Kelso v. Applington

548 P.3d 363

Gregory L. KELSO, as Personal Representative of the Estate of Karon Kelso, Plaintiff-Appellant,

v.Linda APPLINGTON, Defendant-Respondent.

Docket No. 50039

Supreme Court of Idaho, Boise, January 2024 Term.

Opinion filed: May 8, 2024

Appeal from the District Court of the Second Judicial District of the State of Idaho, Clearwater County. Gregory FitzMaurice, District Judge.

The judgment of the district court is reversed and remanded.

Silvey Law Office, Ltd., Boise, for Appellant Gregory L. Kelso. Greg Silvey argued.

Blewett Mushlitz Hally, LLP, Lewiston, for Respondent Linda Applington. Jonathan Hally argued.

MOELLER, Justice.

This appeal concerns a dispute over the ownership of funds in a joint checking account following the death of one of the parties named on the account. Karon "Kelly" Kelso (hereinafter "Kelly")¹ was originally a joint owner of a checking account with his wife, Sandra Kelso. After Sandra died in 2017, Linda Applington ("Linda"), a friend of Kelly’s, began helping Kelly process his monthly bills. In March 2018, Kelly executed a will, leaving his entire estate to his son, Greg Kelso ("Greg"). Around fourteen months later, Kelly added Linda on his checking account as a joint owner with the right of survivorship. Kelly died in July 2020. Thereafter, his son, Greg, became the personal representative and sole heir of Kelly’s estate.

Greg contacted Linda and sought to have the funds transferred to Kelly’s estate. Upon learning for the first time how the account was arranged, Linda claimed ownership of the account under the right of survivorship and declined to transfer the funds to Kelly’s estate. Thereafter, Greg, acting as personal representative, filed a multi-count complaint against Linda, including a claim to invalidate the gift under Idaho Code section 15-6-104 for lack of donative intent and other equitable claims (such as undue influence, fraud, breach of fiduciary duty, and quasi estoppel). Linda moved for summary judgment. Greg later conceded that there were no facts in the record to support the Estate’s equitable claims but argued that there remained a genuine issue of material fact as to donative intent, as required by Idaho Code section 15-6-104. The district court disagreed and granted summary judgment in favor of Linda.

Greg timely appealed to this Court. For the reasons explained below, we reverse the district court’s grant of summary judgment and remand for a jury trial. Additionally, we vacate the award of attorney fees below.

I. Factual and Procedural Background

Kelly owned a joint checking account with his wife, Sandra. Sandra had long handled the financial affairs for the couple before she died in 2017. After Sandra’s death, Kelly sought help from Linda to pay the monthly bills. Linda agreed to help Kelly and continued helping for the remainder of his life, until he passed away on July 30, 2020.

While it is undisputed that there was a previous friendship between the Applington and the Kelso families, there appears to be a dispute between the parties as to how to characterize the relationship between Kelly and Linda. As noted by the district court, "[Linda] asserts that she and her husband were close friends to [Kelly] and his wife."² Linda characterized herself as a "longtime friend" of Kelly. She testified that her husband, Gene, had known Kelly "for approximately sixty-seven (67) years." Linda also explained that she "met [Kelly Kelso] in 1980" and maintained a friendship with Kelly since then. This is supported by deposition testimony in the record.

Greg presented conflicting evidence of the relationship. While Linda characterized the relationship with Kelly as being a "longtime friend," Greg testified that Linda "wasn’t that close to my family." Greg stated he was friends with Gene Applington and conceded that both his father and mother were friends with Gene. However, he maintained that he did not believe that his father and Linda were friends. He claimed that although his father knew Linda as Gene’s wife, they did not share a personal friendship. Regardless of how we define the relationship, it is undisputed that Linda began helping Kelly process his bills after Sandra’s death in 2017.

In March 2018, Kelly executed his last will and testament. As alleged in the complaint: "[Kelly] executed a will leaving his entire estate to [Greg]. On that same date [Kelly] executed a power of attorney naming [Greg] as [Kelly’s] agent for his financial affairs." Neither the will nor the power of attorney is in the record on appeal.

