Harold O. Fulp, Jr. v. Nancy A. Gilliland, Individually and as Successor Trustee of the Ruth E. Fulp Revocable Trust Dated June 29, 2005 ( 2012 )

FOR PUBLICATION FILED
Aug 14 2012, 8:57 am
CLERK
of the supreme court,
court of appeals and
tax court
ATTORNEY FOR APPELLANT: ATTORNEYS FOR APPELLEE:
ROBERT M. HAMLETT THOMAS W. VANDER LUITGAREN
Frank & Kraft BRANDI R. FOSTER
Indianapolis, Indiana Van Valer Law Firm
Greenwood, Indiana
IN THE
COURT OF APPEALS OF INDIANA
HAROLD O. FULP, JR., )
)
Appellant-Plaintiff, )
)
vs. ) No. 41A01-1111-TR-530
)
NANCY A. GILLILAND, Individually and as )
Successor Trustee of the Ruth E. Fulp )
Revocable Trust Dated June 29, 2005, )
)
Appellee-Defendant. )
APPEAL FROM THE JOHNSON SUPERIOR COURT
The Honorable Kevin M. Barton, Judge
Cause No. 41D01-1011-TR-299
August 14, 2012
OPINION - FOR PUBLICATION
RILEY, Judge
STATEMENT OF THE CASE
Appellant-Plaintiff, Harold O. Fulp, Jr. (Harold), appeals the trial court’s denial of
his request for specific performance of a purchase agreement which he entered into with
Ruth E. Fulp (Ruth) and which was rescinded by Appellee-Defendant, Nancy A.
Gilliland (Gilliland), Individually and as Successor Trustee of the Ruth E. Fulp
Revocable Trust.
We affirm in part and reverse in part.
ISSUES
Harold raises five issues on appeal, which we consolidate and restate as the
following two issues:
(1) Whether Ruth, as the settlor, trustee, and sole lifetime beneficiary of the Ruth
E. Fulp Revocable Trust, could properly execute a purchase agreement for the sale of the
Trust property, thereby divesting the Trust; and
(2) Whether the trial court erred by determining that Gilliland did not tortiously
interfere with the purchase agreement when she rescinded the agreement upon becoming
successor trustee.
FACTS AND PROCEDURAL HISTORY
Ruth was married to Harold O. Fulp, Sr. (Fulp). During their marriage, three
children were born: Harold, Terry Fulp (Terry), and Gilliland. The family resided at the
family farm, which consisted of approximately 254.66 acres and was located in Franklin,
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Indiana. After Fulp’s death in 1990, Harold farmed the land on a cash rent basis. On
May 19, 2004, Ruth sold fifty acres, consisting mostly of woodland, to Gilliland’s
daughter for $110,000.
On June 29, 2005, Ruth executed the Ruth E. Fulp Revocable Trust (the Trust),
designating herself as the settlor, trustee, and sole lifetime beneficiary and incorporating
the family farm as the main Trust corpus by quitclaim deed. Ruth’s three children were
named as remainder beneficiaries. Article I of the Trust provided, in pertinent part, that
“the settlor shall have the right to alter, amend or revoke this agreement in any respect or
particular.” (Appellant’s App. p. 40).
Following the execution of the Trust and due to her advancing age and infirmity,
Ruth moved to the Indiana Masonic Home in Franklin, Indiana, where she resides to this
day. Of Ruth’s three children, Harold was the only child interested in farming the family
farm. Because Ruth wanted the farm to remain in the family, Gilliland encouraged Ruth
to ask Harold about his interest in purchasing the real estate. In August 2010, while
Harold visited Ruth in the nursing home, Ruth approached Harold about buying the farm.
