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Gelber v. Glock

Supreme Court of Virginia

June 22, 2017

LAWRENCE E. GELBER, CO-EXECUTOR OF THE ESTATE OF BEVERLY E. GELBER, DECEASED, AND CO-TRUSTEE OF THE BEVERLY E. GELBER TRUST U/A DATED DECEMBER 1, 2010, AS RESTATED AND AMENDED, ET AL.
v.
MERYL ANN GLOCK

          FROM THE CIRCUIT COURT OF HENRICO COUNTY Gary A. Hicks, Judge

          PRESENT: All the Justices

          OPINION

          ELIZABETH A. McCLANAHAN, JUSTICE

         This case involves the validity of instruments executed by Beverly E. Gelber ("Mrs. Gelber") two months prior to her death and purporting to convey her home and personal property to her daughter, Meryl Glock. Lawrence ("Larry") E. Gelber and Darlene A. Fleischmann, the executors of Mrs. Gelber's estate, who are also her children, contend that Meryl wrongfully induced Mrs. Gelber to execute a deed of gift and bill of sale through undue influence and fraud.[1] They also assert that the bill of sale, executed by Mrs. Gelber in her individual capacity, was of no effect because Mrs. Gelber's personal property was held in trust.

         The Executors challenge the circuit court's rulings denying their motion for partial summary judgment on the issue of Mrs. Gelber's execution of the bill of sale in her individual capacity and granting Meryl's motion to strike the Executors' evidence at trial in support of their claims of undue influence, promissory fraud, and civil conspiracy. The Executors also challenge the circuit court's rulings on the exclusion from evidence of Mrs. Gelber's declarations disavowing the property transfers and the exclusion from evidence of records of real estate tax assessments on Mrs. Gelber's home.

         Although we conclude that the circuit court did not err in denying the motion for partial summary judgment on the issue of title and possession of Mrs. Gelber's personal property, in excluding records of real estate tax assessments on Mrs. Gelber's home, and in granting the motion to strike the Executors' evidence on the civil conspiracy claims, we hold that the circuit court committed error in excluding from evidence the declarations made by Mrs. Gelber disavowing the property transfers and in granting the motion to strike the Executors' evidence on their claims for undue influence and promissory fraud.

         I. BACKGROUND

         On December 1, 2010, Mrs. Gelber executed several estate planning documents, including a will and trust agreement. The 2010 will revoked any other wills, which included a previous will that had been executed by Mrs. Gelber in 2009, and gave Mrs. Gelber's real and personal property to her trustee under the 2010 trust agreement. The 2010 trust agreement named Mrs. Gelber as the trustee and amended a trust agreement previously executed by her in 2009. The 2010 trust agreement directed that upon Mrs. Gelber's death, the successor trustee distribute her assets in equal shares to her children. Mrs. Gelber also executed a tangible personal property deed by which she conveyed all of her tangible personal property to herself as trustee.

         On July 18, 2014, while Mrs. Gelber was an inpatient at St. Mary's Hospital in Richmond, she executed a deed of gift in which she conveyed her home on Edwardsville Drive in Glen Allen to Meryl, one of her five children. On that same date, Mrs. Gelber executed a bill of sale in which she conveyed to Meryl all items of her personal property located at her home.[2]Mrs. Gelber, who was 87 years old at the time and suffering from terminal cancer, later made statements, both orally and by signed typewritten declaration, in which she disavowed the property transfers. More specifically, Mrs. Gelber stated that she did not intend to make the transfers, had no recollection of the execution of the documents, was in a weakened mental, physical, and emotional condition when she executed the documents, and did so upon undue influence and misrepresentations made to her by Meryl.

         On August 19, 2014, Mrs. Gelber, individually, by and through her attorneys-in-fact, Larry and Darlene, filed a complaint against Meryl alleging undue influence and fraud in connection with Mrs. Gelber's execution of the deed of gift and bill of sale.[3] After Mrs. Gelber died on September 19, 2014, Larry and Darlene were substituted as plaintiffs in their capacities as executors of Mrs. Gelber's estate and trustees of her trust. Subsequently, the Executors added a count alleging a civil conspiracy between Meryl and her sister and brother-in-law, Linda and Philip Landa, though Meryl remained the sole defendant.

         Meryl filed a counterclaim asserting breaches of contract, statutory warranty, and express warranty against the Executors and seeking damages and attorney's fees incurred in defending the claims made by Larry and Darlene in their capacities as trustees of Mrs. Gelber's trust.

