2022 Amendments to Title 25

Senate Bill 1383 was signed by the governor on June 14, 2022 and becomes effective on September 24, 2022 (90 days after the legislature adjourned sine dine). The bill amends several sections of chapter 3, adds new section 25-314.01 and repeals and replaces section 25-316. All of the substantive changes are detailed below.

Most important changes for practitioners

If you’re short on time, here are the most important changes you need to know about:

  • New procedure for cancelling a legal separation: If the parties are legally separated and later reconcile, there is a new process for terminating the legal separation decree. Any property awarded to either spouse in the legal separation decree or acquired during the period of legal separation remains separate, unless stated otherwise. You also have to address what happens to property payments and support payments that were ordered in the legal separation decree but haven’t been fulfilled.
  • Formal adoption of summary consent decree process: The summary consent decree process that was being trialed in Maricopa County is now codified in § 25-314.01. But there are some changes—the filing fee is now 50% of the combined petition and response fee, and the decree can be submitted to the court earlier than 60 days (but cannot be entered until after 60 days).
  • Minor changes to temporary orders: Provisions regarding temporary orders have been moved to § 25-316. “Physical or emotional” harm has been deleted as a requirement for exclusive use of property, and there is now specific authority for exclusive use and possession of other property, not just the marital residence. The definition of “liquid assets” now includes cryptocurrency and “nonretirement funds in financial institutions.”
  • Spousal maintenance guidelines: The new § 25-319 authorizes the supreme court to establish spousal maintenance guidelines, and limits the court to awarding maintenance “only for a period of time and in an amount necessary to enable the receiving spouse to become self-sufficient.” The court may deviate from the guidelines if the application is inappropriate or unjust (like child support). The actual guidelines haven’t been created yet.

If a statute has been amended but isn’t mentioned below, it’s because the changes are only cosmetic—e.g., changing custody to legal decision-making and parenting time, or adding annulment to divorce and legal separation.

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Costaras v. Costaras

  • If a foreign judgment includes support and non-support components, is it subject to the four-year statute of limitations for domesticating foreign judgments in A.R.S. § 12-544(3)?

Facts and Procedural History

Bill and Pana were divorced in Ohio in 1999. In 2016, another Ohio court entered judgment against Bill for $174,467.84–30% for spousal support arrearages and the remaining 70% for a “civil judgment” for attorney’s fees and costs.

Pana domesticated the judgment in Arizona about five years later. Bill moved to set aside the judgment, arguing that it was time-barred by A.R.S. § 12-544(3), which requires foreign judgments to be domesticated within four years after they become enforceable. Foreign judgments for support, however, are exempt from this statute of limitations.

The trial court held that the judgment could not be “dissected,” and therefore the entire judgment was exempt from the statute of limitations because the judgment included a support component. Bill appealed.

Ruling

Judgments that include support and non-support components can be bifurcated. The four-year statute of limitations in A.R.S. § 12-544(3) only applies to the non-support components of the foreign judgment, and the support components remain exempt.

If you’re not familiar with § 12-544, here’s what it says about domesticating foreign judgments:

There shall be commenced and prosecuted within four years after the cause of action accrues, and not afterward, the following actions: […] Upon a judgment or decree of a court rendered without the state, or upon an instrument in writing executed without the state. This paragraph does not apply to a judgment for support, as defined in section 25-500, and to associated costs and attorney fees.

Costaras v. Costaras, 1 CA-CV 21-0401, 2022 WL 1467900 (App. May 10, 2022).

Sowards v. Sowards (mem.)

  • Is a structured settlement agreement for one spouse’s personal injury award a valid and binding postnuptial agreement?
  • Do the undisputed allegations in the parties’ initial pleadings constitute a binding agreement?
  • Is it an abuse of discretion if the trial court fails to account for one spouse’s violation of temporary orders in its final decree?

Facts and Procedural History

During the marriage, Husband and Wife recovered $6 million in damages in an action arising from Husband’s pacemaker surgery. They worked with a financial advisor to create a structured settlement agreement for the award. Both parties signed the settlement agreement, which provided for large monthly and annual payments, payments to Wife in the event of Husband’s death, and payments to beneficiaries in the event of Wife’s death.

Wife petitioned for legal separation in 2019 and alleged in her petition that neither party was entitled to spousal maintenance. Husband admitted the allegation in his response. However, shortly thereafter, Wife filed a motion for temporary orders requesting spousal maintenance which was granted on a temporary basis.

At trial, the court ruled that approximately $2 million in damages for Husband’s physical injuries was his separate property, but the substantial award for punitive damages was subject to the parties’ contractual agreement, “which takes these payments out of the community property realm.” The trial court also ruled that the parties had created a binding agreement through their pleadings that neither party was entitled to spousal maintenance.

Ruling

Spouses are free to contract for changes to their community property rights through a postnuptial agreement. The agreement must be free from any taint of fraud, coercion or undue influence, it must be fair and equitable, and each spouse must have acted with full knowledge of the property involved and their rights therein. In re Harber’s Estate, 104 Ariz. 79 (1969). Arizona law does not require a postnuptial agreement to be formed in anticipation of separation or divorce. See Austin v. Austin, 237 Ariz. 201, 206-07 (App. 2015) (“A postnuptial agreement is defined as ‘[a]n agreement entered into during marriage to define each spouse’s property rights in the event of death or divorce.'” (citation omitted) (emphasis added)).

