In the Missouri Court of Appeals Eastern District
DIVISION ONE
U.S. BANK, N.A., AS TRUSTEE OF THE ) No. ED108598 LIVING TRUST AGREEMENT OF ) LORENZ K. AYERS, DATED MAY 3, 1967,) AS AMENDED AND RESTATED, ) Appeal from the Circuit Court ) of the City of St. Louis Respondent, ) Cause No. 1722-PR00637 )
vs. )
)
ELIZABETH MOLK, )
) Honorable Rex M. Burlison Appellant, )
)
and )
)
ANNE HERBST, CATHERINE HERBST, ) DONALD A. HERBST, MILES HERBST, ) DAVID C. MOLK, REBECCA B. MOLK and ) PETER F. MOLK, )
)
Defendants. ) Filed: January 19, 2021
OPINION
Elizabeth Molk (“Appellant”) appeals the probate court’s grant of the motion for summary judgment filed by U.S. Bank, as trustee of the Living Trust Agreement of Lorenz K. Ayers (“Grantor”), dated May 3, 1967, as amended and restated (the “Lorenz K. Ayers Trust”), on U.S. Bank’s claim for declaratory judgment. Appellant raises five points on appeal related to the probate court’s grant of U.S. Bank’s motion for summary judgment and award of attorney’s
2
fees. U.S. Bank also filed a motion for appellate attorney’s fees with our Court that was taken with the case.
Finding that the probate court did not err, we affirm the judgment of the probate court.
Additionally, we grant U.S. Bank’s motion for attorney’s fees on appeal and remand to the probate court for determination of U.S. Bank’s reasonable appellate attorney’s fees.
I. Factual and Procedural Background On May 3, 1967, Grantor executed the instrument that established the Lorenz K. Ayers Trust, which was created for the purpose of supporting Grantor during his lifetime and Grantor’s wife, daughters (Helen A. Davis (“Helen”) and Barbara A. Herbst (“Barbara”)), and his daughters’ descendants after Grantor’s death. The Lorenz K. Ayers Trust became irrevocable when Grantor passed away in 1987. Pursuant to the terms of the Lorenz K. Ayers Trust instrument, separate trusts were created for Helen and Barbara with the corpus of each trust containing half of the assets in the Lorenz K. Ayers Trust following Grantor’s death. The Lorenz K. Ayers Trust instrument further instructs that, following the death of each respective daughter, the trust share of the deceased daughter would be further evenly split such that separate trusts would be created for each of that daughter’s children (Grantor’s grandchildren) and maintained by U.S. Bank as trustee.1 Item Five, Section 6 of the Lorenz K. Ayers Trust instrument establishes that U.S. Bank, as trustee, “shall pay the entire net income” of each grandchild’s trust to the subject grandchild- beneficiary “in convenient installments, for the life of said beneficiary.” Item Five, Section 6 further states that, upon the death of a grandchild-beneficiary, the principal of that grandchild’s
1 The Lorenz K. Ayers Trust instrument names “Mercantile Trust Company” as the corporate trustee for all trusts created under that instrument; U.S. Bank absorbed Mercantile Trust Company through a merger following Grantor’s execution of the Lorenz K. Ayers Trust instrument.
3
separate trust shall be divided amongst the children of that grandchild-beneficiary (Grantor’s great-grandchildren), or in the case of a grandchild-beneficiary dying childless, amongst “his or her then heirs at law who are direct descendants of Grantor….” Once assets of the Lorenz K. Ayers Trust are passed to Grantor’s great-grandchildren, each great-grandchild share shall be held in a separate trust maintained by the trustee for the great-grandchild-beneficiary until he or she reaches 21 years of age, at which time said great-grandchild share shall be distributed outright and thus terminating the Lorenz K. Ayers Trust as to that share.
Following Barbara’s death on or about October 15, 2015, individual trusts were established (pursuant to the terms of the Lorenz K. Ayers Trust instrument) for her children (Grantor’s grandchildren): Appellant, Anne Herbst (“Anne”), Catherine Herbst (“Catherine”), and Donald A. Herbst (“Donald”). U.S. Bank acts as trustee for Anne’s, Catherine’s, and Donald’s grandchild trusts, but not for Appellant’s. In 2016, after conferring with U.S. Bank’s representatives, Anne requested that U.S. Bank, as trustee, convert her separate, individual grandchild trust to a “unitrust” with 4% of the fair market value of her trust’s assets being paid to her annually, pursuant to § 469.411.2 On July 20, 2016, U.S. Bank notified all qualified beneficiaries of its intent to make Anne’s requested unitrust election, as required by § 469.411.5, and, although not required by statute, provided all such beneficiaries the opportunity to consent or object to the unitrust election. Appellant was the only qualified beneficiary who objected to Anne’s requested unitrust election.
As a result of Appellant’s objection to Anne’s requested unitrust election, U.S. Bank filed its petition for declaratory judgment before the probate division of the Circuit Court of the City of St. Louis on September 28, 2017, in which U.S. Bank requested that the court “enter judgment
2 All references are to Mo. Rev. Stat. Cum. Supp. 2016.
4
declaring U.S. Bank in its capacity as Trustee is authorized to make the unitrust election of Anne[’s] separate share,” pursuant to § 469.411.5.3 Appellant and her children filed a joint answer to U.S. Bank’s petition and also filed a counterclaim for declaratory judgment. In their subsequently filed second amended counterclaim for declaratory judgment, Appellant and her children argued that Anne’s requested unitrust election pursuant to § 469.411.5 would be improper because such an election would be contrary to Grantor’s intent expressed in the Lorenz K. Ayers Trust instrument in violation of § 469.411.5 (Count I) and that § 469.411 was unconstitutional (Count II). Appellant and her children argued in their counterclaim for declaratory judgment that Grantor’s intent was that the Lorenz K. Ayers Trust’s principal be preserved for future generations, and per the terms of the Lorenz K. Ayers Trust instrument, the assets of Anne’s separate, individual trust would pass to Appellant, Catherine, Donald and/or their descendants upon Anne’s death because she has no children. Additionally, Appellant filed a motion to withdraw her previous consent to U.S. Bank converting Donald’s grandchild trust to a unitrust and for revocation of the unitrust election made for Catherine’s grandchild trust.4 In that motion, Appellant again pointed out that, because Anne and Donald have no heirs and Catherine only has one heir, “at least three quarters (3/4) of their trusts is distributable to [Appellant’s] children.” U.S. Bank, Anne, Donald, and Catherine also filed motions requesting awards of attorney’s fees from some combination of Appellant personally, Appellant’s grandchild trust, and/or Appellant’s children; Appellant filed a motion conversely requesting an award of attorney’s fees from U.S. Bank and Anne.
