IN THE SUPREME COURT
STATE OF NORTH DAKOTA
| In the Matter of the Estate of | |||||
| Mary Ann Fisk, Deceased | |||||
| North Dakota Department of | |||||
| Human Services, | |||||
| Appellant, | Supreme Ct. No. 20090157 | ||||
| Ward County No. 51-01-P-176 | |||||
| vs. | |||||
| Royce S. Fisk as Personal | |||||
| Representative of the Estate of | |||||
| Mary Ann Fisk, Deceased, | |||||
| Appellee. | |||||
APPEAL FROM THE DISTRICT COURT
WARD COUNTY, NORTH DAKOTA
NORTHWEST JUDICIAL DISTRICT
HONORABLE RICHARD L. HAGAR
BRIEF OF APPELLEE
| Carol K. Larson State Bar ID #4406 | ||||||
| PRINGLE & HERIGSTAD, P.C. | ||||||
| PO Box 1000 | ||||||
| Minot, ND 58702-1000 | ||||||
| Attorneys for Appellee |
| TABLE OF CONTENTS | |||||||||||
| Paragraph | |||||||||||
| Table of Authorities | Page | ii | |||||||||
| Summary of the Argument | 1 | ||||||||||
| Law and Argument | 4 | ||||||||||
| I. | Section 30.1-19-05 N.D.C.C. governs the classification | ||||||||||
| of claims for estates in which the decedent did not | |||||||||||
| receive medical assistance | 5 | ||||||||||
| II. | The personal representative's compensation, including | ||||||||||
| attorneys fees and expenses, were reasonable and | |||||||||||
| supported by the facts. | 12 | ||||||||||
| III. | There are no additional assets to pay claims | 20 | |||||||||
| Conclusion | 24 | ||||||||||
| Certificate of Service | 27 | ||||||||||
i
| TABLE OF AUTHORITIES | |||||||||||
| Paragraph | |||||||||||
| Cases: | |||||||||||
| Estate of Flaherty, 484 N.W.2d 515 (N.D. 1992) | 13 | ||||||||||
| Estate of Gleeson, 2002 ND 211, 655 N.W.2d 69. | . | 13, 17 | |||||||||
| Estate of Peterson, 561 N.W.2d 618 (N.D. 1997) | 13, 14 | ||||||||||
| Estate of Thompson, 1998 ND 226, 586 N.W.2d 847 | 7, 9 | ||||||||||
| Estate of Tuntland, 364 N.W.2d 513 (N.D. 1985) | 18, 23 | ||||||||||
| Estate of Wirtz, 2000 ND 59, 607 N.W.2d 882 | 8, 21 | ||||||||||
| In re Estate of Howser, 2002 ND 33, 639 N.W.2d 485 | 14 | ||||||||||
| Matter of Estate of Ridl, 455 N.W.2d 188 (N.D. 1990) | 19 | ||||||||||
| Statutes: | |||||||||||
| NDCC §28-22-03 | 21 | ||||||||||
| NDCC §28-22-03.1 | 21 | ||||||||||
| NDCC §30.1-18-19 | 13 | ||||||||||
| NDCC §30.1-19-05 | 2, 5, 6, 23 | ||||||||||
| NDCC §50-24.1-07 | 2, 6, 9 | ||||||||||
| Other Authorities: | |||||||||||
| 42 U.S.C. §1396p(b)(4) | 7 | ||||||||||
ii
¶1 SUMMARY OF THE ARGUMENT
¶2 The payment priorities for recovery from estates of medical assistance recipients is found in N.D.C.C. §50-24.1-07. The classification of claims for individuals who are non-recipients of medical assistance is governed by N.D.C.C. §30.1-19-05. The District Court properly applied §30.1-19-05 in approving the payment of funeral expenses for Mary Ann Fisk.
¶3 The District Court's determination that the fees paid to the personal representative were reasonable is supported by the facts and the law. The District Court's approval of attorney's fees paid to elder law specialist, Paul Mitchell, was proper. The personal representative acknowledged paying certain decedent's debts owed to creditors with claims junior to the Department claim from his own funds. However, the personal representative did not seek, nor did the Court order, reimbursement of these payments. A finding on this issue would not change the outcome of this appeal. There is no personal property with value to apply to the State's claim.
