Barnett v. Barnett ( 2022 )

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UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL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 Matter of:
RODERICK HOWARD BARNETT, Petitioner/Appellant,
v.
NGAN NGOC BARNETT, Respondent/Appellee.
No. 1 CA-CV 21-0714 FC
FILED 8-18-2022
Appeal from the Superior Court in Maricopa County
No. FC2019-002329
The Honorable Monica Edelstein, Judge
DECREE AFFIRMED IN PART; VACATED IN PART, AND
REMANDED
COUNSEL
Jaburg & Wilk, Phoenix
By Mervyn T. Braude
Co-Counsel for Petitioner/Appellant
R D Smith Law, P.C., Scottsdale
By Roger D. Smith
Co-Counsel for Petitioner/Appellant
Ngan Ngoc Barnett, Chandler
Respondent/Appellee
BARNETT v. BARNETT
Decision of the Court
MEMORANDUM DECISION
Judge Cynthia J. Bailey delivered the decision of the Court, in which
Presiding Judge Samuel A. Thumma and Vice Chief Judge David B. Gass
joined.
B A I L E Y, Judge:
¶1 Roderick Howard Barnett (“Husband”) appeals the superior
court’s decree of dissolution and order denying Husband’s motion to alter
or amend the decree, arguing the court erred in awarding spousal
maintenance and an equalization payment to Ngan Ngoc Barnett (“Wife”).
Although we affirm the dissolution, we vacate the award of spousal
maintenance, the award of the parties’ business to Husband, and the
equalization payment to Wife, and we remand for determinations
consistent with this decision.
FACTS AND PROCEDURAL HISTORY
¶2 Husband and Wife were married in March 2012. The parties
signed a premarital agreement, which waived any award of spousal
maintenance to either party. In March 2019, Husband filed a petition for
dissolution of the marriage, seeking to enforce the premarital agreement.
¶3 During the marriage, the couple co-owned and operated an
Asian fusion restaurant. Husband managed and had sole access to the
accounts, except during parts of January and February 2021, when Wife
obtained an order of protection and briefly had sole control of the business.
Shortly after that period, Wife agreed to allow Husband to manage the
restaurant, while she received a $3,000 monthly salary pending dissolution.
Before the dissolution trial, the parties asked the court to order the business
be sold and the profits split, with disagreement only on the allocation of the
profits between them. Husband represented he had an offer to purchase
the business for $150,000.
¶4 At trial, the parties disputed whether the business was
profitable. Husband testified the business was not profitable and he had
invested his separate funds into the business to keep it afloat between 2014
and 2021. In contrast, Wife testified that, in the preceding few years, the
restaurant had average monthly sales of $85,000 and annual net profits of
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$120,000 to $150,000. She referenced ”self-prepared profit and loss
statements” from around the time she managed the restaurant alone and
submitted into evidence a handful of cash register receipts from late 2020
and early 2021. Neither party submitted any exhibits fully showing the
business’s profits and losses for any year.
¶5 As to the premarital agreement, Wife testified she had been
told the agreement was standard procedure in the United States, a country
she immigrated to approximately one month before the marriage. She
stated Husband gave her a check for $1,500, dropped her off at an attorney’s
office, told her to hand the attorney the check, and sign the document. The
process took less than ten minutes. She did not ask the lawyer questions
because she believed the agreement was part of the normal marriage
process.
¶6 The court ordered dissolution of the marriage and awarded
the business to Husband with an equalization payment to Wife of $48,000.
The court declined to enforce the spousal maintenance waiver and ordered
Husband to pay Wife $5,000 in monthly spousal maintenance for five years.
The court denied Husband’s subsequent motion to alter or amend the
decree.
¶7 We have jurisdiction over Husband’s timely appeal under
Article 6, Section 9, of the Arizona Constitution and Arizona Revised
Statutes (“A.R.S.”) section 12-2101(A)(1) and (2); see Yee v. Yee, 251 Ariz. 71,
73, ¶ 1 (App. 2021).
