In re Marjorie A. Fearn Trust , 2012 Ohio 1029 ( 2012 )

[Cite as In re Marjorie A. Fearn Trust, 2012-Ohio-1029.]
COURT OF APPEALS
KNOX COUNTY, OHIO
FIFTH APPELLATE DISTRICT
IN THE MATTER OF: JUDGES:
Hon. W. Scott Gwin, P.J.
THE MARJORIE A. FEARN TRUST Hon. Sheila G. Farmer, J.
Hon. John W. Wise, J.
Case No. 11-CA-16
OPINION
CHARACTER OF PROCEEDING: Appeal from the Court of Common
Pleas, Probate Division, Case No.
2010-8001A
JUDGMENT: Reversed & Remanded
DATE OF JUDGMENT: March 13, 2012
APPEARANCES:
For Appellant For Richard Wells & Stephen Algire
KELLY M. MORGAN KIM M. ROSE
380 South Fifth Street CLINTON G. BAILEY
Suite 3 P.O. Box 469
Columbus, OH 43215 Mount Vernon, OH 43050
For Estate of Stephen E. Algire For Brenda, Andrew, Ashley, &
Blake Algire
ROBERT L. RAUZI
305 East High Street KENNETH E. LANE
Mount Vernon, OH 43050 5 North Gay Street
Mount Vernon, OH 43050
MS. BUTCHER
First-Knox National Bank CURTIS P. WEAVER
1 South Main Street 218 Bret Harte Drive
P.O. Box 1270 Newport News, VA 23602
Mount Vernon, OH 43050
BRADLEY D. WEAVER
JORDAN R. INMAN 15249 Tracy Beth Drive
1378 Hamlet Street Huntersville, NC 28078
Columbus, OH 43201
Knox County, Case No. 11-CA-16 2
Farmer, J.
{¶1} Marjorie Ann Fearn was the mother of three children, Stephen Algire,
Brenda Algire, and appellant, Kathy Salyers. On June 2, 2006, Ms. Fearn executed a
Restatement of the Marjorie Ann Fearn Revocable Trust Agreement, wherein Ms. Fearn
directed her trust assets to be divided into three equal shares and distributed after her
death to her three children. Named as co-trustees were appellees, Richard Wells and
Stephen Algire. The trust directed that appellant's share was to remain in trust and be
distributed to her at the discretion of appellees.
{¶2} Ms. Fearn died on February 19, 2010.
{¶3} On June 15, 2010, appellant filed a complaint for declaratory relief
regarding the rights and responsibilities of the parties involving the trust, and seeking
several issues including a trust accounting and inventory.
{¶4} On October 18, 2010, the trial court conducted a status conference.
Following this conference, the trial court filed an entry on October 26, 2010 ordering
appellees to provide appellant with an accounting within thirty days.
{¶5} On January 11, 2011, appellees filed a motion for summary judgment.
Attached to the motion was a "Record Book" which was the accounting ordered by the
trial court on October 26, 2010. Appellees filed a second accounting on June 23, 2011.
{¶6} During the pendency of the case, appellee Wells resigned as co-trustee.
Appellee Stephen Algire passed away on July 28, 2011. Due to the resignation of
appellee Wells and the passing of appellee Algire, many of the issues raised by
appellant in her declaratory judgment complaint were moot. By journal entry filed
August 2, 2011, the trial court granted summary judgment to appellees, finding the
Knox County, Case No. 11-CA-16 3
accounting was adequate, and ordered appellant to pay 75% of the attorney fees
incurred by appellees.
{¶7} Appellant filed an appeal and this matter is now before this court for
consideration. Assignments of error are as follows:
I
{¶8} "THE JUDGMENT OF THE COURT THAT THE DOCUMENTS FILED BY
THE CO-TRUSTEES ON JANUARY 11, 2011, AND JUNE 23, 2011, REPRESENT AN
ADEQUATE ACCOUNTING IS CONTRARY TO THE APPLICABLE LAW GOVERNING
SUMMARY JUDGMENT."
II
{¶9} "THE COURT ERRED IN ORDERING APPELLANT KATHY J. SALYERS
TO PAY ATTORNEY FEES FOR THE APPELLEES PURSUANT TO THE MOTION
FOR SUMMARY JUDGMENT FILED BY THE CO-TRUSTEES."
I
{¶10} Appellant claims the trial court erred in granting summary judgment to
appellees as the two accountings submitted by appellees were inadequate. We agree.
{¶11} Summary Judgment motions are to be resolved in light of the dictates of
Civ.R. 56. Said rule was reaffirmed by the Supreme Court of Ohio in State ex rel.
