In Re the Estate of Bayers , 304 Mont. 296 ( 2001 )

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No. 00-715
IN THE SUPREME COURT OF THE STATE OF MONTANA
2001 MT 49IN THE MATTER OF THE ESTATE
OF SHIRLEY L. BAYERS,
A Protected Person.
APPEAL FROM: District Court of the Thirteenth Judicial District,
In and for the County of Yellowstone,
The Honorable Russell C. Fagg, Judge presiding.
COUNSEL OF RECORD:
For Appellant:
Philip P. McGimpsey, Billings, Montana
For James Bennett:
David A. Duke, Billings, Montana
For Guardian Ad Litem for Shirley Bayers:
Damon L. Gannett, Gannett Law Firm, Billings, Montana
For Guardian Judy Trenka:
William J. Mattix, Crowley Law Firm, Billings, Montana
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For Respondent:
John T. Jones, Nancy Bennett, Moulton, Bellingham, Longo & Mather, Billings, Montana
Submitted on Briefs: February 8, 2001
Decided: March 22, 2001
Filed:
_________________________________________
Clerk
Justice Patricia O. Cotter delivered the Opinion of the Court.
¶1 The Thirteenth Judicial District Court, Yellowstone County, assessed $1,500.00 in
attorney fees as a sanction against Philip P. McGimpsey (McGimpsey) for unreasonably
and vexatiously multiplying legal proceedings, pursuant to § 37-61-421, MCA.
McGimpsey appeals this sanction. We affirm and remand with instructions.
FACTUAL BACKGROUND
¶2 First Interstate Bank (Conservator) is the court-appointed Conservator of the Estate of
Shirley L. Bayers (Bayers), who is incapacitated due to Alzheimer's disease. McGimpsey
purports to be Ms. Bayers' private attorney, claiming Bayers hired him after
conservatorship proceedings were underway. When McGimpsey began expressing an
interest in participating in matters involving Bayers' estate, Conservator became concerned
about the extent of McGimpsey's involvement in Bayers' affairs. Conservator's attorney
therefore wrote to him requesting a copy of any legal documents he had that may have
been executed by Bayers. McGimpsey responded, saying he could provide only "an
abstract" of his attorney-client agreement with Bayers, and declining to make any further
disclosures, citing the attorney-client relationship.
¶3 On February 16, 2000, following a hearing on Conservator's annual accounting at
which McGimpsey was present, the District Court informed McGimpsey that Conservator
was statutorily entitled to the documents it had requested from him. The District Court
then instructed Conservator to put its request in writing. The next day, counsel for
Conservator sent McGimpsey a letter, once again, requesting documents he possessed
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having to do with Bayers' affairs. This letter asked McGimpsey to provide:
[C]opies of any estate plans you have for Shirley L. Bayers, including, but not
limited to: any wills; powers of attorney; trusts of which she is a settler; and any
contract, transfer, or joint ownership arrangement with provisions for payment or
transfer of benefits or interest at her death of another. In the event that you have
knowledge of any estate plans that are not in your possession, please provide the
name and address of the person in possession of those documents.
The letter went on as follows:
Furthermore, any person taking actions based upon a Durable Power of Attorney is
accountable to the conservator. See Mont. Code Ann. §72-5-501(2). Thus, in the
event that you are taking direction from or have an attorney client relationship with
any person claiming to be Ms. Bayers' agent or attorney-in-fact under a Durable
Power of Attorney for Shirley L. Bayers, please provide a copy of any engagement
or retention letters as well as copies of all bills or account statements for services
provided under the Durable Power of Attorney.
If you choose not to provide the requested information within ten days, the
conservator will be forced to seek the Court's intervention. In the event the
conservator is required to file a motion with the Court, the conservator will
seek sanctions in the form of attorneys' fees and costs. (Emphasis in original.)
¶4 McGimpsey ignored Conservator's request. Accordingly, on April 24, 2000,
Conservator filed a motion to compel McGimpsey to provide the requested information,
together with a request for attorney fees necessitated by the motion. On April 27, 2000,
McGimpsey responded with a letter threatening Conservator's counsel with Rule 11
sanctions if she did not withdraw the motion to compel. Among other things, McGimpsey
stated:
[T]o put this in language that I'm hoping you'll understand, it is my profound and
unwavering belief that your Motion and Brief were not written and filed after
reasonable inquiry; are not well grounded in fact; and are not warranted by
existing law or a good faith argument for the extension, modification or
reversal of existing law. . . . (emphasis in original)
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Before you fall too deeply in love with your current Motion, I would suggest that
you secure a copy of (and very, very carefully read) the transcript from the Hearing
of February 16, 2000. To analogize: Do you remember the scene from one of the
Star Wars's movies where young Luke was being told to 'feel the force; listen to his
feelings?' Well . . . , 'read the transcript.' What you will magically find is that my
well-prepared and surgically scripted remarks will put an end to you and Damon's
[Guardian ad litem] continuous and unnecessary billing for 'housekeeping matters.'
