This opinion will
be unpublished and
may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (2004).
IN COURT OF APPEALS
Jill S. Hansen, et al.,
Robert J. Hansen,
December 26, 2006
File No. C8-04-5858
Harry T. Neimeyer, Stringer & Rohleder, Ltd., 1200 Fifth Street
Center, 55 East Fifth Street,
St. Paul, MN 55101 (for appellants)
Timothy W. Ridley, Erica Gutmann Strohl, Meagher & Geer,
P.L.L.P., 33 South Sixth Street, Suite 4400, Minneapolis, MN 55402 (for
and decided by Minge,
Presiding Judge; Shumaker,
Judge; and Hudson,
U N P U B L I S H E D O P I N I O N
challenges the district court’s findings that (1) appellant Bryan Hansen unduly
influenced the execution of a 1993 amendment to the Hansen Family Trust; (2)
Bryan unduly influenced his father’s 2000 grant of power of attorney to Bryan; and
(3) Bryan breached his fiduciary duty to the Hansen Family Trust. Because the district court’s findings are not
clearly erroneous, we affirm.
appeal arises out of an intra-family dispute between appellant Bryan Hansen,
respondent Robert Hansen, and their father Richard Hansen, who is now deceased. The dispute involves three distinct but
A. 1993 Trust Amendment
February 19, 1985, Richard Hansen and his wife Jane executed a revocable trust
agreement creating the Hansen Family Trust.
They are the parents of Bryan and Robert. Bryan, a California attorney, drafted the
agreement. The agreement made Richard
and Jane initial co-trustees and provided that after both Richard and Jane died,
the trust property would be divided between Bryan and Robert and distributed to
them equally. After the trust agreement
was executed, Richard and Jane transferred several properties to the
to January 7, 1993, Bryan
prepared an amendment to the trust, and on that date it was executed. The amendment provided that upon the death of
the survivor of Richard and Jane, Bryan’s one-half interest in the trust would
be distributed, but that Robert’s one-half interest would remain in trust and
be administered by Bryan for the benefit of Robert. The amendment also provided that if, prior to
termination of the trust, Robert and his children died without issue, the
remaining trust property would be distributed to Bryan and his heirs. The amendment did not include a reciprocal
provision in favor of Robert. Finally,
the amendment added a no-contest clause, limiting the ability of Robert and his
family to challenge Bryan’s
distribution of trust property.
of the Hansen Family Limited Partnership
November 13, 2000, Richard granted a limited power of attorney to Bryan. It authorized Bryan, as attorney-in-fact, to create the
Hansen Family Limited Partnership. On
December 18, 2000, Bryan and Robert formed the partnership. The certificate of limited partnership was
filed with the Minnesota Secretary of State on December 22, 2000. According to the partnership agreement, the
Hansen Family Trust would transfer the trust’s interest in a Goodhue County
property and a business property known as Dick & Jane’s Commercial Center
to the limited partnership. At that
time, Bryan and Richard were co-trustees.
As of December 18, 2000, they deeded these properties to the limited
properties that were also supposed to be transferred to the partnership had
previously been transferred to Bryan. When Robert realized that these properties
were still in Bryan’s name, he asked Bryan to transfer them to
the partnership. Bryan refused on the ground that such a
transfer would create avoidable tax liabilities. Robert then discussed the situation with
their father, Richard, who revoked the limited power of attorney he had granted
Grille and Pub
Late in 2001,
Robert and Bryan worked to develop a business, Bentley’s Grille and Pub, on property
owned by the Hansen Family Trust. Due to
early difficulties with the project, Robert withdrew. Bryan
continued the effort. He established a
corporation, 2MH, Inc., to own and operate Bentley’s. The project included construction of a
building, which Bryan
financed. Bryan has been principal shareholder of 2MH. Robert has never had any ownership interest
rental agreement with the Hansen Family Trust is characterized as a triple net
lease. It requires that 2MH pay the
trust $12,000 a month in rent, plus late payment charges, taxes, insurance, and
maintenance expenses. Bryan signed the initial lease agreement on
behalf of the Hansen Family Trust. At
the time of trial, almost four years later, 2MH had only paid $4,000 in rent,
had not paid penalties for late payments, and had not contributed its share of
taxes, insurance, or maintenance expenses.
At that time, 2MH owed $576,000 in overdue rent and an estimated
$144,000 in taxes, insurance, and maintenance expenses. Although the record indicates 2MH has paid
debt service on the building, the record does not disclose any offset against
rent for payment of that indebtedness.
trial, the district court concluded that the 1993 trust amendment and 2000
grant of power of attorney were the result of Bryan’s undue influence. The court also concluded that in operating
2MH and Bentley’s, Bryan
breached his fiduciary duty as a trustee of the Hansen Family Trust. This appeal followed. Appellant’s claims on appeal are confined to
the district court’s factual findings.
E C I S I O N
appeal is a series of challenges to the district court’s findings of fact. “Findings of fact . . . shall not be set
aside unless clearly erroneous . . . .” Minn. R. Civ. P.
