Justia Trusts & Estates Opinion Summaries

The estate of Etsuko Futagi Toland appealed a Court of Appeals decision upholding summary judgment that denied registration of a Japanese divorce decree awarding Etsuko Toland a monetary award against her former husband, Peter Paul Toland. The question to the Washington Supreme Court was whether the trial court abused its discretion in denying recognition of the divorce decree under comity principles because Paul was not given notice of a Japanese guardianship proceeding involving the couple's daughter. The Washington Court reversed: the 2008 guardianship had no effect on Paul's legal obligations under the 2006 divorce decree. The divorce decree was valid, and whether it should have been recognized as a matter of comity did not depend on whether Paul had notice of the guardianship proceeding. The Washington Court held that the trial court abused its discretion, and remanded this case back to the trial court for registration of the divorce decree. View "In re Estate of Toland" on Justia Law

Seventy-six-year-old William suffered from a lifelong mental disability. William’s brother Robert and sister Jeanne were the sole trustees of a trust established by William’s mother to support William. Because Williams had fallen prey to financial scammers, Robert and Jeanne took steps to prevent William from trust money. Thereafter, Robert petitioned for appointment as William’s guardian, and Jeanne cross-petitioned seeking to be appointed as William’s guardian and conservator. The district court dismissed Robert’s petition as a sanction for his failure to appear at a pretrial conference and temporarily appointed Jeanne as William’s guardian and conservator. The Supreme Court affirmed, holding (1) the district court properly dismissed Robert’s guardianship petition; (2) the district court did not abuse its discretion in disposing of Robert’s motions to submit the case to mediation and to quash the proposed order dismissing Robert’s petition; and (3) the district judge did not abuse his discretion in denying Robert’s petition to disqualify the presiding judge. View "In re Guardianship & Conservatorship of Bratton" on Justia Law

In 2002, three months after she married her fourth husband, Patricia Watson created a trust that left substantially all of her property to her half siblings. The trust expressly stated that Watson’s husband, Arnold Smith, would not receive any part of the trust estate. Thereafter, Watson’s mental health began deteriorating, and in 2007, Watson began making changes to her trust. Watson signed two trust amendments, signed changes to several of her bank and retirement accounts, and signed documents retitling several of her accounts and vehicles. The effect of the changes was that almost all of Watson’s personal property passed to Smith when Watson died. After Watson’s death, the half siblings filed this action seeking to set aside the trust amendments, beneficiary designations, and property transfers. The circuit court ruled that the changes to the estate plan were void due to a lack of testamentary capacity and undue influence. The Supreme Court affirmed, holding that substantial evidence supported the circuit court’s judgment that Watson lacked testamentary capacity to make the changes to her estate plan and that the judgment was not against the weight of the evidence. View "Ivie v. Smith" on Justia Law

Plaintiff prevailed at trial in an action for financial abuse of an elder or dependent adult. The judgment was affirmed on appeal. After judgment, Plaintiff brought a separate action seeking to prevent or reverse Defendant’s transfer of real property to third persons. Plaintiff subsequently dismissed the fraudulent transfer action pursuant to an agreement with Defendant. Thereafter, Plaintiff moved for costs and attorney fees incurred both on appeal from the elder abuse judgment and in the fraudulent transfer action. The court of appeals concluded that the fees and costs motion was untimely under Cal. Code Civ. Proc. 685.040. The Supreme Court reversed in part, holding (1) as to attorney fees on appeal from the elder abuse judgment, the motion was not subject to section 685.080 because Plaintiff’s efforts in opposing Defendant’s appeal were not undertaken to enforce the judgment but to defend it against reversal or modification; and (2) Plaintiff’s motion was untimely as to fees incurred enforcing the judgment through the separate fraudulent transfer action because the fees incurred in that action could only be recovered under section 685.040. View "In re Conservatorship of McQueen" on Justia Law

