Court Opinion

ID: 4409127
Source: CourtListenerOpinion
Date Created: 2019-06-21 15:06:03.578259+00
Date Added: 2024-06-11T12:31:46.714350
License: Public Domain

FILED
                                                                           Jun 21 2019, 5:59 am

                                                                                 CLERK
                                                                             Indiana Supreme Court
                                                                                Court of Appeals
                                                                                  and Tax Court

ATTORNEYS FOR APPELLANT                                    ATTORNEY FOR APPELLEES
Jonathan E. Lamb                                           Jeffry G. Price
John A. Cremer                                             Peru, Indiana
Cremer & Cremer
Fishers, Indiana

                                            IN THE
    COURT OF APPEALS OF INDIANA

Sheri Montgomery,                                          June 21, 2019
Appellant,                                                 Court of Appeals Case No.
                                                           18A-ES-2191
        v.                                                 Appeal from the Miami Superior
                                                           Court
Estate of Donald M.                                        The Honorable Wayne E. Steele,
Montgomery, Steve Shively, the                             Special Judge
Executor, and                                              Trial Court Cause Nos.
The Living Trust of Donald M.                              52D02-1611-TR-32
                                                           52D02-1612-ES-35
Montgomery and Betty M.
                                                           25D01-5216-CB-35
Montgomery, Steve Shively,
Trustee,
Appellees.

Brown, Judge.

Court of Appeals of Indiana | Opinion 18A-ES-2191 | June 21, 2019                                    Page 1 of 15
[1]   Sheri Montgomery appeals from the trial court’s approval of an accounting by

      Steve Shively as executor of the Estate of Donald M. Montgomery (the

      “Estate”) and trustee of The Living Trust of Donald M. Montgomery and Betty

      M. Montgomery (the “Trust,” and Steve, the Estate, and the Trust, collectively,

      “Appellees”). Sheri raises two issues which we consolidate and restate as

      whether the court erred in approving the accounting. We reverse and remand.

                                       Facts and Procedural History

[2]   Sheri and Pamela Shively are the daughters of Donald Montgomery, and Steve

      is Pamela’s husband. In November 2016, Steve filed a Petition to Docket Trust

      under cause number 52D02-1611-TR-32 (the “Trust Cause”). On December

      10, 2016, Donald passed away. On December 12, 2016, Steve filed a petition

      for probate of Donald’s will under cause number 52D02-1612-ES-35 (the

      “Estate Cause”), and on December 19, 2016, the court appointed Steve as

      personal representative. Donald’s Last Will and Testament bequeathed his

      estate to Sheri and Pamela equally. On December 22, 2016, the court granted

      the petition to docket the Trust. A Settlement Agreement and Mutual Release

      of Claims dated August 2, 2017 (the “Settlement Agreement”) was signed by

      Sheri, Pamela, and Steve, filed in the Trust and Estate Causes, and provided:

              [A]t Don M. Montgomery’s date of death there existed certain
              property belonging to the [Trust] and/or [Estate], with approximate
              date of death values, to wit:

              1) 1091 W. 450 N. Peru, Indiana, to be determined by appraisal
              2) 4569 S. Strawtown Pike, Peru, Indiana, to be determined by
              appraisal

      Court of Appeals of Indiana | Opinion 18A-ES-2191 | June 21, 2019         Page 2 of 15
        3) 1st Merchants Checking Account, approximate value of
        $1,917.00;
        4) 1st Merchants Money Market, approximate value of $4,902.00;
        5) Logansport Savings, approximate value of $84,930.00;
        6) 1st Merchants Bank account, approximate value of $207,000.00;
        7) American Funds account, approximate value of $288,000.00;
        8) Raymond James account. approximate value of $109,162.00;
        9) Vodaphone stock, approximate value of $9,995.00;
        10) Verizon stock, approximate value of $71,192.00;
        11) Comcast stock, approximate value of $39,346.00;
        12) AT&T stock, approximate value of $166,220.00;
        13) Frontier Communications stock, approximate value of
        $1,000.00;
        14) Fidelity Investments approximate value of $18,000.00;
        15) Raymond James Account, approximate value of $1,038.00;
        16) 2012 Chevy Colorado LT, approximate value of $20,000.00;
        17) 2013 Chevy Cruz, approximate value of $13,000.00;
        18) 2011 Trailer, approximate value of $2,500.00;
        19) Grasshopper Mower, approximate value of $3,250.00;
        20) Cub Cadet Mower, approximate value of $500.00;
        21) Other personal property.

