IN THE

SUPREME COURT OF NORTH DAKOTA

Supreme Court No. 20040235

Cass County No. 99-02-P-2398 In Re the Guardianship and Conservatorship of Doris Murial Onstad.

Elizabeth Onstad, Petitioner and Appellant v. Mary Onstad and John Onstad, Guardians and Conservators, Appellees.

ON APPEAL FROM THE ORDER OF JUNE 10, 2004

OF THE CASS COUNTY DISTRICT COURT, THE HONORABLE DOUGLAS HERMAN, PRESIDING

OPENING BRIEF OF APPELLANT ELIZABETH ONSTAD

Monty G. Mertz Attorney at Law

N.D. Bar No. 3778 1308 23rd Street South

Fargo, ND 58103 (701) 293-7788

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TABLE OF CONTENTS Table of Authorities . . . . . . . iii Issues Presented . . . . . . . . v Statement of the Case . . . . . . . 1 Statement of the Facts . . . . . . . 2 Argument . . . . . . . . . 19

I. Elizabeth never had a meaningful opportunity to be heard on her application to be her mother’s guardian. 19 II. Doris should have been present at the hearing. . 24

III. The Court did not prepare findings as required by Rule 52. . . . . . . . 26

IV. The Clear and Convincing Standard of Proof was not met. 27

V. The Final Order did not conform to Civil Rule 63. . 29 VI. The Eviction Hearing of November 4, 2004. . 29 A. Res Judicata Effect of Judge Irby’s Dismissal . 29 B. North Dakota law prohibits joining an eviction proceeding with any other action. . . . . 30 C. The Supreme Court never relinquished jurisdiction to the trial court to conduct a hearing. . . . 31 D. Elizabeth was not on notice that the court might consider imposing rental and expense payments as a condition of continuing residence. . . . 31 VII. Child Caretaker Exemption to Medicaid Spend-down. 32 A. Federal Medicaid Law . . . . . 32 B. Minnesota Medicaid Law . . . . . 33

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C. Preservation of an estate for Doris . . . 34 VIII. Priority of Appointment . . . . . 36 IX. Conclusion . . . . . . . 37

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TABLE OF AUTHORITIES

Cases 9 Avenue Plaza LLC v. Falgoust 676 So.2d 1077 (La. 1996) . . . . . 29-30 Albrecht v. Metro Area Ambulance 1998 ND 132, 580 N.W.2d 583 . . . . 31 Crawford v. Washington 541 U.S. 36 (2004) . . . . . . 28 Dvorak v. Dvorak 2001 N.D. 178, 635 N.W.2d 135 . . . . 21 Gepner v. Fujicolor Processing, Inc. 2001 ND 207, 637 N.W.2d 681 . . . . 29 Gross v. Gross 287 N.W.2d 457 (N.D. 1979) . . . . . 27 Guardianship/Conservatorship of Van Sickle 2005 ND 69, ¶ 36, ___ N.W.2d ___ . . . . 36 Hefty v. Aldrich 220 N.W.2d 840 (N.D. 1974) . . . . . 21, 23 In re Estate of Handy 672 N.W.2d 214 (Minn.App. 2003) . . . . 34 Kinsella v. Kinsella 181 N.W.2d 764 (1970) . . . . . . 23, 24 Knight v. Milwaukee County 2002 WI App 194, 651 N.W.2d 890 . . . . 26 Kostrzewski v. Frisinger 2004 N.D. 108, 680 N.W.2d 271 . . . . 21 Logan v. Zimmerman Brush Co. 455 U.S. 422 (1982) . . . . . . 19 Matter of Guardianship of Kelly 910 P.2d 665 (Ariz. App. 1996) . . . . 36

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Muhammed v. Welch 2004 N.D. 46, 675 N.W.2d 402 . . . . 22 Mund v. Rambough 432 N.W.2d 50 (N.D. 1988) . . . . . 19 Nielsen v. Cass County Social Services Board 395 N.W.2d 157 (N.D. 1986) . . . . . 35, 36 Schiavo v. Schiavo ___ F.3d ___ (11th Cir. March 25, 2005) . . . 27 Statutes NDCC 30.1-28 . . . . . . . . 30 NDCC 30.1-28-03 . . . . . . . . 25 NDCC 30.1-28-04 . . . . . . . . 27 NDCC 30.1-28-11(3)(c)(e)&(f) . . . . . . 37 NDCC 31-11-06 . . . . . . . . 22 NDCC 33-06 . . . . . . . . 30 NDCC 31-06-04 . . . . . . . . 30 42 U.S.C. §1396p . . . . . . . . 32-33 N.D. Admin. Code 75-02-02.1-33.1(2)(A)(4) . . . . 33 Minn. Stat. § 256B.056, subd. 2 . . . . . 33 Minn. Stat. § 256B.15, subd. 4 . . . . . 34, 36 Other Rule 35(a)(3), N.D.App.P. . . . . . . 31 Rule 52, N.D.R.Civ.P. 26 Rule 60(b), N.D.R.Civ.P. . . . . . . . 21-24 Rule 63, N.D.R.Civ.P. 28, 29

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ISSUES PRESENTED FOR REVIEW

I. Did Elizabeth Onstad have a meaningful opportunity to be heard

on her application to be her mother’s guardian?

II. Should Doris Onstad, the proposed ward, have been present at the

guardianship hearings?

III. Did the Court fail to prepare findings as required by Rule 52,

N.D.R.Civ.P.?

IV. Was the clear and convincing standard of proof met?

V. Was the Order of June 10, 2004 signed in violation of Rule 63,

N.D.R.Civ.P.?

VI. Was the Conditional Order of Eviction of November 16, 2004

defective for violation of res judicata, NDCC 33-06-04, incorrect

assumption of jurisdiction, and failure of notice?

VII. Was the guardians’ determination to evict Elizabeth in the best

interest of the ward?

VIII. Did Elizabeth present a timely claim for priority of appointment?

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STATEMENT OF THE CASE

This case is a proceeding for the appointment of a guardian for Doris

Muriel Onstad (“Doris”), an elderly person unable to manage her affairs.

Pursuant to a petition for guardianship, the District Court appointed two

of her children, Mary (“Mary”) and John (“John”) Onstad, as guardians

after a brief hearing held on August 27, 2002. At the hearing a third

child, Elizabeth Onstad (“Elizabeth”), objected to the appointment.

Subsequently Elizabeth petitioned the court to reconsider the order

appointing guardians, to remove her brother and sister as guardians,

and to appoint her as guardian for her mother. The court held a hearing

on these petitions on December 19, 2002, and ordered the matter

reopened including preparation of new reports. Prior to the new hearing,

a judge rotation occurred. The Honorable Norman Backes, presiding on

January 14, 2004, refused to reopen the hearing, and heard only the

motion for removal of guardians, which he denied. By the time his order

was ready for signature, Judge Backes had retired. The Honorable

Douglas Herman, Judge of District Court, signed the order denying the

petition for removal of guardians on June 11, 2004. Elizabeth filed a

notice of appeal on August 18, 2004. Subsequently the guardians

noticed a hearing to evict Elizabeth from the family residence. Judge

Herman granted a conditional order of eviction, which is the subject of a

Supplemental Notice of Appeal.

