Opinion
24A-CT-468
07-02-2024
David W. Reid, Appellant-Plaintiff v. Todd M. Reid and Heather L. Reid, Appellees-Defendants
ATTORNEYS FOR APPELLANT Douglas E. Johnston Tyler J. Rotstein Tourkow, Crell, Rosenblatt & Johnston, LLP Fort Wayne, Indiana ATTORNEYS FOR APPELLEES Gregg S. Gordon Craig C. Siebe Nickloy, Albright, Gordon & Siebe LLC Noblesville, Indiana
Pursuant to Ind. Appellate Rule 65(D), this Memorandum Decision is not binding precedent for any court and may be cited only for persuasive value or to establish res judicata, collateral estoppel, or law of the case.
Appeal from the Whitley Circuit Court The Honorable Matthew J. Rentschler, Judge Trial Court Cause No. 92C01-2309-CT-877
ATTORNEYS FOR APPELLANT
Douglas E. Johnston Tyler J. Rotstein Tourkow, Crell, Rosenblatt & Johnston, LLP Fort Wayne, Indiana
ATTORNEYS FOR APPELLEES
Gregg S. Gordon Craig C. Siebe Nickloy, Albright, Gordon & Siebe LLC Noblesville, Indiana
MEMORANDUM DECISION
MATHIAS, JUDGE
[¶1] David Reid ("David") appeals the Whitley Circuit Court's dismissal of his complaint against Todd Reid ("Todd") and Heather Reid ("Heather"). David raises a single issue for our review, namely, whether the trial court erred when it concluded that he lacked standing to assert the claims set out in his complaint.
Notably, David does not make separate arguments to show standing vis-à-vis each individual count in his complaint. Our analysis is limited by David's arguments on appeal.
[¶2] We affirm. Facts and Procedural History
[¶3] David and Todd are brothers; their mother was Rebecca Curless; and Todd is married to Heather. At some point before she died, Curless appointed Heather to be her attorney in fact. In September 2021, the trial court appointed Todd to serve as guardian over Curless's person and her estate. Later, Heather, purportedly using her power of attorney, transferred title in Curless's real property located at 208 N. Line Street in Columbia City to herself and Todd. Heather also transferred title in Curless's vehicle, boat, and other personal property to herself and Todd.
For some reason, David was not given statutory notice of Todd's guardianship petition.
[¶4] On October 4, Curless died testate. David was the primary beneficiary of the will. Curless's bequests included $1 million to David and $250,000 to Heather. If there was any money left after those distributions, Todd was to receive up to $100,000. Curless's will also purported to leave to David the Line Street property, which had been transferred to Heather and Todd before Curless's death. Finally, David was named the residual heir in Curless's will.
Significantly, Curless's will left the Line Street property to David "subject to Brad Minear's option to purchase." Appellant's App. Vol. 2, p. 54.
[¶5] David served as a co-personal representative of Curless's estate along with Stanley Sickafoose. On April 28, 2022, David and Sickafoose filed their verified closing statement, whereby they swore that they had collected all of the assets of the estate and had paid all claims and expenses of administration. The probate court approved the closing statement on July 29.
[¶6] More than a year later, on September 21, 2023, David filed a nine-count complaint against Todd and Heather. Among David's claims were allegations that Heather had violated her fiduciary duty to Curless and that Todd and Heather had committed conversion when they transferred title to the Line Street property to themselves before Curless's death.
[¶7] On November 13, Todd and Heather filed a motion to dismiss David's complaint under Trial Rule 12(B)(6). Todd and Heather argued that David lacked standing to assert his claims. In support, they cited this Court's opinion in Inlow v. Henderson, Daily, Withrow & DeVoe, 787 N.E.2d 385 (Ind.Ct.App. 2003), trans. Denied.
In Inlow, during the administration of their deceased father's estate, four of the Inlow children filed a complaint and amended complaint against a law firm and attorneys seeking damages for "harms allegedly caused to the Inlow Estate to the detriment of their intestate shares of the property." 787 N.E.2d at 389. The trial court dismissed their complaint under Trial Rule 12(B)(6). On appeal, we held that the children's claims stemmed from "their status as heirs" and that the "harm is to the estate property and the Inlow Children are harmed only to the extent the estate is harmed." Id. at 396. Thus, we affirmed the trial court's dismissal of their complaint.
