In re Estate of Chess ( 2023 )

Nebraska Supreme Court Online Library
www.nebraska.gov/apps-courts-epub/
08/29/2023 10:12 AM CDT
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Nebraska Court of Appeals Advance Sheets
32 Nebraska Appellate Reports
IN RE ESTATE OF CHESS
Cite as 32 Neb. App. 191In re Estate of Calvin J. Chess, deceased.
Christine Spanyers, as Personal Representative
of the Estate of Calvin J. Chess, appellee,
v. Richard Chess, appellant, and
Matthew Pokorny, appellee.
___ N.W.2d ___
Filed August 29, 2023. No. A-22-782.
1. Judgments: Jurisdiction. A jurisdictional issue that does not involve a
factual dispute presents a question of law.
2. Decedents’ Estates: Judgments: Appeal and Error. Appeals of matters
arising under the Nebraska Probate Code are reviewed for error on the
record. When reviewing a judgment for errors appearing on the record,
an appellate court’s inquiry is whether the decision conforms to the law,
is supported by competent evidence, and is neither arbitrary, capricious,
nor unreasonable.
3. Decedents’ Estates: Appeal and Error. When reviewing a decision of
the probate court, the appellate court does not reweigh the evidence and
must consider the evidence in the light most favorable to the success-
ful party, who is entitled to every reasonable inference available from
the evidence.
4. Decedents’ Estates: Attorney Fees. Ordinarily, the fixing of reasonable
compensation, fees, and expenses, pursuant to Neb. Rev. Stat. § 30-2480(Reissue 2016), governing compensation of personal representatives;
Neb. Rev. Stat. § 30-2481 (Reissue 2016), governing expenses in estate
litigation; and Neb. Rev. Stat. § 30-2482 (Reissue 2016), governing
compensation of personal representatives and employees of the estate, is
within the sound discretion of the county court.
5. Attorney Fees: Appeal and Error. When an attorney fee is authorized,
the amount of the fee is addressed to the trial court’s discretion, and its
ruling will not be disturbed on appeal absent an abuse of discretion.
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IN RE ESTATE OF CHESS
Cite as 32 Neb. App. 1916. Jurisdiction: Appeal and Error. It is the power and duty of an appel-
late court to determine whether it has jurisdiction over the matter before
it, irrespective of whether the issue is raised by the parties.
7. Final Orders: Appeal and Error. Pursuant to Neb. Rev. Stat.
§ 25-1902(1)(b) (Cum. Supp. 2022), an order affecting a substantial
right made during a special proceeding is a final order which may be
vacated, modified, or reversed.
8. Decedents’ Estates: Final Orders: Appeal and Error. A proceeding
under Neb. Rev. Stat. § 30-2454 (Reissue 2016) to remove a personal
representative for cause is a special proceeding within the meaning of
Neb. Rev. Stat. § 25-1902 (Cum. Supp. 2022) and therefore can result in
a final, appealable order even though it may not terminate the action or
constitute a final disposition of the case.
9. Final Orders: Appeal and Error. A substantial right is involved if an
order affects the subject matter of the litigation, such as diminishing a
claim or defense that was available to an appellant before the order from
which an appeal is taken.
10. Decedents’ Estates: Final Orders: Appeal and Error. An order that
terminates the appointment of a personal representative and appoints a
successor personal representative is a final, appealable order when such
order was entered in a special proceeding and affected a substantial right
of the estate and its beneficiaries.
11. Decedents’ Estates: Executors and Administrators: Damages: Proof.
A beneficiary or designee seeking a surcharge against the personal
representative for conversion, damage, or loss of estate property has
the burden of proving (1) a fiduciary duty was breached, (2) the breach
of the fiduciary duty caused the losses alleged, and (3) the extent of
those damages.
12. Decedents’ Estates: Executors and Administrators. A personal repre-
sentative is a fiduciary who must comply with the prudent investor rule
set forth at Neb. Rev. Stat. §§ 30-3883 through 30-3889 (Reissue 2016).
The prudent investor rule provides, among other things, that a trustee (or
personal representative) shall invest and manage trust assets as a prudent
investor would, taking into account the purposes, terms, distribution
requirements, and other circumstances of the trust (or estate).
13. Attorney Fees. Attorney fees and expenses may generally be recovered
in a civil action only where provided for by statute or when a recognized
and accepted uniform course of procedure has been to allow recovery of
attorney fees.
14. Decedents’ Estates: Attorney Fees. Under Neb. Rev. Stat. § 30-2481(Reissue 2016), attorney fees are awarded to the personal representative
as part of the administrative expenses for the estate.
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Nebraska Court of Appeals Advance Sheets
32 Nebraska Appellate Reports
IN RE ESTATE OF CHESS
Cite as 32 Neb. App. 19115. ____: ____. No allowance is authorized to be made out of an estate for
the services of an attorney not employed by the personal representative.
Such an allowance is permitted, however, when the services provided
were in the interest of all persons interested in the estate and were ben-
eficial to the estate.
