Estate of Ardell, In re, 17473-5-III

• Decision Date: 15 June 1999
• Docket Number: No. 17473-5-III,17473-5-III
• Citation: 980 P.2d 771,96 Wn.App. 708
• Court: Washington Court of Appeals
• Parties: In the Matter of the ESTATE OF Kenneth C. ARDELL, Deceased.

Page 771

96 Wn.App. 708

980 P.2d 771

In the Matter of the ESTATE OF Kenneth C. ARDELL, Deceased.

No. 17473-5-III.

Court of Appeals of Washington,

Division 3,

Panel Four.

June 15, 1999.

Sigurd B. Borgersen, James C. Hanken, Schwabe, Williamson & Wyatt, Seattle, for Appellant.

Michael R. Tabler, Schultheis & Tabler, Ephrata, for Respondent.

SCHULTHEIS, C.J.

Kenneth Ardell's Last Will and Testament entrusted the disposition of his estate to William Chatham as personal representative with unrestricted nonintervention powers. Seven and one-half years after the will was admitted to probate, one of the estate's beneficiaries filed a petition for orders revoking Mr. Chatham's letters testamentary, revoking his nonintervention powers, removing him as personal representative and compelling an accounting. Mr. Chatham filed a declaration of completion of probate the day before the hearing on the petition. The declaration stated Mr. Chatham had completed administration of the estate and signified he and his attorneys were to receive about $960,000 in fees. The trial court granted all the orders in the beneficiary's petition, appointed an attorney as successor personal representative and ordered return of any fees paid to Mr. Chatham or his attorneys. On appeal, Mr. Chatham challenges the trial court's jurisdiction to administer the estate and to remove him as personal representative. We reverse and remand for an evidentiary hearing on the issue of fees.

FACTS

Mr. Ardell died in 1990, leaving a sizable estate. His will was admitted to probate in August 1990. By the terms of the will, Mr. Ardell's two daughters were to receive no distribution from the estate because they had each accepted $350,000 before his death. Mr. Ardell also devised a condominium to good friend Marina Romary. The remainder of the estate - nearly $9,000,000 - was bequeathed to his friend and accountant, Mr. Chatham, as personal representative and trustee. In that capacity, Mr. Chatham was authorized to distribute the residue of the estate with unrestricted nonintervention powers.

In late 1990, Mr. Ardell's daughters filed petitions to interpret or invalidate the will. The daughters and the estate reached a settlement in September 1991, which the court approved in October 1991. In part, the settlement provided that the estate would distribute to each daughter an additional sum of $100,000 in cash, $100,000 in cash to each daughter's children, and $550,000 in trust to each daughter with the remainder to their children. Mr. Chatham retained control over what remained of the estate, provided he did not exercise his powers to benefit himself. In a section entitled "Attorney's fees and costs" the settlement agreement provided that each party would be responsible for their respective attorneys' fees, except that the daughters' attorneys' fees of $350,000 would be paid by the estate. The section then provided for the other parties' fees as follows:

Attorneys for the Settling Parties shall file a joint petition seeking court approval of the aforesaid as a cost of administration. Said law firm [for the daughters] shall provide justification for those fees in affidavit form, which shall be delivered to the Estate's counsel in sufficient time that the matter may be noted for consideration at the hearing on final court approval of this Settlement Agreement. The attorney's fees and costs incurred by the Executor on behalf of the Estate shall be paid as costs of administration upon application and approval of the Court. The attorney's fees and costs incurred by Marina J. Romary shall be paid by the Estate upon application to the Court and to the extent they are approved by the Court as a cost of administration.

(Emphasis added.) Each party agreed to release the others for all claims now or in the future arising out of the facts that were the subjects of the litigation. The daughters, Ms. Romary and their attorneys received the amounts due under the settlement. They do not claim they are entitled to more from the estate.

In September 1992, Mr. Chatham filed a motion for court approval of a $325,000 payment to him for "interim fees" and about $250,000 for the attorneys hired by the estate to defend the will. The superior court judge responded by letter that he was unwilling to authorize these fees on the basis of an ex parte application. Among its concerns, the court noted

[t]he fee requested by the P.R. is, on its face, shocking. The fee requested amounts to a salary in excess of $13,500 per month; that is hard to justify even if he devoted 100% of his professional life to this probate since the moment of his appointment.

