GARDNER v. RICHARDSON

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IN THE COURT OF APPEALS STATE OF ARIZONA DIVISION ONE In the Matter of the Estate of: ) ) J. SCOTT GARDNER, ) ) Deceased. ) __________________________________) WAYNE K. GARDNER, Personal ) Representative and Trustee of ) the J. Gardner Revocable Living ) Trust, ) ) Petitioner/Appellee, ) ) v. ) ) MARLENE RICHARDSON, ) ) Respondent/Appellant. ) __________________________________) DIVISION ONE FILED: 08/09/2012 RUTH A. WILLINGHAM, CLERK BY: sls 1 CA-CV 11-0519 DEPARTMENT D O P I N I O N Appeal from the Superior Court in Maricopa County Cause No. PB2008-050912 The Honorable John R. Doody, Commissioner AFFIRMED Gust Rosenfeld, PLC By Timothy J. Watson Chas W. Wirken Attorneys for Petitioner/Appellee Phoenix Murphy Law Firm, Inc. By Thomas J. Murphy Attorneys for Respondent/Appellant Phoenix G O U L D, Judge ¶1 This is an appeal taken from the trial court s order determining that Appellant, Marlene Richardson, was responsible for payment of associated Decedent J. the with mortgage interest and all other expenses the Scott life estate Gardner s interest Prescott house she received ( the in Property ). Richardson challenges the court s finding that her disclaimer was barred under Arizona Revised Statutes ( A.R.S. ) section 1410013(B)(1). Based on Richardson s conduct in continuing to occupy the Property to the exclusion of others, her knowledge of her liability for expenses related to the Property, and her belated attempt to disclaim her life estate interest, we affirm the trial court s determination her disclaimer was ineffective. Facts and Procedural Background ¶2 Upon Decedent s death, Richardson was granted a life estate interest in the Property. Under the terms of Decedent s Amended Trust, at the termination of Richardson s life estate, the Property would ( Remaindermen ). pass The to life Decedent s estate two children provisions directed Richardson to maintain the Property as if it was her own; to pay all taxes, utilities, homeowners association fees and insurance on the property; and to be responsible 2 for [a]ny other reasonable and customary fees that would normally accompany a property. ¶3 At Decedent s death, the Property was subject to a $205,330 mortgage ( the Mortgage ). From the time of Decedent s death, the Trust paid the principal and interest expenses on the Mortgage. Wayne Gardner, the successor trustee of Decedent s Trust, petitioned the court for instructions to determine who, between Richardson and Remaindermen, would be responsible for paying the interest and the principal of the Mortgage. In August 2009, the court found that Richardson, in exchange for her life estate, was required under the terms of the Trust to pay reasonable interest on the Mortgage, and that the current interest on the mortgage payment of 6% is a reasonable rate. Based on the fact that Richardson s life estate would pass to the Remaindermen upon her death, the court decided that the Remaindermen were required to pay the principal on the Mortgage. ¶4 On May 21, 2010, Richardson mailed Gardner a letter seeking to disclaim September 23, 2008. remove Trust. Richardson her interest in the Property effective In August 2010, Gardner filed a petition to and Remaindermen as beneficiaries of the Gardner sought a declaration from the Court stating that Richardson is responsible to pay (i) all Mortgage interest paid by the Trust from the date 3 of Decedent s death until current and (ii) all other expenses associated with the Property as set forth in the First Amendment [to Decedent s Trust]. Arguing that Richardson was barred from disclaiming her interest under A.R.S. § 14-10013(B), Gardner sought to remove Richardson as a beneficiary and reduce her distribution to offset her willful failure to pay the Mortgage interest and expenses. ¶5 Gardner and Richardson filed cross-motions for summary judgment. estate, as spanning later Gardner argued Richardson s acceptance of the life evidenced October attempt Richardson s to 2008 by emails to February disclaim. disclaimer Gardner 2009, Gardner was received barred her Richardson s further untimely. from argued Gardner that asserted Richardson did not disclaim her interest until May 21, 2010 over nine months after the court issued instructions that Richardson was required to pay interest on the Mortgage - and two months after Gardner sent Richardson a form of renunciation, which purportedly provided Richardson an opportunity to renounce her interest in the life estate. In her cross-motion, Richardson denied she had accepted the life estate. argued she never received a deed 4 or other Richardson documentation evidencing ownership of the life estate interest and she did not have the ability to sell her interest or use