Opinion
Case No. 2017CA00152
08-06-2018
BEVERLY S. NICHOLS, ET AL. Plaintiffs-Appellees v. JEFFREY J. BIXLER, INDIVIDUALLY, AND AS TRUSTEE OF THE JO L. BIXLER TRUST Defendant-Appellant
APPEARANCES: For Plaintiffs-Appellees TIMOTHY J. MOORE Bixler Moore, LLC 318 E. Main Street Louisville, Ohio 44641 RYAN J. MELEWSKI Rafidi, Pallante & Melewski LLC 105 North Broad Street Canfield, Ohio 44406 For Defendant-Appellant JEFFREY JAKMIDES 325 East Main Street Alliance, Ohio 44601
JUDGES: Hon. W. Scott Gwin, P.J. Hon. William B. Hon. Craig R. Baldwin, J.
OPINION
CHARACTER OF PROCEEDING: Appeal from the Stark County Court of Common Pleas, Probate Division, Case No. 226829 JUDGMENT: Affirmed APPEARANCES: For Plaintiffs-Appellees TIMOTHY J. MOORE
Bixler Moore, LLC
318 E. Main Street
Louisville, Ohio 44641 RYAN J. MELEWSKI
Rafidi, Pallante & Melewski LLC
105 North Broad Street
Canfield, Ohio 44406 For Defendant-Appellant JEFFREY JAKMIDES
325 East Main Street
Alliance, Ohio 44601 Hoffman, J.
{¶1} Defendant-appellant Jeffrey J. Bixler, Individually, and as Trustee of the Jo L. Bixler Trust ("the Trust"), appeals the July 18, 2017 Journal Entry entered by the Stark County Court of Common Pleas, Probate Division, which removed his as Successor Trustee of the Trust. Plaintiffs-appellees are Beverly S. Nichols, et al.
STATEMENT OF THE FACTS AND CASE
{¶2} Appellant and Appellee Beverly Nichols are the son and daughter of Jo L. Bixler ("Decedent"), respectively. Appellee Anthony Nichols is Appellee Beverly Nichols' son and Decedent's grandson. Decedent also had two other children: Timothy Bixler and Pamela S. Rose.
{¶3} On September 16, 2005, Decedent executed the Trust which was amended and restated several times throughout the years. Decedent died on January 30, 2014. Pursuant to the Trust, upon Decedent's death, Appellant became the trustee. The terms of the Trust required Appellant as trustee to add to the Trust all accumulated income and property received by Jo L. Bixler's Last Will & Testament as well as the proceeds from life insurance policies.
{¶4} The Trust provided for the division of the assets as follows:
| Appellant: | 52% |
| Timothy J. Bixler: | 7% |
| Appellee Beverly Nichols: | 13% |
| Pamela S. Rose (nee Bixler): | 10% |
| Appellee Anthony Nichols: | 18% |
{¶5} The Trust real property included seven parcels of real estate located north of Hartville, Ohio, totaling 290.71 acres of land located in Stark and Portage Counties. The land is held by Bixler & Sons LLC, which is owned by the Trust. The real property consists of the main farmhouse, where Decedent resided with Appellant and Timothy J. Bixler, and two other residences, a home to which Decedent granted a life estate to Pamela S. Rose, and a duplex. The duplex is rented for $1,500/month.
{¶6} During his life, Decedent farmed the land with Appellant and Appellee Anthony Nichols. Decedent held all of the farming equipment and livestock in an LLC known as the J. Bixler Farm, LLC. Decedent subsequently transferred his interest in J. Bixler Farm to Appellant.
{¶7} On August 10, 2016, Appellees filed a Complaint, seeking a declaratory judgment relative to the option to purchase language contained in the Trust; requesting an accounting of the Trust; seeking specific performance of the terms of the Trust including distribution of personal property; and seeking an injunction prohibiting Appellant from transferring Trust real property at an artificially low price. Appellees served upon Appellant Plaintiff's First Set of Interrogatories and Requests for Production of Documents on the same day.
