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Willey v. Willey

Supreme Court of Wyoming

December 5, 2016

SPENCER D. WILLEY, Appellant (Plaintiff),
v.
BERTHA I. WILLEY, ALLEN F. WILLEY, individually, and FIRST FEDERAL SAVINGS BANK OF SHERIDAN, WYOMING as Trustee of the Allen F. Willey Revocable Trust, As Amended And Restated On, Appellees (Defendants). SPENCER D. WILLEY, Appellant (Plaintiff),
v.
BERTHA I. WILLEY, ALLEN F. WILLEY, individually, and FIRST FEDERAL SAVINGS BANK OF SHERIDAN, WYOMING as Trustee of the Allen F. Willey Revocable Trust, As Amended And Restated On, Appellees (Defendants).

          Appeal from the District Court of Sheridan County The Honorable John G. Fenn, Judge

          Representing Appellant: Steve C.M. Aron and Galen B. Woelk of Aron & Hennig, LLP, Laramie, Wyoming. Argument by Mr. Aron.

          Representing Appellees Willey: Debra J. Wendtland of Wendtland & Wendtland, LLP, Sheridan, Wyoming.

          Representing Appellee First Federal Savings Bank of Sheridan: Amanda K. Roberts and Mistee Lyn Elliott of Lonabaugh & Riggs, LLP, Sheridan, Wyoming.

          Before BURKE, C.J., and HILL, DAVIS, FOX, and KAUTZ, JJ.

          KAUTZ, Justice.

         [¶1] The appellant, Spencer D. Willey, brought a complaint for declaratory judgment and a permanent injunction against the appellees, his father, Allen F. Willey; his father's wife, Bertha I. Willey; and First Federal Savings Bank of Sheridan, Wyoming, as trustee of the Allen F. Willey Revocable Trust (hereinafter First Federal). Spencer[1] sought to prevent the appellees from selling the Willey Ranch, which was held in the trust, by alleging that selling the ranch amounted to a breach of contract. Spencer further alleged that Bertha exerted undue influence over Allen to convince him to sell the ranch and to amend the trust provisions in such a way that it completely removed Spencer from the trust and gave more benefit to Bertha and her children. The district court granted summary judgment in favor of the appellees with respect to the breach of contract claim, but determined issues of material fact existed in the undue influence claims. After a five day trial, a jury determined that Bertha did not exercise undue influence over Allen or his decisions regarding the Willey Ranch or his trust. Spencer now appeals the district court's summary judgment decision and several aspects of the trial. We affirm.

         ISSUES

         [¶2] We have restated the issues presented by the parties:

         1. Whether the district court properly instructed the jury regarding the elements of undue influence.

         2. Whether the special verdict form confused the jury or failed to allow the jury to properly consider all of Spencer's claims.

         3. Whether the district court's judgment improperly deprives Spencer's children, who were not parties to this proceeding, their right to access the courts in the future should they decide to challenge the Allen F. Willey Revocable Trust.

         4. Whether the district court erred when it allowed the successor trustee, First Federal, to participate at trial when Spencer challenged the trust amendment that appointed it as successor trustee.

         5. Whether the district court erroneously granted summary judgment in favor of the appellees on the breach of contract claim when it determined that there were no material facts in dispute.

          6. Whether the district court erred when it denied Spencer's motion for a new trial under Wyoming Rule of Civil Procedure 59.

         FACTS

         [¶3] Spencer Willey is the only surviving child of Allen Willey. Spencer grew up on the Willey Ranch near Sheridan with his parents. Allen's parents (Spencer's grandparents), Ralph and Barbara Willey, also lived on the ranch. Spencer testified that it was always his intention to follow in the footsteps of his grandfather and father and run the Willey Ranch. He also stated that Ralph, Allen and Spencer all assumed Spencer would eventually run the ranch on his own. In 2001, Allen executed the Allen F. Willey Trust Agreement and Declaration of Trust (hereinafter the trust), which included the Willey Ranch as a trust asset. This was a revocable lifetime trust which provided for management of Allen's assets during his lifetime, and for distribution of the trust assets upon his death. As will be more thoroughly discussed below, the trust initially named Spencer as the successor trustee and ultimately benefitted Spencer's children, E.W. and A.W. However, over time, Allen amended the trust and eventually removed Spencer from the trust provisions altogether. We will now review the relevant trust provisions and amendments Allen made to the trust.

         [¶4] On September 12, 2001, Allen executed the trust and served as trustee. Of relevance to this appeal, Allen provided that his son, Spencer, would serve as successor trustee, and if Spencer was unable to serve, then Spencer's wife, Stephanie Willey, would act as successor trustee. Further, Spencer's son, E.W., and his daughter, A.W., [2] would become co-trustees with their parents when they reached the age of twenty-one. The trust also provided that the trust assets would continue to be held in the trust for the combined lifetime of Spencer and Stephanie or until E.W. reached the age of fifty, whichever were to occur last. However, during that time, all of the income from the trust was to be distributed to Spencer and Stephanie until E.W. turned thirty. Thereafter, Spencer and Stephanie would receive half of the income, and their children would equally share the other half of the income. The trust provided Bertha Ligocki (who would later marry Allen and become Bertha Willey) a life estate in the house in which Bertha and Allen mutually resided.

         [¶5] On July 10, 2006, Allen executed the First Amendment to the trust. In the amendment, Allen provided a life estate in another home on the ranch, the Mead Creek ranch house, to Bertha's daughter and granddaughter, Susan Williams and Brittany Phillips.[3] Further, Allen removed Stephanie as a successor trustee of the trust. On March 16, 2009, Allen executed the Second Amendment to the trust and provided that Susan Williams would serve as successor trustee if Spencer was unable or unwilling to serve.

