In the Matter of the Joan T. Goetzinger Living Trust Dated May 30, 2014

IN THE COURT OF APPEALS OF IOWA
No. 19-1342
Filed July 22, 2020
IN THE MATTER OF THE JOAN T. GOETZINGER LIVING TRUST DATED
MAY 30, 2014,
GAIL M. MILLER,
Appellant.
________________________________________________________________
Appeal from the Iowa District Court for Dubuque County, Monica Zrinyi
Wittig, Judge.
A former trustee appeals the district court’s refusal to order payment of all
of her and her attorney’s fees from the trust. AFFIRMED.
Alyssa M. Carlson of O’Connor & Thomas, P.C., Dubuque, for appellant.
Gary Dickey of Dickey, Campbell & Sahag Law Firm, PLC, Des Moines, for
appellee Matthew Boleyn.
Susan M. Hess of Hammer Law Firm, PLC, Dubuque, for appellee Gladys
M. Goetzinger-Strachan.
Considered by Vaitheswaran, P.J., and Mullins and Ahlers, JJ.
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AHLERS, Judge.
Joan Goetzinger established a trust in 2014 that became irrevocable upon
her death in 2015. The trust was expressly designed to benefit Joan’s mother,
Gladys Goetzinger-Strachan, after Joan’s death. The trust document stated the
trustee “shall have no obligation to preserve principal for the remainder
beneficiaries.” There were six named remainder beneficiaries who were to receive
the remaining trust assets, if any, after Gladys’s death.
One of the named remainder beneficiaries was Gail Miller. Miller was a
friend of Joan. The trust document named Miller as successor trustee upon Joan’s
death. After Joan died, Miller began serving in her capacity as successor trustee.
That is where the problem started.
Almost immediately after starting her duties as trustee, Miller began
controlling the assets of the trust in a way that Gladys perceived as stingy. Miller
refused to purchase such basics for Gladys as hearing aids, a lift chair, or a stair
lift, which was necessary to allow Gladys, who was eighty-eight years old at the
time, to get to the bathroom on the second floor of her residence. This left the
impression that Miller was more interested in preserving trust assets for herself
and the other remainder beneficiaries than she was in providing for Gladys’s
needs. Not surprisingly, this drew the ire of Gladys, who filed this action to seek
judicial oversight of the trust that was otherwise operating without court
supervision. Gladys sought to have Miller removed as trustee and to require the
distribution of funds from the trust that would enable Gladys to obtain the requested
hearing aids, lift chair, and stair lift. Very soon into the judicial proceedings, Miller
also drew the ire of the district court, as she continued to refuse to purchase the
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previously mentioned items in spite of the district court’s directions to do so, while
seeming to spare no expense in fighting Gladys on nearly every issue.
It was only after nearly one and one-half years of repeated court orders and
threats of contempt sanctions that Gladys was able to obtain the requested items.
Additionally, Miller was persuaded to resign as trustee in April 2017, but not before
procuring a purported settlement agreement that seemed designed for her benefit
rather than Gladys’s, as it sought to release Miller from liability while also changing
the terms of the trust to curtail discretionary spending for Gladys’s benefit. The
district court accepted Miller’s resignation, but the court reserved deciding whether
to approve the settlement agreement until the trustee that replaced Miller had a
chance to review it. The district court also reserved ruling on whether fees claimed
by Miller or for Miller’s attorney should be paid from the trust due to the district
court’s concern over the amount of fees claimed. The district court directed Miller
and her attorney to submit detailed information in support of their fee claims.
After the replacement trustee reviewed the settlement agreement, he
objected to the agreement, pointing out its lopsided nature in Miller’s favor. The
district court refused to accept the settlement agreement. That decision has not
been appealed.
The issue resulting in this appeal is the claim for fees submitted by Miller
and her attorney. For the period of approximately twenty-seven months Miller
served as trustee before her resignation, Miller claimed trustee fees and expenses
of $42,059.81, and Miller’s attorneys claimed fees and expenses of $73,989.83
(later reduced to $62,958.83).
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As to trustee fees and expenses, the court found Miller overstated the
number of hours expended on certain tasks, failed to provide adequate explanation
of what tasks were performed to support some claimed work for the benefit of the
trust, and failed to include adequate explanation as to how some expenses
benefited the trust. The court also found “no authority within the trust documents
to permit” Miller’s claims of $30,000.00 for “investment services.” Furthermore,
due to Miller breaching her fiduciary duties to the trust, the court rejected trustee
fees for her claims arising after November 4, 2016. Accordingly, the district court
authorized the trust to reimburse Miller for a total of $8505.20 in trustee fees and
expenses.
Of the $62,958.83 claimed for Miller’s attorney fees and expenses, the
district court authorized the trust to pay a total of $3745.50. The district court
determined this figure as the amount incurred for preparation of tax filings and the
annual report for 2016. The district court determined all other attorney fees and
expenses incurred were related to Miller’s efforts to avoid responsibility for her
failure to fulfill her duties as trustee, so such fees and expenses would remain
Miller’s responsibility and not the trust’s.
