Estate of Cote , 2017 MT 11N ( 2017 )

01/17/2017
DA 16-0295
Case Number: DA 16-0295
IN THE SUPREME COURT OF THE STATE OF MONTANA
2017 MT 11N
IN THE MATTER OF THE ESTATE OF:
JOHN P. COTE, SR., F LED
Deceased.
JOHN P. COTE,JR., individually, JAN 1 7 2017
KATHERIN CLEMMENCE,individually,
and KATHERIN CLEMMENCE and EiSmith
BARBARA C. McEWEN,as Trustees My CT THE SUPREME COURT
S‘',1-E (JP MONTANA
of the RUTH COTE TRUST,
Plaintiffs and Appellees,
v.
JANICE SMITH-COTE, individually and as
Personal Representative of the ESTATE OF
JOHN P. COTE, SR.,
Appellant and Defendant.
and FARMERS STATE FINANCIAL CORP.,
Defendant.
APPEAL FROM: District Court of the Twenty-First Judicial District,
In and For the County of Ravalli, Cause No. DP 12-72
Honorable John W. Larson, Presiding Judge
COUNSEL OF RECORD:
For Appellant:
Lon J. Dale, Esq., Michael D. Bybee, Esq., Milodragovich, Dale &
Steinbrenner, P.C., Missoula, Montana
Royce A. McCarty, Jr., Attorney at Law, Hamilton, Montana
(Attorneyfor Janice Smith)
For Appellee:
Robert Terrazas, Dana A. Henkel, Terrazas Law Office, Missoula,
Montana
(Attorneyfor Cotes)
David Jackson, John H. Grant, Murry Warhank, Jackson, Murdo & Grant,
P.C., Helena, Montana
(Attorneysfor Famers State Financial Corp.)
Submitted on Briefs: December 7, 2016
Decided: January 17, 2017
Filed:
Clerk
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Justice James Jeremiah Shea delivered the Opinion of the Court.
¶1 Pursuant to Section I, Paragraph 3(c), Montana Suprerne Court Internal Operating
Rules, this case is decided by memorandum opinion and shall not be cited and does not
serve as precedent. Its case title, cause nurnber, and disposition shall be included in this
Court's quarterly list of noncitable cases published in the Pacific Reporter and Montana
Reports.
¶2 Janice Srnith-Cote appeals a Twenty-First Judicial District Court, Ravalli County,
order declaring John P. Cote, Sr.'s January 5, 2011 will null and void, removing
Srnith-Cote as personal representative of John's estate, and removing a lis pendens on
trust property. We address whether the District Court erred in reaching these decisions.
We affirm.
¶3 In November 2009, John and Smith-Cote were married. Before they rnet, John
was diagnosed with terminal cancer. On February 5, 2011, John succumbed to his illness
and died. On January 5, 2011, exactly one month before his death, John signed a will
leaving a broken-down El Carnino to his son, John P. Cote, Jr. (JP), two Navajo blankets
to his daughter, Katherin Clemrnence, and the remainder of his property to Smith-Cote.
The will also nominated Srnith-Cote as the personal representative of John's estate. On
October 3, 2012, Srnith-Cote filed an application in Ravalli County District Court for
informal probate of the January 5, 2011 will and for her appointment as personal
representative of John's estate. Ravalli County is the location of 80 acres of real
property, including a cabin, to which the Ruth Cote Trust holds title. Smith-Cote claimed
John had a vested interest in this property. The District Court granted Smith-Cote's
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application and issued an order admitting the January 5, 2011 will to informal probate
and appointing Smith-Cote as personal representative.
¶4 On February 28, 2013, Barbara C. McEwen,' JP, and Clernmence (collectively,
"the Cote Family"), filed a petition requesting the District Court to: (1) invalidate the
January 5, 2011 will, (2) probate John's October 1980 will, (3) remove Srnith-Cote as
personal representative, and (4) issue a declaratory judgment that neither Smith-Cote nor
John's estate holds any interest in the Ruth Cote Trust property. The Cote Family also
asserted claims against Smith-Cote for breach of contract, tortious interference, and
breach of fiduciary duty. Srnith-Cote counterclaimed and filed a lis pendens on the Ruth
Cote Trust property. On June 30, 2014, the Cote Family amended their petition, adding
claims against Smith-Cote for undue influence, conversion, fraud, and unjust enrichment
related to the execution of the January 5, 2011 will.2 On July 30, 2014, the District Court
issued an order granting the Cote Farnily's petition for a declaratory judgment that
neither Smith-Cote nor John's estate holds any interest in the Ruth Cote Trust property.
¶5 On August 31 and September 1, 2015, the District Court held a two-day bench
trial. On the eve of trial, Smith-Cote's counsel disclosed the existence of a will John had
signed on January 2, 2011, and advised the District Court that the signed will was in
Renton, Washington. Later that day, the District Court obtained a signed copy of the
January 2, 2011 will from the Hamilton office of probate counsel Royce Allen McCarty,
Jr. On September 8, 2015, the January 2, 2011 will was filed in the District Court.
