IN THE MATTER OF THE ESTATES OF LOREN S. BOCKWOLDT, Deceased, and TAMMY R. BOCKWOLDT, Deceased, DALE RICHARD WILLOWS, Conservator for Brandie Renee Bockwoldt, the minor child of the Decedents, and Co-Executor for the Estates of Loren and Tammy Bockwoldt.
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IN THE COURT OF APPEALS OF IOWA
No. 7-765 / 07-0531
Filed December 28, 2007
IN THE MATTER OF THE ESTATES OF
LOREN S. BOCKWOLDT, Deceased, and
TAMMY R. BOCKWOLDT, Deceased,
DALE RICHARD WILLOWS,
Conservator for Brandie Renee
Bockwoldt, the minor child of the
Decedents, and Co-Executor for the
Estates of Loren and Tammy Bockwoldt.
________________________________________________________________
Appeal from the Iowa District Court for Muscatine County, Patrick J.
Madden, Judge.
The conservator for the minor child of the decedents and co-executor of
the decedents’ estates appeals the district court’s order ruling on various estate
administration matters.
AFFIRMED IN PART, REVERSED IN PART, AND
REMANDED.
Timothy L. Baumann and Christopher Surls of Wm. B. Norton Law Firm,
P.C., Lowden, for appellant Dale Richard Willows.
Thomas Reidel of Conway & Reidel, P.C., Muscatine, for appellee Estate
of Tammy R. Bockwoldt.
Pete Wessels of Wessels & Stojan, P.C., Rock Island, Illinois, for appellee
Estate of Loren S. Bockwoldt.
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Eric Knoernschild, Muscatine, for Pete Wessels.
Brock Bockwoldt, Zion, Illinois, pro se.
Eric Syverud, Davenport, for Brandie Renee Bockwoldt.
Heard by Huitink, P.J., Vogel, J., and Robinson, S.J.,* but decided by
Huitink, P.J., Vogel and Mahan, JJ., and Robinson, S.J.
*Senior judge assigned by order pursuant to Iowa Code section 602.9206 (2007)
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PER CURIAM
Dale Willows, conservator for the minor child of the decedents and coexecutor of the decedents’ estates, appeals the district court’s ruling awarding
attorney fees to the attorney for the executors of the estates, requiring any
recovery from the wrongful death suit ongoing in Arizona to be distributed
according to Iowa law, removing the co-executors of the estates, and failing to
remove the attorney for the executors of the estates. We affirm in part, reverse
in part, and remand.
I.
Background Facts and Proceedings
Loren and Tammy Bockwoldt, husband and wife, were killed in a car
accident in Arizona on March 12, 2005. They left behind a minor child, Brandie
Bockwoldt and Loren’s adult son, Brock Bockwoldt, who resides in Illinois. Loren
and Tammy were both Iowa residents. Brandie is a beneficiary of both estates.
Brock is a beneficiary of Loren’s estate only.
On April 7, 2005, the court appointed three co-executors to both Loren’s
and Tammy’s estates—(1) Dale Richard Willows, Tammy’s brother; (2) Neal
Bockwoldt, Loren’s brother; and (3) Brock.
The co-executors designated
attorney Pete Wessels as their attorney in both estates.
Willows was also
appointed as conservator for Brandie.
Wessels filed a report and inventory in each estate on July 11, 2005. The
reports valued Loren’s estate at $190,052.41 and Tammy’s estate at $70,740.03.
No supplemental reports have been filed. However, in Wessel’s application for
attorney fees filed February 8, 2007, he states the Bockwoldt estates’ gross
assets total $1,704,429.13. The large increase is attributable to the discovery of
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numerous life insurance policies on the couple’s lives. In addition, in December
2006 each estate received $200,000 from an underinsured insurance policy of
the decedents’.
In his application for attorney fees, Wessels requested fees in the amount
of $66,404.50 plus $640.50 in expenses for Loren’s estate and $5,802.00 plus
$86.50 in expenses for Tammy’s estate. Willows, in his capacities as both coexecutor of the estates and conservator of Brandie, resisted the application for
attorney’s fees. The district court granted the request for attorney’s fees without
specifying ordinary and extraordinary fees.
On January 18, 2007, Wessels filed a motion for appointment of corporate
executors alleging conflicts among the co-executors. Willows filed a resistance
to the motion on February 12, 2007.
