97-297
No. 97-297
IN THE SUPREME COURT OF THE STATE OF MONTANA
1997
IN RE ESTATE OF DAVID BENNIE HAAGENSON,
Deceased.
APPEAL FROM: District Court of the Fourth Judicial District,
In and for the County of Missoula,
The Honorable John W. Larson, Judge presiding.
COUNSEL OF RECORD:
For Appellants:
Bradley D. Dantic; Worden, Thane & Haines;
Missoula, Montana
For Respondent:
Michael Sol; Sol & Wolfe Law Firm;
Missoula, Montana
Guardian Ad Litem:
Alice E. Kennedy; Attorney at Law; Missoula, Montana
Submitted on Briefs: November 6, 1997
Decided: November 25, 1997
Filed:
__________________________________________
Clerk
Justice Terry N. Trieweiler delivered the opinion of the Court.
Sara and Benjamin Haagenson filed a petition in the District Court for the
Fourth
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Judicial District in Missoula County in which they sought removal of Darla
Zenker-Haagenson as personal representative, and for supervised administration of the
Estate of David B. Haagenson. Following a hearing, the petition was denied. Sara
and
Benjamin appeal. We affirm the order of the District Court.
The issue on appeal is whether the District Court abused its discretion when it
denied the appellants' petition.
FACTUAL BACKGROUND
David B. Haagenson and Kathy Finneman married in 1974. They had two
children, Sara and Benjamin, who are now 18 and 17 years old, respectively. David
and
Kathy divorced in August 1988. Afterward, they shared joint custody and support of
the
children.
In November 1988, David married Darla Zenker. In April 1991, David suffered
a heart attack and stroke from which he was permanently disabled. He lost much of
his
ability to speak, write, and read, as well as many other motor functions.
Nonetheless,
David maintained his ability to drive and remained intellectually competent.
Shortly after
he became disabled, he and Darla stopped living together. During the following
years,
both David and Darla expressed their desire to divorce, and Darla filed a petition
for
dissolution of marriage with the District Court in April 1996, two weeks before
David's
death. However, due to David's hospitalization, she did not inform David of the
petition
and ultimately withdrew it. At the time of David's death on April 30, 1996, they
were
still married.
After David's disability, he and Darla brought a malpractice action against the
doctors who had been responsible for his treatment following his heart attack and
stroke.
The suit was eventually settled for approximately $900,000; Darla received
approximately
$200,000; and David received approximately $700,000. The parties to the settlement
were bound by a confidentiality agreement not to disclose specific details of the
settlement, although the terms of the agreement permitted disclosure to immediate
family
members.
After David received the settlement funds, he established a conservatorship at
First
Trust Company of Montana to protect and manage most of his financial affairs.
David's
parents and Kathy were under the impression from David that a trust of some type had
also been established to provide for the children, although none had actually been
created.
Despite the requests of Darla, Sara and Benjamin, and other family members, David did
not have a will prepared or do any other estate planning prior to his death at age
forty-two in April 1996.
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On June 5, 1996, Darla applied to the District Court for appointment as personal
representative of David's estate, and she was appointed. Darla continued to use
First
Trust Company of Montana to administer the estate. She gave public notice to
potential
creditors of the estate and paid all creditor claims, except four claims made by the
appellants in November 1996. She also arranged for an auction of items from the
estate
and sold David's new truck; all proceeds from the sales and from other assets of the
estate were deposited with First Trust Company of Montana.
In January 1997, the appellants filed a petition for removal of Darla as
personal
representative and for supervised administration of the estate. After a hearing on
March
28, 1997, the District Court denied the petition.
DISCUSSION
Did the District Court abuse its discretion when it denied the appellants'
petition?
We review a district court's decision regarding removal of a personal
representative to determine whether the district court has abused its discretion.
See In
re Estate of Peterson (1994), 265 Mont. 104, 108, 874 P.2d 1230, 1232; In re Estate
of
Nelson (1990), 243 Mont. 276, 278, 794 P.2d 677, 678; In re Estate of Stone (1986),
223 Mont. 327, 330, 727 P.2d 508, 511.
Pursuant to õ 72-3-526(2), MCA, a district court may find cause for removal of
the personal representative:
(a) when removal would be in the best interests of the estate; or
(b) if it is shown 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 perform any
duty pertaining to the office.
The appellants did not allege in their petition for removal that Darla had
disregarded an order of the court. They alleged only that due to a conflict of
interest
with the children and with David she had become unable to discharge the duties of a
personal representative, and that she mismanaged the estate and had failed to
perform the
duties of her office.
Among the specific allegations made by the appellants was their contention that
Darla's failure to pay support claims made by the children justified her removal.
The
claims, however, listed no basis for the requested amounts, which totaled
approximately
$200,000. The appellants rejected Darla's attempts to learn the basis of the claims
and
did not provide grounds for the amount, nor did they present testimony at the
hearing to
justify the specific claims. In fact, there was testimony that the children were
receiving
approximately $600 each month as Social Security benefits because of David's
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disability.