. . . [I]f you're anxious to run with the tall dog litigators in your firm, or for that
matter, you need productive billable hours, may I suggest that the following subject
areas directed to the financial management of Shirley's account are ripe for the
application of your considerable talent. . . .
There followed a laundry list of complaints and criticisms of Conservator's handling of
Bayers' estate.
¶5 On May 8, 2000, McGimpsey filed a motion to strike scandalous, immaterial and
irrelevant content in Conservator's motion and brief. His motion was denied. On June 1,
2000, after the motion to compel was fully briefed, the District Court granted
Conservator's motion to compel and for attorney fees. The District Court indicated in its
order that if the amount of attorney fees was contested, a hearing would be held to
determine the amount of fees to be awarded.
¶6 On June 7, 2000, McGimpsey filed a motion to alter or amend the District Court's order
granting attorney fees. Conservator opposed the motion. The District Court denied
McGimpsey's motion, and ordered a hearing on the amount of the sanction to be awarded,
"unless the parties can agree to $1,000 in attorney fees being assessed." Conservator
agreed to accept the District Court's suggestion. McGimpsey did not. A hearing on the
amount of fees was therefore scheduled for July 27, 2000.
¶7 On July 18, 2000, McGimpsey filed a motion to vacate the hearing and moved to
establish a discovery schedule regarding attorney fees. The District Court denied the
motion at the beginning of the July 27, 2000 hearing. Conservator's counsel then testified
as to her reasonable attorney fees incurred due to McGimpsey's conduct. On July 31,
2000, the District Court issued its order requiring McGimpsey to pay Bayers' estate
$1,500.00 in attorney fees. McGimpsey filed another motion to alter or amend the order
determining attorney fees. The District Court denied the motion on August 30, 2000.
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McGimpsey now appeals to this Court.
DISCUSSION
¶8 Did the District Court abuse its discretion by sanctioning McGimpsey $1,500.00
under § 37-61-421, MCA, for unreasonably and vexatiously multiplying the
proceedings in District Court?
¶9 The District Court awarded fees to Conservator under § 37-61-421, MCA, which
provides:
An attorney or party to any court proceeding who, in the determination of the court,
multiplies the proceedings in any case unreasonably and vexatiously may be
required by the court to satisfy personally the excess costs, expenses, and attorney
fees reasonably incurred because of such conduct.
It is within a district court's discretion to award attorney fees under § 37-61-421, MCA.
Rocky Mountain Ent. v. Pierce Flooring (1997), 286 Mont. 282, 301, 951 P.2d 1326,
1338. We review a district court's determination to grant attorney fees pursuant to § 37-61-
421, MCA, for an abuse of discretion. Tigart v. Thompson (1990), 244 Mont. 156, 159-60,
796 P.2d 582, 584. This Court generally defers to the discretion of the district court
regarding sanctions because it is in the best position to know whether parties are
disregarding the rights of others and which sanction is most appropriate. McKenzie v.
Scheeler (1997), 285 Mont. 500, 506, 949 P.2d 1168, 1172.
¶10 McGimpsey argues that the District Court erred in ordering him to pay fees under §
37-61-421, MCA, because in a civil action such as this one, all discovery and discovery
disputes, including sanctions, must be governed by the Montana Rules of Civil Procedure,
and not by § 37-61-421, MCA. He also argues that it was error for the District Court to
sanction him because it made no findings of fact as to his unreasonable and vexatious
conduct. Lastly, he asserts that Conservator totally failed to carry its burden of proof as to
the amount of time its attorney spent due to his conduct.
¶11 Conservator counters that the issue before the District Court was not a discovery
dispute because there was no litigation and no adversity of parties as envisioned by the
rules governing discovery. The only party involved was Ms. Bayers. Conservator also
notes that the District Court examined Conservator's request for fees, heard testimony, and
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applied the seven factors set forth in Audit Services, Inc. v. Haugen (1979), 181 Mont. 9,
591 P.2d 1105. Finally, Conservator points out that the District Court specifically found
McGimpsey's conduct to be unreasonable and vexatious, as contemplated by § 37-61-421,
MCA. We agree.
