Matter of Michael J. Tharaldson Trust , 2021 ND 203 ( 2021 )

FILED
IN THE OFFICE OF THE
CLERK OF SUPREME COURT
NOVEMBER 17, 2021
STATE OF NORTH DAKOTA
IN THE SUPREME COURT
STATE OF NORTH DAKOTA
2021 ND 203In the Matter of the Michael J. Tharaldson Irrevocable Trust II dated October
3, 2011
Bell Bank, Trustee, Petitioner and Appellee
v.
Matthew D. Tharaldson,
Michelle Tharaldson LeMaster, Respondents and Appellees
and
E.M., through his guardian,
Mark McAllister, Interested Party and Appellant
No. 20210139
Appeal from the District Court of Cass County, East Central Judicial District,
the Honorable Steven E. McCullough, Judge.
REVERSED AND REMANDED.
Opinion of the Court by Crothers, Justice.
Berly D. Nelson (argued) and Timothy G. Richard (on brief), Fargo, ND, for
petitioner and appellee.
Jonathan T. Garaas, Fargo, ND, for interested party and appellant.
Beverley L. Adams (argued) and Fred J. Williams (on brief), Fargo, ND, for
respondent and appellee Matthew D. Tharaldson.
Matter of Michael J. Tharaldson Trust
No. 20210139
Crothers, Justice.
[¶1] E.M. appeals from a district court order determining beneficiaries and
approving distribution of trust assets. E.M. argues the district court did not
have jurisdiction and erred in denying his demand for change of judge. E.M.
also argues the district court erred in interpreting the trust terms. We reverse
and remand.
I
[¶2] Michael J. Tharaldson executed an “Irrevocable Trust Agreement” on
February 14, 2007. The trust named State Bank & Trust, now known as Bell
Bank, as trustee. On October 3, 2011, Tharaldson executed an “Irrevocable
Trust Agreement II” and merged assets from the first trust into the second
trust.
[¶3] Tharaldson died intestate on December 11, 2017. On June 28, 2019, Bell
Bank filed a petition seeking the district court’s determination of trust
beneficiaries and approval of asset distribution. Bell Bank claimed the sole
beneficiary was Tharaldson’s brother, Matthew Tharaldson.
[¶4] Tharaldson had three biological children. Bell Bank mailed its petition,
proposed order, and notice of hearing to the two adult children. Bell Bank sent
the documents via email to the attorney representing Tharaldson’s minor child,
E.M., in the separate probate action.
[¶5] On August 8, 2019, E.M. filed in this action an “Objection to
Proceedings,” claiming the district court lacked jurisdiction to proceed and
requesting affirmative relief “if jurisdiction is ever acquired.” On August 30,
2019, E.M. filed a “Continued Objection to Proceedings,” again arguing the
district court lacked subject matter and personal jurisdiction and requesting
affirmative relief “[i]f the above-entitled matter is ever initiated by the Trustee,
through proper service of process.”
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[¶6] At the petition hearing on September 4, 2019, the district court directed
Bell Bank to personally serve E.M. Bell Bank made personal service on E.M.’s
guardian on September 30, 2019.
[¶7] On October 2, 2019, E.M. filed a demand for change of judge. The
presiding judge of the district denied E.M.’s demand as untimely. On
October 11, 2019, E.M. filed a renewed demand that included allegations of the
assigned judge’s bias. The presiding judge denied the renewed demand because
the first demand was untimely. The assigned judge did not address the bias
allegations. See Chisholm v. State, 2019 ND 70, ¶ 16, 924 N.W.2d 127 (holding
a request for recusal based on bias should be determined by the judge assigned
to the case).
[¶8] On April 22, 2021, the district court entered an order granting Bell
Bank’s petition. The district court found the language of the trust was not
ambiguous, Tharaldson died intestate, and Matthew Tharaldson was the sole
beneficiary of the trust, entitling him to distribution of all trust assets.
II
[¶9] E.M. argues the district court was without jurisdiction to act. This Court
reviews jurisdiction de novo. In re Estate of Brandt, 2019 ND 87, ¶ 18, 924
N.W.2d 762.
A
[¶10] “Subject-matter jurisdiction is the court’s power to hear and determine
the general subject involved in the action[.]” In re Estate of Finstrom, 2020 ND
227, ¶ 30, 950 N.W.2d 401 (quoting Albrecht v. Metro Area Ambulance, 1998
ND 132, ¶ 10, 580 N.W.2d 583).
[¶11] The Uniform Probate Code and the North Dakota Uniform Trust Code
provide the district court with subject-matter jurisdiction. “The district court
has jurisdiction over all subject matter relating to . . . Trusts.” N.D.C.C. § 30.1-
02-02(4). “A judicial proceeding involving a trust may relate to any matter
involving the trust’s administration, including a request for instructions and
an action to declare rights.” N.D.C.C. § 59-10-01(3).
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[¶12] Bell Bank filed a petition seeking determination of trust beneficiaries
and approval to distribute assets. Thus, the district court had subject matter
jurisdiction over the action.
