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In re Estate of Boland

Supreme Court of Montana

October 1, 2019

IN RE THE ESTATE OF EDWARD M. BOLAND, Deceased,
v.
CHRIS BOLAND, BARRY BOLAND, ED BOLAND CONSTRUCTION, INC., and NORTH PARK INVESTMENTS, LLC, Respondents and Appellees. PAUL BOLAND and MARY GETTEL, as heirs of the Estate of Dixie L. Boland, Petitioners and Appellants,

          Submitted on Briefs: June 5, 2019

          APPEAL FROM: District Court of the Eighth Judicial District, In and For the County of Cascade, Cause No. ADP-15-125 Honorable Gregory G. Pinski, Presiding Judge

          For Appellants: Thomas E. Towe, Towe, Ball, Mackey, Sommerfeld, & Turner, P.L.L.P., Billings, Montana

          For Appellees: Jason T. Holden, Katie R. Ranta, Faure Holden Attorneys at Law, P.C., Great Falls, Montana

          OPINION

          Laurie McKinnon Justice

         ¶1 Paul Boland (Paul) and Mary Gettel (Mary), as heirs of the Estate of Edward M. Boland (Estate), appeal the denial of their request to recover assets for the Estate, as well as various other related orders, entered in the Eighth Judicial District Court, Cascade County. We affirm and restate the issues as follows:

1. Were Paul and Mary entitled to a hearing on their Petition for Order to Recover Assets?
2. Did the District Court correctly conclude that the allegations of bias made against it by Mary and Paul were frivolous?
3. Did the District Court err by imposing Rule 11 sanctions against Paul and his attorney?
4. Should attorney fees and costs be assessed against Paul and Mary in this appeal?

         FACTUAL AND PROCEDURAL BACKGROUND

         ¶2 This appeal arises from two cases, now consolidated, involving the same underlying probate of the Estate. Ed Boland (Ed) died on December 26, 2014, and was survived by his five children-Barry, Chris, Jacquie, Mary, and Paul-and wife, Dixie Boland (Dixie). Dixie died on January 4, 2016, and her estate is being formally probated.[1] In his Will, Ed nominated his two sons, Chris and Paul, to be Co-Personal Representatives of his Estate.

         ¶3 Ed founded Ed Boland Construction, Inc., a successful construction company. Chris and Barry, Ed's two oldest sons, worked for Ed Boland Construction, Inc., and now own it together. Chris and Barry also own North Park Investments, LLC, a real estate company. The origins of the instant dispute concern a claim by Paul and Mary that Chris, Barry, and their entities owed substantial sums of money to Ed at the time of his death. Paul and Mary claim the debt owed to the Estate by Chris and Barry was in the form of: (1) unpaid wages, (2) loans, (3) life insurance proceeds, and (4) undervalued stock.

         ¶4 On November 30, 2017, Paul filed a Petition for Order to Recover Assets (Petition) and a supporting brief and exhibits. The exhibits included: (1) a printout of all transactions made by Ed between 2007 and 2014; (2) correspondence between Barry and the accountant for Ed Boland Construction, Inc., in which it is discussed that an $8, 000 liability will be included on the Estate as owed by Chris and Barry; (3) some notes written by Ed; (4) Chris's responses to some of Paul's discovery requests; (5) a 2017 balance statement from the Estate; and (6) the Ed Boland Construction, Inc., shareholders's agreement demonstrating the total common stock issued as 100 shares.

         ¶5 Chris opposed Paul's Petition, denying that any money was owed to Ed other than "$8, 000 for his 2014 tax liability" and $6, 165.91 for a development project, which had already been paid into the Estate account. Paul next sent Chris a demand letter requesting Chris's consent to file a complaint as Co-Personal Representative to recover the funds Chris and Barry allegedly owed the Estate. Not surprisingly, Chris opposed the request and attached 125 pages of exhibits to his response in support of his conclusion that Ed was not owed any money by Chris, Barry, or any of their affiliated entities. These exhibits included: (1) articles of incorporation for Ed Boland Construction, Inc., authorizing, but not issuing, 500 shares; (2) the Ed Boland Construction, Inc., shareholders's agreement demonstrating the total common stock issued as 100 shares; (3) stock certificates demonstrating the amount of shares owned at various times by Chris, Barry, and Ed; and (4) a 72-page report addressing the fair market value of Ed's non-controlling common stock interest in Ed Boland Construction, Inc., prepared by Anderson ZurMuehlen & Co., P.C. This report concluded that, based on the percentage of ownership in Ed Boland Construction, Inc., the value of Ed's interest was $278, 100 and, accordingly, the Estate was overpaid when it received $400, 000 for its interest in Ed Boland Construction, Inc.

