This opinion will be unpublished and may not be cited except as provided by Minn. Stat. § 480A.08, subd. 3 (2014).
STATE OF MINNESOTA IN COURT OF APPEALS A15-0440
In the Matter of the Conservatorship of: Patricia Annette Wallace, Protected Person.
Filed January 25, 2016 Affirmed in part, reversed in part, and remanded Johnson, Judge
Hennepin County District Court File No. 27-GC-PR-12-114
Michael D. O’Neill, Martin & Squires, P.A., St. Paul, Minnesota (for appellant Alternate Decision Makers, Inc.)
Jill A. Adkins, Henningson & Snoxell Ltd., Maple Grove, Minnesota (for respondent Patricia Annette Wallace)
Robert E. Kuderer, Erickson, Zierke, Kuderer & Madsen, P.A., Minneapolis, Minnesota (for respondent Colonial America Casualty & Surety)
Considered and decided by Cleary, Chief Judge; Connolly, Judge; and Johnson,
Judge.
UNPUBLISHED OPINION
JOHNSON, Judge
A guardian and conservator filed an annual accounting and a final accounting
seeking court approval of expenses that were incurred and fees for services that were
performed on behalf of a protected person. The district court allowed some expenses and
some fees but disallowed other expenses totaling $13,246.26 and disallowed fees totaling $30,994.92. The guardian and conservator appeals. We affirm in part, reverse in part, and
remand for further proceedings.
FACTS
In March 2012, Hennepin County petitioned for a guardianship and a
conservatorship for Patricia Annette Wallace because of her mental condition and her
inability “to care for herself or manage her finances.” The petition nominated Alternate
Decision Makers, Inc. (ADMI), to serve as guardian and conservator. In April 2012, the
district court granted the county’s petition in part, appointed ADMI to be Wallace’s limited
guardian, and continued the conservatorship petition. In October 2012, ADMI petitioned
for appointment as emergency guardian and conservator because Wallace had been
released from the hospital following hip surgery and was returned to her home, which was
“totally unfit for human habitation, with animal feces and urine throughout the home,
discarded adult diapers on the floor, [and] human and animal feces on [Wallace’s] bed.”
The district court granted ADMI’s petition and appointed ADMI to serve as emergency
guardian and conservator until December 8, 2012. In November 2012, the district court
granted ADMI’s subsequent petition to be appointed permanent guardian and conservator
of Wallace.
While serving as guardian and conservator, ADMI incurred significant expenses on
behalf of Wallace, including more than $45,000.00 on the renovation of Wallace’s home
and more than $5,000.00 on medical bills. ADMI paid expenses by causing checks to issue
from Wallace’s checking account. In December 2013, Wallace (through counsel)
petitioned for the appointment of a successor guardian and conservator. In January 2014,
2 the district court granted Wallace’s petition and appointed Senior Options, Inc., as
successor guardian and conservator. The district court discharged ADMI, subject to final
approval of ADMI’s accountings.
ADMI filed an annual accounting in January 2014 and a final accounting in April
2014. In the two accountings, ADMI sought approval of its payment of a total of
$286,010.56 in expenses and approval of $62,454.67 in guardian and conservator fees and
accountant fees. In August 2014, the district court scheduled a hearing on the accountings
for October 2014.
Before the October 2014 hearing, ADMI’s accountings were reviewed by the
Conservator Account Auditing Program (CAAP), a statewide program within the
Minnesota Judicial Branch that reviews conservator accountings and provides
recommendations to the district courts. In this case, the CAAP auditor issued an audit
report in the form of a letter to the assigned district court referee. The CAAP auditor’s
report noted that ADMI had not submitted cancelled checks, invoices, or receipts to provide
support for ten expenses totaling $15,779.03. The CAAP auditor recommended to the
district court that ADMI either be required to provide additional documentation to support
those expenses or to reimburse Wallace for the total amount of those ten expenses. The
CAAP auditor noted ADMI’s requests for guardian and conservator fees and accountant
fees but did not make any recommendation to the district court concerning those requests.
At the October 2014 hearing, ADMI called Jasmine Jonell, president of ADMI, to
testify generally about the expenses and fees contained in the accountings. ADMI did not
introduce any exhibits through Jonell. Jonell stated that relevant documentation could be
3 provided to Wallace’s attorney or to the district court on request. ADMI also called Pat
Shanahan, the contractor responsible for the renovations of Wallace’s house, to testify
about the work that his firm performed and the subcontractors he retained. Wallace’s
attorney cross-examined ADMI’s witnesses but did not introduce any other evidence.
