IN RE: WALLACE REVOCABLE TRUST

IN RE: WALLACE REVOCABLE TRUST
2009 OK 34
219 P.3d 536
Case Number: 104036
Decided: 05/26/2009

THE SUPREME COURT OF THE STATE OF OKLAHOMA

IN RE: THE LORICE T. WALLACE REVOCABLE TRUST DATED DECEMBER 26, 1974, AS RESTATED EFFECTIVE OCTOBER 5, 1993 AND AS AMENDED ON FEBRUARY 12, 1998, THE LORICE T. WALLACE IRREVOCABLE TRUST DATED FEBRUARY 8, 1996, AND THE LORICE T. WALLACE IRREVOCABLE TRUST DATED SEPTEMBER 11, 1992, ALSO KNOWN AS THE LORICE T. WALLACE LIFE INSURANCE TRUST, AND THE LISA FRANCES WALLACE DISCRETIONARY SPENDTHRIFT TRUST.

THE TRUST COMPANY OF OKLAHOMA and RONALD SAFFA, Petitioners-Appellees,
v.
MARY ROMA WALLACE JAGE, Respondent-Appellant.

APPEAL FROM THE DISTRICT COURT OF TULSA COUNTY, HONORABLE GREGORY K. FRIZZELL

¶0 The trial court, after a hearing, found that the respondent-appellant, Mary Roma Wallace Jage, through a federal court complaint, had contested the validity of family trusts. The trusts included no-contest provisions, and the court ordered that the respondent-appellant should not receive any distribution from the trusts, in accord with the provisions in those trusts.

AFFIRMED.

James C. Milton, Elizabeth W. Carroll, DOERNER, SAUNDERS, DANIEL & ANDERSON, L.L.P., Tulsa, Oklahoma, Attorneys for Petitioner-Appellee, The Trust Company of Oklahoma,
James E. Poe, COVINGTON & POE, Tulsa, Oklahoma, Attorney for Petitioner-Appellee, Ronald J. Saffa.
Joan Godlove, Tulsa, Oklahoma, For Respondent-Appellant.

WINCHESTER, J.

¶1 On June 30, 2006, the petitioners-appellees, The Trust Company of Oklahoma and Ronald Saffa, filed a pleading entitled "Application for Instructions, and Brief in Support, Regarding Conduct in Apparent Violation of the No-Contest Provisions of the Lorice T. Wallace Revocable Trust and the Lorice T. Wallace Irrevocable Trust." After a hearing the trial court found that the respondent-appellant, Mary Roma Wallace Jage, had violated the no-contest provisions included in the two trusts.

¶2 "The subject of trusts and the control of trust estates are cognizable only by courts of equity." Peyton v. McCaslin,

II. JURISDICTION

¶3 Ms. Jage initially asserts that all Oklahoma state courts lost all jurisdiction when Stephen P. Wallace, the brother of Ms. Jage, and a party to the underlying trust case, notified the clerk of the Tulsa County District Court that PT 2002-56 had been removed to U.S. District Court for the District of Columbia on October 23, 2006. After the notice was filed, the trial judge heard arguments concerning whether he should stay further proceedings until the federal court decided if the case should be remanded. The judge determined that the proceedings would not be stayed.

¶4 Ms. Jage cites numerous cases in an attempt to support her proposition that a state court loses all jurisdiction when a notice of removal is filed with that court. Besides cases from federal district courts, she cites cases from the 1st, 3rd, 4th, 8th, 9th, and 11th federal circuit courts.

"Promptly after the filing of such notice of removal of a civil action the defendant or defendants shall give written notice thereof to all adverse parties and shall file a copy of the notice with the clerk of such State court, which shall effect the removal and the State court shall proceed no further unless and until the case is remanded."

¶5 But the cases cited by Ms. Jage are distinguishable. Subsection § 1446(a)

¶6 The attempted removal was, as the D.C. court called it, a hybrid notice of removal and civil rights claim.

¶7 Oklahoma has long recognized the power inherent in the court to control its own docket, that courts are created for the purpose of administering justice under the law, and that to accomplish that purpose a court must have the power to facilitate and expedite causes before it so long as the reasonable exercise of these inherent powers do not prejudice the rights of the parties involved. Hambright v. City of Cleveland,

II. FORFEITURE

¶8 Ms. Jage cites

¶9 This Court has previously held that the validity of no-contest clauses has been explicitly and implicitly acknowledged by this Court and is favored by public policy. Estate of Westfahl,

¶10 In this forfeiture proceeding, the trial court examined whether Ms. Jage had probable cause to challenge the validity of the trusts, based on fraud and undue influence, as alleged by Ms. Jage. The trial court found that the court determined, by the journal entry of March 25, 2002, Case No. PT-2000-21, the controlling terms of the trusts. That journal entry was not appealed. When Ms. Jage filed a federal complaint on May 9, 2006, which the trial court characterized as a collateral attack on the March 25, 2002, journal entry, the trial court concluded the federal lawsuit lacked probable cause and used that conclusion as the basis for finding Ms. Jage had violated the no-contest provisions of each trust.

