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In re Curtiss A. Hogen Trust B

Supreme Court of North Dakota

May 8, 2018

In the Matter of Curtiss A. Hogen Trust B, created under the Last Will and Testament of Curtiss A. Hogen
v.
Rodney Hogen, Co-Trustee, Respondent and Appellant Steven C. Hogen, Co-Trustee, Petitioner and Appellee

          Appeal from the District Court of Cass County, East Central Judicial District, the Honorable Steven E. McCullough, Judge.

          Sara K. Sorenson (argued) and Stephen R. Hanson II (appeared), West Fargo, ND, for petitioner and appellee.

          Jonathan T. Garaas, Fargo, ND, for respondent and appellant.

          OPINION

          VandeWalle, Chief Justice.

         [¶ 1] Rodney Hogen appealed from an order granting Steven Hogen's petition for approval of a final report and accounting for the Curtiss A. Hogen Trust B. In his appeal, Rodney Hogen raises multiple issues. For purposes of this decision, we consolidate his issues into four related subjects involving his claims the district court erred in determining the Trust did not immediately terminate upon Arline Hogen's death, the court erred in authorizing the sale of Trust property and ordering an offset of more than $300, 000 from his share of the property, the court erred in awarding trustee's fees and attorney's fees, and the court was not impartial. We affirm.

         I

         [¶ 2] Curtiss and Arline Hogen were married, and they jointly owned farmland in Barnes and Cass Counties. In the 1960s, their son, Rodney Hogen, began farming the land with Curtiss Hogen. When Curtiss Hogen died in 1993, his 1984 will devised certain personal property to Arline Hogen and devised the remainder of his property, including his roughly one-half undivided interest in the farmland, to the trustee for the Curtiss Hogen Trust B. Curtiss Hogen's will allowed the Trust to continue the farming operation, appointed his two children, Steven and Rodney Hogen, as co-trustees for the Trust, and authorized the trustee to make payments to Arline Hogen during her lifetime of all the Trust's net income and any discretionary payments from principal necessary for her medical care, education, support and maintenance. Curtiss Hogen's will included the following language describing the consequences of the death of the surviving spouse:

Upon the death of the survivor of my said spouse and me, my Trustee shall divide this Trust into equal separate shares so as to provide One (1) share for each then living child of mine and One (1) share for each deceased child of mine who shall leave issue then living.
(a) Each share provided for a living child of mine shall be distributed to such child. Each share provided for a deceased child of mine who shall leave issue then living, shall be distributed by representation to such issue.

         [¶ 3] After Curtiss Hogen's death, Rodney Hogen continued farming the land under a cash rent and crop-share arrangement with the Trust and with Arline Hogen, the owner of the other one-half undivided interest in the farmland. Arline Hogen died on March 23, 2007, and her will equally devised all of her property to Steven and Rodney Hogen.

         [¶ 4] In April 2007, Steven Hogen initiated informal probate proceedings for Arline Hogen's estate, which led to extensive litigation and this Court's decision in Estate of Hogen, 2015 ND 125, 863 N.W.2d 876. In that case, we rejected Rodney Hogen's argument that his share of Arline Hogen's real property devolved to him immediately upon her death. Id. at ¶¶ 26-27. We concluded the district court did not err in determining the devolution of Arline Hogen's real property to Rodney Hogen was subject to the personal representative's power during the administration of her estate to seek a retainer for any noncontingent indebtedness that Rodney Hogen owed her or her estate. Id. at ¶ ¶ 1, 27. Except for a calculation involving some Barnes County land, we concluded that evidence in the record supported the court's findings about the amount Rodney Hogen owed to Arline Hogen and her estate for post-death cash rent, crop-share proceeds, and conservation reserve program payments and that the court's findings about those amounts were not clearly erroneous. Id. at ¶ 37. We upheld the court's rejection of the personal representative's claim that Rodney Hogen purloined money from the Trust, stating the court had explained the Trust could bring a direct action against Rodney Hogen for any money allegedly due the Trust. Id. at ¶ 40. We held the court did not clearly err in finding Arline Hogen waived any claims for pre-death cash rent and crop-share proceeds owed by Rodney Hogen to her. Id. at ¶ 43. We further held the court did not abuse its discretion in awarding Steven Hogen $27, 500 in personal representative fees, and ordering payment of $333, 272.23 in attorney's fees, costs, and expert witness fees from Arline Hogen's estate. Id. at ¶¶ 48, 51.

