| Alaska Supreme Court Opinions made Available byTouch N' Go Systems and Bright Solutions |
|
|
|
This site is possible because of the following site sponsors. Please support them with your business.
|
| Alaska Supreme Court Opinions made Available byTouch N' Go Systems and Bright Solutions |
|
|
|
|
|
This site is possible because of the following site sponsors. Please support them with your business.
|
You can search the entire site. or go to the recent opinions, or the chronological or subject indices. Dieringer v. Martin (07/03/2008) sp-6280
Notice: This opinion is subject to 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, phone (907) 264-0608, fax (907) 264-0878,
e-mail corrections@appellate.courts.state.ak.us.
THE SUPREME COURT OF THE STATE OF ALASKA
| JAMES F. DIERINGER, JR., | ) |
| ) Supreme Court No. S- 12400 | |
| Appellant, | ) |
| ) Superior Court No. 4FA-85- 113 PR | |
| v. | ) |
| ) O P I N I O N | |
| DARREL MARTIN, | ) |
| ) No. 6280 July 3, 2008 | |
| Appellee. | ) |
| ) | |
Appeal from the Superior Court of the State
of Alaska, Fourth Judicial District,
Fairbanks, Niesje J. Steinkruger, Judge.
Appearances: Cory R. Borgeson, Borgeson &
Burns, PC, Fairbanks, for Appellant. Thomas
R. Wickwire, Law Office of Thomas Wickwire,
Fairbanks, for Appellee.
Before: Fabe, Chief Justice, Matthews,
Eastaugh, and Carpeneti, Justices.
MATTHEWS, Justice.
I. INTRODUCTION
This case presents an appeal from the superior courts
modified award of attorneys fees and personal representative
fees. In a prior appeal, we concluded that the estates personal
representative, James Dieringer, breached his fiduciary duty to
the estate by engaging in self-dealing and other bad faith
conduct. We vacated awards of attorneys fees and personal
representative fees and remanded the case for the reconsideration
of fees in light of our opinion. On remand, the probate master
allowed a full evidentiary hearing spanning the history of the
estate, issued new factual findings, and recommended that the fee
awards either be reinstated to their original amounts or
increased. The superior court rejected the probate masters new
findings. The court decided that its earlier award of attorneys
fees should not be reinstated in any amount and that a reduced
personal representative fee was appropriate. The court ordered
counsel to restore the prior award of attorneys fees to the
estate. Dieringer appeals the superior courts award of fees and
the courts order that his counsel restore the prior award of
fees. We affirm.
II. FACTS AND PROCEEDINGS
We have previously set forth the relevant factual
history:
This case involves an estate that
remained open for more than seventeen years.
William Martin died in 1985. He was survived
by two children, Donna, then age fourteen,
and Darrel, then age eighteen. His will left
everything (after payment of debts and
certain expenses) in equal shares to the
children, in trust. James Dieringer
(Dieringer or PR) was the personal
representative, and with his wife Nancy
Dieringer, co-trustee of the trust.
The assets of the estate included a
house in Fairbanks, a lot on Summit Lake, a
motor home, some snowmachines, an escrow, and
some life insurance. The net value of the
estate was less than $250,000.
. . . .
