Horton v. Mitchell

2018 Ark. App. 610

568 S.W.3d 274

Cynthia Lou HORTON and Anthony Bryce Brewer, as Special Administrator of the Estate of Prentice Byars Young, Appellants/Cross Appellees

v.Deborah Ann MITCHELL, Appellee/Cross Appellant

No. CV-17-270

Court of Appeals of Arkansas, DIVISION I.

Opinion Delivered: December 12, 2018

Rehearing Denied January 16, 2019

Taylor & Taylor Law Firm, P.A., Little Rock, by: Andrew M. Taylor and Tasha C. Taylor, for appellants.

James, House, Downing & Lueken, P.A., Little Rock, by: Matthew R. House, for appellee.

ROBERT J. GLADWIN, Judge

This appeal stems from a dispute between three siblings over the management and distribution of their mother's trust. Deborah Mitchell (Deb), sued her siblings, Cynthia Horton (Cindy) and Prentice Young (Butch), and Cindy and Butch filed a counterclaim against Deb. Deb ultimately prevailed. Thereafter, the circuit court awarded Deb attorney's fees and later held Cindy in contempt of court for failing to comply with its orders. Butch had died by the time the contempt proceedings were held, and Bryce Brewer was appointed as special administrator of Butch's estate.¹ Cindy and Butch appeal the circuit court's judgment, the order awarding attorney's fees, and the contempt finding against Cindy. Deb cross-appeals, challenging a posttrial ruling wherein the circuit court refused to void a mortgage on certain property that Cindy and Butch had given to their lawyer. We affirm on direct appeal and on cross-appeal.

I. Background

The Rena Byars Mitchell Revocable Trust (the Trust) was established by Rena Byars Mitchell in June 2005. Pursuant to the Trust, Rena, a widow with three living children—Deb, Cindy, and Butch—served as the initial trustee.

Deb, Cindy, and Butch have been estranged for years. Their strained relationship is apparent throughout this litigation. Deb generally claims that Butch and Cindy, who lived on the same property as Rena until Rena's death, abused drugs and mistreated Rena during her life, while Butch and Cindy accuse Deb of being absent from their mother's life.

Due to health problems, Rena resigned as trustee of the Trust in April 2008. The Trust delineated that on her resignation, Butch, Cindy, and Deb would be appointed as cotrustees and serve by majority agreement.

This allowed two of the three siblings, Butch and Cindy, authority to make decisions on behalf of the Trust without Deb's approval.

After Rena's resignation, Deb petitioned for guardianship of Rena's estate and person, and Butch and Cindy petitioned to become coguardians of Rena's estate and person. Ultimately, Butch and Deb were appointed as coguardians. Cindy admitted to long-term methamphetamine use at the guardianship hearing. Later, Butch resigned after refusing to submit to a drug test, and Deb became Rena's sole guardian.

In May 2012, Rena died. Shortly after Rena's death, Deb filed a complaint and then an amended complaint relating to administration of the Trust and alleged the misappropriation of Trust funds by Cindy and Butch. She made claims against Cindy and Butch for breach of trust, breach of fiduciary duty, conversion, fraud, breach of contract, civil action by a crime victim, tortious interference, unjust enrichment, removal of trustees, imposition of constructive trust and equitable lien, and injunction. Generally, Deb claims that Butch and Cindy used their powers as cotrustees to pay themselves hundreds of thousands of dollars out of the Trust for which Deb contends there was little or no justification or supporting documentation. Butch and Cindy counterclaimed and alleged that Deb breached her duties as cotrustee.

A three-day jury trial was held on July 27, 28, and 30, 2015. At the conclusion of the trial, the jury rendered a verdict in favor of Deb. The jury found Butch liable to Deb on behalf of the Trust for $420,000 in compensatory damages and $630,000 in punitive damages and found Cindy liable for $205,000 in compensatory damages and $310,000 in punitive damages. The jury also rejected Butch and Cindy's counterclaim. This left pending several equitable claims to be decided by the circuit court. After the jury was released, counsel for Deb mentioned that he was concerned about the resolution of Deb's pending injunction claim because, until it was decided, Butch and Cindy could theoretically clean out the Trust account. The court responded by saying there would be no action on the Trust over the weekend and directed the parties to promptly prepare a judgment for its approval.

More than two months passed, and on October 5, 2015, a judgment memorializing the jury's verdict was entered. That same day, the circuit court entered a decree addressing many of Deb's equitable claims. The decree included language that "in the event" Butch and Cindy "have withdrawn any money from the trust or disposed of any trust property, they are given ten (10) days from the date this decree is filed ... to return said funds or property to the trust."