In December 2014, the district court referee signed a four-page order. The referee
recommended that the district court allow all expenses except eight of the ten expenses
identified by the CAAP auditor. The referee also recommended that ADMI’s request for
guardian and conservator fees be reduced from $20,608.92 to $3,500.00, an amount that
the referee found to be reasonable in light of the complexity of the case and the limited
amount of Wallace’s assets. The referee further recommended that ADMI’s request for
accountant fees be reduced from $15,086.00 to $1,200.00, an amount that the referee found
to be reasonable in light of Wallace’s low income and the fact that most of her assets were
in a single account. In sum, the referee recommended that ADMI’s accountings be allowed
in part and disallowed in part and that ADMI be required to return $44,133.22 in expenses
and fees to Wallace. The referee named Western National Mutual Insurance Company as
surety for ADMI’s obligation to return funds to Wallace. A district court judge adopted
the referee’s recommendations, issued the order, and directed entry of judgment.
In February 2015, ADMI requested leave to file a motion for reconsideration. See
Minn. R. Gen. Pract. 115.11. ADMI argued that it had provided sufficient support for its
expenses or, alternatively, that it should be allowed to submit additional documentation.
In addition, ADMI argued that the district court had erred by naming the wrong company
as surety. By letter, the referee denied ADMI’s request for leave to file a motion for
4 reconsideration. The referee’s letter noted, however, that the district court’s order had
misidentified the surety, and the referee stated that an amended order would be
forthcoming. On March 11, 2015, ADMI filed a notice of appeal. On the following day,
the district court issued an amended order naming Colonial America Casualty and Surety
Company as surety instead of Western National Mutual Insurance Company.
DECISION
I. Disallowed Expenses and Fees
ADMI argues that the district court erred by disallowing six of the expenses for
which it sought approval, by disallowing some of the fees it sought as compensation for its
services as guardian and conservator, and by disallowing fees incurred by a third-party
accountant. No responsive brief was filed.
A guardian or conservator is entitled to reimbursement of necessary expenses
incurred on behalf of a ward or protected person and to compensation for necessary services
performed for the benefit of a ward or protected person. Minn. Stat. § 524.5-502(c) (2014).
Both a guardian and a conservator’s compensation is paid from the protected person’s
estate and is subject to approval by the district court. Id.; see also In re Guardianship of
Doyle, 778 N.W.2d 342, 347-48 (Minn. App. 2010). The district court’s approval is
prompted by the guardian and conservator’s filing of an annual accounting report, which
must list the receipts, disbursements, and distributions occurring during the relevant period.
See Minn. Stat. §§ 524.5-316(a)(7), 524.5-420(a)-(b) (2014). A conservator also must file
a final accounting upon being discharged. Minn. Stat. § 524.5-420(a).
5 A. Expenses
If a district court “determines that a . . . conservator . . . has incurred necessary
expenses for the benefit of the ward or protected person, the court may order
reimbursement . . . to be paid from the estate of the protected person.” Minn. Stat. § 525.5-
502(c); see also Minn. Stat. § 524.5-417(c)(i) (stating that conservator has “duty to pay the
reasonable charges for the support, maintenance, and education of the protected person”).
This court applies an abuse-of-discretion standard of review to the district court’s decision
to approve the reimbursement of necessary expenses. Doyle, 778 N.W.2d at 347 (citing In
re Estate of Baumgartner, 274 Minn. 337, 346, 144 N.W.2d 574, 580 (1966)).
In this case, the district court allowed expenses totaling $272,872.26. But the
district court disallowed eight expenses totaling $13,138.30, and required ADMI to repay
that amount to Wallace, on the ground that ADMI did not provide documentation to support
those expenses. ADMI contends on appeal that the district court erred by disallowing six
expenses, for four reasons.
First, ADMI contends that the district court erred because ADMI provided the
district court with sufficient documentation for the challenged expenses by completing the
accounting reports that are required by statute. The statute provides, “A [conservator’s
accounting] report must state or contain . . . a listing of the receipts, disbursements, and
distributions during the reporting period.” Minn. Stat. § 524.5-420(b). That statute,
however, does not state that a listing of receipts, disbursements, and distributions is
sufficient for purposes of allowing expenses. See id. A different statute governs the issue
of the reimbursement of a conservator’s payment of expenses; that statute provides that an
6 expense may be reimbursed if it was “necessary” for the conservator to incur the expense.
