In re: James L. Osborn, Jr. Central States Natural Gas, LLC Central States Energy, LLC, AZ-17-1083-KuFS (9th Cir. BAP 2017)

United States Bankruptcy Appellate Panel for the Ninth Circuit


                                                         FILED
                                                          NOV 09 2017
 1                        NOT FOR PUBLICATION
                                                      SUSAN M. SPRAUL, CLERK
 2                                                      U.S. BKCY. APP. PANEL
                                                        OF THE NINTH CIRCUIT
 3                UNITED STATES BANKRUPTCY APPELLATE PANEL
                            OF THE NINTH CIRCUIT
 4
 5   In re:                        )      BAP No. AZ-17-1083-KuFS
                                   )
 6   JAMES L. OSBORN, JR.; CENTRAL )      Bk. Nos.  2:14-bk-03079-BKM
     STATES NATURAL GAS, LLC;      )                2:14-bk-03080-BKM
 7   CENTRAL STATES ENERGY, LLC,   )                2:14-bk-03081-BKM
                                   )           (jointly administered)
 8                  Debtors.       )
     ______________________________)      Adv. No. 2:16-ap-00061-BKM
 9                                 )
     SHERYL OSBORN,                )
10                                 )
                    Appellant,     )
11                                 )
     v.                            )      M E M O R A N D U M*
12                                 )
     DAVID M. REAVES, Chapter 7    )
13   Trustee,                      )
                                   )
14                  Appellee.      )
     ______________________________)
15
                  Argued and Submitted on October 26, 2017
16                           at Phoenix, Arizona
17                        Filed - November9, 2017
18             Appeal from the United States Bankruptcy Court
                         for the District of Arizona
19
         Honorable Brenda K. Martin, Bankruptcy Judge, Presiding.
20                 _____________________________________
     Appearances:   Chris D. Barski of Barski Law argued for
21                  appellant Sheryl Osborn; Alan R. Costello of
                    Costello Law Firm argued for appellee, David M.
22                  Reaves, Chapter 7 trustee.
                   _____________________________________
23
     Before:   KURTZ, FARIS, and SPRAKER, Bankruptcy Judges.
24
25
26       *
          This disposition is not appropriate for publication.
27 Although it may be cited for whatever persuasive value it may
   have (see Fed. R. App. P. 32.1), it has no precedential value.
28 See 9th Cir. BAP Rule 8013-1.

                                    -1-
 1           Sheryl (Sheryl) and James L. Osborn, Jr. (James)
 2   (collectively, the Osborns) entered into a premarital agreement
 3   (PMA) in Kansas whereby the parties agreed to hold their
 4   existing and future acquired property as separate property.         The
 5   Osborns agreed that the PMA would be governed by Kansas law.
 6           The Osborns moved to the community property state of Texas
 7   and executed a waiver of community property laws (Waiver),
 8   restating their intent to keep their property separate.
 9           The Osborns then moved to the community property state of
10   Arizona where James filed a chapter 111 bankruptcy petition
11   which was converted to chapter 7.         Sheryl moved for declaratory
12   relief relating to property which she asserted was her sole and
13   separate property and not subject to James’ creditors.        The
14   chapter 7 trustee, David M. Reaves (Trustee), argued that the
15   PMA and Waiver were not valid as to James’ creditors because the
16   Osborns failed to record them as required under Ariz. Rev. Stat.
17   (A.R.S.) § 33-413.     The bankruptcy court agreed with Trustee.
18   Sheryl moved for reconsideration, which the bankruptcy court
19   denied.     This appeal followed.
20           We are called upon to interpret A.R.S. § 33-413 which
21   requires the recordation of agreements made in consideration of
22   marriage in order to be valid against creditors without actual
23   notice.     No Arizona court has interpreted the statute, much less
24   cited it.     As an issue of first impression, we predict that the
25
         1
26        Unless otherwise indicated, all chapter and section
   references are to the Bankruptcy Code, 11 U.S.C. §§ 101-1532.
27 “Rule” references are to the Federal Rules of Bankruptcy
   Procedure and “Civil Rule” references are to the Federal Rules of
28 Civil Procedure.

