BURDICK, Justice.
This is an appeal from the Clearwater County district court's decision affirming the magistrate court's summary dismissal of the Estate of John Cornell's claims involving the administration of a trust. John and his sister, Toni Johnson, were beneficiaries of their parents' trust. When the time came to distribute the assets, Johnson apparently refused, which led John to file a petition for the administration of the trust and removal of Johnson as trustee. Shortly after filing the petition, John committed suicide. Consequently, the magistrate court granted Johnson's motion to dismiss John's petition. Kareen Cornell, John's surviving spouse, subsequently petitioned the magistrate court for administration of the trust and to remove Johnson as trustee. The magistrate court once again granted Johnson's motion to dismiss, basing its decision on the trust distribution survivorship clause and on abatement of the claims. John's Estate appealed, and the district court affirmed. On appeal to this Court, the Estate argues that its claims survived John's death. We agree.
Michael S. Cornell and Arlie M. Cornell established a revocable family trust on November 1, 1996, naming their two children, Toni C. Johnson and John H. Cornell, as joint trustees and beneficiaries of the trust. The trust stated that "[o]n the death of the surviving Trustor, the Trust shall terminate and the Trustee shall, as soon as reasonably possible, divide the net income and principal remaining in the Trust into two (2) equal
Arlie M. Cornell passed away on November 9, 2008. On August 6, 2009, Michael S. Cornell amended the trust to name Johnson as the sole trustee. Michael S. Cornell passed away on December 15, 2009.
Following his father's death, John contacted Johnson regarding the status of the trust but Johnson refused to speak to him. John wrote several letters and made several phone calls to the attorney for the Estate requesting information as to the status of the trust without any response. In the nearly three years from the last trustor's death to John's death, Johnson refused and failed to distribute any of the trust to John. During that time, Johnson lived rent-free in the home that was included in the trust and apparently paid all her living expenses with trust funds. At one point, John received $3,000 as the beneficiary of his father's life insurance policy, which Johnson demanded he turn over to her. Upon that demand, John sent a check for $2,500 to Johnson, retaining $500 for his own living expenses.
On July 11, 2012, John filed a petition for supervised administration and removal of trustee. In that petition, John alleged that Johnson breached her fiduciary duty as trustee of the trust by failing to provide an inventory of trust assets upon request, using trust assets for personal expenses, and for failing to distribute the trust assets within a reasonable time.
On August 20, 2012, John committed suicide. In the case of the death of one of the beneficiaries, the trust provided:
Although John's wife survived him, John left no issue.
Shortly after John's death, Johnson moved the court to dismiss John's pending petition for administration and removal of trustee. Johnson argued that John's claim was extinguished by his death and that by the trust's express terms, all net income and principal remaining in the trust Estate vested in Johnson when John died without issue. The magistrate court granted Johnson's motion to dismiss
On February 26, 2013, Kareen Cornell, John's surviving spouse, in her personal capacity and as the personal representative of John's Estate, filed a petition for supervised administration and court ordered distribution. In that petition, the Estate alleged that Johnson breached her fiduciary duty by, among other things, failing to provide an accounting of trust assets, failing to distribute trust assets, and engaging in self-dealing.
On March 4, 2013, Johnson filed a second motion to dismiss on the basis that the Estate's claims abated. On June 21, 2013, the magistrate court dismissed the Estate's petition on the basis of abatement. The Estate appealed that decision to the district court, which remanded the case back to the magistrate court for further ruling on the request to remove Johnson as trustee. On remand, the magistrate court denied the request to remove Johnson as trustee and reaffirmed its prior dismissal on grounds of abatement. The Estate once again appealed to the district court, which affirmed. The Estate then timely appealed to this Court.
When this Court reviews the decision of a district court sitting in its appellate capacity, the standard of review is as follows:
The sole issue on appeal is whether John's claims survived his death. The Estate makes two main arguments in this regard. First, the Estate argues that John's claims fall under a common law exception to the rule of abatement. Second, the Estate argues that even if its claims abated, they fall under Idaho Code section 5-327(2) as an exception to abatement.
The Estate's petition alleged a breach of fiduciary duty claim, as well as claims for conversion, unjust enrichment, and constructive trust. The magistrate court concluded that all of the Estate's claims were in the nature of torts and consequently, they abated upon John's death. In so holding, the magistrate court relied on this Court's decision in Bishop v. Owens, 152 Idaho 616, 272 P.3d 1247 (2012).
In Bishop, this Court recognized that "[t]he abatement rule holds that in the absence of a legislative enactment addressing the survivability of a claim, the common law rules govern." 152 Idaho at 619, 272 P.3d at 1250. Under common law, claims arising out of contracts generally survive the claimant's death, while those sounding in pure tort abate. Id. The magistrate court in this case found the following excerpt from Bishop instructive for determining whether a case sounds in contract or tort:
Id. at 620, 272 P.3d at 1251. The magistrate court relied on the foregoing analysis to conclude that the claims, including the equitable claims, sounded in tort and were therefore abated.
