Title: Dowell v. Dowell

State: wyoming

Issuer: Wyoming Supreme Court

Document:

IN THE MATTER OF THE MODIFICATION OF THE MARK E. DOWELL IRREVOCABLE TRUST #1, dated the 16th of May, 2000: ELIZABETH L. DOWELL v. MARK E. DOWELL2012 WY 154Case Number: S-12-0098Decided: 12/13/2012This 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.
OCTOBER 
TERM, A.D. 2012
 
IN 
THE MATTER OF THE MODIFICATION OF THE MARK E. DOWELL IRREVOCABLE TRUST #1, dated 
the 16th day of May, 2000:ELIZABETH L. 
DOWELL,Appellant(Respondent),v.MARK E. 
DOWELL,Appellee(Petitioner).
 
Appeal 
from the District Court of Natrona County
The 
Honorable David B. Park, Judge
 
 
Representing 
Appellant:
Ann M. Rochelle of 
Rochelle Law Offices, P.C., Casper, Wyoming; Douglas McLaughlin of Law Office of 
Douglas R. McLaughlin, Casper, Wyoming.  Argument by Ms. 
Rochelle.
 
Representing 
Appellee:
Judith Studer and Tassma 
A. Powers of Schwartz, Bon, Walker & Studer, LLC, Casper, 
Wyoming.  Argument by Ms. Studer.
 
Before KITE, C.J., and 
HILL, VOIGT, BURKE, and DAVIS, JJ.
 
DAVIS, 
Justice.
 
[¶1]      While 
he and Appellant Elizabeth (Betsy) Dowell were still married, Appellee Dr. Mark 
Dowell created an irrevocable life insurance trust (ILIT) naming Ms. Dowell as 
its primary beneficiary and their two children as contingent 
beneficiaries.  The couple divorced five years later.  Six 
years after the divorce, Dr. Dowell filed a petition to modify the trust, in 
which he contended that he did not need to obtain Ms. Dowell’s consent to modify 
because she had relinquished her beneficial interest in the property settlement 
agreement incorporated into their divorce decree.  The district court 
agreed. 
 
[¶2]      Ms. 
Dowell appeals from the district court’s order granting summary judgment to Dr. 
Dowell.  We reverse the order granting Dr. Dowell summary judgment 
with instructions to instead grant Appellant Elizabeth Dowell’s motion for 
summary judgment.
 
ISSUE
 
[¶3]      Did 
Ms. Dowell waive her expectancy in an irrevocable life insurance trust by 
consenting to the terms of a property settlement agreement which was 
incorporated in the parties’ decree of divorce?
 
FACTS
 
[¶4]      On 
May 16, 2000, Dr. Dowell created the ILIT, the proper name of which is the Mark 
E. Dowell Irrevocable Trust #1. He funded the trust with two life insurance 
policies:  one originally named Ms. Dowell the primary beneficiary and 
their daughter the sole contingent beneficiary; the second named their daughter 
and son the primary beneficiaries.  Approximately eighteen months 
after the creation of the ILIT, the beneficiary designations in the first policy 
were changed to make the ILIT’s trustee the sole policy 
beneficiary.   
 
[¶5]      Stated 
very simply, an ILIT is an irrevocable and, without judicial approval, 
unamendable trust funded by insurance policies.  Upon the death of the 
insured, the ILIT trustee administers the trust for the benefit of the 
beneficiaries.  If all steps are appropriately taken, federal estate 
taxation may be avoided or minimized.  The parties agree that the 
settlor of an ILIT cannot maintain or exercise any control over the trust, or it 
can be considered part of his or her estate for tax purposes.  The 
ILIT specifically eliminated any right of control by the settlor in Article 
II:
 
This trust and all 
interests in it are irrevocable, and the Grantor has no power to alter, amend, 
revoke, or terminate any trust provision or interest. 
 
[¶6]      The 
ILIT designated Ms. Dowell as its primary beneficiary, while the parties’ two 
children were designated as contingent beneficiaries.  The trust 
instrument directed the trustee to hold and administer the trust assets for Ms. 
Dowell’s benefit and to distribute interest income from those assets to 
her.  It also prohibited the distribution of trust income to the two 
children who were contingent beneficiaries until after Ms. Dowell’s 
death. 
 
