Sabour v. Koller

546 P.3d 28

Kayleen K. SABOUR, Julie R. Mylander, and Daniel E. Koller, Appellees,

v.Mark A. KOLLER, Appellant.

No. 20220699-CA

Court of Appeals of Utah.

Filed February 29, 2024

First District Court, Logan Department, The Honorable Spencer D. Walsh, No. 190100295

Joseph M. Chambers, Logan, and J. Brett Chambers, Attorneys for Appellant

Stephen M. Sargent and Matthew J. Ball, Salt Lake City, Attorneys for Appellees

Judge David N. Mortensen authored this Opinion, in which Judges Michele M. Christiansen Forster and John D. Luthy concurred.

Opinion

MORTENSEN, Judge:

¶1 A family feud followed a sibling’s breach of his duties as the trustee of a family trust. After a bench trial, the district court granted the complaining siblings much of the relief they sought, including removing the trustee. The now-removed trustee raises claims of error on appeal having to do with witness disclosures, computation of damages, and admission of certain expert testimony. He further challenges whether sufficient evidence existed to justify his removal and specifically challenges the district court’s determination that he abused the discretion granted him as trustee. We reject all claims of error, either on their merits or on harmlessness grounds, and affirm.

BACKGROUND

¶2 Evan O. Koller (Grantor) established the Evan O. Koller Revocable Living Trust (Trust) in December 2006. Grantor’s six children were named beneficiaries.

¶3 After Grantor’s death, one of the children, Mark A. Koller, eventually became the trustee of the Trust in early 2016 after obtaining a declaratory judgment to that effect in district court. This court subsequently affirmed that decision. See In re Evan O. Koller Revocable Living Trust, 2018 UT App 26, ¶¶ 6-8, 31, 414 P.3d 1099. Three of the beneficiary children, Kayleen K. Sabour, Julie R. Mylander, and Daniel E. Koller (collectively, the Appellees) subsequently sued, alleging that Mark breached his duties as trustee in a variety of ways.¹

¶4 As relevant here, the Trust provided that its property was to be distributed as follows: (1) the Trust’s farmland could not "be sold and divided among the beneficiaries" but was "to be held in trust and maintained for the benefit of Grantor’s children and for future generations, unless all [the] beneficiaries unanimously [agreed], in writing, to sell or divide any part or all of the property" and (2) the remainder of the trust estate (nonfarmland assets) was to be divided equally among the six beneficiaries. Among other powers, the Trust granted the trustee discretion to hold and operate any property in the Trust and to withhold from distribution property that was "subject to conflicting claims."

¶5 According to the Appellees’ complaint, the Trust held significant assets, including (1) approximately 5,300 acres of farmland (the Farm); (2) 52% of the shares of the Koller Corporation, which owned and operated equipment used on the Farm; (3) residential lots in Idaho and a commercial lot in Utah (the Lots); and (4) "tangible and intangible personal property." The other 48% of the Koller Corporation shares was held by the six beneficiaries—8% each. The Appellees maintained that, following the passage of a resolution by the officers, the Koller Corporation was to be dissolved in 2016 but Mark, its president, did not follow through on the action.

¶6 The Appellees identified the following alleged breaches of duty on the part of Mark: (1) failing to distribute to the beneficiaries (a) Grantor’s personal effects, (b) the Trust’s share of the Koller Corporation (which Mark had neglected to dissolve), (c) the Lots, (d) lease payments, and (e) crop insurance payments; (2) failing to rent Grantor’s house; (3) "failing to provide complete, accurate or sufficient annual accountings"; (4) failing to "properly and prudently manage, sell and/or operate assets of the Trust including, but not limited to the Farm, the Lots" and Grantor’s house; (5) failing "to efficiently retire or eliminate debts and liabilities of the Trust"; and (6) paying himself "excessive and unnecessary compensation" for menial tasks.

¶7 The Appellees asserted eight claims for relief. For the first three claims—breach of fiduciary duty, violation of section 75-7-801 of the Utah Code,² and breach of the trust agreement—they sought monetary damages. In the fourth claim, they sought the removal of Mark as trustee. The fifth claim was a request for a full accounting of the Trust’s assets and activities. For the sixth claim, they sought rescission of all transactions involving alleged self-dealing by Mark and restoration to the Trust of all money to which Mark was not entitled. In their seventh claim, the Appellees asked for an injunction compelling Mark to perform his duties as trustee and barring him from committing a further breach of trust and from paying legal expenses from assets of the Trust. And in their final and eighth claim, they sought an award of reasonable attorney fees.

