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Keywords

plaintiffhearingtestimonyfiduciaryprobatewillfiduciary dutygood faithbreach of fiduciary duty
damageslitigationappealtrialfiduciaryprobatewillfiduciary dutygood faithbreach of fiduciary duty

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In re Estate of Potter, Not Reported in S.W. Rptr., 2017 WL 4546788

Facts

Marjorie Ross Potter died on May 7, 2008, and her will was admitted to probate on June 19, 2008, with Carey Potter appointed as executor. Over the years, multiple petitions were filed by Steven Potter regarding the administration of the estate, including requests for executor fees, distribution of personal property, and claims of breach of fiduciary duty against Carey Potter. After a hearing, the Probate Court found that Carey Potter had not breached his fiduciary duties and awarded him a fee for his services.

The parties to this appeal, Steven Potter and Carey Potter, are the sons of Marjorie Ross Potter, who died a resident of Memphis, Tennessee, on May 7, 2008. On June 19, 2008, Ms. Potter's will was admitted to probate; Carey Potter was appointed as the executor of her estate. Numerous petitions relating to the administration of the estate were filed by the parties over the course of several years.

Issue

Did Carey Potter breach his fiduciary duty as executor of Marjorie Ross Potter's estate, and was the award of executor fees justified?

Steven Potter contends that the trial court abused its discretion in failing to find that Carey Potter breached his fiduciary duty, 'ignoring the breaches of fiduciary duty' and awarding Carey Potter a fee, by not granting him damages based on Carey Potter's breach of fiduciary duty, and by concluding that the Probate Court's July 26, 2011 Order had a res judicata effect on his Petition to Distribute Property.

Rule

An executor must act in good faith and with the diligence and caution that a reasonably prudent person would exercise in managing their own affairs. A breach of fiduciary duty requires establishing a fiduciary relationship, a breach of that duty, and injury to the plaintiff.

An executor of an estate occupies a fiduciary position. 'As such, the executor must deal with the beneficiaries in utmost good faith and “exercise the same degree of diligence and caution that reasonably prudent business persons would employ in the management of their own affairs.”'

Analysis

The court analyzed the evidence presented, including testimony from both Steven and Carey Potter, and concluded that Carey Potter acted reasonably in withholding distributions until administrative expenses were settled and that he relied on legal advice throughout the process. The court found no evidence of harm resulting from Carey Potter's actions regarding tax matters or the distribution of personal property, thus supporting the conclusion that he did not breach his fiduciary duty.

The Probate Court held that it was reasonable for Carey Potter to withhold a distribution of cash to Steven Potter and that he acted in good faith in his distribution of estate funds in light of various facts: the ongoing litigation involving the estate, and the ancillary administrations taking place in Mississippi and Arkansas; his reliance on the advice of counsel in not making a distribution; his 'retain[ing] possession and control of the estate assets to insure adequate funds remained to cover the administration'; and Steven Potter's refusal to sign a receipt and waiver.

Conclusion

The court affirmed the Probate Court's decision, concluding that Carey Potter did not breach his fiduciary duty and that the award of executor fees was justified.

For the foregoing reasons the judgment of the trial court is affirmed in all respects.

Who won?

Carey Potter prevailed in the case as the court found that he did not breach his fiduciary duty and was entitled to the executor fee.

The court found that the determination that Carey Potter did not breach his fiduciary duty is fully supported by the evidence and in accordance with applicable law; the court did not abuse its discretion in so holding.

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