Court Opinion

ID: 4427027
Source: CourtListenerOpinion
Date Created: 2019-08-20 17:03:32.388677+00
Date Added: 2024-06-11T14:23:07.005501
License: Public Domain

NOTICE: NOT FOR OFFICIAL PUBLICATION.
  UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL
                  AND MAY BE CITED ONLY AS AUTHORIZED BY RULE.

                                     IN THE
              ARIZONA COURT OF APPEALS
                                 DIVISION ONE

                              In re the Marriage of:

                 RAKESH MALHOTRA, Petitioner/Appellee,

                                         v.

                 NEERA MALHOTRA, Respondent/Appellant.

                            No. 1 CA-CV 18-0403 FC
                                 FILED 8-20-2019

            Appeal from the Superior Court in Maricopa County
                            No. FC2006-009701
               The Honorable Timothy J. Thomason, Judge

                       VACATED AND REMANDED

                                    COUNSEL

Stinson Leonard Street LLP, Phoenix
By Lonnie J. Williams, Jr.
Counsel for Petitioner/Appellee

Alexander R. Arpad, Phoenix
Counsel for Respondent/Appellant
                      MALHOTRA v. MALHOTRA
                        Decision of the Court

                      MEMORANDUM DECISION

Judge Samuel A. Thumma delivered the decision of the Court, in which
Acting Presiding Judge Kenton D. Jones and Judge Maria Elena Cruz
joined.

T H U M M A, Judge:

¶1             The dispositive issue in this appeal is whether a July 2015
post-decree judgment properly distributed the assets Neera Malhotra was
awarded in a May 2011 Decree ending her marriage to Rakesh Malhotra.
Because the Decree awarded Neera specific assets (not the listed value of
those assets), and because the values of many of those assets were different
than those listed in the Decree, the July 2015 judgment is vacated and this
matter is remanded for further proceedings.

                FACTS AND PROCEDURAL HISTORY

¶2             Rakesh petitioned for divorce in late 2006, and after
significant motion practice and a trial, in May 2011, the court entered the
Decree. Rakesh, who is a medical doctor, was the chief operating officer of
Saguaro Medical Associates (SMA). SMA had a retirement plan called the
SMA Pension Plan or Profit Sharing Plan (the Plan). Along with awarding
other assets, as relevant here, the Decree stated:

                    At trial, it was undisputed that the
             following assets titled in the [Plan] were
             community property. The values of these assets
             were also undisputed: Cash in the amount of
             $12,000; stocks and bonds valued at $572,226;
             Cash value of two New York Life insurance
             policies in the amount of $290,000.

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                      MALHOTRA v. MALHOTRA
                        Decision of the Court

                     IT IS ORDERED awarding these assets
             of the [Plan] to [Neera] as her sole and separate
             property. 1

Elswehere, the Decree noted the assets awarded to Neera included nearly
$950,000 in liquid assets (apparently including the Plan assets awarded to
her) and awarded her $6,292 “to equalize the division of community
property.”

¶3           No appeal was taken from the Decree and the award of the
assets to Neera has never changed. Had these assets been distributed to
Neera when the Decree became final, there would have been no issue.
Unfortunately, no such timely distribution occurred, due to apparent
intransigence, a generous ration of motion practice and Neera filing for
bankruptcy after entry of the July 2015 judgment at issue here.

¶4             Given that the assets were not timely distributed, economic
good fortune (both before and after entry of the Decree) has caused the
dispute resulting in this appeal. Notwithstanding the values attributed to
the Plan assets awarded to Neera in the Decree: (1) at the time of the entry
of the Decree, those assets were worth more than the value listed in the
Decree and (2) the assets continued to appreciate in value after the entry of
the Decree. Whether the July 2015 judgment properly took this into account
is the dispositive issue in this appeal.

¶5           By 2015, the distribution of Plan assets awarded to Neera in
the Decree was a significant point of friction. A February 2015 minute entry
thoughtfully addressed the dispute, noting “that the parties are not in as
much disagreement as they first seemed to be.” With regard to the Plan
assets awarded to Neera in the Decree, that February 2015 minute entry
stated:

             [a]pparently, income has been earned on the
             [Plan] assets or the [Plan] assets have
             appreciated and the value of these assets

1 The appellate briefs provide various views on whether these assets were
the only assets held by the Plan, whether the Decree awarded Neera all Plan
assets and whether the Decree awarded Rakesh other Plan assets. The
Decree as well as post-Decree orders make clear other Plan assets included
an interest in land in Gila Bend and a Wells Fargo (or Wachovia) account
XXXX-2772. Because the parties have not shown how those other Plan
assets are relevant here, they are not discussed further.

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                      MALHOTRA v. MALHOTRA
                        Decision of the Court

             exceeds the value in 2006. Questions asked at
             oral argument did not elicit clear answers as to
             the current status of the [Plan] assets or
             precisely what the parties are really “fighting
             about.”

