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In re Guardianship of Wood

Court of Civil Appeals of Oklahoma, Division No. 4

December 31, 2018

In the MATTER OF the GUARDIANSHIP OF Harold S. WOOD, a Partially Incapacitated Person.
Mark Lyons, Defendant/Appellee. Virginia L. Wood, Plaintiff/Appellant,

          Mandate Issued: 10/16/2019

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[Copyrighted Material Omitted]

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         Thomas M. Ladner, Roger K. Eldredge, LADNER & ELDREDGE, PLLC, Tulsa, Oklahoma, for Plaintiff/Appellant.

         Joseph R. Farris, FRANDEN | FARRIS | QUILLIN GOODNIGHT ROBERTS, Tulsa, Oklahoma, for Defendant/Appellee.



         [¶1] Plaintiff Virginia L. Wood (Widow) appeals the trial court’s May 2, 2017, order denying her request to impose a surcharge on Defendant Mark Lyons, (Guardian) who had served as a Limited Guardian of Harold S. Wood, a partially incapacitated person, now deceased (Ward). Widow contends that upon his appointment, Guardian was obligated by 30 O.S.2001, § 4-709(A), which defines the appropriate types of investments in which a guardian may invest a ward’s money, to liquidate Ward’s existing stock portfolio, which was not compliant with § 4-709(A), and use the resulting proceeds to re-invest in § 4-709(A)-approved investments. Widow contends Guardian’s failure to do so constituted a breach of fiduciary duty, meriting a surcharge. The trial court found no breach of duty occurred and denied the request for a surcharge. On this first impression issue, based on our review of the facts and applicable law, we affirm the order under review.


         [¶2] Guardian was temporarily appointed Special Limited Guardian of Ward in an order filed July 11, 2007, and was later appointed Limited Guardian, with both the order and letters of limited guardianship being filed August 24, 2007.[1] At the time of Guardian’s appointment, Ward was 84, in poor health, and required round-the-clock professional medical care. He lived with Widow and his medical staff, and owned substantial assets. Guardian had been Ward’s attorney for at least 10 years prior to his appointment as Ward’s guardian. Guardian managed Ward’s and Widow’s assets until Ward’s death on January 7, 2012. After Guardian filed a final account of Ward’s estate on October 12, 2012,[2] Widow objected to that accounting on October 29, 2012. She requested Guardian be made subject to a surcharge for allegedly breaching his fiduciary duties relating to the handling of Ward’s assets, and for failure to timely file required reports.[3] ,[4] Widow

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claimed that Guardian caused a financial loss to Ward by failing to immediately liquidate Ward’s existing, substantial stock portfolio which contained volatile, individual blue-chip stocks, and convert that portfolio into one consisting of the approved bond funds set out in 30 O.S.2001, § 4-709(A). Widow also sought an order discharging Guardian as Limited Guardian, and that he be denied a fee for his services.

         [¶3] Guardian filed a motion for summary judgment on April 25, 2014.[5] He argued § 4-709(A) did not require him to liquidate the stock portfolio, and objected to being discharged as Guardian. In a minute order filed August 6, 2014, the court, without comment, granted Guardian’s summary judgment on the issue of § 4-709(A), but removed Guardian as Limited Guardian, at Widow’s request.[6] ,[7] Guardian’s letters of guardianship were revoked, but Guardian was not discharged immediately, and instead ordered to submit a final accounting before September 11, 2014.[8] Substitute guardians for Widow were appointed, as well as a substitute personal representative for Ward’s estate.

         [¶4] The surcharge and breach of fiduciary duty issues between the parties continued until an evidentiary hearing was held over several days in November, 2016. On May 2, 2017, the trial court filed an order containing extensive and detailed findings of fact and conclusions of law.[9] The trial court denied Widow’s motion to surcharge Guardian, finding that he met the standard of care in his handling of Ward’s assets and breached no fiduciary duties.[10] Widow appeals this order.


         [¶5] In re Estate of LaRose, 2000 OK CIV APP 33, ¶ 5, 1 P.3d 1018, 1021, states:

Where a final account of a guardian is presented and considered and surcharges made and disallowed, and thereafter an appeal is taken, the matter will be considered as an appeal from an equity judgment and the surcharges made or disallowed will be approved where such action is based on competent evidence and not clearly against the weight of the evidence. In re Guardianship of Durnell, 1967 OK 62, 434 P.2d 905. The judgment of the trial court in a settlement of a guardian’s account will not be disturbed unless against the weight of the evidence. Pruitt v. Pilgreen, 178 Okl. 608, 64 P.2d 263 (1936).


