Court Opinion

ID: 4303585
Source: CourtListenerOpinion
Date Created: 2018-08-14 17:22:47.145731+00
Date Added: 2024-06-11T14:33:40.679323
License: Public Domain

Filed
                                                                                           Washington State
                                                                                           Court of Appeals
                                                                                            Division Two

                                                                                           August 14, 2018

       IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON

                                              DIVISION II
    In the Matter of the Estate of:                                     No. 50708-1-II

    SANDRA L. WESTALL,
                                                                   PUBLISHED OPINION

                                      Deceased.

          MAXA, C.J. – Paul Westall, as personal representative of the community property portion

of his deceased wife Sandra Westall’s estate, appeals the superior court’s order (1) denying his

motion to sell to himself the one-half interest in certain real property in Gig Harbor that Sandra1

bequeathed to a special needs trust for their daughter Destiny Westall, and (2) appointing a third

party to engage a real estate broker to list the entire property for sale.

          The property at issue was Paul and Sandra’s community property. Following Sandra’s

death, Paul retained ownership of a one-half interest in the property and the other one-half

interest was part of Sandra’s estate that she bequeathed to the trust. Paul made offers to purchase

the estate’s one-half interest, but the trustee rejected those offers. Paul believed that he had the

authority to sell the property to himself without court approval because he was a personal

representative with nonintervention powers. But he filed a motion with the superior court to

approve the sale. The court denied the motion and directed that the entire property be listed for

1
 To avoid confusion we refer to Sandra, Paul, and Destiny Westall by their first names. No
disrespect is intended.
No. 50708-1-II

sale in an attempt to determine the property’s fair market value, although the court did not order

the sale of the property.

        We hold that (1) the superior court did not err by denying Paul’s motion to approve the

sale of the estate’s one-half interest in the Gig Harbor property to himself despite his

nonintervention powers because Paul invoked the superior court’s jurisdiction regarding the sale

and there was uncertainty regarding the property’s fair market value, and (2) the superior court

had authority to order that the entire property be listed for sale.

        Accordingly, we affirm the superior court’s order denying Paul’s motion to approve the

sale of the estate’s one-half interest in the Gig Harbor property to himself and appointing a third

party to list the property for sale.

                                               FACTS

Sandra’s Will and Grant of Nonintervention Powers

        Sandra died in March 2015 and her will was admitted to probate. Sandra was survived

by her husband Paul and their daughter Destiny. Destiny has a mild developmental delay and

some significant medical problems.

        Sandra’s will established a special needs trust to provide for Destiny’s care and named

Sandra’s brother, Bill Peacher, as the trustee. The will bequeathed Sandra’s interest in all

community property to the special needs trust.

        Sandra’s will appointed Peacher as the personal representative of the estate, to act

without intervention of any court. However, as the surviving spouse, Paul had the right under

RCW 11.28.030 to serve as the personal representative of the community property portion of

Sandra’s estate.

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No. 50708-1-II

          In May, Paul and Peacher jointly petitioned the trial court to appoint them as personal

representatives with nonintervention powers. The superior court appointed Paul as personal

representative of the estate with respect to Sandra’s community property with nonintervention

authority to administer that property without further court intervention. The court appointed

Peacher as personal representative with respect to Sandra’s separate property, also with

nonintervention authority. The court also found that the estate was solvent.

          In June, Peacher petitioned the court to appoint a litigation guardian ad litem (LGAL) to

protect Destiny’s interests in the administration of the estate. The court entered an agreed order

appointing an LGAL.

Property Value and Offers to Purchase

          One item of community property was a 2,180 square foot building in downtown Gig

Harbor. There was a retail hair salon on the main floor of the building and a living area on the

upper floor. Paul lived in the building after Sandra’s death. The building has a view of the

harbor.

          In October 2016, the LGAL obtained a comparative market analysis of the Gig Harbor

property from Julia Runyan, who estimated the property’s fair market value at up to $720,000.

