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Ramsay v. Wheeler-Ramsay - 5/20/2010

Arizona Court of Appeals Division One Holds That (1) Real Property Acquired During a Marriage Does Not Necessarily Lose Its Community Character When One Spouse Encumbers the Property Without the Other Spouse’s Joinder, (2) a Debt so Incurred May be a Community Debt, and (3) the Maricopa County Spousal Maintenance Guidelines Have No Force of Law, and Cannot be Used to Attack an Otherwise Proper award of Spousal Maintenance.


Husband and Wife divorced after ten years of marriage.  Husband contested the trial court’s division of property with regards to a property in Queen Creek, a property in Rocky Point, and credit card debt.  Husband also contested the trial court’s award of spousal maintenance. 

Husband and Wife purchased the Queen Creek property as community property with right of survivorship and used community credit cards for the down payment.  Three months after Husband filed the petition for dissolution, Wife refinanced the property as a married woman dealing with her sole and separate property.  Seven months later, Husband and Wife agreed to lease the property and both signed the lease agreement as lessors.  The trial court determined that the property was owned by the community and that the mortgage should be divided equally.  On appeal, Husband argued that because Wife refinanced the property as her separate property after he filed the petition for dissolution, the trial court lacked authority to consider the property or the mortgage community property.  Pursuant to A.R.S. § 25-211(A)(2), property “[a]cquired during the course of marriage is community property, unless the property is “[a]cquired after service of a petition for dissolution of marriage . . . if the petition results in a decree of dissolution of marriage.”  The Court of Appeals found that the property was community property before the petition was filed and that the character of the property did not change as a result of the refinancing.  Although Wife purported to treat the property as her sole and separate property when obtaining the loan, Husband did not sign a disclaimer disavowing an interest in the property.  In addition, Husband signed the lease agreement as an owner of the property following the refinancing.  With regards to the repayment of the mortgage, the Court agreed with Husband that the bank failed to abide by A.R.S. § 25-214(C)(1) which requires both spouses to join in “[a]ny transaction for the acquisition, disposition or encumbrance of an interest in real property.”  However, the Court of Appeals noted that there is a strong presumption that debt acquired is community in nature and if the mortgage was determined to be Wife’s separate debt, she would have in effect made a very large gift to Husband while the petition for dissolution was pending.  Furthermore, the trial court had issued an injunction requiring the parties to maintain the status quo which would be violated by allowing the debt to remain Wife’s separate property.

With respect to the Rocky Point property, Husband and Wife both signed an agreement to purchase it and the down payment was a combination of community property and Husband’s separate property.  Problems occurred and the house never closed.  The trial court found that Husband and Wife were each entitled to half of any refund of the down payment.  On appeal, Husband asserted that trial court should have allocated the return of the down payment should have proportionally. The Court of Appeals noted that funds in a joint bank account are presumed separate property while property purchased using the funds of one spouse is presumed to be a gift to the other spouse and the property belongs to the community.  The act of parting with money for a stated community goal triggers the presumption of community character.  Here, the Court of Appeals explained, the parties intended that the funds would be applied towards property that they were purchasing jointly.  Accordingly, the presumption that Husband’s funds were a gift to the community applies. 

With respect to the joint bank accounts, when Husband filed the petition for dissolution, the parties’ joint bank account held $47,592.01.  The trial court ordered that each party receive one half of this balance.  On appeal, Husband argued that Wife had withdrawn $13,150 after the filing of the petition.  He also admitted that both parties had deposited money into the account and that he had withdrawn money as well.  The Court of Appeals found that although wife had withdrawn money, she had also deposited at least $10,115 after being served with the petition.  Although courts must distribute property and debt equitably, distribution of marital property is left to the sound discretion of the trial court.  The Court of Appeals held that the trial court’s distribution of the bank account funds was not clearly erroneous. 

In connection with the community credit cards, both parties agreed in their joint pretrial statement that they owed $31,340.17.  The trial court ordered that each party bear half of the debt.  To accomplish this, the court ordered Husband to pay wife $15,670.00 and ordered wife solely responsible for the debt.  On appeal, Husband argued that the trial court lacked authority to require one party to pay the other an equalizing payment as a payment toward outstanding debt due to a third party.  The Court of Appeals held that the trial court properly used its equitable authority in requiring Husband to pay Wife his portion of the credit card debt.

The trial court also ordered husband to pay $2,700.00 per month for twenty-one months.  On appeal, Husband argued that the trial court erred by not following the Maricopa County Guidelines for spousal support.  The Court of Appeals held that the trial court was not required to follow the Maricopa County Guidelines.  A.R.S. § 25-319(B) vests the trial court with broad discretion to determine the amount and duration of spousal support so long as the court considers the thirteen factors enumerated in the statue.  The trial court properly considered the relevant statutory factors.  The Court of Appeals affirmed the decision of the trial court.

Judge Swann authored the opinion; Judges Norris and Barker concurred.

Posted On: 6/3/2010