In re Hammett

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          Appeal from the Superior Court in Maricopa County, No. FN2015-071793, No. FN2017-002640, (Consolidated), The Honorable Lori Horn Bustamante, Judge, The Honorable Frank W. Moskowitz, Judge, VACATED IN PART AND REMANDED WITH INSTRUCTIONS

          Lincoln & Wenk PLLC, Goodyear, By Michael Lincoln, Counsel for Petitioner/Appellee

         DeRoon & Seyffer, Phoenix, By Charles R. Seyffer, Counsel for Respondent/Appellant

         Presiding Judge Paul J. McMurdie delivered the opinion of the Court, in which Chief Judge Peter B. Swann and Judge Diane M. Johnsen joined.

          OPINION

         McMURDIE, Judge

         [¶1] Ann Hammett ("Wife") appeals from the property distribution in the decree annulling her marriage to Michael Hammett ("Husband") and the superior court’s subsequent orders. We hold parties acquire community property and debt even during a marriage that results in an annulment; and, when terminating the marriage, the court must dispose of such assets and debt under Arizona Revised Statutes ("A.R.S.") section 25-318, to the extent applicable. Because the superior court and the parties assumed the couple had acquired no community property, we vacate the decree’s property disposition and remand for further proceedings consistent with this opinion.

          FACTS AND PROCEDURAL BACKGROUND

         [¶2] Husband met Wife while she lived in the Philippines. The couple married in Nevada in November 2009, after Wife obtained a fiancévisa. See 8 U.S. C. § 1101(a)(15)(K)(i) (2006). In November 2015, Husband, as the sole signatory, obtained a loan for $78,600, secured by a house that was his separate property (the "Loan"). That same month, Husband purchased a condominium for $58,000, titled in both spouse’s names as community property with the right of survivorship. Less than two weeks later, Husband petitioned for the dissolution of the parties’ six-year marriage.

         [¶3] In August 2016, Wife moved for a temporary order for spousal maintenance. She claimed that she was unable to work because of a car accident, Husband had been supporting the couple for the duration of their marriage, and he had ended all financial support earlier in the year. The court discussed Wife’s motion during a resolution management conference and ordered the parties to exchange financial affidavits. At the conference, Husband asserted— for the first time— that Wife was married to another man when the couple married.

         [¶4] After Wife submitted her financial affidavit, over Wife’s objection Husband moved to dismiss his petition for dissolution. He argued that the court must dismiss the dissolution action because of the "mutual fraud committed by both parties" and asserted that Wife was still married to her first husband. He alleged that before their marriage in 2009, the parties conspired to have a fake death certificate produced to allow Wife to enter the United States with a fiancévisa. Husband submitted emails between him and a third party from 2008 in which he expressed his frustration with the time and cost of an annulment in the Philippines, and solicited the help of the third party to either "find[ ] a judge and pay[ ] him off" or create a fake death certificate.

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         [¶5] The court held an oral argument on Husband’s motion in February 2017— more than a year after Husband petitioned for dissolution. Because the parties presented evidence outside of the pleadings, the court treated the motion to dismiss as a summary judgment motion. See Ariz. R. Fam. Law P. 32(B) (2006) (repealed effective January 1, 2019, see now Ariz. R. Fam. Law P. 29 (2019)). Husband argued that because Wife’s marriage to her first husband had never been dissolved, their subsequent marriage was invalid. Husband asserted that even though Wife had unsuccessfully tried to locate her first husband for 19 years before she married Husband, she had failed to comply with the law in the Philippines to have her first husband presumed dead and the marriage dissolved. Accordingly, Husband argued Wife’s first husband "must be presumed to be alive."

         [¶6] The court dismissed the dissolution petition based on Wife’s admission that she failed to have her first husband presumed dead, and her previous marriage annulled. The court held Wife did not correctly dissolve her first marriage under Philippine law, which rendered her subsequent marriage to Husband invalid.^[1]

         [¶7] In March 2017, Husband petitioned for annulment. Before the resulting trial, the parties agreed that Husband’s house would remain his separate property and that each spouse would "keep their retirement accounts and bank accounts in their own names" and "the debts in their own names." The court found that the parties knowingly, intelligently, and voluntarily entered into a binding agreement that was fair and equitable under Arizona Rule of Family Law Procedure ("Rule") 69.

         [¶8] The parties then presented evidence on the remaining unresolved claims— mainly, their interest in the condominium, the Loan, and Wife’s allegation that she contributed over $30,000 in repairs and improvements to the condominium after service of the dissolution petition. After the trial, the court ruled that "all community property rights and obligations acquired by marriage are void ab initio with respect to both parties as to all property, income, and liabilities received or incurred from the date of the annulled marriage." The court then ordered that the parties owned the condominium as tenants in common and directed Wife to buy out Husband’s one-half interest in the condominium by refinancing the loan in her name before August 19, 2018, or place the condominium on the market on or before September 1, 2018. The court further ordered Wife to pay any mortgage payments, HOA fees, and taxes so long as she continued to live in the condominium. The court declined to grant either party any additional funds from the proceeds of the condominium for improvements to it.

         [¶9] Husband moved the court to clarify its ruling concerning the condominium sale proceeds and the Loan. The court did not explain its decision until after the 90-day deadline passed for Wife to refinance the Loan. The court clarified that the condominium "sale proceeds shall first be applied to the [Loan]" and "any remaining proceeds shall be equally divided." The court again ordered Wife to "refinance the mortgage in her name alone" if she wanted to retain possession of the condominium. The balance ...