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IN THE UTAH COURT OF APPEALS

K1MDAHL,

Appellant,

vs.

MARLETTE ENTERPRISES, LC, C. ROBERT DAHL, DAHL FAMILY IRREVOCABLE

TRUST, AND CHARLES F. DAHL,

Appellees.

BRIEF OF APPELLANT

Appellate Case No. 20111077 District Court Case No. 090402989

Appeal from the Fourth District Court, Utah County, Judge Lynn W. Davis Oral Argument Requested

Steve S. Christensen (U.s.B. No. 6156) [email protected] David M. Corbett (U.S.B. No. 13946) Craig L. Pankratz (U.s.B. No. 12194) Samuel]. Sorensen (U.S.B. No. 13366) CHRISTENSEN CORBETT & PANKRATZ, PLLC

136 East South Temple, Suite 1400 Salt Lake City, Utah 84111-3156 Telephone: (801) 303-5800 Facsimile: (801) 322-0594 Attornrys for Appellant Kim Dahl

Rosemond Blakelock BLAKELOCK & PETERSON

1832 North 1120 West Provo, UT 84604 Telephone: (801) 356-1720 Facsimile: (801) 356-1730 Attorn~y.for Appellees

TABLE OF CONTENTS

TABLE OF AUTHORITIES ....................................................................................................... 4

STATEMENT OF JURISDICTION .......................................................................................... 7

STATEMENT OF THE ISSUES ................................................................................................ 7

STATEMENT OF THE CASE ................................................................................................. 11

STATEMENT OF RELEVANT FACTS ................................................................................. 11

SUMMARY OF THE ARGUMENT ........................................................................................ 27

ARGUMENT ............................................................................................................................... 30

1. The Trust is revocable under Utah law ..................................................................... 31

I(a). The Trust is revocable pursuant to the sole beneficiary rule ................................. 32

I (b). Even if the setdor's unrestricted power to amend the Trust Agreement does not render the Trust revocable, Utah's public policy invalidates the irrevocability provision ............................................................................................................. 36

II. Judge Davis erred when he resorted to Nevada law as an alternative basis to construe the Trust as irrevocable because the application of Nevada law leads to a result that violates Utah's public policy ................................................................... .41

III. Judge Davis abused his discretion when he entered summary judgment on Kim's alter ego theory without allowing her to conduct discovery ................................... .44

IV. Judge Davis erred when he issued a hypothetical ruling that causes of action not before him would have been barred by the statute of limitations .......................... .48

CONCLUSION ........................................................................................................................... 51

3

TABLE OF AUTHORITIES

Cases

Bqyd v. Grand Trunk W.R Co., 338 c.s. 263 (1949) ......................................................................... .42

Callioux ZJ. Progressi1)e 1m. Co., 745 P.2d 838 (Utah Ct. App. 1987) ................................................... .45

Cecil1). Cecil, 356 P.2d 279 (Utah 1960) ............................................................................................ 38

Clqyton v. Behle, 565 P.2d 1132 (Utah 1977) ............................................................................... 33, 34

Combe 1). Wamn's ramify Drive-lnm, l1Z(~, 680 P.2d 733 (Utah 1984) ................................................. .48

Cornia l). Cornia, 546 P.2d 890 (Utah 1976) ..................................................................................... .48

Culbertson v. Bd. qfCotmty Com'rs, 2001 UT 108,44 P.3d 642 ............................................................ 30

De ue v. Hicks, 611 P.2d 211 (Nev. 1980) ....................................................................................... 34

Due South, Inc. 1). Dep't if Alcoholir Betl• Control, 2008 UT 71, 197 P.3d 82 .......................................... 30

Estate if Flake v. Flake, 2003 UT 17, 71 P.3d 589 ....................................................................... 33, 43

First Nat. Bank qf Chirago v. Ettlinger, 465 F.2d 343 (7th Cit. 1972) ................................................... .42

Fletchert). Fletcher, 615 P.2d 1218 (Utah 1980) .................................................................................. 38

Florida Nat. Bank if Palm Beach COUllty 1). Gm01)a, 460 So.2d 895 (Fla. 1984) ...................................... 34

Franco v. Church rifJesus Christ ifLatter-dqy Saints, 2001 UT 25, 21 P.3d 198 ..................................... 50

Hoggan 1). Hoggan, 2007 UT 78, 169 P.3d 750 ................................................................................... 33

Howel! 1). Howell, 806 P.2d 1209 (Utah Ct. App. 1991) ..................................................................... 38

111 re Bell's Estate, 29 Utah 1 (Utah 1904) .................................................................................... 37, 42

In re Estate q/Wes!, 948 P.2d 351 (Utah 1997) .................................................................................. 33

III re Woodward's Tn/st, 284 A.D. 459 (New York 1954) ................................................................... 34

III tbe Mat/eroftbe Estate if Leone, 860 P.2d 973 (Utah Ct. App. 1993) .............................................. 30

]ambsel1 Com!. Co., Inr. 1). Teloll Builden, 106 P.3d 719 (Utah 2005) ................................................... .42

4

1:yon v. Bateman, 119 Utah 434, 228 P.2d 818 (Utah 1951) .............................................................. .48

MIJ Bremen 1). Zapata OfFShore Co., 407 U.S. 1 (1972) ..................................................................... .42

Mathie v. Mathie, 363 P.2d 779 (Utah 1961) ..................................................................................... 38

McRae I'. J ack.ron, 526 P.2d 1190 (Utah 1974) .................................................................................. .48

Meadou! FreJh FarmJ, 1m: I'. Utah State Unil)mit;, Dept. rifAgrictfltttre ti~ Applied Science, 813 P.2d 1216

(Utah Ct. }lPP. 1991) ............................................................................................................ 48,49

Mryer I). Bank q/Manhattall TrtlJt Co .• 232 A.D. 228, 249 N .Y.S. 640 (1931) ...................................... 34

Miller I). If/ealier, 2003 UT 12,66 P.3d 592 ...................................................................................... .48

Nie/Jol1 I'. NielJol1, 780 P.2d 1264 (Utah Ct. App. 1989) .............................................................. 37, 38

01)mtock.tom, Jm: v. SmartBargaim, Inc., 2008 UT 55, 192 P.3d 858 .................................................. .45

Palmeri). Palmer, 26 Utah 31 (Utah 1903) ......................................................................................... 37

Patter.ron v. Pattmon, 2011 UT 68, 266 P.3d 828 ............................................................................... 33

Perrenoud IJ. Harman, 2000 UT App 241, 8 P.3d 293 ......................................................................... 33

PhillipJ IJ. Lowe, 639 S.W.2d 782 (Ky. 1982) ..................................................................................... 34

Pierce I). Pierce, 994 P.2d 193 (Utah 2000) ................................................................................... 36, 37

Porter 1). CommiJJioner, 60 F.2d 673 (2nd Cit. 1932) ............................................................................. 34

Pn'ce Del). Co., L.P. I). Orem City, 2000 UT 26,995 P.2d 1237 ........................................................... .45

Progrmil)e Cm. 1m. Co. Ii. EWal1, 2007 UT 52, 167 P.3d 1011 ............................................................ 30

RrynoldJ 1). RrynoldJ, 788 P.2d 1044 (Utah Ct. App. 1990) ................................................................ .48

Roly IJ. COip. ojLlqyd'J, 996 F.2d 1353 (2nd Cit. 1993) ...................................................................... .42

lli/JJeI! Packard Dev., 1m: Ii. Carson, 2005 UT 14, 108 P.3d 741 ......................................................... .49

lr~ti~G. Co. t'. Redeli. A,gmo!, 802 P.2d 755 (Ltah Ct. App. 1990) ...................................................... 31

WaddotfPJ I). Amalgamated Sugar Co., 54 P.3d 1054 (2002) ................................................................ .41

5

Wcryne lJ. W7qyne, 2012 UT 13,275 P.3d 238 ..................................................................................... 32

Statutes

Nev. Re\~. Stat. § 163.560 ................................................................................................................ 43

Utah Code Ann. § 30-3-5 ............................................................................................................... 38

Utah Code Ann. § 75-7-107 ..................................................................................................... 41,42

Utah Code Ann. § 75-7-1103 .......................................................................................................... 32

Utah Code Ann. § 75-7 -411 ........................................................................................................... 3 3

Utah Code Ann. § 75-7-605 ......................................................................................... 32,33,36,43

Rules

lJtah R. Civ. P. 56 .......................................................................................................................... 45

6

STATEMENT OF JURISDICTION

This Court has jurisdiction under Utah Code Ann. § 78A-4-103(h) (2012).

STATEMENT OF THE ISSUES

Issue #1:

Whether the trial court erred when it determined that the Trust was irrevocable under

Utah law.

1. Standard of Review:

To determine whether a trial court properly granted summary judgment, a trial

court's legal conclusions are reviewed for correctness with no deference. Utab Coal r&~

Lumber Rest. Inc., t). Outdoor Endeavor..r Unlimited, 2001 UT 100, ~ 9, 40 P.3d 581. The validity

and construction of a trust is an issue of law, which is reviewed for correctness without any

deference to the trial court's determination of law. Lakeside Lumber Product.f, Inc. tl. El)anJ,

2005 UT App 7, ~ 8,110 P.3d 154; Ertate ~ff<iake t'. Flake, 2003 UT 17, ~ 8, 71 P.3d 589;

Groesbeck Z). Groesbeck (In re Estate qfGroe-fbeckj, 935 P.2d 1255,1257 (Utah 1997).

2. Determinative Law:

Constitutional Provisions, Statutes, and Rules:

Utah Code Ann. § 30-3-5(8)( d); Utah Code Ann. § 75-7-107; Utah Code Ann. § 75-7-

411; Utah Code Ann. § 75-7-605).

Cases:

Cedlz •. Cecil, 356 P.2d 279, 281 (Utah 1960); Clqyton v. Behle, 565 P.2d 1132, 1133

(Utah 1977); Perrenoud tJ• Harman, 2000 UT App 241, ~ 17, 8 P.3d 293, Patterson Zl. Patten"on,

2011 UT 68, ~~ 29-30,266 P.3d 828, Hoggan v. Hoggan, 2007 UT 78, ~ 11,169 P.3d 750;

7

]acobJen ConJt. Co., 1m: v. Teton Budden, 2005 UT 4, 106 P.3d 719; Bqyd 1'. Grand Trunk W".R

Co., 338 U.S. 263 (1949); Rolry t'. Corp. qfLlqyd\ 996 F.2d 1353 (2nd Cir. 1993); FirJt Nat. Bank

qfChicago v. Ettlinger, 465 F.2d 343 (7 th Cir. 1972); Pierce v. Pierce, 2000 UT 7, 994 P.2d 193;

Nie/Jon v. NielJon, 780 P.2d 1264 (Utah Ct. App. 1989); Palmer l). Palmer, 26 Utah 31 (Utah

1903); In re Beltr BI·tate, 29 Utah 1, (Utah 1904); In re EJtate qfWeJt, 948 P.2d 351 (Utah 1997);

In re Woodward'J TruJt, 284 A.D. 459,464 (New York 1954); Mathie l). Mathie, 363 P.2d 779

(Utah 1961); Howell v. Howell, 806 P.2d 1209 (Utah Ct. App. 1991);f<ietcher 1). Fletcher, 615 P.2d

1218 (Utah 1980); Recordr 1). BriggJ, 887 P.2d 864 (Utah Ct. App. 1994).

3. Statement of Preservation:

This issue was preserved at R. 563-65; 2011; 2862-91.

Issue #2:

Whether the trial court erred by applying Nevada law in order to construe the Trust

Agreement where the application of Nevada law led to a conclusion that violates Utah's

public policy.


A trial court's conclusion regarding which law should apply constitutes a legal

conclusion, and the appellate court gives a trial court's legal conclusions no deference but

reviews them for correctness. Shaw l'. Layton Comt. Co., 1m:, 872 P.2d 1059, 1061 (Utah Ct.

App. 1994); Kennecot Corp. 1). State Tax Comm'n, 862 P.2d 1348, 1350 (Utah 1993).



Nevada Rev. Stat. § 163.560; Utah Code Ann. § 30-3-5(8)(d); Utah Code Ann. § 75-7-

8

107; Utah Code Ann. § 75-7-605.

Cecilt'. Cecil, 356 P.2d 279, 281 (Utah 1960); WaddoupJ t'. Amalgamated Sugar Co., 2002

UT 69,54 P.3d 1054;jambJen Comt. Co., 1m: 1J. Teton BttZiderJ, 2005 UT 4,106 P.3d 719; Bqyd 1).

Grand Tnmk I¥"':R Co., 338 U.S. 263 (1949); M/ S Bremen t'. Zapata Off-Shore Co., 407 U.S. 1,15

(1972); Bqyd t'. Grand Trunk U7.R Co., 338 U.S. 263 (1949); Ro~y t'. Corp. rifLlqyd\ 996 F.2d

1353 (2nd Cit. 1993);1-'-'irJt Nat. Bank q[ Chicago tJ• Ettlinger, 465 F.2d 343 (7 th Cit. 1972); Pierce t'.

Pierce, 2000 UT 7, 994 P.2d 193; In re Bell's EJtate, 29 Utah 1, (Utah 1904); EJtate qfrtake 1!.

Flake, 71 P.3d 589, 594 (Utah 2003).


This issue was preserved at R. 563-65; 2011; 2862-91.

Issue #3:

Whether the trial court abused its discretion by ruling on Appellees' Motion for

Summary Judgment before allowing Kim to obtain discovery regarding her alter ego cause of

action.


A trial court's Rule 56(f) decision is reviewed for an abuse of discretion-whether it

exceeds "the limits of reasonability." jenJen t'. Smith, 2007 UT App 152, ~ 1, 163 P.3d 657.

The issue turns on whether the grant or denial of the motion exceeds the limits of

reasonability. Pn·ce Det!. Co. 1!. Orem Ci!y, 2000 UT 26, ~ 9, 995 P.2d 1237.

9



U.R.C.P. 56.

Cases:

Price Dev. Co., LP. v. Orem Ci!J, 2000 UT 26, ~ 26, 995 P.2d 1237; OverJtock.com, 1m: v.

SmartBargaim, Inc., 2008 UT 55, 192 P.3d 858; Callioux li. Progre.rJive 1m. Co., 745 P.2d 838, 841

(Utah Ct. App. 1987).


This issue was preserved at R. 1797-98; 1829-3434; 2564; 2977:18; 23; 27.

Issue #4:

Whether the trial court erred in determining that hypothetical claims, none of which

were brought by lZim in her Amended Complaint, would have been barred by the statute of

limitations if she had brought such claims.


Whether there is a ripe controversy between the parties that can be adjudicated is a

legal conclusion, which this Court reviews on a "correction of error" standard. Barnard v.

Utah State Bar, 857 P.2d 917, 919 (Utah 1993).


Cases:

Miller 1i. jJ7eaver, 2003 UT 12, ~ 26, 66 P.3d 592; ~yon 11. Bateman, 119 Utah 434, 228

P.2d 818, 820 (Utah 1951); RuJ.rell Packard Deli., 1m: 11. Canon, 2005 UT 14, ~~ 24-26, 108 P.3d

741; Pr01)O City Corp. 1i. ThompJOn, 2004 UT 14, ~~ 21-24,86 P.3d 735; Meadow FreJhl-'armJ, 1m:

10

v. Utab State Univenity Dept. ~/Agricttltttre & Applied Science, 813 P.2d 1216, 1220-21 (Utah Ct.

App. 1991); R~ynoidJ Z'. %ynoidJ, 788 P.2d 1044,1045 (Utah Ct. App. 1990)


This issue was preserved at R. 2011-12; 2559-6363; 2969-7272.

STATEMENT OF THE CASE

This case came before the Fourth District Court,Judge Lynn W. Davis presiding, on

Kim Dahl's First Amended Complaint for Declaratory Judgment and Request for

Accounting. Kim Dahl (hereinafter "Kim") filed a Motion for Partial Summary Judgment,

seeking a determination that she is a settlor of the Trust and that the terms of the Trust

Agreement render the Trust revocable. Appellees filed a Motion for Summary Judgment on

all causes of action, including Kim's alter ego theory that was not a part of her Motion for

Partial Summary Judgment. Kim asked for the ability to conduct depositions of C. Robert

Dahl and Charles F. Dahl (hereinafter "Dr. Dahl") before Judge Davis ruled on Appellees'

Motions for Summary Judgment, but Judge Davis denied that request. In his order granting

Appellees' Motion for Summary Judgment, Judge Davis declined to render a declaratory

judgment on the grounds that it would not settle the dispute between the parties. He

ultimately determined that the trust is irrevocable and that Kim had no rights under the

same.

STATEMENT OF RELEVANT FACTS

The Trust

1. Appellant Dr. Dahl and Kim Dahl are recently divorced, the divorce decree

having been signed on July 20,2010. (R.2421.) Judge James Taylor of the Fourth Judicial

11

District Court presided over the divorce case. 1 (R. 572.)

2. On or about September 15,1999, the Dahls purchased the vacant lot upon

which they built their Vintage Drive home. (R. 570.) The Dahls purchased the lot for

$195,000. They used marital funds to purchase the lot. (Id.)

3. The Dahls received the aforementioned lot as husband and wife. (!d.) A

Warranty Deed memorializing this transaction was recorded with the Utah County Recorder

on September 20, 1999. (!d.)

4. The Dahls subsequently built their marital home at the 4322 North Vintage

Drive address at a cost of over $1,000,000, funded by marital cash and a mortgage in the

names of Kim and Dr. Dahl. (!d.) Construction ended in May 2001. (Id.)

5. The Dahls resided - as man and wife - at the Vintage Drive property from May

2001, until Dr. Dahl petitioned for a divorce in October 2006. (R. 569.)

6. On October 23, 2002, Dr. Dahl signed an instrument entitled: The Dahl FamilY

Irrevocable TruJt (the "Trust Agreement"). (!d.) He executed the Trust Agreement in Salt

Lake County, Utah. (Id.)

7. Kim had nothing to do with the preparation of the Trust Agreement, is not

named in the Trust as a settlor, and did not sign the Trust Agreement or any related Trust

documents. (R. 1642.)

8. The Trust Agreement names Dr. Dahl as the "Settlor," and C. Robert Dahl as

the "Investment Trustee." (R. 569.) The Trust 1\greement names Kim as settlor's spouse.

I The divorce case is the subject of an appeal currently pending before this Court in case number 20100683.

12

(R. 553.) C. Robert Dahl is Dr. Dahl's brother. (R. 569.)

9. The Trust Agreement also names four classes of beneficiaries. (R.568.) These

include the Settlor, the Settlor's spouse, the Settlor's issue, and certain organizations that the

Settlor may later designate. (!d.)

10. Under § II of the Trust agreement, entitled "DISPOSITION DURING

SETTLOR'S LIFE," the agreement states that C. Robert Dahl, as Investment Trustee,

shall pay over or apply the net income and principal of the Trust Estate to such extent, including the whole thereof, and in such amounts and proportions, including all to one to the exclusion of others, and at such time or times as the Investment Trustee, in the exercise of his sole discretion, shall determine, to or for the benefit of the Beneficiaries; provided, however, that during the life of Settlor, at least thirty (30) days prior to making any payment or application of income or principal to any beneficiary other than Settlor, the Investment Trustee shall advise Settlor in writing of the Investment Trustee's intention to pay over or apply income or principal to a beneficiary other than Settlor and Settlor may veto ("Veto") any such intended payment or application by directing the Investment Trustee in writing not to make the payment or application, and, if such Veto is exercised by Settlor, the Investment Trustee shall not make the intended payment or application to a beneficiary other than Settlor.... Without in any way limiting the sole and absolute discretion of the Investment Trustee hereunder and ,vithout imposing any fiduciary duty to do so, it would be in keeping ,vith Settlor's current intention that the Investment Trustee consider distributions to or for the benefit of Settlor during Settlor's lifetime to allow Settlor to maintain Settlor's lifestyle as it existed at the time of the creation of the Trust taking into account resources and income available for or by Settlor.

(R.597.)

11. The trust agreement contains no language creating a mandatory distribution to

any beneficiary during Dr. Dahl's life. (Id.) Thus, without revoking the Trust, IZim cannot

compel the trustee to deliver any Trust assets. (Id.)

12. Appellees admitted that they never chose to distribute Trust assets to lZim. (R.

1641.) They further admitted that Dr. Dahl would veto any such distribution if it were

13

proposed. (!d.) In their memorandum in support of their motion for summary judgment,

} .. ppellees wrote:

(Id.)

Any distribution to [Kim], as spouse of Dr. Dahl, the Settlor, was to be in the sole discretion of the Investment Trustee and Dr. Charles Dahl. Further, even if the Investment Trustee chose to distribute any monies to [Kim], which he has not, Charles Dahl, as the named settlor had the right to veto that payment, which he certainly would have done ....

At no time during which the Trust has been in existence, has the Investment Trustee ever determined, in the exercise of his discretion, to distribute funds to [Kim]. Even if he had done so, the Defendant Charles Dahl, using his rights under the Trust, would have vetoed the same.

13. On or about June 20, 2003, Kim and Dr. Dahl jointly conveyed the Vintage

Drive property to C. Robert Dahl, as Trustee of the Dahl Family Irrevocable Trust, via

rJ:7arranty Deed. (R.568.) The Warranty Deed was executed in Utah County, and was filed with

the Utah County Recorder. (!d.)

14. The Trust Agreement purports that the Trust is irrevocable. (R. 533.)

Nevertheless, Dr. Dahl resel'Ved for the Settlor an unrestricted right to modify the Trust.

(!d.) Indeed, the Trust Agreement states: "Settlor reserves any power whatsoever to alter or

amend any of the terms or provisions hereof." (IcI).

15. The Trust Agreement creates a mechanism by which Dr. Dahl and the trustees

can terminate and distribute the assets without the consent of the beneficiaries. (R. 543.)

Under section 4.3 Special Trustee, the Trust Agreement states

In his/her sole discretion, the Special Trustee may also recommend the termination of this Trust or any trust created herein at any time. If the Trustee and the Settlor (if living) concur with the recommendation of the Special Trustee that the Trust should be terminated, then the assets of the trust shall be distributed pursuant to section 5.1.

14

(Id.)

16. In the event that the Special Trustee, Settlor, and Investment trustee agree to

terminate the trust, then all the assets are to be distributed to the beneficiaries who are

permissible distributes in a manner consistent with the intent of the Settlor, Dr. Dahl. (!d.)

17. The Trust Agreement contains a provision whereby Kim loses all beneficial

interest in the Trust in the event that Dr. Dahl succeeded in obtaining a divorce from her.

(R. 551.) She must be married to Dr. Dahl at the time of his death to receive any

distribution from the Trust. (Id.) Thus, she cannot obtain a mandatory distribution of Trust

assets during Dr. Dahl's life pursuant to § II, and she cannot receive any benefit from the

Trust upon his death because she is no longer married to him. (R. 551-52.)

18. The Trust Agreement also has a choice of law provision: "The validity,

construction and effect of the provisions of this Agreement in all respects shall be governed

and regulated according to and by the laws of the State of Nevada." (R. 534.)

19. On January 27,1998, Dr. Dahl formed Marlette Enterprises, L.C (hereinafter

"Marlette"), a Utah limited liability company, for the purpose of "acquiring, holding, and

developing investment property." (R. 2567).

20. The sole members of Marlette were Dr. Dahl and C Robert Dahl (as custodian

for Clara Dahl). (R. 2566.)

21. On October 23,2002, Charles Dahl amended the Marlette operating agreement

to transfer 97% of the interest in Marlette to the Dahl Family Irrevocable Trust, reserving

1 % for himself, 1% for CD., the parties' daughter, and 1 % for D.D., the parties' son. (Id.)

22. I<.im Dahl had no knowledge of this transfer. (Id.) She did not learn of this

15

transfer until after October 2007 when Dr. Dahl disclosed this transaction as part of his

discovery production in the divorce case. (Id.)

23. As of December 31, 2002, Marlette held brokerage accounts with a total value

of $935,996. (Id.)

24. As part of the divorce action, Judge James Taylor of the Fourth District Court

found that Marlette was a marital asset at the time it was transferred to the trust. 2 (Id., R.

2453-54.)