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STATEMENT OF THE FACTS

On July 3, 2002, Mary and John Onstad filed a petition to be

appointed guardians and conservators for their mother, Doris Muriel

Onstad, then 83 years old. Docket No. 1; Appendix at 1. On July 18,

2002, petitioners noticed a hearing for August 27, 2002. On July 19,

2002, the court appointed a visitor, an examining physician, and a

guardian ad litem. Docket Nos. 5-7. The guardian ad litem filed his

report on August 14, 2002. Dkt. No. 10. However, the visitor and the

examining physician reports were not filed until the day after the

hearing. Docket Nos. 13-14.

Elizabeth Onstad appeared at the hearing and objected through

counsel Monty Mertz to the absence of her mother from the hearing, the

unavailability of the physician’s and visitor’s reports prior to the hearing,

the unavailability of the physician and her brother for cross-examination,

and the suitability of her brother and sister as guardians. Transcript of

August 27, 2002 at 5/8-9; 6/14-17; 8/24-25; 9/1. She requested an

opportunity for discovery and for a contested hearing on the choice of

guardian. Id. at 6/20-24. (None of the parties dispute the necessity for

Doris Onstad to have a guardian. Transcript of August 27, 2002 at 5/9-

13; 19/4-16; Transcript of January 15, 2004 at 17/23 to 18/13.)

The court commented that it had scheduled the matter as a 15-

minute uncontested hearing, and that otherwise it would have allotted

two hours. Id. at 10/13-20. Nonetheless, after hearing Mary Onstad as a

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witness, the court found that the proposed ward’s appearance was not

necessary, id. at 34/3, that the reports demonstrated the need for a

guardianship, id. at 34/4-7, and that Mary and John would be

appropriate guardians, id. at 34/13-15. Mr. Mertz restated his objections

to the absence of the proposed ward and one of the proposed guardians,

and to the unavailability of the physician’s and visitor’s reports prior to

the hearing. Id. at 37/15-38/7.

On September 6, 2002, the court signed an order appointing Mary

and John Onstad as guardians for their mother. Docket No. 16;

Appendix at 9. Several days later counsel for the guardians wrote to Mr.

Mertz expressing a willingness to re-open the proceeding. “You have

expressed concerns over Doris’ absence from the August 27 hearing. In

light of the concerns, my clients would consider a re-hearing on the

guardianship issue.” Letter from Bruce D. Johnson to Monty Mertz dated

September 10, 2002. Docket No. 70, Exhibit 1. A week later Mr. Johnson

reiterated his offer. “In appreciation for Elizabeth’s concern over Doris’

lack of presence at the guardianship hearing, my clients are open to the

possibility of having another hearing with Doris present.” Id., Exhibit 2.

On November 26, 2002, Elizabeth filed a motion for reconsideration of

the order appointing guardians and for a new hearing, and a petition for

removal of the guardians and the appointment of herself as successor

guardian. She supported the motions with 11 affidavits. Docket Nos. 22-

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27. At the hearing on December 19, 2002, the court acknowledged that it

had been hasty in making its ruling in August.

The Court in reflecting on what took place at the hearing in August has determined that it probably would have been better – a better thing to have had an opportunity to explore more fully both sides of the issue. What happens sometimes when we have our hearing week schedules and they’re set in 15 minute slots, as Mr. Mertz noted, we have a tendency to want to move things along. We sometimes are backed up like O’Hare. And when things are scheduled and parties appear, it’s easier I think sometimes for us to simply perhaps trample on some folks and their right to be heard. I think that was a mistake. And, Mr. Mertz, I appreciate your filing the affidavits and giving me an opportunity to hear more fully both sides.

Transcript of December 19, 2002 at 5/2-14. The court stated, however,

that it would not revisit its decision to hold the hearing without Doris

present. “But I’m not backing up on my decision that it wasn’t in the best

interests of the ward to be here.” Id. at 6/18-19.

Having acknowledged that it should have permitted Elizabeth an

opportunity to contest the matter when she appeared and objected to the

appointment at the hearing in August, the court set the matter for a full

hearing and requested the guardian’s attorney to draw an order for new

reports from the visitor, the guardian ad litem, and the doctor “so that I

can be current.” Id. at 21/6-17; 22/23-23/23. “And my next hearing

week would be thirty days from now and if you get right on it I have the

idea that we could have those reports filed by the time I have another

hearing week.” Id. at 22/19-22.

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The next action in the file occurs on September 12, 2003, a motion to

substitute Mark Hellerud for Bruce Johnson as counsel for Mary and

John Onstad. Docket No. 42. On December 3, 2003, Mr. Hellerud noticed

a hearing for January 15, 2004 on the pending motions. Docket No. 48.

On December 18, 2003, Judge Dawson signed an Amended Order for

appointment of a physician, a visitor, and a guardian ad litem to report

to the court by January 5, 2004. Docket No. 53. At year-end the Cass

County judges rotated and the Honorable Norman Backes replaced

Judge Dawson on this case.

On January 12, 2004, Judge Backes granted a motion by Mr. Mertz to

withdraw as counsel and denied a motion by Elizabeth Onstad for a

continuance to seek new representation. Docket No. 60. Transcript of

January 12, 2004. At the hearing on January 15, 2004, Judge Backes

characterized the matter as “a petition for the removal of guardians and

conservators, and appointment of a successor guardian, conservator[.]”

Transcript of January 15, 2004 at 3/24 to 4/2. The attorney for the

guardians pointed out that pending also was a motion for

reconsideration of the initial appointment as well. Id. at 4/3-6.

I was also led to believe that this — we might be somewhat starting from scratch on the — actually the appointment of who was going to be guardian and conservator the way the issues shaped up. That’s the gist I got from the transcript of the last hearing that had been continued, and in light of that, we have endeavored to do some of the work over, as if we were initiating this.

Id. at 4/24 to 5/5.

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The court indicated that it saw the matter only as a petition to

remove, and would not revisit the initial appointment. “I’m just telling

you right now that I’m not going to go into irregularities in the first

petition now.” Id. at 11/14-16. In the court’s view errors in the initial

hearing were subject to appellate review, and would not be revisited now.

“ . . . from what I’m reading, we’re talking an awful lot about errors that

occurred in the initial proceedings, which were appealable, and the

Court, of course, is not going to go into those errors.” Id. at 9/19-23. See

also id., passim, at 9/24 to 10/13. The guardian ad litem also indicated

that he viewed the matter as a petition to remove the existing guardians,

not as a hearing anew on an initial appointment. He did not interview

Elizabeth as a potential guardian because “in my view, the issue was —

is for this kind of proceeding, whether or not the current appointed

guardians have been carrying out their functions as guardian, and if they

have, there’s no need to appoint a successor guardian, so that’s what I

was looking at . . .” Id. at 22/18-22.

Elizabeth disagreed with this characterization of the hearing. “Now,

there was a reopening of this hearing on the merits and on the facts

because we never had one. We had a 15-minute hearing in September.

That’s all we had.” Id. at 22/25 to 23/2. Judge Backes then made his

ruling on the scope of the hearing very clear.

