Fellers v. Norris ( 2023 )

NOTICE: NOT FOR OFFICIAL PUBLICATION.
UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL
AND MAY BE CITED ONLY AS AUTHORIZED BY RULE.
IN THE
ARIZONA COURT OF APPEALS
DIVISION ONE
________________________________
In re the Matter of:
OAKLAND LIVING TRUST
CATHERINE S. FELLERS, et al., Petitioners/Appellants,
v.
VICTORIA NORRIS, et al., Defendants/Appellees.
No. 1 CA-CV 22-0288
FILED 1-31-2023
Appeal from the Superior Court in Maricopa County
No. PB2014-000972
The Honorable Dean M. Fink, Judge
AFFIRMED
COUNSEL
Anthony Law Group, Scottsdale
By Stephen J. Anthony
Counsel for Petitioners/Appellants
Thorpe Schwer, P.C., Phoenix
By André H. Merrett
Counsel for Defendants/Appellees
FELLERS, et al. v. NORRIS, et al.
Decision of the Court
MEMORANDUM DECISION
Judge Paul J. McMurdie delivered the Court’s decision, in which Presiding
Judge Brian Y. Furuya and Judge Jennifer B. Campbell joined.
M c M U R D I E, Judge:
¶1 Trust beneficiaries Catherine Fellers and Gary Bailey appeal
from the superior court’s denial of their petition to forfeit the beneficiary
interests of James Bailey and Victoria Norris.1 We find no reversible error
and affirm the court’s judgment.
FACTS AND PROCEDURAL BACKGROUND
¶2 The beneficiaries’ mother, Patricia Oakland, established the
Oakland Living Trust (“Trust”). The Trust entitled each beneficiary to a 25%
share of Patricia’s assets upon her death and named James as the successor
trustee.
¶3 The Trust contained a no-contest clause, which disinherited a
beneficiary that:
f. Attacks or seeks to impair or invalidate (whether or not
any such attack or attempt is successful) any designation of
beneficiaries for any insurance policy on [Patricia’s] life or any
designation of beneficiaries for any pension plan, Keogh, SEP,
or IRA;
g. In any other manner contests [Patricia’s] Trust
Agreement, or any amendment thereto executed by [Patricia],
or in any other manner, attacks or seeks to impair or
invalidate any of [Patricia’s] Trust’s provisions; [or]
h. Conspires with or voluntarily assists anyone
attempting to do any of the above acts.
¶4 The Trust provided for the appointment of a co-trustee. If the
trustor is alive, the trustor “shall designate” a co-trustee if the co-trustee “is
1 We refer to the beneficiaries by their first names to avoid confusion.
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needed to act.” If the trustor is not alive, then the trustee “shall have the
right to designate” a co-trustee. If appointed, the co-trustee can perform
certain functions “to the extent that the discretionary authority of [the]
Trustee to perform a function might constitute an act of self-dealing.” For
example, if the trustee has a conflict of interest, the co-trustee can value
property or decide on trust distributions. No co-trustee was ever appointed.
¶5 The Trust terms direct the trustee to distribute to the
beneficiaries an amount that the trustee “determines is necessary.” Before
making any discretionary distribution, the trustee must “give consideration
to all other income and resources.” The trustee may postpone distribution
to one of the beneficiaries if the trustee determines a compelling reason to
do so and notifies the beneficiary of the postponement. The Trust terms
include a non-exhaustive list of examples of compelling reasons to
postpone distributions. James has not distributed Trust assets since March
2012.
¶6 Patricia died in November 2011. When Patricia died, she
owned, inter alia, a life insurance policy from MetLife Insurance Company
(“MetLife”), an Individual Retirement Account (“IRA”) from Protective
Life Insurance Company (“Protective Life”), an IRA and Money Market
Account from Waddell & Reed (“Waddell”), a Fidelity & Guaranty Life
(“Fidelity”) insurance policy, and real property in Phoenix. Patricia
designated the Trust as the beneficiary of the MetLife policy, the Protective
Life IRA, and the Waddell accounts. And Patricia designated her four
children as beneficiaries of the Fidelity policy. Victoria took possession of
Patricia’s financial documents after Patricia died, and the siblings agreed to
have Patricia’s mail forwarded to Victoria’s address.
