Probate and Trust Law
Dawn T. Christoffersen, Esquire
Bhavik R. Patel, Esquire
Joan M. Grasso appeals a summary judgment which ruled that
her indebtedness offset her cash distributive share of a trust of which
she was a beneficiary. In re the Matter of: Bruce G. Robert QTIP Marital Trust v. Grasso, No. 93836 (Mo. App. E.D., December 28, 2010), Odenwald, P.J.
Bruce G. Robert established a QTIP Marital Trust funded with stock of
his company and named their 10 children as beneficiaries after his
wife's death. After Bruce's death, his wife sold the stock to their 10
children for non-recourse promissory notes. The stock was held by the
trust as security until the notes were paid off, and if the required
payment was not made the stock was redeemed in the amount sufficient to
make the payment. Most children made payments, but Grasso did not.
When the wife died, Grasso also had the largest outstanding balance.
The trustees decided to terminate the trust with a cash distribution to
each beneficiary, the notes forgiven, and stock released to them, all
of which took into account the amount of indebtedness. Ultimately the
distribution gave Grasso no cash. The trustees filed petition to
distribute under those terms and the nine children filed a motion for
summary judgment in support of that petition. However, Grasso filed a
cross-motion for summary judgment seeking denial of the plan. Trial
court granted the nine children's motion and Grasso filed a motion to
reconsider, which was denied. Grasso appealed.
Held: Affirmed. Grasso claims that the testator's
intent of "equal distributions", the spendthrift provision and the
non-recourse provision of the trust would not allow any offset. She
first asserts the "equal distribution" clause of the trust does not
allow her to receive nothing from the distribution. The appellate
court looks to the document and finds that the trust provides the
trustees with discretionary authority regarding the distribution. As
such, courts will ordinarily not interfere with trustees' exercise of
that discretion unless to prevent abuse. Oksner v. Jaco, 646
S.W.2d 285, 286-87 (Mo. App. E.D., 1983). Here, the trustees'
decision was in good faith and within the estate plan of Bruce Robert.
Grasso's second argument is that the spendthrift provision does not
allow her interest to be pledged as security for the loan given to
her. Here, the court applies the doctrine of equitable retainer to
offset her share where she is indebted. See In re Lietman's Estate,
50 S.W. 307, 309 (Mo., 1899); Restatement (Second) of Trusts, Section
255. The Missouri Uniform Trust Code allows loans out of trust property
to beneficiaries that are fair and reasonable which give the trustee a
lien on future disbursements for repayment.. Sections 456.1-105.1,
456.8-816(18), RSMo. Additionally, security for the loan "may consist
of a charge on the beneficiary's interest in the trust." Section
456.8-816 (18 and 19) Comment, RSMo. The Comment does not address a
spendthrift provision in the trust document, but the Restatement allows
it. Grasso's final argument was that of valuation and the court
denies it as they find Grasso had admitted her balance and value on the
Eldon Bugg appeals a judgment of res judicata against him. Bugg v. Rutter, No. 72292 (Mo. App. W.D., December 14, 2010), Mitchell, P.J.
Respondent James Rutter, as conservator for Laura Downs, filed for
discovery of assets against Eldon Bugg, as co-trustee and beneficiary
of a trust. The court found Bugg was wrongfully in possession of a
note and gave judgment accordingly. Bugg appealed and lost. Downs
died, so the conservatorship ended and had no ability to enforce
judgment. The estate, through personal representative Rutter and the
Estate's attorney Jean Goldstein, then filed the same suit against Bugg
and judgment was rendered. Bugg appealed, lost, and fees were awarded
to the estate. The estate filed a motion for contempt, because Bugg
did not pay the money owed, and the court issued a judgment for civil
contempt and an order of commitment. Bugg appealed, and the judgment
was reversed because the court lacked authority. Bugg then filed a
complaint in Federal District Court against Respondents for federal
civil rights conspiracy, state common law torts, and other state law
actions. The Respondents submitted a motion to dismiss.The district
court granted it, dismissing the case "in its entirety." Bugg then
filed this case in the state circuit court against Respondents for
claims similar to those raised in the federal case. Respondents filed a
motion to dismiss stating the claims are barred by res judicata and the circuit court granted that motion. Bugg now appeals.