See Minn. Stat. § 525.5-502(c). A district court may not be able to determine whether an
expense is necessary based solely on a conservator’s accounting report, which typically
follows a template that requires only summary information and sometimes consolidates
multiple expenses into a single line-item. A district court does not necessarily abuse its
discretion by refusing to rely on a template that includes only summary information when
deciding whether to allow expenses, especially in a case involving hundreds of thousands
of dollars in expenses. Thus, ADMI’s accounting reports, by themselves, do not compel
the conclusion that ADMI incurred necessary expenses on behalf of Wallace.
Second, ADMI contends that the district court erred because the evidence ADMI
introduced at the hearing, especially the testimony of its president, Jonell, is sufficient to
justify the six challenged expenses. Our review of the district court record indicates that
Jonell’s testimony was rather general, vague, and conclusory, proving little more than the
mere fact that expenses were incurred and were paid, without providing details regarding
the necessity of the expenses. She sometimes qualified her testimony by noting that she
was not employed by ADMI when it provided services to Wallace. The district court
apparently was not persuaded by Jonell’s testimony or determined that her testimony did
not bear directly on whether the challenged expenses were necessary. We note that, in this
context, oral testimony may be less valuable to the fact-finder than contemporaneous
documentation. See Redies v. Cosner, 2002 MT 86, ¶ 38, 309 Mont. 315, 327 48 P.3d 697,
704-05 (2002) (noting preference for independently verifiable documentation over oral
testimony). However, ADMI’s argument is valid with respect to one of the six expenses
7 at issue. ADMI introduced evidence through Shanahan, the contractor who performed
renovations on Wallace’s home, including both detailed testimony and documentary
evidence. Shanahan’s testimony and the exhibits establish that ADMI necessarily incurred
$2,650.00 in expenses that the district court disallowed. In essence, the testimony of a
nonparty served the same purpose as documentation. Thus, the district court did not err by
rejecting Jonell’s testimony with respect to five of the six challenged expenses but erred
by rejecting the evidence presented through Shanahan with respect to one of the six
challenged expenses.
Third, ADMI contends that the district court erred because ADMI provided
additional documentation to Wallace’s counsel and Wallace did not object to ADMI’s
request for reimbursement of expenses. Assuming without deciding that Wallace did not
object,1 the absence of an objection does not relieve a conservator of its obligation to prove
the necessity of the expenses for which it seeks approval. The conservator bears the burden
of proving that expenditures are appropriate. See Doyle, 778 N.W.2d at 347. Furthermore,
the district court has an obligation to preserve a protected person’s property and to ensure
that the person’s estate is not dissipated. See id. Accordingly, even in the absence of an
objection, a district court may disallow the reimbursement of expenses to a conservator.
1 It appears that Wallace objected to ADMI’s accountings but did not object to any of the six expenses that are at issue on appeal. During the hearing, Wallace’s counsel objected generally to ADMI’s accountings and referred to a few expenses with specificity. At the conclusion of the hearing, the referee directed Wallace’s attorney to submit a letter identifying the objections that Wallace wished to withdraw. After the hearing, Wallace’s attorney submitted a letter to the district court in which she noted continuing objections to some expenses and specifically withdrew her objection to only one of the six challenged expenses, the payment to Shanahan that we have determined was proved to be necessary.
8 See id. at 347-48. Thus, the district court did not err on the ground that Wallace did not
object to ADMI’s request for reimbursement of expenses.
Fourth, ADMI contends that the district court erred by not requesting any additional
evidence from ADMI to substantiate its request for reimbursement of expenses. ADMI
cites no authority for the proposition that the district court has an obligation to identify
shortcomings in a conservator’s evidence before disallowing expenses. Again, a
conservator bears the burden of proving an entitlement to expenses. See id. at 351. A
district court may communicate to counsel that additional evidence is necessary to satisfy
the burden of proof, but there is no requirement that the district court do so. It is important
to note that, in this case, the CAAP auditor recommended that ADMI “provide
documentation to support [the] expenses or repay [them].” The CAAP audit program is
part of the judicial branch. The CAAP audit program allows a thorough and detailed review
of a conservator’s accounting by a trained professional, who provides a recommendation
on which a district court may, in its discretion, rely. See Minn. Stat. § 524.420(h); see also
Minnesota Judicial Branch, Conservator Account Auditing Program (CAAP),
http://mncourts.gov/Help-Topics/Guardianship-and-Conservatorship.aspx (last visited
Jan. 13, 2016). In this case, the auditor’s recommendation put ADMI on notice that its
documentation was potentially lacking and that additional documentation might be
required. But ADMI did not heed the warning. Having received notice of the CAAP
auditor’s recommendation, ADMI cannot argue that it did not have an adequate opportunity
to introduce evidence to justify the six challenged expenses. Thus, the district court did
9 not err by disallowing ADMI’s expenses without requesting additional evidence from
ADMI.
