Osguthorpe v. Rudd (In re Osguthorpe)
| Decision Date | 01 July 2021 |
| Docket Number | No. 20180686,20180686 |
| Citation | 491 P.3d 894 |
| Court | Utah Supreme Court |
| Parties | In the MATTER OF The ESTATE OF D.A. OSGUTHORPE, D.V.M. Stephen A. Osguthorpe, The Dr. D.A. Osguthorpe Trust, Jerry S. Osguthorpe, Sue Ann Larsen, and Karen Brown, Appellants, v. David R. Rudd and Ballard Spahr, LLP, Appellees. |
Peggy A. Tomsic, James E. Magleby, Christine T. Greenwood, Jennifer Fraser Parrish, Salt Lake City, for appellants
Mark R. Gaylord, Jonathan O. Hafen, Jenifer L. Tomchak, Salt Lake City, for appellees
INTRODUCTION
¶1 Dr. D.A. Osguthorpe (Dr. Osguthorpe) passed away in 2009, leaving behind significant assets. Dr. Osguthorpe also left behind multiple versions of his will and trust documents. A dozen years after his death, his now-adult children (Osguthorpe Children or Children) are embroiled in a legal battle with David R. Rudd—the nephew of Dr. Osguthorpe's second wife (June). Rudd is an attorney who had represented June and Dr. Osguthorpe in various matters. The Osguthorpe Children also assert claims against Ballard Spahr, LLP (Ballard), the law firm where Rudd was a partner.
¶2 At the heart of this dispute are the Osguthorpe Children's allegations that Rudd and Ballard (Rudd/Ballard) improperly influenced Dr. Osguthorpe to amend his will and trust in a manner that shifted a portion of the Children's expected inheritance to June and to Dr. Osguthorpe's alma mater. The Osguthorpe Children also allege that Rudd/Ballard engaged in improper and/or misleading conduct which resulted in one of Dr. Osguthorpe's sons losing co-ownership of the land on which his house stood. The Osguthorpe Children further allege that, following Dr. Osguthorpe's death, Rudd/Ballard mishandled estate assets. And they claim that Rudd and June improperly removed assets from Dr. Osguthorpe's estate (Estate).
¶3 After years of litigation, three of the district court's orders are before us. The Osguthorpe Children first appeal the district court's order granting Rudd/Ballard's motion to dismiss the Children's claim for intentional interference with inheritance. The Osguthorpe Children contend the district court erred by declining to recognize the tort and by dismissing their claim on the alternative ground that, even if the tort were a valid cause of action in Utah, the probate proceeding would resolve all of their complaints.
¶4 The Osguthorpe Children next maintain that the district court erroneously granted summary judgment on several other tort claims they wanted to assert on behalf of Dr. Osguthorpe's Estate. The Osguthorpe Children assert that the district court erroneously denied their motion to have the Estate's claims assigned to them after the Estate's court-appointed special fiduciary declined to pursue the claims on behalf of the Estate.
¶5 The Osguthorpe Children lastly aver that the district court improperly granted a motion in limine that prevented them from impeaching Rudd with statements Rudd had made in support of his motion to set aside a settlement agreement. The district court excluded those statements as a "reference to the parties’ mediation," which the court concluded was inadmissible under rules 401, 402, 403, and 408 of the Utah Rules of Evidence and Utah Code section 78B-10-104.
¶6 We first conclude that, under certain circumstances, a party can assert a claim for intentional interference with inheritance and we therefore reverse the district court's dismissal of that claim. We affirm the district court's decision to not assign the Estate's claims to the Osguthorpe Children. But we take the opportunity to clarify the law that underlies the district court's decision. Finally, we reverse the district court's grant of the motion in limine . We remand for additional proceedings.
¶7 Dr. Osguthorpe passed away in 2009. He was survived by his four adult children from his first marriage: Stephen A. Osguthorpe (Stephen), Jerry S. Osguthorpe (Jerry), Sue Ann Larsen (Sue Ann), and Karen Brown (Karen) (collectively, Osguthorpe Children or Children). His second wife of nearly two decades, June Osguthorpe (June), also outlived him.
¶8 Dr. Osguthorpe was a veterinarian, educated at Colorado State University (CSU). Dr. Osguthorpe and his first wife, Afton, acquired significant assets, including hundreds of acres of land throughout Utah. The Osguthorpe's used much of this land for ranching and agricultural businesses. Dr. Osguthorpe held some of these properties directly, while some of his business entities owned others. A trust established in Afton's name (Afton Trust) held a number of other properties.
