Russell v. Wachovia Bank, N.A.
| Decision Date | 24 July 2006 |
| Docket Number | No. 26190.,26190. |
| Citation | 633 S.E.2d 722 |
| Court | South Carolina Supreme Court |
| Parties | Walker Scott RUSSELL, Respondent, v. WACHOVIA BANK, N.A., as Putative Trustee of the Alleged Donald Stuart Russell Revocable Trust and as Putative Trustee of the Alleged Donald Stuart Russell Irrevocable Trust, Virginia U. Russell, Donald S. Russell, Jr., Mildred Russell Williams Nieman, John R. Russell, Thaddeus Russell Williams, Virginia Carol Williams, and Cecilia Frances Williams, Appellants. and Mildred R. Neiman, Respondent-Appellant, v. Wachovia Bank, N.A., as Personal Representative of the Estate of Donald S. Russell, Sr., Virginia C. Williams, T. Russell Williams, Cecilia F. Williams, Virginia U. Russell, Donald S. Russell, Jr., W. Scott Russell, and John R. Russell, Defendants, of which Wachovia Bank, N.A., as Personal Representative of the Estate of Donald S. Russell, Sr., Virginia C. Williams, T. Russell Williams, Cecilia F. Williams, Virginia U. Russell, Donald S. Russell, Jr., and John R. Russell are Respondents-Appellants and W. Scott Russell is Respondent. and Mildred R. Neiman, Respondent-Appellant, v. Wachovia Bank, N.A., as Personal Representative of the Estate of Donald S. Russell, Sr., Virginia C. Williams, T. Russell Williams, Cecilia F. Williams, Virginia U. Russell, Donald S. Russell, Jr., W. Scott Russell, and John R. Russell, Defendants, of which Wachovia Bank, N.A., as Personal Representative of the Estate of Donald S. Russell, Sr., Virginia C. Williams, T. Russell Williams, Cecilia F. Williams, Virginia U. Russell, Donald S. Russell, Jr., and John R. Russell are Appellants-Respondents and W. Scott Russell is Respondent. and In the Matter of the Estate of Donald S. Russell, Deceased, — Walker Scott Russell, Respondent, v. Virginia U. Russell, Donald S. Russell, Jr., Mildred Russell Williams Neiman, John R. Russell, and Wachovia Bank, N.A. as Personal Representative, Appellants. and Wachovia Bank, N.A., as Personal Representative of the Estate of Donald S. Russell, deceased, Third-Party Appellant Respondent, v. Virginia Williams, Russell Williams, Cecilia Williams, Walker Scott Russell, Jr., and Grace Johnson Russell, Third-Party Respondents, of which Virginia Williams, Russell Williams and Cecilia Williams are Third-Party Respondents-Appellants. |
Stanley T. Case and Edward G. Smith, of Butler Means Evins & Browne, of Spartanburg, for Appellant-Respondent Wachovia Bank.
G. Dewey Oxner, Jr., and Moffatt G. McDonald, of Haynsworth Sinkler Boyd, of Greenville, for Appellant-Respondent Estate of Virginia U. Russell.
R. Ray Dennis, of Dennis Shaw & Drennan, of Spartanburg, for Appellants-Respondents John R. Russell and Donald S. Russell, Jr.
Thomas E. McCutchen and Hoover C. Blanton, of McCutchen Blanton Johnson & Barnette, of Columbia, for Appellants Virginia C. Williams, T. Russell Williams, and Cecelia F. Williams.
Desa A. Ballard and Jason B. Buffkin, of Law Offices of Desa Ballard, of West Columbia; and Joseph M. McCulloch, Jr., of Law Offices of Joe McCulloch, of Columbia, for Respondent-Appellant Mildred R. Neiman.
J. Neil Robinson, of Robinson Law Office, of Charlotte; and Leo A. Dryer, Jr., of Dryer Law Offices, of Columbia, for Respondent Walker Scott Russell.
The underlying litigation began when beneficiaries of an estate challenged the validity of a will and two trusts, alleging the documents were procured by undue influence. The trial court granted summary judgment in favor of the defendants. This Court affirmed as modified. Russell v. Wachovia Bank, 353 S.C. 208, 578 S.E.2d 329 (2003). After remittitur was issued, certain defendants moved for summary judgment, seeking to enforce no-contest clauses appearing in the will and revocable trust. The trial court denied summary judgment, ruling that the no-contest clauses were unenforceable because beneficiaries had probable cause to challenge the estate plan. The court also issued two orders regarding attorney's fees and costs. After certifying this case for review pursuant to Rule 204(b), SCACR, we affirm in part and reverse in part.
