Warne v. Warne
| Decision Date | 06 March 2012 |
| Docket Number | No. 20100125.,20100125. |
| Citation | 703 Utah Adv. Rep. 40,275 P.3d 238,2012 UT 13 |
| Parties | Thomas WARNE, individually and as Trustee of the Avis P. Warne Family Protection Trust and the Ira B. Warne Family Protection Trust, Appellee and Plaintiff, v. Jeffrey WARNE, individually and as Trustee of the Avis P. Warne Family Protection Trust and the Ira B. Warne Family Protection Trust, Appellant and Defendant. |
| Court | Utah Supreme Court |
OPINION TEXT STARTS HERE
Edward R. Munson, Ryan M. Harris, Salt Lake City, for appellee.
Clark R. Nielsen, Kathryn J. Steffey, Salt Lake City, for appellant.
INTRODUCTION
¶ 1 In 2003, Ira B. Warne (Ira) executed the Partial Revocation of and Amendment to the Ira B. Warne Family Protection Trust (Partial Revocation). The purpose of the Partial Revocation was to terminate the interest of one of Ira's sons, Thomas Warne (Tom), who had been designated as a beneficiary in the original trust instrument. On summary judgment, the district court invalidated the Partial Revocation based on our holding in Banks v. Means, 2002 UT 65, 52 P.3d 1190. The district court also held that Tom was entitled to one-half of the personal property of Ira's estate pursuant to the distribution provisions of Ira's will.
¶ 2 Tom's brother, Jeffrey Warne (Jeff), appeals. We reverse the district court's grant of summary judgment and hold that the Partial Revocation complies with Utah Code section 75–7–605 (section 605), which has statutorily overruled our holding in Banks. We also hold that the distribution of Ira's personal property is governed by the terms of the Ira B. Warne Family Protection Trust (the Trust), rather than by Ira's will, and therefore reverse the district court's order awarding Tom one-half of that property. Because the district court did not reach the issue of whether Ira's Partial Revocation was a product of Jeff's undue influence, we remand for consideration of that claim.
¶ 3 In 1991, Ira executed the Ira B. Warne Family Protection Trust (the Trust or Ira's Trust). The Trust was established “for the primary benefit of [Ira] during [his] lifetime, for [Ira's] surviving spouse, and for [Ira's] family thereafter.” After the deaths of Ira and his wife, the Trust property was to be divided equally among Ira's sons, Tom and Jeff. The Trust was a “living” or “inter vivos” trust in which Ira, as settlor, “reserve[d] the right to amend, modify or revoke th[e] Trust in whole or in part, including the principal, and the present or past undisbursed income from such principal.” The Trust document states that “revocation or amendment ... may be in whole or in part by written instrument.” And the Trust provides that “[t]he interests of the beneficiaries are presently vested interests subject to divestment which shall continue until this Trust is revoked or terminated other than by death.” Finally, the Trust contains an after-acquired property section providing that all of Ira's property, whenever acquired, automatically becomes part of the Trust corpus.
¶ 4 In 2002, this court issued its decision in Banks v. Means, 2002 UT 65, 52 P.3d 1190. In Banks, a settlor had created a revocable trust that provided for amendment, modification, or revocation through language that was identical to the language in Ira's Trust. Id. ¶ 4. Like Ira's Trust, the trust in Banks named the settlor's children as beneficiaries and identified their interests as “presently vested interests subject to divestment.” Id. And, like Ira, the settlor in Banks executed an amendment before her death. Id. ¶ 5. Under the terms of the amendment, the settlor's sister became the primary beneficiary and the settlor's children became alternate beneficiaries who would take only if the settlor's sister predeceased her. Id. The settlor's children challenged the amendment and we invalidated it. Id. ¶¶ 6, 16. We held that under the terms of the trust, the only way the settlor could terminate the children's “vested” interest was through a complete revocation of the trust; a mere amendment was insufficient. Id. ¶¶ 14–16.
¶ 5 In 2003, subsequent to the death of his wife, Ira executed the Partial Revocation and a codicil to his last will and testament. Ira stated that he was seeking to “preempt the results of the case Banks v. Means.” The Partial Revocation removed Tom as a beneficiary and successor trustee, leaving Jeff as the sole remaining beneficiary and successor trustee. It also removed the language previously contained in paragraph 3.2, which stated that “the interests of the beneficiaries are presently vested interests subject to divestment which shall continue until this Trust is revoked or terminated other than by death.” This language was supplanted with language expressly stating that the beneficiaries' interests were not vested, but rather contingent, and subject to the absolute control of the Trustees. Ira died in August 2007.