Appellant’s Appendix Volume II at 47-48. It provided, “with the exception of

any of their respective rights and obligations created pursuant to this

Agreement, upon execution of this agreement each party hereby mutually

releases and discharges the other . . . from any and all known claims, demands,

causes of action, obligations, and liabilities of every kind and nature whatsoever

which each had, or claims to have had, or now has, against the other, which

related to or arises out of the [Trust] or [Estate].” Id. at 48. It further provided,

among other things, that: the Trust and Estate shall each be distributed equally

to Sheri and Pamela; Pamela “shall receive the home located at 2569

Court of Appeals of Indiana | Opinion 18A-ES-2191 | June 21, 2019           Page 3 of 15
      Strawtown Pike, attributed at appraised value toward her distributive share”

      and Sheri “shall receive the farm located at 10901 W 450 N, attributed at

      appraised value toward her distributive share” 1; Pamela and Sheri “will each

      receive one-half (1/2) of each of the investment accounts and/or stocks owned

      as part of this estate or by this trust, listed in numbers 7-15 above”; Sheri shall

      receive the 2012 Chevy Colorado LT, the Grasshopper mower, 2017 farm rent,

      and certain other property; and Pamela shall receive the 2013 Chevy Cruz and

      certain other property. Id. at 48. It provided that: Davis, MacDonald, & White

      Law Firm shall prepare all transfer forms for the transfer or liquidation of stocks

      and investment accounts; Jeffry G. Price, PC shall prepare deeds, affidavits for

      transfer of motor vehicles, gather bank accounts, pay bills, file tax returns, and

      execute any other documents necessary to carry out the terms of the agreement;

      and the Trust shall bear the expense of attorney fees incurred by the law firms

      for any and all matters related to the Trust and Estate.

[3]   The Settlement Agreement also provided that Steve “shall prepare a Final

      Combined Personal Representative’s and Trustee’s Accounting and file any

      necessary closing documents with the court.” Id. at 49. It stated that “any

      adjustments necessary for equalization of trust distributions due to the

      difference in value of real estate distributed shall be made with cash, and, after

      equalizing distribution and after the payment of any and all final bills, the

      remaining cash shall be divided equally and distributed” to Sheri and Pamela.

      1
          These addresses differ from those listed earlier in the Settlement Agreement.

      Court of Appeals of Indiana | Opinion 18A-ES-2191 | June 21, 2019                   Page 4 of 15
      Id. The court issued an order approving the Settlement Agreement and stating

      that Steve was appointed as trustee of the Trust and personal representative of

      the Estate “to do all things and execute all documents necessary to carry out the

      terms and conditions of said Settlement Agreement.” Id. at 54.

[4]   On December 13, 2017, Steve filed a “Personal Representative’s Final Account,

      Petition to Settle and Allow Account, and Petition for Authority to Distribute

      Assets Remaining and Close Estate and Petition for Fees of Attorney and

      Personal Representative” in the Estate Cause. Id. at 55. The filing stated that

      any income tax owed has been paid by the personal representative. The

      accounting includes three attached schedules, the first of which is labeled

      “Assets” and provides:

