In the Matter of the Guardianship of N.R., N.R. v. Eva Willis and Charles Reagins, Peoples Bank, SB , 26 N.E.3d 97 ( 2015 )

ATTORNEY FOR APPELLANT ATTORNEYS FOR APPELLEES
Douglas M. Grimes For Eva Willis and Charles Reagins
Douglas M. Grimes, PC Mark A. Bates
Gary, Indiana Schererville, Indiana
For Peoples Bank, SB
Benjamin T. Ballou
Bonnie C. Coleman Feb 11 2015, 8:42 am
Hodges & Davis, P.C.
Merrillville, Indiana
IN THE
COURT OF APPEALS OF INDIANA
In the Matter of the February 11, 2015
Guardianship of N.R., Court of Appeals Case No.
45A05-1303-GU-150
N.R.,
Appellant-Protected Person,
Appeal from the Lake Superior Court
v. The Honorable Calvin Hawkins,
Judge
Eva Willis and Charles Reagins, Cause No. 45D02-1206-GU-27
Peoples Bank, SB,
Appellees-Petitioners.
Robb, Judge.
Case Summary and Issue
[1] N.R. was the subject of guardianship proceedings in 2012, as part of which the
trial court approved requests for guardian fees, attorney fees, and costs from
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former temporary guardians Eva Willis, Charles Reagins (“Charles”), and
Peoples Bank, SB (the “Bank”). The trial court denied N.R.’s objection to its
orders that the fees and costs of the former temporary guardians be paid out of
his estate. N.R. now raises several issues for our review, which we consolidate
and restate as: whether the trial court abused its discretion in awarding fees and
costs to the former temporary guardians by excluding evidence N.R. wished to
offer to show that Willis and Charles engaged in misconduct and that the
temporary guardianship was improper.
[2] Concluding the excluded evidence, if credited, would make the award of fees
and costs unreasonable, we reverse and remand with instructions that the trial
court hear N.R.’s evidence and reconsider the fee petitions.
Facts and Procedural History
[3] On January 14, 2012, N.R., who was eighty-one years old, executed a general
power of attorney appointing his daughter, Nelva Berry, as his attorney-in-fact.
Berry had taken care of N.R., his business, and his bills for several years prior.
As N.R.’s attorney-in-fact, Berry had “full power and authority to act” on
N.R.’s behalf. Appendix of Appellant at 36. Berry was authorized “to manage
and conduct all of [N.R.’s] affairs and to exercise all of [N.R.’s] legal rights and
powers . . . .” Id.
[4] On June 25, 2012, Willis (N.R.’s niece) and Charles (N.R.’s nephew) filed an
emergency petition to be appointed temporary co-guardians over N.R. and his
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estate, alleging N.R. “is unable to maintain and care for his financial affairs and
person because he suffers the following incapacities: dementia with slight
memory loss.” Id. at 16. Attached to the petition was a physician’s report from
February 2012 in which the doctor reported that N.R. was not incapacitated
and was in good physical condition, although “he does have dementia with
slight memory loss but is able to speak and behave in an acceptable way.” Id. at
20. The doctor declared N.R. “partially” incapable of making personal and
financial decisions because he is “only slightly forgetful,” and posited that it
would be appropriate for N.R. to live in his own home “with the relatives
checking in on him every day. He only needs minimal assistance.” Id. at 21.
The petition further alleged “[t]hat there is no guardian of the person or estate
appointed for [N.R.] in this state or any other state . . . .” Id. Finally, the
petition alleged that the need exists for the appointment of a temporary and
permanent guardian for N.R. because:
(a) he cannot handle his financial affairs, and his assets need to be
preserved for his support, maintenance, care, and proper medical
treatment;
(b) his ex-wife of forty years has removed him from the State of
Indiana and has taken him to Texas. She is attempting to convince
him to withdraw cash from his accounts and remove other assets;
(c) there is a need to protect his assets from his daughter who has
previously removed assets from him;
(d) his real estate taxes have not been paid; and
(e) his income tax returns have not been filed.
Id. at 17-18.
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[5] Without providing N.R. or Berry notice or holding a hearing at which N.R.
appeared, the trial court issued an order the same day the petition was filed:
[T]he Court . . . now finds that the allegations contained in said
petition are true, and that a temporary guardian of the person and
estate of [N.R.] should be appointed.
