Little v. Davis

974 N.W.2d 70

Katina M. LITTLE, Appellee,

v.Keith A. DAVIS and Donald J. Davis, Co-Trustees of the Donald K. Davis and Collen Davis Family Trust, Appellants.

No. 21-0953

Supreme Court of Iowa.

Submitted March 23, 2022

Filed May 6, 2022

John G. Daufeldt of John C. Wagner Law Offices, P.C., Amana, for appellants.

Randall C. Stravers of Stravers Law Firm, Oskaloosa, for appellee.

McDonald, J., delivered the opinion of the court, in which all justices joined.

McDONALD, Justice.

This case concerns a beneficiary's challenge to modifications of the dispositive provisions of an irrevocable trust. The Iowa Code provides that an irrevocable trust may be modified in one of two ways. First, without court approval, "[a]n irrevocable trust may be modified or terminated upon the consent of the settlor and all of the beneficiaries." Iowa Code § 633A.2202(1) (2020). Second, with court approval, "[a]n irrevocable trust may be terminated or its dispositive provisions modified ... with the consent of all of the beneficiaries if continuance of the trust on the same or different terms is not necessary to carry out a material purpose." Id. § 633A.2203(1). The question presented in this appeal is whether the surviving settlor of an irrevocable trust can, with the consent of all of the beneficiaries, modify the dispositive terms of an irrevocable trust without court approval.

I.

Husband and wife Donald K. and Collen Davis established the Donald K. & Collen Davis Family Trust in February 2016. The trust agreement provided that while Donald and Collen were both living and competent, the trust could "be altered or amended by written instrument signed by both Co-Trustors." The trust agreement also contained an irrevocability provision stating that "[u]pon the death of the first Co-Trustor to die ... the then surviving Co-Trustor ... shall not have the power to amend, revoke and/or terminate the [trust]." Upon the death of the surviving spouse, the trust estate was to be distributed equally to Donald's four children: Keith Davis, Jeffrey Davis, Donald J. Davis, and Katina Little. The primary asset of the trust was Donald's farmland, which he acquired prior to marrying Collen, but which was held jointly by them. The apparent purpose of the trust was to protect Donald's farmland from any claims of Collen (or her children from a previous relationship) in the event Donald predeceased Collen. Donald did not predecease Collen; Collen died in September 2017, leaving Donald as the surviving trustor (or settlor) and the surviving trustee.

At some point after Collen's death, Donald decided he wanted to amend the dispositive terms of the trust. His attorney prepared a two-page document entitled "Consent to Modify Trust Agreement." The consent document acknowledged that the trust agreement provided the surviving trustor did not have the power to amend, revoke, or terminate the trust. The consent document stated the purpose of the irrevocability provision—to protect Donald's farmland against any claims from Collen or her children—no longer existed. The second page of the consent document contained signature lines for Donald and each of the four beneficiaries of the trust underneath a single paragraph. That paragraph stated:

THEREFORE, the undersigned, being the current trustee, the current income beneficiary, and all of the adult beneficiaries who would receive a share of the trust if Donald K. Davis was not living, hereby agree that Donald K. Davis, as surviving Trustor and as surviving Trustee, shall have the power and authority to alter, amend, or revoke the DONALD K. & COLLEN DAVIS FAMILY TRUST[.]

Donald and his four children, including appellee Katina Little, signed the consent document on different days in April and May of 2018.

On May 30, 2018, Donald executed a document entitled "First Amendment to Trust Agreement of Donald K. & Collen Davis Family Trust." The amendment altered the disposition of the trust estate. Upon Donald's death, under the amendment, Donald's farmland was to pass one-half each to his sons Donald J. and Keith. Meanwhile, Jeffrey was to receive $50,000, and Little was to receive $25,000. The remainder of the trust estate was to be divided evenly between the four beneficiaries. The amendment also changed the trustees to succeed Donald after his death. The 2016 trust agreement provided Donald's four children would succeed Donald as co-trustees, but the amendment provided that only Donald's sons Donald J. and Keith would succeed Donald as co-trustees.

