IN THE MATTER OF THE CORDELIA STEFFES TRUST, Plaintiff-Appellee, vs. JUSTIN A. HOFFMAN and JOHN F. FOUST, Trustee and/or FRANKLIN TRUST INTEREST, Defendants-Appellants, ALDEN STEFFES, and/or M. LIFE FOUNDATION, and WHITFIELD FINANCIAL CORPORATION, Defendants.
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IN THE COURT OF APPEALS OF IOWA
No. 7-576 / 06-0607
Filed November 29, 2007
IN THE MATTER OF THE CORDELIA
STEFFES TRUST,
Plaintiff-Appellee,
vs.
JUSTIN A. HOFFMAN and
JOHN F. FOUST, Trustee and/or
FRANKLIN TRUST INTEREST,
Defendants-Appellants,
ALDEN STEFFES, and/or
M. LIFE FOUNDATION, and
WHITFIELD FINANCIAL CORPORATION,
Defendants.
________________________________________________________________
Appeal from the Iowa District Court for Audubon County, Jeffery Larson,
Judge.
Justin Hoffman and John Foust, trustee of the Franklin Trust, appeal from
a ruling declaring null and void the deeds to certain property. AFFIRMED.
2
John Martens of Terrill, Martens & Richardson Law Office, Ames, for
appellant Justin Hoffman.
John Foust, Des Moines, pro se.
Jeffrey Minnich and Frank J. Comito of Neu, Minnich, Comito, & Neu,
P.C., Carroll, for appellee Cordelia Steffes Trust.
Robert W. Peters of Robert W. Peters, P.C., Carroll, for appellee James
Daniels, beneficiary of the Steffes Trust.
Heard by Sackett, C.J., and Vaitheswaran and Baker, JJ.
3
BAKER, J.
Justin Hoffman, individually, and John Foust, as trustee of the Franklin
Trust, appeal from a ruling declaring null and void the deeds to certain property.
We affirm.
Background Facts and Proceedings.
We briefly detail the extensive procedural and factual background of this
dispute. Alden Steffes is the youngest son of Frank and Cordelia Steffes. Frank
died in 1982.
Alden has two sisters and one brother: Leona Frazer, Diana
Fischer, and Blane Steffes. Frank and Cordelia owned several plots of land in
Iowa that they farmed. Alden was the only child that carried on in the family
farming operation. Frank and Cordelia began making substantial transfers of
their land to Alden at some point.
Alden married Sharon in 1972. They farmed the land and raised their
children on it. In 1997, Alden and Sharon dissolved their marriage. As part of
the property settlement in that case, Alden was awarded two farms, which are
the subject matter of this action, and Sharon was awarded two farms, neither of
which are the subject of this action.
In 1998, after other members of the family apparently became concerned
that Sharon was taking former family property, Cordelia filed an action against
Alden seeking the creation of a trust over the property she and Frank had
transferred to him. The district court subsequently determined that the transfers
of the Audubon and Carroll County farms to Alden were merely to him as a
trustee with Cordelia holding the beneficial ownership to the real estate. The
4
court entered a decree ordering the properties be titled in trust as “Alden Steffes,
trustee of the Cordelia Steffes Trust.” No appeal was taken from this ruling.
While the above case was pending, Alden transferred a farm in Carroll
County and an Audubon County farm by quitclaim deed to a revocable trust
called M Life Foundation, a trust for which Alden served as trustee. Later, in
1999, M Life transferred the Audubon farm by real estate contract to Franklin
Trust Interests. John Foust is the trustee of Franklin Trust. On March 25, 2000,
M Life, with Alden signing as trustee, executed a quitclaim deed of the Carroll
County farm to Justin Hoffman.
On January 16, 2001, Cordelia filed the current action to recover the
Carroll County and Audubon County farms, arguing that the transfers from Alden
to M Life, and then from M Life to Franklin Trust and Justin Hoffman, were
fraudulent. Cordelia obtained default judgments against Alden and M Life and
was subsequently granted a summary judgment in her favor against Franklin
Trust and Hoffman.
