Court Opinion

ID: 2752125
Source: CourtListenerOpinion
Date Created: 2014-11-17 16:06:08.079326+00
Date Added: 2024-06-11T10:03:58.251867
License: Public Domain

Nov 17 2014, 6:12 am
FOR PUBLICATION

ATTORNEY FOR APPELLANT:                       ATTORNEY FOR APPELLEE:

JASON M. SMITH                                KATHRYN D. SCHMIDT
Seymour, Indiana                              Burke Costanza & Carberry LLP
                                              Merrillville, Indiana

                             IN THE
                   COURT OF APPEALS OF INDIANA

IN THE MATTER OF THE WALTER                   )
PENNER TRUST UNDER AGREEMENT                  )
CREATED BY THE GRANTOR, WALTER                )
PENNER ON APRIL 13, 2010,                     )
                                              )
STANLEY PENNER,                               )
                                              )
     Appellant-Petitioner,                    )
                                              )
             vs.                              )       No. 45A03-1212-TR-516
                                              )
RONALD PENNER,                                )
                                              )
     Appellee-Respondent.                     )

                     APPEAL FROM THE LAKE CIRCUIT COURT
                         The Honorable George Paras, Judge
                           Cause No. 45C01-1112-TR-17

                                  November 17, 2014

                             OPINION – FOR PUBLICATION

MAY, Judge
       The parties to this case, along with their brother Frank Penner, are beneficiaries of the

Walter Penner Living Trust (Trust). According to the terms of the Trust, Ronald Penner

became the Trustee of the Trust on Walter’s death. Stanley Penner brought an action against

Ronald in his capacity as Trustee, and the trial court found against Stanley on all counts.

Stanley now appeals the denial of his motion to correct error and the trial court’s order that

he pay attorney fees to the Trust. He presents multiple issues for our review, which we

consolidate and restate as:

       1.     Whether the trial court erred when it determined Ronald, in his capacity as

              Trustee, did not commit the following breaches of trust:

                     a.       failure to submit an accounting of the Trust;

                     b.       mismanagement of funds and property;

                     c.       co-mingling of Ronald’s personal funds and Trust funds;

       2.     Whether the trial court erred when it determined Stanley was not entitled to

              attorney’s fees;

       3.     Whether the trial court erred when it ordered Stanley to pay the Trust’s

              attorney’s fees because his claim was frivolous; and

       4.     Whether Stanley is entitled to appellate attorney’s fees.

We affirm and remand.

                          FACTS AND PROCEDURAL HISTORY

       On April 13, 2010, Walter created the Trust, named Ronald, Stanley, and Frank as

beneficiaries, and named Ronald as successor trustee, with Frank to serve if Ronald was

                                               2
unable, and Stanley to serve if Ronald and Frank were unable. Walter died on March 30,

2011. Shortly thereafter, Ronald, Stanley, and Frank met to discuss the assets of the Trust.

At that time, Ronald proposed the three work on repairing Walter’s home, which was an asset

of the Trust, in order to prepare it for sale in August 2012.

       The brothers met at Walter’s house in August 2011 to work on it, but little was

accomplished. At that time, Stanley indicated he planned to sue Ronald (hereinafter,

“Trustee”) in his capacity as trustee, and he would do so to deplete the assets of the Trust.

Neither Ronald nor Frank thought Stanley was joking. In addition, Stanley also said his

statement “[was] not a threat; it [was] a promise.” (App. at 151.)

       On December 9, 2011, Stanley filed a Petition for Trustee’s Accounting, for Order to

Sell Real Estate, and Related Matters, alleging Trustee had committed certain breaches of

trust including failure to render an accounting, mismanagement of Trust assets, and

mismanagement of the sale of Walter’s residence. The trial court held a hearing on the

matter on February 16, 2012, during which Stanley argued Walter’s residence should be

deeded to the three brothers as tenants in common. On the day of the hearing, Trustee filed a

request for attorney’s fees, alleging Stanley’s claims were frivolous and the legal action was

meant to harass. Stanley orally requested attorney’s fees during the hearing.