{¶8} Appellees filed a motion to compel on March 23, 2017, which sought the production of the following:
a. Books, receipts, invoices and accounting for Bixler & Sons, LLC, Jo. L. Bixler Trust and/or Bixler Farm LLC;
b. All bank statements, agreements, copies of checks or any other documents purporting to sell, transfer or convey the shares of Bixler & Son LLC;
c. All bank statements or other documents sowing income from Bixler & Sons LLC and/or Jo. L. Bixler Trust. This includes all deposits (by cash, check or money order);
d. Any and all written leases involving Bixler & Son LLC properties;
e. The expenses of the Trust including invoices and receipts showing the source of the expense;
f. Documentation of profits and expenses of the Trust; and
g. All documentation, including, but not limited to bank statements, checks, and withdraws regarding Huntington Bank Account and KeyBank Account.
{¶9} Appellant filed a motion for partial summary judgment on March 27, 2017. Appellees filed a response on April 10, 2017, to which Appellant filed a reply on April 25, 2017. Via Judgment Entry filed May 22, 2017, the trial court denied Appellant's motion for partial summary judgment.
{¶10} Via Judgment Entry also filed May 22, 2017, the trial court granted Appellees' motion to compel, ordering Appellant to produce the requested records on or before May 30, 2017, the day before the scheduled trial. Appellant filed a Notice of Filing Trust Accounting as well as copies of a number of cancelled checks and other documents on May 23, 2017.
{¶11} The matter proceeded to trial on May 31, 2017. At trial, Appellant acknowledged he had been depositing the rental income from the duplex into the business bank account of J. Bixler Farm, his wholly owned company. Appellant conceded he had comingled funds. The testimony also revealed Appellant had used substantial Trust assets for his personal benefit. Appellant lived rent-free in the main farmhouse, beginning on January 30, 2014, the day of Decedent's death, and throughout the proceedings, despite the fact the residence is partially owned by his siblings and nephew. Appellant continued to farm the Trust property after Decedent's death. Although J. Bixler Farm pays $95/acre to farm other properties, Appellant collects only $60/acre from J. Bixler Farm for the benefit of the Trust.
{¶12} Section 6.2 of the Trust granted Appellant the first right and option to purchase any or all of the units of Bixler & Son owned by Decedent and held in the Trust. The valuation of said units was to be based upon the agricultural use value of said real estate. Appellant posited the agricultural use value was equivalent to a tax valuation method known as "Current Agricultural Use Value" or "CAUV". Using this method, the value of the Trust assets was only $600,000, which would allow Appellant to buy out the remaining beneficiaries at a highly discounted price. The terms "Current Agricultural Use Value" and "CAUV" do not appear in the language of the Trust. Decedent was aware of how a farm could be appraised for its CAUV. Appellees countered Decedent intended the property be valued at a price a willing farmer would pay a farmer willing to sell the collective properties as a farm. Their expert appraised the farm at $2,143,800.
{¶13} The testimony further revealed, despite the passage of several years, Appellant failed to distribute specific property in accordance with Decedent's wishes. Appellant asserted certain items which were to be distributed to the other beneficiaries were missing. Appellant admitted he did not lock the main farmhouse, did not make a police report, or otherwise attempt to recover the lost Trust property.
{¶14} After hearing all the evidence, the trial court ordered the parties to submit proposed findings of fact and conclusions of law. In their proposed findings of fact and conclusions of law, Appellees additionally asked the trial court to remove Appellant as trustee. Via Journal Entry filed July 18, 2017, the trial court found Appellant's performance in accounting for and securing Trust assets constituted a serious breach of trust and warranted his removal as trustee.
{¶15} It is from this journal entry Appellant appeals, raising the following assignment of error:
I. THE TRIAL COURT ERRED IN REMOVING THE APPELLANT JEFFREY BIXLER AS SUCCESSOR TRUSTEE OF THE JO L. BIXLER TRUST FOR MINOR FAULTS IN THE ADMINISTRATION OF THE ESTATE AND IN CONTRAVENTION OF THE CLEARLY EXPRESSED WISHES OF THE DECEASED.
