Bernard J. Fischer v. Pauline M. Fischer, Gregory Fischer, and Theresa Lane

• Court: Court of Appeals of Iowa
• Decided: February 7, 2024
• Docket: 23-0090
• Status: Published

Opinion

IN THE COURT OF APPEALS OF IOWA

No. 23-0090 Filed February 7, 2024

BERNARD J. FISCHER, Plaintiff-Appellant,

vs.

PAULINE M. FISCHER, GREGORY FISCHER, and THERESA LANE, Defendant-Appellees. ________________________________________________________________

Appeal from the Iowa District Court for Pottawattamie County,

Greg W. Steensland, Judge.

Bernard Fischer appeals the district court’s ruling dismissing his petition to

review the actions of agents under his mother’s power of attorney and denying his

claim for attorney fees. AFFIRMED.

Matthew V. Stierman, Council Bluffs, for appellant.

Joseph D. Thornton of Smith Peterson Law Firm, LLP, Council Bluffs, for

appellee.

Considered by Bower, C.J., and Ahlers and Chicchelly, JJ. 2

AHLERS, Judge.

In 2019, when she was approaching eighty-eight years of age, Pauline

Fischer signed a power of attorney naming two of her children—Gregory Fischer

and Theresa Lane—as her agents. In 2021, Pauline’s son Bernard (Ben) Fischer

filed a petition pursuant to Iowa Code section 633B.116 (2021) requesting

information about the power of attorney, Pauline’s mental capacity, Pauline’s

estate planning documents, and leases of her farmland. He also asked the court

to construe the power of attorney, review Gregory and Theresa’s conduct, and

award him attorney fees.

During the lead-up to trial, the court ordered Gregory and Theresa to

provide Ben with much of the information he requested. After Ben received the

information, the case proceeded to trial, at which Ben asked the court to determine

that Gregory and Theresa breached their fiduciary duties.

Ben claimed Gregory and Theresa breached their fiduciary duties based on

numerous transactions that occurred after Pauline became ill in 2020 and moved

from her farmstead to live with Theresa. Some of the transactions at issue were

carried out by Gregory and Theresa on Pauline’s behalf pursuant to the power of

attorney, and some were carried out by Pauline herself.

After a trial, the district court determined that none of the transactions were

a breach of Gregory or Theresa’s fiduciary duties. The court did not grant Ben the

attorney fees he requested. Ben appeals both the finding that his siblings did not

breach their fiduciary duties and the denial of his claim for attorney fees. He also

asks for appellate attorney fees. 3

I. Standard of Review

This is an action in equity, so our review is de novo. Wallace v. Wildensee,

990 N.W.2d 637, 642 (Iowa 2023). With de novo review, we give weight to the

district court’s factual findings, especially concerning witness credibility, but we are

not bound by them. McNaughten v. Chartier, 977 N.W.2d 1, 8 (Iowa 2022).

II. Governing Statute and Standards

Iowa Code chapter 633B governs powers of attorney and this action.

Because Pauline signed a document granting Gregory and Theresa the authority

to act in her place, the statute defines the document as a “power of attorney,”

Pauline as the “principal,” and Gregory and Theresa each as an “agent.” See Iowa

Code § 633B.102(1) (defining agent), (9) (defining power of attorney), and (11)

(defining principal). Section 633B.116(1) permits designated classes of persons

to “petition a court to construe a power of attorney or to review an agent’s conduct.”

One class of designated persons permitted to file such a petition is the principal’s

“descendant or an individual who would qualify as a presumptive heir of the

principal.” Id. § 633B.116(1)(d). No one disputes that Ben, as Pauline’s son, falls

within this class of persons permitted to file a petition to review Gregory and

Theresa’s conduct as Pauline’s agents.

As Pauline’s agents under the power of attorney, Gregory and Theresa had

a fiduciary relationship with Pauline. See Vos v. Farm Bureau Life Ins. Co., 667

N.W.2d 36, 52 (Iowa 2003) (“Some relationships, such as those between . . .

principal and agent . . . ‘necessarily give rise to a fiduciary relationship.’” (quoting

Kurth v. Van Horn, 380 N.W.2d 693, 696 (Iowa 1986)). As fiduciaries, Theresa

and Gregory are required to act in Pauline’s best interest. In re Est. of Crabtree, 4

550 N.W.2d 168, 171 (Iowa 1996). “A transfer to a grantee standing in . . . a

fiduciary relationship to the grantor is presumptively fraudulent . . . .” Mendenhall

v. Judy, 671 N.W.2d 452, 454 (Iowa 2003). When there is a transfer to a grantee

standing in a fiduciary relationship, the burden is on “the grantee to negate a

presumption of undue influence by clear, convincing, and satisfactory evidence.”

Id. at 454–55. The grantee can meet that burden by proving that he or she acted

in good faith. Jackson v. Schrader, 676 N.W.2d 599, 605 (Iowa 2003).