¶7 Upon her death, Patricia also owned a Bank of America
checking account, on which she listed Victoria as a “Joint [owner] with
Right of Survivorship.” Patricia and Victoria also jointly owned certificates
of deposit with Amtrust Bank. The beneficiaries’ attorney informed the
beneficiaries that because Patricia had died, the checking account and
certificates of deposit now solely belonged to Victoria. Victoria took
possession of the bank account upon her mother’s death. Victoria gave each
sibling $13,000 from the certificates of deposit but decided not to distribute
the remaining funds.
¶8 Shortly after Patricia died, Victoria deposited a check issued
from Waddell before Patricia’s death into the Bank of America checking
account. Waddell also directly deposited a check into the account. Victoria
did not transfer these funds to the Trust.
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¶9 In early 2012, James deposited proceeds of the Waddell
Money Market Account and the MetLife Policy into the Trust bank account.
James partially distributed the funds from the money market account to the
beneficiaries.
¶10 Around April 2012, James submitted a claim to receive the
proceeds from the Protective Life IRA in a lump sum. Catherine and James
worked with their attorney to request that Protective Life divide the IRA
into four equal accounts to avoid tax consequences, but Protective Life
declined to do so. Instead, Protective Life paid the benefits to the Trust in a
lump sum, and James deposited the proceeds in the Trust’s bank account.
James did not distribute these proceeds. The parties’ counsel began
discussing potential Trust litigation in March 2013.
¶11 In July 2013, without notifying Gary or Catherine, James
transferred the Trust’s real property to himself, Victoria, and Victoria’s
husband through a quitclaim deed. James testified his bank told him he
needed to pledge the property as collateral to obtain a loan to purchase the
property. Once James transferred the title, the bank hired an appraiser to
value the property. James reduced the purchase price by six percent from
the appraised value to account for the amount the Trust would have paid
for real estate commission.2 James, Victoria, and Victoria’s husband then
borrowed half of the reduced purchase price and deposited this money to
the Trust account to cover Gary’s and Catherine’s shares. Throughout the
real estate transaction, James relied on the advice of his lender and attorney.
James has not distributed the real estate proceeds to Gary or Catherine.
¶12 In May 2014, Victoria notified Fidelity that Patricia had died.
That same month, Victoria’s and James’s attorney informed them that
because each sibling was a beneficiary of the policy, they would each need
to submit their claim for benefits. But Catherine and Gary did not learn of
the policy until around January 2015, when they received letters from
Fidelity because James never listed the policy in an asset disclosure or
accounting.
¶13 In November 2014, James, acting as trustee, submitted a claim
to Fidelity for payment to the Trust. Fidelity requested that James withdraw
2 In a prior ruling, the superior court found the six percent deduction
unreasonable and ordered the property to be valued without the deduction.
The court also ensured that the closing costs and transfer fee for the
transaction would not be charged to the Trust.
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the claim because the four siblings were the policy’s beneficiaries, not the
Trust. Fidelity would not pay the siblings their benefits until James
withdrew the Trust claim. In February 2015, James removed the Trust
claim, and Catherine and Gary received their benefits.
¶14 Catherine and Gary petitioned to remove James as trustee,
alleging he breached several fiduciary duties. The superior court denied the
petition, and this court affirmed the decision.3 In re Oakland Living Trust
(Oakland I), No. 1 CA-CV 16-0073, 2017 WL 2544836, at *6, ¶ 34 (Ariz. App.
June 13, 2017) (mem. decision).
¶15 Catherine and Gary also petitioned to remove James’s and
Victoria’s beneficiary interests under the Trust, alleging they violated
subsections (f), (g), and (h) of the Trust’s no-contest clause. Both parties
filed motions for summary judgment on the forfeiture petition. The
superior court denied Catherine’s and Gary’s cross-motion and granted
Victoria’s and James’s motion for summary judgment. This court affirmed
the denial relating to Catherine and Gary but reversed the granting of
Victoria’s and James’s summary judgment. In re Oakland Living Trust
(Oakland II), No. 1 CA-CV 19-0759, 2021 WL 1183010, at *4, ¶ 15 (Ariz. App.
