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Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 28:1441 Petition for Removal- Fraud

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IN THE UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF ARKANSAS

NORTHERN DIVISION

IN RE ELIJAH AND MARY

STINY TRUSTS No. 3:19-cv-346-DPM

MEMORANDUM OPINION AND ORDER

Our law favors settlements, especially among family members.

And a proposed compromise of one slice in this case, which has

involved many disputes and lengthy proceedings, is particularly

welcome. The Court concludes, though, that Mary Stiny's intentions

about what should happen to Della Moore's share, if Moore

predeceased Stiny, are clear and the Court must enforce them to keep

faith with all applicable and material provisions of the Stiny trust.

When Mrs. Stiny amended her survivor's trust for the second and

last time, she eliminated a bequest to her church in Hoxie and added a

bequest to her mother, Della Moore. This change created an alleged

ambiguity. The amended provision -Article Seven, paragraph D(2) -

is in an Appendix. On the one hand, Mrs. Stiny's amendment provided

that, if her mother predeceased her, the bequest "shall lapse."

Under California law, in that instance her mother's share would be

shared among a group of family members listed in amended paragraph

(D)(2)(i)-(vii). CAL. PROB. CODE § 21109. Call them group one.

They include one of Mrs. Stiny's daughters, Rena Wood, and several of

her grandchildren. On the other hand, the amendment contained a

Case 3:19-cv-00346-DPM Document 320 Filed 03/06/24 Page 1 of 13
more general provision about what should happen if any one of the

listed family members in group one predeceased Mrs. Stiny. It says:

"Except as otherwise provided, in the event any beneficiary named in

clauses (iii) through (viii) above, predeceases trustor, the such share

shall be distributed to the predeceased beneficiary's living issue, by

right of representation. . . ." See Exhibit F, Doc. 284-6 at 2.

Della Moore died first. Then Mrs. Stiny died. In addition to

Mrs. Stiny, Della Moore had eight other children. None of these eight

individuals are in group one. Call them group two. Several of the

children of group two members are in group one. A dispute exists

about Mrs. Stiny's intentions and who should get her mother's lapsed

2.66% share of the survivor's trust.

When the most recent round of litigation about the Stiny Trusts

writ large began, the trustee served all the members of groups one and

two and many others with process. Some members of groups one and

two have appeared, and some have not. The main litigation issues have

involved some of Mr. Stiny's grandchildren and Mrs. Stiny, plus what

should happen to Rena Wood's share. Wood passed away during the

case and her estate now stands in her place. All the members of group

one and group two who have appeared and been active in the case, and

the trustee, have come together about Della Moore's share. Several of

them have moved the Court to approve a settlement and direct

distribution. Two members of group one, Corbyn Martin and Sterling

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Martin, did not appear but attended the trial; they have filed written

consents to the settlement. Doc. 286 & 287. All parties who have

appeared were served with the trustee's August 2022 motion to

approve, as well as with the October 2023 motion to approve by all of

Mrs. Stiny's siblings. No one has objected to the settlement.

This unanimity is remarkable in this case full of disputes. The proposed

distribution of Della Moore's share is as follows:

DELLA MOORE'S 2.66% SHARE DIVISION OF

2.66%

1. Mary Stiny, deceased

Jason Baker 1/8 of 1/9

Jessica Baker 1/8 of 1/9

ChadRaker i/8of 1/9

Corbyn Martin 1/8 of 1/9

Sterling Martin 1/8 of 1/9

SheelaMartin 1/8ofl/9

Rena Wood, deceased

*to be paid to the Estate ofRena Wood

dec.

1/8 of 1/9

John Vernon Moore 1/8 of 1/9

2. Helen Robins 1/9

3. Joann Gates Harris, deceased

*to be paid to the Estate ofJoann

Harris, dec.

1/9

4. Linda Davis 1/9

5. Joyce Roberts 1/9

6. Janet Brand 1/9

7 PeggyMiles 1/9

8. Tom Moore 1/9

9. Vernon Moore 1/9

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Doc. 284 at 7; Doc. 309 at 4.