By 1997 the only remaining assets of the
estate were the Summit Lake lot, which was
subject to a mortgage, and a loan Dieringer
had made to a company that he owned a half
interest in. The children agreed that Darrel
would receive the Summit Lake property and
Donna would receive more cash from the
estate. Darrel contacted Dieringer a number
of times concerning the Summit Lake property
and closing the estate. Dieringer informed
Darrel that he wanted to buy the Summit Lake
property for $15,000. Darrel had received a
substantially larger offer for the property
and was reluctant to agree to sell to
Dieringer at Dieringers price. When this
occurred Dieringer took the position that
unless [the] Summit Lake [property was] sold
to him he would charge the estate fees for
his services. Further, he stated that the
proceeds of a $50,000 life insurance policy
he and Nancy had received when William died
were actually owned by him and Nancy, that
they had merely loaned the proceeds to the
estate, and that the proceeds would have to
be repaid.[1]
Based on these facts, Darrel Martin filed a petition to
remove James Dieringer as the estates personal representative.2
Martin also instituted a separate civil action against Dieringer.3
In the removal case, the probate master recommended that the
superior court reject Martins petition and uphold Dieringers
conduct. The superior court adopted the probate masters findings
and, applying collateral estoppel, dismissed Darrels civil suit.4
Darrel appealed and we reversed both decisions. In the
removal appeal we concluded that Dieringer breached his fiduciary
duty to the estate by taking out a loan from the estate for a
company he owned an interest in (at a preferential interest rate)5
and demanding that he be allowed to purchase the Summit Lake
property for less than fair market value, threatening retaliation
if this demand was not satisfied.6 We also concluded that the
$50,000 life insurance policy was meant for the estate, not
Dieringer personally, and that Dieringer improperly asserted that
he had merely loaned the proceeds to the estate.7 Based on these
conclusions, we determined that Dieringer acted in bad faith with
regard to these issues. We vacated the superior courts award of
$16,320 in attorneys fees and $5,850 in personal representative
fees to Dieringer and remanded for reconsideration of fees in
light of our opinion.8 On the same day, we reversed the superior
courts application of collateral estoppel in Martins civil suit.9
On remand in this case the removal action Probate
Master Alicemary Closuit, deeming the case completely open again,
held a full evidentiary hearing. The master heard testimony over
the course of three days. After this hearing, the master issued
new factual findings and a recommendation regarding the personal
representative and attorneys fees. The masters new findings
covered the whole history of the case, including conduct that we
considered in our initial opinion such as the self-dealing loan,
the dispute over the Summit Lake property, and the ownership of
the insurance proceeds. The masters findings contradicted some
of the earlier findings and characterizations made by the master
that we relied on in our earlier opinion.
The master recommended that the superior court uphold
its prior award of attorneys fees and either uphold the prior
award of personal representative fees or increase them. The
master concluded that [n]othing in [Dieringers attorney and
estate representative] charges relates to any action the Supreme
Court found to be made in bad faith.
Superior Court Judge Niesje J. Steinkruger rejected the
masters findings as clearly erroneous. The court rejected the
masters recommendation concerning attorneys fees to Dieringer and
decided no fees should be awarded. The court approved Dieringers
personal representative fees in a reduced amount.
The superior court reasoned that the attorneys fees
previously awarded $16,320 were generated in defense of Martins
petition to remove Dieringer as personal representative. The
court found that Dieringers bad faith actions comprised major
issues in the removal litigation and that Dieringers defense was
not undertaken with the intent to benefit the estates
beneficiaries. The court concluded that Dieringer was entitled
to no money from the estate for his unsuccessful defense. The
court required that Dieringers law firm, Borgeson & Burns,
restore these fees to the estate.
The superior court also reduced Dieringers personal
representative fees by $1,390, to $4,460. The $1,390 comprised
fees related to preparing for and defending against Martins suit.
The court reasoned that the disallowed fees were not part of
Dieringers reasonable compensation because they were not incurred
to benefit the estate or the beneficiaries. The court ordered
Dieringer to restore $1,390 to the estate.
While the superior court initially ordered that the
excess paid by the estate be restored to the estate, its judgment
provided that the money be paid directly to Darrel Martin. The
estate was closed in May 2003, prior to the first appeal to this
court.
Dieringer moved for reconsideration; the superior court
denied his motion. He now appeals.
III. STANDARD OF REVIEW
When a superior court adopts a masters findings, those
findings become the findings of the superior court.10 We will not
set aside a superior courts findings of fact unless those
findings are clearly erroneous.11 When a superior court rejects a
masters factual findings, this court will review the rejection de
novo.12 Whether a personal representative litigated in good faith
is a question of fact.13 We use our independent judgment when
reviewing questions of law.14
IV. DISCUSSION
A. The Superior Court Properly Rejected the Probate
Masters New Findings and Recommendation.
