April 9, 2014
Authored by: Luke Lantta
When fiduciary litigation involves individuals, there is sometimes the risk that a successful plaintiff will get a judgment against an individual fiduciary but will never be able to collect the monetary damages award from that individual. When a wrongful executor is also a beneficiary of an estate, making a successful beneficiary/plaintiff whole can get a little easier through the doctrine of set off.
In Georgia, under this doctrine, a legatee or owner of a distributive share in an estate may set off such share against a judgment against him unless special reason exists requiring collection of the judgment. While Georgia probate courts have broad authority to set off a money judgment against a personal representative’s share of the estate, certain findings and calculations are necessary. Thus, a probate court cannot just broadly prohibit an executor who breached his or her fiduciary duties from receiving any future distributions from an estate. In In re: Estate of George Edward Knapp, the Georgia Court of Appeals gave us guidance on what more is needed.
Scott Knapp was the former executor of his mother’s will and the nominated, but unappointed, executor of his father’s will. The Probate Court of Bibb County entered an order finding that Knapp breached his fiduciary duty, thereby damaging the other heirs to the estates. Knapp didn’t dispute the finding that he breached his fiduciary duties, but did appeal the probate court’s broad award of damages. The probate court ruled that Knapp was prohibited from receiving any further distributions from his mother’s and father’s estates. The Georgia Court of Appeals determined that this damages award – without some specific findings – was impermissible.
The probate court was apparently intending to set off the damages award against Knapp’s share of the remaining estates. The probate court found that the other heirs suffered certain “actual damages in amounts not less than” $92,540.58, in the aggregate, but that other damages remained indeterminate or contemplated yet unawarded, including punitive damages. Moreover, the probate court never appeared to actually determine the value of Knapp’s remaining share of the estates for any set off. The $92,540.58 in actual damages found by the probate court was not necessarily greater than Knapp’s remaining distributions from the estates.
If a Georgia probate court is going to apply the doctrine of set off, then it must make a specific finding of the amount of damages suffered from the breach of fiduciary duty (which includes specific calculations of awards of punitive damages and attorney’s fees, if any) and a further specific finding of the share of the estate to which the executor would otherwise be entitled.