Robert T. Mclean Irrevocable Trust v. Ponder

• Decision Date: 25 February 2014
• Docket Number: No. SD 31767.,SD 31767.
• Citation: Robert T. McLean Irrevocable Trust v. Ponder, 418 S.W.3d 482 (Mo. App. 2014)
• Parties: ROBERT T. McLEAN IRREVOCABLE TRUST U/A/D MARCH 31, 1999, by Linda McLEAN, as Trustee, Plaintiff/Appellant, v. J. Michael PONDER, Defendant/Respondent.
• Court: Missouri Court of Appeals

418 S.W.3d 482

ROBERT T. McLEAN IRREVOCABLE TRUST U/A/D MARCH 31, 1999, by Linda McLEAN, as Trustee, Plaintiff/Appellant,

v.J. Michael PONDER, Defendant/Respondent.

No. SD 31767.

Missouri Court of Appeals,

Southern District,

Division One.

Oct. 24, 2013.

Motion for Rehearing and/or Transfer to Supreme Court Denied Nov. 15, 2013.

Application for Transfer Denied Feb. 25, 2014.

Edward F. Luby, of St. Louis, MO, and Kenneth Blumenthal and Lopa Blumenthal of Hazelwood, MO, for appellant.

Joseph C. Blanton, Jr., of Sikeston, MO, for respondent.

WILLIAM W. FRANCIS, JR., C.J.

The Robert T. McLean Irrevocable Trust U/A/D March 31, 1999, by Linda McLean, as Trustee (“the Trust”), appeals from the “Judgment” sustaining J. Michael Ponder's (“Ponder”) “Motion ... for Directed Verdict at the Close of Plaintiff's Evidence” and granting judgment in favor of Ponder. The Trust asserts eleven points of trial court error. We affirm the Judgment of the trial court.

Factual ¹ and Procedural Background ²

Robert McLean (“Robert”) ³ was involved in an automobile accident in 1996 that left him a quadriplegic. Robert originally hired attorney Patrick Davis to represent him in a product liability suit arising out of the accident. Davis then referred Robert to Ponder, who successfully prosecuted the suit for Robert by settling the case for a large sum of money. The net settlement proceeds were placed in the Trust. Due to significant medical expenses paid by Medicaid and the need to continue Robert's eligibility for all available government assistance, the Trust contained “Supplemental Needs Provisions” under “Article II” of the Trust. Lettie May Brewer, Robert's grandmother, was named as “Trustor”; Merrill Lynch Trust Company, FSB and David Potashnick, were named as “Trustee[s]”; and Ponder was named as “Trust Protector.” The Trust provided for three specific powers for the Trust Protector in subparagraphs 5.4.1, 5.4.2, and 5.4.3. The Trust Protector could: (1) remove a Trustee; (2) appoint a Successor Trustee; and (3) resign as Trust Protector.

Section 5.4 of the Trust described the role and duties of the “Trust Protector” as follows:

5.4 Trust Protector. The “Trust Protector” of such trust shall be [Ponder]. The Trust Protector's authority hereunder is conferred in a fiduciary capacity and shall be so exercised, but the Trust Protector shall not be liable for any action taken in good faith.

5.4.1 Removal of Trustee. The Trust Protector shall have the right to remove any Trustee of the trust under this Agreement. If the Trust Protector removes a Trustee, any successor Trustee appointed by the removed Trustee shall not take office. The Trust Protector may, by written instrument, release the Trust Protector's power to remove a particular Trustee and such release may be limited to the releasing Trust Protector or made binding upon any successor Trust Protector.

5.4.2 Appointment of Successor Trustee. The Trust Protector shall also have the right to appoint an individual or corporation with fiduciary powers to replace the removed Trustee or whenever the office of Trustee of a trust becomes vacant.

5.4.3 Resignation of Trust Protector; Successor. Any person serving as Trust Protector may resign. The Trust Protector may appoint one or more persons to be successor Trust Protector to take office upon the death, resignation, or incapacity of the Trust Protector or any person serving as protector. The Trust Protector may be one or more persons, whether individuals or corporations. If more than one person is serving as Trust Protector, they shall act by majority.

(Bold in original).

The Trust did not provide Ponder with any powers or duties to supervise the Trustees or to direct their activities, but did outline the rights, duties, directives, and powers of the Trustees.

In May 1999, when the original Trustees resigned, Ponder exercised his power under the Trust and appointed Patrick Davis and his law firm, Patrick Davis, P.C. (collectively “Davis”), and Daniel Rau, as Successor Trustees. The Successor Trustees had referred legal clients to Ponder over the years and those referrals netted Ponder fees, a portion of which were then shared with Davis and his firm.

In July 2001, Davis resigned as a Successor Trustee. At that same time, Ponder resigned as Trust Protector, but not before appointing Tim Gilmore (“Gilmore”) as Successor Trust Protector and Brian Menz (“Menz”) to take Davis's place as a Successor Trustee.

