Shriners Hospitals for Children, In Its Capacity as Beneficiary of the Alfred J. and Pegge A. Cooksley Trust v. First Northern Bank of Wyoming, In Its Capacity as Trustee of the Alfred J. and Pegge A. Cooksley Trust

IN THE SUPREME COURT, STATE OF WYOMING
2016 WY 51
APRIL TERM, A.D. 2016
May 18, 2016
SHRINERS HOSPITALS FOR
CHILDREN, In its capacity as beneficiary
of the Alfred J. and Pegge A. Cooksley
Trust,
Appellant
(Plaintiff),
v.
FIRST NORTHERN BANK OF
WYOMING, In its capacity as trustee of
the Alfred J. and Pegge A. Cooksley Trust,
Appellee
(Defendant).
S-15-0238, S-15-0239
SHRINERS HOSPITALS FOR
CHILDREN, In its capacity as beneficiary
of the Alfred J. and Pegge A. Cooksley
Trust,
Appellant
(Plaintiff),
v.
FIRST NORTHERN BANK OF
WYOMING, In its capacity as trustee of
the Alfred J. and Pegge A. Cooksley Trust,
Appellee
(Defendant).
Appeal from the District Court of Johnson County
The Honorable William J. Edelman, Judge
Representing Appellant:
Christopher C. Voigt and Timothy M. Stubson of Crowley Fleck, PLLP, Casper,
WY. Argument by Mr. Voigt.
Representing Appellee:
Tom C. Toner of Yonkee & Toner, Sheridan, WY; and Keith Dodson of Williams,
Porter, Day & Neville, Casper, WY. Argument by Mr. Toner.
Before BURKE, C.J., and HILL, DAVIS, FOX, and KAUTZ, JJ.
NOTICE: This opinion is subject to formal revision before publication in Pacific Reporter Third.
Readers are requested to notify the Clerk of the Supreme Court, Supreme Court Building,
Cheyenne, Wyoming 82002, of any typographical or other formal errors so that correction may be
made before final publication in the permanent volume.
HILL, Justice.
[¶1] Alfred “Jack” Cooksley and Pegge Cooksley placed their ranch and other property
in a revocable charitable trust entitled the Alfred J. and Pegge A. Cooksley Trust (Trust).
The Trust named Shriners Hospitals for Children (Shriners) and the Kalif Children’s
Travel Fund (Kalif) as beneficiaries, and First Northern Bank of Wyoming as the
successor trustee. The Trust specified the year 2100 as its termination date, and it
directed First Northern Bank to hold the ranch and other property in the Trust until that
date. Upon termination of the Trust, First Northern Bank was to distribute the Trust
assets to the beneficiaries, and, until then, the Bank was to distribute to the beneficiaries
any Trust income not otherwise required to maintain and operate the ranch.
[¶2] Pegge Cooksley died in 2007, and Jack Cooksley died in 2011. After Jack
Cooksley’s death, Shriners filed a petition seeking termination of the Trust and an
immediate distribution of the Trust assets. In a separate action, Shriners filed a complaint
against First Northern Bank alleging it had breached its fiduciary duty to the Trust
beneficiaries and seeking the Bank’s removal as trustee, an award of damages, and a
disgorgement of any fees paid to the Bank. Shriners’ actions were consolidated, and
following a bench trial the district court ruled against Shriners and issued a judgment
denying all of its claims. The court thereafter entered an order directing Shriners to pay
First Northern Bank its attorney fees and costs in the amount of $48,343.74. Shriners
appeals both the judgment denying its claims and the order awarding fees and costs. We
affirm both.
ISSUES
[¶3] Shriners presents eight issues on appeal, which we reorder and condense into the
following:
1. Whether the district court erred in concluding that the Trust did not violate
the rule against perpetuities.
2. Whether the district court erred in concluding there were no grounds to
terminate the Trust.
3. Whether the district court erred in concluding First Northern Bank did not
breach its fiduciary duties to the beneficiaries.
4. Whether the district court erred in concluding there were no grounds to
remove First Northern Bank as trustee.
5. Whether the district court erred in finding that First Northern Bank’s
attorney acted reasonably in response to Shriners’ initial challenge to the Trust.
6. Whether the district court abused its discretion in ordering Shriners to pay
First Northern Bank’s attorney fees and costs.
1
[¶4] First Northern Bank identifies the issues on appeal similarly and adds the
additional question of whether Shriners should be required to pay First Northern Bank’s
attorney fees associated with this appeal.
FACTS
A. Creation of Trust
[¶5] On October 24, 2006, Jack and Pegge Cooksley jointly executed a Declaration of
Trust, which created the Alfred J. and Pegge A. Cooksley Trust (Trust). The Trust was a
revocable trust and reserved in both Jack and Pegge Cooksley the power to revoke or
amend the Trust, add or remove a trustee, or add or remove any asset. The Declaration of
Trust designated Jack Cooksley as the initial trustee, and upon his death, First National
Bank of Buffalo (now First Northern Bank) was to serve as the successor trustee. 1 The
Cooksleys placed all of their property, both real and personal, in the Trust when they
created the Trust in October 2006.
[¶6] The principal asset of the Trust is an approximately 1,620-acre ranch that the
Cooksleys purchased in 1951. The ranch is located in Sheridan County, Wyoming, about
twenty-five miles southeast of Sheridan and four miles west of Ucross and is accessible
by U.S. Highway 14. The ranch appraised at a value of $2,000,000.00 in 2011 and, with
over a mile of frontage on Piney Creek, was described in that property appraisal as being
located in “a highly sought after area situated along the year-round flowing Piney Creek.”
The property appraiser observed: “The meadows/creek bottom land, located along Piney
Creek, are not only highly productive (providing a good hay base for the ranching
operation) but also esthetically pleasing and valued for their recreational amenities.”
[¶7] The Trust provided that while both Jack and Pegge Cooksley were living, the
trustee was to pay the net income and principal (up to the entire amount) of the Trust to
or for their benefit, in such amounts and at such times as either might direct. Upon the
death of either Jack or Pegge Cooksley, the Trust directed the following disposition:
The Trustee shall collect the income from the trust,
and after deducting any charges and expenses properly
chargeable to income in the administration of the trust, shall
pay all of the net income, at least quarter-annually, to or for
the benefit of the surviving Settlor, for life. In the event any
such payment of income is insufficient, in the sole opinion of
the survivor of us, to provide for the health, education,
maintenance and support of the survivor, the Trustee shall use
1
Although at times during these proceedings, First Northern Bank was still First National Bank, we refer
to it herein by its current name of First Northern Bank.
2
from time to time so much of the principal of this Trust as the
survivor of us shall direct be withdrawn and used, paid or
applied for those purposes.
[¶8] Upon the death of the surviving Cooksley spouse, the Trust directed the following
disposition of the Trust property:
2.2 Disposition After Death of Both Settlors. Upon
the death of the survivor of us, the Trustee shall administer,
dispose of and distribute the then remainder of this trust,
including income accruing after the date of death of the
survivor of us, as follows:
A. [distribution of personal property per any
separate writing]
B. [distribution of rocks, minerals, and historical
artifacts to Jim Gatchell Museum]
C. The Trustee may make distribution or
disposition of any other tangible personal property as the
Trustee, in its sole discretion, shall deem appropriate,
including but not limited to private sale, auction and
charitable donation. We intend that the trust continue for
some years, and direct the Trustee to dispose of tangible
personal property so that it is not a burden on the trust.
Notwithstanding the foregoing, the Trustee is
authorized to retain such tangible personal property as it
deems appropriate or necessary to the management of the
ranch land, buildings and residence.
D. The Trustee shall thereafter hold, manage,
invest, reinvest and distribute the remaining trust estate for
the benefit of the SHRINERS HOSPITAL FOR
CRIPPLED CHILDREN – INTERMOUNTAIN, or its
successor, (“SHRINERS HOSPITAL”) as follows:
(i) The Trustee shall distribute to or apply for the
benefit of the SHRINERS HOSPITAL, at least semi-
annually, all of the net income of the trust. We specifically
direct that any and all accumulation of funds, whether from
depletion, depreciation, and/or any other non-distributable
source, be managed by the Trustee and used to the extent that
the Trustee deems appropriate or necessary, to maintain the
real property. In the event that there are insufficient funds to
pay such expenses, then the Trustee is authorized to withhold
so much of the net income otherwise distributable as is
3
necessary or advisable, in the Trustee’s sole discretion, to
provide for such expenses.
(ii) As soon as practical after the year 2100, the
Trustee shall distribute outright to the SHRINERS
HOSPITAL all of the then-remaining principal together with
any undistributed income, free and clear from the restrictions
of these Trust provisions, and when all funds have been
distributed, the Trust shall terminate.
(iii) If SHRINERS HOSPITAL shall cease to
exist, without a successor qualified as an IRC Section
501(c)(3), as amended, then the Trustee shall designate one or
more qualified IRC Section 501(c)(3) recipient(s), upon
application to and approval of a court of competent
jurisdiction, such qualified recipient(s) to be chosen
according to the criteria of assisting and promoting the
medical diagnosis, care and treatment of children in
Wyoming and the greater intermountain region.
B. First Amendment to Trust
[¶9] On January 15, 2007, the Cooksleys executed the first amendment to the Trust.
The first amendment revised Paragraph 2.2.D(ii) to provide for distribution of the Trust
assets to Shriners as soon as practical after the year 2050 and to provide for the Trust’s
termination after that 2050 distribution. The first amendment also added Paragraph 2.2.E
to the Trust, which provided:
E. The major asset that we have contributed to this
Trust is our ranch, consisting of land, improvements and
minerals. It is our intention that the Trustee continue to hold
the ranch for the term of this trust, with the land remaining
open and its use devoted to agriculture and/or preservation.
We realize, however, that circumstances may occur that
would make the continued ownership of this asset by the trust
impractical or imprudent. By way of example, and by way of
limitation, we list the following circumstances that would
affect and possibly prohibit the continued ownership of the
ranch:
(i). The need for liquidity to pay for the extended
nursing or home care for either or both of us; or
(ii). The inability of the trust assets to provide
sufficient income from all sources (interest, dividends,
surface lease, surface damages, easements, rights-of-way,
mineral royalties, mineral lease bonuses and other revenue
4
sources) to pay the costs of maintaining the ranch,
administering the trust and providing for the care of one or
both of us.
In making its determination as to whether to sell the
ranch land, we instruct the Trustee to evaluate the expected
duration of the specific circumstances, the likelihood of a
change in the circumstances, and the opportunities for a
partial disposition of the ranch land to meet the financial
needs. If all, or substantially all, of the ranch surface has been
sold, the Trustee shall distribute the assets, after paying
reasonable expenses and obligations, as described in
Subsection D above, and this Trust shall terminate.
