Myers v. Myers

Opinion

297 Ga. 490 FINAL COPY

S15A0403. MYERS v. MYERS.

NAHMIAS, Justice.

James T. Myers, Sr. (Decedent) executed his last will and testament on

June 9, 2008, and died on September 29, 2012. He was survived by his wife and

two sons, James T. Myers, Jr. (Appellant) and Anthony Lee Myers (Appellee).

Appellant was appointed executor by the will. After a motion by Appellee and

a hearing, the probate court entered an order on August 1, 2014, finding that

Appellant had violated his fiduciary duty in numerous ways, removing him as

executor, and appointing a county administrator to replace him. Appellant filed

a timely notice of appeal to this Court. We affirm.

1. The will directs that Decedent’s house be placed in trust as a life

estate for his wife, with the remainder to be divided between Appellant and

Appellee, who must pay equally for the house’s maintenance. Except for certain

personal effects, the rest of Decedent’s estate is divided evenly into separate

trusts for each son. The will names Appellant as the first choice for executor

and trustee and Appellee as the second choice. The probate court admitted the will to probate in solemn form on November 15, 2012, and letters testamentary

were issued to Appellant that day. As executor, Appellant established the trusts

and began managing Buckshot Properties, LLC (Buckshot), a company

previously owned solely by Decedent, which is one of the estate’s major assets.

During his time as executor, Appellant withdrew $63,401.05 in executor fees.

On October 7, 2013, Appellee filed a “Petition To Cite Executor To A

Settlement Of His Account And Further To Inquire Whether The Executor

Should Be Sanctioned, Including Removal, Due To Breach Of Fiduciary Duty,

Misconduct And/Or Mismanagement Of The Estate Assets.” The petition

alleged, among other things, that Appellant had failed to provide complete

information about the estate, used estate funds to pay personal expenses, and

used a truck owned by the estate as his personal vehicle. The petition also

alleged that Appellant had a conflict of interest as executor of the estate because

he was operating a business on land owned by Buckshot without paying rent,

was using estate resources to fund Buckshot’s expenses, and was paying

personal expenses from Buckshot’s business account. In his answer to the

petition, Appellant sought to remove Appellee as a beneficiary under the will

based on a portion of the will’s in terrorem clause that requires the removal of

2 a legatee or devisee who unsuccessfully seeks the removal of a personal

representative.

Appellee then filed an amended petition “expressly withdraw[ing] his

request that the Executor be removed and for other sanctions and expressly

limit[ing] his Petition to request an accounting for the Executor.” The amended

petition, however, repeated the original petition’s allegations of breach of

fiduciary duty and conflict of interest. The probate court issued a scheduling

order, setting a hearing on the “Petitions to Cite Executor and Motion to

Remove Executor.” Appellant filed a motion again requesting the removal of

Appellee as a devisee or legatee of the will, this time based on the will’s

provisions requiring disinheritance of any beneficiary who “objects in any

manner to any action taken or proposed to be taken in good faith by my Personal

Representative” or who “claims entitlement to (or any interest in) any asset

alleged by my Personal Representative to belong to my Probate Estate.” The

court then issued an amended scheduling order setting a hearing on the

“Petitions to Cite Executor, Motion to Remove Executor, and Motion to

Remove Devisee or Legatee.”

The hearing was held on May 21, 2014. At the outset, Appellee

3 acknowledged that his petition to remove Appellant as executor had been

withdrawn, but in his closing argument, he noted that although he had

withdrawn his original petition in the face of the threat of disinheritance, the

probate court still had “the authority to take action.” Appellant admitted that he

was driving a truck belonging to the estate and that he used estate funds to pay

for maintenance on Decedent’s house. Appellant also testified that he had

worked for Decedent at Buckshot and continued to run the business after

Decedent’s death, including withdrawing funds from the estate for the company

and using money from the company to pay his personal bills.

