Losie v. Kaneen

• Decision Date: 09 January 2023
• Docket Number: 82993-9-I
• Parties: DIANE S. LOSIE, Respondent, v. BRIAN J. KANEEN, trustee of the Kaneen family trust, Appellant.
• Court: Washington Court of Appeals

DIANE S. LOSIE, Respondent,
v.
BRIAN J. KANEEN, trustee of the Kaneen family trust, Appellant.

No. 82993-9-I

Court of Appeals of Washington, Division 1

January 9, 2023

UNPUBLISHED OPINION

COBURN, J.

This case involves the distribution of a family trust. Brian Kaneen and Diane Losie are brother and sister. After their mother died, Kaneen, the sole trustee, unreasonably delayed distributing the Kaneen Family Trust until after Losie filed a TEDRA petition. Though the Trust was to be distributed equally between the siblings, the trial court failed to consider earlier distributions to Losie and offset already-paid tax-related fees by the Trust in the final judgment. The court also erred in awarding Losie 12 percent prejudgment interest under RCW 19.52.010. When given an opportunity to correct the errors in a partial motion to reconsider, the court abused its discretion in denying that motion. We affirm the trial court's finding that Kaneen breached his fiduciary duty of diligence and the court's award of attorney fees to Losie. However, we reverse the judgment, and remand to the trial court to vacate the award of

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prejudgment interest and re-calculate the trust distributions consistent with this opinion.

FACTS

James Ralph and LaVerna Kaneen had two children, Brian Kaneen and Diane Losie. In May 1986, James Ralph and LaVerna^[1] created the Kaneen family trust, naming themselves as co-trustees and designating Kaneen as sole trustee in the event his parents could not serve. The Trust directed that "[u]pon the death of a Trustor. . . the Trustee shall allocate and dispose of the remaining assets of the trust[.]" It further required that "[u]pon the death of the last of the Trustors to die, the remaining trust estate shall be distributed in equal shares" to their two children.

In May 2009, LaVerna executed her final will, naming Kaneen as her personal representative. LaVerna also signed a durable power of attorney, naming Kaneen as the attorney-in-fact. James Ralph died in February 2013 and LaVerna suffered a stroke in January 2017. Kaneen became trustee in March 2017 when LaVerna resigned due to health issues.

At the time of her stroke, LaVerna was living at a senior facility in Washington. Kaneen was living in Indiana and Losie was living in California. After LaVerna's stroke, she was no longer spending money on her own and Kaneen began reviewing his mother's financial accounts and took control of her bills and financial affairs.

In August 2017, Losie traveled to Washington to clean out her mother's

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home. Kaneen arranged for the sale of their parent's golf cart to assist Losie with her expenses for the trip. Kaneen hired an estate company to manage the remaining property in the home.

LaVerna's house was sold for $70,000 in November 2017 with the proceeds deposited into her Bank of America (BoA) account which was not part of the Trust, but co-owned by LaVerna and her children. Prior to the house sale, both siblings took items from their mother's home. Kaneen took gold and silver coins for which he paid Losie her portion with personal funds, $18,065.13, in September 2017.

LaVerna passed in December 2017. At that time the value of the assets in the Trust account totaled $1,001,828.12.

A significant portion of the Trust assets, over $450,000, included several precious metal certificates issued by Perth Mint.^[2] In July 2017, before LaVerna had died, Kaneen had already discussed liquidating the certificates with Asset Strategies International (ASI). ASI told Kaneen he could liquidate his parents' certificates so long as he could provide additional documentation including James Ralph's death certificate, copies of Kaneen's identification, the power of attorney form, an application filled out by Kaneen, the Perth Mint certificates, and lastly, a "copy of the [w]ill and probate. If there is no probate, we will need an original letter from the lawyer indicating why there was no probate." Losie found the mint certificates while cleaning LaVerna's home in August 2017 and mailed

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them to Kaneen. In September 2017, Kaneen told Losie ASI told him he could sign for the certificates without an attorney because he held the power of attorney.

In January 2018, Kaneen sent an e-mail to Losie indicating that all the major bills should be paid with the exception of an outstanding pharmacy bill that should be less than $40.

