Black v. Black

482 P.3d 460

In the Matter of Joanne BLACK, Protected Person, Appellee, and Guardian Ad Litem for Joanne Black,

v.Bernard Steven BLACK, individually and as Trustee for the Supplemental Needs Trust for the Benefit of Joanne Black, and Samuel Black, as Co-Trustee for the Supplemental Needs Trust for the Benefit of Joanne Black, Appellants.

Court of Appeals Nos. 16CA2157

17CA2242

18CA0346 & 18CA1094

Colorado Court of Appeals, Division VII.

Announced April 9, 2020

Rehearing Denied June 11, 2020

Holland & Hart, LLP, Rebecca Klock Schroer, Morgan M. Wiener, Denver, Colorado, for Appellee

Gayle Y. Young, Guardian Ad Litem

Davis Graham & Stubbs, LLP, Shannon Wells Stevenson, Aditi Kulkarni-Knight, Denver, Colorado, for Appellant Bernard Steven Black

Moore Williams, PLLC, Marie E. Williams, Golden, Colorado, for Appellant Samuel Black

Opinion by JUDGE LIPINSKY

Table of Contents

I. Background Facts and Procedural History...468

A. The Parties and the Trusts...468

B. Bernard's Appointment as Joanne's Conservator...468

C. The April 2015 Order...469

D. The September 2015 Order...469

E. Bernard's Merits Appeal...470

F. The February 2016 Order...470

G. Bernard's Jurisdictional Appeal...470

H. The SNT Spending Orders...470

1. The October 2016 Order...471

2. The October 2017 Order...471

3. The January 2018 Order...471

I. The April 2018 Order...471

II. Discussion...472

A. The Probate Court's Jurisdiction...472

1. The Probate Court's Subject Matter Jurisdiction...473

2. The Probate Court's Authority on Remand...473

3. The Probate Court's in Rem Jurisdiction...474

a. Legal Authority...474

b. Analysis...474

4. The Probate Court's Personal Jurisdiction...475

a. Personal Jurisdiction Over Bernard...475

i. Bernard Waived His Objection...476

(1) Legal Authority...476

(2) Analysis...476

ii. Personal Jurisdiction as Joanne's Conservator...477

iii. Personal Jurisdiction and Due Process...478

(1) Legal Authority...478

(2) Analysis...478

b. Personal Jurisdiction Over All Trustee...480

c. Personal Jurisdiction Over Samuel...480

B. The Probate Court's Jurisdiction Over the Disclaimers...480

1. Legal Authority...480

2. Analysis...481

C. Dain's Motions for SNT Distributions...482

D. The Probate Court's Suspension of the Trustees...482

1. Legal Authority...483

2. Analysis...483

a. The Probate Court's Suspension of Bernard...484

b. The Probate Court's Suspension of Samuel...484

E. Bernard's Recusal Motion...485

1. Legal Authority...485

2. Analysis...485

a. Bernard Waived His Recusal Argument...485

b. Bernard's Recusal Argument Fails on the Merits...486

F. Samuel's Appellate Attorney Fees...488

1. Legal Authority...488

2. Analysis ...488

III. Conclusion...488

(This table of contents and the section headings are offered solely for the convenience of the reader and do not control or modify the substance of each section.)

¶ 1 When Renata Black planned her estate and established trusts benefitting her children and grandchildren, she surely did not foresee that her descendants would become embroiled in years-long litigation over the disposition of her assets in no fewer than eight courts in three states. The comparisons to Charles Dickens's Jarndyce and Jarndyce are all too obvious.

¶ 2 For the third time, we consider an appeal of the Denver Probate Court's rulings in this matter. The appeal raises an issue of first impression in this state — whether a Colorado probate court can exercise jurisdiction over the trustees and assets of a foreign trust when that trust was funded with assets misappropriated from a Colorado conservatorship. We address this issue in two parts: first, we hold that the probate court retains in rem jurisdiction over the assets transferred to the foreign trust, infra Part II.A.3; second, we conclude that the court may exercise personal jurisdiction over one of the trustees of the trust who actively litigated in the Colorado court, infra Part II.A.4.a.

¶ 3 Bernard Steven Black and Samuel Black challenge four of the probate court's orders:

• orders entered in October 2016 (the October 2016 Order) and October 2017 (the October 2017 Order) authorizing Anthony Dain to disburse assets from a supplemental needs trust benefitting Joanne Black (the SNT);

• a January 2018 order (the January 2018 Order) suspending Bernard and Samuel as trustees of the SNT and directing them to send the SNT's information and assets to Joanne's counsel and Dain; and

• an April 2018 order (the April 2018 Order) holding that the probate court could exercise jurisdiction over Bernard and Samuel, authorizing Dain to disburse additional funds from the SNT, and voiding certain disclaimers it had previously authorized Bernard to make in his capacity as Joanne's conservator.