[¶8] In opposition to Todd and Heather's motion to dismiss, David argued that Inlow was distinguishable because, unlike the Inlow Children, David had standing to sue them under Indiana Code section 29-1-13-10 ("Section 10"). That statute provides in relevant part that either the personal representative "or any other person interested in the estate" may bring an action "alleging that any person has, or is suspected to have, concealed, embezzled, converted or disposed, of any real or personal property belonging to the estate of a decedent[.]" Id. In support of his argument, David cited this Court's opinion in In re Guardianship of French, 927 N.E.2d 950 (Ind.Ct.App. 2010), trans. denied.
[¶9] The trial court granted Todd and Heather's motion to dismiss David's complaint without a hearing. David filed a motion to correct error, which the trial court denied. This appeal ensued.
Discussion and Decision
[¶10] David contends that the trial court erred when it dismissed his complaint under Trial Rule 12(B)(6). As our Supreme Court has stated:
A motion to dismiss for failure to state a claim tests the legal sufficiency of the claim, not the facts supporting it. When ruling on a motion to dismiss, the court must view the pleadings in the light most favorable to the nonmoving party, with every reasonable inference construed in the non-movant's favor. We review a trial court's grant or denial of a Trial Rule 12(B)(6) motion de novo. We will not affirm such a dismissal unless it is apparent that the facts alleged in the challenged pleading are incapable of supporting relief under any set of circumstances.Thornton v. State, 43 N.E.3d 585, 587 (Ind. 2015) (internal quotation marks and citations omitted). We may affirm the trial court's grant of a motion to dismiss if it is sustainable upon any theory. Sims v. Beamer, 757 N.E.2d 1021, 1024 (Ind.Ct.App. 2001).
[¶11] Standing is a legal question we review de novo. City of Gary v. Nicholson, 190 N.E.3d 349, 351 (Ind. 2022). Indiana law is clear that standing requires an injury. Id. David argues that he has standing under Section 10. Specifically, he asserts that, "as the sole residual heir, [he] is allowed to bring these claims in his individual capacity in a separate action, independent of the Estate matter. Accordingly, [David] has the right to pursue [his claims against Todd and Heather] as pled." Appellant's Br. at 12.
[¶12] While we agree with David that Inlow is inapposite here, we disagree that he has standing under Section 10. As he did in the trial court, in support of his argument on appeal David relies on French, 927 N.E.2d at 950. In that case, Pheffer alleged that her brother, Ed III, had transferred shares in their father's business, Monarch Beverage Co., Inc., to himself when their father, Ed. Jr., was mentally infirm. A short time later, the probate court established a guardianship over Ed Jr. After Ed Jr. died, and while the guardianship proceeding was ongoing and an estate proceeding had been stayed, Pheffer asserted claims
pursuant to Section 10 request[ing] that the court "set aside the purported gift to [Ed III] of Monarch stock or, alternatively, equalize the respective ownership interests of [Pheffer] and [Ed III] in Monarch . . . to effectuate the intent and language of the Last Will and Testament of [Ed Jr.]." Thus, Pheffer [requested] that the Disputed Shares be included in Ed Jr.'s estate and equally divided, rather than simply transferring them over to her.Id. at 960. The trial court granted Ed III's motion to dismiss Pheffer's claims asserted against him under Trial Rule 12(B)(6).
[¶13] On appeal, we rejected Ed III's argument that Pheffer lacked standing to bring the claims, reversed the trial court, and remanded for further proceedings. As we stated, Section 10 "specifically authorizes" a claim by an heir alleging conversion of real or personal property "where there is a dispute as to ownership between the estate and another person or persons." 927 N.E.2d at 957 (emphasis added). In French, Pheffer's complaint sought to include the disputed shares "in Ed Jr.'s estate and equally divided, rather than simply transferring them over to her." Id. at 960. And Pheffer's claim was raised within the still-open guardianship proceeding. Here, in contrast, David's complaint seeks to have the real and personal property transferred to him directly, without first going through the estate. And there is no corresponding open guardianship.
