United States District Court, D. Utah, Central Division
TIMOTHY WATSON RICHARDS, an individual, and LAURIE O'KEEFE RICHARDS DAYNES, an individual, Plaintiffs,
KARL OHLAND and KATHLEEN OHLAND, as Trustee of the HELENE E. RICHARDS TRUST, and as personal representatives of THE ESTATE OF HELENE E. RICHARDS, RAYMOND J. OHLAND, an individual, and RICHARD K. OHLAND, individually and in his capacity as the Trustee of the K.O. MINOR'S TRUST, and the A.O. MINOR'S TRUST, Defendants.
ORDER AND MEMORANDUM DECISION
CAMPBELL, U.S. DISTRICT COURT JUDGE
seek leave to file a second amended complaint. For the
reasons set forth below, their motion (ECF No. 24) is GRANTED
IN PART AND DENIED IN PART.
case arises out of a family trust which held a parcel of real
property in Utah for the Plaintiffs. Plaintiffs contend that
the Defendant family members violated that trust and
committed fraud when the property was transferred to another
trust and then to individuals who were not the intended
beneficiaries. The relevant events occurred between 1991 and
2016. Plaintiffs brought suit in 2017, and now request leave
to amend their original complaint to include five causes of
action: (1) Fraudulent Concealment; (2) “Quiet Title -
Violation of Richards Trust”; (3) “Quiet Title -
Undue Influence and Breach of Fiduciary Duty”; (4)
Intentional Interference with Expected Inheritance; and (5)
to Defendants, amendment would be futile and so the court
should deny the motion. As the basis for their opposition,
Defendants contend that three of the claims are time-barred
by the applicable statutes of limitations and that the other
two claims do not state a claim upon which relief can be
the facts set forth below are taken from Plaintiffs'
proposed second amended complaint (ECF No. 24-1). The series
of events is lengthy and complicated, so the court only
discusses the facts necessary to provide context and decide
property at issue is located in Carbon County, Utah, and has
been in the Richards family for decades. The Plaintiffs are
the children of Peter Richards, who, along with his brother
Stephen Richards, inherited the property in 1970. In 1991,
Stephen (the Plaintiffs' uncle) deeded his interest in
the property (hereinafter called the “Richards
Property”) to himself and his wife, Helene
Richards. They put the property in a family trust (along with
other assets) by executing the “Richards Family Trust
Agreement” (the “1991 Trust
Document”). Stephen and Helene were
co-trustees of the trust, called the “Richards
Family Trust.” The 1991 Trust Document
contained language that treated the Richards Property as
Stephen's separate property. The 1991 Trust Document was
amended and restated in the 2006 Richards Trust
Agreement. According to Plaintiffs, “The 2006
Richards Trust Agreement provided that certain assets of
Stephen and Helene would be distributed to both heirs of
Stephen, including [the Plaintiffs], and heirs of Helene,
including [the Defendants].” (Proposed 2d Am. Compl.
¶ 20, ECF No. 24-1.) But even given the general plan
that the trust assets would go to both Stephen's heirs
and Helene's heirs, the 2006 Richards Trust Agreement
treated the Richards Property as Stephen's separate
property that would not be distributed to Helene's heirs.
The agreement contains the following provision: “The
Trustees shall distribute to TIMOTHY WATSON RICHARDS and
LAURIE O'KEEFE DAVIS, nephew and niece of Stephen O.
Richards, all interest of Trustors in that certain real
estate located in Carbon County, Utah.” (Id.
¶ 25 (quoting Section 8.1.1 of 2006 Richards Trust
agreement also restricted the rights of one trustor (e.g.,
Helene) to transfer property that was property of the other
trustor (e.g., Stephen). Specifically:
Only the Trustor who contributed separate or quasi-community
property may amend this trust regarding any property owned by
such Trustor as his or her separate property or
quasi-community property. … [A]ny amendment made by
the other Trustor at any time shall have no effect and shall
not be taken into account.
(2006 Richards Trust Agreement ¶ 15.2, attached as Ex. C
to Proposed Am. 2nd Compl.) In other words, the agreement
barred Helene from unilaterally amending the agreement to
change the intended recipients of the Richards Property.
died on December 17, 2008. But in May 2008, before he died,
he “allegedly executed a Delegation of
Co-Trustee Powers from Stephen O. Richards to Helene E.
Richards” in which he delegated his trustee powers to
Helene. (Proposed 2nd Am. Compl. ¶ 32 (emphasis added).)
Twenty-three days before Stephen died, on November 24, 2008,
Helene executed a Warranty Deed which transferred the
Richards Property from the Richard Family Trust to herself.
That warranty deed was recorded in Carbon County, Utah on
December 3, 2008.
alleged that this act was “self-dealing, in violation
of the 2006 Richards Trust Agreement, and in breach of her
fiduciary duty to Stephen.” (Id. ¶ 33.)
