Estate of Snover, In re

• Decision Date: 23 April 1996
• Docket Number: No. A-94-579,A-94-579
• Parties: In re ESTATE OF Walter SNOVER, Deceased. Merrill SNOVER and Dorothy Willnerd, Copersonal Representatives of the Estate of Walter Snover, Deceased, Appellants and Cross-Appellees, v. William G. LINE, Individually and as Former Personal Representative of the Estate of Walter Snover, Deceased, Appellee and Cross-Appellant.
• Court: Nebraska Court of Appeals

Page 341

546 N.W.2d 341

4 Neb.App. 533

In re ESTATE OF Walter SNOVER, Deceased.

Merrill SNOVER and Dorothy Willnerd, Copersonal Representatives of the Estate of Walter Snover, Deceased, Appellants and Cross-Appellees, v. William G. LINE, Individually and as Former Personal Representative of the Estate of Walter Snover, Deceased, Appellee and Cross-Appellant.

No. A-94-579.

Court of Appeals of Nebraska.

April 23, 1996.

Syllabus by the Court

1. Decedents' Estates: Appeal and Error. An appellate court reviews probate cases for error appearing on the record made in the county court.

2. Decedents' Estates: Attorney and Client. Unless restricted by the will or by an order in a formal proceeding, a personal representative is authorized to employ persons,

including attorneys, to advise or assist in the performance of administrative duties.

3. Prejudgment Interest: Claims. Prejudgment interest is recoverable when a claim is liquidated, that is, when there is no reasonable controversy as to either the plaintiff's right to recover or the amount of such recovery.

4. Prejudgment Interest: Claims. Prejudgment interest is recoverable when a claim is unliquidated if a plaintiff complies with the statutory requirements of Neb.Rev.Stat. § 45-103.02 (Reissue 1993).

5. Prejudgment Interest. Neb.Rev.Stat. § 45-103.02 (Reissue 1993) applies to all causes of action accruing on or after January 1, 1987.

6. Attorney Fees. The rule in Nebraska is that attorney fees may be recovered only when authorized by statute or when a recognized and accepted uniform course of procedure has been to allow such a recovery.

7. Attorney Fees. Neb.Rev.Stat. § 25-824 (Reissue 1995) allows a court to award reasonable attorney fees against an attorney or party who has brought or defended a civil action that alleges a claim or defense which the court determines is frivolous or made in bad faith.

8. Actions. Any doubt about whether or not a legal position is frivolous or taken in bad faith must be resolved in favor of the party whose legal position is in question.

9. Costs. The Nebraska Supreme Court has held that only such items as are prescribed by statute or expressly authorized by agreement of the parties may be taxed as costs.

10. Decedents' Estates. A personal representative is a fiduciary who is obligated to observe the standards of care applicable to trustees.

11. Decedents' Estates. A personal representative is obligated to observe the standards in dealing with assets that would be observed by a prudent man dealing with the property of another, and if the personal representative has special skills, he is under a duty to use those skills.

Appeal from the District Court for Dodge County, Robert R. Steinke, Judge, on appeal thereto from the County Court for Dodge County, Gerald E. Rouse, Judge.

Charles H. Wagner, of Edstrom, Bromm, Lindahl, Wagner & Miller, Wahoo, for appellants.

Thomas A. Grennan and Alison L. McGinn, of Gross & Welch, P.C., Omaha, for appellee.

MILLER-LERMAN, C.J., and IRWIN and MUES, JJ.

IRWIN, Judge.

I. INTRODUCTION

The successor copersonal representatives of an estate brought a surcharge action against the former personal representative. The county court awarded various damages, including a refund of the former personal representative's fees, reimbursement of interest and penalties incurred because of the former personal representative's failure to timely file an estate tax return, attorney fees incurred by the successor copersonal representatives in securing the former personal representative's removal and in bringing the surcharge action, and costs. The district court affirmed in part and reversed in part, reversing the county court's award of prejudgment interest and attorney fees and reducing the award of costs. The successor copersonal representatives appealed the district court's order, and the former personal representative cross-appealed. We affirm the decision of the district court in all regards except that portion of the decision regarding attorney fees. In that regard, we remand because we find the county court should make a finding on whether or not the former personal representative's actions in the case were frivolous.

