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Garwood v. Garwood

June 29, 2010

ORLAN O. GARWOOD AND CAROL A. JONES AS TRUSTEES OF THE W.J. GARWOOD AND MILDRED E. GARWOOD FAMILY TRUST, APPELLANTS (DEFENDANTS),
v.
WILLIAM J. GARWOOD, APPELLEE (PLAINTIFF).



Appeal from the District Court of Platte County The Honorable John C. Brooks, Judge.

The opinion of the court was delivered by: Golden, Justice.

Before VOIGT, C.J., and GOLDEN, HILL, KITE, BURKE, JJ.

[¶1] On May 2, 2006, Appellee, William J. Garwood (Mr. Garwood), filed a lawsuit seeking an order directing the Appellants (Trustees), who are two of Appellee's three children and two of the three designated Trustees of the W.J. Garwood and Mildred E. Garwood Trust (Family Trust), to pay to him a sum of money from the Family Trust sufficient to provide for his support, as provided by the terms of the Trust. The district court issued an order allocating trust assets and directing payments to Mr. Garwood, the Trustees appealed, and on October 22, 2008, this Court issued its decision affirming that district court order. See Garwood v. Garwood, 2008 WY 129, 194 P.3d 319 (Wyo. 2008) (Garwood I).

[¶2] This matter is again before this Court, this time on the Trustees' appeal from a subsequent order of the district court directing the Trustees to reimburse the Family Trust for amounts the Trustees withdrew from the trust for payment of their attorneys' fees and costs. We affirm.

ISSUES

[¶3] The Trustees present the following issues on appeal:

1. Is it contrary to the Wyoming Rules of Civil Procedure and Wyoming law for the District Court to issue a Supplemental Order purporting to expand the judgment in the underlying matter nearly two years after the District Court entered its judgment and more than five months after this Court affirmed the District Court's judgment?

2. Did the District Court's Supplemental Order erroneously award a judgment against individuals that were not parties to Appellee's underlying Complaint?

3. Did the District Court's Supplemental Order violate the rights of Orlan O. Garwood and Carol A. Jones individually by levying a judgment against them without notice of the claim or a meaningful opportunity to be heard opposing such claim?

4. Is the District Court's Supplemental Order contrary to Wyoming's Uniform Trust Code?

FACTS

[¶4] The facts underlying the original dispute between these parties over the Family Trust assets and Mr. Garwood's entitlement to subsistence payments from that trust are set forth in our opinion in Garwood I, 2008 WY 129, 194 P.3d 319, and we will not restate that detailed recitation of facts here, except as necessary to frame the current issues.

[¶5] Mr. Garwood and his wife, Mildred Garwood, were married in 1951. The Appellant Trustees in this matter, Orlan O. Garwood and Carol A. Jones, are the natural children of Mrs. Garwood from a prior marriage. Mr. Garwood adopted them shortly after he married Mrs. Garwood in 1951. A third child, Judy K. Kechter, was born of Mr. Garwood's marriage to Mrs. Garwood. Judy Kechter is named in the district court proceedings as a party to this litigation in alignment with her father, but she has had limited involvement in the proceedings and is not represented by counsel.

[¶6] In 1992, Mr. and Mrs. Garwood purchased a Revocable Living Trust "kit" from a door-to-door salesman representing Somerset Group of Salt Lake City, Utah. The district court found, and we agreed in our Garwood I decision, that the trust was of no earthly use to the Garwoods. Garwood I, ¶ 5, 194 P.3d at 321. As we noted, at its peak, the Garwoods' estate was valued at about $400,000, and at that time, adverse estate tax consequences did not arise until the estate was over $1,200,000 (if both were living) and $600,000 (if only one of the two were living). Nonetheless, on April 21, 1992, Mr. and Mrs. Garwood executed the trust documents and transferred some of their assets, including their home in Wheatland, into a trust.

[¶7] After executing the trust documents, Mr. and Mrs. Garwood ignored the terms and requirements of the trust and largely used their assets as though the trust did not exist. In 2005, Mrs. Garwood passed away, and that event caused the trust to divide into two separate trusts: the Marital Trust and the Family Trust. Mr. Garwood was the trustee of the Marital Trust, and the Garwoods' three children were the trustees of the Family Trust. Even after Mrs. Garwood's death and the division of the trust, all of the parties to this litigation continued to ignore the Trusts.

[¶8] The disregard of the Trusts and neglect by all Trustees to follow the terms of the Trusts continued until a dispute arose in 2006. In 2006, Mr. Garwood needed money to live on because the Marital Trust's cash assets had been expended and his income was not sufficient to cover his on-going expenses. Mr. Garwood, who had in 2006 moved from Wheatland to Cheyenne, therefore desired to sell his Wheatland home. Title to the Wheatland home was, however, in the Family Trust, and a majority of the Trustees of the Family Trust would not approve the home's sale. Specifically, Orlan Garwood and Carol Jones objected to the sale of the Wheatland home, while Judy Kechter did not object to the home's sale.

