Shurman v. Shurman
1 CA-CV 21-0038-FC
Ariz. Ct. App.Sep 21, 2021Background
- Married couple co-owned a bed-and-breakfast business and multiple rental properties in Arizona; finances were commingled and business records were sparse or nonexistent.
- Parties took three loans (totaling about $280,000) for business/real-estate purposes; loans did not directly encumber the properties in some instances.
- At dissolution, superior court found the business had "zero" value (no valuation evidence), valued real property at $983,772.98, and awarded the business and real property to Wife while ordering Wife to pay Husband $144,483.24 in equalization payments.
- Husband moved under Ariz. R. Fam. Law P. 83 to alter or amend the decree; the court granted the motion, concluding the original property division was inequitable and ordering valuation and sale of the business and real property with proceeds divided equally.
- Wife appealed the Rule 83 ruling; the Court of Appeals affirmed, finding the original zero valuation and debt allocation erroneous and that substantially equal division was required absent a sound reason otherwise.
Issues
| Issue | Wife's Argument | Husband's Argument | Held |
|---|---|---|---|
| Whether the court erred in granting Husband’s Rule 83 motion to alter the decree | Original decree was supported by evidence (tax returns showed minimal profits) and no larger equalization payment was needed because business had no value | Original division was inequitable: business had value, loans were business-related, and assets/debts were misallocated | Affirmed: court did not abuse discretion in granting Rule 83; original valuation and allocation were erroneous |
| Whether the business could be valued at zero | Tax returns and reported minimal profits supported zero value | Business produced profits and paid personal expenses; valuation at zero was unsupported | Court erred in assigning zero value; business should be valued and proceeds divided equally |
| Whether offsetting property value by business loans and allocating half the loans to Husband was proper | Offset and allocation were proper under original division | Loans tied to business; reducing real-property value by loan amount and not crediting Husband with business interest was inequitable | Court erred in reducing property value by the loans and in debt allocation; sale and equal division ordered |
| Whether unequal division could be justified by children’s housing stability or earning capacities | Stability for children and Wife’s higher historic income justified awarding property/business to Wife | No sound reason to depart from substantially equal division; children were nearly adult and evidence did not support impinging property interests | No sound reason shown to depart from substantially equal division; court permissibly found earning capacities did not justify unequal award |
Key Cases Cited
- Stock v. Stock, 250 Ariz. 352 (App. 2020) (standard of review for Rule 83 motions)
- Toth v. Toth, 190 Ariz. 218 (1997) (marital property should be divided substantially equally absent sound reason)
- Kelsey v. Kelsey, 186 Ariz. 49 (App. 1996) (asset valuation must be based on recognized methods and evidence)
- Rogone v. Correia, 236 Ariz. 43 (App. 2014) (a newly assigned judge may consider post-judgment motions without jurisdictional problem)
- Dole v. Blair, 248 Ariz. 629 (App. 2020) (court may consider children’s needs but may not impair either party’s property interests)
- Kohler v. Kohler, 211 Ariz. 106 (App. 2005) (apportionment of community property rests within the superior court’s discretion)