Landi v. Arkules

Court of Appeals of Arizona, Division 1, Department A
172 Ariz. 126, 835 P.2d 458 (1992)

ELI5:

Rule of Law:

A contract for heir-finding services is void as against public policy and unenforceable when its performance requires acts that violate state law, such as engaging in private investigation without a license, improperly soliciting clients for an attorney, and charging a fee in excess of limits established by public policy. A party to such an illegal contract is also barred from recovering in quantum meruit for services rendered.

Facts:

In late 1987, David I. Arkules, working for his sister Nancy Moorehead's heir-locating business, discovered the Arizona estate of Roi Landi Yelverton, who had apparently died without known heirs.
Arkules' initial research led him to enter agreements with three potential heirs, who were then represented in the probate proceedings by his father, attorney Bernard Arkules.
After being informed of an heir with a superior claim, David Arkules located Dale Michael Landi, Yelverton's son, in New York.
On March 25, 1988, Landi signed an agreement in New York appointing Moorehead's company to secure his inheritance.
The agreement stipulated that Moorehead's company would retain an attorney and pay all legal fees in exchange for a 40% share of any inheritance Landi received.
Following the agreement, Bernard Arkules contacted Landi, provided him with genealogical materials, and offered legal advice regarding the estate.
Landi subsequently retained his own attorney, who notified Bernard Arkules that he was not authorized to act on Landi's behalf and that the agreement was unenforceable.

Procedural Posture:

Dale Michael Landi filed a complaint in Maricopa County Superior Court, a trial court, to rescind the heir locator agreement and have it declared void and unenforceable.
Landi filed three motions for summary judgment, arguing the agreement was unenforceable for multiple reasons.
The superior court granted summary judgment for Landi, declaring the agreement rescinded and unenforceable because it violated Arizona public policy, involved an excessive fee, and was performed by unlicensed private investigators.
The defendants filed a motion for a new trial, which the superior court denied.
The defendants then filed separate appeals to the Arizona Court of Appeals from the entry of judgment and the denial of their motion for a new trial.

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Issue:

Is an heir finder agreement that provides for a forty percent contingency fee unenforceable as against public policy when the heir finder is not a licensed private investigator in the state and the agreement involves the improper solicitation of an attorney?

Opinions:

Majority - Judge Lankford

Yes, the heir finder agreement is unenforceable as contrary to public policy. The court found the agreement void on three independent grounds. First, the agreement constituted improper solicitation of a client for an attorney, as the record showed a pattern of Moorehead and David Arkules funneling cases to their father, Bernard Arkules, which violates attorney ethics rules. Second, the heir-finding activities constituted private investigation under Arizona law, and performing these services without the required state license renders the contract for such services illegal. Third, the forty percent contingency fee, while not directly prohibited by a statute covering probate, violates the public policy expressed in analogous Arizona statutes that cap fees at thirty percent for recovering escheated or abandoned property. Finally, because the contract is illegal and void, the defendants are not entitled to equitable relief under a theory of quantum meruit, as courts will not aid a party who has performed services under an illegal contract.

Analysis:

This decision solidifies that heir-finding services fall under the regulatory scope of private investigator licensing statutes in Arizona, treating it as a professional, regulated activity rather than mere genealogical research. The ruling demonstrates the court's willingness to invalidate contracts that violate public policy on multiple grounds, including those derived from attorney ethics rules and analogous statutes. By firmly denying any recovery in quantum meruit, the court reinforces the strong legal principle that parties to an illegal contract will receive no assistance from the courts, thereby deterring conduct that contravenes public policy and licensing laws. This case serves as a significant precedent for the enforceability of contracts in quasi-professional fields that intersect with licensed activities.

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