Court: Indiana Court of Appeals; November 16, 2011; Indiana; State Appellate Court
Melvin Simon died in 2009, and his surviving spouse, Bren Simon, was appointed Personal Representative of his Estate and Trustee of the Melvin Simon Family Enterprises Trust. Bren filed an interlocutory appeal after the trial court denied her request to disqualify the judge overseeing a will and trust contest and a declaratory judgment action, both consolidated in Hamilton Superior Court. The court also granted motions from Melvin's daughter, Deborah Simon, to remove Bren from her fiduciary roles, subsequently appointing a Successor Personal Representative and Trustee who is not part of this appeal.
The ruling determined that Bren lost her authority to pursue the appeal after her removal and was not a party in her individual capacity in the trial court. Consequently, the court found that Bren lacked standing to maintain the appeal in either capacity, leading to the dismissal of the case due to lack of jurisdiction.
Melvin's estate plan, established in 1972 and altered six months before his death, allocated his assets into three parts: one-third to Bren, one-third to a marital trust for her benefit, and one-third to a charitable trust. The 2009 modifications increased Bren's inheritance while reducing that of Melvin's children and eliminated charitable donations. After Melvin's death, Deborah contested the will and trust, alleging Melvin's lack of capacity and claims of fraud, undue influence, and duress regarding the estate plan changes. Additionally, she sought Bren’s removal from her roles as Personal Representative and Trustee.
The Trust’s main asset consists of partnership units in Simon Property Group, LP, with David Simon, Melvin’s son, as the chairman and CEO of the general partner, Simon Property Group, Inc. The partnership agreement grants the Trust the right to convert these units into shares or cash, contingent upon delivery free of liens, which the agreement broadly defines. Simon Property Group is not obligated to convert units subject to a lien.
On January 12, 2010, Bren submitted an irrevocable notice to SPG to convert approximately 6.5 million SPGLP units, valued at about half a billion dollars, to cash or SPG common stock, without consulting a financial advisor. SPG refused the request, citing the Estate Dispute as a potential lien under the partnership agreement. Subsequently, on January 25, SPG filed a complaint for declaratory judgment against Bren, seeking a court ruling to classify the Estate Dispute as a lien. Bren counterclaimed against SPG for breach of contract and fiduciary duty.
The related lawsuits were heard in the Hamilton Superior Court by Judge William J. Hughes. On July 15-16, 2010, an evidentiary hearing addressed Deborah's motion to remove Bren as Personal Representative and Trustee, based on Bren's unconsulted request to convert the partnership units. During the hearing, Bren’s counsel acknowledged a $14 million distribution to Bren as a 'de minimus advance subject to reimbursement.' Judge Hughes raised concerns about Bren’s actions, noting that under Indiana law, a trustee cannot make distributions to themselves without court approval or beneficiary consent, neither of which Bren had obtained. Consequently, Judge Hughes prohibited any trust distributions by Bren without prior court approval.
On October 27, 2010, Judge Hughes was charged with driving while impaired while vacationing in North Carolina. He reported the incident to the Indiana Commission on Judicial Qualifications and subsequently disqualified himself from fourteen related criminal cases. On November 8, he retained attorneys from Bingham McHale, a firm that also represented SPG, but received assurances that a 'Chinese Wall' would separate his representation from cases involving the firm. The following day, he disclosed the situation to both parties in the ongoing cases and indicated he would issue a written disclosure notice regarding his ability to continue presiding over them.
Judge Hughes issued a disclosure notice stating that he is not required to disqualify himself under Rule 2.11 of the Code of Judicial Conduct due to a lack of bias or prejudice against Bingham McHale or its clients, despite their previous representation of him. Parties may agree to his continued role as presiding judge or file objections by December 10, 2010. If objections arise, they will be resolved by Magistrate David Najjar.
On November 22, 2010, Judge Hughes ended Bingham McHale’s representation. Later that day, Bren filed an objection to Judge Hughes presiding over two cases, arguing disqualification was necessary under Rule 2.11(A). Judge Hughes overruled this objection on December 1, agreeing to certify the order for interlocutory appeal if requested. Bren filed this request on December 8, which was granted on December 15.
On the same day, the court also granted Deborah’s motion to remove Bren as Personal Representative and Trustee, finding substantial evidence of misconduct. The court noted Bren improperly distributed approximately $18 million from the Trust to herself without proper notice or consent and later attempted to classify this as a loan without adequate terms. The court referenced Indiana law, stating that self-dealing provisions do not allow a trustee to loan trust assets to themselves. Bren’s actions regarding the Trust were deemed relevant to her capability to serve as Personal Representative, and her designation in the will does not compel the court to retain her in that role.
