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Brown v. Brown-Thill

Court of Appeals of Missouri, Western District, First Division

January 9, 2018


         Appeal from the Circuit Court of Jackson County, Missouri The Honorable Kathleen A. Forsyth, Judge

          Before Cynthia L. Martin, P.J., James Edward Welsh, and Karen King Mitchell, JJ.

          James Edward Welsh, Judge.

         Richard L. Brown appeals the circuit court's judgment in a probate proceeding commenced by Susan Brown-Thill, in which she sought, inter alia, approval of the "Final Distribution of the Brown Family Estate and the Trustees' Final Accounting." We affirm.


         Brown and Brown-Thill, brother and sister, are the beneficiaries of Trusts established by their parents, Eugene D. Brown and Saurine L. Brown ("Grantors").[1] The Trusts, which we refer to as the "EDB Trust" and the "SLB Trust, " were "mirror trusts" with essentially identical provisions. They were established in 1989 and 1999, respectively, and were created to allow the Grantors' Estate to pass at their deaths to residuary trusts set up for their children.[2] On January 3, 2007, the Grantors executed Restatements of their Trust Agreements. Those documents were drafted by James Cooper, who had been the Brown's estate attorney since 2006.

         Eugene was the sole trustee of the EDB Trust until he suffered a disabling fall in 2007, after which Saurine began serving as sole Trustee of his Trust. Following Eugene's death in May 2008, Saurine appointed Vernon Lotman (her brother) and Cooper to serve as her co-trustees on the EDB Trust. Saurine was sole trustee of the SLB Trust until July 2007, when she appointed Lotman as the sole Trustee. In April 2008, Lotman appointed Cooper as a co-trustee of the SLB Trust. After Saurine died in March 2009, Lotman and Cooper continued to serve as co-trustees of her Trust. Upon Lotman's death in 2011, Cooper became the sole trustee of the SLB Trust.

         When Saurine died, Brown and Brown-Thill became co-trustees of the EDB Trust charged with distributing the Trust into their own separate residuary trusts. The two siblings disagreed about various aspects of handling the Trust and eventually submitted their disputes to an arbitrator. In 2010, Brown and Brown-Thill entered into a binding Arbitration Agreement which was intended to resolve their disputes over the EDB Trust. The disputes nevertheless continued, and Brown eventually resigned as co-trustee of the EDB Trust in December 2011. Brown-Thill then became the sole trustee of the EDB Trust.

         In December 2011, Brown filed a seven-count Petition against Cooper and his associates in the Jackson County Circuit Court ("the Civil Case"). In his first amended petition, Brown alleged, inter alia, breaches of fiduciary duties and legal malpractice.[3] The case was initially assigned to the Civil Division but was later transferred to the Probate Division.

         Two years later, in December 2013, Brown-Thill and Cooper, as sole Trustees of the EDB and SLB Trusts, respectively, filed a petition in the Probate Division of the Jackson County Circuit Court ("the Probate Case"). They sought: (1) a declaration approving their proposed final distribution plans for both Trusts; (2) a declaration approving the final accountings for the Trusts; (3) an offset against Brown's share of the Estate for attorneys' fees, expenses, and costs incurred by the Trusts in defending lawsuits filed by him;[4] and (4) an injunction enjoining Brown from bringing "further vexatious litigation" regarding the Brown Family Estate.

         Along with his Answer, Brown filed a Counterclaim seeking: (Count I) damages for breach of fiduciary duty against Cooper, as trustee of the SLB Trust, and against Brown-Thill, as trustee of the EDB Trust; (Count II) damages for legal malpractice against Cooper and his law partner, Donald Friend II, individually, and their law firms; (Count III) damages for breach of investment advisor fiduciary duties against Cooper and Friend, individually, and Sentinel Wealth Advisors, LLC; (Count IV) an "immediate and equal division, distribution and termination" of the EDB Trust; and (Count VI) an injunction to prevent Brown-Thill and Cooper from paying additional fees from the Trusts and disgorgement of fees previously paid. (There is no Count V.)