Mar. 30, 2021) (mem. decision). We concluded the no-contest clause applied
to all four siblings, including James, the trustee-beneficiary, and that
genuine issues of material fact precluded summary judgment. Id. at *3–4,
¶¶ 11–12.
¶16 The superior court held a bench trial to consider Gary’s and
Catherine’s petition to forfeit James’s and Victoria’s beneficiary interests in
the Trust. After the siblings testified, the court denied the petition, finding
neither James nor Victoria violated subsections (f), (g), or (h) of the Trust’s
no-contest clause. The superior court entered judgment for James and
Victoria, and Gary and Catherine appealed. We have jurisdiction under
A.R.S. § 12-2101(A)(1).
DISCUSSION
¶17 On appeal, Gary and Catherine assert James and Victoria
violated subsection (f) of the no-contest clause by pursuing the Fidelity
3 James petitioned to forfeit Catherine’s and Gary’s beneficiary
interests under the no-contest clause based on the removal petition. But the
superior court denied the petition, finding that Catherine and Gary had
probable cause to seek to remove James as trustee.
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annuity benefits for the Trust and failing to turn over the Waddell IRA
funds to the Trust. They also argue that James and Victoria violated
subsection (g) of the no-contest clause by failing to distribute Trust assets
or appoint a co-trustee. Finally, Gary and Catherine contend James and
Victoria violated subsection (h) of the no-contest clause by working
together to commit the above allegations. The superior court did not err by
finding that James and Victoria did not violate the no-contest clause and
denying the petition to remove James’s and Victoria’s beneficiary interests.4
¶18 We view the facts in the light most favorable to sustaining the
superior court’s judgment. In re Estate of Pouser, 193 Ariz. 574, 576, ¶ 2
(1999). “We will not set aside the . . . court’s findings of fact unless clearly
erroneous, giving due regard to the opportunity of the court to judge the
credibility of witnesses.” In re Estate of Zaritsky, 198 Ariz. 599, 601, ¶ 5 (App.
2000); see also Ariz. R. Civ. P. 52(a)(6). We do not reweigh conflicting
evidence; we determine whether substantial evidence supports the court’s
ruling. Pouser, 193 Ariz. at 579, ¶ 13.
¶19 “We review the superior court’s legal conclusions de novo.”
Zaritsky, 198 Ariz. at 601, ¶ 5. When interpreting a trust document, the goal
is to “ascertain the intent of the trustor.” In re Estate of Zilles, 219 Ariz. 527,
530, ¶ 8 (App. 2008). We determine the trustor’s intent by looking “within
the four corners of the instrument . . . and when necessary or appropriate,
the circumstances under which the [instrument] was made.” Id. (quoting In
re Gardiner’s Estate, 5 Ariz. App. 239, 240–41 (1967)).
¶20 “The law favors testamentary disposition of property.” In re
Estate of Shumway, 198 Ariz. 323, 326, ¶ 7 (2000). Because the Trust’s
no-contest clause operates as a forfeiture, which the law disfavors, see id. at
328, ¶ 14, we will find a violation “only when the acts of a party come
strictly within its express terms.” Claudia G. Catalano, Annotation, What
Constitutes Contest or Attempt to Defeat Will Within Provision Thereof Forfeiting
Share of Contesting Beneficiary, 3 A.L.R. 5th 590 § 2[a] (1992); see also Shumway,
198 Ariz. at 328, ¶ 14 (citing this section of the A.L.R.); Restatement (Third)
of Prop.: Wills & Other Donative Transfers § 8.5 cmt. d (Am. L. Inst. 2003)
(“No-contest clauses are construed narrowly, consistent with their terms.”);
4 Gary and Catherine also assert that the superior court judge violated
the Arizona Code of Judicial Conduct. We lack the authority to consider
this claim. Arizona’s Commission on Judicial Conduct and the Arizona
Supreme Court handle complaints and investigate cases involving judicial
conduct. In re Peck, 177 Ariz. 283, 284–85 (1994); see also Ariz. Const. art. 6.1.
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Decision of the Court
see also A.R.S. § 14-10112 (“The rules of construction that apply in this state
to the interpretation of and disposition of property by will also apply as
appropriate to the interpretation of the terms of a trust and the disposition
of the trust property.”).