¶ 4 Because the probate court lacked jurisdiction to void the disclaimers due to Bernard's then-pending appeal, we vacate the portion of the April 2018 Order voiding the disclaimers. We also hold that the probate court erred in suspending Samuel as a "co-trustee[ ] of the SNT and any other trusts which benefit Joanne" and therefore vacate the portion of the January 2018 Order suspending him as a trustee of such trusts and directing him to provide information on those trusts to Joanne's counsel and Dain. We reject Bernard and Samuel's other arguments and affirm the remainder of the appealed orders.

¶ 5 A recitation of the facts and procedural history of the Black family battle is necessary before we consider the legal issues presented in this appeal. (For clarity, and without intending any disrespect, we refer to the members of the Black family by their first names.)

I. Background Facts and Procedural History

A. The Parties and the Trusts

¶ 6 Bernard and Joanne were Renata's only children. Bernard is a resident of Illinois. Bernard's son Samuel is a resident of Maryland. Katherine Litvak is Bernard's wife. Bernard and Katherine are law professors. Joanne, who has schizophrenia, was homeless in Denver when this case began. She currently resides in New York. Dain is one of Bernard and Joanne's cousins. He resides in California.

¶ 7 Renata died in New York in 2012, leaving an estate valued at more than $4.7 million. She created two trusts relevant to this appeal: the SNT and an Irrevocable Trust for the Benefit of the Issue of Renata Black (the Issue Trust).

¶ 8 Renata established the SNT to provide for Joanne's "special needs." Following Renata's death, the co-trustees of the SNT were Bernard and Dain. In May 2013, Bernard and Dain appointed Samuel as the third co-trustee of the SNT. Although the record does not reflect where the SNT was registered, it has never been registered in Colorado. Its assets have been held by Chase Bank and J.P. Morgan Securities in Illinois.

¶ 9 Renata established the Issue Trust to provide for the "financial needs and medical expenses" of Bernard and his children. Bernard and Dain served as co-trustees of the Issue Trust until December 2015, when Dain resigned and was replaced by Samuel. The Issue Trust also has never been registered in Colorado, and its assets are located in Illinois.

B. Bernard's Appointment as Joanne's Conservator and the Disclaimers

¶ 10 Shortly before her death, Renata changed the beneficiary designations on a number of her bank accounts (the bank accounts), valued at approximately $3 million, to be payable-on-death (POD), primarily to Joanne. As a result, the funds in the bank accounts would have passed directly to Joanne upon Renata's death without the need for probate. This distribution arrangement differed from the plan reflected in Renata's will, which provided that two-thirds of her residuary estate would pass to the SNT and one-third to the Issue Trust.

¶ 11 After learning of the POD designations, Bernard, professing concern about Joanne's ability to manage her assets, filed a petition for a conservatorship over her in the Denver Probate Court. In the petition, Bernard claimed that Renata had inadvertently changed her beneficiary designations and that the funds in the bank accounts should be placed in trust so Joanne could not squander them. Based on his stated desire to protect Joanne, Bernard sought the probate court's permission to disclaim the POD designations.

¶ 12 The probate court appointed Bernard as Joanne's conservator and, in March 2013, expressly authorized him to execute the disclaimers (the March 2013 Order). After disclaiming the POD designations, Bernard moved the funds into Renata's estate and later transferred approximately two-thirds of the funds to the SNT and one-third to the Issue Trust. (The Surrogate's Court for Westchester County, New York appointed Bernard as executor of Renata's estate.) He also created a trust (the 2013 Trust) to receive Joanne's governmental benefits (collectively with the SNT and the Issue Trust, the Trusts). Samuel was not involved in Joanne's conservatorship proceedings.

C. The April 2015 Order

¶ 13 In April 2015, the probate court held a status conference in response to allegations from Joanne's court-appointed counsel and Dain that Bernard was mismanaging the assets of Joanne's conservatorship. Following the status conference, the probate court entered an order (the April 2015 Order) freezing most of Joanne's assets — including Joanne's governmental benefits that Bernard diverted to the 2013 Trust and the funds that Bernard transferred from the bank accounts — pending an evidentiary hearing. In the April 2015 Order, the court also suspended Bernard as Joanne's conservator and appointed a special conservator to manage her conservatorship.

¶ 14 Bernard did not object to the April 2015 Order or the probate court's exercise of jurisdiction over him reflected in that order. He requested permission to pay the taxes and accounting fees for the Trusts out of their respective assets. The court granted Bernard's request, but it denied his separate request to pay for his personal legal fees relating to the Colorado litigation from trust or conservatorship funds.

¶ 15 After discovering that Bernard had apparently violated the April 2015 Order by paying his personal attorney fees...