In the Matter of the Trust Agreement of Julian M. Johnson.

This opinion is nonprecedential except as provided by
Minn. R. Civ. App. P. 136.01, subd. 1(c).

STATE OF MINNESOTA
IN COURT OF APPEALS
A20-1504

In the Matter of the Trust Agreement of Julian M. Johnson.

Filed July 19, 2021
Affirmed
Worke, Judge

Hennepin County District Court
File No. 27-TR-CV-19-83

Francis J. Rondoni, Elizabeth C. Henry, Gary K. Luloff, Chestnut Cambronne PA,
Minneapolis, Minnesota (for appellants)

Bradley A. Kletscher, Tyler W. Eubank, Barna, Guzy & St effen, Ltd., Coon Rapids,
Minnesota (for respondents)

Considered and decided by Johnson, Presiding Judge; Worke, Judge; and Gaïtas,
Judge.
NONPRECEDENTIAL OPINION
WORKE, Judge
In this appeal from summary judgment, appellant-trust beneficiaries argue that the
district court misread relevant portions of the trust and improperly disregarded their
arguments that respondent-trustees breached th eir duties of loyalty and impartiality. We
affirm.
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FACTS
The Trust Agreement of Julian M. Johnso n (trust) was created in 2010 by Julian
Johnson, who died in 2015. Upon Julian’s death, respondent JoAnn Johnson, Julian’s wife,
and respondent Thomas Stoltman, an attorney and Julian’s friend, became the co-trustees
of the trust. JoAnn is also a beneficiary, along with the children of Julian and JoAnn.
Appellants Karen Carlson a nd Diane Waller are two of Julian’s children who are
beneficiaries under the trust.
In 2017, appellants and two other bene ficiaries brought a lawsuit against
respondents that ended in a settlement agreement. The relevant portions of the settlement
agreement stated that (1) JoAnn remains a trustee; (2) Stoltman will provide the
beneficiaries quarterly updates; (3) Stoltman will provide the bene ficiaries an annual
accounting of the income, expens es, and distributions of the trust; and (4) Stoltman will
provide the beneficiaries a copy of the trust tax returns. The settlement agreement also
stated that “Stoltman will be the sole trustee to make decisions on beneficiary distributions
of income” for the trust.
In 2019, appellants filed a petition to remo ve respondents as trustees, appoint a
successor trustee, void transfer of funds, and subject the trust to c ourt supervision. The
dispute is largely focused on how Stoltman a llegedly failed to abide by the terms of the
settlement agreement and distributed trust inco me in a manner partial to JoAnn. Section
6.1.1 of the trust states the terms for income distribution:
The Trustees shall distribute the income to my spouse;
provided that to the extent the Independent Trustees determine
that my Spouse has adequate ot her income, such Trustee may
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distribute all or any part of the net income to one or more of
my or my spouse’s Children in any proportions deemed
advisable by such Trustees and may accumulate all or any part
of the income and shall add it to principal.

