Court Opinion

ID: 6340232
Source: CourtListenerOpinion
Date Created: 2022-05-12 18:01:49.510813+00
Date Added: 2024-06-11T15:49:14.442465
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  UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL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:

          MEREDITH L. BERG, Petitioner/Appellee/Cross-Appellant,

                                         v.

           JOSHUA J. BERG, Respondent/Appellant/Cross-Appellee.

                            No. 1 CA-CV 21-0320 FC
                                 FILED 5-12-2022

            Appeal from the Superior Court in Maricopa County
                            No. FC2019-098387
                 The Honorable Marvin L. Davis, Judge

    AFFIRMED IN PART; VACATED AND REMANDED IN PART

                                    COUNSEL

Adam C. Rieth PLLC, Mesa
By Adam Rieth
Counsel for Petitioner/Appellee/Cross-Appellant

Tiffany & Bosco, PA, Phoenix
By Amy D. Sells
Counsel for Respondent/Appellant/Cross-Appellee
                            BERG v. BERG
                          Decision of the Court

                      MEMORANDUM DECISION

Judge Brian Y. Furuya delivered the decision of the Court, in which
Presiding Judge David D. Weinzweig and Judge Jennifer M. Perkins joined.

F U R U Y A, Judge:

¶1            The parties appeal and cross-appeal several rulings in their
dissolution decree and a post-decree order. For the following reasons, we
affirm the valuation of the community business and parenting time orders.
We vacate and remand for the superior court to reconsider the spousal
maintenance award, the property allocation and reimbursement ruling, the
child support order, and the attorneys’ fees ruling.

                FACTS AND PROCEDURAL HISTORY

¶2            Meredith L. Berg (“Mother”) and Joshua J. Berg (“Father”)
were married in 2004 and have two children. Father owns an insurance
agency. Mother has a master’s degree and previously taught special
education in Washington state. She had not worked outside the home for
thirteen years before petitioning for divorce in December 2019.

¶3            The superior court issued temporary orders instituting a 5-2-
2-5 parenting time schedule, awarding Mother $2,000 per month in spousal
maintenance, and granting her use of the marital home. Father was ordered
to make all payments related to the marital home, including the mortgage,
homeowners’ association dues, utilities, and insurance as well as the
minimum payments on the community credit cards. The court also
awarded Mother $5,000 in interim attorney’s fees. On Mother’s motion, the
court also appointed a real estate appraiser to determine the value of the
marital home, rejecting Father’s contention that an appraisal was not
needed until the court ordered the home sold or refinanced.

¶4           The dissolution decree awarded Mother and Father joint legal
decision-making authority and equal parenting time and ordered Father to
pay monthly child support of $311. In determining child support, the court
attributed Mother a monthly income of $6,066.67 ($72,800.04 annually) and
included Father’s monthly expenses for childcare ($238) and health
insurance ($636). The court also awarded Mother $2,000 a month in spousal
maintenance for one year, starting June 1, 2021.

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                             BERG v. BERG
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¶5             In dividing the community’s property, the court found the
parties’ marital community was the exclusive owner of Blue Lion
Insurance, LLC, rejecting Father’s claim that his business associate, Brian
Roberts, owned 50% of that business. The court valued Blue Lion Insurance
at $1,195,000 and ordered Father to pay half that amount ($597,500) to
Mother. Mother was awarded the marital home and ordered to refinance
within four months or sell the home. The court further awarded Father half
the equity in the home as of the refinance or sale date. Mother’s share of the
community business was to be offset by Father’s share of the equity in the
marital home. The court declined to reimburse Father for the community
debts and expenses he paid under the temporary orders. Finally, the court
denied both parties’ requests for attorneys’ fees.

¶6            Father timely appealed and Mother cross-appealed, but
Mother also moved the superior court to alter or amend the decree under
Arizona Rules of Family Law Procedure (“Rules”) 82(b) and 83(a)(1), and
for additional factual findings. We therefore stayed the appeal to allow the
superior court to rule on Mother’s motion.

¶7            The superior court corrected the decree to state that only
Father requested a week on/week off schedule and granted other relief not
relevant to the appeal. The court also issued a new child support worksheet,
which attributed Mother a monthly income of $4,166.67 ($50,000 annually),
eliminated Father’s childcare costs, and corrected the health insurance cost.
Mother amended her notice of cross-appeal to appeal the post-decree order,
too. We have jurisdiction under Arizona Revised Statutes (“A.R.S.”) § 12-
2101(A)(1)–(2).

