Protective Proceeding for Strozzi, In re

• Decision Date: 14 May 1991
• Docket Number: No. 11266,11266
• Citation: 1991 NMCA 57,112 N.M. 270,814 P.2d 138
• Parties: In re the Protective Proceeding for Frederick STROZZI, Respondent-Appellee, Mikel Schoonover, Petitioner-Appellant.
• Court: Court of Appeals of New Mexico

Page 138

814 P.2d 138

112 N.M. 270

In re the Protective Proceeding for Frederick STROZZI Respondent-Appellee Mikel Schoonover, Petitioner-Appellant.

No. 11266.

Court of Appeals of New Mexico.

May 14, 1991.

[112 NM 271] Rolf A. Melkus, Thomas L. Popejoy, Popejoy & Leach, P.C., Albuquerque, for petitioner-appellant.

Lee E. Peters, Martin, Cresswell, Hubert, Hernandez & Roggow, P.A., Las Cruces, for respondent-appellee.

OPINION

HARTZ, Judge.

On motion for rehearing, the opinion previously filed is hereby withdrawn and the opinion filed this date is substituted therefor.

This case presents issues of first impression concerning the res judicata effects of a proceeding seeking to create a guardianship and conservatorship. We hold that, in general, a judgment in an action to appoint a guardian or conservator for an allegedly incompetent person is conclusive on all persons who had an opportunity to be a party to the action. A substantial change in circumstances, however, may justify reconsideration of the status of the allegedly incompetent person. Because of a procedural error, we must remand for further proceedings.

I. BACKGROUND

On August 7, 1987, Dean Thomas filed a petition to create a guardianship and conservatorship for Fred Strozzi, his great uncle. His attorney mailed a copy of the Amended Petition for Appointment of Guardian and Conservator and a notice of hearing on the petition to all of Strozzi's known relatives, including appellant Mikel Schoonover. Schoonover received no further notices regarding the case; he did not enter an appearance, expressly waive further notice, or participate in the case. On March 7, 1988, the district court entered an Order of Dismissal with Prejudice and a Stipulated Order that incorporated an Agreement and Stipulation. The agreement set forth certain limitations on Strozzi's authority to handle his affairs. A third-party was given a limited power of attorney and was directed to perform such duties as (1) function as a trustee for Strozzi with respect to virtually all of his property, (2) co-sign any document affecting any real property of Strozzi, and (3) assure that major assets were insured. The Stipulated Order recited that Strozzi was competent, not incapacitated, and able to manage his property and affairs effectively.

On April 28, 1988, Schoonover filed the petition in the present case, which requested essentially the same relief as Thomas's petition. The district court dismissed the petition with prejudice on December 19, 1988. The court held that Schoonover was bound by the Order of Dismissal in the prior proceeding. It also held that the prior judgment adequately protected Strozzi even if he was incapacitated or incompetent, although the court specifically stated that it was not deciding whether he was in such condition.

II. DISCUSSION

A. Was Schoonover bound by the prior orders?

Schoonover was not a party to the prior proceeding. Ordinarily, one is not bound by a judgment in a proceeding in which one was not a party or in privity with a party. See Silva v. State, 106 N.M. 472, 474, 745 P.2d 380, 382 (1987). Strozzi contends that Schoonover was in privity with Thomas, the petitioner in the prior proceeding. The only relationship between Thomas and Schoonover that appears in the record is that they are brothers. We would hesitate to base our decision on a determination that their relationship established the privity necessary to apply the doctrine of res judicata.

In any event, we need not reach that issue. The usual rules regarding what parties are bound by a prior judgment do not apply to judgments determining status. The general rule with respect to such judgments is: "A judgment in an action whose purpose is to determine or change a person's status is conclusive with respect to that status upon all other persons[.]" Restatement (Second) of Judgments Sec. 31(2) (the "Restatement"). This rule applies to the Stipulated Order in the case filed by Thomas. Comment a to Section 31 states: "Proceedings for the determination of status include * * * proceedings for appointment of a conservator or guardian of property for a person who lacks capacity to manage his own affairs[.]"

