Smith v. Lopp

• Citation: 2020 OK CIV APP 24
• Decision Date: 17 June 2020
• Docket Number: Case Number: 117365
• Court: United States State Court of Criminal Appeals of Oklahoma. Court of Civil Appeals of Oklahoma
• Parties: CAMERON SMITH, individually and as Personal Representative of the Estate of Gregory Michael Smith, deceased, Plaintiff/Appellant, v. JULIE LOPP, individually and in her capacities as Trustee of the Sharon A. Smith Living Trust and Personal Representative of the Estate of Gary Don Smith, deceased; THE SHARON A. SMITH LIVING TRUST; SHARON A. SMITH; JONATHAN SMITH; and SONJA SMITH, Defendants/Appellees.

2020 OK CIV APP 24

CAMERON SMITH, individually and as Personal Representative of the Estate of Gregory Michael Smith, deceased, Plaintiff/Appellant, v. JULIE LOPP, individually and in her capacities as

Trustee of the Sharon A. Smith Living Trust and Personal Representative

of the Estate of Gary Don Smith, deceased; THE SHARON A. SMITH LIVING TRUST;

SHARON A. SMITH; JONATHAN SMITH; and SONJA SMITH, Defendants/Appellees.

Case Number: 117365

COURT OF CIVIL APPEALS OF THE STATE OF OKLAHOMA, DIVISION IV

Decided: August 30, 2019

Mandate Issued: June 17, 2020

APPEAL FROM THE DISTRICT COURT OF

CLEVELAND COUNTY, OKLAHOMA

HONORABLE THAD BALKMAN, TRIAL JUDGE

AFFIRMED IN PART, REVERSED IN PART,AND REMANDED FOR FURTHER PROCEEDINGS

Robert P. Powell, C. Scott Jones PIERCE COUCH HENDRICKSON BAYSINGER & GREEN, L.L.P., Oklahoma City, Oklahoma, for Plaintiff/Appellant

Sara E. Potts, DOERNER, SAUNDERS, DANIEL & ANDERSON, L.L.P., Oklahoma City, Oklahoma, and David J. Looby, Sara E. Daly, CONNER & WINTERS, LLP, Oklahoma City, Oklahoma, for Defendants/Appellees

DEBORAH B. BARNES, PRESIDING JUDGE:

¶1 Plaintiff Cameron Smith, individually and as Personal Representative of the Estate of Gregory Michael Smith, appeals from an order of the trial court filed in August 2018 granting Defendants' motion to dismiss Plaintiff's petition. The August 2018 order states that "Plaintiff's Petition . . . is hereby DISMISSED for lack of subject matter jurisdiction, pursuant to 12 O.S. 2011, § 2012(b)(1), and for failure to state a claim, pursuant to 12 O.S. 2011, § 2012(b)(6)." Plaintiff also appeals from the trial court's order filed in February 2019 awarding attorney fees to Defendants. Based on our review, we affirm in part, reverse in part, and remand for further proceedings.

BACKGROUND

¶2 Plaintiff is the grandson of Gary Don Smith (GDS) and Sharon A. Smith (SAS). Plaintiff asserts in his petition that GDS died intestate in March 2015, and that GDS was survived by his adult children: Defendant Julie Lopp; Defendant Jonathan Smith; and Gregory Michael Smith (GMS), who is Plaintiff's father and who subsequently died intestate in December 2016. Plaintiff asserts he is the only heir of GMS.

¶3 Plaintiff also asserts GDS was survived by his wife, SAS, but that she is "suffering from Alzheimer's disease and dementia and . . . unable to care for herself." He asserts that, "[s]hortly following the death of GDS, [Defendant Julie Lopp] engaged an attorney to initiate probate proceedings for [the Estate of GDS] and prepare documents purporting to create the Trust, Durable Power of Attorney ('POA') and Last Will and Testament for SAS, with all giving Lopp exclusive control over the Trust and the affairs of SAS and the Estate of GDS." He asserts that "[o]n April 15, 2015, even though SAS was suffering from Alzheimer's and dementia and unable to make decisions on her own behalf, Lopp had SAS execute the Will, POA and documents purporting to create the Trust."

¶4 As set forth in Plaintiff's petition, the above-mentioned probate proceeding for the Estate of GDS was initiated in Cleveland County, Case No. PB-2015-134, and a probate proceeding was also initiated for the Estate of Plaintiff's father, GMS, in Cleveland County, Case No. PB-2017-33. On April 27, 2018, Plaintiff filed documents in both probate proceedings, including a "General Inventory and Appraisement" in Case No. PB-2017-33 in which he, as personal representative of the Estate of GMS, asserted:

The Estate [of GMS] has an interest in real property from the Estate of [GDS], No. PB-2015-134 . . . . However, there are conflicting inventory and appraisements filed in [the probate of the Estate of GDS] . . . [which] is still pending. An updated inventory will be submitted once the interests from that estate have been determined and distributed.¹

Also on April 27, 2018, Plaintiff filed a "Motion for Accounting" in the probate proceeding for the Estate of GDS, requesting that the district court order Ms. Lopp (i.e., the personal representative of the Estate of GDS) "to provide an accounting for all activity and the status of all real and personal property of [GDS] and activities undertaken on behalf of the [GDS] Estate."

