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Williams v. Hubbard

Supreme Court of Missouri, En Banc

February 3, 2015

ERIC WILLIAMS, Appellant,
v.
WILLIAM L. HUBBARD, LIMITED ADMINISTRATOR A.D. LITEM OF THE ESTATE OF BETTY MARGARET REYNOLDS AND KENNETH NELSON AND SANDRA K. NELSON, HUSBAND AND WIFE, Respondents

Page 427

APPEAL FROM CIRCUIT COURT OF JACKSON COUNTY. The Honorable Kathleen A. Forsyth, Judge.

Williams was represented by Rex V. Gump and Christian L. Faiella of Tatlow, Gump, Faiella & Wheelan LLC in Moberly.

Kenneth Nelson was represented by John M. Kilroy Jr. and Anthony W. Bonuchi of Polsinelli PC in Kansas City.

Sandra Nelson was represented by Richard E. McLeod of The McLeod Law Firm in Kansas City and B. Janeen De Vries of De Vries & Associates PC in Kansas City.

William Hubbard of Kansas City represented himself.

Paul C. Wilson, Judge. Russell, C.J., Breckenridge, Fischer and Teitelman, JJ., concur; Draper, J., dissents in separate opinion filed; Stith, J., concurs in opinion of Draper, J.

OPINION

Paul C. Wilson, Judge.

Page 428

Eric Williams sued attorney Kenneth Nelson and his wife, Sandra Nelson. He alleges they violated their fiduciary duties to Betty Reynolds by unduly influencing her to give Sandra joint ownership of (or to designate Sandra as the " payable on death" or POD beneficiary for) most of Reynolds' assets. The trial court granted summary judgment in favor of the Nelsons on the ground that Williams did not have standing to bring these claims because " the undisputed facts demonstrated show that [Williams] has suffered no harm and has no right to any of the assets at issue." This judgment is affirmed in part and vacated in part, and the matter is remanded.

Background

In 2000, Reynolds retained Kenneth Nelson to advise her in achieving her estate planning objectives. She requested that Kenneth draft a beneficiary deed transferring certain real property upon her death to Williams, Reynolds' second cousin. She executed that deed in March 2000. Reynolds also asked Kenneth to draft a will naming Williams, together with her friends Norma Lamp (mother of Sandra Nelson) and Erma Louise Baughman, as her beneficiaries. She executed that will in May 2000.

In 2006, Reynolds wrote a letter to Kenneth instructing him to prepare a durable power of attorney naming Sandra as Reynolds' attorney-in-fact. She also wanted Kenneth to change her will to remove Lamp and Baughman as beneficiaries and name Sandra in their stead. Finally, Reynolds wanted Sandra to be her personal representative. Reynolds signed the power of attorney and the new will in 2006.

Reynolds made no further changes to her will before she died on April 28, 2010. At that time, however, her will was of little practical significance because she had few assets that became part of her probate estate. Instead, most of Reynolds' personal property consisted of bank accounts that passed directly to Sandra, either by virtue of Sandra being a joint owner (with right of survivorship) or because Reynolds had designated Sandra as the " payable on death" (" POD" ) beneficiary on those accounts.

When Reynolds first approached Kenneth in 2000 for estate planning advice, Kenneth had her fill out a questionnaire identifying her assets. Reynolds listed four bank accounts (one with Bank of America and three with the Kansas City Police Credit Union (" KCPCU" )) and

Page 429

three brokerage accounts (one with AARP Scudder and two with American Century). Reynolds noted that she owned one of the accounts jointly with Lamp and that she either owned the other six accounts jointly with Baughman or had designated Baughman as the POD beneficiary on those accounts.

Between the time she filled out Kenneth's questionnaire in 2000 and her death in 2010, Reynolds closed four of these seven accounts (i.e., the Bank of America account, two of the three KCPCU bank accounts, and the AARP Scudder brokerage account). The remaining three accounts (i.e., one KCPCU bank account and the two American Century brokerage accounts) remained open until her death, but with significant changes. On July 10, 2006, Reynolds revoked Baughman's POD beneficiary designation on the KCPCU account and instead gave Sandra joint ownership of that account with the right of survivorship.[1] Similarly, on April 29, 2008, Reynolds terminated Baughman's joint ownership interests in the two American Century accounts and made Sandra the joint owner of these accounts.

