Mineral-rich property transfers void in siblings’ trust dispute

A dispute between step-siblings over profitable real estate did not result in the brother’s favor Friday, when the Indiana Court of Appeals found a trial court did not clearly err in declaring transfers of the property to him as void ab initio.

Before their deaths, Nile and Georgia Richmond executed a series of trusts providing that upon their deaths, interests in certain real estate acquired by Nile during his life would be divided between their respective children – step-siblings Brenda Gittings and William Deal – as well as among Nile and Georgia’s grandchildren.

After Nile died in 1995 but before Georgia’s death in 1997, the latter reformed her trust agreements and transferred title to the real estate, writing Gittings and the grandchildren out of the inheritance. The transfers were made without court approval and without disclosing all of the material facts to Gittings, who in 2010 began asserting interest in the mineral-rich real estate.

The ensuing sibling squabble made its way to the Indiana Supreme Court, which unanimously held in 2018 that the later transfers of land to Deal by his mother were improper and that he was therefore not entitled to court approval of the transfers. Additionally, the high court found that claims by Gittings and her son Marc were not tolled by fraudulent concealment, and that their claims were subject to statutes of limitations to the extent they seek affirmative relief but not to the extent they diminish or defeat Deal’s request for declaratory relief.

The Indiana Court of Appeals had previously affirmed the Spencer Circuit Court, but the justices reversed in part and remanded the case to the trial court for further proceedings.

In September 2019, the trial court declared the transfers void ab initio and ordered a constructive trust to facilitate the transfer of the real estate and income received since the transfers to Brenda and the other original beneficiaries.

Deal appealed in William H. Deal v. Brenda Sue Gittings and Marc Richmond Gittings, 19A-TR-2210, but the Court of Appeals affirmed in a Friday decision, finding the trial court did not clearly err in its decision.

First, the COA found the trial court did not improperly grant affirmative relief to the Gittingses.

“In William’s petition to docket the NDR Primary Trust, he sought to have the Transfers approved by the court. The Gittingses countered William’s petition with their claim that the Transfers were contrary to law and therefore void,” Chief Judge Cale Bradford wrote for the appellate court. “This is not a new claim for affirmative relief but a response in opposition to William’s, denying its merits. The fact that the trial court adopted the Gittingses’ counter-argument does not mean that it granted the Gittingses affirmative relief.”

The COA further disagreed with Deal’s assertion that the trial court was without authority to declare the transfers void ab initio or create a constructive trust in light of the probate court’s equitable powers and the Supreme Court’s holding that deal was not entitled to court approval of the transfers.

“In this case … a trustee has control over property that is to be used for the benefit of another, creating obvious opportunities for mischief. Consequently, we find that the goal of preventing the possibility of fraud to be equally compelling in either case. We conclude that the trial court did not clearly err in declaring the Transfers to be void ab initio,” Bradford wrote.

Lastly, the appellate court found, contrary to Deal’s argument, that a constructive trust is not affirmative relief granted to the Gittingses but rather a remedy to ensure trust property is appropriately conveyed pursuant to the terms of the trust agreement.

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