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McCaffery v. Lindner

Court of Appeals of Louisiana, Fifth Circuit

December 27, 2018

JANA MARIE LINDNER MCCAFFERY
v.
JOE ANN YOUNG LINDNER

          ON APPEAL FROM THE TWENTY-FOURTH JUDICIAL DISTRICT COURT PARISH OF JEFFERSON, STATE OF LOUISIANA NO. 753-803, DIVISION "I" HONORABLE NANCY A. MILLER, JUDGE PRESIDING

          COUNSEL FOR PLAINTIFF/APPELLANT, JANA MARIE LINDNER MCCAFFERY Ronald W. Morrison, Jr.

          COUNSEL FOR DEFENDANT/APPELLEE, JOE ANN YOUNG LINDNER Stephen D. Marx.

          Panel composed of Judges Fredericka Homberg Wicker, Robert A. Chaisson, and Stephen J. Windhorst.

          STEPHEN J. WINDHORST JUDGE.

         Appellant, Jana Marie Lindner McCaffery, seeks review of the trial court's January 9, 2018 judgment, in which the trial court ordered appellee, Joe Ann Young Lindner, to return $897, 079.78 to the Lazy J-7 Trust, subject to a credit for those monies returned prior to judgment. For the following reasons, we affirm the trial court's judgment.

         Facts and Procedural History

         This matter involves the disputed management of a family trust fund established by John Lindner, Jr. ("Mr. Lindner"), Mrs. McCaffery's father and Mrs. Linder's husband. Mr. Lindner established the Lazy J-7 Trust on November 18, 1992 and served as the sole trustee until his death on March 24, 2001. Mrs. Linder was named as the sole income beneficiary, and Mrs. McCaffery and John E. Lindner, III were named as the principal beneficiaries of the trust with Mr. Lindner, III's interest set at Fifty Thousand Dollars, $50, 000 and Mrs. McCaffery's interest for the remainder. Upon Mr. Lindner's death, Mrs. Lindner became the successor trustee and remains the trustee to date.

         The Lazy J-7 Trust is a so-called "spendthrift" trust, which allows for invasion of principle only under limited circumstances. The trust was funded upon its creation with three pieces of immovable property: (1) a ranch in Hancock County, Mississippi owned by Mr. Lindner individually; (2) a property on Gentilly Blvd. in New Orleans; and (3) a property on Chateau Blvd. in Metairie. The Gentilly and Metairie properties were found to be marital property when they were donated. All three funding properties were sold during Mr. Lindner's tenure as trustee: (1) the ranch in 1998 for $2.4 million; (2) the Gentilly property in 1994 for $140, 000; and (3) the Chateau property in 1999 for $310, 000. Accordingly, the principal value of the trust at the time that Mrs. Lindner became trustee should have been not less than $2.85 million.

         On September, 23, 2015, appellant, Mrs. McCaffery, filed a petition for trustee's accounting against her mother, Mrs. Lindner, of the inter vivos irrevocable Lazy J-7 Trust. Mrs. McCaffery received Mrs. Lindner's accounting in October, 2015 and learned that the trust's actual value at the time Mrs. Lindner became trustee was approximately $1.36 million. The accounting revealed that Mrs. Lindner distributed to herself almost $900, 000 in trust principal during her tenure as trustee. After submission of the accounting, Mrs. McCaffery amended her petition to include demands for return of all monies from the sales of the three funding properties, and for damages for mismanagement of the trust by Mr. and Mrs. Lindner. It is undisputed that both Mr. and Mrs. Lindner invaded trust principle in violation of the terms of the trust during their respective terms as trustee. Mrs. McCaffery also sought removal of Mrs. Lindner as trustee and her appointment as successor trustee.

         On July 14, 2016, the trial court held an evidentiary hearing on Mrs. McCaffery's motion to remove Mrs. Lindner as trustee. At this hearing, Mrs. Lindner testified that she took over as trustee in 2001 and that there was approximately one million three hundred thousand dollars ($1, 300, 000) in the trust. She also testified that she was in the meeting with legal counsel when the trust was created and that counsel told her and her husband that the money could be treated as their own property. The trial court declined to remove Mrs. Lindner as the trustee of the Lazy J-7 Trust, finding that there was no evidence of bad faith and thus no basis to support removal of the trustee.

         At trial, Mrs. Lindner again testified that she and Mr. Lindner relied on the advice of counsel in treating the trust assets as their own. Mrs. Lindner also testified that, since the filing of this lawsuit, the terms of the trust have been explained to her and she has replaced an undisputed portion of the removed principal. Mrs. Lindner argued at trial that she should not be obligated to return any portion of invaded principle which constitutes her share of community property. She also asserted that she should not be held liable for any violation of the trust which occurred during Mr. Lindner's tenure as trustee.

         At trial, the trial court considered the following issues: (1) whether Mrs. Lindner had a claim to a community interest in the trust's funding properties; (2) whether Mrs. Lindner should replace principal assets removed from the trust during Mr. Lindner's term as trustee; and (3) whether Mrs. Lindner should replace principal assets removed from the trust during her own term as trustee. The trial court ruled in favor of Mrs. McCaffery and against Mrs. Lindner, and ordered Ms. Lindner to return $897, 079.78 to the Lazy J-7 Trust, subject to a credit for those monies returned prior to judgment. After trial on November 27, 2017, the trial court also (1) ruled that Mrs. Lindner does not have any community interest claim to the three funding trust properties and that she is not liable for the breaches committed by the predecessor trustee; and (2) excluded the expert testimony of appellant/Mrs. McCaffery's expert, a Louisiana attorney and board certified estate planning and administration expert.

         Assignments of Error

         Appellant asserts that the trial court erred (1) in not removing Mrs. Lindner as trustee of the Lazy J-7 Trust; (2) in not holding Mrs. Lindner liable for the breaches of trust by her predecessor, Mr. Lindner; and (3) in excluding the expert testimony and report of Carole Cukell Neff, a proposed expert in the usual and customary standards of a trustee. Appellee answered the appeal, asserting the trial court erred in (1) not classifying the Mississippi ranch and contiguous acreage as community ...


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