SMITH v. LOPP

SMITH v. LOPP
2020 OK CIV APP 24
Case Number: 117365
Decided: 08/30/2019
Mandate Issued: 06/17/2020
DIVISION IV
THE COURT OF CIVIL APPEALS OF THE STATE OF OKLAHOMA, DIVISION IV

CAMERON SMITH, individually and as Personal Representative of the Estate of Gregory Michael Smith, deceased, Plaintiff/Appellant,
v.
JULIE LOPP, individually and in her capacities as Trustee of the Sharon A. Smith Living Trust and Personal Representative of the Estate of Gary Don Smith, deceased; THE SHARON A. SMITH LIVING TRUST; SHARON A. SMITH; JONATHAN SMITH; and SONJA SMITH, Defendants/Appellees.

APPEAL FROM THE DISTRICT COURT OF
CLEVELAND COUNTY, OKLAHOMA

HONORABLE THAD BALKMAN, TRIAL JUDGE

AFFIRMED IN PART, REVERSED IN PART,
AND REMANDED FOR FURTHER PROCEEDINGS

Robert P. Powell, C. Scott Jones PIERCE COUCH HENDRICKSON BAYSINGER & GREEN, L.L.P., Oklahoma City, Oklahoma, for Plaintiff/Appellant

Sara E. Potts, DOERNER, SAUNDERS, DANIEL & ANDERSON, L.L.P., Oklahoma City, Oklahoma, and
David J. Looby, Sara E. Daly, CONNER & WINTERS, LLP, Oklahoma City, Oklahoma, for Defendants/Appellees

DEBORAH B. BARNES, PRESIDING JUDGE:

¶1 Plaintiff Cameron Smith, individually and as Personal Representative of the Estate of Gregory Michael Smith, appeals from an order of the trial court filed in August 2018 granting Defendants' motion to dismiss Plaintiff's petition. The August 2018 order states that "Plaintiff's Petition . . . is hereby DISMISSED for lack of subject matter jurisdiction, pursuant to 12 O.S. 2011, § 2012(b)(1), and for failure to state a claim, pursuant to 12 O.S. 2011, § 2012(b)(6)." Plaintiff also appeals from the trial court's order filed in February 2019 awarding attorney fees to Defendants. Based on our review, we affirm in part, reverse in part, and remand for further proceedings.

BACKGROUND

¶2 Plaintiff is the grandson of Gary Don Smith (GDS) and Sharon A. Smith (SAS). Plaintiff asserts in his petition that GDS died intestate in March 2015, and that GDS was survived by his adult children: Defendant Julie Lopp; Defendant Jonathan Smith; and Gregory Michael Smith (GMS), who is Plaintiff's father and who subsequently died intestate in December 2016. Plaintiff asserts he is the only heir of GMS.

¶3 Plaintiff also asserts GDS was survived by his wife, SAS, but that she is "suffering from Alzheimer's disease and dementia and . . . unable to care for herself." He asserts that, "[s]hortly following the death of GDS, [Defendant Julie Lopp] engaged an attorney to initiate probate proceedings for [the Estate of GDS] and prepare documents purporting to create the Trust, Durable Power of Attorney ('POA') and Last Will and Testament for SAS, with all giving Lopp exclusive control over the Trust and the affairs of SAS and the Estate of GDS." He asserts that "[o]n April 15, 2015, even though SAS was suffering from Alzheimer's and dementia and unable to make decisions on her own behalf, Lopp had SAS execute the Will, POA and documents purporting to create the Trust."

¶4 As set forth in Plaintiff's petition, the above-mentioned probate proceeding for the Estate of GDS was initiated in Cleveland County, Case No. PB-2015-134, and a probate proceeding was also initiated for the Estate of Plaintiff's father, GMS, in Cleveland County, Case No. PB-2017-33. On April 27, 2018, Plaintiff filed documents in both probate proceedings, including a "General Inventory and Appraisement" in Case No. PB-2017-33 in which he, as personal representative of the Estate of GMS, asserted:

The Estate [of GMS] has an interest in real property from the Estate of [GDS], No. PB-2015-134 . . . . However, there are conflicting inventory and appraisements filed in [the probate of the Estate of GDS] . . . [which] is still pending. An updated inventory will be submitted once the interests from that estate have been determined and distributed.1

 

Also on April 27, 2018, Plaintiff filed a "Motion for Accounting" in the probate proceeding for the Estate of GDS, requesting that the district court order Ms. Lopp (i.e., the personal representative of the Estate of GDS) "to provide an accounting for all activity and the status of all real and personal property of [GDS] and activities undertaken on behalf of the [GDS] Estate."

 

¶5 In the present action, Plaintiff alleges Ms. Lopp, as Trustee of the Trust of SAS, "entered into an agreement on behalf of the Trust to sell [a certain residence in Oklahoma City (the Residence)] to her brother Jonathan Smith and his wife Sonja Smith for $150,000.00," a price which Plaintiff asserts is at least $41,000 below market value. Plaintiff also asserts that a $30,406.32 benefit in the form of "'Gift Equity' and closing costs . . . resulted in a windfall and preference in favor of Jonathan and Sonja Smith of at least $71,406.52."

¶6 Plaintiff also takes issue with a certain estate sale arranged by Ms. Lopp as Trustee. Plaintiff asserts Ms. Lopp entered into an agreement with an "estate liquidation company to carry out an estate sale on May 6 and 7, 2017, to liquidate the contents of the Residence, with all proceeds to go to the Trust." Plaintiff asserts he "became concerned that items listed in advertisements on the internet were potential assets of the GDS Estate, the GMS Estate and/or Smith Construction, a partnership that provided high quality carpentry services that [GMS] and [GDS] operated." He asserts that despite objecting to the estate sale and requesting that it be delayed, the sale was nevertheless held.

