Bird v. McCauley (In re McCauley)
520 B.R. 874
| Bankr. D. Utah | 2014Background
- Ruth E. McCauley formed a revocable trust and a will directing Trust assets to four siblings (including Debtor Eugene).
- Ruth died; Susan became sole trustee and executor; the Court did not accept a full accounting of Trust assets.
- Trust assets included REM (an LLC) formed by Ruth, which held Ballard Property and other assets transferred from the Trust.
- Ballard Property, REM, and related assets were distributed to siblings through various transfers (some to EMSN, REM, or individuals) with no verified valuation or comprehensive accounting.
- Trustee seeks to have REM and Ballard Property declared property of Debtor’s estate under constructive trust, resulting trust, or alter ego theories; court limited its reach due to probate exception and insufficient proof.
- Court dismisses Trustee’s claims for lack of proof of elements and absence of controlling evidence tying REM or Ballard Property to Debtor's estate
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether REM and Ballard Property are Debtor's estate property | Trustee: theory supports Debtor’s equal share claim | Defendants: not estate property; assets traced to trusts/other entities | Not established; insufficient evidence and jurisdiction limits apply |
| Whether a resulting trust can be imposed | Trustee asserts intended equal distribution to Eugene | No clear intent to convey; evidence insufficient | Trustee failed to prove by clear and convincing evidence |
| Whether a constructive trust can be imposed | Elizabeth/Susan held REM assets for Eugene under trust or unjust enrichment | No express oral trust proven; unjust enrichment not shown | Constructive trust not established |
| Whether Elizabeth was sole REM member; and whether membership interests equal Ballard Property | Elizabeth as sole member implies beneficial interest held for Eugene | Membership interests are personal property; no clear transfer | Elizabeth not shown as sole member with sole beneficial interest; not dispositive |
| Whether alter ego/piercing the corporate veil applies | Eugene used REM to shield assets; veil should be pierced | Insufficient unity of interest; no fraud/injustice proven | Alter ego claim not supported |
Key Cases Cited
- Rawlings v. Rawlings, 240 P.3d 754 (Utah 2010) (constructive vs resulting trusts; intent considerations)
- In re Estate of Hock, 655 P.2d 1111 (Utah 1982) (trust/ownership distinctions and case authority)
- Transamerica Cash Reserve, Inc. v. Dixie Power & Water, Inc., 789 P.2d 24 (Utah 1990) (alter ego/veil piercing standards and procedural posture)
- Baker v. Pattee, 684 P.2d 632 (Utah 1984) (no resulting trust where intent to convey not shown)
- Taylor v. Rupp (In re Taylor), 133 F.3d 1336 (10th Cir. 1998) ( Restatement concepts and trust injury analogies)