Estate v. Bakarich
| Decision Date | 12 May 2022 |
| Docket Number | 2020-IA-00339-SCT |
| Citation | 337 So.3d 1078 |
| Parties | ESTATE OF Michael N. BAKARICH, and Co-Executrices, Victoria Lynn Ray, Stephanie Bakarich Jeselnik and Alexandra Elizabeth Owens v. John Frederick BAKARICH |
| Court | Mississippi Supreme Court |
¶1. This interlocutory appeal concerns two provisions in a will related to an estate's attorney's fees. In the first, the testator directed that his Co-Executrices not be personally liable for any expenses incurred in administering the estate, including attorney's fees. In the second, the testator directed that the cost of any judicial challenge to the Co-Executrices’ actions or decisions would be borne by the beneficiary lodging the challenge, regardless of the outcome.
¶2. One of the ten beneficiaries did lodge a judicial challenge to the Co-Executrices’ actions. But the chancellor did not order that beneficiary to bear the estate's attorney's fees. Instead, the chancellor ordered the Co-Executrices to personally pay the attorney's fees incurred by the estate. Because the chancellor's decision on attorney's fees appears to contradict both provisions in the will, we granted the Co-Executrices’ petition for interlocutory appeal.
¶3. After review, we find the second provision shifting the attorney's fees from the estate to the beneficiary is unenforceable. While a testator has authority to control his own assets, he does not have authority to compel a beneficiary to pay attorney's fees. Parker v. Benoist , 160 So. 3d 198, 212 (Miss. 2015). Thus, we affirm the chancellor's order to the extent it denied the Co-Executrices’ request that the beneficiary who judicially challenged their actions have to pay the estate's attorney's fees.
¶4. That said, we find the first provision relieving the Co-Executrices of personal responsibility for attorney's fees is enforceable and consistent with Mississippi public policy. McLemore v. McLemore (In re Est. of McLemore) , 63 So. 3d 468, 485 (Miss. 2011) (citing Miss. Code Ann. § 91-7-281 (Rev. 2004)). And because nothing in the record supports the chancellor's decision to go against the will of testator and public policy by ordering the Co-Executrices personally liable for the estate's attorney's fees, we reverse and remand this part of the chancellor's order.
FACTS AND PROCEDURAL HISTORY
¶5. Michael N. Bakarich died in July 2018. His Last Will and Testament named three of his daughters as Co-Executrices of his estate. Specifically, Michael's will directed:
My [C]o-Executrices may employ and pay, in their discretion and as they deem appropriate, attorneys and accountants to assist in the administration of my Estate .... None of my daughters shall receive any fee or other compensation for serving as an Executrix of my Estate. However, I direct that each of them shall be entitled to reimbursement of travel costs and other reasonable and properly documented expenses incurred in connection with the administration of my Estate ....
¶6. In addition to his three daughters, Michael had seven other children named as beneficiaries, totaling ten in all. The Co-Executrices filed a Petition to Authorize Interim Distribution among the beneficiaries. Six of the seven beneficiaries filed formal joinders to the motion. Just one beneficiary, John, did not.
¶7. In December 2018, Michael's heirs received distribution checks from the estate. Displeased with the amounts distributed, John filed a motion for emergency relief in the Warren County Chancery Court. In his motion, John objected to the interim distribution and other decisions of the Co-Executrices—particularly, the manner in which his father's doll collection was sold and the donation of a vintage car to St. Jude Children's Research Hospital. In short, by taking these actions, he alleged his sisters had violated their fiduciary duties. Among other relief, he asked that the court remove the Co-Executrices and order the remaining siblings to return their interim distributions.
¶8. Notably, the Co-Executrices asked that John pay the estate's costs of defending against this litigation. They pointed to the following portion of Michael's Last Will and Testament:
Except for and excluding legal action in response to criminal conduct or a breach of fiduciary duty, the legal fees and costs of any judicial challenge to the actions or decisions of my [C]o-Executrices, regardless of the merit or outcome of such challenge, shall be borne by the person or persons waging such challenge and shall not be charged to my Estate. In support of this provision, an appropriate bond as determined by the Court shall be posted as a condition of any legal action or challenge brought against the [C]o-Executrices or against the Estate.
¶9. On March 6, 2020, the Warren County Chancery Court entered a judgment. The chancellor found the distribution was proper. So she did not order the siblings to return their distribution checks to the estate. The chancellor also held that the Co-Executrices did not violate their fiduciary duties and would remain the executors of the Estate. But contrary to the will's terms, the chancellor ordered that the Co-Executrices—rather than John—pay the resulting legal fees "individually and not as an expense of the estate." The Co-Executrices sought, and this Court granted, an interlocutory appeal challenging the legal fees ruling.
