Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Holmes v. Potter

Court of Appeals of Arkansas, Division II

June 7, 2017

CASSAUNDRA HOLMES, INDIVIDUALLY, AND AS TRUSTEE OF THE BETTY L. POTTER REVOCABLE TRUST ESTABLISHED SEPTEMBER 10, 2004, AND THOMAS WRIGHT AND KEVIN WRIGHT APPELLANTS
v.
FREDRICK R. POTTER, INDIVIDUALLY, AND AS TRUSTEE OF THE FRED R. POTTER REVOCABLE TRUST ESTABLISHED SEPTEMBER 10, 2004, AND AS TRUSTEE OF THE FRED POTTER REVOCABLE TRUST ESTABLISHED JULY 10, 2013 APPELLEE

         APPEAL FROM THE SCOTT COUNTY CIRCUIT COURT [NO. 64CV-13-54] HONORABLE DAVID H. MCCORMICK, JUDGE

          Skinner Law Firm, P.A., by: Jack Skinner, for appellant Cassaundra Holmes. Michael Hamby, P.A., by: Michael Hamby, for appellants Thomas Wright and Kevin Wright.

          Kevin L. Hickey, for appellee.

          WAYMOND M. BROWN, Judge

         This appeal arises from a dispute concerning an alleged agreement between spouses to execute mutual, reciprocal trusts. The circuit court found that there was no contract between the spouses, and that the surviving settlor could revoke his earlier trust and transfer all the assets from that trust to a new trust without it being a conversion or a breach of his fiduciary duties. Three beneficiaries under the original trusts filed two separate appeals, arguing the same four points challenging the court's finding that there was no breach of fiduciary duty and refusing to reinstate the original trust. We affirm.

         Facts and Procedural History

         In 2004, Fred and Betty Potter signed reciprocal, mirror-image trusts providing that four members of Betty's family and one member of Fred's would receive the residuary principal assets from both trusts.[1] Each settlor was to be the trustee of his or her trust during his or her lifetime and, upon the death or incapacity of the settlor, appellant Cassaundra Holmes would become successor trustee. Attached to each trust instrument was a schedule of assets for each settlor setting out the certificates of deposit, real property, and other property being transferred into their respective trusts. Fred's schedule of assets included 1, 600 troy ounces of silver, valued at between $10, 000 and $15, 000. They later signed mirror-image amendments to their trusts that are not pertinent to this appeal.

         Betty died in January 2013, and Holmes became successor trustee of Betty's Trust. Appellee Fred Potter filed a complaint seeking Holmes's removal as trustee on September 20, 2013. He asserted that Holmes was not paying him the income from the trust. He further alleged that Holmes had breached her fiduciary duties by self-dealing and unnecessarily causing Betty's Trust to pay fees and to lose $300, 000 in her first year as trustee. Holmes answered the complaint, denying the material allegations and pleading affirmative defenses. She later amended her answer. She also sought certain injunctive relief against Fred.

         On April 4, 2014, Holmes filed a motion for partial summary judgment as to Fred's claims that she had breached her fiduciary duties. The motion listed thirteen specific factual statements from Fred's complaint for the court to address.

         On April 23, 2014, Holmes filed a counterclaim against Fred, individually and as trustee of the Fred R. Potter Revocable Trust (Fred's 2004 Trust). She contended that after Betty's death, Fred attempted to get her, as trustee, to sell him assets from Betty's Trust at below market value; that Fred amended his own trust, despite the parties' alleged agreement as to reciprocal trusts, and created a new trust (Fred's New Trust or Fred's 2013 Trust) to remove Betty's family members as beneficiaries under his trust and then transferred the assets from Fred's 2004 Trust to Fred's 2013 Trust without valuable consideration. She contended that this transfer was a conversion, and requested specific performance of the original Fred's 2004 Trust, for Fred to make a full accounting, and that she be awarded her attorney's fees and costs in enforcing Fred and Betty's agreement. In addition, she asserted claims for breach of fiduciary duty, breach of contract, and conversion of a beneficiary's share, and sought actual damages in excess of $300, 000. Fred answered, denying the material allegations.

         Intervenors Kevin Wright and Thomas Wright filed a third-party complaint against Fred, individually and as trustee of Fred's 2004 Trust on July 28, 2014, for specific performance of Fred's 2004 Trust, for a declaration that Fred's New Trust is invalid, and damages of $300, 000 for breach of fiduciary duty, breach of contract, and conversion. The Wrights were granted intervention by an order entered on August 21, 2014. Fred responded to the third-party complaint, again denying the material allegations.

         On January 20, 2015, the court entered an order granting Holmes's motion for partial summary judgment as to certain allegations from Fred's complaint. Among the many allegations of Fred's complaint, the court found that there was no evidence that Holmes had breached her fiduciary duties or was self-dealing, or that Betty's Trust had suffered a loss of approximately $300, 000.

         Also on January 20, 2015, Fred filed an amended complaint for Holmes's removal. Holmes and the Wrights responded with a motion to strike the amended complaint. The motions to strike argued that the amended complaint was in violation of the court's scheduling order and that the court had granted partial summary judgment on Fred's original complaint. Fred replied to the responses.

         On September 8, 2015, Fred filed a motion seeking to nonsuit his complaint. The motion was granted the next day.[2]

         The case proceeded to a bench trial on September 9, 2015. At the conclusion, the court took the matter under advisement. On March 1, 2016, the circuit court entered its order deciding the case. The court found that there was no contractual agreement that prevented Fred from amending his trust, and that the amendments made in the September 2013 Fred's New Trust were valid and denied appellants' requests to set aside those amendments. The court also found that there was no agreement between Fred and Betty to make their trusts irrevocable. The court found that the transfer of assets from Fred's 2004 Trust to Fred's New Trust was neither a breach of fiduciary duty nor a conversion of assets belonging to Betty's Trust. Based on its finding that there was no contract between Fred and Betty, the court also ruled that Holmes and the Wrights lacked standing to pursue a breach-of-contract claim against Fred. Likewise, the court ruled that appellants also lacked standing to pursue a breach-of-fiduciary-duty claim. The court denied the relief sought in the counterclaim. The court also issued a declaratory judgment as to the issues covered in the partial summary judgment in favor of Holmes.

         These appeals followed.

         Standard of Review

         The exclusive jurisdiction in cases involving trusts, and the construction, interpretation, and operation of trusts are matters within the jurisdiction of the courts of equity, and courts of equity have inherent and exclusive jurisdiction of all kinds of trusts and trustees.[3] Arkansas appellate courts have traditionally reviewed matters that sounded in equity de novo on the record with respect to factual and legal questions.[4] We have stated repeatedly that we will not reverse a finding by a circuit court in an equity case unless it was clearly erroneous.[5] We have also stated that a finding of fact by a circuit court sitting in an equity case is clearly erroneous when, despite supporting evidence in the record, the appellate court viewing all of the evidence is left with a definite and firm conviction that a mistake has been committed.[6]

          Argume ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.