Opinion
No. 108,377.
2013-09-13
Lillian L. LEPPKE, Appellee, v. Marilyn K. HEIER and Harold E. Heier, Husband and Wife, Appellants.
Appeal from Marion District Court; Steven L. Hornbaker, Judge. Michael P. Whalen, of Law Office of Michael P. Whalen, of Wichita, for appellants. Charles R. Rayl, of Charles R. Rayl, LLC, of Law Office of Seth Meyer, LLC, of Cottonwood Falls, for appellee.
Appeal from Marion District Court; Steven L. Hornbaker, Judge.
Michael P. Whalen, of Law Office of Michael P. Whalen, of Wichita, for appellants. Charles R. Rayl, of Charles R. Rayl, LLC, of Law Office of Seth Meyer, LLC, of Cottonwood Falls, for appellee.
Before GREEN, P.J., PIERRON, J., and BUKATY, S.J.
MEMORANDUM OPINION
BUKATY, J.
Lillian Leppke and her husband, Elmer Leppke (now deceased) executed a deed to property they owned granting joint tenancy with rights of survivorship to themselves and their three children, including Marilyn Heier. Lillian filed this lawsuit requesting the deed be declared void on the grounds it had been executed under undue influence by Marilyn and Marilyn had breached her fiduciary duty to Lillian as her attorney-in-fact by engaging in self-dealing. The district court granted summary judgment to Lillian along with attorney fees under K.S.A.2012 Supp. 58–657(g). Marilyn and her husband, Harold Heier, appeal that ruling. We conclude that Lillian's motion and Marilyn's response to it presented disputed facts that precluded summary judgment. We further conclude that the award of attorney fees should be reversed in light of our ruling on the summary judgment issue. We reverse and remand to the district court for further proceedings.
Facts
We first summarize the facts alleged in the summary judgment motion and the response to it.
From 2006 to 2009, Marilyn regularly served as caregiver for Lillian and Elmer. She left her own family and stayed with her parents on a regular basis for days, weeks, and months at a time. She cleaned and cooked for them, gave them medications, nursed them, and drove for them.
In 2008, Lillian and Elmer engaged attorney J. Robert Brookens to advise them on estate planning and real estate matters. On October 9, 2008, Brookens conferred with Lillian and advised her to retain control and ownership of her real estate during her lifetime because she might need the proceeds of any rental or sale of the real estate for her own care and maintenance. In his affidavit, Brookens claims that on October 23, 2008, with Marilyn present, he again shared this same advice. Marilyn denies she heard Brookens give this advice. In December 2008, Brookens drafted for Lillian and Elmer durable power of attorney documents for health care and financial decisions. Lillian appointed Elmer and Marilyn jointly or individually as her agents, and Elmer appointed Lillian and Marilyn jointly or individually as his agents.
On April 8, 2009, while running errands with Lillian and Elmer in downtown Marion, Kansas, Marilyn left them in the car and went inside Hannaford Title Company (Hannaford) to inquire about including herself and her siblings on the titles to her parents' real property. She also called Brookens' office to inquire about the cost of changing the deed. Upon learning that Hannaford could do the job for $100 as opposed to the $200 Brookens would charge, Marilyn informed her parents of the prices. She then had Hannaford prepare a deed naming Lillian, Elmer, and their children as joint tenants of the real property. Marilyn provided Hannaford with all the instructions on how to prepare the deed. Lillian and Elmer did not provide any directions. Marilyn and a Hannaford notary public brought the deed out to the car. The notary watched Lillian and Elmer sign the deed and she then notarized it. The notary stated in her affidavit that Lillian and Elmer “signed the deed at Marilyn K. Heier's direction.”
The next day, Marilyn filed the deed with the Marion County Register of Deeds office using a check signed by Lillian for the filing fee. That office then mailed the receipt and deed to Marilyn at her address. As we stated, the deed showed Elmer and Lillian Leppke as grantors and Elmer Leppke, Lillian Leppke, Merle Leppke, Robert Leppke, and Marilyn Heier as grantees as joint tenants with rights of survivorship. Lillian stated in her petition that Marilyn had represented to her and Elmer that the deed only transferred the property with their home on it, but the deed in fact transferred all of their real estate. In her response, Marilyn claimed she clearly represented to her parents that the deed would transfer both of their properties onto one title. She asserted the deed was only executed after the consent and verbal agreement of Lillian and Elmer.
