Newcomer v. Roan , 2016 Ohio 541 ( 2016 )

[Cite as Newcomer v. Roan, 2016-Ohio-541.]
IN THE COURT OF APPEALS OF OHIO
SIXTH APPELLATE DISTRICT
WILLIAMS COUNTY
David C. Newcomer, in his capacity as Court of Appeals No. WM-14-007
Trustee of the Revocable Trust
Agreements of Betty S. Strickland Trial Court No. CI20124001
Appellee
v.
Ann Roan, et al.
Appellants/Cross-Appellees
and Thomas Levenson DECISION AND JUDGMENT
Appellee/Cross-Appellant Decided: February 12, 2016
*****
James R. Jeffery, for appellee.
Timothy A. Shimko, for appellants/cross-appellees.
William T. Maloney and Sarah A. McHugh, for appellee/cross-appellant.
*****
JENSEN, P.J.
{¶ 1} This case is before the court upon an appeal filed by Ann, Steven, and Kerry
Roan (collectively, “the Roans”), and a cross-appeal filed by Thomas Levenson (“Tom”).
The Roans and Tom were named as defendants in the underlying action filed by David
Newcomer, the trustee of a trust created by Betty Strickland, Ann and Tom’s mother.
This case arises out of their disagreement over how that trust should be administered.
{¶ 2} The Williams County Court of Common Pleas issued judgments dated
February 19, 2014 (decision on cross-motions for summary judgment), October 8, 2014
(judgment memorializing the court’s decisions on the Roans’ motions for directed verdict
and entering its decision on the issues that proceeded to a verdict), and December 31,
2014 (decision denying the Roans’ motion for permanent injunction and dissolving
preliminary injunction). For the reasons that follow, we affirm the February 19, 2014
judgment; affirm, in part, and reverse, in part, the October 8, 2014 judgment; and affirm
the December 31, 2014 judgment.
I. Background
{¶ 3} Betty Strickland was the daughter of one of the two founders of the Spangler
Candy Company in Bryan, Ohio. She married Neil Levenson and together they adopted
Ann in 1952, and three years later, Tom. In the 1980s, Betty and Neil moved to Vero
Beach, Florida, where they lived most of the year; they spent their summers in Bryan,
Ohio. Neil died in 1992. Betty remarried Harold Strickland, who died in 1997.
{¶ 4} Betty and Neil owned a substantial number of shares in Spangler Candy
Company. They wanted future generations to remain invested in the company.
Apparently apprehensive about their children’s ability to manage money and concerned
that they may not retain the shares, Neil created a revocable trust on June 12, 1991, the
2.
effect of which was to hold the Spangler Candy shares in trust and provide Ann and Tom
with income on the shares. Following Ann and Tom’s deaths, ownership of the shares
would pass outright to their children. Ann and her husband, Steven Roan, had one son,
Kerry. Tom had no children.
A. Betty Executes a Number of Trust Documents
{¶ 5} On October 28, 1991, Betty executed a revocable trust agreement which
contained substantially the same terms as the trust executed by Neil. She executed a
number of amendments and restatements in the years that followed. The following table
chronologically lists the various trust documents Betty executed.
October 28, 1991 Revocable Trust Agreement
March 20, 1998 Restatement of the Betty S. Strickland Revocable Trust Agreement
April 22, 1998 First Amendment to the Betty S. Strickland Trust Agreement
April 20, 1999 Second Restated Exhibit A to the Restatement of the Betty S.
Strickland Trust Agreement
August 29, 2000 First Amendment to the Second Restated Exhibit A to the First
Restatement of the Betty S. Strickland Trust Agreement
March 4, 2002 Second Amendment to the Second Restated Exhibit A to the
Restatement of the Betty S. Strickland Trust Agreement
July 25, 2003 Addendum to Trust Agreement Dated October 28, 2001
October 20, 2003 Third Complete Restatement of the Revocable Trust Agreement of
Betty S. Strickland
August 24, 2006 Second Amendment to the Betty S. Strickland Trust Agreement
{¶ 6} The March 20, 1998 document completely superseded the October 28, 1991
trust. The provisions for the disposition of the Spangler Candy stock were contained in
an exhibit A. Like the October 28, 1991 trust, it provided for the payment of income on
the Spangler Candy stock to Betty’s children, and provided for the eventual disposition of
the shares outside the trust to Betty’s grandchildren.
3.
{¶ 7} The April 22, 1998 document appointed a co-trustee, but otherwise restated
the March 20, 1998 trust.
{¶ 8} The April 20, 1999 document restated exhibit A to provide, in paragraph A,
that shares gifted to or held in trust for Tom’s then-wife, Karon, would equal the number
of shares gifted to or held in trust for Steven.
{¶ 9} The August 29, 2000 document revoked paragraph A of exhibit A, and
inserted no new provision in its place. This change was precipitated by Tom and Karon
divorcing. Confusingly, it then ratified the October 28, 1991 document despite the fact
that it had been superseded by the March 20, 1998 document.
{¶ 10} The March 4, 2002 document added a new paragraph A, which the parties
refer to as the equalization provision. It sought to ensure that Ann and Tom received an
equal number of shares of Spangler Candy stock.
{¶ 11} The July 25, 2003 document appointed Betty’s Bryan, Ohio attorney,
David Newcomer, to be her successor trustee.
{¶ 12} The last two documents that Betty executed are at the heart of the parties’
disagreement.
{¶ 13} The October 20, 2003 document was drafted by Betty’s Florida counsel,
Todd Fennell. It acknowledged the existence of each of the documents previously
executed by Betty and restated Betty’s entire trust. It distributed Betty’s trust estate to
her living descendants “outright and free of trust,” thereby eliminating any remainder
interest to her grandson.
4.
{¶ 14} The August 24, 2006 document was drafted by Newcomer. It
acknowledged the existence of the October 28, 1991 trust agreement and the documents
dated March 20, 1998, and April 22, 1998, but made no mention of the existence of the
October 20, 2003 restatement or any of the other documents. It purported to change
provisions that corresponded to the March 20, 1998 agreement. It made two changes,
referred to as Item One and Item Two. Item One appointed Newcomer to replace Betty
as trustee. Item Two “restate[d] and reaffirm[ed] each and every paragraph of said
Restatement of Trust dated April 22, 1999.”
{¶ 15} Betty died in Florida on March 30, 2011, at age 93. Her trust became
irrevocable at that point. Within 60 days of becoming irrevocable, Fla.Stat. 736.0813
required her trustee to give notice to the beneficiaries of the trust’s existence, the identity
of the settlor, the right to request a copy of the trust instrument, and the right to an
accounting. In accordance with this requirement, Fennell’s partner, attorney Anthony
Guettler, mailed to Ann and Tom on May 31, 2011, a notice of acceptance of
appointment as successor trustee and related trust disclosures and a copy of the
October 20, 2003 trust agreement. The notice, signed by Newcomer, indicated that Betty
had served as trustee until her death, thus suggesting that Fennell and Guettler were
unaware of the existence of the August 24, 2006 amendment drafted by Newcomer and
executed by Betty in Ohio.
5.
B. Lawsuits Are Filed
{¶ 16} Ann retained Florida counsel, inquiring about the possibility of setting
aside the October 20, 2003 trust due to either a lack of capacity by Betty or undue
influence by Tom. The existence of the August 24, 2006 document eventually came to
her attorney’s attention. In a letter to Ann dated April 13, 2012, counsel raised the
possibility of arguing that the effect of the August 24, 2006 amendment was to revoke the
October 20, 2003 trust agreement. Counsel communicated this theory to Newcomer in a
letter dated May 12, 2012.
{¶ 17} On May 25, 2012, Newcomer, as trustee, filed a declaratory judgment
action in the Williams County Court of Common Pleas seeking an order determining
which trust agreement was the valid last trust agreement. In his complaint, he alleged
that the April 22, 1999 date that appeared in the August 24, 2006 amendment was a
typographical error and that April 20, 1999, was the date that should have been
referenced in the August 24, 2006 amendment.
{¶ 18} The Roans answered and counterclaimed, alleging that the August 24, 2006
amendment revoked the October 20, 2003 amendment and “readopted” the April 20,
1999 version of Betty’s trust.
