Opinion
NO. 2014-CA-000895-MR
05-20-2016
BOBBY GENE JUSTICE, individually and as Executor for the Estate of Joseph Justice APPELLANT v. KATHERINE JUSTICE ADKINS; CAROL JUSTICE STEVENS; AND HONORABLE STEVEN D. COMBS, JUDGE, PIKE CIRCUIT COURT APPELLEES
BRIEFS FOR APPELLANT: James L. Hamilton Jonah L. Stevens Pikeville, Kentucky BRIEF FOR APPELLEE: Michael De Bourbon Pikeville, Kentucky
NOT TO BE PUBLISHED APPEAL FROM PIKE CIRCUIT COURT
HONORABLE STEVEN D. COMBS, JUDGE
ACTION NO. 03-CI-00522 OPINION
AFFIRMING
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BEFORE: COMBS, D. LAMBERT, AND VANMETER, JUDGES. VANMETER, JUDGE: By statute, personal representatives are entitled to compensation of up to five percent of the personal estate of the decedent and five percent of the income collected by the personal representative. The primary issue we must resolve in this third appeal of this matter is whether the Pike Circuit Court erred in denying any additional fees to Bobby Justice for his services as executor of his father's estate. We hold that the trial court did not err, and therefore affirm its decision.
I. FACTUAL AND PROCEDURAL BACKGROUND.
In 2002, Joseph Justice died testate, a resident of Pike County, Kentucky. He was survived by his three children, Bobby Gene Justice, Katherine Justice Adkins, and Carol Justice Stevens. His last will and testament and a codicil were admitted to probate by the Pike District Court. Adkins and Stevens filed this action in Pike Circuit Court, pursuant to KRS 394.240, seeking to invalidate the codicil since it purported to devise and bequeath the residuary of the decedent's substantial estate, including over $600,000 in bank accounts, to Justice to the exclusion of Adkins and Stevens. Following a trial, a jury invalidated the codicil due to lack of testamentary capacity or undue influence. Justice appealed, and the jury verdict was upheld.
Kentucky Revised Statutes.
Justice v. Stevens, 2005-CA-001218-MR, 2006 WL 2988221 (Ky. App., Oct. 20, 2006).
Following the jury's verdict, the circuit court in 2005 ordered transfer of administration of the probate estate to it, for "ease of administration." Unfortunately, the Estate's administration has been anything but easy. After remand of the case back to the trial court, Justice, in 2009, filed a proposed final settlement by which Adkins and he would share the residuary of the decedent's real estate, to the exclusion of Stevens. The trial court rejected that claim, holding, in its Findings of Fact, Conclusions of Law and Judgment ("June 2010 Judgment"), that the will evinced the decedent's intention that all three children should share the residuary of the estate, both real and personal, one-third each.
In November 2010, the court ordered Justice to file an updated Final Settlement distributing the remaining assets of the Estate according to its June 2010 Judgment. Over the ensuing months, Justice filed a number of motions to pay estate expenses, including attorneys' fees to Hamilton & Stevens, PLLC, for its services from November 2009 through February 23, 2011. In response, the trial court entered the following Order:
1. The Defendants' Motion to Vacate all Judgments and for Recusal of the [trial] judge are all DENIED.The trial court appended finality language to the Order. Again, Justice appealed, and again he lost.
2. The Defendants' Motions to Pay various Estate expenses are all DENIED, as the distribution of the Estate has already been made. The parties are to pay their share of the Estate's expenses, per the Final Distribution Order, and their own costs and attorney fees.
3. The Defendants' Motions to Alter, Amend, or Vacate the Court's September 10, 2010 Order and the November 19, 2010, Final Distribution Order are DENIED.
In Justice v. Adkins, 2011-CA-000430-MR, 2013 WL 3238455 (Ky. App., Jun. 28, 2013), this court dismissed the second appeal on the basis that Justice failed to timely file his notice of appeal of the trial court's June 2010 Judgment. Although Justice timely filed a Motion to Alter, Amend or Vacate that Judgment, he had not timely filed his appeal of the Order denying his Motion.
During the pendency of the second appeal, the trial court continued to exercise limited jurisdiction over administration of the Estate and, by agreed Order, a number of tax bills and expenses relating to real estate which had belonged to the decedent were paid, as were agreed equal distributions each to Justice, Adkins and Stevens.
In January 2014 and as supplemented in May 2014, Justice filed motions for payment of an additional fiduciary fee in the amount of $18,331.58. Justice's basis for claiming the additional fee was that he was entitled to (i) a fee of 5% on all personal property received into the estate, and (ii) an extraordinary fee of an additional 5% of the monies received for operating and managing the mobile home park which the decedent had owned, litigating matters on behalf of the Estate, negotiating with various companies, and paying taxes, insurance and upkeep on various properties in Floyd and Pike Counties. At the same time, Justice requested payment of counsel fees to Hamilton & Stevens in the amount of $6,562.50, for services from February 2011 to May 2014.