[¶7]      On 
the same date the ILIT trust was executed by Dr. Dowell, the parties separately 
created the Mark E. Dowell Revocable Trust and the Elizabeth L. Dowell Revocable 
Trust.  The corpus of each of those trusts included the respective 
settlor’s sole or shared interests in personal property, brokerage accounts, and 
real property, as well as equity interests in various business 
entities. 
 
[¶8]      On 
October 14, 2005, the District Court for the Eighth Judicial District entered a 
decree in the Dowells’ divorce proceedings. The decree provided that Ms. Dowell 
retained primary physical custody of their two children, and the court therefore 
ordered Dr. Dowell to pay child support.  The decree also incorporated 
the Dowells’ property settlement agreement.  That agreement permitted 
each party to retain any household items, retirement accounts, or real property 
owned in whole by their respective revocable trusts.  Where one 
party’s revocable trust owned his or her share of a jointly held interest in 
realty or business securities agreed to be transferred to the other, the 
agreement required the parties to divide that property by having the trust of 
one convey its share of a designated asset to the trust of the 
other. 
 
[¶9]      Two 
portions of the divorce decree figure prominently in the dispute now before this 
Court.  The first is paragraph 12 of the district court’s 
findings:
 
12.  INHERITANCE:  At 
the time that this Decree is signed by the Judge, the parties 
agree and it is ordered that:
 
a.  Plaintiff 
shall cease to be a beneficiary under Defendant’s Will and 
Defendant’s Revocable Trust Dated May 16, 2000 and all life 
insurance policies owned by Defendant.  This does not pertain to 
Plaintiff being the beneficiary of the ILIT.
 
b.  Defendant 
shall cease to be a beneficiary under Plaintiff’s Will and the 
Plaintiff’s Revocable Trust Dated May 16, 2000 and all life 
insurance policies owned by Plaintiff.
 
c.  Plaintiff 
shall be treated as having predeceased Defendant for purposes of inheritances 
because she was Defendant’s wife and being a beneficiary under 
any Wills or Trusts of Defendant.
 
d.  Defendant 
shall be treated as having predeceased Plaintiff for purposes of inheritances 
because he was Plaintiff’s husband and being a beneficiary under 
any Wills or Trusts of Plaintiff.
 
The second is paragraph 
7(d) of the district court’s order:
 
(d)  ILIT:  Defendant 
is ordered to fund the Mark E. Dowell Irrevocable Trust No. One Dated 
May 16, 2000 (ILIT herein) established for the children’s 
benefit, by timely paying to Christopher Tice, Trustee or his Successor Trustee 
under said ILIT, the amount necessary to pay the premiums for said 
policies No. [] and No. [] within this ILIT until these 
policies are paid up and no further premium payments are necessary to fund the 
policies.
 
[¶10]   On 
August 1, 2011, nearly six years after the decree was entered, Dr. Dowell filed 
a petition to modify the ILIT in the District Court for the Seventh Judicial 
District.  As settlor of that noncharitable trust, he could seek 
modification under Wyo. Stat. Ann. §§ 4-10-411(b) and 4-10-412 (LexisNexis 
2011).1  Noting in his petition that § 
4-10-412(a) – the provision on which he relied – permitted modification only if 
all “qualified beneficiaries” of the trust consented, he alleged that Ms. Dowell 
had relinquished her beneficial interest in the ILIT through the above-quoted 
paragraphs 12(c) and 7(d) of the divorce decree, and that her consent to 
modification by the court was therefore not required.  In her answer 
to the petition, Ms. Dowell asserted that the above-quoted paragraph 12(a) of 
the decree instead memorialized the parties’ agreement that she would remain a 
beneficiary of the ILIT, and that she did not waive that 
interest. 
 
[¶11]   Dr. 
Dowell reiterated his position in a motion for a judgment on the pleadings, 
which argued that the divorce decree contained a clear and unambiguous waiver by 
Ms. Dowell of any interest in the ILIT.  Ms. Dowell responded that 
because disposition of the petition to modify the ILIT required an 
interpretation of the divorce decree, and because her ex-husband had appended 
documents to the petition to support his interpretation, the district court 
should treat his motion as one for a summary judgment by virtue of Wyoming Rule 
of Civil Procedure 12(c).  She also filed a motion for summary 
judgment, which was supported by her affidavit and accompanied by a statement of 
allegedly uncontested material facts. 
 
