Kimball v. Perkins
1 CA-CV 14-0657
| Ariz. Ct. App. | Jul 6, 2016Background
- Decedent David Perkins died intestate owning ~550 acres in Chino Valley; estate heirs included Patricia (Patti) Kimball and others; Patti served as a co-personal representative.
- To avoid a trustee’s sale after Perkins’s death, the estate conveyed the Property into a newly formed corporation that declared bankruptcy; family friend Harry Robertson later purchased the Property and gave Patti a two‑year option to reacquire it (Option Agreement).
- Patti exercised the Option in her name in 1995 and then conveyed and sold portions; Northland defaulted and returned most acreage, leaving Patti with ~402 acres by trial.
- Patti and Ben Kimball later formed a joint venture with John Tucker; Tucker contributed money to pay off encumbrances and helped form 7 Bar LLC (Tucker entities held 50%; Patti and Ben 25% each); 7 Bar/Banjo hold much of the remaining Property.
- In 2008 heirs (led by Memi) sued seeking removal of Patti as personal representative, imposition of a constructive trust, and quiet title; the superior court imposed a constructive trust over an undivided one‑half interest in the Property in favor of the Estate, denied equitable subrogation and full recovery, and denied certain fee requests.
- On appeal the court affirmed the constructive trust as fashioned, found 7 Bar was not a bona fide purchaser (due to imputed knowledge), declined equitable subrogation, and modified the judgment to award $15,656.30 in taxable costs to the Estate.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Application of A.R.S. § 14‑1106 (5‑year repose for probate fraud) | Memi: statute inapplicable because claim is breach of fiduciary duty/constructive trust, not fraud | LLCs: Patti’s alleged fraud occurred by 1995 so suit is time‑barred | Court: § 14‑1106 inapplicable; claim is fiduciary breach/constructive trust, not fraud requiring reliance |
| Laches (delay from 1995 to 2008) | Memi: delay reasonable because heirs lacked clear notice until 2008 | Kimballs/LLCs: Patti repudiated fiduciary role in 1995; delay prejudiced defendants | Court: no abuse of discretion in finding heirs lacked notice until 2008; laches not bar |
| Standing to pursue estate remedies | Memi: as interested heir she can invoke probate trust remedies (constructive trust, removal) | LLCs: non‑PR plaintiff lacks authority; §14‑3709 gives limited discovery rights only to interested persons | Court: Memi had standing as an interested person under §§ 14‑3712 and 14‑11001 to assert breach and seek constructive trust; consolidation with quiet title appropriate |
| Bona fide purchaser defense / imputed notice | LLCs: 7 Bar paid value without notice and is protected | Memi: knowledge of Patti imputed; prior joint venture and agency relationships meant 7 Bar had notice | Court: summary judgment that 7 Bar not a BFP affirmed—Patti’s knowledge imputed via joint venture/manager relationships and later findings that Patti acted as agent |
| Constructive trust scope / equitable subrogation | Memi: trust should cover entire Property (estate interest existed by 1996) | LLCs/Tucker: Tucker paid Slabine loan and should get equitable subrogation or full property interest; equities favor denying full recovery | Court: constructive trust appropriately imposed but limited to undivided one‑half interest after balancing equities; equitable subrogation denied because Estate’s earlier interest was superior |
| Attorney’s fees and taxable costs | Memi: sought fees under A.R.S. §§ 12‑1103 and 14‑3709 and mediation costs | Court/LLCs: fees discretionary and §14‑3709 procedure not followed; mediation costs treated as legal fees below | Held: trial court did not abuse discretion denying statutory fees; mediation fees taxable under A.R.S. § 12‑332(A)(6); judgment modified to add $15,656.30 taxable costs |
Key Cases Cited
- BMO Harris Bank, N.A. v. Wildwood Creek Ranch, LLC, 236 Ariz. 363 (discusses de novo review for summary judgment)
- Town of Marana v. Pima County, 230 Ariz. 142 (deference to bench trial factual findings; legal conclusions reviewed de novo)
- Cal X‑Tra v. W.V.S.V. Holdings, L.L.C., 229 Ariz. 377 (constructive trust principles; equitable relief tailored to circumstances)
- Murphy Farrell Dev., LLLP v. Sourant, 229 Ariz. 124 (constructive trust and need for equitable interest)
- Dawson v. Withycombe, 216 Ariz. 84 (distinguishing breach of fiduciary duty from constructive fraud requiring reliance)
- In re Milliman’s Estate, 101 Ariz. 54 (agent’s knowledge imputable to principal for notice purposes)
- Sparks v. Republic Nat’l Life Ins. Co., 132 Ariz. 529 (joint venture principals are agents; imputing knowledge among venturers)
- Sourcecorp, Inc. v. Norcutt, 229 Ariz. 270 (equitable subrogation doctrine—prevents unjust enrichment)
- Turley v. Ethington, 213 Ariz. 640 (statute of frauds does not bar constructive trust in real property cases)
- Jones v. Burk, 164 Ariz. 595 (quiet title fee considerations when quitclaim demanded)
- In re Estate of Newman, 219 Ariz. 260 (§ 14‑3709 disclosure procedure; double damages tied to order of disclosure)
- Reyes v. Frank’s Service & Trucking, LLC, 235 Ariz. 605 (mediation fees may be taxable when parties agreed to incur them)