Holt v. Baum

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UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL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 the Matter of:
JAMES R. BAUM AND MYRA W. BAUM TRUST
JAMES R. BAUM IRREVOCABLE TRUST
JAMES R. BAUM AND MYRA W. BAUM IRREVOCABLE TRUST
JAMES R. BAUM 2003 IRREVOCABLE TRUST
JAMES R. BAUM
___________________________________________________________
DEBRA HOLT, Petitioner/Appellee-Cross Appellant,
v.
MYRA BAUM, et al., Defendants/Appellants-Cross Appellees.
No. 1 CA-CV 18-0744
FILED 3-19-2020
Appeal from the Superior Court in Maricopa County
No. PB2012-002237
The Honorable Amy Michelle Kalman, Judge Pro Tempore
The Honorable Margaret B. LaBianca, Judge
JURISDICTION ACCEPTED IN PART; RELIEF GRANTED IN PART
__________________________________________________________________
COUNSEL
Andersen PLLC, Scottsdale
By Mark E. Andersen, Samantha Garber Stirling
Counsel for Defendants/Appellants/Cross-Appellees Jordan Lotsoff, Maureen
Hardy, Rebecca Lotsoff and Phillip Lotsoff
Alexander R. Arpad, Phoenix
Counsel for Defendant/Appellant/Cross-Appellee Myra Baum
Asimou & Associates, PLC, Phoenix
By Thomas G. Asimou, Meagan M. Pollnow
Co-Counsel for Petitioner/Appellee/Cross-Appellant Debra L. Holt
Nearhood Law Offices, PLC, Scottsdale
By Laura M. Stover
Co-Counsel for Petitioner/Appellee/Cross-Appellant Debra L. Holt
MEMORANDUM DECISION
Presiding Judge Samuel A. Thumma delivered the decision of the Court, in
which Judge Randall M. Howe and Judge Diane M. Johnsen joined.1
T H U M M A, Judge:
¶1 In 2016, a co-trustee issued a subpoena duces tecum seeking
documents from the trust’s accountant. The other co-trustee objected on
various grounds, including claiming compliance could be an undue burden
costing as much as $6,000. That modest start spawned hundreds of pages
of motion practice leading to the denial of a motion to compel, a second
subpoena following a petition for final distribution and termination of the
1Judge Johnsen was a sitting member of this court when the matter was
assigned to this panel of the court. She retired effective February 28, 2020.
In accordance with the authority granted by Article 6, Section 3, of the
Arizona Constitution and pursuant to A.R.S. § 12-145, the Chief Justice of
the Arizona Supreme Court has designated Judge Johnsen as a judge pro
tempore in the Court of Appeals, Division One, for the purpose of
participating in the resolution of cases assigned to this panel during her
term in office.
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trust, more motion practice leading to the grant of a motion to quash and
awards of about $100,000 in attorneys’ fees.
¶2 In late 2018, this court was invited to review the superior
court’s orders on the two subpoenas and to award more fees. Because the
final judgments appealed from were improperly issued, this court treats the
appeals and cross-appeals as seeking special action relief, accepts
jurisdiction in part as discussed below and grants relief in part.
FACTS AND PROCEDURAL HISTORY
¶3 Myra and James Baum were married for 28 years before James
died in July 2012. They had no children together, but each had children
from prior marriages. Debra Holt, Valerie Hanna and Jeffrey Baum are
James’ children. Rebecca, Jordan and Phillip Lotsoff and Maureen Hardy
are Myra’s children. Myra and James amassed significant wealth during
their lives, resulting in estate-planning efforts that include multiple trusts
and a limited partnership. Myra and James were co-trustees of the James R.
Baum and Myra W. Baum Trust u/a/d January 11, 1984 (1984 Joint Trust)
until James died. Debra then became co-trustee, along with Myra, of the
1984 Joint Trust. Debra also became trustee of other trusts and managing
general partner of the partnership.
¶4 The relationship between Myra and Debra appears strained.
