Matter of Branning

No. 05-099

IN THE SUPREME COURT OF THE STATE OF MONTANA

2006 MT 106N

IN THE MATTER OF HAZEL E. BRANNING,
an Incapacitated Person.

APPEAL FROM: The District Court of the First Judicial District,
In and For the County of Lewis and Clark, Cause No. DG 2001-37,
Honorable Dorothy McCarter, Presiding Judge

COUNSEL OF RECORD:

For Appellant:

Steven J. Shapiro, Attorney at Law, Montana City, Montana
(Attorney for Nancy Marshall)

For Respondent and Cross-Appellant:

Karen M. Branning, pro se, Ben Lomand, California

Submitted on Briefs: October, 26, 2005

Decided: May 9, 2006

Filed:

__________________________________________
Clerk
Justice Patricia O. Cotter delivered the Opinion of the Court.

¶1 Pursuant to Section I, Paragraph 3(c), Montana Supreme Court 1996 Internal

Operating Rules, the following decision shall not be cited as precedent. It shall be filed as a

public document with the Clerk of the Supreme Court and its case title, Supreme Court cause

number and disposition shall be included in this Court’s quarterly list of nonciteable cases

published in the Pacific Reporter and Montana Reports.

¶2 Hazel and Morland Branning raised five children and had been married approximately

58 years at the time Morland died in March 2005. As Hazel and Morland aged and

experienced physical and mental infirmities, their youngest daughter, Nancy, petitioned the

District Court and was appointed guardian for each of them. Nancy was guardian and

conservator for her father from July to October 31, 2002, at which time Capital City Case

Management was appointed guardian and conservator for Morland. Nancy served as

guardian and conservator for her mother Hazel from July 2001 until March 2003.

¶3 Nancy’s sister, Karen, and their brother, Jim, disagreed with the decisions Nancy was

making on behalf of their mother, and legally sought to have Nancy removed as guardian and

conservator. Hazel also sent a letter to the District Court requesting that Nancy be removed.

In March 2003, the District Court determined that Hazel did not need a guardian or a

conservator; therefore, it dissolved Nancy’s guardianship and conservatorship and named

Karen as Hazel’s medical guardian.

¶4 During and following Nancy’s guardianship and conservatorship, she filed two

accountings with respect to Hazel’s Estate with the District Court. In the post-termination

2
final accounting, she sought reimbursement for expenses and payment for services rendered.

The District Court approved some expenses and granted payment for some services, and

rejected other requests. Nancy appeals from the court’s refusal to pay all costs and expenses

presented in the final accounting. Karen and Jim cross-appeal, claiming the court erred in not

rejecting both accountings and requests for expenses and fees in their entirety. We affirm in

part and reverse and remand in part.

ISSUE

¶5 A restatement of the dispositive issue on appeal is whether the District Court properly

accounted for all of Hazel’s assets and whether it correctly determined that, based upon

Nancy’s accountings, she was entitled to certain out-of-pocket expenses and fees for service,

and not to others.

FACTUAL AND PROCEDURAL BACKGROUND

¶6 Hazel was 73 years old in July 2001 when her youngest daughter, Nancy, was

appointed as Hazel’s guardian and conservator over the objections of Hazel’s son, Jim.

Shortly thereafter, Nancy had Hazel involuntarily committed to the Golden Triangle

Community Mental Health Center. In October 2002, Hazel wrote a letter to the District

Court requesting that Nancy be removed as guardian and conservator and replaced by Jim

and another of Hazel’s daughters, Karen.

¶7 In November 2002, Nancy filed her first accounting, followed, in December, by her

objection to Hazel’s personal entreaty to have her removed as guardian and conservator. A

few days later, Karen and Jim filed a joint petition seeking to vacate their mother’s

3
involuntary commitment and the order requiring Hazel to have a guardian and conservator.

