IN RE ESTATE OF SHUMWAY

• Decision Date: 15 September 2000
• Docket Number: No. CV-99-0391-PR.,CV-99-0391-PR.
• Parties: In the Matter of the ESTATE OF Ralph Vincill SHUMWAY, Deceased. Adelida Vega Rodriguez, Petitioner-Appellee, v. Virginia Gavette, Personal Representative-Appellant.
• Court: Arizona Supreme Court

9 P.3d 1062

198 Ariz. 323

In the Matter of the ESTATE OF Ralph Vincill SHUMWAY, Deceased.

Adelida Vega Rodriguez, Petitioner-Appellee, v. Virginia Gavette, Personal Representative-Appellant.

No. CV-99-0391-PR.

Supreme Court of Arizona, En Banc.

September 15, 2000.

Ronald G. Cooley, Sun City, and John R. Coll, Phoenix, for Adelida Vega Rodriguez.

Jennings, Strouss & Salmon, P.L.C. By David Brnilovich, Peoria, David B. Earl and Stacey A. Dowdell, Phoenix, for Virginia Gavette.

OPINION

FELDMAN, Justice.

¶ 1 We granted review to determine whether the penalty, or so-called in terrorem, clause in a will should be enforced against those who contest the will. Per A.R.S. § 14-2517, the penalty clause is unenforceable if probable cause existed to contest the will. Under the facts of this case of first impression and according to what we conclude to be the proper definition of probable cause, we find that the penalty clause should not be enforced. We thus vacate part of the court of appeals' opinion, reverse the portion of the trial court's judgment dealing with enforcement of the penalty clause, and remand to the trial court for further action consistent with this opinion.

¶ 2 We have jurisdiction pursuant to Arizona Constitution article VI, section 5(3).

FACTS AND PROCEDURAL HISTORY

¶ 3 Ralph V. Shumway (Decedent) executed a will six days before his death. The will had been prepared at his request by his helper and bookkeeper, Adelida Rodriguez. The will nominated Rodriguez, who was neither related to Decedent nor a beneficiary under his prior will, as personal representative and left her twenty-five percent of Decedent's estate. Decedent was survived by a brother and four children. Virginia Gavette, one of his daughters, filed a petition for appointment as personal representative; the other survivors agreed to that appointment. After Gavette's appointment, Rodriguez filed an objection, offering the 1997 will for probate. Gavette contested that will, alleging undue influence and unauthorized practice of law by Rodriguez. Rodriguez was not an attorney but held Decedent's power of attorney. She occupied a confidential relationship with Decedent, thus raising a presumption of undue influence because she benefitted from the will. See In re Estate of Pitt, 88 Ariz. 312, 317, 356 P.2d 408, 411 (1960); In re O'Connor's Estate, 74 Ariz. 248, 259-60, 246 P.2d 1063, 1071 (1952). The trial judge found that the will was valid; that Rodriguez proved by clear and convincing evidence that she had not exerted undue influence; and that Rodriguez had not engaged in the unauthorized practice of law in assisting in preparation of the will, using a computer program, and reading questions and recording answers given by Decedent, who was severely visually impaired. The judge also enforced a penalty clause contained in the will,¹ resulting in forfeiture of the portion of the estate bequeathed to Gavette and another daughter, Nikki Cole.² Because A.R.S. § 14-2517 prohibits penalizing a contestant when there was probable cause for the contest, by enforcing the penalty clause the trial judge implicitly found no probable cause to challenge the will.

¶ 4 The court of appeals affirmed the judgment, with a majority of the panel believing the evidence supported the trial judge's conclusions on enforcement of the penalty clause. In re Estate of Shumway, 197 Ariz. 57, 66 ¶¶ 32-34, 3 P.3d 977, 986 ¶¶ 32-34 (App.1999). In dissent, Judge Ehrlich found probable cause existed to contest the will and the forfeiture clause should therefore not have been enforced. Id. at 67-68 ¶ 39-40, 3 P.3d at 987-88 ¶ 39-40. The court also held that the evidence supported the trial judge's conclusion that the will was not the product of undue influence. Id. at 64 ¶ 22, 3 P.3d at 984 ¶ 22. The court of appeals further found the will was not the result of the unauthorized practice of law because Rodriguez acted only as a scribe for Decedent, filling in his answers to the questions in the computer program. Id. at 62 ¶¶ 11-12, 3 P.3d at 982 ¶ 11-12.

¶ 5 The only issue on which we granted review was whether a legal presumption of undue influence is sufficient probable cause under A.R.S. § 14-2517. We requested that supplemental briefs be directed to the question of the appropriate standard to be applied when determining the existence of probable cause under the statute.

DISCUSSION

A. The statute

¶ 6 There is a significant divergence of views as to whether an in terrorem clause is enforceable when a contest is brought in good faith. See Annotation, Validity and Enforceability of Provision of Will or Trust Instrument for Forfeiture or Reduction of Share of Contesting Beneficiary, 23 A.L.R.4th 369, 376-81 (1983). We need not concern ourselves with this because our statute provides:

A provision in a will purporting to penalize an interested person for contesting the will or instituting other proceedings relating to the estate is unenforceable if probable cause exists for that action.