3 Appellant, Anne, Catherine, Donald, and Catherine’s and Appellant’s children were listed as defendants. 4 At the time of the below litigation, U.S. Bank had already converted Catherine’s grandchild trust to a unitrust and was in the process of making a unitrust election for Donald’s grandchild trust.
5
Appellant filed a motion for partial summary judgment on Count I of her second amended counterclaim for declaratory judgment and U.S. Bank shortly thereafter filed its cross- motion for summary judgment on its declaratory judgment claim. In support of its cross-motion for summary judgment, U.S. Bank filed its correlating statement of uncontroverted material facts, memorandum of law, and exhibits containing the records detailing its maintenance as trustee of the subject trusts deriving from the Lorenz K. Ayers Trust. The exhibits filed by U.S. Bank correlated with the affidavit of Justin R. Meyer (“Meyer”), U.S. Bank’s Trust Managing Director, who also previously served as a trust officer for U.S. Bank. In regards to U.S. Bank’s cross-motion for summary judgment on its declaratory judgment claim, Appellant filed motions to strike Meyer’s affidavit and U.S. Bank’s exhibits supporting its cross-motion for summary judgment, but did not file a response to U.S. Bank’s cross-motion for summary judgment or its statement of uncontroverted material facts. In her motions to strike Meyer’s affidavit and U.S. Bank’s exhibits, Appellant argued why the affidavit did not sufficiently support the exhibits and why the exhibits were inadmissible, but did not substantively respond to U.S. Bank’s cross- motion for summary judgment or statement of uncontroverted material facts.
After further pleadings, the probate court entered its order ruling on the parties’
preliminary motions, specifically denying Appellant’s motions to strike Meyer’s affidavit and U.S. Bank’s exhibits. On June 28, 2019, the probate court entered its order granting U.S. Bank’s cross-motion for summary judgment and denying Appellant’s motion for partial summary judgment.5 The court thereafter on December 15, 2019, entered its order on the parties’ motions for attorney’s fees. The probate court found in its December 15, 2019 order that, while Anne,
5 On September 9, 2019, Appellant and her children filed a dismissal memorandum dismissing without prejudice Appellant’s motion to withdraw her previous consent to Donald’s unitrust election and for revocation of Catherine’s unitrust election and Count II of the second amended counterclaim.
6
Donald, Appellant, and Appellant’s children were not personally entitled to an award of attorney’s fees, “equity and justice in this matter require that [Appellant] be responsible for the portion of the legal fees incurred by [U.S. Bank].” Noting several pleadings entered by Appellant and that she “added a divisive element to the cause of action when she withdrew her prior consent to the conversion of Donald’s separate trust,” the probate court ordered that Appellant reimburse Anne’s, Catherine’s, and Donald’s grandchild trusts for the attorney’s fees incurred by U.S. Bank in the following amounts: $94,693.26 to Anne’s grandchild trust and $20,291.25 to each of the grandchild trusts for Donald and Catherine.
This appeal follows.
II. Discussion
Appellant raises five points on appeal. Appellant asserts in her first, second, third, and fourth points on appeal that the probate court erred in several ways by granting U.S. Bank’s motion for summary judgment. Appellant further argues in her fifth point on appeal that the probate court erred in ordering Appellant to reimburse various trusts stemming from the Lorenz K. Ayers Trust for attorney’s fees incurred by U.S. Bank in litigating the case at bar. We address Appellant’s points in the order in which they would be dispositive of the other points, first collectively analyzing Points III and IV, then Points I and II collectively, and finally Point V. Standard of Review for Points I - IV Review of a trial court’s grant of summary judgment is de novo, and we apply the same criteria as the trial court in analyzing whether summary judgment was proper. Green v. Fotoohighiam, 606 S.W.3d 113, 115 (Mo. banc 2020) (quoting Goerlitz v. City of Maryville, 333 S.W.3d 450, 452 (Mo. banc 2011)). We review the record in the light most favorable to the party against whom summary judgment was entered and we afford that party the benefit of all
7
reasonable inferences from the record. Id. at 116 (quoting Goerlitz, 333 S.W.3d at 453); Zygler v. Hawkins Constr., 609 S.W.3d 61, 65 (Mo. App. E.D. 2020). “However, facts contained in affidavits or otherwise in support of the [moving] party’s motion are accepted as true unless contradicted by the non-moving party’s response to the summary judgment motion.” Green, 606 S.W.3d at 116 (quoting Goerlitz, 333 S.W.3d at 453); see also Kroner Invs., LLC v. Dann, 583 S.W.3d 126, 128 (Mo. App. E.D. 2019). Analysis of Points III and IV In Appellant’s third point on appeal, she argues that the probate court “erred in considering and relying upon [] Meyer’s affidavit in granting summary judgment in favor of [U.S. Bank]” because Meyer’s affidavit did not comply with Rule 74.04(e).6 Specifically, Appellant argues that Meyer’s affidavit was not compliant with Rule 74.04(e) in that it was not “made on personal knowledge” and did not set forth “such facts as would be admissible in evidence.” Appellant likewise asserts in her fourth point on appeal that the probate court “erred in considering and relying upon purported bank records attached as exhibits to [] Meyer’s affidavit” because such exhibits were not admissible under the business records exception to hearsay pursuant to § 490.680, and consequently, would not have supported “facts as would be admissible in evidence” as required by Rule 74.04(e).
