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You can search the entire site. or go to the recent opinions, or the chronological or subject indices. Conservatorship Estate of K.H. v. Continental Insurance Co. (6/20/2003) sp-5708

Conservatorship Estate of K.H. v. Continental Insurance Co. (6/20/2003) sp-5708

     Notice:   This opinion is subject to correction  before
     publication  in  the  Pacific  Reporter.   Readers  are
     requested to bring errors to the attention of the Clerk
     of  the  Appellate  Courts, 303  K  Street,  Anchorage,
     Alaska 99501, phone (907) 264-0608, fax (907) 264-0878.



            THE SUPREME COURT OF THE STATE OF ALASKA


CONSERVATORSHIP ESTATE OF     )
K.H.,                               )     Supreme Court  Nos.  S-
9949/9959
                              )
             Appellant/            )    Superior Court No.
             Cross-Appellee,       )    4FA-99-00614 CI
                              )
     v.                       )    O P I N I O N
                              )
CONTINENTAL INSURANCE         )    [No. 5708 - June 20, 2003]
COMPANY; COMMUNITY       )
ADVOCACY PROJECT OF      )
ALASKA, INC.; PROFESSIONAL    )
GUARDIAN SERVICES        )
CORPORATION; and DAVID        )
SCHADE,                       )
                              )
             Appellees/            )
             Cross-Appellants.     )
________________________________)



          Appeal  from the Superior Court of the  State
          of   Alaska,    Fourth   Judicial   District,
          Fairbanks, Charles R. Pengilly, Judge.

          Appearances:  Robert S. Noreen, Law Office of
          Robert  S.  Noreen, Fairbanks, for  Appellant
          and    Cross-Appellee.     Christopher     E.
          Zimmerman,  McConahy,  Zimmerman  &  Wallace,
          Fairbanks,  for  Appellee and Cross-Appellant
          Continental  Insurance  Company.   James   D.
          Oswald,   Song   Oswald  &  Mondress,   PLLC,
          Seattle, Washington, and Ronald Bliss, Bliss,
          Wilkens  &  Clayton, Anchorage, for  Appellee
          and    Cross-Appellant   Community   Advocacy
          Project  of  Alaska, Inc.   David  W.  Pease,
          Burr, Pease & Kurtz, Anchorage, for Appellees
          and  Cross-Appellants  Professional  Guardian
          Services Corporation and David Schade.

          Before:    Fabe,  Chief  Justice,   Matthews,
          Eastaugh, Bryner, and Carpeneti, Justices.

          FABE, Chief Justice.


I.   INTRODUCTION

          K.H.s inheritance was rapidly depleted while he was  in

the care of professional guardians.  He sued two prior guardians,

the  first for breach of fiduciary duty and the second for fraud.

The superior court dismissed the claims against both guardians on

statute   of  limitations  grounds.   However,  because   neither

guardian  filed  a  final  accounting that  fully  disclosed  all

financial  matters,  thus  triggering the  six-month  statute  of

limitations,  we reverse the order granting summary  judgment  in

favor of both guardians.

II.  FACTS AND PROCEEDINGS

     A.   Factual History1

          1.   K.H. s personal background

          After  K.H.  graduated from high  school  in  1962,  he

enlisted  in the United States Navy.  He served through 1966,  at

which time he was honorably discharged.  He then moved to Alaska,

and  in  1969  he began to experience the onset of the  prodromal

phase  of schizophrenia.  He was first hospitalized at the Alaska

Psychiatric   Institute  in  1973  after   being   arrested   for

trespassing.  He was subsequently hospitalized twelve  additional

times  in  Alaska,  and  was admitted to  a  number  of  Veterans

Administration  (VA) hospitals in Wisconsin and  Illinois.   From

1976  to  the  present,  K.H. participated in  various  community

mental health programs in Alaska.

          K.H.  now suffers from paranoid schizophrenia, possible

organic  brain  syndrome, and glaucoma.  His  mental  illness  is

longstanding  and  chronic.  He suffers auditory  hallucinations,

diminished   concentration  and  attention  span,  and   periodic

difficulties  with  anger  management.   His  illness  makes   it

impossible  for  him to provide for himself both  physically  and

financially   and,  when  left  alone,  he  has  a  tendency   to

          deteriorate considerably.  He is also unable to manage money,

being  unaware  of the source of his income or monthly  expenses.

