United States District Court, D. Arizona
ORDER
Honorable Steven P. Logan United States District Judge
Plaintiff
Kelly Wilson (the “Plaintiff”) filed suit against
her stepmother Deborah Patterson (the
“Defendant”) seeking a declaratory judgment
regarding the validity of a trust agreement. (Doc. 58) The
Defendant moved for summary judgement on each of the
Plaintiff's claims against her (the
“Motion”). (Doc. 75) The Motion was fully briefed
on May 14, 2018. (Docs. 87, 88) The Court's ruling is as
follows.
I.
Background
On
October 8, 2006, Robert Patterson (“Decedent
Patterson”) and the Defendant met with an attorney and
a financial advisor to execute the documents necessary to
create an estate planning trust (the “Patterson
Trust”). (Doc. 76 at 4) The Patterson Trust consisted
of six warranty deeds representing eleven properties that
were owned by Decedent Patterson and the Defendant as joint
tenants with rights of survivorship. (Doc. 76 at 5) The terms
of the Patterson Trust provided that in the event that either
Decedent Patterson or the Defendant died, the surviving
spouse would serve as sole trustee of the Patterson Trust,
and the terms of the Patterson Trust provided the surviving
spouse with the ability to modify, amend or revoke the
Patterson Trust. (Doc. 58 at 21) Decedent Patterson's
daughter, the Plaintiff, was listed as the “First
Successor Trustee” under the Patterson Trust. (Doc. 58
at 18) Under the terms of the Patterson Trust, the Plaintiff
was intended to serve as trustee upon the deaths of both
Decedent Patterson and the Defendant. (Doc. 58 at 18)
On July
20, 2016, Decedent Patterson died. (Doc. 76 at 9) The
Defendant, as the surviving spouse and sole trustee, revoked
the Patterson Trust on August 20, 2016. (Doc. 76 at 9) The
Defendant then transferred the assets present in the former
Patterson Trust to the newly created Deborah A. Patterson
Trust, naming her own issue as contingent beneficiaries.
(Doc. 76 at 10) The Plaintiff initiated this action on
December 5, 2016, alleging causes of action for breach of
fiduciary duty and reformation of the trust, among other
relief. (Doc. 76 at 10)
II.
Legal Standard
A court
shall grant summary judgment if the pleadings and supporting
documents, viewed in the light most favorable to the
non-moving party, “show that there is no genuine
dispute as to any material fact and the movant is entitled to
judgment as a matter of law.” Fed.R.Civ.P. 56(a);
see also Celotex Corp. v. Catrett, 477 U.S. 317,
322-23 (1986). Material facts are those facts “that
might affect the outcome of the suit under the governing
law.” Anderson v. Liberty Lobby, Inc., 477
U.S. 242, 248 (1986). A genuine dispute of material fact
arises if “the evidence is such that a reasonable jury
could return a verdict for the nonmoving party.”
Id.
The
party moving for summary judgment bears the initial burden of
informing the court of the basis for its motion and
identifying those portions of the record, together with
affidavits, which it believes demonstrate the absence of a
genuine issue of material fact. Celotex, 477 U.S. at
323. If the movant is able to do such, the burden then shifts
to the non-movant who, “must do more than simply show
that there is some metaphysical doubt as to the material
facts, ” and instead must “come forward with
‘specific facts showing that there is a genuine issue
for trial.'” Matsushita Elec. Indus. Co. v.
Zenith Radio Corp., 475 U.S. 574, 586-87 (1986).
III.
Analysis
The
Defendant moves for summary judgment on each of the
Plaintiff's claims. The Court finds that there is no
genuine dispute as to the material facts of this lawsuit and
addresses each claim in turn.
A.
Declaratory Judgment
The
Plaintiff seeks a declaratory judgment from the Court
deciding whether the Patterson Trust was revoked and whether
the Plaintiff has any rights under the Patterson Trust. (Doc.
58 at 6) The Defendant argues that she should be granted
summary judgment on the Plaintiff's declaratory judgment
claim because the Plaintiff does not have a definite interest
in the Patterson Trust sufficient to create a justiciable
controversy. (Doc. 75 at 16) Specifically, the Defendant
argues that the Plaintiff's lawsuit triggered the
“no-contest” provision of the Patterson Trust,
effectively invalidating the Plaintiff's interest as a
contingent beneficiary under the trust. (Doc. 75 at 16)
The
first issue before the Court is whether the Plaintiff's
challenge to the Patterson Trust eliminated her interest as a
contingent beneficiary of the trust. Prior to bringing any
claims against the Defendant, the Plaintiff was listed as the
“First Successor Trustee” under the terms of the
Patterson Trust, and, on this basis, brought the present
claims challenging the terms of the Patterson Trust. (Doc. 58
at 18) The Defendant cites the “no-contest”
provision of the Patterson Trust, which states, “ [i]f
any beneficiary under this trust, singly or in conjunction
with any other person, whether directly or indirectly: (1)
contests or in any manner attacks or seeks to impair or
invalidate any of the provisions of this trust, . . . then,
in that event, all distributions given under this trust to
that person shall be forfeited as though he or she failed to
survive Robert J. Patterson and Deborah A. Patterson.”
(Doc. 58 at 33)
Under
Arizona law, no-contest provisions are generally enforceable;
however, a court may decline to enforce a no-contest clause
where the challenges to the trust were brought with probable
cause. In re Shaheen Tr., 341 P.3d 1169, 1172 (Ct.
App. 2015). Probable cause means “the existence, at the
time of the initiation of the proceeding, of evidence which
would lead a reasonable person, properly informed and
advised, to conclude that there is a substantial likelihood
that the contest or attack will ...