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Carroll v. Carroll (10/6/95), 903 P 2d 579
NOTICE: This opinion is subject to formal correction
before publication in the Pacific Reporter. Readers
are requested to bring errors to the attention of the
Clerk of the Appellate Courts, 303 K Street, Anchorage,
Alaska 99501; (907) 264-0607.
THE SUPREME COURT OF THE STATE OF ALASKA
PAULA CARROLL, )
) Supreme Court No. S-5571
) Superior Court No.
v. ) 4FA-89-320 P
DONNA CARROLL, personal ) O P I N I O N
representative of the estate )
of James A. Carroll, ) [No. 4267 - October 6, 1995]
Appeal from the Superior Court of the State
of Alaska, Fourth Judicial District,
Ralph R. Beistline, Judge.
Appearances: David T. Lyons, Seattle,
Washington, and Lance Parrish, Parrish Law
Office, Fairbanks, for Appellant. James R.
Blair and Richard W. Hompesch, Winfree and
Hompesch, Fairbanks, for Appellee.
Before: Moore, Chief Justice, Rabinowitz,
Matthews, Compton, and Eastaugh, Justices.
The two beneficiaries of the estate of James Carroll
are his wife, Donna, and his only child, Paula. Donna is the
estate's personal representative, and she attempted to sell the
estate's interests in a corporation and a partnership to James'
partner. Paula has opposed the sales, alleging that Donna agreed
to them without adequate information. The superior court refused
to block the sales. Paula now brings this appeal.
II. FACTS AND PROCEEDINGS
James Carroll and Lewis Vondra were longtime business
partners and friends. They joined together in two enterprises:
a corporation and a partnership.
The two formed a closely held Washington corporation,
Carroll-Vondra, Inc. Each owned 50% of the stock. They signed
an agreement forming the Carroll-Vondra partnership on May 1,
1968. The partnership owns properties in Alaska, Washington, and
Colorado, working interests in oil and gas leases, and various
promissory notes. The agreement states that upon the death of
one partner, the surviving partner may purchase his interest at
the appraised value.
A quitclaim deed transferred the Brown's Hill Quarry,
located near Fairbanks, from the partnership to the corporation;
the partners executed the deed in 1982, but it was not recorded
until August 27, 1991. The estate asserts that the delay was
James died intestate on July 27, 1989. He was survived
by his wife, Donna, and his daughter, Paula. Donna is the
personal representative of the estate.
A. Transfer of the Stock
Vondra offered to purchase the estate's shares in
Carroll-Vondra, Inc. for $400,000 on or about May 4, 1990. Paula
alleges that Donna discussed the offer with her, and told her
that she believed it was fair in light of the fact that the
Brown's Hill Quarry was running out, and that the quarry business
was doing poorly, largely due to insufficient demand in the
Donna filed a motion for superior court approval of the
sale of the estate's stock holdings on August 21, 1990. She also
filed an affidavit stating that she was not seeking an appraisal
because she believed Vondra's offer to be reasonable and because
she wished to avoid the administrative costs of an appraisal.
She served Paula with a copy of the motion and affidavit. Paula
did not oppose the motion for approval of the stock sale. The
superior court approved the sale on September 22, 1990, and the
sale closed in November, 1990.
Subsequently, Paula visited the Brown's Hill Quarry in
September, 1991, and observed an operation far more active than
she anticipated. She later testified, however, that she did not
know the boundaries of the Carroll-Vondra corporation's property
when she visited the quarry. On March 5, 1992, Paula moved the
superior court to set aside the stock sale.
B. Transfer of the Partnership Interest
Vondra decided to exercise his right to buy out James
Carroll's interest in their partnership, and so informed Donna in
a letter dated January 8, 1991. On July 9, 1991, Donna moved the
superior court to approve the sale of the estate's interest in
the partnership for a price of $274,049, payable over five years,
and her attorney sent a number of letters to Paula's attorney
concerning the sale. Donna obtained an "Opinion of Value,"
according to which the contemplated purchase price for the
estate's interest in the partnership was considered a fair one.
