First Colo. Nat'l Bank v. English (In re Arnold)

553 P.3d 264

2024 COA 44

In the MATTER OF the ESTATE OF Michael P. ARNOLD, deceased.

First Colorado National Bank, Plaintiff,

v.Annette M. English, Defendant-Appellant,andLynn M. Arnold, Personal Representative, Defendant-Appellee.

Court of Appeals No. 23CA1381

Colorado Court of Appeals, Div. I.

Announced April 25, 2024

Delta County District Court No. 22PR30008, Honorable Steven L. Shultz, Judge

Evans Case LLP, Susan G. Pray, Keith D. Lapuyade, Marianne LaBorde, Andrew W.

Rogers, Denver, Colorado, for Defendant-Appellant

Samuel J. Owen P.C., Melanie J. Stickler, Golden, Colorado; Alan B. Hendrix, Golden, Colorado, for Defendant-Appellee

Opinion by JUDGE GOMEZ

¶ 1 This probate case, which involves competing claims to funds from a bank account with First Colorado National Bank formerly owned by the decedent, Michael P. Arnold, presents novel issues concerning the waiver of payable on death (POD) assets through a settlement agreement. Annette M. English, who was previously in a romantic relationship with the decedent and thereafter remained designated as the POD beneficiary of the bank account, contends that she owns the account funds as a matter of law. But Lynn M. Arnold, who is the decedent’s sister, the personal representative of his estate, and the primary beneficiary under his will, contends that the account funds belong to the estate because English waived her interest through a settlement agreement she entered into with the decedent after their relationship ended.

¶ 2 We conclude that the settlement agreement didn’t waive English’s expectancy interest in the POD account. Therefore, we reverse the district court’s order holding that the account funds belong to the estate, and we remand the case with instructions to enter an order holding that those funds belong to English.

I. Background

¶ 3 Several years ago, the decedent opened a single-party POD bank account with First Colorado National Bank and designated English as the beneficiary of the account.

¶ 4 When their relationship ended six years later, the decedent and English entered into a settlement agreement. Under that agreement, the decedent paid English $25,000 in "complete settlement" of any claims she might have against him, including claims recited in the agreement that the decedent had allegedly breached an oral implied agreement giving English a right of support and/or property interest. The release language in the settlement agreement provides,

Each party hereby releases and holds harmless the other party of and from any and all claims, demands, obligations, actions, causes of action, rights, covenants, contracts, controversies, agreements, promises, debts, costs, damages, expenses, judgments and the like, of any nature whatsoever, whether known or unknown, including, without limitation, all claims related to their past relationship and their past financial dealings with each other, except for claims arising out of the enforcement of this Agreement.

….

It is understood and agreed that the consideration referenced herein and provided by or on behalf of the parties is made and accepted in compromise and settlement of disputed claims, and that this Agreement shall terminate all issues which may have been, might have been, or could be raised in any suit, or action in any court of law or equity, or any judicial, quasi-judicial, or administrative forum. It is the intention of the parties that this Agreement shall terminate and waive forever any and all claims that they have, have had, may have, whether know [sic] or unknown at this time, except for claims arising out of the enforcement of this Agreement.

The agreement provides that these releases are for the benefit of both parties, as well as their successors and assigns. It also provides that if either party fails to abide by the terms of the agreement, the defaulting party will indemnify the other party for all reasonable expenses, including attorney fees, incurred in successfully enforcing the agreement.

¶ 5 The decedent died more than ten years after entering into the settlement agreement, having never changed the POD designation on the bank account. English and the personal representative both asserted their entitlement to the account funds, which then totaled more than $165,000.

¶ 6 The personal representative opened this action with an application for informal probate of the decedent’s will and appointment as the personal representative. Following her appointment, she petitioned the district court to determine that the bank account funds were property of the estate and to enjoin the parties from bringing a separate action against the bank. The bank joined in those requests and sought interpleader relief under C.R.C.P. 22. The court treated the filings as an interpleader motion by the bank, designated English and the estate as co-defendants as to that motion, granted leave to deposit the account funds into the court registry, and ordered English and the personal representative to file briefs addressing their competing claims to those funds.

¶ 7 The district court later ruled that the bank account funds belong to the estate, reasoning that the settlement agreement's broad language effectuated a waiver of English’s right to assert a claim against the estate based on the POD designation.

II. Waiver of the POD Designation

¶ 8 On appeal, English contends that she didn’t waive her rights as the POD beneficiary of the bank account by entering into the settlement agreement. We agree.

