In Re the Estate of Mary A. Riley

SUPREME COURT OF ARIZONA
En Banc

In re the ESTATE OF MARY A. ) Arizona Supreme Court
RILEY, aka MARY AGNES RILEY, aka ) No. CV-12-0007-PR
MARY AGNES REILLY. )
) Court of Appeals
) Division Two
) No. 2 CA-CV 10-0149
)
) Pima County
) Superior Court
) No. P26266
)
_________________________________ ) O P I N I O N

Appeal from the Superior Court in Pima County
The Honorable Charles V. Harrington, Judge

REMANDED
________________________________________________________________

Opinion of the Court of Appeals, Division Two
228 Ariz. 382, 266 P.3d 1078 (App. 2011)

VACATED
________________________________________________________________
JONATHAN W. REICH, P.C. Tucson
By Jonathan W. Reich
Attorneys for R. J. Riley, Regina M. Riley,
F. Martin Riley, Neysa Kalil, Nora J. Simons,
Cecelia Riley, Jude S. Riley, Loretta LaCorte,
and Julia Riley

MESCH, CLARK & ROTHSCHILD, P.C. Tucson
By J. Emery Barker
Scott H. Gan
Attorneys for John D. Barkley

LAW OFFICE OF DWIGHT M. WHITLEY, JR., P.L.L.C. Benson/
By Dwight M. Whitley, Jr. Tucson
Attorneys for Mary Benge

LAW OFFICE OF TERRENCE A. JACKSON Tucson
By Terrence A. Jackson
Attorneys for Joseph H. Riley, Jr.
________________________________________________________________
B E R C H, Chief Justice

¶1 We granted review to decide whether A.R.S. § 14-3952(1)

requires beneficiaries of an estate to unanimously approve a

settlement agreement. We hold that the statute requires all

beneficiaries to execute the agreement if it affects beneficial

interests in the estate and the settling parties seek court

approval pursuant to A.R.S. § 14-3951.

I. FACTS AND PROCEDURAL HISTORY

¶2 Mary A. Riley (“Decedent”) died in 1996, leaving her

estate to her thirteen children and appointing her two oldest,

Joseph Riley and Mary Benge, as co-personal representatives.

The family settled the estate’s distribution scheme in 1997

through a Family Compromise Agreement that divided the estate

among the thirteen children. Nine years later, in March 2006,

Joseph and Mary filed a petition to distribute and close the

estate. The petition included an accounting of the amounts they

had spent administering the estate.

¶3 One of Decedent’s other children, R. J. Riley, objected

to the accounting. He asserted that Joseph and Mary had

breached their fiduciary duties, and he sought the appointment

of a successor personal representative (“PR”). Joseph and Mary

resigned, and the probate court appointed John Barkley as the

new PR. The court ordered Joseph and Mary to file another

accounting. After reviewing it, Barkley objected, citing the

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“lack of supporting documentation and inaccuracies apparent on

the face of the document.” The court scheduled a hearing on the

PR’s objection.

¶4 While awaiting the hearing, Barkley settled the

estate’s claims against Joseph and Mary.1 The settlement

agreement required Joseph to pay $15,000 and disclaim his

interest in the estate; Mary was to pay $50,000, but retain her

interest in the estate. In exchange, the estate agreed to

release all claims against Joseph and Mary relating to their

activities as co-PRs. The agreement also required the “parties

signatory [t]hereto” to present the agreement to the probate

judge for approval under A.R.S. §§ 14-3951 and -3952. Although

only Barkley, Joseph, and Mary had signed the agreement, it

provided that “[t]his Agreement shall bind and inure to the

benefit of the heirs, assignees and distribute[e]s of the

Parties.” Their goal was to prevent further litigation stemming

from Joseph and Mary’s administration of the estate.

¶5 Nine of Decedent’s thirteen children (the “Objectors”),

none of whom had executed the agreement, objected to the

settlement. Nonetheless, after an evidentiary hearing, the

probate court approved the agreement, finding that it settled a

good faith dispute and its terms were reasonable.

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The agreement also resolved the estate’s claims against
Kathryn Riley. That settlement is not at issue here.
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¶6 The Objectors appealed. The court of appeals sua

sponte ordered the parties to brief whether the agreement was

“void for failing to be executed by all the necessary parties

under § 14-3952(1).” In re Estate of Riley, 228 Ariz. 382, 384

¶ 5, 266 P.3d 1078, 1080 (App. 2011).