We are not going back to the original hearing. In fact, I’ll make it very clear at this point. The motion for reconsideration of the order appointing guardians and

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conservators and for a new hearing, the Court has reviewed the files and will dismiss that motion on its merits as a matter of law. The only hearing we are having today is a brief — the motion for reconsideration — the petition for removal of guardians and conservators and the appointment of successors guardians and conservators.

Id. at 23/7-15. The court, therefore, did not allow testimony on

Elizabeth’s qualifications to be guardian nor question the correctness of

the original appointment. “I have to have a reason to remove the old

guardians . . . That’s the only issue before this court.” Id. at 24/10-13.

The guardian ad litem in his testimony indicated that Doris was

competent to testify.

A. . . . I was reappointed guardian ad litem in December, 2003 . . . earlier last week I talked to [your mother] on the telephone. And I asked her how she was getting along . . . . She certainly carried on a good conversation. She —

Q. Quite — pretty lucid? A. Yeah, I thought so. Q. Did she pretty much sound like any person, or were you aware

that there was an impairment, or — A. I’m aware she has impairment. I’m aware that she can’t remember

a lot of things that most people can remember, but she was carrying on a sensible conversation.

. . . Q. [The doctor] does say she would be able to answer in a court

proceeding? A. I think that’s what he says. I mean, I think she would make a fairly

good impression if she was here.

Id. at 31/10-25; 33/1-4. Despite this testimony, Doris was not present at

the hearing.

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The guardian ad litem did not discuss with the ward her wishes in

regard to being in a nursing home in the Fargo area as opposed to being

in Eden Prairie, Minnesota. (Mary had removed her from a nursing home

in Arthur, North Dakota shortly after the August 27, 2002 hearing.) Nor

did he ascertain if she preferred to be in the area she had lived all her life

where friends could visit her. When asked if he had taken steps to build

rapport with Doris over time, as opposed to a brief phone conversation,

the guardian ad litem responded: “It’s not my job.” Id. at 38/25 to 39/39.

The court repeatedly sustained objections to questions about the duty of

the guardian to ascertain the wishes of the ward. “It is immaterial.” Id. at

40/15 to 42/2. In the court’s view the role of the guardian ad litem was

to report on the ward, not to represent her in any meaningful way.

MS. ELIZABETH ONSTAD: He’s to be a representative of her desires.

THE COURT: No, he is not.

Id. at 44/18-20.

The court refused to permit questioning of Mary on her plans for the

ward or actions as guardian. Id., passim at 48-60. The court took the

position that only the testimony of an expert could establish “violation of

duties.” Id. at 51/1-6; 53/9-12. When Elizabeth expressed perplexity at

the court’s refusal to permit her to question the guardian, Judge Backes

replied: “I’m not going to . . . explain my rulings.” Id. at 54/12-14.

The court converted a hearing on who would make the best guardian

for Doris into an inquiry on whether the present guardians should be

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removed, thus placing the burden of proof to show misconduct upon

Elizabeth rather than neutrally ascertaining what arrangement would

truly be in Doris’ best interests. The person best qualified to testify on

this issue was Doris herself. Mary had removed her from Fargo in the fall

of 2002 and did not make arrangements for her to appear at the hearing.

The guardian ad litem did not consider his duties to encompass

ascertaining Doris’ wishes, but instead only to assess what was best for

her by his own lights.

The court did not hear closing arguments, but instead gave the

parties five days to submit letter briefs. Its opinion, dated May 27, 2004,

contained no findings of fact and ignored the Motion for Reconsideration

and for a New Hearing. “Elizabeth Onstad has petitioned for Removal of

Guardians and Conservators, and Appointment of Successor Guardian

and Conservator,” the opinion began. Memorandum Opinion of May 27,

2004. Docket No. 73; Appendix at 19. Without referring to any facts of

record, the court concluded that the petition lacked “any grounds” to

remove the guardians, that there had not been “a significant change of

circumstances,” and that it would not be in the best interests of the ward

to change guardians. The Court concluded further, drawing on ¶ 8 of the

guardians’ return to the petition for removal (December 16, 2002),

Docket No. 36, that failure to assert priority for appointment at the

original hearing had caused that claim to be barred by “the doctrines of

laches and res judicata.” Judge Backes retired four days later on May 31,

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2004. On June 4, 2004, the attorney for Mary and John submitted an

order for the court’s signature, which The Honorable Douglas Herman,

Judge of District Court, who had no familiarity with the proceedings,

signed on June 6th. Docket No. 75; Appendix at 21. Elizabeth filed a

notice of appeal August 18, 2004. Docket No. 77; Appendix at 22.

Campaign to Evict Elizabeth from the Family Homestead

The effort to evict Elizabeth from the family home is a sub-theme in

this case, which gradually grew in prominence and merged with the

larger issues of her suitability as guardian and the competence of her

siblings in managing the estate and the care of their mother. In 1995, at

her mother’s request, Elizabeth and her two daughters, who were then in

grade school, relocated from the east coast to live with their mother in

the family residence at 1140 5th Street North in Fargo. Doris was 77

years old at that time. Her husband, father of their six children, had died

in 1993. Affidavit of Elizabeth Onstad dated November 26, 2002. Docket

No. 26, ¶ 4.

During the next seven years Elizabeth bore the daily burden of care

for an aging parent whose mental condition was noticeably deteriorating.

At the same time she also had to provide a nurturing environment for her

young daughters. Her brothers John and Mark, who live in New Mexico,

never returned home to visit their mother after their father’s death. Id.,

¶11. (John owed his mother and father $50,000 on a note from 1986,

which was renegotiated in 1990. Payments lapsed after his father’s

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death. Id., Exhibits A-C.) Elizabeth’s brother Paul visited once in 1993.

Mary, living in Minneapolis, was closer to the situation, but visited

infrequently. When Elizabeth expressed disapproval of Mary’s affair with

the married principal of a Catholic school in Fargo, Mary retaliated

emotionally and visited her nieces only when Elizabeth was not present.

Id., ¶ 6. Affidavit of Francine McGaughy, Docket No. 26, ¶¶ 12, 19-20.

Mary’s plan to move Doris from the Fargo area and Elizabeth from the

family home first appears in the record in the hearing of August 27,

2002.

Q. If you were appointed guardian, would you continue to recommend that she live in the nursing home in Arthur?

A. What I would recommend, if possible, is to move her to

Minneapolis to a nursing home there, where I could be close to her and visit her on a relatively frequent basis.

Q. Your mother has one asset that you are aware of that’s not in

the trust, her home? A. Yes. Q. Are you seeking permission to control the home then as

conservator of your mother’s assets that are not in the trust? A. Yes, I believe we would transfer the house or the assets from the

house, the sale of the house, to the trust, to continue to provide care for my mother.

Transcript of August 27, 2002 at 16/1-14.

Soon after securing the letters of guardianship, Mary took steps to

remove Elizabeth from the family home. Shortly before the December 19,

2002 hearing, her attorney served Elizabeth with a notice to evict.

Transcript of December 19, 2002, at 23/19-23. The court halted this

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effort. “Well, that will be in abeyance until the hearing’s over so we can

deal with the house.” Id. at 23/24-25. With her mother in a nursing

home, Elizabeth raised the issue of paying for the expenses on the house.

