MacLean v. Kappa

NOTICE: NOT FOR PUBLICATION.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.

IN THE
ARIZONA COURT OF APPEALS
DIVISION ONE

In re the Matter of:

RICHARD W. MACLEAN, JR., Petitioner/Appellant,

v.

DIANE K. KAPPA, Respondent/Appellee.

No. 1 CA-CV 13-0512
FILED 06-24-2014

Appeal from the Superior Court in Maricopa County
No. FN2010-001992
The Honorable Daniel J. Kiley, Judge

AFFIRMED

COUNSEL

Terrance D. Dunmire, Esq., Scottsdale
By Terrance D. Dunmire
Counsel for Petitioner/Appellant

S. Alan Cook, PC, Phoenix
By S. Alan Cook
Counsel for Respondent/Appellee
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Decision of the Court

MEMORANDUM DECISION

Judge Kent E. Cattani delivered the decision of the Court, in which
Presiding Judge Patricia K. Norris and Judge Samuel A. Thumma joined.

C A T T A N I, Judge:

¶1 Richard MacLean appeals from the superior court’s decision
declining to award him attorney’s fees incurred defending against Diane
Kappa’s post-dissolution-decree motion. For reasons that follow, we
affirm.

FACTS AND PROCEDURAL BACKGROUND

¶2 MacLean and Kappa were married in 1969. In 2010,
MacLean filed a petition for dissolution of marriage. Ten months later, the
parties reached a property division agreement pursuant to Rule 69 of the
Arizona Rules of Family Law Procedure, and the superior court accepted
the agreement as fair and equitable. 1

¶3 The resultant decree of dissolution entered in June 2011
recited the terms of the parties’ Rule 69 property division as orders of the
court. The decree awarded to MacLean “all right, title and interest” in his
two business entities (Competitive Environment and MacLeanTech, LLC),
subject to division of the monies held in the business accounts. The decree
also divided the total funds held in the couple’s bank accounts as of
initiation of the dissolution to equalize each party’s share of community
assets held in the accounts. The decree also included a clause awarding
attorney’s fees and costs to the prevailing party in post-decree litigation or
arbitration. 2

1 The parties’ children had reached adulthood by the time of
dissolution and the parties expressly waived any claim to spousal
maintenance, leaving property division the only subject of the Rule 69
agreement.

2 In its entirety, the prevailing-party clause provides:

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¶4 One year later, Kappa filed a motion to amend the decree to
include in her share half of the value of payments to Competitive
Environment earned before but received after the petition for dissolution
was filed. She asserted that the decree was deficient because it did not
address Competitive Environment’s accounts receivable existing when
dissolution proceedings were initiated, and that MacLean had concealed
payments totaling $11,522.50, which should have been divided equally
between them. Accordingly, Kappa asked the court to award her half of
this amount (approximately $5,760) plus interest until paid in full.

¶5 After extensive briefing, 3 the superior court denied Kappa’s
motion. The court found that MacLean had disclosed the existence of the
accounts receivable as well as the $11,522.50 received before the parties
entered their Rule 69 agreement and before the court entered the decree.
Because the payments were not concealed, the decree’s award to MacLean
of “all right, title and interest” in Competitive Environment included
receipt of payments belonging to the entity. Accordingly, the court denied
Kappa’s motion for division of the $11,522.50, and also denied both
parties’ requests for attorney’s fees and costs.

¶6 MacLean filed a motion for reconsideration of the denial of
his fees request, arguing that the prevailing-party clause in the decree
mandated an award of fees and costs to him for successfully defending
against Kappa’s motion. He also sought fees under Arizona Revised
Statutes (“A.R.S.”) § 25-324, 4 which generally authorizes a discretionary
award of attorney’s fees and costs in family court cases, but mandates

The parties further agree that if either party does not abide
by the terms of the Rule 69 Agreements that have been
reached and/or attempts to have them set aside or not
included within the Decree, and that causes either
arbitration or litigation, the prevailing party shall be
awarded his/her attorneys fees and costs.

