In re Estate of Marie Anderson Young ( 2016 )

IN THE COURT OF APPEALS OF TENNESSEE
AT JACKSON
January 21, 2016 Session
IN RE ESTATE OF MARIE ANDERSON YOUNG
Appeal from the Chancery Court for Haywood County
No. 2014PR40 George R. Ellis, Chancellor
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No. W2015-01753-COA-R3-CV – Filed January 29, 2016
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The trial court denied a personal representative‟s fee request after concluding that the request
did not comply with a local rule setting a personal representative‟s fee as a percentage of the
value of the estate. We reverse and remand for the trial court to reconsider Appellant‟s fee
request “in light of all the relevant circumstances.” In re Estate of Schorn, No. E2013-
02245-COA-R3-CV, 2015 WL 1778292, at *8 (Tenn. Ct. App. Apr. 17, 2015).
Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Chancery Court Reversed
and Remanded
J. STEVEN STAFFORD, P.J.,W.S., delivered the opinion of the Court, in which ARNOLD B.
GOLDIN, and KENNY ARMSTRONG, JJ., joined.
James Sampson Wilder, III, Dyersburg, Tennessee, for the appellant, Cathy Mumford
Shelton.
OPINION
Background
On October 14, 2014, Appellant Cathy Mumford Shelton (“Appellant”), the Executrix
of the Estate of Marie Anderson Young, filed a petition to probate the will of the decedent.
The decedent had bequeathed small sums of money and property to numerous beneficiaries,
who were spread widely. As such, Appellant was allegedly required to expend considerable
time locating those beneficiaries, as she was not related to the decedent and did not know the
beneficiaries‟ whereabouts.
According to the petition, the gross estate contained $2,461.22 in cash. The bulk of the
estate, however, consisted of jewelry owned by the decedent. According to the petition to
probate the will, Appellant previously obtained an appraisal of the jewelry, which valued it at
approximately $10,401.00. Accordingly, Appellant‟s petition to probate the will requested
permission to sell the jewelry and to be reimbursed for the appraisal. On November 25,
2014, the trial court entered an order admitting the decedent‟s will to probate, appointing
Appellant as Executrix of the estate, and allowing Appellant to sell the jewelry “in any
manner she sees fit in order to receive the highest and best price for said property.” Finally,
the trial court ordered that Appellant be reimbursed $387.50 for the appraisal of the jewelry.
After a second appraisal was conducted, Appellant ultimately sold the jewelry at auction for
less than one-half of its initial appraised value, realizing net proceeds of $2,384.00. The
proceeds from the jewelry sale were deposited into the estate account along with the cash
remaining from decedent‟s gross estate. After paying the necessary expenses of the estate,
only $3,881.22 remained in the estate account.
On February 26, 2015, the Bureau of TennCare (“TennCare”) filed a claim in the
estate in the amount of $215,840.32. As a result of the claim filed by TennCare, the named
beneficiaries were to receive nothing.
Appellant subsequently filed an affidavit and motion setting out the amount of time
she expended in administering the estate and asking that she be awarded a fee for her
services. Appellant detailed that she expended forty-seven hours on administration of the
estate, and requested that she be paid at a rate of $80.00 per hour, or a total of $3,760.00 with
$286.52 in expenses.
The trial court denied Appellant‟s requested fee, however, as the fee requested did not
comply with Local Rule 19:00(H) of the Rules of the Chancery Court, Twenty-Eighth
Judicial District of Tennessee, which provides that the court “shall consider the following
guidelines” in setting the fee of the personal representative, specifically, capping the fee at
5% for the first $20,000.00 in the estate. Under this metric, Appellant was only entitled to a
fee of $242.25 (considering the gross estate). The trial court did not award any fee to
Appellant. Appellant appealed.
Issues Presented
Appellant raises three issues on appeal, which are taken, and slightly restated, from
her appellate brief:
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1. Whether Local Rule 19:00(H) of the Rules of the
Chancery Court, Twenty-Eight Judicial District of Tennessee
conflicts with Tennessee Code Annotated Section 30-2-606
when it sets a percentage rate schedule to be used for the setting
of a personal representative‟s fee with no consideration as to
what is a reasonable fee based upon the facts and circumstances
of the estate, and should be stricken.
