James Ashton Long v. The Succession of Marian Shirley James Long

• Court: Louisiana Court of Appeal
• Decided: April 22, 2020
• Docket: 53,463-CA
• Status: Published

Opinion

Judgment rendered April 22, 2020. Application for rehearing may be filed within the delay allowed by Art. 2166, La. C.C.P.

No. 53,463-CA

COURT OF APPEAL SECOND CIRCUIT STATE OF LOUISIANA

*****

JAMES ASHTON LONG, ET AL. Plaintiffs-Appellees

versus

THE SUCCESSION OF MARIAN Defendants-Appellants SHIRLEY JAMES LONG, ET AL.

Appealed from the Forty-Second Judicial District Court for the Parish of DeSoto, Louisiana Trial Court No. 77121

Honorable Amy Burford McCartney, Judge

AYRES, SHELTON, WILLIAMS, Counsel for Appellants BENSON & PAINE, L.L.C. By: Lee H. Ayres Ryan P. Telep

BETHARD & BETHARD, L.L.P. Counsel for Appellees By: Robert E. Bethard

Before WILLIAMS, STONE, and COX, JJ. WILLIAMS, C.J.

The defendants, M&M Long Properties, LLC, and Marian Alice

Long, individually, as executrix of the Succession of Marian Long, as trustee

of the Marvin Long Family Trust and as trustee of the Long Investments

Trust, appeal a judgment granting partial summary judgment in favor of the

plaintiff, James Ashton Long. The district court found that the sale of the

Marvin Long Family Trust’s membership interest in M&M Long Properties,

LLC was null. For the following reasons, we reverse and remand for further

proceedings.

FACTS

In September 1995, Marvin Vivian Long (“Marvin”) and his wife,

Marian Shirley Long (“Marian”), established the Marvin and Marian Long

Living Trust and served as the original trustees. James Ashton Long

(“Ashton”) and Marian Alice Long (“Alice”) are the children of Marvin and

Marian. Upon Marvin’s death in April 2002, the Marvin and Marian Long

Living Trust split into two separate trusts, the Marvin Long Family Trust

(“Marvin Trust”), which was irrevocable, and the Marian Long Living Trust

(“Marian Living Trust”). Marian was the sole income beneficiary of the

Marvin Trust and Alice and Ashton were the principal beneficiaries. Section

12.5 of the Marvin Trust provided that if one settlor ceased to serve as

trustee, the other settlor shall serve as the sole trustee, with the power to

appoint a successor trustee.

On September 22, 2002, Marian executed an authentic act appointing

Alice as “co-trustee” of the Marvin Trust. On that same date, M&M Long

Properties, LLC (“M&M”) was created with the following members:

Marvin Trust with a 39.67% membership interest; Marian Long Living Trust with 39.67% interest; and Alice, individually, with a 20.65% interest. M&M

primarily owned immovable property located in DeSoto Parish that had been

contributed by its members and mineral royalties. In February 2003, Marian

appointed Alice as successor trustee of the Marvin Trust.

In 2008, after hearing an estate planning seminar, Marian decided to

create the Long Investments Trust (“Long Investments”) with Alice as the

trustee and beneficiary. Ashton was not a beneficiary of the Long

Investments Trust. The plan was to have the Marvin Trust and the Marian

Living Trust each sell its membership interest in M&M to the Long

Investments Trust. The purchase price was based on a fair market value

appraisal. On October 7, 2008, the Marvin Trust and the Marian Living

Trust each sold its membership interest in M&M to the Long Investments

Trust for the amount of $273,405. In December 2008, M&M sold 50% of its

mineral royalties for the price of $2,634,480. Alice and Marian were the

managers of M&M at the time.

In July 2015, Marian died and her succession was opened. In

February 2016, the plaintiff, Ashton, individually and as beneficiary of the

Marvin Trust, filed a petition for damages seeking to nullify the sale of trust

assets against defendants, M&M Long Properties, LLC, and Marian Alice

Long, individually, as executrix of the Succession of Marian Long, as trustee

of the Marvin Long Family Trust and as trustee of the Long Investments

Trust. The parties later filed cross motions for partial summary judgment.

