Opinion
No. 25464-0-III.
November 1, 2007.
Appeal from a judgment of the Superior Court for Benton County, No. 05-2-00358-5, Craig J. Matheson, J., entered August 24, 2006.
Reversed by unpublished opinion per Kulik, J., concurred in by Schultheis, A.C.J., and Stephens, J.
At age 12, Randall Carey Roberts, Jr., lost two fingers while playing with a friend. The resulting personal injury action was settled for the policy limits and the proceeds placed in an annuity. When the settlement was approved, Mr. Roberts's mother, Lori Kendall, was appointed as his guardian. Ms. Kendall then named herself as the alternate beneficiary of the annuity. Mr. Roberts died at age 27 and was survived by his wife, Kristina Roberts, and his infant son, K.R. At the time of his death, Mr. Roberts had not changed the beneficiary on the annuity.
Mr. Roberts's estate filed an action seeking an order designating the Estate of Randall Carey Roberts, Jr., as the sole beneficiary of the annuity. The court granted the Estate's motion for summary judgment. On appeal, Ms. Kendall argues that the transaction naming her as the alternate beneficiary was voidable, not void, and that the Estate's claim was barred by the statute of limitations. Holding that the mother's designation of herself as beneficiary was voidable and was not challenged within the statute of limitations, we reverse the trial court's grant of summary judgment.
FACTS
Randall Carey Roberts, Jr. was born on May 23, 1977. Shortly before his 13th birthday, Mr. Roberts was injured while playing with a friend. Mr. Roberts lost two index fingers in the accident.
Ms. Kendall retained an attorney, Mike Kozlowski, to represent Mr. Roberts in connection with the accident. Ms. Kendall petitioned the court to have herself appointed the "general guardian of the estate of RANDALL CAREY ROBERTS, JR." for the purpose of settling the personal injury action. Clerk's Papers (CP) at 246. She also asked the court to approve the terms of the settlement negotiated with Allstate. The settlement was for policy limits. Mr. Kozlowski asked the court for permission to dispense with the appointment of a guardian ad litem pursuant to Superior Court Special Proceedings Rule (SPR) 98.16W because he served as independent counsel for Mr. Roberts. The court agreed. The court appointed Ms. Kendall the general guardian of the estate and approved the terms of the settlement and the disbursement plan.
Nearly one month after the court entered its order approving the settlement for a minor and order of disbursement, Ms. Kendall entered into a settlement and release agreement with Allstate Insurance Company naming herself as the alternate beneficiary of the annuity, without a court order to do so.
On March 17, 2004, at age 27, Mr. Roberts died intestate as the result of a work-related accident. He was survived by his wife, Kristina Roberts, and his son K.R, who was born five weeks after Mr. Roberts's death. Ms. Kendall challenged the paternity of K.R.
While Mr. Roberts was alive, the documents connected with the settlement were kept at Ms. Kendall's house. The only correspondence from Mr. Roberts to Allstate was a change of address form. Prior to Mr. Roberts's marriage, Ms. Kendall was listed as the beneficiary for Mr. Roberts's three life insurance policies and his retirement plan. After Mr. Roberts's death, the Estate learned that Ms. Kendall was named as the beneficiary on two life insurance policies and Mr. Roberts's retirement plan.
After Mr. Roberts's death, Ms. Kendall notified Allstate of the death and designated her husband, Richard D. Kendall, as the alternate beneficiary of the settlement funds.
The Estate brought this action, seeking an order designating the Estate of Randall Carey Roberts, Jr., as the sole beneficiary of the settlement funds. The Estate moved for summary judgment.
The court granted the Estate's motion for summary judgment. The court found no indication that Mr. Roberts had knowledge of, or acquiesced to, his mother's decision to name herself as a beneficiary to the settlement proceeds. The court concluded that there was no evidence that Mr. Roberts ratified his mother's decision and that Ms. Kendall did not have the authority to name a beneficiary without court approval. The court also concluded that there was no applicable statute of limitations because the beneficiary designation was void.
ANALYSIS
Standard of Review
When reviewing an order of summary judgment, this court engages in the same inquiry as the trial court. Syrovy v. Alpine Resources, Inc., 122 Wn.2d 544, 548 n. 3, 859 P.2d 51 (1993). This court will affirm summary judgment if no genuine issue exists and the moving party is entitled to judgment as a matter of law. CR 56(c). All facts and inferences are considered in the light most favorable to the nonmoving party. Taggart v. State, 118 Wn.2d 195, 199, 822 P.2d 243 (1992).
Guardian's Fiduciary Duty
The Estate asserts that Ms. Kendall breached her fiduciary duty by naming herself as beneficiary of her son's annuity. A guardian is a person who is appointed by the court to provide for the basic needs of a person with incapacities and to help that person exercise his or her rights. RCW 11.88.005. Agents acting in a fiduciary duty are held to a standard of strict accountability. Stewart v. Baldwin, 86 Wash. 63, 69, 149 P. 662 (1915). "[A] person occupying a relation of trust or confidence to another is in equity bound to abstain from doing everything which can place him in a position inconsistent with the duty or trust such relation imposes upon him, or which has a tendency to interfere with the discharge of such duty." In re Guardianship of Carlson, 162 Wash. 20, 31-32, 297 P. 764 (1931). And a guardian should not be allowed to profit at the expense of a ward's estate. Id. at 31.