On August 1, 2014, the probate court issued an order removing Appellant

as executor and appointing a county administrator, explaining: “[A]lthough

[Appellee] has not requested the Court remove the Executor, after hearing the

evidence presented at the hearing . . . the Court finds that good cause exists to

remove [Appellant].” The probate court concluded that Appellant had a conflict

of interest and had breached his fiduciary duty in numerous ways, including by

using the estate’s truck, using estate funds to pay maintenance on the house, not

paying rent for his use of Buckshot’s property, not keeping records of rent paid

by other tenants to Buckshot, and using Buckshot’s business checking account

4 to pay personal bills. The court found that Appellant had overpaid himself by

$53,066.70 in executor’s fees and ordered him to repay that amount as well as

$43,339.21 that Buckshot wrongfully received from the estate. The court

determined that Buckshot’s operating agreement requires the company to be

dissolved upon Decedent’s death, so Appellant was not permitted to use estate

funds to continue operating it. The court ordered that the new executor “begin

to wind up the affairs” of Buckshot.

On appeal, Appellant does not challenge the probate court’s factual

findings, but he contends that his continued operation of Buckshot was proper,

that he lacked notice that the hearing could result in his removal as executor, and

that the court’s appointment of a county administrator as executor was reversible

error. None of those contentions has merit.1

2. The probate court found that Appellant breached his fiduciary duty

as executor in numerous ways, but he challenges only those rulings regarding

his operation of Buckshot.

(a) Appellant argues that his continued operation of Buckshot was

1 The probate court also froze the estate’s assets, ordered the appointment of a special co- trustee, denied Appellant’s motion to remove Appellee as a beneficiary, and ordered Appellant to repay to the estate $8,000 in attorney fees. Appellant does not challenge these rulings.

5 consistent with Decedent’s intentions because, although the will does not

mention Buckshot, it gives the executor all of the powers set out in former

OCGA § 53-12-232, which included the power “to continue or participate in the

operation of any business or other enterprise, whatever its form or

organization.”2 The will further provides that the executor “shall have . . . the

power to form, terminate, continue or participate in the operation of any

business enterprise including . . . a limited liability company,” and authorizes the

executor to make investments, borrow, lease, make repairs, and “retain any real

estate interests, closely held securities or affiliated companies or business

interests, and to sell or dispose of such interests only after careful consideration

and after determining that sale or disposition is under the existing circumstances

in the best interests of” the beneficiaries. Appellant also notes that OCGA § 14-

11-506 provides that the executor of a deceased sole member of a limited

liability company “shall become a member of the limited liability company.”

Under these statutes and will provisions, Appellant, as executor, took

Decedent’s place as the sole member of Buckshot, and he had all the powers

2 The chapter of the Georgia Code relating to wills and trusts was repealed and replaced in 2010. See Ga. L. 2010, p. 579, § 1. The language previously found in OCGA § 53-12-232 (5) can now be found in OCGA § 53-12-261 (b) (3).

6 associated with that position. The problem for Appellant is that under the

unequivocal terms of Buckshot’s operating agreement, the only things he could

do in that position involved dissolving the company. See OCGA § 14-11-305

(4) (A) (explaining that the duties of an LLC’s member may be restricted by

provisions in a written operating agreement). The operating agreement names

Decedent as “the Member” of Buckshot, and it provides that “the death,

withdrawal, removal, bankruptcy, insolvency or incompetency of the Member”

dissolves the company. The duties of the successor member are clearly

expressed and strictly limited: “Upon the occurrence of any of the terminating

events . . . , the Company shall be dissolved, the Member shall convert the

Company’s assets into cash, and all such cash shall be applied and distributed

in the following order of priority . . . [by which assets remaining after paying

debts go to the Member].”

