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Tuesday, December 11, 2007
Waldren v. Waldren (12/3/2007): Arizona Supreme Court Holds that Statutorily Non-Modifiable Spousal Maintenance Agreements are Not Subject to Modification or Termination, nor Is Relief from Such Agreements Available under Ariz. R. Civ. P. 60(c)(5).
In connection with a petition to dissolve marriage, the Superior Court entered a decree requiring Husband to pay child support, attorneys’ fees, and monthly spousal maintenance. The spousal maintenance provision expressly provided that “spousal maintenance shall not be subject to modification.” After Husband became disabled, he moved under Ariz. R. Civ. P. 60(c)(5) to set aside the spousal maintenance provision. The Superior Court rebuffed this request. On appeal, however, the Arizona Appeals Court vacated the Superior Court’s judgment, holding that Rule 60(c)(5) entitled Mr. Waldren to an evidentiary hearing. This appeal followed.
The Arizona Supreme Court first held that the Arizona legislature stripped the courts of jurisdiction to modify spousal maintenance provisions in a decree, even in the face of substantial changes in circumstances. In so holding, the Supreme Court relied upon A.R.S. § 25-317(G), which provides that an agreement entered into by the parties to make maintenance terms non-modifiable “prevents the court from exercising jurisdiction to modify the decree and the separation agreement regarding maintenance.” The Supreme Court also rejected Husband’s argument that the legislature stripped the courts of jurisdiction only with regard to modifications, and not terminations, of maintenance agreements. The Supreme Court reasoned that terminations have the same effect as modifications, relieving courts of jurisdiction over minor modifications while allowing them to terminate agreements would be counterintuitive, and legislative history supports the conclusion that, at the time of § 25-317(G)’s passage, the term “modify” included termination. Because Husband’s request to terminate a provision of the decree necessarily required the court to modify the decree, it lacked the jurisdiction to do so.
As for whether Ariz. R. Civ. P. 60(c)(5) allows a trial court to provide equitable relief when the court is otherwise lacking in jurisdiction, the Supreme Court explained that Rule 60(c)(5) must yield to statutory provisions on substantive matters where there exists conflict between them. As a result, “once the statutory conditions making a maintenance provision non-modifiable have been met, A.R.S. § 25-317(G) removes jurisdiction from the courts to modify decrees regarding spousal maintenance” and Rule 60(c)(5) does not otherwise provide an avenue for relief. Thus, the Superior Court correctly denied Mr. Waldren’s request to modify the decree containing a non-modifiable spousal maintenance provision.
Vice Chief Justice Berch authored the unanimous opinion.
In connection with a petition to dissolve marriage, the Superior Court entered a decree requiring Husband to pay child support, attorneys’ fees, and monthly spousal maintenance. The spousal maintenance provision expressly provided that “spousal maintenance shall not be subject to modification.” After Husband became disabled, he moved under Ariz. R. Civ. P. 60(c)(5) to set aside the spousal maintenance provision. The Superior Court rebuffed this request. On appeal, however, the Arizona Appeals Court vacated the Superior Court’s judgment, holding that Rule 60(c)(5) entitled Mr. Waldren to an evidentiary hearing. This appeal followed.
The Arizona Supreme Court first held that the Arizona legislature stripped the courts of jurisdiction to modify spousal maintenance provisions in a decree, even in the face of substantial changes in circumstances. In so holding, the Supreme Court relied upon A.R.S. § 25-317(G), which provides that an agreement entered into by the parties to make maintenance terms non-modifiable “prevents the court from exercising jurisdiction to modify the decree and the separation agreement regarding maintenance.” The Supreme Court also rejected Husband’s argument that the legislature stripped the courts of jurisdiction only with regard to modifications, and not terminations, of maintenance agreements. The Supreme Court reasoned that terminations have the same effect as modifications, relieving courts of jurisdiction over minor modifications while allowing them to terminate agreements would be counterintuitive, and legislative history supports the conclusion that, at the time of § 25-317(G)’s passage, the term “modify” included termination. Because Husband’s request to terminate a provision of the decree necessarily required the court to modify the decree, it lacked the jurisdiction to do so.