By November 2012, Debra filed a petition to remove Myra as co-trustee of
the 1984 Joint Trust. During settlement conferences in 2014, various
agreements may have been reached, although the parties dispute aspects of
those purported agreements, both here and in a declaratory judgment
petition pending in superior court. This decision need not (and expressly
does not) address or resolve any of those disputes. For now, it is sufficient
to acknowledge that the settlement conferences occurred where certain
representations were made, the superior court denied Debra’s 2012 petition
to remove Myra as co-trustee without prejudice and, after the settlement
conferences, the superior court retained jurisdiction to resolve resulting
disputes.
¶5 In June 2016, Myra issued a subpoena duces tecum to the 1984
Joint Trust’s accountant that, as later clarified and narrowed, sought
documents regarding four life insurance policies alleged to benefit the 1984
Joint Trust. Debra objected, the accountant did not respond, and Myra
moved to compel a response to the 2016 subpoena. Debra cross-moved to
quash, filed a supplemental petition to remove Myra as co-trustee and
sought attorneys’ fees and costs. Debra claimed the documents sought by
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the 2016 subpoena were irrelevant given the 2014 settlement conferences
and that compliance would be “unreasonable, burdensome and
duplicative,” noting it might cost as much as $6,000 to comply. In denying
Myra’s motion to compel, the superior court found Myra either was or
should have been aware of the insurance policies before the 2014 settlement
conferences, meaning the documents sought were not relevant to the then-
pending proceedings. The court denied as moot Debra’s cross-motion to
quash.
¶6 Finding it unreasonable for Myra to pursue discovery of the
insurance policies, the court imposed as a sanction $48,000 in attorneys’ fees
and costs against Myra and in favor of Debra, citing Arizona Revised
Statutes (A.R.S.) sections 12-349(A)(3), 12-341.01, 14-1105(A) and 14-10805
(2020).2
¶7 In March 2017, the court granted Debra’s petition to remove
Myra as co-trustee of the 1984 Joint Trust. Starting in May 2017, Myra’s son
Jordan attempted to succeed Myra as co-trustee, an attempt the court
apparently rejected in August 2019. The merits of that endeavor are the
subject of a separate appeal.
¶8 In July 2017, Debra filed a petition for final distribution and
termination of the 1984 Joint Trust. Debra listed more than $5,000,000 to be
distributed and, as trustee, sought a release and discharge from all
potentially interested parties, including Myra and her children Maureen,
Rebecca, Jordan and Phillip (the Children). Myra, the Children and Jordan
as putative co-trustee filed objections to Debra’s petition.
¶9 A few weeks later, the Children served a subpoena duces
tecum on the 1984 Joint Trust’s accountant. This 2017 subpoena sought “any
and all records” of the 1984 Joint Trust, the other trusts, and the partnership,
from 2009 forward. Debra moved to quash, arguing the 2017 subpoena
sought “the same and/or substantially similar discovery that Myra” sought
in the 2016 subpoena and that such discovery was barred by agreements
reached at the 2014 settlement conferences, issue/claim preclusion and law
of the case. Debra’s motion also asked that the settlement judge “Interpret
and/or Enforce the” 2014 settlement conferences to find the Children “are
not ‘Interested Persons,’” and sought an award of attorneys’ fees and costs.
2Absent material revisions after the relevant dates, statutes and rules cited
refer to the current version unless otherwise indicated.
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¶10 Jordan as putative co-trustee, joined by Myra and the
Children, opposed the motion to quash, arguing Debra’s petition for final
distribution and termination, and the resulting objections, “effectively
commenc[ed] a contested proceeding” authorizing discovery. Debra
moved to strike Myra’s joinder, arguing the 2017 subpoena was barred “for
the same reasons” as set forth in the order denying Myra’s motion to
compel enforcement of the 2016 subpoena.