Paula eventually challenged the adequacy of the "Opinion of
Value," and Donna thereafter filed a "full appraisal" of some
On March 5, 1992, Paula filed a "Motion for Court Order
for Appraisal of Partnership Assets" together with a supporting
memorandum, in which she asserts that Vondra misrepresented the
economic health of the corporation to Donna, and that Donna's
attorney may have had a conflict of interest.2 In this
memorandum Paula argued that the partnership assets should be
subjected to a formal appraisal.
C. Subsequent Proceedings
A hearing was held before the probate master for the
purpose of resolving all pending motions. On June 2, 1992 Paula
filed a supplemental memorandum in support of her motions to set
aside the stock sale and formally appraise the partnership
The supplemental memorandum included a report by Edward
Strandberg, which set forth a much higher estimate of the value
of the Brown's Hill Quarry than Donna had. Donna then moved to
strike the report, arguing that Paula had not established
Strandberg's qualifications. Donna served this motion on Paula's
counsel. Paula did not oppose the motion.3 On July 22, 1992,
the superior court struck the Strandberg report. Paula moved for
reconsideration, without offering any supporting arguments. The
superior court denied the motion.
The probate master issued findings of fact and
recommendations on November 30, 1992, in which she found that
Paula had not presented substantial grounds for further delay,
but recommended that Paula be allowed to submit an appraisal of
previously unappraised partnership assets, and that the estate be
ordered to reimburse Paula for the appraisal if the appraisal met
certain specified requirements.4 Donna objected on the basis
that a full appraisal of the Alaska properties had been done, and
that a full appraisal of other properties would be unnecessary
Meanwhile, Paula moved the superior court to order a
distribution and inspection of estate records. She filed an
affidavit in which she stated that she desired to appraise the
partnership assets, but would be unable to do so without a
partial distribution. Donna did not oppose inspection of the
estate's records, making it unnecessary for the court to rule on
that portion of the motion.
Donna did, however, oppose the motion for distribution.
She argued that the superior court might moot the question by
departing from the probate master's recommendation.
Additionally, she argued that the request for $45,000 was
excessive, and supported by no evidence in the record. Finally,
she contended that Paula's assertions of impecuniousness were
exaggerated. She recited a litany of disbursements she had made
to Paula, including half of the first $300,000 from the stock
The superior court denied all of Paula's outstanding
motions including Paula's request to refile the Strandberg
report. It declined to provide Paula with an opportunity to
obtain her own appraisal, noting that "Paula Carroll has
presented no evidence, other than her personal speculation, that
the appraisal obtained is unrepresentative of the value of the
partnership assets."6 Two days later, it approved the sale of
the estate's partnership interest.
On Donna's motion, the superior court certified its
rulings as final judgments. Paula appeals.7
A.The Estate's Sale of Its Interest in Carroll-Vondra,
A personal representative is a fiduciary who has a duty to
act as a prudent person caring for the property of another would.
AS 13.36.075. Paula alleges that Donna violated the standard of
care by failing to require a sufficient price for the sale of the
estate's stock in Carroll-Vondra, Inc. More specifically, she
contends that (1) Donna's duty required her to obtain an
appraisal, and (2) Donna should have placed the stock on the open
market. As a result of that inaction, Paula alleges, Donna did
not know what assets the corporation possessed; specifically, she
did not know the corporation had a quarry capable of generating a
net income of $543,600 per year. She admits, however, that this
net income figure is speculative.
Donna's first response is that Paula cannot now
criticize the sale or the ruling because she did not timely
oppose Donna's motion for superior court approval of the stock
sale. She offers four sub-arguments, which amount to the same
point: Paula consented and therefore waived her right to object
to the sale of the estate's interest in the corporation.
This contention is correct. Paula protests that she
did not have full information about the corporation's assets or
their value. Nonetheless, she did know enough to raise her
objections earlier. That is, she knew that there had been no
appraisal or public offering. Her current argument is that any
personal representative who takes neither of those measures
before selling stock is negligent. The knowledge of what
measures Donna had or had not taken was enough to prompt such an
Paula waited one and one-half years after the sale
occurred to challenge it, knowing all the while there had been no
appraisal. Additionally, one of the most significant alleged
consequences of Donna's failure to have an appraisal done is
ignorance of corporate assets.8
Paula makes another argument: Donna was negligent
because she sold the stock at a price that was too low. Yet
Paula acknowledges that she does not know what the quarry is
really worth, and the probate master found that she had not
properly introduced any evidence establishing a value different
from the sale price.