              1091 W. 450 N., Logansport, IN (House & 2 acres)            $59,000.00
              49 +/- Acres with Logansport Proprty [sic]                  $183,634.00
              4569 S. Strawtown Pike, Peru, IN                            $130,000.00
              First Merchant’s Bank Checking (Estate)                     $121,853.00
              First Merchant's Bank Checking                              $152.00
              First Merchant‘s Bank Money Market                          $375.00
              2013 Chevy Cruz                                             $13,000.00
              2012 Chevy Colorado LT                                      $20,000.00
              2011 Trailer                                                $2,500.00
              Grasshopper Mower                                           $3,250.00
              Cub Cadet Mower                                             $500.00
              Land Rent (Hattery) 2016, 2017                              $12,000.00
              Household Misc.                                             $1,500.00
              Raymond James                                               $505,089.00
              Partial Distribution to Pam Shively                         $283,949.00
              Partial Distribution to Sheri Montgomery                    $146,065.00
              ASSETS/INCOME TO ESTATE:                                    $1,482,867.00

      Court of Appeals of Indiana | Opinion 18A-ES-2191 | June 21, 2019              Page 5 of 15
      Id. at 59. The next schedule is labeled “Expenses” and lists nineteen expenses

      that total $20,264.67. Id. at 60. The expenses include among other items

      attorney fees of Jeffry Price, utilities, automobile and homeowners insurance,

      lawn care, tax preparation and appraisal services, and property taxes. The third

      schedule provides:

                                            RECAPITULATION
              Total Assets                                         $1,482,867.00
              Total Disbursements                                  $20,264.67
              Net Available for Distribution                       $1,462,602.33

                                              DISTRIBUTION
              Pamela Shively                                       $731,301.16
              Sheri Montgomery                                     $731,301.17
                                                                   $1,462,602.33

      Id. at 61.

[5]   In January 2018, Sheri filed an objection to the accounting in both causes

      claiming errors including that: Steve “failed to show beginning and ending

      dates and balances from date of death to present, how real property and

      personal property was valued”; the “number of shares of stock were not

      provided along with the date-of-death value of said shares with adjustments”;

      Sheri had been “deeded real property from the trust by a warranty trustee deed

      executed on December 7, 2017”; Steve “failed to explain how the partial

      distributions were allocated” to Pamela and Sheri and “how each shall receive

      the amounts they are to receive”; Sheri’s attorney fees were not included or paid

      as ordered; no records were presented to establish the numbers in the

      Court of Appeals of Indiana | Opinion 18A-ES-2191 | June 21, 2019            Page 6 of 15
      accounting; and no “reserve” account can be located on the accounting. Id. at

      66-67. Sheri requested that the court order Steve to comply with the Indiana

      Code and the Settlement Agreement or, in the alternative, consider the removal

      of Steve and the appointment of a neutral third party to fulfill the parties’

      agreement. In February 2018, Sheri filed a motion for removal of Steve as

      personal representative and trustee and the appointment of a neutral third party.

[6]   On March 12, 2018, the court held a hearing. Steve indicated he believed the

      assets and expenses listed were accurate, he did not know of any monies that

      were not represented in the accounting, he never received a bill for Sheri’s

      attorney fees, and “the bottom line is everything was eventually liquidated” and

      all the funds were deposited in the estate account. Transcript Volume 2 at 67.

      When asked if the American Funds listed in the Settlement Agreement had

      been liquidated, he testified that the American Funds were part of the holdings

      at Raymond James and that “the entire Raymond James Account - because it

      was essentially in one large account, it made sense to say well just split it. Open

      a new account in Pam’s name. Open a new account in Sheri’s name. They

      each get 50 percent and we don’t have to go through all this,” and “that’s been

      accomplished.” Id. He indicated the Vodafone, Verizon, Comcast, AT&T, and

      Frontier Communications stock had been sold, and that Fidelity Investments

      “was basically down as life insurance” and it was split between Pamela and

      Sheri with each receiving a check for $9,000. Id. at 69. He stated that he had

      informed Sheri’s attorney in November 2017 that he was thinking he was going

      to need to hold money back in reserve to file taxes for 2017 and testified “I

      Court of Appeals of Indiana | Opinion 18A-ES-2191 | June 21, 2019          Page 7 of 15
      mean in part I’m holding up that because I had no idea what’s going to happen

      down the road, so I wanted to make sure that there was enough funds

      available” and “I did not want to have to, after everything settled, have to go to

      Sheri and try to get money to pay for something that I had no way of knowing.”