The record shows that as of the date of the hearing, which was nearly 18

months after Appellant became the estate’s executor and Buckshot’s successor

member, he had yet to follow this mandate of the operating agreement by taking

steps to effectuate the dissolution of the company. Instead, Appellant withdrew

$43,339.21 from the estate to continue operating Buckshot, including

7 $27,856.61 used to pay for a new fence and other improvements to Buckshot’s

rental property and a $5,000 capital contribution to Buckshot. The trial court as

factfinder was authorized to conclude that, by failing to follow the operating

agreement and instead expending estate funds on an asset of the estate that

should be dissolved and liquidated, Appellant caused “unnecessary delay and

expense to the [e]state.” In re Estate of Arnsdorff, 273 Ga. App. 612, 615 (615

SE2d 758) (2005). See also OCGA § 53-7-1 (a) (explaining that an executor “is

under a general duty to settle the estate as expeditiously and with as little

sacrifice of value as is reasonable under all of the circumstances”).

Moreover, although Appellant argues that disregarding Buckshot’s

operating agreement and spending estate funds on the company helped the estate

by improving the value of the business, his decisions regarding Buckshot were

tainted by an impermissible conflict of interest. While the estate was losing

money because of Buckshot, Appellant was personally benefitting from the

continued operation of the business by using Buckshot property rent-free and

using Buckshot funds to pay his personal bills. See Ringer v. Lockhart, 240 Ga.

82, 85 (239 SE2d 349) (1977) (“‘An administrator or executor is a trustee

invested with a solemn trust to manage the estate under his control to the best

8 advantage of those interested in it. . . . Nothing can be tolerated which comes

into conflict or competition with the interests and welfare of those interested in

the estate.’” (citation omitted)). See also Ray v. Nat. Health Investors, Inc., 280

Ga. App. 44, 51 (633 SE2d 388) (2006) (explaining that the broad grant of

powers to continue to participate in and operate a decedent’s enterprises under

former OCGA § 53-12-232 do not excuse the executor from his fiduciary duty).

For these reasons, the expenditures Appellant made from the estate to

Buckshot were improper, and the trial court did not err in requiring Appellant

to repay to the estate the funds he paid to Buckshot and in requiring the new

executor to begin winding up the company.

(b) Appellant also contends that he was entitled to a commission on the

money paid to or spent on behalf of Buckshot. Under OCGA § 53-6-60 (b) (1),

if an executor’s compensation is not specified in the will, he is entitled to a “2

1/2 percent commission on all sums paid out by the personal representative,

either for debts, legacies, or distributive shares.” The probate court correctly

concluded, however, that the money Appellant paid out to or for Buckshot was

not properly paid for “debts, legacies, or distributive shares” of the estate, and

so the court did not err in ordering Appellant to repay commissions he took on

9 those transactions. See Greenway v. Hamilton, 280 Ga. 652, 655-656 (631

SE2d 689) (2006) (affirming the probate court’s order to the executor to forfeit

his commissions because “the probate court has the power to require [an

executor] to forfeit commissions and fees for breaching his fiduciary duties”).

3. Appellant next argues that despite his numerous breaches of

fiduciary duty (several of which are undisputed on appeal), he should not have

been removed as executor. He points to OCGA § 53-7-55, which says in

relevant part:

Upon the petition of any person having an interest in the estate or whenever it appears to the probate court that good cause may exist to revoke the letters of a personal representative or impose other sanctions, the court shall cite the personal representative to answer to the charge. Upon investigation, the court may, in the court’s discretion: (1) Revoke the personal representative’s letters . . . .

See In re Estate of Zeigler, 259 Ga. App. 807, 809 (578 SE2d 519) (2003)

(explaining that OCGA § 53-7-55 requires that “the executor be given notice of

the charge and opportunity to answer”). Appellant claims that because Appellee

specifically withdrew his petition to remove Appellant as executor, Appellant

did not have notice of the charge against him and was not aware that the hearing

might lead to his removal.

10 However, although Appellee withdrew the formal request to remove

Appellant as executor made in his original petition, he made it clear that he did

so to avoid Appellant’s invocation of the will’s in terrorem clause. The

substance of Appellee’s complaint remained unchanged; in his amended

petition, he again asserted, with the same detailed allegations, that Appellant “is

mismanaging and wasting Estate assets, is engaged in breaches of his fiduciary

duty[,] and may have direct conflicts of interest with the Estate.” These charges,

if proved, clearly would be grounds for the court to remove Appellant as

executor. At the hearing, which was described in the court’s amended

scheduling order as a hearing on “Petitions to Cite Executor, Motion to Remove

Executor, and Motion to Remove Devisee or Legatee,” the testimony focused

on these allegations of executor misconduct. And in closing argument,

Appellee’s attorney reminded the court that it had the power to remove

Appellant as executor, saying that although Appellee had withdrawn his removal

request, the court still had “the authority to take action.”

