Estate of Axvig , 1999 MT 28N ( 1999 )

No
No. 98-362
IN THE SUPREME COURT OF THE STATE OF MONTANA
1999 MT 28N
IN RE ESTATE OF KENNETH G. AXVIG,
Deceased.
MORTON GOLDSTEIN, Individually,
Appellant,
v.
ESTATE OF KENNETH G. AXVIG, Deceased,
and its Personal Representative, Ole Axvig,
Respondent.
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APPEAL FROM: District Court of the Twelfth Judicial District,
In and for the County of Hill,
The Honorable Thomas M. McKittrick, Judge presiding.
COUNSEL OF RECORD:
For Appellant:
Andrew Utick; Utick & Grosfield; Helena, Montana
For Respondent:
Maxon R. Davis and Dennis Tighe; Davis, Hatley,
Haffeman & Tighe, P.C.; Great Falls, Montana
Submitted on Briefs: November 5, 1998
Decided: February 19, 1999
Filed:
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__________________________________________
Clerk
Justice Jim Regnier delivered the opinion of the Court.
¶1. Pursuant to Section I, Paragraph 3(c), Montana Supreme Court 1996 Internal
Operating Rules, the following decision shall not be cited as precedent but shall be
filed as a public document with the Clerk of the Supreme Court and shall be
reported by case title, Supreme Court cause number, and result to the State Reporter
Publishing Company and to West Group in the quarterly table of noncitable cases
issued by this Court.
¶2. This is an appeal that evolves from a probate in which the respondent, Ole Axvig,
filed a motion to compel the appellant, Mort Goldstein, to account for payments
Goldstein made to himself as the personal representative and attorney for Kenneth
Axvig's estate. The Twelfth Judicial District Court, Hill County, ordered Goldstein to
provide an accounting of the payments, which he failed to do. Thus, the District
Court ordered Goldstein to reimburse the estate $56,942.55 and stated that if he did
not do so, he would be deemed in contempt of court and subject to execution on his
obligation in the same manner as a judgment. Goldstein alleges that the District
Court issued its order in violation of his due process rights since he was not given
proper notice and the opportunity to be heard. Goldstein appeals the District Court's
order. We affirm.
¶3. We consider two issues on appeal:
¶4. 1. Was Goldstein denied due process of law under the Montana Constitution?
¶5. 2. Should Axvig be awarded costs and fees?
We do not consider Goldstein's due process argument under the United States Constitution
because he cites only the Montana Constitution and Montana case law as support to his
argument. Also, since we affirm the District Court on the first issue, we do not consider a
separate issue raised by Goldstein, whether upon remand the presiding District Court
Judge should be disqualified.
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FACTUAL BACKGROUND
¶6. Respondent's father, Kenneth Axvig, passed away on August 26, 1996, leaving an
estate valued at $1.8 million. His last will, which was prepared by Goldstein,
disinherited Kenneth's son, Ole Axvig (Axvig), and made Goldstein devisee of one-
half of the estate, and further named Goldstein as attorney and personal
representative of the estate, as well as trustee of a testamentary trust.
¶7. On September 6, 1996, Axvig filed a petition in the Twelfth Judicial District
Court, Hill County, to request supervised administration of the estate, pursuant to §
72-3-401, MCA, and to challenge the validity of the will. In response to Axvig's
petition, the District Court ordered Goldstein to restrain from exercising any powers
of administration except as necessary to preserve the estate. One month later, Axvig
filed a motion alleging that Goldstein violated the District Court's order and to
request that he show cause. After a show cause hearing was held, the District Court
issued an order on December 10, 1996, expressing its concerns that Goldstein
collected over $220,000 in unsubstantiated payments from Kenneth Axvig's accounts
and continued to prosecute various matters that were initiated before Kenneth
Axvig's death. The December 10, 1996, order restrained Goldstein from further
prosecuting any claims on behalf of the estate or from taking any action which would
serve to cause an expenditure of estate funds, except those expenditures which would
directly and demonstrably preserve the estate.