25. On or about June 10, 2009, the Fourth District Court of Utah-in a collateral

case-found that Ms. Dahl is a settlor of the Trust. (R. 566.)

26. Although Ms. Dahl consistently claimed that she is a settlor and has certain

rights thereby, Appellees have claimed that she has no interest in the Trust and will not

honor any of her requests regarding the same. (R. 2565.)

The Declaratory Judgment Lawsuit

27. On July 31, 2009, Kim filed a Complaint for Declaratory Judgment and Request

for Accounting & Copy of Trust Agreement ("Complaint") against Appellees C. Robert

Dahl, as Investment Trustee of the Dahl Family Irrevocable Trust, and Dr. Dahl. (R.79.)

28. In her Complaint, IZim asked the trial court to determine the appropriate

construction and validity of the Dahl Family Irrevocable Trust ("Trust"), her status under

2 I<im asked Judge Taylor, who presided over the divorce case between lZim and Charles F. Dahl, to consider the marital assets held by the trust and provide her with an equitable offset of the value of those assets. (R. 572.) Judge Taylor denied that request, which created I<im's need to file this lawsuit. (Id.) Judge Taylor's refusal to provide lZim an equitable offset from the marital estate for property transferred to the Trust is an issue included in lZim's appeal from the divorce judgment in Utah Court of ~\ppeals Case number 20100911.

16

the Trust, and her rights in the Trust's corpus. (!d.)

29. After discovering that the Trust owned 97% of Marlette, Kim amended her

Complaint to include Marlette as a party to the suit. (R.330-49.) Her Amended Complaint

reaffIrmed her request to determine her status under the Trust and her rights to the property

held by the trust. (R. 1029.)

30. On February 5, 2010, Kim filed her Motion for Partial Summary Judgment

seeking a determination that she was a settlor of the trust and that the trust was revocable.

(R.355.)

31. On February 22,2010, Appellees filed their Motion for Extension of Time to

Respond to Motion for Summary Judgment. (R. 617.) Appellants sought additional time for

discovery to determine the situs of the Trust for jurisdictional purposes. (R. 620.)

32. Appellees served discovery requests on Kim on February 23, 2010. (R. 624.)

Nevertheless, Appellees moved on March 17, 2010 to strike the scheduling order previously

entered by the Court. (R. 757.) They also filed a Motion for a Protective Order on April 30,

2010 in order to prevent Kim from propounding discovery on them. (R. 800.)

33. On June 9, 2010, Judge Davis granted Appellees' motion for extension of time,

allowing them to file their response "'within a reasonable time." (R. 906.) He held,

In the interest of fair play, Defendants should be entitled to releyant evidence needed to mount a defense to the summary judgment motion. Further, the court is aware that there were many pending motions that both counsel had to deal with in a relatively brief period of time. The court grants some leeway to Defendants' counsel to prepare adequately to defend the summary judgment motion, especially considering its dispositive nature. Defendants shall respond to Plaintiff's Motion for Partial Summary Judgment within a reasonable time.

(Id.; R. 1255.)

17

34. On September 16, 2010, Kim served her Notice of Deposition of Defendant C.

Robert Dahl. (R. 1349.) In response, Defendants flied an ex pa11e motion for protective

order to prevent the deposition. (R. 1513.) Judge Davis held a telephone conference on

October 18, 2010, ordering the parties to exchange dates and cooperate in scheduling the

deposition. (R. 1578.)

35. Defendants followed the ex parte by filing their own Motion for Summary

Judgment on October 26,2010, by which they sought judgment on all causes of action and

theories. (R. 1582.) They asked for judgment on the following grounds: (1) the Trust is

irrevocable (R. 1639); (2) there was no factual basis upon which the court could determine

the Trust is null and void (R. 1634); (3) any claims regarding the Trust were barred by the

statute of limitations (R. 1632.); (4) there was no basis by which Kim could seek a

distribution of trust assets (!d.); (5) there was no basis to construe the Trust as revocable (R.

1630); and (6) I<im did not have a right to an accounting (R. 1628.).

36. In their Memorandum in Support of Defendants' Motion for Summary

Judgment, they cited entirely to Utah law; they neglected to cite to any Nevada law. (R.

1626-45).

37. Two days after filing their Motion for Summary Judgment, Appellees filed their

second ex parte motion seeking to prevent the deposition of Defendant C. Robert Dahl, this

time on the grounds that the court should rule on their summary judgment motion before

allowing depositions. (R. 1647.) They moved to prevent the deposition despite the fact that

they previously agreed, in writing, to set the deposition for December 11, 2010. (R. 1800.)

Judge Davis set the matter for oral arguments on November 23,2010. (R. 1662.)

18

38. On November 2,2010, Defendants filed their Memorandum in Opposition to

Plaintiffs Motion for Partial Summary Judgment. (R. 1796). Appellees repeated the

arguments they posited in support of their Motion for Summary Judgment, again avoiding

any citation to Nevada law. (Id)

39. Kim filed a Rule 56(f) Motion for Denial or Continuance of Defendants'

Motion for Summary Judgment on November 3,2010. (R. 1798.) She requested additional

time to obtain discovery before responding. (R. 1843.) Christopher J. Rogers, then counsel

for I<:im, f1led his affidavit in support of the Rule 56(f) motion. (R. 1834.) He requested

additional time to take the depositions of Defendants C. Robert Dahl and Dr. Dahl, which

were set for December 1st (Dr. Dahl) and December 11th (c. Robert Dahl). (R. 1831.) In

support of the motion, Mr. Rogers stated:

To date, no depositions have occurred in this matter. The information garnered from these anticipate depositions will bear directly on the issues of Defendants' motion for summary judgment, including but not limited to the issue of Plaintiffs status as the settlor and beneficiary of the Trust and the . nature and extent of property Plaintiff provided under the Trust ....

Further, discovery is therefore needed to determine, including but not limited to the following: the nature and extent of the property Plaintiff contributed; whether that property was intended to satisfy Utah and/or Nevada law as a settlor; whether the Investment Trustee or the Settlor waived, disregarded, or amended Section 5.4.6 of the Trust; whether Plaintiff was treated as a beneficiary under the Trust; whether Defendants failed to pay Plaintiff prior disbursements; whether the Trust terms are vague or ambiguous with respect to whether Plaintiff constituted a settlor or beneficiary; and to glean facts about whether Plaintiff is a settlor or beneficiary under Nevada and Utah law.

(R. 1830-31.)

40. Appellees opposed I<:im's Rule 56(f) motion on November 12, 2010. (R.1905.)

Despite their arguments that no further discovery was needed, and despite their efforts to

19

prevent depositions they agreed to schedule, !\ppellees filed on the same day a reply brief

seeking a modification of the trial court's scheduling order that would allow them to serve

additional interrogatories on Kim. (R. 1898.)

41. Appellees also filed on November 12, 2010 a motion to disqualify Steve S.

Christensen from further representation of Kim. 3 (R. 1909.)

42. Kim filed on November 12,2010 her Reply Memorandum in Support of

Plaintiffs Motion for Partial Summary Judgment. (R.2017). She argued that Appellees

admitted that Utah law controlled the construction of the Trust because Appellees had not

"opposed [Kim's] contention that Utah law controls this Trust." (R. 2011.)

43. Judge Davis granted Kim's Rule 56(f) motion. (R.2020.) Instead of allowing

Kim to file her response within a reasonable amount of time, as he allowed Appellees, Judge

Davis allowed Kim respond on December 15, 2011, four days after the scheduled deposition

of Defendant C. Robert Dahl. (Id.)

44. On November 23,2010, the parties appeared for oral argument on Appellees'

motions seeking to prevent the depositions of C. Robert Dahl and Charles F. Dahl. (R.

2187.) Judge Davis determined, however, that the motion to disqualify Kirn's counsel

trumped all other issues. (Id.) Judge Davis stayed all discovery and pending motions, and he

set the motion to disqualify for oral argument on January 3, 2011. (!d.)

45. The parties appeared for oral arguments as scheduled. (R.2327). Because a

similar motion was pending in the divorce matter between I<im and Appellee Dr. Dahl,

3 Appellees re-filed their Motion to Disqualify Plaintiffs Counsel on November 22,2010. (R.2122.)

20

Judge Davis elected to reserve his ruling on the motion to disqualify until after the divorce

court entered its ruling. (R. 2327; 2976:18-21.) He stayed the entire case until the motion to

disqualify was decided. (R.2327.)

46. On July 18, 2011, Judge Davis entered three orders: He denied Appellees'

motion to disqualify I<im's counsel (R. 2391); he lifted the stay on the proceedings (R. 2389);

and he amended the scheduling order, which allowed the uncompleted discovery to continue

(R.2387).

47. The following day, I<im served her Notice of Deposition of C Robert Dahl (R.

2399) and Dr. Dahl (R. 2395). She contemporaneously filed her Response in Opposition to

Defendants' Motion for Summary Judgment. (R.2574). She filed her opposition subject to

her previous Rule 56(f) motion because the necessary depositions had not occurred as

previously scheduled. (R. 2564). She specifically incorporated her previous Rule 56(f)

motion by reference in the summary judgment opposition. (Id.)

48. In order to expedite the conclusion of discovery, I<im filed a notice with Judge

Davis that Appellee's prior motion for protectiiTe order-C Robert Dahl's deposition,

which was previously set to be heard on November 23, 2010, were ready for decision by the

court. (R. 2577). Appellees responded by filing their third motion for protective order, this

time seeking to prevent the depositions of C Robert Dahl and Dr. Dahl. (R. 2581).

49. The parties appeared before Judge Davis on August 17,2011 to discuss the

various motions pending before the court. (R.2606.) Judge Davis asked the attorneys to

confer \v'ith each other to determine whether any resolution could be made and set the

matter for oral arguments on August 31, 2011. (!d.)

21

50. On Friday, August 26,2011, Appellees filed their Reply Memorandum in

Support of Defendants' Motion for Summary Judgment. (R.2712.) In their reply

memorandum-the last briefing flied regarding the cross-motions for summary judgment-

Appellees cited to Utah law for the construction of the Trust and cited, for the first time, to

Nevada law, asking that the trial court also construe the Trust according to Nevada law. (!d.)

51. The parties appeared for oral argument August 31, 2011, three business days

after Appellees flied their reply memorandum. (R.2713.) Judge Davis asked for argument

on the cross-motions for summary judgment, as well as Kim's Rule 56(f) motion. (R.

2977:6.) Before the judge allowed argument, he stated

(!d.)

If the summary disposition is granted, then all of the other issues are resolved. If it's not granted and I grant the discovery issue in the 56-f motion, then we'd be looking at the addition. And I do that formerly [sic.] in writing because I think everything in this case needs to be in writing. It's already seven or eight files thick and it's still at the beginning stages of discovery, so I think that's what I would prefer doing. And then we'd stay all of the other issues until such time as there's a ruling either regarding one way or the other here in connection with this.

52. Before Kim presented her arguments to Judge Davis, she made it clear that her

response to Appellees' motion for summary judgment was subject to her Rule 56(f) request

to perform more discovery before the court ruled on their motion. (R.2977:18.) She argued

that the court could not grant summary judgment on her alter ego theories until additional

discovery was completed. (R.2977:24-25.)

53. Judge Da\Tis did not pronounce his ruling after hearing argument. (R.2977:26.)

Rather, he ordered, "1' d like you -- both sides to submit within a period of 30 days a ruling

and proposed order consistent with your respective conditions [sic.] relative to this issue and

22

then I will review the case law, I'll review my notes, I'll review these new cases that have

been supplied today and I'll make a decision." (Id.)

54. Kim then asked for clarification of the scope of the proposed rulings and

orders: "And just for clarification, we're limiting it to the revocable, irrevocable settlor?" (R.

2977:27.) To which Judge Davis responded, "It is because ultimately that's the issue that

relates to the motion for summary disposition in connection with yours."4 (Id.) Kim

submitted her proposed ruling and order on September 30, 2012. (R.2769.)

55. Judge Davis entered a written Order Granting Defendants' Motion for

Summary Judgment on November 1, 2011.5 (R. 2732). In his Order, Judge Davis indicated

he had considered the memoranda of law, arguments of counsel, and "carefully examined

the proposed orders of counsel." (R. 2732; 2962.) 6 Judge Davis originally declined to

exercise jurisdiction over the declaratory judgment action on the grounds that "it would not

terminate the controversy or resolve the dispute between the parties." (R. 2730, R. 2960.)

Accordingly, Judge Davis "decline[d] to undertake the seemingly meaningless task of

declaring the rights and duties of the parties to this action."7 (Id.)

56. Judge Davis entered this order despite the fact that Appellees never raised

4 The relevant portion of the transcript is attached hereto as Addendum 4.

5 Judge Davis, at the request of this Court, incorporated the November 1, 2010 order into a final order entitled Findings of Fact and Conclusions of Law, and Order Granting Defendant's [sic.] Motion for Summary Judgment and Denying Plaintiff's Motion for Summary Judgment, which he entered on February 27,2012. (R.2962.)

6 The February 27, 2012 order had slightly modified language that omitted the word "carefully" from his statement that he examined the proposed orders of counsel.

23

arguments related the propriety of a declaratory judgment action in their summary judgment

pleadings. (R. 1645, 1796,2712.) Indeed, Appellees Memorandum in [sic.] Opposition to

Plaintiffs Motion for Partial Summary Judgment appears to concede that the trial court

could declare the Kim's rights under the Trust. (R. 1776-77.)

57. Moreover, the matter had already been decided by the trial court: On February

22,2010, Appellees filed a motion to dismiss on the grounds that Kim failed to state a cause

of action upon which relief could be granted. (R. 623.) Specifically, they argued that Kiln's

complaint, in which she sought "a determination of her rights and interests in the Trust" had

"fail[ed] to create an actionable cause of action under the facts of the case." (R. 603-604.)

Kim responded to the motion to dismiss by citing to U.c.A. §§ 78B-6-401, 408 for the

proposition that Utah's statutes "specifically authorizes the district courts to issue declaratory

judgments determining rights, status, and other legal relations within their respective

jurisdiction" and to "determine questions of validity to make determinations of rights under

any instruments." (R. 703.) Judge Davis denied Appellee's motion to dismiss before issuing

his decision regarding summary judgment. (R. 907-909, 1255.)

58. Despite his decision to refuse to render declaratory judgment, Judge Davis spent

another twelve pages addressing the substantive issues. (R. 2717-2730; 2946-60.) He denied

Kim's Rule 56(f) motion on the grounds that no attorney affidavit was filed. (R. 2729; 2958-

59.) He ruled that all of Kim's claims that the Trust was null and void, including I<im's alter

ego theory that the court previously said it would not address in its ruling, was without

factual basis. (R. 2727-28; 2956-58.) Judge Davis determined that I<im has no immediate

interest in the Trust. (R. 2725-27; 2955-56.) He held that the Trust is irrevocable. (R.2719-

24

25; 2949-55.) In doing so, he failed to announce whether he determined Utah or Neyada

law controlled the construction of the trust; he cited, instead, to authority from both

jurisdictions. (!d.) Finally, he held that I(im was only a discretionary beneficiary and had no

right to an accounting of Trust assets. (R. 2717-19; 2947-48.)

59. Because her proposed ruling did not appear on the trial court's docket and

because I(im considered the proposed ruling to be in the nature of post hearing briefing

supporting each party's position for the court's further consideration, I<lln filed a Motion to

Supplement Record on December 8, 2011. (R.2739.) She asked Judge Davis to include her

proposed ruling in the record pursuant to Rule 11 of the Utah Rules of Appellate Procedure,

which requires that all original papers and exhibits be included in the record on appeal. (Id.)

She attached a file-stamped copy of her proposed ruling to her pleadings in support of her

motion to supplement. (R.2769.)

60. Appellees opposed the Motion to Supplement Record on the grounds that the

proposed ruling was not signed and not submitted in the format of a legal memoranda or

motion, as required by Rule 11 of the Utah Rules of Civil Procedure. (R.2802.) Nine days

later, I(im sought leave to file a signed version of the proposed order and

contemporaneously filed a signed copy for the court's consideration, which the trial court

entered on the record on January 27,2012. (R.2922.) The original filing date of the signed

proposed order was redacted by the court. (Id.)

61. The original, unsigned proposed ruling \,vas also made a part of the file on

25

January 27, 2012.8 (R.2891.) The original filing date of the proposed order appears to have

been redacted from the document by editing tape, replaced by a stamped date of January 27,

2012. (!d.) The back side of page 30 of the proposed order has the trial court's date stamp

of September 30,2011. (R.2862). The original proposed ruling contains Kim's original

Certificate of Se!yice for the proposed order. (!d.) The trial court included the original

proposed ruling in the record despite the fact that Judge Davis denied Kim's Motion to

Supplement Record.9

62. Kim also filed a Motion for Relief from Judgment on February 17, 2012. (R.

2926.) She requested that Judge Davis strike footnote 1 appearing on page 6 of the

November 1,2011 Order Granting Defendants' Motion for Summary Judgment, which

footnote stated that certain claims-all of which were not raised by I<im in her Amended

Complaint-would have been barred by the statute of limitations even if she had raised

them. (!d.) She renewed her arguments by objecting to the inclusion of the same footnote

in the final order entered on February 27, 2012. (R.2972.)

63. Judge Davis refused to strike the footnote on the grounds that the order is now

the subject of appeal and that the court "cannot find a reason to alter or amend the prior

ruling and Order that was issued. 10

8 It is unknown why the original document made its way into the court's record five months after I<im filed it. Counsel cannot find an order that it be included in the record. 9 The original, signed order denying Kim's Motion to Supplement Record does not have a record Bates stamp. It is located in file 8 of 8 and begins on the third page from the top.

10 The original, signed order denying Kirn's Motion for Relief from Judgment does not have a record Bates stamp. It is located in file 8 of 8 and begins on the third page from the top.

26

SUMMARY OF THE ARGUMENT

Issue #1:

Judge Davis erred when he determined that the Trust was irrevocable according to

Utah law. Utah courts apply the sole beneficiary rule when construing trust agreements.

Under the sole beneficiary rule, a trust, which by its terms purports to be irrevocable, is

nevertheless revocable where the settlor reserved an unrestricted right to modify the terms

of the trust agreement. This is so because the settlor may remove all beneficiaries, name

himself sole beneficiary, and revoke the Trust without the consent of the remaining

beneficiaries.

The Trust Agreement in this case contains a term that allows Dr. Dahl, as Settlor, to

alter or amend the terms of the Trust Agreement in any manner whatsoever. Dr. Dahl

reserved the power to substitute himself as the sole trustee and beneficiary. As such, the

Trust is revocable. Because the Trust is revocable, I<im, as statutory settlor, has the right to

revoke any portion of the Trust that contains property that was her marital property at the

time it was contributed to the Trust.

Moreover, the trust is revocable because enforcement of the irrevocability term

would violate Utah's public policy. The Trust Agreement constituted a postnuptial

agreement that divested I<im of all interest in the Trust upon divorce from Dr. Dahl. This

term unreasonably tended to induce Charles Dahl to seek a divorce from I<im, which

renders the irrevocability term unenforceable as against public policy.

Issue #2:

The trial court erred by applying Nevada law to the construction of the Trust

27

Agreement. Utah courts apply Utah's choice of law rules when deciding which jurisdiction's

law governs the construction of a trust. Utah generally allows the trustor to determine the

governing law. The trustor's election, however, cannot be enforced where doing so would

violate Utah's public policy.

Dr. Dahl created the Trust Agreement without the any participation from Kim. He

added a term to the Trust Agreement that served to deprive Kim of any beneficial interest in

the Trust upon his success in obtaining a divorce from I<im. He also elected to construe the

Trust Agreement according to Nevada law, which abrogates the common law sole

beneficiary rule employed by Utah courts. He then funded the Trust with his and I<im's

marital assets.

The trust would have been revocable under the laws of the State of Utah-allowing

I<im, as settlor, to revoke any marital asset portion of the Trust. But the Trust would be

irrevocable under the laws of the State of Nevada-prohibiting I<im from revoking her

marital assets from the Trust and allowing Dr. Dahl to maintain beneficial ownership of

assets to which he would not otherwise be entitled the moment he succeeded in divorcing

I<im. The application of Nevada law to the Trust Agreement created an incentive for Dr.

Dahl to divorce I<im in violation of Utah's public policy. Utah has a significant interest in

this matter because all of the beneficiaries are Utah residents and it contains valuable real

property located in Utah. Because enforcement of the choice oflaw provision would violate

Utah's public policy, Judge Da\Tis should not have construed the Trust Agreement pursuant

to Nevada law.

28

Issue #3:

The trial court abused its discretion when it did not permit her to depose Dr. Dahl

and C. Robert Dahl after granting Kim's Rule 56(f) motion on her alter ego theory. A court

should refuse the application for summary judgment or order a continuance of the same

where it appears that a party cannot present facts essential to justify the party's opposition.

After Judge Davis lifted the stay in June 2011, Kim again asked to continue the

summary judgment decision until the depositions occurred. At a hearing on August 31,

2011, Judge Davis stated that his summary judgment ruling would be limited to issues that

overlapped between the cross-motions for summary judgment. His ruling and subsequent

order, however, denied the Rule 56(f) request and rendered judgment for Appellees on all

causes of action, prohibiting Kim from gathering necessary discovery.

Issue #4:

A trial court may only issue rulings on matters placed before it by the pleadings of the

parties. Trial courts are prohibited from making hypothetical rulings on issues over which

they do not have jurisdiction. In a footnote to his order granting Defendants' Motion for

Summary Judgment, which he admittedly did not read very carefully, Judge Davis erred

when he held that several causes of action, none of which were the subject of any of the

parties' pleadings, would have been barred by the statute of limitations.

II

II

II

29

ARGUMENT

PRELIMINARY MATTER

Before addressing the merits of this appeal, it is necessary to address a problem

created by the trial court's order. The trial court's order contradicts itself.!! In its sixth

paragraph, it states, "this Court declines to undertake the seemingly meaningless task of

declaring the rights and duties of the parties [related to the trust)." R. 2960. The order then

continues for an additional fifteen pages, twelve of which declare I<im's rights and duties

related to the trust.

There is a simple way to resolve these contradicting terms: Employing the rules of

construction, this Court should disregard the sixth paragraph of the order as surplusage.

The rules of construction used to interpret contracts and statutes apply to the interpretation

of court orders. See Culhert.ron 1'. Bd. ifCounry Com/n, 2001 UT 108, ~ 15, 44 P.3d 642; In tbe

A1atteriftbe Estate qfLeone, 860 P.2d 973, 975 (Utah Ct. App. 1993). The purpose of

interpreting an order is to construe the intent of the issuing judge. See ProgreSJiIle Cas. Ins. Co.

11. Ewart, 2007 UT 52, ~ 16, 167 P.3d 1011. A court must read an order "as a whole." In tbe

Matter if tbe Estate qf Leone, 860 P.2d at 976. An order's language must usually be interpreted

to give meaning to all of its provisions and to avoid rendering any part of it "superfluous."

See Due S outb, Inc. II. Dep't if Alcobolic Bev. Control, 2008 UT 71, ~ 33, 197 P .3d 82. But '\vhen

the words of ran ordcrl are so meaningless or inconsistent with the intention ... othel"\vise

plainly expressed in the lorder,J ... they may be rejected as surplusage and omitted,

!IBy its own admission, the trial court "[doesn't] always read carefully" parts of the orders it signs. Transcript of March 28,2012 Hearing, p. 14.

30

li · . 1 J' "I d" c lfn ' "(~ (~ D' 1 . ) ') P , 1 ...., r'" ...., t: () fq 1 (' C n11natec, or Cllsrcgarc e . ,) ee . C!-~ 7. ""0. I'. [\coel' . . ' <g('1l~), H( ~ ._c! ~J, ! 0 \, L ta 1 J t.

"\.pp. 1 ()90) (internal citations omitted).

The sixth paragraph of the order is so inconsistent with the clear intent of the trial

court's order that it should be rejected as surplusage and omitted, eliminated, or disregarded.

The trial court clearly intended to declare l<..im's rights related to the trust. The majority of

its order addresses I<..im's requests for declaratory relief. (See R. 2962-45.) First, it denies

Kim's request for a declaration that the trust is null and void. (R .. 2958-56.) Next, it

addresses Kim's request for a declaration that she has an immediate interest in the trust. (R.