[¶9] Because the Trustees refused to approve the sale of Mr. Garwood's Wheatland home, Mr. Garwood filed a complaint in district court. Through that action, Mr. Garwood sought an order directing the Trustees of the Family Trust to liquidate the Wheatland home and pay Mr. Garwood subsistence payments from the proceeds. The Trustees, Orlan Garwood and Carol Jones, filed an answer and counterclaim seeking an order directing Mr. Garwood to repay to the Trusts sums of money that they contended he had expended in violation of the terms of the Trusts.

[¶10] On June 11, 2007, the district court issued a decision letter that, although it ordered Mr. Garwood to repay roughly $21,000 to the Family Trust, generally ruled in Mr. Garwood's favor and directed the Trustees to liquidate the Wheatland home and ensure that Mr. Garwood's monthly income from the Trusts and any other sources totaled at least $3,200 per month. On July 2, 2007, the district court entered its judgment in Garwood I, and on July 30, 2007, the Trustees filed their notice of appeal. We issued our decision affirming the district court's judgment on October 22, 2008.

[¶11] After the district court entered its judgment in Garwood I, and while the Trustees' appeal was pending, motions and applications continued to be filed with the district court. The first was Mr. Garwood's application for attorneys' fees and costs in the amount of $20,559.85, which was filed on July 3, 2007, the day after the district court entered its judgment in Garwood I. Mr. Garwood's application was made pursuant to Wyo. Stat. Ann. § 4-10-1004, the Uniform Trust Code provision governing attorneys' fees and costs, and included an itemized statement of the services and fees of Mr. Garwood's attorney. On July 13, 2007, the Trustees filed their response objecting to Mr. Garwood's application for fees and costs. The Trustees argued that attorneys' fees and expenses are not automatically paid under the Uniform Trust Code and that Mr. Garwood had failed to show that justice and equity required payment of his fees from the Trust or that the fees applied for were reasonable and customary.

[¶12] On August 2, 2007, Mr. Garwood filed another application with the district court, this one seeking an order directing the Trustees to make payments to Mr. Garwood totaling $58,300 to allow him to purchase a wheel chair, hearing aids and a wheel chair accessible van. On August 24, 2007, the Trustees responded and requested that the district court deny Mr. Garwood's application. The Trustees pointed out that payment of the current application, together with payment of Mr. Garwood's attorneys' fees, would use all of the trust funds, which they argued was contrary to the stated purpose of the Trust. The Trustees further argued that the application should be denied because Mr. Garwood had "failed to set priorities which expenditures he deems more important to him. In a situation where limited resources exist, setting priorities what is important and what is unimportant is imperative." The Trustees also argued that the payment should be rejected because "payment to Plaintiff of the remaining trust assets before final resolution of this matter will negate the appeal of this matter and irreparably prejudice Defendants in this matter."

[¶13] On October 23, 2007, Mr. Garwood filed an application with the district court for payment of attorneys' fees to respond to the Trustees' Supreme Court appeal. The application requested between $5,000 and $7,000 in anticipated attorneys' fees for the appeal.

[¶14] On November 6, 2007, the district court issued an Order on Applications for Disbursement of Funds. The district court granted Mr. Garwood's July 3, 2007, application for attorneys' fees and costs and ordered the Trustees to issue payment to Mr. Garwood of attorneys' fees in the amount of $23,200 and costs in the amount of $1,020.35, for a total payment of $24,220.35. The district court denied the other application for payment of expenses from the Family Trust.*fn1

[¶15] On November 15, 2007, the Trustees filed a motion to stay the district court's order awarding attorneys' fees and costs to Mr. Garwood. In that motion, the Trustees informed the district court that only $17,666 remained in the Family Trust, and that payment of the ordered attorneys' fees and costs would consume the fund. The Trustees did not disclose amounts expended but did inform the district court for the first time that the Trustees had expended funds from the Family Trust to pay costs of their litigation and appeal and for anticipated accounting and tax costs. The Trustees further argued that should Mr. Garwood require funds for litigation costs, he should be required to use funds from the Marital Trust, not the Family Trust. They stated:

The nature of the underlying matter was such that Plaintiff elected to bring suit in this matter, not the Trustees. The use of the Marital Trust funds for the cost of the underlying suit is certainly within the realm of discretionary uses left the Plaintiff by the language of the Marital Trust. The provision of Family Trust funds for such payments, when such funds are stated by the trust agreement to be for the support of the Plaintiff is not in keeping with the tenor of the trust agreement.

[¶16] Subsequent submissions by the parties showed that at some point after the district court entered its judgment on July 2, 2007, and after the subsequent sale of the Wheatland home, the Trustees transferred $29,320.85 from the Family Trust to pay attorneys' fees and costs and another $20,000 from the Family Trust to the law firm of Hickey & Evans, LLP, as a retainer for costs and fees associated with the Trustees' Supreme Court appeal and for anticipated accounting and tax costs.

[ΒΆ17] The record is unclear as to the sequence of hearings that followed the Trustees' motion for a stay. At some point during an unrecorded telephone hearing with the district court, Mr. Garwood withdrew his request to have his attorneys' fees and costs paid from the Family Trust, and ...


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