Dressler v. Morrison

SUPREME COURT OF ARIZONA
En Banc

WALTER A. DRESSLER, ) Arizona Supreme Court
) No. CV-05-0119-PR
Plaintiff-Appellant, )
) Court of Appeals
v. ) Division One
) No. 1 CA-CV 03-0785
DONA MORRISON fka DONA M. )
DRESSLER, a single woman, ) Maricopa County
individually and as trustee, ) Superior Court
DONA DRESSLER REAL ESTATE TRUST, ) No. CV 03-012110
)
Defendant-Appellee. )
) O P I N I O N
__________________________________)

Appeal from the Superior Court of Maricopa County
The Honorable Peter C. Reinstein

REVERSED IN PART AND REMANDED
_______________________________________________________________

Memorandum Decision of the Court of Appeals, Division One
Filed March 8, 2005

VACATED IN PART
________________________________________________________________

GILBERT B. WEINER, P.C. Phoenix
By Gilbert B. Weiner
Attorney for Walter A. Dressler

CATES, HANSON, SARGEANT & RAKESTRAW, P.L.C. Phoenix
By Leslie Rakestraw
Dwane M. Cates
Michael R. Karber
Attorneys for Dona Morrison
________________________________________________________________

M c G R E G O R, Chief Justice

¶1 Walter A. Dressler brought this action against Dona

Morrison, his former wife, to recover his share of community
property that he alleged she fraudulently induced him to

transfer to her separate property trust. The trial court

dismissed Dressler’s action pursuant to Arizona Rule of Civil

Procedure 12(b), 1 holding that Dressler should have filed a Rule

60(c) 2 motion in the dissolution proceedings. The court of

appeals affirmed, concluding that the domestic relations court

provided the proper forum for resolving Dressler’s claim. We

hold that a party who claims to be a tenant in common with a

former spouse may bring a separate civil action to obtain relief

when a dissolution decree fails to mention or does not dispose

of real property.

¶2 Because the trial court dismissed Dressler’s action

pursuant to a Rule 12(b) motion, we assume the facts alleged in

the complaint are true. Mohave Disposal, Inc. v. City of

Kingman, 186 Ariz. 343, 346, 922 P.2d 308, 311 (1996).

¶3 According to the complaint, Dressler and Morrison were

married on January 20, 1980, in Jamaica. Dressler is originally

from Germany and has an eight-year grammar school education and

1
Unless otherwise indicated, citations in this opinion to
“Rule ___” refer to the Arizona Rules of Civil Procedure.
2
Rule 60(c) allows a court to relieve a party from final
judgment for the following reasons: (1) mistake, (2) newly
discovered evidence, (3) fraud or misrepresentation, (4) void
judgment, (5) satisfied, released, or discharged judgment, or

2
a three-year trade school education. Morrison was born in the

United States and has an undergraduate and a graduate degree.

¶4 Throughout the course of the marriage, Morrison

managed and controlled the marital finances and business

interests. In 1993, Dressler and Morrison, as husband and wife,

purchased real property in Westerville, Ohio, located at 892

Tradewind Drive. Two years later, the couple purchased real

property at 1034 Crosshaven Court in Westerville. The two

Westerville properties (the Properties) constituted a

considerable portion of the parties’ net worth.

¶5 At Morrison’s suggestion, the couple employed attorney

Scott A. Smith to prepare estate planning trusts for them. In

December 1998, Smith prepared two trusts, known as the Walter A.

Dressler Living Trust and the Dona M. Dressler Living Trust.

The Properties were conveyed to these trusts through four

recorded deeds. In April 1999, Morrison moved to Fountain

Hills, Arizona, and Dressler followed in August. They continued

to maintain title in the Properties through the trusts while

residing in Arizona.

¶6 Some time later, Morrison informed Dressler that,

because of insurance coverage issues, he needed to sign two

deeds involving the Properties. Dressler, noting that his

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(6) any other reason justifying relief from the operation of the
judgment.

3
estate planning lawyer had prepared the deeds, signed them.

These two deeds conveyed the Properties to a new entity, the

Dona Morrison Real Estate Trust, a revocable trust in which

Morrison is the sole beneficiary and trustee and her nephew,

Duncan Pelly, is the sole remainder beneficiary.

¶7 Morrison recorded the deeds in Franklin County, Ohio

on June 22, 2000. Two months later, she filed for dissolution

of marriage in Arizona. Dressler accepted service of process

but took no further action. Morrison filed a notice of default

against Dressler on October 23, 2000, and the court entered a

decree of dissolution on December 7, 2000.