The Washington legislature defines and controls the guardianship relationship in RCW 11.88.005 and RCW 11.92.010. The guardian of a minor is "under the general direction and control of the court making the appointment." RCW 11.92.010. The court with jurisdiction is the "superior guardian" of the ward and the appointed guardian is "an officer of the court." Seattle-First Nat'l Bank v. Brommers, 89 Wn.2d 190, 200, 570 P.2d 1035 (1977). A guardian assumes all of the duties placed on the guardian of an incompetent's estate. Id. These duties include the duty to protect and preserve the estate and to account for the estate, and the duty to obtain the court's approval for the disposition of any real or personal property in the estate. Id. (citing RCW 11.92.040(4), .090).
In Brommers, Ms. Bottiger voluntarily chose to be the guardian of her husband's estate. She listed all of the community property in the inventory with the court. However, she then allowed three parcels of land to be logged without court approval. Brommers, 89 Wn.2d at 198-200. The court concluded Ms. Bottiger was liable for the proceeds from the guardianship property sold and the court assessed treble damages against Ms. Bottiger. Significantly, the court concluded that: "Once [Ms. Bottiger] had placed the community property in the guardianship estate, she was required to deal with this property in the same manner as a guardian who has no interest in the ward's property." Id. at 200.
Ms. Kendall asserts that she did not breach her fiduciary duty as guardian when she allowed herself to be named as a contingent beneficiary on the annuity. She maintains that Mr. Kozlowski, the attorney for Mr. Roberts, made the decision to name her as beneficiary. In Ms. Kendall's view, Mr. Kozlowski had the authority to make this designation and the Estate was bound by this designation.
Mr. Kozlowski's declaration states that he had no knowledge as to how Ms. Kendall was named beneficiary and that he had "no independent recollection of the structured settlement." CP at 99. Moreover, there is no evidence that Mr. Kozlowski had the authority to appoint a beneficiary for the annuity or that the court approved the beneficiary designation.
Statutory Duties.
The duties of a guardian are set forth in RCW 11.92.040 and RCW 11.92.043. In addition, the court may authorize a guardian to perform the same duties as a trustee as set forth in RCW 11.98.070. RCW 11.92.040(4). Significantly, a guardian must petition the court in order "to sell, exchange, lease, mortgage, or grant an easement, license or similar interest in any of the real or personal property." RCW 11.92.090. Here, the naming of a beneficiary transferred an interest to the beneficiary. Ms. Kendall was not authorized to name herself a beneficiary or to accept the beneficiary designation.
Ms. Kendall asserts that a guardian has authority to disclaim an interest in an inheritance on behalf of the ward. She points to RCW 11.86.021, which provides that a guardian may disclaim interests on behalf of a beneficiary, without a court order, as long as a court order has not been entered prohibiting this action. Ms. Kendall argues that a disclaimer under RCW 11.86.021 is analogous to the designation of Ms. Kendall as an alternate beneficiary under the annuity. She maintains that because no present interest was transferred, the beneficiary designation was not detrimental to Mr. Roberts.
RCW 11.86.021 does not give Ms. Kendall the authority to designate herself a beneficiary. RCW 11.86.021 involves disclaimers when the ward has a present interest in the property. See In re Estate of Baird, 131 Wn.2d 514, 521, 933 P.2d 1031 (1997). This provision does not give Ms. Kendall the authority to make testamentary dispositions of Mr. Roberts's property.
Ms. Kendall also contends that she has the authority to gift herself the ward's property under RCW 11.98.070, which sets forth the power of trustees. Specifically, she relies on RCW 11.98.070(21)(k). But RCW 11.98.070(21)(k) deals with the powers necessary to manage a business interest; this provision does not grant Ms. Kendall the power to name herself as the alternate beneficiary of the annuity.
SPR 98.16W.
The trial court ruled that SPR 98.16W was inapplicable because the case was governed by the rules of guardianship. Ms. Kendall argues that she could name herself as a beneficiary to the annuity pursuant to former SPR 98.16W (1989). She maintains that nothing in former SPR 98.16W requires court approval of her designation as beneficiary.
SPR 98.16W contains rules for any settlement involving the beneficial interest or claim of a minor. Former SPR 98.16W cannot be read to allow or disallow Ms. Kendall's designation as beneficiary. Former SPR 98.16W required the appointment of a guardian ad litem unless the child had independent counsel and the court approved the terms of the settlement. The guardian ad litem must then investigate the adequacy of the settlement and file a report. Former SPR 98.16W(a). Nothing in this provision changes the fiduciary duty that Ms. Kendall owed to Mr. Roberts.