       While the case was pending, Walter’s residence sold. On August 23, 2012, the trial

court issued its order denying Stanley’s claims and denying Stanley’s oral request for

attorney’s fees. Stanley filed a motion to correct error on September 24; it was deemed

denied on November 8, 2012. The parties appeared before the trial court on November 8 for

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a status conference and to present their arguments regarding attorney’s fees. On December 7,

Stanley filed his notice of appeal with this court. On February 1, 2013, the trial court ordered

Stanley to pay $13,166.00 in attorney’s fees to the Trust, and it denied Stanley’s request for

attorney’s fees. Stanley filed an amended appeal with this court on February 28, 2013.

                             DISCUSSION AND DECISION

       A trial court has broad discretion in ruling on a motion to correct error. Volunteers of

Am. v. Premier Auto Acceptance Corp., 755 N.E.2d 656, 658 (Ind. Ct. App. 2001). We will

reverse only for an abuse of that discretion. Id. An abuse of discretion occurs if the decision

was against the logic and effect of the facts and circumstances before the court or if the court

misapplied the law. Id.

       The trial court sua sponte entered findings of fact and conclusions of law. When the

trial court enters findings sua sponte, the specific findings control only as to the issues they

cover, and a general judgment standard applies to any issue on which the court has not

entered findings. Scoleri v. Scoleri, 766 N.E.2d 1211, 1214-15 (Ind. Ct. App. 2002). In

reviewing the judgment, we determine whether the evidence supports the findings and the

findings support the judgment. Id. at 1215. We will reverse only when the judgment is

clearly erroneous, i.e., when it is unsupported by the findings of fact and conclusions entered

on the findings. Id. For findings of fact to be clearly erroneous, the record must lack

probative evidence or reasonable inferences from the evidence to support them. Id. In

determining the validity of the findings or judgment, we consider only the evidence favorable

to the judgment and all reasonable inferences to be drawn therefrom, and we will not reweigh

                                               4
evidence or assess credibility of witnesses. Id. A general judgment may be affirmed on any

theory supported by the evidence presented at trial. Id.

       1.      Alleged Breaches of Trust

       The court’s primary purpose in construing a trust document is to “ascertain and give

effect to the settlor’s intention.” Univ. of S. Ind. Found. v. Baker, 843 N.E.2d 528, 532 (Ind.

2006). Indiana follows “the four corners rule” that “extrinsic evidence is not admissible to

add to, vary or explain the terms of a written instrument if the terms of the instrument are

susceptible of a clear and unambiguous construction.” Hauck v. Second Nat’l Bank of

Richmond, 153 Ind. App. 245, 259, 286 N.E.2d 852, 861 (1972), reh’g denied. Therefore,

the court must give effect to a Trust’s clear meaning without the use of extrinsic evidence

where a Trust is capable of clear and unambiguous interpretation. See Baker, 943 N.E.2d at

532. Document language is not ambiguous simply because two parties disagree about the

meaning of the language. Id. Rather, “language is ambiguous only if reasonable people

could come to different conclusions as to its meaning.” Id.

               a.    Accounting of Trust

       Regarding the Trustee’s responsibility to provide an accounting to Stanley, the trial

court found:

       9.     Stanley requested an accounting of the Trust assets and the Trustee has
       not provided one. The Trust, in [Section] VII. D., provides no accountings are
       required. Trustee did provide Stanley bank statements and other financial
       documents for his review. Trustee also provided information to Stanley
       regarding the estimated Indiana inheritance tax liability which was due
       December 30, 2011. The IH-6 was filed and Stanley paid his share of the tax
       which was less than he anticipated.

                                              5
(App. at 10.) Based on that finding, the trial court concluded:

       8.      Trustee provided Stanley with and [sic] bank account and other
       financial information although no formal accounting. However, the Trust
       document provides that there do not have to be accountings. [Section] VII D.
       It also provides that Trustee shall not be liable for actions taken in good faith.
       [Section] IV I. Stanley’s allegations of “wrongful transactions” requiring an
       accounting are not established by the evidence. Trustee had the right to
       advance funds and in good faith used the checking account to pay expenses
       and create the trust account in order to preserve the trust property. The intent
       of the settler [sic] was for there to be no accounting and there is no reason to
       vary from the clear language evidencing that intent.