                                         -2-
 1   Arizona Supreme Court would interpret A.R.S. § 33-413 as the
 2   bankruptcy court did.      Accordingly, we AFFIRM.
 3                                    I. FACTS
 4            James filed an individual chapter 11 petition on March 9,
 5   2014.      Sheryl, allegedly a member of Central States Natural Gas,
 6   LLC (CSNG), signed and filed CSNG’s chapter 11 petition on the
 7   same date.      James, as a member of Central States Energy, LLC
 8   (CSE), signed and filed CSE’s chapter 11 petition at the same
 9   time.      The bankruptcy court later entered an order authorizing
10   joint administration of the three cases.       Still later, the cases
11   were converted to chapter 7, and Mr. Reaves was appointed the
12   chapter 7 trustee for the estates.2
13   A.       Declaratory Relief:   Ownership Of CSNG
14            Sheryl filed a motion to obtain a declaratory ruling that
15   she was the 100% owner of CSNG, and thus her interest was not
16   property of James’ bankruptcy estate.       Sheryl asserted her
17   ownership based on an operating agreement which showed her as
18   the sole member.
19            She also relied upon the 1990 PMA whereby the Osborns
20   agreed to keep all property separate.       The PMA provided that
21   “separate property” shall include not only all real and personal
22   property owned at the time of their marriage, but also “all
23   other property, assets, or estate which may be purchased,
24   acquired or received in any manner by each of the parties after
25   their marriage, which includes but is not limited to any shares
26
          2
27        In CSNG’s case, Mr. Reaves was disqualified and replaced
   by trustee Lothar Goernitz. CSNG’s administratively insolvent
28 case was closed in August 2017.

                                        -3-
 1   of stock, partnership interest or similar property from any
 2   business or company formed by such party or with any other
 3   person.”   The PMA further stated that the parties intended to
 4   make their residence after marriage in the state of Kansas, and
 5   thus the agreement “shall be governed by the laws of Kansas.”
 6   The schedule attached to the PMA listed various assets and
 7   liabilities of James and showed his net worth as $26 million
 8   while Sheryl’s was $75,000.
 9        In support of her motion, Sheryl also relied upon the
10   Waiver which was executed by Sheryl and James in 1995 after they
11   moved to Texas.   There, the parties agreed that any assets
12   titled in their individual names were to remain the separate
13   property of each of them and that they did “not desire to have
14   any of their assets treated as community property.”   The Waiver
15   stated that the parties each had formed individual trusts and
16   that the assets titled in the name of each of the trusts as well
17   as any assets that were titled in each of their individual names
18   were to remain the separate property of each them, except as may
19   otherwise be provided under the terms of the PMA.
20        Based on the operating agreement, PMA, and Waiver, Sheryl
21   sought a declaration that her 100% ownership interest in CSNG
22   was not property of James’ bankruptcy estate.
23        In response, Trustee provided evidence of a different
24   operating agreement which showed James as the sole member of
25   CSNG.   Other evidence showing that James was the owner and sole
26   member of CSNG included:
27        ! tax returns showing that James was the proprietor of CSNG
28   in 2008, 2009, 2010, and 2011.    It was not until 2013 where the

                                      -4-
 1   tax return showed Sheryl was the proprietor of CSNG.
 2           ! CSNG applied to the Kansas Secretary of State to do
 3   business in Kansas in March 2008.      The application showed James
 4   as the manager or member, and James signed the application as
 5   manager or member.     Copies of the 2008, 2010, and 2011 annual
 6   reports filed with the Kansas Secretary of State by CSNG showed
 7   that the James L. Osborn, Jr. Revocable Trust was the owner of
 8   CSNG.     These annual reports were signed by James under penalty
 9   of perjury.
10           Trustee alleged that the operating agreement submitted by
11   Sheryl was a duplicate copy of James’ operating agreement with
12   two simple changes: the name of the sole member in paragraph 5
13   and the signature block.     According to Trustee, the preparation
14   and execution of duplicate and essentially identical operating
15   agreements, one for James and one for Sheryl, was “significant
16   and substantial evidence of their fraudulent intent and
17   conspiracy to avoid and defraud creditors.”     Based on his
18   evidence, Trustee contended that Sheryl’s motion should be
19   denied.
20           The bankruptcy court later deemed the contested matter
21   requesting declaratory relief to be an adversary proceeding.3
22   Trustee filed an answer and counterclaim alleging that James’
23   transfer of his ownership interest in CSNG to Sheryl was made
24   with the actual intent to hinder, delay, or defraud creditors.
25
26       3
          Pacific Western Bank (PWB) filed a motion to intervene in
27 the adversary proceeding which the bankruptcy court granted.
   James listed PWB as an unsecured creditor holding a civil
28 judgment against him in the amount of $2.5 million.

