Foster v. Gilliam (In re Estate of Foster)

• Citation: 268 P.3d 945,165 Wash.App. 33
• Decision Date: 19 December 2011
• Docket Number: Nos. 64633–8–I,65132–3–I.,s. 64633–8–I
• Parties: In the Matter of the Estate OF Lloyd W. Foster and Alice H. Foster.Laurance FOSTER, Appellant, v. Jennifer J. GILLIAM, Special Representative (discharged); and Sandra Bates Gay, Special Administrator (discharged), Respondents.
• Court: Court of Appeals of Washington

165 Wash.App. 33

268 P.3d 945

In the Matter of the Estate OF Lloyd W. Foster and Alice H. Foster.Laurance FOSTER, Appellant,

v.Jennifer J. GILLIAM, Special Representative (discharged); and Sandra Bates Gay, Special Administrator (discharged), Respondents.

Nos. 64633–8–I

65132–3–I.

Court of Appeals of Washington, Division 1.

Oct. 31, 2011.Reconsideration Denied Dec. 19, 2011.

Brian J. Carl, Attorney at Law, Seattle, WA, for Appellant.

Jennifer Jean Gilliam, Attorney at Law, Seattle, WA, Sandra Bates Gay, Attorney at Law, Bellevue, WA, for Respondent.

BECKER, J.

[165 Wash.App. 36] ¶ 1 Special appointments became necessary in this trust proceeding because appellant Laurance Foster, who served at various times as a trustee, violated his fiduciary duty. We conclude the trial court did not err in denying Foster's request for a jury trial and in holding him personally responsible for amounts due to minor beneficiaries and for the expenses incurred by the special appointees. All judgments are affirmed.

FACTS

¶ 2 Lloyd and Alice Foster died, leaving an estate consisting primarily of real estate in Hawaii and a bank account. The value of the gross probate estate was estimated at about $682,000.¹ In June 2003, their son Alan Foster was appointed personal representative of the estate, as designated by the wills.

¶ 3 The Fosters had created a revocable living trust and had executed reciprocal pour-over wills in favor of the trust, so that the trust was the sole beneficiary under the wills. The trust provided a 35 percent share to the Fosters' son Laurance, a 25 percent share to Alan, a 20 percent share to the grandchildren, and a 20 percent share to the great-grandchildren. The trust funds for the grandchildren and great-grandchildren were not to be distributed until the beneficiary reached 30 years of age, except that funds could be distributed for a beneficiary's postsecondary education. Any remaining funds would then be distributed when the beneficiary turned 30. Under the trust, Alan became a successor cotrustee upon his mother's death. Other persons designated by the trust to serve with Alan declined to accept the position of cotrustee. The proceedings in King County Superior Court involving the administration of the estate and trust were generally before court commissioners, primarily Commissioner Eric Watness at first and then Commissioner Carlos Velategui.

[165 Wash.App. 37] ¶ 4 In December 2003, the court appointed attorney Jennifer Gilliam as a special representative for the interests of the great-grandchildren, who were minors, concerning a proposed agreement to split the administration of the trust between Alan and his brother Laurance. This particular agreement did not come to fruition because some of the beneficiaries did not consent to it. However, Alan and Laurance petitioned in January 2004 to have Laurance appointed as cotrustee, without giving notice to Gilliam. The court granted the request ex parte. Gilliam discovered this and reported the lack of notice to the court. In August 2004, the court vacated the appointment of Laurance and directed Gilliam to represent the best interests of the minors in the probate and trust proceedings. Eventually, as a result of Gilliam's efforts, it would come to light that Alan and Laurance were distributing assets disproportionately to particular beneficiaries (including Laurance) instead of accumulating them to be divided in shares according to the directives of the trust.

¶ 5 As the extensive record shows, what should have been a simple estate and trust matter became protracted and contentious. At the outset, Alan and Laurance came into conflict with the attorneys then representing the estate, Diana Zottman and Gregory Cromwell, both employed by the law firm Curran Mendoza P.S. For example, Zottman filed a declaration stating that Laurance should not serve as cotrustee and that Laurance “did not want to probate the Estate of his parents at all.” ² Alan and Laurance claimed the firm was charging a lot of money and accomplishing nothing. For example, Laurance stated in a declaration filed in July 2004 that nothing had been accomplished except a bill from Curran Mendoza for $23,000.³ Correspondence between Laurance and Curran Mendoza also showed significant discord.⁴ The court granted the firm's request to withdraw in August 2004.