The Court further finds that [N.R.] is in need of a guardian to protect
his assets and that it is in the best interests of said [N.R.] that a
temporary guardian be appointed over his person and estate.
The Court finds that a guardian has not previously been appointed for
[N.R.]; that an emergency exists; that the welfare of [N.R.] requires
immediate action; that no other person has the authority to act under
the circumstances; and that immediate and irreparable loss of property
. . . may result before notice and a hearing can be held . . . .
[The Bank’s] App. at 1.1 Accordingly, the trial court appointed Willis and
Charles as temporary co-guardians over N.R. and his estate for a period not to
exceed sixty days; ordered them to take an oath but did not order them to post a
bond; stated that they would have “powers and responsibilities without
limitation”; and set a hearing to determine whether Willis and Charles should
be appointed permanent co-guardians. Id.
[6] On July 17, 2012, Berry and Monique Wilson (N.R.’s step-daughter) filed
petitions to participate in the guardianship proceedings and objections to the
petition for appointment of a guardian. The trial court held a hearing on
August 7, 2012, at which Willis and Charles, Berry and Wilson, and N.R. all
1
The order states that the court heard evidence on the petition, but the Chronological Case Summary reflects
no hearing, and in any event, the order also states that Willis and Charles appeared only by counsel.
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appeared. The parties entered into the following stipulated agreement: Willis
and Charles resigned as temporary guardians in open court; the Bank was
appointed temporary guardian over N.R.’s estate; and Berry and Wilson were
appointed permanent co-guardians over N.R.’s person. The court approved the
agreement and set a hearing regarding a permanent guardianship over N.R.’s
estate.
[7] Following a November 8, 2012, hearing at which the parties agreed a
guardianship was in N.R.’s best interest “not because of incapacity but due to
his age,” id. at 4, the court entered an order continuing Berry and Wilson as
permanent co-guardians of N.R. and also appointing them permanent co-
guardians of his estate. Berry and Wilson were ordered to post a $400,000
bond, and all former temporary guardians were ordered to submit petitions for
fees and costs within ten days. The court approved Willis’s and Charles’s
petition for attorney fees of $15,030.00 and costs of $177.55 (totaling
$15,207.55).2 In a separate order, the court also approved the Bank’s petition
requesting temporary guardian fees for its services in the amount of $4,275.00,
temporary guardian’s attorney fees of $3,454.25, and costs of $55.45 (totaling
$7,784.70). N.R. then filed an objection to the court’s orders awarding fees
without first allowing time for objection and a hearing.
2
The order approving the award of attorney fees to Willis’s and Charles’s attorneys noted that “the
temporary co-guardians are not seeking a fee.” App. of the Appellees Eva Willis and Charles Reagins at 1.
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[8] The court held a hearing on N.R.’s objection to its orders allowing fees on
March 19, 2013. At the hearing, N.R. attempted to present evidence showing
that Willis’s and Charles’s misconduct before and during the guardianship
proceedings made the court’s order appointing Willis and Charles as temporary
co-guardians improper and the award of fees and costs unreasonable. The
court, however, refused to hear the evidence and denied N.R.’s objection,
issuing an order that the fees and costs were reasonable and were to be paid out
of the guardianship estate within ten days. N.R. now appeals the court’s
awards of fees and costs.3
Discussion and Decision
I. Standard of Review
[9] In guardianship proceedings, all findings and orders are within the trial court’s
discretion. Ind. Code § 29-3-2-4(a); In re Guardianship of Hollenga, 852 N.E.2d
933, 936 (Ind. Ct. App. 2006). We review only for an abuse of discretion,
which occurs if the decision is against the logic and effect of the facts and
circumstances before the court or if the court has misinterpreted the law.
Hollenga, 852 N.E.2d at 937. The right to compensation from the estate “should
3
The timeliness of N.R.’s appeal was the subject of a motion to dismiss prior to this case being fully briefed,
and this court dismissed the appeal. See Order dated July 26, 2013. The Indiana Supreme Court thereafter
granted N.R.’s petition to transfer, vacated the order dismissing the appeal, and remanded to this court for
consideration on the merits. See Order dated April 10, 2014. Each of the appellees has raised the timeliness
issue again in its brief; however, the issue was decided by the Indiana Supreme Court and we will not
entertain it further.