[¶10] Just over a month after the first amendment to the Trust was executed, on
February 21, 2007, Pegge Cooksley died.
C. Second Amendment to the Trust
[¶11] On November 13, 2007, Jack Cooksley executed a second amendment to the
Trust. The second amendment replaced section 2.2 in its entirety, but section 2.2.A
through C, governing the disposition of personal property, remained unchanged.
Likewise, section 2.2.E., defining the types of circumstances under which the trustee was
authorized to sell the ranch or a portion of the ranch, was not substantively changed by
the second amendment to the Trust, though the language was revised to reflect Jack
Cooksley’s status as the surviving settlor. The changes were to section 2.2.D and they
included: 1) the addition of Kalif Children’s Travel Fund (Kalif) as an additional
beneficiary; and 2) an extension of the Trust’s termination date back to the year 2100.
The revised section 2.2.D provided:
D. The Trustee shall thereafter divide, manage,
invest, reinvest and distribute the remaining trust estate in two
funds, 85% for the benefit of the SHRINERS HOSPITAL
FOR CRIPPLED CHILDREN – INTERMOUNTAIN, or
its successor, (“SHRINERS HOSPITAL”), and 15% for the
benefit of the KALIF CHILDREN’S TRAVEL FUND of
the Kalif Shrine in Sheridan, Wyoming, or its successor,
(“KALIF TRAVEL FUND”).
(i). The Trustee shall distribute to or apply for the
benefit of the SHRINERS HOSPITAL, at least semi-
annually, 85% of the net income of the trust, and shall
distribute to or apply for the benefit of the KALIF TRAVEL
FUND, at least semi-annually, 15% of the net income of the
trust. I specifically direct that any and all accumulation of
5
funds, whether from depletion, depreciation, and/or any other
non-distributable source, be managed by the Trustee and used
to the extent that the Trustee deems appropriate or necessary,
to maintain the real property. In the event that there are
insufficient funds to pay such expenses, then the Trustee is
authorized to withhold so much of the net income otherwise
distributable as is necessary or advisable, in the Trustee’s sole
discretion, to provide for such expenses.
(ii). As soon as practical after the year 2100, the
Trustee shall distribute outright to the SHRINERS
HOSPITAL 85% and to the KALIF TRAVEL FUND 15%
of the then-remaining principal together with any
undistributed income, free and clear from the restrictions of
these Trust provisions, and when all funds have been
distributed, this Trust shall terminate.
(iii). If the SHRINERS HOSPITAL or the KALIF
TRAVEL FUND shall cease to exist, without a successor
qualified as an IRC Section 501(c)(3), as amended, then the
Trustee shall designate one or more qualified IRC Section
501(c)(3) recipient(s), upon application to and approval of a
court of competent jurisdiction, such qualified recipient(s) to
be chosen by the extent to which it/they perform or enable
assistance similar in nature and function to that of the
organization being replaced. For example, a designee to
replace the SHRINERS HOSPITAL should assist and
promote the medical diagnosis, care and treatment of children
in Wyoming and the greater intermountain region; a designee
to replace the KALIF TRAVEL FUND should assist
children and their families in the Sheridan area with travel
expenses related to or arising from a child’s illness.
[¶12] When First Northern Bank received a copy of the second amendment to the Trust,
it requested confirmation that Mr. Cooksley did in fact intend to extend the Trust’s
termination date from the Year 2050 to the Year 2100. Mr. Cooksley’s attorney, Darlene
Reiter, responded in a letter dated January 17, 2008:
I discussed the term of the Cooksley Trust with Jack
when we met earlier this week. Jack confirmed that the Trust
is intended to continue to the year 2100, unless earlier
terminated by exercise of the very limited provision for sale
of the surface.
6
D. Third Amendment to the Trust
[¶13] On January 26, 2009, Jack Cooksley executed a third amendment to the Trust.
The third amendment revised only the provisions of the Trust affecting the disposition of
Mr. Cooksley’s personal property. The Trust, as revised by the third amendment,
directed the trustee, upon Mr. Cooksley’s death, to convey possession of all of Mr.
Cooksley’s tangible personal property to his friend John Piesik and his attorney Darlene
Reiter. The amendment gave Mr. Piesik and Ms. Reiter sole discretion over the
disposition of the personal property, including by private sale, auction, gift, charitable
donation, or other disposition. The amendment further stated: “I intend that the trust
continue for some years, and direct Piesik and Reiter to dispose of tangible personal
property so that it is not a burden on the trust.” Proceeds realized from the sale of any
personal property were to be submitted to First Northern Bank as trustee.
E. Shriners’ Challenge to Trust following Jack Cooksley’s Death
[¶14] Jack Cooksley died on March 17, 2011. On April 28, 2011, Wendy Martin, a trust
officer at First Northern Bank, sent a letter to Patricia Dockery in Shriners’ legal
department informing her of Mr. Cooksley’s death and providing copies of the Trust and
the three amendments to the Trust. On May 20, 2011, Ms. Dockery notified Ms. Martin
of concerns Shriners had with the Trust and its amendments. Ms. Dockery cited three
concerns: first, she suggested the Trust’s year 2100 termination date would appear to
violate Wyoming’s statutory rule against perpetuities; second, she expressed a concern
that Mr. Cooksley’s attorney, Darlene Reiter, had violated the Rules of Professional
Conduct by accepting a substantial gift from Mr. Cooksley when she prepared the third
amendment to the Trust giving her a great deal of latitude in disposing of Mr. Cooksley’s
personal property; and third, she indicated that she had received information that Mr.
Cooksley renegotiated an agricultural lease on the ranch, prior to the lease’s expiration,
resulting in terms less favorable to the Trust and she expressed concerns regarding Mr.
Cooksely’s motivation and his mental and physical status when the lease was
renegotiated.2
[¶15] On September 1, 2011, Patricia Dockery sent another letter to First Northern Bank
again raising her concern that the Trust violated the statutory rule against perpetuities.
Ms. Dockery wrote:
Shriners Hospitals for Children would be interested in the
early termination of the trust and outright distribution of the
trust assets. If court action is necessary to terminate the trust,
2
Facts concerning the agricultural lease are relevant to Shriners’ claim that First Northern Bank breached
its fiduciary duties and will be set forth in that part of our discussion.
7
we would suggest that perhaps Mr. Cooksley’s attorney,
Darlene Reiter, should absorb those costs as the effective date
of W.S. § 34-1-139 is some three years prior to the execution
of the Cooksley’s trust and Ms. Reiter had a duty to be
familiar with the statutes of the state in which she practices.
[¶16] On October 6, 2011, First Northern Bank acted on Shriners’ concerns regarding
the rule against perpetuities by filing a Petition to Amend Trust in the Fourth Judicial
District Court, Johnson County. The petition alleged that the Trust violated the rule
against perpetuities and asked that the court enter an order amending the Trust to provide
a termination date of not later than twenty-one years after the last to die of Jack and
Pegge Cooksley. The next day, October 7, 2011, counsel for First Northern Bank, Tonia
Hanson, sent a letter to Patricia Dockery informing her of the Bank’s filing of the
petition. Ms. Hanson wrote:
The Trustee carefully considered your request that the
Court Petition include a request to terminate the Trust.
However, after considering the matter fully and taking into
consideration the intent of the Settlors, Alfred J. Cooksley
and Pegge A. Cooksley, and in consulting with their close
friends, it was determined that the intent of Mr. and Mrs.
Cooksley was that the ranch lands be maintained for a long
period of time with the beneficiaries enjoying the income
from the property. Terminating the Trust would not
accomplish this intent.
[¶17] On May 14, 2012, Shriners filed an objection to the First Northern Bank’s petition
to amend the trust along with its own petition requesting an order terminating the Trust.
Shriners alleged that the Trust could not be modified without consent of the beneficiaries
and because Shriners objected to any modification, the Bank’s petition to amend should
be denied. Shriners further alleged that continuation of the Trust was not economical or
necessary to achieve a material purpose of the Trust and its termination was therefore
proper.
[¶18] On June 18, 2012, the district court held a hearing on First Northern Bank’s
petition to amend the Trust and Shriners’ petition to terminate the Trust. Following that
hearing, First Northern Bank moved to amend its petition, arguing:
3. [First Northern Bank’s] original Petition
inadvertently alleged that the Trust violated the [rule against
perpetuities]. Evidence was presented at the hearing alleging
the Trust is a charitable trust in which case there is no
violation of the Rule Against Perpetuities. Justice requires
8
allowing [First Northern Bank] to amend the Petition in order
to conform the pleadings to the evidence presented at the
hearing in this matter.
4. Based upon the evidence presented, it is in the
best interest of justice that [First Northern Bank] be allowed
to amend its petition to allege that the Trust be amended or
reformed only in the event the court finds the Trust is not a
charitable trust as defined in W.S. § 4-10-103(a)(iii).
[Underline in original.]
[¶19] On August 20, 2012, Shriners filed a new and separate action against First
Northern Bank. Shriners filed its new complaint again in the Fourth Judicial District
Court, Johnson County, this time alleging that First Northern Bank breached its fiduciary
duty to the Trust beneficiaries by failing to diversify the Trust’s investments and failing
to prudently invest and manage the Trust’s assets, and that First Northern Bank breached
its duty of loyalty to the beneficiaries, its duty of prudent administration, its duty of good
faith, and its duty to minimize the costs of administering the Trust. For its relief, Shriners
sought removal of First Northern Bank as trustee, an order compelling diversification and
sale of the Cooksley ranch, and an order denying any further compensation to the Bank,
imposing a surcharge against the Bank, and a disgorgement of any and all fees the Bank
had received from the Trust.
[¶20] On that same date, August 20, 2012, the district court issued a decision letter
addressing First Northern Bank’s petition to amend the Trust and Shriners’ petition to
terminate the Trust. The court ruled, citations omitted:
After giving consideration to the arguments of counsel
and materials of record in this matter, the Court finds that the
trust is a charitable trust such that the rule of perpetuities does
not apply. * * * Accordingly, Trustee’s Petition to Amend
Trust on the basis that the trust violates the rule against
perpetuities is denied. Similarly, Trustee’s Motion for Leave
of Court to Amend Petition appears to be an alternative
pleading which is made moot by this Court’s decision that the
trust is a charitable trust. Therefore, this motion is also
denied.
The beneficiaries’ petition to terminate the trust on the
basis that continuing the trust is no longer practicable or
economic raises questions of fact which will necessitate an
evidentiary hearing. Therefore, the Court does not grant or
deny the beneficiaries’ motion. Rather, a hearing will need to
be set to hear evidence to determine whether or not such
efforts have merit.
