In re:  Conservatorship of Walter W. Apple.

In re:  Conservatorship of Walter W. Apple. A05-2523, Court of Appeals Unpublished, August 22, 2006.

This opinion will be unpublished and

may not be cited except as provided by

Minn. Stat. § 480 A. 08, subd. 3 (2004).

 

STATE OF MINNESOTA

IN COURT OF APPEALS

A05-2523

 

 

In re:  Conservatorship of Walter W. Apple.

 

 

Filed August 22, 2006

Reversed

Halbrooks, Judge

 

 

Stearns County District Court

File No. P0-00-3716

 

 

Robert A. McLeod, Marc A. Al, Lindquist & Vennum, P.L.L.P., 4200 IDS Center, 80 South 8th Street, Minneapolis, MN 55402 (for appellants Patricia A. Murphy and Professional Fiduciary, Inc.)

 

Gerald W. Von Korff, Pamela A. Steckman, Rinke-Noonan, 1015 West St. Germain Street, Suite 300, P.O. Box 1497, St. Cloud, MN 56302 (for respondent Walter W. Apple)

 

 

            Considered and decided by Minge, Presiding Judge; Willis, Judge; and Halbrooks, Judge.

U N P U B L I S H E D   O P I N I O N

HALBROOKS, Judge

            Appellant challenges the probate court's order awarding respondent damages for breach of fiduciary duty, fraud, and negligent misrepresentation, as well as an award of attorney fees for bad faith and submitting false information to the court.  Appellant asserts, among other things, that the probate court did not have the authority to review or modify the annual accountings, which had been previously settled and approved.  Because the probate court did not have the authority to review the previous accountings, we reverse.  As a result, the award of attorney fees is also reversed.

FACTS

            Respondent Walter Apple petitioned the Hennepin County Probate Court for the appointment of a conservator of his estate in 1993.  The probate court granted his petition and appointed appellant Patricia Murphy as his conservator.[1]  Appellant filed five annual accountings with the probate court, all of which were settled and approved.  Respondent neither objected to those accountings nor did he appeal from the orders approving them.

Appellant continued to serve as respondent's conservator until 1999, when respondent petitioned the probate court to discharge appellant and appoint Bremer Trust as the successor conservator.  Appellant agreed to resign as conservator, and the probate court appointed Bremer Trust as the successor conservator.  The probate court also authorized the change of venue to the Stearns County Probate Court because both Bremer Trust and respondent are in St. Cloud. 

Appellant then filed the final accounting, which the Hennepin County Probate Court approved as modified.  The probate court determined that appellant was charging respondent for many things that appellant should have been absorbing, for instance, parking fees, faxes, de minimis phone bills, and gift preparation.  The court found that the costs for those tasks should have been considered part of appellant's overhead and not passed on to respondent.  Additionally, the probate court found that appellant took "excessively long" to complete some tasks, which contributed to her fees being "unreasonably high" for what was "a simple conservatorship." 

            Thus, respondent questioned appellant's fees and the services for which he was charged and requested financial documents from appellant.  Respondent retained counsel and requested that appellant disclose all documents related to his conservatorship.  Appellant refused to disclose the documents, arguing that the accounts could not be challenged.  Respondent then attempted to obtain similar documentation from other sources, but was unable to obtain all of the documents.  As a result, respondent petitioned the Stearns County Probate Court to compel appellant to provide the documents, which the court ordered. 

After respondent obtained his file from appellant, he petitioned the probate court for a hearing to review appellant's annual accountings and the merits of her billing practices.  Appellant opposed the hearing, arguing that the accountings were final judgments that could not be collaterally attacked in this manner.  The probate court granted respondent's petition for a hearing.  Appellant filed an interlocutory appeal challenging that decision, but this court dismissed the appeal as untimely.

            The probate court conducted an evidentiary hearing and concluded that appellant was liable to respondent for breach of fiduciary duty, fraud, and negligent misrepresentation.  The court found, as had the Hennepin County Probate Court, that appellant overcharged respondent for certain items, such as billing him for the time it took to sort through a phone bill, de minimis phone charges, going to the bank to deposit checks, and buying and wrapping gifts.  In addition, the court found that appellant charged respondent the same hourly rate regardless of who completed a task, whether it was herself or an employee. 

As a result, the court ordered appellant to pay damages of $81,389.59 plus interest.  In addition, the court ordered appellant to pay $25,000 in attorney fees because she had refused, without basis, to disclose the documents pertaining to respondent's conservatorship and because she submitted false information to the court in her annual accountings.  Appellant was also ordered to pay $8,423.47 in costs, for a total monetary award of $114,813.06.  This appeal follows.

D E C I S I O N

Appellant asserts that the judgment against her is void for lack of subject-matter jurisdiction.  We review legal issues concerning jurisdiction de novo.  McLain v. McLain, 569 N.W.2d 219, 222 (Minn. App. 1997), review denied (Minn. Nov. 18, 1997).  Although the legislature repealed portions of chapter 525 of the Minnesota Statutes in 2003, it provided that any cause of action arising before the effective date of the successor statute shall be allowed under chapter 525.  2003 Minn. Laws ch. 12 art. 2 §§ 8, 9(c).[2]  Thus, because respondent's causes of action arose between 1993 and 1998, his claims are grandfathered-in under chapter 525.  Id., § 9(c). 

