Guardianship of Adamec, Matter of
| Decision Date | 28 July 1983 |
| Docket Number | No. 49402-9,49402-9 |
| Citation | 100 Wn.2d 166,667 P.2d 1085 |
| Parties | In the Matter of the GUARDIANSHIP OF Cora ADAMEC, An Incompetent. |
| Court | Washington Supreme Court |
Kleist & Davis, Inc., P.S., Donald K. Davis, Seattle, for appellant.
Bogle & Gates, E. McDuff Archibald, Seattle, for respondent.
Eldon W. Anderson, Seattle, pro se.
John Ranquet, Seattle, administrator.
The personal representative of Cora Adamec and Shriners' Hospitals for Crippled Children, Inc., appeal the dismissal of their CR 60(b) motion to vacate an order confirming a sale of real property.
At the center of the dispute before us is the sale of a piece of real property by a client to her attorney. The sale was subsequently confirmed by the Superior Court in guardianship proceedings initiated by the attorney. The order of confirmation was entered after the court had appointed a guardian ad litem to investigate the transaction, and after the guardian ad litem reported to the court that the attorney had paid a reasonable price for the property. The issue before us is whether this order of confirmation should be vacated upon timely motion under CR 60(b). We hold that no grounds for vacation of the motion have been established, and accordingly we affirm the trial court.
Appellants in this joint appeal are Eldon Anderson, administrator de bonis non with will annexed for the Estate of Cora Adamec (Administrator), and the Shriners' Hospitals for Crippled Children (Shriners), principal beneficiary under the will of Cora Adamec. Respondent is a Seattle attorney, H. Joel Watkins.
In December 1976, Cora Adamec sold to her attorney, Watkins, a houseboat moorage on Lake Union. In March 1980, this sale was confirmed by an order of the Superior Court. This order of confirmation was challenged by Shriners and the Administrator, who in January 1981 jointly moved the court to vacate the order of confirmation. The court denied the motion and Shriners and the Administrator appealed. Watkins has cross-appealed from the trial court's denial of appraisal fees incurred in responding to the motion of the Shriners and the Administrator.
Watkins was for many years both attorney for and close friend of Mr. and Mrs. Adamec. He met Joseph Adamec in 1940 when both were employed by the Alaska Steamship Company on the SS Columbian. Watkins left his employment with the steamship company to study law and in 1949 was admitted to practice in this state. He met Mrs. Adamec in 1949 when he began to perform legal services for the Adamecs. Over the ensuing years, Watkins intermittently performed a variety of legal services for Adamecs, and a close friendship developed between Watkins and the Adamecs.
The Adamecs lived for many years on the Lake Union moorage property, which comprised 120 feet of lakefront and three houseboats. They derived income from renting the houses and moorage sites on the property.
In May 1973, Joseph Adamec died. Subsequently, Watkins drafted a new will for Mrs. Adamec, in which she named Watkins her executor. The primary beneficiaries of this will were the Shriners. In October 1974, Mrs. Adamec executed a durable power of attorney (pursuant to RCW 11.94.010) which designated Watkins as her attorney in fact, with power to act on her behalf if she subsequently became disabled or incompetent.
In December 1976, Mrs. Adamec was hospitalized for treatment of an infection of one of her toes. On December 30, 1976, while in the hospital, she executed a contract for the sale to Watkins of real property, a leasehold interest, and other personal property. Under this contract, Watkins agreed to purchase the Lake Union waterfront for $70,000; a floating moorage and storage shed for $1,500; and a floating home for $5,700. The contract also granted an option to purchase either or both of two floating homes moored at the property. The contract reserved for Mrs. Adamec a limited estate in the property for so long as she should "maintain or occupy [the property] as her principal and sole residence". She was entitled to all profits from the property for the duration of her limited interest.
Pursuant to the contract, Watkins made a $500 down payment on the property. The balance of the purchase price was to be paid as follows: $200 a month for the duration of Mrs. Adamec's limited interest, and, when that limited interest terminated, a balloon payment of $5,000 and monthly payments of $600.
On January 4, 1977, Mrs. Adamec signed a statutory warranty deed which, pursuant to the real estate contract, was to be held in escrow pending payment in full of the purchase price. According to Watkins, this contract was the culmination of Mrs. Adamec's plan, developed over 2 years, to provide herself with security in her declining years and relieve her from the burden of managing the property. Watkins participated in the transaction in his capacity as her friend and pursuant to her specific wishes.
