No. 92,912
IN THE COURT OF APPEALS OF THE STATE OF KANSAS
LILIA RODRIGUEZ-TOCKER, M.D.,
Appellee,
v.
THE ESTATE OF ALFRED M. TOCKER, M.D.,
THE ALFRED M. TOCKER, M.D., LIVING TRUST, AND DARRYL S. TOCKER, SUCCESSOR TRUSTEE OF THE ALFRED M. TOCKER, M.D., LIVING TRUST AND EXECUTOR OF THE ESTATE OF ALFRED M. TOCKER, M.D.,
Appellants,
and
IN THE MATTER OF THE ESTATE OF ALFRED M. TOCKER, M.D.
SYLLABUS BY THE COURT
1. Whether jurisdiction exists is a question of law over which an appellate court has unlimited review.
2. Appellate courts have only such appellate jurisdiction as is provided by law.
3. This court is vested with discretion to permit or deny an application for interlocutory appeal pursuant to K.S.A. 2004 Supp. 60-2102(c).
4. Under the law of the case doctrine, once an issue is decided by the court, it should not be relitigated or reconsidered unless it is clearly erroneous or would cause manifest injustice.
5. Pendent jurisdiction, also known as supplemental jurisdiction, refers to a court's jurisdiction to hear and determine a claim over which it would not otherwise have jurisdiction because the claim arises from the same transaction or occurrence as another claim that is properly before the court.
6. Exercise of pendent or supplemental jurisdiction is properly declined where propriety of district court's grant of partial summary judgment is not inextricably intertwined with or necessary to the resolution of other issues properly before the appellate court, nor would consideration of the issue have the effect of resolving the ultimate issue in the case.
7. The granting or denying of injunctive relief is reviewed for abuse of discretion.
8. Judicial discretion is abused only when no reasonable person would take the view adopted by the district court. On appeal, the appellate court examines the record only to determine if any reasonable grounds support the district court's decision.
9. To obtain injunctive relief, a movant must establish: (1) a substantial likelihood that the movant will eventually prevail on the merits; (2) a showing that the movant will suffer irreparable injury unless the injunction issues; (3) proof that the threatened injury to the movant outweighs whatever damage the proposed injunction may cause the opposing parties; and (4) a showing that the injunction, if issued, would not be adverse to the public interest.
10. The establishment of a bona fide risk to the defendants' ability to pay a judgment satisfies the requirement that the movants establish a probable right to the injunctive relief sought and a probable danger of irreparable injury if that injunctive relief is not granted.
11. Pursuant to K.S.A. 2004 Supp. 58a-706(b), a court may remove a trustee if: (1) the trustee committed a breach of trust; (2) a cotrustee's lack of cooperation substantially impairs the trust's administration; (3) the trustee's unfitness, unwillingness, or persistent failure to administer the trust in an effective manner leads the court to determine removal of the trustee best serves the beneficiaries' interests and is consistent with the terms of the trust; or (4) a substantial change of circumstances leads the court to determine removal of the trustee best serves the beneficiaries' interests, is consistent with the terms of the trust and not inconsistent with a material purpose of the trust, and a suitable successor trustee or cotrustee is available.
12. A district court's decision to remove a trustee or executor is reviewed for abuse of discretion.
Appeal from Sedgwick District Court; ERIC R. YOST, judge. Opinion filed February 10, 2006. Affirmed in part and dismissed in part.
Warren R. Southward, of Madden & Orsi, of Wichita, and Robert Martin and Ross W. Townsend, of Martin, Pringle, Oliver, Wallace and Bauer, L.L.P., of Wichita, for appellants.
Vern Miller of Law Offices of Vern Miller, of Wichita, Robert M. Hughes, of Bever Dye, L.C., of Wichita, and Coy M. Martin and John Terry Moore, of Moore Martin, L.C., of Wichita, for appellee.
Before PIERRON, P.J., CAPLINGER, J., and BUKATY, S.J.
CAPLINGER, J.: Defendants appeal the district court's order granting partial summary judgment to plaintiff, Lilia Rodriguez-Tocker, M.D., arguing the court erroneously interpreted the antenuptial and postnuptial agreements executed by Lilia and Alfred Tocker, M.D., now deceased. Defendants also appeal the court's orders enjoining defendants from depleting the assets of the trust or estate and directing the removal of the trustee and executor.