This suit arises out of Little's challenge to the validity of the amendment to the trust agreement. Donald died on November 13, 2019. According to the terms of the amended trust agreement, Donald J. and Keith became trustees of the trust. In January 2020, Little received a notice regarding the disposition of the trust estate that contained a copy of the 2016 trust agreement and the 2018 amendment to the trust agreement. Little filed this suit against Donald J. and Keith as trustees. In her petition, Little contended the amendment to the trust agreement was void.

The parties filed cross-motions for summary judgment. The co-trustees argued the amendment was valid because Iowa Code section 633A.2202(1) provides that an irrevocable trust can be modified with the consent of the settlor and all of the beneficiaries. Little asserted several reasons why the amendment was not valid. First, she argued the trust agreement, by its own terms, could not be amended, revoked, or terminated after Collen's death. Second, she argued the amendment was void without court approval because Collen could not and did not consent to the amendment. Third, she argued the amendment was invalid because the consent document did not identify the dispositive terms of the trust that were to be modified. Finally, she argued she did not knowingly and voluntarily consent to the amendment. In support of this last argument, Little testified in her deposition that Donald pressured her to sign the consent document. She testified she was visiting her father on April 25, 2018, when he asked her to sign a one-page document. Little noticed that a staple had been torn out of the document but there was no other page attached. Little asked to see the other page and recalled that Donald looked for the additional page but was unable to find it. Little testified that Donald became "more and more agitated" as he was unable to find the missing page. Finally, Donald explained the purpose of the document was to "tak[e] Collen's name off" the trust agreement. Little signed the document despite not seeing the other page. The document she signed was only the second page of the two-page consent document.

The district court granted Little's motion for summary judgment and denied the trustees’ motion for summary judgment. The district court held the amendment to the trust agreement was "void for lack of authority." In reaching that conclusion, the district court relied on Iowa Code section 633A.1105, which states, "The terms of a trust shall always control and take precedence over any section of [the] trust code to the contrary." In the district court's view, section 633A.1105 compelled the conclusion that the provision of the trust agreement stating that the surviving settlor could not amend, revoke, or terminate the trust was controlling and disallowed modification of the trust under any circumstances. Finding the issue dispositive, the district court did not address the other arguments raised by the parties.

II.

"The standards for granting summary judgment are well established and need not be repeated in full herein." Kostoglanis v. Yates , 956 N.W.2d 157, 158 (Iowa 2021). Review of summary judgment rulings is for correction of errors at law. Id. "Summary judgment is properly granted when there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law." McQuistion v. City of Clinton , 872 N.W.2d 817, 822 (Iowa 2015). When an appeal from a district court's ruling on a summary judgment motion requires us to resolve a legal question by interpreting a statute, our review is also for correction of legal error. Homan v. Branstad , 887 N.W.2d 153, 164 (Iowa 2016). We can affirm the district court's grant of summary judgment on any ground urged on appeal that was also raised in the district court. See Pitts v. Farm Bureau Life Ins. , 818 N.W.2d 91, 97 (Iowa 2012).

A.

Before 2000, the law of trusts was scattered throughout the Probate Code, various other statutes, and judicial decisions. See Martin D. Begleiter, In the Code We Trust—Some Trust Law for Iowa at Last , 49 Drake L. Rev. 165, 171 (2001) [hereinafter Begleiter]. To bring greater clarity to the law of trusts, the general assembly adopted a comprehensive Trust Code in 1999, which is now codified in Iowa Code chapter 633A. Id. While the Trust Code now controls many aspects of the law of trusts, it "does not attempt to cover every area of trust law nor provide for every situation." Id. at 185. Rather, "[e]xcept to the extent that [chapter 633A] modifies the common law governing trusts, the common law of trusts shall supplement th[e] trust code." Iowa Code § 633A.1104. Prior judicial decisions thus remain an integral part of the law of trusts and should be harmonized with the Trust Code. See id. ; see also, e.g. , Keating v. Keating , 182 Iowa 1056, 165 N.W. 74, 77–78 (1917) ("Even in the absence of statute the authority to entertain complaints alleging improper or arbitrary and unreasonable conduct of trustees in the administration of trusts has long been held to be inherent in courts of equity.").

B.

With that background, we turn our attention to the district court's ruling. The district court held the amendment to the trust agreement was void. In reaching that conclusion, the district court relied on Iowa Code section 633A.1105. That Code section provides:

The terms of a trust shall always control and take precedence over any section of this trust code to the

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