Henderson v. Henderson

974 N.W.2d 372

In the MATTER OF the ROSE HENDERSON PETERSON MINERAL TRUST DATED MARCH 26, 1987

Lyle M. Henderson, Clifford Henderson, Herbert Henderson, Emmalee McKenzie, and Dixie J. Henderson, Petitioners and Appellees

v.Dennis Henderson and James Henderson, individually and as co-trustees of the Rose Henderson Peterson Mineral Trust, Respondents and AppellantsandDonna Foreman, Patsy Gabbert, Kimber Henderson, Larry Henderson, Lyleen Henderson, and Penny Pitman, Interested Parties

No. 20210258

Supreme Court of North Dakota.

FILED MAY 12, 2022

Michael T. Andrews, Fargo, ND, for petitioners and appellees.

Tyler J. Malm (argued), and David J. Smith (on brief), Bismarck, ND, for respondents and appellants.

McEvers, Justice.

[¶1] Dennis Henderson and James Henderson, individually and as co-trustees of the Rose Henderson Peterson Mineral Trust (together the "Trustees") appeal from a judgment entered after the district court determined they paid themselves an unreasonable amount of compensation from the Trust for their duties as trustees. The court ordered the Trustees return a portion of the compensation and that all parties’ attorney fees be paid with Trust funds. We hold the questions presented in this case are not barred by the law of the case doctrine or res judicata. We also hold additional findings are required concerning application of an exculpatory provision in the Trust as well as the issue of whether the doctrine of laches applies. We retain jurisdiction and remand for additional findings under N.D.R.App.P. 35(a)(3)(B).

I

[¶2] The Trust is a testamentary trust. The settlor was Rose Henderson Peterson. She died in 1995. The Trust property consists of roughly 1,000 mineral acres in McKenzie County. Rose Henderson Peterson's thirteen grandchildren are the beneficiaries. Five of the beneficiaries are the Petitioners. The two Trustees are also beneficiaries. The terms of the Trust generally require income to be distributed to the beneficiaries and not held in trust.

[¶3] The Trust contains a provision allowing the Trustees "reasonable compensation, if demanded." Between September 2011 and March 2012, the Trustees paid themselves compensation based on 8% of the Trust income. They decreased their rate to 5% in 2012. In the years 2011 through 2013, the Trustees were compensated $46,878, $74,601, and $61,177, respectively. In 2012, one of the beneficiaries, Lyle "Rocky" Henderson, filed a petition requesting, among other relief, return of the Trustees’ compensation. In 2013, the district court denied the petition concluding the Trustees’ compensation was reasonable "under the circumstances." The judge who issued the order has retired.

[¶4] The Trustees have continued to compensate themselves based on 5% of the Trust income. In the years 2014 through 2019, the Trustees were compensated $307,547, $246,241, $110,290, $101,822, $198,856, and $131,971, respectively. The Petitioners filed the present petition in 2019. They alleged the Trustees breached fiduciary duties by paying themselves an unreasonable amount of compensation. They requested an inventory, accounting, repayment of compensation, removal of the trustees, and attorney fees.

[¶5] After an evidentiary hearing, the district court entered an order determining the Trustees breached their fiduciary duty. The court found five hours per month is "the amount a reasonable trustee would devote to administering this Trust." The court determined the compensation the Trustees received—"over one million dollars for their work as trustees in six years" was "an outrageous amount." But the court determined the breach did not require removal of the Trustees. The court held 2% of Trust income was a reasonable amount, and it ordered the Trustees to return amounts they accepted over 2% from 2014 to present. The court also ordered all parties’ attorney fees to be paid from Trust funds.

[¶6] The Trustees appeal. They claim the district court erred when it did not apply, as law of the case, the 2013 order that set 5% as reasonable compensation. The Trustees also contend an exculpatory provision in the Trust relieves them from liability, and even if it did not, the doctrine of laches bars the Petitioners’ claims.

II

[¶7] As a threshold matter, the Petitioners argue the Trustees waived their right to appeal by paying the parties’ attorney fees from Trust funds.

[¶8] A party who voluntarily satisfies a judgment generally waives his or her right to appeal from the judgment. Mr. G's Turtle Mountain Lodge, Inc. v. Roland Twp. , 2002 ND 140, ¶ 9, 651 N.W.2d 625 ; see also Lyon v. Ford Motor Co. , 2000 ND 12, ¶ 7, 604 N.W.2d 453. "Because a satisfaction of judgment extinguishes the claim, the controversy is deemed ended, leaving the appellate court with nothing to review." Lyon , at ¶ 10. See also N.D.C.C. § 28-05-10 (a civil action remains pending until final determination on appeal or expiration of the time to appeal "unless the judgment is sooner satisfied"). Satisfaction of an independent undisputed portion of a judgment does not operate as a full waiver of the right to appeal. State ex rel. Storbakken v. Scott's Electric, Inc. , 2014 ND 97, ¶¶ 7-8, 846 N.W.2d 327 (appellant that satisfied undisputed portion of judgment did not waive its right to appeal a portion of the judgment the appellant disputed). Payment of costs that are incidental to the judgment and independent of the merits of the case also will not defeat the right to appeal. Twogood v. Wentz , 2001 ND 167, ¶ 7, 634 N.W.2d 514.