9
[¶21] On August 31, 2012, Shriners filed a motion asking the district court to reconsider
its ruling on the application of the rule against perpetuities. In seeking reconsideration,
Shriners did not disagree that the Trust is a charitable trust, rather it argued that
Wyoming’s rule against perpetuities applies regardless of whether a trust is charitable or
not. Shriners stated:
3. The Court, in the Decision Letter, found that the
Trust is a charitable trust. Shriners does not dispute this
finding. However, the Court also found that the Trust “is a
charitable trust such that the rule of perpetuities does not
apply.” It is this finding, that charitable trusts are not subject
to Wyoming’s rule against perpetuities, which Shriners is
requesting the Court reconsider.
[¶22] On September 14, 2012, the district court issued an order denying the motion for
reconsideration. Shriners’ petition to terminate the Trust and its complaint against First
Northern Bank then moved forward, and on November 5, 2012, the district court, with
the agreement of both parties, entered an order consolidating the two actions.
[¶23] A two-day bench trial was held on the two actions on March 17-18, 2015. Both
parties submitted proposed findings and orders, and on June 23, 2015, the district court
issued its Findings of Fact, Conclusions of Law and Judgment. Relevant to Shriners’
claims, the court found:
[T]he Trust has two valid material charitable purposes: (1) to
keep the Ranch open and used for agricultural purposes or
preservation until 2100, and (2) to benefit Shriners and Kalif.
This Court further holds that, according to the Trust terms,
the material charitable purpose of keep[ing] the Ranch open
takes precedence.
[¶24] The district court concluded that termination of the Trust would defeat the Trust’s
dominant material purpose of retaining the ranch until the year 2100 and that First
Northern Bank did not breach any of its fiduciary obligations. Based on these
conclusions, the court denied Shriners’ requested relief in its entirety. The court further
ordered that “Shriners shall be responsible for its own attorney’s fees, and FNB shall
submit the appropriate affidavits and other evidence so the court may consider an award
of its attorney fees.”
[¶25] On July 10, 2015, First Northern Bank filed its motion for attorney fees seeking
$48,343.74 in fees and costs for the Bank’s trial counsel, Tom Toner, and $89,067.09
paid by the Bank’s insurance company for expert witness fees and counsel the insurance
10
company retained to defend the Bank. On September 10, 2015, the district court issued
its Order Awarding Attorney’s Fees. The court found Shriners filed its litigation in bad
faith and would therefore be responsible for payment of the Bank’s fees and costs. The
court limited Shriners’ responsibility, however, to payment of Mr. Toner’s fees and costs
in the requested amount of $48,343.74.
[¶26] Shriners filed timely notices of appeal from the district court’s Findings of Fact,
Conclusions of Law and Judgment and its Order Awarding Attorney’s Fees.
STANDARD OF REVIEW
[¶27] We have stated our standard of review following a bench trial as follows:
When reviewing a bench trial, this Court reviews the trial
court’s findings of fact for clear error and its conclusions of
law de novo. Moore v. Wolititch, 2015 WY 11, ¶ 9, 341 P.3d
421, 423 (Wyo.2015). Additionally,
[t]he factual findings of a judge are not entitled to the
limited review afforded a jury verdict. While the
findings are presumptively correct, the appellate court
may examine all of the properly admissible evidence
in the record. Due regard is given to the opportunity of
the trial judge to assess the credibility of the witnesses,
and our review does not entail reweighing disputed
evidence. Findings of fact will not be set aside unless
they are clearly erroneous. A finding is clearly
erroneous when, although there is evidence to support
it, the reviewing court on the entire evidence is left
with the definite and firm conviction that a mistake has
been committed.
Id. (quoting Miner v. Jesse & Grace, LLC, 2014 WY 17, ¶ 17,
317 P.3d 1124, 1131 (Wyo.2014)). “‘We assume that the
evidence of the prevailing party below is true and give that
party every reasonable inference that can fairly and
reasonably be drawn from it.’” Id., ¶ 10, 341 P.3d at 423
(quoting Miner, ¶ 17, 317 P.3d at 1131).
Wimer v. Cook, 2016 WY 29, ¶ 9, ___ P.3d ___, (Wyo. 2016).
[¶28] To the extent the district court’s rulings require use of an additional or different
standard of review, we will set that out in our discussion of the affected ruling.
11
DISCUSSION
A. Rule against Perpetuities
[¶29] The district court ruled as a matter of law that the rule against perpetuities did not
apply to the Trust because the Trust is a charitable trust. The court’s ruling preceded the
bench trial, and at the time of the ruling, both parties agreed that the Trust is a charitable
trust. On appeal, Shriners contends that the Trust is not a charitable trust, at least not the
portion of the Trust devoted to retention of the Cooksley ranch. Shriners further contends
that even if the Court were to conclude that the Trust is a charitable trust, Wyoming’s
rule against perpetuities does not recognize an exception for charitable trusts. We
conclude that we need not address either question, because regardless of whether the
Trust is charitable or not, and regardless of whether our rule against perpetuities
recognizes an exception for charitable trusts, the rule against perpetuities does not apply
here.
[¶30] Application of the rule against perpetuities is a question of law, and as stated
above, we review a district court’s conclusions of law de novo. Wimer, ¶ 9, ___ P.3d
___. Additionally, this Court may affirm a district court ruling on any basis appearing in
the record. Redland v. Redland, 2015 WY 31, ¶ 17, 346 P.3d 857, 866 (Wyo. 2015).
[¶31] Article 1, § 30 of the Wyoming Constitution states: “Perpetuities and monopolies
are contrary to the genius of a free state, and shall not be allowed.” Wyoming’s rule
against perpetuities has been codified and provides, in relevant part:
No interest in real or personal property shall be good unless it
must vest not later than twenty-one (21) years after some life
in being at the creation of the interest and any period of
gestation involved in the situation to which the limitation
applies. The lives selected to govern the time of vesting must
not be so numerous nor so situated that evidence of their
deaths is likely to be unreasonably difficult to obtain. It is
intended by the enactment of this statute to make effective in
this state the American common-law rule against perpetuities.
Wyo. Stat. Ann. § 34-1-139(a) (LexisNexis 2015).
[¶32] Wyoming’s rule against perpetuities encourages the constitutional goal of
alienability of property by voiding property interests that will not vest within the statutory
term. Horse Creek Conservation Dist. v. State ex rel. Wyo. AG, 2009 WY 143, ¶ 40, 221
P.3d 306, 318 (Wyo. 2009). The rule against perpetuities does not apply to a property
interest that has already vested. Id., ¶ 41, 221 P.3d at 318 (citing Williams v. Watt, 668
12
P.2d 620, 633 (Wyo.1983)). A property interest vests at the point when no contingency
can defeat the interest. Horse Creek Conservation Dist., ¶ 41, 221 P.3d at 319; Williams,
668 P.2d at 633. We have distinguished vested and contingent interests as follows:
The broad distinction between vested and contingent
remainders is this: In the first, there is some person in esse
known and ascertained, who, by the will or deed creating the
estate, is to take and enjoy the estate, and whose right to such
remainder no contingency can defeat. In the second, it
depends upon the happening of a contingent event, whether
the estate limited as a remainder shall ever take effect at all.
The event may either never happen, or it may not happen
until after the particular estate upon which it depended shall
have been determined, so that the estate in remainder will
never take effect.
Williams, 668 P.2d at 633 (quoting 28 Am.Jur.2d Estates § 242, p. 396).
[¶33] Pursuant to the Trust terms, the beneficiaries, Shriners and Kalif, do not take
possession of the Trust property until the year 2100. Their interest in that property,
however, vested upon Jack Cooksley’s death. There is no contingency that can defeat the
beneficiaries’ interest in the property, and it is certain that when the Trust terminates in
the year 2100, the beneficiaries will receive possession of the Trust property. This result
is not affected by the risk that the Trust property may be diminished in some respect
before the beneficiaries take possession. We have explained:
Although it may be uncertain whether a remainder will ever
take effect in possession, it will nevertheless be a vested
remainder if the interest is fixed. It is the uncertainty of the
right of enjoyment, and not the uncertainty of its actual
enjoyment, which renders a remainder contingent and
distinguishes it from a vested remainder.
Williams, 668 P.2d at 633 (quoting 28 Am.Jur.2d Estates § 243).
[¶34] Shriners and Kalif have a fixed and vested interest to which the rule of perpetuities
does not apply. This conclusion is captured in the following explanation:
The [rule against perpetuities] requires a creator of a
contingent interest to ensure that any contingent interest will
vest or fail within 21 years of the death of a life or lives in
being at creation. It is concerned with vesting in interest or
ownership, and not with vesting in possession (the right to
13
occupy or enjoy the subject matter of the transfer). Thus if a
fee owner dies leaving a will by which he creates a trust for A
and A’s successors to last for 25 years, remainder to B (a
person living at that time), the Rule is not involved because
the interest of B is vested at once as far as ownership is
concerned, and the fact that B will not come into the
enjoyment of the property until the lapse of 25 years is
immaterial to the Rule, because no contingent interest is
involved.
George Gleason Bogert & Helen S. Shapo, The Law of Trusts and Trustees § 213, p. 170
(3d ed. 2007).
[¶35] Because the interest of Shriners and Kalif in the Trust property was fixed and
vested upon Jack Cooksley’s death, the Trust does not violate the rule against
perpetuities. We therefore uphold the district court’s ruling on First Northern Bank’s
petition to amend the Trust.
B. Termination of the Trust
[¶36] The district court rejected Shriners’ petition to terminate the Trust based on its
findings that holding the ranch in the Trust until the year 2100 was the Trust’s dominant
material purpose and termination of the Trust would defeat that material purpose.
Shriners contends that the district court erred in finding that retention of the ranch was a
material purpose of the Trust. It further contends that the Trust’s only remaining material
purpose is that of benefitting Shriners and Kalif, which purpose it asserts is better served
by termination of the Trust. We disagree and find the district court’s ruling supported by
both the Trust’s plain terms and Wyoming law.
[¶37] Section 411 of Wyoming’s Uniform Trust Code (UTC) provides for termination of
a trust if “no material purpose of the trust remains to be achieved or the purposes of the
trust have become unlawful, contrary to public policy or impossible to achieve.” Wyo.
