The ACH litigation team had its first ever (as far as I'm aware) litigation retreat this weekend, and as I reminisce on our time, I am struck by the realization that to be a successful business, you have to allow your team to envision and strive for excellence with you. This weekend we had some great discussion and "vision-casting" on the areas of privacy litigation, Indiana probate litigation, business law, Internet litigation, banking law, SaaS litigation, and several other areas where we are already working and where we can work more, and throughout the discussions, I was struck again and again by how fantastic and forward-thinking everyone on our team is. The moral of the story to me is that you, as a business person, have surrounded yourself with excellent people. You need to listen to them and see where they can take your company. It doesn't matter what "position" they have in the company because everyone has ideas. Your goal as a manager should be to foster those ideas and push them to verbalize and realize those ideas. Otherwise, you will achieve nothing but stagnation. However, if you allow your team to envision with you, not only will you get some great ideas, but they will also own a piece of your business' future. They will have a stake in your game. Allow them to participate and purposefully embrace their ideas of the company and you can't avoid great results.
Your Indianapolis Attorney at Alerding Castor Hewitt here with another litigation post for the business and technology world, this time regarding preliminary injunctions. What is a preliminary injunction? In simple terms, it is an equitable remedy that you can seek asking a court to order someone else to stop doing something or cease threatening to do something that is causing or is likely to cause you irreparable harm. It is another weapon in the litigation arsenal, one to restore the status quo between you and another entity until a court can resolve your dispute.
A request for a preliminary injunction can arise in any number of situations. I won’t try to name all of those that I have encountered, but one example involves claims of infringement of intellectual property (trademark, copyright or patent). Another example is interference with a contract. And of course, a recent example is the decision by the U.S. District Court for the Southern District of Indiana in Workman v. Greenwood Community School Corp., cause no. 1:10-cv-0293-SEB-TAB (S.D. Ind. Apr. 30, 2010), enjoining a school from permitting a school-endorsed prayer at a high school graduation.
The difficulty in obtaining a preliminary injunction should not be underestimated. This is in part due to the hefty applicable standard for this remedy, which includes a showing of a reasonable likelihood of success on the merits. And sometimes just finding time on a court’s calendar on short notice to hear your arguments can be a challenge. But if you can convince a court to issue a preliminary injunction, it is not unusual for a settlement to follow on the heels of the court’s order, in part due to the fact that the court will have concluded at that point that you will likely succeed on the merits of your claim.
Another possible result, though rare, is a decision by the court to consolidate a preliminary injunction hearing with a trial on the merits. This happened recently on a case handled by Brian Hewitt and Angela Hopper (a contract attorney who has provided assistance on a number of occasions). Brian and Angela were seeking to obtain a preliminary injunction in a probate litigation matter involving the appointment of a guardian to oversee the health care of an elderly lady. Their clients’ claim boiled down to a request that a settlement agreement be enforced. Not only were they successful, but the court took the interesting step of consolidating the hearing on their motion with a trial on the merits and entered judgment outright on their clients’ claims.
Brian and Angela’s case reveals an exciting aspect of litigation: sometimes the outcome of a hearing can be a surprise (and better than anticipated). In any event, deciding whether to seek a preliminary injunction is no light undertaking. As with any litigation matter, you should consult with your counsel to weigh the pros and cons before making a decision on whether a request for a preliminary injunction will advance your interests.
I am an Indianapolis Attorney here at Alerding Castor Hewitt LLP. This is my first blog post – so bear with me. As a brief introduction, my role at ACH is working on our litigation team, both at trial and on appeal if necessary, on issues related to business law, probate litigation, SaaS litigation, and other technology litigation – just to name a few of the areas.
One area often overlooked in the litigation process is the area of collections. Some lawyers might look upon the collection process with disdain because it’s not as “sexy” as doing other things. But at bottom, bringing a suit is all about collecting money. After all, a judgment is just a piece of paper. At ACH, we pride ourselves on being able to assist clients in the collection process; it’s a part of our commitment to being a Partner in Success and we represent a variety of clients in business litigation and technology litigation in this process.
We often encounter situations where we have an out-of-state defendant who has breached a contract by failing to pay for services. In fact, it’s not that unusual in cases for our SaaS law and technology law clients for this to occur. Many times such a defendant will fail to appear to defend itself in the suit and we wind up obtaining a default judgment for our clients. The question is, what do you do next? Do you undertake a proceeding supplemental in Indiana to try to collect on a judgment when the defendant is unlikely to show, or do you take your default judgment (i.e., piece of paper) to the defendant’s state and try to domesticate it (in other words, try to collect there)?
I recently witnessed a couple of examples of this very situation. The answer boils down to a matter of cost-benefit analysis. In my humble opinion, it’s probably worth the minimal time and effort to undertake a proceeding supplemental in Indiana. Plus, you don’t have to immediately take on the added expense of hiring another lawyer in the defendant’s state to do the job for you.
The reason for this is that you never know what will motivate someone to make good on a debt owed to you, or at least negotiate some sort of payment arrangement. While it doesn’t happen in every case, it’s not unusual for a defendant to try to resolve a case after receiving notice of a proceeding supplemental. This is even more likely once they receive notice of one of the later steps in that process, such as an order to show cause why the defendant should not be held in contempt for failing to appear or a body attachment warrant to arrest the defendant. And if it doesn’t work out, you’ll still have your judgment that you can take to the other state.
Congratulations are in order to Brian Hewitt, the newest parter of Alerding Castor Hewitt, LLP, who was recognized this week as one of Indiana's 2010 top 50 Super Lawyers.Brian concentrates his practice on estate, trust, and guardianship planning, administration, and litigation; and mediation and business law.
He is a Certified Estate Planning and Administration Specialist, a Fellow of the American College of Trust and Estate Counsel, and a member of the Probate Litigation Committee of the American College of Trust and Estate Counsel.
Brian has spoken widely at continuing education seminars on estate planning, business succession, litigation, and mediation.
Congrats Brian!
We are proud that you have chosen to join us as a named partner of Alerding Castor Hewitt, LLP, an Indianapolis law firm focusing on business law, information technology law (including SaaS law and legal technology consulting), private equity consulting, and business and Internet litigation.
About three weeks ago I wrote a post addressing some of my concerns regarding the rumored state budget cut to innovation and entrepreneurship initiatives. Sadly, the state legislatures decided to cut innovation funding substantially.On July 1 the budget for Indiana's 21st Century Research and Technology Fund was cut by $35 million over the next two years. This is an extremely short sighted move. It has a negative impact on both attracting and promoting growth for emerging technology businesses - businesses which have proven to be high growth and high profit. Promoting the success of these businesses leads to an increase in jobs, increase in average incomes, increase in consumer spending, and increase to tax dollars back to the state. That is economic improvement.
It is odd that in the year of economic stimulus dollars being granted to the state to boost infrastructure and economy, our state takes a position to decrease funding to businesses that truly impact economic improvement.
According to their website, the Indiana 21 Fund exists to stimulate the process of diversifying the State's economy by developing and commercializing advanced technologies in Indiana.
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Alerding Castor Hewitt is an Indianapolis law firm focusing on business law, information technology law (including SaaS law and legal technology consulting), private equity consulting, probate and business litigation.
Happy Fourth of July! 
You might have noticed that this blog has been very quiet for the past month. There are two reasons for this period of silence. First, probate litigation was not a signficant source of appellant decisions in June. Second, Alerding Caster LLP was given the honor and privilege of adding a new named partner as of June 28th: Brian Hewitt.
Brian is an extremely gifted attorney with over twenty years of experience and is an icon in the legal community. In fact, in 2009, Brian was selected as an Indiana Super Lawyer by his peers. While Brian’s practice includes commercial, corporate and banking law – for purposes of probate litigation, there is probably no better attorney in the State of Indiana. Brian is known state-wide for his skills as a mediator – and in particular for matters involving probate litigation. Having used Brian numerous times as mediator in the past, the reason for his success is obvious: he understands not only the legal criteria of probate litigation but also the personal (and oftentimes highly dynamic) aspects of the people affected by the litigation: friends and families of the deceased. In short, Brian defines what it means to be a probate litigator/mediator.