¶7 Plaintiff also asserts in his petition that he has unsuccessfully

made numerous requests for further documentation from Lopp about potential assets of the GDS Estate in which the GMS Estate may have an interest, including details regarding former assets and effects of GDS that are now claimed to be part of the Trust and the Trust document itself. Plaintiff has requested that Lopp provide a full accounting of the assets and activity involving the GDS Estate and Trust so that Plaintiff can determine assets or potential assets in which he and the Estate of GMS may have an interest.

¶8 Plaintiff has set forth six claims in his petition:

1) He requests a declaratory judgment finding that SAS "did not have the capacity . . . to understand or approve the Trust, POA and Will," and "set[ting] aside the Trust, POA and Will on the grounds of incapacity . . . ." 2) He asserts Ms. Lopp breached "her fiduciary duty to Plaintiff and other persons with an interest in assets of the GDS Estate and the Trust" by undertaking actions "including but not limited to: a) failing to have a guardian appointed for SAS, b) the unlawful sale of the Residence at a loss, c) engaging and participating with a beneficiary of the Trust in mortgage fraud in violation of federal and state consumer finance laws in connection with the sale of the Residence, d) failing to provide an accounting for the disposition of assets and activities undertaken on behalf of the GDS Estate and the Trust, and f) continuing to represent the Estate of GDS and the Trust even though there is an impermissible conflict of interest between the two." 3) He asserts Ms. Lopp's "actions on behalf of SAS and the GDS Estate are in breach of her duties as trustee for the Trust[.]" 4) He asserts the sale of the Residence is void and should be rescinded because SAS lacked capacity to create the Trust and execute the POA and Ms. Lopp lacked authority to sell the Residence. 5) He requests that "[Ms.] Lopp be removed as Trustee and that a guardian and/or successor Trustee be appointed by the Court for SAS and/or the Trust." 6) He asserts that he is entitled to an accounting concerning the Trust, the Trust assets and activities of Ms. Lopp as Trustee, including the disposition of assets and funds.

¶9 After filing a "Qualified Special Entry of Appearance and Reservation of Time and Defenses," Defendants filed a joint motion to dismiss Plaintiff's petition. Defendants point out in their motion to dismiss that Plaintiff alleges in his petition that he is a "contingent beneficiary of the [SAS] Living Trust." Defendants assert, among other things, that Plaintiff, as a mere contingent beneficiary of the Trust, is not a necessary party "under the Oklahoma Trust Act, 60 O.S. 2011, § 175.1, et seq., and dismissal is . . . appropriate pursuant to 12 O.S. 2011, § 2012(b)(1)" because the court lacks subject matter jurisdiction over Plaintiff's claims, claims which essentially constitute an attack by one with an unvested interest in a trust against the actions of its trustee.

¶10 In Plaintiff's response, he asserts "Defendants have waived their right to file a motion to dismiss" by filing the above-mentioned special appearance and reservation of time and defenses. Plaintiff further asserts, among other things, that "contingent beneficiaries clearly have standing to pursue an action for breach of trust under Oklahoma law[.]"

¶11 At the hearing on Defendants' motion to dismiss, counsel for Defendants asserted that under the Oklahoma Trust Act, "only those individuals who have vested interests, which means they exist not in the future but now, may challenge the trust administration or bring breaches of trust actions on behalf of themselves for the breach of fiduciary duty by a trustee. . . . It isn't until [SAS] dies and . . . it is also not until all the contingent beneficiaries survive [SAS], that their interests become fully vested and they may bring actions on behalf of their own protected interests[.]" Counsel for Defendants stated that the Trust "is still revocable because [SAS] is still alive."

¶12 Counsel for Defendants also stated that the Residence is not part of the Estate of GDS -- i.e., it is "non-probate" -- because the Residence "was actually held in joint tenancy with right of survivorship between [GDS] and [SAS]. When [GDS] died, it automatically reverted, by operation of law, no probate action required, to [SAS's] full ownership and . . . possession." Counsel for Defendants also asserted that

the other assets in the [GDS] estate were also non-probate. And those were, I believe, either two or three payable on death bank accounts. The other assets . . . that are probate, we've provided accountings of those . . . . We've got no objection, from my understanding of the correspondence between counsel, about what assets are probate assets of [GDS] that would be inherited per stirpes by [Plaintiff] as . . . an heir to [GMS]. The only assets that were transferred into the trust were the non-probate assets. Everything else is still outside and still pending the finalization of the probate matter for [GDS]. But the [Residence], the bank accounts, which then funded the trust res . . . . [Those assets or the proceeds from the sale of those assets are] completely paying for all of [SAS's] care in the residential facility and for her medical needs . . . . So as far as the issue regarding the assets, . . . we have no problem with the probate assets being adjudicated in probate. It's the non-probate assets that are at issue.

¶13 Counsel for Plaintiff stated that he "moved for an accounting of the estate" in the probate proceedings for the Estate of GDS, but asserted,

our problem is, is that Ms. Lopp because she was the personal administrator for the estate of [GDS], and also the trustee for [SAS], . . . she had control over all of the assets and so she got to pick and choose. And she can say, These were the assets, . . . this was the property. And so she's disclosed some, but we don't know if that's all and we have no way to verify that without getting an accounting of the trust, which we are actually entitled to as a contingent beneficiary. We are entitled to find out the information so we understand the nature of what our interest may be and how we can protect it.