The Boys and Girls Clubs of South Alabama, Inc. ("BGCSA"), sought a writ of mandamus to order the Baldwin Circuit Court to dismiss a declaratory-judgment action filed against it and The Community Foundation of South Alabama by the attorney general of Alabama, Fairhope-Point Clear Rotary Youth Programs, Inc. ("Rotary Inc."), and Ruff Wilson Youth Organizations, Inc. ("Wilson Inc.") In 1996, B.R. Wilson, Jr., one of the incorporators and a principal benefactor of BGCSA, executed a deed transferring to BGCSA approximately 17 acres of real estate. Contemporaneously with the execution of the deed, Wilson gave a letter to BGCSA that stated Wilson's intentions and stipulations concerning his gift of the property. The letter stated that BGCSA was "'free to ultimately dispose of this property,'" but that it was Wilson's "'desire and understanding that [BGCSA] will use the proceeds from any such disposition for [BGCSA's] facilities and/or activities in the Fairhope–Point Clear area.'" Wilson died in 1997. In 2010, the Eastern Shore Clubs filed an action in the Baldwin Circuit Court seeking declaratory and injunctive relief against BGCSA. The Eastern Shore Clubs alleged that BGCSA "ha[d] used," or, perhaps, was "anticipat[ing] using," the proceeds from the sale of the property for its own operations, rather than for the benefit of the Eastern Shore Clubs. In 2012, the Baldwin Circuit Court entered a judgment concluding Wilson's intent was that the Wilson funds should be used for the "exclusive benefit of the Fairhope and Daphne Clubs." The Baldwin Circuit Court ordered the disbursal of the remainder of the Wilson funds. This case was the third action that has come before the Supreme Court arising out the dispute between BGCSA and the Eastern Shore Clubs over the Wilson funds. The Supreme Court concluded Section 6-5-440 compelled dismissal of this case because another action involving the same cause and the same parties ("the Mobile action") was filed first. Therefore, the Court granted the petition for a writ of mandamus and directed the Baldwin Circuit Court to vacate its most recent order in this case, and to enter an order dismissing this case. View "Alabama et al. v. Boys And Girls Clubs of South Alabama, Inc." on Justia Law

Petitioner’s father established a trust for the benefit of petitioner and his siblings, and made petitioner the nonprofessional trustee. The trust’s sole asset was the father’s life insurance policy. Petitioner borrowed funds from the trust three times; all borrowed funds were repaid with interest. His siblings obtained a state court judgment for breach of fiduciary duty, though the court found no apparent malicious motive. The court imposed constructive trusts on petitioner’s interests, including his interest in the original trust, to secure payment of the judgment, with respondent serving as trustee for all of the trusts. Petitioner filed for bankruptcy. Respondent opposed discharge of debts to the trust. The Bankruptcy Court held that petitioner’s debts were not dischargeable under 11 U. S. C. 523(a)(4), which provides that an individual cannot obtain a bankruptcy discharge from a debt “for fraud or defalcation while acting in a fiduciary capacity, embezzlement, or larceny.” The district court and the Eleventh Circuit affirmed. The Supreme Court vacated. The term “defalcation” in the Bankruptcy Code includes a culpable state of mind requirement involving knowledge of, or gross recklessness in respect to, the improper nature of the fiduciary behavior. The Court previously interpreted the term “fraud” in the exceptions to mean “positive fraud, or fraud in fact, involving moral turpitude or intentional wrong.” The term “defalcation” should be treated similarly. Where the conduct does not involve bad faith, moral turpitude, or other immoral conduct, “defalcation” requires an intentional wrong. An intentional wrong includes not only conduct that the fiduciary knows is improper but also reckless conduct of the kind that the criminal law often treats as the equivalent. Where actual knowledge of wrongdoing is lacking, conduct is considered as equivalent if, as set forth in the Model Penal Code, the fiduciary “consciously disregards,” or is willfully blind to, “a substantial and unjustifiable risk” that his conduct will violate a fiduciary duty. View "Bullock v. BankChampaign, N. A." on Justia Law

