Oct 14 2015, 9:56 am
ATTORNEY FOR APPELLANT ATTORNEYS FOR APPELLEES
P. Gregory Cross Thomas M. Beeman
The Cross Law Firm, P.C. Kyle B. DeHaven
Muncie, Indiana Beeman Law Office
Anderson, Indiana
Alexander M. Beeman
Ciobanu Law, P.C.
Indianapolis, Indiana
IN THE
COURT OF APPEALS OF INDIANA
Scott Alan Stibbins, individually October 14, 2015
and as Personal Representative Court of Appeals Case No.
of the Estate of Warren E. 18A02-1410-PL-750
Stibbins, and Trustee of the Appeal from the Delaware Circuit
Warren E. Stibbins Revocable Court
Trust, et al, The Honorable Marianne L.
Appellants-Defendants, Vorhees, Judge
Trial Court Cause No.
v. 18C01-0902-PL-4
Carol (Stibbins) Pagano Foster,
Angela Pagano, and Christopher
Pagano,
Appellees-Plaintiffs
Baker, Judge.
Court of Appeals of Indiana | Opinion 18A02-1410-PL-750 | October 14, 2015 Page 1 of 14
[1] Warren Stibbins had seven children and a complicated estate plan. In the years
before his death, Warren became frustrated with the inability of his daughter,
Carol, to manage her finances. He purchased an annuity for her that would
have provided a steady source of income for the rest of her life, and then
removed her as a beneficiary from his estate plan and from her deceased
mother’s trust. After Warren’s death, Carol and her children filed an action
contesting the probate of Warren’s will. They were unsuccessful after years of
litigation and a five-day jury trial. After they lost the will contest, they sought
to be reimbursed for their attorney fees pursuant to Indiana Code section 29-1-
10-14. Although the trial court found that two of their three claims were
litigated without good faith and just cause, it found that their third claim met
that test. As a result, the trial court ordered that the estate pay all of Carol’s
attorney fees and costs in an amount exceeding $170,000.
[2] The estate now appeals, arguing, among other things, that Carol and her
children do not have standing to seek attorney fees because they are not
devisees under the relevant statute. We agree, and reverse the judgment of the
trial court awarding attorney fees to Carol and her children.
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Facts 1
[3] Warren Stibbins (Warren) was a successful family physician who lived most of
his life in Muncie. He and his wife, Mary Stibbins (Mary), were the parents of
seven children: David Stibbins, Mary Liddy, Scott Stibbins, Carol Foster
(Carol), Thomas Stibbins, Susan Stibbins, and Sarah Hohmann.
[4] Mary died in 1994. In accordance with the Stibbinses’ estate plan, a significant
amount of money had been placed in a living trust in Mary’s name (Mary’s
Trust), which became irrevocable upon her death. Mary’s Trust permitted
Warren, the primary beneficiary, to amend some of its provisions even after the
trust had vested, through the exercise of a power of appointment in his will.
[5] During the years following his wife’s death, Warren became concerned about
Carol, who had significant difficulty managing her financial affairs. She
received frequent monetary gifts from her parents and siblings, as well as
distributions from Mary’s Trust, but always seemed to be in need of more.
Eventually, in the spring of 2005, Warren decided to purchase an annuity for
Carol that would pay her a specified sum of money—nearly $1,000 per
month—for the rest of her life.
[6] On August 16, 2005, Warren executed a revocable trust (Warren’s 2005 Trust),
providing that he would be its primary beneficiary for the balance of his
1
We held oral argument in this cause in Indianapolis, Indiana, on September 15, 2015. We thank counsel
for both parties for their outstanding written and oral advocacy.
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lifetime, and upon his death, the property would be distributed to four of his
children. Two of Warren’s children, David and Thomas, were very successful
physicians, and in Warren’s judgment, they did not need this inheritance.
Carol was also excluded as a beneficiary because he had provided for her
otherwise with the annuity. In 2005, Warren also executed a pour-over will
(the 2005 Will) that did not name Carol as a beneficiary.
[7] After an altercation at Warren’s home in January 2006, Carol and her son,
Christopher Pagano, never saw Warren again. Carol’s daughter, Angela
Pagano, did not see Warren again after he bought her a computer sometime in
2005.
[8] In April 2007, Carol sold the present rights in her annuity. While Warren’s
initial investment in the annuity totaled over $180,000, Carol sold it for
approximately $70,000, to pay off some of her debts.
[9] Later that year, Warren realized that David, Thomas, and Carol were still
named as beneficiaries to Mary’s Trust. On May 5, 2008, Warren executed a
new will (the 2008 Will) exercising the power of appointment to remove David,
Thomas, and Carol as beneficiaries.