¶14 The trial court stated at the hearing that Plaintiff as a "contingent beneficiary doesn't have [the] rights that [he is] seeking to assert through [his] petition." As set forth above, the trial court granted Defendants' motion to dismiss in its order filed in August 2018 on the basis of a "lack of subject matter jurisdiction, pursuant to 12 O.S. 2011, § 2012(b)(1)," and also "for failure to state a claim, pursuant to 12 O.S. 2011, § 2012(b)(6)."

¶15 Defendant then filed a motion for attorney fees which the trial court also granted. The trial court, in its order filed in February 2019, awarded attorney fees to Defendants in the amount of $13,681.50, and costs in the amount of $232.67.

¶16 From the August 2018 order, as well as from the February 2019 order, Plaintiff appeals.

STANDARD OF REVIEW

¶17 The following standard of review is applicable to this appeal:

A motion to dismiss is generally viewed with disfavor, and the standard of review before this Court is de novo. When evaluating a motion to dismiss, this Court examines only the controlling law, taking as true all of the factual allegations together with all reasonable inferences that can be drawn from them. The party moving for dismissal bears the burden . . . to show the legal insufficiency of the petition.

Ladra v. New Dominion, LLC, 2015 OK 53, ¶ 8, 353 P.3d 529 (citations omitted).2 "If relief is possible under any set of facts which can be established and are consistent with the allegations, a motion to dismiss should be denied." Miller v. Miller, 1998 OK 24, ¶ 15, 956 P.2d 887 (footnote omitted). At the pleading stage,

[a] plaintiff is required neither to identify a specific theory of recovery nor to set out the correct remedy or relief to which he may be entitled. If relief is possible under any set of facts which can be established and is consistent with the allegations, a motion to dismiss should be denied.

Darrow v. Integris Health, Inc., 2008 OK 1, ¶ 7, 176 P.3d 1204 (footnotes omitted). A question of statutory interpretation is also presented on appeal, and questions of statutory interpretation are reviewed de novo as well. See Welch v. Crow, 2009 OK 20, ¶ 10, 206 P.3d 599 (Questions of statutory construction "are questions of law that we review de novo and over which we exercise plenary, independent, and non-deferential authority." (footnote omitted)).

¶18 Regarding the award of attorney fees,

Because Oklahoma follows the American Rule, a prevailing party is not entitled to an attorney fee award unless authorized by contract, statute or some particular circumstance of the case. City Nat'l Bank & Trust Co. v. Owens, 1977 OK 86, 565 P.2d 4. This rule is "firmly established." Barnes v. Okla. Farm Bur. Mut. Ins. Co., 2000 OK 55, ¶ 46, 11 P.3d 162. Whether a party is entitled to an attorney fee is a question of law, reviewed de novo. Boston Ave. Mgmt., Inc. v. Associated Res., Inc., 2007 OK 5, ¶ 10, 152 P.3d 880.

In re Guardianship of Richardson, 2016 OK CIV APP 58, ¶ 4, 423 P.3d 660.

ANALYSIS

I. Motion to Dismiss

A. To the extent Plaintiff is attempting to state a claim on behalf, or as a beneficiary, of the Estate of GDS, the trial court properly dismissed that portion of the petition.

¶19 Plaintiff acknowledges in his petition that probate proceedings have been initiated and are ongoing for the estates of both GDS and GMS. Plaintiff also acknowledges, and the docket sheets of those proceedings confirm, that Plaintiff has filed various documents in those proceedings, including a document in the probate proceeding for the Estate of GDS requesting that the district court order Ms. Lopp, the personal representative of the Estate of GDS, to "provide an accounting for all activity and the status of all real and personal property of [GDS.]"

¶20 Nevertheless, in the present, non-probate proceeding, Plaintiff has set forth allegations that could be interpreted as an attempt to state a claim on behalf of, or as a beneficiary of, the Estate of GDS.3 However, courts, when sitting in probate, have, by statute, "probate jurisdiction" to, among other things, "compel personal representatives . . . to render accounts," "compel the attendance of witnesses and the production of title deeds, papers, and other property of an estate," and "order and regulate all distribution of property or estates of" the deceased person in question; courts sitting in probate also have authority "[t]o make such orders as may be necessary to the exercise of the powers conferred upon it[.]" 58 O.S. 2011 § 1(A). As explained by the Oklahoma Supreme Court, it is the court sitting in probate that "has the power to determine what property is part of the decedent's estate." In re Estate of Estes, 1999 OK 59, ¶ 21, 983 P.2d 438 (citation omitted). See also Williams v. Mulvihill, 1993 OK 5, ¶ 8, 846 P.2d 1097 ("Although probate now begins in district court, interdocket remedial boundaries survive." (emphasis in original)); In re Fullerton's Estate, 1962 OK 168, ¶ 0, 375 P.2d 933 (Syllabus by the Court) ("In the absence of statutory restrictions probate courts have such ancillary and incidental powers as are reasonably necessary to an effective exercise of the powers expressly conferred.").4

 

¶21 Portions of Plaintiff's petition could be interpreted as an attempt to undertake an exploratory review and accounting of property which might or might not belong to the Estate of GDS.5 This portion of Plaintiff's action falls squarely within probate's domain, and is already being addressed in the separate probate proceeding.6

 

¶22 Moreover, even if matters pertaining to the property of an estate but that fall outside the traditional parameters of probate had been alleged by Plaintiff, amendments to 58 O.S. § 1 have "expanded . . . probate's remedial range." Jernigan v. Jernigan, 2006 OK 22, ¶ 15, 138 P.3d 539. Title 58 O.S. 2011 § 1(C) provides as follows:

 

The district court which has jurisdiction and venue of the administration of any estate is granted unlimited concurrent jurisdiction and venue to hear and determine: 1. In whom the title to any property is vested, whether the property is real, personal, tangible, intangible, or any combination thereof; 2. Rights with respect to such property as to all persons and entities; 3. Whether or not such property is subject to the jurisdiction of the court in the decedent's estate; and 4. Issues relating to trusts or issues involving a guardian or ward that may arise.

