NOTICE: NOT FOR OFFICIAL PUBLICATION.
UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL
AND MAY BE CITED ONLY AS AUTHORIZED BY RULE.
IN THE
ARIZONA COURT OF APPEALS
DIVISION ONE
In re the Matter of:
ROBERT MICHAEL SEASE, Petitioner/Appellant,
v.
ANGELINA MARIE SEASE, Respondent/Appellee.
No. 1 CA-CV 23-0515 FC
FILED 4-4-2024
Appeal from the Superior Court in Maricopa County
No. FC2016-070786
The Honorable Jillian Francis, Judge
AFFIRMED IN PART; DISMISSED IN PART
COUNSEL
Raymond S. Dietrich, PLC, Phoenix
By Raymond S. Dietrich
Counsel for Petitioner/Appellant
Keist, Thurston O'Brien, P.C., Glendale
By James P. Buesing
Counsel for Respondent/Appellee
SEASE v. SEASE
Decision of the Court
MEMORANDUM DECISION
Judge James B. Morse Jr. delivered the decision of the Court, in which
Presiding Judge Angela K. Paton and Judge Michael S. Catlett joined.
M O R S E, Judge:
¶1 Robert Sease ("Husband") appeals from the superior court's
order granting Angelina Sease's ("Wife") motion to enter a qualified
domestic relations order ("QDRO") and awarding her attorney fees. For the
following reasons, we affirm the order entering the QDRO but dismiss the
attorney-fees appeal.
FACTS AND PROCEDURAL BACKGROUND
¶2 Husband and Wife married in 1993. Husband began a career
as a firefighter paramedic, and in September 1996, he began to accrue
benefits under the Public Safety Personnel Retirement System ("PSPRS").
Husband left his job as a firefighter paramedic on April 1, 2022. As a
participant in the PSPRS, Husband did not contribute to the Social Security
Retirement System for his pay as a firefighter paramedic. But Husband had
a second job and paid into the Social Security Retirement System during the
marriage for his compensation from that job. Wife also paid into the Social
Security Retirement System but accrued no other retirement benefits during
the marriage.
¶3 Husband filed for divorce in February 2016. In September
2017, the parties entered an Arizona Rules of Family Law Procedure
("Rule") 69 agreement ("Agreement") to resolve any issues in the dissolution
and asked the court to vacate the impending trial. In pertinent part, the
Agreement provided that the parties would retain "Mr. Bob Harrian
Esq. . . . for the preparation of the Qualified Domestic Order," to divide the
PSPRS plan, but the Agreement did not further specify how the plan would
be divided. The court entered a decree of dissolution in April 2018
("Decree"), "adopting and incorporating . . . the Rule 69 agreement," and
ordering the parties to "retain Mr. Robert Harrian, Esq. within the next
thirty days (30) to prepare a Qualified Domestic Relations Order."
¶4 Neither party retained Mr. Harrian within 30 days of the
Decree. Instead, Wife contacted Mr. Harrian's office in July 2021 and was
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Decision of the Court
put in touch with Mr. O'Brien, a former associate of Mr. Harrian. Later, in
October 2021, Mr. Harrian merged his law firm into Mr. O'Brien's firm,
Keist Thurston O'Brien. Wife and Mr. O'Brien submitted a QDRO to the
PSPRS for approval on August 6, 2021. The proposed QDRO employed the
"time rule" (months as a member of the PSPRS plan while married ÷ total
months as a member of the PSPRS plan multiplied by 50% = Wife's portion)
from Van Loan v. Van Loan, 116 Ariz. 272, 274 (1977) to calculate the
community portion of the PSPRS plan.
¶5 Husband received a copy of the QDRO in February 2022, and
in June 2022, he refused to sign the QDRO. Wife then filed a motion with
the court to enter a "Domestic Relations Order." Husband responded to
Wife's motion, arguing (i) the connection between Mr. O'Brien and Mr.