I
{¶16} "The decision whether to remove a trustee lies within the sound discretion of the probate court, and an appellate court will not reverse that decision absent a showing of a clear abuse of that discretion." In re Trust Estate of CNZ Trust, 9th Dist. Lorain No. 06CA008940, 2007-Ohio-2265 at ¶ 16.
{¶17} R.C. 5807.06(B) grants the probate court authority to remove a trustee if the trustee has committed a serious breach of the trust, or if the court determines removal of the trustee best serves the interests of the beneficiaries because of the trustee's unfitness, unwillingness, or persistent failure to administer the trust effectively. "The removal of a trustee is generally considered a drastic action and the party seeking to remove a trustee must show a basis for removal by clear and convincing evidence." Tomazic v. Rapoport, 2012-Ohio-4402, 977 N.E.2d 1068, ¶ 33.
{¶18} R.C. 5807.06 is Ohio's version of Uniform Trust Code § 706. Although the entire uniform section was not adopted, the Ohio "serious breach of trust" reason for removal of a trustee is the same as the uniform code. The official comment to the 2006 version of the Uniform Code states:
[N]ot every breach of trust justifies removal of the trustee. The breach must be "serious." A serious breach of trust may consist of a single act that causes significant harm or involves flagrant misconduct. A serious breach of trust may also consist of a series of smaller breaches, none of which individually justify removal when considered alone, but which do so when considered together. A particularly appropriate circumstance justifying removal of the trustee is a serious breach of the trustee's duty to keep the beneficiaries reasonably informed of the administration of the trust or to comply with a beneficiary's request for information as required by Section 813. Failure to comply with this duty may make it impossible for the
beneficiaries to protect their interests. It may also mask more serious violations by the trustee.
{¶19} Although R.C. 5807.06 does not define the conduct which constitutes a "serious breach of trust", the Second District Court of Appeals for Montgomery County noted a serious breach can consist of a single act which causes significant harm or involves flagrant misconduct, or a serious breach can consist of a series of smaller acts which, while not individually justifying a trustee's removal when standing alone, when viewed collectively warrant removal. See, Kidd v. Alfano, 2nd Dist. Montgomery App. 26598, 2016-Ohio-7519, para. 37.
{¶20} R.C. 2109.24 allows for the removal of a fiduciary who fails to file an inventory or accounting of an estate more than 30 days after being notified by the court to do so. In addition, a trustee owes the beneficiaries certain statutory duties pursuant to R.C. 5808.13. Specifically, the "trustee shall keep the current beneficiaries of the trust reasonably informed about the administration of the trust and of the material facts necessary for them to protect their interests." R.C. 5808.13(A). Also included in the duties is the requirement an accounting be provided annually to the beneficiaries. R.C. 5808.13(C).
{¶21} The trial court found the accounting Appellant provided was "inadequate with regard to the assets, liabilities, income, and expenses of the Trust and the personal property that became part of the Trust assets upon [Decedent's] death." July 18, 2017 Journal Entry at 14. The trial court noted it was "impossible, from what little information [Appellant had] provided, to determine the true value of the Trust's personal property assets." Id. The trial court further found the inadequacy of Appellant's accounting was "compounded by the fact that [Appellees] requested a full accounting and supporting documentation in their Interrogatories and Requests for Production of Documents that were served on [Appellant] in August, 2016, and that [Appellant] still did not produce documents requested by [Appellees] even after this Court ordered him to do so by May 30, 2017." Id. The trial court concluded Appellant's accounting and failure to secure the Trust assets constituted a serious breach of trust and warranted removal.
{¶22} Based upon the foregoing, we find the trial court did not abuse its discretion in ordering Appellant's removal as trustee. The record is replete with evidence establishing Appellant did not fulfill his obligations as successor trustee.
{¶23} Appellant's sole assignment of error is overruled.
{¶24} The judgment of the Stark County Court of Common Pleas, Probate Division, is affirmed. By: Hoffman, J. Gwin, P.J. and Baldwin, J. concur