In Re: the Matter of the Supervised Administration of the Estate of Wayne Lewis Stayback, Deceased, Joseph Stayback, Appellant-Respondent,
Jeffrey Stayback and Julie Warnke, Appellees-Petitioners
Appeal from the LaPorte Superior Court. The Honorable Kathleen B. Lang, Judge. Cause No. 46D01-1110-ES-35.
ATTORNEY FOR APPELLANT: Morris A. Sunkel, Harris Welsh & Lukmann, Chesterton, Indiana.
ATTORNEY FOR APPELLEES: Elizabeth A. Flynn, Michigan City, Indiana.
Najam, Judge. Baker, J., and Friedlander, J., concur.
Statement of the Case
[¶1] Wayne Lewis Stayback, deceased, was the father of three children: Joseph Stayback, Jeffrey Stayback, and Julie Warnke. In 2010, Wayne created the Wayne Lewis Stayback Irrevocable Living Trust (" the Trust" ), the corpus of which consisted of approximately seventy-five acres of real property in LaPorte County (" the property" ) and some personal property. After Wayne died in 2011, Jeffrey and Julie filed a joint petition to remove Joseph as trustee of the Trust. Joseph filed a motion to dismiss that petition, and he requested fees and expenses. Jeffrey and Julie subsequently filed a motion to dissolve and terminate the Trust. Following a hearing on all pending motions, the trial court denied Joseph's motion to dismiss and motion for fees and expenses, and the court denied Jeffrey and Julie's motion to dissolve and terminate the Trust. Joseph appeals and presents two issues for our review:
1. Whether the trial court erred when it concluded that the Trust shall distribute to Joseph, Jeffrey, and Julie income generated by billboards located on the property.
2. Whether the trial court abused its discretion when it denied Joseph's motion for fees and expenses.
[¶2] Jeffrey and Julie cross-appeal and present two issues for our review, which we consolidate and restate as whether the trial court erred when it denied their petition to dissolve and terminate the Trust.
[¶3] We affirm in part and reverse in part.
Facts and Procedural History
[¶4] In approximately 1990, Wayne and Joseph started a business together operating a paintball course on the seventy-five acre property Wayne owned in LaPorte County. The business was very successful and, over the years, Wayne and Joseph expanded the operation from three playing fields to eleven playing fields. At some point, Joseph took over sole ownership of the paintball business, which became known as Sherwood Forest Adventure Games. But Wayne continued his daily involvement in running the business. Wayne also leased a portion of the property to Burkhart Advertising Corporation (" Burkhart" ), which erected billboards on the leased property.
[¶5] On May 3, 2010, Wayne executed the Trust, which provided in relevant part as follows:
DISTRIBUTION OF INCOME AND PRINCIPAL
3.01 Use of Trust Income During the Lifetime of Wayne Lewis Stayback
During the lifetime of Wayne Lewis Stayback of LaPorte County, Indiana, the Trustee, [Joseph,] in his . . . sole discretion, as defined hereafter, may use any portion or all of the income and/or principal of the Trust for the use or benefit of any purpose the Trustee deems necessary or advisable. Under no circumstances may Trustee use any of the assets of Trustee to benefit Grantor, Wayne Lewis Stayback.
3.02 Use of Trust Real Estate :
During the lifetime of Joseph Stayback, so long as he wishes, he shall have the right to operate his business known as Sherwood Forest Adventure Games, or other business name as Joe Stayback desires, on any trust[-]owned real estate and to retain all profits and/or losses of said businesses so as [sic] long as he desires. The Trust shall be responsible to pay yearly taxes regarding said property.
3.03 Distribution of Undistributed Income and/or Principal after the Death of Wayne Lewis Stayback
Upon the death of Wayne Lewis Stayback, the TRUSTEE shall divide the property of the Trust (including the proceeds of any insurance policy payable on the death of Wayne Lewis Stayback), into as many equally [sic] shares as shall be required to provide and make distribution as follows:
1. Joseph Stayback, for as long as he desires, shall be able [to] operate his business on any real estate owned by the Trust and retain all income and losses therefrom.
