Bergal v. Bergal

153 N.E.3d 243

Linda S. BERGAL, Appellant-Defendant,

v.David A. BERGAL and Joseph M. Sanders, as Successor-Trustee of the Milton B. Bergal Trust, Appellees-Plaintiffs

Court of Appeals Case No. 19A-CT-1062

Court of Appeals of Indiana.

Filed July 28, 2020

Rehearing denied September 17, 2020

Attorneys for Appellant: Megan L. Craig, John R. Craig, Richard P. Long, Craig & Craig, LLC, Merrillville, Indiana, Mark R. Anderson, Michael Anderson, Anderson & Anderson, P.C., Merrillville, Indiana

Attorneys for Appellee David A. Bergal: Beth Brown Nowak, Kelly Law Offices LLC, Crown Point, Indiana, Michelle R. Canerday, Katten Muchin Rosenman LLP, Chicago, Illinois, Floyd D. Perkins, Nixon Peabody LLP, Chicago, Illinois

Attorney for Appellee Joseph M. Sanders : Kevin E. Steele, Burke Costanza & Carberry LLP, Valparaiso, Indiana

Baker, Judge.

[1] Linda Bergal (Linda) appeals after a jury found in favor of David Bergal (David) and Joseph Sanders on David and Sanders's complaint related to assets that were originally part of the trust of Milton Bergal (Milton), who was David's father and Linda's husband. Linda raises the following arguments: (1) the trial court erred by denying her motion to dismiss the breach of contract claim; (2) the trial court made a number of erroneous evidentiary rulings; (3) the trial court gave the jury an erroneous instruction and improper verdict forms; (4) the jury was permitted to craft an inappropriate equitable remedy; and (5) the verdict resulted in a double recovery. We find that one of the assets at issue was never a part of the trust and consequently reverse the verdict with respect to that asset. In all other respects, we affirm and remand for further proceedings.

Facts

Underlying Facts

[2] Linda married Dr. Milton Bergal in 2009. Milton had four adult children—three daughters¹ and one son, David.

[3] In September 2009, Milton created an estate plan with the help of his attorney, Ben Roth, and his accountant, Sanders.

To that end, Milton executed the Milton B. Bergal Estate Trust (Trust) and a will. Milton was the trustee during his life, and in the event Milton was no longer able to act as trustee, Linda and Sanders were named as successor co-trustees. The Trust also provided for two sub-trusts to be funded upon Milton's death—Trust A, of which Linda was the primary beneficiary (with Linda and Sanders serving as co-trustees); and Trust B, of which David was the primary beneficiary and sole trustee. The Trust was funded with assets that included real and personal property.

[4] At some point, Milton lost ambulatory abilities and succumbed to multiple conditions affecting his mental status, including dementia and Alzheimer's disease.² During those years, six non-real-estate assets (the Assets) were moved out of the Trust,³ with Linda being named as the primary beneficiary of the Assets. The Assets include the following accounts:

• Vanguard Rollover IRA Account (Vanguard IRA). This one is unique among the six because it was never included in the Trust. Milton designated Linda as its primary beneficiary on April 23, 2010.

• JPMorgan Chase IRA Account (JPMorgan IRA). Milton designated Linda as the primary beneficiary on March 1, 2013.

• Nicholas Fund Asset (Nicholas Fund). In October 2015, Linda transferred this asset by using her power of attorney from US Bank as Custodian to the JPMorgan IRA.

• JPMorgan Chase Brokerage transfer on death account (JPMorgan TOD). Milton named Linda as primary beneficiary on November 19, 2015.

• Fidelity Brokerage transfer on death account (Fidelity TOD). Milton named Linda as the primary beneficiary on March 28, 2016.

• Vanguard Brokerage transfer on death account (Vanguard TOD). Milton named Linda as primary beneficiary on June 28, 2016.

Roth and Sanders were not made aware of these transfers. The total value of the Assets amounted to approximately $8 million, and these changes resulted in the Trust receiving approximately $200,000 instead of $8 million from the Assets. This change effectively resulted in David's disinheritance.

[5] Milton died on November 22, 2016. Shortly after Milton's death, Roth and Sanders learned of the diversion of the Assets from the Trust to Linda.

[6] On December 15, 2016, a meeting took place between Linda, Roth, Sanders, and David. At that meeting, Linda admitted to re-titling the Assets and admitted that Milton did not intend to disinherit David. Linda agreed to resign as co-trustee and replace all the Assets into the Trust in exchange for David's agreement to refrain from filing a lawsuit and to try to restore family harmony. She began performance within days by resigning as co-trustee and disclaiming her status as primary beneficiary of one account—the Vanguard TOD—resulting in David receiving the entire amount of that asset, totaling approximately $1.5 million. Linda took no further action on the remaining Assets.