Dieringer challenges the superior courts rejection of
the probate masters new factual findings. He also challenges the
superior courts refusal to increase his fee award on remand.
Because the probate master disregarded the law of the case
doctrine, adopted an untenable interpretation of the scope of
this courts remand order, and issued new factual findings that
were clearly erroneous, we conclude that the superior court
properly rejected the probate masters factual findings.
1. The probate masters new findings violated the law
of the case doctrine and exceeded the scope of
this courts remand order.
The probate master erred when she deemed this case
completely open again. The case did not return to her as a blank
slate. Rather, only fee issues remained.
In Wolff v. Arctic Bowl, Inc. we explained that
[t]he doctrine of the law of the case
prohibits the reconsideration of issues which
have been adjudicated in a previous appeal in
the same case. Even issues not explicitly
discussed in the first appellate opinion, but
directly involved with or necessarily
inhering in the decision will be considered
the law of the case.[15]
The law of the case is both a doctrine of economy and of
obedience to the judicial hierarchy.16 The doctrine applies to
all previously litigated issues unless there are exceptional
circumstances presenting a clear error constituting manifest
injustice.17
Before the first appeal in this case, in early 2002,
the master held a two-day hearing considering Martins removal
petition. All of the factual topics now raised on appeal were
litigated at that hearing. The master found that Dieringer had
loaned money from the estate to a business that he held an
interest in, that Dieringer had demanded that he be allowed to
buy the Summit Lake property at a price $8,000 below a third
partys offer, and that Dieringer and his wife claimed that the
insurance proceeds belonged to them personally and asserted that
they had simply loaned the proceeds to the estate. These factual
findings involved issues that were central to Martins removal
petition.
Dieringer now argues that there is new evidence
suggesting that this courts conclusions regarding the self-
dealing loan, the Summit Lake property, and the insurance
proceeds are wrong. He argues that the newly developed testimony
demonstrates that he had reasonable grounds to defend against
Martins challenges, suggesting that he defended in good faith.
He does not explain his apparent failure to present this evidence
at the initial hearing. The probate master, in her new
recommendation, likewise did not explain why this evidence was
not adduced at the original hearing. In the absence of any such
explanation, there are no exceptional circumstances to justify
departing from the law of the case doctrine.18 The probate
masters acceptance of testimony contradicting the conclusions
reached in our prior opinion was mistaken.
Moreover, the probate master ignored the scope of this
courts remand order when she allowed a hearing covering issues
that spanned the history of the estate. Our prior decision was
clear. We concluded the opinion by stating, [f]or the foregoing
reasons, we . . . REMAND this case for reconsideration of
attorneys fees and fees of the personal representative in light
of the conclusions expressed herein.19 The conclusions referred
to were that Dieringer had committed breaches of fiduciary duties
and acts of bad faith.20 We did not remand for reconsideration of
these conclusions. Rather, given these conclusions, the court
was directed to reconsider the fee awards.21 The superior court,
in its decision rejecting the probate masters recommendation,
properly recognized the scope of the remand.
2. The probate masters new factual findings were
clearly erroneous.
Apart from procedural bars to the masters new findings,
we agree with the superior court that the probate masters new
findings were clearly erroneous. Significantly, in reaching her
new factual findings the master provided no reasons for
overturning her prior findings.
In her new findings, the master briefly mentioned the
self-dealing loan, but failed to recognize that Dieringer
breached his fiduciary duty by making it.22 The master found that
Dieringer acted properly with regard to the Summit Lake property,
but not did explain why her previous findings including that
Dieringer demanded that he be allowed to purchase the property
were mistaken. Likewise the master did not explain her reasons
for suggesting that Dieringer merely comment[ed] on the insurance
proceeds when her prior findings stated that Dieringer asserted
his belie[f] that the proceeds were his. Finally, the master
changed her prior calculation of estate representative fees
increasing the amount of money she thought Dieringer was owed
without explaining why she was now adopting hourly rates for
Dieringers work that were greater than the rates she previously
used. The masters new findings leave us with a definite and firm
conviction that they are mistaken.