Held: Affirmed. Federal res judicata law
is applied in deciding whether a federal judgment precludes a
plaintiff from recovering under a petition filed in the state courts of
Missouri. Brown v. Simmons, 270 S.W.3d 508, 512-13 (Mo. App. S.D., 2008). "Res judicata applies to prevent repetitive suits involving the same cause of action." Ripplin Shoals Loan Co, LLC v. Army Corps of Eng'rs,
440 F.3d 1038, 1042 (8th Cir. 2006). The doctrine will bar a suit if
the prior judgment (1) was entered by a court of competent
jurisdiction; (2) disposed of the same causes of action involved in the
second suit; (3) involved the same parties (or those in privity with
them) who are involved in the second suit; and (4) constituted a final
judgment on the merits. Id. The plaintiff also must have had a full and fair opportunity to litigate the issues in the prior action. Brown, 270 S.W.3d at 513. Additionally, claim preclusion will depend on whether the prior court ruled on substance or procedure. Semtek Int'l, Inc. v. Lockheed Martin Corp.,
531 U.S. 497, 502 (2001). Here, all elements were found and Bugg was
given a full and fair opportunity to litigate and could have appealed
the district court which he forwent. Thus, res judicata applies.
Joyce Stabler appeals a ruling that she has no standing to
ask for an accounting by trustees of a revocable trust established by
her late husband for health, maintenance, comfort and support. Stabler v. Stabler, No. 94411 (Mo. App. E.D., November 30, 2010), Baker, J.
Appellant filed a petition against Respondent as trustees and
personal representatives claiming she was a beneficiary and that
trustees failed to provide her with an accounting. Additionally, she
claimed mismanagement of trust assets, engagement in self-dealing, and
unjust enrichment because they benefited from assets that should have
been expended by the trust for the health, maintenance, comfort and
support for the decedent. Respondents filed no answer, but filed two
motions to dismiss based on lack of standing and failure to state a
cause of action against them in their capacity as personal
representatives. The trial court granted both motions on lack of
standing. The Appellant now appeals.
Held: Affirmed in part, reversed in part, and remanded.
Appellant's first point was that the court considered evidence outside
the pleadings. This was denied as the court found nothing to show the
trial judge considered anything not permitted by law. Appellant's
second point, that she has standing,was confirmed and the trial court
reversed. "To have standing to sue, a plaintiff must have an
interest.which, if valid, gives plaintiff a right to relief." Switzer v. Hart,
957 S.W.2d 512, 514 (Mo. App. E.D., 1997). Where a plaintiff alleges
standing as a beneficiary, it can be dismissed only if she is "unable
to prove any set of facts which would make [her] a beneficiary." Id. A summary judgment mode of analysis is used to find standing. Id.
Although Respondents claim the trust shows Appellant is not a
beneficiary, they failed to include the trust document in the
pleadings. Evidence not included within the pleadings is not
considered in determining whether a plaintiff lacked standing. Breeden v. Hueser,
273 S.W.3d 1, 15 (Mo. App., 2008). As such, the trial court's
dismissal for lack of standing was in error. However, the trial court's
dismissal of Respondents as personal representatives is upheld as the
petition does not state any claim against them in that capacity.
Linda Pence, former wife by divorce of decedent, appeals a
ruling that Section 474.420 revoked provisions of her joint will with
decedent, due to the will having been written prior to the divorce,
despite including language such as "not to revoke". In the Estate of: Ray L. Pence, deceased. Pence v. Haddock, as Personal Representative of the Estate of Ray L. Pence, No. 30378 (Mo. App. S.D., November 30, 2010), Francis, J.
Linda Pence, following the death of her ex-husband, filed for an
"Application for Probate of Will" and "Application for Letters
Testamentary" of a will she and decedent entered into jointly while
married. Sheila Gay Haddock, decedent's daughter by another marriage,
filed to dismiss these applications because Linda had no standing.
Linda claimed that Section 474.155, along with the terms of the will
which states the parties are "not to revoke it", show that Section
474.420, calling for the revocation of all provisions in a will toward a
divorced spouse, is inapplicable. The probate division ordered that
all provisions were revoked by operation of Section 474.420 and
sustained Sheila's motion to dismiss. Linda now appeals.
Held: Affirmed. "In construing a statute, the Court
must presume the legislature was aware of the state of the law at the
time of its enactment." Nicolai v. City of St. Louis, 762
S.W.2d 423, 426 (Mo. banc, 1988). As Section 474.420 became effective
in 1956 and Section 474.155 in 1981, the court assumes the legislature
was aware of the former when enacting the latter. An exception could
have been added, but it was not. Accordingly, the two sections are not
John Goulding appeals a judgment denying his claims that
Bank of America, as trustee, failed to distribute proceeds of the trust
according to its terms. Goulding v. Bank of America, N.A., No. 71446 (Mo. App. W.D., November 30, 2010), Hardwick, J.
John P. Goulding filed a breach of trust action against Bank of
America claiming they, as trustee, failed to distribute the trust
according its terms. After the Bank filed a cross motion claiming it
properly distributed the proceeds, the circuit court denied the Bank's
motion and effectively awarded John his claim. John then filed an
amended petition claiming failed distribution as to another portion of
the trust and moved for partial summary judgment as to that portion.
