In re In re Ishida-Waiakamilo Legacy Trust Dated June 27

398 P.3d 658

In the MATTER OF the ISHIDA-WAIAKAMILO LEGACY TRUST Dated June 27, 2006

In the Matter of the Ishida-Winant Legacy Trust Dated June 27, 2006

SCWC-13-0000449

Supreme Court of Hawai'i.

JUNE 15, 2017

Margery S. Bronster, Rex Y. Fujichaku, Honolulu, and Angela K.H. Jacso, for petitioners.

Michael A. Lilly and Valerie M. Kato, Honolulu, for respondents.

RECKTENWALD, C.J., NAKAYAMA, McKENNA, POLLACK, AND WILSON, JJ.

OPINION OF THE COURT BY RECKTENWALD, C.J.

This case arises from the administration of two irrevocable trusts established by Richard and Rachel Ishida: the Ishida-Waiakamilo Legacy Trust (Waiakamilo Trust), and the Ishida-Winant Legacy Trust (Winant Trust) (collectively, "the Trusts"). The Trusts name as beneficiaries the Ishidas' daughters Jeri S. Wilson (Jeri) and Juney M. Ishida (Juney), and their granddaughter Kauialohaokalani R. Wilson (Kaui), but they expressly exclude the Ishidas' third daughter, Richardeen Kimura (Deenie). Six years after the creation of the Trusts, the Ishidas filed petitions in Probate Court of the First Circuit (probate court) requesting rescission of both Trusts. The Ishidas alleged that they never intended to make the Trusts irrevocable, and that Jeri had wrongfully transferred ownership of property from the Waiakamilo Trust to herself. Jeri and Juney opposed the petitions.

The probate court found that the transfer of property to Jeri had violated the terms of the Waiakamilo Trust, ordering the property returned to the Trust; it declined to rescind or reform the Trusts. The Ishidas appealed to the Intermediate Court of Appeals (ICA), which affirmed the probate court's denial of their petitions.

The Ishidas' Application for Writ of Certiorari presents two issues to this court: 1) whether that the probate court's failure to return the Waiakamilo Trust property to the Ishidas was an abuse of discretion in light of alleged wrongdoing by Jeri, and 2) whether the ICA improperly discounted the evidentiary value of the Ishidas' petitions, which were verified pursuant to Hawai'i Probate Rules (HPR) Rule 5(a).

First, we hold that the probate court did not err in denying the Ishidas' requested relief, as the matter was within the court's equitable discretion. Second, we affirm the ICA's holding that the probate court was not required to accept the Ishidas' petitions at face value, and in doing so we clarify the status of HPR Rule 5(a) statements in relation to other types of testimonial evidence.

I. Background

The Ishidas hired an attorney to draft documents creating the Trusts, which they executed on June 27, 2006. The Ishidas settled each Trust with a single residential and/or commercial property. Jeri and Juney were named as trustee for the Waiakamilo Trust and Winant Trust, respectively. The Waiakamilo Trust designates Jeri as beneficiary, with full ownership of the Trust's property passing to Jeri's daughter Kaui upon Jeri's death. The Winant Trust provides that its property will be distributed to Juney as beneficiary upon the death of the Ishidas, with full ownership passing to Kaui upon Juney's death. The Trusts are irrevocable, with both including the following provision:

Section 3. Irrevocable Trust

Our Trust is irrevocable. Except as expressly herein provided to the contrary, no Trustor or any other person shall have any right or power to alter, amend, or in any manner whatsoever modify any of the provisions hereof.

Additionally, both the Waiakamilo Trust and the Winant Trust specifically exclude the Ishidas' third daughter, Deenie, with both Trusts including the following provision:

c. Exclusions

We hereby exclude RICHARDEEN R. KIMURA and such person's descendants as beneficiaries under our Trust Agreement, including without limitation for the purposes of intestate succession. For the purposes of our Trust Agreement, all excluded persons shall be treated as having died prior to the execution of our Trust Agreement.

On March 28, 2007, Jeri and the Ishidas executed a series of deeds, transferring ownership of the Waiakamilo Trust property (Waiakamilo Property) from the trust to Jeri personally.

On May 4, 2012, the Ishidas filed in probate court a Petition for Rescission of Warranty Deed, Imposition of Constructive Trust and an Order for Disgorgement related to the Waiakamilo Trust (Waiakamilo Petition), and a Petition for Reformation of Trust and/or Order Setting Aside the Ishida-Winant Trust (Winant Petition). The Ishidas alleged that, although they had asked their attorney to make simple wills and revocable trusts as part of their estate planning, their attorney went against their wishes and designed the Waiakamilo and Winant Trusts to be irrevocable. The Ishidas further claimed that Jeri had schemed with their attorney to transfer the Waiakamilo Property to Jeri personally in the March 28, 2007 deeds. Accordingly, the Ishidas asked the probate court to rescind the deed transferring the Waiakamilo Property to Jeri, and to set aside both Trusts and restore ownership of Trust properties to the Ishidas. In apparent compliance with HPR Rule 5(a),¹ both petitions included the following text above the Ishidas' signatures:

THE UNDERSIGNED UNDERSTANDS THAT THIS DOCUMENT IS DEEMED TO INCLUDE AN OATH, AFFIRMATION, OR STATEMENT TO THE EFFECT THAT ITS REPRESENTATIONS

ARE TRUE AS FAR AS THE UNDERSIGNED KNOWS OR IS INFORMED, AND PENALTIES FOR PERJURY MAY FOLLOW DELIBERATE FALSIFICATION.