Runyan believed that the property could accommodate a number of residential or commercial

uses and referred to the property as “spectacular and desirable.” Clerk’s Papers (CP) at 80.

Runyan later provided an updated analysis stating the value at $820,000 to $900,000.

          In February 2017, Peacher on behalf of the trust offered to purchase Paul’s one-half

interest in the property based on a property value of $760,000. Paul declined that offer. But

Paul then offered to purchase the trust’s one-half interest of the property for an amount not

disclosed in the record. Peacher declined that offer.

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No. 50708-1-II

       In March, the LGAL filed a petition with the superior court making various requests,

including that the court authorize her to list the Gig Harbor property for sale and to sell the

property. Paul subsequently filed a formal offer with the court to purchase the trust’s interest in

the property for $380,000 less certain offsets. A few days later, the court entered an agreed order

stating that the parties would continue to negotiate regarding the property and that the trust

would obtain and pay for an appraisal of the property.

       In June, the trust obtained an appraisal of the Gig Harbor property from Barbara Montro,

who estimated the property’s fair market value at $700,000 as of May 2017. Montro believed

that the best and highest use was redevelopment as two single-family sites. In July, Paul filed

another formal offer with the court to purchase the trust’s interest for $350,000 less certain

offsets. Paul apparently received no response.

Motion to Sell Property

       In July 2017, Paul filed a motion for an order approving the sale of the estate’s one-half

interest in the property. He asserted that as personal representative with nonintervention powers

over the administration of the community property he had authority to sell the property, but he

nevertheless was seeking court approval to avoid the impression that he had a conflict of interest.

       The trust filed a response in which it requested that the superior court order that the

property be listed for sale to receive offers and determine the actual fair market value. The trust

believed that the property had a greater market value than reflected in the appraisals. The LGAL

joined in that request.

       In support of its position, the trust submitted the declaration of real estate broker Ray

Velkers. Velkers stated that he had listed the property at Paul’s request in 2014 for $1,995,000,

which he believed was too high. However, he thought that “there are very good prospects of a

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No. 50708-1-II

sale at somewhere around $1.3 million.” CP at 491. Velkers stated that a prospective purchaser

would have to consult with the city of Gig Harbor to see if a development like a restaurant would

be allowed on the property, but he thought that it was very likely that the city would agree to a

restaurant on the property.

       Velkers concluded:

       The view from that property is spectacular, which is why I had so many interested
       prospects when the property was listed back in 2014. I am aware that the property
       has been recently appraised at $700,000, but it is my opinion that if the property
       were listed at, say $1.35 million, we would be able to find a buyer who could
       convince the City of Gig Harbor that development of that property with a restaurant
       or other use would be beneficial to the City and in keeping with the intent of the
       City’s zoning.

CP at 491.

       The trust also submitted a letter from Montro in which she explained that her $700,000

appraisal was based on the current zoning, which would allow only 50 percent of the property to

be redeveloped and would limit restaurant use to 800 square feet.

       The superior court held a hearing on Paul’s motion and stated in its oral ruling that it was

appropriate to test the market given the unique nature of the property. Accordingly, the court

entered an order denying Paul’s motion to approve a sale and appointing an attorney to list the

property for sale and bring offers to the attention of the parties. The order stated that no offer

could be accepted without court approval.

       Paul appeals the trial court’s order.2

2
  The superior court included in its order an express statement that the order was final for the
purposes of CR 54(b) and that there was no just reason for delay. However, the parties do not
raise the issue of appealability and therefore we do not address that issue.

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No. 50708-1-II

                                           ANALYSIS

A.     DENIAL OF MOTION TO APPROVE SALE

       Paul argues that the superior court erred by denying his motion to approve the sale of the

estate’s one-half interest in the Gig Harbor property to himself because (1) he had full authority

to administer the community property portion of the estate as a personal representative with

nonintervention powers and the court had no authority to interfere, and (2) approval of the sale

was in the estate’s best interest. We disagree.