[10] Warren died on October 7, 2008. Neither Carol nor her children attended his
funeral.
[11] On February 13, 2009, Carol initiated an action to contest the 2008 Will.
Christopher and Angela joined her as plaintiffs. They sought to revoke probate
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of the will, reverse the exercise of the power of appointment with respect to
Mary’s Trust, and restore Carol as a beneficiary of the trust. Carol and her
children also filed a second action to challenge Warren’s 2005 Trust, which did
not include her as a beneficiary. Eventually, the two actions were consolidated.
[12] A jury trial regarding the 2008 Will took place over the course of five days,
beginning on June 16, 2014. The jury found that the will was valid, and
judgment was entered in favor of the defendants.
[13] On July 24, 2014, Carol and her children filed a petition for attorney fees and
expenses. Following a hearing, on September 22, 2014, the trial court granted
Carol’s petition. In relevant part, the trial court found and concluded as
follows:
5. Argument on Standing: Defendants argued Carol,
Angela, and Christopher cannot recover attorneys’ fees and
expenses because they were not devisees under the last two wills
executed by [Warren]. . . . Plaintiffs countered by arguing that if
they had set aside the [2008] Will, . . . they would have also
sought to set aside the [2005 Will] . . . . If successful, they would
have probated the [third will in line, executed in 1992, which
included Carol as a beneficiary].
***
. . . [T]he Court finds authority to support Plaintiffs’ argument
that they have standing to seek attorneys’ fees. Although it
would have involved a great deal of legal activity, attorneys’ fees,
and expenses, Plaintiffs could have eventually brought to probate
a Will naming them as beneficiaries.
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For these reasons, the Court finds Plaintiffs have standing to
request the Court to order their attorneys’ fees and expenses
reimbursed and/or paid from the Estate assets.
6. Did Plaintiffs Bring This Action in Good Faith and With
Just Cause? The Court does not question the attorneys’ good
faith in litigating this matter. . . . [T]he Court will only consider
whether Carol litigated this matter in good faith and with just
cause in deciding whether to award attorneys’ fees and expenses.
(A) Fraud Action: If Plaintiffs had brought the action
based only on Fraud, the Court would not have
awarded fees and expenses. The Fraud argument
was puzzling, at best, and the testimony from the
Plaintiff’s handwriting expert bordered on the
incredible.[2]
(B) Incompetency: Although this claim was a little
stronger than the Fraud claim, the evidence on the
Fraud and Incompetency claims together might not
have caused the Court to find “good faith and just
cause.” . . .
(C) Undue Influence: Plaintiffs’ strongest ground was
Undue Influence. The evidence submitted required
the Court to give a jury instruction concerning
2
The expert testified that dozens of specimens of Warren’s handwriting were forgeries. She was also certain
that the signatures of all of the witnesses to nearly all of the documents at issue in this litigation were
forgeries. Carol found this expert on the Internet. The expert received her training from another Internet
vendor who also offered programs on, among other things, how to predict the gender of unborn children
through the handwriting of a parent. At times, the jurors laughed audibly during the expert’s testimony.
Court of Appeals of Indiana | Opinion 18A02-1410-PL-750 | October 14, 2015 Page 6 of 14
undue influence, and Defendants had to overcome
the presumption of undue influence. . . .
The Court finds at least on the Undue Influence Claim, Plaintiffs
brought the action in good faith and with just cause. Because all
three claims were so interrelated, the Court cannot divide the fees
among the claims.
Appellants’ App. p. 27-29. The trial court ordered the Estate to pay Carol’s
attorney fees in an aggregate amount of $171,360.64. The Estate now appeals.
Discussion and Decision
I. Cross-Appeal
[14] First, we will consider Carol’s cross-appeal. She argues that the trial court erred
by denying her motion for amendment of the pleadings to conform to the
evidence presented pursuant to Indiana Trial Rule 15(B). A ruling on a Rule
15(B) motion is within the discretion of the trial court, and we will reverse only
upon finding a “clear and prejudicial” abuse of that discretion. Lutz v. Belli, 516
N.E.2d 95, 101 (Ind. Ct. App. 1987). Indiana Trial Rule 15(B) provides as
follows:
When issues not raised by the pleadings are tried by express or
implied consent of the parties, they shall be treated in all respects
as if they had been raised in the pleadings. Such amendment of
the pleadings as may be necessary to cause them to conform to
the evidence and to raise these issues may be made upon motion
of any party at any time, even after judgment, but failure so to
amend does not affect the result of the trial of these issues. If
evidence is objected to at the trial on the ground that it is not
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within the issues made by the pleadings, the court may allow the
pleadings to be amended and shall do so freely when the
presentation of the merits of the action will be subserved thereby
and the objecting party fails to satisfy the court that the
admission of such evidence would prejudice him in maintaining
his action or defense upon the merits.