We dismiss defendants' challenge to the district court's order granting partial summary judgment based upon our finding that this court lacks jurisdiction over that nonfinal decision. However, we affirm the decisions of the district court which are before us on direct appeal. Specifically, we conclude the district court did not abuse its discretion in issuing an injunction prohibiting defendants from distributing or transferring any assets of the trust or estate pending final adjudication of Lilia's claims. And we further find the district court did not abuse its discretion in disqualifying Darryl Tocker to serve as trustee and executor and peremptorily disqualifying Robert Tocker to serve as successor trustee and executor, pending resolution of this litigation.
Background
Lilia and Alfred married on December 11, 1961. Prior to their marriage, the parties executed an antenuptial agreement, which provided, in pertinent part:
"WHEREAS, the said Lilia M. Rodriguez, Party of the First Part, is the owner of certain stock, savings, checking accounts and other personal property, and
"WHEREAS, the said Alfred M. Tocker, Party of the Second Part, is the owner of certain notes, debentures, stock, securities, savings, checking accounts and other personal property, and
"WHEREAS, each of the parties hereto is familiar with the nature, extent and amount of property owned by the other, and it is mutually desired and agreed between the said parties that the property and estate of each of the said parties as now composed and constituted shall remain separate and be subject to the sole control and use of its owner as well after the solemnization of said marriage as previous thereto, except as hereinafter stated; and
. . . .
"IT IS AGREED BY AND BETWEEN THE PARTIES TO THIS AGREEMENT . . . as follows:
"1. That the estate of the Party of the First Part shall remain her separate property, subject entirely to her individual control and use, the same as if she were unmarried; and the Party of the Second Part shall not acquire by reason of said contemplated marriage, for himself, his heirs, assigns or creditors, any interest in said property or estate or right to the control thereof or any interest in the gross income, increase, rents, profits or dividends arising therefrom, excepting as hereinafter provided; and IT IS FURTHER AGREED BY THE PARTY OF THE FIRST PART that any property the Party of the Second Part may hereafter acquire by will or descent shall be owned and held by him as though he had acquired it before the solemnization of said marriage; and the Party of the Second Part agrees in consideration of said contemplated marriage and the conveyance of the Party of the First Part herein set forth that he will and does waive, release and relinquish unto the Party of the First Part all right to the use and control of her separate property and the estate and the gross income therefrom and further agrees that the Party of the First Part shall have the right at any time to dispose of any part or all of her separate property or estate by deed, will, or otherwise, upon her sole signature, hereby ratifying and consenting on his part to any and all such disposition of her said property or estate, or in case any purchaser desires that he join in the execution of any instrument conveying any part of her said separate estate, he will jointly execute the same with her.
"2. That the estate of the Party of the Second Part shall remain his separate property, subject entirely to his individual control and use, the same as if he were unmarried; and the Party of the First Part shall not acquire by reason of said contemplated marriage, for herself, her heirs, assigns or creditors, any interest in said property or estate or right to the control thereof or any interest in the gross income, increase, rents, profits or dividends arising therefrom, excepting as hereinafter provided; and IT IS FURTHER AGREED BY THE PARTY OF THE SECOND PART that any property of the Party of the First Part may hereafter acquire by will or descent shall be owned and held by her as though she had acquired it before the solemnization of said marriage; and the Party of the First Part agrees in consideration of said contemplated marriage and the conveyance of the Party of the Second Part herein set forth that she will and does waive, release and relinquish unto the Party of the Second Part all right to the use and control of his separate property and the estate and the gross income therefrom and further agrees that the Party of the Second Part shall have the right at any time to dispose of any part or all of his separate property or estate by deed, will, or otherwise, upon his sole signature, hereby ratifying and consenting on her part to any and all such disposition of his said property or estate, or in case any purchaser desires that she join in the execution of any instrument conveying any part of his said separate estate, she will jointly execute the same with him.
