No. 93-434
IN THE SUPREME COURT OF THE STATE OF MONTANA
1994
No. 9 3 - 4 3 4
IN THE MATTER OF THE ESTATE OF,
JUSTIN PETERSON, also known as
JUSTIN C. PETERSON, Deceased.
APPEAL FROM: District Court of the Thirteenth Judicial District,
In and for the County of Yellowstone,
The Honorable G. Todd Baugh, Judge presiding.
COUNSEL OF RECORD:
For Appellant:
Charles F. Moses, Moses Law Firm, Billings, Montana
For Respondent:
James L. Jones, William A. Cole, Richard A. Brekke,
Dorsey & Whitney, Billings, Montana
Submitted on Briefs: February 24, 1994
Decided: May 20, 1994
Filed: MAY 2 0 1994
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Justice Fred 3. Weber delivered the Opinion of the Court.
This is an appeal by Michael J. Whalen from an Order of the
District Court of the Thirteenth Judicial District, Yellowstone
County, removing him for cause f r o m his duties as personal
representative in the above-entitled informal probate proceeding.
We affirm.
We have restated the issues as follows:
1. Did the District Court abuse its discretion by removing
Michael J. Whalen as personal representative of the estate of
Justin Peterson?
11. Did the District Court err in appointing David Peterson,
the sole heir, as the successor personal representative?
111. Should the appellant be sanctioned and ordered to pay
respondent's attorney fees and costs pursuant to Rule 32,
M.R.App.P., for bringing a meritless appeal?
Justin C. Peterson died on March 25, 1993 at the age of 33
years. David L. Peterson is the younger brother of Justin C.
Peterson, the deceased, and the sole beneficiary under Justin
Peterson's will. Justin and David Peterson, although part of a
large family, were raised in a series of foster homes. During part
of their time in high school after Justin was "on his own,'' they
lived together in a tent in a cave in the llrimsll Billings.
in
David has suffered from cerebral palsy since birth and one of his
teachers would pick him up in the morning to take him to school
when the boys lived in the tent. The record indicates an extremely
close relationship between the two brothers which continued until
Justin's death in March of 1993.
Justin Peterson died from complications resulting from an
accident which occurred on June 23, 1982, while swimming at Lake
Elmo, a recreational facility in Billings. As an immediate result
of that accident, Justin was rendered a quadriplegic, completely
dependent on others for his care, including feeding, and he was
unable to breathe without the assistance of a respirator or
ventilator. Although he could talk, he spoke with difficulty.
During the eleven years in which Justin survived following the
accident, he endured repeated life-threatening complications.
David lived with Justin following his release from the
hospital in September of 1984 and was granted a limited power of
attorney by Justin to handle household matters. Another limited
power of attorney was given to an accountant who handled payroll
matters and taxes for Justin. Justin needed round-the-clock care
until the time of his death and employed nursing assistance for
such care. Justin had been hospitalized from the date of the
accident in 1982 until September 1984, and was able to leave the
hospital and move into a home he had purchased only after a
settlement was obtained for him by his attorneys.
Ernest F. Boschert of the Boschert & Boschert law firm was
contacted by other family members in January 1983 to represent
Justin. Mr. Boschert subsequently associated with Michael J.
Whalen of the Whalen & Whalen law firm to represent Justin in his
claim against the owners of the recreational area, Kimble
Properties and Tymon, Inc.
On February 2, 1983, Justin signed a contingency fee agreement
with Michael J. Whalen and Ernest F. Boschert which provided the
following fee schedule:
25% of the recovery if the case was settled prior to
filing a complaint in district court;
33 1/3% of the recovery after a complaint was filed in
district court;
40% of the recovery if the case was set for trial or was
tried; and
5% additional if the case was appealed or there was a new
trial.
On February 22, 1983, the law firm of Whalen & Whalen filed a
two-page complaint against the owners of Lake Elmo. Three requests
were made for the District Court to set a trial d.ate within the
ensuing months of 1983. The first such request was made of the
presiding judge in the matter, Judge Wilson, on August 16, 1983.
