Court Opinion

ID: 4709441
Source: CourtListenerOpinion
Date Created: 2021-08-05 18:03:05.870712+00
Date Added: 2024-06-11T08:06:56.558521
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 UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL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:

   YVONNE BOOK, BRUCE REIGELSPERGER, KEVIN O’CONNELL
                         TRUST,

                BART V. WHILES, et al., Plaintiffs/Appellees,

                                        v.

          GORDON KEITH JONES, et al., Defendants/Appellants.

        JAMES BRUCE HENDERSON, et al., Intervenors/Appellees.

                             No. 1 CA-CV 20-0508
                               FILED 8-5-2021

           Appeal from the Superior Court in Maricopa County
                          No. PB2014-070659
              The Honorable Lisa Ann VandenBerg, Judge

                                  AFFIRMED

                                   COUNSEL

Kenneth M. Rudisill Attorney at Law, Peoria
By Kenneth M. Rudisill
Counsel for Plaintiffs/Appellees
Mazza Law PLC, Scottsdale
By Stephen J.P. Kupiszewski

The Law Office of Libby Banks PLLC, Phoenix
By Libby Houghland Banks
Co-Counsel for Defendants/Appellants

Snell & Wilmer LLP, Phoenix
By Kevin J. Parker, Kevin W. Wright
Counsel for Plaintiffs/Appellees Marquette University and Saint Leo University

                       MEMORANDUM DECISION

Judge Peter B. Swann delivered the decision of the court, in which Presiding
Judge D. Steven Williams and Judge James B. Morse Jr. joined.

S W A N N, Judge:

¶1             The superior court determined that our previous appellate
decision in this matter did not compel the court to unwind a select portion
of a settlement agreement entered in a different case. We agree, and we
therefore affirm.

                 FACTS AND PROCEDURAL HISTORY

¶2             Kevin O’Connell created a trust (the “Trust”) that provided
for the payment of specific cash gifts to four employees (the “Primary
Beneficiaries”) and the distribution of the residual Trust assets to two
universities (the “Residuary Beneficiaries”). When O’Connell died, Gordon
L. Jones became trustee in accordance with the terms of the Trust and he
designated his son, Gordon Keith Jones, as co-trustee.

¶3             In 2014, several of the Primary Beneficiaries filed a complaint
against the Joneses, alleging that the Joneses had breached their fiduciary
duties by misappropriating trust assets for their own benefit and by failing
to distribute the specific cash gifts. Each of the four Primary Beneficiaries
ultimately signed a settlement agreement, which the court reduced to a
written order. As part of the settlement agreement, Gordon L. Jones
appointed Bart Whiles and Clark Leuthold as co-trustees (the “Successor
Trustees”) and both Joneses resigned. Though the Residuary Beneficiaries
attended the settlement conference through counsel, the Settlement Order

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                          Decision of the Court

included specific language acknowledging that they were neither parties to
the settlement agreement nor bound by its terms.

¶4             In 2015, the Successor Trustees initiated an action against the
Joneses and other defendants (collectively, the “Defendants”), alleging
breach of fiduciary duty, civil conspiracy to commit fraud, aiding and
abetting fraud, and constructive trust. The superior court denied the
Joneses’ petition to enforce the terms of the 2014 settlement agreement and
dismissed the new action, and further ordered both sides to bear their own
attorney’s fees.

¶5            In 2019, on appeal and cross-appeal, we held that the
settlement agreement in the 2014 case did not preclude the Successor
Trustees from bringing the new action on behalf of the Residuary
Beneficiaries. Matter of Book, 1 CA-CV 18-0296, 2019 WL 2394259, at *4,
¶¶ 14–15 (Ariz. App. June 6, 2019) (mem. decision). We affirmed the denial
of the petition to enforce but vacated the denial of attorney’s fees and
remanded for reconsideration on fees. Id. at *6, ¶ 23.

