Court Opinion

ID: 4199140
Source: CourtListenerOpinion
Date Created: 2017-08-26 02:10:47.984766+00
Date Added: 2024-06-11T07:47:32.118511
License: Public Domain

FILED
                                                                     Aug 25 2017, 8:35 am

                                                                          CLERK
                                                                      Indiana Supreme Court
                                                                         Court of Appeals
                                                                           and Tax Court

ATTORNEY FOR APPELLANTS/                                   ATTORNEY FOR APPELLEE/
CROSS-APPELLEES                                            CROSS-APPELLANT
Darla S. Brown                                             Robert M. Hamlett
Sturgeon & Brown, PC                                       Carmel, Indiana
Bloomington, Indiana

                                            IN THE
    COURT OF APPEALS OF INDIANA

In the Matter of the Supervised                            August 25, 2017
Estate of Gary D. Kent,                                    Court of Appeals Case No.
Deceased; and                                              55A01-1612-ES-2907
In the Matter of the Educational                           Appeal from the Morgan Superior
Trust of the Grandchildren of                              Court
Gary D. Kent;                                              The Honorable Peter R. Foley,
                                                           Judge
John David Kent, Kevin Kent,
                                                           Trial Court Cause Nos.
Jacob Anderson, Garrett Kerr,
                                                           55D01-1602-ES-000022
Griffin Kerr, Nicholas Kent, and                           55D01-1603-TR-000038
David Kent,                                                55D01-1605-PL-000659
Appellants/Cross-Appellees-
Respondents,

        v.

Cynthia Kerr,
Appellee/Cross-Appellant-Petitioner.

Najam, Judge.

Court of Appeals of Indiana | Opinion 55A01-1612-ES-2907 | August 25, 2017                    Page 1 of 13
                                            Statement of the Case
[1]   Following the death of her father, Gary Kent (“Gary”), Cynthia Kerr

      (“Cynthia”) filed with the probate court a verified petition to revoke the probate

      of Gary’s will and, under a separate cause number, a complaint to revoke the

      probate of the will. Under a third cause number, Cynthia’s brother John David

      Kent (“John”) filed with the probate court a verified petition to docket Gary’s

      educational trust. Following a consolidated hearing on the parties’ cross-

      motions for summary judgment, the probate court dismissed, with prejudice,

      both the trust proceeding and the will contest. Specifically, the court denied

      Cynthia’s summary judgment motion, which sought to enforce a family

      settlement agreement that had been executed by Gary, John, and Cynthia

      before Gary’s death. And the court ordered the Personal Representatives, John

      and Gary’s cousin, Kevin Kent (“Kevin”), to “proceed with administration of

      the probate estate pursuant to decedent’s Last Will and Testament, executed on

      June 23, 2008.” Cross-Appellant’s App. at 25.

[2]   John and Kevin filed a notice of appeal, but this court granted Cynthia’s motion

      to dismiss that appeal after John and Kevin1 failed to timely file an appellants’

      brief. We retained jurisdiction, however, to hear Cynthia’s cross-appeal, where

      she presents a single dispositive issue for our review, namely, whether Indiana

      Code Section 29-1-9-1 permits the prospective beneficiaries of a future

      1
          For ease of discussion, we refer to John as the sole Cross-Appellee herein.

      Court of Appeals of Indiana | Opinion 55A01-1612-ES-2907 | August 25, 2017        Page 2 of 13
      inheritance to execute, prior to the decedent’s death, a family settlement

      agreement to determine their anticipated rights or interests in the decedent’s

      estate. We reverse and remand, and we instruct the trial court to enter

      judgment for Cynthia on her motion to enforce the parties’ agreement.

                                    Facts and Procedural History
[3]   On December 19, 2015, Gary, who was terminally ill, asked John and Cynthia

      to sign a settlement agreement (“the agreement”) regarding “how their

      inheritance [would] be divided” upon his death. Cross-Appellant’s App. Vol. 3

      at 46. At that time, Gary had a valid will, which provided in relevant part that

      the majority of his personal property and his entire residuary estate would be

      divided equally between John and Cynthia, with a few personal items going to

      Gary’s grandson Jacob Anderson.2 The agreement provided as follows:

      Cynthia would receive Gary’s coin collection; John would receive certain rental

      properties; John would “remove the mortgage on [real estate on Hacker Creek

      Road] at his sole expense”; and John and Cynthia would “subdivide” the

      Hacker Creek Road property “equally.” Id. Gary, John, and Cynthia each

      signed the agreement, and Gary’s attorney notarized it. Unbeknownst to Gary,

      a few days later, on December 26, John executed a written notice purporting to

      rescind the settlement agreement, and he notified Cynthia by certified mail.

