In the Matter of the Estate of John L. O'Neill

IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
In the Matter of the Estate of ) C.A. No. 2022-0088-LM
JOHN L. O’NEILL )
) and
)
) ROW Folio No. 177444 WF-LM
MAGISTRATE’S POST-TRIAL FINAL REPORT
Final Report: March 28, 2024
Date Submitted: November 17, 2023
Timothy S. Ferry, FERRY JOSEPH, P.A., Wilmington, Delaware; Counsel for
Petitioner Kathleen O’Neill.
Jason C. Powell and Thomas J. Reichert, THE POWELL FIRM, LLC,
Wilmington, Delaware; Counsel for Respondent Kevin O’Neill.
Kenneth O’Neill, Saint Johns, Arizona; pro se Respondent.
MITCHELL, M.
This case arises from the administration of the Estate of John L. O’Neill. John
O’Neill died testate on December 24, 2020, leaving behind three adult children, and
two adult grandchildren as beneficiaries of his estate.
After a two-day trial on the merits, I find: (1) Kevin O’Neill has breached his
fiduciary duties; (2) the Respondent should be required to provide an updated
accounting and updated inventory, but may continue to serve as the personal
representative of the Estate, with specific requirements as further explained herein;
and (3) the Petitioner may charge her attorney fees for this litigation to the estate.
This is my final report.
I. BACKGROUND 1
The parties’ disputes concern the late John L. O’Neill and the administration of
his estate (the “Estate”). The Decedent’s daughter, Kathleen O’Neill challenges the
administration of the Estate by her brother, Kevin O’Neill.
1
The facts in this report reflect my findings based on the record developed at trial on
September 13, 2023, and October 3, 2023. See D.I. ____. I grant the evidence the weight
and credibility I find it deserves. Citations to the trial transcripts are in the form “Tr. #.”
The Parties’ jointly submitted exhibits are cited as “JX __.” Certain exhibits proffered at
trial and excluded from the jointly submitted exhibits are cited as “Tr. Ex. __.”
2
A. The Decedent
John L. O’Neill (the “Decedent”) died on December 24, 2020. 2 He was
diagnosed with dementia and Alzheimer’s and died of COVID. 3 At the time of his
death, the Decedent owned two (2) real properties: 2821 Fawkes Drive, Wilmington,
Delaware 19808 (“Fawkes Property”), and 11 Edinburgh Court, Newark, Delaware
19711 (“Edinburgh Property”).4 The Fawkes Property and the Edinburgh Property
(together the “Two Properties”) are just a couple of miles away from each other. 5
The Decedent and his wife spent their lives living in the Edinburgh Property.6
However at the time he died, the Decedent was a resident at Serenity Gardens
Assisted Living in Middletown, Delaware.7
B. The Parties8
The Decedent was survived by three out of four of his biological children:
Kathleen O’Neill (the “Petitioner”), Kevin D. O’Neill (the “Respondent”), and
Kenneth O’Neill (“Kenneth”); and two biological grandsons: Kyle O’Neill (“Kyle”)
2
D.I. 62 at ¶1.
3
Tr. 52:20 – 53:3.
4
D.I. 62 at ¶7.
5
Tr. 125:3-6.
6
Tr. 326:20 – 327:1.
7
D.I. 62 at ¶7.
8
I use first names for Kenneth, Kyle, Cory, and Krystin to avoid any confusion as everyone
has the same last name; I intend no disrespect or familiarity.
3
and Cory O’Neill (“Cory”); and one granddaughter: Krystin O’Neill (“Krystin” and
Petitioner’s daughter). The Petitioner and the Respondent had a strained relationship
for most of their lives. 9 In fact, the parties have not communicated since the
Respondent called the Petitioner when their dad died.10 Currently, the parties only
communicate through their counsels. 11 The Petitioner, through her counsel, has
made at least forty attempts to communicate with the Respondent about their father’s
Estate, but the Respondent has been unresponsive.12
C. Administration of the Estate
The Decedent died testate with a Last Will and Testament (“Will”) dated October
15, 1990.13 The Will devised the Decedent’s entire estate equally to his children,
per stirpes, and nominated the Respondent as Executor. 14 The Respondent was
granted letters testamentary on April 19, 2021. 15 In accordance with the letters
testamentary, an inventory was due on or before July 19, 2021. The accounting was
due on or before April 19, 2022.16 Respondent filed, and was granted an extension
9
Tr. 386:22 – 388:6 (the parties have not communicated since Petitioner was five years
old).