Thereafter, Butch and Cindy filed a motion for judgment notwithstanding the verdict and a motion for new trial or remittitur. Deb responded, and the circuit court denied the motions. Butch and Cindy filed a notice of appeal of the judgment and the denial of their posttrial motions. Later, a judgment for prejudgment interest was entered, and Butch and Cindy filed an amended notice of appeal to include this order. Finally, the circuit court entered an order awarding attorney's fees and costs to Deb, and Butch and Cindy timely appealed this order.

The record on appeal was filed in our court. However, the appeal was dismissed without prejudice due to lack of finality. There were several pending claims that had not been resolved. The case was remanded to the circuit court, and the circuit court administratively dismissed the unresolved claims. Butch and Cindy timely appealed.

The circuit court also held a contempt hearing based on a motion filed by Deb. Deb claimed that Cindy and Butch had violated the circuit court's July 2015 oral order not to engage in any Trust transactions over the weekend following the jury trial. She also claimed that Cindy and Butch had violated the circuit court's decree, which required them to return any funds or property they may have withdrawn from or disposed of from the Trust. Also, in the contempt motion, Deb sought to have a mortgage on Trust property that Cindy and Butch executed in favor of their attorney as payment for his attorney's fees declared null and void. Shortly after Deb filed the motion, Butch died, and Bryce Brewer was appointed as special administrator of his estate.

At the contempt hearing, Deb proceeded against only Cindy since Butch had died. The circuit court held Cindy in contempt and ordered her to reimburse the Trust for $41,054.32 that she and Butch had taken in violation of the court's posttrial orders. The circuit court denied Deb's request to cancel the mortgage Butch and Cindy executed in favor of their attorney. Butch and Cindy timely appealed from the contempt order, and Deb cross-appealed.

Finally, Cindy and Butch filed a motion to modify the judgment, and Deb filed a motion for reconsideration of the contempt order. Both motions were deemed denied, and the parties timely filed a final notice of appeal and cross-appeal.

In this appeal, our court must decide several issues. On direct appeal, Cindy and Butch contend (1) the doctrine of laches barred Deb's claims, (2) the language of the Trust barred Deb's claims, (3) the jury verdict contained a mathematical error, (4) the punitive-damages award should be reversed, (5) the award of attorney's fees should be reversed, and (6) the finding of contempt against Cindy should be reversed. On cross-appeal, Deb contends the circuit court erred when it declined to rule that Butch and Cindy's mortgage of the trust property should be canceled and invalidated.

II. The Direct Appeal

A. Laches

Butch and Cindy raised the defense of laches to Deb's claims, arguing that Deb waited too long after she realized she had concerns about the management of the Trust to pursue her claims against them. The defense was rejected by the circuit court. Specifically, the circuit court found that "laches is not a defense to the claims presented to and decided by the jury because the jury's verdict was for legal causes of action, and laches does not apply to legal causes of action." Butch and Cindy contend the rejection of their laches defense was reversible error.

Laches is based on the equitable principle that an unreasonable delay by the party seeking relief precludes recovery when the circumstances are such as to make it inequitable or unjust for the party to seek relief. Larco, Inc. v. Strebeck , 2010 Ark. App. 263, at 4, 379 S.W.3d 16, 20. It requires a detrimental change in the position of the one asserting the doctrine, as well as an unreasonable delay by the one asserting his rights against whom laches is invoked. Id.

The principle question here is whether the laches defense is applicable to legal causes of action. Our caselaw frequently provides that "the doctrine of laches is only applicable where equitable relief is sought; where a party is only seeking to enforce a legal right ... and is not seeking equitable relief, the doctrine of laches has no application." See generally Warford v. Union Bank of Benton , 2010 Ark. App. 635, at 5, 378 S.W.3d 239, 243 ; Landreth v. First Nat'l Bank of Cleburne Cty. , 45 F.3d 267, 271 (8th Cir. 1995) ; Rogers Iron & Metal Corp. v. K & M, Inc. , 22 Ark. App. 228, 230, 738 S.W.2d 110, 111 (1987). Moreover, our courts have held that "laches is not applicable to actions for damages, accounting, or the recovery of money or property fraudulently obtained." Warford, supra.

In support of reversal, Butch and Cindy cite McPherson v. McPherson , a trust case in which money damages were awarded. 258 Ark. 257, 523 S.W.2d 623 (1975). In McPherson , the supreme court determined that the doctrine of laches was inapplicable but not before first conducting...