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Digital Systems Engineering, Inc. v. Moreno

Court of Appeals of Arizona, First Division

April 18, 2017

DIGITAL SYSTEMS ENGINEERING, INC., Plaintiff/Appellee,
v.
JOHN MORENO and BERNADETTE BRUCE-MORENO, Defendants/Appellants. [1]

         Appeal from the Superior Court in Maricopa County No. CV2007-005794 The Honorable Margaret Benny, Commissioner, Judge Pro Tem

          Marko Law PLC, Phoenix By Edward J. Marko Counsel for Plaintiff/Appellee

          Dickinson Wright PLLC, Phoenix By Charles H. Oldham, Amanda E. Newman Counsel for Defendants/Appellants

          Judge Jon W. Thompson delivered the opinion of the Court, in which Presiding Judge Randall M. Howe and Judge Lawrence F. Winthrop joined.

          OPINION

          THOMPSON, Judge

         ¶1 Appellants, John Moreno (John) and his wife Bernadette Bruce-Moreno (Bernadette) (collectively, the Morenos) appeal from the trial court's order permitting Digital Systems Engineering, Inc. (DSE) to garnish John's wages in his current marital community with Bernadette, whom he remarried after divorce, to fulfill his liabilities associated with the Morenos' prior marital community, despite a contrary stipulated judgment tantamount to an agreement by DSE to limit the scope of John's liability. For the reasons that follow, we reverse the trial court's order and vacate the garnishment writ.

         FACTUAL AND PROCEDURAL HISTORY

         ¶2 In April 2007, DSE filed a lawsuit against Bernadette, who is its former employee, and her husband, John. In the lawsuit, DSE alleged that from 2001 to 2005 Bernadette engaged in fraudulent transactions causing DSE nearly $300, 000 in damages. DSE sought relief from both Bernadette and John in their individual capacities and from their marital community. After a bench trial in 2008 and 2009, the superior court found that John was not individually liable, and entered judgment, on September 4, 2009, only against his undivided one-half interest in his marital property with Bernadette.[2]

         ¶3 John appealed the judgment and DSE filed a cross-appeal challenging the court's ruling that John was not individually liable. On appeal, this court affirmed both the judgment on the fraud claim and the determination that John was not individually liable. See Digital Sys. Eng'g, Inc. v. Bruce-Moreno, 1 CA-CV 09-0574, 2010 WL 5030808, at * 7, ¶ 36 (Ariz. App. Nov. 16, 2010). However, we reversed the court's damages award and remanded the case for further determinations as to the amount of DSE's damages on the fraud claim and directed that the judgment granted to DSE against John for unjust enrichment be vacated. Id.

         ¶4 Back in the trial court, in April 2011, DSE filed a Request for Judicial Notice, asking the court to take judicial notice of the fact that the Morenos had entered into a marital settlement agreement and that the marriage was dissolved on September 8, 2009. On August 3, 2011, the court took judicial notice, as DSE requested.

         ¶5 Before the trial to determine DSE's damages, DSE and John entered a stipulated judgment, on September 2, 2011, which the court filed on September 7, 2011. As relevant here, the Stipulated Judgment provided:

JUDGMENT IS ENTERED IN FAVOR OF PLAINTIFF [DSE] AND AGAINST JOHN MORENO'S UNDIVIDED ONE-HALF INTEREST IN HIS MARITAL COMMUNITY WITH BERNADETTE BRUCE-MORENO . . .
THE CLAIM AGAINST JOHN MORENO'S SOLE AND SEPARATE PROPERTY IS DISMISSED WITH PREJUDICE. (Emphasis added.)

         ¶6 The Morenos remarried two years later. In December 2015, DSE served a Writ of Garnishment on John's employer. The Morenos objected to the garnishment on the grounds that: (1) the Stipulated Judgment is, by its terms, limited to recovery from John's interest in the prior marital community; (2) under Arizona law, the Morenos' remarriage after divorce did not "resume" their prior marital community, but instead created a new and distinct community, beyond the reach of the Stipulated Judgment; (3) John's current wages are property of the new community, and not the prior; and (4) Arizona law supports limiting an innocent spouse's liability to the community property that existed at the time of any tortious acts. In ...


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