A.R.S. § 14-2517 (1995). The court of appeals' opinion is the first published decision to construe this statute. The statute is based on Uniform Probate Code § 2-517. A similar discussion of enforceability is given in the RESTATEMENT OF PROPERTY, which a majority of jurisdictions supports:³

An otherwise effective provision in a will or other donative transfer, which is designed to prevent the acquisition or retention of an interest in property in the event there is a contest of the validity of the document transferring the interest or an attack on a particular provision of the document, is valid, unless there was probable cause for making the contest or attack.

RESTATEMENT (SECOND) OF PROPERTY: Donative Transfers § 9.1 (1983) (hereinafter RESTATEMENT).

¶ 7 The law favors testamentary disposition of property. See O'Connor's Estate, 74 Ariz. at 261, 246 P.2d at 1071-72. One stated purpose of Arizona's probate procedure is "to discover and make effective the intent of a decedent in distribution of his property." A.R.S. § 14-1102(B)(2). Once the testator's intent is known, doubts should be resolved on the side of carrying out the testator's intent. See In re Walters' Estate, 77 Ariz. 122, 125-26, 267 P.2d 896, 898-99 (1954). The rationale behind the rule on enforceability of penalty clauses in wills balances several policy factors. Public policy reasons to support penalty clauses include preserving the transferor's donative intent, avoiding waste of the estate in litigation, and avoiding use of a will contest to coerce a more favorable settlement to a dissatisfied beneficiary. See RESTATEMENT § 9.1 cmt. a. These must be balanced with the public policy interests of allowing access to the courts to prevent probate of wills procured by or resulting from fraud, undue influence, lack of capacity, improper execution, forgery, or subsequent revocation by a later document. See id. Thus, the Uniform Code, the RESTATEMENT, and the Arizona statute all refer to probable cause as the key issue in deciding whether to enforce a penalty clause.

¶ 8 The court of appeals construed the statutory language to mean that probable cause would exist if a "reasonably prudent person ... [would believe] that the will is invalid." Shumway, 197 Ariz. at 65 ¶ 29, 3 P.3d at 985 ¶ 29. The dissent believed, however, that the majority "erroneously focused on facts accepted by the trial court after a full development of the record and not upon whether a reasonable person in the challenger's position at the time the lawsuit was instituted would have had probable cause for concluding as she did." Id. at 67 ¶ 40, 3 P.3d at 987 ¶ 40.

¶ 9 In malicious prosecution and false imprisonment cases, whether probable cause existed in a particular case is a question of law to be determined by the court after the factual basis is determined by the trier of fact. See Hockett v. City of Tucson, 139 Ariz. 317, 320, 678 P.2d 502, 505 (App.1983); Watzek v. Walker, 14 Ariz.App. 545, 548, 485 P.2d 3, 6 (1971). We thus review the legal issues de novo, applying the appropriate legal standard to the facts found by the trier. See State v. Buccini, 167 Ariz. 550, 555-56, 810 P.2d 178, 183-84 (1991) (probable cause for issuance of search warrant). Although the present case falls within a different area of the law, we believe this procedure is nevertheless appropriate.

B. Probable cause—the standard

¶ 10 We first resolve the standard of probable cause to be applied under the statute. The trial judge did not make a specific probable cause finding. See Shumway, 197 Ariz. at 65 ¶ 24 n. 6, 3 P.3d at 985 ¶ 24 n. 6. The judge merely acknowledged that the will had been challenged and ruled that the penalty clause should be enforced. The court of appeals stated that "the circumstances regarding the will might give rise to a good faith belief that the decedent's will was overborne." Id. at 66 ¶ 33, 3 P.3d at 986 ¶ 33. But the court then differentiated this "good faith belief" from "probable cause" by saying that "[p]robable cause ... requires an independent, objective determination of whether reasonable persons in appellants' situation would have thought that their father's will was invalid." Id. at 66 ¶ 33 n. 9, 3 P.3d at 986 ¶ 33 n. 9. The court concluded that Gavette did not establish to the trial judge's satisfaction that "a reasonably prudent [person would] have instituted or continued the proceeding." Id. at 66 ¶ 33, 3 P.3d at 986 ¶ 33 (quoting Hockett, 139 Ariz. at 320, 678 P.2d at 505).

¶ 11 In articulating these tests, the court of appeals relied on definitions of probable cause used in criminal cases and in civil cases dealing with false arrest or malicious prosecution. See id. at 65 ¶¶ 27-28, 3 P.3d at 985 ¶¶ 27-28. It did so in part because "technical words and phrases that `have acquired a peculiar and appropriate meaning in the law shall be construed according to such peculiar and appropriate meaning.'" Id. at 65 ¶ 26, 3 P.3d at 985 ¶ 26...