{¶ 19} Tom answered, counterclaimed, and cross-claimed. He asserted a number
of defenses, including that the declaratory judgment action was barred by the statute of
limitations. In his counterclaim and cross-claim, he alleged that the October 20, 2003
trust agreement was the final and complete statement of the terms of the trust and was in
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effect on the date of Betty’s death. He maintained that the August 24, 2006 amendment
was not intended to revoke or alter the October 20, 2003 trust. Tom also alleged that
Newcomer had not properly applied the equalization provision of the trust agreement. He
sought Newcomer’s removal as trustee due to a conflict of interest, and he claimed that
Newcomer was negligent in preparing the August 24, 2006 amendment.
{¶ 20} The Roans filed a cross-claim against Tom, again alleging that the
August 24, 2006 amendment operated to revoke the October 20, 2003 amendment and to
readopt the April 20, 1999 version of the trust. They also asserted a number of defenses
to Tom’s cross-claims, including that the October 20, 2003 restatement was procured
under fraud, duress, or undue influence.
{¶ 21} Tom replied to the Roans’ cross-claim, denying their allegations and
asserting a number of defenses. His reply did not contain a statute of limitations defense,
but it asserted that Betty lacked the capacity to execute the August 24, 2006 amendment
or was under undue influence at the time of its execution.
{¶ 22} Tom also filed an action in Indian River County, Florida on October 17,
2012, against both Newcomer and Ann. The Roans and Newcomer sought an order from
the Williams County Court of Common Pleas enjoining Tom from prosecuting the
Florida action. The court granted their motion for temporary injunctive relief on
November 29, 2012. It granted a preliminary injunction to the Roans on May 3, 2013.
7.
C. The Parties Move for Summary Judgment
{¶ 23} The Roans filed a motion for summary judgment. They argued that in
order for Tom to prevail, he must establish by clear and convincing evidence that Betty
lacked capacity or was subjected to undue influence at the time she executed the August
24, 2006 amendment. They attached to their motion a number of affidavits of people
who had interacted with Betty in the days preceding her execution of the August 24, 2006
amendment, all of whom attested that she conversed with them intelligently and appeared
to be oriented and in control of her faculties. The Roans also urged that Tom could not
establish by clear and convincing evidence any basis to remove Newcomer as trustee, and
that Tom lacked standing to assert a malpractice claim against Newcomer.
{¶ 24} In support of their motion for summary judgment, one of the affidavits the
Roans submitted was from Newcomer. Newcomer attested that on August 24, 2006,
Betty came to his office because she wished to appoint him to replace her as trustee. He
stated that while at his office, Betty specifically told him that “she wanted to make sure
that the ultimate disposition of the trust assets followed that of Neil Levenson’s trust. To
that end she asked that the instrument restate that disposition.” He said that “it was
always her intention to make the distribution of assets within her trust consistent with the
distribution of assets set forth in the Trust of her late husband.” Newcomer described that
Betty waited while he made the changes reflected in the August 24, 2006 amendment,
and he “personally saw her execute” the document. He also recounted that he spoke with
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her to determine her capacity to make the changes, and that from his professional
observations, she was “lucid and of sound mind and memory to dispose of her property.”
{¶ 25} The parties engaged in substantial discovery before Tom responded to the
Roans’ motion and filed his own cross-motion for summary judgment. In his opposition
to the Roans’ motion, Tom argued that a question of fact existed as to Betty’s
competence at the time she executed the August 24, 2006 trust.
{¶ 26} To begin with, Tom pointed out that while the body of the amendment
drafted by Newcomer was dated August 24, 2006, the notarization bore the date of
August 28, 2006.1 Tom obtained medical records that demonstrated that Betty was
actually in the midst of a nine-day hospitalization on that date. Those records indicated
that Betty had decreased cognition and at the request of her physician, she underwent a
neuropsychological evaluation due to “patterns of confabulation, confusion, and
difficulties with organization and problem solving.” The records also indicated that
Newcomer had spoken to Betty’s doctors about concerns he had about her “thought
processes” at that time.
{¶ 27} As to the Roans’ position that Tom failed to establish clear and convincing
evidence that Newcomer should be removed as trustee, Tom argued that Newcomer was
not impartial. He urged the trial court to defer to the Florida probate court to determine
1
Despite the August 28, 2006 execution of the document, for the sake of consistency, we
continue to refer to the amendment as the August 24, 2006 document.
9.
the issue. He also asserted that as a beneficiary of the trust, he had standing to assert a
malpractice claim against Newcomer.
{¶ 28} In regard to his own motion for summary judgment, Tom claimed that
(1) the statute of limitations barred any action to contest the validity of the October 20,
2003 trust; (2) the August 24, 2006 amendment did not revoke the October 20, 2003
restatement; and (3) regardless of whether the August 24, 2006 amendment revoked the
October 20, 2003 restatement, the equalization provision remained in effect.
{¶ 29} In support of his statute of limitations defense, Tom cited Fla.Stat.
736.0604 which provides that:
An action to contest the validity of a trust that was revocable at the
settlor’s death is barred, if not commenced within the earlier of:
(1) The time as provided in chapter 95; or
(2) Six months after the trustee sent the person a copy of the trust
instrument and a notice informing the person of the trust’s existence, of the
trustee’s name and address, and of the time allowed for commencing a
proceeding.
Tom contended that because Newcomer filed suit more than 12 months after the notice
described in Fla.Stat. 736.0604, the statute of limitations barred the action.
{¶ 30} Relying on an affidavit from his retained expert, Ohio estate-planning
attorney, Michael Henry, Tom asserted that the August 24, 2006 amendment employed a
template that was created while the March 20, 1998 restatement was still in effect. He
10.
claimed that the item purportedly reaffirming the April 22, 1999 trust was a common
provision not ordinarily intended to have substantive effect. Its intention, he explained,
was just the opposite—to signal to the reader that no further changes were intended and
that the remaining terms of the current trust are reaffirmed.
{¶ 31} Tom discussed Newcomer’s deposition testimony in this regard.
Newcomer testified that he did not know that the October 20, 2003 trust agreement
existed when he drafted the August 24, 2006 amendment. He believed that Betty was
executing the August 24, 2006 amendment simply to make him the trustee, and he said
that if he had understood that Betty wished to revoke the current version of the trust, he
would have expressly written this and would have drafted an entirely new trust
agreement. Tom countered the Roans’ argument that the “plain and ambiguous meaning”
of the amendment was to revoke the October 20, 2003 trust and to revert to the April 20,
1999 trust, responding that (1) the date “April 20, 1999” does not appear at all in the
August 24, 2006 amendment—it refers to an April 22, 1999 document which does not
exist; (2) the work “revoke” is never used; and (3) the document was not intended to
accomplish the purpose advanced by the Roans. He urged that the October 20, 2003
restatement was put in place after careful planning whereas the August 24, 2006
amendment contained inconsistencies and inaccuracies.
{¶ 32} Finally, Tom argued that regardless of whether the August 24, 2006
amendment effectively revoked the October 20, 2003 restatement, the equalization
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provision remained valid. This, he claimed, is because the August 24, 2006 document is
not a stand-alone document—it amended only the specifically-referenced provisions.
{¶ 33} The Roans replied to Tom’s arguments. While they conceded that
Newcomer had incorrectly recalled the circumstances surrounding the execution of the
August 24, 2006 amendment, they insisted that Tom failed to establish that Betty was
incompetent or unduly influenced. They claimed that the mental capacity required of
Betty depended on the nature of the transaction. Here, they argued, Betty was required to
understand the business in which she was engaged, to comprehend generally the nature
and extent of her property, to hold in her mind the names and identity of those who have
natural claims upon her bounty, and to be able to appreciate her relations to the members
of her family. They insisted that evidence that Betty’s health was deteriorating—and
even evidence of dementia on the date of execution—standing alone, was insufficient to
establish that she lacked capacity to execute the amendment. And despite the fact that
Betty’s doctor ordered a neuropsychological exam, the Roans maintained that the medical
records demonstrated that Betty was oriented to person, place, and time on August 28,
2006, and had even signed a health care directive during her hospitalization.
