October, 2020 - Case Summaries - Trust/Estates Law

*Disclaimer* - the below case summaries are not to be construed as legal advice, they are nonexhaustive, and they contain only my own summary/interpretation of the cases so noted.

NO. CAAP-17-0000481

IN THE MATTER OF THE CHARLES L. LAKE, JR. and THERESA PHYLLIS LAKE REVOCABLE TRUST, DATED NOVEMBER 30, 1987, AS AMENDED

Memo Op

Subjects Include: Right to Amend Trust After Death of One Settlor; Contractual Agreements Made by the Trust; Equitable Claims Against the Trust

 Appeal From:

  • Appeal from the June 5, 2017 Judgment on the Order Denying Petition for Instructions and the June 5, 2017 Judgment on the Order Granting Petition to Confirm Settlor's Right to Amend Trust and Trustee's Authority Over Real Property.

  • The Beneficiaries also challenge the Circuit Court's: (1) June 5, 2017 Order Denying Petition for Instructions (Order Denying Instructions); and (2) June 5, 2017 Order Granting Petition to Confirm Settlor's Right to Amend Trust and Trustee's Authority Over Real Property (Order Confirming Settlor's Right to Amend.

 Background:

  • Surviving Settlors (Mrs. Lake and successor trustee, Cheryl) filed petitioner to confirm settlor's right to amend.

  • The petition further states that Mr. Lake died on March 23, 2015, and asserts that Mrs. Lake held the power and authority to amend the Trust after the death of Mr. Lake, with the consent of Cheryl.

  • Mrs. Lake and Cheryl requested that the Circuit Court "confirm that Trustee is entitled to terminate Bob's tenancy of [46-251 Kalali Street] and to be restored to immediate possession of [46-251 Kalali Street]." Additionally, the petitioners sought to "confirm the authority of Trustee to sell real estate owned by the Trust estate, including without limitation [46-251 Kalali Street], pursuant to the terms of the Trust."

Beni's Argued that Trust Became Irrev Upon Death of First Settlor:

  • They argued that "a proper reading of the Trust, as the Settlors intended it, would require that the Trust be irrevocable," especially in order to provide the tax benefits sought in the First Amendment.

  • The Beneficiaries requested that the Circuit Court: (1) instruct Cheryl as to the irrevocable nature of the Trust Agreement following the death of Mr. Lake; (2) invalidate any amendments made after the death of Mr. Lake; and (3) reaffirm the agreement between Bob and the Trust, which (purportedly) provides that Bob is entitled to live at 46-251 Kalali Street until the death of both of his parents and that, upon their death, he will receive title to 46-309 Kalali Street.

Lower Court Ruled in Favor of the Settlors' Right to Amend.

 

Points of Error:

(1) failing to recognize that the 1999 First Amendment to the Trust limited the power to amend to the Lakes' joint lifetimes and concluding that the Lakes' joint trust and its amendments gave Mrs. Lake the power to amend the trust after Mr. Lake died;

(2) concluding the Trust's 2007 equalization agreement with Bob was invalid and not enforceable and issuing a writ of possession to evict Bob from 46-251 Kalali Street; and

(3) summarily denying Bob relief on his equitable claims against the Trust and entering judgment without providing reasons for its conclusion.

 

Standards of Review:

Trust: "The construction of a trust is a question of law which this court reviews de novo." In re Lock Revocable Living Trust, 109 Hawaii 146, 151, 123 P.3d 1241, 1246 (2005) (citation and internal quotation marks omitted).

Equity Court: "The relief granted by a court in equity is discretionary and will not be overturned on review unless the circuit court abused its discretion by issuing a decision that clearly exceeds the bounds of reason or disregarded rules or principles of law or practice to the substantial detriment of the appellant." Aickin v. Ocean View Invs. Co., 84 Hawaii 447, 453, 935 P.2d 992, 998 (1997) (citation, internal quotation marks, and brackets omitted).

 

Discussion:

Right to Enter FOFs/COLs AFTER Notice of Appeal Filed - Lack of JX:

  • Because the general rule is that "the filing of a notice of appeal divests the trial court of jurisdiction over the appealed case," we must determine whether the Circuit Court had jurisdiction to enter the FOFs and COLs. See TSA Int'l Ltd. v. Shimizu Corp., 92 Hawaii 243, 265, 990 P.2d 713, 735 (1999) (citing State v. Ontiveros, 82 Hawaii 446, 448–49, 923 P.2d 388, 390–91 (1996); Richardson v. Sport Shinko (Waikiki Corp.), 76 Hawaii 494, 500, 880 P.2d 169, 175 (1994)). "Notwithstanding the general effect of the filing of a notice of appeal, the trial court retains jurisdiction to, inter alia, determine matters collateral or incidental to the judgment, and may act in aid of the appeal." Id. For example, a circuit court retains jurisdiction to enforce a judgment, to approve a supersedeas bond to stay a judgment, or to hear a motion for stay pending appeal. Sakatani v. Murakami, CAAP-10-0000106, 2012 WL 2878131, *3 (Haw. App. July 13, 2012) (SDO) (citing MDG Supply, Inc. v. Diversified Invs., Inc., 51 Haw. 375, 381, 463 P.2d 525, 529 (1969)); Chun, 106 Hawai#i at 430 n.13, 106 P.3d at 353 n.13. Conversely, a circuit court lacks jurisdiction to "alter the substance" of a final judgment while an appeal is pending or to 13 NOT FOR PUBLICATION IN WEST'S HAWAII REPORTS AND PACIFIC REPORTER accept a stipulation of the parties as to the facts of the case after the filing of the notice of appeal. Tanga v. Centex Homes, CAAP-14-0001036/CAAP-14-0001373, 2018 WL 581136, *3-4 (Haw. App. Jan. 29, 2018) (mem. op.); State v. Pacquing, 129 Hawaii 172, 186, 297 P.3d 188, 202 (2013). Additionally, Rule 52(b) of the Hawaii Rules of Civil Procedure (HRCP) 9 allows the court to "amend its findings or make additional findings" upon motion of a party made not later than ten days after entry of the judgment.

