Warner v. Warner
| Citation | 319 P.3d 711,752 Utah Adv. Rep. 5 |
| Decision Date | 24 January 2014 |
| Docket Number | No. 20110078–CA.,20110078–CA. |
| Court | Court of Appeals of Utah |
| Parties | Charles Albert WARNER, Alan Smith Warner, and Theron C. Warner, Plaintiffs, Appellees, and Cross-appellants, v. Albert Heber WARNER Jr., Vernon S. Warner, and Valeen W. Peterson, Defendants, Appellants, and Cross-appellees. |
OPINION TEXT STARTS HERE
Second District Court, Ogden Department; No. 983900152; The Honorable Roger S. Dutson; The Honorable W. Brent West.2
David B. Stevenson, Vancouver, and Samuel A. Hood, Attorneys for Appellants and Cross-appellees.
Dale F. Gardiner, Scott M. Lilja, and Nicole M. Deforge, Salt Lake City, Attorneys for Appellees and Cross-appellants.
Christopher S. Hill, Shawn T. Richards, and Joshua S. Rupp, Salt Lake City, Attorneys for Appellants and Cross-appellees on Petition for Rehearing.
Amended Opinion 1
¶ 1 This appeal arises from litigation that has been ongoing for more than fifteen years over a family trust. The Defendants Albert “Skip” Heber Warner Jr. (Skip), Vernon S. Warner, and Valeen W. Peterson (collectively, the Trustees) appeal from the district court's order that certain trust property be removed from the trust. They also challenge the court's decision to require the Trustees to pay some of the Plaintiffs' attorney fees, as well as the court's denial of their own requests that their attorney fees be paid by the Plaintiffs, rather than by the trust. The Plaintiffs Charles Albert Warner, Alan Smith Warner,3 and Theron C. Warner (collectively, the Beneficiaries) 4 cross-appeal the district court's grant of summary judgment to the Trustees on all of the Beneficiaries' claims and the court's denial of the Beneficiaries' subsequent motions to amend their pleadings. We reverse the district court's order that the Trustees remove what the parties refer to as the Smith Property from the trust and the court's denial of that portion of the Beneficiaries' last motion to amend related to the Smith Property and remand for further consideration. We affirm on all other issues.
¶ 2 Albert H. Warner (Father) and Joanne S. Warner (Mother) (collectively, the Settlors) executed the Albert H. Warner Family Trust (the Trust) in 1988 to benefit their eight children. The Settlors named four of their children—Skip, Vernon, Valeen, and Alan—as trustees. Father died in 1995, and Mother subsequently executed a “Will of Joanne Smith Warner” (Mother's Will), in which she purported to authorize Skip to take “lead responsibility in charge of the [T]rust” and to give him her power of attorney. Mother died in 1996. According to the Trust's terms, “[f]ollowing the death of both Settlors all assets, except those listed below[,] remaining after payment of debts, taxes and expenses and disposition of personal and household effects shall be divided into equal shares.” The excepted property—that is, the property permitted to remain in the Trust—included “80 acres [of vacation property] ... [to] be established as a permanent recreation area for their family” and “[a]ll stocks, bonds, mutual funds and similar investment assets,” “collectively referred to as securities.” The securities were to be used “to provide funds for taxes, expenses of maintenance and improvement and insurance and any other expenses in connection [with the vacation property].” When the Trust was created, the trust corpus consisted of all the Settlors' assets, which included, among other things, the eighty acres of vacation property and the securities. In addition, Mother expected to inherit a 320–acre parcel of property located in Box Elder and Cache Counties (the Smith Property) and had prepared a special warranty deed in April 1988, transferring the Smith Property to the Trust in anticipation of that inheritance. The Smith Property became a Trust asset in 2003.5
¶ 3 The Beneficiaries sued three of the four trustees (excepting only Alan) on June 5, 1998, alleging multiple breaches of fiduciary duty. The Beneficiaries also sought an order to show cause asking the district court to order, among other things, the Trustees to be “restrained and enjoined from incurring additional costs and expense” related to the vacation property, “be removed as trustees,” and be ordered to cover their own attorney fees as opposed to having them paid out of the Trust. The Trustees filed an answer denying that they had breached their fiduciary obligations and seeking removal of Alan as a trustee and payment of their attorney fees. In their response to the Beneficiaries' request for an order to show cause, the Trustees included a copy of Mother's Will, presumably to demonstrate that the Settlors intended Skip to be primarily responsible for carrying out their desires. The parties later treated this as the Trustees' request for a declaratory judgment on the validity of Mother's Will. The court issued the order to show cause but, after hearing “argument and proffered testimony,” denied the Beneficiaries' “request for temporary and preliminary remedies.”
