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In re Estate of Burnette

Court of Appeals of Tennessee, Knoxville

March 21, 2018


          Session September 13, 2017

          Appeal from the Chancery Court for Hamilton County No. 99-P-649 Jeffrey M. Atherton, Chancellor

         This appeal involves a successor estate administrator's attempt to collect his attorney's fees from a prior administrator. John G. McDougal, the prior administrator, gave his co-administrator, John D. Burnette (Burnette), a check representing the proceeds from the sale of the decedent's real estate. Instead of depositing the check in a Tennessee bank as instructed, Burnette took the check to Florida and deposited it in a bank account there. Afterward, Burnette refused to communicate or cooperate with McDougal. The trial court held that McDougal breached his fiduciary duty to the estate and beneficiaries, and awarded the successor administrator a judgment of $5, 523.28. We hold that the undisputed facts establish no negligence or malfeasance on McDougal's part that warrant an award of attorney's fees. Accordingly, we reverse the judgment of the trial court.

         Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Chancery Court Reversed; Case Remanded

          Lee Ortwein, Red Bank, Tennessee, for the appellant, John G. McDougal.

          Anna Marie Davenport, Chattanooga, Tennessee, for the appellee, G. Michael Luhowiak.

          Charles D. Susano, Jr., J., delivered the opinion of the court, in which John W. McClarty and Thomas R. Frierson, II, JJ., joined.




         John J. Burnette died intestate on September 19, 1999.[1] His estate was probated in Hamilton County. McDougal and the decedent's son, Burnette, were appointed co-administrators. With the trial court's permission, they sold decedent's real property on May 1, 2000. The net proceeds from the sale approximated $39, 419. McDougal testified that the check was made out to the estate. He stated that it was designated "for deposit only." McDougal gave the check to co-administrator Burnette, with instructions to deposit it in an estate account with American National Bank in Chattanooga. Instead, Burnette took the check to Florida, where he resided, and deposited it in a bank account there. McDougal instructed Burnette that the funds were required to be deposited in the estate account in Tennessee, and asked him to transfer the money. McDougal testified that although Burnette initially agreed, he never made the transfer. Burnette thereafter hired an attorney, who instructed McDougal that any communication with Burnette should come through the attorney.

         In February 2000, decedent's widow filed for an elective share, a year's support, homestead, exempt property, and other relief. On June 12, 2000, the trial court awarded her, among other things, $5, 000 for homestead rights and $13, 380 for a year's support. When the payment from the estate was not forthcoming, she filed a motion for contempt against the co-administrators. Following a hearing, the trial court entered an order on August 2, 2001, stating in pertinent part as follows:

Upon representation of co-administrator's, John D. Burnette, counsel to the Court that John D. Burnette would not be attending said Show Cause hearing and upon further representation that the funds to pay said Judgment [to the widow] as stated in the May 3, 2000, Master's Report had been transferred to Florida where co-administrator John D. Burnette resides, and that said funds were no longer available, the Court found that the administrators of the estate shall be found in contempt. Further, upon oral Motion of co-
administrator John McDougal, to remove co-administrator John D. Burnette as co-administrator of the estate, the Court found that Motion to be well taken. It is, therefore,
ORDERED that John D. Burnette is hereby removed as administrator of the estate of John Jay Burnette and John McDougal shall solely continue as administrator of this estate. It is, further, ORDERED that the administrators of the estate shall be held in contempt of the Court with further penalties, if any, to be determined at a later hearing of this Court.

(Capitalization and striking out in original.) The above language with a line through it is struck through by a handwritten line in the trial court's order. No explanation is provided in the record as to who struck the language, nor the intent of the trial court, if it was the one who edited the order.

         The next document in the record following this order is a notice issued by the Clerk & Master on April 6, 2004, instructing McDougal to file a settlement of the estate by April 27, 2004. McDougal responded with a "motion for instructions" in which he alleged that Burnette absconded with the proceeds of the sale of decedent's real estate and thereafter refused to communicate with McDougal. McDougal stated that he tried to have criminal charges brought against Burnette, to no avail. At this point, the estate had no remaining assets other than the proceeds from the real estate sale. McDougal asked the court to "give instructions as to the next possible move for the attorney for the estate or allow [him] to close the estate with what has been passed out."