10
Tr.385:18-21.
11
Tr. 120:17-22.
12
Tr. 442:9-16.
13
Id.
14
Id.
15
ROW D.I. 3.
16
Id.
4
to file the inventory by September 19, 2021.17 Nonetheless, the inventory was not
filed until June 30, 2022,18 with an amended inventory filed on July 1, 2022. 19 A
first accounting was filed on May 25, 2023, but was not docketed due to an incorrect
calculation on the last page of the inventory. 20 As such, an amended first accounting
was filed on June 1, 2023. 21 On September 5, 2023, the Petitioner filed exceptions
to the first accounting, however they have not yet been heard. 22
a. The Edinburgh Property
The Edinburgh property was in danger of foreclosure and the Decedent’s
estate needed funds.23 When conducting the inventory, the Respondent realized the
estate was insolvent.24 The Edinburgh Property was sold in July 2022.25 It sold for
$525,000,26 and netted approximately $173,000 in proceeds from the sale. 27
17
ROW D.I. 5.
18
ROW D.I. 10.
19
ROW D.I. 12.
20
ROW D.I. 15.
21
ROW D.I. 24.
22
ROW D.I. 25
23
Tr. 84:7-9; Tr. 228:21 – 229:7.
24
Tr. 104:9-14.
25
Tr. 258:2-3.
26
Tr. 82:7-9.
27
Tr. 230:6-15.
5
When the Respondent filed the first inventory, it listed the Petitioner, the
Respondent, Kenneth, and equal shares between Cory and Kyle as owners of the
Two Properties.28 When the Respondent filed an amended inventory a week later,
he changed the owner of the Edinburgh Property to himself allegedly to sell the
Edinburgh Property.29 After Petitioner commenced this action, the Respondent
reached out to a realtor to assist with the sale of the Edinburgh Property.30 The home
sold within approximately three months and none of the beneficiaries in the Will
were involved with the sale.31 The beneficiaries have not yet received any of the
proceeds and have agreed the proceeds should be held pending this litigation.32
The settlement statement for the sale of the Edinburgh property shows that
Brian Frederick Funk, P.A. (“Mr. Funk”), the attorney who conducted the sale,
currently has $300,000 in escrow to settle the mortgage of the Edinburgh property.33
The settlement statement also indicates that there is an amount of $173,103.91 as
“Remainder held in Escrow to Brian Frederick Funk, P.A.” 34 The Respondent has
28
Tr. 228:10-18.
29
Tr. 229:22 – 230:8.
30
Tr. 82:10 – 83:13.
31
Tr. 83:23 – 84:2.
32
Tr. 89:2-21; Tr. 314:2-317:19.
33
Tr. 85:5-18; Tr. 86:1-3.
34
Tr. 86:22 – 87:7.
6
not received any updates from Mr. Funk about the payoff of the mortgage of the
Edinburgh Property or additional escrow.35 Mr. Funk is holding the proceeds in
escrow until this lawsuit is closed. 36
D. Bank Accounts
The accounting mentions three bank accounts: two Artisans’ accounts and a Voya
Financial Plan (“Voya Account”).37 The combined total of the three accounts was
$47,451.59.38 Although the three accounts are listed in the inventory, the Respondent
claims to be the sole beneficiary to the two Artisans’ accounts. 39 One of the
Artisans’ accounts amounted to $4,589.24 while the other amounted to $17,172.20.40
No documentation was presented to confirm that the Respondent is the only
beneficiary of those accounts. 41 However, none of the interested parties have raised
this issue as a claim in this litigation.
