Opinion
No. 14 MA 90.
12-30-2015
In re HUNTINGTON National Bank, Trustee for the Esther Dickinson Revocable Trust, et al., Plaintiffs–Appellees, v. RIVERSOURCE Life Insurance Company, et al., Defendants–Appellant.
Attorney Thomas W. Connors, Canton, OH, for Plaintiff–Appellees. Attorney Glenn R. Osborne, Attorney Larry D. Wilkes, Canfield, OH, for Defendants–Appellant.
Attorney Thomas W. Connors, Canton, OH, for Plaintiff–Appellees.
Attorney Glenn R. Osborne, Attorney Larry D. Wilkes, Canfield, OH, for Defendants–Appellant.
GENE DONOFRIO, J., CHERYL L. WAITE, J., and MARY DeGENARO, J.
OPINION
DONOFRIO, P.J.
{¶ 1} Defendant-appellant, Donna Dyke, appeals from a Mahoning County Probate Court judgment finding that the transfer of an oil and gas interest to her was the product of undue influence and, therefore, was void.
{¶ 2} Donna Dyke was a first cousin once removed of Esther Dickinson. Dickinson was a long-time resident of Copeland Oaks Nursing Home. In 2007, Dickinson asked Dyke to be her attorney-in-fact. Dyke agreed and signed the attorney-in-fact paperwork on January 19, 2007. Dyke acted in this capacity for Dickinson up until the time of Dickinson's death on November 24, 2011. Dickinson was 102 years old when she died.
{¶ 3} Dickinson owned an interest in an oil and gas lease in Utah. On May 5, 2010, Dyke, acting as attorney-in-fact for Dickinson, executed a new oil and gas lease with Newfield Productions replacing Dickinson's old lease on the Utah property.
{¶ 4} On December 21, 2010, Dickinson signed a deed conveying her oil and gas interest to Dyke. Dickinson signed the deed in the presence of a notary public who worked at the nursing home. Dyke was also present at the signing.
{¶ 5} In 1995, Dickinson had set up a trust. Plaintiff-appellee, Huntington National Bank, is the trustee of Dickinson's trust. Huntington is also the executor of Dickinson's estate.
{¶ 6} In early 2007, Dickinson retained Attorney Thomas Moushey. Atty. Moushey had his first meeting with Dickinson on January 10, 2007. They had several more meetings during January and February 2007. On February 26, 2007, Dickinson amended her trust to include Dyke as a beneficiary to receive 15 percent of the trust's assets. Atty. Moushey was unaware of Dickinson's oil and gas interest and, consequently, did not place it in the trust.
{¶ 7} On August 20, 2012, Huntington, as trustee and as the executor of Dickinson's estate, filed a complaint against Dyke and Riversource Life Insurance Company. Counts 1 and 2 of the complaint sought a declaration as to the proper beneficiary of Dickinson's life insurance policy. Count 3 alleged the transfer of the oil and gas interest was the direct result of Dyke's undue influence over Dickinson who “was in a weakened mental and physical state.” It sought a declaration that the transfer was void. Huntington later amended its complaint to add Count 4, which alleged Dyke was in possession of certain jewelry and valuables belonging to Dickinson's estate.
{¶ 8} The matter proceeded to a trial before the magistrate. The magistrate determined that as to Counts 1 and 2, Huntington as the trustee was the sole beneficiary of the life insurance policy; as to Count 3, the quitclaim deed was a valid transfer of the oil and gas lease from Dickinson to Dyke; and as to Count 4, judgment was granted in favor of Dyke.
{¶ 9} As to Count 3, the magistrate found there was no evidence that Dickinson was suffering from a weakened mental and physical state as the complaint had alleged. He also found there was no indication from the notary public who notarized the quitclaim deed that Dickinson had any problem understanding the nature of the events nor was there any indication of undue influence, coercion, fraud, or mistake. And the magistrate found that Dyke's testimony rebutted the presumption of abuse of power by the fiduciary.
{¶ 10} Huntington filed objections to the magistrate's decision requesting that the court declare the quitclaim deed invalid.