¶6             Certain language in this court’s decision regarding the
enforceability of the settlement agreement led the Successor Trustees to
petition the superior court for a confirmation of their appointment, which
had been made under the settlement agreement. The Defendants objected.
The court confirmed the Successor Trustees’ appointment, holding in a
signed final judgment:

       This Court is not sure that it agrees there was a necessity for
       such a [petition confirming the Successor Trustees’
       appointment]. . . . This Court . . . reads the Court of Appeals .
       . . decision to be specific in simply denying the Jones
       Defendants claim that the Settlement prevents [the Successor
       Trustees] from bringing the 2015 Case and nothing more. The
       Court of Appeals ruled that to the extent the Jones Defendants
       thought that the Settlement could prevent non-parties from
       raising claims regarding their activities as Trustees, it does
       not. While the Jones Defendants argue that this ruling
       disrupts the Settlement regarding the 2014 Case, this Court
       finds that it does not. . . .

             Contrary to the Jones Defendants argument, the Court
       of Appeals Decision did not determine that the Settlement
       was unenforceable but rather clarified to whom it could be
       binding and enforceable.

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                          Decision of the Court

       ....

       . . . . [T]he Settlement entered to resolve the 2014 Case
       provided that Gordon L. Jones appointed Bart Whiles and
       Clark Leuthold as Co-Trustees and . . . such appointment has
       not been demonstrated to be disrupted by controlling ruling
       of the Superior Court or the Arizona Court of Appeals
       Division 1. The Court therefore finds that the Maricopa
       County Superior Court accepted on November 20, 2014 that
       Bart Whiles and Clark Leuthold were duly appointed as Co-
       Trustees and that the Settlement, entered and Court’s Order
       reflecting such, issued on November 20, 2014 remains in
       effect.

The Defendants appeal.

                               DISCUSSION

¶7            The Defendants contend that this court’s 2019 decision
established that the settlement agreement in the 2014 case was wholly void
and unenforceable. Therefore, the Defendants contend, the Successor
Trustees’ appointment was never valid and they can no longer continue.

¶8             The Defendants rely on the “law of the case” doctrine. Under
that doctrine, “the decision of an appellate court in a case is the law of that
case on the points presented throughout all the subsequent proceedings in
the case in both the trial and the appellate courts.” State v. Bocharski, 218
Ariz. 476, 489, ¶ 60 (2008) (citation omitted). But “[i]n order for a decision
in a prior appeal to become the law of the case in all subsequent stages of
the same action, including a later appeal, the facts, issues, and evidence in
the later actions must be substantially the same as those on which the first
decision was based.” Leo Eisenberg & Co. v. Payson, 162 Ariz. 529, 533 (1989).
Extraneous dicta does not become the law of the case. See id. at 534; see also
Phelps Dodge Corp. v. Ariz. Dep’t of Water Resources, 211 Ariz. 146, 152, ¶ 21
n.9 (App. 2005) (“‘Obiter dictum’ . . . is ‘[a] judicial comment made during
the course of delivering a judicial opinion, but one that is unnecessary to
the decision in the case and therefore not precedential (although it may be
considered persuasive).’” (citation omitted)). Nor does the law of the case
doctrine apply to matters “expressly reserved” or to decisions that are
“ambiguous and uncertain.” In re Monaghan’s Estate, 71 Ariz. 334, 336
(1951).

¶9           This court’s 2019 decision (rendered by a different panel)
addressed a discrete dispute: “whether [the] settlement agreement entered

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                          Decision of the Court

into between [the Joneses] . . . and four primary beneficiaries of a trust is
binding upon successor trustees when the contingent beneficiaries were not
parties to the settlement agreement.” Matter of Book, 1 CA-CV 18-0296, at
*1, ¶ 1. We concluded that the settlement agreement did not preclude the
Successor Trustees from bringing the Residuary Beneficiaries’ claims
because the Residuary Beneficiaries were not parties to the agreement and
its releases, as applied to the Successor Trustees, were unenforceable as
violative of legislation and public policy. Id. at *4, ¶¶ 14–15. Resolving the
issue presented, we held: “the settlement agreement cannot be applied to
prevent the Successor Trustees from bringing the 2015 Case on behalf of the
Contingent [or Residuary] Beneficiaries.” Id. at ¶ 15.

