No. 93-434 IN THE SUPREME COURT OF THE STATE OF MONTANA 1994

No. 93-434 IN THE MATTER OF THE ESTATE OF, JUSTIN PETERSON, also known as JUSTIN C. PETERSON, Deceased.

APPEAL FROM: District Court of theThirteenth Judicial District, In and for the County of Yellowstone, The Honorable G. Todd Baugh, Judge presiding.

COUNSEL OF RECORD: For Appellant: Charles F. Moses, Moses Law Firm, Billings, Montana 

### For Respondent: James L. Jones,WilliamA. Cole, RichardA. Brekke, Dorsey & Whitney, Billings, Montana

Submitted on Briefs: February 24, 1994 Decided: May 20, 1994 Filed: 

### MAY

### 2

### 01994

..: ?' /,., .:? p s.+- CLERKOFSUPhi?ii~ COURT 

### ; -. ; ;;ywd:,+,.~ STATE OFwe I. ._)

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;. CFeirk 1;'

### Justice Fred 3. 

### Weber delivered the Opinion of 

### the Court. This is an appeal by 

### Michael J. 

### Whalen 

### from an Order of the District Court of 

### the Thirteenth Judicial District, Yellowstone County, removing him 

### for cause from his 

### duties as personal representative in the above-entitled informal probate proceeding. We affirm. We 

### have restated the issues as follows: 1. Did the 

### District Court abuse 

### its discretion by 

### removing Michael J. 

### Whalen as personal representative of 

### the estate of 

### Justin Peterson? 11. 

### Did the District Court err inappointing David Peterson, the sole heir, as the 

### successorpersonal representative? 111. 

### Should the appellant be sanctioned and ordered to pay respondent's attorney fees and costs pursuant to Rule 32, M.R.App.P., 

### for bringing a

### meritless appeal? Justin C. 

### Peterson died on March 25, 1993 

### at the age of 33 

### years. David L. 

### Peterson is the younger brother of 

### Justin C. 

### Peterson, the deceased, and the 

### sole beneficiary under Justin Peterson's will. Justin and David Peterson, although part of 

### a large 

### family,were raised ina series of fosterhomes. During part of 

### their time in high 

### school after Justin

### was "on his 

### own,'' they 

### lived together in a tent in a cave in the llrimsll in Billings. David has 

### suffered from cerebralpalsy sincebirth and one 

### of his teachers would pick 

### him up in 

### the morning to 

### take him to 

### school when theboys 

### lived inthetent. The 

### record indicatesanextremelyclose relationshipbetween the two brothers which continued until Justin's death inMarch of 1993. Justin Peterson died from complications resulting from an accident which occurred on June 23, 1982,while swimming at Lake Elmo, a recreational facility in Billings. As an immediate result of that accident, Justin was rendered a quadriplegic, completely dependent on others for his care, including feeding, and he was unable to breathe without the assistance of 

### a respirator or ventilator. Although he could talk, he spoke with difficulty. During the eleven years in which Justin survived following the accident,he endured repeated life-threatening complications. David lived with Justin following his release from the hospital in September of 1984 and was granted a limited power of attorney by Justin to handle household matters. Another limited power of attorney was given to an accountant who handled payroll matters and taxes for Justin. Justinneeded round-the-clock care until the time of his death and employed nursing assistance for such care. Justin had been hospitalized from the date of the accident in 1982 until September 1984, and was able to leave the hospital and move into a home he had purchased only after a settlement was obtained for him by his attorneys. Ernest F. Boschert of the Boschert & Boschert law firm was contacted by other family members in January 1983 to represent Justin. Mr. Boschert subsequently associated with Michael J. Whalen of theWhalen & Whalen law firm to represent Justin inhisclaim against the owners of the recreational area, Kimble Properties and Tymon, Inc. On February 2, 1983,Justinsignedacontingency feeagreement with Michael J. Whalen and Ernest F. Boschert which provided the following fee schedule: 25% of the recovery if the case was settled prior to filing a complaint indistrict court; 33 1/3% of the recovery after a complaint was filed in district court; 40% of the recovery if the casewas set for trial orwas tried; and 5%additional if the casewas appealed or therewas anew trial. On February 22, 1983, the law firmof Whalen & Whalen filed a two-page complaint againsttheownersof Lake Elmo. Threerequests

were made for the District Court to set a trial d.atewithin the ensuing months of 1983. The first such request 

