Hamel v. Hamel

299 P.3d 278, 296 Kan. 1060
CourtSupreme Court of Kansas
DecidedApril 5, 2013
DocketNo. 102,744
StatusPublished
Cited by19 cases

This text of 299 P.3d 278 (Hamel v. Hamel) is published on Counsel Stack Legal Research, covering Supreme Court of Kansas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Hamel v. Hamel, 299 P.3d 278, 296 Kan. 1060 (kan 2013).

Opinions

The opinion of the court was delivered by

Moritz, J.:

This appeal arises from a dispute over the administration of a trust between a beneficiary of the trust, Lawrence Hamel (Lawrence), and tire trustees of that trust, Dennis Hamel (Dennis) and Leona Newell (collectively Trustees).

Lawrence sought termination of his deceased father s trust, the Arthur L. Hamel Living Trust, dated February 7, 2003, and the First Amendment to the Arthur L. Hamel Living Trust, dated February 17, 2003, (collectively Trust) and immediate distribution of Trust assets based on the Trustees’ alleged failure to properly administer tire Trust. Lawrence later moved to set aside a contract for deed executed between Dennis and his wife, as buyers, and the Trustees, as sellers, for the sale of farmland owned by the Trust. Lawrence also sought to remove the Trustees, alleging they engaged in self-dealing and breached their fiduciary duties.

[1062]*1062Lawrence appeals from the district court’s conclusions that (1) Arthur did not intend the Trust to terminate immediately upon his death; (2) the Trust permitted the Trustees to finance the sale of the farmland to Dennis under the terms set forth in tire contract for deed; (3) Lawrence violated the Trust’s no-contest clause by challenging, without probable cause, the Trustees’ sale of the farmland to Dennis; (4) Lawrence’s violation of the no-contest clause required his disinheritance; and (5) Lawrence was not entitled to attorney fees and costs under K.S.A. 58a-1004.

The Trustees cross-appeal from the district court’s determination of the effective date of Lawrence’s disinheritance and from the court’s conclusion that they acted in bad faith by failing to provide Lawrence with an adequate accounting before being ordered to do so by the court.

We hold the district court reasonably interpreted ambiguous Trust provisions as not requiring the Trust’s immediate termination upon Arthur’s death. However, we conclude the Trustees lacked authority to sell the farm to Dennis under a contract for deed that exceeded the 3-year period expressly provided by the Trust. But for reasons discussed herein, we decline to set aside the sale. Instead, because the Trustees’ execution of the contract for deed violated the terms of the Trust, we hold that Lawrence had probable cause to challenge the Trustees’ sale of the farm to Dennis under the terms set forth in that contract. Thus, we reverse both the district court’s ruling regarding the Trustees’ authority to finance the sale of the farm as well as its enforcement of the no-contest clause against Lawrence. We remand to the district court for further proceedings necessary, if any, to effectuate our rulings and for consideration of Lawrence’s claim for attorney fees and costs.

Additionally, while the Trustees cross-appealed the district court’s determination as to the date of Lawrence’s disinheritance, our reversal of the district court’s enforcement of the no-contest clause renders that issue moot. Finally, in light of Lawrence’s abandonment of any issue regarding the district court’s denial of his motion to remove the Trustees, the Trustees’ challenge to the dis[1063]*1063trict court’s conclusion that the Trustees breached their duty to provide an accounting also is moot.

Factual and Procedural Background

In 2003, Arthur established a revocable living trust naming himself and his son Dennis as Trustees. Arthur named as beneficiaries all of his surviving children (Dennis, Lawrence, Leona Newell, Elaine Befort, and Linda Leiker) and the children of Arthur’s deceased son (Lisa Riebel and John Hamel). Arthur included a no-contest clause in the Trust itemizing several actions that, if taken by a beneficiary, could result in that beneficiary’s disinheritance.

After preparation of the Trust documents, Arthur, Elaine, Lawrence, Dennis, Leona, and Linda met with an attorney to discuss the terms of the Trust. Arthur asked each of the siblings if they had any interest in buying the family farm. After Dennis expressed an interest, the family decided Arthur would give Dennis a first option to buy the farm. The family also discussed naming an additional person to serve as a trustee after Arthur’s death.

A few days after the meeting, Arthur amended the Trust to name Dennis and Leona as Trustees upon Arthur’s death. Additionally, Arthur amended Article Eight, Section One of the Trust, to include an option for Dennis to purchase the farm:

“It is my intention that my son, DENNIS HAMEL, have the first option to purchase any or all of the farmland (including cultivated and pasture) owned by my trust and/or by me individually. Upon my death, my Trustees shall have the farmland appraised. Based upon that appraisal, DENNIS HAMEL has the option to purchase any or all of the farmland for three years immediately following my death at the appraised price. During such time period, the trust shall continue to hold the farmland not yet purchased by DENNIS HAMEL. All net income from the farmland shall be distributed annually to the beneficiaries in accordance with the above listed beneficiary’s fractional share of the trust. If DENNIS HAMEL has not purchased tire farmland within the allotted time period, then it shall be divided in accordance with the above beneficiary’s fractional shares.”

Arthur died on June 14, 2004. Thereafter, Elaine, Lawrence, Dennis, and Leona met on several occasions to discuss funeral arrangements, the sale of Arthur’s personal property, and administration of the Trust. Lawrence obtained a copy of the Trust in July 2004. In August 2004, Elaine, Lawrence, Dennis, and Leona [1064]*1064met to discuss the third-party appraisal of the farmland and Dennis’ intent to purchase the farm on a 6-year contract at 5 percent interest. At the meeting, Lawrence did not object to the method or terms of Dennis’ purchase, but Lawrence later told his children he did not like the concept of Dennis buying the farm on contract.

In October 2004, Dennis executed a contract for deed between himself and his wife, as buyers, and the Trustees, as sellers, to purchase the farmland for $244,000 to be paid over 6 years with 5 percent interest and a down payment of $10,000. Over the next several months, the beneficiaries, including Lawrence, received distributions based in part on Trust income from Dennis’ purchase of the farm.

In May 2005, Lawrence hired attorney Joseph Jeter to assist in acquiring information from the Trustees “regarding certain financial matters.” Jeter advised Lawrence that under the Trust’s provisions, Lawrence could request copies of die third-party appraisals of farmland and farm equipment purchased by Dennis, an inventory of Trust assets, and an accounting, including all receipts and disbursements from the Trust. Jeter explained that Lawrence’s request would not violate the Trust’s no-contest clause because the Uniform Trust Code of Kansas entitled Lawrence to this information.

Between May 2005 and March 2006, Jeter corresponded with the Trustees’ attorneys, requesting specific information about Trust activity, including bank statements, canceled checks, and copies of deeds related to Trust assets. In this correspondence, Jeter made at least three requests for an accounting or a trust report pursuant to K.S.A. 2012 Supp. 58a-813.

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Cite This Page — Counsel Stack

Bluebook (online)
299 P.3d 278, 296 Kan. 1060, Counsel Stack Legal Research, https://law.counselstack.com/opinion/hamel-v-hamel-kan-2013.