                               DISCUSSION

I.     Evidence Supports Finding the Community Is the Exclusive
       Owner of Blue Lion Insurance.

¶8            Father argues the superior court erred as a matter of law when
it found the parties’ marital community was the exclusive owner of Blue
Lion Insurance because Blue Lion’s operating agreement identified Roberts
as a one-half member. We review allocations of community property for
abuse of discretion. Bell-Kilbourn v. Bell-Kilbourn, 216 Ariz. 521, 523, ¶ 4
(App. 2007). An abuse of discretion occurs if the court “commits an error of
law in the process of exercising its discretion.” Boncoskey v. Boncoskey, 216
Ariz. 448, 451, ¶ 13 (App. 2007).

¶9          Father testified he and Roberts formed Blue Lion Brokers,
LLC, an insurance agency in Washington, during the marriage in 2010,

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                             BERG v. BERG
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through a parent company named Soleyon. In 2013, Father left Washington
and started Blue Lion Insurance in Arizona, which required him to buy out
Soleyon’s interest in his half of Blue Lion Brokers’ policies. Roberts
remained as the sole owner of Blue Lion Brokers in Washington. According
to Father, despite these changes to business ownership, he and Roberts
continued to share profits from the two agencies under an informal
arrangement. When Roberts left Soleyon in 2017, he transferred his Blue
Lion Brokers policies to Blue Lion Insurance and started to write policies
for Blue Lion Insurance.

¶10           The Blue Lion Insurance operating agreement shows that
Father and Roberts each owned 50% of Blue Lion Insurance on January 1,
2019. Father points to the operating agreement as dispositive on the
question of who owned Blue Lion. We are not persuaded. Arizona law
permits a person to become a member of an LLC through the terms of the
operating agreement or by vote of all existing members. A.R.S. § 29-
3401(C)(1), (3). However, Arizona law did not require the superior court to
unconditionally defer to language from the operating agreement when
deciding who owned the business here. The operating agreement was
evidence, which the court considered along with other evidence, to find the
marital community owned Blue Lion in whole.

¶11           That evidence included Mother’s business valuation expert,
David Cantor, who opined that Father did not sell half his interest in Blue
Lion Insurance to Roberts, noting that Roberts did not pay anything for an
ownership interest and was not issued shares of stock. Cantor testified that
the only evidence of Roberts’ 50% ownership was the 2019 operating
agreement and 2019 tax documents. But Father testified that Roberts
contributed assets to Blue Lion Insurance in exchange for his 50%
membership interest. Those assets allegedly consisted of the Blue Lion
Brokers policies Roberts brought with him and the additional policies he
wrote for Blue Lion Insurance. However, Cantor explained that Blue Lion
Insurance compensated Roberts for his efforts, so he did not necessarily
contribute these assets in exchange for an ownership interest.

¶12           Furthermore, Mother testified the parties had discussed
divorce for many months before she filed the petition and Father made
Roberts a 50% owner to reduce his own interest in Blue Lion Insurance in
anticipation of the parties’ divorce. To support her contention, Mother
provided an April 2020 filing from the Arizona Corporation Commission
showing Father as the sole principal of Blue Lion Insurance and an annual
report filed with Washington Secretary of State showing Roberts did not
have an interest in Blue Lion Insurance until November 2019.

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                              BERG v. BERG
                            Decision of the Court

¶13           The court had discretion to weigh Father’s testimony together
with the timing of these events and other evidence to conclude the
community was the only owner of Blue Lion Insurance, despite the
document’s demonstrating a change in ownership occurred while the
parties were contemplating divorce. “Our duty on review does not include
re-weighing conflicting evidence or redetermining the preponderance of
the evidence.” Hurd v. Hurd, 223 Ariz. 48, 52, ¶ 16 (App. 2009). Viewing the
evidence in the light most favorable to affirming the court’s decision, we
discern no error. Boncoskey, 216 Ariz. at 451, ¶ 13.

II.    Because the Superior Court Did Not Determine the Value of the
       Marital Home, It Is Unclear If the Spousal Maintenance Award Is
       Appropriate or If the Overall Property Allocation Is Equitable.

¶14           The superior court has broad discretion to allocate individual
assets and liabilities in determining the equitable division of property, and
“we will not disturb its allocation absent an abuse of discretion.” Id. We also
review the court’s spousal maintenance ruling for an abuse of discretion.
Gutierrez v. Gutierrez, 193 Ariz. 343, 348, ¶ 14 (App. 1998).