As for whether Ariz. R. Civ. P. 60(c)(5) allows a trial court to provide equitable relief when the court is otherwise lacking in jurisdiction, the Supreme Court explained that Rule 60(c)(5) must yield to statutory provisions on substantive matters where there exists conflict between them. As a result, “once the statutory conditions making a maintenance provision non-modifiable have been met, A.R.S. § 25-317(G) removes jurisdiction from the courts to modify decrees regarding spousal maintenance” and Rule 60(c)(5) does not otherwise provide an avenue for relief. Thus, the Superior Court correctly denied Mr. Waldren’s request to modify the decree containing a non-modifiable spousal maintenance provision.
Vice Chief Justice Berch authored the unanimous opinion.
Posted by azapp @ Tue, Dec 11, 2007
Regal Homes, Inc. v. CNA Insurance (11/29/2007): Arizona Court of Appeals Division One Holds “Arising Out Of” Language in Insurance Agreement Requires Only any Causal Nexus, Not Proximate Cause and That Mutually Repugnant “Other Insurance” Clauses Nullify Each Other Triggering a Coverage Obligation by Both Insurers
Regal Homes, Inc., a builder and developer of single family homes, was insured by Auto-Owners Insurance Co. for 1995 and Zurich Companies for 1996-1998. Sub-contractor GMS Concrete, Inc. was insured by CNA Insurance, who also included Regal Homes as an “additional insured” under their policy.
Eight homeowners sued Regal Homes for manufacturing defects in their homes. Auto-Owners and Zurich participated in the defense and settlement of the litigation, but CNA refused. Regal Homes and Auto-Owners Insurance sued CNA for reimbursement of defense costs and indemnity payments. The trial court granted summary judgment in favor of CNA, and Regal Homes and Auto-Owners appealed.
On appeal, the Arizona Appeals Court affirmed in part, reversed in part, and remanded the case for further consideration. CNA argued it was not required to participate in the defense because a previous court had already adjudicated the issue and determined that GMS Concrete was not at fault for the manufacturing defects. The Court noted that the language of the insurance policy triggered coverage for liability “arising out of” GMS’s work. The Court interpreted the words “arising out of” as “broad, general, and comprehensive terms effecting broad coverage.” Therefore, even if GMS was not the proximate cause of the manufacturing defects, the liability may still have arisen from GMS’s work, and therefore the Court remanded this issue for further consideration.
CNA also argued that it was only required to provide excess coverage to Regal Homes, not primary coverage. The Court stated that when two otherwise applicable insurance policies contain mutually repugnant “other insurance” clauses, a court must disregard both clauses. “Other insurance” clauses are clauses that limit or eliminate coverage under the policy if the insured has other insurance available. Here, the Court held that CNA and Auto-Owners did not have mutually repugnant clauses, therefore, CNA was only required to provide excess coverage. However, the Court found that CNA and Zurich did have mutually repugnant clauses, because both policies said their coverage was only “excess” if the insured had other insurance available. Therefore, CNA and Zurich were co-primary insurers for Regal Homes, and both were required to defend Regal against liability. The Court remanded the case to determine how to allocate the costs of defending the action among the three insurance carriers. Regarding Regal Homes, the Court affirmed their summary judgment, holding that their right to reimbursement was too speculative considering they voluntarily used their own money to settle their case even though their insurance carriers did not exhaust their coverage.
Finally, appellants argued that CNA’s refusal to participate in the defense was an act of bad faith. The Court stated that “bad faith” requires that there is no reasonable basis for denying coverage under the policy. Here, the Court found CNA did not act unreasonably by refusing to defend Regal Homes because it was relying on its “excess” insurance clause, and although CNA’s position was ultimately incorrect, it was not unreasonable.
Chief Judge Gemmill authored the decision; Judge Kessler and Judge Orozco concurred.
