In re the Supervised Estate of: Brian Scott Short, Deceased.

STATE OF MINNESOTA
IN COURT OF APPEALS
A18-1682

In re the Supervised Estate of: Brian Scott Short, Deceased.

Filed August 26, 2019
Affirmed
Reilly, Judge

Hennepin County District Court
File No. 27-PA-PR-15-1210

John G. Westrick, Savage Westrick, P.L.L.P., Bloomington, Minnesota (for appellant East
Coast Test Prep LLC, d/b/a Achieve Test Prep)

John D. Reddall, James J. Kretsch, Kretsch Law Office, PLLC, Lakeville, Minnesota (for
respondent/cross-appellant personal representative David Smits)

Considered and decided by Reilly, Presiding Judge; Johnson, Judge; and Hooten,
Judge.
S Y L L A B U S
When determining whether to distribute assets or hold open an estate with a
contingent claim, courts must apply a balancing test to weigh the interests of efficient
administration of an estate against protection of the contingent claim , considering the
following factors: (1) the nature of the claim being ass erted before another tribunal;
(2) the hardship on the estate of deferred distribution of pr incipal or income; and (3) the
adverse effect of refusing any asset withholding and thereby p otentially impa iring
satisfaction of a meritorious claim.

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O P I N I O N
REILLY, Judge
Appellant East Coast Test Prep LLC , d/b/a Achieve Test Prep (ATP ) filed a
contingent claim against decedent’s estate related to appellant’s pending federal lawsuit.
The merits of appellant’s claim against the estate are still being litigated in federal court.
ATP appeals the district court’s decision to allow the distribution of income from
decedent’s estate before the federal litigation is finally resolved . The personal
representative of the estate (the PR) cross-appeals, arguing that the district court erred by
(1) converting administration of the estate from unsupervised to supervised, (2) denying
the PR’s request to disallow appellant’s claim against the estate, and (3) barring the
distribution of principal from the estate. We affirm.
FACTS
The decedent, Brian Short , died testate in September 2015. Before decedent’s
death, ATP sued decedent and his company, Allnurses.com, in federal district court .1
ATP’s lawsuit alleged, among other things, that Allnurses.com breached its terms of
service by failing to remove internet posts about ATP that were false and defamatory
(federal claim).
In October 2015 , the probate court ( district court ) ordered an unsupervised
administration of decedent’s estate and appointed a PR. Due to ATP’s federal claim against
the PR, ATP filed a statement of unsecured claim against the estate, alleging the estate may

1 After decedent’s death, ATP substituted the PR of decedent’s estate as a defendant in the
federal lawsuit.

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become indebted to ATP in an amount in excess o f $50,000 (contingent claim). The PR
disallowed ATP’s contingent claim. In order to protect its contingent claim against the
estate, ATP petitioned for supervised administration of decedent’s estate. The district court
issued an order reserving its decision on whether to convert the estate to supervised
administration until after the federal district court’s decision on a then-pending motion to
dismiss the PR and Allnurses.com as parties in the federal proceeding.
In January 2018, the federal district court dismissed all claims against the PR and
Allnurses.com with prejudice , stating that “ATP alleges few specific facts in support of
[its] allegations, and despite two years of trying it has discovered virtually no evidence that
they are true.” E. Coast Test Prep LLC v. Allnurses.com, Inc. , 307 F. Supp. 3d 952, 956
(D. Minn. 2018), appeal docketed, No. 18-3197 (8th Cir. Oct. 15, 2018) . ATP appealed
the federal district court’s decision; that appeal is still pending in the Eighth Circuit Court
of Appeals. Id. Based upon the federal district court’s dismissal of all claims against the
PR and Allnurses.com, the PR moved the district court to confirm its disallowance of
ATP’s contingent claim. In June 2018, a fter a hearing on the matter, the district court
converted the estate to a supervi sed administration until ATP’s federal claim is finally
resolved in the federal litigation. The district court also denied the PR’s request to confirm
the disallowance of ATP’s contingent claim against the estate and instead requested that
the parties propose a sum to be reserved in the estate to protect ATP ’s contingent claim.
ATP proposed that the estate set aside $7.56 million ; the PR proposed that the estate set
aside no more than $50,000.

