Opinion
1 CA-CV 12-0284
04-16-2013
In the Matter of the Estate of: MARION B. ROGERS, Deceased. GARY B. ROGERS, as Personal Representative of the Estate of Marion B. Rogers, Deceased, Appellee, v. NANCY BAUMRUCKER, Appellant.
Murphy Law Firm, Inc. By Thomas J. Murphy Attorneys for Appellant Sheridan Larson, PLLC By Michael J. Sheridan Attorneys for Appellee
NOTICE: THIS DECISION DOES NOT CREATE LEGAL PRECEDENT AND MAY NOT BE CITED
EXCEPT AS AUTHORIZED BY APPLICABLE RULES.
See Ariz. R. Supreme Court 111(c); ARCAP 28(c);
Ariz. R. Crim. P. 31.24
MEMORANDUM DECISION
(Not for Publication -
Rule 28, Arizona Rules
of Civil Appellate
Procedure)
Appeal from the Superior Court in Maricopa County
Cause No. PB2007-002049
The Honorable Richard L. Nothwehr, Commissioner
AFFIRMED
Murphy Law Firm, Inc.
By Thomas J. Murphy
Attorneys for Appellant
Phoenix Sheridan Larson, PLLC
By Michael J. Sheridan
Attorneys for Appellee
Mesa OROZCO, Judge ¶1 Nancy Baumrucker (Nancy) appeals from the probate court's order overruling her Objection to the Closing of the Estate (Objection) and denying her Petition for Removal and Surcharge of the personal representative. For the following reasons, we affirm.
FACTUAL AND PROCEDURAL BACKGROUND
¶2 On June 22, 2006, Marion Rogers (Decedent) passed away leaving a surviving spouse, Dolores Rogers (Dolores), and three children: Nancy, Gary, and Candace. On September 20, 2007, Gary filed an application to appoint himself personal representative of the estate and to probate the estate through intestate proceedings. Nancy, Candace and Dolores all waived their rights to apply as personal representative and consented to the appointment of Gary. ¶3 On February 12, 2010 Gary filed a closing statement seeking to close the probate estate. Nancy subsequently filed an Objection and requested a hearing. Nancy also filed a Petition for Removal and Surcharge of Gary as personal representative. A hearing was held in September 2011, and the probate court heard testimony from Nancy, Candace, Gary, and Nancy's husband. ¶4 Decedent's properties and assets at the time of his death were (1) Decedent's house and adjacent vacant lot in Phoenix, Arizona; (2) a cabin and two vacant lots in Pine, Arizona; (3) a life insurance policy; (4) an Arizona Federal Credit Union account; (5) a Bank of America account; (6) a Desert Schools Federal Credit Union account; and (7) a Linsco/Private Ledger Investment (LPL) account. The assets in dispute are the Bank of America account, the Desert Schools Federal Credit Union account, and the LPL account (collectively, Financial Accounts). Several years before Decedent's passing, Gary received a house from his paternal grandmother that Nancy argued, and Gary disputed, was to be considered an offset to Gary's inheritance of Decedent's estate. ¶5 Decedent's house and vacant lot were sold, and Nancy received $25,000, Candace received $25,000 and Gary received $19,000 from the proceeds. The properties located in Pine, Arizona were titled initially in Nancy's, Candace's, and Gary's names. Gary later titled the three properties in Pine, Arizona solely in the names of Candace and Nancy in order to facilitate the settlement of the estate. The proceeds from the Arizona Federal Credit Union account and the life insurance policy were distributed to Nancy, Gary and Candace. At the time of Decedent's death, Decedent and Gary held the Financial Accounts as joint tenants with rights of survivorship. Gary elected not to submit the Financial Accounts to probate because they were non-probate assets. Gary also did not share any interest in the house he had received from his paternal grandmother with Nancy and Candace. ¶6 Decedent had a holographic will (Will) dated April 4, 2004. Although all interested parties knew about the Will, it was not admitted into probate. Decedent also instituted and signed the Marion B. Rogers Revocable Trust (Trust) in October 2005, but the Trust was never funded. Again, despite the parties' knowledge of the Trust, it was not submitted to probate. ¶7 After the hearing, the probate court issued a minute entry stating that it found "no witness was more or less credible" and "this case [was] the result of [Decedent] failing to specifically provide written directives." It further found that although the Will may have been a valid document, Nancy and Candace waived, consented and acquiesced to the informal probate of Decedent's estate, thereby