         Prior to trial, the Executors filed a motion for partial summary judgment as to title and possession of the personal property on the grounds that the bill of sale was signed by Mrs. Gelber in her individual capacity and was of no effect since the personal property had been conveyed in 2010 to Mrs. Gelber in her capacity as trustee. Also prior to trial, Meryl filed a motion in limine seeking to exclude evidence of Mrs. Gelber's declarations not contemporaneous with the execution of the deed of gift and bill of sale to establish the substantive fact of undue influence. The circuit court denied both motions and the parties proceeded to trial.[4]

         During trial, the circuit court excluded from evidence tax assessment records on Mrs. Gelber's home that the Executors sought to introduce to prove the home's value. After the Executors presented their evidence, the circuit court granted Meryl's motion to strike the Executors' evidence as to all claims. In granting the motion to strike, the circuit court ruled that declarations made by Mrs. Gelber disavowing the property transfers were not admissible and would not be considered in determining whether the Executors had met their burden of proof. At a separate hearing, the circuit court entered judgment for Meryl on her claim for attorney's fees.[5]

         II. DENIAL OF MOTION FOR PARTIAL SUMMARY JUDGMENT AS TO PERSONAL PROPERTY

         The Executors argue that the circuit court erred in denying their motion for partial summary judgment as to title and possession of Mrs. Gelber's personal property. They contend that the bill of sale failed to transfer title over the personal property, as a matter of law, because Mrs. Gelber signed the bill of sale in her individual capacity without referencing her capacity as trustee. We disagree with the Executors that they were entitled to partial summary judgment on this ground. Mrs. Gelber retained the power to revoke prior conveyances to her trust and was, therefore, empowered to withdraw the property from the trust upon substantial compliance with the provisions of the trust agreement, which required only written notice to herself as trustee.

         Mrs. Gelber was the sole settlor, [6] trustee, and lifetime beneficiary of her trust under the provisions of the 2010 trust agreement. Although Mrs. Gelber maintained the right to designate a successor trustee to serve upon her resignation, incapacity, or death, and named therein certain individuals to serve as trustees should she fail to designate a successor trustee, Mrs. Gelber remained the sole trustee at the time the bill of sale was executed by her. The trust agreement provided that "my Trustee shall distribute principal from the trust as I may direct." The trust agreement also expressly reserved to Mrs. Gelber "the right to revoke or amend this agreement by a writing (other than a will) signed by me and delivered to my Trustee during my lifetime." Therefore, as the settlor, trustee, and lifetime beneficiary, Mrs. Gelber maintained control over the property she placed in trust under the 2010 revocable trust agreement. See Murnan v. Stewart Title Guar. Co., 585 F.Supp.2d 825, 834 (E.D. Va. 2008), vacated in part on other grounds, 607 F.Supp.2d 745 (E.D. Va. 2009) ("[A] grantor who retains the sole discretionary power to revoke the trust owns the right to eliminate the trust and thereby own the trust property outright any time she chooses to do so.").

         Furthermore, Mrs. Gelber possessed the power to amend or revoke the trust upon substantial compliance with the provisions of the trust agreement. See Code § 64.2-751(C)(1) ("The settlor may revoke or amend a revocable trust . . . [b]y substantial compliance with a method provided in the terms of the trust."). See also Austin v. City of Alexandria, 265 Va. 89, 95, 574 S.E.2d 289, 292 (2003) (when a trust is revocable, the settlor retains the right to withdraw property from the trust in accordance with the terms specified by the trust agreement). The only requirement imposed upon Mrs. Gelber for exercising her rights under the 2010 trust agreement was "a writing . . . signed by me and delivered to my Trustee during my lifetime."

         We have previously recognized that where the settlor of a revocable trust is also the trustee, a requirement of written notice to the trustee of the settlor's intention to revoke a prior conveyance may be satisfied by the settlor's written execution of instruments conveying the trust property to another party. See id. at 96, 574 S.E.2d at 293. In Austin, the settlor executed and recorded a deed in 1993 conveying real property to himself as trustee under a declaration of trust. The pertinent provisions of the declaration of trust named the settlor as the initial trustee, named the settlor as the income beneficiary during his lifetime, provided for discretionary distributions of corpus by the trustee to the settlor, and provided that "by signed instruments delivered to the Trustee, " the settlor may withdraw property from the trust "upon giving reasonable notice in writing to the Trustee." Id. at 91-92, 574 S.E.2d at 290. In 1999, the settlor executed a deed in his individual capacity conveying the trust property to himself as trustee of a newly created trust.

