Bowley v. Fugate (In re Estate of Bowley)

IN RE ESTATE OF GERTRUDE C. BOWLEY, DECEASED.DE. STEVEN J. BOWLEY ET AL., APPELLANTS, v. ALLEN FUGATE, PERSONAL REPRESENTATIVE OF THE ESTATE OFGERTRUDE C. BOWLEY, DECEASED, AND GARY BOWLEY, APPELLEES.

No. A-13-048

NEBRASKA COURT OF APPEALS

Filed: January 28, 2014

MEMORANDUM OPINION AND JUDGMENT ON APPEAL

NOTICE: THIS OPINION IS NOT DESIGNATED FOR PERMANENT PUBLICATION

AND MAY NOT BE CITED EXCEPT AS PROVIDED BY NEB. CT. R. APP. P. § 2-102(E).

Appeal from the County Court for Lincoln County: MICHAEL E. PICCOLO, Judge. Affirmed.

Monelle M. Beal, Patrick M. Heng, and Terrance O. Waite, of Waite, McWha & Heng, for appellants.

Katherine R. Hall, P.C., L.L.O., for appellee Allen Fugate.

Kent E. Florom, of Lindemeier, Gillett & Dawson, for appellee Gary Bowley.

INBODY, Chief Judge, and RIEDMANN, Judge.

INBODY, Chief Judge.

I. INTRODUCTION

Dr. Steven J. Bowley, Larry R. Bowley, and Loretta K. Poore, the appellants, have appealed the decision of the Lincoln County Court denying their request to remove Allen Fugate as personal representative of the estate of their mother, Gertrude C. Bowley, and denying their motion to appoint a special administrator. As required by Neb. Rev. Stat. § 30-1601(3) (Cum. Supp. 2012), a supersedeas bond hearing was held, and the county court set the bond at $15,000, which decision the appellants have also assigned as error. Gary Bowley contends that the county court erred in admitting certain exhibits into evidence over objection. For the reasons set forth herein, we affirm the decision of the county court.

II. STATEMENT OF FACTS

Gertrude was 89 years old when she died on January 19, 2010. She left behind four adult children: Steven, a doctor who lives in Phoenix, Arizona; Larry, who is retired and travels the country in his recreational vehicle; Loretta, who lives in Omaha, Nebraska; and Gary, who lived at home with Gertrude and had worked on the family farm since December 1977. Gary was Gertrude's primary caregiver during the years she was confined to a wheelchair, from 2005 until her death in 2010. Later in her life, Steven, Larry, and Loretta rarely called or visited Gertrude; only Gary remained close with Gertrude in her later years.

After Gertrude fell and broke her hip in January 2005, she became upset when her children, other than Gary, did not visit her. At that time, Gertrude decided to remove Steven and Larry as payable on death (POD) beneficiaries on certificates of deposit (CD's) and replaced Gary as the POD beneficiary on both CD's.

In 2008, Gertrude hired Fugate, a practicing Nebraska lawyer since September 1982, to prepare a durable general power of attorney on her behalf naming Gary as her attorney in fact. Gertrude was familiar with Fugate, because he had acted as Gertrude's attorney previously, having prepared Gertrude's will which had been executed in April 1998. Gertrude's will designated Fugate as the personal representative for her estate. Gertrude signed the power of attorney on December 16, 2008. Shortly thereafter, Gertrude's power of attorney was used to sell her lake house property for nearly $400,000. Gertrude placed these proceeds in a First National Bank investment agency account that she opened, making herself and Gary the owners of the account.

After Gertrude's death on January 19, 2010, Steven learned that Gary had been named as Gertrude's power of attorney. At that time, Steven informed Fugate that he had concerns about Gary's and Gertrude's mental abilities and that based upon those concerns, he felt it was inappropriate for Gary to have the power of attorney over Gertrude's estate. Steven also expressed concerns to Fugate that Gary had used the power of attorney to transfer assets to himself, and Steven requested that Fugate, as personal representative, investigate and take action to recover assets that Steven felt belonged to Gertrude's estate.

However, after Fugate refused Steven's request to act to recover assets that Steven felt belonged to Gertrude's estate, the appellants filed an action on April 19, 2012, to remove Fugate as the personal representative and sought the appointment of a special administrator. A hearing thereon was held on August 13 and October 10. The evidence adduced at trial can be divided into several categories: evidence regarding Gertrude's power of attorney; evidence regarding the CD's, including changes made to the beneficiaries and subsequent changes to the asset form; the sale of the lake house property and the proceeds therefrom; Gertrude's mental status; concerns regarding Gary; and concerns about Fugate as personal representative.