¶12 Section 37-61-421, MCA, was modeled after 28 USCS § 1927, with only minor
changes made to clarify its applicability to pro se litigants as well as attorneys, and to
establish that attorney fees may be awarded as damages. Hearing on HB 541 Before the
House Judiciary Committee, 49th Legis. (1985) (statement of Judge Robert M. Holter, 19th
Judicial District). It was adopted in 1985 to provide redress against persons who abuse the
judicial process for their convenience, tactical reasons, personal gain, or the satisfaction of
vengeful motives. Hearing on HB 541 Before the House Judiciary Committee, 49th Legis.
(1985) (statement of Judge Michael Keedy, 11th Judicial District).
¶13 Contrary to McGimpsey's assertions, we have upheld the award of attorney fees for
discovery violations under § 37-61-421, MCA. See, e.g., In re Marriage of Rager (1994),
263 Mont. 361, 366, 868 P.2d 625, 628 (failure to appear at hearing and refusal to provide
discovery responses warranted sanction under § 37-61-421, MCA); also see, Tigart, 244
Mont. at 159-60, 796 P.2d at 584-85 (withholding of requested discovery information
requiring a second trial warranted sanction under § 37-61-421, MCA). The point in court
proceedings at which the vexatious conduct occurs is not the issue. Rather, it is the
unreasonable multiplication of court proceedings that is germane.
¶14 Rules 34 and 37, M.R.Civ.P., anticipate the existence of a dispute between opposing
parties. The underlying matter here is not an adversarial proceeding. See, In re Estate of
Bayers, 1999 MT 154, ¶ 14, 295 Mont. 89, ¶ 14, 983 P.2d 339, ¶ 14 (a petition to appoint
a guardian is not an adversarial proceeding). Conservatorship proceedings are established
to promote the best interests of the protected person. See, § 72-5-401 et seq., MCA.
Conservator was authorized to request the documentation from McGimpsey with or
without court authorization or confirmation. Section 72-5-427, MCA. Formal discovery
proceedings were not required for Conservator to obtain documents deemed relevant to the
protected person's estate.
¶15 McGimpsey intentionally led Conservator to believe he possessed documents relevant
to Bayers' estate. When Conservator first requested a copy of any engagement letter,
McGimpsey stated he could provide only an "abstract" of the attorney-client agreement
because of the other non-conservatorship personal legal matters which he was currently
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working on for Ms. Bayers. This led to Conservator's justifiable request to examine
representation agreements between McGimpsey and Bayers, which McGimpsey simply
refused to answer. On appeal, McGimpsey contends that his "no response" to
Conservator's request was a response, and should have been construed by Conservator as
an indication he did not have any of the documents she requested. We find this argument
specious. McGimpsey could have given a straightforward answer. Instead, he chose to
force a needless multiplication of proceedings and the pointless involvement of the
District Court in this dispute.
¶16 The District Court found that McGimpsey prolonged this matter unreasonably and
vexatiously, thus meeting the requirements set forth in § 37-61-421, MCA. The District
Court noted it would have been very simple for McGimpsey to write a one-sentence
response that he did not have the information requested. This would have ended the
inquiry, and would have obviated the necessity for the numerous briefs, hearings and legal
proceedings which ensued due to McGimpsey's recalcitrance. The District Court
justifiably found that McGimpsey was "playing games" and "pushing Ms. Bennett's
[Conservator's counsel] buttons" by forcing this matter forward. We conclude that the
District Court did not abuse its discretion by assessing attorney fees against McGimpsey
pursuant to § 37-61-421, MCA. The District Court is affirmed on this issue.
¶17 Unfortunately, McGimpsey's inclination to prolong this matter unreasonably and
vexatiously did not end in the District Court. McGimpsey forced this matter forward on
appeal, unnecessarily requiring the respondents to expend additional attorney fees
defending the order of the District Court. As already noted, § 37-61-421, MCA, permits
the Court to require an attorney who unreasonably multiplies the proceedings to satisfy
personally the expenses and attorney fees reasonably incurred because of such conduct.
We conclude that McGimpsey should be responsible under this statute for respondent's
expenses and attorney fees incurred on appeal as well as below. Accordingly, we remand
to the District Court for the assessment against McGimpsey of the respondent's costs and
attorney fees incurred herein.
/S/ PATRICIA COTTER
We Concur:
/S/ KARLA M. GRAY
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/S/ JAMES C. NELSON
/S/ W. WILLIAM LEAPHART
Justice Jim Regnier concurring and dissenting:
1. ¶I respectfully dissent to that part of the Court's opinion which awards attorneys fees
on appeal. Although this Court certainly has authority to award said fees pursuant to
§ 37-61-421, MCA, as well as Rule 32 of the Montana Rules of Appellate
Procedure, I note that the Respondent First Interstate Bank does not request fees on
appeal. In the instant case I would not award fees on appeal sua sponte. In all other
aspects, I agree with the Court's opinion.
/S/ JIM REGNIER
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