¶4
LAW AND ARGUMENT
¶5 I. Section 30.1-19-05 N.D.C.C. governs the classification of claims for estates in which the decedent did not receive medical assistance.
¶6 Section 30.1-19-05 N.D.C.C. governs the classification of claims for estates in which the decedent did not receive medical assistance and provides in pertinent part:
"1. If the applicable assets of the estate are insufficient to pay all claims in full, the personal representative shall make payment in the following order:
a. Costs and expenses of administration.
b. Reasonable funeral expenses.
c. Debts and taxes with preference under federal law."
N.D.C.C. §50-24.1-07(1) governs recovery from the estate of medical assistance recipients and provides in pertinent part with emphasis added:
§50-24.1-07. Recovery from estate of medical assistance recipient.
1. On the death of any recipient of medical assistance who was fifty-five years of age or older when the recipient received the assistance, and on the death of the spouse of the deceased recipient, the total amount of medical assistance paid on behalf of the recipient following the recipient's fifty-fifth birthday must be allowed as a preferred claim against the decedent's estate after payment, in the following order of:
a. Funeral expenses not in excess of three thousand dollars;
b. Expenses of last illness;
c. Expenses of administering the estate, including attorney's fees approved by the court."
In this case, Mary Ann Fisk was not a recipient of medical assistance and, therefore, priority of her claims is set forth in N.D.C.C. §30.1-19-05. (App. 10)
¶7 In Thompson, 1998 ND 226, ¶15, the North Dakota Supreme Court determined "in light of the Congressional purpose to provide medical care for the needy, reveals a legislative intention to allow states to trace the assets of recipients of medical assistance and recover the benefits paid when the recipient's surviving spouse dies. Because the expansive federal definition of 'Estate' in 42 U.S.C. §1396p(b)(4) extends only to assets in which the medical assistance benefits recipient 'had any legal title or interest in at the time of death', it is a matter of little moment whether the department seeks to recover the benefits paid by filing a claim in the estate of the recipient after the death of the recipient's surviving spouse or by filing a claim in the surviving spouse's estate." The Court concluded that the obligation to repay the benefits arose at the time of the medical recipient's death, although the Department's right to recover the benefits paid was suspended until the death of his surviving spouse. Id. at ¶16
¶8 The estate does not dispute that the State has the right to trace a recipient's assets and recover them from the estate of a recipient's surviving spouse. However, this right of recovery is limited to the assets traceable to the assets in which the deceased medical assistance recipients held an interest. Estate of Wirtz, 2000 ND 59 ¶14, 607 N.W.2d 882.
¶9 No authority is cited, and no authority exists, that the non-recipient spouse's funeral is limited to $3,000. Section §50-24.1-07 N.D.C.C. sets forth the Department's right to recover the benefits paid to Raymond Fisk, which were suspended until the death of his surviving spouse, Mary Ann Fisk, some eight years later.
The primary objective of statutory construction is to ascertain the Legislature's intent. In ascertaining legislative intent, we look first at the words used in the statute, giving them their ordinary, plain-language meaning. We construe statutes as a whole to give effect to each of its provisions, whenever fairly possible. 'If the language of a statute is clear and unambiguous, the legislative intent is presumed clear from the face of the statute.' If statutory language is ambiguous, we may resort to extrinsic aids to construe the statute. For an ambiguous statute, 'where a public interest is affected, an interpretation is preferred which favors the public. A narrow construction should not be permitted to undermine the public policy sought to be served.'
Thompson, 1998 ND 226, ¶8 (internal citations omitted.).
