Court Opinion

ID: 4683781
Source: CourtListenerOpinion
Date Created: 2021-05-04 16:04:27.562897+00
Date Added: 2024-06-11T08:04:17.585998
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 UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL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 the Matter of:

                 CRYSTAL HILLMAN, Petitioner/Appellee,

                                        v.

               MICHAEL HILLMAN, Respondent/Appellant.

                           No. 1 CA-CV 20-0121 FC
                                FILED 5-4-2021

           Appeal from the Superior Court in Maricopa County
                           No. FC2015-070217
              The Honorable Lisa Ann VandenBerg, Judge

      VACATED AND REMANDED FOR RECONSIDERATION

                                   COUNSEL

Curry Pearson & Wooten PLC, Phoenix
By Daniel Seth Riley
Counsel for Petitioner/Appellee

Michael Hillman, Glendale
Respondent/Appellant
                        HILLMAN v. HILLMAN
                         Decision of the Court

                     MEMORANDUM DECISION

Judge David B. Gass delivered the decision of the Court, in which Presiding
Judge Jennifer M. Perkins and Judge Michael J. Brown joined.

G A S S, Judge:

¶1           Michael Hillman appeals from a superior court order
reinstating a qualified domestic relations order (QDRO) allocating his
pension and from the denial of his motion to alter, amend, or vacate that
order. Because the superior court needed a hearing to determine whether a
dissolution agreement was merged into the dissolution decree or
incorporated by reference, we vacate the superior court’s previous orders
and remand for reconsideration.

              FACTUAL AND PROCEDURAL HISTORY

¶2            Before the marriage, husband worked as a police officer,
participating in the Public Safety Personnel Retirement System (PSPRS)
pension. See generally A.R.S. §§ 38-841 to -863.01. Husband worked as an
officer throughout the marriage and continues to do so. After his wife,
Crystal Hillman, petitioned for dissolution, the parties went to mediation
and entered a Rule 69 agreement on several issues. Relevant to this appeal,
the agreement said:

             6.      Pursuant to A.R.S. [§] 25-319(A), [husband]
      agrees to pay Spousal Maintenance to [wife] in the amount of
      $1,600.00 per month beginning the first day of the month after
      the marital residence is refinanced or sold . . . . The Spousal
      Maintenance award will be paid until the date of [husband’s]
      retirement from the Phoenix Police Department and upon the
      start of pension payments to [wife] for her community
      interest in the [PSPRS]. This provision is non-modifiable for
      all purposes.

             7.      The parties agree that the community portion of
      [husband’s PSPRS] plan through the City of Phoenix will be
      divided by QDRO. The parties will equally share the fees for
      the preparation of the QDRO and will rely on their attorneys
      to agree to the selected QDRO attorney. [Wife] agrees that she

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                          HILLMAN v. HILLMAN
                           Decision of the Court

       will not begin to receive her portion of the benefits due her
       from the Pension Plan until [husband’s] actual retirement
       (which could be as soon as immediate or as long as the year
       2032). Once [wife] begins to receive her pension benefit, her
       spousal maintenance will terminate.

¶3            In a separate order, the superior court said, “IT IS ORDERED
adopting and incorporating herein by reference the parties’ Rule 69
Agreement, which is attached to the parties’ Joint Notice of Partial Settlement
and Request for Order Approving Rule 69 Agreement, eFiled September 27,
2016.” After a trial on the remaining issues, the superior court entered its
decree. In addressing the agreement, the decree said:

       IT IS ORDERED adopting and incorporating by reference
       herein all other orders not otherwise specifically addressed
       herein, but are set forth in the parties’ Joint Notice of Partial
       Settlement and Request for Order Approving Rule 69 Agreement,
       eFiled September 27, 2016 and adopted as a formal Order of
       the Court pursuant to its minute entry dated October 4, 2016,
       and filed on October 5, 2016.

¶4            The decree makes similar references on several issues,
including joint legal decision-making, parenting time, child support, tax
deductions, spousal maintenance, community property, and the marital
residence. For example, the superior court ordered husband to pay monthly
spousal maintenance of $1,600, noting “details of same are set forth in the
parties’ Rule 69 Agreement.”