Marilyn's two siblings, Merle and Robert, later executed deeds reconveying the property to Lillian. Brookens sent letters on April 27, 2010, and June 2, 2010, requesting that Marilyn and Harold quitclaim the real estate to Lillian. They never did so. On December 14, 2010, Lillian filed a petition alleging the deed was void because of Marilyn's undue influence and Marilyn had breached her fiduciary duty as attorney-in-fact by transacting with herself. Marilyn filed a response on January 4, 2011, in which she admitted that as attorney-in-fact for Lillian and Elmer she “occupied a fiduciary and confidential relationship with ... Lillian L. Leppke and her now deceased husband, Elmer H. Leppke and such relationship was in existence when ... Marilyn K. Heier discussed adding all three children's names on each of the two real estate titles.” Although Marilyn further admitted to being present in Brookens' office on October 23, 2008, she claimed she was unaware of his legal advice to Lillian regarding the real property. She also stated that when she was attorney-in-fact for her parents, she had many discussions with them about adding the names of the children to the land deeds.
On May 3, 2011, Lillian filed a motion for summary judgment. She noted she had told Brookens she wanted to appoint someone else as executor of her estate because that person “would not try to ‘sneak one in [on her] like Marilyn did.’ “ In her affidavit in response to the motion, Marilyn stated that even though Lillian maybe did not want to sign the deed, Lillian knew what she was doing when she signed and did so in accordance with Elmer's wishes.
Upon a review of the petition, response, summary judgment motion, memoranda, affidavits, and oral arguments, the district court found there was no disputed issue of material fact as to any of the claims set forth and granted summary judgment on August 2, 2011. At the hearing and in its journal entry, the court found Marilyn admitted she had a continuing fiduciary and confidential relationship with her parents at the time the deed was recorded. Finding Marilyn was aware of Brookens' advice regarding her parents' disposition of their real estate, the court held she had breached her duty and was self-dealing for her own interest and not in the best interest of Lillian. The court found Lillian had received no benefit or consideration from the execution of the deed creating the joint tenancy. The court further found Marilyn had unduly influenced Lillian under suspicious circumstances when a confidential relationship existed between them because Marilyn instructed Lillian and Elmer who were inside a car and outside the presence of their legal counsel to execute a deed transferring all their real estate assets to Marilyn and her siblings against the previous advise of their legal counsel. The court granted Lillian's request to void the deed and awarded her attorneys fees pursuant to K.S.A.2012 Supp. 58–657(g).
Marilyn and Harold subsequently filed a motion to dismiss for lack of jurisdiction, which the court denied. They also filed a motion to amend and/or reconsider challenging the court's finding that there were no controverted material facts. Marilyn and Harold noted they had denied the application of any undue influence because Marilyn asserted in her response and affidavit that she had spoken to her parents several times about a joint tenancy deed and the deed was the independent wish and desire of Lillian and Elmer. They also argued there was a disputed material fact as to whether Lillian was influenced to sign the deed by being in the car when the deed was brought to them or if this was merely a matter of convenience for an elderly couple on a cold day. Moreover, Marilyn and Harold asserted this was not enough to establish undue influence. They finally claimed that even if a presumption of undue influence had arisen, the burden shifted to them and thus summary judgment was not appropriate because they would then have the opportunity to reply and meet that burden. However, the court denied their motion and adopted its prior order granting summary judgment, noting that Marilyn and Harold had failed to satisfy their duty to refute the factual statements made by Lillian.
We will list additional facts as they pertain to the specific issues on appeal.
Our Scope of Review
The relevant rules pertaining to summary judgment have been stated many times and are well known. When the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law, summary judgment is appropriate. The district court is required to resolve all facts and inferences which may reasonably be drawn from the evidence in favor of the party against whom the ruling is sought. When opposing a motion for summary judgment, an adverse party must come forward with evidence to establish a dispute as to a material fact. In order to preclude summary judgment, the facts subject to the dispute must be material to the conclusive issues in the case. O'Brien v. Leegin Creative Leather Products, Inc., 294 Kan. 318, 330, 277 P.3d 1062 (2012).