2956-55.) It then addresses Kim's request for a declaration that the trust is revocable. (R.

2955-49.) Finally, it addresses Kim's request for a declaration that she is entitled to an

accounting. (R .. 2948-47.) Indeed, the Court granted Defendants'I'vlotion for Summary

Judgment on all causes of action, \'vhieh is a declaratory judgment. (R.2947.)

If the trial court did not want to "undertake the seemingly meaningless task of

declaring the rights and duties of the parties [related to the trust]," it had a funny way of

showing it. Its order should have ended after the sixth paragraph if its intent was to exercise

its discretion to refuse to consider I<..im's petition for declaratory relief. Instead, it took

twelve pages to declare I<..im's rights related to the trust. Without question, the trial court

intended to declare the rights and duties of the parties related to the trust. Therefore, the

sixth paragraph expressing an intent not to declare their rights related to the trust is

surplusage, and this Court should eliminate, omit, or disregard it.

I. The Trust is revocable under Utah law.

Dr. Dahl created a Trust that purported to be irrevocable. He funded it with marital

31

assets with a total value of at least $2,000,000. The terms of the Trust Agreement, concealed

from Kim until after Dr. Dahl funded the Trust and filed for divorce, deprived Kim of all

beneficial interest in her marital property upon divorce. The Trust Agreement purports to

create an irrevocable trust, but the Trust is nevertheless revocable under Utah law on two

independent grounds: (1) the clause reserving to Dr. Dahl to right to modify the Trust

Agreement in any manner whatsoever renders the Trust revocable under the sole beneficiary

rule; and (2) enforcing the irrevocability term would violate Utah's public policy in favor of

preserving marital relationships.

I(a). The Trust is revocable pursuant to the sole beneficiary rule.

Trusts created before May 1, 2004 are presumed irrevocable. See Utah Code Ann. §

75-7-605(1) (Uniform Law Comments). 12 Nevertheless, in its comments to the Utah

Uniform Trust Code ("UUTC"), the Utah legislature cited to the Restatement (Second) of

Trusts § 331, comments g and h (1959): "A power of revocation includes the power to

amend. An unrestricted power to amend may also include the power to revoke." Id. The

Utah Supreme Court recognized this long-standing common law principle before the code's

enactment when it stated "if a power to modify is subject to no restrictions, then a reserved

power to amend or modify includes the power to revoke." Estate qfPlake v. Flake, 2003 UT

12 Dr. Dahl executed the Trust Agreement in 2002. (R. 569.) The Utah Uniform Trust Code was enacted in 2004. In Wt:rylle ll. Wqyne, 2012 UT 13, ~ 28,275 P.3d 238, the Utah Supreme Court determined that the presumptions and construction rules of the UUTC apply retroactively to trusts created before its enactment. See also Utah Code Ann. § 75-7-1103(2).

32

17, ~ 13,71 P.3d 589.13

Underlying this holding is the principle that an "irrevocable trust may be modified or

terminated upon consent of the settlor and all beneficiaries, even if the modification or

termination is inconsistent with a material purpose ofthe trust." Utah Code Ann. § 75-7-

411 (1); Clqyton l'. Behle, 565 P.2d 1132, 1133 (Utah 1977) ("A trust may be terminated where

... all beneficiaries thereof consent .... "). If a settlor who has reserved an unrestricted power

to amend the trust, then he may remove all beneficiaries but himself. See Perrmoud li. Harman,

2000 UT App 241, ~ 18,8 P.3d 293 (where trust does not require beneficiaries' consent

before revoking or amending trust, beneficiaries are contingent beneficiaries, and settlor may

divest their interests), accord Patterson v. Patten"on, 2011 UT 68, ~ 30, 266 P.3d 828 (settlor who

reserved right to amend trust reserves right to divest beneficiaries because beneficiaries'

"interests are contingent upon the settlor not amending ... the trust"), citing Hoggan v. Hoggan,

2007 UT 78, ,-r 11 n. 2, 169 P.3d 750.

Once he has divested all beneficiaries but himself, Dr. Dahl may simply give

unilateral consent as settlor and sole beneficiary to revoke the trust. See also Perrenoud, 2000

UT App at ~ 19 (sole present beneficiary was entitled to conveyor encumber trust assets "in

whatever manner she desired"); In re Estate qflf/eJt, 948 P.2d 351, 354 (Utah 1997); Clqyton li.

13 In Patten-on li. Patter.ron, 2011 UT 68, ~~ 30-35,266 P.3d 828, the Utah Supreme Court recognized that a portion of the l'iake decision was superceded by the passage of the UUTC. Only the portion of the Fl:::..ke holding that conditioned the validity of a revocable trust on the existence of a vested beneficiary's interest was superseded. !d. No language in the Patterson decision suggests that the UUTC superceded the common law principle that an unrestricted right to modify or amend a trust includes a revocation right. !d. Indeed, such a holding would be inconsistent with the legislature's comments in § 75-7-605 of the UUTC.

33

Behle, 565 P.2d 1132, 1133 (Utah 1977) (trust revocable "where the settlor is the sole

beneficiary") .

Precedent from other jurisdictions reaches the same conclusion: In In re Woodward:r

Trust, the Supreme Court of N ew York, ~'\ppellate Division, stated that: "A settlor who has

reserved the right to amend the trust 'in any manner whatsoever' or in 'any and every

respect' may ... revoke the trust ... even though the trust iJ in termJ irrez10cable .... " 284 A.D.

459,464 (New York 1954) (emphasis added) (internal citations omitted). The If/oodward

court declared a trust revocable even though the trust instrument claimed it was irrevocable

and the trust instrument named his surviving issue as beneficiaries, too. !d. at 460-61. In

order to reach this conclusion, the N ew York appellate court relied on § 331 of the

Restatement of Trusts-the same section cited by Utah's legislature in the UUTC-to

conclude that an unrestricted power to modify supersedes any terms declaring a trust's

irrevocability. Id. at 463-64, dtingMrycr v. Bank qfA1anhattan Trust Co., 232 A.D. 228, 249

N.Y.S. 640 (1931); Porter v. CommiSJioner, 60 F.2d 673 (2nd Cir. 1932). See also De Lee v. Hicks,

611 P.2d 211, 212 (Nev. 1980) (an unrestricted right to modify the beneficiaries of an inter

vivos trust includes the power to revoke the trust); PhillipJ lJ. Lowe, 639 S.W.2d 782, 783 (I<y.

1982) (trust revocable even though the instrument "expressly declared the trust irrevocable"

if the settlor makes himself the sole beneficiary);f't01'ida Nat. Bank qf Palm Beach Counry I).

GenOl}a, 460 So.2d 895,897 (Fla. 1984) (sole beneficiary of trust may revoke the trust and

"distribute the trust assets any way she wishes").

In present case, section 5.5 of the Trust Agreement provides that: "The Trust hereby

established is irrevocable. S ett/or reJet1ICJ at!)' power whatJOelJer to alter or amend a1l)' terms or

34

proviJionJ hereqf." (R. 533.) (emphasis added). In short, Dr. Dahl reserved an unrestricted

power to amend or modify the trust. Like the settlor in Patten'on and JJ7oodward, he has the

ability to divest all beneficiaries other than himself then terminate the trust as sole J

beneficiary. Dr. Dahl may revoke the Trust despite its statement to the contrary. Therefore,

the trust itself is revocable.

The Trust is also revocable because of the mechanism available to terminate the

Trust as provided in §§ 4.3 and 5.1 of the Trust agreement. Pursuant to § 4.3, Dr. Dahl may

terminate the Trust at any time during his life, and distribute the property in accordance

with § 5.1, in the event that he, the Special Trustee, and the Investment Trustee agree to do

so. (R. 542-43.) He need not obtain the consent of any other beneficiaries or any court.

This power to terminate the Trust is, of course, inconsistent with any term purporting that

the Trust is irrevocable.

According to § 5.1, if the trust terminates at a time when the relative interests of the

beneficiaries of the Trust are unclear, then the Investment Trustee must distribute the

property in accordance with Dr. Dahl's intent. There is no provision in the Trust agreement

setting forth the relative interests of any beneficiaries during Dr. Dahl's lifetime. Therefore,

if the Trust is terminated during his lifetime, then Dr. Dahl may simply manifest his intent

that the Trust property be distributed to him in full, thereby obtaining title to all property in

the Trust during his lifetime. This result would constitute a complete revocation of the

Trust. Therefore, the Trust is revocable on these grounds, too.

Because the Trust is revocable, Kim may also revoke the portion of the Trust

attributable to her marital property donated to the Trust. Under the UUTC,

35

If a revocable trust is created or funded by more than one settlor:

(a) to the extent the trust consists of community property, the trust may be revoked by either spouse acting alone ... ; and

(b) to the extent the trust consists of property other than community property, each settlor may revoke or amend the trust with regard to the portion of the trust property attributable to that settlor's contribution."

Utah Code Ann. § 75-7-605(2).

Kim, acting alone, may revoke the Trust attributable to her contribution. Kim

contributed the parties' marital home and her share of Marlette. Kim has a right, therefore,

to revoke those assets from the Trust. Judge Davis erred when he concluded otherwise, and

this Court should reverse the trial court's judgment that the Trust is irrevocable.

I(b). Even if the settlor's unrestricted power to amend the Trust Agreement does not render the Trust revocable, Utah's public policy invalidates the irrevocability provision.

The Trust Agreement, created by Dr. Dahl during his marriage to Kim, is a post-

nuptial agreement that provided him a significant incentive to divorce his wife. Postnuptial

agreements that incentivize divorce run afoul of Utah's public policy favoring marriage,

rendering them unenforceable. Any portion of the Trust Agreement that promotes the

divorce of Kim and Dr. Dahl cannot be enforced.

Spouses are fiduciaries of each other. Pierce 1). Pierce, 994 P .2d 193, 198 (Utah 2000).

Postnuptial agreements are scrutinized just as prenuptial agreements. Id. at 199. Such

agreements are heavily scrutinized because of the parties' relationship to each other:

Parties to [postnuptial] agreements do not deal with each other at arm's length. Unlike a party negotiating at arm's length, who generally will view any proposal with a degree of skepticism, a party to a [postnuptial] agreement is much less likely to critically examine representations made by the other party. The mutual trust between the parties raised an expectation that each party will

36

act in the other's best interest. The closeness of the relationship, however, also renders it particularly susceptible to abuse. Parties to [postnuptial] agreements therefore are held to the highest degree of good faith, honesty, and candor in connection with the negotiation and execution of such agreements.

Id. at 198-99 quoting In re Estate ~rBees/~)', 883 P.2d 1343, 1346 (Utah 1994). Utah has

advanced a strong public policy to preserv~ marriage and disfavor dissolution. Nielron lJ.

Nieil"On, 780 P.2d 1264, 1269 (Utah Ct. App. 1989). Agreements between spouses that tend

to unreasonably encourage divorce or separation are unenforceable because they violate

public policy. Id. Agreements between spouses are also unenforceable where there is

material non-disclosure. !d. at 1268. Marriage itself "and the obligations inherent in it are

matters which it has always been recognized cannot be left entirely to private contract." Id.

at 1269.

This public policy has its roots in precedent over a century old. In Palmer v. Palmer,

26 Utah 31 (Utah 1903), the Utah Supreme Court, in refusing to enforce a postnuptial

settlement agreement executed in another state, declared, "Comity between different states

requires no state to uphold or enforce contracts which injuriously affect the welfare of its

subjects, or contravenes its own laws, institutions, or policy." Two years later, the Utah

Supreme Court invalidated another postnuptial agreement because the settlement, which

was "wholly inadequate and inequitable" to the ""vife, violated public policy. In re Bell's Estate,

29 Utah 1 (Utah 1904).

Fifty years ago, the Utah Supreme Court reiterated the public policy that agreements

between spouses cannot be enforced where they "run afoul of any consideration of public

policy" because "their welfare, and to some degree the public welfare, is involved." A1.athie 1'.

37

Mathie, 363 P.2d 779, 784 (Utah 1961).

Moreover, Utah has a strong public policy that compels its courts to ensure that

spouses' property rights are fully protected upon separation and divorce. Utah appellate

courts "appear to have been greatly influenced by a public policy of ensuring to a wife the

legal right to support." Cedi tJ• Cecil, 356 P.2d 279, 281 (Utah 1960) (reversing trial court's

refusal to reinstate alimony obligation of flrst husband after wife's annulment of marriage to

second husband). In Howell v. Howell, the Utah Court of Appeals recognized the judicial goal

of equalizing the spouses' post divorce status. 806 P.2d 1209, 1212 (Utah Ct. App. 1991)

(reversing alimony decision that left the wife at a great flnancial disadvantage).

Like many other jurisdictions, Utah courts "have measured [postnuptial] agreements

against diverse standards of procedural and substantive 'fairness,' at the time of their

execution and/ or at the time enforcement is sought." NeiLron ZI. NeilJon, 780 P2d 1264, 1268

(Utah Ct. App. 1989), citing Younger, PerJpectiz'eJ on Antenuptial AgreementJ, 40 Rutgers L.Rev.

1059,1073-86 (1988); Oldham, Premarital Contract.rAre Now Enforceable, UnleJJ ... ,21 Houston

L.Rev. 757, 766 (1984).

These considerations have also directed Utah's statutes regarding property division

upon divorce. Utah's divorce property division law has been designed to maintain the wife's

standard of living so that she does not become a "public charge." Fletcherv. Fletcher, 615

P.2d 1218, 1223 (Utah 1980). In some circumstances, where the court cannot maintain the

standard of living for both spouses through its alimony award, it may attempt to equalize

their respective standards of living. See Utah Code Ann. § 30-3-5(8)(d).

The Trust had an approximate minimum value of 52.2 million dollars when the

38

parties separated in 2006.14 (R. 570,2566.) The parties did not dispute the fact that the

marital home and Marlette were marital assets when thev were transferred into the Trust. -

Because Dr. Dahl executed the Trust Agreement during the marriage and funded the Trust

with marital assets, the Trust Agreement is a de/acto postnuptial agreement, the

enforceability of which is subject to a high level of scrutiny. The terms declaring the Trust

irrevocable and disgorging Kim of any beneficial interest upon divorce offends Utah's

public policy.

First, if the Trust is irrevocable, then Dr. Dahl succeeded in assigning over a million

dollars worth of assets beyond Kim's reach \vithout her effective knowledge or consent. He

drafted a trust instrument that directed the trustee to use the assets to maintain Dr. Dahl's

standard of living while granting himself the power to prevent the trustee from paying even

one dollar to Kim. Indeed, Dr. Dahl admitted,

At no time during which the Trust has been in existence, has the Investment Trustee ever determined, in the exercise of his discretion, to distribute funds to [Kim]. Even if he had done so, the Defendant Charles Dahl, using his rights under the Trust, would have vetoed the same.

(R. 1830-31.) Dr. Dahl excluded I<im from any participation in the Trust Agreement's

drafting. Because divorcing I<im would result in a windfall of property to him of at least

$1.1 million, the Trust Agreement unreasonably tended to induce him to divorce his wife.

Second, the terms declaring the Trust irrevocable and disgorging I<im's beneficial

interest upon divorce are unenforceable because of a material non-disclosure as discussed in

14 The Vintage Drive property was built on a lot purchased for $195,000 and cost over $1,000,000 to build in 1999. Marlette had an approximate value of$935,996 in December 2002.

39

NielJon, Jupra. No undisputed facts presented to the trial court tended to prove that Dr.

Dahl informed I<im that she would forfeit her rights to the trust upon divorce; there was no

assertion that Dr. Dahl informed Kim that she could not revoke her share of the Trust

corpus; and there is no evidence that Kim even received a copy of the Trust agreement

before Charles Dahl initiated divorce proceedings against her. To the contrary, the

undisputed facts-in the words of Appellees-established that I<im "had nothing to do

with the preparation of the Trust agreement ... and did not sign the Trust or any related

Trust documents." (R. 1642.)15 Indeed, I<im's original complaint asked to the Court to

compel Dr. Dahl to produce a copy of the Trust Agreement to her. (R.79.)

Dr. Dahl's failure to inform I<im about forfeiture terms, the terms favoring him to

the exclusion of I<im, and of the Trust's purported irrevocable nature each constituted a

material non-disclosure of information. Given their marital relationship, the non-disclosure

renders the terms unenforceable as a matter of public policy.

Finally, the terms of the trust, which allow Dr. Dahl to prohibit any distribution to

any person other than himself and directs the Investment Trustee to consider only Dr.

Dahl's standard of living when exercising his discretion to distribute property, indicates that

Dr. Dahl had the Trust agreement drafted to his substantial benefit without regard to the

rights and desires of I<im.

I<im had no input in the creation of the Trust Agreement. Dr. Dahl effectively to

robbed I<im of her own property. Appellees additted that the trustee never attempted to

15 I<im did sign a quit claim deed transferring the marital home into the Trust, but this was done without a knowledge of the Trust Agreement's terms.

40

distribute property to Kim and that Dr. Dahl would have prevented any distribution to

Kim-even during the years the parties were still married. Simply stated, Dr. Dahl took

adyantage of his fiduciary position of trust. By declaring the Trust irrevocable and that Kim

had no right to the Trust, Judge Davis disregarded equity and Utah public policy. In the

event that this Court determines that the Trust Agreement creates an irrevocable Trust in

which I<im does not have any exercisable rights, it should further hold that the irrevocable

nature of the Trust violates Utah's public policy. Therefore, it should hold that Kim has a

right to revoke the Trust and that the district court has the ability to reach the trust to divide

it in a divorce action.

II. Judge Davis erred when he resorted to Nevada law as an alternative basis to construe the Trust as irrevocable because the application of Nevada law leads to a result that violates Utah's public policy.

Judge Davis never decided whether he was constrained to construe the Trust

Agreement pursuant to Utah or Neyada law; rather, he determined that the Trust is

irrevocable under the laws of both states. As shown above, the Trust was revocable under

Utah law. Alternatively, Judge Davis erred when he applied Nevada law to construe the

Trust Agreement because the application of Nevada law led to a result contrary to Utah

public policy.

Because Utah is the forum state of this action, Utah's choice of law rule determines

the outcome of the conflict. WaddoupJ tJ• Amalgamated Sugar Co., 54 P.3d 1054, 1059 (2002).

Settlors generally have the right to determine which state's laws "vill govern the meaning and

effect of the terms of a trust. Utah Code Ann. § 75-7-107 (Uniform Law

Comments)("Paragraph (1) allows a settlor to select the law that \\111 govern the meaning

41

and effect of the terms of the trust."). Nevertheless, Utah courts must invalidate a choice of

law clause where it would force the court to enforce terms wholly repugnant to its local

public policy. Jacob.fen Const. Co., In{~ v. Teton Builders, 106 P.3d 719, 724 (Utah 2005), dting

M/ S Bremen il. Zapata Off-Shore Co., 407 U.S. 1,15 (1972)(a choice of forum clause "should

be held unenforceable if enforcement would contravene a strong public policy of the forum

in which it is brought, whether declared by statute or by judicial decision."). See also Bqyd v.

Grand Trunk WR Co., 338 U.S. 263 (1949); Rob v. Corp. dLlqyd\ 996 F.2d 1353, 1363 (2nd

Cir. 1993)(a forum selection clause is unreasonable if it "contravene[s] a strong public policy

of the forum state"); i'zr.rt Nat. Bank of Chicago il. Ettlinger, 465 F.2d 343, 347 (7 th Cit.

1972)("In deciding whether or not to give recognition to a stipulation of what law is to

govern a particular transaction, the crucial question is whether an important policy of the

most interested state would be evaded thereby.").

In its comment to Utah Code Ann. § 75-7-107, the Utah legislature stated, "[t]his

section does not attempt to specify the strong public policies sufficient to invalidate a

settlor's choice of governing law." The legislature, however, suggested certain factors for

the courts to consider, including the "personal and proprietary effects of marriage." !d.

As shown above, Utah as a long-established public policy that requires that

agreements between spouses and the division of assets upon divorce or separation serve

equitable principles of fairness and equality. This public policy pervades its common law

and statutes. Utah courts will not enforce agreements that are "inadequate and inequitable"

in their treatment of one of the spouses. See In re BelJ:r Estate, 29 Utah 1 (Utah 1904).

Enforcement of the choice of law provision would result in a serious inequity to

42

Kim. The controlling Nevada statute states:

1. If the settlor of any trust specifically declares in the instrument creating the trust that such trust is irrevocable it shall be irrevocable for all purposes, even though the settlor is also the beneficiary of such trust.

2. Such trust shall, under no circumstances, be construed to be revocable for the reason that the settlor and beneficiary is the same person.

Nev. Rev. Stat. § 163.560. No Nevada precedent has interpreted this statute. This statute,

on its face, Nevada law appears to abrogate the common law sole beneficiary rule, which,

simplified, stands for the proposition that any trust is revocable where the settlor is the sole

beneficiary. Utah has adopted the sole beneficiary rule. 16 See Utah Code Ann. § 75-7-605;

Estate ~fFlake v. Flake, 71 P.3d 589, 594 (Utah 2003); Restatement (Second) of Trusts § 331,

cmt. h. Nevada law appears to be unique in its abrogation of the traditional sole beneficiary

rule, suggesting that Dr. Dahl selected Nevada law for this purpose. His election afforded

him the ability to reserve an unrestricted ability to amend or modify the Trust Agreement

without rendering the Trust revocable, as it would be under Utah law. In essence, he

maintained complete control of the management of the Trust assets, complete control over

who could receive a distribution of Trust assets, and complete control over whether Kim

could be deprived of her own money.

Assuming that the foregoing interpretation of Nev. Rev. Stat. § 163.560 is correct, if

this Court construed the Trust Agreement according to Nevada law, then the foreign law

would compel this Court to hold that the Trust is irrevocable. Because the terms of the

16 This interpretation of Nev. Rev. Stat. § 163.560 is inconsistent ",1.th the Nevada Supreme Court's adoption of the sole beneficiary rule in De Lee v. Hicks, sztpra. It appears, however, that the De Lee decision construed the terms of a trust created just before the effective date of Nev. Rev. Stat. § 163.560.

43

Trust agreement do not allow Kim to compel a distribution of Trust assets during Dr.

Dahl's life, Kim can only enjoy the benefit for her property if she may revoke it. If the

Trust is irrevocable, I<im would be prohibited from revoking any portion of the Trust

during Dr. Dahl's life. Moreover, she cannot receive portion of the assets after his death,

owing to Dr. Dahl's successful efforts to divorce I<im. Construing the Trust Agreement

according to Nevada law would deprive I<im Dahl of at least $1.1 million of her own

property, including her interest in a large stock account that Dr. Dahl transferred into the

Trust without her knowledge or consent Further, I<im never received a copy of the Trust

Agreement and did not know that it effectively cut her out of her own money upon divorce.

This deprivation creates a serious inequity between the parties. The settlement is "wholly

inadequate and inequitable" to I<im. Given that Utah has established a public policy

directed toward equalizing the spouses and equitably dividing their property upon divorce,

enforcement of the choice of law provision in the postnuptial agreement would result in a

disposition of the case wholly repugnant to the state of Utah.

Because the enforcement of Dr. Dahl's unilateral choice of governing law would

violate Utah's public policy, Judge Davis erred when he construed the Trust Agreement

according to Nevada law. For this reason, this Court should reverse Judge Davis' ruling that

relied upon Nevada law to determine that the Trust is irrevocable.

III. Judge Davis abused his discretion when he entered summary judgment on

Kim's alter ego theory without allowing her to conduct discovery.

Where a party needs additional discovery to provide affidavits to justify the party's

opposition to a motion for summary judgment, the trial court may refuse the application for

44

judgment or order a continuance to permit the discovery. Utah R. Civ. P. 56(f). The trial

court "should liberally grant rule 56(f) motions unless they are dilatory or lacking merit."

Price Det'. Co., LP. ll. Orem Ci!Jl, 2000 UT 26, ~ 30, 995 P.2d 1237.

