Cartwright v. Batner

• Decision Date: 03 July 2014
• Docket Number: No. 25938.,25938.
• Citation: 15 N.E.3d 401
• Parties: Kimberly A. CARTWRIGHT, Plaintiff–Appellant v. David S. BATNER, Trustee, et al., Defendant–Appellee.
• Court: Ohio Court of Appeals

15 N.E.3d 401

Kimberly A. CARTWRIGHT, Plaintiff–Appellant

v.David S. BATNER, Trustee, et al., Defendant–Appellee.

No. 25938.

Court of Appeals of Ohio, Second District, Montgomery County.

July 3, 2014.

James R. Kingsley, Circleville, OH, for Plaintiff–Appellant.

Timothy A. Tepe, Cincinnati, OH, for Defendants–Appellees.

Opinion

WELBAUM

, J.

{¶ 1} In this case, Plaintiff–Appellant, Kimberly Cartwright, appeals from judgments rendering an accounting on a revocable trust, and awarding attorney fees to Defendants–Appellees, David S. Batner, Trustee of the Lorraine M. Batner Revocable and Irrevocable Trusts, and David S. Batner, individually.¹ In support of her appeal, Kimberly contends that the trial court erred by failing to require David to itemize and account for every expenditure from the trust. Kimberly further contends that the trial court erred by not beginning the accounting in 2005, when Lorraine Batner's dementia appeared, and assets were allegedly placed into the revocable trust.

{¶ 2} In addition, Kimberly maintains that the trial court erred in dismissing her claim for treble damages under R.C. 2307.60

and R.C. 2307.61. Finally, Kimberly contends that the trial court erred in awarding David some attorney fees for defending the accounting action, and in denying her some fees for discovering David's defalcations.

{¶ 3} We conclude that the trial court did not abuse its discretion in determining that the accounting was adequate for the revocable trust for periods between June 2007 and 2009. Although David admitted to having improperly expended money from the trust, the sum he took is reasonably consistent with the tally made by Kimberly's witness after having received the accounting documents from David.

{¶ 4} The trial court did err in concluding that the claim regarding David's use of a power of attorney belonged to the estate, and that the remedy was in probate court. Kimberly was entitled to bring an action in common pleas court, which had concurrent jurisdiction over the matter. The court also erred in concluding, on the merits of this claim, that Kimberly failed to prove a misuse of the powers of attorney. There was sufficient evidence of transfers of funds to David, causing the burden to shift to David to show that his conduct was free of undue influence and fraud. David failed to present such evidence. Additionally, David violated prohibitions against self-dealing with respect to a condominium that was part of the irrevocable trust, and should be required to reimburse the trust for the fair market rental value of the condominium from the time that he began living there.

{¶ 5} We further conclude that the trial court erred in dismissing Kimberly's claim for civil damages under R.C. 2307.60

and R.C. 2307.61. Because of the error regarding David's alleged misuse of the power of attorney and Kimberly's entitlement to bring a civil action under R.C. 2307.60 and R.C. 2307.61, the attorney fee awards must be reversed.

{¶ 6} Accordingly, the decision of the trial court will be affirmed in part, reversed in part, and remanded for further proceedings.

I. Facts and Course of Proceedings

{¶ 7} This tale of warring siblings began in 2004, when Lorraine Batner, who was then about 81 years old, was concerned about protecting her estate should she need home nursing care.² At the time, Lorraine had assets of approximately $319,389, and also received a substantial civil service pension and social security benefit every month. Based on these probate concerns, Lorraine consulted with Michael Millonig, an estate planning specialist. Before consulting Millonig, Lorraine had established a revocable trust in 1993, and had a prior will that was written in 2003. Lorraine was the trustee for that trust, and her children, David and Kimberly, were successor co-trustees. The 2003 will left Lorraine's property equally to David and Kimberly. Also, in 2003, David became the holder of a power of attorney for Lorraine.

{¶ 8} David made the initial contact with Millonig and attended some meetings with his mother and the attorney. Millonig was aware that Lorraine had been diagnosed with dementia

and Alzheimer's. As a result, Millonig had Lorraine evaluated by a doctor to obtain a medical opinion about her competency to sign legal documents. Upon receiving the doctor's report, Millonig concluded that Lorraine was capable of doing an estate plan.