{¶ 11} The trial court adopted the magistrate's decision on Counts 1, 2, and 4. It declared that Huntington was the sole beneficiary of the life insurance policy and that Dyke had not concealed any of Dickinson's personal property. But it rejected the magistrate's decision on Count 3. The court found the magistrate should not have admitted two depositions into evidence. It also found the magistrate should not have admitted Dyke's testimony that Dickinson wanted her to have the oil and gas interest because it was inadmissible hearsay. Therefore, the court entered judgment on Counts 1, 2, and 4 and ordered further proceedings on Count 3.
{¶ 12} The matter then proceeded to a trial before the court on Count 3. The court heard evidence from Atty. Moushey, Dyke, Dyke's son John Dyke, and the notary public who notarized the quitclaim deed, Monica Winans.
{¶ 13} The trial court made the following factual findings. Dickinson had a good relationship with Dyke during the period of time immediately prior to the execution of the power of attorney until the time of her death. Atty. Moushey met with Dickinson many times in 2007, to prepare the power of attorney, amend the trust, and transfer assets into the trust. Atty. Moushey did not learn of the oil and gas lease until November 8, 2010, when Dyke and her son mentioned it to him. Atty. Moushey asked Dyke to provide him with any documents relating to the oil and gas lease so that the trust would be the beneficiary of this asset. On December 21, 2010, Dickinson executed a quitclaim deed for her oil and gas lease transferring her interest to Dyke.
{¶ 14} The court went on to find there was no evidence that Dickinson knew that Dyke had executed the new oil and gas lease on her behalf, or that this new lease had generated three bonus checks, until December 21, 2010. At all relevant times, Dyke was in a fiduciary capacity with Dickinson and, therefore, owed Dickinson a duty to act in her best interest. There was no evidence that Dickinson knew the legal effect of the execution of the quitclaim deed. On at least two occasions, Atty. Moushey asked Dyke and her son to provide him with information regarding the oil and gas lease. Yet Atty. Moushey did not learn of the quitclaim deed until after Dickinson's death. The court further found that Dyke created a situation where she could acquire title to the oil and gas lease and defeat, in part, Dickinson's estate plan.
{¶ 15} The court found Dyke exerted undue influence over Dickinson. It based this conclusion on its findings that Dickinson was not aware of the transactions regarding the execution of the new oil and gas lease and was not aware of the bonus checks, and the fact that Dyke failed to comply with Atty. Moushey's requests for information regarding the oil and gas lease. It also relied on the fact that Dickinson was 101 years old at the time. Consequently, the court ordered that the quitclaim deed was void and that all royalties paid to Dyke were to be paid to Huntington as trustee for Dickinson's trust.
{¶ 16} Dyke filed a timely notice of appeal on July 11, 2014. She now raises two assignments of error.
{¶ 17} Dyke's first assignment of error states:
THE TRIAL COURT ERRED BY RULING THAT THE TESTIMONY OF DONNA DYKE CONCERNING COMMENTS OF DECEDENT'S INTEREST WAS INADMISSIBLE UNDER OHIO R. EVID. 804 SINCE THE TESTIMONY IS CLEARLY ADMISSIBLE WITHIN THE HEARSAY EXCEPTION OF OHIO R. EVID. 803(3).
{¶ 18} At trial, Dyke testified that Dickinson had wanted to keep the oil and gas interest in the family and that she wanted Dyke to have it. (Tr. 127–128, 143). The trial court allowed Dyke's testimony at the time. In its judgment entry, however, the court ruled that statements allegedly made by Dickinson that she wanted Dyke to have the oil and gas interest were hearsay and not admissible under Evid.R. 804(B)(5).
{¶ 19} Evid.R. 804(B)(5) provides a hearsay exception for a statement by a deceased or mentally incompetent person when all of the following apply:
(a) the estate or personal representative of the decedent's estate or the guardian or trustee of the incompetent person is a party;
(b) the statement was made before the death or the development of the incompetency;
(c) the statement is offered to rebut testimony by an adverse party on a matter within the knowledge of the decedent or incompetent person.
