Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Callaway v. Willard

Court of Appeals of Georgia, Third Division

June 25, 2019

CALLAWAY
v.
WILLARD.

          DILLARD, C. J., GOBEIL and HODGES, JJ.

          Dillard, Chief Judge.

         William Callaway appeals the trial court's grant of partial summary judgment to Lucinda Durham Willard ("Lucinda")[1] in her action against Callaway, individually and as trustee of the Marjorie H. Durham Irrevocable Trust (the "Durham Trust" or "Trust"), seeking a final accounting of the Trust, which designated her and her three siblings as remainder beneficiaries.[2]

         Callaway asserts that the trial court erred in finding as a matter of law that (1) he was required to distribute the trust corpus to the remainder beneficiaries immediately upon Durham's death; (2) he was required to disgorge trustee fees, attorney fees, and certain costs paid to him by the Trust after May 3, 2012; (3) he violated his duty of loyalty by making a pre-litigation settlement offer to Lucinda; (4) he lacked the authority to distribute trust assets to or for the benefit of Lawrence, without resolving Lucinda's pending motion for set-off and his motion for approval of his accounting; (5) he lacked the authority to lease trust property to a remainder beneficiary without first resolving the issues raised in the aforementioned motions; (6) he violated his duty to provide reports and accounts of the Trust without first addressing the issues presented by his motion for review and approval of accounting; and (7) the Trust did not hold title to a property known as Dowdy Farm prior to May 12, 2017. Callaway also contends that the trial court erred in striking affidavits he submitted in response to Lucinda's motion for partial summary judgment. For the reasons set forth infra, we affirm.

         Viewing the evidence in the light most favorable to Callaway (i.e., the nonmovant), [3] the record shows that on April 13, 2000, Durham created an irrevocable trust, designating herself as the sole lifetime beneficiary and Callaway as the trustee. In doing so, Durham conveyed to Callaway and his successors property referred to as Trust Track A and Trust Track B, which were described in an attachment to the trust instrument and were collectively referred to as "the Trust Estate." Durham also indicated that additional properties may be added to the Trust Estate from time to time if acceptable to the trustee. And relevant to the instant dispute, the Trust provided that upon Durham's death, all of the remaining trust property "shall be distributed to [her] four children, with properties designated as Trust Tract A being conveyed to Lawrence H. Durham in fee simple, and the properties designated as Trust Tract B being conveyed to Bryant Durham, Lee Durham, and Lucinda D. Willard in fee simple." Tract A and Tract B were comprised of real property, and for purposes of management and final distribution of the Trust Estate, the Trust required that the fair-market value of the properties in Tract A were equal to the fair-market value of the properties in Tract B. Additionally, the Trust provided that certain indebtedness must be paid before the two trust tracts were distributed to Durham's children (i.e., the remainder beneficiaries). Durham passed away on May 3, 2009, and notwithstanding these trust provisions, Callaway did not distribute the trust property to the remainder beneficiaries. Indeed, there is nothing in the record or the parties' briefs to suggest that-at least as of the 2018 order that is the subject of this appeal-he ever made such distributions.[4]

         On January 9, 2014, Lucinda filed a verified petition for a final accounting under OCGA § 53-12-243 against Callaway, individually, and in his capacity as trustee of the Durham Trust. Lucinda also sought attorney fees and costs of litigation against Callaway personally. Thereafter, the court issued an order compelling Callaway to submit a trust accounting. On May 1, 2015, Lucinda amended her petition, adding a claim for distribution of the Trust Estate and detailing specific instances in which Callaway allegedly engaged in improper or unauthorized conduct as trustee. Discovery ensued, and on April 25, 2017, Lucinda filed a motion for partial summary judgment, seeking a judgment establishing Callaway's liability for his various actions or inactions that she alleged violated his fiduciary duties and provisions of the trust instrument. But throughout her supporting brief, Lucinda contended that the exact amount of "credits" owed by Callaway to the Trust for certain claims should be "set by the finder of fact." Ultimately, following a hearing, the trial court granted Lucinda's motion for partial summary judgment, and agreed with her that the exact amount Callaway owed to the Trust must be determined by the factfinder. This appeal follows.

         1. Callaway first argues that the trial court erred in striking three affidavits that he submitted at the summary-judgment hearing. We disagree.

