Pyeatte Distinguised -- Student Loans, Earning Potential & Divorce
In Jacobsen v. Jacobsen, 2009 WL 5062291 (Ariz.App. Div. 1), Husband appealed from a decree of dissolution that required him to pay certain student loan debt, among other things. Husband filed a motion for new trial regarding the student loan debt and other issues. The court declined to alter its allocation of student loan debt. The Court of Appeals discussed and distinguished Pyeatte v. Pyeatte, 135 Ariz. 346, 357, 661 P.2d 196 (App.1982).
Student Loan Debt
Husband contends the family court abused its discretion by ordering him to pay one-half of Wife's student loan debt, though he concedes that debt was a community obligation. Husband argues Wife was unjustly enriched because she left the marriage with increased earning potential as a nurse practitioner due to the graduate degree she obtained during the marriage, which the community financed without realizing any benefit.
The Court of Appeals held that although increased earning potential based on a degree earned during marriage is not community property subject to division, a spouse who works to allow the other spouse to obtain a degree may, under some circumstances, be entitled to restitution in subsequent divorce proceedings pusuant to its prior ruling in Pyeatte v. Pyeatte, 135 Ariz. 346, 357, 661 P.2d 196, 207 (App.1982), but that was not the case here.
In Pyeatte, the parties agreed wife would work to put husband through law school, then husband would provide financial support while wife earned a graduate degree. Husband obtained his law degree and, shortly thereafter, told wife he “no longer wanted to be married to her.” The Court of Appeals noted that
“[t]he mere fact that one party confers a benefit on another ... is not of itself sufficient to require the other to make restitution.” Restitution is appropriate “only if the circumstances are such that it would be unjust to allow retention of the benefit without compensating the one who conferred it.... One circumstance under which a duty to compensate will be imposed is when there was an expectation of payment or compensation for services at the time they were rendered.”.
The Court of Appeals further stated that
"[a]lthough there was no enforceable contract between the spouses in Pyeatte, the court found their agreement “still has importance in considering [wife's] claim for unjust enrichment because it both evidences [wife's] expectation of compensation and the circumstances which make it unjust to allow [husband] to retain the benefits of her extraordinary efforts.” We also noted the “difficult problem of the ‘working spouse’ claiming entitlement to an equitable recovery where there is little or no marital property to divide and therefore the conventional remedies of property division or spousal maintenance are unavailable.” Finding that the husband “left the marriage with the only valuable asset acquired during the marriage-his legal education and qualification to practice law,” we concluded, “It would be inequitable to allow [husband] to retain this benefit without making restitution to [wife].”
The Court then held that Pyeatte was readily distinguishable from the Jacobsen case because in Jacobsen
"Husband presented no evidence of an agreement regarding Wife's schooling. Additionally, these parties had other assets, including substantial retirement accounts and a home with significant equity. Another distinguishing fact is that Wife worked part-time while attending graduate school, and the community benefited, albeit relatively briefly, from her increased earning potential (Wife obtained a job in 2005 earning approximately $20,000 more per year than she did as a registered nurse). Finally, Husband earns over $10,000 per month, and unlike the non-student spouse in Pyeatte, there is no indication his career or educational goals were affected by Wife's schooling or the timing of the divorce.
As a result, it found that The Honorabloe Judge Gentry-Lewis did not abuse her discretion in requiring the parties to equally share the student loan debt.
