Opinion
No. WD 58466
Opinion Filed: May 22, 2001
APPEAL FROM THE CIRCUIT COURT OF CLAY COUNTY, MISSOURI HONORABLE LARRY D. HARMAN, JUDGE
Joseph Y. Decuyper, Esq., for Appellant Gary Gabel, KCMO,
Steven M. Petry, Esq., for Respondent Beverly Sue Ryan, KCMO
Teresa M. Terry, Esq., Liberty, MO, for Respondent James Spiegelhalter,
Before: Ellis, P.J., Lowenstein and Newton, J.J.
Pursuant to § 473.340, RSMo 2000, Conservator of incapacitated woman's estate (respondent) was granted judgment in probate court against woman's daughter and son-in-law (appellants) relating to proceeds withheld from the sale of real estate. The facts in this case were hotly contested and are highly unusual. The facts are set out in the next section, but the reader is now advised: 1) the daughter and son-in-law of the disabled and incapacitated woman attempted to sell the woman a condominium in which to live some time after she had suffered a debilitating stroke though before she was declared incapacitated and disabled; 2) there were three separate contracts for sale or transfer of title drawn up by sellers and executed by the parties (creating a vital issue at trial as to which one, if any, actually was effective); 3) it is unclear whether the daughter and son-in-law ever had legal title to transfer; the deed was never executed by them during the time in question to the woman; 4) the woman paid a substantial amount of money as a down payment and several years of monthly payments to the Appellants.
Appellants challenge the discovery of assets judgment, arguing that the probate court was in error: 1) because of the expiration of two statutes of limitations; 2) because the Conservator's pleadings were insufficient to state a cause of action; 3) because the probate court lacked subject-matter jurisdiction; and 4) because there was not substantial evidence that Appellants adversely withheld or claimed an interest in the real estate.
Factual and Procedural History
Beverly Sue Ryan, Public Administrator of Clay County, was appointed conservator (hereafter Conservator) of Ruth Spiegelhalter's estate because Ruth was declared legally disabled and incapacitated by the probate division of the Clay County Circuit Court on February 6, 1998. On December 11, 1998, the Conservator filed a petition for discovery of assets, accounting, and other relief in the probate division against all of Ruth's children. The probate court found in favor of all of the children except for one claim, on which it ruled against Ruth's daughter and son-in-law, Appellants Teresa and Gary Gabel (hereafter Appellants or either Gary or Teresa Gabel).
Many of the parties are referred to by their first names for clarity.
The count against Appellants involves a condominium at 7140 Kingston Court in Clay County. Legal title to the property was originally in the name of Ron Topham, Gary Gabel's joint-venture partner, or in the name of the Kingston Court Development Corp. Prior to Ruth's incapacity, three contracts may have been drawn to sell that condominium to Ruth, though there are allegations that Teresa may have signed Ruth's name, either at Ruth's direction or in forgery. Appellants state that Ruth was unable to perform under any of the contracts. The court, however, found that Ruth paid the Gabels a $49,000 down payment and that the Gabels carried an $11,000 note on the property. The court also found that legal ownership was never transferred to Ruth. Nonetheless, Ruth lived in the condominium from December of 1988 until she was unable to care for herself in 1997. During the time she was in the condominium, Ruth paid Appellants $235 each month on the $11,000 note.
In 1995 or 1996, the Spiegelhalter children held a family meeting and discussed who should buy the Kingston Court condominium after it was discovered that title had not been transferred to Ruth and that the title remained in the name of the Kingston Court Development Corp. John Spiegelhalter, a son of Ruth, agreed to purchase the condominium for $85,000, and paid $35,000 (by taking out a second deed of trust on his own home) to the Appellants to clear an encumbrance that was on the condominium. John did not pay anyone the remaining $50,000. The probate court noted that this transaction occurred on an unknown date.
The facts surrounding the $35,000 encumbrance are vague, but the trial court found that the lien was incurred by the Gabels against the condominium.
