Horsley v. Wardwell

• Decision Date: 04 January 2023
• Docket Number: 1:22-cv-00217-BLW
• Parties: NORMAN HORSLEY, an individual, Plaintiff, v. WILLIAM WARDWELL, individually and as Trustee of the Shirley Packer Trust, Defendant.
• Court: U.S. District Court — District of Idaho

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NORMAN HORSLEY, an individual, Plaintiff, v. WILLIAM WARDWELL, individually and as Trustee of the Shirley Packer Trust, Defendant.

No. 1:22-cv-00217-BLW

United States District Court, D. Idaho

January 4, 2023

MEMORANDUM DECISION AND ORDER

B LYNN WINMILL, U.S. DISTRICT COURT JUDGE

INTRODUCTION

Defendant William Wardwell's Motion to Dismiss (Dkt. 10) is fully briefed and before the Court. The Court will grant the motion and dismiss Horsley's claims with prejudice.

BACKGROUND

The great American satirist, Ambrose Bierce, once cynically observed that “death is not the end. There remains the litigation over the estate.”^[1] Sadly, that dim view of reality was borne out in this case.

Shirley Packer, the grantor of the Shirley Packer Trust, passed away in 2008. Unfortunately, the administration of her Trust quickly broke down. What ensued, in one arbitrator's words, is a “tragic true story of a family gone asunder” and a “family inheritance materially depleted or diverted because of real and imagined misconduct.” Verified Petition at 72, Dkt 10-3.

Today's iteration of the trust dispute involves claims by Plaintiff Norman Horsley, a Trust beneficiary, against Defendant William Wardwell, a court-appointed trustee. Horsley has two main complaints. First, he claims that all state court orders and judgments previously entered regarding distribution of the Trust are void because the state courts lacked subject matter jurisdiction to enter them. And second, Horsley claims that Wardwell violated fiduciary duties in his capacities as a trustee and an attorney. Before analyzing these claims, the Court reviews the relevant litigation history.^[2]

1. The Arbitration Agreement

The Trust named Norman and Scott Horsley, Shirley's sons, as co-trustees of the Trust. Id. at 73. Right out of the gates, alleged misconduct by both led to litigation mediation, and a settlement in 2009. Id. The parties memorialized the settlement in a Settlement Memorandum adopted by the Honorable Dan Grober of the Third Judicial District. Id. at 54. The Memorandum contained the following arbitration provision:

Any dispute arising between or among Beneficiaries, or between or among any Beneficiary and the Trustee shall be resolved by binding arbitration in Owyhee County, Idaho, situs of the Trust Registration, in accordance [with] the rules of the American Arbitration Association. Any party to such arbitration must be represented by an attorney in the proceedings. The prevailing party in arbitration shall be entitled to an award of reasonable attorney's fees and costs incurred.

Id. at 58. In April 2010, Judge Grober affirmed that the arbitration provision “binds all beneficiaries and successor trustees to resolve all issues concerning The Shirley Packer Trust through binding arbitration.” Def.'s Br. at 3, Dkt. 10-1.

2. Past Arbitration Proceedings

In the years following the 2009 settlement, Horsley invoked the arbitration provision to initiate two arbitration proceedings.^[3] Id. at 4. In the first, Horsley brought claims against Scott and other beneficiaries. On April 17, 2013, the arbitrator issued a final award against Horsley based on claim preclusion and awarded over $65,000 in attorneys' fees against Horsley. Verified Petition at 75, Dkt. 10-3.

In the second arbitration, Horsley brought claims against Wardwell, whom the Court had appointed in January 2014 to administer the Trust. Id. at 76. The arbitrator issued a Partial Final Award in February 2017. After a scathing review of Horsley's conduct-“bordering on paranoia”-the arbitrator addressed Horsley's claims point-by-point. Id. at 85-86. One issue presented was “[w]hether the Trustee has breached his duties to the beneficiaries” by:

expending trust funds to resist arbitration; expending trust funds to resolve disputes between the Trustee and the Beneficiaries outside of arbitration and engaging in self-dealing by hiring his own law firm to represent him in disputes with the beneficiaries; failure to pay attorney fees pursuant to the agreement, even the attorney fees that he agreed were to be paid; using trust funds to engage in actions which represented a conflict of interest between himself and a beneficiary; failure to provide an accounting; and failure to allocate receipts and disbursements to principal and income.

Id. at 86.