¶10 The statute does not limit the recipient's spouse's funeral expenses, and if it was meant to do so, the statute should have specifically said so. A person who did not receive medical assistance should be afforded the decency of a proper funeral and burial. Furthermore, the personal representative, or family members, who may not be the personal representative, must make arrangements for a proper funeral and burial in advance of the appointment of a personal representative and well before the expiration of the claims period. Placing the financial burden on individuals who have no ability to access the private information of the decedent until a personal representative has been appointed would cause a significant delay in the proper burial and would be void as against public policy. The personal representative was unaware of the medical assistance claim at the time of Mary Ann Fisk's death. (App. 36) The payment of $6,206.25 for the funeral of Mary Ann Fisk was reasonable. (App. 53-54).
¶11 In this case, the State is attempting to create new law through the judiciary rather than through the legislature. The issue of limiting the funeral allowance for the non-recipient spouse should come through the legislative process not the judicial process.
¶12 II. The personal representative's compensation, including attorneys fees and expenses, were reasonable and supported by the facts and law.
¶13 "A personal representative is entitled to reasonable compensation for services rendered." Estate of Gleeson 2002 ND 211, 655 N.W.2d 69, in which this court quoted from Estate of Flaherty, 484 N.W.2d 515, 520 (N.D. 1992). "The review of fees paid or taken by a personal representative is left to the sound discretion of the trial court." Citing Flaherty, 484 N.W.2d at 521; N.D.C.C. §30.1-18-19; and the Matter of [Estate of] Peterson, 1997 ND 48, ¶23, 561 N.W.2d 618."
¶14 The District Court applied the correct standard as no breach of fiduciary duty was found, and reached the correct conclusion, in approving the personal representative's compensation. Whether a personal representative breached a fiduciary duty is a question of fact. Matter of Estate of Peterson, 1997 ND 48, ¶36, 561 N.W.2d 618. A trial court's finding of fact will not be set aside unless it is clearly erroneous. Id. A finding of fact is clearly erroneous if the finding is induced by an erroneous view of the law, if there is no evidence to support the finding, or if, after reviewing all evidence, the Supreme Court is left with a definite and firm conviction a mistake has been made. In re Estate of Howser, 2002 ND 33, ¶10, 639 N.W.2d 485. On appeal, a trial court's findings of fact are presumed to be correct and the complaining party bears the burden of showing a finding is clearly erroneous. Id.
¶15 The dollar value of an estate is not always a good indication of the amount of time necessary to administer the estate. In this case, the modest home was in poor repair, smoke stained, and full of trash. (App 34-36). A significant amount of time, effort and money were necessarily incurred to sell the house and administer the estate. (App. 34-36, 44). In contrast, an estate consisting of only liquid assets, however, large, may be administered with only minimal time, effort or money expended.
¶16 The state argues that the personal representative "openly expressed resentment" that the Department failed to assist the personal representative. (Appellant's Brief 15-16). This is a complete mischaracterization of what was stated. (App. 37). It is a true statement that the North Dakota Department of Human Services did not assist in any way with the cleaning, repairs, or marketing of the modest home. The personal representative did it all and is entitled to reasonable compensation. It is not a breach of fiduciary duty to be compensated for performing those necessary tasks.
¶17 The State, for the first time on appeal, argues that the affidavit is "unsworn." (Appellant's Brief 14). The affidavit was sworn but not notarized, however, this issue was not raised before the trial court. Had the issue been raised, it could have been easily rectified. It is well settled that an issue not properly raised before the trial court cannot be brought for the first time to the Supreme Court. Estate of Gleeson, 2002 ND 211 ¶19. The court determined the fees charged by the personal representative were reasonable and there is ample evidence to support the finding. (App. 35,36, 55).
¶18 The fee for additional attorney's fees paid by the personal representative were incurred solely for the benefit of the estate administration. The issue of medicaid recovery against a recipient estate is complicated and has both state and federal application. The personal representative was entitled to hire a consulting attorney if, in his sole discretion, he felt it necessary. These charges are, indeed, a proper cost to the court, and were approved by the court. Whether they were approved by the court as personal representative expenses, or attorney's fees, is immaterial as this would not change the outcome of this appeal. Estate of Tuntland, 364 N.W.2d 513 (N.D. 1985).
