Mary Nies v. Probate Services, LLC ( 2021 )

COURT OF APPEALS
DECISION NOTICE
DATED AND FILED This opinion is subject to further editing. If
published, the official version will appear in
the bound volume of the Official Reports.
June 22, 2021
A party may file with the Supreme Court a
Sheila T. Reiff petition to review an adverse decision by the
Clerk of Court of Appeals Court of Appeals. See WIS. STAT. § 808.10
and RULE 809.62.
Appeal No. 2020AP1411 Cir. Ct. No. 2019PR34
STATE OF WISCONSIN IN COURT OF APPEALS
DISTRICT III
IN RE THE ESTATE OF LOIS M. NIES:
MARY NIES AND KAY NIES-TOREN,
APPELLANTS,
V.
PROBATE SERVICES, LLC, MARY KUDICK, CAROL METZGER,
JEAN THORPE, MICHAEL NIES AND MARK NIES,
RESPONDENTS.
APPEAL from an order of the circuit court for Brown County:
BEAU LIEGEOIS, Judge. Affirmed.
Before Stark, P.J., Hruz and Seidl, JJ.
Per curiam opinions may not be cited in any court of this state as precedent
or authority, except for the limited purposes specified in WIS. STAT. RULE 809.23(3).
No. 2020AP1411
¶1 PER CURIAM. Mary Nies and Kay Nies-Toren, two of the six
heirs to the Estate of Lois M. Nies, appeal from a final order denying their petition
to have the circuit court order certain directions to the Estate’s personal
representative. Mary and Kay1 argue that the circuit court erred by failing to order
the personal representative to have an independent forensic investigation
conducted into: (1) the sale of Lois’s farmland real estate; (2) the deposit of rental
property proceeds payable to the Estate; (3) a life insurance policy paid as a result
of their father Earl Nies’s death a few years earlier; and (4) the manner in which
$1,050,100 of Lois’s cash was located and provided to the Estate. They also claim
the court erred by failing to order the personal representative to produce the will of
Earl Nies. Lastly, Mary and Kay argue the Hanaway Ross Law Firm (Hanaway
Ross) should be removed as attorneys for the Estate. We reject all of Mary and
Kay’s arguments and affirm.
BACKGROUND
¶2 Lois died on January 7, 2019, without a will. Her husband, Earl,
predeceased her on October 15, 2017. Lois and Earl had six children
together: Kay, Mary, Jean Thorpe, Carol Metzger, Mark Nies and Michael Nies.
At the time of her death, Lois owned an investment account at Edward Jones
containing a balance of nearly four million dollars. The investment account had a
payable on death (POD) provision that designated the six children as the
beneficiaries to be paid in equal shares. The money in the account has been paid
equally to the six children consistent with the POD provision and is not a subject
1
Because some of the parties share a surname, we refer to them individually by their
first names.
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of this appeal. In addition to the investment account, Lois had a safe deposit box
containing cash in the amount of $1,050,100.
¶3 Lois also owned farmland that, prior to her death, she placed for
auction with a list price of $800,000. The agreement with the auctioneer provided
for a ten percent fee if the auctioneer found a buyer willing to pay the full list
price. The auction garnered an offer to purchase for $643,500 with a closing date
of no later than February 14, 2019, which was accepted before Lois’s death.
Following the auction, the auctioneer’s fee was renegotiated to four percent.
¶4 Mary Kudick of Probate Services, LLC (Kudick) was named as
special administrator of Lois’s estate for the sole purpose of completing the real
estate transaction. Kudick deposited the gross proceeds from the farmland sale
into the Estate’s checking account.
¶5 After Lois died, Mark and Michael retained attorney Christina
Peterson, who at that time was a member of One Law Group, S.C., to represent the
Estate during its administration. Peterson had previously assisted Lois and Earl
with their estate planning. She subsequently left One Law Group and joined
Hanaway Ross. Peterson had originally recommended that the children open an
informal administration appointing Mark and Michael as co-personal
representatives. When Mary and Kay objected to Mark and Michael acting as
co-personal representatives, the Estate was opened with their consent as a formal
administration, and Kudick was appointed personal representative.