       1.   Superior Court’s Authority

       Paul argues that the superior court did not have authority to deny his motion to approve

the sale of the estate’s one-half interest in the Gig Harbor property to himself. We disagree.

       The superior court granted Paul nonintervention powers as personal representative of the

community property portion of Sandra’s estate and declared that the estate was solvent. Paul

relies on RCW 11.68.090(1), which states:

       [A] personal representative acting under nonintervention powers may . . . sell, exchange,
       convey, and otherwise have the same powers, and be subject to the same limitations of
       liability, that a trustee has under chapters 11.98, 11.100, and 11.102 RCW with regard to
       the assets of the estate, both real and personal, all without an order of court and without
       notice, approval, or confirmation, and in all other respects administer and settle the estate
       of the decedent without intervention of court.

(Emphasis added.)

       In general, a superior court has very limited authority3 to intervene in the administration

of a nonintervention estate once the court declares the estate solvent. In re Estate of Rathbone,

3
  Some cases refer to the superior court’s “jurisdiction” when discussing nonintervention estates.
E.g., In re Estate of Jones, 152 Wash. 2d 1, 9, 93 P.3d 147 (2004). But as the Supreme Court
recently noted, the actual question involves the superior court’s statutory authority and in this
context “jurisdiction” and “authority” are synonymous. In re Estate of Rathbone, 190 Wash. 2d
332, 339 n.4, 412 P.3d 1283 (2018).

                                                  6
No. 50708-1-II

190 Wash. 2d 332, 339, 412 P.3d 1283 (2018). However, the court can regain authority if the

personal representative or another person with statutorily conferred authority properly invokes

that authority. Id.

       Here, in his motion to approve the sale, Paul expressly invoked the superior court’s

authority under the Trust and Estate Dispute Resolution Act (TEDRA), chapter 11.96A RCW.

He quoted from RCW 11.96A.020, which grants courts full authority to “administer and settle all

matters concerning the estates of . . . deceased persons.” See CP at 389. Paul emphasized that it

was “time for the Court to intervene.” CP at 389. Further, at oral argument of the motion Paul

stated that “it is within the Court’s jurisdiction to enter an order approving a sale of the

community’s interest to Paul.” Report of Proceedings (July 28, 2017) at 19.

       We hold that because Paul expressly invoked the superior court’s authority, the court had

authority to approve or deny approval for Paul’s proposed sale of the estate’s one-half interest in

the Gig Harbor property to himself.

       2.    Merits of Motion

       Paul argues that even if the superior court had authority to decide whether or not to

approve the proposed sale of the estate’s one-half interest in the Gig Harbor property to himself,

the trial court erred in denying the motion. We disagree.

             a.   Authority to Sell Property Bequeathed to Third Person

       Initially, the trust argues that Paul did not have authority to sell the one-half interest in

the property that had been bequeathed to the trust. We disagree.

       RCW 11.48.020 grants a personal representative the right to immediate possession of all

real and personal property of the deceased. And as noted above, RCW 11.68.090(1) authorizes a

personal representative to sell the estate’s assets. RCW 11.68.090(1) also states that a party to

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No. 50708-1-II

such a sale is entitled to a conclusive presumption that the transaction is necessary for the

administration of the estate. In addition, RCW 11.98.070(15)4 gives a trustee (and therefore a

personal representative who has a trustee’s powers under RCW 11.68.090(1)) the right to

“[s]elect any part of the trust estate in satisfaction of any partition or distribution, in kind, in

money, or both.”

        The trust relies on RCW 11.04.250, which states that when a person dies owning real

property, “his or her title shall vest immediately in his or her heirs or devisees, subject to his or

her debts, family allowance, expenses of administration, and any other charges for which such

real estate is liable under existing laws.” The trust argues that a personal representative can sell

bequeathed property only to satisfy those enumerated estate obligations. Because there are more

than enough assets in the estate to cover all debts and expenses, the trust claims that there is no

statutory basis for Paul to sell the property to himself.