2. Whether the percentage rate schedule, contained in Local
Rule 19:00(H) may be used solely to set the fee of a personal
representative, or should the percentage rate schedule be merely
used as a guide, which may be considered by the court, along
with the facts and circumstances of the estate when the court
sets the fee of a personal representative, and therefore, does the
probate court have discretion to set a reasonable fee for a
personal representative in an amount other than that which
would be calculated solely by the percentage rate schedule
included in Local Rule 19:00(H), pursuant to Tennessee Code
Annotated Section 30-2-606.
3. Whether the probate court erred, and abused its
discretion, in straying beyond the applicable legal standard by
failing to take into consideration the facts and circumstances of
the estate, when the court denied the fee petition of the
Appellant for the reason that her fee petition did not meet the
percentage rate schedule contained in Local Rule 19:00(H).
Although TennCare is ostensibly a party to this case, it has chosen not to participate in this
appeal.1 Accordingly, we consider this appeal only on the brief of Appellant, oral argument,
and the record.
Discussion
This case involves a fee request made by the personal representative to an estate. The
determination of a fee to be awarded to a personal representative is reviewed under the abuse
of discretion standard. In re Estate of Schorn, No. E2013-02245-COA-R3-CV, 2015 WL
1778292, at *8 (Tenn. Ct. App. Apr. 17, 2015) (citing In re Estate of Wallace, 829 S.W.2d
696, 701 (Tenn. Ct. App. 1992)). Discretionary decisions must take the applicable law and
the relevant facts into account. Ballard v. Herzke, 924 S.W.2d 652, 661 (Tenn. 1996); Young
v. Hartley, 152 S.W.3d 490, 500 (Tenn. Ct. App. 2004). Appellate courts will conclude that a
trial court abused its discretion only when the trial court applies an incorrect legal standard,
1
At oral argument, Appellant asserted that TennCare has “withdrawn” its claim to the estate and does
not intend to pursue its claim further. This alleged fact, however, is not contained in the record.
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reaches an illogical decision, bases its decision on a clearly erroneous assessment of the
evidence, or employs reasoning that causes an injustice to the complaining party. Mercer v.
Vanderbilt Univ., 134 S.W.3d 121, 131 (Tenn. 2004); Perry v. Perry, 114 S.W.3d 465, 467
(Tenn. 2003).
Here, Appellant argues that the trial court employed an incorrect legal standard in
denying her fee request solely on the basis that the requested fee did not comply with Local
Rule 19:00(H) of the Rules of the Chancery Court, Twenty-Eighth Judicial District of
Tennessee. The interpretation of statutes, procedural rules, and local rules involve questions
of law which appellate courts review de novo without a presumption of correctness. Lind v.
Beaman Dodge, Inc., 356 S.W.3d 889, 895 (Tenn. 2011); Gleaves v. Checker Cab Transit
Corp., 15 S.W.3d 799, 802 (Tenn. 2000). In reaching our interpretation of a statute or rule,
we look first to the plain language of the enactments, giving the words their ordinary and
plain meaning. See generally Mills v. Fulmarque, 360 S.W.3d 362, 368 (Tenn. 2012).
The Tennessee General Assembly has expressly provided that judicial districts may
promulgate local rules governing legal proceedings in the district. Tennessee Code Annotated
Section 16-2-511 provides:
Uniform rules of practice may be promulgated in each district by
the judges of the district. The rules shall be consistent with the
statutory law, the rules of the supreme court and the rules of
criminal and civil procedure. The judges within a district may,
by rule, designate courts or parts of a court that will be primarily
responsible for hearing certain types of cases or cases dealing
with certain areas of the law. Not less than thirty (30) days prior
to the rules taking effect, copies of the rules shall be published
and circulated to the practicing bar and filed with the
administrative director of the courts.
Rule 18 of the Rules of the Tennessee Supreme Court further provides in part:
Each judicial district may also adopt other uniform rules not
inconsistent with the statutory law, the Rules of the Supreme
Court, the Rules of Appellate Procedure, the Rules of Civil
Procedure, the Rules of Criminal Procedure, the Rules of
Juvenile Procedure, and the Rules of Evidence. Prior to the
adoption or amendment of local rules of court, the judges of the
judicial district shall solicit and consider input from members of
the public and attorneys concerning the proposed rules or
amendments. A judicial district may adopt uniform local rules
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that apply only to the circuit, chancery, criminal, or similar trial
court divisions within the district.
Tenn. R. Sup. Ct. 18(a). Thus, local rules must not conflict with Tennessee Supreme Court
rules, other rules, or statutory law. Id.
