Marianne Waldow v. James Laporta ( 2010 )

SUPREME COURT OF ARIZONA
En Banc
IN THE MATTER OF THE ESTATE OF: ) Arizona Supreme Court
) No. CV-10-0102-PR
ROSANNE L. McGATHY, )
) Court of Appeals
Deceased. ) Division One
) No. 1 CA-CV 09-0022
__________________________________)
MARIANNE WALDOW, as Personal ) Maricopa County
Representative of THE ESTATE OF ) Superior Court
ROSANNE L. McGATHY, Deceased; ) No. PB2007-090525
MARY McGATHY; DAVID RHODES, )
WILLIAM RHODES; MICHAEL McGATHY; )
ERIN McGATHY, )
) O P I N I O N
Appellees, )
)
v. )
)
JAMES M. LAPORTA, )
)
Appellant. )
__________________________________)
Appeal from the Superior Court in Maricopa County
The Honorable Kirby D. Kongable, Commissioner
________________________________________________________________
Order of the Court of Appeals, Division One
Filed February 22, 2010
VACATED AND REMANDED
________________________________________________________________
BARRON AND POLK, PLLC Phoenix
By Jay M. Polk
And
HAHN LAW OFFICE, PC Sun City
By Bradley S. Hahn
Attorneys for Marianne Waldow
BECKER & HOUSE, PLLC Scottsdale
By Mark E. House
Attorneys for Mary McGathy, David Rhodes,
William Rhodes, Michael McGathy, and Erin McGathy
LAW OFFICE OF BILL KING, P.C. Scottsdale
By William M. King
Attorney for James M. LaPorta
________________________________________________________________
H U R W I T Z, Vice Chief Justice
¶1 An appeal may be taken “[f]rom a judgment, decree or
order entered in any formal proceedings under title 14.” A.R.S.
§ 12-2101(J) (2003). The issue for decision is whether, in an
unsupervised administration, an order requiring nonprobate
transferees to pay a pro rata share of estate taxes is
appealable under § 12-2101(J).
I.
¶2 In April 2008, Marianne Waldow, the personal
representative of the estate of Rosanne L. McGathy, filed a
petition in the superior court seeking instructions on whether
estate taxes should be paid solely from the estate or whether
nonprobate beneficiaries were required to contribute a pro rata
share. The court entered an order requiring the nonprobate
transferees to pay their share of the taxes. This order
disposed entirely of the personal representative’s petition.
The order contained findings pursuant to Arizona Rule of Civil
Procedure 54(b) and was entered as a final judgment. James M.
2
LaPorta, a nonprobate beneficiary, filed a timely notice of
appeal.
¶3 The court of appeals dismissed the appeal sua sponte
for lack of jurisdiction. Citing Ivancovich v. Meier, 122 Ariz.
346, 595 P.2d 24 (1979), the court concluded that the tax
payment order was not appealable under § 12-2101(J) and could be
reviewed only in an appeal from a final decree distributing the
estate. After filing an unsuccessful joint motion for
reconsideration, the personal representative and LaPorta filed a
joint petition for review with this Court.
¶4 We granted review to resolve an issue of statewide
importance about appellate jurisdiction over judgments entered
in formal probate proceedings. See ARCAP Rule 23(c)(3). We
have jurisdiction under Article 6, Section 5(3) of the Arizona
Constitution and A.R.S. § 12-120.24.
II.
A.
¶5 Before the adoption of the Uniform Probate Code
(“UPC”), 1973 Ariz. Sess. Laws, ch. 75, § 1 (1st Reg. Sess.),
Arizona law invariably “treated the handling of an estate as one
continuous in rem proceeding.” 1 State Bar of Arizona, 2000
Probate Code Practice Manual § 5.5.1 (4th ed. 2000) (hereinafter
“Practice Manual”). In such a proceeding, the superior court
assumed and maintained jurisdiction over a decedent’s estate
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“until the final decree, distribution, and discharge of the
executor or administrator.” Id. The UPC calls this in rem
proceeding a “supervised administration.” A.R.S. § 14-3501; see
Unif. Prob. Code § 3-501 cmt. (describing supervised
administration as an “optional procedure for settling an estate
in one continuous proceeding in the Court”). An estate under
supervised administration remains “under the continuing
authority of the court . . . until entry of an order approving
distribution of the estate and discharging the personal
representative or other order terminating the proceeding.” Id.
The personal representative in a supervised administration has
no power “to make any distribution of the estate without prior
order of the court.” A.R.S. § 14-3504.
