United States District Court, D. Idaho
ROXANNE L. SLAUGH, an individual in her capacity as Successor Trustee of the Neidigh Trust, dated April 21, 2010 and amended June 10, 2015 Plaintiff,
v.
MARIANNE POSELEY WAGNER, MARRQUARDT NEIDIGH, Defendant.
MEMORANDUM DECISION AND ORDER RE: DEFENDANT'S
MOTION TO ENFORCE SETTLEMENT AGREEMENT (DOCKET NO.
66)
Hon.
Ronald E. Bush, Chief U.S. Magistrate Judge
Now
pending before this Court is Defendant's Motion to
Enforce Settlement Agreement (Docket No. 66). Having fully
reviewed the record herein, the Court finds that the facts
and legal arguments are adequately presented in the briefs
and record. Accordingly, in the interest of avoiding further
delay, and because the Court conclusively finds that the
decisional process would not be significantly aided by oral
argument, this Motion will be decided on the record before
the Court and without oral argument.
BACKGROUND
On May
3, 2017, the parties appeared to informally resolve the
instant action (along with other state court actions - two in
Idaho and one in California), following a settlement
conference with U.S. Magistrate Judge Candy W. Dale.
See 5/3/17 Minute Entry (Docket No. 60) (“The
parties and their representatives met, negotiated in good
faith, and have reached a final settlement
agreement.”). A status conference followed on May 9,
2017 to discuss additional “settlement details, ”
with Judge Dale inviting the parties to contact her “if
further assistance is needed.” 5/9/17 Docket Text
Minute Entry (Docket No. 65). Unfortunately, the parties
reached an impasse when trying to finalize the particulars of
their “settlement” agreement. The at-issue Motion
followed on May 28, 2017.
The
lawsuits involve disputes related to the estate of Robert
Neidigh. Now deceased, Mr. Neidigh is Plaintiff's (the
successor trustee of the Neidigh Trust) father and
Defendant's husband. Though the facts and circumstances
surrounding these actions are both sensitive and contentious,
they are not material to resolving the question of whether
the parties reached a settlement agreement on May 3, 2017
(except to perhaps foreshadow the current state of affairs)
and, if so, what the consequences of that agreement are.
Those lynchpin issues turn on the manner in which Mr.
Neidigh's estate's assets are to be distributed.
Relevant
here, the parties agreed that Plaintiff would receive $136,
000, and that such amount be funded by (1) the balance of the
IBEW retirement account, and (2) such portion of the Fidelity
account to bring the monetary distribution to Plaintiff to
$136, 000. Compare Def.'s Mem. in Supp. of Mot.
to Enforce, p. 4 (Docket No. 66, Att. 1), with
Pl.'s Resp. to Mot. to Enforce, p. 3 (Docket No.
71).[1]
In
correspondence following the May 3, 2017 settlement
conference, the issue of taxes (or, more specifically, the
tax consequences of any distribution) came up in. For
example:
5/6/17 Email from Simpson to Fulgham: “I will
try to summarize my question[ ] which is an issue that was
not discussed. Your client is to receive all or part of the
retirement account and the IRA. It was not discussed that
your client intended to take a distribution of the retirement
or the IRA account. After the fact, you have indicated that
you want Roxanne's portion of these account to go to your
trust account. It probably does not make any difference how
your client receives the money as long as she discloses where
she intends to report it as income and how is the tax being
paid. As you are aware when the funds are distributed from
either of these account[s], the distribution amount must be
reported as income and tax paid. My question is where is the
income to be reported and who is going to pay the tax[?]
These issues were not raised or discussed in our session. If
your client is going to receive the distribution as Trustee
of the 2010 trust does she intend to file a trust return and
where is the money going to come from to pay the tax[?] An
answer to these questions may resolve the necessity for a
conference call with the Judge.
As to any portion of the IRA to be allocated to Marianne, she
will roll it over into another qualified account so the only
portion that would go to your trust account is what Roxanne
is to receive.”
5/9/17 (11:54 a.m.) Email from Fulgham to Simpson:
“Regarding the $136, 000 payment - Since your
settlement offers, which we accepted, agreed to pay Roxanne
Slaugh $136, 000 (which we require to be paid c/o Lukins
& Annis PS [(Plaintiff's counsel)] trust account) why
don't we have the distribution be to the surviving
spouse, with direct payment to Roxanne Slaugh c/o Lukins
& Annis PS? You wanted Marianne to get the remainder of
THE ESTATE anyway (besides the coins and Harley), so I think
during the mediation negotiations you wanted to just pay our
side the funds of $136, 000, and the Estate then goes to
Marianne. She handles the taxes, the roll over, the real
estate, etc.”
5/9/17 (12:02 p.m.) Email from Fulgham to Simpson:
“To be clear, our side gets $136K, the coins, the
Harley, and the remainder of the ESTATE goes to Marianne. She
handles the entire Estate so she pays the taxes.”
See Exs. attached to Simpson Decl. (Docket No. 66,
Atts. 6 & 8); see also Exs. attached to Fulgham
Decl. (Docket No. 73); Exs. attached to Osler Decl. (Docket
No. 72). Unable to resolve the matters themselves, the
parties proceeded to the May 9, 2017 status conference with
Judge Dale. See 5/9/17 Status Conf. Tr. at 2:15-20
(Docket No. 73) (Judge Dale framing issue as: “But in
reviewing the emails, it's my sense that you both agree
that there is a settlement agreement in principle and the
issue that may be interfering, a hurdle at this point is
potential tax consequences based on how the property
that's at issue is going to be distributed.”). At
that time, the parties initially relayed their respective
positions as follows:
Mr. Simpson: It's not going to be - it's not going to
be Marianne because she's not going to be liable for the
tax. If you can figure out a way to transfer those assets to
the trust and there's absolutely no potential liability
for Marianne, I don't have any real problem with it but I
don't see where the trust gets away without paying any
tax whatsoever.
Ms. Fulgham: Well, that was part of my proposal in the last
round of emails, Brian, was that the agreement is Roxanne
gets $136, 000 and we believe the only source for those funds
were these two accounts and so Marianne could take
distribution of those accounts but the payment would go to
Roxanne because -
Mr. Simpson: That would be a taxable event to her. She'd
be subject to the tax.
Ms. Fulgham: But she's going to be dealing with
everything else in the estate ...