        We hold that RCW 11.68.090(1) controls, not RCW 11.04.250. RCW 11.68.090(1)

grants a personal representative with nonintervention powers broad authority to sell estate

property in the administration of the estate, and there is no stated exception for property

bequeathed to a third person. Further, the term “subject to” in RCW 11.04.250 means that the

value of a bequest can be reduced to pay estate obligations. RCW 11.04.250 does not state that

estate property can be sold only to pay those estate obligations.

        No cases specifically address a personal representative’s authority to sell property

bequeathed to a third party or the relationship between RCW 11.68.090(1) and RCW 11.04.250

in this context. But the Supreme Court confirmed in In re Estate of Jones that until the estate

4
 RCW 11.98.070 has been amended since the events of this appeal transpired. However, these
amendments do not materially affect the statutory language relied on by this court. Accordingly,
we do not include the word “former” before RCW 11.98.070.

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No. 50708-1-II

closes, (1) “the heirs may not treat estate real property as their own” and (2) “[a]n executor is

entitled to possess and control estate property during the administration of the estate and has a

right to it even against other heirs.” 152 Wash. 2d 1, 9, 93 P.3d 97 (2004). These statements

support a personal representative’s ability to sell estate property despite the existence of other

heirs.

         We hold that Paul had authority, with court approval, to sell the estate’s one-half interest

in the Gig Harbor property even though that interest had been bequeathed to the trust.

              b.   Personal Representative’s Duty of Loyalty

         The trust also argues that Paul did not have authority to sell the estate’s one-half interest

in the Gig Harbor property to himself because the sale would have breached his fiduciary

obligations and represented an impermissible conflict between his personal interests and the

estate’s interests.5 We hold that a finding that a sale would implicate a personal representative’s

fiduciary duties is a factor that a superior court can consider in deciding whether to approve the

sale, but such a finding does not necessarily preclude the personal representative from making

such a sale with court approval.

         RCW 11.68.090(1) authorizes a personal representative with nonintervention powers to

sell estate assets, but the statute also states that the personal representative shall “otherwise have

the same powers, and be subject to the same limitations of liability, that a trustee has under

chapters 11.98, 11.100, and 11.102 RCW.” This language suggests that a personal

representative’s broad authority to sell estate property is limited by the provisions of the

enumerated RCW chapters.

5
  Here, the superior court did not rely on Paul’s fiduciary duties in denying his motion to approve
the sale. Therefore, it appears that the trust is arguing that Paul had no authority as a matter of
law to sell the property to himself because of his fiduciary obligations.

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No. 50708-1-II

        The trust focuses on RCW 11.98.078, which outlines a trustee’s duty of loyalty. Under

RCW 11.98.078(1), a trustee has a duty of loyalty to the beneficiaries of the trust and must

administer the trust solely in the interests of the beneficiaries. RCW 11.98.078(2) states that a

sale of trust property “for the trustee’s own personal account or . . . otherwise affected by a

conflict between the trustee’s fiduciary and personal interests is voidable by a beneficiary

affected by the transaction” unless one of several exceptions (including court approval) applies.

RCW 11.98.078(8) provides that if the trust has two or more beneficiaries, the trustee “must act

impartially in administering the trust . . . , giving due regard to the beneficiaries’ respective

interests.”

        The Supreme Court in Jones emphasized that a personal representative has ethical and

fiduciary duties to the estate:

        The ethical standards for personal representatives remain the same, regardless of
        whether the representative performs his or her duties under court supervision. All
        personal representatives act in identical fiduciary capacities and must refrain from
        self-dealing, administer the estate solely in the interest of the beneficiaries, and
        uphold their duty of loyalty to the beneficiaries.
152 Wash. 2d at 21.

        The typical remedy for a personal representative’s breach of his or her fiduciary duties is

to remove or restrict the powers of the personal representative under RCW 11.68.070 and RCW

11.28.250. See Jones, 152 Wash. 2d at 9-10. RCW 11.68.070 states:

        [U]pon petition of any unpaid creditor of the estate who has filed a claim or any
        heir, devisee, legatee, or of any person on behalf of any incompetent heir, devisee,
        or legatee, . . . if, upon hearing of the petition it appears that said personal
        representative has not faithfully discharged said trust or is subject to removal for
        any reason specified in RCW 11.28.250 as now or hereafter amended, then, in the
        discretion of the court the powers of the personal representative may be restricted
        or the personal representative may be removed and a successor appointed.