“ ‘An issue of fact is not genuine unless it has legal controlling force as to the controlling issue. The disputed question of fact which is immaterial to the issue does not preclude summary judgment. If the disputed fact, however resolved, could not affect the judgment, it does not present a genuine issue of material fact. [Citation omitted.]’ “ Mitchell v. City of Wichita, 270 Kan. 56, 59, 12 P.3d 402 (2000)
Hall v. Shelter Mutual Ins. Co., 45 Kan.App.2d 797, 800, 253 P.3d 377 (2011) (same), rev. denied 293 Kan. –––– (February 17, 2012).
Of particular application here is the caveat that a court should be cautious in granting a motion for summary judgment when resolution of the dispositive issue requires a determination of the state of mind of one or both of the parties. Smith v. Farha, 266 Kan. 991, 998, 974 P.2d 563 (1999); Downing v. Kingsley, 43 Kan.App.2d 30, 36–37, 221 P.3d 115 (2009), rev. denied 291 Kan. 910 (2011); On appeal, the same rules apply; summary judgment must be denied if reasonable minds could differ as to the conclusions drawn from the evidence. O'Brien, 294 Kan. at 330.
Undue Influence
The determination of whether a conveyance has been induced through the exercise of undue influence on the part of a party standing in a confidential relationship to the grantor is a question of fact. See Curtis v. Freden, 224 Kan. 646, 652, 585 P.2d 993 (1978); Frame, Administrator v. Bauman, 202 Kan. 461, 468, 449 P .2d 525 (1969). An undue influence claim generally requires the party challenging the act to first show influence that amounts to “such coercion, compulsion and restraint as to destroy the testator's free agency, and by overcoming his power of resistance, obliges or causes him to adopt the will of another rather than exercise his own.” In re Estate of Brodbeck, 22 Kan.App.2d 229, 241–42, 915 P.2d 145,rev. denied 260 Kan. 993 (1996). For undue influence to vitiate a contract or inter vivos transfer, the party must then also show that the undue influence directly affected the act by which something of value was transferred. See Hotchkiss, Administrator v. Werth, 207 Kan. 132, 141, 483 P.2d 1053 (1971); In re Estate of Bryan, No. 103,655, 2011 WL 2535005, at *5 (Kan.App.2011) (unpublished opinion) (citing In re Estate of Farr, 274 Kan. 51, 70–71, 49 P.3d 415 [2002];Heck v. Archer, 23 Kan.App.2d 57, Syl. ¶ 3, 927 P.2d 495 [1996] ).
In most cases, undue influence is shown by circumstantial evidence, so additional rules have been developed to determine when a sufficient claim has been presented. Estate of Bryan, 2011 WL 2535005, at *5; see also Howard v. Carter, 71 Kan. 85, 92, 80 P. 61 (1905) (“In the nature of things, it would be a rare case where the details of conversation or conduct could be shown indicating undue persuasion and influence. Such arts would be exercised only in the absence of witnesses, or, at most, in the presence of those whose interest and inclination would impel to their denial.”) Thus, if the person claiming undue influence shows that a confidential relationship existed between the giver and the recipient along with suspicious circumstances, then a presumption of undue influence arises and the burden of proof shifts to the party seeking to uphold the transaction to prove that it was not affected by undue influence. Heck, 23 Kan.App.2d 57, Syl. ¶ 4;Estate of Bryan, 2011 WL 2535005, at *5. Nonetheless, the party challenging the transaction must establish the suspicious circumstances with clear and convincing evidence. See In re Estate of Bennett, 19 Kan.App.2d 154, Syl. ¶ 2, 865 P.2d 1062 (1993) ( “Undue influence is a species of fraud. Fraud is never presumed but must be shown by clear, satisfactory, and convincing evidence.”), rev. denied 254 Kan. 1007 (1994); Estate of Bryan, 2011 WL 2535005, at *5. Thus, the evidence must demonstrate that it was highly probable that suspicious circumstances surrounded the transaction. Estate of Bryan, 2011 WL 2535005, at *5.
