In re Estate of Palmer
| Decision Date | 08 April 2008 |
| Docket Number | No. 36339-9-II.,36339-9-II. |
| Citation | 187 P.3d 758,145 Wn. App. 249 |
| Court | Washington Court of Appeals |
| Parties | In re ESTATES OF Alfred S. PALMER and Sarah L. Palmer, Deceased. Donald Palmer, Respondent, v. Dawn Palmer Golden, Appellant. |
John A. Rorem, Attorney at Law, Gig Harbor, WA, for Appellant.
James Victor Handmacher, Morton McGoldrick PS, Tacoma, WA, for Respondent.
¶ 1 This case involves a dispute between siblings Dawn Golden and Donald Palmer over funds Golden transferred using a durable power of attorney from an account in her mother's name to a joint account with right of survivorship for her mother and herself. But for the transfers, the funds would have gone to Donald as personal representative of the estate of their parents, Alfred and Sarah Palmer.1 Golden now appeals from a judgment in favor of the estate for the amounts she transferred. She argues that the trial court erred by (1) failing to dismiss the petition under the time bar in RCW 11.11.070, (2) declining to admit certain evidence, (3) applying the wrong burden of proof, and (4) entering various findings of fact. Finding no error, we affirm.
¶ 2 In 1997, Alfred and Sarah executed a revocable living trust agreement establishing the Alfred S. Palmer and Sarah L. Palmer Trust. Alfred and Sarah were the initial co-trustees of the Trust, with Palmer designated as successor trustee on the deaths of both Alfred and Sarah. The beneficiaries of the Trust were various religious charities. Alfred and Sarah also each executed wills appointing Palmer as personal representative and bequeathing all of their property to the Trust.
¶ 3 In 1999, Alfred suffered a stroke that left him totally incapacitated and unable to communicate verbally or in writing. He died in 2001. Also in 1999, a neurologist diagnosed Sarah with moderate to severe Alzheimer's disease, finding that she had a progressive and "fairly profound" memory loss. Clerk's Papers (CP) at 341. That year, both Alfred and Sarah executed durable powers of attorney appointing Golden as their attorney-in-fact. From the time of Alfred's stroke until Sarah's death in 2003, Golden managed all of their financial affairs using her powers of attorney.
¶ 4 In 2006, Palmer filed a petition under chapter 11.96A RCW for the court to determine Golden's liability to the estate, alleging that she (1) transferred money and securities from her parents' accounts to herself, (2) made numerous gifts and loans of her parents' funds to family and friends, (3) removed or allowed others to remove personal property from her parents' family home and cabin, and (4) failed to account for certain estate assets. At trial, the parties established the following facts.
¶ 5 While managing her parents' financial affairs under the power of attorney, Golden closed several of their accounts and transferred the funds into a new stock brokerage account where she was named a joint tenant with right of survivorship. The account, number 870-08459-1-3 at Edward Jones, was opened in the names of Sarah Palmer and Dawn L. Golden in December 2000. After Sarah died, Golden transferred the $407,270.42 in the Sarah/Golden joint account to her own account at Edward Jones.
¶ 6 RCW 11.94.050(1) prohibits an attorney-in-fact from designating anyone as a joint tenant with right of survivorship with respect to any of the principal's property without specific authorization in the power of attorney; the trial court held that any such action was ineffective and therefore a conversion of the principal's property. Thus, the major issue at trial was whether Golden used her power of attorney to create the Sarah/Golden joint account or whether Sarah opened it herself. Golden had used her power of attorney to make the initial deposit into the account on the day it was opened, consisting of funds from an account held by Alfred and Sarah at Key Bank. Later, she also used her power of attorney to empty another account, which she had created in Alfred and Sarah's names, into the Sarah/Golden joint account.
¶ 7 Shortly before trial, Golden attempted to submit additional evidence that she had not included on the exhibit and witness list exchanged with counsel two weeks earlier. In fact, Golden had obtained the evidence by a subpoena that she issued after the discovery cutoff and without notice to Palmer. Pierce County Local Rule (PCLR) 3(b)(2) prohibits use of such evidence at trial "unless the court orders otherwise for good cause and subject to such conditions as justice requires." Golden claimed that the court should admit the documents because they were dispositive as to who opened the Edward Jones account, and she claimed that she had used due diligence to obtain them before the discovery deadline. The documents, Edward Jones's "new account form approval" printouts for the Sarah/Golden joint account, contained notations that the account was not being operated by power of attorney during the first month it was open. CP at 325-26. The court denied Golden's motion to admit the documents because of the lack of notice to Palmer.
