Delp v. Delp , 97 N.E.3d 1174 ( 2017 )

[Cite as Delp v. Delp, 2017-Ohio-7774.]
IN THE COURT OF APPEALS OF OHIO
SIXTH APPELLATE DISTRICT
LUCAS COUNTY
Morgan E. Delp, et al. Court of Appeals No. L-16-1242
Appellees Trial Court No. 2014 ADV 1020
v.
Bradley J. Delp DECISION AND JUDGMENT
Appellant Decided: September 22, 2017
*****
Thomas P. Dillon and Nicholas T. Stack, for appellees.
Kevin A. Heban and John P. Lewandowski, for appellant.
*****
PIETRYKOWSKI, J.
{¶ 1} Defendant-appellant, Bradley J. Delp, appeals the September 29, 2016
judgment of the Lucas County Court of Common Pleas, Probate Division, which granted
the motion of plaintiff-appellees and trust beneficiaries, Morgan E. Delp and Sydney J.
Delp, to remove appellant as the trustee of the Delp Heritage Trust. For the reasons set
forth herein, we affirm.
{¶ 2} The relevant factual history of this case is as follows. The Delp Heritage
Trust was formed on December 1, 1997, by grantor John J. Delp who died in 1998. The
trust was formed for the benefit of Delp’s wife Evelyn, who died in 2006, his two
daughters and their children, and the children of his two sons, Cleves and Bradley Delp.
It is undisputed that following Evelyn’s death, the main purpose of the trust was to
provide for Delp’s daughter, Roberta Bonner, who had various medical issues and was
unable to support herself.
{¶ 3} Cleves and Bradley were the named trustees; both served as such until
Cleves’ withdrawal in July 2012. The trust specifically provided that neither Cleves nor
Bradley were entitled to any distributions from the trust proceeds unless they remained as
sole living descendants. As trustees, the brothers had discretion to pay to a beneficiary,
“having in mind both the standard of living to which such beneficiary has been
accustomed and the funds available to or for him or her from all other sources of which
Trustee shall have actual knowledge,” any such “amounts as Trustee, in Trustee’s sole
discretion, shall deem advisable or necessary for any such purpose or purposes.” Further,
the brothers were not permitted to make any decision to use trust income for any person
they were legally obligated to support. The trust required the trustees to provide an
annual accounting of the disbursements and distributions of the trust to “each adult,
competent beneficiary, and to the legal or natural guardian of any beneficiary under a
disability.” The duties and obligations of administering the trust were unchanged
following Cleves Delp’s withdrawal as trustee.
2.
{¶ 4} Following multiple withdrawals from one of the trust accounts to the
personal account of appellant, on April 4, 2014, appellees and three minor trust
beneficiaries, through parent Cleves Delp, requested an accounting of the trust assets
pursuant to the terms of the trust.
{¶ 5} This action commenced on May 20, 2014, with appellees filing of a
complaint against appellant alleging a breach of his trustee duties under the terms of the
trust. Specifically, the complaint alleged that the beneficiaries had not received an
accounting as required by the terms of the trust and R.C. 5808.13(C). The complaint
requested that the court order appellant to provide an accounting within 30 days.
{¶ 6} While the action was pending, on May 21, 2015, appellee Morgan Delp sent
a letter to appellant requesting that the trust reimburse her $18,477 for college tuition.
The letter indicated that the trust has previously provided appellee with $23,778 for
college tuition. In response, appellant requested detailed tuition payment information and
financial information including income, financial support, living arrangements, and all
information relative to whether appellee was claimed as a dependent on her parents’ tax
returns and supporting documentation. Appellee did respond providing her 2015 W-2
form, personal checks paid to Hillsdale College totaling approximately $13,000, and a
statement that she transferred amounts to Hillsdale College totaling approximately
$5,000. Appellee further stated that she shares a condominium with two others and pays
$500 per month in rent plus utilities. Appellant again requested information regarding
3.
the source of her tuition and tax returns of herself and her parents to substantiate any
answers regarding her dependent status.