However, upon appeal this court reversed the grant of
summary judgment, concluding there remained genuine issues of material fact
with regard to the adequacy of consideration. In re Estate of Steffes, No. 4-284
(Iowa Ct. App. Aug. 26, 2004). We therefore remanded for further consideration.
Upon remand, the court held a trial. It held that the transactions between
Alden and Foust and between Alden and Justin Hoffman were fraudulent. It
therefore deemed null and void the quitclaim deed from Alden to Hoffman and
set aside the real estate contract between Alden and Foust. It is from this ruling
that the present appeal was taken by Foust and Hoffman.
5
We must further note that, meanwhile, in September of 2002, in a
separate proceeding Alden’s three siblings sued Sharon contending that Alden
and Sharon were farming under an oral constructive trust created by Frank and
Cordelia for plaintiffs' benefit. They claimed that two Carroll County farms that
Sharon received in the 1997 dissolution decree were held in trust and should be
conveyed to plaintiff Lance Levis as trustee of the Cordelia Steffes Trust. The
district court found for plaintiffs and ordered Sharon to convey to the trust the two
farms and certain proceeds and rents therefore. This court reversed, finding
there was “no equity in imposing a trust on the property Sharon took from the
marriage.” Levis v. Steffes, No. 04-1117 (Iowa Ct. App. Jan. 19, 2006). We
therefore determined there was no constructive trust over the Carroll County
land.
The decision on this prior appeal came down days after the trial in this
matter, but before the trial court had issued a decision.
Arguing that Levis
constituted “new evidence” that rendered the plaintiff trust nonexistent, the
defendants sought to reopen the record to have the court take into account our
decision that no constructive trust was created. The court summarily denied this
request, stating simply the opinion was “not relevant” to the current proceedings.
Appeal.
Now on appeal, Foust and Hoffman both re-assert that the court erred in
failing to determine Levis to be issue preclusive or res judicata on the instant
matter. They assert that Levis, in effect, extinguished the Trust that now purports
to be the plaintiff in this action and therefore places into question the court’s
jurisdiction in this case because the Trust never had standing to bring a lawsuit.
6
The doctrine of issue preclusion prevents a party to a prior action in
which a judgment has been rendered from re-litigating in a subsequent action
issues raised and resolved in the previous action.
Hunter v. City of Des
Moines, 300 N.W.2d 121, 123 (Iowa 1981). Before issue preclusion applies,
four prerequisites must be established:
(1) The issue concluded must be identical;
(2) The issue must have been raised and litigated in the prior
action;
(3) The issue must have been material and relevant to the
disposition of the prior action; and
(4) The determination made of the issue in the prior action must
have been necessary and essential to the resulting judgment.
Upon consideration of these factors, we conclude our opinion in Levis is
not preclusive of the issue of the viability or existence of the plaintiff trust in this
case. First, the issues are not identical in the two cases. At its root, Levis
involved the question of whether equity required the court to invalidate a transfer
of land made to Sharon Steffes in her dissolution decree. This case involves the
fraudulent nature of certain transfers of land from Alden to Foust and Hoffman.
Moreover, the specific farms at issue in Levis are not at issue in the present
case. Further, the December 2000 decree entered in Cordelia’s action against
Alden determined that the transfers of the Audubon and Carroll County farms to
Alden were merely to him as a trustee with Cordelia holding the beneficial
ownership to the real estate. Thus, a Cordelia Steffes Trust was established,
and this ruling was not appealed. This December 2000 decree which involved
the same land as is involved in this action, and which involved Alden as a party,
would appear to be more on all fours with this case than Levis.
7
Having rejected the claim that the Steffes Trust is either an improper party
or lacks standing, we thus proceed to address the merits of this case. Upon our
de novo review of the district court’s ruling, see In re Estate of Clark, 357 N.W.2d
34, 37 (Iowa Ct. App. 1984), we affirm. The evidence establishes that Alden was
attempting to dispose of and hide property from his family, and that he did so
after learning that his family would be attempting to recover the farms.
He
received substantially less than market value for the farms. Hoffman and Foust
were aware of Alden’s intentions and participated willingly and knowingly in these
sham transactions.
The district court’s order setting aside the transfers was
proper and is therefore affirmed.
AFFIRMED.
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