841 F.2d 635 (5th Cir. 1988), 87-3615, Kurzweg v. Marple
|Citation:||841 F.2d 635|
|Party Name:||Frank T. KURZWEG and Frank Turner Kurzweg, Jr., Plaintiffs-Appellants, v. Gretchen E. Kurzweg MARPLE and First National Bank of Commerce, Defendants- Appellees.|
|Case Date:||April 07, 1988|
|Court:||United States Courts of Appeals, Court of Appeals for the Fifth Circuit|
Joseph S. Russo, Jefferson, La., for plaintiffs-appellants.
Steven W. Usdin, Susan G. Talley, Marjorie Niset Neufelf, New Orleans, La., for First Nat. Bank of Commerce.
Clyde P. Martin, Jr., Thomas M. Gereighty, New Orleans, La., for Gretchen E. Kurzweg Marple.
Appeal from the United States District Court for the Eastern District of Louisiana.
Before RUBIN, KING, and WILLIAMS, Circuit Judges.
ALVIN B. RUBIN, Circuit Judge:
Family disputes about property generate long-lived litigation frequently requiring more than a single legal battle. This is the second diversity-based lawsuit between a father and his son, on the one hand, and their daughter and sister on the other, involving property previously donated to the daughter by her father and a trust created for the daughter by her grandfather. The first suit was compromised and ended with a consent decree. Contending that their daughter-sister failed to carry out their agreement, the father and son now sue her and a bank that was trustee of a trust held for her benefit. The district court imposed a merciful armistice by holding the claims against the family member barred by res judicata and dismissing the claims against the bank for failure to state a claim for which relief could be granted. We affirm that judgment, relying in part on somewhat different grounds, and impose sanctions against the father and son for appealing the district court's judgment dismissing the trustee bank, because the appeal of that part of the judgment was frivolous, presenting no arguable basis for appeal.
In 1983, Gretchen E. Kurzweg, who was then 22 years old, sued her father, Dr. Frank T. Kurzweg, and others, contending that he had secreted and converted funds belonging to her. She sought an accounting for the assets of the Frank T. Kurzweg Inter Vivos Trust, a trust established for her benefit by her father shortly after her birth. She also sought an accounting from her father for his actions as a co-trustee of a testamentary trust that had been created for her benefit by Victor J. Kurzweg, Dr. Kurzweg's father and Gretchen's grandfather, and for income from that trust that she said her father had converted. The assets of the Victor T. Kurzweg Trust included stock in Consolidated Companies, Inc., and several other family-held corporations, and Gretchen alleged that her father had received the dividends from these stocks. She also sought an accounting for other funds and "a return of all funds and assets held or in possession of, by defendant, belonging to complainant, [and] a return to complainant of all personal property belonging to her."
A pretrial conference was held on October 18, 1984. The parties agreed that the Victor Kurzweg Trust provided that Gretchen was to begin receiving income from that trust at age 21, which she had attained on December 5, 1981, and was at the same age to receive all of the corpus and income of the Frank Kurzweg Inter Vivos Trust. They also stipulated that in September, 1982, Gretchen had executed a one-page document, which was witnessed but not notarized, that purported to transfer all of her assets, including her rights to the Victor Kurzweg Trust and to the assets of the terminated Frank Kurzweg Inter Vivos Trust, to her father and her brother, F. Turner Kurzweg, Jr. Gretchen however, disputed the validity of this transfer, claiming that she had signed it under duress from her father. Gretchen also disputed the validity of a transfer made four months later, in 1983, in which Dr. Kurzweg, using a 1977 power of attorney, had donated all of her assets to a new inter vivos trust for Gretchen's benefit, naming himself and Kurzweg, Jr., as trustees.
Gretchen argued that all of the income from the Victor Kurzweg Trust and all of the assets of the Frank Kurzweg Trust had been received by Dr. Kurzweg but that he had never exercised any incidents of ownership over the assets or formally accepted their donation to him and that the donation was therefore voidable. Finally, she asserted that she owned real estate that was not mentioned in the transfer to the inter
vivos trust created in January 1983, contending that her father controlled and claimed ownership of this property.
