Estate of Dahlke v. Dahlke

Decision Date25 February 2014
Docket NumberNo. S–13–0077.,S–13–0077.
PartiesThe ESTATE OF H. Kent DAHLKE, by and through its Personal Representative Susan M. JUBIE, Appellant (Plaintiff), and The Estate of Sara Westerberg Dahlke, by and through its Personal Representative Susan M. Jubie, and Susan M. Jubie, individually, Appellants (Defendants), v. Jay H. DAHLKE, Kurt M. Dahlke, Hearthside Care Center, Umpqua Homes for The Handicapped, and M. Scott McColloch, Appellees (Defendants).
CourtWyoming Supreme Court

319 P.3d 116

The ESTATE OF H. Kent DAHLKE, by and through its Personal Representative Susan M. JUBIE, Appellant (Plaintiff),
and
The Estate of Sara Westerberg Dahlke, by and through its Personal Representative Susan M. Jubie, and Susan M. Jubie, individually, Appellants (Defendants),
v.
Jay H. DAHLKE, Kurt M. Dahlke, Hearthside Care Center, Umpqua Homes for The Handicapped, and M. Scott McColloch, Appellees (Defendants).

No. S–13–0077.

Supreme Court of Wyoming.

Feb. 25, 2014.


[319 P.3d 118]


Representing Appellants: Eldon E. Silverman, Esq., of Preeo Silverman Green & Egle, P.C., Denver, Colorado; Randy L. Royal, Esq., Greybull, Wyoming.

Representing Appellees Jay H. Dahlke and Kurt M. Dahlke: Edward G. Luhm, Esq., Worland, Wyoming.


Representing Appellees Umpqua Homes for the Handicapped and Hearthside Care Center: Laurence Stinson, Stinson Law Group, P.C., Cody, Wyoming.

Representing M. Scott McColloch: No appearance.

Before KITE, C.J., and HILL, VOIGT,*BURKE, and DAVIS, JJ.

DAVIS, Justice.

[¶ 1] The Estate of J. Kent Dahlke included a checking account he held jointly with his surviving wife Sara Dahlke. There were irregularities in the administration of the estate, including failure to assure that the heirs waived a hearing on a decree of distribution, and failure to advise Sara Dahlke of her statutory elective share. Sara

[319 P.3d 119]

served as the personal representative of Kent's estate. After Sara died, her daughter Susan Jubie, acting as the subsequent personal representative of Kent's estate, the personal representative of Sara's estate, and individually, sought to set aside the decree of distribution of Kent's estate five years after it was entered and its assets were distributed to the devisees. The district court denied the requested relief. We affirm.

ISSUES PRESENTED

[¶ 2] 1. Was the decree of distribution interlocutory and therefore subject to being set aside or revised because the personal representative was never discharged and the estate was never closed?

2. Was the decree of distribution void under Wyoming Rule of Civil Procedure 60(b)(4) due to irregularities in the probate proceeding, including failure to obtain waivers of hearing and failure to advise the surviving spouse of a statutory right to an elective share?

3. Did the district court err in failing to set the decree aside because of fraud on the court or exceptional circumstances under Wyoming Rule of Civil Procedure 60(b)(6)?

4. Did the existence of a possible malpractice claim against the estate's attorney prevent the district court from setting the decree of distribution aside?

FACTS

[¶ 3] J. Kent (Kent) and Sara Westerberg Dahlke (Sara) were married in Oregon in 1987. Both had children from prior marriages. Appellees Jay H. Dahlke and Kurt M. Dahlke are Kent's adult sons, and he was also survived by another adult son and daughter. Appellant Susan Jubie is Sara's daughter.

[¶ 4] Kent owned and operated a bar called the Barge Inn in Newport, Oregon before and after he and Sara were married. He also owned other Oregon real estate, including apartments he had acquired before he married Sara. Sara was not technically employed during the marriage and therefore relied upon Kent for support, but she worked with him at the Barge Inn without set compensation.

[¶ 5] The couple moved to Greybull, Wyoming around 1999 because Kent believed the dry climate there would alleviate respiratory problems from which he suffered. The couple purchased a home which they owned as tenants by the entirety.

[¶ 6] The Dahlkes established a joint checking account at Big Horn Federal Savings Bank in Greybull in 1999. They held the account as “joint tenants with right of survivorship and not as tenants in common.” The parties used the money in the account to pay their living expenses. It was at least in part funded by payments of rent from Kent's apartments and the Barge Inn.

[¶ 7] In 2003, Kent sold some or all of the Oregon apartments, and the sales proceeds of $1,998,893.75 were deposited by wire transfer into the Big Horn Federal checking account on May 23 of that year. The couple continued to pay their living expenses from the account. Sara paid the bills and cared for Kent as his health deteriorated.

