In re Estate of Abraitis

2017 Ohio 5577

• Court: Ohio Court of Appeals
• Decided: June 29, 2017
• Docket: 104816
• Status: Published

Opinion

[Cite as In re Estate of Abraitis, 2017-Ohio-5577.]

Court of Appeals of Ohio EIGHTH APPELLATE DISTRICT COUNTY OF CUYAHOGA

JOURNAL ENTRY AND OPINION No. 104816

IN RE: ESTATE OF VLADA SOFIA STANCIKAITE ABRAITIS [Appeal by Attorney Catherine M. Brady]

JUDGMENT: AFFIRMED

Civil Appeal from the Cuyahoga County Court of Common Pleas Probate Division Case No. 2011 EST 172533

BEFORE: Stewart, J., Kilbane, P.J., and E.T. Gallagher, J.

RELEASED AND JOURNALIZED: June 29, 2017 ATTORNEYS FOR APPELLANT

For Catherine M. Brady

Catherine M. Brady 4417 West 189th Street Cleveland, OH 44135

ATTORNEYS FOR APPELLEES

For Adam M. Fried

Adam M. Fried Martin T. Galvin Paul R. Shugar David J. Walters Reminger Co., L.P.A. 1400 Midland Building 101 Prospect Avenue, West Cleveland, OH 44115

For Vivian Abraitis-Newcomer

Randall M. Perla 19443 Lorain Road Fairview Park, OH 44126

Also Listed

Egidijus K. Marcinkevicius A. Sirviaitis & Associates 880 East 185th Street Cleveland, OH 44119 MELODY J. STEWART, J.:

{¶1} After finding that appellant-attorney Catherine M. Brady engaged in frivolous

conduct with respect to the administration of an estate, the probate court ordered her to

pay attorney fees and expenses to appellee Adam Fried, the successor fiduciary to the

estate of Vlada Sofija Stancikaite Abraitis.1 The nine assignments of error on appeal

collectively challenge whether the court properly determined that sanctions were

warranted and whether the amount of sanctions was reasonable.

{¶2} This case has a long history that belies the simplicity of the facts. In 2004,

Abraitis was named guardian for his mother, Vlada, but was later removed. Vlada died

in 2008. No will was offered into probate at that time.

{¶3} In June 2011, the Internal Revenue Service issued Abraitis a final notice of

intent to levy on assets he held in an investment account under his own name and social

security number in order to satisfy his tax obligations for prior years. Abraitis claimed

that the proceeds of the investment account had been deposited into the account by his

The court also found that Brady’s client, Sarunas Abraitis, engaged in frivolous conduct, 1

and imposed sanctions jointly and severally against him. Abraitis filed a separate appeal, 8th Dist. Cuyahoga No. 104822, and that appeal was consolidated with this one. Sarunas died in January 2017. Brady gave notice that she had been appointed executor of Sarunas’s estate and we substituted her as the party appellant in appeal No. 104822. We then received notice that Brady had been removed as the executor of Sarunas’s estate and replaced by Egidijus Marcinkevicius, whom we substituted as a party on behalf of Sarunas’s estate. Marcinkevicius filed a notice of voluntarily dismissal of appeal No. 104822. The notice of dismissal did not state that it had been joined by the estate of Vlada Sofia Stancikaite Abraitis, so we treat it as a motion to dismiss the appeal under App.R. 28 and grant it contemporaneous with the announcement of our decision herein. See In re Estate of Abraitis, 8th Dist. Cuyahoga No. 104822, motion No. 506200. mother. Abraitis argued to the IRS that the investment account belonged to his mother

and that the probate court “had ruled that all of the assets held by him originated from and

were the sole property of V. Abraitis” and that they were no longer under his control.

Abraitis v. United States, N.D.Ohio No. 1:11-cv-2077, 2012 U.S. Dist. LEXIS 123073, *3

(June 12, 2012). Those tax matters were resolved adversely to Abraitis with a notice of

levy. A final disposition of the tax case occurred in March 2013 after the United States

Court of Appeals for the Sixth Circuit rejected his appeal. See Abraitis v. United States,

709 F.3d 641 (6th Cir.2013).

{¶4} With the tax matter finally adjudicated, Abraitis offered into probate a will

that his mother executed in 1978. The will named Abraitis and his brother as equal

beneficiaries of the estate. The court named Abraitis as the executor of the estate. An

inventory of the estate listed a single asset — the investment account that the IRS ruled

belonged to Abraitis — and noted that the funds were the subject of state2 and federal tax

proceedings.