While a trial court has discretion to grant to deny a rule 56(f) motion, its decision

may not exceed "the limits of reasonability." Id. at ~ 9. There is no "bright line" test for

determining whether the trial court abused its discretion. OlJersto(k.com, 1m: tl. SmartBat:gains,

1m:, 2008 UT 55, ~ 21, 192 P.3d 858. Some of the relevant factors include, but are not

limited to (1) whether the discovery sought will uncover disputed material facts that will

prevent the grant of summary judgment or if the party requesting discovery is simply on a

fishing expedition; (2) whether the party opposing summary judgment has had adequate

time to conduct discovery and has been conscientious in pursuing such discovery; and (3)

the diligence of the party moving for summary judgment in responding to discovery

requests. !d., citing Callioux ll. ProgrCSJil)e Ins. Co., 745 P.2d 838, 841 (Utah Ct. App. 1987).

In her Amended Complaint, Kim made factual allegations supporting her theory that

the Trust was null and void because it was an alter ego of Dr. Dahl. (R. 1029.) She claimed

that the conveyance of the marital home to Dr. Dahl, who encumbered the home with a

loan in his name before transferring it back to the Trust, proved that the Trust was an alter

ego of Dr. Dahl. Id. She had specific facts supporting her claim, and a basis for seeking

discovery related to those facts. Thus, her request cannot be described as a "fishing

expedition. "

Kim was diligent in seeking the necessary discovery to support her alter ego theory.

She first sought to take the deposition of the trustee, C. Robert Dahl, by sending notice of

45

his deposition on September 16,2010. (R. 1394.) Appellees sought an ex parte protective

order prohibiting the deposition. (R. 1533.) After the parties agreed to take the depositions

of Dr. Dahl and C. Robert Dahl on December 1 and 11, 2012, Appellees filed their Motion

for Summary Judgment a second motion for protective order seeking to prevent the

deposition until after the summary judgment decision was made. (R. 1582; 1647; 1798;

1800.) Kim filed her rule 56(f) motion nine calendar days after Appellees filed their motion

for summary judgment. (R. 1798).

Judge Davis granted I<im's rule 56(f) motion, allowing her to file her response four

days after the last scheduled deposition. (R. 2020.) The court, however, imposed a stay

owing to Appellees' motion to disqualify I<im's counsel, before the scheduled depositions

occurred. When Judge Davis lifted the stay on July 18, 2011, and I<im obtained an

Amended Scheduling Order so that discovery for all parties could occur after the

interruption. (R. 2387; 2577). I<im immediately sent notice of the depositions of Dr. Dahl

and his brother. (R. 2389; 2395; 2399.) Appellees' then sought a third protective order

motion to prevent the depositions. (R.2581.)

Throughout the case, Appellees actively frustrated I<im's discovery efforts. Despite

the fact that they served discovery requests on I<im early in the case, Appellees sought to

quash the scheduling order so that I<im could not propound discovery on them. (R. 624;

757.) Appellees filed a motion for a protective order to prevent I<im from serving requests

on them. (R. 800.) Because they refused to answer I<im's discovery requests, Judge Davis

signed an order compelling their responses and awarding attorney fees to I<im. (R. 1384.)

46

Then Appellees filed a motion to disqualify counsel and obtained a stay of the action just

before their depositions occurred.

Judge Davis initially found merit in Kim's rule 56(f) motion, allowing her to

complete the depositions of Dr. Dahl and his brother before requiring her summary

judgment response. (R. 2020.) As required by the rules, Kim filed a response to Appellees'

Motion for Summary Judgment once the stay was lifted, but made her response subject to

her previous rule 56(f) request to take the depositions. (R.2574.) For efficiency, she

incorporated in full her previous motion. (Id.) During oral argument, she emphasized the

need for depositions to develop facts related to her alter ego theory. (R. 2977:18,24-25.)

It is unclear why the district court ruled on Appellees' Motion for Summary

Judgment before allowing the discovery ordered prior to the stay. Judge Davis stated that

he denied her motion on the grounds that Kim did not accompany her motion with the

required affidavit. (R. 2958.) He did so despite the fact that Kiln's renewed rule 56(f)

request incorporated the motion previously granted. (R. 2574.) The motion included a

supporting affidavit signed by I<im's attorney, Christopher J. Rogers. (R. 1834.) The

affidavit stated that further discovery was needed to determine whether portions of the

Trust Agreement had been "waived, disregarded, or ignored." (Id.)

Judge Davis erred when he found that I<im had not filed the appropriate affidavit

since he had already granted the motion and needed to reset discovery dates after a stay

caused the previous deadlines to expire. The district court ignored I<im's diligence in

seeking discovery and turned a blind eye to Appellees' efforts to obstruct I<im's discovery

efforts at every turn. Thus, his denial of I<im's renewed and incorporated rule 56(f) motion

47

exceeded the limits of reasonability. This Court should reverse the denial of Kim's renewed

Rule 56(f) motion and remand the case with an order that Kim be allowed to conduct

additional discovery before the district court renders judgment on her alter ego theory.

IV. Judge Davis erred when he issued a hypothetical ruling that causes of action not before him would have been barred by the statute of limitations.

The courts of the State of Utah do not issue advisory opinions. Miller v. Weazler, 2003

UT 12, ~ 26, 66 P.3d 592. They do not "give opinions on merely abstract or theoretical

matters." Reynoldrv. ReynoldJ, 788 P.2d 1044, 1045 (Utah Ct. App. 1990), quoting M(Rae v.

]ackJon, 526 P.2d 1190, 1191 (Utah 1974). The courts "must operate within the

constitutional and statutory powers and duties imposed upon them. They are not supposed

to be a forum for hearing academic contentions or rendering advisory opinions." L.yon fl.

Bateman, 119 Utah 434, 228 P.2d 818, 820 (Utah 1951). Before a court may render judgment

on an issue, the issues between the parties "must be ripe for judicial determination." Id. A

court is not permitted to grant relief on issues neither raised nor tried. Combe f!. Warren '.I'

FamilY Drif!e-Inm, Inc., 680 P.2d 733, 735 (Utah 1984), citing Cornia fl. Cornia, 546 P.2d 890

(Utah 1976).

In Meadow FreJh }<cmm, 1m: v. Utah State Univer.riry Dept. ~f Agriculture & Applied Science,

this Court provided some instructive language. 813 P.2d 1216 (Utah Ct. App. 1991). In that

case, the plaintiff asked the Court to issue an opinion that he could refile its lawsuit in the

event the dismissal \vithout prejudice was upheld on appeal. !d. at 1220. The Court

declined to render such an opinion. Id. at 1220-21. The issue was not ripe for adjudication

by the Court until the plaintiff refiled its complaint, the trial court subsequently dismissed it,

and the plaintiff appealed the dismissal. Id. at 1221 To issue an opinion before the plaintiff

48

triggered the issue by refiling the lawsuit would be to render an inappropriate advisory

opinion. !d.

Whether a lawsuit is barred bv the statute of limitations involves several factual J

findings, including an analysis of facts related to the equitable tolling doctrine. RuJJell

Packard Dev., Inc: v. Car..ron, 2005 UT 14, ~~ 24-26, lOS P.3d 741. The analysis includes, inter

alia, factual determinations of when a plaintiff knew or should have known of the existence

of the facts forming the basis of the cause of action. Id.

In her Amended Complaint, Kim sought a declaratory judgment related to the

construction and validity of the Trust. (R. 1029.) She did not accuse Appellees of fraud,

mistake, duress, or undue influence. (!d.) No controversy related to those potential causes

of action, therefore, was pending before the district court.

Nevertheless, in his order granting Appellees' Motion for Summary Judgment, Judge

Davis held, "There are no material factual allegations in the Amended Complaint that accuse

Defendants of fraud, mistake, duress, undue influence, illegality or otherwise contend that

the Trust is violative of public policy or contrary to law or statute." (R. 2957; 2727.) This

sentence signals the reader to footnote number 1, which states

However, even if the Plaintiff were to make such a claim, the statute of limitations has passed on all causes of action related to those theories. U.c.A. 7SB-2-305 (2010 as amended) limits actions based on the grounds [sic.] of fraud or mistake to three years. 7SB-2-307 (2010 as amended) limits actions based upon a contract, obligation, or liability not founded upon an instrument in writing as well as other action not detailed in the statute to four years. 7SB-2-309 (2010 as Amended) limits actions based upon any contract, obligation, or liability founded upon an instrument in writing, to six years.

(Id.) At oral arguments on Kun's motion to strike the footnote, Judge Davis stated, "I don't

always read carefully footnotes, I'll have to mention that to you in connection with that, but

49

that may be a basis upon your attack on appeal as it relates to the order itself.. .. " (Transcript

of March 28, 2012 Hearing, p. 14.) He ultimately denied Kiln's motion for relief from

judgment-by which she requested that the court strike the footnote-on the grounds that

the order was already the subject of this appeal. 17

It was error for the district court to render any sort of judgment regarding the

application of the statute of limitations on various causes of action not pleaded by Kim in

her Amended Complaint. Those causes of action were not before the court, and the

application of the respective statutes of limitations to those causes of action was not briefed

by either party. Further, such a determination would require the court to rely on facts

neither found by the court nor raised by the parties in this matter.

Further, there was no basis to grant summary judgment even if the issues had been

raised. A fraud cause of action against an Appellee would not have begun running until she

knew or reasonably should have known facts supporting each of the elements for fraud.

Fraud requires proof of nine distinct elements: 1) that a representation was made; 2)

concerning a presently existing material fact; 3) which was false; 4) which the representor

either knew to be false or made recklessly, knowing that he had insufficient knowledge upon

which to base the representation; 5) for the purpose of inducing the other party to act upon

it; 6) that the party, acting reasonably and in ignorance of its falsity; 7) did in fact rely upon

the statement; 8) and was thereby induced to act; 9) to his own injury and damage. Franco v.

Church qf jeJus Christ qfLatter-dqy Saints, 2001 UT 25, ~ 33,21 P.3d 198. No facts related to

17 The original, signed order denying Kim's Motion for Relief from Judgment does not have a record Bates stamp. It is located in file 8 of 8 and begins on the third page from the top.

50

those elements appeared in any pleadings.

By including the footnote in his order, Judge Davis rendered an advisory opinion on

a merely abstract or theoretical matter. Kim did not plead any causes of action related to

fraud, mistake, duress, undue influence, and the parties did not raise facts or legal arguments

related to those unpleaded theories. Thus, no issues related to those hypothetical,

speculative theories were ripe for a determination by Judge Davis.

Judge Davis did not-and could not for purposes of summary judgment-make any

factual findings regarding when Kim knew or reasonably should have known the facts

underlying a fraud cause of action. The same can be said also for a cause of action related to

duress, mistake, or undue influence. Therefore, it was error for Judge Davis to hold that the

statute of limitations would preclude any such cause of action in the future. By doing so, he

entered an impermissible advisory opinion that went beyond his jurisdiction. This Court

should reverse the district court's determination that a future cause of action related to

fraud, duress, mistake, or undue influence would be barred by the statute of limitations, and

it should remand the matter with an instruction that Judge Davis strike the offending

footnote from his order.

CONCLUSION

Judge Davis erred when he determined that the Trust is irrevocable. The Trust is

revocable under Utah law for several reasons: First, and despite the Trust Agreement's

language to the contrary, the Trust is revocable because Dr. Dahl reserved to the settlor an

unrestricted right to modify the trust; second, the Trust is an unenforceable postnuptial

agreement because it unreasonably tended to induce Dr. Dahl to divorce Kim, the material

51

provisions divesting Kim of her property interests were not disclosed, and the property

settlement was wholly inadequate and inequitable to Kim.

Even if the Trust would be irrevocable under Nevada law, it was error for Judge

Davis to apply Nevada because the application of Nevada law results in a conclusion

repugnant to Utah's public policy.

Judge Davis erred when he entered summary judgment as to all causes of action

without allowing Kim an opportunity to conduct discovery related to her alter ego claim.

Despite commenting at the August 31, 2011 hearing that he would not enter a summary

judgment order that resolved the alter ego theory, Judge Davis signed an order granting

summary judgment to Appellees on all counts. Judge Davis, in fairness, should have allowed

Kim to take the depositions. The denial prejudiced Kim by denying her the opportunity to

gather facts necessary to contest Appellees' summary judgment motion.

Finally, Judge Davis entered an inappropriate advisory opinion when he determined

that any claims related to fraud, mistake, duress or undue influence-none of which were

pleaded by Kim-would have been barred by the statute of limitations. Those claims were

not ripe for determination.

WHEREFORE, PREMISES CONSIDERED, I<im respectfully requests that this

Court reverse the district court's orders that declared the Trust irrevocable, that denied Kim

an opportunity to conduct reasonable and necessary discovery, and the advisory portion of

the order. Further, this Court should remand the matter to the trial court so that I<im may

conduct discovery related to her claim that the Trust is invalid under her alter ego theory.

52

CHRISTENSEN CORBETT & PANKRATZ, PLLC

CERTIFICATE OF COMPLIANCE WITH RULE 24(F)(1)

I hereby certify that this brief complies with the requirements of Rule 24(f) (1) of the

Utah Rules of Appellate Procedure. This is a principal brief which must be less than 14,000

words. I have used the word processor to count the amount of words in this brief, excluding

words in the table of contents, table of authorities, and the addenda. The total number of

words in this brief is 13,591.

An emplqyee qf CHR1STE1\}SEI\~ CORBETT & PANKRATZ, PILC

53

CERTIFICATE OF SERVICE

I hereby certify that I caused a true and correct copy of the foregoing BRIEF OF

APPELLANT to be sent via flrst class U.S. Mail, postage prepaid, on the 1. day of

August, 2012, to:

Rosemond Blakelock 1832 North 1120 West Provo, Utah, 84604 Attornry for Difendants

An empiqyee of CHRIS1ENSEN CORBETT & PANKRATZ, PILC

54

Addenda

Addendum 1

Statutes and Rules Cited in the Brief

163.560. Irrevocable trust not to be construed as revocable, NV ST 163.560

West's Nevada Revised Statutes Annotated Title 13. Guardianships; Conservatorships; Trusts (Chapters 159-167)

Chapter 163. Trusts (Refs & Annos) Miscellaneous Provisions

N.R.S. 163.560

163.560. Irrevocable trust not to be construed as revocable

Currentness

1. If the settlor of any trust specifically declares in the instrument creating the trust that such trust is irrevocable it shall be

irrevocable for all purposes, even though the settlor is also the beneficiary of such trust.

2. Such trust shall, under no circumstances, be construed to be revocable for the reason that the settlor and beneficiary is the

same person.

Credits Added by Laws 1973, p. 372.

N. R. S. 163.560, NV ST 163.560

Current through the 2011 76th Regular Session of the Nevada Legislature and technical corrections received from the Legislative

Counsel Bureau (2011).

End of Document ~:;, 2012 Thomson Reuters. No claim to Oliginallf.S. Government Works.

'v"testlav .. Nexr @ 2012 Thomson Reuters. No claim to original U.S. Government Works

§ 30·3·5. Disposition of property··Maintenance and health care of ••• , UT ST § 30·3·5

West's Utah Code Annotated Title 30. Husband and Wife

Chapter 3. Divorce (Refs & Annos)

U.C.A. 1953 § 30-3-5

§ 30-3-5. Disposition of property--Maintenance and health care of parties and

children--Division of debts--Court to have continuing jurisdiction--Custody and

parent-time--Determination of alimony--Nonmeritorious petition for modification

Currentness

(1) When a decree of divorce is rendered, the court may include in it equitable orders relating to the children, property, debts

or obligations, and parties. The court shall include the following in every decree of divorce:

(a) an order assigning responsibility for the payment of reasonable and necessary medical and dental expenses of the

dependent children including responsibility for health insurance out-of-pocket expenses such as co-payments, co-insurance,

and deductibles;

(b )(i) if coverage is or becomes available at a reasonable cost, an order requiring the purchase and maintenance of appropriate

health, hospital, and dental care insurance for the dependent children; and

(ii) a designation of which health, hospital, or dental insurance plan is primary and which health, hospital, or dental

insurance plan is secondary in accordance with the provisions of Section 30-3-5.4 which will take effect if at any time a

dependent child is covered by both parents' health, hospital, or dental insurance plans;

(c) pursuant to Section 15-4-6.5:

(i) an order specifying which party is responsible for the payment of joint debts, obligations, or liabilities of the parties

contracted or incurred during marriage;

(ii) an order requiring the parties to notify respective creditors or obligees, regarding the court's division of debts,

obligations, or liabilities and regarding the parties' separate, current addresses; and

(iii) provisions for the enforcement of these orders; and

(d) provisions for income withholding in accordance with Title 62A, Chapter 11, Recovery Services.

(2) The court may include, in an order determining child support, an order assigning financial responsibility for all or a portion

of child care expenses incurred on behalf of the dependent children, necessitated by the employment or training of the custodial

parent. If the court determines that the circumstances are appropriate and that the dependent children would be adequately cared

for, it may include an order allowing the noncustodial parent to provide child care for the dependent children, necessitated by

the employment or training of the custodial parent.

(3) The court has continuing jurisdiction to make subsequent changes or new orders for the custody of the children and their

support, maintenance, health, and dental care, and for distribution of the property and obligations for debts as is reasonable and necessary.

(4) Child support, custody, visitation, and other matters related to children born to the mother and father after entry of the decree

of divorce may be added to the decree by modification.

WesttawNexr © 2012 Thomson Reuters, No claim to original U.S. Government Works,

§ 30·3·5. Disposition of property-Maintenance and health care of ••• , UT ST § 30-3·5

(5)(a) In determining parent-time rights of parents and visitation rights of grandparents and other members of the immediate family, the court shall consider the best interest of the child.

(b) Upon a specific rroding by the court of the need for peace officer enforcement, the court may include in an order establishing a parent-time or visitation schedule a provision, among other things, authorizing any peace officer to enforce a court-ordered parent-time or visitation schedule entered under this chapter.

(6) If a petition for modification of child custody or parent-time provisions of a court order is made and denied, the court shall order the petitioner to pay the reasonable attorneys' fees expended by the prevailing party in that action, if the court determines that the petition was without merit and not asserted or defended against in good faith.

(7) If a petition alleges noncompliance with a parent-time order by a parent, or a visitation order by a grandparent or other member of the immediate family where a visitation or parent-time right has been previously granted by the court, the court may award to the prevailing party costs, including actual attorney fees and court costs incurred by the prevailing party because of the other party's failure to provide or exercise court-ordered visitation or parent-time.

(8)(a) The court shall consider at least the following factors in determining alimony:

(i) the financial condition and needs of the recipient spouse;

(ii) the recipient's earning capacity or ability to produce income;

(iii) the ability of the payor spouse to provide support;

(iv) the length of the marriage;

(v) whether the recipient spouse has custody of minor children requiring support;

(vi) whether the recipient spouse worked in a business owned or operated by the payor spouse; and

(vii) whether the recipient spouse directly contributed to any increase in the payor spouse's skill by paying for education received by the payor spouse or allowing the payor spouse to attend school during the marriage.

(b) The court may consider the fault of the parties in determining alimony.

(c) As a general rule, the court should look to the standard of living, existing at the time of separation, in determining alimony in accordance with Subsection (8)(a). However, the court shall consider all relevant facts and equitable principles and may, in its discretion, base alimony on the standard of living that existed at the time of trial. In marriages of short duration, when no children have been conceived or born during the marriage, the court may consider the standard of living that existed at the time of the marriage.

(d) The court may, under appropriate circumstances, attempt to equalize the parties' respective standards ofliving.

(e) When a marriage of long duration dissolves on the threshold of a major change in the income of one of the spouses due to the collective efforts of both, that change shall be considered in dividing the marital property and in determining the amount of alimony. If one spouse's earning capacity has been greatly enhanced through the efforts of both spouses during the marriage, the court may make a compensating adjustment in dividing the marital property and awarding alimony.

(f) In determining alimony when a marriage of short duration dissolves, and no children have been conceived or born during the marriage, the court may consider restoring each party to the condition which existed at the time of the marriage.

(g)(i) The court has continuing jurisdiction to make substantive changes and new orders regarding alimony based on a substantial material change in circumstances not foreseeable at the time of the divorce.

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§ 30·3·5. Disposition of property··Maintenance and health care of ••. , UT ST § 30·3·5

(ii) The court may not modifY alimony or issue a new order for alimony to address needs of the recipient that did not exist

at the time the decree was entered, unless the court finds extenuating circumstances that justifY that action.

(iii) In determining alimony, the income of any subsequent spouse of the payor may not be considered, except as provided

in this Subsection (8).

(A) The court may consider the subsequent spouse's financial ability to share living expenses.

(B) The court may consider the income of a subsequent spouse if the court finds that the payor's improper conduct

justifies that consideration.

(h) Alimony may not be ordered for a duration longer than the number of years that the marriage existed unless, at any time

prior to termination of alimony, the court finds extenuating circumstances that justifY the payment of alimony for a longer

period of time.

(9) Unless a decree of divorce specifically provides otherwise, any order of the court that a party pay alimony to a former

spouse automatically terminates upon the remarriage or death of that former spouse. However, if the remarriage is annulled

and found to be void ab initio, payment of alimony shall resume if the party paying alimony is made a party to the action of

annulment and his rights are determined.

(10) Any order of the court that a party pay alimony to a former spouse terminates upon establishment by the party paying

alimony that the former spouse is cohabitating with another person.

Credits

Laws 1909, c. 109, § 4; Laws 1969, c. 72, § 3; Laws 1975, c. 81, § 1; Laws 1979, c. 110, § 1; Laws 1984, c. 13, § 1; Laws 1985,

c. 72, § 1; Laws 1985, c. 100, § 1; Laws 1991, c. 257, § 4; Laws 1993, c. 152, § 1; Laws 1993, c. 261, § 1; Laws 1994, c. 284,

§ 1; Laws 1995, c. 330, § 1, eff. May 1, 1995; Laws 1997, c. 232, § 4, eff. July 1, 1997; Laws 1999, c. 168, § 1, eft". May 3,

1999; Laws 1999, c. 277, § 1, eft". May 3,1999; Laws 2001, c. 255, § 4, eft". April 30, 2001; Laws 2003, c. 176, § 3, eft". May

5,2003; Laws 2005, c. 129, § 1, eff. May 2, 2005; Laws 2010, c. 285, § 1, eff. May 11,2010.

Codifications R.S. 1898, § 1212; c.L. 1907, § 1212; C.L. 1917, § 3000; R.S. 1933, § 40-3-5; C. 1943, § 40-3-5.

Notes of Decisions (1443)

U.C.A. 1953 § 30-3-5, UT ST § 30-3-5

Current through 2012 Fourth Special Session.

End of Ilocument ,~) 20.12 Thomson Reut.ers. No claim to original U.S. Government Works.

Yl"estl~'!Nexr © 2012 Thomson Reuters. No claim to original U.S. Government Works. 3

§ 75-7-107. Governing law, UT ST § 75-7-107

West's Utah Code Annotated

Title 75. Utah Unifonn Probate Code (Refs &Annos)

Chapter 7. Utah Unifonn Trust Code (Refs & Annos) Part 1. General Provisions (Refs & Annos)

U.C.A. 1953 § 75-7-107

§ 75-7-107. Governing law

Currentness

(1) For purposes of this section:

(a) "Foreign trust" means a trust that is created in another state or country and valid in the state or country in which the trust is created.

(b) "State law provision" means a provision that the laws of a named state govern the validity, construction, and administration

ofa trust.

(2) If a trust has a state law provision specifying this state, the validity, construction, and administration of the trust are to be

governed by the laws of this state if any administration of the trust is done in this state.

(3) For all trusts created on or after December 31, 2003, if a trust does not have a state law provision, the validity, construction,

and administration of the trust are to be governed by the laws of this state if the trust is administered in this state.

(4) A trust shall be considered to be administered in this state if:

(a) the trust states that this state is the place of administration, and any administration of the trust is done in this state; or

(b) the place of business where the fiduciary transacts a major portion of its administration of the trust is in this state.

(5) If a foreign trust is administered in this state as provided in this section, the following provisions are effective and enforceable

under the laws of this state:

(a) a provision in the trust that restricts the transfer of trust assets in a manner similar to Section 25-6-14;

(b) a provision that allows the trust to be perpetual; or

(c) a provision that is not expressly prohibited by the law of this state.

(6) A foreign trust that moves its administration to this state is valid whether or not the trust complied with the laws of this state

at the time of the trust's creation or after the trust's creation.

(7) Unless otherwise designated in the trust instrument, a trust is administered in this state if it meets the requirements of Subsection (4).