Stat. Ann. § 4-10-411(a) (LexisNexis 2015). Section 413 allows termination “if, because
of circumstances not anticipated by the settlor, modification or termination will further
the purposes of the trust.” Wyo. Stat. Ann. § 4-10-413(a) (LexisNexis 2015). This Court
has also adopted the Restatement (Second) of Trusts § 337, which, consistent with the
UTC, allows beneficiaries to compel the early termination of a trust as follows:
(1) Except as stated in Subsection (2), if all of the
beneficiaries of a trust consent and none of them is under an
incapacity, they can compel the termination of the trust.
14
(2) If the continuance of the trust is necessary to
carry out a material purpose of the trust, the beneficiaries
cannot compel its termination.
American Nat’l Bank v. Miller, 899 P.2d 1337, 1340 (Wyo. 1995).
[¶38] In adopting this Restatement provision, we observed:
This rule balances between protecting and enforcing a
grantor’s instructions regarding a trust, and providing for
distribution to beneficiaries at the earliest time after all the
grantor’s material purposes have been fulfilled. The law
should guard and enforce a grantor’s wishes and purposes, so
long as they remain unfulfilled. When those purposes have
been fulfilled, however, the law should provide for the most
expeditious termination and distribution of the trust estate.
American Nat’l Bank, 899 P.2d at 1340.
[¶39] Shriners does not contend that unanticipated circumstances have arisen, or that
retention of the Cooksley ranch has become unlawful, contrary to public policy or
impossible to achieve. Shriners contends that the district court’s decision should be
overturned on three grounds: 1) As a matter of trust interpretation, retention of the ranch
was not a material purpose of the Trust; 2) Retention of a trust asset cannot be a material
purpose of a trust; and 3) Retention of the ranch is permissive, not mandatory, and the
circumstances warrant termination. We will address each argument in turn.
1. Interpretation of the Trust
[¶40] Interpretation of an unambiguous trust instrument is a matter of law for the court.
Forbes v. Forbes, 2015 WY 13, ¶ 23, 341 P.3d 1041, 1051 (Wyo. 2015). We have said:
The meaning of a trust is determined by the same rules that
govern the interpretation of contracts. In interpreting a trust,
our primary purpose is to determine the intent of the settlor.
Wells Fargo Bank Wyoming, N.A. v. Hodder, 2006 WY 128,
¶ 21, 144 P.3d 401, 409 (Wyo.2006); First Nat’l Bank &
Trust Co. v. Brimmer, 504 P.2d 1367, 1369 (Wyo.1973). We
construe the trust instrument as a whole, attempting to avoid a
construction which renders a provision meaningless. Id. “We
strive to reconcile by reasonable interpretation any provisions
which apparently conflict before adopting a construction
which would nullify any provision.” Wells Fargo, ¶ 21, 144
15
P.3d at 409. See also, Purcella v. Purcella, 2011 WY 124,
¶ 14, 258 P.3d 730, 734–35 (Wyo.2011).
Evans v. Moyer, 2012 WY 111, ¶ 21, 282 P.3d 1203, 1210 (Wyo. 2012).
[¶41] Shriners argues that the material purpose of the Trust was established in the
Cooksley’s Declaration of Trust with the Declaration’s statement: “The purpose of this
agreement is to create the trust as described in Exhibit A for our benefit and the other
beneficiaries designated there.” Shriners points out that the other designated
beneficiaries are Shriners and Kalif and that each amendment to the Trust reaffirmed all
unaltered provisions of the Declaration and Trust, including this statement of purpose.
This is true, and it would certainly be erroneous to suggest that the benefit to Shriners and
Kalif was not one of the Trust’s material purposes. To say that it is the only remaining
material purpose, however, requires that we ignore other clear statements of the settlors’
intent, contrary to our rules of interpretation.
[¶42] The first amendment to the Trust added section 2.2.E, which addressed the
settlors’ desire that the Cooksley ranch be retained in the Trust (emphasis added):
E. The major asset that we have contributed to this
Trust is our ranch, consisting of land, improvements and
minerals. It is our intention that the Trustee continue to
hold the ranch for the term of this trust, with the land
remaining open and its use devoted to agriculture and/or
preservation. We realize, however, that circumstances may
occur that would make the continued ownership of this asset
by the trust impractical or imprudent. By way of example,
and not by way of limitation, we list the following
circumstances that would affect and possibly prohibit the
continued ownership of the ranch:
(i). The need for liquidity to pay for the extended
nursing or home care for either or both of us; or
(ii). The inability of the trust assets to provide
sufficient income from all sources (interest, dividends,
surface lease, surface damages, easements, rights-of-way,
mineral royalties, mineral lease bonuses and other revenue
sources) to pay the costs of maintaining the ranch,
administering the trust and providing for the care of one or
both of us.
In making its determination as to whether to sell the
ranch land, we instruct the Trustee to evaluate the expected
duration of the specific circumstances, the likelihood of a
change in the circumstances, and the opportunities for a
16
partial disposition of the ranch land to meet the financial
needs. If all, or substantially all, of the ranch surface has been
sold, the Trustee shall distribute the assets, after paying
reasonable expenses and obligations, as described in
Subsection D above, and this Trust shall terminate.
[¶43] Shriners acknowledges the language of this provision but contends it cannot be
read to reflect a material purpose of the Trust because the provision was added as an
“after-thought.” We find no merit in this argument, first because Shriners cites no
authority to suggest a trust cannot be amended to add an additional material purpose and,
moreover, because it ignores the Trust’s original terms reflecting the settlors’ intention
that the ranch be retained.
[¶44] In the Trust’s original version, it had a termination date of the year 2100, with the
Trust assets, including the ranch, to be distributed after that date. Additionally, the Trust
stated that the settlors intend “the trust [to] continue for some years, and direct the
Trustee to dispose of tangible personal property so that it is not a burden on the trust,”
and it authorized the trustee “to retain such tangible personal property as it deems
appropriate or necessary to the management of the ranch land, buildings and residence.”
It further stated (emphasis added):
The Trustee shall distribute to or apply for the benefit of the
SHRINERS HOSPITAL, at least semi-annually, all of the
net income of the trust. We specifically direct that any and
all accumulation of funds, whether from depletion,
depreciation, and/or any other non-distributable source, be
managed by the Trustee and used to the extent that Trustee
deems appropriate or necessary, to maintain the real
property. In the event that there are insufficient funds to
pay such expenses, then the Trustee is authorized to
withhold so much of the net income otherwise distributable
as is necessary or advisable, in the Trustee’s sole discretion,
to provide for such expenses.
[¶45] These provisions remained largely unchanged with the amendments to the Trust,
except that the first amendment shortened the Trust’s term to the year 2050 and the
second amendment extended it back out to 2100. Thus, although the first amendment’s
addition of section 2.2.E perhaps made the intention more explicit, the settlors’ intent was
clear from the outset that the ranch was to be retained, and its operation and maintenance
trumped payment of income to Shriners and Kalif. Given this clear and continuing
expression of the settlors’ intent, we must agree with the district court’s conclusion that
retention of the ranch was at least a material purpose of the Trust, if not its paramount
purpose.
17
2. Retention of Trust Asset as Material Purpose
[¶46] Shriners next argues that retention of a trust asset cannot be a material purpose of
a trust. We again disagree.
[¶47] Under the Uniform Trust Code, a trust may be created for any purpose that is
lawful, not contrary to public policy, and possible to achieve. Specifically, section 405
provides: “A trust may be created only to the extent its purposes are lawful, not contrary
to public policy, and possible to achieve. A trust and its terms shall be for the benefit of
its beneficiaries.” Wyo. Stat. Ann. § 4-10-405 (LexisNexis 2015). The comments to the
Uniform Trust Code explain:
* * * A trust with a purpose that is unlawful or against public
policy is invalid. Depending on when the violation occurred,
the trust may be invalid at its inception or it may become
invalid at a later date. The invalidity may also affect only
particular provisions. Generally, a trust has a purpose which
is illegal if (1) its performance involves the commission of a
criminal or tortious act by the trustee; (2) the settlor’s purpose
in creating the trust was to defraud creditors or others; or (3)
the consideration for the creation of the trust was illegal. See
Restatement (Third) of Trusts Section 28 cmt. a (Tentative
Draft No. 2, approved 1999); Restatement (Second) of Trusts
Section 60 cmt. a (1959). Purposes violative of public policy
include those that tend to encourage criminal or tortious
conduct, that interfere with freedom to marry or encourage
divorce, that limit religious freedom, or which are frivolous or
capricious. See Restatement (Third) of Trusts Section 29 cmt.
d-h (Tentative Draft No. 2, 1999); Restatement (Second) of
Trusts Section 62 (1959).
* * * [A] trust must have an identifiable beneficiary unless
the trust is of a type that does not have beneficiaries in the
usual sense, such as a charitable trust or, as provided in
Sections 408 and 409, trusts for the care of an animal or other
valid noncharitable purpose. The general purpose of trusts
having identifiable beneficiaries is to benefit those
beneficiaries in accordance with their interests as defined in
the trust’s terms. The requirement of this section that a trust
and its terms be for the benefit of its beneficiaries, which is
derived from Restatement (Third) of Trusts Section 27(2)
(Tentative Draft No. 2, approved 1999), implements this
general purpose. While a settlor has considerable latitude in
18
specifying how a particular trust purpose is to be pursued, the
administrative and other nondispositive trust terms must
reasonably relate to this purpose and not divert the trust
property to achieve a trust purpose that is invalid, such as one
which is frivolous or capricious. See Restatement (Third) of
Trusts Section 27 cmt. b (Tentative Draft No. 2, approved
1999).
Uniform Trust Code § 404 cmt. (Unif. Law Comm’n).
[¶48] Retention of the ranch is not unlawful, contrary to public policy, or impossible.
That said, we recognize that the Trust’s retention of the ranch is not necessarily a term
directed to the benefit of Shriners and Kalif, given that it delays their immediate
possession of the asset and consumes income that would otherwise be available to them.
As the comments to the Uniform Trust Code explain, though, this does not place the
Trust crosswise with section 405. The Code recognizes there may be trusts that do not
have a definite and ascertainable beneficiary. Moreover, a trust may have more than one
purpose, and its purposes can be a mix of charitable and noncharitable. As one court
explained:
A ‘mixed trust’ is usually defined as one which possesses
private and public elements and is partly charitable and partly
for the benefit of private individuals or non-charitable objects.
