JASON D. WOODARD, Bankruptcy Judge.
This adversary proceeding is before the Court on the Motion for Partial Summary Judgment (the "Motion") (A.P. Doc. 60) filed by Michael R. Smith, Sr. (the "Defendant") on January 17, 2013 and the response thereto (the "Response") (A.P. Doc. 66). A hearing on the Motion was held on June 11, 2013. Appearing at the hearing were R. David Ringer, attorney for plaintiff Estate of Maggie Mae Smith (the "Plaintiff"), and Craig Geno and James Mozingo, attorneys for the Defendant. Plaintiff commenced this adversary proceeding with the filing of the Complaint (A.P. Doc. 1) on September 9, 2008, wherein the Plaintiff seeks a determination that debts arising from Defendant's alleged self-dealing related to a trust be declared nondischargeable pursuant to 11 U.S.C. § 523(a)(2), § 523(a)(4) and § 523(a)(6). This Court has jurisdiction pursuant to 28 U.S.C. §§ 151, 157(a) and 1334(b) and the United States District Court for the Northern District of Mississippi's Order of Reference dated August 6, 1984. This is a core proceeding arising under Title 11 of the United States Code as defined in 28 U.S.C. § 157(b)(2)(A), (B), and (I). The Court has considered the arguments of counsel, the pleadings, the evidence, the briefs and the law, and finds and concludes that summary judgment is due to be granted in favor of Defendant as to the transfer of the William Wilson Property.
The following facts are undisputed, if complicated. Plaintiff is the estate of the now deceased Maggie Mae Smith, acting through David Smith in his capacity as executor of her estate.
Katie Legett Wilson ("Aunt Katie") — sister to Ms. Maggie Smith and aunt of Plaintiff and Defendant — was the original owner of the William Wilson Property. In 1984, Aunt Katie deeded the William Wilson Property to the Defendant in his personal capacity (the "1984 Deed"). (A.P. Doc. 60, Ex. F). The 1984 Deed was never recorded in the public records. (A.P. Doc. 60, Ex. A, ¶ 6).
Aunt Katie and her sister, Eva Elise Legett ("Aunt Eva"), subsequently established the Mrs. Katie Louise Legett Wilson and Miss Eva Elise Legett Revocable Trust (the "Katie and Eva Trust"). (A.P. Doc. 60, Ex. H). With Defendant's knowledge and despite the prior 1984 Deed to Defendant, Aunt Katie deeded the William Wilson Property to the Katie and Eva Trust. (A.P. 60, Ex. A, ¶ 7). The Defendant stated in his affidavit that he had no use for the land at the time, and did not object to the land being placed in the Katie and Eva Trust. Id. Upon Aunt Katie's death, Aunt Eva conveyed four pieces of property — including the William Wilson Property — from the Katie and Eva Trust into the Eva Trust, effectively ending the Katie and Eva Trust. (A.P. Doc. 60, Ex. I). Aunt Eva was the settlor, creator, and sole beneficiary of the Eva Trust at the time of its establishment. (A.P. Doc. 60, Ex. E). At Aunt Eva's direction, Defendant served as the trustee of the Eva Trust. (A.P. Doc. 62, Pg. 2).
On March 15, 1999 Defendant, acting in his capacity as trustee of the Eva Trust, deeded the William Wilson Property from the Eva Trust to himself (the "1999 Deed"). (A.P. Doc. 60, Ex. C). The transfer of the William Wilson Property out of the Eva Trust to the Defendant was made at the direction of Aunt Eva, as evidenced by her written instructions. (A.P. Doc. 60, Ex. J). Although the consent of contingent beneficiary Maggie Smith was not required, she also consented to the transfer, as evidenced by her written acknowledgement. (A.P. Doc. 60, Ex. K). Defendant subsequently sold the William Wilson Property and retained the proceeds from the sale. (A.P. Doc. 60, Ex. D).
In 2002, David Smith filed a petition to become, and was subsequently appointed as, conservator for Ms. Maggie Smith. On August 9, 2002, the Conservatorship of Maggie Mae Smith filed a petition to remove Defendant as trustee of the Eva Trust.