[¶ 8] Kent died at home on December 31, 2003, leaving a will he had executed in 2001. In it, he made specific bequests of $100,000 to each of his four children and to Sara's daughter, Appellant Susan Jubie. He also left $30,000 to Hearthside Care Center and $40,000 to the Umpqua Home for the Handicapped, both of which had cared for a daughter who predeceased him. He willed his tangible personal property to Sara. Sara was nominated as personal representative of the estate.

[¶ 9] The residue of Kent's estate was to be paid into a marital trust for Sara's benefit if she survived him. Sara was nominated as trustee, with Appellant Jay Dahlke to serve as successor trustee if she was unwilling or unable to serve. The marital trust was to distribute the income from the trust property to Sara as often as monthly and no less than quarterly. The trustee was authorized to invade principal as necessary for Sara's support, maintenance, and education. Upon Sara's death, the trustee was to pay all accrued and undistributed income to her estate, and to pay certain amounts from the trust

[319 P.3d 120]

principal to cover some taxes and all administrative expenses of her estate. The balance of the trust principal was then to be paid to Jay and Kurt Dahlke if they survived Sara, with the share of either who predeceased her to go to the other or to that son's issue.1

[¶ 10] Sara contacted Greybull attorney M. Scott McColloch (McColloch) about probating Kent's estate in August of 2004, about eight months after his death. At their first meeting, Sara was primarily concerned about transferring title to the parties' home. McColloch advised her that it would not be an asset of the estate because it was held in a tenancy by the entireties, and that it would only be necessary to record an affidavit of survivorship with Kent's death certificate to transfer it to her alone. He asked Sara to prepare a list of Kent's assets so that they could begin probate proceedings. When Sara did not promptly return with the list, McColloch reminded her that she needed to do so by a letter he sent in September of that same year.

[¶ 11] Sara came back to McColloch's office with a list of property some time before January 26, 2005, when the petition to probate Kent's will was filed in Big Horn County District Court. Among the assets she identified was the Big Horn Federal account, which then contained about $1,300,000.2 The parties agree that account would normally have become Sara's alone because it was held as joint tenants with a right of survivorship, and that it would not therefore have been an asset of Kent's probate estate. However, McColloch testified, subject to objections based on Wyoming's version of the Dead Man's statute,3 that Sara told him that the funds should be included in Kent's estate, even though the two discussed that the only assets subject to probate were those belonging to Kent. McColloch indicated that Sara told him that the funds were from real estate Kent owned before they were married, and that she was supposed to have placed them in a separate account in his name, but simply failed to do so. He advised her that this would not be a problem if she included the balance left in the account in the estate.

[¶ 12] The petition for probate listed the Big Horn Federal account as an asset of the estate. By then it contained $1,424,318.00. The entire estate was valued at $2,046,212.30 in the inventory, meaning that the account was by far its largest asset. Appellants point out that inclusion of the account substantially increased the statutory attorney fee.4 Sara was duly appointed personal representative of the estate.

[319 P.3d 121]

[¶ 13] The probate proceedings were by any standard irregular and did not, in alarming respects, comply with the probate code. Sara was never advised of her right to an elective share against the will under Wyo. Stat. Ann. § 2–5–101(a). Attorney McColloch applied for and was authorized his entire statutory fee on July 13, 2005, eight months before filing a final report, accounting, and petition for distribution of the estate. Sara's fee as personal representative was also authorized at that time.5 Sara never opened an account for the funds belonging to the estate, instead using the Big Horn Federal account for all disbursements. She wrote the checks for the specific bequests to the charities, Kent's surviving children, and Appellant Susan Jubie from that account about four months before the district court entered an order of final distribution authorizing these payments.

[¶ 14] A final report, accounting, and petition for distribution signed by Sara Dahlke was filed on March 9, 2006. The document indicated that the heirs had waived notice of any hearing required by Wyo. Stat. Ann. § 2–7–811(c), and that they consented to the distribution proposed in the petition. In reality, although McColloch claims to have prepared and sent the notices to the heirs, none of them returned the waivers, and they therefore could not have been attached to the petition.

[¶ 15] An order approving the final report, accounting, and decree of distribution (hereinafter decree of distribution) was entered without hearing on August 1, 2006.6 It incorrectly recited that the probate court had examined waivers of notice of hearing. The order directed the personal representative to file a petition for discharge when all estate assets had been distributed. No petition for discharge has ever been filed, and therefore no order discharging Sara as personal representative or closing the estate has ever been entered.

[¶ 16] In addition, the balance of the Big Horn Federal account was not transferred to the marital trust, and so that trust was not funded until 2008, when an ancillary probate in...

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