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The PR also moved the district court for permission to distribute estate income (not
principal) to avoid adverse tax consequences. The district court held another hearing and,
in October 2018, filed an order which allowed the PR to distribute estate income. However,
the district court determined that it could not identify a reasonable amount for the estate to
reserve because the amounts proposed by ATP and the PR were “dramatically different”
and the court was “unable to independently determine the likelihood of success of ATP’s
appeal.” The district court barred the PR from distributing any principal from the estate
and ordered that the estate remain under supervised administration until the federal
litigation is finally resolved.
The PR challenges the district court’s decision to allow the conversion of the estate
to supervised administration, the district court’s denial of the PR’s request to confirm
disallowance of ATP’s contingent claim and t he decision to bar the distribution of
principal. ATP challenges the district court’s decision to allow the distribution of income.
ISSUES
I. Did the district court abuse its discretion when it granted ATP’s motion to
convert the estate to supervised administration?
II. Did the district court abuse its discretion when it denied the PR’s motion to
confirm the PR’s disallowance of ATP’s contingent claim against the estate?
III. Did the district court abuse its discretion when it granted the PR’s motion to
allow the distribution of estate income but not principal?

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ANALYSIS
Standard of Review
An appellate court review s a district court’s findings of fact concerning wills and
trusts under a clearly erroneous standard and review s a district court’s conclusions of law
de novo. In re Estate of Neuman, 819 N.W.2d 211, 215 (Minn. App. 2012); see also In re
Coleman, 793 N.W.2d 296, 303 (Minn. 2011) (stating that factual findings will not be
reversed “if they have evidentiary support in the record and are not clearly erroneous”
(quotation omitted)). “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). However,
“[w]hen reviewing mixed questions of law and fact, we correct erroneous applications of
law, but accord the district court discretion in its ultimate conclusions and review such
conclusions under an abuse of discretion standard.” In re Estate of Sullivan, 868 N.W.2d
750, 754 (Minn. App. 2015) (quotation omitted).
I. Conversion of the Estate to Supervised Administration

In its June 2018 order, the district court found that supervised administration of the
estate was necessary to protect ATP’s contingent claim, at least until ATP’s federal claim
is finally resolved in the federal courts. The PR argues that the district court improperly
applied the law when it converted the estate to supervised administration.
Minnesota law prescribes the procedure to convert the unsupervised administration
of an estate to a supervised administration. Minn. Stat. § 524.3 -502 (2018) . After an
interested person or other authorized individual petitions the court for supervised

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administration, notice is given to interested persons and the district court holds a hearing
on the petition. Id. If the decedent’s will directs unsupervised administration, as is the
case here, 2 supervised administration shall be ordered only upon a finding that it is
necessary for protection of persons interested in the estate. Id.
The PR argues that the district court misapplied the law and misplaced the burden
on the estate to show that supervision is unnecessary. According to the PR, the existence
of an appeal right related to a dismissed federal complaint is insufficient to support the
district court’s conversion of administration of the estate from unsupervised to supervised.
We agree that the mere existence of a contingent claim might be insufficient to require
supervised administration. Here, however, the district court carefully weighed the
evidence before it and balanced the opposing parties’ concerns.
The district court considered ATP’s interest in the contingent claim, while noting
that “the [e]state is now ready for distribution and the only remain ing unresolved claim is
[ATP’s] claim.” If the administration of the estate had remained unsupervised, the PR
indicated his intent to distribute all of the estate assets. The court balanced ATP’s interest
against the potential hardship imposed on the est ate from deferred distribution. In doing
so, the district court “recognize[d] the result of the Federal [district court’s] Order and the
Federal Litigation” 3 and found “no need for the [PR] to post a bond in this matter.”

2 Decedent’s will, signed on April 27, 2009, requested: “unsupervised administration of
my estate and that my estate be administered in as informal a manner as my personal
representative deems advisable.”
3 As noted earlier, the federal district court dismi ssed with prejudice all of ATP’s claims,
finding that two years of discovery had uncovered “virtually no evidence that [ATP’s
claims] are true.” E. Coast Test Prep LLC, 307 F. Supp. 3d at 956.

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Ultimately, the district court determined that supervised administration was necessary to
protect ATP’s interest until final resolution of the federal litigation. Accordingly, even if
we may have reached a different conclusion, we see no abuse of discretion in the district
court’s deter mination that supervised administration was necessary in this case. See
Chamberlain v. Chamberlain, 615 N.W.2d 405, 412 (Minn. App. 2000) (stating that when
evidence supports the district court ’s discretionary determination, a reviewing court must
affirm even if it would have reached a different conclusion), review denied (Minn. Oct. 25,
2000).
II. Denial of PR’s Request to Confirm Disallowance of Contingent Claim

