Peter v. Gibson

• Citation: 336 S.W.3d 2
• Decision Date: 16 December 2010
• Docket Number: No. 2010–SC–000155–MR.,2010–SC–000155–MR.
• Parties: Emil PETER, III, Appellant,v.Hon. Susan Schultz GIBSON, Judge, Jefferson Circuit Court, Appellees.andEmil Peter IV, Real Party in Interest.
• Court: United States State Supreme Court (Kentucky)

336 S.W.3d 2

Emil PETER, III, Appellant,

v.Hon. Susan Schultz GIBSON, Judge, Jefferson Circuit Court, Appellees.andEmil Peter IV, Real Party in Interest.

No. 2010–SC–000155–MR.

Supreme Court of Kentucky.

Dec. 16, 2010.

Harry Bernard O'Donnell IV, Louisville, KY, Counsel for Appellant.Honorable Susan Schultz Gibson, Judge, Jefferson Circuit Court, Louisville, KY, for Appellee.Matthew Faurest Coogle, Ackerson & Yann, PLLC, Louisville, KY, Counsel for Appellee and Real Party in Interest, Emil Peter IV.Opinion of the Court by Justice VENTERS.

Appellant, Emil Peter III, seeks a writ of prohibition against the Jefferson Circuit Court to bar an accounting of funds held by him for the benefit of Appellee and Real Party in Interest, Emil Peter IV. Appellant argues that since the funds in question were part of a bequest made pursuant to the Uniform Transfers to Minors Act (hereinafter “UTMA”), the Jefferson Circuit Court does not have subject matter jurisdiction over this matter. The Court of Appeals denied the writ of prohibition finding that the General Assembly's grant of original jurisdiction to the district court over matters involving the UTMA did not extend to parties, like Appellee, who are no longer minors. For the reasons set forth below, we affirm the Court of Appeals.

FACTUAL AND PROCEDURAL BACKGROUND

In 1983, Appellee's grandmother, Decedent, Allyne M. Peter, bequeathed to Appellee all of the benefits due her estate from her employee pension plan. Since Appellee at the time was a minor, pursuant to the UTMA, Appellant, who was the Decedent's son and Appellee's father, was named custodian of the custodial property. The initial amount of the bequest totaled $86,409.46.

According to an affidavit filed by Appellee in the underlying case, he only had a general understanding that his grandmother had left him some money. Appellant provided Appellee with very little information regarding the bequest, but did give Appellee several distributions from the custodial property which were described to Appellee as “gifts.” When Appellee turned eighteen, Appellant failed to give the remaining custodial property to Appellee as was required by KRS 385.202(1). Appellee eventually learned of the size of the initial bequest through a review of public records. Surprised by the size of the bequest in comparison to the small distributions he received, Appellee brought an accounting action against Appellant in Jefferson Circuit Court.

The circuit court initially dismissed the accounting action for lack of subject-matter jurisdiction, due to the UTMA's exclusive grant of jurisdiction to district court. However, upon Appellee's motion to amend, alter, or vacate its dismissal order, the circuit court changed its position and held that since Appellee was no longer a minor, the circuit court had subject matter jurisdiction. Appellant then sought a writ of prohibition against the Jefferson Circuit Court which was denied by the Court of Appeals. He now appeals that denial to this Court as a matter of right.

APPELLANT IS NOT ENTITLED TO A WRIT OF PROHIBITION BECAUSE THE GENERAL ASSEMBLY DID NOT GIVE JURISDICTION TO THE DISTRICT COURT OVER AN ACCOUNTING ACTION FILED BY AN ADULT

Appellant argues that he is entitled to a writ of prohibition because the district court has exclusive jurisdiction over any case dealing with the UTMA, and thus the Jefferson Circuit Court is acting outside of its jurisdiction by hearing Appellee's accounting action. We disagree.

A writ of prohibition “is an ‘extraordinary remedy’ that Kentucky courts ‘have always been cautious and conservative both in entertaining petitions for and in granting such relief.’ ” Newell Enterprises, Inc. v. Bowling, 158 S.W.3d 750, 754 (Ky.2005) (quoting Bender v. Eaton, 343 S.W.2d 799, 800 (Ky.1961)).

A writ of prohibition may be granted upon a showing that (1) the lower court is proceeding or is about to proceed outside of its jurisdiction and there is no remedy through an application to an intermediate court; or (2) that the lower court is acting or is about to act erroneously, although within its jurisdiction, and there exists no adequate remedy by appeal or otherwise and great injustice and irreparable injury will result if the petition is not granted.

Hoskins v. Maricle, 150 S.W.3d 1, 10 (Ky.2004).

