Bryan v. Chytil
| Citation | 2021 Ohio 4082 |
| Decision Date | 10 November 2021 |
| Docket Number | 20CA3732,20CA3723,20CA3726,20CA3725 |
| Parties | GENE BRYAN, ET AL., Plaintiffs-Appellees, v. SCOTT CHYTIL, ET AL., Defendants-Appellants. |
| Court | United States Court of Appeals (Ohio) |
CIVIL APPEAL FROM COMMON PLEAS COURT DATE JOURNALIZED:11-10-21
James R. Kingsley, Circleville, Ohio, for appellant Eric Thompson.
Mark C. Eppley and Andrew W. Green, Cincinnati, Ohio, for appellant Jeffrey Thompson.
Clifford N. Bugg, Chillicothe, Ohio, and James K. Cutright Chillicothe, Ohio, for appellees.
DECISION AND JUDGMENT ENTRY
{¶1} This is a consolidated appeal from Ross County Common Pleas Court, Probate Division, judgments that (1) determined Gene Bryan and Carolyn Bryan, plaintiffs below and appellees herein (trustees), did not breach any fiduciary duties while acting as trustees of the Dyer Family Trust dated July 11 2011, also known as the Charles Dyer Revocable Living Trust dated July 11, 2011; (2) dismissed the counterclaims, except the counterclaim for an accounting, filed by Eric Thompson and Jeffrey Thompson, defendants below and appellants herein; (3) granted attorney Phillip King's motion for attorney's fees; and (4) overruled Eric's exceptions to the trustees' final accounting.
{¶2} For ease of reference, we set forth the assignments of error under the discussion of each case.
{¶3} This appeal arises from a dispute concerning the administration, distribution, and termination of the Dyer Family Trust. Charles (Pete) Dyer and his wife, Lela accumulated a sizable estate during their lifetimes. Among other assets, Pete and Lela owned a unique parcel of real estate located at 729 Adena Road in Chillicothe. The Adena Road property abuts Adena Mansion State Park and totals approximately 29 acres that contains a single-family residence, a five-acre lake, and acres of uninhabited land.
{¶4} In early June 2011, Pete visited attorney James K. Cutright. Pete informed Cutright that Pete, who was in his mid-90s, had been diagnosed with a fatal aortic aneurysm. Pete wanted to create a trust to provide for Lela upon Pete's death. Pete indicated that Lela had begun to show signs of dementia, and Pete "wanted to make sure that she was taken [care] of for the rest of her life and basically be able to stay on the Adena Road property."
{¶5} Pete also advised Cutright that Pete's and Lela's estates were valued between $6 and $7 million. The largest assets, according to Pete, were a Janney Montgomery account and the Adena Road property. Pete informed Cutright that the Adena Road property was worth approximately $2 million.
{¶6} Cutright prepared Pete's trust and, on July 11, 2011, Pete executed the trust agreement. The trust named Pete as the trustee and Gene Bryan (Pete's nephew) and Carolyn Bryan (Gene's wife) as successor trustees.
{¶7} The trust directed that after Pete's death, the trustees "may * * * pay to or expend for the benefit of [Lela] such part or all of the principal of [the trust funds] as she, in her sole discretion, shall deem necessary or desirable for the comfortable maintenance, care and support of my wife in accordance with her customary manner of living * * *."[1] {¶8} Pete's trust further stated that, upon Lela's death, the trustees "shall distribute all remaining trust assets after the payment of taxes and administrative fees * * * to my grandchildren, Scott Chytil, Julia Chytil, Brett Chytil, Randy Thompson, Eric Thompson, and Jeffrey Thompson, in equal shares."
{¶9} The trust also specified that the trustees would be entitled to compensation. The trust recited that the trustees "shall be entitled to receive compensation for ordinary services hereunder equal to one percent (1%) of corpus and income held in trust per year." The trust continued to state that "in the event that the trust is terminated within a fiscal year, the compensation shall not be prorated or abated, and the full amount shall be payable as such compensation." The trust additionally indicated that the trustee "shall also be entitled to receive reasonable compensation for any extraordinary services requested or required." The trust directed that the trustee's "compensation shall be charged to and deducted from income and/or principal as the Trustee may deem appropriate and shall be payable at such times as she may determine."
{¶10} Pete died five days after he executed the trust.
{¶11} Shortly after Pete's death, the trustees consulted with Cutright regarding the trust administration. Upon Cutright's advice, the trustees hired Henry Stanley to appraise the real property and Stanley appraised 729 Adena Road at $1.7 million.