¶ 8 After trial, the trial court found that Golden, not Sarah, had opened the account, relying on several factors. First, Golden made the initial deposit, on the day the account was opened, using funds that she had withdrawn using her power of attorney. Second, Brian Duffy, an investment advisor for Edward Jones, testified in his deposition that Golden opened the account using her power of attorney. Third, Golden admitted that she handled all of Alfred and Sarah's financial affairs under the powers of attorney after Alfred's stroke because they were not capable of doing so themselves.2 The court further found that there was no credible evidence that Sarah intended to give Golden all of her remaining funds upon her death. To the extent that Golden's and Duffy's trial testimony conflicted with these findings, the trial court found it not credible. Thus, Golden's transfer of those funds to herself after Sarah's death was a conversion of assets belonging to the estate and trust.
¶ 9 Golden made loans to several of her friends and relatives from her parents' funds, in most cases without a promissory note, collateral, or interest. Although Golden repaid some of the loans to the estate, loans totaling $31,200 remain unpaid. The trial court held that Golden breached her fiduciary duties as attorney-in-fact by making these unsubstantiated loans to her family and friends.
¶ 10 Golden also removed or allowed others to remove personal property and fixtures from her parents' home and cabin in Warm Beach. The value of the items removed from these properties was $10,000 and $1,500, respectively, and the estate never received reimbursement for those items. The trial court ruled that Golden wrongfully interfered with and converted the estate's possession and control of the personal property when she allowed others to remove it.
¶ 11 Golden also made numerous gifts from her parents' funds. The powers of attorney authorized Golden to make gifts, if she did so in good faith. But her authorization extended only to gifts to Alfred and Sarah's lawful descendants, after considering the pattern of giving Alfred and Sarah had established. The trial court found that although a few of Golden's gifts were in good faith, several were not, and were therefore not authorized by the powers of attorney. One of the gifts was further unauthorized because the donee Dustin Carling, was not related to Alfred and Sarah.
¶ 12 Finally, Golden was unable to account for assets belonging to her parents that she had liquidated or withdrawn between 1999 and 2002. The trial court held that Golden breached her fiduciary duty as attorney-in-fact by failing to account to the estate for these assets.
¶ 13 On the last day of trial, Golden moved to dismiss under RCW 11.11.070(3), which imposes a one-year time bar on actions by testamentary beneficiaries claiming a nonprobate asset after the owner's death. The trial court denied the motion, finding it untimely and holding that the statute did not apply because Palmer was not a "testamentary beneficiary" as defined in RCW 11.11.010(10).
¶ 14 The trial court entered judgment to Palmer for (1) $407,270.42 for conversion of the Edward Jones account plus $190,380.00 in prejudgment interest, (2) $31,200.00 for the outstanding loans of estate property, (3) $12,118.35 for unauthorized gifts, (4) $11,500 for conversion of personal property, (5) $67,639.52 for the assets missing from the estate plus $62,237.23 in prejudgment interest, (6) $2,685.93 in unpaid interest on the amounts ordered by the commissioner, and (7) $37,547.19 for Palmer's attorney fees and costs under RCW 11.96A.150. The court also imposed a constructive trust on the funds in Golden's personal account at Edward Jones to pay the $597,650.42 judgment on the first claim.
¶ 15 Golden alleges that Palmer's petition for ownership of the Edward Jones account was barred by RCW 11.11.070(3), which imposes a one-year period within which a testamentary beneficiary may claim a nonprobate asset after the owner's death.3 Palmer responds that Golden waived this affirmative defense by failing to plead it in her answer.
¶ 16 Civil Rule (CR) 8(c) requires responsive pleadings to set forth "any . . . matter constituting an avoidance or affirmative defense," including statutes of limitation. Affirmative defenses are thus waived unless they are (1) affirmatively pleaded, (2) asserted in a motion under CR 12(b), or (3) tried by the parties' express or implied consent. Harting v. Barton, 101 Wash.App. 954, 962, 6 P.3d 91 (2000). None of these conditions apply to Golden's RCW 11.11.070(3) defense.
¶ 17 Citing CR 12(h)(3), Golden argues that the time bar in RCW 11.11.070(3) is not an affirmative...
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