                    [Rakesh], however, is not claiming the
             income from, or increase in value of, the [Plan]
             assets. In fact, [Rakesh] conceded at [the]
             hearing that income from, or appreciation of,
             assets awarded to [Neera] belong to [Neera]. As
             such, [Neera] is entitled to the benefit of any
             increase in value of the [Plan] assets or income
             earned on those assets, not [Rakesh].

                    The parties should have divided up the
             assets long ago. The parties need to do an
             accounting immediately. The stocks and bonds
             that existed as of December 31, 2006 that were
             valued at $572,226 need to be identified. Any
             appreciation of these assets, or income earned
             from those assets, needs to be traced and
             provided to [Neera]. Similarly, income earned
             from the $12,000 in cash and $290,000
             [representing the insurance policies] must be
             traced and provided to [Neera].

¶6           After further briefing, a July 2015 minute entry again stated
that Neera is entitled to appreciation on these assets, finding the
appreciation “methodology proposed by [Rakesh] is reasonable.” In the
July 2015 judgment that followed, the court applied the methodology
Ramesh proposed and distributed to Neera “the following assets from the”
Plan:

             Stocks, Bonds and Cash                   $584,226.00

             Appreciation on Stocks,
             Bonds and Cash – as of June
             30, 2015                                 $174,545.15

             Cash Value of NY Life
             Policies                                 $290,000.00

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                       MALHOTRA v. MALHOTRA
                         Decision of the Court

              Appreciation on Cash Value
              Of Life Policies – as of July
              10, 2015                                    $ 93,455.95

                           TOTAL                        $1,142,[]227.11

As discussed below, at the time of the entry of this July 2015 judgment, the
assets awarded to Neera in the Decree were in fact worth $1,334,055.30. The
July 2015 judgment awarded Rakesh “[a]ll remaining assets,” including the
$191,828.18 difference between the amount awarded to Neera in the
judgment and the value of the assets awarded to her in the Decree at the
time the judgment was entered.

¶7            Additional motion practice, a stay when Neera filed for
bankrupty and this timely appeal followed. Neera argues the July 2015
judgment should have distributed to her the total value of the assets
awarded to her in the Decree ($1,334,055.03), not the $1,142,227.11 actually
awarded in the judgment. Stated differently, Neera claims the July 2015
judgment awarded her $191,828.18 less than it should have. This court has
jurisdiction over the appeal pursuant to Article 6, Section 9, of the Arizona
Constitution and Arizona Revised Statutes (A.R.S.) section 12-2101(A)(2)
(2019).2

                               DISCUSSION

¶8             The parties disagree about the appropriate standard of
review. Neera asserts, correctly, that the interpretation of a decree is
reviewed de novo. See Cohen v. Frey, 215 Ariz. 62, 66 ¶ 10 (App. 2007).
Rakesh asserts, also correctly, that a ruling on a post-decree petition is
reviewed for an abuse of discretion. See In re Marriage of Priessman, 228 Ariz.
336, 338 ¶ 7 (App. 2011). To complete the picture, issues of law are reviewed
de novo, while issues of fact are reviewed for an abuse of discretion. See
Danielson v. Evans, 201 Ariz. 401, 406 ¶ 13 (App. 2001); Gutierrez v. Gutierrez,
193 Ariz. 343, 347–48 ¶ 13 (App. 1998). With these standards in mind, the
court first addresses Rakesh’s procedural arguments.

2Absent material revisions after the relevant dates, statutes and rules cited
refer to the current version unless otherwise indicated.

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                      MALHOTRA v. MALHOTRA
                        Decision of the Court

I.     The Appeal Is Timely.

¶9            Rakesh argues the appeal is untimely because Neera did not
appeal a Qualified Domestic Relations Order (QDRO) entered in August
2011 or a February 2015 order addressing some of the same issues.
Assuming those decisions were appealable orders, Rakesh has not shown
how Neera was aggrieved by those decisions or that they were inconsistent
with the Decree. See Ariz. R. Civ. App. P. 1(d) (requiring a party to be
aggrieved to appeal). It was not until entry of the July 2015 judgment, which
distributed to Neera less than all the appreciation of the assets awarded,
that she was aggrieved. Neera timely appealed from that judgment.

II.    Neera’s Failure To Include An October 28, 2011 Order Is An
       Insufficient Ground For Remand.

¶10            Rakesh notes Neera filed a motion for new trial in April 2018
and, in her reply in further support of that motion, asserted an October 28,
2011 order was not previously considered by the superior court. That court
denied Neera’s motion for new trial. Rakesh argues it was improper to use
a motion for new trial to have the court consider evidence that was available
at the time of prior motion practice. In her reply on appeal, however, Neera
states that her “appeal is not based on the significance of the October 28,
2011 Order” and that she “is not making any separate arguments” based on
that order. Accordingly, the October 28, 2011 order is not at issue on appeal
and does not provide any ground for remand.