Appeal from the County Court for Douglas County: Darryl
R. Lowe, Judge. Affirmed in part, dismissed in part, and in
part remanded with directions.
Thomas E. Whitmore, of Whitmore Law Office, L.L.C., for
appellant.
Julie M. Ryan and Nicole Seckman Jilek, of Abrahams,
Kaslow & Cassman, L.L.P., for appellee Christine Spanyers.
Pirtle, Chief Judge, and Moore and Arterburn, Judges.
Arterburn, Judge.
I. INTRODUCTION
Richard Chess appeals from two separate orders entered by
the Douglas County Court that pertained to the administration
of the estate of Calvin J. Chess, who was Richard’s father. In
the first order, the county court removed Richard as personal
representative of the estate and appointed Christine Spanyers
(Christine), Richard’s half sister, as the successor personal
representative. In the second order, the county court imposed
a surcharge against Richard in the amount of $84,224, to be
split equally between Christine and the third beneficiary of
the estate. The county court also awarded Christine attorney
fees and costs in connection with her filing of the petition to
remove Richard as personal representative. The court denied
Richard’s request for attorney fees incurred during his time as
personal representative of the estate.
Upon our review, we conclude that we do not have juris-
diction to review the county court’s decision to remove
Richard as personal representative of the estate. The court’s
order effectuating such removal was final and appealable,
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IN RE ESTATE OF CHESS
Cite as 32 Neb. App. 191but Richard did not appeal from the order within 30 days.
We affirm, in part, the county court’s decision to impose a
surcharge on Richard. The amount of the surcharge should be
based on Richard’s failure to collect fair market rent from ten-
ants who occupied real estate owned by the estate and for his
utilizing estate funds to pay unreasonable expenses. However,
the surcharge should not be based on Richard’s actions regard-
ing the stock owned by the estate. We remand the cause to
the county court because we cannot discern how the county
court determined the amount of surcharge to impose for the
uncollected rent. The county court is directed to delineate
separately the amount of the surcharge to be imposed for the
uncollected rent and payment of unreasonable expenses. We
affirm the court’s award of attorney fees to Christine from
Richard’s portion of the estate proceeds, which attorney fees
were incurred in connection with the litigation herein and the
court’s denial of Richard’s request for attorney fees.
II. BACKGROUND
Calvin died intestate in October 2018. In January 2019,
Richard was appointed as personal representative of Calvin’s
estate. It was determined that Calvin had four heirs at the time
of his death: Richard; Christine; Calvin’s other son, Michael
Chess; and Matthew Pokorny (Matthew), the son of Calvin’s
deceased daughter. A few months after Calvin’s death, Michael
died. Pursuant to Michael’s will, Richard was to inherit his
entire estate. As such, Calvin’s estate was to be divided as fol-
lows: 50 percent to Richard, 25 percent to Christine, and 25
percent to Matthew.
In September 2020, almost 2 years after Calvin’s death,
Christine filed a petition seeking the removal of Richard as
personal representative of Calvin’s estate, the appointment of
a successor personal representative, an accounting, a surcharge
against Richard, and attorney fees. In the petition, Christine
alleged that Richard had failed to timely file an accurate
inventory for the estate, had failed to timely pay inheritance
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IN RE ESTATE OF CHESS
Cite as 32 Neb. App. 191taxes, had failed to sell real property that was a part of the
estate, had failed to keep her informed regarding the adminis-
tration of the estate, and had failed to preserve all of the assets
held by the estate.
On July 13, 2021, the county court held a hearing solely on
the issues of whether Richard should be removed as personal
representative and whether a successor personal representa-
tive should be appointed. At this hearing, Christine testified to
her concerns regarding Richard’s administration of the estate.
Richard testified and offered other evidence to demonstrate his
good faith efforts to close the estate.
On March 16, 2022, the county court entered an order
removing Richard as personal representative of the estate. In
the order, the court found merit to many of Christine’s con-
cerns with Richard’s administration of the estate since his
appointment in January 2019. First, the county court found
that Richard had “failed to file an Inventory within 90 days
[after his appointment], which in the Letters [of Personal
Representative], he was required to do.” Instead, Richard sub-
mitted an initial inventory to the county court on June 27,
2019, more than 5 months after his appointment as personal
representative. He did not file a corrected, amended inventory
until 15 months later, in September 2020. And, by the time
of the hearing in July 2021, Richard testified that he was still
working on a second amended inventory.
In its order, the county court also found that Richard had
failed to file all closing documents for the estate within a year
of his appointment. According to the county court, much of
the delay in filing was caused by Richard’s mishandling of
the sale of two real properties owned by the estate, including
his failure to collect fair market rent from the tenants who
resided at the properties prior to their sale and by expend-
ing estate funds to repair the properties when they were both
sold “‘as is.’” The county court also found that Richard had
failed to timely file an inheritance tax worksheet, which fail-
ure subjected the estate to interest and penalties, and failed to
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Nebraska Court of Appeals Advance Sheets
32 Nebraska Appellate Reports
IN RE ESTATE OF CHESS
Cite as 32 Neb. App. 191reasonably communicate with Christine as an heir to the estate.