{¶12} After Stanley's appraisals, Cutright and the trustees listed all of the trust assets that included (1) eleven parcels of real estate with a total value of $2, 025, 000, (2) personal property valued at $165, 200, (3) various bank accounts and certificates of deposit valued at $1, 352, 068.01, and (4) a Janney Montgomery account valued at $2, 312, 490.02. Of the eleven parcels of real estate, the Adena Road property had the highest value-$1.7 million. In total, Cutright and the trustees determined a trust value of $5, 854, 758.03.
{¶13} One of the properties, valued at $45, 000 and located at 3693 State Route 207, was erroneously included because Pete and Lela had not transferred that property to the trust. Instead, they intended to give the property to their son, Larry. On August 16, 2011, after Pete's death, Lela deeded the property to Larry. Thus, the trust's real-estate assets should have consisted of ten properties with a total value of $1, 980, 000.
{¶14} Nevertheless, neither Cutright nor the trustees apparently recognized the error. Thus, they used the total figure of $5, 854, 758.03 to calculate the trustees' 1% fee-$58, 547.
{¶15} The trustees paid their fee within the first month of assuming their trusteeship and, due to the mistaken inclusion of property, the trustees paid themselves $450 more than they should have been paid.
{¶16} Cutright also used the total value of the trust assets to calculate his attorney's fee. The trustees paid Cutright $58, 547 on the same date that the trustees paid themselves.
{¶17} Over the next five years, the trustees administered the trust for Lela's benefit, and sought Cutright's counsel as needed. The trustees continued to pay their 1% trustee fee at the rate of $58, 547 each year. When Lela died in 2016, the trust's value was listed at $5, 441, 499.98.
{¶18} Shortly after Lela's death in July 2016, the trustees consulted with Cutright and the beneficiaries to discuss distributing the trust assets. The trustees initially gave each beneficiary $20, 000. The trustees also asked Stanley to reappraise the Adena Road property, and Stanley again appraised it at $1.7 million.
{¶19} In October 2016, the Dyers' personal property was sold at auction. After the auction, the trustees distributed additional trust assets to the beneficiaries. Some beneficiaries received personal property from the auction. The trustees also issued checks to the beneficiaries. In total, the trustees distributed $182, 715.81 to each beneficiary.
{¶20} At the end of the trust's 2017 fiscal year, $4, 474, 080.10 remained in trust assets. Most of the value was held in the Janney Montgomery account and the Adena Road property.
{¶21} Apparently, the trustees did not immediately place the Adena Road property on the market for a couple of reasons. First, the property contained the Dyers' residence, and the Dyers had collected valuable personal property that the trustees did not want to risk being stolen or damaged while being shown to potential purchasers. The trustees thus decided to auction the personal property before they placed the property on the market.
{¶22} Additionally, liquidating the Adena Road property became an issue. In March 2017, the trustees listed the property with a local realtor, Lisa Diehl, for $1.3 million. Diehl informed the trustees that she did not believe they would find a buyer willing to pay $1.3 million for the property. Diehl, instead suggested that the trustees list the property at $500, 000. Later, Diehl reduced the price to $1.1 million and the property still did not sell. Because the beneficiaries did not want to sell the property for less than $1 million, Diehl de-listed the property.
{¶23} Cutright and the trustees did suggest that the trustees transfer the Adena Road property to the six beneficiaries by deed. The beneficiaries, however, did not agree to this proposal. Cutright and the trustees then suggested that the beneficiaries form a limited liability company to hold title to the property, but the beneficiaries did not agree with this alternative proposal either. Shortly thereafter, the relationship between the trustees and the beneficiaries deteriorated and discussions ended in September 2017.
{¶24} In October 2017, Diehl re-listed the Adena Road property for sale with an $800, 000 asking price. Diehl continued the listing through January 2019 and, at that point, the trustees decided to auction the property. The property later sold at auction for $500, 000.
{¶25} On March 7, 2018, the trustees filed a complaint against the six beneficiaries and sought a declaratory judgment that they did not violate any fiduciary duties to the beneficiaries and a declaration to authorize them to distribute trust assets to the beneficiaries. The trustees specifically requested the court to authorize them to execute a fiduciary's deed to the beneficiaries for all remaining real property held in the trust.
{¶26} Eric and Jeffrey filed a combined answer through attorney James R. Kingsley and filed...
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