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In re Bradley K. Brakke Trust

Supreme Court of North Dakota

February 23, 2017

In the Matter of Bradley K. Brakke Trust dated November 11, 2013
Bell State Bank & Trust, Trustee of the Bradley K. Brakke Trust, Respondent and Appellant Timothy A Brakke, Petitioner and Appellee and Vicki Brakke, Kari Headington, Respondents Alanna Rerick, Appellee

         Appeal from the District Court of Cass County, East Central Judicial District, the Honorable Norman G. Anderson, Judge.

          Andrew D. Cook (argued) and Sara K. Sorenson (on brief), P.O. Box 458, West Fargo, N.D. 58078-0458, for petitioner and appellee.

          Berly D. Nelson (argued) and Ian R. McLean (appeared), P.O. Box 6017, Fargo, N.D. 58108-6017, for respondent and appellant.



         [¶ 1] Bell State Bank & Trust, as trustee of the Bradley K. Brakke Trust, appeals from a judgment approving a settlement and dismissing Timothy Brakke's petition challenging Bradley Brakke's capacity to create the Trust. We conclude the district court did not err in accepting the settlement agreement and dismissing Timothy Brakke's petition. We affirm the judgment.


         [¶ 2] Brothers Bradley and Timothy Brakke operated a family farm. Timothy Brakke began managing the farm in 1974, claiming he contributed significantly more labor and management skill to the farming operation than Bradley Brakke. Nevertheless Timothy Brakke agreed to equally split the farm profits with his brother and Bradley Brakke agreed that when he died he would leave half of his property to Timothy Brakke and half to their sister, Kari Headington. According to Timothy Brakke, the brothers agreed in 2009 that Timothy Brakke's daughter, Alanna Rerick, would receive her father's half of Bradley Brakke's property.

         [¶ 3] In September 2009 Bradley Brakke executed a will citing a marital agreement with his wife, Vicki Brakke, and providing her with a life estate in his property. The will provided the residue of Bradley Brakke's estate would be devised equally to Headington and Rerick after the expiration of Vicki Brakke's life estate.

         [¶ 4] On November 11, 2013 Bradley Brakke executed a will revoking his former wills, devising the residue of his estate to Bell State as successor trustee under the November 11, 2013 Bradley Brakke Trust and directing the administration of his estate under that Trust. Under the 2013 Trust, Bradley Brakke conveyed his property to himself as trustee and named Bell State as successor trustee. The 2013 Trust provided Vicki Brakke with a life estate in Bradley Brakke's property and stated "[t]he continued well-being and comfort of [his] spouse is the primary concern and the Trustee shall administer this Trust accordingly." The Trust effectively disinherited Rerick by distributing the entire residue to Headington, or to Headington's children if she did not survive both Bradley and Vicki Brakke. On November 11, 2013, Bradley Brakke executed a general durable power of attorney designating Bell State as his attorney in fact.

         [¶ 5] According to Bell State, in January 2014, Bradley Brakke indicated he wanted to amend the 2013 Trust to add language distributing approximately fifteen acres of land equally to Headington and Rerick. On March 12, 2014, Bell State, acting under Bradley Brakke's 2013 power of attorney, executed the 2014 Trust restating the entire 2013 Trust and adding a provision authorizing the trustee to distribute fifteen acres equally to Headington and Rerick upon Vicki Brakke's death. According to Bell State, the material purpose of Bradley Brakke's changes to his Trust was to leave a significant portion of his assets to Headington or her children, to give Rerick only a small amount of his property, for Timothy Brakke to receive none of his assets and to prevent Timothy Brakke from interfering with his estate planning.

         [¶ 6] Bradley Brakke died on April 5, 2014. Bell State, as successor trustee, sent May 6, 2014 letters to Vicki Brakke, Headington, Rerick and Timothy Brakke, informing them about the 2013 will, the 2013 Trust, the 2013 power of attorney, and the 2014 Trust. The letter explained the 2014 Trust "supersede[d], in its entirety, the original [2013] Trust... and govern[ed] the administration and distribution of the Trust." The letter said the recipients had 120 days to contest the validity of the Trust "as created on November 11, 2013 and as restated on March 12, 2014."

         [¶ 7] Rerick assigned all her right, title and interest in Bradley Brakke's estate to Timothy Brakke, including all claims or causes of action related to the estate, and Timothy Brakke filed an August 26, 2014 petition specifically challenging Bradley Brakke's capacity to create the 2013 Trust. The petition stated the 2013 Trust was contrary to the brothers' agreement for Rerick to receive half of Bradley Brakke's estate and sought to set aside the 2013 Trust and distribute Bradley Brakke's property under his 2009 will. The petition stated it was filed "to simply reserve any and all of [Timothy Brakke's] rights under North Dakota law, but his hope is to seek to resolve this family matter with [Bradley Brakke's] wife and his sister and not engage in full-blown litigation." Separate counsel for Vicki Brakke and Headington both filed notices of appearance in the proceeding.

         [¶ 8] In June 2015, Bell State moved for summary judgment, claiming Timothy Brakke lacked standing to challenge the 2013 Trust and any challenge to the 2014 Trust was barred by the statute of limitations because Timothy Brakke's petition specifically failed to challenge the 2014 Trust. Timothy Brakke moved to amend his petition to explicitly challenge the 2014 Trust and also moved for approval of a settlement agreement distributing an additional 1, 060 acres of land to Rerick.

