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COURT OF APPEALS
DECISION
DATED AND FILED
May 17, 2011
A. John Voelker
Acting Clerk of Court of Appeals
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NOTICE
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This opinion is subject to
further editing. If published, the
official version will appear in the bound volume of the Official
Reports.
A party may file with the
Supreme Court a petition to review an adverse decision by the Court of
Appeals. See Wis. Stat. § 808.10 and Rule 809.62.
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Appeal No.
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STATE OF WISCONSIN
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IN COURT OF
APPEALS
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DISTRICT III
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Merrilynne Haugen, John E. Hanson, Robert H. Hanson,
Julianne A. Elgin, Harvey J. Hanson and Sarah Mealey,
Plaintiffs-Respondents,
v.
Steven D. Hanson,
Defendant-Appellant,
Stanley
A. Hanson,
Defendant-Co-Appellant.
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APPEAL
from a judgment of the circuit court for Barron County: TIMOTHY
M. DOYLE, Judge. Affirmed in
part; reversed in part.
Before Hoover,
P.J., Peterson and Brunner, JJ.
¶1 PER CURIAM. Steven Hanson, pro se, and
Stanley Hanson appeal a money judgment against them for conspiracy and breach
of fiduciary duties relating to their deceased father’s trust. They argue that the circuit court failed to
apply the proper legal standard and misinterpreted the trust language, that there
was insufficient evidence to demonstrate either a conspiracy or a breach of
fiduciary duty, that a two-year statute of limitations should have applied and
reduced the damages award, and that the damages award is not supported by the
evidence. Steven also makes several
additional arguments. We reject Steven’s
and Stanley’s arguments, with one exception.
One component of the damages award was without any evidentiary basis
because it in fact represented transfers between the trust’s bank accounts—not
disbursements. We therefore direct the
circuit court to subtract $42,803.50 from the judgment. The judgment is affirmed in all other respects.
BACKGROUND
¶2 Helmer Hanson created a living trust in September 2003. Helmer’s eight children were named as the
primary beneficiaries of the trust estate. Sons Stanley and Steven are the defendants in
this action, while the remaining six (the Siblings) are the plaintiffs. Stanley
became trustee upon Helmer’s death in November 2004.
¶3 The trust provides that upon Helmer’s death, Stanley shall sell Helmer’s residence, add
the proceeds to the trust estate, and promptly pay the funds to the
beneficiaries. Stanley did not, however, sell the residence
during the five years that he served as trustee. Stanley
received eight offers to purchase the home, but made no counteroffers. While trustee, Stanley paid himself trust
management and accounting fees and paid himself or Steven for maintenance and improvement
work at the house. Stanley also provided Steven several gifts
and advances from the trust.
Additionally, trust funds were utilized to pay legal costs defending this
lawsuit.
¶4 Stanley
operated a sole proprietorship named Certified Professional Accounting. The only income that entity ever received was
paid from either Helmer or his trust. Stanley operated another
sole proprietorship known as Stan Hanson Homes and Home Improvements, which
also received funds from the trust. However,
Stanley only
kept one commercial bank account and deposited all income from the two entities
into the same account.
¶5 Steven was Helmer’s
primary caretaker in the three years before Helmer’s death, operating a business
named Hanson Management. Helmer and the trust
were Steven’s only source
of income for the years 2001 through 2007.
¶6 Stanley
maintained two bank accounts on behalf of the trust. The accounts contained over $300,000 when Stanley became
trustee. In September 2009, there was a
little over $54,000 remaining. Stanley produced activity
spreadsheets for the bank accounts, and the Siblings then prepared summary
exhibits, which grouped the disbursements by payee.
¶7 Following a bench trial, the court concluded Stanley breached his fiduciary duties to the
estate. Further, the court wrote:
This breach of duty is demonstrated by Stanley’s failure to sell the house in a
timely manner, close the trust and make prompt distribution to the
beneficiaries as required. Over the
intervening five years, he has systematically drained almost all cash assets
from the trust, almost exclusively for the benefit of himself and his twin
brother, Steven. This includes, but is
not limited to, making gifts and advance distributions to Steven without regard
to the rights of other beneficiaries for similar distributions. Notwithstanding a deteriorating real estate
market, Stanley
nevertheless had abundant opportunity to sell the house and make final
distribution as the trust requires.
The testimony and the exhibits make clear a concerted
plan or course of action by both defendants to delay sale of the house, avoid
final distribution to the beneficiaries and permit ongoing payments to their
benefit.
....
Stanley and Steven Hanson acted in concert to defraud
the trust .... They jointly prepared
invoices and arranged payments to [themselves].