{¶ 34} Addressing Tom’s statute of limitations argument, the Roans claimed that
Tom waived this defense because he failed to plead it as an affirmative defense in reply
to their cross-claim and failed to amend his pleadings before moving for summary
judgment. The Roans also argued that the statute of limitations never began to run
because Newcomer failed to serve the August 24, 2006 document with the required
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notice. They urged that while Fla.Stat. 736.0604 prohibits contestants to a trust from
bringing suit after six months, it does not prohibit a trustee from bringing an action
seeking the court’s guidance in applying inconsistent provisions within trust documents.
Finally, the Roans argued that the six-month statute of limitations may be asserted only
by the trustee—all other individuals are bound by the four-year limitations period set
forth in Fla.Stat. 95.11(p). Here, they urged, the trustee is estopped from asserting the
six-month statute of limitations because he failed to serve the August 24, 2006
amendment.
{¶ 35} The Roans claimed that the distribution of assets as set forth in the
April 20, 1999 restated exhibit A must be applied. This, they argued, meant that the
method of distribution established in the October 28, 1991 trust document governed.
{¶ 36} Tom filed a reply in support of his motion for summary judgment. He
argued that the Roans’ cross-claim raised no new claims against him, thus his pleading of
the statute of limitations defense in response to the trustee’s complaint sufficed to
preserve the defense. In the event the court disagreed, Tom sought leave to amend his
reply to the cross-claim. He distinguished case law relied upon by the Roans, including
Am. Diversified Devs. v. Hinti Constr., 8th Dist. Cuyahoga Nos. 73116, 73168, 1998 WL
767618 (Oct. 29, 1998), where the Eighth District held that the affirmative defense of
personal jurisdiction was waived where it had been raised in response to the original
complaint, but not in the reply to the cross-claim. He claimed that Civ.R. 12 provides for
13.
the waiver of lack of personal jurisdiction as a defense if not pled, but the rule does not
apply to the defense of statute of limitations.
{¶ 37} As for the Roans’ other responses to his statute of limitations arguments,
Tom contended that equitable estoppel could be asserted only where there was
misconduct inducing the party not to act. Tom denied that there had been any
misconduct. He also argued that the delayed discovery doctrine did not apply in this
context.
{¶ 38} Tom also disputed that the second restated exhibit A—the April 20, 1999
document—was applicable because it was prepared while Tom was married to his former
wife, Karon, and contained an equalization provision in Karon’s favor. Betty ultimately
replaced the equalization provision to favor Tom instead of Karon.
{¶ 39} The trial court granted the Roans’ motion for summary judgment on Tom’s
legal malpractice claim, but it denied the Roans’ motion for summary judgment on Tom’s
claim for removal of the trustee. The court also found that no evidence was presented in
support of Tom’s claim of undue influence, and the court granted summary judgment to
the Roans on this claim. As to capacity, the court determined that Tom submitted
medical records containing evidence that could support his assertion that Betty was not
competent on August 28, 2006. It denied the Roans’ summary judgment motion on this
issue.
{¶ 40} Turning to which document constituted the last valid trust agreement and
which provisions applied, the court determined first that the reference in the August 24,
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2006 document to the “April 22, 1999 restatement” was a typographical error and that the
April 20, 1999 document was intended to be referenced in the amendment. As to
whether Betty intended to amend her trust to distribute her assets consistent with Neil’s
1991 trust, the trial court concluded that this was an issue that must be resolved at trial.
The court held, however, that under Ohio procedural law, Tom waived the statute of
limitations defense by failing to assert it in his reply to the Roans’ cross-claim. The court
also agreed that the statute of limitations did not begin to run because the notice did not
attach the August 24, 2006 amendment.
{¶ 41} Concerning the equalization provision, the court held that if the April 20,
1999 document controls, then so would its provisions for disposition, which do not
include the equalization provision. If the August 24, 2006 amendment did not revive the
April 20, 1999 document, then the equalization provision in the October 20, 2003 trust
document would control. The court held that this issue could not be determined on
summary judgment.
{¶ 42} Finally, the court held that there was a question of fact as to the validity of
Item Two and whether Item Two of the August 24, 2006 amendment was a mistake. It
acknowledged the evidence that Tom submitted that would tend to show that it was a
mistake, but it was ultimately persuaded that a question of fact existed.
{¶ 43} Following the trial court’s summary judgment decision, the Roans filed a
brief in which they conceded that Betty did not revoke the equalization provision of the
October 20, 2003 restatement, however, they explained to the court that they disagreed
15.
about how the provision should be applied. Tom’s position was that Betty intended the
equalization provision to ensure that Tom and Ann received the same number of shares of
Spangler Candy stock, regardless of the source of the stock. He argued that the trust
agreement provided precise numbers to be used as a starting point for calculating the
number of shares that each was to receive. The Roans’ position was that Betty intended
that only the shares she gifted to her children be used in the calculation. In other words,
they contended that shares given to them by others—which included shares that their
maternal grandmother had gifted to Ann—should not be considered in the calculation.
The Roans insisted that the numbers specified in the trust document were meant merely
to provide an example of how to apply the formula for calculating the number of shares
to be transferred.
D. The Matter Proceeds to Trial
{¶ 44} The case went to trial beginning August 11, 2014. A jury was empaneled
to hear evidence on the issue of whether Betty was competent for purposes of executing
the August 24, 2006 document. The remaining issues were reserved for determination by
the court.
{¶ 45} The Roans presented testimony from a number of witnesses who testified
that Betty was competent at the time she executed the August 24, 2006 amendment,
including two employees from Newcomer’s office who witnessed her signature. The
witnesses had no independent recollection of Betty executing the document, but both
testified that it was not uncommon for them to travel to health care facilities for the firm’s
16.
clients to execute documents. They testified that they would not have proceeded with the
execution of the amendment had Betty not appeared to them competent to sign it.
{¶ 46} Tom presented the testimony of clinical neuropsychologist, Joan Lawrence,
Ph.D., who examined Betty on August 29, 2006. She testified that she had no
independent recollection of the exam and was testifying purely based on what was
contained in her evaluation notes. According to those notes, she performed
neuropsychological testing at the request of Betty’s physician. The physician had
commented that Betty’s lawyer had concerns about her thought process and that Betty
appeared to the medical, nursing, and therapy staff to display illogical thinking and to
frequently present different stories to different staff members about various things.
{¶ 47} Dr. Lawrence described her examination. She first explained to Betty why
she was there and obtained her consent to perform a battery of tests evaluating memory,
visual and spatial skills, language, attention, and other aspects of delayed memory. Dr.
Lawrence found that Betty performed at levels ranging from moderately impaired to
average. However, Dr. Lawrence’s behavioral notes indicated that Betty was alert and
generally oriented in all spheres, except she thought it was August 27 instead of
August 29. Dr. Lawrence noted that Betty’s speech was fluent and functional and
interpersonally, she was cooperative, engaging, cheerful, and unremarkable.
{¶ 48} Based on the results of her testing, Dr. Lawrence provided a differential
diagnosis of delirium and dementia. She described delirium as “a kind of descent
inconsistently transient alteration of the individual’s ability to think, reason and process
17.
information” that typically lasts only “hours, days, [or] weeks.” She described dementia
as “a disorder of thinking that involve[s] a deficit in memory plus a deficit in any one of
problem solving, self[-]awareness, voluntary motor movement or for language.” Dr.
Lawrence described that she had “significant concerns that [Betty’s] current cognitive
deficits, most particularly confusion, confabulation and memory problems could
compromise her safety if she was in a position of needing to problem solve and
communicate effectively to manage an emergent situation,” such as a fall, weather
emergency, etc.
{¶ 49} Dr. Lawrence made clear, however, that the testing she performed on Betty
differs substantially from the type of evaluation that one would do to test someone’s legal
competence. She was adamant that she had not conducted an evaluation that would
enable her to render an opinion one way or the other as to whether Betty was competent
to execute the August 24, 2006 amendment. She also said she could not offer an opinion
as to Betty’s cognitive functioning on August 28, 2006, because the symptoms she
observed in Betty can be transient. She did not administer any testing to assess psycho-
legal concerns.