¶5            Several months after the decree, the parties met with a series
of QDRO attorneys because disputes arose over spousal maintenance and
wife’s share of husband’s deferred pension payments under Koelsch v.
Koelsch, 148 Ariz. 176 (1986). Husband objected to the prepared QDROs,
arguing they did not reflect the intent of the agreement or decree. The
superior court did not appoint any QDRO attorney as a special master with
the authority to take evidence and enter findings, and the superior court
itself never held a hearing on the disputed issues. Indeed, the last QDRO
attorney correctly observed he “[had] not been appointed to take evidence
and try the case, or to enter findings and conclusions.”

¶6           That last attorney, nonetheless, resolved disputed issues and
concluded: (1) the agreement and decree provided for a spousal
maintenance payment only and did not include a Koelsch payment; (2) the
second attorney’s QDRO formula was correct; (3) wife was entitled to share

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                         HILLMAN v. HILLMAN
                          Decision of the Court

in any future Deferred Retirement Option Plan (DROP) benefits; and (4) the
QDRO should not contain an equitable adjustment for social security
benefits. The superior court adopted the last QDRO attorney’s
recommendations over husband’s objections and reinstated one of the
previous QDROs.

¶7            Husband moved to alter, amend, or vacate the superior
court’s ruling reinstating the previous QDRO. In an unsigned order, the
superior court denied without comment husband’s motion. After husband
submitted a proposed form of order for the court’s signature, the court
issued a minute entry nunc pro tunc correcting the unsigned minute entry
to include required certification language and a signature under Arizona
Rule of Family Law Procedure 78(c). This appeal followed.

                             JURISDICTION

¶8            Wife argues this court lacks jurisdiction because husband’s
notice of appeal was untimely. We disagree.

¶9            The superior court issued an unsigned minute entry on
December 20, 2019, denying husband’s time-extending motion to alter,
amend, or vacate. The time to appeal did not start until the superior court
issued the signed minute entry nunc pro tunc on January 29, 2020, in which
it ruled on the time-extending motion. See ARCAP 9(e)(1); see also Valley
Nat’l Bank of Ariz. v. Meneghin, 130 Ariz. 119, 123 (1981) (“[T]he time for
appeal runs from the entry of the judgment nunc pro tunc . . . .”). Because
husband filed the notice of appeal within thirty days of the superior court
filing its signed minute entry, his appeal is timely. See ARCAP 9(a).
Accordingly, this court has jurisdiction under article VI, section 9, of the
Arizona Constitution, and A.R.S. § 12-2101.A.1.

                               ANALYSIS

I.    The superior court must determine whether the agreement was
      merged into the decree or incorporated by reference before ruling
      on whether a hearing is needed on the underlying disputes.

¶10           Husband asked the superior court to resolve disputed factual
and legal issues as soon as wife attempted to obtain a QDRO. The superior
court acknowledged the issues and vacated a prepared QDRO as a result.
The superior court appointed consecutive QDRO attorneys without either
authorizing them to conduct a hearing or holding a hearing itself. At its
core, this case is about those underlying disputed issues—the Koelsch

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                          HILLMAN v. HILLMAN
                           Decision of the Court

payments, spousal maintenance, and DROP benefits—in the context of the
agreement and the decree.

¶11           On this record, we cannot resolve the underlying disputes
husband raises on appeal. We are unable to determine whether the superior
court intended to have the agreement merge with the decree as an order of
the court or simply be incorporated by reference because the superior
court’s decree did not sufficiently track necessary statutory language. See
A.R.S. § 25-317.D (providing the required findings, criteria, and language
for the superior court to use when stating whether a separation agreement
is merged into a degree or incorporated by reference); Young v. Burkholder,
142 Ariz. 415, 420 (App. 1984). We address this issue because its resolution
on remand is necessary to determine if husband is entitled to the
evidentiary hearing he requests. See Buckholtz v. Buckholtz, 246 Ariz. 126,
131, ¶ 17 (App. 2019) (court may address issues likely to arise on remand).