  • No JX: Accordingly, we conclude that the Circuit Court lacked jurisdiction to enter the FOFs/COLs.

 

Re Power to Amend:

Rules re Trust Interpretation:

  • "When construing a trust, this court is guided by principles relating to the interpretation of trusts as well as those relating to the interpretation of wills." In re Lock, 109 Hawaii at 151, 123 P.3d at 1246 (citing Trust Created Under the Will of Damon, 76 Hawaii 120, 124, 869 P.2d 1339, 1343 (1994)).

  • "It is a fundamental principle that the intent of the settlor, as expressed in the trust instrument, shall prevail, 'unless inconsistent with some positive rule of law.'" In re IshidaWaiakamilo Legacy Trust, 138 Hawaii 98, 102-03, 377 P.3d 39, 43- 44 (App. 2016) (quoting In re Lock, 109 Hawaii at 151-52, 123 1 P.3d at 1246-47).

  1. Holding - Yes Power to Amend Even After First Settlor Died: Article 2.04 of the Trust Instrument unambiguously confers upon the surviving Settlor the right to amend the Trust following the death of the other Settlor. It is undisputed that none of the subsequent amendments explicitly deleted or modified this provision, notwithstanding that various other paragraphs in the Trust Instrument were specifically "deleted" and "substituted" by way of those amendments. Thus, Article 2.04 remains in full effect

 

Re Bob's Agmt with the Trust:

Issues Alleged: Whether the oral contract, if it existed and was validly formed, was unenforceable for its failure to comply with the Statute of Frauds, which is a legal conclusion this court reviews de novo. 11 See Nelson v. Boone, 78 Hawaii 76, 80, 890 P.2d 313, 317 (1995).

Statute of Frauds Applies: The parties do not appear to dispute that the purported agreement would fall within the Statute of Frauds as a contract for an "interest in or concerning" land.

Nelson Case:

  • Moreover, the Beneficiaries construe too broadly the holding in Nelson with respect to the purpose of the Statute of Frauds. In that case, the Hawaii Supreme Court addressed the narrow issue of "[w]hether the Statute of Frauds bars specific performance of an otherwise enforceable written agreement for the sale of land…

  • In light of the particular circumstances of that case, the supreme court held that "the Statute of Frauds should not be inequitably applied to prevent the enforcement of otherwise valid oral contracts or even written agreements signed by agents without the written authorization of their principals." Id. at 82, 890 P.2d at 319.

Holding - No Relief: In contrast, the issue here is not simply whether a strict and technical application of the Statute of Frauds would undermine the fundamental purpose of the statute and prevent enforcement of "a bargain fairly made." See id. Here, the parties clearly dispute whether Mr. Lake, as Trustee, ever promised Bob a certain inheritance or a right to reside at a particular Trust property and whether a valid contract resulted therefrom.

Can Part Performance Save It?:

  • Rule: "'Performance or part performance of a contract required to be in writing will take the matter out of the statute of frauds, where the party seeking to enforce it has acted to his [or her] detriment in substantial reliance upon the oral agreement.'" Credit Assocs. of Maui, 98 Hawaii at 469, 50 P.3d at 438 (quoting Shannon v. Waterhouse, 58 Haw. 4, 5-6, 563 P.2d 391, 393 (1977)). Part performance must be established by clear and convincing evidence. Boteilho v. Boteilho, 58 Haw. 40, 42, 564 P.2d 144, 146 (1977); Shannon, 58 Haw. at 6, 563 P.2d at 394.

  • No It Cannot: Here, Bob's actions in making payments to and on behalf of the Trust do not constitute part performance referring unequivocally to the alleged equalization agreement since they are equally referable to payments made in order to reside at 46- 251 Kalali Street.13 See Rossiter, 4 Haw. App. at 339-40, 666 P.2d at 621-22

Not Saved by the Separate "Schedule" in the Trust Noting that Bob Would Receive the Property:

  • [W]e cannot conclude that the writings "state with reasonable certainty the essential terms of the unperformed promises in the contract." Burgess, 5 Haw. App. at 588, 704 P.2d at 936.

  • We cannot conclude that the 2011 and 2014 Guides to Disposing of Assets, even when taken together, state with reasonable certainty the complete and essential terms of the purported agreement. Consequently, there does not exist a writing or memorandum sufficient to satisfy the Statute of Frauds in order to render the purported oral agreement enforceable. Accordingly, the Beneficiaries' second point of error is rejected.

 

Equitable Claims:

Error Alleged: Beneficiaries contend that the Circuit Court erred in "summarily reject[ing] Bob's claims for equitable relief" without stating its reasons. The Beneficiaries assert that because the denial of equitable relief is reviewed under the highly deferential abuse of discretion standard, the "failure to set out reasons is alone sufficient for this court to vacate the judgment and remand the case."

Holding - No Relief: On appeal, the Beneficiaries fail to present any substantive argument with respect to the Circuit Court's rejection of the Beneficiaries' restitution claim, instead seeking relief based on the Circuit Court's lack of explanation of its ruling. We conclude that the Beneficiaries have waived this point of error [.]