Margaret Blair Trust v. Blair

• Decision Date: 13 May 2016
• Docket Number: Case No. 112,895 (,C/w 113,395)
• Citation: 2016 OK CIV APP 47,378 P.3d 65
• Parties: The Margaret Blair Trust, a Limited Partner of Blair Royalties, Ltd.; Margaret A. Blair, an individual and beneficiary of the Margaret Blair Trust; The Patricia Jane Bender Trust, a Limited Partner of Blair Royalties, Ltd.; Patricia Jane Bender, an individual and beneficiary of the Patricia Jane Bender Trust; The Mary Alice Blair Trust, a Limited Partner of Blair Royalties, Ltd.; and Mary Alice Blair, an individual and beneficiary of the Mary Alice Blair Trust, Plaintiffs/Appellants, v. Robert G. Blair, individually, as beneficiary of the Robert G. Blair Trust, as Trustee under Last Will and Testament of W.W. Blair, deceased, as Trustee of each Limited Partner of Blair Royalties, Ltd., as General Partner of Blair Royalties, Ltd. and as an officer, Director and owner of Comanche Exploration Co. LLC, and Comanche Resources Company; The Robert G. Blair Trust, a Limited Partner of Blair Royalties, Ltd.; Comanche Exploration Co. LLC; Comanche Resources Company; The John David Blair Trust, a Limited Partner of Blair Royalties, Ltd.; JOHN DAVID BLAIR, individually, as beneficiary of the John David Blair Trust, as Trustee under Last Will and Testament of W.W. Blair, deceased, as Trustee of each Limited Partner of Blair Royalties, Ltd. and as an officer, Employee and owner of Comanche Exploration Co. LLC, and Comanche Resources Company; and Blair Royalties, Ltd., Defendants/Appellees.
• Court: United States State Court of Criminal Appeals of Oklahoma. Court of Civil Appeals of Oklahoma

378 P.3d 65

2016 OK CIV APP 47

The Margaret Blair Trust, a Limited Partner of Blair Royalties, Ltd.; Margaret A. Blair, an individual and beneficiary of the Margaret Blair Trust; The Patricia Jane Bender Trust, a Limited Partner of Blair Royalties, Ltd.; Patricia Jane Bender, an individual and beneficiary of the Patricia Jane Bender Trust; The Mary Alice Blair Trust, a Limited Partner of Blair Royalties, Ltd.; and Mary Alice Blair, an individual and beneficiary of the Mary Alice Blair Trust, Plaintiffs/Appellants,

v.Robert G. Blair, individually, as beneficiary of the Robert G. Blair Trust, as Trustee under Last Will and Testament of W.W. Blair, deceased, as Trustee of each Limited Partner of Blair Royalties, Ltd., as General Partner of Blair Royalties, Ltd. and as an officer, Director and owner of Comanche Exploration Co. LLC, and Comanche Resources Company; The Robert G. Blair Trust, a Limited Partner of Blair Royalties, Ltd.; Comanche Exploration Co. LLC; Comanche Resources Company; The John David Blair Trust, a Limited Partner of Blair Royalties, Ltd.; JOHN DAVID BLAIR, individually, as beneficiary of the John David Blair Trust, as Trustee under Last Will and Testament of W.W. Blair, deceased, as Trustee of each Limited Partner of Blair Royalties, Ltd. and as an officer, Employee and owner of Comanche Exploration Co. LLC, and Comanche Resources Company; and Blair Royalties, Ltd., Defendants/Appellees.

Case No. 112,895 (

C/w 113,395)

Court of Civil Appeals of Oklahoma, Division No. 2, DIVISION II .

Filed: May 13, 2016

Mandate Issued: July 18, 2016

Rehearing Denied June 15, 2016

Michael J. Blaschke, Michael J. Blaschke, P.C., Rachel Lawrence Mor, Dan M. Peters, Oklahoma City, Oklahoma, and Richard M. Healy, Richard M. Healy, P.C., Oklahoma City, Oklahoma, and Larry Derryberry, Derryberry & Naifeh, LLP, Oklahoma City, Oklahoma, for Plaintiffs/Appellants.

Laura McConnell–Corbyn, Hartzog Conger Cason & Neville, Oklahoma City, Oklahoma, for Defendants/Appellees.

OPINION BY P. THOMAS THORNBRUGH, PRESIDING JUDGE:

¶ 1 The above captioned Plaintiffs appeal the decision of the district court in a trust/accounting case and the subsequent attorney fee award to Defendants. On review, we affirm these decisions.

BACKGROUND

¶ 2 This case began in 2001, was presided over by three different judges during its history, and was finally tried in 2014. It arose from the 1977 will of W.W. Blair creating six testamentary trusts for his six children. The value of the assets contained in these trusts is disputed. Plaintiffs state that W.W. Blair divided “vast holdings” of oil and gas property among the trusts. Defendants state that the assets devolved to each trust were worth approximately $250,000. As of 1978, defendants Robert and John David Blair (Defendants) were the trustees of these trusts. In 1982, purportedly for tax purposes, the trusts were incorporated by agreement into a partnership, the Blair Royalties Limited Partnership (BRL). Robert Blair was general partner, and the six individual trusts were limited partners. W.W. Blair's estate was finally closed, and any remaining devised assets were transferred to BRL.

¶ 3 Plaintiffs suspected that the asset value of, and income from, the trusts and later the partnership were smaller than they properly should have been, and made various accounting demands on Defendants. Defendants provided some degree of accounting, but Plaintiffs disputed its sufficiency, arguing that they were entitled to, and had not received, a “full fiduciary accounting.” Defendants argued that Plaintiffs had received the accounting they were entitled to, and that their only further remedy was the right to inspect the books and records of the partnership and derive their own figures from the books.

