Smith v. Kirkland
392 P.3d 847
Utah Ct. App.2017Background
- Steven E. Kirkland (Trustor) created the Terrestrial Kingdom of God Trust in 1993; trustees included Penn Smith and Valden Cram. The Declaration required the Trustor to "prepare and deliver" Lease and Stewardship Agreements to beneficiaries, but he died before doing so.
- Trustees amended the Declaration in 2005 to add paid managerial positions; Smith (manager) and Cram (assistant) began charging the Trust $50/hr in 2006. An arbitration panel in 2006 found it was gross negligence for trustees to appoint themselves paid roles and that some manager acts exceeded authority.
- Smith sued the Trust for compensation, obtained default judgment because beneficiaries were not notified, and placed a lien on Trust property; beneficiaries later intervened and sued Smith and Cram for breaches of fiduciary duty and conversion.
- Multiple arbitrations and consolidated district-court actions followed. In May 2013 the court granted summary judgment on the Trust’s validity but denied summary judgment on trustee breach and manager compensation; 45 days later the trustees filed a second summary-judgment motion on those same issues.
- The district court granted the trustees’ second motion for summary judgment (and attorney fees) after beneficiaries failed to oppose; beneficiaries’ motions to reconsider and two Rule 60(b) motions were denied. The beneficiaries appealed.
Issues
| Issue | Beneficiaries' Argument | Trustees' Argument | Held |
|---|---|---|---|
| Whether grant of the trustees’ second motion for summary judgment was proper | Second MSJ relied on insufficient/new admissible evidence and genuine issues of fact remained on breach and compensation | Second MSJ was proper; beneficiaries failed to oppose and submitted no evidence to create a fact issue | Reversed: court improperly granted MSJ because the only "new" evidence was inadmissible and genuine issues remained |
| Whether denial of beneficiaries’ Rule 60(b) motion was erroneous | Court abused discretion in denying relief from judgment entered on the second MSJ | Denial proper | Moot (appeal reversal of MSJ renders Rule 60(b) challenge unnecessary) |
| Whether awarding attorney fees to trustees was proper | Fees improperly awarded because underlying MSJ was erroneous | Fees appropriate as part of MSJ relief | Vacated (fees vacated because MSJ reversal) |
| Whether Trust was invalid because Lease/Stewardship Agreements were not delivered before Trustor’s death | Failure to deliver agreements before death invalidates the Trust | Court may modify administrative terms under Utah statute; failure to deliver did not invalidate Trust and trustees could effectuate Trust purposes | Affirmed: Trust not invalidated; court may modify terms to effect settlor’s probable intentions |
Key Cases Cited
- Basic Research LLC v. Admiral Ins., 297 P.3d 578 (Utah 2013) (standard of review for summary judgment)
- Orvis v. Johnson, 177 P.3d 600 (Utah 2008) (view facts and inferences in favor of nonmovant on summary judgment)
- Pepperwood Homeowners Ass’n v. Mitchell, 351 P.3d 844 (Utah Ct. App. 2015) (summary judgment against an unopposed party requires appropriateness)
- Sandy City v. Salt Lake County, 794 P.2d 482 (Utah Ct. App. 1990) (inadmissible evidence cannot support summary judgment)
- IHC Health Servs. Inc. v. D & K Mgmt. Inc., 196 P.3d 588 (Utah 2008) (law-of-the-case principles allow reconsideration before final judgment)