      2
          Gary disinherited his son Donald Kent and Vickie Beach, Gary’s stepdaughter.

      Court of Appeals of Indiana | Opinion 55A01-1612-ES-2907 | August 25, 2017         Page 3 of 13
[4]   On January 27, 2016, Gary died. On February 9, John and Kevin filed a

      verified petition for probate of Gary’s will and issuance of letters testamentary

      for supervised administration in cause number 55D01-1602-ES-22 (“ES-22”).3

      On March 21, Cynthia filed a verified petition to revoke the probate of Gary’s

      will. And on May 5, Cynthia filed a complaint to revoke the probate of the will

      under cause number 55D01-1605-PL-659 (“PL-659”). Following a hearing on

      the parties’ cross-motions for summary judgment, the probate court found in

      relevant part that the agreement, which Cynthia had asked the court to enforce,

               does not meet the legal requirements of a “settlement agreement”
               or “compromise” under I.C. § 29-1-9-1, et. seq. The Settlement
               Agreement was executed prior to the decedent’s death. At the
               time the Settlement Agreement was executed, the parties to the
               Settlement Agreement had no vested rights in decedent’s estate[],
               but[,] rather[,] mere expectancy interests. In addition, John
               David Kent rescinded the Settlement Agreement prior to the
               death of the decedent. Based upon the undisputed facts
               presented to the Court, the Settlement Agreement does not meet
               the requirements of I.C. § 29-1-9-1.

      Cross-Appellant’s App. Vol. 2 at 24. Thus, the probate court denied Cynthia’s

      “motion to enforce” the agreement. Id. at 25. The court also dismissed the will

      contest and ordered that the Personal Representatives “promptly proceed with

      3
        John also filed a verified petition to docket an educational trust, but that matter is not relevant to this
      appeal.

      Court of Appeals of Indiana | Opinion 55A01-1612-ES-2907 | August 25, 2017                             Page 4 of 13
      administration of the probate estate pursuant to decedent’s Last Will and

      Testament, executed on June 23, 2008.” Id. This cross-appeal ensued.

                                      Discussion and Decision
[5]   Cynthia contends that the trial court erred when it denied her motion for

      summary judgment to enforce the agreement.

              “When reviewing the grant or denial of a motion for summary
              judgment we stand in the shoes of the trial court.” SCI Propane,
              LLC v. Frederick, 39 N.E.3d 675, 677 (Ind. 2015) (internal
              quotation omitted). Summary judgment is appropriate only
              when “the designated evidentiary matter shows that there is no
              genuine issue as to any material fact and that the moving party is
              entitled to a judgment as a matter of law.” Ind. Trial Rule 56(C).
              When “the challenge to summary judgment raises questions of
              law, we review them de novo.” Rogers v. Martin, 63 N.E.3d 316,
              320 (Ind. 2016) (citing Ballard v. Lewis, 8 N.E.3d 190, 193 (Ind.
              2014)). Issues of statutory construction are questions of law,
              which are particularly appropriate for summary resolution.
              Evansville Courier & Press v. Vanderburgh Cnty. Health Dep’t, 17
              N.E.3d 922, 927-28 (Ind. 2014) (citations omitted).

      City of Lawrence Util. Serv. Bd. v. Curry, 68 N.E.3d 581, 585 (Ind. 2017).

[6]   Initially, we note that Cynthia complied with Trial Rule 9.2(A) by filing a copy

      of the agreement with her petition in the trial court. As such, the agreement

      became a part of the record and execution of the instrument was deemed

      established pursuant to Trial Rule 9.2(B).