Regal Homes, Inc., a builder and developer of single family homes, was insured by Auto-Owners Insurance Co. for 1995 and Zurich Companies for 1996-1998. Sub-contractor GMS Concrete, Inc. was insured by CNA Insurance, who also included Regal Homes as an “additional insured” under their policy.
Eight homeowners sued Regal Homes for manufacturing defects in their homes. Auto-Owners and Zurich participated in the defense and settlement of the litigation, but CNA refused. Regal Homes and Auto-Owners Insurance sued CNA for reimbursement of defense costs and indemnity payments. The trial court granted summary judgment in favor of CNA, and Regal Homes and Auto-Owners appealed.
On appeal, the Arizona Appeals Court affirmed in part, reversed in part, and remanded the case for further consideration. CNA argued it was not required to participate in the defense because a previous court had already adjudicated the issue and determined that GMS Concrete was not at fault for the manufacturing defects. The Court noted that the language of the insurance policy triggered coverage for liability “arising out of” GMS’s work. The Court interpreted the words “arising out of” as “broad, general, and comprehensive terms effecting broad coverage.” Therefore, even if GMS was not the proximate cause of the manufacturing defects, the liability may still have arisen from GMS’s work, and therefore the Court remanded this issue for further consideration.
CNA also argued that it was only required to provide excess coverage to Regal Homes, not primary coverage. The Court stated that when two otherwise applicable insurance policies contain mutually repugnant “other insurance” clauses, a court must disregard both clauses. “Other insurance” clauses are clauses that limit or eliminate coverage under the policy if the insured has other insurance available. Here, the Court held that CNA and Auto-Owners did not have mutually repugnant clauses, therefore, CNA was only required to provide excess coverage. However, the Court found that CNA and Zurich did have mutually repugnant clauses, because both policies said their coverage was only “excess” if the insured had other insurance available. Therefore, CNA and Zurich were co-primary insurers for Regal Homes, and both were required to defend Regal against liability. The Court remanded the case to determine how to allocate the costs of defending the action among the three insurance carriers. Regarding Regal Homes, the Court affirmed their summary judgment, holding that their right to reimbursement was too speculative considering they voluntarily used their own money to settle their case even though their insurance carriers did not exhaust their coverage.
Finally, appellants argued that CNA’s refusal to participate in the defense was an act of bad faith. The Court stated that “bad faith” requires that there is no reasonable basis for denying coverage under the policy. Here, the Court found CNA did not act unreasonably by refusing to defend Regal Homes because it was relying on its “excess” insurance clause, and although CNA’s position was ultimately incorrect, it was not unreasonable.
Chief Judge Gemmill authored the decision; Judge Kessler and Judge Orozco concurred.
Posted by azapp @ Tue, Dec 11, 2007
Wednesday, December 5, 2007
State Farm Insurance Companies v. Premier Manufactured Systems, Inc. (12/03/2007): Arizona Supreme Court Holds That Liability Among Tortfeasors in Strict Products Liability Actions is Several Only.
In 2001, an insured of State Farm suffered real and personal property damage when their water filtration system leaked. After covering its insured’s loss, State Farm brought a strict products liability claim against Premier Manufactured Systems, Inc. (“Premier”), the assembler and retailer of the system, and Worldwide Water Distributing, Ltd (“Worldwide”), the manufacturer of a component part. State Farm moved for partial summary judgment, arguing that Premier and Worldwide were joint and severally liable for the homeowners damages. The superior court denied State Farm’s motion. A stipulated final judgment was subsequently entered, which apportioned fault between Premier and Worldwide, and reserved State Farm’s right to appeal the ruling eliminating joint and several liability. State Farm appealed, and the court of appeals affirmed, holding that pursuant to A.R.S. § 12-2506, liability was several only.