Accordingly, we begin with the local rule at issue in this case, Local Rule 19:00(H) of
the Rules of the Chancery Court for the Twenty-Eight Judicial District of Tennessee. Local
Rule 19:00(H) provides, in relevant part:
The Court will set the fees of personal representatives
and attorneys of decedent‟s estate upon written sworn petition
filed by the personal representative.
The personal representative may be allowed all necessary
expenses in the care, management and preservation of the estate,
and may be allowed compensation, as hereinafter provided, for
services rendered, unless the decedent, by will, makes other
provisions for compensation of the personal representative, and
unless the personal representative renounces or disclaims any
and all interest in the compensation specified in the will by
filing a written instrument.
* * *
In setting all fees the Court may consider: any
extraordinary services, such as sales or mortgages of real or
personal property, will contest or other such litigation; lengthy,
contested or litigated claims against the estate; tax returns or
audits by any federal or state agencies; the managing or selling
of the decedent's business; or special services as may be
necessary for the personal representative to prosecute, defend or
perform.
The Court, in fixing the fees or compensation to personal
representatives when no compensation is provided by will, shall
consider the following guidelines based on the value of the gross
estate, including real estate to the extent services are rendered in
connection with the real estate, plus any income earned during
the administration of the estate.
Value of Estate Percentage as Fees
First $20,000 5%
Next $80,000 4%
Next $150,000 3%
Next $500,000 2%
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Over $750,000 1%
Here, the trial court expressly rejected Appellant‟s fee request because it did not comply with
Local Rule 19:00(H) in that Appellant requested a fee greater than 5% of the value of the
estate. From our review, it appears that in denying the fee request, the trial court interpreted
Local Rule 19:00(H) as an absolute cap on the fee a personal representative may be paid
from an estate.
Appellant argues, however, that such an interpretation is not only contrary to the plain
language of the rule indicating that the percentage schedule is to be used as a “guideline[,]”
but also in conflict with statutory law. To support this argument, Appellant cites Tennessee
Code Annotated Section 30-2-606, which concerns the fee allowed for a personal
representative. Tennessee Code Annotated Section 30-2-606 provides that: “The clerk shall
charge every accounting party with all sums of money the accounting party has received, or
might have received by using due and reasonable diligence, and shall credit the accounting
party with a reasonable compensation for services, and with disbursements supported by
lawful vouchers.” Based upon this statute, this Court has explained:
Generally, personal representatives are entitled to reasonable
compensation for their services and to payment for reasonable
expenses incurred in good faith for the necessary benefit of the
estate. In re Estate of Wallace, 829 S.W.2d 696, 700–01 (Tenn.
Ct. App. 1992); see Tenn. Code Ann. § 30-2-606. The
determination of reasonableness is left, in the first instance, to
the discretion of the trial court, which is to make that
determination in light of all the relevant circumstances. Id. at
701. Reasonable compensation should be fixed with reference to
the entire estate and services. Loftis v. Loftis, 28 S.W. 1091,
1093 (Tenn. 1895). Among the circumstances relevant to the
reasonableness of fees and expenses to be charged against an
estate are the extent of the personal responsibilities rendered, the
promptness and adequacy of the services, and the value of the
benefits conferred. In re Estate of Wallace, 829 S.W.2d at 701.
In re Estate of Schorn, 2015 WL 1778292 at *8. Thus, Tennessee Code Annotated Section
30-2-606 mandates that a personal representative‟s fee be determined on the basis of
reasonableness, considering “all the relevant circumstances.” Id. (emphasis added).
Local Rule 19.00(H)‟s directive that a personal representative‟s fee be determined by
the amount of the estate appears to conflict with the clear import of Tennessee Code
Annotated Section 30-2-606. This Court addressed a similar conflict in In re Estate of
Thompson, No. M2011-00411-COA-R3CV, 2012 WL 912859 (Tenn. Ct. App. Mar. 14,
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2012), perm. app. denied (Tenn. Aug. 15, 2012), which concerned an apparent conflict
between a local rule regarding the fee awarded to an attorney in an estate matter and the
Rules of Professional Conduct governing attorneys.2 Id. at *1.
In Thompson, the attorney for an estate submitted a fee request to the trial court,
ostensibly seeking an award of $50,000.00.3 The trial court eventually awarded the attorney
his requested fee.4 Id. at *2. The appellant objected to the fee on the basis that it was not
reasonable and was clearly excessive. Id. at *3. The trial court, however, upheld the fee
award, and the appellant appealed. Id. at *4.
