In Re Estate of: Mary Elizabeth Pearson, a/k/a Mary N. Danaher, Mary Danaher Pearson and Mary E. Pearson.

This opinion will be unpublished and

may not be cited except as provided by

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

STATE OF MINNESOTA

IN COURT OF APPEALS

In Re Estate of:

Mary Elizabeth Pearson, a/k/a Mary N. Danaher,

Mary Danaher Pearson and Mary E. Pearson.

Filed May 2, 2000

St. Louis County District Court

File No. P697600250

John G. Westrick, Tammy L. Merkins, Westrick & McDowall-Nix, P.L.L.P., 400 Minnesota Bldg., 46 East Fourth St., St. Paul, MN 55101 (for respondent Duane L. Pearson )

Margaret Danaher, Kate Danaher, 18810 Orchard Trail, Lakeville, MN 55044 (pro se appellants)

            Considered and decided by Davies, Presiding Judge, Lansing, Judge, and Harten, Judge.

U N P U B L I S H E D   O P I N I O N

DAVIES, Judge

            Two of the decedent's children appeal the district court's denial of their request to reopen a probate proceeding.  They challenge the values in the original inventory, claiming the personal representative, who is the surviving spouse, intentionally misrepresented property values and omitted assets.  The children also appeal the district court's order refusing their petition to remove the personal representative.  We affirm.

            Mary Elizabeth Pearson died intestate in February 1997.  In June 1997, decedent's surviving spouse, respondent Duane L. Pearson, was appointed personal representative of her estate.  The decedent is survived by four adult daughters from a previous marriage, two of whom, Margaret Danaher and Kate Danaher, are appellants.

In October 1997, the district court issued an order allowing the final account and decree of distribution.  The property in the original inventory consisted of a house in Minneapolis, with an estimated value of $70,500, and two other parcels, with a total estimated value of $20,350.  The district court accepted the estimated property values and awarded the real property to respondent, as surviving spouse.  Appellants consented to the final account and distribution of the estate.  In December 1997, the district court discharged respondent as the personal representative and the estate was closed.

In November 1998, appellants filed a petition for appointment of a successor personal representative to administer omitted assets, which included decedent's interest in a corporation and certain vehicles and equipment.  After the district court re-appointed respondent as personal representative, appellants filed a petition to remove him.  At the hearing, appellants challenged the original inventory value of the Minneapolis house.  To determine if there was a pattern of misrepresentation, the district court heard testimony regarding the value of the Minneapolis house.

Appellants claim the district court abused its discretion by denying their requests to challenge, for fraud and misrepresentation, the estimated market values in the original inventory and by denying their petition to remove respondent as successor personal representative.

D E C I S I O N

I.

            The district court's decision in a probate case is res judicata and binding unless reversed or modified on appeal or in a direct proceeding.  Application of Schaefer, 287 Minn. 490, 493, 178 N.W.2d 907, 909 (1970); Bengtson v. Setterberg, 227 Minn. 337, 347-48, 35 N.W.2d 623, 628 (1949).  Under Minn. Stat. § 525.71(12) (1998), an appeal may be taken from a judgment of final distribution.

The appeal may be taken by any person aggrieved within 30 days after service of notice of the filing of the order, judgment, or decree appealed from, or if no notice be served, within six months after the filing of the order, judgment, or decree.

Minn. Stat. § 525.712 (1998).  The district court may also vacate its order within two years for fraud or misrepresentation.  Minn. Stat. § 525.02(c) (1998).  Fraud occurs when a party intentionally misleads the court.  In re Conservatorship of Bromley, 359 N.W.2d 723, 724 (Minn. App. 1984), review denied (Minn. Mar. 21, 1985).

Appellants argue that the district court erred in refusing to allow them to challenge the property values contained in the original inventory.  They argue that the values were false and misleading because they were based on the county assessor's calculations instead of fair-market value.  Minn. Stat. § 524.3-706 (1998) (decedent's property to be listed at fair-market value as of date of decedent's death).

After appellants consented to the inventory values in the original probate proceeding, the district court determined that using the county's estimated market value was a common practice and accepted the value, entered an order allowing the final account, closed the probate proceedings, and discharged respondent as personal representative.  Appellants did not appeal the property valuations within six months after the order was filed.  Absent fraud or misrepresentation, any appeal after April 1998 would be untimely.