McEwen is a co-trustee of the Ruth Cote Trust.
2 The Cote Family also filed claims against Smith-Cote regarding Farmers State Financial
Corporation stock that is not subject to this appeal.
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¶6 On October 27, 2015, the Cote Family filed a rnotion for sanctions, asking the
District Court to enter a default judgrnent striking the January 2 and January 5, 2011
wills, and removing Smith-Cote as personal representative as sanctions for Smith-Cote's
alleged fraud, discovery abuses, and violations of court orders. On May 9, 2016, the
District Court issued an order denying probate of the January 5, 2011 will as a sanction
for discovery violations. The Court also issued alternative findings of fact, conclusions
of law, and order denying probate of the January 5, 2011 will on the basis that John
lacked testamentary capacity when he signed it. The District Court also ordered Smith-
Cote to remove her lis pendens on the Ruth Cote Trust property. Srnith-Cote appeals the
District Court's May 9, 2016 order.
¶7 We review a district court's findings of fact, including whether a testator has
testarnentary capacity, for clear error and its conclusions of law, including statutory
interpretation, for correctness. See In re Estate of Quirin, 2015 MT 132, 11 10, 17, 379
Mont. 173, 348 P.3d 658. A district court's findings are clearly erroneous if they are not
supported by substantial evidence, if the court misapprehended the effect of the evidence,
or if our review of the record convinces us that the district court rnade a rnistake. Quirin,
¶ 10. We review a district court's removal of an estate's personal representative for an
abuse of discretion. In re Estate ofHannum, 2012 MT 171, ¶ 18, 366 Mont. 1, 285 P.3d
463. A district court "abuses its discretion when it acts arbitrarily without employment of
conscientious judgment or exceeds the bounds of reason resulting in substantial
injustice." Hannurn, ¶ 18.
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¶8 Although the District Court denied probate of the January 5, 2011 will on two
separate bases—as a sanction and due to its conclusion that the will was invalid—we
resolve this case on the latter basis. Therefore, we address only the District Court's May
9, 2016 alternative findings of fact, conclusions of law, and order in which the District
Court found that John lacked testamentary capacity, and that Srnith-Cote exerted undue
influence in procuring the 2011 will.
¶9 A testator has testamentary capacity if, at the time the will is executed, he or she is
"aware of. . .(1)the nature of the act to be perforrned,(2)the nature and the extent of the
property to be disposed of, and (3) the objects of his or her bounty." Quirin, ¶ 18
(quoting In re Estate ofLightfield, 2009 MT 244, ¶ 28, 351 Mont. 426, 213 P.3d 468).
"Testarnentary capacity is determined as of the date the will was executed." Lightfield,
¶ 28. Contestants of a will rnay rebut the presurnption that the testator was competent
and of sound rnind by establishing "lack of testamentary intent or capacity, undue
influence, fraud, duress, rnistake, or revocation." Lightfield,¶ 28.
¶10 Undue influence consists of:
(1) the use by one in whorn a confidence is reposed by another person or
who holds a real or apparent authority over the other person of the
confidence or authority for the purpose of obtaining an unfair advantage
over the other person;
(2)taking an unfair advantage of another person's weakness of rnind; or
(3) taking a grossly oppressive and unfair advantage of another person's
necessities or distress.
Section 28-2-407, MCA. We have found undue influence where property transfers were
made to a person with a confidential relationship, to the exclusion of others, when the
testator's mental and physical health were failing. See Lightfield, ¶¶ 36-37, 40. Based on
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testimony during the two-day hearing, the District Court found that Smith-Cote "had
complete control over John during the last days before his death," and controlled and
administered his rnedication and every other aspect of his life, including contact with his
family. The District Court further found that it was Smith-Cote, not John, who initiated
"drastic changes" to John's estate plan, causing him to disinherit his son in favor of
herself at a time when he lacked testamentary capacity.
¶11 The District Court found that the following evidence weighed in favor of a finding
that John lacked testamentary capacity when he signed the January 5, 2011 will:
Smith-Cote controlled JP's private access to John because John was physically and
mentally incapable of holding and using a cell phone without Srnith-Cote's presence; on
January 2, 2011, John's pain rnedications doubled; on January 3, 2011, John's mental
status was "lethargic," Smith-Cote was administering Lorazeparn and Oxycodone every
two to four hours for pain, extreme shaking, and severe diaphoresis, and John switched to
liquid morphine for faster uptake; and John signed both his initials and name incorrectly
on the will. The District Court found that John lacked testarnentary capacity because the
January 5, 2011 will was executed "at a time when John was under [Smith-Cote]'s
complete care and control and when he was heavily medicated with narcotic painkillers
and tranquilizers." Ultimately, the District Court concluded: "John's 2011 wills are
invalid due to both [Smith-Cote]'s undue influence in prompting the changes with
inaccurate representations, and John's lack of capacity."
