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In re Hutki

Court of Appeals of Arizona, First Division

April 24, 2018

In re the Matter of: LETTIE HUTKI, Petitioner/Appellant,
v.
DENNIS HUTKI, Respondent/Appellee.

          Appeal from the Superior Court in Maricopa County No. FN2015-050064 The Honorable Joseph C. Kreamer, Judge

          Joseph M. Huey PLC, Scottsdale By Joseph M. Huey Counsel for Petitioner/Appellant.

          Harla Davison Law Firm PLLC, Phoenix By Jennifer D. Hill Counsel for Respondent/Appellee.

          Presiding Judge Jon W. Thompson delivered the Opinion of the Court, in which Judge Peter B. Swann and Judge James P. Beene joined.

          OPINION

          THOMPSON, PRESIDING JUDGE:

         ¶1 Letti Hutki (Wife) appeals from the trial court's order denying her motion concerning the fairness of a property settlement agreement (PSA) she entered with Dennis Hutki (Husband), at a private mediation, where both parties were represented by counsel. She also appeals from the decree that incorporates the terms of the PSA, which the trial court approved and signed on July 5, 2017, and entered the following day. For the following reasons, we affirm the trial court's decisions. Contrary to Wife's position on appeal, we hold that neither Arizona Revised Statutes (A.R.S.) section 25-317(B) (2018)[1] nor Sharp v. Sharp, 179 Ariz. 205 (App. 1994) requires a "fairness determination" hearing in all cases.

         FACTUAL AND PROCEDURAL HISTORY

         ¶2 After approximately 41 years of marriage, Wife and Husband's marital union was dissolved on August 23, 2016. During the marriage, Wife had been a teacher. After she retired, Wife took on bookkeeping duties for Husband's family business, Hoenshied Family Limited Partnership (HFLP).[2] Husband is a self-employed real-estate investor.

         ¶3 Before dissolution of the marriage, Husband and Wife participated in mediation, on May 26, 2016, wherein they addressed the division of their property, including business entities, a trust account, other financial accounts, and debts. The businesses were Blue Ink, LLC; D&L Consulting, Inc.; and HFLP.

         ¶4 Wife had consulted Kotzin Valuation Services (Kotzin) to assess the separate and marital community interest in these assets. Kotzin provided its valuation reports on May 17, 2016, prior to the mediation. A note contained in one of the Kotzin reports stated:

Despite repeated requests, Mr. Hutki never provided a clear listing of which business interests he believed to be community property and which he was claiming were sole and separate. As such, we performed our own procedures regarding the four identified business entities[3] and came to the following conclusions. These conclusions could materially change if Mr. Hutki were to produce further documentation for how the interests were obtained.

         However, a March 15, 2016 email from Kotzin informed Husband "it looks like you have sent all of the items we have requested so far." During Kotzin's valuation, Husband also followed up with Kotzin to determine if additional information was needed. A valuation had also been done of "a 1 percent limited partnership interest in [HFLP]" in 2013.

         ¶5 Particularly as to HFLP, and relying on a 2015 partnership ledger of unit ownership, the Kotzin valuation concluded that 66.5 percent of the entities' shares, held by Husband and Wife, were rendered community property due to co-mingling of separate assets with community assets. The partnership had 99 limited partnership units. The Kotzin valuation noted Husband owned 62 limited partnership units, and 1 general partner unit, and Wife owned 3.5 limited partnership units. The shares were originally obtained as gifts to each party respectively. Husband, at various times, also had gifted away certain amounts of his limited partnership units.

         ¶6 At mediation, the parties reached full agreement regarding all but one issue-the division of three pieces of jewelry that were later awarded to Husband after a trial on the issue. The agreement specifically stated that "[a]ny dispute the parties [had] with each other over the sole or separate or community nature of their interest in [HFLP] is compromised by the agreements herein." The agreement was reduced to writing pursuant to Arizona Rules of Family Law Procedure (ARFLP) 69.[4] Both Husband and Wife acknowledged entering the PSA knowingly, voluntarily, intelligently, and with the advice of counsel. In her separate pre-trial statement relating to the jewelry, Wife also specifically acknowledged that, excepting the jewelry, the PSA "equalized the parties' assets and liabilities."

         ¶7 About six months after the parties' agreement, Wife filed a "Motion for Determination as to the Fairness of the Parties Property Division Agreement[, ]" (the Motion). In the Motion, Wife stated certain reasons she believed the PSA was unfair, and requested that the trial court "make an independent determination of the fairness of the [PSA, ]" pursuant to A.R.S. § 25-317(B), and Sharp. Sharp is the seminal case interpreting § 25-317(B).

         ¶8 Husband filed a "Notice of Lodging Decree of Dissolution of Marriage"pursuant to ARFLP 81. He requested that the court "sign and enter the same . . . or, alternatively, enter the parties' [PSA] as a final Decree in this case." Wife filed an objection to the lodged decree. Husband then filed a "Notice of Lodging of Amended Decree (Amended Decree), which also reserved his right to file a response to the Motion. Husband subsequently filed his response to the Motion. Wife did not file a reply.

         ¶9 In an unsigned minute entry filed January 5, 2017, the trial court denied the Motion after finding the PSA was "fair" and "equitable[.]" The court also indicated it would sign the Amended Decree given its conclusion regarding the PSA. The court signed Husband's Amended Decree. Wife timely appealed to this court from the signed decree. The trial court later issued another signed order, including the denial of the Motion and again stating it would sign Husband's Amended Decree. Wife then amended her appeal to challenge both the court's denial of the Motion and signing of the Amended Decree.

         ¶10 The signed Amended Decree contained language "reserv[ing] jurisdiction on the issue relating to the award of [the three pieces of jewelry.]" After receiving Wife's appeal, this court requested the parties file memoranda addressing whether all issues had been resolved by the Amended Decree. Wife did not submit a memorandum. Husband submitted a memorandum asserting that all claims had been resolved and averred the decree erroneously indicated the jewelry issue remained outstanding. This court then stayed the appeal, and revested jurisdiction in the trial court to permit the trial court to consider a motion for an amended decree that did not include the reserving language.

         ¶11 The parties subsequently stipulated to permit further amendment of the Amended Decree to exclude the statement reserving jurisdiction. A further amended decree, excluding the erroneous language (the Final Decree), ...


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