Victor D. Labantschnig, Jr. v. Kenneth H. Bohlmann, and Dennis G. Labantschnig , 439 S.W.3d 269 ( 2014 )

In the Missouri Court of Appeals
Eastern District
DIVISION TWO
VICTOR D. LABANTSCHNIG, JR., ) No. ED100790
)
Respondent, ) Appeal from the Circuit Court
) of St. Louis County
vs. ) 11SL-CC02900
)
KENNETH H. BOHLMANN, )
)
and, )
)
DENNIS G. LABANTSCHNIG, ) Honorable Thea Anne Sherry
)
Appellants. ) FILED: August 26, 2014
OPINION
Kenneth H. Bohlmann (Trustee) and Dennis G. LaBantschnig (Dennis) appeal from the
judgment following an equity suit brought by Victor D. LaBantschnig, Jr. (Victor) 1 against
Trustee alleging breach of fiduciary duty under the Victor D. LaBantschnig, Sr. Revocable
Living Trust (Trust). We affirm.
Factual and Procedural Background
On February 10, 1995, Victor LaBantschnig, Sr. (Grantor) created the Trust,
subsequently amended, which named Dennis and Victor as sole beneficiaries. The Trust was to
be distributed pursuant to the terms of Item Four, which provides the following:
1
For clarity and ease of reading, we refer to the LaBantschnig brothers by their first names
throughout this opinion.
After the death of the Grantor, all property then constituting the principal
of the trust estate…shall be administered as follows:
(A) The Trustees are directed to pay over, free from trust, to Grantor’s son,
DENNIS G. LABANTSCHNIG, if living, the sum of Fifty Thousand Dollars
($50,000.00)….
(B) If, at the time of Grantor’s death, the property known as and numbered
2951 Finestown Road, St. Louis, Missouri 63129 (the “Residential Real
Estate”), is held as part of the trust estate, the Trustees shall employ two (2)
qualified appraisers to conduct an appraisal of the Residential Real Estate and
the average of the appraised values shall determine the value thereof, provided,
however, that if the results of the two appraisals differ by more than twenty
percent (20%), the two appraisers shall select a third appraiser to appraise
the Residential Real Estate, and the average of the two values which are
closest to each other shall determine the value of the Residential Real Estate.
When making the appraisal of the Residential Real Estate, however, the
appraisers shall exclude from the total value thereof the value of the addition
to the detached garage which has been constructed thereon. (Grantor
acknowledges that the cost of construction of said addition to the detached
garage was paid by Grantor’s son, DENNIS G. LABANTSCHNIG, and the
value thereof is not to be included in Grantor’s estate for purposes of division
of the trust estate, as hereinafter provided.) The value of the ground on
which the addition to the detached garage is built is, however, to be included
in the valuation of the Residential Real Estate.
Item Eleven of the Trust states:
If, at any time, either before or after Grantor’s death, either of Grantor’s
said sons shall, either directly or indirectly, contest the validity of this Trust
Agreement, or shall attempt to vacate or change the same, or to alter or
change any of the provisions hereof, then such son shall be thereby deprived
of any interest hereunder and of any share of the trust estate, and the share
of such son shall go to the other of Grantor’s said sons.
On April 25, 2010, Grantor died and Trustee became the successor Trustee of the estate,
which was valued at $947,147.84 and consisted of real estate as well as certificates of deposit,
cash and liquidated stocks. In May 2010, following Grantor’s death, Trustee met with both
beneficiaries to discuss administration of the estate, including appraisal of the real estate.
Trustee proceeded to obtain the two required appraisals, neither of which included the value of
the main garage.
On July 19, 2011, Victor brought suit against Trustee alleging breach of
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fiduciary duty under the Trust. Victor petitioned the court for an accounting by
Trustee, a preparation of a proposed schedule of distribution, removal of Trustee as
successor trustee and other relief. Additionally, Victor alleged that Trustee failed to
provide proof that the property was properly appraised. Dennis was also named
defendant as a necessary party. Trustee counterclaimed that Victor violated the in
terrorem clause of the Trust thereby forfeiting his rights as beneficiary. Dennis
subsequently joined the Trustee in that request but did not file a separate claim.