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No. 50708-1-II

But RCW 11.68.070 is inapplicable in this appeal because at the time of the court’s order, the

trust had not filed a petition to remove Paul or to restrict Paul’s powers.

        A superior court reasonably could consider whether a sale of estate property would

violate a personal representative’s fiduciary duties in deciding whether to approve a sale. But the

violation of those duties necessarily would depend on the reasonableness of the sale. If the sale

was for the full market value of the property, there presumably would be no breach of duty under

RCW 11.98.078(1) or (8). And even a sale for the personal representative’s account can be valid

if approved by the court under RCW 11.98.078(2)(b). Therefore, the fact that Paul proposed

selling the property to himself did not necessarily preclude the superior court from approving the

sale.

             c.   Estate’s Best Interest

        Paul argues that the superior court erred in not approving the sale of the estate’s one-half

interest in the Gig Harbor property to himself because the sale was in the estate’s best interest.

We disagree.

        The general rule is that probate proceedings represent an exercise of the trial court’s

equitable powers, which we review de novo. In re Estate of Collister, 195 Wash. App. 371, 374,

382 P.3d 37 (2016). We apply that standard to the superior court’s denial of Paul’s motion to

approve the sale.6

6
 There is some support for applying an abuse of discretion standard for a superior court’s
decisions regarding the sale of property. In re Estate of Scholes, 49 Wash. 2d 325, 326, 301 P.2d
172 (1956) (stating that whether the superior court should confirm a sale of property in probate
proceedings is vested in the court’s sound judicial discretion). Because both parties agree that
we should apply de novo review of the superior court’s denial of Paul’s motion, we do not
address whether an abuse of discretion standard is appropriate here.

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No. 50708-1-II

        Paul argues that approval of the sale of the estate’s one-half interest in the Gig Harbor

property to himself was in the estate’s best interest because (1) everyone agreed that it is in the

trust’s interest that the property be sold and the cash distributed to the trust, (2) Paul’s offers to

purchase the property were based on market values obtained by the LGAL and the trustee, (3)

Paul has offered to give the trust an additional distribution if he sells the property for an amount

higher than the purchase price in the next five years, and (4) there is benefit in closing the estate

and eliminating further administrative costs.

        However, the key question here is the true market value of the Gig Harbor property. The

appraisals indicated that the property’s fair market value was in the range of $700,000 to

$900,000. Velkers believed that there were very good prospects for a sale around $1.3 million if

the city would approve use of the property for a restaurant or other development.

        Given the uncertainty regarding the property’s value, it was reasonable for the superior

court to deny Paul’s motion to approve the sale. Paul’s last offer for the estate’s one-half interest

in the property was $350,000, which is lower than would be indicated by the highest appraisal

value of $900,000 and significantly lower than Velkers’ opinion regarding market value.

        We hold that the superior court did not err in denying Paul’s motion to approve the sale

of the estate’s one-half interest in the Gig harbor property to himself.

B.      ORDER DIRECTING THAT THE PROPERTY BE LISTED FOR SALE

        Paul argues that the trial court erred by ordering that the entire Gig Harbor property be

listed for sale because (1) the court lacked jurisdiction over his personal one-half interest in the

property and (2) the court had no authority to order a listing of the property without a filed

petition seeking approval of a sale. We disagree.

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No. 50708-1-II

        1.   Superior Court Authority

        Paul argues that the superior court had no legal basis for ordering that the entire Gig

Harbor property, including the one-half interest that he owns, be listed for sale. He relies on

RCW 11.02.070, which states that upon one spouse’s death, a one-half share of community

property shall be confirmed in the surviving spouse. Paul claims that his one-half interest is not

subject to estate administration.