In November 1998, appellants filed a petition for appointment of a successor personal representative to administer omitted assets and sought to have one of the daughters appointed.  At the hearing to appoint a successor personal representative, appellants also challenged the original inventory valuations and alleged fraud and misrepresentation by respondent.  The district court stated:

All we are going to deal with is what was omitted.  We don't go back and change what has happened before.  Those orders were in effect and they have never been appealed.

Appellants argue that they alleged fraud within the required two years and therefore should be allowed to reevaluate the property listed in the original inventory.  The district court stated that the issue was not properly appealed (by petitioning for a successor personal representative), but that he would nonetheless accept testimony regarding the value of the property from the original inventory solely to determine if there was a pattern of misrepresentation.

            The district court found that respondent had not acted fraudulently or misrepresented the values regarding the original and supplemental inventories.  The district court's findings will not be overturned unless they are clearly erroneous.  Fletcher v. St. Paul Pioneer Press, 589 N.W.2d 96, 101 (Minn. 1999).  The record supports the district court's findings.  Because appellants did not object to or timely appeal the values listed in the original inventory, the district court did not abuse its discretion by refusing to reevaluate the original inventory.

II.

            The district court has authority to remove a personal representative

when removal is in the best interests of the estate, or if it is shown that a personal representative or the person seeking the personal representative's appointment intentionally misrepresented material facts in the proceedings leading to the appointment, or that the personal representative has disregarded an order of the court, has become incapable of discharging the duties of office, or has mismanaged the estate or failed to perform any duty pertaining to the office.

Minn. Stat. § 524.3-611(b) (1998).  We will not reverse the district court's determination regarding removal unless the district court clearly abused its discretion by disregarding the facts.  In re Estate of Michaelson, 383 N.W.2d 353, 356 (Minn. App. 1986).

            Appellants argue that respondent breached his fiduciary duty and should have been removed as personal representative because he misrepresented, in the original inventory, the value and extent of the estate's assets.  They also argue that, after they petitioned for appointment of a successor personal representative to administer the omitted assets, respondent failed to timely file a supplemental inventory.  Appellants further allege that respondent had a conflict of interest as personal representative because he had a financial interest in the estate.

In an intestate estate, a surviving spouse, unless disqualified, has priority over other heirs to be appointed personal representative.  Minn. Stat. § 524.3-203(a)(4) (1998).  A person is disqualified from being appointed a personal representative if found to be unsuitable.  Minn. Stat. § 524.3-203(f)(2) (1998).  A person is not unsuitable merely because that person has some pecuniary interest in the estate or because there is some hostility between interested parties.  Id.; In re Estate of Healy, 247 Minn. 205, 209, 76 N.W.2d 677, 680 (1956).  The district court has discretion to determine suitability, and its determination will not be reversed absent abuse of discretion.  In re Estate of Crosby, 218 Minn. 149, 157, 15 N.W.2d 501, 506 (1944).

The record does not indicate abuse of discretion.  At the hearing in June 1999, the district court heard testimony regarding the property values listed in the original and supplemental inventories to determine if there was a pattern of misrepresentation.  The court found no such pattern and, in the absence of any abuse of discretion, we defer to the district court's findings of fact and will not set them aside unless they are clearly erroneous.  Fletcher, 589 N.W.2d at 101.

The district court found that respondent inadvertently omitted decedent's assets in a corporation and certain vehicles and equipment.  The corporation was a salvage business, of which decedent and respondent were equal shareholders.  But respondent considered it "his" business and was not aware, until after the estate was closed, that the corporation, vehicles, and equipment had to be probated.  Respondent subsequently filed a supplemental inventory listing the omitted assets.  See Minn. Stat. § 524.3-708 (1998) (personal representative has duty to file supplemental inventory on discovery of property omitted from original inventory).  Respondent provided, and the district court heard, appraisal testimony.  Appellants disputed the appraisals as to the vehicles and equipment but stipulated to the value of the corporation.

The district court found that respondent had not committed fraud in omitting the assets or in the appraisals.  The district court thus found respondent to be suitable and to have priority over other heirs to be the successor personal representative.  Minn. Stat. § 524.3-203(a)(4).

The record supports the district court's finding of suitability.  The district court did not abuse its discretion in denying appellants' petition to remove respondent as successor personal representative.

            Affirmed.