Doug Deatherage v. Pamela Breving

• Court: Court of Appeals of Kentucky
• Decided: March 4, 2021
• Docket: 2019 CA 001583
• Status: Unknown

Opinion

RENDERED: MARCH 5, 2021; 10:00 A.M. NOT TO BE PUBLISHED

Commonwealth of Kentucky Court of Appeals

NO. 2019-CA-1583-MR

DOUG DEATHERAGE APPELLANT

APPEAL FROM OWEN CIRCUIT COURT v. HONORABLE REBECCA LESLIE KNIGHT, JUDGE ACTION NO. 15-CI-00103

PAMELA BREVING; JOHN G. WRIGHT, ESQ., As Administrator of the Estate of Starr Payton Deatherage, deceased; CHARLES JEFFREY SIMS; BRET ALAN SIMS; CHRISTOPHER BLAINE SIMS; and APRIL DEE BOSWELL APPELLEES

OPINION AFFIRMING

** ** ** ** **

BEFORE: CLAYTON, CHIEF JUDGE; COMBS AND JONES, JUDGES.

CLAYTON, CHIEF JUDGE: The husband of decedent Starr Payton Deatherage,

Douglas Deatherage (“Doug”), appeals from the Owen Circuit Court’s

determination that it had subject matter jurisdiction to hear a petition filed pursuant to Kentucky Revised Statutes (KRS) 395.510, which authorizes a legatee or

distributee to file suit in circuit court to settle a probate estate. Doug contests the

validity of the circuit court’s determination that it had subject matter jurisdiction to

hear the petition filed in this case and claims that the matter fell within the Owen

District Court’s exclusive jurisdiction. Additionally, Doug argues that the circuit

court incorrectly determined that certain items of personal property belonged to

Starr’s estate and that two of Starr’s heirs had been extinguished. Upon review of

the facts and applicable law, we affirm as to all of Doug’s allegations of error.

FACTUAL AND PROCEDURAL BACKGROUND

Starr died intestate on January 6, 2014, survived by her husband of

approximately thirty years, Douglas Deatherage. Starr was also survived by her

five children from a previous marriage; two daughters – appellees Pamela Breving

and April Boswell; and three sons – Charles Sims, Bret Sims, and Christopher

Sims. Starr and Doug were the joint owners with survivorship of a farm which

included a house and several outbuildings. Prior to her death, Starr had not worked

outside the home in several years and received Social Security income, while Doug

ran a trucking business. The couple also owned cattle.

On January 16, 2014, Doug filed a petition to dispense with the

administration of Starr’s estate (the “Estate”), claiming that the Estate’s only asset

at the time of Starr’s death was a 2009 Dodge Journey that was worth less than

-2- Doug’s $15,000.00 spousal exemption. The Owen District Court entered an order

on January 17, 2014, dispensing with the administration of the Estate.

On January 23, 2014, a fire occurred at Doug’s property which

destroyed a barn and other significant personal property, including several trailers

and other large farm equipment. Kentucky Farm Bureau Mutual Insurance

Company (“KFB”) ultimately paid $145,108.24 to Doug pursuant to a

homeowners’ insurance policy under which Doug and Starr were the beneficiaries.

On April 21, 2014, Pamela filed with the Owen District Court a

petition for probate and to be appointed as the administratrix of the Estate, alleging

that the Estate possessed more assets than were listed in Doug’s petition to

dispense with administration. The Owen District Court entered an order on August

29, 2014, denying Pamela’s motion.

Pamela then filed a notice of appeal of the denial of her motion to the

Owen Circuit Court on September 19, 2014. On December 19, 2014, the circuit

court reversed the district court’s order denying Pamela’s motion and remanded the

case to the Owen District Court for an evidentiary hearing to determine the nature

and value of the Estate’s personal property.

Upon remand, the Owen District Court determined that the

appointment of an independent public administrator was warranted to determine if

there were other assets of the Estate subject to administration. Additionally, the

-3- district court appointed a public administrator (the “Public Administrator”) in

March of 2015.

The Public Administrator conducted an investigation of potential

estate assets and filed an inventory of those assets with the district court (the

“Inventory”). Doug and Pamela filed objections to the Inventory, and the district

court held a hearing. Thereafter, the district court entered a revised inventory of

the Estate on September 25, 2015 (the “Revised Inventory”). According to the

Revised Inventory, and taking into account Doug’s exemptions and claims against

the Estate as well as other debts, the Public Administrator determined that the

Estate was insolvent.