¶23 "[T]he district court sitting in probate has authority to make all such orders as may be necessary to exercise the powers conferred upon it, 58 O.S. 2011 § 1(A)(10)," and, following the 1997 amendments to 58 O.S. § 1, the district court sitting in probate has "further authority to determine rights as to estate property as to all persons and entities. 58 O.S. 2011 § 1(C)." In re Estate of Vose, 2017 OK 3, ¶ 15, 390 P.3d 238. See also Booth v. McKnight, 2003 OK 49, ¶ 24, 70 P.3d 855 ("A district court sitting in probate has unlimited jurisdiction to determine in whom an estate's property is to be vested and any rights held by other persons in those assets. Upon a probate's commencement, the district court acquires exclusive cognizance over the estate which remains superior to that of every other tribunal." (citing, inter alia, 58 O.S. § 1(C)) (emphasis in original)).

¶24 Finally, the Oklahoma Supreme Court has explained that a specific procedure should be followed in order for a beneficiary of an estate in probate, who is not a personal representative of that estate, to pursue an action on behalf of that estate. "[T]he probate division may grant leave to a beneficiary to prosecute an action on behalf of the estate" "when there are special circumstances that take the case out of the general rule" which otherwise prohibits such an action. In re Estate of Bleeker, 2007 OK 68, ¶ 14, 168 P.3d 774 (emphasis omitted). "[I]n circumscribed circumstances" -- such as where "fraud, collusion or refusal to act" "makes it necessary for beneficiaries to bring their own suit for the protection of an interest in the estate that would otherwise be lost" -- "persons other than the estate's court-appointed fiduciary" may be granted "leave to pursue litigation for recovery of estate assets." Id. ¶¶ 13-14. However, the beneficiary "should present to the court [sitting in probate] a formal application, acting in [one's] capacity as an estate beneficiary, for leave to prosecute on behalf of the estate a claim for the recovery of missing estate assets." Id. ¶ 17 (emphasis omitted). The Supreme Court further explained: "If, after an adversary proceeding, leave is granted, [the beneficiary] must then file a petition qua court-authorized beneficiary plaintiff stating for the estate the claim upon which her action is founded." Id. Here, however, there is no indication that Plaintiff has filed such an application in the probate proceeding for the Estate of GDS, nor has Plaintiff filed the present action as a court-authorized beneficiary plaintiff for the Estate of GDS.

¶25 For all these reasons, to the extent Plaintiff is attempting to state a claim on behalf of, or as a beneficiary of, the Estate of GDS, the trial court properly dismissed that portion of the petition.

B. The trial court erred in dismissing that portion of Plaintiff's petition bringing an action under the Oklahoma Trust Act as a beneficiary of the Trust of SAS.

¶26 Plaintiff challenges various actions undertaken by Ms. Lopp as Trustee of the Trust of SAS. He also seeks to remove Ms. Lopp as Trustee. Plaintiff describes the Trust in his petition as "the [SAS] Living Trust," and he states he is a "contingent beneficiary" of the Trust. As Plaintiff alleges, at all times relevant to this appeal SAS is still living.

¶27 The fundamental issue presented in this regard is whether Plaintiff, as a contingent beneficiary, lacks standing7 to pursue these challenges. "When standing of a party is brought into issue, the focus is on the party seeking to get the complaint before the court, and not on the issues the party wishes to have adjudicated." State ex rel. Bd. of Regents for Okla. Agr. & Mech. Colleges v. McCloskey Bros., 2009 OK 90, ¶ 18, 227 P.3d 133 (footnote omitted).8

  Standing is the right to commence litigation, to take the initial step that frames legal issues for ultimate adjudication by a court or jury. The doctrine of standing identifies those disputes that are appropriately resolved through the judicial process. Standing requires proof of: (1) a legally protected interest which must have been injured in fact -- i.e., suffered an injury which is actual, concrete and not conjectural in nature, (2) a causal nexus between the injury and the complained-of conduct, and (3) a likelihood, as opposed to mere speculation, that the injury is capable of being redressed by a favorable court decision.

Murray Cnty. v. Homesales, Inc., 2014 OK 52, ¶ 17, 330 P.3d 519 (emphasis added) (internal quotation marks omitted) (citations omitted).

¶28 As a contingent beneficiary, it is difficult to immediately discern whether Plaintiff can assert "an injury which is actual, concrete and not conjectural in nature," or "a likelihood, as opposed to mere speculation, that the injury is capable of being redressed by a favorable court decision." For example, during the life of a trustor, the trust, if revocable, may be revoked by the trustor, and even an "irrevocable" trust may be revoked under certain circumstances.9 Thus, it would appear that Plaintiff's interest is merely speculative or conjectural for purposes of a standing inquiry. Indeed, by definition, "rights [that] are contingent . . . only . . . come into existence on an event or condition which may not happen[.]" Randolph v. Bd. of Regents of Okla. Colleges, 1982 OK 75, ¶ 7, 648 P.2d 825. Thus, Defendants asserted at the hearing:

In this case, the only person who may bring such action would be the grandmother, [SAS], because she is the only person that [Ms. Lopp], as trustee, owes fiduciary duties to during [SAS's] lifetime. It isn't until [SAS] dies and . . . it is also not until all the contingent beneficiaries survive [SAS], that their interests become fully vested and they may bring actions on behalf of their own protected interests that are now fully vested and essentially have matured . . . .