We agree with the district court that the thrust of the Estate's claims were torts in that they focused on Johnson's alleged breach of fiduciary duty and the damages
However, the common law rule that tort claims abate is not an absolute rule and is subject to exceptions. Claims alleging an injury that lessens the injured party's estate are one such exception. Recently, this Court explained:
St. Luke's Magic Valley Reg'l Med. Ctr. v. Luciani, 154 Idaho 37, 41, 293 P.3d 661, 665 (2013) (quoting MacLeod v. Stelle, 43 Idaho 64, 75, 249 P. 254, 257 (1926)). Thus, torts that are not purely personal, but rather lessen the injured party's estate, survive death. The survivability of claims that arise from injuries that affect property and property rights was explained in American Jurisprudence as follows:
1 Am. Jur. 2d Abatement, Survival, and Revival § 51.
The injury complained of in this case was not purely personal, but rather an injury that allegedly lessened John's estate. Indeed, John alleged a breach of fiduciary duty due to Johnson's delay in distributing the trust assets, which not only affected John personally, but also affected his estate by potentially diminishing it during his lifetime and at death. Johnson argues that John did not suffer an injury to property because he had no right to the trust assets unless he survived distribution. This Court has recognized that "[a] trust creates a fiduciary relationship in which the trustee is the holder of legal title to the property subject to the beneficial interest of the beneficiary." DBSI/TRI V v. Bender, 130 Idaho 796, 808, 948 P.2d 151, 163 (1997). Accordingly, a beneficiary has a property interest in the trust res that is enforceable either in law or in equity. See generally, Restatement (2d) of Trusts, §§ 198-99 (1959); see also Hayden Lake Fire Prot. Dist. v. Alcorn, 141 Idaho 388, 401, 111 P.3d 73, 86 (2005) overruled on
The Estate argues that Johnson was required to distribute the trust assets within a reasonable time after the surviving parent's death. The Estate contends that Johnson unreasonably delayed in distributing the trust assets and urges this Court to adopt a rule where a beneficiary's interest vests upon a trustee's unreasonable delay in distributing a trust.
Although this Court has yet to address the precise issue, the California Supreme Court has confronted the issue. In In re Estate of Taylor, the testatrix died September 14, 1963, and her will provided that one-third of the residue of her estate should go to Ellen Glasky if she survived distribution of the estate. 66 Cal.2d 855, 59 Cal.Rptr. 437, 428 P.2d 301, 302 (1967). If Glasky predeceased distribution, her one-third share was to go in equal shares to two other individuals, one of whom was the executor of the estate. Id. The will was admitted to probate on November 26, 1963, and letters testamentary were issued to the executor on December 2, 1963. Id. However, the petition for final distribution was not filed until March 4, 1965, which requested that one-third of the residue of the estate be distributed to Glasky. Id. Hearing on the petition was set for March 29, 1965, but Glasky died on March 15, 1965. Id. The executor then filed another petition for final distribution requesting that the one-third share bequeathed to Glasky be distributed to him and the other contingent beneficiary. Id. The administratrix of Glasky's will objected to the petition, and the trial court sustained the objections to the petition and decreed that Glasky's interest vested in her before her death. Id. The court found that the estate could have been distributed in September of 1964 and should have been distributed before Glasky's death. Id. It subsequently ordered distribution of Glasky's share to the administratrix of Glasky's estate. Id.
On appeal, the California Supreme Court affirmed, noting that the evidence supported a finding of undue delay on the part of the executor. Id. The court recognized that to date, no California case had adopted the rule that vesting cannot be postponed by unreasonable delay in distributing an estate and that when there is such delay, contingent interests vest at the time distribution should have been made. Id. However, the court went on to adopt the rule and concluded that "unreasonable delay cannot defeat the beneficiary's interest." Id. at 303. The court reasoned that "this conclusion promotes the established policy favoring prompt distribution of estates and carries out the presumed intent of the testatrix," which absent any indication to the contrary, is prompt distribution. Id. (internal citations omitted).
In this case, there was a trust provision stating that the trustee "shall, as soon as reasonably possible, divide the net income and principal remaining in the trust into two (2) equal shares and distribute them to the following beneficiaries: TONI C. JOHNSON and JOHN H. CORNELL." This Court has held that "unless contrary to settled principles of law, the intentions of a trust's settlors must control in actions involving the trust." Carl H. Christensen Family Trust v. Christensen, 133 Idaho 866, 873, 993 P.2d 1197, 1204 (1999). The trust reflects the settlors' intent to have distribution made "as soon as reasonably possible." However, the facts before this Court indicate that Johnson delayed for nearly three years to account for or distribute the trust assets, which appears to us to be unreasonable. However, whether Johnson unreasonably delayed distribution of the estate is ultimately a question of fact that must be determined on remand.
Because the tort claims in this case alleged injuries that may have lessened John's Estate, we hold that they did not abate under common law. On remand, the trial court must determine not only whether waste has occurred, but also whether Johnson unreasonably delayed distribution of the trust assets. If the finder of fact concludes that Johnson unreasonably delayed, then as a matter of law, John's interest in the trust assets vested at a time when distribution should have occurred, assuming John survived through the time reasonably necessary to make distribution. Because we hold that the Estate's claims did not abate under the common law, we do not reach the Estate's second argument under Idaho Code section 5-327(2).
We reverse the district court's decision affirming the magistrate court's grants of summary judgment in favor of Johnson. We remand to the district court for proceedings consistent with this opinion. Costs to the Estate.
Chief Justice J. JONES and Justices EISMANN, W. JONES and HORTON concur.
