In re Marjorie A. Fearn Trust

2012 Ohio 1029

• Court: Ohio Court of Appeals
• Decided: March 13, 2012
• Docket: 11-CA-16
• Status: Published

Opinion

[Cite as In re Marjorie A. Fearn Trust, 2012-Ohio-1029.] COURT OF APPEALS KNOX COUNTY, OHIO FIFTH APPELLATE DISTRICT

IN THE MATTER OF: JUDGES: Hon. W. Scott Gwin, P.J. THE MARJORIE A. FEARN TRUST Hon. Sheila G. Farmer, J. Hon. John W. Wise, J.

Case No. 11-CA-16

OPINION

CHARACTER OF PROCEEDING: Appeal from the Court of Common Pleas, Probate Division, Case No. 2010-8001A

JUDGMENT: Reversed & Remanded

DATE OF JUDGMENT: March 13, 2012

APPEARANCES:

For Appellant For Richard Wells & Stephen Algire

KELLY M. MORGAN KIM M. ROSE 380 South Fifth Street CLINTON G. BAILEY Suite 3 P.O. Box 469 Columbus, OH 43215 Mount Vernon, OH 43050

For Estate of Stephen E. Algire For Brenda, Andrew, Ashley, & Blake Algire ROBERT L. RAUZI 305 East High Street KENNETH E. LANE Mount Vernon, OH 43050 5 North Gay Street Mount Vernon, OH 43050 MS. BUTCHER First-Knox National Bank CURTIS P. WEAVER 1 South Main Street 218 Bret Harte Drive P.O. Box 1270 Newport News, VA 23602 Mount Vernon, OH 43050 BRADLEY D. WEAVER JORDAN R. INMAN 15249 Tracy Beth Drive 1378 Hamlet Street Huntersville, NC 28078 Columbus, OH 43201 Knox County, Case No. 11-CA-16 2

Farmer, J.

{¶1} Marjorie Ann Fearn was the mother of three children, Stephen Algire,

Brenda Algire, and appellant, Kathy Salyers. On June 2, 2006, Ms. Fearn executed a

Restatement of the Marjorie Ann Fearn Revocable Trust Agreement, wherein Ms. Fearn

directed her trust assets to be divided into three equal shares and distributed after her

death to her three children. Named as co-trustees were appellees, Richard Wells and

Stephen Algire. The trust directed that appellant's share was to remain in trust and be

distributed to her at the discretion of appellees.

{¶2} Ms. Fearn died on February 19, 2010.

{¶3} On June 15, 2010, appellant filed a complaint for declaratory relief

regarding the rights and responsibilities of the parties involving the trust, and seeking

several issues including a trust accounting and inventory.

{¶4} On October 18, 2010, the trial court conducted a status conference.

Following this conference, the trial court filed an entry on October 26, 2010 ordering

appellees to provide appellant with an accounting within thirty days.

{¶5} On January 11, 2011, appellees filed a motion for summary judgment.

Attached to the motion was a "Record Book" which was the accounting ordered by the

trial court on October 26, 2010. Appellees filed a second accounting on June 23, 2011.

{¶6} During the pendency of the case, appellee Wells resigned as co-trustee.

Appellee Stephen Algire passed away on July 28, 2011. Due to the resignation of

appellee Wells and the passing of appellee Algire, many of the issues raised by

appellant in her declaratory judgment complaint were moot. By journal entry filed

August 2, 2011, the trial court granted summary judgment to appellees, finding the Knox County, Case No. 11-CA-16 3

accounting was adequate, and ordered appellant to pay 75% of the attorney fees

incurred by appellees.

{¶7} Appellant filed an appeal and this matter is now before this court for

consideration. Assignments of error are as follows:

I

{¶8} "THE JUDGMENT OF THE COURT THAT THE DOCUMENTS FILED BY

THE CO-TRUSTEES ON JANUARY 11, 2011, AND JUNE 23, 2011, REPRESENT AN

ADEQUATE ACCOUNTING IS CONTRARY TO THE APPLICABLE LAW GOVERNING

SUMMARY JUDGMENT."

II

{¶9} "THE COURT ERRED IN ORDERING APPELLANT KATHY J. SALYERS

TO PAY ATTORNEY FEES FOR THE APPELLEES PURSUANT TO THE MOTION

FOR SUMMARY JUDGMENT FILED BY THE CO-TRUSTEES."

{¶10} Appellant claims the trial court erred in granting summary judgment to

appellees as the two accountings submitted by appellees were inadequate. We agree.

{¶11} Summary Judgment motions are to be resolved in light of the dictates of

Civ.R. 56. Said rule was reaffirmed by the Supreme Court of Ohio in State ex rel.