John testified that even though the selling price of the condominium was $85,000, his only obligation was to pay $35,000 so that the property would be free of encumbrances. Ruth resided in the condominium and paid "rent" to John until June of 1997 when she moved into a nursing home. John applied that "rent" towards his $35,000 deed of trust.
In 1998, John sold the condominium for $101,000. He paid to the Conservator approximately $55,000 for Ruth's "interest" on the property, and the rest went to cover the $35,000 lien and closing costs and taxes that John had incurred (approximately $10,000). The trial court assessed a $36,502.54 judgment plus interest against the Gables, citing its inherent power to adjust the equities between parties without strict adherence to any determined form and to shape the remedy to meet the demands of justice.
Neither the Appellants nor the Conservator contests the $36,502.54 as being the correct net amount owed Ruth's estate, if indeed the Gables are liable to the estate.
Appellants essentially assert four points on appeal, three of which, if granted, would affect the outcome of the case for procedural reasons and thus are addressed first. First, Appellants argue that two statutes of limitations bar consideration of the contracts under either § 516.110, RSMo 2000, or § 516.120 because the contracts were dated January 15, 1988 and December 3, 1988, and the Conservator's suit was filed December 11, 1998. Second, Appellants argue that the Conservator's pleadings were insufficient to state a cause of action against them for discovery of assets. Third, Appellants argue that the probate court lacked jurisdiction to hear the count against them because it involves claims for common-law tort claim or breach of contract. Finally, Appellants argue that there was not substantial evidence that they adversely withheld or claimed an interest in the Kingston Court condominium.
All further statutory references are to RSMo 2000 unless indicated otherwise.
Analysis I.
This court first addresses Appellant's argument that the Conservator's action is barred by two statutes of limitations, § 516.110 (general ten-year statute of limitations) and § 516.120 (five-year statute of limitations, including actions on contracts). Because the statute of limitations is an affirmative defense, it must be alleged with particularity. Rule 55.08. "A party desiring to avail himself of the statute of limitations must plead the particular statute upon which he relies." Alvarado v. H R Block, Inc ., 24 S.W.3d 236, 241 (Mo.App. 2000). Even more stringent is the requirement that "one seeking to take advantage of the statute of limitations 'must plead the very provision on which he depends.'" Modine Mfg. Co. v. Carlock , 510 S.W.2d 462, 467 (Mo. 1974)(citation omitted).
In the case at bar, Appellants pleaded the statute of limitations as an affirmative defense, but they did not comply with Rule 55.08. Instead, Appellants' affirmative defense stated only that "the applicable statute of limitations bars Plaintiff from make [sic] any claim as alleged in Count X of Plaintiff's Petition against these Defendants and such Petition should be dismissed." This allegation is bereft of particularity: it specifies neither the statute of limitations in question nor the specific provision. Because the affirmative defense fails for lack of specificity, this point is denied.
II.
Although not a separate point, Appellants complain at various times that the Conservator's pleadings were insufficient because she failed to allege that the Appellants adversely withheld property from Ruth's estate and she did not set forth whether she was asserting a claim for breach of contract or fraud.
In a discovery of assets claim, the petition shall describe the property, if known, and shall allege the nature of the interest of the petitioner; it shall also allege that title or possession of the property, or both, are adversely withheld or claimed. § 473.340.1. The rules for petitions for discovery of assets are governed by the Missouri Rules of Civil Procedure. § 473.340.2. However, "the strict rules of pleadings in circuit court petitions do not apply to probate proceedings." In re Miller , 9 S.W.3d 760, 765 (Mo.App. 2000)(citation omitted). Instead, the pleadings must "give reasonable notice of the nature and extent of the claim." In re Woodrum , 859 S.W.2d 259, 261 (Mo.App. 1993) (emphasis added). See also In re Foster , 878 S.W.2d 896, 897 (Mo.App. 1994).