On June 21, 2013, following a bench trial, the court entered judgment in favor of Victor
and determined that the Trustee breached his fiduciary duty in the following respects:
a. Failure to administer the Trust pursuant to the explicit directions, and to abide
by the unambiguous terms of the Trust;
b. Failure to divide and segregate the Trust assets into two separate trust shares as
required after determination of the value of the Finestown property on or about
August 13, 2010;
c. Failure to segregate the Finestown property and then delayed distribution to
Dennis until July 2012;
d. Failure to allocate the Finestown property’s regular maintenance as well as
expenses for significant repairs and improvements to Dennis’s share after
August 13, 2010, totaling $43,391.88;
e. Requiring [Victor] to share in the cost of the Finestown property
improvements without a trust directive, thereby failing to administer the Trust
in the interest of both beneficiaries;
f. Failure to allocate the interest income proportionally to Dennis and [Victor];
g. Failure to provide the beneficiaries with details of the Trustee’s fees, accounting
fee and attorney’s fees for over 15 months;
h. Improper payment of expenses from the Trust assets including but not
limited to, the payment of insurance and personal property tax for vehicles
not held by the Trust without inquiry into whether the vehicles were part of
the Trust;
i. Failure for over a year to communicate with and respond timely to [Victor’s]
inquiries until after Victor retained his own counsel;
j. Admitted failure by the Trustee to devote sufficient time or attention to the
administration of the Trust;
k. Failure to distribute the Trust in a timely manner without just cause or excuse;
l. Engaging unnecessary expenses and litigation costs of $38,585.34 through
November 21, 2012;
m. Failure to exercise the requisite skill and care and diminishing the value of the
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Trust by incurring significant attorneys’ fees after the beneficiaries agreed in
writing to resolve their dispute and end litigation; (footnote: In April 2012, the
brothers reached an agreement on the proposed distribution, but the Trustee
refused to approve it because [Victor] would not sign a release of liability for
the Trustee).
n. Failure to preserve [Victor’s] share of the Trust in the amount of $65,000.00.
Based on the numerous breaches of Trustee’s fiduciary duties, the trial court awarded
damages to Victor against Trustee personally. 2 Thereafter, the trial court specifically found
the Victor’s actions did not violate the in terrorem clause in the Trust:
The Court finds that [Victor’s] efforts to force the Trustee to
comply with the terms of the Trust, challenging appraisals, and refusing
to execute a release did not constitute an attempt to challenge the
validity of the Trust or alter or change the terms of the Trust to
otherwise violate the terms of Item Eleven.
This appeal follows. 3
Standard of Review
In reviewing a court-tried case, we are governed by the principles established in Murphy
v. Carron, 536 S.W.2d 30, 32 (Mo. banc 1976). Betty G. Weldon Revocable Trust v. Weldon,
231 S.W.3d 158, 173 (Mo. App. W.D. 2007). We will affirm the judgment of the trial court
unless no substantial evidence supports it, it is against the weight of the evidence, or it
erroneously declares or applies the law. Betty G. Weldon Revocable Trust, 231 S.W.3d at 173.
We will conduct de novo review of questions of law, which include determination of the
meaning of a trust instrument, and give no deference to the trial court’s judgment in such
matters. Id.Generally, the paramount rule of construction in determining the meaning of a trust
provision is to ascertain the grantor’s intent at the time of the trust’s creation. Id. The grantor’s
2
Those findings and damages are not being appealed.
3
In its Amended Judgment, entered October 17, 2013, the trial court made no amendments to its
previous findings in regard to the in terrorem clause.
4
intent must be ascertained primarily from the trust instrument as a whole, and no clause in the
trust is given undue preference. Id. The unambiguous terms of a trust will be given effect, and
we will not attempt to rewrite an unambiguous trust under the guise of construction. Id. at 174.
Discussion
In their sole point on appeal, Trustee and Dennis argue the trial court erred in finding that
Victor did not violate the in terrorem clause of the Trust thereby forfeiting his rights as a
beneficiary of the Trust. We disagree.
Missouri courts strictly construe no-contest, or in terrorem, clauses in wills and trusts,
and forfeitures are not favored by the law:
In determining what constitutes a “contest” or other violation of a no-
contest or forfeiture provision, it would seem the facts of the particular case are
to be considered, taken into account and applied with a careful regard for the
phrasing or language of the no-contest or forfeiture clause; and, having in mind
that forfeitures are not favored by the law, a no-contest or forfeiture provision
is to be enforced where it is clear that the trustor (or testator) intended that the
conduct in question should forfeit a beneficiary’s interest.
Cox v. Fisher, 322 S.W.2d 910, 915 (Mo. banc 1959); see also Chaney v. Cooper, 954
S.W.2d 510, 519 (Mo. App. W.D. 1997) (in reviewing applicability of forfeiture provisions in
wills, courts are to consider facts of the particular case, and those facts are to be considered
and applied with careful regard for phrasing or language of the forfeiture clause, and, having
in mind that forfeitures are not favored by the law); see also Tobias v. Korman, 141 S.W.3d
468, 477 (Mo. App. E.D. 2004) (generally unfavored by the law, a no-contest clause is to be
enforced where it is clear that the trustor (or testator) intended that the conduct in question
should forfeit a beneficiary’s interest under the trust (or will)).
