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| Allegedly, there are people who like to drive these things. |
By Andrew Delaney
Love. It’s what makes a Subaru a Subaru. If you listen to VPR, you’ve heard this tagline. I’m guessing the Lamson brothers might have a couple things to say about that. Personally, I hate Subarus.
Roger and Frank were both beneficiaries and trustees of a trust established by their mom. Roger sued Frank in the probate division, saying that Frank’s personal use of mom’s cars violated the trust. The probate division found for Roger. Frank appealed to the civil division, which gave Frank summary judgment on the use-of-cars issue. Roger appeals.
Let’s back up. Frank, Roger, and a bank were all trustees of mom’s revocable trust. In 2012, Roger filed for an accounting, later amending his complaint to argue that Frank had breached the trust and distributed funds in Frank’s self interest. The probate division removed Roger, Frank withdrew, and the probate division appointed an independent institutional trustee and a guardian for mom.
Roger alleged various breaches of the trust, one of which was the use-of-cars claim. Essentially, Roger said that Frank bought a 2009 Subaru with trust funds, and that the car’s primary use was for Frank’s and Frank’s family’s benefit, not mom’s. There was also a claim that mom’s 2000 Subaru was used to the same ends. An accountant put a value on the use-of-cars claim of about $45,000. As a person who hates Subarus—and I know I’m going to offend some people here but I don’t care because Subarus are horrible—I cannot honestly wrap my head around this claim. I would award Frank money for having to drive Subarus at all. I'd make a terrible judge.
Mom died and there was a hearing on Roger’s petition. The probate court made extensive findings. For the most part, the probate division found in Frank’s favor. On the use-of-cars claim, however, the probate division reasoned that the 2009 Subaru was purchased with funds that “involved” trust principal, that the mileage was excessive, and the car was ultimately transferred to Frank in 2011. So the probate division ordered Frank to pay damages of about $45,000.
Frank appealed that part to the civil division. Roger appealed everything else. We’re only dealing with Frank’s stuff today.
Frank and Roger both moved for summary judgment. Frank pointed out that the 2009 Subaru was purchased from a joint account with mom, not a trust account. Frank also pointed out that the probate division didn’t find that Frank breached the trust in purchasing the Subaru, nor did it order Frank to repay the purchase price. Accordingly, because there was no evidence that the cars were trust assets, then Roger’s only claim for breach of trust was based on excessive personal use of the non-trust-asset cars, there’s no claim.
Roger argued in response that his claim for breach of trust covered the car purchase and that the probate division implicitly found that the ’09 was purchased with trust assets, so everything is on the table.
Long story short, the trust provided that Florida law controlled and provided that mom was entitled to all the income from the trust during her lifetime. Language in the trust also allowed for funds to be withdrawn from the principal for mom’s benefit at her direction “in writing.” Funds were transferred from a trust account to a personal (joint with Frank) account per mom’s request, and said funds were used to purchase the ’09 Subaru. Mom signed the bill of sale. Mom already had another car. Frank used the cars to transport mom and also sometimes used them for his personal use.
There was no evidence to indicate that it was Frank who caused the funds to be transferred. In other words, there was no support for the idea that this was Frank’s doing and not mom’s. Because the law and the trust provided that mom could spend the principal if she decided to, the civil division found no basis to consider the cars trust assets. And if the cars aren’t trust assets, then the wheels fall off Roger’s claim. (Yes, I completely intended to use that pun—you’re welcome.) On this basis, the civil division granted summary judgment to Frank.
Roger appeals.
He “focuses primarily on the transfer of funds from the trust account to Virginia and Frank’s joint account for the purposes of funding the car purchase.” Roger points to a comment in the Uniform Trust Code that provides “when a trustee enters into a transaction involving trust property for the trustee’s own personal account, the transaction is presumed to be a conflict and voidable without further proof.” He argues that the transfer to a personal account from the trust and the fact that Frank ultimately ended up with the car show enough self-dealing to make the transaction voidable.
The standard of review for summary judgment should be familiar to you, dear reader, by now. The SCOV applies the same standard as the trial court, considering “whether the undisputed facts show that either party is entitled to judgment as a matter of law.”
The majority concludes that Frank is entitled to summary judgment here.
The majority begins by noting that Roger’s arguments have evolved through this case’s course, and this makes the review a little more complicated. Roger argued in the probate and civil divisions that the cars were trust assets and that Frank owed the trust the value of Frank’s personal use. He didn’t try to get Frank to pay back the purchase price of the ’09 Subaru below.
The majority sees holes in this argument for several reasons. First there’s no evidence that either car was a trust asset. Insofar as the argument is that Frank owes the trust for purchasing the ’09 Subaru—that the purchase is a breach of the trust—then the remedy would be a Frank-pays-the-trust-back-for-the-car order, not a Frank-pays-for-the-excess-use order. Further, there was no evidence whatsoever that the 2000 Subaru was a trust asset. And so, the majority holds that this evidence can’t support Roger’s claim as a beneficiary against Frank as trustee for breach of trust.
Finally, there was no evidence that gas and maintenance were paid for with trust funds. Because of this, the federal-reimbursement-rate argument falls flat. So, the majority concludes “that Roger’s claim for damages in favor of the trust based on the calculations in his expert’s report is unsupported by the evidence as a matter of law.”
On the transfer-of-the-funds-to-buy-the-car-was-self-dealing-and-therefore-voidable argument, the majority also concludes that Frank gets summary judgment. All the evidence indicates that mom approved of the transfer. She signed the paperwork.
While the majority acknowledges there’s an argument that the transaction was self-dealing on Frank’s part—and that it can be reasonably inferred from the available evidence—if the transaction was approved by the beneficiary, then there’s no real breach. Because mom approved the transaction, Roger’s argument is, more or less, that any kind of self-dealing by a trustee trumps the beneficiary’s ability to make any decisions. The majority doesn’t buy that argument.
Roger also argues that Frank didn’t produce a written request from mom for the transfer. The majority notes that Roger bears the burden here and that the record from the bank indicates that mom’s request for the transfer was “on file,” so this argument isn’t going very far. Finally, so far as Roger argues the bank shouldn’t have transferred funds from the trust to the personal account, the majority reasons that this is a claim against the bank not Frank, so tough luck, Chuck . . . um, I mean Roger. The majority affirms summary judgment in Frank’s favor.
Justice Dooley, in a one paragraph dissent, reasons that summary judgment ought not have been granted to Frank because the evidence shows that mom was essentially blind and deaf, owned a car that she retained after the purchase of the ’09 Subaru, and that the fact that the bank’s notes on the transaction indicate that mom could be reached through Frank’s cell if the bank had questions all raise “a reasonable inference that it was Frank that controlled the direction of the money to his account.”
And there you have it. See? Subarus just cause problems.
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