¶6 The UPC also offers the option of an unsupervised
administration. See A.R.S. § 14-3704. The “basic philosophy”
of unsupervised administration is to minimize judicial
involvement. Practice Manual § 5.5.2. In an unsupervised
administration, the personal representative can distribute
assets and close an estate informally and without court order.
A.R.S. §§ 14-3704, 14-3933. The personal representative or
other interested parties may petition the court for instructions
or other determinations in a “formal proceeding” when necessary.
See, e.g., A.R.S. §§ 14-3401, 14-3414; Practice Manual § 5.5.2.
Even if formal proceedings are instituted, the personal
4
representative may nonetheless close the estate without a final
decree. A.R.S. § 14-3933.
B.
¶7 The court of appeals concluded that Ivancovich
deprived it of appellate jurisdiction. Although Ivancovich is
strikingly similar in its facts to this case, it is
distinguishable in a critical respect.
¶8 In Ivancovich, the decedent passed away in 1944; the
superior court distributed his estate in 1947. 122 Ariz. at
348, 595 P.2d at 26. In 1967, the initial distribution was set
aside. Id. An appeal in the late 1970’s challenged a series of
orders by the trial court, one of which apportioned state and
federal tax payments between the residuary estate and the
beneficiaries of a life insurance policy. Id. at 353, 595 P.2d
at 31. Citing A.R.S. § 12-2101(J), we concluded that the trial
court’s order could only be reviewed “in an appeal from the
final decree distributing the estate.” Id.
¶9 In Ivancovich, the estate was under supervised
administration. Administration of the estate began under
Arizona’s previous probate code, and after Arizona adopted the
UPC, pending probate proceedings became “supervised
administrations” by operation of law. 1973 Ariz. Sess. Laws,
ch. 75, § 29(2) (1st Reg. Sess.) (“[A]ny proceedings relating to
estates of decedents then pending shall become proceedings in
5
supervised administration, unless the decedent’s will expressly
provided otherwise.”).
¶10 An estate under supervised administration remains
under the supervision of the trial court until a final decree is
entered. A.R.S. § 14-3501. Accordingly, all orders entered
before the final decree are interlocutory. Ivancovich thus
correctly found the tax apportionment order before it non-
appealable.
C.
¶11 In contrast to Ivancovich, the case before us involves
an unsupervised administration. The issue is thus one we have
not previously confronted: whether an order that terminates a
formal probate proceeding in an unsupervised administration is
appealable.
¶12 “In Arizona, with certain exceptions, jurisdiction of
appeals is limited to final judgments which dispose of all
claims and all parties” because “[p]ublic policy is against
deciding cases piecemeal.” Musa v. Adrian, 130 Ariz. 311, 312,
636 P.2d 89, 90 (1981) (citations omitted). Section 12-2101
provides for limited statutory exceptions to the general rule of
finality. Before adoption of the UPC, subsection (J) defined
appealable probate orders as those meeting one of the following
criteria:
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1. Granting or refusing to grant, revoking or refusing
to revoke, letters testamentary, or of
administration, or of guardianship.
2. Admitting or refusing to admit a will to probate, or
against or in favor of the validity of a will, or
revoking or refusing to revoke the probate thereof.
3. Against or in favor setting apart property, or
making allowance for a widow or child.
4. Against or in favor of directing the partition,
sale, or conveyance of real property, or settling an
account of an executor, administrator, guardian, or
trustee.
5. Refusing, allowing, or directing the distribution or
partition of an estate, or any part thereof, or
payment of a debt, claim, legacy, or distributive
share.
6. Confirming or refusing to confirm a report of an
appraiser or appraisers setting apart a homestead.
7. Determining heirship.
A.R.S. § 12-2101(J) (1970).
¶13 When the legislature adopted the UPC in 1973, it
concurrently amended § 12-2101(J) to remove this list of
interlocutory appealable orders and instead simply allowed for
appeals from a “judgment, decree or order entered in any formal
proceedings under title 14.” 1973 Ariz. Sess. Laws, ch. 75, §
10, codified at A.R.S. § 12-2101(J) (2003). A formal probate
proceeding is “conducted before a judge with notice to
interested persons,” A.R.S. § 14-1201(20), which commences with
the filing of a petition in the superior court, Ariz. R. Prob.
P. 4(A). Each formal proceeding is “independent of any other
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proceeding involving the same estate.” A.R.S. § 14-3107(1); see
also Unif. Prob. Code § 3-107 cmt. (“[T]he scope of the [formal]
proceeding if not otherwise prescribed by the Code is framed by
the petition.”); Ariz. R. Prob. P. 17 cmt. (“A petition . . . is
the equivalent of a complaint in a civil action[.]”). There may
be several formal proceedings concerning an estate in an
unsupervised administration. Ariz. R. Prob. P. 2(O), (P) cmt.