¶12 Srnith-Cote contends that, in reaching its conclusion, the District Court "ignored
the controlling testimony of subscribing witnesses to the January 5, 2011 Will."
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Specifically, Smith-Cote cites testimony by Dan Kellogg, the attorney she retained to
change John's estate plan. The District Court found Kellogg's testimony "unpersuasive"
because "Kellogg met John only on the afternoon of January 5, 201 1[, and] was retained
by [Smith-Cote] and misinformed regarding John, his capacity, and his Estate," citing a
litany of pertinent facts Kellogg admitted he did not know. By contrast, the District
Court found that Dr. Eric Kress, who reviewed John's rnedical records, provided
testimony demonstrating that "John was cognitively impaired and did not have the mental
capacity to execute a will." The District Court held a two-day bench trial, during which it
weighed the testimony of the various witnesses presented by both parties. At the end of
the trial, it found the Cote Family's evidence rnore persuasive than that of Smith-Cote.
This was well within the District Court's purview as the trier of fact. See Quirin, ¶ 22
("Where conflicting evidence exists, we will not substitute our judgment for the district
court's."). Substantial record evidence supports the District Court's factual findings. See
Quirin, ¶ 10.
If13 Smith-Cote also contends that the District Court erred in removing her as personal
representative of John's estate. Trial courts have -broad discretion to rernove a personal
representative provided the grounds for rernoval are valid and supported by the record."
Hannum, ¶ 28. A district court "rnay remove a personal representative for cause if it is in
the best interests of the estate" or if the personal representative has breached any single
duty pertaining to his or her office. Hannum, ¶ 27 (citing § 72-3-526(2), MCA). "A
personal representative is a fiduciary who shall observe the standards of care applicable
to trustees under the laws of the state of Montana." Section 72-3-610, MCA. A personal
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representative's improper exercise of power concerning the estate is considered a breach
of his or her fiduciary duty. Section 72-3-616(1), MCA.
¶14 The District Court removed Srnith-Cote as personal representative because it
found that she breached her fiduciary duty to John's estate, as "dernonstrated by the
following actions:"
1. her failure to act in the Estate's best interests;
2. her refusal to provide the Cote Farnily with John's purported will;
3. her threats to JP regarding attorney fees for seeking information rightfully
belonging to hirn;
4. her failure to distribute the estate according to the terrns of John's ostensible
will;
5. her failure to provide a tirnely inventory;
6. her failure to provide an accurate inventory;
7. her failure to fully respond to several discovery requests necessitating the Cote
Family to file rnultiple motions to compel;
8. her failure to provide the medical records of Dr. Scott Tykodi or Carlos Alaniz;
9. her failure to produce medical and hospice records;
10. her failure to produce complete life insurance records;
11. her failure to produce docurnents and records from John's Boeing insurance,
pension, and employment;
12. her failure to rnaintain the Ruth Cote Trust property when she improperly
seized it.
Based on its finding that Smith-Cote breached her fiduciary duty, the District Court also
awarded attorney fees against Smith-Cote pursuant to § 72-3-616, MCA (providing that a
personal representative is liable to interested persons for darnage or Ioss resulting frorn
the breach of his or her fiduciary duty). The District Court's findings are supported by
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substantial record evidence. The District Court properly weighed the evidence before it
and its findings are not clearly erroneous.3 See Quirin, ¶ 10.
¶15 Finally, Smith-Cote contends that the District Court improperly ordered her to
remove the lis pendens on the Ruth Cote Trust property, contending that the District
Court's finding that Smith-Cote has no interest in the Trust is interlocutory. In its July
30, 2014 order, the District Court held: -[T]he Estate of John P. Cote[, Sr.] and Ms.
Smith-Cote lack standing to participate in Trust adrninistration or to demand information,
accountings, or distribution of the Trust." We reject Smith-Cote's assertion that this was
not a final judgment, as it was dispositive of all issues regarding the Ruth Cote Trust in
relation to Smith-Cote and to John's estate.
¶16 We have deterrnined to decide this case pursuant to Section I, Paragraph 3(c) of
our Internal Operating Rules, which provides for memorandum opinions. In the opinion
of the Court, the case presents a question controlled by settled law or by the clear
application of applicable standards of review. The District Court's interpretation and
application of the law were correct, and its findings of fact are not clearly erroneous. We
affirm.
We Concur:
Chief Justice
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Because we are affirming the District Court's award of attorney fees under § 72-3-616, MCA,
and not pursuant to the District Court's alternative basis, these fees are assessed only against
Smith-Cote personally.
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