Gittings v. Deal

• Decision Date: 13 October 2017
• Docket Number: Court of Appeals Case No. 74A01-1611-TR-2551.
• Citation: 84 N.E.3d 749
• Parties: Brenda Sue GITTINGS and Marc Richmond Gittings, Appellants–Respondents, v. William H. DEAL, Appellee–Petitioner.
• Court: Indiana Appellate Court

84 N.E.3d 749

Brenda Sue GITTINGS and Marc Richmond Gittings, Appellants–Respondents,
v.
William H. DEAL, Appellee–Petitioner.

Court of Appeals Case No. 74A01-1611-TR-2551.

Court of Appeals of Indiana.

FILED October 13, 2017
Rehearing Denied December 14, 2017

Attorney for Appellant : James D. Johnson, Jackson Kelly, PLLC, Evansville, Indiana

Attorneys for Appellee : David L. Jones, David E. Gray, Jones • Wallace, LLC, Evansville, Indiana

Barnes, Judge.

Case Summary

1] Brenda Sue Gittings and Marc Gittings ("the Gittingses") appeal the trial court's judgment in favor of William Deal. We affirm.

Issues

[2] The Gittingses raise three issues, and we address the following two issues:

I. whether the trial court's findings that the Gittingses' claims are barred by the statute of limitations are clearly erroneous; and

II. whether the trial court's findings that transfers of property from the NDR Primary Trust to the NDR Trust A and from the NDR Trust A to the GLR Trust were proper are clearly erroneous.

Facts

[3] Brenda is the daughter of Nile D. Richmond, and Marc Gittings is Brenda's son and Nile's grandson. In 1985, Nile married Georgia L. Richmond, who also had a prior child, William. Prior to their wedding, they signed an Antenuptial Agreement, which provided that all property acquired after marriage would be owned as community property and that,

[84 N.E.3d 751

after their death, one-half of the community property would pass to each estate. In 1988, Nile and Georgia acquired property and mineral interests in West Virginia ("West Virginia Properties").

4] In 1993, Nile and Georgia retained Attorney David E. Price to prepare trusts for them. Nile executed the NDR Trust Agreement, and Georgia executed the GLR Trust Agreement. Nile and Georgia funded the trusts with half of the parties' assets being placed in each of the respective trusts. The Trust Agreements had substantially identical terms. The Trust Agreements provided:

[D]uring the life of the Settlor, the Settlor shall have the power to completely revoke or terminate this Trust Agreement, at any time, by an instrument signed by the Settlor and delivered to the Trustees during the life of the Settlor. In addition, during the life of the Settlor, the Settlor shall have the power to alter or amend this Trust Agreement, in whole or in part, at any time and from time to time, by an instrument signed by the Settlor, and delivered to the Trustees.

Exhibits Vol. IV pp. 22, 46. Additionally, the Trust Agreements provided that they could not be "changed orally, but only by a written agreement of the parties hereto." Id. at 37, 61. Upon the death of the Settlor, the Trust Agreement became "irrevocable." Id. at 21, 45.

[5] Each Trust Agreement created three separate trusts—the Primary Trust, Trust A, and Trust B. The Primary Trust was established to hold the primary trust estate during the life of the Settlor (Nile in the NDR Trust Agreement and Georgia in the GLR Trust Agreement). Upon the Settlor's death, the Primary Trust estate was to be distributed to Trust A and Trust B. Trust A was designed to be a Q–TIP trust and qualify for a marital deduction to minimize the federal estate tax. Trust A was to be funded with

the smallest fraction of the assets of Settlor's estate that qualify for the federal estate tax marital deduction as will be sufficient to result in the lowest federal estate tax being imposed upon [the] estate after allowing for the unified credit, and any other allowable credits and deduction, but in no event shall Trust A be less than the smaller of $100,000.00 or the balance of the Primary Trust.

Id. at 24, 48. Trust A was to be used to provide for the support, maintenance, and health of the Settlor's spouse.

[6] The remainder of the Primary Trust's assets were to be distributed to Trust B. Upon the surviving spouse's death, the remainder of Trust A was also to be distributed to Trust B. In the event that the Settlor's spouse predeceased the settlor, upon the Settlor's death, the Primary Estate's assets were to be transferred to Trust B. Upon the death of both the Settlor and the Settlor's spouse, Trust B was to be distributed as follows: one-third to Brenda, one-third to William, and one-third to the grandchildren of the Settlor and Settlor's spouse.