On appeal, the Arizona Supreme Court affirmed the Arizona Appeals Court’s decision. The Court explained that the 1987 amendments the Uniform Contribution Among Tortfeasors Act, codified at A.R.S. § 12-2506(A), created a system of comparative fault and abolished joint and several liability in all but certain enumerated circumstances. In the Court’s view, none of the enumerated exceptions are applicable to the instant case. State Farm argued that liability should be joint under A.R.S. § 12-2506(D)(2) because Premier served as the agent of Worldwide. The Court took a different view, stating that each entity in the chain of distribution of a defective product is liable for its own breach; thus, liability is not premised on the relationship between the entities. The Court also rejected State Farm’s arguments that A.R.S. §§ 12-2509 and 12-684 require joint and several liability in strict products liability actions.
The Court further held that interpreting A.R.S. § 12-2506 to preclude joint and several liability in a strict product liability action does not violate Article 18, Section 6 of the Arizona Constitution. By abolishing joint and several liability, the Legislature did not abrogate the right of action, nor did it statutorily limit the amount to be recovered.
Justice Hurwitz wrote the opinion for the unanimous Court.
In 2001, an insured of State Farm suffered real and personal property damage when their water filtration system leaked. After covering its insured’s loss, State Farm brought a strict products liability claim against Premier Manufactured Systems, Inc. (“Premier”), the assembler and retailer of the system, and Worldwide Water Distributing, Ltd (“Worldwide”), the manufacturer of a component part. State Farm moved for partial summary judgment, arguing that Premier and Worldwide were joint and severally liable for the homeowners damages. The superior court denied State Farm’s motion. A stipulated final judgment was subsequently entered, which apportioned fault between Premier and Worldwide, and reserved State Farm’s right to appeal the ruling eliminating joint and several liability. State Farm appealed, and the court of appeals affirmed, holding that pursuant to A.R.S. § 12-2506, liability was several only.
On appeal, the Arizona Supreme Court affirmed the Arizona Appeals Court’s decision. The Court explained that the 1987 amendments the Uniform Contribution Among Tortfeasors Act, codified at A.R.S. § 12-2506(A), created a system of comparative fault and abolished joint and several liability in all but certain enumerated circumstances. In the Court’s view, none of the enumerated exceptions are applicable to the instant case. State Farm argued that liability should be joint under A.R.S. § 12-2506(D)(2) because Premier served as the agent of Worldwide. The Court took a different view, stating that each entity in the chain of distribution of a defective product is liable for its own breach; thus, liability is not premised on the relationship between the entities. The Court also rejected State Farm’s arguments that A.R.S. §§ 12-2509 and 12-684 require joint and several liability in strict products liability actions.
The Court further held that interpreting A.R.S. § 12-2506 to preclude joint and several liability in a strict product liability action does not violate Article 18, Section 6 of the Arizona Constitution. By abolishing joint and several liability, the Legislature did not abrogate the right of action, nor did it statutorily limit the amount to be recovered.
Justice Hurwitz wrote the opinion for the unanimous Court.
Posted by azapp @ Wed, Dec 5, 2007
Tuesday, December 4, 2007
Picaso v. Tucson Unified School District (12/13/2007): Arizona Supreme Court Vacates Decision by Arizona Court of Appeals Division Two, Which Held that a Guilty Plea in a Criminal Case Does Not Result in Issue Preclusion Against a Plaintiff in Later Civil Litigation
Plaintiff Maribel Picaso pleaded guilty to misdemeanor child abuse stemming from the death of her son, who was struck and killed by a school bus. The Plaintiff mother and her husband later brought a wrongful death action against the school district. The trial court, relying on A.R.S. § 13-807, granted the school district’s motion in limine to preclude the mother from denying the essential allegations of her guilty plea. At trial, the jury found in favor of the defendant school district.
On appeal, however, the Court of Appeals reversed and remanded for a new trial, holding that A.R.S. § 13-807 did not apply because it only spoke to civil actions in which the criminal defendant is later the civil defendant — not, as here, the civil plaintiff. The Court of Appeals also rejected the trial court’s alternative ground of issue preclusion, reasoning that there is no “actual litigation” below when a criminal defendant pleads guilty.
