Summary
The Supreme Court of Missouri held that plaintiffs could pursue a declaratory judgment and constructive trust action concerning assets distributed under a revocable living trust. The court concluded that the plaintiffs' allegations of undue influence and violation of a confidential relationship stated a potentially viable claim and that dismissal for lack of standing was improper. The judgment was reversed and the case remanded.
Topics
Practice areas
Questions Presented
- Whether plaintiffs could pursue a constructive-trust and declaratory-judgment action in circuit court concerning assets distributed under a living trust.
- Whether the petition adequately pleaded a claim for imposition of a constructive trust based on alleged undue influence or violation of a confidential relationship.
- Whether defendants' statute-of-limitations defense concerning a trust contest was preserved when it was not raised in the trial-court pleadings.
Holdings
- Plaintiffs could elect to pursue a constructive-trust cause of action in circuit court rather than a discovery-of-assets proceeding in the probate division; circuit-court jurisdiction was concurrent with probate-division jurisdiction for this type of claim.
- The petition stated a cognizable claim for imposition of a constructive trust because it alleged that the trust provision excluding plaintiffs resulted from undue influence or a violation of confidence and that defendants would be unjustly enriched by retaining the assets.
- Defendants waived the statute-of-limitations defense concerning a challenge to the trust because they did not raise it in their trial-court pleadings.
Key quotations
“A constructive trust is an equitable device employed by "courts of equity to remedy a situation where a party has been wrongfully deprived of some right, title or interest in property as a result of fraud or violation of confidence or faith reposed in another."” (837)
“By requesting the imposition of a constructive trust on assets that Defendants are to receive, Plaintiffs pled an appropriate remedy.” (838)
Factual background
Harry Schoepp and Olivia Schoepp executed a will and a joint revocable living trust. The trust provided that, after both spouses' deaths, the remaining assets would be distributed to Olivia's living children and Harry's sister, while expressly excluding the descendants of Olivia's deceased son, John J. Lynch II. After both spouses died, the will was admitted to probate without challenge, and the assets were distributed under the will and trust. John J. Lynch II's descendants sued to invalidate the exclusion and obtain a constructive trust, alleging Alzheimer's disease, undue influence, breach of confidence, and unjust enrichment.
Procedural history
The trial court granted defendants' motion to dismiss on the ground that plaintiffs lacked standing. Plaintiffs had not challenged the decedent's will and sought relief concerning the trust assets based on alleged undue influence and violation of confidence. The Supreme Court reversed and remanded, holding that the petition pleaded an appropriate constructive-trust remedy and that plaintiffs should have an opportunity to conduct discovery.
Remand instructions
The case was remanded to allow plaintiffs to proceed beyond dismissal, conduct discovery, and attempt to establish facts supporting entitlement to a constructive trust. The court did not decide whether plaintiffs would ultimately prove entitlement or have standing after discovery. If a constructive trust is imposed, defendants may litigate whether the value of the husband's probated assets is included.