         ¶6 Paul filed a Reply in which he asked for a hearing but did not respond in substance to any of the exhibits provided by Chris.

         ¶7 Pursuant to § 72-3-607, MCA, which requires a personal representative to prepare an inventory of all property owned by the decedent at the time of death within nine months of appointment, Judge Pinski ordered the parties to file inventories with the District Court. However, Judge Pinski expedited the timeline for filing inventories noting "The inventory will be necessary in resolving the Petition for Order to Recover Assets." Judge Pinski required the parties to file inventories within 30 days of his order, which was dated February 2, 2018. Chris filed his inventory on March 2, 2018. Paul filed his inventory on March 8, 2018, after the deadline set forth in the order.

         ¶8 On March 13, 2018, the District Court issued a written order denying the Petition. The court did not hold a hearing before making its ruling, relying instead on the pleadings and substantial documentation filed in support of the pleadings. In its order, the District Court addressed every asset for which Paul provided details and reasoned largely the same for each item, in that it found there was no evidence to substantiate the existence of any debt owed to the Estate. The District Court concluded there was affirmative evidence indicating the debt did not exist and no evidence to substantiate the debt did exist. The District Court held, "In summary, the Court is satisfied with the evidence provided by Chris to explain each of the categories challenged by Paul. There are no assets which need to be recovered by the Estate of Edward Boland."

         ¶9 On April 2, 2018, Paul filed a motion and brief pursuant to M. R. Civ. P. 60(b) requesting that the court set aside its March 13, 2018 order. Paul, through his attorney Thomas E. Towe (Towe), alleged the order contained "three serious errors or mistakes." Paul alleged: (1) he was entitled to a hearing on his Petition; (2) he timely filed his inventory and the court erred in failing to consider it; and (3) the court erred by concluding that a $230, 000 payment was made by North Park Investments, LLC, and not by Ed Boland Construction, Inc. Importantly for purposes of this appeal, Paul and Towe averred in their motion that Judge Pinski was biased. We set forth exactly what Towe and Paul represented in their motion:

Is there a question of lack of impartiality on the part of the Judge of this Court?

Paul Boland has raised the question of whether or not the presiding Judge of this case, Judge Pinski, is or can be totally impartial. He fully understands that decisions of the Court cannot be the basis of a determination of bias or prejudice. Nevertheless, the 3 huge mistakes made by the Judge in this case seem so obviously in error that a further inquiry may be necessary. Paul is aware that Chris Boland or his corporation has made a significant contribution to Judge Pinski's campaign fund during his election bid. In addition, Paul has seen [ ] Judge Pinski at the Peak, a gymnasium which Chris Boland and his previous attorney, Gary Bjelland, often go to exercise. Paul is not aware of any improper communication regarding this case nor any other indication of impartiality apart from the decisions of the Court, but if there is any such matters it would be appropriate for Judge Pinski to disclose those facts so that a reasonable determination of impartiality can be made. Clearly if there are some facts that may indicate a lack of impartiality, Judge Pinski may want to recuse himself from further participation in this case. See the Supreme Court's insistence that a Judge should disclose circumstances that could potentially cause his impartiality to be questioned. Draggin' Y Cattle Co., Inc. v. Addink, 2016 MT 98, ¶ 31, 383 Mont. 243, ¶ 31, 371 P.3d 970. ¶ 31 (2016).

         Chris responded that Towe and Paul were making unsubstantiated factual allegations against the court and that Towe and Paul should be required to provide evidentiary support for their allegations.

         ¶10 On April 16, 2018, the District Court issued an order in which it advised both parties that it must address the allegations before it could resume acting on the merits of the case. Accordingly, the District Court carefully outlined for Towe the appropriate action available to a party when it believes a tribunal is not impartial: file a bias and prejudice petition pursuant to § 3-1-805, MCA. The court also allowed Towe to supplement his motion with evidence to support his allegations or Towe could withdraw his brief, "with an apology to the Court for impugning its integrity without sufficient factual support."

         ¶11 On April 25, 2018, Towe and Paul filed a Response of Counsel to Court's order as well as a Fourth Affidavit of Paul Boland. Towe's response did not comply with the court's instructions and essentially reiterated the same allegations. Towe and Paul maintained they never accused Judge Pinski of being biased or prejudiced but were instead concerned with the "appearance of impartiality." Although "bias" and "prejudice" clearly appear in Towe's brief, Towe asserted "the words bias or prejudice do not appear in Paul's Brief." Although acknowledging that Judge Pinski could not be disqualified based on the rulings he made during the proceeding, Paul's affidavit recited the numerous orders Judge Pinski made "which took us by surprise" and had "serious errors."