The other aspect of Brian's arrival is the new office Alerding Castor Hewitt LLP in Greenwood Indiana. Brian is a long-time resident of Johnson County and has many long-standing personal and professional relationships in that community. Brian’s fully committed to maintaining those relationships and adding a new office for this firm in that community will allow him to do so. The new offices of Alerding Castor Hewitt LLP in Greenwood are located at 972 Emerson Parkway Suite A, Greenwood, IN 46143. Contrary to some reports the firm is not moving to Greenwood. Alerding Castor Hewitt LLP will have two office locations - one in Greenwood and one in Indianapolis.
Welcome Brian!
You might have noticed that this blog has been very quiet for the past month. There are two reasons for this period of silence. First, probate litigation was not a signficant source of appellant decisions in June. Second, Alerding Caster LLP was given the honor and privilege of adding a new named partner as of June 28th: Brian Hewitt.
Brian is an extremely gifted attorney with over twenty years of experience and is an icon in the legal community. In fact, in 2009, Brian was selected as an Indiana Super Lawyer by his peers. While Brian’s practice includes commercial, corporate and banking law – for purposes of probate litigation, there is probably no better attorney in the State of Indiana. Brian is known state-wide for his skills as a mediator – and in particular for matters involving probate litigation. Having used Brian numerous times as mediator in the past, the reason for his success is obvious: he understands not only the legal criteria of probate litigation but also the personal (and oftentimes highly dynamic) aspects of the people affected by the litigation: friends and families of the deceased. In short, Brian defines what it means to be a probate litigator/mediator.
The other aspect of Brian's arrival is the new office Alerding Castor Hewitt LLP in Greenwood Indiana. Brian is a long-time resident of Johnson County and has many long-standing personal and professional relationships in that community. Brian’s fully committed to maintaining those relationships and adding a new office for this firm in that community will allow him to do so. The new offices of Alerding Castor Hewitt LLP in Greenwood are located at 972 Emerson Parkway Suite A, Greenwood, IN 46143. Contrary to some reports the firm is not moving to Greenwood. Alerding Castor Hewitt LLP will have two office locations - one in Greenwood and one in Indianapolis.
Welcome Brian!
For my first foray into the world of blogging, I think the important first step is to answer the standard journalism questions necessary for any good story, namely, the who, what, when, where, and why. Sorry for the length. I promise that future blogs will be shorter. Without further adieu, here we go . . . .
Who: This one is easy because I know a lot about me. My name is Chris Stephen and I consider myself first and foremost a litigator. Some people in my field like to classify themselves first as attorneys and then focus into their specialty, but I start with what I love. I enjoy the law and I immensely enjoy helping people, which are both great aspects of being an attorney, but my passion is litigation. The constant strategy that is trial and appellate litigation is intoxicating and addictive, and I seek it out. Secondly, I consider myself a technophile. I enjoy learning about the new and emerging technologies and the implications that they have for our world (and more specifically for the microcosm that is the legal world). But for more about me, please feel free to check out my bio at http://www.alerdingcastor.com/professionals/cstephen.html
What: This question is slightly more difficult to answer. What is “technology litigation”? To me, it is the emerging areas of litigation that focus on the interplay of technology and our world. Globally, we are becoming evermore connected and technology is advancing at an outstanding rate. And, as with all areas of society, as innovation advances, the legal world is left to catch up. As the legal world transitioned from the radio to the television and from the telephone to the Internet, new laws and new legal interpretations are constantly evolving. This evolution has been evident for some time in the transactional side of the law as newly emerging companies seize new ideas and seek to make businesses out of them. But the litigation side is still burgeoning. This is a natural consequence of the legal framework. You often don’t have litigation first and transactions second. The transactions come first and then we litigators argue about where the transaction falls apart, and in doing so, law is created. But too often in the law, people are trying to use 20th (or sometimes 19th) century laws to deal with 21st century problems. So my goal with this blog is to bring to light the new and emerging areas of law (and potential litigation minefields) that surround the interplay of technology in our world. This encompasses information technology, e-commerce, privacy, data ownership, cyberlaw, e-discovery, website ownership, some trademark and just about anything else that I (or you) can think of. Of course, I’m also likely to include general litigation points or developments that strike my fancy.
When: I make no promises, but the when is going to be as often as I can.
Where: While the scope of the issues I plan to address are global, my location is
To learn more about AC, check out http://www.alerdingcastor.com/index.html . To learn more about David, check out his blog at http://blog.alerdingcastor.com/blog/alerding-castor.
Why: “What work I have done I have done because it has been play. If it had been work I shouldn't have done it. Who was it who said, ‘Blessed is the man who has found his work’? Whoever it was he had the right idea in his mind. Mark you, he says his work--not somebody else's work. The work that is really a man's own work is play and not work at all. Cursed is the man who has found some other man's work and cannot lose it. When we talk about the great workers of the world we really mean the great players of the world. The fellows who groan and sweat under the weary load of toil that they bear never can hope to do anything great. How can they when their souls are in a ferment of revolt against the employment of their hands and brains? The product of slavery, intellectual or physical, can never be great.” -Mark Twain
Let's face it - most contract terms are boring. SaaS licensors and their customers want to close deals. They want to hammer out the business terms and key legal terms and get the contract done. I don't blame them. Nobody in their right mind wakes up in the morning and says "I want to negotiate a contract today."After weeks (or even months) of negotiations over key business and legal terms, the parties often are left with a few miscellaneous "legal" terms that seem more of a burden than important to the ultimate goals of the transaction. One common term that reaches these final stages is the forum selection clause (i.e., if a lawsuit arises based on the contract, where will it be brought?).
An Indiana technology company obviously wants all actions to take place in Indiana courts. The out of state (or out of country) customer wants their home forum.
So the key question is: Is this clause really important enough to delay closing the transaction?
My favorite attorney answer: It depends.
As a business law attorney, answers are not always so clear. For instance, a SaaS client of mine once asked me regarding a large scale SaaS licensing agreement valued at hundreds of thousands of dollars in which we were negotiating a choice of law clause, "What is the difference between choosing Indiana law or Illinois law to govern this contract?" There are two potential answers. The first answer engages the standard large business law firm approach - have an associate draft a massive memorandum comparing statutory and case laws of each state on each and every clause of the contract and then outlining each and every difference to the client. Spend: 40 legal hours @ $250/hr = $10,000.
The second answer is approached from a business risk standpoint. This is usually more what the client is looking for. The attorney answers that there will be some differences but anticipates the differences will be fairly minor as both are seventh circuit states and have approached business law in very similar manners. That said, this does not mean there are not differences in law, and we can look into specific issues further if there are key issues you want addressed. Spend: 0.3 Hour @ $250/hr = $75.
The second answer provides a platform of risk assessment for the client to make an informed decision. Do they want more information or are they willing to take on the risk of not knowing all of the answers in order to get the transaction done.
That example is for choice of law. With forum selection clauses you are taking on the risk of a lawsuit arising from this contract and the need to bring an action on this contract. The attorney can either do a detailed analysis of the differences in procedure and history of case law in SaaS transactions in the other state or provide the client with the opportunity to weigh the risk.
An out of state (or country) forum selection clause will greatly increase the costs of an action on the SaaS licensor. So, there are several factors to consider when weighing the risk.
- Is the SaaS licensor collecting a subscription fee over time or payment upfront? A foreign forum selection will make small collection actions more difficult to obtain.
- Does the contract provide for attorney's fees and collection costs to be recovered by the SaaS business?
- Does the foreign selection clause put the SaaS business' customer on their home turf (there is a such thing as home court advantage in law) or is it a neutral site?
- What is the estimated cost for securing counsel in the forum (e.g., If you have London or New York forum, the SaaS business will pay double or triple on legal rates than Midwest rates).
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Alerding Castor is an Indianapolis law firm focusing on business law, information technology law (including SaaS law and legal technology consulting), private equity consulting, probate and business litigation.
No new probate litigation decisions for probate attorneys. But there has been a substantive change to Indiana Code § 29-1-4-1 which will be effective as of July 1, 2009. 