         At the hearing on Lucinda's motion for partial summary judgment, Callaway sought to submit affidavits executed by himself, Jimmy Sands, and Randy Waters. Specifically, Callaway's affidavit detailed the history of the bank stock owned by the Trust.[5] Sands-who is a real estate broker, auctioneer, and general appraiser-averred that, on a number of occasions, he assisted Callaway with various matters regarding the trust property. His affidavit primarily relates to appraisals of various trust properties and his assessment that the fair-market value of six of those properties had been reduced as a result of conservation easements. Waters-who is a registered forester-averred that he had been retained on a number of occasions by Durham and some of her family members to manage and periodically arrange for sales of their timber holdings. And his affidavit relates primarily to his relationships with Durham and Callaway, the process by which they decided to sell timber, and how those sales were conducted.

         Lucinda moved to strike the affidavits, arguing that they contained hearsay and were not relevant to the issues before the trial court. A discussion then ensued between the court and parties, during which the court and Lucinda repeatedly expressed concerns that, while the affidavits might be relevant to the issues submitted to the fact finder in a later proceeding, they were not relevant to the limited issues before the court in Lucinda's motion for partial summary judgment. And even Callaway agreed several times that, if the issues raised by the affidavits would not be decided at the summary-judgment phase, excluding them at that time was appropriate. Indeed, at one point, Callaway indicated that if issues regarding whether his actions as trustee were justified or prudent would not be addressed at the summary-judgment stage, "[he] [did] [not] think the affidavits properly relate[d]" to the proceedings. Ultimately, finding that the affidavits were not relevant to the instant proceedings, the trial court excluded them from consideration only with respect to Lucinda's motion for partial summary judgment. And while Callaway objected "just for the record[, ]" he provided no basis for this objection, and he did not withdraw his earlier statements regarding whether the affidavits were relevant in the context of Lucinda's motion for partial summary judgment.

         The determination of whether evidence is relevant, of course, "lies within the discretion of the trial court, whose decision will not be disturbed on appeal absent an abuse of discretion."[6] And although Georgia law favors the admission of relevant evidence, "evidence that does not bear directly or indirectly on the questions being tried should be excluded as irrelevant."[7]

         Callaway now argues, generally, that the trial court erred in excluding the affidavits summarized above because its order granting partial summary judgment "resolve[d] issues as a matter of law with respect to which the affidavits clearly and unequivocally create genuine issues of fact that must be resolved by a jury." He further contends that the trial court was required to determine which parts of the affidavits were admissible and could not strike them in their entirety without first making findings of fact and conclusions of law. But Callaway does not identify any specific portions of the trial court's ten-page order that decides an issue to which any of the affidavits were relevant. Likewise, Callaway does not specify which portions of which affidavit he believes are relevant to the issues ultimately decided by the court. Furthermore, in addition to Callaway's complete lack of specificity, we are further impeded in reviewing this claim of error by the voluminous record in this case, which includes 17 volumes comprised of several transcripts as well as a 2, 751 page record. As we have previously explained, we will not "cull the record on behalf of a party, particularly in a case such as this where the record is voluminous."[8] Thus, because Callaway has not identified which portions of the affidavits he believes were erroneously excluded and the trial court findings to which they were relevant, he fails to provide us with any specific error to review.[9]

         2. Next, Callaway asserts several claims of error related to the trial court's findings as to whether his actions or inactions in his capacity as trustee of the Durham Trust violated the terms of the Trust or his fiduciary duties. As explained infra, each of his claims of error in this regard lack merit.[10]

         The cardinal rule in construing a trust instrument is to "discern the intent of the settlor and to effectuate that intent within the language used and within what the law will permit."[11] And in the event of doubtful or ambiguous language, we adhere to the "rule of contra proferendum, construing the language against the maker of the document."[12] But in construing an express trust, such as the Durham Trust, we look first and foremost to "the language therein to effectuate the intent of the settlor[ ], [and] [w]e turn to parol evidence only if the trust instrument is ambiguous. . . ."[13]Finally, the existence or nonexistence of an ambiguity is "a question of law for the court."[14] With these guiding principles in mind, we turn now to Callaway's specific claims.

         (a) Distribution of the Trust Property. Callaway argues that the trial court erred in finding that the terms of the Trust required him to distribute the trust corpus to the remainder beneficiaries immediately after Durham died in May 2009.