After granting review, the Arizona Supreme Court vacated the Court of Appeals’ opinion but declined to decide whether a guilty plea in a criminal case has issue preclusive effect in a subsequent civil action. The Court held that, in light of the trial court’s jury instructions and the jury’s unanimous defense verdict, the result at trial would not have changed had the trial court denied the motion in limine. Because the jury found that the school district had no fault in the boy’s death, the jury never had occasion to consider questions of comparative fault, and any preclusive effect of the criminal guilty plea therefore could not have affected the jury’s defense verdict.
Plaintiff Maribel Picaso pleaded guilty to misdemeanor child abuse stemming from the death of her son, who was struck and killed by a school bus. The Plaintiff mother and her husband later brought a wrongful death action against the school district. The trial court, relying on A.R.S. § 13-807, granted the school district’s motion in limine to preclude the mother from denying the essential allegations of her guilty plea. At trial, the jury found in favor of the defendant school district.
On appeal, however, the Court of Appeals reversed and remanded for a new trial, holding that A.R.S. § 13-807 did not apply because it only spoke to civil actions in which the criminal defendant is later the civil defendant — not, as here, the civil plaintiff. The Court of Appeals also rejected the trial court’s alternative ground of issue preclusion, reasoning that there is no “actual litigation” below when a criminal defendant pleads guilty.
After granting review, the Arizona Supreme Court vacated the Court of Appeals’ opinion but declined to decide whether a guilty plea in a criminal case has issue preclusive effect in a subsequent civil action. The Court held that, in light of the trial court’s jury instructions and the jury’s unanimous defense verdict, the result at trial would not have changed had the trial court denied the motion in limine. Because the jury found that the school district had no fault in the boy’s death, the jury never had occasion to consider questions of comparative fault, and any preclusive effect of the criminal guilty plea therefore could not have affected the jury’s defense verdict.
Posted by azapp @ Tue, Dec 4, 2007
In re the General Adjudication of All Rights to Use Water in the Gila River System and Source (11/30/07): The Arizona Supreme Court Grants Pascua Yaqui Tribe’s Petition for Interlocutory Appeal Regarding Approval of a Settlement Agreement Determining the Tohono O’odham Nation’s Water Rights, But Denies Relief
Pursuant to the Arizona Water Settlement Act, the United States, the Tohono O’odham Nation (the “Nation”) and various other settling parties sought judgment from an adjudication court confirming a settlement agreement among them regarding the Nation’s water rights. The Pascua Yaqui Tribe (the “Tribe”) filed objections to the judgment and decree, which the adjudication court summarily disposed of. The settling parties and the Tribe sought interlocutory review from the Supreme Court, which the court accepted.
The Tribe’s appeal is based on an Arizona Supreme Court Special Procedural Order providing for the Approval of Federal Water Rights Settlements (the “Special Order”). Under the terms of the Special Order, a settlement will be approved if the settling tribe is no better off than it would be after the final adjudication of all claims, and the settlement preserves the remedies of the non-settling claimants. Other claimants may object to a settlement agreement, but the objecting party must show that its claimed water right would suffer “material injury.”
The Tribe raised numerous objections to the legality and constitutionality of the settlement agreement, asserted that it would suffer from material injury because its due process rights had been violated, alleged federal law had been violated because the settlement stripped adjudication of its “comprehensive” nature, and raised various other procedural objections. The Supreme Court concluded that none of the Tribe’s objections had merit, noting that the settlement agreement determines only the water rights of the Nation, does not provide the Nation with any federal reserved rights, restricts the amount of groundwater the Nation may pump, puts the Nation in no better position that it would be after a trial, and expressly reserves all rights and claims of the Tribe.
Justice Ryan authored the opinion, in which Justices McGregor, Berch and Hurwitz, and Judge Pelander concurred.
Justice McGregor also issued an order granting a request by the United States and other settling parties for an expedited decision, ordering that the adjudication court’s Judgment and Decree approving the Tohono O’odham Settlement is final and non-appealable under Arizona law.