Respondents filed concurrent motions fo r summary judgment. The district court
granted summary judgment in respondents’ favor and dismissed appellants’ petition. The
district court found several facts to be undisputed, including the following. Stoltman is the
independent trustee of the trust. Stoltm an consulted with Jo Ann for guidance on her
income distributions after the settlement ag reement. “Stoltman discussed [JoAnn’s]
financial needs in relation to how much income distribution she wanted from the Trust and
identified the amount of approximately $200,000.00 per year as an amount. . . . Stoltman
would follow up distributions to [JoAnn] and ask her ‘are you comfortable? Is this working
out?’” He did not ask JoAnn what her other income was or seek any records. Although he
obtained JoAnn’s input, Stoltman stated that he made the final distribution decisions on his
own.
The district court interpreted section 6. 1.1 as a mandate for Stoltman to make
income distributions to JoAnn to cover her needs. If Stoltm an determines that her needs
are met, the trust permits him to make distributions to the secondary beneficiaries or invest
the income back into the trust. The district court also dismissed appellants’ concerns about
the communication between Stoltman and JoAnn by stating, “The record reflects adequate
determinations were made by Stoltman as to [JoAnn]’s needs before allowing distributions
to [appellants] and the other Children. Nothin g in the language of the Trust requires that
Stoltman conduct a formal accounting of [JoAnn]’s finances to justify making
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distributions . . . .” Even though the settlement agreement stated that Stoltman would make
the sole decision for distributions, it did not prohibit him from communicating with JoAnn
on the matter, and the district court conclude d that appellants failed to produce evidence
that JoAnn controlled and made the decisions about distributions. This appeal followed.
DECISION
Appellants challenge the district court’s grant of summary judgment in favor of
respondents. “We review the grant of summ ary judgment de novo to determine whether
there are genuine issues of ma terial fact and whether the district court erred in its
application of the law.” Montemayor v. Sebright Prods., Inc., 898 N.W.2d 623, 628 (Minn.
2017) (quotation omitted). In doi ng so, “we view the facts in the light most favorable to
the nonmoving party.” Kelly v. Kraemer Constr., Inc., 896 N.W.2d 504, 506 (Minn. 2017).
“A genuine issue of material fact arises when there is su fficient evidence regarding an
essential element to permit reasonable pe rsons to draw different conclusions.” Id. at 508
(quotation omitted).
Trust language
Appellants argue that the district court misread relevant porti ons of the trust by
(1) focusing on specific wo rds instead of the entire language of the provision,
(2) contradicting precedent, and (3) interpreting the language in a way that contradicts the
intent of the settlor.
Appellate courts review a district court’s interpretation of a trust agreement de novo.
In re Stisser Grantor Trust , 818 N.W.2d 495, 5 02 (Minn. 2012). “[O]ur purpose in
construing a trust agreement is to ascertain and give effect to the grantor’s intent.” Id. This
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is determined by looking at “the instrument as a whole, not isolated words.” Id. (quotation
omitted). “When the trust agreement is unambiguous, we will ascertain the grantor’s intent
from the language of the agreement, without resort to extrinsic evidence.” Id.
The language of the trust determines wh ether a trustee’s exercise of power is
discretionary or mandatory. Id. at 509. “When a trustee’s exercise of power is
discretionary, a court will generally interfere w ith the trustee’s decisi ons only to prevent
an abuse of discretion.” Id. But if the terms are mandatory, “there is no deferential
review.” Id.
Appellants first argue that the district court improperly focused on the word “shall”
instead of the qualifying language following th e semicolon. The relevant portion of the
trust states:
The Trustees shall distribute the income to my Spouse;
provided that to the extent the Independent Trustees determine
that my Spouse has adequate ot her income, such Trustee may
distribute all or any part of the net income to one or more of
my or my spouse’s Children in any proportions deemed
advisable by such Trustees and may accumulate all or any part
of the income and shall add it to principal.

The district court relied on the use of “shall” and “may” in the trust to determine that
distributing income to JoAnn is mandatory wh ile distributing income to the children is
discretionary upon a determination that Jo Ann has adequate other income. Appellants
argue that the phrase “provided that to the extent the Independent Trustees determine that
my Spouse has adequate other income” is a qualifier that required St oltman to diligently
inquire about JoAnn’s other income before distributing to her any of the trust income.
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The district court’s interpretation of the trust is the only reasona ble interpretation.
The first clause states that the trustee shall distribute the trust’s income to JoAnn. This is
set off from the next clause by a semicolon. Semicolons are “most commonly used between
two independent clauses not joined by a conjunction to signal a closer connection between
them than a period would.” The Chicago Manual of Style § 6.56 (17th ed. 2017); see Shire
v. Rosemount, Inc., 875 N.W.2d 289, 296 (Minn. 2016) (using Chicago Manual to interpret
grammar of a statute). The mandate to dist ribute income to JoAnn is independent from,
but closely related to, the follo wing discretionary clause. In other words, Stoltman must
distribute the income to JoAnn, but if he determines that she has adequate income, then he
may distribute income to the children or back into the trust. Finally, the plain language
does not list any requirements as to how Stoltman should consider JoAnn’s other income,
if at all. A plain reading of the trust shows that the district court correctly interpreted the
clause and that it properly granted summary judgment in favor of respondents.
Appellants argue that this interpretation of the trust contradicts our caselaw. We
have interpreted similar trus t language to determine that the appellant was the primary
beneficiary of a support trust and thus had re sources available to her for purposes of her
eligibility for medical assistance. In re Decision of Comm’r of Human Servs. in Appeal of
Flygare for Med. Assistance, 725 N.W.2d 114, 119-20 (Minn. App. 2006), review denied
(Minn. Feb. 28, 2007). Appella nts attempt to extend this hol ding to mean that Stoltman
had a duty to inquire into JoAnn’s needs and other income to determ ine if her needs are
met, and that he did not sa tisfy his duty simply by asking her about her needs. But
appellants’ argument is inconsis tent with our conclusion in Flygare, which was that the
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trustee did not have discre tion to ignore the primar y beneficiary’s needs. Id. Appellants
have not shown that the district court’s decision contradicts precedent.
Finally, appellants argue that the district court’s interpretation of the trust violates
the intent of the settlor because there is no ev idence that the settlor wanted to deprive his
children of support through the trust. But appellants have not sh own, and we did not
observe, any section of the trust to suggest that the plain language of section 6.1.1 does not
reflect the settlor’s intent. Appellants have not shown that the district court erred by
granting summary judgment in favor of respondents.
Duty of loyalty
Appellants next argue that the district c ourt erroneously disregarded the substantial
evidence that they prov ided that showed that Stoltman breached his duty of loyalty by
withholding information and being partial to JoAnn.
A trustee owes a duty of lo yalty to the beneficiaries to not put their own interests
above those of the beneficiaries. Minn. Stat. § 501C.0802(a) (2020). The trustee’s primary
duty is to not allow their personal interest to conflict with their interest as a trustee. In re
Revocable Trust of Margolis, 731 N.W.2d 539, 545 (Minn. App. 2007).
Appellants first argue that Stoltman “dem onstrated his disinterest in meeting his
duties to [a]ppellants by withho lding information and then pu rposefully obscuring other
information.” Appellants cite two instances in the record to support this assertion. The
first is a portion from Stoltman’s deposition when he was asked about an email to an
accountant in which he stated, “In equity why are the distributions shown? Will these be
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carried forward on future statements,” and, “If so, put them under a single distribution
heading.” This deposition dialogue followed:
Q: That would essentially eliminate any idea of who got how
much distribution, correct?
STOLTMAN: [T]hat may be the result, but that wasn’t the
intent. My intent was to make this more understandable.
Q: But it would, also, serve to blur the amount that JoAnn was
getting, right?
STOLTMAN: [I]f you say so. That wasn’t my intent.