This provision deals with the spousal allowance and the old version of the provision provided that:
The surviving spouse of a decedent who was domiciled in Indiana at his death is entitled from the estate to an allowance of twenty-five thousand dollars ($25,000). The allowance may be claimed against the personal property of the estate or a residence that is a part of the decedent's estate, or a combination of both. If there is no surviving spouse, the decedent's children who are under eighteen (18) years of age at the time of the decedent' s death are entitled to the same allowance to be divided equally among them. If the personal property and a residence that is a part of the decedent's estate are less than twenty-five thousand dollars ($25,000) in value, the spouse or decedent's children who are under eighteen (18) years of age at the time of the decedent' s death, as the case may be, are entitled to any real estate of the estate to the extent necessary to make up the difference between the value of the personal property plus the residence that is a part of the decedent's estate and twenty-five thousand dollars ($25,000). The amount of that difference is a lien on the remaining real estate. An allowance under this section is not chargeable against the distributive shares of either the surviving spouse or the children.
Effective July 1, 2009, this provision will read (changes in bold):
his the decedent's death is entitled from the estate to an allowance of twenty-five thousand dollars ($25,000). The allowance may be claimed against the personal property of the estate or a residence that is a part of the decedent's estate, or a combination of both. If there is no surviving spouse, the decedent's children who are under eighteen (18) years of age at the time of the decedent's death are entitled to the same allowance to be divided equally among them.
(b) The allowance under subsection (a) may be claimed against:
(1) the personal property of the decedent's estate;
(2) the real property that is part of the decedent's estate; or
(3) a combination of personal property under subdivision (1) and real property under subdivision (2).
(c) Not later than ninety (90) days after the order commencing the estate administration, an individual entitled to the allowance may file with the court an election specifying whether the allowance is being claimed under subsection (b) against the personal property of the estate or the real property that is part of the estate, or a combination of both. An interested party may file an objection to the manner in which the allowance is being claimed not later than thirty (30) days after the date the election is filed with the court. The court shall rule on the objection after notice and a hearing. If an election is not filed within ninety (90) days after the order commencing the estate administration, the allowance must be satisfied according to the following order of preference:
(1) From the intangible personal property of the estate.
(2) From the tangible personal property of the estate.
(3) From the real property that is part of the estate.
(d) If the personal propertyand a residence that is a part of the decedent's estate are is less than twenty-five thousand dollars ($25,000) in value, the spouse or decedent's children who are under eighteen (18) years of age at the time of the decedent's death, as the case may be, are entitled to any real estate of the estate to the extent necessary to make up the difference between the value of the personal property plus the residence that is a part of the decedent's estate and twenty-five thousand dollars ($25,000). The amount of that difference is a lien on the remaining real estate. However, no real estate may be sold to satisfy the survivor's allowance unless the sale is approved:
This provision deals with the spousal allowance and the old version of the provision provided that:The surviving spouse of a decedent who was domiciled in Indiana at his death is entitled from the estate to an allowance of twenty-five thousand dollars ($25,000). The allowance may be claimed against the personal property of the estate or a residence that is a part of the decedent's estate, or a combination of both. If there is no surviving spouse, the decedent's children who are under eighteen (18) years of age at the time of the decedent' s death are entitled to the same allowance to be divided equally among them. If the personal property and a residence that is a part of the decedent's estate are less than twenty-five thousand dollars ($25,000) in value, the spouse or decedent's children who are under eighteen (18) years of age at the time of the decedent' s death, as the case may be, are entitled to any real estate of the estate to the extent necessary to make up the difference between the value of the personal property plus the residence that is a part of the decedent's estate and twenty-five thousand dollars ($25,000). The amount of that difference is a lien on the remaining real estate. An allowance under this section is not chargeable against the distributive shares of either the surviving spouse or the children.
Effective July 1, 2009, this provision will read (changes in bold):
(b) The allowance under subsection (a) may be claimed against:
(1) the personal property of the decedent's estate;
(2) the real property that is part of the decedent's estate; or
(3) a combination of personal property under subdivision (1) and real property under subdivision (2).
(c) Not later than ninety (90) days after the order commencing the estate administration, an individual entitled to the allowance may file with the court an election specifying whether the allowance is being claimed under subsection (b) against the personal property of the estate or the real property that is part of the estate, or a combination of both. An interested party may file an objection to the manner in which the allowance is being claimed not later than thirty (30) days after the date the election is filed with the court. The court shall rule on the objection after notice and a hearing. If an election is not filed within ninety (90) days after the order commencing the estate administration, the allowance must be satisfied according to the following order of preference:
(1) From the intangible personal property of the estate.
(2) From the tangible personal property of the estate.
(3) From the real property that is part of the estate.
(d) If the personal property
(1) in an agreement signed by all interested persons; or
(2) by court order following notice to all interested persons.
(e) An allowance under this section is not chargeable against the distributive shares of either the surviving spouse or the children.
(f) For purposes of this section, the value of the real property that is part of a decedent's estate must be determined as of the date of the decedent's death.
Probate litigation is back in the appellant courts. Probate attorneys involved in probate litigation involving claims for services provided to a decedent during lifetime will find this decision instructive:
Estate of Margaret H. Prickett, Deceased v. Marilyn Prickett Womersley
71S03-0808-CV-419
Indiana law presumes that services provided by a family member are rendered gratuitously. In this case, the Indiana Supreme Court concluded that presumption cannot be rebutted by evidence that the mother wanted her daughter to be compensated because the mother was under a guardianship and the guardian did not consent.
The mother was under a guardianship where an entity and a daughter were named guardians of the person while a bank was named guardian of the mother's estate. The guardians of the person were responsible for providing care for the mother's personal needs and the costs for which were to be overseen and paid by the bank. During the guardianship, the mother resided with another daughter. Upon the mother's death, the non-guardian daughter filed a claim in the mother's estate for $546,000 for various expenses and personal services she rendered to her mother during the time they lived together.
In the trial court, the estate sought summary judgment with respect to the daughter's claim on two grounds: (1) the expenses and personal services provided by the daughter were, as a matter of law, “gratuitous,” and therefore not compensable; and (2) that any claims asserted by the daughter were time-barred because they were not filed in the guardianship. The trial court denied the motion but certified its order for appeal. The Court of Appeals affirmed the trial court and the Indiana Supreme Court granted the petition for transfer.
The Indiana Supreme Court first noted that “Indiana law allows for the appointment of a guardian to act in the best interests of a person who is unable to care for [her]self or for [her] property" and that "A court in its discretion may limit the scope of a guardianship by restricting the responsibilities and powers a guardian would otherwise have under the Guardianship Code." In this instance, the Court concluded that the court ordering the guardianship imposed no limitations on the power of the guardian of the mother's estate. "Conversely, the [guardian] court did not direct that [the mother], an incapacitated person, reserved any such powers over her estate. Therefore, we conclude that [the bank], as guardian of [the mother's] estate, held all the power to possess and dispose of [the mother's] property pursuant to I.C. § 29-3-7-6, including the power to compensate care-providers, and that [the mother] retained no such power once the guardianship was established."
Turning to the issues raised on appeal, the Indiana Supreme Court first held that "We agree with the both the probate court and the Court of Appeals that the Guardianship Code does not require a claim for personal services rendered in a non-fiduciary capacity to a protected person to be filed in the guardianship estate rather than in the subsequent probate estate of the deceased protected person". As such, "[the daughter] was not required to pursue her claim in the guardianship proceeding; she properly filed her claim against her mother's estate. Therefore, the Estate was not entitled to summary judgment on this issue."
In regards to the second issue, the daughter sought to rebut the presumption that her services were rendered gratuitously, by relying on a "typed and signed 'Statement of [the mother]'. The statement expressed [the mother's] desire that the guardian of her estate compensate [the daughter] for her services. [The daughter also] submitted affidavits of two people who witnessed [the mother's] execution of the statement and opined that [the mother] had been 'well aware of what she was doing and her intentions when she executed the [statement].'"