Before the Public Administrator filed his final settlement for the

district court’s review and approval, Pamela filed a petition for administration and

settlement in the Owen Circuit Court on November 20, 2015 (the “Petition”). The

language of the Petition indicated that it was being filed pursuant to KRS1 395.510

and 395.515, that a dispute had arisen regarding the extent and value of personal

property in the Estate, and that the dispute was such that a correct and lawful

settlement of the Estate could not be obtained by the district court.

Doug filed a motion to dismiss the Petition on December 17, 2015,

claiming that the Petition constituted an improper and unlawful appeal from an

1 Kentucky Revised Statutes.

-4- interlocutory order of the district court and that the subject matter of the Petition

did not constitute an “adversary proceeding” such as to vest the circuit court with

subject matter jurisdiction to hear the matter. The circuit court denied Doug’s

motion to dismiss on May 9, 2016, finding that, under KRS 24A.120(2), the

district court has jurisdiction of matters involving probate except matters contested

in an adversary proceeding. Because the circuit court found the matter to be an

adversary proceeding, the circuit court determined that it had subject matter

jurisdiction and that the Petition was not an interlocutory appeal.

Thereafter, the circuit court held a bench trial on September 28, 2017,

to hear evidence. On March 19, 2019, the circuit court entered its findings of fact,

conclusions of law, and order in which it again reiterated its finding that it had

subject matter jurisdiction over the case. The order also made new determinations

as to which items were considered assets of the Estate as well as their respective

values. Specifically, the circuit court found that a tractor and round bailer that had

been destroyed in the fire were co-owned by Starr and Doug, and therefore Starr

had an insurable interest in those items of farm equipment. The circuit court noted

that “[t]here was no evidence indicating the source of the funds for these

purchases, and considering the value of these items, the Court can only presume

that they were purchased with joint funds and that the couple considered them to

be joint property.” Therefore, the court held that $32,000.00 of the KFB insurance

-5- payout was an asset of the Estate and included that sum in the total estate to be

distributed to the heirs.

Thereafter, the circuit court ultimately approved Doug’s claims

against the Estate and his surviving spouse exemption. Additionally, the circuit

court approved waivers and assignments of Christopher’s and Bret’s interests in

the Estate to Doug. In sum, Doug was ordered to pay the Public Administrator’s

fee and to pay Pamela, April, and Charles $1,913.65 each in estate assets, with

Doug to keep the remaining personal property for himself.

Doug filed a motion to alter, amend, or vacate the court’s judgment on

March 29, 2019, which the circuit court ultimately denied. This appeal followed.

Further facts will be developed as required to address the specific

issues presented.

ANALYSIS

a. Standard of Review

Kentucky law provides that when a lower court is alleged to be acting

without the requisite subject matter jurisdiction, the appellate court conducts a de

novo review of a circuit court’s determination that it has jurisdiction over the

subject matter. Basin Energy Co. v. Howard, 447 S.W.3d 179, 184 (Ky. App.

2014). This Court reviews any questions of fact, or questions that involve both the

law and the facts of the case, under a clearly erroneous standard, and “the

-6- reviewing Court has greater latitude to determine whether the findings below were

sustained by evidence of probative value.” Arterburn v. First Community Bank,

299 S.W.3d 595, 598 (Ky. App. 2009) (citations omitted).

b. Discussion

As a preliminary matter, Doug argues that Pamela’s appellate brief

deviates significantly from the format mandated by Kentucky Rule of Civil

Procedure (CR) 76.12 and should therefore be stricken. Our options when an

appellate advocate fails to abide by CR 76.12 are: “(1) to ignore the deficiency

and proceed with the review; (2) to strike the brief or its offending portions . . . ; or

(3) to review the issues raised in the brief for manifest injustice only[.]” Hallis v.

Hallis, 328 S.W.3d 694, 696 (Ky. App. 2010) (citations omitted). Because we do

not find the deficiencies in the brief egregious enough to strike Pamela’s brief, we

will proceed with a review thereof. This Court will not, however, consider any

matters referred to in Pamela’s brief that are outside of the record on appeal. See

Telek v. Daugherty, 376 S.W.3d 623, 626 (Ky. App. 2012).

