Estate of Cote

2017 MT 11N

• Court: Montana Supreme Court
• Decided: January 17, 2017
• Docket: 16-0295
• Status: Published

Opinion

01/17/2017

DA 16-0295 Case Number: DA 16-0295

IN THE SUPREME COURT OF THE STATE OF MONTANA

2017 MT 11N

IN THE MATTER OF THE ESTATE OF: JOHN P. COTE, SR., F LED Deceased.

JOHN P. COTE,JR., individually, JAN 1 7 2017 KATHERIN CLEMMENCE,individually, and KATHERIN CLEMMENCE and EiSmith BARBARA C. McEWEN,as Trustees My CT THE SUPREME COURT S‘',1-E (JP MONTANA of the RUTH COTE TRUST,

Plaintiffs and Appellees,

v.

JANICE SMITH-COTE, individually and as Personal Representative of the ESTATE OF JOHN P. COTE, SR.,

Appellant and Defendant.

and FARMERS STATE FINANCIAL CORP.,

Defendant.

APPEAL FROM: District Court of the Twenty-First Judicial District, In and For the County of Ravalli, Cause No. DP 12-72 Honorable John W. Larson, Presiding Judge

COUNSEL OF RECORD:

For Appellant:

Lon J. Dale, Esq., Michael D. Bybee, Esq., Milodragovich, Dale & Steinbrenner, P.C., Missoula, Montana

Royce A. McCarty, Jr., Attorney at Law, Hamilton, Montana (Attorneyfor Janice Smith) For Appellee:

Robert Terrazas, Dana A. Henkel, Terrazas Law Office, Missoula, Montana (Attorneyfor Cotes)

David Jackson, John H. Grant, Murry Warhank, Jackson, Murdo & Grant, P.C., Helena, Montana (Attorneysfor Famers State Financial Corp.)

Submitted on Briefs: December 7, 2016

Decided: January 17, 2017

Filed:

Clerk

2 Justice James Jeremiah Shea delivered the Opinion of the Court.

¶1 Pursuant to Section I, Paragraph 3(c), Montana Suprerne Court Internal Operating

Rules, this case is decided by memorandum opinion and shall not be cited and does not

serve as precedent. Its case title, cause nurnber, and disposition shall be included in this

Court's quarterly list of noncitable cases published in the Pacific Reporter and Montana

Reports.

¶2 Janice Srnith-Cote appeals a Twenty-First Judicial District Court, Ravalli County,

order declaring John P. Cote, Sr.'s January 5, 2011 will null and void, removing

Srnith-Cote as personal representative of John's estate, and removing a lis pendens on

trust property. We address whether the District Court erred in reaching these decisions.

We affirm.

¶3 In November 2009, John and Smith-Cote were married. Before they rnet, John

was diagnosed with terminal cancer. On February 5, 2011, John succumbed to his illness

and died. On January 5, 2011, exactly one month before his death, John signed a will

leaving a broken-down El Carnino to his son, John P. Cote, Jr. (JP), two Navajo blankets

to his daughter, Katherin Clemrnence, and the remainder of his property to Smith-Cote.

The will also nominated Srnith-Cote as the personal representative of John's estate. On

October 3, 2012, Srnith-Cote filed an application in Ravalli County District Court for

informal probate of the January 5, 2011 will and for her appointment as personal

representative of John's estate. Ravalli County is the location of 80 acres of real

property, including a cabin, to which the Ruth Cote Trust holds title. Smith-Cote claimed

John had a vested interest in this property. The District Court granted Smith-Cote's

3 application and issued an order admitting the January 5, 2011 will to informal probate

and appointing Smith-Cote as personal representative.

¶4 On February 28, 2013, Barbara C. McEwen,' JP, and Clernmence (collectively,

"the Cote Family"), filed a petition requesting the District Court to: (1) invalidate the

January 5, 2011 will, (2) probate John's October 1980 will, (3) remove Srnith-Cote as

personal representative, and (4) issue a declaratory judgment that neither Smith-Cote nor

John's estate holds any interest in the Ruth Cote Trust property. The Cote Family also

asserted claims against Smith-Cote for breach of contract, tortious interference, and

breach of fiduciary duty. Srnith-Cote counterclaimed and filed a lis pendens on the Ruth

Cote Trust property. On June 30, 2014, the Cote Family amended their petition, adding

claims against Smith-Cote for undue influence, conversion, fraud, and unjust enrichment

related to the execution of the January 5, 2011 will.2 On July 30, 2014, the District Court

issued an order granting the Cote Farnily's petition for a declaratory judgment that

neither Smith-Cote nor John's estate holds any interest in the Ruth Cote Trust property.