[7]   In her cross-appeal, Cynthia contends that the settlement agreement is a valid

      contract on its face and that there is no authority for John’s purported rescission

      Court of Appeals of Indiana | Opinion 55A01-1612-ES-2907 | August 25, 2017   Page 5 of 13
of the agreement. Cynthia presents an issue of first impression for our courts,

namely, whether Indiana Code Section 29-1-9-1 permits family settlement

agreements to be executed prior to a decedent’s death. The statute provides as

follows:

        The compromise of any contest or controversy as to:

                 (a) admission to probate of any instrument offered as
                 the last will of any decedent,

                 (b) the construction, validity or effect of any such
                 instrument,

                 (c) the rights or interests in the estate of the decedent
                 of any person, whether claiming under a will or as
                 heir,

                 (d) the rights or interests of any beneficiary of any
                 testamentary trust, or

                 (e) the administration of the estate of any decedent or
                 of any testamentary trust,

        whether or not there is or may be any person interested who is a
        minor or otherwise without legal capacity to act in person or
        whose present existence or whereabouts cannot be ascertained, or
        whether or not there is any inalienable estate or future contingent
        interest which may be affected by such compromise, shall, if
        made in accordance with the provisions of this article, be lawful
        and binding upon all the parties thereto, whether born or unborn,
        ascertained or unascertained, including such as are represented
        by trustees, guardians of estates and guardians ad litem; but no
        such compromise shall in any way impair the rights of creditors
        or of taxing authorities.

Court of Appeals of Indiana | Opinion 55A01-1612-ES-2907 | August 25, 2017   Page 6 of 13
      Ind. Code § 29-1-9-1 (2017). Indiana Code Section 29-1-9-2 provides in

      relevant part that the terms of the compromise shall be set forth in an agreement

      in writing which shall be executed by all competent persons having interests or

      claims which will or may be affected by the compromise. And Indiana Code

      Section 29-1-9-3 provides in relevant part that the court shall, if it finds that the

      contest or controversy is in good faith and that the effect of the agreement upon

      the interests of persons represented by fiduciaries is just and reasonable, make

      an order approving the agreement.

[8]   Cynthia maintains that Section 1 does not “specif[y] a time when an agreement

      may or must be made, or a time before which it may not or must not be made.”

      Cross-Appellant’s Br. at 10. But John maintains that Section 1 unambiguously

      and plainly prohibits “pre-mortem” family settlement agreements. Cross-

      Appellees’ Br. at 19. “As is apparent [from] the arguments of both sides we are

      presented with a question of statutory construction which is a matter of law and

      is reviewed de novo.” Suggs v. State, 51 N.E.3d 1190, 1193 (Ind. 2016).

              When construing a statute our primary goal is to ascertain the
              legislature’s intent. Adams v. State, 960 N.E.2d 793, 798 (Ind.
              2012). To discern that intent, we look first to the statutory
              language itself and give effect to the plain and ordinary meaning
              of statutory terms. Pierce v. State, 29 N.E.3d 1258, 1265 (Ind.
              2015). “If a statute is unambiguous, that is, susceptible to but
              one meaning, we must give the statute its clear and plain
              meaning.” State v. Evans, 810 N.E.2d 335, 337 (Ind. 2004)
              (quotation omitted). However, if a statute admits of more than
              one interpretation, then it is ambiguous; and we thus resort to
              rules of statutory interpretation so as to give effect to the
              legislature’s intent. Adams, 960 N.E.2d at 798. “For example,

      Court of Appeals of Indiana | Opinion 55A01-1612-ES-2907 | August 25, 2017   Page 7 of 13
              we read the statute as whole, avoiding excessive reliance on a
              strict, literal meaning or the selective reading of individual
              words.” Id. And we seek to give a practical application of the
              statute by construing it in a way that favors public convenience
              and avoids an absurdity, hardship, or injustice. Merritt v. State,
              829 N.E.2d 472, 475 (Ind. 2005).

      Id. at 1193-94.

[9]   Indiana Code Section 29-1-9-1 does not specifically address the timing of a

      family settlement agreement. And while the tense of some of the words used

      might suggest that such an agreement may only be made “post-mortem,” such a

      strict interpretation would undermine the statute’s underlying policy of

      encouraging family settlement agreements and Indiana’s policy which favors

      freedom of contract. See I.C. § 29-1-9-1 study commission’s comment (stating

      that family settlement agreements “are looked upon with favor in law”).

      Indeed, as our Supreme Court has stated,

              because we value the freedom to contract so highly, we will not
              find that a contract contravenes a statute unless the language of
              the implicated statute is clear and unambiguous that the
              legislature intended that the courts not be available for either
              party to enforce a bargain made in violation thereof.