{¶ 7} Also during this time, appellant’s sister and trust beneficiary, Kathleen
Higgins, had questions regarding a life insurance policy acquired by the trust which
allegedly resulted in her and her husband’s inability to get a lower insurance premium on
a personal life insurance policy.
{¶ 8} Additionally, the parties disputed the circumstances surrounding
withdrawals and deposits totaling $205,000 from a trust account to appellant’s personal
account. Appellant claimed it was inadvertence on his wife’s part; appellees contended
that appellant feigned accidental transfers only after he was caught.
{¶ 9} Appellees amended their complaint on January 27, 2016, adding a claim for
breach of the trust agreement and requesting the removal of appellant as trustee. The
complaint alleged several instances of misconduct (some set forth above) by appellant as
trustee and chronicled the extensive ligation brought by and involving various family
members and trusts. The complaint further alleged that appellant was hostile toward
certain trust beneficiaries. In addition, the amended complaint quoted extensively from a
United State District Court case where appellant’s declaratory judgment action was
dismissed with prejudice upon a finding by the trial judge that appellant wrongfully took
certain documents from the opposing party and attempted to conceal his actions. See
Bradley J. Delp Revocable Trust v. MSJMR 2008 Irrevocable Trust, N.D.Ohio No. 3:14
CV 591, 2015 U.S. Dist. LEXIS 173432 (Dec. 31, 2015). It was further noted that
4.
appellant, pursuant to a consent agreement, was suspended from the Financial Industry
Regulatory Authority (“FINRA”) for 75 days and fined in connection with an unrelated
company.
{¶ 10} On May 10, 2016, appellees filed a motion to remove trustee incorporating
many of the claims set forth in the amended complaint. A hearing on the motion was
held on August 22, 2016, and testimony was received from appellant’s sisters, Kathleen
Higgins and Roberta Bonner, and appellant. Several exhibits were admitted into
evidence.
{¶ 11} On September 29, 2016, the trial court granted appellees’ motion to remove
appellant as trustee. The court found the appellant’s dealings with trust beneficiaries was
hostile and indicative of an “incurable” communication breakdown between the parties.
The court was also “troubled” by the fact that appellant had twice been sanctioned by the
FINRA and that, in an unrelated matter imposing sanctions, appellant’s conduct
regarding family members was scrutinized. The court further noted the GE funds
transfer. The court then concluded that removal of appellant as trustee served the best
interests of the trust beneficiaries. This appeal followed.
{¶ 12} Appellant now raises the following assignment of error:
Assignment of Error No. 1:
The trial court erred by granting appellees’ motion to remove
appellant Bradley J. Delp as trustee of the Delp Heritage Trust.
5.
Final, Appealable Order
{¶ 13} Before turning to the merits of the appeal, we must first examine whether
the court’s judgment is a final, appealable order and properly before this court. Appellees
contend that the judgment would not deprive appellant of a meaningful remedy should he
have to wait for the conclusion of the case, R.C. 2505.02. Further, appellees note that the
trial court failed to certify under Civ.R. 54(B) that there was no just reason for delay.
Conversely, appellant asserts that a probate proceeding is a “special proceeding” as
defined in the statute.
{¶ 14} R.C. 2505.02 provides:
(B) An order is a final order that may be reviewed, affirmed,
modified, or reversed, with or without retrial, when it is one of the
following:
(1) An order that affects a substantial right in an action that in effect
determines the action and prevents a judgment;
(2) An order that affects a substantial right made in a special
proceeding or upon a summary application in an action after judgment;
(3) An order that vacates or sets aside a judgment or grants a new
trial;
(4) An order that grants or denies a provisional remedy and to which
both of the following apply:
6.
(a) The order in effect determines the action with respect to the
provisional remedy and prevents a judgment in the action in favor of the
appealing party with respect to the provisional remedy.
