In re Mourning

In re the Estate of: Sylvia Ann Mourning, Deceased.

No. A21-1241

Court of Appeals of Minnesota

April 18, 2022

This opinion is nonprecedential except as provided by Minn. R Civ. App. P. 136.01, subd. 1(c).

Scott County District Court File No. 70-PR-18-12182

D Clay Taylor, Taylor Fricton, P.L.L.C., Edina, Minnesota (for appellant Michael Mourning)

Court J. Anderson, Benjamin J. Hamborg, Henson & Efron, P.A. Minneapolis, Minnesota (for respondent Elizabeth Ann Bakker)

Considered and decided by Johnson, Presiding Judge; Reyes, Judge; and Cochran, Judge.

REYES JUDGE

Appellant, acting as personal representative of decedent's estate, challenges the district court's denial of his attorney-fee request. We reverse and remand.

FACTS

Sylvia Mourning (decedent) died intestate in June 2017. Decedent had three children who became her heirs: appellant Michael Mourning (Michael), Dana Mourning (Dana), and respondent Elizabeth Bakker (Elizabeth).^[1] Michael was appointed personal representative of decedent's estate. Decedent's assets included a house in St. Louis Park (the house). Elizabeth purchased the house in 1998, but it went into foreclosure after she defaulted on the mortgage in 2008. Decedent then bought the house from the bank for $153, 000. Elizabeth continued living in the house and was living there when decedent died. From 2008 until decedent's death in 2017, Elizabeth made only minor, sporadic payments to help pay for the line of credit decedent had taken out to purchase the house, and she did not contribute to decedent's payments for real-estate taxes and homeowner's insurance.

Elizabeth disagreed with Michael on how the estate should handle the disposition of the house. In May 2018, Michael told Elizabeth that the county estimated the market value of the house at $266, 200, and she could either buy it for $275, 000 or be evicted. Elizabeth rejected the offer. She claimed that, when decedent purchased the house in 2008, decedent had promised to retitle it in Elizabeth's name once Elizabeth paid decedent back for the post-foreclosure purchase. Elizabeth therefore argued that she should only pay $153, 058 to the estate for the house to account for the mortgage and real-estate taxes she owed decedent. In June 2018, Elizabeth filed a petition to determine title to the house, claiming that the district court should impose a constructive trust on the property in her favor. Michael as the personal representative opposed the petition, arguing that the house should remain part of the estate. The district court scheduled a petition hearing for March 2019.

On February 12, 2019, Elizabeth told Michael that she had agreed to purchase Dana's interest in the estate for $80, 000. The agreement contained a mutual release whereby Elizabeth and Dana agreed to release each other from all liability related to the estate. After that agreement, Elizabeth would inherit two-thirds of the estate, with Michael inheriting the other third. On that same day, Michael offered to sell his interest in the estate to Elizabeth for $100, 000, with the same release that she negotiated with Dana. Elizabeth declined his offer, stating that she did not have enough information on Michael's estate administration to take over as the personal representative or to grant a release. Elizabeth repeated her initial $153, 000 offer and asked Michael to translate his buyout proposal into a sale price for the house so the parties could negotiate. Michael did not do so.

The parties proceeded to the hearing on Elizabeth's petition. On April 26, 2019, the district court denied Elizabeth's constructive-trust claim, determining that she provided insufficient evidence that decedent intended her to obtain title to the house and that she would be unjustly enriched at the expense of the estate if it imposed a constructive trust in her favor. The district court ordered Michael to proceed with the disposition of the house as the personal representative of decedent's estate.

On May 7, 2019, Elizabeth offered to purchase the house for $250, 000. In a May 8, 2019 letter, Michael instead offered to sell it for $285, 000, plus $35, 250 in back rent. His offer also required Elizabeth "to fully release any claim she has or may have against the Personal Representative related to his administration of the estate." Elizabeth counteroffered $270, 000 without a release. Michael rejected that offer.

Elizabeth's friend G.F. offered to purchase the house on Elizabeth's behalf for $270, 000 or $285, 000 in cash, depending on whether the estate had already hired a real-estate agent. Michael told Elizabeth that he was proceeding with the sale of the house and that he would consider any offers once the house was on the market.