{¶5} Abraitis’s brother died in Florida in November 2013. The brother’s will

named his ex-wife as his personal representative and sole beneficiary. One day after a

Florida court made the ex-wife the personal representative of the estate (and less than

three weeks after the brother’s death), Abraitis filed an application to probate a new will

The state of Ohio had likewise issued income-tax assessments against Abraitis. See 2

Abraitis v. Testa, 137 Ohio St.3d 285, 2013-Ohio-4725, 998 N.E.2d 1149. — one that his mother executed in 1993. The 1993 will named Abraitis as the sole heir;

the brother would take under the will only if he survived Abraitis. Abraitis then filed a

motion to correct the estate inventory he filed with the court to remove the investment

account from the estate on grounds that the investment account was “misidentified as an

asset” and belonged to him. The court noted that removing the investment account from

the estate inventory would reduce the estate assets to zero. In response to the motion to

correct the inventory, the ex-wife filed a separate action to contest the 1993 will.

Abraitis-Newcomer v. Abraitis, Cuyahoga P.C. No. 2104 ADV 195000.

{¶6} The court removed Abraitis as executor of the estate and named Fried the

successor executor. The court found that Abraitis “acknowledged that he was aware in

2011 when he opened his mother’s estate that there was a later will that was not presented

for probate.” The court also found that Abraitis had “no explanation for why he did not

probate the most recent will at that time but that he put it away for later.” And the court

found that when Abraitis was asked what made him decide to apply for admission of the

1993 will, Abraitis said that “he did it because his brother had died” and he wanted to

prevent the brother’s ex-wife from being a beneficiary of his mother’s estate.

{¶7} In addition to removing Abraitis as executor of his mother’s estate, the court

ordered him to deposit the investment account funds into an estate bank account.

Abraitis not only failed to comply with the order, he refused to testify at a subsequent

contempt hearing on the advice of his attorney, Brady. The court found Abraitis in contempt and ordered him to serve ten days in jail. Despite the punishment, it appears

that Abraitis never deposited any money into an estate account.

{¶8} These facts spawned a multitude of motions and filings in the probate court,

this court, and the Ohio Supreme Court. As relevant here, Fried filed a complaint in the

probate court alleging that Abraitis concealed estate assets. Abraitis defended by

claiming that the IRS determined that the estate assets belonged to him, so he had no

choice but to amend the inventory. The court rejected that assertion when finding

Abraitis guilty of concealing estate assets. It found it unsurprising that the IRS

determined Abraitis owned the investment account because the account was “listed in his

name for all of the relevant tax years. What Abraitis cannot explain is how the

[investment account] came to be in his name and from what sources the account was

funded.” The court’s question about how the investment account was funded arose

because Abraitis testified that “he has not worked or had taxable income from

employment for many years, if ever.” This suggested that he could not have been the

source of the money: “What is clear however, is that Abraitis has never had taxable

income from employment and therefore the monies that funded the [investment] account

got there one way or another from his father, his mother, or both.”

{¶9} Following the court’s ruling that Abraitis concealed estate assets, Fried filed a

motion for attorney fees against Brady under both Civ.R. 11 and R.C. 2323.51. The

motion asserted that Brady and Abraitis frivolously listed the investment account as an

estate asset when they initially opened the estate. When they amended the estate inventory to list the investment account as an asset that belonged to Abraitis and not the

estate, Fried maintained that he was forced to litigate their new position that the money

belonged to Abraitis. In addition, Fried maintained that Brady acted in bad faith by filing

the new will. The motion also noted that Abraitis was in violation of the court’s order to

return the investment account proceeds to the estate, a failure that forced the estate to file

a separate motion seeking relief from the concealment of the asset. The motion claimed

that the estate had incurred reasonable attorney fees of $104,485 along with expenses of

$1,214.59, to defend the frivolous conduct.