{¶ 50} The Roans moved for a directed verdict on the issue of Betty’s competence
and the court granted their motion. It explained that the burden was on Tom to establish
by clear and convincing evidence that Betty was incompetent on the day she executed the
August 24, 2006 amendment. The court reasoned that the only evidence supporting
Tom’s claim of Betty’s incompetence was the medical records describing her as confused
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and “confabulating.” It observed that the other witnesses—Newcomer, the two women
from his office who witnessed the signature, Ann, and Steven—all testified that Betty
was competent, and Dr. Lawrence refused to provide any opinion bearing on Betty’s
competence on the date the document was executed. It also disagreed with Tom that
Betty could be competent for the purpose of changing her trustee, but incompetent for
other purposes.
{¶ 51} On the claims as to the effect of the August 24, 2006 amendment, because
Tom had conceded that Item One—which substituted Newcomer as trustee—was valid,
the parties focused their evidence on whether Item Two constituted a substantive change
to the terms of Betty’s trust. Newcomer testified, as did Betty’s Florida counsel, whose
testimony was presented via trial deposition. Each side also offered expert testimony
from Ohio estate planning attorneys supporting their respective positions. The evidence
the parties presented was primarily consistent with the evidence and arguments they
submitted in support of their cross-motions for summary judgment.
{¶ 52} After hearing the evidence, the trial court took a brief recess, then issued a
decision from the bench, later reduced to a written judgment entry. It held that the
October 20, 2003 restatement was the last valid statement of the substantive terms of the
trust. The court recited its reasons for reaching this conclusion. It explained that the
October 20, 2003 restatement was the starting point for its analysis because it was a
complete restatement of Betty’s trust. It recognized that under Fla.Stat. 736.0602, a
settlor can modify, amend, or revoke a revocable trust, but it interpreted that statute as
19.
requiring that any such amendment manifest the settlor’s intent by clear and convincing
evidence. The court found the August 24, 2006 amendment to be ambiguous, thereby
failing to clearly and convincingly establish Betty’s intent.
{¶ 53} Newcomer’s testimony was crucial to the court’s decision. The court
observed that Newcomer’s recollection of the events was unclear to the point that his
affidavit and trial testimony contradicted each other. But more important to the court’s
consideration was Newcomer’s testimony that he told Betty that Item Two of the
August 24, 2006 amendment changed nothing, and that he had nothing—no notes to the
file, no letters from Betty, etc.—evidencing that it was her intent to change the
dispositional provisions of the trust agreement. Also important to the court was that
when sending the notice required by Florida law after Betty’s death, Newcomer did not
attach the August 24, 2006 amendment or even correct the Florida lawyers that he—not
Betty—had been acting as trustee since 2006. The court expressed that it agreed with
Tom’s expert witness’s interpretation that Item Two was merely a boilerplate
reaffirmation clause that made no substantive change. It was unpersuaded by the Roans’
expert witness’s testimony to the contrary.
{¶ 54} As to the equalization provision, it held that the number of shares set forth
in the provision was merely an example—and not a starting point—for calculating the
number of shares that would need to be transferred to Tom in order to achieve Betty’s
objective of dividing her stock evenly between her two children. It held that Betty did
20.
not intend that shares transferred to Ann from other sources would be included in the
calculation.
E. The Trial Court Dissolves the Injunction
{¶ 55} Following the trial, the court was left to consider whether to enter
permanent injunctive relief prohibiting Tom from litigating his claims in Florida, or
whether to dissolve the preliminary injunction that it had previously entered. In a
decision dated December 31, 2014, the trial court dissolved the injunction. It recognized
that Tom had filed claims in Florida identical to the ones litigated in Williams County,
and it acknowledged that the parties would have to expend additional fees litigating in
Florida. It determined, however, that this would not cause irreparable injury because
both Ohio and Florida have statutes providing for attorney fees to the prevailing party. It
also acknowledged the possibility of inconsistent rulings and agreed that this would
constitute irreparable injury, but it reasoned that the Full Faith and Credit Clause of the
U.S. Constitution required other states to give credit to and honor the rulings of Ohio
courts. In the end, the court found that the public interest was not served by enjoining a
litigant from proceeding in another forum. It dissolved the preliminary injunction and
denied the Roans’ motion for permanent injunction.
F. Both Parties Appeal
{¶ 56} The Roans disagree with the trial court’s conclusion that the August 24,
2006 amendment did not revive the dispositional provisions of the April 20, 1999
document. They are also dissatisfied with the trial court’s decision to dissolve the
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injunction. Tom, on the other hand, believes that the court misapplied the equalization
provision, improperly rejected his statute of limitations defense, and incorrectly directed
a verdict in favor of the Roans on the issue of Betty’s competence. They seek our review
of the trial court’s decisions in these regards.
{¶ 57} To that end, the Roans assign the following errors for our review:
Assignment of Error I
Exhibit 9 satisfied the requirements of Fl. Stat. § 736.0602 and
established Betty’s intent to amend her Trust in the manner specified in the
Trust.
Assignment of Error II
The Trial Court erred as a matter of law in ruling that Ex. 9, the
August 28, 2006 Second Amendment was ambiguous and in denying the
Roans’ Motions for Summary Judgment and Directed Verdict on that issue.
Assignment of Error III
The Trial Court erred as a matter of law in failing to grant the
Roans’ Motion for Directed Verdict on Levenson’s claims that Betty
Strickland executed Ex. 9, the August 28, 2006 Second Amendment due to
a mistake.
Assignment of Error IV
The Trial Court’s ruling rejecting Ex. 9 as an amendment to the
Trust and finding that the Roans had the burden of proving that Betty
22.
intended to amend her trust by extrinsic clear and convincing evidence is
contrary to Florida law.
Assignment of Error V
The Trial Court’s Judgment that Betty Strickland intended to
terminate the Trust upon her death and eliminate the remainder interest that
Kerry Roan had in the Trust is contrary to the manifest weight of the
evidence.
Assignment of Error VI
The Trial Court erred as a matter of law in dissolving the
preliminary injunction it entered in this case by order dated May 3, 2013.
Levenson assigns the following errors:
Assignment of Error #1: The lower court erred in its interpretation
of the Equalization provision of the Trust Agreement[.]
Assignment of Error #2: The lower court erred in failing to apply
the 6 month statute of limitations set forth in Section 736.0604 of Florida
Statutes and in failing to permit a pleading amendment to assert it.
Assignment of Error #3: The lower court erred in directing a verdict
on the issue of competency[.]
23.
II. Law and Analysis
A. The Roans’ Appeal
1. The Effect of the August 24, 2006 Amendment
{¶ 58} The Roans’ first five assignments of error all deal with the trial court’s
conclusions with respect to the effect of the August 24, 2006 amendment. They claim
that Betty intended to amend the October 20, 2003 trust and did so in accordance with
Fla.Stat. 736.0602. They challenge the trial court’s denial of their motion for summary
judgment and their motion for directed verdict based on its finding that the August 24,
2006 amendment was ambiguous. They also contend that the trial court incorrectly
placed upon them the burden of establishing by clear and convincing evidence that Betty
intended to amend her trust via the August 24, 2006 amendment. They argue that the
trial court’s decision was against the manifest weight of the evidence.
{¶ 59} Before addressing these claims, we discuss the various standards of review
that we must apply in reviewing the Roans’ assignments of error. Appellate review of a
summary judgment is de novo, Grafton v. Ohio Edison Co., 77 Ohio St.3d 102, 105, 671
N.E.2d 241 (1996), employing the same standard as trial courts. Lorain Natl. Bank v.
Saratoga Apts., 61 Ohio App.3d 127, 129, 572 N.E.2d 198 (9th Dist.1989). The motion
may be granted only when it is demonstrated:
(1) that there is no genuine issue as to any material fact; (2) that the moving
party is entitled to judgment as a matter of law; and (3) that reasonable
minds can come to but one conclusion, and that conclusion is adverse to the
24.
party against whom the motion for summary judgment is made, who is
entitled to have the evidence construed most strongly in his favor. Harless
v. Willis Day Warehousing Co., 54 Ohio St.2d 64, 67, 375 N.E.2d 46(1978), Civ.R. 56(C).
