McNeely v. Hiatt
| Decision Date | 03 January 1996 |
| Parties | Theodore R. McNEELY, Robert J. Adams, Ronald W. Adams and Kristi Landucci, Respondents, v. Eva HIATT, in her capacities as Personal Representative of the Estate of Dollie E. Crockett, Deceased, and the Trustee of the Zahnie Crockett Revocable Living Trust, Appellant. In the Matter of the Trust of Zahnie J. Crockett, Deceased. Theodore R. McNEELY, Robert J. Adams, Ronald W. Adams and Kristi Landucci, Respondents, v. Eva HIATT, Trustee of the Trust of Zahnie J. Crockett, Deceased, Appellant. In the Matter of the Trust of Dollie E. Crockett, Deceased. Theodore R. McNEELY, Robert J. Adams, Ronald W. Adams and Kristi Landucci, Respondents, v. Eva HIATT, Personal Representative of the Estate of Dollie E. Crockett, Deceased, Appellant. 92CV105, 92PR019, 91PR048; CA A82252. |
| Court | Oregon Court of Appeals |
Les Swanson, Jr., Portland, argued the cause and filed the briefs for appellant.
James N. Westwood, argued the cause for respondents. With him on the brief were John R. Bakkensen and Miller, Nash, Wiener, Hager & Carlsen, Portland.
Before RIGGS, P.J., and LANDAU and LEESON, JJ.
Plaintiffs, the surviving grandchildren of Dollie and Zahnie Crockett, initiated this action to challenge the probate of the will of Dollie Crockett. Consolidated with this action is a separate proceeding in which plaintiffs sued Eva Hiatt, daughter of Dollie and Zahnie Crockett, in her capacity as personal representative of Dollie Crockett's estate and as trustee of Zahnie Crockett's revocable living trust. Plaintiffs alleged breach of fiduciary duty and prayed for the imposition of a constructive trust, an accounting and an award of attorney fees. Also consolidated with this action is plaintiffs' petition for the removal of defendant Hiatt as trustee of the Zahnie Crockett trust. The trial court set aside Dollie Crockett's will, removed Hiatt as trustee, invalidated Hiatt's conveyance of certain real property from the Zahnie Crockett trust, ordered an accounting of the disposition of the trust assets and awarded attorney fees against Hiatt in her personal capacity, not as personal representative or trustee. Hiatt appeals, assigning error to the setting aside of the will, to the invalidation of the sale of trust property and to the order requiring her personally to pay attorney fees. On de novo review, ORS 19.125(3), we reverse the portion of the judgment requiring Hiatt personally to pay attorney fees and affirm the balance of the judgment.
During their marriage, Dollie and Zahnie Crockett accumulated substantial holdings, including parcels of timber and farmland in Curry County, amounting to some 2,200 acres, collectively known as "the Ranch." They had four children: Dollie Jean, June, Eva Hiatt and Zahna. Dollie Jean, the eldest, had four children, who are plaintiffs in this action. Dollie Jean died in 1978.
Hiatt lived in Baker City with her husband and worked as a CPA. In the late 1970's, however, Dollie and Zahnie asked her to return to Curry County to help with the Ranch. She did so.
In 1979, Zahnie Crockett became terminally ill. With the assistance of Hiatt, he and Dollie executed wills and created a revocable living trust. Under the terms of those instruments, Dollie and Zahnie each held a 50-percent interest in the Ranch. Upon Zahnie's death, half of his interest in the Ranch would pass to Dollie directly; the other half would pass to the Zahnie Crockett trust, to be administered by Hiatt for the purpose of supporting Dollie and the three surviving children. Upon Dollie's death, the trust was to be distributed in four equal parts: one part to each of the three surviving children and the fourth part to be divided equally among plaintiffs, the children of Dollie Jean, the deceased fourth daughter. Upon her death, Dollie's interest in the Ranch was to pass to the three children and plaintiffs in the same fashion.
One month after the execution of the wills and the trust instrument, Zahnie Crockett died. In accordance with the terms of Zahnie's will, Dollie inherited one half of Zahnie's 50 percent of the Ranch, giving her a total interest in the property of 75 percent. The remaining 25-percent interest went to the trust. After Zahnie's death, one of plaintiffs, Ted McNeely, inquired about the will of his grandfather. Hiatt refused to disclose the contents of the will and asserted her sole authority over the disposition of the trust.
