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In re Estate of Graham

Supreme Court of Nebraska

November 16, 2018

In re Estate of Hilda M. Graham, deceased.
v.
Gregory g. Graham, appellee. Merle Gallagher and Linda Clarke. appellants,

         1. Decedents' Estates: Appeal and Error. Appeals of matters arising under the Nebraska Probate Code are reviewed for error on the record.

         2. Judgments: Appeal and Error. When reviewing a judgment for errors appearing on the record, an appellate court's inquiry is whether the decision conforms to the law, is supported by competent evidence, and is neither arbitrary, capricious, nor unreasonable.

         3. Decedents' Estates: Attorney Fees. Ordinarily, the fixing of reasonable compensation, fees, and expenses, pursuant to Neb. Rev. Stat. § 30-2480 (Reissue 2016), governing compensation of personal representatives; Neb. Rev. Stat. § 30-2481 (Reissue 2016), governing expenses in estate litigation; and Neb. Rev. Stat. § 30-2482 (Reissue 2016), governing compensation of personal representatives and employees of the estate, is within the sound discretion of the county court.

         4. Attorney Fees: Appeal and Error. When an attorney fee is authorized, the amount of the fee is addressed to the trial court's discretion, and its ruling will not be disturbed on appeal absent an abuse of discretion.

         5. Pretrial Procedure: Appeal and Error. Determination of an appropriate sanction for failure to comply with a proper discovery order initially rests with the discretion of the trial court, and its rulings on appropriate sanctions will not be disturbed on appeal absent a showing of an abuse of that discretion.

         6. Rules of the Supreme Court: Appeal and Error. The cross-appeal section of an appellate brief must set forth a separate title page, a table of contents, a statement of the case, assigned errors, propositions of law, and a statement of the facts.

         [301 Neb. 595] 7. ___: ___. When a brief of an appellee fails to present a proper cross-appeal pursuant to Neb. Ct. R. App. P. § 2-109 (rev. 2014), an appellate court declines to consider its merits.

         8. Appeal and Error. Absent plain error, an appellate court considers only an appellant's claimed errors that the appellant specifically assigns in a separate "assignment of error" section of the brief and correspondingly argues in the argument section.

         9. Decedents' Estates: Executors and Administrators: Courts: Jurisdiction. A probate court's jurisdiction and authority continue until an executor or administrator has fully complied with all its judgments, orders, and decrees and the estate has been placed in the possession of whom it devolves.

         10. Decedents' Estates: Courts: Jurisdiction. Pursuant to Neb. Rev. Stat. § 30-2473 (Reissue 2016), county courts in ongoing probate proceedings have jurisdiction over surcharge motions brought against former personal representatives to recover losses to the decedent's estate arising from an alleged breach of fiduciary duty.

         11. Decedents' Estates: Executors and Administrators: Damages: Proof. A beneficiary or designee seeking a surcharge against the personal representative for conversion, damage, or loss of estate property has the burden of proving that (1) a fiduciary duty was breached, (2) the breach of the fiduciary duty caused the losses alleged, and (3) the extent of those damages.

          Appeal from the County Court for Douglas County: Thomas K. Harmon, Judge. Affirmed.

          Howard Kaiman and Edward W. Hasenjager for appellants.

          Norman Denenberg for appellee.

          Heavican, C.J., Miller-Lerman, Cassel, Stacy, Funke, Papik, and Freudenberg, JJ.

          Freudenberg, J.

         NATURE OF CASE

         The designees of the decedent's estate appeal the county court's determination that the evidence was insufficient to prove damages for the conversion of estate property purportedly caused by the personal representative who was removed [301 Neb. 596] for breaches of fiduciary duties. They also assert that the personal representative should have been surcharged for the attorney fees and successor personal representative fees because of his breaches of fiduciary duties and alleged frivolous defense to his removal. We affirm.

         FACTS

         Removal of Personal Representative and Personal Property Damages

         Gregory G. Graham (Graham) was the designated personal representative of the estate of Hilda M. Graham, who died on September 5, 2013. In accordance with the decedent's last will and testament, Graham's appointment as the personal representative followed.

         A dispute developed between Graham and two interested parties in the estate, Merle Gallagher and Linda Clarke. Both Gallagher and Clarke were to inherit from the decedent's will. Specifically, Clarke was to receive a "Peanuts collection" of figurines and Gallagher was to inherit full ownership of the decedent's home, as well as the residual estate. After Graham distributed the personal property pursuant to the decedent's will, Gallagher and Clarke alleged that they did not receive the entirety of what was bequeathed to them. As a result, they sought to have Graham removed as personal representative.