3 The parties fully briefed Kappa’s motion. Additionally, MacLean
filed a motion to dismiss Kappa’s motion, which itself was fully briefed
and included supplementary filings. MacLean also moved for discovery
sanctions against Kappa premised on Kappa’s refusal to withdraw her
motion.

4 Absent material revisions after the relevant date, we cite a statute’s
current version.

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such an award in certain circumstances. After full briefing, the superior
court declined to reconsider its denial of a fee award under the statute,
reasoning that under Edsall v. Superior Court, 143 Ariz. 240, 247, 693 P.2d
895, 902 (1984), the discretionary statutory attorney’s fees provision A.R.S.
§ 25-324 overrode the prevailing-party provision in the Rule 69 agreement
and decree.

¶7 MacLean timely appealed. We have jurisdiction under
Article 6, Section 9, of the Arizona Constitution and A.R.S. § 12-2101(A)(2).

DISCUSSION

¶8 MacLean argues the superior court erred by denying his
request for an award of attorney’s fees under the decree’s prevailing-party
provision, as well as under A.R.S. § 25-324(A) and (B)(2). We generally
review the grant or denial of an award of attorney’s fees for an abuse of
discretion. MacMillan v. Schwartz, 226 Ariz. 584, 592, ¶ 36, 250 P.3d 1213,
1221 (App. 2011). We review questions regarding the superior court’s
authority to grant or deny fees, however, de novo as matters of law.
Thompson v. Corry, 231 Ariz. 161, 163, ¶ 4, 291 P.3d 358, 360 (App. 2012).

¶9 MacLean asserts that the court should have “honored the
prevailing-party clause” in the Rule 69 agreement and decree, arguing
that principles of contract law mandate enforcement of the parties’
agreement by its terms. In Edsall, however, our supreme court concluded
otherwise. 143 Ariz. at 247–49, 693 P.2d at 902–04. The supreme court
held that “A.R.S. § 25-324 overrides the provision in the property
settlement agreement awarding attorneys’ fees solely on the basis that one
is the prevailing party.” Id. at 249, 693 P.2d at 904. Under Edsall, the
court’s authority under A.R.S. § 25-324 trumps even an ostensibly
mandatory prevailing-party clause. Id. at 247, 693 P.2d at 902. MacLean
himself acknowledged as much in his motion for reconsideration,
recognizing that “the award of attorney’s fees in this situation is governed
by ARS 25-324” and arguing that the prevailing-party clause should just
weigh in favor of an award under the statute. As such, the superior court
did not err by assessing MacLean’s fees request within the constraints of §
25-324 rather than awarding fees pursuant to the settlement provision.

¶10 MacLean claims Edsall should no longer control in light of
subsequent legislative enactments modifying § 25-324. But none of the
modifications on which he relies undermine the force of Edsall. In 1996,
our Legislature added consideration of “the reasonableness of the
positions each party has taken throughout the proceedings” (in addition

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to the parties’ respective financial resources) to the provision allowing a
discretionary award of attorney’s fees under what is now § 25-324(A).
1996 Ariz. Sess. Laws ch. 145, § 9 (2d Reg. Sess.). Despite this addition, the
relative financial positions of the parties—a key policy concern in Edsall,
143 Ariz. at 248–49, 693 P.2d at 903–04—remained a lynchpin of the
court’s exercise of discretion under the statute as amended. See, e.g.,
MacMillan, 226 Ariz. at 592, ¶ 37, 250 P.3d at 1221 (“Although the intent of
A.R.S. § 25–324 is to assure a remedy for the party least able to pay, the
trial court may also consider whether a party has adopted unreasonable
positions.”) Moreover, the Legislature is aware of how to craft a
prevailing-party standard. See, e.g., A.R.S. § 12-341.01 (allowing award of
fees to successful party in action arising out of contract). Nevertheless, the
Legislature chose not to do so in § 25-324, mandating instead an analysis
of the reasonableness of the parties’ positions.