Elizabeth then filed a petition to remove Michael as personal representative, arguing that Michael had breached the fiduciary duties he owed to the estate by requiring a release for any liability related to his estate administration before he would sell the house to Elizabeth. The district court directed Michael to list and sell the house. Michael retained a real-estate agent who listed the house for sale. Shortly after, the real-estate agent suggested the estate sell the house to Elizabeth for $290, 000. The parties agreed and closed the cash sale of the house in September 2019.

Elizabeth continued to dispute Michael's estate administration. In December 2019, as part of the winding up of the estate administration, Michael provided a draft of the final accounting to Elizabeth. Among other things, Elizabeth objected to Michael's request for attorney fees incurred by the Taylor Fricton, PLLC, firm after February 12, 2019, arguing that those fees were not incurred in good faith.^[2] Michael rejected Elizabeth's prehearing settlement proposals. Michael also served discovery requests seeking information about Elizabeth's relationship with G.F. and her buyout of Dana's interest. The district court denied Michael's discovery requests and instructed him to submit evidence supporting his attorney-fee requests.

The district court issued its findings of fact, conclusions of law, and order on Elizabeth's objections to Michael's final accounting. The district court determined that Michael acted for his personal benefit when he began demanding a release and refused to negotiate with Elizabeth in good faith over the house sale and her final-accounting objections. The district court found that the challenged fees "could have been avoided had [Michael] simply negotiated in good faith" over the house sale instead of "demanding" a release. The district court also stated that, after the sale, Michael "continued to take actions that drove up the estate's litigation costs without offering any benefit to the estate." (Emphasis added). The district court allowed Michael to recover fees that the Taylor Fricton firm incurred before February 12, 2019, but denied his request for any fees incurred by the firm after that date.

Michael moved for amended findings or a new trial, contesting the district court's order regarding the attorney-fee issue. The district court denied his motion.^[3] This appeal follows.

DECISION

The district court abused its discretion by denying reimbursement of all attorney fees incurred by the Taylor Fricton firm after February 12, 2019.

Michael argues that the district court misapplied Minn. Stat. § 524.3-720 (2020) and that its denial of all attorney fees incurred after February 12, 2019, was overly broad. We agree and discuss each issue in turn.

We review the district court's denial of attorney fees for an abuse of discretion. In re Est. of Martignacco, 689 N.W.2d 262, 271 (Minn.App. 2004) rev. denied (Minn. Jan. 26, 2005). "A district court abuses its discretion when its decision is based on an erroneous view of the law or is inconsistent with the facts in the record." In re Stisser Grantor Tr., 818 N.W.2d 495, 508 (Minn. 2012).

A. The district court misapplied section 524.3-720 by requiring Michael to show that his actions actually benefitted the estate.

Michael, in his capacity as personal representative, sought reimbursement for attorney fees under the first sentence of section 524.3-720. Under the first sentence of section 524.3-720, "Any personal representative . . . who defends or prosecutes any proceeding in good faith, whether successful or not . . . is entitled to receive from the estate necessary expenses and disbursements including reasonable attorneys' fees incurred." A personal representative is not required to show that his actions actually benefitted the estate to recover attorney fees under the first sentence of section 524.3-720. In re Est. of Evenson, 505 N.W.2d 90, 92 (Minn.App. 1993).

In denying attorney fees to Michael, the district court first stated that, for the personal representative to receive attorney fees from the estate under section 524.3-720, "the Court must determine that the services for which the fees are sought actually benefitted the estate." It proceeded to analyze Michael's fee request under that standard, determining that he was not entitled to fees incurred after February 12 because his actions taken after that date did not benefit the estate. And in denying Michael's motion for amended findings, the district court again stated that it had "applied the appropriate legal test when determining whether the [personal representative] had acted in bad faith . . . . in applying this standard, the Court sought to determine whether the [personal representative]'s behavior actually benefitted the estate . . ."

This was error. The district court cited In re Estate of Opsahl, 448 N.W.2d 96, 102-03 (Minn.App. 1989), for the actual-benefit requirement. In Opsahl, we confirmed that a party seeking attorney fees...