In light of these rules and our scope of review of the district court's grant of summary judgment on Lillian's claim of undue influence, we will examine whether the uncontroverted facts establish a confidential relationship between Lillian and Marilyn, suspicious circumstances, and whether Marilyn and Harold met their burden to present evidence indicating that undue influence did not bear on Lillian's execution of the deed.
It appears that Marilyn and Harold have admitted a confidential relationship existed between Lillian and Elmer and her at the time they signed the deed. This admission also has support in several other facts in the case. To begin with, Lillian and Elmer had appointed Marilyn as their attorney-in-fact. While this alone would not necessarily create such a relationship, it certainly is a persuasive factor in evaluating whether it existed. See Estate of Farr, 274 Kan. at 72. Also, Marilyn admits she served her parents in a caregiver relationship between June 2006 and July 2009. She stated she left her own family and stayed with her parents on a regular basis for days, weeks, and even months at a time. She declared she cleaned, cooked, gave them medications, nursed them to health, drove them places, and even emptied and cleaned their chamber pots. See Estate of Brodbeck, 22 Kan.App.2d at 241–42;Estate of Bennett, 19 Kan.App.2d at 168.
Thus, it appears there are uncontroverted facts that support the first element Lillian had to prove to make her claim of undue influence.
Moving on to whether suspicious circumstances existed, we first note the person claiming undue influence must show a confidential relationship and suspicious circumstances by clear and convincing evidence to establish a presumption of undue influence. See Heck, 23 Kan.App.2d 57, Syl. ¶ 4;Estate of Bryan, 2011 WL 2535005, at *5 Therefore, Lillian only had to present evidence that it was highly probable suspicious circumstances surrounded the transaction; she did not have to present direct evidence of actual undue influence. See Estate of Bryan, 2011 WL 2535005, at *5.
There is no Kansas case defining the term “suspicious circumstances,” and the question of whether suspicious circumstances exist is necessarily dependant on the facts and circumstances of each individual case. Bennett, 19 Kan.App.2d at 170. Nonetheless, Kansas courts have generally considered certain factors in their analysis, including good faith, the relationship of the parties, who initiated the transaction, the time and manner of suggestions or advice, the motives behind those suggestions, whether there was any independent advice, the testator's competency, and whether there was any valuable consideration. Frame, 202 Kan. at 468;Bowen, Administrator v.. Hathaway, 202 Kan. 107, 111, 446 P.2d 723 (1968); see, e.g., Overstreet v. Beadles, 151 Kan. 842, 845–47, 101 P.2d 874 (1940) (considering lack of consideration, lack of independent advice at time deeds made, and dependence of conveyor on conveyee to advise her on all business matters); Post v. Hodges, 122 Kan. 755, 761, 253 P. 556 (1927) (considering advice from transferees, arrangements made by transferees to be alone with transferor at time of transfer, and transferor's enfeebled mind); Funk v. Fish, 122 Kan. 294, 295–301, 252 P. 256 (1927) (considering deed executed without knowledge of testator's other children and testator was old, infirm, enfeebled in mind and memory, incompetent, distracted, and dependent on others for management of her affairs); Kruse v. Fredlum, 96 Kan. 456, 457, 152 P. 617 (1915) (noting some family members urged transferor to deed land to father and transferor's nervous illness causing her to not always understand what she was doing); Paddock v. Pulsifer, 43 Kan. 718, 721–23, 23 P. 1049 (1890) (considering lack of consideration and conveyor's age, sickness, and feebleness of mind); Logan v. Logan, 23 Kan.App.2d 920, 924–25, 937 P.2d 967 (considering who initiated contact to effect transfers, whether transferor was confused or disoriented, and whether transferor received independent legal advice), rev. denied 262 kan. 961 (1997); Heck, 23 Kan.App.2d at 64 (considering recipient of POD accounts did not directly affect their creation when established); McConachie v. McConachie, 1 Kan.App.2d 12, 14, 561 P.2d 889 (considering transferor's increasing physical infirmity and mental deterioration, deed not read or explained to transferor, transferor was not the initiating party, and all parties involved in procuring, notarizing, and recording deed were members or agents of interested family), rev. denied 225 Kan. 845 (1977).
