                                                                        FILED BY CLERK
                             IN THE COURT OF APPEALS                       DEC -9 2011
                                 STATE OF ARIZONA
                                   DIVISION TWO                             COURT OF APPEALS
                                                                              DIVISION TWO



In re the ESTATE OF MARY A. RILEY, )                    2 CA-CV 2010-0149
aka MARY AGNES RILEY,              )                    DEPARTMENT A
aka MARY AGNES REILLY.             )
                                   )                    OPINION


           APPEAL FROM THE SUPERIOR COURT OF PIMA COUNTY

                                    Cause No. P26266

                          Honorable Charles V. Harrington, Judge

          AFFIRMED IN PART, VACATED IN PART, AND REMANDED


Jonathan W. Reich, P.C.
 By Jonathan W. Reich                                                               Tucson
                                     Attorney for Appellants R.J. Riley, Regina M. Riley,
                              F. Martin Riley, Neysa Kalil, Nora J. Simons, Cecelia Riley,
                                            Jude S. Riley, Loretta LaCorte, and Julia Riley

Mesch, Clark & Rothschild, P.C.
 By J. Emery Barker and Scott H. Gan                                              Tucson
                                                           Attorneys for John D. Barkley,
                                                        Successor Personal Representative

Law Office of Terrence A. Jackson
 By Terrence A. Jackson                                                           Tucson
                                                          Attorney for Joseph H. Riley, Jr.

Law Office of Dwight W. Whitley, Jr.
 By Dwight W. Whitley, Jr.                                                        Tucson
                                                              Attorney for Mary C. Benge

John A. Baade                                                                     Tucson
                                                               Attorney for Kathryn Riley
E C K E R S T R O M, Presiding Judge.


¶1             Appellants R.J. Riley, Regina Riley, F. Martin Riley, Neysa Kalil, Nora

Simons, Cecelia Riley, Jude Riley, Loretta LaCorte, and Julia Riley (hereinafter “the

objectors”) appeal from the probate court’s order approving a compromise between the

personal representative of their mother’s estate, John Barkley, and two of their siblings,

Joseph Riley and Mary Benge, as well as a separate compromise between Barkley and

their sibling, Kathryn Riley. Because the compromise between Barkley, Joseph, and

Mary was not executed by all beneficiaries of the estate, as required by A.R.S. § 14-3952,

it is void, and the probate court erred when it approved that compromise. But we will not

disturb the court’s approval of the compromise between Kathryn and Barkley because the

objectors stipulated to its approval. Accordingly, we affirm the probate court’s order in

part and vacate it in part.

                              Compromise with Joseph and Mary1

¶2             Joseph and Mary were appointed co-personal representatives of their

mother’s estate in February 1996. In an effort to close the estate, they filed a proposal for

its distribution in March 2006. A few months later, after receiving a draft of the estate

accounting, R.J. Riley filed a petition to remove Joseph and Mary as co-personal

representatives and to appoint a successor personal representative. In the petition, R.J.

       1
        Although the term “settlement” has been used interchangeably with the term
“compromise” in some of the relevant authority, see, e.g., In re Estate of Ward, 200 Ariz.
113, ¶¶ 17-19, 23 P.3d 108, 112-13 (App. 2001), we have used “compromise” whenever
possible throughout our decision because it is the term used in the relevant statutes. See
A.R.S. §§ 14-3951, 14-3952.

                                             2
alleged Mary and Joseph had breached their fiduciary duties and had administrated the

estate improperly. R.J. also moved the probate court to appoint John Barkley as the

successor personal representative of the estate. Joseph and Mary resigned as co-personal

representatives, and the court granted the motion to appoint Barkley as their successor.

¶3            Pursuant to the probate court’s order, Joseph and Mary filed an accounting

for the estate, covering the period from February 1996 to July 2006. Barkley objected to

the accounting, enumerating concerns about the lack of supporting documentation and

inaccuracies apparent on the face of the document. Barkley requested a bench trial on the

objection, which the court granted.