¶5 On August 31 and September 1, 2015, the District Court held a two-day bench

trial. On the eve of trial, Smith-Cote's counsel disclosed the existence of a will John had

signed on January 2, 2011, and advised the District Court that the signed will was in

Renton, Washington. Later that day, the District Court obtained a signed copy of the

January 2, 2011 will from the Hamilton office of probate counsel Royce Allen McCarty,

Jr. On September 8, 2015, the January 2, 2011 will was filed in the District Court.

McEwen is a co-trustee of the Ruth Cote Trust. 2 The Cote Family also filed claims against Smith-Cote regarding Farmers State Financial Corporation stock that is not subject to this appeal.

4 ¶6 On October 27, 2015, the Cote Family filed a rnotion for sanctions, asking the

District Court to enter a default judgrnent striking the January 2 and January 5, 2011

wills, and removing Smith-Cote as personal representative as sanctions for Smith-Cote's

alleged fraud, discovery abuses, and violations of court orders. On May 9, 2016, the

District Court issued an order denying probate of the January 5, 2011 will as a sanction

for discovery violations. The Court also issued alternative findings of fact, conclusions

of law, and order denying probate of the January 5, 2011 will on the basis that John

lacked testamentary capacity when he signed it. The District Court also ordered Smith-

Cote to remove her lis pendens on the Ruth Cote Trust property. Srnith-Cote appeals the

District Court's May 9, 2016 order.

¶7 We review a district court's findings of fact, including whether a testator has

testarnentary capacity, for clear error and its conclusions of law, including statutory

interpretation, for correctness. See In re Estate of Quirin, 2015 MT 132, 11 10, 17, 379

Mont. 173, 348 P.3d 658. A district court's findings are clearly erroneous if they are not

supported by substantial evidence, if the court misapprehended the effect of the evidence,

or if our review of the record convinces us that the district court rnade a rnistake. Quirin,

¶ 10. We review a district court's removal of an estate's personal representative for an

abuse of discretion. In re Estate ofHannum, 2012 MT 171, ¶ 18, 366 Mont. 1, 285 P.3d

463. A district court "abuses its discretion when it acts arbitrarily without employment of

conscientious judgment or exceeds the bounds of reason resulting in substantial

injustice." Hannurn, ¶ 18.

5 ¶8 Although the District Court denied probate of the January 5, 2011 will on two

separate bases—as a sanction and due to its conclusion that the will was invalid—we

resolve this case on the latter basis. Therefore, we address only the District Court's May

9, 2016 alternative findings of fact, conclusions of law, and order in which the District

Court found that John lacked testamentary capacity, and that Srnith-Cote exerted undue

influence in procuring the 2011 will.

¶9 A testator has testamentary capacity if, at the time the will is executed, he or she is

"aware of. . .(1)the nature of the act to be perforrned,(2)the nature and the extent of the

property to be disposed of, and (3) the objects of his or her bounty." Quirin, ¶ 18

(quoting In re Estate ofLightfield, 2009 MT 244, ¶ 28, 351 Mont. 426, 213 P.3d 468).

"Testarnentary capacity is determined as of the date the will was executed." Lightfield,

¶ 28. Contestants of a will rnay rebut the presurnption that the testator was competent

and of sound rnind by establishing "lack of testamentary intent or capacity, undue

influence, fraud, duress, rnistake, or revocation." Lightfield,¶ 28.

¶10 Undue influence consists of:

(1) the use by one in whorn a confidence is reposed by another person or who holds a real or apparent authority over the other person of the confidence or authority for the purpose of obtaining an unfair advantage over the other person; (2)taking an unfair advantage of another person's weakness of rnind; or (3) taking a grossly oppressive and unfair advantage of another person's necessities or distress.

Section 28-2-407, MCA. We have found undue influence where property transfers were

made to a person with a confidential relationship, to the exclusion of others, when the

testator's mental and physical health were failing. See Lightfield, ¶¶ 36-37, 40. Based on

6 testimony during the two-day hearing, the District Court found that Smith-Cote "had

complete control over John during the last days before his death," and controlled and

administered his rnedication and every other aspect of his life, including contact with his

family. The District Court further found that it was Smith-Cote, not John, who initiated

"drastic changes" to John's estate plan, causing him to disinherit his son in favor of

herself at a time when he lacked testamentary capacity.

¶11 The District Court found that the following evidence weighed in favor of a finding

that John lacked testamentary capacity when he signed the January 5, 2011 will:

Smith-Cote controlled JP's private access to John because John was physically and

mentally incapable of holding and using a cell phone without Srnith-Cote's presence; on

January 2, 2011, John's pain rnedications doubled; on January 3, 2011, John's mental

status was "lethargic," Smith-Cote was administering Lorazeparn and Oxycodone every

two to four hours for pain, extreme shaking, and severe diaphoresis, and John switched to

liquid morphine for faster uptake; and John signed both his initials and name incorrectly

on the will. The District Court found that John lacked testarnentary capacity because the

January 5, 2011 will was executed "at a time when John was under [Smith-Cote]'s

complete care and control and when he was heavily medicated with narcotic painkillers

and tranquilizers." Ultimately, the District Court concluded: "John's 2011 wills are

invalid due to both [Smith-Cote]'s undue influence in prompting the changes with

inaccurate representations, and John's lack of capacity."