The Indiana Supreme Court, however, found that "Traditionally, the sole method of rebutting the presumption [that the services were gratuitously rendered] requires evidence of either an implied or express contract formed by both intention and expectation. ... [the mother], however, could not enter into contracts at the time she executed the statement because she had already been adjudicated an incapacitated person under the Guardianship Code." The daughter argued "that the Court of Appeals . . . 'recognized well-established law holding that an implied contract can exist between the protected person and provider of services.'" The Indiana Supreme Court, however, found that "Though this contention may be true for general creditors or non-family members, when the provider is a family member, the implied contract must exist between that person and the incapacitated person‟s guardian." Since the daughter failed to offer evidence of an implied contract with the mother's guardian, the daughter "failed to rebut the presumption under the traditional analysis."
The Indiana Supreme Court also distinguished prior appellant decisions involving claims by family members from those that involving claims by attorneys who provided legal services to the protected person. In regards to the later, the Court held that these cases suggest no grounds for rebutting the presumption that family services are rendered gratuitously. The Court also noted that a prior decision also “suggests that exigent circumstances may warrant compensation for necessary services that were performed without approval of the guardian. … But in the absence of the exigent circumstances, the guardian's approval is required in order to secure compensation for those services.” In this instance, there was no evidence of such exigent circumstances.
Finally, the daugher argued, based a statutory change and other Indiana cases, that "'when a court determines that a person is incapacitated, no presumption or inference arises that the person is not mentally competent.'" The Court, however, held that "We do not see the distinction between 'incompetency' and 'incapacity' as affecting the outcome of this case. Indeed, [the daughter's] assertion runs counter to both the facts of this case and the overall purpose of a guardian of an estate. If the probate court had found that although physically incapacitated, [the mother] was still able to manage her estate, it would have either designated a guardian over only her person, placed limitations on the letters of the guardian of her estate, or directed that she reserved certain powers. In the absence of such limitations or direction, we must conclude that the court appointed a guardian over [the mother's] estate because she was unable to manage her property. The appointment of a guardian of her estate deprived [the mother] of the power to dispose of her property."
The Indiana Supreme Court reversed the trial court's denial of summary judgment and remanded for proceedings consistent with the opinion. The opinion was handed down on May 13, 2009 and a full text copy of the opinion can be found here.
Estate of Margaret H. Prickett, Deceased v. Marilyn Prickett Womersley
71S03-0808-CV-419
Indiana law presumes that services provided by a family member are rendered gratuitously. In this case, the Indiana Supreme Court concluded that presumption cannot be rebutted by evidence that the mother wanted her daughter to be compensated because the mother was under a guardianship and the guardian did not consent.The mother was under a guardianship where an entity and a daughter were named guardians of the person while a bank was named guardian of the mother's estate. The guardians of the person were responsible for providing care for the mother's personal needs and the costs for which were to be overseen and paid by the bank. During the guardianship, the mother resided with another daughter. Upon the mother's death, the non-guardian daughter filed a claim in the mother's estate for $546,000 for various expenses and personal services she rendered to her mother during the time they lived together.
In the trial court, the estate sought summary judgment with respect to the daughter's claim on two grounds: (1) the expenses and personal services provided by the daughter were, as a matter of law, “gratuitous,” and therefore not compensable; and (2) that any claims asserted by the daughter were time-barred because they were not filed in the guardianship. The trial court denied the motion but certified its order for appeal. The Court of Appeals affirmed the trial court and the Indiana Supreme Court granted the petition for transfer.
The Indiana Supreme Court first noted that “Indiana law allows for the appointment of a guardian to act in the best interests of a person who is unable to care for [her]self or for [her] property" and that "A court in its discretion may limit the scope of a guardianship by restricting the responsibilities and powers a guardian would otherwise have under the Guardianship Code." In this instance, the Court concluded that the court ordering the guardianship imposed no limitations on the power of the guardian of the mother's estate. "Conversely, the [guardian] court did not direct that [the mother], an incapacitated person, reserved any such powers over her estate. Therefore, we conclude that [the bank], as guardian of [the mother's] estate, held all the power to possess and dispose of [the mother's] property pursuant to I.C. § 29-3-7-6, including the power to compensate care-providers, and that [the mother] retained no such power once the guardianship was established."
Turning to the issues raised on appeal, the Indiana Supreme Court first held that "We agree with the both the probate court and the Court of Appeals that the Guardianship Code does not require a claim for personal services rendered in a non-fiduciary capacity to a protected person to be filed in the guardianship estate rather than in the subsequent probate estate of the deceased protected person". As such, "[the daughter] was not required to pursue her claim in the guardianship proceeding; she properly filed her claim against her mother's estate. Therefore, the Estate was not entitled to summary judgment on this issue."
In regards to the second issue, the daughter sought to rebut the presumption that her services were rendered gratuitously, by relying on a "typed and signed 'Statement of [the mother]'. The statement expressed [the mother's] desire that the guardian of her estate compensate [the daughter] for her services. [The daughter also] submitted affidavits of two people who witnessed [the mother's] execution of the statement and opined that [the mother] had been 'well aware of what she was doing and her intentions when she executed the [statement].'"
The Indiana Supreme Court, however, found that "Traditionally, the sole method of rebutting the presumption [that the services were gratuitously rendered] requires evidence of either an implied or express contract formed by both intention and expectation. ... [the mother], however, could not enter into contracts at the time she executed the statement because she had already been adjudicated an incapacitated person under the Guardianship Code." The daughter argued "that the Court of Appeals . . . 'recognized well-established law holding that an implied contract can exist between the protected person and provider of services.'" The Indiana Supreme Court, however, found that "Though this contention may be true for general creditors or non-family members, when the provider is a family member, the implied contract must exist between that person and the incapacitated person‟s guardian." Since the daughter failed to offer evidence of an implied contract with the mother's guardian, the daughter "failed to rebut the presumption under the traditional analysis."
The Indiana Supreme Court also distinguished prior appellant decisions involving claims by family members from those that involving claims by attorneys who provided legal services to the protected person. In regards to the later, the Court held that these cases suggest no grounds for rebutting the presumption that family services are rendered gratuitously. The Court also noted that a prior decision also “suggests that exigent circumstances may warrant compensation for necessary services that were performed without approval of the guardian. … But in the absence of the exigent circumstances, the guardian's approval is required in order to secure compensation for those services.” In this instance, there was no evidence of such exigent circumstances.
Finally, the daugher argued, based a statutory change and other Indiana cases, that "'when a court determines that a person is incapacitated, no presumption or inference arises that the person is not mentally competent.'" The Court, however, held that "We do not see the distinction between 'incompetency' and 'incapacity' as affecting the outcome of this case. Indeed, [the daughter's] assertion runs counter to both the facts of this case and the overall purpose of a guardian of an estate. If the probate court had found that although physically incapacitated, [the mother] was still able to manage her estate, it would have either designated a guardian over only her person, placed limitations on the letters of the guardian of her estate, or directed that she reserved certain powers. In the absence of such limitations or direction, we must conclude that the court appointed a guardian over [the mother's] estate because she was unable to manage her property. The appointment of a guardian of her estate deprived [the mother] of the power to dispose of her property."
The Indiana Supreme Court reversed the trial court's denial of summary judgment and remanded for proceedings consistent with the opinion. The opinion was handed down on May 13, 2009 and a full text copy of the opinion can be found here.
The flow of appellant decisions addressing probate litigation has temporarily diminished. In gaps such as this, probate attorneys may find it useful to review some of the precedent that serves as the basis for probate litigation: The Indiana Code.
The Indiana Code serves as the starting point for probate matters in general as well as for probate litigation. For example, Indiana Code § 29-1-7-17 sets forth who may file a will contest, the grounds for a will contest and the deadline when a will contest must be filed:
Any interested person may contest the validity of any will in the court having jurisdiction over the probate of the will within three (3) months after the date of the order admitting the will to probate by filing in the court the person's allegations in writing verified by affidavit, setting forth:
(1) the unsoundness of mind of the testator;
(2) the undue execution of the will;
(3) that the will was executed under duress or was obtained by fraud; or
(4) any other valid objection to the will's validity or the probate of the will.
The executor and all other persons beneficially interested in the will shall be made defendants to the action (emphasis added).
