Equitable Defense of Waiver Allowed Husband Credit for Spousal Maintenance Payments Made Directly to Wife

Equitable Defense of Waiver Allowed Husband Credit for Spousal Maintenance Payments Made Directly to Wife

Trial court properly credited husband with spousal maintenance payments made directly to the wife and not to the Arizona Support Payment Clearinghouse; equitable defense of waiver meant husband’s direct payments were permitted by law after court hearing.

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Equitable defense of waiver allowed husband credit for spousal maintenance payments made directly to wife

Gus Schultz v. Taryn Schultz

Trial Court Rejected Wife’s Hyper-Technical Argument for Payment Arrears

According to the spouses’ consent decree of legal separation which was converted to a divorce, husband was to pay spousal maintenance for three years in the amount of $3,000.00 per month. When he fell behind on this obligation, the wife petitioned for support nonpayment claiming $35,000.00 in arrearages. Admitting to some arrears, husband sought credit for the $18,210.00 in payments he made directly to wife. He provided the cancelled checks cashed by the obligee-spouse as proof of payment.

After the hearing, the trial court credited husband for the direct payments over wife’s argument that ARS § 46-441(H) prohibits crediting for direct payments, other than to the Clearinghouse, “unless the direct payments were ordered by the court, or made pursuant to a written support agreement by the parties.”

The trial court reasoned, first, that the parties’ consent decree was a written agreement that did not specifically prohibit husband from paying wife directly. And second, wife failed to assert ARS § 46-441(H) as a statutory defense when she accepted direct support payments. The court found wife’s “hyper-technical argument” unreasonable given she did not dispute the payments. Husband was credited for the direct payments made and awarded $1,025.00 in attorneys’ fees. Wife appealed.

Direct Support Payments Not Absolutely Prohibited

On review, the Court of Appeals analyzed two Arizona statutes and the parties’ competing arguments. On the one hand, wife argued the trial court erred because ARS § 46-441(B, H) precluded crediting obligor for direct support payments to the obligee in the absence of a court order or written agreement between the parties.

On the other hand, husband argued that ARS § 25-510(G) supported the trial court’s ruling in that:

“Any direct payments not paid through the Clearinghouse or any equitable credits of principal or interest permitted by law and allowed by the court after a hearing shall be applied to support arrearages as directed in the court order. The court shall make specific findings in support of any payments or credits allowed.”

In its final analysis, the appeals court determined that ARS § 25-510 authorizes trial courts to credit direct support payments “if the obligor meets his burden of proving he made support payments not shown in the Clearinghouse records.” This husband met the burden of proof with cancelled checks. ARS § 25-510(G) contemplates a court hearing to “determine whether an obligor is entitled to credit for ‘[a]ny direct payments not paid through the Clearinghouse or any equitable credits of principal or interest permitted by law[.]’”

Equitable Defense of Waiver Available in Divorce Proceedings

Interpreting ARS § 46-411 less narrowly than wife through her divorce attorney, the Court of Appeals noted that ARS § 25-510(G) lets the trial court allow credit for direct payments to an obligee when such direct payments are “permitted by law.” And because dissolution of marriage actions are considered to be equitable actions, the trial court has full equitable powers. One equitable defense in Arizona is a waiver to claims for support arrearages.

Did the husband establish the equitable defense of waiver? Yes. The trial court properly credited husband’s direct support payments to the wife because those payments were permitted by law.

To establish waiver, the obligor must show by “clear and compelling evidence” that the obligee-spouse “voluntarily and intentionally abandoned a known right.” According to the spouses’ consent decree, husband was to make spousal maintenance payments by wage assignment through the Clearinghouse. However, the wife accepted each of his direct payments without raising any statutory defense.

Also, the appeals court found that husband’s hands were clean (in equity) as he sought no reduction or relief from the support arrears he owed. Nor did the wife dispute husband’s having made payments to her directly. Therefore, the wife “waived her claim for arrearages resulting from the direct payments.” Furthermore, not crediting husband $18,210.00 for his direct support payments would mean a windfall for the wife. That result would be inequitable.

The Court of Appeals affirmed the trial court’s rulings. Because direct payments were permitted by law given husband’s equitable defense of waiver, the trial court did not err in crediting the direct payments. As of December 31, 2015, the total spousal maintenance arrearages were held to be $15,724.64 plus interest in the amount of $1,245.61. The lower court’s grant of attorneys’ fees to the husband was also affirmed.

Schultz v. Schultz, 1 CA-CV 16-0316 FC (Ariz. Ct. App. July 20, 2017)

For precise language, read the court’s original opinion. Legal citations omitted.

To learn more about support for a spouse in Arizona divorce law, take a look at our discussion regarding important spousal maintenance details.