Based on all of these factors, the court ordered the removal of
Richard as the personal representative of the estate. The court
specifically declined to find that Richard’s failure to diversify
the estate’s stock portfolio was a basis for removal. The court
appointed Christine as the successor personal representative.
On July 21, 2022, the county court held another hearing.
This hearing focused on whether Richard owed a surcharge
to the other beneficiaries for his mishandling of the estate and
whether attorney fees should be awarded either to Christine
or to Richard. At this hearing, Christine presented evidence
to demonstrate the amount of funds that Richard owed to the
estate. She argued that Richard owed money for his failure to
collect fair market rent on the two real properties owned by the
estate, his failure to diversify stock owned by the estate prior
to its decrease in value, and his expenditure of estate funds for
unreasonable expenses.
Christine contended that a fair market rent for each of the
two real properties owned by the estate was $700 per month.
The same tenants who resided in the two homes at the time of
Calvin’s death on October 30, 2018, resided in them through
sometime in November 2020, the month that Richard, acting
as personal representative, closed on the sale of those houses.
Thus, Christine contended that in the time between October
30, 2018, and November 2020, the estate was owed rent for
each property in the amount of $17,381.10, for a total of
$34,762.20. Richard’s receipts indicated that he had collected
only $6,500 in rent from one of the properties. He agreed that
$700 per month was fair market value for rent on that house.
He collected $0 in rent for the other property, even though
he testified that $400 per month would be fair market value.
Richard explained that the tenant who paid no rent made
repairs to the two homes in exchange for living rent free.
Christine did not believe that the tenant was actually com-
pleting any valuable work. As such, she argued that Richard
owed a surcharge of $28,262.20 ($34,762.20 - $6,500), for
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IN RE ESTATE OF CHESS
Cite as 32 Neb. App. 191his failure to collect rent owed to the estate for the period
beginning the day after Calvin’s date of death. She conceded
that a lesser amount would be due if the date of Richard’s
appointment as personal representative was utilized as the
inception point.
Christine also asserted that Richard had dissipated the
assets of the estate by failing to diversify stock that had been
owned by Calvin and that was a part of the estate. At the
time of his death, Calvin owned 11,200 shares in Century
Link stock. On October 30, 2018, those shares were valued
at $20.46 per share, or a total of $229,152. On February 14,
2019, Christine alerted Richard by email that the stock was
then valued at $12.78 per share. Christine asked Richard to
address the diminished value. She argues that had Richard
sold the stock and invested the funds in an “S&P 500” index
mutual fund, the value of the asset would have increased since
Calvin’s death, rather than decreased. Christine did admit, on
cross-examination at the July 13, 2021, hearing, that Richard
was unable to manage the stocks until he was appointed as
the personal representative in January 2019. By the time
of his appointment, the stock had already depreciated in
value by approximately $5 per share. After January 2019, the
stock fluctuated in value and paid some dividends. Evidence
adduced at the hearing indicated that as of the date Richard
was removed as personal representative (March 16, 2022), the
stock was valued at $10.80 per share. Ultimately, Christine
contended that but for Richard’s failure to manage the stock,
the “value of Century Link stock should have increased to
at least $371,226.24.” Christine did not provide expert testi-
mony to support her calculation. However, in her affidavit,
she arrives at this number by utilizing the value of the stock
on the date of Calvin’s death, then computing the dollar fig-
ure that amount would have grown to had the money been
invested that day in an S&P 500 index fund. She asked that
Richard be ordered to pay the other heirs a surcharge based on
the difference between the stock’s value on the date of death
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32 Nebraska Appellate Reports
IN RE ESTATE OF CHESS
Cite as 32 Neb. App. 191and what its value would have been on the date Richard was
removed as personal representative.
Christine further argued that Richard should be ordered to
pay a surcharge based on certain expenditures he made using
estate funds. Christine asserted that certain expenditures were
unreasonable, including the monthly rental payments for the
use of storage units and the purchase of building materials that
were, according to Richard, used to make repairs to the two
real properties owned by the estate. Christine calculated that
$23,128.89 in purchases from the estate’s account were unrea-
sonable and that Richard should be ordered to pay a surcharge
to the other beneficiaries.
In total, Christine asked the county court to impose a sur-
charge on Richard in the amount of $96,732.68, with one-half
of the surcharge paid to Christine and one-half paid to the other
heir, Matthew.
Christine also asked the county court to award her attorney
fees in the amount of $47,924.48. Richard also asked for an
award of attorney fees for costs associated with his time as
personal representative. He requested fees in the amount of
$14,527.50.
On September 23, 2022, the county court entered an order
addressing Christine’s request for a surcharge and both par-
ties’ requests for attorney fees. The court first determined that
Richard owed a surcharge to the other beneficiaries as a result
of his actions while personal representative. The court found:
Richard as personal representative . . . had a duty to
charge the tenants [residing in the properties owned by
the estate] fair market rent for the entire duration of
their tenancies to fulfill the requirements of Neb. Rev.
