Will & Appt of the Estate of: William C. Mackey, Dec'd

7 N.W.3d 137

• Court: Court of Appeals of Minnesota
• Decided: April 29, 2024
• Docket: a231675
• Status: Published

Opinion

STATE OF MINNESOTA IN COURT OF APPEALS A23-1675

Will & Appt of the Estate of: William C. Mackey, Dec’d.

Filed April 29, 2024 Reversed and remanded Connolly, Judge

Washington County District Court File No. 82-P2-03-006722

Michael Kemp, Aaron Ferguson Law, Roseville, Minnesota; and

Paul D. Funke, Funke Law Office, St. Paul, Minnesota (for appellants Thomas Mackey and Catherine Arndt)

Thomas R. Haugrud, Martin & Squires, P.A., St. Paul, Minnesota (for appellant First Fiduciary Corporation)

John Barragry, Barragry Law LLC, North Oaks, Minnesota (for respondent M. Denise Mackey-Loya)

Considered and decided by Connolly, Presiding Judge; Segal, Chief Judge; and

Reilly, Judge

SYLLABUS

I. A personal representative may be removed for cause under Minn. Stat.

§ 524.3-611 (2022), but such removal does not discharge the personal representative from

liability for transactions or omissions occurring before removal.

II. Unless a claim against a personal representative for breach of fiduciary duty

has previously been barred by adjudication, or excepted as provided in the closing

 Retired judge of the Minnesota Court of Appeals, serving by appointment pursuant to Minn. Const. art. VI, § 10. statement, the statute of limitations for such claims, as set forth in Minnesota Statutes

section 524.3-1005 (2022), is six months after the filing of the closing statement.

OPINION

CONNOLLY, Judge

In this probate dispute, appellants argue that the district court erred in determining

that their petition was time-barred under Minn. Stat. § 541.05, subd. 1(1) (2022), because

the applicable statute of limitations is Minn. Stat. § 524.3-1005, and their petition was

timely under that statute. Because we agree, we reverse and remand.

FACTS

William C. Mackey (decedent) passed away in July 2003. Pursuant to his will, the

decedent left his estate in equal shares to his six children, all of whom survived him. The

decedent’s six children include William J. Mackey, respondent M. Denise Mackey-Loya,

and appellants Catherine A. Arndt and Thomas P. Mackey.1

In October 2003, respondent filed an application for informal probate of will and

for informal appointment of personal representative. Consistent with the terms of the

decedent’s will, respondent was appointed personal representative of the decedent’s estate.

But in March 2006, a petition for formal proceeding to compel accounting was signed by

Catherine and Thomas and filed with the district court. The petition invoked the district

court’s jurisdiction and converted the proceeding to a formal unsupervised estate.

1 Apart from respondent, the decedent’s children will be referred to by first name for ease of reference.

2 On May 30, 2006, an order to compel accounting was filed requiring respondent to

file an inventory of assets and to complete a detailed accounting from the date of her

appointment to the date of the accounting. Respondent then filed an interim account on

September 22, 2006, which covered her administration of the estate from her appointment

in November 2003, through September 2006.

In January 2014, a petition was filed by Catherine and Thomas to compel accounting

and remove respondent as personal representative. Following a hearing, the district court

found cause for removing respondent as personal representative based on her failure to

(1) “communicate with beneficiaries”; (2) “timely pay taxes and utilities for real property

held by the estate”; (3) “make payments on [a] mortgage taken out on real property of the

estate resulting in foreclosure”; (4) “render estate assets productive”; (5) “file necessary

income tax returns for the estate”; and (6) “close the estate and distribute the property in a

timely manner.” The district court also ordered respondent to “prepare, serve and file a

complete and detailed accounting from the date of her appointment to the date assets are to

be turned over to the Successor Personal Representative.” Finally, the district court

appointed William as the successor personal representative of the estate.

In April 2014, respondent filed a final accounting as directed. All interested parties

were properly served with copies of the final accounting and respondent took no action on

behalf of the estate after her submission of the final accounting. Respondent also never

filed a closing statement. Respondent, however, was not, and still has not been, discharged

as personal representative.

3 Seven years later, in April 2021, William was removed as personal representative

because he “no longer ha[d] the capacity to perform his duties as personal representative.”