¶6 Mark and Michael obtained the $1,050,100 from the safe deposit
box and ultimately provided that money to Kudick. Kudick filed an inventory in
the Estate proceeding reflecting that Lois died with $1,693,600 in assets subject to
probate administration consisting of the $643,500 gross proceeds from the
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farmland sale and the $1,050,100 from the safe deposit box. Kudick then paid the
four percent auctioneer’s commission from the Estate checking account. Just prior
to the inventory filing, Mary and Kay sent a letter to the Brown County register in
probate requesting that irregularities in the Estate be investigated. The register in
probate responded, stating that she would take no further action on the issues
raised by Mary and Kay.
¶7 Attorney Warren Wanezek then entered an appearance on behalf of
Mary and Kay, and on November 7, 2019, he filed a petition on their behalf for the
circuit court to issue certain directions to the personal representative. In that
petition, Mary and Kay requested that the court order the personal representative
to investigate what they asserted were irregularities in the handling of the Estate.
They also included a request to replace Hanaway Ross as legal counsel for the
Estate due to an alleged conflict of interest and a failure to investigate various acts
of alleged misconduct.
¶8 A hearing on Mary and Kay’s petition was held on February 18,
2020. On March 16, 2020, the circuit court issued a written decision denying the
petition for the removal of Hanaway Ross and Mary and Kay’s request to order the
personal representative to conduct an independent investigation into various acts
of “fraud, waste and/or mismanagement” by Mark and Michael. In short, the court
determined that Mary and Kay failed to provide any credible evidence of the need
for either an independent forensic investigation into the probate of the estate or the
need to remove the Estate’s attorneys. On July 8, 2020, the court issued an
amended decision taking into consideration various objections and concerns Mary
and Kay had with the original decision, but leaving intact the substance of the
decision.
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¶9 Mary and Kay appealed from the order denying their petition.
Meanwhile, the remainder of the documents necessary to finalize the Estate’s
administration were completed and filed. A final hearing, however, has been
adjourned pending the outcome of this appeal. Additional facts are provided in the
discussion below.
DISCUSSION
¶10 On appeal, Mary and Kay present the same five alleged events that
they raised in the circuit court as the basis for their request for a forensic
investigation under WIS. STAT. § 879.61 (2019-20)2—namely, various acts of
“fraud, waste and/or mismanagement” by Mark and Michael in: (1) the sale of
Lois’s farmland real estate; (2) the deposit of rental property proceeds payable to
the Estate; (3) a life insurance policy paid as a result of their father Earl Nies’s
death a few years earlier; (4) the manner in which $1,050,100 of Lois’s cash was
located and provided to the Estate; and (5) failure to produce the will of Earl Nies.
2
WISCONSIN STAT. § 879.61 provides that:
Any personal representative or any person interested who
suspects that any other person has concealed, stolen, conveyed or
disposed of property of the estate; or is indebted to the decedent;
possesses, controls or has knowledge of concealed property of
the decedent; possesses, controls or has knowledge of writings
which contain evidence of or tend to disclose the right, title,
interest or claim of the decedent to any property; or possesses,
controls or has knowledge of any will of the decedent, may file a
petition in the court so stating. The court upon, such notice as it
directs, may order the other person to appear before the court or
a circuit court commissioner for disclosure, may subpoena
witnesses and compel the production of evidence, and may make
any order in relation to the matter as is just and proper.
All references to the Wisconsin Statutes are to the 2019-20 version unless otherwise
noted.
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No. 2020AP1411
¶11 Under WIS. STAT. § 879.61, the circuit court, in its discretion,
determines if a personal representative or interested person should be granted
discovery as part of the probate proceedings, and, if so, whether any further relief
will be granted. In Matter of Guardianship of Wisnewski, 100 Wis. 2d 391,
393-96, 302 N.W.2d 79 (Ct. App. 1981). The court’s determination will not be set
aside on appeal absent an erroneous exercise of discretion. Id. at 396. We will
uphold a court’s discretionary decision if it can be concluded from the record that
the facts would support the court’s decision. Id. In determining whether to grant
a petition under § 879.61, the circuit court should have borne in mind the
following factors: “(1) [t]he extent to which an opportunity for a quick and
complete examination had been provided to prevent deception or surprise; (2) the
potential abuse of discovery as a fishing expedition, delaying tactic or harassment
device; and (3) the availability of alternative discovery methods.” Wisnewski, 100
Wis. 2d at 396. Mary and Kay contend that the circuit court erroneously exercised
its discretion by denying their § 879.61 claims. We address each of their claims in
turn.