Stat. § 30-2470 [(Reissue 2016)] and the best interests of
the Estate.
The court indicated that Richard owed a surcharge as a result
of his failure to collect all of the rent owed to the estate.
The court also found that Richard did not act prudently in
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Nebraska Court of Appeals Advance Sheets
32 Nebraska Appellate Reports
IN RE ESTATE OF CHESS
Cite as 32 Neb. App. 191his handling of the Century Link stock owned by the estate.
Specifically, the court found:
Richard’s handling of the stock was not one of the
grounds for his removal as Personal Representative of
the Estate. But the evidence is undisputed that the stock
decreased by about half the fair market value it held on
the date of the death of the Decedent. In the about one
year and eight months that pre-dated Christine filing
her Petition on September 1, 2020, in which Richard
was Personal Representative of the Estate, Richard never
changed his investment strategy. Nor did he change his
strategy for the remaining about one year and six months
until his ordered removal in March 2022.
The court also agreed with Christine that Richard had made
unreasonable expenditures using the estate’s bank account in the
amount of $23,128.29. Ultimately, the court ordered Richard to
pay a total surcharge in the amount of $84,224, with $42,112
to be paid to Christine and $42,112 to be paid to Matthew.
The $84,224 in surcharge Richard was ordered to pay was
$12,508.68 less than Christine asked to be awarded. Other than
the amount specified for unreasonable expenditures, the court
did not provide any specific calculations in its order that delin-
eate how it arrived at the amount of the surcharge it ordered
Richard to pay.
Also in its September 2022 order, the court ordered Richard
to pay attorney fees to Christine in the amount of $42,888.
The court found that Christine’s actions in filing the petition
for removal of Richard as personal representative benefited the
estate. It also found that Christine had made significant efforts
toward closing the estate since being appointed as successor
representative. The court denied Richard’s request for attorney
fees: “Richard is not entitled to payment of his attorney’s fees
and costs out of the Estate to any extent.”
Richard appeals here, challenging both the county court’s
order removing him as personal representative and the order
requiring him to pay a surcharge and attorney fees.
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IN RE ESTATE OF CHESS
Cite as 32 Neb. App. 191III. ASSIGNMENTS OF ERROR
Richard assigns, renumbered and consolidated, that the
county court erred in removing him as personal representative
of the estate, in ordering Richard to pay a surcharge to the
other beneficiaries of the estate, in awarding Christine attor-
ney fees incurred in connection with the filing of the petition
to remove him as personal representative of the estate, and in
denying his request for attorney fees.
IV. STANDARD OF REVIEW
[1] A jurisdictional issue that does not involve a factual dis-
pute presents a question of law. In re Estate of Abbott-Ochsner,
299 Neb. 596, 910 N.W.2d 504 (2018).
[2,3] Appeals of matters arising under the Nebraska Probate
Code are reviewed for error on the record. In re Estate of
Graham, 301 Neb. 594, 919 N.W.2d 714 (2018). When review-
ing a judgment for errors appearing on the record, an appellate
court’s inquiry is whether the decision conforms to the law,
is supported by competent evidence, and is neither arbitrary,
capricious, nor unreasonable. Id. When reviewing a decision of
the probate court, the appellate court does not reweigh the evi-
dence and must consider the evidence in the light most favor-
able to the successful party, who is entitled to every reasonable
inference available from the evidence. Id.[4,5] Ordinarily, the fixing of reasonable compensation, fees,
and expenses, pursuant to Neb. Rev. Stat. § 30-2480 (Reissue
2016), governing compensation of personal representatives;
Neb. Rev. Stat. § 30-2481 (Reissue 2016), governing expenses
in estate litigation; and Neb. Rev. Stat. § 30-2482 (Reissue
2016), governing compensation of personal representatives and
employees of the estate, is within the sound discretion of the
county court. In re Estate of Graham, supra. When an attorney
fee is authorized, the amount of the fee is addressed to the trial
court’s discretion, and its ruling will not be disturbed on appeal
absent an abuse of discretion. Id.
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IN RE ESTATE OF CHESS
Cite as 32 Neb. App. 191V. ANALYSIS
1. Removal of Richard as
Personal Representative
On March 16, 2022, the county court entered an order ter-
minating Richard’s appointment as personal representative of
the estate and appointing Christine as the successor personal
representative. In this appeal, Richard purports to challenge
the county court’s decision to terminate his appointment as
personal representative. However, Richard’s notice of appeal
was filed on October 21, more than 30 days after the county
court filed its March 16 order. As such, if the March 16 order
terminating Richard’s appointment as personal representative
of the estate was a final, appealable order, Richard’s appeal
of this issue is not timely and we lack jurisdiction to consider
the substance of his arguments in this regard. See Tilson v.
Tilson, 299 Neb. 64, 907 N.W.2d 31 (2018) (to vest appellate
court with jurisdiction, notice of appeal must be filed within
30 days of entry of final order).