Jeri and Juney (Respondents) disputed the Ishidas' account of the Trusts' creation, claiming that the Ishidas intentionally made the trusts irrevocable because they had disinherited Deenie. Respondents further contended that Deenie had recently reconciled with their parents, and that she was behind the petitions. Respondents also alleged that the transfer of property from the Waiakamilo Trust to Jeri personally had been done with the Ishidas' knowledge in order to avoid "issues" raised by the Ishidas' accountant. Respondents concluded that "further discovery into the Ishidas' allegations is required as they raise issues of material fact," asking that both petitions be assigned to the civil trials calendar pursuant to HPR Rule 20(a).²

The Ishidas replied to Respondents' objections, asserting, "[w]hile the allegations against Deenie are absolutely untrue, they are irrelevant and the Ishidas will not address them." The Ishidas urged the probate court to grant their petitions forthwith, arguing that "the equities of the case, as well as public policy" required immediate relief. The Ishidas opposed discovery or otherwise prolonging the proceedings in court, asserting that "the Court has all the information it needs to declare the transfer void and return the [Trust properties] to [their] rightful owners, the Ishidas."

After a hearing, the probate court issued an order rescinding the March 28, 2007 deeds and restoring the Waiakamilo Property to the Waiakamilo Trust, finding that the transfer had violated the terms of the Waiakamilo Trust. However, the probate court denied all other relief requested. The Ishidas filed petitions for reconsideration of the orders, which the probate court denied, and final judgment was entered for both petitions on May 2, 2013.

The Ishidas appealed to the ICA, arguing that the probate court erred in 1) failing to "right the injustice done to the Ishidas" by refusing to set aside the Trusts and restore the Properties to the Ishidas, and 2) failing to reform the Trusts because they "were a mistake." Accordingly, the Ishidas urged the ICA to reform or set aside the Waiakamilo and Winant Trusts, or in the alternative, to impose constructive trusts on the Waiakamilo and Winant Trust properties.

In a published opinion, the ICA examined each of the Ishidas' arguments in turn, finding that the Ishidas had failed to show by clear and convincing evidence circumstances warranting the reformation of the Trusts or other equitable relief. In re Ishida Waiakamilo Legacy Trust , 138 Hawai'i 98, 103–09, 377 P.3d 39, 44–50 (App. 2016). Regarding the evidence presented by the Ishidas, ICA stated:

On appeal, the Ishidas refer to "compelling evidence" and "the clear testimony of the Settlors regarding their own intent and the mistake that was made," in apparent reference to the Ishidas' signatures on the Waiakamilo Petition following a statement that:

THE UNDERSIGNED UNDERSTANDS THAT THIS DOCUMENT IS DEEMED TO INCLUDE AN OATH, AFFIRMATION, OR STATEMENT TO THE EFFECT THAT REPRESENTATIONS ARE TRUE AS FAR AS THE UNDERSIGNED KNOWS OR IS INFORMED, AND PENALTIES FOR PERJURY MAY FOLLOW DELIBERATED FALSIFICATION.

....

As set forth in HPR Rule 5(a), this attestation is accepted in lieu of a sworn affidavit to the same effect, i.e., that the information contained therein is true as far as the affiant knows or is informed , and thus satisfied the requirements of the rule. It is not, however, identical in every way to testimony that has been subject to cross-examination, or a sworn affidavit, or a declaration made under penalty of law, that specified factual statements are true andcorrect . It is within the province of the trial court to determine the credibility of a witness and the weight to be given to a witness's testimony. See , e.g. , Tamashiro v. Control Specialist, Inc. , 97 Hawai'i 86, 92, 34 P.3d 16, 22 (2001). Written testimony that could be based upon limited memory or knowledge, or information and belief, rather than personal knowledge, particularly testimony that purports to reflect the joint recollection and intent of two people, without distinction, might reasonably be viewed as less reliable or less convincing than other forms of evidence.

Id. at 106–07, 377 P.3d at 47–48.

The ICA also determined that the creation of the irrevocable trusts was not "so inherently improvident and unreasonable" that the probate court was required to infer that it was the product of delusion or mental infirmity. Id. at 109, 377 P.3d at 50 (citing Love v. Love , 17 Haw. 206, 215 (1905) ). Accordingly, the ICA concluded that the...