Warner v. Ford

680 S.W.3d 439

2023 Ark. App. 537

Tracy WARNER, Appellant

v.Richard FORD, Appellee

No. CV-22-145

Court of Appeals of Arkansas, DIVISION IV.

Opinion Delivered November 29, 2023

APPEAL FROM THE PULASKI COUNTY CIRCUIT COURT, ELEVENTH DIVISION [NO. 60CV-16-4194], HONORABLE PATRICIA JAMES, JUDGE

Tinsley & Youngdahl, PLLC, Little Rock, by: Jordan B. Tinsley, for appellant.

Schwander Law Firm, by: L. Howard Schwander III, Little Rock; and James, House, Swann & Downing, P.A., Little Rock, by: Patrick James, for appellee.

BRANDON J. HARRISON, Chief Judge

₁This is an appeal from proceedings over a life estate in Bobbie Warner’s one-half interest in what we will call the "Property": twenty-three acres on Lawson Road in Pulaski County. In February 2013, Bobbie created a revocable trust with herself as original trustee, with instructions to her successor trustee (her son Tracy Warner), to distribute a life estate in her interest in the Property to Richard Ford, the appellee here, if he survived her. Ford lived with Bobbie on the Property and owned the other one-half interest. The remainder was for Bobbie’s four children as tenants in common if they survived her. All of them did. Bobbie amended the trust—and that disposition—on March 28. She died weeks later, May 12. We will refer to the first trust instrument as the "Original Trust," the second instrument as the "Amendment," and the amended trust (or the original trust when the version doesn’t matter) as the "Trust."

₂Determining Bobbie’s intent requires us to read the relevant Trust provisions in the context of the whole. E.g., Fisher v. Boling, 2019 Ark. App. 225, 575 S.W.3d 592. But our analysis centers on paragraph 2 of the Amendment:

Specific Distribution of Residential Property. A life estate in the Trustee’s interest in the house and approximately 23 acres (including the 5 rental properties) in Pulaski County, Arkansas, (including a concurrent obligation to pay insurance, taxes, and maintenance on such property) which the Trustor occupies as her residence at the time of the Trustor’s death shall be conveyed to RICHARD FORD, if he shall survive the Trustor. If this property at the time of the Trustor’s death is subject to any mortgage, then this conveyance shall be subject thereto and the beneficiary shall not be entitled to have the obligation secured by such mortgage paid out of the Trust Estate or the Trustor’s general estate. If, in Trustee’s sole and unfettered discretion, RICHARD FORD commits waste of such property, then such life estate shall terminate, and RICHARD FORD shall have no further interest in Tnistor’s share of such property.

At this point, the reader might expect an appeal about whether Ford committed waste or perhaps about what standard should apply. We did too. Actually, the parties agreed Ford’s life estate was subject to the waste standard above, and no one minds now whether his life estate terminates.

The core issue on appeal is whether Bobbie intended the life estate and remainder interests in the Property to be conveyed to Ford and the remaindermen immediately (as the circuit court found) or kept in trust indefinitely (as Tracy had done). That matters to Tracy because he contends in other litigation that his siblings forfeited their interests to him under an in terrorem provision. It matters to Ford because those siblings have conveyed those interests to him.¹

₃The appeal can be understood with relatively little of the procedural history, which is still a lot. Much of it is relevant only because Tracy contends, under a number of theories, that we should hold Ford to descriptions of the interest as "trust owned" that he made, overlooked others making, or failed to appeal earlier in these proceedings—even if the circuit court correctly concluded at the end that Tracy should have conveyed it at Bobbie’s death.

I.

The case started with Tracy’s request to inspect the Property for waste. He filed an eight-paragraph petition for declaratory judgment in July 2016 captioned In the Matter of Bobbie D. Warner Revocable Trust dated February 9, 2013. He identified himself as the petitioner, quoted paragraph 2 of the Amendment (attaching the Trust instruments as exhibits), and asserted that he "as Trustee, is authorized, in his sole and unfettered discretion as noted hereinabove, to determine if [Ford] has committed waste with respect to trust-owned property" but that Ford had refused to give him access. Ford filed a timely response admitting Tracy had the right to determine whether he was committing waste. But he objected to Tracy’s personal inspection because of Tracy’s alleged history of threatening or violent conduct. Ford attached correspondence with Paul White, Tracy’s counsel, including a May 2016 email in which White threatened that if the parties could not agree on an inspection, "the only choice [Tracy] has is to file the petition seeking to enforce the ‘in terrorem’ clause," which was "set up to disinherit a beneficiary who ‘objects in any manner to any action taken or proposed to be taken in good faith by the Trustee.’" At that point, Tracy would "most likely seek the sale of the property through a partition action."