There are two estate accounts; one with DEXSTA Federal Credit Union
(“DEXSTA Account”) and the other is with the Respondent’s counsel (“Counsel
35
Tr. 230:16-19.
36
Tr. 231:5-9.
37
Tr. 90:5-8.
38
Tr. 90:9-10.
39
Tr. 90:14-22; Tr. 91:17-20.
40
Tr. 91:17-20.
41
Tr. 448:4-21.
7
Account”).42 The Decedent’s Voya Account belongs to the estate. 43 The funds from
the Voya Account were put into the Counsel Account.44 The DEXSTA account is
comingled.45 It contains moneys from the Artisans’ accounts, allegedly the
Respondent’s sole inheritance, the Respondent’s death benefit from the State of
Delaware, and moneys from the sale of decedent’s personal property. 46 The
Respondent debited $2,261.00 from the DEXSTA Account on August 13, 2022, to
retain counsel for this lawsuit.47 The DEXSTA Account was also used to pay
Liberty Mutual to insure the Two Properties and a 2006 Mitsubishi Eclipse (the
“Car”).48 The Decedent also had IRA accounts at Charles Schwab and PNC.49
E. Miscellaneous Personal Property
The Decedent’s personal property was sold through an estate yard sale and online
via Facebook Marketplace. 50 The Respondent had an estate sale during the summer
42
Tr. 92:8-15.
43
Tr. 91:21-23.
44
Tr. 91:21–92:7-15.
45
Tr. 119:18-20.
46
Tr. 119:13-17; Tr. 113:3-14.
47
Tr. 160:18-23.
48
Tr. 161:8-14; The Car is valued at $2,200, and it is currently located at the Respondent’s
residence. Tr. 93:19 – 95:3; Both the Respondent and the Petitioner have expressed interest
in the Car. Tr. 96:11-13; Tr. 233:23-234:5.
49
Tr. 124:12-14.
50
Tr. 311:23 – 312:2.
8
of 2022 at the Fawkes Property. 51 There, the Respondent with assistance from his
wife, Theresa, sold some of the Avon bottles, furniture, lamps, stainless steel
shelving, and extension cords. 52 The Respondent conducted these sales without
offering any of the personal property to the other beneficiaries of the Decedent’s
Will. 53 The first accounting indicates that personal property sold at the estate sale
totaled $486.00.54
The Respondent’s wife helped sell other miscellaneous property online, via
Facebook Marketplace, which amounted to $686.00. 55 The miscellaneous personal
property in the inventory consists of coins, jewelry, and furniture, which totals
$6,433.37 56 The Respondent hired Frank McCraghan to appraise the items
sometime after the Petitioner filed her petition. 57
Petitioner was unaware of both the online estate sale and the yard sales.58 The
online sales were not reflected in the accounting. 59 The sum of the estate yard sale
51
Tr. 110:11-15.
52
Tr. 306:19 – 307:7.
53
Tr. 101:12-19.
54
Tr. 110:5-8.
55
Tr. 111:22 – 112:6.
56
Tr. 97:10-18.
57
Tr. 97:20 – 98:8.
58
Tr. 347:10 – 350:15.
59
Tr. 112:1-11.
9
and online sales, were kept in a safe in the Respondent’s home before it was
deposited in the DEXSTA Account two months before the hearing on October 3,
2023. 60
The Respondent does not have a list of the items sold at the estate sale or the
items from the online sales.61 When the Decedent died, he owned jewelry such as
cufflinks, watches, and a compass. 62 He also had his wife’s jewelry which consisted
of a ruby ring, diamond earrings, pearl earrings, yellow diamonds, necklaces,
bracelets, and sapphires from a war in Germany.63 The Decedent had two safe
deposit boxes and only the Respondent had access to them.64
F. Procedural Posture
Petitioner filed this action on January 27, 2022 seeking removal of the respondent
as executor.65 The petition alleged that Respondent failed to marshal and gather the
assets of the estate, including but not limited to tangible personal property; 66 that
Respondent failed to communicate with Petitioner’s counsel with regard to the
60
Tr. 113:12-21.