Doug first argues that the circuit court did not have subject matter

jurisdiction to make de novo rulings in this matter. Particularly, Doug maintains

that the Petition was nothing more than an interlocutory appeal, as the district

court’s administration of the Estate had not been completed.

-7- To address Doug’s argument, we must examine the interplay between

three statutes – KRS 24A.120, KRS 395.510, and KRS 395.515. KRS 24A.120(2)

states that a “District Court shall have exclusive jurisdiction in: . . . [m]atters

involving probate, except matters contested in an adversary proceeding. Such

adversary proceeding shall be filed in Circuit Court in accordance with the

Kentucky Rules of Civil Procedure and shall not be considered an appeal[.]”

(Emphasis added.)

The definition of the term “adversary proceeding,” while somewhat

circuitous, is found in KRS 24A.120(3): “[m]atters not provided for by statute to

be commenced in Circuit Court shall be deemed to be non[-]adversarial within the

meaning of subsection (2) of this section and therefore are within the jurisdiction

of the District Court[.]” Based on the foregoing language, the test of jurisdiction in

the Circuit Court over probate matters is whether a statute exists that authorizes

initiating suit in circuit court. Stated differently, the district court possesses

jurisdiction over all probate actions except actions that by statute may be

commenced in circuit court.

We next turn to KRS 395.510, which authorizes “[a] representative,

legatee, distributee or creditor of a deceased person” to “bring an action in circuit

court for the settlement of his estate[.]” Lastly, KRS 395.515 explains the types of

issues that may be addressed and adjudicated by the circuit court, including:

-8- a genuine issue concerning the right of any creditor, beneficiary or heir-at-law to receive payment or distribution, or if it appears that there is a genuine issue as to what constitutes a correct and lawful settlement of the estate, or a correct and lawful distribution of the assets[.]

A separate panel of this Court discussed the interplay of jurisdiction

under KRS 24A.120 and KRS 395.510 in Hale v. Moore, 289 S.W.3d 567 (Ky.

App. 2008). Hale involved a probate case in which the heirs to an estate disagreed

with certain actions of the executrix of a will, particularly the actions of the

executrix in distributing the assets of the estate and the method by which the

executrix calculated her fees. Id. at 580. The primary issue discussed by the Court

was whether “the mere filing of a complaint that questions the distribution of an

estate [constitutes] the type of ‘adversary proceeding’ needed to transfer

jurisdiction to circuit court.” Id. at 579.

The Hale Court began its analysis by noting that its review of the

applicable statutes and caselaw “disclose[d] no general definition of [the] term

[‘adversary proceeding’].” Id. The Court went on to conclude that the

beneficiaries’ questioning of the action of the executrix in distributing the assets of

the estate was “far more than an accounting matter,” but rather “gave rise to

precisely the type of ‘adversary proceeding’ contemplated in KRS 395.510(1).”

Id. at 580. The Court noted that the beneficiaries “had no alternative but to

-9- commence this action in the circuit court since the district court was without

statutory power to render the judgment sought.” Id.

In this case, we find the matter to be an “adversary proceeding” under

KRS 24A.120(2). Undeniably, a specific statute – KRS 395.510 – authorized

Pamela, as one of Starr’s heirs, to commence a settlement action in circuit court.

Therefore, because the statutory language explicitly states that such an action is not

an appeal, Doug’s arguments concerning the interlocutory nature of the district

court’s orders are inapplicable.

Moreover, we believe implicit in the power to adjudicate the issues

delineated in KRS 395.515 is necessarily the authority to initially adjudicate the

ownership and value of the assets claimed by the Estate, including disputes

concerning ownership of personal property. In the matter before us, the Petition

sought an adjudication of “the extent and value of the personal property of the

Estate,” as the dispute was “such that a correct and lawful settlement of the Estate”

could not otherwise be obtained. It is clear here that Doug and Pamela have

widely opposing views of the extent and value of the Estate. The proper settlement

of the Estate and the proper distribution of assets of the Estate required that such

issues be addressed. Accordingly, we conclude that the circuit court was vested

with subject matter jurisdiction in this matter.

-10- Doug next argues that KRS 395.510 and/or KRS 395.515 are not

applicable in this situation because the statutes refer to the failure to make a

settlement of a decedent’s estate and do not authorize an original action in the

circuit court when a party disagrees with the district court’s rulings. To be sure,

there is a window of opportunity for claims to be brought under KRS 395.510.