         ¶12 Towe never filed a disqualification motion and affidavit pursuant to § 3-1-805, MCA. Additionally, the District Court concluded Towe and Paul's response was neither an apology nor evidence in support of their bias allegations against the court. As a result, the District Court held a show cause hearing on June 21, 2018. At the hearing, Towe was given the opportunity to present additional testimony and argument to substantiate his allegations against Judge Pinski. Towe's additional evidence was witness Young Boland, Paul's wife, who testified they saw Judge Pinski at the Peak Health and Wellness Center on February 7, 2018, when she was there with Paul. Young indicated they saw Judge Pinski talking on the phone and he looked "upset." Judge Pinski did not greet them or say anything to them. In an unsuccessful effort to cast his bias allegations in a different light, Towe represented to the court that he did not assert Judge Pinski was biased but was merely attempting to follow this Court's rulings in Draggin' Y Cattle Company v. Addink, 2016 MT 98, 383 Mont. 243, 371 P.3d 970. Towe maintained he was simply "suggesting" the District Court should make any disclosures of bias so that the timeliness of disqualifying Judge Pinski did not become an issue. Towe again claimed that he was "taken aback" by the District Court's unfavorable rulings against his client, Paul.

         ¶13 The District Court listened to Towe's statement, before admonishing him at length. The court reminded Towe, an attorney with 56 years in practice, that an appeal is the proper avenue for disagreeing with a court's ruling, not levelling assertions of unethical conduct against the court. Judge Pinski explained that a judge has an "affirmative obligation" under the rules of judicial conduct, requiring judges to make disclosures when there is something to disclose. Judge Pinski explained, "I have nothing to disclose here."

         ¶14 Following the show cause hearing, but prior to Judge Pinski entering his written order addressing the Rule 11 violations, Paul and Mary filed, on June 29, 2018, a Notice of Appeal. On July 17, 2018, the District Court issued its Findings of Fact and Conclusions of Law Re: Rule 11 and § 37-61-421, MCA (Rule 11 Order). In its Rule 11 Order, the District Court produced campaign donation lists showing that no member of the Boland family ever contributed to Judge Pinski's campaign in any amount. The District Court noted, however, that James Towe, Towe's son, had contributed to Judge Pinski's campaign. The District Court also produced a printout from Peak Fitness, which established that Judge Pinski was not present at Peak Fitness on February 7, 2018, the date Young testified she saw him on his phone. The court stated, "it is difficult for this Court to imagine a more absurd, ludicrous and downright silly allegation of bias and prejudice." The court concluded that by asserting unsubstantiated factual allegations of bias which were meritless and frivolous, Paul and Towe violated M. R. Civ. P. 11 (b) and that attorney fees were appropriate pursuant to § 37-61-421, MCA. Next, the District Court scheduled a sanctions hearing to determine: (1) what sanction suffices to deter repetition of the conduct or comparable conduct by others similarly situated; and (2) the amount of excess costs, expenses, and attorney fees incurred.

         ¶15 At the sanctions hearing on September 6, 2018, Towe recognized that he should have investigated further the allegations he made, stating, "I fully acknowledge that we could have and should have investigated those matters that we did raise further." Towe, however, renewed his assertion that he thought he had a legal basis under the Rules of Judicial Conduct and this Court's decision in Draggin' Y, to proceed as he did. Towe argued against any sanctions being imposed. Chris urged the court to sanction Towe and Paul, asserting that all probate proceedings in this matter were brought to a standstill based on the actions of Towe and Paul. Chris further maintained Paul was unfit to be Co-Personal Representative and that the levelling of false allegations against the court went to the heart of a personal representative's fiduciary duty to investigate and ensure the accuracy and legitimacy of all matters of estate administration. Chris argued that the court should remove Paul as Co-Personal Representative and further asserted that such an action was within the District Court's jurisdiction, regardless of the pending appeal before this Court. Towe responded that, while he "certainly accepts the court's jurisdiction" to continue with the sanction proceedings, the removal of Paul as Co-Personal Representative went to much of the substance of the probate and, consequently, the District Court did not have jurisdiction to remove Paul as a Co-Personal Representative.

         ¶16 The District Court imposed the following sanctions: (1) removal of Paul as Co-Personal Representative; (2) Paul and Towe were held jointly and severally liable for attorney fees in the amount of $13, 240.55 payable to Chris and $2, 310 payable to Gary Bjelland; and (3) Paul and Towe were held jointly and severally liable for a $2, 000 payment to the Cascade County Law Clinic.

         ¶17 Although Paul and Mary identify the District Court's order denying their Petition as the order from which they appeal, the only error alleged by Paul and Mary respecting the Petition concerns the failure of the District Court to conduct a hearing prior to making its ruling. We think it significant to note that the instant appeal therefore is primarily about the bias allegations made in the motion to set aside the ...


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