Therefore, the district court did not err with respect to five of the six challenged
expenses, totaling $7,690.13, but erred with respect to one of the six challenged expenses,
in the amount of $2,650.00.
B. Fees
If a district court “determines that a guardian or conservator . . . has rendered
necessary services . . . for the benefit of the ward or protected person, the court may order
reimbursement or compensation to be paid from the estate of the protected person.” Minn.
Stat. § 525.5-502(c). In determining whether a guardian or conservator’s fees are
appropriate, a district court must consider several factors: “‘(1) the time and labor required;
(2) the experience and knowledge of the [guardian or conservator]; (3) the complexity and
novelty of problems involved; (4) the extent of the responsibilities assumed and the results
obtained; and (5) the sufficiency of assets properly available to pay for the services.’”
Doyle, 778 N.W.2d at 351 (quoting Minn. Stat. § 525.515(b) (2008)). “The burden of
providing evidence to support fee requests lies with the guardian/conservator.” Id. (citing
Butt v. Schmidt, 747 N.W.2d 566, 576 (Minn. 2008)). This court applies a clear-error
standard of review to a district court’s findings concerning the value of a guardian or
conservator’s necessary services. Id. We apply an abuse-of-discretion standard of review
to a district court’s ultimate decision to allow or disallow fees to a guardian or conservator.
Id. at 350-51 (citing Baumgartner, 274 Minn. at 346, 144 N.W.2d at 580).
10 1. Guardian and Conservator’s Fees
ADMI sought guardian and conservator fees in the amount of $20,608.92. The
district court determined that the fees sought by ADMI were excessive in light of the
limited amount of Wallace’s assets and the complexity of Wallace’s case. The district
court reduced ADMI’s fees to $3,500.00.
ADMI contends that the district court erred by disallowing guardian and conservator
fees for essentially the same four reasons that it urged with respect to expenses and for one
additional reason. We reject ADMI’s first and second contentions for essentially the same
reasons that are described above. Furthermore, we generally approve of the district court’s
suggestion that detailed billing statements are essential to the determination whether a
guardian or conservator has “rendered necessary services . . . for the benefit of the ward or
protected person.” Minn. Stat. § 524.5-502(c). In the analogous situation of a request for
attorney fees, a district court cannot determine whether services were necessary without
detailed information concerning the nature of the services provided and the amount of time
required to provide those services. See Minn. R. Gen. Pract. 119.01-02 (requiring detailed
documentation supporting attorney fees requests); see also Borchert v. Borchert, 279 Minn.
16, 21-22, 154 N.W.2d 902, 906-07 (1967) (remanding for reconsideration of award of
attorney fees based on additional and more particular evidence of “the amount of work
done and the value of the services rendered”). There is no apparent reason why a different
approach should prevail with respect to guardian or conservator fees, especially in light of
the district court’s obligation to ensure that the protected person’s assets are not dissipated.
Doyle, 778 N.W.2d at 347. This is especially true in a case involving a professional
11 guardian and conservator, which can be expected to have established systems for recording
the services provided to a protected person and for tabulating their value.
Our analysis of ADMI’s third and fourth contentions with respect to guardian and
conservator fees is, however, somewhat different from our analysis of those contentions
with respect to expenses. The district court appears to have altered the usual procedures
by which ADMI could have satisfied its burden of proof. At the conclusion of the hearing,
the referee asked Wallace’s attorney whether she would like to receive additional
documentation from ADMI. After Wallace’s attorney answered in the affirmative, the
referee directed her and ADMI’s attorney to confer to ensure that ADMI had provided all
documentation to Wallace, and the referee further directed Wallace’s attorney to submit a
letter to the district court within 10 days to state whether Wallace was withdrawing any
objections to ADMI’s accountings. The referee stated that, after 10 days, the district court
would consider the parties’ positions “based on the evidence that’s been presented.” The
referee’s comments are ambiguous as to whether it was necessary for ADMI to submit
additional evidence to the district court or whether it was required merely to provide
additional evidence to Wallace. The referee’s comments also are ambiguous as to whether
ADMI would have an opportunity to present additional evidence to the district court after
Wallace submitted a letter to the district court. By directing ADMI to provide additional
documentation to Wallace, but not directing ADMI to provide additional documentation to
the district court, the referee’s comments could be understood to mean that ADMI was not
permitted to submit additional evidence at that time. But the referee disallowed a
substantial part of ADMI’s fee requests without receiving additional evidence from ADMI.
12 Without such evidence, the district court had no means of resolving Wallace’s objections
on the merits.
