Interest on a Judgment in an Arizona Divorce Decree
Mr. Skirboll (Husband) appealed a court order from his divorce trial. The order applied a ten percent interest rate to a judgment entered against him. The trial court denied his request to offset monies his wife was ordered to pay a creditor. The trial court ordered interest to being accruing sixty days after the entry of the divorce decree. Mr. Skirboll appealed those orders to the Arizona Court of Appeals in the case of Reichert v. Skirboll (No. 1 CA-CV 140178). The Court of Appeals issued this unpublished decision in that case.
A Background of the Case: Reichert v. Skirboll
Mrs. Reichert (Wife) petitioned for dissolution of marriage in 2008. There were no minor children involved. Both parties testified at the trial. Testimony indicated Husband received $15,400 in settlement proceeds from a civil lawsuit. He kept all of the money and did not share any of it with his wife. In addition, the parties had credit card debt to divide.
Husband did not pay the $2,000 per month temporary spousal maintenance ordered by the court. At the final trial, the judge ordered him to pay Mrs. Reichert $57,221.52. That total included $7,700 for Wife’s half of the settlement (to be paid within 60 days of the entry). It also included $20,000 in spousal maintenance arrears. Lastly, the credit card balance was split evenly with Wife ordered to pay her half directly to the creditor.
Husband filed a motion for a new trial regarding spousal maintenance. His basis for doing so was his claim that his wife had a multi-million dollar interest in a Canadian real estate company she failed to disclose. His motion was granted and Wife withdrew her claim for spousal maintenance.
Husband asked the trial judge to issue a new Decree of Dissolution of Marriage to remove the $20,000 judgment for spousal maintenance arrears. He also asked the court to dismiss Wife’s claims due to her failure to disclose information. The family court amended the decree and removed the award of spousal maintenance. The judge, however, left the remaining provisions of the couple’s original decree unchanged. Husband appealed the trial court’s refusal to make the additional requested changes to the decree.
Back to Court: Reichert v. Skirboll
One year later, Wife petitioned to have the decree enforced alleging that the $37,221.52 had never been paid. She also requested that interest be added to the awarded amount. She did not specify a date when interest should begin to accrue.
At the hearing, Husband argued he sent payment. He noted an uncashed check for the amount of the judgment minus an amount he offset from the judgment. That offset amount was based upon the 50% of the credit card debt he claimed his former wife did not pay as ordered. Testimony established the check was sent to Wife on condition that she accept the amount of the check in full satisfaction of the judgment. Husband argued the court could not impose a ten percent interest rate on the monies owed to Wife or, if interest were to accrue, it should accrue from the date of the amended decree.
The Trial Court Ruling
The court ordered the decree would be enforced and awarded Wife $37,221.52 plus ten percent interest (per A.R.S. Section 44-1201(B)). The interest was ordered to begin accruing on the date of the amended decree. It was also noted by the court that Husband was not entitled to an offset. The reason was that Wife was ordered by decree to pay her portion of the debt directly to the creditor. Further, Husband did not provide documentation prove he paid the debt on Wife’s behalf.
The judge ordered the husband to pay 10% interest on the $37,221.52 judgment awarded to Wife. Interest was to begin sixty days after the original decree was entered. The court chose sixty days because the original order provided him with sixty days to pay Wife $7,700 for her share of the lawsuit settlement. The trial court, therefore, concluded the most logical result was to apply the same deadline for all interest accruals.
On Appeal: Reichert v. Skirboll
Interest on the Judgment
Husband argued the judge made an error in using a ten percent interest rate to accrue sixty days after the original decree was issued. He also argued the judge made an error in not offsetting the amount Wife was ordered to pay, but did not, to the credit card debt. Husband cited Arizona Revised Statute Section 44-12-1(B) in support of his argument the court should have imposed a lower interest rate.
The court of appeals recognized the statute relied upon by Husband was modified from a 10% interest rate on judgments to a lower rate. The change in the statute occurred after the parties’ divorce decree was signed by the judge. The change to the statute applies to all judgments entered on or after the date of the amendment. That change, therefore, clearly does not apply to the judgment entered in this case. The trial judge, therefore, was correct in applying a 10% interest rate to the judgment.
Date Interest Was to Begin Accruing
Husband argued the judgment could not be a final until the date of the amended decree. Therefore, he argued interest should not have been determined from the original divorce decree date. The appeals court cited the cases of Cockrill v. Cockrill and Malecky v. Malecky. It also cited Rule 78 of the Arizona Rules of Family Law Procedure. The court of appeals concluded a decree of dissolution is a final judgment and interest is permitted to begin accruing if the parties divorce decree resolved the all of their claims.
The court of appeals concluded the trial court did, however, error in ordering the interest to begin accruing sixty days after the entry of the divorce decree. The court of appeals ruled the interest should have been ordered to accrue immediately upon the entry of the original divorce decree. Interest begins to accrue when the precise amount is determined and a judgment is entered for that amount.
Off The Setting Judgment
The Arizona Court of Appeals considered Husband’s arguments for an offset for the amounts Wife did not pay to the credit card companies. However, the court of appeals did not conclude the judge abused his discretion when denying that offset. The reason was simple. Both the original, as well as the amended divorce decree, ordered Wife to pay her share of the debt directly to the creditor, not to Husband.
Husband requested repeatedly that Wife pay her share of the debt to him and the family court refused. Husband testified regarding the debt, but provided no documentation proving he made the payments to the creditors on behalf of Wife. Husband simply could not establish from the record if he had paid those creditors or not.
Conclusion: The Court of Appeals of Arizona on Reichert v. Skirboll
The Court of Appeals of Arizona affirmed the family court’s order to impose the ten percent interest rate and the ruling that the Husband was not entitled to an offset for Wife’s share of the debt. The appellate court also modified the accrual date of the interest to the original decree’s date of entry.