EGW v. First Fed. Sav. Bank of Sheridan

• Decision Date: 05 March 2018
• Docket Number: S-17-0151
• Citation: 413 P.3d 106
• Parties: EGW, a minor, and AW, a minor, by their Court Appointed Guardian Ad Litem, Stephanie J. Withrow, Appellants (Plaintiffs), v. FIRST FEDERAL SAVINGS BANK OF SHERIDAN, Wyoming, in its capacity as purported Successor Trustee of the Allen F. Willey Trust Dated September 12, 2001, as competently amended, and Irma Bertha Willey, Susan Williams, Martin Martinez, Leslie Lube, and Brittany Phillips, Appellees (Defendants).
• Court: Wyoming Supreme Court

413 P.3d 106

EGW, a minor, and AW, a minor, by their Court Appointed Guardian Ad Litem, Stephanie J. Withrow, Appellants (Plaintiffs),

v.FIRST FEDERAL SAVINGS BANK OF SHERIDAN, Wyoming, in its capacity as purported Successor Trustee of the Allen F. Willey Trust Dated September 12, 2001, as competently amended, and Irma Bertha Willey, Susan Williams, Martin Martinez, Leslie Lube, and Brittany Phillips, Appellees (Defendants).

S-17-0151

Supreme Court of Wyoming.

March 5, 2018

Representing Appellants: Steve C.M. Aron, Aron and Hennig, LLP, Laramie, Wyoming.

Representing Appellee First Federal Savings Bank of Sheridan: Mistee L. Elliott, Lonabaugh & Riggs, LLP, Sheridan, Wyoming.

Representing Appellees Irma Bertha Willey, Susan Williams, Martin Martinez, Leslie Lube, and Brittany Phillips: Debra J. Wendtland, Wendtland & Wendtland, LLP, Sheridan Wyoming.

Before BURKE, C.J., and HILL^* , DAVIS, FOX, and KAUTZ, JJ.

BURKE, Chief Justice.

[¶1] Appellants, E.W. and A.W., the grandchildren of Allen F. Willey, filed suit in the district court seeking to prevent the sale of land held in Mr. Willey's revocable trust. They challenge the district court's grant of summary judgment in favor of Appellees, First Federal Savings Bank of Sheridan, the successor trustee, and the beneficiaries of the trust. The district court determined that Appellants are no longer beneficiaries of the trust as a result of their father's 2014 lawsuit against Mr. Willey and his wife. We affirm.

ISSUES

[¶2] Appellants present the following issues:

1. By the doctrine of res judicata , is an attempt by Appellants' father to file a legal challenge to their grandfather's Trust void where Appellants' father lacked legal standing to file the action?

2. Whether the 2014 in terrorem clause in the Trust, forfeiting the property rights of minor children by the act of a third party, violates the statutory and constitutionally established public policies of the State of Wyoming.

3. Whether, as a matter of law, Appellants' father's 2014 lawsuit challenged only the 2010 Trust Amendment, at a time when the in terrorem clause did not disqualify Appellants.

4. Did the district court err in disqualifying Appellants' father from serving as Appellants' representative in this action?

FACTS

[¶3] The underlying facts of this case are set forth at length in Willey v. Willey , 2016 WY 116, 385 P.3d 290 (Wyo. 2016), and will be briefly summarized here. In 2001, Allen Willey created the Allen F. Willey Trust Agreement and Declaration of Trust, a revocable trust that provided for the management of his assets during his lifetime, and for distribution of the assets upon his death. The Willey Ranch, located in Sheridan County, was included as a trust asset. Mr. Willey served as the trustee of the trust during his lifetime. Mr. Willey's trust initially named his son, Spencer, as successor trustee and the trust ultimately benefitted Spencer's minor children, E.W. and A.W.

[¶4] Mr. Willey amended the trust in 2006 and 2009, adding his wife's daughter and granddaughter as beneficiaries under the trust. In 2010, he executed the Allen F. Willey Amended and Restated Declaration of Trust, which made additional changes to the original trust. Most significantly, the amendment removed Spencer as beneficiary and successor trustee. Appellants, however, remained as beneficiaries.

[¶5] In March 2014, Mr. Willey amended the trust again. The amendment changed the successor trustee to First Interstate Bank of Sheridan and provided that under no circumstances should Spencer or any lineal descendant of Mr. Willey be named trustee. The amendment also added the following in terrorem , or "no-contest" clause, which is the subject of this appeal:

It is my intention that the provisions of my Trust be honored and respected without challenge from my son SPENCER WILLEY, from my grandchildren, from my sisters or their children, or from anyone purportedly acting on behalf of any of the foregoing. Any challenge to this Trust made directly by or on behalf of my son or grandchildren shall immediately terminate any interest in the Trust of any descendant of mine[.]

