Opinion ID: 2680251
Heading Depth: 4
Heading Rank: 2

Heading: June 2011, Dismissal Order

Text: After Kastner amended the complaint following the district court’s November 2010 dismissal order, Intrust moved to dismiss under Fed. R. Civ. P. 12(b)(6), six of the seven remaining claims (all but the breach-of-trust claim).4 The district court granted the motion. 4 The seven claims were: breach of trust; fraud by silence in failing to disclose material facts concerning the nature of the trust investments or explain poor investments; fraud in the investment of the trust; reformation of trust; breach of contract; deceptive trade practices under the KCPA; and civil conspiracy. -6- Regarding the reformation-of-trust and removal-of-trustee claim, the district court agreed with Intrust that Kastner was not a “qualified beneficiary” and, therefore, lacked standing to seek reformation or modification of the trust. On appeal, Kastner argues the district court erred in finding he was not a “qualified beneficiary,” pointing to the fact that Intrust has been treating him as a qualified beneficiary since 2001. Under Kansas law, a “beneficiary” is a person who “[h]as a present or future beneficial interest in a trust, vested or contingent.” Kan. Stat. Ann. § 58a-103(2)(A). Although Kansas has substantially adopted the Uniform Trust Code (“UTC”), its definition of a “qualified beneficiary” is a departure from the UTC. Under the UTC, a “qualified beneficiary” is a beneficiary who, on the date the beneficiary’s qualification is determined: (A) Is a distributee or permissible distributee of trust income or principal; (B) Would be a distributee or permissible distributee of trust income or principal if the interests of the distributees described in subparagraph (A) terminated on that date without causing the trust to terminate; or (C) Would be a distributee or permissible distributee of trust income or principal if the trust terminated on that date. Unif. Trust Code § 103(13). In contrast, under the Kansas Uniform Trust Code (“KUTC”), a “qualified beneficiary” is a “beneficiary who, as of the date in question, either is eligible to receive mandatory or discretionary distributions of trust income or principal, or would be so eligible if the trust terminated on that date.” Kan. Stat. -7- Ann. § 58a-103(12)(A). The KUTC therefore does not include within its definition of “qualified beneficiaries” an individual who would be eligible to receive a distribution if the current distributee’s interests terminated without terminating the trust. Under the UTC definition, Kastner, a contingent beneficiary, would qualify as a “qualified beneficiary” because he would be a distributee if Ms. Wills’ interest terminated and the trust continued. But the KUTC is critically different in this respect. Additionally, as relevant to Kastner’s reformation-of-trust claim, under Kansas law only a settlor, co-trustee or “qualified beneficiary” may request removal of a trustee, id. § 58a-706(a), and only a settlor, trustee or “qualified beneficiary” may seek modification or termination of a trust, id. § 58a-410(b). As such, contingent beneficiaries cannot request removal of a trustee or seek modification of a trust. In determining whether Kastner was a “qualified beneficiary” under Kansas law the district court looked to the terms of the trust. Pursuant to the trust terms, the district court found that Kastner was not currently eligible to receive any distributions, mandatory or discretionary. It reasoned that the trust provides for distributions to Ms. Wills (Kastner’s mother), who is currently living, and only upon her death is Kastner entitled to distributions. Neither would Kastner have been eligible to receive distributions if the trust terminated at that point in time while Ms. Wills is still living. The district court concluded, and we agree, that Kastner is -8- not a “qualified beneficiary” under the KUTC. Accordingly, dismissal of the reformation-of-trust claim was appropriate.5 Turning to Kastner’s deceptive-trade-practices claim under the KCPA, the district court dismissed the claim finding that Kastner was not a “consumer” within the meaning of the Act, nor did he allege a “consumer transaction” between himself and Intrust. Kastner argues on appeal that the “statute clearly applies and [he] has a 7th Amendment right to the claim.” Aplt. Opening Br. at 23. We disagree. As the district court observed, the KCPA applies to “‘consumers’ engaged in ‘consumer transactions’ with ‘suppliers.’” Berry v. Nat’l Med. Servs., Inc., 205 P.3d 745, 752 (Kan. Ct. App. 2009); see also Kan. Stat. Ann. § 50-624(b), (c), (l). Its “protection is limited to individuals . . . who directly contract with suppliers for goods or services.” CIT Grp./Sales Fin., Inc. v. E-Z Pay Used Cars, Inc., 32 P.3d 1197, 1204 (Kan. Ct. App. 2001). A “consumer” is “an individual . . . who seeks or acquires property or services for personal, family, household, business or agricultural purposes.” Kan. Stat. Ann. § 50-624(b). A “consumer transaction” is a “sale, lease, assignment or other disposition for value of property or services within [Kansas] 5 Kastner seeks certification on “the qualified beneficiary issue and interpretation of state trust duties.” Motion, 6-7. We decline to certify because Kastner does not present a specific legal question for certification. Further, he did not seek certification until after losing in district court. See Enfield ex rel. Enfield v. A.B. Chance Co., 228 F.3d 1245, 1255 (10th Cir. 2000). And the issues Kastner raises for certification are not “sufficiently novel that we feel uncomfortable attempting to decide [them] without further guidance.” Pino v. United States, 507 F.3d 1233, 1236 (10th Cir. 2007). -9- (except insurance contracts regulated under state law) to a consumer; or a solicitation by a supplier with respect to any of these dispositions.” Id. § 50-624(c). Kastner did not allege in his complaint that he directly sought or acquired Intrust’s services in exchange for anything of value. Instead, he alleged that Intrust “deceived” him about the investment and performance of the trust and failed to provide him with certain records. R., Vol. I, at 1229. We agree with the district court that Kastner did not allege that he was a “consumer” or that he was engaged in a “consumer transaction” within the meaning of the KCPA. The district court dismissed the remaining claims concluding that because Kastner sought damages for only depreciation of the value of the trust property, the claims were subsumed by the breach-of-trust claim. See Kan. Stat. Ann. § 58a-1003(b) (“Absent a breach of trust, a trustee is not liable to a beneficiary for a loss or depreciation in the value of trust property or for not having made a profit.”). We see no error.