A04-2426

In re: Estate of Scot Nicholas Feyen

Filed November 1, 2005

Affirmed in part and reversed in part

Hudson, Judge

Ramsey County District Court

File No. P5025392

Gregory R. Troy, Troy & Associates, P.A., 2550 University Avenue West, Suite 459S, St. Paul, Minnesota 55114 (for appellants Gary and Mary Jane Torgerson)

Eric J. Magnuson, Shanda K. Pearson, Rider Bennett LLP, 33 South Sixth Street, Suite 4900, Minneapolis, Minnesota 55402; and

Brian D. Alton, McClay & Alton, P.L.L.P., 951 Grand Avenue, St. Paul, Minnesota 55105 (for Estate of Scot Nicholas Feyen)

Rodney Mason, Chandler & Mason, Ltd., 1607 Pioneer Building, 336 North Robert Street, St. Paul, Minnesota 55101 (for respondent Ruth Allison)

Considered and decided by Worke, Presiding Judge; Hudson, Judge; and Wright, Judge.

U N P U B L I S H E D O P I N I O N

HUDSON, Judge

Appellants Gary and Mary Jane Torgerson appeal from the partial denial of their claim for attorney fees arguing that the district court erred by: (1) denying their attorney’s petition for fees related to the attempted probate of a codicil; (2) concluding that the parties were not collaterally estopped from relitigating the petition for fees; and (3) failing to hold a hearing to permit testimony and other evidence of mishandled assets. The respondent estate argues that the district court erred by granting appellants’ attorney’s petition for fees related to the opening of the special administration. Because we find no error in the district court’s decision to deny the petition for fees, we affirm in part. Because we conclude that the district court lacked a sufficient factual basis to award fees related to the special administration, we reverse in part.

FACTS

The decedent died on April 20, 2002, in Harmony, Wisconsin. At the time of his death, the decedent was domiciled in the state of Wisconsin but owned income-producing rental properties in Minnesota. The decedent executed his last will and testament on March 3, 2000 (hereinafter the “will”). In the will, the decedent named his sister, Ruth Allison, to serve as personal representative of his estate. On December 13, 2001, in a handwritten document, the decedent signed a statement identified as a codicil revoking his will of March 3, 2000, and leaving his entire estate to Gary and Mary Jane Torgerson, a married couple the decedent befriended while living in Wisconsin (hereinafter the “codicil”). This codicil named Mary Jane Torgerson as administrator of the decedent’s estate.

On April 30, 2002, Gary Torgerson filed a petition in Ramsey County seeking the formal probate of the codicil in Ramsey County and the appointment of Mary Jane Torgerson as personal representative of the estate. Allison objected to the petition and subsequently filed a petition for probate of the will and appointment as personal representative in Price County, Wisconsin, on May 20, 2002. Appellants objected to the probate of the will in Price County. The Ramsey County district court appointed Securian Trust Company, N.A. (Securian), as special administrator pending the appointment of a personal representative. Securian appointed Gary Torgerson as the special property manager for the Minnesota properties.

In October 2002, the Ramsey County district court denied Gary Torgerson’s petition for probate of the codicil and appointment of a personal representative. The district court found that the proper venue for probate was Price County, Wisconsin, and found that Ramsey County was the proper venue for an ancillary probate proceeding, after a determination by the Price County court.

The Price County district court thereafter (1) granted Allison’s petition to probate the will, (2) appointed Allison as personal representative, and (3) denied appellants’ petition to admit to probate the codicil. Allison subsequently petitioned for probate of the will and appointment as personal representative in an ancillary proceeding in Ramsey County. The Ramsey County district court granted Allison’s petition for probate and appointment.

In November 2002, Securian petitioned the district court for approval of its accounts accrued in administering the estate and for discharge as special administrator. Attached to the petition was a billing statement for roughly $3,200 submitted by Gary Torgerson for his services as special property manager. Securian sought instructions from the district court regarding what amount of the Torgerson billing should be paid. The estate and Securian reached a settlement with respect to Securian’s outstanding accounts. Following a hearing, the district court adopted Securian’s proposed order with one modification: Securian was to withhold $3,200 from a fund previously established for administration of the estate pending the resolution of Gary Torgerson’s claim for services as special property manager. In its May 3, 2004 order, the district court ordered Securian to reimburse Gary Torgerson roughly $2,900 in expenses and costs incurred as property manager.