Credits Laws 2003, c. 301, § 16, eff. Dec. 31, 2003; Laws 2003, 2nd Sp.Sess., c. 3, § 12, eff. Dec. 31,2003. Laws 2004, c. 89, § 19,

eff. July 1,2004.

\NesHawNext' © 2012 Thomson Reuters, No claim to original U.S. Government Works,

§ 75·7·107. Governing law, UT ST § 75·7·107

Editors' Notes

UNIFORM LAW COMMENTS[UTC § 107]

This section provides rules for detennining the law that will govern the meaning and effect of particular trust tenns. The law

to apply to determine whether a trust has been validly created is determined under Section 403.

Paragraph (1) allows a settlor to select the law that will govern the meaning and effect of the terms of the trust. The jurisdiction

selected need not have any other connection to the trust. The settlor is free to select the governing law regardless of where the

trust property may be physically located, whether it consists of real or personal property, and whether the trust was created by

will or during the settlor's lifetime. This section does not attempt to specify the strong public policies sufficient to invalidate a

settlor's choice of governing law. These public policies will vary depending upon the locale and may change over time.

Paragraph (2) provides a rule for trusts without goveming law provisions·the meaning and effect of the trust's terms are to be

determined by the law of the jurisdiction having the most significant relationship to the matter at issue. Factors to consider

in determining the governing law include the place of the trust's creation, the location of the trust property, and the domicile

of the settlor, the trustee, and the beneficiaries. See Restatement (Second) of Conflict of Laws Sections 270 cmt. c and 272

cmt. d (1971). Other more general factors that may be pertinent in particular cases include the relevant policies of the forum,

the relevant policies of other interested jurisdictions and degree of their interest, the protection of justified expectations and

certainty, and predictability and uniformity of result. See Restatement (Second) of Conflict of Laws Section 6 (1971). Usually,

the law of the trust's principal place of administration will govern administrative matters and the law of the place having the

most significant relationship to the trust's creation will govern the dispositive provisions.

This section is consistent with and was partially patterned on the Hague Convention on the Law Applicable to Trusts and on

their Recognition, signed on July 1, 1985. Like this section, the Hague Convention allows the settlor to designate the governing

law. Hague Convention art. 6. Absent a designation, the Convention provides that the trust is to be governed by the law of the

place having the closest connection to the trust. Hague Convention art. 7. The Convention also lists particular public policies for

which the forum may decide to override the choice oflaw that would otherwise apply. These policies are protection of minors

and incapable parties, personal and proprietary effects of marriage, succession rights, transfer of title and security interests in

property, protection of creditors in matters of insolvency, and, more generally, protection of third parties acting in good faith.

Hague Convention art. 15.

For the authority of a settlor to designate a trust's principal place of administration, see Section 108(a).

U.C.A. 1953 § 75-7-107, UT ST § 75-7-107


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VVestla;,.vNexr @ 2012 Thomson Reuters. No claim to original U.S. Government Works. 2

§ 75-7-1103. Application to existing relationships, UT ST § 75·7·1103

West's Utah Code Annotated Title 75. Utah Unifonn Probate Code (Refs &Annos)

Chapter 7. Utah Unifonn Trust Code (Refs & Annos) Part 11. Miscellaneous Provisions

U.C.A.1953 § 75-7-1103

§ 75-7-1103. Application to existing relationships

Currentness

(1) Except as otherwise provided, this chapter applies to:

(a) all trusts created before, on, or after July 1, 2004;

(b) all judicial proceedings concerning trusts commenced on or after July 1, 2004; and

(c) judicial proceedings concerning trusts commenced before July 1, 2004 unless the comt finds that application of a particular

provision of this chapter would substantially interfere with the effective conduct of the judicial proceedings or prejudice the

rights of the parties, in which case the particular provision of this chapter does not apply and the superseded section will apply.

(2) Any rule of construction or presumption provided in this chapter applies to trust instruments executed before July 1, 2004

unless there is a clear indication of a contrary intent in the tenns of the trust.

(3) An act done before July 1,2004 is not affected by this chapter.

(4) If a right is acquired, extinguished, or barred upon the expiration of a prescribed period that has commenced to run under

any other statute before July 1, 2004, that statute continues to apply to the right even if it has been repealed or superseded.

Credits Laws 2004, c. 89, § 121, eff. July 1,2004.

Editors' Notes

UNIFORM LAW COMMENTS[UTC § 1106)

The Unifonn Trust Code is intended to have the widest possible effect within constitutional limitations. Specifically, the Code

applies to all trusts whenever created, to judicial proceedings concerning trusts commenced on or after its effective date, and

unless the court otherwise orders, to judicial proceedings in progress on the effective date. In addition, any rules of construction

or presumption provided in the Code apply to preexisting trusts unless there is a clear indication of a contrary intent in the trust's

tenns. By applying the Code to preexisting trusts, the need to know two bodies of law will quickly lessen.

This Code cannot be fully retroactive, however. Constitutional limitations preclude retroactive application of rules of

construction to alter property rights under trusts that became irrevocable prior to the effective date. Also, rights already barred

by a statute of limitation or rule under fonner law are not revived by a possibly longer statute or more liberal rule under this

Code. Nor is an act done before the effective date of the Code affected by the Code's enactment.

The Uniform Trust Code contains an additional effective date provision. Pursuant to Section 602(a), prior law will determine

whether a trust executed prior to the effective date of the Code is presumed to be revocable or irrevocable.

For a comparable uniform law effective date provision, see Unifonn Probate Code Section 8-101.

Westla"NNexr © 2012 Thomson Reuters. No claim to original U.S. Government Works.

§ 75·7·1103. Application to existing relationships, UT ST § 75-7-1103


V.C.A. 1953 § 75-7-1103, VT ST § 75-7-1103 Current through 2012 Fourth Special Session.

.End of Document (~~, 2012 Thomson Reuters. No claim to original U.S. GovenU11en! Works .

WestlawNext' © 2012 Thomson Reuters, No claim to original U.S, Government Works, 2

§ 75·7-411. Modification or termination of noncharitable ••• , UT 8T § 75-7-411

West's Utah Code Annotated Title 75. Utah Uniform Probate Code (Refs &Annos)

Chapter 7. Utah Unifonn Trust Code (Refs & Annos) Part 4. Creation, Validity, Modification, and Termination of Trust (Refs & Annos)

U.C.A. 1953 § 75-7-411

§ 75-7-411. Modification or termination of noncharitable irrevocable trust by consent

Currentness

(1) A noncharitable, irrevocable trust may be modified or terminated upon consent of the settlor and all beneficiaries, even

if the modification or termination is inconsistent with a material purpose of the trust. A settlor's power to consent to a trust's

termination may be exercised by an agent under a power of attorney only to the extent expressly authorized by the power of

attorney or the terms of the trust, by the settlor's conservator with the approval of the court supervising the conservatorship if

an agent is not so authorized, or by the settlor's guardian with the approval of the court supervising the guardianship if an agent

is not so authorized and a conservator has not been appointed.

(2) A noncharitable, irrevocable trust may be terminated upon consent of all of the beneficiaries if the court concludes that

continuance of the trust is not necessary to achieve any material purpose of the trust. A noncharitable, irrevocable trust may

be modified upon consent of all of the beneficiaries if the court concludes that modification is not inconsistent with a material

purpose of the trust.

(3) A spendthrift provision in the terms of the trust is not presumed to constitute a material purpose of the trust.

(4) Upon termination of a trust under Subsection (1) or (2), the trustee shall distribute the trust property as agreed by the

beneficiaries.

(5) Ifnot all of the beneficiaries consent to a proposed modification or termination of the trust under Subsection (1) or (2), the

modification or termination may be approved by the court if the court is satisfied that:

( a) if all of the beneficiaries had consented, the trust could have been modified or terminated under this section; and

(b) the interests of a beneficiary who does not consent will be adequately protected.


Editors' Notes

UNIFORM LAW COMMENTS[UTC § 411]

This section describes the circumstances in which termination or modification of a noncharitable irrevocable trust may be

compelled by the beneficiaries, with or without the concurrence of the settlor. For provisions governing modification or

termination of trusts without the need to seek beneficiary consent, see Sections 412 (modification or termination due to

unanticipated circumstances or inability to administer trust effectively), 414 (termination or modification of uneconomic

noncharitable trust), and 416 (modification to achieve settlor's tax objectives). If the trust is revocable by the settlor, the method

of revocation specified in Section 602 applies.

Subsection (a) states the test for termination or modification by the beneficiaries with the concurrence of the settlor. Subsection

(b) states the test for termination or modification by unanimous consent of the beneficiaries without the concurrence of the

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§ 75-7-411. Modification or termination of noncharitable ... , UT ST § 75-7-411

settlor. The rules on trust termination in Subsections (a)-(b) carries forward the Claflin rule, first stated in the famous case

of Claflin v. Claflin, 20 N.E. 454 (Mass. 1889). Subsection (c) addresses the effect of a spendthrift provision. Subsection (d)

directs how the trust property is to be distributed following a termination under either subsection (a) or (b). Subsection (e)

creates a procedure for judicial approval of a proposed termination or modification when the consent of less than all of the

beneficiaries is available.

Under this section, a trust may be modified or terminated over a trustee's objection. However, pursuant to Section 410, the

trustee has standing to object to a proposed termination or modification.

The settlor's right to join the beneficiaries in terminating or modifying a trust under this section does not rise to the level of

a taxable power. See Treas. Reg. Section 20.2038-1(a)(2). No gift tax consequences result from a termination as long as the

beneficiaries agree to distribute the trust property in accordance with the value of their proportionate interests.

The provisions of Article 3 on representation, virtual representation and the appointment and approval of representatives

appointed by the court apply to the determination of whether all beneficiaries have signified consent under this section. The

authority to consent on behalf of another person, however, does not include authority to consent over the other person's objection.

See Section 301(b). Regarding the persons who may consent on behalf of a beneficiary, see Sections 302 through 305. A

consent given by a representative is invalid to the extent there is a conflict of interest between the representative and the

person represented. Given this limitation, virtual representation of a beneficiary's interest by another beneficiary pursuant to

Section 304 will rarely be available in a trust termination case, although it should be routinely available in cases involving trust

modification, such as a grant to the trustee of additional powers. If virtual or other form of representation is unavailable, Section

305 of the Code permits the court to appoint a representative who may give the necessary consent to the proposed modification

or termination on behalf of the minor, incapacitated, unborn, or unascertained beneficiary. The ability to use virtual and other

forms of representation to consent on a beneficiary's behalf to a trust termination or modification has not traditionally been

part of the law, although there are some notable exceptions. Compare Restatement (Second) Section 337(1) (1959) (beneficiary

must not be under incapacity), with Hatch v. Riggs National Bank, 361 F .2d 559 (D.C. Cir. 1966) (guardian ad litem authorized

to consent on beneficiary's behalf).

Subsection (a) also addresses the authority of an agent, conservator, or guardian to act on a settlor's behalf. Consistent with

Section 602 on revocation or modification of a revocable trust, the section assumes that a settlor, in granting an agent general

authority, did not intend for the agent to have authority to consent to the termination or modification of a trust, authority

that could be exercised to radically alter the settlor's estate plan. In order for an agent to validly consent to a termination or

modification of the settlor's revocable trust, such authority must be expressly conveyed either in the power or in the terms of

the trust.

Subsection (a), however, does not impose restrictions on consent by a conservator or guardian, other than prohibiting such

action if the settlor is represented by an agent. The section instead leaves the issue of a conservator's or guardian's authority

to local law. Many conservatorship statutes recognize that termination or modification of the settlor's trust is a sufficiently

important transaction that a conservator should first obtain the approval of the court supervising the conservatorship. See, e.g.,

Unif. Probate Code Section 5-411(a)(4). Because the Uniform Trust Code uses the term "conservator" to refer to the person

appointed by the court to manage an individual's property (see Section 1 03(4», a guardian may act on behalf of a settlor under

this section only if a conservator has not been appointed.

Subsection (a) is similar to Restatement (Third) of Trusts Section 65(2) (Tentative Draft No.3, approved 2001), and Restatement

(Second) of Trusts Section 338(2) (1959), both of which permit termination upon joint action of the settlor and beneficiaries.

Unlike termination by the beneficiaries alone under subsection (b), termination with the concurrence of the settlor does not

require a finding that the trust no longer serves a material purpose. No finding of failure of material purpose is required because

all parties with a possible interest in the trust's continuation, both the settlor and beneficiaries, agree there is no further need for

the trust. Restatement Third goes further than subsection (b) of this section and Restatement Second, however, in also allowing

the beneficiaries to compel termination of a trust that still serves a material purpose if the reasons for termination outweigh

the continuing material purpose.

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§ 75·7-411. Modification or termination of noncharltable •.• , UT ST § 75-7-411

Subsection (b), similar to Restatement Third but not Restatement Second, allows modification by beneficiary action. The

beneficiaries may modify any term of the trust if the modification is not inconsistent with a material purpose of the trust.

Restatement Third, though, goes further than this Code in also allowing the beneficiaries to use trust modification as a basis

for removing the trustee if removal would not be inconsistent with a material purpose of the trust. Under the Code, however, Section 706 is the exclusive provision on removal of trustees. Section 706(b)(4) recognizes that a request for removal upon

unanimous agreement of the qualified beneficiaries is a factor for the court to consider, but before removing the trustee the

court must also find that such action best serves the interests of all the beneficiaries, that removal is not inconsistent with a

material purpose of the trust, and that a suitable cotrustee or successor trustee is available. Compare Section 706(b)(4), with

Restatement (Third) Section 65 cmt. f(Tentative Draft No.3, approved 2001).

The requirement that the trust no longer serve a material purpose before it can be terminated by the beneficiaries does not

mean that the trust has no remaining function. In order to be material, the purpose remaining to be performed must be of some

significance:

Material purposes are not readily to be inferred. A finding of such a purpose generally requires some showing of a particular

concern or objective on the part of the settlor, such as concern with regard to the beneficiary's management skills, judgment,

or level of maturity. Thus, a court may look for some circumstantial or other evidence indicating that the trust arrangement

represented to the settlor more than a method of allocating the benefits of property among multiple beneficiaries, or a means of

offering to the beneficiaries (but not imposing on them) a particular advantage. Sometimes, of course, the very nature or design

of a trust suggests its protective nature or some other material purpose.

Restatement (Third) of Trusts Section 65 cmt. d (Tentative Draft No.3, approved 2001).

Subsection (c) of this section deals with the effect of a spendthrift provision on the right of a beneficiary to concur in a trust

termination or modification. Spendthrift tenus have sometimes been construed to constitute a material purpose without inquiry

into the intention of the particular settlor. For examples, see Restatement (Second) of Trusts Section 337 (1959); George G.

Bogert & George T. Bogert, The Law of Trusts and Trustees Section 1008 (Rev. 2d ed. 1983); and 4 Austin W. Scott & William

F. Fratcher, The Law of Trusts Section 337 (4th ed. 1989). This result is troublesome because spendthrift provisions are often

added to instruments with little thought. Subsection (c), similar to Restatement (Third) of Trusts Section 65 emt. e (Tentative

Draft No.3, approved 2001), does not negate the possibility that continuation of a trust to assure spendthrift protection might

have been a material purpose of the particular settlor. The question of whether that was the intent of a particular settlor is instead

a matter of fact to be determined on the totality of the circumstances.

Subsection (d) recognizes that the beneficiaries' power to compel termination of the trust includes the right to direct how the

trust property is to be distributed. While subsection (a) requires the settlor's consent to terminate an irrevocable trust, the settlor

does not control the subsequent distribution of the trust property. Once termination has been approved, how the trust property

is to be distributed is solely for the beneficiaries to decide.

Subsection (e), similar to Restatement (Third) of Trusts Section 65 cmt. c (Tentative Draft No.3, approved 2001), and

Restatement (Second) of Trusts Sections 338(2) & 340(2) (1959), addresses situations in which a termination or modification is

requested by less than all the beneficiaries, either because a beneficiary objects, the consent of a beneficiary cannot be obtained,

or representation is either unavailable or its application uncertain. Subsection (e) allows the court to fashion an appropriate

order protecting the interests of the nonconsenting beneficiaries while at the same time permitting the remainder of the trust.

property to be distributed without restriction. The order of protection for the nonconsenting beneficiaries might include partial continuation of the trust, the purchase of an annuity, or the valuation and cashout of the interest.

2003 Amendment. The amendment, which adds the language "modification or" to subsection (a), fixes an inadvertent omission.

It was the intent of the drafting committee that an agent with authority or a conservator or guardian with the approval of the

court be able to participate not only in a decision to terminate a trust but also in a decision to modify it.

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§ 75-7-411. Modification or termination of noncharitable ... , UT ST § 75-7-411


U.C.A. 1953 § 75-7-411, UT ST § 75-7-411 Current through 2012 Fourth Special Session .

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§ 75-7-605. Revocation or amendment of revocable trust, UT ST § 75-7-605

West's Utah Code Annotated Title 75. Utah Uniform Probate Code (Refs & Annos)

Chapter 7. Utah Uniform Trust Code (Refs & Annos) Part 6. Revocable Trusts (Refs & Annos)

U.CA. 1953 § 75-7-605

§ 75-7-605. Revocation or amendment of revocable trust

Currentness

(1) Unless the terms of a trust expressly provide that the trust is irrevocable, the settlor may revoke or amend the trust. This

Subsection (1) does not apply to a trust created under an instrument executed before May 1,2004.

(2) If a revocable trust is created or funded by more than one settlor:

(a) to the extent the trust consists of community property, the trust may be revoked by either spouse acting alone but may

be amended only by joint action of both spouses; and

(b) to the extent the trust consists of property other than community property, each settlor may revoke or amend the trust

with regard to the portion of the trust property attributable to that settlor's contribution.

(3) The settlor may revoke or amend a revocable trust:

(a) by substantially complying with a method provided in the terms of the trust; or

(b) if the terms of the trust do not provide a method or the method provided in the terms is not expressly made exclusive, by:

(i) executing a later will or codicil that expressly refers to the trust or specifically devises property that would otherwise

have passed according to the terms of the trust; or

(ii) any other method manifesting clear and convincing evidence of the settlor's intent.

(4) Upon revocation of a revocable trust, the trustee shall deliver the trust property as the settlor directs.

(5) A settlor's powers with respect to revocation, amendment, or distribution of trust property may be exercised by an agent

under a power of attorney only to the extent expressly authorized by the terms of the trust or the power.

(6) A conservator of the settlor or, if no conservator has been appointed, a guardian of the settlor may exercise a settlor's powers

with respect to revocation, amendment, or distribution of trust property only with the approval of the court supervising the

conservatorship or guardianship.

(7) A trustee who does not know that a trust has been revoked or amended is not liable to the settlor or settlor's successors in

interest for distributions made and other actions taken on the assumption that the trust had not been amended or revoked.


Editors' Notes

UNIFORM LAW COMMENTS[UTC § 602J

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§ 75-7-605. Revocation or amendment of revocable trust, UT ST § 75-7-605

Subsection (a), which provides that a settlor may revoke or modify a trust unless the tenns of the trust expressly state that the

trust is irrevocable, changes the common law. Most states follow the rule that a trust is presumed irrevocable absent evidence

of contrary intent. See Restatement (Second) of Trusts Section 330 (1959). California, Iowa, Montana, Oklahoma, and Texas

presume that a trust is revocable. The Unifonn Trust Code endorses this minority approach, but only for trusts created after

its effective date. This Code presumes revocability when the instrument is silent because the instrument was likely drafted by a nonprofessional, who intended the trust as a will substitute. The most recent revision of the Restatement of Trusts similarly

reverses the fonner approach. A trust is presumed revocable if the settlor has retained a beneficial interest. See Restatement

(Third) of Trusts Section 63 cmt. c (Tentative Draft No.3, approved 2001). Because professional drafters habitually spell out

whether or not a trust is revocable, subsection (a) will have limited application.

A power of revocation includes the power to amend. An unrestricted power to amend may also include the power to revoke a

trust. See Restatement (Third) of Trusts Section 63 emt. g (Tentative Draft No.3, approved 2001); Restatement (Second) of

Trusts Section 331 cmt. g & h (1959).

Subsection (b), which is similar to Restatement (Third) of Trusts Section 63 cmt. k (Tentative Draft No.3, approved 2001),

provides default rules for revocation or amendment of a trust having several settlors. The settlor's authority to revoke or modify

the trust depends on whether the trust contains community property. To the extent the trust contains community property, the

trust may be revoked by either spouse acting alone but may be amended only by joint action of both spouses. The purpose of

this provision, and the reason for the use of joint trusts in community property states, is to preserve the community character of

property transferred to the trust. While community property does not prevail in a majority of states, contributions of community

property to trusts created in noncommunity property states does occur. This is due to the mobility of settlors, and the fact that

community property retains its community character when a couple move from a community to a noncommunity state. For

this reason, subsection (b), and its provision on contributions of community property, should be enacted in all states, whether

community or noncommunity.

With respect to separate property contributed to the trust, or all property of the trust if none of the trust property consists of

community property, subsection (b) provides that each settlor may revoke or amend the trust as to the portion of the trust

contributed by that settlor. The inclusion of a rule for contributions of separate property does not mean that the drafters of this

Code concluded that the use of joint trusts should be encouraged. The rule is included because of the widespread use of joint

trusts in noncommunity property states in recent years. Due to the desire to preserve the community character of trust property,

joint trusts are a necessity in community property states. Unless community property will be contributed to the trust, no similarly

important reason exists for the creation of a joint trust in a noncommunity property state. Joint trusts are often poorly drafted,

confusing the dispositive provisions of the respective settlors. Their use can also lead to unintended tax consequences. See

Melinda S. Merk, Joint Revocable Trusts for Married Couples Domiciled in Common-Law Property States, 32 Real Prop. Prob.

& Tr. J. 345 (1997).

Subsection (b) does not address the many technical issues that can arise in detennining the settlors' proportionate contribution

to a joint trust. Most problematic are contributions of jointly-owned property. In the case of joint tenancies in real estate, each

spouse would presumably be treated as having made an equal contribution because of the right to sever the interest and convert

it into a tenancy in common. This is in contrast to joint accounts in financial institutions, ownership of which in most states is

based not on fractional interest but on actual dollar contribution. See, e.g., Unif. Probate Code Section 6-211. Most difficult

may be determining a contribution rule for entireties property. In Holdener v. Fieser, 971 S.W. 2d 946 (Mo. Ct. App. 1998),

the court held that a surviving spouse could revoke the trust with respect to the entire interest but did not express a view as to revocation rights while both spouses were living.

Subsection (b )(3) requires that the other settlor or settlors be notified if a joint trust is revoked by less than all of the settlors.

Notifying the other settlor or settlors of the revocation or amendment will place them in a better position to protect their interests.

If the revocation or amendment by less than all of the settlors breaches an implied agreement not to revoke or amend the trust,

those banned by the action can sue for breach of contract. If the trustee fails to notify the other settlor or settlors of the revocation

or amendment, the parties aggrieved by the trustee's failure can sue the trustee for breach of trust.

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§ 75·7-605. Revocation or amendment of revocable trust, UT ST § 75·7-605

Subsection (c), which is similar to Restatement (Third) of Trusts Section 63 cmt. h & i (Tentative Draft No.3, approved 2001), specifies the method of revocation and amendment. Revocation of a trust differs fundamentally from revocation of a will. Revocation of a will, because a will is not effective until death, cannot affect an existing fiduciary relationship. With a trust, however, because a revocation will terminate an already existing fiduciary relationship, there is a need to protect a trustee who might act without knowledge that the trust has been revoked. There is also a need to protect trustees against the risk that they will misperceive the settlor's intent and mistakenly assume that an infonnal document or communication constitutes a revocation when that was not in fact the settlor's intent. To protect trustees against these risks, drafters habitually insert provisions providing that a revocable trust may be revoked only by delivery to the trustee of a fonnal revoking document. Some courts require strict compliance with the stated formalities. Other courts, recognizing that the formalities were inserted primarily for the trustee's and not the settlor's benefit, will accept other methods of revocation as long as the settlor's intent is clear. See Restatement (Third) of Trusts Section 63 Reporter's Notes to cmt. h-j (Tentative Draft No.3, approved 2001).

