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In re Marriage of Leas

Court of Appeals of Arizona, First Division, Department E

July 11, 2013

In re the Marriage of: NATHANIEL R. LEAS, Petitioner/Appellee,
v.
CHERYL F. LEAS, Respondent/Appellant.

Not for Publication -Rule 28, Arizona Rules of Civil Appellate Procedure

Appeal from the Superior Court in Maricopa County Cause No. FN2010-002523 The Honorable Thomas L. LeClaire, Judge

Law Offices of Stone & Davis, P.C., Kiilu Davis Attorneys for Respondent/Appellant.

Berkshire Law Office, PLLC Keith A. Berkshire Attorneys for Petitioner/Appellee.

MEMORANDUM DECISION

MICHAEL J. BROWN, Judge.

¶1 Cheryl Leas ("Wife") appeals (1) from a dissolution decree that assigns mortgage, tax, and loan balances to her, and (2) from the denial of her Rule 85(C)(1)(b) motion to set aside the decree. For the reasons that follow, we affirm in part, vacate in part, and remand for further proceedings consistent with this decision.

BACKGROUND

¶2 Wife and Nathaniel Leas ("Husband") married in April 1989. During the marriage, Wife obtained student loans to fund both tuition and living expenses while she pursued a master's degree in management at Cornell University. She resided in Ithaca, New York, while studying for the degree.

¶3 Following graduation, Wife returned to Arizona and, in 2004, became Vice President for Brand Strategy and Marketing Research at SHR Perceptual Management, Inc. ("SHR"). Wife's starting salary was $77, 000, a $30, 000 increase from her pre-Cornell earnings; eventually, her salary rose to $137, 000.

¶4 After five years at SHR, Wife co-founded CSK Strategic Marketing Group, Inc. ("CSK"), a Colorado corporation, with two former SHR colleagues. At trial, Frank Pankow, a business valuation expert, estimated Wife's reportable share of CSK to be $229, 000, and subsequent to his evaluation Wife received a $50, 000 bonus.

¶5 The parties owned residences in Phoenix and Colorado Springs, Colorado as joint tenants. The parties were jointly responsible for the mortgage on the Colorado Springs residence, as well as the mortgage and home equity line of credit ("HELOC") for the Phoenix residence. At the time of trial, the Colorado Springs residence had an estimated $46, 474.21 in equity, and the combined mortgage and HELOC debt on the Phoenix residence exceeded its estimated value by $125, 168.37.

¶6 Husband petitioned for dissolution on July 2, 2010. As set forth in their joint pretrial statement, the parties stipulated to an equitable allocation of their bank accounts, IRAs, and vehicles and an equitable division of their credit card debts. As pertinent here, the primary contested issues at trial were: (1) the valuation of CSK, (2) the classification and allocation of Wife's student loan debt, (3) the allocation of 2010 tax liability, (4) the allocation of a promissory note executed by the parties in favor of CSK, and (5) the allocation of the real properties with the related debts. In its decree of dissolution, the trial court awarded the Phoenix residence to Husband, and the Colorado Springs residence to Wife. The parties were assigned the indebtedness associated with their respective properties, but the court ordered the parties to "share equally" the net "negative equity" on the properties in the amount of $78, 694.16 ($125, 168.37 "negative equity" in the Phoenix residence less $46, 474.21 equity in the Colorado Springs residence).

¶7 The decree characterized the student loans as Wife's sole and separate debt and required Wife to pay the entire balance. Wife received her interest in CSK, which the trial court valued at $239, 000, and Husband received $119, 500 for his community share in that interest. Finally, the trial court entered a judgment against Wife for a $70, 630.80 equalization payment to Husband, reflecting the court's balance of the assets and debt, and required each party to bear their respective attorneys fees and costs.[1]

¶8 Addressing Wife's post-trial motions, the trial court amended the decree, correcting some mathematical errors and finding that because Husband was "starting at a negative equity of ($47, 847.13), Wife shall pay to Husband a sum of $181, 107.60, " which would result in each party having "50% of the total equity of $133, 260.47 each." The court corrected the business valuation to $229, 000 and ordered each party to bear their own 2010 income taxes, without filing a joint return or obtaining contribution from the other party. The amended decree further directed that "Husband shall have until 120 days after the date of the final payment on ...


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