Charles E. Lakin Found., Inc. v. Pribil (In re Estate)
| Decision Date | 08 October 2021 |
| Docket Number | S-20-094.,Nos. S-20-093,s. S-20-093 |
| Citation | 965 N.W.2d 365,310 Neb. 271 |
| Parties | IN RE ESTATE OF Charles E. LAKIN, deceased. Charles E. Lakin Foundation, Inc., appellant, v. Thomas Pribil and William Kilzer, Copersonal Representatives of the Estate of Charles E. Lakin, appellees. In re Trust of Charles E. Lakin, deceased. Charles E. Lakin Foundation, Inc., appellant, v. Thomas Pribil and William Kilzer, Cotrustees of the Charles E. Lakin Revocable Trust, et al., appellees. |
| Court | Nebraska Supreme Court |
Zachary W. Lutz-Priefert, Frederick D. Stehlik, William J. Lindsay, Jr., and John A. Svoboda, of Gross & Welch, P.C., L.L.O., Omaha, for appellant.
Edward D. Hotz, Omaha, Amanda M. Forker, and Benjamin C. Deaver, of Pansing, Hogan, Ernst & Bachman, L.L.P., for defendants-appellees Thomas L. Pribil and William A. Kilzer.
Trenten P. Bausch, and Megan S. Wright, of Cline, Williams, Wright, Johnson & Oldfather, L.L.P., Omaha, for appellee Thomas L. Pribil in his individual capacity.
Cathy S. Trent-Vilim and Brian J. Brislen, of Lamson, Dugan & Murray, L.L.P., Omaha, for appellee William A. Kilzer, an individual.
The Charles E. Lakin Foundation, Inc., appeals from the granting of summary judgment in favor of Thomas Pribil and William Kilzer, appellees, who are the copersonal representatives of the estate of Charles E. Lakin and the cotrustees of the Charles E. Lakin Revocable Trust. The foundation contends appellees improperly paid Pribil approximately $7 million after Lakin's death. On appeal, we conclude that because Pribil failed to file a claim for the debt with the estate, appellees’ payment of the debt was not authorized. Based upon the summary judgment record before this court, we conclude that a dispute of material fact exists regarding the foundation's fiduciary duty claims against appellees as copersonal representatives and cotrustees. Therefore, we reverse, and remand for further proceedings consistent with this opinion.
Lakin amassed an estate worth approximately $170 million at the time of his death. Lakin's businesses included ownership of numerous farms in Iowa and Arizona. Lakin operated his business as Lakin Enterprises, which was not incorporated or established as a limited liability company. In 1972, Pribil began working for Lakin.
In his "Last Will and Testament," Lakin nominated Pribil and Kilzer, Lakin's grandson, to serve as copersonal representatives of his estate. Lakin executed a trust, appointed Pribil and Kilzer to serve as cotrustees of the trust, and made the trust the primary beneficiary of his will.
Lakin's son, Charles E. Lakin III (Chuck), worked for him from 1977 until 2014. Initially, Chuck was a copersonal representative and cotrustee of Lakin's estate and trust. In 2016, Lakin changed his will and trust agreement to remove Chuck from both representative positions and nominated Kilzer in his place.
Lakin named the foundation as the primary beneficiary of the trust. The trust authorized, but did not direct, the trustee to "pay or satisfy any other obligations of the Grantor's estate (including without limitation debts of the Grantor and expenses of administration of the Grantor's estate) as the Trustee in its sole discretion may deem appropriate." Further, the trust agreement gave the trustee the power to dispose of any securities or property and to make payments and allocate principal or income or any property received as a result thereof.
In 1984, Lakin wanted to increase Pribil's salary, but did not want Chuck to know. As a result, Lakin made a confidential agreement to pay Pribil deferred wages in the future. Lakin and Pribil worked together to prepare a document entitled "Promissory Note" (note) setting forth their agreed-upon terms. The note reads:
The validity of the written note is not contested. However, an alleged oral modification is contested. According to Pribil, he and Lakin orally agreed to reduce the interest rate to 6 percent annually and agreed that interest would accrue on Pribil's 60th birthday. Pribil claimed that in order to keep the agreement confidential, the note would become due upon Lakin's death. Pribil testified that interest began when he turned 60 years old in March 2007, even though he did not make a demand at that time. Pribil opined that the note was a compensation agreement for deferred wages due to him for his work with Lakin Enterprises.
Lakin died in March 2016. In April 2016, Pribil and Kilzer filed an application for informal probate of the will and informal appointment of a personal representative to administer Lakin's estate. In the application, Pribil and Kilzer stated that neither was indebted to the estate nor a creditor of the estate. During a deposition, Pribil was asked whether his statement from the application was accurate, to which he responded, "Outside of my wages, but I never — I never understood — I'm certainly not indebted, and I didn't consider myself a creditor, because wages is ongoing[.]" Pribil also characterized the debt as "an obligation of [Lakin]" and as "wages owing by the Estate."
Lakin's will, which was admitted into probate, provides, in part, "My Personal Representative shall pay all enforceable debts, unsatisfied charitable pledges, funeral expenses, costs of administration including ancillary administration, costs of safeguarding and delivering devises, and other proper charges against my estate as soon as practicable."
It is undisputed that Pribil did not file a claim in the estate proceedings. However, in April 2016, Pribil and Kilzer began discussions with their legal counsel regarding payment of the debt to Pribil. In June 2016, Pribil asked Lakin's accountant to calculate the debt. On September 26, with the consent of Kilzer but without approval from the court, Pribil paid himself $6,946,828.33 as payment due under the note, with $3,242,869.12 withheld for taxes, leaving a net payment of approximately $3.7 million. In order to make the full payment under the note, Pribil and Kilzer liquidated stocks held by the trust without a request to the court.
In May 2018, the foundation filed a petition for suspension, removal, and surcharge of the personal representatives and for appointment of successor copersonal representatives or a special administrator. At the same time, the foundation filed a petition for suspension, removal, and surcharge of the trustees and for appointment of successor cotrustees or a special fiduciary. The foundation moved to compel distribution of assets from the estate to the foundation and filed similar motions in the trust case. Pribil and Kilzer objected to the motions and, subsequently, moved for summary judgment in each case. The foundation, in turn, moved for partial summary judgment in each case. The foundation later renewed its motions to compel distribution of assets. Pribil and Kilzer filed an objection in the probate case.
On June 26, 2018, in both cases, the court held a hearing on the foundation's petitions for suspension and removal and took the matter under advisement. At the next hearing, the court informed the parties that it had not yet ruled on the matter from the previous hearing, and it advised that it would not be able to proceed that day due to new information that had come to light during the discovery process.
At a December 6, 2018, hearing, the foundation offered into evidence in the probate case the amended petitions for suspension, removal, and surcharge of copersonal representatives and appointment of successor copersonal representatives or a special...
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