¶8 In their rule 26(a) initial disclosures, the Appellees did not include Mark’s name as a witness to be called. However, Mark was listed in the same document on a list of individuals "likely to have discoverable information supporting [the Appellees’] claims." The Appellees disclosed themselves as the only witnesses who would testify. And even though they were represented by counsel, the Appellees’ summaries of their expected testimony were identical (excepting name and pronoun) and spartan:

[Name] is expected to testify that (a) Mark A. Koller failed to administer the Trust prudently, expeditiously and impartially, and (b) [she or he] has been damaged by Mark A. Koller’s failures as trustee.

The Appellees also included a one-page listing of eight vague categories purporting to compute the monetary damages they had suffered.

¶9 Mark deposed the Appellees.

¶10 The Appellees retained and called at trial two expert witnesses: Expert 1, who addressed the fees Mark took as trustee, and Expert 2, who opined on the rental value of Grantor’s home.

¶11 Mark subsequently filed four motions for partial summary judgment and three motions in limine.

¶12 Mark’s first motion requested summary judgment because the Appellees had allegedly "failed to set forth both the fact of damages and a method of their calculations that was apparent in the initial disclosures." The court largely denied the motion, ruling that any inadequacy in the damages calculation was either harmless or for good cause.

¶13 The second motion sought summary judgment on the basis that some of the Lots were farmland, which, under the terms of the Trust, could not be sold without the unanimous consent of the beneficiaries. The court denied this motion because it concluded there was a dispute of material fact as to the nature of the Lots in question.

¶14 Mark’s third motion asked the district court to rule that the trust agreement gave Mark discretion regarding the retention of a gun collection, coin collection, shares of the Koller Corporation, the Lots, and various sources of revenue. The district court denied the motion after determining that a reasonable fact finder could conclude that Mark had "abused his discretion [with] respect to [the] distribution of the Trust assets by obtaining more than $150,000 for himself using Trust assets while only distributing $2,800 to the beneficiaries since becoming" trustee.

¶15 The fourth motion sought a determination that Mark could not be compelled to dissolve the Koller Corporation because only the company’s officers and not the sharehold- ers had approved the dissolution. The district court granted this motion.

¶16 The three motions in limine asked the court to exclude the testimony of certain witnesses. Two of these motions concerned the expert witnesses. With respect to Expert 1, Mark argued that the expert had failed to disclose all the data he relied on and had opined in his report on topics "clearly outside his expertise and field." The court denied the motion, ruling that Expert 1 did reveal the data he used and that Mark was free to raise an objection during Expert 1’s trial testimony if Mark believed Expert 1 was "exceeding the scope of his expertise" or there was not "sufficient foundation . for him to testify about certain topics." Regarding Expert 2, Mark argued that the expert’s appraisals were unreliable and did not comply with professional standards. The court denied the motion, stating that it was "in a position to either accept, reject, or partially accept the testimony" and that Mark would "have an opportunity to cross-examine," "provide rebuttal testimony," and "attack the credibility of that testimony."

¶17 In the third motion in limine, Mark asked the court, among other requests, to exclude the Appellees from "providing any opinions at trial that they could and should have disclosed," arguing that their "initial disclosures were grossly inadequate and vague to the point of being nondisclosures." More specifically, Mark stated,

Rule 26 requires much more than simply parroting conclusory complaint allegations. In no way did [the Appellees] disclose how they had been allegedly harmed. They did not disclose how they would testify the Trust was administered imprudently. They did not disclose how they would testify it was not administered expeditiously. They did not disclose how they would testify [Mark] had acted partially.

The district court denied this aspect of the motion, saying,

[Mark] did have an opportunity to depose all the [Appellees] in this case well in advance of trial and question them about these alleged failures and alleged damages that ... they claim they have suffered.

The Court finds that while the disclosures are brief they are in fact a summary of [the Appellees’] expected testimony.

The Court finds that this summary, in addition to [Mark] having had the opportunity to depose the [Appellees], has adequately prepared [Mark] for [the Appellees’] anticipated testimony.

¶18 After a four-day bench trial, the district...