¶4            While the trial was pending, Barkley reached agreements with Mary,

Joseph, and Kathryn. The agreement between Barkley, Mary, and Joseph contained a

term stating it would be presented to the court for approval under A.R.S. §§ 14-3951 and

14-3952, and Barkley filed a “petition for approval of compromise of controversies”

pursuant to those statutes in June 2009 for both of the agreements. Nine of the estate’s

thirteen beneficiaries (the objectors) filed an objection to the petition.        After an

evidentiary hearing, the court approved the compromises. The objectors moved for a

new trial and for the court to reconsider its ruling. The court denied the motions, and this

appeal followed.

¶5            We sua sponte reach the threshold question of whether the compromise

agreement with Joseph and Mary is void for failing to be executed by all the necessary

parties under § 14-3952(1). See Nat’l Union Indem. Co. v. Bruce Bros., 44 Ariz. 454,

467-68, 38 P.2d 648, 653-54 (1934) (where illegality of contract appears on face of

                                             3
contract or appears from evidence necessary to prove contract, court has duty to declare

contract void); see also Clark v. Tinnin, 81 Ariz. 259, 263, 304 P.2d 947, 950 (1956)

(waiver and estoppel cannot be invoked against void contract); cf. Kaiser Steel Corp. v.

Mullins, 455 U.S. 72, 83 (1982) (federal court has duty to determine whether contract

violates federal law before enforcing it). Because the issue was not addressed in the

parties’ original briefs, we ordered them to submit supplemental briefing on whether the

compromise agreement is void. Cf. State v. Curry, 187 Ariz. 623, 626-27, 931 P.2d 1133,

1136-37 (App. 1996) (deciding issue raised sua sponte without benefit of supplemental

briefing implicates due process concerns).        Barkley has not argued, either in his

supplemental brief or at oral argument, that the objectors waived the right to challenge

the agreement on this ground by not raising it below. See Van Loan v. Van Loan, 116

Ariz. 272, 274, 569 P.2d 214, 216 (1977) (failure to raise issue in appellate briefs

constitutes waiver); Fid. Nat’l Title Co. v. Town of Marana, 220 Ariz. 247, n.2, 204 P.3d

1096, 1099 n.2 (App. 2009) (affirmative defenses of waiver and estoppel can be waived

if not argued below).

¶6            A compromise agreement is void unless executed in compliance with the

governing statute.2 See Clark, 81 Ariz. at 263, 304 P.2d at 950 (agreement in violation of


       2
         We note the difference between a void contract and a voidable one. A voidable
agreement is “subject to rescission or ratification,” while a void agreement is “incapable
of ratification or disaffirmance.” Princess Plaza Partners v. State, 187 Ariz. 214, 222
n.5, 928 P.2d 638, 646 n.5 (App. 1995). Arizona law presumes that a contract in
violation of statute is illegal and void unless legislative intent is to the contrary. Yank v.
Juhrend, 151 Ariz. 587, 590, 729 P.2d 941, 944 (App. 1986); see, e.g., Smith v.
Pinnamaneni, 227 Ariz. 170, ¶ 9, 254 P.3d 409, 412-13 (App. 2011) (applicability of
substantial compliance doctrine to statute makes contract based on its terms voidable not
                                              4
state’s public policy as reflected in statutes “void as against public policy”); cf. W. Corr.

Grp. v. Tierney, 208 Ariz. 583, ¶ 13, 96 P.3d 1070, 1073 (App. 2004) (public contract

entered in violation of statute void). Section 14-3952(1) requires the compromise to be

“executed by all competent persons . . . having beneficial interests or having claims

which will or may be affected by the compromise.” We interpret statutes according to

their plain meaning if the language is clear. Nordstrom, Inc. v. Maricopa Cnty., 207 Ariz.

553, ¶ 10, 88 P.3d 1165, 1168-69 (App. 2004). And, the plain language of § 14-3952(1)

provides that a compromise that has not been executed by all of the persons with

beneficial interests in the estate is void.3 See, e.g., In re Estate of Sullivan, 724 N.W.2d

532, 535-36 (Minn. Ct. App. 2006) (analyzing identical provision to § 14-3952); cf.