         [¶ 5] Steven Hogen thereafter petitioned the district court for the supervised administration of the Trust to compel an accounting and recover an offset against Rodney Hogen's share of the Trust for claimed breaches of fiduciary duties to the Trust, to void deeds unilaterally issued by Rodney Hogen as co-trustee to himself, to remove Rodney Hogen as co-trustee, and for injunctive relief preventing Rodney Hogen from contacting or receiving rent from renters of the Trust land.

         [¶ 6] On cross-motions for summary judgment, the district court granted Steven Hogen partial summary judgment, ruling the Trust did not automatically and immediately terminate upon Arline Hogen's death. The court construed the Trust language, explaining the Trust did not explicitly say when it would terminate and included language requiring the trustee to divide and distribute the Trust property upon the death of the surviving spouse. The court explained the Trust's purposes were to provide income and support to Arline Hogen during her lifetime and to equally divide and distribute the corpus of the Trust among Curtiss Hogen's then-living children or issue upon the surviving spouse's death. The court concluded the entire fulfillment of the Trust objective had not yet been achieved because the Trust property had not been properly divided into equal shares and distributed. The court rejected Rodney Hogen's arguments that the Trust immediately terminated on Arline Hogen's death, that the trustee's claims were barred by the statute of limitations, and that Rodney Hogen's deeds to himself as co-trustee were ministerial acts.

         [¶ 7] The district court thereafter entered an interim order for supervised administration of the Trust, in part to avoid a "plethora of appeals" and piecemeal litigation. The court also denied Steven Hogen's interim request to suspend Rodney Hogen as co-trustee and enjoined the brothers from executing any documents on behalf of the Trust without the agreement and signature of both co-trustees.

         [¶ 8] After a bench trial, the district court found that Rodney Hogen breached certain fiduciary duties and obligations to the Trust and that he owed the Trust $305, 961.65 for the fiduciary breaches and for purloined assets. The court permanently suspended Rodney Hogen as co-trustee of the Trust and ordered Steven Hogen, as the remaining trustee, to divide and allocate the Trust property for the benefit of the Trust and the co-beneficiaries. The court authorized Steven Hogen to sell sufficient Trust property in a commercially reasonable manner to pay outstanding mortgages, debts, and encumbrances on Trust land, to pay the Trust's attorney's fees, and to pay equal shares to the co-beneficiaries with $305, 961.65 first offset from Rodney Hogen's share of the Trust property. Rodney Hogen appealed.

         [¶ 9] Because the court explicitly reserved a decision on issues about the amount of awarded fees, we temporarily remanded Rodney Hogen's appeal for consideration of Steven Hogen's petition for approval of a final trustee's report and request for trustee's fees and attorney's fees. On remand, the district court granted Steven Hogen's petition for approval of the trustee's final report and awarded trustee's fees in the amount of $13, 750, attorney's fees in the total amount of $401, 916.50, with $208, 000 withheld from Rodney Hogen's share of Trust assets, and associated litigation fees, costs, and expenses in the amount of $26, 325.35. The court also directed Steven Hogen to withhold $10, 000 from Trust property for continuing fees and expenses and payment of ongoing attorney's fees and capital gains taxes on the land sale. Rodney Hogen also appealed from that order.

         II

         [¶ 10] We initially discuss an issue about appealability in trust proceedings to address the application of our finality jurisprudence to these proceedings. The right to appeal in this state is purely statutory, and if there is no statutory basis for an appeal, we must dismiss it for lack of jurisdiction. In re Estate of Hollingsworth, 2012 ND 16, ¶ 7, 809 N.W.2d 328. Only judgments and decrees constituting a final judgment of the rights of the parties and certain orders enumerated by statute are appealable. Investors Title Ins. Co. v. Herzig, 2010 ND 138, ¶ 23, 785 N.W.2d 863. See Matter of Admin. by Mangnall, 1997 ND 19, ¶ 18, 559 N.W.2d 221 (stating policy of discouraging piecemeal litigation and requiring complete accounting of ...


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