The rule stated in Section 31 has the obvious desirable purpose of preventing repeated litigation that could harass and wear down an individual whose status is at issue. We agree that "the determination of a status in a proceeding for that purpose [should be] conclusive on all persons except where strongly countervailing interests ought to be given precedence." Restatement Sec. 31 comment b.

Are there such countervailing interests in this case? Although neither party relied on the Restatement in the appellate briefs, Schoonover raised contentions that relate to two exceptions expressly stated in Section 31(2).

1. Probate Code does not prohibit binding Schoonover.

First, Schoonover contends that he cannot be bound because he is not one of the persons specifically listed by the New Mexico Probate Code as being bound in a conservatorship or guardianship proceeding. The applicable exception in Restatement Section 31(2) is:

(b) When a statute, rule of court, or provision of the judgment itself limits the effect of the judgment with respect to other persons, the effect of the judgment is limited accordingly[.]

Schoonover points to NMSA 1978, Section 45-1-403, which states:

In judicial proceedings involving trusts, or estates of decedents, minors, protected persons or incapacitated persons, and in judicially supervised settlements, the following apply:

* * * * * *

B. Persons are bound by orders binding others in the following cases:

(1) orders binding the sole holder or all co-holders of a power of revocation or a presently exercisable general power of appointment, including one in the form of a power of amendment, bind other persons to the extent their interests, as objects, takers in default, or otherwise, are subject to the power;

(2) to the extent there is no conflict of interest between them or among persons represented:

(a) orders binding a conservator bind the person whose estate he controls;

(b) orders binding a guardian bind the ward if no conservator of his estate has been appointed (c) orders binding a trustee bind beneficiaries of the trust in proceedings to probate a will establishing or adding to a trust, to review the acts or accounts of a prior fiduciary, and in proceedings involving creditors or other third parties; and

(d) orders binding a personal representative bind persons interested in the undistributed assets of a decedent's estate in actions or proceedings by or against the estate. If there is no conflict of interest and no conservator or guardian has been appointed, a parent may represent his minor child;

(3) an unborn or unascertained person who is not otherwise represented is bound by an order to the extent his interest is adequately represented by another party having a substantially identical interest in the proceeding[.]

Schoonover seems to suggest that this paragraph is intended to be exclusive, so that no other third-parties can be bound by an order.

No New Mexico precedent addresses this issue. Although other states have statutes similar to ours, which is taken from the Uniform Probate Code Section 1-403(B), we have not found any foreign cases in point. Nor does the official comment to the Uniform Probate Code address whether the paragraph is intended to be exclusive.

In our view, Section 45-1-403(B) is not exclusive. The wording of the paragraph is not language of exclusivity. The paragraph does not say "persons are bound by orders binding others only in the following cases." Nor do we see any reason why we should read language of exclusivity into the section. The purpose of the paragraph appears to be to make absolutely clear that certain persons are bound, not to prevent others from being bound. To read the paragraph as exclusive would lead to results that are highly unlikely to have been intended by the legislature. For example, Section 45-1-403(B) does not explicitly state that a successor conservator may be bound by an order against the original conservator or that a judgment may bind an heir. Surely the Probate Code did not intend to set aside such deeply rooted rules. Although not directly controlling, NMSA 1978, Section 45-1-304 strongly suggests the approach we should adopt. That section reads:

Unless specifically provided to the contrary in the Probate Code, or unless inconsistent with its provisions, the Rules of Civil Procedure govern formal and informal proceedings under the code.

The same standard should govern the applicability of common-law procedural rules even though they have not been codified by our supreme court. In other words, common-law procedural rules govern probate proceedings unless they are inconsistent with the Probate Code. That standard requires that Section 45-1-403 not be read as exclusive. We cannot fathom how the purposes of the Probate Code would be advanced by refusing to apply the common law to bind additional third parties to a judgment or order.

Because Section 45-1-403(B) does not use language of exclusivity and because we can discern no reason why it should be interpreted as exclusive, we hold that the exception stated in Restatement Section 31(2)(b) does not apply.

2. Notice.

Second, Schoonover contends that he should not be bound by the first judgment because he was not adequately advised regarding the prior proceeding. Schoonover was not served with a pleading making him a party to the original action. He was merely mailed a copy of the petition and a notice of a hearing. The hearing was continued to a later time, but Schoonover did not receive notice of the...