IN THE MATTER OF THE GNB III TRUST JERITA WYLIE AND DOUG BOBO APPELLANTS
CHERYL SHAW APPELLEE
FROM THE HEMPSTEAD COUNTY CIRCUIT COURT [NO. 29PR-16-79]
HONORABLE DUNCAN CULPEPPER, JUDGE.
Montgomery & Burke, by: Wm. Blake Montgomery and Jim A.
Burke, for appellants.
Wilson, Walker & Short, by: Charles M. Walker, for
PHILLIP T. WHITEAKER, JUDGE.
appellants, Jerita Wylie and Doug Bobo, and the appellee,
Cheryl Shaw, are siblings. They serve as cotrustees of the
GNB III Trust (the Trust), which was created by their
parents, Guy M. and Nellie Bobo. When a disagreement between
the cotrustees arose concerning trust administration, Wylie
and Bobo requested that the probate division of the Hempstead
County Circuit Court make a declaration that a majority of
cotrustees could act on behalf of the Trust and approve the
sale of certain trust property to Bobo. The circuit court
denied their request, and Wylie and Bobo appeal. We reverse
in part and affirm in part.
Facts and Procedural History
Nellie created the GNB III Trust on August 13, 2004. Guy and
Nellie partially funded the Trust with real estate, including
their marital home and acreage. Guy and Nellie were the
grantors of the Trust, the primary beneficiaries, and the
initial trustees of the Trust. The Trust provided that if
either Guy or Nellie was unable to serve as a trustee due to
death, resignation, or incompetency, the other would assume
the full duties of the office of trustee. Wylie, Bobo, and
Shaw were designated as contingent beneficiaries, and in the
event that both Guy and Nellie were unable to serve as
trustees, then Wylie, Bobo, and Shaw were to serve as
successor cotrustees. Unfortunately, Guy and Nellie failed to
specify in the Trust whether the successor cotrustees must
act by majority vote or by unanimity.
2011, Guy was declared incapacitated, and a guardianship was
created. Nellie was appointed as guardian of his person and
of his estate. Based on Guy's incapacity, Nellie became
the sole trustee of the Trust. Nellie passed away in 2015.
Because of Nellie's death and Guy's incapacity,
Wylie, Bobo, and Shaw assumed their roles as successor
cotrustees of the Trust and became the beneficiaries of
Nellie's one-half interest in the Trust.
among Wylie, Bobo, and Shaw developed in 2016. Bobo desired,
individually and not as cotrustee or beneficiary, to purchase
real estate owned by the Trust. Wylie agreed with Bobo's
purchase. Bobo and his wife entered into a contract to
purchase with the Trust. Because Bobo was a trustee and was
attempting to purchase a trust asset, his offer to purchase
was made contingent on court approval.
and Bobo, pursuant to Arkansas Code Annotated section
28-73-802 (Repl. 2012), petitioned the Hempstead County
Circuit Court to approve Bobo's offer to purchase trust
property. Shaw responded and filed a counterpetition claiming
that Wylie and Bobo had committed serious breaches of trust
and fiduciary duty and seeking their removal as cotrustees
and coguardians. She requested that the court appoint an
independent third party as trustee. Shaw also claimed that
Bobo had entered into a pasture-lease agreement with the
Trust; that the rental rate was far below the fair rental
value for comparable property in the area; that Bobo had
already taken possession of the premises and had cut and
baled hay thereon; and that she was willing to pay more for
the subject property and more for pasture rental but had not
been given an opportunity to do so. Wylie and Bobo denied the
any court action was taken on the petition or
counterpetition, Wylie and Bobo filed a motion for a
temporary order requesting that the court find that a
majority of the three cotrustees could act with all the
authority and power granted to a trustee under the trust
declarations. They asserted that such a finding was necessary
because banks were refusing to allow them to conduct banking
business without the unanimous consent of all the cotrustees.
As a result, they were having to pay trust expenses directly
out of their personal funds.
court took no action on the request for a temporary order but
did conduct a final hearing on the petition and
counterpetition. After the hearing, the circuit court entered
an order denying the petition to approve the sale and lease
of trust lands to Bobo and provided that no further real
estate transactions could occur without the unanimous
agreement of the trustees or prior court approval. The order
also denied Shaw's request to have a third party
appointed as trustee.
and Bobo filed a motion for new trial pursuant to Arkansas
Rule of Civil Procedure 59(a)(6). They asserted that a new
trial should be granted on their petition for approval of the
sale of real property because (1) the sale was fair, (2) it
had been authorized by the majority of trustees, and (3) it
was in the best interest of the Trust and its beneficiaries.
Essentially, they argued that the circuit court's denial
of their petition was contrary to the preponderance of the
evidence. They also argued that they should be granted a new
trial on their request for declaratory relief. They cited
Arkansas Code Annotated section 28-73-703(a), which provides
that "[c]otrustees who are unable to reach a unanimous
decision may act by majority decision." They claimed
that this statute clearly and unambiguously authorized a
majority of trustees to make decisions on behalf of the Trust
and that the circuit court erred in concluding that any sale
of real estate must be by unanimous agreement of the trustees
or by court approval. Shaw responded to the motion, denying
that Bobo and Wylie were entitled to a new trial on the
circuit court did not rule on the motion within thirty days;
therefore, it was deemed denied. Wylie and Bobo appeal the
denial of their motion for new trial, arguing that the
Arkansas Trust Code provides that a majority of three
cotrustees may make decisions when unanimity cannot be
obtained and that the circuit ...