The Bank also moved for partial summary judgment. The circuit court
held the Bank had properly distributed the second portion. John then
filed a motion for reconsideration. The court denied that Motion and
entered Judgment. John now appeals, claiming the circuit court failed
to interpret the trust properly, specifically the words "accrue,"
"former share" and "respective former share."
Held: Affirmed. The settlor's intent is controlling. Blue Ridge Bank and Trust Co. v. McFall,
207 S.W.3d 149, 156 (Mo. App., 2006). Such intent is determined from
the trust agreement as a whole, giving words their usual, ordinary and
natural meaning unless the agreement indicates another meaning should
be given. Trustees of Green Trails Estate Subdivision v. Marble, 80 S.W.3d 841,
846 (Mo. App., 2002). Here, based on the trust agreement, the circuit
court correctly interpreted the meaning of the words.
Sandra Lee Kile appealed denial of a motion to void
appointment and temporary appointment of guardian and conservatorship,
neither of which continued to exist at the time of the motion. In the matter of: Sandra Lee Kile. Kile v. McGuire, Public Administrator of Dade County, Missouri, No. 30168 (Mo. App. S.D., November 18, 2010), Francis, J.
In 2006, Respondent filed a "Petition for Appointment of a Guardian
of the Person and Conservator of the Estate" of Sandra Lee Kile in the
probate division of Dade County, as well an "Application for
Appointment of Temporary Guardian and Temporary Conservator." The
probate division signed the orders appointing Respondent guardian and
conservator over Appellant. In 2008, a petition for restoration was
filed by Appellant and granted with regard to the guardianship, but the
conservatorship was left in place. On June 15, 2009, a petition to
approve final settlement and a final settlement were filed. Such was
approved on October 8, 2009. On October 14, 2009, Appellant filed a
motion to void the 2006 temporary appointment and appointment of the
Respondent as guardian and conservator. The motion was denied and
Appellant appealed. Respondent seeks to dismiss as moot and untimely.
Held: Dismissed as moot and lacking in case or controversy. "A threshold issue in any appellate review of a controversy is the mootness of the controversy." Armstrong v. Elmore,
990 S.W.2d 62, 64 (Mo. App., 1999). A cause of action is moot "when
the judgment presented for decision seeks a judgment upon some matter
which, if the judgment was rendered, would not have any practical effect
upon any then existing controversy." Shelton v. Farr, 996
S.W.2d 541, 543 (Mo. App., 1992). Appellant is challenging a
guardianship/conservatorship that no longer exists and, thus, the
appellate court's decision is unnecessary.
Nancy Almond appeals judgment declaring estate taxes to be
paid out of the residuary estate and claims appellate jurisdiction
under Section472.160.1. In the Matter of the Estate of M. Stanley Ginn, Deceased; Almond v. Almond, No. 71554 (Mo. App. W.D., November 9, 2010), Welsh, P.J.
Nancy Almond filed a six count petition for will, construction,
asking the court in one count to determine who should pay the estate
taxes. The trial court granted Respondents' motion for judgment on the
pleadings and found that the taxes were to be paid from the residuary
estate. Nancy Almond appealed this judgment, claiming jurisdiction
under Section 472.160.1. The Respondents filed a motion to dismiss for
lack of jurisdiction, but withdrew it at oral arguments.
Held: Dismissed for lack of jurisdiction.
Although the Respondents withdrew their motion, the court has a duty
to determine whether it has jurisdiction to entertain the appeal. Couch v. W. Sur. (In the Estate of Couch),
920 S.W.2d 165, 167 (Mo. App., 1996). Generally, orders from the
probate division of the circuit court are "interlocutory and not
subject to appeal until final disposition of the matters before the
court." Standley v. Standley, 204 S.W.3d 745, 748 (Mo. App., 2006). However, Section 472.160.1 creates an expedited right to permissively appeal. In the Estate of Straszynski,
265 S.W.3d 394, 395 (Mo. App., 2008). Nancy Almond claims the
circuit court's refusal to apply equitable apportionment falls into
Section 472.160.1 (3) and (13) which allows appeal "on all
apportionment among creditors, legatees or distributees" and denial of
such apportionment. However, the action before the circuit court was
not an apportionment case, but a will construction and the circuit court
merely found the testator's intent to have estate taxes paid from the
residuary. Therefore, the matter is not set forth in Section 472.160
and as this was the only count determined, not all issues were fully
determined. Additionally, for the circuit court to certify appeal of a
judgment resolving fewer than all claims, the judgment must expressly
state "no just reason for delay." Rule 74.01(b). Here, no such
designation was made. As the judgment was not final and no exception
was present, dismissal for lack of jurisdiction resulted.
