Opinion
No. 50303-1-I, consolidated with: No. 50880-6-I.
Filed: February 23, 2004. UNPUBLISHED OPINION
Appeal from Superior Court of King County. Docket No: 00-4-00318-5. Judgment or order under review. Date filed: 03/12/2002. Judge signing: Hon. James Doerty.
Counsel for Appellant(s), Stanbery Jr Foster, Attorney at Law, 1601 5th Ave Ste 2100, Seattle, WA 98101-3656.
Steven Alan Reisler, Attorney at Law, 1601 5th Ave Ste 2100, Seattle, WA 98101-3656.
Philip Albert Talmadge, Talmadge Stockmeyer, 18010 Southcenter Pkwy, Tukwila, WA 98188-4630.
Counsel for Respondent(s), Charles Richard Jr Lonergan, Siderius Lonergan Martin LLP, 500 Union St. Ste 847, Seattle, WA 98101-2394.
Raymond Huber Siderius, Siderius Lonergan Martin LLP, 500 Union St. Ste 847, Seattle, WA 98101-2394.
Richard L. Gemson, Attorney at Law, 1001 4th Ave Ste 3200, Seattle, WA 98154-1003.
The grant of nonintervention powers to a personal representative confers extraordinary authority and discretion. The statutory scheme limits the reasons for removal to reasons of waste, embezzlement, mismanagement, fraud, and neglect. Here, the showing by Susan Pearman Hudson does not approach that necessary to allow the superior court to intervene or to resolve disputes about the fairness or reasonableness of James Dore's administration of the estate as personal representative. Therefore, the decision of the lower court is affirmed.
FACTS
Because this court has determined that this matter does not warrant publication, the detailed facts will not be restated as they are well known to the parties. Suffice it to say that this probate deteriorated to a spate of allegations and counter allegations between siblings, a dispute in which the personal representative became inextricably involved.
Marian Pearman died testate on March 6, 2000. Her heirs included her surviving son James Pearman (James), her daughter Susan Pearman Hudson (Susan), and five grandchildren. Two of Marian's children predeceased her. In her will, Marian bequeathed 25 percent of her residuary estate to each surviving child and 10 percent to each grandchild. The will designated that a $40,000 debt owing by James was to be deducted from his residuary share. Marian left a `Statement Regarding Gifts of Tangible Personal Property' and her children eventually agreed on the distribution thereof.
Marian named her brother James J. Dore, Sr., and her son James as co-personal representatives granting them nonintervention powers. James indicated he was not a creditor of the estate. The co-personal representatives published a notice to creditors signed by James. The original of this notice was defective because it was not filed with the court.
Susan and James found two promissory notes payable to Marian signed by James and Katalin Pearman in Marian's safe deposit box. One note was in the amount of $40,000 and the other was in the amount of $25,000.
One of the major assets of the estate was the family home. James wanted to purchase the home. Due to this fact and the fact that there were promissory notes signed by him in the estate, James petitioned the court for withdrawal as personal representative due to his conflict of interest. The court allowed his withdrawal and Marian's brother James J. Dore, Sr., became the sole personal representative. During this time, Susan filed a request for special notice proceedings.
An inventory of the estate was filed showing total assets of approximately $1.8 million. The inventory showed the $40,000 promissory note signed by James would be compromised and reduced. The initial federal estate tax return was filed, placing the value of James' promissory notes at $10,000, the compromised value of the notes.
In late September 2000, the personal representative sold Marian's entire securities portfolio and converted the proceeds into a time deposit certificate. This was done before the stock market began its decline and therefore was of enormous benefit to the estate.
The trial court concluded that although the administration of the estate was `sloppy and rife with errors and stubbornness,' none of the mistakes established bad faith or dishonesty. The court recognized bullying by the personal representative, but it concluded that it was merely his style. The court specifically found that as a matter of law it was permissible for the nonintervention personal representative to make mistakes. The court concluded that it could not intrude on the administration of the estate, restrict the personal representative's powers, or remove the personal representative unless it was shown that the personal representative made mistakes rising to the level of dishonest judgment or bad faith; committed waste, fraud, and embezzlement; or did not faithfully discharge his trust. Finding no evidence of dishonesty or bad faith, the court denied the request to remove the personal representative.