         The successor trustee of the 1993 trust challenged the 1999 deed as ineffective since the property previously had been conveyed by the settlor to himself as trustee of the 1993 trust. With regard to the settlor's compliance with the provisions of the 1993 trust, we reasoned that because the settlor was the trustee of the 1993 trust, written notice of the settlor to himself as trustee was a "non-issue." Id. at 96, 574 S.E.2d at 293. Therefore, we accepted the contention that the requirement of notice in writing to the trustee was satisfied by the settlor's "signed instruments" establishing the 1999 trust and conveying the property to the 1999 trust. Id.

         Notwithstanding our holding in Austin that the written notice requirement of the 1993 trust was satisfied, we further concluded that the settlor failed to comply with the revocation and reversion of title provisions of the 1993 deed. The deed provided that any revocation of the trust agreement shall not be effective as to the property conveyed unless the grantor executed a deed, duly recorded, evidencing the revocation and reversion of title. See id. at 96-97, 574 S.E.2d at 293. Because the 1999 deed was not executed by the grantor in his capacity as trustee and contained no reference to the 1993 trust, we held that the 1999 deed failed to satisfy the revocation and reversion title requirements of the recorded 1993 deed. Id. In contrast, the tangible personal property deed executed by Mrs. Gelber in which she conveyed her personal property to herself as trustee under the 2010 trust agreement contained no provisions requiring a deed evidencing a revocation or reversion of title to the personal property.

         In sum, Mrs. Gelber retained control over the property she conveyed to herself as trustee under the terms of the 2010 trust agreement and reserved to herself the power to withdraw property from her trust or revoke her prior conveyance of personal property to the trust upon written notice to herself as trustee. We conclude that Mrs. Gelber's written execution of the bill of sale substantially complied with the provision of the trust agreement requiring a writing signed by her and delivered to herself.[7] Thus, we reject the Executors' contention that the bill of sale failed to transfer title over the personal property, as a matter of law, on the ground that Mrs. Gelber signed the bill of sale in her individual capacity.

         III. EXCLUSION OF DECLARATIONS BY MRS. GELBER

         The Executors assign error to the circuit court's exclusion from evidence of declarations made by Mrs. Gelber disavowing the deed of gift and bill of sale. They argue that her declarations were admissible under the hearsay exception provided by Code § 8.01-397 (the "Dead Man's statute"). We review the circuit court's decision to admit or exclude evidence using an abuse of discretion standard. John Crane, Inc. v. Jones, 274 Va. 581, 590, 650 S.E.2d 851, 855 (2007). This review necessarily includes a determination of whether the circuit court was guided by an erroneous legal conclusion or flawed interpretation of Code § 8.01-397. See Lawlor v. Commonwealth, 285 Va. 187, 213, 738 S.E.2d 847, 861-62 (2013).

         Although the circuit court initially denied Meryl's motion in limine to exclude declarations by Mrs. Gelber not made contemporaneously with the execution of the deed of gift and bill of sale and permitted most of Mrs. Gelber's statements into evidence, the circuit court subsequently ruled the statements were not admissible when it granted Meryl's motion to strike the Executors' evidence. The circuit court explained that "[t]he Dead[ M]an['s] [s]tatute is not available to the [Executors] as to hearsay exceptions for Ms. Gelber's declarations not contemporaneous with the execution of the deed of gift and the bill of sale, " that "Virginia case law supports this, " and that "[t]his would also perplex and mislead a jury." We conclude the circuit court erred in its ruling on the admissibility of Mrs. Gelber's declarations under the Dead Man's statute.

Code § 8.01-397 states, in pertinent part:
In an action by or against a person who, from any cause, is incapable of testifying, or by or against the committee, trustee, executor, administrator, heir, or other representative of the person so incapable of testifying . . . whether such adverse party testifies or not, all entries, memoranda, and declarations by the party so incapable of testifying made while he was capable, relevant to the matter in issue, may be received as evidence in all proceedings including without limitation those to which a person under a disability is a party.