[¶12]   The 
district court treated the motion for judgment on the pleadings as a motion for 
summary judgment, and so the two motions were considered and ruled upon as 
cross-motions for summary judgment, without objection from the 
parties.   We will review them in the same light.
 
[¶13]   In 
her motion for summary judgment, presumably as an aid to understanding the 
divorce decree or as a means of describing the context surrounding the property 
settlement agreement on which it was based, Ms. Dowell attested by affidavit to 
the terms of the ILIT, to the facts surrounding its creation, to the parties’ 
common purpose in creating the trust, and to its value to her at the time of 
their divorce. Dr. Dowell’s response to those filings coupled a recitation of 
circumstances allegedly bearing on his intent when he created the ILIT with an 
argument that the court should read the divorce decree so as to give effect to 
that intent. 
 
[¶14]   On 
March 19, 2012, the district court entered an order granting Dr. Dowell’s 
summary judgment motion and denying that of Ms. Dowell.  The court 
found that the record revealed no disputed issues of material facts:
 
the Decree of Divorce is 
not ambiguous; and, that when common sense is applied under the circumstances 
and in the context that existed, the rights of [Ms. Dowell] as a beneficiary to 
the Trust were terminated. The Court incorporates the arguments presented 
by [Dr. Dowell] as if fully set forth herein.
 
The district court 
therefore concluded that Ms. Dowell was not a “qualified beneficiary” whose 
consent was needed for modification of the ILIT under Wyo. Stat. Ann. § 
4-10-412(a), and it modified the trust as requested by Dr. 
Dowell. 
 
STANDARD OF 
REVIEW
 
[¶15]   Summary 
judgment is appropriate only when the record discloses that no genuine issue 
exists as to any material fact, and when the prevailing party is entitled to 
judgment as a matter of law.  W.R.C.P. 56(c); Cellers v. 
Adami, 2009 WY 120, ¶ 8, 216 P.3d 1134, 1137 (Wyo. 2009).  We 
examine the record in the light most favorable to the non-prevailing party, 
giving that party the benefit of all favorable inferences that may be fairly 
drawn from it.  O’Donnell v. Blue Cross Blue Shield of Wyoming, 
2003 WY 112, ¶ 9, 76 P.3d 308, 312 (Wyo. 2003).  We evaluate the 
propriety of a summary judgment by employing the same standards and using the 
same materials as the lower court employed and used, and we accord no deference 
to the district court’s decision on issues of law.  Cellers, ¶ 
8, 216 P.3d  at 1137. 
 
[¶16]   Where 
cross-motions for summary judgment are filed and an appeal is taken from an 
order granting one party a summary judgment and denying the summary judgment 
motion of the opposing party, we will review both aspects of that 
order.  O’Donnell, ¶ 9, 76 P.3d  at 312.  When, as in 
this litigation, a decision to grant one cross-motion for summary judgment and 
deny another completely resolves a case, the order is properly subject to appeal 
to this Court. Lindsey v. Harriet, 2011 WY 80, ¶ 18, 255 P.3d 873, 
880 (Wyo. 2011).
 
DISCUSSION
 
[¶17]   The 
district court determined that Ms. Dowell unambiguously and as a matter of law 
relinquished her beneficial interest in the ILIT by virtue of the terms of her 
divorce decree.  That determination rested on what the district court 
described as “well established law that applies to the interpretation of 
contracts.”  From the same starting point, we arrive at a contrary 
conclusion.
 
[¶18]   As 
with all contracts, a court reviewing a property settlement agreement 
incorporated into a divorce decree must attempt to ascertain the parties’ intent 
by first looking to the specific wording of the agreement.  If the 
language is clear and unambiguous, the court should restrict its review to the 
four corners of the document.  Cellers, ¶ 9, 216 P.3d  at 
1137; Rehnberg v. Hirshberg, 2003 WY 21, ¶ 9, 64 P.3d 115, 118 (Wyo. 
2003).  That is, a court should not resort to extrinsic or parol 
evidence or rules of contract construction to avoid or enlarge the clearly 
expressed intent of the parties.  Id.  It may, 
however, confirm its understanding of otherwise seemingly unambiguous language 
by reviewing evidence which, although extrinsic to the contract, complements 
that language by clarifying the context in which the agreement was 
drawn.  Knight v. TCB Const. & Design, LLC, 2011 WY 27, ¶ 
7, 248 P.3d 178, 181 (Wyo. 2011).
 
