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Russell Piccoli P.L.C. v. O'Donnell

Court of Appeals of Arizona, First Division

February 26, 2015

RUSSELL PICCOLI P.L.C., Plaintiff/Appellee,
v.
KATHLEEN M. O'DONNELL, Trustee; FRANCIS E. O'DONNELL, JR., a married man, Defendants/Appellants.

Appeal from the Superior Court in Maricopa County No. CV2012-013260 The Honorable Katherine Cooper, Judge

Russell Piccoli, P.L.C., Phoenix By Russell Piccoli Counsel for Plaintiff/Appellee

Gaona Law Firm, Phoenix By David F. Gaona Counsel for Defendants/Appellants

Presiding Judge Jon W. Thompson delivered the opinion of the Court, in which Judge Donn Kessler and Chief Judge Diane M. Johnsen joined.

OPINION

THOMPSON, Judge

¶1 Appellants appeal from the trial court's grant of summary judgment 1) confirming an arbitration award and certifying it as a final judgment, and 2) issuing a declaratory judgment that the amounts awarded to attorney Russell Piccoli and Mariscal, Weeks, McIntyre & Friedlander, P.A. (collectively Law Firm) at arbitration constituted marital debts pursuant to Missouri law that could be satisfied out of marital assets. For the following reasons, we affirm the decision of the trial court.

FACTUAL AND PROCEDURAL HISTORY

¶2 Francis E. O'Donnell Jr. (Frank) and Kathleen E. O'Donnell (Katie) were married in 1990. A day before and shortly after his marriage to Katie, Frank established a number of trusts entitled "The Francis E. O'Donnell Jr. Irrevocable Trusts #1 through 10 and Descendents Trust" (the trusts). Frank's sister Kathleen M. O'Donnell (Trustee), an Arizona attorney, was trustee of the trusts and administered them in Maricopa County. Katie filed for divorce in Missouri in 2008. As of the briefing in this appeal, the divorce was still pending.

¶3 In May 2009, Trustee filed an action in Maricopa County probate court seeking a declaration that Katie was no longer a beneficiary of the trusts and to determine whether she had any marital interest in any of the trust assets. Katie hired Law Firm to represent her in the probate action and in a civil action she brought against Frank and Trustee alleging various torts relating to the administration of the trusts.[1]

¶4 Katie unsuccessfully attempted to join Trustee and the trusts as necessary parties in the Missouri divorce proceeding.[2] In November 2010, the Missouri court confirmed that the Maricopa County probate court should decide whether the trust assets were marital in nature under Missouri law, stating that the determination would not "prejudice the ability of the Missouri court to eventually address the equitable distribution of the property and debts of the parties along with the other issues involved in the dissolution proceeding." Also in November 2010, the Missouri court denied Trustee's motion to intervene in the Missouri divorce, without prejudice to her reasserting the motion to intervene in the future.

¶5 Katie ultimately was successful at trial in Arizona; in 2011 the probate court determined that she had a marital property interest in the trust assets.[3] Trustee and Frank appealed. Law Firm withdrew from representing Katie prior to the briefing in that appeal. It then sought to intervene in the probate action to protect its interest in attorneys' fees and costs owed by Katie. The probate court denied Law Firm's motion to intervene.

¶6 We affirmed the probate court's decision in In re Francis E. O'Donnell Jr., Irrevocable Trust No. 1 to No. 10, No. 1 CA-CV 11-0261, 2013 WL 709650 (App. Feb. 26, 2013) (mem. decision). In doing so, we acknowledged that, under Missouri law, "a spouse does not have a presently enforceable ownership interest in marital property until a court has issued a decree of dissolution, " but concluded that the probate court could still determine whether Katie factually had a marital interest in the trust assets. Id. at ¶¶ 18-19. After a dispute arose over Law Firm's fees, Law Firm filed a private arbitration action against Katie pursuant to its retention agreement with her. Trustee and Frank were not involved in the arbitration because they were not parties to the retention agreement. The arbitration resulted in an arbitration award in favor of Law Firm and against Katie for $163, 642.37.[4] The award stated that the $163, 642.37 "constitute[d] a marital debt within the purview of Missouri law . . . ."

¶7 In August 2012, Law Firm filed a complaint in superior court (the case resulting in this appeal) against Katie, Frank, and Trustee requesting a declaratory judgment that its arbitration award against Katie could be satisfied from the marital assets. After briefing, the trial court granted Law Firm's motion for summary judgment. The court rejected Frank and Trustee's argument that the award should not be confirmed because it resulted from collusive conduct between Law Firm and Katie, and issued a declaratory judgment including Arizona Rule of Civil Procedure 54(b) certification on April 18, 2013 that:

(a) [Katie] incurred her debt to [Law Firm] during the marriage to [Frank];
(b) all amounts awarded, and to be awarded, to [Law Firm] at arbitration constitute marital debts within the ...

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