¶ 6 Tom filed suit on May 12, 2008. He sought to invalidate the Partial Revocation, arguing that it was the product of Jeff's undue influence and that it was, in any event, invalid under Banks v. Means. Tom also asked the district court to declare that, even if the Partial Revocation was valid, it had not affected his status as a legatee of one-half of Ira's personal property. Jeff counterclaimed, seeking a declaration that the Partial Revocation was valid. Jeff also requested that, in the event the court invalidated the Partial Revocation, the court reform the Trust pursuant to Utah Code section 75–7–415 to conform to Ira's intent. Tom moved for partial summary judgment, seeking a declaration that the Partial Revocation was invalid under Banks. He also sought summary judgment on Jeff's counterclaims.
¶ 7 After both parties filed memoranda but before the hearing on the motion for partial summary judgment, Jeff retained new counsel. At the hearing, Jeff's new counsel argued for the first time that Utah Code sections 75–7–605 and 75–7–606, rather than Banks, controlled. These sections had been enacted in 2004 as part of the legislature's adoption of the Utah Uniform Trust Code (UUTC). 2004 Utah Laws 332 (codified at Utah Code Ann. § 75–7–605 (Supp.2011)). Jeff's counsel provided copies of the relevant sections to both the district court and Tom's counsel and argued that the legislature had effectively overruled our holding in Banks v. Means.
¶ 8 The district court granted Tom's motion for partial summary judgment in a written opinion issued some weeks after argument. In it, the court did not address Jeff's argument that section 605 had overruled Banks. Rather, the court's decision relied exclusively upon Banks. It held that Ira had not properly terminated Tom's vested interest under Banks because he had failed to completely revoke the Trust. The district court also ruled that Tom was entitled to one-half of Ira's personal property pursuant to the distribution provisions of Ira's will.
¶ 9 The case was thereafter reassigned to another district judge and Jeff moved the court to alter or amend its judgment. He again asked the court to apply section 605 and declare the Partial Revocation valid. The new judge denied Jeff's motion, stating that the prior judge had properly declined to consider the statutory argument that Jeff had made for the first time during oral argument on the summary judgment motion. On January 29, 2010, the district court certified its ruling as final.
¶ 10 Jeff filed a timely appeal. We have jurisdiction pursuant to Utah Code section 78A–3–102(3)(j).
¶ 11 Summary judgment is appropriate where there are no genuine issues of material fact and the moving party is entitled to judgment as a matter of law. Utah R. Civ. P. 56(c). We review the district court's grant of summary judgment for correctness, according no deference to its legal conclusions. Salt Lake City Corp. v. Big Ditch Irrigation Co., 2011 UT 33, ¶ 3 n. 2, 258 P.3d 539.
¶ 12 Jeff raises three primary issues on appeal. First, Jeff contends that the district court erred in deciding the validity of the Partial Revocation under Banks v. Means, 2002 UT 65, 52 P.3d 1190, rather than section 605 of the UUTC, and that the Partial Revocation complies with the statute. In the alternative, Jeff asserts that the district court erred when it denied his request to reform the Trust pursuant to Utah Code section 75–7–415 to conform to Ira's clear intent. Finally, Jeff argues the district court erred in ruling that Tom was entitled to one-half of Ira's personal property.
¶ 13 We hold that the district court erred in relying on Banks and failing to apply the relevant provisions of the UUTC. We further hold that Ira's Partial Revocation satisfies the requirements of the UUTC. Finally, we hold that Tom is not entitled to one-half of Ira's personal property under the terms of Ira's will because, at the time of Ira's death, the Trust contained all of Ira's personal property. Because we hold that the Partial Revocation complies with the terms of the UUTC, we do not reach Jeff's alternative argument that the district court should have reformed the Trust.
¶ 14 Jeff first argues that Ira's Partial Revocation complies with section 605, which Jeff contends overrules our holding in Banks v. Means, 2002 UT 65, 52 P.3d 1190. Tom responds that Jeff waived the statutory argument. In the alternative, he argues that the statute does not overrule Banks. Finally, Tom contends that, even if the statute does overrule Banks, it cannot be applied here because it was enacted after Ira executed his Partial Revocation.
¶ 15 We hold that Jeff's statutory argument was properly preserved, that section 605 overrules Banks, that the statute is applicable here, and that the Partial Revocation satisfied the statutory requirements for terminating Tom's interest in the Trust.
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