He  currently  receives Social Security and a VA pension.   After

his  expenses are paid, he has approximately $75 left each month.

He has never married, nor had any children.  He does not remember

the  names  or  locations of his remaining family members.   K.H.

currently  resides  in  a supervised, semi-independent  apartment

operated  by Fairbanks Community Mental Health Center.   He  will

always need supervision and a structured environment.

          2.   The conservatorship and guardianship

          In  1992  K.H.  received an inheritance of  $92,172.32.

This  prompted a petition for conservatorship and,  in  September

1992, the superior court appointed Community Advocacy Project  of

Alaska  (CAPA)  as  K.H.s conservator. Shortly  thereafter,  K.H.

moved  to  Seward where he resided at Seward Life Action  Council

(SLAC).  K.H. had difficulties with at least one staff member  at

SLAC,  so in 1995 CAPA assisted in transferring him to Fairbanks,

where  he  was placed under the care of Monta Faye  Lane  of  the

Interior Caregivers Association.  Although K.H. had $90,241 in  a

securities  account at the beginning of the CAPA  conservatorship

in  1992,  that  money was gone when he arrived in  Fairbanks  in

1995.

          While at Lanes assisted living home, K.H. intentionally

cut  his  left wrist. In order to provide better supervision  and

care  for  K.H.,  CAPA,  already his conservator,  was  appointed

temporary   guardian   in  February  1996.   CAPAs   guardianship

appointment was finalized on July 10, 1996.  Soon thereafter, two

members  of CAPA, Michael Schade and B. Jarvi, formed  their  own

company,  Professional  Guardian  Services  Corporation   (PGSC).

Accordingly, Lane petitioned the superior court to terminate CAPA

as  guardian and transfer K.H.s guardianship to PGSC so that K.H.

could  continue  to receive services from the  same  people.   On

November  12,  1996,  the  court  ordered  the  transfer  of  the

conservatorship and guardianship to PGSC.

          In  December  1996 a standing master for  the  superior

court  ordered the court visitor to report on CAPAs  expenditures

of  K.H.s  assets.  The report, filed with the court in  February

1997,   expressed  concern  that  CAPAs  billings   presented   a

disturbing breakdown of costs, and stated that some fees  charged

were  unheard  of.  The  court visitor concluded  her  report  by

stating  that CAPA spent a large sum of [K.H.s] money in a  spend

down  fashion  rather than using it in a frugal and conscientious

way.   In  a  follow-up report, the court visitor concluded  that

CAPA had purchased mental health support services for [K.H.] at a

rate   1500%  higher  than  was  necessary.   The  court  visitor

suggested that it was time for an attorney to explore recovery of

K.H.s assets.  She expressed doubts about whether Schade was in a

position  to do that, as he had been Executive Director  of  CAPA

while  it served as K.H.s conservator and he now served as  K.H.s

conservator  at PGSC.  The court visitors concerns about  Schades

possible  conflict of interest were heightened when  she  learned

that  Schade  had  stated in his May 13, 1997  objection  to  the

masters  recommendation  that it would not  be  in  [K.H.s]  best

interest to get a recovery . . . .

          In   February  1997,  after  the  conservatorship   and

guardianship had been transferred to PGSC, CAPA filed a  document

entitled final guardianship report regarding K.H.  However,  this

report   apparently   contained   a   number   of   errors    and

inconsistencies, and CAPA submitted an amended report on  May  9,

1997.

          At   the  request  of  PGSC,  Sandra  Bolling  of   the

Department of Veterans Affairs conducted a field examination  and

interview with K.H. in April 1997.  She recommended that  because

PGSC  was  K.H.s guardian and conservator, it should be appointed

his  legal custodian for VA purposes.  PGSC signed a VA fiduciary

agreement naming itself as legal custodian and fiduciary for K.H.

          Because  of continuing concerns that PGSC and CAPA  had

not  fulfilled  their duties as guardians and  conservators,  and

that  K.H.s  estate  was  subject to waste,  the  superior  court

ordered on July 8, 1997 that the Office of Public Advocacy  (OPA)

intervene.  OPA is K.H.s current guardian and conservator.

          In  August 1997 PGSC filed a request with the  superior

court   for   approval  to  pay  itself  more  than   $3,000   in

conservatorship fees from K.H.s VA benefits.  The request  stated

that [t]he VA has authorized [K.H.s] guardianship/conservatorship

fees  to  be taken from the VA pension funds.  In September  1997

the  superior court issued an order allowing PGSC to pay its fees

from  K.H.s  assets as authorized by the Veterans Administration.

