Tisher v. Norwest Capital Management & Trust Co., Inc.

Decision Date23 September 1993
Docket NumberNo. 92-526,92-526
Citation260 Mont. 143,859 P.2d 984
CourtMontana Supreme Court
PartiesBill D. TISHER and Gayle Schleve, as personal representatives for Viola J. Heath, Deceased, Plaintiffs and Appellants, v. NORWEST CAPITAL MANAGEMENT & TRUST CO., INC., Montana, Defendant and Respondent.

Robert L. Johnson, Lewistown, J. Douglas Alexander, Sidney, for plaintiffs and appellants.

Earl Hanson, Hanson & Todd, Billings, Walter S. Murfitt, Luxan & Murfitt, Helena, for defendant and respondent.

GRAY, Justice.

Bill Tisher and Gayle Schleve (Tisher and Schleve) appeal from an order of the Thirteenth Judicial District Court, Yellowstone County, granting summary judgment to Norwest Capital Management and Trust Co. (Norwest) and denying their motion for summary judgment. We affirm.

The sole issue on appeal is whether the District Court erred in concluding that res judicata barred the claims asserted by Tisher and Schleve.

The facts surrounding this litigation are voluminous but relatively undisputed. Caleb and Viola Heath, longtime residents of Glendive, Montana, worked hard, were frugal, and accumulated considerable wealth during their lifetimes. They had no children, few intimate friends and were not particularly close to their relatives. On March 17, 1976, after consulting with their attorney, Kenneth Haag, Caleb and Viola each executed revocable living trusts leaving the bulk of their respective estates to charitable organizations, including the John Birch Society and the Twentieth Century Reformation Hour. Both trusts named Norwest as sole trustee. On the same date, Caleb and Viola executed "pour-over" wills that named the trusts as the beneficiaries of their residuary estates.

In 1977, Carol and Richard Schleve, Caleb's niece and her husband, moved in with Caleb and Viola. On December 6, 1977, attorney Haag received a letter from attorney Jerome Cate which, on apparent authorization of Caleb and Viola, terminated Haag's services as Caleb and Viola's attorney. On January 5, 1978, Caleb and Viola executed documents entitled "Amendment of Trust Agreement," which benefitted their heirs instead of the charities mentioned above. On that date, Caleb and Viola also executed new wills which benefitted their heirs.

To assist Caleb and Viola in managing their property, they were advised to seek the appointment of First Trust Company of Montana (First Trust) as their conservator. On February 3, 1978, Caleb and Viola filed petitions in the District Court nominating First Trust as their conservator. Two weeks later, Caleb and Viola both executed documents entitled "Revocation of Trust," which purported to entirely revoke the trusts with Norwest.

On February 24, 1978, Norwest, as trustee for Caleb and Viola's trusts, filed an appearance in both of the conservatorship actions. Norwest asserted that Caleb and Viola were legally incompetent to execute either the amendments or the revocations to their trusts. Norwest also sought a protective order restraining all parties from interfering with the trusts until a court had determined the validity of the amendments and revocations.

Following a hearing, the District Court appointed First Trust as conservator of both Caleb and Viola's assets and issued the protective order requested by Norwest. The court reserved for later judicial determination the issues of validity of the purported amendments and revocations.

On April 5, 1978, First Trust, as Caleb and Viola's conservator, filed a complaint against Norwest. Denominated Cause No. 10488A, the complaint alleged that Norwest had improperly converted the assets of Caleb and Viola when it refused to comply with the amendments and revocations of the trusts, and had mismanaged the trusts in violation of Montana statutes. The complaint was later amended, and damages were stated to be $6,500,000.

On July 10, 1978, the District Court granted partial summary judgment for Norwest on the issue of conversion. Regarding the mismanagement claim, the court ordered:

It is further ordered that such remaining part of the Plaintiff's cause as may relate to the issues raised in their petitions filed in Probate Causes No. 10621 and No. 10622 relating to Caleb C. Heath and Viola J. Heath, are hereby dismissed without prejudice, for the purpose of determining those issues in the appropriate conservatorship forms [sic].

