Landi v. Arkules

• Decision Date: 09 January 1992
• Docket Number: Nos. 1,CA-CV,s. 1
• Citation: 835 P.2d 458,172 Ariz. 126
• Parties: Dale Michael LANDI, Plaintiff-Appellee, v. Bernard ARKULES and Barbara Arkules, husband and wife; David Arkules and Stacy Arkules, husband and wife; Nancy Moorehead & Associates, an Illinois business entity; Nancy Moorehead and George Moorehead, wife and husband, Defendants-Appellants. 89-361, 1 89-505.
• Court: Arizona Court of Appeals

Page 458

835 P.2d 458

172 Ariz. 126

Dale Michael LANDI, Plaintiff-Appellee, v. Bernard ARKULES and Barbara Arkules, husband and wife; David Arkules and Stacy Arkules, husband and wife; Nancy Moorehead & Associates, an Illinois business entity; Nancy Moorehead and George Moorehead, wife and husband, Defendants-Appellants.

Nos. 1 CA-CV 89-361, 1 CA-CV 89-505.

Court of Appeals of Arizona Division 1, Department A.

Jan. 9, 1992.

Reconsideration Denied March 3, 1992.

Petition and Cross-Petition for Review Denied Sept. 15, 1992.

[172 Ariz. 128] Kaye, Scholer, Fierman, Hays & Handler by Daniel H. Williams III, Los Angeles, Cal., and Ridenour, Swenson, Cleere & Evans by James W. Evans, John T. Moshier, Barbara B. Maroney, Phoenix, for plaintiff-appellee.

Mohr, Hackett, Pederson, Blakley, Randolph & Haga, P.C. by Robert C. Hackett, David W. Dow, Michele M. Feeney, Thomas M. Quigley, Arthur W. Pederson, Phoenix, for defendants-appellants.

AMENDED OPINION

LANKFORD, Judge.

Defendants filed separate notices of appeal from a judgment entered by the superior court in favor of the plaintiffs and from the superior court's denial of defendants' motion for a new trial. We consolidated these appeals for decision.

Defendants have presented three issues for review:

1) Did the trial court properly apply Arizona law rather than New York or Illinois law in interpreting an "heir finder" agreement?

2) Did the trial court err in finding that the "heir finder" contract was unenforceable as contrary to public policy?

3) Are the defendants entitled to payment for services rendered on the basis of quantum meruit?

We issued an opinion affirming the trial court's judgment and its denial of defendants' motion for a new trial. Defendants then filed a motion for reconsideration, which we granted. This amended opinion clarifies our prior opinion and also affirms the trial court's rulings.

I.

In late 1987, in the course of randomly reviewing probate files in Maricopa County, defendant David I. Arkules discovered the estate of Roi Landi Yelverton ("Yelverton"), who had apparently died leaving no known heirs. David Arkules' search was done for an Illinois heir locating business, Moorehead & Associates, operated by his sister, Nancy Moorehead ("Moorehead"). David Arkules' intention was to locate and offer to assist any heirs in establishing a claim to the estate in return for a share of the estate.

David Arkules conducted genealogical research in an attempt to identify and locate heirs to the Yelverton estate, and he eventually entered into agreements with three potential heirs of the estate. Bernard Arkules, a licensed Arizona attorney and the father of both David Arkules and Nancy Moorehead, then represented these potential heirs in the Yelverton probate proceedings.

On March 21, 1988, an assistant attorney general informed Bernard Arkules of the existence of an heir with claims superior to those of Bernard Arkules' clients. This information was conveyed to David Arkules who then located Dale Michael Landi ("Landi"), the son of Yelverton, in New York. On March 25, 1988, David Arkules and Landi executed an agreement in which Landi appointed Moorehead "to do all things necessary to obtain the inheritance." The agreement further provided that Moorehead would retain an attorney and pay the expenses for researching and proving the validity of Landi's claim of inheritance, including attorney's fees. In exchange, Landi assigned to Moorehead forty percent of any inheritance which Landi might receive.

Subsequently, Bernard Arkules contacted Landi by telephone and agreed to send Landi genealogical materials. On March 31, 1988, Bernard Arkules sent a letter to Landi on his legal stationery in which he provided Landi with Yelverton's family history and gave Landi advice regarding probating the Yelverton estate, including the potential tax liability of the estate.

Landi subsequently hired an attorney who responded with a letter to Bernard Arkules stating that Bernard Arkules was not authorized to act on Landi's behalf, and that the agreement Landi had signed was unenforceable.

On April 22, 1988, Landi filed a complaint in Maricopa County Superior Court to rescind the heir locator agreement and have it declared void and unenforceable or, in the alternative, to have the agreement reformed to establish a fair and equitable fee.