         On August 24, 2006, the trial court entered an order removing McDougal as administrator and appointing G. Michael Luhowiak as successor administrator.[2] Over four years later, on October 5, 2010, Luhowiak filed a motion for extension of time to file a settlement of the estate. The motion states that "[t]he Successor Administrator would show that an equity action has been commenced against the previous Administrator, John McDougal, and that action is still pending." There are no pleadings from that separate action in the record before us. McDougal testified that the successor administrator sued him for breach of his duty as administrator of the estate. It is undisputed that Luhowiak voluntarily nonsuited that separate action. On November 3, 2011, Luhowiak requested another extension of time to settle the estate, which the trial court granted.

         On April 29, 2013, Luhowiak filed a motion requesting the trial court to grant him a judgment in the amount of $5, 523.28 against McDougal for attorney's fees charged by Luhowiak in settling the estate. The court referred the matter to the Clerk & Master, who, after a hearing, found that McDougal breached his fiduciary duty as administrator. On October 3, 2014, the trial court entered an order confirming the C&M's report and entering judgment against McDougal. McDougal appealed. This Court "vacate[d] the trial court's judgment because the court failed to hold a hearing and failed to independently assess the merits of the master's report." In re Estate of Burnette, No. E2014-02522-COA-R3-CV, 2016 WL 626041, at *1 (Tenn. Ct. App., filed Feb. 16, 2016). On remand, the trial court conducted an independent review and again confirmed the C&M's report. The court entered judgment against McDougal for attorney's fees charged by Luhowiak in the amount of $5, 523.28. McDougal again filed a timely notice of appeal.


         The issue on appeal is whether the trial court erred in holding McDougal, the original administrator, liable for the attorney's fees charged by the successor administrator of the estate.


         Under Tenn. Code Ann. § 27-1-113 (Supp. 2015), our standard of review is affected by the trial court's referral of all or part of a case to a special master. "A concurrent finding of a master and chancellor is conclusive on appeal, except where it is upon an issue not proper to be referred, where it is based on an error of law or a mixed question of fact and law, or where it is not supported by any material evidence." In re Estate of Ladd, 247 S.W.3d 628, 636 (Tenn. Ct. App. 2007) (citing Coates v. Thompson, 713 S.W.2d 83, 84 (Tenn. Ct. App. 1986)). "We must affirm such a concurrent finding if there is any material evidence to support it." In re Conservatorship of Duke, No. M2015-00023-COA-R3-CV, 2015 WL 5306125, at *6 (Tenn. Ct. App. M.S., filed Sept. 3, 2015) (citing Archer v. Archer, 907 S.W.2d 412, 415 (Tenn. Ct. App. 1995); Tenn. R. App. P. 13(d)).

         If a finding of a clerk and master is not concurrent with the trial court, we review the trial court's finding of fact de novo with a presumption of correctness unless the evidence preponderates against it. Estate of Ladd, 247 S.W.3d at 637 (citing Tenn. R. App. 13(d)). The trial court's conclusions of law are also reviewed de novo, but are accorded no such presumption. In re Estate of Bennett, No. E2004-02007-COA-R3-CV, 2005 WL 2333597, at *2 (Tenn. Ct. App., filed Sept. 23, 2005) (quoting Southern Constructors, Inc. v. Loudon Cnty. Bd. of Educ., 58 S.W.3d 706, 710 (Tenn. 2001)). We review a trial court's award of attorney's fees under the abuse of discretion standard. Taylor v. Fezell, 158 S.W.3d 352, 359 (Tenn. 2005) (quoting Aaron v. Aaron, 909 S.W.2d 408, 411 (Tenn. 1995)).


         It is well established that "[a]n executor of an estate occupies a fiduciary position" and owes certain duties to the estate and the beneficiaries. Estate of Ladd, 247 ...

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