# In the Matter of the Living Trust Agreement of Virgil C. Morningstar and Agnes M. Morningstar, Teresa J. Morningstar v. Nina Fortunka and STAR Financial Bank

> Indiana Court of Appeals · November 15, 2019

URL: https://www.frixlaw.com/law-library/cases/4456165

## Case

- **Court:** Indiana Court of Appeals
- **Decided:** November 15, 2019
- **Precedential status:** Published
- **Opinion:** Opinion
- **Cited by:** 0 later opinions in the Frix Law Library

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## Opinion text

FILED
Nov 15 2019, 9:18 am

CLERK
Indiana Supreme Court
Court of Appeals
and Tax Court

ATTORNEY FOR APPELLANT ATTORNEYS FOR APPELLEE
Max A. Myers NINA FORTUNKA
Myers Law Office John O. Feighner
Fort Wayne, Indiana Troy C. Kiefer
Haller & Colvin, P.C.
Fort Wayne, Indiana

ATTORNEY FOR APPELLEE
STAR FINANCIAL BANK
Matthew J. Elliott
Beckman Lawson, LLP
Fort Wayne, Indiana

IN THE
COURT OF APPEALS OF INDIANA

In the Matter of the Living Trust November 15, 2019
Agreement of Virgil C. Court of Appeals Case No.
Morningstar and Agnes M. 18A-TR-3044
Morningstar, Appeal from the Allen Superior
Teresa J. Morningstar, Court, Probate Division
Appellant, The Honorable Stanley A. Levine,
Judge
v.
Trial Court Cause No.
02D03-1604-TR-8
Nina Fortunka and STAR
Financial Bank,
Appellees.

Brown, Judge.
Court of Appeals of Indiana | Opinion 18A-TR-3044 |November 15, 2019 Page 1 of 32
[1] Teresa J. Morningstar (“Morningstar”) appeals the trial court’s November 21,

2018 order finding that she breached various duties as trustee of the Living Trust

Agreement of Virgil C. Morningstar and Agnes M. Morningstar (the “Trust”).

The trial court entered judgment in favor of the trust beneficiaries and awarded

attorney fees in favor of beneficiary Nina Fortunka. The restated issue is whether

the court erred in finding that Morningstar breached her duties as trustee. We

affirm.

Facts and Procedural History

[2] In January 2012, Agnes died, predeceasing Virgil. Prior to her death, Attorney

Max Myers prepared the Trust, which established Agnes and Virgil as trustors

and Agnes, Virgil, and Morningstar as trustees. 1 Morningstar, a beneficiary of

the Trust, signed the trust instrument as an attorney-in-fact on behalf of Agnes

and Virgil as both Trustor and Trustee and as herself as Trustee. The Trust

provides in part that, in the investment, administration and distribution of the

trusts created under it, the trustee shall be given “those powers set forth in the

Indiana Trust Code as amended from time to time hereafter” and, in Article X,

titled “Compensation of Trustee,” that the trustee shall receive reasonable

compensation for ordinary services and “shall also receive reasonable

compensation for unusual and extraordinary services rendered in serving the

personal needs of the Trustor [sic] and in settling Trustor’s [sic] financial affairs

1
As Morningstar points out, the Trust appears to contain a scrivener’s error when it states that it was
executed on the 7th day of “January, 2011.” Appellant’s Appendix Volume II at 35.

Court of Appeals of Indiana | Opinion 18A-TR-3044 |November 15, 2019 Page 2 of 32
and in making distribution of the assets.” Appellant’s Appendix Volume II at

37, 41. Article X further provided that “[s]uch compensation shall be adequate

to cover the work involved, as well as responsibilities assumed, in effecting

financial disposition of the trust.” Id. At some point, Agnes and/or Virgil

transferred title to certain real estate to the Trust.

[3] Virgil died in August 2015 and, in administering the Trust, Morningstar

completed an accounting for the period covering August 13, 2015, through May

31, 2016, and submitted it to the trial court on July 19, 2016. The accounting

lists as an Asset an item titled “Rental Real Estate” valued at $226,000.00, and

as Income to the “CHASE BANK Account” a “Sale of rental real estate”

transaction on “1/15/16” valued at $210,342.63 and bearing an asterisk

notation which states “reduction in amount reflects costs of sale.” Appellant’s

Appendix Volume II at 45, 47. The accounting also contains an affidavit in lieu

of receipts, checks, and vouchers that lists a disbursement on “1/20/16” of

$6,780.00 for “Teri Morningstar – RE finders fee” by means of “ck 4516,” as

well as monthly or bimonthly disbursements of $845.50 for “Teri Morningstar –

payroll” from “8/17/15” until “3/1/16.” 2 Id. at 49-52.

[4] On September 9, 2016, Fortunka as one of twenty-one beneficiaries of the Trust

filed her Objections to Trustee’s Court Ordered Accounting, which asserted that

2
The affidavit does not list monthly disbursements other than “9/16/15” for September 2015 and “1/19/16”
for January 2016. Appellant’s Appendix Volume II at 50-51. The affidavit also contains a disbursement on
August 25, 2015, of $600.00 for “Teri Morningstar – finders fee” by means of “ck 4454.” Id. at 49.

Court of Appeals of Indiana | Opinion 18A-TR-3044 |November 15, 2019 Page 3 of 32
the Trustee breached her fiduciary duties, committed self-dealing, and carelessly

and negligently handled trust assets. It stated that among the undervalued

assets were fourteen rental properties, which were sold in a single sale without

appraisals performed either at the time of Virgil’s death or at the time of the

sale, and that the sale was heavily discounted. It further contended that

Morningstar continued to receive a salary and mileage as property manager

after the sale, and it objected to several disbursements as unclear and invalid

expenditures of the Trust, including those “described as finder’s fees, payroll,

mileage and misc. paid to Trustee.” Id. at 57.

[5] On July 17, 2018, and September 4, 2018, the court held hearings. Tom Mack

testified as to his credentials as an independent real estate appraiser, and the

court found him to be qualified as an expert in the field of appraisals without

objection. He indicated that he completed exterior appraisals for 2822 Mauldin

Drive, 2724 Schaper Drive, 2315 Saint Mary’s Avenue, and 2221 Vance

Avenue, explained his methodology, and provided an assessed retrospective

value for each of the properties effective January 15, 2016. 3 During cross-

examination, he provided an opinion that he had “known parties to

3
The court admitted without objection four appraisal reports for real property that had the purpose of
“estimat[ing] the market value of the property . . . as improved, in unencumbered fee simple title of
ownership.” Accord Exhibits Volume I at 7. The reports’ Opinion of Value was $11,000 for the property at
2822 Mauldin Dr, $34,000 for the property at 2724 Schaper Dr, $23,000 for the property at 2315 Saint Marys
Ave, and $30,000 for the property at 2221 Vance Ave. Each report contained signed pages titled Exterior-
Only Inspection Residential Report, Property Record Information per Wayne Township Assessor, and
Comparable Sales.