At the same time, appellant First Fiduciary Corporation (FFC)2 was appointed as the

second successor personal representative of the estate. FFC subsequently filed a petition

to hear and examine respondent’s 2006 interim account and 2014 final account, to

determine liability between respondent and the estate, and to surcharge her to the extent of

her liability. The petition also sought to “[d]etermine the liability if any between the Estate

and William . . . and surcharge [him] to the extent of his liability.” FFC later filed a detailed

objection to respondent’s accounting, which was joined by Catherine and Thomas.

Respondent moved to dismiss FFC’s petition and objections on the ground that they

were “time-barred by the statute of limitations or alternatively, should be dismissed

pursuant to the equitable doctrine of laches.”3 Following a hearing, the district court filed

an order on August 29, 2023, rejecting appellants’ argument that the applicable statute of

limitations is Minn. Stat. § 524.3-1005, because that statute “addresses the rights of

‘successors’ and ‘creditors,’ not second successor personal representatives like FFC.”

Instead, the district court determined that the six-year statute of limitations contained in

Minn. Stat. § 541.05, subd. 1(1) was applicable to appellants’ petition. The district court

then determined that FFC’s petition is time-barred by the applicable six-year statute of

limitations because the district court’s 2014 order removing respondent as personal

2 Catherine, Thomas, and FFC will collectively be referred to as “appellants.” 3 The portion of FFC’s petition relating to the administration of the estate by William as first successor personal representative was resolved through mediation.

4 representative “noted [the] breaches of [respondent’s] fiduciary duties and put interested

parties on notice that the statute of limitations for breach-of-duty claim had begun.” The

district court, therefore, granted respondent’s motion to dismiss without discussing

appellants’ argument related to the equitable doctrine of laches.

Catherine and Thomas filed a notice of appeal and FFC later filed a notice of related

appeal. By order dated December 5, 2023, this court designated Catherine, Thomas, and

FFC as appellants.

ISSUES

I. Is this appeal properly before this court?

II. Did the district court err in dismissing appellants’ petition as time-barred under the statute of limitations in Minn. Stat. § 541.05, subd. 1(1)?

ANALYSIS

I. This appeal is properly before this court.

Respondent argues first that this appeal is untimely, or in the alternative, premature.

We disagree. Under the rules of appellate procedure, “[a]n appeal may be taken to the

Court of Appeals . . . from such other orders or decisions as may be appealable by statute.”

Minn. R. Civ. App. P. 103.03(j). The appeals of probate proceedings are governed by

Minnesota Statutes section 525.71 (2022), and subpart (a) of that section contains a list of

17 specifically appealable orders. In re Est. of Figliuzzi, 979 N.W.2d 225, 230 (Minn.

2022). One of these appealable orders is “an order permitting, or refusing to permit, the

filing of a claim, or allowing or disallowing a claim or counterclaim, in whole or in part,

when the amount in controversy exceeds $100.” Minn. Stat. § 525.71(a)(5). And an appeal

5 may be taken from “an order allowing, or refusing to allow, an account of a representative

or any part of it when the amount in controversy exceeds $100.” Minn. Stat. § 525.71(a)(9).

The district court’s August 29, 2023, order falls within these two appeal provisions.

Because the August 29, 2023, order is independently appealable under Minn. Stat.

§ 575.71(a)(5), (9), this appeal is not premature.

This appeal is also timely. Minn. Stat. § 525.712 (2022) provides that, if a party has

served written notice of filing of an order, an appeal may be taken pursuant to the rules of

civil appellate procedure. If a party has not served written notice of filing of the order, an

appeal may be taken within six months after filing of the order. Minn. Stat. § 525.712.

The rules of appellate procedure provide that an appeal may be taken from an appealable

order within 60 days after service by any party of written notice of the filing of the order.

Minn. R. Civ. App. P. 104.01. Because no party has served written notice of the district

court’s order, the six-month deadline in section 525.712 applies here instead of the 60-day

deadline in rule 104.01. The record reflects that this appeal was timely filed within six

months after the district court’s August 29, 2023 order. Therefore, this appeal is properly

before us.

II. The district court erred in dismissing appellants’ petition as time-barred.

Appellants challenge the district court’s decision to dismiss their petition as time-

barred under Minn. Stat. § 541.05, subd. 1(1). We review de novo “the construction and

application of a statute of limitations.” Sipe v. STS Mfg., Inc., 834 N.W.2d 683, 686 (Minn.