On May 6, 2019, Linda’s name was added on Kelly’s checking account at Banner Bank. She was designated as a "joint owner with the right of survivorship." The addition of Linda as a joint owner took place more than a year after Kelly executed his estate planning documents. Although Greg apparently had power of attorney for his father’s financial affairs, he was not made aware of the change in the account. As explained by the district court, there was conflicting testimony concerning how Linda was added to the account:

On May 6, 2019, [Linda] became a joint owner with right of survivorship on [Kelly]’s Banner Bank account. Testimony conflicts as to how this occurred. [Linda] testified that she went into the Banner Bank in Orofino and signed the master signature card for [Kelly’s] account. Janet Overman, the bank employee who handled the transaction, testified that [Linda] signed the card outside her presence and [Kelly] brought the signed card to her.

(Citations omitted). As referenced by the district court, Linda testified in her deposition that she originally understood that Kelly added her to the account for only a limited purpose:

Q. Okay. So your belief at that point was that [Kelly] was just adding you as a signor [sic]?

A. Absolutely. Yes.

Kelly passed away on July 30, 2020. In the course of administering his father’s estate, Greg attempted to have the funds from the Banner Bank checking account, totaling approximately $140,000, transferred to Kelly’s estate.³ Both Greg and Linda were then informed by Banner Bank personnel that the account designated Linda as a joint owner with the right of survivorship. Thereafter, Linda declined Greg’s request to transfer the funds in the account to Kelly’s estate. The parties disagreed on why Linda was added to the account. Greg asserted that Linda was added for banking convenience related to the help she was providing Kelly with his bills, while Linda later maintained that she was added for the express purpose of making her a joint owner with the right of survivorship.

Greg filed a multi-count complaint against Linda, including: (1) a claim that the gift of the account under a right of survivorship failed for lack of donative intent under Idaho Code section 15-6-104(a), which requires the person claiming the gift to show by clear and convincing evidence the donor’s intent to give the account; and (2) other equitable claims for undue influence, fraud, breach of fiduciary duty, and quasi estoppel. Linda answered and demanded a trial by jury.⁴ The district court summarized the dispute as follows:

[Greg] alleges that [Linda] acted as a fiduciary to [Kelly], and breached her fiduciary duty and fraudulently convinced his father to place funds from his accounts in Wells Fargo and U.S. Bank into the account at Banner Bank and then tricked [Kelly] into making [Linda] a joint owner of the account. He alleges that the funds in the Banner Bank account belong to [Kelly’s] estate.

[Linda] alleges that Karon [Kelly] Kelso intended to gift funds remaining in his bank account to her at his death. She maintains that [Greg] has not shown that [Linda] committed fraud, a breach of fiduciary duty or quasi-estoppel as he has alleged.

Following discovery, Linda moved for summary judgment. Greg "conceded there were no facts supporting the equitable claims"; however, he still "defended his § 15-6-104(a) claim[,]" arguing that there was a genuine dispute whether Kelly had the requisite donative intent.

The district court issued a written decision granting summary judgment on the equitable claims to Linda. Greg does not challenge this decision on appeal. The district court then addressed Kelly’s section 15-6-104(a) claim, focusing on the clear and convincing evidence standard, the donative intent requirement, and the testimony of the bank employee who worked with Kelly to add Linda to the account, Janet Overman ("Overman"). Notably, while the testimony from Linda and Overman diverged on certain points, the district court ultimately found those points of conflict immaterial. The district court explained:

Gregory [Greg] Kelso argues that the evidence presented is not clear and convincing. He notes that [Linda] testified that [Kelly] wanted her name on the account so that she would be able to pay his bills if he became unable to do so. Declaration of William Jeremy Carr, Ex. B, Deposition of Applington, p. 13-14. Citing In re Chase's Est., 82 Idaho 1, 8, 848 [348] P.2d 473, 477 (1960), Greg Kelso asserts that the account was established for convenience reasons, so there is no right of survivorship.

Greg Kelso also points to conflicting testimony regarding where [Linda] signed the signature card. [Linda] testified that she signed the card in the bank, while Overman testified that [Kelly] took the card to [Linda] and he brought the signed card back to the bank. He also points to conflicting testimony regarding whether [Linda] was ever at the bank when Overman was discussing the different types of accounts with [Kelly]. These credibility issues, Greg Kelso asserts, make summary judgment improper.

These two factual issues are not material. There is no dispute that the card bears the signature[s] of both [Kelly] and [Linda]. There is no allegation that either signature was forged. How the signatures were obtained is not a material fact.

At issue here is the donative intent of [Kelly]. What [Linda] knew or whether she was present for any discussion

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