(Id. at 13-14.) Stanley argues he is entitled to an accounting despite language in the Trust

relieving the Trustee of the requirement to do so. We disagree.

       Section VII. D. of the Trust states, “No accountings or reports shall be required of the

trustee.” (Id. at 33.) While Ind. Code § 30-4-3-6(b) requires the trustee to “maintain clear

and accurate accounts with respect to the trust estate” and provide access to the trust’s

accounting and financial records, and while Ind. Code § 30-4-5-12(a) requires the trustee

provide an annual accounting of the trust, both statutory provisions indicate those

requirements apply only when the terms of the trust do not provide otherwise. The language

in the Trust was not ambiguous, and thus the Trust provisions override the statutes. The

Trustee was not required to provide Stanley with an accounting of the Trust.

              b.      Alleged Mismanagement of the Trust

       Under Ind. Code § 30-4-3-6(a), the Trustee “has a duty to administer a trust according

to the terms of that trust.” Stanley argues Trustee violated that duty when Trustee: (1) did not

immediately sell Walter’s residence included in the Trust and disburse those assets to the

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beneficiaries of the Trust; (2) did not make the Trust property productive and did not act as a

prudent investor; and (3) prolonged the distribution of the Trust for Trustee’s own benefit.

The trial court rejected Stanley’s allegations, and we find no error in that decision.

       Stanley argues Trustee’s delay in selling Walter’s real estate upon his death violates

the term of the trust which states: “Upon the death of the grantor, the trustee shall distribute

the trust property outright to the beneficiaries named in Section V, Paragraph (A) subject to

any provision in this Declaration of Trust.” (App. at 32.) Under the “Specified Powers”

section of the Trust:

       The trustee’s powers include, but are not limited to:
                                          *****
       2.     The power to manage trust real estate as if the trustee were the absolute
              owner of it, including the power to lease or grant options to lease the
              property, to make repairs or alterations, and to insure against loss.
       3.     The power to sell or grant options for the sale or exchange of any trust
              property, including stocks, bonds, debentures, and any other form of
              security or security account, at public or private sale for cash or on
              credit.
       4.     The power to invest trust property in property of any kind, including but
              not limited to bonds, debentures, notes, mortgages, stocks, stock
              options, stock futures, and buying on margin.
                                          *****
       7.     The power to dispose and hold trust funds in interest-bearing accounts.
                                          *****
       11.    The power to diversify investments.

(Id. at 31.) The trial court concluded the “Specified Powers” delineated in the Trust language

were “clear and unambiguous and [gave] Trustee the full power to deal with the real estate.”

(Id. at 12.) The trial court noted: “Trustee is insuring the property, repairing and cleaning it

and making it ready for sale in this [sic] spring.” (Id.) Therefore, while Trustee was required

                                               7
to disburse assets of the trust upon Walter’s death, he was given the power to manage those

assets to the benefit of the beneficiaries pursuant to the clause which states that disbursement

is “subject to any Provision in this Declaration of Trust.” (Id. at 32.)

       Trustee presented evidence he decided to wait to list Walter’s house on the market

until the real estate market improved, as to maximize the profit gained from the sale of the

house, that he and one of the other beneficiaries had been working to fix up the house, and

that the other beneficiary was satisfied with his management of the trust. Stanley’s argument

is an invitation for us to reweigh the evidence, which we cannot do. See Scoleri, 766 N.E.2d

at 1215 (appellate court cannot reweigh evidence on appeal).

              c.      Co-mingling of Trust Assets

       Ind. Code § 30-4-3-6(b)(5) requires the Trustee to “[k]eep the trust property separate

from the trustee’s individual property[.]” Ind. Code § 30-4-3-3(a)(10)(A) grants Trustee the

power to “advance money for the benefit of the trust estate and for all expenses or losses

sustained in the administration of the trust.” Stanley argues Trustee committed a breach of

trust when he paid bills such as Walter’s medical and funeral expenses, out of his personal

account, instead of out of the Trust account, and then refused Stanley’s request for an

accounting of the Trust. Trustee did not.

       Regarding this issue, the trial court found:

       12.     [Trustee] has paid a number of bills with his own funds like the funeral
       and funeral lunch, Walter’s final medical bills and payment for other work
       performed at the Residence. With only the house and personal possessions in
       the Trust, it is cash poor and funds must come from somewhere to maintain the
       trust property.