II. BACKGROUND

This is the fourth time various aspects of this estate proceeding have been reviewed by the Nebraska appellate courts. The three previous occasions have been: In re Estate of Snover, 233 Neb. 198, 443 N.W.2d 894 (1989) (judgment of district court removing William G. Line as personal representative for estate affirmed); Line v. Rouse, 241 Neb. 779, 491 N.W.2d 316 (1992) (judgment of district court denying Line's petition for writ of prohibition as former personal representative against Judge Rouse affirmed); and State ex rel. Line v. Rouse, 241 Neb. 784, 491 N.W.2d 320 (1992) (judgment of district court denying Line's motion for writ of mandamus as former personal representative against Judge Rouse affirmed).

Walter Snover died on December 24, 1985. William G. Line was appointed personal representative of the estate on January 10, 1986, by the Dodge County Court. Line is also an attorney licensed to practice law in the State of Nebraska. Line began to carry out his duties as personal representative and collected the assets of the estate, filed an inventory, and began county, state, and federal inheritance tax determinations.

Line paid himself attorney fees of $11,600.22 and personal representative fees of $4,649. Line failed to file a federal estate tax return within the statutory period and also failed to request an extension. Merrill Snover and Dorothy Willnerd, two of the heirs of the estate, filed a request for supervised administration of the estate in the county court. On January 23, 1987, the county court entered a progression order requiring Line to complete all matters of the estate within 45 days. On May 29, a hearing was conducted, at which time Line admitted that he had not complied with the progression order and had not yet filed a federal estate tax return.

On May 12, 1987, Snover and Willnerd filed a motion in the county court to have Line removed as personal representative. The Dodge County Court denied the motion. On appeal, the district court for Dodge County reversed the county court judgment and ordered Line removed. On further appeal to the Nebraska Supreme Court, the district court judgment was affirmed. See In re Estate of Snover, supra. On August 11, 1989, the Supreme Court held that Line's failure to comply with the progression order and his failure to file the estate tax return constituted a breach of his fiduciary duty and warranted his removal as personal representative. Id.

Snover and Willnerd were appointed successor copersonal representatives on October 10, 1989. The Internal Revenue Service (IRS) determined that $35,000 in estate taxes was owed in addition to a penalty of $5,455.86 and interest of $11,451.67 for late filing. The successor copersonal representatives paid the estate taxes and penalties in February 1990.

Snover and Willnerd, as successor copersonal representatives, brought a motion to surcharge Line for damages caused to the estate by the breach of his fiduciary duty. A hearing was held on the fourth amended motion to surcharge on October 19 through 21, 1992. Snover and Willnerd asserted that Line failed to observe the standard of care applicable to personal representatives who are also attorneys, and they sought recovery of the penalty and interest assessed by the IRS for the late estate tax return, reimbursement for an unauthorized excess distribution to one of the heirs, reimbursement of the personal representative and attorney fees which Line had paid to himself and interest on the reimbursements, reasonable attorney fees incurred in the action to remove Line as personal representative, reasonable attorney fees incurred in the surcharge action, and costs incurred in the surcharge action. Line argued primarily that the county court did not have jurisdiction over the case because the allegations in the motion were more properly considered complaints of attorney malpractice. Additionally, Line argued that the statute of limitations had run and, through questioning at trial, that his actions had been authorized by the will and were therefore not the proper subject of a surcharge action.

On March 18, 1993, the county court entered a "Surcharge Action Judgment." The court made specific findings of fact and conclusions of law. The court held that Line breached his duties as personal representative and that he failed to observe the requisite standard of care for personal representatives who possess special skills. The court further held that Line's breach resulted in damage to the estate. The court granted the surcharge motion and assessed damages against Line as follows: (1) Line was ordered to reimburse the interest of $11,451.67 and penalty of $5,455.86 assessed by the IRS for the late filing of the estate tax return, (2) Line was ordered to reimburse his personal representative fees of $4,649, (3) Line was ordered to pay interest of $1,301.72 on the reimbursement of his personal representative fees, (4) Line was ordered to reimburse the estate $786.48 for the unauthorized excess distribution to one of the heirs, (5) Line was ordered to pay attorney fees of $15,385.41 incurred in the action to remove Line as personal representative, (6) Line was ordered to pay attorney fees incurred by the estate in the surcharge action in an amount determined at a later hearing to be $47,310.50, and (7) Line was ordered to pay costs incurred by the estate in the surcharge action in an amount determined at a later hearing to be $1,515.56. The court further held that attorney fees Line had paid to himself for work performed while he was personal representative were reasonable for work performed, and the court declined to surcharge Line for them.

Line appealed the county court decision to the district court for Dodge...