After a hearing, the trial court issued written reasons for judgment finding

that Alice was a co-trustee of the Marvin Trust at the time of the sale of its

interest in M&M to Long Investments Trust. As a result, the court found

that Alice violated her fiduciary duty as trustee by selling the Marvin Trust 2 property to herself as trustee of Long Investments Trust. The trial court

further found that the sale violated the operating agreement of M&M. The

trial court denied defendants’ motion for partial summary judgment on the

issue of limitation of damages and plaintiff’s motion regarding Marian’s acts

in conveying the trust interest. The district court rendered partial summary

judgment in favor of plaintiff declaring as null and void the sale of the

Marvin Trust interest in M&M to Long Investments Trust in October 2008.

The defendants appeal the partial summary judgment.

DISCUSSION

The defendants contend the district court erred in granting partial

summary judgment in favor of plaintiff. Defendants argue that summary

judgment was improper because a genuine issue of material fact exists as to

whether Alice Long was a co-trustee of the Marvin Trust at the time of the

sale in October 2008.

An original trustee, an alternate trustee or a successor trustee may be

designated in the trust instrument or chosen by the use of a method provided

therein. If the trust instrument does not designate a trustee or the trustee

ceases to serve as trustee, then the proper court shall appoint one or more

trustees. La. R.S. 9:1785.

Appellate courts review summary judgments de novo, using the same

criteria that govern the trial court’s consideration of whether summary

judgment is appropriate. Samaha v. Rau, 2007-1726 (La. 2/26/08), 977

So.2d 880; Argonaut Great Central Ins. Co. v. Hammett, 44,308 (La. App. 2

Cir. 6/3/09), 13 So.3d 1209, writ denied, 2009-1491 (La. 10/2/09), 18 So.3d

122. Summary judgment shall be rendered if the motion, memorandum and

supporting documents show there is no genuine issue as to material fact and 3 that the mover is entitled to judgment as a matter of law. La. C.C.P. art.

966(A)(3). A fact is “material” if it potentially ensures or precludes

recovery, affects a litigant’s ultimate success or determines the outcome of

the legal dispute. Van v. Ferrell, 45,977 (La. App. 2 Cir. 3/2/11), 58 So.3d

522. In ruling on a motion for summary judgment, the district court’s role is

not to evaluate the weight of the evidence or to determine the truth of the

matter, but instead to determine whether there is a genuine issue of triable

fact. Hines v. Garrett, 2004-0806 (La. 6/25/04), 876 So.2d 764.

In the present case, the record shows that Marvin and Marian Long

were the settlors of the Marvin Trust. The trust instrument provided that

“should a settlor cease or fail to serve as trustee, the other shall serve as sole

trustee.” Despite this provision, in September 2002, Marian signed an

authentic act appointing Alice as “co-trustee” of the Marvin Trust. Then, in

February 2003, Marian appointed Alice as successor trustee of the Marvin

Trust in an act stating that Marian and Alice were serving as “co-trustees,”

but that Marian had intended that “should she cease or fail to serve as

trustee, then [Alice] shall serve as sole successor trustee.”

When completing the transaction in October 2008, the parties

executed a number of documents, including a bill of sale, a valuation

agreement and a promissory note. However, Alice did not sign those

documents as co-trustee of the Marvin Trust, consistent with the intent

expressed in the act appointing her successor trustee. In contrast, the record

also contains documents that Alice did sign as co-trustee of the Marvin

Trust, such as a deed transferring immovable property to M&M, the act

accepting her appointment as successor trustee and a mineral lease.

4 In opposing summary judgment, defendants submitted the transcript

of Alice’s testimony at a hearing on their exceptions. Alice testified that at

the time of the transaction in 2008, her mother, Marian, was the trustee of

the Marvin Trust and that Alice was not a trustee of the Marvin Trust. Alice

stated that her understanding was that Marian did not have the authority to

appoint a co-trustee under the terms of the Marvin Trust instrument. Alice

acknowledged that she had mistakenly signed a number of documents as co-

trustee of the Marvin Trust. Alice testified that her appointment as successor

trustee was intended to correct the prior mistaken appointment of her as co-

trustee.

