Lee v. Sheldon

427 P.3d 745
CourtAlaska Supreme Court
DecidedAugust 31, 2018
Docket7285 S-16442/S-16471
StatusPublished
Cited by2 cases

This text of 427 P.3d 745 (Lee v. Sheldon) is published on Counsel Stack Legal Research, covering Alaska Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Lee v. Sheldon, 427 P.3d 745 (Ala. 2018).

Opinion

BOLGER, Justice.

I. INTRODUCTION

Following mediation, a trust beneficiary and a trustee signed a document purporting to settle bitter family litigation and referring future disputes to the mediator for resolution. The beneficiary subsequently denied that she had settled and asked the mediator to resolve the issue, and the mediator concluded that the parties had reached a binding settlement. The beneficiary tried to resurrect this issue in the superior court, but the court concluded that the mediator's decision was within the scope of the authority conferred *747 by the parties. We conclude that the superior court did not err by confirming the mediator's decision. We also conclude that the court did not err by denying the beneficiary's petition to review the trustee's compensation, or by awarding Alaska Civil Rule 82 attorney's fees to the trustee. We therefore affirm the superior court's judgment.

II. FACTS AND PROCEEDINGS

A. Creation Of Mountain House, LLC And Roberta Sheldon's Trust

In the 1960s, famed Alaska bush pilot Don Sheldon built a cabin-known as the Mountain House-at the head of Ruth Glacier in Mount McKinley National Park (now Denali National Park). Following Don's death in 1975, his wife Roberta Sheldon assumed control of the Mountain House. In 2006 Roberta created Mountain House, LLC to own and manage the cabin.

In early 2014 Roberta conveyed Mountain House, LLC and other assets into a newly created revocable trust. The trust names the Sheldons' three children Holly, Robert, and Kate 1 as beneficiaries and designates Robert as successor trustee. It establishes procedures for distribution of real and personal property among the beneficiaries. It also includes a penalty clause designed to dissuade the beneficiaries from contesting the trust's terms. The clause provides that persons who contest the trust or its provisions "shall not benefit in any way under this Trust ... and shall not receive any distribution whatsoever."

Following Roberta's death in June 2014, Robert became trustee. Holly requested an accounting of trust assets in September, and Robert provided a list of assets the following month. In December, Robert-acting in his capacity as trustee-drafted an operating agreement appointing himself as manager of Mountain House, LLC. The agreement provided that membership shares in the LLC would be distributed equally among Holly, Robert, and Kate "[a]t such time as the Trustee deems suitable for both this LLC and the Trust."

B. Initial Litigation

Over the following months, disagreements arose between Holly and Robert concerning his administration of the trust. Holly claimed that Robert had failed to adequately respond to her request for an accounting and that he also had failed to distribute trust assets that she had requested and that he had stated he would provide.

In February 2015 Holly and her company, Sheldon Air Service, LLC (SAS), 2 filed a lawsuit against Robert individually and in his capacity as trustee. Holly argued that Robert had "unlawfully detained ... Trust assets without regard to the beneficiaries' distribution rights" and that he had breached his fiduciary duties "[b]y refusing to timely distribute Mountain House, LLC to the beneficiaries." 3 She moved for summary judgment, asking the superior court to rule that Robert was required "to immediately distribute the Mountain House, LLC, to its three, equal owners." Robert brought a cross-motion for summary judgment, arguing that Holly had "no right to distribution, immediate or otherwise, of an in-kind membership in the Mountain House, LLC" and that Holly's complaint and litigation violated the trust's penalty clause.

In November 2015 the superior court ruled that under the terms of the trust, Robert was entitled to determine which children would receive membership interests in Mountain House, LLC. It also found that Robert was not obligated to immediately distribute Mountain House, LLC. However, the court rejected Robert's argument that Holly's litigation had triggered the trust's penalty clause. Noting that attempts to enforce rights or "secure an interpretation of [an] instrument" generally do not trigger penalty clauses, the court held that Holly had "advanced a reasonable interpretation of the *748 trust in light of an ambiguity." Though the court "[found] her interpretation unsupported," it concluded that Holly had merely sought to "clarify and enforce the trust," not void it, nullify it, or set it aside.

C. Mediation And Subsequent Disputes

Robert and Holly participated in mediation conducted by retired superior court judge Eric Sanders in December 2015. Following the mediation, the parties signed a document titled "Mediator's Proposal" (Proposal). Under the terms of the Proposal, Holly would pay $25,000 into Mountain House, LLC. She would receive a one-third, non-voting interest in the LLC as well as various personal effects from the trust's corpus, and she would be granted periodic access to the Mountain House. The Proposal stated that the parties had "reached an agreement to the settlement of all claims of all parties" and would "execute a Settlement Agreement and Mutual Release of All Claims between the parties as a result of the full and complete settlement reached." Lastly, paragraph 11 of the Proposal provided that "[a]ny disputes concerning [the Proposal's] terms or the execution of these terms and the Settlement and Release shall be resolved finally and completely by Eric Sanders."

Per the Proposal's terms, Robert sent Holly a draft settlement agreement to review. In response Holly sent a "Response Regarding Term Sheet" (Response) to Sanders arguing that the Proposal had not settled her claims against Robert. She argued that at the time she signed the Proposal, she "believed [the] document was merely a proposal ... and that her signature would not result in a binding agreement." She also claimed that she "lacked sufficient information concerning the assets and liabilities of the Trust" to make an informed decision during the mediation and that Robert's failure to provide this information "vitiate[d] [her] consent" to any settlement. Lastly, she argued that even if she and Robert had reached a settlement, SAS had separate claims that had not yet been resolved. Holly "requested that the mediation be reconvened to address all disputes." She also indicated that her Response was "submitted within the context of mediation" and that she "reserve[d] all rights as to whether the issues raised herein are subject to arbitration."

In response Robert submitted an "Arbitration Memorandum Regarding Settlement Existence, Scope, Noncompliance, and Enforcement" (Arbitration Memorandum) to both Holly and Sanders. Robert argued that the parties had agreed to a settlement when they signed the Proposal, that Holly had all the information she needed to make an informed decision regarding settlement, and that SAS's claims against Robert, the trust, and Mountain House, LLC had been resolved.

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Bluebook (online)
427 P.3d 745, Counsel Stack Legal Research, https://law.counselstack.com/opinion/lee-v-sheldon-alaska-2018.