The Court studied the proposed settlement but struggled to see

any ambiguity or contradiction in the applicable trust provisions.

It held a February 2024 hearing to ventilate that issue; it also pressed

the parties on whether the family settlement doctrine applies to an

active irrevocable trust. The Court has benefitted from the parties' oral

arguments, pre-hearing briefs, and post-hearing briefs. The Court

concludes that, under California law, the settlement should not be

approved.

First, it disregards Mrs. Stiny's clear intent-it would distribute

trust money to Mrs. Stiny's siblings and to her son, John Moore.

CAL. PROB. CODE § 21102. That's because her siblings are Della Moore's

children and John Moore is Della Moore's grandson, which makes them

Della Moore's "issue" under California law. CAL. PROB. CODE § 50.

Mrs. Stiny, however, made no provisions for her siblings. And she was

unambiguous when it came to her son: "Wife has knowingly made no

provision for her son, JOHN MOORE." Exhibit F, Doc. 284-6 at 2.

This intention was longstanding. This provision in the second

amendment echoed identical provisions through various amendments

dating back to 2007. Exhibit C, Doc. 284-3 at 3.

Second, the Court must "give every expression some effect,

rather than one that will render any of the expressions inoperative."

CAL. PRoB. CODE § 21120. The language -"Except as otherwise

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provided" -gives effect to Mrs. Stiny's direction that her mother's gift

"shall lapse." The bequest to Della Moore and this phrase were added

in the second amendment, when Mrs. Stiny substituted her mother for

her church in paragraph D(2)(viii). Compare Exhibit E, Doc. 284-5 at 2,

with Exhibit F, Doc. 2 84-6 at 2. While Mrs. Stiny could have expressed

her intent about Della Moore's share in other ways, this added phrase

qualified the faliback distribution that Mrs. Stiny had provided for in

her first amendment. It was a fix of a then-existing term. Without an

exception, Mrs. Stiny's siblings and son would receive a slice of the

share that she intended for her mother. But the lapse exception

forecloses that possibility. This reading gives effect to every expression

in the amended survivor's trust. And it construes all the trust's parts

in a way that forms a consistent whole. CAL. PRoB. CODE § 21121.

The settling parties are, in effect, proposing a modification of

Mrs. Stiny's irrevocable survivor's trust. Doc. 317 at 7; Doc. 318 at 7.

That step requires two things: all beneficiaries' consent to the

modification; and the Court's determination "that the reason for doing

so under the circumstances outweighs the interest in accomplishing a

material purpose of the trust." CAL. PRoB. CODE § 15403. Mrs. Stiny's

distributive intent is a material purpose. E.g., Boys & Girls Club of

Petaluma v. Walsh, 87 Cal. Rptr. 3d 413, 422-23 (Cal. Ct. App. 2008).

And, because she was unambiguous with respect to her mother's share,

the Court should not disturb that intent. CAL. PROB. CODE § 21102(a).

Case 3:19-cv-00346-DPM Document 320 Filed 03/06/24 Page 5 of 13
As important as maintaining family harmony is, and it is very

important, the applicable law must be followed.

Third, the parties contend that the Court may approve the

settlement, whether an ambiguity exists or not. But the California

Supreme Court has squarely foreclosed that argument when a

beneficiary's interest is subject to a valid spendthrift clause. Kelly v.

Kelly, 79 P.2d 1059, 1063 (Cal. 1938). That is the situation here.

Article Eleven, paragraph E, provides: "No interest in the principal or

income of any trust created under this instrument shall be anticipated,

assigned, encumbered, or subjected to creditor's claim or legal process

before actual receipt by the beneficiary." Exhibit A, Doc. 284-1 at 19.

The parties' settlement agreement "executed before payment to the

beneficiar{ies] confers on the assignee[s] no right to demand payment

or delivery from the trustee as it becomes due to the beneficiar[ies]."