"3. Both parties to this agreement are licensed practitioners of medicine, and as to the income or personal earnings of either or both or the acquiring of real estate, notes, stocks, securities and other personal properties after the contemplated marriage and subsequent to the solemnization of said marriage, the same shall be considered as joint earnings and shall become their property as joint tenants with right of survivorship, and the survivor shall become the sole owner thereof in the case of the death of either, and any other real, personal or mixed property acquired by either or both out of the income of either or both during said marriage relationship shall become likewise joint property with the right of survivorship. PROVIDED, HOWEVER, that any increment to the separate estate of either by operation of law shall not be considered as income or joint earnings; and PROVIDED, FURTHER that nothing in this agreement shall relieve said Party of the Second Part from his obligation as a husband to the Party of the First Part as his wife, as provided by the laws of the State of Kansas.
"4. The provisions of this agreement shall extend to any and all properties of the said parties now owned by said parties as separate estate or joint earnings during such marriage relationship under the laws of any state or country."
Subsequently, in 1977, the parties executed a postnuptial agreement, which amended paragraph 3 but ratified the remainder of the antenuptial agreement. The paragraph, as amended, provided:
"'3. Both parties to this agreement are licensed practitioners of medicine, and as to the income and personal earnings of either or both and the acquiring of real estate, notes, stocks, securities and other property of any nature whatsoever during their marriage, the same shall be considered as joint monies and shall become their joint property as tenants in common, not as joint tenants and without right of survivorship. Each shall own said property in equal shares and each shall have the right to dispose of his or her share, as the case may be, during lifetime, and by testamentary disposition without regard to the rights or wishes of the other. Any increment or appreciation to the separate estate of either party by operation of law or otherwise shall not be considered as income or joint earnings or joint property. Nothing in this agreement shall relieve AL from his obligation as a husband to LILIA as his wife as provided by the laws of the State of Kansas.'"
In 2000, apparently unbeknown to Lilia, Alfred (Al) created the Alfred M. Tocker, M.D., Living Trust ("the trust"). The trust identified Al's nephew, Darryl Tocker, as successor trustee and Al's brother, Robert Tocker, as successor trustee in the event Darryl was unavailable. Further, the trust directed the successor trustee to distribute the trust assets upon Al's death to Al's nephews and nieces; Lilia was not named as a beneficiary.
The parties remained husband and wife until Al's death on October 23, 2001. No children were born of the marriage. At the time of Al's death, the trust, comprised of various bank accounts, stocks, bonds, mutual funds, and the like, was valued at approximately $8 million.
In November 2001, Darryl Tocker filed a petition for probate of Al's will and issuance of letters testamentary in Sedgwick County District Court. The court admitted the will to probate and appointed Darryl as executor in conformance with the wishes set forth in Al's will. Darryl identified the value of the probate assets as $277,410.
Lilia filed written defenses in the probate case as well as a petition exercising her right to receive her spousal elective share of Al's augmented estate. Additionally, Lilia filed a petition in Sedgwick County District Court, case No. 02 C 0446, against the following parties: The Estate of Alfred M. Tocker, M.D., The Alfred M. Tocker, M.D., Living Trust, and Darryl S. Tocker, Successor Trustee of the Alfred M. Tocker, M.D., Living Trust and Executor of the Estate of Alfred M. Tocker, M.D. (defendants). Lilia initially also included as a party Robert L. Tocker in his capacity as successor trustee of the trust and alternate executor of Al's estate. The district court dismissed Robert as a party, however, and he is not a party to this appeal.
Lilia's petition asserted alternative claims for: (1) breach of the antenuptial and postnuptial agreements; (2) a determination that the agreements were void; and (3) a declaration of Lilia's spousal election rights. Additionally, the petition asserted claims for breach of fiduciary duty and conflict of interest against Darryl and alleged wrongful conversion. Finally, the petition requested appointment of a receiver and an accounting. Essentially, through the civil case, Lilia sought to bring the assets of the trust into the probate estate for distribution in accordance with her spousal elective share. The district court later dismissed Lilia's claims for breach of fiduciary duty, conflict of interest, and conversion.
District court's decision on motion for partial summary judgment
Lilia filed a motion for partial summary judgment in the civil action requesting that the district court construe the antenuptial and postnuptial agreements and determine the legal effect of such upon Lilia's share of and interest in the income, property, and assets earned or acquired by Al during their marriage. Lilia argued growth from Al's separate property during the marriage, whether in the form of income, profits, or other increases, constituted joint property and she did not clearly and unmistakably waive her right of election as to that property.