Also in November 2002, Robert McLeod, appellants’ attorney petitioned for allowance of attorney fees “incurred on behalf of said special administration and the estate” and fees incurred by Gary Torgerson in his capacity as Securian’s agent. Allison objected to McLeod’s petition for allowance of fees. In support of this petition for fees, Gregory Troy, Robert McLeod’s successor in interest and the Torgerson’s new counsel, submitted an affidavit from McLeod under Minn. R. Gen. Pract. 119. Attached to the affidavit were four invoices that McLeod submitted to Gary Torgerson:

# 18884	In Reference To: Fees to Probate in Wisconsin	$ 9,117.43
# 18885	In Reference To: Fees for Gary Torgerson to Administer Estate	$ 2,154.82
# 18886	In Reference To: To Get Will Probated in Minnesota	$ 3,088.74
# 18887	In Reference To: Fees to open Special Administration in Minnesota	$ 3,942.84
	TOTAL	$18,303.83

By order dated May 3, 2004, the district court denied Troy’s petition for fees with respect to invoices #18884 and #18886, the invoices related to the unsuccessful attempt to probate the codicil in Minnesota and Wisconsin. The district court then requested an additional hearing to determine whether the balance of Troy’s fees benefited the estate and, if so, whether the claimed fees were reasonable.

Troy moved for amended findings or, in the alternative, a new trial. The district court orally denied Troy’s motion at the hearing on June 28, 2004. In a subsequent order dated September 10, 2004, the district court found that, as a matter of law, the only fees benefiting the estate were those incurred in opening the special administration. Because the record before the court was insufficient to allow a determination as to which entries contained in invoices #18885 and #18887 prior to opening the special administration actually benefited the estate as opposed to Gary Torgerson, the district court ordered Troy to file a detailed affidavit of fees regarding invoices #18885 and #18887 laying out the services performed, the reasons for which they were performed, and how they related to the special administration. Troy filed an affidavit on September 30, 2004, six days after the district court’s deadline for submission.

Following submissions by the parties, the district court ordered Allison to pay Troy attorney fees in the amount of $3,170.04 by order dated October 15, 2004. The court stated that, despite receiving Troy’s affidavit, “the Court finds itself in no better position to determine whether many of the entries in the two invoices represent services that actually benefited the special administration.” Nevertheless, the court apportioned fees incurred in invoices #18885 and #18887 based on the court’s estimation of the time McLeod likely worked toward setting up the special administration.

The court administrator served notice of filing of the district court’s May 3, 2004, September 10, 2004, and October 15, 2004 orders on December 16, 2004. This appeal follows.

D E C I S I O N

Appellants challenge the district court’s order denying Troy’s petition for attorney fees attributable to the unsuccessful attempt to probate the codicil in Wisconsin and Minnesota. “[T]his court will not reverse a district court’s denial of attorney fees unless there has been an abuse of discretion.” In re Estate of Van Den Boom, 590 N.W.2d 350, 354 (Minn. App. 1999), review denied (Minn. May 26, 1999). But the interpretation of a statute is a question of law that this court reviews de novo. Lolling v. Midwest Patrol, 545 N.W.2d 372, 375 (Minn. 1996).

Minn. Stat. § 524.3-720 (2004), states that

[a]ny personal representative or person nominated as personal representative who defends or prosecutes any proceeding in good faith, whether successful or not, or any interested person who successfully opposes the allowance of a will, is entitled to receive from the estate necessary expenses and disbursements including reasonable attorneys’ fees incurred.

The statute further provides:

When after demand the personal representative refuses to prosecute or pursue a claim or asset of the estate or a claim is made against the personal representative on behalf of the estate and any interested person shall then by a separate attorney prosecute or pursue and recover such fund or asset for the benefit of the estate, or when, and to the extent that, the services of an attorney for any interested person contribute to the benefit of the estate, as such, as distinguished from the personal benefit of such person, such attorney shall be paid such compensation from the estate as the court shall deem just and reasonable and commensurate with the benefit to the estate from the recovery so made or from such services.

Id.

The district court concluded that, upon reading the statute as a whole, attorneys are allowed to petition for fees directly from the court only when they have served as an attorney for an “interested person,” whose efforts have benefited the estate itself, as opposed to his own personal interests. The district court denied Troy’s petition for attorney fees under the first part of section 524.3-720 because it was Troy, and not Mary Jane Torgerson, who petitioned the court for the allowance of fees.

Appellants argue that the district court erred in its interpretation of section 524.3-720. According to appellants, as the named personal representative in the codicil, Mary Jane Torgerson had a duty to probate the codicil and acted for the benefit of the estate. Accordingly, because Mary Jane Torgerson was a “nominated personal representative” under the first part of the statute, appellants were therefore entitled to reasonable attorney fees absent a showing of bad faith. Appellants contend that the district court’s interpretation created a false distinction between appellants and appellants’ attorney when it denied Troy’s petition for fees. Under appellants’ interpretation, Troy’s petition for fees should be examined as though Mary Jane Torgerson was the petitioner. We disagree.

