Court Opinion

ID: 2800777
Source: CourtListenerOpinion
Date Created: 2015-05-14 15:03:35.773121+00
Date Added: 2024-06-11T11:29:37.488305
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  UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL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 re the Matter of:

                      BARBARA LANSDON, Deceased.

         PEGGY PETERSON JOHNSON, Interested Party/Appellant,

                                         v.

              LISA WALTON, Personal Representative/Appellee.

                              No. 1 CA-CV 14-0194
                                FILED 5-14-2015

             Appeal from the Superior Court in Apache County
                          No. S0100PB201100026
                The Honorable Donna J. Grimsley, Judge

                                   AFFIRMED

                                    COUNSEL

John A. Banker, Attorney at Law, Taylor
By John A. Banker
Counsel for Interested Party/Appellant

Murphy Law Firm, Inc., Phoenix
By Thomas J. Murphy
Counsel for Personal Representative/Appellee
                         JOHNSON v. WALTON
                          Decision of the Court

                      MEMORANDUM DECISION

Presiding Judge John C. Gemmill delivered the decision of the Court, in
which Judge Kenton D. Jones and Judge Donn Kessler joined.

G E M M I L L, Judge:

¶1            Peggy Peterson Johnson appeals from the superior court’s
order granting her sister Lisa Walton’s request for attorney fees and
expenses incurred as the personal representative of their deceased mother’s
estate. For the reasons that follow, we affirm.

                             BACKGROUND

¶2            Johnson and Walton are the adult daughters of Barbara
Lansdon, who died on April 12, 2011. Lansdon’s Will designated Walton
as the personal representative (“PR”) of her estate. Eight days later, Walton
initiated probate proceedings by applying for appointment as the PR. The
court granted Walton’s application.

¶3           The Will directed various items of Lansdon’s tangible
personal property be given to Johnson and Walton. The Will further
directed that items not specifically disposed of be added to Lansdon’s
residuary estate and distributed according to the instructions of The
Lansdon Family Trust. Johnson and Walton are co-trustees of the Trust.

¶4            As the probate matter proceeded, the record reflects Johnson
frustrated Walton’s attempts to administer the estate. For example, Johnson
and her husband attempted to transfer funds from the Trust’s bank
accounts to their personal accounts the day before Lansdon died. Johnson
also succeeded in obtaining the original Will and Trust documents from
Lansdon’s accountant, which resulted in Walton filing an emergency
motion with the court seeking production of those items. Additionally,
Johnson, who was living in Landson’s home in Eagar during the probate
proceedings, prevented Walton from accessing the home to conduct an
inventory of the estate’s assets. As a result, Walton had to make multiple
trips from her home in Oregon to Arizona. Furthermore, Johnson refused
to co-sign checks drawn on the Trust’s bank accounts, thereby preventing

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                           JOHNSON v. WALTON
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payments to the estate’s creditors. Johnson also refused to co-sign Motor
Vehicle Division affidavits.

¶5             On January 14, 2014, Walton moved for approval of payment
of her costs incurred in administering the estate, including her attorney
fees.1 Johnson objected. The court held an evidentiary hearing on the
matter and took testimony from the parties. Subsequently, the court issued
a signed order approving $15,125.94 of the $16,945.10 Walton requested.
The amount approved includes $8,081.20 in attorney fees. The court’s order
also states that the expenses and fees “are initially an obligation of the Estate
to the extent of assets and thereafter subject to the provisions of the Trust.”2
Johnson appealed from that order, and we have jurisdiction pursuant to
Arizona Revised Statutes (“A.R.S.”) section 12-2101(A)(9).

                                DISCUSSION

¶6            Johnson raises two issues on appeal. First, she contends the
court erred in approving Walton’s expenses, including her attorney fees,
incurred as the PR of the estate. Second, Johnson argues the court lacked
the authority to order payment of estate expenses from the Trust.

