Wells Fargo Bank, N.A., of the Estate of Geneva J. Burger v. Jerry D. Burger

• Court: Court of Appeals of Iowa
• Decided: June 25, 2014
• Docket: 13-1729
• Status: Published

Opinion

IN THE COURT OF APPEALS OF IOWA

No. 13-1729 Filed June 25, 2014

WELLS FARGO BANK, N.A., Executor of the ESTATE OF GENEVA J. BURGER, Deceased, Plaintiff-Appellee,

vs.

JERRY D. BURGER, Defendant-Appellant. ________________________________________________________________

Appeal from the Iowa District Court for Dallas County, John D. Lloyd,

Judge.

Jerry Burger appeals the district court’s summary judgment ruling and

judgment entry in favor of the plaintiff-estate to recover monies overpaid to

Burger by the estate’s executor. AFFIRMED.

Matthew J. Hemphill of Bergkamp, Hemphill & McClure, P.C., Adel, for

appellant.

Karl T. Olson of Parker & McNeill, P.L.L.C., West Des Moines, for

appellee.

Considered by Vogel, P.J., and Doyle and Mullins, JJ. 2

DOYLE, J.

Jerry Burger appeals from the district court’s summary judgment ruling

and the subsequent judgment entered in favor of the Estate of Geneva J. Burger

(estate) to recover estate monies overpaid to Burger by the estate’s executor and

trustee, Wells Fargo Bank (executor). We affirm.

I. Background Facts and Proceedings.

Harvey and Geneva Burger had four children: Jerry, Jacqueline, Curtis,

and Cris. Before their deaths, Harvey and Geneva created revocable trusts to

govern the disposition of their property to their children-beneficiaries. Henry

predeceased Geneva, and Geneva died in 2008. Geneva’s estate was opened,

and Wells Fargo Bank was appointed executor, as well as trustee of her trust.1

During the probate proceedings, Curtis and Cris filed a lawsuit challenging

changes made by Geneva in her last will and trust instruments. The

beneficiaries eventually entered into a settlement agreement, ending the lawsuit.

The agreement required Jerry to pay certain monies to Curtis and Chris. Jerry

also agreed to provide an early pay-off of the notes he had given to the trust in

connection with his purchase of Geneva’s farmland, allowing liquidation of the

estate assets. The executor proceeded to administer the estate, including

interim distributions, in accord with what the executor understood the

beneficiaries’ intentions to be following their settlement.

The executor filed its final report and application for discharge in May

2011, and Curtis subsequently filed objections to the report. Among other things,

1 It does not appear to be disputed that Jerry was appointed co-trustee of Geneva’s trust. 3

Curtis objected to (1) the executor’s “improper distribution of proceeds received

from [Jerry] from the note payoffs, by including [Jerry] as a recipient of the

distribution of those proceeds;” (2) the executor’s “failure to collect interest from

[Jerry] on the notes from the time of the beneficiaries’ settlement of their litigation

until transfer of the funds securing the notes”; and (3) the executor’s “over-

allocation of a capital gains tax credit to [Jerry].” The executor stood by its

calculations and report, and it argued Curtis’s objections had “no factual or legal

basis.” It also relied on the discretion given to the trustee in the trust to abandon

claims, including any interest due on the notes held by the trust.

Hearing on the matter was held. Ultimately, Jerry agreed with the

executor’s position and opposed the objections raised by his siblings. Jerry

requested the final report be approved as filed, including the report’s

determination that he owed the estate $27,715. He stated he would pay that

amount upon approval of the report.

In November 2011, the probate court entered its order disapproving the

proposed final report for the reasons asserted by Curtis. The court directed the

executor to revise the final report in those respects, including reducing the

amount to be distributed to Jerry. The court noted, in an aside, that it “appears

that the deficiencies in the estate are primarily Jerry’s obligation to reimburse the

estate even though the executor may be chargeable (see Iowa Code sections

633.157 to 633.160 and particularly 633.158 as it relates to the issue of

commingling).” However, the court did not specifically order Jerry to repay the

estate the amount he had been overpaid, stating that depending on the other 4

beneficiaries’ objections, the amount retained by the estate for distribution to

Jerry

may not be adequate to make the estate whole. Jerry is not a defendant, and while the court has jurisdiction to modify the distribution, it has no jurisdiction to enter any judgment against Jerry and could not determine an appropriate amount anyway until a decision is made by the other two beneficiaries. Nevertheless, Jerry appeared by counsel in the matter, and it seems that this ruling would constitute res judicata as to the matters litigated.