[¶6] In 2013, Mr. Willey entered into a listing agreement with a real estate broker for the purpose of selling the Willey Ranch. In May 2014, Spencer filed a Complaint for Injunction and Declaratory Judgment against Mr. Willey, individually and as trustee of the Allen F. Willey trust, and Mr. Willey's wife, Bertha. Spencer sought to set aside the listing of the ranch and requested that Mr. Willey be removed as trustee due to incapacity. Spencer also alleged that Bertha Willey had exercised undue influence over Mr. Willey's weakened condition to convince him to sell the ranch instead of leaving it in the trust for the benefit of E.W. and A.W. He sought a declaration that would void any part of the trust permitting sale of the ranch.

[¶7] In May 2015, Spencer amended the Complaint, adding a claim that Bertha Willey had exercised undue influence over Mr. Willey by convincing him to remove Spencer from the trust, reduce the benefits to E.W. and A.W., and grant additional benefits to Mrs. Willey. He further alleged that he had an oral agreement with his father that he would inherit the Willey Ranch, and that the sale of the Ranch constituted a breach of that agreement. The defendants moved for summary judgment on the breach of contract claim, and the district court granted the motion.

[¶8] Approximately one month after the Amended Complaint was filed, Mr. Willey died. The case subsequently went to trial and the jury found that the trust amendments were not the product of undue influence. Spencer appealed, challenging the award of summary judgment and several aspects of the trial, and we affirmed. Willey , ¶ 51, 385 P.3d at 304.

[¶9] In early 2016, while the appeal in Willey v. Willey was pending, Appellants filed the present action through Spencer, who acted as "next friend" for his children.¹ Appellants sought an injunction preventing sale of the Willey Ranch, a declaratory judgment that the in terrorem clause would not apply to them, removal of First Federal as trustee, and damages for First Federal's alleged breach of fiduciary duties. Appellees answered and subsequently moved for summary judgment on the grounds that, due to Spencer's 2014 suit, Appellants were no longer beneficiaries of the trust by operation of the in terrorem clause. Appellants responded by claiming that, in Willey , the district court had determined that Spencer did not have standing to challenge his removal from the trust. They asserted that, because Spencer lacked standing, the 2014 suit did not trigger the in terrorem clause. They also claimed that the in terrorem clause was void because it violated public policy.

[¶10] Following a hearing, the district court granted summary judgment to Appellees. The court concluded that Appellants' claims relating to Spencer's standing in the 2014 suit lacked cogent supporting argument or authority. The court also determined, however, that Spencer had standing to challenge the trust in the 2014 action and that the challenge terminated E.W.'s and A.W.'s interest in the trust. The court further concluded that the in terrorem provision of the trust did not violate public policy. This appeal followed.

STANDARD OF REVIEW

[¶11] We apply the following standard of review to a district court's summary judgment decision:

Summary judgment is appropriate when there are no genuine issues of material fact and the moving party is entitled to judgment as a matter of law. W.R.C.P. 56(c) ; Metz Beverage Co. v. Wyoming Beverages, Inc. , 2002 WY 21, ¶ 9, 39 P.3d 1051, 1055 (Wyo. 2002). "A genuine issue of material fact exists when a disputed fact, if it were proven, would establish or refute an essential element of a cause of action or a defense that the parties have asserted." Id. Because summary judgment involves a purely legal determination, we undertake de novo review of a trial court's summary judgment decision. Glenn v. Union Pacific R.R. Co. , 2008 WY 16, ¶ 6, 176 P.3d 640, 642 (Wyo. 2008).

Fugle v. Sublette Cty. Sch. Dist. No. 9 , 2015 WY 98, ¶ 5, 353 P.3d 732, 734 (Wyo. 2015) (quoting Singer v. Lajaunie , 2014 WY 159, ¶ 19, 339 P.3d 277, 283 (Wyo. 2014) ). We consider the record from a viewpoint most favorable to the party opposing summary judgment, giving to him all favorable inferences that can be drawn reasonably from the facts set forth in the affidavits, depositions, and other material properly appearing in the record. Fugle, ¶ 5, 353 P.3d at 734.

DISCUSSION

I. Whether Spencer's 2014 suit constituted a "challenge" to the trust

[¶12] In Appellants' first issue, they claim Spencer's 2014 challenge to the trust was void because he did not have standing to challenge the trust. According to Appellants, in Willey , the district court determined that Spencer did not have standing. They claim, "The District Court's judgment was affirmed by this Court, so Spencer's lack of standing must be accorded res judicata effect." Additionally, Appellants assert that "Since Spencer had no standing to challenge the post-2010 Trust Amendments, his entire legal proceeding in the 2014 action was governed by, and its effect determined by, the in terrorem clause that was in effect when he had standing in 2010." As a result, Appellants contend Spencer's 2014 suit did not trigger the in terrorem provision of the trust. We do not agree.

[¶13] Contrary to Appellants' assertions, the district court did not conclude that Spencer did not have standing to bring his suit in 2014. Rather, as noted in Willey , ¶ 26, 385 P.3d at 299, the court determined that, "If the jury found no undue influence on the 2010 amendment, Spencer had no further interest in the trust." This does not amount to a conclusion that Spencer lacked standing. Standing is a jurisdictional question, and a finding that Spencer lacked standing would have constituted grounds for dismissal of the action. Gheen v. State ex rel. Dep't of Health,...