In the alternative, they sought to remove Nancy as the guardian and conservator and be

appointed as successor guardians. Hazel filed a lengthy affidavit describing the hardships

she had endured since Nancy became her guardian and conservator. Hazel alleged that

Nancy was disposing of and inappropriately distributing her possessions, and requested an

accounting of her possessions and her estate. Jim and Karen also filed lengthy affidavits in

support of their petition alleging similar misconduct by Nancy.

¶8 The court held a hearing on the first accounting and on the petition to terminate

guardianship on February 19, 2003. After hearing testimony from Hazel, Nancy, Karen,

Hazel’s son Dale, and some of Hazel’s caregivers, the District Court ordered the parties to

submit proposed findings of fact. The court also directed that the estate’s finances be

examined by a mutually agreed-upon independent party. Van Barron was appointed to serve

in this capacity.

¶9 On March 27, 2003, the District Court concluded that Hazel did not need a general

guardian or a conservator. The court appointed Karen as Hazel’s medical guardian and

removed Nancy as Hazel’s general guardian/conservator.

¶10 On November 25, 2003, the court held another hearing on the first accounting. At this

hearing, Nancy, as outgoing conservator/guardian, presented a final “Report and Summary of

Account” prepared by Scheffel and Company (Scheffel) at Nancy’s behest. Scheffel noted

that the report was merely a compilation presented in the form of “financial statements

information that is the representation” of Nancy. Scheffel advised in its Report that the

4
company had not “audited or reviewed the accompanying financial statements and,

accordingly, do not express an opinion or any other form of assurance on them. The

Conservator has elected to omit substantially all of the disclosures required by generally

accepted accounting principles.”

¶11 As stated in the Scheffel Report, Hazel and Morland’s joint estates were valued at

approximately $92,500.00, $61,000.00 of which was comprised of a debt purportedly owed

to them by their son, Jim. Scheffel determined that the value of Hazel’s estate was one-half

this amount, or approximately $46,250.00. The Scheffel Report also set forth Nancy’s claim

against Morland’s Estate for costs and fees associated with her guardianship/conservatorship

of both Morland and Hazel, totaling $37,519.15.

¶12 The court instructed the parties to review the Scheffel Report, compare it to the

previously-submitted accounting by independent auditor Van Barron, attempt to resolve any

inconsistencies between the two reports, and present to the court at a hearing “only the

contested portions of the accountings.” At the hearing held on April 15, 2004, Hazel argued

through counsel that she was entitled to have returned to her certain items of personal

property as well as funds that had been divested allegedly for the purpose of qualifying her

for Supplemental Security Income (SSI) and Medicaid. The court then directed counsel for

the parties to research and report back on Medicaid rules with respect to Social Security and

SSI, and to estimate the remaining value of Hazel’s estate, including Hazel’s right to inherit

from Morland and to be a beneficiary on his life insurance. The court imposed a deadline of

June 15, 2004, for counsel to provide the requested information. On June 15, Nancy, through

5
her attorney, submitted her brief on the accounting issues identified by the court. Hazel’s

counsel submitted no brief at any time responding to the court’s request.

¶13 Subsequent to the April hearing, Karen and Jim filed objections to Nancy’s

accounting. Hazel demanded, among other things, the return of certain property and the

restoration of her name as beneficiary to certain insurance policies. Karen’s brief, in which

Jim joined, primarily complained that the Van Barron accounting was incomplete and the

Scheffel accounting, prepared at Nancy’s behest, was unverifiable and lacked necessary

supporting documentation. Nancy responded that Karen’s and Jim’s objections were belated,

untimely and should have been presented at the April 15 hearing when the court requested

arguments pertaining to contested portions of the accountings. Nancy also claimed that

Karen and Jim had no standing to object to the accountings and that their arguments were

without a factual basis.