1. GERTRUDE'S POWER OF ATTORNEY

There was substantial testimony regarding the circumstances surrounding Gertrude's signing of her durable power of attorney on December 16, 2008. The December day that Gertrude signed the durable power of attorney was a very cold day. Gary drove Gertrude, who was confined to a wheelchair, to Fugate's law office. While Gary entered Fugate's office to inform him that they had arrived, Gertrude remained in the van. Due to the weather conditions,Fugate took the power of attorney documents to the van where Gertrude was waiting and met with her privately.

Fugate testified that he had several conversations with Gertrude regarding the durable power of attorney and that Gertrude stated she wanted a durable power of attorney so Gary could pay her bills, handle her financial affairs, and handle a real estate transaction that she was working on. During Fugate's discussion with Gertrude, she recognized who he was; she was oriented as to time, person, and place; and Fugate explained to Gertrude what health care power of attorney and financial power of attorney documents were, what purpose they served, and what the consequences of signing those documents were. Gertrude asked questions regarding the financial power of attorney, including whether she could still handle her own financial affairs if she was of a mind or desire to do so. Fugate informed her that the document did not take away her power to do so, but, rather, the documents simply provided that Gary could do it. Gertrude indicated that she understood, and Fugate believed that she fully understood the purpose and effect of the power of attorney, knew the nature of her estate at that time, and was satisfied with the documents. Gertrude executed both the health care power of attorney and financial power of attorney on that date with the notary and witnesses coming to the van to be present during the signing of the documents. Fugate further testified that Gary did not have any participation in procuring the power of attorney.

2. CD'S OWNED BY GERTRUDE

There was substantial testimony regarding the CD's owned by Gertrude, the change made to the POD beneficiaries of those CD's, and the changes made to the asset form of the CD's.

In 2001, Gertrude was the owner of three CD's, with each of her sons named as a POD beneficiary on one of the CD's. In February 2005, Gertrude changed the beneficiaries on two of those CD's, removing Steven and Larry as POD beneficiaries and replacing them with Gary as POD beneficiary. Thus, after February 2005, Gertrude was the owner of the three CD's with Gary as POD beneficiary on all three CD's.

These three CD's totaling $275,013.35 were liquidated into a money market account in October 2008, with Gertrude again listed as the account owner and Gary as POD beneficiary. This change in asset form was made using Gertrude's signature; the power of attorney was not used. A few months later, on December 18, $250,000 was withdrawn from the money market account in order to open an account with an investment service, which was then used to purchase a Symetra Custom 7 annuity. Gertrude remained the owner of the annuity, and Gary remained named as POD beneficiary. The annuity was opened using Gertrude's power of attorney.

Steven testified that he was not claiming that Gary used Gertrude's power of attorney to change the beneficiaries of the CD's in 2005; however, he was contending that Gary used the power of attorney to assign the proceeds to himself when the funds were invested into the annuity, that Gary used undue influence over Gertrude, or that Gertrude lacked the capacity to execute documents naming Gary as co-owner of the account. He also claimed that Fugate failed to investigate what Steven felt was Gary's inappropriate use of the power of attorney and that Fugate did not ask him any questions about the transfer of the CD's.

Fugate testified that Gertrude had expressed in conversations with him in early February 2005 that she was unhappy with her children, other than Gary, because they had not visited herafter she broke her hip in January 2005, even after she requested that they do so, which prompted her to remove Steven and Larry as POD beneficiaries of CD's that Gertrude owned. At that time, Fugate advised Gertrude that since there was a specific provision in her will concerning the CD's, that they prepare a codicil to remove that provision; however, Gertrude indicated that she was going to take care of the matter herself at the bank. Fugate testified that he did not make inquiries from Steven, Larry, or Loretta regarding the 2005 change of POD beneficiaries on the CD's because of his telephone conversation with Gertrude wherein she was "pretty clear as to what she was going to do and why she was going to do it."

As personal representative of Gertrude's estate, Fugate investigated the change of asset form of the CD's and determined that although Gertrude had moved the money from the CD's to a money market account, the ownership and beneficiary of the investment remained the same. Further, although the nature of the asset changed from a CD to a money market account in 2008, Fugate saw no reason to question Gary regarding Gertrude's state of mind at the time the transaction occurred because the ownership of the asset and the beneficiary of the asset remained unchanged since February 2005. Additionally,...