B. The Superior Court Did Not Err when It Disallowed
Dieringers Attorneys Fees.
Dieringer challenges the superior courts decision to
award him no money from the estate for attorneys fees he incurred
in the defense of Martins removal petition. Because we reject
Dieringers new factual arguments, we only consider his argument
that the superior court made an insufficient finding of bad faith
to justify its decision.
Alaska Statute 13.16.435 governs a personal
representatives litigation expenses. The statute provides: If
any personal representative or person nominated as personal
representative defends or prosecutes any proceeding in good
faith, whether successful or not, that person is entitled to
receive from the estate necessary expenses and disbursements
including reasonable attorney fees incurred. In Enders v. Parker
(Enders I) we explained that a personal representative . . . who
has prosecuted or defended a probate action in good faith is
entitled to recover all necessary expenses and disbursements,
regardless of whether he or she prevailed in the action.23 There
is no requirement that the litigation benefit the estate.24
We recognize that a wide array of evidence can be
considered when ascertaining whether litigation was conducted in
good faith by a personal representative.25 However, a major
factor is the presence or absence of reasonably arguable grounds
for the representatives litigation position. [T]he presence or
absence of reasonably arguable grounds creates a presumption of
good faith or lack of good faith, respectively. This presumption
can be rebutted by evidence sufficient to establish good faith or
lack thereof, as the case may be.26 Reasonably arguable grounds
do not exist merely because the estate representative survived
summary judgment or would have survived it.27 The standard for
determining whether reasonably arguable grounds existed will vary
according to what the personal representative sought to
accomplish.28
The superior courts decision to disallow attorneys fees
incurred in defending against Martins removal action is amply
supported. Martins action was for removal of the estate
representative based on his claimed misconduct. Dieringer
attempted to defend his actions. But we ultimately concluded
that Dieringer committed intentional bad faith acts.
Dieringer breached his fiduciary duties as a
trustee. He engaged in self-dealing when he
made a loan with the estate assets to a
company in which he had an interest. He
improperly, albeit equivocally, claimed that
the $50,000 life insurance proceeds were his
individually rather than as trustee, and he
engaged in self-dealing when he attempted to
purchase the Summit Lake property for less
than fair market value. The breaches were
intentional and are equivalent to bad
faith.[29]
Given this misconduct, Dieringer lacked reasonably arguable
substantive grounds to defend against the removal petition. His
conduct was not reasonably defensible.
C. The Superior Courts Decision To Reduce Dieringers
Estate Representative Fees Is Supported by the
Evidence.
Dieringer argues that the superior court erred in two
ways: by failing to increase his award of personal representative
fees and by reducing its prior award of fees. In light of our
decision that the superior courts action in reducing the fees was
justified, we have no reason to address Dieringers claim that a
larger fee should have been awarded.
Alaska Statute 13.16.430 governs compensation for
personal representatives. The statute provides in relevant part:
A personal representative is entitled to reasonable compensation
for services. While the statute does not expressly condition
compensation on the representatives good faith actions, this
requirement is encompassed by the statutes allowance for
reasonable compensation.30
The superior court vacated personal representative fees
related to preparing for and defending the removal action,
determining that these fees were not within the bounds of
reasonable compensation. While Dieringer argues that the
superior court did not explicitly find that he acted in bad
faith, the superior court stated that these fees shall be
disallowed as they were not fees incurred to benefit the estate
or the beneficiaries. More specific bad faith language can be
found in the superior courts consideration of attorneys fees,
which also denied fees related to the defense of the removal
petition, where the court explained: His defense was
unsuccessful and on the major issues, he was found to have acted
in bad faith. His actions in litigating against the beneficiary
were not actions taken with the intent to benefit the
beneficiaries.
The superior courts decision to reduce Dieringers
personal representative fees is sound. The superior court only
disallowed fees incurred after December 2000 because that was
when the bad faith defense began. Dieringers intentional bad
faith actions as representative doomed the defense on the
substantive conduct issues in the removal litigation. Reasonable
compensation does not extend to a personal representatives
unreasonable defense in removal litigation.
