In Re Estate of Alys Harris Lipscomb ( 2018 )

06/21/2018
IN THE COURT OF APPEALS OF TENNESSEE
AT JACKSON
Assigned on Briefs June 1, 2017
IN RE ESTATE OF ALYS HARRIS LIPSCOMB
Appeal from the Probate Court for Shelby County
No. PR-1541 Karen D. Webster, Judge
No. W2016-00881-COA-R3-CV
The administrator of an estate appeals the trial court’s award of attorney fees to a
beneficiary in a contempt action filed by him against the beneficiary. We reverse,
holding that the trial court abused its discretion in its award of attorney fees because the
fees awarded did not inure to the benefit of the estate.
Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Probate Court
Reversed; Case Remanded
JOHN W. MCCLARTY, J., delivered the opinion of the Court, in which FRANK G.
CLEMENT, JR., P.J., M.S. and BRANDON O. GIBSON, J., joined.
Kenneth P. Jones, Memphis, Tennessee, for the appellant, Scott B. Peatross,
Administrator of the Estate of Alys Harris Lipscomb.
Robert L. J. Spence, Jr. and Kristina A. Woo, Memphis, Tennessee, for the appellee,
Carnita F. Atwater.
OPINION
I. BACKGROUND
Alys H. Lipscomb, M.D. (“Decedent”) died at the age of 98 on May 21, 2014.
Her death has resulted in years of protracted litigation concerning the administration of
her estate, valued at approximately $2.9 million. This action is one of many concerning
Carnita F. Atwater’s (“Beneficiary”) status as a beneficiary of the estate following her
long-term care of Decedent and resulting relationship with her.
Scott B. Peatross (“Administrator”), serving as the administrator of the estate, filed
the petition for contempt that is at issue in this case on October 1, 2015, alleging that
Beneficiary violated the trial court’s temporary restraining order, entered on July 3, 2014,
and then extended on August 31, 2014, against Beneficiary. The July 2014 order,
provided, as pertinent to this appeal, as follows:
[Beneficiary] is hereby ORDERED not to transfer, spend, or dispose of any
asset described in the Verified Complaint and formerly owned by
[Decedent] or any asset purchased, in whole or in part, with funds that
belonged to Decedent.
The temporary restraining order was then extended by consent through the trial of the
matter. In the petition for contempt, Administrator alleged that Beneficiary listed several
items, either owned by Decedent or paid for with Decedent’s funds, on an estate sale
website for sales held on May 9 and August 2, 2015, in violation of the court’s order. He
sought a finding of contempt, an assessment of damages, and an order directing
Beneficiary to “provide an inventory of any and all items purchased, in whole or in part,
with funds that belonged to [Decedent], which [she] sold, transferred, disposed of,
through the [website] or otherwise.”
Beneficiary denied wrongdoing, claiming that she has been in the business of
selling antiques, household furniture, and other items at community sales and flea
markets for years. She asserted that none of the items at issue were actually sold, that
some of the items were owned by her, and that other items were inadvertently or
mistakenly uploaded to the website. She attached photographs of several items at issue in
an attempt to establish her continued possession. Further, she agreed that she would
refrain from selling items that qualified as contested property without prior permission.
The case proceeded to a hearing on November 12, 2015, at which Administrator
identified the advertisements and photographs listed on the website. In turn, Beneficiary
confirmed that none of the items at issue were actually sold. Following the hearing, the
court denied the petition, finding that while Beneficiary had violated “the spirit” of the
restraining order by attempting to effect a sale, transfer, or disposition of estate property,
she had not violated the words set forth in the order because no items at issue were sold.
The court further ordered Beneficiary to provide a written full and complete inventory of
any and all items of property “purchased, in whole or in part, with funds that belonged to
[Decedent]; and including a full and complete inventory of any and all items of such
property which [Beneficiary] has sold, transferred, or disposed of, through [the sales
website] or otherwise.”
On March 18, 2016, Beneficiary filed a petition for attorney fees incurred in her
defense of the petition for contempt with an attached affidavit setting forth the time
records for services rendered, in a total amount of $8,459. Administrator objected to the
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request for attorney fees, claiming that the services rendered benefited her personally, not
the estate. The court granted the petition, in part, finding as follows:
[I]n order to better address the offensiveness of [Beneficiary’s] actions
which led to the contempt proceedings, it is fair and equitable to require the
Estate to pay half of [Beneficiary’s] attorney’s fees and for [Beneficiary] to
pay the other half. Thus, [Beneficiary] is awarded attorney’s fees paid from
the Estate in the amount of $4,229.50.
The court certified the judgment as final pursuant to Rule 54.02 of the Tennessee Rules
of Civil Procedure.1 Administrator filed a timely appeal.2
II. ISSUES
The sole and determinative issue on appeal is whether the trial court abused its
discretion in its award of attorney fees incurred by Beneficiary in her defense of the
contempt petition.
