LEANHART Et Al. v. KNOX. ( 2019 )

SECOND DIVISION
MILLER, P. J.,
MCMILLIAN and REESE, JJ.
NOTICE: Motions for reconsideration must be
physically received in our clerk’s office within ten
days of the date of decision to be deemed timely filed.
http://www.gaappeals.us/rules
June 28, 2019
In the Court of Appeals of Georgia
A19A0690. LEANHART et al. v. KNOX.
MCMILLIAN, Judge.
This case presents an issue of first impression concerning the trial court’s
authority to apportion between two claims pursuant to a “High-Low” Agreement
when the Agreement is silent on the issue. As more fully set forth below, we must
vacate the trial court’s order and remand for further proceedings consistent with this
opinion.
The underlying facts are not in dispute. Paul Knox was severely injured and
later died from injuries he suffered when the motorcycle he was riding crashed after
swerving to miss a waste receptacle allegedly left out in the street by workers from
A-1 Sanitation Service, Inc. His widow, Toni Knox, filed negligence claims against
A-1: (1) as Paul’s surviving spouse for Paul’s wrongful death (“Wrongful Death
Claim”) and (2) as Administrator of Paul’s estate for the suffering he endured before
he died and funeral and burial expenses (“the Estate Claim”). After several years of
discovery and motions practice, the case proceeded to trial. While the jury was
deliberating, Knox and A-1 entered into a “High-Low Settlement Agreement” (“High-
Low Agreement”), which provided:
Terms:
• Any verdict in excess of One Million Dollars will be satisfied by
payment of One Million dollars ($1,000,000).
• In the event of a defense verdict or a verdict of less than $375,000,
Defendant’s Insurer will pay three hundred seventy-five thousand
dollars ($375,000) to Plaintiff.
• Plaintiff will dismiss this matter with prejudice and fully release
Defendant and its agents and employees.
• Neither party shall have any appeal.
The jury subsequently entered an award of $1,000,000 on the claims of the
Estate and $3,000,000 on the Wrongful Death Claim. Recognizing the conflict
between her roles as Paul’s heir and representative of his Estate while also acting
individually and as the representative of Paul’s children on the Wrongful Death
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Claim, Knox filed a motion requesting that the trial court apportion the High-Low
funds between the claims. However, she also took an active role in the apportionment
proceedings by urging the trial court to allocate 100 percent of the High-Low Funds
to the Estate so that Paul’s children would not share in the High-Low Funds, arguing
that Paul was estranged from his children and had not left them anything in his will
and would not want them to share in the funds. A few days later, three of Paul’s four
children filed a motion to intervene in order to assert their rights as wrongful death
heirs (the “Children”1). The Children also filed a response to the motion to apportion,
arguing that they had an absolute right to share in the proceeds pursuant to the
wrongful death statute and the trial court should apportion the funds between the
claims based on the jury’s verdict, which would result in an allocation of 75 percent
of the High-Low funds to the Wrongful Death Claim and 25 percent of the funds to
the Estate Claim. Following a hearing, the trial court granted the Children’s motion
to intervene but then allocated 100 percent of the High-Low funds to the Estate
1
Although the motion to intervene was filed on behalf of only three of Paul’s
four children and the notice of appeal was also filed by those same three children, the
appellants’ brief contains a footnote that the fourth child is now represented by their
counsel and the “Children, therefore, speak as one.” Although Knox argues that the
child who did not participate in the intervention proceedings has now waived the
right to participate in any further proceedings in this case, that issue is not before us,
and we do not address it.
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Claim, pointing to, among other things “the relationships between the heirs and the
deceased and the wishes of the deceased as evidenced by the record[.]” The Children
then filed this appeal.
A high-low agreement is a settlement agreement which sets a fixed range of
payment such that the defendant agrees to pay the plaintiff a minimum recovery and
plaintiff agrees to accept a maximum amount based on the possible outcomes at trial.
Broda v. Dziwura, 286 Ga. 507, 507, n.2 (689 SE2d 319) (2010). Thus, like any other
settlement agreement, it is a contract and must be analyzed according to the rules
governing the construction of contracts. H & E Innovation, LLC v. Shinhan Bank
America, Inc., 343 Ga. App. 881, 885 (1) (808 SE2d 258) (2017) (“Because a
settlement agreement is a contract, it is subject to the usual rules of statutory
construction.”). Although the High-Low Agreement in this case does not mention any
particular claim that is being settled and is silent as to how the funds should be
allocated, there is no dispute that the Hi-Low Agreement was intended to settle all the
claims being tried by the jury when the settlement was reached.2 Further, there is also
2
We note that although not executed until after the hearing on the motion to
apportion, the release Knox signed, unlike the High-Low Agreement, contained
specific language that the settlement was “for the purpose of making a full and final
compromise adjustment and settlement of any and all claims, . . .”
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no dispute that the High-Low funds are insufficient to satisfy both claims. The
question then is how to allocate the insufficient funds between the two claims in the
face of a silent agreement.
Because the settlement agreement does not address the allocation of funds and
in the absence of clear precedent to guide us, we believe the proper starting point is
to look to the claims that were filed and settled, as well as the various parties’ rights
and responsibilities with respect to those claims. See Nash v. Allstate Ins. Co., 256
Ga. App. 143, 146 (567 SE2d 748) (2002) (where insufficient insurance funds were
paid out without specifying the funds were in satisfaction of any particular claim, this
Court looked to the claims that had been filed and then determined that none of the
“meager” insurance funds available should be used to satisfy a hospital lien where the
Estate had not asserted a claim for medical expenses but the children had asserted a
wrongful death claim).