Judy Johnson appeals from a judgment denying her unjust enrichment claim against Wesley H. McFarlin's estate. Johnson
v. Estate of Wesley H. McFarlin, Deceased, by and through its duly
appointed Personal Representative, Rebecca J. Lindstrom, No. 30149 (Mo. App. S.D., October 7, 2010), Bates, J.
Johnson filed suit against McFarlin's estate,
claiming unjust enrichment because she had lived with McFarlin and
claimed to have helped purchase the major assets in his estate, such
that she should have part ownership in them. The trial court found
against Johnson because she failed to meet her burden of proving she
had contributed the funds used to buy the property.
Held: Affirmed. "To establish the elements of
an unjust enrichment claim, the plaintiff must prove that (1)
[plaintiff] conferred a benefit on the defendant; (2) the defendant
appreciated the benefit; and (3) the defendant accepted and retained
the benefit under inequitable and/or unjust circumstances." Howard v. Turnbull, 316 S.W.3d 431, 436 (Mo. App., 2010). The claimant has the burden of proving unjust enrichment. AnchorCentre Partners, Ltd. v. Mercantile Bank, N.A.,803
S.W.2d 23, 32-33 (Mo. banc, 1991). Here, Johnson does not satisfy that
burden and did not give the trial court enough evidentiary bases to
conclude that she conferred a benefit on McFarlin. Therefore, the
trial court is affirmed.
The Estate of Jeffrey A. Houska seeks to make a preliminary
writ of prohibition permanent to prevent the trial court from
reinstating a claim barred by the statutes of limitation after James T.
Panagos, LLC claimed the statute violated he and his companies due
process rights. State ex rel. Houska, Personal Representative of the Estate of Jeffrey A. Houska, Deceased v. The Honorable Ray Dickhaner, No. 90701 (Mo. banc, October 5, 2010), Price, C.J.
James T. Panagos, LLC brought a claim against Jeffrey A. Houska's
estate for payment of completed work over a year after the estate
published letters of administration. The trial court dismissed under
Sections 473.444 and 473.360. Panagos then filed a motion for
rehearing to determine if Section 473.444 violated their due process
rights. The trial court reinstated the claim under Tulsa ProfessionalCollection Services, Inc. v. Pope,
458 U.S. 478 (1988). The estate now seeks an order prohibiting the
trial court from reinstating Panagos' original claim. A preliminary
writ of prohibition was issued.
Held: Preliminary Writ of Prohibition made Permanent.
The Due Process Clause of the Fourteenth Amendment protects the
opportunity to participate of interested parties to an action from
deprivation by state action. Panagos argues the statute of
limitations violates due process because it does not require actual
notice to decedent's creditors before it can begin. The trial court
cited Pope and, here, the Court distinguishes Pope by
showing the Oklahoma non-claim statute in that case required intimate
involvement by the trial court to implement. Here, the statute is
self-executing and that Supreme Court in Pope explained that with a self executing statute of limitation, the state has no role other than the enactment of the statute. Pope,
458 U.S. at 486. Section 473.444 "operates independently of any
notice, judicial action or jurisdiction of the probate division to bar
claims" Hatfield v. McCluney, 893 S.W.2d 822, 827 (Mo. banc,
1995). As there is little to no state action, Panagos' due process
claim fails. This holding is consistent with other jurisdictions.
Kimberly Lynn Nichols and other trust beneficiaries appeal
the trial court's judgment on their petition for partition and Joseph
Donaldson's counterclaim for quantum meruit for improvements of trust property. Nichols, v. Donaldson, Individually and as Trustee of the Walter R. Donaldson Revocable Trust, No. 94481 (Mo. App. E.D., September 28, 2010), Sullivan, P.J.
Appellants, as 50/50 beneficiaries with Respondent, filed suit
against Respondent, who is trustee, for failing to distribute their 50%
interest in the trust real estate following decedent grantor's death.
They sought partition of the real estate in kind, an accounting, and
removal of the Respondent as trustee. Respondent counterclaimed that
he was due quantum meruit his expenses in servicing and
improving the land. The trial court ordered the trust property be
divided in kind, that Respondent was owed for some expenses he incurred
in taking care of the property, that Appellants were due their portion
of the rental value plus interest and that Respondent, because of his
breach of trustee duties, must pay Appellant's attorney fees.
Appellants appeal the trial court's accounting claiming that the trial
court awarded Respondent 100% credit for his expenditures to improve
the land but it should be only 50%.
Held: Reversed and remanded. The net income for the property is gross income less the operating expenses. Schindler v. Pepple,
158 S.W.3d 784, 786 (Mo. App. E.D., 2005). Here, the trial court had
done this incorrectly. The appellate court found gross income by
including rents and then subtracting the expenses incurred by
Respondent to get net income. It then split the net income between the
parties. The case was remanded to determine the new cost of attorney
fees including the appeal and the new interest charge.
The Missouri Bar Courts Bulletin, 11-Mar