                                               8
(App. at 11.) Based on that finding, the trial court concluded:

       8.      Trustee provided Stanley with and [sic] bank account information and
       other financial information although no formal accounting. However, the
       Trust document provides that there do not have to be accountings. [Section]
       VII D. It also provides that Trustee shall not be liable for actions taken in
       good faith. [Section] IV I. Stanley’s allegations of “wrongful transactions”
       requiring an accounting are not established by the evidence. Trustee had the
       right to advance funds and in good faith used the checking account to pay
       expenses and create the trust account in order to preserve the trust property.
       The intent of the settler [sic] was for there to be no accounting and there is no
       reason to vary from the clear language evidencing that intent.

(Id. at 13-14.) We agree with the trial court. There was no evidence suggesting Trustee

improperly used his personal funds for the benefit of the Trust, and the Trust language

indicated an accounting of the Trust was not required. Stanley’s argument is an invitation for

us to reweigh the evidence, which we cannot do. See Scoleri, 766 N.E.2d at 1215 (appellate

court cannot reweigh evidence on appeal).

       2.     Stanley’s Attorney Fees

       Under Ind. Code § 30-4-3-22(a), a “beneficiary of a trust may maintain an action (1)

to compel the trustee to perform his duties . . . [or] (3) to compel the trustee to redress a

breach of trust.” Under Ind. Code § 30-4-3-22(e), if a beneficiary “successfully maintains an

action under subsection (a) of this section . . . he is entitled to a judgment for reasonable

attorney’s fees.” Stanley was not successful in his claim alleging deficiencies in Trustee’s

performance, and thus he was not entitled to attorney’s fees.

       3.     Trust’s Attorney Fees

       Under Ind. Code § 34-52-1-1(b):

       [T]he court may award attorney’s fees as part of the cost to the prevailing
                                          9
         party, if the court finds that either party:
         (1)     brought the action or defense on a claim or defense that is frivolous,
         unreasonable, or groundless;
         (2)     continued to litigate the action or defense after the party’s claim or
         defense clearly became frivolous, unreasonable, or groundless; or
         (3)     litigated the action in bad faith.

For purposes of awarding attorney’s fees under Ind. Code § 34-52-1-1(b), a claim is frivolous

“if it is made primarily to harass or maliciously injure another[.]” Parks v. Madison Cty., 783

N.E.2d 711, 723 (Ind. Ct. App. 2002), reh’g denied, trans. denied. A claim is “litigated in

‘bad faith’ if the party presenting the claim is affirmatively operating with furtive design or

ill will.” Id.

         A trial court’s decision to award attorney’s fees pursuant to Ind. Code § 34-52-1-1(b)

is subject to a multi-level review. Purcell v. Old Nat. Bank, 972 N.E.2d 835, 843 (Ind.

2012).

         [T]he trial court’s findings of facts are reviewed under the clearly erroneous
         standard and legal conclusions regarding whether the litigant’s claim was
         frivolous, unreasonable, or groundless are reviewed de novo. Finally, the trial
         court’s decision to award attorney’s fees and any amount thereof is reviewed
         for an abuse of discretion. A trial court abuses its discretion if its decision
         clearly contravenes the logic and effect of the facts and circumstances or if the
         trial court has misinterpreted the law.

Id.

         In its order awarding attorney’s fees to the Trust, the trial court found:

