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FOR PUBLICATION
ATTORNEY FOR APPELLANT: DAVID E. BAILEY Eilbacher Fletcher LLP Fort Wayne, Indiana ATTORNEYS FOR APPELLEES: CATHLEEN M. SHRADER THOMAS A. HERR Barrett & McNagny, LLP Fort Wayne, Indiana

FILED
of the supreme court, court of appeals and tax court

IN THE COURT OF APPEALS OF INDIANA
IN THE MATTER OF: THE STEPHEN L. CHAPMAN IRREVOCABLE TRUST AGREEMENT DATED DECEMBER 18, 1997: CARRIE CHAPMAN, Appellant-Intervenor, vs. HOWARD L. CHAPMAN and ELIZABETH W. CHAPMAN, Trustees of the STEPHEN L. CHAPMAN IRREVOCABLE TRUST AGREEMENT DATED DECEMBER 18, 1997, Appellees-Petitioners. ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) )

Aug 24 2011, 10:07 am

CLERK

No. 02A03-1012-TR-624

APPEAL FROM THE ALLEN SUPERIOR COURT The Honorable David J. Avery, Special Judge Cause No. 02D01-1005-TR-10 August 24, 2011 OPINION - FOR PUBLICATION KIRSCH, Judge

Howard L. ("Howard") and Elizabeth W. ("Elizabeth") Chapman (collectively, "Trustees"), parents of Stephen L. Chapman ("Stephen") and settlors of the Stephen L. Chapman Irrevocable Trust Agreement ("the Trust") filed a petition to modify the date of distribution of Trust assets to Stephen, and the trial court granted the petition. Intervenor Carrie Chapman ("Carrie"), wife of Stephen, appeals the trial courts decision, raising the following two restated issues: I. Whether the trial court possessed jurisdiction to modify the Trust even though there was a previously-filed dissolution proceeding between Carrie and Stephen pending in another Allen County Superior Court; and Whether the trial court erred when it granted Trustees petition to reform the Trust.

II.

We affirm in part and reverse in part. FACTS AND PROCEDURAL HISTORY1 Howard and Elizabeth, husband and wife, created the Trust on December 18, 1997. The Trust provided that a distribution of trust assets was to be made to Stephen, their son, upon his fifty-fifth birthday, which was November 13, 2010. Initially, the assets of the Trust consisted of stock in Waterfield Mortgage, a company that Elizabeths father founded in the 1920s or 1930s, and at some point Elizabeth inherited the stock from her parents. In 2006 or

We held oral argument in this case on July 12, 2011 in the Allen County Courthouse before an audience of Allen County Bar Association members. We commend counsel on their written advocacy and oral presentations. We also thank the courthouse personnel for their hospitality in hosting this oral argument. Finally, we thank the Allen County Bar Association members for their thoughtful post-argument questions concerning Indianas appellate system.

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2007, Waterfield Mortgage Company was sold, and the stock was replaced with cash or other assets. Appellant's App. at 82. At the time the Trust was created, Stephen and Carrie were engaged, and they married about a month later, on January 22, 1998. On June 29, 2009, Carrie filed a petition for dissolution of her marriage to Stephen in the Whitley Circuit Court, which was thereafter removed to Allen County Superior Court No. 7 ("dissolution court"), where it is still pending.2 On May 13, 2010, Trustees filed a verified petition to reform the Trust in Allen County Superior Court No. 1 ("trial court"), seeking to delay distribution of assets to Stephen. Trustees argued for reformation based on provisions in the Trust and also pursuant to Indiana Code sections 30-4-3-24.4 and 30-4-3-26, which provide standards for modification of administrative or dispositive terms of a trust. Carrie filed a motion to intervene under Indiana Trial Rule 24, arguing that she had a substantial interest in the modification of the Trust. More specifically, she argued that Stephens interest in the Trust constituted a marital asset and that a distribution of the Trust to Stephen while the divorce was pending should be considered an economic circumstance affecting the division of the marital estate. The trial court held a hearing on Carries motion and, on July 14, 2010, granted her request to intervene in the Trust proceedings.3 Appellant's App. at 33.

Thereafter, Carrie filed a motion to stay the Trust reformation proceedings, arguing that the
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Carrie and Stephen are the parents of three minor children. Trustees do not challenge the trial courts order allowing Carrie to intervene.