“Summary judgment is only proper if the moving party establishes that there is no genuine issue as to the material facts and that the movant is entitled to judgment as a matter of law.” Cent. Trust and Inv. Co. v. Signalpoint Asset Mgmt., LLC, 422 S.W.3d 312, 319 (Mo. banc 2014). For a movant to make a prima facie case that there is no genuine issue of material fact in dispute:
6 All references are to Missouri Supreme Court Rules (2018).
8
the movant must attach to the motion for summary judgment a statement of uncontroverted material facts that “state[s] with particularity in separately numbered paragraphs each material fact as to which movant claims there is no genuine issue, with specific references to the pleadings, discovery, exhibits[,] or affidavits that demonstrate the lack of a genuine issue as to such facts.”
Green, 606 S.W.3d at 116 (quoting Rule 74.04(c)(1)). Rule 74.04(c)(1) additionally requires that the movant attach all discovery, exhibits, and affidavits that support the summary judgment motion.
Once a moving party makes a prima facie case that there are no genuine issues of material fact, “the nonmovant must show by affidavits, depositions, answers to interrogatories, or admissions on file that one or more of the material facts shown by the movant to be without any genuine dispute is, in fact, genuinely disputed.” Theerman v. Frontenac Bank, 308 S.W.3d 756, 758 (Mo. App. E.D. 2010); see also Taylor v. Zoltek Cos., Inc., 18 S.W.3d 541, 543 (Mo. App. E.D. 2000); Rule 74.04(c)(2). To do this, the non-moving party must respond to the movant’s summary judgment motion by “set[ting] forth each statement of fact in its original paragraph number and immediately thereunder admit or deny each of movant’s factual statements,” with the response “support[ing] each denial with specific references to the discovery, exhibits or affidavits that demonstrate specific facts showing that there is a genuine issue for trial.” Rule 74.04(c)(2); see also Fidelity Real Estate Co. v. Norman, 586 S.W.3d 873, 882 (Mo. App. W.D. 2019).
In this case, Appellant never filed a response to U.S. Bank’s cross-motion for summary judgment;7 Appellant only filed motions to strike Meyer’s affidavit and the exhibits containing U.S. Bank’s records detailing its maintenance of the subject trusts originating from the Lorenz K. Ayers Trust. “A response that does not comply with [] Rule 74.04(c)(2) with respect to any
7 Appellant likewise never filed a response to U.S. Bank’s additional statement of uncontroverted material facts filed in conjunction with Appellant’s motion for partial summary judgment.
9
numbered paragraph in movant’s statement is an admission of the truth of that numbered paragraph.” Rule 74.04(c)(2); see also Green, 606 S.W.3d at 117 (finding that the non-movant’s failure to file a timely response to the movant’s summary judgment motion resulted in the non- movant’s admission of all of movant’s stated uncontroverted material facts); Reverse Mortg. Sols., Inc. v. Estate of Hunter, 479 S.W.3d 662, 667 (Mo. App. W.D. 2015) (stating that the non- movant failed to establish or preserve any disputes of material fact by failing to timely file a response to the summary judgment motion). Although Appellant failed to file a response to U.S. Bank’s motion for summary judgment, she argues on appeal that the probate court still erred in granting U.S. Bank’s motion because the court impermissibly considered Meyer’s affidavit and U.S. Bank’s exhibits, which were the only bases of fact supporting U.S. Bank’s summary judgment motion. Thus, if Meyer’s affidavit properly complied with Rule 74.04(e) and U.S. Bank’s records were admissible evidence such that U.S. Bank sufficiently made a prima facie case that no genuine issue of material fact was in dispute, the factual assertions made in U.S. Bank’s summary judgment motion and statement of uncontroverted material facts must be taken as true because Appellant failed to file a response. See Rule 74.04(c)(1)–(c)(2); Green, 606 S.W.3d at 117; Reverse Mortg. Sols., Inc., 479 S.W.3d at 667.
Rule 74.04(e) requires that “[s]upporting and opposing affidavits shall be made on personal knowledge, shall set forth such facts as would be admissible in evidence, and shall show affirmatively that the affiant is competent to testify to the matters stated therein.” Our Court recently elaborated on the requirements of Rule 74.04(e) as applied to the business records exception to hearsay in Gateway Metro Fed. Credit Union v. Jones, 603 S.W.3d 315 (Mo. App. E.D. 2020). In Gateway, we stated that:
While an affidavit need not contain a particular “magic phrase” in order to establish that it is made on personal knowledge, the averments should still demonstrate that
10
the affiant has personal knowledge of the matters contained in the affidavit. On the other hand, an affidavit which relates information gained from other documents relates hearsay, not such facts as would be admissible in evidence, and is not sufficient to support a motion for summary judgment. In such a case, if the documents themselves qualify as business records, a party may submit them through use of a business records affidavit [(pursuant to § 490.692)] to avoid any hearsay issue.
Id. at 319–20 (internal quotations omitted) (citing Scott v. Ranch Roy-L, Inc., 182 S.W.3d 627, 635 (Mo. App. E.D. 2005); May & May Trucking, L.L.C. v. Progressive Nw. Ins. Co., 429 S.W.3d 511, 515 (Mo. App. W.D. 2014); Perry v. Kelsey-Hayes Co., 728 S.W.2d 278, 280 (Mo. App. W.D. 1987)).
