In re the Matter of: Karen K. HEFNER, Petitioner/Appellee-Cross Appellant,
Gary S. HEFNER, Respondent/Appellant-Cross Appellee.
[Copyrighted Material Omitted]
from the Superior Court in Maricopa County; No.
FN2015-050301; The Honorable Jennifer E. Green, Judge.
AFFIRMED IN PART; VACATED IN PART AND REMANDED
Dickinson Wright, PLLC, Phoenix, By Leonce A. Richard III,
Counsel for Petitioner/Appellee-Cross Appellant
Family Law, P.C., Mesa, By Steven M. Ellsworth, Glenn D.
Halterman (argued), Counsel for Respondent/Appellant-Cross
Paul J. McMurdie delivered the opinion of the Court, in
which Presiding Judge Michael J. Brown joined. Judge Kenton
D. Jones concurs in part and dissents in part.
Gary Hefner ("Husband") appeals, and Karen Hefner
("Wife") cross-appeals, from a decree dissolving
their marriage. Between them, the parties assert that the
superior court erred by: (1) treating personal injury damages
related to two automobile accidents as community property;
(2) finding an auto-repair business was Husbands separate
property and Wife was not entitled to a community lien on the
property; (3) denying both parties reimbursement for expenses
paid during the dissolution proceedings; and (4) awarding
Wife only a portion of her attorneys fees. For the following
reasons, we affirm the orders regarding attorneys fees and
costs, business assets, and reimbursements; but vacate the
courts order regarding the classification of the
personal-injury settlement monies and remand for correction
of the decree on that issue.
AND PROCEDURAL BACKGROUND
In 2015, Wife petitioned for dissolution of the parties
thirty-four-year marriage. At that time, Husband was in the
process of negotiating settlements for personal injuries he
sustained in two separate automobile accidents. Since 1998,
Husband operated Hefner Auto Repair, Inc. ("the
business"), an auto-repair shop purportedly gifted to
him by his father, Frank Hefner.
After the January 2017 trial on the petition for dissolution,
the superior court determined the personal-injury damages
were community property and divided them equally between the
parties. The court found the business was Husbands separate
property and awarded it to Husband. The court denied the
parties competing claims for reimbursement of expenses paid
during the proceedings but awarded Wife a portion of her
attorneys fees because Husband had greater financial
The superior court resolved several post-trial motions in a
manner that did not affect the provisions of the decree
relevant to this appeal but granted a hearing to consider
whether Wife was entitled to a share of the increased value
of the business attributable to the communitys contribution.
After reviewing the additional evidence and argument, the
court denied Wifes motion. Husband appealed and Wife
cross-appealed. We have jurisdiction under Arizona Revised
Statutes ("A.R.S.") sections 12-120.21(A)(1),
-2101(A)(1), and -2101(A)(5)(a), and Arizona Rule of Family
Law Procedure 78(c) (2019).
Husband argues the superior court erred by treating his
personal-injury damages related to the two automobile
accidents as community property because it was not his burden
to prove what parts of the awards were separate property.
Wife argues the superior court erred by classifying Husbands
business as separate property, denying her reimbursement for
paying post-dissolution expenses, and awarding her only a
portion of her attorneys fees.
The superior courts characterization of property is a
question of law that we review de novo . In re
Marriage of Pownall, 197 Ariz. 577, 581, ¶ 15, 5 P.3d
911, 915 (App. 2000). However, we review the division of
property and debts, factual determinations, and award of
attorneys fees under A.R.S. § 25-324 for an abuse of
discretion "and reverse only when clearly
erroneous." In re Marriage of Gibbs, 227 Ariz.
403, 406, ¶ 6, 258 P.3d 221, 224 (App. 2011); Helland v.
Helland, 236 Ariz. 197, 199, ¶ 8, 337 P.3d 562, 564
(App. 2014) (division of property); Valento v.
Valento, 225 Ariz. 477, 481, ¶ 11, 240 P.3d 1239, 1243
(App. 2010) (factual determinations); Murray v.
Murray, 239 Ariz. 174, 179, ¶ 20, 367 P.3d 78, 83 (App.
2016) (attorneys fees). A trial court abuses its discretion
when it misapplies the law or predicates its decision on
incorrect legal principles. Hammett v. Hammett, __
Ariz.App. __, __, 453 P.3d 1145, 1148, 2019 WL 5556953, *3, ¶
13 (App. Oct. 29, 2019).
A. Husbands Personal-Injury Settlements Are
Presumptively His Separate Property, and the Community