Here, the relevant no-contest provision, contained in Item Eleven, states that if a
beneficiary shall, “contest the validity of this Trust Agreement, or shall attempt to vacate or
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change the same, or to alter or change any of the provisions hereof” then such beneficiary’s
interest would be forfeited. Under Missouri law, this clause must be strictly construed to
determine whether any actions taken by Victor were of such a nature that the Grantor
intended forfeiture. We believe they did not.
The record shows that the appraisal process was specifically set forth in the Trust, and
that the Trustee did not follow those directions. The Trust clearly provided that the detached
garage was to be included in the valuation of the property. Despite the express language of
the Trust, both of the appraisers confirmed that Trustee gave them the incorrect instructions
regarding the appraisal of the Finestown property and they did not include the garage in their
calculations. Moreover, in his testimony Trustee essentially conceded that he did not follow the
terms of the Trust in determining the property’s value:
Q Okay. And you understand that in the appraisals, they’re
supposed to include the value of the detached garage; is that right?
A A value for the detached garage, yes.
Q Is supposed to be included?
A If they thought it was of value.
Q Okay. Let me hand you what’s been marked Exhibit 41, which
is—and this is a letter to you, and it says,…“At the time of the inspection I
was instructed not,” in capital letters, “to include the detached parking
structure in the appraisal.”
And so that was an incorrect instruction to the appraiser?
A (No response.)
Q Is that true? You incorrectly instructed the appraiser how to
appraise the building?
A No. I gave them the instructions that were in the—in the trust.
Q Okay. So [the appraiser] is not telling the truth when he says
that?
A As I recall, we were—Victor, Dennis, myself and the
appraisers were all standing outside the garage or outside the house, and for
the second time had gone over what the appraiser—what the appraisal was
and that the statement was made that the garage was to be excluded.
Q That’s not what the trust says. Though?
A That’s not what the trust says.
Q And you’re the trustee, and you’re responsible for getting the
correct appraisal on the property; isn’t that true?
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A That is correct.
Q And according to the first letter from the first appraiser, you
didn’t do that?
A (No response.)
Q That’s all right. We’ll just take no answer to that. You have
no answer.
Similarly, according to the second appraiser, he too was instructed by Trustee contrary to
the terms of the Trust: “For purposes of this appraisal, we have been instructed to appraise the
subject property without the large masonry detached garage to the rear of the main residence.”
The appraiser indicated that reappraising the property (in compliance with the terms of the
Trust) would be a “new assignment” and would require additional work to provide the
analysis. The Trustee never made such a request.
Victor’s “challenge” was to the Trustee’s appraisals, not a challenge to the Trust itself
or its terms but an attempt to ensure that the Trust was executed according to its terms. The
plain language of Item Eleven does not prohibit a beneficiary from questioning a Trustee’s
execution of the Trust, seeking an accounting or a review of the Trustee’s actions,
questioning appraisals, or seeking to force action by the Trustee. It only prohibits an attempt
to vacate, change or alter the Trust itself. When Victor received an independent appraisal,
questioned whether Trustee’s appraisers had properly appraised the property, and identified
the appraisals as a concern in his Petition, he explicitly and repeatedly acknowledged that he
wished to ensure that the appraisals were done in accordance with the terms of the Trust.
Furthermore, the record shows that Victor ordered his appraisal before seeing the
Trustee’s appraisals, for his “own purposes” and that Victor did not bring his appraisal to the
Trustee until Trustee specifically asked for it. At the request of Trustee, following a joint
request by Dennis and Victor for the appraisers to “reconsider their methodology,” Trustee’s
attorney sent a letter to the appraisers indicating that they incorrectly excluded the detached
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garage and asked them to revisit those appraisals: “In your appraisals, it appears that not only
did you exclude the addition to the attached garage, but you assumed the entire garage was not
there.” The record supports Victor’s contention that this is was not an independent attack by
Victor of the appraisers or the appraisal process but done by the Trustee’s own attorney to try
to determine if the property had been appraised pursuant to the terms of the Trust, and, if not,
what the effect of the error was.
We find no language in the in terrorem clause indicating that enforcing one’s rights
under the Trust would cause a forfeiture. Here, Victor does not ask for any part of the Trust to
be altered or changed in any way but only requests that the property be appraised as set forth
in the Trust. By its own language, the purpose of the Trust was to divide the Grantor’s assets
equally between his two sons. Victor brought suit to enforce the terms of the Trust and to
require the Trustee to complete and file an accounting and distribute the assets pursuant to the
terms of the Trust. Based on the record before us, the trial court correctly determined that
Victor’s actions to enforce the provisions of the Trust did not violate the terms of the in
terrorem clause contained in Item Eleven. Point denied. 4
Conclusion
The judgment is affirmed.
_________________________________
Mary K. Hoff, Judge
Sherri B. Sullivan, Presiding Judge, and Philip M. Hess, Judge, concur.
4
Victor’s request for attorney’s fees and costs on appeal is denied.
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