Valer v. Bartelson (In re Estate of Bartelson)

• Decision Date: 11 June 2015
• Docket Number: No. 20140244.,20140244.
• Citation: 864 N.W.2d 441
• Parties: In the Matter of the ESTATE OF Ralph BARTELSON, deceased. Jean Valer and Jane Haught, Petitioners and Appellees v. Neil Bartelson, Steven M. Fischer, Personal Representative of the Estate of Diane Fischer and Guardian and Protective Services, Personal Representative, Respondents. Neil Bartelson, Appellant.
• Court: North Dakota Supreme Court

864 N.W.2d 441

In the Matter of the ESTATE OF Ralph BARTELSON, deceased.

Jean Valer and Jane Haught, Petitioners and Appellees

v.Neil Bartelson, Steven M. Fischer, Personal Representative of the Estate of Diane Fischer and Guardian and Protective Services, Personal Representative, Respondents.

Neil Bartelson, Appellant.

No. 20140244.

Supreme Court of North Dakota.

June 11, 2015.

William C. Severin, Bismarck, N.D., for petitioners and appellees.

Clark J. Bormann (argued) and Sophie Y. Morgan (appeared), Bismarck, N.D., for respondent and appellant.

Opinion

SANDSTROM, Justice.

[¶ 1] Neil Bartelson appeals from an order denying his petition to remove Guardian and Protective Services (“GAPS”) as personal representative of Ralph Bartelson's estate and to appoint him as successor personal representative. Because the district court failed to apply the presumption of undue influence and incorrectly presumed there can be no undue influence if the principal is lucid, we reverse and remand.

I

[¶ 2] This is the third time this case has been before us. The facts of this case have been explained in detail in Estate of Bartelson, 2011 ND 219, 806 N.W.2d 199 (“Bartelson I ”), and Estate of Bartelson, 2013 ND 129, 833 N.W.2d 522 (“Bartelson II ”), and will be repeated as necessary to explain the resolution of the issues in this appeal.

[¶ 3] Ralph Bartelson had four children: Neil Bartelson, Diane Fischer, Jean Valer, and Jane Haught. Because of Ralph Bartelson's declining health, the children agreed Ralph Bartelson would reside with Valer and she and Haught would receive compensation for the care they provided. While living under the care of Valer, Ralph Bartelson gave her a power of attorney and established a joint checking account, naming both Valer and Haught co-owners with rights of survivorship and allowing them to issue checks from the account. Alleging Valer and Haught had misappropriated funds, Neil Bartelson and Fischer petitioned for the appointment of Neil Bartelson as Ralph Bartelson's guardian and conservator. In July 2008, the parties stipulated that Valer would act as guardian with limitations and GAPS would be appointed conservator and be responsible for investigating the alleged misappropriation of funds. This stipulation provided:

[T]he conservator ... will be empowered to investigate and pursue any inappropriate expenditures from the ward's funds if the conservator deems it appropriate so to do.... [T]ransfers Ralph made to Jean Valer, Jane Haught and Diane Fischer in December of 2007 of $12,000 and in January of 2008 of $60,000 will not be contested but all other transfers are subject to review by the conservator.

[¶ 4] Upon Ralph Bartelson's death in August 2008, the district court granted Valer's and Haught's request that Ralph Bartelson's will be admitted to informal probate, and the court appointed Valer and Haught as co-personal representatives of the estate. In February 2009, Neil Bartelson and Fischer petitioned for formal probate of Ralph Bartelson's will and requested the appointment of a different personal representative. Prior to the hearing on the petition, Neil Bartelson, Fischer, Valer, and Haught stipulated to admitting Ralph Bartelson's will to formal probate and to appointing GAPS as successor personal representative. The district court then ordered formal probate for Ralph Bartelson's will and appointed GAPS as personal representative of his estate.

[¶ 5] In July 2009, GAPS moved for court approval of compensation to Valer and Haught for the expenses they incurred while serving as personal representatives of Ralph Bartelson's estate. Neil Bartelson and Fischer objected to the expenditure requests and reasserted their allegation that Valer and Haught had misappropriated estate funds prior to GAPS' appointment as personal representative. In March 2010, the parties stipulated to payment of the expenditures requested by GAPS, but conditioned the payments upon the parties reaching a settlement or abiding by a court judgment on the issue of misappropriation of funds. As part of the stipulation, the parties agreed to fully cooperate with GAPS in preparation of an inventory and accounting of assets, income, withdrawals, and deposits and to allow GAPS to employ a forensic accountant to analyze the misappropriation claims. The stipulation stated:

4. Before any payment is made from the assets of the Estate to any heir, the parties will either

a. reach a settlement agreement pertaining to the claims identified in Paragraph 5 below or

b. abide by a final Judgment of the Trial Court determining the merits of the claims identified in Paragraph 5 below if settlement cannot be reached. The amounts awarded to the Estate in either the settlement agreement or Judgment of the Trial Court, as the case may be, shall then be used as an offset against any amounts to be distributed to any heir.