On August 17, 1978, Caleb died. Both his March 17, 1976 will and his January 5, 1978 will were filed for probate. The District Court, pursuant to Rule 42, M.R.Civ.P., consolidated the following actions:

. Cause No. 10621 Conservatorship of Caleb

. Cause No. 10622 Conservatorship of Viola

. Cause No. 10650 Petition for Probate of Caleb's 3-17-76 will

. Cause No. 10652 Petition for Probate of Caleb's 1-5-78 will

On December 15, 1980, in the consolidated action, a Joint Petition for Settlement was filed to settle all pending litigation between First Trust, Norwest and Caleb and Viola's heirs. The District Court issued findings of fact, conclusions of law and order approving the settlement on December 30, 1980. Under the settlement, Caleb and Viola's 1976 trusts and wills were acknowledged to be valid and operative. In exchange, the heirs would receive $1,000,000 from the trust monies.

When the settlement was final, Norwest was appointed as Viola's conservator at First Trust's request. Norwest also was named special administrator for Caleb's estate. On April 3, 1981, Norwest filed a combined final accounting as special administrator of Caleb's estate and as trustee for Caleb's trust. No objections were filed. The District Court approved the final accounting and dismissed with prejudice all pending litigation in the consolidated action on May 18, 1981. The final accounting provided that Caleb and Viola's 1976 wills and trusts were valid and operative and distributed Caleb's assets pursuant to the 1976 will and trust. Norwest continued to manage Viola's trust and filed periodic accountings.

Viola died on December 13, 1987. Pursuant to Viola's March 17, 1976, will, Norwest was appointed co-personal representative with Mr. Donald Bouchard. On March 1, 1988, Norwest, as Viola's conservator, filed its final accounting of the conservatorship with the District Court. On March 15, 1988, the court held a hearing on the conservatorship and issued an order approving the final accounting, including leave to distribute the assets of the conservatorship into Viola's probate estate. Viola's co-personal representatives subsequently filed the closing statement in the probate proceeding of Viola's 1976 will on September 14, 1988.

Approximately six months after the closing statement was filed, Tisher and Schleve sought probate of Viola's January 5, 1978 will. Schleve is Caleb's niece and Tisher is Viola's nephew. Norwest contested the 1978 will and the matter was set for trial. As part of a settlement, the parties agreed to admit Viola's 1978 will to probate. At that time, less than $100,000 in assets, those not previously placed in the trust, remained for distribution under Viola's will. Pursuant to Viola's 1978 will, Tisher and Schleve were appointed co-personal representatives of Viola's estate.

Tisher and Schleve, as co-personal representatives of Viola, filed the present action against Norwest on October 10, 1990. The complaint alleged that Norwest failed to distribute the trust assets as provided for in the amended trust or, alternatively, failed to return Viola's assets after receiving her revocation of the trust. They also claimed that Norwest, as Viola's conservator from December 30, 1980, to her death, had breached its fiduciary duty to Viola by mismanaging her estate to its own benefit. Norwest moved for, and was granted, a change of venue to Yellowstone County.

Norwest then moved for summary judgment on the complaint; Tisher and Schleve responded by moving for summary judgment on their claims relating to Viola's amendment and revocation of her trust. The Thirteenth Judicial District Court, Yellowstone County, granted Norwest's motion, denied Tisher and Schleve's motion, and dismissed their complaint in its entirety. This appeal follows.

Did the District Court err in concluding that res judicata barred the claims asserted by Tisher and Schleve?

The District Court initially applied the doctrine of res judicata to Tisher and Schleve's claims concerning the purported amendment and/or revocation of Viola's trust. The court found that Viola was a party to her conservatorship action, Cause No. 10622 in Dawson County, and that Norwest had raised the issue of her competency to execute the amendment and the revocation in that action. The court concluded that the settlement and dismissal with prejudice of Cause No. 10622 in the consolidated action barred relitigation of the validity of the purported amendment and revocation.

The court also determined that Norwest's accountings of its actions regarding the trust estate precluded further litigation regarding Norwest's management of the trust estate. Thus, the court concluded that res judicata barred the breach of fiduciary duty claim as well. We will examine each of the court's conclusions regarding res judicata in turn.

Our standard in reviewing a grant of summary judgment is the same as that initially used by the trial court. McCracken v. City of Chinook (1990), 242 Mont. 21, 24, 788 P.2d 892, 894. Summary judgment is appropriate when the pleadings, depositions, and other documents on file demonstrate that no genuine issue of material fact exists and that the moving party is entitled to judgment as a matter of law. Rule 56(c), M.R.Civ.P. Here, the District Court's summary judgment decisions turned on its legal conclusion that res judicata barred Tisher and Schleve's claims. Our review of legal conclusions is plenary. Steer, Inc. v. Dep't of Revenue (1990), 245 Mont. 470, 475, 803 P.2d 601, 603.


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