433 P.3d 569
Ariz. Ct. App.2018Background
- Valer Clark (formerly Austin) received sole ownership of El Coronado Ranch in a 2015 divorce Settlement with Josiah Austin; the Settlement contained representations and indemnification provisions.
- Dan and Myriam Roe lived at a house on the Ranch for years and claimed an oral promise granted them a life estate; Valer sought to evict them and they sued for declaratory relief asserting a life estate.
- Valer pleaded the statute of frauds and counterclaimed to quiet title; she also sued Josiah as a third-party defendant, alleging the Settlement required him to defend and indemnify her against the Roes’ claim.
- At trial the jury awarded the Roes a life estate and found Josiah did not breach the indemnification provisions; the trial court denied Valer’s Rule 50 motions.
- On appeal the court reviewed (1) whether the Roes’ alleged acts constituted part performance sufficient to overcome the statute of frauds for an oral life estate, and (2) whether the Settlement unambiguously required Josiah to defend and indemnify Valer against the Roes’ claim.
Issues
| Issue | Valer’s Argument | Josiah/Roes’ Argument | Held |
|---|---|---|---|
| Whether the statute of frauds bars the Roes’ oral-life-estate claim | The Roes’ acts (sale of home, moving, $155k contributions, labor) are unequivocally referable to an oral life-estate promise (part performance) | The same acts are consistent with alternative explanations (at-will tenancy, work-for-rent, down payment or lease-credit) and thus not unequivocal | Reversed jury: as a matter of law the Roes’ acts are not unequivocally referable; statute of frauds bars the life estate claim |
| Whether the Settlement unambiguously requires Josiah to defend and indemnify Valer for the Roes’ claim | The Settlement’s §22(f) representation that no life estates exist plus §3(a)/(b) indemnity language unambiguously obligate Josiah to defend and indemnify Valer | §22(f)’s qualifier “which are not known to the other Party” makes the clause ambiguous; parol evidence should be admissible to show Valer knew of the life estate | Reversed: the Settlement is clear and unambiguous that Josiah must defend and indemnify Valer against the Roes’ claim; trial court erred admitting parol evidence that contradicted the written terms |
| Admissibility of parol evidence to vary contract | Contract is not ambiguous; parol evidence may not be used to contradict explicit representations | Contract is reasonably susceptible to Josiah’s interpretation; extrinsic evidence admissible | Held that parol evidence was improperly used to vary the Settlement’s clear representation denying existence of life estates |
| Award of attorney fees on appeal | Valer seeks fees under contract §22(o) and statutes for prevailing party | Roes and Josiah oppose | Court awards Valer reasonable fees against Roes under §12-341.01 and against Josiah under §22(o); taxable costs allowed |
Key Cases Cited
- Owens v. M.E. Schepp Ltd. P'ship, 218 Ariz. 222 (2008) (articulates demanding “unequivocally referable” part-performance standard to overcome statute of frauds)
- William Henry Brophy Coll. v. Tovar, 127 Ariz. 191 (1980) (acts of part performance must be unequivocally referable solely to the oral contract)
- Burns v. McCormick, 233 N.Y. 230 (1922) (classic examples illustrating when part performance exceptions apply and when service-for-life-estate claims sound only in quantum meruit)
- Taylor v. State Farm Mut. Auto. Ins. Co., 175 Ariz. 148 (1993) (parol evidence admissible only if contract terms are reasonably susceptible to the proponent’s interpretation)
- Grosvenor Holdings, L.C. v. Figueroa, 222 Ariz. 588 (2009) (contract interpretation is a question of law; unambiguous terms control)