[¶19]   Our 
first point of departure from the district court’s decision derives from its 
apparent reliance on Dr. Dowell’s arguments to provide such a clarifying context 
for the provisions of the divorce decree.  We believe that the 
district judge was referring to Dr. Dowell’s assertion that the ILIT was created 
not only to shelter life insurance proceeds from estate taxes, but also to 
provide a liquid asset from which estate taxes could be paid by the 
beneficiaries’ sale of non-trust assets to the ILIT, thereby increasing the 
inheritance to be received by the Dowells’ children.  Reading the 
record in the light most favorable to Ms. Dowell, the party against whom summary 
judgment was granted, we perceive several problems with that “contextual” 
evidence.
 
 
[¶20]   First, 
the ILIT seems to allow, but does not require, that the trustee use the 
insurance proceeds to purchase non-trust assets from the beneficiaries so that 
they may pay estate taxes.  Second, Dr. Dowell never explained why it 
was necessary or even expedient to name Ms. Dowell as the primary beneficiary of 
the ILIT if his purpose was just to shield his children from estate 
taxes.  Finally, and perhaps most importantly, Ms. Dowell asserted 
that Dr. Dowell had named her the primary beneficiary of the ILIT because they 
did not want the trust’s assets to go directly to their inexperienced minor 
children upon his death, and because they recognized that she would need those 
assets to care for herself and the children until the children reached 
adulthood.  Viewing Ms. Dowell’s assertions in the light most 
favorable to her, we find nothing in the record to suggest that those concerns 
had ceased to be significant at the time of the divorce, when the children were 
still only nine and eleven years old.  The Court is not so naïve as to 
fail to apprehend that the interests of the parties had become adversarial by 
the time of their divorce, and that the common objectives which had existed at 
the time the trust was created, if any, had probably ceased to exist, with each 
party no doubt seeking to obtain as many marital assets as reasonably 
possible. 
 
[¶21]   At 
the very least, these aspects of the record point to the existence of a 
significant factual dispute regarding the context in which both the trust and 
the divorce decree came to exist.  While that factual dispute calls 
into question the propriety of granting   summary judgment to 
either party, we will not decide this case on that basis, because we also take 
issue with the district court’s disposition of the more fundamental question of 
whether the divorce decree was unambiguous.
 
[¶22]   A 
contract is ambiguous if its language conveys a double meaning, lacks 
definiteness, or otherwise makes the meaning of a provision doubtful or 
uncertain.  O’Donnell, ¶ 10, 76 P.3d  at 
312; Rehnberg, ¶ 9, 64 P.3d  at 118.  If the meaning of a 
contractual provision is not readily apparent when read as a whole, the parties’ 
intent may be determined by considering competent evidence of pertinent 
explanatory circumstances extraneous to the 
contract.  O’Donnell, ¶ 10, 76 P.3d  at 312.  Such 
evidence may not, however, be used to contradict the terms of a written 
contract, and a finder of fact may not use such evidence to supply an additional 
contract term.  Mullinnix LLC v. HKB Royalty Trust, 2006 WY 14, 
¶ 25, 126 P.3d 909, 920 (Wyo. 2006).  In any event, a court may not 
normally grant a summary judgment as to the meaning of an ambiguous 
contract.  Cellers, ¶ 8, 216 P.3d  at 1137.
 
[¶23]   Dr. 
Dowell asserted that Ms. Dowell had been deprived of her status as a beneficiary 
of the ILIT by virtue of paragraph 7(d) of the “order” portion of the divorce 
decree.  That provision required Dr. Dowell to continue to fund the 
ILIT by paying the premiums on the two life insurance policies owned by the 
trust.  Dr. Dowell claims this provision had the asserted effect on 
Ms. Dowell’s status because, in specifically identifying the trust by both its 
more formal name and as the ILIT, paragraph 7(d) noted the trust was 
“established for the children’s benefit.”  Reading paragraph 7(d) in 
the light most favorable to Ms. Dowell, we view it as instead assuring that the 
trust continued to be funded as originally intended, and we decline to read its 
collateral reference to the children as unambiguously depriving Ms. Dowell of 
her interest in the ILIT.
 
