Opinion
No. 2 CA-CV 2017-0157
07-26-2018
IN RE THE HART FAMILY TRUST AND THE ESTATE OF JOHN STANLEY HART, DECEDENT JILL MCHANEY, Petitioner/Appellant, v. JOHNNA HART MATTHEWS, ELIZABETH H. MATTHEWS, AND MORRISON NEWELL, Respondents/Appellees.
COUNSEL Munger Chadwick P.L.C., Tucson By Mark E. Chadwick Counsel for Appellant Howard Baldwin, Tucson Counsel for Appellees
THIS DECISION DOES NOT CREATE LEGAL PRECEDENT AND MAY NOT BE CITED EXCEPT AS AUTHORIZED BY APPLICABLE RULES.
NOT FOR PUBLICATION
See Ariz. R. Sup. Ct. 111(c)(1); Ariz. R. Civ. App. P. 28(a)(1), (f). Appeal from the Superior Court in Pima County
No. PB20160638
The Honorable Charles V. Harrington, Judge
REVERSED AND REMANDED
COUNSEL Munger Chadwick P.L.C., Tucson
By Mark E. Chadwick
Counsel for Appellant Howard Baldwin, Tucson
Counsel for Appellees
MEMORANDUM DECISION
Judge Eppich authored the decision of the Court, in which Presiding Judge Vásquez and Judge Espinosa concurred. EPPICH, Judge:
¶1 Jill McHaney appeals the trial court's order granting summary judgment and awarding attorney fees in favor of Johnna Hart Matthews, Elizabeth Hart Matthews, and Morrison Newell (collectively "the Matthews"), following her petition for accounting of the Hart Family Trust. She argues the court erred by concluding the trust never came into existence and if it did, it was "validly revoked in 2006." She also contends the court erred in awarding attorney fees. For the reasons that follow, we reverse and remand for further proceedings.
Factual and Procedural Background
¶2 "In reviewing a grant of summary judgment, we view the facts in the light most favorable to the party against whom judgment was entered." Timmons v. Ross Dress for Less, Inc., 234 Ariz. 569, ¶ 2 (App. 2014). In March 1989, John and Vivian Hart sought services for estate planning. John signed a durable power of attorney appointing Vivian as his attorney-in-fact, which only became valid upon his incapacity. John also signed a healthcare power of attorney and a living will.
¶3 The same day, Vivian executed a document purporting to create the Hart Family Trust, of which John and Vivian were the trustors and lifetime beneficiaries, and Vivian was the trustee. McHaney was included as one of the beneficiaries of the trust upon the deaths of John and Vivian. On the signature lines of the trust certification, which was signed by a notary, Vivian signed both for herself and for John, and indicated she was signing for John as his attorney-in-fact. A few days later, Vivian signed property agreements transferring five properties to the trust, again signing on John's behalf as his attorney-in-fact. John passed away approximately five months later.
¶4 In 2016, shortly after Vivian's death, McHaney filed a petition seeking an accounting for several real properties and other assets of the purported Hart Family Trust. She also filed a notice of, and later recorded, lis pendens on all of the properties. The Matthews filed an objection and opposition to McHaney's petition, alleging she had no legal basis for her action. The Matthews asked that the petition be dismissed and requested attorney fees and costs.
¶5 The Matthews subsequently filed a motion for summary judgment arguing, among other things, the Hart Family Trust had never come into existence because Vivian signed the certification of trust under a springing power of attorney which had not yet sprung. In response, McHaney argued, although the certification of trust was not signed by John, a valid trust had nonetheless been created. She pointed to a document purporting to be John's will, arguing the will created a testamentary trust upon John's death. The will contained a pour-over provision leaving the residue of John's estate to the Hart Family Trust, and specified it was not John's intent to create a separate trust through the will. The will also contained an alternate disposition provision, however, in the event the Hart Family Trust was not in effect or invalid at the time of John's death. Pursuant to the alternate disposition provision, John's estate was to be administered and distributed pursuant to the terms of the trust certification documents of the Hart Family Trust. But, the purported will did not bear any signatures. Instead, the signature block was stamped to indicate the necessary signatures were on the original document. The purported will also bore a date stamp, which matched the date the other estate planning documents were executed. In order to establish the validity of the will, McHaney filed an affidavit from the notary which asserted, "John S. Hart did sign his powers of attorney, living will and pour over will."
