National Foundation for Special Needs Integrity, Inc., Plaintiff-Appellee,
Devon Reese, as Personal Representative for the Estate of Theresa A. Givens, Defendant-Appellant.
September 27, 2017
from the United States District Court for the Southern
District of Indiana, Indianapolis Division. No. l:15-cv-00545
- Tanya Walton Pratt, Judge.
Ripple, Sykes, and Hamilton, Circuit Judges.
HAMILTON, CIRCUIT JUDGE
case, we apply Indiana law to a trust agreement to determine
who receives the remainder funds upon the beneficiary's
death. Plaintiff National Foundation for Special Needs
Integrity signed an agreement with Theresa Givens
establishing a trust that the Foundation was to manage for
her benefit while she lived. In the agreement, Givens named
herself as the only contingent remainder beneficiary. Givens
died just a month after funding the trust, leaving more than
$234, 000 in the trust.
naming herself, Givens failed to specify a surviving
remainder beneficiary. The Foundation claims that the
agreement entitles it as trustee to retain any remaining
trust assets in this situation. Givens's son, defendant
Devon Reese, is the representative of her estate. The Estate
argues that it is entitled to the money for the benefit of
Givens's children. The Estate argues that the agreement
is ambiguous and should be construed against the Foundation,
and in the alternative that the court should use its
equitable power to reform, rescind, or order deviation from
the agreement's terms.
district court rejected the Estate's arguments, finding
that the trust agreement is unambiguous and that the
Estate's evidence does not warrant any equitable remedy.
The court also found that the equitable defense of laches
would bar the Estate's equitable theories. We reverse. We
find that the trust agreement is ambiguous on the key
question. Beyond the document, the overwhelming weight of
evidence shows that Givens intended that any remaining assets
pass to her children as the beneficiaries of her Estate
rather than to the Foundation. We therefore remand and direct
entry of judgment for the Estate, without reaching the
equitable theories or the laches defense. On remand the
district court will need to award damages and prejudgment
interest in favor of the Estate.
Factual and Procedural Background
Theresa Givens and Her Assets
Givens was a Missouri resident and was sick for many years
before she died in November 2011. She suffered from renal
failure, was on dialysis for about ten years, and had
experienced multiple strokes. In 2009, she suffered an
additional injury from gadolinium dye, a substance used in
MRIs. She then joined a class action related to the dye, with
the Missouri law firm Brown & Crouppen as her counsel.
When that suit settled in 2011, Givens received about $255,
000 in net settlement proceeds.
The National Foundation for Special Needs Integrity
National Foundation for Special Needs Integrity is an Indiana
not-for-profit corporation that is a trustee for a pooled
special needs trust. A special needs trust is a type of trust
that allows individuals with disabilities to avoid losing
eligibility for Medicaid, which is means-tested. See 42
U.S.C. § 1396p(d)(4)(C). The Foundation acts as trustee
for many qualifying individuals across the country. Under
federal law, the Foundation must pool all beneficiaries'
assets for purposes of custody, management, and investment.
42 U.S.C. § 1396p(d)(4)(C)(ii). The Foundation must also
maintain a separate sub-account for each beneficiary.
feature of the special needs trust is that, under federal
law, trust assets do not count against the beneficiaries'
eligibility for Medicaid during their lifetimes. Compare 42
U.S.C. § 1396p(d)(3) (counting assets in certain trusts
as income and assets of individuals seeking Medicaid), with
§ 1396p(d)(4)(C) (exempting special needs trusts from
this accounting). But upon a beneficiary's death, the
trustee must reimburse the state for any medical assistance
the state provided. § 1396p(d)(4)(C)(iv). The trust
agreement can direct who should receive any assets that might
remain after reimbursement.
The Trust Agreement
advice of her lawyers, and to maintain her eligibility for
Medicaid, Givens agreed to contribute the settlement proceeds
to a special needs trust. She signed an agreement with the
plaintiff Foundation in August 2011. The agreement identified
the Foundation as the trustee and Givens as the beneficiary
during her lifetime. Givens funded the trust in October 2011
but died a month later. In this rather unusual case, Givens
did not owe her state of residence any reimbursement upon her