At the April 2018 hearing, the PR requested that the district court confirm the
disallowance of ATP’s contingent claim against the estate because ATP’s federal claim
had been dismissed by the federal district court. The district court reasoned that it would
not confirm the PR’s disallowance of the claim because “the Federal Litigation has not
been finally resolved and that [ATP’s] claim is still contingent and unliquidated pending
appeal of the Federal order.” The PR argues that the district court erred when it determined
that it lacked authority to confirm disallowance of ATP’s contingent claim.
The parties cite no relevant Minnesota caselaw. Instead, the parties look to authority
from other jurisdictions, like Minnesota, that have adopted the Uniform Probate Code
(UPC). “Because uniform laws are intended to encourage common interpretation among
jurisdictions, caselaw from other UPC jurisdictions has substantial persuasive value.” In
re Estate of Kotowski, 704 N.W.2d 522, 526 (Minn. App. 2005) (citing Johnson v. Murray,

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648 N.W.2d 664, 670 (Minn. 2002)), review denied (Minn. Dec. 21, 2005); see also Minn.
Stat. § 645.22 (2018) (addressing construction of uniform laws).
One case in particular is instructive, Powers Blvd. Assocs. Ltd. v. Estate of Reel, 839
P.2d 516 (Colo. App. 1992). The Powers case is factually similar to the case before this
court. In Powers, the Colorado Court of Appeals held that the district court did not abuse
its discretion when it dismissed a claimant’s petition for allowance of a contingent claim
against the estate—after the contingent claim was adjudicated on the merits in favor of the
estate.4 Id. at 517. The decedent, Reel, was involved in a federal lawsuit prior to his death
and his estate was substituted for him in the federal action after he died . Id. The federal
court granted summary judg ment in favor of the estate, but could not certify the order as
final because claims against other pa rties survived the summary judg ment motion. Id.
Thereafter, the probate court dismissed the claimant’s motion for allowance of its claim.
Id. The claimant appealed the district court’s decision and the Colorado Court of Appeals
held that a district court “has broad discretion in determining whether such claims should
be allowed, the amount of time to give a claimant to secure a judgment on the claim, and
the amount or number of assets to be held in reserve for the contingency.” Id. at 518.
The Powers court cited to In re Mellon, 314 A.2d 500 (Pa. 1974), a case analyzing
a district court’s decision to allow distribution of an estate’s assets notwithstanding a

4 Minnesota Statutes section 524.3 -806(b) (2018) mirror s the relevant Colorado Statute,
which provides that “[u]pon the petition of the personal representative or of a claimant in
a proceeding for the purpose, the court may allow in whole or in part any claim or claims
presented to the personal representative.” See Colo. Rev. Stat. § 15-12-806 (1987).

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contingent claim against the estate .5 The Mellon court determined that district courts
should consider the following factors when balancing the “prompt, orderly, and efficient
administration of decedent’s estate” against the “interest in protecting the claims of
creditors against [an estate]”:
(1) the nature of the claim being asserted before the other
tribunal, (2) the hardship, if any, which deferred distribution of
principal or income would im pose on the estate or the
individual or charitable beneficiaries, and (3) the adverse effect
of refusing any withholding and thereby precluding
satisfaction from estate assets of a possibly meritorious claim
being adjudicated in another court.

Id. at 502-03. The Powers court adopted the balancing test as outlined in Mellon and
provided:
When faced with similar situations in which contingent
claims have forced the administration of an estate to be held
open, other jurisdictions have applied a balancing tes t to
determine the rights of the competing interests. In those
jurisdictions, the court is required to consider the interests of
the prompt, orderly, and efficient administration of an estate as
against the protection of claims against the estate being
asserted in other fora.

839 P.2d at 518. The Powers court concluded that it “must strike a proper balance between
[the] conflicting goals . . . [and give] careful judicial circumspection and due consideration
of all attending circumstances” and ultimately determined that the Colorado district court
had not abuse d its discretion when it granted the estate’s motion to dismiss Powers’s
petition. Id. (citation omitted).