DISCUSSION
¶10. The only issue before this Court is who should pay the attorney's fees the Co-Executrices incurred in defending against John's motion. We review a chancellor's decision to award attorney's fees for abuse of discretion. Parker v. Benoist , 160 So. 3d 198, 211 (Miss. 2015).
I. Denial of Request that John Pay the Estate's Attorney's Fees
¶11. The Co-Executrices argue that because Michael's Last Will and Testament clearly mandates that a challenger to the actions and decisions of the Co-Executrices pay the attorney's fees, John is responsible for the fees. And John insists this portion of Michael's will is an in terrorem clause, rendering it invalid. But neither party is correct—the clause is not a forfeiture clause, but it is unenforceable regardless.
¶12. The Constitution "jealously safeguard[s] ... the absolute freedom of a testator to dispose of his own property as he chooses." Olin v. Richards (In re Est. of Blackburn) , 299 So. 3d 781, 787 (Miss. 2020) (quoting Sullivant v. Vick (In re Est. of Vick ), 557 So. 2d 760, 765 (Miss. 1989) ). And one of "the most solemn obligation[s] [of] any court [is] to see that the true intent of the testator is carried out." Id. () (quoting In re Est. of Vick , 557 So. 2d at 765 ). But this principle is not absolute—the testator's intent only controls so long as it is not "contrary to law or public policy." Cross v. O'Cavanagh , 198 Miss. 137, 21 So. 2d 473, 474 (1945).
¶13. John argues that by imposing attorney's fees upon challengers of the Co-Executrices’ decisions, the clause at hand operates as an in terrorem , or forfeiture, clause. An in terrorem clause is defined as a provision that "acts to frighten a beneficiary that any benefit they might receive will be forfeited if they contest or otherwise dispute the validity of the will ." Roosa v. Roosa (Est. of Roosa) , 328 So. 3d 117, 120 (Miss. Ct. App. 2019) (emphasis added) (citing Taylor v. Rapp , 217 Ga. 654, 124 S.E.2d 271, 272 (1962) ).
¶14. But this is not a forfeiture clause. Neither John's challenge nor the subject clause were aimed at the will's validity. Rather, John took issue with the Co-Executrices’ distribution of estate funds and personal property. And the clause simply mandates any challenger of the Co-Executrices’ actions and decisions pay the associated legal fees and costs. So the clause at issue acts as a fee-shifting provision. Fee-shifting is simply the "transfer of responsibility for paying fees, esp[ecially] attorney's fees, from the prevailing party to the losing party." Fee-shifting , Black's Law Dictionary (11th ed. 2019).
¶15. But this does not mean the Co-Executrices’ assertion that John should pay the estate's attorney's fees is correct.
¶16. This Court has been clear that, "when there is no contractual provision or statutory authority providing for attorney's fees, they may not be awarded as damages unless punitive damages are proper as well." Willard v. Paracelsus Health Care Corp. , 681 So. 2d 539, 544 (Miss. 1996) (citing Stokes v. Bd. of Dirs. of La Cav Improvement Co. , 654 So. 2d 524, 529 (Miss. 1995) ). The fee-shifting provision the Co-Executrices seek to enforce was not part of a contract between John and his sisters. It is part of Michael's will, of which John and his sisters are the beneficiaries. While Michael, as testator, had statutory authority to control "those things ‘which he ... hath, or at the time of his ... death shall have[,]’ " he had no authority "to control assets that do not belong to him or her through a will." Parker , 160 So. 3d at 212 (quoting Miss. Code Ann. § 91-5-1 (Rev. 2013)).
¶17. In addressing a similar fee-shifting provision in Parker , we explained that "[t]he Legislature has not seen fit to grant testators the authority to invoke the power of the courts to compel unsuccessful contestants to pay attorney fees incurred in defending a will contest." Id. The same reality applies to unsuccessful challengers to executor actions. While this provision in Michael's will—shifting the responsibility of attorney's fees from his estate to a would-be challenger of his Co-Executrices’ actions—may have been prescient and well-intended to protect estate assets, Michael lacked authority to dictate that a challenger to his will pay the attorney's fees associated with that challenge. Id. Thus, the clause is unenforceable.
¶18. For this reason, we must find that the chancellor did not...
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