52.01. See also In re Estate of Olson, 357 N.W.2d 407, 411 (Minn. App.
1984), review denied (Minn. Feb. 27,
1985). “Findings of fact are clearly
erroneous only if the reviewing court is left with the definite and firm
conviction that a mistake has been made.”
Fletcher v. St. Paul Pioneer Press,
589 N.W.2d 96, 101 (Minn.
1999) (quotation omitted). Moreover,
“[i]f there is reasonable evidence to support the district court’s findings, we
will not disturb them.” Rogers v. Moore, 603 N.W.2d 650, 656 (Minn. 1999). “That the record might support findings other
than those made by the [district] court does not show that the . . . findings
are defective.” Vangsness v. Vangsness, 607 N.W.2d 468, 474 (Minn. App. 2000). We give great deference to the factfinder’s
determinations regarding weight and credibility of witness testimony. Sefkow
v. Sefkow, 427 N.W.2d 203, 210 (Minn.
The first issue is
whether the district court clearly erred in finding that Bryan unduly influenced the execution of the
1993 amendment to the Hansen Family Trust.
The existence of undue influence is a question of fact, which will not
be reversed unless clearly erroneous. Balafas v. Angelos (In re Estate of Balafas),
293 Minn. 94,
96, 198 N.W.2d 260, 261 (1972).
the drafting of trust provisions is akin to the drafting of will provisions, we
apply the standard used to determine whether a will was affected by undue
influence to evaluate whether the 1993 amendment was the result of Bryan’s undue
influence. See Restatement (Third) of Property: Wills & Other Donative
Transfers § 8.3(a) (2003) (“A donative transfer is invalid to the extent that
it was procured by undue influence . . . .”); e.g., Arneson v. Arneson, 372 N.W.2d 20, 21 (Minn. App. 1985)
(considering undue influence in the context of a trust instrument), review denied (Minn. Oct. 11, 1985). To establish undue influence, a contestant
must show that another person exercised influence at the time the grantor
executed the transfer to the degree that the transfer reflects the other person’s
intent instead of the grantor’s intent. See York v.
Reay (In re Estate of Reay), 249 Minn.
123, 126, 81 N.W.2d 277, 280 (1957).
Conjecture and suspicion are insufficient to prove undue influence. Id. Courts consider several factors to determine
whether a grantor was unduly influenced, including: (1) the opportunity to
exercise influence; (2) the existence of a confidential relationship between
the grantor and the person claimed to have influenced the grantor; (3) active
participation by the alleged influencer in preparing the transfer; (4) an
unexpected disinheritance or an unreasonable disposition; (5) the singularity
of provisions; and (6) inducement of the grantor to make the transfer. See Gustafson
v. Kilgore (In re Estate of Peterson), 283 Minn. 446, 449, 168 N.W.2d 502,
504 (1969); Teschendorf v. Strangeway (In
re Estate of Wilson),
223 Minn. 409, 413, 27 N.W.2d 429, 432 (1947) (applying this six-factor test in
the wills context).
reasonable evidence supports the district court’s conclusion. Bryan
had the opportunity to exercise influence over his parents. He drafted the original 1985 trust instrument
and multiple deeds transferring real property to the family trust. He regularly assisted his father with Hansen
family business dealings. Most
personally drafted the 1993 amendment to the Hansen Family Trust, and despite
consistent testimony that Richard and Jane’s wish was to provide equally for
their sons, the amendment resulted in an unequal disposition between Robert and
Bryan. Under the amendment, Bryan’s share was distributed immediately after his
parents’ death, but Robert’s share was to be held in continuing trust, with Bryan as trustee. Moreover, the amendment gave Robert’s share to
certain circumstances. The amendment did
not contain a reciprocal provision in favor of Robert. The amendment also added a no-contest clause,
and gave Bryan broad
discretion to manage the continuing trust property. Together, these provisions established a
disposition favoring Bryan
to Robert’s detriment.
explained the continuing trust for Robert by testifying that Richard and Jane
were concerned about Robert’s financial irresponsibility. Bryan
attempted to explain the potentially inequitable distribution as his father’s
desire. But Robert testified that his
father said he would have never agreed to the amendment had he read the
amendment and known of its unequal distribution. The trial court plainly gave Bryan’s testimony little credibility, calling
that testimony “disingenuous” and finding that “the specifics of the amendment
were never discussed with [Richard and Jane].”
We defer to the district court’s credibility determinations here.
opportunity to exercise influence, his active participation in drafting the
amendment, and the amendment’s unequal disposition support the district court’s
finding of undue influence. In light of
this evidence, we conclude that the district court did not clearly err by
finding the 1993 amendment was the result of Bryan’s undue influence.
