Lattin v. Shamrock Materials

Lattin v. Shamrock Materials, LLC, No. CV-21-0031-PR, 2022 WL 324574 (Ariz. Feb. 3, 2022).

Facts and Procedural History

In 2017, Kristi Lattin sued Shamrock Materials for breach of contract and lost, badly. The trial court awarded Shamrock more than $130,000 in attorney’s fees as the prevailing party, and Shamrock executed on the judgment by garnishing a bank account belonging to Lattin and her husband. Lattin argued that Shamrock could not garnish community funds because her husband was never joined as a party to the breach of contract litigation. Lattin cited A.R.S. § 25-215(D), which says:

[E]ither spouse may contract debts and otherwise act for the benefit of the community. In an action on such a debt or obligation the spouses shall be sued jointly and the debt or obligation shall be satisfied: first, from the community property, and second, from the separate property of the spouse contracting the debt or obligation.

A.R.S. § 25-215(D)

After receiving notice of the garnishment, Lattin moved the trial court to enjoin the garnishment proceedings. The court quashed the garnishment because the judgment was only entered against Lattin, not her husband. However, the court stopped short of determining whether the attorney’s fees judgment was a community or separate debt. Shamrock appealed and the court of appeals affirmed. The supreme court granted review.

Ruling

Pursuing an award of attorney’s fees as the prevailing party in a civil case is not “an action on [a community] debt or obligation” under § 25-215(D). Shamrock did not have to sue Lattin for the attorney’s fees; the award was automatic under § 12-341. “An action” for purposes of § 25-215(D) is “a cause of action based on a community debt or obligation that can result in a damage award.” A request for attorney’s fees after successfully defending a lawsuit does not fall within that definition, and so a defendant is not required to sue the plaintiff’s spouse to recover fees and costs.

The general rule remains unchanged: “[A] party seeking damages from community assets for an unpaid debt or breach of an obligation must join both spouses when asserting a cause of action, whether by complaint, counterclaim, crossclaim, or third-party complaint.” But, this case shows there are exceptions for certain types of claims.