The     following     month,    PGSC    submitted     a     final

guardianship/conservatorship report.   On  behalf  of  K.H.,  OPA

requested  a  hearing  to clarify the discrepancies  between  the

court  order allowing fees and PGSCs purported final report.   An

evidentiary  hearing was held on December 17, 1997, at  which  it

was  revealed  that  PGSC and Schade still  controlled  K.H.s  VA

benefits.

          In   February  1998,  after  OPA  had  been   appointed

guardian,  the court visitor closed her investigation into  K.H.s

case.   In  her  notice of closed case and further  concern,  she

remarked that she had additional concerns about CAPAs billing  of

K.H. for vague charges for case management services not otherwise

detailed; . . . transaction charges not consistent with  the  fee

schedule(s)  in  effect; improper travel charges; and  duplicated

charges (more than one staff charging for the same service).

          In  May  1998  PGSC filed a federal fiduciarys  account

with the Department of Veterans Affairs, covering the period from

November  1, 1996 to March 31, 1998.  It revealed that PGSC  paid

itself $3,672.01 in guardianship fees from the veterans benefits.

Responsibilities for K.H.s veterans benefits were apparently  not

transferred from PGSC to OPA until sometime in March  1998.2   At

this  time, the Department of Veterans Affairs conducted a second

field  examination, but the payee was now listed  as  OPA  rather

than  PGSC.  In her report, the field examiner addressed  Schades

          handling of K.H.s VA benefits.  She reported that, while Schade

had  asserted  to the superior court that the VA  has  authorized

[K.H.s] guardianship/conservatorship fees to be taken from the VA

funds, the field examiner had discovered no evidence of any  such

authorization  and  thought it extremely unlikely  that  such  an

authorization had been given.  She added that PGSC  signed  a  VA

form  that  did  not  allow for fee payment.   She  concluded  by

stating, I find it is highly likely that Mr. Schade made a  false

or  misleading statement to the [s]uperior court.  I find that VA

funds  have  been misused.  I suspect there is a high possibility

of fraud in this case.

     B.   Procedural History

          On  March 18, 1999, OPA filed a complaint on behalf  of

K.H.  to recover money overcharged by CAPA and PGSC.3  It alleged

that CAPA breached its fiduciary duty by charging excessive fees,

diverting  K.H.s assets to SLAC, and paying itself  fees  without

written order of the court.  K.H. further asserted that PGSC  and

Schade committed fraud and misrepresentation by telling the court

that  the  VA  had authorized them to take fees from  VA  pension

funds.   This,  K.H.  alleges,  resulted  in  the  conversion  of

$5,020.87 of his VA benefits.

          PGSC  filed a motion for summary judgment, arguing that

res  judicata  barred  K.H.s fraud and misrepresentation  claims.

PGSC  and  Schade claimed that this cause of action was litigated

and decided by the September 1997 court order that permitted PGSC

to  pay itself fees as authorized by the Veterans Administration.

The  superior  court denied the motion on the basis that  neither

the  doctrine  of  res  judicata  nor  Alaska  Civil  Rule  60(b)

precluded a claim that a prior judgment was obtained by fraud  or

misrepresentation.

          PGSC  filed a motion for reconsideration of the  denial

of  summary  judgment, arguing that the savings  clause  in  Rule

60(b) was used only in rare and unusual circumstances not present

in  this  case.   The  allegations in  this  case,  PGSC  argued,

          amounted only to common law fraud, taking the case out of the

realm  of  fraud upon the court.  The superior court  denied  the

motion for reconsideration without comment.

          CAPA  moved for summary judgment based on its assertion

that the statute of limitations had expired.  It argued that  the

court  visitors  report  constituted  a  final  account  for  the

purposes  of  AS 13.36.100, and that since K.H.s  claim  was  not

filed within six months of that report, it was time barred.  K.H.

responded that since no final accounting had ever been submitted,

the  motion  should be denied.  PGSC joined in CAPAs  motion  for

summary  judgment  based  on  the statute  of  limitations.   The

superior  court  granted  the motion  for  summary  judgment  and

dismissed all claims against PGSC, David Schade, and CAPA.

