Leela Curtiss hired a law firm to represent her in a legal separation and marriage dissolution proceeding from her husband Kieran. She died before the dissolution became final and the case was dismissed. The law firm then sought to recover its fees from Kieran, arguing that because Kieran and Leela were still married at the time of her death, the debt belonged to the marital community.
Kieran moved for dismissal pursuant to Rule 12(b)(6) of the Arizona Rules of Civil Procedure, arguing that the attorney fees could not be a community debt as a matter of law because they were incurred to destroy the community rather than to benefit it. The trial court agreed and granted the motion to dismiss. The law firm appealed.
The Court of Appeals reversed, holding that a debt incurred to dissolve a marriage can be considered a community debt if it is intended to benefit the community. Although the idea of marriage dissolution benefitting the community may seem counterintuitive, the Court explained that “the orderly and lawful division of assets, including temporary orders which protect community assets” can benefit the community as it heads toward dissolution. The community can also benefit from advice of counsel by the resolution of child custody issues, and even by reconciliation with the help of mediation and counseling.
The Court examined the law in other community property states, and while differing law makes cases from other states distinguishable, the Court found that no states disallow attorney fees incurred in dissolution of marriage actions as community debt. The Court also found some support for the proposition that such fees are community debt in the statutes and decisions of New Mexico, Louisiana, and Texas.
To consider attorney fees incurred during dissolution proceedings to be a community debt, there must be evidence that the spouse who incurred the debt “evinced any intent to benefit the community.” The opinion also clarified that in making such a finding, courts must focus not on the subjective intent of the spouse, but only on the objective intent as demonstrated by “the surrounding circumstances at the time of the transaction.”
Judge Kelly authored the opinion; Judges Vásquez and Eckerstrom concurred.
Posted by: Shane M. Ham