Interior v. McClure

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UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL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 re the Matter of the Estate of:

JON ALAN MCCLURE, Deceased.
__________________________________
DINA INTERIOR, Petitioner/Appellee,

v.

JAMES ALLAN MCCLURE, Respondent/Appellant.
__________________________________

No. 1 CA-CV 24-0196 PB

FILED 10-17-2024

Appeal from the Superior Court in Mohave County
No. B8015PB201904048
The Honorable Kenneth Gregory, Judge Pro Tempore

AFFIRMED

COUNSEL

Law Offices of Daniel J. Oehler, Bullhead City
By Daniel J. Oehler
Counsel for Petitioner/Appellee

Knochel Law Offices, Bullhead City
By Keith S. Knochel
Counsel for Respondent/Appellant
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Decision of the Court

MEMORANDUM DECISION

Presiding Judge Cynthia J. Bailey delivered the decision of the Court, in
which Judge Anni Hill Foster and Judge Angela K. Paton joined.

B A I L E Y, Judge:

¶1 James McClure appeals the superior court’s judgment for
Dina Interior on McClure’s petition to remove Interior as the personal
representative of his father’s (“Decedent”) estate and McClure’s request for
declaratory judgment. McClure argues the court erred by concluding (1)
Arizona Revised Statutes (“A.R.S.”) section 33-405(A) did not convert a
home equity line of credit (“HELOC”) balance to Interior’s personal
obligation and (2) Interior could pay off the HELOC before the creditor
presented a claim. For the following reasons, we affirm.

FACTS AND PROCEDURAL HISTORY

¶2 As part of his regular business practice before his death,
Decedent took out a HELOC from Bank of America to finance the
development of a property (the “McCormick” residence). The loan was
secured by a deed of trust on Decedent’s home (“Indian Head”). Decedent
executed a beneficiary deed naming Interior as grantee beneficiary to
Indian Head, meaning title to Indian Head would transfer to Interior when
Decedent died. Decedent also executed a will, which nominated Interior as
his estate’s personal representative and specified that the estate residue be
distributed equally between McClure and Interior.

¶3 After Decedent’s death, Interior continued developing
McCormick and eventually sold the property. Interior paid off the
HELOC’s balance, using proceeds from the sale; the remaining proceeds
became residue of the estate. Interior then filed her first inventory and
appraisement, listing the McCormick sale and the HELOC loan payment.
She petitioned the superior court to approve her interim accounting and to
distribute the residue from the McCormick sale and other accounts. The
superior court granted Interior’s petition, and she transferred to McClure
his portion of the McCormick sale proceeds.

¶4 McClure petitioned the superior court to remove Interior as
personal representative and requested declaratory judgment, arguing she

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had no authority as personal representative to pay off the HELOC with
estate assets. Both parties briefed the issue, and the superior court held oral
argument. The superior court granted “summary judgment”1 for Interior,
concluding that A.R.S. § 33-405(A) did not convert the HELOC into
Interior’s personal obligation. The court also found that she did not exceed
her authority by paying the HELOC balance.

¶5 McClure timely appealed the superior court’s order. We have
jurisdiction pursuant to A.R.S. § 12-2101(A)(1).

DISCUSSION

¶6 McClure argues the superior court erred by concluding (1)
A.R.S. § 33-405(A) did not convert the HELOC into Interior’s personal
obligation, and (2) Interior could pay off the loan before Bank of America
presented a claim.

¶7 We review the superior court’s grant of summary judgment
de novo. In re Estate of Waterloo, 226 Ariz. 492, 494, ¶ 6 (App. 2011). We also
review the interpretation of statutes de novo. Premier Physicians Grp., PLLC
v. Navarro, 240 Ariz. 193, 194, ¶ 6 (2016). When a statute’s language is clear,
we must follow its plain meaning and not resort to other methods of
statutory interpretation. N. Valley Emergency Specialists, L.L.C. v. Santana, 208 Ariz. 301, 303, ¶ 9 (2004) (citations omitted).