In July 2002, Menz resigned as a Successor Trustee, and Linda McLean (“Linda”), Robert's Mother, was appointed as Successor Trustee.

In 2001, Robert was determined to be incompetent by the Circuit Court of Scott County, and Linda and Paul McLean were appointed Robert's guardians.

In August 2004, the Trust brought suit against all persons who had served either as a Successor Trustee or as Trust Protector under the Trust, including Ponder. The Trust's “First Amended Petition” was filed on April 6, 2005. The petition alleged Ponder had breached his fiduciary duties to Robert and acted in “bad faith” in one or more of the following respects: (1) failed to monitor and report expenditures; (2) failed to stop Trustees when they were acting against the interests of Robert; and (3) placing his loyalty to the Trustees and their interests above those of Robert. The petition also claimed that in the summer of 2000, Robert and his attorney informed Ponder that the Successor Trustees were inappropriately spending Trust funds. While Ponder's firm was a named defendant in the petition, its registered agent was never served, no mention of the firm was made anywhere in the petition, and no relief was requested against the firm.

On May 10, 2005, Ponder filed a “Motion to Dismiss or, in the Alternative, for Summary Judgment.” Attached to that motion were copies of the Trust, a memorandum in support of the motion, and a statement of uncontroverted facts with accompanying affidavit.

On July 27, 2005, the trial court sustained Ponder's Motion to Dismiss or, in the Alternative, for Summary Judgment.⁴ The trial court's order also struck Ponder's law firm from the caption. The claims against the other defendants were ultimately settled and a “Judgment of Dismissal” was entered by the trial court on January 25, 2007.⁵ Several months later, the Trust requested leave to file an appeal out of time, which was granted by this Court on July 25, 2007. The “Notice of Appeal” listed “Linda McLean, as Trustee of Robert T. McLean Irrevocable Trust U/A/D March 31, 1999” as “Plaintiff/Petitioner,” and no other appellants were listed.

The matter proceeded on appeal with the Trust as the only appellant. The function and duties of a “Trust Protector” was a question of first impression before this Court in Robert McLean Irrevocable Trust v. Patrick Davis, P.C., 283 S.W.3d 786 (Mo.App. S.D.2009), on appeal.⁶ This Court issued its opinion finding that the Trust stated a claim for breach of fiduciary duty and that a genuine issue of material fact existed as to whether Ponder breached a fiduciary duty.⁷Id. at 794–95. This Court remanded the case to the trial court to determine the duties owed by Ponder as Trust Protector and to whom he owed those duties.⁸Id. at 795. Specifically, this Court ordered the cause “remanded for further proceedings consistent with [the] opinion.” Id.

Following remand, the Trust sought leave to amend the petition. The trial court denied this request on August 6, 2009. The Trust then filed a “Writ of Prohibition and/or Mandamus” in this Court seeking to overrule the trial court's denial of leave to amend. This Court denied the Trust's writ on August 25, 2009.

On November 16, 2009, Ponder filed a “Motion for Summary Judgment”; the Trust filed its response on January 15, 2010. The trial court denied Ponder's Motionfor Summary Judgment and later set the case for trial on November 29, 2010.

On July 21, 2010, the Trust filed a motion for default judgment or in the alternative to compel, and requesting leave to amend the petition. The trial court allowed the Trust to file its “Fourth (Substituted) Amended Petition” and removed the case from the November 2010 trial setting. This petition alleged Ponder ignored information he received regarding the Trustees, did not investigate the depletion of the Trust assets, did not question the actions of the Trustees or take any action, and as a result the Trust was damaged. Following the filing of the Fourth (Substituted) Amended Petition, Ponder filed a motion to dismiss Counts I, III, IV, V and VI, and all personal claims of Robert.

Following additional briefing on all pending motions, the trial court entered its order dismissing Counts I, III, IV, V and VI, as well as Robert's personal claim as set forth in Count II, as being “barred by applicable statutes of limitations.” The trial court denied Ponder's motion to dismiss Count II as to the Trust; i.e., “Linda McLean, Trustee.”

Following this ruling, multiple motions were filed by both parties, including motions for summary judgment. The trial court heard argument on all pending motions, and denied all pending motions, including both motions for summary judgment.⁹ The case was later set for jury trial on October 26, 2011.

On October 20, 2011, shortly before the jury trial, the trial court issued its legal findings as to Ponder's duties. The trial court deferred to the language of the Trust for direction in determining the duties of the Trust Protector, which included section 5.4 (5.4.1–5.4.3) cited above, and noted those provisions gave the Trust Protector “the authority to remove a Trustee.” The trial court further found the terms of the Trust evidence “the independence of the Trustee from control or supervision of the Trust Protector.” The trial court further found the Trust Protector's authority “is limited to the power to remove[,]” and “under the terms of the trust agreement, the Trust Protector had no obligation to monitor the activities of the Trustee.”...