Breitbart-Napp v. Napp – 5/24/2007

June 1, 2007

Arizona Court of Appeals Division One Holds that Superior Court Could Reopen Divorce Decree to Determine Whether Further Relief Under Rule 60 Was Appropriate.

In connection with a complicated divorce proceeding involving numerous business interests, the parties’ dissolution decree incorporated a negotiated property settlement agreement to “be signed by the parties.” Husband and Wife subsequently executed the Property Settlement Agreement (“PSA”), but Wife expressed concerns about the agreement based on alleged disclosure violations she learned about after negotiating the PSA. When executing the PSA, she expressly noted that her signature “shall not constitute [a] waiv[er of] my Rule 60(c) rights concerning Husband’s Rule 26.1 violation regarding this agreement.”

Wife subsequently moved for relief under Rule 60(c), which relief the trial court granted. On appeal, Husband argued that the trial court could not relieve a party pursuant to Rule 60(c) from a property settlement agreement that has not merged into the divorce decree issued by the court. The Court of Appeals framed the issue more narrowly: whether Rule 60(c)(3) can be utilized to allow the court to reopen the approval it has given to a non-merged settlement agreement pursuant to A.R.S. § 25-317(B) (2007). After a lengthy analysis, the Court of Appeals held that whether merged or incorporated by reference, a party could reopen a property settlement agreement under Rule 60(c) because in either case the decree must expressly refer to the court’s approval of the property disposition, and it is that term of the decree – the court’s approval – that is being reopened.

The Court further explained that the rule announced in Norwest Bank (Minnesota), N.A. v. Symington, 197 Ariz. 181, 187, ¶ 26, 3 P.3d 1101, 1107 (App. 2000) – that Rule 60(c)(3) does not require a showing that the outcome of the case would have been different but for the nondisclosure – applies to nondisclosure cases generally, not just to cases involving a judgment on the merits.

The Court further held that the trial court abused its discretion in awarding Wife attorneys’ fees under A.R.S. § 25-324. That statute does not establish a prevailing party standard for awarding fees and costs, but rather requires the court to determine the parties’ financial status. The court awarded fees in July 2005, more than three years after Wife’s last affidavit of financial information and eight months after Husband’s last financial affidavit, which failed to provide the trial court an adequate basis for the award.

The decision was authored by Judge Barker; Judges Portley and Ehrlich concurred.