61
Tr. 179:18-23.
62
Tr. 335:7-13.
63
Tr. 335:14 – 336:2.
64
Tr. 338:10-19.
65
D.I. 1.
66
Id. at ⁋ 16.
10
administration of the estate; 67 and that Respondent had not taken any action to
remove Kenneth from the two parcels of real property subject to the estate.68
Respondent filed his Answer and both a counterclaim against the Petitioner
and a cross claim against Kenneth on April 25, 2022. 69 The counterclaim against
the Petitioner alleged, in part, that Petitioner and her agents were unduly influencing
their father who was suffering from Alzheimer’s. 70 Respondent’s counterclaim
claimed that in the last few years of Decedent’s life, Petitioner exploited Decedent’s
weakened intellect and begun taking over his financial affairs to enrich herself. He
also sought declaratory judgment that Kathleen was unfit to serve as a successor
executrix of Decedent’s estate. The crossclaim sought contribution and liability for
Kenneth’s frustration of Respondent’s efforts to administer the estate. Kathleen filed
her Answer on May 16, 2022.71
On June 10, 2022, Kenneth O’Neill motioned the Court for an Enlargement
of Time.72 He claimed to have been living “off the grid” and not received
67
Id. at ⁋ 17.
68
Id. at ⁋ 18.
69
D. I. 6.
70
Id. at ⁋ 47-49.
71
D. I. 10.
72
D. I. 11.
11
information regarding the matter, he requested a reasonable time to respond.73
Counsel for Respondent indicate to the Court that he had no objection to Kenneth’s
request.74 Master Griffin granted Kenneth’s request.75
On August 18, 2022, Respondent filed a Motion for Default against Kenneth
for his counterclaim because Kenneth had not yet responded. 76 A hearing was
scheduled for September 27, 2022, at 2:00 pm, on the matter. 77 At approximately
10:30 am that day, Kenneth submitted his Answer along with crossclaims against
the Respondent for undue influence, declaratory judgement that both Respondent
and Petitioner were unfit to serve as administrator to the Estate, a crossclaim against
Respondent for any damages relating to the delay in filing of the inventory for the
Estate, costs of repairs to the Fawkes Drive property, and attorney’s fees. 78 Because
Kenneth filed a response, the Respondent withdrew his motion around noon that day,
so no hearing was held. 79
73
Id.
74
D. I. 12.
75
D. I. 13.
76
D. I. 14.
77
D. I. 15.
78
D. I. 17.
79
D. I 19.
12
On December 14, 2022, this case was reassigned to me. 80 On January 25,
2023, counsel for Respondent requested a teleconference regarding scheduling in
this matter. 81 Counsel for Plaintiff responded shortly thereafter.82 Included in his
response was a motion to bifurcate the issue of removal with the counterclaims and
crossclaims. 83 I granted a stipulated briefing schedule on the motion to bifurcate on
February 9, 2023.84 Following a telephonic hearing on the matter, I subsequently
granted in part the motion on March 8, 2023.85
Kenneth and the Respondent engaged in motion practice between July 2023
and August 2023.86 On August 30, 2023 we held Oral Argument on two pending
motions and a Pre-Trial conference.87 Kenneth did not show at the hearing. 88 On
September 7, 2023, Respondent motioned for default against Kenneth again.89 This
time it was granted.90 On September 13th I held an Evidentiary hearing on the
80
D. I. 20.
81
D.I. 21.
82
D. I. 22.
83
Id.
84
D. I. 25.
85
D. I. 35, 36, 38.
86
D. I. 50-64.
87
D. I. 69.
88
Id.
89
D. I. 71.
90
D. I. 74 (September 13, 2023).
13
bifurcated matter of removal of the executor. We ran out of time and added a second
date for a few weeks later.91 We continued the hearing on October 3rd and the parties
agreed to submit post-trial summations simultaneously within three weeks.92 This
is my Post-Trial Final Report.