“Although Stephen was still alive at this time, he
never signed the Warranty Deed and there is no documentation
showing that he authorized this transaction.”
(Id. ¶ 34.)
Stephen died, Helene created the “Helene Richards
Trust” and included the Richards Property in it. The
Helene Richards Trust, as amended in 2011, directed that the
Richards Property be distributed in equal parts to Richards
Ohland, Raymond Ohland, A.O. and K.O.
died on November 18, 2013. After Helene's death,
Defendants Karl Ohland and Kathleen Ohland were appointed
successor co-trustees. Plaintiffs were not notified that
Helene had died. They did not learn of Helene's death
until three years later, in September 2016, through
co-trustees, Karl and Kathleen “had access to
Helene's files, reviewed them, and had access to the 2006
Richards Trust Agreement and other related documents which
informed them that Plaintiffs were potential creditors or
claimants of Helene's Trust and Estate.”
(Id. ¶ 44.) They knew that Plaintiffs were
family members and Stephen's heirs and that Plaintiffs
had an interest in the Richards Property under the 2006
Richards Trust Agreement.
February 3, 2014, Karl and Kathleen filed a Notice of Trust
in Florida (where Helene lived and died), which said that
notice was “mailed to attorney for the Personal
Representative [i.e., Karl and Kathleen].” (Notice of
Trust, attached as Ex. J to Proposed 2nd Am. Compl. and
quoted in ¶ 49.) “The Notice of Trust was only
mailed to McLin Burnsed, Karl and Kathleen's attorney,
who drafted and prepared all the prior Helene trust
documents, and had information concerning the prior trust
agreements and ownership of prior trust assets, but never had
his client provide any notice to potential creditors,
including Plaintiffs, of Helene's death, her Trust, or
her Estate.” (Proposed 2nd Am. Compl. ¶ 50.) No
other party received notice. And then, only one day later, on
February 4, 2014, the trust proceeding was closed. The
Richards Property was distributed to Defendants Richards
Ohland, Raymond Ohland, A.O. and K.O. According to
Plaintiffs, Karl and Kathleen concealed that information from
Plaintiffs in order to let Plaintiffs' claims lapse.
August 25, 2017, less than one year after learning of
Helene's death, the Plaintiffs filed this action.
Rule 15(a)(2) of the Federal Rules of Civil Procedure, the
court should freely give leave to amend “when justice
so requires.” Leave should be denied if the court finds
“undue delay, bad faith or dilatory motive on the part
of the movant, repeated failure to cure deficiencies by
amendments previously allowed, undue prejudice to
the opposing party by virtue of allowance of the amendment,
[or] futility of amendment ….“
Foman v. Davis, 371 U.S. 178, 192 (1962) (emphasis
oppose the motion to amend, contending they will be unduly
prejudiced and that amendment would be futile because it
would not survive a motion to dismiss under Federal Rule of
Civil Procedure 12(b)(6). Gohier v. Enright, 186
F.3d 1216, 1218 (10th Cir. 1999) (holding that a proposed
amendment is futile if the complaint, as amended, would be
subject to dismissal for any reason, including failure to
state a claim for relief that can be granted). When
evaluating a complaint under Rule 12(b)(6), the court must
accept all well-pleaded factual allegations as true and
construe allegations in the light most favorable to the
non-movant. Ashcroft v. Iqbal, 556 U.S. 662, 678
(2009). If the proposed complaint states a claim for relief
that is plausible on its face, the motion for leave to amend
should be granted. See id. (citing Bell Atlantic
Corp. v. Twombly, 550 U.S. 544, 570 (2007)).
Alleged Undue Prejudice
to the Defendants, they will be unduly prejudiced for two
they contend that two witnesses are no longer alive and,
accordingly, “there is little reliable evidence”
of the events subject to Plaintiffs' proposed complaint.
(Defs.' Opp'n Mot. File 2nd Am. Compl. at 4, ECF No.
25.) But the court is not evaluating evidence at this stage
in the proceedings. Whether Plaintiffs have a proof problem
is not an issue that can be determined in this context.
they assert that if the Plaintiffs are allowed to continue
with their proposed claims, Defendants will incur
“significant costs, expenses and attorney fees”
defending against claims that they believe have no merit.
(Id.) That is not a sufficient reason to deny leave
to amend. See, e.g., Bylin v. Billings, 568
F.3d 1224, 1230 (10th Cir. 2009) (“the expenditure of
time, money, and effort alone is not grounds for a finding of
prejudice” under Rule 15(a)(2)); Minter v. Prime
Equip. Co., 451 F.3d 1196, 1207 (10th Cir. 2007)
(“Courts typically find prejudice only when the
amendment unfairly affects the defendants ‘in terms of
preparing their defense to the amendment.'”)
(quoting Patton v. Guyer, 443 F.2d 79, 86 (10th Cir.