In the Matter of the Walter Penner Trust Under Agreement Created by the Grantor, Walter Penner on April 13, 2010, Stanley Penner v. Ronald Penner , 2014 Ind. App. LEXIS 563 ( 2014 )

Nov 17 2014, 6:12 am
FOR PUBLICATION
ATTORNEY FOR APPELLANT: ATTORNEY FOR APPELLEE:
JASON M. SMITH KATHRYN D. SCHMIDT
Seymour, Indiana Burke Costanza & Carberry LLP
Merrillville, Indiana
IN THE
COURT OF APPEALS OF INDIANA
IN THE MATTER OF THE WALTER )
PENNER TRUST UNDER AGREEMENT )
CREATED BY THE GRANTOR, WALTER )
PENNER ON APRIL 13, 2010, )
)
STANLEY PENNER, )
)
Appellant-Petitioner, )
)
vs. ) No. 45A03-1212-TR-516
)
RONALD PENNER, )
)
Appellee-Respondent. )
APPEAL FROM THE LAKE CIRCUIT COURT
The Honorable George Paras, Judge
Cause No. 45C01-1112-TR-17
November 17, 2014
OPINION – FOR PUBLICATION
MAY, Judge
The parties to this case, along with their brother Frank Penner, are beneficiaries of the
Walter Penner Living Trust (Trust). According to the terms of the Trust, Ronald Penner
became the Trustee of the Trust on Walter’s death. Stanley Penner brought an action against
Ronald in his capacity as Trustee, and the trial court found against Stanley on all counts.
Stanley now appeals the denial of his motion to correct error and the trial court’s order that
he pay attorney fees to the Trust. He presents multiple issues for our review, which we
consolidate and restate as:
1. Whether the trial court erred when it determined Ronald, in his capacity as
Trustee, did not commit the following breaches of trust:
a. failure to submit an accounting of the Trust;
b. mismanagement of funds and property;
c. co-mingling of Ronald’s personal funds and Trust funds;
2. Whether the trial court erred when it determined Stanley was not entitled to
attorney’s fees;
3. Whether the trial court erred when it ordered Stanley to pay the Trust’s
attorney’s fees because his claim was frivolous; and
4. Whether Stanley is entitled to appellate attorney’s fees.
We affirm and remand.
FACTS AND PROCEDURAL HISTORY
On April 13, 2010, Walter created the Trust, named Ronald, Stanley, and Frank as
beneficiaries, and named Ronald as successor trustee, with Frank to serve if Ronald was
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unable, and Stanley to serve if Ronald and Frank were unable. Walter died on March 30,
2011. Shortly thereafter, Ronald, Stanley, and Frank met to discuss the assets of the Trust.
At that time, Ronald proposed the three work on repairing Walter’s home, which was an asset
of the Trust, in order to prepare it for sale in August 2012.
The brothers met at Walter’s house in August 2011 to work on it, but little was
accomplished. At that time, Stanley indicated he planned to sue Ronald (hereinafter,
“Trustee”) in his capacity as trustee, and he would do so to deplete the assets of the Trust.
Neither Ronald nor Frank thought Stanley was joking. In addition, Stanley also said his
statement “[was] not a threat; it [was] a promise.” (App. at 151.)
On December 9, 2011, Stanley filed a Petition for Trustee’s Accounting, for Order to
Sell Real Estate, and Related Matters, alleging Trustee had committed certain breaches of
trust including failure to render an accounting, mismanagement of Trust assets, and
mismanagement of the sale of Walter’s residence. The trial court held a hearing on the
matter on February 16, 2012, during which Stanley argued Walter’s residence should be
deeded to the three brothers as tenants in common. On the day of the hearing, Trustee filed a
request for attorney’s fees, alleging Stanley’s claims were frivolous and the legal action was
meant to harass. Stanley orally requested attorney’s fees during the hearing.
