IN RE: CHRISTIAN FAMILY TRUST ( 2020 )

136 Nev., Advance Opinion 73
IN THE SUPREME COURT OF THE STATE OF NEVADA
IN THE MATTER OF THE CHRISTIAN No. 75750
FAMILY TRUST U.A.D. 10/11/16.
SUSAN CHRISTIAN-PAYNE;
ROSEMARY KEACH; AND RAYMOND
CHRISTIAN, JR., FILED
Appellants,
vs. DEC 0 3 2020
ANTHONY L. BARNEY, LTD.; AND EUZABEM A. BROWN
CLERK • PREME COURT
FREDRICK P. WAID, BY
DEPUTY CLERK
Respondents.
Appeal from a district court order allowing payment of a
creditor's claim in a trust action. Eighth Judicial District Court, Clark
County; Vincent Ochoa, Judge.
Affirmed.
Cary Colt Payne, Las Vegas,
for Appellants.
Anthony L. Barney, Ltd., and Anthony L. Barney, Tiffany S. Barney, and
Zachary D. Holyoak, Las Vegas,
for Respondent Anthony L. Barney, Ltd.
Hutchison & Steffen, LLC, and Russel J. Geist, Las Vegas,
for Respondent Fredrick P. Waid.
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BEFORE PARRAGUIRRE, HARDESTY and CADISH, JJ.
OPINION'
By the Court, HARDESTY, J.:
In this appeal, we consider whether a creditor of a settlor may
satisfy its claim against the settlor's trust where the trust does not
specifically provide for payment of the claim but the trustees approve the
payment. We conclude that a creditor may bring a claim against a settlor
of a trust so long as the settlor's interest in the trust is not solely
discretionary and there is not a spendthrift provision precluding payment
of the claim. Further, where a trust provides broad discretion to its
trustees, the trustees may approve a creditor's claim against the trust.
Because the creditor's claim here was proper and the trustees were within
their broad discretion in approving the claim, we affirm.
FACTS AND PROCEDURAL HISTORY
Settlors Nancy and Raymond Christian, Sr., created the
Christian Family Trust (the Trust),2 naming appellants, three of their
children, as co-trustees. Under the Trust, Nancy and Raymond had a
1We originally resolved this appeal in an impublished order of
affirmance. Respondent Anthony L. Barney, Ltd., subsequently filed a
motion to publish the order as an opinion. We grant the motion and replace
our earlier order with this opinion. See NRAP 36(f).
2The Trust refers to Nancy and Raymond as "trustors," whereas
Nevada law refers to trustors as "settlors." See, e.g., NRS 163.003
(describing the requirements for a settlor to create a trust). While the terms
may be interchangeable, we use the term "settlors" in this opinion. See
Settlor, Black's Law Dictionary (1.1th ed. 2019) (defining "settlor" as one who
sets up a trust and providing that a settlor may also be called a "trustoe).
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mandatory interest in all income and principal from their community
property and a mandatory interest in the income and principal of his or her
own separate property. After the death of one settlor, the Trust provided
that the trustee may in his or her discretion "pay.. . . the administrative
expenses, the expenses of the last illness and funeral of the [d]ecedent and
any debt owed by the [dlecedent." The Trust did not provide a similar
provision governing the death of the second settlor.
Raymond died first, which, under the Trust, left Nancy with a
discretionary interest in the remaining income of the Trust property and a
mandatory interest in the residence. After Raymond died, Nancy removed
appellants as trustees and appointed her son from a different marriage,
nonparty Monte Reason, as trustee. Appellants challenged the replacement
in district court, and Nancy retained respondent law firm Anthony L.
Barney, Ltd. (Barney, Ltd.) to represent her. After Nancy's death, Barney,
Ltd. sent letters to Trustee Reason and, after he resigned, to successor
Trustee Jacqueline Utkin,3 requesting attorney fees and costs for
representing Nancy. Trustee Reason and Trustee Utkin both approved
Barney, Ltd.'s request for payment. Over appellants objection, the district
court ordered $53,031.97 of frozen trust funds be released to pay Barney,
Ltd. This appeal followed.