II. ANALYSIS
Pursuant to 12 Del. C. § 1541(a), the Court of Chancery may remove an
administrator or executor who neglects their official duties. An executor of a
decedent’s estate has many statutory duties. Under 12 Del. C. § 1905 (a), the
executor is required to file an inventory within three months of the granting of the
letters testamentary from the Register of Wills. Under section 2301, the executor
must submit an accounting to the court “every year from the date of their letters until
the estate is closed… .” Under section 2302, with each accounting filed, the executor
must provide notice to each beneficiary of the estate.
Perhaps fundamental to the administration of an estate, Delaware law
maintains that an executor of an estate stands in the position of a fiduciary.93 As
such, an executor of an estate owes both a duty of care and a duty of loyalty to the
91
D. I. 75; D.I. 77.
92
D. I. 90.
Vredenburgh v. Jones, 349 A.2d 22, 32 (Del. Ch. 1975) (citing Downs v. Rickards, 1872
93
WL 2132, at *8 (Del. Ch. Mar. 1, 1872)).
14
estate and to the beneficiaries of the estate. 94 An executor is held to a standard of
care that requires him to exercise “ordinary care, prudence, skill and diligence” in
carrying out her duties. 95 The duty of loyalty requires the executor “to act, at all
times, in the best interests of the estate.” 96
A. The Respondent Breached his Duty of Care to the Estate.
With respect to an executor’s duty of care, Delaware case law indicates that
the law imposes a strong emphasis on “diligence in all aspects of estate
administration.”97 Though often glossed over in the estate administration context,
as opposed to the close attention the duty of care receives in the corporate fiduciary
context, the duty owed by an executor is to execute its statutory duties and whatever
other duties as may be prescribed by decedent’s will with ordinary care under the
reasonable person standard. 98 In particular, the same care that a prudent person
would exercise in her own affairs. 99 Accordingly, the law requires an executor to
94
Wanamaker v. Wanamaker, 2024 WL 416498, at *3 (Del. Ch. Feb. 5, 2024); In re Est.
of Newton, 2023 WL 3144700, at *3 (Del. Ch. Apr. 28, 2023).
95
Id. (quoting Est. of Chambers, 2020 WL 3173032, at *2 (Del. Ch. June 12, 2020)).
96
Id.97
Madden v. Phelps, 1995 WL 606318, at *13 (Del. Ch. May 15, 1995), aff'd, 671 A.2d
870 (Del. Ch. 1995).
In re Spicer's Est.,120 A. 90, 92 (Del. Orph. 1923) (“…which is now generally held to
98
mean that which would be exercised by an ordinarily prudent and careful man in the
management of his own affairs under similar circumstances…”).
99
Id.15
marshal, inventory, and possess all the decedent's estate, collect any income from
the decedent's estate, manage the estate, contest any erroneous claims against the
estate, pay and discharge out of the estate all expenses of administration, taxes,
charges, claims allowed by the court, or such payment on claims as directed by the
court, render accurate accounts, make distributions, and do any other things as
directed by the court or required by law under the terms of the will. 100
Respondent breached his duty of care by failing to properly administer
his father’s estate. Respondent failed to timely inventory the estate, he failed to gain
access and safeguard the personal property of the estate, and he failed to timely pay
bills for the estate. First, I will address the timeliness of the estate’s inventory.
Respondent opened the estate on April 19, 2021. 101 The first inventory was due in
three months on July 19, 2021.102 Like sometimes is the case, on July 19th, he
requested an extension for filing the inventory. The Register of Wills (“ROW”)
granted the extension, giving Respondent an additional two months to complete the
first inventory for the estate.103 Despite the extension, the Respondent failed to file
100
See generally 12 Del. C. §§1901-1912, 2101-2109, 2301-2357, 2701-2719, and 2901-
2915; See also In re Spicer's Est., 120 A. at 92.
101
Folio 177444, D. I. 3.
102
Folio 177444, D. I. 5.
103
Folio 177444, D. I. 5.
