                     NOTICE: NOT FOR OFFICIAL PUBLICATION.
 UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL
                 AND MAY BE CITED ONLY AS AUTHORIZED BY RULE.




                                    IN THE
             ARIZONA COURT OF APPEALS
                                DIVISION ONE


                                In the Matter of:

                     THE LLOYD REVOCABLE TRUST


             AUTUM HAWORTH, et al., Petitioners/Appellees,

                                        v.

                JUDY LIGON, et al., Respondents/Appellants.

                             No. 1 CA-CV 16-0458
                               FILED 10-19-2017


           Appeal from the Superior Court in Maricopa County
                           No. PB2013-050882
           The Honorable Andrew J. Russell, Judge Pro Tempore

    VACATED AND REMANDED IN PART; AFFIRMED IN PART


                                   COUNSEL

The Law Offices of Kelly J. McDonald, P.L.L.C., Phoenix
By Kelly J. McDonald, Katie L. Warner
Counsel for Petitioners/Appellees

Munger Chadwick, P.L.C., Tucson
By Thomas A. Denker, David Ruiz
Counsel for Respondents/Appellants
                         HAWORTH v. LIGON
                         Decision of the Court



                     MEMORANDUM DECISION

Judge Maria Elena Cruz delivered the decision of the Court, in which
Presiding Judge Lawrence F. Winthrop and Judge Diane M. Johnsen joined.


C R U Z, Judge:

¶1            Appellant Judy Ligon (formerly known as Judy E. Herman,
referred to herein as “Judy”) challenges those portions of the court’s
judgment granting Appellees, Autum Haworth and Amber Haworth, a
constructive trust over Judy’s assets and those of her marital community
and awarding attorneys’ fees. Judy also contends that Autum and Amber’s
claims against her for breach of trust were time-barred. We affirm the
ruling that the claims were not time-barred, but vacate and remand the
imposition of a constructive trust and the award of attorneys’ fees.

           FACTUAL AND PROCEDURAL BACKGROUND

¶2          Robert G. Lloyd and Ruth B. Lloyd established the Lloyd
Revocable Trust (the “Trust”) in 2000. The Lloyds were Appellees’
grandparents; Judy is their aunt. As amended, the Trust provided Judy
would receive one-half of the Trust assets, with the other half going to
Amber and Autum.

¶3            The Trust provided any beneficiary who was not yet 25 years
old would have his or her distribution “continue to be held in trust and be
administered by the Successor Trustee for the benefit of each such
beneficiary.” Upon reaching the age of 25, the beneficiary would receive
his or her share of the Trust “and the Trust Estate as to such beneficiary
shall thereupon terminate.”

¶4             Judy was the trustee of the Trust when Amber, the older of
the sisters, reached the age of 25. Judy provided $25,000 to Amber on her
25th birthday. Three years later, when Autum reached her 25th birthday,
she contacted Judy to inquire about a possible distribution. Judy
responded, “Let me make it clear that you have no inheritance from Ruth
and Bob Lloyd. I inherited all the assets.” Judy also told Autum that the
money Amber received was a personal gift, not a distribution. Autum
requested a copy of the “will,” but Judy told her she could not find one.




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                          Decision of the Court

¶5           Autum hired a lawyer, who wrote Judy in December 2010 and
March 2011 seeking copies of the Trust documents as well as an inventory
and accounting. Judy’s husband, Grover Ligon, responded in August 2011,
telling Autum’s counsel that “Bob left all of his estate to Judy.” Grover also
wrote:

       Bob had an IRA account, which still exists today, of which
       Judy is the sole beneficiary. Judy decided to share some of
       that money with you and Amber and arbitrarily established
       an equal amount of $25,000 each, with qualifying parameters
       for giving the gift, those being educational expenses, buying
       a home or [a] retirement fund. Your share of $25,000 remains
       in that account.

Judy also called Autum to tell her she would not provide a copy of the Trust
documents.