it as collateral.1 ¶6 The court rejected Richardson s argument and ordered that any distribution made to Richardson by Gardner could be reduced to pay the estate for expenses Richardson owed in connection with her life estate interest in the Property.2 The court by concluded Richardson had accepted the life estate asserting her right to exclusive possession to the exclusion of Remaindermen and their agents, and thus, any later disclaimer was irrevocably barred. The court stated [t]his ruling opens the way for [Gardner] to reduce any gifts to Richardson by an 1 In the midst of the motions for summary judgment, the parties filed, and the court granted, a stipulation regarding the Property. The parties stipulated the value of the Property was approximately equal to the outstanding principal of the Mortgage and that it would be economically detrimental to continue to make mortgage payments. On February 23, 2011, the court permitted Gardner to cease making payments on the Mortgage and to take any and all necessary actions for the Trust to dispose of the Property in the most timely and efficient manner possible. By the time of this appeal, the Property had been sold at a foreclosure sale. 2 Although the Property has been sold at a foreclosure sale, the issue concerning reduction in Richardson s distribution for the Property s expenses is still pending before the trial court. The parties did not provide, and the appellate record does not reveal, the amount Richardson owed for expenses on the Property. This amount would appear to be comprised of the 6% interest payments accrued from the time of Decedent s death to the time the Property was sold at a foreclosure sale in addition to the utilities and other maintenance expenses Richardson was directed to pay under the terms of the life estate. 5 amount equal to any interest paid by the estate on the Prescott Property after the Decedent died, but it left more detailed determinations of the amount Richardson owed to be calculated after the estate is finalized. Richardson timely appealed and we have jurisdiction pursuant to A.R.S. § 12-2101(A)(9). Discussion ¶7 We review a trial court s ruling on cross-motions for summary judgment de novo. Nelson v. Phx. Resort Corp., 181 Ariz. 188, 191, 888 P.2d 1375, 1378 (App. 1994). We view the facts in the light most favorable to the party against whom summary judgment was granted. Id. On appeal, we will affirm the grant of summary judgment if there are no genuine issues of material fact and the prevailing party is entitled to judgment as a matter of law. Ariz. R. Civ. P. 56(c); Orme School v. Reeves, 166 Ariz. 301, 305, 802 P.2d 1000, 1004 (1990). ¶8 Both parties agree that the sole issue on appeal is whether Richardson s acceptance of interest in the disclaimer subject property is is barred life estate. barred if . by her prior [D]isclaimer of an . . [t]he accepts the interest sought to be disclaimed. disclaimant A.R.S. § 14- 10013(B)(1); see also In re Costas, 555 F.3d 790, 793 (9th Cir. 2009) ( Where the beneficiary had previously . . . accepted certain benefits or interests in the property, the right to 6 disclaim was barred. ). Disclaimer is defined as the refusal to accept an interest in or power over property. 10002(3). A.R.S. § 14- The statute, however, does not define accept or acceptance. ¶9 In the absence of a statutory definition for acceptance, we will examine the facts of the case to determine whether Richardson s conduct constitutes acceptance of the life estate. over When a devisee takes possession and exercises control the devised property, objectively manifesting possession and acceptance. control any without intent to constitute contemporaneously disclaim, conclusive the acts evidence and of of See, e.g., Evans v. Blankenship, 4 Ariz. 307, 316, 39 P. 812, 813 (1895) ( Acceptance may be presumed if the gift is beneficial, and use[] is evidence that it is beneficial. ) (quoting Abbott v. Cottage City, 10 N.E. 325, 329 (Mass. 1887)); Crumpler v. Barfield ( The fact that Wilson Co., 40 S.E. 808, 810 (Ga. 1902) [devisee] had remained in possession a reasonable time after entering thereon under the provisions of the will, and had not within such time expressed in any way her dissatisfaction to remain thereon, would conclusively show an election on her part to remain satisfied on the land. ); Blake v. Blake, 31 P.2d 768, 771 (Or. 1934) (stating that acceptance was evidenced by devisee s actions entering into possession of 7 the property, continuing to live on it, and treating it as his own); In re Estate of Lyng, 608 N.W.2d 316, 319 (S.D. 2000) (stating that exercise of dominion and dictation over a gift, even if made as an attempt to direct the gift being renounced, is virtually an acceptance ). ¶10 The conclusion that