Justice calculated the total personal property received as $612,994.07, 5% of which is $30,649.70. The extraordinary fee was calculated based on $403,689.72 received from rents, royalties and litigation proceeds from other civil actions. 5% of this latter amount is $20,184.18. The two claimed fees totaled $50,834.18. Justice stated, and the record confirms, that he had previously received $32,502.60, in payment of his fiduciary fee, leaving a claimed balance of $18,331.58.
The trial court denied both motions and this appeal followed.
II. STANDARD OF REVIEW.
The award of fiduciary fees and of attorneys' fees in the context of estate administration is left to the sound discretion of the trial court. See Greenway's Adm'r v. Greenway, 266 Ky. 114, 120, 98 S.W.2d 283, 286 (1936) (upholding discretionary award of fiduciary fee of 1%).
When reviewing a trial court's award of such fees, we are limited to determining whether or not the trial court abused its discretion. Angel v. McKeehan, 63 S.W.3d 185, 190 (Ky. App. 2001) (citing Croley v. Adkins, 305 Ky. 765, 205 S.W.2d 332, 334 (1947); Gernert v. Liberty Nat'l Bank & Trust Co., 284 Ky. 575, 145 S.W.2d 522 (1940)). The test for abuse of discretion is whether the trial judge's decision was arbitrary, unreasonable, unfair, or unsupported by sound legal principles. Goodyear Tire & Rubber Co. v. Thompson, 11 S.W.3d 575, 581 (Ky. 2000); Commonwealth v. English, 993 S.W.2d 941, 945 (Ky. 1999).
III. ARGUMENTS ON APPEAL.
A. Fiduciary Fee.
As argued to the trial court, Justice claims that KRS 395.150 entitles him to fees equal to 5% of personal property received and to 5% for extraordinary services. This statute provides as follows:
(1) The compensation of an executor, administrator or curator, for services as such, shall not exceed five percent (5%) of the value of the personal estate of the decedent, plus five percent (5%) of the income collected by the executor, administrator or curator for the estate.
(2) Upon proof submitted showing that an executor, administrator or curator has performed additional services in the administration of the decedent's estate, the
court may allow to the executor, administrator or curator such additional compensation as would be fair and reasonable for the additional services rendered, if the additional services were:
(a) Unusual or extraordinary and not normally incident to the administration of a decedent's estate; or
(b) Performed in connection with real estate or with estate and inheritance taxes claimed against property that is not a part of the decedent's estate but is included in the decedent's estate for the purpose of asserting such taxes.
Notwithstanding Justice's argument, the statute has consistently been held to "establish[] a ceiling, not a base." Clay v. Eager, 444 S.W.2d 124, 127 (Ky. 1969); see also Hamilton v. Nunn, 247 Ky. 715, 719, 57 S.W.2d 655, 656 (1933) (stating that the statute does not require "that the maximum commission fixed by the statute must be allowed in every case[]"). In fact, the court in Nunn questioned whether a personal representative should be entitled to the maximum commission of 5% "where the estate consists principally of cash in bank or property such as government bonds, or insurance policies easily convertible into cash, and the settlement of the estate involved no complications[.]" Id.
Justice's argument is unclear as to whether he is seeking an income collected fee under KRS 395.150(1) or an extraordinary fee under KRS 395.150(2). Be that as it may, for our review, the trial court's award of these fees is subject to abuse of discretion analysis.
By his own accounting, Justice cashed out nearly $613,000 of the decedent's certificates of deposit and bank accounts, and claims a full 5% commission on these amounts. Under the authority of Nunn, such a commission is impermissible.
The record indicates that Justice was allowed a fee of $32,502.60. While the trial court did not explicitly set forth factual reasons for denying any additional fee, the video record of the final hearing clearly indicates the trial court's thoughts that this Estate should have been settled and closed long ago. We cannot help but also note that the two appeals in this matter were instigated by Justice in attempts 1) to uphold the terms of a codicil which would have largely excluded his sisters, Adkins and Stevens, from sharing a large portion of the decedent's estate; and 2) to recognize Justice's interpretation of the will which would have excluded Stevens from sharing the decedent's real estate. In other words, the appeals were undertaken for the benefit of Justice, which stands in contrast to the efforts of a disinterested fiduciary seeking an interpretation of a will. In light of the antagonistic positions that Justice, as executor, took to the interests of the other beneficiaries of the estate and the delay that was entailed by Justice's two prior appeals in this case in which he sought the aggrandizement of his share of the Estate, we are unable to say that the trial court's denial of any additional fee to Justice was an abuse of discretion. In fact, under the circumstances, we believe the trial court's permitting Justice a fee of slightly more than 3% of personal assets received and collected was generous.