Zimmerman v. Tompkins, 75 Ohio St.3d 447, 448, 1996-Ohio-211:
{¶12} "Civ.R. 56(C) provides that before summary judgment may be granted, it
must be determined that (1) no genuine issue as to any material fact remains to be
litigated, (2) the moving party is entitled to judgment as a matter of law, and (3) it
appears from the evidence that reasonable minds can come to but one conclusion, and
viewing such evidence most strongly in favor of the nonmoving party, that conclusion is
adverse to the party against whom the motion for summary judgment is made. State
Knox County, Case No. 11-CA-16 4
ex. rel. Parsons v. Fleming (1994), 68 Ohio St.3d 509, 511, 628 N.E.2d 1377, 1379,
citing Temple v. Wean United, Inc. (1977), 50 Ohio St.2d 317, 327, 4 O.O3d 466, 472,
364 N.E.2d 267, 274."
{¶13} As an appellate court reviewing summary judgment motions, we must
stand in the shoes of the trial court and review summary judgments on the same
standard and evidence as the trial court. Smiddy v. The Wedding Party, Inc. (1987), 30
Ohio St.3d 35.
{¶14} In its journal entry filed August 2, 2011, the trial court found the following
in pertinent part:
{¶15} "8. The accounting filed in this matter, as supplemented at this Court's
request, does not meet the professional standard this Court is used to seeing, but it is
adequate. The Court is satisfied that all of the significant Trust assets have been
gathered and accounted for, the Co-Trustees did not engage in any self-enrichment, the
fiduciary fees paid to themselves were not excessive, the trust expenses have been
paid, and distributions have been made in a manner that is consistent with Mrs. Fearn's
wishes as expressed in her Trust.
{¶16} "9. The litigation initiated by Ms. Salyers ultimately revealed the Co-
Trustees were using a less than perfect accounting system. It also revealed that as a
matter of common courtesy the Co-Trustees could have done a better job of
communicating with Ms. Salyers. However, this poor communication did not violate any
legal standard. Primarily, the instant litigation reveals a profound and long standing
state of animosity between Ms. Salyers and her brother, Mr. Algire. The degree of this
animosity is so great the Court does not believe Mr. Algire could have continued to be
an effective trustee, which the trust laws of this State require. However, because of Mr.
Algire's death this has become a moot issue.
Knox County, Case No. 11-CA-16 5
{¶17} "Accordingly, the Court concludes, as matter of Summary Judgment, that
Marjorie Ann Fearn did in 2006 created and execute a valid Trust which provides the
basis for the distribution of her assets at the time of her death. At the time this 2006
trust was executed she was not under any undue influence and had the necessary
mental capacity to execute this legal document. The Court further concludes, as a
matter of Summary Judgment, that the performance of the Co-Trustee, while not
perfect, still exceeded the minimum standard for fiduciaries. There is no credible
evidence that any significant trust asset was lost or stolen. There is no credible
evidence the Co-Trustees paid themselves excessive fees. There is evidence the Co-
Trustees attempted to administer the Trust in accordance with the wishes and directives
of Mrs. Fearn."
{¶18} In support of appellees' position is the affidavit of appellee Algire, attached
to the motion for summary judgment as Defendant's Exhibit 1. In this affidavit, appellee
Algire listed the manner of the trust distribution and the reserve for appellant which was
to be paid out at $30,000.00 per year until she would qualify for social security.
{¶19} R.C. 5808.13 explicitly defines the duties of a trustee to the beneficiaries.
Included in the duties is the requirement that an accounting be given annually:
{¶20} "(C) A trustee of a trust that has a fiscal year ending on or after January 1,
2007, shall send to the current beneficiaries, and to other beneficiaries who request it,
at least annually and at the termination of the trust, a report of the trust property,
liabilities, receipts, and disbursements, including the source and amount of the trustee's
compensation, a listing of the trust assets, and, if feasible, the trust assets' respective
market values. Upon a vacancy in a trusteeship, unless a cotrustee remains in office, a
report for the period during which the former trustee served must be sent to the current
Knox County, Case No. 11-CA-16 6
beneficiaries by the former trustee. A personal representative or guardian may send the
current beneficiaries a report on behalf of a deceased or incapacitated trustee."
{¶21} Implicit within the duties and powers of a trustee is the prohibition against
self-dealing [R.C. 5808.14(B)(2)]. Also, a trustee "shall exercise a discretionary power
reasonably, in good faith, and in accordance with the terms and purposes of the trust
and the interests of the beneficiaries." R.C. 5808.14(A).
{¶22} It is undisputed that no accounting and/or inventory by appellees were
made known to appellant. It was not until the trial court required an accounting via an
entry filed October 26, 2010 pursuant to a status conference that an accounting was
given:
{¶23} "Pursuant to said status conference, the Court makes the following
Orders.
{¶24} "1. Defendants, Richard O. Wells, Co-Trustee, and Stephen E. Algire, Co-
Trustee, shall provide Plaintiff, Kathy J. Salyers, with an accounting concerning the trust
assets. Said accounting shall be provided to plaintiff within the next thirty days."