¶11 Nor does the 2010 addition of a mandatory statutory fees
provision undermine Edsall. At that time, the Legislature added § 25-
324(B) to mandate an award of fees where a domestic relations petition
was filed in bad faith, was groundless, or was filed for an improper
purpose. 2010 Ariz. Sess. Laws ch. 221, § 2 (2d Reg. Sess.). But this
provision is similar to former § 25-332(C) (now § 25-411(M)), which
mandates an award of fees for a “vexatious” action to modify child
custody, and which the supreme court considered in Edsall. 143 Ariz. at
248, 693 P.2d at 903; see also In re Gubser, 126 Ariz. 303, 304–05, 614 P.2d
845, 846–47 (1980) (concluding authority to award fees under § 25-324 and
then § 25-332(C) trumped settlement agreement’s prevailing-party
provision in a proceeding to modify child custody). Moreover, the
Legislature again premised a mandatory award of fees not on which party
prevails, but rather on the greater showing of bad faith or whether a claim
was groundless or made for an improper purpose. A.R.S. § 25-324(B)(1)–
(3). Accordingly, we conclude that the superior court did not err by
determining its authority under A.R.S. § 25-324 overrode the prevailing-
party provision in the Rule 69 agreement and decree.

¶12 MacLean also argues the superior court erred by declining to
award fees under A.R.S. § 25-324(A) or (B)(2). Even assuming MacLean
properly and timely sought fees under § 25-324(A), the court did not err
by denying his request. The superior court, in its discretion, may award
fees under § 25-324(A) after considering the financial resources of both
parties and the reasonableness of the positions each party has taken, but
such consideration of the parties’ relative financial positions requires
record evidence establishing the parties’ current financial situations.
Breitbart-Napp v. Napp, 216 Ariz. 74, 83–84, ¶ 37, 163 P.3d 1024, 1033–34

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(App. 2007). Here, MacLean failed to provide any current financial
information to support his request for an award of fees. Instead, he relied
only on an assertion that Kappa has “ample resources” and that “[t]he
parties’ financial resources are essentially equal” based on the property
division in the decree. The decree’s property division almost two years
before the current fee request was an insufficient basis from which to
establish the parties’ relative financial positions as required under § 25-
324(A). See id. at 84, ¶ 39, 163 P.3d at 1034. Accordingly, the court did not
abuse its discretion by denying an award of fees under § 25-324(A).

¶13 Nor did the court abuse its discretion by declining to award
MacLean fees under § 25-324(B)(2), which mandates an award of fees “[i]f
the court determines that . . . [t]he petition was not grounded in fact or
based on law.” By denying MacLean’s request for fees—and by declining
to reconsider this denial—the superior court implicitly found Kappa’s
motion was not groundless.

¶14 MacLean nevertheless characterizes the superior court’s
ruling on Kappa’s motion as containing “numerous findings that place
[Kappa’s] § 25-318(D) motion squarely in the category of baseless under §
25-324(B).” But although the court’s ruling denied Kappa’s motion, it did
not determine the motion was groundless. The ruling, although
unequivocally against Kappa on the merits, was not tantamount to a
finding of groundlessness (or, indeed, bad faith or improper purpose).

¶15 Moreover, the record does not unequivocally establish that
Kappa’s motion was utterly ungrounded in fact or entirely without legal
basis. Without such a showing, we decline to override the superior court’s
discretion, particularly in light of that court’s superior knowledge of the
parties and the proceedings leading up to Kappa’s motion. Accordingly,
we conclude that the superior court did not abuse its discretion by
denying MacLean’s § 25-324(B)(2) request for fees.

¶16 Finally, MacLean seeks an award of attorney’s fees and costs
on appeal under the decree’s prevailing-party clause, A.R.S. § 25-324, and
A.R.S. § 12-349; Kappa seeks only costs on appeal. Because Kappa
prevailed on appeal, MacLean is not entitled to an award of fees by the
terms of the decree, as a sanction under § 25-324(B), or as a sanction for an
unjustified action under § 12-349. Nor is MacLean entitled to a fee award
under § 25-324(A), having failed to provide current financial information
necessary to assess a request for fees under that section. Accordingly, we
deny his request for fees and costs. As the prevailing party, Kappa is
entitled to an award of costs upon compliance with ARCAP 21.

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CONCLUSION

¶17 The superior court’s judgment is affirmed.

:gsh

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