        However, RCW 11.02.070 also states, “The whole of the community property shall be

subject to probate administration for all purposes of this title, including the payment of

obligations and debts of the community, the award in lieu of homestead, the allowance for family

support, and any other matter for which the community property would be responsible or liable if

the decedent were living.” (Emphasis added.) Although listing estate property for sale to

determine its market value does not fall within any of the enumerated purposes, determining the

value of estate property certainly is a purpose of title 11 RCW. Therefore, Paul’s one-half

interest in the Gig Harbor property was subject to estate administration.

        Further, RCW 11.96A.020(1)(a) gives the court “full and ample power and authority

under this title to administer and settle . . . [a]ll matters concerning the estates and assets of . . .

deceased persons.” And RCW 11.96A.020(2) states,

        If this title should in any case or under any circumstance be inapplicable,
        insufficient, or doubtful with reference to the administration and settlement of the
        matters listed in subsection (1) of this section, the court nevertheless has full power
        and authority to proceed with such administration and settlement in any manner
        and way that to the court seems right and proper.

(Emphasis added.) Once Paul invoked the superior court’s authority, the court had broad

authority to administer all matters concerning the estate’s assets.

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No. 50708-1-II

       We hold that the superior court had authority to order that the entire Gig Harbor property,

including the one-half interest that Paul owns, be listed for sale.7

       2.    Need for a Petition

       Paul also argues that the trial court did not have authority to order that property be listed

for sale without a petition invoking the court’s jurisdiction. He relies on RCW 11.56.005, which

references a petition.

       However, RCW 11.56.005 governs the exchange of property. RCW 11.56.030, which

authorizes the superior court to order the sale of real property, states that “the court may, if it see

fit, order such sale, lease or mortgage without any petition having been previously presented.”

(Emphasis added.)

       Paul makes a vague reference to the rule that a superior court has no authority when the

personal representative has nonintervention powers unless that authority is invoked. But he does

not explain why his motion for court approval of the proposed sale of the trust’s one-half interest

in the Gig Harbor property did not invoke the superior court’s authority.

       We hold that the absence of a petition requesting the superior court to list the property for

sale did not preclude the court from ordering that the property be listed for sale.

C.     ATTORNEY FEES ON APPEAL

       All parties request that this court award attorney fees on appeal under RCW

11.96A.150(1). Paul requests attorney fees assessed against the estate. The trust requests

attorney fees from Paul. And the LGAL requests attorney fees from Paul to reimburse the estate.

7
 We do not address whether the superior court had the authority to actually order the sale of
Paul’s one-half interest in the property. This issue is not presented in this appeal because the
court did not order the sale, just the listing for sale.

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No. 50708-1-II

       Under RAP 18.1, a party may recover attorney fees on appeal if allowed under the

applicable law. RCW 11.96A.150(1) states that the appellate court may, in its discretion, order

attorney fees to be awarded to any party from any other party, the estate assets, or nonprobate

assets “in such amount and in such manner as the court determines to be equitable.” RCW

11.96A.150(1) further states, “In exercising its discretion under this section, the court may

consider any and all factors that it deems to be relevant and appropriate, which factors may but

need not include whether the litigation benefits the estate or trust involved.” This statute does

not require that a party substantially prevail in order to recover attorney fees. In re Estate of

Mower, 193 Wash. App. 706, 728, 374 P.3d 180, review denied, 186 wn.2d 1031 (2016).

       This case involves a bona fide dispute between the parties regarding the proposed sale.

The superior court’s guidance was required, and it was not inappropriate for Paul to appeal the

superior court’s determination. Therefore, we do not impose attorney fees on any party.

                                          CONCLUSION

       We affirm the trial court’s order denying Paul’s motion to approve the sale of the estate’s

one-half interest in the Gig Harbor property to himself and appointing a third party to list the

property for sale.

                                                      MAXA, C.J.

 We concur:

SUTTON, J.

LANESE, J. PRO TEM

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