Pederson v. Wells Fargo Bank

2008 ND 210, 757 N.W.2d 740, 2008 N.D. LEXIS 230
CourtNorth Dakota Supreme Court
DecidedNovember 21, 2008
DocketNo. 20080076
StatusPublished
Cited by2 cases

This text of 2008 ND 210 (Pederson v. Wells Fargo Bank) is published on Counsel Stack Legal Research, covering North Dakota Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Pederson v. Wells Fargo Bank, 2008 ND 210, 757 N.W.2d 740, 2008 N.D. LEXIS 230 (N.D. 2008).

Opinion

KAPSNER, Justice.

[¶ 1] Kenneth Pederson appeals an order denying his petition for supervision of the trust and termination of the trust, and [742]*742he appeals a separate order awarding attorney fees to Wells Fargo Bank of Minot, North Dakota (“Wells Fargo”) and Darlene Bernsdorf. We affirm.

I.

[¶ 2] Oliver Pederson executed an irrevocable living trust agreement on December 13, 2002. The primary asset of the trust is an undivided one-half interest in real estate located in Bottineau County. Oliver Pederson’s child, Kenneth Peder-son, owns the other undivided one-half interest in the real estate. Oliver Pederson named Wells Fargo trustee, with Darlene Bernsdorf as co-trustee. The income of the trust was to be paid to or used for the benefit of Oliver Pederson, and at his death, it was to be paid to Darlene Berns-dorf. Upon the death of Darlene Berns-dorf, the income and principal of the trust was to be distributed to Oliver Pederson’s “child per stirpes,” less certain personal items. Oliver Pederson died on July 5, 2003; thus, Darlene Bernsdorf is presently an income beneficiary, and Kenneth Peder-son is the sole remainder beneficiary.

[¶ 3] In March 2007, Kenneth Peder-son petitioned the district court, seeking supervision of the trust, termination of the trust, or, alternatively, appointment of a successor trustee. He alleged: The trustee had not exercised full power and responsibility to manage the trust estate; the trustee failed to pay property taxes on the primary asset of the trust for more than three years; the trustee failed to provide maintenance and care for the property; and the trust failed to serve any trust purpose or to be any benefit to Kenneth Pederson. Wells Fargo responded. It denied all allegations by Kenneth Peder-son which suggested Wells Fargo failed to fulfill its duties under the terms of the trust agreement, and it asserted it has prudently managed the assets of the estate conveyed to the trust.

[¶ 4] The district court held a hearing on April 23, 2007, and it filed an order on July 9, 2007. First, the district court addressed whether the trust should be supervised. While the district court found the trustee had not paid its one-half of the property taxes, it determined this was due to lack of trust funds, as a result of legal fees incurred by the trust. The present case was the third brought by Kenneth Pederson; in the first, he challenged Oliver Pederson’s competency, and in the second, he sought to dissolve the trust. Additionally, the district court determined since Kenneth Pederson owns one-half of the property, only one-half of the waste can be attributable to the trust. At the hearing, when asked if Darlene Bernsdorf had done anything wrong as trustee, Kenneth Peterson testified: “She hasn’t done nothing so how could she do anything wrong?” When asked if Wells Fargo had done anything wrong as trustee, Kenneth Peterson testified: “I think they tried their best. I will give them credit.” The district court determined Kenneth Pederson had not established any justification for supervision of the trust.

[¶ 5] Second, the district court discussed whether the trust should be terminated. It found one of the purposes of the trust was to provide Darlene Bernsdorf income, and even though the distribution to Darlene Bernsdorf would be modest, this purpose could still be fulfilled. The district court determined the goals of the trust were achievable; therefore, it denied Kenneth Pederson’s petition for termination of the trust.

[¶ 6] Third, regarding the appointment of a successor trustee, the district court found Kenneth Pederson believed Wells Fargo was doing a good job as trustee. It also found Kenneth Pederson conceded [743]*743Darlene Bernsdorf had done nothing ■wrong which would constitute grounds for her removal. Therefore, the district court did not remove either trustee and did not name a successor trustee.