         Although Callaway's characterization of his claim of error suggests otherwise, the trial court did not find that he was required to distribute trust property to Durham's children immediately after she died. Instead, the court found that Callaway was required to distribute it "within a reasonable period of time" after her death. The court then concluded that Callaway's continued failure to distribute any of the trust property to Lucinda during the nine years after the Trust terminated was unreasonable. And indeed, at a hearing on December 17, 2014, approximately five years after Durham died, Callaway admitted that he had not yet distributed the trust property to the remainder beneficiaries. Then, in a 2017 summary-judgment filing, Callaway conceded that Lucinda's claim that he still had not distributed any of the trust property to her was "essentially true."

         In relevant part, Section (4) (f) of the Durham Trust provides:

Upon the death of the Donor/Beneficiary [i.e., Durham], all of the property remaining in the hands of the Trustee shall be distributed to [her] four children, with properties designated as Trust Tract A being conveyed to Lawrence H. Durham in fee simple, and properties designated as Trust Tract B being conveyed to Bryant Durham, Lee Durham[, ] and Lucinda D. Willard in fee simple. . . ."[15]

         Suffice it to say, the plain language of Section (4) (f) of the Trust required Callaway to distribute the remaining trust property to Durham's four children upon her death, and it provided the manner in which he was to divide the property among them. Callaway does not dispute this requirement, but he contends that the Trust also required him to pay off all existing indebtedness of the Trust prior to such distribution. In making this argument Callaway relies on subsequent language in Section 4 (f) of the Trust, which provides:

Each trust tract shall be subject to an equal portion of any indebtedness owed by and/or secured by the Trust Estate, and shall be subject to any indebtedness and/or liability of Donor or Donor's Estate, including costs of administration and estate tax liabilities, which said indebtedness and/or liability shall be paid, utilizing said two trust tracts equally, by my [t]rustee prior to the final distribution to [Donor's] children. The decision of [the] [t]rustee as to the means, method[, ] and manner of said payment and distribution shall be final, binding, and absolute.[16]

         Callaway argues that requiring him to distribute the trust assets immediately following Durham's death would render his ability to pay off the relevant indebtedness impossible. But again, the trial court imposed no such requirement. Instead, while the parties dispute whether Section 4 (f) of the Trust required Callaway to pay off the Trust's indebtedness or only Durham's personal debts prior to distributing the property, the trial court found that Callaway was required to execute all of his duties under the Section within a reasonable amount of time. Thus, Callaway's argument based on the language of Section 4 (f) simply does not relate to the trial court's actual ruling.

         Callaway further contends that, under Section 3 of the trust instrument, he was entitled to a "period of not less than 36 months to equalize the utilization of assets between the two tracts" before distributing the trust assets. Setting aside that this 36-month period has long since passed, Callaway's reliance on Section 3 to support his continued failure to distribute trust assets is misplaced. In relevant part, the Trust provides:

It is hereby directed that my Trustee, in the management of this Trust and the Trust Estate, shall utilize equally the assets from Trust Tract A and Trust Tract B, to the extent that such utilization shall be consistent with both good forestry management practices and sound business management practices; provided however, that my Trustee shall have a period of not less than 36 months to equalize the utilization of assets between the two tracts; and provided however further, that my Trustee, in his sole discretion, shall be authorized and empowered to borrow funds against either trust tract for the specific purposes of maintaining equal net values between the two trust tracts.[17] .

         Unlike Section 4 (f), the foregoing section makes no mention of Callaway's duties following Durham's death, instead providing instructions for his management of the Trust and requiring him to maintain equal net values of both trust tracts. Because Callaway was required to distribute those assets upon Durham's death, Section 3 can only apply to his actions as trustee during the life of the Trust. Further, Section 3 does not set a time limit for compliance with its provisions, but instead, it provides for an unspecified time period of not less than 36-months for compliance. Such an open-ended time period, if it applied after Durham died, is inconsistent with Durham's mandate to distribute the trust property upon her death. Thus, Callaway's interpretation that Section 3 allowed him at least 36 months following Durham's death to distribute trust assets to her children is belied by the plain language of the Trust.[18]