The court of appeals affirmed the trial court’s determination that the structured settlement agreement and a valid and binding postnuptial agreement. Wife did not claim that she signed the agreement as a result of fraud or mistake; the trial record confirmed that Wife had an adequate understanding of the agreement and its effect on her property.

The court of appeals also rejected the idea that the undisputed allegations in the parties’ pleadings consituted a binding agreement, but noted that Wife could have and should have amended her petition. This is an interesting decision in light of Rule 24(b)(6), which states that “the filing of a response has the effect of placing at issue any matter in the petition not specifically admitted.”

Finally, the court of appeals held that the trial court should have addressed Wife’s claim that Husband failed to comply with the temporary orders. Although temporary orders terminate and become unenforceable upon the entry of a decree, the court of appeals remanded the issue to permit the court to “account for the value of any noncompliance with the temporary orders and make an equitable adjustment if needed.”

Sowards v. Sowards, 1 CA-CV 21-0098 FC, 2022 WL 678530 (App. Mar. 8, 2022) (mem.).

Modifying Non-Modifiable Spousal Maintenance

  • If both parties agree to make spousal maintenance non-modifiable and the obligor subsequently becomes disabled or unable to pay, can the court modify non-modifiable spousal maintenance?

A.R.S. § 25-317(G) provides that the court loses jurisdiction to modify non-modifiable spousal maintenance upon the entry of the decree:

[E]ntry of a decree that sets forth or incorporates by reference a separation agreement that provides that its maintenance terms shall not be modified prevents the court from exercising jurisdiction to modify the decree and the separation agreement regarding maintenance, including a decree entered before July 20, 1996.

In re Marriage of Waldren (2007)

In the case In re Marriage of Waldren, the supreme court held that § 25-317(G) prohibits the obligor from filing any post-decree motions to modify spousal maintenance, even in extreme circumstances. 217 Ariz. 173, 171 P.3d 1214 (2007). The decree in Waldren incorporated the parties’ agreement that the husband would pay non-modifiable spousal maintenance for 60 months. Less than two years later, the husband became disabled and his income was limited. He moved to terminate under Ariz. R. Civ. P. 60(c)(5) which provides relief from a “final judgment, order or proceeding [if] it is no longer equitable that the judgment should have prospective application.”

The court concluded that procedural “rules must yield to statutory provisions on substantive matters such as the court’s subject matter jurisdiction.” Because § 25-317(G) eliminated the superior court’s jurisdiction to modify decrees regarding non-modifiable spousal maintenance, “[a]llowing Husband relief under Rule 60(c)(5) would permit the court’s procedural rule to govern the substantive statute that limits the court’s jurisdiction in such matters.”

Coburn v. Rhodig (2017)

In Coburn v. Rhodig, the court of appeals addressed a similar issue. 243 Ariz. 24, 400 P.3d 448 (App. 2017). In this case, the parties also agreed to non-modifiable spousal maintenance. The parties later agreed to modify and shorten the spousal maintenance term. After the husband paid the agreed-upon amount, the wife filed for enforcement of the full amount set forth in the parties’ consent decree.

The court of appeals found this case distinguishable from Waldren. The husband in Coburn did not ask to modify or terminate his spousal maintenance obligation. Rather, he was defending a petition for enforcement filed by his ex-wife. Although the court did not have jurisdiction to modify or terminate the decree, the husband may still establish an equitable defense to enforcement. If he succeeds, the court need only deny the wife’s petition to enforce.

The court analogized Coburn to similar cases involving child support, where the obligor established an equitable defense even though child support orders cannot be retroactively modified. See Ray v. Mangum, 163 Ariz. 329, 788 P.2d 62 (1989); Cordova v. Lucero, 129 Ariz. 184, 629 P.2d 1020 (App. 1981).

In most cases, non-modifiable spousal maintenance is truly non-modifiable. However, there may be other avenues in defending a request for arrearages. If the other party delayed in filing for enforcement or agreed to accept a lesser amount, they may be barred from enforcing the award.

Smith v. Smith (mem.)

Smith v. Smith, No. 1 CA-CV 21-0300 FC, 2022 WL 320569 (Ariz. App. Feb. 3, 2022).

Facts and Procedural History

Heath and Tricia Smith were married in 2009 but lived together for about 10 years prior to that. Tricia, 40, is disabled due to a genetic disorder affecting her joints and is unable to work. Heath earns a modest income of about $72,000 per year as an electrician. Tricia’s only income comes from adoption subsidies of $1,931 per month. The parties have four children, three of whom are minors and two of whom were adopted.

Following a trial, the court ordered Heath to pay spousal maintenance of $1,500 per month for 20 years—twice the length of the parties’ actual marriage. Notably, the court made a finding that the parties were “legally married for approximately ten year[s] but ha[d] lived as a married community since the birth of their first [c]hild more than 20 years ago.”

After paying spousal maintenance and child support ($849/month), Heath’s income was $3,611 per month and Tricia’s income was $4,280 per month.

Heath appealed, arguing that the court improperly considered their premarital cohabitation in determining the “duration of the marriage” under A.R.S. § 25-319(B).

Ruling

The court of appeals found no abuse of discretion in ordering Heath to pay spousal maintenance for 20 years. A court must consider “all relevant factors” under § 25-319(B), and an award longer than the actual marriage is not automatically an abuse of discretion if other findings support the award. The court of appeals also noted that nothing in the trial court’s ruling indicated that the court gave much weight to the premarital cohabitation.

Likewise, the court of appeals found no abuse of discretion in ordering $1,500 per month in spousal maintenance because it was “approximately 25% of [Heath]’s income, which is not unusual.”