Dahlke v. Jubie

426 P.3d 138, 292 Or. App. 804
CourtCourt of Appeals of Oregon
DecidedJuly 18, 2018
DocketA160400
StatusPublished
Cited by1 cases

This text of 426 P.3d 138 (Dahlke v. Jubie) is published on Counsel Stack Legal Research, covering Court of Appeals of Oregon primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Dahlke v. Jubie, 426 P.3d 138, 292 Or. App. 804 (Or. Ct. App. 2018).

Opinion

ORTEGA, P.J.

*805Defendant appeals a judgment that directed her, as trustee of the Sara L. Dahlke Living Trust (the living trust), to execute a deed transferring real property known as the Barge Inn to the Dahlke Marital Trust (the marital trust), and imposed a constructive trust for income derived from the Barge Inn after May 2010. On appeal, defendant assigns error to the trial court's grant of summary judgment to plaintiffs, arguing that the trial court improperly did so on a basis that was not advanced by plaintiffs, and alternatively, that genuine issues of material fact existed that precluded summary judgment. Because we agree that the trial court granted summary judgment on a basis that was not raised by the parties, we reverse and remand for further proceedings.

The following background facts are undisputed. Kent and Sara Dahlke were married and living in Wyoming when Kent died testate in 2003. At that time, Sara and Kent had a joint checking account (the joint account) containing over $1,400,000. Sara, as the personal representative of Kent's estate, administered the estate in a Wyoming court with the help of Wyoming counsel. As part of the court proceedings, she listed the joint account as an asset of Kent's estate. In addition, she withdrew approximately $590,000 from the joint account to satisfy cash bequests listed in Kent's will, including $100,000 each to defendant (Sara's daughter), and plaintiffs, Jay and Kurt Dahlke (Kent's sons). Without the money from the joint account, Kent's estate would have had insufficient funds to satisfy the cash bequests made in his will. Kent's will also provided that, if Sara survived him, any residue of his estate would be paid into the marital trust for Sara's benefit. Kent designated Sara as the trustee of the marital trust. In August 2006, the Wyoming court entered a final decree of distribution for Kent's Wyoming estate.

In 2008, Sara retained counsel to administer an ancillary probate in Lincoln County Circuit Court to deal with Kent's assets in Oregon, including the Barge Inn. During that process, Sara's Oregon attorney advised her that the joint account may have been mistakenly included as *806an asset of Kent's Wyoming estate because, generally, a joint account becomes the property of the surviving party upon the death of the decedent joint owner-in other words, by its terms, the *140joint account became Sara's property when Kent died. The attorney suggested to Sara that the $590,000 from the joint account that she used to satisfy the cash bequests in Kent's will could be considered a personal loan to Kent's estate. He further advised that she could be repaid for that loan by conveying the Barge Inn from the marital trust into a revocable living trust. To accomplish that plan, another attorney created a revocable living trust for Sara.

Meanwhile, in the ancillary probate, the circuit court ordered Sara, as the personal representative of Kent's estate, to distribute the Barge Inn to the marital trust. She did so by deed. Then, shortly before her death in May 2010, Sara, as trustee of the marital trust, conveyed the Barge Inn into her living trust.

In June 2011, defendant, who was the trustee of Sara's living trust, petitioned the court to become the successor personal representative of Kent's estate. She then sought to set aside the decree of distribution in Wyoming. At the same time, plaintiffs filed this action in Oregon against defendant in her individual capacity and as trustee of Sara's living trust, seeking to undo the transfer of the Barge Inn. Plaintiffs sought declaratory and equitable relief, asserting that they, as heirs to the marital trust, were entitled to ownership and possession of the Barge Inn. They also alleged a breach of trust claim, asserting that Sara had violated her fiduciary duty and duty of loyalty when she transferred the Barge Inn out of the marital trust without the authority to do so. Defendant's answer asserted that Sara had properly transferred the Barge Inn to her living trust to repay her for the personal funds that she had loaned to Kent's estate. She also asserted that plaintiffs would be unjustly enriched if they received the Barge Inn as well as the $100,000 cash bequests they had received from Kent's estate.

Plaintiffs' action was abated pending conclusion of the Wyoming proceedings. Ultimately, the Wyoming court rejected defendant's attempt to set aside the decree of distribution, but, in doing so, expressly declined to decide *807ownership of the Barge Inn, concluding that issue should be left to the Oregon courts.1

When the litigation in Oregon resumed, plaintiffs moved for summary judgment, arguing that there was no genuine issue of material fact that Sara, as trustee of the marital trust, lacked authority under the terms of the marital trust to transfer the Barge Inn to her living trust. Plaintiffs based their motion on two provisions in the trust. The first provided that the trustee could not invade the principal of the trust unless it was necessary for Sara's health, education, or maintenance and support. The second provided that, if the trustee was distributing principal from the trust to Sara, the trustee had to consider the best interests of the estate or its beneficiaries before doing so. Plaintiffs argued that it was undisputed that (1) the Lincoln County Circuit Court had ordered Sara to distribute the Barge Inn to the marital trust, (2) plaintiffs are heirs to the marital trust, and (3) Sara transferred the Barge Inn from the marital trust to her living trust even though there was no evidence that it was necessary for her maintenance and support and without considering the best interests of the estate or its beneficiaries. For the same reason, plaintiffs claimed that they were entitled to summary judgment on their breach of trust claim, and that, as a result of that breach, they were entitled to the equitable remedy of a constructive trust. In short, plaintiffs' summary judgment motion was premised on the concept that the trustee was authorized to invade the principal of the trust only in limited circumstances, none of which was present when Sara conveyed the Barge Inn out of the trust.

Defendant responded by asserting that genuine issues of material fact existed that controlled whether plaintiffs were "equitably entitled to the Barge Inn." Supported by declarations, defendant claimed that provisions in Kent's will allowed Sara, as the administrator of Kent's estate, to loan funds to the estate and later disperse assets from the estate to herself in repayment of that loan. Defendant *808asserted that there was *141evidence in the record that is what Sara had done, and that she had done so in accordance with the advice of her CPA and attorneys. In short, defendant argued that, viewing the disputed facts in the light most favorable to her, a court sitting in equity could determine that the living trust was equitably entitled to the Barge Inn. As for plaintiffs' breach of trust claim, defendant argued that there were issues of fact as to whether she, as opposed to Sara, owed any fiduciary duty to plaintiffs given that Sara had transferred the Barge Inn prior to her death.

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Cite This Page — Counsel Stack

Bluebook (online)
426 P.3d 138, 292 Or. App. 804, Counsel Stack Legal Research, https://law.counselstack.com/opinion/dahlke-v-jubie-orctapp-2018.