Spanyers v. Chess (In re Chess)

32 Neb.App. 191

995 N.W.2d 675

IN RE ESTATE OF Calvin J. CHESS, deceased.

Christine Spanyers, as Personal Representative of the Estate of Calvin J. Chess, appellee, v. Richard Chess, appellant, and Matthew Pokorny, appellee.

No. A-22-782.

Court of Appeals of Nebraska.

Filed August 29, 2023.

Thomas E. Whitmore, Omaha, of Whitmore Law Office, L.L.C., for appellant.

Julie M. Ryan and Nicole Seckman Jilek, Omaha, of Abrahams, Kaslow & Cassman, L.L.P., for appellee Christine Spanyers.

Pirtle, Chief Judge, and Moore and Arterburn, Judges.

Arterburn, Judge.

I. INTRODUCTION

Richard Chess appeals from two separate orders entered by the Douglas County Court that pertained to the administration of the estate of Calvin J. Chess, who was Richard's father. In the first order, the county court removed Richard as personal representative of the estate and appointed Christine Spanyers (Christine), Richard's half sister, as the successor personal representative. In the second order, the county court imposed a surcharge against Richard in the amount of $84,224, to be split equally between Christine and the third beneficiary of the estate. The county court also awarded Christine attorney fees and costs in connection with her filing of the petition to remove Richard as personal representative. The court denied Richard's request for attorney fees incurred during his time as personal representative of the estate.

Upon our review, we conclude that we do not have jurisdiction to review the county court's decision to remove Richard as personal representative of the estate. The court's order effectuating such removal was final and appealable,

but Richard did not appeal from the order within 30 days. We affirm, in part, the county court's decision to impose a surcharge on Richard. The amount of the surcharge should be based on Richard's failure to collect fair market rent from tenants who occupied real estate owned by the estate and for his utilizing estate funds to pay unreasonable expenses. However, the surcharge should not be based on Richard's actions regarding the stock owned by the estate. We remand the cause to the county court because we cannot discern how the county court determined the amount of surcharge to impose for the uncollected rent. The county court is directed to delineate separately the amount of the surcharge to be imposed for the uncollected rent and payment of unreasonable expenses. We affirm the court's award of attorney fees to Christine from Richard's portion of the estate proceeds, which attorney fees were incurred in connection with the litigation herein and the court's denial of Richard's request for attorney fees.

II. BACKGROUND

Calvin died intestate in October 2018. In January 2019, Richard was appointed as personal representative of Calvin's estate. It was determined that Calvin had four heirs at the time of his death: Richard; Christine; Calvin's other son, Michael Chess; and Matthew Pokorny (Matthew), the son of Calvin's deceased daughter. A few months after Calvin's death, Michael died. Pursuant to Michael's will, Richard was to inherit his entire estate. As such, Calvin's estate was to be divided as follows: 50 percent to Richard, 25 percent to Christine, and 25 percent to Matthew.

In September 2020, almost 2 years after Calvin's death, Christine filed a petition seeking the removal of Richard as personal representative of Calvin's estate, the appointment of a successor personal representative, an accounting, a surcharge against Richard, and attorney fees. In the petition, Christine alleged that Richard had failed to timely file an accurate inventory for the estate, had failed to timely pay inheritance

taxes, had failed to sell real property that was a part of the estate, had failed to keep her informed regarding the administration of the estate, and had failed to preserve all of the assets held by the estate.

On July 13, 2021, the county court held a hearing solely on the issues of whether Richard should be removed as personal representative and whether a successor personal representative should be appointed. At this hearing, Christine testified to her concerns regarding Richard's administration of the estate. Richard testified and offered other evidence to demonstrate his good faith efforts to close the estate.

On March 16, 2022, the county court entered an order removing Richard as personal representative of the estate. In the order, the court found merit to many of Christine's concerns with Richard's administration of the estate since his appointment in January 2019. First, the county court found that Richard had "failed to file an Inventory within 90 days [after his appointment], which in the Letters [of Personal Representative], he was required to do." Instead, Richard submitted an initial inventory to the county court on June 27, 2019, more than 5 months after his appointment as personal representative. He did not file a corrected, amended inventory until 15 months later, in September 2020. And, by the time of the hearing in July 2021, Richard testified that he was still working on a second amended inventory.