A. Standard of Review

[1, 2] ¶ 9 We review a district court’s legal conclusions de novo but defer to its factual findings when they are supported by the record. In re Estate of Trevino, 2020 COA 125, ¶ 13, 474 P.3d 223. Because the relevant facts are undisputed and the district court didn’t make any factual findings, our review in this appeal is exclusively de novo. Indeed, the district court’s ruling involves interpretation and application of the Colorado Probate Code, interpretation of the settlement agreement, and determination of whether the bank funds are part of the decedent’s estate, all of which present legal issues subject to de novo review. See In re Estate of Dowdy, 2021 COA 136, ¶ 9, 503 P.3d 906; Highlands Broadway OPCO, LLC v. Barre Boss LLC, 2023 COA 5, ¶ 15, 528 P.3d 517; In re Estate of Trevino, ¶ 13.

B. Applicable Legal Standards

1. Interpretation of the Probate Code and Settlement Agreement

[3–5] ¶ 10 Our primary objective when interpreting provisions of the Colorado Probate Code, like any other statute, is to ascertain and effectuate the General Assembly’s intent. See In re Estate of Dowdy, ¶ 9. If more than one statute addresses an issue, we construe the related provisions as a whole and read them together. Id. We begin with the statutes’ plain language, giving that language its commonly accepted and understood meaning. Id. If the language is unambiguous, we apply it as written. Id.

¶ 11 Because the Colorado Probate Code is adapted from the Uniform Probate Code, we may look to case law from other jurisdictions that have adopted similar provisions from the Uniform Probate Code. In re Estate of Colby, 2021 COA 31, ¶ 14, 486 P.3d 466; see also § 15-10-102(1), (2)(e), C.R.S. 2023 ("This code shall be liberally construed and applied to promote its underlying purposes and policies," including "[t]o make uniform the law among various jurisdictions."); § 15-16-928, C.R.S. 2023 ("In applying and construing this uniform act, consideration must be given to the need to promote uniformity of the law with respect to its subject matter among states that enact it.").

[6–8] ¶ 12 When interpreting a contract, like the settlement agreement, our primary goal is to effectuate the parties’ intent. French v. Centura Health Corp., 2022 CO 20, ¶ 25, 509 P.3d 443. We discern that intent by examining the language in the contract and construing that language based on the plain and generally accepted meaning of the words. Id. If the contract is unambiguous, we apply it as written. Id. And the mere fact that parties disagree about a contract’s interpretation doesn’t itself establish ambiguity. Id.

2. POD Designations

¶ 13 Under the Colorado Probate Code, insurance policies, pension plans, individual retirement plans, trusts, deposit agreements, and other written instruments may provide for the nonprobate transfer of assets upon death, meaning that the assets transfer directly to the POD beneficiary upon the owner’s death without becoming an asset of the probate estate. See § 15-15-101(1), C.R.S. 2023; In re Estate of Scott, 77 P.3d 906, 909 (Colo. App. 2003). As relevant here, this means that a deposit agreement may provide for bank account funds to be distributed to a POD beneficiary upon the account owner’s death. See §§ 15-15-201(8), -203(1), -212(2), - 214, C.R.S. 2023; In re Estate of Trevino, ¶¶ 15-16.

¶ 14 During the account owner’s lifetime, a POD beneficiary has no right to any of the assets in the POD account. See § 15-15-211(3), C.R.S. 2023; Est. of Westfall v. Westfall, 942 P.2d 1227, 1230 (Colo. App. 1996). But the POD beneficiary becomes the owner of those assets by operation of law immediately upon the owner’s death. See §§ 15-15-212(2)(b), -214; In re Estate of Trevino, ¶ 16.

C. Application

¶ 15 The parties agree that because English was designated as the bank account’s POD beneficiary, she ordinarily would’ve become the owner of the account funds upon the decedent’s death. They also agree that section 15-ll-804(2)(a)(i), C.R.S. 2023 — under which a divorce automatically revokes any revocable disposition of property to a former spouse unless a court order, agreement, or instrument expressly provides otherwise — doesn’t apply because the decedent and English were never married. See § 15-11-804(6) ("No change of circumstances other than as described in this section … effects a revocation."); cf. In re Katherine E. Reece Tr., 2023 COA 89, ¶ 14, 541 P.3d 37 (section 15-11-804(2)(a) doesn’t apply when spouses merely...