Opinion
CV-22-421
12-11-2024
SHELLEY DIANE COOPER AND ANNETTE MICHELLE EDELEN APPELLANTS v. CASEY BRYANT, PERSONAL REPRESENTATIVE OF THE ESTATE OF HORACE E. BRYANT, DECEASED; AND NANCY ELIZABETH EDELEN APPELLEES
L. David Stubbs; and Taylor & Taylor Law Firm, P.A., by: Andrew M. Taylor and Tasha C. Taylor, for appellants. Cochran Law Firm, by: Tamra Cochran, for separate appellee Casey Bryant, as personal representative of the estate of Horace Bryant, deceased. Jarvis Law Firm, by: Amanda Jarvis, for separate appellee Nancy Edelen.
APPEAL FROM THE BENTON COUNTY CIRCUIT COURT [NO. 04PR-16-891] HONORABLE XOLLIE DUNCAN, JUDGE
L. David Stubbs; and Taylor & Taylor Law Firm, P.A., by: Andrew M. Taylor and Tasha C. Taylor, for appellants.
Cochran Law Firm, by: Tamra Cochran, for separate appellee Casey Bryant, as personal representative of the estate of Horace Bryant, deceased.
Jarvis Law Firm, by: Amanda Jarvis, for separate appellee Nancy Edelen.
WENDY SCHOLTENS WOOD, JUDGE
This case began when Horace Bryant ("Horace") filed a petition to reform a trust against the trustees of the Dolores Ann Bryant Revocable Living Trust ("Trust")-Shelley Cooper ("Shelley"), Annette Edelen ("Annette"), and Nancy Edelen ("Nancy"). Shelley and Annette (collectively "appellants") responded by filing a motion to dismiss his petition and a petition for declaratory judgment against him claiming that his petition violated provisions of the Trust. Following a series of amendments to both Horace's petition and appellants' motion to dismiss, the circuit court dismissed appellants' petition for declaratory judgment and denied their motions to dismiss Horace's petitions to reform. Appellants asserted a counterclaim against Horace again alleging violations of the Trust provisions and a cross- claim against Nancy asserting that she breached her fiduciary duty as trustee by engaging in self-dealing. The circuit court ultimately resolved the issues in favor of Horace and Nancy following the grant of partial summary judgment to Horace and a trial on the remaining issues. On appeal, appellants challenge multiple rulings made by the circuit court, which include the dismissal of their petition for declaratory judgment filed against Horace, the denial of their motions to dismiss Horace's petitions to reform the Trust, the grant of Horace's motion for partial summary judgment seeking reformation, the grant of a directed verdict to Nancy on appellants' cross-claim, and the awards of attorney's fees to Horace and Nancy. We affirm.
I. Relevant Facts
Dolores S. Bryant ("Dolores") and Horace married on July 16, 1976. Shelley, Annette, and Nancy are Dolores's adult daughters from a previous marriage. In 1987, Horace and Dolores moved into a home located on approximately twenty acres in Benton County, Arkansas ("the home property") that Dolores inherited from her mother. In February 2005, Dolores created the Trust and transferred the home property into the Trust.
Attorney Deborah Sexton ("Sexton") drafted the Trust and five amendments thereto. In the fifth amendment ("fifth amendment"), Dolores appointed her daughters to serve as successor trustees. The fifth amendment contains a provision that allows Horace to live on the home property rent-free following her death as long as he did not remarry. Horace and Dolores lived on the home property continuously until Dolores's death in July 2013, and Horace continued to live there until his death in August 2022.
On November 8, 2022, Casey Bryant, as the personal representative of Horace's estate, filed a suggestion of death and motion for substitution of parties, which this court granted on November 30, 2022.
Upon Dolores's death, her daughters served as the trustees and met with Sexton shortly after Dolores's funeral to review her estate plan and to discuss the administration of the Trust. Shelley and Annette are estranged from Nancy. In November 2014, Nancy and her husband moved into the home property with Horace at his request.
In early October 2016, Horace learned that appellants were seeking to deed the home property to the trustees and out of the Trust. Appellants were relying on a different provision in the fifth amendment providing that upon Dolores's death, the trustees shall distribute her twenty acres in Benton County to her three daughters. Appellants scheduled a beneficiaries' meeting on October 20, 2016, and a trustees' meeting on October 21, 2016, to discuss the distribution of the home property and their allegations of self-dealing against Nancy, which generally involved Nancy's living with Horace without appellants' knowledge or permission and without paying rent to the Trust.