In her count against Appellants, the Conservator alleged that "$49,000 was removed from a bank account of Ruth Alice Spiegelhalter and paid to [the Gabels] toward the purported purchase of said residence and that [the Gabels] agreed to carry an $11,000 note for the balance of the purchase price." The Conservator also alleged that Appellants never owned the residence because title was vested in Topham and his wife. The Conservator further alleged that Ruth was damaged as a result of Appellants' failures to alert Ruth as to the correct titleholder and to transfer ownership to Ruth. Finally, the Conservator alleged that the estate was damaged because of Appellants' failure to compensate the estate when the condominium was sold in 1998.
Because this court finds that the petition was reasonably sufficient to put Appellants on notice of the claims involving the Kingston Court condominium, this point is denied.
III.
Appellants argue next that the probate court erred in denying their motion to dismiss for lack of subject-matter jurisdiction. Specifically, Appellants argue that probate courts have no jurisdiction over breach of contract and tort claims and that Appellants were not the proper parties because they transferred their interest (to John) two years before Ruth was adjudicated incapacitated.
The standard of review is that "[a] court should grant a motion to dismiss for lack of subject-matter jurisdiction whenever it 'appears' that the court lacks such jurisdiction." Two Pershing Square, L.P. v. Boley , 981 S.W.2d 635, 639 (Mo.App. 1998)(citation omitted). "As the term 'appears' suggests, the quantum of proof is not high. It must appear by a mere preponderance of the evidence that the court is without jurisdiction." Id .
In a discovery of assets proceeding, the court determines whether specific property has been adversely withheld or claimed. § 473.340.1. "The statute is not intended as a device to test general fiduciary conduct, improper administration of the estate, or general disputes [among] heirs." In re Goldenberg's Estate , 601 S.W.2d 637, 639 (Mo.App. 1980). Such a proceeding is similar to common-law actions of trover or conversion. State ex rel. Knight v. Harmon , 961 S.W.2d 951, 954 (Mo.App. 1998). "The probate division of the circuit court has original and exclusive jurisdiction over a proceeding to discover assets pursuant to § 473.340." Estate of Williams v. Williams , 12 S.W.3d 302, 305 (Mo.banc 2000). However, this jurisdiction does not extend to choses in action. Ryan ex rel. Estate of Reece , 31 S.W.3d 82, 86-87 (Mo.App. 2000). Allegations involving breach of fiduciary duty or legal malpractice are not appropriate in a discovery of assets proceeding because they do not involve the determination of title and/or the right to possession of property. Harmon , 961 S.W.2d at 955 .
Appellants argue that the Conservator's count involving the Kingston Court condominium improperly alleges either breach of contract or fraud. The proper inquiry, as Appellants correctly argue, was whether Ruth held title to certain property at the time she was adjudicated incapacitated which was adversely withheld or claimed, not whether Appellants defrauded her or breached a contract with her.
Appellants' argument that the Conservator's petition inappropriately alleges either breach of contract or fraud is flawed for several reasons. First, although the probate judge decided this case on principles of equity rather than on contractual interpretation, infra, contract actions have been held appropriate in discovery of assets proceedings. In re Estate of Halverson , 840 S.W.2d 280, 284 (Mo.App. 1992)(ex-wife of deceased subject to discovery of assets proceeding for breach of property settlement agreement); cf. Woodrum , 859 S.W.2d at 259 (surety bond issued for faithful performance of Conservator which was not paid to estate was not within subject-matter jurisdiction of the probate division because action was for breach of contract; petition did not involve whether surety had possession or title to assets).