[6] It is the power and duty of an appellate court to deter-
mine whether it has jurisdiction over the matter before it,
irrespective of whether the issue is raised by the parties. In
re Estate of Lakin, 310 Neb. 271, 965 N.W.2d 365 (2021),
modified on denial of rehearing 310 Neb. 389, 966 N.W.2d
268. Appellate review under the Nebraska Probate Code is
governed by Neb. Rev. Stat. § 30-1601 (Cum. Supp. 2022),
which states that appeals from a county court may be taken
in the same manner as appeals from a district court and that
“[a]n appeal may be taken by any party and may also be taken
by any person against whom the final judgment or final order
may be made or who may be affected thereby.” In this case,
we must determine whether the March 16, 2022, order termi-
nating Richard’s appointment as personal representative of the
estate constituted a final, appealable order.
[7-9] Pursuant to Neb. Rev. Stat. § 25-1902(1)(b) (Cum.
Supp. 2022), an order affecting a substantial right made
during a special proceeding is a final order which may
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IN RE ESTATE OF CHESS
Cite as 32 Neb. App. 191be vacated, modified, or reversed. The Nebraska Supreme
Court has previously determined that a proceeding under
the Nebraska Probate Code is a special proceeding. In re
Estate of Lakin, supra. More specifically, the Supreme Court
has acknowledged that a proceeding under Neb. Rev. Stat.
§ 30-2454 (Reissue 2016) to remove a personal representa-
tive for cause is a special proceeding within the meaning of
§ 25-1902 and therefore can result in a final, appealable order
even though it may not terminate the action or constitute a
final disposition of the case. In re Estate of Lakin, supra.Further, a substantial right is involved if an order affects the
subject matter of the litigation, such as diminishing a claim
or defense that was available to an appellant before the order
from which an appeal is taken. Id. We determine that the
March 16, 2022, order finally disposed of Christine’s peti-
tion to remove Richard as personal representative and, there-
fore, affected a substantial right of Richard and of the estate.
This right cannot be effectively vindicated in an appeal from
another final judgment in the case.
The Supreme Court has previously held that an order deny-
ing a motion to remove a personal representative for cause
under § 30-2454 was a final, appealable order because it
affected the substantial rights of the parties who petitioned
for such removal. In re Estate of Snover, 233 Neb. 198, 443
N.W.2d 894 (1989). In In re Estate of Snover, the Supreme
Court indicated that given the broad scope of the personal
representative’s power over the interests of the beneficiaries
and other interested parties in an estate, the right conferred by
§ 30-2454 to petition the county court to remove the personal
representative for cause is a substantial right. The court then
held that an order denying the removal of the personal rep-
resentative affected the substantial rights of those requesting
the removal and was, thus, final and appealable. See, also,
In re Estate of Abbott-Ochsner, 299 Neb. 596, 910 N.W.2d
504 (2018) (orders denying request to remove personal rep-
resentative for cause are final and immediately appealable
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Cite as 32 Neb. App. 191by person interested in estate who petitioned for personal
representative’s removal); In re Estate of Nemetz, 273 Neb.
918, 735 N.W.2d 363 (2007) (county court’s order denying
children’s request to remove personal representative is final
order and is appealable, even though it neither terminated
action nor constituted final disposition of case).
The Supreme Court has not yet explicitly addressed whether
an order granting a motion to terminate the appointment of a
personal representative is a final, appealable order. However,
the Supreme Court has cited with approval to the proposi-
tion adopted by other jurisdictions that an order appointing
or removing a personal representative is final and appealable.
See In re Estate of Abbott-Ochsner, supra. The Supreme Court
has also implicitly indicated that an order granting a motion
to terminate the appointment of a personal representative is
a final, appealable order in In re Estate of Graham, 301 Neb.
594, 919 N.W.2d 714 (2018). Therein, the court noted that
the personal representative had not appealed from the county
court’s order removing him as personal representative within
30 days. Such comment implies that the order removing the
personal representative was final and appealable. Moreover,
in In re Estate of Webb, 20 Neb. App. 12, 817 N.W.2d 304(2012), this court affirmed an order of the county court remov-
ing a personal representative and appointing a successor per-
sonal representative without addressing whether such order
was a final, appealable order.
[10] We conclude that the March 16, 2022, order entered
by the county court that terminated Richard’s appointment as
personal representative of the estate was a final, appealable
order. Such order was entered in a special proceeding and
affected a substantial right of the estate and its beneficiaries,
including Richard. The March 16 order also terminated a dis-
tinct portion of the estate proceedings by removing Richard as
personal representative and appointing Christine as the succes-
sor personal representative. See In re Estate of Severson, 310
Neb. 982, 970 N.W.2d 94 (2022). Because Richard did not
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IN RE ESTATE OF CHESS
Cite as 32 Neb. App. 191appeal from the March 16 order within 30 days, his appeal of
this order is not timely and we lack jurisdiction to consider the
merits of his substantive argument. We dismiss that portion of
his appeal which challenges the March 16 order.