On Sexton's advice, Horace filed a petition to reform the Trust and for a temporary restraining order on October 20, 2016, claiming that the fifth amendment to the Trust contained inconsistent provisions pertaining to the home property. Specifically, he alleged that one provision allowed him to live on the home property if he did not remarry, and another provision provided that the home property shall be distributed to the daughters at Dolores's death "free of trust."
On November 16, appellants moved to dismiss Horace's petition and first amended petition to reform the Trust pursuant to Rules 12(b)(1), (b)(2), and (b)(6) of the Arkansas Rules of Civil Procedure, claiming that the Trust prohibited the filing of a claim without first submitting the claim to a special co-trustee to resolve the dispute, which deprived the court of both subject-matter and personal jurisdiction. Also on November 16, appellants filed a petition for declaratory judgment against Horace arguing that his petitions to reform violated the no-contest clause of the Trust, resulting in his immediate disinheritance. Appellants asked the court to declare that Horace forfeited his rights under the Trust by filing his petition to reform and to order him to vacate the home property. On November 18, appellants filed answers to Horace's petition and first amended petition to reform the Trust. On November 30, Horace moved to dismiss appellants' petition for declaratory judgment pursuant to Rule 12(b)(6) of the Arkansas Rules of Civil Procedure alleging that appellants failed to state facts in support of their claim that he violated the no-contest clause.
In January 2017, Horace filed a second amended petition to reform the Trust wherein he also sought the removal of Shelley and Annette as trustees, an accounting and inventory, and the distribution of trust income. Appellants moved to dismiss his second amended petition and filed an answer as well.
Horace moved for partial summary judgment on June 15, asserting, among other things, that as a matter of law, the fifth amendment contained a mistake of expression or, alternatively a latent ambiguity; the Trust should be reformed to reflect Dolores's intent for Horace to remain on the home property so long as he did not remarry; he did not violate the no-contest clause; and appellants waived the right to assert the special co-trustee provision against him. In response, appellants argued that the circuit court lacked subject-matter and personal jurisdiction, Horace's claims were moot as he was disinherited subject to the terms of the Trust, the statute of limitations to contest the Trust had expired, and multiple questions of material fact remained.
On August 17, the circuit court entered an order denying each of appellants' motions to dismiss Horace's petitions to reform and granted Horace's motion to dismiss appellants' petition for declaratory judgment. Appellants filed a "response" to the petition to reform the Trust and the amended petitions on September 5 in which they asserted a counterclaim against Horace. The counterclaim reasserted appellants' arguments involving the special cotrustee provision and alleged that seeking removal of appellants as trustees resulted in his disinheritance, the statute of limitations to contest the Trust had expired, and by allowing Nancy to live in the home property rent-free, Horace had diminished the value of the Trust. Appellants also filed a cross-claim against Nancy for self-dealing, abusing the assets of the Trust, and violating her fiduciary duties as trustee. Nancy moved to dismiss the cross-claim.
In an October 19 order, the circuit court granted Horace's motion for partial summary judgment. Pertinent to this appeal, the court specifically found that the fifth amendment was affected by a mistake of expression and also contained a latent ambiguity. The court ordered that the Trust be reformed to conform to Dolores's intent that Horace be allowed to occupy the home property. The court determined that Horace had not violated the no-contest clause of the Trust and that appellants failed to request the appointment of a special co-trustee and were estopped from relying on the special co-trustee provisions. After the circuit court entered an order denying her motion to dismiss appellants' cross-claim, Nancy filed an answer on November 13.
On June 27, 2018, appellants filed an amended response to Horace's petitions to reform the Trust, which included an amended counterclaim against Horace and an amended cross-claim against Nancy. On July 3, Nancy filed an answer and asserted a cross-claim against appellants alleging that appellants had conspired to take actions in violation of the no-contest clause of the Trust and proposed entitlement to or distributions of the Trust that the court determined to be invalid.
The circuit court conducted a bench trial over three nonconsecutive days from July to October 2018. Horace testified that he asked Nancy and her husband to move in with him after Dolores passed because he did not feel comfortable living alone. Horace confirmed that Nancy paid the property taxes, electric bills, and cable bills and assisted in lawn maintenance, while he paid the gas bills and insurance for the property. Horace stated that Nancy had made several improvements to the home after moving in, such as replacing the living room floors, replacing the tile floors and countertops in the kitchen, and replacing heat and air units.
