HOLLY SHELDON LEE and SHELDON AIR SERVICE, LLC, Appellants and Cross-Appellees,
v.
ROBERT DONALD SHELDON, individually and as Trustee of the Roberta Reeve Sheldon 2014 Grantor Controlled Revocable Trust, Appellee and Cross-Appellant.
Appeal
from the Superior Court No. 3 AN- 15-05117 CI of the State of
Alaska, Third Judicial District, Anchorage, Pamela Scott
Washington, Judge pro tem, and William F. Morse, Judge.
Robert
John, Law Office of Robert John, Fairbanks, for Appellants
and Cross-Appellees.
Kevin
G. Clarkson and Matthew C. Clarkson, Brena, Bell &
Clarkson, P.C., Anchorage, for Appellee and Cross-Appellant.
Before: Stowers, Chief Justice, Winfree, Maassen, Bolger, and
Carney, Justices.
OPINION
BOLGER, Justice.
I.
INTRODUCTION
Following
mediation, a trust beneficiary and a trustee signed a
document purporting to settle bitter family litigation and
referring future disputes to the mediator for resolution. The
beneficiary subsequently denied that she had settled and
asked the mediator to resolve the issue, and the mediator
concluded that the parties had reached a binding settlement.
The beneficiary tried to resurrect this issue in the superior
court, but the court concluded that the mediator's
decision was within the scope of the authority conferred by
the parties. We conclude that the superior court did not err
by confirming the mediator's decision. We also conclude
that the court did not err by denying the beneficiary's
petition to review the trustee's compensation, or by
awarding Alaska Civil Rule 82 attorney's fees to the
trustee. We therefore affirm the superior court's
judgment.
II.
FACTS AND PROCEEDINGS
A.
Creation Of Mountain House, LLC And Roberta
Sheldon's Trust
In the
1960s, famed Alaska bush pilot Don Sheldon built a
cabin-known as the Mountain House - at the head of Ruth
Glacier in Mount McKinley National Park (now Denali National
Park). Following Don's death in 1975, his wife Roberta
Sheldon assumed control of the Mountain House. In 2006
Roberta created Mountain House, LLC to own and manage the
cabin.
In
early 2014 Roberta conveyed Mountain House, LLC and other
assets into a newly created revocable trust. The trust names
the Sheldons' three children Holly, Robert, and
Kate[1]
as beneficiaries and designates Robert as successor trustee.
It establishes procedures for distribution of real and
personal property among the beneficiaries. It also includes a
penalty clause designed to dissuade the beneficiaries from
contesting the trust's terms. The clause provides that
persons who contest the trust or its provisions "shall
not benefit in any way under this Trust... and shall not
receive any distribution whatsoever."
Following
Roberta's death in June 2014, Robert became trustee.
Holly requested an accounting of trust assets in September,
and Robert provided a list of assets the following month. In
December, Robert-acting in his capacity as trustee-drafted an
operating agreement appointing himself as manager of Mountain
House, LLC. The agreement provided that membership shares in
the LLC would be distributed equally among Holly, Robert, and
Kate "[a]t such time as the Trustee deems suitable for
both this LLC and the Trust."
B.
Initial Litigation
Over
the following months, disagreements arose between Holly and
Robert concerning his administration of the trust. Holly
claimed that Robert had failed to adequately respond to her
request for an accounting and that he also had failed to
distribute trust assets that she had requested and that he
had stated he would provide.
In
February 2015 Holly and her company, Sheldon Air Service, LLC
(SAS), [2] filed a lawsuit against Robert
individually and in his capacity as trustee. Holly argued
that Robert had "unlawfully detained . . . Trust assets
without regard to the beneficiaries' distribution
rights" and that he had breached his fiduciary duties
"[b]y refusing to timely distribute Mountain House, LLC
to the beneficiaries."[3] She moved for summary judgment,
asking the superior court to rule that Robert was required
"to immediately distribute the Mountain House, LLC, to
its three, equal owners." Robert brought a cross-motion
for summary judgment, arguing that Holly had "no right
to distribution, immediate or otherwise, of an in-kind
membership in the Mountain House, LLC" and that
Holly's complaint and litigation violated the trust's
penalty clause.
In
November 2015 the superior court ruled that under the terms
of the trust, Robert was entitled to determine which children
would receive membership interests in Mountain House, LLC. It
also found that Robert was not obligated to immediately
distribute Mountain House, LLC. However, the court rejected
Robert's argument that Holly's litigation had
triggered the trust's penalty clause. Noting that
attempts to enforce rights or "secure an interpretation
of [an] instrument" generally do not trigger penalty
clauses, the court held that Holly had "advanced a
reasonable interpretation of the trust in light of an
ambiguity." Though the court "[found] her
interpretation unsupported," it concluded that Holly had
merely sought to "clarify and enforce the trust,"
not void it, nullify it, or set it aside.
C.
Mediation And Subsequent Disputes
Robert
and Holly participated in mediation conducted by retired
superior court judge Eric Sanders in December 2015. Following
the mediation, the parties signed a document titled
"Mediator's Proposal" (Proposal). Under the
terms of the Proposal, Holly would pay $25, 000 into Mountain
House, LLC. She would receive a one-third, non-voting
interest in the LLC as well as various personal effects from
the trust's corpus, and she would be granted periodic
access to the Mountain House. The Proposal stated that the
parties had "reached an agreement to the settlement of
all claims of all parties" and would "execute a
Settlement Agreement and Mutual Release of All Claims between
the parties as a result of the full and complete settlement
reached." Lastly, paragraph 11 of the Proposal provided
that "[a]ny disputes concerning [the Proposal's]
terms or the execution of these terms and the Settlement and
Release shall be resolved finally and completely by Eric
Sanders."