                                      -5-
 1   Trustee sought avoidance of the transfer under §§ 544 and 548
 2   and recovery of the asset for the benefit of the estate under
 3   § 550.
 4        The matter proceeded to trial in August 2016.    At a
 5   separate hearing, the bankruptcy court ruled that James was the
 6   owner of CSNG and not Sheryl.    The court next considered
 7   allowing the parties an opportunity to brief the issue whether
 8   the PMA and Waiver were valid against James’ creditors under
 9   A.R.S. § 33-413.    Sheryl asserted that the issue was irrelevant
10   due to the bankruptcy court’s ruling regarding the ownership of
11   CSNG.    Trustee argued that the issue was relevant since the
12   Osborns contended that Sheryl owned substantial jewelry,
13   automobiles, and other business entities as her sole and
14   separate property.    The bankruptcy court authorized further
15   briefing by the parties.
16        The court later entered a final judgment denying Sheryl’s
17   request for declaratory relief and finding that James was, and
18   always had been, the sole member of CSNG.
19   B.   Applicability Of A.R.S. § 33-413 To The PMA And Waiver
20        The parties filed simultaneous opening and responsive
21   briefs on the applicability of A.R.S. § 33-413 to the PMA and
22   Waiver.    A.R.S. § 33-413 provides:
23        No covenant or agreement made in consideration of
          marriage shall be valid against a purchaser for
24        valuable consideration, or a creditor not having
          notice thereof, unless the covenant or agreement is
25        duly acknowledged and recorded in the manner and form
          required for deeds and other conveyances.
26
27        Relying on this statute, Trustee asserted that the Osborns’
28   failure to record the PMA and Waiver made them invalid as to

                                     -6-
 1   James’ creditors.    In turn, Sheryl argued that under the plain
 2   language of A.R.S. § 33-413:    (1) the PMA and Waiver were not
 3   “agreements made in consideration of marriage” and (2) the
 4   statute applied to secured creditors and real property and not
 5   to general unsecured creditors or personal property.
 6           In support of her first contention, Sheryl noted that other
 7   Arizona statutes referred to a premarital agreement as a
 8   “premarital agreement” or “marital agreement” and not as an
 9   “agreement made in consideration of marriage.”    A.R.S. § 25-201
10   defines a “premarital agreement” as “an agreement between
11   prospective spouses that is made in contemplation of marriage
12   and that is effective on marriage.”     A.R.S. § 25-202 provides:
13           A marital agreement must be in writing and signed by
             both parties. The agreement is enforceable without
14           consideration. . . . The agreement becomes effective
             on marriage of the parties.
15
16   Sheryl argued that the “without consideration” language in
17   A.R.S. § 25-202 was important since family practitioners know
18   that marriage is never consideration for a premarital agreement.
19   She further asserted that the Waiver was a postnuptial agreement
20   which could not be “in consideration of marriage” given that it
21   was entered into after the marriage.4
22
23
         4
          A.R.S. §§ 25-201 and 25-202 are part of Arizona’s Uniform
24 Premarital Agreement Act (PMAA) which became effective
   September 21, 1991. Prior to the enactment of the PMAA, there
25 was no statute in Arizona that defined a “premarital agreement”
26 or “property” in relation to a premarital agreement. See A.R.S.
   § 25-201 (definitions). The PMAA was enacted in Kansas at the
27 time the Osborns entered into the PMA. Arizona enacted the PMAA
   after the Osborns entered into the PMA, but before their
28 execution of the Waiver in Texas.

