Bourne v. Lloyd

BLOOM, Judge. After accepting the resignations of appellant, James Bourne, and others as co-personal representatives of the Estate of John Briscoe Howes, the Orphans’ Court for Calvert County appointed appellee, Richard D. Lloyd, as special administrator. In this appeal from orders of the orphans’ court granting appellee’s petition to sell real estate and approving the sale made by appellee, appellant presents the following issues: 1. Did the court err in approving the sale of the real property of the estate where the method of valuing and offering the property for sale employed by the Special Administrator precluded a sale at the highest and best price?

(a) Did the method used by the Special Administrator in valuing the property constitute a failure to act diligently and in a prudent and businesslike manner? (b) Did the manner of offering the property for sale used by the Special Administrator constitute a failure to act diligently and in a prudent and businesslike manner? 2. Did the Special Administrator breach his fiduciary duty to the beneficiaries of the estate in failing to provide information to them regarding the valuation and sale of the real property? Our answer to each of the questions is “No”; consequently, we shall affirm. ⁵⁷⁹ Factual Background The Estate of John Briscoe Howes was admitted to probate in 1986.

One testamentary provision of the will stated, All the rest, residue and remainder of my estate, of whatever kind and whatsoever situated, I give, devise and bequeath to my nieces and nephews, the children of my brothers and sisters, in equal shares, share and share alike, per stirpes and not per capita. The testator also gave his personal representatives full discretionary power, ... to take any action desirable for the complete administration of my estate, including the power to sell, at public or private sale, any real ... property belonging to my estate at whatever prices and upon whatever terms my personal representatives shall deem advisable.... A principal asset of the estate was a large parcel of real estate, containing at least 100 acres of land, in Calvert County. During the course of the subsequent six years, the co-personal representatives, Spencer Howes, James Bourne, and Bourne Howes, three nephews of the testator, were not able to reach a mutually acceptable disposition of the real property.

In 1988, several of the beneficiaries expressed their opinion that the property should be sold to the highest bidder. Discussions were held over the years regarding attempts to divide the property, and in 1992 several of the beneficiaries expressed concern regarding a conflict of interest involving one of the co-personal representatives. In June 1992, the orphans’ court was informed that the personal representatives could not agree on the disposition of the property. On 20 July 1992, the three co-personal representatives filed their resignation with the orphans’ court.

The orphans’ court appointed Richard D. Lloyd (hereinafter “Lloyd” or “appellee”), an attorney in general practice in Calvert County, as special administrator. Lloyd was granted by the court “full authority to pursue a course of action, as deemed necessary, to manage and sell the estate’s real property in a fair and expeditious manner, subject to this Court’s ⁵⁸⁰ approval of contract of sale____” No objections were raised by any party to either the selection of Mr. Lloyd or the terms of his appointment. Mr. Lloyd attempted to have a meeting with the three former personal representatives. Two of the former personal representatives attended; appellant did not.

Lloyd had a title search done, made a physical tour of the property, and engaged a local engineering firm, Collinson and Oliff & Associates, to advise him on the best use or development potential of the property. He then had an independent appraisal performed by L.W. Fey, ASA, an appraiser with offices in Mayo and Hyattsville. The appraisal established a property value of $540,000. Lloyd determined that it would be appropriate to offer the opportunity to purchase first to family members and interested persons, through a solicitation to submit a written bid.

Terms were set at cash, with a minimum acceptable bid price of $600,000. A solicitation letter was sent to family members and about one dozen others who had either expressed interest or had inquired about the sale after the letter was initially distributed. These solicitation letters were sent to a group that included at least three prominent local builder/developers, a realtor, several private individuals, a state senator, and an environmental organization that had expressed an interest in purchasing the property. In addition, the special administrator testified that he had contacted “several people,” including two real estate agents, to “tell them that they should make a bid if they were interested.” One bid for $606,000 was received by the 15 May 1993 deadline.

The successful bidder, Thomas Miller, stated that he had learned of the sale from a builder who was doing work on the house of one of the other heirs. On 19 May 1993, Lloyd filed a petition to sell the property to Miller pursuant to the $606,000 bid. On 8 June 1993 appellant filed an opposition to the petition, contending that ⁵⁸¹ the manner in which the property had been offered was inadequate to assure the best and highest price. Lloyd filed a response on 14 June 1993.

On 29 June 1993, a hearing was held before the orphans’ court. At the conclusion of the hearing, following a brief recess, the orphans’ court issued an order from the bench granting the petition and approving the sale. I. In our review of the orphans’ court’s decision, we are obliged to consider evidence produced at the hearing below in a light most favorable to the prevailing party. Cassel v. Pfaifer, 243 Md. 447, 453 , 221 A.2d 668 (1966).

If there was substantial evidence supporting the factual conclusions of the orphans’ court when viewed in a light most favorable to the prevailing party, the decision is not clearly erroneous and will not be disturbed. Geo. Bert. Cropper, Inc. v. Wisterco Investments, Inc., 284 Md. 601 , 399 A.2d 585 (1979).

The burden is on appellant, who opposed the sale, to convince the court that the sale should not be ratified. Kramme v. Mewshaw, 147 Md. 535 , 128 A. 468 (1925). The court found that appellant did not meet this burden. Since there was substantial evidence to support the court’s determination, we agree and affirm.

A. Appellant’s main argument is that Lloyd failed to act with diligence and in a prudent and businesslike manner, evidenced by the method used to value the property and the manner in which the property was offered for sale. Specifically, appellant complains that there was no public notice of the sale and no advertising. Appellant argues that the test to be followed is that set forth in Feldman v. Feldman, 234 Md. 173, 176-77 , 198 A.2d 257 (1963): It was their duty, therefore, in making a sale of the property to act in a prudent and business-like manner, with ⁵⁸² a view to obtain as large a price as might, with due diligence and attention, be fairly and reasonably obtainable under the circumstances. In other words, to exercise that diligence and caution which a careful and prudent owner would observe in the sale of his own property.

If the sale be made under circumstances of haste and imprudence, or if the trustees fail in reasonable diligence in inviting competition, or adopt an injudicious and disadvantageous mode of selling the property, a Court of equity ought not ratify the sale. (Emphasis in original.) Feldman , like the other cases cited by appellant, involved the sale of property by a trustee under a testamentary power. In the instant case, Lloyd is a special administrator, a fiduciary appointed by an orphans’ court order to sell the real property. The orphans’ court ordered that Lloyd assume all duties unperformed by the personal representatives as set out in Md.Code (1974, 1991 Repl.Vol.) § 6-403 of the Estates and Trusts Article (ET), and he was given “full authority to pursue a course of action, as deemed necessary, to manage and sell the estate’s real property in a fair and expeditious manner, subject to this Court’s approval of contract of sale____” When the actions of the special administrator are examined under the Feldman standard, with an emphasis on the court’s charge to act in a fair and expeditious manner, it is clear that Mr. Lloyd properly fulfilled his duties.

Appellant argues that the special administrator needed to secure the opinions and