I. The superior court did not misinterpret A.R.S. § 33-405(A).

¶8 McClure contends the superior court’s interpretation of
A.R.S. ֻ§ 33-405(A), which defines beneficiary deeds, was erroneous. We
disagree. The superior court held: (1) A.R.S. § 33-405(A) “merely confirms
that a grantee beneficiary receives title in the condition it was in at the time
of the grantor’s death,” (2) the statute “confirms that [Interior] took title to
Indian Head subject to Bank of America’s lien interest,” (3) the
indebtedness was incurred by the Decedent and was owed by the Estate
regardless of the security, and (4) interpreting the statute in any other way
“would make unsuspecting grantee beneficiaries personally liable for debts
they did not incur.”

¶9 Here, the language in A.R.S. § 33-405(A) is clear:

1 The court granted Interior “summary judgment,” but neither party moved

for summary judgment under Ariz. R. Civ. P. 56.

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A deed that conveys an interest in real property, including
any debt secured by a lien on real property, to a grantee
beneficiary designated by the owner and that expressly states
that the deed is effective on the death of the owner transfers
the interest to the designated grantee beneficiary effective on
the death of the owner subject to all conveyances, assignments,
contracts, mortgages, deeds of trust, liens, security pledges and
other encumbrances made by the owner or to which the owner
was subject during the owner’s lifetime.

(Emphasis added.)

¶10 In the context of property transactions, “subject to” means
“burdened with.” Ariz. Title Ins. & Tr. Co. v. Smith, 21 Ariz. App. 371, 374
(1974). In Esplendido Apartments v. Metropolitan Condominium Association of
Arizona II, 161 Ariz. 325, 328 (1989), our supreme court explained what it
means to purchase property “subject to” a mortgage. There, the court held
that “[w]hen property is transferred subject to an existing mortgage, the
terms and obligations of that mortgage are not extinguished, but remain as
a lien upon the transferred property without imposing any personal
liability upon the grantee.” Id. (emphasis added).

¶11 “Subject to” carries the same meaning in A.R.S. § 33-405(A).
Although A.R.S. § 33-405(A) does not address the sale of real property, we
see no reason to assign a different meaning to “subject to” when real
property is transferred from one party to another through a beneficiary
deed rather than a sale. The superior court correctly found A.R.S. § 33-
405(A) did not convert the HELOC into Interior’s personal obligation.

II. Interior had authority to unilaterally pay the HELOC balance.

¶12 The superior court relied on A.R.S. § 14-3809 and our ruling
in Binder v. Fruth, 150 Ariz. 21 (App. 1986), to find Interior had authority to
pay the remaining HELOC balance. Section 14-3809 describes how to value
a secured creditor’s claim and the various remedies available to creditors.
Binder held that § 14-3809 does not limit a creditor’s authority under the
common law to select a remedy. 150 Ariz. at 24. However, neither the
statute nor Binder necessarily empowered Interior to pay the HELOC
balance before Bank of America presented a claim. Her authority to pay the
claim is governed by statutory claim payment guidelines.

¶13 “The personal representative at any time may pay any just claim
which has not been barred, with or without formal presentation[.]” A.R.S. § 14-
3807(B) (emphasis added). Otherwise, “[o]n the expiration of the earlier of

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the time limitations prescribed in § 14-3803 for the presentation of claims,
the personal representative shall proceed to pay the claims allowed against
the estate in the order of priority prescribed[.]” A.R.S. § 14-3807(A).

¶14 Here, Interior properly exercised her authority under A.R.S. §
14-3807(B) to pay the HELOC balance amount before Bank of America
presented a claim. As discussed above, the claim was a valid claim against
the estate, and the limitations period for presenting a claim had not expired
when Interior paid the HELOC balance.2 And, McClure cannot argue his
right to the estate residue constituted a claim. See A.R.S. § 14-1201(8).
Accordingly, Interior had authority to pay Bank of America the outstanding
HELOC balance.

III. We award Interior attorneys’ fees and costs.

¶15 Interior requests attorneys’ fees and costs pursuant to A.R.S.
§ 14-3720. Interior proceeded in this litigation in good faith. We award
Interior taxable costs and reasonable attorneys’ fees, in an amount to be
determined upon her compliance with Rule 21, ARCAP.

CONCLUSION

¶16 We affirm.

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

2 Bank of America was a known creditor of the estate which required
Interior to provide written notice of her appointment and the need to
present a claim. A.R.S. § 14-3801(B). No evidence in the record indicates
Interior provided the required notice. As a result, the limitations period
had not begun to run when Interior paid the HELOC.

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