2013) (quotation omitted). We also apply a de novo standard of review to issues involving

6 statutory interpretation. White Bear Lake Restoration Ass’n ex rel. State v. Minn. Dep’t of

Nat. Res., 946 N.W.2d 373, 379 (Minn. 2020).

“A personal representative is a fiduciary who . . . is under a duty to settle and

distribute the estate of the decedent in accordance with the terms of any probated and

effective will and applicable law, and as expeditiously and efficiently as is consistent with

the best interests of the estate.” Minn. Stat. § 524.3-703(a) (2022). “If the exercise of

power concerning the estate is improper, the personal representative is liable to interested

persons for damages or loss resulting from breach of fiduciary duty to the same extent as a

trustee of an express trust.” Minn. Stat. § 524.3-712 (2022); In re Estate of Neuman, 819

N.W.2d 211, 216 (Minn. App. 2012). A personal representative may also be removed for

cause at any time. Minn. Stat. § 524.3-611. But, although the removal of a personal

representative terminates the representative’s authority to represent the estate in pending

or future proceedings, it does not discharge the personal representative from liability for

transactions occurring before termination. Minn. Stat. § 524.3-608 (2022).

“Issues of liability as between the estate and the personal representative individually

may be determined in a proceeding for accounting, surcharge or indemnification or other

appropriate proceeding.” Minn. Stat. § 524.3-808(d) (2022). Here, pursuant to section

524.3-808, FFC filed a petition, which Catherine and Thomas joined, to determine

respondent’s liability and to surcharge her to the extent of her liability. The district court

dismissed the petition as time-barred under the statute of limitations contained in section

541.05, subdivision 1(1). That statute provides that: “[e]xcept where the Uniform

Commercial Code otherwise prescribes, the following actions shall be commenced within

7 six years: (1) upon a contract or other obligation, express or implied, as to which no other

limitation is expressly prescribed.” Minn. Stat. § 541.05, subd. 1(1).

Appellants argue that the district court erred in dismissing the petition as time-

barred because section 541.05 is not the applicable statute of limitations. Instead, they

argue that the applicable statute of limitations is found in Minn. Stat. § 524.3-1005 (2022).

They argue further that, because the statute of limitations contained in section 524.3-1005

has not yet begun to run, the petition is not time-barred.4 We agree.

This court has referred to section 541.05, as the “general statute of limitations.”

Twinco Romax Auto. Warehouse, Inc. v. Olson Gen. Contractors, Inc., 643 N.W.2d 338,

340 (Minn. App. 2002), rev. denied (Minn. July 16, 2002). By its plain language, that

general statute of limitations applies only to actions upon a contract or other obligation

when “no other limitation is expressly prescribed.” Minn. Stat. § 541.05, subd. 1(1)

(emphasis added). Therefore, our first step is to determine whether another statute of

limitations is applicable. See Park Nicollet Clinic v. Hamann, 808 N.W.2d 828, 831 (Minn.

2011) (stating that, when reviewing the construction and application of a statute of

limitations, the first step is to “determine which statute of limitations applies to the claims

asserted”).

4 In its main brief, FFC argued first that its petition “is part of the on-going administration of the estate and is not subject to any statute of limitations or other bar date.” But this argument is being raised for the first time on appeal. We generally do not consider issues that were not presented to or decided by the district court. Thiele v. Stich, 425 N.W.2d 580, 582 (Minn. 1988). As such, FFC’s argument is not properly before us. Moreover, as explained below, we conclude that the statute of limitations prescribed in section 524.3- 1005 is applicable in this case, and that the petition was timely filed under that statute.

8 The petition in this case asserts that respondent breached her fiduciary duty as

personal representative of the estate. Based on their petition, appellants contend that the

applicable statute of limitations is contained in section 524.3-1005. That statute provides:

Unless previously barred by adjudication and except as provided in the closing statement, the rights of successors and of creditors whose claims have not otherwise been barred against the personal representative for breach of fiduciary duty are barred unless a proceeding to assert the same is commenced within six months after the filing of the closing statement. The rights thus barred do not include rights to recover from a personal representative for fraud, misrepresentation, or inadequate disclosure related to the settlement of the decedent’s estate.

Minn. Stat. § 524.3-1005 (emphasis added).

