Galavich v. Hales

Decision Date31 March 2022
Docket Number21 BE 0033
Citation187 N.E.3d 664
Parties Dennis N. GALAVICH, Plaintiff-Appellant, v. Carol HALES et al., Defendants-Appellees.
CourtOhio Court of Appeals

Atty. Kristopher O. Justice, Atty. Adam Schwendeman, Atty. Caroline A. Eversman, Theisen Brock, 424 Second Street, Marietta, Ohio 45750, for Plaintiff-Appellant.

Atty. Lee M. Grosscup, Miller & Grosscup Law Firm, LLC, 3465 South Arlington Road, Ste. D, Akron, Ohio 44312, for Defendants-Appellees Carol Hales.

Atty. Nicholas Schneckenburger, Maguire Legal Group, LLC, 190 East Avenue, Tallmadge, Ohio 44278 for Estate of Bonnie G. Stetson.

BEFORE: Carol Ann Robb, Gene Donofrio, Cheryl L. Waite, Judges.


Robb, J.

{¶1} Plaintiff-Appellant Dennis Galavich appeals the decision of the Belmont County Common Pleas Court granting summary judgment for Defendants-Appellees Carol Hales and the Estate of Bonnie Stetson. Two issues are raised in this appeal. First, is whether a trust for the Appellant's benefit was created. The second issue is whether any of the defenses raised prevented him from collecting as beneficiary of the trust.

{¶2} For the reasons expressed below, we affirm the decision of the trial court. The evidence indicates an express trust was created. However, Appellant failed to disclose to the Bankruptcy Court that the property was being held for him. Accordingly, the doctrine of judicial estoppel is applicable and prevents Appellant from now claiming the property was being held for him.

Statement of the Facts and Case

{¶3} Carol Galavich owned 172.713 acres in Belmont County, Ohio (Galavich Farm). This farm had been in the family for approximately 150 years. In March 2011, Carol Galavich was diagnosed with pancreatic cancer. At that time her son, Appellant Dennis Galavich was living with her; he was having some financial problems and was contemplating filing for bankruptcy.

{¶4} Carol Galavich contacted Attorney Richard Yoss while she was in the hospital to discuss end of life decisions for her estate. Attorney Yoss visited Carol in the hospital and they discussed the option of creating a trust. Attorney Yoss's deposition testimony indicated Carol wanted Dennis to have the farm, but due to his financial problems she wanted to protect the farm from his creditors. He described the conversation as he remembered it, stating that Carol wanted Bonnie Stetson to hold the property for Dennis and then give it to him when his financial issues were resolved. Yoss Depo. 31-33. However, she did not want to execute a complicated 10-15 page trust document. Yoss Depo. 31-33. He indicated Carol kept saying she trusted Bonnie. He told her they should at the least make it clear to the world that she was not gifting the property to Bonnie and to add the word trustee behind Bonnie's name. Yoss Depo. 31-33. Carol then agreed indicating she was not gifting it to Bonnie, she just wanted her to hold it until Dennis resolved his financial troubles. Yoss Depo. 31-33. This meeting resulted in a letter drafted by Attorney Yoss and signed by Bonnie. The letter stated:

As you know, Carol Galavich is in the hospital and remains concerned about her son Dennis and his finances. Because of this, I believe she has talked with you about signing an Affidavit which would transfer certain property to you upon her death. This transfer would be to you as Trustee with the understanding that should Carol die you would ultimately transfer this property to Dennis once his financial problems were taken care of.
This is an unusual situation, but Carol trusts you and tells me that you understand and are agreeable to this. If that is the case, I would ask that you sign the original of this letter at the space below and return the same to me in the enclosed self-addressed envelope.

5/3/11 Document.

{¶5} This document was signed by Bonnie Stetson and was in Attorney Yoss’ file. In addition to the letter, a Transfer on Death Designation Affidavit was executed by Carol regarding the Galavich farm. The name of the beneficiary on this document was Bonnie Stetson, Trustee. It was signed by Carol Galavich. 5/25/11 Transfer on Death Designation Affidavit.

{¶6} Carol Galavich died on July 7, 2011. An Affidavit for Transfer on Death signed by Bonnie as trustee was recorded September 19, 2011. Also recorded on that same date was a Transfer on Death Designation Affidavit by "Bonnie Stetson, Trustee," for the Galavich Farm and named Dennis Galavich as the beneficiary. 9/19/11 Transfer on Death Designation Affidavit.

{¶7} Less than a week prior to Carol's death, Dennis filed for bankruptcy. 7/1/11 Bankruptcy Petition.

{¶8} Dennis proceeded through bankruptcy. At no point during the bankruptcy proceedings did Dennis indicate to the bankruptcy court that he was the beneficiary of a trust or that property was being held for his benefit. His bankruptcy proceedings indicated he was disinherited by his mother, Carol.

