Young v. Kaufman
| Decision Date | 14 December 2017 |
| Docket Number | 105359,Nos. 104990,s. 104990 |
| Citation | 2017 Ohio 9015,101 N.E.3d 655 |
| Parties | Laurel K. YOUNG, et al., Plaintiffs–Appellants v. Josh S. KAUFMAN, et al., Defendants–Appellees |
| Court | Ohio Court of Appeals |
Richard G. Johnson, Richard G. Johnson Co., L.P.A., 220 Crittenden Court Building, 955 West St. Clair Avenue, Cleveland, Ohio 44113, ATTORNEY FOR APPELLANTS.
John E. Schiller, Jamie A. Price, Walter Haverfield L.L.P., 1301 East Ninth Street, Suite 3500, Cleveland, Ohio 44114, ATTORNEYS FOR APPELLEES JOSH KAUFMAN, KIM KAUFMAN AND DOUG KAUFMAN IN THEIR CAPACITIES AS CO–EXECUTORS AND CO–TRUSTEES.
Leon A. Weiss, Adam M. Fried, Paul R. Shugar, Reminger Co., L.P.A., 101 Prospect Avenue, # 1400, Cleveland, Ohio 44114, Adriann S. McGee, Reminger Co., L.P.A., 200 Civic Center Drive, Suite 800, Columbus, Ohio 43215, ATTORNEYS FOR APPELLEE JOSH KAUFMAN.
Jeffrey P. Consolo, Michael G. Latiff, McDonald Hopkins L.L.C., 600 Superior Avenue, East, Suite 2100, Cleveland, Ohio 44114, ATTORNEYS FOR APPELLEE KIM KAUFMAN.
Joseph C. Weinstein, Rebecca W. Haverstick, Squire Patton Boggs, 4900 Key Tower, 127 Public Square, Cleveland, Ohio 44114, ATTORNEYS FOR APPELLEE DOUG KAUFMAN.
BEFORE: E.A. Gallagher, P.J., Kilbane, J., and Jones, J.
JOURNAL ENTRY AND OPINION
{¶ 1} This consolidated appeal involves a challenge by plaintiffs-appellants Laurel Young ("Lori") and James Kaufman ("Jim") (collectively, "appellants") to their deceased mother's estate plan. Appellants claim that the estate plan, which disinherited Lori and Jim—two of the decedent's five children—is not valid because it was the product of undue influence by two of their siblings, Josh Kaufman ("Josh") and Kim Kaufman ("Kim") (the "contest claim"). Appellants also seek to remove Josh and Kim as co-executors and co-trustees of the decedent's will and trust based on their alleged breaches of fiduciary duty (the "removal claim"). Appellants appeal from the Cuyahoga County Court of Common Pleas, Probate Division's (the "probate court's") orders entering summary judgment in favor of defendants-appellees Josh, Kim and Doug Kaufman ("Doug"), individually, and in their capacities as co- executors and co-trustees of the estate of Joyce Kaufman, deceased (collectively, "appellees") on appellants' contest claim (Appeal No. 104990) and removal claim (Appeal No. 105359). For the reasons that follow, we reverse the trial court's judgment and remand the matter for further proceedings.
{¶ 2} The decedent, Joyce Kaufman ("Joyce"), passed away on August 6, 2013. She had five children—Jim, Lori, Doug, Kim and Josh. David Kaufman ("David"), Joyce's second husband, was the biological father of Josh and Kim. David adopted Jim, Lori and Doug after marrying Joyce.
{¶ 3} David was the founder of several family businesses including American Consolidated Industries, Inc. ("ACI") (a holding company), Monarch Steel Corporation ("Monarch") (a steel business) and Anchor Industries, Inc. ("Anchor") (a business supplying aftermarket automotive engine and transmission mounts). Monarch and Anchor were originally both subsidiaries of ACI. David gave each of the children stock in the businesses. Following David's death in 1997, Joyce became the sole voting shareholder in the businesses and continued as the sole voting shareholder until her death.
{¶ 4} In the late 1990s or 2000, Jim redeemed his shares in the family businesses for $7 million. In 2002 or 2003, Lori redeemed her shares in the family businesses for a similar sum. At the end of 2009, Anchor was spun off from ACI. Doug bought Josh's shares of Anchor and Josh bought Doug's shares of Monarch. After the buyouts, Kim and Joyce remained shareholders of both Anchor and Monarch.
