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In re John T. Gassmann GST Trust

Supreme Court of North Dakota

October 3, 2017

In the Matter of the John T. Gassmann GST Trust
v.
Margaret A. Oakland, Respondent and Appellant Bell Bank, f/k/a Bell State Bank & Trust, as Trustee of the John T. Gassmann GST Trust, Petitioner and Appellee

         Appeal from the District Court of Barnes County, Southeast Judicial District, the Honorable Jay A. Schmitz, Judge.

         AFFIRMED.

          Berly D. Nelson (argued) and Ian McLean (appeared), Fargo, N.D., for petitioner and appellee.

          Margaret A. Oakland, Valley City, N.D., self-represented, respondent and appellant.

          OPINION

          TUFTE, JUSTICE.

         [¶ 1] Margaret Oakland appeals a district court order granting Bell Bank's petition to approve the accounting, distribution, and termination of the John T. Gassmann generation-skipping trust. She also appeals from an order denying her motion for relief from the order approving Bell Bank's petition. Oakland argues that Gassmann improperly exercised a special power of appointment over the trust estate and that Bell Bank breached its fiduciary duty of impartiality. We affirm.

         I

         [¶ 2] John T. Gassmann died in February 2012. Oakland is his only child. Under a generation-skipping trust created by his parents, Gassmann had a special power of appointment over the trust estate, which included family farmland. The power was exercisable "by appointment, outright or in trust, in such portions as my child may appoint in a valid testamentary instrument that specifically refers to this special power of appointment." The trust prohibited Gassmann from exercising the power in favor of himself, his estate, his creditors, or creditors of his estate. The generation-skipping trust provided that unless Gassmann exercised the power of appointment in a valid testamentary instrument, all trust assets would pass to Gassmann's descendants at Gassmann's death.

         [¶ 3] Gassmann exercised the special power of appointment through both his will and revocable living trust executed in 2011. Gassmann exercised his special power of appointment by distributing all of the real estate in his generation-skipping trust to the Valley Township Land Trust ("land trust") and the residue of the trust estate to the Canadian Mineral Share Trust ("mineral trust"), which were both created under Gassmann's revocable living trust. Oakland is a primary beneficiary of the mineral trust. She is not a beneficiary of the land trust.

         [¶ 4] After Gassmann's death, Oakland contested his will and revocable living trust. Oakland argued Gassmann's will was invalid, alleging he executed the will under an insane delusion. Estate of Gassmann, 2015 ND 188, ¶ 6, 867 N.W.2d 325. Oakland's challenges were denied and the denials affirmed on appeal. See Gassmann, at ¶ 24; Oakland v. Bowman, 2013 ND 217, ¶ 12, 840 N.W.2d 88.

         [¶ 5] Bell Bank, as trustee of the John T. Gassmann generation-skipping trust, petitioned the district court to approve the accounting and to order the distribution and termination of the trust. Bell Bank requested to sell the assets to be distributed to the mineral trust to partially satisfy the liabilities of the generation-skipping trust. Oakland filed a response to the petition the evening before the hearing, arguing her father's exercise of the special power of appointment was invalid. She also argued Bell Bank breached its fiduciary duties as trustee of the generation-skipping trust. After a hearing, the court dismissed Oakland's objections and granted Bell Bank's petition. Following the order approving Bell Bank's petition, Oakland moved to alter or amend the findings and requested relief from the order. The court denied her motion.

         II

         [¶ 6] Oakland argues Gassmann's exercise of the special power of appointment was invalid because he appointed trust assets to other trusts that were accessible to pay expenses and debts of his estate or claims against his estate. She argues the exercise of the power made trust assets available to Gassmann's estate and creditors of the estate in violation of the generation-skipping trust's provisions.

         [¶ 7] In response, Bell Bank argues Oakland could have raised the effectiveness of her father's exercise of his special power of appointment in her earlier lawsuits, and res judicata bars her from rearguing that issue in this appeal. Bell Bank argued Oakland was barred from arguing this issue at the hearing on its petition to terminate the generation-skipping trust:

What she's trying to argue is that [the power of appointment] was somehow improperly done. A, she should have raised that before. She didn't. She's waived it. All right. Effectively, what she wants to do, your Honor, is she wants this to be the fourth lawsuit now. She wants another bite at the apple. Your Honor, this is one of these situations where unfortunately it[']s become a situation where if I can't have [the farmland], I don't want anybody to have it.

         [¶ 8] Res judicata precludes courts from relitigating claims in order to promote finality of judgments, which avoids multiple litigation, wasteful delay, and expense and conserves judicial resources. SNAPS Holding Co. v. Leach, 2017 ND 140, ¶ 28, 895 N.W.2d 763. "Res judicata prevents the 'relitigation of claims that were raised, or could have been raised, in prior actions between the same parties or their privies.'" Id. (quoting Lucas v. Porter, 2008 ND 160, ΒΆ 16, 755 N.W.2d 88). Res judicata applies to subsequent claims based on the same underlying facts even if the subsequent claims are ...


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