Dillard, Judge.
Sandra Kemp (“Sandra”) appeals the trial court’s interim award of attorney fees to her son, Charles Alexander Kemp II, and his minor children (collectively, “Alexander”) in their action against her for breach of trust and other related claims.
On appeal, Sandra argues that the trial court erred in awarding attorney fees to Alexander under OCGA § 53-12-302 (a) (4) prior to the conclusion of the case because (1) such an award is not authorized by the statute, and (2) it is impossible to know at this time whether and to what extent Alexander will prevail on his claims. As to the amount of the award, Sandra maintains that the trial court erred in awarding fees for claims other than breach of trust, including claims that Alexander later abandoned. Because we agree that an award of attorney fees and costs of litigation to Alexander prior to the adjudication of his breach-of-trust claim is not authorized by OCGA § 53-12-302 (a) (4), we vacate the fee award and remand the case for further proceedings consistent with this opinion.
Relevant to this appeal, the record shows
that Charles Alexander Kemp (“Alex”), who was Sandra’s late husband and Alexander’s
father, was a successful businessman who founded companies that provide dialysis-management services. In February 2004, Alex executed his last will and testament, in which Sandra was named the sole executrix and trustee of a marital trust and a residual trust, both of which were created by the will. Alexander, who was 19 years old at the time, was named the first successor trustee of both trusts. Also in February 2004, Alex created the Green Tree Trust, which was the sole owner of his business that managed contracts for the operation of Wake Forest University’s dialysis clinics.
Alex died on May 24, 2004, and under his will, he left substantially all of his estate to the marital trust. The remainder of the estate was left to the residual trust. Both the marital and residual trusts (like the Green Tree Trust) provided that all income derived from those trusts be paid to Sandra during her lifetime, and if such income was not sufficient, the trustee of the marital trust could draw from the principal as necessary The will further provided that, after Sandra’s death, the marital and residual trusts would be combined, with Alexander as the sole trustee and beneficiary of the income and principal. Thereafter, all trust property would eventually pass outright, free of trust, to Alexander incrementally over his lifetime.
Shortly after Alex’s death, his life insurance policy paid $4,781,235.07 to Sandra, as trustee of the so-called 1990 Life Insurance Trust that Alex had created prior to his death. Under this trust, Sandra was entitled to income, but no principal absent a showing of a need for the funds. Following her death, Alexander would be the sole beneficiary of all trust property. But notwithstanding the terms of the 1990 Life Insurance Trust, Sandra distributed all of the life insurance proceeds to herself, individually And later, when the insurance company paid $80,000 from a lawsuit settlement to Sandra, as trustee of the 1990 Life Insurance Trust, she again deposited the funds to an account in her individual name.
On October 12, 2005, Sandra’s attorneys created the SS Kemp Trust to replace the Green Tree Trust. Despite being named as a trustee of the SS Kemp Trust, Alexander had no knowledge that the trust was created, never signed the trust agreement, and only discovered the trust’s existence after initiating this litigation. The SS Kemp Trust was different, from the Green Tree Trust in several material respects, including that Sandra reserved the right to unilaterally designate all of the trust property to pass to her future spouse or siblings, among others. In 2007, Sandra entered a new management contract for the operation of Wake Forest University’s dialysis clinics, referenced supra, but she did so via a company owned by the SS Kemp Trust, instead of the one owned by the Green Tree Trust, which had been created by her late husband. The business model was identical to that created by Alex in 2004, except for the different terms set forth in the SS Kemp Trust. Subsequently, Sandra, as managing member of a new dialysis-management company owned by the SS Kemp Trust, contracted with Emory University to manage its dialysis clinics. While the marital trust and Alexander had an interest and a reasonable expectancy in the profits from this new business opportunity, the profits derived from this business were distributed solely to Sandra, outside of trust.
On October 11, 2013, Sandra created yet another irrevocable trust, the SSK Kemp Trust, to replace the SS Kemp Trust and to own 99 percent of the dialysis-management business. Under this trust’s terms, Sandra was the trustee and several other individuals were her co-successors, but Alexander was neither a trustee nor a successor trustee. Indeed, prior to filing this lawsuit, Alexander had never even seen the SSK Kemp Trust. Sandra was the lifetime beneficiary of the trust, and after her death, all trust property was to be distributed to her grandchildren. Thus, the SSK Kemp Trust, unlike the Green Tree Trust from which it originated, excluded Alexander as a beneficiary
On June 9, 2014, Alexander, individually and on behalf of his minor children, filed a complaint against Sandra, personally and as trustee of the above-referenced trusts, as well as various businesses that were owned by those trusts. The complaint asserted, inter alia, claims for “breach of trust, misappropriation of corporate opportunity, self-dealing, conspiracy to commit breach of trust, and aiding and abetting in breach of trust.” In relevant part, Alexander contended that, as trustee of the marital trust, Sandra had “pursued and misappropriated opportunities belonging to the [m]arital [t]rust” and “entered into various businesses that compete directly with the [m]arital [t]rust.” In addition, Alexander sought preliminary and
permanent injunctive relief, requesting that Sandra be immediately removed as trustee of the marital trust and Alexander be appointed as successor trustee.