We acknowledge the pour-over and alternate disposition provisions in John's will facially conflict with one another, insofar as the pour-over provision states John's intent was not to create a separate trust and the alternate disposition provision suggests the creation of a separate testamentary trust. In our view, these provisions can be harmonized as indicating John's primary intent was not to create a separate trust through the will, but recognizing a contingency where, in the event the initial trust failed, the will would establish a testamentary trust with the same terms. See Newhall v. McGill, 69 Ariz. 259, 263 (1949) (courts assume no testator intends to make conflicting provisions in last will); cf. LeBaron v. Crismon, 100 Ariz. 206, 209 (1966) ("It is the duty of the court to adopt a reasonable interpretation of a contract which will harmonize all of its provisions and any conflicting provisions on the face of the instrument must be reconciled if possible to meet the purposes for which the contract was intended.").
¶6 Before ruling on the motion for summary judgment, the trial court allowed the parties to depose the notary and submit documents calling the court's attention to specific portions of her testimony. At the deposition, the notary testified she had seen a copy of John's purported will, although she had not seen the copy before signing her affidavit. She stated that the documents signed by John and Vivian in 1989 were "boilerplate documents," and were completed by typing the necessary information and names into a computer form. She further testified it was her practice to stamp copies of a will to indicate signatures were on the original documents. She did not have an independent recollection of watching John sign his will, but had notarized all of the estate planning documents. She also testified she had complied with all notarial statutes in executing the will and never notarized documents that were not signed in her presence.
¶7 After a hearing, the trial court issued a written ruling granting the Matthews' motion for summary judgment. It concluded that the Hart Family Trust had never come into existence, or that, alternatively, Vivian validly had revoked it before her death. It reasoned that although the notary's affidavit indicated she had notarized a pour-over will, neither her affidavit nor her deposition established that the document submitted to the court was, in fact, the same document the notary said she had watched John sign. The court also issued a separate written ruling granting attorney fees to the Matthews pursuant to A.R.S. § 14-11004(B). The court issued a final, appealable order, which McHaney appealed. We have jurisdiction pursuant to A.R.S. § 12-2101(A)(1).
Motion for Summary Judgment
¶8 Our rules of civil procedure mandate the entry of summary judgment "if the moving party shows that there is no genuine dispute as to any material fact and the moving party is entitled to judgment as a matter of law." Ariz. R. Civ. P. 56(a). Such a motion "should be granted if the facts produced in support of the claim or defense have so little probative value . . . that reasonable people could not agree with the conclusion advanced by the proponent of the claim or defense." Orme Sch. v. Reeves, 166 Ariz. 301, 309 (1990). "[A]lthough the trial judge must examine the evidence to some extent," id., "[s]ummary judgment is not intended to resolve factual disputes and is inappropriate if the court must determine the credibility of witnesses, weigh the quality of evidence, or choose among competing inferences." Taser Int'l, Inc. v. Ward, 224 Ariz. 389, ¶ 12 (App. 2010). We review a grant of summary judgment de novo. Id.
¶9 Both parties agree that Vivian signed the trust documents and transfers of title funding the trust using an invalid power of attorney. Accordingly, those documents are void, see Tuttle v. Green, 5 Ariz. 179, 183 (1897) (deed signed under invalid power of attorney rendered real estate transaction void), and, standing alone, could not have created a valid trust that included John's interests in the underlying properties, cf. Nat'l Union Indem. Co. v. Bruce Bros., 44 Ariz. 454, 464 (1934) ("A void contract is one which never had any legal existence or effect."). Thus, we must consider whether other evidence submitted to the trial court established the creation of a valid trust.
Trust Creation
¶10 A trust may be created by transfer, declaration, or exercise of a power of appointment. A.R.S. § 14-10401. A trust need not be created during the settlor's lifetime, but may also be created through a transfer of property by will. See id.; see also A.R.S. § 14-2511(A)(2). But, a trust is created only if the settlor has capacity to create a trust, the trust has a definite beneficiary, the trustee has duties to perform, the same person is not the sole trustee and sole beneficiary, and the settlor indicates an intention to create the trust. A.R.S. § 14-10402(A). While "[n]o particular words are necessary to create an express trust," there must be a "clear expression that one holds property for the benefit of another." Lecky v. Staley, 6 Ariz. App. 556, 560 (1967).
The Will
¶11 McHaney argues John's will validly created the Hart Family Trust as a testamentary trust. See § 14-2511(A)(2). While the terms of the will would likely have satisfied the requirements for establishing a valid trust, see id.; §§ 14-10401, 14-10402, the will submitted to the trial court was not the original. If an original will is not available, Arizona law allows for the contents of a valid and unrevoked will to be "proved by a copy of the will and the testimony of at least one credible witness that the copy is a true copy of the original." A.R.S. § 14-3415(B). Accordingly, in order to prove the contents of John's will and to establish the creation of the Hart Family Trust through that instrument, McHaney must, as a threshold matter, have provided evidence that the copy presented to the trial court was "a true copy of the original." Id.; Stevens v. Anderson, 75 Ariz. 331, 333-35 (1953) (to withstand summary judgment party must show there will be some form of proof at trial).
