Estate of Smith , 2021 ND 238 ( 2021 )

FILED
IN THE OFFICE OF THE
CLERK OF SUPREME COURT
DECEMBER 23, 2021
STATE OF NORTH DAKOTA
IN THE SUPREME COURT
STATE OF NORTH DAKOTA
2021 ND 238In the Matter of the Estate of William E. Smith, Deceased
Scott L. Smith and Kristen J. Hackmann,
Personal Representatives, Petitioners and Appellants
v.
Charlene Smith and LeeAllen Smith, Respondents and Appellees
and
David Smith and Jacqueline Walby, Respondents
No. 20210114
Appeal from the District Court of Sargent County, Southeast Judicial District,
the Honorable Mark T. Blumer, Judge.
AFFIRMED.
Opinion of the Court by Jensen, Chief Justice.
Brandon M. Erickson (argued) and Sarah Aaberg (on brief), Fargo, ND, for
petitioners and appellants.
Amy M. Clark, Wahpeton, ND, for respondent and appellee Charlene Smith.
Steven T. Ottmar, Jamestown, ND, for respondent and appellee LeeAllen
Smith; submitted on brief.
Estate of Smith
No. 20210114
Jensen, Chief Justice.
[¶1] Scott Smith and Kristen Hackmann, co-personal representatives of
William Smith’s estate, appeal from a February 17, 2021 order denying their
post-judgment motions and granting Charlene and LeeAllen Smith’s motion to
enforce the existing judgment. On appeal, the co-personal representatives
argue the district court erred in denying their motions without a hearing and
without adequate explanation, erred in granting Charlene and LeeAllen
Smith’s motion, and erred in awarding attorney’s fees against them personally.
We affirm.
I
[¶2] William Smith (“the decedent”) died in October 2017. Charlene Smith
was the wife of the decedent, and LeeAllen is Charlene’s son and the decedent’s
stepson. Two of the decedent’s four children from his first marriage, Scott
Smith and Kristen Hackmann, were appointed co-personal representatives of
the estate pursuant to the decedent’s will.
[¶3] On November 14, 2017, the co-personal representatives initiated this
proceeding as an informal probate. On November 2, 2018, the district court
entered a judgment approving the Inventory and Appraisement, allowing the
Final Account, approving the settlement of the estate, and directing
distribution of the estate. The judgment included an allowance for “increased
administrative and legal fees” and “such other relief as may be proper.” A
Notice of Entry of the Judgment was filed and served by the co-personal
representatives on November 7, 2018. None of the parties initiated an appeal
from the November 2, 2018 Judgment.
[¶4] In May 2019, the co-personal representatives filed a supplemental
inventory and moved the district court to compel Charlene Smith to accept in-
kind distributions and sign titles for the distributions from the estate.
Charlene Smith responded by indicating she was willing to accept the in-kind
distributions and also requested an accounting for all expenses and receipts
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since the accounting provided prior to the entry of the November 2, 2018
Judgment. The co-personal representatives withdrew their pending motion
and, with exception of the co-personal representatives’ counsel withdrawing
from the case, there was no further activity in the court until the summer of
2020.
[¶5] On June 15, 2020, the co-personal representatives filed an amended
inventory and appraisement along with a notice of proposed distribution.
Charlene Smith objected to the proposed distribution and filed a motion to
compel compliance with the November 2, 2018 Judgment. In response to the
motion to compel, the co-personal representatives argued that Charlene Smith
had rejected the distribution reflected in the November 2, 2018 Judgment by
filing for an elective share, she had no probable cause to challenge the will so
the penalty clause in the will had been triggered, and the question of whether
she was entitled to a share of the estate remained open. Charlene Smith’s
assertion of an elective share and challenge to the will were within the
litigation between the parties prior to the entry of the November 2, 2018
Judgment. The co-personal representatives sought a temporary restraining
order to prevent Charlene Smith from disposing or destroying any property
received through the estate proceedings and filed a motion seeking to exclude
Charlene Smith and LeeAllen from distributions from the estate.
[¶6] On July 30, 2020, the co-personal representatives filed and served a
notice for a hearing on their motions. The initial date secured by the co-
personal representatives was canceled, and a rescheduled hearing date was set
for October 13, 2020. The notice for the October 13, 2020 hearing was sent to
the parties by the district court and did not specify which of the pending
motions would be considered at the hearing. Charlene Smith did not file a
notice for a hearing on her motion to compel.