{¶ 5} In 1993, Joyce executed an estate plan that provided for the disposition of her assets first to her husband and thereafter to her five children. In 1999, she modified her estate plan to exclude Jim as a beneficiary except for a $1,000 bequest. Joyce made additional changes to her estate plan in 2000. Under these modifications to her estate plan, Joyce's personal property was to be disposed of at the discretion of Kim, and Lori, Doug, Kim and Josh were to receive the balance of her assets. In 2000, Joyce also executed a durable power of attorney, appointing Doug and Kim jointly as her attorneys-in-fact.
{¶ 6} Jim testified that Joyce's decision to exclude him from her estate plan in 1999 and 2000 was not unexpected, based on a conversation he had had with Joyce in or around 2000 or 2001. As Jim testified:
{¶ 7} In 2009, Joyce took steps to revise her estate plan. Joyce initially worked with attorney Joan Gross, a partner with the law firm Hahn Loeser & Parks, L.L.P. ("Hahn Loeser"), to revise her estate plan. Although it was not involved in her 1993 estate plan or the modifications thereto, Hahn Loeser had previously done legal work for other family members and certain of the family businesses, including Monarch.1
{¶ 8} Around the time Joyce began working with Gross, she also began working with accountant Phil Baptiste, who assisted her with tax-related issues. According to Baptiste, Joyce and ACI had been clients of his accounting firm, Cohen & Company, for a number of years but the family had become unhappy with them. In an effort to retain the family as a client, in early 2009, Baptiste met first with Josh, then with Joyce, to discuss the family's issues.
{¶ 9} Baptiste testified that when he first met with Joyce, he inquired about the state of her estate planning. He testified that Joyce indicated that she wanted to update her estate plan. According to Baptiste, Joyce did not indicate specifically what changes she wanted to make, but that, "in broad terms," "[s]he was well kind of settled that * * * Jim and Lori had both been bought out of the businesses, so they sort of had received their money already." Baptiste testified that "from day one" Joyce was "very clear" that her beneficiaries would be Josh, Kim and Doug and that the details that were being worked out from April 2009 until her estate plan was finalized in 2010 were "smaller but emotional type items that had to be resolved." Baptiste testified that Joyce did not use email and that he communicated with her via telephone or in-person meetings.
{¶ 10} In January 2009, Joyce had a meeting with Gross, Baptiste, Gross' partner Larry Oscar, and Joyce's business advisor, David Stith, to discuss her objectives for her new estate plan. Gross testified that, at the meeting, Joyce stated that she wanted only three of her children to inherit under her new estate plan—Josh, Kim and Doug—and that she documented this in her notes. According to Gross, Joyce explained that she did not intend to include Jim and Lori as beneficiaries in her new estate plan because they had already received their share of the family's wealth when they redeemed their company stock.2 Oscar similarly testified that Joyce had informed him that Jim and Lori were to be excluded from her estate plan because they had already received their inheritance through the buyout of their interests in the family businesses.
{¶ 11} Following the January 2009 meeting, Gross sent Joyce a summary of a proposed estate plan and a flow chart showing how the estate plan would work. The summary excluded Jim and Lori from inheriting under the new estate plan. After a second meeting in February, Gross sent Joyce a revised summary and flow chart. The revisions involved changing the order in which the three children who were beneficiaries served as fiduciaries and setting up a trust for Joyce's grandchildren. None of Joyce's children were present during Gross' meetings with Joyce or otherwise a party to Gross' communications with Joyce.
{¶ 12} In April 2009, Gross forwarded draft estate planning documents that excluded Jim and Lori as beneficiaries to Joyce for her review. Joyce, however, never signed them. Gross testified that Joyce informed her that she would not sign the estate planning documents Gross had prepared until some of her children repaid several outstanding promissory notes they owed her.3 According to Gross, Joyce wanted to use the proceeds of the notes to fund a trust for her grandchildren and refused to sign the estate planning documents as Joan had drafted them because she was considering making additional changes to her estate plan once the promissory notes were repaid. Joyce did not indicate to Gross what those changes might be. Gross testified that she communicated with Joyce via mail, federal express, in-person meetings or telephone.
{¶ 13} In the summer of 2010, Joyce began working with another Hahn Loeser attorney, Steve Gariepy, on her new estate plan. Oscar testified that in August 2010, Josh informed him that Joyce was not comfortable moving forward with Gross and wanted to retain another attorney to complete her estate plan. As to why Joyce decided to switch counsel, Oscar testified that, according to Josh , Joyce was displeased with the time...
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