         The Probate Case was assigned to Judge Kathleen Forsyth. At a case management conference on May 12, 2014, the judge set the first hearing for September 26, 2014. On May 14th, she granted Brown's motion to consolidate the Probate Case and the Civil Case (which had earlier been transferred to the Probate Division), as "both involve common questions of law and fact concerning the division and distribution, and alleged misadministration of [the SLB] Trust." The court later rescheduled the initial hearing date in the Probate Case to October 31, 2014.

         When the bench trial commenced on October 31st, the probate court confirmed that, in addition to the distribution issues, it would hear evidence regarding alleged breaches of fiduciary duty. Thereafter, testimony was heard and evidence was presented on twenty-four non-consecutive days over the course of more than a year. At the conclusion of the trial on December 11, 2015, after eighteen witnesses and hundreds of exhibits, the court ordered the parties to submit proposed findings and conclusions. The court thereafter ordered Cooper and Brown-Thill each to provide a final accounting for the period of their trusteeships. The Trustees timely submitted their accountings with the information requested by the court.

         On July 15, 2016, the court entered Judgment in the Probate Case, ordering a final distribution of the assets of the EDB and SLB Trusts and approving the Trustees' final accountings. The court denied the Trustees' request to enjoin Brown from bringing any additional lawsuits against the Estate. The court granted the Trustees' request for a setoff against Brown's share of the assets of the Trusts for the fees and expenses the Trusts had incurred in the Probate Case. The court also ordered an offset against Brown's share for damages he caused by interfering in a sale of property owned in part by an entity of the Trusts (Normand LP). The court further ordered that Brown be removed as trustee of the residuary trust for himself and his minor children (which would be funded by the distribution plan). To minimize the impact of the offsets on the children, the court ordered Brown's residuary trust divided into sub-trusts for Brown and for his children and directed the guardian ad litem to select an independent trustee for both. The court denied Brown's counterclaims against Cooper and Brown-Thill for breach of fiduciary duty and his counterclaim to enjoin the payment of Trustee fees.[5]

         Standard of Review

         In reviewing a court-tried case, we will affirm the judgment "unless there is no substantial evidence to support it, it is against the weight of the evidence, or it erroneously declares or applies the law." Pearson v. Koster, 367 S.W.3d 36, 43 (Mo. banc 2012). We review questions of law de novo. Id. We defer to the trial court's judgment on questions of fact, as it "is in a better position not only to judge the credibility of the witnesses and the persons directly, but also their sincerity and character and other trial intangibles which may not be completely revealed by the record." Id. at 44. In reviewing mixed questions of law and fact, we defer to the court's factual findings but review de novo the application of the law to the facts. Id.


         Brown raises fourteen points on appeal. We address some points out of order where they are closely related to other non-contiguous points. In Point I, Brown contends that the probate court erred in "ordering a trial without notice, because due process required [that he] be given sufficient notice and reasonable opportunity to prepare for trial on the merits, in that the court failed to provide adequate notice the partial distribution hearing [on October 31, 2014] was going to be a trial." He claims that he was prejudiced because he had "to try his claims without the ordered discovery, the privileged documents, and the Trustees' final accounting, which precluded [him] from demonstrating Trustees' partiality, disloyalty, and breaches of their fiduciary duties."[6]

         In plain English, Brown claims that he was denied his constitutional right to due process because he was not notified that the upcoming hearing was going to be a trial on the merits.[7]When an appellant raises a claim of constitutional error, he must demonstrate, inter alia, that he raised the constitutional issue at the first available opportunity and preserved the claim throughout the trial for appellate review. State v. Gannaway, 497 S.W.3d 819, 822-23 (Mo. App. 2016). Here, Brown first complained of an alleged lack of notice on April 29, 2015, which was the tenth day of trial and approximately six months after the trial began. Thus, he clearly failed to raise his constitutional claim at the first available opportunity. That failure is sufficient for this Court to find that Brown did not properly preserve the issue for review. See id. at 823.