The Litigation

[7] When it became apparent that Linda did not intend to return the rest of the Assets to the Trust, David filed a complaint.

He filed a first amended complaint on April 20, 2018. Linda filed a motion to dismiss. While that was pending, the trial court issued a case management order setting a discovery deadline and expert disclosure date of January 4, 2019, and a jury trial⁴ start date of March 4, 2019. The trial court granted Linda's motion to dismiss for two of the three counts.

[8] David filed a second amended complaint on January 7, 2019.⁵ His complaint includes the following relevant claims: undue influence, lack of testamentary capacity, breach of fiduciary duty, fraud and constructive fraud, conversion, and breach of contract. Linda filed a new motion to dismiss and motion for summary judgment on the second amended complaint. On February 19, 2019, the trial court denied the motions. Linda had argued, among other things, that the contract stemming from the December 2016 meeting—pursuant to which she had agreed to return the Assets to the Trust—must have been in writing to be enforced. The trial court disagreed, noting that because David alleged that "the parties also agreed to ‘restore family harmony’ in addition to staying out of court," the contract need not have been in writing. Appellant's App. Vol. XVIII p. 38.⁶ On February 28, 2019, Linda filed her answer and affirmative defenses.

[9] Before the trial began, David filed a motion in limine seeking, among other things, to prohibit Linda from testifying about statements made by Milton. In making this argument, David directed the trial court to the Dead Man's Statute. Ind. Code ch. 34-45-2. On February 28, 2019, the trial court granted the motion, holding that Linda "may not testify about what Dr. Bergal said or testify about actions that constitute an assertion by Dr. Bergal." Appellant's App. Vol. XX p. 22.

[10] On March 4, 2019, the trial court entered a pretrial order (PTO), which included Linda's affirmative defenses, and the jury trial began. The next day, David filed a motion to strike the affirmative defenses. The trial court granted the motion to dismiss with respect to seventeen of Linda's forty-five affirmative defenses on March 18, 2019, subsequently amending the PTO to that effect. Appellant's App. Vol. XXI p. 18-19 (a chart attached to the trial court's order carefully and thoroughly goes through each of Linda's forty-five affirmative defenses).

[11] On March 21, 2019, David filed a motion in limine seeking to restrict the testimony of Dr. Mark Simaga, a physician who treated Milton; the trial court granted the motion the same day. The trial court ordered that Dr. Simaga was only permitted to testify "as to his opinions which relate to his period of treatment [of Milton] ..., including treatment of his patient, his opinion on the mental status of [Milton], his diagnoses, the prognosis for the patient, and the patient's executive function," as well as to how Milton "appeared over the years from 2000 to 2014 or 2015, at their hospital board meetings." Id. at 44.

[12] Following the fourteen-day jury trial, the jury received its final instructions. Linda objected to the instruction regarding fraud, and the trial court overruled the objection.

[13] On March 22, 2019, the jury unanimously found in favor of David and against Linda on all of David's claims and Linda's counterclaims. On the verdict form, the jury was able to indicate which of the Assets should be restored to the Trust by virtue of each claim; as the Assets and claims were overlapping, many of the Assets fell under multiple claims. Specifically, each of the Assets was ordered to be restored to the Trust for the following reasons:

• Vanguard IRA: breach of contract.

• JPMorgan IRA: undue influence; breach of contract.

• Nicholas Fund: undue influence; Milton's lack of testamentary capacity; breach of fiduciary duty; fraud; constructive fraud; conversion.

• JPMorgan TOD: undue influence; Milton's lack of testamentary capacity; breach of contract.

• Fidelity TOD: undue influence; Milton's lack of testamentary capacity; breach of contract.

• Vanguard TOD: undue influence; Milton's lack of testamentary capacity; breach of contract.

Appellant's App. Vol. XXI p. 105-22. The trial court entered an oral judgment in David's favor from the bench following the verdict. Am. Tr. Vol. X p. 74.⁷

[14] On April 25, 2019, the trial court entered a first amended judgment. On May 22, 2019, the trial court entered a second amended judgment.⁸ The order largely recounts the jury's verdict. It also explicitly notes the need, given the overlapping claims, to avoid duplicative recovery. To that end, the trial court ordered as follows:

Though the verdict directed recovery of certain accounts under multiple causes of action, each account shall only be delivered once to the Trust, subject to one recovery of the entirety of each account (including its income and gains). This Court's hearing on Linda Bergal's accounting for all accounts she received as a result of Dr. Bergal's death will allow for an appropriate review of credit

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