          K.H.  appeals the grant of summary judgment in favor of

PGSC, Schade, and CAPA.  PGSC cross-appeals the denial of summary

judgment based on res judicata.

III. STANDARD OF REVIEW

          We  review a grant of summary judgment de novo and view

the  facts in the light most favorable to the non-moving  party.4

When  reviewing  a grant of summary judgment, we  must  determine

whether any genuine issue of material fact exists and whether the

moving  party  is  entitled to judgment  as  a  matter  of  law.5

Summary  judgment  may be affirmed on grounds  other  than  those

relied upon by the superior court.6

IV.  DISCUSSION

     A.   The  Statute  of Limitations Does Not Bar  K.H.s  Claim

          Because  Neither  CAPA Nor PGSC Filed  a  Final  Report

          Fully Disclosing All Financial Matters.

          The  crux of the dispute before us is whether  CAPA  or

PGSC filed a final accounting or other statement fully disclosing

the  matter  sufficient  to  trigger  the  six-month  limitations

period.   Alaska  Statute 13.36.1007 provides for  a  limitations

period of six months after receipt of a final account that  fully

discloses  all pertinent matters upon termination  of  the  trust

          relationship:

          Unless  previously  barred  by  adjudication,
          consent  or limitation, any claim  against  a
          trustee for breach of trust is barred  as  to
          any  beneficiary  who has  received  a  final
          account  or  other statement fully disclosing
          the  matter  and showing termination  of  the
          trust  relationship between the  trustee  and
          the beneficiary unless a proceeding to assert
          the  claim  is  commenced within  six  months
          after  the  receipt of the final  account  or
          statement.
          
Even if a trustees final account or statement does not amount  to

a  full  disclosure, the beneficiary must file suit within  three

years of receipt of the final account or other statement as  long

as  the trustee has made all records available for examination by

the beneficiary:

          In any event and notwithstanding lack of full
          disclosure, a trustee who has issued a  final
          account   or   statement  received   by   the
          beneficiary  and has informed the beneficiary
          of  the  location and availability of records
          for   examination  by  the   beneficiary   is
          protected after three years.[8]
          
Because  K.H.s relationships with CAPA and PGSC spanned different

periods,  we  will  address  the  statute  of  limitations  issue

separately for each defendant.

          1.   Community Advocacy Project of Alaska

          CAPA served as conservator for K.H. from September 1992

to November 1996.  CAPA served as guardian for K.H. from February

1996  to November 1996.  The court visitor filed her first report

on  May  24, 1996, and, on December 10, 1996, the standing master

issued a second order appointing the same court visitor to review

prior expenditures made on behalf of K.H.  That report, filed  on

February  17,  1997,  examined CAPAs expenditures  for  K.H.  and

concluded that it presented a disturbing breakdown.  For example,

the  court visitor expressed concerns that CAPA paid SLAC $54,759

for  services, while at the same time paying itself $27,437 under

a  category  entitled other.  In just one year,  CAPA  paid  SLAC

almost  $22,000,  or $80 per hour, for non-professional  services

          such as training K.H. to do his laundry.  The court visitor

reported that the fees charged for such services were unheard of,

and  pointed  out that K.H. was being charged for these  services

while he was already paying for twenty-four-hour assisted living.

She  also  noted that CAPAs billing statements for  its  services

during  this  period were not specific, usually  indicating  only

guardianship   services  or  conservatorship   services   without

breaking  down the nature of assistance and cost per  hour.   The

court  visitor  concluded her report by observing that  CAPA  had

dissipated  large  sums of K.H.s money in a  spend  down  fashion

rather than using it in a frugal and conscientious way.

          In  her follow-up report, issued on February 27,  1997,

the  court  visitor reported her discovery that K.H. should  have

been  charged $5 per hour for the services he received  at  SLAC.

In  the  court visitors view, the securities account where  K.H.s

money  was held should not have been touched and interest  income

on  those  securities  should only  have  been  used  if  it  was

distributed  to  K.H.  The visitor concluded that CAPA  purchased

mental health support for [K.H.] at a rate 1500% higher than  was

necessary.

          On  February  26,  1997, the day  before  the  visitors

follow-up report was filed, CAPA filed a document entitled  final

guardianship  report  in  the superior  court.  That  report  was

challenged  by K.H.s then-guardian and conservator,  PGSC,  which

requested  that  the  report  be rejected  because  it  contained

numerous errors.  CAPA subsequently filed an amended final report

in the superior court on May 9, 1997.