THE COURT: So I would think that she, as a person living in a house, would be responsible for those expenses; not Doris who’s not getting any benefit from that house.

Id. at 23/18-21. Elizabeth explained that her income was minimal and

that she had managed the checkbook for her mother to see that utilities

were paid. Id. at 25/6 to 26/2. Bruce Johnson, attorney for Mary and

John, stated that Northern Capital Trust, Doris’ conservator, would pay

the bills.

MR JOHNSON: Two letters in Mr. Mertz’s file telling him have his clients send the bills to Northern Capital Trust. They can’t seem to do that. MS. ELIZABETH ONSTAD: I’m sorry. I didn’t see that. THE COURT: Thank you. That solves the problem.

Id. at 26/18-23. See Letter of Bruce Johnson to Monty Mertz dated

September 16, 2002 (“Utility bills that come to the house will need to be

sent to me so that they can be paid by Northern Capital Trust”). Docket

No. 70, Exhibit 2.

Despite this direction from the court, attorney Hellerud a year later

inserted into the order for new reports a statement that Elizabeth should

pay the utilities and other expenses on the house. Amended Order of

December 18, 2003. Docket No. 53, ¶ 4. In his cross-examination of

Mary Onstad at the January 15, 2004, hearing, he asked: “Isn’t it true

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that the Court at the last hearing directed that Elizabeth Onstad was to

pay the utilities and the water and whatnot on that house?” Mary Onstad

answered: “Yes.” Transcript of January 15, 2004 at 63/16-19. Elizabeth

objected that there was no order for her to pay expenses on the house

and that the court had actually endorsed the representation of the

guardians’ lawyer that Northern Capital Trust would continue to pay

expenses. Id. at 63/22 to 64/23. Attorney Hellerud then pointed out

Judge Dawson’s initial statement that she thought it would be

Elizabeth’s responsibility to pay the expenses. Id. at 64/24 to 65/10.

Elizabeth countered: “The Judge ruled from the bench that Northern

Capital trust would pay.” Id. at 65/11-12.

THE COURT: No, the transcript says you’re supposed to pay it. There didn’t happen to be an order that said you were supposed to pay it. . . The Court did order you to pay it. It wasn’t reduced to writing.

Id. at 65/18-23. Despite Elizabeth’s effort to explain what Judge Dawson

had actually determined on this matter, Judge Backes stayed with

attorney Hellerud’s mischaracterization. Id. at 65/24 to 68/2.

Judge Backes did not address the issue of residence in the house or

payment of maintenance costs in his Memorandum Opinion of May 27,

2004. Nonetheless, attorney Hellerud included the following sentence in

his draft order of June 4, 2004. “The eviction proceeding concerning the

ward’s house that was held in abeyance by this Court pursuant to Judge

Georgia Dawson’s oral order of December 19, 2002 until this matter

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could be heard is hereby reinstated and the abeyance lifted.” Docket No.

75. Judge Herman signed this order June 10, 2004. Docket No. 75. An

affidavit of mailing a copy of the order to Elizabeth Onstad was filed June

21, 2004. Docket No. 76. Elizabeth filed a notice of appeal on August 18,

2004. Docket No. 77

A week prior to the filing of the notice of appeal, Mary and John

commenced a separate eviction action against Elizabeth. Cass County

File No. 09-04-C-02670. Elizabeth answered and denied she was a “hold-

over tenant”. NDCC 33-06-01(4). The Honorable John Irby, Judge of

District Court, heard the matter on August 25, 2004. He dismissed the

case on the merits because “Plaintiff presented no witnesses or evidence

in support thereof.” Supreme Court Docket No. 26, Attachment A. The

next day Elizabeth wrote a letter to attorney Hellerud explaining that it

was in the best interest of her mother and of the estate for her to

continue to reside in the house. Once Doris’ liquid assets were depleted,

the home would normally be next in line as a source for nursing home

payments, either by liquidation or by a lien. (As of October 22, 2002,

Doris had $140,054.21 plus trust assets. Docket No. 21; Appendix at 16)

However, if Elizabeth, the child caretaker continued to reside in the

home, it would not be counted as an asset in determining Medicaid

eligibility. Therefore, Elizabeth concluded, it was objectively in the best

interests of both mother and children for Elizabeth to continue to reside

in the house, thus exempting it from the Medicaid spend-down. Letter of

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Elizabeth Onstad to Mark Hellerud dated August 26, 2004, citing 42

U.S.C. §1396p(c)(2); Minn. Stat. § 256B.15, subd. 4. Docket No. 100,

Affidavit of Elizabeth Onstad dated November 2, 2004, Exhibit VI. Mary

did not respond to the letter. Transcript of November 4, 2004 at 49/13-

19.

Instead on October 13, 2004, Mary and John’s attorney requested

that the Supreme Court return the Record on Appeal (“ROA”) to the

district court for a hearing on November 4, 2004, “regarding the above

mentioned file.” Supreme Court Docket No. 19, Attachment B. Mr.

Hellerud’s letter did not state the name of the case for which he was

requesting use of the ROA. On October 18, 2004 the Supreme Court

ordered the ROA returned to the Clerk of Cass County District Court “for

the purpose of making the record available for use in a related matter,

Onstad v. Onstad, Cass Co. No. 09-04-C-2670.” Id., Attachment C, Order

of Return. Apparently by verbal means or otherwise, Mr. Hellerud had

identified for the Supreme Court the “related matter” for which he needed

use of the ROA, namely the eviction action which had been dismissed on

August 25, 2004.

Having accomplished the return of the record to the district court, Mr.

Hellerud then filed a hybrid motion/summons-and-complaint in this

action requesting Judge Herman to evict Elizabeth from the house.

Docket Nos. 86-89. At the hearing on November 4, 2004, Judge Herman

16

assumed the record had been returned pursuant to a remand from the

Supreme Court, which wished him to act expeditiously on the motion.

As I understand it the Court returned the entire file here simply for purposes of deciding this issue and they wanted a determination of that; and then to kick the case right back to them so that, I assume it’s based on their policy of trying to avoid what they call piecemeal appeals so that everything involving this conservatorship/guardianship of Doris Muriel Onstad can be heard by them at one time if it is in fact appealed by either party.

Transcript of November 4, 2004 at 3/6-14 (emphasis added).

Elizabeth requested that the matter be continued until Mr. Mertz

could appear for her, but the court, under the impression that the

Supreme Court desired a speedy resolution of the matter in order for the

appeal to resume, denied the request. “[T]his matter being properly

noticed, and the Supreme Court so anxious to get this thing resolved by

virtue of their correspondence with this Court, we’re going to proceed.” Id.

at 4/10-13 (emphasis added). In truth, however, there was no remand

order and the Supreme Court had never, sua sponte or otherwise,

relinquished jurisdiction back to the district court for any purpose. It

had merely administratively made the record available at Mr. Hellerud’s

request for reference in a “related” case. “A return of the record, as

opposed to a remand, is simply ministerial in nature. Jurisdiction was

not returned to the trial court.” Letter from Penny Miller to Elizabeth

Onstad dated November 12, 2004. Supreme Court Docket No. 19,

Attachment G.