Court of Appeals of Indiana | Opinion 18A-TR-3044 |November 15, 2019 Page 4 of 32
inaccurately fill out sales disclosures” through his work as an assessor back in

2000, where he would “see sales disclosures that did not reflect the sales price.”

Transcript Volume II at 46. 4

[6] The court admitted various Objector’s Exhibits, including copies of

correspondence regarding the administration of the Trust and the sale of the

properties. A letter by Attorney Myers, addressed to the heirs of Virgil, dated

August 26, 2015, and admitted as Objector’s Exhibit 5, announced that Virgil

had died on August 13th and stated:

Upon the death of Agnes [] all of the business real estate which she
owned was placed into a living trust for which Virgil and
[Morningstar] were the Trustees. Those properties have been
managed, improved and a sale off at [sic] fair value has been
underway. However, there remains [sic] approximately one
dozen houses unsold in addition to eight (8) that are under
Contracts which will pay off at various dates over the next three
(3) years. I will be asking for input from you in the future
regarding suggestions for distribution of the Contract payments
and/or the remaining real estate.

I will happily discuss the strategy and results involved in the
business real estate since Agnes died, however, I can state up front
that the plan was to have it all sold at a good price before Virgil
died.

*****

4
We cite the page numbers as they appear consecutively in the PDF of the Electronic Record. See Ind.
Appellate Rule 28(A) (The electronic Transcript is to be prepared in accordance with Appendix A, which
provides in part: “Each volume of the Transcript shall be independently and consecutively numbered at the
bottom. Each volume shall begin with numeral one on its front page.”).

Court of Appeals of Indiana | Opinion 18A-TR-3044 |November 15, 2019 Page 5 of 32
By virtue of the Estate holding a good deal of real estate, it will be
necessary for us to come to a consensus of how that is to be
handled before a complete distribution from the Estate can be
made.

I will secure a complete status on all of the real estate and submit it
to the heirs for comment on how they would prefer it be handled.
Look for that in another ten (10) days or so.

Exhibits Volume I at 101-102. A letter by Attorney Myers, similarly addressed,

dated September 15, 2015, and admitted as Objector’s Exhibit 6, stated that it

appeared that the one asset which would pass through the estate was Virgil’s

brokerage account valued at $826,215.08. The letter also stated:

As previously mentioned, there exists [sic] in the trust
approximately one dozen houses unsold in addition to eight (8)
that are under Contracts which will pay off at various dates over
the next three (3) years. The market is such in Fort Wayne that
the only realistic expectation is that the houses must be sold to an
investor who will keep them as rentals. The mortgage companies
will not lend on a property worth what these are worth and
further, the buyer intending to live in one will not have the down
payment required to entice a lender.

*****

I have already been asked by more than one heir what I think the
shares are expected to be. I refuse to commit to an exact number
because the selling price of the real estate is so elusive that I can
only speculate.

If these dozen houses average in value around $12,000.00* and the
balance on the contracts adds another $25,000.00, we can expect
the real estate to add another $160,000.00 to the distributive
amount for a total approaching $990,000.00. This amount is

Court of Appeals of Indiana | Opinion 18A-TR-3044 |November 15, 2019 Page 6 of 32
subject both to the marketability of the real estate and any
fluctuation in the value of the brokerage account.

*****

* They are mostly 1,000 sq. ft. rental properties in the bad parts of
Fort Wayne.

Id. at 103-104. Fortunka responded affirmatively when asked whether the

September 15, 2015 letter was the first time she had received the information that

the only realistic expectation was to sell the properties to an investor.

[7] A letter by Attorney Myers, addressed to the Trust beneficiaries, dated October

30, 2015, and admitted as Objector’s Exhibit 7, indicated that he had held a

meeting to address questions by Kyle Foreman and others. 5 It further stated:

Let me start by saying that I was truly dumbstruck by the amount
of false information that is circulating among some of you. Some
of the rumors which Kyle related as having been suggested by
some of you are not just a little wrong; they are nowhere close to
any conceivable possibility of misunderstanding. They are
outright fabrications with no basis in fact whatsoever.

I do not intend to waste my time and your money (for attorney fee
bills) chasing these wild stories to ground. If any of you have a
specific question, ask it of me. If it is a relevant inquiry, you will
receive a prompt and complete answer. If I am asked a question
that has no role in moving the estate/trust to closure and
distribution, I will not waste trust assets looking into it.

5
Fortunka testified that Foreman was her brother and that he lived in south Florida as of October 2015.
Transcript Volume II at 64. Plaintiff’s Exhibit 34, which lists the names and addresses of the beneficiaries of
the Trust, indicates that Foreman was a beneficiary as of September 2017. Exhibits Volume II at 22.

Court of Appeals of Indiana | Opinion 18A-TR-3044 |November 15, 2019 Page 7 of 32
*****

In about 45 days from the date of this letter, the Estate can be
closed and the funds transferred to the Trust. The Trust was
originally constructed to run Agnes’ real estate business so it has
only a modest amount of liquidity – with the bulk of the assets
being real estate[.]

*****

[] The remaining assets in the Trust will be the real estate which
appears on a list enclosed herewith.[ 6] Note that the top items are
under contract, some of which will last almost three (3) more
years. There is little that can be done with these except let them
pay out and periodically distribute the accumulated payments to
you beneficiaries.

The second set is the rental houses which can be sold at any time
for a reasonable fair value, if a buyer can be located. Kyle was
visibly shocked when I informed him that several of these houses
were valued in the $8,000.00 to $12,000.00 range. I proved it to
him by showing him sales documents for properties in these
neighborhoods which have sold in the last three months for this
price range.

THIS JUST IN: [Morningstar] has just informed me that an
individual has indicated a willingness to purchase all of these
houses and will give us a written offer with his price early next
week.

6
Attached to the October 30, 2015 letter was a document titled “V & A Morningstar Trust Properties,”
which listed eight Fort Wayne addresses as “Currently Being Sold On Contract,” including “5226 Winter
Street,” and the following Fort Wayne addresses as “Rentals”: “2822 Mauldin Drive,” “2724 Schaper
Drive,” “2315 Saint Marys Avenue,” “2221 Vance Avenue,” “5714 Holiday Lane,” “2602 Lynn Avenue,”
“4115 Robinwood,” “4809 Spatz Avenue,” “4310 Standish Drive,” “2620 Trentman Avenue,” “436 Violet
Court,” “3724 Winter Street,” and “1302 Sinclair Street.” Exhibits Volume I at 108.

