Regions Bank v. Lowrey

Decision Date11 April 2014
Docket Number1120612.
Citation154 So.3d 101
PartiesREGIONS BANK, as trustee of the J.F.B. Lowrey Trust v. Sam G. LOWREY, Jr., individually and on behalf of the J.F.B. Lowrey Trust, and Shelby Jones, individually and on behalf of the J.F.B. Lowrey Trust.
CourtAlabama Supreme Court

Edward A. Dean and Duane A. Graham of Armbrecht Jackson LLP, Mobile, for appellant.

James H. McLemore of Capell & Howard, P.C., Montgomery, for Alatrust, Inc.

Opinion

PARKER, Justice.

Regions Bank (Regions), as sole trustee of the J.F.B. Lowrey Trust (“the Lowrey Trust”), appeals the order of the Monroe Circuit Court (“the trial court) awarding Regions $312,257.36 from the Lowrey Trust as reimbursement for attorney fees and expenses Regions incurred as trustee during the successful defense of an action brought against Regions by two of the beneficiaries of the Lowrey Trust—Sam G. Lowrey, Jr., and Shelby Jones (“the beneficiaries”).1

Facts and Procedural History

This is the second time this matter has come before this Court. In Regions Bank v. Lowrey, 101 So.3d 210 (Ala.2012), we set forth the relevant facts and procedural history concerning the underlying action:

“On December 11, 2007, the beneficiaries sued Regions, alleging breach of fiduciary duty. The beneficiaries claimed that Regions failed to protect and preserve the assets of the Lowrey Trust, which consisted primarily of approximately 20,000 acres of timberland located in Monroe and Conecuh Counties and which have been the subject of much intra-family litigation as the trial judge set out in its order and judgment as follows:
“ ‘II. Prior Litigation and Court Order History
“ ‘There has been considerable intra-family litigation over the years pertaining to the Lowrey Trust, and this [c]ourt has issued several orders that have a direct bearing on the issues in this case. The first pertinent order was the Consent Decree (the “1990 Order”) dated July 6, 1990, entered in “H. Lowrey McNeil, et al., v. Samuel Graves Lowrey. et al., Case No. CV–88–114.... The more significant provisions of this order are as follows:
“ ‘—AmSouth Bank was appointed as co-trustee along with Sam Lowrey, Sr.
“ ‘—The two trustees were required to select an independent, neutral professional forestry consultant whose primary task was to recommend a timber management plan to the trustees.
“ ‘—The timber management plan was to “balance the interest of the successive income beneficiaries of the [Lowrey] Trust and the remainder interest.” The plan was not to endanger “the safety of the principal in order to produce a large income” or sacrifice “income for the purpose of increasing the value of the principal.”
“ ‘—Distributable income from the Lowrey Trust was to be based on the annual growth of the forest, and the timber management plan was to provide for cutting “at least 87% of the average annual growth of the forest during each five-year period, but not less than 75% of the annual growth in any single year.”
“ ‘—The timber management plan was to be periodically reviewed and updated.
“ ‘In response to this Order, Mr. Lowrey and AmSouth Bank selected Pomeroy & McGowin as the independent forestry consultant, and Pomeroy submitted a timber management plan. This plan was in effect for 10 years into 2000 and called for a thinning of mature natural pine stands rather than an aggressive clear-cutting plan. It is undisputed that the selection of Pomeroy & McGowin was appropriate. No one contends that the Pomeroy plan was inconsistent with the 1990 Order, and the [beneficiaries] stipulated during the trial that they had no complaint concerning this plan or the manner in which the Bank had implemented it.
“ ‘Further court proceedings occurred in 1993. These proceedings ultimately resulted in an Order and Judgment dated July 21, 1993 (the “1993 Order”).... This Order made AmSouth Bank the sole trustee of the Lowrey Trust and vested the Bank with additional powers and authorities beyond those specified in the Will. Included among these additional powers and authorities were the following:
“ ‘ “c. To hold and retain without liability for loss or depreciation any real or personal property ... without regard to any statutory or constitutional limitations applicable to the investment of funds and though the retention might violate principles of investment diversification, so long as the trustee shall consider the retention for the best interests of the trust.
“ ‘ “d. To sell at public or private sale ... or otherwise dispose of all or any portion of the trust in such manner and upon such terms and conditions as the trustee may approve.”
“ ‘1993 Order, paragraph 3. As acknowledged by the Bank's witnesses, this language from the 1993 Order did not require the Bank to retain the timberland; however, it authorized the Bank to either retain or sell the timberland as it thought best, without concern over specific investment rules or principles of diversification.’
“On September 16, 2004, Hurricane Ivan made landfall and moved over Monroe and Conecuh Counties, causing severe wind damage and destruction of much of the standing timber owned by the Lowrey Trust. In their complaint, the beneficiaries averred that Regions failed to discharge its duty to protect and preserve the assets of the Lowrey Trust and claimed losses amounting to approximately $13,000,000. Specifically, the beneficiaries asserted that Regions should have purchased casualty-loss insurance on the timber, should have sold most of the timberland before Hurricane Ivan in order to diversify the investments of the trust estate, should have cut the timber more rapidly, or should have pursued some combination of these tactics in order to preserve the corpus of the Lowrey Trust.
“From June 28, 2010, through July 2, 2010, the trial court conducted a 5–day bench trial, at which ore tenus evidence was received and 12 witnesses testified. On August 2, 2010, as trustee of the Lowrey Trust, Regions filed a motion to award attorney fees and costs and requested an evidentiary hearing on its motion. Regions also moved for the joinder of AlaTrust, Inc., which was named the successor trustee of the Lowrey Trust on August 3, 2010. The trial court scheduled several evidentiary hearings, but continued those dates. On March 9, 2011, without conducting an evidentiary hearing on Regions' motion, the trial court issued an order denying Regions' motion to award attorney fees and reserved ruling on an award of costs.
“The following day, on March 10, 2011, the trial court entered a detailed order in favor of Regions, rejecting the beneficiaries' claims of mismanagement of the trust assets and taxing costs against the beneficiaries.”