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Mr. Hellerud, rather than correcting the court’s misimpression, stated

that he was acting at the direction of Judge Irby in setting the eviction

for hearing in the guardianship proceeding. Transcript of November 4,

2004 at 5/6-8. In truth, however, Judge Irby, though discussing the

relationship of the eviction action to the probate case, had neither

declined to rule nor dismissed the complaint without prejudice. Instead

he had decided the matter on the merits.

Thus, Judge Herman continued in his misapprehension that he was

proceeding under an order of remand which required him to hold an

eviction proceeding.

One things that seems clear is that the Supreme court is anxious to have everything at the District Court level decided. Right or wrong, get everything decided so that if and when any of the elements of the case . . . are heard it can deal with those issues.

Id. at 5/15-20. Elizabeth attempted to correct the court’s impression, but

to no avail. Id. at 7/12-15; letter from Elizabeth Onstad to Judge

Herman dated November 4, 2004. Docket No. 107.

The court ordered Elizabeth to pay $750 per month plus utilities to

stay in the house or else post a $9000 bond. Docket No. 111; Appendix

at 25. Elizabeth stated that this level of payment was beyond her means,

and that it would be wiser to leave her in the house and preserve the

Medicaid exemption for the property. Id. at 61/19-23; 63/1-21. She also

presented an affidavit from her former husband stating that he had

18

visited Doris Onstad recently in the nursing home, and that she would

like to have the home preserved.

I mentioned the possibility that the asset represented by her homestead could be preserved—that she could avoid a Medicaid spend-down requirement—by deeding it to a child-caretaker. She said she thought that would be a good idea. She indicated she would want all of her children to benefit in some way. I said that I did not know if that would be possible. However, I felt that, given a reasonable explanation, she would choose to preserve the homestead as part or her personal legacy.

Affidavit of Gregg R. Mitchell dated October 23, 2004. Docket No. 91;

Appendix at 23. The court stated that Doris’ wishes may have no legal

effect because she is under guardianship. Transcript of November 4,

2004 at 56/8-19; 57/11-17.

Following the hearing Elizabeth sought an order from the Supreme

Court declaring the hearing void. Supreme Court Docket No. 19. The

motion was denied. Id., Docket No. 27. Elizabeth then filed a

Supplemental Notice of Appeal from the conditional order of eviction.

Docket No. 113.

On January 11, 2005, Judge Herman signed an eviction order,

Docket No. 124; Appendix at 28, which was executed in early February.

Elizabeth then moved the court to vacate its order, arguing inter alia,

that her continuous residence in the house was necessary to preserve it

from pre-Medicaid liquidation. The Court denied the motion. Docket No.

142; Appendix at 29.

19

ARGUMENT

I. Elizabeth never had a meaningful opportunity to be heard on her application to be her mother’s guardian.

“Procedural due process requires the right to notice and a meaningful

opportunity for a hearing appropriate to the nature of the case.” Mund v.

Rambough, 432 N.W.2d 50 (N.D. 1988), citing Logan v. Zimmerman Brush

Co., 455 U.S. 422 (1982). That hearing has never occurred in this case.

Judge Dawson confessed that a meaningful hearing had not occurred on

August 27, 2002, and scheduled the matter for reconsideration on

December 19, 2002. Despite her instructions to the guardians’ attorney

for a speedy new hearing, the case languished for a year until new

counsel set it on for hearing before Judge Backes on January 14, 2004.

Refusing to honor Judge Dawson’s instruction that the matter of who

should be appointed guardian be reheard de novo, Judge Backes limited

the hearing to a petition to remove the guardians. Finding no substantial

change in circumstances, he denied the petition. Thus, Elizabeth Onstad

has yet to have a hearing on the merits of who should be appointed

guardian for her mother.

By limiting the hearing to the motion to remove guardians, Judge

Backes placed the burden of proof on Elizabeth to prove wrongdoing by

Mary and John. Had he heard the matter of appointment of guardians de

novo, as ordered by Judge Dawson, Elizabeth would have been able to

present evidence of her suitability to be her mother’s guardian and to

prevail by a preponderance of the evidence. By refusing to hear the

20

matter as scheduled, the court wrongly excluded relevant evidence and

imposed an improper burden of proof. The guardian ad litem shared in

the court’s error. He did not interview Elizabeth, limiting his report to the

issue of removal. Furthermore, even on the issue of removal, the court

refused to allow Elizabeth to examine her sister on her conduct as

guardian, arguing that only an expert could provide such testimony.

The Motion for Reconsideration of Order Appointing Guardians and

Conservators and for a New Hearing was effectually granted, at least in

part, by Judge Dawson in the December 19, 2002 hearing. She certainly

ordered that there be a new hearing. Whether the result of that hearing

would change the appointment of guardians remained to be seen. Judge

Backes, however, refused to conduct that part of the hearing on the

grounds that any issues of irregularity in the initial appointment were

waived by the failure to appeal. This is the same argument that Bruce

Johnson made in his return to the reconsideration motion. “The issues

raised in the Motion are issues which should be raised in an appeal.”

Docket No. 37, ¶ 6. Mr. Mertz and Mr. Johnson debated whether

Elizabeth had received notice of entry of judgment so as to commence the

time for appeal. Transcript of December 19, 2002 at 7/20 to 8/18; 17/5-

24. This issue, however, became moot once Judge Dawson granted the

motion to reopen the case.

In Judge Backes’ view, however, the failure to appeal precluded

reconsideration of the merits of the original appointment, which were no

21

longer subject to review. In effect, he overruled Judge Dawson’s

determination based upon his own finding “as a matter of law” that there

was no legal basis for reopening a matter which had gone to judgment

and had not timely been appealed. There is, however, a provision of the

civil rules which permits reopening or reconsideration of an order or

judgment after the time for appeal has lapsed. “On motion and upon

such terms as are just, the court may relieve a party or a party’s legal

representative from a final judgment or order in any action or proceeding

for the following reasons . . . .” Rule 60(b), N.D.R.Civ.P.

Elizabeth did not cite Rule 60(b) in her motion for reconsideration, but

that omission is not controlling. “We have repeatedly held that we will

consider a motion’s substance rather than its title to ascertain the

correct nature of the pleading.” Kostrzewski v. Frisinger, 2004 N.D. 108,

¶ 10, 680 N.W.2d 271. The Supreme Court has frequently treated a

motion for reconsideration or to reopen a case as a Rule 60(b) motion for

relief from a judgment or order. Hefty v. Aldrich, 220 N.W.2d 840 (N.D.

1974) (motion to reopen case); Dvorak v. Dvorak, 2001 N.D. 178, ¶ 9, 635

N.W.2d 135 (motion for reconsideration). That is exactly what occurred

here. Elizabeth in substance made a Rule 60(b) motion, but did not title

it as such. Judge Dawson’s grant of Rule 60(b) relief from the order

appointing guardians was fully within her discretion. Judge Backes’

claim that failure to appeal precluded such reconsideration is plain error.

22

This case should be remanded for a proper hearing on the merits of the

Rule 60(b) motion, as Judge Dawson intended and the parties expected.

