In Re Irrevocable Jack W. Kunkler Trust A

2011 UT 7, 246 P.3d 1184, 2011 WL 182848
CourtUtah Supreme Court
DecidedJanuary 21, 2011
Docket20090514
StatusPublished

This text of 2011 UT 7 (In Re Irrevocable Jack W. Kunkler Trust A) is published on Counsel Stack Legal Research, covering Utah Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In Re Irrevocable Jack W. Kunkler Trust A, 2011 UT 7, 246 P.3d 1184, 2011 WL 182848 (Utah 2011).

Opinion

246 P.3d 1184 (2011)
2011 UT 7

In the Matter of the IRREVOCABLE JACK W. KUNKLER TRUST A.
William Kunkler, Plaintiff and Appellant,
v.
Key Bank, Defendant and Appellee.

No. 20090514.

Supreme Court of Utah.

January 21, 2011.

Michael A. Jensen, Alexander Dushku, Justin W. Starr, Salt Lake City, for plaintiff.

Douglas K. Cummings, Thomas B. Price, Salt Lake City, for defendant.

DURHAM, Chief Justice:

INTRODUCTION

¶ 1 This appeal is from a district court order denying as untimely a demand for jury trial on the issue of trustee fees under Utah Rule of Civil Procedure 38. We conclude that the demand was timely, and therefore reverse and remand.

BACKGROUND

¶ 2 The Irrevocable Jack W. Kunkler Trust A (the Trust) was established on June 20, 1983. The Trust requires investment in "raw undeveloped ground," which "must be situated in Salt Lake County." In particular, the Trust calls for decennial land sales of "between 25% and 30% (in value) of the ground which [the Trust] owns."

¶ 3 The Trust provides for two trustee positions. The Class I Trustee is responsible for managing and investing Trust funds. The original Class I Trustee was Commercial Security Bank of Utah; KeyBank later assumed the role of Class I Trustee through acquisition. The Class II Trustee's responsibilities depend on who occupies the position. Under the terms of the Trust, the original named Class II Trustee, William B. Wray, Jr., had "complete discretion" over the selection of land for the decennial land sales. Upon Mr. Wray's departure from the position of Class II Trustee, however, the Class I Trustee would permanently inherit that responsibility.

*1185 ¶ 4 In accordance with the Trust, Mr. Wray—acting as Class II Trustee—began work in 2005 on a sale of two Trust properties together worth over $46 million. The Trust entered into a Purchase and Sale Agreement for the two land parcels on November 30, 2005, with Mr. Wray signing as Class II Trustee and KeyBank signing as Class I Trustee. Mr. Wray had notified the Trust of his intent to resign as Class II Trustee on October 28, 2005, but Mr. Wray's resignation did not become effective until the end of January 2006. After Mr. Wray's resignation, KeyBank assumed his land-sale responsibilities and the appellant William Kunkler was elected the new Class II Trustee.

¶ 5 Under the terms of the Purchase and Sale Agreement, the first land parcel was sold on July 14, 2006, and the second sale occurred on June 19, 2007. In conjunction with each of the two land sales, KeyBank conducted tax-free exchanges pursuant to section 1031 of the Internal Revenue Code, which permits the deferral of capital gains taxes. The original terms of the Trust contemplated such tax-free exchanges. KeyBank completed the final tax-free exchange on December 11, 2007.

¶ 6 The present litigation began on March 2, 2007, when KeyBank filed a petition to modify the Trust. KeyBank's petition primarily sought to expand the Trust's scope of permissible land purchases to include both developed land and land outside Salt Lake County. On May 9, 2007, Mr. Kunkler filed a Petition to Remove Key Bank as Trustee and Objections to Key Bank's Petition to Amend the Trust. The litigation slowly advanced on both issues—amending the Trust and compelling KeyBank's removal— throughout the remainder of 2007.

