April 6, 2010; withdrawn and opinion filed September 21, 2010
Appeal from the District Court of Ward County, Northwest Judicial District, the Honorable Richard L. Hagar, Judge.
The opinion of the court was delivered by: Kapsner, Justice.
AFFIRMED IN PART, REVERSED IN PART, AND REMANDED.
[¶1] The Department of Human Services appeals from a probate court order declaring the estate of Mary Ann Fisk insolvent and discharging the personal representative upon payment to the Department of $29,565.70 on its claim against the estate. We conclude the district court did not abuse its discretion in approving the personal representative's fees and the costs of administering the estate, but erred in ruling Mary Ann Fisk's allowable funeral expenses were not subject to the $3,000 limit in N.D.C.C. § 50-24.1-07(1)(a). We also conclude the record is inadequate to determine the validity of the Department's claim against the estate. We affirm in part, reverse in part, and remand for further proceedings to allow the Department an opportunity to present evidence concerning asset traceability.
[¶2] Mary Ann Fisk's husband, Raymond Fisk, received $56,312.35 in medical assistance benefits dating from March 1, 1993, until his death on February 4, 1997. Mary Ann Fisk suffered from heart disease, diabetes, and respiratory problems. After Raymond Fisk died, Mary Ann Fisk's sister, Clarice Lagasse, lived with Mary Ann Fisk in her Minot home where the sisters helped care for each other. The sisters merged their household goods and owned their car jointly. Before Mary Ann Fisk died on September 27, 2001, she gave her personal property and household goods to Lagasse. Mary Ann Fisk did not receive medical assistance benefits.
[¶3] In her will, Mary Ann Fisk appointed her stepson, Royce S. Fisk, as personal representative of her estate. On December 6, 2001, the Department filed a claim against the estate for $70,887.59, representing the cost of Raymond Fisk's medical assistance benefits plus interest. On March 11, 2002, the personal representative disallowed the Department's claim, explaining "[i]n the event it is established that Raymond A. Fisk actually received Medical Assistance recovery is limited to the traceable assets in which Raymond A. Fisk had an interest in." The personal representative also stated "[i]nterest shall commence on allowed claims sixty (60) days after the time for original presentation of the claim has expired." On May 13, 2002, the Department petitioned the district court for allowance of its claim. On October 6, 2002, the personal representative allowed the Department's claim for medical assistance benefits of $56,312.35, but continued to deny its claim for interest from August 4, 1997, stating interest would commence to run from March 16, 2002. The Department again petitioned the court for allowance of the claim on November 15, 2002.
[¶4] For reasons not apparent from the record, nothing further appears in the probate court file until the Department petitioned the district court for an order allowing its claim and compelling payment of the claim on November 25, 2008. The personal representative responded and petitioned the court for an order declaring the estate insolvent and for discharge of the personal representative. After deducting expenses of administration, funeral expenses, expenses of Mary Ann Fisk's last illness, and taxes, the personal representative indicated the estate had $29,565.70 remaining for distribution. The Department objected to various aspects of the personal representative's proposed final account. The petitions of both parties were brought as motions under N.D.R.Ct. 3.2, and the personal representative submitted an affidavit to the court. The Department did not submit an affidavit. No evidentiary hearing or oral arguments were requested by the parties. In March 2009, the court issued an order rejecting the Department's arguments and granting the personal representative's petition.
[¶5] The Department argues the district court erred in approving the personal representative's compensation and in approving certain attorney fees as expenses of administration.
[¶6] Personal representatives are entitled to reasonable compensation for their services. See, e.g., Estate of Gleeson, 2002 ND 211, ¶ 21, 655 N.W.2d 69. Furthermore, "[a]s a fiduciary acting on behalf of persons interested in an estate, a personal representative may use estate funds to pay reasonable compensation to persons employed to advise or assist him in the administration of an estate." Estate of O'Connell, 476 N.W.2d 8, 11 (N.D. 1991). Section 30.1-18-15(21), N.D.C.C., empowers the personal representative to employ attorneys to assist and advise him and to have the estate pay compensation for those services. See Estate of Hass, 2002 ND 82, ¶ 10, 643 N.W.2d 713. The review of fees paid or taken by a personal representative is left to the sound discretion of the district court. See, e.g., Estate of Peterson, 1997 ND 48, ¶ 18, 561 N.W.2d 618. We will not overturn the district court's decision on reasonable compensation absent a showing of an abuse of discretion, and the court's underlying findings of fact will be upheld unless they are clearly erroneous. See, e.g., Oliver v. City of Larimore, 540 N.W.2d 630, 635 (N.D. 1995); Estate of Flaherty, 484 N.W.2d 515, 521 (N.D. 1992). Whether a personal representative has breached a fiduciary duty is a question of fact which will not be set aside unless it is clearly erroneous. Gleeson, at ¶ 17. A district court abuses its discretion when it acts in an arbitrary, unreasonable, or unconscionable manner, or when it misinterprets or misapplies the law. Estate of Allmaras, 2007 ND 130, ¶ 12, 737 N.W.2d 612. A finding of fact is clearly erroneous if it is induced by an erroneous view of the law, if there is no evidence to support it, or if, after reviewing all of the evidence, we are left with a definite and firm conviction a mistake has been made. Gleeson, at ¶ 17. The complaining party has the burden of establishing an abuse of discretion and of showing a finding is clearly erroneous. See Martin v. Trinity Hosp., 2008 ND 176, ¶ 17, 755 N.W.2d 900; Gleeson, at ¶ 17.
[¶7] In his affidavit, the personal representative stated: Prior to Mary Ann's death, she gave her personal property and household goods to Clarice. I was not present when this gift was made, but I had no reason to dispute the gift. Clarice lived in the home with Mary Ann, she assisted in caring for her, and the property was of little or no monetary value. Mary Ann and Raymond were people of modest means and the household goods were old and in poor repair. In addition, years of smoking had taken its toll on the property.
The residence of Mary Ann Fisk was in poor repair, smoke stained, and full of trash. The realtor advised that the house had to be cleaned from top to bottom and trash removed in order to sell this property. It took 4 adults, working from morning to night to accomplish this task.
After scrubbing walls for several days, we determined we could not get rid of the stain or smoke smell. I prepped the walls and hired a painter. We cleaned the carpets with a rented machine and still had to hire a professional[.]
I respectfully request that I be fairly compensated for the work I performed and the expenses I incurred for the estate, which has been of no benefit to me or my family.
[¶8] The Department offered no evidence to support its claim that fees paid or taken by the personal representative were excessive or inappropriate. Rather, the Department simply argues the district court erred in approving the personal representative's compensation in the amount of $9,600, which included $986 for "Elder Law specialist, Paul Mitchell." The Department complains about "amounts the personal representative sought to pay to himself for his own services, for the non-local travel, meals, and lodging of himself and family members engaged in housecleaning, and to reimburse himself for amounts he paid to Paul Mitchell, an attorney he engaged for unknown services." The ...