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Rondowsky v. Beard

Court of Appeals of Georgia, Third Division

October 17, 2019

HARRIET H. RONDOWSKY, AS CO- TRUSTEE OF THE CHARLES C. HARMAN TRUST
v.
MARY HARMAN BEARD, AS EXECUTRIX OF THE ESTATE OF JAMES H. BEARD, III; and vice versa.

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

          Dillard, Presiding Judge.

         Harriett H. Rondowsky, as co-trustee of the Charles C. Harman Trust, appeals the trial court's grant of summary judgment in favor of Mary Harman Beard, as executrix of the estate of James H. Beard, III (Case No. A19A1165). Specifically, Rondowsky argues that the trial court erred in granting summary judgment based solely on the plain language of OCGA § 53-12-204 when the court did not (1) perform "the necessary analysis of the entire factual circumstances presented by this case," and (2) consider the "ramifications" of other litigation pending between the parties. Mary Harman Beard, as executrix of the estate of James H. Beard, III, cross- appeals the trial court's denial of a motion to disqualify counsel of record from representing the Trust (Case No. A19A1166). Specifically, Beard contends that the trial court erred in denying this motion when it (1) correctly held that Rondowsky could not act unilaterally to bring suit against the Estate, and (2) failed to order the return or reimbursement of Trust assets used to fund the improper litigation. For the reasons set forth infra, we affirm in both cases.

         Viewing the facts in the light most favorable to Rondowsky (i.e., the non-movant), [1] the record shows that Charles C. Harman appointed his son-in-law James H. Beard, III to act as, inter alia, trustee of a trust created under the terms of Harman's will-the Charles C. Harman Trust. The relevant income beneficiaries of the Trust were Harman's three daughters: Jenilu Harman, Harriett Harman Rondowsky (appellant/cross-appellee), and Mary Harman Beard (appellee/cross-appellant). After James Beard resigned as trustee, Rondowsky and her niece, Mary Harman Beard's daughter, Jenny Beard Biehunko, assumed the roles of co-trustees following election to this position by the Trust beneficiaries.

         On September 14, 2017, in her capacity as a co-trustee of the Trust, Rondowsky filed a complaint against Beard in her capacity as executrix of James Beard's estate. Rondowsky asserted that James Beard served as sole trustee of the Trust from November 1980 until March 2015, and during that time, he breached his fiduciary duties, committed conversion, and made fraudulent transfers. And as a result, Rondowsky sought imposition of a constructive trust against Beard in her capacity as executrix of the Estate.

         In response, Beard asserted that Rondowsky lacked standing to bring suit on behalf of the Trust because she had not obtained co-trustee Biehunko's consent to file the lawsuit. Beard also asserted counterclaims against Rondowsky, including an assertion that Rondowsky was using Trust assets to pay for what amounted to personal counsel-due to the alleged lack of standing-in the action against Beard. In bringing these counterclaims, Beard noted that she was "not a party to this action since she is named only in her representative capacity on behalf of the Estate" and, thus, she believed that "claims against the Trust and claims asserted in her individual capacity are not properly asserted as compulsory counterclaims in this action." Thus, she asserted her counterclaims "in an abundance of caution." And all future relevant filings by Beard were also made in her capacity as executrix of the Estate.

         Beard later filed a motion for summary judgment on May 25, 2018, asserting that the motion should be granted because-as previously raised in her answer and counterclaim-Rondowsky lacked standing to bring the action on behalf of the Trust without the consent of co-trustee Biehunko, as required by OCGA § 53-12-204 (1). That same day, Beard also filed a motion to disqualify counsel of record from its purported representation of the Trust and to require reimbursement of Trust assets used to fund the action, relying upon the same reasoning as the motion for summary judgment.

         In support of her arguments, Beard submitted an affidavit from Biehunko, who averred that after she and Rondowsky assumed the roles of trustees, they employed the services of professionals to investigate potential claims for mismanagement of the Trust by Biehunko's father, James Beard. Thereafter, Rondowsky and Biehunko participated in an unsuccessful mediation with the Estate; but the parties continued to negotiate and reached a preliminary settlement agreement. Thus, Biehunko did not consent to-and instead expressly objected to-the Trust filing suit against the Estate. Biehunko also averred that she objected to filing suit because (1) she feared the Trust would have difficulty proving its claims due to the passage of time, (2) the Estate indicated that it would file counterclaims against the Trust, and (3) she feared litigation would be complex, lengthy, and "ruinously expensive" for the Trust. As to this final point, Biehunko expressed concern that the cost to the Trust would "deprive the three income beneficiaries of income distributions for years to come," which she "believed was something to avoid since they [were] all of advanced age." Biehunko also asserted that counsel of record for the Trust in this litigation had only ever served as personal counsel to Rondowsky in the past, and Biehunko had neither consented to counsel entering an appearance on behalf of the Trust nor to Rondowsky using Trust assets to pay the legal fees.

