Kidd v. Alfano
2016 Ohio 7519
| Ohio Ct. App. | 2016Background
- Herbert and Jean Webb created an inter vivos trust in 2006; upon Herbert’s death in 2009 the marital subtrust benefitting Jean was administered by successor co‑trustees Susan Alfano and Jennifer Alfano‑Hill. Jean is elderly and incapacitated; the remainder beneficiaries are the four children (including Martha Kidd).
- Martha filed multiple Georgia guardianship/conservatorship actions (and appeals) after discovering transfers and joint accounts she controlled; litigation and settlement followed in 2010–2011. A 2011 mediated Georgia settlement stated “Each party will pay his/her own costs and fees.”
- The Ohio marital subtrust (and conservatorship account in Georgia) paid substantial attorney fees to defend the co‑trustees and allied family members in the Georgia and Ohio litigation; Martha sued in Ohio seeking an accounting and tort damages and later sought removal of the co‑trustees.
- The magistrate found a single fiduciary breach: a $14,000 advancement to Susan; the trial court ordered repayment of that advancement plus interest but declined to remove the co‑trustees and upheld trustees’ use of trust funds to pay defense fees.
- On appeal, Martha assigned two errors: (1) trial court abused discretion by not removing co‑trustees for conflicts/ breaches/ failure to account; (2) trial court misinterpreted the Georgia settlement and erred in permitting trust payment of family attorney fees.
- The appellate court affirmed: (a) the single breach (the $14,000 advancement) did not amount to a “serious breach” warranting removal; (b) the Georgia settlement was ambiguous and did not bar the trust from paying attorney fees for trustees and allied beneficiaries in the related litigation.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether co‑trustees should be removed for a "serious breach of trust" | Kidd: trustees committed conflicts, breaches, failed timely accountings and wasted trust assets, so removal required | Trustees: only one breach (the $14,000 advancement), repayment ordered; removal is drastic and unnecessary | Court: no abuse of discretion in declining removal; single statutory/conflicted advancement not a "serious breach" warranting removal |
| Whether the trust breached fiduciary duties by using trust funds to pay attorney fees for trustees and allied family members | Kidd: trust payments were improper and excessive; Georgia settlement required each party pay own fees, so trust couldn’t fund defendants’ fees | Trustees: trust instrument and Ohio Trust Code authorize payment of reasonable expenses and attorneys to protect ward and trust interests | Court: payment was reasonable and authorized by trust and statute; not a breach of fiduciary duty |
| Whether the 2011 Georgia settlement barred use of Ohio trust funds to pay fees for the family’s defense in the Georgia litigation | Kidd: "Each party will pay his/her own costs and fees" plainly bars third‑party (trust) funding of those fees | Defendants: settlement did not name the Ohio trust; language ambiguous as to representative vs. individual capacities; did not preclude trust funding | Court: clause ambiguous; extrinsic evidence supports interpretation that parties meant they would not pay the opposing side’s fees, and it did not limit the trust from paying fees; fee payments not barred |
| Standard/Timing — was removal timely raised and properly considered sua sponte? | Kidd: removal should have been granted when argued post‑trial | Defendants: plaintiffs did not timely request removal; trial court properly exercised discretion | Court: plaintiffs’ request for removal was untimely but court considered issue sua sponte and still found no abuse of discretion in denying removal |
Key Cases Cited
- Arnott v. Arnott, 972 N.E.2d 586 (Ohio 2012) (discussing mixed questions of law and fact and standards of appellate review)
- Tomazic v. Rapoport, 977 N.E.2d 1068 (Ohio App. 2012) (trustee removal upheld where record showed numerous and egregious fiduciary breaches)
- State v. Carr, 878 N.E.2d 1077 (Ohio App. 2007) (appellate review accepts trial court's factual findings if supported but reviews legal conclusions de novo)