¶12 Viewed in the light most favorable to McHaney, the evidence presented to the trial court established John had executed a valid will in 1989. See A.R.S. § 14-2502. The notary affirmed John had signed his will and she had notarized it. There was also some evidence to suggest the will was signed by two witnesses. Moreover, there is no evidence in the record to suggest the will was revoked by John. See, e.g., § 14-3415(A). Accordingly, McHaney had established, for purposes of summary judgment, that John's 1989 will was valid and unrevoked pursuant to § 14-3415(B).
¶13 There was also some evidence to suggest the 2016 copy was a true copy of the 1989 will. During her deposition, the notary confirmed she had seen the 2016 copy of the will. She further testified the documents signed by John and Vivian in 1989 were boilerplate forms, and were completed by typing the necessary information and names into a computer. It is thus a reasonable inference that the notary was familiar with the contents of the 1989 will, and could therefore testify at trial as to whether the 2016 copy reflected the 1989 will. She also testified it was her practice to stamp copies of a will to indicate signatures were on the original documents. The 2016 copy bore a stamp that is consistent with the notary's testimony regarding her normal practices. The 2016 copy also bore a date stamp, which matched the date the other estate planning documents were executed. Taken together, these assertions create a genuine issue of fact as to whether the 2016 copy was a true copy of John's original will. See Ariz. R. Civ. P. 56(a); see also § 14-3415(B). And because John's will could have created a testamentary trust consisting of the remainder of his estate, the disputed fact was material to the existence of the trust.
Assuming the Hart Family Trust was not in existence at the time of John's death, the alternate disposition provision of the will could have created a testamentary trust including the remainder of John's estate—which would have apparently consisted of insurance policies, investments, rental income, and other assets. See § 14-10401(A)(1) (trust may be created through transfer by will). The real properties, however, which John and Vivian apparently owned in joint tenancy with a right of survivorship, would not have been included in the testamentary transfer creating the trust, as John's interest in the properties would have ceased upon his death. See In re Estelle's Estate, 122 Ariz. 109, 111 (1979) ("The distinguishing feature of a joint tenancy is the right of survivorship by which the survivor takes the estate free of any claim of a deceased joint tenant.").
¶14 McHaney next suggests John's signatures on the power of attorney, living will, and will create a writing satisfying the statute of frauds because John's signature was "effectively fastened" to the trust documents, relying on Favour v. Joseff, 16 Ariz. App. 470 (1972). See A.R.S. § 44-101. She essentially argues John's signatures on the power of attorney, living will, and will demonstrate John's intent to create the Hart Family Trust, since all of the estate planning documents were purportedly signed during the same transaction. We fail to see how John's intention to execute a springing power of attorney and living will would have reflected his separate intent to create a trust. See § 14-10402(A)(2). We are therefore unpersuaded that the living will and springing power of attorney could satisfy the statute of frauds in this manner. In contrast, John's will expressly mentions the Hart Family Trust. To the extent John's will is declared valid, and assuming the original was signed by John, the will could arguably be construed as a memorandum of his intent to create a trust, in writing and signed by John, the person charged, thereby negating a defense under the statute of frauds. See Favour, 16 Ariz. App. at 475; see also § 44-101. Because we remand for further determination on the validity of the will, however, we do not decide the issue.
¶15 Viewing the facts in the light most favorable to the non-moving party and resolving all reasonable inferences in her favor, see Timmons, 234 Ariz. 569, ¶ 2, McHaney has established a genuine issue of material fact as to the existence of a valid trust. Accordingly, the trial court erred in granting summary judgment to the Matthews, and we remand the case to the trial court on that basis. See Ariz. R. Civ. P. 56(a); Orme Sch., 166 Ariz. at 309. Because the trial court's award of attorney fees was based on its grant of summary judgment, we reverse that portion of its order as well.
McHaney also challenges the trial court's alternative ruling, that, if the Hart Family Trust was created and valid only as to Vivian in 1989, Vivian later revoked it. Because the court's alternative ruling is based entirely on the conclusion that John's interests were not included in the trust, and because that conclusion is the basis for our reversal, we do not further consider the court's alternative ruling. We also do not consider McHaney's argument that the court erred in awarding attorney fees, as that issue has been rendered moot by our decision herein. --------
Disposition
¶16 Because the trial court erred in granting summary judgment and attorney fees, we reverse its order and remand the case for further proceedings consistent with this decision.