Moore v. Moore

Citation509 P.3d 597 (Table)
Decision Date13 May 2022
Docket Number122,944
Parties John A. MOORE and Joyce E. Moore Trust, and John W. Moore, Trustee, Appellants, v. Jebediah MOORE and Steven L. Moore, Appellees.
CourtCourt of Appeals of Kansas

Michael R. Ong, of Ong Law Firm, of Overland Park, for appellants.

John W. Fresh and Andrew E. Werring, of Farris, Fresh & Werring Law Offices, of Atchison, for appellees.

Before Atcheson, P.J., Hill and Cline, JJ.

MEMORANDUM OPINION

Per Curiam:

This intrafamilial battle over valuable farmland in far northeast Kansas returns to our court for a second time following the Brown County District Court's entry of findings of fact and conclusions of law that Steven Moore did not unduly influence his mother Joyce Moore to sell about two quarter sections to his son and her grandson Jebediah at far below market value. The transaction substantially drained a trust Joyce and her late husband John had established and effectively disinherited their three other children. The trust has appealed. We conclude the trial evidence does not support key factual findings of the district court, and its judgment upholding the sale, in turn, cannot stand. The supported findings show Steven did not meet his burden to overcome a presumption of undue influence that arose from his confidential or fiduciary relationship with Joyce. We, therefore, reverse the judgment for Steven and Jebediah and remand with directions that the district court enter judgment for the trust rescinding the land sale in accordance with this opinion.

FACTUAL AND PROCEDURAL BACKGROUND

The issues before us now have narrowed from the earlier appeal, and we assume the reader's familiarity with that opinion, Moore v. Moore , 56 Kan. App. 2d 301, 429 P.3d 607 (2018) (Moore I ). John and Joyce set up the John A. and Joyce E. Moore Revocable Living Trust in 1999 and placed several tracts of land in the trust. They amended the trust at least twice over the years. In 2014, the trust held a quarter section, including the Moores’ home; a quarter section that included the home of Steven and his wife; and a third quarter section. The trust provided that upon the deaths of both John and Joyce, Steven would receive the quarter section on which he lived. The other two parcels would go to John W. Moore, Sue Hartter, and Wilma Rainwater—the Moores’ other children. As trustees, John and Joyce could move assets into or out of the trust.

John and Joyce farmed the land. Joyce always deferred to John when it came to the finances of the farm. Of the children, only Steven chose to join in the farming operation as a career. Jebediah, who was in his early 20s, had shown a similar inclination and worked on the farm. As John and Joyce got older, Steven assumed a greater role in the day-to-day operation of the farm and in the financial management of the business. John and Joyce hoped to keep the farm "in the family," so the trust provided that should John W., Sue, or Wilma wish to sell their interests in the land, they had to give Steven a first option to buy at a fair-market price.

In May 2014, John was hospitalized with terminal cancer

. Joyce, then 80 years old, had been emotionally and physically depleted in caring for him. They separately signed a contract and related documents selling their home and the surrounding two acres to Jebediah on terms that could be fairly characterized as quite favorable to their grandson. John died days later. In Moore I , Joyce and the trust challenged that transaction on the grounds she and John lacked the capacity to contract because of their immediate adverse circumstances and even if they had capacity, they had been unduly influenced by Steven. Without belaboring the procedural history, those claims have been decided adversely to them. That transaction has not been challenged in this appeal.

Jebediah moved in with Joyce to assist her and to maintain the family home. Steven assumed control of the farming operation and oversaw Joyce's personal finances and other matters. According to Joyce, Steven repeatedly told her over the summer that she should let Jebediah buy the two quarter sections of farmland designated in the trust to go to John W., Sue, and Wilma. If she did not, Steven warned, he could not afford to purchase the land from them and, as a result, the family farm could be sold off. Steven disclaimed pestering Joyce about the farmland.

In September 2014, Joyce sold the two quarter sections to Jebediah for $292,000 with a $5,000 down payment and the balance to be paid to Joyce over 30 years in monthly installments at two percent annual interest. An appraisal done in probating John's estate valued the two tracts together at about $1.4 million. Don Cashman, a Hiawatha lawyer, drafted the contract of sale at Steven's request. He and his law firm had done real estate and tax work for John and Joyce for about 30 years. The firm had prepared the trust and handled the amendments to it. Cashman did not consult individually with Joyce about the land sale, the terms of the contract, or how the transaction would deplete the trust assets.

