Sandel v. Sandel

463 P.3d 510

Jeffrey W. SANDEL, Plaintiff-Appellant,

v.Jerry W. SANDEL, individually, and in his capacity as Personal Representative of the Estate of Nancy M. Sandel, and in his capacity as Trustee of the Jerry W. and Nancy M. Sandel Trusts, Defendants-Appellees.

No. A-1-CA-36397

Court of Appeals of New Mexico.

Filing Date: January 30, 2020

Bustos Law Firm, P.C., Dustin N. Slade, Of Counsel, Fernando M. Bustos, Lubbock, TX, for Appellant

Hurley Toevs Styles Hamblin & Panter PA, Gregory W. MacKenzie, Lalita Devarakonda, Albuquerque, NM, Gurley Law Firm, Curtis Gurley, Aztec, NM, for Appellees

OPINION

MEDINA, Judge.

{1} Plaintiff Jeffrey Sandel appeals the district court's order dismissing his complaint on the grounds that Plaintiff was collaterally estopped from bringing his tort claims and barred by the statute of limitations for bringing a claim under the New Mexico Uniform Probate Code (the Probate Code). We affirm.

BACKGROUND

{2} This action arises out of an intergenerational dispute over the proceeds of a marital trust. Plaintiff is the adult son of Defendant Jerry Sandel and his now-deceased wife, Nancy Sandel. Defendant and Mrs. Sandel jointly executed the Jerry W. and Nancy M. Sandel Revocable Trust (the Trust) in 1974. The Trust was amended and restated several times over the years, with the last amendments and restatements occurring in June 1995 (the 1995 Amendment), January 1999 (the 1999 Restatement), and May 2001 (the 2001 Restatement). Following Mrs. Sandel's death in 2001, Defendant, the personal representative of Mrs. Sandel's estate, informally probated her estate in August 2002. As we describe in detail below, Plaintiff first brought suit against Defendant, individually, as well as in his capacity as the personal representative of Mrs. Sandel's estate and trustee of the Trust in federal court, and when those claims were dismissed, Plaintiff then filed this action.

The Federal Lawsuit

{3} In October 2015, fourteen years after Mrs. Sandel's death, Plaintiff filed suit in federal district court (the Federal Suit) against Defendant, alleging fraud, breach of trust, and conversion. Plaintiff's complaint alleged that under the original terms of the Trust, following the deaths of both Defendant and Mrs. Sandel, the Trust principal was to be distributed in equal parts to Plaintiff and his two siblings over the course of time until they reach thirty-five years of age, at which time they could demand their remaining full share of the marital trust principal. However, the Trust was amended in 1995 and then amended and restated in 2001 in such a way to ultimately eliminate Plaintiff's right to demand the principal of the Trust—which Plaintiff claimed was in the millions of dollars. A handwriting expert, who subsequently reviewed the 1995 Amendment and 2001 Restatement, concluded that Mrs. Sandel's signatures on two instruments were forged. The complaint further alleged that Defendant: (1) knew that Mrs. Sandel's signature was forged on the two instruments; (2) intentionally misled Plaintiff by telling him that Defendant and Mrs. Sandel "modified the terms of [Mrs. Sandel's] testamentary documents such that Plaintiff ... had no inheritance rights, present or future, to any of the assets in [Mrs. Sandel's] estate[;]" and (3) fraudulently concealed the existence of the Trust by telling Plaintiff in March 2009 and February 2010 that "there was no trust in which Plaintiff ... had any interest." As a result of Defendant's representations, Plaintiff claimed that he did not contest the validity of the Trust or the disposition of Mrs. Sandel's estate until he was able to obtain a copy of the 1995 Amendment and 2001 Restatement through discovery in a separate lawsuit.¹

{4} Defendant filed a motion for judgment on the pleadings, which the federal district court granted as to the counts for fraud, breach of trust, and conversion. Sandel v. Sandel , No. CV-15-924 MCA/KK, 2016 WL 7535356 (D.N.M. July 18, 2016). In doing so, the federal court found that those claims were foreclosed by Wilson v. Fritschy , 2002-NMCA-105, 132 N.M. 785, 55 P.3d 997, which "established that ‘when the interference with inheritance takes place in the context of a will or other testamentary device that can be challenged in probate,’ the plaintiff must utilize the Probate Code, rather than tort law, to obtain relief." Sandel , 2016 WL 7535356, at *1 (quoting Wilson , 2002-NMCA-105, ¶ 12, 132 N.M. 785, 55 P.3d 997 ). Although the federal district court dismissed Plaintiff's tort claims, it noted that Plaintiff could potentially pursue his fraud claim under NMSA 1978, Section 45-1-106(A) (1975), a Probate Code provision that allows any person to obtain "appropriate relief" within two years of discovering fraud "perpetrated in connection with any proceeding or in any statement filed under the ... Probate Code or ... fraud ... used to avoid or circumvent the provisions or purposes of the code." See Sandel , 2016 WL 7535356, at *1.

