ROBERTA M. DICKSON; WILLIAM M. DICKSON; AND SULPHUR GUM, LLC APPELLANTS/CROSS-APPELLEES
MARY LOUISE DICKSON SHOOK; AND DICKSON OAKS, LLC APPELLEES/CROSS-APPELLANTS
AND CROSS-APPEAL FROM JEFFERSON CIRCUIT COURT HONORABLE BRIAN
C. EDWARDS, JUDGE ACTION NO. 11-CI-006921
FOR APPELLANTS/CROSS-APPELLEES: William W. Allen Donald M.
Wakefield Lexington, Kentucky
ARGUMENT FOR APPELLANTS/CROSS-APPELLEES: William W. Allen
FOR APPELLEE CROSS-APPELLANTS: Carl D. Edwards, Jr. David A.
Cohen Lexington, Kentucky
ARGUMENT FOR APPELLEES/CROSS-APPELLANTS: Carl D. Edwards, Jr.
BEFORE: ACREE, JONES AND K. THOMPSON, JUDGES.
OPINION REVERSING, IN PART, VACATING, IN PART, AND
intra-family dispute began with Appellee Mary Louise (Mollie)
Dickson Shook's allegations of wrongdoing by her mother,
Appellant Roberta M. Dickson, and her brother, William
Dickson (Bill), regarding Bill's management of a closely
held family business entity, and allegations of Roberta's
interference with Mollie's expectancy interest in the
estate of her father, Stanley Dickson.
Jefferson County jury sided with Mollie. For the various
reasons set forth below, we reverse, in part, vacate, in
part, and remand.
2000, Stanley and Roberta began estate planning together.
That December, each executed separate wills and revocable
trusts. As part of their plans, they sheltered real property
in a limited liability company, Glen Oak, LLC, named after
their farm which became the LLC's capital.
Oak was somewhat informally divided into two tracts. A larger
tract was known as "Bill's Farm" and a smaller
tract was known as "Mollie's Farm." Glen Oak,
LLC, had four members: Stanley; Roberta; Sulphur Gum, LLC
(created by Stanley for Bill's benefit); and Dickson
Oaks, LLC (created by Stanley for Mollie's
benefit). Although not a member of Glen Oak, LLC,
Bill was the farm's manager. In accordance with the
operating agreement for Glen Oak, LLC, only Stanley and
Roberta had a say in governance, with each holding 50% of the
LLC's "Governance Units"; Sulphur Gum and
Dickson Oaks were passive beneficial participants in Glen
Oak's profits and losses.
parts of Stanley's and Roberta's December 2000 estate
planning - i.e., Stanley's will, his revocable
living trust, and his power of attorney in favor of Roberta -
are at the center of this litigation and appeal.
Stanley's will bequeathed to Roberta certain tangible
personal property. The residue of his estate, including such
intangible property as his Governance Unit in Glen Oak, LLC,
was to be conveyed at his death to a revocable living trust
he executed as the trust's grantor and initial trustee
trust provided that, upon his death, the successor trustee
(Roberta, if she survived him) would divide his interest in
Glen Oak, LLC (i.e., his Governance Unit) equally
between Mollie and Bill. The trustee was then to divide the
remaining estate into two separate, but not equal, shares
denominated the Marital Share and the Trust "B"
trust was designed to minimize the tax impact on the Marital
Share by requiring taxes to be paid from the Trust
"B" Estate. In addition to other language intended
to preserve the Marital Share, the trust provided that:
"The Trustee shall have the sole discretion to select
the assets which shall constitute the Marital Share. . . .
Trust 'B' shall be the balance of the Trust Estate
after the assets have been selected for the Marital Share . .
. ." The trust even contemplated the possibility that
"the assets constituting Trust 'B' [could] be
exhausted, or [that] Trust 'B' [could] not be
established . . . ."
minimizing taxes, the priority for use of the Trust
"B" Estate assets was to benefit Roberta. The trust
granted Roberta an annual "right, at her discretion, to
withdraw up to a maximum of five percent (5%) of the net fair
market value of the Trust 'B' Estate . . . ."