¶14 The District Court issued its Decision and Order on December 16, 2004. Over the

course of the proceeding, the court had heard testimony from Hazel, Nancy, Karen, Jim,

Dale, Van Barron, and a fellow accountant, some of Hazel’s caregivers and doctors. The

court accepted the Scheffel report but noted that it was incomplete. It also accepted the Van

Barron report. The court then reviewed the approximately $7,440.00 in expenses claimed by

Nancy, determined which expenses related to Hazel rather than Morland, and awarded Nancy

a total of $4,896.40 in expenses. The District Court also awarded Nancy conservator fees in

the amount of $2,670.00, as opposed to the $30,080.00 requested by Nancy. The court

explained that it was “incredible” that on the days Nancy spent with her parents, she devoted

6
a full eight hours per day to conservator/guardian activities as opposed to family visits,

performing tasks that a daughter would normally perform for her parents, and attending to

her own personal needs. The court therefore determined that Nancy was entitled to fees from

her parents’ estates for three hours per day that she spent with her parents. The Court granted

her one-half of these fees from Hazel’s Estate. The court also held that Nancy was entitled to

attorney fees totaling $6,155.71.

¶15 The District Court also ordered that Nancy restore Hazel’s name as beneficiary on

Morland’s insurance policies. In the event that any of these policies had been cashed out,

Nancy was directed to repay her mother one-half of the proceeds because there was no

evidence that Nancy had spent any of the proceeds on Hazel. Nancy was ordered to restore

her mother’s name on the title to a truck owned by Morland and Hazel, and to rescind a pre-

paid burial contract she had purchased for Hazel with $6,000.00 of Hazel’s money because

Hazel had made it known that she intended to be cremated. In the event Nancy was unable to

rescind the contract, she was ordered to repay Hazel $6,000.00. The court further found that

Nancy had transferred two Certificates of Deposit, each valued at $18,000.00, originally

jointly held by Morland and Hazel into an account in Nancy’s name only. As there was no

evidence that Nancy had spent any of the $36,000.00 on Hazel, the court ordered her to repay

Hazel $18,000.00. Lastly, Nancy had sold a car that Hazel and Morland had owned for

$2,500.00. She was instructed to repay Hazel $1,250.00.

¶16 Nancy filed a timely appeal from the District Court’s Decision and Order. Karen filed

a timely cross-appeal.

7
 STANDARD OF REVIEW

¶17 We review a trial court’s determinations of law de novo. We typically review a trial

court’s findings of fact to determine whether those findings are clearly erroneous. A finding

of fact is clearly erroneous if substantial evidence does not support it, if the district court

misapprehended the effect of the evidence, or if, after reviewing the record, this Court is left

with a firm conviction that a mistake has been made. We refined the clearly erroneous test

when considering accountings submitted for conservatorships by holding that an accounting

must be accurate, complete, and verifiable. In re Guardianship of Saylor, 2005 MT 236,

¶ 10, 328 Mont. 415, ¶ 10, 121 P.3d 532, ¶ 10 (internal citations omitted).

DISCUSSION

¶18 Nancy notes that on November 25, 2003, the date on which she filed her final

accounting, the District Court ordered the parties to resolve any issues relative to the

accountings and to bring “only the contested portions of the accountings” to an upcoming

hearing. Nancy argues that at the April hearing, neither her siblings nor her mother

challenged her accountings, questioned her regarding the reasonableness of her costs and

expenses, or asked for documentation verifying her expenses. She further asserts that the

District Court asked the parties to brief whether the transfer of assets to Nancy was

appropriate, or reasonably believed to be appropriate, considering SSI and Medicaid

requirements. She states that she submitted a timely brief but the other parties did not submit

briefs. Nancy, therefore, contends that because there was no evidence presented at the

hearing contradicting her accountings, there was no substantial credible evidence to support

8
the District Court’s findings that she was entitled to only a portion of the expenses and costs

sought.