{¶ 60} When seeking summary judgment, a party must specifically delineate the
basis upon which the motion is brought, Mitseff v. Wheeler, 38 Ohio St.3d 112, 526
N.E.2d 798 (1988), syllabus, and identify those portions of the record that demonstrate
the absence of a genuine issue of material fact. Dresher v. Burt, 75 Ohio St.3d 280, 293,
662 N.E.2d 264 (1996). When a properly supported motion for summary judgment is
made, an adverse party may not rest on mere allegations or denials in the pleadings, but
must respond with specific facts showing that there is a genuine issue of material fact.
Civ.R. 56(E); Riley v. Montgomery, 11 Ohio St.3d 75, 79, 463 N.E.2d 1246 (1984). A
“material” fact is one which would affect the outcome of the suit under the applicable
substantive law. Russell v. Interim Personnel, Inc., 135 Ohio App.3d 301, 304, 733
N.E.2d 1186 (6th Dist.1999); Needham v. Provident Bank, 110 Ohio App.3d 817, 826,
675 N.E.2d 514 (8th Dist.1996), citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242,
248, 106 S.Ct. 2505, 91 L.Ed.2d 201 (1986).
{¶ 61} Like a motion for summary judgment, a motion for a directed verdict also
presents a question of law which must be reviewed employing a de novo standard of
review. (Citations omitted.) Bennett v. Admr., Ohio Bur. of Workers’ Comp., 134 Ohio
St.3d 329, 2012-Ohio-5639, 982 N.E.2d 666, ¶ 14. Under Civ.R. 50(A)(4), a motion for
25.
a directed verdict may properly be granted where, after construing the evidence most
strongly in favor of the non-moving party, the trial court finds that “upon any
determinative issue reasonable minds could come to but one conclusion upon the
evidence submitted and that conclusion is adverse to such party.” In considering a
motion for a directed verdict, the court cannot evaluate the weight of the evidence or the
trustworthiness of witnesses. Strother v. Hutchinson, 67 Ohio St.2d 282, 284-285, 423
N.E.2d 467 (1981). The court must use the “reasonable minds” approach to determine
whether there exists any material evidence that supports the arguments of the non-moving
party. Id. Civ.R. 50(A)(4).
{¶ 62} Finally, when reviewing a claim that a verdict is against the manifest
weight of the evidence, the appellate court must weigh the evidence and all reasonable
inferences, consider the credibility of witnesses, and determine whether the trier of fact
clearly lost its way in resolving evidentiary conflicts so as to create such a manifest
miscarriage of justice that the decision must be reversed and a new trial ordered. State v.
Thompkins, 78 Ohio St.3d 380, 387, 678 N.E.2d 541 (1997), superseded by constitutional
amendment on other grounds as stated by State v. Smith, 80 Ohio St.3d 89, 684 N.E.2d
668 (1997). Reversal on manifest weight grounds is reserved for the exceptional case in
which the evidence weighs heavily against the judgment. Thompkins at 387.
{¶ 63} The Roans claim that the August 24, 2006 amendment satisfied the
requirements of Fla.Stat. 736.0602 and established Betty’s intent to amend the
October 20, 2003 trust. Despite previously arguing that that amendment operated to
26.
revoke the October 20, 2003 trust, their position at trial was that it did not revoke, but
merely amended, the October 20, 2003 restatement to provide for the method of
distribution set forth in the April 20, 1999 amendment. They claim that the trial judge
improperly ruled against them on this issue, purportedly on the basis that it “did not make
sense” to him that Betty would change the dispositional scheme of the trust in 2003 only
to revert to the original scheme in 2006. They insist that the plain meaning of the 2006
amendment evidences Betty’s intention to do just that.
{¶ 64} Fla.Stat. 736.0602 governs the amendment of a revocable trust. It
provides, in pertinent part:
(1) Unless the terms of a trust expressly provide that the trust is
irrevocable, the settlor may revoke or amend the trust.
***
(3) Subject to s. 736.0403(2), the settlor may revoke or amend a
revocable trust:
(a) By substantial compliance with a method provided in the terms
of the trust; or
(b) If the terms of the trust do not provide a method, by:
***
2. Any other method manifesting clear and convincing evidence of
the settlor’s intent.
***
27.
{¶ 65} Article XXII of the October 20, 2003 restatement permits the grantor “to
amend or revoke [the] Agreement in whole or in part, at any time or times * * * by notice
in writing, delivered to the Trustee.” Thus, under Fla.Stat. 736.0602(3)(a), assuming that
the August 24, 2006 document was an attempt to amend the October 20, 2003
restatement, Betty substantially complied with Article XXII by doing so in writing and
delivering a copy to Newcomer. Although the trial court referenced a clear and
convincing standard with respect to establishing an intent to revoke or modify a
revocable trust, when the court’s ruling is read in its entirety, it is obvious that the court
actually agreed with the Roans that Betty validly modified her trust via the August 24,
2006 amendment. The question the court struggled with was the effect of that
amendment.
{¶ 66} The court and the parties agreed that Item One unambiguously appointed
Newcomer as trustee, so we will not address Item One of the August 24, 2006
amendment, despite the fact that (1) the August 24, 2006 amendment refers to Item
Eleven—contained in the March 20, 1998 restatement—as authority for amending the
terms of the trust even though the March 20, 1998 restatement was not the most current
version of the trust; and (2) the notice sent pursuant to Fla.Stat. 736.0813, signed by
Newcomer, indicates that Betty served as trustee until her death. Instead, we, like the
trial court did, focus our attention on Item Two of the August 24, 2006 amendment.
28.
{¶ 67} Item Two provides as follows: “The Settlor hereby restates and
reaffirms each and every paragraph of said Restatement of Trust dated April 22,
1999, as amended hereby.” As previously discussed, the trial court concluded that
the reference to the April 22, 1999 document was a typographical error and that
the April 20, 1999 document was the intended reference.
{¶ 68} Under Florida law, “[t]he polestar of trust or will interpretation is the
settlor’s intent.” Bryan v. Dethlefs, 959 So.2d 314, 317 (Fla.App.2007). It should be
“ascertained from the four corners of the document through consideration of ‘all the
provisions of the will [or trust] taken together.’” Id., quoting Sorrels v. McNally, 105 So.
106, 109 (Fla.1925). The trust instrument should be construed as a whole, taking into
account the general dispositional scheme. Id., citing Pounds v. Pounds, 703 So.2d 487,
488 (Fla.App.1997). The meaning applied must not lead to absurd results. Id., citing
Roberts v. Sarros, 920 So.2d 193, 196 (Fla.App.2006).
{¶ 69} If trust language is unambiguous, the settlors’ intent as expressed in the
trust controls and the court cannot refer to extrinsic evidence to interpret its meaning.
Ludwig v. AmSouth Bank of Fla., 686 So.2d 1373, 1376 (Fla.App.1997). That the parties
ascribe different meanings to the language does not necessarily render the trust
ambiguous. Bryan at 317, fn. 2.
{¶ 70} If, on the other hand, the trust is ambiguous, construction of the instrument
is necessary. First Nat. Bank of Florida v. Moffett, 479 So.2d 312, 313 (Fla.App.1985).
In construing a contract, the court must try to determine the meaning and intent of the
29.
language used by the parties by considering the surrounding circumstances and placing
itself in the parties’ situation. (Internal citations omitted.) Miller v. Kase, 789 So.2d
1095, 1098 (Fla.App.2001). Depending on the type of ambiguity that exists, Florida
courts may or may not allow the parties to present extrinsic evidence of the settlor’s
intent. To that end, Florida courts differentiate between “patent” and “latent”
ambiguities.
{¶ 71} “A patent ambiguity is [one] which appears on the face of the instrument,
and arises from defective, obscure, or insensible language used.” Ace Elec. Supply Co. v.
