High court allows man’s complaint against stepmother to continue

August 30, 2017

A Delaware County man’s complaint alleging his stepmother violated her duties as trustee of his deceased father’s trust will continue after the Indiana Supreme Court upheld a finding that the trial court has jurisdiction to hear the case.

In a two-page per curiam opinion in Michael R. Pilkington v. Karen A. Pilkington, 18S02-1708-PL-554, the unanimous high court determined the Delaware Circuit Court erred when it dismissed with prejudice Michael Pilkington’s complaint against his stepmother, Karen. The case began when Flannan Pilkington died, leaving his wife to be the trustee of a trust he created that included his interest in five limited liability corporations.

Michael Pilkington also had an interest in the LLCs, but in 2009, he filed Chapter 7 bankruptcy, prompting him to sell that interest to his stepmother for $20,000. He then filed a complaint against Karen Pilkington in 2015, alleging she had breached her duties as trustee and that only his “entity interests,” not beneficiary interest, were sold to her.

Karen Pilkington moved to dismiss, arguing the bankruptcy court’s order and quitclaim deeds divested her stepson of any interest he had in the LLCs and that his complaint raised issues that should have been resolved in bankruptcy court. The trial court granted her motion to dismiss, but the Indiana Court of Appeals reversed. Senior Judge Randall Shepard wrote in a March opinion that because Michael Pilkington’s bankruptcy was concluded before he filed the 2015 complaint and because he did not ask the trial court to determine penalties with the bankruptcy process, the court could consider the issue of what interests Michael Pilkington sold to his stepmother.

The high court justices agreed in their Wednesday opinion that granted transfer, adopted and incorporated by reference the Court of Appeals’ March opinion.


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