         After a hearing, Graham was removed as personal representative of the estate and a successor personal representative, Edward Kasl, was appointed by the county court. Graham subsequently appealed that decision, and in case No. S-14-804, an unpublished memorandum opinion dated May 21, 2015, we reversed. We held that the county court erred in removing Graham as personal representative without having heard his evidence and testimony. We also held that the court erred in awarding damages when such relief was not requested. We remanded the matter, ordering a new hearing and directing that the case be reassigned to a new judge.

         [301 Neb. 597] At the hearing on remand, exhibit 101 was offered, but the county court sustained Graham's relevancy objection to exhibit 101 and did not receive it into evidence. Exhibit 101 consists of the entire bill of exceptions for the proceedings leading up to the order that we reversed in our memorandum opinion.

         Gallagher and Clarke again presented evidence in support of Graham's removal. They also moved for the court to assess damages against Graham for the alleged conversion, damage, or loss of estate property. Gallagher and Clarke testified that Graham maintained exclusive control over the real estate, as well as its contents, for a period in excess of 90 days after the decedent's death and failed to properly inventory the contents of the residence or provide an accounting of how the nonprobate estate assets were disposed of during that time.[1]

         In support of their claims that certain items were stolen, damaged, or lost, Gallagher and Clarke offered testimony from various witnesses that the decedent, at some point before she died, had at least three jewelry boxes full of "expensive" jewelry. Gallagher and Clarke testified that the decedent had several items of "nice" clothing, various tools, and a number of documents in her home before her death. All of these items were absent from the decedent's home at the time the keys to her home were finally transferred to Gallagher.

         The court also received into evidence pictures of the decedent wearing certain pieces of jewelry from her collection. Additional testimony was received that, while attending the decedent's funeral, Gallagher observed Graham's wife wearing a pendant and a locket allegedly owned by the decedent.

         Clarke testified that she had seen the decedent's figurine collection in the past. She stated that it filled an entire hallway closet. When she arrived at Graham's attorney's office to retrieve the figurines she was to inherit, some were broken while others were completely missing.

         [301 Neb. 598] Graham testified that he was out of town for work during the months following the decedent's death. As a result, Graham was unable to transfer the keys to the home to Gallagher. But he claimed that he had told Gallagher to contact Graham's attorney for further information about obtaining the keys.

         Graham attested that he emptied the entire contents of the decedent's home and transferred the property to his home for safekeeping. He then transferred some of the property to his attorney's office for distribution, but donated many articles of the decedent's clothing. Graham testified that he delivered all property that was to be distributed to interested parties to his attorney's office.

         An inventory document was prepared by Graham's attorney which set forth the items of personal property retrieved by Gallagher and Clarke at his office. Both Gallagher and Clarke signed this inventory document to indicate that they had received the items that were bequeathed to them. However, Gallagher and Clarke took exception to the contents of that inventory document, claiming Graham failed to list several items owned by the decedent that were in her home at the time of her death.

         Graham maintained that the property he distributed was all that remained in the decedent's home after her death. It was undisputed that Graham and Gallagher were both at the home near the time of the decedent's death, but neither made a list of what was in the home. Both testified that hospice workers were also in and out of the home during the decedent's final days.

         On April 25, 2016, the court removed Graham as personal representative with an additional order that his status was terminated rather than discharged so he would remain responsible for any misdeeds he may have committed while acting as personal representative. The county court found that Graham had acted negligently and improvidently in denying access and then in failing to either protect or inventory the contents of the residence which he maintained under his exclusive control. [301 Neb. 599] Thus, the court found that he had breached his fiduciary duty as a personal representative as it related to the filing of an inventory concerning personal property when he took control of nonprobate assets. Graham did not appeal within 30 days of the April 25 order.

         In a subsequent order on September 26, 2017, the court denied Gallagher and Clarke's motion to assess damages against Graham for his conversion, damage, or loss of estate property. The court reasoned that, based on the evidence presented, it could not determine beyond mere speculation whether or not Graham had converted, damaged, or lost assets of the estate.

         Attorney Fees and Personal Representative Fees

         In addition to damages, Gallagher and Clarke sought attorney fees and personal representative fees for Kasl. Kasl had obtained counsel and performed services for the benefit of the estate, such as obtaining records from banks and attending meetings with his counsel while the first appeal was pending.

         In its September 26, 2017, order, the county court awarded personal representative fees to Kasl to be paid from the estate. The court also awarded attorney fees to the attorney representing Gallagher, Clarke, and Kasl for services rendered on behalf of Kasl as ...


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