      Id. at 70. He indicated the Chevy Colorado and Grasshopper mower are in

      Sheri’s possession that he was prepared to liquidate the estate and trust

      accounts once the court approved the accounting.

[7]   On March 14, 2018, the court issued an order denying Sheri’s motion for

      removal of Steve as trustee and personal representative and providing: “The

      parties are instructed to work through their respective counsel to set up dates

      and places for transfer of all personal property.” Appellant’s Appendix Volume

      II at 110. Sheri filed a Motion to Correct Error and/or Motion to Reconsider,

      which the court denied. On August 13, 2018, the court issued an “Order

      Closing Estate Proceeding and Closing Trust Docket” stating that Sheri’s

      objection “has now been overruled and the said accounting otherwise

      approved” and, “[i]n order to clarify the record, the Court now directs the Clerk

      to make an entry showing that the final accounting . . . has been approved” and

      the Estate is closed and to make a similar entry with regard to the Trust. Id. at

      122. Sheri appeals. 2

      2
        Appellees filed a motion to dismiss Sheri’s appeal as untimely. In response, Sheri argued the March 14,
      2018 order was not a final judgment and that the court ruled on her objections to the accounting for the first
      time in its August 13, 2018 order closing the Estate and Trust proceedings. This Court denied the motion to
      dismiss.

      Court of Appeals of Indiana | Opinion 18A-ES-2191 | June 21, 2019                                 Page 8 of 15
                                                     Discussion

[8]    The issue is whether the trial court erred in approving Steve’s accounting. The

       court’s findings control as to the issues they cover and a general judgment will

       control as to the issues upon which there are no findings. Yanoff v. Muncy, 688

       N.E.2d 1259, 1262 (Ind. 1997). Findings are clearly erroneous when the record

       contains no facts to support them. Id. A judgment is clearly erroneous if it

       applies the wrong legal standard to properly found facts. Id.

[9]    Sheri maintains that Steve’s accounting is statutorily deficient. She argues the

       assets schedule does not contain a beginning balance identifying the assets Steve

       was initially charged with administering, the schedule is undated and does not

       even appear to be an inventory of all assets as of a single point in time, and she

       cannot tell what happened to the assets listed in the Settlement Agreement and

       why they are so different from his assets schedule. She further argues the

       expenses schedule does not list gains or income received during his

       administration, her attorney fees as required, expected future expenses despite

       his testimony, or the gains or losses incurred through the sale of the stocks

       identified in the Settlement Agreement. She states that the last schedule does

       not identify property held by Steve as of the filing of the accounting and the

       assets which have been distributed. She also asserts the accounting was not

       verified as statutorily required and that his testimony does not cure the

       accounting “because it is conclusion-based in nature.” Appellant’s Brief at 25.

[10]   Appellees assert that Sheri received a partial distribution of $148,000 and title to

       a house and thus cannot bring this appeal and that she cannot complain about
       Court of Appeals of Indiana | Opinion 18A-ES-2191 | June 21, 2019           Page 9 of 15
the accounting or any matters related to the Settlement Agreement in light of its

release language. They claim the accounting “tracks rather well all of the assets

listed in the [S]ettlement [A]greement,” there “was no need for a beginning

balance because the beginning balance was shown in the [S]ettlement

[A]greement,” “the short time lapse between the approval of the agreement and

the submission of the final accounting . . . was a mere matter of months,” and

“[l]ittle would have changed from the assets identified in the [S]ettlement

[A]greement until the accounting itself.” Appellees’ Brief at 20. Appellees

argue the real estate was divided pursuant to the Settlement Agreement, the

Raymond James accounts were divided in-kind, and Sheri provides no details

showing Steve abused his fiduciary responsibility. They argue “it would make

sense for Steve to withhold the complete distribution of the assets since the

objection was filed in January, and one would expect that either the estate or

the trust (or both) would be required to file income tax returns with regard to

any gains or income incurred in that calendar year.” Id. at 23. They argue that,

to the extent there was a technical defect in that the accounting was not

verified, the defect was corrected by Steve’s sworn testimony, and they assert

“[i]t appears that the trial court concluded that Sheri’s objections were largely

either procedural or so minimal in its [sic] impact on the overall accounting, as

to warrant approval of Steve’s final accounting.” Id. at 26. In reply, Sheri

argues that she did not release Steve from his obligations under the Settlement

Agreement, including his obligation to file a final accounting. She also argues

the partial distribution did not constitute a waiver of his fiduciary obligations.