Such action is especially appropriate in this case, where there is

evidence in the record that the prevailing party expressed a willingness to

reopen the matter and thus, by inference, preclude an appeal. Letters

from Bruce Johnson to Monty Mertz of September 6 and 10, 2002,

Docket No. 70, Exhibits 1-2. Having made this offer, Mary and John

should be precluded by equitable estoppel from then taking the opposite

position that appeal was the only remedy. NDCC 31-11-06; Muhammed

v. Welch, 2004 N.D. 46, ¶¶ 18-19, 675 N.W.2d 402.

Rule 60(b) provides for relief from a judgment or order for, inter alia,

surprise, misrepresentation, “or (vi) any other reason justifying relief

from the operation of the judgment.” It is arguable that Elizabeth

experienced surprise in having to meet a motion for appointment of

guardians without the statutory reports being available prior to the

hearing. The affidavits submitted on the motion also clearly called into

question Mary’s representation to the court that Elizabeth had been

“neglectful and potentially abusive” towards her mother. Transcript of

August 27, 2002 at 17/21 to 18/5. Affidavit of Francine McGaughy, ¶¶

5-9, 14-19; Affidavit of Camilla J. Wilson, ¶ 3; Affidavit of Elizabeth

Williams, ¶¶ 4-6; Affidavit of Mary Rice, ¶¶ passim, Affidavit of Linda

Johanson, ¶¶ passim; Affidavit of Kathleen Kerlin, ¶¶ 2-3; Affidavit of

Cindy Stadum, ¶¶ 4-6; Affidavit of Gayle Brant, passim. Judge Dawson,

23

in reviewing these affidavits, may well have concluded that Mary had

seriously misrepresented the quality of care Elizabeth provided to her

mother. This misrepresentation may have contributed to the court’s

decision to grant letters of guardianship after only a cursory hearing.

Is it your intention to stand on your affidavits, Mr. Mertz? . . . the Court has had an opportunity to read all of them. . . . Mr. Mertz, I appreciate your filing the affidavits and giving me an opportunity to hear more fully both sides.

Transcript of December 19, 2002 at 3/19-23; 5/12-14.

Rule 60(b)(vi) references “any other reason,” which this court has

interpreted to mean “something more or extraordinary” justifying relief.

Hefty v. Aldrich, 220 N.W.2d 840 (N.D. 1974). “We have previously found

such extraordinary conditions to exist where the welfare of minors was

directly involved, and where a constitutional question was duly raised.”

Id. (citations omitted). A guardianship proceeding for an elderly person

has many of the features of a proceeding implicating the welfare of a

minor. Elizabeth also raised the due process issue of being denied a

meaningful opportunity to be heard. Brief in Support of Motion for

Reconsideration at 1-3. Docket No. 24. In general, Rule 60(b) is available

to prevent a miscarriage of justice.

[T]he broad language of Rule 60(b) (6), N.D.R.Civ.P., gives the court ample power to vacate a judgment or an order whenever such action is appropriate to accomplish Justice. If it is unjust that a judgment or an order be enforced, Rule 60(b) (6) does provide an avenue of escape from the judgment or order, unhampered by detailed restrictions.

Kinsella v. Kinsella, 181 N.W.2d 764 (1970).

24

Rule 60(b) “is remedial in nature and should be liberally construed

and applied.” Id. A Rule 60(b) motion is addressed to the trial court’s

sound discretion, which Judge Dawson’s properly exercised in reopening

the hearing. “A court may exercise its power under Rule 60(b)(6) to

vacate an order on conditions that will place the parties in status quo.”

Id. This is exactly what Judge Dawson did. When Judge Backes refused

to hear the matter de novo, he denied Elizabeth a meaningful hearing on

the issue of who would be the best guardian for her mother, and

disregarded the well-established role of Rule 60(b) in providing the relief

requested. His erred in finding that “as a matter of law,” the district court

lacked authority to reopen the hearing.

II. Doris should have been present at the hearing.

In the original Petition for Appointment of Guardian and Conservator

for an Incapacitated Person dated July 3, 2002, Mary and John stated

under oath: “The proposed ward is able to appear at the hearing.” Docket

No. 1, ¶ 8. The Visitor’s Report dated August 13, 2004 (based on a visit

on August 9, 2004), also states that Doris is able to appear at the

hearing. Docket No. 14, ¶ 5(l). At the hearing the guardian ad litem

stated that he anticipated that she would be present. Transcript of

August 27, 2002 at 27/23-24. The petitioners, however, did not make

arrangements for Doris to appear at the hearing.

The proposed ward must be present at the hearing in person, unless good cause is shown for the absence. Good cause does not consist only of the physical difficulty of the proposed ward to attend the hearing. The court shall take all

25

necessary steps to make the courts and court proceedings accessible and understandable to impaired persons. Accordingly, the court may convene temporarily, or for the entire proceeding, at any other location if it is in the best interest of the proposed ward.

NDCC 30.1-28-03(7-8).

Subsequent to the hearing, the successful petitioners offered to

remedy the problem of Doris not being at the hearing. Docket No. 70,

Exhibits 1-2. Judge Dawson, however, did not wish to revisit this issue.

Transcript of December 19, 2002 at 6/18-19. After being appointed

guardian, Mary moved Doris from Good Samaritan Nursing Home in

Arthur, North Dakota to Castle Ridge Care Center in Eden Prairie,

Minnesota, thereby limiting her ability to appear for a hearing. (Arthur is

only 30 miles from Fargo as opposed to Eden Prairie, which is 240 miles

away).

On January 12, 2004, the guardian ad litem conducted a half-hour

telephone interview with Doris in anticipation of the hearing scheduled

for January 15, 2004. Docket No. 64. “Mrs. Onstad was able to carry on

a sensible conversation with me,” he reported. “Throughout the

conversation Mrs. Onstad was very pleasant and cordial.” Id. at 2. At the

hearing the guardian ad litem confirmed that Doris communicated well

with him.

A. She certainly carried on a good conversation. She – Q. Quite – pretty lucid? A. Yeah, I thought so.

26

Q. Did she pretty much sound like any person, or were you aware that there was an impairment, or –

A. I’m aware that she has impairment. I’m aware that she can’t

remember a lot of things that most people can remember, but she was carrying on a sensible conversation.

Transcript of January 15, 2004 at 31/18-25. Under these circumstances

there was no good cause for Doris’ absence from the hearing, and under

the statute she should have been present. Compare Knight v. Milwaukee

County, 2002 WI App 194, 651 N.W.2d 890 (vacating guardianship

proceeding for failure to provide for attendance of proposed ward).

III. The Court did not prepare findings as required by Rule 52.

In all actions tried upon the facts without a jury . . ., the court shall find the facts specially and state separately its conclusions of law thereon and direct the entry of the appropriate judgment . . . . It will be sufficient if the findings of fact and conclusions of law are stated orally and recorded in open court following the close of the evidence or appear in an opinion or memorandum of decision filed by the court.

Rule 52(a), N.D.R.Civ.P. Judge Backes did not state his findings and

conclusions orally in open court. Instead he invited letter briefs from the

parties. Transcript of January 15, 2004 at 68/13-23. The Memorandum

Opinion of May 27, 2004, however, also did not find any facts. The

conclusions of law, therefore, are without an evidentiary foundation. It is

not necessary to object to findings in the district court in order to

challenge them on appeal. Rule 52(b), N.D.R.Civ.P. When Judge Dawson

granted a new hearing on December 19, 2002, she in effect vacated her

prior order with its findings. Therefore, there are no undisturbed findings

27

of record to support the order appointing guardians, or the refusal to

reconsider their appointment or to remove them.