precluding them from raising concerns about the Will. The probate court did concede that Gary was untimely in probating the estate; however, it found that the accounting Gary provided concerning the probate assets was correct and his removal or surcharge was unnecessary. The probate court also held that the Financial Accounts had all been created by Decedent and Gary before Decedent's passing and were held in joint tenancy with right of survivorship, thereby passing outside of probate. ¶8 The probate court concluded that it had been Decedent's responsibility to fund the Trust and the court was "in no position to rewrite [Decedent's] investment or bank account designations or to . . . transfer[] these accounts into the Trust." It ultimately overruled Nancy's Objection and denied her Petition for Removal and Surcharge of Gary as personal representative. ¶9 Nancy filed a motion to reconsider requesting that the probate court review its ruling and specifically address the issue of whether the house Gary received from the paternal grandmother should be considered an offset. After re-reviewing the evidence and testimony presented at the hearing, the probate court reaffirmed its original ruling and held that the offset issue of the house was not properly before it. In order to cover the cost of the litigation that had ensued as a result of Nancy's Objection, the court also ordered that Nancy and Candace return real property to the estate that was distributed to them. ¶10 Nancy timely appealed. We have jurisdiction under Arizona Revised Statutes (A.R.S.) section 12-2101.A.9 (Supp. 2012).
Although Candace and Dolores participated in the probate proceedings, they did not object to the closing of the estate and are not parties to this appeal.
Decedent failed to transfer any property into the Trust for distribution to the beneficiaries; therefore, the Trust provisions are irrelevant. "The essential elements of a trust are a competent settlor and a trustee, clear and unequivocal intent to create a trust, ascertainable trust res, and sufficiently identifiable beneficiaries." Golleher v. Horton, 148 Ariz. 537, 543, 715 P.2d 1225, 1231 (App. 1985) (emphasis added).
DISCUSSION
¶11 Nancy argues that the probate court erred by (1) holding that the Financial Accounts were non-probate, and thus, belonged to Gary; (2) holding that the offset issue was not properly before the court; (3) ordering the return of previously distributed real property to the estate in order for Gary, as personal representative, to pay attorney fees; and (4) refusing to sanction Gary, as personal representative, for his delay in probating the estate.
Jointly Held Financial Accounts
¶12 Nancy argues that the probate court erred when it held that ownership of the Financial Accounts was governed by the jointly titled nature of those accounts and not by the Will, Trust, or Decedent's intentions. Nancy specifically states that the probate court should look to the Trust and the Will as guidance of Decedent's intent to place the Financial Accounts in a constructive trust. ¶13 Arizona Revised Statutes § 14-6213.B (2012) states that "[a] right of survivorship arising from the express terms of the account, § 14-6212 or a pay on death designation may not be altered by will." Also, "on the death of a party, sums on deposit in a multiple party account belong to the surviving party or parties." A.R.S. § 14-6212.A (2012). Joint tenancy is not testamentary in nature but is a present estate in which both joint tenants are in possession of the property in terms of the half as well as the whole. Kleemann v. Sheridan, 75 Ariz. 311, 315, 256 P.2d 553, 555 (1953). Therefore, the right of survivorship in a joint tenancy does not necessarily pass anything from the deceased to the surviving joint tenant, "as both cotenants in a joint tenancy are possessors and owners . . . of the whole." Id. Consequently, "the title of the first joint tenant who dies merely terminates and the survivor continues to possess and own the whole of the estate as before." Id. Therefore, upon the death of Decedent, Gary became the sole owner of the Financial Accounts in their entirety. ¶14 Nancy urges this court to look at the language in Grant v. Grant, 119 Ariz. 470, 581 P.2d 704 (App. 1978) and O'Hair v. O'Hair, 109 Ariz. 236, 508 P.2d 66 (1973), for guidance in our determination of Gary's interest in the Financial Accounts upon Decedent's death. However, Nancy's