I. Walton’s Expenses and Attorney Fees

¶7            A personal representative that defends or prosecutes any
proceeding in good faith is entitled to receive necessary expenses, including
attorney fees, from the probate estate. A.R.S. § 14-3720; see In re Estate of
Gordon, 207 Ariz. 401, 408, ¶ 37, 87 P.3d 89, 96 (App. 2004) (“It is undisputed
that payment of attorneys’ fees is considered an expense of
administration.”); see also A.R.S. § 14-11004(A) (establishing that a trustee is

1 Walton initially filed her motion on December 3, 2013, but she failed to
include an application that complies with Schweiger v. China Doll Restaurant,
Inc., 138 Ariz. 183, 673 P.2d 927 (App. 1983). Accordingly, Walton filed a
revised motion on January 14, 2014 that included a proper fee application.

2   At the hearing, the court also addressed Johnson’s Petition for
Construction and Interpretation of Trust and Will, wherein Johnson alleged
Walton forfeited her interest in the Trust and estate because she instigated
the probate proceeding in violation of the Will’s and Trust’s respective in
terrorem clauses. The court found Johnson failed to present evidence that
Walton directly attacked the Will or the Trust; thus, the in terrorem clauses
were not implicated. Johnson does not challenge this ruling on appeal.

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                         JOHNSON v. WALTON
                          Decision of the Court

entitled to expenses incurred in connection with administering the trust).
A PR’s expenses incurred in “finding the assets of the estate, of discharging
its obligations, of preventing waste, and of carrying out the expressed
wishes of the testator” are expenses of administration. Garver v. Thoman, 15
Ariz. 38, 42, 135 P. 724, 725 (1913).

¶8              We review a court’s approval of a PR’s request for
administrative expenses for an abuse of discretion. See Matter of Wright’s
Estate, 132 Ariz. 555, 560, 647 P.2d 1153, 1158 (App. 1982) (“The allowance
of extraordinary fees to a personal representative is a matter within the
discretion of the trial court.”) disapproved of on other grounds by Marvin
Johnson, P.C. v. Myers, 184 Ariz. 98, 907 P.2d 67 (1995). Similarly, “[t]he
reasonableness of compensation for the attorneys representing the personal
representative is peculiarly within the knowledge of the probate court and
will not be disturbed absent a showing of abuse of discretion.” Id. Under
such a standard, we view the record in the light most favorable to
upholding the superior court’s decision, and we will not disturb that
decision if it is supported by any reasonable basis. In re Indenture of Trust
Dated Jan. 13, 1964, 235 Ariz. 40, 51, ¶ 41, 326 P.3d 307, 318 (App. 2014).

¶9             We find no abuse of discretion here. Arizona Code of Judicial
Administration Rule 3-303(D)(1) governs the court’s approval of a PR’s
request for compensation. See Ariz. R. Prob. P. 33(F). Rule 3-303 explains
that the court must “[w]eigh the totality of the circumstances in each case”
to determine whether the request complies with the compensation
guidelines. Walton’s motion for approval of payment included an itemized
affidavit of attorney fees, explanations of her travel and lodging expenses,
and explanations of her time expended. This evidence provides a
reasonable basis on which the court could conclude that the request for fees
complied with Rule 3-303, thereby justifying an award of compensation.

¶10           Johnson asserts the court abused its discretion in awarding
Walton her PR expenses because Walton “administered the estate in an
elaborate, expensive, inefficient, and incomplete manner, consistent with
[Walton’s] best interests[.]” We disagree. The record reflects Johnson’s
obstructionist tactics prohibited Walton from efficiently administering the
estate. The itemized fee statement indicates a significant amount of time
spent by Walton’s counsel responding to Johnson’s interference with
Walton’s efforts to administer the estate, and Walton’s counsel informed
counsel for Johnson at least twice that Walton was incurring extensive
expenses and fees in the administration of the estate “due to [Johnson’s]
tactics.” Thus, Johnson knew—or at least should have known—that her

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                          JOHNSON v. WALTON
                           Decision of the Court

actions were escalating Walton’s PR expenses, which included costs
associated with traveling to and lodging in Arizona.