[¶7] A hearing was held on October 13, 2020. Charlene Smith argued that the
2018 Judgment was final regardless of a provision that left open an increase
in legal and administrative fees. The co-personal representatives argued there
were mistakes in the 2018 inventory and appraisement and questioned
whether the district court should require distributions pursuant to the 2018
2
Judgment, the supplemental inventory, or start over. During the hearing, all
of the parties provided argument on the issue of whether the November 2, 2018
Judgment was final. At the conclusion of the hearing, the court noted the
following: “These matters—or the Motion to Compel issue, obviously, needs to
be decided first.” The co-personal representatives did not object to proceeding
with arguments on the finality of the November 2, 2018 Judgment.
[¶8] On February 17, 2021, the district court entered its findings of fact and
order on the pending motions. The court found, in part, the following:
The Court finds that the November 2, 2018 Judgment is final, that
the Co-Personal Representatives’ Rule 65 Ex Parte Motion for
Temporary Restraining Order is frivolous, that the Co-Personal
Representatives’ attempts to circumvent the Judgment by
motioning the Court to disinherit Charlene and LeeAllen is
frivolous, and that the Co-Personal Representatives have failed to
abide by the terms of the November 2, 2018 Judgment by refusing
to make distributions ordered therein. The court finds that the Co-
Personal Representatives no longer have authority to bring a Rule
65 Motion for Temporary Restraining Order or Motion to Amend
Proposed Distribution on behalf of the estate, as the matter was
concluded over two years ago.
[¶9] The district court denied the co-personal representatives’ motions after
finding the motions to be an attempt to circumvent the appeals process to
challenge the final judgment entered on November 2, 2018. The court found
the November 2018 Judgment was final, the time to appeal the November 2,
2018 Judgment had passed, LeeAllen and Charlene Smith were entitled to
their distributions pursuant to the November 2, 2018 Judgment, and the
finality of the November 2, 2018 Judgment precluded resolution of the co-
personal representatives’ post-judgment motions. The court ordered attorney’s
fees to be paid by the co-personal representatives personally after finding there
was no basis in law to support their post-judgment motions and their authority
as personal representatives had ceased. The co-personal representatives
appealed the court’s February 17, 2021 Order.
3
II
[¶10] Central to resolution of this appeal is whether or not the November 2,
2018 Judgment was a final order in the probate proceedings and, if so, what
impact its finality had on the post-judgment motions. We have previously
recognized that extensive litigation can convert informal proceedings into
formal probate proceedings. See Estate of Ketterling, 515 N.W.2d 158, 161-165
(N.D. 1994) (providing a useful comparison of informal probate proceedings to
formal probate proceedings and providing examples of when informal
proceedings convert to formal probate proceedings). When there are formal
probate proceedings, “[o]nce a final judgment or order has been entered
approving a final accounting and distribution under N.D.C.C. § 30.1-21-01(1),
the estate proceedings are concluded, and the parties are not authorized to file
a petition to approve an amended final accounting under the statute.” Estate
of Cashmore, 2010 ND 159, ¶ 14, 787 N.W.2d 261. A final order or judgment
entered under N.D.C.C. § 30.1-21-01(1) may include enumerated changes if the
effect of those changes upon the overall distribution of the estate is easily
calculable and self-explanatory, and does not require entry of a new judgment
to effectuate the judgment of the court. Id. at ¶ 15.
[¶11] Our cases recognize the lack of clarity of the order may leave a question
of whether the district court intended finality. See e.g., Dixon v. Dixon, 2021
ND 94, ¶ 15, 960 N.W.2d 764. In this case, the co-personal representatives
concede on appeal the November 2, 2018 Judgment was a final order. Although
the judgment included an allowance of “increased administrative and legal
fees” and “such other relief as may be proper,” those enumerated changes were
easily calculable and self-explanatory, and did not require entry of a new
judgment to effectuate the judgment of the district court. We affirm the court’s
finding the November 2, 2018 Judgment was final.
III
[¶12] The co-personal representatives raise two challenges to the granting of
the motion to compel and the denial of their motions. First, they argue they
were denied a hearing on their motions. Second, because the district court’s
order was mostly a verbatim adoption of the findings proposed by Charlene
4
and LeeAllen Smith, they argue the court failed to adequately explain its
findings.
A
[¶13] The co-personal representatives assert they were denied a hearing on
their post-judgment motions. We disagree. Pending before the district court
was a motion to compel the co-personal representatives’ compliance with the
November 2, 2018 Judgment and several motions seeking to re-litigate or stop
the implementation of the November 2, 2018 Judgment. The court, at the
October 13, 2020 hearing noted the following: “These matters—or the Motion
to Compel issue, obviously, needs to be decided first.” All of the parties were
given an opportunity to argue about the finality of the Judgment during the
October 13, 2020 hearing. The court’s February 17, 2021 Order found the
resolution of the motion to compel necessarily required denial of the pending
motions to re-litigate or stop the implementation of the Judgment.