Horace testified that he filed this lawsuit when he learned that appellants were seeking to deed the home property to the trustees and out of the Trust. He feared that if this happened, appellants would "kick" him off the home property. Horace admitted that he did not consult the appellants or seek a meeting of the trustees prior to filing this action. He agreed that no one had disturbed his ability to live on the property.
Sexton testified that she drafted the Trust and the five amendments thereto. Dolores directed Sexton to draft the fifth amendment distributing her possessions equally among her three daughters. However, it was Sexton's belief that Dolores intended for Horace to have possession and control of the home property following her death.
Horace notified Sexton that appellants were seeking to deed the home property out of the Trust, and she reached out to appellants' counsel to inform him that the property could not be deeded to the trustees until after Horace's death. Appellants' counsel directed Sexton to the language in the fifth amendment regarding distribution of the home property to the trustees, which Sexton stated was a drafting mistake on her part and not Dolores's intent. Concerning the two conflicting provisions, Sexton testified that at one time, she thought the home and the twenty acres were two separate tracts of land. She later learned that they were the same tract of land and testified, "I made a mistake." Sexton recommended that any deed distributing the home property contain a life estate for Horace.
Sexton stated that discussion of deeding the home property to the trustees was on the agenda for the meeting of the trustees. Sexton advised Horace that he needed to prevent such a deed from being filed. She testified that the trustees could have excluded Horace from the home property if it was deeded to them because the Trust would no longer control the property. She was also concerned that if the home property was deeded to the trustees and did not protect Horace's interests, a creditor of one of the trustees could attach a lien or a judgment on the home property, which could "cause issues" for him.
Sexton confirmed that the Trust and the fifth amendment do not contain any language regarding whether Horace was allowed to let anyone live in the home with him. Sexton stated that Horace did not follow the dispute-resolution provisions of the Trust because litigation to reform the Trust was necessary to avoid the potential of irreversible harm if the trustees filed a deed that transferred the home property out of the Trust.
Nancy testified about various email and written communications she had with Shelley about the Trust and the home property. Nancy identified a packet of documents appellants had mailed to her requesting that she purchase their interests in the Trust and retain the remainder of the Trust to provide for Horace in his old age. Nancy confirmed that appellants were seeking to dissolve and distribute the assets of the Trust. In August 2016, Shelley emailed Nancy a deed to distribute the home property to the trustees and asked her to sign it. She refused.
Nancy attended a beneficiaries' meeting with appellants in October 2016. Nancy testified that appellants wanted her to pay $2,250 a month in rent for living with Horace and accused her of self-dealing. Nancy confirmed that she paid for the repairs to the home property as described by Horace and added that she also enclosed the front porch, enclosed the carport, and installed new toilets and glass shower doors in the bathrooms.
Nancy confirmed that she did not seek permission from her sisters or inform them that she had moved in with Horace. Nancy said she had agreed to sign a deed distributing the home property if it included a life estate for Horace. Nancy was unaware of anyone informing Horace he could not live on the property or questioning his right to remain on the home property during his lifetime. Nancy testified that she did not recall being presented with a deed that reserved a lifetime right of possession for Horace.
Annette testified that she had inherited funds following her mother's passing, and she spent all of her inheritance by 2015. She stated that she and Shelley recognized in late 2015 that they had questions regarding the proper administration of the Trust. In November 2015, Annette and Shelley signed a letter sent to Nancy requesting termination of the Trust and distribution of the assets. Annette testified about correspondence with Shelley regarding their proposed settlement to allow Nancy to purchase their interests in the Trust. Annette admitted that in October 2015, she obtained information on properties owned by and devised to Nancy as a way to brainstorm how Nancy could purchase appellants' interests in the Trust.
Shelley testified about multiple emails she exchanged with Nancy. Shelley confirmed that she did not agree to distribute any Trust income to Horace because she believed any distributions were discretionary. Shelley did not respond to the January 2014 letter from Sexton requesting a distribution of the net income of the Trust to Horace. Appellants began discussing whether Nancy was engaged in self-dealing after learning she had moved in with Horace. Shelley said that in the agenda she prepared for the beneficiaries' meeting, she asked Nancy what she thought was fair for self-dealing. Shelley included her calculations in the agenda suggesting that Nancy owed $63,000 for self-dealing.
