Kent v. Carter-Kent

IN THE
ARIZONA COURT OF APPEALS
DIVISION ONE

IN RE THE MATTER OF:

RICHARD A. KENT, Petitioner/Appellee,

v.

CHRISTINE CARTER-KENT, Respondent/Appellant.

No. 1 CA-CV 13-0067
FILED 07-29-2014

Appeal from the Superior Court in Maricopa County
No. FC2007-008845
The Honorable Daniel J. Kiley, Judge
The Honorable Michael R. McVey, Judge (retired)

AFFIRMED

COUNSEL

Burt & Feldman, Scottsdale
By Sandra Burt
Co-Counsel for Petitioner/Appellee

Law Office of Melinda K. Cekander, Flagstaff
By Melinda K. Cekander
Co-Counsel for Petitioner/Appellee
Law Office of Scott E. Boehm, P.C., Phoenix
By Scott E. Boehm
Co-Counsel for Respondent/Appellant

The Cavanagh Law Firm, Phoenix
By Christina S. Hamilton
Co-Counsel for Respondent/Appellant

OPINION

Judge Jon W. Thompson delivered the opinion of the Court, in which
Presiding Judge Andrew W. Gould and Judge Peter B. Swann joined.

T H O M P S O N, Judge:

¶1 This action arises from the family court’s valuation of
Richard E. Kent’s (Husband’s) interest in his law practice. Christine
Carter-Kent (Wife) appeals from a post-dissolution ruling denying her
motion for new trial. Finding no abuse of discretion or legal error, we
affirm.

FACTS AND PROCEDURAL BACKGROUND

¶2 After fifteen years of marriage, Husband petitioned for
dissolution. Husband is an attorney and fifty percent shareholder in Kent
& Wittekind, P.C. (Law Firm).

¶3 Throughout this protracted litigation, the parties disagreed
concerning the valuation of the community’s interest in Law Firm and in a
$1,447,500 settlement obtained by Law Firm (the Turner Litigation
Proceeds or TLP). In the parties’ joint pre-trial statement, Wife addressed
the disposition of the TLP and the Law Firm valuation as two separate
issues.

A. The Trial

¶4 During a two-day trial, each party presented expert
testimony concerning the valuation of the community’s interest in Law
Firm. Wife’s expert, Lynton Kotzin, valued the parties’ interest in Law
Firm at $920,350, and Husband’s expert, Frank Pankow, valued the
interest at $701,000.

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¶5 The family court awarded Husband his interest in Law Firm
in a post-trial minute entry order. It also granted Wife’s ensuing Rule
83(A) motion on the failure to allocate the net TLP, and ordered “that the
Kimberly Kent litigation proceeds [TLP] be divided as a community
asset.” At the evidentiary hearing on this issue, Kotzin testified that Wife
would be entitled to some value of the TLP, while Pankow asserted that it
had no value.

¶6 On August 29, 2009, the family court found that each party
was entitled to twenty-five percent “of the net proceeds recovered” by
Law Firm, i.e., “gross proceeds less actual incremental expenses incurred
both before . . . and after the date of valuation.” Husband unsuccessfully
moved to alter or amend the judgment on the ground that Wife should be
liable for costs associated with other contingency fee cases.

B. The Decree

¶7 On October 6, 2009, the family court signed a Decree
awarding Husband all right and interest in Law Firm, and awarded Wife
a $460,000 “equitable offset.” The Decree characterized the TLP as an
asset of Law Firm and reserved jurisdiction “to determine . . . the
community’s interest in . . . the [TLP] . . .” and to determine Law Firm’s
value in light of the TLP and Law Firm’s associated costs.

C. The Amended Decree

¶8 Wife moved to amend the Decree in order to reduce the
$460,000 equitable offset to a judgment, and argued that the community
interest in Law Firm’s value was considered separately from the
community’s interest in the TLP. Husband objected that the Decree
reserved jurisdiction to determine whether the valuation of Husband’s
interest in the Law Firm “should be adjusted.” But Wife contended that
the prior ruling granted a new trial on the limited issue of the TLP only,
and that ruling did not affect the finality of its determination that Wife
was entitled to recover $460,000.