While the case was pending, Walter’s residence sold. On August 23, 2012, the trial
court issued its order denying Stanley’s claims and denying Stanley’s oral request for
attorney’s fees. Stanley filed a motion to correct error on September 24; it was deemed
denied on November 8, 2012. The parties appeared before the trial court on November 8 for
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a status conference and to present their arguments regarding attorney’s fees. On December 7,
Stanley filed his notice of appeal with this court. On February 1, 2013, the trial court ordered
Stanley to pay $13,166.00 in attorney’s fees to the Trust, and it denied Stanley’s request for
attorney’s fees. Stanley filed an amended appeal with this court on February 28, 2013.
DISCUSSION AND DECISION
A trial court has broad discretion in ruling on a motion to correct error. Volunteers of
Am. v. Premier Auto Acceptance Corp., 755 N.E.2d 656, 658 (Ind. Ct. App. 2001). We will
reverse only for an abuse of that discretion. Id. An abuse of discretion occurs if the decision
was against the logic and effect of the facts and circumstances before the court or if the court
misapplied the law. Id.The trial court sua sponte entered findings of fact and conclusions of law. When the
trial court enters findings sua sponte, the specific findings control only as to the issues they
cover, and a general judgment standard applies to any issue on which the court has not
entered findings. Scoleri v. Scoleri, 766 N.E.2d 1211, 1214-15 (Ind. Ct. App. 2002). In
reviewing the judgment, we determine whether the evidence supports the findings and the
findings support the judgment. Id. at 1215. We will reverse only when the judgment is
clearly erroneous, i.e., when it is unsupported by the findings of fact and conclusions entered
on the findings. Id. For findings of fact to be clearly erroneous, the record must lack
probative evidence or reasonable inferences from the evidence to support them. Id. In
determining the validity of the findings or judgment, we consider only the evidence favorable
to the judgment and all reasonable inferences to be drawn therefrom, and we will not reweigh
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evidence or assess credibility of witnesses. Id. A general judgment may be affirmed on any
theory supported by the evidence presented at trial. Id.
1. Alleged Breaches of Trust
The court’s primary purpose in construing a trust document is to “ascertain and give
effect to the settlor’s intention.” Univ. of S. Ind. Found. v. Baker, 843 N.E.2d 528, 532 (Ind.
2006). Indiana follows “the four corners rule” that “extrinsic evidence is not admissible to
add to, vary or explain the terms of a written instrument if the terms of the instrument are
susceptible of a clear and unambiguous construction.” Hauck v. Second Nat’l Bank of
Richmond, 153 Ind. App. 245, 259, 286 N.E.2d 852, 861 (1972), reh’g denied. Therefore,
the court must give effect to a Trust’s clear meaning without the use of extrinsic evidence
where a Trust is capable of clear and unambiguous interpretation. See Baker, 943 N.E.2d at
532. Document language is not ambiguous simply because two parties disagree about the
meaning of the language. Id. Rather, “language is ambiguous only if reasonable people
could come to different conclusions as to its meaning.” Id.
a. Accounting of Trust
Regarding the Trustee’s responsibility to provide an accounting to Stanley, the trial
court found:
9. Stanley requested an accounting of the Trust assets and the Trustee has
not provided one. The Trust, in [Section] VII. D., provides no accountings are
required. Trustee did provide Stanley bank statements and other financial
documents for his review. Trustee also provided information to Stanley
regarding the estimated Indiana inheritance tax liability which was due
December 30, 2011. The IH-6 was filed and Stanley paid his share of the tax
which was less than he anticipated.
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(App. at 10.) Based on that finding, the trial court concluded:
8. Trustee provided Stanley with and [sic] bank account and other
financial information although no formal accounting. However, the Trust
document provides that there do not have to be accountings. [Section] VII D.
It also provides that Trustee shall not be liable for actions taken in good faith.
[Section] IV I. Stanley’s allegations of “wrongful transactions” requiring an
accounting are not established by the evidence. Trustee had the right to
advance funds and in good faith used the checking account to pay expenses
and create the trust account in order to preserve the trust property. The intent
of the settler [sic] was for there to be no accounting and there is no reason to
vary from the clear language evidencing that intent.
(Id. at 13-14.) Stanley argues he is entitled to an accounting despite language in the Trust
relieving the Trustee of the requirement to do so. We disagree.
