Opinion
No. A06-473.
Filed December 19, 2006.
Appeal from the District Court, St. Louis County, File No. 69-P9-04-600635.
Laura S. Weintraub, Johnson, Killen Seiler, A Professional Association, (for appellant Darrell LaDouceur).
Yvonne M. Novak, Gerlach Beaumier, (for respondent Rosanne Suomala).
Considered and decided by TOUSSAINT, Chief Judge; MINGE, Judge; and HUDSON, Judge.
This opinion will be unpublished and may not be cited except as provided by Minn. Stat. § 480A.08, subd. 3 (2004).
UNPUBLISHED OPINION
Appellant, son of decedent, challenges the district court's decision setting aside certain inter vivos transfers of property by the decedent. Because we conclude there were disputes of material fact whether decedent had capacity to transfer the property in question and whether the decedent was unduly influenced to transfer the property, and because after trial there was clear and convincing evidence that decedent lacked capacity and was unduly influenced, we affirm.
FACTS
Decedent Allen LaDouceur died on November 24, 2004, at the age of 86. Decedent's wife of 64 years died on May 29, 2003. Appellant Darrell LaDouceur is one of two surviving children. Rosanne Suomala, decedent's other surviving child, is decedent's personal representative, and in that capacity she is the respondent in this proceeding. Decedent's third child, Arnold LaDouceuer, died on January 12, 2000, leaving children. At the time of decedent's death, Rosanne Suomala was decedent's guardian and conservator.
Until decedent moved to Suomala's Duluth home in July 2003, decedent lived in Brainerd. Appellant resides in Brainerd and assisted both of his parents by driving them to appointments and taking them grocery shopping. On December 10, 2001, decedent executed his last will and testament in the Brainerd office of attorney Richard Ohlsen. Attorney Ohlsen testified that decedent "knew what was going on" during the execution of the will. Because his wife did not survive him, decedent's will divides his personal property "in equal shares" between his surviving children. Rosanne Suomala suggested to her parents that they give appellant a power of attorney so he could assist them in paying their bills. In 2003, decedent and his wife added appellant as a joint tenant on their bank accounts. Appellant indicated that this was done for estate planning purposes and did not constitute "a[n] outright gift." Appellant did not deposit any of his funds in the joint accounts.
Rosanne Suomala first reported that her father was starting to show signs of Alzheimer's disease in 1999. In October 2002, decedent's wife and appellant took decedent for an assessment of his memory loss. The doctor's diagnosis was "dementia, primary progressive, probably of the Alzheimer's type."
After decedent's wife died, appellant withdrew money from the accounts he held jointly with decedent: $45,000 to purchase savings bonds for decedent's grandchildren and $5,000 for appellant's use. After decedent's death, appellant withdrew all of the remaining money in the joint accounts. Although a portion of these funds went to Suomala, several withdrawals went to only appellant. One of these transactions was a check for $19,330.11 to pay off appellant's vehicle loan.
Decedent owned two parcels of real estate: his homestead and his business site. In June 2003, decedent transferred the homestead real estate to appellant, retaining a life estate for himself. The former business site was transferred to appellant outright. Attorney Thomas Borden drafted both deeds. Borden testified that decedent appeared to be of sound mind when he signed the deeds. Rosanne Suomala did not discover this homestead transaction until she and her father attempted to sell the homestead property. In 2003, appellant also transferred title of decedent's motor home to himself, using his power of attorney.
After filing for formal probate of decedent's estate, Rosanne Suomala, in her capacity as personal representative, commenced this action to recover assets she claimed appellant wrongfully held and should be part of decedent's estate. The district court denied appellant's motion for summary judgment and the matter proceeded to a bench trial. After trial, the district court concluded that, at the time the transfers were made, decedent lacked capacity and was unduly influenced by appellant and ordered the property turned over to the estate. This appeal followed. We note that issues relating to decedent's will are not before us on appeal.
DECISION I. Summary Judgment
The first issue is whether the district court erred in denying appellant's motion for summary judgment. When reviewing summary judgment determinations, this court considers "(1) whether there are any genuine issues of material fact and (2) whether the [district] court erred in [its] application of the law." State by Cooper v. French, 460 N.W.2d 2, 4 (Minn. 1990). No genuine issue of material fact exists when "the record taken as a whole could not lead a rational trier of fact to find for the nonmoving party. . . ." DLH, Inc. v. Russ, 566 N.W.2d 60, 69 (Minn. 1997) (quotation omitted). "[T]he party resisting summary judgment must do more than rest on mere averments." Id. at 71. A genuine issue for trial must be established by "substantial evidence." Id. at 69-70 (quotation omitted). Summary judgment is "inappropriate when reasonable persons might draw different conclusions from the evidence presented." Id. at 69.
