Monzo v. Eighth Judicial Dist. Court of State (In re Irrevocable Trust Agreement of 1979)

• Decision Date: 07 August 2014
• Docket Number: No. 62160.,62160.
• Citation: 130 Nev. Adv. Op. 63,331 P.3d 881
• Parties: In the Matter of the IRREVOCABLE TRUST AGREEMENT OF 1979. Charron C. Monzo, as Beneficiary of the Charron C. Monzo Real Estate Trust Agreement of 2005, Petitioner, v. The Eighth Judicial District Court of the State of Nevada, in and for the County of Clark; and The Honorable Gloria Sturman, District Judge, Respondents, and Daisy Monzo, Real Party in Interest.
• Court: Nevada Supreme Court

331 P.3d 881

130 Nev. Adv. Op. 63

In the Matter of the IRREVOCABLE TRUST AGREEMENT OF 1979.Charron C. Monzo, as Beneficiary of the Charron C. Monzo Real Estate Trust Agreement of 2005, Petitioner,

v. The Eighth Judicial District Court of the State of Nevada, in and for the County of Clark; and The Honorable Gloria Sturman, District Judge, Respondents,andDaisy Monzo, Real Party in Interest.

No. 62160.

Supreme Court of Nevada.

Aug. 7, 2014.

Bailus Cook & Kelesis, Ltd., and Marc P. Cook and Kathleen T. Janssen, Las Vegas, for Petitioner.

Snell & Wilmer, LLP, and Patrick G. Byrne, Las Vegas; Gordon Silver and Bradley J. Richardson and Puneet K. Garg, Las Vegas, for Real Party in Interest.

BEFORE THE COURT EN BANC.

OPINION

By the Court, HARDESTY, J.:

Real party in interest Daisy Monzo executed a deed gifting a condominium that she owned to an irrevocable trust for the benefit of her daughter, petitioner Charron C. Monzo. Daisy later rescinded that transfer based on alleged unilateral mistakes in the execution of the deed conveying the property to the trust. We are asked to determine whether unilateral mistakes, if proven, will allow the donor to rescind or reform an errant gift. We hold that a donor may obtain relief from an erroneous gift if he or she proves by clear and convincing evidence that the donor's intent was mistaken and was not in accord with the donative transfer. Further, remedies available to correct such mistakes, which include rescission or reformation of the deed transferring the property, depend on the nature of the unilateral mistake in question.

FACTS AND PROCEDURAL HISTORY

Daisy and her three adult daughters, Charron, Charlene, and Michelle, established three irrevocable inter vivos real estate trusts, each benefiting a daughter, and into each of which a one-third interest in properties located in Arizona and New York was transferred. Daisy was the sole original trustee of each of the trusts. Michelle lived in the Arizona property and Charlene lived in the New York property. These properties were each valued at approximately $500,000. Charron lived with Daisy in a Las Vegas condominium owned by Daisy that is valued at over $2 million, but that had not been transferred into any of the trusts.

When Charron and Daisy considered transferring the Las Vegas condo into a trust for Charron's use, Charron introduced Daisy to Las Vegas attorney Michael Rasmussen who met with them several times about the proposed transfer. During these meetings, they discussed whether Daisy would retain control over the Las Vegas condo if it was transferred into a trust, whether Daisy needed to transfer the condo to avoid having it escheat to the state upon her death, and how the condo should be transferred and titled if it were to be placed into a trust. Despite the ongoing consultations with Rasmussen over the transfer of the condo, Daisy never provided Rasmussen with any of her prior estate planning documents or authorized him to contact her other attorneys.

Rasmussen prepared a deed, which Daisy signed, gifting a 100–percent interest in the Las Vegas condo from Daisy to Charron's trust. But Rasmussen later learned that, when transferring real property into her family trusts, Daisy typically transferred a one-third interest in the subject properties to each daughter's trust, rather than the 100–percent interest in the condo that she had transferred to Charron's trust. Rasmussen prepared a correction deed to rectify this situation, but Daisy refused to sign that deed. Instead, three months after Daisy signed the deed transferring the Las Vegas condo into Charron's trust, Daisy signed another deed, prepared by a different attorney, transferring the condo back into her own name.

