"We Note, However . . ."
So, the co-trustees won their appeal, right? By now, you can probably guess that the answer, in the long run, is likely "no." To explain why, we turn to the paragraph of the Supreme Court's order immediately after it seemingly handed a victory to the co-trustees:
We note, however, that the circuit court also ruled that the No Contest Clause would not apply to, and does not bar McMurtrie from raising, a claim under Code § 64.2-729 of the Uniform Trust Code or from bringing a claim that the Trustees breached their fiduciary duties. These rulings of the trial court are not challenged on appeal. Thus, as ruled by the circuit court, McMurtrie may, without triggering the application of the No Contest Clause, pursue any remedies to modify or terminate the Trust that may be provided in Code § 64.2-729 of the Uniform Trust Code, and any claims concerning the Trustees' alleged breaches of their fiduciary duties.
Although the Court didn't use the phrase, what it is saying is that the trial court's rulings the co-trustees left unchallenged on appeal have become the "law of the case." The parties are now bound by them, and the co-trustees have waived their right to challenge them in the future.
So, what does that mean in this case? Well, for one thing, it's clear that Mr. McMurtrie now has free reign to sue the co-trustees for breach of fiduciary duty. The no-contest provision can no longer prevent him from doing that.
But the Court's order leaves some questions, at least for those not privy to the unstated facts of the case, about whether Mr. McMurtrie gains anything from the Court's holding that he may pursue remedies under Code § 64.2-729 without fear of triggering the no-contest clause. That section provides that an irrevocable trust can be modified or terminated by the consent of the settlor and all of the beneficiaries. However, the Court's order doesn't say whether Mr. McMurtrie's once-revocable trust (called the "Alexander B. McMurtrie, Jr. Revocable Trust") has since become irrevocable. If it hasn't, a settlor's ability to unilaterally revoke or modify a revocable trust comes not from Code § 64.2-729, but from Code § 64.2-751. But if the trust remains revocable, and Mr. McMurtrie could just unilaterally revoke it rather than fight with the co-trustees, one must wonder what all this fuss was about to begin with.
We Handle Estate/Trust Disputes And Appeals to the Supreme Court of Virginia
Either way, the McMurtrie case illustrates the dangers posed by the "law of the case" doctrine. When pursuing an appeal to the Supreme Court of Virginia, parties must be careful to challenge all of the trial court's adverse rulings. Otherwise, they might unintentionally find themselves bound by an unfavorable ruling they failed to appeal.
Here at The Mottley Law Firm we have substantial experience handling appeals to the Supreme Court, as well as complex estate and trust litigation. If you have an estate or trust dispute in Virginia, or you're facing the prospect of an appeal, call us today.