Bates v. Howell

352 Ga.App. 733

835 S.E.2d 814

BATES

v.HOWELL.

A19A0881

Court of Appeals of Georgia.

October 30, 2019

Andrew B. Flake, Jennifer Lynne Shelfer, Atlanta, for Appellant.

Daniel Francis Diffley, Atlanta, Kevin Trent Moore, for Appellee.

Reese, Judge.

Philip A. Bates, as the trustee of the Anne S. Florance Revocable Trust ("Trust"), appeals from the trial court's grant of summary judgment to Emily Howell on Bates's wrongful restraint claim for monetary damages that allegedly arose as a result of temporary restraining orders ("TROs") obtained by Howell. Bates contends that the trial court erred in finding, as a matter of law, that the TROs did not constitute a wrongful restraint. Bates argues, inter alia, that Howell lacked the authority to obtain the TROs, that the TROs improperly prevented him from performing his required duties as trustee under the Trust, and that Howell was liable for the damages to the Trust that arose from the wrongful restraint. For the reasons set forth infra, we reverse the trial court's order and remand this case for further proceedings consistent with this opinion.

The record shows the following, undisputed facts.¹ Bates served as an attorney for Anne S. Florance ("decedent") from 1996 until the decedent's death on May 14, 2013.² In February 2013, the decedent executed three legally distinct and independent documents: a "Last Will and Testament" ("Will"); a revocable, inter vivos Trust; and an "Assignment[.]"³ In her Will, the decedent nominated Bates as the executor and provided that, upon her death, all of her tangible and intangible assets (except enough funds to pay taxes, final administrative expenses, and the remaining outstanding expenses of the estate) poured over into the Trust.⁴ The Will did not provide for any assets to be distributed to any beneficiaries except the Trust.

The Trust provided that the decedent was to serve as trustee until her incapacity or death, at which time Bates was to take over as trustee.⁵ The Trust provided for the distribution of assets to several named beneficiaries, including $25,000 to her niece, Howell,⁶ after the decedent's death, and provided that, upon distribution of the Trust's assets to all of the named beneficiaries, the trustee was to distribute the remaining assets to three charities ("charitable remainder beneficiaries").

Finally, in the Assignment, the decedent immediately and irrevocably transferred all of her assets that existed at the time of the Assignment's execution (February 20, 2013) to the Trust. Thus, the decedent's only assets at the time of her death on May 14, 2013, were those that she had acquired in the two to three months since she had executed the Assignment. And, pursuant to the Will, those newly acquired assets were then automatically transferred to the Trust at the time of the decedent's death.⁷ Consequently, the decedent's estate contained no distributable assets after May 14, 2013.⁸

For three and a half years, from the decedent's death in May 2013 until Bates filed the instant declaratory judgment petition in November 2016, Bates, as trustee, managed the Trust's assets pursuant to the terms of the Trust, which authorized him, inter alia, to sell the Trust's real and personal property, invest its assets, borrow or lend money, hire accountants and other agents, litigate claims involving the Trust, execute documents, and pay bills and fees, as necessary. Bates also made distributions of the Trust's assets to the Trust's beneficiaries, as directed by the Trust. Throughout that period, Howell never challenged the validity of the Trust, Bates's qualifications to serve as trustee of the Trust, or anything that Bates had done in his capacity as trustee, nor did she challenge the validity of the Assignment, which had irrevocably transferred most of the decedent's assets to the Trust prior to the decedent's death.

However, in January 2016, Howell filed a petition in the Probate Court of Fulton County ("probate court proceeding"), asserting that the decedent had died without a valid will and asking the court to appoint her as administrator of the decedent's estate.⁹ In addition, in response to Bates's petition to probate the decedent's Will, Howell filed a caveat challenging the validity of the Will and Bates's qualifications and ability to serve as executor of the Will.¹⁰ Specifically, Howell asserted that the decedent's estate may have claims against Bates for, inter alia, legal malpractice, breach of trust, conversion, fraud, and undue influence, based on alleged conduct by Bates toward the decedent prior to her death.¹¹ However, Howell's caveat did not assert any claims against the Trust or Bates in his capacity as trustee. The probate court proceeding was still pending in August 2016.¹²

In August 2016, the most valuable remaining asset of the Trust was the decedent's Atlanta home ("Atlanta residence"). After almost three years of trying to sell the Atlanta residence, Bates contracted to sell it to a third party for $5.5 million, and the closing of the sale was scheduled for noon on August 29, 2016.

