Title: Arnott v. Arnott

State: ohio

Issuer: Ohio Supreme Court

Document:

[Until this opinion appears in the Ohio Official Reports advance sheets, it may be cited as 
Arnott v. Arnott, Slip Opinion No. 2012-Ohio-3208.] 
 
 
 
NOTICE 
This slip opinion is subject to formal revision before it is published in 
an advance sheet of the Ohio Official Reports.  Readers are requested 
to promptly notify the Reporter of Decisions, Supreme Court of Ohio, 
65 South Front Street, Columbus, Ohio 43215, of any typographical or 
other formal errors in the opinion, in order that corrections may be 
made before the opinion is published. 
 
SLIP OPINION NO. 2012-OHIO-3208 
ARNOTT ET AL., APPELLANTS, v. ARNOTT ET AL., APPELLEES. 
[Until this opinion appears in the Ohio Official Reports advance sheets,  
it may be cited as Arnott v. Arnott, Slip Opinion No. 2012-Ohio-3208.] 
Declaratory judgments—Standard of review. 
(No. 2010-2180—Submitted October 5, 2011—Decided July 18, 2012.) 
CERTIFIED  by the Court of Appeals for Highland County, No. 09CA25,  
190 Ohio App.3d 493, 2010-Ohio-5392. 
__________________ 
 
PFEIFER, J. 
{¶ 1} In this certified-conflict case, we hold that an appellate court 
reviewing a declaratory-judgment matter should apply an abuse-of-discretion 
standard in regard to the trial court’s holding concerning the appropriateness of 
the case for declaratory judgment, i.e., the matter’s justiciability, and should apply 
a de novo standard of review in regard to the trial court’s determination of legal 
issues in the case. 
 
 
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Factual and Procedural Background 
{¶ 2} This matter arises out of a controversy over a phrase in a trust; the 
language at issue established the calculation of the price of trust property offered 
for sale to certain trust beneficiaries.  The Joseph Scott Arnott Revocable Living 
Trust gave James Arnott, the trust’s successor trustee, and his brother, Kenneth, 
the option to purchase specified parcels of farmland owned by the trust “at a price 
equal to the appraised value of said property as affixed for federal and/or state 
estate tax purposes.”  That price-determining phrase caused disagreement: 
Kenneth and certain other beneficiaries (“Kenneth”) argued that pursuant to the 
trust language, the option price is the fair market value as determined by an 
appraiser, whereas James and certain other beneficiaries (“James”) contended that 
the trust set the option price as the appraiser’s value less the estate-tax deduction 
allowed for farmland in either the federal or state tax code. 
{¶ 3} Kenneth filed a complaint for declaratory judgment in the 
Highland County Probate Court, seeking judicial interpretation of the provision at 
issue.  The trial court held that the matter was appropriate for disposition through 
a declaratory-judgment action and concluded that the disputed phrase was 
unambiguous—the option price was simply the fair market value as determined 
by the appraisal. 
{¶ 4} James appealed.  He argued that there was insufficient evidence of 
a justiciable controversy to permit the declaratory-judgment action to go forward 
and that even if declaratory judgment was proper, the trial court had improperly 
interpreted the contested language of the trust. 
{¶ 5} The court of appeals employed an abuse-of-discretion standard on 
the first issue James raised, whether there were grounds for proceeding on a 
declaratory-judgment action.  Finding that the court had not abused its discretion 
in proceeding on the action, the appellate court moved on to the issue of whether 
the trial court had erred in finding that the trust language—“the appraised value 
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* * * affixed for federal and/or state estate tax purposes”—is equivalent to “fair 
market value.”  In addressing this assignment of error, the court employed a de 
novo standard of review.  The court wrote, “A trial court's determination of purely 
legal issues is never one of degree or discretion.  Regardless of whether the action 
is styled as one for declaratory relief, the trial court must correctly apply the law.”  
In re Arnott, 190 Ohio App.3d 493, 2010-Ohio-5392, 942 N.E.2d 1124, ¶ 42 (4th 
Dist.). 
{¶ 6} Reviewing the trust document de novo, the court reversed.  It 
found that the option language was “susceptible of more than one reasonable 
interpretation” and “guided by the rule that [the court] should review the Trust as 
a whole to determine the settlor’s intent,” the court ultimately determined that 
“the settlor intended the option price to be the value established for federal and/or 
state estate-tax purposes, in this case, the federal and/or Ohio qualified-use 
value.”  Id. at ¶ 4. 
{¶ 7} Kenneth moved the court of appeals to certify a conflict, arguing 
that the court had applied the wrong standard of review in determining the case, a 
standard in conflict with a holding from the Twelfth District Court of Appeals in 
Maxwell v. Fry, 12th Dist. No. CA2007-11-284, 2009-Ohio-1650, 2009 WL 
903828.  Kenneth argued that instead of applying a de novo review to the trial 
court’s interpretation of the trust language at issue in the case, the court should 
have applied an abuse-of-discretion standard of review to all the issues under 
review.  In Maxwell, a declaratory-judgment matter, the parties had disputed the 
appellate court’s proper standard of review in regard to the trial court’s 
determination of legal issues concerning whether the parties were tenants in 
common.  The appellate court in Maxwell held that this court’s decision in Mid-
American Fire & Cas. v. Heasley, 113 Ohio St.3d 133, 2007-Ohio-1248, 863 
N.E.2d 142, had “definitively settled” the standard-of-review question regarding 
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declaratory-judgment actions and that such actions are to be reviewed under the 
abuse-of-discretion standard.  Maxwell, ¶ 16. 
{¶ 8} The court below certified to this court that a conflict existed 
between its decision and Maxwell.  Upon our review of that order, this court 
determined that a conflict exists and ordered the parties to brief the following 
issue: 
 