Terra Nova Elec., Inc., 288 So.2d 544, 547 (Fla.App.1973). Florida courts generally
decline to allow the introduction of extrinsic evidence to construe a patent ambiguity. Id.A latent ambiguity, on the other hand, is one where “the language employed is clear and
intelligible and suggests but a single meaning, but some extrinsic fact or extraneous
evidence create[s] a necessity for interpretation or a choice among two or more possible
meanings.” Id. In the case of a latent ambiguity, Florida courts allow the presentation of
extrinsic evidence. Id.{¶ 72} The Roans insist that there exists no ambiguity, and that the language in
Item Two plainly manifested Betty’s intent to incorporate by reference the provisions of
the April 20, 1999 document. They apparently refuse to acknowledge that a latent
ambiguity was created in that (1) the August 24, 2006 document “restated and
reaffirmed” a document that did not exist, and (2) even assuming, as the trial court did,
that the document intended to be referenced in the August 24, 2006 document was the
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April 20, 1999 document, that document had twice been amended (on August 29, 2000,
and March 4, 2002), and then had been superseded by the October 20, 2003 restatement.
{¶ 73} The Roans claim that Tom asked the trial court to invalidate Item Two or to
declare it a mistake. They insist that it was Tom’s burden to establish the grounds for
invalidity and to establish by clear and convincing evidence what the mistake was and
what Betty’s true intent was. They maintain that Tom failed in his burden.
{¶ 74} But the court’s judgment entry does not indicate that its decision was
premised on any mistake by either Betty or by Newcomer, the author of the August 24,
2006 document. In fact, this issue was discussed at length when the parties appeared
before the trial court on October 8, 2014. In trying to finalize a judgment entry, counsel
for the Roans sought to insert language indicating that the trial court found the August 24,
2006 document to be the result of a mistake. The trial court repeatedly corrected counsel
that its decision was not premised on the finding of a mistake—it was based on its
interpretation that both Betty and Newcomer intended only to change the trustee and not
to make any other substantive changes via the August 24, 2006 document.
{¶ 75} In this regard, the Roans also claim that the trial court mistakenly focused
on what Newcomer’s intent was instead of relying on Betty’s. They contend that Betty
made her intentions clear when she directed Newcomer to include Item Two despite his
insistence that Item Two was unnecessary. They rely on Fla.Stat. 732.512(1), which
provides: “A writing in existence when a will is executed may be incorporated by
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reference if the language of the will manifests this intent and describes the writing
sufficiently to permit its identification.”
{¶ 76} While Florida courts do recognize the doctrine of incorporation by
reference, they warn that “[c]onsiderable caution must be exercised in applying the
doctrine of incorporation by reference.” Martin v. Martin, 687 So.2d 903, 906
(Fla.App.1997), quoting Flinn v. VanDevere, 502 So.2d 454, 455-56 (Fla.App.1986).
The doctrine requires that there must be an expression in the incorporating document of
an intention to be bound by the collateral document. Kantner v. Boutin, 624 So.2d 779,
781 (Fla.App.1993). Specifically, “[t]o incorporate by reference a collateral document,
the incorporating document must (1) specifically provide that it is subject to the
incorporated [collateral] document and (2) the collateral document to be incorporated
must be sufficiently described or referred to in the incorporating agreement so that the
intent of the parties may be ascertained.” (Internal quotations omitted.) BGT Group, Inc.
v. Tradewinds Engine Servs., LLC, 62 So.3d 1192, 1194 (Fla.App.2011). “A mere
reference to another document is not sufficient to incorporate that other document into a
contract, particularly where the incorporating document makes no specific reference that
it is ‘subject to’ the collateral document.” Kantner at 781.
{¶ 77} We agree with Tom that the August 24, 2006 document does not suffice to
incorporate the terms of the April 20, 1999 document. To begin with, like the trial court,
we find Newcomer’s testimony to be important. Newcomer testified that he told Betty
that Item Two would not change the trust agreement. He made clear that he would not
32.
have used a form like the August 24, 2006 document to make a substantive change to a
trust agreement, and in fact, said that was “[n]ot what I thought I was doing.” He
believed that he was merely changing the trustee. He said he would “absolutely not”
make a major change to her estate plan in this way.
{¶ 78} But beyond Newcomer’s intent in drafting the document, the same result
must be reached in considering Betty’s intent. The Roans went to great lengths in
arguing that Betty was intelligent, competent, and completely aware of the dispositional
provisions of her trust documents. Given their position, it does not follow that Betty
would attempt to alter those provisions by mere reference to an incorrectly-dated
document that had actually given shares of her family stock to her ex—and by that time,
deceased—daughter-in-law. This is especially true given that she had executed four
additional amendments or restatements in the years that followed the execution of the
April 20, 1999 document—one expressly revoking a portion of that document.
Moreover, the evidence supports Tom’s contention that the October 20, 2003 document
was the product of a careful, comprehensive estate-planning process which extended over
many months. During the course of that process, Betty met with her counsel in Florida,
spoke with him on the phone, handwrote him letters expressing her desire that the stock
be “placed out of trust and [that] no cash [be] involved,” and arranged for him to receive
copies of all of her trust documents and details about her assets. Before she executed the
October 20, 2003 restatement, she was provided with a flow chart summarizing the terms
and effect of the restatement. If Newcomer instructed her that Item Two was
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unnecessary and would change nothing, a woman of Betty’s intelligence and
sophistication would surely have been more careful in ensuring that her intentions were
carried out properly.
{¶ 79} In addition to this, Newcomer served as trustee, both before and after
Betty’s death. Although aware of the existence of the August 24, 2006 document, it was
not until the Roans’ attorney’s suggestion, a year later, that Newcomer even entertained
the possibility that Item Two of the August 24, 2006 document may have had any
substantive effect. This is certainly consistent with the trial court’s and our interpretation
that Item Two made no substantive changes to the October 20, 2003 restatement.
{¶ 80} For these reasons, we find the Roans’ first five assignments of error not
well-taken.
2. Injunctive Relief
{¶ 81} In their sixth assignment of error, the Roans argue that the trial court erred
in dissolving the preliminary injunction and in denying their motion for permanent
injunction. They contend that Tom seeks to deplete the trust assets by forcing the trustee
to use trust funds to defend a case that has already been litigated. They maintain that
Tom is simply trying to harass and vex them by compelling them to pay substantial
attorney fees to relitigate claims that have already been resolved in Ohio.
{¶ 82} “To establish a claim for injunctive relief, a plaintiff must show, by clear
and convincing evidence: (1) the likelihood of success on the merits; (2) granting the
injunction will prevent irreparable harm; (3) the potential injury that may be suffered by
34.
the defendant will not outweigh the potential injury suffered by the plaintiff if the
injunction is not granted; and (4) the public interest will be served by the granting of the
injunction.” Byers DiPaola Castle, L.L.C. v. Portage Cty. Commrs., 2015-Ohio-3089,
¶ 68, 41 N.E.3d 89 (11th Dist.), citing Cleveland v. Cleveland Elec. Illuminating Co., 115
Ohio App.3d 1, 12, 684 N.E.2d 343 (8th Dist.1996).
{¶ 83} The Roans claim that without an injunction, they will suffer irreparable
injury because if Tom is permitted to litigate in Florida, they will be exposed to
inconsistent rulings, they will lose further time, the trust assets will be further depleted,
and they will incur exorbitant attorney fees, litigation costs, and travel expenses. They
insist that no other third parties will be impacted by the granting of permanent injunctive
relief because they, the trustee, and Tom are the only parties to the trust. They contend
that the public interest will be served if an injunction is issued because it will promote
confidence that orders entered by courts with proper jurisdiction will be enforced. They
cite a number of cases from other jurisdictions restraining litigants from proceeding in
suits brought in sister states. They claim that “a duplication of the parties and issues,
alone, is generally sufficient to justify the issuance of an antisuit injunction.”
{¶ 84} Tom counters that a court should be particularly cautious when considering
an injunction that would interfere with the exercise of constitutional rights or interfere
with the jurisdiction of another court. He insists that the trust at issue is a Florida trust
prepared for a Florida resident that expressly adopts Florida law as controlling. He
contends that the use of injunctive relief to prohibit a person from resorting to a foreign
35.
court is a power that must be used sparingly and that this case is not a proper case for the
issuance of such an injunction.