¶19 As the court found no breach of fiduciary duty, it is well established that a trial court is considered an expert in determining the value of reasonable attorney's fees and the court has consistently taken the "view that trial court's generally, and particularly county courts in probate matters, are qualified to determine reasonable legal fees for services rendered to an estate." Matter of Estate of Ridl, 455 N.W.2d 188, 194 (N.D. 1990).
¶20 III. There are no additional assets to pay claims.
¶21 The personal representative's amended Inventory and Appraisement establishes that the estate contained no household goods and furniture. (App. 34). The personal representative states in his affidavit that "prior to Mary Ann's death, she gave her personal property and household goods to her sister, Clarice Lagasse. Following the death of Raymond Fisk, Clarice resided with Mary Ann. The sisters helped take care of each other. They shared Mary Ann's home and merged their household goods. They owned their car jointly. But for the assistance Mary Ann received, it is likely she would have ended up on medical assistance. When Clarice lived in the home with Mary Ann, she assisted in caring for her, and the property received was of little or no monetary value. In addition, years of smoking had taken its toll on the property." (App 34). Mary Ann and Raymond Fisk were people of modest means and their household goods were old and in poor repair. The cost of pursuing recovery of old worn household goods, merged with an elderly sister's household goods for many years, would have outweighed any potential benefit to the estate. In addition, Clarice Lagasse had the statutory right to claim the household goods as exempt. N.D.C.C. §28-22-03 and §28-22-03.1. Furthermore, the burden is on the state to prove traceability of the household goods to Raymond Fisk. Wirtz, 2000 ND 59, ¶15.
¶22 Individuals also have personal property other than household goods that have no monetary value. Such personal property can include letters, photographs, personal documents, income tax returns, bank statements, family films and videos. When a personal representative is charged with the responsibility of preparing a personal residence for sale, and inventorying the estate, one must necessarily sort through this personal property to identify potential sources of assets of the estate, to dispose of that which is trash, and distribute to family members those personal effects which have sentimental or historical significance, even though they have no monetary value.
¶23 The State argues that the district court may not properly approve the personal representative's petition absent his disclosure of, and accounting for, certain payments to junior creditors. The personal representative paid these funds prior to his awareness of the medicaid claim. Due to the priorities set forth in N.D.C.C. §30.1-19-05, he did not seek reimbursement. He correctly advised the court that these claims had been paid, as his failure to do so would have been fraud. All assets subject to the probate administration, together with all jointly owned assets, are fully disclosed on the inventory and appraisement. A finding on this issue would not change the outcome in this appeal. Estate of Tuntland, 364 N.W.2d, 513 (N.D. 1985). It is obvious by the fact that the decedent's checking account contained $52.34, that she had a loan with the local bank in the amount of $1,069.80, and credit card debt exceeding $4,500.00 that Mary Ann Fisk was a person of modest means. (App. 30). There was no evidence put forth by the state of any additional assets owned by Mary Ann Fisk available to pay on its claim.
¶24
CONCLUSION
¶25 For the reasons stated above, the personal representative respectfully requests that the court affirm the District Court's order declaring the estate insolvent in all respects, and remand the matter to the court with directions for payment of additional attorney's fees and costs in defending this appeal, and to correct the clerical error to reflect that $28,409.09 shall be paid on the state's claim per the amended Final Account, rather that $29,565.70 as set forth in the Court Order. (App. 38-39, 56).
| ¶26 | Respectfully submitted this 31st day of August, 2009. | |||||
| PRINGLE & HERIGSTAD, P.C. | ||||||
| /s/ | ||||||
| Carol K. Larson - #04406 | ||||||
| Attorneys for Appellee | ||||||
| PO Box 1000 | ||||||
| Minot, ND 58702-1000 | ||||||
| (701) 852-0381 | ||||||
1. Since this estate proceeding was commenced in 2001, NDCC § 50-24.1-07 has been amended, in S.L. 2005, ch. 424 § 1; in S.L. 2007, by ch. 421 § 2, and ch. 424, § 1; and, in 2009, by H.B. 1157, § 1. The quoted parts of the statute have remained unchanged.