Spoon v. Arturo Mata & Burn Constr. Co.

• Decision Date: 18 August 2014
• Docket Number: No. 32,674.,32,674.
• Citation: 338 P.3d 113
• Parties: Shannon SPOON, individually and as Personal Representative of Daniel Spoon, Deceased, Plaintiff–Appellee, v. Arturo MATA and Burn Construction Company, Inc., Defendants, and Korina Flores, as Parent, Guardian and Next Friend of minor Noah Spoon, Intervenor–Appellant.
• Court: Court of Appeals of New Mexico

338 P.3d 113

Shannon SPOON, individually and as Personal Representative of Daniel Spoon, Deceased, Plaintiff–Appellee,

v. Arturo MATA and Burn Construction Company, Inc., Defendants,andKorina Flores, as Parent, Guardian and Next Friend of minor Noah Spoon, Intervenor–Appellant.

No. 32,674.

Court of Appeals of New Mexico.

Aug. 18, 2014.

Affirmed in part, reversed in part, and remanded.

Bustamante, J. filed specially concurring opinion. Blenden Law Firm, Dick A. Blenden, Carlsbad, NM, Templeman & Crutchfield, P.C.C., Barry Crutchfield, Lovington, NM, for Appellee.

Martin, Dugan & Martin, Kenneth D. Dugan, Carlsbad, NM, for Appellant.

Jarmie & Associates, Mark D. Standridge, Las Cruces, NM, Allen, Shepherd, Lewis & Syra, P.A., David A. Gonzales, Albuquerque, NM, for Amicus Curiae New Mexico Defense Lawyers Association.

Michael B. Browde, Albuquerque, NM, David J. Stout, Albuquerque, NM, for Amicus Curiae New Mexico Trial Lawyers Association.

OPINION

FRY, Judge.

{1} Korina Flores (Petitioner) appeals the district court's order denying her petition to intervene and to be appointed co-personal representative in a wrongful death action brought by Plaintiff, Shannon Spoon, wife of Decedent, Daniel Spoon, who was the father of Petitioner's child (Child). Petitioner sought to intervene to assert Child's loss of consortium claim and further sought appointment as co-personal representative in the wrongful death action in order to protect Child's interests as a statutory beneficiary. Petitioner argued that Child's interests were not adequately represented by Spoon's counsel because a conflict of interest existed due to Spoon's role as personal representative and her pursuit of individual claims against Defendant.

{2} We agree with Petitioner that the district court erred in not permitting Petitioner to intervene to assert Child's loss of consortium claim. However, we disagree that there is currently a conflict of interest as we understand that phrase. As we explain below, a conflict of interest is something that affects an attorney's relationship with his or her client, and no such conflict has yet developed in the relationship between Spoon and her attorney. Instead, what exists in this case may be called an “adversity of interest” between Spoon and Child. We conclude that this adversity of interest cannot be resolved by appointing Petitioner as a co-personal representative, as Petitioner argues. Accordingly, although we reverse and remand to allow Petitioner to intervene to assert Child's loss of consortium claim, we affirm the district court's decision denying Petitioner's appointment as co-personal representative.

{13} Even though we are addressing whether an adversity of interest exists sufficient to preclude Spoon's serving as the personal representative, we apply the de novo standard of review applicable to the determination of whether a conflict of interest exists. See State ex rel. Children, Youth & Families Dep't v. Tammy S., 1999–NMCA–009, ¶ 19, 126 N.M. 664, 974 P.2d 158 (stating we review whether a conflict of interest exists de novo). Although we distinguished above between an adversity of interest and a conflict of interest, we believe the determination of whether either exists is sufficiently similar to warrant application of the same standard of review. Accordingly, we review Petitioner's argument de novo.

A. Adversity of Interest

{14} Petitioner argues that an adversity of interest exists because Spoon's conduct in the related probate proceedings evinces a hostility toward Child's rights as an heir and because Spoon's individual claims against Defendant make Spoon's and Child's interests in the distribution of any recovery adverse to one another. Petitioner contends that these adversities of interest can be resolved by disqualifying Spoon from representing Child's interest in the wrongful death action and appointing Petitioner co-personal representative.

{15} Petitioner first contends that the facts surrounding Spoon's appointment as personal representative for the estate—not the wrongful death action—establishes an adversity of interest. Petitioner claims that before paternity was established, Spoon sought appointment as the executor of Decedent's estate without notifying Child and represented to the probate court that she was aware of no other heirs besides herself and Decedent's mother. Petitioner contends that this conduct by Spoon indicates that Spoon's interests are directly adverse to Child's and, therefore, she cannot fulfill her duties as the personal representative in the wrongful death action.

