Court Opinion

ID: 9948947
Source: CourtListenerOpinion
Date Created: 2024-03-08 15:15:11.679463+00
Date Added: 2024-06-11T14:26:25.108121
License: Public Domain

RENDERED: MARCH 1, 2024; 10:00 A.M.
                           NOT TO BE PUBLISHED

                   Commonwealth of Kentucky
                              Court of Appeals
                                  NO. 2023-CA-0108-MR

JAIME MCCOY1 AND HEATHER
MCCOY DANIELS                                                                 APPELLANTS

                  APPEAL FROM PIKE CIRCUIT COURT
v.            HONORABLE JAMES W. CRAFT, II, SPECIAL JUDGE
                       ACTION NO. 19-CI-01328

JUDY PAFUNDA; ESTATE OF FERN
MCCOY; ESTATE OF JACK DON
MCCOY; AND SETH MCCOY                                                           APPELLEES

                                   OPINION
                           REVERSING AND REMANDING

                                       ** ** ** ** **

BEFORE: ACREE, GOODWINE, AND JONES, JUDGES.

GOODWINE, JUDGE: Jamie McCoy and Heather McCoy Daniels (collectively,

“Granddaughters”) appeal the October 14, 2020 and January 5, 2023 orders of the

Pike Circuit Court. We reverse and remand.

1
 Appellant’s name is spelled “Jaime” in the notice of appeal. However, elsewhere in the record,
her name is spelled “Jamie.” Although we have no way to be sure which is the correct spelling,
we will proceed with “Jamie” for consistency because this is the spelling used in the underlying
complaint, the will in question, and the circuit court’s findings of fact.
                                  BACKGROUND

               The parties in this case are members of a family with a discordant

history. Prior to his death in 2007, Arnold McCoy (“Arnold”) created a revocable

trust for the benefit of his wife, Fern McCoy (“Fern”), and their children, Judy

McCoy Pafunda (“Judy”), Jack Donald McCoy (“Don”), Ronald G. McCoy

(“Ron”), and Eddie A. McCoy (“Eddie”). Arnold named Community Trust &

Investment Company (“CTIC”) as trustee. Upon Fern’s death, the remaining trust

assets were to be distributed equally between the four children. Fern passed away

in 2016.

               In 2017, in Pike Circuit Court Action No. 17-CI-00146, Ron and

Eddie filed a complaint against Fern’s estate, Don, Judy, Edward D. Jones & Co.,

L.P. (“Edward Jones”), and JC Hensley, individually and as an agent for Edward

Jones (collectively, “the trust litigation”). Therein, Ron and Eddie sought to

enforce the terms of the trust and recover funds they claimed were wrongfully

distributed.

               They alleged that after Arnold’s death, Fern asked CTIC to distribute

her $370,500.00 from the trust principal. CTIC denied this request because it was

outside the terms of the trust. Thereafter, Fern terminated CTIC as trustee and

named herself as successor trustee. She transferred the trust assets to Edward

Jones and withdrew the funds CTIC previously denied. Ron and Eddie also

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alleged Fern continued to distribute trust funds to herself, Judy, and Don in

violation of the trust’s terms. Ron and Eddie allege their claims are supported by

an accounting completed by order of the district court.

             The trust litigation was resolved by mediation on March 11, 2019.

Judy and Don agreed to pay Eddie and Ron each $310,000.00 for a total of

$620,000.00. The parties agreed that $381,000.00 would be paid from Fern’s

estate and $239,000.00 from the trust. The parties also agreed the trust litigation

and settlement “shall not be deemed as a contest of the Will in the Estate of Fern

McCoy, deceased.” Record (“R.”) at 42. The siblings and their respective counsel

signed the agreement.

             Soon thereafter, Ron and Eddie moved to enforce the settlement

agreement. Judy and Don moved to set it aside. On April 26, 2019, the circuit

court denied the motion to set aside and granted the motion to enforce the

agreement. In its order, the court found “[t]he parties further agreed that this

litigation and settlement shall not be deemed as a contest of the Will in the Estate

of Fern McCoy, deceased.” Id. at 165. The court’s order was final and appealable.

None of the parties appealed from the order.

             Prior to her death, Fern devised a will which, in part, bequeathed

                                      ITEM VI
                  All of the rest and residue of my property,
             whatsoever situated, I devise and bequeath as follows:

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                   1/4 to my daughter, Judy McCoy Pafunda

                   1/4 to my son, Don McCoy
                   1/4 to my granddaughter, Heather McCoy

                   1/4 to my granddaughter, Jamie McCoy

             ...
                    The interests to the four named above is subject to
             the following bequest:

                   $100.00 to my son Ron G. McCoy

                   $100.00 to my son Eddie A. McCoy

                    Ron and Eddie are to only receive $100.00 each
             for actions, in writing and orally, known to them. As
             noted above, their daughters inherit instead of them. The
             bequest of $100.00 each to Ron and Eddie are done so
             with the knowledge that both Ron and Eddie are
             beneficiaries of 1/4 each in my husband’s Trust (Arnold
             McCoy Trust). The Arnold McCoy Trust has
             substantially more assets than my estate.