                                      -7-
 1           In support of her second argument, Sheryl maintained that
 2   Title 33 of A.R.S. deals with real property rights and
 3   interests, including landmarks and surveys, landlord and tenant,
 4   conveyances and deeds, mortgages, deeds of trust, liens,
 5   homesteads, condominiums, mobile home parks, timeshares, and
 6   homeowners associations.     Sheryl argued that A.R.S. § 33-413
 7   could not be read in isolation and that overall, the statutory
 8   scheme shows that the statute applies to agreements in
 9   consideration of marriage that affect real property interests.
10           Sheryl further maintained that unrecorded premarital
11   agreements are binding on unsecured creditors under Arizona case
12   law, citing Schlaefer v. Financial Management Service, Inc.,
13   
996 P.2d 745
(Ariz. Ct. App. 2000), and Elia v. Pifer, 
977 P.2d 14
  796 (Ariz. Ct. App. 1998).5
15           In addition, Sheryl pointed to statutes from Texas and
16   California to support her position that A.R.S. § 33-413 applied
17   only to agreements affecting real property.     The Texas Uniform
18   Premarital Agreement Act provides:
19           An agreement made under this subchapter is
             constructive notice to a good faith purchaser for
20           value or a creditor without actual notice only if the
             instrument is acknowledged and recorded in the county
21           in which the real property is located.
22   Tex. Family Code § 4.106(b) (emphasis added).
23           California Family Code § 1502, entitled “Recording of
24
25       5
          These cases cannot be binding precedent on a point of law,
26 i.e., that A.R.S. § 33-413 does not apply to unsecured creditors,
   when the statute is neither mentioned nor discussed. See
27 Sakamoto v. Duty Free Shoppers, Ltd., 
764 F.2d 1285
, 1288 (9th
   Cir. 1985) (“[U]nstated assumptions on non-litigated issues are
28 not precedential holdings binding future decisions.”).

                                      -8-
 1   Agreements,” provides:
 2        (a) A premarital agreement or other marital property
          agreement that is executed and acknowledged or proven
 3        in the manner that a grant of real property is
          required to be executed and acknowledged or proved may
 4        be recorded in the office of the recorder of each
          county in which real property affected by this
 5        agreement is situated.
 6   Emphasis added.
 7        According to Sheryl, A.R.S. § 33-413, unlike Texas or
 8   California, does not specify in which county the “agreement in
 9   consideration of marriage” must be recorded.   Sheryl maintains
10   that if A.R.S. § 33-413 is read literally, without statutory
11   context or common sense, you could seemingly have your pick of
12   which of Arizona’s fifteen counties to record in, especially as
13   it pertains to personal property.
14        In sum, Sheryl asserted that all property acquired during
15   her marriage to James was the sole and separate property of each
16   spouse.   Therefore, James’ creditors had only a claim to his
17   sole and separate assets.
18        Finally, Sheryl asserted that factual and legal issues
19   remained.   She contended that she was not permitted to conduct
20   any discovery on whether creditors had actual notice of the PMA
21   and Waiver.   She further argued that she did not brief choice of
22   law issues and contended that both the PMA and Waiver were
23   governed by Kansas law, not Arizona law.   Without elaborating,
24   Sheryl maintained that the location of the personal property may
25   also be relevant to determining the choice of law or whether
26   community property laws even apply.
27        Trustee responded that A.R.S. § 33-413 clearly requires
28   marital agreements to be recorded, and the plain language of the

                                    -9-
 1   statute shows that the recording is not limited to agreements in
 2   consideration of marriage that transfer real property.    Trustee
 3   also cited the Arizona Legal Forms, Domestic Relations § 13:17,
 4   which addresses A.R.S. § 33-413:
 5        One area that is often overlooked is having the
          agreement, or a summary thereof, recorded. As many
 6        individuals are reluctant to record their entire
          agreement, a notice can be recorded. In situations
 7        where the parties are not responsible for the other’s
          debts, it is imperative that such matter be recorded
 8        in order to place creditors and other third parties on
          notice.
 9
10   Catherine A. Creighton and Therese R. McElwee, 4A Ariz. Legal
11   Forms, Domestic Rel. § 13:17 (3d ed. 2016).
12        Trustee further argued that the Texas and California
13   statutes cited by Sheryl expressly refer to real property while
14   the plain and unambiguous language of A.R.S. § 33-413 makes no
15   reference to real property or in any way limits its
16   applicability to real property.    According to Trustee, the
17   language in A.R.S. § 33-413 does not place any limitation on who
18   can be a “creditor,” secured or otherwise.
19        Finally, Trustee maintained that the statute is not limited
20   to real property by virtue of being included in Title 33,
21   because other statutes within Title 33 apply to more than real
22   property.   See A.R.S. § 33-412(A) (requiring the recording of
23   deeds of settlement upon marriage, whether of land, money or
24   other personal property, which must be recorded or are otherwise
25   void as to creditors and subsequent purchasers for valuable
26   consideration without notice).    Moreover, Title 33 addresses
27   both real and personal property, including personal property
28   exemptions (A.R.S. § 33-1121 et seq.), and personal property