reliance on these two cases is misplaced. ¶15 Although Grant and O'Hair hold that the intention of the depositor is relevant in determining the interest the joint account holder holds, the source of the litigation in those cases involved a dissolution of marriage. Grant, 119 Ariz. at 471-72, 581 P.2d at 705-06; O'Hair, 109 Ariz. at 237-38, 508 P.2d at 67-68. This is a stark contrast from a probate proceeding involving accounts held between a father and son that pass outside of probate upon the death of one of the parties. Additionally, Grant and O'Hair involve joint account holders who were living at the time of the dissolution proceedings. Grant, 119 Ariz. at 471, 581 P.2d at 705; O'Hair, 109 Ariz. at 238-39, 508 P.2d at 68-69. ¶16 Because the Financial Accounts were held between Decedent and Gary as joint tenants with rights of survivorship, we find that the probate court correctly found that the Financial Accounts were non-probate in nature and not subject to a constructive trust.
Absent material revisions, we cite to the current version of the statute.
The Offset
¶17 Nancy argues that the probate court erred by declining to address the issue of whether the house Gary received from the paternal grandmother should be considered an offset to his inheritance. ¶18 In Nancy's Motion to Reconsider, she requested that the probate court clarify its position concerning the offset because the court did not address it in its initial ruling. The probate court stated that the "issue of determining whether a valid offset exists was not before the [c]ourt" and that it was "improper [for Nancy] to present [the] issue in a motion to reconsider." We agree. ¶19 Nancy did not request this relief from the trial court in the Objection and, consequently, has waived it. See Payne v. Payne, 12 Ariz. App. 434, 435, 471 P.2d 319, 320 (1970) (noting that "a party must timely present his legal theories to the trial court so as to give the trial court an opportunity to rule properly"). In her Objection, Nancy complained of Gary's failure to distribute the Financial Accounts but never mentioned the offset of the house. At the conclusion of Nancy's Objection, she asked that "the estate be reopened and further move[d] for a hearing for this [c]ourt to enter orders providing the relief sought." Nowhere in the Objection is there a request to offset the house Gary received from his grandmother with the remaining assets in the probate estate. Therefore, the probate court did not err in declining to address this issue.
Return of the Real Property to the Estate
¶20 In its initial ruling on October 10, 2011, the probate court ordered each party to pay his or her own attorney fees and costs. On October 28, 2011, Gary filed a motion requesting that the probate court order Nancy and Candace to return previously distributed real property to the estate to pay outstanding costs and fees that were paid personally by Gary. Nancy filed a response to that motion on November 25, 2011 and a Motion to Reconsider on November 30, 2011. ¶21 The probate court ruled on that "there has been a substantial amount of costly litigation. . . . [and] the Personal Representative has the right to recover those necessary expenses, including attorneys' fees." Nancy alleges that it was error for the probate court to order return of previously distributed real property to the estate to pay attorney fees and court costs incurred by Gary as personal representative following its ruling on Nancy's Motion to Reconsider. Nancy claims that the probate court granted attorney fees to Gary "without any motion for attorneys' fees before it or providing an explanation for a change in its ruling." ¶22 Nancy's argument fails for two reasons. First, Gary filed multiple motions requesting that attorney fees be paid and real property be returned to the estate throughout the proceedings. Gary also asked for attorney fees and sanctions in his proposed findings of fact and conclusions of law submitted on September 9, 2011. Additionally, he filed a motion on October 28, 2011 requesting the probate court order Nancy and Candace to return already distributed real property to the estate to pay outstanding costs and fees that were paid personally by Gary. This motion was filed more than two weeks after the probate court's initial minute entry and before Nancy's motion for reconsideration. ¶23 Second, the probate court stated in its ruling that the