In the case at bar, U.S. Bank’s records detailing its maintenance of the Lorenz K. Ayers Trust as its corporate trustee, upon which Meyer’s affidavit largely relied, qualify as business records pursuant to § 490.680. Section 490.680 states that:
A record of an act, condition or event, shall, insofar as relevant, be competent evidence if the custodian or other qualified witness testifies to its identity and the mode of its preparation, and if it was made in the regular course of business, at or near the time of the act, condition or event, and if, in the opinion of the court, the sources of information, method and time of preparation were such as to justify its admission.
U.S. Bank’s records of its actions as trustee of the subject trusts deriving from the Lorenz K. Ayers Trust certainly record “an act, condition or event” (specifically, evaluations of whether Anne’s individual grandchild trust should be converted to a unitrust and correspondence with the individual trusts’ beneficiaries) that (as indicated by Meyer’s affidavit) was made in the regular course of business as a corporate trustee at or near the time of those acts, conditions, or events, and the source of that information, method, and time of preparation justify the admission of those records. See § 490.680. Further, from Meyer’s affidavit, he is clearly a “qualified witness” who could testify to U.S. Bank’s records’ identity and mode of preparation and whether they were made in the regular course of business; as indicated by his affidavit, Meyer has been employed
11
as Trust Managing Director for U.S. Bank since August of 2016 and, prior to that time, served as a trust officer for U.S. Bank, is familiar with U.S. Bank’s record-keeping practices, and had reviewed the records that U.S. Bank, as trustee, maintained for the subject trusts. See CACH, LLC v. Askew, 358 S.W.3d 58, 64 (Mo. banc 2012) (stating that, to be a “qualified witness” pursuant to § 490.680, a person “must have ‘sufficient knowledge of the business operation and methods of keeping records of the business to give the records probity’”) (quoting Asset Acceptance v. Lodge, 325 S.W.3d 525, 528 (Mo. App. E.D. 2010)).
Consequently, because U.S. Bank’s records were admissible under the business records exception to hearsay pursuant to § 490.680, whether Meyer’s affidavit constituted a valid business records affidavit pursuant to § 490.692 is determinative of whether that affidavit fulfilled the requirements of Rule 74.04(e). See Gateway, 603 S.W.3d at 319–20. Section 490.692.1 establishes that:
Any records or copies of records reproduced in the ordinary course of business by any photographic, photostatic, microfilm, microcard, miniature photographic, optical disk imaging, or other process which accurately reproduces or forms a durable medium for so reproducing the original that would be admissible under sections 490.660 to 490.690 shall be admissible as a business record, subject to other substantive or procedural objections, in any court in this state upon the affidavit of the person who would otherwise provide the prerequisites of sections 490.660 to 490.690, that the records attached to the affidavit were kept as required by section 490.680.
Section 490.692.3 thereafter provides an example of the “form and content” that may be used in such a business records affidavit, which notably includes: that the affiant is “personally acquainted with the facts” stated within the affidavit; describes the records which purportedly constitute business records; that the records were kept “in the regular course of business”; that it was the regular course of business for an employee or representative “with knowledge of the act, event, condition, opinion, or diagnosis recorded to make the record or to transmit information
12
thereof to be included in such record”; that “the record was made at or near the time of the act, event, condition, opinion or diagnosis”; and that the records attached to the affidavit “are the original or exact duplicates of the original.”
By simply examining Meyer’s affidavit, it is clear that it substantively complies with § 490.692 to constitute a valid business records affidavit. While not exactly matching the example business records affidavit set forth in § 490.692.3, Meyer’s affidavit contains all of the content provided in that example. Specifically, in paragraph 4 of his affidavit, Meyer attests: that he is familiar with the facts set forth in the affidavit from his review of the records, his personal knowledge, and his communications with other U.S. Bank employees; to the nature of the subject records (describing them as “correspondence, reports, and completed forms”); that the records were kept in U.S. Bank’s regular course of business; that it is a regular practice of U.S. Bank’s regularly conducted business activities to record the information contained in the records; and that “[t]he entries in those records are made at the time of the events and conditions they describe either by people with first-hand knowledge of those events and conditions or from information provided by people with such first-hand knowledge.” Additionally, throughout the affidavit, Meyer attests that “[a] true and correct copy” of each pertinent record is attached to the affidavit. Although Meyer’s affidavit does not exactly match the form of the example business record affidavit provided in § 490.692.3, that subsection does not require such affidavits to do so, specifically stating that “[t]he affidavit permitted by this section may be in form and content substantially as follows…” (emphasis added). In sum, Meyer’s affidavit sufficiently complied with § 490.692 such that it constituted a valid business record affidavit, and thus satisfied the requirements of Rule 74.04(e). See Gateway, 603 S.W.3d at 319–20.8
8 Contrary to Appellant’s argument, our holding in Gateway does not support her position. Our Court reversed the trial court’s grant of summary judgment in Gateway primarily because the required business records or copies of
13
Thus, because U.S. Bank’s exhibits were admissible under the business records exception to hearsay pursuant to § 490.680 and Meyer’s affidavit constituted a valid business record affidavit pursuant to § 490.692, the probate court did not err in considering Meyer’s affidavit or the exhibits in granting U.S. Bank’s summary judgment motion. See Rule 74.04(e); Gateway, 603 S.W.3d at 319–20. As the probate court did not err in considering U.S. Bank’s exhibits and Meyer’s affidavit, U.S. Bank made a prima facie case that no genuine issue of material fact was in dispute. See Rule 74.04(c)(1); Green, 606 S.W.3d at 117; Reverse Mortg. Sols., Inc., 479 S.W.3d at 667. Because Appellant failed to file a response to U.S. Bank’s motion for summary judgment and statement of uncontroverted material facts, the facts stated by U.S. Bank (which are based upon its exhibits and Meyer’s affidavit) must be taken as true. See Rule 74.04(c)(2); Green, 606 S.W.3d at 117; Reverse Mortg. Sols., Inc., 479 S.W.3d at 667. Consequently, there was no genuine issue of material fact in regards to U.S. Bank’s summary judgment motion.