                                      -10-
 1   liens (A.R.S. § 33-1021 et seq.) among others.    In light of the
 2   overall statutory scheme, Trustee argued there was no reason for
 3   the bankruptcy court to read an unstated limitation into A.R.S.
 4   § 33-413.
 5        In her responsive brief, Sheryl argued that the resolution
 6   of the enforceability of the PMA and Waiver would not resolve
 7   all issues relating to her property.    Sheryl asserted that the
 8   bankruptcy court should import no binding effect to any ruling
 9   on the PMA and Waiver on other property as those consequences
10   were not before the court factually.    Sheryl pointed out that
11   there were no factual findings whether any creditor of the
12   estate had, or did not have, actual notice of the PMA and
13   Waiver.
14        On January 25, 2017, the bankruptcy court issued its ruling
15   in favor of Trustee.    The court found A.R.S. § 33-413
16   unambiguous, noting that its plain language did not limit its
17   application to a lien creditor, and therefore it applied to all
18   creditors.   The court further found that the PMA and Waiver were
19   agreements made in consideration of marriage and thus within the
20   scope of the statute.    Although Trustee was instructed to
21   prepare and upload an order reflecting this ruling, he did not
22   do so until May 22, 2017.
23   C.   The Motion For Reconsideration
24        On February 22, 2017, Sheryl filed a motion for
25   reconsideration under Civil Rule 59(e).    The basis for the
26   motion was that “further research” showed that the terms
27
28

                                     -11-
 1   “marriage settlements” and “marriage contracts”6 emanated from
 2   common law England whereby an unmarried woman essentially
 3   forfeited all of her property to her husband upon marriage.
 4   These marriage settlements or marriage contracts were creations
 5   of the common law that were almost universally upheld by the
 6   Courts of Chancery in England to preserve a woman’s property for
 7   her own benefit.     Sheryl maintained that these antiquated
 8   “marriage settlements” were in no way comparable or analogous to
 9   a modern-day divorce decree.     Likewise, these dated “marriage
10   contracts” were not analogous to a premarital agreement or
11   postnuptial agreement as the court so ruled.
12           Trustee responded that the motion was untimely because
13   under Rule 9023, a Civil Rule 59(e) motion must be filed no
14   later than fourteen days after entry of judgment.      Since Sheryl
15   filed the motion for reconsideration twenty-eight days after the
16   court’s ruling, it must be denied.      Trustee maintained that
17   Civil Rule 59(e) could not be used by a losing party who failed
18   to raise available arguments in the first place.
19           On March 2, 2017, the bankruptcy court denied the motion as
20   untimely.     Sheryl filed a timely appeal from this ruling.
21           Subsequently, the Panel ordered Sheryl to show that a
22   separate order had been entered or file a response as to why the
23   January 25, 2017 ruling was sufficiently final to support the
24   Panel’s jurisdiction.     On May 22, 2017, the bankruptcy court
25
26       6
          The term “deeds of settlement upon marriage” is contained
27 in A.R.S. § 33-412, entitled “Invalidity of unrecorded
   instruments as to bona fide purchaser or creditor.” The term
28 “marriage contract” is found in the title of A.R.S. § 33-413.