¶8. For the next several months, the parties prepared for a jury trial on the validity
of the will. The trial was held and the jury returned its verdict that the will was
invalid, which Goldstein challenges in a separate appeal. Following the trial, the
District Court appointed Axvig as special administrator and personal representative
of the estate.
¶9. On October 15, 1997, Axvig filed another motion alleging that Goldstein violated
the District Court's December 10, 1996, order and to compel Goldstein to account for
$46,942.55 he paid to himself from estate funds since May 12, 1997, without the
court's authorization. The District Court, also on October 15, 1997, ordered
Goldstein to appear on October 21, 1997, to "account for all payments which he
made to himself or his law firm from estate funds and to provide any explanation
which he c[ould], so as not to be required to immediately repay all such sums to the
estate."
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¶10. Early on October 21, 1997, Goldstein initiated a Chapter 13 bankruptcy
proceeding on his own behalf, and later appeared before the District Court. The
District Court rejected Goldstein's argument that the bankruptcy petition should
stay the hearing, rejected Goldstein's explanation that checks made out from the
estate where used to pay his office staff, and ordered Goldstein to produce his office
billing records by 5:00 p.m. that day. The District Court's review of approximately
$56,000 that Goldstein paid himself was taken under advisement, and a decision was
stayed until Goldstein resolved his bankruptcy proceeding. Nevertheless, Goldstein
did not produce his billing records by 5:00 p.m. on October 21, 1997.
¶11. On January 8, 1998, Goldstein filed an administrative claim against the estate in
the amount of $3,744.66 for his work as personal representative. He later amended
his claim to the amount of $4,004.41. On January 29, 1998, Goldstein filed a motion
for settlement of fees and expenses on behalf of all agents and attorneys of the estate.
His motion was accompanied by an affidavit generally describing the work he did for
the estate and indicating that "thousands of dollars" were owing to him and his law
firm. Axvig opposed Goldstein's motion.
¶12. On February 25, 1998, the United States Bankruptcy Court lifted the stay
insofar as the pending probate matter, and later, on April 1, 1998, the Court
dismissed Goldstein's bankruptcy proceeding; however, Goldstein still had not
provided the court an accounting. The District Court on March 9, 1998, issued an
order scheduling a conference to "review[] the status of this case and [to] expedit[e]
the disposition of the various matters." The order specifically required the attorneys
for the respective parties to attend.
¶13. The conference was held on April 14, 1998. Goldstein's attorney was at the
conference, but Goldstein was not. At the start of the conference, Goldstein's
attorney was asked to provide an accounting for the payments Goldstein made to
himself and his law firm from estate funds. Goldstein's attorney responded that he
did not have an accounting because the District Court's order gave him no notice
that an accounting would be taken or that matters would be settled. Ultimately,
Goldstein's attorney objected to going any further, which the District Court
overruled. Goldstein's attorney also argued that since Goldstein was no longer the
personal representative of the estate, he was no longer a party to the action, so the
(1)
District Court did not have jurisdiction to enter an order against him. On the same
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basis, Goldstein's attorney stated that he would not pursue the motions and pleadings
Goldstein previously filed. During a short recess, Judge McKittrick asked a deputy
sheriff to find Goldstein and bring him to the hearing; however, the deputy sheriff
could not find him.
¶14. Judge McKittrick entered an opinion and order on April 14, 1998, concluding
that payments Goldstein made to himself and his law firm while Goldstein served as
personal representative of Kenneth Axvig's estate were in violation of the court's
December 10, 1996, order. He concluded that Goldstein breached his fiduciary duty
as personal representative of the estate by not keeping any contemporaneous records
to justify the payments he made. Goldstein was required to reimburse the Axvig
estate $56,942.55. In addition, Goldstein's failure to reimburse the estate would be
deemed in contempt of court and would cause an execution on his obligation in the
same manner as a judgment, pursuant to § 25-13-204, MCA.