Judge Wilson deemed himself disqualified and the case was assigned
to Judge Barz. On September 2, 1983, another request was made to
set the matter f o r trial ; this time, Judge Barz disqualified
herself. The case was then assigned to Judge Speare. Timothy
Whalen of Whalen & Whalen wrote a letter on September 7, 1983,
again requesting that the cause be placed on the trial calendar.
On October 17, 1983, the ~istrictCourt entered an order setting a
trial date. As a result of the foregoing actions, the amount of
fees increased to 40% under the contingency agreement.
On March 9, 1984, Michael J. Whalen made an offer to settle
the case for policy limits of $2,500,000 cash or, in the
alternative, for $1,250,000 cash and $1,875,000 to be paid in
installments of $15,625 per month over a ten-year period, for a
total of $3,125,000. The defendants' insurers accepted the
alternative proposal without making a counteroffer. The final
payments on this alternative settlement proposal will be made in
May, 1994.
After the 1984 settlement, Michael J. Whalen drafted a will
for Justin Peterson in which he and Ernest F. Boschert were named
as co-personal representatives. Ernest F. Boschert predeceased
Justin Peterson and has not acted as personal representative.
Following the death of Justin Peterson, Michael J. Whalen was
appointed as personal representative of his estate. David Peterson
obtained separate counsel and asked Michael J. Whalen to step aside
as personal representative of his brother's estate.
After discussions, Mr. Whalen declined to resign. On May 27,
1993, David Peterson filed a petition to remove Michael J. Whalen
as personal representative which is the subject of this appeal.
After a hearing held on June 16, 1993, the District Court removed
Mr. Whalen and appointed David Peterson as successor personal
representative in an order dated July 20, 1993.
David Peterson has filed a claim against the Whalen and
Boschert firms with regard to the fee agreement. Michael J. Whalen
filed suit against the estate of Justin Peterson (the Estate) to
recover his legal expenses.
Issue I.
Did the District Court abuse its discretion by removing
Michael J. Whalen as personal representative of the estate of
Justin Peterson?
In the petition for removal of Michael J. Whalen as personal
representative of the Estate, David Peterson stated that the
attorney fees on the part of the two law firms were excessive in
relation to the amount of work done in connection with Justin
Peterson's personal injury claim.
After a hearing on June 16, 1993 to determine whether Mr.
Whalen should be removed for cause, the District Court determined
that a conflict of interest existed between the Estate and Mr.
Whalen as Mr. Whalen could not be expected to pursue a claim
against himself on behalf of the Estate. A personal representative
may be removed for cause in certain situations under 5 72-3-526,
MCA, which provides in pertinent part:
72-3-526. Termination of appointment
cause. (1)
--
removal for
A person interested in the estate may
petition for removal of a personal representative for
cause at any time. Upon filing of the petition, the
court shall fix a time and place for hearing. Notice
shall be given by the petitioner to the personal
representative and to other persons as the court may
order. ...
(2) Cause for removal exists:
(a) when removal would be in the best interests of
the estate; or
(b) if it is shown that a personal representative or
the person seeking his appointment intentionally
misrepresented material facts in the proceedings leading
to his appointment or that the personal representative
has disregarded an order of the court, has become
incapable of discharging the duties of his office, or has
mismanaged the estate or failed to Derform anv dutv
pertainins to the office. (Emphasis supplied.)
Removal of a personal representative for cause pursuant to 8 72-3-
526, MCA, is within the sound discretion of the district court and
this Court will not overturn such a termination unless there is a
clear abuse of discretion. In re the Estate of Nelson (1990), 243
Mont. 276, 278, 794 P.2d 677, 678. A district court can remove a
personal representative or refuse to appoint a person as personal
representative for cause if there is a conflict of interest between
that person's interests and those of the estate. In re the Estate
of Obstarczyk (1963), 141 Mont. 346, 351-53, 377 P.2d 531, 534-35.
