In re Guardianship of Saylor

• Decision Date: 19 October 2005
• Docket Number: No. 04-183.,04-183.
• Citation: 2005 MT 236,328 Mont. 415,121 P.3d 532
• Parties: In the Matter of the GUARDIANSHIP and Conservatorship OF Elizabeth SAYLOR, an Alleged Incapacitated Person and Appellant.
• Court: Montana Supreme Court

121 P.3d 532

2005 MT 236

328 Mont. 415

In the Matter of the GUARDIANSHIP and Conservatorship OF Elizabeth SAYLOR, an Alleged Incapacitated Person and Appellant.

No. 04-183.

Supreme Court of Montana.

Submitted on Briefs July 13, 2005.

Decided September 20, 2005.

Rehearing Denied October 19, 2005.

COPYRIGHT MATERIAL OMITTED

Shari M. Gianarelli, Attorney at Law, Conrad, for Appellant.

Gregory J. Hatley, James A. Donahue, Davis Hatley Haffeman & Tighe, Great Falls, for Respondent.

NELSON, Justice.

¶ 1 Elizabeth Saylor (Elizabeth) appeals from the Order and Judgment of the Ninth Judicial District Court, Teton County, dismissing her petition that Tim Saylor (Tim) be removed as conservator of Elizabeth's Montana property.

¶ 2 We affirm in part and remand for further proceedings consistent with this Opinion.

¶ 3 We address the following issue on appeal:

¶ 4 Did the District Court err by holding that Tim had not breached his fiduciary duties as conservator of Elizabeth's Montana property?

FACTUAL AND PROCEDURAL BACKGROUND

¶ 5 By petition dated October 25, 1999, Tim, Elizabeth's stepson, asked the District Court to appoint a guardian and conservator for Elizabeth and, pending a hearing on the matter, to appoint a temporary guardian for her pursuant to § 72-5-317, MCA. The District Court appointed Tim Elizabeth's temporary guardian by Order issued on the same day. Shortly thereafter, Elizabeth and Deane Sadler (Deane), Elizabeth's brother, both filed written objections to Tim's appointment as temporary guardian.

¶ 6 The parties eventually entered into a settlement agreement, dated July 11, 2000, by which they agreed to the establishment of a guardianship and two limited conservatorships for Elizabeth. In particular, the parties agreed that Deane would serve as her limited guardian, with powers and duties as specified pursuant to § 72-5-321, MCA, and would also serve as the conservator of that portion of her assets which were located outside the State of Montana. Tim, for his part, would serve as the conservator of her Montana property. The District Court approved the agreement by Order issued on the same day.

¶ 7 Conflict between the parties continued, however, now centering around what Elizabeth and Deane claimed to be Tim's failure to disclose certain financial documents related to his administration of Elizabeth's Montana estate. This conflict eventuated in the aforementioned "Petition for Removal of Conservator of the Montana Property of Elizabeth Saylor and Appointment of Successor Conservator and Complaint for Breach of Fiduciary Duty," which Elizabeth, her estate, and Deane¹ caused to be filed on July 5, 2002. Elizabeth and Deane alleged that Tim had failed to keep Elizabeth reasonably informed concerning his administration of Elizabeth's Montana estate in response to her reasonable request, in violation of §§ 72-34-124 and -125, MCA, fiduciary duties imposed upon him by § 72-5-423, MCA. They further alleged that Tim had breached his duties to administer the conservatorship solely in Elizabeth's interest, § 72-34-103, MCA; to avoid a conflict of interest in administering the conservatorship, § 72-34-105, MCA; to take reasonable steps under the circumstances to take and keep control of and to preserve the conservatorship property, § 72-34-107, MCA; to make the conservatorship property productive, § 72-34-108, MCA; and to properly administer the estate pursuant to § 72-34-114(1) and (2), MCA (2001), all duties which § 72-5-423, MCA, likewise made incumbent upon him. Tim filed a response to the petition on July 23, 2002.

¶ 8 The District Court conducted a hearing on the petition on September 4, 2003, and dismissed it by Order dated November 12, 2003. This appeal followed.

¶ 9 We will introduce further facts as they become relevant to the discussion.

STANDARD OF REVIEW

¶ 10 We review a trial court's determinations of law de novo. Matter of Conservatorship of Kovatch (1995), 271 Mont. 323, 326, 896 P.2d 444, 446. We typically review a trial court's findings of fact to determine whether those findings are clearly erroneous. Kovatch, 271 Mont. at 326, 896 P.2d at 446. A finding of fact is clearly erroneous if substantial evidence does not support it, if the district court misapprehended the effect of the evidence, or if, after reviewing the record, this Court is left with a firm conviction that a mistake has been made. Eschenbacher v. Anderson, 2001 MT 206, ¶ 22, 306 Mont. 321, ¶ 22, 34 P.3d 87, ¶ 22 (citing Interstate Production Credit v. DeSaye (1991), 250 Mont. 320, 323, 820 P.2d 1285, 1287). However, we refined the clearly erroneous test when considering accountings submitted for conservatorships by holding that an accounting must be accurate, complete, and verifiable. Matter of Estate of Clark (1989), 237 Mont. 179, 184, 772 P.2d 299, 302.