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dissolution court possessed jurisdiction of the matter. The trial court denied her motion. Carrie also filed a motion for joinder in the dissolution action, seeking, among other things, to have the trust proceedings joined with the dissolution matter; the dissolution court denied her motion. On September 29, 2010, the trial court held a hearing on Trustees verified petition to reform the Trust. At the hearing, Howard testified that the purpose of the Trust was to pass the property that had been inherited by Elizabeth "and accumulated for generations" to Stephen. Tr. at 15 (Sept. 29, 2010 hearing). He explained, "The only way . . . that [Carrie] could ever become a beneficiary would be if Steve had died during the term of the trust and there were [sic] no divorce pending." Id. at 19. Carries testimony included her statement that she was making a claim in the dissolution action that the Trust should be considered as a marital asset. Stephen testified that he had conversations with Carrie prior to their marriage about a pre-marital agreement, but one was never prepared or signed. Referring to the dissolution proceedings, Stephen opined that "it seems" Carrie and her attorney were purposely delaying the resolution of the dissolution that was filed in June 2009. Id. at 51. Stephens testimony neither objected to nor overtly advocated for the reformation of the Trust. After taking the matter under advisement, and receiving post-trial briefs from the parties, the trial court issued an order on November 12, 2010 granting Trustees petition to reform the trust. That same date, it issued a separate order including findings, discussion, and decision, explaining its reasoning. In making its decision, the trial court relied on Article
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II, Clause 7 of the Trust, which provides for the reformation of the Trust and states: The Settlors recognize that one or both of the following unforeseeable conditions may arise in the future: (a) Legislation or court decisions highly detrimental to any trust created hereunder or to any beneficiaries; or (b) Other events tending to greatly impair the intent and purposes of this Irrevocable Trust Agreement. Should either of these conditions occur, reformation or termination of the Trust created hereunder might be desirable. The Trustee, in the sole judgment and discretion of the Trustee, may petition the court of competent jurisdiction for a determination that a condition coming within either of the foregoing standards has occurred, and that the best interest of the Trust and other beneficiaries require reformation or termination of the Trust. If such court shall order that such a condition has occurred and that the best interest of the Trust and of the beneficiaries require reformation or termination of the Trust, the Trustee shall act in accordance with such order. Appellant's App. at 200. The trial court found that "[t]he intent of the Chapmans as the Settlors of the trust was to pass the assets received by Elizabeth Chapman from her parents on to her son, his family and his issue." Id. at 201. The trial court determined that "the pending dissolution . . . is an event tending to greatly impair the intent and purposes of the [Trust] and that it is in the best interest of the [T]rust and the Beneficiary that [the Trust provisions] be reformed." Id. The trial court ultimately ordered: [T]he Trust shall be modified so that any interest of Stephen L. Chapman in the Trust shall not vest prior to six months after the entry of the final dissolution decree dissolving the marriage of Carrie A. Chapman and Stephen L. Chapman and disposing of the marital property, and the completion of any appeal therefrom, if an appeal is timely taken.

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Id. at 194. Thus, the terms of the Trust were modified4 such that the distribution to Stephen of the Trust assets would occur six months after the final order of dissolution or certification of any appeal. Carrie now appeals. DISCUSSION AND DECISION I. Jurisdiction

Carrie asserts that the trial court erred when it exercised jurisdiction over the Trust reformation proceedings. The vehicle by which Carrie raised the jurisdictional issue to the trial court was her motion to stay, where she argued that by reforming the Trust, Trustees "are attempting to control the distribution of marital property which they contend does not include the Trust corpus and the [T]rustees are effectively attempting to assert a right to control how the dissolution court divides the marital property."5 Appellant's App. at 41. We review a trial courts denial of a motion to stay under an abuse of discretion standard. See Hilliard v. Jacobs, 927 N.E.2d 393, 403 (Ind. Ct. App. 2010), trans. denied. However, Carrie urges that because the essence of her motion to stay was jurisdictional, we should apply a de novo review to the trial courts denial of her motion. Beatty v. Liberty Mut. Ins. Grp., 893 N.E.2d 1079, 1084 (Ind. Ct. App. 2008) (appellate review of trial courts dismissal

The trial courts Findings primarily use the terms modify or modification, not reform or reformation, as do the parties in their appellate briefs. According to authorities, "The basis of a reformation is that the instrument is the product of a mistake." However, where there was no mistake, the remedy is not reformation, but is to modify the trusts terms. See Appellant's App. at 88-89 (Trustees Post Trial Brief citing to George Gleason Bogert et al., Bogerts Trusts & Trustees

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