2. Surcharge Imposed
Against Richard
Richard next appeals from the county court’s September 23,
2022, order that directed him to pay a surcharge to Christine
and Matthew and to pay a portion of Christine’s attorney fees.
Richard first contends that the county court erred in order-
ing him to pay a surcharge in the total amount of $84,224.
Essentially, Richard argues that he exercised reasonable judg-
ment in his administration of the estate and that he should
not be required to reimburse the estate based on any of his
decisions as personal representative. Upon our review of the
record, we affirm the county court’s decision that Richard
should pay a surcharge to the estate in part. We find that the
county court’s findings regarding improper expenditures of
estate funds and failure to collect rent are supported by the
record. However, we find that Christine has failed to present
sufficient evidence to justify a surcharge based on Richard’s
management of the estate’s stock. Since the county court’s
order does not delineate what portion of the surcharge it
imposed relates to uncollected rent and/or management of
the stock, we remand the cause back to the county court for
a calculation of the portion of the surcharge that relates to
uncollected rent. That calculation may then be combined with
the amount previously determined to be due based on improper
expenditures to reach a total figure for the surcharge.
[11] If a personal representative’s exercise of power con-
cerning the estate is improper, he or she is liable to interested
persons for “damage or loss resulting from breach of his
[or her] fiduciary duty to the same extent as a trustee of an
express trust.” Neb. Rev. Stat. § 30-2473 (Reissue 2016). See,
also, Line v. Rouse, 241 Neb. 779, 491 N.W.2d 316 (1992)
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IN RE ESTATE OF CHESS
Cite as 32 Neb. App. 191(stating action to surcharge personal representative may be
brought to recover losses to estate for alleged breach of fidu-
ciary duty by personal representative). The Supreme Court
has recently held that a beneficiary or designee seeking a
surcharge against the personal representative for conversion,
damage, or loss of estate property has the burden of prov-
ing (1) a fiduciary duty was breached, (2) the breach of the
fiduciary duty caused the losses alleged, and (3) the extent of
those damages. In re Estate of Graham, 301 Neb. 594, 919
N.W.2d 714 (2018).
In the county court’s September 2022 order, it found that
Richard breached his fiduciary duty as personal representa-
tive by failing to collect fair market rent from the tenants who
occupied real estate owned by the estate; by failing to take
any action with regard to the Century Link stock, despite its
decrease in value during his tenure as personal representative;
and by utilizing estate funds to pay unreasonable expenses.
Upon our review of the record, we find that the county court’s
findings regarding Richard’s breach of fiduciary duties as to
uncollected rent and payment of unreasonable expenses to
be supported by the evidence presented at the hearings held
below. There was evidence that Richard did not collect fair
market rent from the tenants residing in the properties owned
by the estate. Richard attempted to collect some amount of rent
from the tenants living in one property, but failed to collect
any rent from the tenant living in the other property. Instead,
Richard claimed that this tenant was repairing the properties
in lieu of paying rent. The record does not demonstrate that
much, if any, of this work was actually completed or that it
actually improved the value of the properties in any significant
way. Richard was notified by Christine on multiple occasions
regarding his obligation to collect fair market rent for the ben-
efit of the estate.
Christine also offered detailed records of the estate’s
bank accounts to support her assertion that Richard used
estate funds to make unreasonable expenditures. Examples of
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Cite as 32 Neb. App. 191unreasonable expenditures included building and material
costs that did not improve the value of the houses or make
them more marketable, storage unit rental costs that were
taken out in Richard’s name in his individual capacity and
benefited only Richard, and code violation fees. The county
court specifically found that Richard unreasonably expended
$23,128.89 in violation of his fiduciary duty to the estate. We
agree that the evidence was sufficient to justify the imposition
of this surcharge.
The evidence regarding the management of the Century
Link stock is not nearly so clear. Under Christine’s calcula-
tion, Richard should be held to a standard in which he would
have to produce a gain that equals selling the stock on the
date of Calvin’s death and investing the value that existed at
that time in an S&P 500 index fund. According to her evi-
dence, such a strategy would have resulted in a gain to the
estate of $142,074 as of the date Richard was removed as
personal representative.
[12] We first pause to note that a personal representative
is a fiduciary who must comply with the prudent investor
rule set forth at Neb. Rev. Stat. §§ 30-3883 through 30-3889
(Reissue 2016). See Neb. Rev. Stat. § 30-2464 (Reissue 2016).
The prudent investor rule provides, among other things, that
a trustee (or personal representative) shall invest and man-
age trust assets as a prudent investor would, taking into
account the purposes, terms, distribution requirements, and
other circumstances of the trust (or estate). Section 30-3885
requires a trustee to diversify the investments of the trust
unless the trustee reasonably determines that, because of
special circumstances, the purposes of the trust are better
served without diversifying. Christine argues that this provi-
sion required Richard to sell the Century Link stock in favor
of a more diverse portfolio. While it may have been reason-
able to sell this stock, we cannot say that the failure to sell the
stock violated any requirement of diversification. According
to the inventory filed by Christine, the Century Link stock
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Cite as 32 Neb. App. 191comprised less than 50 percent of the value of the estate at
the time of Calvin’s death. Other assets included real estate,
checking and savings accounts, cash, bonds, a treasury war-
rant, coins, a vehicle, and other personal property. Viewed in
total, the estate as a whole consisted of diverse assets.