¶15           In allocating the community property, the court awarded
Mother half the value of Blue Lion Insurance ($597,500). This equalization
payment is to be offset by Father’s 50% share of the equity in the marital
home. Mother’s evidence suggested the home was worth $472,000, with
$159,000 in equity when she filed the petition. Father testified, generally,
that the value had since increased, though he did not provide an exact
valuation. But the court did not make a finding determining the value of
the home or the amount of equity. Instead, it ordered Mother to refinance
the loan by September 1, 2021, or sell the home. Thus, at the entry of the
decree, the value of the marital home remained undetermined.

¶16          The court has broad discretion to determine the property’s
valuation date to achieve an equitable property allocation. Sample v. Sample,
152 Ariz. 239, 242 (App. 1986) (“[A] trial court must be allowed to utilize
alternative valuation dates.”). But failure to determine the value of the
marital home until the refinance or sale date was an abuse of discretion
here.

       A.     Spousal Maintenance

¶17           The spousal maintenance award of $2,000 a month was based,
in part, on the fact that “Mother will have significant financial resources
based on the amount of equity she will receive from Father’s insurance
business.” The court properly considered the interest income that the

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                              BERG v. BERG
                            Decision of the Court

business equalization payment might generate in determining the spousal
maintenance award. See A.R.S. § 25-319(B)(9); Deatherage v. Deatherage, 140
Ariz. 317, 321 (App. 1984). But because the court did not value the marital
home, there was insufficient evidence to accurately estimate the net
equalization payment or how much potential interest income to attribute to
Mother. Thus, the record does not support the finding that Mother will have
“significant financial resources” from the equalization payment, and we
cannot say the spousal maintenance award was appropriate. Also unclear
is when the equalization payment would generate income for Mother
because the court never ordered a date certain for payment. Indeed, Father
still has not paid Mother.

¶18           Because the record lacks sufficient evidence to support the
spousal maintenance award, we vacate the award and remand for
reconsideration. Given this resolution, we do not address Mother’s other
objections regarding amount and duration of the spousal maintenance
award, since the court may exercise its discretion to reconsider the amount
and duration on remand.

       B.     Reimbursement Claim

¶19           The failure to determine the value of the marital home also
affects Father’s reimbursement claim. The temporary orders required
Father to pay spousal maintenance, all expenses related to the marital
home, and the minimum payment on the community credit cards.
According to Father, he paid $3,500 a month for these community expenses
starting in December 2019. Father argues that under Bobrow v. Bobrow, 241
Ariz. 592, 596, ¶ 19 (App. 2017), he is entitled to be reimbursed for these
payments, and the court abused its discretion in denying his claim for
reimbursement.

¶20            Under Bobrow, payments voluntarily made by a spouse after
service of a petition for dissolution are not presumed to be gifts to the other
spouse and must be accounted for in an equitable property allocation. Id. at
593, 596, ¶¶ 1, 19. We reject Father’s contention that Bobrow—and cases
citing it—require courts to order reimbursement for all post-petition
payments. Rather, courts must account for such payments. Id. For example,
in Hammett v. Hammett, 247 Ariz. 556, 561, ¶ 26 (App. 2019), we remanded
for the court to consider post-petition payments “to maintain community
assets as it would in any other proceeding dividing community property.”
(Emphasis added) (citing Bobrow, 241 Ariz. at 596, ¶ 19). And Barron v.
Barron, 246 Ariz. 580, 591, ¶¶ 43–44 (App. 2018), vacated in part on other
grounds, 246 Ariz. 449 (2019), denied both parties’ reimbursement claims

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                              BERG v. BERG
                            Decision of the Court

because the “overall property allocation was equitable.” These cases
support the conclusion that courts must consider the post-petition payment
of community expenses but retain discretion to account for such payments
in an equitable overall property allocation.

¶21            In denying Father’s reimbursement claim, the court found
Mother would not have been able to make these payments with the
temporary spousal maintenance award. The court also found Father has
substantially greater financial resources, and Mother needed additional
financial assistance above the temporary support. According to Mother,
these findings suggest the court denied the reimbursement claim because it
would otherwise have had to retroactively grant additional temporary
spousal maintenance. Father argues that such an inference defeats the
holding in Bobrow. However, in Bobrow, 241 Ariz. at 595, ¶ 14, the husband
was not obligated to pay spousal maintenance after the petition was filed
in accordance with a premarital agreement, so the court could not consider
the wife’s need for post-petition support as it did in Barron, 246 Ariz. at 591,
¶ 43.