¶12           When an agreement merges into the decree, it “is superseded
by the decree, and the obligations imposed are not those imposed by
contract, but are those imposed by decree, and enforceable as such.”
LaPrade v. LaPrade, 189 Ariz. 243, 247 (1997) (quoting Glassford v. Glassford,
76 Ariz. 220, 226 (1953)). If the superior court determines the agreement
merged into the decree, the court shall interpret the orders under the
appropriate standard for interpreting judgments. See Cohen v. Frey, 215
Ariz. 62, 66, ¶ 11 (App. 2007). The superior court need not hold an
evidentiary hearing to interpret its own order. See id.

¶13           But when a decree incorporates the agreement by reference,
“the agreement retains its independent contractual status and is subject to
the rights and limitations of contract law.” LaPrade, 189 Ariz. at 247.
Accordingly, if the superior court finds the agreement was merely
incorporated by reference, the court must apply the standard rules for
interpreting a contract, which may require an evidentiary hearing. See
Buckholtz, 246 Ariz. at 129–30, ¶¶ 10–11.

¶14           Wife contends an evidentiary hearing on the underlying
disputes is unnecessary because husband’s position relies on parol
evidence. Parol evidence is inadmissible to interpret the agreement
because, she argues, it merged into the decree. See In re Marriage of Zale, 193
Ariz. 246, 249, ¶ 11 (1999) (“[A]pplying the parol evidence rule to a
judgment would create a result contrary to the very rationale for a
judgment.”). Husband argues the agreement did not merge into the decree.
Accordingly, the superior court must resolve this issue to determine

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                          HILLMAN v. HILLMAN
                           Decision of the Court

whether it must hold the evidentiary hearing husband requests on the
underlying disputes.

¶15          Husband argues wife waived this argument by not raising it
before the superior court. Though wife did not raise the issue before the
superior court, we express no opinion regarding waiver because we are
remanding for further proceedings.

¶16           In short, the superior court must resolve whether the
agreement was merged into the decree or incorporated by reference
because whether husband is entitled to a hearing on the disputed QDRO
issues depends on the question’s resolution. See A.R.S. § 25-317.D; Young,
142 Ariz. at 420. Once the superior court resolves the merger-or-
incorporation issue, the superior court then can address the disputed issues
as to the meaning of the spousal maintenance provision and the appropriate
formula for dividing husband’s pension under the relevant contract
interpretation rules, conducting an evidentiary hearing if needed. This
determination will define the correct formula for the QDRO. It also will
resolve whether the spousal maintenance is in fact a Koelsch payment,
whether wife is entitled to share in any future benefits under the DROP
program, the extent of her share if any, whether husband is entitled to any
credit for any prior payments to wife, and the QDRO attorney fees issue.

II.    On remand, the superior court must determine whether husband
       waived his argument regarding an equitable adjustment for social
       security benefits.

¶17           Husband argues the QDRO failed to include an equitable
adjustment in the allocation of his pension benefits to account for wife’s
non-divisible social security benefits as required by Kelly v. Kelly, 198 Ariz.
307, 309, ¶¶ 9, 11 (2000). Wife contends husband waived this argument
because he did not raise it at trial.

¶18          True, husband did not request the equitable social security
adjustment at trial and first raised this issue when he objected to one of the
QDROs. Because we remand, we express no opinion regarding waiver.

                      ATTORNEY FEES ON APPEAL

¶19           Both parties request their attorney fees and costs on appeal.
In our discretion, we decline to award attorney fees but grant husband—as
the prevailing party—his costs upon compliance with ARCAP 21.

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                       HILLMAN v. HILLMAN
                        Decision of the Court

                             CONCLUSION

¶20          We vacate the superior court’s prior orders reinstating the
QDRO and denying husband’s motion to amend, alter, or vacate. We
remand the case for reconsideration and a proper adversarial hearing to
resolve disputed issues if appropriate.

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

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