Montgomery v. Divine, 1 CA-CV 16-0187-FC

Steven Montgomery (Husband) owned a house as his separate property before marrying Melissa Divine (Wife) in 2006; Wife was served with dissolution papers in Sept. 2014.
Wife claimed community funds were used to pay two loans on the house and sought an equitable community lien for community contributions to mortgage principal (originally seeking $44,922.23).
Husband acknowledged community payments toward the loans but asserted the house had depreciated during the marriage and there was no meaningful increase in equity.
Evidence: Husband testified to loan amounts and reductions; a 2005 loan/refinance ~ $267,782 and a home-equity loan originally between $55,000–$65,000 reduced to ~$35,914.77 by mid‑2014; an appraisal in Sept. 2014 valued the house at $350,000 and a Zillow printout at $363,813.
Trial court found the house was Husband’s separate property but that community payments reduced principal during the marriage, increasing Husband’s equity by $56,059.96; awarded Wife half ($28,029.98) as an equitable lien.
Husband appealed; the Court of Appeals reviewed mixed questions de novo and factual findings for clear error.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether evidence established appreciation or depreciation such that a lien could be calculated	Husband argued the evidence did not show appreciation/depreciation, so lien calculation was impossible	Court and Wife relied on Husband’s own statements/testimony that the house depreciated	Court found sufficient evidence Husband had admitted depreciation; lien could be calculated
Whether there remained positive equity to support a lien	Husband contested that positive equity remained	Court relied on appraisal/Zillow values and loan balances showing positive equity	Court found positive equity and therefore entitlement to community lien
Whether court had adequate evidence to calculate principal reductions	Husband claimed court lacked specific evidence and improperly computed reductions	Court used Husband’s testimony, bank statements, and reasonably averaged ranges where Husband provided ranges	Court’s computation of principal reductions was supported by the record and not erroneous
Whether equitable lien can be based on reduction of non‑real‑estate debt	Husband contended lien cannot flow from reduction of non‑real‑estate related debt	Court relied on precedent focusing on reduction in indebtedness attributable to community funds, not debt nature	Court held lien proper because community funds reduced indebtedness on the real property

Valento v. Valento, 225 Ariz. 477 (App. 2010) (when community funds pay mortgage on separate property, community may have an equitable lien; treatment differs for appreciation vs. depreciation)
Barnett v. Jedynak, 219 Ariz. 550 (App. 2008) (discusses calculation of community interest when separate property appreciates)
Drahos v. Rens, 149 Ariz. 248 (App. 1985) (framework for calculating community interest on appreciation)