¶15. On April 29, 1998, the District Court issued an order scheduling a hearing in
Great Falls on May 26, 1998. Among other things, the order required Goldstein to
personally appear and "account to the Court for all actions he undertook regarding
the above estate while acting as personal representative." The hearing was conducted
as scheduled; Goldstein appeared but refused to testify and did not provide the court
with an accounting.
¶16. Goldstein appeals the District Court's April 14, 1998, opinion and order.
ISSUE 1
¶17. Was Goldstein denied due process of law under the Montana Constitution?
¶18. Goldstein argues that he was not provided adequate notice and the opportunity
to be heard when the District Court issued its April 14, 1998, order requiring him to
reimburse the Axvig estate. Goldstein asserts that the District Court's order did not
provide notice that the court intended to take up specific motions, entertain orders,
impose liens, or enter a judgment against him. In addition, the order was sent only to
his attorney, not to him. Thus, he argues that he was denied due process of law.
¶19. Goldstein cites In re Marriage of Nordberg (1995), 271 Mont. 328, 896 P.2d 447,
to support his position. In Nordberg, we decided that the District Court failed to give
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the appellant adequate notice and the opportunity to be heard when it executed a lien
as a result of a conference involving a husband and a wife in a divorce preceding. In
the District Court's order, it stated that a conference would be held "to address the
format for the disposition of all pending mattes [sic]." Nordberg, 271 Mont. at 330,
896 P.2d at 448. During the conference, the court apparently asked the wife to submit
a calculation of the amount due on the husband's obligation to her. Without holding
any further proceedings, the court granted the wife a money judgment, which
created a lien against the husband's property. We held that the District Court's
scheduling order did not provide the husband adequate notice that the conference
might result in a lien against him, nor was he given an opportunity to set forth
evidence of the payments he already made on the obligation. Nordberg, 271 Mont. at
331, 896 P.2d at 449.
¶20. Article II, Section 17, of the Montana Constitution, states that "[n]o person shall
be deprived of life, liberty, or property without due process of law." Due process of
law refers to certain fundamental rights which require notice to be given and a
hearing had before property may be taken away, or impressed with a lien. See Great
Northern Ry. Co. v. Roosevelt County (1958), 134 Mont. 355, 362, 332 P.2d 501, 505.
We recognize that procedural due process requires notice and an opportunity for
hearing appropriate for the case. See In re Adoption of K.L.J.K. (1986), 224 Mont.
418, 421, 730 P.2d 1135, 1137 (quoting Mullane v. Central Hanover Bank & Trust Co.
(1950), 339 U.S. 306, 70 S. Ct. 652, 94 L. Ed. 865).
¶21. We conclude that Goldstein received appropriate notice. Six months before he
was ordered to reimburse the Axvig estate, Goldstein was instructed to appear on
October 21, 1997, to account for the payments he made to himself and his law firm
from estate funds. Goldstein was given another notice in the District Court's March
9, 1998, order after he failed to submit an accounting to the court. Unlike the order
issued in Nordberg, in which the District Court stated that the upcoming conference
was only to address the format for the disposition of all pending matters, the District
Court's order to Goldstein stated that the conference would be held to review the
status of the case and to expedite the disposition of the various matters. Certainly one
of those matters was the court's pending order to produce the billing records which
was actually pending since October 21, 1997. In his brief, Goldstein incorrectly
interprets the District Court's March 9, 1998, order to mean that the parties would
set a schedule to expedite the various matters. The order was void of any such
language. Based on the two orders that Goldstein and his attorney received, we
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conclude that Goldstein had ample notice that actions could be taken against him to
cause him to reimburse the Axvig estate. The fact that Goldstein's attorney received
the District Court's March 9, 1998, order instead of Goldstein, does not affect our
decision.
¶22. Goldstein urges us not to consider the October 21, 1997, hearing as part of the
notice he received because the hearing should have been stayed as a result of his
bankruptcy proceeding. He also contends that the hearing was a result of ex parte
meetings between Axvig's counsel and the District Court Judge, and that he had only
two days to prepare for it. However, our decision does not rely entirely on the
District Court Judge's orders pronounced during the October 21, 1997, hearing.