[¶14] Moreover, the estate proceeding in French was still open when Pheffer filed her complaint. Indeed, Curless's estate had been closed for more than one year when David filed his complaint. David cites no authority for the proposition that he can rely on Section 10 after an estate has been closed.
[¶15] Still, David argues that the claims set out in his complaint belonged to Curless before her death and that, now that the estate is closed, the claims belong to him under Indiana Code section 29-1-7-23. In support, David cites this Court's opinion in First Farmers Bank & Trust Company v. Whorley, 891 N.E.2d 604 (Ind.Ct.App. 2008), trans. denied. In Whorley, the Bank served as guardian over Whorley's father's estate before his death. In its role as guardian, the Bank orchestrated a rental agreement pertaining to farmland owned by Whorley's father. After her father's death, the Bank filed a tax return and elected a "Special Use Valuation" when it was not warranted. After the estate was closed, the IRS told Whorley that, because of the Bank's error, it was imposing on the estate an additional tax liability of more than $500,000.
Todd and Heather move to strike this portion of David's reply brief. But, both to the trial court and in his initial brief on appeal, David made a cursory argument under Indiana Code section 29-1-7-23. While David does cite to Whorley for the first time in his reply brief, we think that David barely preserved the argument on appeal, and we deny the motion to strike by separate order.
[¶16] Whorley sued the Bank, "asserting that [it] had breached its duties as guardian of the estate by failing to evaluate the effect of converting the main corpus of the estate, 2,700 acres of farmland, from a modified share crop arrangement to a cash rent farm resulting in a significant tax liability to the estate." Id. at 607. The Bank moved for summary judgment and alleged that Whorley lacked standing to bring her claims. The trial court disagreed and denied that motion. On appeal, we rejected the Bank's argument that our holding in Inlow controlled. Specifically, we stated that,
[w]hereas the action in the Inlow case occurred during the administration of the probate estate, here, the designated evidence clearly indicates that the probate estate had closed at the time Whorley's cause of action accrued. As such, the mechanisms under the probate code allowing an heir to the estate to pursue collection of an indebtedness in lieu of the personal representative were no longer available to Whorley.Id. at 611 (emphasis added). In other words, because the Bank's costly error was not apparent until after the estate was closed and Whorley got the tax bill from the IRS, the estate was unable to pursue the claims and Whorley was entitled to do so.
[¶17] Here, in contrast, David's complaint asserts that the alleged conversion and breach of fiduciary duty occurred during Curless's lifetime. And it is significant that David served as co-personal representative of Curless's estate and thus knew that Curless had purported to leave the Line Street property to him in her will. In other words, unlike in Whorley, there were no surprises here, and the alleged cause of action occurred before the estate was even opened. Thus, our holding in Whorley is inapposite here.
Notably, David does not allege fraud or fraudulent concealment, which might have delayed the accrual of the cause of action. See, e.g., Estates of Kalwitz v. Kalwitz, 717 N.E.2d 904, 914 (Ind.Ct.App. 1999) (holding discovery rule applies in assessing the accrual of a cause of action for fraud).
[¶18] Finally, in the alternative David argued to the trial court that it could reopen Curless's estate. And he reiterates that argument on appeal. But David has not yet filed a petition under Indiana Code section 29-1-17-14 to reopen the estate, which is a condition precedent to any such decision. Thus, at least at the moment, there is no basis to reopen the estate.
[¶19] In sum, David has not shown that he has standing to bring the claims in his complaint. We cannot say that the trial court erred when it dismissed his complaint under Trial Rule 12(B)(6).
David also argues that equity dictates that his claims against Heather for self-dealing should survive the motion to dismiss. But Todd and Heather point out that David did not raise that argument to the trial court, and it is not preserved for our review. See GKC Ind. Theatres, Inc. v. Elk Retail Invs., LLC., 764 N.E.2d 647, 651 (Ind.Ct.App. 2002). In any event, under Indiana Code section 30-5-6-4(f)(2), those claims are time-barred.
[¶20] Affirmed.
Brown, J., and Pyle, J., concur.