Landi then filed three motions for summary judgment. In the initial motion, he argued that the agreement was unenforceable on three grounds: first, an Arizona statute renders heir finding agreements unenforceable when the fee exceeds thirty percent; second, the defendants were acting as heir finders in Arizona without first having obtained an Arizona private investigator license; and third, there was a failure of consideration.

Landi's next motion for summary judgment claimed that the agreement was unenforceable because the parties did not intend to create a binding contract.

Landi's final motion for summary judgment argued that the agreement was void ab initio as illegal and contrary to public policy because it required Moorehead to engage in the unauthorized practice of law. Landi argued that the agreement required Moorehead to establish a claim in Arizona courts although she was not a licensed Arizona attorney. Landi further asserted that the agreement to hire an attorney and pay all fees in pursuit of these claims was improper solicitation of an attorney and constituted acting as a middleman for profit in judicial proceedings in violation of Arizona Rules of the Supreme Court, Rule 42, E.R. 7.3.

The superior court judge considered these summary judgment motions together, granted the first motion in part on the grounds that the agreement violated Arizona law, and declared the agreement rescinded and unenforceable. He reasoned that the forty percent fee enumerated in the agreement rendered the agreement unenforceable as a matter of law because it was contrary to the express provisions of Ariz.Rev.Stat.Ann. 'A.R.S.' § 12-890. He further found that Moorehead could not enforce the agreement because she did not have an Arizona private investigator's license and that the agreement was illegal and void ab initio as against public policy. The trial court denied the motion for summary judgment with regard to failure of consideration and found that the above findings rendered moot the issue of the parties' intent to create a binding contract. The court later entered an appropriate final judgment.

The defendants then filed a motion for new trial on the ground that the Arizona Department of Public Safety had recently granted Moorehead and David Arkules licenses as private investigators. The superior court determined that the newly-obtained licenses did not alter its earlier legal conclusions. The defendants filed separate appeals from the entry of judgment and from the denial of the motion for new trial. We consolidated these appeals for decision.

II.

On appeal from the granting of the motions for summary judgment, we will view the facts and draw all reasonable inferences in the defendants' favor. Ariz.R.Civ.P. 56; Woerth v. City of Flagstaff, 167 Ariz. 412, 416, 808 P.2d 297, 301 (App.1990); Cecil Lawter Real Estate School, Inc. v. Town & Country Shopping Center Co., Ltd., 143 Ariz. 527, 537, 694 P.2d 815, 825 (App.1984). We are not bound by the trial court's determinations as to matters of law. Gary Outdoor Advertising Co. v. Sun Lodge, Inc., 133 Ariz. 240, 244, 650 P.2d 1222, 1226 (1982); Stika v. Albion, 150 Ariz. 521, 724 P.2d 607 (App.1986). We will review the denial of the motion for new trial for an abuse of discretion. Suciu v. AMFAC Distributing Corp., 138 Ariz. 514, 520, 675 P.2d 1333, 1339 (App.1983).

III.

Defendants first argue that the trial court erred in applying Arizona law rather than Illinois or New York law in interpreting the legality and enforceability of this agreement because the contract provided that Illinois law would apply to disputes arising from the agreement. In the alternative, defendants argue that New York law should apply because the agreement was negotiated and signed in that state.

Arizona courts follow the RESTATEMENT (SECOND) OF CONFLICT OF LAWS ("RESTATEMENT OF CONFLICTSS") in determining choice of law issues. Burr v. Renewal Guaranty Corp., 105 Ariz. 549, 550, 468 P.2d 576, 577 (1970). This court will apply the law of the state chosen by the parties as to issues that could have been resolved by an explicit provision in the contract. RESTATEMENT OF CONFLICTS § 187. The legality and validity of a contract provision, however, cannot be resolved by an explicit provision in the contract: it is a question of law. See id. at comment d, 1988 Supp., p. 137. Therefore, we will apply the rule that the law chosen by the parties governs unless that law is contrary to the fundamental policy of a state with a materially greater interest in the issue. Id. at pp. 139-40. If the parties choose the law of a state which would declare the contract invalid, however, we will presume that the parties made this choice by mistake and will not apply the chosen law. Id. § 187, comment e, 1988 Supp., p. 138.

In this case, as is discussed at length in Part IV of this decision, conducting heir locating investigations in Arizona is an activity that requires licensing in Arizona as a private investigator. Neither David Arkules nor Moorehead were licensed private investigators. Because Illinois law makes contracts void where a party to the contract fails to obtain a required license necessary to his performance of the contract, Illinois law would render the agreement unenforceable. See T.E.C. & Assoc., Inc. v. Alberto-Culver Co., 131 Ill.App.3d 1085, 87 Ill.Dec. 220, 228, 476 N.E.2d 1212, 1220 (1985) (failure to obtain license required by statute made contract void and unenforceable). Accord Broverman v. City of Taylorville, 64 Ill.App.3d 522, 21 Ill.Dec. 264, 381 N.E.2d 373 (1978).

Even if Illinois law would...