{¶9} At the end of 2012, Dennis’ bankruptcy was completed. In 2013, Dennis asked for Bonnie to transfer the house he lived in and had lived in with his mother. Dennis’ deposition testimony indicated that he knew Bonnie and kept in touch with her for years following the death of his mother. Bonnie, as trustee, conveyed the house and approximately 1 acre to Dennis. This property was a part of the Galavich farm. Bonnie signed the warranty deed as trustee. 9/26/13 Warranty Deed.

{¶10} Bonnie signed other documents as trustee. She conveyed land to Mountain Gathering, LLC for a pipeline on the Galavich Farm. That document indicated the transfer was done in her individual and trustee capacity. 4/24/14 Special Warranty Deed. However, she signed the Special Warranty Deed as trustee. 4/24/14 Special Warranty Deed. In 2019, Bonnie executed a new Transfer on Death Designation Affidavit naming Carol Hales as the beneficiary of the Galavich Farm. This document indicated Bonnie was trustee. 5/2/19 Transfer on Death Designation Affidavit.

{¶11} Bonnie entered into contracts for the minerals to the Galavich Farm, some as trustee. In many of those leases, she signed solely in her individual capacity and nowhere in the lease did it indicate she was trustee.

{¶12} Bonnie died April 5, 2020. At the time of her death, the Transfer on Death Designation Affidavit naming Carol Hales as the beneficiary of the Galavich Farm was still in effect. Carol Hales had taken care of Bonnie in the years leading up to Bonnie's death. An Affidavit of Confirmation of Transfer on Death was filed May 1, 2020.

{¶13} Dennis became aware of the transfer to Carol Hales after Bonnie's death and filed an action in September 2021. This complaint named Carol Hales, the Estate of Bonnie Stetson, and numerous oil and gas companies as defendants. He asserted claims sounding in breach of trust, quiet title, breach of fiduciary relationship, trespass and conversion. 9/30/21 Complaint; 11/9/20 First Amended Complaint. Hales and the Estate of Bonnie Stetson filed answers asserting defenses of laches, estoppel, unclean hands, and waiver. 10/29/20 Carol Hales Answer; 10/29/20 Answer of Estate of Bonnie Stetson; 11/20/20 Answer of Estate of Bonnie Stetson to First Amended Complaint; 11/20/20 Answer of Carol Hales to First Amended Complaint. The oil and gas companies also filed answers, counterclaims, and/or motions to dismiss. 12/8/20 Answer of Defense Strike Force East, LCC; 12/8/20 Answer of South Central Power Company; 12/9/20 Answer of Summit Midstream Utica, LLC; 12/10/20 Answer of Mountain Gathering; 12/14/20 Defendant Ascent Resources Answer to First Amended Complaint; 12/15/20 Defendant Monbel Motion to Dismiss; 12/30/20 Answer of Defendant CNX Gas Co.

{¶14} In response to the counterclaims and Motion to Dismiss, Appellant filed answers and opposition motions. 1/8/21 Answer to Strike Force Counterclaim and Summit Midstream Counterclaim; 1/14/21 Plaintiff Motion in Opposition to Motion to Dismiss.

{¶15} Thereafter, Motions for Summary Judgment by the oil and gas companies were filed. 2/18/21 XTO Motion for Summary Judgment; 2/25/21 CNX Gas Joinder to Motion for Summary Judgment; 2/25/21 Utica Motion for Summary Judgment; 2/25/21 Strike Force Motion for Summary Judgment; 3/3/21 Ascent Motion for Partial Summary Judgment.

{¶16} Appellant then filed a Motion in Opposition to the above summary judgment motions. 3/5/21 Galavich Motion in Opposition to Summary Judgment Motions.

{¶17} The trial court granted summary judgment for Strike Force East, LLC, Summit Midstream Utica, LLC, CNX Gas Co., XTO Energy and Mountain Gathering. It also granted Strike Force's Motion for Judgment on pleadings and Ascent Resources – Utica, LLC's Motion for Partial Summary Judgment. 3/1/21 J.E.

{¶18} Hales filed a Motion for Summary Judgment arguing there was no trust and even if there was, judicial estoppel and/or laches prevented the trust from being effective. 5/25/21 Hales Motion for Summary Judgment. Specifically, as to judicial estoppel, Hales asserted Appellant could not take a contrary position in bankruptcy proceedings and also claim in the trial court that a trust exists where he is the beneficiary.

{¶19} Attached to the Motion for Summary Judgment was an affidavit from Heidi Kemp, Attorney for Bonnie Stetson. In this affidavit Attorney Kemp indicated that Bonnie contacted her to execute an affidavit of transfer on death. Given the recorded documents, Attorney Kemp contacted Ms. Stetson to inquire as to the existence of a trust. Bonnie informed Attorney Kemp no trust was in existence and never was. Bonnie said she intended to create one but never did. Based on the conversation Attorney Kemp was under the belief and impression that any potential trust Bonnie and she discussed was a trust created by Bonnie for her own benefit. 5/25/21 Heidi Kemp Affidavit.

{¶20} The Estate of Bonnie Stetson also filed a motion for summary judgment arguing there is no evidence of trust, no express oral trust, no implied trust, no resulting trust, and no...

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