Kerby v. Jerry Kerby Revocable Trust

IN THE COURT OF APPEALS OF IOWA
No. 16-1208
Filed December 20, 2017
TROY KERBY,
Petitioner-Appellee,
vs.
JERRY KERBY REVOCABLE TRUST,
Respondent-Appellant.
________________________________________________________________
Appeal from the Iowa District Court for Appanoose County, Randy S.
DeGeest, Judge.
A trust appeals the district court’s denial of its request for a protective order.
APPEAL DISMISSED.
Bradley M. Grothe of Craver & Grothe, LLP, Centerville, for appellant.
Steven Gardner of Denefe, Gardner & Zingg, P.C., Ottumwa, for appellee.
Considered by Vogel, P.J., and Tabor and Bower, JJ.
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VOGEL, Presiding Judge.
Jerry Kerby established a revocable trust in 2005. In January 2016, Jerry’s
son, Troy, filed a lawsuit against the trust alleging he was a “current or former
beneficiary” of the trust and requesting the court review the internal affairs of the
trust. On March 23, 2016, Jerry answered the lawsuit as the trustee, and he
asserted the action should be dismissed because Troy did not have standing to
petition the court concerning the trust. See Iowa Code §§ 633A.3103 (2016)
(noting in a revocable trust the “holder of the power” has the rights afforded to
beneficiaries and the duties of a trustee are owed to the “holder of the power,” not
to the beneficiaries), 633A.6202 (providing “a trustee or beneficiary of a trust may
petition the court concerning the internal affairs of the trust or to determine the
existence of the trust”). On the same day he answered the petition, Jerry also filed
a motion for a protective order seeking to prevent discovery regarding the trust
until Troy’s standing to bring the lawsuit could be litigated.
Troy resisted the motion for a protective order, asserting Jerry was not
competent, which made the revocable trust irrevocable. See In re Trust No. T-1
of Trimble, 826 N.W.2d 474, 484 (Iowa 2013) (noting a trustee owes his duties to
the settlor of a revocable trust so long as the settlor is alive and competent); see
also Iowa Code § 633A.3101 (“To create, revoke, or modify a revocable trust, the
settlor must be competent. An aggrieved person shall have all causes of action
and remedies available to the aggrieved person in attacking the creation,
revocation, or modification of a revocable trust as one would if attacking the
propriety of the execution of a will.”). In April 2016, Troy also served discovery
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requests on the trust seeking Jerry’s medical information and the documents
creating and amending the trust.
Soon after, Jerry filed a motion for summary judgment, wherein Jerry
asserted he is the settlor and trustee of the trust in question and he believed he
was still competent to carry out the administration of the trust. He asserted Troy
had no right, title, or interest in the trust, and Troy lacked standing to bring the
action to review the internal affairs of the trust. Attached to the motion was Jerry’s
affidavit that asserted he was alive and competent. The affidavit admitted his wife
acted as trustee of the trust for a short time during Jerry’s hospitalization in 2015,
he approved of the actions she took as trustee during that time, and he resumed
the office of trustee after his hospitalization. Jerry also attached a redacted copy
of the trust document.
After a hearing, the district court denied the motion for a protective order on
May 16, 2016, stating Troy “may seek and discover evidence relevant to the
competence of the settlor, including changes the settlor may or may not have made
to the trust during any alleged incompetence.” Jerry filed a motion to enlarge and
amend the district court’s decision asking the court to, among other things, find
Troy is not a beneficiary of the trust and thus has no standing to maintain the
action. The court, finding the standing issue was not before the court when it ruled
on the protective order, denied the motion, and Jerry appealed.
Following the notice of appeal, Jerry died, and Troy filed a motion to dismiss
the appeal as moot. Troy asserted that after Jerry’s death he was provided
unredacted copies of the document creating the trust along with the trust
amendments in 2010 and 2015. He further asserted that all issues concerning the
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validity of the trust and any amendments thereto must now be brought in a probate
proceeding. See Iowa Code § 633A.3108. The trust, through the successor
trustee, Jerry’s surviving spouse, Carol, resisted the motion to dismiss the appeal
as moot, maintaining that Jerry’s death did not affect Troy’s lack of standing to
maintain the action. The successor trustee attached to the resistance the trust
document and the amendments, which provide Troy was originally a beneficiary of
the trust and a successor trustee, but he was removed as a beneficiary of the trust
and as a nominated successor trustee on July 30, 2015, by an amendment signed
by Jerry.
Troy filed a supplement to his motion to dismiss the appeal informing this
court that he has now filed a separate action in district court challenging the validity
of the July 30, 2015 amendment to the trust and alleging undue influence and
incompetence. He stated it was his intention to move to consolidate the newly filed
action with the matter currently on appeal before this court. Troy again asserted
the death of Jerry; the newly filed suit against the now irrevocable trust; the
production of the trust documents, which were initially the subject of the motion for
the protective order; and his standing as an heir to challenge the irrevocable trust,
make this current appeal moot. See id. § 633A.3110(2) (providing a “trustee may
give notice . . . to creditors, heirs, and the surviving spouse of the settlor for the
purpose of establishing their rights to contest the trust and to file claims against
the trust assets”).
A case is moot if it “no longer presents a justiciable controversy because
the issues involved have become academic or nonexistent.” Martin-Trigona v.
Baxter, 435 N.W.2d 744, 745 (Iowa 1989). The district court ruling that is on appeal
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before us is the denial of the trustee’s motion for a protective order for the
revocable trust. The protective order sought to prevent Troy from obtaining copies
of the trust documents during discovery. Those documents have now been turned
over to Troy as a result of the death of Jerry, the settlor. Thus, any decision this
court renders regarding the validity of the district court’s decision to deny the
protective order would have no force or affect—the documents have already been
produced to Troy.
The successor trustee asserts this appeal is not moot and the protective
order should have been granted because Troy does not have standing to maintain
the action against the revocable trust. However, the district court has not yet ruled
on the standing issue. This issue was raised in the trustee’s motion for summary
judgment, and that motion was pending at the time the trustee appealed the district
court’s denial of the protective order. Once discovery regarding Jerry’s
competency is complete, the district court can then determine whether Troy has
standing to petition for a review of the internal affairs of the trust.
Because we conclude the appeal of the district court’s decision on the
motion for a protective order is moot,1 this appeal is dismissed, and the case is
1
Even if we were to determine the exception to the mootness doctrine applied, we would
conclude the district court did not abuse its discretion in denying the motion for a protective
order. See Homan v. Branstad, 864 N.W.2d 321, 330 (Iowa 2015) (outlining the public-
importance exception to the mootness doctrine). The issue of whether Troy has standing
to bring the action to review the internal affairs of the revocable trust turns on whether
Jerry was competent when he executed the amendment to the trust in 2015 that removed
Troy as a beneficiary and as a successor trustee. Permitting limited discovery regarding
the issue of the competency of the settlor and the trust documents was not an abuse of
the wide discretion granted to the district court over matters pertaining to discovery. See
Comes v. Microsoft Corp., 775 N.W.2d 302, 305 (Iowa 2009) (“A trial court has wide
discretion to enter a protective order pursuant to Iowa Rule of Civil Procedure 1.504. We
review the district court’s decisions regarding discovery for an abuse of discretion.”).
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remanded to the district court for further proceedings.
APPEAL DISMISSED.