In Re the Estate of John R. Young

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DEC 4 - 2002
SUPREME COURT OF ARIZONA NoHKlE&MmT
EH B&HC cLEaKsuPaEMEcoun‘r
ev

Arizona Supreme Court
No. CV-02-Ol81-PR

In re the EState of
Court of AppealS
DiviSion Two

No. 2 CA-CV 01-OO3l
JOHN R. YOUNG, CochiSe County Superior
Court

No. PB99000244

Deceased.

MEMDRANDUM DECISION

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Appeal from the Superior Court of CochiSe County
No. PB99000244
The Honorable JameS L. Conlogue, Judge Pro Tempore

Memorandum Decision of the Court of AppealS
Division Two
Filed April 18, 2002

VACATED and REMANDED

Slutes, Sakrison & Hill, P.C. TucSon
by Tom Slutes
and Michael B. Smith

Attorneys for Christiane Young

Malanga Law Office Bisbee
by Ralph Malanga
and Joel A. LarSon

Attorneys for Personal Representative of
the Estate of John R. ¥oung

McGregor, Vice Chief Justice

`iu¥\iw:__` 2
_.a. We granted review to determine whether the COUI°C Of
////;ppea1s abused its discretion in declining to consider Petitioner

Christiane Young’s federal preemption argument under Egelhoff v.

Egelhoff, 532 U.S. 141, 121 S. Ct. 1322 (2001).

L2 Christiane and John Young dissolved their twenty-five
year marriage in 1999. John passed away after the divorce became
final. At the time of John's death, Christiane remained the named
beneficiary on his employer~provided life insurance and retirement
plan. A dispute arose between Christiane and John's estate
regarding who was entitled to receive the insurance and retirement
proceeds. The trial court ordered Christiane to surrender the
proceeds to the estate, ruling that the dissolution of the marriage
automatically revoked John’s designation of Christiane as the named
beneficiary under Arizona Revised Statutes (A.R.S.) section 14-2804
(1995).

L3 On appeal, Christiane argued that the Employee Retirement
1ncome Security Act (ERISA) preempts the application of A.R.S.
section 14-2804, relying on the United States Supreme Court's
recent decision in Egelhoff. The Court of Appeals, however,
declined to consider her federal preemption argument and Egelhoff’s
impact, stating that Christiane did not preserve these arguments
for appeal by raising them in the trial court. In re Estate of
Young, No. 2 CA-CV 01-OO31, slip op. at 2, I 2 (App. April 18,

2002).

I4 We hold that the Court of Appeals abused its discretion
in concluding that Christiane waived the right to raise federal
preemption and argue Egelhoff's impact. First, Christiane did
argue that ERISA law preempts the state cause of action during the
evidentiary hearing on May 23, 2000.1 Second, she was unable to
argue Egelhoff’s impact to the trial court because the United
States Supreme Court had not yet decided the case. The Court did
not decide Egelhoff until almost a year after the trial court
ordered Christiane to return the insurance and pension proceeds to
John's estate, Accordingly, her inability to rely upon Egelhoff
before the trial court does not waive her right to argue federal
preemption under Egelhoff on appeal. See INernes v. City of
Lakeside Park, 779 F.2d 1187, 1188~89 (6th Cir. 1986) (remanding
for further consideration in light of an FCC regulation preempting
state and local laws pertaining to amateur radio facilities because
the FCC promulgated the rule after the trial concluded and
petitioner argued preemption during tria1). Finally, our courts
prefer to resolve cases on the merits rather than on procedural
grounds. See Golembieski v. O’Rielly R.V. Ctr., Inc., 147 Ariz.
134, l35, 708 P.2d 1325, 1326 (App. 1985).

L5 For the foregoing reasons, we vacate the Court of

1 Christiane also raised the ERISA preemption argument in

her Notice of Removal to the United States District Court for the
District of Arizona.

Appeals’ memorandum decision in In re Estate of YOung and remand

for further consideration in light of Egelhoff v. Egelhoff, 532

U.S. l41, 121 S. Ct. 1322 (2001).

V. McGregor, Vic Chief Justice

CONCURRlNG:

F/

Charles E. JoEes¢/Chief Just c

§ 7

Stanley G. eldman,‘Uustic§

¢.

RebeccalWhite Berch, Justice

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Michael D. Ryan, Ju$tice