DISCUSSION
Both parties have standing to maintain this action, and the appeal is not
moot
Barney, Ltd. first argues that appellants lack standing to
pursue this appeal because they are no longer trustees of the Trust. We
3Trustee Utkin has since resigned, and respondent Frederick P. Waid
is the current Trustee.
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disagree. Appellants have standing to appeal because the appealed order
reduces the Trust assets available for disbursement to them as
beneficiaries. See In re Estate of Herrmann, 100 Nev. 1, 26, 677 P.2d 594,
610 (1984) (explaining that heirs of an estate are interested parties with a
right to contest an award of attorney fees where the award reduces their
legacies). Reviewing de novo, Arguello v. Sunset Station, Inc., 127 Nev. 365,
368, 252 P.3d 206, 208 (2011), we also reject appellants claim that Barney,
Ltd. lacked standing to petition the district court for payment. NRS 132.390
gave Barney, Ltd. standing to bring its claim because it was Nancy's
creditor and because both Trustee Reason and Trustee Utkin accepted its
claim.4 See NRS 132.390(1)(c)(8) (explaining that "a creditor of the settlor
who has a claim which has been accepted by the trustee is an interested
person as to the trust).
Barney, Ltd. also urges that this appeal is moot because the
district court unfroze trust assets such that the current Trustee is now free
to approve Barney, Ltd.'s request for payment. See NRS 155.123
(explaining that the district court may order "an injunction to preserve and
protect [trust] assets"). Although Barney, Ltd. is correct that the district
court unfroze Trust assets, it does not explain how this renders the instant
appeal moot. See Edwards v. Emperor's Garden Rest., 122 Nev. 317, 330
n.38, 130 P.3d 1280, 1288 n.38 (2006) (noting that appellants must "cogently
argue, and present relevant authority" to support their claims). And we do
4To the extent appellants argue that the Trustees breached their
fiduciary duty to protect Trust assets by approving Barney, Ltd.'s request
for fees, we decline to reach this argument because it was raised for the first
time on appeal. See Old Aztec Mine, Inc. v. Brown, 97 Nev. 49, 52, 623 P.2d
981, 983 (1981) (noting that "[a] point not urged in the trial court . . . will
not be considered on appeal").
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not agree that the district court's action rendered this appeal moot, as it has
no impact on the propriety of using the Trust assets to pay for alleged non-
Trust expenses.
The Trust allows for payment of Barney, Ltd.'s attorney fees
The parties do not dispute that Barney, Ltd. was Nancy's
personal creditor rather than a creditor of the Trust, but they disagree as
to whether the Trust allows for payment of Barney, Ltd.'s fees. As this
dispute involves trust interpretation and there are no disputed facts, our
review is de novo. In re W.N. Connell & Marjorie T. Connell Living Tr., 134
Nev. 613, 616, 426 P.3d 599, 602 (2018).
After reviewing the parties arguments, we disagree with
appellants that the Trust does not authorize the payment of Barney, Ltd.'s
claim from Trust assets. Barney, Ltd., as a creditor, brought a claim against
the settlor of a trust. A creditor may bring a claim against a settlor for the
assets of a trust so long as the settlor's interest in the trust is not purely
discretionary. NRS 163.5559(1) ("[A] creditor of a settlor may not seek to
satisfy a claim against the settlor from the assets of a trust if the settlor's
sole interest in the trust is the existence of a discretionary power granted
to a person other than the settlor. . . ."). Nancy did not have a solely
discretionary interest in the Trust. In addition to being the surviving settlor
after Raymond's death, Nancy was also a beneficiary of the Trust with both
a discretionary interest in receiving support from Trust assets and a
mandatory interest as to her possession of the residence and certain
personal property of Raymond. Further, the spendthrift provision in the
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Trust explicitly does not apply to a settlor's interest in the Trust estate.5
See generally Matter of Frei Irrevocable Tr. Dated October 29, 1996, 133 Nev.
50, 55, 390 P.3d 646, 651 (2017) (stating that a valid spendthrift provision
prevents a beneficiary's creditors from reaching the trust property (citing
NRS 166.120(1))). Accordingly, we conclude that Barney, Ltd.'s claim
against the Trust was therefore proper.