Following her hospitalization in December 1976, Mrs. Adamec's physical condition deteriorated. She returned briefly to the moorage property in January 1977, after the infection in her toe was eliminated. She was, however, hospitalized once again in February 1977, suffering from depression, and was subsequently transferred to a convalescent home. Watkins at this time exercised the powers pursuant to the durable power of attorney executed in October 1974, and authorized some modifications to the moorage property.
Mrs. Adamec never returned to the moorage property. In May 1978, she underwent a mastectomy from which she failed to recover. It now became apparent to Watkins that Mrs. Adamec would never be well enough to return to her moorage property. He made arrangements to refurbish her residence and place it on the rental market, intending thereby to increase Mrs. Adamec's income from her property. The cost of the improvements in 1978 exceeded $8,000. In the fall of 1978, however, the Department of Natural Resources increased the annual rent on the lakebed from $900 to $3,024. Watkins attempted to recoup these increased costs by increasing the rent charged moorage tenants on the property; he was, however, unsuccessful because local regulations limited such increases.
In December 1978, Watkins formalized a partnership, J & D Investments, with David D. Webber. Webber was Watkins' law partner in the firm of Watkins & Webber. The moorage property was conveyed by Watkins to J & D Investments by statutory warranty deed dated January 1, 1979. On December 29, 1978, J & D Investments paid $75,000 into Mrs. Adamec's account, fulfilling all outstanding obligations under the December 30, 1976 contract. Of this amount, $5,900 was for the purpose of one of the houseboats, in exercise of the option. An additional $1,890 was paid on May 5, 1979. (This latter payment apparently reflected a typographical error in the contract of sale: the parties had agreed orally that the purchase price of the houseboat was to be the appraised value of $7,590, not $5,700, as specified in the contract, and $1,890 represented the difference.) Watkins had paid $8,600 under the contract prior to December 1979. Total payments to Mrs. Adamec therefore amounted to $85,490.
In July 1979, Watkins was informed by the Washington State Bar Association that a complaint had been registered regarding the sale of the moorage property. The complaint made by a tenant of the moorage property was investigated by the Disciplinary Board of the bar association.
While this investigation was under way, Watkins, on November 29, 1979, petitioned for his own appointment as guardian of Mrs. Adamec, for approval of his account to date as Mrs. Adamec's attorney in fact, and for confirmation of the sale to him of the moorage property. The petition alleged that Watkins was inhibited in the exercise of his power of attorney by unjustified claims and accusations of "unrelated persons". The court responded to this petition the following day by appointing an experienced Seattle attorney, Robert Beezer, guardian ad litem to represent Mrs. Adamec's interests. Beezer was directed to consult with Mrs. Adamec and explain to her the nature of the proceedings, to provide the court with a written report, and to arrange for a written medical report pursuant to RCW 11.88.045.
On December 10, 1979, Beezer submitted his first report to the court. In this report he indicated that he had consulted with Mrs. Adamec and found her extremely confused. He recommended that Watkins be appointed guardian of the person and estate of Mrs. Adamec. Beezer also provided a statement from Mrs. Adamec's longtime personal physician to the effect that Mrs. Adamec's condition had gradually deteriorated since her mastectomy. The deterioration was the result of her advanced age (she was born in 1901) and general arteriosclerosis. Mrs. Adamec was completely confused and disoriented, and her prognosis was poor.
On December 11, 1979, the court authorized Beezer to appoint an MAI appraiser (Member of the American Institute of Real Estate Appraisers) to evaluate the property sold by Mrs. Adamec to Watkins, and directed Beezer to submit a further report. On the same day, the court appointed Watkins guardian of Mrs. Adamec.
Beezer obtained a "preliminary value estimate" of the property from Michael McCrackin, an MAI appraiser. McCrackin estimated the property was worth, as of December 1977, between $80,000 and $100,000. McCrackin stressed in his letter that this estimate did not represent an appraisal and that "because of the unusualness of the property and the difficulty of the appraisal problem an in-depth appraisal may change the valuation found in this preliminary report". McCrackin's appraisal did not take into account the value of Mrs. Adamec's limited life estate in the property. (Subsequently, McCrackin formally appraised the property--again without considering the life estate--as having a fair market value of $90,000 on December 30, 1976.) ...
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