III. Breach-of-Fiduciary-Duty Claims

Ben asserts the agents breached their fiduciary duties in five ways:

(1) Purchasing a pickup in Theresa’s name with Pauline’s money;

(2) Making payments to Theresa for services in caring for Pauline;

(3) Paying Gregory for services in preparing Pauline’s house for sale;

(4) Permitting or making ATM withdrawals from Pauline’s account; and

(5) Leasing Pauline’s farmland at below-market rates.

The district court addressed each of these claims and found no breach of duty by

Gregory or Theresa. On appeal, Ben asks us to find otherwise. We address each

claim in turn.

A. Pickup Purchase

Around the time Pauline moved from her farmstead to live with Theresa,

Pauline’s vehicles were sold. Even though Pauline could no longer drive, she

requested that her money be used to purchase a vehicle to transport her to her

various activities, including medical visits and shopping excursions. Pauline was

capable of making financial decisions at that time, so Gregory and Theresa

honored Pauline’s request and spent $11,400 of Pauline’s money to purchase a 5

used pickup. Because Pauline no longer had a driver’s license, the truck was

placed in Theresa’s name so that it could be titled, registered, and insured.

Although the evidence shows that Theresa’s son used the vehicle for his own

benefit a few times, the evidence also establishes that the truck was mainly used

to drive Pauline around to her activities. Following our de novo review, we agree

with the district court that, while the truck may not have been the best use of

Pauline’s funds, it was purchased at her behest and for her benefit. The purchase

was not a breach of fiduciary duty.

B. Payments to Theresa

After Pauline’s 2020 illness, Pauline could no longer live alone. This left the

options of Pauline moving in with Theresa or moving into a nursing home. At the

time the decision was made, Pauline was capable of making her own decisions.

One circumstance that influenced the decision was that it was April 2020, and

COVID-19 concerns and restrictions were high. Living in a nursing home would

have required Pauline to be isolated in her room without contact with other

residents or family members. After a discussion between Theresa, Gregory,

Roberta (another child of Pauline’s), and Pauline, it was decided it would be better

for Pauline to move in with Theresa. This decision saved Pauline the $6200-per-

month cost of a nursing home. However, Pauline was opposed to being a

“freeloader,” so she agreed that Theresa should be paid $375 per week for her

services in providing a home and care for Pauline. By the time Pauline eventually

moved to a nursing home about fourteen months after moving in with Theresa,

Theresa was paid a total of $22,300 (about fifty-nine and one-half weeks of

payments at $375 per week). 6

Theresa did not provide records demonstrating the cost of taking care of

Pauline at home, but she did testify that her utilities costs increased, and she

provided care for Pauline, including providing room and board, taking her to

medical appointments, taking her out to eat, taking her for drives, taking her

shopping, and taking her to church. Ben argues that Theresa has not met her

burden of showing good faith because she could not provide records or receipts to

support her decision to charge Pauline $375 per week. While Theresa arguably

had a responsibility to keep more records than the bank records showing these

payments to her, see Iowa Code § 633B.114(2)(d), we disagree with Ben’s

contention that Theresa failed to meet her burden of showing that she acted in

good faith for the benefit of Pauline. Moving in with Theresa, even at a cost of

$375 per week, was in Pauline’s best interest. A fact has been proven by clear,

convincing, and satisfactory evidence if “there is no serious or substantial

uncertainty about the conclusion to be drawn from it.” Mendenhall, 671 N.W.2d at

454. There is no serious doubt that Theresa received these payments in good

faith. Cf. Miller v. Eisentrager, No. 09-0596, 2009 WL 5126118, at *3 (Iowa Ct.

App. Dec. 30, 2009) (concluding an agent could not rebut the presumption of

undue influence when she admitted using the principal’s funds for her and her

family’s benefit, although still providing him care, and almost completely depleted

the principal’s estate). We further find the payments were fair, for a reasonable

amount, and made for reasonable services provided by Theresa. Theresa did not

breach her fiduciary duty by receiving these payments.

As part of his argument, Ben claims Theresa cannot rely on Pauline’s

knowledge of and agreement to the payments because Theresa has not proven 7

that Pauline was not incapacitated. The record provides persuasive and

unrebutted testimony that Pauline was capable of handling her own affairs until

she went to the nursing home, at which time payments to Theresa stopped. 1 The

evidence shows that Pauline was an active woman who was not incapacitated from

making decisions during the time she lived with Theresa. When she became

incapacitated, Theresa was no longer able to meet all of Pauline’s needs, and

Pauline then moved to a nursing home. We do not find that Pauline was

incapacitated at the time she lived with Theresa and agreed to pay Theresa for

room, board, and other services, so we reject Ben’s argument to the contrary.

C. Payment to Gregory for House Sale Preparation

Next, Ben challenges the $4300 paid to Gregory for his work getting

Pauline’s house ready for sale. The evidence establishes that this figure was

reached by calculating two percent of the purchase price of the house and Pauline

agreed to the figure to compensate Gregory for his work and expenditures. While

Gregory failed to present perfect records of the work he did or its value, he did

testify to the work he did and filed an affidavit explaining the same. At trial, he

testified that he had replaced the locks, handled snow removal, provided lawn

service, kept up the garden, and prepared the home for sale. This testimony went

unrebutted. We find that Gregory met his burden to prove that he acted in good

1 While there was technically a payment to Theresa for services rendered after

Pauline went to the nursing home, the record shows that the weekly payments of $375 were not made each week. There were several gaps in payments coupled with payments making up for the gap. One of those “fill the gap” payments occurred after Pauline went to the nursing home, but would still have been payment for time periods when Pauline was living with Theresa. 8

faith. Because the payment was fair and reasonable and the work done by

Gregory was in Pauline’s best interest, Gregory did not breach his fiduciary duty.

