The Supreme Court of Montana concludes that the district court was within its discretion to reopen an estate to account for a subsequently discovered investment. Although the estate representative knew about the investment, the company had misled her into believing it lacked value. In Estate of Starkel (DA 22-0744, November 21, 2023).
Before he passed away, Victor Starkel invested in his grandson Adamson’s company, Cradlepoint. Per the Stock Pledge Agreement (SPA), Mr. Starkel would receive 40,000 shares in the company for $10,000.
After his death, his sister Sylvia Moody became his personal representative. She found a copy of the SPA and reached out to Adamson, who failed to respond. She then contacted Cradlepoint, which told her that the company’s ledger did not list Mr. Starkel as a shareholder. Believing that the SPA lacked value, Ms. Moody filed a Final Account of the Estate that did not include the SPA. The court issued a distribution decree and final account and closed the estate.
Seven years later, another company acquired Cradlepoint for $1.1 billion. Ms. Moody asked Adamson about the value of the SPA. He responded that it had no value upon Mr. Starkel’s death. However, she learned that he honored other family member’s investments following the sale of his company.
She sued Adamson for conversion, security fraud, violating the Montana Consumer Protection Act, deceit, and unjust enrichment. In addition, she petitioned to reopen the estate and resume her appointment as personal representative. The grandson, claiming to be an interested person, objected to her reopening the estate. The district court allowed her to reopen the estate. Then, Adamson’s mother objected.
The Supreme Court of Montana considers whether the district court erred in reopening the estate. Per Section 72-3-1016 of the Montana Code Annotated (MCA), the court can reopen a case in the event of a subsequently discovered asset.
With his mother, the grandson argued that the SPA was not a subsequently discovered asset because the estate representative knew about it during the first probate. They relied on Estate of Swandal. But that case focused on a scrivener’s error, and the estate representative knew the value of the sale. This case is distinct because Ms. Moody did not know that the SPA created a debt to the estate of any value, and she made a reasonable inquiry to find out the value.
Her efforts to determine whether the SPA had value were diligent. She investigated all sources of information available to her. If anyone is to blame for her lack of knowledge of the value of the SPA, it is Adamson.
Because the SPA qualifies as a subsequently discovered asset, the district court did not abuse its discretion in reopening the estate per Section § 72-3-1016, MCA.
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