D. The Superior Court Did Not Err when It Ordered
Dieringers Law Firm To Return Attorneys Fees.
Dieringer challenges the order requiring his counsel to
restore to the estate the attorneys fees (in the amount of
$16,320.89) that the court had previously approved. These fees
were incurred in the defense of the removal proceedings.
In our prior opinion we ordered that the award of these
fees be vacated and remanded the case with instructions that they
be reconsidered in light of the other conclusions expressed in
our opinion.31 As already noted, the superior court decided that
no fees should be awarded for the defense of the removal
petition. We have concluded in Part B of the present opinion
that this decision was proper. Dieringers argument that we now
consider is that the court should not have ordered his counsel to
restore the fees to the estate. He claims that the order of
restoration deprived counsel of due process because they were not
parties to the litigation and were not given an opportunity to be
heard.
For purposes of this argument, we take as established
that the superior court properly declined to reinstate any
portion of the prior award of fees that we ordered vacated and
that the funds ordered restored were previously paid to counsel.
Based on these assumptions, we consider first the claim that the
restoration order should not have run against counsel because
they were not named parties.
We think that this claim lacks merit. Counsel prepared
the original request for attorneys fees. They have participated
as counsel in subsequent proceedings leading up to and including
the order of restoration. Courts have considered counsel to be
de facto parties in probate proceedings concerning attorneys fees
that are awarded to them.
By the very nature of an attorney fee
application prepared by the attorney, the
attorney is the real party in interest and is
subject to the jurisdiction of the court to
the extent the fee is later attacked.[32]
On a hearing of objections to the
confirmation of the final report of an
administrator or executor, the latters
attorney is, in the very nature of things, a
party to the proceeding and is subject to the
jurisdiction of the court whenever, and to
the extent that, his fee is attacked.[33]
Based on these authorities, we conclude that counsel may properly
be considered as de facto parties in this proceeding.
The remaining question is whether counsel had notice
and an opportunity to be heard regarding the restoration issue.
As previously stated, this court vacated the attorneys fees award
and directed that further proceedings be conducted in the
superior court to reconsider the award. Counsel fully
participated in the proceedings before this court and before the
superior court. They are charged with knowledge that any portion
of the award that was vacated and not reinstated by the superior
court would necessarily have to be repaid. As the Iowa Supreme
Court observed in Estate of Borrego:
[T]he courts authority to vacate fees carries
with it authority to enter judgment for the
return of the fee to the extent that it is
excessive. Subject to notice and the
opportunity to defend, the court may order
the attorney to return any portion of the fee
later found excessive.[34]
Counsel were given the opportunity to and did fully present the
case for a renewed award of fees. Counsel do not suggest that
different contentions would have been presented if counsel were
named parties. Under these circumstances we conclude that
counsel were accorded both notice and an opportunity to be heard.
We therefore conclude that the order of restoration does not
violate due process.
E. The Superior Court Erred in Part when It Ordered that
the Excess Fees Paid by the Estate Be Returned to
Darrel Martin.
Dieringer finally argues that the superior court erred
by not having the excess fees restored to the closed estate. He
contends that the superior courts final judgment in favor of
Darrel Martin was inconsistent with its prior order that the fees
be returned to the estate. Darrel responds that this
inconsistency is not important because he is a beneficiary of the
estate and that reopening the estate would be a wasted added
step.
In light of the fact that the estate was open for an
excessive period of time and has been closed for years, we reject
Dieringers invitation to reopen it. However, we recognize that
the estate had two beneficiaries Darrel and Donna Martin. While
the two may have an agreement covering the disposition of the
funds,35 it seems prudent to provide for the possibility that this
is not so. Therefore Donna should be added to the judgment and
she should be given notice of the award. If there turns out to
be a dispute between the Martins concerning the funds, the fact
that both are named in the judgment should not be understood as
resolving their dispute. Rather, further proceedings will have
to be conducted.
