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Guardianship of Hayes v. Hayes

Court of Appeals of Indiana

May 29, 2014

GUARDIANSHIP OF PHYLLIS D. HAYES, AN ADULT, JOANN HAYES and DIANNA HALE, Appellants,
v.
KENNETH J. HAYES, Appellee

Page 43

APPEAL FROM THE MIAMI SUPERIOR COURT. The Honorable J. David Grund, Judge. Cause No. 52D01-1003-GU-3.

ATTORNEY FOR APPELLANT: JEFFRY G. PRICE, Peru, Indiana.

ATTORNEYS FOR APPELLEE: THOMAS M. BEEMAN, KYLE B. DEHAVEN, Anderson, Indiana.

BARNES, Judge. BAKER, J., and CRONE, J., concur.

Page 44

OPINION

BARNES, Judge

Case Summary

Jo Ann Hayes and Dianna Hale appeal the trial court's denial of their motion for summary judgment and the trial court's order concluding that the execution of an option contract by their mother, Phyllis Hayes, to their brother, Kenneth Hayes, was enforceable. We affirm.

Issues

Jo Ann and Dianna raise two issues, which we restate as:

I. whether the trial court properly denied their motion for summary judgment because the sale was subject to trial court approval; and
II. whether, after a hearing, the trial court properly ordered the execution of the option contract because it was not the result of undue influence.

Facts

Phyllis and her husband owned a 200-acre farm in Miami County. Prior to passing away in 1993, Phyllis's husband farmed the land with the couple's son, Kenneth. Jo Ann and Dianna are Kenneth's sisters. Kenneth and his family lived in one house on the farm, and Phyllis and her husband lived in another house on the farm. In the mid-1980s, Kenneth loaned his parents $179,539.80 to support the farm.

In 1997, Phyllis gave Kenneth the authority to act as her power of attorney. On March 3, 2005, Phyllis executed a promissory note, mortgage, will, and an option contract as part of her estate plan created by attorney Joseph Certain. Certain created the documents pursuant to Phyllis's request and videotaped Phyllis on March 3, 2005, explaining why she set up her estate plan the way she did.

The promissory note and mortgage were in favor of Kenneth in the amount of $180,000. The option contract allowed Kenneth to purchase the 200-acre farm at $2,500 per acre, for a total purchase price of $500,000, which was a reasonable fair market price at that time. Pursuant to the terms of the option contract, Kenneth could exercise the option to purchase through September 1, 2014, and, upon expiration of the initial option period, it could

Page 45

be renewed for another ten years. The option contract also specified that Kenneth was owed $180,000 and that, should he exercise the option, any unpaid balance of the promissory note should be credited toward the $500,000 purchase price.

In January 2010, Kenneth told Jo Ann and Dianna that he intended to purchase the farm, and he later executed a letter of his intent to exercise the option. In March 2010, Jo Ann and Dianna petitioned for the appointment of a guardian over Phyllis's person and estate. Kenneth was the appointed as the guardian over Phyllis's person and a bank was appointed as the guardian over the estate. Litigation ensued regarding the sale of the farm to Kenneth pursuant to the terms of the option contract. Jo Ann and Dianna's expert valued the farm at $8,000 to $10,000 per acre.

Eventually, Kenneth moved for summary judgment arguing that the option contract was valid and binding. Jo Ann and Dianna also moved for summary judgment arguing that there were no genuine issues of material fact and that the sale was void as a matter of law. The trial court denied both motions. The trial court rejected Jo Ann and Dianna's request to certify the denial of their motion for summary judgment for interlocutory appeal, and a fact-finding hearing was held.

Jo Ann and Dianna requested special findings and conclusions, and the parties submitted proposed findings to the trial court. The trial court largely adopted Kenneth's proposed findings and conclusions and ordered the sale of the farm pursuant to the option contract. In its order, the trial found in part:

7. That there was no evidence that [Kenneth] ever acted under the authority of the Power of Attorney prior to 2006;
* * * *
10. That [Phyllis] had been consulting her attorney Joseph Certain in the months leading up to March 3, 2005;
* * * *
17. That [Kenneth] was not present when the contract was discussed, created, or executed by [Phyllis];
18. That [Phyllis] created the option contract with the assistance and advice of her attorney;
19. That the option contract was consistent with her overall estate plan as well as the wishes of her late husband as testified to by her attorney Mr. Certain;
20 That, according to Mr. Certain, precautions were taken to insure, in his mind that [Phyllis] knew the gravity of the option contract.
21. That, according to Mr. Certain, and in his legal opinion, [Phyllis] was legally competent to execute the option contract and ...

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