It is not objectionable to have a mixed trust as such. Bogert,
Law of Trusts, § 65 (Fifth Edition 1973). The objectionable
characteristic of a mixed trust having both charitable and non-
charitable purposes, is not due to the commingling of
purposes. The objectionable characteristic occurs when the
charitable portion of the trust is invalid for some reason or
another, or the private portion of the trust is invalid for some
reason or another, and the two trusts cannot be separated and
individually enforced. If a mixed indivisible trust satisfies all
of the requirements for a valid charitable trust and all of the
requirements of a valid private trust, there is no good reason
why the courts should not carry out the intentions of the
settlor by enforcing the trust. Bogert, Law of Trusts, § 65
(Fifth Edition 1973); 2A Bogert, Trusts and Trustees, § 372,
p. 85. See also Moskowitz v. Federman, 72 Ohio App. 149, 51
N.E.2d 48 (1943).
Rice v. Morris, 541 S.W.2d 627, 631 (Tex. Civ. App. 1976).
19
[¶49] The Trust has two distinct material purposes: 1) retention of the ranch; and 2)
providing a benefit to Shriners and Kalif. We need not decide whether the purpose
served by retention of the ranch is a charitable purpose or a noncharitable purpose. The
Code allows for either, and because we resolved the Trust’s alleged violation of the rule
against perpetuities without regard to the Trust’s charitable status and that was the only
challenge to the Trust’s validity, the determination will have no effect on our ruling.
[¶50] We turn then to Shriners’ argument that the district court should have ordered
termination of the Trust because the ranch is subject to a permissive retention
requirement only and the circumstances warrant termination.
3. Permissive Retention Requirement
[¶51] Shriners asserts that the rate of return First Northern Bank is earning on the ranch
is far less than Shriners and Kalif would realize if the ranch were sold or distributed to
them outright. For this reason, and because the Trust’s general provisions give the trustee
authority to terminate any fund the trustee in its sole discretion determines to be
uneconomical or inefficient, and Section 2.2.E gives the trustee discretion in particular to
dispose of the ranch and terminate the Trust, Shriners contends that the Trust should be
terminated.
[¶52] This argument fails first and foremost because termination of a trust is not
permitted under Wyoming law if the continuance of the trust is necessary to carry out a
material purpose of the trust. American Nat’l Bank, 899 P.2d at 1340; Wyo. Stat. Ann. §
4-10-411(a); Wyo. Stat. Ann. § 4-10-413(a). Holding the ranch in the Trust until the year
2100 is a material purpose of the Trust and requires continuation of the Trust. Sale of the
ranch and termination of the Trust would obviously defeat that material purpose.
[¶53] Additionally, although the Trust’s general provisions do give the trustee discretion
to dispose of uneconomic assets, the more specific section 2.2.E applies when the asset to
be sold is the ranch. See Douglas v. Newell, 719 P.2d 971, 973 (Wyo. 1986) (holding
will’s more specific provision prevails over general provision). Section 2.2.E limits sale
of the ranch to those circumstances in which continued ownership is “impractical or
imprudent,” and by way of example cites insufficient funding for nursing or home care
and insufficient funding for trust administration and the settlor’s care. While the cited
examples were not exclusive, “[t]he principle of ejusdem generis tells us that ‘general
words, [associated with] an enumeration of words with specific meanings, should be
construed to apply to the same general kind or class as those specifically listed.’”
DiFelici v. City of Lander, 2013 WY 141, ¶ 15, 312 P.3d 816, 821 (Wyo. 2013). The
desires of Shriners and Kalif to greater income does not fit with examples cited for the
ranch’s sale. Indeed, the Trust implicitly excludes beneficiary distributions as a reason to
sell the ranch by authorizing Trust income to be withheld from beneficiary distributions
and directed first to maintenance of the ranch.
20
[¶54] For all the reasons stated above, we find no error in the district court’s denial of
Shriners’ petition to terminate the Trust.
C. Breach of Fiduciary Duties
[¶55] Shriners contends that First Northern Bank breached its fiduciary duties to the
beneficiaries by: 1) construing the Trust unreasonably and with no good faith basis to
support its interpretation; 2) failing to diversify the Trust’s investments; 3) failing to
renegotiate the agricultural lease entered into by settlor Jack Cooksley prior to his death
and including unfavorable terms in a clarifying amendment to the lease; and 4) failing to
investigate “red flags” relating to the agricultural lease. We find no support for Shriners’
breach of fiduciary duties claim in Wyoming law or the record, and we uphold the district
court ruling rejecting the claim.
[¶56] We begin our discussion with the legal framework governing a trustee’s
obligations in administering a trust. We will then address the specific allegations
underlying Shriners’ claim.
1. Legal Framework Governing Trustee’s Obligations
[¶57] Shriners bases its breach of fiduciary duties claim on the premise that a trustee has
a singular obligation and that obligation is to act solely in the best interests of the
beneficiaries. This premise is flawed because it ignores the trustee’s co-equal obligation
to carry out the trust according to its terms and to carry out the settlor’s intentions. We
have said:
A trustee, however, acts on behalf of both the
beneficiaries and the grantor of the trust. A fundamental duty
of a trustee is to carry out the terms of the trust. 76 Am.Jur.2d
Trusts §§ 374, 375 (1992). “The clearly expressed intention
of the settlor should be zealously guarded....” First Nat’l Bank
& Trust Co. v. Brimmer, 504 P.2d 1367, 1371 (Wyo.1973).
A trustee has an obligation to defend the trust in order
to carry out the material purposes of the trust.
American Nat’l Bank, 899 P.2d at 1339.
[¶58] While our decision in American Nat’l Bank preceded Wyoming’s adoption of the
Uniform Trust Code, the Code’s adoption did not alter these fundamental obligations of a
trustee. To the contrary, Section 801 of the Code affirms the trustee’s obligation to
“administer the trust in good faith, in accordance with its terms and purposes and the
21
interests of the beneficiaries, and in accordance with this act.” Wyo. Stat. Ann. § 4-10-
801 (LexisNexis 2015) (emphasis added); see also Charles E. Rounds, Jr. & Charles E.
Rounds, III, Loring and Rounds: A Trustee’s Handbook § 6.1.2 , pp. 428-29 (2013 ed.)
(noting court and academic rejection of notion that UTC benefit-the-beneficiaries rule
erodes principle that settlor intent is paramount).
[¶59] Shriners contends that this Court’s recent holding in Forbes, ¶ 28, 341 P.3d at
1052, that a trustee’s duty of loyalty encompasses “a duty to the beneficiary to administer
the trust solely in the interest of the beneficiary,” is an acknowledgement that the
beneficiary’s interest must be considered to the exclusion of all other interests. We
disagree. This Court’s holding in Forbes was not limited to the general statements relied
upon by Shriners. Our decision went on to explain that a trustee’s duty of loyalty was
aimed at deterring the trustee from temptation and the prohibited conduct was conduct
such as self-dealing and conflicts of interest. Forbes, ¶¶ 58-59, 341 P.3d at 1058. The
focus of our decision was not on the tension between settlor intent and beneficiary
wishes, and in defining a trustee’s duty of loyalty, we did not in any way deviate from the
principle that settlor intent is paramount.
[¶60] Wyoming’s jurisprudence has long reflected this “commitment to the protection of
the settlor’s intent.” Rock Springs Land and Timber, Inc. v. Lore, 2003 WY 100, ¶ 30, 75
P.3d 614, 626 (Wyo. 2003) (citing First Nat’l Bank and Trust Co. of Wyoming v.
Brimmer, 504 P.2d 1367, 1371 (Wyo.1973); International Trust Co. v. Preston (Hicks’
Estate), 156 P. 1128, 1132 (Wyo. 1916)). That we continue to adhere to this principle is
reflected in our recent holdings:
The clearly expressed intention of the settlor should be
zealously guarded by the courts, particularly when the trust
instrument reveals a careful and painstaking expression of the
use and purposes to which the settlor’s financial
accumulations shall be devoted. A settlor must have
assurance that his solemn arrangements and instructions will
not be subject to the whim or suggested expediency of others
after his death.
Poland v. Nalee (In re Estate of George), 2011 WY 157, ¶ 13, 265 P.3d 222, 225 (Wyo.
2011) (quoting First Nat’l Bank & Trust Co., 504 P.2d 1367 at 1371 (Wyo. 1973)); see
also Meyer v. Miller, 2014 WY 91, ¶ 19, 330 P.3d 263, 269 (Wyo. 2014) (quoting Matter
of Estate of Brosius, 683 P.2d 663, 665 (Wyo. 1984)) (“We have often said that a testator
[or settlor] who is legally qualified and who acts in accordance with the law has an
absolute right to dispose of h[er] property after death as [s]he sees fit.”).
[¶61] Thus, while we recognize that a beneficiary is entitled to the trustee’s proper
exercise of its fiduciary duty, our consideration of a breach of fiduciary claim is
22
“governed by the settlor’s intent, not the beneficiaries’ preferences.” Rock Springs Land
and Timber, Inc., ¶ 25, 75 P.3d at 624.
2. Breach of Fiduciary Duty Allegations
a. First Northern Bank’s Interpretation of Trust
[¶62] In its interpretation and administration of the Trust, First Northern Bank concluded
that retention of the ranch until the year 2100 was one of the Trust’s material purposes.
Based on that interpretation, the Bank did not accede to Shriners’ demand to sell the
ranch and terminate the Trust. Shriners contends that this was a violation of the Bank’s
fiduciary obligation to the Trust beneficiaries because “[t]he Bank had no good faith
basis for its construction of the Trust and it acted unreasonably in construing the Trust.”
We find no error in the district court’s rejection of this claim.
[¶63] With respect to the reasonableness of the Bank’s interpretation of the Trust, our
decision confirms the Bank interpreted the Trust correctly, and, needless to say, we find
nothing unreasonable in that interpretation. With respect to the Bank’s good faith basis
for its interpretation, the record shows the Bank took appropriate steps before reaching its
decision. The Bank sought clarification of Mr. Cooksley’s intent before his death and
received confirmation from Mr. Cooksley’s attorney that in fact it was his intention that
the ranch be retained by the Trust until the year 2100 unless its sale was required for the
limited reasons set forth in the Trust. Additionally, the Bank’s trust officer testified that
she sought legal advice from the Bank’s attorney in interpreting the Trust provisions and
acted in accordance with that advice in making its decision to refuse sale of the ranch and
termination of the Trust. There is simply no basis to conclude that in interpreting the
Trust, the Bank had any motivation other than its statutory duty to administer the Trust in
accordance with the Trust terms or otherwise acted in bad faith.
b. Bank’s Failure to Diversify Investments
[¶64] Shriners contends that the district court erred in concluding that First Northern
Bank was not required to sell the ranch to diversify the Trust’s investments. Given our
conclusions above, we must again reject Shriners’ claim.