¶9 The family court accepted Wife’s argument, and amended
the Decree by deleting the equitable offset and granting her a judgment
“for her community interest in the law firm” in the amount of $460,000
(the Judgment). After filing an appeal, which he later dismissed, Husband
began to make payments to satisfy the Judgment.

¶10 Wife moved several months later to resolve outstanding
issues concerning the TLP, including the amount owed to Wife under the

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August 29, 2009 order. Husband countered that the TLP was a Law Firm
asset, and the parties’ interests in Law Firm had been finally resolved in
an unappealed judgment. He also claimed that the family court lacked
jurisdiction over Law Firm, a non-party, and moved to vacate the
evidentiary hearing. At this point, Wife conceded that the TLP belonged
to Law Firm, but argued that she was entitled to judgment for twenty-five
percent of the TLP.

D. The Motion for New Trial

¶11 On June 1, 2012, the family court granted Husband’s motion
to dismiss, explaining that the August 29, 2009 order should not be given
effect because it purported to assert jurisdiction over Law Firm, a non-
party, and declining Wife’s request to follow that order’s “methodology”
in valuing the TLP. Wife unsuccessfully moved for a new
trial/reconsideration under Rule 83(A)(6) of the Arizona Rules of Family
Law Procedure, contending that she had been deprived of her right to
“collect her fair share” of Law Firm’s value.

¶12 In denying the motion, the family court explained that Wife
was not entitled to change her position and claim that the proceeds were a
component of Law Firm’s value. Wife appeals from the denial of this
motion.1 We have jurisdiction pursuant to Arizona Revised Statutes
(A.R.S.) § 12-2101(A)(1) (Supp. 2013).

DISCUSSION

A. Wife’s TLP Claim is Barred

¶13 Wife appeals only from the denial of a motion for new trial,
and we review rulings on the issues raised in that motion for abuse of
discretion. See Ariz. Mgmt. Corp. v. Kallof, 142 Ariz. 64, 66-67, 688 P.2d 710,
712-13 (App. 1984); Pullen v. Pullen, 223 Ariz. 293, 296, ¶ 10, 222 P.3d 909,
912 (App. 2009).

¶14 The relief Wife seeks is compensation for her equitable
interest in the “community’s . . . increased value of Husband’s law firm.”
She now characterizes the TLP as a valuation component of Law Firm
which remains in the family court’s jurisdiction to award. According to

1Prior to our conference and oral argument in this matter, Wife filed an
unopposed motion for an extension of time to file her reply brief. We
have considered the matters set forth and argued in the reply.

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Husband, however, the family court has already compensated Wife for
her community share of Law Firm in the Amended Decree.

¶15 We interpret a decree according to its natural and legal
import. Lopez v. Lopez, 125 Ariz. 309, 310, 609 P.2d 579, 580 (App. 1980). In
addition, we construe a decree provision in a manner that would not
render any other part meaningless. Cohen v. Frey, 215 Ariz. 62, 66, ¶ 12,
157 P.3d 482, 486 (App. 2007).

¶16 The amended Decree awards Wife a $460,000 judgment for
her community interest in Law Firm. It also purports to reserve
jurisdiction

to determine the extent and apportionment of
the community’s interest in Husband’s
shareholder interest in [Law Firm’s] interest in
the net proceeds from the Turner/Kent
litigation, and to determine whether the
Court’s valuation of Husband’s interest in
[Law Firm] should be adjusted as a result of
the valuation’s inclusion and consideration of
the firm’s costs related thereto. Said
determinations will be made pursuant to a
separate Order of the Court following the
evidentiary hearing thereon.