About two hours before the scheduled closing, however, Howell filed an ex parte petition for a TRO against Bates that stopped the closing from proceeding as scheduled. In her petition, Howell asserted that, in her capacity as the "Proposed Administrator of the Estate of [the decedent,]" she had "a property right or at least a protectable right" in the proceeds of Bates's imminent sale of the Atlanta residence. According to the petition, Howell "belie[ved]" that Bates intended to "immediately transfer [the sale proceeds] to the beneficiaries under the terms of the Trust[,]"¹³ which would place the estate "at great financial risk, liability and damage and which would further irreparably damage the [e]state's ability to pay the [estate's] remaining beneficiaries."¹⁴ Howell asserted that

a substantial controversy [exists] between the parties [that] is currently in litigation in the [p]robate [c]ourt[,] and because there are significant issues alleged as to the ethical conduct of [Bates], the Trust property should not be distributed at this time[,] as to do so would destroy the status quo of the controversy before a full hearing can be had on the merits of the case [in the probate court]."

Therefore, the petition asked the court to enjoin Bates

from disbursing from the Trust or any other account any real or personal property including the proceeds or funds from the sale of the [Atlanta residence] or any other real or personal property to any [T]rust beneficiary, beneficiary, charity or third party named in [the decedent's] Will or Trust until [Howell could] be heard on [the above matters].

At some time between the 10:00 a.m. filing of the petition and the 12:00 noon closing the same day, a Fulton County judge granted Howell's petition, acknowledging that the petition was filed "without notice to [Bates]," but stating that Howell's counsel, Kevin Moore, had "certified the efforts that [had] been made to give [prior] notice to [Bates.]" The ex parte TRO issued by the judge prevented Bates from distributing or disbursing any "property, money or assets" from the Trust, including the proceeds from the sale of the residence, until further order of the court. Consequently, the TRO prevented Bates from using the proceeds of the sale to pay any closing costs, such as broker's fees, title insurance costs, attorney fees, etc., at the closing. According to Bates, the TRO also "effectively prohibited all Trust administration and immediately put the Trust at risk of violating its terms."

At 12:10 p.m. the same day, Howell's counsel, Moore, e-mailed a copy of the signed and filed TRO to Bates's counsel, Henry Chalmers.¹⁵ However, Chalmers had already been notified of the TRO by the closing attorney, to whom someone had sent the TRO; the title insurance underwriter had already received the TRO, also. Based on the TRO's complete restriction on the disbursement of the sale proceeds, the closing attorney and underwriter refused to proceed with the closing unless the TRO was immediately dissolved or revised, expressing their concern about whether Bates would be able to use the proceeds from the sale to pay customary closing expenses. Chalmers also expressed concern about whether invoices from his law firm would be paid during the pendency of the TRO. As a consequence, the August 29 closing was rescheduled for August 31.

At some point thereafter, Moore promised Chalmers that he would obtain a revised TRO that would allow the closing to take place on August 31. Between that time and the morning of August 31, Chalmers repeatedly e-mailed Moore to find out when the TRO would be revised and signed. In the e-mails, Chalmers notified Moore that the TRO had already caused the Trust to incur additional costs and other harm and had jeopardized the sale of the residence, emphasizing that the closing had to occur on August 31 "or the entire sale will be jeopardized." In fact, one of Chalmers's e-mails to Moore included this specific warning: "Please understand that we will hold ... Howell responsible for all damages and harm caused by her improper ex parte TRO." Another e-mail to Moore, sent by Chalmers at 11:59 a.m. on August 31 (the day of the rescheduled closing), expressed shock at the fact that Moore still had not obtained a revised TRO and warned him that, "[i]f the sale does not close, as now appears ever more likely, it will be due to ... Howell's improper TRO, for which she will be responsible to the Trust and to the Trust's charitable remainder beneficiaries." Later that day, Bates filed an emergency motion to dissolve Howell's ex parte TRO. In his motion, Bates expressly "reserve[d] all rights to recover actual damages associated [with the] improper action by [Howell]."

Finally, at 4:15 p.m. on August 31, Moore e-mailed a proposed, revised TRO to the judge who had signed the first one, and the judge signed the order ("Revised TRO"). The Revised TRO allowed...