Morse v. SunTrust Bank, N.A.

364 Ga.App. 571

873 S.E.2d 238

MORSE et al.

v.SUNTRUST BANK, N.A. et al.

A22A0200

Court of Appeals of Georgia.

May 16, 2022

Reconsideration Denied June 29, 2022

William Joseph Sheppard, Michael Brian Terry, Atlanta, for Appellant.

John Alan Sugg, Atlanta, Thomas E. Cauthorn III, Marietta, Justin B. O'Dell, Marietta, Roy E. Paul, Savannah, W. Vincent Settle III, Waycross, Clay Seaton O'Daniel, Atlanta, Keith Alan O'Daniel, Alpharetta, Leslee Champion Hungerford, Marietta, Nicholas Matheson Booth, for Appellee.

Phipps, Senior Appellate Judge.

In this action concerning the interpretation of a will, plaintiffs Steven and Stuart Morse appeal from the trial court's order that, among other things, denied their renewed motion for partial summary judgment and granted a motion for summary judgment filed by a number of defendants and joined by additional defendants and a guardian ad litem representing various beneficiaries under the will (collectively the "Appellees"). For the reasons that follow, we reverse the trial court's order.

This action involves a multi-generational family trust (the "1967 Trust") created by Section VIII (the "Section") of the Last Will and Testament of Moi M. Monroe executed on May 15, 1967. The Section creates 13 separate and equal sub-trusts, with each of the following grandchildren designated as primary beneficiaries of one of the sub-trusts: (1) Ann Bashlor Monroe, (2) Jayne Powell Monroe, (3) Ida Katherine Monroe, (4) Carolyn Elizabeth Monroe, (5) Martha Madison Monroe, (6) Moi Madison Monroe III, (7) Patricia Drand Monroe, (8) Mary Helen Monroe, (9) Constance Lee Monroe, (10) William Joseph Monroe, Jr., (11) Carolyn Ruth Hopkins, (12) Hannah Hart Hopkins, and (13) Mary Elizabeth Hopkins. The Section further provides as follows: "In the event an additional grandchild or grandchildren shall be borne to me, whether during my lifetime or after my death, ... the number of trusts shall be increased accordingly, and each afterborn grandchild shall be the primary beneficiary of a separate, equal trust just as if herein designated by name." The Section also provides that if one of the designated beneficiaries becomes a parent, the annual distributions of income would thereafter be distributed to the parent and his or her children on a pro rata basis: "the income of each trust shall be distributed to the primary beneficiary of such trust and to each child of the primary beneficiary of such trust, in equal shares." The Section then designates when and how the trust income will be distributed to the beneficiaries and their descendants, specifically stating that upon the death of a primary beneficiary, that beneficiary's interest is passed to his or her descendants; however, "in the event of the death of all persons entitled to income distributions from a trust, such trust shall thereupon terminate, and all property then held in such trust shall be divided equally and added to the remaining trust[s]."

The will does not authorize a beneficiary to add someone else as a beneficiary, change the beneficiary, or otherwise dispose of any interest in an individual trust. In fact, the will contains a spendthrift provision expressly prohibiting beneficiaries from disposing of any interest in their trust: "No beneficiary shall have any power to dispose of ... any interest hereunder[.]" The will also includes a good faith provision: "I would expressly enjoin my family, including all descendants whether now in life or hereafter borne, to deal in fairness and in good faith in all matters, and particularly with respect to my probate estate and the trust estates herein created." It is undisputed that the testator died in Georgia in 1967.

It is undisputed that Mary Helen Monroe ("Molly") never had biological children, but in 2018 she filed a Florida petition to adopt 36-year-old Steven Morse and 34-year-old Stuart Morse. Molly and the Morses acknowledge that Molly adopted the adults, at least in part, so that they could receive distributions from the separate trust created for her under the will. The Morses’ biological parents are still living, still have a relationship with Steven and Stuart, and possibly were present during conversations about Molly adopting Steven and Stuart to make them beneficiaries of the trust. William Monroe, Jr., and Hannah Hopkins Franklin, as beneficiaries of one or more trusts potentially affected by the adoption, opposed the adoption petition. On June 4, 2019, the Florida court granted Molly's adoption petition. The record does not contain any evidence that this decision was appealed.