(b) The appealing party would not be afforded a meaningful or
effective remedy by an appeal following final judgment as to all
proceedings, issues, claims, and parties in the action.
{¶ 15} We agree with appellant that several courts have held that similar probate
court judgments were special proceedings and, thus, were final and appealable. This
court has consistently held, however, that because probate estate proceedings existed at
common law, they may not be considered special proceedings under the statute. In re
Estate of Gannett, 6th Dist. Huron No. H-01-047, 2001 Ohio App. LEXIS 5310 (Nov. 27,
2001), relying on In re Estate of Packo, 6th Dist. Lucas No. L-99-1350, 2000 Ohio App.
LEXIS 544 (Feb. 15, 2000).
{¶ 16} However, in In re Estate of Sneed, 166 Ohio App. 3d 595, 2006-Ohio-1868,
852 N.E.2d 234 (6th Dist.), we overruled Gannett, in part, by concluding that although
the action in which an estate administrator was removed and new administrator appointed
was not a “special proceeding” under R.C. 2505.02(B)(2), it was an order granting or
denying a provisional remedy, R.C. 2505.02(B)(4), because after the closing of the estate,
any mistakes or mishandling of the estate assets could not be remedied. Id. at ¶ 18. We
reasoned that the correct focus was not in whether any mishandling of estate assets could
be remedied by an appeal after an estate closed; rather, it was the loss of a person’s
7.
opportunity to be the executor of an estate. Id. at ¶ 17-18. We concluded that such loss
cannot be remedied. Id. at ¶ 18.
{¶ 17} Finding the Sneed holding instructive, the Fifth Appellate District
concluded that a probate court’s sua sponte appointment of independent counsel to
oversee an irrevocable trust was a final, appealable order. In re Cletus P. McCauley &
Mary A. McCauley Irrevocable Trust, 5th Dist. Stark No. 2013CA00237, 2014-Ohio-
3489. Further, in Giffin v. Mull, 7th Dist. Belmont No. 15 BE 11, 2015-Ohio-5440, the
court, following the cases finding that a decision to remove an executor is a final,
appealable order, noted that “[a] trustee is a fiduciary just as an executor is a fiduciary.
Both actions to remove occurred in probate court proceedings.” Id. at ¶ 82.
{¶ 18} In Giffin, the court further noted that it is well established that “‘[a]
provisional remedy is a remedy other than a claim or relief. Therefore, an order granting
or denying a provisional remedy is not subject to the requirements of Civ.R. 54(B).’” Id.
at ¶ 87, quoting State ex rel. Butler Cty. Children Servs. Bd. v. Sage, 95 Ohio St. 3d 23,
25, 764 N.E.2d 1027 (2002).
{¶ 19} We do acknowledge that this case has the factual distinction of including
both a motion for removal of the trustee and a claim for relief requesting removal.
However, we find that because the court specifically ruled on the motion following
briefing and a hearing was held on the motion that the order appealed from was a
provisional remedy which was not subject to the requirements of Civ.R. 54(B).
8.
Standard of Review
{¶ 20} We next address the appropriate standard of review for this court to use on
appeal. Appellant argues for a “mixed” standard of review: a general abuse of discretion
review but a de novo review as to the question of whether the facts meet the appropriate
legal standard. Conversely, appellees assert that the proper standard of review is purely
whether the court abused its discretion; appellees contends that even using a hybrid
approach, the trial court did not err when it granted their motion to remove appellant as a
trustee.
{¶ 21} In general, it is well-settled that a probate court’s decision regarding the
removal of a trustee is reviewed for an abuse of discretion. Ulinski v. Byers, 9th Dist.
