Court Determines Distribution of Estate

January 23, 2012 | Erika Eckley

This case involved the distribution of an Iowa estate’s assets to the surviving spouse, adult children, and minors following the lump settlement of a wrongful death case filed in Nebraska. On appeal, the court was asked to determine choice of law for the distribution and the equitable distribution of the settlement proceeds.

The decedent died intestate while undergoing a “routine surgery” at a hospital in Nebraska following a heart attack at his home in Iowa. The decedent’s surviving spouse opened a probate estate, and as administrator, brought a wrongful death and medical malpractice action against the physician and medical facilities. This claim resulted in a confidential settlement agreement between the estate and the defendants. The district court in Iowa approved the terms of the settlement. The proceeds from the settlement were then distributed via Iowa probate administration proceedings.

Under the proposed distribution, five of the decedent’s children each received $10,000; two adult children received nothing; and the surviving spouse received the remainder. Four of the adult children objected to the proposed distribution, and the court held a hearing to conduct discovery. At the close of the hearing, the judge allowed the parties to submit post-trial briefs in lieu of closing arguments. The objecting children argued, for the first time in their closing brief, that the court should determine the distribution of the proceeds pursuant to Nebraska law rather than Iowa law. The trial court took judicial notice of Nebraska law, but distributed the proceeds pursuant to Iowa law and adopted the proposed distribution. The four children appealed the court’s use of Iowa law and the actual distribution.

The appellate court held that because the children failed to plead that Nebraska law should apply or present evidence of the propriety of Nebraska law, the trial court should not have taken judicial notice of the Nebraska law and that it was inapplicable. The court then examined the trial court’s distribution of the settlement proceeds pursuant to Iowa law.

The children argued that the distribution was improper because the settlement was for a lump sum with no award for damages for loss of services and support. They claimed Iowa law requires that when there is no specific award of damages for services and support, the proceeds should be distributed as personal property of the estate. The court disagreed and held that because Iowa Code § 633.336 requires the equitable apportionment of proceeds, the legislature intended for the court to distribute the lump sum proceeds equivalent to each person’s loss. Additional conflict of law arguments were presented, but the court concluded that because Nebraska law was never properly pled, the distribution of the settlement would be equitable under Iowa Code § 633.336.

In reviewing the factual determinations of the court in distributing the settlement proceeds, the appellate court determined that the evidence in the record did not reflect the trial court’s distribution and made adjustments to better reflect the support and services lost from the father’s death by decreasing the wife’s award and increasing the award to the younger children. The court did, however, uphold the denial of any support award to the two adult children because there was no evidence they relied on their father for support or benefitted from his companionship. In re Estate of Pullen, No. 1-856/11-0094 (Iowa Ct. App. Jan. 19, 2012).