¶11 After briefing and oral argument, the court granted Debra’s
motion and struck Myra’s joinder. The court found the interests of Myra
and the Children do “not materially conflict,” and that they all were bound
by the 2014 settlement conferences. The court also concluded that Debra’s
petition for final distribution and termination, and the objections, did not
re-open discovery foreclosed by the ruling denying Myra’s motion to
compel enforcement of the 2016 subpoena. “That [Debra] has petitioned
regarding distribution and termination does not re-awaken claims or
disputes already resolved.” Citing its ruling on the 2016 subpoena, the court
also granted Debra’s motion to strike Myra’s joinder and awarded Debra
attorneys’ fees and cost against the Children under A.R.S. § 14-1105(A).
¶12 Debra lodged a proposed order and judgment reflecting these
rulings, citing Ariz. R. Civ. P. (Rule) 54(b), which the court entered in June
2018. Myra and the Children filed a timely motion for new trial, challenging
the Rule 54(b) certification. After briefing and oral argument, the court
denied the motion for new trial and denied Debra’s request for an award of
additional fees.
¶13 After more briefing, the court denied Debra’s request for an
award of fees against Myra in connection with the 2017 subpoena (“as
[Myra’s joinder was] not the subject of this Court’s order and attorney’s fees
were not requested”), but awarded $51,882.59 in fees against the Children
and in favor of Debra. Debra lodged a proposed judgment reflecting these
rulings, citing Rule 54(b), which the court entered in October 2018.
¶14 Myra and the Children filed timely notices of appeal from the
Rule 54(b) judgments and the denial of their motion for new trial, and Debra
filed a timely cross-appeal from the denial of her request for an award of
additional fees.
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DISCUSSION
I. Jurisdiction.
¶15 The parties dispute whether the superior court properly
certified the rulings at issue as partial final judgments under Rule 54(b).
This court has an independent obligation to determine whether it has
appellate jurisdiction. Robinson v. Kay, 225 Ariz. 191, 192 ¶ 4 (App. 2010). If
appellate jurisdiction is lacking, this court may in its discretion accept
special action jurisdiction. Id. at 193 ¶ 7; see also A.R.S. § 12-120.21(A)(4);
Ariz. R.P. Spec. Act. 1(a).
If an action presents more than one claim for
relief . . . or if multiple parties are involved, the
court may direct entry of a final judgment as to
one or more, but fewer than all, claims or parties
only if the court expressly determines there is
no just reason for delay and recites that the
judgment is entered under Rule 54(b).
Ariz. R. Civ. P. 54(b). Stated simply, entry of a Rule 54(b) judgment requires
(1) final resolution of at least one claim against all parties or all claims
against one party and (2) the need to appeal that resolution sooner rather
than later. The orders leading to the judgments appealed from here failed
both requirements.
¶16 The rulings did not resolve Debra’s petition for final
distribution and termination of the 1984 Joint Trust, which remains pending
in the superior court. The rulings did not resolve claims for relief regarding
the outcome of the 2014 settlement conferences, the terms of which are still
being litigated with superior court. Finally, the rulings on discovery
disputes did not finally resolve any claim for relief as to any party.
Accordingly, the judgments here do not satisfy this aspect of Rule 54(b).
¶17 Similarly, “[t]he phrase ‘no just reason for delay’ in Rule 54(b)
means that ‘there must be some danger of hardship or injustice through
delay which would be alleviated by immediate appeal.’” Pulaski v. Perkins,
127 Ariz. 216, 218 (App. 1980) (citation omitted). Accordingly, Rule 54(b)
judgments should be entered only where “hardship or injustice would
result from a delay in entering a final judgment.” S. Cal. Edison Co. v.
Peabody W. Coal Co., 194 Ariz. 47, 53 ¶ 19 (1999). Because the rulings here do
not meet this requirement, the resulting judgments also fail to do so.
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¶18 For these reasons, the Rule 54(b) certifications are vacated,3
meaning this court lacks appellate jurisdiction. See Brumett v. MGA Home
Healthcare, LLC, 240 Ariz. 421, 429 ¶13 (App. 2016) (requiring compliance
with Rule 54(b) or (c) to be appealable under A.R.S. § 12-2101(A)(9)).