Summit No. 27267, 2015-Ohio-282, ¶ 14. We agree that questions of law, if any, are
subject to de novo review. Specifically, the construction of a trust document, as a written
contract, is reviewed de novo. Arnott v. Arnott, 132 Ohio St. 3d 401, 2012-Ohio-3208,
972 N.E.2d 586, ¶ 14. We further note that the trial court, as the trier of fact, had the
advantage of observing witnesses at the removal hearing and assessing their credibility.
Thus, we will defer to any findings relative thereto. See Gorby v. Aberth, 9th Dist.
Summit No. 28021, 2017-Ohio-274, ¶ 19.
The Court’s Removal of Appellant as Trustee
{¶ 22} Removal of a trustee is governed by R.C. 5807.06, which provides:
(A) The settlor, a cotrustee, or a beneficiary may request the court to
remove a trustee, or the court may remove a trustee on its own initiative.
9.
(B) The court may remove a trustee for any of the following reasons:
(1) The trustee has committed a serious breach of trust;
(2) Lack of cooperation among cotrustees substantially impairs the
administration of the trust;
(3) Because of unfitness, unwillingness, or persistent failure of the
trustee to administer the trust effectively, the court determines that removal
of the trustee best serves the interests of the beneficiaries.
{¶ 23} The removal of a trustee is a drastic remedy and the party seeking removal
must establish a basis for removal by clear and convincing evidence. Gorby at ¶ 31.
Further, in cases where a trustee has absolute discretion “the broader the range of
permissible conduct by the trustee in exercising it.” R.C. 5808.14(A).
{¶ 24} In the present case, appellant argues that the trial court erred in granting
appellees’ motion for removal because appellant neither committed a “serious breach of
trust” nor failed to effectively administer the trust and that appellant was fit to administer
the trust. Appellant further argued that during the hearing, only one person, Kathy
Higgins, testified that she wanted appellant to be removed as trustee.
{¶ 25} Supporting his arguments, appellant relies on a Seventh Appellate District
case which denied the motion to remove finding that co-trustees did not commit a
“serious” breach of trust by making an inheritance advancement. Kidd v. Alfano, 2016-
Ohio-7519, 64 N.E.3d 1052 (2d Dist.). The court further noted that the other claimed
breaches, including payment of attorney fees and various alleged conflicts of interest,
10.
were not supported by the record and did not rise to the level of a breach of the trustee’s
fiduciary duty. Id. at ¶ 43.
{¶ 26} Appellant argues that like Kidd, the only alleged “serious” breach in this
case was his wife’s accidental transfer of funds from the GE trust account to his personal
GE account. Appellant asserts that unlike Kidd, however, he independently caught and
remedied the mistake. As is apparent from the trial court’s decision, it did not find
appellant’s explanation of the events to be credible; rather, it referenced the bank’s
correspondence which placed the blame for the error upon appellant. In conjunction, the
court stressed the fact that appellant had been sanctioned twice by the FINRA. Finally,
the court found troubling appellant’s interactions with trust beneficiaries; the court
concluded that appellant’s actions resulted in an “incurable” communication breakdown
between the parties. See Tomazic v. Rapoport, 2012-Ohio-4402, 977 N.E.2d 1068 (8th
Dist.) (removal was proper despite trustee’s broad discretion).
{¶ 27} Upon review of the record and, particularly, the transcript of the August 22,
2016 hearing, we cannot say the trial court abused its discretion when it granted
appellees’ motion to remove appellant as trustee. The court was in the best position to
assess the credibility of the witnesses at the hearing and its findings support removal
under R.C. 5807.06(B). Appellant’s assignment of error is not well-taken.
11.
{¶ 28} On consideration whereof, we find that substantial justice was done the
party complaining and the judgment of the Lucas County Court of Common Pleas,
Probate Division, is affirmed. Pursuant to App.R. 24, appellant is ordered to pay the
costs of this appeal.
Judgment affirmed.
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
James D. Jensen, P.J.
_______________________________
Christine E. Mayle, J. JUDGE
CONCUR.
_______________________________
JUDGE
12.