In re Hoopiiaina Trust

• Decision Date: 19 September 2006
• Docket Number: No. 20050619.,20050619.
• Parties: In the matter of the Malualani B. HOOPIIAINA TRUST, aka the Larayne J. Hartman Trust and the Donald Hartman Trust. Michelle Samantha Gatlin Nolan, successor trustee of the Malualani B. Hoopiiaina Trust; Michelle Samantha Gatlin Nolan, individually; and Michael Gatlin, individually, Plaintiffs and Respondents, v. Cuma S. Hoopiiaina, personal representative of the Estate of Malualani B. Hoopiiaina, Cuma S. Hoopiiaina, individually; Marlin M. Forsyth, individually; George K. Fadel, individually; IFG Resources Inc.; Lisa Goodwill; and John Does 1 through 10, Defendants and Petitioners.
• Court: Utah Supreme Court

Page 1129

144 P.3d 1129

2006 UT 53

In the matter of the Malualani B. HOOPIIAINA TRUST, aka the Larayne J. Hartman Trust and the Donald Hartman Trust.

Michelle Samantha Gatlin Nolan, successor trustee of the Malualani B. Hoopiiaina Trust; Michelle Samantha Gatlin Nolan, individually; and Michael Gatlin, individually, Plaintiffs and Respondents, v. Cuma S. Hoopiiaina, personal representative of the Estate of Malualani B. Hoopiiaina, Cuma S. Hoopiiaina, individually; Marlin M. Forsyth, individually; George K. Fadel, individually; IFG Resources Inc.; Lisa Goodwill; and John Does 1 through 10, Defendants and Petitioners.

No. 20050619.

Supreme Court of Utah.

September 19, 2006.

COPYRIGHT MATERIAL OMITTED

Nolan J. Olsen, Salt Lake City, for plaintiffs and respondents.

Ralph C. Petty, Salt Lake City, for defendants and petitioners.

On Certiorari to the Utah Court of Appeals

DURHAM, Chief Justice:

¶ 1 This case, which reaches us on certiorari in the form of a quiet title action, involves a multi generational family dispute over the ownership of certain real property that was placed into two irrevocable trusts over thirty years ago. Defendants Cuma S. Hoopiiaina (Cuma), individually and as personal representative of the Estate of Malualani B. Hoopiiaina (Malu), and Marlin Forsyth¹ request that we reverse the Utah Court of Appeals' decision. The court of appeals held that plaintiffs Michelle Samantha Gatlin Nolan's (Michelle)—both individually and as trustee for the Malualani B. Hoopiiaina Trusts—and Michael Gatlin's (Michael) suit should be characterized as a quiet title action and that quiet title actions are not subject to a statute of limitations. We accepted certiorari in order to clarify the legal principles underlying the application of the statute of limitations to claims seeking to quiet title to real property. We affirm the decision of the court of appeals and hold that plaintiffs' quiet title claims are not subject to a statute of limitations. We also modify the court of appeals' holding that summary judgment was inappropriate as to plaintiffs' remaining claims and hold that the concealment version of the equitable discovery rule tolled the statutes of limitation on these claims as a matter of law.

BACKGROUND

¶ 2 Because this case reaches us on certiorari from the court of appeals following the district court's grant of summary judgment in favor of defendants, we recite the facts in a light most favorable to plaintiffs, the non-moving party below. Wayment v. Clear Channel Broad., Inc., 2005 UT 25, ¶ 3, 116 P.3d 271.

I. FACTUAL BACKGROUND

¶ 3 This case involves an intrafamily dispute between the grandchildren of Malu (plaintiffs Michelle and Michael) and Malu's widow (plaintiffs' stepgrandmother, Cuma) and her son Marlin Forsyth. The facts underlying this dispute are somewhat complicated and stretch back over thirty years. In 1974, attorney George K. Fadel prepared two similar trust agreements for Malu. These agreements were executed by Malu, as settlor of the trusts, on April 10, 1974. They were subsequently recorded in the Salt Lake County Recorder's Office on April 18, 1974. The first agreement (Trust I) conveyed the title to real property located at 349 West 700 South in Salt Lake City to Trust I. The second agreement (Trust II) conveyed the title to real property located at 345 West 700 South as well as all personal property used in connection with the iron works business located at that address to Trust II. Both Trust I and Trust II also provided that additional property or assets could be deposited into the trusts after their creation. Importantly, each trust specifically provided that it was irrevocable.²

¶ 4 Under the terms of Trust I, three trustees were to administer the trust: Malu, his daughter Inez Gatlin (Inez) (the mother of plaintiffs), and LaRayne J. Hartman. Ms. Hartman was also an initial beneficiary of Trust I. Trust I provided that the trustees were to commence paying Ms. Hartman $400.00 per month, to continue for her lifetime, upon the death of Malu or when Ms. Hartman turned sixty-five years old, whichever occurred sooner. The remainder beneficiaries of Trust I were Inez and her children, plaintiffs Michelle and Michael. Trust I provided that upon the death of Ms. Hartman, the trustees were to begin paying the entire income of the trust property to these three beneficiaries annually, an undivided one-third to each. However, when Michelle reached the age of twenty-one, the trust was to terminate and the trust res was to be divided equally among the three.

