In re Estate of Gladstone
Decision Date | 07 May 2018 |
Docket Number | S17G1472 |
Citation | 814 S.E.2d 1 |
Parties | IN RE: ESTATE OF JACQUELINE GLADSTONE. |
Court | Georgia Supreme Court |
Boris, Kyle, Burch & Medlin, John V. Burch, W. Randal Bryant, Timothy J. Burson, for appellant.
Neville & Cunat, J. Richard Neville ; Boling Rice, Margaret A. Spaulding ; Miles, Hansford & Tallant, Kevin J. Tallant ; Bryant & Oakes, Craig S. Oakes, for appellee.
Owen, Gleaton, Egan, Jones & Sweeney, M. Michael Egan, Jr., amicus curiae.
This appeal stems from the Forsyth County Probate Court’s finding that Emanuel Gladstone breached his fiduciary duty as conservator for his incapacitated wife, Jacqueline Gladstone. The court entered a judgment against Gladstone and his surety, Ohio Casualty Insurance Company, for $167,000 "on the settlement of accounts and as damages" and $150,000 in punitive damages. The Court of Appeals affirmed the probate court’s judgment. In re Estate of Gladstone, 341 Ga. App. 72, 798 S.E.2d 660 (2017). We granted the petition for certiorari filed by Ohio Casualty, directing the parties to address two questions:1
We answer the first question in the affirmative, rendering the second question moot.
For purposes of our analysis here, the record reveals that in January 2015, the probate court appointed Gladstone as conservator for his wife ("the ward"), who suffered from dementia, and set a bond at $430,000. Ohio Casualty posted the bond. After the ward’s attorney raised concerns about Gladstone’s failure to provide requested documentation to support an asset management plan, and unapproved expenditures made by Gladstone, the probate court suspended him and appointed a temporary substitute conservator.
Following a hearing, the probate court issued an order removing Gladstone from office, finding that he failed to account for $167,576.20 of the ward’s funds. The court entered a judgment against Gladstone and Ohio Casualty for $167,000 for breach of fiduciary duty. The court concluded further that "punitive damages should be imposed against [Gladstone] and his surety in the amount of $150,000."
In affirming the probate court’s judgment, the Court of Appeals held that the award of punitive damages was proper against Gladstone and Ohio Casualty pursuant to OCGA § 29-5-92 (b) (4) ( ), and also proper under OCGA § 51-12-5.1 ( ), although the probate court did not specifically reference this Code section in its order. Gladstone, supra, 341 Ga. App. at 76-78 (4), 798 S.E.2d 660. It is this holding of the Court of Appeals that we consider here.2
OCGA § 29-5-40 (a) provides, "A conservator appointed by the court shall give bond with good and sufficient security." The bond "shall be in an amount equal to the estimated value of the estate if secured by a licensed commercial surety authorized to transact business in this state," OCGA § 29-5-41 (c), and is "[p]ayable to the court for the benefit of the ward" and "[c]onditioned upon the faithful discharge of the conservator’s duty, as such is required by law[.]" OCGA § 29-5-41 (a) (2) and (a) (3). In accordance with these statutory guidelines, the bond here obligated Gladstone as indemnitor and Ohio Casualty in the amount of $430,000, which amount represented the value of the ward’s estate. See OCGA § 29-5-42 ( ); see also In re Hudson, 300 Ga. App. 340, 341, 685 S.E.2d 323 (2009) ( ). The condition of the obligation was that Gladstone "well and truly demean himself" as conservator, and that he "faithfully discharge all of the duties required by law."
The probate court found that Gladstone breached those duties and was liable to the ward in the amount of $167,000, and it removed him from office. Gladstone and Ohio Casualty therefore were jointly liable for that amount. See OCGA § 29-5-63 (); OCGA § 29-5-49 (d) ( ); OCGA § 29-5-46 ().
With respect to the probate court’s conclusion that punitive damages should be imposed against both Gladstone "and his surety," Ohio Casualty argues that, while it is liable for Gladstone’s act of misappropriating $167,000 of the ward’s funds, it is liable only for actual damages because the bond is based upon the value of the ward’s estate, and there is no authority for the award of punitive damages against a surety. The successor conservator argues that the bond did not specifically exclude punitive damages, that there is no statute that limits recovery under a conservator bond to actual damages, and that OCGA § 29-5-92 (b) (4) authorizes the probate court to impose any sanctions it deems appropriate.
(Citation and punctuation omitted.) Lyman v. Cellchem International, Inc., 300 Ga. 475, 477, 796 S.E.2d 255 (2017). As we recently explained in Lyman, in considering whether punitive damages are recoverable under the Georgia Computer Systems Protection Act ("GCSPA"), Id. Punitive damages are imposed solely to punish, penalize, or deter a party for wrongful conduct. See id. ; see also OCGA § 51-12-5.1 (c) ().
The conservatorship statutes do not explicitly provide for punitive damages against a surety, and provide only for a judgment against the surety in the amount that the conservator is liable to the ward. See OCGA § 29-5-63. The references to "damages" and "judgment" are tied to the ward’s assets: in the event of termination of a conservatorship or the resignation of the conservator, see OCGA § 29-5-80, and upon final settlement of accounts, the court shall issue a judgment "for any sums found to be due." OCGA § 29-5-81 (d). If the conservator commits or threatens to commit a breach of fiduciary duty, a ward or person on behalf of the ward shall have a cause of action to, among other things, recover "damages" or "compel the redress of a breach of fiduciary duty by payment of money or otherwise." See OCGA § 29-5-93 (a) (1), (4).
"When the ward’s assets are misapplied and can be traced into the hands of persons who have notice of the misapplication, a trust shall attach to the assets." OCGA...
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