¶ 4 In 2001, Defendants sued Plaintiffs. Neither party designated the 2001 petition as part of the record, but Plaintiffs describe it as one “seeking an accounting.” In 2004, the court gave notice of intent to dismiss for lack of prosecution. In 2006, Plaintiffs requested leave to amend to add several tort claims, including fraud in all its forms, unjust enrichment, breach of fiduciary duty, negligence, breach of contract, and usurpation of partnership opportunities. The court refused permission to amend, and Plaintiffs filed the claims as a separate suit, in Oklahoma County Case No. CJ–2006–10547. In 2007, the court ordered that case to be consolidated into the current case.

¶ 5 In July 2009, the court gave a second notice of intent to dismiss for lack of prosecution. Plaintiffs then filed another request to amend, which the court granted the following December. For the next two years, the parties intermittently skirmished over discovery. In January 2012, the court entered a scheduling order setting trial for August 2012, but later struck this date at the request of the parties. In June 2012, Plaintiffs requested and obtained leave to file another amended petition, which was filed in August 2012.

¶ 6 The same month, Plaintiffs filed a “motion to require Defendants to account, and to set evidentiary hearing to determine the manner of accounting to Plaintiffs and to the court.” The court entered a new scheduling order setting trial for March 2013. The court denied the “motion to require Defendants to account” on the grounds that no accounting claim was currently before the court,¹ but purportedly gave Plaintiffs permission to “clean up their petition and add the accounting claim back against the original defendants.” Plaintiffs did so in December 2012, re-instituting their claims for “an accounting” and requesting the appointment of a receiver or special master over the trusts. The petition at this time included all tort claims previously raised, as well as a claim of “statutory conversion” that apparently had been added sometime between 2006 and 2012. Plaintiffs then filed a second “motion for an accounting and request for evidentiary hearing to determine the manner and scope of accounting.” The court evidently held a hearing on this motion in February 2013. The court subsequently entered a minute order which stated “plaintiffs' second motion for an accounting and request for evidentiary hearing to determine the manner and scope of accounting—granted in part, court to take remaining issues under advisement.”

¶ 7 The March 13, 2013 trial date evidently was struck, and expert reports were finally exchanged in July 2013. In August 2013, Plaintiffs filed a third motion seeking an “order to require an accounting,” stating that the court had not ruled on their prior request, but had taken it under advisement. In September 2013, Plaintiffs voluntarily dismissed the tort claims they had maintained since 2006. After the dismissal of the tort claims, the court responded that the issue of the accounting was set for an “evidentiary non-jury hearing,” and outlined the following elements Plaintiffs would be required to show at the hearing: 1) proof that a fiduciary duty existed between the parties; 2) proof that Plaintiffs have a right to an accounting; 3) proof that an accounting has not been provided to Plaintiffs; and 4) presentation of facts and evidence indicating a balance is due to Plaintiffs. On March 24–25, 2014, the court, now headed by a third judge, held a hearing/trial on these issues. After the presentation of Plaintiffs' evidence, the court granted Defendants' motion for directed verdict (“demurrer”), as follows:

The Court, having heard the evidence presented by the Plaintiffs, the cross-examination of Plaintiffs' witnesses, and having considered the elements and burdens of proof set forth in the Order entered February 12, 2014, finds as follows:

1. Plaintiffs have met their burden of proof that a fiduciary duty existed or does exist between Plaintiffs and Defendants, Robert and David Blair.

2. Plaintiffs have met their burden of proof that they have a right to an accounting.

3. Plaintiffs have failed to meet their burden of proof that an accounting has not been provided to Plaintiffs. The Court finds that the trust instrument and the partnership Agreement at issue herein control the manner in which Defendants, Robert and David Blair, are required to account to Plaintiffs. The Court finds based upon the evidence presented herein that Defendants, Robert and David Blair, have accounted to Plaintiffs as required by the trust instrument and Partnership Agreement.

4. Plaintiffs have failed to meet their burden of proof in presenting facts and evidence which reasonably tend to prove that there is a balance due and owing to Plaintiffs.² Plaintiffs have placed great emphasis on the report of their expert. However, the Court finds that the report lacks several pieces of relevant information material to supporting the expert's analysis and ultimate conclusion. Based upon the testimony of Plaintiffs expert, even if he were afforded the documentation that he has requested, his final analysis could conclude that Plaintiffs are owed more, less, or nothing at all. This is too speculative and unreliable for this Court's purposes....

¶ 8 Plaintiffs appealed the decision as Appeal No. 112,895. Defendants subsequently sought attorney fees and costs totaling $502,515. After a hearing which included expert testimony, the court awarded fees of $296,465 and costs of $16,209, pursuant to 60 O.S.2011 § 175.57D. Plaintiffs appealed this fee award as Appeal No. 113,395, which was later consolidated with Appeal No. 112,895.

¶ 9 While Plaintiffs urge some 35 combined allegations of error, the issues of consequence on appeal are 1) whether the court correctly exercised its equitable jurisdiction in this “accounting” case; 2) whether the court was correct in finding that Defendants had satisfied their accounting duty to Plaintiffs; and 3) whether the trail court's order awarding attorney fees was in error.

STANDARD OF REVIEW

¶ 10 During the multiple years of litigation, changes of counsel, consolidations, dismissals, and amendments in this case, Plaintiffs' basic...