Paula submitted a report to the superior court that
estimated a value that was much higher than the sale price. Yet
she did not establish the qualifications of Strandberg nor did
she object to Donna's motion to strike which was based on that
failure. Thus, we hold it was not improper for the superior
court to grant the motion to strike.9
Based upon our review of the record we hold that the
superior court did not abuse its discretion in denying Paula's
motion to set aside the estate's sale of its stock in Carroll-
Vondra, Inc. As noted above, with full knowledge that the
personal representative had not obtained an appraisal of the
corporation's assets, Paula failed to object to the superior
court's approval of the sale of the estate's stock in Carroll-
Vondra, Inc. Furthermore, Paula delayed approximately one and
one-half years after the sale received court approval before
challenging it (again with full knowledge that there had been no
appraisal). Given Paula's consistent failures to raise
objections in a timely manner, it was not an abuse of discretion
on the superior court's part to reject Paula's motion to set
aside the estate's sale of its stock in Carroll-Vondra, Inc.10
B.The Estate's Sale of Its Interest in the Partnership
In response to Paula's objections to the "Opinion of
Value," Donna obtained an analysis and ultimately a "full
appraisal" of the value of the estate's interest in the
partnership. The "Opinion of Value" considered the values of the
partnership's properties in Alaska as well as properties owned
and located in the states of Washington and Colorado. The full
appraisal was limited to just some of the partnership properties
which were located in Alaska.
Paula advances two substantive objections to the "full
appraisal" of the partnership's assets. First, she notes that
the full appraisal does not purport to evaluate the partnership
properties which are located in the states of Colorado and
Washington. Second, "both sets of property evaluations offered
by [the appraiser] assume that the 3best and highest use3 of the
partnership's real property holdings is a residential use and the
appraisals were completely silent on the property's mineral value
or commercial use."
Unlike Paula's belated attack on the superior court's
approval of the sale of the estate's stock holdings in Carroll-
Vondra, Inc., her objections to the estate's sale of its half
interest in the partnership were timely filed. Thus, we reach
the merits of the issue.
The "Opinion of Value" valued the estate's half
interest in the partnership at $290,200. This figure was
subsequently revised to $274,049 because of an error in the
computation of the original value. The "Land and Buildings"
component of the "Opinion of Value" set forth a value of
$337,048. This figure consisted of eleven "tracts" of land.
After Paula objected to the "Opinion of Value" appraisal, five of
these eleven tracts were reappraised in the "full appraisal."
The differences in valuation amounts between the
"Opinion of Value" and the "full appraisal" for these five tracts
are as follows:
Description Opinion of Value Full Appraisal Difference
Ripple11 14,600 42,200 +27,600
Plack Road12 3,000 4,200 + 1,200
Van Horn Road13 57,000 63,300 + 6,300
BFG Property14 28,000 56,250 +28,250
Fox15 63,400 80,250 +16,850
Totals: $166,000 $246,200 $80,200
Based upon our review of the record we hold that the
superior court's approval of the estate's sale of its 50%
interest in the Carroll-Vondra partnership should be set aside
We reach this disposition for the following reasons.