Court of Appeals of Indiana | Opinion 18A-TR-3044 |November 15, 2019 Page 8 of 32
Once received, I will share it with you on the following basis: A) If
you have a valid objection to the price or terms, that objection
must be sent to me in writing, within 10 days, detailing the
objection with documented or statistical support; or B) that you
submit a valid written offer to purchase the lot of the properties
(either by you or someone else as buyer) for a greater price and
terms as good as the offer given to [Morningstar].

If the offer we receive next week is of reasonable value and we
have not received any qualifying response (as set forth in the
preceding paragraph) then said offer will be accepted.

*****

Please take this letter as my request to each of you to propose a
solid alternative to the options which I have outlined above. Some
that come to my mind that you may consider are:

a. Sell all to a company/person engaged in the rental of low value
housing;

b. Have [Morningstar] continue to market each unit seeking a
cash buyer for them; or

c. One or more of the beneficiaries come up with the money to
buy them or agree to take them as a distribution rather than cash[.]

Please don’t perpetuate the misunderstanding that Kyle was
operating upon: We cannot put a sign in the front yard of most of
these places and then drive over with the key for a showing. Most
likely a call to see it is the precursor to an armed robbery.
Furthermore, you do not go into these neighborhoods after 4:00
pm for any reason, without a police escort.

Id. at 105-106. Fortunka testified that she understood the statement in

paragraph c. of the letter to mean that if she or any of the other beneficiaries

“wanted to buy them we could exchange our shares of cash for the properties.”

Court of Appeals of Indiana | Opinion 18A-TR-3044 |November 15, 2019 Page 9 of 32
Transcript Volume II at 68. She also testified that, in reliance upon the letter,

she then began “[t]o purchase the properties” and “sent a letter to [Attorney

Myers] and [Morningstar] saying that [she] would like to take the properties in

lieu of cash and that [she] had other beneficiaries that would also trade their

cash distributions for property.” Id. at 69.

[8] A letter by Attorney Myers, addressed to the beneficiaries of the Trust, dated

November 10, 2015, and admitted as Objector’s Exhibit 8, indicated that the

offer mentioned in the previous letter had arrived and stated: “[i]n the interest

of saving a few trees, I can tell you that the offer is for $220,000.00 to purchase

those properties shown on page 6 of the offer (a copy of which page I have

attached),” 7 and that, “[a]s the Trustee, [Morningstar] is inclined to accept this

offer, however yields to any honest concerns that the beneficiaries may have.”

Exhibits Volume I at 109. It stated:

So, as indicated in my letter of October 30th: A) if you have a
valid objection to the price, that objection must be sent to me in
writing and be in my hands no later than November 25, 2015; or
B) You or a conglomerate must submit a valid written offer to
purchase all of those properties shown on the enclosed page for a
greater net cash price than the offer just given to [Morningstar] by
that November 25th date.

7
Following Attorney Myers’s November 10, 2015 letter, the Exhibits Volume contains a photocopy of a
single page of what appears to be a form document with largely-indecipherable handwriting under the header
“Further Conditions.” Exhibits Volume I at 110. The numbers “1302,” 2602,” and “2822” can be
deciphered. See id.

Court of Appeals of Indiana | Opinion 18A-TR-3044 |November 15, 2019 Page 10 of 32
Id.

[9] A letter by Fortunka addressed to Morningstar, dated November 18, 2015, and

admitted as Objector’s Exhibit 9, responded to Attorney Myers’s November 10,

2015 letter; disagreed with “selling the 14 properties for $220,000” which, as it

indicated, “appear to be liquidated at too far below fair market value”; and

provided examples of what Fortunka deemed to be appropriate average prices for

specific units. Id. at 111. It stated that she expressed a preference for selling the

properties individually as the “letter from [Attorney Myers] dated October 30,

2015 [had] proposed.” Id. With regard to the “option for Trust Beneficiaries to

receive distribution as a combination for property and cash,” it indicated that

Fortunka was in the process of contacting all Trust beneficiaries, several of whom

had expressed a desire to take that option, and stated: “As a group we offer

$225,000 for the 14 properties in question. We consider this a great opportunity

for [the Trust] to minimize costs and for the Beneficiaries to receive better

values.” Id. The letter requested that Morningstar provide relevant property

information and inquired into the properties under contract. When asked about

the letter, Fortunka testified that she considered $225,000 to be her offer and that

she did not receive the rent amounts, occupancy details, property conditions, or

known defects from the trustee or Attorney Myers.

[10] Attorney Myers’s response to Fortunka, dated November 24, 2016, and

admitted as Objector’s Exhibit 10, indicated he had discussed her letter with

Morningstar and stated:

Court of Appeals of Indiana | Opinion 18A-TR-3044 |November 15, 2019 Page 11 of 32
Clearly, your simple mention of the willingness of a group of
heirs to purchase the properties falls short of a real offer and
cannot be treated as such. But, it does raise the specter that
failing to allow a validly formulated offer to be prepared would
be to neglect the interests of all beneficiaries.

Id. at 112. The letter stated that Fortunka’s suggestion – of selling the properties

individually resulting in a larger sale price – was “accurate as stated,” however

the process “could easily take six months to a year,” during which “time the

costs to manage and maintain the properties would likely eat up more than the

extra funds from an individual sale.” Id. The letter stated that a realtor

handling the sales would result in “an immediate six percent loss of sale price

due to commission” and provided that, accordingly, the Trustee

will entertain the “best and final” offer of any and all interested
purchasers, subject to the criteria set forth below. The best offer
received by the date set forth below which meets all of the stated
criteria will be accepted by the Trust as the final purchaser.

The criteria for the offer to be considered are as follows:

1. The cash price must be stated and must be for all of the
real estate titled to the Trust;

2. The purchase must be “AS IS” meaning no warranty as
to representations regarding physical condition, tenancy,
right to immediate possession, status of rents, status of
contract payments, balances due on contracts or any other
expectation or assumption not specifically required as an
essential element of the written offer;

3. The offer must be complete and in writing with no oral
terms or considerations;

Court of Appeals of Indiana | Opinion 18A-TR-3044 |November 15, 2019 Page 12 of 32
4. The offer must be accompanied by a five percent (5%)
earnest money deposit paid to the Escrow account of the
Myers Law Office (which will be applied against the
purchase price at closing or refunded if the offer is not the
best and, thus, not accepted).

5. The conforming written offer and earnest money must
be received in this office no later than 4:30 pm on
December 7, 2015.

