In Re Estate of Alys Harris Lipscomb

06/21/2018

IN THE COURT OF APPEALS OF TENNESSEE

AT JACKSON

Assigned on Briefs June 1, 2017

IN RE ESTATE OF ALYS HARRIS LIPSCOMB

Appeal from the Probate Court for Shelby County

No. PR-1541 Karen D. Webster, Judge

No. W2016-00881-COA-R3-CV

The administrator of an estate appeals the trial court’s award of attorney fees to a

beneficiary in a contempt action filed by him against the beneficiary. We reverse,

holding that the trial court abused its discretion in its award of attorney fees because the

fees awarded did not inure to the benefit of the estate.

Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Probate Court

Reversed; Case Remanded

JOHN W. MCCLARTY, J., delivered the opinion of the Court, in which FRANK G.

CLEMENT, JR., P.J., M.S. and BRANDON O. GIBSON, J., joined.

Kenneth P. Jones, Memphis, Tennessee, for the appellant, Scott B. Peatross,

Administrator of the Estate of Alys Harris Lipscomb.

Robert L. J. Spence, Jr. and Kristina A. Woo, Memphis, Tennessee, for the appellee,

Carnita F. Atwater.

OPINION

I. BACKGROUND

Alys H. Lipscomb, M.D. (“Decedent”) died at the age of 98 on May 21, 2014.

Her death has resulted in years of protracted litigation concerning the administration of

her estate, valued at approximately $2.9 million. This action is one of many concerning

Carnita F. Atwater’s (“Beneficiary”) status as a beneficiary of the estate following her

long-term care of Decedent and resulting relationship with her.

Scott B. Peatross (“Administrator”), serving as the administrator of the estate, filed

the petition for contempt that is at issue in this case on October 1, 2015, alleging that

Beneficiary violated the trial court’s temporary restraining order, entered on July 3, 2014,

and then extended on August 31, 2014, against Beneficiary. The July 2014 order,

provided, as pertinent to this appeal, as follows:

[Beneficiary] is hereby ORDERED not to transfer, spend, or dispose of any

asset described in the Verified Complaint and formerly owned by

[Decedent] or any asset purchased, in whole or in part, with funds that

belonged to Decedent.

The temporary restraining order was then extended by consent through the trial of the

matter. In the petition for contempt, Administrator alleged that Beneficiary listed several

items, either owned by Decedent or paid for with Decedent’s funds, on an estate sale

website for sales held on May 9 and August 2, 2015, in violation of the court’s order. He

sought a finding of contempt, an assessment of damages, and an order directing

Beneficiary to “provide an inventory of any and all items purchased, in whole or in part,

with funds that belonged to [Decedent], which [she] sold, transferred, disposed of,

through the [website] or otherwise.”

Beneficiary denied wrongdoing, claiming that she has been in the business of

selling antiques, household furniture, and other items at community sales and flea

markets for years. She asserted that none of the items at issue were actually sold, that

some of the items were owned by her, and that other items were inadvertently or

mistakenly uploaded to the website. She attached photographs of several items at issue in

an attempt to establish her continued possession. Further, she agreed that she would

refrain from selling items that qualified as contested property without prior permission.

The case proceeded to a hearing on November 12, 2015, at which Administrator

identified the advertisements and photographs listed on the website. In turn, Beneficiary

confirmed that none of the items at issue were actually sold. Following the hearing, the

court denied the petition, finding that while Beneficiary had violated “the spirit” of the

restraining order by attempting to effect a sale, transfer, or disposition of estate property,

she had not violated the words set forth in the order because no items at issue were sold.

The court further ordered Beneficiary to provide a written full and complete inventory of

any and all items of property “purchased, in whole or in part, with funds that belonged to

[Decedent]; and including a full and complete inventory of any and all items of such

property which [Beneficiary] has sold, transferred, or disposed of, through [the sales

website] or otherwise.”

On March 18, 2016, Beneficiary filed a petition for attorney fees incurred in her

defense of the petition for contempt with an attached affidavit setting forth the time

records for services rendered, in a total amount of $8,459. Administrator objected to the

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request for attorney fees, claiming that the services rendered benefited her personally, not

the estate. The court granted the petition, in part, finding as follows:

[I]n order to better address the offensiveness of [Beneficiary’s] actions

which led to the contempt proceedings, it is fair and equitable to require the

Estate to pay half of [Beneficiary’s] attorney’s fees and for [Beneficiary] to

pay the other half. Thus, [Beneficiary] is awarded attorney’s fees paid from

the Estate in the amount of $4,229.50.

The court certified the judgment as final pursuant to Rule 54.02 of the Tennessee Rules

of Civil Procedure.1 Administrator filed a timely appeal.2

II. ISSUES

The sole and determinative issue on appeal is whether the trial court abused its

discretion in its award of attorney fees incurred by Beneficiary in her defense of the

contempt petition.

