James M. Cagle, Esq.
Charleston, West Virginia
Attorney for the Petitioner
| Robert L. Bays, Esq.
Paul L. Hicks, Esq.
Heather Harlan, Esq.
Bowles, Rice, McDavid, Graff & Love
Parkersburg, West Virginia
Attorneys for Respondents,
Charles F. Erickson and
Lee A. Scott |
The Opinion of the Court was delivered PER CURIAM.
SYLLABUS BY THE COURT
1.
“The writ of prohibition will issue only in clear cases where the inferior
tribunal is proceeding without, or in excess of, jurisdiction.” Syl.,
State ex rel. Vineyard v.
O'Brien, 100 W. Va. 163, 130 S.E. 111 (1925).
2. “In determining whether to entertain and issue the writ of prohibition
for cases not involving an absence of jurisdiction but only where it is claimed that the lower
tribunal exceeded its legitimate powers, this Court will examine five factors: (1) whether the
party seeking the writ has no other adequate means, such as direct appeal, to obtain the
desired relief; (2) whether the petitioner will be damaged or prejudiced in a way that is not
correctable on appeal; (3) whether the lower tribunal's order is clearly erroneous as a matter
of law; (4) whether the lower tribunal's order is an oft repeated error or manifests persistent
disregard for either procedural or substantive law; and (5) whether the lower tribunal's order
raises new and important problems or issues of law of first impression. These factors are
general guidelines that serve as a useful starting point for determining whether a
discretionary writ of prohibition should issue. Although all five factors need not be satisfied,
it is clear that the third factor, the existence of clear error as a matter of law, should be given
substantial weight.” Syl. pt. 4,
State ex rel. Hoover v. Berger, 199 W. Va. 12, 483 S.E.2d 12
(1996).
Per Curiam:
In this original proceeding, the petitioner, Nicholas W. Johnson, asks this Court
to prohibit the enforcement of the December 13, 2005, order of the Circuit Court of Wood
County, West Virginia, removing him as Executor of the Estate of Ethel M. Erickson,
deceased, and as Trustee of the Ethel M. Erickson Grantor's Trust. The Circuit Court ruled
that Johnson, an attorney, should be removed from those positions because of the pendency
of a legal malpractice action filed against him concerning his representation of Ms. Erickson
on various matters during her lifetime. Johnson denies any transgressions in his
representation of Ms. Erickson and alleges that the malpractice action, filed by certain
beneficiaries of the Estate and Trust, constitutes a sham advanced to avoid paying his
fiduciary fees and, possibly, to break the Trust.
This Court has before it the petition, the response, the exhibits and the
argument of counsel. As discussed below, the December 13, 2005, order contained no
findings or conclusions nor any analysis of (1) the malpractice action, (2) the conflict of
interest claims relating thereto or (3) any additional ground for Johnson's removal. Nor was
an evidentiary hearing conducted by the Circuit Court. This Court is, therefore, of the
opinion that the Circuit Court exceeded its authority in removing Johnson as Executor and
Trustee.
Accordingly, this Court grants the relief requested by petitioner Johnson, as
moulded, and prohibits enforcement of the December 13, 2005, order. (See footnote 1) Specifically, this
Court holds that Johnson is reinstated as Executor of the decedent's Estate and as Trustee of
the Ethel M. Erickson Grantor's Trust pending the entry of a final order by the Circuit Court
following an evidentiary hearing to be conducted upon the removal issue and, if removal is
warranted, upon the appropriateness of appointing Charles F. Erickson and Lee A. Scott as
successor Executors and Trustees. If deemed necessary, the Circuit Court is authorized to
appoint an Executor and Trustee ad litem pending resolution of the malpractice action.
I.
Factual and Procedural Background
On September 21, 2001, Ethel M. Erickson of Parkersburg, West Virginia,
executed a trust agreement which amended and republished a Trust she created in December
1999. The purpose of the Trust, known as the Ethel M. Erickson Grantor's Trust, was to
provide for the management of Ms. Erickson's property during the remainder of her life and,
upon her death, to make distributions to her beneficiaries. The primary beneficiaries under
the Trust were Ms. Erickson's three adult children: Charles F. Erickson, Myrah Erickson
Scott and Donna Erickson Roberson. The Trust directed that the trust estate, following the
payment of expenses and the making of specific distributions, would be divided into equal
shares and held by the Trustee as separate trusts for Charles, Myrah and Donna's benefit.