Id. At the bottom of the second page, under Attorney Myers’s signature, the

letter stated: “P.S. This same letter will be sent to the other offering party and

make [sic] known to others in the local community.” Id. When asked about

Objector’s Exhibit 10, Fortunka testified that the real estate commission

mentioned in the letter factored into her decision to make the offer for $225,000

and she thought the benefit of her offer would be “less charges to the Trust.”

Transcript Volume II at 75.

[11] Fortunka’s response, addressed to Attorney Myers, dated December 7, 2015, and

admitted as Objector’s Exhibit 11, mentioned his November 24, 2015 letter,

stated that “[f]or the second time we are communicating with [sic] you [n]ot to

sell the 14 properties for $220,000,” indicated that “running an unadvertised two

party auction is not in the benefit” of the Estate or the beneficiaries, and advised

that the properties should be marked individually utilizing real estate

professionals. Exhibits Volume I at 114. When asked about Objector’s Exhibit

11, Fortunka testified that she considered, at that time, her offer to take the

property in lieu of cash to still be valid, that her letter did not contain the earnest

money because she was “already basically as an heir own [sic] the property” and

Court of Appeals of Indiana | Opinion 18A-TR-3044 |November 15, 2019 Page 13 of 32
she “didn’t feel it was necessary to give money that they already had.”

Transcript Volume II at 78.

[12] A Purchase Agreement, also dated December 7, 2015, and admitted as

Objector’s Exhibit 13, indicates that AM Fire Properties, LLC (“AM Fire”)

agreed to purchase fourteen houses for $226,000. The Agreement contains, on

the “Seller’s Signature” line, the signature of “Teresa Morningstar trustee,”

provides that AM Fire would submit $12,000 as earnest money, and states in a

typed paragraph under the heading “Further Conditions” that “Myer Law

Office [is] to hold Earnest Money” until title is approved for each of the

houses. 8 Exhibits Volume I at 121. After Objector’s Exhibit 13 was admitted,

Fortunka testified that she had a conversation with Morningstar on December

1st about the pending sale, in which she explained her thought that Morningstar

was selling the properties too low and Morningstar said the properties were “in

such disrepair that whoever brought these properties would have a lot of

headaches and a lot of expense.” Transcript Volume II at 82.

[13] Attorney Myers’s response to Fortunka’s December 7, 2015 letter, dated the

following day and admitted as Objector’s Exhibit 12, stated that Fortunka’s

correspondence “fell short of compliance with the bidding criteria established

and therefore does not qualify for consideration” and that the other nineteen

8
Objector’s Exhibit 17 is a photocopy of a check in the amount of $12,000 from “AMFIRE PROPERTIES”
and made out to “Myers Law Office/ Escrow Acct” for “earnest $ Morningstar Estate.” Exhibits Volume I
at 131. The date on the check is “12/7/12.” Id.

Court of Appeals of Indiana | Opinion 18A-TR-3044 |November 15, 2019 Page 14 of 32
heirs besides Fortunka and Foreman “have been silently waiting for the sale

and to receive their proceeds from the trust,” which was the reason that

Attorney Myers was “convinced that [Fortunka’s] opinion is not reflective of

the best interests of the beneficiaries as a whole.” Exhibits Volume I at 115. It

further indicated that the properties

are offered “As Is” because the cost of rehabilitating them to the
local standards of marketability would be prohibitive. Almost
every property sold in these zip codes is sold “As Is” which is
ample evidence that your statements have no basis in reality for
application to the south east side of Fort Wayne, IN.

Id.

[14] A letter by Attorney Myers addressed to the beneficiaries of the Trust, dated

December 23, 2015, and admitted as Objector’s Exhibit 14, indicated that “[t]he

accounting I offered is in process” and “should be done by the end of January,”

that he had conducted record searches and responded to numerous inquiries,

which he billed to the trust, due to “baseless accusations” by “a certain few of

the beneficiaries . . . seeking to create anxiety in the remainder of the

beneficiaries,” and that he had

a demand that the Trust have appraisals made. Had that been
done, the cost would have been nearly $8,000.00 more of your
money. [Morningstar] is unwilling to spend those funds when

Court of Appeals of Indiana | Opinion 18A-TR-3044 |November 15, 2019 Page 15 of 32
our own market analysis tells us that the prices being received are
competitive for this type of real estate and its location.[9]

Id. at 123-124. When asked about Objector’s Exhibit 14, Fortunka testified that

she did not believe that the letter informed the beneficiaries that there was

already a pending transaction pursuant to the December 7, 2015 Purchase

Agreement and that before the closing for the properties, which occurred on

January 15, 2016, she did not know it was going to occur.

[15] The court admitted, as Objector’s Exhibit 31, affidavits of the custodian of

records at the Allen County Assessor’s Office and certified sales disclosure

forms for “the subject properties, fourteen [] in total which were sold at closing

January 15, 2016,” 10 over Morningstar’s objection regarding their reliability.

Transcript Volume II at 131. With the exception of the form disclosing the sale

of 5714 Holiday Lane by the Estate of Virgil C. Morningstar, the sales

disclosure forms with a conveyance date of January 15, 2016 list the Trust as

9
At the bottom, under the signature line, the letter states: “AMOUNT SPENT ON BASELESS
ALLEGATIONS: (Remember that this included dealing with a challenge to the sale of the 642 sq. ft. lake cottage for
$300,000.00, suggesting that it was valued nearer $700,000.00) From September 15, 2015 through December 15,
2015 the costs to you for the baseless claims which I have addressed now total: $2,693.50.” Exhibits Volume I
at 124.
10
The Affidavits of the Records Custodian in Objector’s Exhibit 31 affirm they are from the “custodian of the
records at/for the Allen County Assessor’s Office, including those related to the ( ) Property Record Card or
(XXX) Sales Disclosure Form” for locations at “5226 Winters St,” “2822 Mauldin Dr,” “2724 Schaper Drive,”
“2315 St Marys,” “2221 Vance Ave,” “5714 Holiday Lane,” “2602 Lynn Ave,” “4115 Robinwood Dr,” “4809
Spatz Ave,” “4310 Standish Dr,” “2620 Trentman Av,” “436 Violet Ct,” “3724 Winter St,” and “1302 Sinclair
St,” as well as for a location at “6030 Kent Rd.” Exhibits Volume I at 156, 161, 166, 171, 176, 181, 189, 192,
200, 205, 210, 215, 223, 228, and 233. Further, the affidavits affirm that the representations were “true this 13
day of July, 2018,” and the Sales Disclosure Forms attached to each include a stamp, located at the top, which
states “Jul 13 2018 [] Stacey O’Day Allen County Assessor.” See id.