Testimony was also offered by two expert witnesses regarding the present rental value of the home property. The experts estimated that the expected rental value of the home property would be between $1,200 and $1,500 a month. One of the experts testified that some of the upgrades Nancy made to the property would, at a minimum, increase the ability to sell the property while others would increase the value of the home.
At the conclusion of appellants' case, Nancy moved for directed verdict, contending that appellants failed to prove their claims for self-dealing and conspiracy. Nancy claimed that the Trust did not prohibit Horace from allowing someone to live with him. Nancy argued that appellants failed to prove that her living on the home property caused any detriment to the Trust. The circuit court granted Nancy's motion.
The circuit court entered detailed findings of fact and conclusions of law on December 10, 2018, in which it summarized the procedural history of the case, reaffirmed prior findings, and made repeated findings that appellants had breached their fiduciary duties in the administration of the Trust by engaging in intentional and willful self-dealing. The court found that "justice and equity require that Shelley and Annette, each in their individual capacity, shall be jointly and severally liable to Horace for his attorney's fees and costs" on the basis of its determination that appellants acted intentionally and with malice in their administration of the Trust.
The circuit court awarded Horace $48,554.51 in attorney's fees and costs and awarded Nancy $29,737.43 in attorney's fees and costs. On May 23, 2022, the circuit court entered its final judgment and order incorporating its findings of fact and conclusions of law and the orders awarding attorney's fees to Horace and Nancy. This appeal followed.
Appellants initially appealed the circuit court's findings of fact and conclusions of law and the orders awarding attorney's fees to Horace and Nancy. This court dismissed the appeal without prejudice for lack of a final order. Cooper v. Bryant, 2022 Ark.App. 90.
II. Points on Appeal
A. The Circuit Court Clearly Erred in Failing to Grant Appellants' Declaratory-Judgment Petition
Appellants argue on appeal that the circuit court was clearly erroneous in failing to grant their declaratory-judgment petition seeking a declaration from the court that Horace violated the no-contest and special co-trustee clauses of the Trust when he filed his petition to reform the Trust and requesting that he be disinherited. Appellants contend that "had the court ruled properly and declared the disinheritance of Horace, the case would have immediately been concluded[,] . . . the trial would never have occurred],] . . . [and] [a]ll remaining issues on appeal would therefore be moot."
Appellants' point on appeal incorrectly frames the procedural history of the case. The circuit court never ruled on the merits of appellants' petition for declaratory judgment. Rather, the circuit court dismissed appellants' petition for failing to state facts upon which relief can be granted pursuant to Arkansas Rule of Civil Procedure 12(b)(6). The proper issue on appeal is whether the circuit court abused its discretion in granting Horace's Rule 12(b)(6) motion to dismiss appellants' petition for declaratory judgment. See Worden v. Kirchner, 2013 Ark. 509, at 6, 431 S.W.3d 243, 247. Appellants have failed to present any argument on this issue. Instead, they argue the circuit court clearly erred in not granting their petition on the merits.
It is not the duty of this court to research or develop arguments for an appellant on appeal. Smith v. Heather Manor Care Ctr., Inc., 2012 Ark.App. 584, at 7, 424 S.W.3d 368, 375. Failure to develop an argument precludes review of the issue on appeal. Id., 424 S.W.3d at 375. Therefore, we do not address appellants' first point on appeal.
Appellants did not refile their petition for declaratory judgment, but they later filed counterclaims against Horace reasserting their allegation that he violated the no-contest and special co-trustee clauses of the Trust and should be disinherited. These counterclaims were ruled on by the circuit court in its partial summary-judgment order, which appellants have appealed. See Part II (D), infra.
B & C. The Circuit Court Clearly Erred in Failing to Grant Appellants' Motion to Dismiss Horace's Petition to Reform the Trust in Light of his Violation of the No-Contest and Special Co-Trustee Clauses
On January 9, 2017, Horace filed a second amended petition to reform the Trust, seeking to have it comport with Dolores's intent that he stay on the home property as long as he is not remarried. Appellants moved to dismiss his second amended petition, pursuant to Arkansas Rule of Civil Procedure 12(b)(1), (2) &(6), arguing that because Horace failed to comply with the no-contest and special co-trustee clauses of the Trust (1) the circuit court had no subject-matter or personal jurisdiction, and (2) in light of his disinheritance for failing to comply with these clauses, Horace failed to state a claim upon which relief could be granted. On August 24, 2017, the circuit court denied appellants' motion to dismiss.