(“Each application or petition filed within a probate case gives
rise to a separate probate proceeding.”).
¶14 Accordingly, other UPC jurisdictions have concluded
that in an unsupervised administration, an order terminating a
formal proceeding is appealable. See Scott v. Scott, 136 P.3d
892, 899 (Colo. 2006) (distinguishing between supervised and
unsupervised administrations, and holding that “when the probate
court has entered orders fully determining the rights of the
parties with respect to all claims raised in a [formal]
proceeding, a final judgment exists”); In re Estate of Newalla,
837 P.2d 1373, 1376 (N.M. App. 1992) (noting the distinction
between supervised and unsupervised administrations and holding
that an order terminating a formal proceeding is appealable);
Schmidt v. Schmidt, 540 N.W.2d 605, 607 (N.D. 1995) (“Because
each proceeding in an unsupervised probate is considered
independent of other proceedings involving the same estate,
there need be finality only as to that proceeding, not the
8
entire estate.”); see also Richard V. Wellman, The New Uniform
Probate Code, 56 A.B.A. J. 636, 638 (July 1970) (written by the
Chief Reporter of the UPC, and noting that formal proceedings
are to be held before a “judge of a court having the power of a
court of equity to enter a final order after notice and hearing
on relevant questions”).
¶15 We agree. In an unsupervised administration, an order
disposing of a formal proceeding may be the last one the court
will enter; the estate will often thereafter be distributed
without further court involvement. It makes no sense to defer
appellate review of an order terminating a formal proceeding
until after a final decree that may never come. Under such an
approach, the parties would not “know with any degree of
certainty at the time an order is entered whether the order is
final and appealable, because one cannot predict whether further
orders will be sought.” Newalla, 837 P.2d at 1376. “Failure to
allow an appeal from such an order could compel all subsequent
proceedings . . . to go forward under a cloud of uncertainty.”
Estate of Christensen v. Christensen, 655 P.2d 646, 648 (Utah
1982).
¶16 Indeed, if, as the court of appeals held here, no one
may appeal an order disposing of a formal proceeding in an
unsupervised administration until an order formally terminating
the estate is entered, the utility of unsupervised
9
administration would be severely undermined. In order to seek
appellate review of an order terminating a formal proceeding, a
party would be required to obtain a final order distributing the
estate. This would mandate otherwise unnecessary further court
involvement in the unsupervised administration.
III.
¶17 For the reasons above, we hold that § 12-2101(J)
permits appeal of the final disposition of each formal
proceeding instituted in an unsupervised administration.1 In
this case, there is no dispute that the superior court’s order
finally resolved the formal proceeding instituted by the
personal representative. The order is therefore appealable
under § 12-2101(J).2 We vacate the decision order dismissing the
1
To avoid duplicative appeals, trial judges can consolidate
pending formal proceedings when appropriate. See Ariz. R. Civ.
P. 42(a); Ariz. R. Prob. P. 3(A) (providing that the Rules of
Civil Procedure generally apply in probate cases); Newalla, 837
P.2d at 1377 (“When the subject matter of two petitions overlap,
it would generally be appropriate to consider both petitions as
belonging to the same proceeding.” (citation omitted)).
2
In In re Estate of Kerr, the court of appeals stated that
“to be appealable an order should at least be of the same
general importance as those orders specified” in the pre-UPC
version of § 12-2101(J). 137 Ariz. 25, 27-28, 667 P.2d 1351,
1353-54 (App. 1983) (citing State Bar of Arizona, Arizona
Appellate Handbook § 3.2.1.1, 3-3, 3-4 (Supp. 1981)). Under §
12-2101(J), however, any order finally disposing of a formal
proceeding in an unsupervised administration is appealable.
And, in supervised administrations, the final decree, or any
interlocutory orders properly made final under Rule 54(b), are
appealable under A.R.S. § 12-2101(B), which grants appellate
10
appeal and remand the case to the court of appeals for further
proceedings.
_____________________________________
Andrew D. Hurwitz, Vice Chief Justice
CONCURRING:
_____________________________________
Rebecca White Berch, Chief Justice
_____________________________________
W. Scott Bales, Justice
_____________________________________
A. John Pelander, Justice
__________________________
jurisdiction over a “final judgment.” We therefore disapprove
this statement in Kerr.
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