¶29 Nevertheless, the issue presented is governed by specific statutory language. For purposes of standing, a plaintiff may have "in fact suffered injury to a legally protected interest as contemplated by statutory . . . provisions." Murray Cnty., ¶ 17 (citation omitted). See also Toxic Waste Impact Grp., Inc. v. Leavitt, 1994 OK 148, ¶ 11, 890 P.2d 906 ("The Legislature clearly has the authority to grant standing to someone by statute[.]" (citation omitted)). Moreover, the Oklahoma Supreme Court has explained:

When ruling on a pretrial motion to dismiss for lack of standing, the trial court, and subsequently the reviewing court, "must construe the petition in favor of the complaining party." If the plaintiff alleges facts which are sufficient to establish standing, then the case proceeds to the next stage. A party's standing may be examined at any stage of the proceedings, and the party seeking relief has a greater burden at later stages in the case than in defending a pretrial motion to dismiss.

Okla. Educ. Ass'n v. State ex rel. Okla. Legislature, 2007 OK 30, ¶ 10, 158 P.3d 1058 (footnotes omitted).

¶30 The parties agree that the portion of Plaintiff's petition under consideration here is essentially an attempt to proceed under the Oklahoma Trust Act, 60 O.S. 2011 §§ 175.1-175.57.10 Section 175.23(A) provides as follows:

The district court shall have original jurisdiction to construe the provisions of any trust instrument; to determine the law applicable thereto; the powers, duties, and liability of trustee; the existence or nonexistence of facts affecting the administration of the trust estate; to require accounting by trustees; to surcharge trustee; and in its discretion to supervise the administration of trusts; and all actions hereunder are declared to be proceedings in rem.

Section 175.23(C) specifies who may bring such an action:

Actions hereunder may be brought by a trustee, beneficiary, or any person affected by the administration of the trust estate. If the action is predicated upon any act or obligation of any beneficiary, the beneficiary shall be a necessary party to the proceedings. The only necessary parties to such actions shall be those persons designated as beneficiaries by name or class in the instrument creating the trust and who have a vested interest in the trust which is the subject of the action, those persons currently serving as trustees of the trust, and any persons who may be actually receiving distributions from the trust estate at the time the action is filed. Contingent beneficiaries designated by name or class shall not be necessary parties.

(Emphasis added.)11

 

¶31 Because the first sentence of § 175.23(C) allows such actions to be brought by a "beneficiary," we must first explore whether the Legislature, in employing this term, intended to include contingent beneficiaries. See Welch v. Crow, 2009 OK 20, ¶ 10, 206 P.3d 599 ("The primary goal of statutory construction is to ascertain and follow the intent of the Legislature." (footnote omitted)). "Beneficiary," after all, is defined under the Oklahoma Trust Act as "any person entitled to receive from a trust any benefit of whatsoever kind or character." 60 O.S. Supp. 2012 § 175.3(K) (emphasis added). As explained in the Restatement (Third) of Trusts, a beneficiary is defined under the Uniform Trust Code, for example, as a person who has "a present or future beneficial interest in a trust, vested or contingent," and, under the Uniform Probate Code, a "'trust beneficiary' includes one 'who has any present or future interest, vested or contingent[.]'" Restatement (Third) of Trusts § 94 comment b (2012) (emphasis added).

 

¶32 Section 175.3 does specify that the definitions set forth therein apply "unless the context or subject matter otherwise requires"; however, in the same subsection of § 175.23 that is our focal point, the Legislature apparently deemed it nonredundant and useful,12 when addressing the issue of necessary parties "[i]f the action is predicated upon any act or obligation of any beneficiary," to specify that "[t]he only necessary parties to such actions shall be," among others, "those persons designated as beneficiaries by name or class in the instrument creating the trust and who have a vested interest in the trust which is the subject of the action[.]" (Emphasis added.) It would appear from the use of the term beneficiary in this sentence of § 175.23(C) that it is the Legislature's understanding that a person can be a beneficiary and yet not have a vested interest; otherwise, there would be no need for the Legislature to have stipulated that only those beneficiaries who have a vested interest shall be necessary parties. Thus, at least in the narrow context of § 175.23(C), the term beneficiary is not employed in a manner that excludes contingent beneficiaries.13

 

¶33 Moreover, a review of the entire Oklahoma Trust Act reveals that the Legislature has consistently employed the term beneficiary in a manner that does not exclude contingent beneficiaries. See King v. King, 2005 OK 4, ¶ 22, 107 P.3d 570 (Legislative "[i]ntent is ascertained from the whole act in light of its general purpose and objective considering relevant provisions together to give full force and effect to each." (footnote omitted)). For example, in § 175.41, the Legislature specifies that even irrevocable trusts

 

may be revoked by the trustor upon the written consent of all living persons having vested or contingent interest therein. The term "contingent interest," as used in this section, shall include an interest which a beneficiary may take by purchase, and exclude any interest which a beneficiary may take by descent.

