Opinion
No. 1 CA-CV 14-0086 No. 1 CA-CV 14-0247
12-16-2014
TARIK SHIRIF, Respondent/Appellant, v. JACQUELINE SHIRIF, Petitioner/Appellee.
COUNSEL Rowley Chapman & Barney, Ltd., Mesa By Paul S. Rowley and Nathaniel H. Wadsworth Counsel for Respondent/Appellant Viles Law Offices, LLC, Phoenix By James E. Viles Counsel for Petitioner/Appellee
NOTICE: NOT FOR PUBLICATION. UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION DOES NOT CREATE LEGAL PRECEDENT AND MAY NOT BE CITED EXCEPT AS AUTHORIZED. Appeal from the Superior Court in Maricopa County
No. FC2010-091345
The Honorable Bethany G. Hicks, Judge
AFFIRMED IN PART; REVERSED IN PART; REMANDED
COUNSEL Rowley Chapman & Barney, Ltd., Mesa
By Paul S. Rowley and Nathaniel H. Wadsworth
Counsel for Respondent/Appellant
Viles Law Offices, LLC, Phoenix
By James E. Viles
Counsel for Petitioner/Appellee
MEMORANDUM DECISION
Judge Donn Kessler delivered the decision of the Court, in which Presiding Judge Jon W. Thompson and Judge Kent E. Cattani joined. KESSLER, Judge:
¶1 Tarik Shirif ("Father") appeals from the family court's order awarding child support to Jacqueline Shirif ("Mother"), denying his request for reimbursement of unpaid insurance premiums, and awarding attorneys' fees to Mother. For the following reasons, we affirm the award of child support and attorneys' fees, but reverse and remand on the issue of unpaid insurance premiums.
FACTUAL AND PROCEDURAL HISTORY
¶2 The parties divorced pursuant to a Consent Decree in April 2011. They have three children, one of whom is still a minor. The Consent Decree included provisions that "[c]hild support shall not be paid by either party in this case at this time," and Mother and Father would each pay fifty percent of the child's insurance premiums and uninsured medical costs. At the time of the decree, the court did not attribute income to either party because of the anticipated sale of their business. The court also ordered Mother to attempt to refinance or sell a residence (the "Keene Property") and for Father to cooperate in such sale.
¶3 In November 2012, Mother filed a petition for the distribution of previously unidentified community property assets and reimbursement of unpaid medical expenses. She also filed a separate petition to modify child support. Father's response and counterpetition contained several claims for relief, including requests that the medical expenses incurred by each party be offset and that the court enforce Mother's obligations with respect to the disposition of the Keene Property that she was awarded under the Consent Decree.
¶4 Following an evidentiary hearing, the trial court (1) ordered Father to pay Mother $6,997.25 in unreimbursed medical expenses, (2) found Father failed to meet his burden of proof for reimbursement for the children's medical expenses, (3) found Mother was unable to dispose of the Keene Property because of Father's failure to cooperate, (4) ordered a special commissioner to sell the Keene Property, (5) ordered Father to pay Mother $473 per month in child support, and (6) awarded Mother attorneys' fees based on the parties' disparity in income and Father's unreasonable positions during litigation.
¶5 Father timely appealed. We have jurisdiction pursuant to Arizona Revised Statutes ("A.R.S.") section 12-2101(A)(1) (Supp. 2013).
ISSUES AND STANDARD OF REVIEW
¶6 On appeal, Father argues the court erred in (1) modifying the child support payments, (2) failing to grant Father offsets for medical insurance payments, and (3) awarding Mother her attorneys' fees. "The decision to modify an award of child support rests within the sound discretion of the trial court and, absent an abuse of that discretion, will not be disturbed on appeal." Little v. Little, 193 Ariz. 518, 520, ¶ 5, 975 P.2d 108, 110 (1999). "The decision whether to award attorneys' fees [also] lies within the trial court's sound discretion." Hrudka v. Hrudka, 186 Ariz. 84, 94-95, 919 P.2d 179, 189-90 (App. 1995). "To find an abuse of discretion, there must either be no evidence to support the [trial] court's conclusion or the reasons given by the court must be clearly untenable, legally incorrect, or amount to a denial of justice." Bogard v. Cannon & Wendt Elec. Co., 221 Ariz. 325, 335-36, ¶ 39, 212 P.3d 17, 27-28 (App. 2009) (alteration in original) (citation omitted). "We view the evidence in the light most favorable to upholding the trial court's determination." In re Marriage of Downing, 228 Ariz. 298, 299, ¶ 2, 265 P.3d 1097, 1098 (App. 2011). "[W]e may infer additional findings of fact and conclusions of law sufficient to sustain the trial court's order as long as those findings are reasonably supported by the evidence, and not in conflict with any express findings." Johnson v. Elson, 192 Ariz. 486, 489, ¶ 11, 967 P.2d 1022, 1025 (App. 1998). I. CHILD SUPPORT
A. FATHER'S INCOME
¶7 Father first argues there was no competent evidence to support the trial court's finding that his income was $300,000 for purposes of modifying child support. We disagree.