¶6            Autum then hired another lawyer, who obtained copies of the
Trust documents from a third party. Autum’s counsel wrote Judy in May
2012 to demand “copies of the trust accountings that have been prepared to
date” and “distribution of her trust share.”            Grover responded
approximately a month later, telling Autum’s counsel that Mr. Lloyd told
Judy before his passing that “he wanted her to have everything” and that
“we don’t need to give the girls anything.” Grover reiterated that Judy had
set aside $25,000 each for Amber and Autum, and Autum’s money
remained in a separate account. Grover also acknowledged that he and
Judy sold the Lloyds’ Sun City West home and a vehicle, both Trust assets,
and applied the proceeds from the sale of the Lloyd house to their current
home.

¶7            Amber and Autum petitioned for Judy’s removal as Trustee
on February 4, 2013. Amber and Autum also alleged breach of trust and
sought damages pursuant to Arizona Revised Statutes (“A.R.S.”) section
14-11002. The superior court set a hearing at which Judy did not appear.
Following the hearing, the court entered an order removing Judy as
Trustee, finding Judy in breach of trust, and awarding damages “in an
amount yet to be determined.”

¶8            Approximately two months later, Judy moved to set aside the
judgment, contending she did not receive proper notice of the hearing.
Judy also moved to dismiss the petition, contending Amber and Autum’s
claims were time-barred under A.R.S. § 14-11005 because they did not file
their petition within two years of the termination of their interests in the



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                          Decision of the Court

Trust, which she alleged occurred on their respective 25th birthdays. The
court denied Judy’s motion, finding that Amber and Autum gave Judy
proper notice of the hearing under A.R.S. § 14-1401(A)(2) and that “[Judy’s]
repeated lies about the Trust and the destruction of the original Trust
[documents]” tolled the statute of limitations.

¶9            Two years later, Amber and Autum moved for the entry of
final judgment against Judy, arguing Judy had not responded to their
requests for information regarding the Trust and its assets. Amber and
Autum requested $340,305.92 in damages against Judy. Judy opposed the
motion and requested a damages hearing, which the superior court granted
after settlement efforts failed.

¶10            Amber and Autum then filed a “motion for leave to amend
motion for entry of final judgment,” seeking to “include a request for the
finding of Constructive Trust against the property of both [Grover and
Judy]” in the judgment. The superior court granted their motion, following
which Grover appeared in the case for the first time with counsel. The court
then denied Judy’s motion for reconsideration.

¶11           Following an evidentiary hearing at which both Judy and
Grover testified, the superior court entered judgment against Judy for
$290,145.14, which included $82,540.62 of attorneys’ fees. The court also
imposed a constructive trust “on the personal assets of Judy Ligon and
community assets of Judy Ligon and Grover Ligon” as well as on the
Ligons’ home.

¶12            We have jurisdiction over the Ligons’ timely appeal pursuant
to A.R.S. § 12-2101(A)(9).

                              DISCUSSION

I.    Amber and Autum’s Claims Were Not Time-Barred

¶13          We first address Appellants’ contention that Amber and
Autum’s claims were time-barred because their interests in the Trust
terminated on their 25th birthdays in 2007 and 2010, respectively. See A.R.S.
§ 14-11005(C)(2) (“[A] judicial proceeding by a beneficiary against a trustee
for breach of trust must be commenced within two years after . . . [t]he
termination of the beneficiary’s interest in the trust.”).

¶14          The Trust states that, when the beneficiaries turn 25, “their
separate share trust shall be distributed to them and the Trust Estate as to
such beneficiaries shall thereupon terminate.” Under that provision,


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                            HAWORTH v. LIGON
                            Decision of the Court

Amber and Autum’s interests were not to terminate until they received
their respective distributions. If their respective interests were to
automatically terminate upon their 25th birthdays, as Judy argues, the Trust
would have said just that. But instead, the Trust tied termination of the
beneficiaries’ interests to their distributions by providing that distributions
would be made upon the beneficiaries’ 25th birthdays and further reciting
that their respective interests “thereupon” would terminate. See KAZ
Const., Inc. v. Newport Equity Partners, 229 Ariz. 303, 305, ¶ 7 (App. 2012)
(“[A] trust must be interpreted according to its terms.”). Appellants do not
dispute that neither Amber nor Autum received their share of the Trust in
2007, 2010, or any time thereafter. Their claims therefore are not time-
barred.1

