This case involved the liability of an Arizona couple’s marital community under a contract that was subject to Georgia law. In the case, a Georgia husband (Ogle) and an Arizona husband (Richmond) executed a contract in Georgia, that was to be performed in Georgia, and that specified it was to be governed by Georgia law. The parties subsequently sued each other, and their wives, in Arizona. Berk & Moskowitz represented Ogle at trial.
The trial court dismissed the claims against Ogle’s wife because Georgia is not a marital community property state. Richmond’s wife then moved to dismiss the claims against her, arguing that the contract was governed by Georgia law, therefore, Georgia law should govern the Richmonds’ marital community rights and liabilities as well. The trial court agreed and dismissed Richmond’s wife from the case, but refused to enter final judgment against her at that time. The case proceeded to trial (in the absence of Richmond who failed to appear) without further input or defense from Richmond’s wife, and a judgment for $1,037,060 was entered in favor of Ogle against Richmond.
On behalf of Ogle, Berk Law Group, P.C. appealed the dismissal of Richmond’s wife. The Arizona Court of Appeals reversed the trial court’s dismissal of Richmond’s wife, holding that, notwithstanding the choice of law provision in the contract, Arizona law governs the obligations of marital communities domiciled in Arizona. The Court of Appeals reasoned that applying Georgia law to immunize the Richmond’s marital community from liability “would effectively abrogate” Arizona’s community property laws, and particularly A.R.S. § 25-215(c), which provides that “community property is liable for a spouse’s debts incurred outside of this state during the marriage which would have been community debts if incurred in this state.”
The court of appeals further ordered that, on remand, Richmond’s wife was entitled to dispute whether, or to what extent, the Richmond’s marital community was liable for Richmond’s debt, but that she could no longer dispute the debt itself.