Harrian is unknown; (ii) Wife's share of the PSPRS should be valued at
maturity, under Koelsch v. Koelsch, 148 Ariz. 176, 182–83 (1986); (iii) the
QDRO improperly uses the "time-rule"; (iv) the QDRO does not consider
social-security offsets and an offset should be applied to Wife's community
interest, which is proper under Kelly v. Kelly, 198 Ariz. 307, 309, ¶¶ 7–10
(2000); and (v) the Decree did not award Wife's community interest to her
estate. The court denied Wife's motion for summary judgment and held an
evidentiary hearing in April 2023.
¶6 At the hearing, Wife and Husband testified, and both had
experts testify regarding the QDRO, social-security offsets, and the estate
clause in the QDRO. Husband no longer disputed Mr. Harrian's
involvement in preparing the QDRO. Wife testified that she never
discussed social-security offsets with Husband, she went to Mr. O'Brien for
Husband's convenience because of his ongoing health issues, Husband
initially agreed to the QDRO but reneged on his promise, and she did not
ask for attorney fees at first, and only did so after Husband "contested" the
issue. Wife's expert testified that the Van Loan formula was the correct
method to divide Husband's PSPRS plan, and Mr. Harrian prepared "the
order . . . as per normal."
¶7 Husband testified that Wife had previously agreed to divide
the PSPRS plan for the "time that [they] were married." Husband's expert
testified that a social-security offset of 17% should be applied, and Wife
should have only been awarded 41.5% of the PSPRS plan.
¶8 Both parties presented a closing argument. Wife's attorney
proffered that (i) Husband waived his social-security-offset argument
because he did not raise it during the divorce proceedings, and even if he
had, it would not apply; (ii) the Van Loan formula should be applied because
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SEASE v. SEASE
Decision of the Court
Husband worked beyond his retirement age and Wife never requested or
received Koelsch payments; (iii) Wife's interest in the PSPRS plan should be
payable to her estate because the Decree and A.R.S. § 25-318(D) grants her
a vested separate interest in her portion of the PSPRS benefit; and (iv) Wife
did not waive the attorney-fees issue. Husband's attorney argued that the
"time rule exception applies under Koelsch" and the value of Husband's
PSPRS plan should be "frozen at the date of service," meaning Wife would
be awarded 50% of the value of the PSPRS benefit at the time of service,
reduced by a social-security offset pursuant to Kelly, such that Wife should
only receive "41[.5%] as of date of service." Husband's attorney also argued
that Wife is not entitled to have the PSPRS plan be payable to her estate.
¶9 The court took the matter under advisement and issued an
order in June 2023 ("Order"). The court granted Wife's motion to enter the
QDRO and found that Husband had waived his arguments for "certain
exceptions" because he did not raise them prior to entry of the Decree. The
court further ordered Husband to "reimburse Wife for half of the cost of the
preparation for the QDRO," ordered Wife to lodge the QDRO with the court
by August 1, 2023, and awarded Wife her attorney fees, directing her to
submit a fees application. The court delayed its decision on the amount of
attorney fees and costs but certified its ruling on the Order as a final,
appealable order pursuant to Rule 78(b). On July 18, Husband appealed
from the Order. Three days later, the court issued the QDRO which applied
the Van Loan formula and divided Husband's months as a member during
the marriage (roughly 233 months) by months as a member (roughly 307
months) then multiplied the quotient by 50%. Thus, the QDRO awarded
Wife roughly 38% of the total value of Husband's PSPRS benefit.
¶10 Husband timely appealed the Order, and we have jurisdiction
under A.R.S. § 12-2101(A)(1) over the decision to enter the QDRO. See
Bollermann v. Nowlis, 234 Ariz. 340, 342, ¶ 12 (2014) (stating that rulings on
the merits that include Rule 78(b) language are appealable even if attorney
fees are unresolved). Following Husband's notice of appeal and Wife's
application for attorney fees, the court entered a separate order in August
2023, awarding Wife $23,845.44 in attorney fees and costs. Husband did not
amend or submit a new notice of appeal after the court entered its final
order on attorney fees and costs. As discussed infra ¶ 21, we do not have
jurisdiction over Husband's challenge to the attorney-fees award and
dismiss that portion of this appeal.
DISCUSSION
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SEASE v. SEASE
Decision of the Court
¶11 On appeal, Husband argues the court should have (i) used the
"frozen benefit formula" pursuant to Koelsch to value the PSPRS plan, (ii)
applied a social-security offset, and (iii) not granted Wife's estate an interest
in the PSPRS plan. He also contests the award of attorney fees.
