## Facts

- Wife petitioned for dissolution in 1991 after a long, high-asset marriage marked by substantial luxury spending.
- During the marriage, the parties acquired at least 45 jewelry items purchased with community funds totaling over $1 million.
- A 1987 Rolls-Royce was acquired during the marriage, in part by trading in an older Rolls-Royce.
- Wife claimed most jewelry and the Rolls-Royce were gifts from Husband and therefore her separate property; Husband claimed the items were acquired for community investment or use.
- Wife sought disqualification of Husband’s counsel based on her prior, brief consultation with another lawyer at the same firm before Husband retained the firm.
- The trial court declined to enforce an antenuptial agreement, treated certain debts (including a CIT obligation) as community debts, classified some jewelry as separate and the remainder (and the Rolls-Royce) as community, entered a waste judgment against Wife, ordered sale of certain community property to pay community debts, ordered Wife to reimburse Husband for separate funds used to pay community debt, and denied Wife attorneys’ fees.
- Wife appealed multiple rulings on property classification, debt allocation, waste, counsel disqualification, enforcement of the antenuptial agreement, sale and reimbursement orders, and fees.

## Issues

1. Whether the trial court abused its discretion by denying Wife’s motion to disqualify Husband’s counsel based on Wife’s prior consultation with another attorney at the same firm.
2. Whether the trial court erred by refusing to enforce the parties’ antenuptial agreement.
3. Whether the trial court erred by classifying the CIT obligation as a community debt.
4. Whether the trial court erred by classifying certain jewelry as community property rather than Wife’s separate property by gift.
5. Whether the trial court erred by classifying the 1987 Rolls-Royce as community property rather than Wife’s separate property by gift.
6. Whether the trial court abused its discretion by entering a waste judgment against Wife for dissipation of community assets.
7. Whether the trial court erred by ordering community property sold to satisfy community debts.
8. Whether the trial court abused its discretion by ordering Wife to reimburse Husband for separate funds used to satisfy community debts.
9. Whether the trial court abused its discretion by denying Wife an award of attorneys’ fees and costs.

## Decision

- The court of appeals affirmed the denial of Wife’s motion to disqualify Husband’s counsel.
- The court of appeals affirmed the refusal to enforce the antenuptial agreement.
- The court of appeals affirmed the classification of the CIT obligation as a community debt.
- The court of appeals affirmed the classification of disputed jewelry as community property where Wife failed to prove the elements of an interspousal gift.
- The court of appeals affirmed the classification of the 1987 Rolls-Royce as community property.
- The court of appeals affirmed the waste judgment against Wife.
- The court of appeals affirmed the order requiring sale of community property to pay community debts.
- The court of appeals affirmed the reimbursement order for Husband’s use of separate funds to pay community obligations.
- The court of appeals affirmed the denial of Wife’s request for attorneys’ fees and costs.

## Legal Principles

- Property and debts acquired or incurred during marriage are presumptively community; the spouse claiming separate characterization bears the burden of proof.
- An interspousal gift requires proof of (1) donative intent, (2) delivery, and (3) vesting of irrevocable title upon delivery; possession or primary use alone does not establish a gift of a community asset.
- Symbolic or ceremonial presentation of an item does not, by itself, prove intent to convert community property into the other spouse’s separate property.
- In dividing community property, the trial court has discretion to award relief for waste (dissipation) of community assets and to structure orders to satisfy community obligations, including sale of property.
- A spouse may be entitled to reimbursement when separate funds are used to satisfy community debts, depending on the evidence and equitable allocation.
- Motions to disqualify counsel and requests for attorneys’ fees in dissolution proceedings are reviewed for abuse of discretion, with deference to the trial court’s factual findings and equitable judgments.

## Conclusion

The court of appeals upheld the dissolution decree’s principal rulings, including refusal to disqualify counsel and enforce the antenuptial agreement, community classification of key assets and debts, and equitable remedies for waste, debt payment, reimbursement, and fees, emphasizing that interspousal “gifts” of expensive items require clear proof of donative intent and irrevocable transfer beyond mere delivery or use.


In re Marriage of Hrudka, 186 Ariz. 84, 919 P.2d 179 (Ct. App. 1996)