Court Opinion

ID: 4368876
Source: CourtListenerOpinion
Date Created: 2019-02-19 15:01:57.201145+00
Date Added: 2024-06-11T14:49:22.371124
License: Public Domain

NOTICE: NOT FOR OFFICIAL PUBLICATION.
  UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL
                  AND MAY BE CITED ONLY AS AUTHORIZED BY RULE.

                                     IN THE
              ARIZONA COURT OF APPEALS
                                 DIVISION ONE

                         In the Matter of the Estate of:

                JOHN LAWRENCE FAIRBANKS, II, Deceased

            JOHN L. FAIRBANKS, III, et al., Plaintiffs/Appellants,

                                         v.

                  EVA M. FAIRBANKS, Defendant/Appellee.

                              No. 1 CA-CV 18-0295
                               FILED 2-19-2019

           Appeal from the Superior Court in Maricopa County
                           No. PB2015-001496
           The Honorable Aryeh D. Schwartz, Judge Pro Tempore

                                   AFFIRMED

                                    COUNSEL

Murphy Law Firm, Inc., Phoenix
By Thomas J. Murphy
Counsel for Plaintiffs/Appellants

Bert L. Roos, P.C., Phoenix
By Bert L. Roos
Counsel for Defendant/Appellee
                   FAIRBANKS, III, et al. v. FAIRBANKS
                         Decision of the Court

                      MEMORANDUM DECISION

Judge Maria Elena Cruz delivered the decision of the Court, in which
Presiding Judge Lawrence F. Winthrop and Judge Kenton D. Jones joined.

C R U Z, Judge:

¶1           Appellants John Fairbanks, III and Jonathan Fairbanks appeal
the entry of summary judgment in favor of Eva Fairbanks. For the
following reasons, we affirm.

                  FACTS AND PROCEDURAL HISTORY

¶2           The underlying facts are undisputed. John Fairbanks, II
(“Decedent”) died on May 1, 2015. He is survived by his wife, Eva
Fairbanks, and his sons from previous marriages, John Fairbanks, III and
Jonathan Fairbanks (“the sons” or “Appellants”). Decedent married Eva in
November 2001. In November 2002, Decedent received retirement funds in
the amount of $239,597.98 and elected to rollover the funds into an
individual retirement account (the “annuity”). Prudential issued the
annuity, which identified Decedent as the annuitant and owner and
designated Eva as the beneficiary.

¶3            In October 2012, Decedent attempted to modify the annuity
beneficiary designation to name “Papa’s Trust” as the new primary
beneficiary, and John Fairbanks, III and Jonathan Fairbanks as contingent
beneficiaries. However, on October 22, 2012, Prudential notified Decedent
that without documentation of divorce or his spouse’s death, it was unable
to process the request without Eva’s signature as the existing primary
beneficiary. In 2013, Eva filed for divorce, but it was never finalized.
Decedent died approximately two years later.

¶4             Eva filed an application for formal appointment as personal
representative of Decedent’s estate. The sons objected and filed Decedent’s
will and trust with the superior court. The sons moved for summary
judgment, arguing the superior court should divide the annuity funds
according to community property principles. Eva filed a cross-motion for
summary judgment; she contended the annuity funds should be distributed
to her as the designated beneficiary.

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                   FAIRBANKS, III, et al. v. FAIRBANKS
                         Decision of the Court

¶5           The superior court denied sons’ motion for summary
judgment and granted Eva’s cross-motion for summary judgment, ruling
Eva was the sole beneficiary of the annuity. John Fairbanks, III and
Jonathan Fairbanks timely appealed. We have jurisdiction pursuant to
Arizona Revised Statutes (“A.R.S.”) section 12-2101(A)(1).

                                DISCUSSION

I.     Standard of Review

¶6            We review the superior court’s grant of summary judgment
de novo. Great Am. Mortg., Inc. v. Statewide Ins. Co., 189 Ariz. 123, 125 (App.
1997). We review the facts and inferences therefrom in the light most
favorable to the party against whom judgment was entered. Id. at 124.
Summary judgment is appropriate only when there are no genuine issues
of material fact and the moving party is entitled to judgment as a matter of
law. Orme Sch. v. Reeves, 166 Ariz. 301, 305 (1990). We may affirm the
superior court’s judgment on other grounds if we determine the superior
court reached the right result. Chandler Med. Bldg. Partners v. Chandler
Dental Grp., 175 Ariz. 273, 278 (App. 1993).

II.    Non-Probate Transfer

¶7            Appellants argue the superior court erred by applying
contract law and enforcing the annuity’s beneficiary designation. They also
argue that community property law applies, and therefore, Decedent’s
estate is entitled to a community property share of the annuity. We
disagree.