Wilmot v. Wilmot, 203 Ariz. 565, ¶ 18, 58 P.3d 507, 512 (2002) (discussing § 14-3952(1)

by analogy and noting it requires consent of all beneficiaries and claimants by formal

agreement); In re Estate of Leathers, 876 P.2d 619, 620 (Kan. Ct. App. 1994) (mediation

agreement resulting from disputes over administration of will unenforceable for lacking

signature of one of beneficiaries as required by statute); In re Estate of Outen, 336 S.E.2d

436, 437 (N.C. Ct. App. 1985) (family settlement agreements generally “invalid unless

all who receive under the will join in the agreement”); In re Estate of Webb, 266 S.W.3d



void). Here, where the statute on its face requires strict compliance with its terms, we
will apply the presumption that a contract not in compliance is void. Barkley conceded at
oral argument that the agreement here would be void if it did not contain the signatures of
all necessary parties.
       3
         A beneficial interest is “[a] right or expectancy in something (such as a trust or an
estate), as opposed to legal title to that thing.” Black’s Law Dictionary 885 (9th ed.
2009).
                                              5
544, 550-51 (Tex. App. 2008) (“A family settlement agreement generally requires that all

the beneficiaries of a will be included in the agreement.”).4

¶7            Barkley counters neither the general proposition that a compromise

agreement not in compliance with the statute is void, nor the contention that this court

must vacate a trial court’s order approving a void agreement. Rather, Barkley argues he

complied with § 14-3952, which, he maintains, only requires “the signatures of parties to

the proposed settlement and not the agreement of all beneficiaries of the probate estate.”

But, “[t]he plain language of the statute dictates that a valid proposed agreement must be

signed by every member of two classes of persons—those with a beneficial interest and

those with claims that will or may be affected by the proposed compromise.” Estate of

Sullivan, 724 N.W.2d at 535.       Barkley concedes that the objectors as heirs have a

beneficial interest in the estate, but he attempts to distinguish Sullivan and avoid its

interpretation of the Uniform Probate Code on the ground the compromise in that case

affected the estate’s distribution scheme. However, the terms of the compromise here

also affect the distribution of the estate. They require Joseph to disclaim his interest in

the estate, Joseph and Mary to partially reimburse the estate for its losses, and the estate

to withdraw its objections to Joseph and Mary’s 2006 accounting. See Estate of Leathers,

876 P.2d at 620 (mediation agreement among beneficiaries over disputes arising from



       4
        Agreements among family members to change the distribution of property
provided for in a will are often referred to as “family settlement agreements.” See, e.g.,
In re Estate of Ward, 200 Ariz. 113, ¶ 17, 23 P.3d 108, 117-18 (App. 2001); Ind. Dep’t of
State Revenue v. Estate of Pickerill, 855 N.E.2d 1082, 1084-85 (Ind. T.C. 2006).

                                             6
administration of estate was family settlement agreement because it “distribute[d]

property in a manner different from the will”).

¶8            Barkley further contends that broad application of the signature requirement

set forth in § 14-3952(1) “would not only be impractical, it would also render the notice

and approval requirements contained in A.R.S. § 14-3952(3) superfluous.” Section 14-

3952(3) requires that before the court approves a settlement, notice must be given to “all

interested persons or their representatives.” “Interested person” is defined to “include[]

any trustee, heir, devisee, child, spouse, creditor, beneficiary, person holding a power of

appointment and other person who has a property right in or claim against a trust estate or

the estate of a decedent.” A.R.S. § 14-1201(26). Further, what constitutes an interested

person “may vary from time to time and must be determined according to the particular

purposes of, and matter involved in, any proceeding.” Id.

¶9            We disagree that a plain application of § 14-3952(1) would render the

requirements of § 14-3952(3) superfluous. Section 14-3952(1) imposes the signature

requirement only for those “having beneficial interests or having claims which will or

may be affected by the compromise.”           By contrast, § 14-3952(3) creates notice

requirements for all “interested persons or their representatives.” As noted, the definition

of “interested persons” encompasses not only those with “beneficial interests or . . .

claims which will or may be affected by the compromise,” § 14-3952(1), but also others

who merely are interested in the estate, including those who have no such claim or

beneficial interest.   See § 14-1201(26).    Thus, although all those having beneficial

interests protected by the signature requirement set forth in § 14-3952(1) also would be

                                             7
entitled to notice under § 14-3952(3), not all persons entitled to notice under § 14-

3952(3) necessarily are required to execute a compromise. And, even if in a particular

case all persons entitled to notice under § 14-3952(3) also must execute the compromise

pursuant to § 14-3952(1), the requirement that the interested persons be given notice of

the court’s pending action on the compromise is not superfluous because if the

compromise is approved by the court, it is binding on all parties to the agreement. See

Cravens, Dargan & Co. v. Superior Court, 153 Ariz. 474, 476, 737 P.2d 1373, 1375

(1987) (due process in judicial determinations requires notice and hearing to bind

parties).