On appeal, appellants again make the argument that because Horace violated the nocontest and special co-trustee provisions, the circuit court clearly erred in failing to grant their motion to dismiss. However, the circuit court did not reach the merits of appellants' no-contest- and special-co-trustee-clause arguments at this juncture. Rather, it denied appellants' Rule 12(b)(1), (2) &(6) motion to dismiss because Horace's second amended petition stated sufficient facts to support the circuit court's subject-matter and personal jurisdiction and stated sufficient facts upon which relief could be granted. Appellants fail to establish or even argue why the court's denial of their Rule 12(b)(1), (2) &(6) motion to dismiss is warranted or reviewable. As stated above, it is not the duty of this court to research or develop arguments for an appellant on appeal. Smith, 2012 Ark.App. 584, at 7, 424 S.W.3d at 375. Failure to develop an argument precludes review of the issue on appeal. Id., 424 S.W.3d at 375. Therefore, we do not address appellants' second and third points on appeal.
See footnote 3, supra.
D. The Circuit Court Erred in Granting Partial Summary Judgment to Horace
Horace moved for partial summary judgment, arguing that he was entitled to judgment as a matter of law because (1) a mistake of expression or, alternatively, a latent ambiguity existed in the fifth amendment that required reformation to reflect Dolores's intent; (2) he did not violate the no-contest clause; and (3) appellants waived the appointment of a special co-trustee. The circuit court granted summary judgment in favor of Horace on each of these grounds.
Once the moving party has established a prima facie entitlement to summary judgment, the opposing party must meet proof with proof and demonstrate the existence of a material issue of fact. City of Farmington v. Smith, 366 Ark. 473, 476-77, 237 S.W.3d 1, 4 (2006). On appellate review, we determine if summary judgment was appropriate by deciding whether the evidentiary items presented by the moving party in support of the motion leave a material fact unanswered. Id. at 477, 237 S.W.3d at 4.
1. No-contest clause
Appellants' counterclaims against Horace alleged that he violated the no-contest clause of the Trust, which states that a beneficiary is disinherited if he "[i]n any other manner contests my Trust, or any amendment thereto executed by me, or in any other manner, attacks or seeks to impair or invalidate any of my Trust's provisions." Appellants argue on appeal that Horace contested the Trust by seeking to reform it to obtain a life estate rather than occupancy, and in doing so, he was seeking to impair or invalidate the Trust.
When the terms of a will or trust are unambiguous, it is the circuit court's duty to construe the written instrument according to the plain meaning of the language employed. Patton v. Fulmer, 2016 Ark.App. 260, at 14, 492 S.W.3d 512, 520. The determination of whether there is an ambiguity is a matter of law. Id., 492 S.W.3d at 520.
Our supreme court has recognized the validity of no-contest clauses since at least 1937. Jacks v. Brossett, 2024 Ark.App. 6, at 15, 682 S.W.3d 362, 370 (citing Seymour v. Biehslich, 371 Ark. 359, 266 S.W.3d 722 (2007); Jackson v. Braden, 290 Ark. 117, 717 S.W.2d 206 (1986); Lytle v. Zebold, 235 Ark. 17, 357 S.W.2d 20 (1962); Ellsworth v. Ark. Nat'l Bank, 194 Ark. 1032, 109 S.W.2d 1258 (1937)). This court has held that no-contest clauses must be strictly construed because they result in a forfeiture. Jacks, 2024 Ark.App. 6, at 15-16, 682 S.W.3d at 370. In Seymour, our supreme court cited with approval the Oklahoma Supreme Court's definition of "contest" as it pertains to a no-contest clause as "any legal proceeding designed to result in the thwarting of the testator's wishes as expressed in the will." 371 Ark. at 364, 266 S.W.3d at 726 (citing In re Est. of Westfahl, 674 P.2d 21, 24 (Okla. 1984)).
While appellants contend that Horace's second amended petition "contested" the Trust, the undisputed facts do not support this contention. Horace did not challenge any aspect of the validity of the Trust. Rather, Horace sought to reform it because it contained a mistake and did not comport with Dolores's intent, which-all parties agree-was that Horace live on the home property after she passed as long as he did not remarry. Appellants did not present any evidence to dispute these facts.