         4.     Trustee made several trips to Indiana during the summer of 2011. In
         August, the three brothers met at the property and were suppose [sic] to work
         on needed repairs. Trustee called Stanley and asked if he would work on the
         cracks in the dry wall. Stanley came with some spackle but proceeded to do
         nothing on the house but complained the entire time the three were there.
         Stanley indicated he would do anything to waste Trustee’s time.
         5.     Also in August 2011, while all three brothers were at the house, Stanley
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threatened Trustee saying he talked to a lawyer and that he was going to sue
Trustee and deplete the assets of the trust with legal fees. Stanley admitted the
conversation, saying it was a joke. Trustee and Frank did not think it was a
joke. Stanley testified he told Trustee: “It is not a threat; it is a promise.” He
has followed through on that promise. As a result, thousands of dollars in
legal fees have been incurred by the Trust.
6.      Stanley requested an accounting of the Trust assets and the Trustee has
not provided one. However, the Trust, in [Section] VII, Paragraph D.,
provides no accountings or reports are required. Trustee did provide Stanley
bank statements and other financial documents for his review. Trustee also
provided information to Stanley regarding the estimated Indiana Inheritance
Tax liability which was due December 30, 2011. The IH-6 was filed and
Stanley paid his share of the tax which was less than he anticipated. Stanley
has had the financial information and the request for an accounting is just
another method by which he has harassed Trustee and depleted the assets of
the trust.
7.      The personal property belonging to Walter Penner has now been
distributed. Trustee sent an inventory to the other beneficiaries in August,
2011 and asked them to mark the items they wanted to have from the
Residence. Trustee would then discuss the items with the others if more than
one person wanted something; a decision would be made and then the property
would be distributed. Originally, neither of the other beneficiaries returned the
inventory. Stanley had not returned the inventory when he filed his petition
requesting the distribution, again establishing his goal of harassing Trustee.
Trustee gave the inventory to the beneficiaries again and all three met at the
house on February 19, 2012 to review the personal property and decide what
each was to receive. Since that time, the beneficiaries met at the house in
April and June, 2012 obtaining items they wanted. At the meeting in June,
Stanley indicated there were items of furniture he “maybe” would want.
Trustee had to send out the inventory again with the “maybe” items marked
asking Stanley to make up his mind. Stanley’s complaints on the delay in the
distribution of personal property are disingenuous as he has caused the delay
by not responding promptly when Trustee sent the inventories for review.
Filing the petition for distribution when he had not returned the inventory
makes his petition unreasonable.
8.      Although Stanley has complained about everything that Trustee has
done since the death of Walter and is making good on his “promise” to deplete
the trust with legal fees, the other beneficiary and brother, Frank, said: he is
happy about how all aspects of Walter Penner’s estate were handled; he trusts
Ronald as Trustee; the preparation of the house for sale was moving forward
and he agreed that last year was a bad time to put the house up for sale.
Stanley ignores such facts even though Frank is an equal stakeholder in this
                                        11
matter. Stanley has pushed issues to harass Trustee and waste trust assets.
9.       The actions taken by Stanley in regard to filing the Petition for
Trustee’s Accounting, For Order To Sell Real Estate and Related Matters
when he knew Trustee’s plan for the sale for the real estate, as well as having
received the inventory of personal property to mark but did not return was
primarily to harass and maliciously injure Trustee and should be deemed a
frivolous, unreasonable and groundless filing.
10.      Trustee has done exactly what he told the beneficiaries he would do.
The house was readied for sale and put on the market on March 30, 2012 and
the personal property was distributed in April and June, 2012 when the
beneficiaries returned the inventories marked by them for the items requested.
The Residence was sold and the transaction closed on July 27, 2012. Based
upon the offer of $160,200.00 and the market value of $149,000.00 as of
March, 2011, the value of the house increased $11,200.00 under the
administration of Trustee. There was no reason for Stanley to file the petition
requiring Trustee to go through a full hearing, submission of numerous
memoranda and submission of proposed orders, etc. Trustee has had to
expend thousands of dollars for attorney fees and many hours of his personal
time to defend against the frivolous, unreasonable and groundless petition.
11.      Stanley made an oral request for fees at the hearing in February, 2012
and followed it up with arguments that he had the right to file the petition and
that he prevailed on his requests implying that the actions of Trustee were a
result of the petition. The evidence does not support the conclusion and his
initial request for attorney fees was denied by the Court in its August 23, 2012
order.
                                    *****
14.      Stanley filed a Motion to Correct Errors on September ,[sic] 2012 to
which Trustee had to reply filing Trustee’s Statement in Opposition to
Beneficiary’s Motion to Correct Errors on October 19, 2012. The Motion to
Correct Errors was a regurgitation of the baseless assertions Stanley had made
previously, was not set for hearing and was deemed denied on November 8,
2012.
15.      The Trust provides in [Section] VI, Paragraph B. 6. that he [sic] Trustee
has “[t]he power to employ and pay reasonable fees to accountants, lawyers, or
investment experts for information or advice relating to the trust.” Although
the Trust may pay attorney fees, the Trust also provides in [Section] IV,
Paragraph I that “[w]ith respect to the exercise or non-exercise of discretionary
powers granted by this Declaration of Trust, the trustee shall not be liable for
actions taken in good faith.” The Trust should not have to incur the cost of
unnecessary litigation.