Among other factors, the district court here cited several suspicious circumstances admitted to by Marilyn or undisputed. They include that Marilyn had Lillian and Elmer remain in a parked car while she presented them with a deed, told them to sign it, and obtained a notary public to come to the car. The court concluded this constituted coercion. In addition, the court noted that something of value was transferred to Marilyn with no benefit to Lillian. The court also noted that Marilyn's instructions, while in a confidential relationship with Lillian, to execute the deed outside the presence of Brookens, who Lillian alleges had advised her otherwise, were “indeed suspicious.”
These factual findings are not disputed except whether Marilyn knew of Brookens advice to Lillian to retain title to her property. Marilyn admitted that on April 8, 2009, she had the notary public bring the deed out to her parents while they sat in the car, where they signed it without the presence of their counsel when Marilyn knew they had, indeed, sought legal advice about their affairs 5 or 6 months prior. The affidavit of the notary public states that “Elmer H. Leppke and Lillian L. Leppke signed the deed at Marilyn K. Heier's direction in my presence.” (Emphasis added.) The record indicates Lillian received nothing of value in return for adding her children as joint tenants on the deed.
Thus, it appears there are also uncontroverted facts that support the second element Lillian had to prove to make her claim of undue influence. Since those facts support a presumption that Lillian and Elmer executed the deed under suspicious circumstances during a time when a confidential relationship existed between them and Marilyn,, the burden then shifted to Marilyn and Harold to prove the transaction was not affected by undue influence.
Do the facts presented in the summary judgment motion and the response to it establish that Marilyn and Harold may have met their burden in order to preclude summary judgment? We conclude they did.
After finding a presumption of undue influence existed in this case and the burden had shifted to Marilyn and Harold, the district court then found in favor of Lillian. In doing so, however, the court never really discussed in detail Marilyn's and Harold's burden or the evidence that pertained to that burden. Nor did it ever specifically make a finding as to whether the burden had been met. We can only assume the court felt they had not met their burden since it granted Lillian summary judgment on her claim. Therefore, we must review de novo the district court's apparent conclusion that Marilyn and Harold failed to meet their burden to prove the joint tenancy deed was not affected by undue influence. See American Special Risk Managment Corp. v. Cahow, 286 Kan. 1134, 1141, 192 P.3d 614 (2008) (an appellate court has unlimited review of conclusions of law).
Marilyn and Harold point to evidence they claim the district court improperly ignored that created a genuine issue of material fact regarding whether the transaction was affected by undue influence. It is the responsibility of the party opposing summary judgment to provide such evidence by way of deposition or affidavits in opposition to the motion setting out specific facts showing a genuine issue for trial. See K.S.A.2012 Supp. 60–256; Willard v. City of Kansas City, 235 Kan. 655, 657, 681 P.2d 1067 (1984); Brodbeck, 22 Kan.App.2d at 236. That party cannot rely solely upon the allegations in his pleadings. Willard, 235 Kan. at 657. “A summary judgment proceeding is not a trial by affidavits, and the parties must always be afforded a trial when there is a good faith dispute over the facts.” Brick v. City of Wichita, 195 Kan. 206, 211, 403 P.2d 964 (1965).
We first note several facts stated in Marilyn's and Harold's response to the summary judgment motion and Marilyn's accompanying affidavit. To begin with, while Marilyn admitted to being at a meeting with Lillian and Brookens in October 2008, she consistently disputed she was aware of the advice Brookens gave to Lillian to retain control and ownership of the real estate. Therefore, whether Brookens actually gave this advice at that meeting (as he stated in his affidavit attached to the summary judgment motion) was a controverted fact that is material to whether Marilyn and Harold met their burden. The summary judgment ruling is not the appropriate time to make a credibility determination between two diametrically opposed statements.
