Consent Order Barred Aggrieved Party’s Breach Of Fiduciary Duty And Fraud Claims Against Co-Executors
March 11, 2013
Authored by: Luke Lantta
Sometimes parties have a hard time letting go of trusts and estates litigation even after that litigation has been settled. For example, we’ve seen trustees sanctioned for failing to sign releases contemplated by settlement agreements. We also often see settlement regret where a party tries to set aside or ‘undo’ a settlement. You’re probably more likely to see post-settlement disputes where, as part of a settlement, the parties agree to undertake some other obligations rather than just ‘walking away.’ Often, in estate litigation, those other obligations involve the transfer of property.
In Haney v. Camp, the Georgia Court of Appeals considered questions involving co-executors’ claims for attorneys’ fees in connection with enforcement of a consent order. The Georgia appellate court’s opinion largely involved various state law legal standards for awarding attorney’s fees. For us, we’re more interested in the underlying estate litigation and why one party to the agreement claimed they were wronged.
Brenda Haney and Ronald Womack were co-executors of the estate of Rachel Kenerly. Carolyn Camp, the executors, and others resolved some estate litigation with a consent order that provided that Camp “dismisses her claims against all parties with prejudice” and “waives and releases any and all claims against the Estate or the Executors except in the enforcement of this Order,” and required the estate to convey certain real property to Camp.
Ten months after the consent order ending the litigation was entered, Camp filed a petition for contempt claiming that the executors breached their fiduciary duty to preserve the property conveyed to her pursuant to the consent order. In particular, Camp claimed that the executors allowed waste of the property and the removal of fixtures, reducing the property’s market value, and that the executors knew or should have known of the waste and neglect at the time the property was transferred to Camp.
The trial court that heard the case granted summary judgment to the executors. The trial court found that the consent order barred Camp’s claim because, pursuant to the consent order, Camp waived and released any and all claims against the executors and took the property “as is.” The court also found that Camp’s fraud claim against the executors failed because she “could have learned the truth of the matter” and made no effort to inspect the property to determine its value until after the consent order was entered.
So, there are at least two immediate takeaways from Haney v. Camp – one for executors and one for aggrieved beneficiaries. For executors, if you agree to transfer property as part of a settlement agreement, you might want to consider specifically stating that the receiving party takes that property “as is.” That might cut off a later claim that you committed fraud, breached some fiduciary duty owed the receiving party, or breached the settlement agreement. For aggrieved beneficiaries, you may want to negotiate against an “as is” clause or at least inspect the property you are going to receive before you agree to settle your claims in exchange for it.