This Code tries to effectuate the settlor's intent to the maximum extent possible while at the same time protecting a trustee against inadvertent liability. While notice to the trustee of a revocation is good practice, this section does not make the giving of such notice a prerequisite to a trust's revocation. To protect a trustee who has not been notified of a revocation or amendment, subsection (g) provides that a trustee who does not know that a trust has been revoked or amended is not liable to the settlor or settlor's successors in interest for distributions made and other actions taken on the assumption that the trust, as unamended, was still in effect. However, to honor the settlor's intent, subsection (c) generally honors a settlor's clear expression of intent even if inconsistent with stated formalities in the terms of the trust.

Under subsection (c), the settlor may revoke or amend a revocable trust by substantial compliance with the method specified in the terms of the trust or by a later will or codicil or any other method manifesting clear and convincing evidence of the settlor's intent. Only if the method specified in the terms of the trust is made exclusive is use of the other methods prohibited. Even then, a failure to comply with a technical requirement, such as required notarization, may be excused as long as compliance with the method specified in the terms of the trust is otherwise substantial.

While revocation of a trust will ordinarily continue to be accomplished by signing and delivering a written document to the trustee, other methods, such as a physical act or an oral statement coupled with a withdrawal of the property, might also demonstrate the necessary intent. These less formal methods, because they provide less reliable indicia of intent, will often be insufficient, however. The method specified in the terms of the trust is a reliable safe harbor and should be followed whenever possible.

Revocation or amendment by will is mentioned in subsection (c) not to encourage the practice but to make clear that it is not precluded by omission. See Restatement (Third) of Property: Will and Other Donative Transfers Section 7.2 cmt. e (Tentative Draft No.3, approved 2001), which validates revocation or amendment of will substitutes by later will. Situations do arise, particularly in death-bed cases, where revocation by will may be the only practicable method. In such cases, a will, a solemn document executed with a high level of formality, may be the most reliable method for expressing intent. A revocation in a will ordinarily becomes effective only upon probate of the will following the testator's death. For the cases, see Restatement (Third) of Trusts Section 63 Reporter's Notes to cmt. hoi (Tentative Draft No.3, approved 2001).

A residuary clause in a will disposing of the estate differently than the trust is alone insufficient to revoke or amend a trust. The provision in the will must either be express or the will must dispose of specific assets contrary to the terms of the trust. The substantial body of law on revocation of Totten trusts by will offers helpful guidance. The authority is collected in William H. Danne, Jr., Revocation of Tentative ("Totten") Trust of Savings Bank Account by Inter Vivos Declaration or Will, 46 A.L.R. 3d 487 (1972).

Subsection (c) does not require that a trustee concur in the revocation or amendment of a trust. Such a concurrence would be necessary only if required by the terms of the trust. If the trustee concludes that an amendment unacceptably changes the trustee's duties, the trustee may resign as provided in Section 705.

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§ 75·7-605. Revocation or amendment of revocable trust, UT ST § 75-7-605

Subsection (d), providing that upon revocation the trust property is to be distributed as the settlor directs, codifies a provision

commonly included in revocable trust instruments.

A settlor's power to revoke is not tenninated by the settlor's incapacity. The power to revoke may instead be exercised by an

agent under a power of attorney as authorized in subsection (e), by a conservator or guardian as authorized in subsection (t), or by the settlor personally if the settlor regains capacity.

Subsection (e), which is similar to Restatement (Third) of Trusts Section 63 emt. 1 (Tentative Draft No.3, approved 2001),

authorizes an agent under a power of attorney to revoke or modify a revocable trust only to the extent the·terms of the trust or

power of attorney expressly so permit. An express provision is required because most settlors usually intend that the revocable

trust, and not the power of attorney, to function as the settlor's principal property management device. The power of attorney

is usually intended as a backup for assets not transferred to the revocable trust or to address specific topics, such as the power

to sign tax returns or apply for government benefits, which may be beyond the authority of a trustee or are not customarily

granted to a trustee.

Subsection (t) addresses the authority of a conservator or guardian to revoke or amend a revocable trust. Under the Uniform

Trust Code, a "conservator" is appointed by the court to manage the ward's party, a "guardian" to make decisions with respect

to the ward's personal affairs. See Section 103. Consequently, subsection (t) authorizes a guardian to exercise a settlor's power

to revoke or amend a trust only if a conservator has not been appointed.

Many state conservatorship statutes authorize a conservator to exercise the settlor's power of revocation with the prior approval

of the court supervising the conservatorship. See, e.g., Unif. Probate Code Section 411 (a)( 4). Subsection (t) ratifies this practice.

Under the Code, a conservator may exercise a settlor's power of revocation, amendment, or right to withdraw trust property

upon approval of the court supervising the conservatorship. Because a settlor often creates a revocable trust for the very purpose

of avoiding conservatorship, this power should be exercised by the court reluctantly. Settlors concerned about revocation by

a conservator may wish to deny a conservator a power to revoke. However, while such a provision in the terms of the trust is

entitled to considerable weight, the court may override the restriction if it concludes that the action is necessary in the interests

of justice. See Section 105(b)(13).

Steps a conservator can take to stem possible abuse is not limited to petitioning to revoke the trust. The conservator could

petition for removal of the trustee under Section 706. The conservator, acting on the settlor-beneficiary's behalf, could also

bring an action to enforce the trust according to its terms. Pursuant to Section 303, a conservator may act on behalf of the

beneficiary whose estate the conservator controls whenever a consent or other action by the beneficiary is required or may be

given under the Code.

If a conservator has not been appointed, subsection (t) authorizes a guardian to exercise a settlor's power to revoke or amend the

trust upon approval of the court supervising the guardianship. The court supervising the guardianship will need to detennine

whether it can grant a guardian authority to revoke a revocable trust under local law or whether it will be necessary to appoint

a conservator for that purpose.

2001 Amendment. By amendment in 2001, revocation by "executing a later will or codicil" in subsection (c )(2)(A) was changed

to revocation by a "later will or codicil" to avoid an implication that the trust is revoked immediately upon execution of the

will or codicil and not at the testator's death.

2003 Amendment. The amendment, which adds a new subsection (b )(3), requires that if a joint trust that is revoked or amended

by fewer than all of its settlors, that the trustee must give prompt notice of the change to the other settlors. This new subsection

is a substitute for Section 603(b), which was deleted by a 2003 amendment. For a discussion, see Section 603 comment.


U.C.A. 1953 § 75-7-605, UT ST § 75-7-605

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§ 75-7-605. Revocation or amendment of revocable trust, ur sr § 75·7-605


End of J)ocument ,() 2012 "1110111son Reuters. No claim to original U.S. Government Works.

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8/3/12 Rule 56

Rule 56. Summary judgment.

(a) For claimant. A party seeking to recover upon a claim, counterclaim or cross-claim or to obtain a declaratory judgment may, at any time after the expiration of 20 days from the com mencement of the action or after service of a motion for summary judgment by the adverse party, move for summary judgment upon all or any part thereof.

(b) For defending party. A party against lIIIhom a claim, counterclaim, or cross-claim is asserted or a declaratory judgment is sought, may, at any time, move for summary judgment as to all or any part thereof.

(c) Motion and proceedings thereon. The motion, memoranda and affidavits shall be in accordance with Rule 7. The judgment sought shall be rendered if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law. A summary judgment, interlocutory in character, may be rendered on the issue of liability alone although there is a genuine issue as to the amount of damages.

(d) Case not fully adjudicated on motion. If on motion under this rule judgment is not rendered upon the lIIIhole case or for all the relief asked and a trial is necessary, the court at the hearing of the motion, by examining the pleadings and the evidence before it and by interrogating counsel, shall If practicable ascertain lIIIhat material facts exist without substantial controversy and lIIIhat material facts are actually and in good faith controverted. It shall thereupon make an order specifying the facts that appear without substantial controversy, Including the extent to lIIIhich the amount of damages or other relief is not in controversy, and directing such further proceedings in the action as are just. Upon the trial of the action the facts so specified shall be deemed established, and the trial shall be conducted accordingly.

(e) Form of affidavits; further testimony; defense required. Supporting and opposing affidavits shall be made on personal knowledge, shall set forth such facts as V«)uld be admissible in evidence, and shall show affirmatively that the affiant is competent to testify to the matters stated therein. Soom or certified copies of all papers or parts thereof referred to in an affidavit shall be attached thereto or served therewith. The court may permit affidavits to be supplemented or opposed by depositions, answers to interrogatories, or further affidavits. When a motion for summary judgment is made and supported as provided in this rule, an adverse party may not rest upon the mere allegations or denials of the pleadings, but the response, by affidavits or as otherwise provided in this rule, must set forth specific facts shOwing that there is a genuine issue for trial. Summary judgment, if appropriate, shall be entered against a party failing to file such a response.

(f) When affidavits are unavailable. Should it appear from the affidavits of a party opposing the motion that the party cannot for reasons stated present by affidavit facts essential to justify the party's opposition, the court may refuse the application for judgment or may order a continuance to permit affidavits to be obtained or depositions to be taken or discovery to be had or may make such other order as is just.

(g) Affidavits made in bad faith. If any of the affidavits presented pursuant to this rule are presented in bad faith or solely for the purpose of delay, the court shall forthwith order the party presenting them to pay to the other party the amount of the reasonable expenses lIIIhich the filing of the affidavits caused, including reasonable attomey's fees, and any offending party or attomey may be adjudged guilty of contempt.

www.utcourts.gov/resourceslruleslurcp/urcp056.html 1/1

Addendum 2

Orders and Rulings Granting Appellees' Motion for Summary Judgment

FI,..' v NO\' 0 1 2011

4TH 01£-;-·-. rSTATEO:: . .Ii UiAliCOuilfrv IN THE FOURTH JUDICIAL DISTRICT COURT

UTAH COUNTY, STATE OF UTAH

KIM DAHL, ) )

Plaintiff, ) )

vs. ) )

C. ROBERT DAHL, as Investment Trustee ) Of the DAHL FAMILY IRREVOCABLE ) TRUST (10/23/02); MARLETTE and ) CHARLES F. DAHL, )

) Defendants. )

ORDER GRANTING DEFENDANTS' MOTION FOR SUMMARY JUDGMENT

Civil No.: 090402989 Judge: Lynn Davis

This matter came before the Court for oral argument on August 31, 2011. At the end of

the argument each counsel was instructed to prepare an order consistent with their respective

positions.

The court notes that the Dahls have been involved in an endless divorce for many years.

The claim in this case, which involves, inter alia, the marital home of the parties, should have

been resolved in the pending divorce. For reasons totally unclear to this judge, these claims were

not adjudicated in the ongoing, pending divorce action. Had Plaintiff sought relief in the divorce

action, then the equitable powers of the Court could have applied. Here, no equitable powers can

be applied and the Court must rule as a matter of law.

The Court, having carefully examined the memoranda of law, the arguments of counsel,

and having carefully examined the proposed orders of counsel hereby grants Defendants' Motion

for Summary Judgment and denies Plaintiffs Motion for Summary Judgment.

I. Law Applicable to Summary Judgment Determinations.

1. In keeping with the clear language of Rule 56(c) of the Utah Rules of Civil

Procedure and interpreting case law, summary judgment is appropriate if 'there is no genuine

1

002732

issue as to any material fact and . . . the moving party is entitled to a judgment as a matter of

law.' Cabaness v. Thomas, 2010 UT 23, P 18,232 P.3d 486 (omission in original) (quoting Utah

R. Civ. P. 56(c». A summary judgment movant, on an issue where the nonmoving party will

bear the burden of proof at trial, may satisfy its burden on summary judgment by showing, by

reference to the pleadings, depositions, answers to interrogatories, and admissions on file,

together with the affidavits, if any, that there is no genuine issue of material fact. Upon such a

showing, whether or not supported by additional affirmative factual evidence, the burden then

shifts to the nonmoving party, who may not rest upon the mere allegations or denials of the

pleadings, but must set forth specific facts showing that there is a genuine issue for trial. Orvis v.

Johnson, 2008 UT 2, P 18, 177 P.3d 600 (emphasis in original) (citations and internal quotation

marks omitted). All evidence is viewed in the light most favorable to the party opposing

summary judgment," Doctors' Co. v. Drezga, 2009 UT 60, P 9, 218 P.3d 598.

II. Declaratory Judgment Determination

2. In Count I of her Amended Complaint, the Plaintiff has asked for declaratory

judgment concerning the parties' rights and duties under the Irrevocable Trust (See Amended

Complaint, paragraphs 43-53).

3. The conditions which must exist before a declaratory judgment action can be

maintained are: (1) a justiciable controversy; (2) the interests of the parties must be adverse; (3)

the party seeking such relief must have a legally protected interest in the controversy; and (4) the

issues between the parties involved must be ripe for judicial determination. Lyon v. Bateman,

228 P.2d 818, 820 (Utah 1951). See, e.g., Backman v. Salt Lake County, 375 P.2d 756 (Utah

1962); Parker v. Rampton, 497 P.2d 848 (Utah 1972); Bairdv. State, 574 P.2d 713 (Utah 1978);

Jenkins v. Swan, 675 P.2d 1145 (Utah 1983). Failure to meet any of the four requirement

requires the dismissal of the petition for declaratory judgment. Boyle v. National Union Fire Ins.

Co., 866 P.2d 595, 598 (Utah App. 1993).

2

. 002731

4. However, even if declaratory judgment is appropriate in this case, the court still

has discretion and may thus decline to grant a request for declaratory judgment. The Utah

Declaratory Judgment Act "gives a trial court discretion to either grant or deny a party's

declaratory judgment action by virtue of the statute's use of the word 'may.'" Strawberry Electric

Service District v. Spanish Fork City, 918 P.2d 870, 882 (Utah 1996). In Boyle v. National Union

Fire Ins. Co., the court held that if a declaratory judgment under Section 78-33-6 of the Utah

Code would not terminate the uncertainty or controversy giving rise to the proceeding, then the

court may decline to grant it. 866 P .2d 595, 598 (Utah App. 1993).

5. In fact, the current statutory version of the declaratory judgment act, U.C.A. 78B-

6-404 (2008 as Amended) explicitly provides that "[t]he court may refuse to render or enter a

declaratory judgment or decree where a judgment or decree, if rendered or entered, would not

terminate the uncertainty or controversy giving rise to the proceeding." In this case, even if the

Court were to declare the Plaintiff as a "settlor" and the Trust as "revocable," it would not

terminate the controversy or resolve the dispute between the parties.

6. Accordingly, this Court declines to undertake the seemingly meaningless task of

declaring the rights and duties of the parties to this action.

3

III. Existence of Material Statements of Fact

7. Rule 7(c)(3)(B) of the Utah Rules of Civil Procedure clearly states that:

A memorandum opposing a motion for summary judgment shall contain a verbatim restatement of each of the moving party's facts that is controverted, and may contain a separate statement of additional facts in dispute. For each of the moving party's facts that is controverted, the opposing party shall provide an explanation of the grounds for any dispute, supported by citation to relevant materials, such as affidavits or discovery materials. For any additional facts set forth in the opposing memorandum, each fact shall be separately stated and numbered and supported by citation to supporting materials, such as affidavits or discovery materials. (Emphasis added)

8. In this case, the Plaintiff did not comply with the Rule and did not contest the

Statement of Undisputed Facts contained in the Defendants' original memorandum in support of

summary judgment. Therefore, the same are deemed admitted. The Court finds that the

Statement of Additional Facts contained in the Plaintiffs' response does not raise genuine issues

of material fact.

IV. Plaintiff's Request for Additional Discovery.

9. Although not mentioned specifically by the Plaintiff, the Plaintiff seems to be

relying on Rule 56(f) of the Utah Rules of Civil Procedure for the right to conduct further

discovery in this case before being required to respond to the Defendants' motion. Rule 56(f) of

the Utah Rules of Civil Procedure provides that:

(f) When affidavits are unavailable. Should it appear from the affidavits of a party opposing the motion that the party cannot for reasons stated present by affidavit facts essential to justify the party's opposition, the court may refuse the application for judgment or may order a continuance to permit affidavits to be obtained or depositions to be taken or discovery to be had or may make such other order as is just.

10. The record in this case establishes that the Plaintiff sent a thorough set of requests

for admission, interrogatories and requests for production of documents that resulted In a

massive production that is summarized on the various motions relating to discovery. The

Plaintiff has failed to file the required affidavit outlining specifically what discovery was needed

in relation to the issues raised in the summary judgment motion. Accordingly, because the

required affidavit under Rule 56(f) was not filed with the responsive memorandum of the

Plaintiff, no relief is available under the Rule.

11. Further, under Rule 56(f) a trial court is bound to a standard of reasonability.

4

002729

Overstock.com, Inc. v. SmartBargains, Inc., 2008 UT 55,,20, 192 P.3d 858 (quoting Crossland

Sav. v. Hatch, 877 P.2d 1241, 1243 (Utah 1994)). In Overstock.com, the Utah Supreme Court

listed some of the relevant considerations in determining whether the grant of a rule 56(f) motion

is warranted:

Id.

(1) an examination of the party's rule 56(f) affidavit to determine whether the discovery sought will uncover disputed material facts that will prevent the grant of summary judgment or if the party requesting discovery is simply on a "fishing expedition," (2) whether the party opposing the summary judgment motion has had adequate time to conduct discovery and has been conscientious in pursuing such discovery, and (3) the diligence of the party moving for summary judgment in responding1066 to the discovery requests provided by the party opposing summary judgment.

12. Without the required affidavit, it is impossible for the Court to make a

determination as to what discovery has been conducted, the need for other discovery in light of

the issues raised in the motions for summary judgment and other relevant mqumes.

Accordingly, the implies request for additional time to conduct discovery is denied.

V. Request for a Determination that the Trust is Null and Void.

13. In paragraph 47 of the Amended Complaint, the Plaintiff seeks a determination

that the Dahl Family Irrevocable Trust (10/23/02), is null and void. Nowhere in the Amended

Complaint does the Plaintiff provide a viable legal theory upon which the Court could rule that

the Trust, without any further factual determinations as required by the Declaratory judgment

Act, is null and void. The Plaintiff s theory appears to be that if the Trust was declared void, she

would have restored to her, the interest in the real property that she conveyed away ten years

ago.

14. However, "null and void" is not a formal cause of action. There are no

5

, 002728

material factual allegations in the Amended Complaint that accuse the Defendants of fraud,

mistake, duress, undue influence, illegality or otherwise contend that the trust is violative of

public policy or contrary to a law or statute. 1 The only allegation that the Plaintiff has alleged is

that the language in the Trust has allowed the Defendant Charles Dahl to exercise such control

over the trust that the Court should therefore interpret the Trust as revocable. Such a request is

not grounds to contend that this Court has a factual or legal basis to adjudge the Trust as void.

15. Under the law set out in Ockey v. Lehmer, 2008 UT 37, 189 P.3d 51, it is clear

that none of the allegations in the Amended Complaint rise to the level required for a

determination that the Trust is null and void. In general, the difference between void and

voidable contracts is whether they offend public policy. Contracts that offend an individual, such

as those arising from fraud, misrepresentation, or mistake, are voidable. Only contracts that

offend public policy or harm the public are void ab initio .... For a contract to be void on the

basis of public policy, there must be a showing free from doubt that the contract is against public

policy. Id. PP 18-19,21 (footnotes and internal quotation marks omitted).

16. Therefore there are no material issues of fact that would preclude a determination

that the Trust in question is void and summary judgment is granted to the Defendants on that

point.

VI. Plaintiff's Request for a Determination That she has an Immediate Interest in the Trust.

17. In paragraph 45 of the Amended Complaint, the Plaintiff requests that the Court

However, even if the Plaintiff were to make such a claim, the statute oflimitation has passed on all causes of action related to those theories. U .C.A. 78B-2-305 (2010 as Amended) limits actions based the grounds of fraud or mistake to three years. 78B-2-307 (2010 as Amended) limits actions based upon a contract, obligation, or liability not founded upon an instrument in writing as well as other actions not detailed in the statute to four years. 78B-2-309 (2010 as Amended) limits actions based upon any contract, obligation, or liability founded upon an instrument in writing, to six years.

6

. 002727

adjudge by declaratory judgment that she has an immediate interest in the corpus of the Trust.

The undisputed facts reveal that the Plaintiff has absolutely no factual or legal basis under the

language in the Trust to contend that she is entitled to a determination that she has an interest in

the corpus of the Trust based upon the failure of the trustees of the Trust to distribute funds to

her. Under the terms of the Trust, the Plaintiff was not entitled to any fixed sum and any

distribution to the Plaintiff would have been in the discretion of the Trustee and then survive the

"veto" right of Dr. Charles Dahl, as the trustor of the Trust.

18. Section II of the Trust is the only relevant section to evaluate because the settlor

is still alive. In relevant part, the section states:

During the lifetime of the Settlor, the Investment Trustee shall pay over or apply the net income and principal of the Trust Estate to such extent, including the whole thereof, and in such amounts and proportions, including all to one to the exclusion of others, and at such or times as the Investment Trustee, in the exercise of his sole and absolute discretion shall determine, to or for the benefit of the Beneficiaries; provided., however, that during the life of Settlor, at least thirty (30) days prior to making any payment or application of income or principal to any beneficiary other than the Settlor and Settlor may veto ("Veto") any such intended pay by directing the Investment Trustee in writing not to make the payment or application, and, if such Veto is exercised by Settlor, the Investment Trustee shall not make the intended payment or application to a beneficiary other than the Settlor . . . . Without in any way limiting the sole and absolute discretion of the Investment Trustee hereunder and without imposing any fiduciary duty to do so, it would be in keeping with Settlor's current intention that the Investment Trustee consider distributions to or for the benefit of Settlor during Settlor's lifetime to allow the Settlor to maintain Settlor's lifestyle as it existed at the time of creation of the Trust taking into account resources and income available for or by Settlor. . . . (Emphasis added)

19. There could not be a clearer expression that any and all distributions to the

beneficiaries under the Trust were in the absolute discretion of the Trustee, even as to Dr.

Charles Dahl. There is no claim in this case that the Investment Trustee abused his discretion in

failing to make distributions to the Plaintiff, therefore any right of the Plaintiff to a distribution

7

~ 0027'26

of the Trust assets must be made from the four comers of the Trust and clearly, Plaintiff had no

fixed right to receive any distribution of Trust assets at any time.

20. Summary judgment in favor of the Defendants against the Plaintiff is therefore

appropriate on this claim.

VII. The Trust is Irrevocable

21. The gravamen of the Plaintiff s case revolves around the issue of whether the

Trust is, as it claims, irrevocable; or, as Plaintiff claims, is revocable.

22. If the Trust is construed as "irrevocable," it simply does not matter if the Plaintiff

is a settlor or not. The parties have supplied the Court with only one relevant mechanism by

which settlors of an irrevocable trust have the right or power to amend, alter or revoke the same.

The mechanism is contained in U.C.A. 75-7-411 (2004 as Amended) which provides:

8

Modification or termination of noncharitable irrevocable trust by consent. (1) A noncharitable, irrevocable trust may be modified or terminated upon

consent of the settlor and all beneficiaries, even if the modification or termination is inconsistent with a material purpose of the trust. .. (2) A

noncharitable, irrevocable trust may be terminated upon consent of all of the

beneficiaries if the court concludes that continuance of the trust is not necessary

to achieve any material purpose of the trust. A non charitable, irrevocable trust

may be modified upon consent of all of the beneficiaries if the court

concludes that modification is not inconsistent with a material purpose of the

trust. .. (5) If not. all of the beneficiaries consent to a proposed modification or

termination of the trust under Subsection (1) or (2), the modification or termination may be approved by the court if the court is satisfied that: (a) if all of the beneficiaries had consented, the trust could have been modified or terminated

under this section; and (b) the interests of a beneficiary who does not consent will be adequately protected. (Emphasis added)

OO~725

23. Therefore, if the Court construes the Trust as irrevocable, the Plaintiff would have

a right to alter, amend or revoke the Trust only if all of the other beneficiaries agreed. That class

includes Charles F. Dahl, the parties' minor children (of whom Dr. Dahl has custody) and yet to

be named charitable organizations for whom a representative does not exist. Clearly, Dr. Dahl

would not agree for himself and the children and therefore, the Plaintiff has no rights to the

corpus or proceeds of the Trust as a settlor or beneficiary if the Trust is construed as irrevocable.