We next focus on whether Richard’s decision not to sell the
Century Link stock in and of itself constituted a breach of his
fiduciary duty. In performing this analysis, we first focus on
what the value of the stock was at various key moments in
time. The evidence demonstrates that on the date of Calvin’s
death, the stock was valued at $20.46 per share. Calvin died
intestate, and there is no indication in our record that anyone
other than Richard made application to serve as personal rep-
resentative. Richard was appointed on January 16, 2019. On
that date, the stock was valued at $15.34 per share. There is
no evidence that Richard had any ability to manage or sell the
stock prior to that date. On February 14, Christine informed
Richard of her concern that the stock was losing value. On that
date, she sent him an email stating that the value of the stock
as of that date had dropped to $12.78 after being “over $20
a share” at the time of Calvin’s death. While she expressed
concern that the value of the stock would continue to decrease,
she did not demand that the stock be sold, only that Richard
look into the situation as it was his obligation to maintain the
assets of the estate.
There was no evidence adduced at trial that Richard was
skilled or particularly astute or sophisticated in the area of
investment strategies. Given the evidence adduced, it was
impossible for him to have acted before January 16, 2019.
Some latitude must be given for a personal representative to
become familiar with the assets in the estate and to develop a
plan on how best to manage them, particularly with respect to
the vicissitudes of the stock market. Given these factors, we
find that it is more appropriate to examine whether Richard
violated his fiduciary duty with respect to the management of
the stock from a point following his opportunity to become
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Cite as 32 Neb. App. 191familiar with the assets he managed. On February 14, 2019,
the total value of the stock at $12.78 per share was $143,136.
On March 16, 2022, the date of his removal, the value of the
stock was $10.82 per share, which computes to a total value of
$121,184. This computation excludes dividends, however. In
his affidavit received at the July 2022 hearing on the motion
for surcharge, Richard testified that a 25-cent dividend was
given per share on a quarterly basis. While our record does
not have a complete statement of dividends awarded during
the period Richard served as personal representative, a state-
ment appended to Christine’s affidavit does show the payment
of dividends during the period reflected and does not refute
Richard’s claim that the dividends were awarded quarterly.
Richard claims that a total of $39,200 in dividends was paid
during the time period he was personal representative. Our
computation would put that figure at $36,400. Adding that
amount to $121,184 would put the total value of the stock
plus dividends at $157,584. Therefore, under our calculation,
the value of the stock (including dividends paid) would have
increased the value of this investment by $14,448 between the
date Christine alerted Richard to the issue and the date he was
removed. While this is not a particularly high rate of return,
no investment in the stock market (including an S&P 500
index fund) can guarantee any particular return on the invest-
ment. Given these circumstances and the lack of any expert
testimony supporting Christine’s position, we cannot say that
Richard breached his fiduciary duty to the estate and its ben-
eficiaries in his decisionmaking with regard to the Century
Link stock. We find that Christine failed to produce com-
petent evidence supporting her position that Richard should
be surcharged based on his failure to sell the Century Link
stock. Therefore, we must find that the county court’s deci-
sion imposing a surcharge on this basis is without sufficient
evidentiary support.
Given the foregoing findings, we agree with the county
court that a surcharge should be paid by Richard. We find,
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Cite as 32 Neb. App. 191however, that the surcharge should be based only on Richard’s
payment of unjustified expenditures and failure to collect rent.
The county court ordered Richard to pay a total of $84,224
to the two other beneficiaries, without explaining the precise
rationale for how it arrived at its determination. The court did
indicate that it adopted Christine’s calculation of the amount
of unreasonable expenses paid for with estate funds, that
being $23,128.89. But the court did not indicate the amount
of surcharge that was specifically attributable to Richard’s
failure to collect rent, as opposed to the mismanagement
of the Century Link stock. Without knowing the amount of
surcharge connected to the failure to collect rent, we cannot
review whether the county court’s award of a surcharge with
respect to that issue was supported by the evidence. As such,
we remand this cause back to the county court for an explana-
tion of how it arrived at its decision to order Richard to pay
a surcharge for uncollected rent and the amount of uncol-
lected rent he should be surcharged for. That amount should
be added to the $23,128.89 surcharged for the unjustified
expenses paid so as to determine a total amount of surcharge
to be ordered.
3. Attorney Fees
(a) Award of Attorney
Fees to Christine
Richard also challenges the county court’s decision to award
attorney fees to Christine in the amount of $42,888. Richard
alleges that there was no basis to support an award of attor-
ney fees. Upon our review, we affirm the decision of the
county court awarding Christine attorney fees to be paid from
Richard’s share of the estate.