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not depend upon the result of the litigation but rather upon the reasonable
necessity for such litigation.” Malachowski v. Bank One, Indianapolis, N.A., 682
N.E.2d 530, 533 (Ind. 1997) (quotation omitted). Thus, when ruling on an
attorney fee petition in a guardianship proceeding, the trial court should
consider not only the outcome of the proceedings but also “(1) whether the
parties acted reasonably and in good faith in incurring the fees, (2) whether the
facts were in dispute, (3) whether the legal issues were complex, and (4)
whether any party’s misconduct caused the proceedings.” In re Guardianship of
Shaffer, 711 N.E.2d 37, 41 (Ind. Ct. App. 1999), trans. denied. “A trial court may
not award fees to a party whose misconduct necessitated the proceedings.” Id.
II. Award of Fees and Costs
[10] “A guardian is entitled to reasonable compensation for services as guardian and
to reimbursement for reasonable expenditures made in good faith on behalf of
the protected person.” Ind. Code § 29-3-9-3. Further:
If not otherwise compensated for services rendered, any guardian,
attorney, physician, or other person whose services are provided in
good faith and are beneficial to the protected person or the protected
person’s property is entitled to reasonable compensation and
reimbursement for reasonable expenditures made on behalf of the
protected person. These amounts may be paid from the property of
the protected person as ordered by the court.
Ind. Code § 29-3-4-4.
[11] N.R. contends the trial court abused its discretion in awarding fees and costs to
the former temporary guardians because it refused to hear evidence relevant to
the determination of whether they were incurred in good faith. The trial court
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was only willing to entertain evidence regarding whether the amount of the fees
was unreasonable; whereas N.R. sought to show that the fees were
unreasonable because they were incurred unnecessarily. We review the trial
court’s exclusion of evidence for an abuse of discretion. In re Des.B., 2 N.E.3d
828, 834 (Ind. Ct. App. 2014).
A. Willis and Charles
[12] The trial court allowed Willis’s and Charles’s petition for attorney fees and
costs in the total amount of $15,207.55 and denied N.R.’s objection to the
same. N.R.’s objection to the trial court’s order alleged many facts which the
trial court refused to allow into evidence at the hearing. For purposes of
determining whether the trial court abused its discretion in this matter, we
assume the following facts are true.
[13] In January 2012, Willis, Charles, and Freo Reagins (“Freo”) (N.R.’s brother),
without N.R.’s or Berry’s consent or knowledge, acted unilaterally in: changing
the locks and the burglar alarm code on N.R.’s home; deactivating the garage
door opener on the home; switching N.R.’s mailing address from Berry’s home
address to an unknown P.O. Box location without providing Berry or N.R. a
key; and adding their names as joint owners, beneficiaries, and account
managers to several of N.R.’s bank accounts, credit cards, and investments.
Because Willis, Charles, and Freo refused to communicate with N.R. or Berry,
the changed mailing address resulted in months of unpaid bills, damaging
N.R.’s credit and causing his insurance coverage to lapse.
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[14] At some point in early 2012, Willis, Charles, and Freo took N.R. to see David
Mears, the attorney who represented Willis and Charles during the
guardianship proceedings and in whose favor the attorney fee award was
ultimately entered. N.R. gave Mears $5,000 during the meeting, but at the
hearing on N.R.’s objection, Willis could not recall what the money was for.
Mears stipulated at the hearing that $5,000 was paid to him, that it was in his
trust account, and that it was not reflected on the statement of account
submitted in support of his fee request. Mears also conceded that some of the
fees reflected on the statement were incurred prior to the filing of the
guardianship petition. Virtually all of the fees were incurred prior to the agreed
guardianship in November 2012.4
[15] This issue arises because Willis and Charles filed an emergency petition for
appointment as temporary co-guardians over N.R.’s person and estate. Indiana
Code section 29-3-3-4 governs the emergency appointment of a temporary
guardian:
(a) If:
(1) a guardian has not been appointed for an incapacitated
person . . .;
(2) an emergency exists;
(3) the welfare of the incapacitated person . . . requires
immediate action; and
4
Mears’s statement shows 66.80 hours billed at $225.00 per hour for work performed beginning on February
1, 2012 and ending on November 21, 2012.
