Valer C. Austin, Petitioner/Defendant/Appellee, Valerie A. Gordon, Defendant/Cross-Claimant/Appellee, Albert H. Gordon III, Defendant/Cross-Claimant/Appellee,
Josiah T. Austin, Respondent/Plaintiff/Cross-Defendant/Appellant.
Appeal from the Superior Court in Pima County Nos. D20134007, C20140235 The Honorable Dean Christoffel, Judge Pro Tempore.
DePasquale & Schmidt, PLC By Paul G. Schmidt and Mark DePasquale, Phoenix.
The McCarthy Law Firm, P.L.L.C. By Kathleen A. McCarthy, Tucson Counsel for Petitioner/Defendant/Appellee Valer C. Austin.
Snell & Wilmer L.L.P. By Kevin J. Parker, Phoenix Counsel for Defendant/Cross-Claimant/Appellee Valerie A. Gordon.
Russell B. Stowers, PLLC By Russell B. Stowers, Tucson Counsel for Defendant/Cross-Claimant/Appellee Albert H. Gordon III
Gabroy, Rollman & Bossé, P.C. By Richard M. Rollman and Richard A. Brown, Tucson Counsel for Respondent/Plaintiff/Cross-Defendant/Appellant Josiah T. Austin.
Presiding Judge Miller authored the decision of the Court, in which Chief Judge Eckerstrom and Judge Espinosa concurred.
¶1 Josiah Austin appeals from the trial court's judgment denying his motion to compel arbitration. For the following reasons, we affirm.
Factual and Procedural Background
¶2 In reviewing a denial of a motion to compel arbitration, we must defer to the trial court's factual findings unless clearly erroneous. Harrington v. Pulte Home Corp., 211 Ariz. 241, ¶¶ 8, 16, 119 P.3d 1044, 1048, 1049-50 (App. 2005). None of the parties directly challenges the court's factual findings under this standard. Given the complex nature of the underlying property transactions in the case before us, a detailed review of the factual background is necessary.
¶3 Josiah and Valer Austin were married in 1982. Valer has two children by a previous marriage (hereinafter "children"). Valer had inherited substantial property before her marriage to Josiah. Early in the marriage, Valer agreed to Josiah's management of a portion of her assets with the understanding that the majority of the assets would continue to be managed by third parties and monitored by Josiah.
¶4 Valer, in her estate planning, wished to ensure that certain of her property would be transferred to the children at specific future dates. Accordingly, in November 1987, Valer created two Grantor Retained Income Trusts (GRITs) for the benefit of her children. The Valer C. Austin Trust I dated November 19, 1987 (Valer GRIT) was created as an irrevocable trust for a period of 15 years, with the children designated as the beneficiaries, and was funded by Valer's separate property. The Josiah Austin Trust I dated December 17, 1987 (Josiah GRIT) was created as an irrevocable trust for a period of 20 years with the children designated as the beneficiaries. Although Josiah was shown as the granter of the assets in the Josiah GRIT, those assets too were derived from Valer's separate property.
¶5 In 1996, Josiah was appointed trustee of the GRITs and, in 1997, El Coronado Holdings, LLC (ECH) was formed. The 1997 ECH operating agreement shows the initial members as Josiah, Valer, the Josiah GRIT, and the Valer GRIT. Directly pertinent provisions of the 1997 operating agreement include:
a. Josiah was designated as the sole manager with absolute, exclusive authority, power, and discretion to act on behalf of ECH, which provided Valer with no authority or control over the assets transferred into ECH.
b. Josiah's removal as manager required the affirmative vote of members holding two-thirds of the ownership interests, which, given the size of holding attributable to Josiah under the agreement, made it impossible for Valer or any other member to remove Josiah without his consent.
c. Withdrawal by a member constituted a breach of the 1997 operating agreement, permitting ECH to recover damages as an offset against any amount distributable to the withdrawing member. The amount of ...