                                      -12-
 1   entered an order regarding its ruling on the PMA and Waiver.
 2   Accordingly, the Panel found that all issues in the adversary
 3   proceeding were finally resolved.
 4                             II.   JURISDICTION
 5        The bankruptcy court had jurisdiction over this proceeding
 6   under 28 U.S.C. §§ 1334 and 157(b)(2)(A).      We have jurisdiction
 7   under 28 U.S.C. § 158.
 8                               III.    ISSUES
 9        Did the bankruptcy court err in finding that the PMA and
10   Waiver were “agreements made in consideration of marriage” and
11   thus within the scope of A.R.S. § 33-413?
12        Did the bankruptcy court err in finding that A.R.S.
13   § 33-413 was not limited to marital agreements affecting real
14   property?
15        Did the bankruptcy court err in denying the motion for
16   reconsideration?
17                       IV.    STANDARDS OF REVIEW
18        We review a bankruptcy court’s legal conclusions, including
19   its interpretation of state law, de novo.      Roberts v. Erhard
20   (In re Roberts), 
331 B.R. 876
, 880 (9th Cir. BAP 2005), aff’d,
21   241 F. App’x. 420 (9th Cir. 2007).
22        Denial of a motion to amend or alter judgment under Civil
23   Rule 59(e) is reviewed for an abuse of discretion.      Dixon v.
24   Wallowa Cty., 
336 F.3d 1013
, 1022 (9th Cir. 2003).      To determine
25   whether the bankruptcy court abused its discretion, we conduct a
26   two-step inquiry: (1) we review de novo whether the bankruptcy
27   court “identified the correct legal rule to apply to the relief
28   requested” and (2) if it did, whether the bankruptcy court’s

                                        -13-
 1   application of the legal standard was illogical, implausible or
 2   “without support in inferences that may be drawn from the facts
 3   in the record.”      United States v. Hinkson, 
585 F.3d 1247
,
 4   1261–62 (9th Cir. 2009) (en banc).
 5                                V.   DISCUSSION
 6            Under § 541(a)(2), the debtor’s estate includes all of the
 7   debtor’s and the non-filing spouse’s interests in community
 8   property.      Given this interest, creditors are entitled to a full
 9   accounting of a debtor’s assets, which may be affected by the
10   presence or absence of valid agreements that purport to
11   determine whether property is community or separate property.
12   If the PMA and Waiver are not valid as to James’ creditors who
13   have neither actual nor constructive notice of the agreements,
14   Sheryl’s separate property may7 be deemed community property,
15   and it would become part of James’ bankruptcy estate under
16   § 541(a)(2).
17   A.       Interpretation Of A.R.S. § 33-413
18            Whether the PMA and Waiver are valid against James’
19   creditors depends upon whether those agreements fall within the
20   ambit of A.R.S. § 33-413.      The statute, entitled “Invalidity of
21   unrecorded marriage contract as to bona fide purchaser or
22   creditor,” provides:
23            No covenant or agreement made in consideration of
              marriage shall be valid against a purchaser for
24            valuable consideration, or a creditor not having
              notice thereof, unless the covenant or agreement is
25
26        7
          Although the PMA and Waiver are void as to James’
27 creditors, we do not decide in this appeal whether other law or
   rules are relevant to the separate/community property
28 determination.

                                        -14-
 1        duly acknowledged and recorded in the manner and form
          required for deeds and other conveyances.
 2
 3        When we interpret state law, we are bound by the decisions
 4   of the applicable state’s highest court.      Kekauoha–Alisa v.
 5   Ameriquest Mortg. Co. (In re Kekauoha–Alisa), 
674 F.3d 1083
,
 6   1087 (9th Cir. 2012).    And when, as here, the state’s highest
 7   court has not interpreted the dispositive state law, we do our
 8   best to predict how that state’s highest court would decide the
 9   issue.    
Id. at 1087-88.
  The court may use “decisions from other
10   jurisdictions, statutes, treatises, and restatements as
11   guidance.”    Assurance Co. of Am. v. Wall & Assocs. LLC of
12   Olympia, 
379 F.3d 557
, 560 (9th Cir. 2004).
13        In interpreting Arizona statutes, the Arizona Supreme Court
14   has stated that its duty is to determine the intent of the
15   legislature at the time of enactment.    Jackson v. Phoenixflight
16   Prods., Inc., 
700 P.2d 1342
, 1345 (Ariz. 1985).      “Where the
17   language of the Legislature is clear and leaves no opportunity
18   for interpretation, the language must be followed.”      
Id. And 19
  “clear language in a statute is given its usual meaning unless
20   impossible or absurd consequences would result.”      Ruben M. v.
21   Ariz. Dep’t of Econ. Sec., 
282 P.3d 437
, 441 (Ariz Ct. App.
22   2012); Marriage of Gray, 
695 P.2d 1127
, 1129 (Ariz. 1985).
23        1.     Common Law “Marriage Contracts”
24        Sheryl asserts that the term “marriage contract” as used in
25   the title of A.R.S. § 33-413 is an “antiquated legal
26   arrangement” to avoid outdated concepts preventing married women
27   from owning property and thus has no applicability to modern
28   premarital and postnuptial agreements.