Harold indicated that he was interested if he could obtain a loan to do so. On a next visit,
Harold presented his mother with a piece of paper showing a scenario of sale price
options, reflecting a total sale price from four thousand dollars per acre down in one
hundred dollar increments to one thousand five hundred dollars per acre. Arriving at a
price of two thousand two hundred dollars per acre, Harold mentioned to Ruth that this
was the sale price she had given to her granddaughter in 2004. Harold suggested that the
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same price per acre be used for his transaction. Ruth responded, “I guess I could” sell the
farm for that price. (Transcript p. 21). Harold told his mother, “well, mom, I know the
ground’s worth more than that, but, [], it’s up to you.” (Tr. p. 70). Harold testified that
his mother stated “What I done for one, I can do for another.” (Tr. p. 70).
On September 7, 2010, Harold again visited his mother presenting her with a
Purchase Offer Agreement to sell the farm for a total purchase price of $450,252. Even
though Ruth could not read the form without her glasses, she signed the sales agreement
in front of two witnesses. After signing the agreement, Ruth contacted Gilliland and
advised her of the transaction. Approximately two weeks later, on September 21, 2010,
Ruth resigned as trustee and Gilliland assumed the role of successor trustee of the Trust.
The following day, September 22, 2010, Jack Rogers (attorney Rogers), Ruth’s attorney,
advised Ruth’s three children that
[y]our mother, [], is distressed about the fair market value of her farm. She
wishes to treat all three of you equally after she passes on, but in the
meanwhile, she wishes to have the financial resources to pay her own way
at the Masonic Home while she is alive. She has a line of credit at Mutual
Savings Bank based on the bank’s appraisal of the value of her farm. This
appraised value is approximately $900,000.00. Any sale of the farm for
less than this value will result in a gift tax issue that the U.S. Congress has
yet to resolve.
In any event, your mother is not able to emotionally handle the Fulp
Family’s diversity of interests and objectives. For this reason she has
resigned as the Trustee of her revocable trust and has turned the trusteeship
over to [Gilliland] with Ruth’s brother, Robert, as the backup trustee, both
of whom are interested in your mother’s care and comfort during her
lifetime.
(Appellant’s App. p. 320).
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On October 8, 2010, Harold’s attorney wrote to Ruth, informing her that Harold
had arranged financing to buy the family farm in accordance with the Purchase Offer
Agreement and requesting permission to set a closing date. Four days later, on October
12, 2010, attorney Rogers responded
I am sorry to report that [Ruth] is not mentally competent to manage her
financial affairs and she is in fact no longer in control of the real estate you
reference. There will be no real estate closing in the near future. In fact,
[Ruth] does not have a copy of any agreement to sell any land, nor does she
know the terms of the sale you reference. This is not unusual for a 91 year
old person confined to a long-term care facility where trained staff is well
aware of the mental health of each of their patients.
(Appellant’s App. p. 57). Thereafter, Gilliland repudiated the Purchase Offer Agreement.
On November 22, 2010, Harold filed his Complaint seeking the docketing of the
Trust, the removal of Gilliland as trustee, specific performance of the Purchase Offer
Agreement, and bringing a claim for tortious interference with a contract. On April 12,
2011, Gilliland filed a counterclaim against Harold, alleging tortious interference with an
inheritance. On April 30, 2011, the trial court granted Harold’s motion to dismiss
Gilliland’s counterclaim. On July 27, 2011, the trial court conducted a bench trial.
Thereafter, on October 27, 2011, the trial court entered a detailed Order and Judgment,
comprised of twenty pages and one hundred and nine findings, concluding, in pertinent
part, that
57. The consideration for the sale was approximately one-half of the
known bank appraisal at the time, []. [Gilliland] argues from this disparity
that the transaction was the result of either mental incapacity by [Ruth] or
undue influence by [Harold]. However, a family dynamic is also present.
In establishing the sales price of the farm, [Harold] confronted his mother
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with the fact that she had previously sold acreage for an amount less than
the appraised value of the acreage. This placed [Ruth] in the position of
either accepting the price established in a prior transaction on the principle
that she would treat her son and her granddaughter the same or she would
have to demand a higher price, presumably based on fair market value, and
thus implicitly state to her son that she had previously allowed her
granddaughter to benefit from a transaction with a reduced per acre sales
price but she would now apply different terms of sale. She elected the
former at the time. The decision is logical from the standpoint that she is
not showing favoritism as to the family members to whom she has sold
farm acreage, and the decision permits the farm to remain in the family.