$32,502.60 ÷ ($612,994.07 + $403,689.72) = 3.1969%.
B. Attorneys' Fees.
The record reveals that Justice was permitted to pay attorneys' fees in the amount of $28,500 by Order entered December 23, 2008, $5,650 by Order entered September 8, 2009, and $3,553.55 by Order entered April 11, 2013. Justice's motions for additional attorneys' fees for services from August 14, 2009 through February 23, 2011 in the total amount of $9,623 and from February 25, 2011 to May 15, 2014 in the total amount of $6,562.50 were denied. Only the denial of the latter motion is the subject of this appeal.
This latter amount apparently represented a contingent fee for 33?% of the amount recovered in separate litigation.
As a general rule, fiduciaries are entitled to employ attorneys in the settlement of a probate estate and to pay them reasonable fees for their services. KRS 395.195(18). The trial court in which the administration proceeds, however, must make the determination that the fees are reasonable. White v. White, 883 S.W.2d 502, 506 (Ky. App. 1994). Furthermore, and while attorneys' fees in connection with estate litigation do not necessarily require a showing of benefit to an estate,
where no benefit is shown either to the estate or the other beneficiaries no such allowance should be made unless there appears some good reason for the filing of the suit. We think such a rule will protect estates from unnecessary and fruitless litigation and at the same time prevent unreasonable delay on the part of fiduciaries in the final distribution and settlement of estates.Id. (quoting Johnson v. Ducobu, 258 S.W.2d 509, 510 (Ky. 1953)).
Additionally, case authority exists that attorneys' fees incurred on behalf of a fiduciary in advancing his or her personal interest, as opposed to that of the estate as a whole, should not be charged to the estate. See, e.g., Shields v. Shields, 190 Ky. 109, 226 S.W. 392, 393 (1920) (stating that beneficiaries, "who to protect their interests under the will were required to employ and pay their own counsel by reason of the hostile and unwarranted attitude of the executor, [should not] be required to pay any part of his attorney's fee in this action[]"); Goddard's Ex'x v. Goddard, 164 Ky. 41, 42-43, 174 S.W. 743, 743 (1915) (holding trial court erred in allowing executrix attorney fees, where the suit ostensibly for a construction of the will was in fact for the purpose of enforcing a claim asserted on her own behalf against the other beneficiaries); Wakefield v. Gilleland's Adm'r, 13 Ky. Law Rep. 845, 18 S.W. 768, 770 (1892) (trial court erred in allowing attorney's fee to administrator, stating "[i]f an administrator is allowed attorney's fees and costs for prosecuting or defending his own personal interest as an heir at the expense of the estate he represents, it is an invitation to him to litigate, as it costs him nothing[]").
Much as Justice is not entitled to additional compensation for services as fiduciary, we are unable to say, based on the length of time that this estate has been open and the litigation undertaken by and on behalf of Justice to advance his personal interest to the exclusion of that of the other beneficiaries, that the trial court abused its discretion in denying additional attorney fees to be charged to the Estate.
C. Additional Issues.
The parties address additional matters regarding Justice's addition of the trial judge as a party to the appeal, and whether the proceedings and this appeal are frivolous. Certainly, the naming of the trial judge as a party to this appeal was improper, but we do not believe the filing of this appeal was frivolous in the sense of being wholly without merit. Under CR 73.02(4),
Kentucky Rules of Civil Procedure. --------
If an appellate court determines that an appeal or motion is frivolous, it may award just damages and single or double costs to the appellee or respondent. An appeal or motion is frivolous if the court finds that it is so totally lacking in merit that it appears to have been taken in bad faith.
That said, we note that this decedent has been dead for 14 years. Three trips to the appellate courts are enough. We urge the parties to wrap up this Estate as expeditiously as possible, without further recourse to this court. Recognizing that may be a forlorn hope, we further urge the trial court not to attach finality language to any further additional orders or judgments except that one that finally adjudicates all claims and contentions of the parties, including a final discharge of Justice as executor.
IV. CONCLUSION.
The Pike Circuit Court's Order denying additional commission and attorney's fees to Justice is AFFIRMED.
ALL CONCUR. BRIEFS FOR APPELLANT: James L. Hamilton
Jonah L. Stevens
Pikeville, Kentucky BRIEF FOR APPELLEE: Michael De Bourbon
Pikeville, Kentucky