II.    Amber and Autum Were Not Entitled to a Constructive Trust

¶15           A court may impose a constructive trust when a defendant
obtains property through unconscionable conduct, including breach of a
fiduciary duty. Cal X-Tra v. W.V.S.V. Holdings, L.L.C., 229 Ariz. 377, 409,
¶ 107 (App. 2012). A constructive trust compels a defendant who unfairly
holds a property interest to convey that interest to whom it justly belongs.
Id. The court may not, however, impose a constructive trust if the claimant
has an adequate remedy at law. ML Servicing Co., Inc. v. Coles, 235 Ariz. 562,
569, ¶ 24 (App. 2014). It was Amber and Autum’s burden to show they
were entitled to a constructive trust by clear and convincing evidence.
Murphy Farrell Dev., LLLP v. Sourant, 229 Ariz. 124, 131, ¶ 24 (App. 2012).
We will not interfere with the superior court’s determination as to the
sufficiency of the evidence unless no reasonable person could have agreed
with it as a matter of law. Cal X-Tra, 229 Ariz. at 409, ¶ 108.

¶16           For a constructive trust to be imposed, Amber and Autum
also had to identify specific assets that could be traced back to Trust funds.
See Burch & Cracchiolo, P.A. v. Pugliani, 144 Ariz. 281, 286 (1985) (“A
prerequisite to the imposition of a constructive trust is the identification of
a specific property belonging to the claimant.”); Amtitle Trust Co. v. Fitch, 25
Ariz. App. 182, 184 (1975) (“A prerequisite to the imposition of a
constructive trust is the identification of a specific property, or res, in which
the claimant has an interest.”). Autum and Amber presented no evidence

1      For this reason, we do not reach the parties’ equitable tolling
arguments. See Parkinson v. Guadalupe Pub. Safety Ret. Local Bd., 214 Ariz.
274, 277, ¶ 12 (App. 2007) (“We will affirm the superior court if its ruling
was correct for any reason, even if that reason was not considered by the
court.”) (internal quotations and citation omitted).


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                           HAWORTH v. LIGON
                           Decision of the Court

tracing any Ligon asset to Trust funds or assets except for the Ligons’
current home, which Grover acknowledged was purchased using proceeds
from the sale of the Lloyd house. The record thus does not support
imposing a constructive trust over all “personal assets of Judy Ligon and
community assets of Judy Ligon and Grover Ligon.” See Sourant, 229 Ariz.
at 131, ¶ 23 (“At a minimum, . . . the plaintiff must have an equitable interest
in the property wrongly held by the defendant to give rise to the
defendant’s duty to convey that property to the plaintiff.”).

¶17           As for the Ligon home, the court included the proceeds from
the sale of the Lloyd house in its damages award. The damages award
presumably could constitute an adequate remedy at law, but Amber and
Autum contend that is not so because the Trust proceeds have been
converted into equity in the Ligon home and because Judy and Grover hold
the home as community property.

¶18            As to the first issue, although the evidence is undisputed that
the Ligons used Trust assets to purchase their home, that evidence is
insufficient to conclude that the Ligons bought the home using Trust assets
alone. Amber and Autum cite no authority for the proposition that a
constructive trust is the appropriate remedy when, as here, improperly
converted trust assets may represent only a portion of the value the trustee
paid to acquire other property. In such a situation, Arizona law may allow
for the imposition of equitable liens when unjust enrichment would result.
See Byers v. Wik, 169 Ariz. 215, 224 (App. 1991).