In its order, the county court also found that Richard had failed to file all closing documents for the estate within a year of his appointment. According to the county court, much of the delay in filing was caused by Richard's mishandling of the sale of two real properties owned by the estate, including his failure to collect fair market rent from the tenants who resided at the properties prior to their sale and by expending estate funds to repair the properties when they were both sold " ‘as is.’ " The county court also found that Richard had failed to timely file an inheritance tax worksheet, which failure subjected the estate to interest and penalties, and failed to

reasonably communicate with Christine as an heir to the estate. Based on all of these factors, the court ordered the removal of Richard as the personal representative of the estate. The court specifically declined to find that Richard's failure to diversify the estate's stock portfolio was a basis for removal. The court appointed Christine as the successor personal representative.

On July 21, 2022, the county court held another hearing. This hearing focused on whether Richard owed a surcharge to the other beneficiaries for his mishandling of the estate and whether attorney fees should be awarded either to Christine or to Richard. At this hearing, Christine presented evidence to demonstrate the amount of funds that Richard owed to the estate. She argued that Richard owed money for his failure to collect fair market rent on the two real properties owned by the estate, his failure to diversify stock owned by the estate prior to its decrease in value, and his expenditure of estate funds for unreasonable expenses.

Christine contended that a fair market rent for each of the two real properties owned by the estate was $700 per month. The same tenants who resided in the two homes at the time of Calvin's death on October 30, 2018, resided in them through sometime in November 2020, the month that Richard, acting as personal representative, closed on the sale of those houses. Thus, Christine contended that in the time between October 30, 2018, and November 2020, the estate was owed rent for each property in the amount of $17,381.10, for a total of $34,762.20. Richard's receipts indicated that he had collected only $6,500 in rent from one of the properties. He agreed that $700 per month was fair market value for rent on that house. He collected $0 in rent for the other property, even though he testified that $400 per month would be fair market value. Richard explained that the tenant who paid no rent made repairs to the two homes in exchange for living rent free. Christine did not believe that the tenant was actually completing any valuable work. As such, she argued that Richard owed a surcharge of $28,262.20 ($34,762.20 - $6,500), for

his failure to collect rent owed to the estate for the period beginning the day after Calvin's date of death. She conceded that a lesser amount would be due if the date of Richard's appointment as personal representative was utilized as the inception point.

Christine also asserted that Richard had dissipated the assets of the estate by failing to diversify stock that had been owned by Calvin and that was a part of the estate. At the time of his death, Calvin owned 11,200 shares in Century Link stock. On October 30, 2018, those shares were valued at $20.46 per share, or a total of $229,152. On February 14, 2019, Christine alerted Richard by email that the stock was then valued at $12.78 per share. Christine asked Richard to address the diminished value. She argues that had Richard sold the stock and invested the funds in an "S&P 500" index mutual fund, the value of the asset would have increased since Calvin's death, rather than decreased. Christine did admit, on cross-examination at the July 13, 2021, hearing, that Richard was unable to manage the stocks until he was appointed as the personal representative in January 2019. By the time of his appointment, the stock had already depreciated in value by approximately $5 per share. After January 2019, the stock fluctuated in value and paid some dividends. Evidence adduced at the hearing indicated that as of the date Richard was removed as personal representative (March 16, 2022), the stock was valued at $10.80 per share. Ultimately, Christine contended that but for Richard's failure to manage the stock, the "value of Century Link stock should have increased to at least $371,226.24." Christine did not provide expert testimony to support her calculation. However, in her affidavit, she arrives at this number by utilizing the value of the stock on the date of Calvin's death, then computing the dollar figure that amount would have grown to had the money been invested that day in an S&P 500 index fund. She asked that Richard be ordered...