[¶14] We conclude the district court did not deny the co-personal
representatives an opportunity to be heard. They were provided with an
opportunity to address the finality of the November 2, 2018 Judgment during
the October 13, 2020 hearing, the ultimate determination of which necessarily
compelled the denial of their post-judgment motions. While the court indicated
an additional hearing could be necessary depending on the resolution of the
motion to compel, having concluded the judgment was final, it became
unnecessary for the court to conduct additional proceedings on other post-
judgment motions that had become moot.
B
[¶15] The co-personal representatives assert that the district court failed to
explain its decision. They argue the court’s adoption of Charlene and LeeAllen
Smith’s proposed order with minimal modification was improper. They rely on
this Court’s prior decision in Ryberg v. Landsiedel, in which this Court reversed
a conclusory order, entered without a hearing, and without evidence in the
record. 2021 ND 56, ¶ 18, 956 N.W.2d 749. Charlene and LeeAllen Smith argue
this Court should not reverse merely because the district court adopted one
5
party’s proposed findings, unless the findings are clearly erroneous, relying on
our decision in Estate of Albrecht, 2020 ND 27, ¶ 9, 938 N.W.2d 151.
[¶16] While this Court has noted disapproval of a district court’s “wholesale
adoption of one party’s proposed findings and conclusions,” we have also noted
the following: “The findings will be upheld if they adequately explain the basis
for the court’s decision, unless they are clearly erroneous.” Albrecht, 2020 ND
27, ¶ 9. “A finding of fact is clearly erroneous if it is induced by an erroneous
view of the law, there is no evidence to support it, or this Court is convinced,
on the basis of the entire record, that a mistake has been made.” Id. at ¶ 12.
[¶17] The district court had presided over extensive litigation in this case since
the decedent’s death in October 2017. The dispositive issue was the finality of
the court’s own November 2, 2018 Judgment. While the court mostly adopted
Charlene and LeeAllen Smith’s proposed findings and conclusions, the adopted
findings adequately explained the decision. The court found the November 2,
2018 Judgment was a final judgment, that Charlene and LeeAllen Smith were
entitled to enforcement of the judgment, and the co-personal representatives’
post-judgment motions improperly attempted to circumvent the final
judgment. These findings were not induced by an erroneous view of the law,
there is evidence in the record to support the findings, and we are not left with
a definite and firm conviction a mistake has been made regarding the finality
of the November 2, 2018 Judgment. We conclude the findings are not clearly
erroneous and reject the co-personal representatives’ assertion the court failed
to adequately explain its findings.
IV
[¶18] The co-personal representatives argue that the district court abused its
discretion in awarding attorney fees to be paid by them personally. Charlene
and LeeAllen Smith argue this appeal is frivolous and request attorney fees for
having to respond.
6
A
[¶19] We review an award of attorney’s fees for an abuse of discretion. Estate
of Johnson, 2017 ND 162, ¶ 18, 897 N.W.2d 921 (citing Estate of Hogen, 2015
ND 125, ¶¶ 48, 50, 863 N.W.2d 876). “A district court abuses its discretion if it
acts in an arbitrary, unreasonable, or unconscionable manner, it misinterprets
or misapplies the law, or its decision is not the product of a rational mental
process leading to a reasoned decision.” Estate of Johnson, at ¶ 18.
[¶20] The district court found the co-personal representatives’ post-judgment
motions to be frivolous. We have described sanctions for frivolous pleadings:
The district court has authority to stem abuses of the judicial
process, which comes not only from applicable rules and statutes,
such as N.D.R.Civ.P. 11, but “from the court’s inherent power to
control its docket and to protect its jurisdiction and judgments, the
integrity of the court, and the orderly and expeditious
administration of justice.” Federal Land Bank v. Ziebarth, 520
N.W.2d 51, 58 (N.D. 1994). A district court has discretion under
N.D.C.C. § 28-26-01(2) to decide whether a claim is frivolous and
the amount and reasonableness of an award of attorney fees, but
when the court decides a claim is frivolous, the court must award
attorney fees. See Strand v. Cass Cnty., 2008 ND 149, ¶¶ 12-13,
753 N.W.2d 872. “A claim for relief is frivolous under N.D.C.C. §
28-26-01(2) only if there is such a complete absence of actual facts
or law a reasonable person could not have expected a court would
render a judgment in that person’s favor.” Estate of Dion, 2001 ND
53, ¶ 46, 623 N.W.2d 720.
