Larson v. Larson

• Decision Date: 13 September 2017
• Docket Number: DA 16-0309
• Parties: Florence J. LARSON and Dwight W. Larson, Plaintiffs and Appellants, v. Doug E. LARSON, Defendant and Appellee.
• Court: Montana Supreme Court

389 Mont. 458

406 P.3d 925

2017 MT 299

Florence J. LARSON and Dwight W. Larson, Plaintiffs and Appellants,

v.Doug E. LARSON, Defendant and Appellee.

DA 16-0309

Supreme Court of Montana.

September 13, 2017

December 05, 2017

For Appellant: Kirk D. Evenson, Marra, Evenson & Bell, P.C., Great Falls, Montana.

For Appellee: W. Scott Green, Daniel L. Snedigar, Patten, Peterman, Bekkedahl & Green, P.L.L.C., Billings, Montana.

Justice James Jeremiah Shea delivered the Opinion of the Court.

¶1 Plaintiffs Dwight W. Larson ("Dwight") and Florence J. Larson ("Florence"), through her Conservator Joyce Wuertz ("Wuertz"), appeal the December 29, 2015 Findings of Facts, Conclusions of Law and Judgment by the by the Ninth Judicial District Court, Toole County. We address the following issues:

Issue One: Whether the District Court erred in finding no undue influence by Doug over Florence.

Issue Two: Whether the gift of stock certificates was actually a contract for which Doug furnished no consideration.

Issue Three: Whether the District Court erred in finding Florence made a valid gift of D & D Land Co. stock certificates to Doug.

¶2 We affirm.

PROCEDURAL AND FACTUAL BACKGROUND

¶3 This case concerns whether Florence, mother of Dwight and Doug Larson ("Doug"), properly and without undue influence, gifted her shares in the family farm corporation, to Doug.

¶4 In 1964, Florence and Edward Larson ("Ed") began farming in Toole County. In 1973, Ed and Florence formed D & D Land Company ("D & D") as the operating entity for the family farm. Originally, Ed held 31,200 shares, Florence held 8,800 shares, and D & D retained 10,000 shares. In 1984, Ed and Florence executed their wills, providing the surviving spouse would own 51% "of the total voting rights of D & D Land Company" with the remaining balance going to sons, Dwight and Doug, in equal shares. At that time, Ed held 20,005 shares and Florence held 19,995 shares. Since 1987, D & D has employed Doug as the full-time farm manager. Dwight lives in Billings, where he is a teacher. In 1999, Ed gifted 10 shares to Doug, leaving Ed with 19,995 shares and Florence with 19,995 shares.

¶5 Ed passed away on March 16, 2006. Florence served as the Personal Representative of Ed's estate and hired attorney Gary Bjelland ("Bjelland") to probate the estate. Florence continued to keep the books for the farm's operations while Doug took over the primary operations of the farm. Over the next two years, Florence met with Bjelland and Denise Frigge ("Frigge")—Florence's long-time friend and an accountant with the firm of Brown, Fitchner and Associates in Conrad—to discuss her husband's estate and her own estate. Dwight attended some of these meetings. Doug attended all of these meetings.

¶6 During a December 2007 meeting, Frigge explained that Florence would need D & D assets out of her name for five years if Florence wanted to avoid D & D assets being depleted to pay for her future nursing care. Florence expressed her desire that D & D remain a viable family farm, which she believed would not be possible if the property was divided equally between Dwight and Doug upon her death. Florence also expressed her strong desire to stay on the farmstead she built with her husband and to assist in D & D operations for as long as possible.

¶7 In early 2008, after Florence expressed interest in giving her shares to Doug, Dwight began calling Florence. Dwight taped at least four long calls, and testified that he called his mother more than the calls he taped. Dwight would keep Florence on the phone for an hour at a time and repeatedly tell her that she should not change her will and should leave things as "Dad left them." Dwight complained that he would not get his fair share if she changed her will and that Doug had enough land. On March 12, 2008, after Dwight called and woke Florence up, she told him she could not split the farm fifty-fifty "because it won't be enough to run the farm."

¶8 On February 20, 2008, Dwight drove Florence to Bjelland's law offices for a meeting, and she arrived visibly upset. During the meeting, Florence told Dwight in front of Doug and Bjelland that she thought Doug should receive a greater share of the farm "because he's farming himself and has to make a living on it." Bjelland carefully explained any decision was Florence's to make and that she could enter into an agreement to stay on the farm and have her living expenses provided by D & D. In accordance with Ed's will, Ed's D & D shares were distributed at the meeting: Florence received 405 shares, Doug received 9,795 shares, and Dwight received 9,795 shares. As a result, Florence held 20,400 shares (51%), Doug held 9,805 shares (24.52%), and Dwight held 9,795 shares (24.49%).