The district court appointed corporate
executors to the estates, removing Brock and Willows as co-executors because
of “current and potential conflicts of interest.” Neal subsequently withdrew as coexecutor of the estates.
Further, the district court refused to close the estates due to unfinished
estate matters and the possibility of a recovery from the ongoing wrongful death
suit in Arizona. The district court ruled that, for the time being, any recovery be
divided equally between the estates. At the hearing regarding whether to close
the estates, the parties offered few legal arguments regarding the division of the
wrongful death proceeds. The attorneys were unable to inform the court whether
the suit was brought in the names of the children or the estates. The court’s
ruling left the door open for further argument on the issue if and when a recovery
was made.
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On February 26, 2007, Willows filed a motion asking the court to
reconsider its ruling. Willows attached the online printout from the Arizona courts
public access website which lists Brock and “restricted” as the plaintiffs in the
suit. Willows asserts that Brandie’s name is listed as restricted because she is a
minor. The document does not list the estates as parties. In addition, the motion
cited both Iowa and Arizona law in making its argument that the wrongful death
proceeds should be distributed according to Arizona law. The court denied his
motion the same day. Willows appeals. The estates (appellees) respond.
II.
Standard of Review
A district court’s allowance of attorney fees, removal of fiduciaries, and
direction for distribution of funds are all tried in equity. Iowa Code § 633.33
(2007); In re Estate of Wulf, 526 N.W.2d 154, 155 (Iowa 1994); In re Estate of
Jones, 492 N.W.2d 723, 725 (Iowa Ct. App. 1992). Our review is therefore de
novo. Iowa R. App. P. 6.4. We also make a de novo review of the district court’s
removal of the co-executors to determine if there was an abuse of discretion.
Schildberg v. Schildberg, 461 N.W.2d 186, 190 (Iowa 1990); In re Estate of
Lovell, 344 N.W.2d 576, 579 (Iowa Ct. App. 1983).
III.
Merits
A.
Attorney Fees
Willows argues the district court improperly shifted the burden of proving
Wessels’s attorney fees away from Wessels and onto the objecting parties.
Additionally, he argues the district court was required to make findings regarding
which fees were ordinary and which fees were extraordinary pursuant to Iowa
Code sections 633.198 and 633.199.
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Sections 633.197 and 633.198 allow reasonable attorney fees, not to
exceed two percent of the gross assets of the estate plus $120.00, for the
personal representative’s attorney to be taxed as costs of administration of the
estate. Estate of Randeris v. Randeris, 523 N.W.2d 600, 606 (Iowa Ct. App.
1994). This amount is a ceiling, or maximum, amount that can be paid to an
attorney for any ordinary expenses of administering an estate. In re Estate of
Bolton, 403 N.W.2d 40, 46 (Iowa Ct. App. 1987). In addition, the district court
may allow the payment of necessary and extraordinary expenses. Iowa Code §
633.199.
Iowa Rule of Probate Procedure 7.2(3) governs the procedure for
requesting extraordinary fees:
When an allowance for extraordinary expenses or services is
sought pursuant to Iowa Code section 633.199, the request shall
include a written statement showing the necessity for such
expenses or services, the responsibilities assumed, and the
amount of extra time or expense involved. In appropriate cases,
the statement shall also explain the importance of the matter to the
estate and describe the results obtained. The request may be
made in the final report or by separate application. It shall be set
for hearing upon reasonable notice, specifying the amounts
claimed, unless waivers of notice indentifying the amounts claimed
are filed by all interested persons. The applicant shall have the
burden of proving such allowance should be made.
The compensation of the personal representative’s attorney largely rests in the
discretion of the district court. See Glynn v. Cascade St. Bank, 227 Iowa 932,
939, 289 N.W. 722, 725 (1940). The district court must assure the allowance is
supported by sufficient evidence to support the fees claimed and not excessive.
See id. at 940, 289 N.W. at 726. In addition to the size of the estate, the district
court, in determining the reasonableness of claimed fees, must consider the time
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necessarily spent by the attorney, the nature and extent of the service, the
amount involved, the difficulty of handling and the importance of the issues, the
responsibility and liability assumed by the attorney, the results obtained, and the
experience of the attorney. Bolton, 403 N.W.2d at 43-44.