A. Farmland Real Estate
¶12 Mary and Kay first argue that the circuit court erroneously exercised
its discretion by concluding there was no basis to order further investigation into
the sale of Lois’s farmland real estate. Mary and Kay contend an appraisal
obtained after Lois’s death showing a fair market value (FMV) of $923,000 proves
the farmland was improperly sold for less than its FMV. The court concluded that
Mary and Kay did not have all the information needed before asserting their
opinions. In fact, the court reasoned that the cross-examination of Kay by
Hanaway Ross refuted Mary and Kay’s claims because the auction contract was
already in place when Lois passed away.
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¶13 Fair market value is defined as “the price that property will bring
when offered for sale by one who desires but is not obligated to sell and bought by
one who is willing but not obligated to buy.” Liddle v. Liddle, 140 Wis. 2d 132,
138, 410 N.W.2d 196 (Ct. App. 1987). Here, although the property was sold for
an amount lower than the subsequently appraised value, there is no dispute it was
sold to the highest bidder at the time of the auction. Mary and Kay presented no
evidence that the auction was held improperly, either as to advertising or timing.
The mere fact that a higher appraisal was obtained after Lois’s death did not
provide a basis for the circuit court to order further discovery regarding the
auction price or to take action against the Estate because FMV is determined at the
time of the auction sale, not at some later date. The subsequent appraisal did not
support a claim that Mark or Michael “concealed, stole[], conveyed or disposed of
property of the [E]state[,]” as is required for the court to order discovery under
WIS. STAT. § 879.61.
¶14 Further, Mary and Kay testified that they knew there was an
accepted offer to purchase the farmland at the time of the auction and they did not
object to the sale prior to its closing. Instead, they waited 265 days to raise any
issue. This fact negates any alleged concealment or theft by Mark or Michael.
Mary and Kay failed to take advantage of the opportunity for a quick and complete
examination prior to the closing. Their failure to do so supports the circuit court’s
decision not to order further investigation into the farmland sale.
¶15 Mary and Kay also contend that the circuit court should have
ordered an investigation into the farmland sale because Mark and Michael
arranged for a “kick back” from the auctioneer’s fee. They base this claim upon a
phone conversation between Kay and the auctioneer to which Kay testified at the
hearing only as hearsay. Mary and Kay contend that the court should have
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No. 2020AP1411
required documents evidencing the amount received on sale to be produced. Mary
and Kay, however, presented no evidence that the gross proceeds obtained from
the sale were not provided to Kudick and deposited in the Estate’s checking
account. Additionally, they presented no evidence that Mark and Michael
obtained any “kick back” from the sale. For these reasons, the court properly
found that there was no reasonable basis for further investigation into the
property’s sale, and the court properly exercised its discretion in rejecting Mary
and Kay’s request.
B. Rental Property Checks
¶16 Mary and Kay next claim that Mark and Michael did not place all of
Lois’s rental property proceeds into the Edward Jones account prior to her death.
That claim was based entirely upon Kay’s testimony that Mark and Carol told her
they noticed some cash and checks from the rental property were not being
deposited into the Edward Jones account and that is why Mark got involved. In
addition, Kay also testified that Mark told her that when one of their parents’
properties sold in 2014, the funds were not immediately deposited into the Edward
Jones account.
¶17 The circuit court concluded that Kay’s testimony did not provide a
basis for further investigation. Kay admits that the only evidence she has to
support this claim is “what Mark told [her].” But, Mark also told Kay that the
money is “in [the Edward Jones account] now.” Thus, by Kay’s own admission,
there was no evidence that all of the funds were not accounted for, or that they
were diverted or concealed. Mary and Kay’s claim regarding the rental property
proceeds therefore amounts to mere speculation, and the court properly rejected it.
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No. 2020AP1411
C. Life Insurance Policy
¶18 Kay testified that she overheard on the phone that Michael and/or
Jean stated that Earl had a $700,000 life insurance policy that should have been
paid to Lois when Earl died. Kay was not sure of the exact amount of insurance
coverage. Mary and Kay contend that Lois should have received $700,000 from
that life insurance policy after Earl died. Kay claims she did not receive an
accounting of the deposits to Lois’s Edward Jones account, and, therefore, she did
not know whether the life insurance proceeds were deposited.
¶19 Kay, however, fails to provide any evidence to support this claim.