Court of Appeals of Indiana | Opinion 18A-TR-3044 |November 15, 2019 Page 16 of 32
the Seller/Grantor and Kaufmann LLC as the Buyer/Grantee. Forms sharing

that same conveyance date indicate varying sales prices, ranging from $8,000 to

$37,000. The exhibit contains several sales disclosure forms for subsequent

sales of the same properties that list AM Fire as the Seller/Grantor.

[16] During direct examination by Fortunka’s counsel, Morningstar indicated that

“Kaufmann, LLC” “somehow had an assignment under the purchase agreement

with AM Fire” and “came to the closing and actually paid” $226,000 for the

fourteen parcels. Id. at 133. Morningstar further testified that she had never been

a realtor, was not trained as such, and did not have a real estate license. She

answered, “No I do not,” when asked if she knew how it “came to be that AM

Fire made a second offer” for the properties, and she answered “No sir” when

the court asked if she knew what happened between the initial offer of $220,000

and the offer of $226,000 that would explain the increase of $6,000. Id. at 158.

When the court asked if the increase was “in anyway related to the fact” that

“between those two [] contracts that this lady had made an offer to buy the

properties,” she answered “No sir. I mean I didn’t do – I didn’t contact anybody.

It was just – it came in,” and when asked if she knew whether or not Attorney

Myers communicated to AM Fire that one of the beneficiaries had made an offer

of $225,000, she answered that she did not know. Id. at 158-159. When asked if

the only thing she did to charge the finder’s fee was have a meeting with Fred

Webb of AM Fire at some point in time, she answered “I found him, yes,” and

indicated she did not conduct any negotiation. Id. at 167. She testified that she

did not inform the beneficiaries of her plans to charge the finder’s fee at any time

Court of Appeals of Indiana | Opinion 18A-TR-3044 |November 15, 2019 Page 17 of 32
or ask permission of the court to charge it. She indicated that she “did three

percent (3%) which was half of a what a realtor would charge,” in response to

being asked how she determined the amount for the finder’s fee. Id. at 169-170.

The court sustained an objection based on the Dead Man’s Statute when her

counsel asked during cross-examination whether Virgil was aware that she had

received a percentage of the sale proceeds of a lake cottage, and Morningstar

answered affirmatively when asked if she sold “the other properties while Virgil

was alive and retain[ed] a percentage fee for that activity,” indicated she did not

know how many times and stated“[a] few, yes,” and answered “[y]es I did”

when asked if she consulted Virgil when she did so. 11 Id. at 179. She answered in

the negative when asked if she negotiated for a price with the buyer on any given

property. During recross-examination, the court asked her if she expected it to

believe that, when she signed her name on the disclosures and “they put a value

on each of the properties,” she did not realize what she was doing, Morningstar

answered “[h]onestly, I just signed the papers,” and when the court asked in

follow-up “[a]nd you stick by that you didn’t realize what you were doing,” she

responded “I stick by that. I really didn’t realize what I was doing.” Id. at 193.

[17] Christopher Lasley, who worked for the Trust as a property manager until 2014,

testified as to his recollections about three properties and answered questions

about another property. When Morningstar moved to submit Trustee’s Exhibit

11
The court later sustained an objection based on the Dead Man’s Statute when counsel asked whether, at
any point in time, Virgil threatened to fire Morningstar from her job as Trustee. (179)

Court of Appeals of Indiana | Opinion 18A-TR-3044 |November 15, 2019 Page 18 of 32
F, a list in which Lasley “put down what [he] fe[lt] was the value” for the

fourteen Trust properties in question, Fortunka objected and Lasley indicated in

response to preliminary questions that he was not a licensed realtor or appraiser

of Indiana real estate, had not ever taken classes in real estate appraisal, did not

conduct real estate appraisals for his current employer, and that he had not given

an opinion as to residential real estate values before he was given the list by

Attorney Myers. Transcript Volume III at 54. The court sustained the objection.

[18] Kyle Roemmich, a licensed realtor and owner of a property management

company testified that potential rental property owners ask to “look at houses

that they’re thinking about buying and giv[e an] opinion on what it would cost

to get it rent ready, make the repairs, things like that,” and testified that he

prepared upon request a list of valuations for certain properties. Id. at 62.

When Morningstar moved to admit the list, Fortunka objected as to the

competency of the witness. After Roemmich answered in the negative to each

of the court’s questions of whether he went into any of the properties, knew the

status of the units’ plumbing, heating, air conditioning, or electric, or used any

comparables or Allen County or Township records in preparing the valuations,

the court sustained the objection. Id. at 66.

[19] Fred Webb of AM Fire testified about purchasing the fourteen properties and,

when asked about how he increased his offer to $226,000, stated “I got a call. I

think it was that my offer wasn’t good enough, wasn’t high enough and that I

needed it best and final.” Id. at 97.

Court of Appeals of Indiana | Opinion 18A-TR-3044 |November 15, 2019 Page 19 of 32
[20] On November 21, 2018, the court issued its Findings of Fact, Conclusions of

Law and Judgment on Trustee’s First Accounting and the Objections Thereto.

In its Findings of Fact the court found: from December 7, 2015, until the real

estate closing on January 15, 2016, neither Attorney Myers nor Morningstar

ever disclosed the acceptance and new purchase price sum of $226,000 from

AM Fire to any of the Trust beneficiaries; Morningstar accepted AM Fire’s

offer to purchase the Trust real estate as evidenced by the December 7, 2015

purchase agreement; Webb heard from Morningstar “that his first offer to

purchase of $220,000.00 wasn’t good enough”; that the conflict in testimony

between Webb and Morningstar concerning the request for new bids and the

vague discussion about what “highest and best offer” meant is “very

suspicious”; and that it concluded that either Morningstar or Attorney Myers

must have communicated Fortunka’s offer to Webb “prior to his alleged

submission of his second ‘best and highest offer.’” Appellant’s Appendix

Volume II at 20. The court found: that the check purporting to be AM Fire’s

earnest money deposit, which was dated three years prior to the time in

question, was not credibly the earnest money deposit made by AM Fire; that

none of the evidence presented was consistent with AM Fire submitting an

earnest money deposit on December 7, 2015; and that AM Fire did not meet

Morningstar’s bidding criteria. It further found: Morningstar did not order the

Trust real estate appraised “so the values of the parcels at the time of sale or at

the time of Virgil’s death were not established”; that by using the values of the

Trust real estate “as determined by the Allen County Sales Disclosure forms,”

twelve of the properties “were sold by [Morningstar] for a price less than the

Court of Appeals of Indiana | Opinion 18A-TR-3044 |November 15, 2019 Page 20 of 32
appraised values or subsequent sales price”; that based on the appraisals and

subsequent sales disclosure information, the purchase price of $226,000 “in the

aggregate is $128,100 less” than the fair market value of the Trust real estate,

and that Morningstar’s “unilateral action” deprived the Trust of that amount.