         [¶ 9] The district court denied Bell State's motion for summary judgment, granted Timothy Brakke's motion to amend his petition and approved the settlement. The court ruled Timothy Brakke had standing to bring the petition because he was a third-party beneficiary under the claimed oral agreement that Rerick would receive half of Bradley Brakke's estate and because Rerick assigned her interest in the estate to him. The court also allowed Timothy Brakke to amend his petition to specifically challenge the 2014 Trust because the underlying facts in his initial petition left no mistake he was challenging the Trust as a means to reinstate the 2009 will. The court found the amendment related back to the initial petition. The court ruled N.D.C.C. § 59-09-11, a provision in the Uniform Trust Code relating to nonjudicial settlements, did not apply to the proffered settlement in the context of the ongoing judicial proceeding. The court instead applied the Uniform Probate Code, N.D.C.C. §§ 30.1-22-01 and 30.1-22-02, and approved the settlement, concluding it addressed a good faith dispute, it was consented to by the necessary parties and it was just and reasonable. The court also concluded the settlement did not frustrate a material purpose of Bradley Brakke's Trust because the underlying litigation challenged his capacity to create the Trust.


         [¶ 10] Bell State argues the district court should have applied N.D.C.C. § 59-12-11 from the Uniform Trust Code to the proposed settlement agreement. Doing so, the district court should have rejected the agreement because it changed the residuary beneficiary of nearly half of Bradley Brakke's land from Headington to Rerick and was inconsistent with a material purpose of the 2014 Trust. Bell State argues the court erred in applying N.D.C.C. §§ 30.1-22-01 and 30.1-22-02 from the Uniform Probate Code to approve the settlement because the Trust unambiguously distributed Bradley Brakke's property, no good faith dispute existed about Bradley Brakke's capacity, the settlement did not provide a just and reasonable result and not all the beneficiaries consented to the settlement.


         [¶ 11] Our analysis of the district court's approval of the settlement agreement requires consideration of the interrelationship of North Dakota's enactments of the Uniform Trust Code in N.D.C.C. chs. 59-09 through 59-19 and the Uniform Probate Code in N.D.C.C. tit. 30.1.

         [¶ 12] Statutory interpretation is a question of law, fully reviewable on appeal. Hector v. City of Fargo, 2012 ND 80, ¶ 30, 815 N.W.2d 240. The primary objective in interpreting statutes is to determine the intention of the legislation. Amerada Hess Corp. v. State ex rel. Tax Comm'r, 2005 ND 155, ¶ 12, 704 N.W.2d 8. Words in a statute are given their plain, ordinary and commonly understood meaning, unless defined by statute or unless a contrary intention plainly appears. N.D.C.C. § 1-02-02. Statutes are construed as a whole and are harmonized to give meaning to related provisions. N.D.C.C. § 1-02-07. If the language of a statute is clear and unambiguous, "the letter of [the statute] is not to be disregarded under the pretext of pursuing its spirit." N.D.C.C. § 1-02-05. We construe statutes to give effect to all of their provisions so that no part of the statute is rendered inoperative or superfluous. N.D.C.C. § 1-02-38(2) and (4). "We interpret uniform laws in a uniform manner, and we may seek guidance from decisions in other states which have interpreted similar provisions in a uniform law." In re Estate of Allmaras, 2007 ND 130, ¶ 13, 737 N.W.2d 612. See N.D.C.C. § 1-02-13 (uniform laws must be construed to effectuate general purpose to make uniform the laws of enacting states). When we interpret and apply provisions in a uniform law, we may look to official editorial board comments for guidance. In re Estate of Gleeson, 2002 ND 211, ¶ 7, 655 N.W.2d 69.

         [¶ 13] With modifications, the North Dakota Legislature adopted the Uniform Trust Code in 2007 after an interim study by the Legislature's Judiciary Committee in conjunction with a State Bar Association Task Force. See 2007 N.D. Sess. Laws ch. 549, §§ 15-25; Report of the North Dakota Legislative Council to the Sixtieth Legislative Assembly 304-06 (2007). The Uniform Trust Code contains basic default rules under which the terms of a trust are generally controlling. Report of North Dakota Legislative Council, at 305. See N.D.C.C. § 59-09-05 [Uniform Trust Code § 105] (Default and Mandatory Rules).

         [¶ 14] Section 59-09-11, N.D.C.C. [Uniform Trust Code § 111], permits a nonjudicial settlement in trust matters to the extent the agreement does not violate a material purpose of the trust and includes terms that could be approved by the court under N.D.C.C. chs. 59-09 through 59-19, or other applicable laws. Timothy Brakke's petition invoked a judicial proceeding and we agree with the district court his petition rendered the nonjudicial settlement provisions of N.D.C.C. § 59-09-11 inapplicable.

         [¶ 15] Chapter 59-10, N.D.C.C. [Uniform Trust Code §§ 201-204], describes judicial proceedings in the administration of a trust. Under N.D.C.C. § 59-10-01 [Uniform Trust Code § 201], a "court may intervene in the administration of a trust to the extent its jurisdiction is invoked by an interested person or as provided by law, " and a judicial proceeding may relate to any matter in the trust's administration, including a request for instruction and an action to declare rights. See also N.D.C.C. § 32-23-04 (describing determinations by declaratory judgment for rights in a trust). The comment to Uniform Trust Code § 201 explains the ...

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