[13-15] Attorney fees and expenses may generally be recov-
ered in a civil action only where provided for by statute or
when a recognized and accepted uniform course of proce-
dure has been to allow recovery of attorney fees. In re Estate
of Chrisp, 276 Neb. 966, 759 N.W.2d 87 (2009). Under
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Cite as 32 Neb. App. 191§ 30-2481, attorney fees are awarded to the personal repre-
sentative as part of the administrative expenses for the estate.
See In re Estate of Chrisp, supra. It has long been the rule in
Nebraska that no allowance is authorized to be made out of
an estate for the services of an attorney not employed by the
personal representative. See In re Estate of Love, 136 Neb.
458, 286 N.W. 381 (1939). Such an allowance is permitted,
however, when the services provided were in the interest of
all persons interested in the estate and were beneficial to the
estate. Id.The county court found that an award of attorney fees to
Christine was warranted based upon her actions in bringing
her petition to remove Richard as personal representative, in
collecting evidence to support the imposition of a surcharge
against Richard, and in acting as successor personal representa-
tive. The court found that each of these actions benefited the
estate as a whole:
Christine’s actions through her counsel provided ben-
efit to the entire Estate by, among other things, pushing
and encouraging the real estate transactions to close; con-
tinuously seeking the collection of fair market value of
rent or at the very least a fair rent; collecting, verifying,
and properly accounting for all assets of the Estate per her
filing of the Amended Inventory on July 19, 2022 . . . ;
and seeking a surcharge for Richard’s various breaches of
fiduciary duties . . . . Since becoming Successor Personal
Representative, Christine has pursued her request for sur-
charge not only on her behalf, but also on behalf of the
other innocent beneficiary, Matthew. Further, the Estate
had a value of $477,709.39 . . . on the date of [Calvin’s]
death, Christine sought $96,732.68 in total surcharges
against Richard, and this Court decided to order a sur-
charge in the total amount of $84,224.00 against Richard.
For the most part, Christine has prevailed on her claims
set forth under her Petition and in the litigation of the
above captioned matter.
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Cite as 32 Neb. App. 191We can find no abuse of discretion in the findings of the
county court. First we note that a portion of the attorney fees
sought were incurred pursuant to her duties as the successor
personal representative. Beyond those fees, we agree with the
county court that Christine’s actions in initiating these pro-
ceedings served to benefit the estate as a whole. Christine’s
actions increased the value of the estate and, as such, markedly
increased the shares of the estate owed to herself, to Matthew,
and even to Richard. We affirm the county court’s decision to
award Christine $42,888 in attorney fees, which accounts for a
large portion of the $47,924.48 in attorney fees she incurred in
bringing her petition before the county court and in acting as
successor personal representative.
(b) Denial of Richard’s Request for Fees
Finally, Richard challenges the county court’s failure to
award him any attorney fees that were incurred in his defense
of Christine’s petition. He alleges that such fees are warranted
even though he was not successful in his defense, as he and
his counsel acted in good faith in defending his administration
of the estate. Upon our review, we affirm the decision of the
county court denying Richard any attorney fees.
Richard asked that he be awarded attorney fees in the
amount of $14,527.50, which were “incurred in providing
legal representation [to him] during the course of the [county
court] proceeding[s].” The county court denied Richard’s
request, finding:
Richard breached his fiduciary duties and mismanaged
the Estate in several ways. This Estate does not appear
to be complex and does not involve difficult questions
of law. Richard’s service as Personal Representative was
negligible and caused the Estate to lose value. Richard
failed to close the Estate in a reasonable time and caused
Christine to pursue litigation to protect the best inter-
ests of the Estate. Richard had ample time to adminis-
ter the Estate properly and efficiently and had several
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Cite as 32 Neb. App. 191opportunities to course-correct, but he failed to do so.
Richard was removed as Personal Representative of
the Estate.
In this opinion, we have affirmed the majority of the county
court’s findings regarding Richard’s mismanagement of the
estate. We have also affirmed in part the county court’s deci-
sion to surcharge Richard as a result of the dissipation of the
estate’s assets during his tenure as personal representative.
Given our affirmance of these findings, we can find no abuse
of discretion in the county court’s order to deny Richard’s
application for attorney fees. Richard simply failed to properly
administer the estate, and no fees should be awarded based on
his mismanagement.
VI. CONCLUSION
Because Richard did not timely appeal from the county
court’s order removing him as personal representative of the
estate, this court lacks jurisdiction to consider the merits of
Richard’s argument as to this issue. We dismiss that portion
of the appeal challenging Richard’s removal. We affirm in part
the county court’s order requiring Richard to pay a surcharge
and attorney fees to Christine. However, we remand the cause
to the county court for an exact calculation of the amount of
surcharge Richard is required to pay based on his failure to
collect rent and combine that with its prior finding on the
amount of surcharge due based on Richard’s payment of unjus-
tified expenses with estate funds. We affirm the county court’s
decision denying Richard’s request for any attorney fees.
Affirmed in part, dismissed in part,
and in part remanded with directions.