Dieringer v. Martin

• Decision Date: 03 July 2008
• Docket Number: No. S-12400.,S-12400.
• Citation: 187 P.3d 468
• Parties: James F. DIERINGER, Jr., Appellant, v. Darrel MARTIN, Appellee.
• Court: Alaska Supreme Court

187 P.3d 468

James F. DIERINGER, Jr., Appellant, v. Darrel MARTIN, Appellee.

No. S-12400.

Supreme Court of Alaska.

July 3, 2008.

Cory R. Borgeson, Borgeson & Burns, PC, Fairbanks, for Appellant.

Thomas R. Wickwire, Law Office of Thomas Wickwire, Fairbanks, for Appellee.

Before: FABE, Chief Justice, MATTHEWS, EASTAUGH, and CARPENETI, Justices.

OPINION

MATTHEWS, Justice.

I. INTRODUCTION

This case presents an appeal from the superior court's modified award of attorney's fees and personal representative fees. In a prior appeal, we concluded that the estate's personal representative, James Dieringer, breached his fiduciary duty to the estate by engaging in self-dealing and other bad faith conduct. We vacated awards of attorney's fees and personal representative fees and remanded the case for the reconsideration of fees in light of our opinion. On remand, the probate master allowed a full evidentiary hearing spanning the history of the estate, issued new factual findings, and recommended that the fee awards either be reinstated to their original amounts or increased. The superior court rejected the probate master's new findings. The court decided that its earlier award of attorney's fees should not be reinstated in any amount and that a reduced personal representative fee was appropriate. The court ordered counsel to restore the prior award of attorney's fees to the estate. Dieringer appeals the superior court's award of fees and the court's order that his counsel restore the prior award of fees. We affirm.

II. FACTS AND PROCEEDINGS

We have previously set forth the relevant factual history:

This case involves an estate that remained open for more than seventeen years. William Martin died in 1985. He was survived by two children, Donna, then age fourteen, and Darrel, then age eighteen. His will left everything (after payment of debts and certain expenses) in equal shares to the children, in trust. James Dieringer ("Dieringer" or "PR") was the personal representative, and with his wife Nancy Dieringer, co-trustee of the trust.

The assets of the estate included a house in Fairbanks, a lot on Summit Lake, a motor home, some snowmachines, an escrow, and some life insurance. The net value of the estate was less than $250,000.

....

By 1997 the only remaining assets of the estate were the Summit Lake lot, which was subject to a mortgage, and a loan Dieringer had made to a company that he owned a half interest in. The children agreed that Darrel would receive the Summit Lake property and Donna would receive more cash from the estate. Darrel contacted Dieringer a number of times concerning the Summit Lake property and closing the estate. Dieringer informed Darrel that he wanted to buy the Summit Lake property for $15,000. Darrel had received a substantially larger offer for the property and was reluctant to agree to sell to Dieringer at Dieringer's price. When this occurred Dieringer took the position that unless [the] Summit Lake [property was] sold to him he would charge the estate fees for his services. Further, he stated that the proceeds of a $50,000 life insurance policy he and Nancy had received when William died were actually owned by him and Nancy, that they had merely loaned the proceeds to the estate, and that the proceeds would have to be repaid.[¹]

Based on these facts, Darrel Martin filed a petition to remove James Dieringer as the estate's personal representative.² Martin also instituted a separate civil action against Dieringer.³ In the removal case, the probate master recommended that the superior court reject Martin's petition and uphold Dieringer's conduct. The superior court adopted the probate master's findings and, applying collateral estoppel, dismissed Darrel's civil suit.⁴

Darrel appealed and we reversed both decisions. In the removal appeal we concluded that Dieringer breached his fiduciary duty to the estate by taking out a loan from the estate for a company he owned an interest in (at a preferential interest rate)⁵ and demanding that he be allowed to purchase the Summit Lake property for less than fair market value, threatening retaliation if this demand was not satisfied.⁶ We also concluded that the $50,000 life insurance policy was meant for the estate, not Dieringer personally, and that Dieringer improperly asserted that he had merely loaned the proceeds to the estate.⁷ Based on these conclusions, we determined that Dieringer acted in bad faith with regard to these issues. We vacated the superior court's award of $16,320 in attorney's fees and $5,850 in personal representative fees to Dieringer and remanded for reconsideration of fees in light of our opinion.⁸ On the same day, we reversed the superior court's application of collateral estoppel in Martin's civil suit.⁹