III. STANDARD OF REVIEW
“A trial court’s ruling for reimbursement of attorney’s fees out of an estate is
reviewed under an abuse of discretion standard.” In re Estate of Ledford, 419 S.W.3d
269, 277 (Tenn. Ct. App. 2013) (citing Merchants & Planters Bank v. Myers, 644 S.W.2d
683, 688 (Tenn. Ct. App. 1982)). “A court abuses its discretion when it causes an
injustice to the party challenging the decision by (1) applying an incorrect legal standard,
(2) reaching an illogical or unreasonable decision, or (3) basing its decision on a clearly
erroneous assessment of the evidence.” Lee Med., Inc. v. Beecher, 312 S.W.3d 515, 524
(Tenn. 2010) (citations omitted). Our Supreme Court provided further guidance on this
topic by stating as follows:
To avoid result-oriented decisions or seemingly irreconcilable precedents,
reviewing courts should review a lower court’s discretionary decision to
determine (1) whether the factual basis for the decision is properly
1
“When more than one claim for relief is present in an action . . . or when multiple parties are involved,
the court . . . may direct the entry of a final judgment as to one or more but fewer than all of the claims or
parties only upon an express determination that there is no just reason for delay and upon an express
direction for the entry of judgment.”
2
Administrator then filed a motion to alter or amend three days later, asking the court to remove the
language certifying the judgment as final pursuant to Rule 54.02. The court did not rule upon the motion,
presumably because it no longer held jurisdiction.
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supported by evidence in the record, (2) whether the lower court properly
identified and applied the most appropriate legal principles applicable to the
decision, and (3) whether the lower court’s decision was within the range of
acceptable alternative dispositions. When called upon to review a lower
court’s discretionary decision, the reviewing court should review the
underlying factual findings using the preponderance of the evidence
standard contained in Tenn. R. App. P. 13(d) and should review the lower
court’s legal determinations de novo without any presumption of
correctness.
Id. (citations omitted).
IV. DISCUSSION
Tennessee follows the American Rule which provides that “litigants pay their own
attorney’s fees absent a statute or an agreement providing otherwise.” State v. Brown &
Williamson Tobacco Corp., 18 S.W.3d 186, 194 (Tenn. 2000); accord Taylor v. Fezell,
158 S.W.3d 352, 359 (Tenn. 2005). “Under the American [R]ule, a party in a civil action
may recover attorney fees only if: (1) a contractual or statutory provision creates a right
to recover attorney fees; or (2) some other recognized exception to the American [R]ule
applies, allowing for recovery of such fees in a particular case.” Cracker Barrel Old
Country Store, Inc. v. Epperson, 284 S.W.3d 303, 308 (Tenn. 2009) (citing Taylor, 158
S.W.3d at 359; John Kohl & Co. v. Dearborn & Ewing, 977 S.W.2d 528, 534 (Tenn.
1998)). Our Supreme Court has held that attorney fees may be awarded to someone other
than the administrator of an estate when the services “inured to the benefit of the entire
estate as distinguished from services rendered to individuals claiming an interest in the
estate.” Pierce v. Tharp, 455 S.W.2d 145, 149 (Tenn. 1970) (citation omitted).
Administrator requests reversal of the attorney fee award, arguing that the fees did
not benefit the estate and that the court did not find otherwise in support of its award.
Beneficiary responds that her defense of the petition, inter alia, led the court to order
Administrator to prepare an inventory of personal property pursuant to Tennessee Code
Annotated section 30-2-301(a)3 and otherwise aided the court in the proper administration
of the estate. She further asserts that the fees awarded fall within the bad faith exception
to the American Rule because Administrator filed the petition without sufficient
knowledge of the claims alleged and presented no evidentiary support for the petition at
3
“The personal representative, within sixty (60) days after entering on the administration of a testate or
intestate estate, shall make a complete and accurate inventory of the probate estate of the deceased, and
return the inventory to the clerk of the court exercising probate jurisdiction in the county of the estate, and
verify it by the personal representative’s oath before the clerk or before any person authorized by law to
administer oaths in such cases whether within or without the borders of the state.”
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the hearing. Administrator issues a reply brief in which he asserts that the court ordered
Beneficiary to submit an inventory, not him and that no “bad faith” exception exists in
Tennessee, a claim which she also neglected to allege in her fee petition. He alternatively
responds that the petition was not filed in bad faith as evidenced by the fact that
Beneficiary listed contested property for sale.
Our review of the record reveals that the court ordered Beneficiary to draft an
inventory in an attempt to ensure that the estate property remained in the estate until
further proceedings were held. The court further advised Beneficiary at the hearing that
all estate property would be surrendered to the control of the personal representative and
that any contested items would be ruled upon at a later date. While we agree that the
court’s ruling benefitted the estate, the record reflects that the services at issue were
rendered in defense of Beneficiary’s actions, not for the benefit of the entire estate.
Notably, the court did not find otherwise.
We also agree with Administrator that Beneficiary did not allege “bad faith” in
support of her request for attorney fees. The record does not support a finding of bad
faith when the court specifically reduced the amount requested by Beneficiary based
upon the “offensiveness” of her actions. With the above considerations in mind, we hold
that the court abused its discretion in awarding attorney fees. We reverse the court’s
award of attorney fees.
V. CONCLUSION
We reverse the decision of the trial court and remand for such further proceedings
as may be necessary. Costs of the appeal are taxed to the appellee, Carnita F. Atwater.
_________________________________
JOHN W. McCLARTY, JUDGE
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