{¶ 20} The Evid.R. 804(B)(5) hearsay exception may not be used by the party opposing the decedent. Testa v. Roberts, 44 Ohio App.3d 161, 167, 542 N.E.2d 654 (6th Dist.1988). “Rather, it is a hearsay exception for the declarations of a decedent which rebut testimony of an adverse party and is available only to the party substituting for the decedent.” Id., citing Bilikam v. Bilikam, 2 Ohio App.3d 300, 441 N.E.2d 845 (10th Dist.1982). In this case, the estate is the party substituting for the decedent. Thus, Evid.R. 804(B)(5) was not available for Dyke's use.
{¶ 21} Dyke now argues that the trial court should not have analyzed Evid.R. 804(B)(5) because Evid.R. 803(3) was dispositive of the issue.
{¶ 22} Evid.R. 803(3) provides that a statement of a “then existing, mental, emotional, or physical condition” is not excluded by the hearsay rule. This includes statements “of the declarant's then existing state of mind, emotion, sensation, or physical condition (such as intent, plan, motive, design, mental feeling, pain, and bodily health),” but does not include statements “of memory or belief to prove the fact remembered or believed.” Evid.R. 803(3).
{¶ 23} Dyke argues that because statements regarding Dickinson's then existing mental condition were admissible under Evid.R. 803(3), the trial court erred in holding them inadmissible under Evid.R. 804(B)(5).
{¶ 24} The decision to admit or exclude evidence rests in the trial court's sound discretion and we will not reverse its decision absent an abuse of that discretion. Wightman v. Consolidated Rail Corp., 86 Ohio St.3d 431, 437, 715 N.E.2d 546 (1999). Abuse of discretion connotes more than an error of law or judgment; it implies that the court's attitude is unreasonable, arbitrary, or unconscionable. Blakemore v. Blakemore, 5 Ohio St.3d 217, 219, 450 N.E.2d 1140 (1983).
{¶ 25} A court need only consider Evid.R. 804(B)(5) if, after an analysis of Evid.R. 801 and 803, the objected-to statements appear to be inadmissible hearsay. Ament v. Reassure Am. Life Ins. Co., 180 Ohio App.3d 440, 2009-Ohio-36, 905 N.E.2d 1246, ¶ 30 (8th Dist.). If the objected-to statements are either not hearsay at all or are admissible hearsay under Evid.R. 803 (which specifically provides that the availability of the declarant is immaterial), then Evid.R. 804(B)(5) is not applicable. Id.
{¶ 26} Thus, the trial court should have first considered Evid.R. 803(3) before moving on to hold the statements inadmissible under Evid.R. 804(B)(5).
{¶ 27} Two statements are at issue here. First, the court rephrased a question asked by Dyke's counsel when questioning Dyke:
THE COURT: * * * if Esther [Dickinson] said something to you at that date in Copeland Oaks, on December 21st, 2010, where she deeded her—quitclaimed her interest to you individually of all her interests in this oil and gas royalties in Utah, what did she say? THE
WITNESS: She wanted to keep it in the family.
(Tr. 127–128).
{¶ 28} Second, Dyke's counsel questioned Dyke:
Q Did you ever get an impression that Esther wanted to keep her oil and gas interests to herself?
* * *
A She wanted to pass it on her—to family, yes. To—she wanted me to have another interest in it to go with what my mom has.
(Tr. 143).
{¶ 29} In order to use Evid.R. 803(3) to admit hearsay testimony, the statement must refer to a present condition, not a past condition, i.e. “I am afraid of X.” McGrew v. Popham, 5th Dist. No. 05 CA 129, 2007-Ohio-428, 2007 WL 293022, ¶ 28, citing State v. Apanovitch, 33 Ohio St.3d 19, 514 N.E.2d 394 (1987). Additionally, Evid.R. 803(3) does not permit testimony regarding the declarant's statements as to why he or she held a particular state of mind. State v. Stewart, 75 Ohio App.3d 141, 152, 598 N.E.2d 1275 (11th Dist.1991), citing Apanovitch, 33 Ohio St.3d at 21, 514 N.E.2d 394.