Furthermore, "until the death of [Roberta], the Trustee
shall pay to or for the benefit of [Roberta] such sums from
the remaining net income and/or principal of the Trust
'B' Estate as in the Trustee's reasonable
discretion shall be necessary or advisable from time to time
for the health, education, support and maintenance of
[Roberta] according to the accustomed standard of
living" she had come to enjoy while Stanley was alive.
Once Roberta passes away, whatever remains of Trust
"B" Estate assets, if anything, is to be divided
equally between Bill and Mollie.
years after this round of estate planning, in 2006, Stanley
and Roberta engaged in a second round. Because Bill's
Farm was worth more than Mollie's Farm, Stanley amended
his trust to add an "equalizing payment" to Mollie.
In substance, after Roberta's death the trustee would
first distribute to Mollie from any remaining Trust
"B" Estate assets the difference in value between
the two farms before dividing the remainder between Mollie
and Bill. Significantly, Stanley did not amend the provision
of his original estate plan that permitted Roberta to use as
much of the funds in the Trust "B" Estate for her
own support as she deemed proper, nor did he designate or
restrict any of the Trust "B" Estate to be set
aside solely to make the equalizing payment.
same time, Roberta, too, amended her revocable living trust
to add a "pour over" clause whereby her assets,
including whatever remained of the Marital Share, would be
conveyed upon her death to Stanley's Trust "B"
Estate. Significantly, Stanley's and Roberta's estate
planning, although coordinated, did not include a joint will.
Nor did their planning include reciprocal provisions, either
in their wills or their trusts, that would have the effect of
a joint will or otherwise prohibit either from later amending
any part of his or her respective estate plan.
year 2009 brought a decline in Stanley's health, owing
largely to Alzheimer's disease. It also brought a decline
in Mollie's bond-trader husband's income from
approximately $1.75M in 2008 to $340, 000 in 2009. By
September 2009, Mollie was pursuing a buyout of her interest
in Glen Oak farm. She sought approximately one-fourth of its
assets which she valued at a little more than one-and-a-half
million dollars ($1.5M).
this time, Mollie first told Roberta that Bill sexually
abused her when she was fifteen years old, some thirty years
earlier. Increasing levels of family strife ensued. Believing
it best to retain control of Glen Oak, Roberta used her
authority as Stanley's attorney-in-fact to sell his
Governance Unit in Glen Oak to herself for $26, 634.00.
Stanley died the following day.
engaged counsel to accelerate her efforts toward a buyout. In
a letter dated January 4, 2010, from her attorney to
Roberta's attorney, Mollie claimed Bill mismanaged the
farm and reiterated her assertion that Bill sexually
assaulted her when she was fifteen requiring "years of
therapy" for Mollie. She said she was "prepared to
initiate a complete accounting and investigation into
Bill's conduct [and was] ready to take this and all other
information public . . . . [She ] strongly prefer[red]
however, to informally resolve this as quickly as possible so
that she can finally move on with her
later, Roberta amended her will and bequeathed most of her
estate to a new revocable trust. As stated in paragraph 3.3.1
of her new trust:
The trustee shall set aside the sum of $1, 500, 000 reduced,
however, by any amount payable at my death to [Mollie]
pursuant to paragraph 5.a. of the Amendment to Trust
Agreement executed by Stanley . . . referred to as
"Mollie's Equalization Amount" [provided that
Mollie, ] subsequent to the date of this instrument and prior
to [Roberta's] death . . . has not made public
allegations of wrongdoing by [Bill] for the purpose of
humiliating him or his wife, seeking revenge against him for
injuries done to her (whether such allegations are true or
untrue) or for some other malicious purpose . . . .