¶11           We also disagree with Johnson’s argument that it was the
court’s responsibility to determine the reasonableness of the fees requested.
Johnson concedes that the attorney fee affidavit Walton submitted satisfies
the requirements set forth in Schweiger v. China Doll Restaurant, Inc., 138
Ariz. 183, 673 P.2d 927 (App. 1983). Accordingly, it was Johnson’s burden
“to demonstrate why any of the billing entries were immaterial, irrelevant
or otherwise unreasonable.” State ex rel. Corbin v. Tocco, 173 Ariz. 587, 594,
845 P.2d 513, 520 (App. 1992). In her response to the revised motion for
approval of payment, Johnson only generally complained that Walton’s
attorney fee request was unreasonable, and Johnson “[disagreed] with the
alleged basis of numerous itemized entries[.]” Such a general objection to
a fee affidavit is insufficient to establish the requested fees’
unreasonableness. See id.; see also Ariz. R. Prob. P. 33(D) (“If a petition for
compensation or fees is contested, the objecting party shall set forth all
specific objections in writing[.]”). At the evidentiary hearing, Johnson
focused almost entirely on her allegation that Walton violated the Will’s
and Trust’s in terrorem clauses by initiating the probate proceeding.
Johnson did not raise any additional arguments regarding the bases for her
objection to Walton’s request for attorney fees.

¶12           Johnson also argues Walton’s counsel charged for time spent
on a number of actions that were “taken in bad faith[.]” These arguments
regarding specific “actions” were not raised in superior court and are,
therefore, not properly preserved for our review. See Dugan v. Fujitsu Bus.
Commc’n. Sys., Inc., 188 Ariz. 516, 521, 937 P.2d 706, 711 (App. 1997) (finding
an argument waived because it was not raised before the trial court).

¶13            For these reasons, we conclude the court’s approval of
Walton’s request for expenses and attorney fees is supported by the record.
The court, therefore, acted within its discretion in approving that request.
See Matter of Wright’s Estate, 132 Ariz. at 559, 647 P.2d at 1157 (holding
disproportionate fee award was proper because administrator’s
“extraordinary services” were necessary to resolve “problems
encountered” during administration of estate, including disarray of estate’s
affairs at time administration commenced and co-administrator’s
obstructionist activities) disapproved of on other grounds by Myers, 184 Ariz.
at 101, 907 P.2d at 70.

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                            JOHNSON v. WALTON
                             Decision of the Court

II. Payment From Trust Assets

¶14           Johnson contends the court erred in ordering the Trust to pay
Walton’s expenses and fees to the extent the estate lacks the assets to do so.
In support, Johnson cites to Matter of Estate of Mason, 190 Ariz. 312, 947 P.2d
886 (App. 1997). However, that case is inapposite because, unlike here, it
concerns the apportionment of an estate’s tax liability between probate and
non-probate assets, an issue that is specifically addressed by state statutes.
Mason, 190 Ariz. at 313–14, 947 P.2d at 888–89.

¶15           In addition to Johnson’s lack of supporting authority, we note
that the Will and Arizona law support the court’s order. Article III of the
Will provides, in relevant part:

       I direct that my Personal Representative shall confer with the
       Trustee of my Revocable Living Trust regarding payment of
       my funeral expenses, expenses of last illness, claims, costs of
       administration, other proper charges against my estate, as well as
       inheritance, death and estate taxes, including interest and
       penalties thereon assessed by reason of my death. I have
       directed payment of these items under the trust agreement hereafter
       mentioned and I confirm that direction.

(Emphasis added.) Further, Arizona law similarly states, in pertinent part:

       After the death of a settlor, and subject to the settlor’s right to
       direct the source from which liabilities will be paid, the
       property of a trust that was revocable at the settlor’s death is subject
       to claims of the settlor’s creditors, costs of administration of the
       settlor’s estate, the expenses of the settlor’s funeral and
       disposal of remains and statutory allowances to a surviving
       spouse and children to the extent the settlor’s probate estate is
       inadequate to satisfy those claims, costs, expenses and allowances,
       except to the extent that state or federal law exempts any
       property of the trust from these claims, costs, expenses or
       allowances.

A.R.S. § 14-10505(A)(3) (emphasis added).

¶16            For these reasons, the court did not err in requiring the Trust
to pay Walton’s PR expenses and attorney fees in the event the estate lacks
sufficient assets.

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                        JOHNSON v. WALTON
                         Decision of the Court

                            CONCLUSION

¶17          The court’s order approving Walton’s request for PR expenses
and attorney fees is affirmed.

                                 :ama

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