Wessels followed the correct procedure described in rule 7.2(3). He filed
a written statement with the court detailing the issues for which he incurred
extraordinary expenses. The extraordinary issues Wessels claimed to have dealt
with included: (1) litigation as to the guardianship of Brandie; (2) ownership of
farmland interest and farm-related business interests; (3) disagreement among
co-executors; (4) issues as to whether Loren had a valid last will and testament;
(5) various income tax issues, complicated by the lack of records and no
continuity in income tax preparers in recent years; (6) obtaining necessary
information on nine insurance policies in Loren’s estate and six insurance
policies in Tammy’s estate; and (7) the division of assets between the two
estates. Attached to the statement was Wessels’s billing statement for the two
estates. It consisted of more than fifty pages, each entry describing the work
performed.
However, at the hearing the district court did not require Wessels to go
forward to prove his fees before asking the other parties if they objected.
Rule 7.2(3) requires that this burden be placed on the applicant. It is not clear
the district court required that here. Further, the district court made no specific
findings as to which fees were ordinary and which were extraordinary.
We
therefore remand this issue to the district court for a hearing requiring the
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applicant to meet his burden and for specific findings regarding the
reasonableness of ordinary fees and extraordinary fees granted.
B.
Distribution of Wrongful Death Proceeds
In regard to the distribution of the wrongful death proceeds, the district
court ruled:
For the time being, the Court orders that one-half of the recovery
from the Arizona courts be placed in Loren’s estate and the other
one-half be placed in Tammy’s estate. Should the recovery in
Arizona, if any, assist the Iowa Courts in how to hold or distribute
the wrongful death recovery funds in Iowa, this Order may be
amended upon request of any of the interested parties. Unless
there is a further order by the Court, recoveries from the wrongful
death action will be obtained in accordance with Arizona law, but
distribution of the proceeds from that recovery will be governed by
Iowa law.
(Emphasis added.) Willows argues the district court exceeded its authority in
making this ruling. Both parties agree that Arizona law will control the recovery in
the wrongful death suit. Their dispute lies in whether Iowa or Arizona law will
control the distribution of any recovery. Willows argues that under Iowa law we
must apply the most significant relationship test to determine which state’s law is
applicable. Under this test, he claims that, because the accident occurred in
Arizona and all parties to the suits are domiciled or headquartered in different
states, Arizona law should apply.
He further interprets the Arizona wrongful
death statute as requiring the wrongful death action be brought by Brock and
Brandie individually.
The appellees argue the district court didn’t make a final determination
that any proceeds must be distributed one-half to each estate, but rather left it
open for further argument after a recovery has been made. In addition, the
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appellees argue the Arizona wrongful death statute allows for either the
decedents’ children or their estates to bring the wrongful death suit. We note that
at the hearing no party was able to inform the district court in whose name the
Arizona suit was filed.
The appellees further point out there was already a
distribution of a $500,000 settlement in December 2006 in which $200,000 was
distributed to each estate. The other $100,000 was distributed to the law firm
handling the wrongful death action. Willows did not object to this distribution. It
appears, however, that the $500,000 payment was a payout from an insurance
company, not a recovery from the wrongful death action. Wessels concedes this
in his December 4, 2006 application for wrongful death proceeds distribution.
We agree with the appellees that the district court has made no final
determination as to the distribution of the proceeds.
Therefore, we find the
appellants’ argument on this issue not ripe for appeal. At the hearing, the district
court judge stated:
So at this point in time, one of the things I am ruling today, subject
to your right to correct me through legal authority, is that the
distribution of funds will be made through Iowa law and that the
recovery will be placed into the estates, half in one and half in the
other, when the monies come from Arizona and then the estates
can decide how it is going to be distributed.
....
What I do now is leave the estates open and order that half of the
money recovered goes into each estate when it’s recovered, and
then when something happens, if what you’re saying is right, Bill,
that it comes out that, you know, for Loren’s death it’s worth this
many dollars and Tammy’s death is worth that many dollars, then
come back in and say Judge, your 50-50 distribution is wrong
because here’s how it was determined in Arizona.