{¶10} The court granted the motion for attorney fees, making the following

findings of fact:

The Court finds that as a result of Sarunas Abraitis ’ [sic] actions in this Estate case, all of which were done by and through his attorney, Catherine Brady, Fried was required to file two separate adversarial actions including a concealment action and a complaint for declaratory judgment. The Court further finds that Fried has also been required to defend against multiple appeals.

***

The Court further finds that it has set out in other entries the factual history of this case which can be summarized as the concerted effort by Abraitis and Brady to convince the taxing authorities that funds listed in the inventory of this Estate belonged to the decedent only to argue to this Court that the money belongs to Abraitis after the tax cases were resolved.

The Court finds that the actions taken by Abraitis and Brady, from the filing of the original inventory through the filing of several accounts, applications for attorney fees and attempted distributions are contrary to their current argument that the funds at issue belong to Abraitis. The Court finds that the arbitrary positions and actions of both have caused irreparable harm to the Estate and have resulted in extraordinary fees. {¶11} After finding Fried’s itemized statement of billable hours and rates charged

reasonable, the court awarded attorney fees of $104,485 and expenses of $1,214.59.

{¶12} Civ.R. 11 states that “[e]very pleading, motion, or other document of a party

represented by an attorney shall be signed by at least one attorney of record * * *.” An

attorney’s signature “constitutes a certificate by the attorney or party that the attorney or

party has read the document; that to the best of the attorney’s or party’s knowledge,

information, and belief there is good ground to support it; and that it is not interposed for

delay.”

{¶13} R.C. 2323.51(B)(1) applies more broadly than Civ.R. 11 and permits the

court to award attorney fees and costs to any party adversely affected by frivolous

conduct of another party or that party’s attorney, even if that conduct is not related to a

pleading, motion, or other document. “Frivolous conduct” is defined by R.C.

2323.51(A)(2) as, among other things, conduct that serves to harass or maliciously injure

another party to a civil action; conduct that is not warranted under existing law and cannot

be supported by a good faith argument for an extension or reversal of existing law; or

conduct that consists of allegations or factual contentions that have no evidentiary support

or are not likely to have evidentiary support after a reasonable opportunity for further

investigation.

{¶14} Civ.R. 11 uses a “subjective standard” of “bad faith” that goes beyond mere

bad judgment; it sanctions conduct amounting to “dishonest purpose,” “moral obliquity,”

“a breach of a known duty through some motive of interest or ill will,” or “partakes of the nature of fraud * * * with an actual intent to mislead or deceive another.” State ex rel.

Bardwell v. Cuyahoga Cty. Bd. of Commrs., 127 Ohio St.3d 202, 2010-Ohio-5073, 937

N.E.2d 1274, ¶ 8. “Frivolous conduct, as contemplated by R.C. 2323.51(A)(2)(a), is

judged under an objective, rather than a subjective standard * * *.” State ex rel.

DiFranco v. S. Euclid, 144 Ohio St.3d 571, 2015-Ohio-4915, 45 N.E.3d 987, ¶ 15, citing

State ex rel. Striker v. Cline, 130 Ohio St.3d 214, 2011-Ohio-5350, 957 N.E.2d 19, ¶ 21.

{¶15} Under both Civ.R. 11 and R.C. 2323.51, we review a trial court’s decision to

award sanctions for an abuse of discretion. If competent, credible evidence exists to

support an award of sanctions, the award must stand. Striker at ¶ 9; DiFranco at ¶ 13.

In addition, the abuse of discretion standard means that we cannot substitute our judgment

for that of the trial court. State ex rel. Bardwell at ¶ 9, citing State ex rel. Grein v. Ohio

State Hwy. Patrol Retirement Sys., 116 Ohio St.3d 344, 2007-Ohio-6667, 879 N.E.2d

195, ¶ 1.

{¶16} Brady argues, without relevant citation to authority, that the probate court

had no jurisdiction to award sanctions under R.C. 2323.51 because the statute applies

only to “civil” actions and probate court matters are “special proceedings.”

{¶17} Probate matters are “special proceedings” as that term is used for purposes

of the final order statute, R.C. 2505.02. Schwartz v. Tedrick, 2016-Ohio-1218, 61

N.E.3d 797, ¶ 11 (8th Dist.). But basically, probate matters are civil in nature because

they do not involve the kind of penal sanctions imposed on criminal defendants. Hill v.

