Slosberg v. Giller

• Docket Number: S21G1226
• Decision Date: 30 June 2022
• Citation: 314 Ga. 89,876 S.E.2d 228
• Parties: SLOSBERG v. GILLER et al.
• Court: Georgia Supreme Court

314 Ga. 89

876 S.E.2d 228

SLOSBERG

v.GILLER et al.

S21G1226

Supreme Court of Georgia.

Decided: June 30, 2022

Frederick Skip Sugarman, Matthew Greer Hawk, Sugarman Law, LLP, 154 Krog Street, Suite 190, Atlanta, Georgia 30307, for Appellant.

Tyler Charles Dixon, Raiford & Dixon, LLC, 1155 Hightower Trail, Suite 200, Atlanta, Georgia 30350, Leah Ward Sears, Smith, Gambrell & Russell, LLP, 1105 W. Peachtree Street, N.E., Suite 1000, Atlanta, Georgia 30309-3608, Sasha Nina Greenberg, Smith, Gambrell & Russell, LLP, 1230 Peachtree Street NE, Promenade II, Ste. 3100, Atlanta, Georgia 30309, for Appellee.

Timothy Kyle King, Hodges, McEachern & King, 2002 Commerce Drive North, Suite 300, Peachtree City, Georgia 30269, Nikola R. Djuric, Djuric Spratt P.A., 191 Peachtree St NE Ste 4400, Atlanta, Georgia 30303, for Amicus Appellant.

Warren, Justice.

Georgia law permits a settlor or testator to include in his trust instrument or will an "in terrorem clause." "In terrorem" is a Latin phrase that means "in order to frighten," and this type of clause, which is also known as a "no-contest clause," is "[a] provision designed to threaten one into action or inaction; esp[ecially], a testamentary provision that threatens to dispossess any beneficiary who challenges the terms" of the legal instrument. See In Terrorem , Black's Law Dictionary (11th ed. 2019); No-contest clause , Black's Law Dictionary (11th ed. 2019). Simply put, an in terrorem clause acts as a disinheritance device to dissuade beneficiaries of a trust or a will from challenging the terms of the instrument.

This case involves a contentious family dispute over the effect of an in terrorem clause in a trust instrument that was executed by David Slosberg ("David"), which said that if his son, Robert Slosberg ("Plaintiff"), or daughters, Suzanne Giller and Lynne Amy Seidner ("Defendants"), challenged the trust, they would forfeit any benefits they were to receive from it. After David died, Plaintiff filed a lawsuit alleging, among other things, that Defendants unduly influenced David to create the trust that contained the in terrorem clause, and at a trial in June 2019, the jury agreed. The trial court accordingly entered an order ruling that the trust instrument was void. Defendants filed a motion for judgment notwithstanding the verdict, arguing, among other things, that the in terrorem clause contained in the trust instrument precluded Plaintiff from asserting the undue-influence claim in the first place. The trial court denied the motion, but the Court of Appeals reversed, holding that the in terrorem clause barred Plaintiff's claim and resulted in his forfeiture of any benefits from the trust. See Giller v. Slosberg , 359 Ga. App. 867, 858 S.E.2d 747 (2021).

We granted Plaintiff's petition for certiorari to address whether that holding was correct. We conclude that it was not. As explained below, the Court of Appeals erred by determining that the in terrorem clause barred Plaintiff's undue-influence claim and resulted in forfeiture of the assets the trust instrument otherwise provided. We therefore reverse that part of the Court of Appeals's decision and remand the case to that court for it to remand the case to the trial court for further proceedings consistent with this opinion.

1. Background

(a) Pertinent Facts and Pretrial Proceedings

The record shows the following. In May 2013, Plaintiff filed a lawsuit against Defendants in Fulton County Superior Court, claiming, among other things, that they had unduly influenced David, who was then 88 years old, to execute certain estate planning documents.¹ In January 2014, David created an irrevocable trust that, upon his death, would distribute a "nominal bequest" of $25,000 to Plaintiff, with the remaining trust assets bequeathed to Defendants. The trust instrument included an in terrorem clause, which said, in pertinent part:

[S]hould [Plaintiff], or his legal representative, or [Defendants], or their legal representatives[,] contest or initiate legal proceedings to contest the validity of this Trust or my Last Will and Testament ..., or any provision from being carried out in accordance with its terms as I expressed (whether or not in good faith and with probable cause), then all the benefits provided herein for [Plaintiff] and/or for [Defendants] are revoked and annulled.^{[2 ]}

The trust instrument then said that any forfeited benefits would become "part of the remainder of [David's] Trust Estate" and would be distributed to the "beneficiaries of [the] residual estate other than such contesting beneficiary"—in this context, to Defendants instead of to Plaintiff.

