Lockett v. Lockett (In re Estate of Lockett)
| Decision Date | 26 April 2012 |
| Docket Number | 1 CA-CV 10-0812 |
| Parties | In the Matter of the Estate of: JOSEPH L. LOCKETT, SR., Deceased. LINDA LOCKETT, Appellant, v. MARY E. LOCKETT; PATRICIA LOCKETT BOWDLER; and JOSEPH L. LOCKETT, JR., Appellees. |
| Court | Arizona Court of Appeals |
See Ariz. R. Supreme Court 111(c); ARCAP 28(c);
(Not for Publication - Rule 28, Arizona Rules of Civil Appellate Procedure)
The Honorable Michael Bluff, Judge
AFFIRMED
Dyer & Ferris, L.L.C. By Charles M. Dyer Scott R. Ferris Shad W. Blackford Attorneys for Appellant
Becker & House, P.L.L.C. By Mark E. House Allison E. Evans Attorneys for Appellee
¶1 Linda Lockett (Linda) appeals from the trial court's judgment in favor of Mary Lockett, Patricia Lockett Bowdler, and Joseph L. Lockett, Jr. (Mary, Patricia, and Joe, Jr., respectively, the Appellees, collectively). For the reasons discussed below, we affirm.
¶2 The following facts relevant to the issues on appeal are not disputed. Mary and Joseph L. Lockett, Sr. (Joe) married on June 19, 1965. Mary and Joe had two children, Joe, Jr. and Patricia, before divorcing on May 21, 1991. On August 26, 1990, amidst the parties' divorce negotiations, Joe sent a letter to Mary's attorney, stating:
This letter shall serve as notice to you that I, Joseph L. Lockett intend to will upon my death: 50% of my entire estate to my children, Joseph L. Lockett Jr. and Patricia F. Lockett and 25% of my entire estate to Mary E. Lockett. The distribution of the estate is to be per stirpes.
¶3 On October 25, 1990, Mary and Joe entered into a Marital Settlement Agreement (MSA), drafted by Mary's attorney, which contained the following provision:
[T]he parties hereby irrevocably agree that each shall execute a Will leaving fifty percent (50%) of theirrespective estates in equal shares to the children and twenty-five percent (25%) to each other. In the event that one of the parties has predeceased the other, the share of the one so dying shall be added equally to the children's shares.
¶4 On February 26, 2001, Mary and Joe entered into a Waiver and Modification of Certain Terms of Marital Settlement Agreement (the Modification), drafted by Joe's attorney, that stated, in relevant part:
¶5 On September 29, 2001, Joe married Linda. In June 2006, Joe was diagnosed with small-cell carcinoma. On May 21, 2007, Joe executed his Last Will and Testament (the Will). The Will provides that all of Joe's personal property is to be distributed to Linda and the balance of Joe's estate is to be distributed to the Joseph L. Lockett, Sr. Trust (the Trust). The Trust, as amended on February 27, 2007, provides in relevant part:
¶6 Joe died on December 22, 2007. During the eighteen-month time period following his diagnosis and preceding his death, Joe made several non-probate transfers of assets to Linda (these assets included the marital residence, Lockett Ranches, and multiple bank accounts). The cumulative value of these assets exceeded $2,500,000.
¶7 On November 19, 2009, Mary, Joe, Jr., and Patricia filed a claim against Joe's estate for "an amount of not less than 75% of the gross estate of the Decedent, less administration costs" as provided for in the October 25, 1990 MSA and the February 26, 2001 Modification. In their petition,the Appellees asserted that Joe's Will and Trust did not comply with the terms of the MSA and Modification. The Appellees also claimed that Joe's non-probate transfers to Linda were made to circumvent the MSA and Modification and were thus in bad faith and invalid.
¶8 The matter proceeded to a two-day bench trial. At trial, Linda conceded that the Trust, which provided her a pre-residuary distribution of assets with a combined value substantially in excess of twenty-five percent of Joe's estate, did not comport with the MSA and Modification. She maintained, however, that Joe's transfer of assets to her before his death did not violate the agreements because they occurred outside of probate.
¶9 The trial court found that the MSA and Modification required Joe to convey 75% of his entire estate to Joe, Jr. and Patricia and concluded that the cumulative value of Joe's transfers to Linda rendered them unreasonable as a matter of law. Accordingly, the trial court ordered that the assets Joe transferred to Linda during the eighteen months preceding his death be returned to the estate and that the Trust be distributed seventy-five percent to Joe, Jr. and Patricia and twenty-five percent to Linda.
¶10 Linda timely appealed. We have jurisdiction pursuant to Arizona Revised Statutes (A.R.S.) section 12-2101(B) (2003).
¶11 On appeal, Linda contends the trial court erred by determining that the assets Joe transferred to her before his death were subject to the MSA and Modification. She argues that the term "estate," as used within those documents, referred only to Joe's assets at the time of his death and therefore the MSA and Modification did not restrict his ability to transfer and dispose of his assets during his lifetime. Additionally, Linda asserts that, because Joe, Jr. and Patricia received substantial assets from Joe's estate notwithstanding the non-probate transfers, the trial court erred by finding Joe's transfers were made in bad faith. We address each issue in turn.
¶12 Linda contends that the term "estate," as used in the MSA and Modification, is "confined to the probate estate." Mary, Joe, Jr., and Patricia argue, on the other hand, that the term "estate" is ambiguous and that extrinsic evidence of Mary and Joe's intent at the time they entered into those agreements demonstrates that the term was intended to include Joe's entire estate.
¶13 We review the interpretation of a contract de novo. Rand v. Porsch Fin. Servs., 216 Ariz. 424, 434, ¶ 37, 167 P.3d 111, 121 (App. 2007). General contract principles govern the construction and enforcement of a settlement agreement. Emmonsv. Superior Court, 192 Ariz. 509, 512, ¶ 14, 968 P.2d 582, 585 (App. 1998). When the terms of an agreement are clear and unambiguous, we give effect to the agreement as written. Goodman v. Newzona Inv. Co., 101 Ariz. 470, 472, 421 P.2d 318, 320 (1966).
¶14 If the terms of the agreement are ambiguous, "parol evidence may be used to explain [the ambiguity], but in the absence of fraud or mistake, it may not be used to change, alter or vary the express terms in a written agreement." Brand v. Elledge, 101 Ariz. 352, 358, 419 P.2d 531, 537 (1966). When
parties submit competing interpretations of a contract's meaning, the court should consider "the offered evidence and, if [the court] finds that the contract language is reasonably susceptible to the interpretation asserted by its proponent, the evidence is admissible to determine the meaning intended by the parties." Taylor v. State Farm Mut. Automobile Ins. Co., 175 Ariz. 148, 154, 854 P.2d 1134, 1140 (1993) (internal quotation omitted). "Whether contract language is reasonably susceptible to more than one interpretation so that extrinsic evidence is admissible is a question of law." Id. at 158-59, 854 P.2d at 1144-45.
¶15 When the meaning of a contractual provision remains unclear after consideration of the parties' intentions, "a secondary rule of construction requires the provision to beconstrued against the drafter." MT Builders, L.L.C. v. Fisher Roofing, Inc., 219 Ariz. 297, 302, ¶ 10, 197 P.3d 758, 763 (App. 2008). We do not resort to this secondary rule "unless other interpretive guides fail to elucidate a clause's meaning." First Am. Title Ins. Co. v. Action Acquisitions, L.L.C., 218 Ariz. 394, 397, ¶ 8, 187 P.3d 1107, 1110 (2008); see also Taylor, 175 Ariz. at 158 n.9, 854 P.2d at 1144 n.9 (...
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