Barney, Ltd. satisfied the procedural requirements to file a creditor's claim
We reject appellants argument that Barney, Ltd. had to file a
creditor's claim against the settlor while she was alive. The provisions of
NRS 164.025 specifically provide for claims against a settlor to be filed after
the death of a settlor. See NRS 164.025(3)6 (requiring a creditor to file a
claim against a settlor within 90 days from notice that the settlor has died).
We also reject appellants' argument that Barney, Ltd. did not follow the
applicable procedure to file a creditor's claim. Upon the death of a settlor,
a trustee of a nontestamentary trust may notify known or readily
ascertainable creditors that the settlor has died. NRS 164.025(1). A
creditor who has a claim against the trust estate must file a claim within
90 days after the first notice. NRS 164.025(2). NRS 164.025(3) reiterates
that a person having a claim against a settlor must file a claim with the
trustee within 90 days of notice. The record before us is unclear as to
5The settlors were specifically excluded from the spendthrift provision
of the Trust. See Christian Family Trust Dated October 11, 2016, Article
14, § 14.2 (entitled "Spendthrift Provision" and providing that Itlhis
provision shall not apply to a Trustor's interest in the Trust estate).
6This statute was amended as of October 1, 2019. See 2019 Nev. Stat.,
ch. 309, § 35, at 1870-71. The references to NRS 164.025 in this opinion are
to the previous version.
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whether any trustee of the Trust provided formal notice of Nancy's death to
ascertainable creditors. Regardless, Barney, Ltd. sent letters to both
Trustee Reason and Trustee Utkin within 90 days of Nancy's death
notifying them of its claim against her.7 We conclude that this written
notice satisfied the procedural requirements to file a creditor's claim under
NRS 164.025(3).
The Trustees had broad discretion to approve Barney, Ltd.'s claim
Although the Trust provides for discretionary payment of the
debts of the first settlor to die (Raymond) and is otherwise silent as to the
payment of the successor settlor's (Nancy) debts, Trustee Reason and
Trustee Utkin had broad authority under the Trust to exercise their
discretion in making such a payment.8 They used this discretionary power
to approve payment of Barney, Ltd.'s claim. NRS 163.115(1)(i)9 generally
allows for maintenance of a suit by a beneficiary "[t]o trace trust property
7Nancy passed away on December 14, 2017. Barney, Ltd. sent a letter
to Trustee Reason on December 19, 2017, and to Trustee Utkin on
January 26, 2018, requesting payment from the Trust for legal work done.
8See Christian Family Trust Dated October 11, 2016, Article 10,
§ 10.1(t) ("The enumeration of certain powers of the Trustees shall not limit
their general powers, subject always to the discharge of their fiduciary
obligations, and being vested with and having all the rights, powers and
privileges which an absolute owner of the same property would have.");
Article 11, § 11.1 ("Every election, determination, or other exercise by
Trustees of any discretion vested, either expressly or by implication, in
them, pursuant to this Trust Agreement, whether made upon a question
actually raised or implied in their acts and proceedings, shall be conclusive
and binding upon all parties in interest.").
9This statute was amended as of October 1, 2019. See 2019 Nev. Stat.,
ch. 309, § 26, at 1863-64. The references to NRS 163.115 in this opinion are
to the previous version.
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that has been wrongfully disposed of and recover the property or its
proceeds." Here, however, the Trust language contradicts NRS
163.115(1)(i). Article 12 of the Trust is titled "Exoneration of Persons
Dealing with the Trusteee and states as follows:
No person dealing with the Trustees shall be
obliged to see to the application of any property
paid or delivered to them or to inquire into the
expediency or propriety of any transaction or the
authority of the Trustees to enter into and
consummate the same upon such terms as they
may deem advisable.
Because Trustee Reason and Trustee Utkin used their broad
discretionary power to approve payment to Barney, Ltd. as a creditor of the
settlor, and because persons dealing with the trustees are exonerated under
Article 12 of the Trust, we conclude that the district court did not err by
approving the disbursement of Trust funds to pay Barney, Ltd.'s claim.
Accordingly, for the foregoing reasons, we affirm the order of
the district court.
J.
Hardesty
We concur:
J.
Cadish
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