Opinion
No. C7-96-690.
Filed October 8, 1996.
Appeal from the District Court, Freeborn County, File No. P68015423.
Steven J. Hovey, Hoversten, Johnson, Beckmann, Wellmann Hovey, P.L.L.P., (for Ward)
Peter D. Plunkett, Warren F. Plunkett Associates, (for Minnesota Trust Company)
Gregory C. Olson, (for Bruce Yanke)
Considered and decided by Willis, Presiding Judge, Lansing, Judge, and Kalitowski, Judge.
This opinion will be unpublished and may not be cited except as provided by Minn. Stat. § 480A.08, subd. 3 (1994).
UNPUBLISHED OPINION
The surety for a guardian of a minor ward's estate appeals a district court judgment that required the surety to reimburse the ward for amounts improperly disbursed from the ward's estate. The surety also challenges the district court's taxation of costs for deposition expenses and expert witness fees. We affirm the district court's findings on the guardian's breach, the surety's liability, and the taxation of costs and fees.
FACTS
Bruce Yanke was appointed guardian of the person and estate of his fifteen-year-old niece, Michelle Ann Yanke Beckman Laganiere, in January 1993. Yanke succeeded Laganiere's aunt whose appointment as guardian had begun in 1980 when Laganiere's parents died.
Yanke's guardianship appointment extended for two years, but Laganiere lived with Yanke for only the first three months. After that she lived with various friends, and Yanke visited her approximately once or twice a week. Laganiere was married on November 27, 1993, and turned eighteen on February 23, 1995. She did not formally petition to discharge Yanke as guardian after her marriage, and Yanke continued to exercise control over the guardianship estate until she reached majority in February 1995.
At the beginning of Yanke's appointment as guardian in January 1993, the guardianship estate totalled $655,876.62. Yanke obtained a $700,000 bond from the Minnesota Trust Company (surety) for that amount. When Yanke filed his final account on February 8, 1995, the estate had been reduced to $426,839.54. Laganiere challenged the final accounting, and, after a hearing, the district court concluded that Yanke had breached his guardianship duties. The court found that Yanke unjustifiably expended $179,682.22, held Yanke and the surety liable to Laganiere for that amount, and allowed Laganiere $3,749.55 for costs and disbursements. The surety appeals.
DECISION
The district court held that Yanke breached his duty as guardian of both Laganiere's person and estate. The surety challenges the determination of (1) breach, (2) the amounts attributed to the breach, and (3) costs and disbursements. We address the challenges separately.
I
The district court concluded that Yanke effectively abandoned his role as a guardian of the person after March 1993, when Laganiere moved out of Yanke's home. The limited nature of Yanke's subsequent efforts to care for Laganiere, e.g., visiting her no more than once or twice a week, supports the district court's conclusion that Yanke breached his duties as Laganiere's guardian of the person. See Minn. Stat. § 525.56, subd. 3 (1994) (describing duties of guardian of the person).
As guardian of Laganiere's estate, Yanke was required "to possess and manage the estate" under the "standard of a fiduciary." Minn. Stat. § 525.56, subd. 4(3) (1994). A fiduciary must exercise reasonable care and diligence as a person of ordinary prudence would usually exercise with respect to his own assets. Hoverson v. Hoverson , 216 Minn. 237, 241, 12 N.W.2d 497, 500 (1943). He has a duty to protect the assets of the estate from depletion. In re Conservatorship of Moore , 409 N.W.2d 14, 16-17 (Minn.App. 1987). The evidence supports the district court's findings that Yanke disbursed excessive amounts and failed to account for funds missing from the estate. The district court did not err in concluding that Yanke breached his duties as guardian of Laganiere's estate.
II
The district court found that Yanke had improperly disbursed or was unable to account for certain amounts from the guardianship estate: (1) $12,700 used to purchase two cars for Laganiere; (2) $40,000 out of $49,449.68 designated for Laganiere's allowance and various expenditures in the accounting period ending in 1995; (3) miscellaneous payments made to Yanke, his mother, and his girlfriend; (4) $2,783.86 in missing funds; and (5) guardian fees in excess of $24,000. The surety's challenge to these findings will not be upheld unless the findings are clearly erroneous. Minn.R.Civ.P. 52.01.
During his two-year appointment, Yanke disbursed funds to purchase directly or indirectly four automobiles. The district court allowed the disbursement for the first car, even though neither Yanke nor Laganiere had a valid driver's license when the car was purchased, but disallowed expenditures for two additional cars the following year. These expenditures of $6,200 and $6,500 each depleted the guardianship estate by approximately one percent. In view of the guardian's duty to preserve the principal of the estate and to provide for the minor ward's reasonable needs, the district court did not err in disallowing the expenditures.
