Court Opinion

ID: 3062477
Source: CourtListenerOpinion
Date Created: 2015-10-14 16:05:24.40792+00
Date Added: 2024-06-11T11:49:34.452455
License: Public Domain

Oct 14 2015, 9:56 am

ATTORNEY FOR APPELLANT                                     ATTORNEYS FOR APPELLEES
P. Gregory Cross                                           Thomas M. Beeman
The Cross Law Firm, P.C.                                   Kyle B. DeHaven
Muncie, Indiana                                            Beeman Law Office
                                                           Anderson, Indiana
                                                           Alexander M. Beeman
                                                           Ciobanu Law, P.C.
                                                           Indianapolis, Indiana

                                            IN THE
    COURT OF APPEALS OF INDIANA

Scott Alan Stibbins, individually                          October 14, 2015
and as Personal Representative                             Court of Appeals Case No.
of the Estate of Warren E.                                 18A02-1410-PL-750
Stibbins, and Trustee of the                               Appeal from the Delaware Circuit
Warren E. Stibbins Revocable                               Court
Trust, et al,                                              The Honorable Marianne L.
Appellants-Defendants,                                     Vorhees, Judge
                                                           Trial Court Cause No.
        v.                                                 18C01-0902-PL-4

Carol (Stibbins) Pagano Foster,
Angela Pagano, and Christopher
Pagano,
Appellees-Plaintiffs

Baker, Judge.

Court of Appeals of Indiana | Opinion 18A02-1410-PL-750 | October 14, 2015                Page 1 of 14
[1]   Warren Stibbins had seven children and a complicated estate plan. In the years

      before his death, Warren became frustrated with the inability of his daughter,

      Carol, to manage her finances. He purchased an annuity for her that would

      have provided a steady source of income for the rest of her life, and then

      removed her as a beneficiary from his estate plan and from her deceased

      mother’s trust. After Warren’s death, Carol and her children filed an action

      contesting the probate of Warren’s will. They were unsuccessful after years of

      litigation and a five-day jury trial. After they lost the will contest, they sought

      to be reimbursed for their attorney fees pursuant to Indiana Code section 29-1-

      10-14. Although the trial court found that two of their three claims were

      litigated without good faith and just cause, it found that their third claim met

      that test. As a result, the trial court ordered that the estate pay all of Carol’s

      attorney fees and costs in an amount exceeding $170,000.

[2]   The estate now appeals, arguing, among other things, that Carol and her

      children do not have standing to seek attorney fees because they are not

      devisees under the relevant statute. We agree, and reverse the judgment of the

      trial court awarding attorney fees to Carol and her children.

      Court of Appeals of Indiana | Opinion 18A02-1410-PL-750 | October 14, 2015   Page 2 of 14
                                                      Facts     1

[3]   Warren Stibbins (Warren) was a successful family physician who lived most of

      his life in Muncie. He and his wife, Mary Stibbins (Mary), were the parents of

      seven children: David Stibbins, Mary Liddy, Scott Stibbins, Carol Foster

      (Carol), Thomas Stibbins, Susan Stibbins, and Sarah Hohmann.

[4]   Mary died in 1994. In accordance with the Stibbinses’ estate plan, a significant

      amount of money had been placed in a living trust in Mary’s name (Mary’s

      Trust), which became irrevocable upon her death. Mary’s Trust permitted

      Warren, the primary beneficiary, to amend some of its provisions even after the

      trust had vested, through the exercise of a power of appointment in his will.

[5]   During the years following his wife’s death, Warren became concerned about

      Carol, who had significant difficulty managing her financial affairs. She

      received frequent monetary gifts from her parents and siblings, as well as

      distributions from Mary’s Trust, but always seemed to be in need of more.

      Eventually, in the spring of 2005, Warren decided to purchase an annuity for

      Carol that would pay her a specified sum of money—nearly $1,000 per

      month—for the rest of her life.

[6]   On August 16, 2005, Warren executed a revocable trust (Warren’s 2005 Trust),

      providing that he would be its primary beneficiary for the balance of his

      1
        We held oral argument in this cause in Indianapolis, Indiana, on September 15, 2015. We thank counsel
      for both parties for their outstanding written and oral advocacy.