16
the inventory until nine months later, on June 30, 2022 104—five months after
Plaintiff’s counsel entered an appearance on the ROW docket105 and this petition to
remove was filed 106.
Respondent also failed to gain access to the estate, thereby failing to safeguard
the property in the estate. Respondent claims he was unable to conduct a proper
inventory and monitor personal property at the Edinburgh and Fawkes properties
because his brother, Kenneth, held the only keys to the homes and continued to deny
him access.107 Because of Kenneth’s behavior, he had no real way to know if there
are missing items from the estate. At trial, Petitioner described in detail and provided
a pictured list of items she believed were missing from the homes when she was
allowed access to the homes to retrieve personal property. 108 While most of those
pictures were from, some 25 years ago, and it would be difficult to determine if those
items were missing for some other unrelated reasons, I do find that Respondent’s
failure to gain access to the homes contributed to his inability to identify estate
property and creates ambiguity within the estate inventory.
104
Folio 177444, D. I. 10.
105
Folio 177444, D. I. 8.
106
D. I. 1.
107
Tr. 210: 1-18.
108
Tr. 330:9-333:6; Tr. 341:3-12; see Tr. 35:11-14; Tr. 188:11-192:10; Tr. EX. 663-668.
17
The Respondent’s choice to not remove Kenneth, was like the executrix in In
the Matter of the Estate of Rose ("Rose”). In Rose, one of the beneficiaries, the
grandson of the decedent, moved into the real property and refused to allow anyone
to enter. 109 The property needed to be sold in accordance with the will. The executrix
consulted with counsel but ultimately decided not to remove the beneficiary from
the real property and waited until it was sold, which is when he voluntarily left.110
This Court held that “[a]s a fiduciary, [the executor’s] obligations included taking
care of the Property and taking appropriate actions to remove [a beneficiary] from
the Property.111
Similar to the Executrix in Rose, the Respondent failed to take appropriate
action with respect to Kenneth’s occupation of the Two Properties. While I
empathize and understand that Petitioner may have attempted to avoid conflict with
his brother and was, at times, under the advice of counsel, Respondent was aware
that he could have taken action to remove his brother, but chose not to do so. 112 This
choice left him unaware whether property was missing, making it impossible to
know what if anything Kenneth took from the properties. For example, Respondent
109
IMO Estate of Rose, 2019 WL 2996887 (Del. Ch. July 9, 2019).
110
Id.111
Id. at *6.
JX at 648; Tr 210:20-213:16 (discussing the October 8th email and how evicting Kenneth
112
would have been the “hard way”).
18
noted that after he gained access to his father’s home, that there was a pile of stuff
left in the basement and only a twin bed left in the master bedroom. 113 Respondent’s
decision not to take action regarding the Two Properties, resulted in a loss of
property (and potentially value) to the estate.
B. The Respondent Filed an Incomplete Inventory.
As explained above, when a personal representative files an inventory, it must
contain, among other things “an inventory of all goods and chattels of the
decedent[.]”114 The first accounting identifies $486.00 sold at an estate sale. Prior
to conducting that estate sale, Respondent testified that he noticed items were
missing from his father’s home.115 Respondent and his wife later sold personal
property from the estate online via Facebook Marketplace and by conducting a yard
sale. 116 Neither Respondent nor his wife kept track of any of those items he sold.117
While the first accounting says the sales yielded $484.00, Respondent subsequently
indicated that both sales yielded $646.00. Further, when asked how the Respondent
113
Tr. 184:12-21.
114
12 Del. C. § 2301(a).
115
Tr. 239:18-23.
116
Tr. 112:3-6.
Tr. 179:21-23; Respondent’s wife Theresa, who helped him sell items on Facebook
117
Marketplace testified that she didn’t “recall anything” she helped sell on the internet
marketplace. Tr. 309:17-21.