Pursuant to the Arizona Water Settlement Act, the United States, the Tohono O’odham Nation (the “Nation”) and various other settling parties sought judgment from an adjudication court confirming a settlement agreement among them regarding the Nation’s water rights. The Pascua Yaqui Tribe (the “Tribe”) filed objections to the judgment and decree, which the adjudication court summarily disposed of. The settling parties and the Tribe sought interlocutory review from the Supreme Court, which the court accepted.
The Tribe’s appeal is based on an Arizona Supreme Court Special Procedural Order providing for the Approval of Federal Water Rights Settlements (the “Special Order”). Under the terms of the Special Order, a settlement will be approved if the settling tribe is no better off than it would be after the final adjudication of all claims, and the settlement preserves the remedies of the non-settling claimants. Other claimants may object to a settlement agreement, but the objecting party must show that its claimed water right would suffer “material injury.”
The Tribe raised numerous objections to the legality and constitutionality of the settlement agreement, asserted that it would suffer from material injury because its due process rights had been violated, alleged federal law had been violated because the settlement stripped adjudication of its “comprehensive” nature, and raised various other procedural objections. The Supreme Court concluded that none of the Tribe’s objections had merit, noting that the settlement agreement determines only the water rights of the Nation, does not provide the Nation with any federal reserved rights, restricts the amount of groundwater the Nation may pump, puts the Nation in no better position that it would be after a trial, and expressly reserves all rights and claims of the Tribe.
Justice Ryan authored the opinion, in which Justices McGregor, Berch and Hurwitz, and Judge Pelander concurred.
Justice McGregor also issued an order granting a request by the United States and other settling parties for an expedited decision, ordering that the adjudication court’s Judgment and Decree approving the Tohono O’odham Settlement is final and non-appealable under Arizona law.
Posted by azapp @ Tue, Dec 4, 2007
Arizona Supreme Court Minutes:
The Arizona Supreme Court granted review in 2 cases:
1. Employers Mutual Casualty Co v. DGG & CAR INC et al
2. ADOR v Action Marine/Randall et al
The Arizona Supreme Court granted review in 2 cases:
1. Employers Mutual Casualty Co v. DGG & CAR INC et al
2. ADOR v Action Marine/Randall et al
Posted by azapp @ Tue, Dec 4, 2007
In re 24,000 in United States Currency (11/29/2007): Arizona Court of Appeals Division One Reaffirms that Probable Cause To Forfeit Assets is Determined Not at Time of Seizure but At Time of Hearing and Holds that Drug Package Profile can Contribute to Probable Cause.
The State of Arizona, unopposed, challenged the Superior Court’s denial of an application for an order forfeiting $24,000 of alleged drug proceeds to the State. The Superior Court had found that the State’s application lacked probable cause linking the cash to the sale of illegal drugs.
Reversing and remanding, the Court of Appeals reaffirmed that in reviewing the State’s application, the Superior Court was to evaluate probable cause as of the time of the hearing, not as of the time of seizure. See In re U.S. Currency in the Amount of $26,980, 193 Ariz. 427, 430 (App. 1998). In this case, the Arizona Appeals Court also reiterated that the probable cause determination is made from the totality of the circumstances. Furthermore, the Court held that a law enforcement “Drug Package Profile” can contribute to the totality of the circumstances.
Applying the totality of the circumstances in this case The Court of Appeals held that the Superior Court erred in denying the application and the Appeals Court reversed and remanded for further proceedings.
Judge Johnsen authored the decision in which judges Thompson and Ehrlich joined.
The State of Arizona, unopposed, challenged the Superior Court’s denial of an application for an order forfeiting $24,000 of alleged drug proceeds to the State. The Superior Court had found that the State’s application lacked probable cause linking the cash to the sale of illegal drugs.
Reversing and remanding, the Court of Appeals reaffirmed that in reviewing the State’s application, the Superior Court was to evaluate probable cause as of the time of the hearing, not as of the time of seizure. See In re U.S. Currency in the Amount of $26,980, 193 Ariz. 427, 430 (App. 1998). In this case, the Arizona Appeals Court also reiterated that the probable cause determination is made from the totality of the circumstances. Furthermore, the Court held that a law enforcement “Drug Package Profile” can contribute to the totality of the circumstances.