¶11 We agree with that determination of the trial court. The record reveals that the litigation over these trusts includes numerous lawsuits, which have continued for years. Although Ms. Jage claims that the unappealed March 25, 2002, judgment was obtained by fraudulent representations to the trial court, the trial court was not persuaded by these arguments. Instead of raising this before the district court in Tulsa County, Ms. Jage chose to file a federal lawsuit contesting the findings made in the March 25, 2002, judgment. Res judicata operates to bar all theories and all issues of fact or law that were litigated or which could have been litigated. Mobbs v. City of Lehigh,

AFFIRMED

ALL JUSTICES CONCUR

FOOTNOTES

1 The trust provisions are quoted in Ms. Jage's Brief-in-Chief, page 1, as follows: "If any person shall, in any manner, directly or indirectly, contest the validity of this Trust, or any part thereof, that person or persons shall take nothing from this Trust and distribution shall be made as though that person or persons did not exist. (Lorice T. Wallace Revocable Trust, § 1.03, TCO/Saffa Application, pp. 1-2, 996-97)." The second provision quoted is: "If any person shall, in any manner, directly or indirectly, contest the validity of this Trust, or any part thereof, or any of the provisions for distribution, that person or those persons shall receive no distribution from this Trust and distribution shall be made as though that person or persons did not exist. (Lorice T. Wallace Irrevocable Trust, art. IX, TCO/Saffa Application, p. 2; R.)." The third provision quoted by Ms. Jage is: "It is the intention of the Grantor to prevent and eliminate as much of the disharmony, the destruction of relationships, and disputes among the descendants of the Grantor as possible. (Amendment No. 1, § 3, Lorice T. Wallace Revocable Trust, TCO/Saffa Application, pp. 11-12; R. 1006-07)."

2 Commonwealth of Mass. v. V & M Mgmt, 929 F.2d 830 (1st Cir. 1991); In re Diet Drugs Prods. Liability Litig., 282 F.3d 220 (3rd 2002); Yarnevic v. Brink's, 102 F.3d 753 (4th Cir. 1996); Ward v. Resolution Trust, 972 F.2d 196 (8th Cir. 1992); Resolution Trust v. Bayside Developers, 43 F.3d 1230 (9th Cir. 1995); Maseda v. Honda Motor Co., 861 F.3d 1248 (11th Cir. 1988). For example, In South Caroline v. Moore, 447 F.2d 1067, 1073 (4th Cir. 1971), that court, after citing § 1446, opined that after the filing of a petition in federal court and prior to a federal remand, any proceedings in a state court held within those boundaries are absolutely void, even when a subsequent determination is made that the removal petition is ineffective.

3 Subsection § 1446(a) provides: "A defendant or defendants desiring to remove any civil action or criminal prosecution from a State court shall file in the district court of the United States for the district and division within which such action is pending a notice of removal signed pursuant to Rule 11 of the Federal Rules of Civil Procedure and containing a short and plain statement of the grounds for removal, together with a copy of all process, pleadings, and orders served upon such defendant or defendants in such action."

4 Footnote 3, page 2 of Memorandum Opinion of the United States District Court for the District of Columbia.

5 Footnote 4, pages 2 and 3 of Memorandum Opinion of the United States District Court for the District of Columbia.

6 Page 1 of Memorandum Opinion of the United States District Court for the District of Columbia.

7 Page 4 of Memorandum Opinion of the United States District Court for the District of Columbia.

8 Page 5 of Memorandum Opinion of the United States District Court for the District of Columbia.

9 In re Wallace, 2009 OK 16, ¶ 19, 204 P.3d 80.

10 http://www.uscourts.gov/faq.html, 4/22/2009, citing 28 U.S.C., §§ 81-144.

11 Title 60 O.S.2001, § 175.57(A) provides: "A violation by a trustee of a duty the trustee owes a beneficiary is a breach of trust." The statute then provides methods to remedy the breach.

12 Ms. Jage cites Lavine v. Shapiro, 257 F.2d 14, 19 (7th Cir. 1958); Jackson v. Braden, 290 Ark. 117, 119, 717 S.W.2d 206, 208 (1986); Estate of Bullock, 264 Cal. App. 2d 197, 201-202, 70 Cal.Rptr 239, 242-243 (1968); and Railey v. Skaggs, 212 So. 2d 86, 86-88 (Fla.App. 1968).

13 "This Court agrees that beneficiaries may challenge the actions of trustees under Oklahoma law, as set forth in the statutes, and it is right and just that they be able to do so under the law. . . ." Transcript October 25, 2006, O.R. 1598, p. 106, ll. 10-20. The appellees agree and cite Barr v. Dawson, 2007 OK CIV APP 38, ¶ 10, 158 P.3d 1073, 1075.