Kelly, 79 P.2d at 1063.

Settlements are a creatures of contract law. See Kelly,

79 P.2d at 1063-64; De Mule v. Ramsey, 254 Cal. Rptr. 573, 577-78 (Cal.

Ct. App. 1989). And the parties are free, of course, to do whatever they

may agree to do after the trust corpus is distributed. But, that can

happen only after Mrs. Stiny's chosen beneficiaries have received their

distributions. De Mille, 254 Cal. Rptr. At 578. Arkansas law suggests a

similar route. Buckalew v. Arvest Trust Co., 2013 Ark. App. 28, at 6,

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425 S.W.3d 819, 823; Trask v. Trask, 2018 Ark. App. 400, at 13-14,

559 S.W.3d 277, 284.

The cases on which the group two members rely are

distinguishable. The Arkansas cases involve post-deal challenges to the

enforceability of a family settlement agreement; plus they arise in the

will context. Doc. 317 at 1-5; Butler v. Dike, 2009 Ark. App. 435,

320 S.W.3d 647; Green v. McAuley, 953 S.W.2d 66 (Ark. Ct. App. 1997);

Dudgeon v. Dudgeon, 177 S.W. 402 (Ark. 1915). The California cases

concern trusts but under markedly different facts. Two cases dealt with

challenges to settlement agreements that had already been approved

by the court. Chui v. Chui, 291 Cal. Rptr. 3d 213 (Cal. Ct. App. 2022);

Manufacturers Warehouse v. Batistelli, No. B222402, 2011 WL 3341743

(Cal. Ct. App. 4 Aug. 2011) (unpublished). And, in Boys & Girls Club of

Petaluma v. Walsh, 87 Cal. Rptr. at 416, the issues were whether

all beneficiaries had consented to modification and whether

modification was appropriate under California Probate Code § 15403.

This precedent takes this issue back under the governing statute

already discussed.

Fourth, the parties have also raised the possibility that the

settlement is similar to a disclaimer by the members of group one.

But disclaimers are different from settlements. "[A] disclaimer does not

involve an agreement with other parties but rather [i}mplies a unilateral

action which conveys no interest to other parties." Estate of Murphy,

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Case 3:19-cv-00346-DPM Document 320 Filed 03/06/24 Page 7 of 13
154 Cal. Rptr. 859, 866 (Cal. Ct. App. 1979). That's because a

disclaiming beneficiary is treated as having predeceased the settlor.

CAL. PROB. CODE § 282. If the members of group one had disclaimed

their interest in Della Moore's share, the resulting distribution would

not be to group two members. It would be to the living issue of group

one members. In any event, no beneficiary has filed a disclaimer here.

CAL. PROB. CODE § 275.

Last, and as the trustee notes, California law prescribes a specific

order of operations in these circumstances. Della Moore predeceased

Mrs. Stiny, so her gift must lapse unless the anti-lapse statute applies.

CAL. PRoB. CODE § 21109 & 21110(a). The anti-lapse statute does not

apply; Mrs. Stiny expressly required Della Moore to survive her.

CAL. PRoB. CODE § 21110(b). The question therefore is which, if any, of

Mrs. Stiny's remaining beneficiaries should get Della Moore's share?

California law answers this question with a priority list.

CAL. PRoB. CODE § 21111. According to that list, Della Moore's share

must go to Mrs. Stiny's remaining beneficiaries under Article Seven,

paragraph D(2)(i)-(vii), "in proportion to their other interest in the

residuary gift or the future interest." CAL. PRoB. CODE § 21111(b).

Two reasons require this result. First, Mrs. Stiny made the residuary

gift-paragraph D(2) -to more than one beneficiary. Second, Mrs.

Stiny did not provide an alternative distribution for Della Moore's

share. The fallback provision calling for distributions to a predeceased

Case 3:19-cv-00346-DPM Document 320 Filed 03/06/24 Page 8 of 13
beneficiary's living issue does not apply because Mrs. Stiny

provided otherwise -that Della Moore's share "shall lapse."