The evidence from the motion hearing established that $95,469.68 in life
insurance proceeds was paid into Lois’s Edward Jones account by American
General Life Insurance Company (American General) following Earl’s death, not
the alleged $700,000 that Kay believed. In fact, a letter dated July 1, 2019, from
American General to Kudick states that the $95,469.68 was paid into the Edward
Jones account, a non-probate asset, sometime after Earl died on October 15, 2017.
The balance of that account was subsequently distributed to each of the heirs
according to the POD terms. The circuit court found that the $700,000 claim was
based upon “speculation and assumption,” and it properly exercised its discretion
in rejecting this claim.
D. $1,050,100 in Cash
¶20 Mary and Kay also assert that the circuit court erroneously exercised
its discretion by denying their petition to investigate the source of the money
located in Lois’s safe deposit box. They appear to claim that Mark and Michael
hid the money since 2013 when Earl and Lois moved to an assisted living facility.
They question its source, claiming that their father was a shrewd investor and
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No. 2020AP1411
would never have kept this amount of cash on hand. Additionally, Mary and Kay
claim that Mark and Michael developed a scheme to hide the cash from the Estate
and its personal representative by giving their siblings the cash directly, rather
than through the Estate account. They appear to claim that Mark and Michael hid
the money in order to avoid paying taxes and included this money when
calculating the personal representative’s fee. According to Mary and Kay, Kay
received text messages and calls from Jean explaining that the cash would be
transferred outside of the Estate proceedings and that Michael and Mark were
holding the cash to avoid having it placed in the Estate’s account.
¶21 Despite the above allegations, Kay testified that she was aware, in
2014, that her parents gave large cash gifts of $25,000 to each of their ten
grandchildren. Additionally, attorney Daniel Duke of Hanaway Ross, sent a letter
to all of the Estate’s beneficiaries indicating that the original source of the
$1,050,100 was cash located in a home safe. At the time Earl and Lois moved to
an assisted living community, the cash was removed from the safe, counted, and
placed in a safe deposit box. A partial distribution of $175,000 was then provided
to each of the heirs.
¶22 The circuit court denied Mary and Kay’s request for an investigation
into the source of the safe deposit box funds. It found that Michael and Mark’s
delay in providing the funds to the personal representative was due to their waiting
for the time for filing claims against the Estate to lapse. There was no evidence
that all of the funds were not accounted for and delivered to the Estate account.
Further, the court noted that Jean, and not Michael or Mark, contacted Mary and
Kay about the money scheme. Under these facts, we conclude the court did not
err in denying Mary and Kay’s petition.
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No. 2020AP1411
¶23 In addition, Mary and Kay also claim that they are entitled, under
WIS. STAT. § 879.63, to fees for locating the cash and ensuring it was provided to
Kudick. That statute provides:
Whenever there is reason to believe that the estate of a
decedent as set forth in the inventory does not include
property which should be included in the estate, and the
personal representative has failed to secure the property or
to bring an action to secure the property, any person
interested may, on behalf of the estate, bring an action in
the court in which the estate is being administered to reach
the property and make it a part of the estate. If the action
is successful, the person interested shall be reimbursed
from the estate for the reasonable expenses and attorney fee
incurred by the person in the action as approved by the
court but not in excess of the value of the property secured
for the estate.
Sec. 879.63 (emphasis added).
¶24 Again, the circuit court properly exercised its discretion in denying
this claim. The court found that the cash was provided to Kudick independently
and at about the same time as the concerns were raised by Mary and Kay. Further,
the sisters incurred no costs or attorney fees in raising the issue, as they did so
before they retained counsel, and they did not file an action to secure the property.
There is no basis for this claim, and the court properly found that Mary and Kay
were not entitled to any fees pursuant to WIS. STAT. § 879.63.
E. Earl’s Will
¶25 Finally, Mary and Kay argue that the circuit court should have
ordered the Estate to produce Earl’s will as part of the probate proceedings for
Lois’s Estate. They contend the Estate was required to do so because they wanted
to know “if Earl’s estate was properly executed as it pertains to the Estate of Lois
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No. 2020AP1411
Nies.” Additionally, they claim that without the will, “there is no ability to discern
what the Estate of Lois even owned.”
¶26 We conclude the circuit court properly exercised its discretion in
denying this request. Kudick was appointed to represent Lois’s Estate, not Earl’s.