{16} We are unpersuaded that this conduct indicates an adversity of interest sufficient to preclude Spoon from representing Child as the personal representative. Under the Act, Spoon is required to distribute any recovery under the claim in strict accordance with the statutory distribution provisions. NMSA 1978, § 41–2–3 (2001); Spencer, 2013–NMSC–010, ¶ 22, 299 P.3d 388 (“[T]he personal representative has a nondiscretionary duty to distribute the wrongful death proceeds in the ratio prescribed by the [Act].”). Under these provisions, Spoon and Child will each receive fifty percent of any recovery based on the wrongful death action. Section 41–2–3(B).

{17} During the time Spoon sought appointment as personal representative of the estate, test results confirming that Decedent was Child's father were still being processed. Once paternity was established, Spoon consistently maintained, both below and on appeal, that Child became entitled to his statutory share of any wrongful death recovery and that she intends to fulfill her duty toward him. Spoon's acknowledgment of this duty stands in sharp contrast to the facts in Spencer, where the personal representative's challenge to another statutory beneficiary's entitlement to his share of the wrongful death proceeds created a conflict of interest.² 2013–NMSC–010, ¶ 25, 299 P.3d 388. Accordingly, we do not agree with Petitioner that Spoon's conduct in the probate proceedings creates an adversity of interest that requires her disqualification or the appointment of a co-personal representative.

{18} Second, as to Petitioner's argument that Spoon's pursuit of her individual claims conflicts with her role as personal representative, we briefly summarize the nature of the adversity of interest that Petitioner alleges. Petitioner argues that Spoon, invested with settlement authority in her capacity as personal representative, has an incentive to allocate settlement proceeds toward her individual claims and away from the wrongful death action. Petitioner claims that this creates an adversity of interest necessitating the appointment of Petitioner as co-personal representative to protect Child's interest because otherwise Spoon will have every incentive to maximize her recovery to the detriment of Child.

{19} We recognize that there is an adversity of interest but conclude that in this context it does not require that Spoon be removed. We cannot speculate whether Spoon will ultimately comply with her statutorily mandated responsibilities to Child in the event of a recovery. As we discuss below, however, her failure to do so would expose both her and her attorney to significant liability. Here, we merely conclude that the fact that a personal representative is also pursuing individual claims in the suit is not a sufficient basis by itself to presume that the interests of the personal representative and the statutory beneficiaries are so adverse as to preclude the individual from representing the statutory beneficiaries' interests in the action. Cf. Gresham v. Strickland, 784 So.2d 578, 581–82 (Fla.Dist.Ct.App.2001) (stating that “[h]ostility or tension between a trustee and potential beneficiaries” or “disagreements over litigation” are not grounds for removal of a personal representative).

{20} We recognize that this adversity of interest between Child and Spoon could conceivably evolve into a conflict of interest between Spoon and her attorney with respect to Spoon's individual claims, on the one hand, and her claim as a statutory beneficiary of the wrongful death estate, on the other hand. For example, if the tortfeasor's insurer were to offer policy limits that could not reasonably compensate all claims, then Spoon's attorney may find that his representation of Spoon's individual claims materially limits his responsibilities to her wrongful death action, or vice versa. But such a conflict has not yet developed in this case and may never develop.

{21} As amici curiae have pointed out, where one of the beneficiaries is a minor, it is often the practice to seek court approval of any settlement and appointment of a guardian ad litem to advise the district court on the appropriateness of the allocation of settlement amounts. See Collins ex rel. Collins v. Tabet, 1991–NMSC–013, ¶¶ 30–31, 111 N.M. 391, 806 P.2d 40 (“[W]e have no reason to doubt [ ] that it is the general practice in New Mexico for a guardian ad litem to be appointed to represent the interests of a minor in any proceeding to secure court approval of a settlement involving the minor.... The guardian ad litem thus may fulfill the dual role of providing information to the court to enable it to pass on the reasonableness of a settlement, while at the same time protecting the ward's interests by zealous advocacy and thorough, competent representation.”). We encourage the parties to consider this process in the event that a settlement is reached.

B. Appointing Co–Personal Representatives Would Not Remedy Any Potential Adversity of Interest

{22} Although we conclude that the adversity of interest we have recognized does not require removal of Spoon as the personal representative, we acknowledge that Petitioner's concerns are not entirely unfounded. See Home Ins. Co. v. Wynn, 229 Ga.App. 220, 493 S.E.2d 622, 626 (1997) (holding that a personal representative breached her fiduciary duty...