[¶9] The Petitioners claim the Trustees waived their right to appeal by paying the Petitioners’ attorney fees and by accepting payment for attorney fees from the Trust. We are not persuaded. The Trustees do not challenge the award of attorney fees in this appeal. Nor have the Petitioners appealed the issue. The award of attorney fees therefore has no bearing on the merits of this appeal and consequently does not operate as a waiver. See Storbakken , 2014 ND 97, ¶¶ 7-8, 846 N.W.2d 327. Cf. Burris v. Burris , 2022 ND 67, ¶ 9, 972 N.W.2d 103 (voluntary payment of contested attorney fees resulted in waiver of the right to appeal the issue). The Trustees’ acceptance of payment for attorney fees from the Trust also does not operate as a waiver. Not every acceptance of a benefit from a judgment precludes the right to appeal. Bangen v. Bartelson , 553 N.W.2d 754, 757 (N.D. 1996). There is no waiver when "the parts of the order or judgment are separate and independent and the receipt of a benefit from one part is not inconsistent with an appeal from another.... [A]ppellate review survives the acceptance of a benefit which is not placed in jeopardy by the review sought." Id. (quoting Brunswick Corp. v. Haerter , 182 N.W.2d 852, 859 (N.D. 1971) ). We conclude the Trustees have not waived their right to appeal.

III

[¶10] The Trustees argue the district court erred when it did not apply the law of the case doctrine. They assert, based on the 2013 order determining the compensation they previously accepted was reasonable, that res judicata applies to the Petitioners’ claims and the court should have "found the co-trustees are not required to repay past compensation received for their services in administering the trust."

[¶11] The law of the case doctrine is based upon the theory of res judicata. Pennington v. Continental Res. Inc. , 2021 ND 105, ¶ 9, 961 N.W.2d 264. "The doctrine of res judicata forecloses parties from relitigating claims and issues that have been previously decided." City of Glen Ullin v. Schirado , 2020 ND 185, ¶ 6, 958 N.W.2d 155. Whether res judicata applies is a question of law fully reviewable on appeal. Lucas v. Porter , 2008 ND 160, ¶ 16, 755 N.W.2d 88 ; Ungar v. N.D. State Univ., 2006 ND 185, ¶ 10, 721 N.W.2d 16.

[¶12] The law of the case doctrine has two branches. Peoples State Bank of Truman, Inc. v. Molstad Excavating, Inc., 2006 ND 183, ¶ 12, 721 N.W.2d 43 (citing Ellis v. United States, 313 F.3d 636, 646 (1st Cir. 2002) ). The branch alleged to apply here provides that " ‘unless corrected by an appellate tribunal, a legal decision made at one stage of a civil or criminal case constitutes the law of the case through the pendency of the litigation.’ " Id. at ¶ 12 (quoting Ellis at 646 ). A successor judge should not revisit rulings previously made in the same proceedings unless "special circumstances" exist. Peoples State Bank, at ¶ 11. Whether circumstances justify revisiting a prior ruling made by another district court judge in the same proceeding is a case-specific inquiry. Id. at ¶ 13. Although a court of coordinate jurisdiction must generally respect prior rulings, res judicata does not bar litigation of the same type of claim based on different facts. See Montana-Dakota Utils. Co. v. Behm, 2020 ND 234, ¶ 8, 951 N.W.2d 208 (res judicata and the law of the case apply when "the facts remain the same").

[¶13] The law of the case doctrine does not apply in separate actions. See Riverwood Commercial Park, L.L.C. v. Standard Oil Co., Inc., 2007 ND 36, ¶ 12, 729 N.W.2d 101. The law of the case ceases to operate once a final judgment disposing of litigation is obtained. Id. On the other hand, claim preclusion, which is sometimes referred to as res judicata generally, and issue preclusion, which is sometimes referred to as collateral estoppel, are principles that prohibit relitigating matters that have been decided in a prior action between the same parties or their privies. Id. at ¶ 13.

[¶14] The district court held law of the case did not prevent consideration of the compensation percentage, because the nature of trust administration is fluid. The court found the facts had changed since the entry of the 2013 order regarding trustee compensation. The district court held "[r]es judicata and collateral estoppel do not prevent the petitioners from bringing the current petition for removal." We agree with the court's decision to analyze the preclusion issue raised by the Trustees in this way....