During her lifetime, Ethel M. Erickson was the Trustee of the Trust. At her
death, petitioner Johnson, an attorney who had represented her over the years, was to become
Trustee subject to the provision that, if he failed or refused to serve, the beneficiaries could
appoint a successor. The Trust specified that the Trustee: (1) would be provided with a
financial advisor,
(See footnote 2) (2) was subject to the making of accountings of Trust property and (3) was
entitled to reasonable compensation.
Also on September 21, 2001, Ethel M. Erickson executed a Will. The Will
provided that, following the payment of expenses and the making of specific distributions,
the residue of the Estate would be added to, and become a part of, the Ethel M. Erickson
Grantor's Trust. Johnson was named Executor under the Will, and Charles F. Erickson and
Lee A. Scott, Ms. Erickson's son-in-law, were named successor Executors. The Will
provided that the Executor would serve without bond and would be entitled to reasonable
compensation.
Ms. Erickson died on May 21, 2005. The record indicates that her assets at that
time totaled approximately 16 million dollars. Her Will was admitted to probate in Wood
County in June 2005, and petitioner Johnson qualified as the Executor of her Estate. He also
became the Trustee of the Ethel M. Erickson Grantor's Trust.
(See footnote 3)
Soon after Ms. Erickson's death, Charles F. Erickson and Myrah Erickson
Scott sought to remove Johnson from his fiduciary positions.
(See footnote 4) In October 2005, Charles F.
Erickson and Myrah Erickson Scott filed a legal malpractice action against Johnson in the
Circuit Court of Wood County. The complaint alleged that Johnson breached his contractual
obligations to Ms. Erickson, and was negligent, with regard to: (1) his handling of a 1998
conveyance by her of a tract of land in Logan County, West Virginia,
(See footnote 5) and (2) his advice to
her concerning tax consequences to the beneficiaries under the Will and Trust.
(See footnote 6) The
complaint demanded damages, costs and attorney fees.
(See footnote 7)
In addition to the legal malpractice action, Charles F. Erickson and Myrah
Erickson Scott filed a petition before the County Commission of Wood County to remove
Johnson as Executor of Ms. Erickson's Estate and a declaratory judgment action in the
Circuit Court of Wood County to remove him as Trustee of the Ethel M. Erickson Grantor's
Trust. (See footnote 8) In both instances, removal was sought upon the ground that the claims of
malpractice against Johnson resulted in a conflict of interest, thereby precluding his service
as Executor and Trustee. In reply, Johnson denied any transgressions in his representation
of Ms. Erickson and asserted that the malpractice action and the conflict of interest
allegations constituted a sham advanced by Charles F. Erickson and Myrah Erickson Scott
to avoid paying his fiduciary fees and, possibly, to break the Trust.
The malpractice action, the petition to remove and the declaratory judgment
action were combined for purposes of consideration in the Circuit Court. A non-evidentiary
hearing was conducted on December 9, 2005, at the conclusion of which the Circuit Court
ruled that, because of the pending malpractice action, Johnson should immediately be
removed as Executor of the Estate and as Trustee of the Trust. Soon after, Charles F.
Erickson and Lee A. Scott became the Executors and the Trustees.
On December 13, 2005, an order was entered in the Circuit Court reflecting the
above ruling. The order, consisting of two pages, set forth no findings or conclusions. Nor
did it discuss the alleged conflict of interest relating to the malpractice action or express any
additional ground for petitioner Johnson's removal. The Circuit Court denied Johnson's
request for a stay but indicated that it would conduct an evidentiary hearing on February 13,
2006, upon his motion for reconsideration. The evidentiary hearing, however, was not held
as scheduled, and on February 16, 2006, this Court issued a rule to show cause why relief in
prohibition should not be granted. (See footnote 9)
II.
Standards of Review Concerning Prohibition
This Court has original jurisdiction in prohibition proceedings pursuant to Art.
VIII, § 3, of The Constitution of West Virginia. That jurisdiction is recognized in Rule 14
of the West Virginia Rules of Appellate Procedure and in various statutory provisions.
W. Va. Code, 51-1-3 (1923);
W. Va. Code, 53-1-2 (1933). In considering whether to grant
relief in prohibition, this Court stated in the syllabus point of
State ex rel. Vineyard v.