In 1984, Hiatt arranged to have Dollie's will revised. She personally contacted the attorneys and provided them with all the necessary information. Although she was to be a beneficiary of the 1984 will, Hiatt made no arrangements for Dollie to receive advice from anyone else on the preparation of the new document; indeed, she obtained from Dollie a written waiver of any conflict and a statement that Dollie did not wish independent advice. The lawyer who ultimately prepared the new document saw Dollie Crockett only at the signing.
Under the terms of the 1984 will, Dollie's 75-percent interest in the Ranch would, upon her death, be distributed in three equal shares, one to each of the three surviving daughters, including Hiatt. Plaintiffs were to receive one dollar each. Eleven days after the will was signed, Hiatt--acting as trustee of the Zahnie Crockett trust--sold the 25-percent interest in the Ranch then held by the trust to Dollie Crockett. Hiatt did not inform the beneficiaries of the changes; only she and the attorney she retained knew of the sale. She later testified that she sold the property not to benefit the trust, but to facilitate the new estate plan for Dollie Crockett. The net effect of the foregoing changes was that plaintiffs would inherit no interest in the Ranch.
On November 25, 1991, Dollie Crockett died. On December 4, 1991, Hiatt filed a petition to probate Dollie Crockett's 1984 will. The court admitted the will to probate and appointed Hiatt as personal representative.
On March 16, 1992, plaintiffs filed a Petition to Contest the 1984 will. The petition named Hiatt in her capacity as personal representative of Dollie Crockett's estate. Hiatt was not named individually. Plaintiffs alleged that the will "was induced by undue influence and fraud." Plaintiffs requested that Hiatt, as personal representative, be ordered to show cause why the order admitting the will into probate should not be revoked. Plaintiffs also requested that Hiatt be removed as personal representative of the estate.
Plaintiffs also alleged under each claim for relief that they "are equitably entitled to their attorney fees."
On May 14, 1992, plaintiffs filed an Objection to Hiatt's Petition for Approval of Final Account and Distribution of the Zahnie Crockett trust. Plaintiffs' objection incorporated by reference essentially all the allegations of their April complaint against Hiatt. Plaintiffs also alleged that the trust was not ready for final settlement and distribution, because, as a result of Hiatt's breach of fiduciary duty, Dollie Crockett's estate contained assets to which the Zahnie Crockett trust was entitled. Plaintiffs requested that they be awarded their costs and attorney fees but alleged no specific authority regarding fees.
The three actions were consolidated. The court concluded that Dollie Crockett's 1984 will was void, because it was the product of Hiatt's undue influence. The court also concluded that Hiatt acted while in a position involving a conflict of interest and had breached her fiduciary duties by selling the Ranch interest from the trust to Dollie Crockett in furtherance of her personal interests without obtaining a sufficient valuation and without advising the beneficiaries of the sale. On November 16, 1993, the court entered a judgment ordering that the 1984 will was void, that Hiatt be removed as trustee and personal representative, that the sale of the property from the trust to the estate be rescinded, and that Hiatt pay plaintiffs $68,019.70 in attorney fees.
Hiatt first challenges the trial court's invalidation of the will. According to Hiatt, the trial court erred in setting aside the 1984 will without having made a specific finding that Hiatt held a position of "dominance" over Dollie Crockett. Plaintiffs argue that no such finding is required. We conclude, on de novo review, that, regardless of whether such an explicit finding is required, the evidence in the record shows that Hiatt held a position of dominance over Dollie Crockett. Dollie relied exclusively on Hiatt, largely because of Hiatt's experience and professional training. Hiatt exercised near exclusive control over the preparation of the 1984 will and took steps to ensure that others would not be in a position to influence Dollie Crockett in the process.
Hiatt alternatively argues that the trial court erred in invalidating the will, because its decision was based on an incorrect application of the burden of proof. Hiatt notes that the trial court held that, once plaintiffs demonstrated undue influence, the burden "shifted" to Hiatt to disprove undue influence. Plaintiffs argue that the trial court's remark must be...
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