Yanke's disbursements for the first annual accounting exceeded $100,000 and in the second annual accounting exceeded $200,000. In allowing the disbursements for the first period, the court took into account Laganiere's expenses "in setting up a household." For the subsequent accounting period, the district court found that $40,000 of $49,449.68 in personal and household expenditures was "excessive and unreasonable." The $49,449.68 was broken down as $5,304.96 in "miscellaneous" expenditures, $1,452.72 in "personal" expenditures, $1,652 in "household" expenditures, and a $41,350 "allowance." These expenditures were in addition to separate expenditures of $3,295 for rent, $473.68 for clothes, $3,510.21 for medical expenses, $9,837.27 for insurance payments, $1,476.95 for telephone expenses, $1,180.64 for utility expenses, and $3,861.47 for car repair costs during that same accounting period. The evidence supports the district court's finding that any allowance in excess of $9,449.68 was unreasonable.
The district court disallowed $1,512.28 Yanke used for his own house payments, $1,524.65 paid to his mother, and $952.49 paid to his girlfriend because there was not "any evidence in the form of receipts, invoices, or expense vouchers demonstrating that any of those funds were expended on behalf of the person or estate of [Laganiere]." Absent documentation to justify the disbursements, the district court properly disallowed the expenditures.
The surety also claims that the district court erred in identifying $2,783.86 as "missing" from a guardianship bank account. Laganiere's accounting expert testified that Yanke had not accounted for these funds, but the surety contends that Yanke could have paid this money as "fees" to his mother. The district court rejected Yanke's request of $10,000 in guardian fees for his mother, and the district court did not err in designating the $2,783.86 amount as missing funds.
In addition to requesting guardian fees for his mother, Yanke submitted a total of $70,735 in guardian fees for himself. A guardian may receive "reasonable compensation" for rendering necessary services or incurring necessary expenses for the benefit of a ward. Minn. Stat. § 525.703, subd. 3 (Supp. 1995). Allowing compensation repays the guardian "`for time, labor, and the responsibility involved [in a guardianship and] award[s] him for the fidelity with which he discharges his trust.'" In re Guardianship of Harty (Galloway v. Harty) , 189 Minn. 66, 67, 248 N.W. 329, 329 (1933) (quoting In re Estate of Marchildon , 188 Minn. 38, 41, 246 N.W. 676, 677 (1933)). The district court allowed Yanke to retain $24,000 as fees for services performed during the two years that he was Laganiere's guardian, which was twice the amount that one of Laganiere's experts suggested as a reasonable fee for a guardian of a comparably sized estate. In light of the expert testimony and district court's determination that Yanke had breached his duties as Laganiere's guardian, we conclude that the court acted within its discretion by limiting guardian fees to $24,000.
The surety also argues that it is not liable for any improper disbursements from the guardianship estate after Laganiere's marriage. See Minn. Stat. § 525.6192 (1994) ("A guardian's authority and responsibility terminate upon * * * the minor's * * * marriage * * *."). The surety did not raise this issue in the district court, however, and consequently it cannot be considered on appeal. See Thayer v. American Financial Advisers , 322 N.W.2d 599, 604 (Minn. 1982) (reviewing court should not consider issues not presented and considered in district court). Although the general rule against reviewing issues first raised on appeal has a limited exception, the application of Minn. Stat. § 525.6192 to these facts does not fit the exception. See Byrd v. O'Neill , 309 Minn. 415, 417 n. 2, 244 N.W.2d 657, 658-59 n. 2 (1976) (recognizing exception for plainly dispositive issues that require no additional development). Similarly, the exception does not allow us to consider the surety's argument that the judgment for Laganiere should be reduced by the value of the cars still in her possession when the issue was not raised in the district court and the record contains no evidence on the present value of those automobiles.
III
The surety's final challenge is the district court's allowance of costs and disbursements for deposition expenses and expert witness fees. The taxation of costs and disbursements is discretionary with the district court. Green-Glo Turf Farms v. State , 347 N.W.2d 491, 495 (Minn. 1984) (depositions); Peterson v. City of Elk River , 312 N.W.2d 243, 246 (Minn. 1981) (expert witnesses).
We conclude that the district court did not abuse its discretion in allowing costs for the depositions of Yanke and his accountant, Thomas Duncanson. The surety asserts the depositions were improperly taken for "trial preparation." The surety does not contend that the expenses were unreasonable, both of the deposed witnesses testified at trial, and a court may award costs for depositions even if they were not actually used at trial, provided that the costs are "reasonable." Larson v. Hill's Heating Refrigeration , 400 N.W.2d 777, 783 (Minn.App. 1987), review denied (Minn. Apr. 17, 1987); see also Minn. Stat. § 549.04 (1994) (allowing district court to award "reasonable disbursements" to prevailing party).
Neither do we find an abuse of discretion in allowing expert witness fees for banking officer Douglas Wright who testified on the typical guardianship fees and investment returns or for Laganiere's accounting expert, Greg Larson. Laganiere supported her request for fees with an affidavit from her attorney and with detailed motion hearing testimony from one of the experts. The expert witness fees were well within the "just and reasonable" range allowed for the district court's determination. See Minn. Stat. § 357.25 (1994).