Zimmerman v. Tompkins, 75 Ohio St.3d 447, 448, 1996-Ohio-211:

{¶12} "Civ.R. 56(C) provides that before summary judgment may be granted, it

must be determined that (1) no genuine issue as to any material fact remains to be

litigated, (2) the moving party is entitled to judgment as a matter of law, and (3) it

appears from the evidence that reasonable minds can come to but one conclusion, and

viewing such evidence most strongly in favor of the nonmoving party, that conclusion is

adverse to the party against whom the motion for summary judgment is made. State Knox County, Case No. 11-CA-16 4

ex. rel. Parsons v. Fleming (1994), 68 Ohio St.3d 509, 511, 628 N.E.2d 1377, 1379,

citing Temple v. Wean United, Inc. (1977), 50 Ohio St.2d 317, 327, 4 O.O3d 466, 472,

364 N.E.2d 267, 274."

{¶13} As an appellate court reviewing summary judgment motions, we must

stand in the shoes of the trial court and review summary judgments on the same

standard and evidence as the trial court. Smiddy v. The Wedding Party, Inc. (1987), 30

Ohio St.3d 35.

{¶14} In its journal entry filed August 2, 2011, the trial court found the following

in pertinent part:

{¶15} "8. The accounting filed in this matter, as supplemented at this Court's

request, does not meet the professional standard this Court is used to seeing, but it is

adequate. The Court is satisfied that all of the significant Trust assets have been

gathered and accounted for, the Co-Trustees did not engage in any self-enrichment, the

fiduciary fees paid to themselves were not excessive, the trust expenses have been

paid, and distributions have been made in a manner that is consistent with Mrs. Fearn's

wishes as expressed in her Trust.

{¶16} "9. The litigation initiated by Ms. Salyers ultimately revealed the Co-

Trustees were using a less than perfect accounting system. It also revealed that as a

matter of common courtesy the Co-Trustees could have done a better job of

communicating with Ms. Salyers. However, this poor communication did not violate any

legal standard. Primarily, the instant litigation reveals a profound and long standing

state of animosity between Ms. Salyers and her brother, Mr. Algire. The degree of this

animosity is so great the Court does not believe Mr. Algire could have continued to be

an effective trustee, which the trust laws of this State require. However, because of Mr.

Algire's death this has become a moot issue. Knox County, Case No. 11-CA-16 5

{¶17} "Accordingly, the Court concludes, as matter of Summary Judgment, that

Marjorie Ann Fearn did in 2006 created and execute a valid Trust which provides the

basis for the distribution of her assets at the time of her death. At the time this 2006

trust was executed she was not under any undue influence and had the necessary

mental capacity to execute this legal document. The Court further concludes, as a

matter of Summary Judgment, that the performance of the Co-Trustee, while not

perfect, still exceeded the minimum standard for fiduciaries. There is no credible

evidence that any significant trust asset was lost or stolen. There is no credible

evidence the Co-Trustees paid themselves excessive fees. There is evidence the Co-

Trustees attempted to administer the Trust in accordance with the wishes and directives

of Mrs. Fearn."

{¶18} In support of appellees' position is the affidavit of appellee Algire, attached

to the motion for summary judgment as Defendant's Exhibit 1. In this affidavit, appellee

Algire listed the manner of the trust distribution and the reserve for appellant which was

to be paid out at $30,000.00 per year until she would qualify for social security.

{¶19} R.C. 5808.13 explicitly defines the duties of a trustee to the beneficiaries.

Included in the duties is the requirement that an accounting be given annually:

{¶20} "(C) A trustee of a trust that has a fiscal year ending on or after January 1,

2007, shall send to the current beneficiaries, and to other beneficiaries who request it,

at least annually and at the termination of the trust, a report of the trust property,

liabilities, receipts, and disbursements, including the source and amount of the trustee's

compensation, a listing of the trust assets, and, if feasible, the trust assets' respective

market values. Upon a vacancy in a trusteeship, unless a cotrustee remains in office, a

report for the period during which the former trustee served must be sent to the current Knox County, Case No. 11-CA-16 6

beneficiaries by the former trustee. A personal representative or guardian may send the

current beneficiaries a report on behalf of a deceased or incapacitated trustee."

{¶21} Implicit within the duties and powers of a trustee is the prohibition against

self-dealing [R.C. 5808.14(B)(2)]. Also, a trustee "shall exercise a discretionary power

reasonably, in good faith, and in accordance with the terms and purposes of the trust

and the interests of the beneficiaries." R.C. 5808.14(A).

{¶22} It is undisputed that no accounting and/or inventory by appellees were

made known to appellant. It was not until the trial court required an accounting via an

entry filed October 26, 2010 pursuant to a status conference that an accounting was

given:

{¶23} "Pursuant to said status conference, the Court makes the following

Orders.

