This opinion will be unpublished and
may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (1998).
STATE OF MINNESOTA
IN COURT OF APPEALS
Last Will and Testament of Wilfred Wolfson, Deceased.
In the Matter of the Residuary Trust under the
Last Will and Testament of Wilfred Wolfson, Deceased.
In the Matter of the Revocable Trust Created under
Agreement by Elizabeth Wolfson.
Filed July 18, 2000
John F. Bonner, Amy E. Dawson, Bonner Dawson Borhart LLP, 1500 AT&T Tower, 901 Marquette Avenue, Minneapolis, MN 55402-3205 (for respondent Joyce Witzman)
U N P U B L I S H E D O P I N I O N
Respondent Joyce Witzman brought a petition to be appointed co-trustee of three trusts and later a petition to remove her brother, appellant Blair Wolfson, as trustee. The district court granted the petitions. We reverse.
This lawsuit is another in a long and bitter series of lawsuits concerning a dispute between Witzman and Wolfson, over three trusts left to them by their parents. Witzman and Wolfson were both beneficiaries under each trust, and Wolfson was a trustee of each trust.
In 1993, Witzman commenced three separate actions against Wolfson, alleging he committed misfeasance and malfeasance as trustee. Wolfson and Witzman settled the actions in 1994. Under the settlement agreement, Witzman was to receive approximately $4 million in trust assets and, in exchange, agreed to relinquish her rights as a beneficiary of the trusts. Upon payment of the agreed-upon assets to Witzman, the residue of the trusts was to be transferred to Wolfson and the trusts then terminated. Both parties agreed to release one another from any continuing obligations under the trusts and to dismiss the action with prejudice on the merits. The settlement agreement was approved by the probate court in November 1994. The orders approving the settlement agreement were not appealed. Witzman did make a motion objecting to the settlement, but the court rejected it. The order denying the motion was not appealed.
Witzman later brought additional litigation against Wolfson, as well as against Wolfson's attorney and accountants. Relevant here are her February 1998 petition to be named co-trustee of the trusts and her October 1998 petition to remove Wolfson as trustee. On December 10, 1999, the district court granted Witzman's petition to be named trustee and, by naming her successor trustee instead of co-trustee, implicitly granted the petition to remove Wolfson.
We will not overturn the district court's decision to remove Wolfson as trustee and appoint Witzman as successor trustee unless the district court abused its discretion. See In re Trust Created by Hill, 509 N.W.2d 168, 172 (Minn. App. 1993), review denied (Minn. Feb. 1, 1994). The district court abuses its discretion if it acts in an arbitrary, capricious or illegal manner. Plunkett v. Lampert, 231 Minn. 484, 492, 43 N.W.2d 489, 494 (1950).
Witzman brought her petitions to remove Wolfson as trustee and be appointed co-trustee (later, successor trustee) under a provision of the probate code that provides that "a person interested in the trust may petition the district court" for an order removing a trustee for cause or appointing a successor trustee. Minn. Stat. § 501B.16(9), (10) (1998).
As the statute says, a petition to remove a trustee may only be brought by a "person interested in the trust." The probate code defines an "interested person" as follows:
"Interested person" includes heirs, devisees, children, spouses, creditors, beneficiaries and any others having a property right in or claim against the estate of a decedent, ward or protected person which may be affected by the proceeding. It also includes persons having priority for appointment as personal representative, and other fiduciaries representing interested persons. The meaning as it relates to particular persons may vary from time to time and must be determined according to the particular purposes of, and matter involved in, any proceeding.
Minn. Stat. § 524.1-201 (24) (1998). Wolfson argues that because Witzman no longer has any financial stake in or claim against the trusts, she is not a "person interested in the trust" who may bring a petition for removal under §501B.16(9). Witzman does not address this argument in her brief.
In this context, "interested" means a person with a specific financial stake in or claim against the trust. Even though as a beneficiary Witzman once was a "person interested in the trust," the probate code provides that the meaning of "'interested person' * * * as it relates to particular persons may vary from time to time and must be determined according to the particular purposes of, and matter involved in, any proceeding." Minn. Stat. § 524.1-201 (24). Without a current "property right in or claim against the estate," id., Witzman is not a "person interested in the trust."
Witzman has brought an action seeking to vacate the orders approving the 1994 settlement agreement on the ground that the settlement agreement was fraudulently induced. That litigation is not concluded, however, and unless and until Witzman is successful in vacating the orders, those orders retain their force and res judicata effect:
A judgment obtained with jurisdiction but by fraud is voidable only—and not void—and it is not subject to collateral attack since it stands in full force and effect until vacated in a direct attack proceeding.
Pangalos v. Halpern, 247 Minn. 80, 86, 76 N.W.2d 702, 707 (1956); Goldberger v. Kaplan, Strangis & Kaplan, 534 N.W.2d 734, 736-37 n.1 (Minn. App. 1995) (judgment based on settlement agreement is final judgment on merits for res judicata purposes), review denied (Minn. Sept. 28, 1995).
Because the orders approving the settlement in which she gave up all interest in and claims against the trusts are still valid, Witzman is not an "interested person" and therefore lacks the statutory standing to bring her petitions to remove Wolfson as trustee and be appointed successor trustee. The district court therefore abused its discretion in granting those petitions.
Wolfson also argues that the trusts were terminated by the orders implementing the 1994 settlement agreement. The November 15, 1994 orders approving the settlement provide that when the assets in the trusts have been distributed, the trusts shall be terminated and the trustees discharged. There does not appear to be any dispute that the assets the orders contemplated have been distributed. The same res judicata analysis as above holds that these orders are effective unless and until vacated by a proper direct attack; although such an attack is pending, it has not yet been decided.
We conclude therefore that because the trusts were terminated by the November 15, 1994 orders, a successor trustee could not be appointed.