Opinion ID: 2607318
Heading Depth: 3
Heading Rank: 2

Heading: The Estate's Sale of Its Interest in the Partnership

Text: In response to Paula's objections to the Opinion of Value, Donna obtained an analysis and ultimately a full appraisal of the value of the estate's interest in the partnership. The Opinion of Value considered the values of the partnership's properties in Alaska as well as properties owned and located in the states of Washington and Colorado. The full appraisal was limited to just some of the partnership properties which were located in Alaska. Paula advances two substantive objections to the full appraisal of the partnership's assets. First, she notes that the full appraisal does not purport to evaluate the partnership properties which are located in the states of Colorado and Washington. Second, both sets of property evaluations offered by [the appraiser] assume that the `best and highest use' of the partnership's real property holdings is a residential use and the appraisals were completely silent on the property's mineral value or commercial use. Unlike Paula's belated attack on the superior court's approval of the sale of the estate's stock holdings in Carroll-Vondra, Inc., her objections to the estate's sale of its half interest in the partnership were timely filed. Thus, we reach the merits of the issue. The Opinion of Value valued the estate's half interest in the partnership at $290,200. This figure was subsequently revised to $274,049 because of an error in the computation of the original value. The Land and Buildings component of the Opinion of Value set forth a value of $337,048. This figure consisted of eleven tracts of land. After Paula objected to the Opinion of Value appraisal, five of these eleven tracts were reappraised in the full appraisal. The differences in valuation amounts between the Opinion of Value and the full appraisal for these five tracts are as follows: Description Opinion of Value Full Appraisal Difference Ripple [11] 14,600 42,200 +27,600 Plack Road [12] 3,000 4,200 +1,200 Van Horn Road [13] 57,000 63,300 +6,300 BFG Property [14] 28,000 56,250 +28,250 Fox [15] 63,400 80,250 + 16,850 Totals: $166,000 $246,200 $80,200 ======== ======== ======= Based upon our review of the record we hold that the superior court's approval of the estate's sale of its 50% interest in the Carroll-Vondra partnership should be set aside and vacated. We reach this disposition for the following reasons. First, the full appraisal upon which the superior court relied in approving the personal representative's motion to sell the estate's interest in the partnership is underinclusive in that it omitted to value the partnership's holdings in the states of Colorado and Washington. [16] Second, the full appraisal fails to value four other Alaska partnership properties (tracts) which were valued in the Opinion of Value. Third, on this record the qualitative differences between the values listed in the Opinion of Value and those properties appraised in the full appraisal can not be characterized as mere semantic differences. [17] The basic duty of a personal representative is to act in accordance with the standards in dealing with the [estate] assets that would be observed by a prudent man dealing with the property of another.... AS 13.36.075, AS 13.16.350. The probate code requires the personal representative to make an inventory and appraisement which lists the fair market value of estate assets. AS 13.16.365. Subject to the prudent person standard, employment of appraisers are discretionary. AS 13.16.370. The personal representative has a duty to make a supplementary inventory and appraisement if property not included in the original inventory comes to the personal representative's knowledge or if the personal representative learns that the value or description indicated in the original inventory for any item is erroneous or misleading. AS 13.16.375. The personal representative is authorized to sell estate property (except in cases of conflict of interest) without approval of the court. AS 13.16.390, AS 13.16.410(6). In general, the personal representative can do anything that the deceased might have done, AS 13.16.390, as long as it comports with the prudent person standard. In the present case, Donna sought approval of the sale of the partnership assets. Over objection, the trial court granted approval of the sale. Such approval may preclude on res judicata or collateral estoppel grounds a subsequent claim by Paula that the sale was in breach of the personal representative's duties. See Gump v. Wells Fargo Bank, 237 Cal. Rptr. 311, 322 (Cal. App. 1987) (approval of executor's account bars on res judicata grounds subsequent claim of mismanagement). Paula argues that Donna, as personal representative, had a duty to properly and fully appraise all partnership assets. She contends that Donna violated this duty, requiring that the sale of the partnership assets be set aside. If a duty to obtain a full formal appraisal exists, it is founded not on any specific statutory requirement that an appraiser be employed or that an appraisement take any particular form, but on the more general duty of prudent management. In this case the trial court did not address the question of whether the sale was consistent with the prudent person standard. The discrepancies between the original opinion of value and the subsequent appraisal, the fact that the sale price was not increased in line with the subsequent appraisal, and the fact that not all of the property was covered in the subsequent appraisal all raise questions as to whether the sale was in accordance with the standard. It is for these reasons that we have concluded that the superior court's order approving the estate's sale of its interest in the Carroll-Vondra partnership must be set aside and the matter remanded with directions to the trial court to specifically address whether the sale accords with the prudent management requirement. The court may conduct supplemental evidentiary proceedings prior to entering findings of fact and conclusions of law on this point. AFFIRMED in part, VACATED in part, and REMANDED for further proceedings consistent with this opinion.