Hoag v. French

238 Ariz. 118

357 P.3d 153

719 Ariz. Adv. Rep. 40

Robert G. HOAG Charitable Remainder Unitrust dated March 4, 1994, a charitable remainder unitrust; Robert G. Hoag Charitable Remainder Unitrust II dated February 1, 1999, a charitable remainder unitrust; Robert G. Hoag Charitable Remainder Unitrust III dated January 10, 2000, a charitable remainder unitrust; International Benefits Management Corporation, individually and as Purported Successor Trustee of Robert G. Hoag Charitable Remainder Unitrust dated March 4, 1994, Robert G. Hoag Charitable Remainder Unitrust II dated February 1, 1999, and Robert G. Hoag Charitable Remainder Unitrust III dated January 10, 2000, Petitioners

v. The Honorable Colleen L. FRENCH, Judge Pro Tem of the Superior Court of the State of Arizona, in and for the County of Maricopa, Respondent Judge Pro TemWells Fargo Bank, N.A., Real Party in Interest.

No. 1 CA–SA 15–0167.

Court of Appeals of Arizona, Division 1.

Aug. 18, 2015.

As Amended Sept. 2, 2015.

Gunderson Denton & Peterson, PC By Sterling R. Peterson and Larry A. Dunn, Mesa, Counsel for Petitioners.

Jaburg & Wilk PC By Roger L. Cohen and Kathi M. Sandweiss, Phoenix, Counsel for Real Party in Interest.

Presiding Judge ANDREW W. Gould delivered the opinion of the Court, in which Judge PATRICIA A. OROZCO and Judge PETER B. SWANN joined.

OPINION

GOULD, Judge:

¶ 1 Petitioner International Benefits Management Corporation (“IBMC”), individually and as trustee of three Charitable Remainder Unitrusts (the “Unitrusts”), seeks special action relief from the trial court's order denying its motion to dismiss for lack of personal jurisdiction. For the reasons discussed below, we accept jurisdiction and reverse the trial court's order.

¶ 2 Robert J. Hoag created three Unitrusts between 1994 and 2000. The Unitrusts were funded by shares of stock belonging to Hoag. Hoag served as the trustee and administered the Unitrusts in Arizona until 2014.

¶ 3 In November 2012, Wells Fargo Bank N.A., obtained a $2.5 million default judgment against Hoag personally and against his living trust, the Robert G. Hoag Revocable Living Trust. In December 2013, Wells Fargo initiated garnishment proceedings to satisfy its judgment. During the garnishment proceedings, Wells Fargo attempted to subpoena records from several institutions it believed were holding Hoag's assets/distributions from the Unitrusts.

¶ 4 On February 4, 2014, Hoag resigned as the trustee of the Unitrusts and appointed IBMC, a corporation organized under the laws and operating out of the Bahamas, as successor trustee. To effect his resignation as trustee, and IBMC's designation and acceptance of trusteeship, Hoag and DeVries met in Florida at that time. Hoag turned over all records relating to the Unitrusts, and the parties signed the required documents. Thereafter, IBMC administered the Unitrusts from its office in the Bahamas.

¶ 5 After transferring trusteeship of the Unitrusts to IBMC in February 2014, Hoag filed a Reply in support of his motion to quash the subpoenas. In support of Hoag's position, DeVries, the president of IBMC, sent a declaration to Hoag's counsel in Arizona stating that IBMC would not provide the documents requested by Wells Fargo.¹

¶ 6 IBMC currently makes monthly distributions to Hoag in Arizona.² Specifically, IBMC pays (1) property taxes and insurance on Hoag's house in Chandler, Arizona, (2) spousal maintenance to Hoag's former spouse, a resident of Arizona, and (3) the remaining balance of the distribution to Hoag.

¶ 7 On June 20, 2014, Wells Fargo filed its current lawsuit. Wells Fargo alleges that Hoag has fraudulently concealed his assets by transferring them to the Unitrusts. IBMC and the Unitrusts were served on January 30, 2015.

¶ 8 IBMC moved to dismiss Wells Fargo's complaint for lack of personal jurisdiction. The trial court denied the motion, concluding it had personal jurisdiction over IBMC and the Unitrusts. IBMC now petitions this court for special action relief from the trial court's order.

DISCUSSION

I. Special Action Jurisdiction

¶ 9 We accept special action jurisdiction in this case because IBMC has no “equally plain, speedy, and adequate remedy by appeal.” Ariz. R.P. Spec. Act. 1(a). “[A]n appeal inadequately remedies a trial court's improperly requiring a defense in a matter where it has no jurisdiction.” Polacke v. Superior Court in and for County of Maricopa, 170 Ariz. 217, 219, 823 P.2d 84 (App.1991). Additionally, because this case involves “clear legal principles and no disputed material facts regarding the jurisdictional issue,” special action jurisdiction is appropriate. Id. at 219, 823 P.2d 84.

II. Statutory Jurisdiction

¶ 10 The trial court determined it has personal jurisdiction pursuant to A.R.S. § 14–10202(A). We review issues of statutory interpretation de novo. Obregon v. Indust. Comm'n of Ariz., 217 Ariz. 612, 614, ¶ 9, 177 P.3d 873 (App.2008).