The term "interested person" is also a term of art and is defined by Indiana Code § 29-1-1-3(a)(13) to mean
. . . heirs, devisees, spouses, creditors, or any others having a property right in or claim against the estate of a decedent being administered. This meaning may vary at different stages and different parts of a proceeding and must be determined according to the particular purpose and matter involved.
A careful review of the Indiana Code prior to the commencement of any probate litigation is always the best place to start. Chapter 7 of Title 29 of the Indiana Code may be found here.
The Indiana Code serves as the starting point for probate matters in general as well as for probate litigation. For example, Indiana Code § 29-1-7-17 sets forth who may file a will contest, the grounds for a will contest and the deadline when a will contest must be filed:Any interested person may contest the validity of any will in the court having jurisdiction over the probate of the will within three (3) months after the date of the order admitting the will to probate by filing in the court the person's allegations in writing verified by affidavit, setting forth:
(1) the unsoundness of mind of the testator;
(2) the undue execution of the will;
(3) that the will was executed under duress or was obtained by fraud; or
(4) any other valid objection to the will's validity or the probate of the will.
The executor and all other persons beneficially interested in the will shall be made defendants to the action (emphasis added).
The term "interested person" is also a term of art and is defined by Indiana Code § 29-1-1-3(a)(13) to mean
. . . heirs, devisees, spouses, creditors, or any others having a property right in or claim against the estate of a decedent being administered. This meaning may vary at different stages and different parts of a proceeding and must be determined according to the particular purpose and matter involved.
A careful review of the Indiana Code prior to the commencement of any probate litigation is always the best place to start. Chapter 7 of Title 29 of the Indiana Code may be found here.
The Indiana Court of Appeals recently handed down a memorandum decision (not for publication) which probate attorneys considering the necessity of probate litigation may find of interest since it explores the distinction between a small estate affidavit and the actual opening of a probate estate:
Angela Foster v. Estate of Darlene Shoemaker, Deceased, James Shoemaker, Personal representative (NFP) 
04A05-0809-CV-562
In this matter, the decedent died intestate leaving an estate worth approximately $30,000, a husband and two children. The estate assets consisted of a bank account and a vehicle. One of the children (a daughter) subsequently executed a small affidavit pursuant to Indiana Code § 29-1-8-1 and presented it to the bank where the decedent’s account was located. The bank released $26,000 to the child who retained $6,500, distributed $13,000 to the husband and $6,500 to her sibling. Shortly thereafter, the husband successfully petitioned to open an intestate estate and have himself appointed as the personal representative. The daughter moved to dismiss the estate proceedings claiming that the proceedings were “precluded by another legal proceeding & laches.” The daughter also filed a motion to compel the husband to deliver the vehicle to her so that it could be sold and the proceeds distributed. The husband responded by filing a motion to compel the children to return to the estate the funds they had received from the bank account.
The trial court conducted a hearing during which the husband asserted his intention to claim from the estate his $25,000 spousal allowance pursuant to Indiana Code § 29-1-4-1. Following the hearing, the trial court entered an order denying the motion to dismiss and compelling the children to return the funds they had received. The daughter appealed and the Court of Appeals affirmed.
The Court of Appeals held that the small estate affidavit does not constitute an “action pending in another court of the state” pursuant to Indiana Trial Rule 12(B)(8). The Court also observed that Indiana Code § 29-1-8-2 provides, in relevant part, that “[a]ny person to whom payment, delivery, transfer or issuance is made is answerable and accountable therefor to any personal representative of the estate or to any other person having a superior right” and that the daughter presented no argument that this statutory provision would be inapplicable to her.
The full text of the opinion handed down on April 21, 2009 can be found here.
The Indiana Court of Appeals recently handed down a decision regarding probate litigation which probate attorneys may find instructive since one of the issues decided involved an attorney's decision to follow the client's instructions regarding disbursements from an estate.
Jerry Storey v. Theodore S. Leonas, Jr. and Leonas & Associates Ltd.
No. 46A03-0806-CV-300
The facts of this matter are somewhat unusual. An Illinois resident died in an automobile accident in Indiana. The other vehicle involved in the accident was owned by a Chicago-based company and was driven by an employee of that company. The deceased's mother was named as special administrator of the deceased's estate and she subsequently filed a wrongful death action in Illinois.
The threshold issue in that action was whether Illinois law (which has no statutory limit on damages for wrongful death) would apply or whether Indiana law (which imposes a statutory limit on damages for wrongful death of $300,000) would control. Faced with this possibility, the estate settled the matter for $650,000. The special administrator instructed the attorneys handling the estate to disburse a portion of the settlement to the deceased's father.
The deceased's father, however, had initiated his own wrongful death action "ostensibly as Special Administrator" for his daughter's estate. This action was eventually dismissed with prejudice but upon receipt of the disbursement check, the deceased's father returned it explaining that he would only accept it on certain conditions - one of which was that the receipt of the check would not constitute a settlement or waiver of the claims he had brought. The special administrator concluded that since the deceased's father had decided to continue his own action and did not consider himself a benefactor of the action she had filed, she directed her attorneys to deny any further disbursements from the settlement proceeds.
The deceased's father thereafter filed an action for legal malpractice and conversion against the attorneys representing the deceased's mother. The legal malpractice claim was decided against the deceased's father as was the conversion claim. In regards to the latter, the Court found that:
Here, [attorney] was acting at the behest of his clients ... She initially directed him to disburse $144,000 to [father], but when [father] attached metaphorical strings to the acceptance of the funds, [mother] changed her mind and directed [attorney] to deny any further disbursement. Thus, to the extent that anyone was controlling the money, it was [mother], not [attorney]. Furthermore, it is well established that the conversion statute “does not apply to the failure to pay a debt.” Tobin v. Ruman, 819 N.E.2d 78, 89 (Ind. Ct. App. 2005). Here, the settlement came as a result of [attorney's] representation of [mother] and the Estate. If [father] was owed money from the settlement, at most, [mother's] refusal to disburse the money to him was wrongful withholding of funds and a failure to pay a debt, which does not constitute conversion as a matter of law. (emphasis in original)
The decision was decided on April 3, 2009 and the full text can be found here.
Jerry Storey v. Theodore S. Leonas, Jr. and Leonas & Associates Ltd.
No. 46A03-0806-CV-300
The facts of this matter are somewhat unusual. An Illinois resident died in an automobile accident in Indiana. The other vehicle involved in the accident was owned by a Chicago-based company and was driven by an employee of that company. The deceased's mother was named as special administrator of the deceased's estate and she subsequently filed a wrongful death action in Illinois. The threshold issue in that action was whether Illinois law (which has no statutory limit on damages for wrongful death) would apply or whether Indiana law (which imposes a statutory limit on damages for wrongful death of $300,000) would control. Faced with this possibility, the estate settled the matter for $650,000. The special administrator instructed the attorneys handling the estate to disburse a portion of the settlement to the deceased's father.
The deceased's father, however, had initiated his own wrongful death action "ostensibly as Special Administrator" for his daughter's estate. This action was eventually dismissed with prejudice but upon receipt of the disbursement check, the deceased's father returned it explaining that he would only accept it on certain conditions - one of which was that the receipt of the check would not constitute a settlement or waiver of the claims he had brought. The special administrator concluded that since the deceased's father had decided to continue his own action and did not consider himself a benefactor of the action she had filed, she directed her attorneys to deny any further disbursements from the settlement proceeds.
The deceased's father thereafter filed an action for legal malpractice and conversion against the attorneys representing the deceased's mother. The legal malpractice claim was decided against the deceased's father as was the conversion claim. In regards to the latter, the Court found that:
Here, [attorney] was acting at the behest of his clients ... She initially directed him to disburse $144,000 to [father], but when [father] attached metaphorical strings to the acceptance of the funds, [mother] changed her mind and directed [attorney] to deny any further disbursement. Thus, to the extent that anyone was controlling the money, it was [mother], not [attorney]. Furthermore, it is well established that the conversion statute “does not apply to the failure to pay a debt.” Tobin v. Ruman, 819 N.E.2d 78, 89 (Ind. Ct. App. 2005). Here, the settlement came as a result of [attorney's] representation of [mother] and the Estate. If [father] was owed money from the settlement, at most, [mother's] refusal to disburse the money to him was wrongful withholding of funds and a failure to pay a debt, which does not constitute conversion as a matter of law. (emphasis in original)
The decision was decided on April 3, 2009 and the full text can be found here.