The district court’s interpretation mandating that the nominated personal representative, and not her attorney, actually petition for an allowance of attorney fees effectuates the plain meaning of the text and is consistent with this court’s precedent. See Phelps v. Commonwealth Land Title Ins. Co., 537 N.W.2d 271, 274 (Minn. 1995) (stating that if statutory language is plain and unambiguous, the court must give it its plain meaning); see also In re Estate of Jeruzal, 277 Minn. 103, 105, 151 N.W.2d 788, 790–91 (1967) (denying a special administrator’s request for fees because he was not a party to the litigation in which he had subscribed the pleadings as petitioner’s personal attorney, but failed to substitute himself for the petitioner when appointed special administrator); cf. In re Estate of Kotowski, ___ N.W.2d ___ (Minn. App. Oct. 11, 2005) (holding that “expenses of administration” under Minn. Stat. § 524.3-715(18) are limited to claims by or in the place of the personal representative). Here, the statute explicitly limits the right to receive expenses (including attorney fees) to a “personal representative or person nominated as personal representative” in the first part, while explicitly permitting an attorney to petition for expenses in the second part. Thus, the plain meaning of the text is upheld by the district court’s distinction, as the legislature demonstrated its ability to include attorneys when it thought the inclusion was appropriate. Neither McLeod nor Troy prosecuted or defended the codicil as a personal representative and are, therefore, prohibited from receiving fees under the first part of the statute.

Troy is also prohibited from directly seeking an allowance for fees under the second part of the statute because Troy’s services did not contribute to the benefit of the estate. The successful prosecution or defense of the codicil would not have enlarged or salvaged a portion of the decedent’s estate. As such, appellants’ attorney is not entitled to attorney fees “commensurate with the benefit to the estate from the recovery so made or from such services.” Minn. Stat. § 524.3-720; see also In re Estate and Trust of Anderson, 654 N.W.2d 682, 689 (Minn. App. 2002) (stating that section 524.3-720 does not allow reimbursement where the attorney’s efforts, if successful, would have been to her personal benefit as a beneficiary), review denied (Minn. Feb. 26, 2003); Van Den Boom, 590 N.W.2d at 354 (reversing a district court’s denial of an attorney’s petition for fees under section 524.3-720 because the interested person “acted for the benefit of the estate by keeping a major asset intact”).

Appellants next argue that the district court erred by not applying the doctrine of collateral estoppel to Troy’s petition for attorney fees relating to the administration of the estate. The availability of collateral estoppel is a mixed question of law and fact, subject to de novo review. Falgren v. State, Bd. of Teaching, 545 N.W.2d 901, 905 (Minn. 1996).

Collateral estoppel bars the relitigation of issues that are both identical to those issues already litigated by the parties in a prior action and necessary and essential to the resulting judgment. Id.; Clapper v. Budget Oil Co., 437 N.W.2d 722, 725 (Minn. App. 1989) (stating that collateral estoppel is the “issue preclusion” branch of res judicata), review denied (Minn. June 9, 1989). Collateral estoppel is applicable when (1) the issue was identical to one in a prior adjudication; (2) there was a final judgment on the merits; (3) the estopped party was a party or in privity with a party to the prior adjudication; and (4) the estopped party was given a full and fair opportunity to be heard on the adjudicated issue. Schlichte v. Kielan, 599 N.W.2d 185, 187–88 (Minn. App. 1999) (quoting Ellis v. Minneapolis Comm’n on Civil Rights, 319 N.W.2d 702, 704 (Minn. 1982) (quoting Victory Highway Village, Inc. v. Weaver, 480 F. Supp. 71, 74 (D. Minn. 1979)), review denied (Minn. Nov. 17, 1999).

Appellants contend that the settlement between the estate and Securian, as approved by the district court’s May 3, 2004 order, operates to estop any and all claims that either Securian or the estate could have asserted but did not assert against Gary Torgerson. According to appellants, Securian and Allison were aware of the outstanding claim for legal fees related to Gary Torgerson’s assistance in the administration of the estate as special property manager for Securian when they agreed to a settlement. And that settlement foreclosed any and all claims between the estate and Securian. Appellants argue that, as Securian’s agent, the settlement foreclosed any claims that respondent could assert against Gary Torgerson.