¶21 When ruling on the parties’ summary judgment motions, the
superior court interpreted the no-contest clause provisions. Looking at
dictionary definitions of “attack,” “seek,” “impair,” and “invalidate,” the
court found that a no-contest clause violation occurs when a Trust
beneficiary contests or tries to diminish or nullify 1) any of the decedent’s
beneficiary choices or 2) a Trust provision. Though we reversed the
superior court’s grant of summary judgment for other reasons, see Oakland
II, 1 CA-CV 19-0759, at *4, ¶ 15, we agree with its no-contest clause
interpretation. The trustor’s inclusion of the words “attack” and “seek”
suggests that forfeiture requires more than an impairment. See Nicaise v.
Sundaram, 245 Ariz. 566, 568, ¶ 11 (2019) (We must “give meaning, if
possible, to every word and provision.”); Antonin Scalia & Bryan A. Garner,
Reading Law: The Interpretation of Legal Texts 174 (2012) (“[E]very word and
every provision is to be given effect.”). A violation of the Trust’s no-contest
clause requires proof of intent or an attempt to diminish or nullify a
beneficiary designation or a Trust provision.
¶22 Most of the issues raised have been addressed in prior rulings.
The parties participated in three trials, and this court has issued two
decisions about this Trust and these parties. We will not disturb the legal
conclusions already determined in prior decisions unless we find a clear
error or a change in the law, issue, or evidence. See Dancing Sunshines Lounge
v. Indus. Comm’n of Ariz., 149 Ariz. 480, 482 (1986) (“[T]he decision of a court
in a case is the law of that case on the issues decided throughout all
subsequent proceedings in both the trial and appellate courts, provided the
facts, issues and evidence are substantially the same as those upon which
the first decision rested.”); see also Ariz. Sup. Ct. R. 111(c)(1)(a)
(Memorandum decisions may be cited to establish the law of the case.).
A. The Superior Court Did Not Err by Finding James and Victoria
Did Not Violate Subsection (f) of the No-Contest Clause.
¶23 On appeal, Catherine and Gary assert that, in violation of
subsection (f), James and Victoria attacked or sought to impair or invalidate
Catherine’s and Gary’s beneficiary interests in the Fidelity policy by failing
to timely notify Fidelity of Patricia’s death, failing to notify Catherine and
Gary that they were designated policy beneficiaries, and submitting a Trust
claim to Fidelity.
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¶24 James testified that he never tried to remove or change the
policy’s beneficiaries. James and Victoria both testified they never sought
to conceal the annuity from Gary and Catherine. Victoria said she first
disregarded Fidelity’s letters because she believed Gary and Catherine had
the information. When she finally read the letters, her attorney told her she
“didn’t have to worry” because Fidelity would contact the siblings
individually. James testified he thought the Trust was the annuity
beneficiary and that submitting the Trust claim was a mistake rather than
an attempt to interfere with Gary’s and Catherine’s policy rights. James
explained he withdrew the Trustee claim when Fidelity informed him the
Trust was not the beneficiary.
¶25 The superior court found that “[n]either James nor Victoria
ever attacked or attempted to impair or invalidate any designation of
beneficiaries on the [Fidelity] Annuity.” The court adopted James’s
testimony that he was mistaken about the Trust claim submission, and the
court found “no nefarious intent on his part.”
¶26 On appeal, Gary and Catherine discredit James’s and
Victoria’s explanations by arguing that James never listed the policy as a
Trust asset, Victoria never submitted her claim as a beneficiary, and they
were told the siblings, rather than the Trust, were the policy’s beneficiaries.
