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In re Estate of Adams

Court of Appeals of Oregon

October 8, 2014

In the Matter of the Estate of Archie Q. Adams, Sr., Deceased. ARCHIE Q. ADAMS, JR.; GLEN A. ADAMS; and JEANNE WOLLMAN, individually, Appellants,
WEST COAST TRUST, as Personal Representative of the Estate of Archie Q. Adams, Sr., and as Trustee for the trusts established under the will of Archie Q. Adams, Sr.; JAMES VAN HORN; and NORTHWEST NATURAL GAS COMPANY, Respondents

Argued and Submitted November 15, 2012

Linn County Circuit Court. 19209A. Carol R. Bispham, Judge.

Theodore E. Sims argued the cause for appellants. With him on the briefs was Sims & Sims.

James R. Cartwright argued the cause for respondent West Coast Trust. With him on the brief was Matthew Whitman.

Randolph C. Foster, Amy Edwards, and Stoel Rives LLP filed the brief for respondent Northwest Natural Gas Company.

Stephen R. Owen waived appearance for respondent James Van Horn.

Before Wollheim, Presiding Judge, and Hadlock, Judge, and Schuman, Senior Judge.


[266 Or.App. 85] WOLLHEIM, P. J.

Petitioners are the children and heirs of Archie Q. Adams, Sr., the decedent, who died in 2000. They appeal from a probate court judgment approving a final and an amended accounting submitted by respondent West Coast Trust, the personal representative of the decedent's estate. Respondent Northwest Natural Gas Company (NW Natural) purchased mineral rights from the estate. Respondent James Van Horn, the son of and conservator and then personal representative for Louise Adams, the decedent's surviving spouse, appeared in the probate proceeding to protect his mother's interest in the estate. Petitioners assign error to the probate court's denial of their objection to the final and amended accounting and denial of their petition to surcharge the personal representative $215,573,115.60 for the personal representative's alleged negligent sale of the mineral rights to N.W. Natural. See ORS 116.123.[1]

Page 172

They also challenge the probate court's rejection of their request to set aside the personal representative's sale of the mineral rights or to require N.W. Natural to disgorge $215,573,115.60 on a theory of unjust enrichment. Finally, they contend that the probate court erred in determining that N.W. Natural is not a party to the probate proceeding, and erred in awarding the personal representative an extraordinary fee of $11,500.00. We conclude that the probate court did not err and affirm.

We have traditionally reviewed probate court proceedings de novo. See, e.g., McIntire v. Lang, 241 Or.App. 518, 520 n 1, 254 P.3d 745 (2011); Brown v. Hackney, 228 Or.App. 441, 443, 208 P.3d 988 (2009); Stanfield v. Stanfield, 192 Or.App. 447, 449, 86 P.3d 77, rev den, 337 Or. 160, 94 P.3d 876 (2004). However, since June 4, 2009, de novo review is now discretionary in most equitable cases, like this one. ORS 19.415(3)(b). [266 Or.App. 86] Petitioners have requested de novo review of the record. As will become apparent, the extraordinary circumstances of this lengthy litigation justify the exercise of our discretion to review de novo. ORAP 5.40(8). Many of the procedural facts are undisputed, and the probate court made extensive findings of fact that are supported by legally sufficient evidence in the record. ORS 19.415(3). However, there are some factual disputes that have not been the subject of explicit findings by the probate court and that we conclude must be resolved on appeal. We set out those disputes as well as our findings explicitly where applicable.

The decedent owned mineral rights to 27 parcels in Columbia County. The decedent had had an underground gas storage lease and gas and oil leases with N.W. Natural since the 1970s and received rent and royalties for those leases.[2] In 1996, the decedent and his wife, Louise Adams, entered into a new agreement with N.W. Natural. In March 1997, petitioner Jeanne Wollman, the decedent's daughter, sought to be appointed as conservator for the decedent, for the reason that the decedent could not properly manage his affairs. Also in March 1997, Wollman obtained a power of attorney from the decedent. In June 1997, the court appointed Wollman as conservator.

In October 1997, without notifying the court and under her power of attorney for the decedent, Wollman signed a lease agreement with Enerfin Resources Northwest LP, a natural gas company (Enerfin), for other mineral rights of the decedent in exchange for rents and royalties. The lease agreement designated the decedent as a widower, although at the time he was married to Louise Adams. On May 26, 1998, in her capacity as conservator, and again without notifying the court or anyone else, Wollman transferred all of the decedent's mineral rights to herself and her two brothers, petitioners Glen and Archie Adams, for consideration of $10 in total.[3]

[266 Or.App. 87] On October 1, 1998, Wollman applied for Medicaid for the decedent, and the decedent began receiving Medicaid benefits in November 1998.[4] In February 1999, after the decedent

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had been approved for Medicaid, Wollman requested that the court close the conservatorship. Wollman's final accounting did not make mention of the transfer of the mineral rights. The court closed the conservatorship in March 1999. At the time of the decedent's death in January 2000, the decedent had accumulated $40,000 in Medicaid debt.

In 1999, petitioners had been negotiating with N.W. Natural concerning the lease but could not come to an agreement as long as Louise Adams remained on the lease. When it learned of the decedent's death, N.W. Natural inquired whether the decedent had a will. Wollman informed N.W. Natural that the decedent had died intestate and that she and her brothers owned the decedent's mineral rights. N.W. Natural subsequently learned from Van Horn that the decedent had not died intestate, that Louise Adams was his surviving spouse, and that a will had been executed in 1988. Under that will, after certain specific bequests, the beneficiaries were Louise Adams, the decedent's grandchildren, and Louise Adams's children. The will created a trust for Louise Adams, and the trust set out the powers and duties of the trustee, West Coast Trust. Petitioners were not beneficiaries under the 1988 will.

After the decedent's death, petitioners entered into an additional lease with Enerfin and signed two mineral leases with Cascade Resources Corp. (Cascade) for the same land that the decedent and Louise Adams had leased to N.W. Natural. Wollman testified that she believed that she could re-lease the mineral rights to Cascade because, at the time the decedent and Louise Adams had leased those rights [266 Or.App. 88] to N.W. Natural in 1996, the decedent was incompetent, and the N.W. Natural lease was therefore invalid. Wollman testified that petitioners chose for that reason not to recognize the N.W. Natural lease.

In November 2003, N.W. Natural filed a petition to probate the 1988 will. See ORS 113.035.[5] N.W. Natural alleged in its petition that it was an interested party because

" it believes it owes royalty and rental payments to the Decedent's Estate under certain leases with the Decedent. N.W. Natural has deposited approximately $3,604.51 of such rental payment under Oil and Gas storage leases in an interest bearing account * * * some or all of which sum N.W. Natural believes belongs to the Decedent's Estate. In addition, N.W. Natural has written royalty checks payable to Archie and Louise F. Adams, as well as the three children of Archie Adams, since January 2001 which total the sum of $14,938.15, all of which remains uncashed to date. N.W. Natural is informed and believes that Jeanne Wollman holds all of these uncashed checks and accordingly N.W. Natural requested on October 13, 2003 a stop payment by its bank and is in the process of depositing these funds for the potential benefit of the Decedent's Estate. The amount of $697.55, a sum accumulated from several uncashed royalty checks from 1997 and 1998, was sent to the State of Oregon and are also funds that N.W. Natural believes belong to Decedent's Estate."

NW Natural also alleged in the petition that it was interested in acquiring or leasing additional mineral rights from the decedent's estate. N.W. Natural requested the appointment of West ...

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