First, the "full appraisal" upon which the superior court relied
in approving the personal representative's motion to sell the
estate's interest in the partnership is underinclusive in that it
omitted to value the partnership's holdings in the states of
Colorado and Washington.16 Second, the "full appraisal" fails to
value four other Alaska partnership properties (tracts) which
were valued in the "Opinion of Value." Third, on this record the
qualitative differences between the values listed in the "Opinion
of Value" and those properties appraised in the "full appraisal"
can not be characterized as mere semantic differences.17
The basic duty of a personal representative is to act
in accordance with "the standards in dealing with the [estate]
assets that would be observed by a prudent man dealing with the
property of another . . . ." AS 13.36.075, AS 13.16.350. The
probate code requires the personal representative to make an
inventory and appraisement which lists the fair market value of
estate assets. AS 13.16.365. Subject to the prudent man
standard, employment of appraisers are discretionary. AS
13.16.370. The personal representative has a duty to make a
supplementary inventory and appraisement if property not included
in the original inventory comes to the personal representative's
knowledge or if the personal representative "learns that the
value or description indicated in the original inventory for any
item is erroneous or misleading." AS 13.16.375. The personal
representative is authorized to sell estate property (except in
cases of conflict of interest) without approval of the court. AS
13.16.390, AS 13.16.410(6). In general, the personal
representative can do anything that the deceased might have done,
AS 13.16.390, as long as it comports with the "prudent man"
In the present case, Donna sought approval of the sale
of the partnership assets. Over objection, the trial court
granted approval of the sale. Such approval may preclude on res
judicata or collateral estoppel grounds a subsequent claim by
Paula that the sale was in breach of the personal
representative's duties. See Gump v. Wells Fargo Bank, 237 Cal.
Rptr. 311, 322 (Cal. App. 1987) (approval of executor's account
bars on res judicata grounds subsequent claim of mismanagement).
Paula argues that Donna, as personal representative,
had a duty to properly and fully appraise all partnership assets.
She contends that Donna violated this duty, requiring that the
sale of the partnership assets be set aside.
If a duty to obtain a full formal appraisal exists, it
is founded not on any specific statutory requirement that an
appraiser be employed or that an appraisement take any particular
form, but on the more general duty of prudent management. In
this case the trial court did not address the question of whether
the sale was consistent with the prudent man standard. The
discrepancies between the original opinion of value and the
subsequent appraisal, the fact that the sale price was not
increased in line with the subsequent appraisal, and the fact
that not all of the property was covered in the subsequent
appraisal all raise questions as to whether the sale was in
accordance with the standard.
It is for these reasons that we have concluded that the
superior court's order approving the estate's sale of its
interest in the Carroll-Vondra partnership must be set aside and
the matter remanded with directions to the trial court to
specifically address whether the sale accords with the prudent
management requirement. The court may conduct supplemental
evidentiary proceedings prior to entering findings of fact and
conclusions of law on this point.
AFFIRMED in part, VACATED in part, and REMANDED for
further proceedings consistent with this opinion.
1 Donna submitted an affidavit from the partnership's CPA
stating that the corporation had been listing the quarry on
income tax returns since 1982.
2 Paula subsequently abandoned the conflict of interest
3 Her attorney does claim that there was some confusion
regarding the date of the hearing.
4 The probate master found in relevant part:
Throughout these proceedings, Paula Carroll
has waited until parties have relied on her
lack of action and then objected to the
personal representative's actions and
decisions. Her second guessing of her
mother's decisions has caused the estate
substantial expense and delay in
administration. She either believes that her
mother is "in cahoots" with Lewis Vondra and
she is likely to be cheated, or more likely
that her mother is incompetent and is "being
taken to the cleaners" by Lewis Vondra.
However, she had failed to present timely,
credible evidence that her suspicions are
5 Donna also submitted a supplemental memorandum, in
which she explained that the IRS was auditing the properties in
question and that this made another appraisal unnecessary. The
memorandum also stated that the estate's appraiser had completed
an estimate of the cost of completing a comprehensive appraisal.
6 In its order disposing of these motions the superior
court observed that
counsel for Paula Carroll made clear that Ms.
Carroll's only real objection was to the
valuation of the rock quarry property. The
deed transferring this property from the
partnership to the corporation was signed by
the decedent prior to his death but was
recorded by the corporation/Vondra after
decedent's death. The deed is valid even
though not timely recorded and the rock
quarry property was a corporate asset as of
the date of decedent's death.