Further, she would have no rights to unilaterally alter, amend or revoke the Trust.

24. Only if the Trust is adjudicated to be revocable, would the Plaintiff have any right

as a settlor. The only available statutory remedy that Plaintiff has cited is U.C.A. 75-7-605(2),

which states:

(1) Unless the terms of a trust expressly provide that the trust is irrevocable,

the settlor may revoke or amend the trust. ... (2) If a revocable trust is created or

funded by more than one settlor: (a) to the extent the trust consists of community

property, the trust may be revoked by either spouse acting alone but may be

amended only by joint action of both spouses; and (b) to the extent the trust

consists of property other than community property, each settlor may revoke or

amend the trust with regard to the portion of the trust property attributable to that

settlor's contribution. (Emphasis added)

The first condition precedent contained in the statute cannot be met in this case because the trust

expressly provides that it is irrevocable. However, it is clear that the only way the Plaintiff could

establish a right under the statute is by a determination that the Trust did not expressly provide

that was irrevocable or have this Court somehow made a determination of revocability.

25. The Court determines that the Trust in this case clearly purports to be irrevocable

(See Trust, Section 5.5, Exhibit "B"). There is not a single paragraph that rev e a 1st hat the

Defendant Charles Dahl has any right under the language in the Trust to revoke, amend or alter

the same outside of the power given to every settlor of an irrevocable trust by Utah statute.

9

· On272~

Further, there is no language in the Trust document that can reasonably be interpreted as an

attempt by the settlor, to endow himself with impermissible rights with regard to termination,

amendment or alteration of the Trust.

26. The only language relied upon by the Plaintiff, as to the retained power to alter or

amend the Trust is found in Section 5.5, under a section heading entitled "Trust Irrevocable."

The language is as follows:

Trust Irrevocable. The Trust hereby established is irrevocable. Settlor reserves

any power whatsoever to alter or amend any of the terms or provisions hereof.

(Emphasis added)

27. As a matter of law the Court determines that the cited language does not create

any general right to amend or alter the terms of the Trust; rather, the language simply preserves

the rights of the settlor granted by statute, to amend, alter or terminate the irrevocable trust. As

set out above, D.C.A. 75-7-411 (2004 as Amended) allows a settlor to revoke or modify an

irrevocable trust if he or she has the consent of the settlor and all of the beneficiaries. The cited

language only preserves the rights of the Settlor granted under the statute concerning irrevocable

trusts.

28. The facts are undisputed that in the entire history of the Trust, the settlor has

never attempted to amend, modify, revoke or alter the Trust. To construe the cited language as

containing a general power to alter or amend, the Court would have to disregard the clear title

and name of the Trust, the provisions clearly declaring itself to be irrevocable and even the

section heading where the language was found that clearly states the Trust is irrevocable.

29. Further, there is no section in the Trust document titled or designated

10

002723

"revocation," "amendment" or "alteration." The only language that refers to any retention of

any power to amend and modify is under the section entitled "Trust Irrevocable" as set out

above.

30. '''[T]he paramount rule of construction in determining the meaning of a trust

provision is that the grantor's intent is controlling."'In re Carl McDonald Revocable Trust Dated

October 1,1979,942 S.W.2d 926,931 (Mo. App. S.D. 1997) (citation omitted). "In determining

the intent of a grantor, courts are to consider the trust instrument as a whole and are not to give

any clause in the trust undue preference." Id. Absent ambiguity, the intent of the settlor is

determined from the four comers of the trust instrument. Commerce Bank, NA. v. Blasdel, 141

S.W.3d 434, 444 (Mo. App. W.D. 2004). "It is [not] this court's function to rewrite a [trust] in

order to effectuate a more equitable distribution or to impart an intent to the testatrix that is not

expressed in the [trust]." 2 Estate of Pettit v. Levine, 657 S.W.2d 636, 643 (Mo. App. E.D.

1983). See also, Kline v. Utah Dep't of Health, 776 P.2d 57,61 (Utah App. 1989).

31. The manner in which the trust was written and organized reveals that it was the

intent of the settlor fot the Trust to be irrevocable. A statement that "any" rights existing after

the creation of the irrevocable trust, are not extinguished, is entirely consistent with statute.

Further, there have been no amendments, alternations or modifications in the life of the Trust

attempted or completed.

32. Plaintiff claims three factual bases for the assertion that the Trust is in fact

revocable. First, the Plaintiff cites the language in the Trust referring to amendments, which

issue has been addressed above. Second, the Plaintiff cites the right of the settlor to veto a

distribution. There are simply no cases that have held that a right to veto a distribution

constitutes an amendment, alteration, termination of an irrevocable trust or is inconsistent with

an irrevocable trust. In fact, the irrevocable trusts created by the specialists in the area and

11

, 002722

provided for in form books, include the veto power. Third, the Plaintiff cites the one instance

where property was deeded in and out of the trust.

33. The third and last ground relates to a transaction detailed in Paragraphs 27

through 32 of the Amended Complaint. In summary, the Plaintiff contends that the Investment

Trustee conveyed the Vintage Drive property from the Trust to Charles Dahl and then that

Charles Dahl obtained a loan on the same and transferred the property back into the Trust.

34. Accepting the allegations as true, there is simply nothing about the transaction

that would warrant treating the trust as revocable. The Investment Trustee, in lieu of making a

distribution, had a perfect right to convey a trust asset to a beneficiary to obtain a loan or any

other kind of benefit and did not have to require the property to be reconveyed back to ~he Trust.

The Investment Trustee could have deeded the Vintage Drive property to Charles Dahl or other

beneficiary outright.

35. A review of the provisions of the Trust clearly support the Defendants' position.

Section 4.1.2 of the Trust, Exhibit "B" hereto in describing the duties of the Investment Trustee,

grant him "exclusive power" to vote any stock and to make all investment decisions regarding

the assets of the trust estate. Likewise the same paragraph gives the Investment Trustee

"exclusive power" to payor distribute trust assets or to hold them over. In describing his power,

the Paragraph states that the decision to distribute, manage and hold over assets is to be done "in

the exercise of [his] sole and absolute discretion." Further that same latitude of discretion

applies to the determination of the need of beneficiaries of the Trust.

36. Paragraph 5.3.5 generally and sub-part (a) thereof gives the same discretion with

regard to the administration and management of the Trust assets. Of critical importance to the

fact scenario raised by the Plaintiff, sup-paragraphs (g) and (h) provide:

12

002721

(g) Sale and Disposition. To hold property belonging to any trust in the name

of nominees or in Trustee's names, with or without designation of Trustee capacity.

(h) Dealing with Assets. T in the name of nominees or in Ttrustee's names, with or without designation of Trustee capacity.

37. Paragraph 5.3.5(0) waives the "Prudent Person" rule for the Investment Trustee.

Section II of the Trust gives the Investment Trustee discretion as to how, when and in what

method and amount the Trust assets are to be hold or distributed. There is no question that the

transaction was allowed and proper under the terms of the Trust.

38. The Court determines that it was the Trustee who conveyed the asset consisting of

the Vintage Drive property out of the Trust. Again, conveyance of any Trust asset, under any

terms and conditions is within his power. Second, the Trustee could agree with Dr. Dahl to give

him the property or simply allow him to use it as collateral for a loan, which is the equivalent of

a distribution. As long as the Trustee is the one conveying and distributing, the terms of the

Trust are met. Third, the fact that Dr. Dahl reconveyed the property, with the encumbrance to

the Trust, is within his right as a Settllor of the Trust. Simply, the Defendant Charles Dahl did

not convey the property out of the Trust, the Investment Trustee did. The argument that trust

assets are being used to benefit the beneficiaries is a statement of the obvious and is the intent

and purpose of the Trust. Every transaction pointed to by the Plaintiff is within the scope and

breadth of the explicit language of the Trust and therefore provides no basis to convert the nature

of the Trust.

39. The Court notes that commentators are unanimous in noting that where there is a

question of whether the settlor intended to reserve the right to revoke, a statement that the trust is

irrevocable will control. George O. Bogert, et aI., The Law afTrusts and Trustees § 992 (Rev. 2d

ed.2005).

13

OO~720

40. It would be the height of unreason ability to construe a trust that is titled

"irrevocable" and contains no sections entitled "amendment," "modification," "revocation" to be

revocable. The only sentence in the 21 page trust that the Plaintiff can hold on to is under a

section heading restating that the Trust is irrevocable and is preceded by a sentence that again

states that the Trust is irrevocable.

41. The most compelling argument however is based upon statute. Section 5.4.6 of

the Trust provides as follows:

Governing Law. The validity, construction and effect of the provisions of this Agreement in all respects shall be governed and regulated according to and by the laws of the State of Nevada .....

42. As noted by the Court in Innerlight, Inc. v. Matrix Group, LLC, 2009 UT 31,

choice of law and choice of forum provisions contained in contracts and legal documents are

enforceable.

43. The applicable Nevada statute is dispositive. NRS 163.560 is entitled "Irrevocable

trust not to be construed as revocable." It states, "[i]f the settlor of any trust specifically

declares in the instrument creating the trust that such trust is irrevocable it shall be

irrevocable for all purposes, even though the settlor is also the beneficiary of such trust."

Clearly, under the applicable law both in Nevada and Utah, the Trust is irrevocable and the

Defendants are entitled to summary judgment thereon.

VIII. Plaintiff's Right to an Accounting.

44. Plaintiffs Second Cause of Action is for an Accounting. However, the Plaintiff

has not demonstrated a status that would justify an accounting. She is at best a discretionary

beneficiary and Settlor. However, only if the Trust were to be determined to be revocable would

she have any rights to the corpus of the trust and that right would extend only to her share of the

home and property she conveyed into the trust nearly ten years ago.

14

002719

45. Further, the Plaintiff has not asserted that the discovery undertaken did not satisfy

a request for a general accounting. Finally, As it relates to the right of the Plaintiff as a

discretionary beneficiary to an accounting, Section 5.3.10 of the Trust states, in relevant part, as

follows:

Discretion not to inform or account to discretionary beneficiaries. During the shorter of the Settlor's lifetime ... the Trustee shall not be required to inform any beneficiary(other than the Settlor) who is not entitled to a mandatory distribution of income or principal from the trust on an annual or more frequent basis (I) of the trust; (ii) a court in which the trust may be registered; or (iii) the Trustee's name and address. In addition, during the shorter of the Settlor's lifetime ... the Trustees shall not be required to provide any beneficiary (other than the Settlor) who is not entitled to a mandatory distribution of income and principal from the trust on an annual or more frequent basis with a copy of the terms of the trust and shall not be required to provide a statement of accounts of the trust. (Emphasis added)

46. The above cited provision is compatible with the statute addressing the same

issue. U.C.A. 75-7-811 (2010 as Amended) provides, in relevant part:

15

(1) Except to the extent the terms of the trust provide otherwise, a trustee shall keep the qualified beneficiaries of the trust reasonably informed about the administration of the trust and of the material facts necessary for them to protect their interests. Unless unreasonable under the circumstances, and unless otherwise provided by the terms of the trust a trustee shall promptly respond to a qualified beneficiary's request for information related to the administration of the trust. (2) Except to the extent the terms of the trust provide otherwise, a trustee: (a) upon request of a qualified beneficiary, shall promptly furnish to the beneficiary a copy of the portions of the trust instrument which describe or affect the beneficiary's interest; (b) within 60 days after accepting a trusteeship, shall notify the qualified beneficiaries of the acceptance and of the trustee's name, address, and telephone number; (c) within 60 days after the date the trustee acquires knowledge of the creation of an irrevocable trust, or the date the trustee acquires knowledge that a formerly revocable trust has become irrevocable, whether by the death of the settlor or otherwise, shall notify the qualified beneficiaries of the trust's existence, of the identity of the settlor or settlors, of the right to request a copy of the trust instrument, and of the right to a trustee's report as provided in

~' 002718

Subsection (3); and (d) shall notify the qualified beneficiaries in advance of any change in the method or rate of the trustee's compensation ...

47. The Court therefore determines that the Plaintiff does not have a right to an

accounting and that summary judgment on the issue is appropriate.

IX. Ruling

48. Based upon the absence a material issues of fact and the right of the Defendants

to judgment, the Court grants the Defendants' Motion for Summary Judgment as to both counts

of the Complaint.

The Clerk of the Court is instructed to enter the Order granting Defendants' Motion for

Summary Judgment as submitted by Rosemond G. Blakelock, Esq., counsel for Defendants.

Datedthisj~aYOf ;r{;/ ,2011.

Fourth Judicial District Court

A certificate of mailing is on the following page.

16

. 002717

CERTIFICATE OF NOTIFICATION I certify that a copy of the attached document was sent to the following people for case 090402989 by the method and on the date specified.

MAIL: ROSEMOND V BLAKELOCK 1832 N 1120 W PROVO, UT 84604 MAIL: STEVE S CHRISTENSEN 136 E STEMPLE STE 1400 SALT LAKE CITY UT 84111-2142

Date: /l1~/[1 Deputy Court Clerk

Page 1 (last)

. 002716

ROSEMOND G. BLAKELOCK, #6183 Attorneys for Defendants 1832 North 1120 West Provo, Utah 84604 Telephone: (801) 356-1720

FILED

FEB 27 20~ / W!. IN THE FOURTH JUDICIAL DISTRICT COURT

UTAH COUNTY, STATE OF UTAH

KIM DAHL,

Plaintiff,

vs.

C. ROBERT DAHL,.as Investment Trustee Of the DAHL FAMILY IRREVOCABLE TRUST (10/23/02); MARLETTE and CHARLES F. DAHL,

Defendants.

) ) FINDINGS OF FACT AND CONCLUSIONS ) OF LAW, AND ORDER GRANTING ) DEFENDANT'S MOTION FOR

~ ) SUMMARY JUDGMENT AND ) DENYING PLAINTIFF'S MOTION ) FOR SUMMARY JUDGMENT ) ) ) ) )

Civil No.: 090402989 Judge: Lynn Davis

This matter came before the Court for oral arguments on August 31, 2011. At the end of

the argument, each counsel was instructed to prepare an order consistent with their respective

positions.

The Court notes that the Dahls have been involved in an endless divorce for many years.

The claim in this case, which involves, inter alia, the marital home of the parties, should have

been resolved in the pending divorce. For reasons totally unclear to this judge, these claims were

not adjudicated in the ongoing, pending divorce action. Had Plaintiff sought relief in the divorce

action, then the equitable powers of the Court could have applied. Here, no equitable powers can

be applied and the Court must rule as a matter of law.

The Court. Having carefully examined the memoranda of law, the arguments of counsel

and having examined the proposed orders of counsel hereby issues the following;

Page 1 of 18

002962.

FINDINGS OF FACT AND CONCLUSIONS OF LAW

Law Applicable to Summary Judgment Determinations.

1. The Court finds that in keeping with the clear language of Rule 56( c ) of the Utah

Rules of Civil Procedure and interpreting case law, summary judgment is appropriate if there is

"no genuine issue as to any material fact and ... the moving party is entitled to a judgment as a

matter of law." Cabaness v. Thomas, 2010 UT 23, P 18, 232 P.3d 486 (omission in original)

(quoting Utah R. Civ. P. 56(c». A summary judgment movant, on an issue where the nonmoving

party will bear the burden of proof at trial, may satisfy its burden on summary judgment by

showing, by reference to the pleadings, depositions, answers to interrogatories, and admissions

on file, together with the affidavits, if any, that there is no genuine issue of material fact. Upon

such a showing, whether or not supported by additional affirmative factual evidence, the burden

then shifts to the nonmoving party, who may not rest upon the mere allegations or denials of the

pleadings, but must set forth specific facts showing that there is a genuine issue for trial. Orvis v.

Johnson, 2008 UT 2, P 18, 177 P.3d 600 (emphasis in original) (citations and internal quotation

marks omitted). All evidence is viewed in the light most favorable to the party opposing

summary judgment," Doctors' Co. v. Drezga, 2009 UT 60, P 9,218 P.3d 598.

II. Declaratory Judgment Determination

2. The Court finds that in Count I of her Amended Complaint, the Plaintiff has

asked for declaratory judgment concerning the parties' rights and duties under the Irrevocable

Trust (See Amended Complaint, paragraphs 43-53).

3. The Court fmds that conditions which must exist before a declaratory judgment

action can be maintained are: (1) a justiciable controversy; (2) the interests of the parties must be

adverse; (3) the party seeking such relief must have a legally protected interest in the

controversy; and (4) the issues between the parties involved must be ripe for judicial

detennination. Lyon v. Bateman, 228 P.2d 818,820 (Utah 1951). See, e.g., BacJcman v. Salt Lake

County, 375 P.2d 756 (Utah 1962); Parker v. Rampton, 497 P.2d 848 (Utah 1972); Baird v.

Page 2 of 18

State, 574 P.2d 713 (Utah 1978); Jenkins v. Swan, 675 P.2d 1145 (Utah 1983). Failure to. meet

any Qfthe fQur requirement requires the dismissal Qfthe petitiQn fQr declaratQry judgment. Boyle

v. National Union Fire Ins. Co., 866 P.2d 595,598 (Utah App. 1993).

4. HQwever, even if declaratory judgment is apprQpriate in this case, the court still

has discretiQn and may thus decline to. grant a request fQr declaratQry judgment. The Utah

DeclaratQry Judgment Act "gives a trial CQurt discretiQn to. either grant Qr deny a party's

declaratQry judgment actiQn by virtue Qfthe statute's use Qfthe wQrd 'may.'" Strawberry Electric

Service District v. Spanish Fork City, 918 P.2d 870, 882 (Utah 1996). In Boyle v. National Union

Fire Ins. Co., the CQurt held that if a declaratQry judgment under SectiQn 78-33-6 Qf the Utah

Code WQuld nQt terminate the uncertainty Qr cQntroversy giving rise to. the prQceeding, then the

CQurt may decline to. grant it. 866 P.2d 595,598 (Utah App. 1993).

5. In fact, the CQurt finds that the current statutQry versiQn Qf the declaratQry

judgment act, U.C.A. 78B, 6-404 (2008 as Amended) explicitly prQvides that "[t]he court may

refuse to. render Qr enter a declaratQry judgment Qr decree where a judgment Qr decree, if

rendered Qr entered, WQuld nQt terminate the uncertainty Qr contrQversy giving rise to. the .

proceeding." In this case, even if the CQurt were to. declare the Plaintiff as a "settIQr" and the

Trust as "revQcable," it WQuld nQt terminate the cQntrQversy Qr resQlve the dispute between the

parties.

6. AccQrdingly, this CQurt declines to. undertake the seemingly meaningless task Qf

declaring the rights and duties Qf the parties to this actiQn.

ID. Existence of Material Statements of Fact

7. The CQurt finds that Rule 7(cX3)(B) Qfthe Utah Rules QfCivil Procedure clearly

states that:

A memorandum opposiDg a motion for summary judgment shall contain a verbatim restatement of each of the moving party's facts that is

Page 3 of 18

controverted, and may contain a separate statement of additional facts in dispute. For each of the moving party's facts that is controverted, the opposing party shaD provide an explanation of the grouads for any dispute, supported by citation to relevant materials, sueb as aftidavits or discovery materials. For any additional facts set forth in the opposing memorandum, each fact shaD be separately stated and numbered and supported by citation to supporting materials, such as affidavits or discovery materials. (Emphasis added)

8. In this case, the Court finds that the Plaintiff did not comply with the Rule and did

not contest the Statement of Undisputed Facts contained in the Defendant's original

memorandum in support of summary judgment. Therefore, the same are deemed admitted. The

Court finds that the Statement of Additional Facts contained in the Plaintiff's response does not

raise genuine issues of material fact.

IV. Plaintiff's Request for Additional Discovery.

9. The Court finds that although not mentioned specifically by the Plaintiff, the

Plaintiff seems to be relying on Rule 56(f) of the Utah Rules of Civil Procedure for the right to

conduct further discovery in this case before being required to respond to the Defendants'

motion. Rule 56(f) of the Utah Rules of Civil Procedure provides that:

(f) When affidavits are unavailable. Should it appear from the affidavits of a party opposing the motion that the party cannot for reasons stated present by affidavit facts essential to justify the party's opposition, the court may refuse the application for judgment or may order a continuance to permit affidavits to be obtained or depositions to be taken or discovery to, be had or may make such other order as is just.

10. The Court finds that the record in this case establishes that the Plaintiff sent a

a thorough set of requests for admission, interrogatories and requests for production of

documents that resulted in a massive production that is summarized on the various motions

relating to discovery. The Plaintiff has failed to file the required affidavit outlining specifically

what discovery was needed in relation to the issues raised in the summary judgment motion.

Page 4 of 18

.,~ D02959

Accordingly, because the required affidavit under Rule 56(f) was not filed with the responsive

memorandum of the Plaintiff, no relief is available under the Rule.

11. Further, the Court finds that under Rule 56(f) a trial court is bound to a standard

of responsibility. Overstock.com, Inc. v. SmartBargains, Inc., 2008 ur 55,,20, 192 P.3d 858

(quoting Crossland Sav. v. Hatch, 877 P.2d 1241, 1243 (Utah 1994». In Overstock.com, the

Utah Supreme Court listed some of the relevant considerations in determining whether the grant

of a rule 56(f) motion is warranted:

Id

(1) an examination of the party's rule 56(f) affidavit to determine whether the discovery sought will uncover disputed material facts that will prevent the grant of summary judgment or if the party requesting discovery is simply on a ''fishing expedition," (2) whether the party opposing the summary judgment motion has had adequate time to conduct discovery and has been conscientious in pursuing such discovery, and (3) the diligence of the party moving for summary judgment in responding1066 to the discovery requests provided by the party opposing summary judgment.

12. The Court finds that without the required affidavit, it is impossible for the Court

to make a determination as to what discovery has been conducted, the need for other discovery

in light of the issues raised in the motions for summary judgment and other relevant inquiries.

Accordingly, the implies request for additional time to conduct discovery is denied.

v. Request for a Determination that the Trust is Null and Void.

13. The Court finds that in paragraph 47 of the Amended Complaint, the Plaintiff

seeks a determination that the Dahl Family Irrevocable Trust (10/23/02), is null and void.

Nowhere in the Amended Complaint does the Plaintiff provide a viable legal theory upon which

the Court could rule that the Trust, without any further factual determinations as required by the

Declaratory judgment Act, is null and void. The Plaintiffs theory appears to be that if the Trust

Page 5 of 18

. 002958

was declared void, she would have restored to her, the interest in the real property that she

conveyed away ten years ago.

14. However, the Court finds that "null and void" is not a formal cause of action.

There is no material factual allegations in the Amended Complaint that accuse the Defendants of

fraud, mistake, duress, undue influence, illegality or otherwise contend that the trust is violative

of public policy or contrary to a law or statute.} The only allegation that the Plaintiff has alleged

is that the language in the Trust has allowed the Defendant Charles Dahl to exercise such control

over the trust that the Court should therefore interpret the Trust as revocable. Such a request is

not grounds to contend that this Court has a factual or legal basis to adjudge the Trust as void.

15. The Court finds that under the law set out in Ockey v. Lehmer, 2008 UT 37, 189

P .3rd 51, it is clear that none of the allegations in the Amended Complaint rise to the level

required for a detennination that the Trust is null and void. In general, the difference between

void and voidable contracts is whether they offend public policy. Contracts that offend an

individual, such as those arising from fraud, misrepresentation, or mistake, are voidable. Only

contracts that offend public policy or harm the public are void ab initio. . .. For a contract to be

void on the basis of public policy, there must be a showing free from doubt that the contract is

against public policy. Id. PP 18-19,21 (footnotes and internal quotation marks omitted).

16. The Court finds therefore there are no material issues of fact that would preclude

However, even if the Plaintiff were to make such a claim, the statute of limitation has passed on all causes of action related to those theories. U .C.A. 78B-2-305 (2010 as Amended) limits actions based the grounds offraud or mistake to three years. 78B-2-307 (2010 as Amended) limits actions based upon a contract, obligation, or liability not founded upon an instrument in writing as well as other actions not detailed in the statute to four years. 78B-2-309 (2010 as Amended) limits actions based upon any contract, obligation, or liability founded upon an instrument in writing, to six years.