      Court of Appeals of Indiana | Opinion 18A02-1410-PL-750 | October 14, 2015                    Page 3 of 14
       lifetime, and upon his death, the property would be distributed to four of his

       children. Two of Warren’s children, David and Thomas, were very successful

       physicians, and in Warren’s judgment, they did not need this inheritance.

       Carol was also excluded as a beneficiary because he had provided for her

       otherwise with the annuity. In 2005, Warren also executed a pour-over will

       (the 2005 Will) that did not name Carol as a beneficiary.

[7]    After an altercation at Warren’s home in January 2006, Carol and her son,

       Christopher Pagano, never saw Warren again. Carol’s daughter, Angela

       Pagano, did not see Warren again after he bought her a computer sometime in

       2005.

[8]    In April 2007, Carol sold the present rights in her annuity. While Warren’s

       initial investment in the annuity totaled over $180,000, Carol sold it for

       approximately $70,000, to pay off some of her debts.

[9]    Later that year, Warren realized that David, Thomas, and Carol were still

       named as beneficiaries to Mary’s Trust. On May 5, 2008, Warren executed a

       new will (the 2008 Will) exercising the power of appointment to remove David,

       Thomas, and Carol as beneficiaries.

[10]   Warren died on October 7, 2008. Neither Carol nor her children attended his

       funeral.

[11]   On February 13, 2009, Carol initiated an action to contest the 2008 Will.

       Christopher and Angela joined her as plaintiffs. They sought to revoke probate

       Court of Appeals of Indiana | Opinion 18A02-1410-PL-750 | October 14, 2015   Page 4 of 14
       of the will, reverse the exercise of the power of appointment with respect to

       Mary’s Trust, and restore Carol as a beneficiary of the trust. Carol and her

       children also filed a second action to challenge Warren’s 2005 Trust, which did

       not include her as a beneficiary. Eventually, the two actions were consolidated.

[12]   A jury trial regarding the 2008 Will took place over the course of five days,

       beginning on June 16, 2014. The jury found that the will was valid, and

       judgment was entered in favor of the defendants.

[13]   On July 24, 2014, Carol and her children filed a petition for attorney fees and

       expenses. Following a hearing, on September 22, 2014, the trial court granted

       Carol’s petition. In relevant part, the trial court found and concluded as

       follows:

               5.    Argument on Standing: Defendants argued Carol,
               Angela, and Christopher cannot recover attorneys’ fees and
               expenses because they were not devisees under the last two wills
               executed by [Warren]. . . . Plaintiffs countered by arguing that if
               they had set aside the [2008] Will, . . . they would have also
               sought to set aside the [2005 Will] . . . . If successful, they would
               have probated the [third will in line, executed in 1992, which
               included Carol as a beneficiary].

                                                         ***

               . . . [T]he Court finds authority to support Plaintiffs’ argument
               that they have standing to seek attorneys’ fees. Although it
               would have involved a great deal of legal activity, attorneys’ fees,
               and expenses, Plaintiffs could have eventually brought to probate
               a Will naming them as beneficiaries.

       Court of Appeals of Indiana | Opinion 18A02-1410-PL-750 | October 14, 2015   Page 5 of 14
        For these reasons, the Court finds Plaintiffs have standing to
        request the Court to order their attorneys’ fees and expenses
        reimbursed and/or paid from the Estate assets.

        6.      Did Plaintiffs Bring This Action in Good Faith and With
        Just Cause? The Court does not question the attorneys’ good
        faith in litigating this matter. . . . [T]he Court will only consider
        whether Carol litigated this matter in good faith and with just
        cause in deciding whether to award attorneys’ fees and expenses.

                 (A)      Fraud Action: If Plaintiffs had brought the action
                          based only on Fraud, the Court would not have
                          awarded fees and expenses. The Fraud argument
                          was puzzling, at best, and the testimony from the
                          Plaintiff’s handwriting expert bordered on the
                          incredible.[2]

                 (B)      Incompetency: Although this claim was a little
                          stronger than the Fraud claim, the evidence on the
                          Fraud and Incompetency claims together might not
                          have caused the Court to find “good faith and just
                          cause.” . . .

