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McDermott v. Cline

Court of Appeals of Arkansas, Division III

October 23, 2019

Harry MCDERMOTT and Angela Blevins, Appellants
v.
James M. CLINE, Individually and as Trustee of the James M. Cline and Susan Cline Trust, Appellee

Page 145

          APPEAL FROM THE BENTON COUNTY CIRCUIT COURT [NO 04CV-18-1095], HONORABLE XOLLIE DUNCAN, JUDGE

         Harry McDermott, Fayetteville, for appellants.

         Stephen Lee Wood, P.A., Rogers, by: Stephen Lee Wood, for appellee.

          OPINION

         ROBERT J. GLADWIN, Judge

Page 146

          Harry McDermott appeals the Benton County Circuit Court’s orders sanctioning him under Rule 11 of the Arkansas Rules of Civil Procedure (2018) and denying his motion for recusal. On appeal, McDermott contends that the circuit court abused its discretion. We affirm.

          I. Facts

          McDermott, attorney for Angela Blevins, filed suit on her behalf alleging breach of fiduciary duty and conversion against James M. Cline, Angela’s stepfather. James was married to Angela’s mother, Susan Cline, who died on February 4, 2017. In her will, Susan left her estate to the James M. Cline and Susan E. Cline Trust (the Trust), which was established by a "Revocable Trust Agreement" between James and Susan.

          The Trust was established for the management of the couple’s estate during their lifetimes and for the distribution of their estate upon the death of the survivor of them, and the Trust contains all their real and personal property. The Trust provides that (1) Susan and James are the "settlors" and the "trustees"; (2) the term "settlors" includes the surviving settlor; (3) the survivor of them would serve as the trustee; and (4) if either were unable to serve as trustee, a successor trustee is named. The Trust names Angela and her children, among others, as residual beneficiaries upon the death of the surviving settlor.

          Paragraph 7 of the Trust provides in part:

7. Settlors’ Rights to Amend or to Revoke Trust: The settlors may, by signed and dated instruments delivered to trustees during settlors’ lives:
A. Withdraw property from this trust in any amount or and at any time upon giving at least one business day’s notice in the event of a withdrawal less than the amount of the entire trust assets or at least five business days’ notice in the event of a revocation of the trust prior to the withdrawal.
B. Add other property to this trust.
C. Revoke or amend any term of this agreement in its entirety by giving written notice of the revocation or amendment to the trustees.

          Trustees may waive any notice requirement imposed by this section.

          James filed an affidavit for collection of a small estate in the circuit court after Susan died. Angela filed a competing petition for appointment of administrator of her mother’s estate. During their litigation in the circuit court, Angela’s attorney deposed James, who testified that he and Susan had similarly drafted wills that devised their assets to their Trust. The circuit court denied Angela’s petition, and she did not appeal.

          Instead, Angela filed a new case against James in the circuit court and alleged that the Trust had become irrevocable when Susan died and that it could be amended only for Angela’s benefit. She claimed that James, as the trustee, owed her a fiduciary duty and that he had breached that duty. The complaint alleged that James breached his fiduciary duty as follows:

Page 147

a. undisputedly lied to Angela about the contents of her mother’s will;

b. undisputedly lied to Angela about the contents of the trust;
c. undisputedly had his attorney lie to Angela about her rights under the trust;
d. undisputedly filed fraudulent probate pleadings to enable him to transfer probate assets intended for the trust to be ...

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