¶8 Under the terms of the decree, the court awarded

Morrison and Dressler their sole and separate property and

awarded the marital residence to Morrison. Because the

residence was community property, the court awarded Dressler

half the total equity of the residence in a lump sum payment of

$76,813.00. As both parties recognize, although the decree

specifically referred to the Walter A. Dressler Living Trust and

to the Dona M. Dressler Living Trust, it made no mention of the

Dona Morrison Real Estate Trust, to which Morrison allegedly

transferred the Properties. 3 The decree also failed to mention

3
The decree did award Morrison, as her sole and separate
property, retirement accounts held in her name, an automobile,
and gifts from her grandmother, including a dining room suite,
silver, china, sofa, and chairs. The decree awarded Dressler,

4
or describe the Properties, as required by Arizona Revised

Statutes (A.R.S.) § 25-318.D (Supp. 2005) (stating that “[t]he

decree or judgment shall specifically describe by legal

description any real property affected and shall specifically

describe any other property affected”). 4

¶9 In June 2003, Dressler filed this civil action against

Morrison, the Dona Morrison Real Estate Trust, and Duncan Pelly

alleging fraud, constructive fraud, unjust enrichment,

constructive trust, negligent misrepresentation, and fraudulent

transfer. Dressler later amended his complaint to add counts

for breach of fiduciary duty, quiet title, and sale in lieu of

partition. In response, Morrison moved to dismiss the complaint

pursuant to Rule 12(b). The trial court granted the motion to

dismiss, stating that Dressler’s claims regarding the Properties

“would have been appropriate for a Rule 60(c) . . . Motion filed

in the dissolution proceedings” and that “[i]f [Dressler] wishes

to modify or overturn the above decree, [he] should file the

appropriate motion pursuant to Rule 60(c).”

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as his sole and separate property, retirement accounts held in
his name and an automobile.
4
The decree did provide a legal description for the
community residence.

5
¶10 Dressler appealed the trial court’s decision. 5 The

court of appeals affirmed the trial court’s dismissal of

Dressler’s complaint in a memorandum decision. We granted

review to determine whether a party may bring a separate civil

action for relief, rather than file a Rule 60(c) motion, when

the party alleges ownership in real property not disposed of in

a dissolution decree. 6 We exercise jurisdiction pursuant to

Article 6, Section 5.3 of the Arizona Constitution.

II.

¶11 We review an order granting a motion to dismiss for

abuse of discretion, Franzi v. Superior Court, 139 Ariz. 556,

561, 679 P.2d 1043, 1048 (1984), and review issues of law,

including issues of statutory interpretation, de novo, State ex

rel. Dep’t of Econ. Sec. v. Hayden, 210 Ariz. 522, 523 ¶ 7, 115

P.3d 116, 117 (2005). We will “uphold dismissal only if the

plaintiff[] would not be entitled to relief under any facts

susceptible of proof in the statement of the claim.” Mohave

Disposal, Inc., 186 Ariz. at 346, 922 P.2d at 311.

5
Dressler later filed a Rule 60(c) motion in the dissolution
proceedings, DR2000-095386. That action has been stayed pending
resolution of this appeal.
6
Although the trial court judgment and the court of appeals’
decision affirming that judgment applied to all of Dressler’s
claims, his petition for review in this Court challenged only
the holding that his claim pertaining to community property not
addressed in the decree must be brought through a Rule 60(c)
motion. Accordingly, we resolve only that issue.

6
A.

¶12 Section 25-318.B (2000 & Supp. 2005) states that

“[t]he community, joint tenancy and other property held in

common for which no provision is made in the decree shall be

from the date of the decree held by the parties as tenants in

common, each possessed of an undivided one-half interest.”

Dressler argues that because the dissolution decree did not

address the Properties, he and Morrison became tenants in common

in the property under the terms of section 25-318.B.

Accordingly, he asserts that he should be permitted to bring a

separate civil action, not to reopen or alter the terms of the

dissolution decree, but rather to establish his rights as a co-

tenant in property he alleges belonged to the marital community.

¶13 Arizona case law supports Dressler’s position.

Earlier decisions from Arizona’s appellate courts have applied

section 25-318.B or its statutory predecessor and allowed a

party to bring a civil action to determine ownership rights in

real property alleged to belong to a former marital community

but not awarded in the dissolution action. For example, in

Dawson v. McNaney, this Court allowed a divorced wife to proceed

in a separate action against her former husband to recover a

one-half interest in certain real and personal property that was

not disposed of in a prior divorce decree. 71 Ariz. 79, 83, 223

P.2d 907, 909 (1950). Applying Arizona Code § 27-805 (1939),

7
the statutory predecessor to A.R.S. § 25-318.B, we held that

because “no property or property rights were mentioned in the

divorce proceedings and judgment,” the former spouses held the

property as tenants in common. Id. Consequently, we allowed

the plaintiff to bring a separate civil action against her

former husband. Id.