What is the proper standard for appellate review of purely 
legal issues that must be resolved after the trial court has decided a 
complaint for declaratory judgment presents a justiciable question 
under Revised Code Chapter 2721, i.e., must an appellate court 
afford deference to a trial court's interpretation or application of 
the law? 
 
128 Ohio St.3d 1410, 2011-Ohio-828, 942 N.E.2d 383. 
Law and Analysis 
{¶ 9} We face a very narrow legal issue in this case.  In this appeal, 
Kenneth does not appeal the appellate court’s interpretation of the trust language.  
Instead, he asserts that the court of appeals employed the wrong standard of 
review in addressing that issue.  The only question before us today is what 
standard of review an appellate court should employ in reviewing legal issues in a 
declaratory-judgment action.  This case gives this court the opportunity to clarify 
the holding in Mid-American. 
{¶ 10} In Mid-American, 113 Ohio St.3d 134, 2007-Ohio-1248, 863 
N.E.2d 142, paragraph two of the syllabus, this court held, “Dismissal of a 
declaratory judgment action is reviewed under an abuse-of-discretion standard.”  
Mid-American involved a declaratory-judgment action that the trial court had 
dismissed pursuant to a motion brought pursuant to Civ.R. 12(B)(6); the only 
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issue the court addressed in Mid-American was whether the cause satisfied a 
threshold requirement of a declaratory judgment, justiciability.  As this court held 
in Mid-American, not every case is appropriate for a declaratory-judgment action 
brought pursuant to R.C. Chapter 2721:  
 
Although broad in scope, the declaratory judgment statutes 
are not without limitation. Most significantly, in keeping with the 
long-standing tradition that a court does not render advisory 
opinions, they allow the filing of a declaratory judgment only to 
decide “an actual controversy, the resolution of which will confer 
certain rights or status upon the litigants.” Corron v. Corron 
(1988), 40 Ohio St.3d 75, 79, 531 N.E.2d 708. Not every 
conceivable controversy is an actual one.  As the First District 
aptly noted, in order for a justiciable question to exist, “ ‘[t]he 
danger or dilemma of the plaintiff must be present, not contingent 
on the happening of hypothetical future events * * * and the threat 
to his position must be actual and genuine and not merely possible 
or remote.’ ” League for Preservation of Civil Rights v. Cincinnati 
(1940), 64 Ohio App. 195, 197, 17 O.O. 424, 28 N.E.2d 660, 
quoting Borchard, Declaratory Judgments (1934) 40. 
 
Mid-American, ¶ 9. 
{¶ 11} After the trial court had granted the defendant’s motion to dismiss 
in Mid-American—finding that no justiciable controversy existed between the 
parties—the appellate court applied an abuse-of-discretion standard of review in 
affirming the trial court’s decision.  This court affirmed the court of appeals, 
holding that it had employed the proper standard of review:  
 
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This court has previously addressed the question of the 
appropriate standard of review for a declaratory judgment action. 
We have held that “[t]he granting or denying of declaratory relief 
is a matter for judicial discretion, and where a court determines 
that a controversy is so contingent that declaratory relief does not 
lie, this court will not reverse unless the lower court's 
determination is clearly unreasonable.” Bilyeu [v. Motorists Mut. 
Ins. Co., 36 Ohio St.2d 35, 65 O.O.2d 179, 303 N.E.2d 871 
(1973)], syllabus.  Relying on our decision in that case, courts 
throughout Ohio have adopted an abuse-of-discretion standard for 
reviewing declaratory judgment actions. 
 
