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Ruel v. Dalesandro

Court of Appeals of Louisiana, Fifth Circuit

July 9, 2019

ROBERT E. RUEL, III, JANINE RUEL JUNEAU, KRISTEN RUEL TRICHE, AND JAMES S. RUEL, INDIVIDUALLY AND IN HIS CAPACITY AS TRUSTEE OF THE SALLY H.P. RUEL INTER VIVOS REVOCABLE TRUST
v.
SALLY PULVER DALESANDRO

          ON APPEAL FROM THE TWENTY-FOURTH JUDICIAL DISTRICT COURT PARISH OF JEFFERSON, STATE OF LOUISIANA NO. 727-836, DIVISION "K" HONORABLE ELLEN SHIRER KOVACH, JUDGE PRESIDING

          COUNSEL FOR PLAINTIFF/APPELLANT, ROBERT E. RUEL, III, JANINE RUEL JUNEAU, KRISTEN RUEL TRICHE, AND JAMES SCOTT RUEL, INDIVIDUALLY AND IN HIS CAPACITY AS TRUSTEE OF THE SALLY H.P. RUEL INTER VIVOS REVOCABLE TRUST David P. Salley Stephannie McKinney Sharon I. Corona Davidson S. Ehle, III

          COUNSEL FOR DEFENDANT/APPELLEE, SALLY RUEL DALESANDRO Richard D. Mere

          Panel composed of Judges Jude G. Gravois, Stephen J. Windhorst, and Hans J. Liljeberg

          HANS J. LILJEBERG JUDGE

         Plaintiffs/Appellants, Robert E. Ruel, III, Janine Ruel Juneau, Kristen Ruel Triche and James Scott Ruel, individually and in his capacity as trustee of the Sally H.P. Ruel Inter Vivos Revocable Trust (hereinafter collectively referred to as "plaintiffs"), seek review of the trial court's December 11, 2017 judgment, which granted a motion for judgment notwithstanding the verdict raised by appellee, Sally Pulver Dalesandro. The trial court vacated the verdicts returned by a jury in favor of plaintiffs and entered rulings in favor of Ms. Dalesandro. For reasons stated more fully below, we reverse the trial court's judgment granting Ms. Dalesandro's motion for judgment notwithstanding the verdict, reinstate the verdicts rendered by the jury in favor of plaintiffs and remand this matter to the trial court for further proceedings.

         FACTUAL AND PROCEDURAL BACKGROUND

         This matter involves a dispute arising from a revocable trust - the Sally H.P. Ruel Inter Vivos Revocable Trust - established on February 25, 1994 (the "Trust"). At the time of the creation of the Trust, Ms. Dalesandro was married to Dr. Robert E. Ruel, Jr.[1] Plaintiffs are Dr. Ruel's children from a prior marriage. Ms. Dalesandro was the settlor who created the Trust.[2] The Trust named plaintiffs as the principal beneficiaries and their father, Dr. Ruel, as the income beneficiary.[3]The Trust states that it was created for the benefit of Dr. Ruel's children. Robert E. Ruel, III ("Robbie Ruel"), was initially designated as the trustee. In 2002, James Scott Ruel ("Scott Ruel") was substituted as trustee. Attorney Bruce Miller drafted the Trust and was appointed as the attorney to represent the Trustee.

         The evidence presented at trial revealed that the Trust was originally drafted with Dr. Ruel as both the settlor and income beneficiary, and plaintiffs as principal beneficiaries. Robbie Ruel testified, and Ms. Dalesandro and Mr. Miller did not dispute, that due to financial difficulties resulting from a poor investment decision which Dr. Ruel faced around the time the Trust was created, Mr. Miller recommended that Dr. Ruel restructure the Trust to substitute Ms. Dalesandro as the settlor in place of Dr. Ruel. According to Robbie Ruel, Mr. Miller advised this change in order to provide an additional layer of protection against possible seizure by creditors of Dr. Ruel's assets which were placed into the Trust.

         Dr. Ruel died on October 10, 2011. Shortly after his death, Bruce Miller contacted trustee, Scott Ruel, about executing documents to revoke the Trust and transfer title to the immovable property held by the Trust to Ms. Dalesandro. Plaintiffs contend that on January 19, 2012, based on Mr. Miller's representations that Ms. Dalesandro still had the right to revoke the Trust, Ms. Dalesandro and Scott Ruel executed documents that revoked the Trust and transferred title to four pieces of immovable property to Ms. Dalesandro, including an eighty percent (80%) interest in property located at 210 Highway 21 in Madisonville, Louisiana, a condominium in Redstick Lofts in Baton Rouge, Louisiana, property in Gunnison, Colorado, and property located at 450 Hesper Avenue in Metairie, Louisiana.