¶ 5 Trust II also had three trustees: Malu, Inez, and Donald Hartman. The only significant difference between Trust I and Trust II is that the initial beneficiary of Trust II was Mr. Hartman, and the trustees were to pay Mr. Hartman $300 per month rather than $400. The income and res of Trust II were to be distributed amongst Inez and plaintiffs in the same manner as Trust I.

¶ 6 Larayne Hartman died on September 10, 1994. It is undisputed that Donald Hartman is also deceased, although the record does not disclose when he died. Inez died on April 24, 1996. Thus, plaintiffs eventually became the sole remaining beneficiaries of both Trust I and Trust II. However, the record does not indicate when Michelle turned twenty-one, which under the terms of the trusts should have had the effect of terminating the trusts and triggering the distribution of the res by the trustee. This distribution never occurred.

¶ 7 Malu, the last remaining trustee, died on May 20, 1997. Prior to his death, Malu drafted a holographic will and two codicils; the will was dated March 6, 1996, and the codicils were dated May 23, 1996, and May 15, 1997, respectively. The first codicil contained the following provision: "My daughter Inez Gatlin having died, I remove all provisions for Inez and her children." The second codicil purported to bequeath the property located at 349 West 700 South in Salt Lake City—the same property held in Trust I—to defendants Cuma and Mr. Forsyth in equal portions.³

¶ 8 A probate proceeding regarding Malu's estate was initiated on June 6, 1997, and a probate hearing was held on June 25, 1997. Cuma was appointed as the personal representative of the estate, and Malu's holographic will was found to be his last will and testament. Plaintiff Michelle appeared before the probate court at the June 25th hearing and objected to the will being probated in a manner inconsistent with the trusts.⁴ After voicing her objection, Michelle spoke off the record with Mr. Fadel, the same attorney who had prepared the trust agreements for Malu in 1974⁵ and who was present at the hearing as the attorney for Malu's estate.⁶ Mr. Fadel represented to Michelle that no trusts even existed, that Malu had disinherited her, and that she had no interest whatsoever in Malu's estate.⁷ Following her conversation with Mr. Fadel, Michelle returned to the judge's chambers and waived her objection.

¶ 9 Shortly after the probate hearing, Michelle contacted attorney Phil Dyer, with whom she discussed both Malu's will and the possible existence of the trusts. Mr. Dyer advised Michelle that he could do little to help her unless she had copies of the trust agreements. Because she did not have copies of the trust agreements,⁸ and because Mr. Fadel had told her that no trusts even existed, Michelle took no further action at that time.

¶ 10 On August 20, 1998, Cuma, as personal representative of Malu's estate, deeded the real property held in Trust I to herself and Mr. Forsyth and the property held in Trust II to herself. The deeds were recorded that same day at the Salt Lake County Recorder's Office. Nothing further of note occurred in this dispute until August of 2002.

II. PROCEDURAL BACKGROUND

¶ 11 On or about August 14, 2002, plaintiffs were contacted by a private investigator employed to locate them by plaintiffs' present counsel, attorney Nolan J. Olsen.⁹ This investigator informed plaintiffs that they were the beneficiaries of a trust created by Malu and put them in touch with Mr. Olsen. The record indicates that this was the first point at which plaintiffs had confirmed knowledge that the trusts actually existed. Michelle immediately contacted Mr. Olsen, who filed a probate petition on Michelle's behalf to have her appointed as successor trustee of Trust I on August 26, 2002.¹⁰ Judge Noel was initially assigned to the probate proceeding. On September 10, 2002, Judge Noel signed an order appointing Michelle as successor trustee of Trust I and ordering her to convey the property held by the trust to the beneficiaries (Inez, Michelle, and Michael) in one-third undivided shares, as provided by the trust agreement. On the same day, Michelle executed a deed transferring the property held by Trust I to the three beneficiaries as directed by the court; this deed was recorded with the Salt Lake County Recorder's Office on September 10th as well. Michelle also filed with the district court a petition to determine Inez's heirs—Inez having died intestate—and to distribute Inez's portion of the trust res. On September 25, 2002, the district court entered an order awarding plaintiffs each a one-half undivided interest in the one-third undivided interest owned by Inez in Trust I. During this same period of time, plaintiffs demanded that defendants conduct an accounting and turn over the property to plaintiffs; defendants refused to do so.

¶ 12 On September 27, 2002, Cuma and Mr. Forsyth filed with the district court a motion to set aside the order appointing Michelle successor trustee as well as the trustee's deed whereby Michelle had deeded the real property held by Trust I to the three beneficiaries.¹¹ On this same date, Cuma filed a lis pendens on the property held by Trust I ¶ 13 On October 10, 2002, Michelle initiated a civil action in district court against Cuma, Mr. Forsyth, and several other defendants; Judge Nehring was initially assigned to the civil suit. ...