While there have been no decisions lately from the appellant courts directly addressing probate litigation matters, the Indiana Supreme Court recently handed down a decision that probate attorneys may wish to consider in the context if the situation where a person assumes a duty to another person – a situation which can oftentimes arise in matters resulting in probate litigation.
Estate of Jerome Mintz v. Connecticut General Life Ins. Co. and Wayne E. Gruber
Case No. No. 49S05-0805-CV-214
This case involved, in part, the alleged failure of an insurance agent to properly convert group life insurance polices to individual polices after the insured retired. The trial court granted summary judgment to the agent and the estate of the insured appealed. The Court of Appeals affirmed the summary judgment in an unpublished opinion, but the Indiana Supreme Court reversed, in part, the decision.
The Indiana Supreme Court first noted that in order to recover under a theory of negligence, a plaintiff must establish (1) the defendant's duty to conform his conduct to a standard of care arose from his relationship with the plaintiff, (2) the failure of the defendant to conform his conduct to that standard of care, and (3) an injury to the plaintiff proximately caused by the defendant’s breach. In this instance, the trial court had concluded that the agent was entitled to summary judgment on the negligence claim because the insured’s injuries “were not proximately caused by [the agent’s] negligence . . . .” The Court addressed this conclusion with two observations:
First, the Court noted that “summary judgment is generally inappropriate in negligence cases because issues of contributory negligence, causation, and reasonable care are more appropriately left for the trier of fact.” Second, “even if the [insured’s and his wife’s] actions were a proximate cause of their injuries, [the agent's] actions could also be a proximate cause of the injuries. It is not necessary for a defendant’s act or omission to be the proximate cause of the plaintiff’s injury, so long as the conduct is a proximate cause of the injury.’” (emphasis in original). Based on the facts of the matter, Court concluded that a trier of fact “could very well conclude” that [the insured’s and his wife’s] actions as well as the agent’s actions were proximate causes of the injuries. “As such the apportionment principles of comparative fault are triggered. And as with the determination of proximate cause, ‘The Comparative Fault Act entrusts the allocation of fault to the sound judgment of the fact-finder.’” The Court concluded that the trial court therefore erred when it entered summary judgment for the agent.
The agent, however, argued that even if the trial court erred in granting summary judgment in his favor on the basis of a lack of proximate cause, the trial court could still be affirmed because “the [insured’s] claim fails under a duty analysis because any duty [the agent] owed . . . was an assumed duty, and his failure to perform his promise was an act of nonfeasance.” This contention was based on the theory that there is a distinction between “malfeasance” (i.e. negligent conduct or active misconduct) and “nonfeasance” (i.e.the complete omission or failure to perform.) The Court, while noting “there is a difference of opinion in the Court of Appeals on this issue”, concluded that “we need not resolve this dispute today” because “[e]ven adopting [the agent’s] view of the law, the point remains that ‘failure to do what a reasonably prudent person would do after taking control of a situation, i.e., after undertaking a duty to act, is nonetheless misfeasance.’ . . . And as with the determination of proximate cause, whether and to what extent [the agent] acted as a ‘reasonably prudent person’ is a question of fact for the fact-finder to resolve. Accordingly, the trial court’s grant of summary judgment in [the agent’s] favor cannot be sustained on this ground.”
This decision was handed down on March 25, 2009 and a fully text of the decision can be found here.
Undue influence is oftentimes the issue that is raised when a decedent makes a change in their estate planning documents which benefits a person (or persons) who have assumed a position of trust and responsibility in the decedent's life. On March 11th, the Indiana Court of Appeals decided a matter involving a parent-child relationship and whether a presumption of undue influence attached when a child benefited from a testamentary disposition from the parent. You can can read about that case here. On March 13, 2009, the Court addressed the same issue in the context of caregivers. While this is not a published opinion, probate attorneys engaged in probate litigation involving caregivers may wish to review:
Dennis M. Horrall, as Successor Trustee of the Mary Y. Skelton Revocable Living Trust, et al. v. Phyllis J. Motts, et al.
Case No. 71A03-0802-CV-48
In this matter, the decedent executed two amendments to her trust. The first amendment benefited one of the decedent's nieces who, at the time the amendment was made, was providing care to the decedent. The bequest would have given the niece fifty percent of the residuary of the trust after certain specific bequests had been made. Four months later, another niece took over the care of the decedent and shortly thereafter the second niece drove the decedent to an attorney who prepared another amendment. The second amendment increased a specific bequest to the second niece, removed the first niece as a beneficiary and named another person as the beneficary of the first niece's bequest. The decedent died shortly thereafter.
Probate litigation ensued with the parties each challenging the validity of the amendment which did not benefit them. After a bench trial, the trial court invalidated both amendments and both parties appealed.
Of particular interest in this case was the claim that there was no showing that the primary benefactor of the second amendment was a person of “trust and confidence” to the settlor sufficient to create a presumption of undue influence. It was also argued there was a lack of evidence that this person dealt unequally with the settlor, had superior knowledge of the matter, or exercised overpowering influence over Yvonne. The Court of Appeals circumvented this argument:
"Having concluded that the court properly invalidated the [second] Amendment due to the unrebutted presumption of undue influence of [the second neice], we need not dissect [the primary beneficary of the second amendment]'s relationship to, or influence on, [the settlor]. Regardless of [this peron's] relationship or influence, the invalidation of the [second] Amendment affects her as well. The unrebutted presumption of undue influence by [the second neice] muddies any attempt to discern [the settlor]'s “clear intent.”
Probate attorneys may also find interesting the Court of Appeal's dissection of an argument that judicial estoppel prevented parties from using the same legal theory, presumption of undue influece, inconsistently. Also of interest, for probate litigation, was the argument that the first amendment was improperly invalidated by the trial court because undue influence, or the presumption of undue influence, was not pled by the parties making that challenge. In this regard, the Court of Appeals noted that "Although the case deviated a bit from its original course, the [Appellants] did not complain while en route and cannot now complain on appeal."
Again, this decision is unpublished and should not be regarded as precedent. But the case does provide useful insight into probate litigation matters.
Dennis M. Horrall, as Successor Trustee of the Mary Y. Skelton Revocable Living Trust, et al. v. Phyllis J. Motts, et al.
Case No. 71A03-0802-CV-48
In this matter, the decedent executed two amendments to her trust. The first amendment benefited one of the decedent's nieces who, at the time the amendment was made, was providing care to the decedent. The bequest would have given the niece fifty percent of the residuary of the trust after certain specific bequests had been made. Four months later, another niece took over the care of the decedent and shortly thereafter the second niece drove the decedent to an attorney who prepared another amendment. The second amendment increased a specific bequest to the second niece, removed the first niece as a beneficiary and named another person as the beneficary of the first niece's bequest. The decedent died shortly thereafter.Probate litigation ensued with the parties each challenging the validity of the amendment which did not benefit them. After a bench trial, the trial court invalidated both amendments and both parties appealed.
Of particular interest in this case was the claim that there was no showing that the primary benefactor of the second amendment was a person of “trust and confidence” to the settlor sufficient to create a presumption of undue influence. It was also argued there was a lack of evidence that this person dealt unequally with the settlor, had superior knowledge of the matter, or exercised overpowering influence over Yvonne. The Court of Appeals circumvented this argument:
"Having concluded that the court properly invalidated the [second] Amendment due to the unrebutted presumption of undue influence of [the second neice], we need not dissect [the primary beneficary of the second amendment]'s relationship to, or influence on, [the settlor]. Regardless of [this peron's] relationship or influence, the invalidation of the [second] Amendment affects her as well. The unrebutted presumption of undue influence by [the second neice] muddies any attempt to discern [the settlor]'s “clear intent.”
Probate attorneys may also find interesting the Court of Appeal's dissection of an argument that judicial estoppel prevented parties from using the same legal theory, presumption of undue influece, inconsistently. Also of interest, for probate litigation, was the argument that the first amendment was improperly invalidated by the trial court because undue influence, or the presumption of undue influence, was not pled by the parties making that challenge. In this regard, the Court of Appeals noted that "Although the case deviated a bit from its original course, the [Appellants] did not complain while en route and cannot now complain on appeal."