58. From a consideration of all factors, the court is unable to determine that
the sale of the farm for an amount less than the appraised value of the farm
establishes any mental incapacity of [Ruth]. The [c]ourt must conclude the
contrary from the evidence presented, [Ruth] was mentally competent and
made a rationale decision.
***
66. The [c]ourt is unable to find undue influence. As noted above, the
price that was established was a sensible decision based upon the family
relationships and past history. Essentially, under the circumstances,
[Harold] “pitched” that the prior price established in the sale to the
granddaughter was a fair price, and [Ruth] agreed. This is not undue
influence. The court also notes that the Purchase Offer Agreement was
witnessed by two employees of the Indiana Masonic Home. One of the
employees was described as a nurse. The testimony was that the agreement
was signed at the nurse’s station. Although neither party called either
witness to testify, the [c]ourt is aware from prior experience that employees
in hospitals, nursing homes and assisted living facilities are particularly
cautious in serving as witnesses. Here, the employees only signed as
witnesses and without being asked to certify any particular facts. However,
the [c]ourt may conclude that the execution of the Purchase Offer
Agreement occurred in front of other individuals, and the circumstances of
the situation did not raise any particular concern to those individuals acting
as witnesses from serving as witnesses. The [c]ourt does not find that
undue influence has been established.
***
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101. Here [Harold] seeks specific performance in equity of the contract
that he procured by breach of the fiduciary duty that he as a beneficiary
owed to the Trust and beneficiaries entering into a contract with the
[t]rustee by which the [t]rustee breached her fiduciary duties by selling trust
property for less than the fair market value of the property.
102. For the [c]ourt to enforce the contract in equity would be to condone a
beneficiary’s breach of fiduciary duty and a violation of Indiana Code
[section] 30-4-3-20. While [Ruth], in her capacity as a beneficiary, may be
equally culpable with the remainder beneficiary, [Harold], in the
commission of a breach of fiduciary duty, both [Ruth], as [t]rustee, and
[Harold], as remainder beneficiary, owed a fiduciary duty to the other
remainder beneficiaries. The [c]ourt accordingly concludes that the action
by [Harold] for specific performance is barred under the “unclean hands”
doctrine and the unwillingness of equity to condone a breach of trust by
specific enforcement of the contract.
103. Accordingly, the [c]ourt declines to award [Harold] specific
performance under Count III of his petition.
104. The [c]ourt turns to the Petition for Removal of Trustee. The [c]ourt
has found that [Ruth] was not mentally incompetent at the time that she
resigned as [t]rustee. Indeed, [Harold] acknowledges that [Ruth] was
mentally competent to sign the Purchase Offer Agreement on September 7,
2010, which was only fifteen (15) days prior to her resignation of trustee.
The [c]ourt found no evidence that [Gilliland] exercised undue influence in
causing [Ruth] to resign. Robert Campbell, [Ruth’s] brother, was very
clear that the decision of [Ruth] to resign was her voluntary act. [Ruth] was
also clear that it was her decision alone to resign as [t]rustee. While the
relationship of [Gilliland] as Attorney In Fact and as the care provider for
[Ruth] would give rise to the presumption of undue influence, the
presumption is rebutted by the evidence from Robert Campbell and [Ruth].
[Harold] presents no evidence to establish undue influence other than is
created by the presumption.
105. The [c]ourt denies the Petition of [Harold] for the removal of
[Gilliland] as [s]uccessor [t]rustee under Count II of his Petition.
***
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107. [] [T]he [c]ourt holds in favor of [Gilliland] and against [Harold] on
the [c]omplaint for [t]ortious [i]nterference [w]ith [c]ontract.
108. The [c]ourt therefore finds that [Harold] takes nothing by his Petition.
Judgment is entered in favor of the [Trust] and [Gilliland] and against
[Harold].
(Appellant’s App. pp. 17-18, 19-20, 27-28).
Harold now appeals. Additional facts will be provided as necessary.