Shortly after the complaint was filed, the trial court issued a temporary restraining order, providing that all defendants in the case were
restrained and enjoined from diverting, transferring, selling, secreting, encumbering, trading, pledging as collateral, contracting to sell, concealing, or otherwise disposing of or removing from the jurisdiction of [the court] any of the assets, property, contracts, equipment, accounts, corporate opportunities, or the like of any of the [defendant entities, [defendants, the [m]arital [t]rust, and [a “new trust” referenced in a letter by Sandra’s attorney]—except as is customary and in the ordinary course of business and is necessary to maintain ongoing operations.
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Dillard, Judge.
Sandra Kemp (“Sandra”) appeals the trial court’s interim award of attorney fees to her son, Charles Alexander Kemp II, and his minor children (collectively, “Alexander”) in their action against her for breach of trust and other related claims.
On appeal, Sandra argues that the trial court erred in awarding attorney fees to Alexander under OCGA § 53-12-302 (a) (4) prior to the conclusion of the case because (1) such an award is not authorized by the statute, and (2) it is impossible to know at this time whether and to what extent Alexander will prevail on his claims. As to the amount of the award, Sandra maintains that the trial court erred in awarding fees for claims other than breach of trust, including claims that Alexander later abandoned. Because we agree that an award of attorney fees and costs of litigation to Alexander prior to the adjudication of his breach-of-trust claim is not authorized by OCGA § 53-12-302 (a) (4), we vacate the fee award and remand the case for further proceedings consistent with this opinion.
Relevant to this appeal, the record shows
that Charles Alexander Kemp (“Alex”), who was Sandra’s late husband and Alexander’s
father, was a successful businessman who founded companies that provide dialysis-management services. In February 2004, Alex executed his last will and testament, in which Sandra was named the sole executrix and trustee of a marital trust and a residual trust, both of which were created by the will. Alexander, who was 19 years old at the time, was named the first successor trustee of both trusts. Also in February 2004, Alex created the Green Tree Trust, which was the sole owner of his business that managed contracts for the operation of Wake Forest University’s dialysis clinics.
Alex died on May 24, 2004, and under his will, he left substantially all of his estate to the marital trust. The remainder of the estate was left to the residual trust. Both the marital and residual trusts (like the Green Tree Trust) provided that all income derived from those trusts be paid to Sandra during her lifetime, and if such income was not sufficient, the trustee of the marital trust could draw from the principal as necessary The will further provided that, after Sandra’s death, the marital and residual trusts would be combined, with Alexander as the sole trustee and beneficiary of the income and principal. Thereafter, all trust property would eventually pass outright, free of trust, to Alexander incrementally over his lifetime.
Shortly after Alex’s death, his life insurance policy paid $4,781,235.07 to Sandra, as trustee of the so-called 1990 Life Insurance Trust that Alex had created prior to his death. Under this trust, Sandra was entitled to income, but no principal absent a showing of a need for the funds. Following her death, Alexander would be the sole beneficiary of all trust property. But notwithstanding the terms of the 1990 Life Insurance Trust, Sandra distributed all of the life insurance proceeds to herself, individually And later, when the insurance company paid $80,000 from a lawsuit settlement to Sandra, as trustee of the 1990 Life Insurance Trust, she again deposited the funds to an account in her individual name.