Although “[f]indings of fact. . . shall not be set aside unless clearly

erroneous,” Rule 52(a), “a finding of fact which failed to show the basis of

the trial court’s conclusion is clearly erroneous.” Gross v. Gross, 287

N.W.2d 457 (N.D. 1979). The absence of findings of fact leaves he

appellate court “without a clear understanding of the basis of the lower

court’s decision.” Id.

The only certain method presently known to guarantee that the trial court has made a complete analysis of all the relevant evidence before it is by what the court has separately set down in writing as its precise findings of fact before those findings are reasoned into legal conclusions.

Id.

IV. The Clear and Convincing Standard of Proof was not met.

A guardian may be appointed only after a “finding in the record based

on clear and convincing evidence.” NDCC 30.1-28-04(2)(c). The Court’s

Order Appointing Guardian and Conservator of September 6, 2002 states

that it is based on clear and convincing evidence. Docket No. 16 at 2.

However, the court’s reopening of the hearing from which this order

issued indicates that on reflection it found the evidence less than

convincing. Judge Backes in his May 27, 2004 opinion did not employ

the term “clear and convincing” at all. Bare invocation of the statutory

language does not suffice if there is insufficient evidence in the record to

support it. See Schiavo v. Schiavo, ___ F.3d ___ (11th Cir. March 25,

28

2005), Tjoflat, J., dissenting from denial of rehearing en banc). It is

questionable whether rival parties for guardianship can stipulate to

incompetency for a proposed ward without compromising her due

process rights. Similarly, written testimony by a guardian ad litem,

physician, and visitor are mere hearsay without record testimony from

the proposed ward and their presence in court for cross-examination.

Compare Crawford v. Washington, 541 U.S. 36 (2004) (out-of-court

testimony in criminal case which is not subject to cross-examination is

inadmissible).

V. The Final Order did not conform to Civil Rule 63.

Judge Backes issued his Memorandum Opinion on May 27, 2004 and

retired on May 31st. Docket No. 73. North Dakota Governor John Hoeven

appointed Douglas Herman as his successor. State of the Judiciary

Message, January 5, 2005. Pursuant to direction in the opinion, attorney

Hellerud prepared an order for the court’s signature, which he submitted

to the Clerk of Court on June 4th. As Judge Backes’ successor, Judge

Herman signed the order June 10th. Docket No. 75. At the time he signed

the order which is the subject of this appeal, Judge Herman had no

familiarity at all with this case.

If a trial or hearing has been commenced and the judge is unable to proceed, any other judge may proceed with it upon certifying familiarity with the record and determining that the proceedings in the case may be completed without prejudice to the parties.

Rule 63, N.D.R.Civ.P.

29

Judge Herman did not certify his familiarity with the record, nor did

he determine that the order could be signed without prejudice to the

parties. At the time he signed the order there was not a transcript or

videotape of the proceedings available for review as required by the rule.

Id., Explanatory Note. Elizabeth was prejudiced by this omission because

attorney Hellerud had added to the order an instruction about resuming

eviction proceedings. Judge Backes, however, had not included such a

statement in his Memorandum Opinion. His instructions to the

prevailing party were simply as follows:

The Petition to remove Mary and John Onstad as guardians and conservators is in all respects denied. The attorney for Mary Onstad and John Onstad is directed to prepare an Order accordingly.

Docket No. 73 at 2.

VI. The Eviction Hearing of November 4, 2004.

A. Res Judicata effect of Judge Irby’s dismissal.

When Judge Irby dismissed the eviction proceeding on the merits on

August 25, 2005 (Docket No. 26, Attachment A), the probate court, in the

absence of a finding of changed circumstances, was bound by that

determination. Res judicata generally prohibits the relitigation of claims

that were raised in a prior action between the same parties and were

resolved by a final judgment in a court of competent jurisdiction. Gepner

v. Fujicolor Processing, Inc., 2001 ND 207, ¶ 21, 637 N.W.2d 681. This

doctrine has been applied to eviction lawsuits. 9 Avenue Plaza LLC v.

30

Falgoust, 676 So.2d 1077 (La. 1996). Thus, Judge Herman was not at

liberty to relitigate the eviction a bare ten weeks after it was dismissed on

the merits.

B. North Dakota law prohibits joining an eviction proceeding with any other action.

Proceedings for eviction are governed by Chapter 33-06, NDCC.

Section 33-06-04 states in part: “An action of eviction cannot be brought

in a district court in connection with any other action, except for rents and

profits accrued or for damages arising by reason of the defendant’s

possession.” (emphasis added). The case at bar is a probate proceeding

for appointment of a guardian pursuant to Chapter NDCC 30.1-28. An

action of eviction, therefore, by the plain prohibition of NDCC 33-06-04

may not be entertained in this action.

Perhaps aware of this statute, attorney Hellerud devised a hybrid

motion/summons-and-complaint to cover all bases. Docket No. 87. If the

summons and complaint inserted into the motion are meant to stand as

an independent action (like a magazine supplement in a newspaper) in

the event that Judge Herman found he could not entertain an eviction

action in a probate proceeding, then they duplicate what Judge Irby had

already dismissed. Otherwise NDCC 33-06-04 governs. Judge Herman

had this argument before him, Docket No. 93, but ignored it.

31

C. The Supreme Court never relinquished jurisdiction to the trial court to conduct a hearing.

Despite Judge Herman’s assertion to the contrary, the Supreme Court

never remanded this case for an eviction decision. Attorney Hellerud’s

artful misdirection in acquiring the record from the Supreme Court

certainly contributed significantly to Judge Herman’s misunderstanding

on this point. The Supreme Court may remand a case to the district

court without relinquishing jurisdiction if a matter necessary to the

appeal needs to be heard. Rule 35(a)(3), N.D.App.P. Such a remand never

occurred, and thus the trial court lacked jurisdiction to proceed. “A

judgment or order entered without the requisite jurisdiction is void.”

Albrecht v. Metro Area Ambulance, 1998 ND 132, ¶ 11, 580 N.W.2d 583.

D. Elizabeth was not on notice that the court might consider imposing rental and expense payments as a condition of continuing residence.

Due process requires notice and a meaningful opportunity to be

heard. Elizabeth had notice of an eviction action, but not that she had to

defend against imposition of rent and expense payments. Thus, she was

not prepared (nor given the opportunity) to testify as to her ability to pay

and at what level. The court simply devised a figure on its own without

any inquiry as to her capacity to pay. Transcript of November 4, 2004 at

53-55. This lack of notice coupled with no opportunity to be heard on the

issue constitutes a denial of due process. Adjudication by improvisation

undermines the fair process of notice, presentation of evidence, and

careful deliberation envisioned by the civil rules.

32

VII. Child Caretaker Exemption to Medicaid Spend-down Doris has been in a Minnesota nursing home since the fall of 2002.

Once her liquid assets are exhausted by nursing home costs, she will be

forced to use proceeds from the house to continue her care. There is,

however, an exception which would allow her to qualify for Medicaid

without having to sell the house.