                 (C)      Undue Influence: Plaintiffs’ strongest ground was
                          Undue Influence. The evidence submitted required
                          the Court to give a jury instruction concerning

2
  The expert testified that dozens of specimens of Warren’s handwriting were forgeries. She was also certain
that the signatures of all of the witnesses to nearly all of the documents at issue in this litigation were
forgeries. Carol found this expert on the Internet. The expert received her training from another Internet
vendor who also offered programs on, among other things, how to predict the gender of unborn children
through the handwriting of a parent. At times, the jurors laughed audibly during the expert’s testimony.

Court of Appeals of Indiana | Opinion 18A02-1410-PL-750 | October 14, 2015                       Page 6 of 14
                                 undue influence, and Defendants had to overcome
                                 the presumption of undue influence. . . .

               The Court finds at least on the Undue Influence Claim, Plaintiffs
               brought the action in good faith and with just cause. Because all
               three claims were so interrelated, the Court cannot divide the fees
               among the claims.

       Appellants’ App. p. 27-29. The trial court ordered the Estate to pay Carol’s

       attorney fees in an aggregate amount of $171,360.64. The Estate now appeals.

                                     Discussion and Decision
                                             I. Cross-Appeal
[14]   First, we will consider Carol’s cross-appeal. She argues that the trial court erred

       by denying her motion for amendment of the pleadings to conform to the

       evidence presented pursuant to Indiana Trial Rule 15(B). A ruling on a Rule

       15(B) motion is within the discretion of the trial court, and we will reverse only

       upon finding a “clear and prejudicial” abuse of that discretion. Lutz v. Belli, 516
N.E.2d 95, 101 (Ind. Ct. App. 1987). Indiana Trial Rule 15(B) provides as

       follows:

               When issues not raised by the pleadings are tried by express or
               implied consent of the parties, they shall be treated in all respects
               as if they had been raised in the pleadings. Such amendment of
               the pleadings as may be necessary to cause them to conform to
               the evidence and to raise these issues may be made upon motion
               of any party at any time, even after judgment, but failure so to
               amend does not affect the result of the trial of these issues. If
               evidence is objected to at the trial on the ground that it is not

       Court of Appeals of Indiana | Opinion 18A02-1410-PL-750 | October 14, 2015   Page 7 of 14
               within the issues made by the pleadings, the court may allow the
               pleadings to be amended and shall do so freely when the
               presentation of the merits of the action will be subserved thereby
               and the objecting party fails to satisfy the court that the
               admission of such evidence would prejudice him in maintaining
               his action or defense upon the merits.

[15]   The complaint originally filed by Carol and her children did not raise whether

       Warren’s exercise of the power of appointment over Mary’s Trust benefited the

       decedent or his estate. On the fourth day of the jury trial, Carol moved to

       amend the pleadings to incorporate that issue. The trial court denied the

       request, and Carol now appeals that ruling.

[16]   The record reveals that in 2010, after the first round of depositions were

       completed, Carol’s attorney contacted the attorney for the estate, indicating that

       “‘Plaintiffs believe that Warren committed breach of his wife’s trust. When as

       trustee, he took the loans from the trust to himself and he exercised the power

       of appointment in a way intended to benefit himself personally.’” Tr. p. 768

       (quoting from an email between the two attorneys). Carol’s attorney asked the

       Estate’s attorney, “‘[w]ill it be necessary for us to move to amend the

       complaints to . . . assert the claims more precisely or do you agree those claims

       have been sufficiently raised to put you and the beneficiaries on notice?’” Id.

       The Estate’s attorney responded, “‘Yes, it will be necessary for you to amend

       the complaint . . . . You better amend the complaint because the complaint

       does not lead this theory.’” Id. at 769. Carol did not seek to amend the

       complaint.

       Court of Appeals of Indiana | Opinion 18A02-1410-PL-750 | October 14, 2015   Page 8 of 14
[17]   To be entitled to amendment of the pleadings to conform to the evidence, a

       movant must establish that the issues were tried by the “express or implied

       consent of the parties[.]” Ind. Trial Rule 15(B). Here, the Estate was on record

       explicitly refusing to consent to precisely that. Carol chose not to attempt to file

       an amended complaint, and cannot now make an end-run around the opposing

       party’s objections via Trial Rule 15(B). We find that the trial court did not

       abuse its discretion in denying Carol’s motion to amend the pleadings pursuant

       to Indiana Trial Rule 15(B).

                                                  II. Appeal
[18]   Where, as here, the trial court issues findings of fact and conclusions of law

       based thereon, we apply a two-tiered standard to review the trial court’s order.