III. STANDARD OF REVIEW

“A trial court’s ruling for reimbursement of attorney’s fees out of an estate is

reviewed under an abuse of discretion standard.” In re Estate of Ledford, 419 S.W.3d

269, 277 (Tenn. Ct. App. 2013) (citing Merchants & Planters Bank v. Myers, 644 S.W.2d

683, 688 (Tenn. Ct. App. 1982)). “A court abuses its discretion when it causes an

injustice to the party challenging the decision by (1) applying an incorrect legal standard,

(2) reaching an illogical or unreasonable decision, or (3) basing its decision on a clearly

erroneous assessment of the evidence.” Lee Med., Inc. v. Beecher, 312 S.W.3d 515, 524

(Tenn. 2010) (citations omitted). Our Supreme Court provided further guidance on this

topic by stating as follows:

To avoid result-oriented decisions or seemingly irreconcilable precedents,

reviewing courts should review a lower court’s discretionary decision to

determine (1) whether the factual basis for the decision is properly

1

“When more than one claim for relief is present in an action . . . or when multiple parties are involved,

the court . . . may direct the entry of a final judgment as to one or more but fewer than all of the claims or

parties only upon an express determination that there is no just reason for delay and upon an express

direction for the entry of judgment.”

2

Administrator then filed a motion to alter or amend three days later, asking the court to remove the

language certifying the judgment as final pursuant to Rule 54.02. The court did not rule upon the motion,

presumably because it no longer held jurisdiction.

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supported by evidence in the record, (2) whether the lower court properly

identified and applied the most appropriate legal principles applicable to the

decision, and (3) whether the lower court’s decision was within the range of

acceptable alternative dispositions. When called upon to review a lower

court’s discretionary decision, the reviewing court should review the

underlying factual findings using the preponderance of the evidence

standard contained in Tenn. R. App. P. 13(d) and should review the lower

court’s legal determinations de novo without any presumption of

correctness.

Id. (citations omitted).

IV. DISCUSSION

Tennessee follows the American Rule which provides that “litigants pay their own

attorney’s fees absent a statute or an agreement providing otherwise.” State v. Brown &

Williamson Tobacco Corp., 18 S.W.3d 186, 194 (Tenn. 2000); accord Taylor v. Fezell,

158 S.W.3d 352, 359 (Tenn. 2005). “Under the American [R]ule, a party in a civil action

may recover attorney fees only if: (1) a contractual or statutory provision creates a right

to recover attorney fees; or (2) some other recognized exception to the American [R]ule

applies, allowing for recovery of such fees in a particular case.” Cracker Barrel Old

Country Store, Inc. v. Epperson, 284 S.W.3d 303, 308 (Tenn. 2009) (citing Taylor, 158

S.W.3d at 359; John Kohl & Co. v. Dearborn & Ewing, 977 S.W.2d 528, 534 (Tenn.

1998)). Our Supreme Court has held that attorney fees may be awarded to someone other

than the administrator of an estate when the services “inured to the benefit of the entire

estate as distinguished from services rendered to individuals claiming an interest in the

estate.” Pierce v. Tharp, 455 S.W.2d 145, 149 (Tenn. 1970) (citation omitted).

Administrator requests reversal of the attorney fee award, arguing that the fees did

not benefit the estate and that the court did not find otherwise in support of its award.

Beneficiary responds that her defense of the petition, inter alia, led the court to order

Administrator to prepare an inventory of personal property pursuant to Tennessee Code

Annotated section 30-2-301(a)3 and otherwise aided the court in the proper administration

of the estate. She further asserts that the fees awarded fall within the bad faith exception

to the American Rule because Administrator filed the petition without sufficient

knowledge of the claims alleged and presented no evidentiary support for the petition at

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“The personal representative, within sixty (60) days after entering on the administration of a testate or

intestate estate, shall make a complete and accurate inventory of the probate estate of the deceased, and

return the inventory to the clerk of the court exercising probate jurisdiction in the county of the estate, and

verify it by the personal representative’s oath before the clerk or before any person authorized by law to

administer oaths in such cases whether within or without the borders of the state.”

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the hearing. Administrator issues a reply brief in which he asserts that the court ordered

Beneficiary to submit an inventory, not him and that no “bad faith” exception exists in

Tennessee, a claim which she also neglected to allege in her fee petition. He alternatively

responds that the petition was not filed in bad faith as evidenced by the fact that

Beneficiary listed contested property for sale.

Our review of the record reveals that the court ordered Beneficiary to draft an

inventory in an attempt to ensure that the estate property remained in the estate until

further proceedings were held. The court further advised Beneficiary at the hearing that

all estate property would be surrendered to the control of the personal representative and

that any contested items would be ruled upon at a later date. While we agree that the

court’s ruling benefitted the estate, the record reflects that the services at issue were

rendered in defense of Beneficiary’s actions, not for the benefit of the entire estate.

Notably, the court did not find otherwise.

We also agree with Administrator that Beneficiary did not allege “bad faith” in

support of her request for attorney fees. The record does not support a finding of bad

faith when the court specifically reduced the amount requested by Beneficiary based

upon the “offensiveness” of her actions. With the above considerations in mind, we hold

that the court abused its discretion in awarding attorney fees. We reverse the court’s

award of attorney fees.

V. CONCLUSION

We reverse the decision of the trial court and remand for such further proceedings

as may be necessary. Costs of the appeal are taxed to the appellee, Carnita F. Atwater.

_________________________________

JOHN W. McCLARTY, JUDGE

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