A. Federal Medicaid Law

As a general rule any assets of a Medicaid applicant which are

transferred within 36 months (the “look-back” period) of a Medicaid

application for less than fair market value will produce a period of

ineligibility equal to the amount transferred divided by the average

monthly cost of nursing home care (about $4000). 42 U.S.C. §1396p.

A homestead is considered an available asset for Medicaid purposes

unless certain exceptions apply. One is that the individual plans to

return to the home. Another, directly applicable in this situation, is that

the homestead may be deeded to a child caregiver.

An individual shall not be ineligible for medical assistance by reason of paragraph (1) [transfer penalty calculation] to the extent that (A) the assets transferred were a home and title to the home was transferred to . . . (iv) a son or daughter of such individual . . . who was residing in such individual’s home for a period of at least two years immediately before the date the individual becomes an institutionalized individual, and who (as determined by the State) provided care to such individual which permitted such individual to reside at home rather than in such an institution or facility[.]

33

42 U.S.C. §1396p(c)(2). See similarly N.D. Admin. Code 75-02-02.1-

33.1(2)(A)(4).

B. Minnesota Medicaid law

Under Minnesota law, “[t]he homestead shall be excluded for the first

six calendar months of a person's stay in a long-term care facility and

shall continue to be excluded for as long as the recipient can be

reasonably expected to return to the homestead.” Minn. Stat. §

256B.056, subd. 2. Arguably, both of these conditions are no longer met.

Additionally, however,

The homestead shall continue to be excluded for persons residing in a long-term care facility if it is used as a primary residence by one of the following individuals: . . . (e) a child of any age, or, subject to federal approval, a grandchild of any age, who resided in the home for at least two years immediately before the date of the person's admission to the facility, and who provided care to the person that permitted the person to reside at home rather than in an institution.

As long as the home continues to be Elizabeth’s primary residence,

Minnesota will not count it as an asset for eligibility purposes and it will

also be exempt from a Medicaid estate lien.

If the decedent who was single, . . . is survived by one of the following persons, a claim exists against the estate in an amount not to exceed the value of the nonhomestead property included in the estate:

. . . . (b) a son or daughter or a grandchild who resided in the decedent medical assistance recipient’s home for at least two years immediately before the parent’s or grandparent’s institutionalization and continuously since the date of institutionalization, and who establishes by a preponderance

34

of the evidence having provided care to the parent or grandparent who received medical assistance, that the care was provided before institutionalization, and that the care permitted the parent or grandparent to reside at home rather than in an institution.

Minn. Stat. § 256B.15, subd. 4 (emphasis added). C. Preservation of an estate for Doris

Because Elizabeth qualifies as a child caregiver by reason of the care

she provided to Doris for seven years, the home at 1140 Fifth Street

North in Fargo will be preserved as a family asset if it is deeded over to

her or (under Minnesota law) continues as her primary residence.

Minnesota law requires that residence in the home be continuous. If

Elizabeth moves out or the home is sold, the exemption is lost. In re

Estate of Handy, 672 N.W.2d 214 (Minn.App. 2003).

Sale of the home, as Mary and John have desired since the beginning

of the case, would eliminate the possibility of preserving its value from

Medicaid liquidation to pay for nursing home care. Even if preserved

temporarily under the “returning home” exception, it would still be

subject to a Medicaid estate lien. A transfer to the child caregiver (or her

continuous residence), however, is compatible with eligibility for

Medicaid and retention of this asset within the family.

Both Doris and her children would be better served by preserving the

family residence from Medicaid liquidation rather than unnecessarily

forfeiting it. The only evidence on this issue is the affidavit of Gregg

Mitchell.

35

I mentioned the possibility that the asset represented by her homestead could be preserved—that she could avoid a Medicaid spend-down requirement—by deeding it to a child-caretaker. She said she thought that would be a good idea.

Docket No. 91; Appendix at 23. It seems reasonable that Doris would

prefer to have an inheritance rather than expending it all unnecessarily

on Medicaid.

The public policy behind the exemption is that the caretaker child has

earned the equity in the homestead by giving up employment and by

providing services to the needy parent. The insistence of the current

guardians on selling the home creates an unnecessary and pointless

wasting of Doris’ assets and is inconsistent with the prudent actions of a

fiduciary. Because Mary and John have been successful in having

Elizabeth evicted from the home, the continuous residence qualification

may be irreparably destroyed. (A reversal of the eviction order on appeal

or remand, however, might as a matter of law allow continuous residence

to be maintained). If that is so, then only deeding the home to the child

caregiver could preserve the residence as a family asset. This is not a

case where children seek to “cast their relatives on the welfare rolls to

reserve their estate for other family members”. Nielsen v. Cass County

Social Services Board, 395 N.W.2d 157 (N.D. 1986), (VandeWalle, J.,

dissenting). It is public policy to protect the child caretaker to encourage

care of the elderly in the home, thus putting off the day when an elderly

person may have to be cared for at public expense. “[T]he care permitted

36

the parent or grandparent to reside at home rather than in an

institution.” Minn. Stat. § 256B.15, subd. 4.

Were Elizabeth to be appointed guardian, it may appear as a conflict

of interest for her to deed the home to herself even though that would be

in the best interest of her mother and the family as a whole. See Nielsen

v. Cass County Social Services Board, 395 N.W.2d 157 (N.D. 1986) (dual

status as conservator and beneficiary may create conflict of interest).

However, recent guidance from this court indicates that in situations of

family conflict, the court should appoint a non-family member as

guardian. Such a resolution seems wise in this case.

When a family is at odds with each other concerning proper care for

the ward, “[t]he best interest of the ward is served by appointing a non-

family member as guardian where the family members are unable to get

along with each other[.]” Guardianship/Conservatorship of Van Sickle,

2005 ND 69, ¶ 36, ___ N.W.2d ___, quoting Matter of Guardianship of

Kelly, 910 P.2d 665, 671 (Ariz. App. 1996).

VIII. Priority of Appointment

In his Memorandum Opinion of May 27, 2004, Judge Backes found

that Elizabeth’s “failure to assert a priority for appointment at the time of

the August 27, 2002 hearing is now barred by doctrines of laches and res

judicata.” Dkt. No. 73; Appendix at 20. Elizabeth originally asserted this

priority in her Motion for Reconsideration dated November 25, 2002

(priority as adult child, primary caregiver, and person with most

37

significant contact). Docket No. 22 at 1. NDCC 30.1-28-11(3)(c)(e)&(f).

When Judge Dawson several weeks later granted this motion and

ordered a new hearing on the merits, she drew into question the basis for

her original appointments. Elizabeth’s claim of priority, therefore, was

timely and no longer a matter of settled adjudication.

IX. Conclusion

For the above-stated reason, the Order of June 10, 2004, should be

reversed and this case remanded to the District Court to hold a hearing

de novo on the appropriate persons to be guardians and conservators for

Doris Onstad.

Respectfully submitted this ____ day of April, 2005.

__________________________________ Monty G. Mertz Attorney at Law N.D. Bar No. 03778 1308 23rd Street South Fargo ND 58103 (701) 293-7788