V. CONCLUSION
For the reasons stated above the judgment of the
superior court should be modified on REMAND to run in favor of
Darrel Martin and Donna Martin. As so modified, the judgment is
AFFIRMED.
_______________________________
1 Martin v. Dieringer, 108 P.3d 234, 235-36 (Alaska
2005).
2 Id. at 236.
3 Martin v. Dieringer, Mem. Op. & J. No. 1203, 2005 WL
503637, at *1 (Alaska, March 4, 2005); see also Martin, 108 P.3d
at 236. This action is ongoing.
4 See Martin, 108 P.3d at 236.
5 Id. at 237-38. The loans rate was at a savings account
rate of interest. Id. at 238.
6 Id. at 239-40.
7 Id. at 238, 240.
8 Id. at 236, 241.
9 Martin v. Dieringer, Mem. Op. & J. No. 1203, 2005 WL
503637, at *1 (Alaska March 4, 2005). While the estate was
closed prior to the appeal to our court, we determined that the
removal petition case was not moot because of the collateral
estoppel effect it had on the civil action. Martin, 108 P.3d at
236.
10 Alaska R. Civ. P. 52(a).
11 Id.
12 Sloan v. Jefferson, 758 P.2d 81, 85 (Alaska 1988).
13 Enders v. Parker (Enders II), 125 P.3d 1027, 1030-31
(Alaska 2005).
14 Id. at 1029.
15 560 P.2d 758, 763 (Alaska 1977) (internal citations
omitted).
16 See 18B Charles Alan Wright, Arthur R. Miller & Edward
H. Cooper, Federal Practice and Procedure 4478, 4478.3 (2d ed.
2002) (hereinafter Federal Practice and Procedure).
17 Petrolane Inc. v. Robles, 154 P.3d 1014, 1026 (Alaska
2007) (quoting State, Commercial Fisheries Entry Commn v.
Carlson, 65 P.3d 851, 859 (Alaska 2003)).
18 18B Federal Practice and Procedure, supra note 16,
4478, at 680-83 (discussing the impact of new evidence on the
law of the case and explaining that [e]vidence that could have
been presented earlier commonly is not considered, in keeping
with the general rules that discourage slovenly or ill-considered
approaches to the first trial).
19 Martin v. Dieringer, 108 P.3d 234, 241 (Alaska 2005).
20 Id. at 240.
21 See Petrolane Inc., 154 P.3d at 1026-27; see also
Carlson, 65 P.3d at 873-74 (observing that [s]uccessive appeals
should narrow the issues in a case, not expand them); Gaudiane v.
Lundgren, 754 P.2d 742, 744 (Alaska 1988) (When an appellate
court issues a specific mandate a trial court has no authority to
deviate from it.).
22 Martin, 108 P.3d at 238.
23 66 P.3d 11, 14 (Alaska 2003).
24 Id.
25 See Enders v. Parker (Enders II), 125 P.3d 1027, 1030
(Alaska 2005).
26 Id.
27 Id. at 1031-32.
28 Id. at 1032.
29 Martin, 108 P.3d at 240.
30 See AS 13.16.350(a) (emphasizing a personal
representatives fiduciary duty).
31 Martin, 108 P.3d at 241.
32 In re Estate of Borrego, 490 N.W.2d 833, 837 (Iowa
1992).
33 In re Petersons Estate, 123 P.2d 733, 746-47 (Wash.
1942); cf. Rose v. Alaskan Vill., Inc., 412 P.2d 503, 507-09
(Alaska 1966) (attorney permitted to appeal on inadequacy grounds
in his own name attorney fee award made to client).
34 490 N.W.2d at 836 (internal citations omitted).
35 Darrel and Donna agreed that Darrel would receive the
Summit Lake property and Donna would receive extra cash from the
estate. Martin, 108 P.3d at 236. Later, the Summit Lake property
was sold and the proceeds went into the estate. The payment to
Borgeson & Burns and Dieringer came from these funds.
 |
| Case Law Statutes, Regs & Rules Constitutions Miscellaneous |
|