¶7 Following oral argument, the court concluded that the

statute required all estate beneficiaries to sign the settlement

agreement. Id. at 386 ¶ 10, 266 P.3d at 1082. The court voided

the agreement because not all beneficiaries had signed it. Id.

at 384-86 ¶¶ 6-10, 266 P.3d at 1080-82.

¶8 We granted Barkley’s petition for review because this

case presents an important issue of first impression. We have

jurisdiction under Article 6, Section 5(3) of the Arizona

Constitution and A.R.S. § 12-120.24.

II. DISCUSSION

¶9 We review statutory interpretation issues de novo.

Duncan v. Scottsdale Med. Imaging, Ltd., 205 Ariz. 306, 308 ¶ 2,

70 P.3d 435, 437 (2003). Because the probate statutes have not

materially changed during the pendency of this action, we cite

the current version of each.

¶10 A.R.S. § 14-3952 sets forth a procedure for securing

court approval of a compromise of disputed interests in the

estate. It imposes the following requirements:

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 1. The terms of the compromise shall be set forth in
an agreement in writing which shall be executed by all
competent persons . . . having beneficial interests or
having claims which will or may be affected by the
compromise.
. . . .
3. After notice to all interested persons . . ., if
[the court] finds that the contest or controversy is
in good faith and that the effect of the agreement
upon the interests of persons . . . is just and
reasonable, [the court] shall make an order approving
the agreement . . . . Upon the making of the order
and the execution of the agreement, all further
disposition of the estate is in accordance with the
terms of the agreement.

A.R.S. § 14-3952. If these statutory procedures are satisfied

and the court formally approves the agreement, A.R.S. § 14-3951

provides that the compromise “is binding on all the parties

thereto including those unborn, unascertained or who could not

be located.” Sections 14-3951 and -3952 thus act together to

permit parties to resolve estate controversies with finality.

¶11 Sections 14-3951 and -3952 mirror §§ 3-1101 and -1102

of the 1969 Uniform Probate Code, see 1973 Ariz. Sess. Laws, ch.

75, § 4 (1st Reg. Sess.), which, in turn, were based on §§ 93

and 94 of the 1946 Model Probate Code. See Unif. Probate Code

§ 3-1102 cmt. (1969). Sections 14-3951 and -3952 allow parties

to enter into settlement agreements that, upon court approval,

bind all interested parties, even if interested parties are not

competent or available to enter into the agreement. See A.R.S.

§ 14-3951; Unif. Probate Code § 3-1102 cmt. (stating that

“[t]his section and the one preceding it outline a procedure”

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for “resolving controversy concerning the estate”); see also In

re Estate of Ward, 200 Ariz. 113, 116 ¶ 12, 23 P.3d 108, 111

(App. 2001) (providing that “[§] 14-3952 authorizes the probate

court to approve a compromise under [§] 14-3951 only if” the

procedures in § 14-3952 are met); accord Matter of Estate of

Hedstrom, 472 N.W.2d 454, 456 (N.D. 1991) (to same effect).

¶12 The parties disagree whether § 14-3952(1) requires all

beneficiaries to execute the agreement at issue. Barkley

contends that §§ 14-3951 and -3952 distinguish disputes over the

administration of the estate from “disputes over the structure

and distribution of the estate.” He concedes that the statutes

“clearly require[] all the beneficiaries to agree to modify the

structure or distribution scheme.” He argues, however, that the

statutes do not require all beneficiaries to execute a

compromise if it merely resolves a dispute over the

administration of the estate. For such an agreement, Barkley

asserts, the statutes require only those directly involved in

the controversy to execute the agreement. He maintains that the

agreement here settled merely an administrative dispute — the

estate’s claims against its former co-PRs — and thus required

signatures only from him, Joseph, and Mary.