O'Brien, 100 W. Va. 163, 130 S.E. 111 (1925), as follows: “The writ of prohibition will
issue only in clear cases where the inferior tribunal is proceeding without, or in excess of,
jurisdiction.” Syl. pt. 1,
State ex rel. Brison v. Kaufman, 213 W. Va. 624, 584 S.E.2d 480
(2003); syl. pt. 1,
State ex rel. Laura R. v. Jackson, 213 W. Va. 364, 582 S.E.2d 811 (2003);
State ex rel. Murray v. Sanders, 208 W. Va. 258, 260, 539 S.E.2d 765, 767 (2000);
State ex
rel. Barden and Robeson Corporation v. Hill, 208 W. Va. 163, 166, 539 S.E.2d 106, 109
(2000).
Here, petitioner Johnson does not contend that the Circuit Court lacked
jurisdiction to consider his removal as Executor and Trustee. Rather, he asserts that, under
the circumstances before it, and in the absence of an evidentiary hearing, the Circuit Court
exceeded its jurisdiction in ordering his immediate removal. In that context, a more specific
standard is found in syllabus point 4 of
State ex rel. Hoover v. Berger, 199 W. Va. 12, 483
S.E.2d 12 (1996), which holds:
In determining whether to entertain and issue the writ of prohibition for
cases not involving an absence of jurisdiction but only where it is claimed that
the lower tribunal exceeded its legitimate powers, this Court will examine five
factors: (1) whether the party seeking the writ has no other adequate means,
such as direct appeal, to obtain the desired relief; (2) whether the petitioner
will be damaged or prejudiced in a way that is not correctable on appeal; (3)
whether the lower tribunal's order is clearly erroneous as a matter of law; (4)
whether the lower tribunal's order is an oft repeated error or manifests
persistent disregard for either procedural or substantive law; and (5) whether
the lower tribunal's order raises new and important problems or issues of law
of first impression. These factors are general guidelines that serve as a useful
starting point for determining whether a discretionary writ of prohibition
should issue. Although all five factors need not be satisfied, it is clear that the
third factor, the existence of clear error as a matter of law, should be given
substantial weight.
Syl. pt. 1,
State ex rel. Blake v. Hatcher, 218 W. Va 407, 624 S.E.2d 844 (2005); syl. pt. 1,
State ex rel. Cosenza v. Hill, 216 W. Va. 482, 607 S.E.2d 811 (2004); syl. pt. 2,
State ex rel.
Isferding v. Canady, 199 W. Va. 209, 483 S.E.2d 555 (1997).
III.
Discussion
Generally, the selection of an executor by a testator or the selection of a trustee
by the settlor of a trust indicates that the testator or settlor did not intend to leave that choice
for others to make. Thus, in honoring that intent, the selection of an executor or trustee
should not be set aside lightly. With regard to testators, this Court stated in
Welsh v. Welsh,
136 W. Va. 914, 928, 69 S.E.2d 34, 42 (1952): “In cases where the personal representative
is nominated by a testator, his desire that a certain person administer his estate should
control, if reasonably possible.”
See also,
In the Matter of the Estate of Moore, 292 N.C. 58,
231 S.E.2d 849 (1977) (indicating that it may be inferred that a testator who selects his or her
executor must have had “reasons for the selection”). Similarly, as noted in II Scott and
Fratcher
The Law of Trusts § 107.1. (4
th ed. Little, Brown & Co. 1987): “The court is less
ready to remove a trustee who was named by the settlor than it is to remove a trustee
appointed by the court [.]”
See also,
Scott and Ascher on Trusts § 11.10.1. (5
th ed. Aspen
Pub. 2006). However, as acknowledged in
Welsh, the selection of the fiduciary “should not
prevent the prompt removal of a personal representative who is incompetent, or who fails or
refuses to perform his clear duties.” 136 W. Va. at 928, 69 S.E.2d at 42.
Upon the latter point, syllabus point 2 of
Tramel v. Stafford, 75 W. Va. 98, 83
S.E. 299 (1914), holds: “Upon appeal from an order of the county court denying removal of
an administrator, the circuit court has jurisdiction, in a proper case, to remove for cause the
original appointee and to substitute another in his stead as personal representative.”
Likewise, syllabus point 6 of
Baltimore Bargain House v. St. Clair, 58 W. Va. 565, 52 S.E.