ADMI’s additional contention is that the district court erred by denying its request
for leave to file a motion to reconsider, in which ADMI specifically expressed its desire to
introduce additional evidence. A district court’s denial of a request for leave to file a
motion to reconsider is subject to an abuse-of-discretion standard of review. Anderson v.
Rengachary, 608 N.W.2d 843, 846 (Minn. 2000); Goerke Family P’ship v. Lac Qui Parle-
Yellow Bank Watershed Dist., 857 N.W.2d 50, 52-53 (Minn. App. 2014). The referee
denied ADMI’s request for reconsideration on the ground that ADMI had failed to present
additional evidence at earlier stages of the case. But, as noted above, the referee had
directed ADMI’s attorney to follow a different procedure, and the referee’s comments are
unclear as to whether ADMI was permitted to introduce additional evidence after the
hearing. At the least, the unusual post-hearing procedures created confusion as to whether
and when ADMI could submit additional evidence. The absence of additional evidence is
significant because it may impede a proper consideration of the issues. A district court
reviewing a guardian and conservator’s request for fees must make findings and
conclusions that are “detailed, specific, and sufficient enough to enable meaningful review
by this court.” Doyle, 778 N.W.2d at 353 (quotation omitted). In Doyle, the district court
made general statements about deficiencies in the guardian and conservator’s billing
entries. Id. This court noted that the district court did not “state specifically which of [the
guardian and conservator’s] numerous itemized charges it is disallowing” such that “it is
not possible for this reviewing court to determine whether the district court could
13 reasonably be more specific based on the record before it or whether a generalized
adjustment was the only practical way for the district court to proceed.” Id. Thus, this
court reversed and remanded “with instructions to clarify the relationship of [the
generalized] adjustment to other disallowed or criticized charges and otherwise allocate the
disallowed fees or to make findings that such specificity is not possible.” Id.
In this case, the district court did not make detailed findings concerning why
ADMI’s fee request should be drastically reduced from approximately $20,000.00 to
$3,500.00. Wallace’s attorney had made rather detailed objections, but the district court
did not state whether those objections were meritorious and was unable to do so without
the evidence underlying Wallace’s objections, which the referee specifically invited.
Consequently, we are unable to conduct meaningful appellate review. See id.
In light of the unusual circumstances of this case, we conclude that the district court
erred by denying ADMI’s request for leave to file a motion for reconsideration and to
introduce additional evidence concerning the necessity of the services it provided to
Wallace.
2. Accountant Fees
ADMI sought fees for work performed by an outside accountant in the amount of
$15,086.00. The district court determined that the accountant fees sought by ADMI were
improper because ADMI did not submit detailed billing statements of the accountant and
because the fees were excessive. The district court reduced the accountant fees to
$1,200.00.
14 ADMI reiterates the contentions that it made concerning both the challenged
expenses and the guardian and conservator fees. We resolve those contentions in the same
manner as ADMI’s contentions concerning guardian and conservator fees. In light of the
unusual circumstances of this case, we conclude that the district court erred by denying
ADMI’s request for leave to file a motion for reconsideration and to introduce additional
evidence concerning the necessity of the services that the accountant provided to ADMI
and Wallace.
II. Surety
ADMI also argues that the district court erred by not accurately identifying in its
December 2014 order the company appointed to serve as surety. ADMI acknowledges that
the March 12, 2015 amended order identified the correct company but suggests that the
amended order is ineffective because it was issued after the notice of appeal, which
deprived the district court of jurisdiction over the matter. We need not determine whether
the amended order is effective because, in light of the referee’s concession in the letter
denying reconsideration, we conclude that ADMI is correct that the district court erred by
identifying Western National Mutual Insurance Company, not Colonial America Casualty
and Surety Company, as surety in the December 2014 order.
In sum, we conclude that the district court did not err by disallowing five of the six
challenged expenses, erred by disallowing one of the six challenged expenses, erred by
denying ADMI’s request for leave to file a motion for reconsideration and to introduce
additional evidence concerning guardian and conservator fees and accountant fees, and
erred by misidentifying the company that is the surety for ADMI’s obligation to return
15 funds to Wallace. Therefore, we affirm in part, reverse in part, and remand for further
proceedings. On remand, the district court shall allow the $2,650.00 expense related to the
renovation work performed by Shanahan, provide ADMI an opportunity to introduce
additional documentary evidence, make findings and conclusions of law with respect to the
necessity of the services rendered to Wallace by ADMI and by the accountant, and properly
identify the company that is the surety for the judgment against ADMI.
Affirmed in part, reversed in part, and remanded.