Respondent argues, and the district court agreed, that section 524.3-1005 is not

applicable because the statute “addresses the rights of ‘successors’ and ‘creditors,’ not

second successor personal representatives like FFC.” We agree that neither FFC nor

Catherine nor Thomas are creditors. But Catherine and Thomas are successors because

they are entitled to property of the decedent under his will. See Minn. Stat. § 524.1-201(55)

(Supp. 2023) (defining “successors” as “those persons, other than creditors, who are

entitled to property of a decedent under the decedent’s will”).

Moreover, although FFC is not a successor because it is not entitled to property of

the decedent, the applicability of section 524.3-1005 is not dependent on whether FFC is a

successor. Rather, section 524.3-1005 applies to proceedings related to the “rights of

successors” against the personal representative for breach of fiduciary duty. See Minn.

Stat. § 524.3-1005. In other words, as FFC points out, the district court improperly focused

9 on the word “successors” instead of the phrase “rights of successors.” FFC, as second

successor personal representative, is the personal representative of the estate, and FFC is a

fiduciary acting for the best interests of the successors of the estate. See Uniform Probate

Code § 3-703(a) (stating that a “personal representative is a fiduciary” required to act in

the best interests of the successors to the estate). As the personal representative, FFC was

“asserting on behalf of the estate and all successors the ‘rights of successors.’” Because

the petition was asserting the “rights of successors,” section 524.3-1005 is applicable to

the petition.

Respondent also argues that section 524.3-1005 is not applicable because the plain

language of the statute “contemplates that there can be a barring of claims for breaches of

fiduciary duty” under a different statute. Specifically, respondent refers to the following

language from Minn. Stat. § 524.3-1005: “the rights of successors and of creditors whose

claims have not otherwise been barred against the personal representative for breach of

fiduciary duty.” (Emphasis added.) She contends that this language refers to claims barred

under Minn. Stat. § 541.05, subd. 1(1), and that, because appellants’ claims are barred

under that statute, Minn. Stat. § 524.3-1005 is not applicable.

We are not persuaded. Respondent’s argument violates the canon of statutory

construction that the more specific statute controls. See Minn. Stat. § 645.26, subd. 1

(2022) (providing that a more specific statutory provision controls over a general

provision); see also Connexus Energy v. Comm’r of Revenue, 868 N.W.2d 234, 242-43

(Minn. 2015) (applying the canon that, when a conflict exists between two statutory

provisions, specific provisions in a statute control over general provisions to hold that

10 statutory limitations period for erroneous refunds applied, rather than more general

statutory limitations period). As addressed above, the more general statute here is Minn.

Stat. § 541.05, subd. 1(1), and it provides that the six-year statute-of-limitations period

applies unless “no other limitation is expressly prescribed.” (Emphasis added.) The

limitation period for claims against a personal representative for breach of fiduciary duty

is expressly provided in Minn. Stat. § 524.3-1005, making it the more specific statute.

Because section 524.3-1005 is the more specific statute of limitations, it applies to

appellants’ petition.

Under section 524.3-1005, the statute of limitations for proceedings against a

personal representative for breach of fiduciary duty is six months after filing of the closing

statement. Minn. Stat. § 524.3-1005; May v. First Nat’l Bank of Grand Forks, 427 N.W.2d

285, 289 (Minn. App. 1988), rev. denied (Minn. Oct. 26, 1988). Here, the parties do not

dispute that no closing statement has been filed in this matter. Nor do the parties dispute

that there has been no prior adjudication of appellants’ claims in this matter. See Minn.

Stat. § 524.3-1005 (acknowledging that claims against a personal representative for breach

of fiduciary duty are barred if they were “previously barred by adjudication”). Therefore,

appellants’ petition is not time-barred by the applicable statute of limitations.5

5 FFC also “seeks in the interest of justice an Order from this Court determining that its Petition is not barred by the equitable doctrine of laches.” Because this issue was never decided by the district court, it is not properly before us, and we decline to address it. See Thiele, 425 N.W.2d at 582; see Brodsky v. Brodsky, 733 N.W.2d 471, 480 (Minn. App. 2007) (declining to address laches argument where it was not properly before the court).

11 DECISION

Appellants’ petition, which seeks to enforce the rights of successors for the personal

representative’s alleged breach of fiduciary duty, is not time-barred under the applicable

statute of limitations set forth in Minn. Stat. § 524.3-1005, because the petition was filed

before the filing of the closing statement, and the claims were not previously barred by

adjudication. Accordingly, we reverse and remand for proceedings consistent with this

opinion.

Reversed and remanded.