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Ray v. Hadaway

Court of Appeals of Georgia, Second Division

February 22, 2018

RAY
v.
HADAWAY et al.

          MILLER, P. J., DOYLE, P. J., and REESE, J.

          Miller, Presiding Judge.

         This appeal involves a dispute over the estate of Jewell Penland ("the decedent"). Appellant Jim Ray-the decedent's son-petitioned the trial court, relevantly, for a constructive trust to be imposed on the proceeds from savings bonds that he alleged rightfully belonged to the decedent's estate, but which had been redeemed by the decedent's grandson, Sam Evans.[1] Sam and the decedent's daughter, Eloise, filed a motion for summary judgment, which the trial court granted. We conclude that genuine issues of material fact remain as to whether Sam owed a fiduciary duty to the decedent and whether he breached that fiduciary duty, resulting in damages to the decedent's estate. Accordingly, we reverse the trial court's grant of summary judgment to Sam and Eloise, and remand the case for further proceedings.

The party moving for summary judgment has the burden of showing the absence of a genuine issue of any material fact and if the trial court is presented with a choice of inferences to be drawn from the facts all inferences of fact from the proofs proffered at the hearing must be drawn against the movant and in favor of the party opposing the motion. A litigant has a right to a trial where there is the slightest doubt as to the facts. All inferences from the evidence introduced will be interpreted favorably toward making an issue of fact. Thus, to prevail on motion for summary judgment, the movant has the burden to produce evidence which conclusively eliminates all material issues in the case. A de novo standard of review applies to an appeal from a grant of summary judgment.

(Citations omitted.) Whiten v. Murray, 267 Ga.App. 417, 417-418 (599 S.E.2d 346) (2004).

         Viewed in the light most favorable to Jim as the non-movant, the record shows that the decedent died testate in 2007 and was survived by three of her four children-Jim, Eloise, and Dorothy. Although the decedent's will is not in the record, it is undisputed that, relevantly, she made specific financial bequests to family members and further provided that the residue of her estate would be distributed among Jim, Eloise, and Dorothy's son, Sam. The parties agree that the decedent excluded Dorothy as a named beneficiary in the will due to her inability to properly manage finances.

         The decedent also co-owned different sets of United States Government savings bonds with Jim, Eloise or Sam, all of whom became the sole named owners of the respective bonds after the decedent died. It is undisputed that Sam had the most bonds, followed by Eloise, and Jim had the least. Shortly after the decedent's death in 2007, Sam redeemed all the bonds he had co-owned with the decedent, worth at least $227, 000. Eloise filed a petition to admit the decedent's will to probate.[2] The decedent's will was admitted to probate, and Jim, Eloise and Dorothy became co-executors of the estate.

          In 2009, Jim and Dorothy filed the complaint in this case. Relevantly, they claimed that while the decedent was alive, she had instructed Sam to return the bonds that he co-owned with her, so that the decedent would have been the sole owner of these bonds.[3] They further argued that Sam had a fiduciary duty to comply with the decedent's instructions regarding these bonds, and that Sam agreed to do so but then refused. Jim and Dorothy requested a constructive trust in favor of Dorothy's estate, on the bond proceeds that Sam possessed.[4]

         While the litigation was pending, Dorothy died intestate, leaving Sam as her sole heir.[5] Sam was also appointed as the administrator of Dorothy's estate. The appellees-Sam and Eloise-moved for summary judgment in the trial court, arguing that Dorothy's death rendered moot Jim's claims regarding the constructive trust.

         Determining that Jim's claims were in fact moot, the trial court granted the summary judgment motion. The trial court ruled that the property in the constructive trust would have been held for Dorothy's benefit, and her death meant that title to those assets passed to Sam as her sole heir. Accordingly, the trial court found that the bond proceeds, even if considered to be property of the constructive trust, "ultimately ended up in the correct hands." This appeal followed.

         1. As his first enumeration of error, Jim argues that the trial court erred in ruling that Dorothy's death rendered moot the claims for the imposition of a constructive trust. We agree.

         "A case is moot when its resolution would amount to the determination of an abstract question not arising upon existing facts or rights." (Citation, punctuation and emphasis omitted.) Scarbrough Group v. Worley, 290 Ga. 234, 236 (719 S.E.2d 430) (2011). Therefore, mootness arises "when a determination is sought on a matter which, when rendered, cannot have any practical effect on the existing controversy." (Citation omitted.) Schoen v. Cherokee County, 242 Ga.App. 501, 502 (2) (530 S.E.2d 226) (2000).

         Although the trial court determined that any constructive trust imposed on the proceeds of Sam's bonds would have been in favor of Dorothy, the complaint is clear that Jim sought a trust in favor of the decedent's estate. The request for the imposition of the constructive trust was predicated on the argument that Sam breached a fiduciary duty to the decedent by not returning the bonds to her so that she was the sole owner. Therefore, in the event that a constructive trust were to be imposed on the proceeds of the bonds, the decedent's estate would hold the title to that trust-not Dorothy, Dorothy's estate, or Sam as Dorothy's sole heir.[6]

         Importantly, too, we cannot assume that the bond proceeds in that constructive trust would have ultimately returned to Sam through Dorothy because the property of an estate is also "liable for the payment of claims against the estate." OCGA § 53-7-40; see Graham v. Patton, 231 Ga. 391, 394 (1) (202 S.E.2d 58) (1973) ("A residuary legacy is a general legacy into which fall all the assets of the estate after the satisfaction of all other legacies and the payment of all debts of the estate and all costs of administration.") (citation omitted) (emphasis supplied). There is no telling from the record whether any portion of those proceeds would first be used to pay claims against the estate or estate expenses, before distribution to the beneficiaries. Similarly, there was no telling whether the amount of money Sam received upon cashing the bonds would have ...


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