A. Capacity
In considering a challenge to capacity to establish accounts, this court has determined that the contractual capacity standard is applicable. In re Estate of Nordorf, 364 N.W.2d 877, 880 (Minn.App. 1985). A person must have the mental capacity "to understand, to a reasonable extent, the nature and effect of what he is doing." Id.
The Restatement provides the following comment regarding capacity to make a gift of property: "Because an irrevocable gift depletes financial resources that the donor may yet need, the standard for mental capacity to make an irrevocable gift is higher than that for making a will." Restatement (Third) of Property: Wills and Other Donative Transfers § 8.1 cmt. d (1999). Not only must the donor have the mental capacity necessary to make a will, but the donor "must also be capable of understanding the effect that the gift may have on the future financial security of the donor and of anyone who may be dependent on the donor." Id. § 8.1(c).
Here, respondent presented evidence to show that there were genuine issues of material fact regarding decedent's capacity at the time of appellant's withdrawals from the joint bank account and the real property transfers. The evidence includes a letter dated November 6, 2003, from Barbara Olson, M.D. to Rosanne Suomala and accompanying medical records. Dr. Olson examined decedent on October 24, 2002, and found that decedent was not orientated to the "day, month, or year" during the examination. Dr. Olson indicates, "It was my impression that at that time he was not able to handle his finances and had not been able to for approximately a year at the time of my examination in October of 2002." (Emphasis added.) Dr. Olson noted personality changes in decedent. Dr. Olson's diagnosis was "Dementia, primary progressive, probably of the Alzheimer's type." Because the evidence created a fact question as to whether decedent lacked capacity at the time of both the creation of the joint accounts and the real estate transfers, we conclude that the district court did not err in denying appellant's motion for summary judgment.
B. Undue Influence
To show undue influence, the contestant must show that another person exercised influence at the time the donor made the donative transfer to the degree that the transfer reflects the other person's intent instead of the donor's intent. See York v. Reay (In re Estate of Reay), 249 Minn. 123, 126, 81 N.W.2d 277, 280 (1957) (applying the doctrine in the testamentary context). This undue influence standard applies to all donative transfers. Restatement (Third) of Property: Wills and Other Donative Transfers § 8.3 cmt. a (1999). Neither conjecture nor suspicion suffices to prove undue influence. In re Estate of Anderson, 379 N.W.2d 197, 200 (Minn.App. 1985), review denied (Minn. Feb. 19, 1986). But circumstantial evidence of undue influence is sufficient. Id. The evidence must show that the influence exerted "was so dominant and controlling of the [donor]'s mind that, in making the [transfer], he ceased to act of his own free volition and became a mere puppet of the wielder of that influence." Caldwell v. LeRoy (In re Estate of Congdon), 309 N.W.2d 261, 268 (Minn. 1981) (quotation omitted).
Courts consider several factors when determining whether a person was unduly influenced, including (1) an opportunity to exercise influence; (2) the existence of a confidential relationship between the donor and the person claimed to have influenced the donor; (3) active participation by the alleged influencer in preparing the transfer; (4) an unreasonable disposition; (5) the singularity of the transfer; and (6) inducement of the testator to make the transfer. See Gustafson v. Kilgore (In re Estate of Peterson), 283 Minn. 446, 449, 168 N.W.2d 502, 504 (1969); Teschendorf v. Strangeway (In re Estate of Wilson), 223 Minn. 409, 413, 27 N.W.2d 429, 432 (1947).
Contrary to appellant's assertions, material factual issues existed as to undue influence. The record indicates that appellant lived near decedent, assisted decedent in many activities, served as decedent's power of attorney, and arranged to be added as a joint owner of decedent's bank accounts. At a minimum, appellant had the opportunity to influence, was in a confidential relationship, and actively participated in the transfers. Appellant himself seemed unable to account for or explain his withdrawals from the various bank accounts. Because this evidence created a fact question regarding whether appellant unduly influenced decedent, appellant was not entitled to summary judgment.
II. The Judgment
A. Capacity
The second issue is whether the evidence at trial was sufficient to support the district court's finding that decedent lacked capacity to transfer his property. A contestant has the burden to establish lack of capacity by clear and convincing evidence. In re Estate of Jeruzal, 269 Minn. 183, 197, 130 N.W.2d 473, 482 (1964). Clear and convincing evidence exists when "the truth of the facts asserted is highly probable." Anderson, 379 N.W.2d at 200.
