435 P.3d 349
Wyo.2019Background
- Robert and Irene Redland created the irrevocable Robert and Irene Redland Family Trust (1989); a 1995 amendment required two trustees to approve actions and included a buyout formula; a 2010 stipulated amendment added a tie‑breaker trustee.
- After Irene died, disputes arose among the five children (beneficiaries) over lands, leases, and trustee actions; prior litigation (Redland I and II) adjudicated many claims and resulted in the court upholding the trust as valid and approving the 2010 amendment.
- Robert sued co‑trustees in 2013; he later resigned and appointed his daughter Lisa as successor trustee; Lisa then sought termination of the trust claiming invalidity and failure to achieve settlors’ purposes; Rolly counterclaimed to remove Lisa as co‑trustee for alleged fiduciary breaches.
- A five‑day bench trial was held; the district court denied termination (finding res judicata and that a material purpose remains) and denied removal (finding no gross and willful misconduct; tie‑breaker trustee reduced deadlocks).
- On appeal the Wyoming Supreme Court affirmed: Lisa is barred by res judicata from relitigating the trust’s validity; a dominant material purpose (holding ranch lands together to conduct business) remains; and the court did not abuse its discretion in retaining Lisa as a settlor‑appointed co‑trustee.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the trust should be terminated because it is invalid | Lisa: trust is invalid (abusive trust under federal tax regs; 1995 amendment unlawful) | Respondents: previous litigation resolved trust validity; res judicata bars relitigation | Court: Res judicata bars Lisa’s invalidity claim; she is bound by prior adjudication and stipulation — no termination on that ground |
| Whether the trust should be terminated because it fails to achieve material purposes | Lisa: trust no longer meets settlors’ estate‑tax, liability‑protection, anti‑transfer purposes | Respondents: trust has multiple purposes; dominant purpose remains (keep lands/leases together for business) | Court: Termination not warranted—a material purpose remains, so continuance allowed |
| Whether Lisa should be removed as co‑trustee for breaching fiduciary duties | Rolly: Lisa showed partiality, disloyalty, hostility, hampering administration; seeks removal | Lisa: acted within duties (advocated funding marital trust, sought termination as permitted remedy); tie‑breaker trustee resolves impasses | Court: No abuse of discretion in retaining Lisa; no gross and willful misconduct shown; hostility alone insufficient when administration functional |
| Whether inability to administer (dysfunction) requires removal or termination | Lisa/Rolly cited dysfunction and hostility; Lisa sought termination; Rolly sought removal | Parties note court supervision and appointment of tie‑breaker trustee improved administration | Court: District court’s supervisory remedies and tie‑breaker trustee addressed deadlocks; neither termination nor removal justified |
Key Cases Cited
- Redland v. Redland, 288 P.3d 1173 (Wyo. 2012) (prior adjudication upholding trust validity and approving amendment)
- Redland v. Redland, 346 P.3d 857 (Wyo. 2015) (affirming remedies regarding trust property and addressing transfer of specific parcel)
- Shriners Hosps. for Children v. First N. Bank of Wyoming, 373 P.3d 392 (Wyo. 2016) (standards for trustee removal and evaluation of material trust purposes)
- Forbes v. Forbes, 341 P.3d 1041 (Wyo. 2015) (deference to settlor‑appointed trustees and removal prerequisites)
- Tozzi v. Moffett, 430 P.3d 754 (Wyo. 2018) (res judicata elements and purposes)
- Ultra Res., Inc. v. Hartman, 346 P.3d 880 (Wyo. 2015) (review standard for claim‑preclusion issues)
- Eklund v. PRI Envtl., Inc., 25 P.3d 511 (Wyo. 2001) (policy and application of res judicata to prevent piecemeal litigation)
- Emerson‑Brantingham Implement Co. v. Riverton Elevator Co., 297 P. 393 (Wyo. 1931) (capacity/privity rules applying res judicata across representative and individual roles)