                                      -15-
 1        By the rules of the common law the husband, upon the
          marriage, becomes the absolute owner of the wife’s
 2        personal property in possession. This transfer of her
          property by the marriage may be provided against by
 3        contract. The Virginia act, and all similar acts, are
          passed to notify all persons that the property did not
 4        vest in the husband by the marriage, but was reserved
          to the separate use of the wife.
 5
 6   Morgan v. Elam, 
12 Tenn. 375
, 379 (Tenn. 1833).   The “marriage
 7   contract” had the effect and intent of preventing the wife’s
 8   property from vesting in the husband by virtue of the marriage.
 9   
Id. at 383-84.
10        Using a trust, a woman was able to stay in possession and
11   control of her property during marriage in contravention of the
12   common law’s rules regarding a married woman’s property.    “A
13   marriage settlement, then, is a conveyance of property upon
14   defined trusts, as a marriage contract is an agreement that it
15   shall be made, enforceable in a court of equity, and its effect
16   to give a different direction to property from that which would
17   result from a marriage without any settlement, or contract for
18   settlement, and looks most usually to the interest of the wife
19   and the issue of the marriage union.”   Sullivan v. Powers,
20   
6 S.E. 395
, 396 (N.C. 1888).
21        Statutes were enacted to require the registration of
22   marriage contracts and settlements to prevent fraud on the
23   husband’s creditors.   See Saunders v. Gerrill, 
23 N.C. 97
(N.C.
24   1840) (registered and written marriage settlements and marriage
25   contracts were the only evidence against husband’s creditors
26   that “‘any estate has been secured to the wife.’”).
27        Although this history is interesting, it is of little
28   assistance in our statutory interpretation when the Arizona

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 1   Supreme Court instructs us to follow the plain language of the
 2   statute.     Sheryl also places too much emphasis on the words
 3   “marriage contract,” which is in the title of A.R.S. § 33-413.
 4   “While words in the title of a statute or the heading of a
 5   section can shed light on the meaning of an ambiguous word or
 6   phrase in the text of a statute, they cannot create an ambiguity
 7   where none otherwise would exist.”       Nat. Res. Def. Council v.
 8   U.S.E.P.A., 
915 F.2d 1314
, 1321 (9th Cir. 1990).       “Since the
 9   text is not ambiguous, the caption does not aid our
10   interpretation.”     
Id. 11 Finally,
if A.R.S. § 33-413 has no applicability to modern
12   marriage contracts (i.e., pre and postnuptial agreements), it is
13   up to the Arizona legislature, not this court, to repeal the
14   statute.
15          2.    Agreements Made In Consideration Of Marriage
16          The PMA and Waiver both constitute “agreements made in
17   consideration of marriage.”     As the bankruptcy court noted, one
18   definition of “in consideration” is “a taking into account.”
19   Consideration, Merriam-Webster, Https://wwww.merriam-
20   webster.com/dictionary/consideration (last visited October 30,
21   2017).      Both the PMA and Waiver were agreements made taking into
22   account the parties’ marriage.     But for their pending marriage,
23   there would have been no reason for them to have executed the
24   PMA.    And, but for their marriage and move to Texas, a community
25   property state, there would have been no need for them to amend
26   or restate their intentions to keep their existing and future
27   property separate through execution of the Waiver.       In short,
28   although the PMA and Waiver may not be “marriage contracts” in

                                       -17-
 1   their historical sense, they are “agreements made in
 2   consideration of marriage” on their face.8     Cf. Sullivan, 
6 S.E. 3
  at 396 (a marriage contract is an agreement and its effect to
 4   give a different direction to property from that which would
 5   result from a marriage).
 6           3.   Real And Personal Property
 7           We are also not convinced by Sheryl’s argument that A.R.S.
 8   § 33-413 applies solely to marriage contracts affecting real
 9   property.     The plain language of the statute states that it
10   applies to “creditors” without actual notice of the marital
11   agreement and without distinction.      It also does not state that
12   recordation is required only for those agreements that affect
13   real estate.     If the Arizona legislature meant to protect only
14   secured creditors, it could have done so in plain language and
15   directed the agreement to be recorded in the office of the
16   county recorder of the county in which the real property was
17   located.     Cf. A.R.S. § 33-411 (providing that no instrument
18   affecting real property gives notice of its contents to
19   subsequent purchasers unless recorded in the office of the
20   county recorder of the county in which the property is located).
21           Furthermore, recording statutes are generally for the
22   purpose of providing constructive notice to third parties.       The
23   placement of A.R.S. § 33-413 in Title 33, Article 2 (which
24   addresses the recording of documents in general) evidences the
25
         8
26        Indeed, construing “in consideration of marriage” as not
   including premarital agreements would lead to the absurd result
27 of making the statute inconsistent with Arizona’s Official Form,
   entitled “Notice of Premarital Agreements.” See Creighton and
28 McElwee, 4A Ariz. Legal Forms, Domestic Rel. § 13:17.

