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Frizzell v. Deyoung

Supreme Court of Idaho

April 4, 2018

DONALD CRAIG FRIZZELL, individually, and as a beneficiary of the CLIFTON AND MARJORIE FRIZZELL FAMILY TRUST, Plaintiff-Appellant,
v.
EDWIN DEYOUNG, individually, and in his capacity as trustee of the CLIFTON AND MARJORIE FRIZZELL FAMILY TRUST; DARLENE DEYOUNG, individually, and in her capacity as beneficiary of the CLIFTON AND MARJORIE FRIZZELL FAMILY TRUST; and on behalf of the marital community of EDWIN DEYOUNG and DARLENE DEYOUNG, husband and wife, Defendants-Respondents.

         2018 Opinion No. 30

          Appeal from the District Court of the First Judicial District, State of Idaho, Kootenai County. Hon. Cynthia K.C. Meyer, District Judge.

         District court order dismissing complaint, reversed and remanded.

          GiantLegal, PLLC, Spokane, WA, for appellant. Robin L. Haynes argued.

          Lake City Law Group, Coeur d'Alene, for respondent. Scot D. Nass argued.

          BURDICK, Chief Justice.

         Donald Craig Frizzell ("Frizzell") appeals the Kootenai County district court's dismissal of his complaint. Frizzell and the defendants, Edwin and Darlene DeYoung (collectively, the "DeYoungs"), were parties to an existing trust, with Edwin serving as trustee and Frizzell and Darlene as beneficiaries. The parties entered into an agreement pursuant to the Trust and Estate Dispute Resolution Act ("TEDRA agreement"). The TEDRA agreement was designed to modify the existing trust terms and also resolve issues related to Edwin's administration of the trust in his role as trustee. Two years after the TEDRA agreement was filed with the district court, Frizzell filed suit against the DeYoungs alleging Edwin was breaching the TEDRA agreement and his fiduciary duties. The district court granted the DeYoungs' motion to dismiss based on provisions in the TEDRA agreement that purported to hold Edwin harmless for any actions taken in his role as trustee. The district court also stated Frizzell was bound by the TEDRA agreement to pursue nonjudicial dispute resolution, rather than file a lawsuit for Edwin's breach of duty. Frizzell timely appealed to this Court. We reverse the district court's order dismissing Frizzell's complaint and remand for proceedings consistent with this opinion.

         I. FACTUAL AND PROCEDURAL BACKGROUND

         Clifton and Marjorie Frizzell created a trust ("Trust") in June of 2009 that contained the various properties and possessions the couple owned, and provided for their distribution. Both Clifton and Marjorie passed away in 2011. Haley Baker was named in the Trust as trustee, but declined the appointment. Edwin DeYoung was appointed successor trustee on October 29, 2011. In 2013, Frizzell commenced litigation regarding the administration of the Trust. Pursuant to that litigation, the parties entered into a TEDRA agreement to resolve disputes related to that administration of the Trust. The TEDRA agreement was filed in district court on October 31, 2014.

         The TEDRA agreement modified certain terms of the Trust relating to what property or money different beneficiaries were to receive and when they would receive it. The agreement also contained various provisions purporting to release, indemnify, and hold Edwin harmless for all actions taken in his role as trustee. The parties disagree about whether the release, indemnity, and hold harmless provisions apply only to claims that arose prior to the TEDRA agreement, or if it releases Edwin from liability for all past and future claims.

         In October of 2016, Frizzell filed a complaint in district court alleging thirteen causes of action relating to Edwin's administration of the Trust. Frizzell alleged that after the TEDRA agreement was signed and filed, Edwin did not follow through with his obligations under the TEDRA agreement and breached his fiduciary duty. This included Edwin's failure to notify Frizzell that one of the properties Frizzell thought he would be receiving as part of the TEDRA agreement actually was not a part of the Trust at all, but rather was in the Estate of Marjorie, which was managed by Edwin's wife (and Frizzell's sister) Darlene. Frizzell also claimed that Edwin failed to pay all net rental income to Frizzell, as was required under the TEDRA agreement. The rental properties generated over $130, 000 during the year but Frizzell only received $6, 123 from Edwin, and Edwin paid himself $49, 303. Frizzell's complaint also alleged that Edwin engaged in several other acts in breach of the TEDRA agreement and in breach of Edwin's fiduciary duties including: that Edwin directly competed with Frizzell, Edwin engaged in negligent supervision of a rental manager, Edwin failed to transfer Frizzell management of the properties, Edwin failed to protect trust property, and Edwin failed to provide an accounting or explain his excessive compensation.

         The DeYoungs filed a motion to dismiss, arguing the TEDRA agreement's indemnity, release, and hold harmless provisions shielded Edwin from any and all liability for his administration of the Trust. The district court concluded that the provisions in the TEDRA agreement purporting to hold Edwin harmless were unambiguous and that the language indemnifies, releases, and holds Edwin harmless from all claims, past or future, in Edwin's role as trust administrator. The district court also concluded that the TEDRA agreement bound Frizzell to pursue nonjudicial dispute resolution, or to petition the court to enforce the TEDRA agreement, rather than file a lawsuit for breach of fiduciary duty. Accordingly, the district court granted the DeYoungs' motion to dismiss. The district court also concluded that because Frizzell was bound to pursue nonjudicial dispute resolution, his complaint was unreasonable, frivolous, and without foundation. Therefore, the district court awarded Edwin attorney fees. Frizzell timely appealed.

         II. ISSUES ON APPEAL

1. Whether the district court erred in dismissing Frizzell's complaint when it found the TEDRA agreement shielded Edwin from all liability arising from his role as trustee.
2. Whether the district court erred in dismissing Frizzell's complaint when it found the TEDRA agreement bound Frizzell to ...

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