Appellants’ arguments are unsupported and lack merit. Appellants cite no authority in support of their argument that the principles of agency law operate to place Gary Torgerson in privity with Securian for purposes of Securian’s settlement with the estate. Furthermore, Troy petitioned for attorney fees, not Gary Torgerson. Appellants do not suggest that Troy was a party to the prior adjudication. And Troy’s petition was pending in a separate action against the estate while Allison and Securian were negotiating their settlement. Thus, the petition for fees is not a claim that arose from the same circumstances as the settlement agreement that could have been raised by the settling parties. Accordingly, the district court did not err by refusing to apply the doctrine of collateral estoppel to appellants’ administration-related attorney-fees claim.

Appellants also argue that the doctrine of equitable subrogation applies to compel respondent to pay attorney fees. Appellants failed to raise this issue in the district court and, therefore, have waived consideration on appeal. See Thiele v. Stich, 425 N.W.2d 580, 582 (Minn. 1988) (stating that this court will generally not consider matters not argued and considered in the district court).

III

Appellants next contend that the district court erred by denying a request in their July 12, 2004 memorandum for a hearing to elicit testimony on an alleged attempt by Securian and Allison to disguise the mishandling of estate assets. The question whether to admit evidence rests within the broad discretion of the district court, and the district court’s decision will not be disturbed unless it constitutes an abuse of discretion or is based on an erroneous view of the law. Uselman v. Uselman, 464 N.W.2d 130, 138 (Minn. 1990). Here, the hearings on December 8, 2003, February 23, 2004, and June 28, 2004, were held to elicit testimony regarding Troy’s petition for attorney fees and whether the work performed by Troy benefited the estate. The record reflects that the district court refused to permit testimony related to asset mismanagement because it was not relevant to Troy’s petition for fees. Appellants do not demonstrate how these rulings constitute an abuse of discretion, given the scope of the proceedings.

The respondent estate challenges the district court’s award of attorney fees to Troy. This court will not reverse a district court’s award of attorney fees unless there has been an abuse of discretion. See In re Estate of Van Den Boom, 590 N.W.2d 350, 354 (Minn. App. 1999), review denied (Minn. May 26, 1999). This court does not set aside the district court’s findings of fact unless they are clearly erroneous. Minn. R. Civ. P. 52.01.

Respondent contends that the fees award constitutes an abuse of discretion because the district court’s findings are not supported by the evidence. Specifically, respondent argues that Troy failed to introduce evidence that could support a finding that any of his requested fees either benefited the estate or were reasonable. We agree. By its own admission, the district court lacked sufficient evidence to determine whether the fee award satisfied the explicit statutory requirement that the attorney’s services benefit the estate. As noted above, this finding requires a demonstration by the attorney that his services contributed to the value of the estate or salvaged estate assets. The district court order does not explain how its award is “commensurate with the benefit to the estate,” and must, therefore, be reversed. See Minn. Stat. § 524.3-720 (2004).

Respondent moves to strike portions of appellants’ brief as containing matters outside the record on appeal and assertions not supported by citation to the record. The papers filed in the trial court, the exhibits, and the transcript of the proceedings shall constitute the record on appeal in all cases. Minn. R. Civ. App. P. 110.01. This court may not consider matters outside the record on appeal and must strike references to such matters from the parties’ briefs. Fabio v. Bellomo, 489 N.W.2d 241, 246 (Minn. App. 1992), aff’d, 504 N.W.2d 758 (Minn. 1993).

We deny respondent’s motion to strike from appellants’ appendix the affidavits of Gary Torgerson and Carol Morse. The record reflects that these affidavits were submitted to the district court as attachments to Troy’s July 12, 2004 memorandum following the district court’s denial of Troy’s motion to reconsider its May 3, 2004 order. The district court did not solicit additional evidence at that time, but stated in its October 15, 2004 order that the court “considered the parties’ submissions.” Thus, the affidavits, although improperly submitted, are part of the record. Respondent’s remedy was to seek exclusion of the affidavits at the district court level.

We grant respondent’s motion to strike from appellants’ appendix the document entitled “Settlement Agreement Proposed by Allison and Securian” and correspondence to Rodney Mason, attorney for Securian, from Brian Alton, attorney for the estate, dated May 10, 2002, as neither document is found in the district court record.

We also grant Securian’s motion to strike the portion of appellants’ reply brief related to appellants’ “rule 60” request for the court to hold a hearing relating to appellants’ fraud allegations. This portion of the reply brief is submitted in violation of Minn. R. Civ. App. P. 128.02, subd. 3, which states that a reply brief must be confined to new matters raised in the brief of the respondent.

Affirmed in part and reversed in part.