Rule 56 of the Federal Rules of Civil Procedure governs the process by which a court will grant or deny a motion for summary judgment.
The Fifth Circuit Court of Appeals and Supreme Court have both clearly held that the moving party is responsible for submitting sufficient evidence that would show an absence of genuine issue of a material fact.
Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir.1994) (citing Celotex, 411 U.S. at 323, 106 S.Ct. at 2553). However, that obligation does not negate the responsibilities of the non-moving party as to issues on which that party bears the ultimate burden of proof. Celotex, 411 U.S. at 323, 106 S.Ct. 2548.
In response to Defendant's Motion, Plaintiff provided the Court with only a general response, admitting or denying the numbered assertions by the Defendant. (A.P. Doc. 66). The Plaintiff provided no evidence, affidavits, or even explanation for the general denial. While this may be an appropriate format for an answer to a complaint, it is usually insufficient as a response to a motion for summary judgment. Subsection (e) of Federal Rule of Procedure provides in relevant part:
Id. A party may not successfully defeat a motion for summary judgment with a blanket denial that the moving party's claims and assertions are correct, without also providing some degree of supporting evidence to show that there is a genuine issue as to a material fact. "If the moving party meets its burden, the non-movant must designate specific facts showing there is a genuine issue for trial." Little, 37 F.3d at 1075. As the Supreme Court has stated, "[o]ne of the principal purposes of the summary judgment rule is to isolate and dispose of factually unsupported claims or defenses." Celotex, 477 U.S. at 323-24,
Though the Complaint is unclear, it appears as though Plaintiff is attempting to bring an action for money damages equal to the sale price for which Defendant sold the William Wilson Property in 1999.
In re Taylor, 137 B.R. 925, 929 (Bankr. S.D.Ind.1991). Beginning with the question of the underlying debt, the Court must consider all relevant factors to the cause of action, including any applicable statute of limitations. "[T]he establishment of the debt itself, is governed by the state statute of limitations — if suit is not brought within the time period allotted under state law, the debt cannot be established." In re McKendry, 40 F.3d 331, 337 (10th Cir.1994). If the statute of limitations on the underlying cause of action has run, a suit seeking an alleged debt to be declared nondischargeable is also necessarily barred. Id.
Under Mississippi state law, the applicable statute of limitations for this action is three (3) years.
Under Mississippi law, the execution and delivery of the 1984 Deed from Aunt Katie, the undisputed owner, to the Defendant, met the necessary statutory requirements and validly transferred title of the William Wilson Property upon delivery
Even assuming that the William Wilson Property was not transferred by the 1984 deed, there exists between the Plaintiff and the Defendant no debate that, at the very latest, the ownership of the property was transferred to the Defendant on March 15, 1999, the date of the 1999 Deed which was recorded. (A.P. Doc. 60, ¶ 3) (A.P. Doc. 66, ¶ 3). In addition, Defendant's unrebutted affidavit indicates that Plaintiff was informed of the 1999 transfer prior to the conveyance. (A.P. Doc. 60, Ex. A, ¶ 11).
Viewing the evidence in the light most favorable to the nonmoving party, the Court considers the possibility that the first relevant litigation was the filing of the petition by plaintiff in Chancery Court to have Defendant removed as executor of the Eva Trust. (A.P. Doc. 60, Ex. G). The petition was not filed until August 9, 2002. Id. Further, the initial Complaint commencing the suit before this Court (which is the only action purportedly seeking damages related to the transfer of the William Wilson Property) was not filed until August 9, 2008. (A.P. Doc. 1).
Only one of the two deeds can be operational — either the 1984 Deed was a valid transfer of the property, thereby cutting off the line of subsequent transfers not stemming from the Defendant
The Plaintiff has not cleared the first step of determining nondischargeability, nor may it ever do so as the relevant state law claim is barred by the statute of limitations.