Mildred Russell Neiman (Mim) and Walker Scott Russell (Scott) each filed actions to set aside the will, and revocable and irrevocable trusts of their father, Donald Stuart Russell (Testator).1 In general, the complaints alleged that Testator was unduly influenced and coerced by Mim's children (the Williams Children), and perhaps others, to design his estate plan as he did. Named defendants included the following: the Williams Children; Mim's ex-husband (Thad Williams); Wachovia Bank (Wachovia), the executor of the estate and the trustee; Testator's wife, Virginia U. Russell (Mrs. Russell), who is now deceased; and Testator's two other children, John R. Russell (Johnny) and Donald R. Russell, Jr. (Donnie).
After extensive discovery was conducted, the trial court granted summary judgment in favor of the defendants. This Court affirmed as modified, holding that the will and trusts were not procured by undue influence. Russell v. Wachovia Bank, 353 S.C. 208, 578 S.E.2d 329 (2003). As to the will contest, we found that the record was "devoid of any evidence that the Williams Children or Thad influenced the execution or any modification of the will." Id. at 219, 578 S.E.2d at 335. Similarly, as to the trust contest, we found that there was "no evidence to make out a prima facie case of undue influence . . . ." Id. at 224, 578 S.E.2d at 337.
Following remittitur, the Williams Children filed a motion for summary judgment seeking to enforce the no-contest clauses appearing in Testator's will and revocable trust. Wachovia intervened, making similar arguments. The no-contest clauses provided that beneficiaries who challenged the validity of the will and trust documents would be disinherited. Therefore, if enforced, these provisions would have the effect of disinheriting Mim and Scott for bringing the underlying actions.
Following a hearing, the trial court issued three orders that are the subject of the present appeal. In the first order, the trial court found that Scott and Mim had probable cause to believe that Testator had been unduly influenced by the Williams Children, and perhaps others, prior to his death. As a result, the court ruled that the no-contest clauses were invalid and unenforceable. Wachovia, Mrs. Russell's estate, Donnie, and Johnny appeal.
In the second order, the trial court ordered Mim to pay attorney's fees and costs incurred by Wachovia in the amount of $264,995.31, by her mother's estate in the amount of $147,110.25,2 and by her brothers, Johnny and Donnie, in the amount of $97,412.83. Mim appeals.
Finally, in the third order, the trial court denied a motion for sanctions filed against Scott and his attorneys. The court also denied the Williams Children's request for attorney's fees and costs. The Williams Children appeal.
Accordingly, the issues presented on appeal are as follows:
I. Did the trial court properly grant summary judgment in favor of Mim and Scott, finding they had probable cause to contest the validity of the estate plan?
II. Did the trial court properly order Mim to pay certain attorney's fees and costs?
III. Did the trial court properly deny the Williams Children's request for attorney's fees and costs?
Wachovia, Mrs. Russell's estate, Donnie, and Johnny contend that the trial court erred in granting summary judgment in favor of Mim and Scott, finding they had probable cause to contest the validity of the estate plan. We agree.
In general, clauses in a will designed to penalize beneficiaries for contesting a will or instituting other proceedings relating to the estate are valid and enforceable. E.g., Cox v. Fowler, 279 Ga. 501, 614 S.E.2d 59 (2005); In re Estate of Mumby, 97 Wash. App. 385, 982 P.2d 1219, 1224 (1999). Commonly referred to as "no-contest" or "in terrorem"3 clauses, such clauses may "protect estates from costly and time-consuming litigation" and "minimize the bickering over the competence and capacity of testators, and the various amounts bequeathed." In re Estate of Seymour, 93 N.M. 328, 600 P.2d 274, 278 (1979). No-contest clauses may have the desirable effect of ensuring that the details of a testator's private life are not made public. Cf. Smithsonian Instit. v. Meech, 169 U.S. 398, 402-03, 18 S.Ct. 396, 42 L.Ed. 793 (1898) ().
But courts in South Carolina and North Carolina,4 along with a majority of jurisdictions, have recognized an exception to the general rule that no-contest clauses are valid and enforceable. Under South Carolina law, a no-contest clause is unenforceable if the challenger has probable cause for instituting proceedings. S.C.Code Ann. § 62-3-905 (1986). Similarly, North Carolina law provides that a no-contest clause is unenforceable against a person who in good faith and with probable cause challenges the validity of a will. Ryan v. Wachovia Bank & Trust Co., 235 N.C. 585, 70 S.E.2d 853, 856 (1952).
In the South Carolina case of Rouse v. Branch, the Court held that beneficiaries contesting a will on the ground that the will was a forgery did not forfeit their right to inherit. 91 S.C. 111, 118, 74 S.E. 133, 135 (1912). In so holding, the Court explained:
The right of a contestant to institute judicial proceedings upon probable cause, to ascertain whether the will was ever executed by the apparent testator, is founded upon justice and morality. If a devisee should accept the fruits of the crime of forgery, under the belief, and upon probable cause, that it was a forgery he would thereby become morally a particeps criminis; and yet if he is unwilling to commit this moral crime, he is confronted with the alternative of doing so, or of taking the risk of losing all, under the...
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