          CAPA does not point to its own amended final report  as

the   accounting   that   triggers  the  six-month   statute   of

limitations; rather, CAPA claims that the February 27, 1997 court

visitors  report  constitutes a final account or other  statement

fully disclosing the matter within AS 13.36.100 and that K.H. had

six  months from that report to file a claim.  Because  suit  was

not  filed until March 18, 1999, more than eighteen months  after

the six-month limitation, CAPA argues that it is time barred.  To

support its argument, CAPA points out that in his complaint, K.H.

simply  reiterated the allegations made by the court  visitor  in

her  February 27, 1997 report and addendum.  CAPA adds that  K.H.

offered  no evidence that he had learned of any additional  facts

regarding  CAPAs performance as conservator between February  27,

1997, the date of the visitors report and addendum, and March 18,

1999, the date the lawsuit was filed.

          However,  CAPAs  argument that the  February  27,  1997

court  visitors  report  constitutes a  final  account  or  other

statement  fully  disclosing the matter under AS 13.36.100,  thus

triggering  the six-month limitations period, is not  convincing.

The  statute  contemplates that the final  account  or  statement

triggering  the statute of limitations must be submitted  by  the

trustee.  Indeed, the statutory provision explicitly provides  in

its second sentence that a trustee who has issued a final account

or  statement  is protected after three years provided  that  the

trustee  has  informed  the  beneficiary  of  the  location   and

availability  of  information.   (Emphasis  added.)   It  is  the

trustee,  not  a third person such as a court visitor,  who  must

issue  the final account or other statement fully disclosing  the

matter in order to trigger the applicable statute of limitations.

The  trustee  is  the  party  with  the  knowledge,  access,  and

information available to make a full disclosure under the statute

and  is therefore the party who is required to provide a full and

final account.

          CAPA  was apparently aware that it was required to file

the  final  account,  as it filed two final  guardianship  report

forms  in  the  superior court.  These forms  provide  a  special

section  for the final accounting.  CAPA filed its amended  final

guardianship  report  on May 9, 1997, after  the  court  visitors

February  27,  1997 addendum and report.   This  undercuts  CAPAs

contention that the visitors report constitutes a statement fully

disclosing  the  matter;  CAPA  was  still  working  on  its  own

accounting in the K.H. conservatorship almost three months  after

the court visitors report.

          Finally,  CAPA  does  not  argue  that  its  own  final

guardianship  report is the triggering event  for  the  six-month

statute  of  limitations.  This report could  not  be  viewed  as

providing  full  disclosure, particularly when  Schade,  who  was

director  of CAPA while it served as K.H.s guardian,  called  the

report  incomplete.  Indeed, CAPAs counsel submitted an affidavit

to the trial court in September 2000, stating that he had learned

that  SLAC overcharged K.H.:  My review of [the SLAC fee  payment

policy]  and [K.H.s] circumstances supports a good faith argument

that  SLACs charges to [K.H.] in 1992 and 1993 violated the  SLAC

contract with [K.H.].  Thus, new facts have come to light  during

the  course  of  this litigation which indicate  that  CAPAs  own

report is not a statement fully disclosing the matter which would

trigger the six-month limit.

             CAPAs  suggestion  that  the  six-month  limitations

period  is triggered here because the subsequent conservator  may

have  been  aware of alleged misconduct is also unavailing.   The

statute  requires  more than just inquiry  notice.   Rather,  the

statute  specifically  provides that  the  six-month  limitations

period  begins to run only after the ward or beneficiary receives

a  statement by the trustee that provides full disclosure of  all

financial matters.  In the absence of full disclosure, the three-

year limitations period is available.

          Because  the  trustee failed to issue  a  final  report

making  full  disclosure under AS 13.36.100, the six-month  limit

was  not triggered.  The court visitors report cannot satisfy the

statutes   requirement  that  the  trustee  issue   the   report.

Therefore, the trial court erred in granting summary judgment  in

favor of CAPA on statute of limitations grounds.

          2.   Professional  Guardian  Services  Corporation  and

               David Schade

          PGSC  served as guardian and conservator for K.H.  from

November  12, 1996 to July 8, 1997.  The court visitor filed  one

report in K.H.s case while PGSC was guardian and conservator.  In

that  report,  she  reiterated  the  questionable  and  excessive

expenditures made by CAPA.  She also concluded that since  Schade

was  director  of  CAPA  at the time, and  now  served  as  K.H.s

guardian  at  PGSC,  there was a possible conflict  of  interest,

particularly given Schades apparent reluctance to sue to  recover

K.H.s  assets.  As a result, the superior court removed PGSC  and

appointed OPA to serve as K.H.s guardian and conservator.