A year later, Joyce and the trust filed this civil action against Steven and Jebediah to set aside both the May and September contracts on equitable grounds of legal incapacity or undue influence and against Cashman's law firm for malpractice and breach of fiduciary duty. Joyce and the trust settled with the law firm before trial, and those claims were dismissed, leaving only the equitable claims against Steven and Jebediah. Although Steven and Jebediah have been named defendants throughout the litigation, Steven orchestrated the land sales to Jebediah. The evidence essentially shows Jebediah to have been a supernumerary in the legal drama. Father and son are united in legal interest and have been represented by the same lawyer from the outset.

A jury heard testimony and received documentary evidence during a four-day trial in September 2016 and returned verdicts for Steven and Jebediah. Joyce and the trust appealed. In Moore I , we found the district court had improperly instructed the jury on the law governing undue influence, so we reversed the verdicts on those claims. Because all of the claims were equitable—meaning no one was entitled to a jury trial in the first place—we remanded with directions that the district court consider the evidence and render findings of fact and conclusions of law as if there had been a bench trial in September 2016. See Moore I , 56 Kan. App. 2d at 323-24, 326.

The district court filed a lengthy memorandum decision in February 2020 ruling for Steven and Jebediah. Joyce died between the jury trial and the district court's memorandum decision, and John W. was substituted as trustee for the trust. The trust has appealed and challenges the sufficiency of the district court's findings and conclusions as to the September 2014 sale of the farmland to Jebediah.

LEGAL ANALYSIS
Governing Legal Principles

In the customarily recited common-law standard, an appellate court reviews a district court's judgment following a bench trial by examining the factual findings to determine if they are supported by substantial evidence and by then asking whether those findings warrant the legal conclusions upon which the judgment rests. We must defer to the district court's assessment of witness credibility and its resolution of other conflicts in the evidence. But our examination of the conclusions together with the judgment compose a question of law, so our answer owes no particular deference to the district court. See Gannon v. State , 298 Kan. 1107, 1175-76, 319 P.3d 1196 (2014) ; Kansas Health Care Stabilization Fund v. St. Francis Hospital , 41 Kan. App. 2d 488, 503, 203 P.3d 33 (2009).

We are statutorily directed to accept a district court's findings of fact in a bench trial unless they are clearly erroneous, giving "due regard" to witness credibility determinations. K.S.A. 2020 Supp. 60-252(a)(5). Although the substantial evidence standard arguably may impose greater restraints on appellate courts than the clearly erroneous standard, we need not resolve the point today. Compare Purnell v. Inland Wetlands and Watercourses Commission of Town of Washington , 209 Conn. App. 688, 725-26, 269 A.3d 124 (2022) (substantial evidence more restrictive than clearly erroneous) with Pegasus Wind, LLC v. Tuscola County , ––– N.W.2d ––––, 2022 WL 572498, at *2 (Mich. App. 2022) (substantial evidence standard same as clearly erroneous standard). Our conclusion does not turn on a fine distinction between the two—a distinction that isn't always drawn. See Weber v. Tillman , 259 Kan. 457, 461-62, 913 P.3d 84 (1996) (district court's findings of fact must be "supported by substantial competent evidence" and "cannot [be] set aside ... unless clearly erroneous").

Before heading deeper into the law, we point out a foundational fact that guides the legal analysis. The district court found that Steven had a confidential or fiduciary relationship with Joyce in 2014 leading up to her signing the contract selling the farmland to Jebediah based on their familial relationship and the extent to which he had taken over managing the farming operation and Joyce's personal finances. The evidence amply supports that conclusion, and Steven does not dispute the finding in this appeal. The existence of such a special relationship enhances the judicial scrutiny of undue influence claims aimed at setting aside contracts. We outline those legal principles and then delve into the district court's findings and conclusions.

In Moore I , we summarized the applicable law this way:

"Kansas courts have long recognized that contracts between parties in a confidential or fiduciary relationship require particular scrutiny should their fairness be challenged. The danger, of course, lies with the party in whom trust has been placed and his or her ability to exploit the relationship to gain unfair advantage in any transaction with the other party. As an antidote, the
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