Due deference is owed to the testator's final wishes; however, the Personal Representative must adhere to court requirements for efficient estate administration. Essential requirements include: (a) making informed litigation decisions, such as hiring unconflicted counsel; (b) engaging professionals for the conversion of over $600,000,000 in stock; and (c) compensating counsel for the estate over $3,000,000 without prior court approval in a supervised estate. Deborah Simon has convincingly met her burden regarding the petitions.
The court removed Bren as Personal Representative and Trustee and appointed former Indiana Supreme Court Justice Theodore R. Boehm as her successor without delay. Bren did not appeal this order or seek a stay. She subsequently filed an appeal regarding Judge Hughes’ refusal to disqualify himself, asserting her standing as 'Personal Representative' and 'Trustee,' despite being removed from those positions on the same day she certified the order for interlocutory appeal.
Deborah and SPG contested Bren's request for interlocutory review, arguing she lacked standing since she no longer represented the Estate or the Trust. The motions panel granted Bren’s request to accept jurisdiction for her appeal. However, it is well established that a writing panel can reconsider motions panel rulings. The court found that the trial court's order removing Bren also terminated her authority to litigate on behalf of the Estate and Trust, which now solely belonged to her successor.
Standing is defined as having a sufficient stake in a justiciable controversy, ensuring that parties before the court have substantive rights to enforce claims. The standing requirement restricts court jurisdiction to actual disputes involving harmed parties, preventing the judiciary from acting in purely speculative scenarios.
Standing is defined as the requirement for a party to demonstrate a proper basis for invoking the Court’s jurisdiction, specifically needing to show an actual injury or imminent danger of injury. In this case, Bren was removed as Personal Representative and Trustee on December 15, 2010, which disqualified her from appealing in a representative capacity since the removal order was self-executing and effective immediately, severing her authority and fiduciary relationship with the estate and trust. Historical cases illustrate that a former representative cannot appeal a removal order, emphasizing that once removed, they lose the ability to represent the estate or trust in any legal matters. Although Bren claims to be a beneficiary and thus an aggrieved party with standing to appeal, the court notes that the estate and trust, which she asserts are injured by the trial judge's refusal to disqualify himself, are not parties to this appeal as they did not pursue that action. Therefore, without the representative capacity to raise claims on behalf of the estate or trust, Bren lacks the necessary standing to appeal the trial court's decisions.
Under the Trust Code, an individual aggrieved by a court's decision may appeal, provided they were a party in the trial court. Appellate Rule 17(A) mandates that only parties of record can appeal, and a person not a party at trial cannot become one on appeal. Bren, after being removed as Personal Representative and Trustee, did not seek to intervene individually in the trial court, and there are no appellate rules allowing for intervention in an appeal. If she perceives herself as aggrieved, she must present that argument in a motion to intervene at the trial level.
Bren's status as Personal Representative at the time of her interlocutory appeal does not grant her standing after losing that status. The dissent argues that she has standing due to being aggrieved by a judge's refusal to recuse, but mere aggrievement does not suffice for standing without current fiduciary capacity or individual intervention. Standing is a threshold issue that can be lost, as illustrated in case law where shareholders lost standing after selling their shares. The court disagrees with the dissent's view that the December 1 order and Bren's motion to certify preserved her standing, emphasizing that standing is a jurisdictional prerequisite and not an immutable status.
The court clarifies that if Bren had intervened as an aggrieved party, she could have had standing to appeal. Furthermore, the Successor Personal Representative and Trustee possess standing, and there is no basis for claiming that Bren retains any authority to litigate on behalf of the Estate or Trust after her removal. Consequently, the court concludes that Bren lacks standing to pursue the appeal since she is no longer in a fiduciary role and has not intervened individually.
She is not considered an aggrieved party in the trial court and therefore cannot appeal, leading to the dismissal of the appeal due to lack of jurisdiction. Judge May concurs with the dismissal, while Judge Riley dissents with a separate opinion. Bren’s counsel indicated that if SPG had remitted stock, Bren would have sold it for cash immediately. According to Indiana Code Section 30-4-3-5(a), if a trustee's duty conflicts with their individual interests, the power may only be exercised under specific circumstances: (1) with court authorization and notice to interested parties; (2) with notice to interested parties where either written authorization is obtained from all interested parties or a beneficiary objects but court authorization is still granted; or (3) if the trust terms specifically authorize the action. The term "Chinese Wall" describes barriers within an organization that prevent members from accessing information about matters handled by colleagues, as referenced in Roberts v. Hutchins.
