A longtime legal battle between siblings over their mother’s trust recently made its way back to the Court of Appeals of Indiana, where the sister lost yet again. The appellate court’s ruling also included a warning for the sister’s longtime counsel.
Mary Ruth Moeder created the Mary Ruth Moeder Revocable Living Trust in 1997, naming her two children, Susan and John Moeder, as the primary beneficiaries. The trust provided that upon Mary’s death, any assets would be divided equally by Susan and John, who is blind.
After Mary died in 2001, Susan took control of the trust as successor trustee. After withdrawing her share of funds, Susan spent the next 15 years trying to claim her disabled brother’s remaining equal share, as well.
Specifically, in 2005, Susan filed a guardianship petition alleging John had mild cognitive impairments and was incapacitated. John responded by attempting to terminate the trust, presumably resulting in equal distributions.
Subsequently, the probate court appointed Salin Bank & Trust Company as guardian of John’s estate only.
Then in 2006, the Marion Superior Court authorized Susan to resign as trustee, appointed Salin as successor trustee and ordered the distribution of Susan’s one-half share of the trust’s assets to her. Because John’s share was not distributed, he became the main beneficiary of the trust and Susan became the contingent remainder beneficiary of John’s share.
The trial court also ordered that except for fees, the assets in the John W. Moeder Revocable Trust, a separate trust for John’s benefit, must be exhausted before the trust’s assets could be distributed to or expended on his behalf.
Several settlements, multiple court orders and five appeals followed and drove the trust’s legal fees for administering and defending John’s share to around $500,000.
A settlement agreement entered into in 2017 specified that Susan and the guardian of John’s estate would identify a new successor trustee, the current successor trustee would resign once the replacement was appointed, and the current successor trustee would “continue to provide periodic account statements to [Susan] with any other documents or information.”
Later, after Susan filed a challenge to the guardian’s accounting and that challenge was dismissed, an agreed order provided that Susan would dismiss her latest appeal and the current successor trustee would resign after the trust paid $247,753.03 in attorney fees and $4,260.77 to the guardian of John’s estate, and after a temporary successor trustee was appointed. The agreed order also required the parties to hold each other harmless.
But as the trust account assets diminished to $443,000, Susan initiated more disputes.
After yielding to some of Susan’s demands and hitting a roadblock on others, the temporary successor trustee informed the trial court “that there is no likelihood of entering into any reasonable agreement with Susan regarding transfer of the Trust Assets.”
In August 2020, in response to the temporary successor trustee’s request for instructions on the trust’s construction, the trial court entered detailed orders that approved the temporary successor trustee’s fees and reiterated that the trustee could make distributions from the trust’s principal and provide income for John’s maintenance “as the Trustee deems appropriate at his or her sole discretion.”
The Court of Appeals of Indiana last year affirmed in Moeder v. York, 20A-TR-1654 (Ind. Ct. App. June 22, 2021), and ordered appellate attorney fees.
Despite the limitations placed on her, Susan continued to seek detailed information from the trust.
After her attorney asked about the attorney fees that Susan had agreed would be paid, she decided to take the matter into her own hands and sent a letter to the temporary successor trustee making several demands. Susan’s demand letter led to more litigation, and the temporary successor trustee eventually filed a petition for instructions with the trial court.
After a hearing, the trial court issued a detailed order finding Susan had violated the settlement agreement and the agreed order and had consistently acted in bad faith in challenging trust expenditures and administration. The court held that the trust had to provide Susan with periodic account statements but “shall not be required to supply (her) with any other documents or information pertaining to the Trust.”
The trial court later ordered Susan to pay attorney fees totaling $83,667.
In the instant appeal, Susan claimed the trial court improperly limited the information she can receive about the trust. Also, she claimed the trial court erroneously found she violated the settlement agreement and agreed order by seeking information to which she was not entitled.
The Court of Appeals again affirmed the trial court’s ruling and remanded for calculations.
First, the COA looked at the request for information agreement and the demand letter.
“We need not consider whether the settlement agreement’s limitations on information are still in effect because the temporary successor trustee’s interpretation of the Trust provisions effectively limits her access even if the settlement agreement does not,” Judge Leanna Weissmann wrote.
Judges further found the trial court didn’t err in finding Susan violated the agreed order by seeking information through her demand letter.
“These are frivolous claims for the reasons stated by the trial court,” Weisssman wrote. “(Susan) waived any right to such information through the Agreed Order.
“In some cases, like the court-ordered legal fees, she had already received the documents she later requested in her demand letter, agreed to their payment, and waived any right to challenge them,” the judge continued. “Susan also had no right to know anything about John’s private tax returns, as she was neither his guardian nor his protector in any sense of the word.
“As the trial court noted, through the many years of litigation, Susan has shown herself to be more of an enemy than a friend to her brother.”
The court continued to criticize Susan on her claims about attorney fees.
“As we did in Susan’s last appeal, we find that Susan’s appeal is frivolous and in bad faith,” Weismann wrote. “She entered into an agreed order and then promptly violated it by seeking information already in her possession and for which she had waived any challenge. Despite the trial court’s comprehensive judgment detailing her violation of the Agreed Order and continuing bad faith, she launched this appeal, raising only frivolous and bad-faith contentions.”
The COA remanded the case for a determination of the trust’s appellate attorney feeds to be paid by Susan. While the remand instructions only relate to Susan, the appellate court added in a footnote, “… (W)e remind Susan’s counsel, who has represented her for at least eight years, that attorneys may be personally sanctioned for pursuing groundless claims on behalf of a client.”