After Daisy rescinded the prior gift, Charron filed a petition in the district court seeking accountings of the various family trusts and an order requiring Daisy to transfer the Las Vegas condo back to Charron's trust. The accounting actions were consolidated and the Las Vegas condo issue was addressed separately. Daisy filed counterclaims against Charron based on the original transfer of the Las Vegas condo into Charron's trust for, among other things, fraudulent misrepresentation, elder abuse, breach of contract, conversion, undue influence, and mistake. Daisy also moved the district court for partial summary judgment, seeking rescission of the initial gift deed based on at least three mistakes that Daisy allegedly made in transferring the condo into Charron's trust. First, Daisy asserted that she mistakenly believed that the deed would transfer the condo into a trust that she controlled while granting her estate planning flexibility. Second, she argued that she mistakenly thought that transferring the property was necessary to avoid having it escheat to the state upon her death. And third, she contended that she mistakenly believed that, consistent with prior estate planning practices, the deed would transfer a one-third interest in the property to each daughter's trust, rather than conveying the full interest to Charron's trust. Charron filed a countermotion for partial summary judgment on Daisy's counterclaims and, in the alternative, for reformation of the deed transferring the condo into Charron's trust, if the district court ultimately determined that Daisy mistakenly transferred a 100–percent interest in the condo into Charron's trust, instead of a one-third interest into each daughter's trust.

Following briefing and a hearing on these motions, the district court denied Charron's countermotions and entered partial summary judgment in Daisy's favor, concluding that Daisy made unilateral mistakes in executing the gift deed and rescinding the initial deed. The district court purported to apply Nevada's general unilateral mistake law, together with gift law from other jurisdictions, in granting summary judgment. But although the district court held that Daisy's execution of the deed transferring title to the condo into the trust was based on unilateral mistakes, it made no findings as to what specific mistakes affected the execution of the deed or what Daisy's intent was when she made the donative transfer, Charron then filed this original writ petition challenging the district court's partial summary judgment order.

DISCUSSION

In her petition, Charron contends that summary judgment was improperly granted in Daisy's favor on the unilateral mistake and rescission issues because questions of material fact remained as to Daisy's intent in transferring a 100–percent interest in the Las Vegas condo into Charron's trust. Charron contends that the summary judgment evidence demonstrated that Daisy did not make any mistake in the transfer, but alternatively asserts that if a mistake was made, this court should clarify the proper remedy to address mistakes in a donative transfer. In response, Daisy argues that no genuine issues of material fact remained, as the evidence demonstrated that she made unilateral mistakes in executing the deed transferring the property into Charron's trust, and that she, as the donor, was entitled to elect rescission to correct these mistakes. The parties and the district court all recognize that this court has not addressed unilateral mistake in the context of a donative transfer.

Standard of review

Although this court generally declines to exercise its discretion to consider writ petitions challenging district court orders granting or denying summary judgment, Smith v. Eighth Judicial Dist. Court, 113 Nev. 1343, 1344, 950 P.2d 280, 281 (1997), we nevertheless will exercise our discretion to consider such petitions when “an important issue of law needs clarification and considerations of sound judicial economy and administration militate in favor of granting the petition.” Int'l Game Tech., Inc. v. Second Judicial Dist. Court, 124 Nev. 193, 197–98, 179 P.3d 556, 559 (2008). We have not previously addressed whether a donor making an inter vivos gift or donative transfer may rely on his or her unilateral mistake in making the gift to obtain relief from the property transfer. As this original writ proceeding provides us with the opportunity to address and clarify this important issue of donative transfer law, we exercise our discretion to consider this matter on the merits. Smith v. Eighth Judicial Dist. Court, 107 Nev. 674, 677, 818 P.2d 849, 851 (1991).

This court typically reviews a petition for a writ of mandamus to determine whether the district court engaged in an arbitrary or capricious exercise of discretion, and we review de novo issues of law presented in the context of such an extraordinary writ proceeding.¹Int'l Game Tech., 124 Nev. at 197–98, 179 P.3d at 558–59.

Mutual and unilateral mistake in the contract context do not apply to donative transfers

In granting rescission of the transfer deed, the district court held that Daisy's transfer of the property into Charron's trust was affected by unilateral mistake. Charron's arguments in her original writ petition, however, initially focus on whether a mutual mistake occurred in this transfer, although she also subsequently addressed the application of unilateral mistake to this dispute in responding to Daisy's assertion that the transfer of the property was, as the district court concluded, based on unilateral mistakes.

Contract-based mistake

We have previously held, in the contract context, that a mutual mistake may provide a basis for relief from a contract. Gramanz v. Gramanz, 113 Nev. 1, 8, 930 P.2d 753, 758 (1997). A “[m]utual mistake occurs when both parties, at the time of contracting, share a misconception about a vital fact upon which they based their bargain.” Id. (internal quotation omitted). But as other courts have concluded, mutual mistake is entirely inapplicable in the gift context because a gift, by its very nature, is unilateral. This is because “[w]hen a deed is exchanged in a contractual relationship, both the grantor and grantee...