{¶24} "1. Defendants, Richard O. Wells, Co-Trustee, and Stephen E. Algire, Co-

Trustee, shall provide Plaintiff, Kathy J. Salyers, with an accounting concerning the trust

assets. Said accounting shall be provided to plaintiff within the next thirty days."

{¶25} The accounting was not given within the thirty day period, but was

attached to appellees' motion for summary judgment filed on January 10, 2011. The

"accounting" was a handwritten ledger titled "Record Book." Defendant's Exhibit C.

The trial court's characterization of the "Record Book" is more than a generous

interpretation of what is required and anticipated by the Ohio Revised Code. An

inventory was not included, nor was there a running account of the daily disbursements

and receipts. The supplemental trust accounting filed on June 23, 2011 did not alleviate

the problems of the "Record Book."

{¶26} This court is aware that non-professional trustees are not necessarily held

to the strict accounting standards of professional trustees. However, we find the Knox County, Case No. 11-CA-16 7

"Record Book" and the supplemental trust accounting fall far beneath the standard of

care mandated by R.C. Chapter 5808.

{¶27} Upon review, we find the trial court erred in determining the accounting

herein to be adequate and in granting summary judgment to appellees.

{¶28} Assignment of Error I is granted, and the matter is remanded for a proper

accounting, inventory, and recalculation of the trust.

{¶29} Appellant claims the trial court erred in ordering her to pay 75% of the

attorney fees incurred by appellees. We agree.

{¶30} In its journal entry filed August 2, 2011, the trial court ordered the following

as to attorney fees:

{¶31} "The Court further finds that Ms. Salyers has already received distributions

of a total value of $103,643.30. The Co-Trustees set aside assets in Edward Jones

account 437-07207-1-8 to fund Ms. Salyers trust. The current value of these assets is

$208,924. To bring her share of the assets from Mrs. Fearn's Trust to the level already

distributed to her brother and sister, Ms. Salyers is entitled to another $47,433.

However, from this $47,433, Ms. Salyers is obligated to pay her own attorneys $21,560.

The Court is also Ordering Ms. Salyers to pay the attorneys for the Fearn Trust

$15,870.49. This represents 75% of the total attorney fee bill for the Trust. The

remaining 25% of the Trust attorney fees, in the amount of $5,290.16 are to be paid

from the remaining funds that would have been distributed to Stephen Algire and which

will now be distributed to his estate. The Court further Orders the remaining court costs

of $307 be paid from Ms. Salyers share of the remaining Trust funds.

{¶32} "The litigation filed by Ms. Salyers contested the very validity of the Fearn

Trust, and in the alternative, sought to reform or modify the trust and other relief. This Knox County, Case No. 11-CA-16 8

Court has found all of these claims to be without merit as a matter of Summary

Judgment. Ms. Salyers litigation forced the Trust to defend itself and expend money on

attorneys which the Court believes Ms. Salyers must now pay. However, part of these

legal fees for the Trust, were to defend Mr. Alguire's position as Trustee for the Trust.

The extent of these legal expenses was expanded because of the degree of animosity

between Mr. Algire and Ms. Salyers. Mr. Algire must bear part of the responsibility for

this animosity and in the opinion of this Court he has the responsibility to pay this part of

the legal expenses of the Trust. Considering all the circumstances of this case the

Court believes this is a just allocation of these legal expenses."

{¶33} The trial court justified its decision by finding animosity between the

siblings, and there is no doubt that it was present. However, an accounting and/or

inventory were not done until appellant initiated the action. It was appellees' statutory

duty to provide an accounting. An adequate accounting was not given despite the trial

court's order of October 26, 2010.

{¶34} Upon review, we find it was error to make appellant responsible for 75% of

appellees' attorney fees. As for appellant's own attorney fees, it was clear that the

challenge to the 2006 trust was not warranted.

{¶35} Assignment of Error II is granted. Knox County, Case No. 11-CA-16 9

{¶36} The judgment of the Court of Common Pleas of Knox County, Ohio,

Probate Division is hereby reversed.

By Farmer, J.

Gwin, P.J. and

Wise, J. concur.

__s/ Sheila G. Farmer_____________

__s/ W. Scott Gwin_______________

___s/ John W. Wise_________________

JUDGES

SGF/sg 305 [Cite as In re Marjorie A. Fearn Trust, 2012-Ohio-1029.]

IN THE COURT OF APPEALS FOR KNOX COUNTY, OHIO

FIFTH APPELLATE DISTRICT

IN THE MATTER OF: : : THE MARJORIE A. FEARN TRUST : JUDGMENT ENTRY : : : CASE NO. 11-CA-16

For the reasons stated in our accompanying Memorandum-Opinion, the

judgment of the Court of Common Pleas of Knox County, Ohio, Probate Division is

reversed, and the matter is remanded to said court for further proceedings consistent

with this opinion. Costs to appellees.