¶19 Karen argues on cross-appeal that the District Court erroneously allowed Nancy any

costs or expenses because Nancy: 1) failed to comply with § 72-5-424(1), MCA, requiring a

conservator to file with the appointing court, within 90 days after his or her appointment, a

complete and accurate inventory of the estate of the protected person; 2) failed to provide

documentation verifying the accuracy and completeness of the costs, attorney fees, and

expenses presented in her accountings; 3) failed to obtain approval from the District Court to

charge hourly fees for time spent as her mother’s conservator; 4) failed to include in her

accountings all of the assets belonging to the estate; and 5) violated §§ 72-5-423 and 72-34-

110, MCA, by co-mingling her mother’s funds with her personal funds. Karen also argues

that the District Court’s Order failed to address some significant items belonging in Hazel’s

Estate, specifically $20,000.00 (plus interest) that was undisputedly entrusted to Nancy in

1998 by Morland to be invested on Morland and Hazel’s behalf; a coin collection valued at

approximately $2,000.00, and many of Hazel’s personal possessions that Hazel listed for the

court.

¶20 Karen relies on Redies v. Cosner, 2002 MT 86, 309 Mont. 315, 48 P.3d 697, wherein

we held that the inventory requirements contained in § 72-5-424(1), MCA, were not

discretionary for Montana’s trial courts or for conservators. In Redies, we reversed the

district court for waiving the statutory 90-day inventory requirement on the ground that the

liabilities of the estate in the Redies’ case exceeded the assets. We first explained that the

9
plain language of the statute required that the conservator “shall” file such an inventory. We

elaborated that “shall” indicates a mandatory, non-discretionary requirement. Redies, ¶ 19.

We further explained that “the purpose of the statutory inventory requirements . . . is to

furnish a means by which the conservator’s management may be checked and the accounts

verified.” Redies, ¶ 20, (citing In Re Allard (1914), 49 Mont. 219, 141 P. 661). Without

such an initial inventory, subsequent annual accountings have no baseline against which to

compare the assets and liabilities claimed in the annual accountings.

¶21 Karen also argues that the District Court should not have approved any costs or

expenses in Nancy’s accountings because she failed to submit documentation or verification

of the costs and expenses claimed. Again, Karen relies on Redies in which we, in turn, relied

on Matter of Estate of Clark (1989), 237 Mont. 179, 772 P.2d 299. In Clark, we held that a

conservator bears the initial burden of proving that his or her fiduciary duties are met. Clark,

237 Mont. at 183, 772 P.2d at 302. Additionally, the conservator, to meet that burden, must

present an accounting that is “accurate, complete, and verifiable.” Clark, 237 Mont. at 184,

772 P.2d at 302. Moreover, “the conservator must . . . keep meticulous accounts of his

administration of the estate, accounting for ‘the source of every item of income and the

purpose of every item of expense.’” Clark, 237 Mont. at 183, 772 P.2d at 302 (citing Allard,

49 Mont. at 229, 141 P. at 665). Karen argues that without such documentation, there was no

way for the District Court to verify the accuracy of Nancy’s accountings.

¶22 It is apparent from the specificity of the court’s Decision and Order that the court

believed it had sufficient evidence before it to determine the extent of the Estate property

10
before Nancy became involved in Hazel and Moreland’s affairs, and after, as well as the

amounts of fees and costs that were appropriate. Such evidence came from the testimony of

the witnesses, as well as from the Scheffel and Van Barron reports. However, as noted by

Karen, the Scheffel and Van Barron reports were incomplete in that they failed to include as

Estate assets the $20,000.00 that Nancy testified she held in an account in her name for her

parents, the coin collection and many personal items belonging to Hazel. As the existence

and value of these items is undisputed, it was error for the District Court to fail to address

them. Therefore, we remand to the District Court for an appropriate resolution of the return

or distribution of these items.