¶ 7 On February 13, 2008, KeyBank filed a Motion to Resign as Class I Trustee and to Appoint Successor Trustee. As part of this motion, KeyBank for the first time presented its fee request to the court.[1] The Trust provides that for sales of real property, the fees are as follows: "Improved, not to exceed 6%. Unimproved, not to exceed 10%. If a broker is employed—to a maximum of 3%. Minimum, $50.00." KeyBank requested the full 10 percent—amounting to over $4.7 million, "the maximum allowable by the Trust"—in its motion.[2]

¶ 8 Mr. Kunkler vigorously opposed KeyBank's fee request. On February 25, 2008, he filed a Memorandum in Opposition to KeyBank's motion. This memorandum outlined Mr. Kunkler's primary argument against KeyBank's fee request: Mr. Wray's prior successful efforts in negotiating the Purchase and Sale Agreement minimized or negated KeyBank's right to claim trustee fees for the land sales. Significantly, Mr. Kunkler's filing highlighted that the issue of the amount of trustee fees owed KeyBank was in dispute and that the language of the Trust provided for fees "up to 10%" rather than guaranteeing a specific amount. At a February 27, 2008 hearing, Mr. Kunkler for the first time indicated his desire for a jury trial on the issue of trustee fees. The next day, Mr. Kunkler filed a Jury Demand and Request to Designate This Case as a Jury Action.

¶ 9 On March 31, 2008, the district court denied Mr. Kunkler's jury demand as not timely filed under Utah Rule of Civil Procedure 38.[3] The district court focused on the *1186 requirement that a jury demand be "not later than 10 days after the service of the last pleading directed to such issue." Utah R. Civ. P. 38(b) (emphasis added). Importantly, the district court determined that the last pleading directed to the issue of KeyBank's trustee fee request was Mr. Kunkler's May 9, 2007 petition to remove KeyBank as Class I Trustee. In denying Mr. Kunkler's jury demand, the district court concluded that

the Class II Trustee .. . could not reasonably have contemplated that Key Bank would be replaced without payment of compensation earned for services rendered during the time it administered the Trust. Therefore, the petition to remove Key Bank as Class I Trustee implicitly included within it the administration fees to which Key Bank would be entitled, and the opposition thereto was "the last pleading addressed to such issue" under [rule 38(b)].

Shortly after this district court ruling, on April 21, 2008, Mr. Kunkler filed a Motion to Construe Key Bank's Motion for Fees as a "Petition," or in the Alternative, to Strike the Motion and Require Key Bank to File a Petition. Mr. Kunkler also had filed a separate Petition to Review Trustee's Fees. KeyBank in response filed a Motion to Strike Class II Trustee's Petition and a motion opposing Mr. Kunkler's April 21, 2008 motion.

¶ 10 On July 8, 2008, the district court denied Mr. Kunkler's remaining jury-related filings. The district court granted KeyBank's motion to strike Mr. Kunkler's new petition, holding that the existing litigation encompassed that petition's request to review trustee fees. Relying exclusively on its March 31, 2008 ruling, the district court also denied Mr. Kunkler's April 21, 2008 motion.

¶ 11 Having rejected Mr. Kunkler's efforts to secure a jury trial,[4] the district court proceeded to hold an evidentiary hearing on the amount of trustee fees owed KeyBank. After the two-day hearing, the district court issued its Findings of Fact and Conclusions of Law, in which it awarded KeyBank a fee equal to 6 percent of the value of the land sales.[5] The district court later awarded KeyBank an additional $321,344.75 in attorney fees.

¶ 12 Mr. Kunkler timely appealed all relevant district court rulings and orders.[6] We have jurisdiction pursuant to Utah Code section 78A-3-102(3)(j) (Supp.2010).

STANDARD OF REVIEW

¶ 13 The district court's interpretations of Utah statutes and rules of procedure are questions of law reviewed for correctness. Jaques v. Midway Auto Plaza, Inc., 2010 UT 54, ¶ 11, 240 P.3d 769; Arbogast Family Trust v. River Crossings, LLC, 2010 UT 40, ¶ 10, 238 P.3d 1035.

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Related

James Manufacturing Co. v. Wilson
390 P.2d 127 (Utah Supreme Court, 1964)
Jaques v. Midway Auto Plaza, Inc.
2010 UT 54 (Utah Supreme Court, 2010)
Arbogast Family Trust v. River Crossings, LLC
2010 UT 40 (Utah Supreme Court, 2010)
Salt Lake County v. Holliday Water Co.
2010 UT 45 (Utah Supreme Court, 2010)
Berneau v. Martino
2009 UT 87 (Utah Supreme Court, 2009)
Pete v. Youngblood
2006 UT App 303 (Court of Appeals of Utah, 2006)

Cite This Page — Counsel Stack

Bluebook (online)
2011 UT 7, 246 P.3d 1184, 2011 WL 182848, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-irrevocable-jack-w-kunkler-trust-a-utah-2011.