[¶65] Shriners’ argument in support of this claim focuses solely on the rate of return the
Trust earns by retention of the ranch and once again disregards entirely the Trust terms
and the settlor’s intent, contrary to our rules of interpreting and enforcing trusts. As we
discussed above, one of the Trust’s material purposes is retention of the ranch until the
year 2100, and the Trust specifically subordinates the beneficiaries’ income distributions
to maintenance of the ranch. The beneficiaries’ dissatisfaction with the income
distributions does not provide a basis to override the settlor’s intent. As we explained in
American Nat’l Bank:
23
* * * It must be remembered that the grantor placed these
assets in the trust, and did not distribute them directly to the
beneficiaries. While the assets remain in the trust, the Trustee
has an obligation to the trust and the grantor as well as to the
beneficiaries.
American Nat'l Bank, 899 P.2d at 1341.
[¶66] The trustee’s obligation to diversify trust investments is not an obligation to be
enforced in a vacuum, without regard to the settlor’s intent. As the district court
observed:
Finally, if it had been the Settlors’ intention to benefit the
charities over any other purpose, they could have included a
provision, which outright donated the Ranch, restriction free,
to Shriners and Kalif upon their deaths. However, they did
not do so. They crafted provisions aligned with their desire to
keep the ranch open, with any net income earned after the
expenses to maintain the ranch had been paid, going to
Shriners and Kalif.
[¶67] We find no error in the district court’s conclusion that First Northern Bank did not
breach a fiduciary duty to diversify trust investments by rejecting Shriners’ demands to
sell the ranch or terminate the Trust.
c. Agricultural Lease
[¶68] Shriners contends that First National Bank also breached its fiduciary duty to the
beneficiaries by failing to renegotiate the agricultural lease Jack Cooksley had entered
into for the lease of the ranch property and by including terms in a clarifying amendment
that were less favorable to the Trust. We again find no error in the district court’s
rejection of this claim.
[¶69] In January 2008, Jack Cooksley, as trustee, entered into an agricultural lease of the
ranch property with Dan Lawrence. The lease was for a term ending on November 30,
2011. Mr. Cooksley liked Mr. Lawrence’s management of the ranch, and in November
of 2010, he contacted his attorney and informed her that he and Mr. Lawrence had agreed
to a five-year extension of the lease. On January 28, 2011, Mr. Cooksley signed the lease
extension, and on January 31, 2011, Mr. Lawrence signed the lease.
[¶70] The lease extension contained a typographical error that was not caught by either
signatory to the lease or Mr. Cooksley’s attorney. The lease extension stated the original
24
lease terminated November 30, 2010, when it actually ended November 30, 2011. The
lease extension also provided a lease term of five years ending on November 30, 2015,
but the lease payment provision provided for payments through November 1, 2016.
[¶71] After Mr. Cooksley’s death, First Northern Bank’s trust officer found the
inconsistency in the lease and lease extension and contacted Mr. Cooksley’s attorney and
asked about the inconsistencies and about Mr. Cooksley’s condition when he signed the
lease extension. After talking with Mr. Cooksley’s attorney, the trust officer believed
Mr. Cooksley was competent to execute the lease extension and the errors in the lease
extension were typographical errors. The trust officer then consulted with counsel, who
prepared an amendment to correct the errors. On the advice of counsel, the trust officer
did not attempt to renegotiate or change substantive lease terms and instead used the
amendment to clarify terms.
[¶72] On June 2, 2011, First Northern Bank sent Shriners’ attorney a copy of the
proposed amendment to the lease extension, indicating the amendment was not yet
executed. The Bank received no response from Shriners concerning the amendment. On
June 13, 2011, the Bank and Mr. Lawrence executed the amendment.
[¶73] Shriners contends that the Bank breached its fiduciary duties by: 1) failing to
negotiate more favorable lease terms that would have increased the payments to the
Trust; 2) changing the lease renewal terms to require that Dan Lawrence be awarded a
new lease if he so elected; and 3) by including property in the lease that had previously
been excepted from the lease. The district court found no merit in these arguments, and
we agree.
[¶74] With regard to renegotiating the lease terms, the lease was, as the district court
found, a fully executed and enforceable contract. Shriners failed to present any basis on
which the Bank could have simply ignored the lease and demanded new terms. In
particular, Shriners presented no evidence that Dan Lawrence was willing to renegotiate
the terms, and it presented no evidence that Jack Cooksley was pressured into executing
the lease or was not competent to execute the lease. Mr. Cooksley’s friend, John Piesik,
testified to his concerns that Mr. Cooksley’s use of pain medication diminished his
capacity to understand his business dealings. Mr. Piesik also testified, however, that he
did not see Mr. Cooksley on the date he executed the lease extension, and he further
testified that if he were not present to witness Mr. Cooksley on a particular date, he
would “have not a clue” as to Mr. Cooksley’s capacity. Given that the lease was an
enforceable contract, we cannot find a breach of fiduciary duty in the Bank’s decision to
abide by the lease terms.
[¶75] We turn then to the lease renewal term the Bank revised with its amendment to the
lease extension. The amended term reads:
25
Term of Lease. * * * In the event the Lessee desires to
re-lease said real property and improvements, the parties shall
negotiate, in good faith, regarding the renewal terms. The
parties agree to enter into a new Agricultural Lease upon
renewal.
[¶76] Shriners argues that the Bank breached its fiduciary duty in adding this term to the
amended lease because it gives the lessee a guaranteed right to a new lease and precludes
the trustee from negotiating with another party for more favorable terms. The district
court disagreed, reasoning:
Shriners interprets the wording that “[t]he parties agree to
enter into a new Agricultural Lease upon renewal” to mean
that the parties are bound to enter into a new lease regardless
of how negotiations turn out. However, when this sentence is
read in light of the surrounding language it becomes clear that
the parties were agreeing that another Lease Extension was
improper, and that if they were successful in their good faith
negotiations, then they would enter into a new lease. The
provision does not eliminate the ability of the Lessor to
decline to re-lease the Ranch if the parties cannot agree on
renewal terms. Therefore, these terms are not more favorable
to Lessee and, as a result, [the Bank] did not breach its
fiduciary duties by entering into the Amendment to Lease.
[¶77] Perhaps the last sentence of this term could have been worded more artfully to
clarify its meaning, but we find the district court’s interpretation reasonable. The
provision promises good faith negotiations and nothing more, and the Bank did not
breach its fiduciary duties by including this term in the lease amendment.
[¶78] We turn to Shriners’ final claim regarding the amended lease, its claim that the
Bank breached its fiduciary duties by giving lessee Dan Lawrence access to more of the
property than was included in the lease extension negotiated by Jack Cooksley. This
claim relates to terms in the lease extension that allowed Jack Cooksley to reside in and
occupy the residence on the property and allowed him a nonexclusive right to hunt, fish,
and otherwise recreate on the land. These provisions were personal to Mr. Cooksley and
did not allow the Trust to separately lease the residence or generally allow the Trust
nonexclusive hunting, fishing and recreation rights. Thus, when the Bank amended the
lease after Mr. Cooksley’s death, it left these terms out. This is not surprising. The Bank
was simply removing lease provisions that no longer applied, and it plainly had good
cause for omitting the terms. The exclusion of these terms was not a breach of the
Bank’s fiduciary duties.
26
[¶79] The Bank did not breach its fiduciary duties by not renegotiating settled lease
terms or executing the amendment to clarify the lease terms.
d. Failure to Investigate Red Flags
[¶80] Shriners argues that the Bank breached its fiduciary duties by failing “to
investigate the substantial red flags when the lessee and his attorney pushed an amended
lease upon Jack [Cooksley] shortly before his death.” Shriners expanded on this
argument, with emphasis in the original:
The Lease Extension was drafted by an attorney who
represented both Jack and Mr. Lawrence and signed by Jack
when he was extremely ill. Jack’s signature is quite
concerning, and the Lease Extension shows that Jack signed
this document on January 31, 2011, but his signature was
notarized two days earlier by the attorney who also
represented Dan Lawrence.
[¶81] The record provides no support to Shriners’ allegations. The agricultural lease and
lease extension signed by Jack Cooksley both contain a conflict waiver provision.
Darlene Reiter, Jack Cooksley’s attorney, testified that she included the provision
because of her representation of lessee Dan Lawrence in an unrelated matter
approximately twenty-five years earlier. She further testified that with respect to the
lease and lease extension, she represented and advised Jack Cooksley, not Dan Lawrence.
Ms. Reiter also explained that she did not introduce Jack Cooksley and Dan Lawrence to
each other, that it was Jack Cooksley who approached her to prepare the lease and lease
extension, and that it was Jack Cooksley who provided the information and terms,
including price, for both documents.
[¶82] With regard to execution of the lease extension, Ms. Reiter testified that Jack
Cooksley was competent to sign the lease extension, that she went over the extension
with him before he signed it, and that she was certain that he signed it on the date she
notarized his signature, January 28, 2011. Ms. Reiter did not know how the lease
extension ended up with a January 31, 2011 execution date, but she assumed Dan
Lawrence filled in the date when he signed the extension because his signature was
notarized by a different notary on the 31st.
[¶83] Shriners presented no evidence to contradict Darlen Reiter’s testimony, and the
record is equally unsupportive of Shriners’ claim that First Northern Bank failed to
closely examine and consider inconsistencies in the lease extension. Wendy Martin, one
of the Bank’s trust officers, reviewed the lease and lease extension following Jack
Cooksley’s death and found the errors in the termination dates. Ms. Martin then
contacted Darlene Reiter and after talking with her concluded that the errors were
27
typographical and that Mr. Cooksley was competent to execute the lease extension. Ms.
Martin also examined other documents it had on file that had been recently signed by Mr.
Cooksley, including tax-related filings, and she consulted with the Bank’s attorney.
Based on this record, we find no error in the district court’s conclusion that the Bank
acted prudently in reviewing the lease extension, investigating the circumstances of its
execution, and clarifying its terms.
[¶84] In a final shot at First Northern Bank, Shriners contends that the Bank should not
have relied on Darlene Reiter’s assurances of Jack Cooksley’s competence because Ms.
Reiter drafted the third amendment to the Trust, causing the Bank to have ethical
concerns regarding her. The third amendment revised the property distribution
provisions of section 2.2 to provide:
C. Piesik and Reiter shall make distribution or
disposition of all other tangible personal property in the
residence as Piesik and Reiter, in their sole discretion, shall
deem appropriate, including but not limited to private sale,
auction, gift, charitable donation or other disposition. I intend
that Piesik and Reiter shall have full discretion to carry out
my wishes, which I have discussed with both of them. I
intend that the trust continue for some years, and direct Piesik
and Reiter to dispose of tangible personal property so that it is
not a burden on the trust. Piesik and Reiter may exercise their
judgment to select items of historical or aesthetic value that
can be preserved, protected and/or made available for
reference; to make gifts to my friends and neighbors; to sell
items; and to otherwise dispose of such property as they deem
appropriate. It is entirely at their discretion whether to
donate, gift or sell items. By way of example, I have daily
journals dating from circa 1960, and I have discussed with
Piesik and Reiter that if the Wyoming Room of the Sheridan
County Fulmer Public Library was interested in receiving
them, that would be a satisfactory disposition of the diaries.