That same month, Kaneen also indicated to Losie that he had "spent many hours researching trusts and estates and taxes" and he did not "understand anything." He could not determine if there was an estate and argued with Losie about whether the BoA account belonged to the siblings or was subject to probate. Losie also testified that although her mother had a CPA and an attorney, Kaneen did not want to pay the money to consult with them. She also testified that he "didn't want to hire anybody to help him," which resorted to him reading hundreds of pages of material.

In March 2018, Losie asked Kaneen to liquidate and disburse the Trust as soon as Kaneen determined the tax liability to avoid further capital gains. He did not do so.

The following month, Losie wrote Kaneen to ask about getting the money from their mother's BoA account, which was not part of the Trust. Kaneen had previously moved money from this account into the Trust. Kaneen responded that he planned to close the account and place the money into the Trust. Losie objected, telling him he was free to keep his share of the money in the bank, but she wished to have her share at that time to respond to mounting medical costs

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due to her husband's cancer treatments. At the time of LaVerna's death, the BoA account had a balance of $79,564.09. Kaneen and Losie also held the BoA account in joint tenancy with right of survivorship. Kaneen paid LaVerna's bills from the BoA account and also transferred balances into the Trust, including $42,000 on April 12, 2018. Shortly after, Kaneen wrote Losie a $21,000 check from the Trust. Kaneen identified the check as a "partial trust distribution." Losie and Kaneen disagreed over whether Kaneen had to transfer the BoA funds into the Trust. Kaneen transferred the funds from the BoA account into the Trust over Losie's objection.

In May 2018, Kaneen told Losie that ASI was only waiting on Kaneen's request to sell the Perth Mint certificates but that he had elected to wait since "metals [have] taken a little dip." He also told Losie, "It will be a while before we can completely liquidate the trust. If you need some immediate money, let me know. If you need more than $50,000, I'll need to know why."

In June 2018, Losie again asked Kaneen when she would receive a disbursement. He did not respond.

In January 2019, Losie made two additional requests and Kaneen sent her a partial distribution check for $50,000. In his attached letter, Kaneen complained that Losie had not been responsive to his requests. He indicated that Losie had not complied with his request to send him a memory box that belonged to their parents,^[3] her trust expenses, and an appraisal for their mother's

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diamond rings. He noted that he could not settle the Trust until Losie sent her expenses.

Losie hired an attorney in February 2019. In July 2019, Losie's attorney requested from Kaneen an accounting for the Trust and a timeline for distribution to prevent the filing of a TEDRA petition.

By August 2019, Kaneen obtained counsel. On August 7, 2019, Kaneen liquidated the Perth Mint certificates for total of $531,845.88. On August 16, Kaneen's attorney responded to Losie's request for information claiming that "any and all delay in the production of a final annual accounting and ultimate distribution of the Trust is solely due to the refusal of [Losie] to communicate and cooperate per the provisions of the Trust." The response letter indicated that Kaneen could not complete the distribution until Losie provided "receipts for any Trust expenses that she incurred" and any "receipts for the preliminary distributions both cash and tangible that she has already received."

In October 2019, Losie filed a TEDRA petition seeking to remove Kaneen as trustee for breaching his fiduciary duties and requesting that he provide an accounting for the Trust and a timeline for distribution of the Trust. In his response, Kaneen denied that he had breached his fiduciary duties. In addition to requesting attorney fees and costs, Losie asked the court to award her damages, including $99,717.61 for the interest accrued on her portion of the trust distribution that Kaneen held from January 2018 to September 2019.

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Soon after, Kaneen sent Losie a distribution check for $473,386.96. In March 2020, Kaneen took $467,000 as his own distribution and left $94,000 in the Trust as a holdback for final reconciliation.

At a bench trial in June 2021, only Kaneen and Losie testified.

Losie's overall testimony reflected her belief that her brother needlessly delayed distributing the Trust. She stated that her brother did not understand how to perform his duties, spent hours on useless research, that he should have immediately split the BoA funds and not comingled non-trust assets into the Trust account, and that he had the necessary information to liquidate the Perth Mint certificates prior to their mother's passing. She stated her mother did not have any expenses Kaneen did not know about given the fact that he was managing her finances, and their mother had no outstanding creditors. Losie indicated that she did not have any trust expenses and never sought any reimbursement for expenses. Losie testified that "[t]here was nothing he needed from me to further the process of closing out the trust."

Losie also testified that she believed her brother was holding her inheritance hostage in part because he wanted the memory box and that his several offers to give her money was a "control" technique. Kaneen...