DISCUSSION AND DECISION
I. Standard of Review
Where, as here, the trial court enters findings and conclusions sua sponte, we
apply the standard of review set out in Indiana Trial Rule 52. Chidester v. City of
Hobart, 631 N.E.2d 908, 909 (Ind. 1994). We determine whether the evidence supports
the findings and the findings support the judgment. Bowyer v. Ind. Dep’t of Natural Res.,
944 N.E.2d 972, 983 (Ind. Ct. App. 2011). In deference to the trial court’s proximity to
the issues, we disturb the judgment only where there is no evidence supporting the
findings or the findings fail to support the judgment. Id. We do not reweigh the
evidence, but only consider the evidence favorable to the trial court’s judgment. Id.While we review findings of fact under the clearly erroneous standard, we review
de novo a trial court’s conclusions of law. Id. Where cases present mixed issues of fact
and law, we have described the review as applying an abuse of discretion standard. Id.We will conclude a judgment is clearly erroneous if no evidence supports the findings,
the findings fail to support the judgment, or if the trial court applies the incorrect legal
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standard. Id. at 983-84. In order to determine that a finding or conclusion is clearly
erroneous, an appellate court’s review of the evidence must leave it with the firm
conviction that a mistake has been made. Id. However, sua sponte findings control only
as to the issues they cover and a general judgment will control as to the issues upon
which there are no findings. Tracy v. Morell, 948 N.E.2d 855, 862 (Ind. Ct. App. 2011).
A general judgment entered with findings will be affirmed if it can be sustained on any
legal theory supported by the evidence. Id.II. The Trust
In framing his argument that the trial court erred when it concluded that he is not
entitled to the equitable remedy of specific performance of the Purchase Offer
Agreement, Harold focuses on Ruth’s status as settlor of the Trust. He contends that
based on the provisions of the Trust, Ruth, as settlor, reserved a right to revoke and
amend the Trust as she saw fit. This reserved right necessarily included a right to sell
part of the Trust corpus, which was properly exercised by Ruth when she entered into the
Purchase Offer Agreement. In response, Gilliland, like the trial court, concentrates her
argument on Ruth’s capacity as trustee, maintaining that as trustee, Ruth was required to
administer the Trust solely in the interest of the beneficiaries and preserve the Trust’s
property. Having failed to do that, Ruth breached her fiduciary duties with Harold’s aid
by selling the farm significantly below fair market value. As such, Gilliland—and the
trial court—conclude that Harold, having unclean hands by encouraging Ruth to breach
her fiduciary duty, is not entitled to specific performance.
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Evaluating the parties’ respective arguments requires us to interpret and construct
the Trust instrument. The interpretation of a trust is a question of law for the court.
Paloutzian v. Taggart, 931 N.E.2d 921, 925 (Ind. Ct. App. 2010). The primary purpose
of the court in construing a trust instrument is to ascertain and give effect to the settlor’s
intention and carry out this intention unless it is in violation of some positive rule of law
or against public policy. Id. This court is not at liberty to rewrite the trust agreement any
more than it is at liberty to rewrite contracts. Id. When a trust instrument must be
construed by a court, we attempt to discern the settlor’s intent in light of the facts and
circumstances existing at the time the instrument was created. Id.A trust is “a fiduciary relationship between a person who, as trustee holds title to
property and another person for whom, as beneficiary, the title is held.” Ind. Code § 30-
4-1-1(a). The trust is a peculiar product of the Anglo-American system. The principles,
rules and standards of the law of Trusts owe their origin and development in large part to
the circumstance that England had for centuries separate courts of common law and
chancery, to which is due the distinction between legal interests and equitable interests
which is the basis for the law of Trusts. RESTATEMENT (SECOND) OF TRUSTS, intro. note
(1959).
Within the area of trusts, the inter vivos or revocable trust is a unique legal entity.
Through its use, the settlor may transfer property to a trustee, reserving the beneficial use
of the property for the life of the settlor with the remainder to designated beneficiaries.