5. Claims include the following (from January 1, 2005 to the present):

a. Funds paid or withdrawn from Ralph Bartelson's accounts or assets which exceeded agreed-upon or reasonable care-giving or expense reimbursement;

b. Accounting of property owned by Ralph Bartelson, such as the van, lift, mule and/or four-wheeler, hospital bed, gold fob, billfold, watch, tractors, trailers, farm machinery and equipment, property sold at auction and the proceeds received, etc.

c. Rent, royalties and income owed to Ralph on land sold and/or conveyed in which he reserved life estates; and

d. Loans made by Ralph to family members.

[¶ 6] In accordance with the parties' stipulation, GAPS employed the services of Terry Daffinrud, a forensic CPA, to review transfers of Ralph Bartelson's assets to his family members occurring between 2002 and GAPS' appointment as personal representative. Daffinrud determined that between 2003 and Ralph Bartelson's death in 2008, Valer received funds in excess of $154,000.00 and Haught received funds in excess of $133,000.00. Although Daffinrud was able to provide a summary of the funds expended from Ralph Bartelson's estate, he was unable to determine the reason for and appropriateness of each transfer, because Valer and Haught failed to provide the requested documentation. Because he was provided “virtually nothing” in terms of the documentation he requested from Valer and Haught, Daffinrud testified he was unable to determine whether the loans, gifts, cash withdrawals, and payments for care made to or by Valer and Haught were appropriate or reasonable. Despite Daffinrud's suspicion and uncertainty regarding the substantial amounts of money expended from Ralph Bartelson's checking account by Valer and Haught, GAPS did not pursue a misappropriation claim against Valer and Haught. Instead, GAPS claimed, without a finding of wrongdoing or misconduct, it had “done all that was possible” to investigate Valer and Haught's alleged misappropriation of Ralph Bartelson's funds and would await further direction from the district court.

[¶ 7] The parties remained unable to reach a settlement in regard to the misappropriation allegations, and as a result a bench trial was held. Neil Bartelson and Fischer argued that because Valer and Haught owed a fiduciary duty to Ralph Bartelson, the district court was required to apply the presumption of undue influence set forth in N.D.C.C. § 59–18–01.1 in determining whether they had misappropriated funds from Ralph Bartelson's checking account. Under this presumption, Neil Bartelson and Fischer claimed Valer and Haught were required to account for all withdrawals and transactions they made while acting as fiduciaries of Ralph Bartelson. Following trial, the district court entered an order disclaiming jurisdiction over the misappropriation that allegedly occurred prior to Ralph Bartelson's death. Neil Bartelson and Fischer appealed, and in Bartelson I, 2011 ND 219, ¶ 13, 806 N.W.2d 199, this Court held the misappropriation claims fell within the district court's jurisdiction. As a result, we reversed and remanded for further proceedings and for the court to determine whether Neil Bartelson and the Estate of Fischer¹ (“Fischer”) had standing to assert their misappropriation claims when they did not allege that GAPS breached its fiduciary duty by failing to pursue misappropriation claims against Valer and Haught. Id. at ¶ 15.

[¶ 8] On remand, Neil Bartelson and Fischer argued they had standing to bring a misappropriation claim against Valer and Haught and the district court was required to apply the presumption of undue influence under N.D.C.C. § 59–18–01.1 to any withdrawals made by Valer and Haught as fiduciaries of Ralph Bartelson. Neil Bartelson and Fischer argued that because Valer and Haught failed to rebut the presumption of undue influence by providing an accurate accounting of the withdrawals they made from Ralph Bartelson's checking account, any unaccounted-for withdrawals were presumed to have been made under undue influence. The district court, however, held Neil Bartelson and Fischer did not have independent standing to assert misappropriation claims against Valer and Haught when they did not allege that GAPS breached its fiduciary duty by failing to pursue such claims against Valer and Haught. After unsuccessfully petitioning for reconsideration, Neil Bartelson then petitioned to remove GAPS as personal representative and to be appointed as successor personal representative, arguing GAPS breached its fiduciary duty by failing to pursue the collection of assets belonging to the estate and by failing to bring an action against Valer and Haught for misappropriation. The district court denied the petition, holding Neil Bartelson was not an interested person and therefore lacked standing to petition for removal of the personal representative. The court also stated it had previously determined GAPS was qualified to act as the personal representative and competently performed its responsibilities.

[¶ 9] Neil Bartelson and Fischer moved, under Rule 60(b), N.D.R.Civ.P., to vacate the order denying their ...