         In any event, after reviewing this claim, ex gratia, we find that Brown was provided adequate notice of the trial and the issues that were being tried. "An elementary and fundamental requirement of due process in any proceeding which is to be accorded finality is notice reasonably calculated, under all the circumstances, to apprise interested parties of the pendency of the action and afford them an opportunity to present their objections." Kerth, 325 S.W.3d at 378. Here, Brown had sufficient "opportunity to be heard" beginning on the first day of trial and in the additional twenty-three days of trial that followed. When the court took up the Probate Case on October 31, 2014, it confirmed that, in addition to the distribution issues, it would hear evidence regarding alleged breaches of fiduciary duty. The court noted that the parties had brought witnesses and were prepared to offer evidence on those claims and that it was prepared to rule on them. Brown's counsel did not object or allege a lack of notice as to the presentation of such evidence. Then, on March 6, 2015, the sixth day of trial, the court again clarified that the bench trial encompassed the breach of fiduciary duty claims, and Brown's counsel agreed. As noted, it was the tenth day of trial before Brown complained about a lack of notice.

         In sum, Brown received adequate notice, prior to the start of the trial, that the probate court would be conducting a hearing that would encompass his breach of fiduciary duty counterclaims. He also had a complete opportunity to be heard on each of the claims and counterclaims that were adjudicated by the probate court. Point I is denied.

         In Point II, Brown contends that the trial court erred in conducting a bench trial,

because [he] was entitled to a jury trial, in that the case involved mixed questions of law and equity and [he] was prejudiced as the court would have been bound by a jury's findings of fact . . . creating reversible error by denying appellant's constitutional right under Art. I, § 22(a) of the Missouri Constitution to have a jury decide these facts.

         A trial court has the discretion to try cases involving requests for equitable relief and damages in one proceeding. State ex rel. Leonardi v. Sherry, 137 S.W.3d 462, 473 (Mo. banc 2004). As noted, the probate court confirmed on the first day of trial that, in addition to the distribution issues, the court would hear evidence regarding the alleged breach of fiduciary duties. Brown did not object to the lack of a jury trial at that time. On March 6, 2015, when the probate court again clarified that the breach of fiduciary duty claims were a part of the bench trial, Brown's counsel agreed that the bench trial would encompass those claims.

         Due to the parties' habit of conflating the Civil Case and the Probate Case, Judge Forsyth sent the parties a letter on March 24, 2016, clarifying which matters were being tried in the Probate Case and which were going to be heard by a jury in the Civil Case. She noted that there was no request for a jury trial in the Probate Case and that it had proceeded to a bench trial. The letter explained that the court had already taken evidence on all the Trustees' claims, as well as Brown's counterclaims for breach of fiduciary duties. The judge observed that the rest of Brown's counterclaims were not triable in the Probate Case either in a bench or a jury trial, as they were brought against persons and entities that were not parties to that case. She further observed, as to Brown's Civil Case, that only Counts II (legal malpractice) and III (breach of investment advisor fiduciary duties) in that case were triable to a jury.

         Two days later, Brown's counsel attended a court hearing via conference call and acknowledged that the letter accurately described the claims and counterclaims being tried at the bench trial. Brown did not complain about the lack of a jury trial until April 27, 2015, the eighth day of trial (and even then, he agreed that the breach of fiduciary duty claims against Brown-Thill should proceed in the bench trial).

         As Brown correctly observes, citing Leonardi, 137 S.W.3d at 472, Missouri's Constitution guarantees a jury trial. A party can waive that right, however, by, among other things, entering into trial before the court without objection. See Estate of Talley v. Am. Legion Post 122, 431 S.W.3d 544, 549 (Mo. App. 2014); § 510.190.2, RSMo[8]; Rule 69.01(b)(4). Here, Brown appeared before the court without objection on seven separate days of hearings before raising his complaint about the lack of a jury. Thus, Brown waived any right he had to a jury trial on his counterclaims alleging breach of fiduciary duty in the Probate Case. Point denied.

