Home Ins. Co. v. Wynn

• Decision Date: 06 November 1997
• Docket Number: Nos. A97A1050,s. A97A1050
• Citation: 229 Ga.App. 220,493 S.E.2d 622
• Parties: , 97 FCDR 4203 HOME INSURANCE COMPANY v. WYNN et al. WYNN v. WYNN et al. MONTGOMERY v. WYNN et al. WYNN et al. v. WYNN et al. to A97A1053.
• Court: Georgia Court of Appeals

Page 622

493 S.E.2d 622

229 Ga.App. 220, 97 FCDR 4203

HOME INSURANCE COMPANY v. WYNN et al.

WYNN v. WYNN et al.

MONTGOMERY v. WYNN et al.

WYNN et al. v. WYNN et al.

Nos. A97A1050 to A97A1053.

Court of Appeals of Georgia.

Nov. 6, 1997.

Certiorari Denied Feb. 27, 1998.

Greene, Buckley, Jones & McQueen, John D. Jones, Troutman Sanders, Robert L. Pennington, Atlanta, for Home Insurance Company.

Taylor, Harp & Callier, John S. Taylor, Jefferson C. Callier, Columbus, for Dannie Wynn et al.

Rhodes, Warner & Lomax, Robert R. Lomax, Columbus, for Jacqueline Wynn.

Hawkins & Parnell, H. Lane Young II, Allen L. Broughton, Atlanta, for Richard Montgomery.

JOHNSON, Judge.

Jacqueline Wynn ("Mrs.Wynn") is the surviving spouse, sole beneficiary and executrix of the estate of Rufus Wynn. At issue in these appeals is whether Mrs. Wynn, her attorney, and the tortfeasor's insurer acted properly in allocating settlement proceeds in a wrongful death action, when Mrs. Wynn simultaneously represented the decedent's children's interests and her own, competing, interests. Under the circumstances presented in these cases, the jury was authorized to find such conduct by Mrs. Wynn and her attorney was improper. The jury was not authorized, however, to find the action of the tortfeasor's insurer was improper.

Viewed in a light most favorable to the jury's verdict, the evidence shows that Rufus Wynn died when the truck he drove was struck by another truck whose driver had automobile liability insurance through Home Insurance Company. Mr. Wynn was survived by Mrs. Wynn and his four adult sons from a prior marriage. Three of the sons, Dannie, Donnie and Ronnie Wynn, are involved in this action and will collectively be referred to as "the sons."

Mrs. Wynn hired attorney Richard Montgomery, who contacted Home Insurance and advised the company of Mrs. Wynn's intent to bring an action against its insured. Negotiations between Mrs. Wynn, Montgomery and Home Insurance ensued and, three weeks after Mr. Wynn's death, the claim was settled for $650,000. An attorney for Home Insurance informed Montgomery that he needed to make an allocation between the various claims, told Montgomery what factors to consider, and stated that the allocation would have to be reasonable. The attorney for Home Insurance discussed the issue with Montgomery at length. Following these discussions, without any notice to or involvement of the sons, the settlement was divided as follows: $325,000 was allocated to wrongful death damages, $275,000 was allocated to estate damages associated with Mr. Wynn's pain and suffering, and $50,000 was allocated to Mrs. Wynn for loss of consortium. The sons had a stake only in the wrongful death claim. The sons' share of the $325,000 wrongful death damages award was immediately reduced by $150,000 to pay Montgomery's fee, and Mrs. Wynn signed a promissory note to pay the balance of his $216,000 fee. The sons were not notified of the negotiations or consulted before the terms of the settlement were agreed upon. In fact, they did not learn that the case had been settled until eight months later. Mrs. Wynn deposited the funds earmarked for the sons into an account bearing only her name.

The sons sued Mrs. Wynn, Montgomery, and Home Insurance, claiming that: (1) Mrs. Wynn breached her fiduciary duty to them in allocating the settlement proceeds; and (2) Montgomery and Home Insurance conspired with her to deprive them of their rightful share of the $650,000 settlement and even of that portion of the $325,000 which the defendants set aside for wrongful death damages, since they never received any of those proceeds. The jury agreed and returned a verdict holding the defendants jointly and severally liable in the amount of $243,750 in compensatory damages. The jury also awarded the sons punitive damages in the amounts of $40,000 against Mrs. Wynn, $100,000 against Montgomery, and $100,000 against Home Insurance, and ordered payment of attorney fees by Mrs. Wynn and Montgomery. In separate appeals, Mrs. Wynn, Montgomery, Home Insurance and the sons appeal from the judgment entered on the verdict.