I. Waiver.
¶12 "In apportioning community property between the parties at
dissolution, the superior court has broad discretion to achieve an equitable
division, and we will not disturb its allocation absent an abuse of
discretion." Boncoskey v. Boncoskey, 216 Ariz. 448, 451, ¶ 13 (App. 2007). The
distribution "need not be in kind or exactly equal, but must result in
substantial equality." Miller v. Miller, 140 Ariz. 520, 522 (App. 1984).
¶13 The court declined to consider Husband's arguments about
valuation, social-security offset, and Wife's estate because the parties
submitted their Agreement "without asking for out-of-the-ordinary terms
of applications of the rules." Based on the evidence presented during the
evidentiary hearing, the court did not abuse its discretion. Before the
parties reached the Agreement, they filed a joint pretrial statement in which
Husband asked for the parties to "equally divide the community interest in
the [PSPRS] retirement plan[] and equally share in the cost to do so" and
suggested "utilizing Robert Harrian for purposes of dividing the [PSPRS
plan] and/or the preparation of a qualified domestic relations [order]."
Wife asked to be "awarded her community portion" of the PSPRS plan and
agreed to use Mr. Harrian to prepare the QDRO.
¶14 Husband argues that the PSPRS plan should have been
valued using the "frozen benefit" formula pursuant to Koelsch rather than
the "time-rule" pursuant to Van Loan. Husband asserts that Wife's share of
the PSPRS benefit should have been fixed at the time of service when
Husband had 233 months service in the plan (i.e., 50% of the total benefit
payable at that time).1 He argues that awarding Wife roughly 38% of the
PSPRS benefit payable now (i.e., a share of the benefit payable now based
on 307 months service) is inequitable because it is based, in part, on the
additional months that Husband participated in the PSPRS after the marital
community ended. Wife contends the Van Loan formula is correct and it
would be inequitable to apply a "frozen benefit" formula because Husband
1 Husband argues that 50% of the PSPRS benefit should be further
reduced by a social-security offset, resulting in Wife receiving 41.5% of the
benefit payable at the time of service. We address this argument below. See
infra ¶ 18.
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SEASE v. SEASE
Decision of the Court
did not make any Koelsch payments, and her "interest remained in PSPRS,
while Husband continued to work, which made the value of the pension
increase."
¶15 Here, the court rejected Husband's request for a valuation
based on Koelsch. Implicit in the Order, the court found the QDRO
equitable. The court also explicitly found that if the parties had intended
for a specific valuation to apply, it would have been included in the
Agreement. Thus, the court found that Husband had waived this new
request for a particular valuation under Koelsch due to the request's
"out-of-the-ordinary" nature.
¶16 The regular method for valuing a pension benefit is "dividing
the length of time worked during the marriage by the total length of time
worked toward earning the pension." Hetherington v. Hetherington, 220
Ariz. 16, 19, ¶ 10 (App. 2008) (quoting Johnson v. Johnson, 131 Ariz. 38, 41 n.4
(1981)). Koelsch acknowledges that "delaying the receipt of benefits until the
employee spouse retires also forces the non-employee spouse to share the
risk that" the non-employee spouse would lose benefits if the employee
spouse died before retirement. 148 Ariz. at 181. To prevent the employee
spouse from unilaterally imposing that risk, the court approved
pre-retirement payments from the employee spouse to the non-employee
spouse. Id. at 185. Here, Husband made no indication in the Agreement or
prior to dissolution that an exception applied and has made no
pre-retirement Koelsch payments to Wife. And because Wife did not begin
receiving pre-retirement payments at the time of separation, there is no
basis upon which to argue that Koelsch stands for the proposition that she is
not entitled to her proportionate share of the benefit payable when
Husband retired. The court did not abuse its discretion in finding that it
was too late for Husband to invoke Koelsch.
¶17 Further, "[e]xpert testimony is necessary to ascertain the
present cash value which reflects contingencies including mortality,
interest, probability of vesting, and probability of continued employment."