          PGSC immediately filed a motion for approval of payment

of   guardianship and conservatorship fees, announcing that [t]he

VA has authorized [K.H.s] guardianship/conservatorship fees to be

taken from the VA pension funds.  On September 9, 1997, the court

issued  an order allowing PGSC to take its fees as authorized  by

the  Veterans  Administration.  PGSC  filed  a  three-page  final

guardianship/conservatorship report  in  the  superior  court  on

October 30, 1997.  K.H. objected to the report, arguing that  the

VA  funds taken pursuant to the September 9, 1997 order were  not

included  in  PGSCs  October  30 final  report  and  requested  a

hearing.   During the hearing, held on December 17, 1997,  Schade

did  not  substantiate  his  claim of  authorization  to  use  VA

benefits  to  pay his fees.  Moreover, OPA was unable  to  obtain

PGSCs  fiduciary  agreement with the VA until  March  1998.   OPA

claims  that  it did not receive PGSCs federal fiduciary  account

statement until June 30, 1998.

          K.H.  contends that the trial court erred  in  granting

summary judgment to PGSC because, like CAPA, PGSC failed to  file

a  final  accounting  or  other statement  fully  disclosing  all

financial matters of the guardianship and conservatorship.   K.H.

points  out  that after PGSC filed a final report on October  30,

1997, K.H. objected, and a hearing was held.  The standing master

asked  for  further reporting.  There was never  a  follow-up  or

amended report.  In addition, K.H. argues that a VA inquiry  into

the expenditure of funds was still ongoing in 1998.

          PGSC and Schade maintain that there is no question that

the  October 30, 1997 final report constitutes a final accounting

of  activities  conducted on behalf of K.H., thus triggering  the

six-month   limit.    PGSC  argues  that  K.H.   has   previously

acknowledged the report as a final accounting and that  the  six-

month limit began to run on October 30, 1997, the date the report

was  filed.   PGSC  also  argues that at the  December  17,  1997

hearing  it  disclosed  the  VA as the  source  of  fees  it  was

receiving and that Schade answered any questions regarding  those

fees.   PGSC  adds  that  [t]here  is  no  indication  that   any

information was withheld from the final accounting.   Thus,  PGSC

argues,  there was no lack of disclosure which would  extend  the

limit from six months to three years.

          Alaska  Statute 13.36.100 requires full  disclosure  of

all  financial matters upon termination of the trust relationship

between the trustee and the beneficiary.  Here, PGSCs October 30,

1997  final report failed to explain the $3,329 in fees  it  paid

itself out of K.H.s VA funds.  Schade did not reveal that he  was

still  receiving  K.H.s  VA checks until the  December  17,  1997

hearing.  Moreover, OPA did not receive PGSCs fiduciary agreement

with  the VA until March 1998 and was apparently unable to obtain

PGSCs  federal fiduciary account statement until June  30,  1998.

None  of  this information was included in the final  accounting.

The  final  report  thus  could not constitute  full  disclosure.

Moreover, OPA does not appear to have taken over for PGSC  as  VA

fiduciary  until March 1998. While K.H. may have been made  aware

that  PGSC was paying itself with his fees in September of  1997,

it  took  almost  six  more months to  obtain  a  copy  of  PGSCs

fiduciary agreement and have a VA examiner determine if and  when

PGSC  received the alleged authorization to take their fees  from

K.H.s  VA  benefits.  Thus, not only did PGSC fail to include  in

its  final report the fact that it continued to receive K.H.s  VA

benefit  checks, it also apparently continued in its capacity  as

fiduciary  for  K.H.s VA benefits well into 1998   at  least  six

months  after filing the alleged final report.  Thus,  the  trust

relationship between K.H. and PGSC had not terminated at the time

the final report was filed.

          Therefore,  the  trial court erred in granting  summary

judgment to PGSC on statute of limitations grounds.  PGSCs  final

report  failed to make a full disclosure in its omission  of  the

fact  that  it  was  still receiving K.H.s VA benefits,  and  the

relationship between K.H. and PGSC continued beyond the  date  of

the final report.