B
[¶13] Personal jurisdiction is “the court’s power over a party.” Estate of
Finstrom, 2020 ND 227, ¶ 30. A district court acquires personal jurisdiction
through valid service of process. See Olsrud v. Bismarck-Mandan Orchestral
Ass’n, 2007 ND 91, ¶ 9, 733 N.W.2d 256. “Absent valid service of process, even
actual knowledge of the existence of a lawsuit is insufficient to effectuate
personal jurisdiction over a defendant.” Id.[¶14] Bell Bank and Matthew Tharaldson argue email service on E.M.’s
attorney in the probate matter was sufficient under N.D.C.C. § 30.1-03-01,
which allows notice to an interested person’s attorney if the interested person
has appeared by counsel. However, here E.M.’s attorney had not yet appeared
on E.M.’s behalf in this trust action when Bell Bank emailed the documents to
him. Notice to or service on E.M.’s attorney prior to E.M.’s or the attorney’s
appearance in this action was inadequate service under N.D.C.C. § 30.1-03-01
since E.M. had not yet appeared by counsel in this matter.
[¶15] Bell Bank and Matthew Tharaldson argue E.M. voluntarily appeared in
the trust action and waived the personal jurisdiction objection because his
attorney filed responsive documents and appeared at the hearing prior to
service on E.M. “A party may waive a personal jurisdiction argument by
voluntarily submitting to the personal jurisdiction of the court.” Mitzel v.
Larson, 2017 ND 48, ¶ 5, 890 N.W.2d 817. In Mitzel, this Court concluded
personal jurisdiction was waived because the party appeared at a hearing
without objecting to service. Id. Here, E.M.’s attorney objected to service in his
court filings and at the hearing. E.M. did not waive his personal jurisdiction
argument.
[¶16] In addition to commencing an action by notice under N.D.C.C. § 30.1-03-
01, service of the petition could have been accomplished under N.D.R.Civ.P. 4.
That rule deals with jurisdiction over a person, process, and personal service,
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and allows personal service on an individual’s agent. In this case, E.M.’s
guardian was personally served on September 30, 2019. The North Dakota
Uniform Trust Code states that notice to a person who represents another has
the same effect as if notice were given directly to the other person. N.D.C.C. §
59-11-01. A parent may represent the parent’s minor child if a guardian has
not been appointed. N.D.C.C. § 59-11-03(6). Similarly, a guardian may
represent a ward if a conservator has not been appointed. N.D.C.C. § 59-11-
03(2). Here, service was on E.M.’s guardian. Therefore, the district court
acquired personal jurisdiction over E.M. when his guardian was served on
September 30, 2019.
III
[¶17] E.M. argues the district court erred by denying his demand for change of
judge as untimely.
[¶18] Any party to a civil action pending in district court may obtain a change
of judge within ten days of the earliest occurrence of the following:
“a. The date of the notice of assignment or reassignment of a judge
for trial of the case;
b. The date of notice that a trial has been scheduled; or
c. The date of service of any ex parte order in the case signed by
the judge against whom the demand is filed.”
N.D.C.C. § 29-15-21(1)-(2). A party added to the proceeding after the above
occurrences can file a demand within ten days of being added. N.D.C.C. § 29-
15-21(3). However, “no demand for a change of judge may be made after the
judge sought to be disqualified has ruled upon any matter pertaining to the
action or proceeding in which the demanding party was heard or had an
opportunity to be heard.” Id.
[¶19] Here, E.M., through his attorney, appeared at the September 4, 2019
hearing and argued the district court lacked jurisdiction over E.M. However,
the assigned judge did not rule on any matter. The hearing established the
need for service on E.M. As concluded above, E.M. was properly served and
joined this action on September 30, 2019. E.M. filed his demand for change of
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judge on October 2, 2019. Therefore, E.M.’s demand was within ten days and
the district court erred in denying his demand for change of judge.
IV
[¶20] E.M. argues the district court erred in granting Bell Bank’s petition. He
claims the merger of assets from the first trust to the second trust was invalid.
E.M. also claims the trust designates E.M. and his siblings as the only
beneficiaries, entitling them to share in the trust assets, and entitling E.M. to
recover attorney’s fees. Bell Bank and Matthew Tharaldson argue collateral
estoppel bars relitigation of E.M.’s claims in this case because of the district
court’s findings about E.M.’s status as an heir in the Tharaldson probate case.
[¶21] After a timely demand for change of judge, the assigned judge “shall
proceed no further or take any action in the action or proceeding and is
thereafter disqualified from doing any further act in the cause unless the
demand is invalidated by the presiding judge.” N.D.C.C. § 29-15-21(6). Here,
the presiding judge erroneously invalidated the demand for change of judge.
But for the presiding judge’s erroneous order, the assigned judge was without
authority to rule on the merits. Therefore, the final order was not properly
entered and we decline to reach issues that have not been properly considered
by the district court.
V
[¶22] The district court’s order denying E.M.’s demand for change of judge is
reversed and the order granting the petition is vacated. This case is remanded
for assignment of a new judge and for proceedings anew on the merits of the
petition.
[¶23] Jon J. Jensen, C.J.
Gerald W. VandeWalle
Daniel J. Crothers
Jerod E. Tufte
Allan L. Schmalenberger, S.J.
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[¶24] The Honorable Allan L. Schmalenberger, S.J., sitting in place of
McEvers, J., disqualified.
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