We liken this case to Jackson, 290 Ark. at 120, 717 S.W.2d at 208, in which the executor argued on cross-appeal that the beneficiaries, by filing a petition in probate court challenging the executor's actions, triggered a no-contest clause in the will. Our supreme court rejected the argument, holding that the beneficiaries "acknowledged the validity of the will and, rather than attacking it, were questioning the actions of the executor for not complying with the probate code." Id., 717 S.W.2d at 208. Similarly, Horace was not contesting the Trust; rather, he was seeking judicial intervention to reform the Trust to comport with Dolores's undisputed intent. Accordingly, we hold that the circuit court did not err in finding as a matter of law that Horace did not violate the Trust's no-contest clause.
In holding that the beneficiaries in Jackson were not attempting "to defeat the will," the supreme court also noted that, pursuant to Arkansas Statutes Annotated section 62-2114 (Repl. 1971), the time to file a will contest had lapsed long before the suits in that case were filed. Id. at 120, 717 S.W.2d at 208. The same is true in the case at bar since the time in which to contest the trust lapsed on July 14, 2016. Ark. Code Ann. § 28-73-604 (Repl. 2005).
Horace's second amended petition to reform the Trust was brought pursuant to Arkansas Code Annotated section 28-73-415 (Repl. 2005), which provides:
A court may reform the terms of a trust, even if unambiguous, to conform the terms to the settlor's intention if it is proved by clear and convincing evidence that both the settlor's intent and the terms of the trust were affected by a mistake of fact or law, whether in expression or inducement.
2. Special co-trustee clause
Appellants' counterclaims against Horace also alleged that he violated the special cotrustee clause of the Trust, which provides: "No one may file or instigate a claim in a court of law without first submitting the claim to the special co-trustee for resolution together with detailed supporting information and a detailed supporting memorandum of law." Appellants contend that Horace violated this section of the Trust because the facts are undisputed that he did not present his claim to a special co-trustee prior to filing his petition to reform the Trust. The circuit court found that appellants were estopped from asserting the special co-trustee clause against Horace because they failed to timely appoint a special cotrustee, making it impossible for Horace to comply with the provision.
Horace admits that he did not submit his claim to a special co-trustee but argues that he could not do so because no special co-trustee had been appointed. Within the special cotrustee clause there is a provision that states: "In the event a special co-trustee is needed to act . . . a majority of the successor trustees . . . shall have the right to designate by written instrument a special co-trustee." It is undisputed that appellants are the majority of the successor trustees. As such, pursuant to the clear and unambiguous language of the Trust, they-not Horace-had the authority to appoint a special co-trustee.
Moreover, the minutes of the trustees' meeting (attached to Horace's motion for partial summary judgment) demonstrate that appellants were aware of Horace's claim to the home property before he filed his petition to reform the Trust. Appellants' own affidavits (attached to their response to Horace's motion) establish that they knew of Horace's claim to the home property before he filed his petition to reform: "[Horace] has resided in the house uninterrupted prior to and ever since the death of my mother. The Trust allows him to occupy the house for his lifetime with a couple of conditions." The minutes also demonstrate that appellants were aware of Sexton's position that Dolores intended Horace to live on the home property as long as he did not remarry and that Sexton had called appellants' attorney twice to ask if appellants would include a provision in the deed that they were seeking to have all three trustees sign that protected Horace's interest. Despite this knowledge, it is undisputed that appellants did not appoint a special co-trustee. Because appellants did not appoint a special co-trustee, Horace was not able to submit his claim to a special co-trustee; therefore, he was not able to comply with the special co-trustee clause of the Trust. Accordingly, we affirm the circuit court's finding that Horace did not violate the special co-trustee clause.
3. Reformation of the trust
There are conflicting provisions in the fifth amendment of the Trust concerning the disposition of the home property. One provision states:
Upon my death, my Spouse shall be allowed to stay on the home property and live in the residence free of rent, as long as he has not re-married. If my Spouse elects to remain in the residence, he shall be responsible for maintenance, repairs, insurance, taxes and all other normal household expenses.
Another section of the fifth amendment states: "Upon my death, my Trustee shall distribute 20 Acres, more or less, to my three daughters . . . free of trust, said real property situated in Benton County, Arkansas." The "home property" referred to in the former provision is located on the twenty acres referred to in the latter provision; therefore, both provisions refer to the same property and have conflicting dispositions of the property.