¶22            In Barron, we affirmed denial of a reimbursement claim based
in part on this inference. Id. But Barron did not rely exclusively on an
implied and retroactive modification of temporary spousal maintenance;
rather, both parties sought reimbursement for post-petition payments. Id.
at 591, ¶ 40. The superior court denied both claims, and we concluded “the
overall property allocation was equitable.” Id. at ¶ 44. This result is
consistent with Bobrow, which held that a reimbursement claim should be
considered as part of the court’s obligation to divide community property
equitably. See A.R.S. § 25-318(A). Thus, we must look at the overall property
allocation to determine if the denial of Father’s reimbursement claim was
equitable in this case.1

¶23            Here, by valuing the marital home as of the date of a
prospective refinance or sale instead of the date of service, the court may
have reimbursed Father for his post-service mortgage payments because he
will share in the increased equity in the home. Because there is no evidence
of the value of the home, it is impossible to conclude that Father’s share of
this increased equity corresponds to the community expenses he paid.

1              Father argues that unlike Barron, the overall property
allocation was not equitable because the court erred in valuing Father’s
interest in the business. We do not address this argument because the court
did not err in allocating the community business. See supra ¶ 13.

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                             BERG v. BERG
                           Decision of the Court

Thus, the record does not support the conclusion that denying Father’s
reimbursement claim was equitable under the circumstances.

¶24           Finally, we reject Mother’s contention that Father’s payments
were not voluntary because the court ordered them as part of the spousal
maintenance award. The expenses were separate from the temporary
spousal maintenance award. Moreover, the temporary order did not limit
Father’s right to seek reimbursement in the final decree. See A.R.S. § 25-
315(F)(1) (temporary orders do not prejudice a party’s rights to be
adjudicated at trial).

       C.    Failure to Order Due Date for Equalization Payment

¶25            Mother argues the lack of a due date for Father’s equalization
payment constitutes an abuse of discretion. Father does not oppose an order
setting a date for his equalization payment but contends it must be tied to
the date the marital home is refinanced or sold. As this case has shown, the
lack of a due date deprived Mother of her interest in one of the community’s
most valuable assets and undermined the basis for the spousal maintenance
award. The inequity of this delay is compounded because the court did not
provide for interest on the deferred payment. “In the absence of a provision
for interest on the deferred amount, [the payee spouse] is forced to make an
interest-free loan to [the payor spouse]. This we deem inequitable in
effectuating a division of community property.” McCune v. McCune, 120
Ariz. 402, 404 (App. 1978).

¶26          We vacate that portion of the decree as to the allocation of the
marital home because the court failed to make a finding determining its
value. We instruct the court to order Father to pay Mother for her share of
the community business by a date certain and determine what, if any,
interest is appropriate. We also vacate the ruling denying Father’s
reimbursement claim and remand for reconsideration. On remand, the
court may exercise its discretion to reallocate other property, if it
determines that is necessary to achieve an equitable overall property
allocation. We express no opinion on whether that is necessary and leave
this determination to the court’s sound discretion. Because the spousal
maintenance award is dependent on the property allocation, we also vacate
that award and remand for reconsideration consistent with this decision.

III.   The Record Supports the Parenting Time Orders.

¶27           Mother objects to the parenting time orders on several
grounds. We review the court’s legal decision-making and parenting time
orders for an abuse of discretion. Engstrom v. McCarthy, 243 Ariz. 469, 471,

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                              BERG v. BERG
                            Decision of the Court

¶ 4 (App. 2018). The court abuses its discretion “when the record is devoid
of competent evidence to support the decision, or when the court commits
an error of law in the process of reaching a discretionary conclusion.” Id. In
determining legal decision-making authority and parenting time, the court
must consider “all factors” regarding the children’s best interests and make
specific findings on the record about those factors and the reasons why its
decision is in the best interests of the children. See A.R.S. § 25-403. Failure
to make the necessary findings is error. Nold v. Nold, 232 Ariz. 270, 273, ¶ 11
(App. 2013).

¶28            Mother argues the week on/week off parenting time order
was not in the children’s best interests because the children will then spend
time at Father’s office on electronic devices. She also alleged, among other
things, that Father was not involved in the children’s medical care or
education and that he left the older child home alone on one occasion.
Father presented evidence he was involved with the children, although
perhaps not as much as Mother was during the marriage. Father did not
think it was harmful for the children to do homework or spend time on
electronic devices at his office after school. He also denied leaving the
children alone except for one occasion when Mother was unavailable and
left the thirteen-year-old home alone for a short time with no adverse
consequences.

¶29           Noting the issues Mother raised and the conflicting evidence,
the court nevertheless found (1) both parents have a strong, loving bond
with the children; (2) both are actively involved with the children; (3) the
children are well adjusted; (4) both parents and the children are mentally
and physically healthy; (5) Father was more likely to allow the children
frequent, meaningful contact with Mother; and (6) there was no domestic
violence. See A.R.S. § 25-403(B). The evidence supports the conclusion that
equal parenting time was in the children’s best interests.