Here, the Legislature again utilizes the term beneficiary in a manner that appears to encompass those with contingent interests.14

 

¶34 In response to a somewhat different, but related, question, the Oklahoma Supreme Court in Welch v. Crow, adopted "[t]he Restatement view" expressed in the Restatement (Third) of Trusts § 25 that the existence of a contingent beneficiary satisfies the requirement that a trust "have a separation of the legal estate from the beneficial enjoyment, and that no trust can exist where the same person possesses both." 2009 OK 20, ¶ 16 (footnote omitted). That is, the Court explained that "[a] trust is not illusory simply because it has the same person as the sole trustee and only vested present beneficiary if it provides for at least a contingent beneficiary." Id. ¶ 17 (emphasis added). Thus, while the Court agreed that "a beneficiary other than the trustor" was needed in order for the trust to be valid, id. ¶ 14, the Court concluded the trust in question was valid because, in effect, the contingent beneficiary named in the trust was a beneficiary as broadly defined under § 175.3(K). See id. ¶ 17 ("The Restatement view is persuasive and consistent with the definition of a trust beneficiary found at . . . § 175.3(K)." (footnote omitted)). The reasoning in Welch lends support to our interpretation of the language in § 175.23(C) that is the focus of this appeal.

 

¶35 In the present case, although Plaintiff does not elaborate in his petition regarding his alleged interest, he does allege that he is a contingent beneficiary. Because, under the Oklahoma Trust Act, "[a]ctions . . . may be brought by a . . . beneficiary," we conclude the trial court erred in dismissing that portion of Plaintiff's petition asserting challenges under the Oklahoma Trust Act in his capacity as a contingent beneficiary.

¶36 Given the arguments of the parties and, in particular, Defendants' assertion that Ms. Lopp owes a duty only to SAS, we emphasize that the Oklahoma Trust Act provides as follows:

Except as otherwise provided by the terms of a trust, while the trust is revocable and the settlor has capacity to revoke, the rights of the beneficiaries are held by, and the duties of the trustee are owed exclusively to the settlor; the rights to be held by and owed to the beneficiaries arise only upon the settlor's death or incapacity. The trustee may follow a written direction of the settlor, even if contrary to the terms of the trust. The holder of a presently exercisable power of withdrawal or a testamentary general power of appointment has the rights of a settlor of a revocable trust under this section to the extent of the property subject to the power.

60 O.S. 2011 § 175.57(E)(3). We disagree with Defendants that, given the allegations contained in the petition,15 questions concerning "the duties of the trustee," and whether those duties "are owed exclusively to the settlor," not to mention various other issues which may be raised under the Oklahoma Trust Act, can be readily resolved by the court in favor of Defendants (or any party) as a matter of law at this stage of the proceedings. It is worth recapitulating:

"Motions to dismiss are generally viewed with disfavor." Rogers v. Quiktrip Corp., 2010 OK 3, ¶ 4, 230 P.3d 853, 856. "The purpose of a motion to dismiss is to test the law that governs the claim in litigation rather than to examine the underlying facts of that claim." Id. When reviewing a motion to dismiss, "the Court must take as true all of the challenged pleading's allegations together with all reasonable inferences that may be drawn from them." Id.

In re Declaration of Tr. Creating the Avery Family Tr., 2017 OK CIV APP 44, ¶ 5, 402 P.3d 696.

¶37 Plaintiff has adequately pled facts in support of the conclusion that he is a person who may bring an action under the Oklahoma Trust Act; therefore, dismissal of this portion of the petition was improper.

C. The trial court properly dismissed that portion of Plaintiff's petition contesting, outside the Oklahoma Trust Act, the "creation and execution" of specified documents.

¶38 Plaintiff asserts "SAS lacked the capacity . . . to understand and consent to the creation and execution of the Trust, POA, and Will," and therefore "requests the Court to set aside the Trust, POA and Will on the grounds of incapacity[.]" In particular, Plaintiff asserts in his petition that on April 15, 2015, "[Ms.] Lopp had SAS execute the Will, POA and documents purporting to create the Trust." Similarly, in the "Statement of Relevant Facts" in the motion to dismiss, Defendants state: "On April 15, 2015, [SAS] executed estate planning documents created for her by the law firm of Postic & Bates, P.C., thereby establishing the [SAS] Living Trust . . . and naming her daughter, [Ms. Lopp,] as Trustee for the Living Trust," and "[w]hile at the Postic and Bates law office that same day, [SAS] also executed her Last Will and Testament, Durable Power of Attorney, and an Advance Directive Health Care and Nomination of Guardians . . . ."

¶39 While we concluded, above, that Plaintiff has standing for purposes of bringing an action under the Oklahoma Trust Act, we conclude that Plaintiff is otherwise unable, outside the Oklahoma Trust Act and during the life of SAS, to contest "the creation and execution of the Trust, POA, and Will." Pursuant to Plaintiff's allegations, at all times relevant to this appeal SAS is still living, and, in Oklahoma, "a living person has no estate subject to probate and . . . there can be no vested right of inheritance in the estate of a living person." Randall v. Travelers Cas. & Sur. Co., 2006 OK 65, ¶ 2, 145 P.3d 1048 (footnotes omitted).

¶40 Accordingly, we conclude the trial court properly dismissed that portion of Plaintiff's petition contesting the formation of these documents, with the important proviso that, as concluded above, the trial court erred in dismissing that portion of Plaintiff's petition asserting claims under the Oklahoma Trust Act.

II. Attorney Fees and Costs

¶41 Defendants sought, and the trial court awarded, attorney fees pursuant to a provision of the Oklahoma Trust Act.16 Having concluded above that Plaintiff has adequately pled facts in support of the conclusion that he is a person who may bring an action under the Oklahoma Trust Act and that dismissal of this portion of the petition was improper, we must reverse the trial court's order awarding attorney fees to Defendants.