5 Pennsylvania adopted the UPC in 1979, and therefore the Mellon court was interpreting
a pre-UPC Pennsylvania statute.

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Like Colorado’s probate code ,6 the Minnesota probate code is to be “liberally
construed and applied to promote the underlying purpose s and polices,” which include
“promot[ing] a speedy and efficient system for liquidating the estate of the d ecedent and
making distribution to successors.” Minn. Stat. § 524.1-102 (2018). We find the analysis
in Powers persuasive and conclude that a similar balancing test should be applied in cases
addressing estate distribution in Minnesota.
Based on the record before us, we conclude that the di strict court considered and
balanced the nature of the contingent claim, the potential adverse effects on the claimant ,
and the potential hardship to the estate from delaying distribution. When evidence supports
the district court’s determination, we defer to the broad discretion of the district court .
Chamberlain, 615 N.W.2d at 412. Accordingly, we affirm the district court on this issue.7

6 “Ultimately, the [Colorado] probate court is charged with maintaining a speedy, efficient,
and exact system for settling estates and making distributions.” Powers, 839 P.2d at 517-
18.
7 Citing the district court’s statement that it “could not disallow” ATP’s contingent claim
against the estate, the PR asserts that the district court erred when it barred complete
distribution of the estate assets based on its erroneous belief that it could not disallow
ATP’s claim, that is that it did not have the authority to allow distribution of the estate’s
assets. We believe that the PR’s assertion misread s the district court’s order. Citing
Powers, the district court stated that, when addressing whether to allow distribution of
estate assets when contingent claims exist, “other courts have looked to a balancing test”
which includes analyzing the “ nature o f the claim being asserted, the protection of a
creditor’s claim, the hardship imposed upon an estate or an individual distributee, and the
court’s charge with promoting a speedy and efficient syst em for liquidation of an estate.”
Because Powers unambiguously holds that a district court may (but need not) disallow a
claim, we read the district court’s statement that it “could not disallow” ATP’s claim to
indicate that it would not disallow ATP’s claim. See Minn. Stat. § 524.1 -302 (b) (2018)
(providing that the district court has “full power to make orders, judgments and decrees
and take all other action necessary and proper to administer justice in t he matters which
come before it”). Because we read the district court’s analysis as informed by its resolution
of the balancing test, rather than a lack of authority to disallow the claim, we reject the

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III. Distribution of Income, But Not Principal

ATP claims that the lower court should not have allowed the distribution of the
estate’s income without knowing the total value of the estate. And the PR claims that the
lower court should have allowed the distribution of the estate’s principal. Pursuant to
Minnesota Statutes section 524.3-504 (2018), the personal representative of a supervised
estate is unable to make dist ributions to the ultimate beneficiaries without “prior order of
the court.” The district court is authorized to issue “[i]nterim orders approving or directing
partial distributions, sale of property or granting other relief . . . at any time during the
pendency of a supervised administration on the application of the personal representative
or any interested person.” Minn. Stat. § 524.3-505 (2018).
The district court has broad power to “administer justice” when s upervising a
probate proceeding. Minn. Stat. § 524.1-302. And, as noted earlier, the probate code is to
be “liberally construed and applied to promote the underlying purposes and polices,” which
include “promot [ing] a speed y and efficient system for liquidating the estate of the
decedent and making distributions to successors.” Minn. Stat. § 524.1-102.
ATP argues the district court should have determined the value of the estate in order
to properly calculate a “reasonable” amount to withhold. However, ATP does not cite to
any relevant legal authority to support its assertion that valuation was required. Here, the
district court carefully balanced the hardship to the estate of retaining income against
ATP’s interest in protecting the contingent claim by not permitting the distribution of the

PR’s argument that is based on what the PR asserts was the district court’s improper
limitation of its authority.

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estate’s principal. The district court found that “by distributing the income of the [e]state
to the devisees, the [e]state avoids the substantial adverse tax consequences of retaining
income within the [e]state . . . [because] income distribution would r educe the [e]state’s
taxable income by transferring income to devisees whose tax brackets are more favorable.”
The court applied the Powers balancing test, weighing the nature of the claim being
asserted and protection of a potential creditor’s claim against the hardship imposed to the
estate or individual distributees, keeping in mind the court’s charge to promote a speedy
and efficient system for liquidating estates. The district court found:
When applying a balancing test to this case, the court
finds that a total suspension of the distribution of [e]state assets
is unreasonable given the fact that ATP has not been successful
in its case at the trial court level, and the fact that an appeal will
likely delay distributions even longer. The court also
recognizes the adverse tax consequences of allowing income
to accumulate to principal in the [e]state. Finally, the court
recognizes the fact that the [d]ecedent died over three years ago
and that there has been no conclusion of the estate or
distribution of assets to the devisees. As such, the court finds
it is both reasonable and equitable to allow distribution of
income from the [e]state to the [e]state’s devisees.

We affirm the district court’s carefully considered decision to make a partial distributi on
of the estate’s income, but not the principal.
D E C I S I O N
Because the district court did not abuse its discretion by converting the estate to
supervised administration, allowing income distribution, and denying the disallowance of
ATP’s claim against the estate, we affirm.
Affirmed.