Estate of Rohrich, Matter of, 920245

• Decision Date: 25 February 1993
• Docket Number: No. 920245,920245
• Citation: 496 N.W.2d 566
• Parties: In the Matter of the ESTATE OF Katherine ROHRICH, Deceased. James ROHRICH and Clemens Rohrich, Appellants and Cross-Appellees, v. Joanne NOZISKA, Appellee and Cross-Appellant. Civ.
• Court: North Dakota Supreme Court

Page 566

496 N.W.2d 566

In the Matter of the ESTATE OF Katherine ROHRICH, Deceased.

James ROHRICH and Clemens Rohrich, Appellants and Cross-Appellees, v. Joanne NOZISKA, Appellee and Cross-Appellant.

Civ. No. 920245.

Supreme Court of North Dakota.

Feb. 25, 1993.

Charles D. Evans of LaRoy Baird, P.C., Bismarck, for appellants and cross-appellees.

James J. Coles of Wheeler Wolf, Bismarck, for appellee and cross-appellant.

VANDE WALLE, Chief Justice.

James Rohrich and Clemens Rohrich, as co-personal representatives of the estate of their mother, Katherine Rohrich, appealed a county court "Order Approving Second Amended Report and Final Account and Distribution" which reflected a memorandum opinion denying expenses and fees submitted by them and awarding attorney fees to Joanne Noziska. Joanne cross-appealed regarding fees paid to James and Clemens which allegedly were not related to their personal representative duties. We affirm.

Katherine Rohrich died on June 22, 1989. She was survived by four children, James Rohrich, Clemens Rohrich, Pius Rohrich, and Joanne Noziska. James, Clemens, and Pius were appointed as personal representatives of her estate. In order to avoid a creditor's claim, Pius renounced his interest in the estate on March 2, 1990, but continued to serve as a personal representative until May 2, 1990.

During the course of the estate administration, numerous conflicts developed between Joanne and her brothers. Allegations were made which included purposeful conduct by failure of the co-personal representatives to include significant estate assets in their accounting, mismanagement of the estate's tangible assets, breach of fiduciary duties, transferring estate assets to Pius despite his renunciation, and conflicts of interest because the attorney for the estate also served as the attorney for Pius.

On May 18, 1990, James and Clemens petitioned the county court to allow and approve the Final Report and Account submitted by them. Joanne resisted this motion. Judge Donovan Grenz, a judge of the County Court of Emmons County, denied the approval of the Final Report and Account due to inconsistencies in the accounting, illegal expenditures, and faulty claims. The court notified the parties that it would reconsider approval of the Final Report and Account should a proper request be made.

The case was subsequently reassigned to Judge Gail Hagerty, a judge of the County Court of Burleigh County, who was assigned to Emmons County Court for this probate matter. Judge Hagerty did not hold a hearing, but considered the record and evidence presented in front of Judge Grenz, and issued a memorandum decision on September 23, 1991. Because Pius's interests were distinct and different from those of the estate, and because he continued to act as a personal representative and be advised by the same attorney who advised the estate, the court found that close scrutiny of his dealings with the estate was necessary.

In the memorandum opinion, Judge Hagerty considered a $5,000.00 claim which Pius submitted to the estate for the management of Katherine's farming and ranching operation for work done between July 1988 and May 1990. Because Katherine died in June 1989, the court determined that approximately half the claim was for work done prior to her death. The court found that a claim for the pre-death portion was not properly submitted to the estate, so the court allowed only $2,500.00 of the $5,000.00 claim. Similarly, Pius made a claim against the estate for parts and materials purchased in relation to Katherine's business prior to her death, and the court refused the claim because it was not properly presented to the estate.

Next, the court considered the issue of whether James and Clemens should be paid their personal representative fees. Joanne objected to the payment of fees on the grounds that James and Clemens breached their fiduciary duty to the estate. The court found that, to the estate's detriment and despite Pius's renunciation, James and Clemens had endeavored to allow Pius to benefit from their administration of the estate through a number of methods. First, James and Clemens had allowed for the payment of several claims which the court concluded were not properly documented. Second, the court found that Farm Credit Services stock worth $8,815.00 was not filed in the Final Report and Account which James and Clemens knew was a part of the estate. Both Pius and James testified they knew nothing about the amount of money they would receive from the stock. However, they also suggested that Pius was entitled to one-half of its proceeds, but that Pius would "consent" to have the payments divided equally between James, Clemens, and Joanne if she would accept an estate settlement offered by James and Clemens. Nothing in the record suggests there was ever any proof substantiating the allegation that Pius was to receive one-half of the stock payment, but arguments were nonetheless made that Pius should benefit because he had renounced his interest in the estate. The court found that because the personal representatives attempted to allow claims which were not properly documented and avoided including assets in the estate in order to benefit Pius, they violated their fiduciary duty to the estate.