(Emphasis added.) The district court begins its written ruling on this issue with
the words, “for the time being,” indicating its ruling is not final. In addition, at the
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hearing the district court indicated to the attorneys that they could file motions to
change the temporary ruling when more information on the recovery in Arizona
became available. At both the hearing and in its ruling, the district court indicated
it was concerned about protecting Brandie’s interests. It wanted to ensure that,
since she is a minor and the daughter of both decedents, Brandie receives her
fair share of the proceeds.
For the reasons stated above, we find that the district court has not yet
made a final ruling which can be appealed. See Mason City Prod. Credit Ass’n v.
Van Duzer, 376 N.W.2d 882, 884-85 (Iowa 1985) (holding that a party may only
appeal a final judgment); Grains of Iowa, L.C. v. Iowa Dep’t of Agric., 562 N.W.2d
441, 445 (Iowa Ct. App. 1997) (requiring a final ruling). Willows should make his
arguments to the district court if and when a recovery is made in the wrongful
death action. The district court has not been afforded the opportunity to consider
detailed information on the Arizona lawsuit and the terms of the recovery
obtained, Arizona law, or hear arguments regarding the proper distribution under
the most significant relationship test.
C.
Removal of Executors
Willows appeals the district court’s decision to remove the co-executors of
the estates and appoint corporate executors. He claims the reasons Wessels
offered in his motion to appoint corporate executors do not support removal.
Wessels alleges that the co-executors have difficulty agreeing on estate matters
and that they have inherent conflicts in guarding the interests of the beneficiaries.
Specifically, Wessels points out that the same executors cannot fulfill their duties
to ensure the best interests of the beneficiaries of two estates at the same time.
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It is impossible to argue, on behalf of the beneficiaries of both estates at the
same time, that each should get a bigger share of distributions. Instead, right or
wrong, the co-executors divided all of the distributions as equally as possible
between the two estates.
In addition, Wessels points out that Brock, as a beneficiary of Loren’s
estate but not Tammy’s, has an interest in getting as much money into Loren’s
estate as possible. Similarly, Willows, as conservator to Brandie, must look out
for her best interests, which would require getting as much money into Tammy’s
estate as possible. It is impossible for Willows to reconcile the fiduciary duties he
owes to both Brandie and the estates.
The district court has broad discretion in its decision to remove an
executor. Lovell, 344 N.W.2d at 579. Executors are fiduciaries. Iowa Code
§ 633.3(17). As a fiduciary, an executor has a duty to act in the best interests of
the beneficiaries of the estate.
See Vos v. Farm Bureau Life Ins. Co., 667
N.W.2d 36, 52 (Iowa 2003). If an executor has adverse interests to the interests
of the beneficiaries of the estate, this duty cannot be fulfilled. See In re Estate of
Cutler, 368 N.W.2d 724, 727 (Iowa 1985). Iowa Code section 633.65 allows
removal of a fiduciary when he or she “is, or becomes, disqualified under
sections 633.63 and 633.64, has mismanaged the estate, failed to perform any
duty imposed by law, or by any lawful order of court, or ceases to be a resident of
the state.”
Both a conflict of interest and unwarranted hostility between the
executor and beneficiaries can support removal of the executor. In re Estate of
Randeris, 523 N.W.2d at 606. A district court has the authority to remove an
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executor even though there has been no actual misconduct if the person is
unsuitable to act as executor. Cutler, 368 N.W.2d at 728.
It is clear that at least two of the three co-executors possessed conflicts of
interests that made it impossible for them to act as true fiduciaries to the
beneficiaries of the estates. In addition, because there are different beneficiaries
in each estate, it is impossible to act in the best interests of all of them at the
same time. The district court did not, therefore, abuse its discretion in removing
the co-executors and appointing corporate executors.
D.
Removal of Attorney Wessels
Willows claims the district court should have removed Wessels as the
attorney for the executors of the estates due to the conflict of interest he had in
representing both estates’ executors. Although the district court did not remove
him as attorney for the executors of either of the estates, Wessels subsequently
withdrew from representation of the executor of Tammy’s estate.
Therefore,
there is no longer an actual, justiciable controversy. Because the issue is moot,
we do not address it. E. Buchanan Tel. Coop. v. Iowa Utils. Bd., 738 N.W.2d
636, 640-41 (Iowa 2007).
AFFIRMED IN PART, REVERSED IN PART, AND REMANDED.
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