Wulf v. Barrow , 418 P.3d 906 ( 2017 )

IN THE
ARIZONA COURT OF APPEALS
DIVISION ONE
In the Matter of:
ROBERT E. WULF, Deceased.
DEBORA A. BARROW, et al., Petitioners/Appellees,
v.
RON WULF, Respondent/Appellant.
No. 1 CA-CV 16-0317
FILED 10-12-2017
Appeal from the Superior Court in Maricopa County
No. PB2010-070797
The Honorable Frank W. Moskowitz, Judge
AFFIRMED
COUNSEL
Warner Angle Hallam Jackson & Formanek, PLC, Phoenix
By Jerome K. Elwell, Phillip B. Visnansky
Counsel for Respondent/Appellant
Gorman & Jones, PLC, Sun City
By Andrew P. Gorman
Co-Counsel for Petitioners/Appellees
Padish & Wells, PLLC, Scottsdale
By James E. Padish
Co-Counsel for Petitioners/Appellees
WULF v. BARROW, et al.
Opinion of the Court
OPINION
Judge James P. Beene delivered the opinion of the Court, in which
Presiding Judge Samuel A. Thumma and Judge Lawrence F. Winthrop
joined.
B E E N E, Judge:
¶1 Ron Wulf, trustee for the Wulf Family Support Trust, Wulf
Family Trust, and Wulf Irrevocable Trust (collectively, the “Trusts”),
appeals the superior court’s finding that probable cause supports
beneficiaries’ Arizona Adult Protective Services Act (“APSA”) claim, and
thus, did not trigger the in terrorem clauses in the Trusts. Wulf contends
that each factual allegation giving rise to a claim challenging an in terrorem
clause must be supported by probable cause. Because A.R.S. § 14-2517
requires only that the beneficiaries’ claim—and not each of the underlying
factual allegations—be supported by probable cause, we affirm.
FACTUAL AND PROCEDURAL HISTORY
¶2 Each of the Trusts contain an in terrorem clause.1 In October
2013, beneficiaries of the Trusts, Debora Barrow and Kathi Wulf
(“Beneficiaries”), petitioned to remove Wulf as trustee. Beneficiaries
amended the petition in April 2014 to add an alleged violation of APSA.
Ariz. Rev. Stat. (“A.R.S.”) § 46-456 (2017).2 Beneficiaries asserted seven
factual allegations of financial exploitation in support of their APSA claim:
1 Two of the in terrorem clauses are identical, and the third has the
same effect as the other clauses. An in terrorem clause, or no-contest
clause, is a provision that threatens to dispossess any beneficiary who
challenges the terms of a trust or will. Black’s Law Dictionary 1073 (8th
ed. 2004). An in terrorem clause is invalid as a matter of law if probable
cause supports the beneficiaries’ claim challenging the trust or will. A.R.S.
§ 14-2517 (2017).
2 Absent material revisions after the relevant date, we cite a statute’s
current version.
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Opinion of the Court
(1) $200,000 withdrawn from a bank account, which is
unaccounted for;
(2) proceeds from the sale of real property owned by the
Trusts amounting to $120,790.64 are unaccounted for;
(3) $20,000 withdrawn from a bank account, which is
unaccounted for;
(4) A $11,351.52 purchase and installation of solar panels;
(5) Wulf opened a bank account and added the vulnerable
adult to the account;
(6) A $10,990.14 check was issued from the Trusts to Wulf
Urethane, Inc.;
(7) A $7,000 check issued to a law firm.
¶3 Wulf counterclaimed seeking to enforce the in terrorem
clauses of the Trusts. Beneficiaries then filed a motion for partial
summary judgment seeking to invalidate the in terrorem clause, but the
superior court denied the motion, ruling that the Beneficiaries’ complaint
“trigger[ed] the in terrorem provisions of the three trusts.” The superior
court also ruled that there were disputed issues of material fact regarding
whether Beneficiaries had probable cause, as required by A.R.S. § 14-2517,
for their APSA claim.
¶4 The superior court ordered a bifurcated trial to determine
whether there was probable cause for the Beneficiaries’ APSA claim.
Before the bifurcated trial, this court issued its opinion in In re Shaheen
Trust, 236 Ariz. 498 (App. 2015). In a motion in limine, Wulf contended
that under Shaheen, all of Beneficiaries’ allegations must be supported by
probable cause.
¶5 After oral argument, the superior court determined that “the
parties and the Court have always treated the Beneficiaries’ claim that
triggers the in terrorem clause as one claim[.]” Therefore, the court ruled
that the Beneficiaries “need only establish ‘probable cause’ for [the APSA
claim as a whole] and not for each and every allegation that may support
that claim.” Alternatively, and in the event Shaheen would bar
Beneficiaries’ claim, the superior court determined that Shaheen did not
retroactively apply.
¶6 After an evidentiary hearing, the court ruled that “most of
the contested allegations . . . do not give rise to ‘probable cause,’” but
found that Beneficiaries, “by the thinnest of margins,” had shown
probable cause for their APSA claim. At Wulf’s request, the court entered
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Opinion of the Court
partial final judgment on that decision pursuant to Arizona Rule of Civil
Procedure 54(b).