19
valued the property to be sold, he responded that they “just guessed.” 118 The
Respondent did not keep a list of the items sold, nor did he document prices he sold
them for.119
The instant dilemma is like that in the Estate of McDowell. In McDowell, the
executrix failed to itemize household goods on her inventory and instead used a flat
estimate of $500.00, which did not itemize or account for property gifted, sold, or
trashed.120 A beneficiary filed exceptions based on undervaluation and the executrix
argued “the items were not valuable enough to warrant appraisal. The cost of
appraising such property would only deplete the estate.”121 Vice Chancellor
Longobardi found that the executrix failed to meet her duty to provide a complete
inventory. 122
The executrix in McDowell, thus, was “ordered to conduct a new inventory of
all items . . . in her possession[,]” and “directed to have the items she has stored
appraised and sold and to apply the amount received to the other assets of the
estate.”123 As to the items already sold, the executrix was required “to list any and
118
Tr. 111:13-16.
119
Tr. 111:13-19.
120
In re Est. of McDowell, 1983 WL 103268, at *1 (Del. Ch. Aug. 5, 1983).
121
Id. at *1,
122
Id. at *3.
123
Id. at *3.
20
all proceeds received from the sale of those items as assets of the estate.”124 And for
those discarded, trashed, or gifted, those items were also required to be listed on the
inventory with “a detailed description of each and . . . some reasonable value
[assigned] to each.”125 From there, beneficiaries could then challenge the valuations.
Like the executrix in McDowell, the Respondent will be required to file a new
inventory listing all items of personal property. Any items still in the Respondent’s
possession should be appraised, sold, and added to the estate account to the extent
it’s not an item to be given to one of the beneficiaries. Items already sold should be
listed with a sale price, or closest estimate for the items where the sale price can’t be
recalled. If there were items given or thrown away, they should be assigned a
reasonable value and contain a notation regarding to whom, if anyone, they were
given to or when and where they were disposed of. All interested parties can file
exceptions to the new inventory. Further, although the Respondent can be removed
for his breaches of his duty as explained above, I decline to remove him as doing so
may further interrupt the administration of this estate.
C. Respondent should be surcharged in the form of a reduced
commission.
“A surcharge is, essentially, a sanction … requiring the [executor] to fund (or
refund) the estate because [he] improperly or poorly handled the estate, engaged in
124
Id.
125
Id.
21
self-dealing, or improperly depleted estate assets. The sanction of a surcharge is not
appropriate, though, when the fiduciary’s failings are harmless or justified under the
circumstances. Further, surcharges are normally tailored to remedy the specific
harm caused, rather than to punish[.]”126 Petitioner requests a surcharge to remedy
Respondent’s mismanagement of the estate. Applicable here, is the late fees127
associated with the Respondent’s lapse on the bills of the estate and the estate’s
missing personal property.128 Respondent allowed the mortgage on both homes to
lapse and car insurance on one of the vehicles to lapse.129 At trial, he acknowledged
that this caused the estate to incur late payments for that time. 130 Moreover, the first
and only accounting on the docket negates these additional expenses. Accordingly,
126
In re Estate of Clark, 2019 WL 3022904, at *7 (Del. Ch. July 9, 2019).
127
Respondent allowed the mortgage on both homes to lapse and car insurance on one of
the vehicles to lapse. Tr.193:12-15; Tr. 161:20-162:8. At trial, he acknowledged that this
caused the estate to incur late payments for that time. Tr. 193:12-15; Tr. 161:20-162:8.
Moreover, the First and only accounting on the docket negates these additional expenses.
128
The issue of missing personal property was raised by the Petitioner. I do not find she
met her burden to establish that all items from her list were missing from the estate
following her father’s death. But I do find it is more likely than not that some items are
missing from the estate because of Respondent’s lack of documentation regarding the
personal property that was sold, and Kenneth’s occupation of the Two Properties. The latter
is supported by Respondent’s own admissions in deposition testimony that there were, at
least, “golf clubs,” that were missing from the estate when Kenneth vacated the Edinburgh
and Fawkes properties. JX E at 86:4-6.
129
Tr. 193:12-15; Tr. 161:20-162:8.