estate planning after Stanley's death did not affect
Stanley's trust. Although Mollie claims otherwise - that
Roberta's new will and trust "interfered with the
Equalizing Payment" - Mollie did not allege that Roberta
failed to comply with the terms of Stanley's trust
itself. Stanley's trust and its component
parts, the Marital Share and the Trust "B" Estate,
remain unchanged to this day. To the extent the Trust
"B" Estate has sufficient assets to fund the
equalizing payment on the date of Roberta's death, Mollie
still will receive the equalizing payment. This explains why
Roberta's new trust provided for a reduction of the $1.5M
set aside for Mollie to the extent remaining Trust
"B" Estate assets are available to fund the
Roberta's lawful access to Trust "B" Estate
assets from which the equalizing payment is to be made still
makes it possible, just as Stanley's trust always
recognized, that "the assets constituting Trust
'B' [could] be exhausted." Reading together the
surviving provisions of Stanley's trust and its amendment
shows that the equalizing payment will be made only to the
extent there are assets in the Trust "B" Estate to
fund it. Stanley's trust does not guarantee Mollie will
ever receive the equalizing payment. The fact is that
Mollie's compliance with the condition in Roberta's
new trust would guarantee (to the extent of the value of
Roberta's estate upon her death) that Mollie would
receive $1.5M even if Trust "B" Estate assets were
diminished or exhausted.
did not interpret Roberta's actions after Stanley's
death this same way. She and Dickson Oaks filed suit in
circuit court against Roberta, Bill, and Sulphur Gum. The
court allowed a first amendment to the complaint after which
Mollie's and Dickson Oaks' causes of action were as
• Breach of fiduciary duty against Bill as manager of
• Aiding and abetting Bill's breach of fiduciary
duty, against Roberta.
• Breach of fiduciary duty against Roberta in her role
as Stanley's attorney-in-fact.
• Aiding and abetting Roberta's breach of fiduciary
duties, against Bill.
• Breach of contract against Roberta, Bill, and Sulphur
Gum for sundry violations of the Glen Oak operating
• Tortious interference with devise against Roberta for
conditioning the "equalizing payment" on
Mollie's "silence regarding the incestuous rape by
her brother . . . ." (R. at 622).
• Aiding and abetting Roberta's tortious
interference with devise, against Bill.
• Intentional infliction of emotional distress/outrage
(IIED)against Roberta for executing what Mollie
termed the "blackmail trust" in 2010 which
attempted to "threaten, intimidate, and harass Mollie
into remaining silent regarding Bill's incestuous rape of
Mollie . . . ." (R. at 628).
moved to amend the complaint a second time to add claims that
Roberta breached her fiduciary duties as trustee of
Stanley's trust. Unwilling to allow those claims to be
added, the circuit court denied the motion.
extensive pretrial proceedings, the Jefferson Circuit Court
conducted a multi-day jury trial in August 2016. The circuit
court granted defendants' motion to dismiss the claim
against Roberta individually for breaching fiduciary duties
in operating/dissolving Glen Oak, after which the jury found
for Mollie on all claims submitted to it.
circuit court entered a judgment in November 2016, after
which Appellants filed a lengthy motion for judgment
notwithstanding the verdict, for a new trial, or to amend
judgment; Mollie filed a motion for attorney fees. In May
2017, the circuit court denied all post-trial motions. These
allege a host of errors. First, they contend the circuit
court should have dismissed the tortious interference with
devise claim or granted a directed verdict on that claim.
They next contend the circuit court should have done the same
regarding the IIED claim. Third, they argue the circuit court
should not have given a punitive damages instruction. Fourth,
they argue the circuit court should have dismissed the claim
for breach of fiduciary duty against Roberta in her role as
Stanley's attorney-in-fact. Fifth, they assert the
judgment does not conform to the jury's verdict. Sixth,
they claim the circuit court erred by instructing the jury on
breach of fiduciary duty against Roberta in her role as
trustee of Stanley's trust after the court rejected
Mollie's motion to amend the complaint addressing that
claim. Seventh, they argue the jury instruction on the claim
against Bill for breach of fiduciary duty in his role as
manager of Glen Oak was erroneous. Eighth, they assert the
circuit court should not have entered judgment against Bill
for breach of contract and, relatedly, that the jury
instruction on that claim should not have included Roberta.
Ninth, they assert the $165, 000.00 damage award aggregated
for five (5) separate causes of action was improper. Finally,
they argue that various evidentiary rulings by the circuit
court were erroneous. The sole issue in the cross-appeal is
the denial of attorney fees. We will consider these
arguments, although not always in the order presented.