D. ATM Withdrawals

Ben also challenges many ATM withdrawals for everyday expenditures

made by Pauline or on her behalf. These include expenditures for groceries, dining

out, and shopping. Ben claims this spending was unusual for his frugal mother,

and that she was not competent to be making these purchases. Ben’s claim of

incompetency appears to stem from the admissions at trial that Pauline’s mental

state began to decline after her 2020 illness and that by the time of trial she was

not competent. But no persuasive evidence in the record supports the assertion

that during the time she made these expenditures (2020‒2021) she was

incompetent. Ben also suggests that Theresa’s son may have been responsible

for some of the purchases. No persuasive evidence in the record supports this

claim or suggests that these purchases were not made by Pauline or at her

request. There is no breach of fiduciary duty simply because Pauline was

spending more than Ben thought prudent.

E. Farmland Leases

Finally, Ben contends Gregory and other family members received a gift in

the form of renting Pauline’s farmland at discounted lease rates. Because the

power of attorney does not allow Pauline’s agents to give gifts, Ben argues

Theresa and Gregory breached their fiduciary duties and the power of attorney by

leasing land to family members at below-market rates.

Pauline has a history of leasing farmland to her family members, including

Ben and his children, at below-market rates. Theresa, acting on Pauline’s behalf, 9

tried to honor this pattern by leasing farmland to family members, including

Gregory, at the low end of fair rent, but still within the range of rents paid in the

county for farmland of similar quality. Pauline’s attorney, who has experience

helping Pauline rent her farmland and knowledge of the local rents, testified that

he considered the rent to be within the range of the fair and reasonable rates for

the area, and therefore not a gift. Data from Iowa State University regarding

farmland rental rates presented as evidence by Ben supports the finding that, at

the very least, the 2022 rent charged to Gregory was within the range of rents in

the county for similar quality land. Gregory also testified that he is renting farmland

of a similar quality from a third party who charges him even less in rent than what

he pays to rent Pauline’s farmland. After our de novo review of the entire record,

we conclude the farmland was leased to family members for a fair rental price and

the leases are therefore not a gift. As a result, we find Theresa and Gregory proved

they were acting in good faith, and there was no breach of fiduciary duty related to

the farm leases.

IV. Attorney Fees

Ben asked the district court for attorney fees and was denied. Ben appeals

this denial, arguing that because he was the successful party, Gregory and

Theresa should pay his attorney fees. Under Iowa Code section 633B.116(4), the

court may award attorney fees to the prevailing party. We review the district court’s

decision whether to award attorney fees for abuse of discretion. NCJC, Inc. v.

WMG, L.C., 960 N.W.2d 58, 61 (Iowa 2021). We will reverse only if the district

court’s ruling rests on grounds that are clearly unreasonable or untenable. Id. The

district court found that Ben’s claim was not brought in good faith: 10

It is clear from Ben’s own testimony and the exhibits received, Ben was motivated to bring this action out of his belief that he was not being treated fairly and in retaliation for not being able to lease the farm ground for which he claims he had a “lifetime” lease. The voice and text messages in the spring 2021 and his own testimony make his intentions clear. Iowa Code § 633B.116 is not intended to be used as a sword to bring grievances for alleged past wrongs. Ben received what the statute allows him to get. No other remedy is available to him.

Aside from asking the court to review the agents’ conduct—which resulted in the

district court and us concluding that the agents did not breach their fiduciary

duties—Ben requested nothing besides information. Ben’s petition was successful

to the extent that the court ordered Gregory and Theresa to disclose some of the

information Ben requested, but he was unsuccessful in proving a breach of

fiduciary duty. We agree with the district court’s findings that Ben’s motivation for

filing his petition and continuing the litigation after receiving the information he

asked for was anger with his siblings over matters unrelated to those which he

asked the court to review. We find the district court did not abuse its discretion

when it denied Ben attorney fees.

Ben also seeks appellate attorney fees. Because section 633B.116(4) does

not limit attorney fee awards to fees incurred during the district court proceedings,

we may make such an award to the prevailing party. See Schaffer v. Frank Moyer

Constr., Inc., 628 N.W.2d 11, 23 (Iowa 2001) (not limiting statutory attorney fees

to those incurred in the district court). As Ben did not prevail on appeal, we decline

his request for appellate attorney fees.

V. Conclusion

Upon our de novo review, we find that Theresa and Gregory successfully

rebutted the presumption of undue influence attached to the transactions from 11

which they benefitted and that they did not breach their fiduciary duties regarding

any of the other challenged transactions. We also find that the district court did

not abuse its discretion in denying Ben’s claim for attorney fees, and we decline to

award Ben appellate attorney fees.

AFFIRMED.