[7] Initially, the Trust Agreements provided that Nile and Georgia were the Trustees of both Primary Trusts. The Trust Agreements then provided:

As to the primary trust during the life of the Settlor, either of the initial Trustees may resign by giving ten (10) days written notice to the other Co–Trustee. Upon such event or if either initial Co–Trustee otherwise ceased to continue to be qualified during the life of Settlor, then the remaining Trustee shall be the sole Trustee. If both the initial Co–Trustees cease to be qualified, then William H. Deal and Brenda Sue Gittings, or the survivor thereof, shall be the Co–Trustee.

[84 N.E.3d 752

Sandra Deal shall be the next alternate successor Trustee.

Upon the death of the Settlor, if he is survived by his spouse, then she along with William B. Deal and Brenda Sue Gittings, shall serve as Co–Trustees of Trust A and Trust B. If William H. Deal and Brenda Sue Gittings decline to act or are unable to act, Sandra Deal shall be the alternate Co–Trustee of Trust A and Trust B.

Upon the death of Settlor's spouse, or upon the death of Settlor if his spouse predeceased him, William H. Deal and Brenda Sue Gittings, or the survivor therof, shall be the Co–Trustees of Trust A and Trust B. Sandra Deal shall be the alternate Trustee. In no event shall the surviving spouse serve as sole Trustee after the death of Settlor.

Id. at 32–33, 56–57. The Trusts also provided: "Upon the death of the Settlor, the Trustees shall divide the trust estate of the Primary Trust ... into separate trust estates [Trust A and Trust B]." Id. at 22, 46.

8] Nile died on January 24, 1995. Georgia then distributed property from the NDR Primary Trust to the NDR Trust A and NDR Trust B without consulting Brenda or William.

[9] On October 5, 1995, Georgia executed a First Amendment to the GLR Trust and eliminated Brenda as a beneficiary and as a trustee. That First Amendment was prepared by Attorney Price. Georgia did not inform Brenda of the amendment. On the same day, with the assistance of Attorney Price, Georgia transferred a one-half interest in the West Virginia Properties from the NDR Primary Trust to the NDR Trust A. Georgia then sent Brenda a copy of the NDR Trust and asked Brenda to sign and return four deeds and an assignment regarding the West Virginia Properties to transfer the properties from the NDR Trust A to the GLR Primary Trust.

[10] Brenda consulted with her attorney, who requested relevant documents from Attorney Price. On November 20, 1995, Attorney Price provided some relevant documents to Brenda's attorney, but he did not provide copies of the GLR Trust or its Amendment or inform Brenda's attorney that Brenda had been eliminated as a beneficiary of the GLR Trust.

[11] On December 28, 1995, Georgia and William signed deeds as trustees of the NDR Trust A purporting to transfer the West Virginia properties from the NDR Trust A to the GLR Primary Trust. Those documents were prepared by Attorney Price. After consulting with her attorney, on December 29, 1995, Brenda signed the deeds that had been sent to her as co-trustee of the NDR Trust and sent the documents to Attorney Price. The deeds signed by Brenda were not recorded at that time. Brenda did not know that the West Virginia properties were being transferred to a trust in which she did not have an interest. Although there are some documents in Attorney Price's records that indicate the GLR Primary Trust was purchasing the property from the NDR Trust A, no funds were transferred into any of the NDR trusts to compensate the trusts for the properties. Ultimately, Brenda received a distribution of approximately $90,000 from the NDR Trust B, and Marc received a distribution of approximately $22,000.

[12] In November 1996, Georgia executed a Second Amendment to the GLR Trust Agreement that again changed the beneficiaries and left William as the sole beneficiary if living and, otherwise, to his descendants, per stirpes. Georgia died on March 4, 1997.

[13] In July 1997, Brenda received a copy of the GLR Trust Agreement and the First and Second Amendments and

[84 N.E.3d 753

learned that she and Marc had been eliminated as beneficiaries. In the fall of 1997, according to Brenda, William told Brenda and her husband that "there wasn't anything left [of the inheritance] after they paid the medical bills, the nursing home bills, and the funeral bills." Tr. Vol. II p. 22. Brenda believed that all of the money put into the trusts had been used to care for Georgia. However, in December 1997, William deeded the West Virginia properties, which were held by the GLR Trust, to himself.

14] In 2010, some of the oil and gas interests started producing significant amounts of income. By the time of the trial in this matter, William had received more than three million dollars in royalties, rental payments, and lease payments related to the West Virginia Properties. In September 2011, Brenda was contacted by an attorney and learned that William had transferred the West Virginia properties to himself in 1997. In June 2012, William recorded the deeds that Brenda had signed in 1995...