Per the
Proposal's terms, Robert sent Holly a draft settlement
agreement to review. In response Holly sent a "Response
Regarding Term Sheet" (Response) to Sanders arguing that
the Proposal had not settled her claims against Robert. She
argued that at the time she signed the Proposal, she
"believed [the] document was merely a proposal... and
that her signature would not result in a binding
agreement." She also claimed that she "lacked
sufficient information concerning the assets and liabilities
of the Trust" to make an informed decision during the
mediation and that Robert's failure to provide this
information "vitiate[d] [her] consent" to any
settlement. Lastly, she argued that even if she and Robert
had reached a settlement, SAS had separate claims that had
not yet been resolved. Holly "requested that the
mediation be reconvened to address all disputes." She
also indicated that her Response was "submitted within
the context of mediation" and that she "reserve[d]
all rights as to whether the issues raised herein are subject
to arbitration."
In
response Robert submitted an "Arbitration Memorandum
Regarding Settlement Existence, Scope, Noncompliance, and
Enforcement" (Arbitration Memorandum) to both Holly and
Sanders. Robert argued that the parties had agreed to a
settlement when they signed the Proposal, that Holly had all
the information she needed to make an informed decision
regarding settlement, and that SAS's claims against
Robert, the trust, and Mountain House, LLC had been resolved.
Robert attached an accounting, which disclosed payments made
for repair and renovation of the Mountain House and legal
fees related to the ongoing litigation.
After
both documents had been submitted to Sanders, the parties
exchanged a series of emails discussing the nature of their
dispute. Robert sought to clarify that "this is an
arbitration at this point" and that the parties were no
longer "mediating at this time." Holly stated that
she did "not agree with Robert's position but would
like to see all issues resolved to avoid further litigation
expense" and that the parties would "have to agree
to disagree on this point." In response to a question
about subpoenas, Robert stated that he was "under the
impression that [the parties were] waiting for ... Sanders to
issue a decision as an arbitrator under paragraph 11 of the
Mediator's Proposal." Holly replied that she wanted
to take Robert's deposition, stating, "I do not have
any objection to rescheduling the depo until after [Sanders]
has reviewed the matter." In response Robert again
noted, "We are awaiting ... [Sanders's] decision
regarding the existence and scope of the settlement that was
reached at the December 1, 2015, mediation." And Holly
again confirmed that she was anticipating that Sanders would
issue a decision on the issues she had raised: "[P]lease
confirm whether Robert is willing to agree to reschedule the
deposition until after [Sanders] has issued his
decision."
Sanders
issued a decision in February 2016. He stated that the
parties had identified disputes to be resolved
"[p]ursuant to paragraph 11" of the Proposal. He
concluded that Holly had settled her claims against Robert
when she had executed the Proposal and that she "must
comply with [its] terms and conditions." He further
concluded that the Proposal had settled SAS's claims
against Robert but not its claims against Mountain House,
LLC. Sanders directed the parties to "execute a mutual
release which is consistent with this decision."
D.
Motions To Continue And Enforce
In
March 2016 Holly filed a motion to continue the trial
scheduled in the superior court. She again contended that the
December 2015 mediation had not resulted in a binding
settlement; in the alternative, she argued that fraud and
fiduciary misconduct on Robert's part vitiated her
consent to any settlement that may have occurred. Holly
denied that the parties had already submitted these issues to
arbitration, characterizing her earlier Response as a request
for "assistance" presented to Sanders "in the
context of the mediation." She sought a continuance to
investigate "facts surrounding the Trustee's various
breaches of fiduciary duty." In response Robert filed a
motion to enforce, arguing that the parties had already
submitted these issues to arbitration and that Sanders's
decision directing Holly to comply with the terms of the
Proposal constituted a binding arbitration award. In the
alternative, he argued that the court should enforce the
terms of the Proposal even if it concluded that Sanders's
decision was not the product of arbitration. Robert also
argued that Holly had violated the trust's penalty clause
by filing her motion to continue.
The
superior court issued an order denying Holly's motion to
continue and granting in part Robert's motion to enforce.
The court explained that Holly had asked Sanders to determine
whether the Proposal constituted a binding settlement
agreement and that she now sought to overturn both
Sanders's arbitration decision and the underlying
settlement agreement. The court concluded that the Proposal
was "not a proposal" but rather a settlement
agreement; the court reasoned that "given the wording of
the document, the presence of Holly's attorney, and her
signature," it was a "near certainty" that
Holly understood she was settling her claims. The court
further concluded that Holly's reliance on Robert's
diligence in reporting trust costs was not
"justifiable": Holly "knew the trust had
costs, knew that she did not know the precise value of the
costs, and knew Robert had a duty to disclose the costs but
had not done so." Therefore, Holly's fraud claim
could not vitiate her consent to the terms of the Proposal -
including paragraph 11, the provision providing for
arbitration of subsequent disputes.
In
light of these conclusions, the court denied Holly's
motion to continue and granted Robert's motion to enforce
"in so far as it [sought] enforcement of the arbitration
decision." The court noted, however, that "the
remedy sought in Holly's motion" was "a new
trial date and further discovery" rather than
nullification of any trust provisions. Accordingly, the court
denied Robert's motion as it related to the penalty
clause. Having concluded that the parties had settled all
claims, the court entered final judgment.
E.
Post-Judgment Motions And ...