Genz v. Cooksey

2021 Ark. App. 175

TERESA GENZ, KATHERN COOKSEY, CASSANDRA JULICH, LOGAN GENZ,TAYLOR GENZ, JERRY GENZ, AND LANCE COOKSEY APPELLANTS v. AMY CARTER COOKSEY, INDIVIDUALLY AND AS TRUSTEEOF THE JAMES E. COOKSEY TRUST U/T/D MARCH 11, 2010 APPELLEE

No. CV-18-975

ARKANSAS COURT OF APPEALS DIVISION I

April 21, 2021

APPEAL FROM THE WASHINGTON COUNTY CIRCUIT COURT

[NOS. 72CV-16-1044 & 72PR-17-501]

HONORABLE DOUG MARTIN, JUDGE

AFFIRMED

RAYMOND R. ABRAMSON, Judge

This is an intrafamily dispute over the estate plan prepared by the decedent, James Cooksey. On one side are the decedent's daughter, Teresa Genz (Teresa), and the decedent's ex-wife, Kathern Cooksey (Kathern). They are the principal appellants.¹ On the other side is appellee Amy Cooksey (Amy), the decedent's widow and the trustee of the James E. Cooksey Trust (the trust). Appellants sought to reform the trust and to reform a commissioner's deed conveying property to the decedent and Kathern. In the alternative, appellants sought to impose a constructive trust on that property. After a bench trial, thecircuit court granted a motion to dismiss at the close of appellants' case-in-chief. The court also adopted the plan for distribution of the trust assets proposed by Amy. We affirm.

The decedent and Kathern married and had two children before divorcing in 1994. The decedent and Amy had been in a relationship approximately eighteen years when the decedent's estate plan was created. The decedent and Amy would later marry in December 2015, shortly before the decedent's death in February 2016.

The James E. Cooksey Trust was executed in March 2010. At the time of the creation of the trust, the decedent owned several tracts of real property. As pertinent to this appeal, the decedent owned two 40-acre tracts, referred to as the homestead property. This property was conveyed to the trust by quitclaim deed contemporaneously with the execution of the trust. The homestead property was located near another 121-acre tract the decedent owned that had been in his family for many years. The 121-acre tract was also conveyed to the trust. The decedent also executed a beneficiary deed conveying his residence and an adjacent 40-acre tract (the residence property) to Amy upon his death.

At the time of his death, the decedent and Kathern each held an interest in the farm where Teresa and Jerry Genz lived. That property, referred to as the Genz farm, had been foreclosed upon and then had been purchased by the decedent and Kathern. Testimony was presented that there was an agreement between the decedent, Kathern, Teresa, and Jerry in which the decedent and Kathern would borrow the funds to make the purchase and Teresa and Jerry would make the payments. According to appellants, the decedent and Kathern were advised that the property would be conveyed to them as joint tenants with right ofsurvivorship and that this information was passed to the circuit court clerk for preparation of the commissioner's deed. However, the commissioner's deed ultimately conveyed the property to the decedent and Kathern without specifying the type of tenancy conveyed.

The trust provided that upon the decedent's death, his assets would be distributed as follows: (1) certain personal property, including horses, tack, horse trailers, a bobcat loader, a pickup truck, and all household goods and furnishings—with the exception of antiques and family heirlooms—were to be distributed to Amy; (2) machinery and equipment were to be sold and the proceeds equally divided between Amy, Teresa, and Lance; (3) all cattle were to be distributed to Teresa and her children; (4) all family antiques and heirlooms were to be distributed to Teresa; (5) all bank accounts, stocks, and life insurance proceeds were to go to Amy; (6) the 121-acre parcel was to be distributed to Teresa and her children as joint tenants with right of survivorship; (7) all the remaining trust assets were to be divided equally between Amy and Teresa. The trust was silent as to the decedent's interest in the Genz farm.

The trust named the decedent as trustee during his lifetime. After his death, Amy and Teresa were to serve jointly as cotrustees. If either Amy or Teresa was unwilling or unable to serve, the other was to serve as sole successor trustee. The trustees were to account to the beneficiaries at least quarterly.

The decedent executed a pourover will contemporaneously with the establishment of the trust. All the decedent's estate was bequeathed to the trust. Amy was appointed executrix with Teresa named as substitute executrix.