¶9 On March 19, 2008, Florence and Doug again met with Bjelland to discuss Florence's estate planning concerns, including her desire to avoid D & D assets being used to pay for her future nursing care. Florence took copious notes during the meeting. On or about March 27, 2008, Bjelland received a call from Florence and Doug in which Florence stated she decided to "gift substantially all of her stock, except for ten shares, to Doug." Bjelland prepared the stock certificates for the transfer, and sent the blank stock certificates to Florence. Around March 29, 2008, Florence received the blank certificates with Bjelland's instructions that noted "[u]pon signing these, then the certificates comprising of your 20,004 shares should be cancelled or voided out." Florence and Doug discussed the transfer once more before she signed the stock certificates on April 1, 2008. Florence then directed Doug to mail the signed certificated back to Bjelland. Bjelland testified that he received the signed stock certificates Nos. 12 and 13 and made a note to cancel the old stock certificates Nos. 6 and 9, which he ultimately failed to do.

¶10 On April 3, 2008, Bjelland drafted an Agreement that allowed Florence to remain president of D & D for as long as she desired and was capable. The Agreement required Doug to vote his shares to retain Florence as president, and provided that D & D would pay her expenses as long as she resided on the farmstead. On April 4, 2008, Florence met with Frigge to discuss the Agreement and its terms. Florence and Doug signed the Agreement, and Frigge notarized and saved a copy of it.

¶11 Around April 4, 2008, after learning that Florence transferred her shares to Doug, Dwight drove to the farm and, without telling any other family member, took Florence back to Billings. Florence has not returned to the farmstead since that time. On April 16, 2008, Dwight filed a petition for guardianship and conservatorship of Florence in Yellowstone County. As part of the guardianship proceedings, Florence signed an affidavit stating that she did not understand what she signed when she transferred the D & D shares. Florence is now under a Guardianship and Conservatorship in Yellowstone County, with Dwight as guardian and Wuertz as conservator.

¶12 In early May 2008, Dwight began taking Florence to several doctors in Billings. Dr. Patricia Coon, Florence's treating physician since 2008, is a geriatrician that specializes in dementia

, long-term care management, and senior assessments. Dr. Coon referred Florence to the Senior Assessment Clinic at the Billings Clinic for additional testing regarding memory loss and anxiety. At trial, Dr. Coon opined, based primarily on medical history that Dwight provided for Florence and test results from the Senior Assessment Clinic, that Florence suffered from significant cognitive deficiencies and that Florence would need help with complex decision making. Dr. William Bredehoft is a psychologist that evaluated patients for the Senior Assessment Clinic. He testified by deposition regarding Florence's performance on neurological tests in 2008 and 2012, and opined that Florence suffered from a progressive cognitive decline. Dr. Bredehoft also testified he had no way of knowing when Florence's progressive dementia

began, but that she had a mild impairment in May 2008 and a significant impairment in 2012 based on his two evaluations of her. Dr. Debra Sheppard is a neuropsychologist who also performed evaluations for the Senior Assessment Clinic. In her deposition, Dr. Sheppard testified that she diagnosed Florence with dementia and anxiety.

¶13 In November 2008, Florence executed a Power of Attorney to Dwight, and he used it to open joint bank accounts. On March 21, 2011, Florence entered a contract with Dwight to loan him $35,000 to purchase a 1968 GTO convertible. Shortly thereafter, Florence forgave the balance of the loan.

¶14 In June 2009, Dwight filed suit against Doug, alleging undue influence, and requesting, among other things, a judgment directing that all transferred D & D shares be deemed void and requiring Doug to compensate Florence for her emotional distress. In November 2014, following a three-day bench trial, the District Court entered its Findings of Fact, Conclusions of Law, and Judgment. The District Court found no evidence that Florence was unduly influenced by Doug or incompetent from March 29 through March 31, 2008, or on April 4, 2008, the times during which she decided to gift her shares to Doug and signed the Agreement to stay on the farm. Dwight failed to convince the Court that Florence's gift was invalid because none of the medical experts could definitively say that Florence lacked the mental capacity to make a gift at the time she signed the stock certificates. Bjelland and Frigge testified they had no concerns regarding Florence's capacity to understand what she was doing at the time she discussed transferring the corporatestock, when she transferred the stock, or when she entered the Agreement to remain on the farm as president of D & D.

¶15 The District Court determined that Doug did not, at any time, exercise undue influence over Florence to convince her to gift her D & D shares to him. However, the District Court concluded...