DISCUSSION
I. The Premarital Agreement’s Waiver of Spousal Maintenance
¶8 Husband argues the superior court erred in finding that Wife
entered the agreement involuntarily and in applying A.R.S. § 25-202(D) to
invalidate the premarital agreement’s waiver of spousal maintenance. We
agree.
A. Voluntariness
¶9 Whether a premarital agreement is enforceable is question of
law, which we review de novo. See In re Marriage of Pownall, 197 Ariz. 577,
580, ¶ 7 (App. 2000). We defer to the superior court’s factual findings if
substantial evidence supports them, Kocher v. Dep’t of Revenue, 206 Ariz. 480,
482, ¶ 9 (App. 2003), without reweighing conflicting evidence on appeal, In
re Estate of Pouser, 193 Ariz. 574, 579, ¶ 13 (1999).
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¶10 Under Arizona law, parties may enter premarital agreements
that modify or eliminate spousal support. A.R.S. § 25-203(A)(4). The
agreement must be in writing and signed by both parties. See A.R.S. § 25–
202(A). A premarital agreement is not enforceable if the agreement was
unconscionable, or it was not executed voluntarily. A.R.S. § 25-202(C). The
person against whom enforcement is sought must prove involuntariness.
Id.
¶11 In finding the agreement involuntary, the superior court
summarized Wife’s testimony as follows: When Wife signed the agreement,
she had recently arrived in the United States and did not understand legal
written English, and the attorney hired by Husband to counsel her did not
explain the agreement but simply pointed to where to sign. Wife testified
she signed the agreement without asking questions of Husband or the
attorney because Husband told her the agreement was standard procedure.
¶12 Wife does not cite case law supporting an involuntariness
finding on this record. In contrast, this court has reversed the invalidation
of a premarital agreement under similar circumstances. See Pownall, 197
Ariz. at 581, ¶¶ 12-13 (reversing decision invalidating premarital agreement
where there was “no evidence that Wife was compelled to sign
the agreement as drafted”). The record does not support the court’s finding
that Wife entered the agreement involuntarily. Wife was represented by
separate counsel, met independently with the attorney, and had the
opportunity to ask questions about the agreement but did not. Wife’s
testimony that Husband told her the agreement was standard procedure
does not suggest that Husband compelled Wife to sign the agreement. See
id. On this record, the agreement is enforceable.
B. A.R.S. § 25-202(D)
¶13 Notwithstanding voluntariness, the superior court found
“based on the facts of the case, A.R.S. § 25-202(D) allows the Court to
invalidate a waiver based on Wife’s qualification/eligibility for State
support as a result of the proceeding.” Thus, the court found the waiver
unenforceable. This finding misconstrues § 25-202(D), which states if the
“elimination [of spousal support] causes one party to the agreement to be
eligible for support under a program of public assistance at the time of
separation or marital dissolution, a court, notwithstanding the terms of the
agreement, may require the other party to provide support to the extent
necessary to avoid that eligibility.” A.R.S. § 25-202(D) (emphasis added).
Section 25-202(D) does not permit invalidation of a waiver of spousal
maintenance outright. And the court’s $5,000 monthly award was not tied
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to the amount necessary to prevent Wife’s eligibility for public assistance.
Indeed, $3,000 of the monthly award corresponded to future wages from
the couple’s restaurant.
¶14 We therefore vacate the superior court’s finding invalidating
the spousal maintenance waiver and remand for the court to consider if any
amount of spousal maintenance is warranted under A.R.S. § 25-202(D),
considering any equalization or other payments when deciding the amount
required to avoid state assistance.
II. Equalization Payment
¶15 Husband also argues the superior court abused its discretion
in awarding Wife a $48,000 equalization payment in exchange for awarding
Husband the parties’ business and for back wages purportedly owed from
the community business.
