In re Estate of Lutz

• Court: North Dakota Supreme Court
• Writing for the Court: NEUMANN, Justice.
• Citation: In re Estate of Lutz, 2000 ND 226, 620 N.W.2d 589 (N.D. 2000)
• Decision Date: 29 December 2000
• Docket Number: No. 20000098.,20000098.
• Parties: In the Matter of the ESTATE OF Emanuel LUTZ, Deceased. Lavilla Oswald Lutz, Petitioner, Appellant and Cross-Appellee, v. Ingrid L. Schneider and Edward J. Lutz, Co-Personal Representatives of the Estate of Emanuel Lutz, Respondents, Appellees and Cross-Appellants.

620 N.W.2d 589

2000 ND 226

In the Matter of the ESTATE OF Emanuel LUTZ, Deceased.

Lavilla Oswald Lutz, Petitioner, Appellant and Cross-Appellee, v. Ingrid L. Schneider and Edward J. Lutz, Co-Personal Representatives of the Estate of Emanuel Lutz, Respondents, Appellees and Cross-Appellants.

No. 20000098.

Supreme Court of North Dakota.

December 29, 2000.

Gregory C. Larson, Wheeler Wolf, Bismarck, ND, for petitioner, appellant and cross-appellee.

Rebecca S. Thiem (argued) and James S. Hill, Zuger Kirmis & Smith, Bismarck, ND, for respondents, appellees and cross-appellants.

NEUMANN, Justice.

[¶ 1] Lavilla Lutz appealed from orders dismissing her creditor's claim against the estate of Emanuel Lutz, dismissing her petition for an elective share, homestead allowance, exempt property entitlement and family allowance, and approving the distribution of the estate. Ingrid Schneider and Edward Lutz, who are Emanuel's children and the co-personal representatives of the estate, cross-appealed from that part of an order alternatively determining the amount of supplemental income from the estate necessary to preclude Lavilla's eligibility for public assistance. We conclude the trial court did not err in dismissing Lavilla's claims and approving the distribution of the estate, rendering it unnecessary for us to address the issue raised in the cross-appeal. We affirm.

I

[¶ 2] Emanuel was born in 1924. He was married in 1947 and helped raise two children. Lavilla was born in 1931. She was married in 1949 and helped raise three children. In 1983 Emanuel's wife died and Lavilla divorced. Emanuel and Lavilla began dating in 1984. In 1986 Lavilla moved into the downstairs apartment of Emanuel's duplex in Bismarck. They began living together a short time afterward, and Emanuel paid their living expenses. [¶ 3] The couple discussed marriage in 1987, and decided to have a premarital agreement prepared because it would be a second marriage for each of them. Emanuel wanted to make sure that, upon his death, his two Bismarck duplexes and farmland would pass to his children and grandchildren. According to Lavilla, although she knew this was a condition of their marriage, Emanuel assured her that he would provide for Lavilla outside of the premarital agreement and his will.

[¶ 4] Emanuel met with attorney Morris Tschider on May 7, 1987, and told him he wanted, upon his death, to give Lavilla the right to live in his duplex and the use of all the household goods and furnishings until she remarried or died, but to also give his children the option to buy her out of this arrangement for $15,000. Tschider gave Emanuel will questionnaire forms to complete. Emanuel took them home and worked on them with Lavilla and his daughter, Ingrid Schneider. According to Schneider, Emanuel then discussed the buy-out arrangement with them, but Lavilla denied ever discussing the arrangement with Emanuel. Emanuel and Lavilla delivered the completed forms to Tschider the following day. According to Tschider, the buy-out arrangement was discussed at the meeting and both Emanuel and Lavilla agreed to it, but Tschider advised against the arrangement, believing it would not be "workable." Lavilla testified Emanuel told her at the meeting he wanted to leave her money outside of the premarital agreement, "under the table to save it from taxes."

[¶ 5] In late May 1987, Tschider sent drafts of the premarital agreement, the consents to will, and the wills to Emanuel and Lavilla. Tschider testified he deleted the $15,000 buy-out arrangement because he believed Lavilla's "attorney would review it" and the provision would "be hard to sell." Emanuel and Lavilla made no changes to the documents and signed them during a meeting in Tschider's office more than eight months later, on February 1, 1988. The premarital agreement provided that each waived any share of the other's estate "except as provided in their respec[ti]ve Wills." It also provided that each of the parties consented to the will of the other as it then existed or as it may be amended or changed in the future. Emanuel's will bequeathed to Lavilla their resident property for her lifetime, or until she remarried.