DISCUSSION

¶ 11 Did the District Court err by holding that Tim had not breached his fiduciary duties as conservator of Elizabeth's Montana property?

¶ 12 We first address Tim's argument that Elizabeth has failed to assert proper grounds for removing him as conservator. Tim claims that she has not argued according to the standard for removal of a conservator, set forth at § 72-5-414, MCA, despite alleging breaches on his part of the aforementioned fiduciary duties. We disagree.

¶ 13 Section 72-5-414, MCA, reads, in relevant part: "The court may remove a conservator for good cause" (emphasis added). The statute itself does not define "good cause" for the specific purpose of conservator removal, nor have we had occasion to interpret the phrase expressly in our previous opinions.

¶ 14 Section 72-5-423, MCA, provides that, "[i]n the exercise of his powers, a conservator is to act as a fiduciary and shall observe the standards of care applicable to trustees." In Redies v. Cosner, 2002 MT 86, ¶ 37, 309 Mont. 315, ¶ 37, 48 P.3d 697, ¶ 37, we interpreted the phrase "standards of care applicable to trustees" in § 72-5-423, MCA, as meaning "duties of trustees" as set forth in Title 72, Chapter 34, Part 1, Montana Code Annotated. We also interpreted § 72-5-423, MCA, as imposing these duties on conservators. Conservators are thus under the same duties as trustees.

¶ 15 Section 72-33-618(2)(a) through (d), MCA, provides four specific grounds on which a court may remove a trustee. Section 72-33-618(2)(e), MCA, then provides in the alternative that the court may remove the trustee "for other good cause" (emphasis added). Thus, the legislature has defined "good cause," at least for the purposes of trustee removal, as including grounds (a) through (d) of § 72-33-618(2). Ground (a) is "if the trustee has committed a breach of the trust[.]" Section 72-33-618(2)(a). Thus, "good cause" exists for a court to remove a trustee if it finds that the trustee has breached the trust.

¶ 16 "Except to the extent that the common law rules governing trusts are modified by statute, the common law as to trusts is the law of this state." Section 72-33-103, MCA. According to the Restatement (Second) of Trusts, an authoritative summary of the common law of trusts, "[a] breach of trust is a violation by the trustee of any duty which as trustee he owes to the beneficiary." Restatement (Second) of Trusts § 201 (1959). As noted above, these duties are set forth in Title 72, Chapter 34, Part 1, Montana Code Annotated. Thus, by breaching any of these duties, the trustee provides good cause for a court to remove him. See § 72-33-618(2)(a); Restatement (Second) of Trusts § 201 (1959).

¶ 17 Since conservators are under the same duties as trustees, and since the nature of their responsibilities is cognate with that of trustees, we conclude likewise that when a conservator breaches the duties, set forth by Title 72, Chapter 34, Part 1, Montana Code Annotated (Duties of Trustees), which § 72-5-423, MCA, imposes upon him, he gives a court good cause to remove him as conservator. Therefore, by alleging the various breaches of fiduciary duties, see ¶ 7 above, Elizabeth has alleged (though, as we hold, not established) good cause for Tim's removal as conservator.

¶ 18 Specifically, Elizabeth claims that Tim has breached his fiduciary duties by leasing certain real property, part of Elizabeth's Montana conservatorship assets, to his brother Pat Saylor (Pat) on terms which yield Elizabeth and her estate no financial benefit.

¶ 19 As the settlement agreement of July 11, 2000, established Deane's powers and duties as limited guardian, so also did it specify Tim's powers and duties as conservator of Elizabeth's Montana estate, among which powers was the power to lease the real property for agricultural purposes. This property, approximately 690 acres in Teton County, is known to the parties as "Glen Willow."

¶ 20 The lease which Tim entered into with Pat for Glen Willow provides in relevant part for a five-year lease term, with annual rent of $14,960.00, calculated by multiplying 220 head of cattle by $17.00 per animal-unit-month. Pat agreed to till and farm in a good and husband-like manner according to the best farming practices, and to furnish all equipment, seed, fertilizer, labor, and all the other costs of farming operations. In return, Pat was entitled to 100% of the crops, and to graze cattle on the land once the crop has been removed. Furthermore, the lease required Pat to maintain the property, pay all the taxes owing thereon, and keep insurance totalling no less than $500,000.00.

¶ 21 The rent owing was subject to two offsets. For use of the irrigation system which Pat had purchased and installed on the property, he was to receive $12,000.00 annually. Pat also was to be compensated in the amount of $3,000.00 per year for maintaining the residence in a condition suitable for Elizabeth's return. These two offsets together eliminated the rent which Pat nominally owed under the lease.

¶ 22 All parties agree that the irrigation system has not been used for several years, but that Pat nonetheless...