Beren v. Beren

• Decision Date: 11 May 2015
• Docket Number: Supreme Court Case No. 13SC127
• Citation: 349 P.3d 233,2015 CO 29
• Parties: Miriam BEREN and Robert Goodyear, Jr., in his capacity as Personal Representative of the Estate of Sheldon K. Beren, Petitioners and Concerning Joshua Beren, Dena Grossman, and The Estate of Cheryl Feldberger, v. David BEREN, Respondent/Cross–Petitioner: Zev Beren, Jonathan Beren, Daniel Beren, and Generation Skipping Trust and the Trustees of said trust, Respondents
• Court: Colorado Supreme Court

349 P.3d 233

2015 CO 29

Miriam BEREN and Robert Goodyear, Jr., in his capacity as Personal Representative of the Estate of Sheldon K. Beren, Petitioners

and

Concerning Joshua Beren, Dena Grossman, and The Estate of Cheryl Feldberger

v.David BEREN, Respondent/Cross–Petitioner:

Zev Beren, Jonathan Beren, Daniel Beren, and Generation Skipping Trust and the Trustees of said trust, Respondents

Supreme Court Case No. 13SC127

Supreme Court of Colorado.

May 11, 2015

Rehearing Denied June 15, 2015

Attorneys for Petitioner Miriam Beren: Hale Westfall, LLP, Richard A. Westfall, Peter J. Krumholz, Aaron Solomon, Denver, Colorado

Attorney for Petitioner Robert M. Goodyear, Jr.: Carver Schwarz McNab Kamper & Forbes, LLC, Peter C. Forbes, Denver, Colorado

Attorneys for Joshua Beren, Dena Grossman, and The Estate of Cheryl Feldberger: Sweetbaum Sands Anderson PC, Alan D. Sweetbaum, Katherine K. Kust, Denver, Colorado

Attorneys for Respondent/Cross–Petitioner David Beren: Blain Myhre LLC, Blain D. Myhre, Englewood, Colorado

Attorneys for Respondents Zev Beren and Jonathan Beren: Fairfield and Woods, P.C., Charles F. Brega, Lee Katherine Goldstein, Scott T. Rodgers, Denver, Colorado, Wade Ash Woods Hill & Farley, P.C., James R. Wade, Denver, Colorado

No appearance by or on behalf of Daniel Beren.

En Banc

Opinion

JUSTICE HOBBS delivered the Opinion of the Court.

¶ 1 We granted certiorari to consider whether, and to what extent, the Colorado Probate Code displaces a probate court's authority to award an equitable adjustment supplementing a spouse's elective share of the decedent's estate.¹ This case involves the probate court's protracted administration of an estate that, by date of final distribution, had grown in value from $73 million to more than $250 million. Concluding that it would be unfair for the elective share to be “frozen in time” while extensive litigation concerning its computation eroded its value in relation to the appreciating estate, the probate court exercised its equitable authority by supplementing the elective share. The probate court determined that the spouse was entitled to an elective share of approximately $26 million, plus an equitable award of approximately $24.5 million, based on a 17.46% rate of return on the undistributed balance of her elective share, calculated to reflect appreciation and income to the entire estate. The court of appeals reversed the trial court's decision, ruling that the Probate Code displaces a court's equitable powers in the elective-share arena as a matter of law. In re Estate of Beren, 2012 COA 203M, ¶ 21, ––– P.3d ––––, as modified on denial of reh'g (Feb. 14, 2013). The court of appeals ordered the spouse to repay the entire $24.5 million equitable award, plus restitutionary interest from the date of distribution. Id. at ¶ 143, 155–56.

¶ 2 Reading the elective-share statutes together with the probate court's equitable authority, we conclude that the Colorado Probate Code's plain language demonstrates that a particular statutory provision dealing with the spouse's elective share, section 15–11–202(1), C.R.S. (2014), fixes the value of the property comprising the augmented estate on the decedent's date of death. This specific provision controls over the general equitable authority the probate court may exercise under section 15–10–103, C.R.S. (2014). Accordingly, the probate court erred by linking its equitable award to appreciation and income to the entire augmented estate. Nevertheless, section 15–10–103 expressly reserves the probate court's equitable authority to the extent that it is not displaced by a specific statutory provision. On remand, the probate court has tools at its disposal to exercise equity consistent with the statutory elective-share framework. For example, the probate court may award interest or assess administrative expenses to take into account undue delay in distributing the elective share.

¶ 3 We affirm in part and reverse in part the judgment of the court of appeals and remand this case for further proceedings consistent with this opinion. We set aside the court of appeals' judgment requiring the spouse to repay the entire $24.5 million equitable award with interest. The probate court shall determine on remand what equitable relief is available to the spouse under the specific facts of this case. The probate court, in its discretion, may take additional evidence and argument, and may order further relief and enter a final judgment consistent with this opinion.