Appellant’s Points III and IV are denied.
Analysis of Points I and II Appellant asserts in her first and second points on appeal that the probate court erred in granting U.S. Bank’s summary judgment motion because U.S. Bank was not entitled to judgment as a matter of law. In her first point, Appellant argues that the probate court erred in entering
those records were not attached to the subject business records affidavit that was executed by the Vice President of Risk Management for Gateway Metro Federal Credit Union. Gateway, 603 S.W.3d at 320–21. We concluded that the affidavit in that case constituted hearsay and did not sufficiently support the motion for summary judgment specifically because the affidavit “contain[ed] information gained from records, rather than [the affiant]’s personal knowledge.” Id. at 320. We reasoned that, without the subject records attached to the affidavit, the affiant’s purported knowledge of the facts stated in her affidavit (which was gained exclusively from those records) could not meet the “personal knowledge” requirement of Rule 74.04(e) solely from her position as Vice President of Risk Management. Id. at 320–22.
Distinguishable in this case is that exact copies of the subject business records were attached to Meyer’s affidavit and that Meyer stated in his affidavit that he was familiar with the facts therein from his review of those business records and his personal knowledge. Our Court’s opinion in Gateway certainly indicates that a valid business records affidavit that has the required records or copies of such attached meets the requirements of Rule 74.04(e) and sufficiently supports a motion for summary judgment, as is the case here. See id.
14
summary judgment on U.S. Bank’s declaratory judgment claim that it was permitted to make Anne’s requested unitrust election pursuant to § 469.411.5. Specifically, Appellant argues that U.S. Bank was not entitled to judgment as a matter of law on that claim because the Lorenz K. Ayers Trust instrument specifically prohibited the unitrust election sought by Anne. And in her second point, Appellant contends that the probate court erroneously entered summary judgment in U.S. Bank’s favor because U.S. Bank failed to comply with the requirements of §§ 469.403 and 469.405 before attempting to convert Anne’s grandchild trust to a unitrust pursuant to § 469.411.5.
Before analyzing Appellant’s first and second points, we note that, based upon our independent research, no Missouri appellate court has substantively applied or addressed § 469.411 since its enactment in 2001. Section 469.411 (entitled “Determination of unitrust amount--definitions--exclusions to average net fair market value assets--applicability of section to certain trusts--net income of trust to be unitrust amount, when”) authorizes trustees in certain circumstances to convert a beneficiary’s interest in an existing trust from an “income interest” to a “unitrust interest”—that is, one that receives “a percent of the entire trust … rather than just the income.”9 See Thomas K. Riley, NEW DRAFTING ISSUES FOR REVOCABLE TRUSTS, 62 J. Mo. B. 22, 27 (2006). Section 469.411.5 establishes that:
This section shall apply to the following trusts:
(1) Any trust created after August 28, 2001, with respect to which the terms of the trust clearly manifest an intent that this section apply;
(2) Any trust created under an instrument that became irrevocable on, before, or after August 28, 2001, if the trustee, in the trustee’s discretion, elects to have this section apply unless the instrument creating the trust specifically prohibits an
9 Section 469.411.1(1) states that, “if the provisions of this section apply to a trust, the unitrust amount determined for each accounting year of the trust shall be a percentage between three and five percent of the average net fair market value of the trust….” In this case, Anne requested the annual unitrust amount of 4% of her separate, individual grandchild trust’s average net fair market value.
15
election under this subdivision. The trustee shall deliver notice to all qualified beneficiaries and the settlor of the trust, if he or she is then living, of the trustee’s intent to make such an election at least sixty days before making that election. The trustee shall have sole authority to make the election. Section 469.402 shall apply for all purposes of this subdivision. An action or order by any court shall not be required. The election shall be made by a signed writing delivered to the settlor of the trust, if he or she is then living, and to all qualified beneficiaries. The election is irrevocable, unless revoked by order of the court having jurisdiction of the trust.
The election may specify the percentage used to determine the unitrust amount pursuant to this section, provided that such percentage is between three and five percent, or if no percentage is specified, then that percentage shall be three percent.
In making an election pursuant to this subsection, the trustee shall be subject to the same limitations and conditions as apply to an adjustment between income and principal pursuant to subsections 3 and 4 of section 469.405; and
(3) No action of any kind based on an election made by a trustee pursuant to subdivision (2) of this subsection shall be brought against the trustee by any beneficiary of that trust three years from the effective date of that election.
In this case, § 469.411.5(1) cannot apply, as the Lorenz K. Ayers Trust was created before August 28, 2001. U.S. Bank argues that it may, in its discretion as trustee, convert Anne’s separate grandchild trust to a unitrust pursuant to § 469.411.5(2), while Appellant conversely argues that it may not. The parties agree that the Lorenz K. Ayers Trust instrument “became irrevocable on, before, or after August 28, 2001,” but disagree as to whether the Lorenz K. Ayers Trust instrument “specifically prohibits an election under [§ 469.411.5(2)].”
“In determining the meaning of trust provisions, the paramount rule of construction is that the grantor’s intent is controlling and such intention must be ascertained primarily from the trust instrument as a whole.” Arthaud v. Arthaud, 600 S.W.3d 882, 888 (Mo. App. E.D. 2020) (quoting Brown v. Brown, 530 S.W.3d 35, 41 (Mo. App. E.D. 2017)). When interpreting a trust instrument, we “must consider the ‘general scheme or intention as shown by the entire document.’” In Matter of Edwin Meissner Testamentary Trust, 497 S.W.3d 860, 863 (Mo. App. E.D. 2016) (quoting Mercantile Trust Co. v. Sowell, 359 S.W.2d 719, 723 (Mo. banc 1962)). Further, it is not the function of this Court to impart an intent to the grantor that is not expressed
16
in the trust instrument. Thompson v. Koenen, 396 S.W.3d 429, 437 (Mo. App. W.D. 2013) (quoting Kimberlin v. Dull, 218 S.W.3d 613, 616 (Mo. App. W.D. 2007)).