Assuming, arguendo, that the statute of limitations had not yet run, the Plaintiff has still failed to provide sufficient evidence to rebut Defendant's evidence that his actions were proper. The Defendant, and movant in this Motion, has submitted unrebutted evidence that the transfer of title of the William Wilson Property was properly carried out pursuant to the specific and written wishes and directions of the trust settlor. The Plaintiffs failure to respond to the Motion beyond general denials,
As already stated in the aforementioned analysis, the 1984 Deed from Aunt Katie to Defendant appears to be effective as to transferring the William Wilson Property and her interest therein to the Defendant.
When determining the proper execution of a trustor's intentions, a court:
Reedy, 200 Miss. at 212, 26 So.2d 685. It is clear from the trust terms that it was the intention of Aunt Eva, the trustor, to maintain control over the disposal of trust property during her lifetime. Furthermore, the Restatement (Third) of Trusts provides that absent contrary provision in the terms of the trust, the settlor's power to revoke or modify the trust can be exercised in any way that provides clear and convincing evidence of the settlor's intention to do so. Id. at § 63. The written directive of Aunt Eva to the Defendant provides such clear and convincing evidence of Aunt Eva's intention that the William Wilson Property be conveyed to Defendant. Aunt Eva specifically reserved the power to make such gifts out of trust property.
The relevant powers of Aunt Eva, enumerated in the terms of the trust, include:
(A.P. Doc. 60, Ex. E, Art. III(C); Art. VII(O); Art. XVIII) (emphasis added).
Aunt Eva specifically reserved the right to make any gift of trust property during her lifetime, and to any person including relatives. Id. Though Defendant very literally "dealt the property" to himself, the action was carried out in his capacity as appointed Trustee, while he received the property in his capacity as relative and/or chosen beneficiary of the Creator. It was a revocable trust and as such, Aunt Eva had no duty to secure the approval of anyone — including future contingent beneficiaries such as her sister Maggie — before transferring property. Pursuant to the trust authority cited above, Aunt Eva executed a valid consent and instructions to Defendant regarding the deed of the William Wilson Property. (A.P. Doc. 60, Ex. J). That Defendant also obtained the written consent of his mother, Maggie Smith, out of an abundance of caution, was not necessary. (A.P. Doc. 60, Ex. K). The written consent of a future contingent beneficiary had no effect on the validity or invalidity of the transfer.
Neither Maggie Smith nor her estate has standing to contest the transfer of deed since the property was withdrawn from the trust by its creator/settlor. "One seeking to enforce a trust must have an interest in the trust before becoming entitled to any relief." 8 Encyclopedia of Mississippi Law — Trusts § 73.16 (citing Dibrell v. Carlisle, 48 Miss. 691 (1873)). Aunt Eva was the sole beneficiary of the trust during her lifetime — no rights vested in anyone until Aunt Eva's death or incapacity. The Mississippi Supreme Court held the same in Johnson v. First National Bank, wherein the court stated that the settlor and sole beneficiary of a trust had the right to modify or even terminate a trust, and that it was not the business of the court to substitute its judgment for that of the creator/settlor. 386 So.2d at 1115. The court further held that "no one has standing to object to the ending of the trust in cases of this type where the settlor demands that the trustee return the trust property to him and the trustee acquiesces." Id. at 1114. Though the property in the instant case was given to a relative and not returned to the creator/settlor, the principle that the judgment and decisions regarding disposal of one's property should not and may not be challenged still holds true.
Though Plaintiff provided no evidence and no authority in its Response to the Defendant's Motion, the Plaintiff did cite to one case during the hearing on the Motion. Plaintiff refers to In re Conservatorship of Estate of Loyd, 868 So.2d 363 (Miss.Ct.App.2003), in which the Mississippi Court of Appeals affirmed a Chancery Court ruling which removed a trustee for breach of fiduciary duty, canceling land deeds executed by the former trustee, and ordering an accounting for trust property. Although many of the allegations contained in Loyd, overlap with those leveled by the Plaintiff, the Court finds that the Loyd case is distinguishable from the one at hand. First, in Loyd, there was no written directive from the grantor to the grantee/trustee, ordering them to dispose of the property in question. In this case, unrebutted evidence from Defendant shows that Aunt Eva specifically directed Defendant to deed the property out of the revocable trust and into his individual possession. (A.P. Doc. 60, Ex. J.).