Even if Appellants are correct that contract disputes are inappropriate in the probate division of courts, deciding whether Appellants were required to pay into Ruth's estate moneys withheld when title was transferred does not amount to litigating a contract, as was the case in Woodrum , and is not otherwise impermissible in this case. In so holding, we distinguish the case at hand from those on which Appellants rely. In Goldenberg , the Eastern District found that the probate court had no jurisdiction over a widow's claim that her son mismanaged her deceased husband's business, that she was due a widow's allowance and tax refund, and that some of her personal property was lost. 601 S.W.2d at 639. None of those allegations related to the discovery of assets; they "at best" concerned the administration of the estate. Id . Similarly, in Reece , this court held that the conservator could not recover "choses in action." Specificially, the conservator sought to recover money lost where a father depleted his incapacitated son's claims for the father's own benefit. 31 S.W.3d at 87. In that case, the conservator's claim failed because she did not assert that the father actually converted any specific assets. Id . Instead, the conservator's allegations concerned the father's breach of fiduciary duty to the son and thus was not properly a discovery of assets claim. See also State ex rel. Abele v. Harmon , 962 S.W.2d 945, 948 (Mo.App. 1998)(no subject-matter jurisdiction where claims were that if defendant had not breached his fiduciary duty to incapacitated boy, boy's estate would have received more money from tort claims); and Knight , 961 S.W.3d at 955 (allegations of legal malpractice/breach of fiduciary duty in a petition for discovery of assets are inappropriate because they do not involve the determination of title and/or the right to possession of property which is claimed a part of the estate). The case at hand concerns assets wrongfully withheld, similar to trover or conversion, and is not analogous to the opinions on which Appellants rely.
Appellants' argument that the Conservator's claim was a fraud action instead of a discovery of assets action is equally without merit. An allegation of ineffective transfer of property does not mean that a discovery of assets case is a fraud case, and a plaintiff need not establish fraud in order to prove that a defendant wrongfully withheld property from the estate. In re Estate of Schwartze , 998 S.W.2d 596, 600 (Mo.App. 1999)(jury instructions requiring that all elements of fraud be established in a discovery of assets proceeding resulted in prejudicial error). Appellants' argument that the case sounded in contract or fraud and was incorrectly labeled a discovery of assets case is thus without merit. As was the case in Schwartze , the conservator's claim that Appellants owed more than $36,000 to the estate "is clearly a discovery of assets action." Id . at 600.
Second, if Appellants' theory were effectuated, they would never have been subject to a discovery of assets proceeding, even if Ruth had been adjudicated incapacitated while still residing in the Kingston Court condominium. Under § 473.340.1, the proper inquiry is whether Appellants adversely withheld or claimed property which is claimed to be an asset of an estate or which is claimed should be an asset of the estate. This statute does not require Appellants to have held title as a prerequisite to a discovery of assets claim. Indeed, the statute provides that where title to real property has been transferred, the appropriate remedy is money judgment. § 473.340.3. The allegation, simply put, was that Appellants adversely withheld proceeds from the sale of real estate and that those proceeds properly belonged to Ruth's estate. The fact that Appellants managed never to have held title to the property by way of a joint-venture agreement or otherwise is of no consequence in determining whether proceeds from the sale of property properly belong in Ruth's estate so as to constitute determining the right to possession of property. In short, the inquiry was properly couched in terms of a discovery of assets claim.
Third, this court addresses Appellants' contention that the count was improper because it related to a time earlier than Ruth's formal adjudication of incapacity. See Woodrum , 859 S.W.2d at 261 (discovery of assets proceeding that included allegation that decedent had withdrawn a savings account prior to his death failed for lack of subject-matter jurisdiction). Specifically, Appellants argue that Ruth was not adjudicated incapacitated until February 6, 1998, approximately two years after Appellants transferred their interest in the condominium, and thus Appellants contend that the court had no jurisdiction over them because Ruth had removed the asset from the estate.
Probate courts possess the same equity powers as circuit courts. Estate of Goslee , 807 S.W.2d 552, 554 (Mo.App. 1991). See also § 478.260 ("the circuit judge or associate circuit judge serving in the probate division shall have general equitable jurisdiction"). In this case, the probate division assessed judgment against Appellants based not on strict contractual interpretation or on elements of fraud, but in equity. As noted supra, Appellants avoided transferring legal title to Ruth; thus, a strict breach of contract claim against Appellants would have been inappropriate. A separate fraud action might have been appropriate, yet as noted supra, the allegations were that Appellants wrongfully withheld proceeds from Ruth's estate, not that their actions amounted to a fraudulent transfer per se. Moreover, as noted supra, in a discovery of assets proceeding, it is unnecessary to prove fraud. See Schwartze , 998 S.W.2d at 600 . Utilizing equitable powers was appropriate in this case, where Ruth no doubt requires money from her estate for her nursing home and where she is restored to the position that the documents and intendments purported: Ruth was at least the equitable owner and her estate was due payment as a matter of right.