The next issue is
whether the district court clearly erred in finding that Bryan
unduly influenced his father’s grant of the power of attorney to Bryan. We have already described the standards
relating to undue influence and apply those standards to this issue.
there is reasonable evidence to sustain the district court’s finding. Bryan
had the opportunity to exercise influence; he engaged in extended discussions
with Richard about the formation of the limited partnership and grant of power
of attorney. Bryan also actively participated in preparing
the power of attorney and the forming of the partnership. Bryan
persuaded his father to sign the power of attorney document in person and stood
to gain financially from the creation of the partnership.
addition to the opportunity to exercise influence, and participation in the
transaction, testimony indicated that Richard signed the power of attorney as a
result of Bryan’s
threat. Both Robert and Shirley
Moriarty, a family friend, testified that Bryan
told them he threatened his father around the time Richard signed the power of
attorney document. According to Robert,
Richard told him that he did not want to grant Bryan the power of attorney but he “felt
forced” to do so. When Moriarty asked Bryan how he got his father to sign the power of attorney
told her that the two were about to “go to fisticuffs” before he signed the
document. And when Moriarty asked
Richard about it, Richard looked away and did not say anything. Eight months later, Richard revoked the power
denied allegations that he threatened or coerced his father into signing the power
of attorney. But this court does not make
credibility determinations; that is the role of the district court. In re Estate
of Anderson, 384 N.W.2d 518, 521 (Minn. App. 1986). “[W]here evidence can support a finding
either way, the [district] court’s decision will not be reversed.” Id. Here, the district court did not find Bryan’s testimony
the record contains evidence sufficient to support determinations that Bryan
had the opportunity to exercise influence over his father, that he actively
participated in preparing the power of attorney, and that he threatened his
father to induce him to sign the power of attorney, we conclude that the district
court did not clearly err by finding the grant of power of attorney was the
result of Bryan’s undue influence. Because
the power of attorney is invalid, we affirm the district court’s conclusion that
the partnership created by using the power of attorney was also invalid and the
court’s conclusion that the attempted property transfers, made with the power
of attorney, were void.
The final issue is
whether the district court clearly erred in finding that Bryan breached his fiduciary duty to the Hansen
Family Trust. “[N]o rule is more fully
settled than that which forbids a trustee’s dealing with himself in respect to
trust property . . . no excuse can be offered by the trustee to justify such
transactions.” Perl v. First Am. Nat’l Bank (In re Anneke’s Trust), 229 Minn.
60, 65, 38 N.W.2d 177, 179 (1949) (quotation omitted). A trustee’s fiduciary duty includes the “duty
not to allow his interest as an individual even the opportunity of conflict
with his interest as trustee.” Smith v. Tolversen, 190 Minn. 410, 413, 252 N.W.
423, 425 (1934). “[T]he burden of
proving that his actions conformed to the standard of his duty falls upon the
trustee and not upon the beneficiaries.” Malcolmson
v. Goodhue County
Nat’l Bank of Red Wing, 198 Minn.
562, 567, 272 N.W. 157, 160 (1936). Generally,
whether a fiduciary has breached his or her fiduciary duty is a question of
fact. Miller Waste Mills, Inc. v. Mackay, 520 N.W.2d 490, 496 (Minn. App.
1994), review denied (Minn. Oct. 14,
1994). Appellant’s challenge on appeal
is limited to the district court’s factual finding that Bryan breached his fiduciary duty to the
Hansen Family Trust.
undisputed evidence at trial established that Bryan initially owned a 100%
interest in the 2MH corporation, which owns and operates Bentley’s Grille and
Pub, that although Bryan transferred part of his ownership interest in the
corporation for services provided to the restaurant by employees, Bryan retained
50% ownership of the corporation, and that Robert has never had an ownership
interest in 2MH. Bryan also personally financed the
restaurant’s built-out costs. There is
ample support for the district court’s finding that the restaurant was
developed for Bryan’s
Bentley’s Grille and Pub is built on land owned by the Hansen Family Trust and
leases the land from the trust, Bryan’s
personal interest in the profitability of the restaurant is in direct conflict
with his duty as trustee to profitably manage property owned by the Hansen
Family Trust. The extent of this conflict
is shown by the $576,000 which the district court found that 2MH owed to the
Hansen Family Trust in unpaid rent and an estimated additional $144,000 for its
failure to pay tax, insurance, and maintenance costs associated with the property. At trial, Bryan
testified that he developed Bentley’s for the benefit of the Hansen Family
Trust, but the trial court did not find Bryan’s
addition to the direct conflict created by the rental agreement, 2MH, and indirectly
additional trust property, without paying rent, for an overflow parking lot,
volleyball courts, and football fields.
Evidence also established that Bryan
borrowed trust property to pay Bentley’s expenses but paid no interest on the
unauthorized loan, that Bryan placed Bentley’s
signage on trust property to the detriment of other businesses operating on that
property, and that Bryan
used trust assets to pay for personal expenses.
All of these facts further support the district court’s finding that Bryan consistently put
his personal interest in Bentley’s profitability in conflict with the interests
of the Hansen Family Trust. Evidence of
Robert’s initial involvement and Bryan’s claims
that the project was initially developed for the benefit of the Hansen Family
Trust do not relieve Bryan
of his fiduciary responsibility.
there is reasonable evidence to support the court’s findings of fact and
because credibility determinations are left to the district court, we conclude
the district court’s finding that Bryan
breached his fiduciary duty to the Hansen Trust was not clearly erroneous.