      Cont’l B’ball Ass’n, Inc. v. Ellenstein Enters., Inc., 669 N.E.2d 134, 140 (Ind. 1996).

      No part of the statute clearly and unambiguously prohibits pre-mortem family

      settlement agreements. Indeed, agreements made in accordance with the

      statute are lawful and binding “whether or not there is . . . any future contingent

      interest which may be affected,” which suggests that the statute contemplates

      Court of Appeals of Indiana | Opinion 55A01-1612-ES-2907 | August 25, 2017    Page 8 of 13
       pre-mortem agreements to determine expectancy interests in a decedent’s estate.

       Here, the parties’ respective interests under the agreement are future contingent

       interests, that is, interests subject to a condition subsequent, namely, Gary’s

       death.

[10]   In any event, as our Supreme Court has observed, “when interpreting an Indiana

       statute for the first time, it is appropriate to look to the decisions of other

       jurisdictions that construe identical statutory provisions.” Fratus v. Marion Cmty.

       Sch. Bd. of Trustees, 749 N.E.2d 40, 44 (Ind. 2001). In support of her interpretation

       of the statute, Cynthia directs us to the decision of the United States Court of

       Appeals for the Tenth Circuit in Salcedo-Hart v. Burningham, No. 15-4099, 656 F.

       App’x 888, 892 (10th Cir. 2016), where the court interpreted Colorado’s family

       settlement agreement statute, which is substantively similar to Indiana’s statute,4 to

       permit pre-mortem agreements. That court held as follows:

                 It is important to first note that Salcedo-Hart has not identified
                 even a single case, either from Colorado or any other jurisdiction,
                 to support her position as to the validity of pre-mortem

       4
           Colorado Revised Statute Annotated Section 15-12-912 provides as follows:

                 Subject to the rights of creditors, competent successors may agree among themselves to
                 alter the interests, shares, or amounts to which they are entitled under the will of the
                 decedent or under the laws of intestacy in any way that they provide in a written
                 agreement, whether or not supported by a consideration, executed by all who are affected
                 by its provisions. The personal representative shall abide by the terms of the agreement
                 subject to his or her obligation to administer the estate for the benefit of creditors, to pay all
                 taxes and costs of administration, and to carry out the responsibilities of his or her office for
                 the benefit of any successors of the decedent who are not parties. Personal representatives
                 of decedents' estates are not required to see to the performance of trusts if the trustee
                 thereof is another person who is willing to accept the trust. Accordingly, trustees of a
                 testamentary trust are successors for the purposes of this section. Nothing in this section
                 relieves trustees of any duties owed to beneficiaries of trusts.

       Court of Appeals of Indiana | Opinion 55A01-1612-ES-2907 | August 25, 2017                              Page 9 of 13
        agreements. Instead, cases addressing the issue uniformly favor
        the validity of pre-mortem settlements. See, e.g., Machen v.
        Machen, 2011 Ark. 531, 385 S.W.3d 278, 282 (2011) (“Family-
        settlement agreements are favorites of the law. Courts of equity
        have uniformly upheld and sustained family arrangements in
        reference to property. . . . The motive in such cases is to preserve
        the peace and harmony of families.” (citations omitted)); Rector
        v. Tatham, 287 Kan. 230, 196 P.3d 364, 368 (2008) (“We have
        found no cases disallowing an assignment of an expectancy
        interest from one heir to another.”). These cases are entirely
        consistent with the general notion of freedom of contract. See
        Balt. & Ohio Sw. Ry. Co. v. Voigt, 176 U.S. 498, 505, 20 S. Ct. 385,
        44 L. Ed. 560 (1900) (“[T]he right of private contract is no small
        part of the liberty of the citizen, and . . . the usual and most
        important function of courts of justice is rather to maintain and
        enforce contracts than to enable parties thereto to escape from
        their obligation. . . .”); Fox v. I-10, Ltd., 957 P.2d 1018, 1022
        (Colo. 1998) (“Where a party enters into a contract absent fraud,
        duress or incapacity, the courts will not relieve that party of the
        consequences of the bargain simply because it may have been
        improvident.”).