Applying the totality of the circumstances in this case The Court of Appeals held that the Superior Court erred in denying the application and the Appeals Court reversed and remanded for further proceedings.
Judge Johnsen authored the decision in which judges Thompson and Ehrlich joined.
Posted by azapp @ Tue, Dec 4, 2007
AHCCCS v. Allen (In re Stephenson) (11/27/2007): Arizona Court Of Appeals Division One Holds That a Secured Creditor Need Not Seek Permission From the Superior Court or the Personal Representative of an Estate to Enforce Its Security Even Though Probate Has Been Opened.
Petitioner, American Savings Life Insurance Company (“Petitioner”) held a properly recorded deed of trust on the real property of a decedent securing a loan made prior to the decedent’s death. At the time of her death, the decedent was also indebted to AHCCCS for medical benefits provided, and AHCCCS recorded a Notice of Medical Assistance Lien against the decedent’s real property. AHCCCS then filed a petition for Formal Probate of Will and Appointment of Personal Representative, and was appointed personal representative of the Decedent’s estate five months later. Before AHCCCS was appointed personal representative, Petitioner caused a notice of trustee’s sale to be recorded, and obtained the real property at the subsequent public trustee’s sale through a credit bid. AHCCCS then filed a Petition to Recover Assets claiming that Petitioner could not conduct a trustee’s sale on estate property without first obtaining permission from the personal representative or the court. The trial court granted summary judgment in favor of AHCCCS and petitioner timely appealed.
The Court of Appeals reversed, holding that under the common law and the Arizona Probate Code, secured creditors have the power to choose a remedy after a debtor dies, either by foreclosing on their security or by filing a claim in probate. The Court also rejected AHCCCS’ argument that even if secured creditors may elect to foreclose on their security, where the estate is subject to an open probate proceeding, the enforcement proceedings of the secured creditor must be supervised by the court. Although the probate court has general jurisdiction over the decedent’s estate, AHCCCS cited no authority for the proposition that the court should also have supervisory authority over a deed of trust sale governed by a separate statutory scheme.
Judge Portley authored the opinion; Presiding Judge Hall and Judge Snow concurred.
Petitioner, American Savings Life Insurance Company (“Petitioner”) held a properly recorded deed of trust on the real property of a decedent securing a loan made prior to the decedent’s death. At the time of her death, the decedent was also indebted to AHCCCS for medical benefits provided, and AHCCCS recorded a Notice of Medical Assistance Lien against the decedent’s real property. AHCCCS then filed a petition for Formal Probate of Will and Appointment of Personal Representative, and was appointed personal representative of the Decedent’s estate five months later. Before AHCCCS was appointed personal representative, Petitioner caused a notice of trustee’s sale to be recorded, and obtained the real property at the subsequent public trustee’s sale through a credit bid. AHCCCS then filed a Petition to Recover Assets claiming that Petitioner could not conduct a trustee’s sale on estate property without first obtaining permission from the personal representative or the court. The trial court granted summary judgment in favor of AHCCCS and petitioner timely appealed.
The Court of Appeals reversed, holding that under the common law and the Arizona Probate Code, secured creditors have the power to choose a remedy after a debtor dies, either by foreclosing on their security or by filing a claim in probate. The Court also rejected AHCCCS’ argument that even if secured creditors may elect to foreclose on their security, where the estate is subject to an open probate proceeding, the enforcement proceedings of the secured creditor must be supervised by the court. Although the probate court has general jurisdiction over the decedent’s estate, AHCCCS cited no authority for the proposition that the court should also have supervisory authority over a deed of trust sale governed by a separate statutory scheme.
Judge Portley authored the opinion; Presiding Judge Hall and Judge Snow concurred.
Posted by azapp @ Tue, Dec 4, 2007