{¶ 30} The Fifth District examined the scope of Evid.R. 803(3) in McGrew, 2007-Ohio-428, 2007 WL 293022. It found that the decedent's statement regarding her intent that certain property be transferred to certain persons upon her death was admissible because it reflected the decedent's then existing state of mind. Id. at ¶ 30. The court noted that the statement referred to a present condition and explained the decedent's intent for the future. Id. But the court found the decedent's statement that her intent was to transfer the property in order to avoid it being used to pay for her medical expenses was inadmissible because it explained why the decedent held a particular state of mind. Id. at ¶ 31. The court noted that this type of evidence is specifically excluded by Evid.R. 803(3). Id.
{¶ 31} The Third District likewise addressed the issue in In re Estate of Beverly, 3d Dist. No. 13–12–28, 2013-Ohio-1498, 2013 WL 1561477. A party sought to introduce two statements by the decedent, (1) that he trusted Jackson to handle his affairs and (2) that he trusted Jackson because he did not trust Stauffer and thought that Sauber could not handle the task. Id. at ¶ 21. The court concluded that the first statement was admissible under Evid.R. 803(3) because it related directly to the decedent's state of mind at the time he made the statement. Id. at ¶ 22. But it found the second statement was inadmissible because it was the basis for the decedent's state of mind, which is not covered by Evid.R. 803(3). Id.
{¶ 32} The statements at issue in this case are similar to those in McGrew and Beverly.
{¶ 33} The first statement came in response to the question of what did Dickinson say when she deeded her oil and gas interest to Dyke. Dyke responded that Dickinson said she wanted to keep the interest in the family. This seems akin to the statement in McGrew that the decedent wanted her property to transfer to certain persons on her death and the statement in Beverly where the decedent stated that he trusted Jackson to handle his affairs. The statement in this case was a statement of Dickinson's state of mind at the time she made the statement, which was also at the time she signed the deed. Thus, the trial court should have admitted this statement under Evid.R. 803(3).
{¶ 34} The second statement was that Dickinson wanted to pass the oil and gas interest to her family, specifically to Dyke so that Dyke would have another interest to go with what Dyke's mother had. This statement was partially admissible. The first part of the statement, that Dickinson wanted to pass the oil and gas interest to her family and specifically to Dyke, was admissible because it was a statement of Dickinson's present state of mind and reflected her intent for the future. The second part of the statement, that Dickinson wanted Dyke to have another interest to go with what Dyke's mother had, was inadmissible because it was an explanation of why Dickinson held the state of mind.
{¶ 35} Given that the first statement and part of the second statement were admissible hearsay under Evid.R. 803(3), the trial court should have allowed them into evidence. The only statement the court properly excluded was the part of the second statement, “to go with what my mom has.”
{¶ 36} Accordingly, Dyke's first assignment of error has merit.
{¶ 37} Dyke's second assignment of error states:
THE TRIAL COURT ERRED AS A MATTER OF LAW BY MISINTERPRETING AND MISAPPLYING THE ELEMENTS OF UNDUE INFLUENCE, SINCE THE DECEDENT WAS ALERT, AWARE, COMPETENT AND NOT PRESSURED WHEN SHE SIGNED A QUITCLAIM DEED CONVEYING MINERAL INTERESTS.
{¶ 38} Here Dyke contends Huntington failed to produce any evidence to satisfy its burden to prove undue influence. Dyke asserts the trial court's reasons for finding undue influence were insufficient as a matter of law. Dyke points out that Huntington did not present any testimony from anyone who was with Dickinson at the time she executed the deed or who spoke to her around the time she executed the deed. Additionally, she points out that Huntington failed to produce any medical evidence tending to show that Dickinson was incompetent. On the other hand, Dyke points out that she presented her own testimony, along with the testimony of her son John Dyke and the notary public who notarized the deed, to show that Dickinson was of sound mind and knew what she was doing when she signed the deed.