When Horace learned that appellants, relying on the latter provision, were attempting to deed the home property out of the Trust and to the three sisters, he contacted Sexton, who drafted the Trust. Sexton's affidavit, which was attached to Horace's partial summaryjudgment motion, stated that Dolores intended that Horace be allowed to live in the house on the home property until his death or remarriage. Sexton further stated in her affidavit that when drafting the Trust, she believed the house and the twenty acres were on separate tracts of land; therefore, she stated that the Trust contained a mistake and should be reformed. On this evidence, the circuit court found as a matter of law that the Trust was affected by a mistake of expression and that it contained a latent ambiguity and ordered the Trust to be reformed to conform to Dolores's intent that Horace be allowed to occupy the home property after her death. Appellants argue on appeal that these findings were erroneous.
The Arkansas trust code provides:
A court may reform the terms of a trust, even if unambiguous, to conform the terms to the settlor's intention if it is proved by clear and convincing evidence that both the settlor's intent and the terms of the trust were affected by a mistake of fact or law, whether in expression or inducement.Ark. Code Ann. § 28-73-415 (Repl. 2005). This court's primary objective when construing the language in a will or trust is to ascertain and effectuate the intent of the testator or settlor as long as that intent is not contrary to the law. Covenant Presbytery v. First Baptist Church, 2016 Ark. 138, at 4, 489 S.W.3d 153, 156. The mistake of a draftsman, whether he is one of the parties or merely a scrivener, is adequate grounds for relief provided only that the writing fails to reflect the parties' true understanding. Genz v. Cooksey, 2021 Ark.App. 175, at 10.
In this case, Horace presented facts that Dolores intended that he live on the home property for the remainder of his life until he remarried. He presented facts that the drafter of the Trust believed that the home and the twenty acres were two separate parcels of land and that she made a mistake in drafting the Trust. Appellants, in their response, failed to meet proof with proof on this issue. They do not contest Horace's allegations that Dolores intended him to live on the home property for his lifetime. In fact, in their affidavits opposing Horace's motion for partial summary judgment, appellants agree that the Trust allowed Horace to live on the home property for his lifetime. Appellants do not contest Horace's allegation that Sexton made a mistake in drafting the Trust. Rather, appellants once again argue that the circuit court was without jurisdiction to hear and decide the case because Horace violated the no-contest and special co-trustee clauses of the Trust. Because appellants failed to meet with proof with proof, the evidence is undisputed that Dolores intended that Horace stay on the home property and live in the residence as long as he did not remarry and that Sexton made a mistake in drafting the Trust. Therefore, we affirm the circuit court's grant of summary judgment to reform the Trust.
In light of this holding, we need not reach appellants' challenge to the circuit court's alternative finding that there was a latent ambiguity in the Trust.
E. The Circuit Court Erred in Granting a Directed Verdict to Nancy on Appellants' Claims of Self-Dealing and Conspiracy
Appellants filed a cross-claim against Nancy for self-dealing because she had moved onto the home property with Horace without notice to or permission from appellants. They claimed that Nancy should have been paying rent to the Trust while living on the property; the Trust did not permit Horace to allow others to live on the property; and Nancy conspired with Horace to prevent the distribution of the property to the trustees and to secure a life estate rather than lifetime occupancy.
Appellants argue for the first time on appeal that Nancy should have been disinherited for violation of the no-contest clause of the Trust because her action in seeking a life estate for Horace was an attempt to change the terms of the Trust. Arkansas appellate courts do not consider arguments, even constitutional ones, that are raised for the first time on appeal. Torres v. Jones, 2014 Ark.App. 634, at 3, 448 S.W.3d 719, 722.
At the conclusion of appellants' case, Nancy moved for directed verdict, which was granted by the circuit court. The court found that appellants failed to prove their claims for conspiracy or self-dealing, that the Trust did not prohibit Horace from allowing someone to live with him, that there was no detriment to the Trust from her living on the home property, and that Nancy needed permission only from Horace, not the trustees.
In a civil bench trial, a motion for directed verdict is treated as a motion to dismiss. Smith v. Orsbun, 2024 Ark.App. 330, at 9, 692 S.W.3d 1, 10. In determining whether such a motion should have been granted, we review the evidence in the light most favorable to the nonmoving party, giving the evidence its highest probative value, taking into account all reasonable inferences deducible from it. Id., 692 S.W.3d at 10. The motion should be granted only if there is no substantial evidence to support a verdict in the nonmoving party's favor. Id., 692 S.W.3d at 10. When the evidence is such that fair-minded persons might reach different conclusions, then a factual question is presented, which requires reversal. Id., 692 S.W.3d at 10.