Appellant did not challenge the propriety of this suggestion, nor did he

dispute the court’s authority to sua sponte remove Appellant as a result of the

hearing evidence. To the contrary, Appellant’s attorney responded to the

11 removal issue directly, beginning his closing argument by saying:

There’s not any evidence whatsoever presented . . . in this case that shows any wrongdoing by my client at all, period. [Appellee] can tiptoe around it all he wants. They are asking you to remove [Appellant] as executor. There’s no question about it.

Appellant’s attorney then argued that Appellant had not committed any

wrongdoing; at no time did he argue that the court could not remove Appellant

because he lacked adequate notice of this possibility. Appellant’s attorney

concluded his argument by saying, “at the end of the day there’s absolutely no

reason, number one, to remove [Appellant].”

Appellant relies on Zeigler, where the Court of Appeals reversed the

removal of an executor because the petition being decided at the hearing alleged

only that the executor had not answered inquiries about the estate, and “[t]here

was no petition made to remove [the] executor, nor any indication that she might

be removed as executor.” 259 Ga. App. at 809. In this case, by contrast,

Appellant was aware that Appellee wanted him removed and in fact repeatedly

argued that his potential removal was exactly what the hearing was about.

Appellant treated the hearing as his opportunity to answer the charges against

him that could result in his removal. He has not asserted that there is any

12 different or additional evidence he would have offered or argument he would

have made if the court had more explicitly directed him to answer why he

should not be removed. The court’s removal of Appellant as executor was the

predictable consequence of its findings as to Appellee’s charges. This

enumeration of error therefore fails.

4. Finally, Appellant contends that even if the probate court did not err

in removing him as executor, it erred in appointing a county administrator as his

successor instead of Appellee, because in the will Decedent

appoint[ed] the following to be my Personal Representative(s) in the order of priority in which their names appear: (1) JAMES THOMAS MYERS, JR. [Appellant] (2) ANTHONY LEE MYERS [Appellee]. If, for any reason, any Personal Representative(s) named above is unable or unwilling to serve, the next Successor Personal Representative(s) shall serve in the order of priority listed until the list has been exhausted.

Although once the court removed Appellant as the executor, the court may

have erred in not addressing the issue of Appellee being named in the will as the

successor executor, any such error is harmless. See OCGA § 9-11-61.3

3 OCGA § 9-11-61 provides: No error . . . in any ruling or order or in anything done or omitted by the court . . . is ground for granting a new trial or for setting aside a verdict or for vacating, modifying, or otherwise disturbing a judgment or order, unless refusal to take such action appears to the court inconsistent with substantial justice. The court at every

13 Appellee has unequivocally represented to this Court, both in his brief and at

oral argument, that he will refuse to serve as executor. Thus, if we were to

remand the case for the probate court to appoint Appellee as the executor, it is

clear that Appellee would refuse, and then the court would be required to

appoint a county administrator to serve as the executor, just as it has already

done. See OCGA § 53-6-35 (a) (“The probate court of each county shall

appoint a county administrator whose duty shall be to take charge of all estates

unrepresented and not likely to be represented.”). We will not prolong this

contentious family dispute simply to require the probate court to perform a futile

act and arrive at the same outcome.

Judgment affirmed. All the Justices concur.

stage of the proceeding must disregard any error or defect in the proceeding which does not affect the substantial rights of the parties.

14 Decided July 6, 2015. Wills. Henry Probate Court. Before Judge Powell. Hodges, McEachern & King, Timothy K. King, for appellant. Stephen H. DeBaun; Gregory A. Futch, for appellee.