Exhibit F, Doc. 284-6 at 2.

* * *

The motions, Doc. 284 & 309, are denied. In due course, the trustee

must reallocate Della Moore's share proportionally among the

beneficiaries listed in amended paragraph D(2)(i)-(vii). Exhibit F,

Doc. 284-6 at 2; CAL. PROB. CODE § 21111(b). Each beneficiary's share,

as increased by Della Moore's lapsed share, will be the percentage share

owed at final distribution. That distribution will abide the Court's

resolution of other pending issues-namely, the dispute over Rena

Wood's share and the three Stiny grandchildren's request for an

accounting or information.

So Ordered.

D.P. Marshall Jr.

United States District Judge

(7 ''l' -0

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APPENDIX

SECOND AMENDMENT TO

SURVIVOR'S TRUST UNDER

ELIJAR AND MARY STINY TRUST

DATED JUNE 6, 2000

On April 2013, Second Amendment to the Survivor's Trust established underthe

Elijah and Mary Stiny Trust Declaration ofTrust dated June 6, 2000 (executed October 4, 2000),

is entered into by MARY MOORE STINY as surviving trustor and MARY MOORE STINY as

surviving trustee, hereafter referred to as "trustor."

WHEREAS, pursuant to Paragraph C ofArticle Eight ofthe Declaration ofTrust dated

June 6, 2000, (hereinafter referred to as the "trust agreement") trustor reserved to herselfthe

power to amend the Survivor's Trust created under such trust agreement, without extending such

power to the Exemption or Marital Trusts created under the trust agreement.

WHEREAS, trustors (Elijah Stiny and Mary Moore Stiny) amended the trust by a First

Amendment dated October 19, 2000; a Second Amendment dated March 29, 2007; and a Third

Amendment dated November 5, 2007.

WHEREAS, trustor Mary Moore Stiny amended the Survivor's Trust created wider the

Elijah and Mary Stiny Trust on February 8,2011.

WHEREAS, trustor now desiresto amend the Survivor's Trust created under such trust

agreement in order to eliminate the PEOPLE'S FAITH TABERNACLE as a beneficiary under

the trust for all purposes, and to add trustor's mother as a beneficiary to the 2.66% interest (ofthe

50% Survivor's Trust) taken from the People's Faith Tabernacle, as well as to reaffirm the "No

Contest" provisions fthe trust.

NOW, THEREFORE, the trust agreement dated June 6,2000, iS hethy arnnded as

follows:

FIRST: Subparagraph (2) ofParagraphD ofArticle even ofthe trust agreement is

deleted and the following new Subparagraph (2) ofParagraplD is inserted in its place:

"(2) The share designated for distribution to relatives ofwife, being equal to the

remaining fifty percent (50%) ofthe trust estate, shall be distributed to, or for the benefit of; the

following persons and in the following percentage shares:

(1) Thirty-five percent (35%) to trustor's daughter, RENA POWELL,

and in the event she predeceases trustor, then to the living issue of

RENA POWELL by right ofrepresentation.

Case 3:19-cv-00346-DPM Document 320 Filed 03/06/24 Page 10 of 13
APPENDIX

(ii) Nine percent (9%) to trustor's grandchild, JAN MOORE, and ifhe

fails to survive, then to the living issue ofIAN MOORE, by right of

representation.

(iii) Ten and 67/100 percent (10.67%) to trustor's grandchild, JASON

BAKER.

(iv) Ten and 67/100 percent (10.67%) to trustor's grandchild, JESSICA

BAKEL

(v) Ten and 67/100 percent (10.67%) to tmstor's grandchild, CHAD

BAKER.

(vi) Ten and 67/100 percent (10.67%) to trustor's grandchild,

STERLING MARTIN.

