Master Recommends Award of Plaintiff’s Partial Attorneys’ Fees in Estate Case
Delaware Fiduciary Litigation Blog
Carol P. Wallace v. Diane Schrock, C.A. No. 13002-MZ (May 30, 2018)
Master Zurn recently issued an opinion in a case where a beneficiary of an estate brought an action against the executor of the estate. Carol P. Wallace (“Plaintiff”) alleged that Diane Schrock (“Defendant”) did not perform the tasks required of her by the will and also that she misappropriated assets of the estate.
Defendant, a friend of Decedent Mary Emily Miller, who died on April 20, 2015, was appointed executor of her estate on June 4th of that year. The will charged Defendant with numerous duties, such as holding a lottery among other beneficiaries for a timeshare in the Outer Banks, selling a real property in Frederica, Delaware, selling a separate timeshare in Ocean Pines, Maryland, making donations to a variety of foundations and public media stations, and distributing all remaining assets among Decedent’s cousins. On December 23, 2016, Plaintiff filed suit, alleging that the lottery was never conducted (and that the timeshare was used by the Defendant herself), the contents of the Decedent’s safe deposit box were unaccounted for, Defendant was allowing her son to live at the Frederica property, estate assets were misappropriated, and Defendant refused to communicate with any beneficiaries.
Defendant dragged her feet, but did send a letter to Plaintiff the day before the answer was due promising to produce certain information within one week. However, no further communication occurred, information was not produced, and the Complaint remained unanswered. On March 28, 2017, Plaintiff moved for a default judgment, which prodded Defendant’s son to agree to a stipulation that would have him leave the Frederica property and, in return, the claim against him would be dismissed.
On July 18, 2017, Defendant retained counsel. And on September 8, 2017, Plaintiff filed a motion to compel discovery responses. On October 5, 2017, a day before a hearing was to be conducted on a motion for default judgment, another stipulation was reached. Defendant agreed to be removed as executor of the estate, turn over all documents relating to the estate, respond to discovery requests, and answer the Complaint. A third stipulation was reached requiring Defendant to turn over all estate assets and provide a full accounting.
In her answer, Defendant admitted that she used the Outer Banks timeshare, allowed her son to live in the Frederica property rent-free, and used Decedent’s car “for a period of time” before selling it and depositing the sale proceeds into the estate. Subsequently, Defendant’s counsel moved to withdraw because their client was not communicating with them. Plaintiff eventually found that the estate was plundered and produced a spreadsheet which showed that the Defendant had engaged in $117,895.49 of self-serving transactions. In addition, an escrow account held by Defendant’s counsel containing $100,000 was not turned over because Defendant alleged it was her personal money.
After months of inaction, Defendant wrote a letter to Plaintiff saying, “I have been unable to find a lawyer who will work with me. Here are the papers. … There is $100,000 @ [former counsel’s] office intended for the estate.”
Master Zurn concluded that the $100,000 and any remaining funds should be remitted to the successor executor (stipulated to be Plaintiff) for distribution. The Master also ruled that all attorney’s fees recorded after October 2, 2017, (date of the second stipulation) should be paid by Defendant because she litigated in bad faith, showing “unusually deplorable behavior” by not abiding by two stipulations to which she had agreed and “unjustifiably increased the cost of litigation.” The Master recommended that the partial fee amount was to be paid by Defendant personally and not out of the estate as an expense of administration because to pay it out of the estate would unfairly sting both the Plaintiff and nonparty beneficiaries of the estate.