Kentucky Constitution § 113(6) expressly provides that “[t]he district court shall be a court of limited jurisdiction and shall exercise original jurisdiction as may be provided by the General Assembly.” “Accordingly, in order to resolve the issue at bar, we must look to the appropriate statutes” to see what jurisdiction was granted to the district courts. McElroy v. Taylor, 977 S.W.2d 929, 931 (Ky.1998).

Clearly, the General Assembly gave district courts original jurisdiction for UTMA disputes. See KRS 385.012(5) (“ ‘Court’ means District Court.”) In Privett v. Clendenin, 52 S.W.3d 530, 532 (Ky.2001), we recognized that the General Assembly gave district courts exclusive jurisdiction to order a custodian to make an accounting under the UTMA through KRS 385.192. However, KRS 385.192 allows only the following persons “to petition the district court for an accounting” under the UTMA:

• a minor who has attained the age of 14 years;

• the minor's guardian of the person or legal representative;

• an adult member of the minor's family;

• a transferor (of the custodial property) or a transferor's legal representative.

KRS 385.012(11) defines a “minor” as “an individual who has not attained the age of eighteen (18) years.” Thus, from its plain language, KRS 385.192 applies only to minors or one petitioning for an accounting of custodial property on behalf of a minor. An accounting action under KRS 385.192 cannot therefore apply to custodial property which was (or should have been) released to an adult beneficiary per KRS 385.202(1), because the beneficiary would no longer be a minor. Our ruling in Privett does not contradict this conclusion, because in that case the beneficial owners of the custodial property were still minors, the claimant on their behalf was an adult member of their family, and the UTMA custodianship was ongoing. Privett, 52 S.W.3d at 532. Thus, in Privett the accounting action fell within the purview of KRS 385.192.

In this matter, Appellee was over twenty-nine years old when he brought this accounting action. Appellee was clearly no longer a minor, and he was entitled to have the custodial property turned over to him once he turned eighteen-years-old. KRS 385.202(1). A beneficial owner of custodial property who once was, but no longer is, “a minor” would have no more right to seek an accounting under KRS 385.192 than a person who once was, but no longer is, a legal representative or guardian of a minor. The UTMA gives no authority to the district court to order an accounting based upon a petitioner's past status. The proper court for an adult, such as Appellee, to file an accounting action like the one in this matter, is the circuit court.

In seeking the accounting here, Appellee did not invoke the provisions of KRS 385.192. Instead, he brought a conventional suit in the circuit court for an equitable accounting of the sort that has long been available in the courts of equity in this Commonwealth. See Neal v. Keel's Ex'rs, 20 Ky. 162, 4 T.B.Mon. 162 (1826):

It is true that the common law gave in certain cases an action of account.... But this antiquated action at common law has been supplanted by the more beneficial powers of a court of equity, whereby not only the production of books, and an account can be compelled, but also an answer under oath can be required, and a decree had.

See also 1A C.J.S. Accounting § 6 (2010):

The right to an equitable accounting arises generally from the defendant's possession of money or property, which, because of some particular relationship with the plaintiff, the defendant is obliged to surrender. Accounting has also been termed a species of disclosure, predicated upon the plaintiffs legal inability to determine how much money, if any, is due. Therefore, an equitable accounting may be ordered where the plaintiff is unable to determine how much, if any, money is due from the defendant.

(internal citations omitted.)

The Court of Appeals opinion correctly observed that “[a]s a general rule, an accounting is an equitable remedy. Conley v. Hall, 395 S.W.2d 575, 578 (Ky.1965). Since circuit courts have general subject-matter jurisdiction over suits in equity, see Ky. Const. §§ 109 & 112(5); KRS 23A.010; Hisle v. Lexington–Fayette Urban County Government, 258 S.W.3d 422, 432 (Ky.App.2008), a request for an accounting was properly brought in circuit court.”

We also note that since Appellant failed to relinquish the custodial property to Appellee as required by KRS 385.202, a constructive trust was created. “[A] court exercising its equitable power may impress a constructive trust upon one who obtains legal title, ‘not only by fraud or by violation of confidence or of fiduciary relationship, but in any other unconscientious manner, so that he cannot equitably retain the property which really belongs to another [.]’ ” Keeney v. Keeney, 223 S.W.3d 843, 849 (Ky.App.2007) (quoting Scott v. Scott, 183 Ky. 604, 210 S.W. 175, 176 (1919)). At the minor's eighteenth birthday (or his death), the rights and remedies of the interested parties, as well as the subject matter jurisdiction of the respective courts, are governed by the law of constructive trusts, not KRS Chapter 385 (the UTMA). The remedy available is precisely the one invoked by Appellee—an equitable action in circuit court for an accounting.

Appellant argues that the language of KRS 385.192(3) gives the district court the jurisdiction to entertain an adult beneficiary's action to compel an accounting by the custodian after the expiration of the custodianship. However, as previously stated, the language of KRS 385.192 limits the accounting action to the time in which the...