¶ 6 The administration of the estate and trust continued to lag. Alan did not respond to Gilliam's requests for information. Gilliam asked the court to remove Alan from his responsibilities as personal representative and trustee because she doubted his capability to perform adequately. She asked the court to appoint replacements, preferably outside professionals. The court denied these requests in January 2005.

¶ 7 Laurance renewed his request to be appointed cotrustee along with Alan. Gilliam expressed reservations. She asserted that Laurance “initially withheld copies of important estate planning documents evidencing the more recent plan of his parents, which included provisions for the minors, while demanding that the estate be shared only between he and his brother, contrary to the provisions of documents in his possession.” ⁵ Despite Gilliam's opposition, the court reappointed Laurance as cotrustee on January 26, 2005.

¶ 8 Throughout 2005, the court expected that Alan would provide an accounting of the trust and a proposed distribution to the minors. Review hearings were scheduled and then continued. On June 8, 2005, William Stoddard, an attorney hired by Alan to represent the estate, submitted an interim report representing that the administration of the estate would soon be completed. A review hearing intended for review of the final report and accounting of the estate was held on October 5. Neither Alan nor Stoddard appeared. The court entered an order to show cause and set a hearing date of November 9, 2005. The matter was continued to January 18, 2006. Meanwhile in December 2005, Stoddard notified Gilliam that he intended to withdraw as attorney for the estate. Gilliam reported to the court that no accounting had been produced. Laurance then provided an accounting showing that individual trust accounts for the minors had been funded at less than $400 apiece, even though the information then available concerning the assets of the estate and trust showed that each of them was entitled to approximately $15,000.

¶ 9 At the hearing on January 18, 2006, the court granted Gilliam's request for outside assistance by removing Alan as personal representative of the estate and appointing attorney Sandra Bates Gay as a special administrator to conduct discovery and report to the court on the status of the probate estate. Alan and Laurance were ordered to cooperate with Gay, but they did not respond to her efforts to contact them. The court reserved for future determination the extent to which Alan would be held personally liable for delaying the administration of the estate.

¶ 10 Around this time, Alan sent letters to Stoddard and Gilliam stating that he had distributed $514,000 to the heirs on January 23, 2004, that the estate was closed, that Gilliam's appointment was illegal, and that Stoddard should withdraw immediately. In late March 2006, Laurance and Alan personally sent letters to Gilliam and Gay. Alan's letter to Gilliam asserted that, among other things, “the estate has been closed,” the “Trust belongs to the State of Hawaii,” he and Laurance had “filed a complaint with the Bar Association,” Commissioner Watness, former estate attorney Diane Zottman, Gay, and Gilliam were “cronies that work together on a regular basis,” and all of them “should be disbarred and do some prison time.” ⁶ Laurance sent similar letters to Gay, alleging that these same individuals had a conspiracy to “bleed the Estate for over $75,000.” ⁷

[165 Wash.App. 40] ¶ 11 In March 2006, Gay filed an interim report. Neither Alan nor Laurance appeared at the hearing at which the report was presented. Gay asked the court to issue citations to Alan and Laurance, directing them to appear and cooperate. In a declaration signed on March 30, 2006, Laurance stated that the “$514,000 distribution from the Estate to the Heirs was done in accordance with the terms of the Will and Trust” and that the “estate is closed.” ⁸

¶ 12 In April 2006, Gay again asked the court to cite Alan and Laurance for failure to cooperate. Laurance wrote Gay a letter in May accusing her of “stealing from dead people and children.” ⁹ In another letter, he asserted that the “Foster Family Trust is closed.” ¹⁰ Nevertheless, a meeting was arranged for May 31, 2006, at which Alan, Laurance and newly obtained counsel met with Gilliam and Gay to assist them with accounting for the estate and trust. At this meeting, Laurance disclosed his own personal knowledge and approval of the distributions made by Alan to particular heirs in January 2004. Alan revealed that a disproportionate distribution of $80,000 had been made to one particular grandchild. Also at this meeting, Laurance provided documentation that more funds had been added to the minor trust accounts bringing them to around $5,000 each.

¶ 13 Still, no complete accounting of the estate had been provided by the time of a new deadline set for August 23, 2006. At a hearing on this date, the court granted Gilliam's petition to have the minor trust funds properly funded. According to Gilliam's petition, the net estate and trust assets available for distribution were at least $925,837.90. Twenty percent of this was $185,167.58. When divided among the 12 great-grandchildren, 8 of whom were minors, the amount due to each was $15,430.00. The existing accounts held only about $5,000.00 for each child. The court ordered a judgment against Alan in favor of the 8 minor beneficiaries in the amount of $10,430.00 each, totaling $83,400.00. The court removed Alan from his position as cotrustee. At the request of Gilliam and Gay, the court also...