Id. at 25-26.

[21] With regard to the three percent “finder’s fee” of $6,780, the court found:

18. The Trustee’s witness, Cindy Wirtner, C.P.A. testified that a
finder’s fee is paid to someone as a fee for finding a buyer or a
seller in a transaction. [Morningstar] did not find the buyer of the
13 properties; and was being compensated as Trustee on a bi-
monthly basis when she received a $6,780 “finder’s fee”.

19. Ms. Wirtner also testified that the 3% “finder’s fee” paid to
[Morningstar] was not a “finder’s fee”, but was a commission.
Although Virgil’s lake property was not in the trust when it was
sold, the 4% “finder’s fee” was in fact a $12,000 commission. The
“finder’s fee” paid to the Trustee on sales of 20-25 parcels of real
estate sold before the trust was funded were also commissions.

20. That the Trustee’s attorney approved the $6,780 “finder’s fee”
does not render said payment as a commission to be proper or
legal.

*****

22. The Trustee’s first accounting disclosed that on January 26,
2016, she received a distribution of Trust property in cash in the
sum of $8,000. She had also received a $26,000 distribution of
cash from the Trust on December 18, 2015.

23. In addition to the Trustee’s receipt of her beneficiary
distributions of $8,000 and $26,000 . . . she also received the
finder’s fee of $6,780 from the sale of the Trust Real Estate. She

Court of Appeals of Indiana | Opinion 18A-TR-3044 |November 15, 2019 Page 21 of 32
had previously received a four percent (4%) finder’s fee from the
Estate of Virgil Morningstar for the sale of the lake property in
Michigan for the sum of $300,000, which reduced the funds to be
distributed to the Trust. The Trustee also collected reimbursement
for mileage, cell phone and bi-monthly payroll payments of
$849.50 while the Trust Real Estate property was under
management by the Trust.

Id. at 28-29 (internal citations omitted).

[22] In its Conclusions of Law, the court concluded that: “[b]ased upon review of the

exhibits in this case in assessing the demeanor and consistency of her testimony,

[Fortunka] was a credible witness at the hearings”; “[b]ased upon the exhibits,

testimony of other witnesses, including [Webb] and [Fortunka], [Morningstar]

was not a credible witness concerning her communications with [Webb] relating

to the Trust Real Estate transaction and events leading up to the closing in

January 2016, as well as in other parts of her testimony, including at the signing

of sales disclosure documents she claimed ‘she didn’t realize what she was

doing’”; and that Morningstar’s history of collecting finder’s fees from prior real

estate properties, although not part of the issues before the court, demonstrate a

past practice of unsupervised collection of finder’s fees without court approval or

disclosure to Trust beneficiaries. Id. at 29. It further concluded that Morningstar

breached her duty to preserve Trust property by failing to adequately determine

the value of Trust Real Estate through appraisals and selling it against the

objections of multiple beneficiaries at less than fair market value and at a loss of

at least $128,100; she breached her duty “against self-dealing pursuant to I.C. §

30-4-3-5” by paying herself a finder’s fee without consultation or consent from

Court of Appeals of Indiana | Opinion 18A-TR-3044 |November 15, 2019 Page 22 of 32
the beneficiaries or the court despite her failure to demonstrate any actions on her

part to cultivate a buyer, to maximize the sales price, or to close the sale of the

property, resulting in a loss of $6,780; and she breached her duty of loyalty to the

beneficiaries by requiring “Fortunka to strictly adhere to certain bidding criteria,

such as submission of an earnest money deposit, while at the same time granting

the third party special treatment by allowing the third party to forego submitting

an earnest money deposit with its bid.” Id. at 32-33. It ordered Morningstar

liable to the beneficiaries in the amount of $128,000 and to disgorge the $6,780

she received as finder’s fees, that the total judgment of $134,880 “shall be a

charge against [her] beneficial interest in the Trust,” and that the “Trustee is

liable to [Fortunka] for reasonable costs and attorney’s fees,” who along with her

counsel was “authorized to submit their petition for fees within fourteen (14)

days of this Order. The Court will then determine an Order for

Reimbursement.” Id. at 33-34.

[23] On November 30, 2018, Morningstar submitted her Resignation of Trustee letter

which provided that it would “be effective at 11:59 pm on December 31, 2018.”

Motion to Dismiss Exhibit A at 1. The chronological case summary contains an

entry indicating that Fortunka filed a petition for attorney fees and costs on

November 30, 2018, and the court conducted a hearing at which it considered

the petition and arguments of counsel and ultimately awarded a judgment

against Morningstar and in favor of Fortunka in the amount of $94,472.00.

Court of Appeals of Indiana | Opinion 18A-TR-3044 |November 15, 2019 Page 23 of 32
[24] Fortunka later filed a request for judicial relief to appoint successor trustee, and

the court held a hearing and appointed STAR Bank, which filed an unopposed

motion to add it as an appellee with this Court, which we granted.

Discussion

[25] The issue is whether the trial court erred in finding that Morningstar breached

her duties as trustee. When the trial court enters an order containing findings of

fact and conclusions, we apply a two-step review. In re Wilson, 930 N.E.2d 646,

650 (Ind. Ct. App. 2010), trans. denied. First, we consider whether the evidence

supports the findings, and second, whether the conclusions support the

judgment. See id. We will neither reweigh the evidence nor assess witness

credibility, considering only the evidence most favorable to the judgment. Id.

We will set aside the trial court’s findings and conclusions only if they are

clearly erroneous, that is, if the record contains no facts or inferences supporting

them. Id. We apply a de novo standard of review to conclusions of law. Id.

[26] A trust is “a fiduciary relationship between a person who, as trustee, holds title

to property and another person for whom, as beneficiary, the title is held.” Ind.

Code § 30-4-1-1(a). “A ‘breach of trust’ is a violation by the trustee of any duty

that is owed to the beneficiary, with the duties being established by statute and

by the terms of the trust.” In re Stuart Cochran Irrevocable Trust, 901 N.E.2d

1128, 1138 (Ind. Ct. App. 2009), trans. denied. See Ind. Code § 30-4-1-2(4)

Court of Appeals of Indiana | Opinion 18A-TR-3044 |November 15, 2019 Page 24 of 32
(2014) (defining “breach of trust”). 12 A trustee has duties to administer a trust

according to the terms of the trust and to preserve the trust property. See Ind.