Tortious/Wrongful Interference with Devise/Expectation of
Inheritance Is Not a Cause of Action Recognized in
scholars erroneously assert that Allen v. Lovell 's
Adm x , 303 Ky. 238, 197 S.W.2d 424 (1946) recognized
tortious interference with an expectation of inheritance as a
sustainable cause of action in Kentucky. A closer
reading reveals that Allen recognizes nothing more
than what several other "courts in the early twentieth
century recognized [-] a tort for the improper destruction of
wills." Virginia L.H. Nesbitt, A Thoughtless Act of
A Single Day: Should Tennessee Recognize Spoliation of
Evidence As an Independent Tort?, 37 U. Mem. L. Rev.
555, 580 n.134 (2007). Specifically, Allen says,
"KRS 434.280 [repealed 1974, Ky. Acts ch.
406, § 336, eff. 1-1-75] penalizes any person who
destroys a will, and [KRS] 446.070 permits a person injured
by the violation of a statute to recover damages by reason of
the violation . . . ." Allen, 197 S.W.2d at
is no Kentucky Supreme Court opinion regarding the tort of
interference with an expectation of inheritance. However,
since 2003, this Court has explicitly stated in several
unpublished opinions that Kentucky does not recognize such a
tort. "On all questions of law the
circuit and district courts are bound by and shall follow
applicable precedents established in the opinions of the
Supreme Court and its predecessor court and, when there are
no such precedents, those established in the opinions of the
Court of Appeals." SCR 1.040(5). Although not binding
precedent, "unpublished Kentucky appellate decisions,
rendered after January 1, 2003, may be cited for
consideration by the court if there is no published opinion
that would adequately address the issue before the
court." CR 76.28(4)(c).
took every available opportunity to point out to the circuit
court that this cause of action has not been recognized in
Kentucky, often citing the unpublished cases in footnote 12,
supra. Nevertheless, the circuit judge instructed
the jury as though the tort had been recognized. That
constitutes reversible error. See Sandy River Cannel Coal
Co. v. Caudill, 22 Ky. L. Rptr. 1175, 60 S.W. 180 (1901)
(error to instruct jury on comparative negligence because
rule was not yet recognized in Kentucky). In essence, Mollie
has two responses: first, any such error by the circuit court
would be nullified if this Court, in this opinion, recognized
the tort; and, second, the error is harmless anyway because
there is no reasonable possibility that the error affected
the judgment. We address both.
acknowledges that the tort has not been recognized explicitly
here and, implicitly, urges this Court to do so now. She
suggests we adopt the articulation of the tort found in
Restatement (Second) of Torts § 774B because Kentucky
appellate courts have been persuaded by that treatise
frequently. We are not persuaded by that generalization.
previous occasions afforded this Court to recognize the tort
were teed up as cases in which the circuit court
appropriately refused to instruct the jury on the cause of
action. This case presents the opposite situation and,
therefore, more directly presents the question. We recognize
the need to express clearer precedent, at least until our
Supreme Court can address it. And so, we will.
Court has not hesitated, on occasion, to recognize torts for
the first time, and the Supreme Court indicates that doing so
is within our authority. See, e.g., Presnell Const.
Managers, Inc. v. EH Const., LLC, 134 S.W.3d 575, 581
(Ky. 2004) (noting the Court of Appeals first recognized the
tort of negligent misrepresentation in Chernick v.
Fasig-Tipton Kentucky, Inc., 703 S.W.2d 885 (Ky. App.
1986)); MV Transp., Inc. v. Allgeier, 433 S.W.3d
324, 336 n.10 (Ky. 2014) (citing two Court of Appeals
opinions each recognizing a tort for the first time:
"McDonald's Corp. v. Ogborn, 309 S.W.3d
274, 291 (Ky. App. 2009) (recognizing negligent supervision);
Oakley v. Flor-Shin, Inc., 964 S.W.2d 438, 441-42
(Ky. App. 1998) (recognizing negligent hiring and
retention)."). But being possessed of authority and
exercising it are separate matters.
case, we choose to resist the "temptation . . . to draw
expansive conclusions about the state of tortious
interference [with inheritance] from the decisions in
[sister] jurisdictions, b[ecause] it is a messy landscape
that does not lend itself to neatly packaged principles of
law." Rebecca M. Murphy and Samantha M. Clarke, A
New Hope: Tortious Interference with an Expected Inheritance
in Rhode Island, 22 Roger Williams U.L. Rev. 531, 551
(2017). That is especially true for Kentucky
where our jurisprudence somehow causes scholars to
"disagree about whether Kentucky [currently] recognizes
tortious interference [with inheritance]." Id.