         [¶6] The central issue in this case is a dispute between Widow and Guardian over Guardian’s management of Ward’s substantial stock portfolio. Widow’s brief-in-chief alleges the trial court committed errors of law and erred in its interpretation and application of certain undisputed facts to the law. With certain limited exceptions, Widow does not allege the trial court’s findings of fact are erroneous; rather, she argues those facts support a different conclusion than that made by the trial court, resulting in trial court error. Therefore, after determining if they are supported by competent evidence, we will cite the applicable findings of fact in addressing each issue on appeal.

         I. Was Guardian Required to Liquidate Ward’s Stock Portfolio by Operation of 30 O.S.2001, § 4-709(A)?

         [¶7] Widow presents a first impression question of law. Questions of law mandate application of the de novo standard of review, which affords this Court with plenary, independent, and non-deferential authority to examine

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the issues presented. Martin v. Aramark Servs., Inc., 2004 OK 38, ¶ 4, 92 P.3d 96, 97; Kluver v. Weatherford Hosp. Auth., 1993 OK 85, ¶ 14, 859 P.2d 1081, 1084.

         [¶8] The resolution of this issue requires the interpretation of the statute in effect when Guardian was first appointed as a limited guardian, i.e., 30 O.S.2001, § 4-709.[11]

A. Except as may be otherwise provided by law, the money belonging to estates of minors and incapacitated or partially incapacitated persons, subject to the jurisdiction of the court, can only be invested in one or more of the following:
1. Real estate and first mortgages upon real property which do not exceed fifty percent (50%) of the actual value of the property;
2. United States bonds, or any other type of security certificate, or evidence of indebtedness which is guaranteed by the United States government, or any authorized agency thereof;
3. State bonds;
4. Bonds of municipal corporations;
5. Annuities covered by the Oklahoma Life and Health Insurance Guaranty Association, which do not exceed Three Hundred Thousand Dollars ($300,000.00), individually; or
6. Accounts in savings and loan associations and credit unions located in this state, and all types of interest-bearing time deposits and certificates of banks, savings and loan associations, and credit unions located in this state, not to exceed the amount insured by the United States government.

         Section § 4-709(A) (emphasis added).[12]

         [¶9] At the time of Guardian’s appointment as a limited guardian, the trial court found:

23. In August 2007, [Ward’s] Smith Barney stock portfolio had a gross value of a little over $6 million with a margin debt of $2,170,000. The net value of the account as of August 31, 2007, was $3,924,939.74.
24. The account was made up of 100% equities/stocks. There were no fixed-income assets, no CDs, and no T-bills. The portfolio was weighted in energy stocks.
25. [Ward] had chosen the nature of his stock portfolio being weighted 37% to energy stocks over a period of 52 years.[13]

         It is undisputed that Ward’s portfolio did not consist of any of the six investment categories set out in § 4-709(A).

         [¶10] Widow contends that upon Guardian’s appointment, he was obligated by § 4-709(A) to immediately liquidate the Smith Barney stock portfolio in order to rid it of non-§ 4-709(A)-sanctioned investments, and use the proceeds of that sale to purchase a portfolio that complied with § 4-709(A)’s list of approved investments. In support of this argument, Widow cited Freeman v. Prudential Sec., Inc., 1993 OK CIV APP 65, 856 P.2d 592, for its proposition that "Guardians ... were limited in the investments they could make for their wards, pursuant to ... § 4-709." Id. at ¶ 10, at 594.[14] Widow argues that by not reconfiguring the volatile, stock-heavy portfolio into the statutorily-authorized, relatively stable, investments, Ward suffered unnecessary and preventable losses during the 2007-2008 stock market turmoil that soon followed.[15] Widow contends Guardian should

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bear responsibility for those losses and be surcharged.

         [¶11] Guardian contended he was under no obligation to liquidate an existing stock portfolio and reinvest the proceeds to conform to § 4-709’s guides. Instead, he argued he was only obligated to follow § 4-709 if he possessed money belonging to Ward which he intended to use to purchase future investments on Ward’s behalf. Guardian argued that to immediately liquidate the holdings would have subjected Ward’s estate to further losses. Moreover, selling the "blue-chip" stocks during a time in which their values were already temporarily depressed would result in enormous capital gains taxes. This would have significantly depleted the amount of money available for Ward’s future use and care.[16]

         [¶12] The trial court found that, under these facts, § 4-709(A) did not require liquidation. We agree.

         A. Analysis of § 4-709(A)

         [¶13] Section ...

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