(vii) Ten and 66/100 percent (10.66%) to trustor's grandchild, SHF.ELA

L. MARTIN.

(viii) Two and 66/100 percent (2.66%) to trustor's mother, DELLA

MOORE, provided she survives trustor, and if'she fails to survive

trustor, then this gift shall lapse.

Wife has knowingly made no provision for her son, JOHN MOORE. Except as otherwise

provided, in the event any beneficiary named in clauses (iii) through (viii) above, predeceases

trustor, the such share shall be distributed to the predeceased beneficiary's living issue, by right of

representation, and ifno living issue, then reallocated equally among the other beneficiaries named

in clauses (iii) through (viii), above. Each share set aside for use ofor distribution to a grandchild

oftrustor shall be administered and distnbuted as set forth in Subparagraphs (3) through (8) of

Paragraph D ofArticle Seven.

Notwithstanding anything contained herein to the contrary, in the event trustor's mother, DELLA

MOORE, survives trustor, and only in such event, then the trustee shall hold in mist that certain

real property commonly known as 402 MIller Street, Hoxie, AR 72433, for the lifetime benefit of

DELLA MOORE, and trustor will establish a non-trust account in order to provide her mother

sufficient funds to pay the expensesfor maintaining such property. Upon the death ofDELLA

MOORE, the trustee shall distribute the property according to the percentage shares set forth

above to beneficiaries as provided (to living or the living issue ofnamed beneficiaries). In the

event such real property has been transferred or disposed ofprior to trustor's death, then any

replacement property utilized by DELLA MOORE as her residence shall be held in this trust

instead. In the event DELLAMOORE predeceases trustor these provisions shall not apply and

gifts shall lapse."

SECOND: The following Contet" Clause shall apply to the ttiist, as aminded, as

well as to this amendment:

"No-Contest Clause. A contestant shall be considered to have predeceased

trustors without surviving issue and not to be in existence at the time ofthe surviving trustor's

death. For purposes ofthis instrument, "contestant" means any person other than the trustors

who, directly or indirectly, voluntarily participates in any proceeding or action in which such

person seeks to void, nullilr, or set aside (1) any provision ofthis instrument; (2) any provision of

eithertrustor's will that gives property to the trustee ofany trust under this instrument; or (3) any

Case 3:19-cv-00346-DPM Document 320 Filed 03/06/24 Page 11 of 13
APPENDIX

amendment ofthis instrument or codicil ofeither trustor's will. The trustor intends to discourage

a tnist contest and such intent shall be considered an important trust purpose. The trustee may use

trust funds to pay attorneys and other agents and to pay other costs and expenses to defend any

contest ofthis trust or any ofits provisions. In authorizing the trustee to use trust funds for these

purposes, the trustor intends to override any fiduciary duty that might otherwise constrain the

trustee."

THIRt): The Elijah and Mary Stiny Declaration ofTrust dated June 6, 2000 (executed

October 4, 2000) is ratified in all other respects and the trust hereafter shall continue to be

referred to as the Elijah and Mary Stiny Trust dated June 6, 2000. All referencesto such trust

shall henceforth be deemed to refer to such trust as amended, and subject to any further

amendments hereafter made pursuant to the terms ofsuch trust.

1k

Executed at , Arkansas, ôn April (j 2013.

IA...

'I

Case 3:19-cv-00346-DPM Document 320 Filed 03/06/24 Page 12 of 13
APPENDIX

STATE OF flJ-k

I )ss.

COUNTY OFU&)fflOL. )

fl6i

On A,cd4, 2013, before me, h) -1 JY)coe $, p '-,Notary Pubhc, personally

appeared MARY MOORE STINY, whc/ proved to me on the basis ofsatis&ctory evidence to be

the person whose name is subscribed to the within instrument, and acknowledged to me that she

executed the same in her authorized capacity, and that by her signature on the instrument the

person, or the entity upon behalfofwhich the person acted, executed the instrument.

I certify under penalty ofpequry under the laws ofthe State ofCalifornia that the foregoing

paragraph is true and correct.

WITNESS my hand and official seal.

R. G

I C_2

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