In re Trust of Morris Bresel, 040516 NECA, A-14-922
|Opinion Judge:||MOORE, JUDGE.|
|Party Name:||In re Trust of Morris Bresel. v. Candee Mack, appellant, and Amanda Mack Gurock, appellee and cross-appellant. Marti Jo Fry, appellee and cross-appellee,|
|Attorney:||David J. Lanphier, of Broom, Clarkson, Lanphier & Yamamoto, for appellant. Edward D. Hotz and Emily L. Jung, of Pansing, Hogan, Ernst & Bachman, L.L.P., for appellee Marti Jo Fry. James Polack, P.C., L.L.O., for appellee Amanda Mack Gurock.|
|Judge Panel:||Moore, Chief Judge, and Inbody and Bishop, Judges.|
|Case Date:||April 05, 2016|
|Court:||Court of Appeals of Nebraska|
NOT DESIGNATED FOR PERMANENT PUBLICATION
Appeal from the County Court for Douglas County: Sheryl L. Lohaus, Judge.
MEMORANDUM OPINION AND JUDGMENT ON APPEAL
Marti Jo Fry (Fry) brought this action in the county court for Douglas County, seeking an accounting and removal of Candee Mack (Mack) as cotrustee of a revocable trust. Fry also sought interpretation of a provision of the trust with respect to the occupancy of certain real property by Amanda Mack Gurock (Gurock). Mack filed a counterclaim, seeking an accounting and removal of Fry as cotrustee. Gurock filed a declaratory judgment action, under the same probate case number, seeking a determination of whether Fry's petition violated a provision of the trust. The county court removed Mack as cotrustee and ordered her to account for all unauthorized distributions of trust property, to reimburse funds to the trust, and to pay attorney fees to Fry. The court also dismissed Mack's counterclaim and Gurock's claim against Fry. Mack appealed, and Gurock cross-appealed. We affirm the county court's order removing Mack as trustee, dismissing her counterclaim, and, except as modified herein, ordering her to reimburse funds to the trust. We also affirm the award of attorney fees to Fry from Mack. Finally, we dismiss Gurock's cross-appeal for lack of jurisdiction.
Morris Bresel (Bresel) and his wife, Jean Bresel (Jean), had one son, Jim Bresel (Jim), and two daughters, Mack and Fry. Gurock is Mack's daughter. Bresel established the Morris Bresel Revocable Trust (Trust) in 1985. It was amended and restated several times, most recently in 2006, 2008, and 2009. The terms of the Trust provide for Fry and Mack to serve as successor cotrustees in the event of Bresel's resignation, incapacity, or death.
After Jean died in 2001, Bresel began experiencing difficulty managing his daily affairs. In November 2006, Bresel signed a durable power of attorney appointing Mack to serve as his attorney in fact. However, she did not begin utilizing the power of attorney at that time. Mack testified that she had also been listed as a signatory for "years" on an Omaha State Bank account belonging to the Trust.
In 2007, Bresel's children became concerned with Bresel's ability to care for himself and manage his affairs independently. In particular, Mack and Jim describe entering their father's house in 2007 to find that their father had failed to keep up with cleaning in his home, allowed bills to go unpaid, and neglected his personal hygiene.
In August 2007, Mack and Fry took Bresel to Dr. Daniel Murman, a geriatric neurologist, for evaluation. Following this initial visit, Murman made a tentative diagnosis of non-Alzheimer's degenerative dementia. Murman referred Bresel for neuropsychological evaluation the following month, which yielded a diagnosis of frontotemporal dementia of mild severity. Murman testified that frontotemporal dementia is a degenerative disease that affects a person's judgment; decision-making; and control of their emotions, language, and executive cognitive function. The neuropsychologist who completed the evaluation encouraged Bresel to appoint a power of attorney for health care and finances.
In late January 2008, Bresel suffered a transient ischemic attack (TIA) and was admitted to the hospital. A TIA is similar to a temporary stroke; it is a temporary interruption in the blood supply that then resumes without permanent damage. Following the TIA, Bresel moved to an independent living apartment. By 2010, Bresel's mental state had declined considerably, and he moved into an assisted living apartment, followed by a move to a skilled care facility in September.
