Estrada v. Arizona Bank
| Decision Date | 13 January 1987 |
| Docket Number | No. 2,CA-CV,2 |
| Citation | 732 P.2d 1124,152 Ariz. 386 |
| Parties | Stephen Michael ESTRADA, a single man, Plaintiff/Appellant, v. The ARIZONA BANK, an Arizona banking corporation, et al., Defendants/Appellees. 5846. |
| Court | Arizona Court of Appeals |
This is an appeal from the granting of a summary judgment. In February 1967, when the plaintiff was approximately two and one-half years old, his mother was killed in an automobile accident. A wrongful death action resulted in a settlement which netted plaintiff $99,161.54, which was paid into a trust established by the Cochise County Superior Court on October 18, 1968. This trust was to continue until the plaintiff reached 21 years of age. The trust instrument named the Arizona Bank as the trustee for the plaintiff, the sole beneficiary. The plaintiff's grandmother was appointed as his guardian.
In April 1976, in order to conform the trust instrument to the reduction in the age of majority in Arizona from 21 to 18, the Arizona Bank petitioned the Cochise County Superior Court for an order interpreting the trust to allow for termination and distribution of the trust assets upon plaintiff's attainment of the age of 18. On May 17, 1976, the court entered an order providing for the termination of the trust when plaintiff reached age 18 and directing the Arizona Bank to make annual accountings of the trust under the conservatorship statutes, A.R.S. §§ 14-5419 et seq.
Thereafter, in accordance with the court's order, petitions for approval of interim accountings were filed with the court each year from 1976 to 1982. The accounting for the period from May 1, 1981, to April 30, 1982, was approved by the court on August 23, 1982. The accountings fully disclosed all details of the investments, income, expenses, gains and losses from the management of the trust during each accounting period. Notice was given to the beneficiary and his guardian. No objections to these accountings were ever filed, and all were approved by the court.
A seventh and final accounting, covering the period from April 30, 1982, through August 24, 1982, the latter date being the eighteenth birthday of the plaintiff, was filed for approval in September 1982. Notice of the petition for approval of the final accounting and of the final settlement and distribution of the trust estate was given to the plaintiff and to Joe Grajeda and Betty Grajeda, the plaintiff's successor guardians. A hearing was held on October 18, 1982, and an order approving the final accounting and proposed final distribution of trust assets was entered, again without objection.
On September 28 and October 20, 1982, the plaintiff, having attained the age of majority, signed documents acknowledging receipt from the Arizona Bank of distributions in the sums of $7,000 and $26,002.54, respectively. Following final distribution of the trust estate, the Arizona Bank filed and gave notice of a petition for final discharge of trustee for a minor. The petition was heard on or about November 15, 1982, and the court entered an order that date acknowledging that no objections to the accountings had been filed and finding that the bank's accountings were complete and correct. The order also found that the final distribution of the trust estate had been accomplished in accordance with the October 18 decree of distribution and ordered that the Arizona Bank be discharged from further claim or demand of any interested person.
On July 30, 1984, this action was commenced. All counts of the complaint derive from the alleged mismanagement of the assets of the trust by the Arizona Bank. The complaint contains five counts. Counts one through three purport to state claims against the Arizona Bank and Arizona Bancwest Corporation, a holding company and owner of the Arizona Bank. Counts four and five attempt to state claims against Ben F. Williams, Jr., Esq., who was hired in 1970 to act as plaintiff's attorney. We are not concerned with the counts against defendant Williams because it appears from the record that he was never served with process in this case.
As against the Arizona Bank, the complaint alleges that the bank allowed the property to remain unproductive despite repeated and numerous demands upon it by plaintiff's guardians who allegedly insisted that the bank convert the trust assets to productive property. Count one of the complaint appears to be a claim for damages attributable to the bank's alleged breach of the common law or contractual fiduciary duties. Count two of the complaint alleges a claim arising out of an asserted misrepresentation by the bank to the plaintiff that it would follow the guardians' alleged demands that the trust property be invested in productive assets. Count three of the complaint asserts that the bank's alleged mismanagement amounted to a negligent failure to act as a reasonable and prudent investor. The prayer for relief sought compensatory damages in an amount not less than $63,966.69 together with punitive damages in the sum of $750,000 and $50,000 in attorney's fees. The Arizona Bank and Bancwest moved for summary judgment on the ground that the complaint was barred by res judicata. The motion was granted, and this appeal followed.
The defendants have two theories which they assert sustain the granting of summary judgment in their favor. First they rely on A.R.S. § 14-5419(D) which states:
In the case of In re Estate of Terman, 135 Ariz. 453, 661 P.2d 1154 (App.1983), the son of a protected person objected to an amended inventory filed by the conservator of his father's estate. The claim was that the assets included in the inventory as sole and separate property of the protected person actually belonged to a trust in which the father and son were co-trustees. The court directed that either party desiring to contest the issues file an appropriate petition, have it set for hearing, and at that time the court would rule on the questions raised by the objection to the inventory. No such petition was filed by the son and, in the interim, orders were entered approving and settling two annual accounts filed by the conservator. Each of these accountings showed the disputed assets as belonging not to a father/son trust but rather to the conservatorship estate. The son never objected to the inclusion of the disputed assets in the inventory as the court had directed, and the question on appeal was whether res judicata, and the provisions of A.R.S. § 14-5419(D), barred the son's attempt to compel repayment of certain funds. The court held the attempt to force repayment to be precluded by the prior orders, reasoning as follows:
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