CONCLUSION

¶42 We conclude the trial court erred in dismissing that portion of Plaintiff's petition bringing an action under the Oklahoma Trust Act. However, we conclude that to the extent Plaintiff is attempting to state a claim on behalf of, or as a beneficiary of, the Estate of GDS in this action, the trial court properly dismissed that portion of his petition because of, among other things, the ongoing probate proceedings. The trial court also properly dismissed that portion of Plaintiff's petition contesting, outside the Oklahoma Trust Act, the formation of certain documents. Because we conclude the trial court erred in dismissing that portion of Plaintiff's petition bringing an action under the Oklahoma Trust Act, we reverse the trial court's order awarding attorney fees to Defendants pursuant to a provision of the Oklahoma Trust Act. We remand for further proceedings consistent with this Opinion.

¶43 AFFIRMED IN PART, REVERSED IN PART, AND REMANDED FOR FURTHER PROCEEDINGS.

WISEMAN, V.C.J., and RAPP, J., concur.

FOOTNOTES

1 Although this document is not contained in the appellate record, this Court has the "present-day capacity to conduct an exploratory review [online] of district court records" "in order to enhance [our] ability to inquire into and protect [our] jurisdiction." Okla. Sup. Ct. R. 1.1(d), 12 O.S. Supp. 2013, ch. 15, app. 1.

2 Plaintiff asserts in his Amended Petition in Error that the trial court "erred in granting [Defendants'] motion to dismiss by relying upon documents attached to [Defendants'] motion without converting [Defendants'] motion to a motion for summary judgment." The only document attached to the motion to dismiss is the Trust of SAS, and the version of the Trust provided is merely an excerpted version, with some pages entirely missing, and other pages partially redacted. Defendants noted in their motion to dismiss that

[a]lthough [we] attach herein certain excerpts portions (sic) of the Living Trust, this Motion should not be viewed as one made under the summary judgment standard, under either § 2012(b)(1) or (b)(6). See Doe v. First Presbyterian Church U.S.A. of Tulsa, 2017 OK 106, ¶ 14 ("A party is generally allowed to submit evidence outside the pleadings when making a challenge to the court's subject matter jurisdiction under 12 O.S. 2011, § 2012(b)(1)."); Tucker v. Cochran Firm-Criminal Def. Birmingham L.L.C., 2014 OK 112, ¶ 30, 341 P.3d 673, 684-85 ("When a defendant files a § 2012(B)(6) motion with an incorporated exhibit which is relied on by plaintiff in the petition, or is integral to plaintiff's petition, the motion is not converted into one for summary judgment.") (emphasis in original).

Moreover, because the standard of review on appeal is de novo, this Court need not further concern itself with whether the trial court appropriately or inappropriately relied upon certain evidentiary sources in deciding the motion to dismiss. See also In re Estate of Estes, 1999 OK 59, ¶ 28, 983 P.2d 438 ("The judgment of the district court is not subject to reversal if the result is correct but based on faulty reasoning.").

Plaintiff also argues the trial court erred in finding that Defendants did not waive the filing of a motion to dismiss for failure to state a claim by filing a reservation of time. However, in the "Qualified Special Entry of Appearance and Reservation of Time and Defenses," Defendants stated they

hereby reserve an additional twenty (20) days from the answer date . . . in which to answer or otherwise respond to Plaintiff's Petition, pursuant to 12 O.S. 2011, § 2012(A). Defendants further hereby reserve their objections to Plaintiff's Petition based upon 12 O.S. 2011, § 2012(B), and expressly qualify this Entry of Appearance as such, as allowed under the rule established in Young v. Walton, 1991 OK 20, 807 P.2d 248, Campbell v. American International Group, Inc., 1999 OK CIV APP 37, ¶ 9, 976 P.2d 1102, and First Texas Sav. Assoc. v. Bernsen, 1996 OK CIV APP 24, 924 P.2d 1293.

(Emphasis added.) Indeed, in Young the Oklahoma Supreme Court stated that the terms of § 2012(A)

do provide that the filing of "an appearance" within the twenty-day period after service of process extends the time to respond and operates as a waiver of certain challenges. This statute, though, applies only to a defendant's general or perhaps to an unspecified appearance, not to one that is explicitly qualified.

1991 OK 20, ¶ 4 (footnote omitted) (emphasis in original). Because Defendants' appearance was explicitly qualified, we are not persuaded by Plaintiff's argument.

3 For example, Plaintiff asserts in his petition that Ms. Lopp has "fail[ed] to provide an accounting for the disposition of assets and activities undertaken on behalf of the GDS Estate," and, moreover, at the hearing on the motion to dismiss, counsel for Plaintiff appears to have acknowledged that Plaintiff is, at least in part, attempting via this action to determine what property is part of the Estate of GDS. Plaintiff also asserts in his petition that in this action he is seeking, in part, to "determine assets or potential assets in which he and the Estate of GMS may have an interest." For purposes of this section of our analysis, we interpret these assertions as attempts to state a claim on behalf, or as a beneficiary, of the Estate of GDS. "The meaning and effect of an instrument . . . depends on its contents and substance rather than on form or title given it by the author." In re Estate of Estes, 1999 OK 59, ¶ 24, 983 P.2d 438 (citation omitted). "The legal effect of any court-filed paper -- be it a motion, a pleading or some other instrument -- is to be measured by its content[.]" State v. Torres, 2004 OK 12, ¶ 3 n.5, 87 P.3d 572 (citations omitted). Plaintiff also attempts in his petition to assert claims as a contingent beneficiary of the Trust of SAS, and to challenge the execution of the Trust, POA and Will. We will address these matters separately further below.