On remand in this case — the removal action — Probate Master Alicemary Closuit, deeming the case "completely open again," held a full evidentiary hearing. The master heard testimony over the course of three days. After this hearing, the master issued new factual findings and a recommendation regarding the personal representative and attorney's fees. The master's new findings covered the whole history of the case, including conduct that we considered in our initial opinion such as the self-dealing loan, the dispute over the Summit Lake property, and the ownership of the insurance proceeds. The master's findings contradicted some of the earlier findings and characterizations made by the master that we relied on in our earlier opinion.

The master recommended that the superior court uphold its prior award of attorney's fees and either uphold the prior award of personal representative fees or increase them. The master concluded that "[n]othing in [Dieringer's attorney and estate representative] charges relates to any action the Supreme Court found to be made in bad faith."

Superior Court Judge Niesje J. Steinkruger rejected the master's findings as clearly erroneous. The court rejected the master's recommendation concerning attorney's fees to Dieringer and decided no fees should be awarded. The court approved Dieringer's personal representative fees in a reduced amount.

The superior court reasoned that the attorney's fees previously awarded — $16,320 — were generated in defense of Martin's petition to remove Dieringer as personal representative. The court found that Dieringer's bad faith actions comprised major issues in the removal litigation and that Dieringer's defense was not undertaken with the intent to benefit the estate's beneficiaries. The court concluded that Dieringer was entitled to no money from the estate for his unsuccessful defense. The court required that Dieringer's law firm, Borgeson & Burns, restore these fees to the estate.

The superior court also reduced Dieringer's personal representative fees by $1,390, to $4,460. The $1,390 comprised fees related to preparing for and defending against Martin's suit. The court reasoned that the disallowed fees were not part of Dieringer's reasonable compensation because they were not incurred to benefit the estate or the beneficiaries. The court ordered Dieringer to restore $1,390 to the estate.

While the superior court initially ordered that the excess paid by the estate be restored to the estate, its judgment provided that the money be paid directly to Darrel Martin. The estate was closed in May 2003, prior to the first appeal to this court.

Dieringer moved for reconsideration; the superior court denied his motion. He now appeals.

III. STANDARD OF REVIEW

When a superior court adopts a master's findings, those findings become the findings of the superior court.¹⁰ We will not set aside a superior court's findings of fact unless those findings are clearly erroneous.¹¹ When a superior court rejects a master's factual findings, this court will review the rejection de novo.¹² Whether a personal representative litigated in good faith is a question of fact.¹³ We use our independent judgment when reviewing questions of law.¹⁴

IV. DISCUSSION

A. The Superior Court Properly Rejected the Probate Master's New Findings and Recommendation.

Dieringer challenges the superior court's rejection of the probate master's new factual findings. He also challenges the superior court's refusal to increase his fee award on remand. Because the probate master disregarded the law of the case doctrine, adopted an untenable interpretation of the scope of this court's remand order, and issued new factual findings that were clearly erroneous, we conclude that the superior court properly rejected the probate master's factual findings.

1. The probate master's new findings violated the law of the case doctrine and exceeded the scope of this court's remand order.

The probate master erred when she deemed this case "completely open again." The case did not return to her as a blank slate. Rather, only fee issues remained.

In Wolff v. Arctic Bowl, Inc. we explained that

[t]he doctrine of the law of the case prohibits the reconsideration of issues which have been adjudicated in a previous appeal in the same case. Even issues not explicitly discussed in the first appellate opinion, but directly involved with or "necessarily inhering" in the decision will be considered the law of the case.[¹⁵]

The law of the case is both a doctrine of economy and of obedience to the judicial hierarchy.¹⁶ The doctrine applies to all previously litigated issues unless there are "exceptional circumstances presenting a clear error constituting manifest injustice."¹⁷

Before the first appeal in this case, in early 2002, the master held a two-day hearing considering Martin's removal petition. All of the factual topics now raised on appeal were litigated at that hearing. The master found that Dieringer had loaned money from the estate to a business that he held an interest in, that Dieringer had demanded that he be allowed to buy the Summit Lake property at a price $8,000 below a third party's offer, and...