In an order dated December 1, 2003, the district court determined no genuine issues of material fact remained as to the construction of the antenuptial and postnuptial agreements and, accordingly, deemed the matter ripe for partial summary judgment. The court found the parties agreed both that the antenuptial and the postnuptial agreements were not ambiguous and that it would be improper to allow extrinsic evidence to establish the intent of the parties. The court noted the agreements identified as separate property all property acquired by the parties prior to the marriage and/or inherited by the parties during the marriage by will or descent. Further, the court acknowledged the agreements limited the parties' rights regarding each other's separate property. The court concluded, however, that "[t]he income from, or growth of, separate property during the marriage is joint property," which, pursuant to the postnuptial agreement, the parties owned as tenants in common. The court also determined the agreements did not contain language clearly and unmistakably waiving Lilia's right of election.
Defendants filed two motions for reconsideration of the court's order granting partial summary judgment, disputing the court's findings that defendants agreed the agreements were unambiguous and that extrinsic evidence should not be considered and challenging the court's interpretation of the antenuptial and postnuptial agreements.
The district court adhered to its prior ruling and denied defendants' motions for reconsideration. However, in an order dated August 3, 2004, the court granted defendants' request to allow an interlocutory appeal of the court's order granting partial summary judgment, finding the proper construction of the antenuptial and postnuptial agreements was a controlling issue in the case, substantial grounds existed for difference of opinion regarding the proper construction of the agreements, and an interlocutory appeal would ultimately advance the conclusion of the litigation.
On August 16, 2004, defendants filed an application with this court for permission to take an interlocutory appeal of the district court's partial summary judgment decision. Importantly, that application was denied by the motions panel of this court in an order dated August 25, 2004.
District court's decision on motions for injunction and for removal of trustee
In March 2004, in response to a motion by defendants for authority to distribute trust income, Lilia moved to enjoin "defendants from further depleting trust assets by any means, pending final adjudication and/or the posting of a good and sufficient trustee bond." Lilia claimed defendants had already distributed $1.8 million from the trust and sought to prevent defendants from distributing or transferring any more assets of the trust for any reason, including payment of attorney fees associated with the present litigation. The following day, the court issued a temporary stay on all distributions.
Lilia also filed a motion to remove Darryl Tocker as trustee and executor and to disqualify Robert as successor trustee and successor executor. Lilia argued Darryl failed to comply with the duties imposed upon him as trustee and executor and claimed Darryl had a conflict of interest by serving in many capacities. Lilia also argued Robert had a conflict of interest by virtue of his blood relationship to Darryl that should prevent him from succeeding Darryl as trustee and executor.
The district court held a joint hearing on Lilia's motions and received proposed findings of fact and conclusions of law from the parties. Regarding Lilia's motion for an injunction, the court found there was a threat to the ability of defendants and the court "to fully satisfy [Lilia's] share of marital assets, whether calculated on the basis of the Kansas Elective Share or on the basis of [Lilia's] tenancy-in-common interest based upon the postnuptial agreement," and given defendants' distributions to beneficiaries, payment of substantial expenses, and handling of the estate's tax returns, continuing to allow defendants to control assets of the trust and estate could render the court's ultimate judgment ineffectual. Accordingly, the court ordered defendants "to refrain from making any distributions or transfer of trust assets, whether in the form of distributions to beneficiaries, payments for expenses, or otherwise, that would have the effect of diminishing or depleting the assets or income of the trust or the estate." Later in the journal entry, the court rephrased its ruling to prohibit distribution or transfer of trust or estate assets.
Regarding Lilia's motion to remove the trustee and executor and disqualify the successor trustee and successor executor, the district court identified Darryl Tocker's numerous roles in the litigation, including trustee of the trust, executor of Al's estate, beneficiary of both the trust and the will, expert witness, and tax preparer for both the trust and the estate. The court found "inherent conflicts of interest" associated with Darryl's various roles and determined he had failed to comply with the duties imposed by both the Uniform Trust Code, K.S.A. 2004 Supp. 58a-101 et seq., and the Kansas Probate Code, K.S.A. 59-101 et seq. The court further found Lilia had standing to seek Darryl's removal as trustee and executor but also determined it had independent authority to remove and replace Darryl. Ultimately, the court ordered Darryl be removed and replaced as executor of the estate and as trustee of the trust.
