Ryan, Conservator of the Estate of Reece v. Reece
| Decision Date | 22 August 2000 |
| Citation | 31 S.W.3d 82 |
| Parties | (Mo.App. W.D. 2000) Beverly Sue Ryan, Conservator of the Estate of Brandon S. Reece, Minor, Respondent, v. John R. Reece, et al., Appellant. WD57785 0 |
| Court | Missouri Court of Appeals |
Appeal From: Circuit Court of Clay County, Hon. John A. Borron, Jr.
Counsel for Respondent: John Shank, Jr.
Opinion Summary: Plaintiff Beverly Sue Ryan, as Conservator for the Estate of Brandon Shane Reece, filed a petition for discovery of assets under Section 473.340 RSMo 1994 against defendants John Robert Reece, Isla Faye Reece, and Reece Farms, L.L.C.. The court found all three defendants liable as a sanction for their alleged violation of certain discovery rules and, following an evidentiary hearing, awarded substantial damages against each defendant.
Division II holds: The probate court lacked subject matter jurisdiction over Ryan's claims. The probate court's subject matter jurisdiction in a discovery of assets proceeding is limited to determining the right and title of an estate to specific assets. Ryan did not assert that the defendants prosecuted the estate's choses in action in their own name and kept for themselves the proceeds derived, thus converting the choses in action of the estate. Because the monies sought by Ryan result not from the taking of the estate's choses of action, but from alleged breaches of fiduciary duty causing the estate to be deprived not of the existing or potential choses of action themselves, but of a greater portion of the proceeds from the settlement of those actions, and even assuming defendant Mr. Reece had breached his fiduciary duty to the estate, he did not convert to himself specific assets of the estate. Therefore, Ryan's claims are beyond the subject matter jurisdiction of the probate division of the circuit court pursuant to a petition for discovery of assets, as she seeks recovery of damages for a breach of fiduciary duty to the estate and not to discover and recover specific assets of the estate.
Opinion modified by Court's own motion on October 3, 2000. This substitution does not constitute a new opinion.
Plaintiff Beverly Sue Ryan, as Conservator for the Estate of Brandon Shane Reece, filed a petition for discovery of assets under Section 473.340 RSMo 1994 against John Robert Reece, Isla Faye Reece, and Reece Farms, L.L.C. ("Reece Farms") (herein referred to as "Defendants"). Judge John A. Borron found all three defendants liable as a sanction for their alleged violation of certain discovery rules. After a hearing on damages, he awarded $7,820,000.00 in actual damages and $4,092,085.38 in pre-judgment interest against Mr. Reece, $720,000.00 in actual damages and $333,766.72 in pre-judgment interest against Mrs. Reece, and $75,000 in actual damages against Reece Farms. Mrs. Reece and Reece Farms appeal.1 Because we find that the trial court lacked subject matter jurisdiction over Plaintiff's claims against them in this petition for discovery of assets proceeding, we reverse and remand with directions to dismiss the claims against Mrs. Reece and Reece Farms.
Further discussion of the underlying facts can be found at State ex rel. Abele v. Harman, 962 S.W.2d 945 (Mo. App. W.D.1998), State ex rel. Knight v. Harman, 961 S.W.2d 951 (Mo. App. W.D. 1998), and Ryan v. Ford, 2000 WL 196638 (Mo. App. W.D. 2000). For purposes of this appeal, we note that the causes of action stem from a serious two-car accident that occurred on November 27, 1980. Involved in that accident were Brandon Shane Reece and his parents, John Robert Reece and Julia Reece, who were riding in the car driven by Mr. Reece, and Gerald Pendleton, who was driving the other car. The accident caused Brandon severe and permanent injuries and caused the death of his mother, Julia. In the years that followed, a number of lawsuits were filed, dismissed, and later re-filed on behalf of Brandon, seeking to establish liability and recover damages from Mr. Pendleton, Brandon's father, and various medical care providers, based on claims of wrongful death or personal injury. Eventually the claims were settled, with $720,000.00 going to Mr. Reece, $380,000.00 in cash and $6,430.00 per month for life with a minimum guaranteed term of 20 years going to Brandon, and $1,200,000.00 going to the attorneys who represented Brandon and Mr. Reece. The settlement was approved by two different courts.