¶13 Barkley mischaracterizes the agreement, however. In

it, Joseph disclaimed his interest in the estate, which altered

the distribution scheme by dividing the estate among twelve

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beneficiaries instead of the thirteen who took under the 1997

Family Compromise Agreement. The agreement thus affected the

“beneficial interests” of the remaining twelve beneficiaries,

and § 14-3952(1) therefore required all of the beneficiaries to

execute the agreement before the court could properly approve it

under the statute.2 See In re Estate of Sullivan, 724 N.W.2d

532, 535 (Minn. Ct. App. 2006) (holding that an agreement that

altered the distribution scheme required the signatures of all

those with a beneficial interest); cf. Matter of Estate of

Outen, 336 S.E.2d 436, 436-37 (N.C. Ct. App. 1985) (noting that

an agreement adding a beneficiary affected the distribution

scheme). Thus, because only Barkley, Joseph, and Mary signed

the agreement, the probate court’s approval under § 14-3952 was

invalid to make the agreement binding on those who did not sign

it.

¶14 Barkley contends that the settlement did not affect

the distribution scheme because “[n]one of the other twelve

beneficiaries . . . had their one-thirteenth distributive share

2
Because the agreement here affected all of the devisees’
beneficial interests, we need not decide whether § 14-3952(1)
always requires the beneficiaries to unanimously agree or
whether it requires only the affected beneficiaries to
unanimously agree. Compare S.C. Code Ann. § 62-3-1102 cmt.
(interpreting nearly identical statute to mean that only those
whose beneficial interests will be affected must execute the
agreement), with In re Estate of Sullivan, 724 N.W.2d 532, 535
(Minn. Ct. App. 2006) (reading nearly identical statute to
require execution by every person with a beneficial interest).
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diminished in any way.” But § 14-3952(1) does not distinguish

based on whether a beneficial interest is positively or

adversely affected. To adopt such a position would require us

to add words to the statute that are not there.3

¶15 Barkley argues that requiring all beneficiaries to

sign compromises like the one at issue here would impede

resolution of disputes, add expense, and delay estate

administration. We agree. But nothing in this opinion or the

statutory probate scheme requires Barkley to use §§ 14-3951 and

-3952 to compromise disputes. The probate statutes allow a

beneficiary to disclaim his interest without court approval, see

A.R.S. § 14-10005, and permit the PR to settle a variety of

claims without court approval, see, e.g., A.R.S. § 14-3715(17),

(27); A.R.S. § 14-3813. If in doubt about how to proceed, the

PR also “may invoke the jurisdiction of the court . . . to

resolve questions concerning the estate or its administration.”

A.R.S. § 14-3704; see also, e.g., §§ 14-3105, -3401, -3414

(authorizing proceedings to resolve a variety of issues).

¶16 Here, however, Barkley sought court approval to bind

all beneficiaries and insulate the settlement from further

challenge – and himself from potential future liability as PR –

3
The Objectors argue that the losses caused by Joseph and
Mary exceeded the settlement amount, and, therefore, despite
Joseph’s relinquishment of his interest in the estate under the
settlement, the Objectors’ interests were adversely affected.
8
by invoking §§ 14-3951 and -3952. Although nothing precludes

attempting such a course of action, it requires compliance with

§ 14-3952’s procedures, including, in this case, obtaining the

signatures of “all competent persons . . . having beneficial

interests.”

¶17 The failure to secure the signatures of all

beneficiaries did not, however, make the agreement void for all

purposes, as the court of appeals concluded. See Riley, 228

Ariz. at 384-85 ¶ 6 & n.2, 266 P.3d at 1080-81 & n.2. Rather,

the failure to comply with § 14-3952 simply means that the

probate court’s approval was not effective to make the agreement

binding on all beneficiaries. See In re Estate of Grimm, 784

P.2d 1238, 1242-43 (Utah Ct. App. 1989) (discussing statutes

nearly identical to Arizona’s and stating that they “merely

outline[] the procedures for securing court approval”; they

“do[] not invalidate an otherwise valid compromise agreement

between the parties prior to court approval”).

III. CONCLUSION

¶18 For the reasons set forth above, we vacate the opinion

of the court of appeals and remand to the superior court for

further proceedings consistent with this opinion.

__________________________________
Rebecca White Berch, Chief Justice

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CONCURRING:

__________________________________
Scott Bales, Vice Chief Justice

__________________________________
A. John Pelander, Justice

__________________________________
Robert M. Brutinel, Justice

__________________________________
Peter J. Cahill, Judge*

* Pursuant to Article 6, Section 3 of the Arizona
Constitution, the Honorable Peter J. Cahill, Presiding Judge of
the Superior Court in Gila County, was designated to sit in this
matter.

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