                                       12
(App. at 16-21.) Stanley asserts many of the trial court’s findings are erroneous and attempts

to continue his argument regarding these findings in his appellate brief. Specifically, Stanley

takes issue with findings regarding Walter’s residence and the sale thereof, the quantity of

financial documents provided to him by Trustee, and his unwillingness to agree to the

manner in which Trustee attempted to divide Walter’s personal property. His arguments are

invitations for us to reweigh the evidence, which we cannot do. See Scoleri, 766 N.E.2d at

1215 (appellate court cannot reweigh evidence on appeal).

       Even if the findings to which Stanley objects were not supported by sufficient

evidence, the fact remains he made a statement to Trustee and Frank indicating his intent to

drain the corpus of the Trust by filing legal actions, those legal actions were unsuccessful

based on the clear language of the Trust, and Stanley continued his legal harassment

regardless. We find no abuse of discretion in the trial court’s award of legal fees to the Trust.

       4.     Appellate Attorney’s Fees

       In his brief, Stanley requests appellate attorney’s fees because “the probate court

abused its discretion when it refused to order an accounting and found Stanley’s claim

frivolous[.]” (Br. of Appellant at 28.) As noted in previous sections of this opinion, the trial

court did not err in its decision regarding the Trustee’s management of the Trust, its award of

attorney’s fees to the Trust, or its denial of attorney’s fees to Stanley. Accordingly, we deny

Stanley’s request for appellate attorney’s fees.

       However, under Appellate Rule 67, we may sua sponte award appellate attorney’s fees

in the event an appeal is “permeated with meritlessness, bad faith, frivolity, harassment,

                                               13
vexatiousness, or purpose of delay.” GEICO v. Rowell, 705 N.E.2d 476, 483 n.12 (Ind. Ct.

App. 1999), reh’g denied. As noted above, Stanley’s arguments, at the trial court and on

appeal, are groundless and frivolous based on the controlling statutes and the plain language

of the Trust. One of the most egregious of these is Stanley’s assertion that he was entitled to

attorney’s fees at the trial court level based on Ind. Code § 30-4-3-22(e), which grants

attorney’s fees to a beneficiary who is successful in a claim to enforce the terms of the Trust.

There is no ambiguity - the trial court’s order clearly indicates Stanley was unsuccessful in

his action to enforce what he claimed to be the terms of the Trust. His request for attorney’s

fees at the trial court, as well as the appellate level, is ridiculous.

       In addition, Stanley failed to comply with many of the Indiana Rules of Appellate

Procedure. First, he did not include a table of contents in his Appendix as required by App.

R. 50(C). In a case with the multitude of filings such as the instant case, the absence of a

table of contents severely hinders the review of the appeal. In addition, Stanley’s Statement

of Facts is rife with argument, which is not permitted under App. R. 46(A)(6). See also

Wright v. Elston, 701 N.E.2d 1227, 1230 (Ind. Ct. App. 1998) (“A Statement of Facts should

be a concise narrative of the facts stated in a light most favorable to the judgment, [sic] and

should not be argumentative.”), trans. denied. We recognize that, taken alone, none of these

violations or arguments would rise to the level of appellate sanctions; however, taken

together, they are an unnecessary drain on judicial resources. Accordingly, we remand this

matter to the trial court for computation and award of appellate attorney’s fees to the Trust.

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                                      CONCLUSION

       The trial court did not err in its findings and conclusions of law regarding Trustee’s

management of the Trust. Further, the trial court did not abuse its discretion when it awarded

the Trust attorney’s fees and denied Stanley’s request for attorney’s fees. Finally, we deny

Stanley’s request for appellate attorney’s fees and sua sponte award the Trust attorney’s fees,

to be determined and ordered by the trial court on remand.

       Affirmed and remanded.

KIRSCH, J., and BAILEY, J., concur.

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