On April 23, 1997, Plaintiff filed a petition for discovery of assets in the Probate Division of the Circuit Court of Clay County, Missouri against Defendants Mr. and Mrs. Reece and Reece Farms; against Douglas Abele, who served as conservator ad litem for Brandon's estate in the litigation of Brandon's tort cases; and against the former attorneys for Brandon's estate and Mr. Reece in the tort cases, Hamp Ford, Larry Ferguson, and the partners of the Knight law firm (collectively as the "Knight lawyers"), seeking to recover assets she alleged were misappropriated from and belonged to the estate.
Sometime thereafter, the Knight lawyers and Mr. Abele each filed a writ of prohibition with this Court asserting that the probate court lacked subject matter jurisdiction to hear Plaintiff's claims. In support, the Knight lawyers claimed that "because the claims alleged against them in the petition for discovery of assets are for legal malpractice and do not involve any property in the possession of the Knight law firm in which [the estate] has any claim or ownership interest," the probate court was without subject matter jurisdiction. Mr. Abele argued that, for similar reasons, the court lacked subject matter jurisdiction over the breach of fiduciary duty claim asserted against him in the discovery of assets proceeding.
This Court granted both Petitions for Writ of Prohibition. In holding that the probate court lacked subject matter jurisdiction of the claims filed against the Knight lawyers, we stated:
The allegations of legal malpractice/breach of fiduciary duty contained in the petition for discovery of assets levied against the Knight law firm are not appropriate claims for [a discovery of assets proceeding], as such claims do not involve the determination of title and/or the right to possession of property which is claimed to belong to Brandon's estate. The allegations of legal malpractice against the attorneys that represented an estate in its personal injury cause of action, are not properly brought under a statute that deals with the "determination of the title, or right to possession thereof" of property that is "being adversely withheld or claimed" pursuant to [Section] 473.340.1.
As such, this action is not a discovery of assets proceeding because its purpose is to seek recovery of monetary damages, including punitive damages. Our second amended preliminary writ in prohibition is, therefore, made absolute as it relates to the Knight law firm. The probate court is hereby directed to sustain the Relator's motion to dismiss, as the probate court lacks jurisdiction to hear the claims set forth in the petition to discovery of assets that are pending against the Knight law firm.
Knight, 961 S.W.2d at 955. In similar fashion, we granted Mr. Abele's Petition for Writ of Prohibition, stating:
Essentially, the claims against Abele are that if he had not breached his fiduciary duties to Brandon, Brandon's estate would have received more money in the settlement of the tort claims. Therefore, the requirements to bring a discovery of assets claim are not met as to the claims against him. A discovery of assets action is not the proper vehicle for the breach of fiduciary duty claims levied against Abele.
Abele, 962 S.W.2d at 948. Subsequent to our decisions in Abele and Knight, Mr. Reece and Reece Farms petitioned this Court for a writ of prohibition on the same grounds. The petition filed by Mr. Reece and Reece Farms was denied, without opinion, on May 21, 1998.2
On the same day that Defendants' petition for a writ was denied, Plaintiff filed an amended petition for discovery of assets against Defendants (the subject of this appeal), which set forth three claims. In Count I, Plaintiff sought actual and exemplary damages based on the constructive fraud of Mr. Reece for alleged breaches of his fiduciary duty owed to Brandon in his handling of Brandon's claims arising out of the accident. In Count II, Plaintiff alleged that the Reeces unlawfully obtained $1,080,000 as a result of the settlement agreements among the parties to the underlying tort suits, and that those funds should be held in constructive trust for the benefit of Brandon. Finally, in Count III, Plaintiff sought to impose a constructive trust on $75,000 in assets held by Reece Farms that Plaintiff alleged it received from Mr. Reece out of the proceeds of the settlements.
On June 10, 1998, counsel for the Reeces and Reece Farms filed a motion to dismiss the claims made in Plaintiff's amended petition and another motion seeking a protective order permitting the Reeces and Reece Farms to forego responding to Plaintiff's discovery requests until their motion to dismiss had been ruled upon.
Before ruling on all of the pending motions, or on Plaintiff's subsequently filed motion to compel discovery, Judge Harman recused himself and Judge Borron was assigned to the case. Judge Borron overruled the motion to dismiss and vacated the stay on discovery. A period of legal maneuvering ensued between August 1998 and December 1998, resulting in a ruling by the probate court striking the answers of Mr. Reece and Reece Farms for failure to timely respond to Plaintiff's discovery requests, and a consequent finding in favor of Plaintiff on the issue of liability. Approximately three months later, and for similar reasons, the probate court entered an order striking Mrs. Reece's answer and finding her liable to the estate as well. The probate court then held a...
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