Kern v. Kern

CourtCourt of Appeals of Arizona
DecidedApril 5, 2018
Docket1 CA-CV 17-0119-FC
StatusUnpublished

This text of Kern v. Kern (Kern v. Kern) is published on Counsel Stack Legal Research, covering Court of Appeals of Arizona primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Kern v. Kern, (Ark. Ct. App. 2018).

Opinion

NOTICE: NOT FOR OFFICIAL PUBLICATION. UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL AND MAY BE CITED ONLY AS AUTHORIZED BY RULE.

IN THE ARIZONA COURT OF APPEALS DIVISION ONE

In re the marriage of:

ROBERT L. KERN, Petitioner/Appellee,

v.

JENNIFER KERN, Respondent/Appellant.

No. 1 CA-CV17-0119 FC FILED 4-5-2018

Appeal from the Superior Court in Maricopa County No. FC2015-008842 The Honorable Timothy J. Thomason, Judge

AFFIRMED IN PART; REVERSED AND REMANDED IN PART

COUNSEL

Modern Law, Mesa By Billie Tarascio, Stanley D. Murray Counsel for Respondent/Appellant

The Cavanagh Law Firm, P.A., Phoenix By Philip C. Gerard, Helen R. Davis Counsel for Petitioner/Appellee KERN v. KERN Decision of the Court

MEMORANDUM DECISION

Judge Jon W. Thompson delivered the decision of the Court, in which Presiding Judge Kenton D. Jones and Judge Jennifer M. Perkins joined.

T H O M P S O N, Judge:

¶1 Jennifer Kern (“mother”) appeals from the family court’s judgment in this dissolution matter. Mother asserts the family court’s child support determination, the distribution of separate and community property as well as community debts, and the apportionment of attorneys’ fees were an abuse of discretion. After a review of the issues on appeal, we affirm as to the division of property and debts and reverse as to the child support award and attorneys’ fees award.

FACTUAL AND PROCEDURAL HISTORY

¶2 Mother and Robert L. Kern (“father”) (mother and father are collectively referred to as “parents” or “the parties”), met when she was working for his company. They had a daughter (“child”) together in 2005 and were married in 2008; there was no prenuptial agreement. Father filed a petition for dissolution in November 2015. Parents reached select resolutions prior to trial, including as to the parenting schedule, certain assets, and temporary orders.1

¶3 As to the remaining issues, a trial was held, at which both parents and their five experts testified. The family court issued a 45-page order addressing spousal maintenance, child support, and the distribution of separate and community property as well as community debts.

¶4 At the outset, it must be noted that father is a person of significant personal wealth arising primarily from an inheritance of a large amount of Disney stock.2 The Disney stock was originally obtained by

1 The parties have engaged in mediation, arbitration, and ultimately a trial.

2Father held 430,214 shares of Disney stock at the time of marriage to mother.

2 KERN v. KERN Decision of the Court

father’s family in the course of the sale of his grandfather’s business to a company subsequently purchased by Disney. At the time of the parties’ marriage, the value of father’s stock portfolio exceeded $17 million. At the time of trial, father’s stock portfolio was valued in excess of $44 million— 88 percent of which was the legacy Disney stock. Father had practiced law and had also owned a business, but as of the time of trial, he had not worked a “regular” job since 2007. From his stock portfolio, father receives approximately $800,000 a year in dividends; the family lived off these funds.3 Father also occasionally sold Disney stock as needed for additional cash.

¶5 The family court found the Kerns enjoyed an exceptionally high standard of living. “They had a large, expensive home in Paradise Valley. They travelled extensively. They bought expensive gifts. They sent the Child to expensive schools. The couple’s lifestyle cost on average over $50,000 per month.” Testimony from one expert placed monthly expenditures at $54,166—with spending at Disney facilities making up the second largest single budget item.4

¶6 The family court found that the Child Support Guidelines (“Guidelines”) dictated father pay $538.29 monthly, but that circumstances dictated an upward deviation. Father volunteered to pay $1,000 a month in addition to health insurance and certain educational and recreational expenses.5 The family court found that an award of $1,000 a month, in

3Father’s adjusted gross income (including interest, dividends, and capital gains) for the four prior years prior to trial was: 2012 $1,048,582; 2013 $1,493,063; 2014 $1,144,920; 2015, $1,294,799.

4Mother testified that the family went to a Disney property 3-4 times per year and took 2 Disney Luxury Cruises per year. Mother’s expert testified, without dispute, that the family spent approximately $36,000 a year on Disney-related trips.

5The cost of minor child’s school tuition and recreational expenses were not explored at trial. Father testified that minor child’s health insurance would cost $1,400 per month. Mother’s affidavit of financial information listed minor child’s pageant expenses at $16,000 per year.

3 KERN v. KERN Decision of the Court

addition to those expenses, was in the best interests of the child. This was a reduction from the $1,500 in child support set out in the temporary orders.

¶7 The family court found mother’s reasonable monthly expenses to be $8,300 per month. Given the length of the marriage, mother’s work history and work prospects, and that she was a stay-at-home mother during the marriage who now did not have sufficient property to meet her reasonable needs, the court awarded her spousal maintenance of $8,300 a month for two years, followed by three additional years of $6,000 maintenance per month.6, 7 Father’s expert testified that mother could return to full-time retail work and earn $31,000 a year; at the time of trial she was starting to work as a retail clerk at Tiffany’s.

¶8 The nature of father’s assets, whether sole and separate or community property, monopolized much of the hearing.8 Father testified extensively regarding his financial accounts, stock holdings, and the manner in which he managed those accounts. He also testified as to his real estate holdings. Eventually, the family court found all of the stock/retirement/investment accounts to be father’s sole and separate property.9 In support of this finding, for example, it found that father was

6The stipulated temporary orders provided for spousal maintenance in the amount of $10,500 per month.

7 Pursuant to father’s motion for reconsideration of the front-loading of spousal maintenance and the tax implications, the court modified the schedule of spousal support. The result was a schedule that provided mother with almost exactly the same amount of support [$415,200] over the same five-year period, with multiple step-downs.

8Mother’s separate property consisted primarily of a premarital individual retirement account (“IRA”), five bank accounts, and approximately $350,000 in jewelry gifted to her by father. Mother’s accounts, including the IRA, at the time of service of the petition for dissolution, cumulatively totaled less than $75,000.

9 Father testified to holding at least twenty-one companies’ stock in his portfolio. Of those, besides Disney, he was also gifted or inherited stock in Exxon, AT&T, Boeing, SW Gas, Raytheon, and General Motors, among others. Prior to his marriage to mother, father purchased, among others, Verizon, Pepsi Co., Citigroup, and Johnson & Johnson.

4 KERN v. KERN Decision of the Court

not an active investor—there were only 22 purchases of stock and 121 sales of stock to the large Schwab account, #2203—during the seven-year marriage.10 It found the real estate, other than the marital home, to be father’s sole and separate property purchased or gifted to him prior to the marriage. It awarded father nearly $50,000 in bank accounts as his sole and separate property. A BMO Harris bank account, #7275, valued at $4,522.84 and a US Bank account, #9323, were identified as community property.

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Kern v. Kern, Counsel Stack Legal Research, https://law.counselstack.com/opinion/kern-v-kern-arizctapp-2018.