¶8 Father owns three medical companies. According to his tax returns and testimony, Father's monthly salary in 2012 was $5,000 and his annual adjusted gross income was -$104,858. Mother testified, however, that based on her prior experience as CFO of the medical companies, she believed Father was understating his income. To demonstrate how much Father was capable of making, she provided the court with copies of his 2010 and 2011 tax returns, which indicated that Father's adjusted gross income for those years was $271,829 and $347,791, respectively. Ultimately the trial court agreed with Mother:
In February 2013, Father submitted a financial affidavit with the trial court which stated his monthly salary was $1000 and his total monthly compensation was $2800. Father testified that this amount had increased to $5000 per month by the time of the October 2013 hearing.
The Court finds that Father's testimony regarding his income is not credible. Based on exhibits and evidence presented, the Court attributes Father with $300,000 per year. He is in control of his income from the family business and has the ability to earn as much as $350,000 per year.
¶9 Arizona has adopted the Arizona Child Support Guidelines (the "Guidelines"), see A.R.S. § 25-320 app. (Supp. 2013), to establish "a standard of support for children consistent with their needs and the ability of parents to pay, and to make child support awards consistent for persons in similar circumstances." Cummings v. Cummings, 182 Ariz. 383, 385, 897 P.2d 685, 687 (App. 1994); see also Guidelines at § 1. "According to the Guidelines, when a parent is unemployed or working below his or her full earning potential, a trial court calculating the appropriate child support payment may impute income to that parent, up to full earning capacity, if the parent's earnings are reduced voluntarily and not for reasonable cause." Little, 193 Ariz. at 521, ¶ 6, 975 P.2d at 111; see also Williams v. Williams, 166 Ariz. 260, 266, 801 P.2d 495, 501 (App. 1990) (noting that when determining earning capacity, "[t]his court has determined that future earnings and/or earning capacity may be considered by the trial court."); cf. McNutt v. McNutt, 203 Ariz. 28, 33, ¶ 20, 49 P.3d 300, 305 (App. 2002) (noting that although courts may use earning capacity to make support determinations, "courts should generally not attribute additional income to a parent that would require an extraordinary work regimen.").
¶10 Here, based on the parties' testimony regarding income, the trial court found that Father was not credible. "We will defer to the trial court's determination of witnesses' credibility and the weight to give conflicting evidence." Gutierrez v. Gutierrez, 193 Ariz. 343, 347, ¶ 13, 972 P.2d 676, 680 (App. 1998). Mother testified without contradiction that rather than selling the business they had owned during the marriage, Father still owned the medical equipment companies. Thus, the trial court could find based on that fact and based on Father's prior income from those companies that Father could exercise control over his annual income. In addition, the court was provided with testimony regarding additional benefits Father receives not covered in his financial statement, as well as copies of his 2010 and 2011 tax returns, which demonstrate that Father is capable of making up to $350,000 per year. Based on the record, we find no error in using Father's imputed income, rather than his alleged income, to calculate child support.
B. SUBSTANTIAL AND CONTINUING CHANGE IN CIRCUMSTANCES
¶11 Father further argues that even if he makes $300,000, there has been no "substantial and continuing change" in circumstances justifying modification. We disagree.
¶12 A court may modify the child support provisions of a consent decree upon a showing of changed circumstances that are substantial and continuing. A.R.S. § 25-327(A) (2007). "The changed circumstances alleged must be proved by a comparison with the circumstances existing at dissolution." MacMillan v. Schwartz, 226 Ariz. 584, 588, ¶ 12, 250 P.3d 1213, 1217 (App. 2011) (citation omitted). Generally, "[t]he future realization of conditions which could be reasonably anticipated by the parties at the time of their initial agreement cannot be considered as evidence of changed circumstances justifying a modification of the initial decree." Alford v. Alford, 18 Ariz. App. 1, 2, 499 P.2d 732, 733 (1972), overruled on other grounds by In re Marriage of Rowe, 117 Ariz. 474, 476, 573 P.2d 874, 876 (1978) (stating that when a trial court finds no change of circumstances it is not authorized to modify spousal maintenance, and overruling anything to the contrary in Alford v. Alford).
¶13 The consent decree, filed in April 2011, provided that "[c]hild support shall not be paid by either party in this case at this time." This was because the parties intended to sell their interest in the family business resulting in no current income for either party, and as a result, the court was unable to calculate child support: "Because the parties have sold their business interests as discussed in more detail below, neither party has an income. Since both parties will have an equal access arrangement and no income, a child support worksheet was not created for this case." The remainder of the provision provided the parameters for future child support payments, demonstrating the parties contemplated such payments when they were once again employed.
¶14 Regardless of how Father retained his interest in the family businesses, the initial decree contemplated that each party would sell their interest and essentially become unemployed. Because of the intended sale, the trial court could not determine Mother and Father's future incomes at the time of the consent decree, and as a result, it was justified in delaying consideration to determine child support until the parties reestablished themselves or were once again employed. See Chaney v. Chaney, 145 Ariz. 23, 27, 699 P.2d 398, 402 ("[C]ourts will not ordinarily look very far into the future to discover a probable [change] in income, but rather will delay consideration of the question until it is presented by an appropriate motion after the change has occurred."). Therefore, regardless of whether Father's income actually changed, under the consent decree, Father's income at the time of dissolution was calculated at zero. As a result, when compared to the attributed income of $300,000, the court did not err in finding that a substantial and continuous change in circumstances existed. II. MEDICAL EXPENSES
¶15 Father next argues the trial court erred in failing to grant him his requested reimbursement or offsets for unreimbursed health insurance premiums. We agree and remand for a determination of the amount owed to Father.