Kudick had the duty to “collect, inventory and possess all of the decedent’s
estate ….” See WIS. STAT. § 857.03(1). The primary duties of the personal
representative “are to manage the affairs of the decedent [Lois], to ensure the
decedent’s creditors are satisfied, and to distribute the residue of the estate
according to the will of the decedent.” Old Republic Surety Co. v. Erlien, 190
Wis. 2d 400, 411, 527 N.W.2d 389 (Ct. App. 1994). Thus, Kudick had no duty to
investigate Earl’s will. Further, it was irrelevant what Earl’s will stated, as his will
would not evidence whether assets that were bequeathed to Lois from Earl
remained in her possession at the time of her death. If Mary and Kay had
questions regarding Earl’s estate, they could have raised them during the probate
proceeding for his estate. The court did not err in denying this request.
¶27 In summary, the circuit court properly concluded that Mary and Kay
failed to make a prima facie case under WIS. STAT. § 879.61 for any of the
investigation they requested. There was insufficient evidence to show that Estate
assets were stolen, concealed or controlled by Mark and Michael or by the other
siblings. Instead, Mary and Kay’s allegations were based upon assumptions,
conjecture and speculation. Some of the relief they sought could not be obtained
in an action against Lois’s Estate. The court properly noted that the evidence was
insufficient, especially when weighed against the cost of such an investigation to
the Estate and other siblings through their reduced shares. The investigation was
not likely to yield any evidence of concealed or dissipated assets, and the court
properly exercised its discretion in dismissing Mary and Kay’s petition.
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¶28 Mary and Kay also argue that the circuit court erred in failing to
remove Hanaway Ross as counsel for the Estate based upon “alleged or potential
conflicts of interest and the appearance of impropriety.” They claim that Peterson,
now with Hanaway Ross, first represented Michael and Mark when attempting to
open the informal administration and appointed them as personal representatives.
Mary and Kay only consented to administration of the Estate when it was opened
formally with Kudick as the personal representative. When Mary and Kay
objected to Hanaway Ross representing the Estate, Kudick provided referrals of
four different lawyers. They claim they would have never consented to Kudick as
the personal representative if they knew she would retain Hanaway Ross.
¶29 In addition, Mary and Kay claim that Peterson hung up on them
during their first phone call and insisted that she represented all six siblings;
however, this claim was directly contrary to the statement of the register in probate
who told them to seek legal advice. Mary and Kay claim three alleged conflicts
that justify Hanaway Ross’s removal: (1) One Law Group represented Alex Nies,
Michael Nies’s son, on an unrelated matter; (2) Peterson previously represented
Earl and Lois with their estate planning; and (3) a relationship existed between
One Law Group and Hanaway Ross.
¶30 Motions to disqualify an attorney in a given case are reviewed under
the erroneous exercise of discretion standard. Marten Transport Ltd. v. Hartford
Specialty Co., 194 Wis. 2d 1, 13, 533 N.W.2d 452 (1995). We will reverse a
discretionary decision when the exercise of discretion is based on an error of law.
Id. “Where the record shows that the court looked to and considered the facts of
the case and reasoned its way to a conclusion that is consistent with applicable law
and one a reasonable judge could reach,” we will affirm the decision. Id.13
No. 2020AP1411
¶31 We conclude that the record supports the circuit court’s conclusion
that there was no basis to remove Hanaway Ross as counsel for the Estate. First,
there was no evidence to suggest that Peterson represented Alex Nies. Peterson’s
prior firm, One Law Group, did represent Alex, but Peterson herself had nothing
to do with that representation, and she was not even with Hanaway Ross at that
time. Therefore, no conflict of interest existed for Peterson. Other than learning
that Alex was represented by Peterson’s prior law firm, Mary and Kay could not
provide any reason as to why this limited fact would raise a conflict.
¶32 Additionally, the fact that Peterson previously assisted Earl and Lois
with estate work does not, without more, create a conflict of interest. Mary and
Kay provide no citation to legal authority that such prior representation presented
a conflict for Peterson in this matter. Indeed, there may be some efficiencies with
attorneys who handled the estate planning representing the resulting probated
estate. Finally, there is no evidence of any relationship between Peterson’s prior
law firm and Hanaway Ross. Those are two separate law firms situated in
separate cities. Ultimately, the circuit court did not err in concluding that no
conflict of interest existed.
By the Court.—Order affirmed.
This opinion will not be published. See WIS. STAT. RULE
809.23(1)(b)5.
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