[15] The complaint originally filed by Carol and her children did not raise whether
Warren’s exercise of the power of appointment over Mary’s Trust benefited the
decedent or his estate. On the fourth day of the jury trial, Carol moved to
amend the pleadings to incorporate that issue. The trial court denied the
request, and Carol now appeals that ruling.
[16] The record reveals that in 2010, after the first round of depositions were
completed, Carol’s attorney contacted the attorney for the estate, indicating that
“‘Plaintiffs believe that Warren committed breach of his wife’s trust. When as
trustee, he took the loans from the trust to himself and he exercised the power
of appointment in a way intended to benefit himself personally.’” Tr. p. 768
(quoting from an email between the two attorneys). Carol’s attorney asked the
Estate’s attorney, “‘[w]ill it be necessary for us to move to amend the
complaints to . . . assert the claims more precisely or do you agree those claims
have been sufficiently raised to put you and the beneficiaries on notice?’” Id.
The Estate’s attorney responded, “‘Yes, it will be necessary for you to amend
the complaint . . . . You better amend the complaint because the complaint
does not lead this theory.’” Id. at 769. Carol did not seek to amend the
complaint.
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[17] To be entitled to amendment of the pleadings to conform to the evidence, a
movant must establish that the issues were tried by the “express or implied
consent of the parties[.]” Ind. Trial Rule 15(B). Here, the Estate was on record
explicitly refusing to consent to precisely that. Carol chose not to attempt to file
an amended complaint, and cannot now make an end-run around the opposing
party’s objections via Trial Rule 15(B). We find that the trial court did not
abuse its discretion in denying Carol’s motion to amend the pleadings pursuant
to Indiana Trial Rule 15(B).
II. Appeal
[18] Where, as here, the trial court issues findings of fact and conclusions of law
based thereon, we apply a two-tiered standard to review the trial court’s order.
Oil Supply Co. v. Hires Parts Serv., Inc., 726 N.E.2d 246, 248 (Ind. 2000). We
determine whether the evidence supports the findings and the findings support
the judgment. Id. 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. We
apply a de novo standard of review to questions of statutory interpretation.
Meyer v. Beta Tau House Corp., 31 N.E.3d 501, 513 (Ind. Ct. App. 2015).
A. Standing
[19] Carol and her children sought attorney fees pursuant to Indiana Code section
29-1-10-14, which provides as follows:
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When any person designated as executor in a will, or the
administrator with the will annexed, or if at any time there be no
such representative, then any devisee therein, defends it or
prosecutes any proceedings in good faith and with just cause for
the purpose of having it admitted to probate, whether successful
or not, he shall be allowed out of the estate his necessary
expenses and disbursements including reasonable attorney's fees
in such proceedings.
(Emphasis added).
[20] The Estate argues that the trial court erroneously determined that Carol and her
children were “devisees” pursuant to Indiana Code section 29-1-10-14.
According to the Estate, because Carol and her children were not beneficiaries
to either the 2005 or 2008 Wills, they were not devisees and did not have
standing to seek attorney fees following the will contest action.
[21] The Estate acknowledges a line of cases finding that will contestors were
“devisees” where, while they were not devisees of the will being contested, they
were devisees of earlier wills that were intended to be offered for probate. E.g.,
In re Estate of Goldman, 813 N.E.2d 784 (Ind. Ct. App. 2004); Brown v. Edwards,
640 N.E.2d 401 (Ind. Ct. App. 1994); Estate of Clark v. Foster, 568 N.E.2d 1048
(Ind. Ct. App. 1991); Dunnuck v. Mosser, 546 N.E.2d 129 (Ind. Ct. App. 1989).
We find this line of cases distinguishable from the case before us. In each of
these cases, the parties challenging the will were devisees under the next will in
line to be probated. In other words, had the challenged will been set aside, the
challengers would directly, and immediately, benefit as a result.
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[22] In this case, in contrast, Carol and her children were not devisees of the will
being challenged or of the next will in line. Instead, their status as devisees is
far more attenuated. They would have had to make successful challenges both
to the 2008 Will and to the 2005 Will in order to have a direct right to inherit.
We have not found any caselaw holding that will challengers with such an
attenuated right to inherit are entitled to seek attorney fees under the statute,
and counsel for Carol and her children acknowledged at oral argument that to
his knowledge, there are no such cases.
