Scottrade v. Davenport et al

INTERPLEADER: Frivolous claims by one-time attorney/girlfriend to all proceeds of decedent’s investment account over 4 others named in TOD rejected, assessed fees/costs against her share of $2,808,425 funds… Cebull.

James LeFeber executed a Scottrade Transfer on Death Beneficiary Plan a month before his death in 2010 at age 71. His former girlfriend Kristine Davenport claims entitlement to his entire Scottrade account. The 4 others named in the TOD — Shane LeFeber, Patricia Faller, Christopher Gibbons, and Kimberly Chabot — do not contest the TOD. When Davenport refused to release Scottrade from liability if it distributed the proceeds pursuant to LeFeber’s TOD, Scottrade filed this interpleader and placed $2,808,425.21 in the Court registry and was then dismissed. Since it acted prudently, the Court ordered that it recoup its attorney fees from the interpled proceeds, reserving ruling as to whom the approximately $6,000 in fees would be charged.

Shane LeFeber is son of LeFeber’s longtime girlfriend Maggie Johnson. They moved to Florence in 1994 and were involved in litigation over the house until 2007. LeFeber and Shane remained close after the relationship ended, with Shane siding with LeFeber over his mother. LeFeber considered Shane his step-son and left him his residuary estate, oil & gas leases, and 56% of the Scottrade account. Shane spent considerable time away from his family in Oregon to care for LeFeber in Montana the last months of his life.

Faller was LeFeber’s neighbor in Florence. Over the years, and especially after Maggie left, he had holiday meals with Faller and her husband. As soon as LeFeber learned he was ill he designated her attorney-in-fact. She was named PR in his will and given his home and beloved dog and cat. Under the TOD she is entitled to 4% of the Scottrade account. She has retained counsel for this suit.

Gibbons met LeFeber in 1979 when he moved across the road from him and his parents in Idaho. LeFeber was a father figure, helping him and his brothers through difficult family times in their teen years. Gibbons avers that LeFeber’s compassion & love made an enormous difference in his life. LeFeber asked that Gibbons be there when he died and Gibbons took time away from his family and work in Idaho to care for LeFeber his last 2 months. LeFeber left 16% of his Scottrade account to Gibbons. Gibbons is pro se.

Chabot, also pro se, developed a close friendship with LeFeber after they met on the Internet in 2006. They spent 2 weeks in Hawaii and had frequent phone and email contact until he died. He left 8% of his Scottrade account to her.

Davenport (aka Hawkins) is a Montana attorney who was suspended indefinitely in 1994 after being convicted of theft. In 5/06 the Montana Supreme Court transferred her to “disability/inactive,” concluding that “clear and convincing evidence does establish that Hawkins suffers from physical and mental conditions which adversely affect her ability to practice law.” Despite her disability/inactive status, she has a history of frivolous & vindictive pro se litigation. The MSC determined earlier this year that she egregiously misrepresented that she should be able to file a late appeal because her counsel died during the proceedings, when he actually died more than a year before she was required to appeal. True to form, she claims it “misunderstood the situation” and has petitioned for rehearing. In another recent case, described by the MSC as having a “mind-numbing” procedural history, she was determined to have filed affidavits in bad faith and prosecuted her appeal by merely repeating “unfounded, outrageous, and conclusory accusations against everyone involved in her case.” That was a misdemeanor prosecution for speeding and maintaining community decay, to which she responded by trying to disqualify the JP by alleging a litany of criminal & ethical misconduct. She has followed the same course in this mind-numbing proceeding. She met LeFeber in 2006 in the offices of Tip & Buley in Missoula. They were introduced by his friend and attorney Raymond Tipp. Although she now denies it, it appears that she knew he was a multimillionaire from the outset. Their relationship became romantic in 7/07, but LeFeber decided to put space in it in the fall of 2007 when she took a sudden interest in his money. There is no evidence of a romantic relationship after 2007, but she maintains that his TOD and will are invalid and she is entitled to his estate. She primarily argues that they entered into an oral contract in 2007 in which he agreed to leave her everything as long as she stayed with him “emotionally” until his death, and that he then made a new will and TOD putting this oral contract into effect. She has used her knowledge of the law to allege virtually every cause conceivable under self-serving theories of LeFeber’s estate planning, death, and cremation. She alleges that Defendants engaged in a conspiracy to interfere with the alleged oral contract and will through fraud, duress, undue influence, and breach of fiduciary duty, as well as other causes, some of which are not recognized by Montana law. Her most scandalous claims are that Defendants murdered LeFeber and spoliated the evidence by illegally cremating him to prevent him from changing the estate plan he made because of their undue influence. As discussed in this lengthy (81-page) order, all these claims are patently frivolous. Defendants seek a declaration that the account be distributed as provided in the TOD and that their attorney fees & costs be paid out of her part of the Scottrade account.