In considering the fee awarded by the trial court, the Court of Appeals first concluded
that “the trial court‟s award was driven in large part by the percentage formula set forth in”
Local Rule 33.04 of the Local Rules of Practice of the 22nd Judicial District (“Local Rule
33.04”). Thompson, 2012 WL 912859, at *5. Local Rule 33.04 provides in relevant part:
Fees for Personal Representatives. In setting or approving fees
to personal representatives, the Clerk and Master or the court
will consider the personal representative's time, experiences,
skills, difficulty in dealing with creditors and beneficiaries of the
estate, and the value of the gross probate estate for which the
personal representative was responsible. The Court may
consider any extraordinary services, including sales of real or
personal property, litigation involving claims against the estate
or other matters, complex tax returns or audits, the management
of the decedent's business, will contests, or such other special
services that may have been necessary. The Clerk and Master
and the Court will be guided, but not bound, by a formula
allowing not less than 1% nor more than 5% of the gross probate
estate for which the personal representative was responsible.
Time expended and the nature of the estate will be given greater
consideration than the monetary value of the estate.
2
Judge, now Justice, Holly M. Kirby delivered the Opinion of the Court in Thompson. Judge Alan E.
Highers filed a separate concurrence regarding the application of White v. McBride, 937 S.W.2d 796 (Tenn.
1996), to the fee requested in the case. Judge J. Steven Stafford filed a separate concurrence concerning the
lack of findings made by the trial court. Neither Judge Highers nor Judge Stafford took issue with the
majority‟s analysis regarding the interplay between the local rule at issue and the requirement that the fee be
reasonable, the issue addressed in this Opinion.
3
The requested fee included the undisputed fee of a tax attorney that had been retained by the
appellee-attorney in the amount of $10,784.50. Accordingly, the appellee-attorney requested a fee of
$39,215.50 for his services.
4
This sum was calculated by considering the trial court‟s gross award of $50,000.00, and subtracting
the undisputed fee of the tax attorney of $10,784.50, which was to reduce the appellee-attorney‟s net fee.
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The Court of Appeals noted, however, an apparent conflict between Local Rule 33.04
and Rule of Professional Conduct (“RPC”) 1.5, contained in Rule 8 of the Rules of the
Tennessee Supreme Court. According to the Thompson Court:
RPC 1.5 lists numerous factors to be considered in determining
the reasonableness of an attorney fee. Tenn. Sup.Ct. R. 8, RPC
1.5. The Court in Wright [ex rel. Wright v. Wright, 337 S.W.3d
166 (Tenn. 2011)], expressly rejected the use of percentage
formulas, especially percentage caps to set an award of attorney
fees. Wright, 337 S.W.3d at 182. The Court explained that
“specify [ing] a percentage of what an attorney could recover in
a case involving a minor . . . would depart from our existing law
that „ultimately the reasonableness of the fee must depend on the
particular circumstances of the individual case.‟” Id. at 182
(quoting White[v. McBride, 937 S.W.2d [796,] 800
[(Tenn.1996)]). It cautioned: “Prescribing a fee structure would
tend to result in similar fees being awarded in cases with
different factual and procedural histories.” Wright, 332 S.W.3d
at 182. The Court rejected a formulaic approach based on any
one of the listed factors, noting that “no single factor found
within RPC 1.5 merits special emphasis over the other factors in
determining a reasonable fee[,] . . . . [although] the trial court
may conclude that certain factors merit greater weight under the
unique circumstances of a particular case.” Id. at 186.
Thompson, 2012 WL 912859, at *6.
Based upon RPC 1.5 and the holding in Wright, the Court of Appeals held:
Local Rule 33.04 characterizes the percentage formula as
a “guide” to the court in setting an attorney fee, and notes that
the court is not bound by them. Moreover, the “amount
involved” is expressly listed in RPC 1.5 as a factor to be
considered in setting an attorney fee. See Tenn. Sup.Ct. R. 8,
RPC 1.5(a)(4) (2011). Nonetheless, we find that the inclusion of
such a formula in the Local Rule is antithetical to RPC 1.5 and
Wright in that it invites the trial court to use a “rule of thumb”
instead of the individualized weighing process mandated by the
Supreme Court. Local rules adopted by trial courts may not
conflict with the rules adopted by the Supreme Court or other
substantive law. See Hessmer v. Hessmer, 138 S.W.3d 901,
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905, n.4 (Tenn. Ct. App. 2003) (citing Tenn. Code Ann. § 16-2-
511 (2009)).
Here, the trial court explicitly relied on the percentage
formula set forth in Local Rule 33.04. In doing so, the trial court
“stray[ed] beyond the applicable legal standards.” See Lee
Med.[, Inc. v. Beecher,] 312 S.W.3d [515,] 524 [(Tenn. 2010)].