         As previously mentioned, Callaway does not expressly object to the trial court's finding that he was required to comply with Section 4 (f) within a reasonable amount of time following Durham's death. But he argues that the issue of what constitutes a reasonable amount of time must be resolved by a jury. And he is correct that, "[g]enerally, the question of what is an unreasonable period of time is one for the jury."[19] Callaway ignores, however, that Georgia courts routinely decide that lengthy delays in performing a legal or contractual obligation much shorter than the one at issue here constitute an unreasonable delay as a matter of law.[20] Here, especially given the unambiguous language of the Trust instrument that Callaway must distribute the trust assets upon Durham's death, we conclude that Callaway's failure to do so for at least nine years is unreasonable as a matter of law. Thus, the trial court did not err in granting summary judgment to Lucinda as to her claim for the distribution of trust assets.[21]

         (b) Trustee and Attorney Fees. Callaway next argues that the trial court erred in finding that he was required, as a matter of law, to disgorge trustee fees, attorney fees, and costs paid to him from trust funds after May 3, 2012.[22]

         In its order, the trial court found that, after the Trust terminated upon Durham's death, Callaway was not authorized to continue paying himself trustee fees, attorney fees, and costs from trust assets. The court noted that, while issues of fact remained as to the exact amount "of credits due from [Callaway][, ] individually, to the Trust as a result of [his various] unauthorized actions, [the] portion of the credits due are ascertainable as a matter of law with respect to [the aforementioned] fees and costs." Additionally, the court found, as we have, that the plain and unambiguous language of the trust instrument did not provide Callaway a period of 36 months to finish administering the Trust after it terminated. The court further found that, notwithstanding Callaway's contention that he had a 36-month "wind down" period, he continued to pay himself fees and costs from trust assets even after that time period expired on May 3, 2012. But ultimately, the court excluded that 36-month period and found Callaway owed the Trust the trustee fees, attorney fees, and other costs that he received after May 3, 2012.[23]

         On appeal, Callaway correctly notes that Section 12 of the Trust provides for the amount of trustee fees and expenses that he must be paid for his services as trustee and when such payments were to be made. He then argues that because he was entitled to a period of at least 36 months to "equalize the utilization of assets between the two [trust tracts], it defies logic" for the trial court to conclude that Durham did not intend for him to be paid for his trustee and attorney services after her death. According to Callaway, no reasonable person, and especially not an attorney, would remain signatory to millions of dollars of debt without being paid for his services, and thus, the only logical interpretation of the Trust instrument is that he was entitled to be paid such fees.

         As to Callaway's reliance on the 36-month time period provided for in Section 3 of the Trust, we have already held in Division 2 (a) supra that it applies to Callaway's management of the Trust during the life of the Trust. And contrary to his repeated assertions otherwise, Section 4 (f), not Section 3, pertains to the duties he was required to perform after Durham's death. It appears that, in an abundance of caution, the trial court ordered Callaway to pay only the fees and costs he received after May 3, 2012, rather than after Durham's May 2009 death. In making that determination, the trial court properly based its decision primarily on the language of the trust instrument, rather than on what a "reasonable attorney" would have agreed to be paid.[24]

         Callaway also alleges that, between May 9, 2009, and December 17, 2014, the timber sales and negotiations he engaged in on behalf of the Trust generated more than two million dollars of Trust income, which allowed him to make significant headway toward paying off the Trust's indebtedness. But again, following Durham's death, Callaway was authorized only to pay off the relevant indebtedness and distribute the trust property within a reasonable period of time. Callaway provides no legal authority or substantive arguments to support his apparent belief that the plain language of the Trust authorized him to continue engaging in business transactions for over five years after Durham died, whether his actions benefitted the Trust or not. In sum, Callaway has not identified a legal or factual error in the trial court's finding that he was not authorized to continue collecting fees and costs of the Trust three years after Durham's death.[25]

         (c) Pre-litigation Settlement Proposal. Callaway also argues that the trial court erred in finding that he violated his duty of loyalty by making a pre-litigation settlement proposal to Lucinda, Bryant, and Lee for distribution of their respective shares of trust property in exchange for a full and complete release of him from liability as trustee.

         On January 8, 2014, over four-and-half years after Durham's death, Callaway sent a letter to Lucinda's counsel, updating him on various matters related to the status of the Trust, including its assets and indebtedness. Callaway then proposed that he convey to Lucinda, Lee, and Bryant their respective shares of trust assets subject to debts owed by the Trust. And in conclusion, Callaway stated that "[t]he conveyances and final distribution of the Trust [are] subject to the simultaneous[ ] execution of a full and complete release of myself as Trustee."

         At a hearing on December 17, 2014, Callaway was asked about the January 2014 letter, ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.