¶23 Additionally, we conclude that it was error for the court to grant Nancy’s request for

legal fees without the benefit of documentation establishing that these fees were incurred as a

result of Nancy performing her guardian/conservator duties. We note, for example, that of

the $6,155.71 in legal fees claimed by and awarded to Nancy, $2,774.49 represented fees

incurred before Nancy became guardian and conservator or after she had been removed as

such. Therefore, we reverse the District Court’s award of attorney’s fees to Nancy and

instruct, upon remand, that the District Court determine which legal fees appropriately reflect

fees incurred by Nancy while she was acting as guardian/conservator for Hazel.

¶24 Lastly, we affirm the remainder of the District Court’s Decision and Order. While no

Inventory per se was filed, we note that the court’s Order contains considerable specificity as

to the assets, fees and expenses it addresses—specificity derived from considerable evidence

pertaining to these assets, fees and expenses. While the accounting formalities required

11
under our case law and statutes were not met here, the District Court nonetheless entered a

well-considered decision and imposed an equitable resolution under extremely difficult

circumstances. See Guardianship of Saylor, ¶¶ 33 and 34 (As courts of equity, the district

court and this Court have the power to grant complete relief and must fashion an equitable

remedy.). To require that the parties and the District Court begin anew and reconsider all the

issues resolved in the Decision and Order would result in a longer, more protracted

proceeding which may actually further deplete Hazel’s estate, which is generously valued

now at little more than $45,000.00. We conclude that the proceedings on remand directed

herein will be of such a limited nature, that the adverse impact, if any, on Hazel’s Estate will

be minimal.

¶25 For the foregoing reasons, we affirm in part and reverse and remand in part.

/S/ PATRICIA COTTER

We Concur:

/S/ KARLA M. GRAY
/S/ BRIAN MORRIS
/S/ JIM RICE
/S/ JOHN WARNER

Justice Jim Rice concurring.

¶26 I concur with the Court’s opinion. I am concerned, however, about the implication of

the District Court’s order with regard to Nancy’s decision to divest Hazel of her assets in

order to qualify for Medicaid assistance. The District Court concluded that:

12
 Nancy testified that she had Hazel’s name removed from the above-described
assets, including Morland’s will, because she believed it was necessary for
Hazel’s Medicaid and SSI eligibility. Notwithstanding Nancy’s intentions, the
Court finds that she violated her fiduciary duty to Hazel and failed to act in
Hazel’s best interest.

¶27 From this language, and from a reading of the entire order, it remains unclear to me

whether the District Court concluded that Nancy had breached her fiduciary duty because of

her decision to divest Hazel of her assets to establish Medicaid and SSI eligibility, or because

of imprudent disposition of Hazel’s assets while implementing that decision. From what I

can glean from the limited record, Nancy’s decision to divest Hazel’s assets was

economically beneficial, with Hazel receiving some $90,000 of medical care and monthly

SSI benefits pursuant thereto, while making Hazel’s divested assets available to Morland.

This can be a legal and beneficial planning device when both spouses are living. Without

more, I could not agree with a conclusion that Nancy had breached her fiduciary duty simply

based on this decision. We are to review financial decisions “in light of the facts and

circumstances existing at the time” they were made. Section 72-34-114(3), MCA.

¶28 However, there were serious questions about Nancy’s disposition of Hazel’s assets

after she implemented this decision, particularly, the two certificates of deposit valued

together at over $36,000. Despite the significance of this amount, which was expended

during Nancy’s administration, the evidence regarding the nature of these expenditures is

very brief and vague. Nancy argues in her briefing that these funds were expended for Hazel

and Morland’s expenses. In her testimony, she stated that the funds were expended on

“issues related to Dad” and for personal expenses she incurred in the management of Hazel’s

13
estate, adding that this was all “in the accounting.” The accounting provides little assistance.

Nancy did not offer the District Court a clear explanation of the purpose of these substantial

expenditures, and the court was entitled to conclude from the evidence that the assets were

improperly dissipated and needed to be repaid, at least partially. Nancy simply failed to meet

her burden to demonstrate otherwise.

/S/ JIM RICE

14