       Oil Supply Co. v. Hires Parts Serv., Inc., 726 N.E.2d 246, 248 (Ind. 2000). We

       determine whether the evidence supports the findings and the findings support

       the judgment. Id. In deference to the trial court’s proximity to the issues, “we

       disturb the judgment only where there is no evidence supporting the findings or

       the findings fail to support the judgment.” Id. We do not reweigh the evidence,

       but only consider the evidence favorable to the trial court’s judgment. Id. We

       apply a de novo standard of review to questions of statutory interpretation.

       Meyer v. Beta Tau House Corp., 31 N.E.3d 501, 513 (Ind. Ct. App. 2015).

                                                 A. Standing
[19]   Carol and her children sought attorney fees pursuant to Indiana Code section

       29-1-10-14, which provides as follows:

       Court of Appeals of Indiana | Opinion 18A02-1410-PL-750 | October 14, 2015   Page 9 of 14
               When any person designated as executor in a will, or the
               administrator with the will annexed, or if at any time there be no
               such representative, then any devisee therein, defends it or
               prosecutes any proceedings in good faith and with just cause for
               the purpose of having it admitted to probate, whether successful
               or not, he shall be allowed out of the estate his necessary
               expenses and disbursements including reasonable attorney's fees
               in such proceedings.

       (Emphasis added).

[20]   The Estate argues that the trial court erroneously determined that Carol and her

       children were “devisees” pursuant to Indiana Code section 29-1-10-14.

       According to the Estate, because Carol and her children were not beneficiaries

       to either the 2005 or 2008 Wills, they were not devisees and did not have

       standing to seek attorney fees following the will contest action.

[21]   The Estate acknowledges a line of cases finding that will contestors were

       “devisees” where, while they were not devisees of the will being contested, they

       were devisees of earlier wills that were intended to be offered for probate. E.g.,

       In re Estate of Goldman, 813 N.E.2d 784 (Ind. Ct. App. 2004); Brown v. Edwards,

       640 N.E.2d 401 (Ind. Ct. App. 1994); Estate of Clark v. Foster, 568 N.E.2d 1048

       (Ind. Ct. App. 1991); Dunnuck v. Mosser, 546 N.E.2d 129 (Ind. Ct. App. 1989).

       We find this line of cases distinguishable from the case before us. In each of

       these cases, the parties challenging the will were devisees under the next will in

       line to be probated. In other words, had the challenged will been set aside, the

       challengers would directly, and immediately, benefit as a result.

       Court of Appeals of Indiana | Opinion 18A02-1410-PL-750 | October 14, 2015   Page 10 of 14
[22]   In this case, in contrast, Carol and her children were not devisees of the will

       being challenged or of the next will in line. Instead, their status as devisees is

       far more attenuated. They would have had to make successful challenges both

       to the 2008 Will and to the 2005 Will in order to have a direct right to inherit.

       We have not found any caselaw holding that will challengers with such an

       attenuated right to inherit are entitled to seek attorney fees under the statute,

       and counsel for Carol and her children acknowledged at oral argument that to

       his knowledge, there are no such cases.

[23]   It is well established pursuant to common law that each party to litigation is

       responsible for her own financial consequences associated with the matter,

       including attorney fees. E.g., State Bd. of Tax Comm’rs v. Town of St. John, 751
N.E.2d 657, 659 (Ind. 2001). The only exceptions to this doctrine occur when a

       statute, court rule, or contractual agreement provides otherwise. Porter Dev.,

       LLC v. First Nat’l Bank of Valparaiso, 866 N.E.2d 775, 779 (Ind. 2007). Where,

       as here, a statute is enacted in derogation of the common law, that statute must

       be strictly construed. Hinshaw v. Bd. of Comm’rs of Jay Cnty., 611 N.E.2d 637,

       639 (Ind. 1993).

[24]   Indiana Code section 29-1-10-14 provides that when a will is challenged, “any

       devisee therein” may be entitled to attorney fees under certain circumstances.