The following morning, Steven and Stuart Morse filed a declaratory judgment action in Gwinnett County Superior Court against SunTrust Bank, William Monroe, Jr., Moi Monroe III, and Hannah Hopkins Franklin, as trustees of the 1967 Trust, claiming a vested interest in a number of family trusts, including the 1967 Trust, and seeking a declaration confirming their status as vested and/or contingent beneficiaries under the trusts and an order directing the trustees to make distributions to them under the terms of the trusts. The Morses subsequently amended their complaint to add a cause of action for breach of fiduciary duty and punitive damages stemming from the trustees’ failure to make trust distributions to them. The Morses then moved for partial summary judgment on their declaratory judgment claim, arguing that under both Georgia and Florida law, adopted adults inherit equally with natural children and adopted minors of the settlors of trusts.

The court subsequently granted William Monroe, Jr.’s motion to intervene in his individual capacity, added as parties all income beneficiaries of the trusts at issue, and issued a consent order appointing a guardian ad litem to protect the interests of minor beneficiaries as well as future income or contingent beneficiaries. The Morses then filed a second amended complaint, adding all the parties as defendants. They subsequently filed a third amended complaint when SunTrust merged and became known as Truist. The third amended complaint only alleged a breach of a fiduciary duty; it did not request a declaratory judgment.

Thereafter, SunTrust Bank and William Monroe, Jr., in his capacity as trustee, filed an answer and a counterclaim for a declaratory judgment, asking the court to declare whether the Morses are entitled to any distributions under the 1967 Trust. The Morses filed a motion for partial summary judgment, arguing that they were entitled to judgment as a matter of law on the defendants’ counterclaim for a declaratory judgment deciding the Morses’ rights under the 1967 Trust. Constance Monroe Bolton, Ida Caroline Bolton, Thomas M. Bolton, and Katherine Bolton Olson (the "Bolton defendants") filed a motion for summary judgment, which a number of other defendants and the guardian ad litem joined. In the motion for summary judgment, the Bolton defendants sought entry of a judgment that the Morses are not beneficiaries of the 1967 Trust. In addition, William Monroe, Jr., William J. Monroe, III, and Caroline Jordan Monroe (the "Monroe defendants") asked the court to deny the plaintiffs’ motion for partial summary judgment and grant the Bolton defendants’ motion for summary judgment. SunTrust Bank and William Monroe, Jr., also responded to the Bolton defendants’ motion for summary judgment, taking a neutral position with respect to the lawsuit and simply urging the court to declare whether the Morses are entitled to distributions under the 1967 Trust.

The trial court granted the Bolton defendants’ motion for summary judgment, concluding that the Morses could not inherit under the will because Molly's adult adoption of them was an act of subterfuge. The court acknowledged that "[n]o Georgia Appellate Court has ever considered, much less held, that a beneficiary of a trust may adopt an adult for purposes of making the adult adoptee a beneficiary and/or to cut out other beneficiaries from the remainder of that beneficiary's share of the trust." The court further found that Molly's adult adoption violated the spendthrift and good faith clauses in the will. The Morses appeal the trial court's order.

We review de novo a grant or denial of summary judgment, viewing the evidence and all reasonable conclusions and inferences drawn from it in the light most favorable to the nonmovant. City of St. Marys v. Reed , 346 Ga. App. 508, 508-509, 816 S.E.2d 471 (2018). Summary judgment is proper when there is no genuine issue of material fact and the movant is entitled to judgment as a matter of law. Id. at 508, 816 S.E.2d 471 ; see OCGA § 9-11-56 (c).

In three related enumerations, the Morses argue that the trial court erred in (a) denying their motion for summary judgment seeking a declaration that they are beneficiaries under Moi M. Monroe's 1967 will and (b) granting the Appellees’ motion for summary judgment seeking a declaration that the Morses are not beneficiaries under the will. The Morses also claim that the trial court erred in considering parol evidence to decide the Appellees’ motion for summary judgment. We agree with the Morses’ arguments for four reasons: (1) the Georgia adult adoption statute plainly and unambiguously permits Molly's adult adoption of the Morses; (2) only the four corners of Moi M. Monroe's will are examined to determine if adult adoptees are excluded, and Moi M. Monroe's will does not expressly exclude adult adoptees; (3) the trial court erred in adopting a subterfuge exception to the adult adoption statute; and (4) the spendthrift and good faith provisions in Moi M. Monroe's will do not preclude Molly from taking an action permitted by law and the will. We will discuss each of these principles in turn.

1. The adult adoption statute. The parties do not dispute that Georgia law controls the interpretation of the 1967 will or that the law in effect at the time Moi M. Monroe died governs the will. In fact, it is well settled in Georgia that, "in the absence of an...