(Emphasis added.) Under the plain language of the statute, "all entries, memoranda, and declarations" by Mrs. Gelber prior to her death are admissible to the extent they are "relevant to the matter in issue." Id. See also Va. R. Evid. 2:804 (b)(5) (providing hearsay exception for statements by party incapable of testifying and incorporating language of Code § 8.01-397); Charles E. Friend & Kent Sinclair, The Law of Evidence in Virginia § 10-7[f], at 575-76 (7th ed. 2012) (noting that Code § 8.01-397 provides that "in any case by or against a decedent/incapacitated person, the hearsay out-of-court statements of the decedent/incapacitated person are generally admissible"). Contrary to the circuit court's ruling, therefore, the hearsay exception set forth in Code § 8.01-397 contains no language that would limit its application to Mrs. Gelber's declarations that were contemporaneous with her execution of the deed of gift and bill of sale.

         To the extent that the circuit court relied upon our decision in Wallen v. Wallen, 107 Va. 131, 57 S.E. 596 (1907), its reliance was misplaced. In Wallen, we held that "declarations of the testator, not made contemporaneously with the execution of his will, are relevant evidence, to show his feelings and affections towards the natural objects of his bounty, his mental condition as reflecting upon his testamentary capacity, but are not admissible to establish the substantive fact of undue influence." Id. at 157, 57 S.E. at 601. We reasoned that such declarations were hearsay and could only be admitted if made contemporaneously with the execution of the will as part of the "res gestae" to show the state of mind of the testator. Id. at 152-57, 57 S.E. at 600-01 ("The declarations are purely hearsay, being merely unsworn declarations, and, when no part of the res gestae, are not within any of the recognized exceptions, admitting evidence of that kind.") (quoting Throckmorton v. Holt, 180 U.S. 552, 573 (1901)).[8] Our decision was rendered when the Dead Man's statute precluded the surviving party from testifying (with certain exceptions) when the opposing party was incapable of testifying. At that time, the Dead Man's statute contained no hearsay exception for declarations made by the party incapable of testifying. See Pollard's Code § 3346 (1904).

         In 1919, Code § 3346 was repealed and replaced by Code § 6209 (the predecessor to Code § 8.01-397), which allowed the admission of testimony of the surviving party and the admission of the declarations of the party incapable of testifying. The goal of the plenary revisions of the Code with respect to competency issues in 1919, including the Dead Man's statute, was to "remove 'practically all disqualifications, ' and thus permit the courts to hear 'all evidence bearing on the question at issue' just as usual 'in the business affairs of life.'" Friend & Sinclair, supra, § 10-7[a], at 568 (quoting Epes v. Hardaway, 135 Va. 80, 88, 115 S.E. 712, 715 (1923)); see also Arwood v. Hill, 135 Va. 235, 241, 117 S.E. 603, 605 (1923) (explaining that the amendment to the Dead Man's statute "was intended to remove all disqualifications affecting the competency of witnesses in suits by or against the estates of persons laboring under disability or who are from any cause incapable of testifying").[9] Therefore, our holding in Wallen, which was rendered before the Dead Man's statute contained a hearsay exception for declarations of a party incapable of testifying, cannot be relied upon to exclude declarations by Mrs. Gelber that clearly fall within the hearsay exception set forth in Code § 8.01-397.[10]

         Because Mrs. Gelber's declarations, "relevant to the matter in issue, " were admissible under the hearsay exception provided for by Code § 8.01-397, the circuit court abused its discretion in ruling that Ms. Gelber's declarations not contemporaneous with the execution of the deed of gift and the bill of sale were inadmissible.[11]

          IV. EXCLUSION OF REAL ESTATE TAX ASSESSMENTS

          The Executors argue that the circuit court erred in refusing to admit records of the real estate tax assessments on Mrs. Gelber's home. The circuit court sustained Meryl's objection to the admission of the records on the ground that the records constituted inadmissible hearsay. The Executors contend that the records were admissible under the public records hearsay exception. As stated previously, we review the circuit court's decision to exclude the tax assessment records under an abuse of discretion standard. See John Crane, Inc., 274 Va. at 590, 650 S.E.2d at 855.

         During Larry's testimony at trial, the Executors sought to introduce a record of the 2015 real estate tax assessment on Mrs. Gelber's home as well as a record of assessment information for prior tax years dating back to 2006. The documents, certified as records of the Real Estate Assessment Division of the Henrico County Finance Department, contained the County's assessed value of Mrs. Gelber's home in 2015 and the assessed values in prior years. The purpose for which the Executors sought to introduce the tax assessment records was to establish the value of Mrs. Gelber's home.