¶30            Mother contends the court abused its discretion by failing to
state why it was in the children’s best interests to adopt the week on/week
off schedule instead of a 5-2-2-5 schedule. Mother did not propose the court
adopt a 5-2-2-5 schedule until her post-decree motion. And she only raised
it as an alternative if the court insisted on equal parenting time because the
children were used to that schedule. At trial, the court decided between
Mother’s request that Father have alternate weekends and Father’s request
for equal parenting time. The findings adequately addressed this dispute.
Knowing that equal parenting time was a possibility, Mother could have
proposed the 5-2-2-5 schedule as an alternative at trial. The court was not

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                              BERG v. BERG
                            Decision of the Court

required to make additional findings on an issue Mother did not timely
raise.

¶31           Next, Mother argues the court abused its discretion by not
allowing the noncustodial parent to have a “couple hours” with the
children on their birthdays. The parents have parenting time on the
children’s birthdays in alternating years. The court did not abuse its
discretion, given the enmity between the parents. For the same reason, the
court did not abuse its discretion when it rejected Mother’s request to have
the children during Father’s working hours.

IV.    The Superior Court’s Child Support Award is Not Consistent with
       Its Findings on Spousal Maintenance or Supported by the
       Evidence.

¶32            We review child support awards for an abuse of discretion
and accept the court’s findings of fact unless clearly erroneous. Engel v.
Landman, 221 Ariz. 504, 510, ¶ 21 (App. 2009). In ruling on Mother’s post-
decree motion, the court adjusted her income from $6,066.67 per month to
$4,166.67 per month, finding she could earn that amount upon
recertification to teach. According to Mother, she earned $3,000 a month at
the time of trial and was not capable of earning $4,166.67 until she is
recertified.

¶33            The court has discretion to determine a parent’s earning
capacity based on education, work experience, and previous earning
capacity. See Taliaferro v. Taliaferro, 188 Ariz. 333, 337 (App. 1996). However,
attributing the income Mother will earn once she is recertified and working
full-time conflicts with the findings the court made when deciding spousal
maintenance. The court found Mother was currently unable to be self-
sufficient in her career and needed one-year to obtain recertification. The
decree and the post-decree order recognized that Mother did not have the
capacity to earn $4,166.67 until recertified. Thus, the attribution of a greater
income before that time for child support purposes is not supported by the
record and is contrary to the court’s other findings. On remand, the court
shall use Mother’s pre-certification income of $3,000 a month for one year
from the trial, which was the amount of time Mother estimated it would
take for her to become recertified.

¶34          Mother also argues the court failed to modify the child
support order after it reduced her income and adjusted Father’s insurance
and childcare costs. This issue is moot because the court entered a new child
support worksheet with these changes, resulting in a monthly child support

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                              BERG v. BERG
                            Decision of the Court

obligation of $614. On January 13, 2022, the court ordered Father to pay $614
per month effective June 1, 2021.

¶35           Mother contends the court failed to allocate the cost of the
children’s extra-curricular activities. This issue is waived because Mother
did not ask the court to allocate this expense. See Bobrow, 241 Ariz. at 597, ¶
23 (stating arguments not raised below are deemed waived). Furthermore,
the Arizona Child Support Guidelines (“Guidelines”) do not require the
court to allocate the cost of extra-curricular activities. See A.R.S. § 25-320,
Guidelines § 9 (2018) (setting forth mandatory and discretionary expenses
for determining the basic child support obligation, which do not include
extra-curricular activities).

V.     Attorneys’ Fees.

       Mother argues the court erred in denying her request for attorneys’
fees. Because we are remanding for reconsideration of several issues, the
court has the opportunity to reconsider the issue of attorneys’ fees.

                    ATTORNEYS’ FEES ON APPEAL

¶36            Both parties request attorneys’ fees on appeal under A.R.S. §
25-324. Neither party took unreasonable positions on appeal, but because
there is a significant financial disparity favoring Father, we grant Mother’s
request for reasonable attorneys’ fees and costs on appeal upon compliance
with ARCAP 21. See A.R.S. § 12-342.

                              CONCLUSION

¶37          We affirm the order valuing the community business and the
parenting time orders. We vacate those portions of the decree concerning
the spousal maintenance award, the property allocation and
reimbursement ruling, the child support order, and the attorneys’ fees
ruling. The superior court shall reconsider these issues on remand in a
manner consistent with this decision.

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

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