Code § 30-4-3-6(a) and (b)(3) (2015). 13

A. Breach of Duty Relating to Sales of Trust Property

[27] Morningstar first argues the trial court erroneously valued the Trust assets and

asserts that the methodology it used to arrive at the fair market value was

illogical, incorrect, and unsupported by the evidence. She contends that the court

erroneously used the sale price for each property shown on its Sales Disclosures

from the Trust to Kaufmann, LLC – which she characterizes as a “random

assignment of individual values” – in light of her testimony that she did not have

input on the values placed on the disclosures. Appellant’s Brief at 20. She asserts

that the court then erred in comparing those values to either the appraisal value –

in light of Roemmich’s testimony – or the price on the Sales Disclosure in the

later fourth party sale by AM Fire, which she asserts failed to account for the

renovations made by AM Fire. She argues that, instead of considering them

individually, the properties should be considered in sum, as a whole portfolio;

that Fortunka placed a total value upon the properties of $225,000, as indicated

by her offer; and that Fortunka never proved any other overall value than that

evidenced by the sale for $226,000 between a willing seller and a willing buyer.

12
Subsequently amended by Pub. L. No. 163-2018, § 13 (eff. July 1, 2018); Pub. L. No. 33-2019, § 13 (eff.
July 1, 2019); Pub. L. No. 221-2019, § 1 (eff. July 1, 2019); and Pub. L. No. 231-2019, § 21 (eff. July 1, 2019).
13
Subsequently amended by Pub. L. No. 221-2019, § 3 (eff. July 1, 2019); Pub. L. No. 231-2019, § 24 (eff.
July 1, 2019).

Court of Appeals of Indiana | Opinion 18A-TR-3044 |November 15, 2019 Page 25 of 32
She contends that her previous experience of selling other properties under

Virgil’s watch made her “very familiar with the marketability of low income

properties” and formed the basis for her acceptance of AM Fire’s offer of

$226,000. Id. at 18. She further argues that “Fortunka’s bid failed to include the

requirements of a legitimate offer,” and that, because Fortunka’s bid amount was

exceeded by that of another buyer, she was thus duty-bound to sell the properties

for the higher offer. Id. at 13.

[28] STAR Bank argues Morningstar’s specific objections on appeal as to valuation

of the properties amounts to a re-litigation of disputed facts and that the court’s

findings must be viewed through the lens of its credibility determinations

which, as evidenced by the judgment and order, weighed heavily in Fortunka’s

favor and against Morningstar. It argues that the process of selling the

properties was unusual and highly suspect and that the bid process “appeared to

be rigged.” Appellee STAR Bank’s Brief at 16. Fortunka contends that the

whole issue in this case could have been avoided if appraisals of the property

had been done “as is routine and customary in trust administration before the

sale of real estate so that the beneficiaries are protected.” Appellee Fortunka’s

Brief at 22.

[29] With regards to the valuation of the Trust property, the record as set out above

reveals that Objector’s Exhibit 31 contained sales disclosure documents

displaying sales prices for the Trust properties for conveyances on January 15,

2016, and on subsequent dates, which were attached to affidavits of the

custodian of the records for the Allen County Assessor. The court heard

Court of Appeals of Indiana | Opinion 18A-TR-3044 |November 15, 2019 Page 26 of 32
testimony about the properties, the differences between each, and estimates of

prices for the separate properties and in the aggregate from several witnesses,

including that of Mack, who was qualified without objection as an expert in the

field of appraisals. It also heard and was able to consider and weigh the

testimony of other witnesses regarding the properties’ values. We do not

reweigh the evidence nor assess witness credibility. See In re Wilson, 930 N.E.2d

at 650. Having found that the record contains facts and inferences supporting

the court’s valuation, we do not disturb its finding that the purchase price in the

aggregate of $226,000 was less than the fair market value of the Trust real

estate, which it valued at an amount of $128,100 in excess of $226,000.

[30] We further note the extensive findings in the court’s twenty-three page order

regarding the administration of the Trust, especially the findings that

Morningstar did not order an appraisal as the Trustee, despite not knowing the

worth of the Trust’s real estate assets, and that Fortunka was a credible witness,

whereas Morningstar was not. With that in mind, we observe that the Trust first

divulged to the beneficiaries the addresses of the properties on October 30, 2015,

in the same letter that it shared that it had secured a potential willing purchaser.

In the same letter, the Trust outlined that, alternatively, Morningstar could

“continue to market each unit seeking a cash buyer” or one or more of the

beneficiaries could “come up with the money to buy them or agree to take them

as a distribution.” Exhibits Volume I at 105-106. Fortunka presented evidence

that she expressed to the Trust a desire as a beneficiary to explore either option.

When the Trust disclosed the amount of the initial offer, Fortunka expressed her

Court of Appeals of Indiana | Opinion 18A-TR-3044 |November 15, 2019 Page 27 of 32
disagreement in selling Trust assets at a price she considered “far below fair

market value.” Id. at 111. We cannot say that the trial court’s conclusion that

Morningstar breached her duty to preserve Trust property was clearly erroneous.

B. Breach of Duty Relating to Finder’s Fees

[31] Morningstar argues that her receipt of a finder’s fee is not prohibited self-dealing

under Ind. Code § 30-4-3-7. 14 She argues that she presented evidence of a

practice in which Virgil, prior to his death, paid her compensation for locating

qualified buyers of his own real estate, and that of the Trust. She further

contends her efforts saved the Trust from incurring costs that would have been

incurred “[h]ad the . . . Trust properties been sold using a Realtor” and that, for

these savings, she was paid the finder’s fee of $6,780. Appellant’s Brief at 34.

[32] Fortunka responds that Morningstar presented no independent evidence of

Virgil’s alleged approval of past finder’s fees and contends that she did not

object when the court struck the self-serving testimony in accordance with the

Dead Man’s Statute per Ind. Code §§ 35-45-2. 15 STAR Bank contends it is

14
Titled “Self dealing; transactions between trusts,” Ind. Code § 30-4-3-7 provided in part at the time of the
Trust Administration that, unless the terms of the trust provide otherwise, the trustee has a duty “not to loan
funds to the trustee or an affiliate,” “not to purchase or participate in the purchase of trust property from the
trust for the trustee’s own or an affiliate’s account,” and “not to sell or participate in the sale of the trustee’s
own or an affiliate’s property to the trust.” (Subsequently amended by Pub. L. No. 194-2017, § 9 (eff. July 1,
2017)). To the extent that the trial court referenced “self-dealing” in its conclusions of law section, we cannot
say reversal is warranted on this basis in light of its citation to and discussion of the statutory elements of Ind.
Code § 30-4-3-5 and application to the facts of this case. See Appellant’s Appendix Volume II at 30-32.
15
In Childress Cattle, LLC v. Estate of Cain, this Court stated that the Dead Man’s Statute

Court of Appeals of Indiana | Opinion 18A-TR-3044 |November 15, 2019 Page 28 of 32
undisputed that she engaged in “little to no effort in ‘finding’ the buyer; in fact,

the buyer may well have found her” and that she was paying herself a

substantial salary out of the Trust during the relevant time frame. Appellee

STAR Bank’s Brief at 13.