In the Matter of Walz, 423 N.E.2d 729, 732 (Ind. Ct. App. 1981). Although the settlor
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enjoys the beneficial use of the trust property until his death, trust property is not subject
to the administration of his estate. Id. Where, as here, a settlor transfers, assigns and sets
over to a trustee title to property owned by him in a proceeding to create a trust inter
vivos, the interest therein passes immediately to the trustee, and the trust is consummated
even though the trust instrument reserves to the settlor the income for life, an absolute
power to revoke the trust in whole or in part and the right to control investments and
further to modify the trust in any respect. Id. (quoting Smyth v. Cleveland Trust Co., 179
N.E.2d 60 (Ohio 1961)). With respect to the settlor’s power to revoke, Indiana’s Trust
Code reads, in pertinent part, as follows:
(c) The settlor may revoke or amend a revocable trust as follows:
(1) The settlor may comply with a method provided in the terms of
the trust.
(2) If the terms of the trust do not provide a method or the terms of
the trust provide a method that is not expressly made the exclusive
method to revoke or amend the trust, the settlor may revoke or
amend the trust by:
(A) executing a will or codicil that:
(i) expressly refers to the trust; or
(ii) specifically devises property that would otherwise
have passed according to the terms of the trust; or
(B) any other method that:
(i) is in writing; and
(ii) manifests clear and convincing evidence of the
settlor’s intent.
I.C. § 30-4-3-1.5(c).
Once the settlor delivers property to a trustee by virtue of a trust agreement, the
trustee takes the legal title to the property and the cestui trust or beneficiary takes the
equitable title. Breeze v. Breeze, 428 N.E.2d 286, 287 (Ind. Ct. App. 1981). Both have a
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property interest recognized by law. Id. Where the trust provides that the trustee shall
hold and manage the property and pay the income derived therefrom and a part of all of
the corpus in its discretion to one beneficiary for life and the remainder, if any, to a
remainder beneficiary upon the death of the first beneficiary, both the first beneficiary
and the remainder beneficiary, upon the activation of the trust, acquire an interest and one
that can be assigned by either beneficiary. Id. at 287-88.
Here, Ruth settled the revocable trust, transferred property into the Trust,
designated herself as trustee, and became the beneficiary for life of the Trust corpus. The
Trust instrument specified that upon Ruth’s death, the Trust shall become irrevocable
with the remainder of the corpus to be dispensed between the remainder beneficiaries,
i.e., her three children. In its Order, the trial court focused on Ruth’s capacity as trustee,
as well as her corresponding fiduciary duty to manage the Trust and safeguard its trust
corpus. However, first and foremost, Ruth is the settlor of the trust—without her transfer
of property, the Trust could not be settled.
Although the question of whether an individual who combines the positions of
settlor of a revocable trust, trustee, and beneficiary for life should be considered the
settlor or trustee for purposes of a property transfer out of the Trust has not been
examined in Indiana, the trial court in its Order relied on Marshall & Ilsley Trust Co. v.
Woodward, 848 N.E.2d 1175 (Ind. Ct. App. 2006). However, we find Marshall to be
inapposite as it analyzes whether a named remote contingent beneficiary of an
irrevocable trust is entitled to an accounting. See id. at 1178.
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Closer related to the current circumstances than the Marshall case, is our recent
opinion of Kesling v. Kesling, 967 N.E.2d 66, 79 (Ind. Ct. App. 2012), in which we
examined if a settlor, who placed shares of stock into a revocable inter vivos trust and
named himself as trustee and beneficiary retained his shareholder status. Analyzing the
legal status of a revocable trust in Indiana, we noted the Internal Revenue Code’s
treatment of a revocable trust whereby settlors with the ability to control the assets of
their revocable trust possess an ownership interest and bear the tax consequences. See id.
at 85. Combining the IRS view with the trust declaration’s provision that the settlor
could revoke the trust at any time, we concluded in Kesling that the placement of the
shares in a trust did not eliminate the settlor’s shareholder’s status. Id. at 86.