Nevertheless, for the rulings refusing to enforce the 2016 and 2017
subpoenas, and the corresponding fee awards, “the parties have fully
briefed and argued the issues, the superior court has ruled on the claims,
and the non-final issues would likely be raised on appeal after a final
judgment.” Dabrowski v. Bartlett, 246 Ariz. 504, 512 ¶ 15 (App. 2019).
Accordingly, under these comparatively unique circumstances, this court
will sua sponte exercise its discretion to accept special action jurisdiction
over those rulings. See, e.g., Danielson v. Evans, 201 Ariz. 401, 411 ¶ 35 (App.
2001).4
II. The Court Erred in Denying Myra’s Motion to Compel
Compliance With the 2016 Subpoena.
¶19 The superior court’s rulings on discovery matters will not be
disturbed absent an abuse of discretion. Braillard v. Maricopa Cty., 224 Ariz.
481, 497 ¶ 52 (App. 2010). This court, however, reviews de novo issues of
law implicated in discovery rulings. See Catrone v. Miles, 215 Ariz. 446, 454
¶ 23 (App. 2007).
¶20 The 2016 subpoena was directed to the 1984 Joint Trust’s
accountant and sought documents related to that trust. Myra served the
2016 subpoena as co-trustee of the 1984 Joint Trust. As a co-trustee, she had
various rights and duties, including to “take reasonable steps to take control
of and protect the trust property,” A.R.S. § 14-10809, and to “keep adequate
records of the administration of the trust,” A.R.S. § 14-108010(A). As co-
trustee, Myra also was a client of the trust’s accountant. For that reason, it
would appear that Myra would have had a right to ask for and obtain
3The judgments, which were entered as submitted by Debra’s counsel, also
contain pages of factual and procedural recitations, contrary to the
admonition in a different subpart of Rule 54. See Ariz. R. Civ. P. 54(a).
4This discretionary exercise of special action jurisdiction does not extend to
the superior court’s order that the Children are bound by the agreements
reached at the 2014 settlement conferences. Because this court does not
accept special action jurisdiction over that ruling, it remains an
interlocutory superior court decision not yet subject to appeal.
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documents from the trust’s accountant without the need for a subpoena.
The trust’s accountant, however, did not respond to the 2016 subpoena.
¶21 Debra objected to the 2016 subpoena, claiming the 2014
settlement conferences precluded Myra from obtaining the documents
sought and that the subpoena was duplicative, unreasonable and
burdensome. The 2014 settlement conferences, however, did not cause the
removal of Myra as co-trustee, and Debra has not shown how they
precluded Myra as co-trustee from securing trust documents from the
trust’s accountant.
¶22 Similarly, Debra’s objections and the resulting order denying
Myra’s motion to compel use a litigation standard, citing procedural rules,
not a trust administration standard directed by statute. Compare Ariz. R.
Civ. P. 26(b) (permitting discovery of any nonprivileged matter that is
relevant), with A.R.S. § 14-10813(A) (mandating a trustee keep qualified
beneficiaries reasonably informed unless trustee determines it is
unreasonable). Nowhere does the order address the necessity of Myra’s
obtaining such information as co-trustee from a trust administration
perspective. That omission occurred even though the order noted the
subpoena was issued at the direction of Myra as co-trustee and that she
claimed “she does not have all the information regarding policies and other
important matters related to the assets of the 1984” Joint Trust.
¶23 On this record, as co-trustee of the 1984 Joint Trust, Myra had
a right to seek information from the trust’s accountant, including
information sought in the 2016 subpoena, particularly as that subpoena was
later clarified and narrowed. Accordingly, the denial of her motion to
compel compliance with the 2016 subpoena was error and is vacated. For
these same reasons, it was not “unreasonable” for Myra to seek this
information, meaning the sanction of $48,000 in attorneys’ fees and costs
against Myra and in favor of Debra is vacated.