Thompson, 2012 WL 912859, at *6 (footnote omitted). Thus, regardless of whether the local
rule concerning the fee to be awarded to an attorney is characterized as a “guide,” a trial
court is not permitted to rely on such a percentage formula in setting the fee but must instead
utilize “the individualized weighing process mandated by the Supreme Court.” Id. The Court
of Appeals therefore went on to determine the reasonable fee that the attorney was owed for
the services rendered in the case, considering, among other things, the hours worked by the
attorney, any extraordinary services rendered, “the novelty and difficulty of the questions
involved,” and “the fee customarily charged in the locality for similar legal services.”
Thompson, 2012 WL 912859, at *10 (quoting Tenn. Sup. Ct. R. 8, RPC 1.5). Ultimately, the
Court of Appeals concluded that the attorney was entitled to a fee of $8,000.00, rather than
the $39,215.50 awarded by the trial court.5 Id. at *16.
The situation in this case is largely analogous to the situation presented in Thompson.
Here, the trial court expressly denied Appellant‟s fee request on the basis that it did not
comply with the Local Rule 19:00(H) percentage guide, despite the fact that Local Rule
19:00(H) expressly states that it is merely a guideline. The use of a percentage to determine a
reasonable fee was clearly rejected by the Thompson Court, even where the local rule was
merely a guide. See id. at *6. Applying Thompson, it appears that the guideline provided by
Local Rule 19:00(H) must also be rejected.
We acknowledge, however, that there are key differences between this case and
Thompson. First, Thompson involved the fee awarded to an attorney rather than a personal
representative. As such, the fee dispute in Thompson was governed by a Rule of Professional
Conduct, contained within the Rules of the Tennessee Supreme Court. Despite these
differences, the similarities between this case and Thompson convince us that it provides
appropriate guidance on this issue. Here, while no Rule of Professional Conduct is
implicated, the determination of the fee to be awarded to a personal representative is clearly
governed by Tennessee Code Annotated Section 30-2-606. Rule 18 of the Rules of the
Tennessee Supreme Court mandates that local rules cannot conflict with not only the Rules
of the Tennessee Supreme Court, but also statutory law. See Tenn. R. Sup. Ct. 18(a).
Tennessee Code Annotated Section 30-2-606, like RPC 1.5, clearly directs that the fee
5
As previously discussed, there was no dispute as to the $10,784.50 fee owed to the tax attorney.
Accordingly, the Court of Appeals awarded the appellee-attorney a total award of $18,784.50, from which both
the appellee-attorney‟s fee and the tax attorney‟s fee were to be paid.
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awarded to a personal representative must be reasonable. See Tenn. Code Ann. § 30-2-606
(requiring that personal representative be awarded “reasonable compensation for services”);
Tenn. Sup. Ct. R. 8, RPC 1.5(a) (requiring that courts consider the “reasonableness of a fee”).
As previously discussed, this Court has indicated that the reasonableness determination
included in Tennessee Code Annotated Section 30-2-606 must be determined by considering
“all the relevant circumstances.” Schorn, 2015 WL 1778292, at *8. Under these
circumstances, we likewise conclude that Local Rule 19:00(H)‟s “rule of thumb” regarding
the fees to be awarded to a personal representative is “antithetical” to Tennessee Code
Annotated Section 30-2-606‟s requirement that the fees be determined on a case-by-case
basis taking into account more than simply the size of the estate. See Thompson, 2012 WL
912859, at *6. The trial court, therefore, abused its discretion in relying solely on Local Rule
19:00(H) to deny Appellant‟s fee request. Instead, on remand, the trial court shall consider
“all the relevant circumstances,” including “the extent of the personal responsibilities
rendered, the promptness and adequacy of the services, and the value of the benefits
conferred.” Schorn, 2015 WL 1778292, at *8 (citing In re Estate of Wallace, 829 S.W.2d at
701). In reaching its decision, the trial court should endeavor to make appropriate findings of
fact and conclusions of law to support its decision. See Tenn. R. Civ. P. 52.01 (requiring
findings of fact and conclusions of law in “all actions tried upon the facts without a jury”).
Conclusion
The judgment of the Chancery Court of Haywood County is reversed and this cause is
remanded to the trial court for further proceedings consistent with this Opinion. Due to the
unique procedural posture of this case, we decline to assess costs to any party.
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J. STEVEN STAFFORD, JUDGE
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