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In re Estate of Gladstone

Supreme Court of Georgia

May 5, 2018

IN RE: ESTATE OF GLADSTONE.

          Boggs, Justice.

         This appeal stems from the Forsyth County Probate Court's finding that Emanuel Gladstone breached his fiduciary duty as conservator for his incapacitated wife, Jacqueline Gladstone. The court entered a judgment against Gladstone and his surety, Ohio Casualty Insurance Company, for $167, 000 "on the settlement of accounts and as damages" and $150, 000 in punitive damages. The Court of Appeals affirmed the probate court's judgment. In re Estate of Gladstone, 341 Ga.App. 72 (798 S.E.2d 660) (2017). We granted the petition for certiorari filed by Ohio Casualty, directing the parties to address two questions:[1]

(1) Did the Court of Appeals err in holding that a conservator's bond covers punitive damages even though such damages are not expressly provided for under OCGA § 29-5-40 et seq. or under the provisions of the bond itself?
2) If a conservator's bond does cover punitive damages, did the Court of Appeals err in holding that because the probate court complied with OCGA § 29-5-92 (b) (4) in imposing sanctions against the petitioner, compliance with the procedures for imposing punitive damages under OCGA § 51-12-5.1 was not required?

         We answer the first question in the affirmative, rendering the second question moot.

         For purposes of our analysis here, the record reveals that in January 2015, the probate court appointed Gladstone as conservator for his wife ("the ward"), who suffered from dementia, and set a bond at $430, 000. Ohio Casualty posted the bond. After the ward's attorney raised concerns about Gladstone's failure to provide requested documentation to support an asset management plan, and unapproved expenditures made by Gladstone, the probate court suspended him and appointed a temporary substitute conservator.

         Following a hearing, the probate court issued an order removing Gladstone from office, finding that he failed to account for $167, 576.20 of the ward's funds. The court entered a judgment against Gladstone and Ohio Casualty for $167, 000 for breach of fiduciary duty. The court concluded further that "punitive damages should be imposed against [Gladstone] and his surety in the amount of $150, 000."

         In affirming the probate court's judgment, the Court of Appeals held that the award of punitive damages was proper against Gladstone and Ohio Casualty pursuant to OCGA § 29-5-92 (b) (4) (court may "impose any other sanction or sanctions as the court deems appropriate"), and also proper under § 51-12-5.1 (punitive damages in tort action), although the probate court did not specifically reference this Code section in its order. Gladstone, supra, 341 Ga.App. at 76-78 (4). It is this holding of the Court of Appeals that we consider here.[2]

         OCGA § 29-5-40 (a) provides, "A conservator appointed by the court shall give bond with good and sufficient security." The bond "shall be in an amount equal to the estimated value of the estate if secured by a licensed commercial surety authorized to transact business in this state, " OCGA § 29-5-41 (c), and is "[p]ayable to the court for the benefit of the ward" and "conditioned upon the faithful discharge of the conservator's duty, as such is required by law." OCGA § 29-5-41 (a) (2) and (a) (3). In accordance with these statutory guidelines, the bond here obligated Gladstone as indemnitor and Ohio Casualty in the amount of $430, 000, which amount represented the value of the ward's estate. See OCGA § 29-5-42 (reduction in bond allowed if value of ward's estate decreases); see also In re Hudson, 300 Ga.App. 340, 341 (685 S.E.2d 323) (2009) (amount of bond increased with increase in value of ward's estate). The condition of the obligation was that Gladstone "well and truly demean himself" as conservator, and that he "faithfully discharge all of the duties required by law."

         The probate court found that Gladstone breached those duties and was liable to the ward in the amount of $167, 000, and it removed him from office. Gladstone and Ohio Casualty therefore were jointly liable for that amount. See OCGA § 29-5-63 ("If the court finds that the conservator is liable to the ward, the court shall enter a judgment against the conservator and any surety in the amount of such liability."); OCGA § 29-5-49 (d) ("In all cases where letters of conservatorship are revoked" the surety is liable "for all acts of the conservator in relation to the trust up until the time of the settlement with the new conservator or the ward."); OCGA § 29-5-46 ("The conservator and any surety shall be held and deemed joint and several obligors and may be subjected jointly and severally to liability in the same action.").

         With respect to the probate court's conclusion that punitive damages should be imposed against both Gladstone "and his surety, " Ohio Casualty argues that, while it is liable for Gladstone's act of misappropriating $167, 000 of the ward's funds, it is liable only for actual damages because the bond is based upon the value of the ward's estate, and there is no authority for the award of punitive damages against a surety. The successor conservator argues that the bond did not specifically exclude punitive damages, that there is no statute that limits recovery under a conservator bond to actual damages, and that OCGA § 29-5-92 (b) (4) authorizes the probate court to impose any sanctions it deems appropriate.

         In interpreting the statutory bond requirement,

we apply the fundamental rules of statutory construction that require us to construe the statute according to its terms, to give words their plain and ordinary meaning, and to avoid a construction that makes some language mere surplusage. We must also seek to effectuate the intent of the Georgia legislature. OCGA § 1-3-1 (a). In this regard, in construing language in any one part of a statute, a court should consider the entire scheme of the statute and attempt to gather the legislative intent from the statute as a whole.

(Citation and punctuation omitted.) Lyman v. Cellchem International, Inc., 300 Ga. 475, 477 (796 S.E.2d 255) (2017). As we recently explained in Lyman, in considering whether punitive damages are recoverable under the Georgia Computer Systems Protection Act ("GCSPA"), "where the legislature has indicated that punitive damages are recoverable, it has generally done so through express language to include punitive damages among the types of damages that a plaintiff may recover.[Cits.]" Id. Punitive damages are imposed solely to punish, penalize, or deter a party for wrongful conduct. See id.; see also OCGA ยง 51-12-5.1 (c) ...


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