¶7 Wulf timely appealed the superior court’s ruling. We have
jurisdiction pursuant to A.R.S. § 12-120.21(A)(1) (2017).
DISCUSSION
¶8 Wulf argues that the superior court erred in its application of
Shaheen and finding that it does not apply retroactively. Whether the
superior court erred in its interpretation of Shaheen is a question of law,
which we review de novo. Enter. Leasing Co. of Phx. v. Ehmke, 197 Ariz. 144,
148, ¶ 11 (App. 1999).
¶9 In Shaheen, beneficiaries of a trust containing an in terrorem
clause “filed a petition alleging multiple claims of breach of trust.” 236
Ariz. at 499, ¶ 2. The beneficiaries’ petition “contained a multitude of
allegations, which the trial court distilled into nine separate claims of
breach of trust.” Id. at 501 n.3, ¶ 13 (internal quotations omitted). The
beneficiaries, however, did not appeal the characterization of their
allegations as claims. Id. In response, the trustee filed a counter-petition
requesting the beneficiaries’ interest in the trust be forfeited pursuant to
the in terrorem clause. Id. at 499-500, ¶ 2. The superior court denied the
trustee’s counter-petition, holding that the in terrorem clause was
unenforceable. Id. This court reversed, holding that the in terrorem clause
was enforceable, and “there must have been probable cause for each of the
[beneficiaries’] nine claims.” Id. at 500, ¶ 7. Citing public policy,
including the cost of litigation and the donative intent of the transferor,
this court reasoned:
When a party brings nine claims against a trustee, as the
[beneficiaries] have done here, that party litigates nine
different challenges, and, accordingly, contests nine separate
claims. If these nine claims had been presented in nine
separate petitions, there would be no question that probable
cause would have to support each claim to avoid forfeiture.
We see no reason for a different result merely because the
claims were asserted in a single petition.
Id. at 501, ¶ 9.
¶10 Wulf incorrectly construes Shaheen to require that all
allegations of financial exploitation be supported by probable cause. On
the contrary, Shaheen held that all claims must be supported by probable
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Opinion of the Court
cause, but did not apply that same standard to their underlying
allegations.
¶11 Interpreting Shaheen as requiring parties to support each
factual allegation with probable cause is contrary to A.R.S. § 14-2517. This
statute provides that an in terrorem clause is unenforceable “if probable
cause exists for that action.” A.R.S. § 14-2517 (emphasis added).
Ordinarily, an action is “any matter or proceeding in a court, civil or
criminal.” A.R.S. § 1-215(1) (2017); see also Semple v. Tri-City Drywall, Inc.,
172 Ariz. 608, 611 (App. 1992) (“The common definition of action is a
proceeding in a court of justice by which one demands or enforces one’s
right.”) (internal citation and quotations omitted). If the Legislature
intended to require probable cause exist for each allegation, rather than
the entire suit, it would have explicitly said so. See Orca Commc’ns
Unlimited, LLC v. Noder, 236 Ariz. 180, 182, ¶ 10 (2014). Instead, the
Legislature used “action.” Under § 14-2517, Beneficiaries are not required
to demonstrate probable cause for each factual allegation.
¶12 Wulf contends that each allegation of financial exploitation
is a separate claim by Beneficiaries. However, a plain language
interpretation of the word “claim” further evidences the fact that Wulf
misconstrues Shaheen.
¶13 Neither APSA nor Title 46, chapter 4 of the Arizona Revised
Statutes defines “claim.” Therefore, we turn to the ordinary meaning of
the word and look to the dictionary for guidance. See DBT Yuma, L.L.C. v.
Yuma Cty. Airport Auth., 238 Ariz. 394, 396, ¶ 9 (2015). A “claim”
ordinarily means a “cause of action.” Resolution Trust Corp. v. W. Tech.,
Inc., 179 Ariz. 195, 201 (App. 1994). On the other hand, an allegation can
mean something quite different, such as a “declaration that something is
true; esp., a statement, not yet proved, that someone has done something
wrong or illegal.” Black’s Law Dictionary 81 (8th ed. 2004).
¶14 Here, Beneficiaries asserted as a claim a violation of APSA,
and sought financial and equitable remedies. The APSA violation was the
claim because it provided the statutory grounds for the relief sought by
Beneficiaries. The violation of APSA was based on allegations that Wulf
misused or appropriated over $370,000 worth of the Trusts’ property. The
allegations of financial exploitation were just that—allegations. They were
declarations of Wulf’s wrongdoing, giving rise to Beneficiaries’ APSA
claim. And as the superior court noted, the court and the parties “always
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Opinion of the Court
treated the Beneficiaries’ claim that triggers the in terrorem clause as one
claim – an [APSA] claim.” 3
CONCLUSION
¶15 For the foregoing reasons, we affirm the superior court’s
decision.
AMY M. WOOD • Clerk of the Court
FILED: AA
3 Because Shaheen does not require Beneficiaries to have all
factual allegations underlying a claim be supported by probable cause, we
need not address the superior court’s retroactivity analysis.
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