However, such window closes when administration of the estate is complete. See

Wood v. Wingfield, 816 S.W.2d 899, 905 n.8 (Ky. 1991) (“The statutory scheme of

KRS 395.510 et seq. requires that the estate be in administration.”). As a result,

we believe the use of the term “settlement” in KRS 395.510 refers to the full

process of administration, distribution, and closing, and the Petition was therefore

timely.

Doug next argues that the Estate was not entitled to any part of the

KFB insurance proceeds for certain of the farm equipment destroyed because the

fire occurred after Starr’s death. Specifically, Doug maintains that his testimony

that the only asset titled in Starr’s name was an automobile subject to a lien went

unrefuted and uncontradicted by Pamela, and he asserts that there was no evidence

to indicate that Starr had any interest in either the farm equipment at issue or in the

insurance proceeds paid therefor.

We once again note that our standard of review of the circuit court’s

findings of fact is whether or not such findings are clearly erroneous. Here, we

-11- cannot say that the circuit court’s conclusion that the two items of farm equipment

were jointly-owned was clearly erroneous. The circuit court considered the

evidence of the value of the applicable farm equipment, as well as the fact that no

evidence had been submitted indicating the source of the funds for the farm

equipment. It was logical for the circuit court to conclude that the applicable farm

equipment had been purchased with joint funds and that the couple considered it to

be joint property, and we see no clear error.

Doug further argues that, because the fire occurred after Starr’s death,

there was no “chose-in-action” or insurance claim for the Estate to make at the

time of her death. Thus, he claims that the Estate had no entitlement to insurance

proceeds from a fire that occurred after Starr’s death. However, in Kentucky:

[t]he law is well settled that a fire insurance policy is a chose in action and does not partake of the nature of the property insured by it, and at least as between the beneficiaries of the estate . . . and the personal representative of the estate, the policy is personal property, and, if a loss insured against occurs after the death of the insured, the personal representative is entitled to collect for it . . . regardless of the fact that the beneficiaries of the estate would be entitled to the proceeds after the payment of debts, unless a different purpose is plainly manifested by the terms of the policy.

Oldham’s Trustee v. Boston Ins. Co., 189 Ky. 844, 226 S.W. 106, 107 (1920); see

also Richardson Adm’r v. German Ins. Co. of Freeport, 89 Ky. 571, 13 S.W. 1, 2

(1890) (“the terms of a policy of insurance . . . should be liberally construed for the

-12- benefit of the insured, and so as to effectuate, as far as may reasonably be done, the

indemnity he justly expected.”). Essentially, “the proceeds of such a policy is in

the same nature as the proceeds of a promissory note in the hands of the personal

representative, and is an asset of the estate, primarily for the payment of debts, and

secondarily for distribution to those entitled thereto.” Kobs v. Insurance Co. of

North America of Philadelphia, Pa., 248 Ky. 55, 58 S.W.2d 242, 243 (1933).

As a result, because the policy was valid and in force at both the time

of Starr’s death and at the time of the fire, and because Doug has produced no

evidence of an express provision in the policy to the effect that it terminated upon

Starr’s death, it did not become void or inoperative upon Starr’s death and by that

reason alone.

Finally, Doug contends that the claims of Charles and April were

“defaulted” and thus extinguished. On December 29, 2016, the circuit court

granted Doug’s motion for default judgment against Charles, as Charles had failed

to answer or otherwise defend. Likewise, while April waived formal service and

acknowledged receipt of process at the beginning of this matter in November of

2015, she failed to file any responsive pleadings or otherwise participate in the

litigation.

We disagree, however, that either Charles’s or April’s failure to

participate in the suit barred them from recovering their statutory share of the

-13- inheritance. The default judgment granted by the circuit court was granted on a

defense, not on a claim by Doug for affirmative relief against Pamela or her

siblings. The only effect that the circuit court’s granting of the motion for default

judgment had against Charles was barring him from participating in the trial or

bringing new claims against the Estate. Doug has provided no authority indicating

that the failure to appear in a circuit court settlement action destroys an heir’s right

to distribution.

CONCLUSION

For the foregoing reasons, we affirm the Owen Circuit Court.

ALL CONCUR.

BRIEFS FOR APPELLANT: BRIEF FOR APPELLEE PAMELA BREVING: Ruth H. Baxter Carrollton, Kentucky Pamela Breving, pro se Cincinnati, Ohio

-14-