Urbana, 79 Ohio St.3d 130, 137, 679 N.E.2d 1109 (1997). R.C. 2323.51(A)(1) references “conduct” in the context of filing a “civil action.” Probate courts have,

without question as to their authority to do so, awarded sanctions for frivolous conduct

under authority of R.C. 2323.51. See, e.g., Soter v. Beyoglides (In re of the

Guardianship of Lewis), 2d Dist. Montgomery No. 22252, 2008-Ohio-3486; In re

Guardianship of Wernick, 10th Dist. Franklin No. 06AP-263, 2006-Ohio-5950. The

argument that the probate court had no authority to impose sanctions under R.C. 2323.51

is baseless.

{¶18} We first consider whether the court erred by imposing sanctions against

Brady under R.C. 2323.51.

{¶19} When granting the motion for sanctions, the court found that Brady engaged

in frivolous conduct that it summarized as “the concerted effort * * * to convince the

taxing authorities that funds listed in the inventory of the Estate belonged to the decedent

only to argue to this Court that the money belongs to Abraitis after the tax cases were

resolved.”

{¶20} Brady maintains that she acted properly by listing the investment account as

an estate asset at the same time that Abraitis was arguing to the IRS that the investment

account belonged to his mother; she claims it was only after the IRS determined that the

investment account actually belonged to Abraitis that she filed a new inventory to reflect

that determination.

{¶21} This argument ignores that Brady filed court documents representing that

the investment account belonged to Abraitis long before she filed the initial estate inventory listing the investment account as an estate asset. The court heard undisputed

evidence that Abraitis was the only person named on the investment account. Nor was

there any question that the investment account had been funded by the proceeds of

another investment account held by both Abraitis and his mother as joint tenants.

Abraitis came into sole possession of the mother’s investment account “by way of a

power of attorney he held from the mother.” This fact had been conceded in a January

2013 motion to correct the inventory which stated that the funds in the mother’s

investment account were “transferred outright to Sarunas Abraitis” in 2003. This

statement contradicted a position maintained in the IRS matter where it was claimed that

the money belonged to the mother’s estate — the district court found that Abraitis

represented to the IRS that “the Cuyahoga County Probate Court had ruled that all of the

assets held by him originated from and were the sole property of [his mother].” Abraitis

v. United States, N.D.Ohio No. 1:11-cv-2077, 2012 U.S. Dist. LEXIS 123073, *3 (June

12, 2012). The IRS rejected that position because “the assets in question were in an

account under Abraitis’s name and social security number * * *.” Id. at *4.

{¶22} Abraitis reaffirmed his sole ownership of the investment account in a

November 2013 complaint for a writ of prohibition filed in this court. That complaint

alleged that a guardianship over Abraitis’s mother was closed in March 2009, “with no

assets remaining.” See Abraitis v. Gallagher, 8th Dist. Cuyahoga No. 101037,

2014-Ohio-2987, complaint at ¶ 9. The record shows that Abraitis was, for a time, his mother’s guardian. If the investment account truly belonged to his mother, the

guardianship estate inventory would have reflected that fact and listed it as an estate asset.

{¶23} It bears noting here that Abraitis was removed from his position as guardian

over his mother and was later sued by the successor guardian for concealment of assets.

The concealment case settled in February 2005. A January 2014 motion to correct the

inventory stated that the concealment case determined that the mother’s account “was an

asset owned by Sarunas Abraitis, outright.”

{¶24} Brady represented Abraitis throughout all of the proceedings we have

described. Those proceedings spawned litigation with the IRS, in the federal courts, and

at all levels of the state courts. The legal arguments offered by Brady in these matters

have been criticized as “specious (and often incomprehensible),” Abraitis v. Testa, 137

Ohio St.3d 285, 2013-Ohio-4725, 998 N.E.2d 1149, at ¶ 4, to doing “little to clarify

Abraitis’s position[.]” Abraitis v. United States, N.D.Ohio No. 1:11-cv-2077, 2012 U.S.

Dist. LEXIS 123073, *5 (June 12, 2012). And the probate court could agree with the

district court’s finding that Brady raised “arguments that contradict positions taken in

other pleadings[.]” Id. The court acted within reason to find that Brady acted frivolously

by taking inconsistent positions when representing Abraitis in the estate matters.