Botteicher v. Becker, 2018 ND 111, ¶ 18, 910 N.W.2d 861 (quoting Estate of
Pedro v. Scheeler, 2014 ND 237, ¶ 14, 856 N.W.2d 775).
[¶21] The co-personal representatives argue they had the duty to carry out the
testator’s intent, and there was a genuine controversy about the penalty clause
of the will in the context of Charlene and LeeAllen Smith’s ongoing conduct.
They argue N.D.C.C. § 30.1-18-03(1) requires a personal representative to
settle and distribute the decedent’s estate pursuant to the decedent’s will and
7
best interests of the estate. They contend a benefit to the estate is not limited
to financial benefits, and may include a personal representative’s good faith
attempts to effectuate the testamentary intention set forth in the decedent’s
will. Estate of Flaherty, 484 N.W.2d 515, 518 (N.D. 1992).
[¶22] Regarding personal representatives being compensated for attorney’s
fees from the estate, this Court has said:
The purpose and public policy underlying these statutes is to allow
the personal representative, as a fiduciary acting on behalf of
persons interested in an estate, to in good faith pursue appropriate
legal proceedings without unfairly compelling the representative
to risk personal financial loss by underwriting the expenses of
those proceedings.
Estate of Flaherty, 484 N.W.2d at 518 (citation omitted). However, the powers
of a personal representative are not limitless and, “[i]f the exercise of power
concerning the estate is improper, the personal representative is liable to
interested persons for damage or loss resulting from breach of the personal
representative’s fiduciary duty . . . .” N.D.C.C. § 30.1-18-12.
[¶23] The district court provided the following summary in granting the
request for attorney fees:
Attorney’s Fees. Charlene and LeeAllen were awarded property
pursuant to the November 2, 2018 Judgment. There is no basis in
fact or law that exists to support the Co-Personal Representatives’
Motions nearly two years after Judgment was entered. As a matter
of law, their authority to bring such motions has ceased. The
November 2, 2018 Judgment is final, the appeal period has long
passed, the probate action is done, and Charlene and LeeAllen are
entitled to their distributions. The Co-Personal Representatives
have no basis to interfere with Charlene and LeeAllen’s property
rights, or to attempt to unilaterally modify the distributions
previously approved by the Court. The Co-Personal
Representatives’ motions are frivolous, and Charlene and LeeAllen
are entitled to their attorneys fees for having to respond to the
same. Charlene is further entitled to her attorneys fees incurred
8
in bringing her Motion to Compel distribution of the property
awarded to her by the November 2, 2020 Judgment.
[¶24] The district court found the co-personal representatives’ actions had
been frivolous, lacking a basis in both law and fact, and were a unilateral
attempt to modify the distributions previously ordered by the court. After
reviewing the record and the court’s reasoning for awarding the attorney fees,
we conclude the court did not act in an arbitrary, unreasonable, or
unconscionable manner, did not misinterpret or misapply the law, and its
determination was the product of a rational process leading to a reasoned
decision, and therefore the court did not abuse its discretion. In light of the
court’s determination to impose liability directly upon personal representatives
for the improper use of their power under N.D.C.C. § 30.1-18-12, we conclude
the court did not abuse its discretion in imposing the liability on the co-
personal representatives personally.
B
[¶25] Charlene and LeeAllen Smith seek an award of attorney fees on appeal.
The decision whether to administer sanctions rests within the discretion of this
Court. Industrial Comm’n v. Noack, 2006 ND 195, ¶ 6, 721 N.W.2d 698. We
decline the invitation to award attorney’s fees on appeal.
V
[¶26] The November 2, 2018 Judgment is final. The co-personal
representatives were provided with a hearing and opportunity to argue on the
issue that was dispositive of their pending motions and the district court’s
findings were not clearly erroneous. The court did not abuse its discretion in
awarding attorney fees against the co-personal representatives personally
after finding their post-judgment motions to be frivolous, lacking basis in law
9
and fact, and a unilateral attempt to modify the court’s previous order
distributions. We decline to impose attorney fees for this appeal. The February
17, 2021 order of the district court is therefore affirmed.
[¶27] Jon J. Jensen, C.J.
Gerald W. VandeWalle
Daniel J. Crothers
Lisa Fair McEvers
Jerod E. Tufte
10