Craig v. Gabbert, Jr., L. Glenn Worley And M. Kimberly Stagg Of ( 2000 )

IN THE COURT OF APPEALS
AT KNOXVILLE
FILED
February 29, 2000
Cecil Crowson, Jr.
Appellate Court Clerk
IN THE MATTER OF: ) GREENE COUNTY
ESTATE OF MARY TIMMONS AUSTIN, ) E1998-00825-COA-R3-CV
)
THOMAS A. SCOTT, JR., )
Administrator C.T.A. )
)
ROBERT C. AUSTIN, JR. )
)
Beneficiary-Appellant ) HON. THOMAS FRIERSON II,
) CHANCELLOR
)
v. )
)
)
ELIZABETH T. AUSTIN )
)
Beneficiary-Appellee ) AFFIRMED AND REMANDED
JOHN P. KONVALINKA AND DAVID M. ELLIOTT OF CHATTANOOGA FOR
APPELLANT
CRAIG V. GABBERT, JR., L. GLENN WORLEY AND M. KIMBERLY STAGG OF
NASHVILLE FOR APPELLEE
O P I N I O N
Goddard, P.J.
This is an appeal from the Chancery Court’s judgment
awarding attorneys’ fees from the assets of the Estate of Mary
Timmons Austin. Robert Austin, Jr., Appellant, raises the
following issue:
Did the trial court err in whole or in part by awarding
attorneys’ fees from the Mary T. Austin Estate to
Harwell Howard Hyne Gabbert & Manner, P.C., attorneys
for beneficiary Elizabeth T. Austin?
The facts of this case span a period of ten years.
Mary Timmons Austin died on August 17, 1989, leaving a husband
and three children. She devised and bequeathed all her assets to
her husband, Robert Austin, Sr. Her will named her husband as
the executor, but in the event he could not perform these duties,
Elizabeth Austin, their daughter, was named executor. On May 16,
1990, an order was entered admitting Mrs. Austin’s will to
probate in common form and Mr. Austin filed a Disclaimer of
Interest in Decedent’s Estate wherein he renounced his claim to
certain property and stock in the Estate. Mr. Austin died on
August 14, 1990, before completing administration of Mrs.
Austin’s estate.
On May 16, 1991, the court appointed Elizabeth Austin,
who was the alternate executor in the will, as executrix of Mrs.
Austin’s estate. Robert Austin, Jr. opposed this appointment.
The main point of contention among the three siblings has been
the Rolich stock in Mrs. Austin’s estate. In 1991 and 1992,
Robert Austin, Jr. (hereinafter “Robert Jr.”) and Christy Austin
(hereinafter “Christy”) moved the court to direct Elizabeth
Austin (hereinafter “Lisa”)1 to distribute the Rolich stock in
kind. On July 23, 1992, Robert Jr. filed a motion to remove Lisa
as executrix and to appoint a successor executor. Before the
court ruled on these motions, Lisa petitioned to resign as
executrix on August 10, 1992, because the motions would require
her to protect her rights as an individual beneficiary.
On November 9, 1992, Lisa responded to the motions for
her to distribute the Rolich stock in kind. Lisa argued that the
Rolich stock should be sold and the proceeds divided by the
beneficiaries, instead of an in kind distribution. On November
18, 1992, Lisa petitioned the court to order the Administrator
C.T.A. of the Estate to place the Rolich stock on the market for
sale. The Administrator C.T.A., Eric Christiansen, filed a
memorandum which stated his intention to distribute the stock in
kind unless otherwise directed by the court. On March 3, 1993,
the court granted the motion to distribute the Rolich stock in
kind. Lisa appealed the court’s decision and this court affirmed
the trial court. See Elizabeth T. Austin v. Christy N. Austin,
et al., an unreported opinion of this Court, filed in Knoxville
on June 30, 1994. The Tennessee Supreme Court reversed the trial
court and this Court by holding that the personal representative
is required to sell the stock and distribute the proceeds. See
1
Our use of the first names of the parties should not be
construed as any disrespect, but rather is for ease of reference.
3
Elizabeth T. Austin v. Christy N. Austin, et al., 920 S.W.2d 209(Tenn. 1996).
The second lawsuit for which Lisa seeks attorneys fees
involved a complaint Lisa filed, before she resigned as
executrix, against Rolich Corporation on behalf of the Estate.2
In the complaint, Lisa asserted that Rolich Corporation sold its
Unaka stock to Lisa, Christy, Robert Jr. and Robert Sr. at a
price less than fair market value. According to Lisa, the
Estate’s interest as a shareholder in Rolich was damaged by this
sale of Unaka stock. Mr. Christiansen, who was appointed
Administrator C.T.A. after Lisa resigned, declined to pursue this
litigation and surrendered his right to any beneficiary. Lisa
chose to pursue the litigation. The lower court dismissed the
action, but this Court reversed the lower court. See
Christiansen v. Rolich Corp., 909 S.W.2d 823 (Tenn. Ct. App.
1995). We found that Lisa could maintain the lawsuit as a
personal representative of the Estate. See Christiansen, 909
S.W.2d at 825.
