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Trust beneficiary’s complaint reinstated by COA

August 25, 2016

The lawsuit filed by a man who claimed the trustee of the irrevocable trust in which he is the beneficiary mismanaged assets will move forward after the Indiana Court of Appeals reversed dismissal of the suit.

Scott Hurwich, settlor and beneficiary of the Scott David Hurwich 1986 Irrevocable Trust, sued Stacey R. MacDonald, trustee of the trust until she was removed in November 2012. Hurwich alleged that MacDonald had mismanaged trust assets while acting as trustee. MacDonald filed a motion to dismiss, alleging the claim was barred by the statute of limitations, the language of the trust limited her liability as trustee, and his complaint lacked sufficient allegations.

The probate court dismissed the claim with prejudice June 12, 2015. Hurwich filed a motion to reconsider, which was treated as a motion to correct error. A hearing was ultimately held Dec. 14, 2015, and the probate court took under advisement whether it had jurisdiction to address the motion to reconsider and the merits of the motion. But the court took no further action and Hurwich appealed Feb. 9.

The COA found the appeal was timely. At a hearing, the probate court issued an order allowing MacDonald to file a motion regarding lack of jurisdiction within two weeks, a response by Hurwich two weeks thereafter, and MacDonald an additional week for a final response. This is a valid time litigation exception under Trial Rule 53.3(B)(2), Judge Cale Bradford wrote. The question is whether the probate court’s decision to set another hearing functioned as an additional extension of the deadline to rule on the motion to correct error.

The probate court’s decision to hold a second hearing indicates that the motion was still being “heard” for purposes of Rule 53.3(A), so the motion cannot be automatically denied if it is still being heard, Bradford wrote.

“To find otherwise would lead to unfair and irrational results where (1) trial courts would be precluded from holding subsequent hearings where such are necessary to reach an accurate resolution, and (2) in cases such as this, parties like Hurwich would be denied their right to appeal through no fault of his own.”

Dismissal of his complaint was inappropriate, the judges held, because the language in the trust does not preclude suing a trustee for allegedly converting, wasting or mismanaging trust funds, the COA held. Also, his complaint was not required at that stage to list specific misdeeds by MacDonald or any specific trust asset that had been detrimentally affected. Specific factual support is not required under Rule 8(A), and with claims such as these, factual specifics may be unavailable until discovery is made, Bradford noted in In re the Scott David Hurwich 1986 Irrevocable Trust Scott D. Hurwich v. Stacey R. MacDonald, 71A03-1602-TR-301. 

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