The court also recognized the legal fees incurred by Joanne in her efforts to force James and Clemens to properly administer the estate. The court stated that it would consider requiring some part of those fees be paid by the estate because, without such intervention, it was clear to the court that the estate would not have been properly administered.

In an order issued on November 5, 1991, Judge Hagerty held that Pius be paid $2,500.00 for management costs incurred after Katherine's death, but denied him the bill for materials and supplies incurred prior to her death. The court denied James and Clemens any additional personal representative fees beyond those allowed by Judge Grenz, and awarded attorney fees to Joanne to be paid by the estate.

James and Clemens raise two issues on appeal: (1) that inclusion of payments to Pius did not constitute a breach of their fiduciary duty, and (2) that the award of Joanne's attorney fees was an abuse of discretion. Joanne counterclaimed on the issue that the court erred in allowing any fees to James and Clemens for services not related to their personal representative services.

I. Breach of Fiduciary Duty

A finding of a breach of a fiduciary duty is a finding of fact. Black v. Peterson, 442 N.W.2d 426 (N.D.1989); Cudworth v. Cudworth, 312 N.W.2d 331 (N.D.1981); In re Estate of Mehus, 278 N.W.2d 625 (N.D.1979); Slope County v. Consolidation Coal Co., 277 N.W.2d 124 (N.D.1979). We will not set aside a trial court's findings of fact unless they are clearly erroneous. Rule 52(a), NDRCivP; Mehus, supra. A finding of fact is "clearly erroneous" only when, although there is some evidence to support it, the reviewing court on the entire evidence is left with a definite and firm conviction that a mistake has been made. Rule 52(a), NDRCivP; Mehus, supra; In re Estate of Elmer, 210 N.W.2d 815 (N.D.1973).

The finding of a breach of fiduciary duty owed to the estate by James and Clemens was made after an extensive factual analysis of the evidence presented to the court. ¹ There is clear evidence that James and Clemens attempted to enrich Pius at the estate's expense. We find nothing clearly erroneous with the trial court's finding, and we affirm on this matter.

II. Statutory Basis for Attorney Fees

The court found that some of Joanne's attorney fees should be paid by the estate because it was "clear the estate would not have been properly administered" without Joanne's intervention. James and Clemens contend that the court abused its discretion by awarding the fees.

The court did not specify the authority to award attorney fees. Although Rule 54, NDRCivP, and Title 32, NDCC, do not require that the court cite to statutes, rules, or case law when entering orders or judgments, it is helpful to the appellate process if it does so. Hieb v. Jelinek, 497 N.W.2d 88 (N.D.1993). Therefore, in order to determine the propriety of an award of attorney fees, we must first determine the statutory basis for the award. ²

In probate proceedings, fees may be allowed pursuant to section 30.1-18-20, NDCC, ³ which reads:

"If any personal representative or person nominated as personal representative defends or prosecutes any proceeding in good faith, whether successful or not, he is entitled to receive from the estate his necessary expenses and disbursements, including reasonable attorneys' fees incurred."

Relying on this statute, we have held that a personal representative is entitled to compensation from the estate for reasonable attorney fees incurred in defending or prosecuting a proceeding in good faith. In re Estate of Flaherty, 484 N.W.2d 515 (N.D.1992); In re Estate of O'Connell, 476 N.W.2d 8 (N.D.1991). In considering the award of attorney fees, the county court stated in its Memorandum Decision and Order, "The Court will consider requiring that some part of those fees be paid by the estate, since without such intervention, it is clear the estate would not have been properly administered." In interpreting an award of attorney fees under this statute, we have held that attorney fees may be awarded in some circumstances if the action "benefited the estate," Flaherty, supra; In re Estate of Honerud, 326 N.W.2d 95 (N.D.1982). We therefore assume that the court used this statute as a basis for the award of attorney fees. The question before us, then, is whether an attorney who is employed by a beneficiary of a will can recover attorney fees from the estate pursuant to section 30.1-18-20, NDCC.

Very few North Dakota cases have specifically dealt with whether attorney fees are recoverable by someone other than attorneys for the personal representative. Those which have, generally allow...