Schroeder v. Gebhart

• Decision Date: 19 July 2002
• Docket Number: No. 5D01-2777.,5D01-2777.
• Citation: 825 So.2d 442
• Parties: Lynda Russell SCHROEDER and Mark Stenstrom, et al., Appellant/Cross-Appellee, v. Steven Thomas GEBHART and Eric Daniel Gebhart, Appellee/Cross-Appellant.
• Court: Florida District Court of Appeals

825 So.2d 442

Lynda Russell SCHROEDER and Mark Stenstrom, et al., Appellant/Cross-Appellee, v. Steven Thomas GEBHART and Eric Daniel Gebhart, Appellee/Cross-Appellant.

No. 5D01-2777.

District Court of Appeal of Florida, Fifth District.

July 19, 2002.

Rehearing Denied September 13, 2002.

Michael S. Herring of Michael S. Herring, P.A., Sanford, for Appellant/Cross-Appellee.

Michael D. Jones of Leffler & Associates, P.A., Winter Springs, for Appellee/Cross-Appellant.

ORFINGER, R.B., J.

Lynda Russell Schroeder (Lynda), Mark Stenstrom (Mark), Deborah Susan Russell Bowman (Debbie), and Jeffrey Thomas Russell (Butch) appeal a final judgment reforming an inter vivos trust following the death of the settlor. The trial court found that the testamentary aspects of the Eleanor C. Russell inter vivos trust contained a drafting mistake causing the trust agreement to inaccurately reflect the settlor's intentions. The court reformed the trust agreement to include Steven Thomas Gebhart (Steven) and Eric Daniel Gebhart (Daniel) as beneficiaries of the trust along with Lynda, Debbie, and Butch. Steven and Daniel cross-appeal the trial court's refusal to impose a constructive trust on certain trust assets. We affirm.

To understand the present dispute, one must have an understanding of the Russell family tree. Eleanor C. Russell (Eleanor), the settlor of the trust, had one son, Joe Thomas Russell (Tommy). Tommy had two biological sons, Steven and Daniel, with his first wife. After Tommy divorced Steven and Daniel's mother, she married William Gebhart who, with Tommy's consent, adopted Steven and Daniel (the "Gebharts" or the "adopted out" children). Tommy later remarried and subsequently adopted his second wife's children, Lynda, Debbie, and Butch (the "Russells" or the "adopted in" children).

In 1989, Eleanor consulted attorney Faith K. Stalnaker for estate planning purposes. At Eleanor's direction, Stalnaker drafted a trust agreement which Eleanor executed. The trust agreement made Eleanor the settlor, trustee, and sole beneficiary during her lifetime. The trust agreement further provided that upon Eleanor's death, all remaining assets would be distributed to "Joe Thomas Russell [Tommy], per stirpes." Tommy died in 1992, and when Eleanor died in 2000, a dispute arose between the Russells and the Gebharts regarding who were the beneficiaries of the trust. The Russells maintained that because Tommy had adopted them, they were his legal heirs, and that the Gebharts, the adopted out children, were no longer a part of Tommy's lineage. The Gebharts maintained that Eleanor intended that they have the ranch and a fish camp, which comprised a substantial part of the trust assets, and that the trust agreement failed to reflect her true intent. As a result of the dispute, the adopted out children filed suit, seeking, among other things, to impose a constructive trust on the ranch and fish camp, based in part on the claim that the trust agreement contained a drafting error.

The evidence at trial demonstrated that both the adopted in and the adopted out children had a continuing and relatively close relationship with Eleanor. While there was conflicting testimony at trial regarding Eleanor's intent to include all, or some of the adopted in and adopted out children in the trust in the event that Tommy predeceased her, the most relevant testimony regarding her intentions and the trust drafting process came from Stalnaker, the attorney who drafted the trust agreement. In pertinent part, Stalnaker testified as follows:

I asked her [Eleanor] who do you what [sic] to get your estate if Tommy dies before you do and she says his children. And I start writing them down and I said who are they, and she named two of them, and then Tommy says well, I have five, and I said well, you want to give me all their names? He says no. I said, well, it wasn't necessary, I'll just put per stirpes, that means your lineal descendants. And that's exactly what happened.

Q. There was no—You didn't ask them if there—had anyone been adopted in or out of the family?

A. I wished to goodness I had but I didn't.

Q. I understand.

A. I wish I had but I didn't, and I didn't know that there were any adoptions at all until much much later.

* * *

Q. Did you have your file with you, did you jot down the names of all five children in your file?

A. No. He never gave them to me, never, but I did jot down two. I jotted—and that's why I did the affidavit that I jotted down because Eleanor was telling me Steve and Daniel, I think.

