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In re Penner

Court of Appeals of Indiana

November 17, 2014

IN THE MATTER OF THE WALTER PENNER TRUST UNDER AGREEMENT CREATED BY THE GRANTOR, WALTER PENNER ON APRIL 13, 2010, STANLEY PENNER, Appellant-Petitioner,
v.
RONALD PENNER, Appellee-Respondent

Page 594

APPEAL FROM THE LAKE CIRCUIT COURT. The Honorable George Paras, Judge. Cause No. 45C01-1112-TR-17.

ATTORNEY FOR APPELLANT: JASON M. SMITH, Seymour, Indiana.

ATTORNEY FOR APPELLEE: KATHRYN D. SCHMIDT, Burke Costanza & Carberry LLP, Merrillville, Indiana.

MAY, Judge. KIRSCH, J., and BAILEY, J., concur.

OPINION

Page 595

MAY, Judge

The parties to this case, along with their brother Frank Penner, are beneficiaries of the Walter Penner Living Trust (Trust). According to the terms of the Trust, Ronald Penner became the Trustee of the Trust on Walter's death. Stanley Penner brought an action against Ronald in his capacity as Trustee, and the trial court found against Stanley on all counts. Stanley now appeals the denial of his motion to correct error and the trial court's order that he pay attorney fees to the Trust. He presents multiple issues for our review, which we consolidate and restate as:

1. Whether the trial court erred when it determined Ronald, in his capacity as Trustee, did not commit the following breaches of trust:
a. failure to submit an accounting of the Trust;
b. mismanagement of funds and property;
c. co-mingling of Ronald's personal funds and Trust funds;
2. Whether the trial court erred when it determined Stanley was not entitled to attorney's fees;
3. Whether the trial court erred when it ordered Stanley to pay the Trust's attorney's fees because his claim was frivolous; and
4. Whether Stanley is entitled to appellate attorney's fees.

We affirm and remand.

FACTS AND PROCEDURAL HISTORY

On April 13, 2010, Walter created the Trust, named Ronald, Stanley, and Frank as beneficiaries, and named Ronald as successor trustee, with Frank to serve if Ronald was unable, and Stanley to serve if Ronald and Frank were unable. Walter died on March 30, 2011. Shortly thereafter, Ronald, Stanley, and Frank met to discuss the assets of the Trust. At that

Page 596

time, Ronald proposed the three work on repairing Walter's home, which was an asset of the Trust, in order to prepare it for sale in August 2012.

The brothers met at Walter's house in August 2011 to work on it, but little was accomplished. At that time, Stanley indicated he planned to sue Ronald (hereinafter, " Trustee" ) in his capacity as trustee, and he would do so to deplete the assets of the Trust. Neither Ronald nor Frank thought Stanley was joking. In addition, Stanley also said his statement " [was] not a threat; it [was] a promise." (App. at 151.)

On December 9, 2011, Stanley filed a Petition for Trustee's Accounting, for Order to Sell Real Estate, and Related Matters, alleging Trustee had committed certain breaches of trust including failure to render an accounting, mismanagement of Trust assets, and mismanagement of the sale of Walter's residence. The trial court held a hearing on the matter on February 16, 2012, during which Stanley argued Walter's residence should be deeded to the three brothers as tenants in common. On the day of the hearing, Trustee filed a request for attorney's fees, alleging Stanley's claims were frivolous and the legal action was meant to harass. Stanley orally requested attorney's fees during the hearing.

While the case was pending, Walter's residence sold. On August 23, 2012, the trial court issued its order denying Stanley's claims and denying Stanley's oral request for attorney's fees. Stanley filed a motion to correct error on September 24; it was deemed denied on November 8, 2012. The parties appeared before the trial court on November 8 for a status conference and to present their arguments regarding attorney's fees. On December 7, Stanley filed his notice of appeal with this court. On February 1, 2013, the trial court ordered Stanley to pay $13,166.00 in attorney's fees to the Trust, and it denied Stanley's request for attorney's fees. Stanley filed an amended appeal with this court on February 28, 2013.

DISCUSSION AND DECISION

A trial court has broad discretion in ruling on a motion to correct error. Volunteers of Am. v. Premier Auto Acceptance Corp., 755 N.E.2d 656, 658 (Ind.Ct.App. 2001). We will reverse only for an abuse of that discretion. Id. An abuse of discretion occurs if the decision was against the logic and effect of the facts and circumstances before the court or if the court misapplied the law. Id.

The trial court sua sponte entered findings of fact and conclusions of law. When the trial court enters findings sua sponte, the specific findings control only as to the issues they cover, and a general judgment standard applies to any issue on which the court has not entered findings. Scoleri v. Scoleri, 766 N.E.2d 1211, 1214-15 (Ind.Ct.App. 2002). In reviewing the judgment, we determine whether the evidence supports the findings and the findings support the judgment. Id. at 1215. We will reverse only when the judgment is clearly erroneous, i.e., when it is unsupported by the findings of fact and conclusions entered on the findings. Id. For findings of fact to be clearly erroneous, the record must lack probative evidence or reasonable inferences from the evidence to support them. Id. In determining the validity of the findings or judgment, we consider only the evidence favorable to the judgment and all reasonable inferences to be drawn therefrom, and we will not reweigh evidence or assess credibility of witnesses. Id. A general judgment may be affirmed on any theory supported by the evidence presented at trial. Id.

Page 597

1. Alleged Breaches of Trust

The court's primary purpose in construing a trust document is to " ascertain and give effect to the settlor's intention." Univ. of S. Ind. Found. v. Baker, 843 N.E.2d 528, 532 (Ind. 2006). Indiana follows " the four corners rule" that " extrinsic evidence is not admissible to add to, vary or explain the terms of a written instrument if the terms of the instrument are susceptible of a clear and unambiguous construction." Hauck v. Second Nat'l Bank of Richmond, 153 Ind.App. 245, 259, 286 N.E.2d 852, 861 (1972), reh'g denied. Therefore, the court must give effect to a Trust's clear meaning without the use of extrinsic evidence where a Trust is capable of clear and unambiguous interpretation. See Baker, 843 N.E.2d at 532. Document language is not ambiguous simply because two parties ...


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