They are jointly and severally liable for repayment of all such
inappropriate payments made from the trust.
¶8 The court also concluded Stanley was not entitled to compensation or
disbursements paid to him as trustee and that neither brother was entitled to
have the trust pay litigation costs. In
setting its damages award, the court adopted the Siblings’ suggested cut-off
date in November 2006, which was when Stanley
could have closed a sale of the home had he accepted a particular offer. The court removed Stanley as trustee and ordered him and Steven
to reimburse the estate $272,216.16.
Stanley and Steven now appeal.
DISCUSSION
¶9 Stanley and Steven raise multiple issues on appeal. We note at the outset, however, that neither
brother moved for a new trial or for reconsideration under Wis. Stat. §§ 805.15(1) or 805.17(3). The Siblings argue Stanley and Steven
forfeited their rights to appeal most issues because they failed to first raise
them in the circuit court. We agree.
¶10 As a general matter, “an
issue must be raised in the trial court to be eligible for review upon appeal.”
Schinner v. Schinner, 143 Wis. 2d 81, 94 n.5, 420 N.W.2d 381 (Ct. App. 1998)
(citing Zeller v. Northrup King Co., 125 Wis. 2d 31, 35, 370 N.W.2d 809 (Ct. App.
1985)). Additionally, the failure to
move for reconsideration under Wis. Stat.
§ 805.17(3) constitutes a forfeiture of the right to raise issues
of manifest errors of law or fact on appeal.
Id.
at 93; see also Koepsell’s Olde Popcorn Wagons, Inc. v. Koepsell’s Festival Popcorn
Wagons, Ltd., 2004 WI App 129, ¶44, 275 Wis. 2d 397, 685
N.W.2d 853. And, it is “well-established law in Wisconsin” that a party
forfeits all alleged errors not raised in motions after verdict, even if a
timely objection was made during trial. Suchomel
v. University of Wis. Hosp. & Clinics, 2005 WI App 234, ¶10, 288
Wis. 2d 188, 708 N.W.2d 13.
¶11 We now turn to Steven’s and Stanley’s arguments, which are
largely overlapping. Stanley argues the circuit court failed to
identify, define, or apply the correct legal standard regarding breach of
fiduciary duty. These issues are first
raised on appeal and are therefore forfeited.
Moreover, the arguments would fail on their merits. The circuit court properly looked to the
trust document to determine the scope of Stanley’s
powers and responsibilities. Contrary to
Stanley’s
assertion, that document does not confer unbridled power or authorize
self-dealing. Nor was it error for the
circuit court to exclude evidence of Helmer’s actions as evidence of intent,
because the trust language is unambiguous. Additionally, Stanley
relies on nonbinding foreign-state case law, which conflicts with Wisconsin precedent.
¶12 Stanley
next argues the evidence was insufficient to demonstrate he violated his
fiduciary duty. This issue has not been
forfeited: “In actions tried by the
court without a jury, the question of the sufficiency of the evidence to
support the findings may be raised on appeal whether or not the party raising
the question has objected in the trial court to such findings or moved for [a]
new trial.” Wis. Stat. § 805.17(4).
Stanley’s
argument, however, ignores both the standard of review and unfavorable
evidence.
¶13 The circuit court’s findings of fact must be affirmed unless
they are clearly erroneous. Wis. Stat. § 805.17(2). When more than one reasonable inference can
be drawn from the credible evidence, we must accept the inference drawn by the
circuit court. Cogswell v. Robertshaw Controls
Co., 87 Wis. 2d
243, 249, 274 N.W.2d 647 (1979).
¶14 The court concluded Stanley breached his fiduciary duties by
failing “to sell the house in a timely manner, close the trust and make prompt
distribution to the beneficiaries as required” and by giving “gifts and advance
distributions to Steven without regard to the rights of other beneficiaries for
similar distributions.” Stanley does not dispute any of the facts the
circuit court relied upon. In fact, he
asserts, “The material facts are undisputed.” Instead, Stanley reargues the significance of the facts
and cites facts favorable to his position. He then suggests we should make inferences
different from the circuit court. We
cannot. Stanley also intersperses legal arguments
concerning interpretation of the trust language. Those arguments do not come within the
sufficiency of the evidence exception, and have been forfeited.
¶15 Stanley
next argues the evidence is insufficient to support a finding of
conspiracy. Stanley again argues the significance of
facts and ignores the standard of review, asserting the Siblings “failed to
meet their burden of proof.” A
conspiracy may be established by evidence that the perpetrators in some way or
manner came to a mutual understanding to try to accomplish a common and
unlawful plan. Wis JI—Civil 2800 (2003).