The probate court

shall have power to correct, modify, vacate, or amend its records, orders, and decrees: (a) At any time, for the correction of clerical error . . .; (b) Within the time for taking an appeal, for the correction of judicial error; (c) Within two years after petitioner's discovery thereof, for fraud, whether intrinsic or extrinsic, or misrepresentation unless petitioner be a party to such fraud; (d) Within two years after the date of filing of any record, order, or decree, for excusable neglect, inadvertence, or mistake.

 

Minn. Stat. § 525.02 (2002) (emphasis added). 

Because this matter arose as a petition in the probate court to review the prior accountings of a conservator, respondent did not actually bring civil claims against appellant but essentially argued that the accountings were erroneous as a result of fraud, breach of fiduciary duty, and negligent misrepresentation.  Thus, the probate court treated respondent's petition as though he had brought those claims.  In order to determine whether the probate court had the authority under Minn. Stat. § 525.02 to modify the previous orders based on fraud or misrepresentation, we must determine whether respondent commenced the action within two years after discovering the facts supporting those claims.

            In order to assert a claim of fraud, the facts supporting such a claim must be specifically pleaded.  Minn. R. Civ. P. 9.02; Parrish v. Peoples, 214 Minn. 589, 591, 9 N.W.2d 225, 227 (1943).  "A general charge of fraud is unavailing."  Parrish, 214 Minn. at 591, 9 N.W.2d at 227.  Here, in his petition to the probate court to review appellant's annual accountings, respondent did not plead a claim of fraud and failed to allege facts supporting a claim of fraud.  Thus, because he failed to plead with specificity the facts supporting a claim of fraud, the claim must fail.  See Westgor v. Grimm, 318 N.W.2d 56, 58 (Minn. 1982) (affirming dismissal of fraud claim that was not specifically pleaded).

            Even if the fraud claim did not fail based on the pleadings, the claims of fraud and negligent misrepresentation are time-barred.  In general, the limitations period begins to run when a cause of action "accrues," that is, when the action can be brought without being subject to dismissal for failure to state a claim.  O'Neill v. Illinois Farmers Ins. Co., 381 N.W.2d 439, 440 (Minn. 1986), overruled on other grounds by Oanes v. Allstate Ins. Co., 617 N.W.2d 401 (Minn. 2000).  A "cause of action [for fraud] does not accrue until the facts constituting the fraud are discovered."  Kassan v. Kassan, 400 N.W.2d 346, 349 (Minn. App. 1987) (citing Minn. Stat. § 541.05(6) (1984)), review denied (Minn. Apr. 23, 1987).  The supreme court has stated that

the facts constituting the fraud are deemed to have been discovered when, with reasonable diligence, they could and ought to have been discovered. The mere fact that the aggrieved party did not actually discover the fraud will not extend the statutory limitation, if it appears that the failure sooner to discover it was the result of negligence, and inconsistent with reasonable diligence.

 

Bustad v. Bustad, 263 Minn. 238, 242, 116 N.W.2d 552, 555 (1962) (quotation omitted).

While denying that any fraud or misrepresentation occurred, appellant alleges alternatively that respondent should have been aware of the facts supporting these claims by 1999, when respondent became dissatisfied with appellant's services and petitioned to change conservators.  Appellant argues that because respondent was represented by counsel and objected to portions of appellant's final accounting, he was or should have been aware that he may have these causes of action.

            As noted, when it settled and approved appellant's final accounting on February 10, 2000, the Hennepin County Probate Court pointed out several anomalies in appellant's billing practices and, as a result, modified the accounting.  The court commented on the suitability of appellant's charges by stating that "[t]he character of the Apple property did not require an extraordinary fee," and "[t]here is no claim [by appellant] of extraordinary skill or success."  The court stated that appellant "has virtually every item of expense billed to [respondent].  There is little overhead.  He pays for parking, phone, faxing, and holiday gift preparation."  Additionally, "[a]ny time charged for preparing time records is a cost of doing business and not billable to respondent."  The court further noted that "[t]he fees of the conservator are unreasonably high" and that respondent was objecting to certain billing items, stating, "Mr. Apple did not want Ms. Murphy to visit and is distressed by this double billing." 

            The court noted, as did the court here, that appellant absorbed essentially no overhead:

Ms. Murphy seeks to have all attorney fees paid by Mr. Apple.  This is consistent with the absence of any discernible overhead in her business.  Just as all expenses are passed on to Mr. Apple, she seeks to pass along attorney fees she incurred trying to collect her fee.  That fee may have been necessary for her; it was not necessary for Mr. Apple or for the administration of the conservatorship.

 

            Therefore, because the Hennepin County Probate Court noted these anomalies and issues with appellant's final accounting specifically and billing practices generally,we hold that respondent's claims for fraud and negligent misrepresentation accrued as of February 10, 2000.  At that time, respondent should have been aware of the facts supporting these claims.  But respondent did not commence the action to review the annual accountings until December 3, 2003, nearly four years later.  Because the statute only allows the probate court to modify or amend orders up to two years after the claims were, or should have been, discovered, we conclude that the probate court did not have jurisdiction under Minn. Stat. § 525.02 (2002) to vacate the orders approving the final annual accounting of 1993 through 1998 and impose damages.

As a result of our holding, we do not reach the other issues raised by appellant.  Because the district court did not have the authority to review the accountings, we also reverse the award of attorney fees. 

            Reversed.

[1] Appellant subsequently converted her sole proprietorship into a corporation, and both appellant and the corporation are named as appellants in this case.  This opinion refers to appellants jointly as Patricia Murphy.

[2] This opinion cites to the 2002 version of the statutes, as that is the version immediately preceding the repeal.