Page60f 18

.. ' 002957

a determination that the Trust in question is void and summary judgment is granted to the

Defendants on that point.

VI. Plaintiff's Request for a Determination That she has an Immediate Interest in the Trust.

17. The Court finds that in paragraph 45 of the Amended Complaint, the Plaintiff

requests that the Court adjudge by declaratory judgment that she has an immediate interest in the

corpus of the Trust. The undisputed facts reveal that the Plaintiff has absolutely no factual or

legal basis under the language in the Trust to contend that she is entitled to a determination that

she has an interest in the corpus of the Trust based upon the failure of the trustees of the Trust to

distribute funds to her. Under the terms of the Trust, the Plaintiff was not entitled to any fixed

sum and any distribution to the Plaintiff would have been in the discretion of the Trustee and

then survive the ''veto'' right of Dr. Charles Dahl, as the trustor of the Trust.

18. The Court finds that section IT of the Trust is the only relevant section to evaluate

because the settlor is still alive. In relevant part, the section states:

During the lifetime of the Settlor, the Investment Trustee shall pay over or apply the net income and principal of the Trust Estate to such extent, including the whole thereof, and in such amounts and proportions, including all to one to the exclusion of others, and at such or times as the Investment Trustee, in the exercise of his sole and absolute discretion shall detennine, to or for the benefit of the Beneficiaries; provided., however, that during the life of Settlor, at least thirty (30) days prior to making any payment or application of income or principal to any beneficiary other than the Settlor and Settlor may veto ("Veto") any such intended pay by directing the Investment Trustee in writing not to make the payment or application, and, if such Veto is exercised by Settlor, the Investment Trustee shall not make the intended payment or application to a beneficiary other than the Settlor . . . . Without in any way limiting the sole and absolute discretion of the Investment Trustee hereunder and without imposing any fiduciary duty to do so, it would be in keeping with Settlor's current intention that the Investment Trustee consider distributions to or for the benefit of Settlor during Settlor's lifetime to allow the Settlor to maintain Settlor's lifestyle as it existed at the time of creation of the Trust taking into

Page 7 of 18

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account resources and income available for or by Settlor. • • . (Emphasis added)

19. The Court fmds that there could not be a clearer expression that any and all

distributions to the beneficiaries under the Trust were in the absolute discretion of the Trustee,

even as to Dr. Charles Dahl. There is no claim in this case that the Investment Trustee abused

his discretion in failing to make distributions to the Plaintiff, therefore any right of the Plaintiff

to a distribution of the Trust assets must be made from the four comers of the Trust and clearly,

Plaintiffhad no fixed right to receive any distribution of Trust assets at any time.

20. Th Court concludes therefore, that Summary judgment in favor of the Defendants

against the Plaintiff is therefore appropriate on this claim.

VII. The Trust is Irrevocable

21. The Court finds that the gravamen of the Plaintiff's case revolves around the issue

of whether the Trust is, as it claims, irrevocable; or, as Plaintiff claims, is revocable.

22. The Court finds that if the Trust is construed as "irrevocable," it simply does not

matter if the Plaintiff is a settlor or not. The parties have supplied the Court with only one

relevant mechanism by which settlors of an irrevocable trust have the right or power to amend,

alter or revoke the same. The mechanism is contained in U.C.A. 75-7-411 (2004 as Amended)

which provides:

Modification or termination of noncharitable irrevocable trust by consent. (l) A noncharitable, irrevocable trust may be modified or terminated upon consent of the settlor and all beneficiaries, even if the modification or

termination is inconsistent with a material purpose of the trust. . . (2) A

noncharitable, irrevocable trust may be terminated upon consent of all of the beneficiaries if the court concludes that continuance of the trust is not necessary

to achieve any material purpose of the trust. A noncharitable, irrevocable trust may be modified upon consent of all of the beneficiaries if the court

Page 8 of 18

.. ' 002955-

concludes that modification is not inconsistent with a material purpose of the trust ...

(5) If not all of the beneficiaries consent to a proposed modification or

termination of the trust under Subsection (1) or (2), the modification or

termination may be approved by the court if the court is satisfied that: (a) if all of

the beneficiaries had consented, the trust could have been modified or terminated

under this section; and (b) the interests of a beneficiary who does not consent will be adequately protected. (Emphasis added)

23. Therefore, the Court fmds that if it construes the Trust as irrevocable, the Plaintiff

would have a right to alter, amend or revoke the Trust only if all of the other beneficiaries

agreed. That class includes Charles F. Dahl, the parties' minor children (of whom Dr. Dahl has

custody) and yet to be named charitable organizations for whom a representative does not exist.

Clearly, Dr. Dahl would not agree for himself and the children and therefore, the Plaintiffhas no

rights to the corpus or proceeds of the Trust as a settlor or beneficiary if the Trust is construed as

irrevocable. Further, she would have no rights to unilaterally alter, amend or revoke the Trust.

24. The Court finds that only if the Trust is adjudicated to be revocable, would the

Plaintiff have any right as a settlor. The only available statutory remedy that Plaintiff has cited

is U.C.A. 75-7-605(2), which states:

(1) Unless the terms of a trust expressly provide that the trust is irrevocable, the settlor may revoke or amend the trust .... (2) If a revocable trust is created or

funded by more than one settlor: (a) to the extent the trust consists of community

property, the trust may be revoked by either spouse acting alone but may be

amended only by joint action of both spouses; and (b) to the extent the trust

consists of property other than community property, each settlor may revoke or

amend the trust with regard to the portion of the trust property attributable to that

settlor's contribution. (Emphasis added)

The first condition precedent contained in the statute cannot be met in this case because the trust

expressly provides that it is irrevocable. However, it is clear that the only way the Plaintiff could

Page 9 of 18

.. 00295~

establish a right under the statute is by a determination that the Trust did not expressly provide

that was irrevocable or have this Court somehow made a determination of revocability.

25. The Court fmds that the Trust in this case clearly purports to be irrevocable

(See Trust, Section 5.5, Exhibit "B"). There is not a single paragraph that rev e a 1st hat the

Defendant Charles Dahl has any right under the language in the Trust to revoke, amend or alter

the same outside of the power given to every settlor of an irrevocable trust by Utah statute.

Further, there is no language in the Trust document that can reasonably be interpreted as an

attempt by the settlor, to endow himself with impermissible rights with regard to termination,

amendment or alteration of the Trust.

26. The Court finds that the only language relied upon by the Plaintiff, as to the

retained power to alter or amend the Trust is found in Section 5.5, under a section heading

entitled "Trust Irrevocable." The language is as follows:

Trust Irrevocable. The Trust hereby established is irrevocable. Settlor reserves

any power whatsoever to alter or amend any of the terms or provisions hereof.

(Emphasis added)

27. As a matter of law the Court determines and concludes that the cited language

does not create any general right to amend or alter the terms of the Trust; rather, the language

simply preserves the rights of the settlor granted by statute, to amend, alter or terminate the

irrevocable trust. As set out above, U.C.A. 75-7-411 (2004 as Amended) allows a settlor to

revoke or modify an irrevocable trust if he or she has the consent of the settlor and all of the

beneficiaries. The cited language only preserves the rights of the Settlor granted under the statute

concerning irrevocable trusts.

28. The Court finds that the facts are undisputed that in the entire history of the Trust,

the settlor has never attempted to amend, modify, revoke or alter the Trust. To construe the cited

language as containing a general power to alter or amend, the Court would have to disregard the

Page 10 of 18

· 002953

clear title and name of the T~ the provisions clearly declaring itself to be irrevocable and even

the section heading where the language was found that clearly states the Trust is irrevocable.

29. Further, there is no section in the Trust document titled or designated

"revocation," "amendment" or "alteration." The only language that refers to any retention of

any power to amend and modify is under the section entitled "Trust Irrevocable" as set out

above.

30. The Court finds that'" [T]he paramount rule of construction in determining the

meaning of a trust provision is that the grantor's intent is controlling. "'In re Carl McDonald

Revocable Trust Dated October I, 1979,942 S.W.2d 926, 931 (Mo. App. S.D. 1997) (citation

omitted). "In determining the intent of a grantor, courts are to consider the trust instrument as a

whole and are not to give any clause in the trust undue preference." Id. Absent ambiguity, the

intent of the settlor is determined from the four comers of the trust instrument. Commerce Bank,

N.A. v. Blasdel, 141 S.W.3d 434, 444 (Mo. App. W.D. 2004). "It is [not] this court's function to

rewrite a [trust] in order to effectuate a more equitable distribution or to impart an intent to the

testatrix that is not expressed in the [trust]." 2 Estate of Pettit v. Levine, 657 S.W.2d 636, 643

(Mo. App. E.D. 1983). See also, Kline v. Utah Dep't of Health, 776 P.2d 57, 61 (Utah App.

1989).

31. The Court finds that the manner in which the trust was written and organized

reveals that it was the intent of the settlor for the Trust to be irrevocable. A statement that "any"

rights existing after the creation of the irrevocable trust, are not extinguished, is entirely

consistent with statute. Further, there have been no amendments, alternations or modifications in

the life of the Trust attempted or completed.

32. The Court fmds that the Plaintiff claims three factual bases for the assertion that

Page 11 of 18

/ .,' 002952

the Trust is in fact revocable. First, the Plaintiff cites the language in the Trust referring to

amendments, which issue bas been addressed above. Second, the Plaintiff cites the right of the

settlor to veto a distribution. There are simply no cases that have held that a right to veto a

distribution constitutes an amendment, alteration, termination of an irrevocable trust or is

inconsistent with an irrevocable trust. In fact, the irrevocable trusts created by the specialists in

the area and provided for in fonn books, include the veto power. Third, the Plaintiff cites the

one instance where property was deeded in and out of the trust.

33. The third and last ground relates to a transaction detailed in Paragraphs 27

through 32 of the Amended Complaint. In summary, the Plaintiff contends that the Investment

Trustee conveyed the Vintage Drive property from the Trust to Charles Dahl and then that

Charles Dahl obtained a loan on the same and transferred the property back into the Trust.

34. Accepting the allegations as true, the Court finds that there is simply nothing

about the transaction that would warrant treating the trust as revocable. The Investment Trustee,

in lieu of making a distribution, had a perfect right to convey a trust asset to a beneficiary to

obtain a loan or any other kind of benefit and did not have to require the property to be

reconveyed back to the Trust. The Investment Trustee could have deeded the Vintage Drive

property to Charles Dahl or other beneficiary outright.

35. The Court finds that a review of the provisions of the Trust clearly support the

Defendants' position. Section 4.1.2 of the Trust, Exhibit "B" hereto in describing the duties of

the Investment Trustee, grant him "exclusive power" to vote any stock and to make all

investment decisions regarding the assets of the trust estate. Likewise the same paragraph gives

the Investment Trustee "exclusive power" to payor distribute trust assets or to hold them over.

In describing his power, the Paragraph states that the decision to distribute, manage and hold

Page 12 of 18

.. ~ 002951

over assets is to be done "in the exercise of [his] sole and absolute discretion." Further that same

latitude of discretion applies to the determination of the need of beneficiaries of the Trust.

36. The Court finds that Paragraph 5.3.5 generally and sub-part (a) thereof gives the

same discretion with regard to the administration and management of the Trust assets. Of

critical importance to the fact scenario raised by the Plaintiff, sup-paragraphs (g) and (h)

provide:

(g) Sale and Disposition. To hold property belonging to any trust in the name

of nominees or in Trustee's names, with or without designation of Trustee capacity.

(h) Dealing with Assets. T in the name of nominees or in Ttrustee's names, with or without designation of Trustee capacity.

37. The Court finds that Paragraph 5.3 .5(0) waives the ~~Prudent Person" rule for the

Investment Trustee. Section II of the Trust gives the Investment Trustee discretion as to how,

when and in what method and amount the Trust assets are to be hold or distributed. There is no

question that the transaction was allowed and proper under the tenns of the Trust.

38. The Court determines and concludes that it was the Trustee who conveyed the

asset consisting of the Vintage Drive property out of the Trust. Again, conveyance of any Trust

asset, under any tenns and conditions is within his power. Second, the Trustee could agree with

Dr. Dahl to give him the property or simply allow him to use it as collateral for a loan, which is

the equivalent of a distribution. As long as the Trustee is the one conveying and distributing, the

tenns of the Trust are met. Third, the fact that Dr. Dahl reconveyed the property, with the

encumbrance to the Trust, is within his right as a Settllor of the Trust. Simply, the Defendant

Charles Dahl did not convey the property out of the Trust, the Investment Trustee did. The

argument that trust assets are being used to benefit the beneficiaries is a statement of the obvious

and is the intent and purpose of the Trust. Every transaction pointed to by the Plaintiff is within

Page 13 of 18

002950

the scope and breadth of the explicit language of the Trust and therefore provides no basis to

convert the nature of the Trust.

39. The Court finds that Court notes that commentators are unanimous in noting that

where there is a question of whether the settlor intended to reserve the right to revoke, a

statement that the trust is irrevocable will control. George G. Bogert, et al., The Law of Trusts

and Trustees § 992 (Rev. 2d ed. 2005).

40. The Court finds that it would be the height ofunreasonability to construe a trust

that it is titled "irrevocable" and contains no sections entitled "amendment," "modification,"

"revocation" to be revocable. The only sentence in the 21 page trust that the Plaintiff can hold

on to is under a section heading restating that the Trust is irrevocable and is preceded by a

sentence that again states that the Trust is irrevocable.

41. The Court finds that the most compelling argument however is based upon

statute. Section 5.4.6 of the Trust provides as follows:

Governirig Law. The validity, construction and effect of the provisions of this Agreement in all respects shall be governed and regulated according to and by the laws of the State of Nevada. ....

42. The Court fmds that as noted by the Court in Innerlight, Inc. v. Matrix Group,

LLCM 2009, UT 31, choice of law and choice of forum provisions contained in contracts and

legal documents are enforceable.

43. The Court finds that applicable Nevada statute is dispositive. NRS 163.560 is

entitled "Irrevocable trust not to be construed as revocable." It states, "[i]f the settlor of any

trust specifically declares in the instrument creating the trust that such trust is irrevocable

it shall be irrevocable for aU purposes, even though the settlor is also the beneficiary of

such trust." Clearly, under the applicable law both in Nevada and Utah, the Trust is irrevocable

and the Defendants are entitled to summary judgment thereon.

Page 14 of 18

0029~9

VllI. Plaintiff's Right to an Accounting.

44. The Court finds that the Plaintiff's Second Cause of Action is for an Accounting.

However, the Plaintiff has not demonstrated a status that would justify an accounting. She is at

best a discretionary beneficiary and Settlor. However, only if the Trust were to be detennined to

be revocable would she have any rights to the corpus of the trust and that right would extend

only to her share of the home and property she conveyed into the trust nearly ten years ago.

45. Further, the Court fmds that the Plaintiffhas not asserted that the discovery

undertaken did not satisfy a request for a general accounting. Finally, As it relates to the right

of the Plaintiff as a discretionary beneficiary to an accounting, Section 5.3.10 of the Trust states,

in relevant part, as follows:

Discretion not to inform or account to discretionaty beneficiaries. During the

shorter of the Settlor's lifetime ... the Trustee shall not be required to inform any

beneficiary(other than the Settlor) who is not entitled to a mandatory distribution

of income or principal from the trust on an annual or more frequent basis (I) of

the trust; (ii) a court in which the trust may be registered; or (iii) the Trustee's

name and address. In addition, during the shorter of the Settlor's lifetime. . . the

Trustees shall not be required to provide any beneficiary (other than the Settlor) who is not entitled to a mandatory distribution of income and principal from the trust on an annual or more frequent basis with a copy of the terms of the trust and shall not be required to provide a statement of accounts of the trust. (Emphasis added)

46. The Court finds that the above cited provision is compatible with the statute

addressing the same issue. U.C.A. 75-7-811 (2010 as Amended) provides, in relevant part:

(l) Except to the extent the terms of the trust provide otherwise, a trustee shall keep the qualified beneficiaries of the trust reasonably informed about the administration of the trust and of the material facts necessary for them to protect their interests. Unless unreasonable under the circumstances, and unless otherwise provided by the terms of the trust a trustee shall promptly respond to a qualified beneficiary's request for information related to the administration of the trust.

Page 15 of 18

0029~8

(2) Except to the extent the terms of the trust provide otherwise, a trustee: (a) upon request of a qualified beneficiary, shall promptly furnish to the beneficiary a copy of the portions of the trust instrument which describe or affect the beneficiary's interest; (b) within 60 days after accepting a trusteeship, shall notify the qualified beneficiaries of the acceptance and of the trustee's name, address, and telephone number; © within 60 days after the date the trustee acquires knowledge of the creation of an irrevocable trust, or the date the trustee acquires knowledge that a formerly revocable trust has become irrevocable, whether by the death of the settlor or otherwise, shall notify the qualified beneficiaries of the trust's existence, of the identity of the settlor or settlors, of the right to request a copy of the trust instrument, and of the right to a trustee's report as provided in Subsection (3); and (d) shall notify the qualified beneficiaries in advance of any change in the method or rate of the trustee's compensation ...

47. The Court therefore concludes that the Plaintiff does not have a right to an

accounting and that summary judgment on the issue is appropriate.

48. The Court concludes that, based upon the absence of material issues of fact and

the right of the Defendants, to relief, that the Court should grant the Defendant's Motion for

Summary Judgment, as to both counts of the Complaint.

ORDER

Based upon the foregoing Findings of Fact and Conclusions of Law, as set forth above

the Defendant's Motion for Summary Judgement on both counts of the Complaint is hereby

granted .

Based upon the Findings of Fact and Conclusions of Law, as set forth above the

Page 16 of 18

. 0029~7

Plaintiff's Motion for Summary Judgment is hereby Denied.

DATED and signed this aZldayof ;rJ,rVdry .2012. 7

BY THE COURT:

Page 17 of 18

.1 0029~S

MAILING CERTIFICATE

I certify that a copy of the foregoing was mailed, postage prepaid to the

following, on thecf.,2, day of February 2012, by first class mail, postage prepaid, to the

following:

Steve s. Christensen, Esq.

Christensen Thornton PLLC 136 East South Temple, Suite 1400

SLC, UT 84111

RULE 7 NOTICE

You will please take notice that the undersigned attorney for Defendant will submit the above

and foregoing Order to the Court for· signature. Pursuant to Rule 7 (f)(2) of the Utah Rules of

Civil Procedure any objection as to the form of the order should be filed with the Court, within

five days after service upon you of this notice.

DATED this ~day of_4b __ , __ , 2012.

Page 18 of 18

0029~5

Addendum 3

Transcript Selection from August 31, 2011

Hearing.

23

1 co-trustee, someway of splitting up the legal and equitable

2 titles held by each either the trustee or the beneficiaries.

3 Charles, by reserving the power to change any terms of the

4 trust, he can make himself the sole trustee and he can make

5 himself the sole beneficiary and then under those terms itself

6 the trust is null and void because the legal and equitable

7 title then merge.

8 So under those two different principles this trust is

9 revocable by its terms even though it does say it's

10 irrevocable. That power to change any matter within it makes

11 it revocable just by extension of logic and it's implicitly

12 revocable by its terms. Well, we can get bogged down on all

13 these different facts, whether or not Charles had anything to

14 do with moving the house in and out, but it doesn't change the

15 fact that on the terms of the trust it's revocable implicitly

16 because of the things that Charles can do related to the trust.

17 And in addition to that, there's no dispute that Kim

18 contributed property into the trust and, therefore, is the

19 settlor.

20 So really that's what it comes down to. Is Kim a

21 settlor and is the trust revocable? I think that's what this

22 all rests on.

23 THE COURT: Well, if you look at that, and it's a

24 very very narrow legal issue, correct? And the Court could

25 without the necessity of looking at all sorts of other

COURT CERTIFIED DOCUMENT

24

1 discovery issues make a declaration one way or another as it

2 relates to that issue either in terms of its revocability or

3 its irrevocability. If it's irrevocable and the Court makes a

4 declaration in connection with that, it has bearing as it

5 relates to this entire case. If the Court determines that on

6 its face by virtue of what you argued in terms of the dual

7 status of both equitable and legal, that it constitutes under

8 Nevada law a revocable trust, then that has bearing as it

9 relates to everything too.

10 So why is there any need even under your view as it

11 relates to additional discovery relative to at least at this

12 point in time if we're trying to just make a determination of

13 its validity and secondarily as it relates to its status of

14 revocable or irrevocable? I mean, ultimately it would because

15 you need an accounting to make a determination as it relates to

16 what you're entitled to.

17

18

MR. PANKRATZ: Yes, sir.

THE COURT: But at least for Stage 1 it seems to me

19 that both of you are agreeing that a summary judgment

20 declaration is necessary in terms of the direction of the whole

21 case on d.eclaration of whether or not it's revocable or

22 irrevocable.

23 MR. PANKRATZ: Your Honor, I think that the

24 additional discovery goes to the alter ego theory that's been

25 asserted, that if you look at the conduct of Charles Dahl as


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the settlor and any communications with the trustee, there may

be other equitable principles that cause it to be revocable.

So I think under that circumstance that's why we're looking for

additional discovery as it relates to (inaudible.)

THE COURT: Yeah, I understand that broadened view.

MR. PANKRATZ: And so I think that's the reason why

we're asking for additional discovery.

THE COURT: Okay.

MR. PANKRATZ: Thank you, your Honor. Anything

further, Counsel?

MS. BLAKELOCK: Just briefly, your Honor. Even the

cases cited here are not on point with trusts who already had

the power to change beneficiaries, the power to revoke it, but

what's in the, just looking briefly, the Niscostia (phonetic)

case on page 2, it is generally held that unless a power of

revocation is specifically provided for in the trust revocation

will not be permitted. On the last page of the trust,

Paragraph 5.5 that they are using to say it's revocable says

trust irrevocable. This trust hereby establishes it is

irrevocable.

He reserves the power to alter and amend. That

doesn't make it revocable. It specifically states it's not.

The case law provided supports the defendant's motion.

THE COURT: Okay. And I haven't read these cases.

I'll read them carefully. I think, counsel, let me tell you


1 what I'd like to do. I recognize that there is long-term

2 litigation between these parties, and if I'm accurate, in

26

3 connection with the divorce action that either one side or both

4 sides have appealed. I don't know.

5 MS. BLAKELOCK: Two appeals pending before before the

6 Supreme Court and their brief is due in September and we'll

7 respond.

8 THE COURT: Okay. That's my understanding. So I

9 think that anything -- any ruling from this Court has to come

10 out in writing and has to be very, very, carefully, carefully

11 drafted because it will be scrutinized by both sides.

12

13

MS. BLAKELOCK: Sure.

THE COURT: This is what I'd like you to do. In

14 light of the fact that we've been in this first-degree murder

15 case for the last 30 days and there have been a lot of things

16 that have piled up, a lot of things, and so I'd like you

17 both sides to submit within a period of 30 days a ruling and

18 proposed order consistent with your respective conditions

19 relative to this issue and then I will review the case law,

20 I'll review my notes, I'll review these new cases that have

21 been supplied today and I'll make a decision.

22 MS. BLAKELOCK: Thank you.

23 THE COURT: And so there we go.

24 MS. BLAKELOCK: Thank you.

25 THE COURT: Thank you very much for your briefing.


27

1 Thank you very much for your arguments and focus as it relates

2 to it. It could have gone on for a long period of time.

3 You've been able to, in my estimation, narrow the focus to the

4 absolute essentials in connection with both arguments.

5

6

7

8

9

10

11

12

13

relates to

MS. BLAKELOCK: Thank you.

THE COURT: Thank you.

MR. PANKRATZ: And thank you for accommodating us.

MS. BLAKELOCK: Yes, I appreciate that.

THE COURT: Is 30 days sufficient for each side as

- -

MR. PANKRATZ: I think it should be.

MS. BLAKELOCK: And that will be for me too.

MR. PANKRATZ: And just for clarification, we're

14 limiting it to the revocable, irrevocable settlor?

it

15 THE COURT: It is because ultimately that's the issue

16 that relates to the motion for summary disposition in

17 connection with yours.

18

19

20

21

22

23

24

25

MS. BLAKELOCK: Thank you.

(PROCEEDINGS IN THE ABOVE-ENTITLED

MATTER WERE CONCLUDED.)


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