Glass v. Faircloth

• Decision Date: 10 March 2022
• Docket Number: A21A1737
• Citation: 363 Ga.App. 232,871 S.E.2d 69
• Parties: GLASS et al. v. FAIRCLOTH et al.
• Court: Georgia Court of Appeals

363 Ga.App. 232

871 S.E.2d 69

GLASS et al.

v.FAIRCLOTH et al.

A21A1737

Court of Appeals of Georgia.

March 10, 2022

Letitia A. McDonald, Robert Matthew Reeves, Thomas T. Tate, Duluth, Lohr Alexandria Beck-Kemp, Jaletta Long Smith, Peter Elliot Diaz, Atlanta, for Appellant.

Julie Adams Jacobs, William Wright Banks Jr., Christopher Michael Carr, Atlanta, Gerald Davidson Jr., Lawrenceville, Ann Wrege Ferebee, James B. Manley Jr., Jennifer Devine Odom, Jill Cox Kuhn, Atlanta, Whitney Warnke Groff, William N. Withrow Jr., Kathleen M. Campbell, Nicholas Anthony Bedo, Atlanta, for Appellee.

Barnes, Presiding Judge.

Appellants, Ashley Glass, Joshua Glass, Gregory H. Glass, individually and as trustee of the Glass Dynasty Trust (the "Trust"), and Samuel Glass (collectively the "Beneficiaries") appeal from the order of the trial court granting a motion to enforce an earlier order that had denied an interlocutory injunction to prevent the payment of attorney fees to Phillip Faircloth and Ted Saxton, the appellees and former trustees. For the reasons that follow, we vacate the trial court's judgment and remand the case for further action consistent with this opinion.

The facts pertinent to this appeal, and as set forth in Glass v. Faircloth , 354 Ga. App. 326, 326-328, 840 S.E.2d 724 (2020) (" Glass I "), demonstrate that

the Trust was established in 2005 by the late Shirley Glass shortly before the death of her husband, Sherwin Glass, who was a successful businessman. The beneficiaries of the Trust are Sherwin's sons (Joel and Greg), Greg's children (David, Joshua, and Ashley), and certain Jewish charities. The trustees were Faircloth and Sexton, who also served as officers in Sherwin's businesses, and Shirley until her death in 2009; Shirley was replaced as a trustee by Greg in 2013.

In 2008, a resolution was signed by Faircloth, Sexton, and Shirley, purporting to compensate the trustees for the first time, paying each trustee $180,000 for the year 2009 and authorizing payments of "reasonable compensation" to the trustees for the prior years.

In 2012, in light of ongoing disputes with the Beneficiaries, Faircloth and Sexton filed a petition in the Superior Court of Gwinnett County seeking various trust accountings, and the court ultimately entered a consent judgment that, in part, approved an amendment to the Trust that entitled trustees to "reasonable compensation." The order also purported to bind Greg and Joel's minor and unborn descendants. The efficacy and scope of this order and the Trust amendment is disputed by the Beneficiaries.

In 2013, Greg, Faircloth, and Sexton executed a release and indemnity agreement stating, in part, that the Trust would indemnify and hold harmless Faircloth and Sexton, absent a final judicial determination of bad faith on their part. As with the consent order, the enforceability of the release and indemnity is disputed by the Beneficiaries.

In December 2017, after further disputes over trustee fees and disbursements, the Beneficiaries sued Faircloth and Sexton[.] ... The Beneficiaries’ verified complaint sought removal of Faircloth and Sexton as trustees, damages for breach of fiduciary duty, disgorgement of trustee fees, attorney fees, appointment of a receiver, an accounting, declaratory and injunctive relief, and punitive damages. According to the complaint, as of 2017, the Trust held approximately $43 million in assets, and the trustees had paid themselves at least $2,972,500 in total compensation from 2008 to 2017.

In January 2018, the Beneficiaries filed a verified motion for an interlocutory injunction in that case, seeking immediate removal of Sexton and Faircloth as trustees and to prevent them from paying any trustee fees or attorney fees. That same day, the defendants moved to dismiss the complaint, and in October 2018, the trial court issued a summary order denying the motion to dismiss. In January 2019, the trial court entered an order denying the motion for an injunction [(the "January 2019 Order")][.] [The order also provided for the appointment of a Special Master to determine the reasonableness of the attorneys fees¹ ].