such actions represent acceptance is further opportunity evidenced to by renounce reasonable time period. a devisee s failure to or disclaim her exercise interest her within a See, e.g., In re Pellicer s Estate, 118 So.2d 59, 60 (Fla. App. 1960) ( The law presumes the acceptance by the testamentary donee of a beneficial gift made to him under the provisions of a will, which presumption is conclusive where the donee has had an opportunity to elect and has not rejected the gift within a reasonable time. ); Seifner v. Weller, 171 S.W.2d 617, 622 (Mo. 1943) ( Where the beneficiary has had the opportunity to renounce and has failed so to do within a reasonable time, the presumption of acceptance has been held to be conclusive. ). ¶11 The undisputed facts show that Richardson accepted her life estate interest in the Property prior to any attempts at disclaimer. Richardson physically occupied the property in the same she had prior pay the utilities manner arranged to to Decedent s and 8 death. on taxes the Richardson Property as required by the life estate agreement. repeated and affirmative statements Finally, Richardson made to Gardner asserting her present right to enjoy the benefits of ownership during [her] lifetime : Please pass along my, reply and remind [Remaindermen] that they do not have the right to enter the house at will. Nor do their agents. The life estate exhibit will be recorded with the Will and should probably be attached to the Title. I can take care of that. [Decedent] bought the house for me. There s no way I would even consider giving it up. ¶12 Richardson s understanding that as statements life tenant also she indicate would be her financially responsible for a portion of the Mortgage a reasonable and customary fee[] that would normally accompany a property. Richardson sent Gardner two emails that evidence her awareness of the financial encumbrances of the Property. In an email sent on January 30, 2009 she said: I m content with the way Scott left things. He had planned to leave me the Prescott house with a $100,000 mortgage. Since he refinanced, unbeknownst to me, he ended up with a mortgage of $208,000. So that explains why he left me the odd amount of $108,000. 9 Shortly accept thereafter, the interest Richardson with reaffirmed full knowledge her of intention the to Mortgage, stating: The [Remaindermen] talked Scott into that Life Tenancy Agreement. Now they don t like it? Do they seriously think I will give up the house? Scott bought the house for me . . . [i]t was his intention to leave it to me with a mortgage of $100,000. I don t know why he refinanced, but he did. Probably to the amount of $208,000 which is why he left me the odd sum of $108,000. ¶13 We reject Richardson s argument that these statements merely expressed her desire to accept the life estate before she learned of her responsibility to pay the interest portion of the Mortgage. not This claim is unsupported by the record, and it does overcome Richardson s burden of proving she disclaimed the interest prior to accepting it. effectively See Daley v. Daley, 32 N.E.2d 286, 290 (Mass. 1941) (stating that renouncing party bears burden of proving renunciation); see also Garfield v. White, 92 N.E.2d 575, 579 (Mass. 1950) ( A renunciation or disclaimer . . . must be clear and unequivocal. ). Although Richardson may have concluded that the Mortgage rendered her life estate interest in the Property an onerous, rather than beneficial gift, her failure to act on this conclusion before she exercised her interest barred 10 any later attempts to disclaim.3 Accordingly, ineffective. Richardson s disclaimer is See A.R.S. § 14-10013(B)(1), (F). Conclusion ¶14 Based on Richardson s conduct in continuing to occupy the Property to the exclusion of others, her knowledge of her liability for expenses related to the Property, and her belated attempt to disclaim her life estate interest, we affirm the trial court s determination her disclaimer was ineffective. /S/_________________________ ANDREW W. GOULD, Judge CONCURRING: /S/_____________________________ JOHN C. GEMMILL, Presiding Judge /S/______________________________ PETER B. SWANN, Judge 3 Prior to Richardson s attempted disclaimer, Gardner had sent Richardson and the Remaindermen a form of renunciation providing them an opportunity to relinquish their interest in the Property, which was not returned. Because we hold that Richardson accepted the life estate interest as early as 2008, the form of renunciation provided to her by Gardner in March 2010 was barred as well. The court correctly concluded that by March 2010 . . . [Richardson s] ability to disclaim her interest was irrevocably barred under the terms of [A.R.S. §] 14-10013(B)(1). 11

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