Brebaugh v. Deane

118 P.3d 43 (2005)

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Nature of the Case

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Facts

Brebaugh (H) and Deane (W) were divorced after thirty years of marriage. H is the vice president of enrollment at Apollo Group, Inc./University of Phoenix ('Apollo'). W teaches art in the Scottsdale School District. H received blocks of stock options from his employer during the marriage. The parties agreed that stock options that had vested prior to the date the petition was served were community property. They also agreed that stock options he received after service were his separate property. They could not agree, however, whether the options he received during the marriage but could not be exercised until after service of the petition were community or separate property. The trial court examined the 'time rule' outlined in In re Marriage of Hug and rejected H's claim that the unvested options were intended as incentive for his future employment. It determined that H had failed to demonstrate by clear and convincing evidence that the options that had not vested before service of process were his sole and separate property. H appealed. H contends that we should allocate the community and separate property interests in unvested stock options using a formula that favors the future efforts of the employee-spouse. W contends that there was insufficient evidence to suggest that the options were granted for H's future efforts. She argues that the options were compensation for work during the marriage and, therefore, are entirely community property. W contends that a time rule that emphasizes the employee's past efforts is the appropriate formula in this case.