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(4) no other person appears to have authority to act in the
circumstances;
the court, on petition by any person or on its own motion, may
appoint a temporary guardian for the incapacitated person . . . for a
specified period not to exceed ninety (90) days. No such appointment
shall be made except after notice and hearing unless it is alleged and found by
the court that immediate and irreparable injury to the person or injury, loss, or
damage to the property of the alleged incapacitated person . . . may result before
the alleged incapacitated person . . . can be heard in response to the petition. If
a temporary guardian is appointed without advance notice and the
alleged incapacitated person . . . files a petition that the guardianship
be terminated or the court order modified, the court shall hear and
determine the petition at the earliest possible time.
(b) If:
(1) a petition is filed under this section for the appointment of a
temporary guardian; and
(2) each person required to receive notice under IC 29-3-6-1(a)
has not:
(A) received a complete copy of the petition and notice
required by IC 29-3-6-2 before the court considers and
acts on the petition; or
(B) received actual notice of the filing of the petition and
specifically waived in writing the necessity for service of
the notice required under IC 29-3-6-2 before the court
considers and acts on the petition;
the petitioner shall, on the earlier of the date the court enters an order
scheduling a hearing on the petition or the date the court enters an
order appointing a temporary guardian, serve complete copies of the
petition, the court’s order, and the notice required by IC 29-3-6-2 on
every person entitled to receive notice . . . . The requirements of this
subsection are in addition to the petitioner’s obligations under Rule 65
of the Indiana Rules of Trial Procedure to make a specific showing of
the petitioner’s efforts to provide advance notice to all interested
persons or the reasons why advance notice cannot or should not be
given.
***
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(d) A temporary guardian appointed under this section has only the
responsibilities and powers that are ordered by the court. The court
shall order only the powers that are necessary to prevent immediate and
substantial injury or loss to the person or property of the alleged incapacitated
person . . . in an appointment made under this section.
(Emphasis added.)
[16] As N.R.’s power of attorney, Berry had the authority to act on N.R.’s behalf,
especially with regard to his finances, which seems to be the main focus of the
guardianship petition. However, Willis’s and Charles’s petition failed to inform
the trial court of the existence of the power of attorney. If they were aware of it,
then the omission of that information from their petition was misleading. And
whether or not they were aware of it, proper notice and a hearing would have
brought it to the court’s attention. Moreover, although the petition alleged an
emergency existed, it did not allege that immediate and irreparable injury might
occur if N.R. were allowed an opportunity to respond, and it is clear from the
language of the statute that those are two separate conditions. Although the
trial court found that immediate and irreparable injury might occur, the statute
requires that such be “alleged and found” before dispensing with notice and a
hearing. Ind. Code § 29-3-3-4(a) (emphasis added).
[17] The petition also fails to specifically allege that efforts had been made to
provide notice of the filing of the petition to the appropriate people—despite
listing therein the names and addresses of those people—or to state reasons why
advance notice could not or should not be given. Ind. Code § 29-3-3-4(b). Had
such notice been given and a hearing held before the appointment of Willis and
Charles as temporary co-guardians, N.R. would have had the opportunity to
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present evidence about the power of attorney, which would have impacted who
should be appointed as temporary guardian. See Ind. Code § 30-5-3-4(a) (“A
principal may nominate a guardian for consideration by the court if protective
proceedings for the principal’s person or estate are commenced. The court shall
make an appointment in accordance with the principal’s most recent
nomination in a power of attorney except for good cause or disqualification.”).
Further, N.R. would have been able to present evidence about Willis’s and
Charles’s actions which, in fact, may have caused the emergency they alleged
existed and which the trial court later refused to hear. Finally, we note that the
trial court did not limit the temporary co-guardians powers as required by the
statute to only those powers necessary to prevent immediate loss. See Ind. Code
§ 29-3-3-4(d).
[18] In short, the order appointing Willis and Charles temporary co-guardians over
N.R.’s person and estate should not have been entered without notice and a
hearing. Proceeding as it did on Willis’s and Charles’s emergency petition,
there is a legitimate concern that the trial court did not scrutinize whether a
temporary guardianship was needed at all, nor did it scrutinize whether Willis
and Charles were the appropriate people to be appointed as co-guardians. That
the ultimate outcome of the proceedings was a guardianship to which N.R.
agreed does not mean that the original order appointing Willis and Charles was
necessarily appropriate in retrospect.