2
The parties refer to this lawsuit as the Roll Over Suit
because Lisa, Christy, Robert Jr. and Robert Sr., as Directors of
Rolich Corporation, sold shares of Unaka to themselves at a
discounted price to avoid tax liability.
4
On April 30, 1998, Thomas A. Scott, Administrator
C.T.A. of the Estate, filed a “Petition To Approve Attorneys Fees
and Expenses and a Plan of Distribution and to Close the Estate.”
The attorneys’ fees Mr. Scott petitioned to be approved were fees
incurred during the distribution in kind litigation and the roll
over litigation. Mr. Scott recommended that the fees be awarded
because benefit inured to the Estate, the lawsuits were pursued
in the name of the Estate and the lawsuits guided the personal
representative in the appropriate actions to take in
administrating the Estate. Rolich Corporation and Robert Jr.
objected to the approval of these attorneys’ fees. On November
5, 1998, the Chancery Court awarded attorneys’ fees and expenses
to Harwell, Howard, Hyne, Gabbert & Manner, P.C. (hereinafter
“firm”) in the amount of $91,965.64. The Chancery Court found
the services provided by the firm were necessary to the
administration of the Estate and inured to the benefit of the
Estate.
First, Robert Jr. argues that an agreement signed by
Lisa in 1996 precludes her recovery of attorneys’ fees. Rolich
Corporation filed suit against Lisa, Christy and Robert Jr. to
enforce this agreement through mediation. According to Robert
Jr., this matter should be part of the mediation process in the
5
separate lawsuit filed by Rolich. Essentially, Robert Jr. asked
the lower court to interpret the agreement, which was the issue
of a separate pending lawsuit, or order that the attorneys’ fees
issue in this case become part of the mediation in the separate
Rolich suit. The Chancellor, without interpreting the agreement,
found that the attorneys’ fees issue should not be part of the
mediation ordered in the separate lawsuit.
Because the Chancellor only addressed the issue of
mediation, we are constrained to do the same. The interpretation
of the agreement will be determined in the court-ordered
mediation of the separate pending Rolich suit. After a thorough
review of the record, we agree with the Chancellor’s decision.
Second, Robert Jr. argues that the attorneys’ services
did not benefit the Estate. “Fees for the services of an
attorney not employed by the personal representative are
sometimes allowed out of the assets but only where the services
have inured to the benefit of the estate.” Davis v. Mitchell,
178 S.W.2d 889, 915 (Tenn. Ct. App. 1943). The trial court
possesses broad discretion in assessing attorney’s fees against
an estate if the services benefitted the estate. See Merchants &
Planters Bank v. Myers, 644 S.W.2d 683, 688 (Tenn. Ct. App.
1982). We will not disturb the trial court’s award of attorney’s
6
fees unless there is an abuse of discretion. See Aaron v. Aaron,
909 S.W.2d 408, 411 (Tenn. 1995).
The distribution in kind litigation certainly
benefitted the Estate because the stock was more valuable when
sold as a unit compared to being split evenly among the
beneficiaries. As Mr. Scott stated in his petition to approve
attorneys’ fees, the “sale resulted in a significantly higher
price for the stock than was previously offered.” The roll over
suit was initiated to insure that the Estate’s interest in the
Rolich Corporation was not damaged by the sale of Rolich’s Unaka
stock. On appeal, this Court stated that Lisa was acting as a
personal representative of the Estate in filing the roll over
suit although she was a beneficiary and participated in the
alleged wrongdoing. See Christiansen v. Rolich Corp., 909 S.W.2d
823, 825 (Tenn. Ct. App. 1995). The Chancellor found the roll
over suit benefitted the Estate. We agree with the Chancellor’s
determination that both actions benefitted the Estate.
The parties dispute whether the fees must be shown to
have been necessary and proper.3 Robert Jr. asserts that
attorney’s fees charged to the estate, whether by the executor or
a beneficiary, must be shown to have been necessary and proper.
3
Another requirement when requesting attorneys fees is that
the fees are reasonable. The parties are not disputing the
reasonableness of the award in this case.
7
See In re Estate of Wallace, 829 S.W.2d 696, 701 (Tenn. Ct. App.
1992); In re Estate of Cuneo, 475 S.W.2d 672, 676 (Tenn. Ct. App.
1971). Lisa asserts that the only standard applied in cases
where someone other than the executor sought attorney’s fees is
whether the services inured to the benefit of the estate. See
Leaver v. McBride, 506 S.W.2d 141, 145-6 (Tenn. 1974); Pierce v.
Tharp, 455 S.W.2d 145, 148 (Tenn. 1970); Merchants & Planters
Bank v. Myers, 644 S.W.2d 683, 688 (Tenn. Ct. App. 1982).
We do not believe it is necessary under the facts of
this case to resolve the competing contentions of the parties.
We reach this conclusion because we are convinced that where the
value of an estate has been enhanced and it would not have been
absent the efforts of an attorney, the attorney’s services were
obviously necessary.
For the foregoing reasons the judgment of the Chancery
Court is affirmed and the cause remanded for the collection of
costs below. Costs of this appeal are adjudged against Robert
Austin, Jr., and his surety.
Houston M. Goddard, P.J.
CONCUR:
8
Herschel P. Franks, J.
John K. Byers, Special Judge
9