This is Part III (third and last) of the 2022 Arizona family court appellate review. The Saba/ Femiano cases, which I wrote about here, discussed the calculation of a community interest in real property where one party signed a Disclaimer Deed during the marriage (thus making the real property someone’s separate property).
The Arizona Supreme Court took up the conflicting calculations set out in Saba v. Khoury (Court of Appeals) and Femiano v. Maust and resolved the issue in favor of the Saba calculation. The Femiano was disapproved and the Drahos/Barnett formula for calculating community equitable liens in separate property was affirmed. The Supreme Court decision establishes that the “Drahos/Barnett formula is an appropriate starting point for courts to calculate a marital community’s equitable lien on a spouse’s separate property…. In our view, a fair return on the amount paid to reduce the principal balance of the mortgage would be the rate of return that money would have otherwise earned for the community and may be reimbursed by a share of the increase in the home’s value proportionate to the amount paid to reduce the principal balance of the mortgage. The Drahos/Barnett formula accounts for this return: it reimburses the community for the contributions made and apportions a share of the property’s increase in value based on those contributions. The Drahos/Barnett formula therefore properly recognizes the nature of the separate property as separate while apportioning a fair and equitable reimbursement to the community”.
It’s important to note, however, that the Supreme Court in Saba does not mandate the use of the Saba/ Drahos/ Barnett calculation in every case, and trial courts should consider additional factors which are unique to a given case.
And finally, an important appellate procedural issue was covered in 2022 consolidated opinions. Rule 78, Arizona Rules of Family Law Procedure, and whether or not certain family court orders are “final” for purposes of appeal, has been an ongoing issue in family court cases for several years. The consolidated Blos and Hopkins cases were decided to determine whether a motion to alter or amend a special order under Arizona Rule of Family Law Procedure 83 tolls the appeal time to appeal from a special order that includes finality language under Arizona Rule of Family Law Procedure 78(C). The answer is no, because a Rule 83 Motion was not proper following entry of a “special order.” In dismissing both of these appeals as untimely, the COA stated that “a special order after final judgment is not a final judgment under Rules 78(b) or (c) (citing Yee, see below) . . . [n]or can the family court transform the nature of a special order into a final judgment by adding Rule 78 finality language. (“[T]he inclusion of Rule 78 language alone does not make a judgment final and appealable; the certification also must be substantively warranted.”)
Also note that Rule 78 was amended in August, 2022 in R-22-0005 to attempt to further define judgment to make it clearer when an order is appealable (and when a Rule 83 Motion applies). The Petition requesting the change to Rule 78 noted that the 2021 opinion Yee v. Yee (2021) clarified jurisdictional issues in post-judgment (typically post-decree) appeals in Family Court proceedings. But Yee noted conflicting approaches taken in recent appellate decisions, both in addressing appellate jurisdiction over orders resolving post-decree requests as well as the applicability of Family Rule 78 to the resolution of post-decree requests. Yee noted that the Family Rules did not reflect a requirement that a post-judgment ruling must resolve all relief requested in a post-judgment request before that ruling is appealable. So, there was need for clarity in the Family Rules, particularly given the number of post-decree actions in family cases and the large number of self-represented parties in family court proceedings. The 2022 amendments to Rule 78 were proposed to provide some of that clarity.