Section VII. D. of the Trust states, “No accountings or reports shall be required of the
trustee.” (Id. at 33.) While Ind. Code § 30-4-3-6(b) requires the trustee to “maintain clear
and accurate accounts with respect to the trust estate” and provide access to the trust’s
accounting and financial records, and while Ind. Code § 30-4-5-12(a) requires the trustee
provide an annual accounting of the trust, both statutory provisions indicate those
requirements apply only when the terms of the trust do not provide otherwise. The language
in the Trust was not ambiguous, and thus the Trust provisions override the statutes. The
Trustee was not required to provide Stanley with an accounting of the Trust.
b. Alleged Mismanagement of the Trust
Under Ind. Code § 30-4-3-6(a), the Trustee “has a duty to administer a trust according
to the terms of that trust.” Stanley argues Trustee violated that duty when Trustee: (1) did not
immediately sell Walter’s residence included in the Trust and disburse those assets to the
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beneficiaries of the Trust; (2) did not make the Trust property productive and did not act as a
prudent investor; and (3) prolonged the distribution of the Trust for Trustee’s own benefit.
The trial court rejected Stanley’s allegations, and we find no error in that decision.
Stanley argues Trustee’s delay in selling Walter’s real estate upon his death violates
the term of the trust which states: “Upon the death of the grantor, the trustee shall distribute
the trust property outright to the beneficiaries named in Section V, Paragraph (A) subject to
any provision in this Declaration of Trust.” (App. at 32.) Under the “Specified Powers”
section of the Trust:
The trustee’s powers include, but are not limited to:
*****
2. The power to manage trust real estate as if the trustee were the absolute
owner of it, including the power to lease or grant options to lease the
property, to make repairs or alterations, and to insure against loss.
3. The power to sell or grant options for the sale or exchange of any trust
property, including stocks, bonds, debentures, and any other form of
security or security account, at public or private sale for cash or on
credit.
4. The power to invest trust property in property of any kind, including but
not limited to bonds, debentures, notes, mortgages, stocks, stock
options, stock futures, and buying on margin.
*****
7. The power to dispose and hold trust funds in interest-bearing accounts.
*****
11. The power to diversify investments.
(Id. at 31.) The trial court concluded the “Specified Powers” delineated in the Trust language
were “clear and unambiguous and [gave] Trustee the full power to deal with the real estate.”
(Id. at 12.) The trial court noted: “Trustee is insuring the property, repairing and cleaning it
and making it ready for sale in this [sic] spring.” (Id.) Therefore, while Trustee was required
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to disburse assets of the trust upon Walter’s death, he was given the power to manage those
assets to the benefit of the beneficiaries pursuant to the clause which states that disbursement
is “subject to any Provision in this Declaration of Trust.” (Id. at 32.)
Trustee presented evidence he decided to wait to list Walter’s house on the market
until the real estate market improved, as to maximize the profit gained from the sale of the
house, that he and one of the other beneficiaries had been working to fix up the house, and
that the other beneficiary was satisfied with his management of the trust. Stanley’s argument
is an invitation for us to reweigh the evidence, which we cannot do. See Scoleri, 766 N.E.2d
at 1215 (appellate court cannot reweigh evidence on appeal).
c. Co-mingling of Trust Assets
Ind. Code § 30-4-3-6(b)(5) requires the Trustee to “[k]eep the trust property separate
from the trustee’s individual property[.]” Ind. Code § 30-4-3-3(a)(10)(A) grants Trustee the
power to “advance money for the benefit of the trust estate and for all expenses or losses
sustained in the administration of the trust.” Stanley argues Trustee committed a breach of
trust when he paid bills such as Walter’s medical and funeral expenses, out of his personal
account, instead of out of the Trust account, and then refused Stanley’s request for an
accounting of the Trust. Trustee did not.
Regarding this issue, the trial court found:
12. [Trustee] has paid a number of bills with his own funds like the funeral
and funeral lunch, Walter’s final medical bills and payment for other work
performed at the Residence. With only the house and personal possessions in
the Trust, it is cash poor and funds must come from somewhere to maintain the
trust property.