Whether a decedent had capacity is a fact question. See In re Estate of Lange, 398 N.W.2d 569, 572 (Minn.App. 1986). An appellate court will disturb the district court's findings of fact "only if clearly erroneous." In re Estate of Olsen, 357 N.W.2d 407, 411 (Minn.App. 1984), review denied (Minn. Feb. 27, 1985). "Findings of fact are clearly erroneous only if the reviewing court is left with the definite and firm conviction that a mistake has been made." Fletcher v. St. Paul Pioneer Press, 589 N.W.2d 96, 101 (Minn. 1999) (quotation omitted). "If there is reasonable evidence to support the district court's findings, we will not disturb them." Rogers v. Moore, 603 N.W.2d 650, 656 (Minn. 1999). This court will not set aside factual findings even though the district court could have reached a different result. Vangsness v. Vangsness, 607 N.W.2d 468, 474 (Minn.App. 2000). The Minnesota Rules of Civil Procedure require this court to give "due regard . . . to the opportunity of the [district] court to judge the credibility of the witnesses." Minn. R. Civ. P. 52.01.
Here, the district court found "abundant and clear and convincing evidence that, at least from [October 24, 2002] forward until Decedent's death on November 24, 2004, he was not capable of testamentary capacity, gifting, or understanding his financial affairs." In support of this finding, the district court cited appellant's own testimony regarding his father's inability "to attend to his own affairs, including simple tasks such as using the safety catch on a firearm." The court also relied on the medical records showing decedent's "mental confusion, personality changes, [and] progressive memory loss. . . ." With respect to the bank accounts, the district court found that "Decedent clearly lacked the understanding and mental capacity to appreciate the import of making Respondent a joint owner and survivor on the accounts. . . ." Further, decedent's medical records indicate that he had memory problems prior to his 2002 diagnosis of dementia. Family members noticed decedent's memory problems as early as 1999.
Appellant argues that the evidence shows that decedent had capacity, pointing, in part, to the testimony of lawyers involved in different transactions. But the fact that this evidence could support a finding that decedent had capacity does not mean the district court's findings are defective. Vangness, 607 N.W.2d at 474. The district court was in the best position to evaluate appellant's testimony and apparently gave it little credence. The district court indicated that appellant's testimony on "virtually every facet of the situation" was "incredible and at odds" with other evidence. Appellant contends that Suomala's recommendations to her parents that they should begin estate planning activities and her own attempt to help decedent transfer real estate demonstrate her belief that decedent had capacity. But her actions do not estop her present claims and are of limited relevance when determining whether decedent had capacity or was unduly influenced. The district court's determination that decedent lacked capacity has ample evidentiary support.
B. Undue Influence
The final issue is whether the district court erred in finding that decedent was unduly influenced by appellant. Undue influence must be proven by clear and convincing evidence. York, 249 Minn. at 126, 81 N.W.2d at 280. The existence of undue influence is a factual question, and this court will not reverse the district court's determination unless its findings are clearly erroneous. See Balafas v. Angelos (In re Estate of Balafas), 293 Minn. 94, 96, 198 N.W.2d 260, 261 (1972). A finding is clearly erroneous if this court "is left with the definite and firm conviction that a mistake has been committed." Id. (quotation omitted).
The district court stated, "The testimony makes it clear that [appellant] exercised undue influence over Decedent to [appellant]'s financial benefit and gain." The district court also stated
This was not a difficult case. [Appellant's] own words, both on the witness stand and in the medical records, doom his claim that the money and property he acquired from his father shortly before his father's death was knowingly gifted to him by his father for "taking care of him." [Appellant] could provide no justification for his withdrawals of cash from his father's accounts for [Appellant's] benefit, or the transferring of titles to real and personal property from his father to [Appellant]. He provided no appreciable care or services to his father other than assisting his father with paying bills and the like. Clearly the conduct of [Appellant] evinces nothing but undue influence and greed. . . . The presumption that the survivor named in a joint bank account is the owner of the funds has been clearly defeated here, mostly by [Appellant's] own testimony.
There is sufficient evidence in the record to sustain the district court's finding that decedent was unduly influenced by appellant. Appellant was in a position to exercise influence. He lived near decedent, assisted decedent in many daily functions, served as decedent's power of attorney, and also was a joint holder of decedent's bank accounts. Appellant was unable to explain his reason for many of the withdrawals and the real estate transfers, other than contending that they were part of an ongoing estate plan. Appellant provided no evidence of this ongoing estate plan, other than his own testimony. During her testimony, Suomala indicated that decedent told her that "[appellant] was stealing from him," but that decedent could not remember what appellant was taking. Suomala also testified that decedent told her, "[appellant]'s taking all my money. . . ."
The district court did not find appellant's testimony credible. Because the district court's determination that decedent was unduly influenced has ample evidentiary support, we affirm.