¶19           Further, the superior court erred by awarding Amber and
Autum judgment against Grover’s community interest in the home when
they had not named Grover as a defendant, and in the resulting absence of
a finding of liability against him. Amber and Autum could have sought
leave to name Grover as a party; their failure to sue Grover does not now
entitle them to a constructive trust over the community property. See A.R.S.
§ 25-215(D); see also Spudnuts, Inc. v. Lane, 139 Ariz. 35, 36 (App. 1984)
(rejecting post-judgment addition of husband as a defendant, stating “if a
plaintiff wants to hold a marital community accountable for an obligation,
both spouses must be sued jointly”).

¶20           For these reasons, we vacate the imposition of a constructive
trust and remand for further proceedings to determine an appropriate
remedy. On remand, the superior court may consider whether Judy’s
community interest in the Ligon home is subject to an equitable lien. In its
discretion, the court also may entertain a motion by Amber and Autum to
amend their complaint to name Grover as a defendant.


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                           HAWORTH v. LIGON
                           Decision of the Court

III.   The Superior Court Erred by Awarding Attorneys’ Fees Without
       Adequate Support

¶21            Appellants also challenge the superior court’s fee award to
Amber and Autum. Under A.R.S. § 14-11004(B), the court may “order that
a party’s reasonable fees . . . be paid by any other party . . . .” We review
the award for an abuse of discretion. In re Conservatorship for Mallet, 233
Ariz. 29, 31, ¶ 7 (App. 2013). The court abuses its discretion if there is no
reasonable basis in the record for its award. State ex rel. Corbin v. Tocco, 173
Ariz. 587, 595 (App. 1992).

¶22           Amber and Autum’s counsel represented at the evidentiary
hearing that they had incurred $82,540.62 in attorneys’ fees to date. The
superior court then stated:

       Because attorneys[‘] fees have been awarded previously, I
       will allow the -- Ms. Warner and the Petitioners to present an
       application for fees which you’ll have a chance to respond to
       of course, and we’ll determine what that -- what that final
       number is.

The court did not, however, await an application; it instead accepted
counsel’s avowal as “reasonable” and awarded Amber and Autum the full
$82,540.62 in the judgment.

¶23           Counsel’s avowal, standing alone, was not adequate support
for the fee award. See Ariz. R. Civ. P. 54(g)(4); see also S & R Properties v.
Maricopa County, 178 Ariz. 491, 504-05 (App. 1993) (“Although trial courts
have wide discretion in determining the amount of attorneys’ fees, the
award must have a reasonable basis in the record.”). Moreover, Appellants
were given no opportunity to challenge the reasonableness of the fee claim.
See Reed v. Reed, 154 Ariz. 101, 108 (App. 1987) (reversing attorneys’ fee
award on due process grounds where the trial court had “effectively
refused to allow petitioner to be heard on the subject of the reasonableness
and appropriateness of the fees and expenses claimed”). Without
expressing any opinion on the reasonableness of the requested fees, we
therefore vacate the fee award and remand for further proceedings to
determine a reasonable award.2


2       Appellants also argue Amber and Autum waived their fee claim by
not filing an application under Rule 54(g)(2), which at that time required a
party seeking fees to file a motion “within 20 days from the clerk’s mailing



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                          HAWORTH v. LIGON
                          Decision of the Court

IV.   Attorneys’ Fees and Costs on Appeal

¶24          Appellants request an award of attorneys’ fees and costs on
appeal pursuant to § 14-11004. In our discretion, we deny their fee claim.
Appellants were partially successful in this appeal; we therefore will award
them taxable costs upon compliance with Arizona Rule of Civil Appellate
Procedure 21. US Bank, N.A. v. JPMorgan Chase Bank, N.A., 242 Ariz. 502,
¶ 25 (App. 2017).

                              CONCLUSION

¶25           We vacate and remand for further proceedings those portions
of the judgment granting Amber and Autum a constructive trust and
attorneys’ fees. We affirm the remainder of the judgment.




                         AMY M. WOOD • Clerk of the Court
                         FILED: AA




of a decision on the merits of the cause.” Amber and Autum had no reason
to file a motion because the court granted their entire fee claim when it
rendered its decision on the merits. We decline to find waiver on this
record.


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