The State Lawsuit

{5} Following the dismissal of the Federal Suit, Plaintiff filed the instant action in state district court in August 2016. Plaintiff's complaint alleged fraud, breach of trust, and tortious interference with an expected inheritance based largely on the same facts he alleged in the Federal Suit. Plaintiff further alleged that the same handwriting expert who reviewed the 1995 Amendment and 2001 Restatement believed that the 1999 Restatement was likely forged as well. In addition to the above causes of actions, Plaintiff contended that Defendant breached his duty as personal representative to Mrs. Sandel's estate by intentionally failing to inform Plaintiff of the estate's informal probate, which Plaintiff claimed he did not learn of until 2009. Although Plaintiff admitted learning in 2009 that Mrs. Sandel's estate had been probated in 2002, the complaint alleged that Plaintiff did not discover the fraud until 2015.

{6} In response, Defendant filed a counterclaim against Plaintiff for malicious abuse of process. Additionally, Defendant moved to dismiss for failure to state a claim, arguing that the Federal Suit barred Plaintiff's tort claims under the doctrine of res judicata. Defendant also argued that Plaintiff's claims were time-barred under NMSA 1978, Section 46A-6-604(A) (2007), which provides that "[a] person may commence a judicial proceeding to contest the validity of a trust that was revocable at the settlor's death within the earlier of ... three years after the settlor's death; or ... one hundred twenty days after the trustee sent the person a copy of the trust [along with a notice containing certain information]." Alternatively, Defendant argued that Plaintiff's claims were time-barred because Plaintiff knew or should have discovered the alleged fraud in 2009.

{7} Defendant attached several exhibits in support of his motion, including multiple affidavits from his estate planning attorney in which the attorney described his personal involvement with drafting the provisions of the Trust—including the 1995 Amendment, 1999 Restatement, and 2001 Restatement—as well as his involvement with the informal probate of Mrs. Sandel's will. Defendant's attorney also attested that he met with Plaintiff on June 5, 2002, to go over Mrs. Sandel's will and the disposition provisions of the Trust and that he sent Plaintiff a complete copy of Mrs. Sandel's will and the 2001 Restatement on April 9, 2009. Additionally, Defendant attached a copy of Mrs. Sandel's will devising her entire estate (besides personal and household effects) to the Trust, as well as copies of the 1995 Amendment, 1999 Restatement, and 2001 Restatement—including the unnotarized signature pages with Mrs. Sandel's purportedly forged signatures.

{8} In addition to the above, Defendant attached two other exhibits to the motion. One was a copy of an email Plaintiff sent to Defendant's attorney in 2009 in which Plaintiff wrote:

I received a copy of the [Trust] ... you sent me on April 9, 2009 and of course I plan on challenging it in court. I have retained [an attorney] in Farmington and have sent a copy to my family law attorney in California ... and given him permission to give a copy of the trust to other attorneys that may be interested in representing me. As you know [Defendant] has repeatedly lied to me about the [T]rust and on numerous occasions has told me there is no trust and then later told me that all of my mother's trust is in his name. ... [Defendant] has constantly defamed me and lied to me about the [T]rust that was originally set up for my comfort, support, and welfare which instead has been used to manipulate, defame, abuse, and hurt me.... [Defendant] is liable for damages that have been caused by his neglect and mishandling of an estate that he pretends to be the sole owner of which is not true. I will personally sue your client for damages and I will win.

The other was a short, six-paragraph affidavit Plaintiff submitted in the Federal Suit in which Plaintiff admitted sending an e-mail in 2009 threatening to challenge the Trust in court. In that affidavit, Plaintiff attested that "[i]n or around 2001, shortly after the death of [Mrs. Sandel], ... Defendant ... told [Plaintiff] that he and [Mrs. Sandel] had modified the terms of [her] testamentary documents such that [Plaintiff] had no inheritance rights, present or future, to any of the assets in [Mrs. Sandel's] estate" and that Defendant told Plaintiff in 2009 and 2010 that "there was no trust in which [Plaintiff] had any interest." Plaintiff also attested that he did not discover the purported forgeries until 2015 because Mrs. Sandel's signatures "on the 1995, 1999, and 2001 [T]rust instruments here in dispute looked similar enough to hers that [Plaintiff] did not question them when [he] saw them." In sum, over sixty pages of supporting documents were attached to Defendant's motion to dismiss.

{9} Plaintiff responded, setting forth his "separate statement of undisputed facts," to which h...