In addition, there was evidence that Ruth was weak near the time of these transactions and could have been adjudicated incapacitated sooner than February of 1998. Albert T. Spiegelhalter (another of Ruth's sons, who is not part of this appeal) filed an application for appointment of guardian and conservator on July 15, 1997, alleging that Ruth "cannot medically or physically take care of herself as she cannot walk without assistance with partial paralysis to the right side of body and could not remember to take medications and could not handle financial affairs mentally as well as physically because she cannot write." On December 30, 1997, Albert filed a motion for an emergency order appointing a guardian ad litem. The probate court ordered a guardian ad litem, finding that respondent was hospitalized with pneumonia, that she could not provide for her essential human needs, that she was paralyzed on her right side, that she was not ambulatory, that she had memory lapses and did not take her medicine, and that she required twenty-four hour care. An official adjudication of incapacity is not always necessary where strong evidence supporting it exists. See generally Vienhage v. Carter , 680 S.W.2d 749 (Mo.App. 1984).
These facts were provided by the conservator in her respondent's brief and in a supplemental legal file. Though Appellants objected to the inclusion of these facts in their reply brief, they failed to file a motion to strike.
In short, because the discovery of assets count was properly before the probate court, this point is denied.
IV.
Appellants argue that the probate court did not have substantial evidence to find that the Gabels adversely withheld or claimed an interest in the condominium because they had no interest in the property when Ruth was adjudicated incapacitated.
"[T]he decree or judgment of the trial court will be sustained by the appellate court unless there is no substantial evidence to support it, unless it is against the weight of the evidence, unless it erroneously declares the law, or unless it erroneously applies the law." Murphy v. Carron , 536 S.W.2d 30, 32 (Mo.banc 1976). "When determining the sufficiency of the evidence, an appellate court will accept as true the evidence and inferences from the evidence that are favorable to the trial court's judgment and disregard all contrary evidence." Propes v. Griffith , 25 S.W.3d 544, 547 (Mo.App. 2000). This court gives considerable deference to the evidentiary and factual evaluations by the trial court; however, no such deference is given where the law has been erroneously applied. Id . "This court will set aside the trial court's decision only when firmly convinced that the judgment is wrong." Evans v. Werle , 31 S.W.2d 489, 491 (Mo.App. 2000).
In this point, Appellants argue that they had no ownership interest in the Kingston Court property and that instead the real party responsible is John because: 1) he entered into the contract with the Kingston Court Development Corporation, not the Appellants; and 2) because he sold the property for $101,000 and realized a profit. Moreover, Appellants argue that Ruth's estate was properly reimbursed because Ruth paid $49,000 from her estate and John re-paid the estate $55,320, and thus the estate gained $4,000.
As noted supra, in addition to the $49,000 down payment, Ruth paid Appellants $11,000. John also testified that he paid Appellants $35,000 to clear an encumbrance when he took title. In reality, Appellants received $95,000 for the condominium, though they apparently "sold" it to Ruth for only $60,000. Moreover, after paying off the second mortgage John acquired in order to take title and after paying related expenses, he reimbursed Ruth's estate the remainder of the proceeds.
Though Gary Gabel testified at a motion to dismiss for lack of subject-matter jurisdiction and for the statutes of limitations defense, neither of the Appellants testified at trial. Nonetheless, the probate court had evidence sufficient to find that although Appellants received $60,000 from Ruth for the Kingston Court condominium, they failed to transfer title to her and to reimburse her estate for proceeds they received when title was transferred to John. Thus, the evidence was sufficient to support a finding under § 473.340. This point is denied.
The judgment of the trial court is affirmed.
All Concur.