                                    ITEM VII
                    Because of the squabbling and infighting between
             some of my children, and my desire to see this stopped, I
             direct that in the event one or more children contest this
             Will in any respect, including named personal
             representatives, said child or children will only receive
             the sum of $1.00. If either of my sons, Ron G. McCoy,
             or Eddie McCoy, do so, the bequests to their daughter or
             daughters will be changed to receiving only $100.00.
             The forfeited shares to be divided equally to the other
             children.

Id. at 146-47.

                                         -4-
               Fern’s will was admitted to probate in 2016 and, per Fern’s wishes,

Judy and Don were named co-executors. While the trust litigation was pending,

Judy and Don submitted a “Notice of Will Contest” in probate alleging

Granddaughters were each entitled to only $100.00 because the trust litigation

constituted a contest of Fern’s will under Item VII.2 R. at 154. The district court

determined the notice was not binding on the court or parties, and that the circuit

court had jurisdiction to determine whether there had been a will contest. It

ordered that the estate would proceed as though there had been no will contest.

               After the trust litigation was settled, Judy, in her capacity of co-

executor of Fern’s estate, initiated this case by filing a petition against

Granddaughters requesting the trust litigation be deemed a violation of Item VII,

the “no-contest clause,” of Fern’s will. Granddaughters moved for summary

judgment. In its October 14, 2020 order, the circuit court denied the motion

because the no-contest clause prohibited the children from contesting the will “in

any aspect.” Id. at 642.

2
  In a letter which was made part of the record, counsel for Judy admitted the notice was not filed
with “the intent to reduce the bequest of Fern McCoy to Heather and Jamie, but for another
purpose. This correspondence is for the purpose of advising Heather and Jamie that Judy and
Don will proceed in a manner fulfilling Fern’s wishes in her Will leaving 1/4 to Heather and 1/4
to Jamie.” R. at 46. Both Judy and her counsel signed the letter.

                                               -5-
                Judy filed a motion for summary judgment on February 24, 2022.3 In

April 2022, the district court removed the executors of Fern’s estate and appointed

Todd Kennedy, Esq. (“Kennedy”) as Public Administrator of the estate. Kennedy

filed a response in opposition of Judy’s motion and adopted Granddaughters’

proposed findings of fact, conclusions of law, and judgment.

                After a hearing, the circuit court granted Judy’s motion for summary

judgment. In part, the court found Granddaughters, Ron, and Eddie sought “to

disrupt the [Fern’s] overall estate plan and the disposition of her assets.” Id. at

647. The court found the legal proceedings were “designed to thwart the wishes of

[Fern] as expressed in her will” and to disrupt the “complex estate plan” of both

Arnold and Fern. Id. at 650, 653. As to the no-contest clause, the court found

                [t]he clause is expansive. It was clearly her wish to
                include a contest of the will, and any aspect thereof,
                including the named representatives. This would extend
                beyond a traditional dispute over the validity of the will,
                such as its execution. It would also include a contest of
                the various parts of the will document, including the
                revocable trust.

Id. at 651.

                This appeal followed.4

3
    Don passed away on February 24, 2021.
4
 Judy Pafunda, the Estate of Fern McCoy, the Estate of Jack Don McCoy, and Seth McCoy are
named appellees. Only Judy has submitted a brief for our consideration.

                                            -6-
                                STANDARD OF REVIEW

                The proper standard of review on appeal when a trial
                judge has granted a motion for summary judgment is
                whether the record, when examined in its entirety, shows
                there is no genuine issue as to any material fact and the
                moving party is entitled to a judgment as a matter of law.
                The trial judge must view the evidence in a light most
                favorable to the nonmoving party, resolving all doubts in
                its favor. Because summary judgment does not require
                findings of fact but only an examination of the record to
                determine whether material issues of fact exist, we
                generally review the grant of summary judgment without
                deference to either the trial court’s assessment of the
                record or its legal conclusions.

Bruner v. Cooper, 677 S.W.3d 252, 269 (Ky. 2023) (quoting Hammons v.

Hammons, 327 S.W.3d 444, 448 (Ky. 2010)). Additionally, we review a circuit

court’s interpretation of a will, like a contract, de novo. Benjamin v. JP Morgan

Chase Bank, N.A., 305 S.W.3d 446, 451 (Ky. App. 2010) (citations omitted).