660 (1906), states: “Equity, by virtue of its general jurisdiction over the administration of
trusts, has power to remove trustees, for cause.” This Court finds the principles thus
expressed in
Tramel and
St. Clair, although set forth in such older cases, consistent with both
the current deference afforded the selection of the fiduciary and the fact that the fiduciary is
subject to removal in limited circumstances. Additionally, in this case, Ms. Erickson's Will
and Trust each provided for successor fiduciaries in the event of Johnson's unwillingness or
failure to serve.
In McClure v. McClure, 184 W. Va. 649, 403 S.E.2d 197 (1991), the parents
of the decedent filed an action in the Circuit Court of Nicholas County, West Virginia, to
remove the decedent's wife as personal representative of his estate. The wife allegedly killed
or conspired to kill the decedent, and the parents asserted that she, therefore, had a conflict
of interest in bringing a wrongful death action. Upon the dismissal of the complaint, the
parents appealed. Reversing the dismissal, this Court held:
[W]e conclude that upon a proper factual showing by the plaintiffs of
the defendant's involvement in her husband's death, the circuit court would be
authorized to remove her and direct the appointment of a new person to act as
the personal representative. * * * We recognize that the bare allegations
of the complaint are not sufficient to mandate the immediate removal of the
administratrix. The plaintiffs must prove the critical facts surrounding the
wife's involvement in the claimed unlawful and intentional killing.
184 W. Va. at 655, 403 S.E.2d at 203.
Here, the Circuit Court removed petitioner Johnson as fiduciary because of the
pending legal malpractice action. Specifically, the Circuit Court was concerned that, as both
a fiduciary and a defendant, Johnson would be in a position to control the flow of
information subject to discovery in the malpractice action. (See footnote 10) As indicated above, however,
the removal order of December 13, 2005, contained no findings or conclusions. Nor did it
discuss the conflict of interest issue relating to the malpractice action or express any
additional ground for Johnson's removal. Moreover, the evidentiary hearing did not take
place as scheduled. The December 13, 2005, order directed that Charles F. Erickson and Lee
A. Scott would become the Executors of the Estate and that procedures would be followed
pursuant to the provisions of the Trust to select a new Trustee. Charles F. Erickson and Lee
A. Scott subsequently became the new Trustees.
While this Court shares the Circuit Court's concern with regard to the assertion
that Johnson's position as Executor and Trustee may enable him to control the flow of
discoverable information in the malpractice action, we note that, during the non-evidentiary
hearing of December 9, 2005, the Circuit Court focused upon that issue to the exclusion of
other concerns, resulting ultimately in Charles F. Erickson and Lee A. Scott becoming the
new Executors and Trustees. Certainly, in the context of removal, it would be inappropriate
for the Circuit Court to conduct a de facto trial to determine the merits of the malpractice
claim. However, part of the equation concerning whether to remove Johnson as fiduciary
which was not considered includes such matters as: (1) the prior litigation involving Ms.
Erickson, Charles F. Erickson and petitioner Johnson as reflected in the 1994 Erickson cases,
discussed supra, (2) whether and to what extent Ms. Erickson had knowledge of Johnson's
specific conduct which gave rise to the alleged malpractice, (3) whether, during her tenure
as Trustee of the Trust, Ms. Erickson ever attempted to revoke Johnson's nomination as
Trustee, (4) the effect of the provision of the Trust that the Trustee is subject to the making
of accountings of Trust property and (5) whether the fiduciary fees charged by Johnson are
excessive. As indicated in McClure, such matters cannot be resolved upon bare allegations
alone and require an evidentiary hearing with an order containing sufficient findings and
conclusions to follow. This Court is, therefore, of the opinion that the Circuit Court
exceeded its authority in removing Johnson as Executor and Trustee. (See footnote 11)
IV.
Conclusion
Upon all of the above, this Court grants the relief requested by petitioner
Johnson, as moulded, and prohibits enforcement of the December 13, 2005, order.
Specifically, this Court holds that Johnson is reinstated as Executor of the decedent's Estate
and as Trustee of the Ethel M. Erickson Grantor's Trust pending the entry of a final order by
the Circuit Court following an evidentiary hearing to be conducted upon the removal issue
and, if removal is warranted by the evidence, upon the appropriateness of appointing Charles
F. Erickson and Lee A. Scott as successor Executors and Trustees. If deemed necessary, the
Circuit Court is authorized to appoint an Executor and Trustee
ad litem pending resolution
of the malpractice action.