¶17 This provision attempting to reserve jurisdiction,2 along with
a footnote stating that the TLP is a Law Firm asset and reiterating the
reservation of jurisdiction, appeared in the Decree prior to amendment
and was premised on the assumption that the family court would revisit

2 In her second supplemental citation of authorities, Wife cites four
Arizona cases in support of her position at oral argument that the trial
court properly “reserved jurisdiction” to determine the increased value of
the community’s interest in Law Firm due to the TLP after the entry of the
Decree. Three of the cases, Johnson v. Johnson, 131 Ariz. 38, 41-42, 638 P.2d
705, 708-09 (1981), Boncoskey v. Boncoskey, 216 Ariz. 448, 452, 167 P.3d 705,
709 (App. 2007), and Hetherington v. Hetherington, 220 Ariz. 16, 19, 202 P.3d
481, 484 (App. 2008), involve pension issues and discuss the present cash
value method vs. the reserved jurisdiction method of apportioning
pensions. The fourth case, Spector v. Spector, 23 Ariz. App. 131, 141, 531
P.2d 176, 186 (1975), is discussed infra at paragraph 18.

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the valuation of Law Firm and enter a separate order at that time. Wife’s
insistence on obtaining a $460,000 judgment has now changed the
equitable offset in the initial Decree into an adjudication on Law Firm’s
value. That Judgment is final and unappealed, and Wife is judicially
estopped from seeking further compensation for the value of TLP, a Law
Firm asset. See Mecham v. City of Glendale, 15 Ariz. App. 402, 404, 489 P.2d
65, 67 (App. 1971) (litigant who assumes one position and obtains relief on
the basis of it is estopped from assuming a contrary position).

¶18 Arizona Revised Statutes § 25-327(A) (2007) contemplates
finality with regard to property disposition in divorce cases: “The
provisions as to property disposition may not be revoked or modified,
unless the court finds the existence of conditions that justify the reopening
of a judgment under the laws of this state.” Wife, however, contends that
Spector, 23 Ariz. App. 131, 531 P.2d 176, authorized the judge to grant her
a judgment regarding the value of the law firm while leaving for future
determination the extent of her interest in the TLP. Spector was a divorce
case where husband had been a lawyer in a partnership with another
lawyer. Id. at 141, 531 P.2d at 186. Prior to the divorce, the law
partnership was dissolved and litigation over the firm’s “financial affairs”
ensued. Id. The law firm litigation was still going on at the conclusion of
the divorce trial, “making a determination of the extent of the community
interest in the firm impossible to determine.” Id. The trial court entered a
Rule 54(b) judgment as to “all property and financial issues except
equitable division of the community interest of the parties, if any, in the . .
. law partnership.” The Spector court wrote:

The court reserved jurisdiction to determine
and apportion their interest after the final
determination of the Spector-Johnson lawsuit.
We find no error in this procedure. Rule 54(b)
of the Rules of Civil Procedure allows the trial
court to enter judgment in fewer than all of the
claims presented. Clearly the disposition of
these assets must await the outcome of the
Spector-Johnson suit, while all other issues are
resolved by the judgment in this one.

Id. at 141, 531 P.2d at 186.

¶19 Here, unlike in Spector, no procedural rule could authorize a
partial judgment. There was no separate claim. See Ariz. R. Civ. P. 54(b)
(“the court may direct the entry of final judgment as to one or more but

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fewer than all of the claims . . . .”) (Emphasis added); (accord Ariz. R. Fam.
L. P. 78(B)). Wife took the position that she had a separate entitlement to a
separate community asset (the TLP). But Wife’s prospective entitlement
regarding the TLP was only in relation to the Law Firm’s valuation – the
TLP was not a community asset subject to division. See Steinfeld v. Copper
State Mining Co., 37 Ariz. 151, 160, 290 P. 155, 163 (1930) (“[a] stockholder
has no right, title or interest in the assets of a corporation. The property
belongs to the corporation.”). See also Marriage of Goldstein, 120 Ariz. 23,
24, 583 P.2d 1343 (1978) (value of individual assets is included in the value
of a corporation).