Self-dealing by a trustee or any fiduciary is always suspect, and it is a universal rule of equity that a trustee shall not deal with trust property to his own advantage without the knowledge or consent of the cestui que trust. Hetrick v. Est. of Sams, 2023 Ark.App. 338, at 8, 670 S.W.3d 430, 435. Self-dealing is a breach of fiduciary duty, even when it is done innocently and without intent. Id., 670 S.W.3d at 435. Further, a fiduciary may be held liable for conduct that does not meet the requisite standards of fair dealing, good faith, honesty, and loyalty. Id., 670 S.W.3d at 435.
The evidence presented at trial viewed in the light most favorable to appellants does not support their claims of self-dealing or conspiracy against Nancy. The parties all agreed that the Trust was silent on whether Horace was allowed to permit anyone to live on the home property with him. It was undisputed that Horace asked Nancy to move onto the home property with him because he was in his eighties and did not feel comfortable living alone. Evidence was presented that Nancy and her husband took Horace to some of his medical appointments and to the hospital. Horace and Nancy testified about the multiple improvements she made to the home property, which she paid for from her personal funds. The two experts who testified about the value of the home property stated that the improvements Nancy made, at a minimum, would make the property easier to rent or sell and likely increased the value of the property. Appellants presented no evidence to the contrary. Therefore, we affirm the circuit court's grant of directed verdict to Nancy on appellants' cross-claim against her for self-dealing.
F. The Circuit Erred in Awarding Attorney's Fees to Horace and Nancy Against Appellants Individually
At the conclusion of trial, the circuit court, in its findings of fact and conclusions of law, found that appellants acted in their own self-interest and breached their fiduciary duties as trustees in failing to distribute the net income of the Trust to Horace, conspiring to distribute assets out of the Trust, and acting intentionally and with malice in their administration of the Trust. In light of these findings, the circuit court found that justice and equity required that appellants-in their individual capacities-pay Horace's and Nancy's attorney's fees.
On appeal, appellants contend that the circuit court erred in awarding attorney's fees against them individually. They argue that "there is no substantial evidence" that "they acted intentionally and with malice in [the] administration of the Trust assets."
Appellants also argue on appeal that the Trust expressly gives the trustees the power to commence or defend litigation with respect to the Trust "at the expense of [the] Trust"; therefore, any award of attorney's fees against them should be paid by the Trust. However, our review of the record reveals that appellants did not raise this argument below. Because this argument is raised for the first time on appeal, we do not consider it. Torres, supra.
We review the circuit court's decision to award attorney's fees and the amount of the award for an abuse of discretion. In re Hamilton Living Tr., 2015 Ark. 367, at 8, 471 S.W.3d 203, 209. Abuse of discretion is a high threshold that does not simply require error in the circuit court's decision but requires that the court act improvidently, thoughtlessly, or without due consideration. Id., 471 S.W.3d at 209.
The circuit court awarded attorney's fees pursuant to Arkansas Code Annotated section 28-73-1004 (Repl. 2005), which provides: "In a judicial proceeding involving the administration of a trust, a court, as justice and equity may require, may award costs and expenses, including reasonable attorney's fees, to any party, to be paid by another party or from the trust that is the subject of the controversy." In Taylor v. Woods, 102 Ark.App. 92, 282 S.W.3d 285 (2008), this court held that section 28-73-1004 gave the circuit court the discretion to award attorney's fees to a beneficiary of a trust to be paid individually by the co-trustees. This court held that the beneficiary's petition seeking a construction of a will necessarily included the construction of a trust and that such an action involved the administration of a trust within the meaning of section 28-73-1004. Taylor, 102 Ark.App. at 107, 282 S.W.3d at 295.
In the instant case, Horace's petitions to reform the Trust and appellants' petition for declaratory judgment were actions that involved the administration of the Trust. And while the statute does not require findings that appellants acted intentionally, willfully, and with malice in their administration of the Trust, the statute does provide that the circuit court may award fees "as justice and equity may require." Under the circumstances of this case, the circuit court did not abuse its discretion in finding that appellants' conduct in their administration of the Trust supported an award of attorney's fees in favor of Horace and Nancy and against appellants individually. Accordingly, we affirm.
Affirmed.
MURPHY and BROWN, JJ., agree.