Warner v. Warner
2014 UT App 16
| Utah Ct. App. | 2014Background
- Parents created the Albert H. Warner Family Trust (1988) naming four children as trustees; trust corpus included an 80-acre vacation parcel, securities, and later (disputedly) an 820-acre parcel (the Smith Property). Mother died 1996; her will and POA were invoked in the dispute.
- Beneficiaries (three Warner children) sued three trustees in 1998 for alleged fiduciary breaches and repeatedly sought to amend to seek distribution/partition of trust assets (including the Smith Property); trustees moved for summary judgment.
- In 1999 the district court granted summary judgment to the trustees on the Beneficiaries’ original causes of action and denied early motions to amend; the parties litigated for years with additional amendment attempts in 2001 and 2007.
- At a May 27, 2009 hearing the court orally directed that the Smith Property be removed from the Trust after trustees’ counsel had represented the Smith Property was not in the Trust; trustees later submitted proposed orders that mischaracterized the oral ruling and asserted a large fee award to trustees.
- The court corrected the signed order, found the trustees acted in bad faith by submitting proposed orders contrary to the court’s oral ruling, awarded the Beneficiaries $37,210 in attorney fees payable personally by the trustees, and denied trustees’ fee requests. Trustees appealed; Beneficiaries cross-appealed summary judgment and denials of amendment.
Issues
| Issue | Plaintiff's Argument (Beneficiaries) | Defendant's Argument (Trustees) | Held |
|---|---|---|---|
| Whether court could order divestment of Smith Property after denying motions to amend / whether it had authority to grant relief | The court should remove/divest the Smith Property because it was improperly held in the Trust and trustees’ representations were false | Court lacked authority because beneficiaries’ amendment to add that claim had been denied (no claim before court) or, alternatively, Smith Property is properly in the Trust under trust retained-power provisions | Vacated divestment order and remanded: district court must decide whether amendment should have been allowed; if amendment properly denied, divestment was beyond authority; if amendment should have been granted, proceed on merits (remand for further proceedings) |
| Whether district court abused discretion in considering beneficiaries’ late objection to trustees’ proposed order (extension/excusable neglect) | Late objection excusable; court should correct inaccurate order | Objection untimely and not excusable; court lacked basis to consider it | Affirmed court’s consideration: court properly exercised inherent power to correct misstatements and ensure orders matched oral rulings (timeliness issue not dispositive) |
| Whether trustees acted in bad faith by submitting proposed orders contrary to oral ruling and whether beneficiaries were entitled to bad-faith fees; whether fees should be paid personally or from trust | Beneficiaries prevailed in vacating erroneous order; trustees’ proposed orders were without merit and made in bad faith; fees should be awarded and paid by trustees personally | Trustees contend proposed orders reflected a good‑faith interpretation of the record; any fee award should come from the Trust (or not at all) | Affirmed award of $37,210 under bad-faith statute; trustees acted without honest belief and in bad faith; court rightly required trustees to pay personally (cannot use trust funds for fees tied to bad‑faith conduct) |
| Whether trustees were entitled to attorney fees (bad faith statute or trust statute §1004(1)) for defending against beneficiaries’ claims | Trustees argue beneficiaries repeatedly brought meritless/amending claims in bad faith and therefore trustees are entitled to fees under bad-faith statute or under §1004(1) (justice and equity) | Beneficiaries acted in good faith; trustees’ fee requests should be denied | Affirmed denial of trustees’ fee requests: district court’s factual finding beneficiaries acted in good faith was not clearly erroneous; §1004(1) award not supported on record given court’s factual findings |
Key Cases Cited
- Johnson v. Johnson, 234 P.3d 1100 (Utah 2010) (describing subject-matter jurisdiction as authority to decide the case and distinguishing jurisdiction from lack of authority to grant particular relief)
- In re Adoption of Baby E.Z., 266 P.3d 702 (Utah 2011) (limiting concept of subject-matter jurisdiction to courts lacking authority to hear a class of cases rather than lacking authority to grant relief in an individual case)
- Still Standing Stable, LLC v. Allen, 122 P.3d 556 (Utah 2005) (bad-faith attorney-fee standard: award requires finding that losing party lacked honest belief in propriety of actions)
- Valcarce v. Fitzgerald, 961 P.2d 305 (Utah 1998) (prevailing-party fee award principles under statutory fee provisions; appellate fees may follow prevailing-party awards)
- Gudmundson v. Del Ozone, 232 P.3d 1059 (Utah 2010) (standard of review for summary judgment: legal rulings reviewed for correctness; facts/inferences viewed in light most favorable to nonmoving party)
- Barnard v. Wassermann, 855 P.2d 248 (Utah 1993) (courts have inherent authority to control proceedings, correct errors, and preserve integrity of judicial process)