I. Issues Presented.
Miller appeals the district court’s ruling. She claims: (1) the services she
rendered necessitated payment of the claimed fees and expenses1; (2) the district
1Miller also argues the district court incorrectly found Miller’s actions were self-
serving. We combine this argument with her argument that the services rendered
necessitated payment, as the arguments are intertwined.
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court was not impartial; and (3) the services rendered by her attorneys
necessitated payment of the amount claimed.
II. Standard of Review and Governing Statutes.
To resolve this trust dispute, we begin with Iowa Code chapter 633A (2017),
the Iowa Trust Code. With respect to trustee fees, such fees are governed by Iowa
Code section 633A.4109. See In re Estate of Gaeta, No. 13-1719, 2014 WL
5862037, at *6 (Iowa Ct. App. Nov. 13, 2014). We review objections to a fiduciary’s
final report de novo. See In re Barkema Trust, 690 N.W.2d 50, 53 (Iowa 2004).
While review is de novo, considerable discretion is given to the district court in the
allocation of trustee fees. See In re Woltersdorf, 124 N.W.2d 510, 511 (Iowa 1963)
(“The matter of fees for executors and trustees rests within the sound discretion of
the trial court.”). Regarding attorney fees, Miller argues Iowa Code section
633A.4507 does not apply, claiming that section only applies to an award of a
beneficiary’s attorney fees. Instead, she argues, attorney fees are governed by
section 633.200, located in the probate code. We disagree.
Starting with her argument that section 633.2002 governs, we note such
section applies to “fiduciaries.” “Fiduciary” is defined by Iowa Code section
633.3(17) to include a trustee, but only “the trustee of any trust described in section
633.10.” The trust involved in this case is not of the type described in section
633.10.3 Therefore, Miller is not a fiduciary as that term is defined for purposes of
2 Iowa Code section 633.200 states, in pertinent part: “The court shall allow and fix
from time to time the compensation for fiduciaries, other than personal
representatives, and their attorneys for such services as they shall render . . . .”
3 Iowa Code section 633.10(4) states, in pertinent part:
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chapter 633, and section 633.200 does not apply. Since the trust at issue is not
one of the types of trusts described in section 633.10, the trust is governed by
chapter 633A. See Iowa Code § 633.10(4)(c) (“A trust not described in paragraph
‘a’ shall be governed exclusively by chapter 633A . . . .”). As a result, Miller’s
attorney-fee claims are governed by sections 633A.4110 and/or 633A.4507.
As to Miller’s argument that section 633A.4507 applies only to the award of
a beneficiary’s attorney fees, the argument is rebutted by the language of the
statute:
In a judicial proceeding involving the administration of a trust, the
court, as justice and equity may require, may award costs and
expenses, including reasonable attorney fees, to any party, to be
paid by another party or from the trust that is the subject of the
controversy.
Iowa Code § 633A.4507. By its express terms, this section applies to an award of
attorney fees to any party. Nothing in the statute confines its application to a
beneficiary’s attorney fees.
Turning to the standard of review on the attorney-fee issue, attorney-fee
awards are reviewed for an abuse of discretion. See In re Trust No. T-1 of Trimble,
In addition to the jurisdiction granted the district court under the trust
code, chapter 633A, or elsewhere, the district court sitting in probate
shall have jurisdiction of:
....
4. Trusts and trustees.
a. The ongoing administration and supervision, including but
not limited to the appointment of trustees, the granting of letters of
trusteeship, trust administration, and trust settlement and closing, of
the following trusts:
(1) A trust that was in existence on July 1, 2005, and that is
subject to continuous court supervision.
(2) A trust established by court decree that is subject to
continuous court supervision.
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826 N.W.2d 474, 482 (Iowa 2013). The district court abuses its discretion when
the “ruling is based on grounds that are unreasonable or untenable.” Id.
III. Discussion.
As mentioned, Miller makes three arguments. We address each in turn.
A. Trustee Fees and Expenses.
Miller was entitled to compensation in some amount. The trust document
did not specify the trustee’s compensation, other than to state the trustee was
entitled to “reasonable compensation.” Therefore, Miller’s compensation was
limited “to compensation that is reasonable under the circumstances.” Iowa Code
§ 633A.4109. On our de novo review, we agree with the district court’s
determination of Miller’s fees and expenses.
Miller’s claim for $30,000.00 of fees for “investment services” based on
calculations of one percent per year of the trust value is not warranted by the trust
document. The trust document did not allow compensation calculated with this
formula—a fact that is conceded in Miller’s brief. With no such specified
compensation, the district court properly rejected this $30,000.00 of Miller’s claim.