                                                 ***

        Upon careful review of the relevant authorities, this court
        concludes that Colorado courts would agree with the apparently
        unanimous view that pre-mortem agreements are valid and
        enforceable contracts. . . . [W]e decline to read into § 15-1-912 an
        intent by the Colorado legislature to bar all other types of family
        settlement agreements but for the one described therein. Thus,
        the district court correctly concluded the Agreement between
        Salcedo-Hart[ and her stepsons] was valid and enforceable.

Id. at 892-93 (emphasis added).

Court of Appeals of Indiana | Opinion 55A01-1612-ES-2907 | August 25, 2017   Page 10 of 13
[11]   In other words, rather than concluding that Colorado’s family settlement

       agreement statute expressly permits pre-mortem agreements, the Tenth Circuit

       Court of Appeals held that the statute does not bar such agreements. Id.

       Following the reasoning in Salcedo-Hart, we observe that Indiana courts have

       held that “future interests are valuable property rights which may be freely

       conveyed.” Kuhn v. Kuhn, 179 Ind. App. 441, 385 N.E.2d 1196, 1200 (1979).

       Moreover, a “‘very strong presumption of enforceability of contracts that

       represent the freely bargained agreement of the parties’ exists reflecting ‘the

       principle that it is in the best interest of the public not to unnecessarily restrict

       peoples’ freedom of contract.’” Robert’s Hair Designers, Inc. v. Pearson, 780

       N.E.2d 858, 869 (Ind. Ct. App. 2002). Finally, in his treatise on wills, Professor

       William Herbert Page discusses family settlement agreements at length and

       acknowledges that some are executed “prior to the testator’s death.” 2 Page on

       the Law of Wills § 25.1 (2003). Accordingly, we hold that Indiana Code

       Section 29-1-9-1 does not prohibit pre-mortem family settlement agreements.

[12]   Still, John maintains that the agreement is unenforceable because it lacked

       consideration and because he rescinded the agreement before Gary’s death. But

       it is well settled that an exchange of mutual promises is consideration for a

       contract, and the agreement expressly includes promises by both Cynthia and

       John. See Hinkel v. Sataria Dist. & Packaging, Inc., 920 N.E.2d 766, 770 (Ind. Ct.

       App. 2010). In addition, Professor Page states that, where, as here, “the

       contract is made to give effect to the wish which [the] testator had expressed in

       his lifetime but which did not take the form of a new will or codicil[,] it has

       Court of Appeals of Indiana | Opinion 55A01-1612-ES-2907 | August 25, 2017   Page 11 of 13
       been said that the desire to carry out the wishes of the testator is consideration.”

       Page, supra, § 25.2. We hold that the settlement agreement is supported by

       adequate consideration.

[13]   Further, it is well settled that a contract may be rescinded “only when a party avers

       that he has performed a substantial part of his obligations under a contract and that

       the other party refused to perform its obligations.” Van Bibber Homes Sales v.

       Marlow, 778 N.E.2d 852, 858 (Ind. Ct. App. 2002), trans. denied. John has not

       averred, either to the trial court or to this court, that Cynthia refused to perform

       her obligations under the agreement. John contends only that he had a right to

       rescind the agreement because Gary was still alive when he executed the

       rescission. But John does not support that contention with citation to authority,

       and we are not aware of any such authority. In sum, the agreement is supported

       by adequate consideration, and John’s purported rescission was a nullity. The trial

       court erred when it denied Cynthia’s motion to enforce the agreement.

                                                     Conclusion

[14]   Cynthia moved for summary judgment on the enforceability of the settlement

       agreement, which presents a pure question of law on appeal. We hold that

       nothing in Indiana Code Section 29-1-9-1 prohibits the agreement, and it is a

       valid and enforceable contract. We also hold that the trial court erred when it

       concluded that the agreement was not supported by sufficient consideration and

       that John had rescinded the agreement. The trial court erred when it denied

       Cynthia’s summary judgment motion. We reverse and remand with

       instructions that the trial court enter judgment for Cynthia on her motion to

       Court of Appeals of Indiana | Opinion 55A01-1612-ES-2907 | August 25, 2017   Page 12 of 13
       enforce the agreement and for further proceedings not inconsistent with this

       opinion.

[15]   Reversed and remanded with instructions.

       Kirsch, J., and Brown, J., concur.

       Court of Appeals of Indiana | Opinion 55A01-1612-ES-2907 | August 25, 2017   Page 13 of 13