         Because the information contained within the tax assessment records was offered by the Executors to establish the truth of the matters asserted therein, i.e., the value of Mrs. Gelber's home, the proffered exhibits were hearsay. See Va. R. Evid. 2:801(c) (defining "hearsay" as "a statement, other than one made by the declarant while testifying at the trial or hearing, offered in evidence to prove the truth of the matter asserted"); Arnold v. Wallace, 283 Va. 709, 713, 725 S.E.2d 539, 541 (2012) ("A hearsay objection lies against the admission of written statements which were made out of court and are offered for the truth of what they say."). Therefore, the tax assessment records were not admissible unless they fell within a recognized exception to the hearsay rule. See Va. R. Evid. 2:802 (stating that "[h]earsay is not admissible except as provided by these Rules, other Rules of the Supreme Court of Virginia, or by Virginia statutes or case law").

         The Executors rely on Rule 2:803(8), which provides a hearsay exception for "records, reports, statements, or data compilations, in any form, prepared by public offices or agencies, setting forth (A) the activities of the office or agency, or (B) matters observed within the scope of the office or agency's duties, as to which the source of the recorded information could testify if called as a witness." The Executors argue that Meryl did not contest the authenticity of the tax assessment records, which were prepared by a public official and set forth matters observed within the scope of the official's duties.

         While it is true that Rule 2:803(8) provides a hearsay exception for public records, the Rule does not render opinions contained within the hearsay automatically admissible. See Friend & Sinclair, supra, § 15-1[d], at 905 ("The objection that an item of proffered proof is hearsay is but one of the many grounds on which the proof might be excluded. Conversely, satisfying the hearsay rule by identifying . . . a recognized 'hearsay exception' which allows the proof to be received despite the general hearsay ban . . . solve[s] only the hearsay problem.") (emphasis in original). "The traditional rule has been that the opinion rule applies to hearsay declarations to the same extent that it applies to in-court testimony. Thus, a hearsay declaration containing a statement of opinion must, to be admissible, satisfy the requirements of both the rule prohibiting admission of hearsay and the rules restricting the expression of opinion by witnesses." Id. In particular, we have held that the official documents exception to the hearsay rule does not "permit the introduction of opinion evidence contained in any such records." Smith v. Woodlawn Construction Co., 235 Va. 424, 432, 368 S.E.2d 699, 704 (1988) (holding that record of assessed value of the property by local commissioner of revenue was properly excluded).

         The tax assessment records on Mrs. Gelber's property contained the expert opinion of the public official as to the value of Mrs. Gelber's home. Admission of the tax assessment records would have allowed the Executors to introduce expert opinion as to the value of Mrs. Gelber's home without requiring them to qualify an expert or satisfy the foundational requirements for admission of expert testimony. "The admission of hearsay expert opinion without the testing safeguard of cross-examination is fraught with overwhelming unfairness to the opposing party. No litigant in our judicial system is required to contend with the opinions of absent 'experts' whose qualifications have not been established to the satisfaction of the court, whose demeanor cannot be observed by the trier of fact, and whose pronouncements are immune from cross-examination." McMunn v. Tatum, 237 Va. 558, 566, 379 S.E.2d 908, 912 (1989); see also Harman v. Honeywell Int'l, Inc., 288 Va. 84, 93 n.4, 758 S.E.2d 515, 520 n.4 (2014) ("This Court has long recognized the dangers of admitting hearsay expert opinion.").

         Accordingly, because the tax assessment records contained hearsay expert opinion, we conclude that the circuit court did not abuse its discretion in excluding them from the evidence at trial.

         V. RULINGS ON MOTION TO STRIKE

         The Executors assert that the circuit court erred in granting Meryl's motion to strike the evidence as to their claims of undue influence, fraud, and civil conspiracy. When ruling on a motion to strike the plaintiff's evidence, the circuit court must "accept as true all the evidence favorable to the plaintiff as well as any reasonable inference a jury might draw therefrom which would sustain the plaintiff's cause of action." Austin v. Shoney's, Inc., 254 Va. 134, 138, 486 S.E.2d 285, 287 (1997). The circuit court may not "judge the weight and credibility of the evidence, and may not reject any inference from the evidence favorable to the plaintiff unless it would defy logic and common sense." Id. When reviewing a circuit court's decision granting a ...


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