{¶25} The accounting was not given within the thirty day period, but was
attached to appellees' motion for summary judgment filed on January 10, 2011. The
"accounting" was a handwritten ledger titled "Record Book." Defendant's Exhibit C.
The trial court's characterization of the "Record Book" is more than a generous
interpretation of what is required and anticipated by the Ohio Revised Code. An
inventory was not included, nor was there a running account of the daily disbursements
and receipts. The supplemental trust accounting filed on June 23, 2011 did not alleviate
the problems of the "Record Book."
{¶26} This court is aware that non-professional trustees are not necessarily held
to the strict accounting standards of professional trustees. However, we find the
Knox County, Case No. 11-CA-16 7
"Record Book" and the supplemental trust accounting fall far beneath the standard of
care mandated by R.C. Chapter 5808.
{¶27} Upon review, we find the trial court erred in determining the accounting
herein to be adequate and in granting summary judgment to appellees.
{¶28} Assignment of Error I is granted, and the matter is remanded for a proper
accounting, inventory, and recalculation of the trust.
II
{¶29} Appellant claims the trial court erred in ordering her to pay 75% of the
attorney fees incurred by appellees. We agree.
{¶30} In its journal entry filed August 2, 2011, the trial court ordered the following
as to attorney fees:
{¶31} "The Court further finds that Ms. Salyers has already received distributions
of a total value of $103,643.30. The Co-Trustees set aside assets in Edward Jones
account 437-07207-1-8 to fund Ms. Salyers trust. The current value of these assets is
$208,924. To bring her share of the assets from Mrs. Fearn's Trust to the level already
distributed to her brother and sister, Ms. Salyers is entitled to another $47,433.
However, from this $47,433, Ms. Salyers is obligated to pay her own attorneys $21,560.
The Court is also Ordering Ms. Salyers to pay the attorneys for the Fearn Trust
$15,870.49. This represents 75% of the total attorney fee bill for the Trust. The
remaining 25% of the Trust attorney fees, in the amount of $5,290.16 are to be paid
from the remaining funds that would have been distributed to Stephen Algire and which
will now be distributed to his estate. The Court further Orders the remaining court costs
of $307 be paid from Ms. Salyers share of the remaining Trust funds.
{¶32} "The litigation filed by Ms. Salyers contested the very validity of the Fearn
Trust, and in the alternative, sought to reform or modify the trust and other relief. This
Knox County, Case No. 11-CA-16 8
Court has found all of these claims to be without merit as a matter of Summary
Judgment. Ms. Salyers litigation forced the Trust to defend itself and expend money on
attorneys which the Court believes Ms. Salyers must now pay. However, part of these
legal fees for the Trust, were to defend Mr. Alguire's position as Trustee for the Trust.
The extent of these legal expenses was expanded because of the degree of animosity
between Mr. Algire and Ms. Salyers. Mr. Algire must bear part of the responsibility for
this animosity and in the opinion of this Court he has the responsibility to pay this part of
the legal expenses of the Trust. Considering all the circumstances of this case the
Court believes this is a just allocation of these legal expenses."
{¶33} The trial court justified its decision by finding animosity between the
siblings, and there is no doubt that it was present. However, an accounting and/or
inventory were not done until appellant initiated the action. It was appellees' statutory
duty to provide an accounting. An adequate accounting was not given despite the trial
court's order of October 26, 2010.
{¶34} Upon review, we find it was error to make appellant responsible for 75% of
appellees' attorney fees. As for appellant's own attorney fees, it was clear that the
challenge to the 2006 trust was not warranted.
{¶35} Assignment of Error II is granted.
Knox County, Case No. 11-CA-16 9
{¶36} The judgment of the Court of Common Pleas of Knox County, Ohio,
Probate Division is hereby reversed.
By Farmer, J.
Gwin, P.J. and
Wise, J. concur.
__s/ Sheila G. Farmer_____________
__s/ W. Scott Gwin_______________
___s/ John W. Wise_________________
JUDGES
SGF/sg 305
[Cite as In re Marjorie A. Fearn Trust, 2012-Ohio-1029.]
IN THE COURT OF APPEALS FOR KNOX COUNTY, OHIO
FIFTH APPELLATE DISTRICT
IN THE MATTER OF: :
:
THE MARJORIE A. FEARN TRUST : JUDGMENT ENTRY
:
:
: CASE NO. 11-CA-16
For the reasons stated in our accompanying Memorandum-Opinion, the
judgment of the Court of Common Pleas of Knox County, Ohio, Probate Division is
reversed, and the matter is remanded to said court for further proceedings consistent
with this opinion. Costs to appellees.
__s/ Sheila G. Farmer_____________
__s/ W. Scott Gwin_______________
___s/ John W. Wise_________________
JUDGES