****
F. I instruct my Trustee to pay the reasonable costs
of valuation secured by Piesik and Reiter as provided above,
and to further pay reasonable compensation to and costs
incurred by Piesik and Reiter in performing the actions
necessary to dispose of the tangible personal property in my
residence. In the event that such property is sold, I direct
Piesik and Reiter to collect the net proceeds therefrom and to
submit same to my Trustee at such time as the dispositions
are completed. I do not intend by this provision to imply that
28
Piesik and Reiter must sell any items; it is entirely at their
discretion whether to gift, donate, discard or otherwise
dispose of the tangible personal property in my home. They
know my wishes and will fulfill my intent, taking into
consideration the circumstances extant at the time of
disposition. In the event that neither Piesik nor Reiter is able
or willing to serve as provided herein, the[n] I authorize my
Trustee to make such dispositions as it, in its discretion,
deems appropriate to the guidelines provided herein.
[¶85] Shriners’ expressed concerns to the Bank regarding the amendment and suggested
that Ms. Reiter had violated the Rules of Professional Conduct by drafting an amendment
that gave John Piesik and her possession and control over Trust property. The Bank
responded by consulting with its attorney and having Ms. Reiter and Mr. Piesik execute
bills of sale signing the property over to the Bank as trustee. Wendy Martin, the Bank’s
trust officer, did not express concerns with Ms. Reiter’s ethical values. Asked whether
she thought the amendment was a potential problem, she testified, “We were not sure[.]”
It is thus something of a stretch to challenge the Bank’s reliance on Ms. Reiter’s
assurances based on alleged ethical concerns of the Bank. Additionally, while the third
amendment could have been better crafted to clarify that possession of the property was
being made solely for purposes of gifting or sales to benefit the Trust, we do not see the
amendment as evidence of the type of nefarious self-dealing Shriners has insinuated
throughout its allegations.
[¶86] We find no violation of the Bank’s fiduciary duties in its consideration of the lease
extension and circumstances surrounding the lease.
D. Removal of Trustee
[¶87] Shriners next contends that the district court erred in denying Shriners’ request
that First Northern Bank be removed as trustee. Shriners argues first that the district
court applied the wrong standard for removal when the court used statutory standards
rather than the “good cause” standard provided in the Trust. It further argues that the
court erred in not finding grounds for removal. We will address first the applicable
standard governing the removal request and then review the district court’s decision
based on that standard and the grounds alleged for removal.
1. Removal Standard
[¶88] Section 5.2 of the Trust governs resignation, removal, and appointment of trustees.
It provides, in part:
29
A trustee may resign at any time by giving written
notice, specifying the effective date of the resignation, to the
income beneficiary or beneficiaries of the trust. Settlor
ALFRED J. COOKSLEY may remove any Trustee or may
add Trustees. After the death of Settlor ALFRED J.
COOKSLEY, the income beneficiary may remove a Trustee
acting hereunder, if for good cause, and may appoint a
suitable, independent, corporate successor Trustee[.]
[¶89] Shriners contends that the good cause standard was included in the Trust to ease
the showing a beneficiary must make to support removal and was included to provide for
removal outside the removal standards prescribed by law. Shriners further contends that
good cause is merely the opposite of no cause and means any cause so long as the
beneficiary has a reason for the trustee’s removal. We disagree.
[¶90] When we interpret a trust instrument, we consider the document as a whole and
read its provisions together. Evans, ¶ 21, 282 P.3d at 1210. We also presume that parties
to the trust know the law and contract with reference to that law. Garwood v. Garwood,
2008 WY 129, ¶ 21, 194 P.3d 319, 327 (Wyo. 2008). This presumption is particularly
appropriate here because the Trust specifically incorporates Wyoming law. Section 3.1
of the Trust provides:
The Trustee may exercise those powers set forth in,
and subject to any limitations in, any and all Wyoming
statutes applicable to Trustees and Fiduciaries. These statutes
are incorporated by reference as if they were set out at length
here. All the general powers granted to the Trustee and all
limitations upon any powers are subject to any express
contrary directions in this [Trust].
[¶91] Similarly, Section 5.4 provides:
The validity, construction and administration of this
[Trust] and any trust created by it, and all questions
concerning any power of appointment granted by this [Trust]
and the exercise of any power, shall be determined by
reference to the laws of the State of Wyoming[.]
[¶92] Given that Wyoming law is expressly incorporated into the Trust to define the
trustee’s powers, obligations, and limitations, we find it unreasonable to interpret section
5.2’s “good cause” standard to be the amorphous standard urged by Shriners. We find it
much more likely that the “good cause” language was included, not to distinguish the
removal standard from the standard prescribed by Wyoming law, but rather to distinguish
30
it from the standard applicable to the settlor’s power to remove a trustee. Section 5.2
allows the settlor to “remove any Trustee,” with no qualification of that power. The next
sentence sets forth the beneficiary’s power to remove a trustee, and it qualifies that
power, specifying that removal must be “for good cause.” Reading the Trust as a whole
and giving effect to all its terms, we must conclude that “good cause” for a beneficiary’s
removal of a trustee means the removal standard set by Wyoming law.
[¶93] Under the Uniform Trust Code, cause for removal of a trustee includes a breach of
fiduciary duties. Wyo. Stat. Ann. § 4-10-1001(b)(vii) (LexisNexis 2015). It also
includes:
(i) The trustee has committed a serious breach of
trust;
(ii) Lack of cooperation among cotrustees
substantially impairs the administration of the trust;
(iii) Because of unfitness, unwillingness or
persistent failure of the trustee to administer the trust
effectively, the court determines that removal of the trustee
best serves the interests of the beneficiaries; or
(iv) There has been a substantial change of
circumstances, or removal is requested by all of the qualified
beneficiaries, and the court finds that removal of the trustee
best serves the interests of all of the beneficiaries and is not
inconsistent with a material purpose of the trust, and a
suitable cotrustee or successor trustee is available.
Wyo. Stat. Ann. § 4-10-706(b) (LexisNexis 2015).
[¶94] This Court has recognized other grounds for removal:
Trustees may be removed for a variety of grounds,
ranging from habitual drunkenness to tax evasion, to
disobedience of directions in the trust instrument. Bogert,
supra, § 527. “Mismanagement of the estate arising from a
misconception or misunderstanding of the trustee’s duties
may be a ground for removal, but not if no serious harm has
been done and no dishonesty or want of capacity is indicated.
Similarly, a mere error in judgment is insufficient.” Id. at 67–
69.
Forbes, ¶ 32, 341 P.3d at 1052-53.
31
[¶95] Regarding hostility between a trustee and a beneficiary as grounds to remove a
trustee, we have said:
Hostility may naturally exist in trust relationships since trusts
are usually created to withhold control of the trust principal
from the beneficiaries. Hostility between the trustee and the
beneficiaries of the trust alone is insufficient to require the
removal of the trustee. To be sufficient to require removal,
the hostility must interfere with the proper administration of
the trust.
Forbes, ¶ 96, 341 P.3d at 1065 (quoting In re Trust Created by Hill for benefit of Schroll,
499 N.W.2d 475, 485 (Minn.Ct.App. 1993)).
2. Review of District Court Decision
[¶96] We review a district court’s decision whether to remove a trustee for an abuse of
discretion:
The district court’s power to remove a trustee is “rooted in
equity,” Kerper, 780 P.2d at 938 (citing Wyo. Stat. Ann. § 2–
3–210), and the court has “sound discretion” to make the
determination whether to remove a trustee, which we will not
disturb absent an abuse of discretion. Id.
Forbes, ¶ 33, 341 P.3d at 1053.
[¶97] We have also recognized that “[c]ourts are more reluctant to remove a trustee who
has been chosen by the settlor than one who is court-appointed.” Forbes, ¶ 30, 341 P.3d
at 1052 (quoting Bogert, The Law of Trusts and Trustees § 527, at 51–52 (2d ed.1978)).
When the removal is of a settlor-appointed trustee we have required an enhanced
showing to justify removal:
As we have seen the removal of an executor or trustee is
harsh and severe; it is serious; it is a drastic action; it should
not be done unless clearly necessary; if the court can adjust
the disputed matters, the removal should not be made; an
executor or trustee should not be removed except for gross
and willful misconduct.
Forbes, ¶ 29, 341 P.3d at 1052 (quoting In re Hartt Estate, 75 Wyo. 305, 295 P.2d 985,
1011 (1956)).
32
[¶98] Shriners has failed to make the showing required to justify removal of First
Northern Bank as trustee. Shriners has not shown a breach of fiduciary duties, a conflict
of interest, self-dealing of any sort, or any type of gross and willful misconduct by the
Bank. We do not doubt a certain amount of hostility exists between Shriners and the
Bank, but Shriners has not shown that the hostility has interfered with the Bank’s
administration of the Trust. Indeed, although Shriners is not receiving as great a benefit
as it would if the ranch were sold outright, the record shows the Bank has administered
the Trust in keeping with its terms and material purposes and that, since Mr. Cooksley’s
death, the Bank has made distributions to Shriners totaling $69,016.24, and distributions
to Kalif totaling $12,179.34. We therefore find no abuse of discretion in the district
court’s decision to deny Shriners’ request to remove the Bank as trustee.
E. Findings Related to Actions of Bank’s Attorney
[¶99] First Northern Bank’s attorney, Tonia Hanson, initially responded to Shriners’
allegation that the Trust violated the rule against perpetuities by filing a petition to amend
the Trust to conform to the rule. On further reflection, the Bank’s attorney changed the
Bank’s position and asked the district court to find that the Trust was a charitable trust
and the rule therefore did not apply. Shriners included a claim in its complaint that
payment of attorney fees associated with this change of position was a waste of Trust
assets, which the district court rejected. Shriners contends on appeal that the district
court’s findings, specifically its findings relating to the attorney’s concerns and thought
process, were unsupported by the record because the attorney did not testify.
[¶100] The sole challenge Shriners makes to the district court’s rejection of this particular
waste claim is to the court’s findings relating to the attorney’s reasons for filing the
petition to amend and then changing course on the rule against perpetuities question. In
our review of the record, we find ample support for the court’s findings in letters written
by the Bank’s attorney, testimony from one of the Bank’s trust officers, and the motion to
amend the petition itself. We therefore find no clear error in the district court’s findings.
