Jackson v. Montoya

471 P.3d 984

David W. JACKSON, AS Successor TRUSTEE OF the PHILLIP G. JACKSON FAMILY REVOCABLE TRUST, Appellant (Plaintiff),

v.Candyce L. MONTOYA and Richard L. Montoya, Appellees (Defendants).

S-20-0008

Supreme Court of Wyoming.

September 4, 2020

Representing Appellant: Amy M. Iberlin and Alia Thal Scott of Williams, Porter, Day, and Neville, P.C., Casper, Wyoming.

Representing Appellees: No appearance.

Before DAVIS, C.J., and FOX, KAUTZ, BOOMGAARDEN, and GRAY, JJ.

DAVIS, Chief Justice.

[¶1] David W. Jackson, Successor Trustee of The Phillip G. Jackson Family Revocable Trust, as amended ("the Trust"), filed a complaint for declaratory judgment requesting a ruling that he could sell real property held by the Trust for the care, maintenance and support of the surviving settlor. The district court interpreted the Trust to grant beneficiary Candyce L. Montoya a life interest in the real property, and it therefore concluded that the Successor Trustee lacked authority to sell the property. We reverse and remand for further proceedings.

ISSUES

[¶2] Appellant presents one issue on appeal, which we restate as:

Did the district court err as a matter of law when it concluded that Ms. Montoya has a life interest in the real property held in the Trust, and that the Successor Trustee therefore lacked authority to sell the property under the terms of the Trust?

FACTS

[¶3] On March 17, 1994, Phillip G. Jackson and Rose D. Jackson, husband and wife ("settlors"), executed the Phillip G. Jackson Family Revocable Trust. Mr. and Mrs. Jackson, as settlors, reserved "the right and power to alter, amend, revoke or modify [the Trust] in whole or in part without the consent of any other person." Mr. and Mrs. Jackson also appointed themselves as the initial trustees.

[¶4] In the event of death, incompetency, inability to serve or resignation of either of the initial trustees, the other named trustee was granted the authority to act alone. In the event of death, incompetency, inability to serve or resignation of both of the original trustees, the settlors appointed their sons Dennis R. Jackson, David W. Jackson and Steve P. Jackson to serve as co-trustees of the Trust.

[¶5] During the initial funding of the Trust in 1994, the settlors transferred real property situated in Natrona County, Wyoming, commonly known as 141 North Lincoln Street, Casper, Wyoming ("Property") to the Trust.¹ The settlors conveyed the Property by quitclaim deed to themselves as trustees and to their successors in trust. The Property was to "be held and managed free of court supervision for the uses and purposes and upon the terms and conditions set forth in" the Trust. Section 6 of the Trust provides for distribution of the net income and principal of the Property under three different scenarios: (1) distribution to the original two settlors during their lifetime (Subsection 6.1); (2) distribution upon the death of one settlor to the surviving settlor (Subsection 6.2); and (3) distribution upon the death of both settlors (Subsection 6.3).

[¶6] On March 18, 2010, the settlors amended the Trust by executing the First Amendment to the Phillip G. Jackson Family Revocable Trust.² The amendment changed the distribution of the Property to be made upon the death of both settlors. Originally, upon the death of both, the Property was to be sold by the trustees subject to a right of first refusal held by their daughter, Candyce L. Montoya. The 2010 amendment eliminated Ms. Montoya's right of first refusal, and instead created a separate trust which would come into being upon both settlors’ deaths. Upon creation of the separate trust, the Property is to be held for Ms. Montoya's benefit for her natural life. As amended, Subsection 6.3.c. read:

6.3 Distribution on Death of Surviving Settlor. Upon the death of the surviving Settlor, the successor trustees shall dispose of and distribute the trust property (including but not limited to assets received by the trustees under such Settlor's Will or otherwise), and any undistributed income, as follows:

* * * *

c. Cash in an amount deemed by the trustees as necessary to pay trustee's fees and expenses as provided herein, together with all right, title and interest owned by the trust in the real property and improvements located at 141 North Lincoln, City of Casper, County of Natrona, Wyoming, shall continue to be held, administered and distributed by the successor trustees for the benefit of Candyce L. Montoya, for the term of her natural life. This trust shall be known as "The Candyce L. Montoya Testamentary Trust ". Except for the fees and expenses of trustee William B. Ebzery, should he be serving as trustee of said trust, all other costs and expenses of maintaining the trust property, including but not limited to taxes, insurance, improvements and repairs, shall be paid individually by the beneficiary, Candyce L. Montoya, and not out of the trust property. Provided, however, the beneficiary, Candyce L. Montoya, shall be entitled to reside in the house, rent free. Should such real property and improvements be sold or leased to a third party by the trustees, the net sales or rental proceeds therefrom shall be held, administered and distributed under the terms of Subsection 6.3.e of this revocable trust, as amended.