101 So.3d at 212–13. Regions appealed the trial court's denial of its motion for reimbursement of attorney fees, and the beneficiaries cross-appealed the trial court's judgment on their breach-of-fiduciary-duty claim.

On appeal, this Court affirmed the trial court's judgment in favor of Regions on the beneficiaries' breach-of-fiduciary-duty claim. Regions Bank, 101 So.3d at 221. However, this Court reversed the trial court's ruling on Regions' motion for reimbursement of attorney fees, stating as follows:

“On appeal ... Regions contends that the trial court erred in summarily denying its motion for attorney fees....
“In Alabama, attorney fees are to be awarded only if they are provided for by statute, contract, or special equity. Hart v. Jackson, 607 So.2d 161, 163–64 (Ala.1992). Reimbursement for expenses, including attorney fees, incurred by a trustee in defending an action is allowed pursuant to § 19–3B–709, Ala.Code 1975,[ 2 ] provided that the trustee has not committed a material breach of the trust. Additionally, §§ 19–3B–816(a)(24) and (28), Ala.Code 1975, provide that a trustee may:
“ ‘(24) prosecute or defend an action, claim, or judicial proceeding in any jurisdiction to protect trust property and the trustee in the performance of the trustee's duties and to employ counsel, expert witnesses, or other agents;
“ ‘....
(28) employ and compensate persons deemed by the trustee needful to advise or assist in the proper management and administration of the trust, including, but not limited to, agents, auditors, including public accountants, certified public accountants or internal auditors, brokers, attorneys-at-law, attorneys-in-fact, investment bankers, investment advisors, rental agents, realtors, appraisers, and tax specialists, including any related party, so long as the relationship and the fees charged are reasonable and disclosed in any reasonable manner to the current beneficiaries; and to do so without liability for any neglect, omission, misconduct, or default of the agent or representative, provided the trustee acted as a prudent person in selecting and monitoring the agent or representative. For purposes of the immediately preceding sentence, compensation charged by or paid to an affiliated business entity shall be presumed to be reasonable if the compensation is consistent with the published fee schedule maintained by the affiliated business entity in the ordinary course of business.’
“Furthermore, when a trustee defends itself against attacks concerning the management of trust assets, the trustee is entitled to recover its litigation expenses, including attorney fees, from the trust. See, e.g., Farlow v. Adams, 474 So.2d 53, 59 (Ala.1985).
“Based on the foregoing, we conclude that Regions was entitled to an award of attorney fees; therefore, the trial court erred in denying Regions' motion for attorney fees. Thus, we reverse the trial court's order denying Regions' motion for attorney fees, and we remand the cause for the trial court to hold the requested evidentiary hearing on that attorney-fee motion. See, e.g., Kiker v. Probate Court of Mobile Cnty., 67 So.3d 865 (Ala.2010), and the cases cited therein.”

101 So.3d at 220–21. This Court also instructed the trial court to determine the taxation of costs. 101 So.3d at 221.

On remand, Regions filed with the trial court a supplemental...

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