       While, as noted above, this Court has held that “devisee” includes a person

       who stands to benefit directly if the challenged will is set aside, we simply

       cannot conclude that our General Assembly intended to include anyone beyond

       this limited group of people. If we opened the term “devisee” up as suggested

       Court of Appeals of Indiana | Opinion 18A02-1410-PL-750 | October 14, 2015   Page 11 of 14
       by Carol and her children, there would be no end to the slippery slope. If a

       ninety-year-old decedent had enacted a new will in every decade of his life, his

       college sweetheart who had been a devisee in his first will at the age of twenty

       would be entitled to attorney fees if she challenged the will in place at his death,

       notwithstanding the reality that she would have to successfully challenge six

       other wills to receive a direct benefit. We do not believe that our legislature

       intended such a result when it enacted this statute.

[25]   Consequently, we find that a “devisee” pursuant to Indiana Code section 29-1-

       10-14 includes only devisees of the will being challenged and devisees of the

       next will in line who would directly benefit if the challenged will were set aside.

       Carol and her children do not qualify as devisees under this definition;

       consequently, they are not entitled to attorney fees pursuant to Indiana Code

       section 29-1-10-14. Therefore, we reverse the judgment of the trial court.

                                          B. Burden of Proof
[26]   Although we need not address the remaining arguments made by the Estate, we

       choose to do so because we so rarely have the opportunity to address these

       issues that so frequently recur in estate practice. Among the most important

       issues raised by the Estate is the issue of who bears the burden of proof with

       respect to Indiana Code section 29-1-10-14, and what, precisely, that burden is.

[27]   Indiana Code section 29-1-7-20 provides that a person challenging a will

       admitted to probate bears the burden of proof. It stands to reason that the same

       person would likewise bear the burden of proof in seeking attorney fees

       Court of Appeals of Indiana | Opinion 18A02-1410-PL-750 | October 14, 2015   Page 12 of 14
       following a will contest. Thus, the challenger bears the burden of proving that

       she prosecuted the will “in good faith and with just cause[.]” I.C. § 29-1-10-14.

[28]   This Court has previously explained that “[t]he purpose and public policy of

       [Indiana Code section 29-1-10-14] is to give all parties concerned a fair trial and

       to encourage the probating or the resisting of the probate of the will where there

       are reasonable grounds or probable cause for such proceedings in good faith, without

       compelling any party to risk financial loss by underwriting the expenses of such

       proceedings.” Dunnuck, 546 N.E.2d at 1291-92 (emphasis added). We find that

       the Dunnuck Court articulated an appropriate and reasonable burden of proof,

       and hereby adopt that standard. Therefore, we hold that a party who is seeking

       attorney fees pursuant to Indiana Code section 29-1-10-14 bears the burden of

       proving by a preponderance of the evidence that she litigated in good faith and

       with just cause, meaning that she had reasonable grounds or probable cause to

       litigate the will contest. The party seeking attorney fees is not entitled to the

       benefit of the doubt; instead, that party must make an affirmative showing

       consistent with Dunnuck.

[29]   Assuming that the party seeking attorney fees is able to make the requisite

       showing of good faith and just cause, that party still bears the burden of proof

       with respect to calculation of attorney fees. In this case, Carol and her children

       raised three claims. Two of those three claims were wholly without just cause

       or good faith. But Carol argues that because the Estate failed to separate Carol’s

       attorney fees by claim, she is entitled to all of her fees. This argument leads to

       Court of Appeals of Indiana | Opinion 18A02-1410-PL-750 | October 14, 2015   Page 13 of 14
       an impermissible shifting of the burden of proof to the Estate to disprove

       Carol’s fees. We cannot countenance this approach.

[30]   We acknowledge that the trial court was unable to separate the fees for the three

       claims, which is understandable given the process that was followed in this

       case. To avoid precisely this issue, we hold that a different process should be

       followed. First, the claimant seeking fees must prove that some or all of her

       claims were made in good faith and with just cause. The trial court must then

       make a preliminary determination as to which of the claims meet this standard.

       Then, the claimant is required to come forward with evidence showing the

       amount of attorney fees expended only for the claims that meet the statutory

       standard. In this way, the trial court and all parties can be assured that the

       claimant receives attorney fees only for those claims that were brought in good

       faith and with just cause, and the burden of proof remains on the claimant.

[31]   The judgment of the trial court is reversed.

       Mathias, J., concurs, and Bailey, J., concurs in result.

       Court of Appeals of Indiana | Opinion 18A02-1410-PL-750 | October 14, 2015   Page 14 of 14