In August 2008, Gurock and her family moved into Bresel's home, which is the Trust Residence (Residence). Bresel, Gurock, and Gurock's husband signed a lease agreement shortly before the Gurocks moved to the Residence, providing that Gurock's family could reside in the Residence without paying rent for as long as they liked, so long as they paid certain house-related expenses. Bresel agreed to take responsibility for major house repairs and house remodels. An April 2009 amendment to the Trust provides in its "DISPOSITION OF THE TRUST PROPERTY AFTER SETTLOR'S DEATH" that the
Trustee shall allow and permit [Gurock] to occupy [the Residence] as principal place of residence for the benefit of her and her family; provided, however that while remaining on premises, without compensation to Trustee, [Gurock], shall be responsible for payment of real estate taxes, insurance premiums, and routine and orderly maintenance expenses during the period of her occupancy.
After moving into the Residence, the Gurocks sold their previous home. Because of a loss in the sale, the Gurocks used the Residence as collateral for a $20, 000 loan. Mack signed various loan documents in her capacity as attorney-in-fact for the Trust. The record shows that the loan was paid off and the mortgage released in November 2011. Gurock's husband testified that the loan was paid through automatic withdrawals from the Gurocks' checking account.
3. Trust Financial Control
Although testimony conflicts as to precisely when, at some point in late 2007 or early 2008, Mack began overseeing her father's financial affairs, including writing checks from the Trust checking account. Mack continued writing checks for Bresel throughout 2008 and 2009. Although she held power of attorney and was a signatory on the Trust checking account, Mack ordinarily signed Bresel's name when she wrote checks from the Trust account. Over this time period, several large checks were written to Mack and Gurock from the Trust checking account. We have set forth the details of additional transactions involving trust property as necessary to the resolution of this appeal in the analysis section below.
Beginning in March 2009, Mack began paying herself a monthly fee for handling Bresel's financial affairs. According to Mack, she was to be paid $1, 500 per month and checks written for larger amounts were "back paid from the year before" when Bresel moved into independent living and Mack "started taking care of him." Mack testified that this unwritten arrangement was based on conversation between herself, her father, and his attorney. Mack did not report this income on her tax returns or discuss the arrangement with Fry. Between March 2009 and December 2009, Mack paid herself fees totaling $31, 000 from the Trust checking account.
4. Fry's Investigation
In February 2010, Fry, who lives in Kansas, visited Bresel and drove him on various errands including a stop at the bank. While at the bank with Bresel, Fry learned that checks totaling approximately $13, 000 had been written from the Trust checking account to Mack and Gurock in a 3-month period. Fry became concerned and began investigating whether Mack had been "taking advantage of [Bresel]." Bresel signed a power of attorney adding Fry as an attorney in fact in February. Utilizing the power of attorney, Fry began compiling lists of transactions from the Trust checking account that she deemed suspicious because they benefitted Mack or Mack's family.
In April 2010, Fry obtained a statement from Dr. Scott Prescher, Bresel's primary care doctor, which stated:
To whom it may concern:
[Bresel] has been diagnosed with Alzhiemers [sic], Dementia and Pick's disease. He is not able to make rational decisions anymore. Please be advised so his daughters, being Powers of Attorney, can make his financial and other decisions in his best interest.
During a subsequent meeting with Bresel's attorney and Mack, Fry saw a copy of the Trust agreement and first learned of the provisions with respect to the Residence. In November 2010, Fry sent an email to Bresel's care facility, stating that she was "co-trustee and co-POA" for her father and did not give permission to use his funds on anything other than his own personal use and care.
Fry's investigation of Mack's actions as cotrustee included requests for supporting documentation for certain reimbursements to Mack from the Trust checking account. Mack testified that she was unable to find the invoice relating to a $5, 000 reimbursement to her when Fry asked for it, so she "tried to reenact it or recreate it, " although she "found the correct one and submitted it" prior to her deposition. Mack agreed that she had prepared a bill for a little over $10, 000 to justify the $5, 000 reimbursement. Mack altered the amount charged on another bill "to re-create what I had spent, " because she could not find an invoice for "some other stuff done at the house." Mack subsequently located the bill for this other work done at the Residence. Mack fabricated another invoice to justify reimbursement for work done at the Residence because she "didn't believe [she] needed to keep a copy of the [original] invoice." Mack subsequently found the original invoice for this work as well. She testified similarly with respect to yet another fabricated invoice but also agreed that the purpose of fabricating that invoice was "[p]robably" to mislead Fry. Mack...
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