In Re Estate of Frank

189 P.3d 834, 146 Wash. App. 309
CourtCourt of Appeals of Washington
DecidedAugust 5, 2008
Docket36206-6-II, 36213-9-II, 36603-7-II
StatusPublished
Cited by5 cases

This text of 189 P.3d 834 (In Re Estate of Frank) is published on Counsel Stack Legal Research, covering Court of Appeals of Washington primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In Re Estate of Frank, 189 P.3d 834, 146 Wash. App. 309 (Wash. Ct. App. 2008).

Opinion

189 P.3d 834 (2008)

In the Matter of the Estate of Kenneth FRANK, Deceased.
In the Matter of the Estate of Catherine H. Frank, Deceased.
David K. Frank and Patricia L. Frank, individually and as a martial community, and David K. Frank, as Personal Representative for the Estate of Kenneth and Catherine Frank, Appellants,
v.
Laurie McClanahan, individually and as part of her marital community; John A. Clees, individually and as part of his marital community; Mary G. Gentry, individually and as part of her marital community; and the Frank Family Foundation, a Washington nonprofit corporation, Respondents.

Nos. 36206-6-II, 36213-9-II, 36603-7-II.

Court of Appeals of Washington, Division 2.

August 5, 2008.

*835 Robert N. Windes, William Arthur Keller, Moran Windes & Wong PLLC, Seattle, WA, for Appellants/Cross-Respondents.

Terrence J. Cullen, Forsberg & Umlauf PS, Mary C. Eklund, Eklund Rockey Stratton PS, Seattle, WA, for Defendants.

Ladd B. Leavens, Zachary Tomlinson Davis Wright Tremaine LLP, Seattle, WA, for Respondents/Cross-Appellants.

BRIDGEWATER, J.

¶ 1 David Frank appeals from the trial court's order declaring that Article VII, section 2. of Kenneth and Catherine Franks'[1] wills, bequesting real property known as Cranberry Lake, to the Frank Family Foundation (Foundation), did not adeem. The court's order declared that even if the estates acquired an interest in Cranberry Lake, the *836 personal representative would have to distribute the property to the Foundation under Article VII, section 2 of the wills. Based on that order, the trial court granted the Foundation's motion for summary judgment, reasoning that because the Franks' bequest under Article VII, section 2 was valid, David had no remedy available against the Foundation in his professional negligence claims against it. David also appeals this summary judgment order in his negligence action. He maintains that the trial court erred because the Article VII, section 2 bequest adeemed. We hold that the trial court properly found that Article VII, section 2 did not adeem. In addition, we hold that the trial court properly granted the Foundation's motion for summary judgment because David has no remedy available against the Foundation in his negligence action.[2] Accordingly, we affirm.

FACTS

¶ 2 Kenneth and Catherine Frank established the Foundation on December 30, 1993, as a Washington nonprofit corporation, organized under chapter 24.03 RCW. Initially, Kenneth and Catherine sat on the Foundation's board of directors. The Foundation qualified under Internal Revenue Code (IRC) section 501(c)(3) and thus was exempt from federal income tax under IRC section 501(a). There is some evidence that Kenneth and Catherine established the Foundation for the tax benefits. Nonetheless, the articles of incorporation indicate that Kenneth and Catherine established the Foundation "exclusively for charitable, religious, educational, and scientific purposes." CP (No. 36206-6-II) at 517. They meant to "[p]reserve the Foundation property in its natural state for the use of youth groups for organized recreation and educational purposes." CP (No. 36206-6-II) at 517.

¶ 3 At the time they established the Foundation, Kenneth and Catherine Frank, together with their son David, owned a full section (640 acres) of Mason County land, commonly known as Cranberry Lake.[3] Kenneth and Catherine owned 560 acres and David, their only child, owned 80 acres. Immediately after creating the Foundation on December 30, 1993, Kenneth and Catherine conveyed four percent of their interest in Cranberry Lake to the Foundation. A year later, on December 28, 1994, they deeded all of their interest in Cranberry Lake, "together with all after acquired [sic] title of the grantor(s) therein" to the Foundation. CP (No. 36206-6-II) at 498. Then, in January 1995, David conveyed his interest in Cranberry Lake to Kenneth and Catherine by statutory warranty deed, which they properly recorded on January 24, 1995. Despite the after-acquired-property clause in the 1994 deed, Kenneth and Catherine subsequently executed another deed to the Foundation, conveying the land they acquired from David on December 23, 1997.

¶ 4 Meanwhile, on August 30, 1996, Kenneth and Catherine executed substantially identical wills.[4] Article VIII of each will acknowledged their creation of the Foundation. In addition, Article VII, section 2 provided:

All of my interest in Section 28, Township 21 North, Range 3 West, commonly known as Cranberry Lake, I give to my wife, provided she survives me by a period of thirty (30) days. In the event that she fails to survive me, or survives me and disclaims, my interest in this property shall be distributed to the Frank Family Foundation referenced in Article VIII below.

CP (No. 36206-6-II) at 240.

¶ 5 Kenneth and Catherine properly executed a first codicil dated October 2, 2000, a second codicil dated July 8, 2002, and a third codicil dated August 20, 2003. The codicils made substantial changes to the wills, including provisions affecting distribution of other *837 items of real property; but none of the codicils affected distribution of Cranberry Lake. Kenneth and Catherine named David as their personal representative, should they not survive each other by 30 days. They also named David the residual beneficiary.

¶ 6 At some point, the Internal Revenue Service and the Foundation's attorneys began corresponding about the Foundation's tax classification. It is unclear how or why this correspondence began. But the correspondence clarified certain requirements under the IRC that the Foundation had to comply with to qualify under its intended tax-exempt classification. One such requirement involved personal use of Cranberry Lake. To qualify as a private foundation under the IRC, the Foundation had to restrict personal use of the property.

¶ 7 In light of this information from the IRS, the Foundation board began to think about how to deal with management of the cabin and property after Kenneth's and Catherine's eventual deaths. Kenneth and Catherine were pondering the same question. In 2003, Kenneth sent a letter to the board, inquiring about the legal use of the cabin after his eventual death. The board responded that the Frank family would likely be able to use the property if there was some reciprocal benefit to the Foundation. It stated that the family could continue to use the property, but they would have to deal with the board in terms of access and such.

¶ 8 Kenneth and Catherine, who had already sought independent counsel to investigate the Foundation's tax status and ramifications, became even more concerned. In November 2003, their counsel sent a letter to the Foundation's board, setting forth their concerns about the Foundation from a tax perspective. Kenneth and Catherine's counsel also requested various documents from the Foundation during this time.

¶ 9 On December 14, 2003, Kenneth and Catherine sent a letter addressed to the Foundation directors, requesting their resignation.[5] As a result, the board held a meeting on January 23, 2004. And although the board notified Kenneth and Catherine of the meeting, they chose not to attend. Rather, their counsel and David attended in their place.

¶ 10 David presented the board with two powers of attorney, one that Kenneth executed and one that Catherine executed. The board then provided David an opportunity to speak at the meeting.

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Bluebook (online)
189 P.3d 834, 146 Wash. App. 309, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-estate-of-frank-washctapp-2008.