David died in August 2014. In November 2015, Plaintiff filed a third amended complaint, asserting, among other things, that Defendants unduly influenced David to create the irrevocable trust and that the trust was therefore invalid.³ Defendants filed various counterclaims, and both parties filed motions for summary judgment.⁴ In May 2016, the trial court issued an order that, as pertinent here, granted Defendants’ motion, ruling that there was no evidence of undue influence; declared that the trust was therefore valid; and concluded that under the in terrorem clause, Plaintiff had forfeited any benefits from the trust. The parties appealed, and the Court of Appeals—without any mention of the in terrorem clause—reversed the grant of summary judgment because the trial court had improperly "discredited" and "limited the scope of [Plaintiff's] evidence" of undue influence. Slosberg v. Giller , 341 Ga. App. 581, 582-583, 801 S.E.2d 332 (2017).

The case then moved forward in the trial court. In March 2019, Defendants filed a motion for judgment on the pleadings, asserting, among other things, that under the Court of Appeals's whole-court decision in Duncan v. Rawls , 345 Ga. App. 345, 812 S.E.2d 647 (2018), the in terrorem clause contained in David's trust instrument barred Plaintiff from raising an undue-influence claim in the first place.

In April 2019, the trial court denied Defendants’ motion, ruling that the in terrorem clause did not bar Plaintiff's undue-influence claim. Agreeing with Plaintiff's assertion that Duncan was distinguishable from this case, the trial court concluded that the Court of Appeals in Duncan "declined to adopt" a good-faith or probable-cause exception to the enforcement of an in terrorem clause, without addressing whether the beneficiaries’ challenge in that case resulted in a forfeiture of their distributions from the trust, "as opposed to precluding them from asserting an undue influence claim."

(b) The Trial and Motion for Judgment Notwithstanding the Verdict

The case was tried from June 3 to 20, 2019. At the close of the evidence, Defendants moved for a directed verdict, again arguing, among other things, that the in terrorem clause contained in David's trust instrument barred Plaintiff's undue-influence claim. The trial court denied the motion. At the end of the trial, the jury found that Defendants had unduly influenced David to create the trust.

In August 2019, the trial court entered a final judgment, ruling, in pertinent part, that the trust instrument was void. The court imposed a constructive trust, granting Plaintiff one-third of the amount in David's trust account, which contained about $1,449,000 at the time of trial. The trial court also concluded that Plaintiff was entitled to pre- and post-judgment interest.

Defendants filed a motion for judgment notwithstanding the verdict, again claiming that under Duncan , the in terrorem clause barred Plaintiff's undue-influence claim in the first place. After a hearing, the trial court denied the motion in January 2020.

(c) The Court of Appeals's Decision

Defendants appealed, contending that the in terrorem clause barred Plaintiff's undue-influence claim and resulted in his forfeiture of trust benefits.⁵ The Court of Appeals agreed, reversed the trial court's judgment, and remanded the case. See Giller , 359 Ga. App. at 867, 858 S.E.2d 747.

The Court of Appeals first noted that Defendants did not challenge the jury's finding of undue influence. It nonetheless determined that, despite Defendants’ "undisputed role in unduly influencing their father to secure the trust containing the in terrorem clause," the court was "constrained to conclude that [Plaintiff's] ‘initiation of legal proceedings triggered the [trust's] in terrorem clause.’ " Id. at 871, 858 S.E.2d 747 (quoting Norman v. Gober , 292 Ga. 351, 354, 737 S.E.2d 309 (2013) ). The Court of Appeals determined that although Plaintiff attempted to distinguish Duncan , that case was "directly on point" and led to the "inescapable conclusion" that the in terrorem clause in this case "bar[red] any claim attacking the trust, including a claim that the trust was executed as the result of undue influence." Giller , 359 Ga. App. at 871, 858 S.E.2d 747.

In so doing, the Court of Appeals repeated Duncan ’s conclusions that in terrorem clauses " ‘are allowed under Georgia law with only one codified limitation, that being [ OCGA § 53-12-22 (b) ]’ "; that there is no statutory good-faith or probable-cause exception to the enforcement of in terrorem clauses in Georgia; and that, because it is the legislature's role to determine public policy, the court would not judicially create such an exception. See Giller , 359 Ga. App. at 871, 858 S.E.2d 747 (quoting Duncan , 345 Ga. App. at 348, 812 S.E.2d 647 ). Construing the issue of undue influence as Plaintiff seeking a "public policy" exception to the enforcement of an in terrorem clause, the court stated that "it is poor public policy to permit individuals exerting undue influence over the creation of trusts to immunize their actions by including in terrorem clauses in the trusts," but reiterated that it is the role of the legislature, not the courts, to " ‘decide public policy, and to implement that policy by enacting laws.’ " Id. at 872, 858 S.E.2d 747 (quoting Duncan , 345 Ga. App. at 350, 812 S.E.2d 647 ).

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