Garrett v. Neece

          APPEAL FROM THE SEBASTIAN COUNTY CIRCUIT COURT, FORT SMITH DISTRICT [NO. 66FCV-16-779] HONORABLE STEPHEN TABOR, JUDGE

          Hall, Estill, Hardwick, Gable, Golden & Nelson, P.C., by: Curtis E. Hogue and M. Scott Hall, for appellant.

          Hardin, Jesson & Terry, PLC, by: Robert M. Honea and J. Leslie Evitts III, for appellee.

          BART F. VIRDEN, JUDGE.

         Appellant John C. Garrett, as heir and nominated personal representative of Nancy Lee Garrett's estate, appeals from the Sebastian County Circuit Court's order that granted summary judgment to appellee George Webb Neece and denied summary judgment to Nancy Lee Garrett.^[1] In its order, the trial court determined that trust documents executed by Eva Lee Neece, the now deceased mother of George and Nancy, evidenced her intent to give Tract A, consisting of 39.07 acres, to George and Tract B, consisting of 38.49 acres, to Nancy. Garrett argues that the trust (1982 Revocable Trust) created by Eva to hold the previously undivided eighty-acre tract was not revoked and that the eighty-acre tract remains in the 1982 Revocable Trust. We affirm and remand with instructions.

         I. Background and Procedural History

         In March 1982, Eva, a widow at the time, established the 1982 Revocable Trust holding property, including approximately eighty acres in Sebastian County. Eva identified herself as both settlor and trustee. She named George and Nancy as successor trustees. The trust provided that the settlor reserved the right to revoke the trust at any time but did not specify a manner for revocation. It further provided that, in the absence of revocation, the trust would remain in effect until the death of the settlor, at which time the successor trustees would distribute one-half of the assets to George and the other one-half to Nancy. The 1982 Revocable Trust also provided,

Generally, and without limitation by any specific enumeration herein, the Trustees shall have the power to manage, control, operate, convert, reconvert, invest, reinvest, sell, exchange, lease, mortgage, create a security interest in, pledge, pool, utilize or otherwise encumber and deal with the property of this Trust, for and in behalf of this Trust and the beneficiaries thereof, as any individual would have in respect of his own property and funds.

         On May 5, 2009, Eva executed a quitclaim deed from herself, individually, to George, conveying 39.07 acres of the eighty-acre tract from the 1982 Revocable Trust. The deed was filed August 15, 2011. This portion is referred to as Tract A. On July 28, 2009, Eva executed an amendment to the 1982 Revocable Trust in which she excepted from the trust's property 39.07 acres (Tract A); the amendment provided that the remaining property, 38.49 acres (referred to as Tract B), would be distributed to Nancy upon termination of the trust.

         On January 22, 2010, Eva executed another revocable trust (2010 Revocable Trust) and specifically revoked the 1982 Revocable Trust and all subsequent amendments to it. She again identified herself as settlor and trustee and named George as successor trustee. Eva then purported to transfer property, including Tract B, into the 2010 Revocable Trust. No mention was made of Tract A. Eva again reserved the right as settlor to revoke the trust at any time. Further, the trust provided that, in the absence of revocation, the trust shall remain in effect until the death of the settlor, and at that time the successor trustee shall initiate a sale of Tract B and distribute the proceeds in one-third shares to three members of the Garrett family.

         On August 22, 2011, Eva did two things: she executed an amendment to the 2010 Revocable Trust and executed her last will and testament. The amendment to the 2010 Revocable Trust included a specific bequest of 38.49 acres (Tract B) to the Nancy Lee Garrett Bypass Trust.^[2] The amendment also provided that the balance of the trust estate should be distributed to George if he survived the settlor. In Eva's will, she gave the rest, residue, and remainder of her property to the trustee of the 2010 Revocable Trust with instructions to add the property to the trust and distribute the property in accordance with the 2010 Revocable Trust and its amendment. Eva died in June 2015.

         In August 2016, Nancy filed a complaint against George, individually and as successor trustee of the 1982 Revocable Trust, seeking a declaratory judgment that the 2009 conveyance of Tract A from Eva, individually, to him is void and should be set aside and that the 1982 Revocable Trust be declared owner of the property at issue in the deed, of which George and Nancy are joint owners. George filed an answer to Nancy's complaint asserting that the 1982 Revocable Trust was revoked on January 11, 2010, and no longer exists. George denied the material allegations of the complaint.

         On February 14, 2017, Nancy moved for summary judgment, asserting that there were no genuine issues of material fact to be litigated, that she was entitled to a declaration that the 2009 quitclaim deed from Eva to George is void and therefore should be set aside, and that the 1982 Revocable Trust remains in full force and effect with George and Nancy as its rightful beneficiaries. She attached to her motion a copy of the 1982 Revocable Trust and the 2009 quitclaim deed to George.

         In March 2017, George amended his answer and pled affirmatively that, by executing and delivering the 2009 quitclaim deed to him, Eva effectively partially revoked the 1982 Revocable Trust or, alternatively, Eva made a distribution of Tract A outside the trust. George admitted that Eva created the 1982 Revocable Trust but asserted that he "lack[ed] sufficient knowledge or information to form a belief as to the truthfulness of the allegation that the real property which is the subject of this litigation was conveyed to the Trustee of the 1982 Trust" and "demand[ed] that [Nancy] be held to strict proof thereof." George also moved for summary judgment and noted, "[Nancy] alleges, but has not yet provided any proof, that legal title to the lands which are the subject of this litigation was formally conveyed to the Trustee of the 1982 Trust." He alleged that Eva expressly revoked the 1982 Revocable Trust when she executed the 2010 Revocable Trust and that she either effectively conveyed Tract A to him through the 2009 quitclaim deed or, upon revocation of the 1982 Revocable Trust, title to the assets reverted to Eva as the settlor. George attached to his motion, in addition to copies of the 1982 Revocable Trust and the 2009 quitclaim deed, the amendment to the 1982 Revocable Trust, the 2010 ...