         In response to interrogatories, Rondowsky admitted that Biehunko never consented to the Trust employing counsel of record or using Trust assets to fund the litigation. And she further admitted that Biehunko had not approved of the action against the Estate. But in a responding affidavit to Beard's motions, Rondowsky averred that Biehunko suffered from a conflict of interest-because of her mother-daughter relationship with Beard-and should have resigned as co-trustee or recused herself from any proceedings. Thus, Rondowsky argued that she had been placed in the position of having to "go it alone" to protect the Trust, which, she argued, was permitted under Georgia law.[2] More precisely, she asserted that Biehunko's conflict of interest presented the trial court with a genuine issue of material fact as to her actions in failing to consent to the action. Rondowsky also maintained that Beard lacked standing to seek redress against the Trust while acting in her capacity as executrix of the Estate, because Beard was not a beneficiary of the Trust in that capacity.

         On September 6, 2018, the trial court granted Beard's motion for summary judgment, concluding that Rondowsky was serving as a co-trustee alongside Biehunko and that Biehunko had not only declined to consent to the filing of the action but had specifically objected to it for a number of reasons. Thus, the trial court concluded that, as one of two co-trustees, Rondowsky was not authorized to file suit on behalf of the Trust over the objections of her co-trustee. The court also concluded that, based upon its grant of summary judgment to Beard, all other pending motions in the case were rendered moot, including Beard's motion to disqualify counsel. These appeals follow.

         1. Case No. A19A1165. Rondowsky argues that the trial court erred in granting summary judgment to Beard based solely on the plain language of OCGA § 53-12-204 (1). Specifically, she contends that the trial court erred in granting Beard's motion when the court did not (a) perform "the necessary analysis of the entire factual circumstances presented by this case," or (b) consider the "ramifications" of the other litigation pending between the parties. We will consider both of these arguments in turn.

         In interpreting any statute, "we necessarily begin our analysis with familiar and binding canons of construction."[3] And in considering the meaning of a statute, our charge is to "presume that the General Assembly meant what it said and said what it meant."[4] To that end, we must afford the statutory text its plain and ordinary meaning, [5] consider the text contextually, [6] read the text "in its most natural and reasonable way, as an ordinary speaker of the English language would, "[7] and seek to "avoid a construction that makes some language mere surplusage."[8] Thus, when the language of a statute is plain and susceptible of only one natural and reasonable construction, "courts must construe the statute accordingly."[9]

         Here, we consider the plain meaning of OCGA § 53-12-204 (1), which provides that when "[a] power [is] vested in two or more trustees," the authority of those co-trustees to act on behalf of the trust "shall only be exercised by their unanimous action; provided, however, that a cotrustee may delegate to one or more other cotrustees the performance of ministerial acts[.]" The only exceptions to this rule are (1) if a vacancy arises in the office of a co-trustee, in which case "the remaining cotrustee or cotrustees may act unless or until the vacancy is filled;"[10] and (2) if a co-trustee is unable to act "because of inaccessibility, illness, or other temporary incapacity," in which case "the remaining cotrustee or cotrustees may act as if they were the only trustees when necessary to accomplish the purposes of the trust."[11] And applying the plain language of these statutory provisions, the trial court concluded that Rondowsky lacked standing to bring suit on behalf of the Trust when it was undisputed that Biehunko, her co-trustee, had not consented to filing suit and had in fact expressly objected to doing so.

         (a) Nevertheless, Rondowsky argues that there are genuine issues of material fact as to whether her duty to protect the Trust under OCGA § 53-12-305 (a) (3) overcame the plain language of OCGA § 53-12-204. She also contends that Biehunko's alleged conflict of interest created a genuine issue of material fact as to the appropriateness of her failure to consent to the ...


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