Court of Appeals of Indiana | Opinion 18A-ES-2191 | June 21, 2019         Page 10 of 15
[11]   Ind. Code § 29-1-16-3 provides in part that “[e]very personal representative may

       file in the court a verified account of his administration at any time prior to final

       settlement and distribution but every personal representative must file in the

       court a verified account of his administration . . . (a) Upon filing a petition for

       final settlement . . . [and] [a]t any other time when directed by the court either

       of its own motion or on the application of any interested person.” Ind. Code §

       29-1-16-4 provides:

               Accounts rendered to the court by a personal representative shall
               be for a period distinctly stated and shall consist of three (3)
               schedules, of which the first shall show the amount of the
               property chargeable to the personal representative; the second
               shall show payments, charges, losses and distributions; the third
               shall show the property on hand constituting the balance of such
               account, if any. When an account is filed, the personal
               representative shall also file receipts for disbursements of assets
               made during the period covered by the account. Whenever the
               personal representative is unable to file receipts for any
               disbursements, the court may permit him to substantiate them by
               other proof. The court may provide for an inspection of the
               balance of assets on hand. The court may, upon its own motion,
               or upon petition, provide that verification of accounts or credits
               thereon may be made by the unqualified certificate of a certified
               public accountant in lieu of receipts or other proof.

       Ind. Code § 29-1-16-5 provides in part: “At the time of filing of an account the

       personal representative shall petition the court to settle and allow his account;

       and if the estate is in a proper condition to be closed, he shall also petition the

       court for an order authorizing him to distribute the estate, and shall specify in

       Court of Appeals of Indiana | Opinion 18A-ES-2191 | June 21, 2019          Page 11 of 15
       the petition the persons to whom distribution is to be made and the proportions

       or parts of the estate to which each is entitled.”

[12]   Further, Ind. Code § 29-1-17-2 provides, “[i]n its decree of final distribution, the

       court shall designate the persons to whom distribution is to be made, and the

       proportions or parts of the estate, or the amounts, to which each is entitled

       under the will and the provisions of this probate code,” “the decree shall state

       that all claims except those therein specified are paid and shall describe the

       claims for the payment of which a special fund is set aside, and the amount of

       such fund,” and “[i]f any contingent claims which have been duly allowed are

       still unpaid and have not become absolute, such claims shall be described in the

       decree, which shall state whether the distributees take subject to them.” The

       statute further provides “[i]f a fund is set aside for the payment of contingent

       claims, the decree shall provide for the distribution of such fund in the event

       that all or a part of it is not needed to satisfy such contingent claims,” and “[i]f

       a decree of partial distribution has been previously made, the decree of final

       distribution shall expressly confirm it, or, for good cause, shall modify said

       decree and state specifically what modifications are made.” Also, Ind. Code §

       29-1-17-13 provides that, “[u]pon the filing of a supplemental report of

       distribution together with receipts or other evidence satisfactory to the court

       that distribution has been made as ordered in the final decree, the court shall

       enter an order of discharge.”