Miller, 140 Ariz. at 523. And Husband did not present any evidence of the
present cash values of PSPRS benefits. In other words, Husband failed to
present evidence from which the court could determine whether the
present cash value of the 38% of the PSPRS benefit awarded to Wife in 2023
was greater or less than 50% of the PSPRS benefit payable in 2018 at the
time of the Decree. In this situation, the court did not abuse its discretion
to enter the QDRO. See Hetherington, 220 Ariz. at 20, ¶¶ 13–15 (rejecting the
wife's argument that she was not required to "prove the value of the
retirement plan as of the date of service"); see also Miller, 140 Ariz. at 523
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SEASE v. SEASE
Decision of the Court
(finding no abuse of discretion when the parties provided "no evidence
upon which to find the present cash value of the retirement plan"). We
affirm the court's entry of the QDRO.
¶18 Similarly, we affirm the court's determination that Husband
waived the social-security offset and estate-clause issues. Husband and
Wife stipulated to have Mr. Harrian draft the QDRO in the Agreement, and
neither party brought forth the social-security offset or estate issues before
the entry of the Decree. See Leathers v. Leathers, 216 Ariz. 374, 378, ¶ 19 (2007)
(noting that an issue is not properly raised when it is not raised in a pretrial
statement or at trial). If Husband wanted these special provisions included
in the QDRO, the time to ask for them was during the dissolution
proceedings. Further, Husband acknowledges that both he and Wife
contributed to, and will receive a benefit under, the Social Security
Retirement System. Thus, he has not demonstrated that he is eligible for a
social-security offset. See Kelly, 198 Ariz. at 309, ¶ 12 (noting that a
social-security offset is not appropriate if both spouses participated in social
security, even when their respective social-security benefits are not equal).
Likewise, Wife has an undivided interest over her share of the pension. See
Snyder v. Tucson Police Pub. Safety Pers. Ret. Sys. Bd., 201 Ariz. 137, 141, ¶ 14
(App. 2001) ("We reaffirm our conclusion in Snyder that, when the
dissolution decree awarded Caren a 21.61 percent share of Michael's
retirement benefits, that share immediately became her vested, separate
property and, upon her death, was thereafter transferred by will to her
parents." (cleaned up)).
II. Attorney Fees.
¶19 We have an independent duty to examine whether
jurisdiction exists over matters on appeal. Ghadimi v. Soraya, 230 Ariz. 621,
622, ¶ 7 (App. 2012).
¶20 Husband claims the court erred in awarding Wife attorney
fees. The Order found that Husband acted unreasonably and granted Wife
a portion of her attorney fees and costs. The Order did not award an
amount and ordered Wife to apply for fees so the court could determine the
amount in a separate judgment. Pursuant to Rule 78(b), the court certified
the Order as a "final, appealable order" and that there was "no just reason
for delay." See Natale v. Natale, 234 Ariz. 507, 509, ¶ 5 (App. 2014) (noting "a
family court ruling is not final and appealable until all of the claims pending
before the court have been resolved" or until the court has issued a
"certification of finality" under Rule 78(b)). Husband appealed from the
Order. The court awarded Wife $23,845.44 in attorney fees and costs on
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Decision of the Court
August 14, and Husband did not amend his appeal or file a separate notice
of appeal from that judgment.
¶21 Because a Rule 78(b) certification is improper for an
unresolved claim, the court erred in certifying the decision regarding
attorney fees before the attorney-fees award was final. See Hernandez v.
Athey, --- Ariz. ---, ---, ¶ 9, 541 P.3d 601, 604 (App. Dec. 21, 2023). Thus,
despite the Rule 78(b) certification, we lack jurisdiction to consider the
attorney-fees issue and dismiss that portion of the appeal.
CONCLUSION
¶22 For the foregoing reasons, we affirm in part and dismiss in
part. Husband requests his attorney fees and costs on appeal pursuant to
A.R.S. § 25-324, and Wife requests her fees and costs pursuant to A.R.S.
§ 25-324 and ARCAP 21. In the exercise of our discretion, we decline to
award attorney fees. But we award Wife, as the prevailing party, her costs
on appeal upon compliance with ARCAP 21.
AMY M. WOOD • Clerk of the Court
FILED: AA
8