Significant Cases

/Significant Cases
Significant Cases 2016-12-15T19:19:16+00:00

Significant trial and appellate court decisions:

Austin v. Austin, 237 Ariz. 201; 348 P.3d 897 (2015) – (Represented prevailing party at trial) (1) On a former husband’s motion to compel arbitration of a dispute with his former wife over limited lability company (LLC) operating agreements, the trial court correctly found that the agreements placed permanent and significant limitations on the wife’s separate property rights and were properly regarded as postnuptial property decision agreements – husband was required to demonstrate by clear and convincing evidence that wife was aware of the property subject to the arbitration provision of advised of the effect of the arbitration provision; (2) Wife’s children’s interests in trusts created by wife were detrimentally impacted by the husband’s putting the trust assets into the LLC without their knowledge or consent. Therefore, the arbitration provision was not enforceable against the children, and the children were not estopped from avoiding arbitration.

Stein v. Stein, 238 Ariz. 548, 363 P.3d 708 (2015) – (Represented prevailing party on appeal) This was an appeal from a child support order. Because a timely request for findings of fact and conclusions of law was filed prior to trial, the family court was required to set forth the facts supporting its substantial deviation from the child support guidelines. The trial court did not do so; therefore, the child support order was vacated and remanded to the family court for additional findings.

Yu-Wen Chang v. Molim Siu, 234 Ariz. 442 (2014) – (Represented prevailing party at trial) This case addresses the use of arbitration in divorce and the right of parties to avoid procedural and substantive limitations imposed by our statutes and common law on the review of a private binding arbitration award. The ruling is particularly significant for those parties involved in complicated, high asset financial cases who elect to hire an experienced private arbitrator who has time to consider the evidence, rather than submitting the issues to a crowded Superior Court. The Court of Appeals recognized the use of arbitration in high asset cases and confirmed that an agreement for “binding” arbitration does not contemplate review of the substantive issues, so long as the arbitrator does not exceed his authority. The case involved disposition of substantial brokerage account assets that husband claimed were his sole and separate property. The parties, through their counsel, agreed to arbitrate this issue. The parties presented a stipulation and order to the trial court that provided for “binding arbitration” but preserved each party’s right to appeal a final Arbitration Award to the Court of Appeals. The arbitrator issued a thirty-four page ruling after a nine day trial. The arbitrator found, among other issues, that all of the assets in the brokerage accounts were community property, subject to equal division. After the ruling was issued, husband filed a motion asking the arbitrator to amend or correct his characterization of the disputed brokerage accounts. The motion was denied by the arbitrator and the Superior Court entered a Judgment and Decree of Dissolution, incorporating the findings and conclusions of the arbitrator at wife’s request. Husband did not exercise his rights under Ariz. Rev. Stat. § 12-3022 et seq. to appeal the award to the Superior Court, but he did file a Notice of Appeal and sought substantive review of the arbitrator’s decision in the Court of Appeals. Generally, a party dissatisfied with an arbitrator’s award, even binding arbitration, has rights to appeal at the Superior Court level, as defined in Ariz. Rev. Stat. § 12-3023. Those rights are limited by statute to issues of fraud, bias of the arbitrator or that the arbitrator exceeded his powers. The Court declined to accept husband’s position that the agreement to arbitrate signed by the parties was “intended” to confer greater appellate jurisdiction on the Appeals Court than would ordinarily be contemplated by statute. The Court clearly stated that “(A)n agreement for ‘binding’ arbitration does not imply substantive judicial review.” The Court declined to address the issue whether parties can, by agreement, expand appellate review of the merits of an arbitrator’s award not otherwise allowed by law.

Walsh v. Walsh, 230 Ariz. 486, 286 P.3e 1095 (2012) – (Represented prevailing party at trial) Family court erred in a dissolution of marriage proceeding by restricting its analysis of the community interest in a husband’s goodwill to realizable benefits of stock redemption value in a law firm of which he was a shareholder, which conflated the net assets of the firm with the husband’s own goodwill based on his reputation and experience. The error was prejudicial because the wife, through her expert witness, introduced evidence that the husband’s goodwill might have exceeded the stock redemption value.