The District Court expressly relied on Estate of Obstarczvk,
which affirmed a removal of an executrix on the grounds that her
interests were adverse to the estate and held as follows:
... The duty of an executor is to examine strictly
all claims against an estate . . . seeking judicial
interpretation if necessary. ... It is clear that [the
executrix's] own interests are antagonistic to the
estate.
In the Tice case, supra, we quoted with approval
from In re Rinio's Estate (1933), 93 Mont. 428, 435, 19
P.2d 322, 325, as follows:
" * * * The law does not look with favor upon the
administration of estates by a person where
conflicts in the performance of his duty are likely
to arise."
Estate of Obstarczvk, 377 P.2d at 534. We conclude that the
potential claim against Michael J. Whalen for excessive attorney
fees is sufficient to create a conflict of interest in this case.
A conflict of interest is sufficient for removal of the personal
representative for cause under § 72-3-526, MCA.
We hold the District Court properly exercised its discretion
in determining that it was in the best interests of the Estate to
remove Michael J. Whalen as personal representative.
Issue 11.
Did the District Court err in appointing David Peterson, the
sole heir, as the successor personal representative?
Mr. Whalen also contends that David Peterson was not a proper
person for appointment as successor personal representative of the
Estate. Although Mr. Whalen testified as noted above that he would
not pursue a claim against himself, he stated that he was willing
to have a special administrator appointed to explore that claim if
the court denied his motion to dismiss David Peterson's petition to
remove him as personal representative.
Section 72-3-527, MCA, provides that parts 2 and 3 of Chapter
72 govern proceedings for appointment of a successor personal
representative to succeed one whose appointment is terminated;
thus, 5 72-3-502, MCA, governs here and provides as follows:
72-3-502. Priorities for appointment. Whether the
proceedings are formal or informal, persons who are not
disqualified have priority for appointment in the
following order:
(1) the person with priority as determined by a
probated will, including a person nominated by a power
conferred in a will;
(2) the surviving spouse of the decedent who is a
devisee of the decedent;
(3) the custodial parent of a minor decedent;
(4) other devisees of the decedent;
(5) the surviving spouse of the decedent;
(6) other heirs of the decedent;
(7) public administrator;
(8) 45 days after the death of the decedent, any
creditor.
We review the appointment of a personal representative according to
3 72-3-502, MCA, to determine whether a district court has
correctly interpretedthe law. Steer Inc. v. Department of Revenue
(lggO), 245 Mont. 470, 474-75, 803 P.2d 601, 603. We conclude that
under the order of priority set forth in 3 72-3-502, MCA, David
Peterson has first priority of appointment as there exist no
persons fitting the descriptions of subsections (1) through (3) and
he is the sole devisee under his brother's will. Further, he will
serve as personal representative at no charge and as noted by the
District Court, a special administrator would increase costs
unnecessarily.
Moreover, 5 72-3-503 (I), MCA, provides that an objection to
the appointment of a personal representative can be made & in
formal proceedings. Justin C. Peterson's will is being informally
probated. On that basis, Mr. Whalen may not object to the District
Court's appointment of David Peterson as personal representative of
the Estate.
We hold the District Court properly appointed David Peterson,
the sole heir, as the successor personal representative of the
estate of Justin C. Peterson.
Issue 111.
Should the appellant be sanctioned and ordered to pay
respondent's attorney fees and costs pursuant to Rule 32,
M.R.APP.P., for bringing a meritless appeal?
David Peterson contends that this Court should assess
sanctions against Mr. Whalen and his attorneys for bringing a
meritless appeal. He further claims that it was brought for an
improper purpose. Thus, he asks this Court to require Mr. Whalen
to reimburse him for his reasonable costs and attorney fees
incurred in connection with this appeal.
On the record before us we hold there is no basis for
sanctions to be assessed against the appellant for attorney fees
and costs pursuant to Rule 32, M.R.App.P., for bringing a meritless
appeal.
Affirmed.
We Concur:
,
Justices
Justice William E. Hunt, Sr., and Justice Terry N. Trieweiler
did not participate.
to the