Further, the district court acknowledged that the successor trustee, Robert Tocker, was Darryl Tocker's father, Al's brother, and father and grandfather to some of the named trust and estate beneficiaries. The court found these blood relationships created an "inherent conflict of interest," especially given the possibility that the successor trustee might be required to take a position adverse to Darryl. Accordingly, the court concluded Robert would not be allowed to serve as successor trustee or as successor executor. The court did not appoint a replacement executor or trustee, however. Instead, the court directed the parties to confer as to who the court should appoint.
This appeal was filed on August 11, 2004. In the notice, defendants expressed their intention to appeal, inter alia, the district court's grant of partial summary judgment, issuance of an injunction, and order to remove Darryl Tocker as trustee and executor and to disqualify Robert Tocker from serving as Darryl's successor. As discussed above, however, the defendants also separately filed an application for leave to take an interlocutory appeal of the district court's partial summary judgment decision, which was denied by this court.
Jurisdiction to consider partial summary judgment
On appeal, defendants first argue the district court erred in granting Lilia's motion for partial summary judgment. Defendants challenge the court's construction of the antenuptial and postnuptial agreements, arguing the court erred in refusing to consider extrinsic evidence and in determining the income from or growth of Al's separate property constituted joint property subject to Lilia's interests and claims. According to defendants, proper construction of the agreements mandates a determination that the income from or growth of Al's separate property was, itself, separate property free from Lilia's reach. Defendants also contend partial summary judgment was inappropriate due to the existence of contested issues of material fact; namely, whether the parties' conduct subsequently modified the terms of the antenuptial and postnuptial agreements.
Preliminarily, we must determine whether this court has jurisdiction to review the district court's grant of partial summary judgment. Whether jurisdiction exists is a question of law over which an appellate court has unlimited review. Mid-Continent Specialists, Inc. v. Capital Homes, 279 Kan. 178, 185, 106 P.3d 483 (2005).
Appellate courts have only such appellate jurisdiction as is provided by law. State v. Verge, 272 Kan. 501, 521, 34 P.3d 449 (2001). Specifically, an appeal may be taken to this court as a matter of right from a final decision. K.S.A. 2004 Supp. 60-2102(a)(4). Clearly, the district court's grant of partial summary judgment was not a final decision. See Investcorp v. Simpson Investment Co., 277 Kan. 445, 454, 85 P.3d 1140 (2003) (final decision disposes of entire merits of case and leaves no further questions or directions for further actions by court). Of course, interlocutory appeals are, at times, permitted. See K.S.A. 2004 Supp. 60-2102(c) (identifying procedure for taking interlocutory appeal). Indeed, the district court indicated an interlocutory appeal of its decision granting partial summary judgment was appropriate and defendants filed an application with this court for an interlocutory appeal of the partial summary judgment decision. This court was vested with discretion to permit or deny defendants' application, however, and the motions panel of this court exercised that discretion in denying defendants' request. See K.S.A. 2004 Supp. 60-2102(c) (Court of Appeals may, in its discretion, permit interlocutory appeal).
Despite this court's rejection of their application for interlocutory appeal, defendants continue to urge this court to review the propriety of the district court's grant of partial summary judgment in this appeal. To this end, defendants assert the proper construction of the antenuptial and postnuptial agreements is a "dominant issue" and "inextricably intertwined with, and necessary to the resolution of" the orders that are appealable as a matter of right. Further, defendants claim resolution of this issue will render moot or resolve the remaining issues that are presently on appeal. Accordingly, defendants maintain this court has jurisdiction to review the order granting partial summary judgment pursuant to the principles of what defendants term "pendent appellate jurisdiction." In support of their arguments, defendants cite Cypress Media, Inc. v. City of Overland Park, 268 Kan. 407, 997 P.2d 681 (2000).