Following the decedent's death in February 2016, on May 20, Amy filed a petition seeking to remove Teresa as cotrustee, alleging that Teresa refused to communicate and cooperate with her in the administration of the trust. Amy asserted that this was done in bad faith to deprive her of assets she was entitled to under the trust. Teresa did not respond to the petition, and by order entered on July 28, 2016, she was removed as cotrustee with Amy remaining as the sole trustee.

On February 21, 2017, Amy, as trustee, executed a quitclaim deed conveying the homestead property's forty-acre pasture to Teresa. She also executed another quitclaim deed conveying the actual homestead place to herself.

By agreement reached after Teresa obtained a temporary restraining order halting an earlier sale, an auction of the decedent's personal property was held in April 2017. Teresa contended that some of the property to be sold was to be distributed to her under the trust. The agreement was that Teresa could bid on any item that she claimed to be hers under the trust and, if successful, would not be required to pay for such items on the day of the auction. Amy later asserted that Teresa purchased items that were not antiques or family heirlooms, while Teresa contended that she had to purchase lots in which antiques were comingled with non-antiques. The upshot is that neither Teresa, Amy, nor Lance paid for their purchases. The trust was owed approximately $45,000 for these purchases.

On May 16, Amy filed an affidavit for collection of small estate in the probate division of circuit court. This companion case was later consolidated for trial with the trust case. Inher affidavit, Amy asserted that the decedent owned a one-half undivided interest in the Genz farm property, and that under the decedent's will, that interest would go to the trust.

On July 23, Teresa and Kathern filed a petition seeking reformation of the trust, reformation of the commissioner's deed, the removal of Amy as trustee, the imposition of a constructive trust, and damages for Amy's breach of the trust. The petition alleged that there had been a scrivener's error concerning the homestead property intended for Teresa. The petition sought reformation of the commissioner's deed where the decedent and Kathern purchased the Genz farm property at a foreclosure sale, asserting that the deed was intended to convey the property as joint tenants with a right of survivorship but mistakenly named them as tenants in common. The petition also alleged that Amy had breached her duties as trustee in various ways and sought Amy's removal as trustee and damages for her breach of trust. The petition further asserted that a few days before his death, the decedent gave Teresa his 2004 Dodge pickup truck. Jerry and the Genz children later filed separate petitions seeking to reform the commissioner's deed and to reform the trust and have Amy removed as trustee.

The case proceeded to a bench trial on appellants' petitions over several days in May 2018. Susan Fox, the attorney who prepared the trust, the will, the quitclaim deeds conveying the real property to the trust, and other ancillary estate-planning documents, admitted that she made a mistake concerning the homestead property in the trust. Fox testified that the decedent wanted to keep the homestead property in his family and did not intend for thehomestead property to be distributed to Amy. Fox and other witnesses testified that the decedent intended for Teresa to receive the property.

According to Teresa, Jerry, and Logan Genz, the decedent gave a 2004 Dodge pickup truck to Teresa as a gift. Amy testified that the decedent had merely loaned the vehicle to Teresa.

There was also testimony from Kathern, Teresa, Jerry, and a bank loan officer about the agreement concerning the purchase of the Genz farm property wherein the decedent and Kathern would borrow the funds to purchase the property at a foreclosure sale and Teresa and Jerry would make the payments. These witnesses testified that it was intended that the property would be conveyed to the decedent and Kathern as joint tenants with right of survivorship.

At the close of appellants' case-in-chief, Amy moved for an involuntary dismissal.² Amy argued that she was entitled to dismissal of the claim for reformation of the commissioner's deed because there was no evidence that a mistake was made in the conveyance. On the claim for reformation of the trust, Amy further argued that there was no evidence of a scrivener's error or that the final draft of the trust was inconsistent with the decedent's intentions. Amy also commented on the credibility of Susan Fox. Amy next argued that she was entitled to a dismissal on appellants' claims against her as trustee becauseappellants had failed to prove their damages resulting from her alleged breaches of the trust. Appellants responded, arguing that they presented sufficient evidence to show that they were entitled to the relief sought. They also argued that the scrivener's error was precisely the situation for which reformation applied. Appellants further argued that the court should impose a constructive trust on the Genz farm property. The court granted the motion for the reasons argued by Amy.

Amy then proceeded to testify about her proposed distribution of the trust assets. Amy testified that she sought reimbursement for certain expenses as trustee. Her...