         [¶6] On November 4, 2010, Allen signed the Allen F. Willey Amended and Restated Declaration of Trust which made additional changes to the original trust. Of most significance, the amended and restated trust omitted Spencer and Stephanie as beneficiaries. It no longer provided that Spencer, E.W., or A.W. would serve as successor trustees. Instead, the trust provided that Allen's accountant, Annette Rinaldo, would serve as successor trustee. In the event Ms. Rinaldo would not or could not serve, the Sheridan County District Court was tasked to appoint a successor trustee. The trust also specified that none of Allen's descendants could be appointed as trustee. Further, the trust provided that the trustee distribute the annual mineral income to Bertha, and then after her death to her daughters, Susan and Leslie, and then to E.W. and A.W. Additionally, Bertha was to receive the balance of the trust assets for her lifetime, and to E.W. and A.W. thereafter. The new trust also stated that once Allen was no longer able to operate the Willey Ranch, he preferred that the ranch be leased to Rob Gorzalka. If Mr. Gorzalka chose not to lease the ranch, or the trustee otherwise determined leasing to Mr. Gorzalka was detrimental to the ranch assets, the trustee could lease the ranch to a third party. However, the trustee was prohibited from directly or indirectly leasing the ranch to Spencer.

         [¶7] On April 4, 2011, Allen amended the Amended and Restated Trust by removing the preference that the ranch be leased to Mr. Gorzalka. On October 13, 2011, Allen again amended the Amended and Restated Trust by increasing the beneficial interests of Bertha, Susan and Leslie.

         [¶8] On March 4, 2014, Allen amended the Amended and Restated Trust a third time. The trust now provided that Bertha receive a $200, 000 distribution upon Allen's death. Allen also added Bertha's son, Martin Martinez, as a partial beneficiary. Further, the amendment added a confidentiality provision which prohibited the trustee from disclosing to E.W. and A.W. the terms and provisions of the trust. Finally, the amendment changed the successor trustee to First Interstate Bank of Sheridan and mandated that under no circumstances should Spencer or any lineal descendant of Ralph and Barbara Willey be named Trustee.

         [¶9] Allen executed a final amendment to the trust on November 3, 2014. In that amendment, Allen designated First Federal as the successor trustee if First Interstate Bank was unwilling to serve as trustee.

         [¶10] Prior to executing the 2014 amendments to the restated trust, Allen listed the Willey Ranch for sale on October 8, 2013. On May 14, 2014, Spencer filed a Complaint for Injunction and Declaratory Judgment against Allen, individually and as trustee of the Allen F. Willey trust, and Bertha, individually, to set aside the real estate listing of the Willey Ranch and requested that Allen be removed as trustee of the trust due to incapacity. Spencer requested that Allen be removed as trustee because in 2012 Allen was diagnosed with frontal temporal dementia after seeking medical help with memory loss and speech difficulties. In the Complaint, Spencer also alleged that Allen's wife, Bertha, exercised undue influence over Allen's weakened physical and mental state to convince him to sell the ranch instead of leaving it in the trust for the benefit of E.W. and A.W.

         [¶11] On May 4, 2015, Spencer amended the Complaint and added an allegation that Bertha also exercised undue influence over Allen by convincing him to amend the trust in such a way that it removed Spencer from the trust, reduced the benefits E.W. and A.W. would receive from the trust, and gave Bertha more benefits from the trust.[4]Approximately one month after the Amended Complaint was filed, Allen died. Two months later, the parties tried the case before a jury, and the jury concluded that Bertha did not exercise undue influence over Allen when he executed the 2010 amendment and restatement of the Trust. Spencer filed a motion for new trial, which the district court denied. Spencer filed a timely notice of appeal of the trial judgment and the order denying the motion for new trial.

         [¶12] Other facts will be discussed as they become relevant in the analysis of the issues below.

         DISCUSSION

         1. Burden of Proving Undue Influence

         [¶13] Spencer argues the district court improperly instructed the jury regarding which party has the burden of proving or disproving the existence of undue influence. The first issue that must be resolved is the standard of review this Court will utilize in reviewing this claim. It is not clear whether Spencer is advocating that this Court review the issue using a de novo or abuse of discretion standard, although his argument as a whole seems to proceed as if the de novo standard applies. The appellees argue that Spencer failed to preserve this issue for appeal because he did not object to the undue influence elements instruction at the formal jury instruction conference as required by Wyoming Rule of Civil Procedure 51(b). Consequently, appellees assert that our consideration of this issue is conducted using a plain error analysis.

         [¶14] The disagreement between the parties regarding the burden of proving or disproving undue influence arose long before the jury instruction conference at trial. In his brief opposing the appellees' motion for summary judgment, Spencer argued that, while he initially has the burden of proof, once he establishes a dependent or confidential relationship between Bertha and Allen, the burden shifts to Bertha to establish by clear and convincing proof that Allen's decisions to amend the trust and sell the ranch took place with fairness and in good faith. The appellees, however, took the position that Spencer had the burden of proving each element of undue influence. In an effort to clarify what the appropriate elements are and the burden of proof in proving the existence of undue influence in a testamentary trust, the appellees filed a motion requesting that the district court rule on the applicable standard. The district court rejected Spencer's argument and concluded the burden always rested with Spencer to show that Bertha exercised undue influence over Allen.

         [¶15] The trial transcripts reveal that, in an apparent attempt to preserve the record for appeal, Spencer submitted proposed jury instructions which would have instructed the jury that the burden of proof shifts to Bertha once a confidential relationship is established. The district court rejected those proposed instructions. The transcripts also reveal that ...


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