The judge also expressed doubt that the attorney fees were all justified. He advised Mr. Chatham and the attorneys to appear before him and present testimony justifying the fees. By letter received in mid-October 1992, Mr. Chatham's attorney stated he had reviewed the motion for fees and had decided, considering probate was "far from being complete," to withdraw the motion and to revisit the issues when probate was completed.

Three and one-half years later, when no further court action or communication had occurred, the judge again wrote to Mr. Chatham's attorney and asked to be advised of the probate's current status. Neither Mr. Chatham nor his attorney responded to the judge's request.

Nearly two years later, in February 1998, Ms. Romary filed a petition under RCW 11.68.070 seeking revocation of Mr. Chatham's letters testamentary and his nonintervention powers, removal of him as personal representative and an accounting. She claimed Mr. Chatham had not filed annual accountings, had filed nothing regarding the settlement of inheritance and federal estate taxes and had failed to establish a trust or to account for about $6,000,000 in estate assets. The court scheduled a show cause hearing for March 20, 1998.

On March 12, Mr. Chatham filed articles of incorporation for a nonprofit corporation entitled the Kenneth Ardell Foundation. The purpose of the foundation is to foster the education and agricultural pursuits of Grant County youth. Mr. Chatham is named as the initial director and agent. He transferred $387,000 in cash and real estate valued at $455,000 from the estate to the foundation. He then filed a declaration of completion of probate on March 19, 1998, one day before the show cause hearing. The declaration stated all distributions, payments to creditors and taxes had been paid. It also declared the "fees paid or to be paid" for services to the estate include $325,000 to the personal representative, $614,568 to attorneys and $15,000 to accountants. Mr. Chatham added, "The Personal Representative believes said fees to be reasonable and does not intend to obtain Court approval of the amount of said fees or to submit an estate accounting to the Court for approval." He also filed a motion to strike Ms. Romary's petition on the grounds that she had no standing to request an accounting, she was contractually barred from making a claim against him, and she failed to set forth a prima facie case for his removal.

After the telephonic show cause hearing on March 20, the judge granted all Ms. Romary's motions and appointed attorney Michael Tabler as successor personal representative. The grounds for removing Mr. Chatham as personal representative included (1) his failure to respond to the judge's September 1992 inquiries; (2) his failure to respond to the judge's April 1996 inquiries; and (3) the appearance that he wrongfully neglected the estate in failing to distribute assets, to provide an accounting and to take any action of record for over five years. He was ordered to prepare a summary of tasks performed for the estate and attendant fees and to return any fees paid to him or the estate's attorneys or accountants. Mr. Chatham's motion for reconsideration was denied. The order denying the motion adds as additional grounds for removing Mr. Chatham "his payment of personal representative and attorney's fees in violation of RCW 11.48.210, SPR [Special Proceedings Rule] 98.12W and the Court's September 28, 1992 denial of his Motion for Approval of Personal Representative and Attorney's Fees."

Although first petitioned for discretionary review, this court accepted Mr. Chatham's appeal as a matter of right. In response to an emergency motion for a stay of the trial court's orders, the commissioner of this court granted a stay pending appeal on the condition that Mr. Chatham post a bond set by the trial court and that Mr. Tabler, the successor personal representative, be authorized to represent the interests of the estate. The superior court set a supersedeas bond of $200,000, which was challenged by Mr. Chatham. In a September 1998 ruling, the commissioner denied his motion for review of the bond amount, noting that the trial court would have waived the bond if Mr. Chatham had agreed to deliver the requested estate documents and records to Mr. Tabler. About a month after filing his appellant's brief, Mr. Chatham filed a motion on the merits to reverse pursuant to RAP 18.14. The motion was set with this appeal for consideration by the panel.

DISCUSSION

Mr. Chatham contends on appeal the trial court did not have jurisdiction or authority to remove him as personal representative or to require him to account for all fees. He argues the court lost jurisdiction over this nonintervention probate when the 1990 order of solvency was entered and insists jurisdiction was never regained.

I. Declaration of completion of probate. We first dispense with Mr. Chatham's argument that his filing of the declaration of completion of probate the day before the show cause hearing effectively closed the estate, discharged his duties as personal representative and divested the court of jurisdiction. Under RCW 11.68.110, a nonintervention estate is closed and the personal representative discharged automatically upon the filing of the declaration of...