{¶25} We reach a similar conclusion with respect to the award of sanctions levied

against Brady under Civ.R. 11.

{¶26} The preceding discussion shows that Brady was subjectively aware that she

filed an estate inventory which claimed that the investment account was an estate asset even though she claimed years earlier that the money in the investment account had been

transferred to Abraitis. To be sure, at the time she filed the estate inventory, she was

representing Abraitis in tax proceedings with the IRS in which she similarly argued that

the mother owned the investment account. But as subsequent filings in the probate court

made clear, Brady asserted as early as 2005 that Abraitis was the sole owner of the

investment account — she claimed in a January 2014 motion to correct the inventory that

the concealment action filed by the mother’s successor guardian “determined that the

asset was owned by Sarunas Abraitis, outright, and that matter was dismissed with

prejudice at plaintiff’s costs [sic].” Brady doubled-down on this assertion by stating that

the settlement agreement also addressed and settled the ownership of the investment

account in his favor. All of this occurred years before Abraitis opened his mother’s

estate and filed an initial inventory claiming that the investment account was an estate

asset.

{¶27} Brady filed inventories and motions that she knew were unsupported by the

record. Those acts spawned needless and expensive litigation that required Fried’s

response. The court acted rationally by finding that Brady’s inconsistencies with the

positions she took during the litigation amounted to bad faith.

{¶28} We next address Brady’s arguments relating to the amount of fees and costs

awarded. She first argues that the court erred by awarding Fried attorney fees and

expenses for professional services rendered by him in our court. We reject this assertion

because R.C. 2323.51(B)(1) states that “[t]he court may assess and make an award to any party to the civil action or appeal who was adversely affected by frivolous conduct[.]”

(Emphasis added.) See also Bilbaran Farm, Inc. v. Bakerwell, Inc., 5th Dist. Knox No.

14CA07, 2014-Ohio-4017, ¶ 35.

{¶29} Brady next argues that the court erred by awarding Fried his expenses. She

maintains that Fried failed to authenticate or properly introduce into evidence the claimed

expenses. But Brady failed to object on this basis at the hearing and has forfeited the

argument on appeal.

{¶30} Brady complains that the court erred by failing to require Fried to verify the

amounts requested under oath. We have rejected this type of argument in the context of

Civ.R. 11, finding that the trial court has no obligation to hear sworn evidence in

awarding attorney fees. Brady v. Hickman & Lowder Co., 8th Dist. Cuyahoga Nos.

83041 and 83989, 2004-Ohio-4745, ¶ 30, citing R.C.H. Co. v. 3-J Machining Serv., 8th

Dist. Cuyahoga No. 82671, 2004-Ohio-57.

{¶31} Brady argues that the amount of attorney fees awarded “shocks the

conscience.” Certainly, the amount of attorney fees ordered are high, but they were

substantiated in Fried’s fee statement. As we earlier noted, Brady has relentlessly

litigated estate issues in this case. By doing so, she forced Fried to respond. This

greatly escalated the number of hours he billed.

{¶32} Brady also argues that Fried failed to “mitigate damages.” She

characterizes Fried as engaging in “a blitzkrieg of expensive countermeasures while

ignoring some of the basic tasks associated with being an administrator” and that he failed to contact Brady “to strike deficient filings[.]” Brady cites no authority for the proposition

that Fried had an obligation to mitigate his fees. And it is difficult to understand why

Brady thinks that efforts by Fried to minimize the cost of litigation would have been

successful. The conduct at the heart of the court’s decision to award attorney fees was

existential to the manner in which Abraitis and Brady pursued their claims.

{¶33} Judgment affirmed.

It is ordered that appellee recover of appellant costs herein taxed.

The court finds there were reasonable grounds for this appeal.

It is ordered that a special mandate issue out of this court directing the probate

division to carry this judgment into execution.

A certified copy of this entry shall constitute the mandate pursuant to Rule 27 of

the Rules of Appellate Procedure.

______________________________________________ MELODY J. STEWART, JUDGE

MARY EILEEN KILBANE, P.J., and EILEEN T. GALLAGHER, J., CONCUR