[13]   Ind. Code § 30-4-5-12 governs accounting by trustees and provides in part that,

       unless the terms of the trust provide otherwise or waived, the trustee shall

       Court of Appeals of Indiana | Opinion 18A-ES-2191 | June 21, 2019          Page 12 of 15
       deliver a written statement of accounts to each income beneficiary or the

       income beneficiary’s personal representative annually and the statement shall

       contain at least all receipts and disbursements since the last statement and all

       items of trust property held by the trustee on the date of the statement at their

       inventory value. Ind. Code § 30-4-5-13 provides that a verified statement of

       accounts filed with the court shall show, among other requirements, the period

       covered by the account; the total principal with which the trustee is chargeable

       according to the last preceding written statement or the original inventory if

       there is no preceding statement; an itemized schedule of all principal cash and

       property received and disbursed, distributed, or otherwise disposed of during

       the period; an itemized schedule of income received and disbursed, distributed,

       or otherwise disposed of during the period; the balance of principal and income

       remaining at the close of the period, how invested, and both the inventory and

       current market values of all investments.

[14]   We observe that the signatories to the Settlement Agreement expressly agreed

       that they did not release any claim related to their rights and obligations created

       pursuant to the agreement, and the agreement required Steve to file a combined

       final accounting. See Appellant’s Appendix Volume II at 48-49 (Settlement

       Agreement provides that, “with the exception of any of their respective rights

       and obligations created pursuant to this Agreement, . . . each party hereby

       mutually releases and discharges the other” and provides that Steve shall

       prepare a final combined accounting and file any necessary closing documents

       with the court). Sheri was entitled to the distribution set forth in the Settlement

       Court of Appeals of Indiana | Opinion 18A-ES-2191 | June 21, 2019        Page 13 of 15
       Agreement 3 and did not, by virtue of the partial distributions, forfeit her right to

       enforce the terms of the Settlement Agreement or to challenge the accounting.

       See Ind. Code §§ 29-1-17-1, -2 (addressing partial distributions).

[15]   We turn next to the accounting. While much of the property and many of the

       amounts listed in the Settlement Agreement may be included or reflected in

       Steve’s first schedule of “Assets,” the schedule does not provide an explanation

       or reference to documentation regarding any liquidation, transfer, or

       distribution which occurred following the execution of the Settlement

       Agreement. The partial distributions to Sheri and Pamela are listed as assets.

       The schedule does not indicate which assets may have been liquidated or

       transferred to Pamela or Sheri or indicate how the undisbursed assets would be

       distributed. The Settlement Agreement lists two tracts of real property, and the

       schedule of assets lists three tracts and does not indicate that they have been or

       will be transferred. The accounting in the record does not include appraisals or

       records showing the closure of accounts or transfers of funds. The schedule

       does not indicate whether the funds held at First Merchants Bank or Raymond

       James have been distributed. The second schedule related to expenses does not

       include attorney fees incurred by Sheri which may be required under the

       Settlement Agreement.

       3
         Steve’s assets schedule shows Sheri had received a partial distribution of $146,065, and the distributions
       schedule indicates that she is entitled to a distribution of $731,301.17.

       Court of Appeals of Indiana | Opinion 18A-ES-2191 | June 21, 2019                                 Page 14 of 15
[16]   In addition, while the third schedule indicates the net amount available for

       distribution and the amounts to which Sheri and Pamela are entitled based on

       the asset values used and identified expenses, the unverified schedules do not

       indicate which assets have been distributed and, to the extent property has not

       been disbursed, do not explain how the distribution will be made, which items

       have been or will be transferred directly to Sheri and Pamela, which items have

       been or will be liquidated, and how the distributions to Sheri and Pamela will

       be equalized. While Steve testified that the funds at Raymond James were

       divided into two accounts, one in Sheri’s name and one in Pamela’s name, the

       assets and distributions schedules do not reflect this division or transfer. While

       Appellees state that it would make no sense for Steve to complete the

       distribution of all assets, the distribution schedule does not reflect any amounts

       held in reserve, Steve did not file a supplemental report of distribution, and the

       court nevertheless closed the proceedings. A final distribution consistent with

       the Settlement Agreement should be verified and effected before the

       proceedings are closed.

[17]   For the foregoing reasons, we reverse the trial court’s approval of the

       accounting and remand for further proceedings consistent with this opinion.

[18]   Reversed and remanded.

       May, J., and Mathias, J., concur.

       Court of Appeals of Indiana | Opinion 18A-ES-2191 | June 21, 2019         Page 15 of 15