¶5 In the present action, Plaintiff alleges Ms. Lopp, as Trustee of the Trust of SAS, "entered into an agreement on behalf of the Trust to sell [a certain residence in Oklahoma City (the Residence)] to her brother Jonathan Smith and his wife Sonja Smith for $150,000.00," a price which Plaintiff asserts is at least $41,000 below market value. Plaintiff also asserts that a $30,406.32 benefit in the form of "'Gift Equity' and closing costs . . . resulted in a windfall and preference in favor of Jonathan and Sonja Smith of at least $71,406.52."

¶6 Plaintiff also takes issue with a certain estate sale arranged by Ms. Lopp as Trustee. Plaintiff asserts Ms. Lopp entered into an agreement with an "estate liquidation company to carry out an estate sale on May 6 and 7, 2017, to liquidate the contents of the Residence, with all proceeds to go to the Trust." Plaintiff asserts he "became concerned that items listed in advertisements on the internet were potential assets of the GDS Estate, the GMS Estate and/or Smith Construction, a partnership that provided high quality carpentry services that [GMS] and [GDS] operated." He asserts that despite objecting to the estate sale and requesting that it be delayed, the sale was nevertheless held.

¶7 Plaintiff also asserts in his petition that he has unsuccessfully

made numerous requests for further documentation from Lopp about potential assets of the GDS Estate in which the GMS Estate may have an interest, including details regarding former assets and effects of GDS that are now claimed to be part of the Trust and the Trust document itself. Plaintiff has requested that Lopp provide a full accounting of the assets and activity involving the GDS Estate and Trust so that Plaintiff can determine assets or potential assets in which he and the Estate of GMS may have an interest.

¶8 Plaintiff has set forth six claims in his petition:

1) He requests a declaratory judgment finding that SAS "did not have the capacity . . . to understand or approve the Trust, POA and Will," and "set[ting] aside the Trust, POA and Will on the grounds of incapacity . . . ."

2) He asserts Ms. Lopp breached "her fiduciary duty to Plaintiff and other persons with an interest in assets of the GDS Estate and the Trust" by undertaking actions "including but not limited to: a) failing to have a guardian appointed for SAS, b) the unlawful sale of the Residence at a loss, c) engaging and participating with a beneficiary of the Trust in mortgage fraud in violation of federal and state consumer finance laws in connection with the sale of the Residence, d) failing to provide an accounting for the disposition of assets and activities undertaken on behalf of the GDS Estate and the Trust, and f) continuing to represent the Estate of GDS and the Trust even though there is an impermissible conflict of interest between the two."

3) He asserts Ms. Lopp's "actions on behalf of SAS and the GDS Estate are in breach of her duties as trustee for the Trust[.]"

4) He asserts the sale of the Residence is void and should be rescinded because SAS lacked capacity to create the Trust and execute the POA and Ms. Lopp lacked authority to sell the Residence.

5) He requests that "[Ms.] Lopp be removed as Trustee and that a guardian and/or successor Trustee be appointed by the Court for SAS and/or the Trust."

6) He asserts that he is entitled to an accounting concerning the Trust, the Trust assets and activities of Ms. Lopp as Trustee, including the disposition of assets and funds.

¶9 After filing a "Qualified Special Entry of Appearance and Reservation of Time and Defenses," Defendants filed a joint motion to dismiss Plaintiff's petition. Defendants point out in their motion to dismiss that Plaintiff alleges in his petition that he is a "contingent beneficiary of the [SAS] Living Trust." Defendants assert, among other things, that Plaintiff, as a mere contingent beneficiary of the Trust, is not a necessary party "under the Oklahoma Trust Act, 60 O.S. 2011, § 175.1, et seq., and dismissal is . . . appropriate pursuant to 12 O.S. 2011, § 2012(b)(1)" because the court lacks subject matter jurisdiction over Plaintiff's claims, claims which essentially constitute an attack by one with an unvested interest in a trust against the actions of its trustee.

¶10 In Plaintiff's response, he asserts "Defendants have waived their right to file a motion to dismiss" by filing the above-mentioned special appearance and reservation of time and defenses. Plaintiff further asserts, among other things, that "contingent beneficiaries clearly have standing to pursue an action for breach of trust under Oklahoma law[.]"

¶11 At the hearing on Defendants' motion to dismiss, counsel for Defendants asserted that under the Oklahoma Trust Act, "only those individuals who have vested interests, which means they exist not in the future but now, may challenge the trust administration or bring breaches of trust actions on behalf of themselves for the breach of fiduciary duty by a trustee. . . . It isn't until [SAS] dies and . . . it is also not until all the contingent beneficiaries survive [SAS], that their interests become fully vested and they may bring actions on behalf of their own protected interests[.]" Counsel for Defendants stated that the Trust "is still revocable because [SAS] is still alive."

¶12 Counsel for Defendants also stated that the Residence is not part of the Estate of GDS -- i.e., it is "non-probate" -- because the Residence "was actually held in joint tenancy with right of survivorship between [GDS] and [SAS]. When [GDS] died, it automatically reverted, by operation of law, no probate action required, to [SAS's] full ownership and . . . possession." Counsel for Defendants also asserted that

the other assets in the [GDS] estate were also

...