                                         ANALYSIS

                Before we reach the merits of this appeal, we will address Judy’s

request that we review Granddaughters’ claims for manifest injustice because they

failed to include preservation statements within their argument. An appellant’s

brief must “contain at the beginning of the argument a statement with reference to

the record showing whether the issue was properly preserved for review and, if so,

in what manner.” RAP5 32(A)(4). In their reply brief, Granddaughters identify

5
    Kentucky Rules of Appellate Procedure.

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where and in what manner each argument was preserved for appeal. It is within

our authority to (1) ignore the error and proceed with our review; (2) strike the

brief “for failure to substantially comply with the requirements of these rules; or

(3) review the alleged errors for manifest injustice. RAP 31(H)(1); Ford v.

Commonwealth, 628 S.W.3d 147, 155 (Ky. 2021). Because Granddaughters

actually preserved their alleged errors and, although they did not comply with RAP

32(A)(4), they ultimately provided statements of preservation, we will ignore this

deficiency and proceed with our review.

              On appeal, Granddaughters argue: (1) the circuit court erroneously

expanded the scope of the no-contest clause beyond its express terms; (2) the trust

litigation did not contest the Fern’s will or the trust itself; (3) Judy is collaterally

estopped from relitigating an issue finally decided by the settlement agreement and

the April 26, 2019 order entered in the trust litigation; (4) the settlement agreement

amounts to a judicial admission by Judy; (5) the trust litigation could not be a will

contest because all beneficiaries were not party to the litigation; and (6) the circuit

court’s interpretation of the no-contest clause is against public policy.

              First, the trust litigation was not a contest of Fern’s will and,

therefore, the circuit court’s interpretation of the no-contest clause was erroneous.

“A no-contest clause provision in a will or trust is referred to as an in terrorem

clause because its purpose is to strike fear into the heart of a beneficiary who might

                                            -8-
wish to consider contesting the provisions of the trust.” Commonwealth Bank &

Trust Co. v. Young, 361 S.W.3d 344, 352 (Ky. App. 2012) (internal quotation

marks omitted). A testator may include such a provision in her will for a number

of reasons including to attempt to reduce costs, avoid hostilities among

beneficiaries, and to keep their bequests private. Id. In Kentucky, no-contest

clauses are enforceable but must be “strictly construed and are not extended

beyond their express terms.” Id. (citation omitted). To strictly construe the

express terms of a will, a court must consider only the literal words of a writing

and consider those words “narrowly.” Strict Construction, BLACK’S LAW

DICTIONARY (11th ed. 2019). This requires highly restrictive readings. Id.

             The no-contest clause in Fern’s will states, in relevant part, “I direct

that in the event one or more children contest this Will in any aspect, including

named personal representatives, said child or children will only receive the sum of

$1.00.” R. at 146-47 (emphasis added). The express terms of this clause can only

be read to apply to contests of Fern’s will, not the trust created by Arnold. The

circuit court’s expansive reading of this clause to apply to both Fern and Arnold’s

“complex estate plan” is beyond the scope of the no-contest clause’s express terms.

Furthermore, to read the no-contest clause to bar the children from initiating

litigation of any kind against Fern’s estate’s personal representatives is not a

sufficiently restrictive reading of the clause. The trust litigation did not implicate

                                          -9-
the terms of Fern’s will, nor did it seek to annul or vacate any portion of the will.

See Strunk v. Lawson, 447 S.W.3d 641, 649 (Ky. App. 2013) (citation omitted).

As such, it does not constitute a will contest.

             Furthermore, the trust litigation was not a contest of the trust itself,

making the circuit court’s findings regarding attempts by Granddaughters, Ron,

and Eddie to thwart the overall estate plan unfounded. “An action to interpret a

will or trust document or an action for breach of a trustee’s fiduciary duties is

consistent with the well established rule that the deceased’s intent be effectuated.”

Young, 361 S.W.3d at 353; see also Strunk, 447 S.W.3d at 649 (holding an action

to interpret a will and establish how to distribute the estate does not contest the will

itself). In the trust litigation, Ron and Eddie claimed Fern breached her fiduciary

duties, sought to enforce the terms of the trust, and asserted their rights as

beneficiaries. Therefore, they did not contest the trust.

             Because the above analysis is determinative of this appeal, we decline

to address the merits of Granddaughters’ remaining arguments.

                                   CONCLUSION

             Based on the foregoing, the October 14, 2020 and January 5, 2019

orders of the Pike Circuit Court are reversed and remanded for entry of an order

granting Granddaughters’ motion for summary judgment.

             ALL CONCUR.

                                          -10-
BRIEFS FOR APPELLANTS:     BRIEF FOR APPELLEE JUDY
                           PAFUNDA:
David L. Baird
Pikeville, Kentucky        Daniel F. Dotson
                           Whitesburg, Kentucky

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