¶10           Barkley contends that because the beneficiaries would not have been

precluded from filing separate claims against Joseph or Mary, the beneficiaries would not

fall into the category of those having “claims which will or may be affected by the

compromise.” § 14-3952(1). But Barkley overlooks that the signature requirement

applies independently to those with “beneficial interests” in the estate, whether or not

their claims will be “affected by the compromise.” See Estate of Sullivan, 724 N.W.2d at

535. Even assuming the signature requirement here was limited to those having claims

affected by the compromise, we cannot agree the beneficiaries here would be unaffected.

The settlement agreement in question provides that “the Estate, including its assigns and

distributees,” gives up the right to “any and all claims” against Joseph and Mary. To the

extent they have a beneficial interest in the estate, the beneficiaries clearly have claims

that are or may be affected by the compromise. Accordingly, the objectors fall under

both classes of persons that must sign a compromise agreement pursuant to § 14-3952(1):

                                            8
“those with a beneficial interest and those with claims that will or may be affected by the

proposed compromise.” Estate of Sullivan, 724 N.W.2d at 535.

¶11           Finally, Barkley contends that “requiring all beneficiaries to sign the

proposed settlement agreement would contravene the role of the personal representative

and the purpose of these statutes.” He emphasizes that personal representatives have the

power to reach a settlement with any “debtor or obligor.” A.R.S. § 14-3715(17). But, to

the extent Mary or Joseph could be considered as such, they also are beneficiaries of the

estate, and the compromise agreement here, as discussed, expressly redistributes the

estate. Under such circumstances, we cannot characterize the compromise agreement

here as a mere assertion of the personal representative’s power to settle debts and

obligations of the estate.5 And, although we agree with Barkley that the purpose of

§§ 14-3951 and 14-3952 is to encourage settlements, their purpose also is to “put the

authority for initiating settlement proposals with the persons who have beneficial

interests in the estate, and to prevent executors and testamentary trustees from vetoing

any such proposal.” Unif. Probate Code § 3-1102 cmt., 8 U.L.A. pt. II, at 305 (1998); see

also Wilmot, 203 Ariz. 565, ¶ 18, 58 P.3d at 512 (in analogous context of settling

wrongful death action, stating person in representative capacity must obtain consent to

settlement of all persons whose claims affected). Thus, at minimum, the statute seeks to


       5
        In fact, Barkley consistently has maintained his position that this compromise
agreement is governed by §§ 14-3951 and 14-3952. The objectors argue the agreement is
not governed by those statutes. But the objectors’ argument, raised for the first time in
their supplemental brief, does not change our conclusion that §§ 14-3951 and 14-3952
apply to the compromise with Joseph and Mary.

                                            9
keep the power to make compromises involving the structure of the estate in the hands of

the estate’s beneficiaries.6

¶12           Moreover, nothing about the requirements of §§ 14-3951 and 14-3952, or

this decision interpreting it, dictates that a personal representative must obtain the

approval of the estate’s beneficiaries in every situation involving a settlement of the

estate’s claims. Nor can we overlook that Barkley, Joseph, and Mary agreed to subject

themselves to the requirements of §§ 14-3951 and 14-3952 by the express terms of the

compromise. And, § 14-3951 limits by its terms the types of agreements subject to the

requirements of § 14-3952 to “any controversy as to admission to probate of any

instrument offered for formal probate as the will of a decedent, the construction, validity

or effect of any probated will, the rights or interests in the estate of the decedent, of any

successor, or the administration of the estate.” We acknowledge the term “administration

of the estate” is general and could, when read out of context with the broader statutory

scheme, be interpreted to require that all beneficiaries approve every action of the

personal representative. But, in this case, we need only decide whether an agreement that

changes the estate’s distribution scheme among beneficiaries requires the approval of the

beneficial interest holders. See Estate of Leathers, 876 P.2d at 620. For the foregoing

reasons, we conclude that it does.