F. Attorney Fees Award
[¶101] The district court ordered Shriners to pay the attorney fees and costs incurred by
Tom Toner of Yonkee & Toner, LLP, on behalf of First Northern Bank in the amount of
$48,343.74. This amount included $1,000.00 incurred to retain an expert whose
testimony the Bank ultimately did not use at trial. On appeal, Shriners asserts two errors
in the award of fees and costs. It contends that the $1,000.00 award for expert fees was a
mistake, and it contends that the district court erred in requiring Shriners to pay the fees
and costs rather than having those fees and costs paid by the Trust.
[¶102] We review an award of attorney fees and costs as follows:
33
The question of whether there is legal authority to award
attorney fees is one of law, which we review de novo. See,
Thorkildsen v. Belden, 2011 WY 26, ¶ 8, 247 P.3d 60, 62
(Wyo.2011); Ultra Resources, Inc. v. Hartman, 2010 WY 36,
¶ 149, 226 P.3d 889, 935 (Wyo.2010); Breitenstine v.
Breitenstine, 2006 WY 48, ¶ 12, 132 P.3d 189, 193
(Wyo.2006). The final attorney fee award is, however,
reviewed for abuse of discretion. Mueller v. Zimmer, 2007
WY 195, ¶ 11, 173 P.3d 361, 364 (Wyo.2007).
Evans, ¶ 37, 282 P.3d at 1214.
1. Expert Fees
[¶103] Shriners challenges the $1,000.00 award for expert fees as a mistake or oversight
by the district court and requests a remand to correct this portion of the award. It bases
this argument on the district court’s denial of expert fees paid in conjunction with legal
fees for counsel retained by the Bank’s insurer. Specifically, the district court ruled:
* * * [T]his Court does not believe that Shriners should be
responsible for any attorney’s fees other than those incurred
by Toner. The Court is persuaded by Shriners’ argument that
justice and equity do not require Shriners to reimburse FNB,
or its insurance company, for the fees incurred by attorneys
hired by FNB’s insurance company. The insurance company
hired multiple attorneys to represent FNB against the
damages claims in this case (not to assist in defending the
Trust). * * * [T]he insurance company’s decision to hire
counsel for FNB, and change counsel more than once resulted
in multiple attorneys duplicating effort without actually trying
the case. This resulted in more fees being incurred than was
practical or necessary. Additionally, none of the fees incurred
by the attorneys hired by the insurance company were for the
purpose of defending the Trust itself. The insurance company
was merely concerned about protecting the interests of FNB.
***
This Court is further persuaded by Shriners’ argument
that it would not be just and equitable to require it to bear the
cost of FNB’s expert fees when it was FNB who changed
positions before the trial arguing that experts should not be
allowed to testify at trial. FNB ultimately decided to
34
eliminate its own expert from the trial phase, and for this
reason Shriners should not be responsible for those fees.
[¶104] The Bank’s insurer paid $11,700.00 in expert witness fees, which were denied.
Tom Toner paid $1,000.00 to retain the expert, which was included in the $48,343.74
awarded by the district court. Mr. Toner’s affidavit in support of his fee application
stated:
5. I represented the Defendant First Northern Bank of
Wyoming in this case. Multiple attorneys were involved in
the defense of this case because The Kansas Bankers Surety
Company would defend only the Plaintiff’s damage claim
against the Bank and would not provide counsel to defend the
Plaintiff’s claims that the trust should be terminated, that the
bank should be required to sell the Cooksley Ranch and that
the Bank should be removed as trustee. * * * I was not paid
by the insurer for the work I did in this case.
****
11. Shriners designated William Welch, a retired trust
officer and a Colorado attorney, as an expert witness. This
made it necessary to employ an expert to counter the
testimony of Mr. Welch, if Mr. Welch was allowed to testify
to all of the opinions set out in his expert designation. I hired
Robert Wyatt, a Wyoming attorney and former trust officer,
as an expert on behalf of the Bank and worked with Mr.
Wyatt in the preparation of his expert designation to be filed
with the Court in case his testimony was required.
[¶105] The $1,000.00 Tom Toner paid to retain the expert witness was related to Mr.
Toner’s defense of the Trust and the Bank as trustee. Additionally, the fee was paid well
before any decision could be made to proceed at trial without an expert. In short, the
expert fee is more in keeping with the fees the district court found should be awarded and
less like those it found should be denied. We therefore find no mistake in the award and
decline Shriners’ request for a remand to correct the award.
2. Requirement that Shriners Pay Fee Award
[¶106] Shriners contends that the fees and costs incurred by First Northern Bank should
have been ordered paid from the Trust and the district court abused its discretion in
requiring Shriners to pay the award. We again disagree.
[¶107] The Uniform Trust Code authorizes the payment of attorney fees and costs as
follows:
35
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’s fees, to
any party, to be paid by another party or from the trust that is
the subject of the controversy.
Wyo. Stat. Ann. § 4-10-1004 (LexisNexis 2015).
[¶108] We have addressed the district court’s discretion in making a “justice and equity”
determination under this provision of the Code. We explained:
Once it has been determined that authority exists to
award fees and costs, a trial court has extremely broad
discretion to rule on the amount of such an award. KC, 941
P.2d at 53; Haltom v. Haltom, 755 P.2d 876, 879–80
(Wyo.1988). In reviewing the district court’s determination of
the amount, if any, to award the Trustees in this case, we are
mindful that we have held that we will not interfere with the
trial court’s exercise of discretion in making such an award
except upon proof that such discretion was gravely abused.
See KC, 941 P.2d at 53; Haltom, 755 P.2d at 879–80.
Courts interpreting provisions identical or similar to § 4–
10–1004 have observed that the provision’s use of the phrase
“justice and equity” must guide a trial court’s discretion in
determining whether to award fees from a trust and the
amount of any fees awarded. See, e.g., Atwood, 25 P.3d at
947. The Oklahoma court in Atwood described the inquiry as
follows:
The highly subjective phrase “justice and
equity” does not state specific guidelines or criteria
for use by a trial court or for use by a reviewing
court. The phrase connotes fairness and invites
flexibility in order to arrive at what is fair on a case
by case basis. Hence, general criteria drawn from
other types of cases provide nonexclusive guides.
These 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,
36
wantonly, or for oppressive reasons in the bringing
or conduct of the litigation.
The role of “justice and equity” in this phase of
the inquiry before the trial court is distinct from
their role in determining what amount of costs,
fees, and expenses should be allowed. For example,
the fact that the nature of the case was difficult and
required a great deal of effort goes to the amount of
the award rather than whether an award should be
granted.
Atwood, 25 P.3d at 947; see also Whittlesey v. Aiello, 104
Cal. App. 4th 1221, 128 Cal. Rptr. 2d 742, 748 (2002) (no basis
for trustee to recover litigation expenses if litigation does not
benefit trust); Nickas, 954 S.W.2d at 741 (award of litigation
expenses authorized only to the extent litigation found
beneficial to trust).
Garwood v. Garwood, 2010 WY 91, ¶¶ 38-39, 233 P.3d 977, 986 (Wyo. 2010).
[¶109] The district court found that justice and equity required that Shriners pay the
award of fees and costs. It reasoned:
An analysis of the results obtained by the litigation and
the prevailing party’s concepts yields the conclusion that
FNB should be entitled to the reasonable attorney’s fees
incurred as a result of defending the Trust. At trial, this court
found in favor of FNB, holding that FNB correctly
determined the material charitable purpose of the Trust was to
keep the ranch land open for agricultural purposes. As a
result of this finding, the Court held that FNB did not act
imprudently in its administration of the Trust by managing
the Trust in a manner that was consistent with the material
purpose. The Court’s ruling was premised on the fact that the
Settlor desired the land to be used for agricultural purposes
until the year 2100, and terminating the Trust would be in
direct contravention of that stated intent. The Settlor
described in the First Amendment to the Trust, and reiterated
in each following Amendment that “it is our intention that the
Trustee continue to hold the ranch for the terms of this trust,
with the land remaining open and its use devoted to
agriculture and/or preservation.” FNB, acting as trustee, not
37
only administered the trust to continue the life of the Trust,
but also defended the Trust against claims that the ranch
should be sold. Both of these actions were exactly what the
Trust document demanded.
After analyzing the next guideline, which is whether a
party has acted in bad faith, vexatiously, wantonly, or for
oppressive reasons in the bringing or conduct of litigation,
again the Court finds that FNB is entitled to the reasonable
attorney’s fees incurred as a result of defending the Trust.
Shriners sought to have the trust terminated, and fought to
have the ranch sold so that it could realize the benefits of that
sale and obtain its gift years before that gift came to fruition.
Shriners’ arguments that the Settlor intended to confer the
best benefit possible to the beneficiaries completely ignored
the expressed desires of the man who was so generous as to
bequeath Shriners with a charitable contribution. Because
Shriners tried to terminate the Trust and sell the ranch against
the wishes of the settlor, it can be said Shriners acted in bad
faith.
****
In sum, the outcome in the trial, coupled with Shriners
bad faith arguments warrants an award of attorney’s fees to
FNB for the reasonable fees it incurred in defending the
Trust. Toner was the attorney retained by FNB to defend the
trust and justice and equity demand Shriners pay for those
fees.
[¶110] We agree with the district court’s observation that Shriners’ actions against the
Bank and the Trust were taken with utter disregard for the Cooksleys’ intentions, a
position contrary to the paramount importance Wyoming law places on a settler’s
intentions. We therefore find no abuse of discretion in the district court’s determination
that Shriners should be responsible for payment of the attorney fees and costs awarded in
this matter.
G. Attorney Fees and Costs on Appeal
[¶111] The final question we address is whether First Northern Bank is entitled to an
award of attorney fees and costs associated with this appeal. In accordance with Wyo.
Stat. Ann. § 4-10-1004, the Bank is entitled to an award of fees and costs incurred on
appeal. For the same reasons stated above, the award shall be paid by Shriners. First
Northern Bank may file a motion for the award of fees and costs in accordance with Rule
10.06 of the Wyoming Rules of Appellate Procedure.
38
CONCLUSION
[¶112] We affirm the district court’s ruling that the Trust does not violate the rule against
perpetuities, though on different grounds from the district court ruling. We also affirm
the district court’s judgment denying Shriners’ claims against First Northern Bank and its
order awarding attorney fees and costs. First Northern Bank may file a motion for an
award of attorney fees and costs incurred on appeal in accordance with W.R.A.P. 10.06.
39