¶20 Moreover, Wife is not entitled to use her motion for new trial
as a vehicle for a revaluation of Law Firm, because that remedy was not at
issue in the underlying order. That order, filed on June 1, 2012, did not
value Law Firm, revalue Law Firm, or address the propriety of revaluing
Law Firm. Instead, the order rejects Wife’s interpretation of the August
29, 2009 order, concludes that the August 29, 2009 order improperly
ordered Law Firm to divide the TLP, and distinguishes Garrett v. Garrett,
140 Ariz. 564, 683 P.2d 1166 (App. 1983). Wife’s position was that she was
entitled to a share of TLP “in addition to her one-half share of the value of
Husband’s law practice.” Accordingly, Wife waived the law firm
revaluation issue by raising it for the first time in her motion for new trial
challenging that order. See Conant v. Whitney, 190 Ariz. 290, 293-94, 947
P.2d 864, 867-68 (App. 1997) (holding that a party cannot raise a new
argument in a motion for new trial).

¶21 Our holding obviates the need to address Husband’s
argument that the TLP had no value as of the December 31, 2007 valuation
date.

B. Res Judicata Did Not Attach to the August 29, 2009 Order

¶22 Wife nevertheless contends that the family court erroneously
failed to give effect to the earlier August 29, 2009 order awarding her
twenty-five percent of the TLP, because that order became “final” and res
judicata as to that order’s methodology upon entry of the Decree. We
assume, without deciding, that Wife has preserved this issue.

¶23 Under the res judicata doctrine, “a final judgment on the
merits in a prior suit involving the same parties or their privies bars a
second suit based on the same claim.” Dressler v. Morrison, 212 Ariz. 279,
282, ¶ 15, 130 P.3d 978, 981 (2006). Contrary to Wife’s assertion, the
August 29, 2009 order was not “final” because it did not resolve all issues

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before the family court. Moreover, that order did not become final upon
entry of the October 6, 2009 Decree. When entered, the Decree (1) did not
yet contain an award of attorneys’ fees, and (2) expressly reserved
jurisdiction as noted above. Further, the Decree still made reference to an
“equitable offset.” It follows that the August 29, 2009 order did not
become final upon entry of the Decree, because the Decree itself was not
yet final, and accordingly Husband was not required to challenge the
August 29, 2009 order by taking an immediate appeal from the Decree.
The final Decree entered by amendment February 12, 2010, which gave
Wife the $460,000 judgment no longer involved any properly reserved
jurisdiction regarding the TLP.

¶24 Res judicata is also inapplicable because Wife was not
seeking to enforce the August 29, 2009 order; rather, she was asking the
family court to change it. In her new trial motion, Wife disavowed any
suggestion that “the marital community has a direct claim on the net
proceeds recovered by the law firm,” but argued that the “defect in the
original remedy” did not merit dismissal and asked the family court to
apply the August 29, 2009 order’s “methodology” to divide the TLP.
Because Wife in her new trial motion sought a remedy other than an
award of a twenty-five percent interest in the TLP, res judicata does not
apply to the August 29, 2009 order. Furthermore, because the August 29,
2009 order was not final, the family court judge or a successor judge could
reconsider it. See State v. King, 180 Ariz. 268, 279, 883 P.2d 1024, 1035
(1994). Our holding obviates the need to address the parties’ remaining
arguments.

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CONCLUSION

¶26 We affirm the family court’s denial of Wife’s motion for new
trial. After considering the reasonableness of the parties’ positions and
their resources, we deny both parties’ requests for attorneys’ fees on
appeal in the exercise of our discretion under A.R.S. § 25-324(A) (Supp.
2013). Husband is entitled to his costs on appeal contingent upon his
compliance with Rule 21(b) of the Arizona Rules of Civil Appellate
Procedure.

:gsh

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