7 Paula contends that this case presents only questions
of law, which this court reviews de novo. Although there are
some such questions, most of Paula's arguments go to whether
Donna breached her duty of care as personal representative. That
question is one of fact. See State v. Guinn, 555 P.2d 530
(Alaska 1976). We will not disturb the superior court's findings
of fact on the issue of breach unless the findings are clearly
Paula also argues that the superior court should not
have allowed the transfers of stock and partnership interests to
go forward. We apply an abuse of discretion standard to the
trial court's use of its equitable power. See Wheatland Cold
Storage & Meat Processing, Inc. v. Wilkins, 705 P.2d 316, 319
(Wyo. 1985) (trial court's decision whether to set aside
execution sale); North Kenai Peninsula Rd. Maintenance Serv.
Area v. Kenai Peninsula Borough, 850 P.2d 636, 639 (Alaska 1993)
(decision whether to grant or deny preliminary injunction). The
same standard applies to decisions concerning the admissibility
of evidence. See Yang v. Yoo, 812 P.2d 210, 217 (Alaska 1991).
8 Paula suggests that if, as she claims, Donna knew that
the corporation held the Brown's Hill Quarry, she concealed that
fact from Paula. This argument is odd, given that Paula explains
her delay in challenging the stock sale by stating that she did
not object to the selling price until she saw the quarry's
operations. If she did not know the quarry was a corporate
asset, it is difficult to explain her decision to oppose the
stock sale after seeing the quarry in person. Nor does Paula
allege that she requested specific information about the
corporation's assets and that Donna misled her.
9 Paula relies heavily on Strandberg's estimate
throughout her briefs. As Donna emphasizes, the Strandberg
report is not part of the record.
Paula correctly notes that a motion to strike under
Civil Rule 12(f) must be directed at a pleading. Yet there is a
more general motion to strike, for evidence or other items that
should not be in the record. See Evidence Rule 103(a)(1) (claim
of error may not be predicated upon ruling unless there was a
timely objection or motion to strike); Widmyer v. Southeast
Skyways, Inc., 584 P.2d 1 (Alaska 1978) (court should strike
expert testimony that would not be of appreciable assistance to
jury); Sylvester v. Sylvester, 723 P.2d 1253 (Alaska 1986)
(motion to strike mortgage should not have been granted because
adverse party was not given adequate opportunity to argue for
admission); Yukon Equipment, Inc. v. Gordon, 660 P.2d 428, 432
(Alaska 1983) (trial court struck expert witness from witness
The superior court also denied Paula's motion for
reconsideration and her attempt to refile the report almost four
months later. Neither of these rulings constituted an abuse of
10 For purposes of construing Alaska's version of the
Uniform Probate Code, AS 13.06.010(b) provides:
The underlying purposes and policies of AS
13.06 - AS 13.36 are to
. . . .
(3) promote a speedy and efficient system
for liquidating the estate of the decedent
and making distribution to the decedent's
successors . . . .
AS 13.16.355 provides in relevant part:
A personal representative shall proceed
expeditiously with the settlement and
distribution of a decedent's estate . . . .
11 Referred to as "Holmes Road" in the full appraisal.
12 Referred to as "Repp Road" in the full appraisal.
13 Referred to as "North Van Horn Street" in the full
14 Referred to as "Badger Road" in the full appraisal.
15 Referred to as "Old Steese Highway" in the full
16 The "Opinion of Value" values the Valliant, Washington
partnership property at $56,948. The "Opinion of Value" values
the Colorado acreage owned by the partnership at $23,750.
17 As noted in the text above as to the five tracts
appraised in the "full appraisal," this second appraisal
concluded that the partnership's interest was worth $80,200 more
than the values found in the "Opinion of Value" for the same
Regarding the methodology employed by the appraiser in
producing the "Opinion of Value," the record contains a critique
by a senior appraiser wherein it is stated in part:
I have performed a preliminary review of
the "opinions of value" . . . and am sorry to
inform you that I cannot provide a standard
appraisal review of the document. The reason
is that the provided document(s) contains
insufficient information to be considered an
appraisal by any reasonable contemporary
. . . .
Not to belabor the point, the provided
document arguably meets very few of the above
requirements and is simply not reviewable
under similarly detailed Review Appraisal
Standards. Some specific areas of concern
include . . . the following:
Apparently the appraiser did not even
inspect all of the subject properties.
No comparable sales information was
Severe discounting of property values
without any support for marketing time or
discount rates used.