reason it was ordering the real property to be returned to the estate was to pay the administrative expenses associated with the litigation that followed Nancy's Objection. Under A.R.S. § 14-3720 (2012), "[i]f any personal representative or person nominated as personal representative defends or prosecutes any proceeding in good faith, whether successful or not he is entitled to receive from the estate his necessary expenses and disbursements including reasonable attorneys' fees incurred." The probate court recognized that there had been a substantial amount of litigation and found "[p]ursuant to A.R.S. § 14-3721 [(2012)], the Personal Representative has the right to recover those necessary expenses, including attorneys' fees." ¶24 An award of administrative costs and attorney fees to the personal representative of an estate is mandatory absent a showing that the personal representative acted in bad faith. See In re Estate of Killen, 188 Ariz. 569, 575, 937 P.2d 1375, 1381 (App. 1996) ("Under A.R.S. section 14-3720, the only circumstance in which the personal representative defending a will would not be entitled to receive from the estate the necessary expenses and disbursements, including attorneys' fees, is if he did not defend the proceeding in good faith."). The reasonableness of the personal representative's compensation and that of the attorney employed by the personal representative is reviewable by the probate court. A.R.S. § 14-3721. Therefore, the probate court would have had to find that Gary defended the estate in bad faith in order to deny his request for attorney fees; however, no such finding was made. ¶25 We find that, based on the motions seeking attorney fees and the mandatory statutory language, the probate court did not err in awarding the personal representative attorney fees. Furthermore, the probate court correctly ordered the return of the real property to the estate in order to fund the expenses resulting from the litigation.
Although the probate court cited § 14-3721, which deals with determining the reasonableness of the compensation of a personal representative, rather than § 14-3720, "[w]e will affirm the trial court's decision if it is correct for any reason. . ." Glaze v. Marcus, 151 Ariz. 538, 540, 729 P.2d 342, 344 (App. 1986).
Personal Representative's Delay
¶26 Nancy contends that the probate court erred when it did not fashion a sanction or remedy for Gary's delay and his unwillingness to follow Decedent's wishes as personal representative in probating the estate. ¶27 In its ruling on October 11, 2011, the probate court found that Gary "should have affirmatively and in written form notified his siblings and been more responsive to questions." However, the court also declared that after all the evidence and testimony was presented, it supported Gary's position over Nancy's. ¶28 We "view the evidence and reasonable inferences therefrom in the light most favorable to the party in whose favor the judgment was rendered[,] and if there is any evidence to support the judgment[,] it will be affirmed." Bates & Springer of Ariz., Inc. v. Firewood, 109 Ariz. 203, 206, 507 P.2d 668, 671 (1973). We will not set aside the probate court's findings unless they are clearly erroneous, acknowledging the opportunity of the court to judge the credibility of witnesses. In re Estate of Zaritsky, 198 Ariz. 599, 601, ¶ 5, 12 P.3d 1203, 1205 (App. 2000). A court's findings are "not clearly erroneous if substantial evidence supports it, even if substantial conflicting evidence exists." Kocher v. Dep't of Revenue of Ariz., 206 Ariz. 480, 482, ¶ 9, 80 P.3d 287, 289 (App. 2003). We review the probate court's legal conclusions de novo. Zaritsky, 198 Ariz. at 601, ¶ 5, 12 P.3d at 1205. ¶29 During the hearing, Nancy testified that Decedent told her that she needed to trust Gary because he would be fair and that everything was going to be divided evenly amongst the siblings. She also stated that Gary led her to believe that he would share the Financial Accounts; however, Nancy admitted that she knew Gary did not have to legally share the proceeds. Nancy also testified that the reason she did not request that the Will be submitted to probate was because she trusted Gary to do what Decedent had wanted and because Gary's attorney said that the Will was invalid because it was not an original. ¶30 Candace testified that Decedent told her "that he was putting everything