But this court’s role is not to reweigh conflicting evidence or reevaluate
witness credibility.5 Zaritsky, 198 Ariz. at 601, ¶ 5; Pouser, 193 Ariz. at 579,
¶ 13. Based on the trial testimony, the court could have reasonably
concluded James made a mistake in his claim submission and that James
5 Gary and Catherine also rely on Reeves v. Sanderson Plumbing
Products, Inc., 530 U.S. 133 (2000), to contend the superior court should have
disregarded James’s and Victoria’s testimonies because they contained
“self-serving statements” that were “solely based on the parties’
self-serving credibility.” Their reliance is misplaced. In Reeves, the court
explained that when ruling on a motion for judgment as a matter of law in
a jury trial, the court “must disregard all evidence favorable to the moving
party that the jury is not required to believe.” Id. at 151. Here, on the other
hand, the superior court held a bench trial and never considered a motion
for judgment as a matter of law. As the fact finder, the superior court judge
was to observe the witnesses and assess their credibility during the bench
trial. See Castro v. Ballesteros-Suarez, 222 Ariz. 48, 51, ¶¶ 6, 11 (App. 2009)
(When reviewing a bench trial ruling, we give “due regard to the
opportunity of the court to judge the credibility of witnesses.”). The Reeves
standard does not apply.
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and Victoria lacked the requisite intent under the no-contest clause.
Substantial evidence supported the superior court’s finding that James and
Victoria did not attack or seek to impair or invalidate Gary’s and
Catherine’s beneficiary interests in the Fidelity policy.
¶27 Gary and Catherine also assert that, in violation of subsection
(f), Victoria attacked or sought to impair the designation of the Trust as the
beneficiary of the Waddell & Reed IRA by depositing an IRA distribution
into her bank account, keeping a direct deposit check from the IRA in the
account, and failing to transfer the funds to the Trust.
¶28 At trial, Victoria explained that these funds would have been
deposited into the joint checking account before her mother died. And
Waddell issued the check before Patricia died. As a result, Victoria did not
notice the direct deposit in the account until after the litigation began. She
also explained she did not transfer the funds to the Trust because James’s
attorney told her that the money would be handled in the Trust’s final
accounting.
¶29 The superior court found Victoria’s statement that she
believed she was supposed to deposit the check into the bank account
credible. It found that Gary and Catherine failed to sufficiently show
Victoria attempted “to improperly deprive the Trust of [the two checks]
received from Waddell & Reed.”
¶30 On appeal, Gary and Catherine assert there was no support
for Victoria’s testimony. They claim she should have known about the
direct deposit because she was using the account around the time of the
deposit. But we will not reweigh conflicting evidence, and we defer to the
superior court’s credibility assessments. Zaritsky, 198 Ariz. at 601, ¶ 5;
Pouser, 193 Ariz. at 579, ¶ 13. Based on Victoria’s belief that depositing the
check into the account was appropriate, her testimony that she overlooked
the direct deposit, and her understanding that the funds would be
eventually considered in a final Trust accounting, the superior court could
have reasonably found Victoria did not attack or seek to impair or
invalidate the designation of the Trust as the beneficiary of the Waddell &
Reed IRA.
¶31 Thus, we conclude the court did not err by finding that James
and Victoria did not violate subsection (f) of the no-contest clause.
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B. The Superior Court Did Not Err by Finding James and Victoria
Did Not Violate Subsection (g) of the No-Contest Clause.
¶32 On appeal, Gary and Catherine argue that James and Victoria,
in violation of subsection (g), attacked or sought to impair or invalidate the
Trust provisions about the appointment of a co-trustee and the distribution
of assets to the beneficiaries.
1. James Did Not Seek to Impair or Invalidate the Trust
Provisions Concerning the Appointment of a Co-Trustee.
¶33 Gary and Catherine contend James violated subsection (g) of
the Trust by failing to appoint a co-trustee to manage the real estate
transaction. This court addressed James’s failure to establish a co-trustee
when affirming the denial of Gary’s and Catherine’s petition to remove
James as trustee. See Oakland I, 1 CA-CV 16-0073, at *3, ¶ 18. In the current
appeal, the superior court found that because James’s actions did not rise
to the level necessary to remove him as trustee, they would be insufficient
to remove him as a beneficiary of the same Trust.
¶34 At the trial, James testified his attorney never told him the
appointment of a co-trustee was required, and he thought he did not need
to appoint one. The superior court found that James acted at his counsel’s
direction throughout the real estate transaction. Thus, the superior court
could reasonably conclude James did not seek to diminish the Trust
provisions because he did not think he needed to appoint a co-trustee under
the Trust terms.