The arbitrator concluded that “Wardwell has [not] committed any breaches of duty.” Id. And in his Final Award in May 2017, the arbitrator again affirmed that “Will convincingly established at the final hearing that [Horsley's] objections to Will's performance as trustee were invalid.” Id. at 91. In November 2017, the Honorable Thomas Ryan of the Third Judicial District issued an order and judgment confirming the arbitrator's Partial and Final awards. Id. at 101-06.

3. Subsequent Attempts to Arbitrate

In July 2018, ten years after the Trust became irrevocable, Wardwell petitioned the Third Judicial District to confirm his final accounting of Trust assets and liabilities and approve a final plan of distribution. Id. Shortly thereafter, Horsley filed an answer to Wardwell's petition objecting that the petition-a judicial action-could not be filed with the court because the arbitration provision prohibited Wardwell from litigating rather than arbitrating Trust matters. Memo. Decision at 3, Dkt. 10-4.

Wardwell moved for summary judgment because Horsley's objections were similar to those previously raised in the 2016-2017 arbitration. The court agreed and granted summary judgment on April 8, 2019. Id. at 7. Res judicata barred Horsley's objections because the prior arbitration “gave all involved a full and fair forum to be heard” and “resulted in an arbitrator's award which was reduced to a judgment.” Id.

Horsley promptly filed a formal application for arbitration, asking the court to refer the Trustee's petition and related disputes to arbitration. Def.'s Br. at 7, Dkt. 10-1. Shortly thereafter, the court entered a final judgment approving Wardwell's final accounting and plan of distribution and authorizing him to distribute Trust assets to the beneficiaries. Final Judgment ¶ 6, Dkt. 10-5. The Judgment stated that “[a]ll potential claims by Beneficiaries have been fully arbitrated or released.” Id.

With a judgment in hand finalizing the Trust accounting and distribution, Wardwell moved to dismiss Horsley's application for arbitration. Before the court could resolve the motion for arbitration and motion to dismiss, Horsley made yet another attempt to initiate arbitration, this time in the form of a motion to reconsider the court's April 8 order. Def.'s Br. at 8, Dkt. 10-1. On August 30, 2019, the court resolved the outstanding motions, denying Horsley's application for arbitration, motion to reconsider, and request for a stay of the litigation. Memo. Decision, Dkt. 10-6.

In doing so, Judge Grober expressly rejected Horsley's argument that state courts had failed to enforce the arbitration agreement and therefore lacked authority to enter orders winding up the Trust. Judge Grober explained in the August 30 order:

Horsley has repeatedly asserted that because of the arbitration clause, this court is without authority to act in any way. If this court were to interpret the clause as does Horsley, no court could ever take action in the subject matter, nor affirm an arbitrator's decision because doing so would beyond be beyond the purview of the court. Per Horsley's analysis, if a court were so audacious as to issue an order in this matter, or affirm in arbitration agreement, and Horsley did not agree with that action, the dispute regarding whether the court had authority to enter the order would have to be arbitrated. Applying Horsley's interpretation of the arbitration clause would emasculate "finality." This court declines to adopt his interpretation. This court finds as a matter of law that those issues Horsley would have arbitrated have either been previously decided via litigation or arbitration, are issues that should have been litigated or arbitrated and are thus barred by res judicata, or are issues which are not factually at issue based upon Horsley's legal shortcomings.

Id.

But Horsley was not finished. A few months later, in October 2019, he filed a notice of appeal to the state court's April 8 and August 30 orders. The appeal was dismissed as untimely and the court entered a permanent injunction barring Horsley from “filing, seeking, or pursuing . . . any arbitration against the Trustee of the Shirley Packer Trust.” Order Enforcing Final Judgment & Order on Trustee's Motion, Dkts. 10-9 & 10-10.

Several months later, Horsley came back for another bite of the apple. This time, represented by Raymond Schild, he filed a Motion to Set Aside Judgments and Orders Pursuant to IRCP 60(B)(4) asking to invalidate the district court's dismissal of his appeal and all “orders and judgments in this action subsumed in that appeal and otherwise.” Motion to Set Aside at 14, Dkt. 10-12. Once again, Horsley asserted that “[a]ll the Judgments and Orders entered in this action are void, as the Court did not have subject matter jurisdiction to enter them.” Id. ¶¶ 11 & 13.

Denying Horsley's motion to set aside on January 28, 2021, the court explained:

This [is] precisely the same argument, although worded just a bit differently, that was raised previously. It was not raised that the Court did not have subject matter jurisdiction but that the Court had to send the matter to arbitration. The words subject matter jurisdiction were not used previously but it was exactly the same argument, same cases, same legal theory as was founded by Mr. Horsley initially.

The Court spent quite a bit of time in its August [30th 2019] memorandum decision and order explaining

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