On October 12, 2005, Sandra’s attorneys created the SS Kemp Trust to replace the Green Tree Trust. Despite being named as a trustee of the SS Kemp Trust, Alexander had no knowledge that the trust was created, never signed the trust agreement, and only discovered the trust’s existence after initiating this litigation. The SS Kemp Trust was different, from the Green Tree Trust in several material respects, including that Sandra reserved the right to unilaterally designate all of the trust property to pass to her future spouse or siblings, among others. In 2007, Sandra entered a new management contract for the operation of Wake Forest University’s dialysis clinics, referenced supra, but she did so via a company owned by the SS Kemp Trust, instead of the one owned by the Green Tree Trust, which had been created by her late husband. The business model was identical to that created by Alex in 2004, except for the different terms set forth in the SS Kemp Trust. Subsequently, Sandra, as managing member of a new dialysis-management company owned by the SS Kemp Trust, contracted with Emory University to manage its dialysis clinics. While the marital trust and Alexander had an interest and a reasonable expectancy in the profits from this new business opportunity, the profits derived from this business were distributed solely to Sandra, outside of trust.
On October 11, 2013, Sandra created yet another irrevocable trust, the SSK Kemp Trust, to replace the SS Kemp Trust and to own 99 percent of the dialysis-management business. Under this trust’s terms, Sandra was the trustee and several other individuals were her co-successors, but Alexander was neither a trustee nor a successor trustee. Indeed, prior to filing this lawsuit, Alexander had never even seen the SSK Kemp Trust. Sandra was the lifetime beneficiary of the trust, and after her death, all trust property was to be distributed to her grandchildren. Thus, the SSK Kemp Trust, unlike the Green Tree Trust from which it originated, excluded Alexander as a beneficiary
On June 9, 2014, Alexander, individually and on behalf of his minor children, filed a complaint against Sandra, personally and as trustee of the above-referenced trusts, as well as various businesses that were owned by those trusts. The complaint asserted, inter alia, claims for “breach of trust, misappropriation of corporate opportunity, self-dealing, conspiracy to commit breach of trust, and aiding and abetting in breach of trust.” In relevant part, Alexander contended that, as trustee of the marital trust, Sandra had “pursued and misappropriated opportunities belonging to the [m]arital [t]rust” and “entered into various businesses that compete directly with the [m]arital [t]rust.” In addition, Alexander sought preliminary and
permanent injunctive relief, requesting that Sandra be immediately removed as trustee of the marital trust and Alexander be appointed as successor trustee.
Shortly after the complaint was filed, the trial court issued a temporary restraining order, providing that all defendants in the case were
restrained and enjoined from diverting, transferring, selling, secreting, encumbering, trading, pledging as collateral, contracting to sell, concealing, or otherwise disposing of or removing from the jurisdiction of [the court] any of the assets, property, contracts, equipment, accounts, corporate opportunities, or the like of any of the [defendant entities, [defendants, the [m]arital [t]rust, and [a “new trust” referenced in a letter by Sandra’s attorney]—except as is customary and in the ordinary course of business and is necessary to maintain ongoing operations.
In addition, the trial court prohibited the parties from “destroying or secreting” certain records relevant to the litigation and granted Alexander access to various records and documents in the defendants’ custody and control. The order also provided that all documents exchanged in discovery must remain confidential and that the complaint and any further pleadings would remain sealed as long as the temporary restraining order was in effect.
Subsequently, after the defendants filed their answers to the complaint, the trial court issued a consent order, extending the temporary restraining order until September 11, 2014, and ordering Sandra to take several actions with respect to the trusts at issue. But notwithstanding the restraining order, Sandra, intentionally and in violation of the order, transferred approximately $4,800,000 in assets held in her individual name to a new trust that was intended to replicate the 1990 Life Insurance Trust. Additionally, she purchased a new home with personal funds.
On September 3, 2014, Alexander filed an application for a contempt order against Sandra for alleged violations of the temporary restraining order. Specifically, Alexander requested an order holding Sandra in civil contempt of court, ordering her to pay a $1,000 fine for each “disobedient act,” ordering her to comply with the trial court’s orders at all times, and awarding Alexander reasonable attorney fees for filing the application. According to Alexander, Sandra had breached at least two provisions of the trial court’s temporary restraining order by spending $250,000 in personal funds to purchase real estate, transferring approximately $4,800,000 in
securities to a new life insurance trust, listing her personal residence for sale, and disclosing the contents of the complaint and the allegations contained therein to third parties.
On October 14, 2014, the trial court granted Alexander’s petition for preliminary injunctive relief. After setting forth its detailed findings, the court ordered, inter alia, that Sandra be temporarily removed as trustee of the “Kemp Trusts”
and that Alexander be appointed as temporary trustee of those trusts. A few days later, the trial court issued another order, holding Sandra in civil contempt of its temporary restraining orders and awarding Alexander attorney fees incurred in pursuing his contempt petition. In that order, the court noted that Sandra admitted disposing of approximately $250,000 of her assets by purchasing certain real estate, she impermissibly transferred approximately $4,800,000 in securities to a life insurance trust, and she admitted making certain disclosures that violated “the spirit and the terms” of the orders’ confidentiality provisions.