[¶ 7] Finally, the district court addressed costs and attorney fees. The trustees had requested Kenneth Pederson be required to pay the fees of the trust pertaining to the present legal action. The district court noted this is the third lawsuit initiated by Kenneth Pederson, with the first two being unsuccessful. It stated the previous lawsuits caused the trust to incur legal fees, which depleted the income of the trust and created the situation of “impossibility” that, in the present lawsuit, Kenneth Pederson cites as support to terminate the trust.

[¶ 8] The district court determined Kenneth Pederson violated N.D.R.Civ.P. 11(b)(1), because the present lawsuit was brought for an improper purpose. Kenneth Pederson’s purpose was to “merely defeat the express purpose of this trust in providing income for Darlene [Bernsdorf].” In addition, the district court found Kenneth Pederson violated N.D.R.Civ.P. 11(b)(3). It held, “while there may be some factual or evidentiary support for the contention that the trust’s purpose has failed, or is impossible to achieve, there is also ample evidentiary support that it was Kenneth [Pederson] who created this situation.” Therefore, the district court entered an order to show cause why Kenneth Pederson, his attorney, Peter Halbach, and Haugland, Halbach & Halbach Law Firm, or all of the above, should not be liable for N.D.R.Civ.P. 11 sanctions.

[¶ 9] On August 10, 2007, the district court held a hearing regarding attorney fees, and on January 22, 2008, it filed an order. The district court held the amount due and owing to Wells Fargo was $2,497.61, and the amount owing to Darlene Bernsdorf was $2,362.50. It deemed the costs and attorney fees be assessed jointly and severally against Kenneth Ped-erson and his attorney, Peter Halbach.

[¶ 10] Kenneth Pederson filed a notice of appeal, arguing the district court improperly denied the petition for supervision of the trust, improperly denied the petition to terminate the trust, and improperly awarded attorney fees to the trustees.

II.

[¶ 11] On appeal, Kenneth Pederson asserts the district court improperly denied court supervision of the trust. Section 59-04-02, N.D.C.C., provided: “Any trustee, beneficiary, or person interested in a trust may file a petition with the clerk of the district court praying that the administration of the trust be supervised.” Chapter 59-04, N.D.C.C., was repealed by 2007 N.D. Sess. Laws ch. 549, § 27, effective August 1, 2007. However, at the time of the district court’s order filed on July 9, 2007, N.D.C.C. ch. 59-04 governed the administration of trusts; therefore, it governs this issue.

[¶ 12] While N.D.C.C. § 59-04-02 was in effect, this Court did not address the standard of review for a district court’s decision on a petition for supervision of the trust. Section 59-04-02, N.D.C.C., in part, provided: “The court, upon hearing, may enter its order that all further proceedings in the supervision of the administration of the trust must be had in that court.” The plain language of the statute did not require a district court to supervise a trust simply because an interested party requests supervision. Id.; see N.D.C.C. § 1-02-02. Rather, the statute provided a district court had discretion whether to grant a petition for supervision of a trust. N.D.C.C. § 59-04-02. ‘When a district [744]*744court may do something, it is generally a matter of discretion.” Waldie v. Waldie, 2008 ND 97, ¶ 11, 748 N.W.2d 683 (quoting Ackerman v. Ackerman, 1999 ND 135, ¶ 19, 596 N.W.2d 332). Therefore, the proper standard of review for this issue is abuse of discretion.

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Related

In Re Pederson Trust
2008 ND 210 (North Dakota Supreme Court, 2008)

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Bluebook (online)
2008 ND 210, 757 N.W.2d 740, 2008 N.D. LEXIS 230, Counsel Stack Legal Research, https://law.counselstack.com/opinion/pederson-v-wells-fargo-bank-nd-2008.