Case No. A97A1051

1. Mrs. Wynn contends the trial court erred in denying her motion for directed verdict and motion for judgment n.o.v., arguing that the wrongful death statute gives her control over the wrongful death action and the right to settle a wrongful death claim without the concurrence of the children. It is true that the surviving spouse in a wrongful death action acts both as an individual and as a representative of the deceased spouse's children and that the surviving spouse may settle the claim without the children concurring. See O'Kelley v. Hosp. Auth. of Gwinnett County, 256 Ga. 373, 374, 349 S.E.2d 382 (1986); OCGA § 51-4-2(c). Indeed, the sons concede that Mrs. Wynn had the statutory right to settle the wrongful death claim without their approval. However, as they point out, the instant case involved other claims as well, namely Mrs. Wynn's loss of consortium claim and a pain and suffering claim asserted on behalf of the estate, of which Mrs. Wynn is the executrix and sole beneficiary. It is her serving simultaneously in these different, competing capacities while settling and dividing the funds which forms the basis of the sons' complaint.

In a wrongful death case, the surviving spouse acts as the children's representative and owes them the duty to act prudently in asserting, prosecuting and settling the claim and to act in the utmost good faith. See O'Kelley, supra; Mack v. Moore, 256 Ga. 138, 345 S.E.2d 338 (1986), overruled on other grounds in Brown v. Liberty Oil, etc., Corp., 261 Ga. 214, 216(2)(b), 403 S.E.2d 806 (1991); OCGA § 23-2-58. At the same time, an executrix of an estate occupies a fiduciary relationship toward parties having an interest in the estate; that relationship also requires the utmost good faith. Liner v. North, 188 Ga.App. 677, 678(2), 373 S.E.2d 846 (1988). Of course, Mrs. Wynn also has an interest in her own loss of consortium claim. Thus, in negotiating and settling the case, Mrs. Wynn represented herself on the consortium claim, the decedent's estate on the pain and suffering claim, and herself and the sons in the wrongful death claim. Under these circumstances, Mrs. Wynn would benefit most by allocating as little of the settlement proceeds to the wrongful death claim as possible.

An agent cannot place herself in a position in which her duty and interests conflict with those of her principal. Franco v. Stein Steel, etc., Co., 227 Ga. 92, 95(1), 179 S.E.2d 88 (1970). The agent is not permitted to acquire rights in the settlement antagonistic to the principal's interests. See OCGA § 23-2-59. "It is generally, if not always, humanly impossible for the same person to act fairly in two capacities and on behalf of two interests in the same transaction. Consciously or unconsciously [s]he will favor one side as against the other, where there is or may be a conflict of interest. If one of the interests involved is that of the trustee personally, selfishness is apt to lead [her] to give [her]self an advantage. If permitted to represent antagonistic interests the trustee is placed under temptation and is apt in many cases to yield to the natural prompting to give [her]self the benefit of all doubts." (Citations and punctuation omitted.) Ringer v. Lockhart, 240 Ga. 82, 84, 239 S.E.2d 349 (1977). Note that it is not necessary for the beneficiaries to show that the trustee acted in bad faith, gained an advantage, or that they were harmed. Id. The trustee must avoid being placed in such a position, and if she cannot avoid it, she may resign, may fully inform the beneficiaries of the conflict, or may request the court to appoint a guardian ad litem to protect the unprotected interests. If she fails to do any of these things, she proceeds at her own peril. Id. at 85, 239 S.E.2d 349. The wrongful death statute creates a cause of action in the children for breach of the spouse's duty as representative. See Morris v. Clark, 189 Ga.App. 228, 231(2), 375 S.E.2d 616 (1988).

Mrs. Wynn acted in several different legal capacities and allocated one-half of the settlement proceeds to claims other than the wrongful death claim; namely, claims in which she was the sole beneficiary. Thus, there was evidence to support a finding that Mrs. Wynn breached her fiduciary duty to the sons. Accordingly, it is unnecessary to consider whether she further breached her duty to the sons by depositing their funds into her own account, not notifying them of the settlement, and not dispersing the proceeds to them. The trial court did not err in refusing to grant Mrs. Wynn's motion for directed verdict or judgment n.o.v. See generally Signsation v. Harper, 218 Ga.App. 141, 142-143(2), 460 S.E.2d 854 (1995); Hill v. Rodriguez, 208 Ga.App. 108, 110(2), 429 S.E.2d 682 (1993).

2. Mrs. Wynn claims that the trial court erred in denying her motions for summary judgment and for directed verdict on the issue of punitive damages. The denial of the motion for summary judgment becomes moot when the court reviews the evidence upon the trial of the case. Talmadge v. Talmadge, 241 Ga. 609(1), 247 S.E.2d 61 (1978).

The court did not err in refusing to direct a verdict on the issue of punitive damages. "A breach of fiduciary duties is sufficient to support an award of punitive damages. Whether punitive damages should be awarded for a breach of fiduciary duties is ordinarily a question for the jury." (Citation omitted.) Daniell v. Clein, 206 Ga.App. 377, 383(3), 425 S.E.2d 344 (1992). There being evidence that Mrs. Wynn breached her fiduciary duties to the sons, the trial court properly denied her motion for a directed verdict as to punitive damages. See generally Byrne v. Reardon, 196 Ga.App. 735, 736(3), 397 S.E.2d 22 (1990).

3. Mrs. Wynn's argument that the trial court erred in denying her motion for directed verdict as to attorney fees is...