In late October 2014, Alexander filed the motion giving rise to this appeal, which sought attorney fees and costs of litigation under OCGA § 53-12-302 (a) (4)
and OCGA § 9-15-14
that he incurred in pursuing the temporary removal of Sandra as trustee of the Kemp Trusts and his appointment as temporary trustee. Alexander contended that, over the course of a four-day hearing, Sandra, in her capacity as trustee, admitted to the misconduct set forth in the trial court’s order granting injunctive relief and that her attempts to defend these acts of breach were frivolous and without merit. In addition, he contended that Sandra had ignored his pretrial requests for documentation and rebuffed his repeated attempts to avoid this litigation. Sandra responded to the motion, arguing that OCGA § 53-12-302 (a) (4) does not authorize an interim award of attorney fees
and that the defendants had not engaged in any conduct that would authorize an award offees under OCGA § 9-15-14 (a) or (b). Following a hearing on the matter, the trial court granted Alexander’s motion, finding that a fee award was appropriate under OCGA § 53-12-302 (a) (4). Specifically, the trial court awarded Alexander $270,789.75 in attorney fees and $24,736.34 in costs of litigation, which represented the amounts that he incurred from the first relevant time entry through October 15, 2014, the date of the trial court’s order granting injunctive relief. The court declined to reach the issue of whether attorney fees were also authorized under OCGA § 9-15-14. This appeal follows.
We begin by noting that the interpretation of a statute is a question of law, which is “reviewed de novo on appeal.”
Indeed, when only a question of law is at issue, as here, we “owe no deference to the trial court’s ruling and apply the ‘plain legal error’ standard of review.”
With these guiding principles in mind, we turn now to Sandra’s specific claims of error.
As noted supra, Sandra argues that the trial court erred in awarding attorney fees for breach of trust because an interim award of attorney fees prior to the final disposition of the case is not authorized by OCGA § 53-12-302 (a) (4) and because it is not possible to know whether and to what extent Alexander will prevail on his breach-of-trust claim. She also maintains that the trial court erred in awarding fees for claims other than breach of trust. Because we agree that OCGA § 53-12-302 (a) (4) does not authorize an award of attorney fees before the final adjudication of Alexander’s breach-of-trust claim, we need not address Sandra’s remaining claims of error.
When we interpret any statute, we necessarily begin our analysis with “familiar and binding canons of construction.”
In considering the meaning of a statute, our charge as an appellate court is to “presume that the General Assembly meant what it said and said what it meant.”
Toward that end, we must afford the statutory text
its plain and ordinary meaning,
consider the text contextually,
read the text “in its most natural and reasonable way, as an ordinary speaker of the English language would,”
and seek to “avoid a construction that makes some language mere surplusage.”
And when the language of a statute is “plain and susceptible to only one natural and reasonable construction, courts must construe the statute accordingly.”
Finally, because any statute that “provides for the award of attorney fees is in derogation of common law, it must be strictly construed against the award of such damages.”
As recognized by the Supreme Court of Georgia, “[generally an award of attorney fees is not available unless supported by statute or contract.”
And when a fee award is entered under a statute, the award must meet the requirements of that statute.
Turning to the case sub judice, the trial court awarded attorney fees under OCGA §
53-12-302 (a) (4), which provides, in relevant part:
(a) A trustee who commits a breach of trust shall be personally chargeable with any damages resulting from such breach of trust, including, but not limited to:
(4) In the discretion of the court, expenses of litigation, including reasonable attorney’s fees incurred in bringing an action on such breach or threat to commit such breach.
Under the plain language of the foregoing statute, Alexander may only be awarded costs of litigation, including attorney fees, that result from Sandra’s breach of trust or threat to commit such breach. But here, the trial court awarded attorney fees and costs of litigation under OCGA § 53-12-302
before
Alexander’s breach-of-trust claim had been resolved. Indeed, although the trial court awarded fees after granting Alexander’s request for injunctive relief based on its finding that Sandra admitted to certain breaches of her duties as trustee, his breach-of-trust claim itself has not yet been adjudicated on the merits or resulted in damages.
And while no Georgia case specifically addresses whether OCGA § 53-12-302 (a) (4) authorizes an “interim-fee award” (such as the one in this case), the plain language of the statute provides that attorney fees and costs of litigation may be
included
in an award of
damages
resulting from a trustee’s breach of trust or threat of such breach.