Again, this decision is unpublished and should not be regarded as precedent. But the case does provide useful insight into probate litigation matters.
… courts must proceed with caution in analyzing these situations and that an automatic presumption that any adult child who assists an aging parent is presumed to be in a dominant role and exert undue influence over that parent’s decisions is ill-advised. We caution that love, attention, and occasional assistance provided by an adult child typically and naturally arise from a sense of filial duty. It seems unreasonable for our courts to rely exclusively upon care, compassion, or generosity by an adult child for their ailing parent and then render such actions suspect. These relationships must be carefully examined in light of the surrounding circumstances before any conclusions regarding that child’s dominance and influence be made. (emphasis added).
Here is the decision:
Bruce Barkwill v. The Cornelia H. Barkwill Revocable Trust
No. 64A04-0808-CV-455
This matter involved two brothers, one who lived in Chicago and one who lived in Florida. Their mother, the settlor, lived alone in northwest Indiana. The Chicago son assisted his mother financially during her life. In March of 2006, the Chicago son visited his mother and found her to be extremely disoriented. The mother also called her Florida son and “made some rather strange accusations” against the Chicago son and his family. The Florida son was convinced the mother was either “drugged out” or paranoid and, after speaking with the Chicago son, decided to travel to Indiana to assess the situation personally.
The Florida son’s visit was the first time he had seen in mother in several years. During the visit the mother continued to display unusual behavior including lunging at the Florida son with a steak knife after the two of them had a disagreement about the mother eating on the floor. The mother was eventually seen by her physician who discovered that the mother was obtaining Valium from the internet and was abusing the drug. After the visit with her doctor, the mother would not communicate with the Florida son, did not want to continue the visit and denied needing any help. Eventually the mother resumed treatment with her physician, stopped using Valium and when the Chicago son spoke with his mother in May or June 200, she “seemed to be back to her normal self.”
After these series of events, the mother met with an attorney and conveyed to him, over a series of meetings and a telephone call, that she was displeased with the Florida son during the recent visit and that he had not been attentive to her throughout his life. The attorney observed that the mother was “competent, had a plan in mind, and had sensible reasons for her plan.” The mother then executed a trust leaving everything to the Chicago son. The mother died the following year. The Florida son filed a petition to determine interest in a trust and requested that an early trust be reinstated. After a two day bench trial, the trial court held the most recent trust was valid.
On appeal, the Florida son argued that the trial court failed to apply the necessary presumption of undue influence by the Chicago son on the mother. The Court concluded that the trial court appeared to reject application of the presumption of undue influence, but conditionally acknowledged that even if such a presumption applied it would have been overcome. The Court went on to review the facts of the matter and concluded itself that:
Under these circumstances, we conclude that [the Chicago son] was not in a dominant role in the relationship with his mother at the time she changed the trust, and therefore, no presumption of undue influence attaches. Even if [the Chicago son] had been in the dominant role, he rebutted the presumption of undue influence with clear and convincing evidence. The trial court had ample evidence to conclude that [the mother] was competent to alter her estate plan and she was not under [the Chicago son’s] influence in making the alterations.
In reaching this conclusion, the Court noted that the determination of whether the Chicago son “was truly in a dominant position in his relationship with [his mother] was a highly fact-sensitive one” and concluded that the facts in this matter were unlike those in other decisions where it was concluded that adult children were in a dominate position over their ailing parents.
The opinion was handed down on March 11, 2009 and the full text of the opinion can be found here.
As most probate attorneys know, probate litigation oftentimes arises as a result of decisions made by a decedent during life time. Sometimes, however, the decisions of a third-party touching on business law and consulting functions can also lead to litigation. This point is demonstrated by this recent decision:
In the Matter of the Stuart Cochran Irrevocable Trust; Chanell and Micaela Cochran v. Keybank, N.A.
No. 71A04-0806-CV-384
This matter involved an irrevocable trust established by a settlor for the benefit of his two children. The trust was initially funded with life insurance policies and the settlor was assisted by an insurance advisor. The settlor subsequently divorced and his wife received full custody of the settlor’s children who were the beneficiaries of the trust. Some ten years later, the bank serving as the trustee resigned because of the settlor’s insistence that certain third parties – namely the settlor, the settlor’s sister and the settlor’s insurance advisor – be involved in the trustee’s decisionmaking process. KeyBank was then named as the successor trustee.
In this same time period, the Settlor's insurance advisor recommended to the children’s mother that the assets of the trust (three life insurance policies and an annuity then valued at $4.7 million) be replaced with two variable life polices with a death benefit of $8 million. When KeyBank assumed its duties, the underwriting for the exchange of policies had been approved and the settlor had already submitted to the physical exams. KeyBank approved the transaction and the exchange of policies took place in early 1999. Following September 11, 2001, however the stock markets took a dramatic decline and the downward trend in the markets had an adverse effect on the value of the mutual fund investments contained in the policies held by the trust. In 2001, the policies lost money because the cost of insurance and the carriers’ administrative charges were greater than the income generated by the investments. The losses were even greater in 2002.
In the spring of 2003, KeyBank hired an independent outside insurance consultant to audit the policies held by the trust. This review indicated that the policies would lapse before the settlor reached his life expectancy. The settlor was also experiencing financial difficulties and did not have the financial wherewithal to supplement the trust with additional resources or purchase additional policies of life insurance. The Settlor's insurance advisor conducted his own review and eventually recommended that the two variable life policies be replaced with a different policy that offered a lump sum death benefit of $2.7 million that was guaranteed until the settlor reached the age of 100. KeyBank had its own to consultant review the proposal and. after confirming the settlor’s desire to make the exchange, the consultant made its own qualified recommendation of the transaction. Thereafter, KeyBank made the exchange in June 2003 and the following January of 2004, the settlor died unexpectedly.
The trust was then docketed by the beneficiaries who sought an accounting from KeyBank. KeyBank responded by filing a petition to reform the trust and for approval of its accounting. The beneficiaries then filed a counterclaim and a claim for surcharge arguing, among other things, that KeyBank had breached its fiduciary duties as Trustee. A bench trial was held on the issues raised in the Beneficiaries’ counterclaim and claim for surcharge and the trial court entered findings of fact and conclusions of law, ruling in KeyBank’s favor.
On appeal, the Beneficiaries argued that the trial court erroneously concluded that KeyBank’s actions leading up to the exchange in 2003 did not violate the Indiana Uniform Prudent Investor Act. Ind. Code § 30-4-3.5-1 et seq. In particular, the Beneficiaries argued that KeyBank violated the act by imprudently and improperly delegating certain decision making functions, by disregarding its consultant’s recommendations and by failing to investigate alternatives. The Court of Appeals rejected each of these arguments and pointed out that “[c]ompliance with the prudent investor rule is determined in light of the facts and circumstances existing at the time of a trustee’s decision or action and not by hindsight” citing Indiana Code § 30-4-3.5-8. In this instance, based on the facts and circumstances that existed in 2003, the Court of Appeals concluded that “KeyBank’s decision to exchange the [variable life] policies for the [lump sum] policy was eminently prudent, reduction in death benefit notwithstanding. That a “wait and see” approach may also have been a prudent course of action does not alter the propriety of the exchange.”
The Court of Appeals also rejected the Beneficiaries’ arguments that KeyBank breached a number of its duties to them. Most importantly, however, the Court of Appeals concluded that “Even if we were to find that KeyBank’s actions herein constituted a breach of its duty to the Beneficiaries, we cannot countenance the Beneficiaries’ argument that the lack of receipt of an annual report or failure to provide information about the exchange, without more, supports an award of compensatory damages.” The trial court had concluded that “financial trends outside of the control of the Trustee or the Beneficiaries were the direct and proximate cause of the problem facing the Trust in 2003” and the Court of Appeals agreed, adding that the settlor’s tragic, untimely death was also a contributing problem beyond everyone’s control.