Even before the hearing, by virtue of the court's order of October 15, 1997, Goldstein
was given notice that he was to provide an accounting to avoid being required to
repay the estate.
¶23. Goldstein's final argument is that at the April 14, 1998, conference, Axvig
presented additional evidence of $10,000 that Goldstein paid to himself, to which
Goldstein had no opportunity to respond. However, the record shows that the
District Court Judge gave Goldstein's attorney the opportunity to respond and that
these payments were introduced at the October 21, 1997, hearing as well. Goldstein
had ample opportunity to account for them.
¶24. We conclude that Goldstein had six-months' notice and the opportunity to be
heard. At the April 14, 1998, conference, the District Court Judge took extra
measures to find Goldstein to allow him to be heard. Any lack of being heard was
due to Goldstein's own failure to provide an accounting. We also recognize that the
District Court, even after it entered its order of April 14, 1998, still invited Goldstein
to account for his actions. The court's order of April 29, 1998, required Goldstein to
appear before the court on May 26, 1998, and account for his actions. Although
Goldstein appeared, he refused to testify or provide an accounting.
¶25. Given this history, we would be hard pressed, indeed, to conclude that Goldstein
was denied due process of law under the Montana Constitution.
ISSUE 2
¶26. Should Axvig be awarded costs and fees?
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¶27. Axvig raised the issue of costs and fees pursuant to Rule 32, M.R.App.P., which
provides that we may award damages to the prevailing party in an appeal that has
been brought without substantial or reasonable grounds. Axvig raises the legitimacy
of the grounds upon which Goldstein makes this appeal. Axvig also suggests that
when Goldstein's attorney told the court at the April 14, 1998, conference that
Goldstein did not intend on offering anything further in regard to outstanding filings
and motions, Goldstein acquiesced to the court's orders; thus, he has no basis to
make an appeal.
¶28. In Bi-Lo Foods, Inc. v. Alpine Bank, 1998 MT 40, ¶ 36, 287 Mont. 367, ¶ 36, 955
P.2d 154, ¶ 36, we stated:
This Court does not readily impose sanctions for filing frivolous appeals. As a general
rule, we impose sanctions in cases only where the appeal is entirely unfounded and
intended to cause delay, or where counsel's actions otherwise constitute an abuse of the
judicial system.
(Citations omitted.) Although Goldstein's arguments were not successful, we are not
satisfied that his appeal was made in the absence of reasonable grounds. We also are not
convinced that Goldstein intended to acquiesce to the District Court's orders. Thus, we
decline to award sanctions against Goldstein under Rule 32, M.R.App.P.
¶29. The District Court's order is affirmed.
/S/ JIM REGNIER
We Concur:
/S/ TERRY N. TRIEWEILER
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/S/ W. WILLIAM LEAPHART
/S/ KARLA M. GRAY
Justice James C. Nelson concurs and dissents.
¶30. I agree with our decision as to Issue Two; I disagree with our decision as to Issue
One. Goldstein filed a bankruptcy petition on October 21, 1997, and, accordingly, the
automatic stay took effect. Any proceedings which took place during the period of
automatic stay are void, and, accordingly, the court simply could not have deemed
the matter submitted on October 21, and then have proceeded on the basis of
argument and testimony taken at the October 21 hearing. Goldstein's attorney
objected to any proceedings on October 21, because the stay was in effect.
Accordingly, I would reverse the April 14, 1998 order on the basis that any
proceedings on October 21, were void. Those proceedings should be redone now that
the bankruptcy has been dismissed.
/S/ JAMES C. NELSON
1
1. In the initial proceedings of this case, Judge John Warner recused himself and Judge Thomas
McKittrick replaced him. Goldstein initiated a disqualification action against Judge McKittrick, over
which Judge C.B. McNeil resided. On February 23, 1998, Judge McNeil denied Goldstein's request for
disqualification, partly because Goldstein was no longer a party to Kenneth Axvig's estate since Ole
Axvig was appointed as personal representative.
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