In April 2019, the Beneficiaries filed a separate petition in the Superior Court of Fulton County, seeking to modify the Trust pursuant to OCGA § 53-12-61 (c) [.] ... The same month, the superior court entered an order finding that the conditions of OCGA § 53-12-61 (c) had been met and amending the order to allow removal of any trustee by a majority of the most senior generation of Sherwin's descendant beneficiaries. Faircloth and Sexton moved to vacate the order, and following a hearing, the superior court denied the motion.

In Glass I , the Beneficiaries appealed the January 2019 Order denying the motion for an interlocutory order to enjoin the payment of Faircloth and Sexton's attorney fees and the order granting the modification of the Trust. We affirmed the January 2019 Order, finding that the beneficiaries had not shown that they would suffer irreparable harm without an interlocutory injunction, as money damages would provide an adequate remedy at law. Glass I, 354 Ga. App. at 328-329 (1), 840 S.E.2d 724. On appeal as a companion case, we also affirmed the trial court's order granting the Trust modification. Id. at 329-332 (2), 840 S.E.2d 724.

The Beneficiaries subsequently removed Faircloth and Sexton as trustees and replaced them with an institutional successor trustee. The trial court entered an order adopting the Special Master's order in its entirety and directing payment of the amount of outstanding attorney fees as determined by the Special Master out of the Trust. Faircloth and Sexton later filed a "Motion to Enforce the Court's January 22, 2019 Order Requiring Interim Advancement of [Their] Attorneys’ Fees," requesting enforcement of the January 2019 Order which, they maintained, entitled them to the continuing payment of such fees throughout the pendency of the litigation in accordance with the terms of the Trust, the signed releases, and the indemnity agreement. Faircloth and Sexton noted in their motion that the trial court's assistance was needed in securing the ongoing payment of fees, as they were no longer trustees and did not have access to the Trust funds. The trial court entered an order granting the motion and directing the Trust to advance 50 percent of the fees incurred by one of Faircloth and Sexton's law firms, with the remaining 50 percent "subject to indemnification at the conclusion of this action"; and 100 percent of the fees incurred by a second law firm (the "Enforcement Order"). The Enforcement Order provided that "[s]uch fees shall be advanced by the [Trust] within 20 days of [Faircloth and Sexton's] requests during the pendency of this litigation without being reviewed for a determination of reasonableness," as long as counsel certifies that their fees are reasonable. The Beneficiaries appeal from that order.

1. We note initially that Faircloth and Sexton have filed a motion to dismiss the appeal and assert that this Court lacks jurisdiction because the Enforcement Order is not a new interlocutory order but, rather, merely an interlocutory enforcement order directing that the January 2019 Order be enforced and as such is not directly appealable. See Jones v. Peach Trader Inc. , 302 Ga. 504, 511 (III), 807 S.E.2d 840 (2017) ("[O]rders modifying or dissolving interlocutory injunctions are appealable only on an interlocutory basis pursuant to OCGA § 5-6-34 (b)"). The Beneficiaries, however, contend that the order is a mandatory interlocutory injunction directly appealable under OGCA § 5-6-34 (a) (4).² We agree with the Beneficiaries.

"This Court has a duty to inquire into its jurisdiction to entertain each appeal." (Citation and punctuation omitted.) City of Dublin School Dist. v. MMT Holdings , 351 Ga. App. 112, 114, 830 S.E.2d 487 (2019). "[P]leadings, motions, and orders are construed according to their substance and function and not merely by nomenclature." Forest City Gun Club v. Chatham County , 280 Ga. App. 219, 220, 633 S.E.2d 623 (2006). The January 2019 order held that Faircloth and Sexton were "not enjoined" from using Trust funds to pay the accrued attorney fees and expenses accrued; it did not affirmatively require the payment of such fees at that time or in the future. Instead, the order specified that a Special Master would be appointed to review the fees and expenses for a determination of reasonableness.

The Enforcement Order, however, required the Trust to pay specified percentages of Faircloth and Sexton's attorney fees within 20 days of a new request for such fees on an ongoing basis. Thus, unlike the January 19 Order, the Enforcement Order directs the Trust to "perform [an] affirmative act [– the payment of the fees on a continuing basis]." Glynn County v. Waters , 268 Ga. 500, 501 (1), 491 S.E.2d 370 (1997) (finding that "[a]lthough it is denominated as a ‘supplemental’ order, it is the first order in the case which requires Glynn County to perform the affirmative act of placing Waters in another position. As the grant of a mandatory injunction, the order is directly appealable pursuant to OCGA § 5-6-34 (a) (4), even though...