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 1   Arizona legislature’s intent to protect creditors who transact
 2   with spouses that have entered into what would otherwise be
 3   secret agreements which alter the character of the spouses’
 4   marital property from community to separate.   In short, without
 5   any language showing that the Arizona legislature intended to
 6   leave unsecured creditors unprotected under the statute, we
 7   cannot import such a limitation.
 8   B.   Conflict Of Laws
 9        Sheryl also complains that the bankruptcy court ignored the
10   choice of law clause in the PMA, which refers to Kansas law.    In
11   her opening brief, Sheryl contends that CSNG is a foreign
12   corporation with all of its principal assets formerly located in
13   Kansas.   Sheryl thus asserts there is no legitimate basis to
14   apply Arizona law as there is in an enforceable choice of law
15   provision in the PMA and all the assets of the entity were
16   located in Kansas.   This argument has no merit.   The bankruptcy
17   court decided that James was the sole member and owner of CSNG,
18   and that finding is not on appeal.
19        Furthermore, although the bankruptcy court did not
20   expressly decide the choice of law issue, Arizona courts review
21   choice of law determinations de novo.   See Garcia v. Gen. Motors
22   Corp., 
990 P.2d 1069
, 1075 (Ariz. Ct. App. 1999).   The choice of
23   law clause in the PMA provides:
24        The parties intend to make their residence after
          marriage in the State of Kansas, and accordingly this
25        Agreement shall be governed by the laws of Kansas.
26   This provision shows that the parties intended Kansas law to
27   govern their contractual rights and obligations under the
28   agreement as between themselves because they intended to reside

                                    -19-
 1   in Kansas.   It does not overtly state that the clause covers a
 2   wide range of claims, disputes, or controversies, including
 3   disputes about the validity of the agreement as to third party
 4   creditors.   The narrow scope of the choice of law clause
 5   indicates that it has no application to the present dispute.
 6        In addition, the plain language of A.R.S. § 33-413
 7   expressly requires agreements made in consideration of marriage
 8   to be recorded in order to be valid against creditors without
 9   actual notice of those agreements.     The statute does not give a
10   court discretion to ignore the recording laws based on choice of
11   law provisions in marital contracts to the detriment of third
12   parties which the statute intends to protect.    It would be
13   anomalous to allow parties to avoid Arizona’s recording statutes
14   by choice of law clauses in private contracts.    In sum, A.R.S.
15   § 33-413 applies to the PMA and Waiver notwithstanding the
16   choice of law provision in the PMA.
17   C.   The Motion For Reconsideration
18        Even if there were error in the bankruptcy court’s decision
19   to deny Sheryl’s motion for reconsideration based on timeliness,
20   we can affirm on any basis supported by the record.    See Brown
21   v. State Bar of Ariz. (In re Bankr. Petition Preparers),
22   
307 B.R. 134
, 140 (9th Cir. BAP 2004) (a reviewing court may
23   affirm on any basis supported by the record).    The bankruptcy
24   court did not abuse its discretion by denying Sheryl’s motion
25   for reconsideration.    She did not present newly discovered
26   evidence, demonstrate clear error, or show an intervening change
27   in controlling law.    See 389 Orange St. Partners v. Arnold,
28   
179 F.3d 656
, 665 (9th Cir. 1999) (setting forth grounds for

                                     -20-
 1   reconsideration under Civil Rule 59(e)); see also Rule 9023
 2   (incorporating Civil Rule 59(e) in bankruptcy proceedings).
 3                           VI.   CONCLUSION
 4        For the reasons stated, we AFFIRM.
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