Gibbons v. Anderson

2019 Ark. App. 193, 575 S.W.3d 144
CourtCourt of Appeals of Arkansas
DecidedApril 3, 2019
DocketNo. CV-18-367
StatusPublished
Cited by3 cases

This text of 2019 Ark. App. 193 (Gibbons v. Anderson) is published on Counsel Stack Legal Research, covering Court of Appeals of Arkansas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Gibbons v. Anderson, 2019 Ark. App. 193, 575 S.W.3d 144 (Ark. Ct. App. 2019).

Opinion

KENNETH S. HIXSON, Judge

Appellants Woodrow Anderson III and Kandice A. Gibbons (co-trustees) appeal *145from the denial of a motion to compel arbitration of a complaint filed by appellees Seth Anderson and Trevor Anderson (beneficiaries). Appellants argue on appeal that the trial court was required to compel arbitration because there was a valid agreement containing an arbitration provision and the scope of the arbitration provision encompassed the dispute herein. Appellants further argue that the trial court erred in deciding that issues of fraud were for the court and not for arbitration. We affirm.

The Facts

The underlying litigation is a contest among family members over a trust. The players: Woodrow W. Anderson, Jr., grandfather (hereinafter referred to sometimes as "Woodrow, Jr."); Woodrow Anderson III (hereinafter referred to sometimes as "Woodrow III") and Kandice A. Gibbons, children; and Seth Anderson and Trevor Anderson, grandchildren.

On April 1, 2014, Woodrow, Jr. executed a trust agreement titled "The WWA Living Trust" (hereinafter referred to as "the Trust"). Woodrow, Jr. appointed himself as the original trustee, and appointed appellants Woodrow III (his son) and Kandice A. Gibbons (his daughter) as successor co-trustees. Relevant to this appeal, the Trust provided that all grandchildren of the grantor1 were to have their college educations paid by the Trust up to $ 100,000 total and no more than $ 25,000 per year. The Trust also provided that each grandchild was to receive a car, not to exceed $ 30,000, upon successful completion of one semester or two terms. Additionally, each grandchild was to receive $ 500 per month for miscellaneous expenses. Appellees, Seth Anderson and Trevor Anderson, are two of Woodrow, Jr.'s grandchildren.

The appellees alleged in their complaint and argued below that in the weeks preceding November 7, 2014, Woodrow, Jr. was in poor health and was often under the influence of heavy narcotics for medication of his terminal illness. On November 7, 2014, Woodrow, Jr. and the appellants executed a document titled "First Amendment to the WWA Living Trust" (Amendment). Woodrow, Jr. executed the Amendment as "Trustor" and "First Trustee" and Woodrow III and Gibbons executed the Amendment as "Successor Co-Trustees." The Amendment made several significant revisions to the Trust. Woodrow, Jr. died seventeen days later on November 24, 2014, and pursuant to the terms of the Trust the appellants became the Co-Trustees. The Co-Trustees managed the Trust apparently unremarkably leading up to January 4, 2017.

The Circuit Court

On January 4, 2017, appellees Seth Anderson and Trevor Anderson, as grandchildren and beneficiaries of the Trust, filed a "Complaint for Breach of Trust" against the appellants as Co-Trustees. The appellees alleged that the Amendment was obtained by the undue influence of the appellants while Woodrow, Jr. was under the influence of heavy narcotics for medication of his terminal illness. The appellees asserted that the revisions in the Amendment were not in the best interests of the beneficiaries. In particular, the Amendment revised the Trust's provision for all grandchildren to receive education benefits as generally described above by giving the Co-trustees sole discretion as to whether to pay such benefits. According to the complaint, appellant Co-Trustee Kandice A. Gibbons had stated that she controls the money and that it will go only to people who respect her. The complaint further *146alleged that there were other changes in the Amendment that benefited the Co-Trustees personally and were discriminatory to the beneficiaries. The complaint also alleged that the appellants had breached the Trust by failing to provide the beneficiaries a vehicle and $ 500 per month in miscellaneous expenses as set forth by the Trust and not modified by the Amendment. The appellees claimed that the Co-Trustees had acted in bad faith and had breached their fiduciary duty to the appellees. The appellees sought to set aside the Amendment and to reform the Trust as set forth in the original Trust agreement; to remove the Co-Trustees with new trustees appointed; for the Co-Trustees to receive no compensation under the Trust; an accounting of the Trust; to restore any funds improperly distributed under the purported Amendment; a constructive trust for any property improperly removed from the Trust; a judgment against the appellants and the Trust for the value of the vehicles that should have been purchased; payment of $ 500 per month that should have been paid pursuant to the Trust; and the amounts the appellees had expended on educational expenses.

On February 6, 2017, the appellants as Co-Trustees filed a motion to dismiss or in the alternative to compel arbitration. The Trust and the Amendment each contained an arbitration clause; however, the arbitration clauses were not identical. In their motion, the appellants argued that the arbitration provisions in both the Trust and the Amendment required the matter to go to arbitration rather than being heard in a court. The Trust contains the following arbitration provision:

Trustees consent that any dispute relating in any way to this Agreement will be resolved by binding arbitration as described in this paragraph, rather than in court.

The Amendment contains the following arbitration provision:

Any claim or dispute, which is not resolved by agreement of the parties, concerning questions of fact or law arising out of or relating to this Trust, or its breach, or the actions or status of any Trustee or any Trust beneficiary, or claims of any child or grandchild of the Trustor, or any claims of Trust beneficiary or the Trust beneficiary's trust, or any dispute relating in any way to this Trust Agreement or its functioning and performance, will be resolved by binding arbitration as described in this paragraph, rather than in court. This arbitration procedure shall apply to all Successor Trustees; Trust beneficiaries; Trust beneficiaries' trusts; children of Trustor; grandchildren of Trustor; and any claimants or contestants to this Trust.

On February 17, 2017, the appellees filed a response to the appellants' motion to dismiss or in the alternative to compel arbitration. In their response, the appellees argued that the arbitration clause in the Trust does not purport to bind the beneficiaries, and that such provisions were not executed with the consent or knowledge of the appellees and were not enforceable as to them. The appellees further argued that the grantor was not competent at the time he executed the Amendment, and thus the Amendment and the arbitration clause contained therein were not valid.

On January 31, 2018, the trial court held a pretrial hearing and addressed the appellants' motion to dismiss and motion to compel arbitration. The following colloquy ensued:

APPELLANTS' COUNSEL : Your Honor, we filed a Motion to Dismiss and an Order to Compel to compel arbitration. In the amendment that was created, *147there is language that forces any dispute to go to arbitration.
TRIAL COURT : Was that in the original Trust or in the amended?
APPELLANTS' COUNSEL : It was in the amended Trust and we-

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Bluebook (online)
2019 Ark. App. 193, 575 S.W.3d 144, Counsel Stack Legal Research, https://law.counselstack.com/opinion/gibbons-v-anderson-arkctapp-2019.