Mid-American, 113 Ohio St.3d 134, 2007-Ohio-1248, 863 N.E.2d 142, ¶ 12. 
{¶ 12} The party that brought the declaratory-judgment action in Mid-
American had asked this court to overrule its decision in Bilyeu, which had set the 
standard of review in regard to dismissals due to lack of justiciability.  This court 
refused to do so and, in summing up, stated, perhaps overbroadly, “We therefore 
reaffirm that declaratory judgment actions are to be reviewed under an abuse-of-
discretion standard.”  Mid-American, ¶ 14. 
{¶ 13} But again, the procedural posture of Mid-American, its syllabus 
language, and its reliance on Bilyeu make clear that the abuse-of-discretion 
standard applies to dismissals of declaratory-judgment actions as not justiciable; 
the case does not suggest that legal issues in a declaratory-judgment action should 
be reviewed by an abuse-of-discretion standard.  Still, some courts have 
interpreted Mid-American as establishing an abuse-of-discretion standard to all 
aspects of a declaratory-judgment action.  E.g., Maxwell; Dawson Ins., Inc. v. 
Freund, 8th Dist. No. No. 94660, 2011-Ohio-1552, 2011 WL 1167487.  Today, 
we reiterate that the abuse-of-discretion standard applies to the review of a trial 
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court’s holding regarding justiciability; once a trial court determines that a matter 
is appropriate for declaratory judgment, its holdings regarding questions of law 
are reviewed on a de novo basis. 
{¶ 14} The determination of the meaning of the disputed language of the 
trust at the heart of this case is a question of law.  “A court’s purpose in 
interpreting a trust is to effectuate, within the legal parameters established by a 
court or by statute, the settlor's intent.”  Domo v. McCarthy, 66 Ohio St.3d 312, 
612 N.E.2d 706 (1993), paragraph one of the syllabus.  Interpreting a trust is akin 
to interpreting a contract; as with trusts, the role of courts in interpreting contracts 
is “to ascertain and give effect to the intent of the parties.”  Saunders v. 
Mortensen, 101 Ohio St.3d 86, 2004-Ohio-24, 801 N.E.2d 452, ¶ 9.  This court 
has held that “[t]he construction of a written contract is a matter of law that we 
review de novo.”  Id.  The same is true of the construction of a written trust; in 
both In re Trust of Brooke, 82 Ohio St.3d 553, 697 N.E.2d 191 (1998), and Natl. 
City Bank v. Beyer, 89 Ohio St.3d 152, 729 N.E.2d 711 (2000), this court applied 
a de novo standard of review in interpreting trust language in appeals of 
declaratory judgments. 
{¶ 15} The fact that the construction of a trust is raised in a declaratory-
judgment action does not change the standard by which an appellate court reviews 
the case; a court always reviews the issue de novo.  Declaratory judgments do not 
enjoy a special insulation from reviewing courts on questions of law.  Mid-
American did not hold otherwise. 
{¶ 16} This court has reviewed multitudinous declaratory-judgment 
actions that have involved questions of law, from the notable to the notorious. 
E.g., Savoie v. Grange Mut. Ins. Co., 67 Ohio St.3d 500, 620 N.E.2d 809 (1993); 
Westfield Ins. Co. v. Galatis, 100 Ohio St.3d 216, 2003-Ohio-5849, 797 N.E.2d 
1256.  Never have we deferred to the judgment of the trial court on issues of law. 
 
 
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Conclusion 
{¶ 17} Our response to the question upon which this court ordered 
briefing is that the de novo standard of review is the proper standard for appellate 
review of purely legal issues that must be resolved after the trial court has decided 
that a complaint for declaratory judgment presents a justiciable question under 
R.C. Chapter 2721. 
{¶ 18} Accordingly, we affirm the judgment of the Fourth District Court 
of Appeals. 
Judgment affirmed. 
O’CONNOR, C.J., and LUNDBERG STRATTON, O’DONNELL, LANZINGER, 
CUPP, and MCGEE BROWN, JJ., concur. 
___________________ 
 
Judkins & Hayes, L.L.C., Robert J. Judkins, and John W. Judkins, for 
appellants. 
 
Shannon M. Treynor, for appellees. 
______________________