Here, Knox, as Paul’s surviving spouse, sought damages for Paul’s wrongful
death, and as Administrator of his Estate, damages for his shock, fright and terror
prior to the collision, all components of the mental pain and suffering endured by
Paul upon impact up until he died, and funeral and burial expenses. Our law is clear
that Knox was the proper party to bring these claims and not only had the right to
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bring the claims but also had the authority to settle or compromise the claims without
any input from Paul’s Children. See OCGA § 51-4-2 (a) (designating the surviving
spouse, if there is one, as the proper party to bring a wrongful death claim); OCGA
§ 51-4-2 (c) (giving the surviving spouse the authority to release the defendant
without concurrence of the children); OCGA § 53-7-45 (“Personal representatives are
authorized to compromise, adjust, arbitrate, assign, sue or defend, abandon, or
otherwise deal with or settle debts or claims in favor of or against the estate.”);
Memar v. Styblo, 293 Ga. App. 528, 528 (667 SE2d 388) (2008). (“[T]he exclusive
right to bring an action on behalf of [an] estate resided in the estates legal
representative, executor, or administrator.”).
But along with the right to bring and settle both causes of action, Knox also
had a fiduciary obligation to both the wrongful death heirs, i.e., the Children, and to
those persons or entities with claims against the Estate. As our Supreme Court
explained with respect to wrongful death claims:
Although the statute confers exclusive standing upon the surviving
spouse, it does not vest in the spouse all of the rights to the claim. The
spouse is required to share the proceeds with the children. [OCGA § 51-
4-2 (d) (1)] A duty is owed to the children and part of that duty is to act
prudently in asserting, prosecuting and settling the claim. The failure to
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do this could subject the spouse to liability for breach of duty as a
representative.
(Citation and punctuation omitted.) Brown v. Liberty Oil & Refining Corp., 261 Ga.
214, 215 (1) (a) (403 SE2d 806) (1991). See OCGA § 53-7-1 (“A personal
representative is a fiduciary . . . .) Also, as we explained in Home Ins. Co. v. Wynn,
229 Ga. App. 220 (493 SE2d 622) (1997), a case in which the surviving spouse was
also acting in several different legal capacities and would have benefitted most from
allocating as little of the settlement proceeds as possible to the wrongful death claim:
In a wrongful death case, the surviving spouse acts as the children’s
representative and owes them the duty to act prudently in asserting,
prosecuting and settling the claim and to act in the utmost good faith. .
. . At the same time, an executrix of an estate occupies a fiduciary
relationship toward parties having an interest in the estate; that
relationship also requires the utmost good faith.
(Citation omitted) Id. at 222 (1).
We agree in this situation it was proper for Knox to request that the trial court
apportion the funds instead of attempting to allocate them herself, and it was proper
to allow the Children to intervene in the action to protect their interests. However,
Knox acted in contravention of her fiduciary duties to the Children by arguing that
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none of the settlement funds should be allocated to the Wrongful Death Claim
because Paul would had left them out of his will and he would not have wanted them
to share in the recovery. See Wynn, 229 Ga. App. at 222-23 (1) (1997) (surviving
spouse breached her fiduciary duty under wrongful death statute by allocating funds
to claims in which she was the sole beneficiary).
Similarly, we have found no authority and the parties have pointed to none that
would allow the trial court to consider the decedent’s wishes in apportioning the
claims between the Estate and Wrongful Death Claims so as to allocate all the funds
to one claim at the expense of the other. It is clear that the Children had an absolute
statutory right under OCGA § 51-4-2 to share in any recovery on that claim, despite
any wishes Paul may have had, so we fail to see how Paul’s desires are relevant to
apportioning between the claims. OCGA § 51-4-2 (a) specifically gives both minor
and adult children a right to share in the proceeds of a wrongful death recovery and
makes no provision for consideration of a decedent’s relationship with his children,
even if they are adults and may have been estranged from their parent. As our
Supreme Court has explained, the Wrongful Death Statute is in derogation of
common law and must be strictly construed. Thus, “[t]he express language of the Act
will be followed literally and no exceptions to the requirements of the Act will be
8
read into the statute by the courts.” (Citation and punctuation omitted.) Tolbert v.
Maner, 271 Ga. 207, 208 (1) (518 SE2d 423) (1999). Accordingly, even when there
are compelling circumstances, we cannot ignore the plain language of the statute and
rewrite it to suit the facts of a particular case. The right to make such revisions or
amendments is placed in the hands of the legislature, not the courts.
Even though we find the trial court erred by failing to allocate any of the
settlement proceeds to the Wrongful Death Claim, that does not answer the question
of how the proceeds should be apportioned. The Children argue that the trial court
should look to the jury’s verdict for guidance. We know of nothing that would
prevent the trial court from exercising its discretion to consider the jury’s verdict in
allocating the settlement funds, although it certainly would not be required to do so.
Further, it would also be within the trial court’s discretion to consider such factors as
the expenses that might be deducted from any recovery allocated to the Estate,3 such
as funeral and burial expenses, as well as the fact that Knox alone has borne the costs
of bringing the litigation, which had proceeded all the way through trial. Accordingly,
and mindful that we cannot give the trial court a precise roadmap to follow in
3
The Wrongful Death Statute specifically exempts any wrongful death
recovery from any debts or liabilities of the decedent. OCGA § 51-4-2 (e).
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allocating the High-Low Funds, we vacate the portion of the trial court’s order
allocating all of the settlement proceeds to the Estate Claim4 and remand for further
proceedings consistent with this opinion.
Judgment affirmed in part, reversed in part, vacated in part, and case
remanded with direction. Miller, P. J., and Reese, J., concur.
4
We vacate only in part because the trial court granted the Children’s motion
to intervene in the same order, and because that issue is not before us, that portion of
the order stands affirmed.
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