¶24 Having vacated those rulings, from the record presented,
there is no need for remand to further consider the 2016 subpoena. Myra is
no longer a co-trustee. Moreover, albeit in a different capacity, Myra joined
the 2017 subpoena seeking comparable information. As a result, the 2016
subpoena is moot. Having vacated the order denying Myra’s motion to
compel compliance with the 2016 subpoena and vacated the order imposing
a sanction of $48,000 in attorneys’ fees and costs against Myra and in favor
of Debra, once such sums paid are refunded by Debra to Myra, no further
judicial action is necessary or appropriate regarding the 2016 subpoena.
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III. The Court Erred in Granting Debra’s Motion to Quash the 2017
Subpoena.
¶25 Debra’s July 2017 petition sought an order approving final
distribution and termination of the 1984 Joint Trust, as well as a release of
liability from Myra, the Children and all other potentially interested parties.
When Myra and the Children filed objections to that petition, the matter
became a “contested probate proceeding.” Ariz. R. Probate P. 27 (2017).5 As
parties to a contested probate proceeding, Myra and the Children had a
right to obtain discovery on “disputed facts and issues raised in the petition
and the objection thereto.” Id. The Children sought to do so by serving the
2017 subpoena duces tecum on the 1984 Joint Trust’s accountant.
¶26 In moving to quash the 2017 subpoena, Debra argued it was
substantially similar to the 2016 subpoena and that it sought discovery
barred by the 2014 settlement conferences, issue/claim preclusion and law
of the case. The order quashing the 2017 subpoena found the Children were
revocable remainder beneficiaries bound by Myra’s involvement in “the
April 8, 2014 Settlement Agreement.” Referring to its earlier refusal to
compel the accountant to respond to the 2016 subpoena, the court noted it
“has already ruled that claims that the 1984 [Joint] Trust did not receive all
assets it should have were resolved by” the 2014 settlement conferences
“and discovery to support such claims is irrelevant.”
¶27 Contrary to this ruling, however, the minute entry from the
April 8, 2014 settlement conference expressly states that the court “shall
retain jurisdiction to handle any disputes that may arise out of the
settlement agreement.” Thus, the suggestion that the 2014 settlement
conferences barred any party from ever challenging the administration of
the trust is contrary to the minute entry from that settlement conference
itself. Moreover, the reference to the April 8, 2014 settlement conference
does not account for subsequent settlement conferences in June and July
2014.
¶28 Debra has not shown that the 2014 settlement conferences
collectively barred discovery on her petition for final distribution and
termination of the trust. The order granting the motion to quash expressly
notes the Children’s assertion that they needed the documents to ensure the
5 The Arizona Rules of Probate Procedure were amended during these
proceedings; this court cites the version of those rules in place at the time
of the relevant motion practice.
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1984 Joint Trust received the assets to which it had a claim of right. In short,
whatever the terms of any 2014 settlement conferences might have been, it
did not bar all discovery of any type once Debra’s 2017 petition became a
contested proceeding.
¶29 Along with being parties to a contested proceeding and
entitled to seek discovery relevant to Debra’s 2017 petition, the Children
argue that they are “qualified beneficiaries” entitled to be informed about
the contents of the trust. See A.R.S. § 14-10813; see also A.R.S. 14-10103(14)
(defining “qualified beneficiary”). Debra disputes the Children’s
contention, but this court need not resolve the issue because Debra’s
petition avowed the Children are, at very least, potentially interested
persons to whom she provided “notice of all pleadings filed in this
proceeding from 2012” forward. See A.R.S. § 14-1201(33) (defining
“interested person”); see also id. § 14-1201(26) (“‘Formal proceedings’ means
proceedings that are conducted before a judge with notice to interested
persons.”). More broadly, Debra’s petition seeks an order releasing and
discharging her as trustee from all claims of potentially interested parties,
including the Children. Given the relief that Debra sought as to the
Children, the Children should be able to pursue relevant discovery on
issues raised in her petition, particularly after having filed objections that
make this a contested proceeding affording them a right to discovery. See
Ariz. R. Prob. P. 27.