{¶ 85} While the trial court acknowledged its authority to restrict a person over
whom it has jurisdiction from bringing and maintaining suit in a foreign state for the
purpose of, or with the effect of, harassing or oppressing another party, it expressed that
enjoining proceedings in another state requires exceptional circumstances not present in
this case. The court also recognized:
The parties to this suit are clearly bound by this decision under the
doctrine of res judicata, at least until the decision is reversed or modified.
The Full Faith and Credit Clause of the U.S. Constitution will require that
other states [sic] courts, including Florida, give full faith and credit to
rulings of Ohio courts and honor them.
{¶ 86} We review a trial court’s order granting or denying injunctive relief for an
abuse of discretion. Try Hours, Inc. v. Douville, 2013-Ohio-53, 985 N.E.2d 955, ¶ 19
(6th Dist.). We find no abuse of discretion in the court’s decision.
{¶ 87} We find the Roans’ sixth assignment of error not well-taken. We now turn
to Tom’s cross-appeal.
36.
B. Tom’s Cross-Appeal
1. The Equalization Provision
{¶ 88} In his first assignment of error, Tom claims that the trial court improperly
applied the equalization provision of the October 20, 2003 restatement. That provision
provides:
It is Grantor’s desire that Grantor’s son, THOMAS O. LEVENSON,
receive an equal amount of shares in SPANGLER CANDY COMPANY to
the amount received by grantor’s daughter, ANN R. ROAN. Accordingly,
Grantor’s Trustee shall first determine the number of shares which have
been transferred by the Grantor, either individually or under this Trust, or in
any gift giving Trust created during Grantor’s lifetime. The Trustee shall
determine the amount of shares received by THOMAS O. LEVENSON,
either outright or in trust, and received by his former wife’s Trust and the
sum of these shares shall be known as the “TOM SHARES”. The Trustee
shall then determine the amount of shares received by Grantor’s daughter,
ANN R. ROAN, and her husband, STEVEN ROAN, either outright or in
trust, and the sum of these shares shall be known as the “ANN SHARES”.
The Trustee shall then distribute to Grantor’s son, THOMAS O.
LEVENSON, outright and free of trust, that number of shares equal to the
ANN SHARES less TOM SHARES. As of the time of execution of this
Agreement, the TOM SHARES equals SIXTEEN THOUSAND EIGHT
37.
HUNDRED SEVENTY FOUR (16,874) and the ANN SHARES equals
TWENTY-ONE THOUSAND EIGHT HUNDRED FIFTEEN (21,815).
Accordingly, if Grantor did not make any more lifetime transfers, then the
amount of shares to be devised to THOMAS O. LEVENSON under this
equalization provision would equal FOUR THOUSAND NINE
HUNDRED FORTY-ONE (4,941) shares.
{¶ 89} Tom urges that under the plain language of this provision, Betty expressed
her desire that he and Ann possess an equal number of shares in Spangler Candy,
regardless of how those shares were acquired. He claims that by specifying in the
provision itself the precise number of shares at issue, Betty was providing a starting point
for the eventual calculation of the number of shares that would need to be transferred to
Tom. He contends that the terms of the provision are unambiguous and that extrinsic
evidence need not be examined in discerning their meaning; however, he emphasizes that
the attorney who drafted the provision specifically testified that the numbers were
incorporated into the provision for the precise purpose of making clear the starting point
for calculations.
{¶ 90} The Roans agree that Betty intended to treat Ann and Tom equally;
however, they argue that Betty did not intend for shares they received from other sources
to be considered in calculating the number of shares that would need to be transferred to
Tom under the equalization provision. The Roans interpret that it was Betty’s intention
that only shares transferred from Betty be considered. They urge that the inclusion in the
38.
provision of the specific numbers of “Tom shares” and “Ann shares” was simply for
purposes of illustration. Moreover, they contend that the provision contains incorrect
numbers.
{¶ 91} The trial court agreed with the Roans’ interpretation of the provision. It
held that “shares of stock transferred to the parties by persons other than Betty Strickland
shall be disregarded by the Trustee when determining the number of shares of Spangler
Candy Company stock which are to be transferred to Thomas Levenson as an equalizing
distribution under the terms of this provision.”
{¶ 92} “The interpretation of a written instrument presents a question of law which
is reviewed de novo.” Davis v. Rex, 876 So.2d 609, 613 (Fla.App.2004). Applying this
de novo standard, we find that the plain language of the equalization provision supports
Tom’s interpretation.
{¶ 93} First, Betty specifically stated that it was her desire that Tom “receive an
equal amount of [Spangler Candy] shares * * * to the amount received by * * * Ann.”
Although the second sentence provides that the trustee “shall first determine the number
of shares which have been transferred by the Grantor,” it goes on to state that the trustee
“shall determine the amount of shares received by THOMAS O. LEVENSON, either
outright or in trust, and received by his former wife’s Trust,” and next to “determine the
amount of shares received by Grantor’s daughter, ANN R. ROAN, and her husband,
STEVEN ROAN, either outright or in trust.” (Emphasis added.) The provision does not
qualify that the trustee’s determination of the number of shares be limited to include only
39.
those shares received from Betty. That the trustee was instructed to determine the number
of shares “received by” Tom, his ex-wife, Ann, and Steven—and not merely to determine
the number of shares that Betty transferred to them—signals to us that she intended for
all Spangler shares to be considered in applying the equalization provision.
{¶ 94} Additionally, the agreement provides the precise number of shares owned
by Ann and Tom. It specifies the number of “Tom shares” and “Ann shares” owned as of
the execution of the October 20, 2003 agreement, and it specifies how many shares would
need to be transferred to Tom if Betty made no further transfers during her lifetime. If
Betty intended to provide only an example of how the number of shares should be
calculated, it seems to us that she would have used simpler, less specific numbers (e.g.,
round numbers like 20,000 or 10,000), instead of numbers actually corresponding to the
number of shares that had been transferred to the parties.
{¶ 95} To that end, the Roans claim that there is an error with the figures
themselves. The October 20, 2003 restatement indicates that the “Ann shares” total
21,815. They concede that if the shares Ann and Steven received from other sources are
considered, this figure accurately reflects the number of “Ann shares.” However, they
claim that at no time did Tom’s shares total 16,874. They claim that Tom’s shares and
those of his ex-wife (i.e., the “Tom shares”) totaled 18,482. Tom explained this
discrepancy: He testified that Betty transferred to him 1,608 shares after the equalization
provision was incorporated into the March 4, 2002 amendment, but before the
40.
October 20, 2003 restatement was executed. Subtracting those 1,608 shares produces the
number specified in the October 20, 2003 document.
{¶ 96} With the discrepancy of the figure listed as “Tom shares” in the
October 20, 2003 amendment having easily been reconciled, we find that the equalization
provision unambiguously provides that Betty intended for shares from all sources to be
considered in equalizing the number of “Tom shares” and “Ann shares.” We find that the
trial court erred in interpreting the equalization provision otherwise.
{¶ 97} We find Tom’s first assignment of error well-taken.
2. The Statute of Limitations
{¶ 98} In his second assignment of error, Tom argues that the trial court erred in
failing to apply the six-month statute of limitations set forth in Fla.Stat. 736.0604 and in
denying his request to amend his reply to the Roans’ cross-claim to assert the statute of
limitations as a defense.
{¶ 99} Fla.Stat. 736.0604 provides:
An action to contest the validity of a trust that was revocable at the
settlor’s death is barred, if not commenced within the earlier of:
(1) The time as provided in chapter 95; or
(2) Six months after the trustee sent the person a copy of the trust
instrument and a notice informing the person of the trust’s existence, of the
trustee’s name and address, and of the time allowed for commencing a
proceeding.
41.
{¶ 100} Tom argues that the October 20, 2003 restatement and the Fla.Stat.