Q. Steven and Daniel were specifically mentioned?

A. Yeah. I've got that written down somewhere if I can ever find it.

Q. I know that's in your affidavit.

A. Yeah, well, that's true.

Q. Okay.

A. To the best of my recollection and my notes.

* * *

Q. You do specifically—to back track— you do specifically recall when you had the initial meeting back in 1989 with Eleanor round about September of '89 that she specifically mentioned Steve or Steven and Daniel as being her grandchildren?

A. Yeah. Now that's Eleanor, that's not Tommy.

Q. Eleanor?

A. Eleanor did. And I've got notes somewhere in here where I wrote it down.

Q. You wrote the two kids' names down.

A. Yeah.

Q. And did you date the notes if you can recall?

A. Yeah, they are dated.

Q. Are they in shorthand? Are they legible?

A. I think so.

Q. Okay.

A. I think so. I'm trying to find them on the yellow sheets. No. I had—I had something in front of me when I did the affidavit but I don't know which file it was in. It may be in Tommy's file because they came to see me together. They never came to see me apart. And the only time I ever saw Eleanor by myself when I asked Tommy to leave the room so I wanted to make sure she understood.

I'll find it. I don't have it. It's got to be in Tommy's file.

* * *

Q. Did you write down both names, first and last name, or did you—

A. No. Just if I remember right I looked at it recently it was Steven, Daniel.

Q. Steve and Dan?

A. Uh-huh.

The trial court found that Stalnaker was unaware at the time she drafted the trust agreement that Steven and Daniel had been adopted out, and Lynda, Debbie, and Butch had been adopted in. As a result, Stalnaker and Eleanor erroneously assumed that any disposition to Tommy per stirpes would, in the event Tommy predeceased Eleanor, pass to all five children.

Although the parties raise numerous issues on appeal, we write to address only two: (1) whether the testamentary aspects of an inter vivos trust are subject to reformation after the death of the settlor in the event of a unilateral drafting error; and, (2) whether the court can properly reform the trust when reformation was not sought. As the trial court found, the term "per stirpes" is unambiguous, and when applied to the facts of this case, has the legal effect of excluding the adopted out children. See § 63.172, Fla. Stat. (2000).¹ But our analysis cannot stop there. We must decide whether a trust can be reformed after the death of the settlor if clear and convincing evidence demonstrates a unilateral drafting error. The Fourth District Court of Appeal answered that question in In re Estate of Robinson, 720 So.2d 540 (Fla. 4th DCA 1998), when it held that "a trust with testamentary aspects may be reformed after the death of the settlor for a unilateral drafting mistake so long as the reformation is not contrary to the interest of the settlor." Id. at 543. The thorough analysis set forth by the court in Robinson is sound, and is hereby adopted. See also In re Estate of Huls, 732 So.2d 1206 (Fla. 2d DCA 1999)

.

Allowing a court to reform an inter vivos trust after the death of the settlor is consistent with general equitable principles well-established in Florida and other states. It has long been held that equity will reform an agreement so as to conform to the intent of the parties, when an agreement, which due to a mistake of the drafter, violates or fails to carry out the intention of the parties. Relief is given where, through a mistake of the scrivener, the instrument contains an error or fails to properly define the terms agreed to by the parties. Steffens v. Steffens, 422 So.2d 963, 964 (Fla. 4th DCA 1982). That principle, which applies generally to bilateral contracts supported by mutual consideration, should certainly apply to a unilateral trust agreement, not supported by consideration given by the competing beneficiaries.

Other states have reached similar conclusions. In Shoemaker v. Estate of Freeman, 967 P.2d 871 (Okla.1998), the Supreme Court of Oklahoma explained:

¶ 19 An exception to the general rule requiring mutual mistake or unilateral mistake and fraud is where the trustor of a trust does not receive any consideration for creating the trust. Where there is no consideration for the creation of the trust, unilateral mistake on the part of the trustor is usually a sufficient ground for reformation. Restatement (Second) of Trusts § 333 cmt. e (1959); 4 Austin Wakeman Scott & William Franklin Fratcher, The Law of Trusts § 333.4 (1989); see Green v. Votaw, 192 Okla. 136, 134 P.2d 367, 371 (1943)....

¶ 20 Even though a unilateral mistake is a sufficient ground for reforming

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