{¶ 39} Equity will set aside a deed that was executed as a result of undue influence. Tracey v. Sacket, 1 Ohio St. 54 (1852). A party seeking rescission and cancellation of a deed because of undue influence or lack of capacity has the burden of proof by clear and convincing evidence. Willis v. Baker, 75 Ohio St. 291, 79 N.E. 466 (1906), paragraph one of the syllabus.
{¶ 40} In order to prove undue influence the plaintiff must prove four elements: (1) the individual in question was susceptible to undue influence; (2) another person had the opportunity to exert undue influence over the susceptible individual; (3) improper influence was exerted or attempted; and (4) the result shows the effect of such influence. West v. Henry, 173 Ohio St. 498, 501, 184 N.E.2d 200 (1962) ; Rutledge v. Wallace, 7th Dist. No. 02AP0770, 2002-Ohio-5372, 2002 WL 31243511, ¶ 24.
{¶ 41} “Where a fiduciary or confidential relationship exists between the donor and the donee, the transfer is regarded with suspicion that the donee may have brought undue influence to bear upon the donor.” Smith v. Shafer, 89 Ohio App.3d 181, 183, 623 N.E.2d 1261 (1993), citing Willis, 75 Ohio St. 291, 79 N.E. 466. Consequently, a presumption arises whereby the donee bears the burden of going forward with proof of the validity of the gift. Id. The party attacking the gift, however, ultimately retains the burden of proving undue influence by clear and convincing evidence. Id.
{¶ 42} Dyke met her burden of going forward with proof of the validity of the gift. Monica Winans, the notary public who notarized the oil and gas deed, testified that Dickinson knew what she was signing. (Tr. 148). She further testified it was her impression that Dickinson understood the document. (Tr. 149). And Winans stated that she asked Dickinson if she understood the document and Dickinson said “yes.” (Tr. 154–155). Thus, Dyke met her burden of providing proof of the validity of the gift. The ultimate burden of proof, however, was on Huntington to prove undue influence by clear and convincing evidence.
{¶ 43} The trial court found that all four elements necessary to prove undue influence were present in this case. It stated the elements were met as follows: (1) Dickinson was 101 years old; (2) the deed was presented to a susceptible person by her attorney-in-fact; (3) the execution of the deed; and (4) the resulting diminution of the trust assets of the susceptible person.
{¶ 44} The evidence, however, did not clearly and convincingly prove undue influence.
{¶ 45} Dyke signed a new oil and gas lease for Dickinson's interest. (Tr. 114). Dyke stated that she did so at Dickinson's request. (Tr. 114–115). Dyke received three checks as payments from the oil and gas lease payable to Dickinson in May, June, and October 2010. In November 2010, Atty. Moushey requested information from Dyke regarding Dickinson's oil and gas interest. (Tr. 42). When Atty. Moushey requested information from Dyke in November 2010, regarding Dickinson's oil and gas interest, it was so that he could include it in the trust. (Tr. 42). On December 21, 2010, Dickinson executed the quitclaim mineral deed to Dyke transferring her oil and gas interest to Dyke. At all times during the execution of the quitclaim deed and the receipt of the bonus checks, Dyke was in a fiduciary capacity with Dickinson. Atty. Moushey did not learn of the deed transferring the interest until after Dickinson's death. (Tr. 45).
{¶ 46} Atty. Moushey had multiple meetings and conversations with Dickinson and Dyke in 2007, regarding Dickinson's estate plans and other business matters. (Tr. 18–19, 28). Atty. Moushey testified it was Dickinson's plan to transfer all of her assets to her trust. (Tr. 31–32).
{¶ 47} As to the trust, Dickinson's original trust agreement was entered into in 1995. (Tr. 21). The trust included 13 beneficiaries. Dyke was not one of the beneficiaries. The trust was amended in 2005. The trust then included ten beneficiaries. Once again, Dyke was not a beneficiary. (Tr. 22). The trust was amended for the final time in 2007. (Tr. 24). This time the trust included 17 beneficiaries, including Dyke who was designated to receive 15 percent of the trust estate. (Tr. 26). When Dickinson amended the trust in 2007, she told Atty. Moushey that she wanted to include Dyke as a beneficiary. (Tr. 25).