       6
       Indeed, courts have allowed beneficiaries to modify the executor’s powers by
family settlement agreements. See, e.g., Harrison v. Prentice, 38 A.2d 101, 105 (Md.
1944); Wachovia Bank & Trust Co. v. Allen, 60 S.E.2d 117, 121 (N.C. 1950).

                                             10
¶13            Because § 14-3952 plainly requires the objectors to have executed the

agreement, we conclude the trial court erred when it approved the compromise with

Joseph and Mary.7 We vacate the judgment in part and remand the case for further

proceedings.

                           Compromise with Kathryn Riley

¶14            Barkley filed a complaint against Kathryn in April 2008, asserting she

owed the estate two and one-half years of unpaid rent. After determining the estate had

no valid claim, Barkley agreed, on behalf of the estate, to release Kathryn from all

present and future claims in exchange for Kathryn waiving a potential claim of attorney

fees and costs against the estate. In November 2009, Kathryn, Barkley, and the objectors

stipulated to compromise the estate’s claims involving Kathryn by way of the release and

the dismissal of the unpaid rent claim with prejudice. The trial court approved the

stipulation. Yet, despite this stipulation, the objectors still opposed the compromise with

Kathryn. And, after a hearing, the court approved the compromise as just and reasonable.

This appeal followed the denial of the objectors’ motion for new trial.

¶15            The objectors concede “[t]he agreement with Kathryn was not contingent

upon court approval,” yet repeatedly complain that Barkley presented no evidence about

the reasonableness of the compromise with Kathryn. However, the objectors do not



       7
        One beneficiary, George Riley, is not a party to this appeal; however, as a person
with a beneficial interest in the estate, he too is required to execute any compromise
agreement under §§ 14-3951 and 14-3952, unless his “whereabouts is unknown and
cannot reasonably be ascertained.” § 14-3952(1).

                                            11
address the stipulation they entered into that approved the compromise with Kathryn.8

That stipulation states the release “is valid and binding on [Barkley] notwithstanding any

action that the Court may take on [Barkley’s] Petition for Approval of Compromise of

Controversies.”    The stipulation further provides that the estate’s complaint against

Kathryn “is dismissed with prejudice.”

¶16            An appellant cannot purport to be an aggrieved party on appeal regarding a

claim the appellant stipulated be dismissed with prejudice. See, e.g., Harris v. Cochise

Health Sys., 215 Ariz. 344, ¶ 14, 160 P.3d 223, 227-28 (App. 2007); see also Contempo-

Tempe Mobile Home Owners Ass’n v. Steinert, 144 Ariz. 227, 228, 696 P.2d 1376, 1377

(App. 1985) (appeal moot when “substantive questions raised have already been resolved

by the stipulation dismissing the suit with prejudice”). Because the objectors agreed to

stipulate that the release with Kathryn was binding without court approval, we will not

overturn the court’s subsequent approval of it.

                                         Disposition
¶17            The order is affirmed in part, vacated in part, and remanded for further
proceedings.

                                               /s/ Peter J. Eckerstrom
                                               PETER J. ECKERSTROM, Presiding Judge


       8
        F. Martin Riley, one of the objectors on appeal, and George Riley, a beneficiary
of the estate who is not a party to this appeal, apparently did not enter into the stipulation
with the other objectors. However, both were given notice of the compromise with
Kathryn and an opportunity to object. Cf. Garn v. Garn, 155 Ariz. 156, 159-60, 745 P.2d
604, 607-08 (App. 1987) (due process requires party to stipulation be given notice and
opportunity to defend). And neither has argued he is not bound by the stipulation
because of the omission. We therefore do not address the issue further. See Polanco v.
Indus. Comm’n, 214 Ariz. 489, n.2, 154 P.3d 391, 393 n.2 (App. 2007).
                                             12
CONCURRING:


/s/ Joseph W. Howard
JOSEPH W. HOWARD, Chief Judge


/s/ J. William Brammer, Jr.
J. WILLIAM BRAMMER, JR., Judge




                                 13