{¶ 9} Millonig decided that Lorraine could place about $150,000 in an irrevocable trust, which would protect her estate from Medicaid claims. Accordingly, he prepared the irrevocable trust documents as well as a deed transferring an unencumbered condominium that Lorraine owned into the trust. The condominium was valued at about $115,000. In addition, $35,000 was placed into the irrevocable trust. The funds for this came from Lorraine's Day Air Credit Union (“Day Air”) Account No. 6200 and from Lorraine's Day Air Checking Account No. 687588 (“588”). David was named the sole trustee for the irrevocable trust.

{¶ 10} Millonig also prepared an amended and restated revocable trust document that replaced the 1993 revocable trust document. He kept the same name for the trust, which was called the Lorraine Batner Trust, 5/12/1993. Both Lorraine and David were named as co-trustees, and the plan was that the rest of Lorraine's assets would be placed in the revocable trust. Under the terms of the trusts and the new will, David was entitled to receive the first $87,400 upon Lorraine's death, based on advancements that had been made to Kimberly. After that deduction, the remaining assets in the irrevocable and revocable trusts were to be divided equally between the two siblings.

{¶ 11} David's position at trial was that the revocable trust had been funded only with ten dollars and Lorraine's household goods and furnishings prior to the time that he took over as trustee in June 2007, when his mother was placed in a nursing home. At that time, signature cards were filled out, transferring ownership of Lorraine's Day Air Checking Account No. 588 to the revocable trust. Kimberly's position was that a “Schedule A” attached to the irrevocable trust, transferred the Checking Account No. 588 and all of Lorraine's other remaining assets when the irrevocable and revocable trusts were created. Kimberly also took the position that David should have to account for these assets between 2005 and June 2007.

{¶ 12} At the bench trial, the parties disputed the extent to which Lorraine handled her own affairs between 2005 and 2007, and the extent of her competency during that time. According to David, Lorraine was fine throughout 2005, and may have even been driving into 2006. He further indicated that Lorraine handled her affairs and that he was not the only one who had access to her credit card during this time. In contrast, Kimberly stated that Lorraine had dementia in late 2004, and was acting odd and saying unusual things. As an example, Lorraine thought Kimberly was her mother at times. In addition, when President Bush was elected, Lorraine wanted to know how to dress for the inaugural ball. Kimberly stated that she had not seen her mother write a check since July 2005, and Lorraine did not have access to her own checkbook after she moved in with Kimberly in December 2005 or January 2006. Further, after July 2005, David gave Kimberly Lorraine's credit card only three or four times, to purchase groceries.

{¶ 13} Lorraine died in August 2009. Although David was the executor of the estate, he did not open an estate in probate court. Instead, an attorney for St. Leonard's, where Lorraine had been residing, opened an estate in order to collect on $27,000 allegedly owed to the nursing home. Kimberly also filed an action in probate court in October 2010 regarding David's failure to probate the estate. In addition, she filed another action in probate court in January 2010, requesting an accounting. Between 2005 and 2009, about $337,731.94 had been deposited into Lorraine's Checking Account No. 588. However, by the time of the bench trial in January 2013, the revocable trust had a balance of about $1,000. The assets in the irrevocable trust had remained unchanged since its initiation in 2004, other than accumulated interest paid on the cash that had been included in the trust.

{¶ 14} The probate action was dismissed in May 2011, and Kimberly filed the present action on May 13, 2011, against David, individually and as trustee of Lorraine's irrevocable and revocable trusts. In this action, Kimberly asserted the following claims: (1) for an accounting, pursuant to R.C. 5808.13

; (2) breach of fiduciary duty; (3) breach of a common law duty to maintain proper records and accounts; (4) conversion of trust assets to David's own benefit; (5) civil conversion of assets and triple damages under R.C. 2307.61 ; (6) an injunction; and (7) intentional interference with expectation of inheritance.

{¶ 15} The case was tried to the bench over two days, in late January and early February 2013. Prior to trial, Kimberly dismissed her claims for intentional interference with expectation of inheritance, and the trial proceeded on the remaining claims. Following the trial, the court issued a decision, concluding: (1) that David had not committed misconduct with respect to the irrevocable trust, and was entitled to $12,000 in fees for administering the trust; (2) that David's acts regarding the revocable trust, at the least, constituted willful misconduct, and he was required to reimburse the trust in the amount of $59,902.57. David was also not entitled to claimed compensation of $6,000 in fees for administering the revocable trust; (3) Bank fees incurred for early withdrawal of CDs were not fraud; (4) the court had insufficient information on attorney fees already paid and presently due, and would need to hold a further hearing; (5) the remedies in R.C. 2307.61

were not available to Kimberly; (6) there was a failure of proof regarding a Northern Communities...