¶8           Non-probate transfers of certain assets at death, including
individual retirement accounts, are non-testamentary. A.R.S. § 14-6101.
Section 14-6101(A) states, “[a] provision for a nonprobate transfer on death
in any insurance policy, . . . account agreement, custodial agreement,
deposit agreement, compensation plan, pension plan, individual retirement
plan, employee benefit plan, . . . or other written instrument of a similar
nature is nontestamentary.” Section 14-6101(B)(1) broadly defines other
types of written instruments that are non-testamentary, namely those
where “[m]oney . . . due to, controlled by or owned by a decedent before
death shall be paid after the decedent’s death to a person whom the
decedent designates either in the instrument or in a separate writing.”

¶9            Here, the annuity is a non-testamentary, non-probate transfer
because it meets the statutory definition of an individual retirement plan in
A.R.S. § 14-6101(A). See In re Estate of Lamparella, 210 Ariz. 246, 248 n.1, ¶ 10

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                   FAIRBANKS, III, et al. v. FAIRBANKS
                         Decision of the Court

(App. 2005) (defining non-probate transfers as assets transferred outside of
probate such as insurance proceeds, payable on death accounts, and other
revocable dispositions).     Also, the annuity is a non-probate, non-
testamentary transfer pursuant to § 14-6101(B)(1) because the annuity is a
writing that provides Decedent’s funds would be paid to the designated
beneficiary after his death.

¶10             It is undisputed that Eva Fairbanks is the named beneficiary.
It is also undisputed that Decedent took no further action to name
Appellants as contingent beneficiaries after receiving the notice from
Prudential that it could not proceed without Eva’s signature. See, e.g., In re
Jones’ Estate, 10 Ariz. App. 480, 482 (1969) (“Where the estate of the decedent
is not the designated beneficiary the proceeds of a [non-testamentary
transfer] do not become a part of the estate of the insured and a beneficiary
under [a non-testamentary transfer] takes by virtue of the contract . . . rather
than by the laws of succession.”) (citations omitted).

¶11           The superior court correctly determined that, according to the
terms of the annuity, Eva was the named beneficiary and granted her cross-
motion for summary judgment. Accordingly, the superior court did not err
by awarding the full annuity proceeds to Eva.

III.   Community Property

¶12            Appellants also contend that “community property concepts
should govern the terms of distribution.” Appellants rely upon the
language in Prudential’s notice to Decedent that it could not change his
beneficiary designations without Eva’s signature. Appellants also rely on
In re Estate of Kirkes, 231 Ariz. 334, 335 (2013), to argue that “community
property law has to be considered when determining who the rightful
beneficiaries are.” Further, they assert that Eva waived her rights to the
annuity when she did not list the annuity account in the community
property declaration Eva submitted in conjunction with her divorce
petition. We disagree.

¶13           It is undisputed that Decedent was married to Eva at his
death. Additionally, even though divorce proceedings had been initiated
there is no evidence in the record that Eva and Decedent entered into a
property settlement agreement. Further, the parties do not dispute that Eva
is named the annuity’s primary beneficiary and Appellants produced no
evidence Decedent ever took further action to change the beneficiary after
receiving Prudential’s letter denying his beneficiary change request. The
evidence on which Appellants rely—the failure to list the annuity in her

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                  FAIRBANKS, III, et al. v. FAIRBANKS
                        Decision of the Court

community property declaration for her divorce petition—had so little
probative value that a court could not reasonably conclude by a
preponderance of the evidence that Eva had waived her rights as the
primary beneficiary of the annuity. Moreover, filing for divorce alone did
not revoke the beneficiary designation; instead, a court order is required.
See A.R.S. § 14-2804(A)(1)(a) (“a court order or a contract relating to the
division of the marital estate made between a divorced couple . . . revokes
any revocable [d]isposition or appointment of property made by a divorced
person to that person’s former spouse”).

¶14           The case on which Appellants rely is also inapposite. Kirkes
held that a spouse may designate to a non-spouse beneficiary more than
one-half of a community property retirement account so long as the other
spouse receives half of the community overall. 231 Ariz. at 337, ¶ 14. This
case does not further our annuity disposition analysis because Decedent
did not designate a non-spouse beneficiary to the annuity account.

¶15          The superior court correctly held Eva did not waive her
beneficiary designation. Ultimately, there are no community property
issues because Eva was the annuity’s only beneficiary at Decedent’s death.

IV.    Eva’s Request for Attorneys’ Fees on Appeal

¶16            Eva requests an award of attorneys’ fees on appeal pursuant
to A.R.S. § 14-3720. In response, Appellants argue Eva is not entitled to fees
because their positions are reasonable and well-founded.

¶17           The record provided to this court indicates that Eva is not the
personal representative of Decedent’s probate estate. Section 14-3720
awards estate litigation expenses to a personal representative who
prosecutes or defends claims against the estate in good faith. Accordingly,
Eva is not entitled to attorneys’ fees. We do, however, grant Eva’s request
for costs incurred on appeal as the successful party upon compliance with
ARCAP 21.

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          FAIRBANKS, III, et al. v. FAIRBANKS
                Decision of the Court

                      CONCLUSION

¶18   For the foregoing reasons, we affirm.

                AMY M. WOOD • Clerk of the Court
                 FILED: AA

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