We believe our review of this issue is precluded under the law of the case doctrine. Under that doctrine, once an issue is decided by the court, it should not be relitigated or reconsidered unless it is clearly erroneous or would cause manifest injustice. State v. Collier, 263 Kan. 629, Syl. ¶ ¶ 2, 3, 952 P.2d 1326 (1998).
Moreover, we do not believe we have "pendent interlocutory jurisdiction" to review this concept as asserted by the defendants. As the Cypress Media court noted, there is a dearth of Kansas case law considering this concept. 268 Kan. at 415. Generally, pendent jurisdiction refers to "[a] court's jurisdiction to hear and determine a claim over which it would not otherwise have jurisdiction, because the claim arises from the same transaction or occurrence as another claim that is properly before the court." Black's Law Dictionary 870 (8th ed. 2004). Pendent jurisdiction, also known as supplemental jurisdiction, typically involves a federal court's exercise of jurisdiction over state law claims brought within the same controversy. See Black's Law Dictionary 870-71 (8th ed. 2004) (providing example of pendent jurisdiction; defining supplemental jurisdiction).
The Cypress Media court applied this concept in ruling it had jurisdiction to consider an issue that was not otherwise properly before the court because it was "inextricably intertwined" with the issue that was properly before the court on interlocutory appeal. 268 Kan. at 415. Specifically, the district court had issued an order compelling defendant to give plaintiff unredacted copies of attorney fee billing statements due to defendant's failure to provide an adequate privilege log. The district court certified its ruling for interlocutory appeal, and this court granted defendant's application for an interlocutory appeal before transferring the case to the Supreme Court.
On appeal, defendant argued the Supreme Court also had jurisdiction to consider the district court's prior ruling that the billing statements were not per se privileged even though the district court had refused to certify that ruling for interlocutory appeal. According to defendant, the privilege issue was "inextricably intertwined" with the court's order to compel production, as that order was a reaction to defendant's continued claim that the billing records were privileged. The Supreme Court agreed, explaining "the broader per se privilege issue was at the heart of and inextricably intertwined with the privilege log issue which has the effect of resolving the ultimate issue in this case." 268 Kan at 415.
Notably, the procedural posture of Cypress Media varies from that of the present case. In Cypress Media, defendant's application for an interlocutory appeal was granted and defendant sought review of an additional issue which had not been certified for interlocutory review. In contrast, this appeal is before the court for resolution of issues from which defendants may appeal of right. See K.S.A. 2004 Supp. 60-2102(a)(2) (appeal may be taken as of right from order granting injunction); K.S.A. 2004 Supp. 59-2401(a)(2) (appeal may be taken from order removing fiduciary other than special administrator); and K.S.A. 2004 Supp. 59-102(3) (defining "fiduciary" to include trustee). Here, defendants' application for interlocutory appeal of the district court's partial summary judgment ruling was denied.
Nor do we agree with defendants' suggestion that determination of the propriety of the district court's grant of partial summary judgment is "inextricably intertwined with, and necessary to the resolution of" the other issues properly before this court. Unlike Cypress Media, this court has the ability to conduct a meaningful review of the issues properly before the court without determining the propriety of the district court's grant of partial summary judgment. More specifically, the district court's actions in issuing an injunction and removing Darryl as executor and trustee are not inextricably intertwined with the court's determination that the income from, or growth of, Al's separate property during the marriage was joint property.
Further, unlike Cypress Media, review of the district court's grant of partial summary judgment would not have the effect of resolving the ultimate issue in this case. It bears repeating that the court's grant of partial summary judgment construed the antenuptial and postnuptial agreements with regard to only two issues: (1) whether growth of Al's separate property during the marriage constituted joint property, and (2) whether Lilia waived her right of election as to that property. Many issues remain in this controversy.
Kansas courts have a strong policy against piecemeal appeals. Arnold v. Hewitt, 32 Kan. App. 2d 500, 504, 85 P.3d 220 (2004). Moreover, the fact remains that the motions panel of this court has previously denied defendants' request for an interlocutory appeal of the district court's grant of partial summary judgment. Accordingly, we conclude we do not have jurisdiction to review the district court's grant of partial summary judgment.
Issuance of injunction
Next, defendants challenge the district court's issuance of an injuncti