     B.   K.H.s Claim Against PGSC Is Not Barred by Res Judicata.

          PGSC  appeals  the  denial of the  motion  for  summary

judgment  based  on res judicata.  PGSC argues that  K.H.  is  in

effect  trying  to  relitigate the  September  1997  court  order

awarding  PGSC $3,020.97 for conservatorship fees.   The  present

action  to recover those fees, PGSC contends, involves  the  same

parties  and  the  same  issue and is  therefore  barred  by  res

judicata.  PGSC maintains that if K.H. thought the fee award  was

obtained improperly, he had one year to challenge the order under

Civil Rule 60(b).9  However, Rule 60(b) contains a savings clause

which  permits the court to set aside a judgment for  fraud  upon

the court:

          This rule does not limit the power of a court

          to entertain an independent action to relieve

          a party from a judgment, order or proceeding,

          or   to  grant  relief  to  a  defendant  not

          personally served, or to set aside a judgment

          for fraud upon the court.

PGSC asserts that the savings clause in Rule 60(b) is only to  be

employed in extraordinary circumstances, such as when a fraud  on

the  court  would  result  in  manifest  injustice.   Thus,  PGSC

maintains  that  because K.H.s allegations would only  amount  to

common  law  fraud, he is not entitled to take advantage  of  the

savings clause and his present claim should have been dismissed.

          We  need  not reach the issue of whether PGSCs  conduct

          amounted to fraud upon the court because we conclude that the

September 1997 order approving fees was not a final judgment  for

purposes  of  res judicata.  Res judicata is a judicial  doctrine

that prevents the relitigation of the same claim between the same

parties or those in privity with them.10  However, only a  valid,

final  judgment  on  the merits presents an  absolute  bar  to  a

subsequent action.11  The September 1997 order allowing  PGSC  to

take  fees  from  K.H.s  VA benefits was  an  interim  order  not

appealable under Appellate Rule 202.12  It does not constitute  a

valid,  final  judgment on the merits and thus res judicata  does

not  apply.  The superior courts ruling in favor of K.H.  on  the

issue of res judicata is affirmed.

V.   CONCLUSION

          Neither  CAPA  nor  PGSC filed final accountings  which

fully disclosed K.H.s financial matters.  Summary judgment as  to

both   is   REVERSED  and  this  case  is  REMANDED  for  further

proceedings in accordance with this opinion.

          The  court order that authorized PGSC and Schade to pay

itself  from  K.H.s  VA  benefits was not a  final  judgment  for

purposes  of res judicata.  The denial of summary judgment  based

on res judicata is AFFIRMED.

_______________________________
     1     In reviewing a grant of summary judgment, we draw  all
reasonable inferences in favor of the non-moving party.   Nichols
v.  State  Farm  Fire & Cas. Co., 6 P.3d 300, 303 (Alaska  2000).
Therefore, K.H. receives the benefit of all factual inferences.

     2      Although  OPA  had  replaced  PGSC  as  guardian  and
conservator  on July 8, 1997, and PGSC filed a final guardianship
report dated October 30, 1997, PGSC retained control of K.H.s  VA
benefits.

     3     The  complaint against CAPA also names  their  bonding
agency, Continental Insurance.

     4    Nichols, 6 P.3d at 303.

     5     R.E. v.  State, 878 P.2d 1341, 1345 (Alaska 1994); see
also Alaska R. Civ.  P. 56(c).

     6     Hernandez  v.  Lambert, 951 P.2d 436, 439 n.5  (Alaska
1998)  (citing  James v. McCombs, 936 P.2d 520, 523  n.2  (Alaska
1997)).

     7     Both parties agree that this is the applicable statute
of limitations.

     8    AS 13.36.100.

     9    Civil Rule 60(b) provides in part:

               The  motion  shall  be  made  within   a
          reasonable  time, and for .  .  .  [fraud  or
          misrepresentation]  not more  than  one  year
          after  the date of the notice of the judgment
          or orders as defined in Civil Rule 58.1(c).
          
     10    Calhoun v. Greening, 636 P.2d 69, 71-72 (Alaska 1981).

     11    Id.

     12    Appellate Rule 202 provides in part:

               (a)   An  appeal  may be  taken  to  the
          supreme  court from a final judgment  entered
          by  the  superior court, in the circumstances
          specified in AS 22.05.010.