[33] As noted, a trust is a fiduciary relationship, see Ind. Code § 30-4-1-1(a), and a

trustee has duties to administer a trust according to the terms of the trust and to

preserve trust property. See Ind. Code § 30-4-3-6(a) and (b)(3) (2015). See also

N.L.R.B. v. Amax Coal Co., a Div. of Amax, Inc., 453 U.S. 322, 329-330, 101 S. Ct.

2789, 2794 (U.S. 1981) (“Under principles of equity, a trustee bears an

unwavering duty of complete loyalty to the beneficiary of the trust, to the

exclusion of the interests of all other parties. To deter the trustee from all

temptation and to prevent any possible injury to the beneficiary, the rule against

a trustee dividing his loyalties must be enforced with ‘uncompromising rigidity.’

establishes as a matter of legislative policy that claimants to the estate of a deceased person
should not be permitted to present a court with their version of their dealings with the decedent.
In re Estate of Rickert, 934 N.E.2d 726, 731 (Ind. 2010). Our Court has explained that
Generally, when an executor or administrator of an estate is one party, the adverse parties are
not competent to testify about transactions that took place during the lifetime of the decedent.
Furthermore, the general purpose of the statutes is to protect decedents’ estates from spurious
claims. The Dead Man’s Statutes guard against false testimony by a survivor by establishing a
rule of mutuality, wherein the lips of the surviving party are closed by law when the lips of the
other party are closed by death.
We have held that the Dead Man’s Statutes apply to all cases in which a judgment may result
for or against the estate, notwithstanding the parties’ positions as plaintiff or defendant. In
addition, neither the express language of the statutes nor accepted concepts of fairness should
preclude application of the statutes so long as no statements made by the decedent are
admitted through depositions or public records made during his life.
J.M. Corp. v. Roberson, 749 N.E.2d 567, 571 (Ind. Ct. App. 2001) (internal citations omitted).
88 N.E.3d 1121, 1123 (Ind. Ct. App. 2017).

Court of Appeals of Indiana | Opinion 18A-TR-3044 |November 15, 2019 Page 29 of 32
A fiduciary cannot contend ‘that, although he had conflicting interests, he

served his masters equally well or that his primary loyalty was not weakened by

the pull of his secondary one.’” (internal citations omitted)), reh’g denied; Scanlan

v. Eisenberg, 669 F.3d 838, 844 (7th Cir. 2012) (“A trustee owes a fiduciary duty

to a trust’s beneficiaries and is obligated to carry out the trust according to its

terms and to act with the highest degree of fidelity and utmost good faith. The

fiduciary obligation of loyalty flows from the relationship of the trustee and

beneficiary . . . .” (internal citations omitted)). 16

[34] Ind. Code § 30-4-3-5 provides:

If the duty of the trustee in the exercise of any power conflicts with
the trustee’s individual interest or the trustee’s interest as trustee of
another trust, the power may be exercised only under one (1) of
the following circumstances:

(1) The trustee receives court authorization to exercise the
power with notice to interested persons as the court may
direct.

(2) The trustee gives notice of the proposed action in
accordance with IC 30-2-14-16 and:

16
We also note that the Indiana Law Encyclopedia provides that, “[b]ecause a trustee’s fundamental duty of
complete loyalty to the interests of a beneficiary requires him or her to forego all selfish interests in the
administration of the trust, a trustee may not profit therefrom.” 28 Ind. Law Encyc. Trusts § 109. We
further note that comment c(2) of § 86 of the Third Restatement of Trusts notes that although a trustee
ordinarily “has broad authority with regard to the sale of real property held in the trust, and even if confirmed
by powers expressly granted in a statute or trust provision, the exercise of the trustee’s power of sale requires
the exercise of prudence . . . , as well as compliance with other relevant fiduciary duties . . . . In this context,
the demands of fiduciary care and skill . . . are likely to be particularly rigorous – requiring the exercise of due
diligence and competence, via advisors or agents if and as needed by the trustee – because of the pricing,
information, and other challenges presented by the particular market.”

Court of Appeals of Indiana | Opinion 18A-TR-3044 |November 15, 2019 Page 30 of 32
(A) the trustee receives the written authorization of
all interested persons to the proposed action within
the period specified in the notice of the proposed
action; or

(B) a beneficiary objects to the proposed action
within the period specified in the notice of the
proposed action, but the trustee receives court
authorization to exercise the power.

(3) The exercise of the power is specifically authorized by
the terms of the trust.

[35] Article X of the Trust is titled “Compensation of Trustee” and provides in part

that the trustee shall receive reasonable compensation “for unusual and

extraordinary services” rendered in settling the trustors’ financial affairs and in

making distribution of the assets. Appellant’s Appendix Volume II at 41.

Article X further provides that “[s]uch compensation shall be adequate to cover

the work involved, as well as responsibilities assumed, in effecting financial

disposition of the trust.” Id.

[36] The record reveals Morningstar paid herself $6,780 in connection with the sale

of the Trust properties, and that she received monthly or bimonthly payroll

disbursements at the time of $845.50. At the hearing, she answered “I found

him, yes,” when asked if the only thing she did to charge the finder’s fee was

have a meeting with Webb at some point in time, and she indicated she did not

conduct any negotiation. Transcript Volume II at 167. Under the

circumstances, we find that the court’s determination that $6,780 was not

reasonable compensation paid for “unusual and extraordinary services” was not

Court of Appeals of Indiana | Opinion 18A-TR-3044 |November 15, 2019 Page 31 of 32
clearly erroneous. Based upon the evidence and testimony presented, we

conclude that Morningstar committed a breach of trust under Ind. Code § 30-4-

3-5 and affirm the judgment ordering her to disgorge the $6,780 payment.

[37] For the foregoing reasons, we affirm the trial court’s order. 17

[38] Affirmed.

May, J., and Mathis, J., concur.

17
While both vigorous representation of a client and thorough and responsive communication are desirable,
we caution Attorney Myers to review the expectations set forth in the Ind. Rules of Professional Conduct, in
light of the correspondence he shared with the beneficiaries as the representative of a fiduciary, as detailed
above and which did not disclose AM Fire’s second offer to purchase.

Court of Appeals of Indiana | Opinion 18A-TR-3044 |November 15, 2019 Page 32 of 32

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/4456165. Public record. Not legal advice.