¶ 4 The Trustees then moved for “summary judgment dismissing the complaint of [the Beneficiaries] and in favor of [the Trustees] on their counterclaim for removal of plaintiff, Alan Smith Warner as a trustee and for [their] attorneys' fees.” The Beneficiaries opposed the Trustees' motion, asserting that there were issues of fact related to the Trustees' performance of their fiduciary obligations and the validity of Mother's Will, which precluded summary judgment. The Beneficiaries also moved to amend their complaint to add a claim for equitable modification of the Trust to require distribution of all its assets. The amendment further sought to dissolve the Trust due to the continuing animosity between the Trustees and the Beneficiaries and because of Alan's financial need due to a recent loss of employment.
¶ 5 In late 1999, the district court granted partial summary judgment in favor of the Trustees and dismissed all of the Beneficiaries' causes of action. The court concluded that the Trustees had not breached their fiduciary obligations because the facts, even construed in a light most favorable to the Beneficiaries, demonstrated that the Trustees “have exercised certain discretionary duties which clearly do not please all the beneficiaries, but they have acted consistent with general law relating to trustees and consistent with [the Utah Code section governing joint trustees] and they have substantially complied with the Trust provisions.” The court denied the Trustees' motion for summary judgment on their counterclaim, stating that “there are still material questions of fact regarding the propriety and legality of” Mother's Will, which made elevating Skip to “lead” trustee or removing Alan “premature.” The court also denied the Beneficiaries' motion to amend the complaint because the proposed amendment did not “address proper issues in this case” but nevertheless admonished that the Trustees “have not been wholly without mistake and in the future the court will apply a very stringent standard upon” the Trustees in conducting Trust business, including possibly “revisit[ing the motion to amend] upon presentation of proper evidence justifying amendment.”
¶ 6 Over the next ten years, the Beneficiaries made further attempts to amend their complaint. In July 2001, they filed a second motion to amend, in which they alleged additional trustee misconduct and sought reformation of the Trust or partition of the Trust property. The court denied the motion on the basis that the Beneficiaries' claims would not be best resolved through judicial intervention.
¶ 7 In August 2007, after the case had been reassigned to Judge W. Brent West, the Beneficiaries filed a third motion to amend their complaint, in which they sought to partition the vacation property and distribute the remaining trust corpus, including the Smith Property.6 The Trustees opposed the motion, asserting that the Beneficiaries “ma[d]e the same claims as in previous attempts to amend their complaint,” all of which had been denied by the court, and raising other procedural objections to amendment. A hearing on the motion to amend was eventually scheduled for May 27, 2009 (the May 2009 hearing). The morning of the hearing, the Trustees filed a motion for attorney fees pursuant to Utah Code section 78B–5–825 () and subsection (1) of section 75–7–1004 (the trust statute).
¶ 8 During the course of the hearing, the Trustees' counsel represented that the Smith Property was “not in the Trust” and that the Trustees “have two separate accounts[;] ... one, handle[s] the Smith funds and then the remaining Warner Estate funds are handled separately.” Following argument from both sides, the court orally denied the Beneficiaries' motion to amend, in part because it “ha[d] evidence today that the Smith [Property is] ... being administered separately” from the Trust. When the Beneficiaries insisted that the Smith Property was still held by the Trust, the court turned to the Trustees and told them to do “whatever you've got to do to get that Smith [Property] out of there.” 7 The court denied the remainder of the Beneficiaries' motion to amend on multiple grounds, including that the causes of action did not arise out of the same conduct as the original causes of action, were time barred by the statute of limitations and doctrine of laches, and were precluded under the doctrines of res judicata and law of the case. The court further determined that the disputes over the validity of Mother's Will and power of attorney were moot. The district court seemed to reserve a ruling on the Trustees' motion for attorney fees, noting that the Beneficiaries had not yet had “a chance to look at [the Trustees' attorney fees affidavit] and submit any counter affidavits or objections” and directing the Trustees to “submit that” motion for...
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