at 545 n.94.
expressly hold that Kentucky does not recognize the cause of
action known as tortious interference with inheritance or
gift, or as Mollie expresses it in this litigation, wrongful
interference with devise. The circuit court's erroneous
Instruction No. 9 on a nonexistent cause of action is
presumed to be prejudicial. Osborne v. Keeney, 399
S.W.3d 1, 13 (Ky. 2012) ("[E]rroneous instructions to
the jury are presumed to be prejudicial." (quoting
McKinney v. Heisel, 947 S.W.2d 32, 35 (Ky. 1997))).
For that reason, we must reverse the portion of the verdict
responsive to Instruction No. 9.
is an additional reason for declining recognition of the tort
based on the allegations Mollie presents. Nonrecognition does
not risk offending the "maxim of the law . . . that,
'There is no wrong without a remedy.'"
Cornett's Ex 'r v. Rice, 299 Ky. 256, 261,
187 S.W.2d 454, 456 (1945). As we discuss in Section V,
below, the legislative scheme of KRS Chapter
395 already provides a remedy, and a forum,
for the wrong Mollie alleges. Granting her plea to save this
verdict by fashioning a new remedy when one already exists
would invite just criticism for basing our decision on
sympathy, not necessity.
reject Mollie's first reason for affirming the verdict -
recognizing a new cause of action. That leads us to the
second reason Mollie urges us to affirm the judgment
notwithstanding the circuit court's instruction error -
that such error was harmless.
Circuit Court's Error in Instructing Jury on Unrecognized
Tort Was Not Harmless Error
presumption of prejudice is rebuttable, but the party
claiming the erroneous instruction was harmless bears the
burden of affirmatively showing that no prejudice resulted
from the error - that means proving "there was 'no
reasonable possibility' the erroneous jury instruction
affected the verdict." Osborne, 399 S.W.3d at
13 (quoting Emerson v. Commonwealth, 230 S.W.3d 563,
570 (Ky. 2007)). Mollie attempts such proof by arguing
"it is not necessary that this Court even reach the
question of Roberta['s] tortious interference with
Stanley's estate plan . . . because Roberta breached the
fiduciary duties she owed to Mollie as Stanley's trustee
[which] Roberta became . . . at his death."
(Appellees' brief, p. 13).
first and obvious flaw in Mollie's argument is that the
circuit court rejected her attempt to add this charge that
Roberta breached her fiduciary duty as Stanley's trustee.
That the circuit court nevertheless instructed the jury on
that claim after rejecting it perplexes this Court. But that
perplexity does not prevent us from recognizing the second
and certainly fatal flaw - there was no evidence to support
such a claim. No matter how generously we read Mollie's
allegations that Roberta engaged in wrongful, unlawful, or
unauthorized conduct to prevent Mollie's receipt of the
"equalizing payment," there is no way to construe
the instruments constituting the estate planning of Stanley
and Roberta other than that they did not prohibit
Roberta's conduct following Stanley's death, nor did
Roberta's estate planning impact the operation of
these reasons, and as further explained below, the circuit
court's instruction on a cause of action not recognized
in this jurisdiction, Instruction No. 9, constitutes
Roberta's Estate Planning Conduct Is Not
attempts to salvage the verdict and judgment on an
unrecognized cause of action by characterizing Roberta's
estate planning as actionable misconduct. Her conflation of
the equalizing payment in Stanley's trust and the $1.5M
conditional bequest in Roberta's new trust contributes to
the confusion of these already complex facts.
we previously explained that Roberta's personal estate
planning leaves Stanley's estate planning, including the
equalizing payment, intact. Stanley's trust authorizes
Roberta, as trustee, to identify what trust assets make up
her Marital Share and what assets make up the Trust
"B" Estate. It authorized Roberta, as trustee, to
determine what Trust "B" Estate assets she deemed
necessary to maintain her accustomed standard of living. As
previously noted, Stanley's trust contemplated the
possibility that Roberta might deplete Trust "B"
Estate assets before she ...