514 P.3d 376
Kan. Ct. App.2022Background
- Julia Culliss created a revocable trust and will (2009), appointed son Brian trustee/executor, and named Brian and Gary as sole beneficiaries; the trust authorized distributions "in cash or in kind (including non-pro rata in kind distributions)" and permitted the trustee to value assets at distribution.
- At Julia's death (2018) two adjacent lake lots (the "Lake Properties") were part of the remainder; Brian proposed taking sole title and paying Gary cash equal to value; Gary preferred sole or joint ownership and filed for declaratory relief.
- The district court treated Gary’s pleading as a motion for partial summary judgment, denied it, and separately held a valuation hearing where Brian’s appraiser (McClain) valued the combined parcels at $177,000.
- The court approved Brian’s distribution plan as within trustee discretion, found no breach of fiduciary duty warranting voiding the transfer, and adopted McClain’s valuation over Gary’s separate-appraisal evidence.
- The district court awarded trustee Brian $42,069.96 in attorney fees to be paid from the trust and ordered Gary to reimburse the trust for the litigation-related fees; Gary appealed.
- The Court of Appeals affirmed: it held the trust’s non-pro rata/in-kind clause authorized Brian’s transaction, the valuation was supported by substantial evidence, and the attorney‑fee award and allocation were not an abuse of discretion.
Issues
| Issue | Plaintiff's Argument (Gary) | Defendant's Argument (Brian) | Held |
|---|---|---|---|
| Whether the trustee’s conveyance of the Lake Properties to himself (with cash to Gary) violated the duty of loyalty and was voidable for self‑dealing | Transaction was self‑dealing and breached duty of loyalty; the trust cannot waive the duty | Trust expressly authorized non‑pro rata cash/in‑kind distributions; K.S.A. 58a‑802(b)(1) authorizes transactions the trust permits | Transaction falls within trust authorization; conflict existed but court found no bad faith/abuse of discretion and affirmed denial of Gary’s SJ motion |
| Proper valuation of the Lake Properties (should Gary’s $226,100 offer control?) | Gary’s bona fide higher offer should control; trustee violated prudent‑investor duties by accepting lower value | Trustee may set value where no generally recognized market value; appraiser McClain supported $177,000 and court may weigh evidence | Court’s valuation of $177,000 supported by substantial competent evidence; prudent‑investor statute not applicable to beneficiary‑ownership allocation |
| Award and allocation of attorney fees for litigation over the Lake Properties | Brian caused unnecessary litigation by refusing joint ownership; Gary should not reimburse the trust | Litigation was necessary to administer the estate; fees were reasonable and benefited the trust | District court did not abuse discretion in awarding fees to trustee and ordering Gary to reimburse the trust |
| Order addressing future and appellate attorney fees | Future fee language was a premature or improper advance imposition; appellate fees request improper | Language signaled intent to charge any subsequently approved litigation fees to Gary; Brian requested appellate fees but failed to follow procedural rules | Future‑fee reservation was not a premature award; Brian’s appellate fee request denied for failure to file required motion/affidavit |
Key Cases Cited
- Roenne v. Miller, 58 Kan. App. 2d 836 (Kan. App. 2020) (a trustee/beneficiary cannot treat the trust as nonexistent; conflicts approved by trust are closely scrutinized)
- Patterson v. Cowley County, 307 Kan. 616 (Kan. 2018) (summary judgment standards)
- Becker v. The Bar Plan Mut. Ins. Co., 308 Kan. 1307 (Kan. 2018) (appellate review of summary judgment and legal questions)
- Hamel v. Hamel, 296 Kan. 1060 (Kan. 2013) (court must effectuate settlor's intent when interpreting a trust)
- Jennings v. Murdock, 220 Kan. 182 (Kan. 1976) (court will not override trustee discretion absent bad faith or arbitrary conduct)
- In re Estate of Hjersted, 285 Kan. 559 (Kan. 2008) (value of real property is a factual finding for the trial court)
- In re Estate of Farr, 274 Kan. 51 (Kan. 2002) (definition of substantial evidence)
- In re Estate of Engels, 10 Kan. App. 2d 103 (Kan. App. 1984) (appellate deference to trial court fact findings)
- Westar Energy, Inc. v. Wittig, 44 Kan. App. 2d 182 (Kan. App. 2010) (district court has broad discretion in awarding attorney fees)
- Cresto v. Cresto, 302 Kan. 820 (Kan. 2015) (abuse‑of‑discretion standard for fee awards)
- In re Estate of Somers, 277 Kan. 761 (Kan. 2004) (appellate courts may assess reasonableness of attorney fees)