[19] Further compounding the problem, even if the emergency order was
appropriate, the guardianship petition alleged that a guardianship was
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necessary, in part, because N.R. was unable to handle his financial affairs, his
real estate taxes had not been paid, and his income tax returns had not been
filed. If N.R. had been allowed to introduce evidence to develop the facts
alleged in his objection, the facts supporting the petition would have been in
dispute, raising questions as to whether Willis and Charles acted reasonably
and in good faith in incurring fees to petition for guardianship and whether
their misconduct—especially in changing N.R.’s mailing address and interfering
with his financial accounts—contributed in whole or in part to the deficiencies
they alleged necessitated these proceedings.
[20] As noted above, in ruling on an attorney fee petition, the trial court is to
consider whether the parties acted reasonably and in good faith, whether there
are disputed facts, and whether any party’s misconduct caused the proceedings.
In re Shaffer, 711 N.E.2d at 41. It is clear from those factors that in ruling on a
fee petition, a trial court is to look not just to whether the amount of the fees is
reasonable, but also to whether incurring the fees was necessary. N.R.’s counsel
stated several times at the hearing on N.R.’s objection to the fees that the fees
were being challenged as unnecessary because of misconduct. See, e.g.,
Transcript at 76, 78-79. The trial court repeatedly refused to hear evidence of
misconduct, relying on an earlier determination that the fees were incurred in
good faith – a finding also made without the benefit of hearing relevant
evidence.
[21] The trial court’s order denying N.R.’s objection to the fees indicates that N.R.
failed to present any admissible evidence to support his objection. On the
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contrary, N.R.’s evidence was admissible as relevant to the determination of
whether the temporary guardianship was proper and ultimately, whether the
fees incurred in seeking the guardianship were necessary. The trial court
abused its discretion in excluding that evidence and therefore abused its
discretion in ordering Willis’s and Charles’s fees to be paid without giving
proper consideration to the factors. N.R. has a right to show that the original
guardianship was improper, and if it was, Willis and Charles are not entitled to
an award of fees from the guardianship estate. We therefore reverse the trial
court’s order denying N.R.’s objection to Willis’s and Charles’s petition for fees
and remand to the trial court to hear N.R.’s evidence regarding whether those
fees were necessary and, if so, whether the amount is reasonable.5
B. The Bank
[22] The trial court also allowed the Bank’s petition for guardian and attorney fees
in the sum of $7,784.70. The Bank acted as substitute temporary guardian of
N.R.’s estate from August 7, 2012, until Berry and Wilson were appointed
permanent guardians of N.R.’s estate on November 8, 2012.
[23] Those who provide services in good faith and for the benefit of the protected
person are entitled to reasonable compensation and reimbursement for their
5
Despite evidence being introduced at the objection hearing that Mears had already been paid $5,000 by
N.R. which was not reflected on Mears’s statement of fees, the trial court found that the amount of fees
requested by Mears was reasonable and ordered that they be paid in total. Although it is unclear what that
fee was for, the trial court made no effort to find out and made no provision for it to be deducted from the
fees if appropriate. This payment should also be considered on remand.
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reasonable expenses. See Ind. Code § 29-3-9-3 (guardian fee); Ind. Code § 29-3-
4-4 (attorney fee). It is unclear how the Bank came to be involved in this matter,
but before undertaking the position, it was incumbent upon the Bank to
investigate and determine whether its guardianship services were necessary and
appropriate. There is no evidence that the Bank did so and therefore no
evidence that it provided its services to N.R. in good faith. The Bank is entitled
to payment for its services, but it may not be entitled to payment from N.R.’s
estate. If it is determined on remand that Willis and Charles did not act in good
faith and that the temporary guardianship was improper, the burden of
compensating the Bank should be theirs. We therefore reverse the trial court’s
award of fees to the Bank from the guardianship estate and remand for
reconsideration of the Banks’ fee petition consistent with this opinion.
Conclusion
[24] The trial court abused its discretion in excluding evidence relevant to the
determination of whether the fees and costs sought to be paid from the
guardianship estate were reasonable. The trial court’s orders are reversed, and
this case is remanded for further proceedings.
[25] Reversed and remanded.
Baker, J., and Kirsch, J., concur.
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