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(App. at 11.) Based on that finding, the trial court concluded:
8. Trustee provided Stanley with and [sic] bank account information and
other financial information although no formal accounting. However, the
Trust document provides that there do not have to be accountings. [Section]
VII D. It also provides that Trustee shall not be liable for actions taken in
good faith. [Section] IV I. Stanley’s allegations of “wrongful transactions”
requiring an accounting are not established by the evidence. Trustee had the
right to advance funds and in good faith used the checking account to pay
expenses and create the trust account in order to preserve the trust property.
The intent of the settler [sic] was for there to be no accounting and there is no
reason to vary from the clear language evidencing that intent.
(Id. at 13-14.) We agree with the trial court. There was no evidence suggesting Trustee
improperly used his personal funds for the benefit of the Trust, and the Trust language
indicated an accounting of the Trust was not required. Stanley’s argument is an invitation for
us to reweigh the evidence, which we cannot do. See Scoleri, 766 N.E.2d at 1215 (appellate
court cannot reweigh evidence on appeal).
2. Stanley’s Attorney Fees
Under Ind. Code § 30-4-3-22(a), a “beneficiary of a trust may maintain an action (1)
to compel the trustee to perform his duties . . . [or] (3) to compel the trustee to redress a
breach of trust.” Under Ind. Code § 30-4-3-22(e), if a beneficiary “successfully maintains an
action under subsection (a) of this section . . . he is entitled to a judgment for reasonable
attorney’s fees.” Stanley was not successful in his claim alleging deficiencies in Trustee’s
performance, and thus he was not entitled to attorney’s fees.
3. Trust’s Attorney Fees
Under Ind. Code § 34-52-1-1(b):
[T]he court may award attorney’s fees as part of the cost to the prevailing
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party, if the court finds that either party:
(1) brought the action or defense on a claim or defense that is frivolous,
unreasonable, or groundless;
(2) continued to litigate the action or defense after the party’s claim or
defense clearly became frivolous, unreasonable, or groundless; or
(3) litigated the action in bad faith.
For purposes of awarding attorney’s fees under Ind. Code § 34-52-1-1(b), a claim is frivolous
“if it is made primarily to harass or maliciously injure another[.]” Parks v. Madison Cty., 783
N.E.2d 711, 723 (Ind. Ct. App. 2002), reh’g denied, trans. denied. A claim is “litigated in
‘bad faith’ if the party presenting the claim is affirmatively operating with furtive design or
ill will.” Id.A trial court’s decision to award attorney’s fees pursuant to Ind. Code § 34-52-1-1(b)
is subject to a multi-level review. Purcell v. Old Nat. Bank, 972 N.E.2d 835, 843 (Ind.
2012).
[T]he trial court’s findings of facts are reviewed under the clearly erroneous
standard and legal conclusions regarding whether the litigant’s claim was
frivolous, unreasonable, or groundless are reviewed de novo. Finally, the trial
court’s decision to award attorney’s fees and any amount thereof is reviewed
for an abuse of discretion. A trial court abuses its discretion if its decision
clearly contravenes the logic and effect of the facts and circumstances or if the
trial court has misinterpreted the law.
Id.In its order awarding attorney’s fees to the Trust, the trial court found:
4. Trustee made several trips to Indiana during the summer of 2011. In
August, the three brothers met at the property and were suppose [sic] to work
on needed repairs. Trustee called Stanley and asked if he would work on the
cracks in the dry wall. Stanley came with some spackle but proceeded to do
nothing on the house but complained the entire time the three were there.
Stanley indicated he would do anything to waste Trustee’s time.
5. Also in August 2011, while all three brothers were at the house, Stanley
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threatened Trustee saying he talked to a lawyer and that he was going to sue
Trustee and deplete the assets of the trust with legal fees. Stanley admitted the
conversation, saying it was a joke. Trustee and Frank did not think it was a
joke. Stanley testified he told Trustee: “It is not a threat; it is a promise.” He
has followed through on that promise. As a result, thousands of dollars in
legal fees have been incurred by the Trust.