Additional issues were addressed (and rejected) by the Court of Appeals including the argument that the 2003 exchange was inconsistent with the intent of the Settlor. The opinion was handed down on March 2, 2009 and the full text of the opinion can be found here.
In the Matter of the Stuart Cochran Irrevocable Trust; Chanell and Micaela Cochran v. Keybank, N.A.
No. 71A04-0806-CV-384
This matter involved an irrevocable trust established by a settlor for the benefit of his two children. The trust was initially funded with life insurance policies and the settlor was assisted by an insurance advisor. The settlor subsequently divorced and his wife received full custody of the settlor’s children who were the beneficiaries of the trust. Some ten years later, the bank serving as the trustee resigned because of the settlor’s insistence that certain third parties – namely the settlor, the settlor’s sister and the settlor’s insurance advisor – be involved in the trustee’s decisionmaking process. KeyBank was then named as the successor trustee.
In this same time period, the Settlor's insurance advisor recommended to the children’s mother that the assets of the trust (three life insurance policies and an annuity then valued at $4.7 million) be replaced with two variable life polices with a death benefit of $8 million. When KeyBank assumed its duties, the underwriting for the exchange of policies had been approved and the settlor had already submitted to the physical exams. KeyBank approved the transaction and the exchange of policies took place in early 1999. Following September 11, 2001, however the stock markets took a dramatic decline and the downward trend in the markets had an adverse effect on the value of the mutual fund investments contained in the policies held by the trust. In 2001, the policies lost money because the cost of insurance and the carriers’ administrative charges were greater than the income generated by the investments. The losses were even greater in 2002.
In the spring of 2003, KeyBank hired an independent outside insurance consultant to audit the policies held by the trust. This review indicated that the policies would lapse before the settlor reached his life expectancy. The settlor was also experiencing financial difficulties and did not have the financial wherewithal to supplement the trust with additional resources or purchase additional policies of life insurance. The Settlor's insurance advisor conducted his own review and eventually recommended that the two variable life policies be replaced with a different policy that offered a lump sum death benefit of $2.7 million that was guaranteed until the settlor reached the age of 100. KeyBank had its own to consultant review the proposal and. after confirming the settlor’s desire to make the exchange, the consultant made its own qualified recommendation of the transaction. Thereafter, KeyBank made the exchange in June 2003 and the following January of 2004, the settlor died unexpectedly.
The trust was then docketed by the beneficiaries who sought an accounting from KeyBank. KeyBank responded by filing a petition to reform the trust and for approval of its accounting. The beneficiaries then filed a counterclaim and a claim for surcharge arguing, among other things, that KeyBank had breached its fiduciary duties as Trustee. A bench trial was held on the issues raised in the Beneficiaries’ counterclaim and claim for surcharge and the trial court entered findings of fact and conclusions of law, ruling in KeyBank’s favor.
On appeal, the Beneficiaries argued that the trial court erroneously concluded that KeyBank’s actions leading up to the exchange in 2003 did not violate the Indiana Uniform Prudent Investor Act. Ind. Code § 30-4-3.5-1 et seq. In particular, the Beneficiaries argued that KeyBank violated the act by imprudently and improperly delegating certain decision making functions, by disregarding its consultant’s recommendations and by failing to investigate alternatives. The Court of Appeals rejected each of these arguments and pointed out that “[c]ompliance with the prudent investor rule is determined in light of the facts and circumstances existing at the time of a trustee’s decision or action and not by hindsight” citing Indiana Code § 30-4-3.5-8. In this instance, based on the facts and circumstances that existed in 2003, the Court of Appeals concluded that “KeyBank’s decision to exchange the [variable life] policies for the [lump sum] policy was eminently prudent, reduction in death benefit notwithstanding. That a “wait and see” approach may also have been a prudent course of action does not alter the propriety of the exchange.”
The Court of Appeals also rejected the Beneficiaries’ arguments that KeyBank breached a number of its duties to them. Most importantly, however, the Court of Appeals concluded that “Even if we were to find that KeyBank’s actions herein constituted a breach of its duty to the Beneficiaries, we cannot countenance the Beneficiaries’ argument that the lack of receipt of an annual report or failure to provide information about the exchange, without more, supports an award of compensatory damages.” The trial court had concluded that “financial trends outside of the control of the Trustee or the Beneficiaries were the direct and proximate cause of the problem facing the Trust in 2003” and the Court of Appeals agreed, adding that the settlor’s tragic, untimely death was also a contributing problem beyond everyone’s control.
Additional issues were addressed (and rejected) by the Court of Appeals including the argument that the 2003 exchange was inconsistent with the intent of the Settlor. The opinion was handed down on March 2, 2009 and the full text of the opinion can be found here.
Probate attorneys, both those involved in probate litigation as well as estate planning, should consider the ramifications of the following decision:
Rosemary Dean v. William T. Pelham, Pers. Rep. of the Estate of William McNatt, Case No. 73A01-0806-CV-306 (Part 2)
A full text copy of the opinion on rehearing handed down on February 27, 2009 can be found here.
While not directly a probate litigation decisions, the following decision may be of interest to some probate attorneys since it involves a contested disinterment of a deceased’s remains – an issue that can occasionally arise during probate litigation.
E. Lee Warren, et al v.
Case No. 02A03-0806-
CV-333
In 1970, the husband passed away and was buried in
The opinion was handed down on February 25, 2009 and a full text copy of the opinion can be found here for those that may be interested in reading this decision.
Probate attorneys involved in probate litigation (and perhaps all attorneys involved in any litigation regardless of whether it involves probate, business law, trademark, intellectual property or any other matter in litigation) may wish to consider the following opinion:
James W. Smyth v. Judy G. Hester & Estate of Timothy P. Brazil. Case
No. 29A02-0803-CV-237
This matter involved the trial court’s award of attorneys’ fees to an estate and an attorney for actions taken by a law firm on behalf of its client. The facts of the matter involved the dissolution of a law firm partnership. The firm had three partners and shortly after the dissolution was announced, one of the partners passed away. One of the two remaining partners filed a complaint against the deceased partner’s estate and the other remaining partner. Litigation ensued and during the course of that litigation, allegations were made that the initiating partner and his counsel had engaged in “frivolous, unreasonable and bad faith conduct.” The trial court eventually entered an order which found that the partner and his attorneys had engaged in such conduct and the estate would therefore be allowed to present evidence of the reasonable attorneys’ fees and costs the estate incurred because of such conduct. An appeal was then initiated.
The Court of Appeals reversed the trial court. In doing so, the Court held that a appellate review of an award of attorneys’ fee pursuant to Indiana Code § 34-52-1-1 proceeds in three steps. First, the trial court’s findings of fact are reviewed under a clearly erroneous standard. Next, the trial court’s legal conclusions are reviewed de novo. Finally, the trial court’s decision to award fees and the amount thereof are reviewed under an abuse of discretion standard. In this instance, the trial court failed to make any specific factual findings and conclusions of law regarding the award of attorney fees. On appeal, the estate argued that the record rather than the general findings of the trial court supported the award. The Court of Appeals found that “inasmuch as the trial court’s findings of fact and conclusions of law do not address the attorney fee award, we may consider that portion of the judgment to be a general judgment; and we may affirm a general judgment on any theory supported by the evidence.” However, the Court was also “mindful of our Supreme Court’s observation that ‘the legal process must invite, not inhibit, the presentation of new and creative argument to enable the law to grow and evolve’; and that in reviewing an award of statutory attorney fees, we ‘must leave breathing room for zealous advocacy and access to the court to vindicate rights,’ and ‘be sensitive to these considerations and view claims of frivolous, unreasonable, or groundless claims or defenses with suspicion.’” The Court then acknowledged that while the record “may include some questionable litigation tactics that might support the trial court’s exercise of its discretion to award attorney fees,” the Court’s review “in that regard is impaired by the fact that the order appealed does not provide us with any insight as to the trial court’s reason for the award of attorney fees in this case, i.e., what the trial court found to be frivolous, unreasonable, and bad faith conduct." Accordingly, the matter was remanded to the trial court for further consideration and explanation of its judgment in that regard.
The opinion was handed down on February 12, 2009 and a full text copy of the opinion can be found here for those that may be interested in reading this decision.
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