Trust Beneficiary Who Asked to Reform Trust Provision Violated No-Contest Clause

In a fascinating case, both legally and factually, the Wyoming Supreme Court ruled that a trust beneficiary did not state a claim for legal malpractice against the attorney who drafted the trust and acted as trustee, and that the beneficiary violated the trust’s no-contest clause by asking the court to remove a requirement regarding a successor corporate trustee. Gowdy v. Cook (Wyo., No. S-19-0005, Jan. 8, 2020).

The plaintiff in Gowdy, Marian Jackson, hired an attorney, Dennis Cook, to draft a revocable trust for her. The trust named Gerald Gowdy as the primary beneficiary after she died and included a no-contest clause and provision that a corporate successor trustee have assets or insurance coverage of at least $100 million. Mr. Cook also drafted estate planning documents for Mr. Gowdy. After Ms. Jackson died, Dennis Cook became trustee and his brother, attorney Craig Cook, became trust protector. Mr. Gowdy complained that the trust was being mismanaged and that the Cooks had a conflict of interest regarding their management of the trust and representation of him.

Mr. Gowdy sued the Cooks for legal malpractice, arguing among other things, that Dennis violated professional rules of conduct by representing both him and Ms. Jackson. Mr. Gowdy asked the court to remove Dennis as trustee and require the Cooks to prepare an accounting. Mr. Gowdy also asked that the court reform the trust to remove the requirement in the trust that a corporate trustee have assets or insurance coverage of at least $100 million. 

The Cooks (the attorneys) filed a motion for summary judgment, which the trial court granted, ruling that Mr. Gowdy forfeited his right as a trust beneficiary under the no-contest clause! Mr. Gowdy appealed, arguing that the no-contest clause should only be applied to challenges "to distributions" under the trust.

The lower court ruled that Mr. Gowdy did not show evidence that he was damaged by the attorneys’ actions, so he did not prove legal malpractice. The court also held that Mr. Gowdy violated the no-contest clause. The court ruled that the no-contest clause is not limited to contests involving changes to the trust’s distribution scheme because, according to the plain language of the clause, it “applies to any court proceeding seeking to void, nullify, or set aside the trust or any of its provisions.”

The full case is worth a read, even for laypersons.  You can read the full decision here.