Furthermore, Darla explained that she doubted whether in her fiduciary capacity she
could deplete the children's share of the estate by essentially paying a support
claim to
the children's mother, who did not have an interest in the estate. As a result of
her
hesitation, she moved for, and the District Court appointed, a guardian ad litem to
protect
the children's interests. Therefore, in light of the overwhelming evidence to
support
Darla's initial denial of the claims and the appellant's failure to present evidence
other
than the initial allegations, we conclude that the District Court did not abuse its
discretion
when it found Darla's denial insufficient grounds on which to base her removal.
Another allegation was that Darla improperly disposed of estate items, including
a claim that she sold David's truck without first giving notice to or allowing the
children
to purchase it. The appellants offered no evidence at the hearing regarding Darla's
disposal of the items, and rely almost exclusively on their pleadings to assert that
it is
"uncontroverted" that Darla mismanaged the estate by the manner in which she disposed
of the items. The District Court heard testimony that all proceeds from any items
of the
estate which had been sold were deposited with the remainder of the estate funds,
and that
Darla accounted for all items of the estate. We conclude that the District Court
did not
abuse its discretion when it determined that the appellants' mere allegations were an
insufficient basis on which to find that she mismanaged the estate and that she
should be
removed as personal representative.
The appellants alleged that Darla was at fault for her actions related to the
malpractice suit, and that she has a concomitant conflict of interest with the
estate that
renders her unable to perform her duties as personal representative. They contend
that
she manipulated David's decisions during the lawsuit, unjustifiably seized a
substantial
share of the settlement, failed to pursue malpractice claims against David's
attorneys on
behalf of the estate, and deceived family members about the terms of the settlement
and
the confidentiality agreement.
At the hearing, however, the testimony from David's family members merely
stated their surprise at being excluded from the lawsuit and at eventually learning
that no
trust for the children had been established. It also addressed the poor relationship
between Darla and David. There was conflicting testimony about David's competency,
but most of the testimony affirmed that David was in fact competent and able to make
and communicate his own decisions. The appellants' evidence at the hearing
ultimately
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failed to address the potential impropriety of Darla in her role as personal
representative.
Instead, it implicitly challenged David's lifetime financial decisions to not
prepare a will,
to not disclose details of the settlement, and to not create a trust for the
children.
The testimony did not address Darla's involvement between the time that David
received the settlement and created the conservatorship, and the time that he died.
Nor
did it establish a connection between Darla's role in the lawsuit and her alleged
inability
to act in the best interests of the estate. Therefore, the only relevant evidence
regarding
the malpractice claim which was before the District Court was that Darla acquired
control
at David's death of his settlement proceeds, the only significant asset in the
estate.
However, evidence before the District Court that Darla planned to distribute the
estate
according to the laws of intestacy established that whatever Darla's conduct may have
been with regard to the lawsuit, that conduct gave rise to no conflict of interest
that might
affect her duties as personal representative. We conclude that the District Court
did not
abuse its discretion when it denied Darla's removal as personal representative based
on
her involvement in David's medical malpractice claim.
Finally, the appellants contend that Darla's failure to comply with certain
notice
provisions and other administrative duties constitutes grounds for her removal.
Beyond
their pleadings, however, they provided the District Court with no other evidence of
these
alleged omissions. They also cite Darla's failure to determine and allow for a
family
allowance, but the appellants presented no evidence at the hearing regarding a family
allowance and, in fact, filed the petition for family allowance after the hearing.
As such,
that issue was not properly before the District Court and cannot be raised for the
first
time on appeal. See Cenex, Inc. v. Board of Comm'rs for Yellowstone County (Mont.
1997), 941 P.2d 964, 968, 54 St. Rep. 695, 698 (citing State v. Weeks (1995), 270
Mont.
63, 86, 891 P.2d 477, 491); Rasmussen v. Lee (1996), 276 Mont. 84, 88, 916 P.2d 98,
100. Therefore, we conclude that the District Court did not abuse its discretion
when it
found the evidence of Darla's alleged failure to conduct her duties insufficient for
her removal.
The appellants contend for the first time in their reply brief that the
District Court
did not allow them a fair and adequate opportunity to present their case because it
gave
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each party a limited time to present evidence. However, we will not address on
appeal
the merits of an issue presented for the first time in a reply brief. See Rule 23
(c),
M.R.App.P.; Loney v. Milodragovich, Dale & Dye, P.C., (1995), 273 Mont. 506, 512,
905 P.2d 158, 162; Denend v. Bradford Roofing & Insulation (1985), 218 Mont. 505,
509-10, 710 P.2d 61, 63-64. Accordingly, the appellants' assertion that they should
not
be prejudiced for their failure to produce evidence at the hearing in support of
their
allegations is not properly before this court.
We conclude that based upon the record and the testimony at the hearing, the
District Court did not abuse its discretion when it was unconvinced by the
appellants'
allegations and denied their petition for removal and supervised administration. We
affirm the order of the District Court.
/S/ TERRY N. TRIEWEILER
We Concur:
/S/ J. A. TURNAGE
/S/ JAMES C. NELSON
/S/ JIM REGNIER
/S/ WILLIAM E. HUNT, SR.
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