[23] It is well established pursuant to common law that each party to litigation is
responsible for her own financial consequences associated with the matter,
including attorney fees. E.g., State Bd. of Tax Comm’rs v. Town of St. John, 751
N.E.2d 657, 659 (Ind. 2001). The only exceptions to this doctrine occur when a
statute, court rule, or contractual agreement provides otherwise. Porter Dev.,
LLC v. First Nat’l Bank of Valparaiso, 866 N.E.2d 775, 779 (Ind. 2007). Where,
as here, a statute is enacted in derogation of the common law, that statute must
be strictly construed. Hinshaw v. Bd. of Comm’rs of Jay Cnty., 611 N.E.2d 637,
639 (Ind. 1993).
[24] Indiana Code section 29-1-10-14 provides that when a will is challenged, “any
devisee therein” may be entitled to attorney fees under certain circumstances.
While, as noted above, this Court has held that “devisee” includes a person
who stands to benefit directly if the challenged will is set aside, we simply
cannot conclude that our General Assembly intended to include anyone beyond
this limited group of people. If we opened the term “devisee” up as suggested
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by Carol and her children, there would be no end to the slippery slope. If a
ninety-year-old decedent had enacted a new will in every decade of his life, his
college sweetheart who had been a devisee in his first will at the age of twenty
would be entitled to attorney fees if she challenged the will in place at his death,
notwithstanding the reality that she would have to successfully challenge six
other wills to receive a direct benefit. We do not believe that our legislature
intended such a result when it enacted this statute.
[25] Consequently, we find that a “devisee” pursuant to Indiana Code section 29-1-
10-14 includes only devisees of the will being challenged and devisees of the
next will in line who would directly benefit if the challenged will were set aside.
Carol and her children do not qualify as devisees under this definition;
consequently, they are not entitled to attorney fees pursuant to Indiana Code
section 29-1-10-14. Therefore, we reverse the judgment of the trial court.
B. Burden of Proof
[26] Although we need not address the remaining arguments made by the Estate, we
choose to do so because we so rarely have the opportunity to address these
issues that so frequently recur in estate practice. Among the most important
issues raised by the Estate is the issue of who bears the burden of proof with
respect to Indiana Code section 29-1-10-14, and what, precisely, that burden is.
[27] Indiana Code section 29-1-7-20 provides that a person challenging a will
admitted to probate bears the burden of proof. It stands to reason that the same
person would likewise bear the burden of proof in seeking attorney fees
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following a will contest. Thus, the challenger bears the burden of proving that
she prosecuted the will “in good faith and with just cause[.]” I.C. § 29-1-10-14.
[28] This Court has previously explained that “[t]he purpose and public policy of
[Indiana Code section 29-1-10-14] is to give all parties concerned a fair trial and
to encourage the probating or the resisting of the probate of the will where there
are reasonable grounds or probable cause for such proceedings in good faith, without
compelling any party to risk financial loss by underwriting the expenses of such
proceedings.” Dunnuck, 546 N.E.2d at 1291-92 (emphasis added). We find that
the Dunnuck Court articulated an appropriate and reasonable burden of proof,
and hereby adopt that standard. Therefore, we hold that a party who is seeking
attorney fees pursuant to Indiana Code section 29-1-10-14 bears the burden of
proving by a preponderance of the evidence that she litigated in good faith and
with just cause, meaning that she had reasonable grounds or probable cause to
litigate the will contest. The party seeking attorney fees is not entitled to the
benefit of the doubt; instead, that party must make an affirmative showing
consistent with Dunnuck.
[29] Assuming that the party seeking attorney fees is able to make the requisite
showing of good faith and just cause, that party still bears the burden of proof
with respect to calculation of attorney fees. In this case, Carol and her children
raised three claims. Two of those three claims were wholly without just cause
or good faith. But Carol argues that because the Estate failed to separate Carol’s
attorney fees by claim, she is entitled to all of her fees. This argument leads to
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an impermissible shifting of the burden of proof to the Estate to disprove
Carol’s fees. We cannot countenance this approach.
[30] We acknowledge that the trial court was unable to separate the fees for the three
claims, which is understandable given the process that was followed in this
case. To avoid precisely this issue, we hold that a different process should be
followed. First, the claimant seeking fees must prove that some or all of her
claims were made in good faith and with just cause. The trial court must then
make a preliminary determination as to which of the claims meet this standard.
Then, the claimant is required to come forward with evidence showing the
amount of attorney fees expended only for the claims that meet the statutory
standard. In this way, the trial court and all parties can be assured that the
claimant receives attorney fees only for those claims that were brought in good
faith and with just cause, and the burden of proof remains on the claimant.
[31] The judgment of the trial court is reversed.
Mathias, J., concurs, and Bailey, J., concurs in result.
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