¶30 The Children properly could seek discovery on issues
relevant to Debra’s 2017 petition and Debra did not show that all the
documents sought by the 2017 subpoena were irrelevant to disputed issues
related to her petition.6 Accordingly, the order granting Debra’s motion to
quash the 2017 subpoena is vacated. For these same reasons, and, having
vacated the court’s denial of Myra’s motion to compel compliance with the
2016 subpoena, the order striking Myra’s joinder in the Children’s response
to Debra’s motion to quash is vacated. As a result, the corresponding award
6 The 2017 subpoena was broad, both temporally and in the scope of
materials sought. In granting the motion to quash in its entirety, the
superior court did not determine whether the subpoena should be
narrowed in any way so that the Children could receive responsive non-
privilege documents relevant to issues raised by Debra’s 2017 petition. This
court defers to the superior court to make that determination in the first
instance following the issuance of this decision. See Jolly v. Superior Court,
112 Ariz. 186, 191 (1975) (“[T]he courts have, on limited occasions, restricted
discovery on grounds of irrelevancy.”).
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of attorneys’ fees and costs totaling $51,882.59 against the Children and in
favor of Debra likewise is vacated.
IV. Debra Has Failed to Show Any Error in the Denial of Her Request
for Additional Fees.
¶31 Debra’s cross-appeal argues the superior court erred in failing
to award her additional fees in responding to the motion for new trial, an
issue this court reviews for an abuse of discretion. Klesla v. Wittenberg, 240
Ariz. 438, 441 ¶ 12 (App. 2016). Although Debra asserts the Children’s
conduct in objecting to a Rule 54(b) judgment was “unreasonable” under
A.R.S. § 14-1105, she has failed to support that argument with authority or
otherwise show that the court abused its discretion in declining to award
her additional fees.
V. Attorneys’ Fees on Appeal.
¶32 Myra, the Children and Debra each request attorneys’ fees
and costs on appeal. Myra and the Children request fees and costs pursuant
to A.R.S. §§ 12-341.01, 12-342 and 14-11004(B). Myra and the Children also
request that Debra be denied reimbursement of her fees and costs incurred
on appeal from the 1984 Joint Trust under A.R.S. §§ 14-10805 and -11004(A).
Debra requests her fees and costs on appeal pursuant to A.R.S. §§ 12-349,
12-341.01 and 14-1105.
¶33 This court declines to award Debra her attorneys’ fees and
costs on appeal, as she is not the successful party. The request by Myra and
the Children to prevent Debra from reimbursing herself from the assets of
the 1984 Joint Trust for her fees and costs incurred on appeal is denied,
without prejudice to the superior court’s final distribution orders. Myra and
the Children are awarded their reasonable attorneys’ fees and taxable costs
incurred here pursuant to A.R.S. §§ 12-341 and 14-11004(B), contingent
upon their compliance with Arizona Rule of Civil Appellate Procedure
21(b).
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CONCLUSION
¶34 The putative Rule 54(b) judgments are vacated and, in its
discretion, this court accepts special action jurisdiction over the challenges
to the orders (1) denying Myra’s motion to compel compliance with the
2016 subpoena, (2) granting Debra’s motion to quash the 2017 subpoena
and her motion to strike Myra’s joinder, (3) the related orders awarding
attorneys’ fees and costs and (4) the order denying Debra’s motion for an
award of additional attorneys’ fees in responding to Myra’s motion for new
trial.
¶35 Having accepted special action jurisdiction over these
matters, the court grants the following relief:
• The order denying Myra’s motion to compel
compliance with the 2016 subpoena is vacated
and the order imposing as a sanction $48,000 in
attorneys’ fees and costs against Myra and in
favor of Debra is vacated.
• The order granting Debra’s motion to quash the
2017 subpoena is vacated; the order striking
Myra’s joinder in the Children’s response to
Debra’s motion to quash the 2017 subpoena is
vacated; and the order awarding $51,882.59 in
attorneys’ fees and costs against the Children
and in favor of Debra is vacated.
AMY M. WOOD • Clerk of the Court
FILED: AA
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