¶16 The superior court has broad discretion to equitably divide
property, and we will not disturb its allocation absent an abuse of
discretion. Boncoskey v. Boncoskey, 216 Ariz. 448, 451, ¶ 13 (App. 2007). We
will sustain the superior court’s ruling if it is reasonably supported by the
evidence. Kohler v. Kohler, 211 Ariz. 106, 107, ¶ 2 (App. 2005).
¶17 Before the dissolution hearing, the parties agreed that the
court should order the sale of the community business, although they
strongly disagreed at trial on the profitability (if any) of that business.
Nevertheless, instead of ordering the business sold, the court awarded the
restaurant to Husband. In so doing, the court noted that the parties did not
submit a business valuation and that there was insufficient evidence to
determine the business’s true value and equity, but then found “an
equalization payment to Wife for her back-wages is necessary.” The court
awarded Wife $48,000, which the court calculated as being equal to a $3,000
monthly wage from the date of the dissolution petition to the hearing date,
and excluding an amount already entered against Husband for a portion of
the back wages.
¶18 In this case, the court erred in rejecting the parties’ pretrial
agreement to sell the business and declining to order that the business be
sold. The parties’ briefs, signed by their attorneys, amounted to a financial
separation agreement, and the court abused its discretion in rejecting the
agreement without a finding of unfairness. See Ariz. R. Fam. Law P. 69
(“An agreement between the parties is valid and binding on the parties if []
the agreement is in writing and signed by the parties personally or by
counsel on a party’s behalf . . . .”); A.R.S. § 25-317(B) (stating that the terms
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of a financial settlement agreement “are binding on the court unless it finds,
after considering the economic circumstances of the parties and any other
relevant evidence produced by the parties, . . . that the separation
agreement is unfair”); see also Wick v. Wick, 107 Ariz. 382, 385
(1971) (explaining a court is “duty-bound” to distribute community
property in a fair manner, even if doing so is contrary to the terms of the
parties’ agreement).
¶19 There is no record evidence supporting the award of the
community business to Husband, countered by a $48,000 “equalization
payment” to Wife, as co-owner, based on back wages for which the court
provided no clear calculation and that cannot be readily determined on the
record provided. Ostensibly, because the parties expected the business to
sell, the parties did not arrange a business valuation and submitted little
evidence for the court to independently value the business. Although Wife
should have more diligently requested the information through discovery,
as the court noted, Husband refused to provide any financial information
despite having effectively sole access to the restaurant’s books and accounts
at almost all times. Accordingly, the court was left with little evidence to
evaluate the business. We therefore vacate the portion of the decree
awarding the business to Husband with an equalization payment to Wife
and remand for an equitable division of assets consistent with this decision.
III. Attorneys’ Fees and Costs on Appeal
¶20 Husband requests attorneys’ fees on appeal under A.R.S. § 25-
324 and costs under A.R.S. § 12-341. Section 25-324 authorizes an award of
attorneys’ fees based on consideration of the financial resources of the
parties and the reasonableness of the positions taken by each party
throughout the proceedings. The superior court awarded attorneys’ fees to
Wife and found that Husband advanced unreasonable positions in the
litigation. Husband has not pointed to any change in the parties’ financial
circumstances since the date of the decree, and neither side has appeared
unreasonable on appeal. In our discretion, we decline to award Husband
attorneys’ fees. As the prevailing party on appeal, Husband is entitled to
taxable costs under § 12-341 upon compliance with Arizona Rule of Civil
Appellate Procedure 21.
CONCLUSION
¶21 We affirm dissolution of the parties’ marriage but vacate the
portion of the decree awarding spousal maintenance to Wife, the award of
the community business to Husband, and the court’s calculation of the
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associated equalization payment. We remand for the court to reconsider
whether any award of spousal maintenance is appropriate under A.R.S.
§ 25-202(D) and for the court to either order sale of the community business
or to calculate a fact-based valuation of the business before awarding the
business, division of the assets, and calculation of any equalization
payment.
AMY M. WOOD • Clerk of the Court
FILED: AA
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