Dep’t of Econ. Sec. v. Waldren (In re Waldren), 217 Ariz. 173 (2007) – (Represented wife on appeal before the Arizona Supreme Court) The decree required husband to pay child support, attorneys’ fees, and spousal maintenance. Husband was declared disabled and he moved under Ariz. R. Civ. P. 60(c) to set aside provisions of the decree, alleging that his support and maintenance obligations were excessive in light of his reduced income. The intermediate appellate court determined that husband was entitled to an evidentiary hearing. At issue before the Arizona Supreme Court was whether a statutorily non-modifiable spousal maintenance provision in a decree of dissolution of marriage was subject to termination under Ariz. R. Civ. P. 60(c)(5). Husband claimed the court retained equitable power to grant relief as to the spousal maintenance provision. The spousal maintenance was, by agreement of the parties at trial, made non-modifiable. Arizona Supreme Court, reversing the Court of Appeals, held Ariz. Rev. Stat. §§ 25-319(C) and 25-317(G) were not subject to modification or termination, nor was relief available under Rule 60(c)(5).

Gerow v. Covill, 192 Ariz. 9 (1998) – (Represented prevailing party at trial and on appeal) The court found that husband, a sole proprietor of a consulting business, gave up his consulting business and began working as an employee for a web company started by his brother and sister-in-law which provided similar services to several of husband’s former clients. Wife contended that she was entitled to a share of the web company. Husband contended that there was no transfer of community property or fraudulent conveyance. The court concluded evidence inferred husband’s transfer of goodwill without compensation was intended to defraud wife, and husband owed wife a fiduciary duty until the marriage was terminated. The court affirmed and held the conditional judgment of the trial court was valid.

Hyatt Regency Phoenix Hotel Co. v. Winston, 184 Ariz. 120 (1995) – (Legal malpractice, represented Plaintiff at trial) On appeal of the several million-dollar jury verdict, the law partnership argued that, as a wholly passive employer, it was not liable for punitive damages. The court held that § 13 of the Uniform Partnership Act, codified at Ariz. Rev. Stat. § 29-213 (1989), imposed vicarious liability on partners for punitive damages. Thus, the law partnership was vicariously liable in punitive damages for acts performed in the ordinary course of the partnership’s business. Moreover, the award satisfied the predicate requirement for punitive damages because the jury reasonably found on the evidence that the partner acted with an evil mind. Writ of certiorari to U.S. Supreme Court.

Standage v. Standage, 147 Ariz. 473, (1985) – (Represented prevailing party at trial) Trial court held that wife could pierce the corporate veil of the parties’ company to protect her interests. There was a unity of interest such that the corporation became the alter ego of husband as an individual. Because the evidence indicated that wife was not a party to the business decisions, and that husband was either uncertain or evasive regarding the valuation of the corporate assets, the trial court did not abuse its discretion when splitting the assets of the corporation.

Sample v. Sample, 135 Ariz. 599 (1983) – (Represented prevailing party at trial and on appeal) Husband and wife moved to Arizona in 1970 after several years of marriage in non-community property states. The trial court granted the bulk of the employer stock to husband as separate property, concluding that the laws of the state where the stock was acquired should apply. An amendment was made to Ariz. Rev. Stat. § 25-318 after judgment which, if applicable, would have treated the stock as quasi-community property. The trial court denied wife’s motion seeking application of the amendment. On appeal, the court reversed and held that the amendment could be applied retroactively.

Wisner v. Wisner, 129 Ariz. 333 (1981) – (Represented prevailing party at trial) This was the first Arizona case involving professional goodwill. On appeal, the Arizona court of Appeals reversed the trial court’s valuation of husband’s interest in the professional corporation because the valuation failed to include goodwill and was based on insufficient evidence. Wife’s argument that her former husband’s medical education was community property under Ariz. Rev. Stat. § 25-211 was rejected by the court as an intangible asset and not subject to division.

In re Marriage of Goldstein, 120 Ariz. 23 (1978) – (Represented prevailing party at trial and on appeal) The appellate court agreed with the trial court’s treatment of the corporate assets. The court found that the accounts receivable of husband’s corporation represented an asset that arose from his efforts during the marriage; therefore, it was proper for the lower court to include it as an asset in the equitable division.

Anonymous v. Anonymous, 106 Ariz. 284, (1970) – (Represented prevailing party at trial and on appeal) This case was tried before the adoption of no-fault dissolution in 1973. Husband alleged adultery by wife; nevertheless, wife was awarded custody of the minor child. In husband’s previous appeal, the matter was remanded to determine the best interests of the minor child. The court affirmed the trial court’s order awarding custody to wife, noting that wife’s marital misconduct was a relevant factor in making a custody award but did not necessarily result in the conclusion that wife was unfit to have custody.

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