6. Stanley requested an accounting of the Trust assets and the Trustee has
not provided one. However, the Trust, in [Section] VII, Paragraph D.,
provides no accountings or reports are required. Trustee did provide Stanley
bank statements and other financial documents for his review. Trustee also
provided information to Stanley regarding the estimated Indiana Inheritance
Tax liability which was due December 30, 2011. The IH-6 was filed and
Stanley paid his share of the tax which was less than he anticipated. Stanley
has had the financial information and the request for an accounting is just
another method by which he has harassed Trustee and depleted the assets of
the trust.
7. The personal property belonging to Walter Penner has now been
distributed. Trustee sent an inventory to the other beneficiaries in August,
2011 and asked them to mark the items they wanted to have from the
Residence. Trustee would then discuss the items with the others if more than
one person wanted something; a decision would be made and then the property
would be distributed. Originally, neither of the other beneficiaries returned the
inventory. Stanley had not returned the inventory when he filed his petition
requesting the distribution, again establishing his goal of harassing Trustee.
Trustee gave the inventory to the beneficiaries again and all three met at the
house on February 19, 2012 to review the personal property and decide what
each was to receive. Since that time, the beneficiaries met at the house in
April and June, 2012 obtaining items they wanted. At the meeting in June,
Stanley indicated there were items of furniture he “maybe” would want.
Trustee had to send out the inventory again with the “maybe” items marked
asking Stanley to make up his mind. Stanley’s complaints on the delay in the
distribution of personal property are disingenuous as he has caused the delay
by not responding promptly when Trustee sent the inventories for review.
Filing the petition for distribution when he had not returned the inventory
makes his petition unreasonable.
8. Although Stanley has complained about everything that Trustee has
done since the death of Walter and is making good on his “promise” to deplete
the trust with legal fees, the other beneficiary and brother, Frank, said: he is
happy about how all aspects of Walter Penner’s estate were handled; he trusts
Ronald as Trustee; the preparation of the house for sale was moving forward
and he agreed that last year was a bad time to put the house up for sale.
Stanley ignores such facts even though Frank is an equal stakeholder in this
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matter. Stanley has pushed issues to harass Trustee and waste trust assets.
9. The actions taken by Stanley in regard to filing the Petition for
Trustee’s Accounting, For Order To Sell Real Estate and Related Matters
when he knew Trustee’s plan for the sale for the real estate, as well as having
received the inventory of personal property to mark but did not return was
primarily to harass and maliciously injure Trustee and should be deemed a
frivolous, unreasonable and groundless filing.
10. Trustee has done exactly what he told the beneficiaries he would do.
The house was readied for sale and put on the market on March 30, 2012 and
the personal property was distributed in April and June, 2012 when the
beneficiaries returned the inventories marked by them for the items requested.
The Residence was sold and the transaction closed on July 27, 2012. Based
upon the offer of $160,200.00 and the market value of $149,000.00 as of
March, 2011, the value of the house increased $11,200.00 under the
administration of Trustee. There was no reason for Stanley to file the petition
requiring Trustee to go through a full hearing, submission of numerous
memoranda and submission of proposed orders, etc. Trustee has had to
expend thousands of dollars for attorney fees and many hours of his personal
time to defend against the frivolous, unreasonable and groundless petition.
11. Stanley made an oral request for fees at the hearing in February, 2012
and followed it up with arguments that he had the right to file the petition and
that he prevailed on his requests implying that the actions of Trustee were a
result of the petition. The evidence does not support the conclusion and his
initial request for attorney fees was denied by the Court in its August 23, 2012
order.
*****
14. Stanley filed a Motion to Correct Errors on September ,[sic] 2012 to
which Trustee had to reply filing Trustee’s Statement in Opposition to
Beneficiary’s Motion to Correct Errors on October 19, 2012. The Motion to
Correct Errors was a regurgitation of the baseless assertions Stanley had made
previously, was not set for hearing and was deemed denied on November 8,
2012.