Defendants are entitled to summary judgment on all of Davenport’s claims including undue influence, fraud, civil conspiracy, duress, felonious killing, spoliation, tortious interference with contract and expectancy, breach of fiduciary duty, unclean hands, active persuasion, encouragement & inciting, unconscionable conduct, and any other cause she has alleged. All of Davenport’s motions for summary judgment are denied.

Declaratory judgment shall be entered in favor of Defendants. LeFeber’s 8/10/10 TOD and allocation of Scottrade funds pursuant to the beneficiary designations are valid, binding, and enforceable. There is no contract that supercedes or takes precedence over the TOD. Defendants are entitled to their part of the funds pursuant to the TOD undiminished by any fees or costs.

After spending considerable time with this case over the last 15 months, the Court is convinced that the only equitable solution is to tax all attorney fees against Davenport’s share of the Scottrade account. Her claims and arguments have been rejected at every stage and she has repeatedly been warned that they appeared totally frivolous and unless she was able to provide admissible evidence, costs would be paid from her share. Her conduct is even more egregious considering that she is trained as an attorney and has previously been sanctioned for frivolous and vindictive litigation. It is well-established that courts have discretion to pay the interpleader plaintiff’s fees from the fund payable to the winning claimants, against the losing claimant or between all the claimants. The usual practice is to tax the fees against the losing claimant because it necessitated the interpleader and prevents the winning claimants from obtaining the fund undiminished by the costs. Absent Davenport’s groundless claims, LeFeber’s Scottrade account would long ago have been distributed pursuant to his TOD. Although the Court is not imposing sanctions under Rules 11(b) and 56(f) because there are other provisions to ensure that Shane’s and Faller’s inheritance are not depleted by this unnecessary suit, Davenport could also be assessed fees under both of those rules. Although it seems unfair, it is well-established that pro se litigants are not entitled to attorney fee awards. Thus Gibbons and Chabot are not entitled to fees for the time expended defending against Davenport’s frivolous claims.

In addition to $11,189.10 attorney fees & costs awarded to Faller and the $6,142.53 fees awarded to Scottrade, fees & costs incurred by Faller and Shane LeFeber shall be deducted from Davenport’s percentage of the Scottrade funds. Counsel for Faller and Shane shall submit bills detailing all reasonable fees & costs, and the Court will review them for reasonableness and then determine whether Defendants are entitled to pre-judgment interest. In the interests of caution, the Court intends to keep the Scottrade funds in the registry pending any appeal ruling. Since any appeal by Davenport would also be frivolous and in bad faith, the Court intends to tax attorney fees on appeal to her share of the funds.

Scottrade v. Davenport et al, 39 MFR 500, 6/5/12.

Tom Singer (Axilon Law Group), Billings, for Scottrade; Kristine Davenport, Missoula, pro se; Jeffery Oven & Michael Tennant (Crowley Fleck), Billings, for Shane LeFeber; Jon Beal & John Horrell (Beal Law Firm), Missoula, for Fallers; Christopher Gibbons, pro se; Kimberly Chabot, pro se.