Ford also attached a copy of a petition filed in August 2016 in Saline County, Ricky Threlkeld et al. v. Tracy Lee "Skip" Warner, Case No. 63CV-16-716 (Saline County I), in which ₄Tracy’s siblings asked the circuit court to remove Tracy as trustee because, more than three years after Bobbie’s death, he had given no accounting and made none of the distributions of real property Bobbie specified should be made at her death. Ford moved the Pulaski County Circuit Court to hold this action in abeyance until the Saline County proceedings finished.

The Pulaski County docket was quiet for two years. In July 2018, Tracy moved for a physical inspection under Rule 34. In the motion, he alleged in relevant part that "[t]he Trustee, [Tracy], and the other beneficiaries under the Trust," retained a one-half interest in the Property pursuant to the Trust. Ford filed a response admitting "that the beneficiaries of the trust estate have a one-half interest in the whole of the property[,]" but he described it as "reversionary in nature" and determinable on the termination of his life estate. To the extent Tracy alleged that the beneficiaries’ interest "is other than anything conveyed to [Ford] via the trust and title," Ford denied the allegations.

The circuit court entered an order in February 2019 permitting Tracy to conduct an inspection in the company of a Pulaski County sheriff’s deputy. Tracy finds significant that the order refers to the Property as "trust-owned" and Ford’s counsel signed it beneath the word "Approved" under the block that identified Tracy’s counsel as drafter.

In March 2020, Tracy filed an amended petition alleging waste at the Property. He sought a declaration that Ford’s life estate had terminated, that Ford "should have no further interest in the Trust’s ownership" in the Property, and that it should be sold at auction. Ford responded, among other things, that "the trust should have been dissolved and deeds issued to all beneficiaries," including Ford. Years of pleadings, amended pleadings, counterpleadings, and amended counterpleadings ensued. On 16 February 2021, Ford filed a "Respondent’s Petition for Declaratory Judgment" asserting the Trust should have been distributed at Bobbie’s ₅death and should be dissolved and terminated nunc pro tunc. Nine days later, he pleaded in a "Second Counter-Petition for Declaratory Judgment" that he had acquired the "future interests" in the Property from Tracy’s siblings, and asked the court to declare the parties’ ownership rights. Tracy moved to dismiss those petitions. The parties traded arguments—most of them meritless—about whether to dismiss them. The circuit court denied the motions to dismiss in July 2021.

The circuit court set Ford’s petitions to be heard 6 October 2021—the only hearing we’ll discuss. One day before the hearing, Tracy filed an amended motion to dismiss the petitions. He attached two filings from the Saline County Circuit Court as exhibits.

One exhibit is an order filed 13 August 2018 in Saline County I, the action by Tracy’s siblings to remove him as trustee. In it, the court contemplates dismissing the petition without prejudice on the parties’ stipulation that they have received deeds to the properties specified in the Trust.² The order finds that "[t]he Trustee remains responsible as the owner of the life estate of John Ford as it remains in the property of the late Bobbie D. Warner."

The other exhibit from a Saline County proceeding was a "Motion for Joinder and Dismissal Pursuant to ARCP 12(b)(8)" Ford had filed in September 2021 in a Saline County case styled In re Bobbie D. Warner Revocable Trust dated February 9, 2013, Case No. 63CV-21-298 (Saline County II). We don’t have the petition. We infer that Tracy asked that court to subvert the relief Ford petitioned for in Pulaski County by finding that the siblings’ conveyances to Ford violated the Trust’s in terrorem provision.

₆Ford’s motion in Saline County II alleged that he was an indispensable party who should have been joined under Rule 19. Tracy argued the same in Pulaski County about his absent siblings. As we’ve hinted, the case is a mess.

The Pulaski County hearing went forward. The circuit court ruled from the bench that the Trust’s interest in the Property should have been distributed at Bobbie’s death—which, as we will get to shortly, is correct. It entered an order November 9 finding that "each of the four children received a vested one-eighth (1/8) undivided interest in the trust property upon the death of the Trustor, subject to the life estate of Richard Ford." The court ordered Tracy to execute all instruments needed to convey those interests.

Tracy, who had gone through several lawyers already, had fired one more by then. He filed a timely pro se motion for new trial or reconsideration ...