As for the remaining $12,059.81, we agree with the district court’s
determination that some of Miller’s claimed hours did not include adequate
explanation as to how they were related to matters concerning the trust. We also
agree with the district court’s determination that significant amounts of Miller’s time
were spent not in fulfilling her obligations to Gladys, but trying to shirk her
responsibilities to Gladys. Miller had the obligation to “administer the trust solely
in the interest of the beneficiaries.” Trimble, 826 N.W.2d at 490 (quoting Iowa
Code section 633A.4202(1)). In this case, that beneficiary was Gladys. Miller’s
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foot-dragging in providing such basic things as the hearing aids, lift chair, and stair
lift, even after being repeatedly directed to provide those items, resulted in
numerous unnecessary hearings and time investment by Miller and was a failure
to fulfill her duties as trustee. Miller was not entitled to compensation for the extra
work and expenses necessitated by her conduct. The district court’s determination
of Miller’s fees and expenses was appropriate.
B. Impartiality of the District Court.
Miller also challenges the district court’s ruling on the basis that the district
court was not impartial. We agree with the replacement trustee’s assertion that
Miller failed to preserve error on this issue. “It is a fundamental doctrine of
appellate review that issues must ordinarily be both raised and decided by the
district court before we will decide them on appeal.” Meier v. Senecaut, 641
N.W.2d 532, 537 (Iowa 2002). “When a district court fails to rule on an issue
properly raised by a party, the party who raised the issue must file a motion
requesting a ruling in order to preserve error for appeal.” Id. The appellate court
will not decide a case based on a ground not raised in the district court. DeVoss
v. State, 648 N.W.2d 56, 60 (Iowa 2002). Here, Miller cites to comments made by
the district court at various hearings throughout the life of this case as proof of the
district court’s lack of impartiality. Yet, in spite of the fact that the claimed
impartiality was displayed at numerous hearings, Miller never once moved to
disqualify the judge or otherwise brought the issue to the district court’s attention.
We understand that challenging a judge’s impartiality is an uncomfortable
undertaking that takes a fair amount of courage. But if a party has enough courage
to raise a claimed transgression on appeal, the party needs to have enough
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courage to raise it before the district court when remedial measures can still be
taken. Since it was not raised below, we do not address it here.
C. Attorney Fees and Expenses.
Much like trustee fees, the obligation to reimburse the trustee for attorney
fees and expenses incurred by the trustee is limited to those that are reasonable.
See Iowa Code §§ 633A.4110,4 .4507.5 As to the interplay between sections
633A.4110 and 633A.4507, in considering whether to require a trust to pay the
fees and costs of the trustee, a court “should first consider whether the
expenditures were properly incurred in the administration of the trust or otherwise
benefited the trust.” Trimble, 826 N.W.2d at 492. Once it is determined that
section 633A.4110 does not defeat a right to reimbursement, courts should then
proceed to consider section 633A.4507. Id. The factors to consider under section
633A.4507 include:
(a) reasonableness of the parties’ claims, contentions, or defenses;
(b) unnecessarily prolonging litigation; (c) relative ability to bear the
financial burden; (d) result obtained by the litigation and prevailing
party concepts; and (e) whether a party has acted in bad faith,
vexatiously, wantonly, or for oppressive reasons in the bringing or
conduct of the litigation.
Id. at 491 (quoting Atwood v. Atwood, 25 P.3d 936, 947 (Okla. Civ. App. 2001)).
4 Iowa Code section 633A.4110 states:
A trustee is entitled to be repaid out of the trust property, with interest
as appropriate, for all of the following expenditures:
1. Expenditures that were properly incurred in the
administration of the trust.
2. To the extent that they benefited the trust, expenditures that
were not properly incurred in the administration of the trust.
5 “In a judicial proceeding involving the administration of a trust, the court, as justice
and equity may require, may award costs and expenses, including reasonable
attorney fees, to any party, to be paid by another party or from the trust that is the
subject of the controversy.” Id. § 633A.4507.
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Here, the district court found that most of the attorney fees claimed by Miller
were not incurred in the administration of the trust or otherwise did not benefit the
trust. We find no abuse of discretion in this determination. The record shows this
to be a fairly uncomplicated trust. Besides two residences, the remainder of the
trust assets were in liquid investment or bank accounts. There was one beneficiary
to serve, and the trust document expressly relieved Miller of any obligation to
preserve principal for remainder beneficiaries. In spite of this simplicity, Miller
chose to resist her obligations and hired counsel to help. At least eight attorneys
and one paralegal became involved. And for what? Primarily to fight with the
beneficiary over her request for hearing aids, a lift chair, and a stair lift to help her
get to her bathroom. This action by Miller and her counsel resulted in claimed
trustee fees and attorney fees that very likely greatly exceeded the beneficiary’s
requests with which Miller quibbled. Based on these circumstances, we agree with
the district court’s limitations on the trust’s reimbursement obligation to Miller’s
attorneys and find no abuse of discretion.
IV. Conclusion.
We have considered all arguments asserted by Miller, whether addressed
herein or not, and find them unpersuasive. Accordingly, we affirm the district
court’s ruling in its entirety.
AFFIRMED.