Second, in Loyd there was significant evidence that the grantor had been suffering from dementia and had been having hallucinations for years prior to the transactions in question. Loyd, 868 So.2d at 367. Conversely, at no time has any party alleged that Aunt Eva suffered from diminished mental capacity, nor has there been any evidence suggesting such.
While Mississippi case law states that the "existence of a confidential or fiduciary relationship gives rise to a presumption of
Murray, 446 So.2d at 578. However, the third prong of the test was modified in Mullins v. Ratcliff, 515 So.2d 1183 (Miss. 1987), which held that while the subsections of the third prong are useful guideposts for the courts, "the independent advice prong of Murray has been read too strictly." Id. at 1193. Instead, the court held that the prong should simply be that "the grantor/testator exhibited independent consent and action ..." and that "the factors listed in Murray ... should be treated as factors that may be considered when independent action is proven by independent advice." Id. Despite Loyd being decided after Mullins, numerous cases that post-date both Loyd and Mullins cite to the Mullins standard. See, e.g., In re Estate of Holmes, 961 So.2d 674, 680 (Miss.2007); In re Estate of Hart, 20 So.3d 748 (Miss.Ct.App.2009); Forbes v. St. Martin, ___ So.3d ___, ___ 2013 WL 791847, *23 (Miss.Ct.App.2013). Independent advice — as demonstrated through the Murray sub-factors — is one way independent consent and action may be shown. However, it is not the only way.
Forbes, ___ So.3d at ____ fn. 5.
This Court is satisfied by the written directive and consent of Aunt Eva, as witnessed by her friends and family, as well as the separate written consent of future contingent trust beneficiary, Maggie Smith, showing that Aunt Eva gave independent consent. In summation, the only case relied upon by Plaintiff is distinguishable from the case at hand on numerous grounds, and the Court is not persuaded by Plaintiffs comparison.
Lastly, Defendant is entitled to grant of partial summary judgment as the evidence demonstrates that Plaintiff is estopped from bringing this action as to the William Wilson Property. Plaintiff, though under the direction of Defendant's brother, David Smith, is the Estate of Maggie Mae Smith. There is no evidence that Maggie Smith objected to the transfer in any way. In fact, the opposite is true. Maggie Smith specifically consented to the transfer in writing, thereby effectively waiving any right to challenge it (to the extent she had any such right at all). (A.P. Doc. 60, Ex. K). Waiver is the voluntary and intentional relinquishment of a
The Court is charged, when contemplating a motion for summary judgment, with viewing the evidence in the light most favorable to the non-moving party. However, "summary judgment is nonetheless appropriate against a party who fails to make a showing sufficient to establish an element essential to the party's case." Moore v. Mississippi Valley State Univ., 871 F.2d 545, 549-550 (5th Cir.1989). A mandatory preface to a suit for nondischargeability of a debt under § 523(a) is the establishment of an underlying debt. Taylor, 137 B.R. at 929. The underlying claim is subject to the normal statute of limitation requirements as imposed by the relevant state law. "[I]f the suit is not brought within the time allotted under state law, the debt cannot be established." McKendry, 40 F.3d at 337. Consequently, the nondischargeability action cannot survive as to the William Wilson Property. Even construing all facts in a light most favorable to the Plaintiff, the underlying claim fails as being barred by the statute of limitations. Further, the Court finds that no interpretation of the evidence as presented could support a conclusion that the underlying transfer of the William Wilson Property was fraudulent or contrary to applicable law. Finally, the claim (to the extent she had a claim) was waived by Maggie Smith and the waiver is now binding on her estate. For each of the independent foregoing reasons, any one of which would have been sufficient, the underlying claim fails. As such, the Court never reaches the issue of nondischargeability.
There is no genuine issue of material fact and Defendant is entitled to summary judgment as to the transfer of the William Wilson Property. Accordingly, it is hereby