         Brown claims in Point III that the trial court erred in denying his Rule 73.01 Motion for Judgment at the close of the Trustees' case-in-chief, in that "the weight of the evidence and applicable law showed such motion should be granted [because] the Trustees failed to make a prima facie case (1) for distribution, (2) for approval of the final accounting, (3) for offsets, or (4) for an injunction." He contends that he was prejudiced by having "to defend his case in the absence of a prima facie case by the Trustees."

         In his one-page argument, Brown states vaguely that the Trustees failed to establish that they were entitled to relief, and thus he was entitled to judgment in his favor. He opaquely claims that the Trustees

had retreated from their distribution plan and labeled it a "blueprint, " had never submitted a "final accounting" . . ., had not submitted a single offset, and could never be granted an injunction.

         He further suggests that "[e]xamination of the transcript reveals the Trustees' case failed, and no defense was necessary"; "the court erred in denying the Motion for Judgment, when it should have granted it as a matter of law"; and "[i]t prejudiced [Brown] to spend the time and money to defend against the Trustee's [unproven] case." That is his entire argument.

         An argument must "explain why, in the context of the case, the law supports the claim of reversible error. It should advise the appellate court how principles of law and the facts of the case interact." In re Marriage of Fritz, 243 S.W.3d 484, 487 (Mo. App. 2007). Here, Brown fails to explain, as to any of his broad conclusory statements, how the facts of the case interact with applicable principles of law. Moreover, "[i]f a party fails to support a contention with argument beyond [mere] conclusions, the point is considered abandoned." Id.; see also Kuenz, 244 S.W.3d at 194 (citing Rule 84.13(a)). Similar to Fritz, Brown cites no specific evidentiary deficiency but, instead, directs us to review the 3, 663-page transcript as a whole. Consequently, as in Fritz, we must find that Point III is abandoned.

         Brown contends in Point IV that the trial court erred "in ordering the Trustees to provide a final accounting after the trial was over and evidence was closed." He claims that "the court should have ordered Trustees to produce the final accounting before the trial" and that "receiving the accounting after trial prevented [him] from proffering questions and presenting rebuttable [we presume that he means rebuttal] evidence regarding the final accounting at trial."[9]

         We disagree. Attached to their petition, the Trustees submitted the Estate's accounting records, including property appraisals, tax returns, and quarterly consolidated balance sheets and income statements, from January 2009 through June 2013. Thereafter, the Estate's financial records (i.e., tax returns, quarterly financials, appraisals of real estate, personalty, and oil and gas interests, and other financial documents) were updated and received into evidence throughout the trial. According to the Trusts' CPA, the annual accounting reports consist of all liabilities, receipts of income and distributions, and a listing of the assets and their respective fair market values. In addition, Brown's accounting expert witness was given access to the Trusts' QuickBooks records to assist Brown in determining his damages. At trial, Cooper provided detailed testimony explaining the content and format of the Trusts' accounting records, and Brown's counsel had the opportunity to cross-examine Cooper about those records.

         On April 12, 2016, the probate court ordered the Trustees to submit final accountings as to the Trusts' assets. The court ordered Brown to file any objections to the accountings within ten days of such filing. The court expressly stated that "there will be no additional evidence taken" and objections would be limited to only those supported by existing trial exhibits and testimony. The Trustees submitted their final accountings for the SLB and EDB Trusts on May 23 and May 31, respectively, [10] which contained the same information previously provided in the pleadings and at trial. Brown thereafter filed his objections.

         In addressing this issue in its Judgment, the trial court opined:

In a final effort to insure that the Consolidated Financials provided all information needed by Brown . . ., the Court required the Trustees of both Trusts to file a final report of their actions in the accounting format common to trusts, notwithstanding the Trust Indentures' waiver of that very requirement. In that same Order, the Court invited Brown and his minor children to point out to the Court any discrepancy between the Trustees' Final Accountings and evidence presented at trial (including the ...

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