In addition, Marilyn's and Harold's response and Marilyn's affidavit stated there had been many discussions between Marilyn and Lillian and Elmer about placing the land in a joint tenancy and she had clearly explained the deed to them at the time it was executed. Marilyn's response and affidavit stated she told Lillian and Elmer the deed would add all three children's names to the title and it would transfer both of their properties onto one title. She argues she also told them how much it would cost. Her affidavit also states that in 2008 she began discussing with her parents the plans for their land and they talked about it several times. Marilyn also stated in her affidavit she was worried her brother Merle would try to take the land away from the rest of the family and she told Lillian and Elmer they would only change the deed if they put all three children's names on it. Although the district court felt this evidence worked against Marilyn, reasonable minds could differ as to what conclusion to draw from this evidence. See O'Brien, 294 Kan. at 330. Marilyn's affidavit presents an issue of material fact as to whether it had been Lillian and Elmer's intention to add their children to the deed as joint tenants or whether Marilyn tricked them into doing so on April 8, 2009.
Finally, Marilyn and Harold point to Marilyn's affidavit as well as the notary public's affidavit as evidence that Lillian and Elmer signed the deed in the car because of their age and feeble condition rather than Marilyn's undue influence. The notary public stated in her affidavit that Elmer and Lillian remained in the car “because of his feeble physical condition.” Marilyn's response to the motion stated the notary public had suggested Marilyn park her vehicle in front of the title company building and the deed be brought out to Lillian and Elmer, who were 87 and 91 years old at the time, so they would not have to exit the vehicle and go into the building. Again, reasonable minds could differ as to the conclusion to be drawn from this evidence. See O'Brien, 294 Kan. at 330.
In short, Marilyn and Harold successfully came forward with evidence in the form of affidavits that established several controverted issues of material fact that could rebut the presumption of undue influence. See K.S.A.2012 Supp. 60–256; O'Brien, 294 Kan. at 330;Willard, 235 Kan. at 657;Brodbeck, 22 Kan.App.2d at 236. The district court was required to resolve all facts and inferences that could be reasonably drawn from the evidence in favor of the party against whom the summary judgment was sought. Therefore, the court erred in granting summary judgment in favor of Lillian, since reasonable minds could differ as to the conclusions drawn from the evidence. See O'Brien, 294 Kan. at 330. Moreover, courts must be cautious in granting summary judgment in cases such as this because resolution of the dispositive issue of undue influence required a factual determination of whether Lillian's will was overcome. See Farha, 266 Kan. at 998;Downing, 43 Kan.App.2d at 36–37. The court's ruling turned the summary judgment proceeding into a “trial by affidavits” which denied Marilyn and Harold a trial to resolve factual disputes. See Brick, 195 Kan. at 211.
Attorney Fees
In their final claim on appeal, Marilyn and Harold argue the district court erred in assessing attorney fees against them because there is no applicable statute allowing for the recovery of attorney fees under the facts of this case.
The issue of the district court's authority to award attorney fees is a question of law over which we have unlimited review. Where the district court has authority to grant attorney fees, we review its decision under an abuse of discretion standard. Both sides agree and the district court stated that attorney fees cannot be granted absent statutory authority or an agreement by the parties. A trial court does not have authority to impose attorney fees under its equitable powers absent statutory authority. See Brennan v. Kunzle, 37 Kan.App.2d 365, 392–93, 154 P.3d 1094,rev. denied 284 Kan. 945 (2007), overruled on other grounds by Osterhaus v. Toth, 291 Kan. 759, 249 P.3d 888 (2011).
Here, the district court granted fees under K.S.A.2012 Supp. 58–657(g), which grants courts the authority to award reasonable attorney fees where an attorney-in-fact “acts in bad faith, fraudulently or otherwise dishonestly ... and thereby causes damage or loss to the principal.”
Obviously, with our reversal of the summary judgment to Lillian and a remand for further proceedings, there no longer exists a determination that Marilyn acted “in bad faith, fraudulently or otherwise dishonestly....” There can then be no basis for an award of attorney fees at this time. We have no choice but to reverse the award of those fees.
We also mention Marilyn and Harold argue that Marilyn was not acting in her capacity as Lillian's attorney-in-fact at the time Lillian signed the joint tenancy deed. They argue this lawsuit was one for termination of a deed and, therefore, this statutory section did not apply. The district court did not comment on this point, and we do not know if Marilyn and Harold raised it to the court. We will not address the argument since our ruling on the undue influence issue renders the attorney fee issue moot.
Reversed and remanded for further proceedings.