[¶24]   Ms. 
Dowell in turn points to paragraph 12(a) of the “findings” portion of the 
divorce decree, which memorialized the parties’ agreement that she would cease 
to be a beneficiary of Dr. Dowell’s will, his revocable trust, and any life 
insurance policies he owned.  That paragraph expressly noted that it 
did not apply to Ms. Dowell’s status as a beneficiary of the 
ILIT.  She contends that this exclusion expressed the parties’ intent 
that she retain her expectancy under the ILIT. 
 
[¶25]   Dr. 
Dowell disputes that contention and directs us to paragraph 12(c), which 
provides that Ms. Dowell shall be deemed to have predeceased Dr. Dowell for 
purposes of inheriting from his estate and being a beneficiary of any of his 
wills or trusts.  He asserts that the general reference to trusts in 
that provision must be read to include the ILIT.
 
[¶26]   Neither 
argument is more persuasive than the other.  The exclusion of the ILIT 
from the reach of paragraph 12(a) does not clearly remove that trust from the 
reach of paragraph 12(c), but 12(c) fails to particularize the wills or trusts 
to which it was intended to apply.  We find this lack of specificity 
especially troubling in a decree which otherwise expressly identified any 
outside documents to which the parties’ agreement related.  The 
Dowells identified their respective revocable trusts by associating them with 
whichever party created those trusts, as well as the dates on which they were 
created, and they also identified the ILIT as either the “ILIT” or the “Mark E. 
Dowell Irrevocable Trust No. One Dated May 16, 
2000.”          The indefinite 
wording and uncertain meaning of these key provisions of the divorce decree lead 
to the conclusion that the decree is ambiguous as a matter of law, and that the 
district court therefore erred in granting summary judgment to Dr. 
Dowell.  Prior to our decision in Cellers, that 
conclusion would likely have led to a remand for further proceedings to resolve 
the parties’ factual dispute as to the intent underlying the above-noted 
provisions of their divorce decree.
 
[¶27]   However, 
in Cellers we considered a property settlement and divorce 
decree which one party claimed had divested the other of a beneficial interest 
in an investment account.  We there adopted the rule that courts 
should not read a divorce decree to waive or relinquish a spouse’s interest in 
such an account or in similar expectancies unless the decree’s language clearly 
so stated.  Cellers, ¶ 23, 216 P.3d  at 1143.  General 
references to unspecified property or property interests like those in the 
Dowells’ decree will not suffice to establish such a waiver.  The 
language of the decree must expressly waive and specifically identify both the 
expectancy or beneficial interest that is at stake, as well as the instrument or 
account to which that interest relates.  Id. It is not 
difficult to conceive of language which would have clarified the conflicting 
provisions of the decree to achieve a waiver, but such language is not to be 
found in the decree.
 
[¶28]   Because 
the Dowells’ divorce decree falls short of 
the Cellers benchmark, it cannot be said to have divested Ms. 
Dowell of her status as the primary beneficiary of the ILIT as a matter of 
law.  Accordingly, we reverse the summary judgment granted to Dr. 
Dowell to the extent it determined that Ms. Dowell was not a qualified 
beneficiary whose consent was necessary to permit the trial court to judicially 
modify the ILIT.  We also remand and instruct the district court to 
grant Ms. Dowell’s summary judgment motion on that issue, as the record before 
us as a matter of law does not reflect an adequate waiver of her status as a 
qualified beneficiary of the ILIT.
 
[¶29]   In 
his brief, Dr. Dowell has argued alternative statutory grounds for affirming the 
trial court’s decision.  These were not raised in his initial petition 
or considered by the trial court.  Because they have not been 
discretely raised, appropriately briefed, and decided below, we will not 
consider them on appeal.  Lindsay, ¶ 20, 255 P.3d  at 
881.  We therefore decline to comment on whether additional 
proceedings to modify the trust might be appropriate under some statutory 
provision other than Wyo. Stat. Ann. § 4-10-412(a).
 
FOOTNOTES
1Modification proceedings may be commenced 
under § 4-10-412 by a trust’s settlor, trustee or beneficiary, but only a 
trustee or beneficiary may seek to modify a noncharitable trust under §§ 
4-10-413 through 4-10-417.  Wyo. Stat. Ann. § 4-10-411(b) (LexisNexis 
2011).