### was made of 

### the presiding judge in the matter, Judge Wilson, 

### on August 16, 1983. JudgeWilson deemed himself disqualified and the case

### was assigned to Judge Barz. On September 2, 1983,another request

### was made to set the matter for trial; this time, Judge Barz disqualified herself. The case was then assigned to Judge Speare. Timothy Whalen of Whalen & Whalen wrote 

### a letter on September 7, 1983, again requesting that the cause be placed on the trial calendar. On October 17, 1983,the ~istrict Court entered an order setting a trial date. As a result of the foregoing actions, 

### the amount of fees increased to 40% under the contingencyagreement.On March 9, 1984, Michael J. Whalen made an offer to settle the case for policy limits of $2,500,000 cash or, in the alternative, for $1,250,000 cash and $1,875,000 to be paid in installments of $15,625 per month over a ten-year period, for a total of $3,125,000. The defendants' insurers accepted the alternative proposal without making 

### a counteroffer. The final payments on this alternative settlement proposal will be made in May, 1994. After the 1984 settlement,Michael J. Whalen drafted a will for Justin Peterson in which he and Ernest 

### F. Boschert were named as co-personal representatives. Ernest F. Boschert predeceased Justin Peterson and has not acted as personal representative. Following the death of Justin Peterson, Michael J. Whalen was appointedaspersonal representative ofhis estate. David Peterson obtained separatecounsel and asked Michael J. Whalen to step aside

as personal representative of his brother's estate. After discussions,Mr. Whalen declined to resign. OnMay 27, 1993, David Peterson filed a petition to removeMichael J. Whalen as personal representative which is the subject of this appeal. After a hearing held on June 16, 1993, the District Court removed Mr. Whalen and appointed David Peterson as successor personal representative in an order dated July 20, 1993. David Peterson has filed a claim against the Whalen and Boschert firmswith regardto the feeagreement. Michael J. Whalen filed suit against the estate of Justin Peterson (the Estate) to

### recover his legal expenses. Issue I. 

### Did the District Court abuse its discretion by removing Michael J. 

### Whalen as personal representative of the estate of Justin Peterson?

In the petition for removal of Michael J. Whalen as personal representative of the Estate, David Peterson stated that the attorney fees on the part of the two law firms were excessive in relation to the amount of work done in connection with Justin Peterson's personal injury claim. After a hearing on June 16, 1993 

### to determine whether Mr. Whalen should be removed for cause, the District Court determined that a 

### conflict of interest existed between the Estate and Mr. Whalen as Mr. Whalen could not be expected to pursue a claim against himself onbehalf of theEstate. Apersonal representative may be removed for cause in certain situations under 

### 5 72-3-526, 

### MCA, which provides inpertinent part: 72-3-526. Termination of appointment

# -- removal for cause. (1) 

### A person interested in the estate may petition for removal of a personal representative for cause at any time. Upon filing of the petition, the court shall fix a time and place for hearing. Notice shall be given by the petitioner to the personal representative and to other persons as the court may order. 

# .

# . . (2) 

### Cause for removal exists: (a) when removal would be in the best interests of the estate; or (b) if it is shown thatapersonal representative or the person seeking his appointment intentionally misrepresented material facts intheproceedings leading to his appointment or that the personal representative has disregarded an order of the court, has becomeincapable of dischargingtheduties ofhis office,orhas mismanaged the estate or failed to Derform anv dutv pertainins to the office. (Emphasissupplied.) Removal of apersonal representative for cause pursuant to 8 72-3- 526, MCA, iswithin the sounddiscretion of thedistrict court and this Court will not overturn such a terminationunless there is a clear abuse of discretion. In re the Estate of Nelson (1990), 243 Mont. 276, 278, 794 P.2d 677, 678. A district court can remove a personal representative or refuse to appoint a person aspersonal representative forcause if there is a conflict of interest between thatperson's interestsand those of the estate. In re the Estate of Obstarczyk (1963),141Mont. 346, 351-53, 377 P.2d 531, 534-35. The District Court expressly relied on Estate of Obstarczvk, which affirmed a removal of an executrix on the grounds that her interests were adverse to the estate and held as follows:



# . ..Theduty of an executor is to examine strictly all claims against an estate 

# . . . seeking judicial interpretation if necessary. 

# . . . It is clear that [the executrix's] own interests are antagonistic to the estate.

In the 

### Tice case, supra, we quoted with approval from In re Rinio's Estate (1933), 93 Mont. 428, 435, 19 P.2d 322, 325, as follows: 

## "* * * The law does not look with favor upon the administration of estates by a person where conflicts in theperformance of his duty are likely to arise." Estate of Obstarczvk, 377 P.2d at 534. We conclude that the potential claim against Michael J. Whalen for excessive attorney fees is sufficient to create a conflict of interest in this case.A conflict of interest is sufficient for removal of the personal representative for cause under § 72-3-526, MCA. We hold the District Court properly exercised its discretion in determining that it was in the best interests of the Estate to

remove Michael J. Whalen as personal representative. Issue 11. Did the District Court err in appointing David Peterson, the sole heir, as the successorpersonal representative? Mr. Whalen also contends that David Petersonwas not aproper person for appointment as successorpersonal representative of the Estate. AlthoughMr. Whalen testified as noted above thathewould not pursue a claim againsthimself,he stated that he was willing to have a special administratorappointed to explore that claim if the courtdeniedhismotion todismissDavid Peterson's petitionto

removehim as personal representative. Section 72-3-527, MCA,provides thatparts 2 and 3 of Chapter 72 govern proceedings for appointment of 

### a successor personal representative to succeed one whose appointment is terminated; thus, 

### 5 72-3-502, MCA, governs here and provides as follows: 72-3-502. Priorities for appointment. Whether the proceedings are formal or informal, persons who are not disqualified have priority for appointment in the following order: (1) the person with priority as determined by a probated will, including a person nominated by a power conferred in a will; (2) the surviving spouse of the decedent who is a devisee of the decedent; (3) the custodialparent of a minor decedent; (4) other devisees of the decedent; (5) the surviving spouse of the decedent; (6) other heirs of the decedent;(7) public administrator; (8) 45 days after the death of the decedent, any creditor. We reviewtheappointment of apersonal representative accordingto 3 72-3-502, MCA, to determine whether a district court has correctlyinterpretedthelaw. Steer Inc.v. Department of Revenue

(lggO),245 Mont. 470,474-75,803 P.2d 601,603. We conclude that under the order of priority set forth in 3 72-3-502, MCA, David Peterson has first priority of appointment as there exist no persons fittingthedescriptionsof subsections (1) through (3)and he is the soledevisee under hisbrother'swill. Further,he will

serve as personal representative at no charge and as noted by the District Court, a special administrator would increase costs unnecessarily. Moreover, 5 72-3-503(I),MCA, provides that an objection to the appointment of a personal representative can be made 

### & in formal proceedings. JustinC. Peterson's will isbeing informally probated. On that basis,Mr. Whalenmay not object to the District Court's appointmentof David Petersonaspersonal representativeof the Estate. We hold the District Courtproperly appointed David Peterson, the sole heir, as the successor personal representative of the estate of Justin C. Peterson.

Issue 111. Should the appellant be sanctioned and ordered to pay respondent's attorney fees and costs pursuant to Rule 32, M.R.APP.P., for bringing a meritless appeal?

### David Peterson contends that this Court should assess sanctions against Mr. Whalen and his attorneys for bringing a meritless appeal. He further claims that it was brought for an improperpurpose. Thus,he asks this Court to requireMr. Whalen to reimburse him for his reasonable costs and attorney fees incurred in connection with this appeal. On the record before us we hold there is no basis for sanctions to be assessed against the appellant for attorney fees and costspursuant toRule 32,

### M.R.App.P., forbringingameritless appeal. Affirmed.

We Concur:



### , Justices

JusticeWilliam E. Hunt, Sr., and Justice Terry N. Trieweiler did not participate.tothe