III.   The Decree Is Not Ambiguous.

¶11            Rakesh argues the Decree is not ambiguous and that any
attempt to rely upon “’extrinsic items not referenced or incorporated into
the Decree” is improper, as “those items have no bearing on the
interpretation of the Decree.” The Decree, on its face, awarded Neera
certain Plan assets. The various orders entered after the Decree, including
the July 2015 judgment, consistently state the Decree awarded Neera
specified assets. Indeed, although pressing alternative arguments, Neera’s
opening brief states that “[t]he Decree is not ambiguous.” As such, there is
agreement that the Decree is not ambiguous and that extrinsic evidence
about the meaning of the Decree should not be considered. See In re Marriage
of Zale, 193 Ariz. 246, 249-50 ¶¶ 11-15 (1999).

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                       MALHOTRA v. MALHOTRA
                         Decision of the Court

IV.    The July 2015 Judgment Did Not Properly Distribute To Neera The
       Plan Assets Awarded To Her In the May 2011 Decree.

¶12           As correctly noted by the superior court in February 2015,
“the parties should have divided up the assets long ago.” The parties did
not do so, however, meaning the issue is whether the July 2015 judgment
correctly distributed to Neera the Plan assets awarded to her in the May
2011 Decree. Resolving that issue involves comparing what should have
happened, had those assets been distributed soon after entry of the Decree,
with what actually happened when they were distributed in the July 2015
judgment.

¶13           Making such a comparison involves (1) identifying the Plan
assets awarded to Neera in the Decree; (2) identifying the correct value of
those assets awarded to Neera at the time of the Decree and (3) identifying
the correct value of those assets at the time of the July 2015 judgment. If the
correct value of those assets as of July 2015 is reflected in the July 2015
judgment, there was no error. If, by contrast, the values are different, the
July 2015 judgment did not properly distribute to Neera the Plan assets
awarded to her in the Decree.

¶14           The Decree awarded Neera three categories of Plan assets: (1)
cash; (2) stocks and bonds and (3) the cash value of two New York Life
insurance policies. As the superior court has stated consistently for years,
the Decree awarded Neera the assets, not the value of the assets,
notwithstanding that the Decree listed values for the categories of assets
awarded. A filing by Rakesh on July 21, 2015, two days before the entry of
the July 2015 judgment, provides values for the assets awarded to Neera
both as of April 30, 2011 (days before the entry of the Decree) and shortly
before the entry of the July 2015 judgment. This filing provides the
valuations needed for this key comparison.

¶15           Although combining cash with stocks and bonds, the April
30, 2011 values for the assets awarded to Neera are:

    Valuation Date                Category                 Valuation
 April 30, 2011            Stocks, Bonds and           $682,517.00
                           Cash
 April 30, 2011            Life Insurance Policies     $349,829.00

                           Total                     $1,032,346.00

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                        MALHOTRA v. MALHOTRA
                          Decision of the Court

Although the Decree was entered a few days later (May 5, 2011), these are
the approximate values of the assets awarded to Neera in the Decree. As
such, they are akin to the value that she would have received if those assets
were distributed to her shortly after the Decree became final. Because that
distribution did not occur, however, it is necessary to look at the value of
these same assets at the time of the entry of the July 2015 Judgment.

¶16           The July 21, 2015 filing notes that Rakesh withdrew $50,000
from the stocks, bonds and cash allocation in May 2011, even though the
Decree awarded those assets to Neera. After that withdrawal, the July 2015
values for the assets awarded Neera in the Decree are:

       Valuation Date             Category                 Valuation
    June 30, 2015          Stocks, Bonds and           $821,489.72
                           Cash
    July 10, 2015          Life Insurance Policies     $462,565.56

                           Total                     $1,284,055.28

Adding the $50,000 Rakesh withdrew in May 2011 (without interest on that
amount through July 2015), the assets awarded to Neera in the Decree were
valued at approximately $1,334,055 when the July 2015 judgment was
entered. The July 2015 judgment, however, awarded Neera $1,142,227.11.
Accordingly, the July 2015 judgment awarded Neera $191,828.18 less than
the July 2015 actual value of the assets awarded to her in the Decree,
without any interest on the $50,000 from May 2011 through July 2015.

¶17           Because the distribution in the July 2015 judgment does not
properly reflect the value, at that time, of the assets awarded to Neera in the
May 2011 Decree, it cannot stand. Accordingly, the July 2015 judgment is
vacated. Given the passage of time, as well as the need to account for
interest on the $50,000 Rakesh withdrew in May 2011, this matter is
remanded to allow the parties to brief the correct, current value of the Plan
assets awarded to Neera in the Decree, to be used in entering a new
judgment distributing that amount to Neera.3

3Given this conclusion, the court does not address the parties’ alternative
arguments raised on appeal.

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                      MALHOTRA v. MALHOTRA
                        Decision of the Court

V.    Attorneys’ Fees And Costs.

¶18           Both Neera and Rakesh request award of their respective
attorneys’ fees incurred on appeal under A.R.S. § 25-324. In the exercise of
the court’s discretion, both fee requests are denied, although Neera is
awarded taxable costs on appeal contingent upon her compliance with
Ariz. R. Civ. App. P. 21.

                              CONCLUSION

¶19          For the foregoing reasons, the July 2015 judgment is vacated
and this matter is remanded for proceedings consistent with this decision.

                         AMY M. WOOD • Clerk of the Court
                         FILED: AA

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