¶9 The Osguthorpe's held extensive acreage in Summit County, including a 19-acre parcel in Park City (19 Acres) that was primarily used for crop cultivation. Stephen's home sits on part of the 19 Acres.
¶10 The Osguthorpe Children claim that from an early age they contributed their efforts at "well below market rates" to the family ranching and agricultural businesses, as well as to Dr. Osguthorpe's veterinary practice. The Osguthorpe Children allege Dr. Osguthorpe "repeatedly assured" them that, upon his death, he would give them the family businesses and real property upon which those businesses operate, to reward the Children's "extensive efforts and contributions."
¶11 Afton passed away in 1989. Dr. Osguthorpe married June in 1992. They signed a prenuptial agreement that acknowledged their individual assets and agreed to keep separate their current and future properties.
June's nephew-by-marriage, Rudd, represented June in the prenuptial negotiations. June has three adult children from a previous marriage.
¶12 Dr. Osguthorpe amended his will and trust documents multiple times. Central to this dispute are amendments made in 1998, 2006, and 2008.
¶13 The Osguthorpe Children allege that, even after September 2008, their father continued to assure them that "his and June's assets remained separate and that his estate plan provided that June would not receive any significant assets of [his] upon his death." The estate plan that the Osguthorpe Children contend reflects Dr. Osguthorpe's "intentions and his oft-repeated promises to [Stephen] and Jerry" is the plan from 1998. This plan involved a will (1998 Will) and trust entitled "the Dr. D.A. Osguthorpe Trust" (1998 Trust) (collectively, 1998 Estate Plan).
¶14 The 1998 Estate Plan designates the Osguthorpe Children as joint personal representatives under the 1998 Will and joint successor-trustees under the 1998 Trust. The 1998 Will devised to the Osguthorpe Children Dr. Osguthorpe's tangible personal property that was not otherwise used in a business or trade. The 1998 Will also devised Dr. Osguthorpe's residual property to the Trust. As for June, she was "not to receive any assets under [the 1998] Will but shall receive assets pursuant to ... [the 1998] Trust."
¶15 The 1998 Trust was revocable. It existed for the "primary benefit" of Dr. Osguthorpe during his lifetime, and designated June and the Osguthorpe Children as the beneficiaries upon Dr. Osguthorpe's death. The 1998 Trust entitled June to annual payments of up to $50,000.
¶16 The 1998 Trust divided shares of its remaining property to the Osguthorpe Children. The 1998 Trust also provided that "[t]he Trustees shall hold, in Trust, all ranch and agricultural property located in Summit County ... owned by the Trust ..., to be used by [the Osguthorpe Children] for their benefit in the same manner and to the same extent as the property has been used in the past." Further, the 1998 Trust specifically gave Stephen and Jerry "the right to continue to use the agricultural property to raise and maintain cattle and to operate a ranch on the agricultural property in the same manner as they have in the past." The 1998 Trust also provided that Stephen's share would include the two acres upon which his current residence is located.
¶17 In 2006, Dr. Osguthorpe amended his will (2006 Will) and trust (2006 Trust) (collectively, 2006 Estate Plan). Among the changes the Osguthorpe Children highlight are that the 2006 Trust changed the gift to June from an annual $50,000 distribution to a one-time $1 million gift, to be paid to June in cash or other assets from the Trust's Summit County properties.2 The 2006 Trust also added a $12 million cash gift to CSU Foundation (CSUF),3 to be paid by liquidating properties in Summit County.
¶18 The 2006 Trust expressly permits Stephen and Jerry to continue farming, ranching, and practicing veterinary medicine on the Summit County properties "in the same manner as they have in the past," though only "[t]o the extent that property in the Summit County Trust is held directly or indirectly for ranch, agricultural, or veterinary medicine uses or purposes." The same provision applies to the Trust's properties outside of Summit County. The 2006 Trust also gives June up to five acres of property in Summit County. And it provides for June's children to receive shares of certain properties outside of Summit County following the deaths of Stephen and Jerry.
¶19 In 2008, Dr. Osguthorpe amended his will and trust again (2008 Will and 2008 Trust, or collectively, 2008 Estate Plan). The 2008 Will largely mirrors the 2006 Will, but it made Stephen and Rudd the personal representatives. The 2008 Will also nominated Stephen's siblings as successor personal representatives.4 The 2008 Trust largely resembles the 2006 Trust, but made Stephen and Rudd successor co-trustees and provided for Rudd to "receive as compensation for acting as a successor trustee an amount equal to five percent (5%) of the fair market value of the trust assets."
¶20 The Osguthorpe Children allege that...
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