736.0813 notice was signed by Newcomer, as trustee, and mailed to the beneficiaries 12
months before Newcomer initiated the present action. He claims that the notice was then
filed with the Indian River County probate court in Florida, where the estate was being
administered. Thus, Tom maintains, unless waived, any challenge to the validity of the
October 20, 2003 restatement was time-barred under Fla.Stat. 736.0604(2). Tom insists
that he asserted the statute of limitations as a defense to the action initiated by
Newcomer, thus it was not waived. He acknowledges that he failed to assert the defense
in his reply to the Roans’ cross-claim. He argues, however, that (1) the defense was most
properly asserted in response to the original complaint; (2) the parties were on notice that
he was asserting the statute of limitations defense, and (3) the trial court improperly
denied his Civ.R. 15(A) motion to amend his reply to the cross-claim.
{¶ 101} The Roans respond that Tom not only waived the statute of limitations
defense by failing to assert it in his reply to their cross-claim, but also that he failed to
timely avail himself of relief under Civ.R. 15(A) because the first time he raised the
defense was in response to the Roans’ motion for summary judgment. The Roans direct
us to American Diversified Devs. v. Hilti Constr. Chem., 8th Dist. Cuyahoga No. 73116,
73168, 1998 WL 767618 (Oct. 29, 1998) as support for their position. They also claim
that the notice relied upon by Tom did not trigger the statute of limitations because it did
not contain the August 24, 2006 amendment. They insist that the trustee could not
activate the statute of limitations without serving notice of the August 24, 2006
42.
amendment along with the October 20, 2003 restatement. And they argue that under
Florida’s delayed discovery doctrine, the statute of limitations could not have begun to
run until they were put on notice of the existence of the 2006 amendment.
{¶ 102} In addition to the foregoing arguments, the Roans urge that Fla.Stat.
736.0604 does not apply where a trustee seeks interpretation of a trust or a declaration
from the court as to which documents constitute the trust. They also contend that it does
not apply to a beneficiary who is not contesting the validity of the trust. They deny that
they are contesting the validity of the trust. They claim that only Tom contests the
validity of the trust by challenging Betty’s execution of the August 24, 2006 amendment.
{¶ 103} Unfortunately, there are no Florida cases that address Fla.Stat. 736.0604.
Under its plain language, however, the statute sets forth a limitations period for actions
“to contest the validity of a trust.” (Emphasis added.) As Newcomer made clear in his
complaint for declaratory judgment, his purpose in bringing this action was not to contest
the validity of the trust, but to enable him to administer the trust in accordance with the
terms of whichever document is declared to be the last valid trust agreement.
Accordingly, because the action was not one challenging the validity of the trust, we find
that the six-month statute of limitations is inapplicable.
{¶ 104} We acknowledge that the parties asserted counterclaims and cross-claims
following Newcomer’s initiation of this action, but we are not persuaded that those cross-
claims and counterclaims were barred by the six-month limitations period, particularly
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where the Fla.Stat. 736.0813 notice provided by Newcomer did not include reference to
the August 24, 2006 document.
{¶ 105} We find Tom’s second assignment of error not well-taken.
3. Betty’s Competence
{¶ 106} In his third assignment of error, Tom claims that the trial court erred in
directing a verdict on the issue of competency. He claims that between the medical
records noting Betty’s illogical thinking, the indication in those records that Newcomer
spoke to Betty’s physician about his concerns about her thought processes, the
neuropsychological examination documenting Betty’s “confusion,” “confabulation,” and
“memory problems,” Newcomer’s admission that he was not present for the execution of
the August 24, 2006 amendment, and the testimony from the witnesses to Betty’s
signature that they really had no recollection of Betty’s execution of the amendment, the
issue was one of fact that should have been submitted to the jury.
{¶ 107} The Roans claim that there is a strong presumption of competency which
Tom failed to overcome. They contend that both Ann and Steven testified to Betty’s
competence on the day in question and they point out that even Tom offered no testimony
to contradict their assertions. They also cite to Tom’s inconsistent position in arguing
that Item One was validly executed, while Item Two was not. And they emphasize that
numerous Florida cases indicate that even a demented, intoxicated, feeble-minded, or
insane person can validly execute estate planning documents if done during a lucid
interval.
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{¶ 108} Although the October 20, 2003 trust agreement indicates that the trust is
to be administered under the laws of Florida, the August 24, 2006 amendment was
executed in Ohio, thus we apply Ohio law in resolving the issue of whether Betty lacked
the capacity to execute that amendment. Ohio law provides the following standard to be
applied:
Testamentary capacity exists when the testator has sufficient mind
and memory: First, to understand the nature of the business in which he is
engaged; second, to comprehend generally the nature and extent of his
property; third, to hold in his mind the names and identity of those who
have natural claims upon his bounty; fourth, to be able to appreciate his
relation to the members of his family. Niemes v. Niemes, 97 Ohio St. 145,
119 N.E. 503 (1917), paragraph four of the syllabus. See also Martin v.
Dew, 10th Dist. Franklin No. 03AP-734, 2004-Ohio-2520, ¶ 10.
{¶ 109} Courts apply this standard in considering a settlor’s capacity to execute
trust documents that form a part of an estate plan. See, e.g., Lah v. Rogers, 125 Ohio
App.3d 164, 175, 707 N.E.2d 1208 (11th Dist.1998); Neumeyer v. Estate of Penick, 180
Ohio App.3d 654, 2009-Ohio-321, 906 N.E.2d 1168, ¶ 47 (5th Dist.). The party seeking
to void the agreement due to a lack of capacity has the burden of proof by clear and
convincing evidence. Lah at 175. “Clear and convincing evidence is that evidence
‘which will provide in the mind of the trier of facts a firm belief or conviction as to the
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facts sought to be established.’” (Internal citations omitted.) State v. Garcia, 126 Ohio
App.3d 485, 487, 710 N.E.2d 783 (12th Dist.1998).
{¶ 110} While at first blush it may seem that Tom presented sufficient evidence to
create a question of fact as to whether Betty suffered from some degree of cognitive
impairment in late August 2006, in fact, he presented no evidence going to the four
factors pertinent to testamentary capacity. Dr. Lawrence did not see Betty on August 28,
2006, and she conceded that Betty’s confusion could very well have been transient. What
is more, Dr. Lawrence described that Betty had trouble reciting back strings of words and
numbers, matching pictures of angled lines, and recalling the details of a story read to
her. She said nothing of Betty’s ability to describe the property in her estate or the family
members who may inherit from her. In fact, Dr. Lawrence noted that Betty was oriented
(other than believing it was August 27 when, in fact, it was August 29), that her speech
was fluent and functional, and that interpersonally, she was cooperative, engaging,
cheerful, and unremarkable. We, therefore, find no error in the trial court’s decision to
grant the Roans’ motion for directed verdict as to the issue of Betty’s competence to
execute the August 24, 2006 amendment. See Doyle v. Schott, 65 Ohio App.3d 92, 95,
582 N.E.2d 1057 (1st Dist.1989) (affirming grant of summary judgment where probate
court concluded that evidence failed to address any of the four criteria relating to the
determination of testamentary capacity).
{¶ 111} We find Tom’s third assignment of error not well-taken.
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III. Conclusion
{¶ 112} For the foregoing reasons, we find all of the Roans’ assignments of error
not well-taken. We find Tom’s first assignment of error well-taken, but we find his
second and third assignments of error not well-taken. We, therefore, affirm the
February 19, 2014 judgment of the Williams County Court of Common Pleas. We
reverse its October 8, 2014 judgment as it pertains to application of the equalization
provision; we affirm the judgment in all other respects. And we affirm its December 31,
2014 judgment. The costs of this case are assessed to the Roans under App.R. 24.
Judgment affirmed, in part,
and reversed, in part.
A certified copy of this entry shall constitute the mandate pursuant to App.R. 27.
See also 6th Dist.Loc.App.R. 4.
Mark L. Pietrykowski, J. _______________________________
JUDGE
Arlene Singer, J.
_______________________________
James D. Jensen, P.J. JUDGE
CONCUR.
_______________________________
JUDGE
This decision is subject to further editing by the Supreme Court of
Ohio’s Reporter of Decisions. Parties interested in viewing the final reported
version are advised to visit the Ohio Supreme Court’s web site at:
http://www.sconet.state.oh.us/rod/newpdf/?source=6.
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