The second instance is an email from Stoltman to JoAnn in which Stoltman stated, “I’m
sending out 3
rd Quarter financials today to all be neficiaries and will copy [appellants’
attorney]. For the moment, I am not going to provide [appellants’ attorney] with
information on distributions.”
Appellants have not shown that Stoltman violated his duty of loyalty because they
have not alleged any self-dealing. Further, the record shows that Stoltman sent appellants’
attorney the distributions four days after th e quoted email above. The district court also
properly noted that appellants offered evidence that supported “an inference that Stoltman
intended to make only minimal disclosures of information” on distributions to JoAnn, but
that “most if not all of the amounts are reflected in the annual accounting, quarterly reports
or, if unclear, could have been answered w ith a brief inquiry from [appellants] seeking
clarification.” Finally, because appellants’ in terpretation of section 6.1.1 is unreasonable
and inapplicable, it is unclear how they were harmed.
Next, appellants argue that, “By allowing JoAnn to tell him ho w much should be
distributed and requiring no documentation or other inform ation to validate or confirm
these requests, Stoltman has sh own that he is not loyal to preserving the interests of
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[a]ppellants or the other beneficiaries.” But appellants’ argument is based on their
erroneous interpretation of the trust, whic h only mandates that Stoltman meet JoAnn’s
needs when distributing income. There is no language in the trust indicating that Stoltman
violated a duty of loyalty by asking JoAnn ab out her unmet needs. Appellants have not
shown that a genuine issue of ma terial fact exists, and the di strict court properly granted
summary judgment on this issue.
Duty of impartiality
Finally, appellants argue that respondents breached their duty of impartiality. “If a
trust has two or more beneficiaries, the trustee shall administer the trust impartially, giving
due regard to the beneficiaries’ respective in terests.” Minn. Stat. § 501C.0803 (2020).
“But a grantor of a trust may express an intention to provide for one beneficiary to a greater
or different extent than others, which requir es the trustee to fulfill that intention.” In re
G.B. Van Dusen Marital Trust , 834 N.W.2d 514, 521 (Minn. App. 2013), review denied
(Minn. June 26, 2013).
Appellants first argue that Stoltman did not consider the inte rests of the other
beneficiaries with JoAnn’s interests, and that the amounts distributed to JoAnn show this
partiality. But this is a product of the trust, not partiality.
Appellants next argue that respondents formed an allianc e when they were on the
same side of the previous litigation and settleme nt negotiations, and that this bias against
the other beneficiaries is clear by both of their refusals to provide information. Appellants
cite a February 18, 2020 email from Stoltman to JoAnn in which Stoltman stated, “At your
convenience, we shou ld discuss whether or not we wa nt to make a distribution for
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2019 . . . .” The district court correctly concluded that this allegation did not create an issue
of material fact because neither the trust nor the settlement agreement prohibits Stoltman
from seeking JoAnn’s input, and Stoltman stated that he always made the final decisions
on distributions. The district court properly granted summary judgment in favor of
respondents.
Affirmed.