The trial court also concluded that the approval of James' creditor claims was within the discretion of the personal representative; the value of the promissory notes was not before it and it was within the personal representative's discretion to compromise them. The trial court granted the personal representative's request to appoint a special master to develop a final accounting and a plan for the distribution of the assets of the estate. The special master was ordered to file amended federal and state estate tax returns, especially due to the agreed negation of the charitable donations anticipated by the initial returns.
The trial court specifically held that the personal representative could not make an equalization distribution to James. The court denied all CR 11 motions, specifically finding that Susan had the right to question the administration of the estate. The court indicated the parties could submit the issues of attorney fees to the court to be considered without oral argument.
The trial court concluded that although it ordinarily would not have authority to intervene with the personal representative regarding the distribution of personal property, the personal representative put that issue to the court, a conclusion that has not been appealed. The trial court suggested that any additional matters requiring intervention of the court should be brought to it.
The personal representative and Susan requested attorney fees and the personal representative also requested payment of fees to him for his services as personal representative. The trial court granted attorney fees to the law firm representing the personal representative and the estate, but denied fees to the personal representative. The court also denied fees or damages to Susan and any of the minor beneficiaries. The court ordered partial distribution of all of the assets due to the minor children, but required that the estate hold back $300,000 to settle the remaining disputes, costs of administration, and fees.
Findings of fact and conclusions of law were filed on March 13, 2002. Susan agrees with the findings of fact, but challenges a number of the conclusions of law as not being supported by the facts. Susan appeals the judgment and decree that denied her petition to revoke the nonintervention powers of the personal representative, but retained jurisdiction until the estate was settled and closed. She also appeals the orders granting the personal representative the authority to pay fees to counsel representing the estate, and the order holding back resources to satisfy any remaining estate claims. In a consolidated case, the personal representative appeals the trial court's denial of the payment of fees to him for his services as personal representative.
DISCUSSION
A trial court's decision regarding a petition for removal of a personal representative receives considerable deference and will not be disturbed absent a manifest abuse of discretion. But a trial court's decision to remove a personal representative is not entitled to deference by a reviewing court if the estate is a non-intervention estate and the trial court does not establish its authority to intervene. Once an order of solvency is entered, the administration of a nonintervention estate is exclusively in the hands of the personal representative. A probate court loses authority over the estate at that time. In order for the court to invoke authority, application must be made by a beneficiary of the estate, and `[t]he petition must be supported by a prima facie showing that the personal representative has failed to faithfully execute his trust or is subject to removal for any of the reasons specified in RCW 11.28.250.' Susan's petition was from a beneficiary, and included at least a prima facie showing. The trial court was empowered to make an inquiry to determine whether good cause had been shown for the court to retake jurisdiction over the administration of the estate.
In re Estate of Jones, 116 Wn. App. 353, 361, 67 P.3d 1113 (citing In re Estate of Ehlers, 80 Wn. App. 751, 761-62, 911 P.2d 1017 (1996)), review granted, 150 Wn.2d 1010 (2003).
Jones, 116 Wn. App. at 361-362.
Jones, 116 Wn. App. at 362.
Jones, 116 Wn. App. at 362 (citing In re Estate of Coates, 55 Wn.2d 250, 256, 347 P.2d 875 (1959); In re Estate of Bobbitt, 60 Wn. App. 630, 632, 806 P.2d 254 (1991)).
RCW 11.68.070, In re Estate of Ardell, 96 Wn. App. 708, 717, 980 P.2d 771 (1999).
Jones, 116 Wn. App. at 362. RCW 11.28.250 provides as follows:
Whenever the court has reason to believe that any personal representative has wasted, embezzled, or mismanaged, or is about to waste, or embezzle the property of the estate committed to his charge, or has committed, or is about to commit a fraud upon the estate, or is incompetent to act, or is permanently removed from the state, or has wrongfully neglected the estate, or has neglected to perform any acts as such personal representative, or for any other cause or reason which to the court appears necessary, it shall have power and authority, after notice and hearing to revoke such letters. The manner of the notice and of the service of the same and of the time of hearing shall be wholly in the discretion of the court, and if the court for any such reasons revokes such letters the powers of such personal representative shall at once cease, and it shall be the duty of the court to immediately appoint some other personal representative, as in this title provided.