In Moon v. Lesikar, 230 S.W.3d 800 (Tex. Ct. App. 2007), the Texas appellate
court was faced with a beneficiary of a revocable trust bringing an action against the
trustee for breach of fiduciary duty in order to challenge the sale of stock by the settlor to
the trustee prior to the settlor’s death. In her concurring opinion, Justice Guzman
analyzed the respective rights and duties of a settlor and trustee. She persuasively noted
as follows:
[The trust] reserved to the settlor the power to modify or revoke the trust, in
whole or in part, and Carolyn, [the beneficiary], did not argue that [the
settlor’s] decision [to sell stock to the trustee] was the result of coercion,
undue influence, lack of capacity, or was otherwise involuntary. To the
contrary, Carolyn essentially complains that [the trustee] violated his
fiduciary duty to her by failing to influence [the settlor] to abandon his
intent to transfer the [stock] to him. She contends that, as a trustee, [the
trustee] has a fiduciary duty to the contingent beneficiaries, and must
therefore prevent the co-trustee from removing property from the trust or
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transferring former trust property to him. In effect, she argues that, in his
capacity as a trustee, [the trustee’s] duty to her as a contingent beneficiary
trumps his duty to fulfill the expressed intent of the settlor.
But this argument elevates the rights of a beneficiary above the rights of the
settlor. Here, the settlor is also a trustee; thus, under the fiduciary duties
that Carolyn suggests, the settlor would share the same duty to prevent the
removal of the trust property. Thus, the settlor could revoke the trust only
by breaching his duty to every beneficiary, contingent beneficiary, and
remainderman who held an interest, however attenuated, in the trust
property. Under this interpretation, the trust would no longer be freely
revocable. Because a fiduciary must also place the interests of the one to
whom a duty is owed above his own interests, it would seem that the
settlor, in his capacity as trustee, would have a duty to prevent himself, in
his capacity as settlor, from revoking the trust. This result is inconsistent
with the Trust Code and the terms of the trust documents.
Id. at 809 (internal references omitted).
In the case before us, Ruth, as settlor, retained the right to alter, amend or revoke
the Trust in any respect. At the time of its creation, Ruth intended the Trust to provide
her with a lifelong beneficiary income. To that end, she transferred, among others, the
family farm into the Trust corpus. Following the execution of the Trust and facing
advanced age, Ruth expressed a desire to keep the farm in the family. After talking with
Harold, she entered into a Purchase Offer Agreement with him and sold him the family
farm. Thereafter, Ruth resigned as trustee; Gilliland became the successor-trustee and
rescinded the Purchase Offer Agreement.
Pursuant to the terms of the Trust, Ruth, as settlor, entered into a valid agreement
with Harold, selling part of the Trust’s corpus and thus, in effect partially amending the
Trust. Holding otherwise and viewing Ruth as trustee would make the Trust in effect
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irrevocable as she would no longer be free to control her assets but instead would owe a
duty to the beneficiaries which would trump her own interest as settlor and owner of the
Trust corpus. Absent a finding of undue influence or mental incapacity—which Gilliland
does not allege, nor did the trial court find any—Ruth entered into a valid agreement and
Harold is entitled to specific performance of the Purchase Offer Agreement.1
III. Tortious Interference With A Contractual Relationship
Next, Harold contends that the trial court erred when it concluded that Gilliland
had not tortiously interfered with the Purchase Offer Agreement when she repudiated the
agreement upon becoming the successor-trustee of the Trust.
The elements constituting an action for tortious interference with a contract are
well-established: (1) the existence of a valid and enforceable contract; (2) defendant’s
knowledge of the existence of the contract; (3) defendant’s intentional inducements of
breach of the contract; (4) the absence of justification; and (5) damages resulting from
1
In her appellate brief, Gilliland raises several claims, encouraging us to find that “Harold’s specific
performance claim would be unfair, harsh, oppressive, unconscionable, inequitable and would result in an
unfair and unjust gain and enrichment to Harold and omitted valuable consideration.” (Appellee’s Br. p.
30). Even though Gilliland pled these affirmative defenses in her answer to the Complaint, none of these
were presented to the trial court during the trial. Moreover, although she asserts these equitable
allegations, she does not appear to contest the trial court’s findings that Ruth’s decision in pricing the
farm as she did was “logical,” “rational,” and “sensible” based on the family dynamic and history.