This case stemmed from the long-running dispute between Vickie Lynn Marshall and E. Pierce Marshall over the fortune of J. Howard Marshall II, a man believed to have been one of the richest people in Texas. Vickie married J. Howard, Pierce's father, approximately a year before his death. Shortly before J. Howard died, Vickie filed a suit against Pierce in Texas state court asserting that J. Howard meant to provide for Vickie through a trust, and Pierce tortiously interfered with that gift. The litigation worked its way through state and federal courts in Louisiana, Texas, and California, and two of those courts, a Texas state probate court and the Bankruptcy Court for the Central District of California, reached contrary decisions on its merits. The Court of Appeals subsequently held that the Texas state decision controlled after concluding that the Bankruptcy Court lacked the authority to enter final judgment on a counterclaim that Vickie brought against Pierce in her bankruptcy proceeding. At issue was whether the Bankruptcy Court Judge, who did not enjoy tenure and salary protections pursuant to Article III of the Constitution, had the statutory authority under 28 U.S.C. 157(b) to issue a final judgment on Vickie's counterclaims and, if so, whether conferring that authority on the Bankruptcy Court was constitutional. The Court held that the Bankruptcy Court had the statutory authority to enter judgment on Vickie's counterclaim as a core proceeding under section 157(b)(2)(C). The Court held, however, that the Bankruptcy Court lacked the constitutional authority under Article III to enter final judgment on a state law counterclaim that was not resolved in the process of ruling on a creditor's proof claim. Accordingly, the judgment of the Court of Appeals was affirmed. View "Stern v. Marshall" on Justia Law

The Jicarilla Apache Nation's ("Tribe") reservation contained natural resources that were developed pursuant to statutes administered by the Interior Department and proceeds from these resources were held by the United States in trust for the Tribe. The Tribe filed a breach-of-trust action in the Court of Federal Claims ("CFC") seeking monetary damages for the Government's alleged mismanagement of the Tribe's trust funds in violation of 25 U.S.C. 161-162a and other laws. During discovery, the Tribe moved to compel production of certain documents and the Government agreed to the release of some documents but asserted that others were protected by, inter alia, the attorney-client privilege. At issue was whether the fiduciary exception to the attorney-client privilege applied to the general trust relationship between the United States and Indian tribes. The Court held that the fiduciary exception did not apply where the trust obligations of the United States to the Indian tribes were established and governed by statute rather than the common law and, in fulfilling its statutory duties, the Government acted not as a private trustee but pursuant to its sovereign interest in the execution of federal law. The reasons for the fiduciary exception, that the trustee had no independent interest in trust administration, and that the trustee was subject to a general common-law duty of disclosure, did not apply in this context. Accordingly, the Court reversed and remanded for further proceedings. View "United States v. Jicarilla Apache Nation" on Justia Law

Petitioners challenged the Commissioner's disallowance of a $30 million deduction on the Estate's tax return for a lawsuit pending at the time of Gertrude Saunders' death (the Stonehill Claim). The court concluded that the Stonehill Claim was disputed at the date of the decedent's death, and its estimated value as of that date was not ascertainable with reasonable certainty. Therefore, the tax court properly disallowed the Estate's deduction, but correctly allowed a deduction in the amount paid to settle the Stonehill Claim after the decedent's death. Accordingly, the court affirmed the judgment of the district court. View "Estate of Saunders v. CIR" on Justia Law

Plaintiff filed suit alleging that the mortgage trust that claimed to hold his mortgage was not validly assigned the mortgage, and therefore, his mortgage could not be foreclosed by the trust. The district court granted summary judgment in favor of the trustee, Wells Fargo. The court affirmed, concluding that the assignment to the mortgage trust was valid. Given the record, including the custodian's initial certification failing to list the promissory note as missing - which provided a strong inference that the note was not missing - and given the lack of any other reason to believe the note was or is missing, the court agreed with the district court that no reasonable jury could find that the original promissory note was not in the Trust's possession on the startup date of the Trust. View "Johnson, Jr. v. Wells Fargo Bank, N.A." on Justia Law