The district court found that Marian, as trustee of the Marvin Trust,

had the authority under the trust instrument to appoint co-trustees. Contrary

to the court’s finding, paragraph 12.5 of the trust instrument expressly

provides that Marian shall serve as “sole” trustee. Based upon this record,

an issue of fact exists as to whether the settlors of the Marvin Trust included

this provision with the intention to limit the power of the trustee to appoint

co-trustees. Another factual issue is whether Marian intended to correct or

revoke the appointment of Alice as co-trustee by appointing her as successor

Thus, this case involves issues of intent that are not suitable for

summary judgment because the fact finder will need to weigh the testimony

of witnesses and the documentary evidence to make such factual

determinations. Considering the evidence presented, we conclude the

district court erred in finding on summary judgment that Alice was serving

as co-trustee of the Marvin Trust and breached her fiduciary duty at the time

of the 2008 transaction. 5 Plaintiff argues in his appellate brief that even if Alice was not co-

trustee of the Marvin Trust at the time of the 2008 transaction, Marian

committed self-dealing as trustee by selling the Marvin Trust interest in

M&M to a relative, her daughter Alice, who was the trustee of Long

Investments. Plaintiff asserts that this sale to a relative was prohibited by

Article 2085(A) and is null. However, we note that the authority cited by

plaintiff refers to situations involving a trustee selling trust property to

herself or to a relative individually. Here, in contrast, Marian did not sell the

Marvin Trust interest to Alice in her individual capacity. Thus, plaintiff’s

argument lacks merit.

Defendants contend the district court erred in finding that the parties

involved in the October 2008 transaction violated the requirements for

transfer of a membership interest contained in the M&M operating

agreement. They argue that the transaction was valid because the sale was

subject to an exception in the operating agreement.

Parties are free to contract for any object that is lawful. La. C.C. art.

1971. The operating agreement of a limited liability company is contractual

in nature and is interpreted pursuant to contract law. Kinkle v. R.D.C., LLC,

2004-1092 (La. App. 3 Cir. 12/8/04), 889 So.2d 405.

In this case, Article 12.1 of the M&M operating agreement provides

that a member may transfer a membership interest pursuant to a written offer

from a qualified buyer and the member shall serve notice of his intent to

transfer the membership interest to the other members. Article 12.1.2.3

provides that if the offer contains no terms of payment, the purchase price

shall be paid by giving the transferring member a promissory note providing

for 20 equal quarterly payments. Article 12.2 provides that a member may 6 transfer his membership interest to an immediate family member or to a trust

of which his descendants are the beneficiaries without complying with

article 12.1.

The record shows that at the time of the 2008 transaction, the

members of M&M were Marian as trustee of the Marvin Trust, Alice and

Marian as co-trustees of the Marian Living Trust and Alice individually. In

addition, Marian and Alice were the managers of M&M. As a result, in the

transfer of the Marvin Trust membership interest, there were no other

members of M&M who were required to receive notice of the sale under the

operating agreement. Further, we note that even accepting for the purpose

of argument that the transfer of the Marvin Trust membership interest did

not comply with the M&M operating agreement, the record shows that

M&M did not insist upon the strict performance of the provisions of the

operating agreement in this transaction and has not sought redress for any

violation of such provisions. Thus, an issue of material fact exists as to

whether the conduct of M&M constitutes a waiver of the operating

agreement provisions with respect to the sale of the Marvin Trust

membership interest.

Based upon this record, issues of material fact exist which make

summary judgment inappropriate in this case. Consequently, we shall

reverse the judgment and remand this matter for further proceedings. In

reaching this conclusion, we pretermit discussion of the assignment of error

regarding the affidavit submitted by defendants.

7 CONCLUSION

For the foregoing reasons, the district court’s summary judgment is

hereby reversed. This matter is remanded for further proceedings. Costs of

this appeal are assessed to the appellee, James Ashton Long.

SUMMARY JUDGMENT REVERSED; REMANDED FOR

FURTHER PROCEEDINGS.