Jerry appealed the probate court’s order, and this court affirmed. In re Estate of

Burger, No. 12-0002, 2012 WL 5540365, at *6 (Iowa Ct. App. Nov. 15, 2012).

After the case was returned to the probate court, the executor requested

Jerry repay the estate the amount it had overpaid him. Jerry declined, and the

executor subsequently filed a petition on behalf of the estate against Jerry to

recover the monies under a theory of unjust enrichment. The estate asserted

Jerry had “received distributions and benefits from the [estate] consisting

of . . . [o]verpayments in amounts in excess of what he is otherwise entitled,

totaling $106,712.38.”

Jerry filed an answer and he denied, among other things, the probate

court had found he “had received benefits and distributions to which he was not

otherwise entitled.” Additionally, Jerry asserted an affirmative defense to the

estate’s unjust enrichment claim, stating: “Plaintiff’s own negligence resulted in

amounts Plaintiff now claims deficient from the Estate and/or trust and Plaintiff is

liable for its own negligence.” He requested the court deny and dismiss the

petition.

The estate later filed a motion for summary judgment requesting a

judgment be entered in its favor. The estate contended Jerry’s liability for the 5

overpayment was fully and fairly litigated in the prior legal proceedings, and Jerry

was precluded from relitigating his liability for the return of such funds. As a

result of the prior litigation, the estate argued no issue of material fact existed

and summary judgment should be entered in its favor as a matter of law.

Jerry resisted the motion, contending “genuine issues of material fact exist

regarding plaintiff’s unjust enrichment claim and the plaintiff’s negligence in

maintaining and administering estate and trust assets.” He asserted that “[a]ny

benefit purportedly improperly received by [him] was not at the expense of Wells

Fargo, but, instead, because of Wells Fargo’s negligence.” (Emphasis in

original.) Jerry denied the doctrine of issue preclusion applied in the instant case

because the issue of “who is liable or responsible for payments owed the estate,

Jerry or Wells Fargo . . . was not concluded, litigated, or determined in the first

action.”

Following a hearing, the district court entered its ruling granting the

estate’s motion. The court concluded, among other things, that issue preclusion

prevented Jerry from relitigating

the issue of his liability vis-à-vis the estate, which is the plaintiff in this action. As an intervenor and appellant, [Jerry] fully litigated the issue of his receiving overpayments or credits from the estate. The amount of those overpayments and credits was determined first by [the district court] and later by the Iowa Court of Appeals. [Jerry] was represented at and participated in the hearing on the final report that resulted in the trial court determination of his overpayments and credits, and he was the sole appellant on those issues to the Iowa Court of Appeals. He had every opportunity to litigate the issues of his overpayments and credits vis-à-vis the estate. He cannot now litigate those issues again. Factually, then, [Jerry] is foreclosed from further litigating this matter. As a matter of law, the estate is entitled to recover the overpayments and credits from [Jerry]. 6

(Footnote omitted.) Addressing Jerry’s affirmative defenses, the district court

stated:

Each of those affirmative defenses involves some claim of error by Wells Fargo Bank that would arguably subject [it] to some liability in favor of [Jerry]. This action, however, is not brought by Wells Fargo Bank in its individual capacity but rather as the executor of the estate. It is the estate that is the plaintiff in this action, not Wells Fargo Bank. If [Jerry] wants to seek some recovery for contribution or indemnity against Wells Fargo Bank, on whatever theory, he needs to bring an action against the bank, not assert defenses against the estate.

(Footnote omitted.) The next day, the court entered its judgment against Jerry

for the reasons noted in its summary judgment ruling in the amount of

$106,712.38 with interest.

Jerry now appeals.

II. Scope and Standards of Review.

We review the district court’s summary judgment ruling for the correction

of errors at law. Iowa R. App. P. 6.907; Pitts v. Farm Bureau Life Ins. Co., 818

N.W.2d 91, 96 (Iowa 2012). Summary judgment is appropriate when the

pleadings, depositions, answers to interrogatories, admissions on file, and

affidavits show there is no genuine issue of material fact, and the moving party is

entitled to a judgment as a matter of law. Iowa R. Civ. P. 1.981(3); Pitts, 818

N.W.2d at 96. “In other words, summary judgment is appropriate if the record

reveals a conflict only concerns the legal consequences of undisputed facts.”

