This opinion will be unpublished and

may not be cited except as provided by

Minn. Stat. § 480A.08, subd. 3 (1998).




In Re Estate of:

Shirley Sektor, a/k/a Shirley S. Sektor,

Shirley Silvia Sektor, Mrs. George S. Sektor

and Mrs. G. S. Sektor, Deceased.

Filed January 12, 1999


Kalitowski, Judge

Hennepin County District Court

File No. P9951238

David D. Himlie, 325 Southdale Place, 3400 West 66th Street, Edina, MN 55435 (for appellant Brian R. Salita)

John G. Westrick, Scott W. Swanson, Westrick & McDowall-Nix, PLLP, 400 Minnesota Building, 46 Fourth Street East, St. Paul, MN 55101 (for respondent Marshall Sektor)

Considered and decided by Kalitowski, Presiding Judge, Shumaker, Judge, and Anderson, Judge.


KALITOWSKI, Judge Appellant Brian R. Salita, the personal representative for the estate of Shirley Sektor, contends the district court referee erred in surcharging appellant $17,000 for breaching his fiduciary duties to the estate. Respondent beneficiary contends the referee erred in limiting the surcharge to $17,000. We affirm.


Appellant did not seek review of the referee's decision in district court under Minn. R. Civ. P. 53. In cases where there is no request for rule 53 review, this court determines whether there is support in the record for the referee's findings of fact, and whether the findings support the conclusions of law and the judgment. Kahn v. Tronnier, 547 N.W.2d 425, 428 (Minn. App. 1996), review denied (Minn. July 10, 1996). The fact-finder's decisions will therefore not be altered unless clearly erroneous. Id.


A personal representative has fiduciary duties to the represented estate. Minn. Stat. § 524.3-703; In re Simmons' Estate, 214 Minn. 388, 397-98, 8 N.W.2d 222, 226-27 (1943). A fiduciary must exercise that degree of care that "[persons] of common prudence ordinarily exercise in their own affairs." In re Janke's Estate, 193 Minn. 201, 204, 258 N.W. 311, 313 (1935) (quoting Harding v. Canfield, 73 Minn. 244, 75 N.W. 1112 (1898)). Estate administrators owe the estate, "a full measure of honesty, diligence, and zeal as a matter of course." In re Simmons' Estate, 214 Minn. at 397, 8 N.W.2d at 226. If the personal representative has special skills, those skills must be used in the administration of the estate. Minn. Stat. § 524.3-703. Administrators are liable for losses that result from a breach of these duties. In re Lund's Estate, 217 Minn. 617, 626, 15 N.W.2d 426, 431 (1944).

Appellant contends any errors appellant may have made in administering the estate are excused because one or both of the heirs did not cooperate in providing information. We disagree. Appellant had a duty to the estate to collect the information necessary to file and pay the estate taxes in a timely fashion. Although appellant claims he telephoned the heirs for information, he did not make a record of these calls or demand the necessary information in writing. There is no evidence that appellant explained to the heirs that the information he requested was necessary to avoid paying interest and penalties. Moreover, the evidence indicates appellant did not raise the cash necessary to pay the estate taxes, or even an estimate of the estate taxes, before the January 16, 1996, deadline. Finally, when appellant made the estate tax filing, he did not request an extension of time to pay the taxes. We conclude there was sufficient evidence in the record to support the referee's finding of breach of fiduciary duty.

Appellant argues the estate would have had to sell the stock in question to pay the taxes in a timely fashion, and because the stock's value increased in an amount greater than the amount of penalties and interest assessed due to late payment, there can be no finding of breach. We disagree. First, the record fails to state how much, if any, the estate appreciated in value from January 1996 to the time the stocks were sold in the summer of 1996. Appellant's defense fails on this ground alone. Second, stocks go up and down in value, and the fact that the stocks may have fortuitously appreciated during the period that appellant failed to take appropriate actions does not preclude the referee from finding appellant breached his fiduciary duty.


Both appellant and respondent claim the referee erred in surcharging appellant $17,000. Respondent contends this amount is too low, and appellant should have been disgorged of all compensation for work on the estate. Appellant claims there can be no surcharge without a finding of actual damages. We disagree with both parties.

An estate beneficiary may hold a personal representative responsible if the representative breaches fiduciary duties by not acting in the estate's best interests. Goldberger v. Kaplan, Strangis and Kaplan, P.A., 534 N.W.2d 734, 739 (Minn. App. 1995), review denied (Minn. Sept. 28, 1995). The amount of the fee forfeiture in breach of fiduciary duty cases is determined by the finder of fact. Gilchrist v. Perl, 387 N.W.2d 412, 417 (Minn. 1986), reh'g denied, (June 23, 1986). "[T]he client is deemed injured even if no actual loss results." Perl v. St. Paul Fire & Marine Insurance Co., 345 N.W.2d 209, 212 (Minn. 1984).

A fiduciary whose breach of duties involves fraud or bad faith forfeits all rights to compensation. Gilchrist, 387 N.W.2d at 417.

However, the supreme court has stated that

when no actual fraud or bad faith is involved, when no actual harm to the client is sustained, and particularly when there are multiple potential plaintiffs, we think the better approach is to determine the amount of the fee forfeiture by a consideration of the relevant factors set out in Minn. Stat. § 549.20, subd. 3 (1984).

Id. We conclude the second approach applies here, because: (1) respondent did not argue that appellant acted fraudulently or in bad faith; (2) appellant contends no actual damages were sustained by the estate because the penalties and interest were covered by the appreciation of estate assets; and (3) both respondent and his brother were potential plaintiffs.

The current statute outlining the factors states:

Any award of punitive damages shall be measured by those factors which justly bear upon the purpose of punitive damages, including the seriousness of hazard to the public arising from the defendant's misconduct, the profitability of the misconduct to the defendant, the duration of the misconduct and any concealment of it, the degree of the defendant's awareness of the hazard and of its excessiveness, the attitude and conduct of the defendant upon discovery of the misconduct, the number and level of employees involved in causing or concealing the misconduct, the financial condition of the defendant, and the total effect of other punishment likely to be imposed upon the defendant as a result of the misconduct, including compensatory and punitive damage awards to the plaintiff and other similarly situated persons, and the severity of any criminal penalty to which the defendant may be subject.

Minn. Stat. § 549.20, subd. 3 (1998).

Applying these factors, we conclude the referee did not err in determining a $17,000 surcharge was proper. Appellant's conduct raised no hazard to the public and he did not profit from his conduct or attempt to conceal his activities. The record indicates, however, that although appellant was reminded by his paralegal service that the estate taxes were coming due, he failed to take appropriate actions, thus subjecting the estate to the assessment of interest and penalties. Moreover, considering that appellant is an attorney and collected over $32,000 in fees for his work with the estate, the referee's surcharge was proper.

Finally, the referee's decision to base the surcharge on the amount of penalties the estate incurred is reasonable. Appellant likely could have prevented the penalties by filing a request to pay the taxes late, or by paying an estimated tax in January. Although respondent argues the surcharge should include the additional interest the estate had to pay, appellant correctly notes that the stocks the estate would have had to sell in order to pay the taxes appreciated in value. See Gits v. Norwest Bank Minneapolis, 390 N.W.2d 835, 837-38 (Minn. App. 1986) ("[I]f a defendant's tortious conduct confers a benefit, as well as a harm, upon the plaintiff, the [factfinder] may weigh the value of the benefit against the claimed harm."). We conclude the surcharge of $17,000 was reasonable under all the circumstances.