¶35 Gary and Catherine assert that the Trust required James to
appoint a co-trustee for the real estate transaction because it constituted
self-dealing and produced conflicts of interest. But according to the Trust,
James did not have to appoint a co-trustee. As this court mentioned in
Oakland I, the Trust authorizes the appointment but does not require a
co-trustee when valuing the property. See Oakland I, 1 CA-CV 16-0073, at *3,
¶ 18. The Trust provisions discussing the co-trustee’s authority to perform
in the event of conflicts of interest only reveal powers a co-trustee would
have if appointed. They do not implicate a requirement that a co-trustee be
established.
¶36 Under the Trust terms, if the trustor is alive, the trustor “shall
designate” a co-trustee if needed. In the following sentence, the Trust
provided that if the trustor is not alive, the trustees “shall have the right to
designate” a co-trustee to perform certain functions. “Shall designate” and
“shall have the right to designate” must have different meanings. See Scalia
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& Garner, supra, at 170 (A “variation in terms suggests a variation in
meaning.”). James began the real estate action after Patricia, the trustor,
died. Thus, James “h[ad] the right to designate” a co-trustee, but he did not
have an obligation to appoint one. See id. at 112 (“Mandatory words impose
a duty; permissive words grant discretion.”).
¶37 Given James’s reliance on counsel that he was not legally
required to appoint a co-trustee, the failure to do so is not an attack or
attempt to impair or invalidate the Trust.
2. James and Victoria Did Not Seek to Impair or Invalidate the
Trust Provisions Governing the Distribution of Assets.
¶38 Gary and Catherine argue James and Victoria violated
subsection (g) of the no-contest clause by transferring the Trust real estate
to themselves and failing to distribute the proceeds from the transfer. They
claim James and Victoria sought to violate the Trust provision requiring
that each sibling have an equal Trust share because James and Victoria
“received the in-kind distribution of the real estate asset” while Gary and
Catherine “never received any distributions from the Trust related to the
real estate.”
¶39 As this court explained in Oakland I, the real property’s
appraisal was conducted independently of James and Victoria, and there
was no indication it did not represent the property’s fair market value.
Oakland I, 1 CA-CV 16-0073, at *3, ¶ 18. And when interpreting the Trust,
this court held that despite the Trust’s criteria for postponing a beneficiary’s
distribution, “the Trust does not provide beneficiaries an entitlement to any
particular distributions of their trust share” and that James has “wide
discretion to distribute to each beneficiary” as he sees necessary. Id. at *4,
¶ 22.
¶40 At the most recent trial, James testified he relied on his
lender’s and attorney’s advice throughout the real estate transaction and
never intended to deprive Catherine and Gary of their equal shares in the
Trust. He testified he intended to distribute the real estate proceeds but was
waiting until after the Trust litigation concluded.
¶41 The superior court found that “although James engaged in an
act of self-dealing, it does not appear he intended to do it to benefit himself
or Victoria” because “he intended to account for Gary and [Catherine’s]
equivalent share through a distribution of funds.” It further found that
Gary and Catherine failed to prove James intended to “deprive them of
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their fair share of Trust assets” or that the final distributions would be
unequal.
¶42 We defer to the superior court’s finding that James’s
testimony about his intent was credible. Zaritsky, 198 Ariz. at 601, ¶ 5;
Pouser, 193 Ariz. at 579, ¶ 13. Given James’s testimony, his reliance on the
advice of his attorney and his lender, and the trustee’s wide discretion to
distribute assets under the Trust, the superior court could have reasonably
concluded that James did not attack or seek to impair or invalidate the Trust
provision granting each sibling an equal share of Trust assets when
participating in the real estate transfer.6
¶43 Gary and Catherine also challenge James’s failure to
distribute proceeds from the bank account and certificates of deposit, and
they assert that Victoria improperly took personal ownership of the assets.
Though this issue has already been resolved, Gary and Catherine argue on
appeal that these assets belong to the Trust, not Victoria. But this court
already concluded that after Patricia died, the bank account and certificates
of deposit belonged solely to Victoria and were not Trust assets. Oakland I,
1 CA-CV 16-0073, at *5, ¶ 28.
6 Gary and Catherine also suggest James should have notified them
that he planned to withhold the real estate proceeds. They rely on the Trust
provision requiring notification to the beneficiary if the trustee decides to
postpone a beneficiary’s distribution. Gary and Catherine made this same
argument when trying to remove James as trustee. But the Trust’s criteria
for postponing distributions to a beneficiary did not control James’s
decision not to schedule a distribution. See Oakland I, 1 CA-CV 16-0073, at
*4, ¶ 22.