Ms. Kendall argues that the entire settlement must be set aside if the court must approve the appointment of a beneficiary. This argument is without merit. In In re Guardianship of Lauderdale, 15 Wn. App. 321, 325, 549 P.2d 42 (1976), the court addressed only the apportionment of the settlement, without addressing the order approving the settlement which was unchallenged.
Mr. Roberts's Intentions.
Ms. Kendall argues that naming herself as a beneficiary was consistent with Mr. Roberts's intentions. She points out that, in 1997, Mr. Roberts named her as beneficiary on three insurance policies and that in 1999, the Kendalls had been named on Mr. Roberts's retirement plan. Ms. Kendall also states that she was named as joint owner of a Share/Savings account. Finally, Ms. Kendall relies on the declaration of Mr. Kendall in which he reminded Mr. Roberts to change the beneficiary designations on his life insurance and the annuity after his marriage. According to Mr. Kendall, Mr. Roberts indicated that he would change these designations after he had been married for a while.
There is no evidence as to Mr. Roberts's intentions as there is no evidence indicating that he was aware of the beneficiary designation on the annuity. Moreover, contrary to Ms. Kendall's assertions, Mr. Kendall's declaration is inadmissible under the deadman's statute, RCW 5.60.030. The case relied upon by Ms. Kendall, Rice v. Life Insurance Co. of North America, 25 Wn. App. 479, 609 P.2d 1387 (1980), is distinguishable. In Rice, the testimony of a nonparty concerning the decedent's statements was allowed because she could not gain or lose by the direct operation of the judgment and there was merely the contingency of loss that she may or may not face in the future. Id. at 483. Mr. Kendall is a party now as the alternate beneficiary of the annuity.
In summary, Ms. Kendall lacked the authority to name herself beneficiary of the annuity.
The Transaction was Voidable
The trial court concluded that Ms. Kendall's act of naming herself beneficiary was a nullity so no statute of limitations applied. Ms. Kendall maintains that this act was voidable, not void.
"It is doubtless the law that where a guardian settles with a ward without making a full and fair disclosure of his acts as such, the settlement is voidable at the option of the ward after attaining his majority." Pickard v. Webb, 118 Wash. 244, 248, 203 P. 51 (1922). After attaining the age of majority, the ward must act within a reasonable time, which is generally held to be the statute of limitations in actions for fraud. Id. The law of trusts provides that the trustee cannot purchase from herself or himself at his or her own sale, but if such sale occurs, the transaction is not void, but voidable. See Ryan v. Plath, 20 Wn.2d 663, 667-70, 148 P.2d 946 (1944); Lewis v. Hill, 61 Wash. 304, 112 P. 373 (1910).
The Estate insists that is it a long-standing rule that guardians cannot have an interest in the ward's property, and that any conveyance to the contrary is void. To support this argument, the Estate relies on the following cases: F.T. Larrabee Co. v. Mayhew, 135 Wash. 214, 237 P. 308 (1925); Roger v. Whitham, 56 Wash. 190, 105 P. 628 (1909); Miller v. Winslow, 70 Wash. 401, 126 P. 906 (1912); Stewart v. Baldwin, 86 Wash. 63, 149 P. 662 (1915); Hemrich v. Hemrich, 117 Wash. 124, 201 P. 10 (1921); and De La Pole v. Lindley, 118 Wash. 387, 204 P. 12 (1922). These cases are distinguishable.
Larrabee Co. was decided under a then-existing statute stating that guardians could not acquire an interest in the ward's real property and that sales to the contrary were void. Larrabee Co., 135 Wash. at 219. Stewart dealt with a situation where a father was administering property on behalf of the heirs of his deceased wife. The court did not void the sales transaction but, instead, awarded monetary damages to the heirs. Stewart, 86 Wash. at 72-73. Hemrich involved a transaction between a trustee and a ward. The court concluded that such transactions are voidable and may be set aside if the trustee fails to prove that the transaction was in good faith. Hemrich, 117 Wash. at 139.
The Estate also relies on Falconer v. Stevenson, 184 Wash. 438, 51 P.2d 618 (1935), and Esmieu v. Schrag, 88 Wn.2d 490, 563 P.2d 203 (1977) to support its argument that Ms. Kendall's act of naming herself beneficiary was void. Falconer involved jurisdictional questions which prevented the court from foreclosing a mortgage. The court also found that there was no equitable lien because the deed was unauthorized. Falconer, 184 Wash. at 440-42. In Esmieu, the court found a denial of procedural due process that rendered the orders void. Esmieu, 88 Wn.2d at 497.
Because Mr. Roberts's claim against Ms. Kendall is voidable, not void, the statute of limitations applies. The three-year statute of limitations contained in RCW 4.16.080(4) is applicable to a cause of action alleging a breach of fiduciary duty. LaHue v. Keystone Inv. Co., 6 Wn. App. 765, 784, 496 P.2d 343 (1972). Mr. Roberts reached the age of majority in May 1995. He died in March 2004. He did not challenge the beneficiary designation during that nine-year period. As a result, the action here is time-barred.
We reverse.
A majority of the panel has determined this opinion will not be printed in the Washington Appellate Reports, but it will be filed for public record pursuant to RCW 2.06.040.