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In re Estate of Beals

Supreme Court of Montana

June 20, 2017

IN THE MATTER OF THE ESTATE OF CLEO M. BEALS, Deceased.

          Submitted on Briefs: May 17, 2017

         APPEAL FROM: District Court of the Sixteenth Judicial District, In and For the County of Rosebud, Cause No. DP 2008-18 Honorable Michael B. Hayworth, Presiding Judge

          For Appellant: Thomas E. Towe, Towe, Ball, Mackey, Sommerfeld & Turner, PLLP, Billings, Montana

          For Appellee: Brandon JT Hoskins, Moulton Bellingham PC, Billings, Montana

          OPINION

          Beth Baker Justice

         ¶1 Pursuant to Section I, Paragraph 3(c), Montana Supreme 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 number, and disposition shall be included in this Court's quarterly list of noncitable cases published in the Pacific Reporter and Montana Reports.

         ¶2 Byron "Bus" Beals and Bonny Rieckmann appeal two orders from the Sixteenth Judicial District Court: one from October 2016 denying their request for a hearing, dismissing their objections, and accepting a final accounting in the Estate of their mother; and one from June 2014 striking their expert witness report and quashing their request for production of documents. We affirm.

         ¶3 W.E. "Dude" Beals died in 1994. His wife, Cleo Beals, and their three children, Bob Beals, Bus, and Bonny, survived him. Dude's will left all of his property to Cleo, with the remainder upon her death to be distributed equally among the three children. Much of Dude's property, however, passed outside of his will to Cleo and the children through non-testamentary transfers, such as life insurance policies and property placed in joint tenancy.

         ¶4 Cleo died in 2007. Her will was submitted to probate, and the District Court appointed her son Bob as personal representative. Cleo's will provided that her property pass to her three children equally. Bob submitted an accounting of the Estate. In response, Bus and Bonny alleged that Bob had failed to include several accounts, including various funds and life insurance policies, that Dude had passed to Bob through non-testamentary transfers.

         ¶5 The case proceeded to a bench trial in May 2012. Prior to trial, Bus and Bonny petitioned the court to order Bob to place the accounts and their "reasonably expected earnings" from "the date they were removed from Cleo" into the inventory of the Estate. At trial, Bus and Bonny presented expert witness testimony estimating the present value of the accounts, taking into consideration the "expected earnings." Bus and Bonny also asked the court to order Bob to include in the Estate inventory the accounts "or their proceeds."

         ¶6 Presiding District Judge Hegel issued an Order in December 2012 (Hegel Order) placing seven accounts into a constructive trust, "subject to equal distribution among the three Beals children." The Hegel Order identified each account by name and included its monetary value at or near the time of Dude's death. The Order stated that the seven accounts "or their values, together with interest at the rate of 10% per annum from Cleo's date of death until paid, are payable into the above-entitled estate for distribution and shall constitute an equitable set-off against any distribution to Bob." Bob appealed the Hegel Order, and we affirmed. In re Estate of Beals, 2013 MT 290N, No. DA 13-0088, 2013 Mont. LEXIS 410 (hereafter Beals I).

         ¶7 In December 2013, following remand, Bob filed a Supplemental Accounting of the Estate that included the amounts of the seven accounts as stated in the Hegel Order plus interest at ten percent per year from the time of Cleo's death-a period of 2, 300 days. Bob provided a "set-off" of his 1/3 share of the Estate and agreed to pay $3, 927.19 into the Estate to fulfill the requirements of the constructive trust.

         ¶8 Bus and Bonny then sought production of documents relating to the seven accounts. They submitted an expert witness report estimating the likely increases in value of the seven accounts between the time of Dude's death and the time of Cleo's death. Then-presiding District Judge Huss quashed the request for production of documents and struck the expert report in June 2014 (Huss Order). He noted that the Hegel Order had clearly rejected Bus's and Bonny's argument that they were entitled to the "reasonably expected earnings" on the accounts from the time of Dude's death. Judge Huss determined that the Hegel Order's conclusions were "res judicata in this matter" and were "not subject to further determination or alteration."

         ¶9 Bob filed a "2nd Supplemental/Final Accounting" in May 2016. Bus and Bonny objected on the grounds that Bob had failed to pay all the interest on the accounts as required by the Hegel Order, that he had violated his fiduciary duty by failing to invest the funds in an interest-bearing account after filing his December 2013 Supplemental Accounting, and that the Huss Order erroneously interpreted the Hegel Order as not requiring "the inclusion ...


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