From examining the Lorenz K. Ayers Trust instrument in its entirety, we find that it does not contain any provision specifically prohibiting a unitrust election made pursuant to § 469.411.5(2). Appellant argues that the mere fact that the Lorenz K. Ayers Trust establishes “income only” trusts (i.e., that beneficiaries are only entitled to income earned on a trust’s assets) equates a specific prohibition against such a unitrust conversion because the principal of the Lorenz K. Ayers Trust cannot be invaded. However, that argument is not only circular considering the function of § 469.411 (to enable trustees to make a unitrust election for an existing trust for which a beneficiary has an income interest), but is also contrary to the intent expressed by Grantor in the Lorenz K. Ayers Trust instrument.
Throughout the instrument, Grantor permits the trustees (including U.S. Bank) to intrude upon the principal of a trust created for a beneficiary. Pertinently, after instructing that the trustees “may in their sole discretion apply any part or all of the net income or principal of the trust directly toward the support, care and benefit” of an incapacitated trust beneficiary in Item One, section 7 of the instrument, Grantor further broadly authorizes the trustees to “do all other similar or dissimilar things which the Trustees deem to be for the benefit of said trust and the various beneficiaries thereof, whether or not such things are hereinabove specifically set forth.” Thus, contrary to Appellant’s contention, the Lorenz K. Ayers Trust instrument, if anything, authorizes U.S. Bank to make the sought unitrust distribution under § 469.411.5(2) (an annual unitrust payment to Anne of 4% of the average net fair market value of her individual grandchild trust) rather than the inverse. Regardless, the Lorenz K. Ayers Trust instrument contains no provision that, explicitly or effectively, specifically prohibits a unitrust election under
17
§ 469.411.5(2).10 Further, to Appellant’s second point on appeal, it is clear that a trustee must comply with certain other sections contained within Chapter 469 in order to make a unitrust distribution pursuant to § 469.411.5(2). Section 469.411.5(2) itself notably states that “[s]ection 469.402 shall apply for all purposes of this subdivision,” and that “[i]n making an election pursuant to this subsection, the trustee shall be subject to the same limitations and conditions as apply to an adjustment between income and principal pursuant to subsections 3 and 4 of section 469.405[.]” Section 469.402 simply states that “[t]he provisions of sections 456.3-301 to 456.3-305 shall apply to sections 469.401 to 469.467 for all purposes.” Sections 456.3-301 to 456.3-305 pertain to representation in the administration of a trust, and are not at issue in this case. Section 469.405.3–.4 states in its entirety:
3. A trustee may not make an adjustment:
(1) That diminishes the income interest in a trust which requires all of the income to be paid at least annually to a spouse and for which an estate tax or gift tax marital deduction would be allowed, in whole or in part, if the trustee did not have the power to make the adjustment;
(2) That reduces the actuarial value of the income interest in a trust to which a person transfers property with the intent to qualify for a gift tax exclusion;
(3) That changes the amount payable to a beneficiary as a fixed annuity or a fixed fraction of the value of the trust assets;
(4) From any amount that is permanently set aside for charitable purposes under a will or the terms of a trust to the extent that the existence of the power to adjust would change the character of the amount set aside for federal income, gift or estate tax purposes;
(5) If possessing or exercising the power to make an adjustment causes an individual to be treated as the owner of all or part of the trust for income tax
10 Appellant posits that it would be impossible or illogical for a grantor to execute a trust instrument prior to the enactment of § 469.411 that specifically prohibited a unitrust election pursuant to § 469.411.5(2). Obviously, a trust instrument that was executed and became irrevocable before August 28, 2001 (the effective date of § 469.411), would not explicitly state that “a unitrust election pursuant to § 469.411.5(2) is prohibited”; however, such an instrument could contain a specific provision(s) that explicitly or effectively prohibits a unitrust conversion under § 469.411.5(2) (e.g., “the trustee shall not encroach upon the trust’s principal,” “only the trust’s income shall be distributed to the beneficiary,” etc.). Here, not only does the Lorenz K. Ayers Trust instrument not contain such a provision, but it specifically provides U.S. Bank, as trustee, the discretion to distribute parts or all of the income or principal of a trust created by the instrument as U.S. Bank deems necessary.
18
purposes, and the individual would not be treated as the owner if the trustee did not possess the power to make an adjustment;
(6) If possessing or exercising the power to make an adjustment causes all or part of the trust assets to be included for estate tax purposes in the estate of an individual who has the power to remove or appoint a trustee, or both, and the assets would not be included in the estate of the individual if the trustee did not possess the power to make an adjustment;
(7) If the trustee is a beneficiary of the trust; or (8) If the trustee is not a beneficiary, but the adjustment would benefit the trustee directly or indirectly.
4. If subdivision (5), (6), (7) or (8) of subsection 3 of this section applies to a trustee and there is more than one trustee, a cotrustee to whom the provision does not apply may make the adjustment unless the exercise of the power by the remaining trustee or trustees is not permitted by the terms of the trust.
It is clear that the restrictions on a trustee set forth in § 469.405.3–.4 do not affect the disposition of this case, as none of the listed restrictions that limit when a trustee may make an adjustment pursuant to § 469.405 or make a unitrust election pursuant to § 469.411.5(2) match the factual circumstances of the case at bar. Appellant argues that U.S. Bank was required to comply with the standards of § 469.405.1–.2 (governing the statutory power of trustees to make adjustments between a trust’s income and principal) before attempting to convert Anne’s separate grandchild trust to a unitrust. However, that argument not only ignores that neither § 469.411.5(2) nor § 469.405.1–.2 instructs that those requirements should apply to a unitrust election made pursuant to § 469.411.5(2), but that argument also unnecessarily conflates a statutory adjustment made under § 469.405 and a unitrust election made under § 469.411. We give effect to the legislature’s intent by considering a statute’s plain and ordinary meaning, see Howard v. SSM St. Charles Clinic Med. Grp., Inc., 364 S.W.3d 242, 244 (Mo. App. E.D. 2012), and the plain and ordinary language of §§ 469.411.5(2) and 469.405 indicates that the legislature only intended that § 469.405.3–.4 apply to unitrust elections made under § 469.411.5(2)—to the
19
exclusion of § 469.405.1–.2. Thus, U.S. Bank’s conversion of Anne’s separate grandchild trust to a unitrust was not prohibited by any provision of § 469.405. See § 469.411.5(2).