4 Moreover, as the Oklahoma Supreme Court has noted, "[t]he probate statutes provide that in a final accounting, the personal representative must, under oath, inform the probate court" regarding numerous matters pertaining to the estate in question, including that "the estate is ready for closing," and "after the entering of an order allowing final accounting, determining heirship and authorizing distribution of the estate, the probate court's review of the estate continues until the representative is discharged." In re Estate of Hughes, 2004 OK 20, ¶ 15 n.5, 90 P.3d 1000 (citations omitted). More broadly:

An administrator is responsible for the faithful administration of the estate's property and has a duty to preserve the estate. The estate administrator has a general duty to take charge of all the effects and personal assets belonging to the decedent and to preserve the same from damage, waste, and injury. An administrator of an estate occupies a fiduciary relationship toward all parties having an interest in the estate. Further, although probate is governed by statutory procedure, substantive law in aid of probate's legal mission of capturing and distributing a deceased person's estate continues to be governed by common-law developments.

In re Estate of Vose, 2017 OK 3, ¶ 31, 390 P.3d 238 (citations omitted) (footnotes omitted).

5 We note that the Oklahoma Supreme Court "has a long history of rejecting the unnecessary waste of judicial resources." Miami Bus. Servs., LLC v. Davis, 2013 OK 20, ¶ 16 & n.19, 299 P.3d 477.

6 Because these same issues are already before the probate court, the Oklahoma Supreme Court's admonishment that "[a]ll judges of the district court have a constitutionally invested power to transfer cases to another division" -- i.e., to the proper division -- "of the district court on any tenable legal or equitable ground shown at any point in litigation," Jernigan v. Jernigan, 2006 OK 22, ¶ 18, 138 P.3d 539, does not require a transfer in the present case.

7 Although it may be the case, as Plaintiff suggests, that "in the Oklahoma legal system standing is not a component of any of the three indispensable jurisdictional elements" as it is in federal courts, Toxic Waste Impact Grp., Inc. v. Leavitt, 1994 OK 148, ¶ 1 n.4, 890 P.2d 906 (Opala, J., concurring), lack of standing is, nevertheless, an appropriate basis for dismissal, see, e.g., Okla. Educ. Ass'n v. State ex rel. Okla. Legislature, 2007 OK 30, ¶¶ 6-7, 10, 158 P.3d 1058.

8 See also In re Estate of Doan, 1986 OK 15, ¶ 7, 727 P.2d 574 ("Standing determines whether the person is the proper party to request adjudication of a certain issue and does not decide the issue itself. The key element is whether the party whose standing is challenged has sufficient interest or stake in the outcome." (footnote omitted)); Democratic Party of Okla. v. Estep, 1982 OK 106, ¶ 7, 652 P.2d 271 ("Standing focuses on the party seeking to get his complaint before the court and not on the issues tendered for determination. In standing problems, the inquiry posed is whether the party invoking the court's jurisdiction has a legally cognizable interest in the outcome of the tendered controversy." (footnote omitted)).

9 Title 60 O.S. 2011 § 175.41 provides, in part, that "[e]very trust shall be revocable by the trustor, unless expressly made irrevocable by the terms of the instrument creating the same. Provided, that any trust may be revoked by the trustor upon the written consent of all living persons having vested or contingent interest therein."

10 The Oklahoma Trust Act is "Oklahoma's version of the Uniform Trust Act which was adopted by the Oklahoma Legislature on May 31, 1941[.]" State ex rel. Cartwright v. Ogden, 1982 OK 82, ¶ 22, 657 P.2d 142.

11 In addition, § 175.39 provides:

Trustees having violated or attempted to violate any express trust, or becoming incompetent or insolvent, or of whose solvency or that of their sureties there is reasonable doubt, or for other cause, in the discretion of the court having jurisdiction, may, on petition of any person interested, after hearing, be removed by such court and denied compensation in whole or in part; and any beneficiary, cotrustee, or successor may treat the violation as a breach of trust; and all vacancies in express trusteeships may be filled by such court.

(Emphasis added.)

12 "[T]he Legislature will not be presumed to have done a vain and useless act in the promulgation of a statute[.]" Wylie v. Chesser, 2007 OK 81, ¶ 19, 173 P.3d 64 (citation omitted). See also Bituminous Cas. Corp. v. Cowen Const., Inc., 2002 OK 34, ¶ 13, 55 P.3d 1030 ("the former would be rendered redundant and the negotiation for and inclusion of the special endorsement would become a vain and useless act" (footnote omitted)).

13 A necessary party is defined as "[a] party who, being closely connected to a lawsuit, should be included in the case if feasible, but whose absence will not require dismissal of the proceedings." Black's Law Dictionary (11th ed. 2019). Section 175.23(C) provides, as quoted above, that "[c]ontingent beneficiaries designated by name or class shall not be necessary parties" -- i.e., at least in the specific actions (those "predicated upon any act or obligation of any beneficiary") addressed in that portion of § 175.23(C) -- but we disagree with Defendants that this resolves the issue of whether contingent beneficiaries are "beneficiaries" who may bring an action under the Oklahoma Trust Act.

14 Although some of the uses of the term beneficiary in other provisions of the Oklahoma Trust Act appear to be neutral with regard to whether the term includes contingent beneficiaries, we find no instances in which the term beneficiary, by itself, is employed in a manner that clearly excludes contingent beneficiaries.

15 A selection of those allegations state, for example, that SAS is "residing and being cared for at a memory care facility," is suffering from "Alzheimer's and dementia," is "unable to appreciate that her husband . . . passed away," is "unable to care for herself," and is "not competent to make decisions on her own behalf[.]"

16 Defendants sought attorney fees under § 175.57(D), which states that, "[i]n a judicial proceeding involving a trust, the court may in its discretion, as justice and equity may require, award costs and expenses, including reasonable attorney's fees, to any party, to be paid by another party or from the trust which is the subject of the controversy."