Dr. Kurzweg and Kurzweg, Jr., asserted that the transfer to them of Gretchen's property and the later transfer to the 1983 inter vivos trust were valid and that they owed no accounting to Gretchen. Aside from the issues concerning the validity of the 1982 transfer and the creation of the 1983 inter vivos trust, the contested issues were whether either Dr. Kurzweg or Kurzweg, Jr., was in possession of property belonging to Gretchen and whether either owed Gretchen an accounting.
Before the pretrial conference was held, a firm of accountants retained by Dr. Kurzweg and Kurzweg, Jr., had prepared a statement of Gretchen's assets and liabilities as of December 31, 1982. This included the assets of the Victor J. Kurzweg Trust. Among the liabilities the statement listed, "Note Payable--Other $47,222.22." Another firm, retained by Gretchen, had prepared a financial statement of her assets and liabilities as of December 31, 1983, showing property in four categories: (1) Not in dispute--in control of Gretchen Kurzweg; (2) Ostensibly in control of G. Kurzweg but in dispute; (3) In registry of court--ownership in dispute; and (4) In control of Dr. Frank T. Kurzweg--ownership in dispute. This statement also showed as a liability of Gretchen "Notes Payable Dr. Frank T. Kurzweg $47,222." Both statements were attached to the pretrial order.
A week after the pretrial conference, on October 25, 1984, the lawyers for the parties signed a letter that set forth the terms of a compromise settlement. The parties thereafter submitted jointly agreed Findings of Fact and Conclusions of Law to the district court. Adopted verbatim by the court on December 21, 1984, these recited that the September 1982 transfer to the male Kurzwegs was invalid, the 1983 inter vivos trust was null and void, and "as a matter of law, the parties hereto are entitled to a partition of the property in controversy in this litigation, including all real property as well as all other properties, and the Court so orders a partition of all properties in controversy herein."
On the same day, the district court signed a judgment that had been prepared by the parties. It placed Gretchen in possession of described properties and recognized her as "the income beneficiary of the Victor Kurzweg Trust," ordering Dr. Kurzweg to "withdraw" as a trustee of that trust. It also ordered that Dr. Kurzweg and Kurzweg, Jr., pay $531,455 to Gretchen and that out of these funds, Gretchen create a spendthrift trust of at least $500,000, to terminate on her 35th birthday. It placed Dr. Kurzweg in possession of a number of stocks, including various certificates of Consolidated Companies, Inc., and placed each of the parties in possession of described real estate and minerals. While the decree recognized that Gretchen was a beneficiary of the Victor Kurzweg Trust, it said nothing about the assets of that trust, nor did it mention any of the debts between the parties.
Peace did not long abide. In March 1987, Dr. Kurzweg and his son sued Gretchen (now Gretchen Marple) and the First National Bank of Commerce, a New Orleans bank that served as co-trustee of the Victor Kurzweg Trust and held its funds. The father-and-son's complaint invokes Rule 60(b) as well as diversity jurisdiction, refers to the prior compromise, and then asserts that, in addition to the matters agreed to in the consent decree and the compromise letter, "there was an oral agreement between the parties that all of the real property and real rights owned by the Victor Kurzweg Trust for the benefit of Gretchen E. Kurzweg Marple would be purchased by Dr. Frank Kurzweg at the then fair market value."
The complaint also recites that Gretchen has refused to perform her obligation with respect to certain stocks and has "failed to respond to plaintiffs' offers to purchase all of Consolidated Companies, Inc., stock held in the Victor Kurzweg Trust for her benefit, after plaintiffs offered to pay the fair market value of said stock." It also asserts that "she failed to acquire said stock from the Victor Kurzweg Trust so that
said agreement could be complied with...
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