¶14 Similarly, in Bates v. Bates, the plaintiff filed a

lawsuit against her former husband, claiming that he had

concealed community property at the time of the couple’s divorce

and that she was entitled to a one-half interest in the property

as a tenant in common. 1 Ariz. App. 165, 166-67, 400 P.2d 593,

594-95 (1965). The trial court dismissed the case as “a

collateral attack on the original judgment.” Id. at 167, 400

P.2d at 595. Although the court of appeals did not decide the

tenancy in common issue, the court cited section 25-318.D

(corresponding to current subsection B) as a basis for

permitting the plaintiff to impeach a valid divorce decree for

extrinsic fraud and to establish her share in undistributed

community property. Id. at 169-70, 400 P.2d at 597-98. The

court also held that the action was not barred by the doctrine

of claim preclusion. Id. at 170, 400 P.2d at 598. Importantly,

as the court noted, the plaintiff’s action did not attack the

finality of the dissolution decree itself. Id. at 168, 400 P.2d

at 596; see also Carpenter v. Carpenter, 150 Ariz. 62, 65, 722

8
P.2d 230, 233 (1986) (reviewing action brought by former wife

for her community property interest in retirement benefits not

disposed of by divorce decree or separate property settlement);

Rothman v. Rumbeck, 54 Ariz. 443, 444-46, 96 P.2d 755, 755-56

(1939) (plaintiff proceeded in a separate civil action against

her former husband’s estate for premiums paid by the community

during coverture on a life insurance policy) (applying Arizona

Revised Code § 2182 (1928)); Fischer v. Sommer, 160 Ariz. 530,

532-33, 774 P.2d 834, 836-37 (App. 1989) (noting that this Court

has never “state[d] or impl[ied] that Rule 60(c) is the sole

method by which a spouse can seek post-decree contribution for

an unallocated community debt” and permitting a separate action

to require contribution to payment of a community debt

discovered after entry of decree). Applying these decisions,

then, a party can bring a separate action to determine ownership

in what he characterizes as community property not disposed of

in the decree, at least when the separate action does not attack

the finality of the decree.

¶15 Morrison suggests that, regardless of our prior

decisions, the doctrine of claim preclusion, or res judicata,

should prohibit Dressler from bringing this action because his

claims should have been resolved in the dissolution proceeding.

Under the doctrine of claim preclusion, a final judgment on the

9
merits in a prior suit involving the same parties or their

privies bars a second suit based on the same claim. Chaney

Bldg. Co. v. City of Tucson, 148 Ariz. 571, 573, 716 P.2d 28, 30

(1986). We conclude that prior decisions of this Court and the

court of appeals correctly held that the doctrine of claim

preclusion does not apply to bar actions such as Dressler’s.

¶16 The
T purpose of section 25-318 is “to provide a

standard for the [equitable] disposition of community and common

property in [] dissolution proceeding[s].” Martin v. Martin,

156 Ariz. 452, 457, 752 P.2d 1038, 1043 (1988). Consistent with

this intent, the legislature enacted section 25-318.B to ensure

the equitable division of community property “for which no

provision [was] made in the [dissolution] decree.” The

legislature thus specifically contemplated that, contrary to

general principles of claim preclusion, dissolution decrees

might not provide for the disposition of all community property.

The legislature also specified a remedy for that circumstance:

Former spouses will hold the property as tenants in common. The

remedy provided by statute would have little force if a party

were foreclosed from bringing an action based on claim

preclusion. Moreover, bringing a separate action to enforce

section 25-318.B does not impair the finality of the dissolution

decree: All the terms of that decree remain valid and

enforceable. If Dressler prevails in his action based on co-

10
tenancy, that result will be entirely consistent with the

decree.

¶17 Other jurisdictions similarly have concluded that the

doctrine of claim preclusion does not bar a subsequent claim

that involves property rights not adjudicated in a dissolution

decree. See, e.g., Tarien v. Katz, 15 P.2d 493, 495 (Cal. 1932)

(holding that when a final divorce decree failed to dispose of

community property, a former spouse’s right to that property can

be determined in a subsequent action, not barred by claim

preclusion); Yeo v. Yeo, 581 S.W.2d 734, 736 (Tex. Civ. App.

1979) (holding that a “partition of community property not

disposed of in the prior divorce decree is not barred by the

doctrine of res judicata”). In accord with these and prior

Arizona decisions, we hold that the doctrine of claim preclusion

does not bar Dressler’s co-tenancy action. 7

¶18 Because the trial court dismissed Dressler’s action

pursuant to Rule 12(b), Dressler has yet to establish the facts

necessary to prevail on his claim that the Properties, which the

dissolution decree did not address, were, indeed, community

7
In his petition for review, Dressler also asked us to
consider and define the circumstances under which the provisions
of Rule 60(c) prohibit an independent post-decree action between
former spouses and mandate a reopening of the dissolution
proceeding. Given our resolution of the first issue presented,
we need not address this issue.

11
property and that he and Morrison hold them as tenants in

common. See A.R.S. § 25-318.B. The trial court also has not

yet considered the various defenses asserted by Morrison. We

therefore remand this matter to permit the trial court to

resolve those issues related to Dressler’s co-tenancy claim.

III.

¶19 For the foregoing reasons, we vacate that portion of

the court of appeals’ memorandum decision that required Dressler

to bring his co-tenancy claim as a Rule 60(c) motion, reverse in

part the judgment of the superior court, and remand to the

superior court for further proceedings consistent with this

opinion.

_____________________________
Ruth V. McGregor
Chief Justice

CONCURRING:

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Rebecca White Berch, Vice Chief Justice

_______________________________________
Michael D. Ryan, Justice

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Andrew D. Hurwitz, Justice

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W. Scott Bales, Justice