The only remaining provision of Chapter 469 that affects a trustee’s conversion of a trust to a unitrust pursuant to § 469.411.5(2) is § 469.403.2.11 Section 469.403.2 states:
In exercising the power to adjust pursuant to section 469.405 or a discretionary power of administration regarding a matter within the scope of sections 469.401 to 469.467, whether granted by the terms of a trust, a will, or sections 469.401 to 469.467, a fiduciary shall administer a trust or estate impartially, based on what is fair and reasonable to all of the beneficiaries, except to the extent that the terms of the trust or the will clearly manifest an intent that the fiduciary shall or may favor one or more of the beneficiaries. A determination in accordance with sections 469.401 to 469.467 is presumed to be fair and reasonable to all of the beneficiaries.
As § 469.411.5(2) grants a trustee the discretion to make a unitrust election under that subsection, it is undoubtedly a “discretionary power of administration regarding a matter within the scope of sections 469.401 to 469.467” that is granted by § 469.411.5(2), which is obviously within §§ 469.401 to 469.467. See § 469.403.2. As such, a trustee making a unitrust election pursuant to § 469.411.5(2) must administer the subject trust impartially, “based on what is fair and reasonable to all of the beneficiaries,” and the determination of a trustee to convert a trust to a unitrust under that section “is presumed to be fair and reasonable to all of the beneficiaries.” See § 469.403.2.
In the present case, as stated in U.S. Bank’s statement of uncontroverted material facts, U.S. Bank made the determination that it would be acting impartially by converting Anne’s separate grandchild trust to a unitrust.12 Pursuant to § 469.411.5(2), U.S. Bank, as trustee, has the
11 Section 469.403.1 does not apply to unitrust elections made pursuant to § 469.411.5(2), as § 469.403.1 specifically states that it applies only “[i]n allocating receipts and disbursements to or between principal and income, and with respect to any matter within the scope of sections 469.413 to 469.421….” 12 Contrary to Appellant’s contention, U.S. Bank asserts in its statement of uncontroverted material facts (supported by Meyer’s affidavit and U.S. Bank’s exhibits) that it made this impartiality determination in evaluating whether Anne’s separate grandchild trust should be converted to a unitrust. Appellant attempts to create an issue of fact regarding whether U.S. Bank did make this determination, but Appellant admitted the truth that U.S. Bank had made such a determination by failing to respond to U.S. Bank’s summary judgment motion and statement of
20
sole authority to make a unitrust election under that subsection and may do so in its discretion if that subsection applies, and its determination to do so “is presumed to be fair and reasonable to all of the beneficiaries.” See § 469.403.2. By failing to respond to U.S. Bank’s summary judgment motion or statement of uncontroverted material facts, Appellant admitted the truth of U.S. Bank’s factual assertion that it had determined that it would be acting impartially by making Anne’s sought unitrust election. See supra II. Discussion, Analysis Points III and IV; Rule 74.04(c)(2); Green, 606 S.W.3d at 117; Reverse Mortg. Sols., Inc., 479 S.W.3d at 667. By failing to respond to U.S. Bank’s summary judgment motion and statement of facts, and thereby admitting U.S. Bank’s stated factual assertions, Appellant effectively conceded that U.S. Bank’s determination to convert Anne’s trust to a unitrust was fair and reasonable and consequently failed to overturn the statutory presumption established by § 469.403.2.
Thus, because the Lorenz K. Ayers Trust instrument did not specifically prohibit a unitrust election such that U.S. Bank could convert Anne’s separate grandchild trust to a unitrust pursuant to § 469.411.5(2) and because §§ 469.402, 469.403.2, and 469.405.3–.4 allowed such a conversion, U.S. Bank was entitled to judgment as a matter of law on its declaratory judgment claim. The probate court therefore did not err in granting U.S. Bank’s motion for summary judgment.
Appellant’s Points I and II are denied.
Point V In her fifth point on appeal, Appellant argues that the probate court abused its discretion in ordering Appellant to reimburse Anne’s, Catherine’s, and Donald’s separate grandchild trusts
uncontroverted material facts. See Rule 74.04(c)(2); Green, 606 S.W.3d at 117; Reverse Mortg. Sols., Inc., 479 S.W.3d at 667. Additionally, we note that U.S. Bank’s records clearly indicate that it made such a determination in conducting its final evaluation of whether to convert Anne’s separate grandchild trust to a unitrust.
21
for attorney’s fees incurred by U.S. Bank because that award was neither just nor equitable and was thus unauthorized by § 456.10-1004. Appellant specifically argues that her actions in the below litigation were reasonable as opposed to vexatious, as she was trying to defend her and her children’s contingent remainder interests in Anne’s, Catherine’s, and Donald’s separate grandchild trusts.
Standard of Review
Where an award of attorney’s fees is authorized by law, we review a trial court’s award of attorney’s fees for abuse of discretion. Berry v. Volkswagen Grp. of Am., Inc., 397 S.W.3d 425, 430 (Mo. banc 2013). A trial court’s award of attorney’s fees is an abuse of discretion and requires reversal only if it is “clearly against the logic of the circumstances then before the court and is so arbitrary and unreasonable as to shock the sense of justice and indicate a lack of careful consideration.” City of Byrnes Mill v. Limesand, 599 S.W.3d 466, 477 (Mo. App. E.D. 2020) (quoting State v. Donovan, 539 S.W.3d 57, 69 (Mo. App. E.D. 2017)); see also Berry, 397 S.W.3d at 431.