in Gary's name for safekeeping." She also testified that it was implied that she should trust Gary and he "would provide everything when the time came." Candace conceded that both Decedent's and Gary's names were on the Financial Accounts. Candace also testified that she thought the Will was a fraud and was aware that Decedent had not funded the Trust while he was alive. ¶31 Gary testified that he filed a petition to close out the estate even though he knew that Nancy and Candace wanted to receive an offset for the house he had received from their paternal grandmother, as well as an offset from the proceeds of the Financial Accounts. However, Gary stated that Decedent specifically told him that the Financial Accounts were his and Gary's, and only the remaining real property and assets were to be evenly distributed upon his death. Gary acknowledged that it was Decedent's signature on the Trust documents and that he knew about the language in the Trust and Will that referred to Gary's house as an offset. Gary also admitted that he never gave the letters to Decedent to sign in order to fund the Trust; however, he stated that Decedent did not want the Trust funded and never asked Gary to help him fund the Trust. ¶32 Although the probate court stated at the hearing that it was a violation of Gary's fiduciary duties not to have reported the Will and the Trust to the court, it affirmed that Nancy also had knowledge of both documents and could have reported them herself. In the September 2011 minute entry, the probate court found that the Financial Accounts were created and titled long before Nancy's expectation and that there was no evidence to support the creation of a constructive trust for the benefit of all three siblings. The court also recognized that it was Decedent's responsibility to fund the Trust while he was alive, not Gary's. ¶33 The record supports the probate court's finding that Gary should have been more forthcoming and timely in probating Decedent's estate. Gary's delay, however, did not prejudice the distribution of assets from Decedent's estate. Gary signed title to the three Pine properties over to Nancy and Candace, sold Decedent's house and distributed the proceeds from that sale, and dispersed the funds remaining in the Arizona Federal Credit Union Bank account. Nancy did not dispute the timeliness or the distribution of these assets. There were no remaining assets to pass through probate because the Financial Accounts were non-probate assets, and the house that Gary had received from the paternal grandmother was not properly contested as an offset because it had been transferred directly from Gary's grandmother to Gary. Therefore, we find that the probate court did not err in declining to sanction Gary as the personal representative.
Attorney Fees
¶34 Gary has requested an award of attorney fees and costs on appeal pursuant to A.R.S. §§ 12-341.01 (2003) and -342 (2003). In a contested action arising out of contract, a court may award the successful party attorney fees. A.R.S. § 12-341.01.A. This, however, is not an action arising out of contract. Under A.R.S. § 12-341.01.C, a court may award attorney fees if the claim or defense constitutes harassment, is groundless, and is not made in good faith. In addition, we do not find this appeal to constitute harassment, nor is it groundless or made in bad faith. ¶35 As the prevailing party, we award Gary his costs on appeal, conditioned upon compliance with Rule 21 of the Arizona Rules of Civil Appellate Procedure.
Due to material revisions to subsection "C" of the statute, we cite to the previous version in effect until January 1, 2013.
--------
CONCLUSION
¶36 For the foregoing reasons, we affirm the probate court's orders overruling Nancy's Objection, denying Nancy's Petition for Removal and Surcharge, and requiring Nancy and Candace to return real property to the estate in order to pay necessary costs, including attorney fees, associated with the litigation.
_______________
PATRICIA A. OROZCO, Presiding Judge
CONCURRING: _______________
PETER B. SWANN, Judge
_______________
TERESA A. SANDERS, Judge Pro Tempore*
*The Honorable Teresa A. Sanders, Judge of the Maricopa County Superior Court, is authorized by the Chief Justice of the Arizona Supreme Court to participate in the disposition of this appeal pursuant to Article 6, Section 3, of the Arizona Constitution and A.R.S. §§ 12-145 to -147 (2003).