¶12 Srnith-Cote contends that, in reaching its conclusion, the District Court "ignored

the controlling testimony of subscribing witnesses to the January 5, 2011 Will."

7 Specifically, Smith-Cote cites testimony by Dan Kellogg, the attorney she retained to

change John's estate plan. The District Court found Kellogg's testimony "unpersuasive"

because "Kellogg met John only on the afternoon of January 5, 201 1[, and] was retained

by [Smith-Cote] and misinformed regarding John, his capacity, and his Estate," citing a

litany of pertinent facts Kellogg admitted he did not know. By contrast, the District

Court found that Dr. Eric Kress, who reviewed John's rnedical records, provided

testimony demonstrating that "John was cognitively impaired and did not have the mental

capacity to execute a will." The District Court held a two-day bench trial, during which it

weighed the testimony of the various witnesses presented by both parties. At the end of

the trial, it found the Cote Family's evidence rnore persuasive than that of Smith-Cote.

This was well within the District Court's purview as the trier of fact. See Quirin, ¶ 22

("Where conflicting evidence exists, we will not substitute our judgment for the district

court's."). Substantial record evidence supports the District Court's factual findings. See

Quirin, ¶ 10.

If13 Smith-Cote also contends that the District Court erred in removing her as personal

representative of John's estate. Trial courts have -broad discretion to rernove a personal

representative provided the grounds for rernoval are valid and supported by the record."

Hannum, ¶ 28. A district court "rnay remove a personal representative for cause if it is in

the best interests of the estate" or if the personal representative has breached any single

duty pertaining to his or her office. Hannum, ¶ 27 (citing § 72-3-526(2), MCA). "A

personal representative is a fiduciary who shall observe the standards of care applicable

to trustees under the laws of the state of Montana." Section 72-3-610, MCA. A personal

8 representative's improper exercise of power concerning the estate is considered a breach

of his or her fiduciary duty. Section 72-3-616(1), MCA.

¶14 The District Court removed Srnith-Cote as personal representative because it

found that she breached her fiduciary duty to John's estate, as "dernonstrated by the

following actions:"

1. her failure to act in the Estate's best interests; 2. her refusal to provide the Cote Farnily with John's purported will; 3. her threats to JP regarding attorney fees for seeking information rightfully belonging to hirn; 4. her failure to distribute the estate according to the terrns of John's ostensible will; 5. her failure to provide a tirnely inventory; 6. her failure to provide an accurate inventory; 7. her failure to fully respond to several discovery requests necessitating the Cote Family to file rnultiple motions to compel; 8. her failure to provide the medical records of Dr. Scott Tykodi or Carlos Alaniz; 9. her failure to produce medical and hospice records; 10. her failure to produce complete life insurance records; 11. her failure to produce docurnents and records from John's Boeing insurance, pension, and employment; 12. her failure to rnaintain the Ruth Cote Trust property when she improperly seized it.

Based on its finding that Smith-Cote breached her fiduciary duty, the District Court also

awarded attorney fees against Smith-Cote pursuant to § 72-3-616, MCA (providing that a

personal representative is liable to interested persons for darnage or Ioss resulting frorn

the breach of his or her fiduciary duty). The District Court's findings are supported by

9 substantial record evidence. The District Court properly weighed the evidence before it

and its findings are not clearly erroneous.3 See Quirin, ¶ 10.

¶15 Finally, Smith-Cote contends that the District Court improperly ordered her to

remove the lis pendens on the Ruth Cote Trust property, contending that the District

Court's finding that Smith-Cote has no interest in the Trust is interlocutory. In its July

30, 2014 order, the District Court held: -[T]he Estate of John P. Cote[, Sr.] and Ms.

Smith-Cote lack standing to participate in Trust adrninistration or to demand information,

accountings, or distribution of the Trust." We reject Smith-Cote's assertion that this was

not a final judgment, as it was dispositive of all issues regarding the Ruth Cote Trust in

relation to Smith-Cote and to John's estate.

¶16 We have deterrnined to decide this case pursuant to Section I, Paragraph 3(c) of

our Internal Operating Rules, which provides for memorandum opinions. In the opinion

of the Court, the case presents a question controlled by settled law or by the clear

application of applicable standards of review. The District Court's interpretation and

application of the law were correct, and its findings of fact are not clearly erroneous. We

affirm.

We Concur:

Chief Justice

3 Because we are affirming the District Court's award of attorney fees under § 72-3-616, MCA, and not pursuant to the District Court's alternative basis, these fees are assessed only against Smith-Cote personally.

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