Culliss v. Culliss
| Decision Date | 17 June 2022 |
| Docket Number | 123,782 |
| Parties | Gary A. CULLISS, Appellant, v. Brian R. CULLISS, AS TRUSTEE OF the JULIA A. CULLISS TRUST, Appellee. |
| Court | Kansas Court of Appeals |
Michael R. Ong, of Ong Law Firm, P.A., of Overland Park, for appellant.
Jeffrey R. King and Caleb F. Kampsen, of Sage Law, LLP, of Overland Park, for appellee.
Before Gardner, P.J., Hill and Isherwood, JJ.
Gardner, J. Trust beneficiary, Gary Culliss, appeals the district court's denial of his motion for partial summary judgment on issues related to the distribution of real property of his mother's estate. Gary argues that his brother, Brian Culliss (trustee and co-beneficiary), breached his fiduciary duties as trustee by conveying ownership of certain real property to himself while paying Gary cash equal to the property's value. Gary claims he was entitled to sole or joint ownership of the property and the district court erred by finding the trust waived Brian's duty of loyalty. Gary also challenges the district court's valuation of the properties and its order that he pay attorney fees. Finding no reversible error, we affirm.
Julia Culliss executed a trust and will in March 2009; she died in June 2018. She appointed her oldest son, Brian, to act as trustee and executor. She named Brian and his brother, Gary, the beneficiaries of her estate.
According to its terms, Julia's trust was "to provide for the management of [her] property during [her] lifetime and at [her] death to reduce taxes and transfer cost of [her] property and provide for the management of the property and its orderly disposition to the proper persons at the proper times." The trust directs the trustee to distribute Julia's "tangible personal property to [Julia's] surviving issue per stirpes ." If a disagreement occurs regarding the distribution of Julia's tangible personal property, the trust gives the trustee "the discretion to either divide the property ... as equitably as possible, taking into account their personal preferences, and/or sell such assets and add the proceeds to the remainder." The trustee must then divide the remainder equally between the beneficiaries.
The trust provision at the center of this appeal is this "cash and in-kind distributions" provision:
Julia included the same language in her will directing her executor (Brian) regarding the disposition of assets, and incorporated the provisions of the trust into her will, giving "all of [her] estate" to Brian, as the trustee, "to dispose of under the terms of the Trust."
The parties agree that, at the time of her death, Julia owned two adjacent properties in Gravois Mills, Missouri—the Lake Properties. But Julia made no specific directions about those properties in her will or her trust. So when she died, the Lake Properties became part of "the remainder" of her estate.
Gary and Brian both wanted to own the Lake Properties. Gary agreed to joint ownership if necessary, but Brian did not. Brian created a proposed distribution plan as trustee, seeking sole ownership of the Lake Properties and offering to pay Gary an amount of cash equal to the value of the properties.
Gary petitioned for declaratory judgment, claiming that Brian's proposed distribution breached his fiduciary duties as trustee. In later briefs, Gary specified that Brian's proposal violated his duties as trustee under K.S.A. 58a-801 (); K.S.A. 2021 Supp. 58a-802 (); K.S.A. 58a-803 (); and K.S.A. 58a-814 (limiting trustee discretion). Brian responded that the distribution plan followed the terms of the trust—specifically its non-pro rata clause—and his duties as trustee. Gary replied that the non-pro rata clause was just boilerplate language and that Julia intended the trust to be administered to equally benefit both brothers. Gary also argued that because the trust did not expressly waive Brian's duty to act as a prudent investor or his duty of loyalty to the trust beneficiaries, those duties prevented Brian from distributing the Lake Properties to himself.
At the hearing, the parties agreed to consider Gary's petition as a motion for partial summary judgment. After considering the parties' claims through that lens, the district court denied Gary's claim, finding that the trust gave Brian the authority to distribute the Lake Properties as he proposed and that doing so did not violate Brian's duties as trustee.
Gary also moved the court to determine the value of the Lake Properties, and the district court considered that issue at a separate hearing.
Brian had the Lake Properties appraised by a certified real estate appraiser, Michael McClain. McClain testified that he had appraised the properties three times and had valued the properties together at $177,000 each time. McClain determined that the highest and best use of the properties was as a single parcel. He explained that although a person could legally separate the two lots, doing so would decrease the value of each lot. McClain explained that one of the two lots had a house on it, and Julia had bought the second lot to get better access to the lake. Both lots shared a single dock, but the first lot would need access to the second lot and its portion of the dock to get a boat on the water. And the second lot could have a dock only by encumbering the first lot, which could significantly affect the value of the second lot.
Gary testified about the positioning of the docks and the value the properties held separately. He stated that a purchaser could remove a portion of the existing dock and rearrange separate docks to allow each lot appropriate access to the lake. Gary thought the properties had separate water and sewer rights, which would allow independent development of the properties, and he believed the lots would be more valuable if sold separately.
Although Gary had obtained separate appraisals for each lot, his appraiser did not testify. Instead, Gary admitted exhibits of two appraisals valuing the Lake Properties separately. Those exhibits showed the value of the lot with the house as $175,000 and the other lot as $51,500. Based on these appraisals, Gary had offered to purchase the Lake Properties from the trust for $226,100 and he was still willing to purchase the properties at that price.
In closing, Brian explained that he had offered to stipulate to a value between his appraiser's value and the value Gary had offered or to get a new appraisal from a third party, but Gary had rejected those offers. Brian then argued that the trust authorized the trustee to overrule any disagreement about the value because its non-pro rata clause gave the trustee discretion to make distributions based on "the recognized market value" but if there was none the trustee could "conclusively ... determin[e] ... such value."
The district court accepted Brian's valuation, finding McClain's explanation about the highest and best use of the Lake Properties as a single parcel more compelling than the information from Gary's appraisals. The court also found that even though Gary had offered to purchase the Lake Properties at a higher value, Brian did not have to accept that value.
At the close of the valuation hearing, the district court found that the parties had failed to provide the evidence necessary to determine attorney fees. After extensive briefing, the district court held another hearing. Gary argued that Brian should be held personally responsible for his attorney fees because he had pursued his own interests by his proposed distribution of the Lake Properties and had not acted on behalf of the trust.
But the district court disagreed and awarded Brian the attorney fees he had incurred throughout the litigation over the Lake Properties. And the court ordered Gary to reimburse the trust for those fees. And as to further fees, the district court stated:
"In addition, should the Court approve any further fees of the [trustee's] Firm for services [that] were incurred that relate to this judicial proceeding, Gary Culliss will be ordered to pay some or all of those fees within thirty days of the entry of that Order.
Brian moved to alter or amend the district court's attorney fees order, claiming the exhibit he had given the district court inaccurately showed his fees. He provided an updated version of the exhibit, listing his requested fees. The district court granted that motion and entered an amended order approving the additional amount. It found Brian's fees were fair and reasonable and ultimately approved both Brian's original request for $35,330.96 and his request for another $3,738. The court again ordered Gary to reimburse the trust for the total amount accrued during the litigation over the Lake Properties.
Gary timely appeals, challenging the district court's decision that Brian could own the Lake Properties, its valuation of the Lake Properties, and its award of attorney fees.
Gary first argues that the district court should have voided Brian's distribution of the Lake Properties to himself against Gary's wishes because doing so...
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