15. The Trust provides in [Section] VI, Paragraph B. 6. that he [sic] Trustee
has “[t]he power to employ and pay reasonable fees to accountants, lawyers, or
investment experts for information or advice relating to the trust.” Although
the Trust may pay attorney fees, the Trust also provides in [Section] IV,
Paragraph I that “[w]ith respect to the exercise or non-exercise of discretionary
powers granted by this Declaration of Trust, the trustee shall not be liable for
actions taken in good faith.” The Trust should not have to incur the cost of
unnecessary litigation.
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(App. at 16-21.) Stanley asserts many of the trial court’s findings are erroneous and attempts
to continue his argument regarding these findings in his appellate brief. Specifically, Stanley
takes issue with findings regarding Walter’s residence and the sale thereof, the quantity of
financial documents provided to him by Trustee, and his unwillingness to agree to the
manner in which Trustee attempted to divide Walter’s personal property. His arguments are
invitations for us to reweigh the evidence, which we cannot do. See Scoleri, 766 N.E.2d at
1215 (appellate court cannot reweigh evidence on appeal).
Even if the findings to which Stanley objects were not supported by sufficient
evidence, the fact remains he made a statement to Trustee and Frank indicating his intent to
drain the corpus of the Trust by filing legal actions, those legal actions were unsuccessful
based on the clear language of the Trust, and Stanley continued his legal harassment
regardless. We find no abuse of discretion in the trial court’s award of legal fees to the Trust.
4. Appellate Attorney’s Fees
In his brief, Stanley requests appellate attorney’s fees because “the probate court
abused its discretion when it refused to order an accounting and found Stanley’s claim
frivolous[.]” (Br. of Appellant at 28.) As noted in previous sections of this opinion, the trial
court did not err in its decision regarding the Trustee’s management of the Trust, its award of
attorney’s fees to the Trust, or its denial of attorney’s fees to Stanley. Accordingly, we deny
Stanley’s request for appellate attorney’s fees.
However, under Appellate Rule 67, we may sua sponte award appellate attorney’s fees
in the event an appeal is “permeated with meritlessness, bad faith, frivolity, harassment,
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vexatiousness, or purpose of delay.” GEICO v. Rowell, 705 N.E.2d 476, 483 n.12 (Ind. Ct.
App. 1999), reh’g denied. As noted above, Stanley’s arguments, at the trial court and on
appeal, are groundless and frivolous based on the controlling statutes and the plain language
of the Trust. One of the most egregious of these is Stanley’s assertion that he was entitled to
attorney’s fees at the trial court level based on Ind. Code § 30-4-3-22(e), which grants
attorney’s fees to a beneficiary who is successful in a claim to enforce the terms of the Trust.
There is no ambiguity - the trial court’s order clearly indicates Stanley was unsuccessful in
his action to enforce what he claimed to be the terms of the Trust. His request for attorney’s
fees at the trial court, as well as the appellate level, is ridiculous.
In addition, Stanley failed to comply with many of the Indiana Rules of Appellate
Procedure. First, he did not include a table of contents in his Appendix as required by App.
R. 50(C). In a case with the multitude of filings such as the instant case, the absence of a
table of contents severely hinders the review of the appeal. In addition, Stanley’s Statement
of Facts is rife with argument, which is not permitted under App. R. 46(A)(6). See also
Wright v. Elston, 701 N.E.2d 1227, 1230 (Ind. Ct. App. 1998) (“A Statement of Facts should
be a concise narrative of the facts stated in a light most favorable to the judgment, [sic] and
should not be argumentative.”), trans. denied. We recognize that, taken alone, none of these
violations or arguments would rise to the level of appellate sanctions; however, taken
together, they are an unnecessary drain on judicial resources. Accordingly, we remand this
matter to the trial court for computation and award of appellate attorney’s fees to the Trust.
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CONCLUSION
The trial court did not err in its findings and conclusions of law regarding Trustee’s
management of the Trust. Further, the trial court did not abuse its discretion when it awarded
the Trust attorney’s fees and denied Stanley’s request for attorney’s fees. Finally, we deny
Stanley’s request for appellate attorney’s fees and sua sponte award the Trust attorney’s fees,
to be determined and ordered by the trial court on remand.
Affirmed and remanded.
KIRSCH, J., and BAILEY, J., concur.
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