[¶ 6] Emanuel and Lavilla were married on February 14, 1988. In August 1991, Emanuel began having health problems, and was eventually diagnosed with a heart condition. He was hospitalized for a period of time in February 1992, but made a full recovery. In January 1994, Emanuel began experiencing stomach pains, and was eventually diagnosed with colon cancer. He had surgery and was hospitalized for 10 days in April 1994. He was also hospitalized for four days in July 1994. In August 1994, Lavilla drove Emanuel to the Mayo Clinic in Rochester, Minnesota, where he was informed his cancer was terminal. Upon returning to Bismarck, the family requested and received a hospice referral. Lavilla, other family members, and hospice volunteers helped care for Emanuel until he died in his home on November 9, 1994.

[¶ 7] On January 5, 1995, Lavilla filed a creditor's claim against Emanuel's estate for the reasonable cost of services she had provided to Emanuel before his death. On January 23, 1995, Lavilla filed a petition for elective share, homestead allowance, exempt property entitlement and family allowance, which sought to invalidate the premarital agreement. The trial court granted summary judgment dismissal of both claims and approved the co-personal representatives' proposed distribution of the estate. Lavilla appealed, and we reversed. In Matter of Estate of Lutz, 1997 ND 82, ¶¶ 54-55, 563 N.W.2d 90 ("Lutz I"), we held summary judgment was inappropriate on Lavilla's claims because there were genuine issues of material fact to be resolved, and we remanded for trial. [¶ 8] Following a trial, the court ruled Lavilla failed to prove her claim for services by a preponderance of the evidence. The court found there was no express or implied agreement for payment, the care provided was not extraordinary, and Lavilla derived significant benefits from the marriage. The trial court found Lavilla had voluntarily entered into the premarital agreement and it was valid and enforceable. The court ruled the agreement was not substantively unconscionable as executed, but concluded it was necessary to modify the effect of the premarital agreement to avoid Lavilla's eligibility for public assistance. Because there was insufficient evidence of the amount of support necessary to avoid eligibility, the court said it would hold an evidentiary hearing at a later date to determine the amount if the parties could not reach an agreement. The trial court further ruled Emanuel's will was ambiguous and the premarital agreement could be used to clarify Emanuel's intentions. The court determined Lavilla was not to receive the residuary of the estate under the will. After obtaining a N.D.R.Civ.P. 54(b) certification from the trial court, Lavilla appealed.

[¶ 9] In Matter of Estate of Lutz, 1999 ND 121, ¶ 1, 595 N.W.2d 590 ("Lutz II"), a majority of this Court held the Rule 54(b) certification was improvidently granted, and we dismissed the appeal. Following an evidentiary hearing, the trial court denied Lavilla's motion for ongoing support from the estate to avoid eligibility for public assistance. Relying on the dissent in Lutz II, at ¶¶ 7-13 (Glaser, S.J., dissenting), the court ruled N.D.C.C. § 14-03.1-06(2) did not apply under the circumstances, and enforcement of the premarital agreement was not clearly unconscionable under N.D.C.C. § 14-03.1-07. Alternatively, the court found $250 per month in support payments from the estate would render Lavilla ineligible for most public assistance programs. Lavilla appealed, and the co-personal representatives cross-appealed, challenging the trial court's alternative ruling $250 per month from the estate would render Lavilla ineligible for public assistance benefits.

II

[¶ 10] Lavilla contends the trial court erred in ruling she was not entitled to $38,832 in compensation from the estate for services she rendered to Emanuel during his illnesses.

[¶ 11] Although a person who performs substantial services for another without an express agreement for compensation ordinarily is entitled to the reasonable value of the services, a presumption arises that services were gratuitous and that compensation was not intended when those services are performed by a family member in the same household. Matter of Estate of Raketti, 340 N.W.2d 894, 901 (N.D.1983). The presumption may be overcome with evidence that the services rendered are exceptional and of an extraordinary nature. Id.; Matter of Estate of Thompson, 191 N.W.2d 578 syl. 1 (N.D. 1971). Mutuality of benefits is also a factor to consider. Lutz I, at ¶ 21. A family claimant has the burden of overcoming the presumption against compensation by proof that the services were extraordinary and not gratuitous. Id. at ¶ 17.

[¶ 12] The issue of whether the services are so exceptional and extraordinary as to imply a contract to pay for those services is a question of fact for the trier of fact to decide. Lutz I, at ¶ 19; Raketti, 340 N.W.2d at 902-03. A trial court's findings of fact will not be set aside unless they are clearly erroneous under N.D.R.Civ.P. 52(a). A finding of fact is clearly erroneous only if it is induced by an erroneous view of the law or, although there is some evidence to support it, on the entire record we are left with a definite and firm conviction a mistake has been made. Matter of Estate of Sagmiller, 2000 ND 151, ¶ 6, 615 N.W.2d 567.

[¶ 13] The trial court ruled there was no express or implied agreement for compensation, finding "the extent of care provided by [Lavilla] has been overstated by her and the degree of assistance from others in the family has been minimized. Additionally, much of the care referred to would not fall into the extraordinary category and would have been the typical household...