Upon the death of Candyce L. Montoya, the successor trustees shall distribute all right, title and interest in the trust property to the then-living children or [sic] Candyce L. Montoya, in equal shares, free of trust. The Candyce L. Montoya Testamentary Trust shall then terminate.

[¶7] On March 12, 2018, Rose D. Jackson's primary care physician, Akash Taggarse, M.D. of Oro Valley, Arizona, certified that to a reasonable degree of medical certainty Rose D. Jackson was not capable of managing her financial or trust affairs. Over one month later, on April 27, 2018, Phillip G. Jackson's primary care physician, also Dr. Taggarse, certified that Phillip G. Jackson was likewise not capable of managing his financial or trust affairs. As a result of the settlors’ incapacitation, David W. Jackson ("Successor Trustee") began serving as successor trustee of the Trust on May 16, 2018.³

[¶8] In May 2018, both settlors resided at Carlton Village in Tucson, Arizona, an assisted living facility. In August 2018, Mrs. Jackson died, leaving Mr. Jackson as the only surviving settlor. The assisted living facility costs for the care of Mr. Jackson are approximately $3,500.00 per month. To pay for that care, the Successor Trustee sought to sell the Property in accordance with Section 6.2.b. of the Trust, which provides:

The trustee shall subject to the other provisions of ... Section 6.2, pay to the surviving Settlor, at convenient intervals, not less frequently than quarterly, all of the net income of the trust property. The trustee shall also pay or distribute to the surviving Settlor such amounts from the principal of the trust as the surviving Settlor may, from time to time, request or as the trustee determines in his or her discretion to be necessary for the surviving Settlor's care, comfort, support, welfare or maintenance.

[¶9] The Successor Trustee intended to use the sale proceeds to pay the monthly expenses for Mr. Jackson's care, comfort, support, welfare and maintenance. He further intended to hold any remaining proceeds in Trust and to distribute them to Ms. Montoya upon Mr. Jackson's death in accordance with Subsection 6.3.c. of the Trust.

[¶10] On July 23, 2018, Successor Trustee David Jackson provided notice of the intended sale to Ms. Montoya, who had resided rent-free at the Property with her husband since 1975. Ms. Montoya refused to vacate the Property, and accordingly, on August 20, 2018, Mr. Jackson served the Montoyas with a Notice to Quit Premises . On August 27, 2018, the Successor Trustee filed a Complaint for Forcible Entry and Detainer in circuit court. Less than thirty days later, on September 10, 2018, the circuit court transferred the case to district court, finding that title was in dispute, and that therefore the matter should be heard in district court. On October 10, 2018, the district court dismissed the forcible entry and detainer action for lack of subject matter jurisdiction.

[¶11] On June 25, 2019, the Successor Trustee filed a Complaint for Quiet Title, Ejectment and Declaratory Judgment against the Montoyas in district court. He also requested that the district court enter a declaratory judgment finding that the Trust is entitled to sole possession of the Property, and that he is entitled to sell the Property by the terms of the Trust. Finally, he requested that the district court find that the Montoyas were precluded from claiming any right, title or interest, including any possessory rights in and to the Property, and that it eject them to allow it to be sold.

[¶12] The Montoyas were served with the complaint and summons on June 27, 2019. They both failed to plead or otherwise respond to the complaint. Accordingly, on July 19, 2019, the Successor Trustee filed an Application to the Clerk for Entry of Default . On October 28, 2019, the district court clerk entered default against the Montoyas. The Successor Trustee thereafter requested a hearing and entry of a default judgment. The Montoyas did not object to the default hearing, nor did they request to set aside the entry of default.

[¶13] On October 18, 2019, the district court held a hearing on the motion and application for default judgment. Successor Trustee David Jackson and Ms. Montoya, appearing pro se, were present at the hearing. Ms. Montoya was allowed to cross-examine Mr. Jackson and to testify, but she provided no argument, testimony, or other evidence pertaining to the requested default judgment.

[¶14] On October 29, 2019, the district court entered an order resulting from the October 18, 2019 hearing. The court denied the request for default judgment and found that the settlors intended that "Candyce L. Montoya [was] to be able to live in the [Property]...