I.

¶ 4 Sheldon K. Beren (“Mr. Beren”) died testate in 1996. He was survived by his wife of twenty-eight years, Miriam Beren (“Mrs. Beren”); his four sons from his previous marriage, David Beren, Zev Beren, Jonathan Beren, and Daniel Beren (“the four sons”² ); two children from Miriam's previous marriage, whom Mr. Beren had adopted, Joshua Beren and Cheryl Beren Feldberger, who is now deceased; and one daughter from Sheldon and Miriam's marriage, Dena Beren Grossman. Mr. Beren was the founder and sole shareholder of the oil and gas company Berenergy Corporation, the estate's largest asset. In his will, Mr. Beren gave a life estate in most of his assets to his wife (in the form of a qualified terminable interest property trust (“QTIP trust”)) and gave the residuary estate to the seven children, leaving management of the estate to his wife and Robert Goodyear (“the personal representative”), an officer of Berenergy. Shortly after the will was admitted to probate, Mrs. Beren petitioned to take her statutory elective share in lieu of the life estate.³

¶ 5 In January 2000, Mrs. Beren petitioned the probate court to determine the value of the augmented estate⁴ and, based on that value, the amount of her elective share.⁵ The four sons objected to her proposed calculation. For the next nine years, Mrs. Beren and the four sons contested the value of the augmented estate and the consequent value of her elective share, as well as the court's proposed exercise of equity. Due to these protracted legal disputes and the fact that the estate experienced substantial earnings during the litigation, the probate court determined that it would be unjust to freeze Mrs. Beren's elective share while litigation prevented complete distribution and eroded its value in relation to the appreciating estate. Specifically, in December 2003, the court observed that “because the estate has experienced earnings during the pendency of this litigation, equity requires the Court provide Mrs. Beren an award.”

¶ 6 In June 2007, recognizing that “both the accumulation of excessive administration costs, as well as the passage of excessive time, have distorted the value of the elective share in this estate,” the probate court found that Mrs. Beren was entitled to an equitable adjustment to her elective share. The court determined that the estate was holding assets—including the spouse's elective share—that were appreciating over time and was also receiving income from its ownership of those assets. The court also determined that, but for unanticipated delay caused by persons other than herself, Mrs. Beren would have received the full balance of her elective share much earlier and would have been able to benefit from the same appreciation the estate experienced.

¶ 7 The probate court directed the personal representative to prepare dual valuations of estate appreciation and income. Specifically, in August 2009, the probate court explained that it had directed the personal representative to

determine values of the estate on May 1, 2000 and December 31, 2007 and calculate a rate of return during that period. It was the Court's intention that the calculation account for appreciation of assets and income to the estate over the selected period. The Court also intended that the calculation would result in a single sum that would be awarded to the widow to adjust for the inequities occasioned by the delays in final distribution to her of the entire elective share.

(Emphasis added.) The personal representative retained two appraisers whose methodologies had already been confirmed as reliable by the court. Relying on these expert opinions, the court adopted a 17.46% internal rate of return, compounded monthly, which it applied to the undistributed balance of Mrs. Beren's elective share between May 1, 2000, and December 31, 2007. The court awarded Mrs. Beren this equitable remedy in addition to her statutory elective share.

¶ 8 Following a hearing scheduled to facilitate quantification of the equitable adjustment, the court made specific findings supporting its exercise of equity:

[T]he decedent's children would be enriched at the expense of their mother if they were allowed to delay the distribution of the full elective share for over a decade, force distribution of cash to their mother while they took “in kind” distributions, or continually reduce the value of the elective share by increasing administrative expenses through delay and obstruction.

The probate court emphasized in its orders that “[i]t would be unfair for Mrs. Beren's share to be ‘frozen in time’ so that all of the external events over which she had no control could erode her share.” Applying “principles of equity,” the probate court determined that Mrs. Beren was entitled an equitable award of approximately $24.5 million, based on the 17.46% rate of return on the undistributed balance of her elective share, in addition to her elective share of approximately $26 million. The court allocated the equitable award pro rata against each of the seven children's shares.⁶ In 2010, after the probate court entered a final order approving the plan of distribution and closing the estate, the four sons appealed.

¶ 9 The court of appeals set aside the probate court's equitable adjustment. Estate of Beren, ¶ 14. The court acknowledged that the probate court had equitable power under section 15–10–103, to the extent that the Probate Code had not displaced such power. Id. The court nevertheless concluded that the exercise...