Analysis
It is the general rule in Missouri that “attorney fees are not awarded to every successful litigant.” Berry, 397 S.W.3d at 431. However, a trial court may award attorney’s fees when a party is entitled to them via contract or when the award is authorized by statute. Id.; Parkway Constr. Servs., Inc. v. Blackline LLC, 573 S.W.3d 652, 666 (Mo. App. E.D. 2019). Further, we consider trial courts to be experts on awarding attorney’s fees because they are best positioned to make such determinations. Parkway Constr. Servs., Inc., 573 S.W.3d at 669; see also Hazelcrest III Condo. Ass’n v. Bent, 495 S.W.3d 200, 209 (Mo. App. E.D. 2016); Berry, 397 S.W.3d at 430.
In this case, the probate court was authorized to award attorney’s fees pursuant to
22
§ 456.10-1004, which broadly states that “[i]n a judicial proceeding involving the administration of a trust, the court, as justice and equity may require, may award costs and expenses, including reasonable attorney’s fees, to any party, to be paid by another party or from the trust that is the subject of the controversy.” The probate court exercised the discretion granted to it by § 456.10- 1004 in ordering Appellant to reimburse Anne’s, Catherine’s, and Donald’s grandchild trusts for the attorney’s fees incurred by U.S. Bank. Specifically, in its December 15, 2019 order, the probate court ordered Appellant to reimburse $94,693.26 to Anne’s grandchild trust and $20,291.25 to each of the grandchild trusts for Catherine and Donald because the court believed that equity and justice required such an award. The probate court noted that Appellant “added a divisive element to the cause of action when she withdrew her prior consent to the conversion of Donald’s separate trust” and that “[her] actions were solely intended to protect her personal interest in her separate trust.”
Considering the procedural circumstances of this case, we cannot say that the probate court’s award of attorney’s fees was clearly against the logic of those circumstances or is so arbitrary and unreasonable as to shock the sense of justice and indicate a lack of careful consideration. See City of Byrnes Mill, 599 S.W.3d at 477; Berry, 397 S.W.3d at 431. It is clear from the record that Appellant did more than simply defend against U.S. Bank’s declaratory judgment claim, as Appellant contends. Appellant did not just file responsive defensive pleadings to U.S. Bank’s petition for declaratory judgment, but instead additionally filed multiple counterclaims and attempted to widen the scope of the litigation below even further by trying to withdraw her previous consents to the conversions of Catherine’s and Donald’s separate grandchild trusts to unitrusts (which were not part of the initial claim filed by U.S. Bank). And, as the probate court noted, Appellant’s explicit intent in filing her counterclaims and motions to
23
withdraw her previous consents was to limit the amounts that Anne, Catherine, and Donald could receive from their separate grandchild trusts so that Appellant and her children would receive the most possible from the remainders of those trusts. This is certainly noteworthy considering that Appellant and her children are not expressly indicated as recipients of Anne’s, Catherine’s, or Donald’s trusts by the Lorenz K. Ayers Trust instrument, but rather, are the contingent beneficiaries of those separate trusts if Anne, Catherine, and/or Donald die childless.13 Appellant’s actions undoubtedly prolonged and complicated the case below more so than if Appellant had only defended the relatively straight-forward legal claim asserted by U.S. Bank.
The probate court clearly accounted for these aforementioned circumstances in its order awarding attorney’s fees and found that equity and justice required its award considering such circumstances. See § 456.10-1004. Accordingly, we cannot say that the probate court’s award of attorney’s fees was arbitrarily arrived at or unreasonable, nor that it indicates indifference or a lack of proper judicial consideration. See City of Byrnes Mill, 599 S.W.3d at 477; Berry, 397 S.W.3d at 431. Thus, the probate court did not abuse its discretion in granting U.S. Bank’s motion for attorney’s fees and ordering Appellant to reimburse Anne’s, Catherine’s, and Donald’s grandchild trusts for the attorney’s fees incurred by U.S. Bank.
Appellant’s Point V is denied.
U.S. Bank’s Motion for Attorney’s Fees on Appeal Similar to its motion for attorney’s fees before the probate court, U.S. Bank argues in its motion for appellate attorney’s fees that it is entitled to attorney’s fees on appeal pursuant to § 456.10-1004. We are authorized to award attorney’s fees in this case pursuant to § 456.10- 1004, and consistent with our conclusion on Appellant’s Point V, we grant U.S. Bank’s motion
13 We again recognize that Catherine is not childless, but include her in this analysis as Appellant did in her pleadings.
24
for appellate attorney’s fees finding that equity and justice require such an award. See § 456.10- 1004. In particular, we again note Appellant’s actions before the probate court that caused U.S. Bank to incur additional attorney’s fees precipitating and during this appeal. See supra II. Discussion, Point V, Analysis.
“While we have the ‘authority to allow and fix the amount of [attorney’s] fees on appeal, we exercise this power with caution, believing in most cases that the trial court is better equipped to hear evidence and argument on this issue and determine the reasonableness of the fee requested.’” Lehman v. Auto. Invs., LLC, 608 S.W.3d 733, 741 (Mo. App. E.D. 2020) (quoting Jamestowne Homeowners Ass’n Trs. v. Jackson, 417 S.W.3d 348, 360 (Mo. App. E.D. 2013)). We therefore remand to the probate court for the sole purpose of determining U.S. Bank’s reasonable appellate attorney’s fees.
III. Conclusion
For the foregoing reasons, we affirm the judgment of the probate court and remand for the probate court to determine U.S. Bank’s reasonable attorney’s fees on appeal.
_______________________________
Colleen Dolan, P.J.
Mary K. Hoff, J., concurs. Robert M. Clayton III, J., concurs.