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In re Hefner

Court of Appeals of Arizona, First Division

December 10, 2019

In re the Matter of: Karen K. HEFNER, Petitioner/Appellee-Cross Appellant,
v.
Gary S. HEFNER, Respondent/Appellant-Cross Appellee.

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[Copyrighted Material Omitted]

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          Appeal 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

         Ellsworth Family Law, P.C., Mesa, By Steven M. Ellsworth, Glenn D. Halterman (argued), Counsel for Respondent/Appellant-Cross Appellee

         Judge Paul J. McMurdie[1] 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.

         OPINION

         McMURDIE, Judge:

         [¶1] 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 Husband’s separate

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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 attorney’s fees. For the following reasons, we affirm the orders regarding attorney’s fees and costs, business assets, and reimbursements; but vacate the court’s order regarding the classification of the personal-injury settlement monies and remand for correction of the decree on that issue.

         FACTS AND PROCEDURAL BACKGROUND[2]

         [¶2] 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.

         [¶3] 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 Husband’s 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 attorney’s fees because Husband had greater financial resources.

         [¶4] 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 community’s contribution. After reviewing the additional evidence and argument, the court denied Wife’s 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).

          DISCUSSION

         [¶5] 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 Husband’s business as separate property, denying her reimbursement for paying post-dissolution expenses, and awarding her only a portion of her attorney’s fees.

         [¶6] The superior court’s 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 attorney’s 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) (attorney’s 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. Husband’s Personal-Injury Settlements Are Presumptively His Separate Property, and the Community ...


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