“A conspiracy may be, and often must be,
proved by circumstantial evidence. Inferences
arising from surrounding facts and circumstances are sufficient to prove a
conspiracy. It is not necessary that the
plaintiffs prove that there was an express agreement.” Wis JI—Civil 2804 (2003). In determining whether a conspiracy existed,
the fact finder is to consider all of the acts, events and evidence as a whole
and its character and effects. Wis JI—Civil 2806 (1993). There was sufficient evidence in this case, as
a whole, to permit the circuit court to conclude there was a civil conspiracy.
¶16 Stanley
next argues the damages awarded by the court are neither causal nor supported
by the evidence. Within this argument,
he also contends the damages should have been limited by a two-year statute of
limitations. These arguments were not presented
below and were therefore forfeited.
Additionally, there is no developed argument on the issue of causation. We will not decide issues that are not, or
inadequately, briefed. State
v. Flynn, 190 Wis. 2d
31, 39 n.2, 527 N.W.2d 343 (Ct. App. 1994).
¶17 Steven, pro se, sets forth many of the same arguments as Stanley. They fail for the same reasons and do not
merit individual recitation. Steven also
argues the circuit court erroneously concluded there was an intentional fraud,
when no such claim had been pled. This
argument was not raised below and was therefore forfeited. Moreover, as best we can discern, it appears
the argument is based on the circuit court’s use of the word “defraud” in both
the decision and judgment. It is clear,
however, that term was used in the context of the conspiracy claim, not as a
separate legal claim. Steven also makes
an incomprehensible argument regarding the availability of a jury trial on
joint and several liability. That
argument was forfeited because it was not raised below. Steven further argues it was improper to
order joint and several liability as to Stanley’s
trustee fees. Again, this argument was
forfeited.
¶18 Finally, we address Steven’s and Stanley’s argument that one component of the
damages award was improper. The brothers
argue there is no basis for the circuit court’s damages item eleven, $42,803.50
in interbank transfers. The precise legal
basis of Steven’s argument is unclear. Stanley raised the issue
in both his insufficiency of the evidence argument and his argument that the
damages award was not supported by the evidence. We conclude the argument comes within the
sufficiency of the evidence exception, permitting Steven and Stanley to raise
the issue as of right for the first time on appeal. See
Wis. Stat. § 805.17(4).
¶19 Stanley’s bank account ledgers showed a number of transfers
from the trust’s U.S. Bank Cumberland
account to its U.S. Bank Battle Creek account, with the notation “74 Michael
Street Expenses.” The Siblings prepared
summary exhibits, which reorganized all of the account entries on the two bank
ledgers by payee. At trial, Stanley was questioned
about one of the summaries, exhibit 19. Stanley denied that the exhibit showed any payments to him
from the Cumberland
account, asserting it only showed transfers.
The Siblings’ counsel then indicated they must have the wrong
exhibit. The court took the exhibit from
Stanley and
stated: “Well, Exhibit 19 appears to
detail or summarize transfers from the U.S. Bank checking account to a
different account maintained in connection with the maintenance of the
house. Is that what these are?” The Siblings’ counsel responded, “Our numbers
are off then. I’m sorry, Your Honor.”
¶20 The Siblings’ pretrial brief itemized their claimed
damages. Item eleven was identified as “[p]ayments
not noted above that were allegedly made for the benefit of the real estate
located at 74 Michael Street[,]”
in the amount of $42,803.50. In its
decision, the court observed, Stanley
“has written checks not otherwise accounted for above and relating to the 74 Michael Street
property in the sum of $42,803.50.” The
court then ordered payment “in the amount of $272,216.16 (as itemized in
plaintiffs’ brief).”
¶21 In response to Stanley’s and Steven’s argument, the Siblings
mischaracterize Steven’s argument and assert the issue was forfeited, ignore
Steven’s actual reasoning, and ignore Stanley’s
argument altogether. They then curiously
argue that, even on the merits, the brothers would only be entitled to a
$21,972.45 reduction in damages, apparently because only that amount of the
transfer was paid out from the trust’s receiving bank account.
¶22 There is no credible evidentiary support for the damages
awarded pursuant to exhibit 19. The Siblings
acknowledged in open court that they had erred in representing that figure as a
disbursement. We therefore direct the
court to subtract $42,803.50 from the damages award.
¶23 No party shall receive appellate costs. See
Wis. Stat. Rule 809.25(1).
By the Court.—Judgment affirmed in part;
reversed in part.
This
opinion will not be published. See Wis.
Stat. Rule 809.23(1)(b)5.