         Ms. Dalesandro subsequently sold the condominium in Redstick Lofts to a third party and in January 2013, Scott Ruel purchased the eighty percent (80%) interest in the property located in Madisonville, Louisiana. In May 2013, Ms. Dalesandro attempted to sell the property located on Hesper Avenue. However, an attorney researching the title for this property determined the sale could not proceed due to title issues created by the terms of the Trust ‒ specifically that the Trust terminated at Dr. Ruel's death and that plaintiffs obtained ownership rights in the property at that point. In response, Bruce Miller contacted Robbie Ruel and requested that plaintiffs execute documents that would serve to quiet title to the property in favor of Ms. Dalesandro. Scott Ruel testified that Robbie contacted him and they reviewed the terms of the Trust in light of the issues raised by the title attorney. Scott testified that at that point, he realized the Trust terminated when his father died.

         Plaintiffs relied on the language of Section 2.1 of the Trust to support their position that the Trust terminated at the time of their father's death:

Term. Except as provided in Section 1.3, this trust shall terminate as to each principal beneficiary upon the death of the Settlor's husband or when the beneficiary attains age 35, whichever last occurs.[4]

         As noted above, Dr. Ruel died on October 10, 2011, and on that date all of the principal beneficiaries (plaintiffs) had attained the age of 35. As a result, plaintiffs took the position that the Trust terminated as to all principal beneficiaries on October 10, 2011. Plaintiffs refused to sign the documents requested by Mr. Miller to quiet title in favor of Ms. Dalesandro, and instead demanded that she return the unsold Trust property to them, as well as the funds she received from the prior sales of two of the Trust properties. Plaintiffs argued that the documents executed in January 2012 to revoke the Trust and to transfer the Trust property to Ms. Dalesandro were invalid because the Trust previously terminated by its own terms at the time of Dr. Ruel's death in October 2011, and at that time, ownership of the immovable property transferred to plaintiffs as they were all 35 or older at the time of their father's death.

         Ms. Dalesandro refused plaintiffs' demands, and on June 11, 2013, they filed this lawsuit seeking a declaration that the Trust terminated on October 10, 2011, upon the death of their father. Plaintiffs also sought to set aside the authentic acts that revoked the Trust and transferred the property held by the Trust to Ms. Dalesandro, and sought to recover all sums she received from the sale of the immovable properties.

         On January 5, 2015, Ms. Dalesandro filed a reconventional demand against plaintiffs seeking to reform the Trust or alternatively, to nullify the Trust. Ms. Dalesandro alleged that when she established the Trust in 1994, she intended for the Trust to terminate at her death and that the Trust failed to reflect her intent as the settlor of the Trust. Ms. Dalesandro alleged in her reconventional demand that Section 2.1 of the Trust, as well as Sections 1.2, 1.3 and 3.2, should be reformed to add language providing for the continuation of the Trust until her death. On January 9, 2017, Ms. Dalesandro filed an amended, restated and superseding reconventional demand which limited her request to reform the Trust to only add the following highlighted phrase "the Settlor" to Section 2.1:

         2.1 Term.

         Except as provided in Section 1.3, this trust shall terminate as to each principal beneficiary upon the death of the Settlor, the Settlor's husband or when the beneficiary attains age 35, whichever last occurs.

         Plaintiffs amended their petition on October 9, 2013, to add a legal malpractice claim against Mr. Miller as the attorney for the Trust, based on the alleged incorrect advice he provided for the trustee to transfer the Trust property to Ms. Dalesandro after Dr. Ruel's death.[5] Almost two and a half years later, on January 28, 2016, Mr. Miller executed a document entitled "Act of Correction" and recorded it in the conveyance records for Jefferson Parish. In this document, Mr. Miller stated that he committed a clerical error in 1994 when he drafted the Trust, by failing to include the highlighted term "the Settlor" immediately before the words "the Settlor's husband" in Section 2.1 of the Trust as follows:

Term. Except as provided in Section 1.3, this trust shall terminate as to each principal beneficiary upon the death of the Settlor, the Settlor's husband or when the beneficiary attains age 35, whichever occurs last.