¶16 The consent decree provides that the parties are to split the cost of the children's insurance premiums: "The parties will share on a 50-50 basis the insurance premium cost for the children." During her testimony, Mother admitted that she has missed several insurance premium payments. Based on Mother's concession, we remand this issue to the trial court for a determination of the amount owed. III. ATTORNEYS' FEES
The decree also provides that "[t]he parties will share uninsured costs 50% Father and 50% Mother related to all reasonable and necessary non-cosmetic uninsured healthcare for the children." The requirement that any request for reimbursement be provided to the other parent within 180 days applies only to "[t]he uninsured health care costs."
¶17 Finally, Father argues the trial court erred in awarding Mother her attorneys' fees. We disagree.
¶18 Section 25-324(A) (Supp. 2013) provides that the trial court can award attorneys' fees after considering the parties' financial resources and the reasonableness of their positions during the proceedings. See Magee v. Magee, 206 Ariz. 589, 591 n.1, ¶ 8, 81 P.3d 1048, 1050 n.1 (App. 2004) (stating that reasonableness of the parties' positions and financial resources are two separate considerations, "and an applicant need not show both a financial disparity and an unreasonable opponent in order to qualify for consideration for an award."); see also Myrick v. Maloney, 235 Ariz. 491, 494, ¶ 9, 333 P.3d 818, 821 (App. 2014) ("[A] disparity alone does not mandate an award of fees. '[T]he reasonableness of the positions each party has taken' is an additional consideration under the current statute. And, as the plain language of § 25-324(A) makes clear, a trial court has the discretion to deny a fee request even after considering both statutory factors." (citations omitted)); In re Marriage of Williams, 219 Ariz. 546, 549, ¶ 12, 200 P.3d 1043, 1046 (App. 2008) (concluding that the "legislature intended courts to assess the reasonableness of a litigant's position pursuant to § 25-324(A) by an objective standard.").
¶19 The court found that Mother earned $73,150 per year and Father had the ability to earn $350,000 per year, but only attributed him with an income of $300,000 per year. Based on the record, the trial court did not abuse its discretion in granting fees based on a disparity in income.
¶20 Furthermore, the record also supports the trial court's finding that Father acted unreasonably during the litigation. Pursuant to the consent decree, Mother was awarded the Keene Property and directed to sell the property or refinance the mortgage within twenty-four months so as to remove Father's name from any recorded indebtedness. In Father's response and counterpetition below, Father alleged that Mother had not complied with the consent decree, and he requested that the court enforce Mother's obligations with respect to the disposition of the Keene Property. Mother, however, testified that she was unable to conduct a short sale because Father refused to cooperate:
Q: Okay. And did you try to sell the home?
A: Yes.
Q: Okay. And how -- what kind of sale did you try to carry out?
A: We tried to do a short sale because the house was significantly under water.
Q: Okay. And were you able to do that?In addition, the trial court found that Father was not credible regarding his income and his request for reimbursement of uninsured medical expenses, and found that other counterclaims Father raised were either resolved by the consent decree or another agreement. "Because the trial court is in the best position to observe and assess the conduct of the parties before it," MacMillan, 226 Ariz. at 592, ¶ 38, 250 P.3d at 1221, and given the broad discretion vested in the trial court, we cannot say from the record before us that the court erred in granting fees based on Father's unreasonableness during the litigation.
A: No.
Q: And why not?
A: We had a buyer and an accepted offer with a buyer and completed all of the documents necessary and [Father] refused to sign any documents, so the lender wouldn't consider . . . the loan.
Q: So he didn't participate in the short sale?
A: Correct.
Father also requested reimbursement for approximately $10,000 in unreimbursed medical expenses. Mother testified that Father never made a claim for those expenses and never provided her with documentation within the timeframe set forth in the decree. Father also failed to provide any evidence of the medical expenses to the trial court. The trial court ultimately declined to award Father his alleged expenses, finding his testimony was not credible and stating he failed to meet his burden of proof.
The court found that Father was not entitled to reimbursement for mortgage and maintenance payments made on other real property that the parties agreed would be awarded to Father as his sole and separate property, and found that Mother's withdrawal of community monies was resolved by the consent decree.
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CONCLUSION
¶21 For the foregoing reasons, we affirm the award of child support and attorneys' fees, but remand on the issue of unpaid insurance premiums. In the exercise of our discretion and pursuant to A.R.S. § 25-324, we will award Mother her costs on appeal and reasonable attorneys' fees in an amount to be determined, limited to her arguments on the issues of child support and attorneys' fees awarded by the trial court, subject to timely compliance with Arizona Rule of Civil Appellate Procedure 21.