Pitts, 818 N.W.2d at 96 (citation and internal quotation marks omitted). The court

reviews the record in a light most favorable to the opposing party, and we afford

the opposing party every legitimate inference the record will bear. Id. 7

III. Discussion.

Although Jerry raises three issues on appeal, we only address his third

issue, finding it dispositive. Jerry contends the district court erred in holding the

doctrine of issue preclusion applies in this case to prevent him “from asserting

defenses and presenting evidence regarding Wells Fargo’s negligence in

administering [the estate].” As he did before the district court, he argues the

issue of who is responsible for repaying the estate the amount overpaid to him

has not yet been litigated, and therefore, summary judgment is not appropriate.

Upon our review, we agree with the district court’s assessment.

“Issue preclusion prevents parties from relitigating in a subsequent action

issues raised and resolved in a previous action.” Emp’rs Mut. Cas. Co. v. Van

Haaften, 815 N.W.2d 17, 22 (Iowa 2012) (citation and internal quotation marks

omitted). In a second action, issue preclusion can be offensively used by a

plaintiff “against the defendant to establish an element of his or her claim.” Id.

Four elements must be established by the party raising issue preclusion:

(1) the issue in the present case must be identical, (2) the issue must have been raised and litigated in the prior action, (3) the issue must have been material and relevant to the disposition of the prior case, and (4) the determination of the issue in the prior action must have been essential to the resulting judgment.

Id. If raised offensively, the plaintiff must also establish that the “opposing party

in the earlier action was afforded a full and fair opportunity to litigate the issues”

and that no other circumstances “are present that would justify granting the party

resisting issue preclusion occasion to relitigate the issues.” Id.

This suit was brought by the estate to recover the overpayment retained

by Jerry. An executor, acting for the estate, is permitted to recover for the estate 8

an overpayment where a “beneficiary [has] received certain specific property to

which, under the order of the court, the beneficiary was not legally entitled, and

the order is to the effect that the beneficiary should restore the possession of

such property to the executor.” In re McKinney’s Estate, 199 N.W. 327, 329

(Iowa 1924) (concerning overpayment to beneficiary mistakenly made by

executor). A beneficiary is “not entitled to retain possession of the property that

had been turned over to her by the executor to the amount of the

overpayment . . . . [The beneficiary’s] possession of these assets of the estate

was therefore a wrongful possession.” Id. at 328. “The right of action for the

recovery of such money is not in the personal but in the representative character

of the administrator.” Dillinger v. Steele, 222 N.W. 564, 565 (Iowa 1928).

That Jerry was overpaid by the estate was previously litigated and decided

by the probate court, and it was affirmed by this court. That train left the station

long ago and cannot now be derailed. The district court correctly determined

Jerry was precluded from relitigating the issue of his receipt of overpayments or

credits from the estate. The estate is entitled to recover the overpayment from

Jerry, whether or not Wells Fargo Bank was negligent in the administration of the

estate. Jerry’s affirmative defense is impotent against the estate. Consequently,

the district court was correct in concluding the estate was entitled to recover the

overpayments from Jerry.

Here, the only parties to the litigation are the plaintiff-estate and

defendant-Jerry. Jerry asserts the executor was negligent in administering the

estate. An estate is not ordinarily “liable for the negligent acts of the executor

toward a third person in the course of administering the estate.” In re Estate of 9

Schield, 300 N.W.2d 302, 304 (Iowa 1981). As the trial court so aptly noted: “If

[Jerry] wants to seek some recovery for contribution or indemnity against Wells

Fargo Bank, on whatever theory, he needs to bring an action against the bank,

not assert defenses against the estate.” Jerry did not cross-petition in the bank

as a third-party defendant to this action. Without the bank as a party to the

lawsuit, Jerry had no justiciable claim against the bank in this lawsuit. Having no

justiciable claim before it, the district court appropriately declined to address

Jerry’s allegation the bank was negligent in administering the estate.

Accordingly, we affirm the ruling and judgment of the district court.

AFFIRMED.