         The Act of Correction explained that La. R.S. 35.2.1 permits a notary public to file an act of correction to correct a clerical error in a notarial act he drafted or before whom it passed. The Act of Correction further stated that the clerical error is evidenced by references in other provisions of the Trust to the death of the Settlor, particularly in Sections 3.2, 3.3, 4.2(H) and 4.4.[6]

         Following the filing of the Act of Correction, the parties engaged in extensive motion practice. Among the motions relevant to this appeal, on April 8, 2016, plaintiffs filed a motion in limine seeking to revoke and redact the Act of Correction from the conveyance records. Plaintiffs also requested that the trial court prohibit Ms. Dalesandro from introducing the Act of Correction into evidence at trial. Plaintiffs argued that the Act of Correction was an improper effort to reform the Trust over 22 years after its creation. They argued the added language resulted in an impermissible and material change to the Trust and did not serve to correct a "clerical error." The trial court held a hearing on the motion in limine on May 25, 2016, and decided to defer this issue to trial.

         On July 19, 2016, Ms. Dalesandro filed a motion for summary judgment arguing the Trust continued to exist after Dr. Ruel's death, because Section 3.2 of the Trust did not require distribution of the Trust assets until after the settlor's (Ms. Dalesandro) death. On September 26, 2016, plaintiffs filed a cross-motion for summary judgment arguing the Trust terminated on the date of Dr. Ruel's death pursuant to Section 2.1 of the Trust. The trial court held a hearing on October 26, 2016, and denied both motions finding that these issues required the consideration of evidence regarding the settlor's intent, and must be resolved following a trial.

         According to the parties, they agreed to set the matter for a jury trial to determine two issues ‒ whether the Act of Correction corrected a clerical error and whether Ms. Dalesandro, as settlor, intended for the Trust to continue until her death. On December 4, 2017, the jury trial commenced. Following three days of testimony and the introduction of numerous exhibits into evidence, the trial court presented the jury with two questions:

1) Did Plaintiffs, Robert E. Ruel, III, Jasmine Ruel Juneau, Kristen Ruel Triche, and James Scott Ruel, prove by a preponderance of the evidence that the Act of Correction filed by Bruce Miller and adding the words "the Settlor" to Section 2.1 of the Sally H.P Ruel Inter Vivos Revocable Trust did not correct a clerical error?
2) Did Sally Ruel Dalesandro prove by clear and convincing evidence that her intent was for the Sally H.P. Ruel Inter Vivos Revocable Trust to continue for her lifetime unless she revoked it?

         On December 7, 2017, the jury returned a verdict in favor of plaintiffs on both issues - answering "yes" to Question 1 and "no" to Question 2. Accordingly, the jury determined that plaintiffs proved by a preponderance of the evidence that the Act of Correction did not correct a clerical error and that Ms. Dalesandro did not prove by clear and convincing evidence that she intended for the Trust to continue for her lifetime unless she revoked it.

         Plaintiffs moved the trial court to make the jury verdict the judgment of the court. Immediately thereafter, Ms. Dalesandro made an oral motion for a judgment notwithstanding the verdict ("JNOV"). The trial court set a schedule for the parties to submit briefing regarding the requested JNOV. However, on the following Monday, December 11, 2017, the trial court requested that counsel for the parties appear in open court that same afternoon. At the hearing, the trial court first entered a written judgment in favor of plaintiffs on the jury's verdict. Immediately after entering this judgment, the trial court granted Ms. Dalesandro's oral motion for JNOV and overturned the jury's verdict on both questions presented on the verdict form. The trial court provided the following oral reasons for its decision to grant the JNOV:

Prior to trial on October 26, 2016, this Court denied cross motions for summary judgment regarding the validity of the Act of Correction filed by Bruce Miller, the attorney who drafted the trust pursuant to Louisiana Revised Statute 35:2.1. In considering the cross motions, the Court studied the trust document and concluded that it was ambiguous on its face. For example, Paragraphs 2.1 and 3.2 cannot be reconciled as written. While 2.1 seems to provide the trust terminated upon Dr. Ruel's death, Section 3.2 does not allow distribution until after Sally Ruel Dalesandro's death.
At the hearing on the cross motions for summary judgment, Sally Dalesandro argued that the words "the settlor" were erroneously omitted from Section 2.1. With the addition of these two words, she argued the entire trust document makes since. [sic] Thus, she argued the omission was a clerical error that should - - that could be corrected by an Act of Correction. Plaintiffs opposed her motion and sought a judgment that the Act of Correction was invalid. Due to the inconsistencies in the trust document, the Court denied both motions in favor of a trial to hear evidence of the settlor's intent.
* * * It is well-settled in Louisiana law that the settlor's intention controls and is to be ascertained and given effect unless contrary to law or public policy. Our trust code rules set forth this policy of protecting the trust instrument from any modification or termination contrary to the settlor's expressed intent.
At trial Sally Dalesandro testified that her intent when she executed the trust document was to have the revocable trust continued for her lifetime unless she revoked it. Her testimony was corroborated by the testimony of Bruce Miller and Patsy Lea. Bruce Miller ...

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