130
Tr. 193:12-15; Tr. 161:20-162:8.
22
the Respondent shall be surcharged 50% of any commission he was to take from the
estate.
Commissions represent “compensation to the personal representative for his
own services in collecting the assets, checking into and paying bills, and performing
the various duties which may be necessary, and his trouble and [i]ncidental expenses
incurred thereby.” 131 Because the personal representative did take steps to
administer the estate by, for example, working with his counsel to finalize and file
an inventory and accounting, I find that eliminating any commission is not
reasonable. However, as noted above, the personal representative’s actions caused
the estate to incur several late fees. In addition, it was the personal representative’s
decision not to evict Kenneth, and to allow Kenneth to occupy two houses
simultaneously that lead to the depletion of estate personal property. Although the
personal representative takes pride in his actions of obtaining a default judgment
against Kenneth, these same actions, or lack thereof, led to the need to obtain the
default judgment. So, as a surcharge for this mismanagement the executor’s
commission will be reduced by 50%. 132
131
In re Whiteside, 258 A.2d 279, 282 (Del. 1969).
132
My recommendation to reduce the commission by 50% does not preclude any interested
party from objecting to the reasonableness of the commission under the Court of Chancery
Rule 192 when the personal representative submits a request to the Register of Wills.
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D. Attorney fees.
The Petitioner also requests for her attorneys’ fees to be paid from the estate.
The American Rule dictates that each party is responsible for its own legal fees.133
This Court does however recognize several exceptions allowing fee shifting,
including the bad faith conduct of a party to the litigation 134 and where fees are
authorized by statute or common law. 135 It is not unheard of for this Court to shift
attorney fees in estate administration and will contests. 136 To justify a shifting of
fees onto the estate, the circumstances must be “exceptional” and demonstrate
“special equities which would make a failure to shift the burden onto the estate
unfair.”137 Attorney's fees for beneficiaries challenging the administration of the
estate can be assessed against the estate if their challenges are made on good grounds
and serve to “potentially benefit the estate as a whole by ensuring that it will be
administered in the manner intended by the testatrix.”138 Here, I find there were
exceptional circumstances as the Petitioner’s actions action birthed the forward
133
Arbitrium (Cayman Is.) Handels AG v. Johnston, 705 A.2d 225, 231 (Del. Ch. 1997).
134
Id.135
See, e.g., 10 Del. C. § 348(e); In re Pusey, 1997 WL 311503, at *4 (referencing a body
of case law that permits exceptants to have their attorneys’ fees and expenses covered by
the estate if the exceptions benefited the estate).
136
IMO Estate of Rose, 2019 WL 2996887, at *7 (citing In re Tunnell & Raysor, PA v.
Truitt, 1997 WL 257440, at *1 (Del. Ch. May 9, 1997).
137
Id. (citing Scholl v. Murphy, 2002 WL 31112203, at *3 (Del. Ch. Sept. 4, 2002)).
138
Id.24
motion on the administration of the estate. It is unclear how long Kenneth would
have occupied the Two Properties but for this litigation. It is unclear, if and when,
the Respondent would have filed the inventory but for this litigation. Moreover, the
Petitioner’s litigation provided the Respondent the opportunity to file his cross claim
against Kenneth, that resulted in the default judgment that will benefit the Estate.
As such, I recommend the Petitioner’s attorney’s fees incurred up to the date of this
Final Report, for the litigation related to the Petition to Remove the Executor, be
paid from the estate.
III. CONCLUSION
For reasons further explained above, the Respondent shall stay in his position
as executor for the sole purpose of submitting a final accounting in accordance with
the above rulings. The Respondent shall prepare a new inventory as specified herein,
which may be subject to future challenges, and the parties shall bear their owns costs
and attorneys’ fees for those future challenges. The Respondent’s new inventory
must be filed within thirty (30) days of this becoming an order of the Court. Any
exceptions thereto would need to be filed under Court of Chancery Rule 197.
This is my Final Report, and exceptions may be filed under Court of Chancery
Rule 144.
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