Reynolds also opened a new checking account at United Missouri Bank (" UMB" ). She originally designated Baughman as the POD beneficiary but, on July 20, 2006, Reynolds revoked Baughman's POD beneficiary designation and made Sandra a joint owner with the right of survivorship. In 2008, Reynolds purchased two certificates of deposit (" CDs" ) at UMB and made Sandra a joint owner of these deposits with survivorship rights.[2] Finally, in 2009, Reynolds purchased a third CD at UMB. Instead of making Sandra a joint owner of this CD as she had the previous two, Reynolds designated Sandra as the POD beneficiary for this asset.

As summarized in the following table, Reynolds' estate planning decisions from 2006 until her death in 2010 were: (1) to replace Baughman (as her POD beneficiary) with Sandra (as her joint owner) on all three of the accounts which remained from the seven accounts Reynolds owned in 2000; (2) to replace Baughman (as her POD beneficiary) with Sandra (as her joint owner) on the new UMB checking account; and (3) to make Sandra the first and only joint owner of, or her first and only POD beneficiary on, the three new CDs from UMB.

Page 430

Account

Final Balance

Final Beneficiary

Previous Beneficiary

(type)

(type)

Bank of America

closed

n/a

Baughman

(unknown)

KCPCU #1

closed

n/a

Baughman

(POD)

KCPCU #2

closed

n/a

Lamp

(joint owner)

KCPCU #3

$61,467.25

Sandra

Baughman

(joint owner)

(POD)

AARP - Scudder

closed

n/a

Baughman

(joint owner)

American Century #1

$16,208.08

Sandra

Baughman

(joint owner)

(joint owner)

American Century #2

$13,226.21

Sandra

Baughman

(joint owner)

(joint owner)

UMB Checking

$2,483.81

Sandra

Baughman

(joint owner)

(POD)

UMB CD #1

$118,684.86

Sandra

None

(joint owner)

UMB CD #2

$41,468.75

Sandra

None

(joint owner)

UMB CD #3

$202,916.99

Sandra

None

(POD)

In 2011, Williams filed suit in the Circuit Court of Jackson County. In the first three counts of his second amended petition, he alleges that the Nelsons, acting in concert, exerted undue influence to cause Reynolds:

... to place Sandra Nelson as payable on death beneficiary and/or joint tenant with right of survivorship and/or transfer on death beneficiary to substantially all of Betty M. Reynolds' personal property, consisting of certificates of deposit, bank accounts, investment accounts and a motor vehicle.

As a result, Williams seeks a declaration that the assets to which Sandra succeeded upon Reynolds' death -- either as joint owner with the right of survivorship or as POD beneficiary -- should be made a part of Reynolds' probate estate under section 473.340 (Count I),[3] or are subject to a constructive trust (Count III). In Count II, Williams seeks to have Reynolds' transfers of joint ownership to Sandra, and her designation of Sandra as POD beneficiary, set aside and declared void.

The remaining counts are against Kenneth alone. Williams alleges that Kenneth breached his fiduciary duty as Reynolds' attorney (Count IV) and/or committed legal malpractice (Count V) by causing Reynolds to name Sandra as her attorney-in-fact and by causing her to transfer joint ownership to Sandra of, or designate Sandra as POD beneficiary on, most of Reynolds' personal property.

Kenneth and Sandra Nelson filed motions for summary judgment. They argue

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that no one can challenge their alleged use of undue influence regarding Reynolds' estate planning decisions unless that person was a joint owner or POD beneficiary of Reynolds' accounts at the time the Nelsons' undue influence was alleged to have occurred. Because they insist Williams had no such interest, the Nelsons contend he suffered no harm from their alleged undue influence over Reynolds and lacks standing to challenge them.

Williams opposed the Nelsons' motions on the ground that, but for the Nelsons' undue influence, Reynolds would not have made Sandra a joint owner of (or designated her as the POD beneficiary on) these accounts and, therefore, Sandra would not have become the sole owner of those accounts when Reynolds died. Instead, Williams contends those assets would have become part of Reynolds' probate estate and been distributed (at least in part) to him. The trial court sustained the Nelsons' motions. ...


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