2. The rest, residue and remainder of my Trust, including real estate subject to paragraph 1 herein above shall be divided equally among Joseph Stayback, Jeffrey Stayback and Julie Warnke, who survive me.
Joint Ex. 1.
[¶6] By 2011, Joseph had incurred " substantial obligations for sales tax to the Indiana Department of Revenue" related to the paintball business. Appellant's Br. at 5. Accordingly, Wayne started a new business known as Sherwood Rentals, and Wayne " ran the paintball business through [that company] prior to his death[.]" Tr. at 63. In turn, Joseph " formed another entity [called Sherwood Paintball Maintenance] to continue doing exactly the same thing as [he] had done[ prior to Wayne's
death in September 2011.]" Id. After Wayne's death in September 2011, Joseph's fiancé e, Kathy Love, created a business called Sherwood Paintball, Inc. Kathy took over responsibility for running the same aspects of the paintball business that Wayne had run during his lifetime, such as admissions and concessions. Joseph continued his work building and maintaining the courses.
[¶7] Wayne's will included a pour-over provision, whereby any undistributed assets of his estate were to be placed in the Trust for distribution. One such asset included the lease agreements with Burkhart. After Wayne's death, Joseph " requested that the lease payments from Burkhart [for the billboards] be made to him as Trustee of the [Trust]." Appellant's App. at 55. Joseph used some of that income, which totaled approximately $12,000 annually, to pay the real estate taxes on the property.
[¶8] On October 12, 2011, Joseph was appointed Personal Representative of the Supervised Estate of Wayne Lewis Stayback. On May 4, 2012, Jeffrey, as " remainderman beneficiary," filed a Verified Petition for Accounting, Report, and Docketing of the Trust. Id. at 20. On August 7, Jeffrey filed a Verified Petition for Estoppel of Burkhart Advertising Corporation's Payments to Joseph Stayback. And on September 26, Jeffrey and Julie filed a Joint Verified Petition to Remove Joseph Stayback as Trustee and Personal Representative. On November 7, Joseph filed a motion to dismiss Jeffrey and Julie's petition to remove him as trustee. On November 30, Jeffrey and Julie filed a Motion to Dissolve and Terminate Trust.
[¶9] Following a hearing on all pending motions on July 21, 2014, the trial court entered the following order:
1. This case involves the interpretation of the language in the Irrevocable Living Trust executed by Wayne Lewis Stayback on May 3, 2010.
2. There are three heirs, [Joseph, Jeffrey, and Julie]. Joseph was appointed Personal Representative and Trustee.
3. Section 3.02 Use of Trust Real Estate states that during the lifetime of Joseph Stayback, so long as he wishes, he shall have the right to operate his business known as Sherwood Forest Adventure Games, or other business name as Joseph Stayback desires, on any trust-owned real estate, and to retain all profits and/or losses of said business so long as he desires. The Trust shall be responsible to pay yearly taxes regarding said property. This section clearly expresses the trustor's intention that Joseph Stayback operate a paintball business on the property for as long as he desires.
4. Section 3.03 Distribution of Undistributed Income and/or Principal after the Death of Wayne Lewis Stayback --This section is the center of the conflict between the parties. Upon the death of Wayne Lewis Stayback, the Trustee shall divide the property of the Trust (including the proceeds of any insurance policy payable on the death of Wayne Lewis Stayback), into as many equally [sic] shares as shall be required to provide and make distribution as follows:
A. Joseph Stayback, for as long as he desires, shall be able [to] operate his business on any real estate owned by the Trust and retain all income and losses therefrom.
B. The rest, residue and remainder of my Trust, including real estate subject to paragraph 1 herein above shall be divided equally among Joseph Stayback, Jeffrey ...