The findings of fact substantiate many of the concerns expressed by Susan as the trial court indicated the estate administration was `sloppy and rife with errors.' There is also no doubt that many of the decisions made by the personal representative are supported. For instance, there is ample evidence that the sale of the family home to James was not an insider deal as claimed by Susan and that the personal representative had the power to make the sale as he did. The sale of the securities turned out to be a windfall to the estate considering what the stock market did shortly thereafter. We agree with the trial court and hold that the administrative problems do not rise to a level of mismanagement to support removal of the personal representative under RCW 11.68.070 and RCW 11.28.250.
A personal representative has a fiduciary duty to the beneficiaries of an estate to marshal the assets of the estate; to prepare an inventory; to notify creditors and to settle claims; to pay taxes; and to distribute the assets of the estate to the proper parties. Here, a review of the record indicates that the personal representative did so, albeit with prodding by Susan, with the exception of the charitable contributions (an issue which was settled outside of the hearing against the personal representative) and the `equalization' payment to James (which also was settled during the hearing when James withdrew his request for the equalization amount). Further, the creditor claims filed by James were properly found by the trial court to be within the discretion of the nonintervention personal representative. Similarly, compromise of the promissory notes was within the discretion of a nonintervention personal representative.
See In re Estate of Wilson, 8 Wn. App. 519, 526-27, 507 P.2d 902 (1973).
Attorney Fees Below:
We find no abuse of discretion. Susan failed to present sufficient evidence to remove the nonintervention personal representative and the trial court had the discretion to award attorney fees under RCW 11.96A.150(1).
Former RCW 11.96.140 (1994), repealed by Laws of 1999, ch. 42, sec. 637. This includes an award of fees to the estate when the personal representative successfully defends an action for removal. In re Estate of Kerr, 134 Wn.2d 328, 342, 949 P.2d 810 (1998). See also Laue v. Estate of Elder, 106 Wn. App. 699, 712-13, 25 P.3d 1032 (2001).
Attorney Fees on Appeal:
Susan seeks an award of attorney fees on appeal pursuant to RAP 18.1(a). Had she prevailed, RCW 11.96A.150 authorizes the award of attorney fees by this court. She did not prevail and no fees are awarded.
Consolidated Appeal:
In his consolidated cross appeal, James J. Dore, Sr., the personal representative, contends the trial court abused its discretion in failing to award fees for his services. But the personal representative did not assign error to conclusions of law 1 or 8 which provided a basis for the decision not to grant fees to the personal representative. Those conclusions stated as follows:
The trial court awarded attorney fees to the law firm who represented the personal representative and the estate in the action to remove the personal representative. This claim is for the personal fees of the personal representative.
The order does not give a basis for the awarding of attorney fees to the law firm representing the estate, and does not give a basis for denying fees. The parties do not point to any place in the record where the trial court may have given its reasons.
1. Many of the mistakes that occurred in the administration of this Estate occurred early in its administration and were the mistakes of the personal representative's previous lawyer.
8. The administration of Decedent's Estate was sloppy and rife with errors and stubbornness. These errors are described by the Petitioner in the attachment to these Findings and Conclusions as `Duties and Breaches by the Personal Representative.' These errors, mistakes and sloppiness occurred as described in the Court's Findings of Fact.
The trial court has discretion to award fees to a personal representative. The personal representative asserts that although the amount of fees is within the trial court's discretion, the trial court was arbitrary in denying all fees to him. But a review of the administration of this estate fully supports the trial court's decision. The trial court did not abuse its discretion by refusing to award fees to the personal representative for his services.
RCW 11.68.100 (closing of estate); RCW 11.68.110(2) (declaration of completion of estate and discharge of personal representative).
The decision of the trial court is affirmed.
BECKER and COX, JJ., concur.