And because this litigation is still pending, no damages have been awarded for Alexander’s breach-of-trust claim. As a result, the instant fee award could not have been included in any such damages. To the contrary, Alexander was awarded fees incurred in pursuing his successful request for
injunctive relief
and it is worth noting that even the trial court’s grant of injunctive relief, including its removal of Sandra as trustee of the Kemp Trusts, is only
temporary.
Furthermore, in addressing a former, nearly identical, version of OCGA § 53-12-302 (a) (4),
we explained that “there can be no recov
ery of any kind under this statute, including attorney fees, without a finding of a breach of trust.”
Specifically, we held that, in the case of a jury trial, the trial court erred in awarding fees under this prior statute when there was no verdict form presenting the jury with the question of whether the defendants breached a fiduciary duty.
But here, at this stage in the proceedings, we are not at liberty to presume that a judge or jury will enter a judgment or verdict answering that question.
In its order granting attorney fees, the trial court noted that it was necessary for Alexander to file the instant action and seek Sandra’s temporary removal as trustee because of the “established breaches of her fiduciary duty” and evidence that there were real and realistic threats of continued and additional breaches of such duties. Nevertheless, even if it was necessary for Alexander to seek temporary injunctive relief, there has been no official adjudication of Alexander’s
breach-of-trust claim
on the merits, either through the grant of summary judgment or by a jury verdict.
Nevertheless, Alexander—relying primarily on federal case law— argues that he may be considered the “prevailing party” for purposes of the attorney-fee award because he succeeded on his claim for injunctive relief, which constituted “some degree of success on the merits.”
However, the issue before us is not whether attorney fees, in general, may be awarded upon the grant of injunctive relief. Instead, we must decide whether attorney fees may be awarded for breach of trust under the plain meaning of OCGA § 53-12-302 while the
breach-of-trust claim
itself is still pending.
Notwithstanding OCGA § 53-12-302 (a) (4)’s provision that attorney fees for breach of trust may be
included
in an award of damages, Alexander contends that an interim attorney-fee award is authorized by the statute because it has no language expressly prohibiting the award of interim fees. But significantly, although the trial court declined to consider the issue, Alexander also sought attorney fees under OCGA § 9-15-14, which
does
expressly provide for a fee award prior to the disposition of a case. Indeed, unlike OCGA § 53-12-302 (a) (4), OCGA § 9-15-14 explicitly provides that “[a]ttorney[ ] fees and expenses under this Code section may be requested by motion
at any time during the course of the action
but not later than 45 days after the final disposition of the action.”
Thus, we must presume that if the General Assembly had wished to allow beneficiaries to seek attorney fees under OCGA § 53-12-302 (a) (4) at any time
during
the litigation, it would have expressly authorized them to do so.
As a result, we must also presume that the General Assembly’s “failure to do so was a matter of considered choice.”
Finally, to the extent that OCGA § 53-12-302 (a) (4) is ambiguous regarding whether attorney fees and litigation costs may be awarded based on the trial court’s factual findings in a
temporary
order that does not adjudicate any breach-of-trust claims, we must strictly construe the statute
against
the award of fees.
Decided June 29, 2016.
Powell & Erwin, William A. Erwin,
for appellant.
James Bates Brannan Groover, LLP, John F. Kennedy, Jeffrey M. Rutledge, Scott E. Anderson,
for appellees.
In sum, even assuming that, as Alexander and the trial court maintain, Sandra admitted to multiple breaches of her fiduciary duties as trustee of the Kemp Trusts during an evidentiary hearing and an interim award of attorney fees is an equitable sanction for her misconduct, such fees may not be awarded under OCGA § 53-12-302 (a) (4) unless the requirements of that statute are satisfied.
And here, because there has not been a judgment in Alexander’s favor on the merits of his breach-of-trust claim, he has not satisfied the requirement of OCGA § 53-12-302 (a) (4) that an award of attorney fees and costs of litigation be included as damages resulting from a breach of trust or threat of such breach.
For all the foregoing reasons, we vacate the trial court’s award of attorney fees under OCGA § 53-12-302 and remand the case for the trial court to consider whether such fees are warranted at the time when damages, if any, are awarded after the disposition of Alexander’s breach-of-trust claim, or, alternatively, whether an award of attorney fees is authorized prior to the disposition of the breach-of-trust claim under OCGA § 9-15-14 (a) or (b).
Judgment vacated and case remanded.
Phipps, P. J., and Rick-man, J., concur.