¶ 11 When interpreting a statute, we must give effect to the drafter's intent; in doing so “we look to the plain language of the statute as the best indicator.” State v. Pledger, 236 Ariz. 469, 471, ¶ 8, 341 P.3d 511 (App.2015) ; see also Stein v. Sonus USA, Inc., 214 Ariz. 200, 201, ¶ 3, 150 P.3d 773 (App.2007). “[U]nless the drafters provide special definitions or a special meaning is apparent from the text,” we give the words and phrases of the statute their commonly accepted meaning. Pledger, 236 Ariz. at 471, ¶ 8, 341 P.3d 511. “If the statute is clear and unambiguous, we apply the plain meaning of the statute” without resorting to statutory construction. Stein, 214 Ariz. at 201, ¶ 3, 150 P.3d 773. (citation omitted).

¶ 12 A.R.S. § 14–10202(A) states that a trustee submits to the personal jurisdiction of Arizona courts by (1) “accepting the trusteeship of a trust having its principal place of administration in [Arizona],” (2) “by moving the principal place of administration to [Arizona],” or (3) “by declaring that the trust is subject to the jurisdiction of the courts of [Arizona].”

¶ 13 Wells Fargo argues that based on A.R.S. § 14–10202(A), because the Unitrusts were being administered in Arizona prior to IBMC's appointment, IBMC submitted to the personal jurisdiction of Arizona when it accepted appointment as trustee. Wells Fargo reasons that under the statute, IBMC was required to expressly declare that the trusts were no longer subject to the jurisdiction of Arizona's courts in order to terminate its submission to personal jurisdiction. We disagree.

¶ 14 The language of A.R.S. § 14–10202(A) provides that personal jurisdiction over a trustee is tied to the principal place where the trust is currently being administered. The statute does not refer to a trust that had its principal place of administration in Arizona. The main clause of the statute, “accepting the trusteeship,” describes present action. Similarly, the clause “having its principal place of administration,” which modifies “trust,” also describes present action.³ See A.R.S. § 14–10108 (stating that a trust may designate any jurisdiction as its “principal place of administration” as long as the “trustee's principal place of business is located in or a trustee is a resident of the designated jurisdiction,” or “[a]ll or part of the [trust] administration occurs in the designated jurisdiction.”).

¶ 15 Thus, under the statute, when a trustee accepts an appointment as trustee, if the principal place of administration remains in Arizona, the trustee submits personally to the jurisdiction of Arizona courts. However, if the principal place of administration is removed to a jurisdiction outside of Arizona, unless the trustee expressly declares the trust will be subject to personal jurisdiction in Arizona, the trustee does not submit to personal jurisdiction in Arizona.See Fellows v. Colburn, 162 N.H. 685, 34 A.3d 552, 563 (2011) (interpreting a substantially similar long-arm jurisdiction statute and concluding that personal jurisdiction is “ predicated upon a finding that the trust's principal place of administration” is the forum state).

¶ 16 Accordingly, we conclude that because the Unitrusts are administered by IBMC in the Bahamas, IBMC is not subject to personal jurisdiction in Arizona pursuant to A.R.S. § 14–10202.

III. Constitutional Jurisdiction

¶ 17 A.R.S. § 14–10202(c) specifies that there may be other methods of obtaining jurisdiction over a trustee. Thus, in addition to finding it had statutory jurisdiction, the trial court determined it had jurisdiction in accordance with Rule 4.2(a) of the Arizona Rules of Civil Procedure. A trial court's ruling on personal jurisdiction is a question of law subject to de novo review. Duckstein v. Wolf, 230 Ariz. 227, 233, ¶ 19, 282 P.3d 428 (App.2012).

¶ 18 Under Rule 4.2(a), Arizona courts may exercise personal jurisdiction to the maximum extent allowed by the United States Constitution. “[T]he Due Process Clause of the Fourteenth Amendment limits the exercise of personal jurisdiction by state courts over non-resident defendants.” Planning Group of Scottsdale, LLC v. Lake Mathews Mineral Props., Ltd., 226 Ariz. 262, 266, ¶ 14, 246 P.3d 343 (2011) (citing Pennoyer v. Neff, 95 U.S. 714, 723–24, 24 L.Ed. 565 (1877) ). A state court may exercise personal jurisdiction over a non-resident defendant “only if that defendant has ‘sufficient contacts' with the forum state ‘such that the maintenance of the suit does not offend “traditional notions of fair play and substantial justice.” ’ ” Id. at ¶ 14 (citing Int'l Shoe Co. v. State of Wash., Office of Unemployment Comp. and Placement, 326 U.S. 310, 316, 66 S.Ct. 154, 90 L.Ed. 95 (1945) ). Under the minimum contacts test the question is whether, “[c]onsidering all of the contacts,” the “defendants engaged in purposeful conduct for which they could reasonably expect to be haled into that state's courts with respect to that conduct[.]” Id. at 268, ¶ 25, 246 P.3d 343.

¶ 19 Personal jurisdiction may be either general or specific. Beverage v. Pullman & Comley, LLC, 232 Ariz....