¶10            We then went on to discuss the effect of the unenforceable
releases on the balance of the settlement agreement. Id. at ¶¶ 16–17.
Relying on the absence of a severability provision, we concluded that the
unenforceable releases rendered “the entirety of the settlement agreement
unenforceable.” Id. In response to the Joneses’ position at oral argument
that such a result would unwind their resignation and the Successor
Trustees’ appointment, we suggested that the proper remedy might be
monetary damages. Id. at ¶ 17. We did not, however, implement any
remedy—instead, we expressly noted that “the claims and consequences
that might arise from our decision are beyond the scope of this appeal.” Id.
Consistent with that statement, we gave effect only to the specific holding
regarding the facial viability of the 2015 case—we affirmed the denial of the
Defendants’ petition to enforce the settlement agreement to bar the 2015
case, and we vacated and remanded on a fees issue in that case, but we did
not reinstate the 2014 case or otherwise take any action to give legal effect
to our description of the settlement agreement as wholly unenforceable. See
id. at *1, 6, ¶¶ 1, 23. Accordingly, we conclude today that those remarks
were not the law of the case—they were, instead, nothing more than dicta
regarding an extrinsic issue that was not veritably decided or given legal
effect.

¶11           The superior court correctly held that our 2019 decision did
not require disruption of the Successor Trustees’ appointment. Further, we
reject the Defendants’ contention that the appointment of non-corporate
Successor Trustees was invalid under the terms of the Trust. Section 4.1 of
the Trust broadly authorized Gordon L. Jones to appoint “a Co-Trustee or
Co-Trustees to serve together with him or to serve as successor Trustee or
successor Co-Trustees,” without limitation regarding the type of appointee.
Appointment of a corporate trustee was required only if Gordon L. Jones
was “not serving as Trustee for any reason and no appointment of a
successor Trustee has been made by him,” and the default successor trustee,

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                      WHILES, et al. v. JONES, et al.
                         Decision of the Court

Northern Trust, NA, was “not serving as successor Trustee for any
reason”—which was not the case when the Successor Trustees were
appointed.

¶12            We finally note that the Defendants have never pursued
reinstatement of the Primary Beneficiaries’ 2014 case based on the theory
that the settlement agreement was unenforceable. Instead, they sought to
unwind select provisions of the settlement agreement in the context of the
2015 case only, to the effect that one of their own would be placed in a
position to direct the dismissal of the claims against them in that case. In
other words, they seek to continue to avoid liability under the settlement
agreement in one case while positioning themselves to evade liability in
another case under the theory that the settlement agreement is invalid. We
will not condone such a blatant attempt at self-dealing.

                              CONCLUSION

¶13          We affirm the superior court’s order confirming the Successor
Trustees’ appointment.

¶14            We deny the Defendants’ request for attorney’s fees on appeal
under A.R.S. §§ 14-11004, 12-341.01, and 12-349. The Defendants are
ineligible for fees under § 14-11004 because they are non-trustees, they are
not the prevailing parties under § 12-341.01, and there is no argument or
support in the record for an award under § 12-349. In exercise of our
discretion, we deny the Successor Trustees’ request for sanctions under
ARCAP 25; we further deny their request for attorney’s fees under § 14-
11001(B)(3), and the Residuary Beneficiaries’ request for fees under § 14-
11004, because the Defendants are non-trustees. In exercise of our
discretion, we also deny the Successor Trustees and the Residuary
Beneficiaries’ request for attorney’s fees under A.R.S. § 14-1105(A) and (C).

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

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