(Appellant’s App. pp. 17-19). Therefore, we refuse to disturb the trial court’s findings. Furthermore,
Gilliland’s argument that “[i]t can reasonably be inferred that, after the sale to her son, she will have no
assets with which to support herself after a mere five year if you assume her basic living costs [of]
approximate Eight Thousand Dollars ($8,000.00) per month” is not supported by any evidence in the
record besides Gilliland’s testimony at trial. (Appellee’s Br. p. 31). With respect to Gilliland’s claim
that Harold failed to act in good faith by not encouraging Ruth to discuss the sale with Gilliland, we note
that Ruth initiated the transaction at Gilliland’s advice and Harold visited three times to complete the
transaction during August and September of 2010, presenting Ruth with a range of sale prices. It is clear
that Gilliland must have been aware about ongoing conversations between Ruth and Harold.
15
defendant’s wrongful inducement of the breach. Melton v. Ousley, 925 N.E.2d 430 (Ind.
Ct. App. 2010). All of these elements must be shown to establish this tort. Id.On September 7, 2010, Ruth, as settlor of the Trust, and Harold entered into the
valid Purchase Offer Agreement to sell the farm. On September 22, 2010, attorney
Rogers notified Ruth’s children that Ruth had voluntarily resigned as trustee and
Gilliland had been appointed successor-trustee. Thereafter, on October 12, 2010, Rogers
informed Harold’s counsel that “there will be no real estate closing” and Gilliland
repudiated the Purchase Offer Agreement. (Appellant’s App. p. 57).
The main contention of the parties turns on the absence of justification. Harold
claims that “[t]here was never any question, or reason to dispute, that [Gilliland’s]
repudiation of the Agreement after she became [s]uccessor [t]rustee was motivated by her
intention to maximize her potential inheritance under the Trust, and for no other reason.”
(Appellant’s Br. p. 17). Gilliland, on the other hand, contends that she was concerned
about the legality of the transaction, as it depleted the Trust corpus.
In determining whether an intentional interference is justified, the following
factors may be considered: (a) the nature of the defendant’s conduct; (b) the defendant’s
motive; (c) the interests of the plaintiff with which the defendant’s conduct interferes; (d)
the interests sought to be advanced by the defendant; (e) the social interests in protecting
the freedom of action of the defendant and the contractual interests of the plaintiff; (f) the
proximity or remoteness of the defendant’s conduct to the interference; and (g) the
relations between the parties. Dietz v. Finlay Jewelry Corp., 754 N.E.2d 958, 970 (Ind.
16
Ct. App. 2001). The weight to be given each consideration may differ from case to case,
but the overriding question is whether the defendant’s conduct has been fair and
reasonable under the circumstances. Bilimoria Computer Sys., LLC v. Am. Online, Inc.,
829 N.E.2d 150, 156 (Ind. Ct. App. 2005). This element of absence of justification is
established only if the interferer acted intentionally, without legitimate business purpose
and the breach is malicious and exclusively directed to the injury and damage of another.
See id. The existence of a legitimate reason for the defendant’s actions provides the
necessary justification to avoid liability. Id.Pursuant to the Trust instrument, the trustee has the duty to administer the Trust
solely in the interest of the beneficiaries and to preserve the Trust property. Being
confronted with a Purchase Offer Agreement that depleted the Trust corpus and sold the
farm below fair market value, Gilliland, as successor trustee, had a legitimate and
reasonable reason to repudiate the agreement. Therefore, we conclude that she did not
tortiously interfere in the contractual relationship between Ruth and Harold.
CONCLUSION
Based on the foregoing, we conclude that Ruth, as the settlor, of the Trust could
properly execute a purchase agreement for the sale of the Trust property and Gilliland did
not tortiously interfere with the purchase agreement when she rescinded the purchase
agreement upon becoming successor trustee.
Affirmed in part and reversed in part.
BAILEY, J. and CRONE, J. concur
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