As for the real estate transaction, Gary and Catherine raise several
other claims, including that James and Victoria failed to get their consent or
court approval for the real estate transaction, created a “false public record”
of the property transfer, and “intentionally [misled them] about the status
of the real property.” Gary and Catherine fail to show how these allegations
were attacks on or attempts to invalidate Trust provisions. Moreover,
James’s reliance on his lender and attorney throughout the real estate
transaction weighs against a finding that he and Victoria tried to impair the
Trust. We note that Gary and Catherine are seeking to void the real estate
transaction in a pending civil action against Victoria and her husband,
James, their bank, and the title insurance company, which may be better
suited to address the claims.
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¶44 The record also shows that Victoria’s and James’s attorney
informed the siblings that the account and certificates of deposit belonged
solely to Victoria. Given their reliance on counsel, substantial evidence
supported the superior court’s conclusion that neither Victoria nor James
sought to violate the Trust provision granting each sibling an equal share
of Trust assets when Victoria took possession of the accounts and James did
not distribute these funds as Trust assets.
¶45 Gary and Catherine also challenge James’s failure to
distribute the funds from the MetLife policy and the Protective Life IRA. As
explained, no beneficiary is entitled to any Trust distribution. Oakland I, 1
CA-CV 16-0073, at *4, ¶ 22. James can distribute Trust funds as necessary,
“considering the beneficiary’s reasonable needs and other resources.” Id.Given James’s testimony that he was preserving Trust assets until the
ongoing litigation was resolved, the superior court could have reasonably
found he acted within his discretion under the Trust and was not seeking
to impair it.
¶46 Finally, Gary and Catherine criticize James’s failure to avoid
tax consequences with the Protective Life IRA when he could not get the
company to roll over the asset into four separate accounts. They claim he
diminished trust assets because he did not do enough to avoid the tax
consequences. The Trust gave James the authority to roll over retirement
plan interests to carry out the Trust requirements or if he determined it was
in the beneficiaries’ best interests. James worked with an attorney to roll
over the IRA interests, but Protective Life would not allow it. The superior
court found that Gary and Catherine “offered no credible evidence that
further efforts by James would have convinced Protective Life to take
different action.” And Patricia designated the Trust, not the four siblings,
as the beneficiary of the IRA, so the superior court reasonably concluded
that James did not try to impair the Trust or any beneficiary designation
when he submitted the claim to Protective Life on behalf of the Trust.
¶47 We thus conclude that the superior court did not err by
finding that James and Victoria did not violate subsection (g) of the
no-contest clause.
C. The Superior Court Did Not Err by Finding James and Victoria
Did Not Violate Subsection (h) of the No-Contest Clause.
¶48 Gary and Catherine contend that James and Victoria violated
subsection (h) of the no-contest clause because they took “concerted
effort[s] to improve their beneficiary interests to the direct detriment” of
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Gary and Catherine and had the “singular goal and purpose” to steal Trust
assets. They urge us to infer that James and Victoria worked together to
violate the Trust based on their decisions over the real estate transaction,
the Fidelity annuity, and the bank account. The superior court found “no
credible evidence indicating that James and Victoria agreed with each other
to accomplish any purpose prohibited by the No Contest Clause.” Because
the superior court could reasonably conclude that neither James nor
Victoria attacked or sought to impair or invalidate a beneficiary designation
or Trust provision, it could also find they did not conspire with each other
or voluntarily assist each other in doing either. We, therefore, conclude that
the superior court did not err by finding that James and Victoria did not
violate subsection (h) of the no-contest clause.
ATTORNEY’S FEES
Appellants request attorney’s fees under the Trust’s Nominee
Agreement and A.R.S. § 12-341.01. We decline to award fees because they
did not prevail. We award costs to Appellees upon compliance with
ARCAP 21.
CONCLUSION
¶49 We affirm.
AMY M. WOOD • Clerk of the Court
FILED: AA
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