{¶ 48} Although this evidence could demonstrate that Dyke had the opportunity to exert undue influence on Dickinson, there is no evidence that Dyke actually did exert undue influence. The magistrate's findings on this point are telling.
{¶ 49} The magistrate found that although the complaint alleged that Dickinson was in a weakened mental and physical state, there was no evidence to substantiate these allegations. The magistrate further relied on the notary public's testimony, noting there was no indication that there was any problem on Dickinson's behalf in understanding the nature of the event that occurred by signing the deed. The magistrate found, “there is no indication that there was any undue influence, coercion, fraud, mistake of fact, or any other cloud on Mrs. Dickinson's ability to knowingly, voluntarily and intelligently execute the Quit Claim Mineral Deed.” (Sept. 23, 2013 Magistrate's Decision).
{¶ 50} Moreover, Dyke presented evidence that Dickinson signed the oil and gas deed of her own free will and without any undue influence from Dyke.
{¶ 51} As discussed above, the notary public who notarized the deed testified that Dickinson knew what she was signing. (Tr. 149). The notary public stated she made sure Dickinson knew what it was that she was signing. (Tr. 148–149). The notary public also testified that before notarizing a document, she makes sure that the person who is signing is alert and oriented and that they understand what they are signing. (Tr. 147). She indicated that she has refused to notarize documents in the past based on her judgment on these matters. (Tr. 147).
{¶ 52} Additionally, Dyke's son, John Dyke, testified that before Dickinson signed the deed, it was read to her “word for word.” (Tr. 82). He further testified that Dickinson read sections of the deed to him and asked him questions about it. (Tr. 82).
{¶ 53} Moreover, we may consider the evidence of Dyke's testimony from the first assignment of error. Dyke testified that Dickinson wanted to Dyke to have the oil and gas interest. (Tr. 127–128–143).
{¶ 54} As set out above, Dyke met her burden of going forward with proof of the validity of the gift. Also, in order to prove undue influence Huntington had to prove: (1) Dickinson was susceptible to undue influence; (2) Dyke had the opportunity to exert undue influence over Dickinson; (3) Dyke exerted or attempted improper influence; and (4) the result shows the effect of such influence. West, 173 Ohio St. at 501, 184 N.E.2d 200 ; Rutledge, 2002-Ohio-5372, 2002 WL 31243511, ¶ 24. Huntington did not meet its burden as to the first, third, and fourth elements.
{¶ 55} As to the first element, the trial court found that Dickinson was susceptible to undue influence simply based on her advanced age. But the evidence demonstrated that when Dickinson signed the deed, she was alert and oriented, she knew what she was signing, and she read the deed and asked questions about it before signing it. Therefore, the first element was not met. As to the second element, Dyke, as Dickinson's attorney-in-fact, had the opportunity to exert undue influence. Therefore, the second element was met. As to the third element, the evidence was not clear and convincing that Dyke exerted or attempted to exert undue influence over Dickinson. There was no evidence that Dyke coerced, tricked, threatened, or even persuaded Dickinson to sign the oil and gas deed. On the contrary, the notary public testified that Dickinson knew what she was signing and Dyke testified that Dickinson wanted her to have the oil and gas interest. Thus, the third element was not met. Because the evidence did not clearly and convincingly demonstrate that Dyke exerted undue influence, the fourth element could not be met because it would have to show the effect of the undue influence.
{¶ 56} Given the above evidence, we cannot conclude that the trial court's judgment finding undue influence is supported by clear and convincing evidence. As the magistrate found, there was no actual evidence of coercion, fraud, mistake of fact, or undue influence. The mere fact that that Dickinson was of advanced age and chose to transfer her oil and gas interest to her attorney-in-fact does not prove a case of undue influence. And while the circumstances in this case may provide an opportunity to exert undue influence, the evidence does not clearly and convincingly prove that undue influence was exerted.
{¶ 57} Therefore, Dyke's second assignment of error has merit.
{¶ 58} For the reasons stated above, the trial court's judgment is hereby reversed.
WAITE, J., and DeGENARO, J., concur.