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In re Estate of Eubanks

Court of Appeals of Mississippi

January 21, 2014

IN THE MATTER OF THE ESTATE OF DANE RICHARD EUBANKS, DECEASED: KATHY MAY HUBER, AS PARENT AND LEGAL GUARDIAN FOR AND ON BEHALF OF DAVID RANDALL EUBANKS, JR. APPELLANT/CROSS-APPELLEE
v.
CECILIA EUBANKS, INDIVIDUALLY AND AS ADMINISTRATRIX OF THE ESTATE OF DANE RICHARD EUBANKS, DECEASED APPELLEE/CROSS-APPELLANT

DATE OF JUDGMENT: 11/22/2011

JACKSON COUNTY CHANCERY COURT, HON. JAYE A. BRADLEY, TRIAL JUDGE

ATTORNEY FOR APPELLANT: TREVOR BRUCE ROCKSTAD

ATTORNEYS FOR APPELLEE: VINCENT J. CASTIGLIOLA JR., DAVID ELIAS KIHYET BETTY CAROLINE CASTIGLIOLA

BEFORE LEE, C.J., ROBERTS AND CARLTON, JJ.

CARLTON, J.

¶1. This case arises from a wrongful-death action brought in the Jackson County Chancery Court resulting from the death of sixteen-year-old Dane Eubanks. Dane died as the result of an automobile accident in 2006, and his mother, Cecilia Borries (hereinafter referred to as the Administratrix) was named administratrix of his Estate.

¶2. As a procedural matter, we first recognize that the record reflects that prior to the wrongful-death action, the Administratrix entered into a legal contract, which was approved by the chancellor, with attorney David E. Kihyat Sr. to represent Dane's Estate. Kihyat, on behalf of the Administratrix, filed a petition for probate of the Dane's Estate in February 2007, stating that Dane was survived by the Administratrix; his father, David Eubanks Sr.; his brother, Seth Eubanks; and his half-brother, Aiden Borries. The Administratrix then filed a motion to preclude Dane's biological father, David Sr., from receiving any damages recoverable for Dane's death, since David Sr. had failed to support Dane or engage in a relationship with Dane since Dane was four years old.

¶3. The chancellor ultimately ordered that David Sr. would not share in any wrongful- death proceeds. Kihyat then pursued two wrongful-death actions on behalf of the Administratrix and the Estate, which we discuss in full later in this opinion. First, Kihyat pursued a claim against the driver (tortfeasor) of the pickup truck that caused Dane's death. The driver of the pickup truck possessed $100, 000 in liability insurance with Allstate Insurance Company (Allstate), and Kihyat obtained a settlement for the policy limit of $100, 000.

¶4. After filing the first wrongful-death claim against the driver's (tortfeasor) insurance company, Allstate, the Administratrix learned that David Sr. fathered two children with Kathy May Huber — David Eubanks Jr. and Allison Eubanks. The Estate then sought joinder by Huber as the natural mother and next friend of Dane's two half-siblings, David Jr. and Allison. In September 2010, attorney Jane Perry entered an appearance in chancery court on behalf of Huber to represent the interests of David Jr. and Allison.

¶5. The chancellor approved the first wrongful-death settlement in the amount of $100, 000, and divided the proceeds among all five wrongful-death beneficiaries — the Administratrix, Seth, Aiden, and David Sr.'s two children with Huber, David Jr. and Allison. The chancellor also awarded attorneys' fees to Kihyat as provided for in his court-approved contract with the Administratrix. We acknowledge that this $100, 000 settlement, and the related attorneys' fees, are not contested in the present appeal.

¶6. Next, Kihyat, on behalf of the Administratrix, presented a separate claim to Allstate for uninsured-motorist benefits under the insurance policy of Dane's stepfather, Kenneth Borries. Allstate responded by filing a declaratory-judgment action against Dane's estate and the Administratrix in the United States District Court for the Southern District of Mississippi. Due to complexity of the issues, Kihyat associated with attorney Vincent Castigliola to defend the suit against the estate and the Administratrix. Both parties participated in a settlement conference in August 2010, resulting in Allstate agreeing to a settlement of $250, 000, subject to chancery court approval.

¶7. After a series of attempts by Kihyat and Castigliola, on behalf of the Administratrix, to exclude David Jr. and Allison from recovering in any of the $250, 000 Allstate settlement proceeds, as set forth in further detail below, the chancellor issued a judgment distributing the settlement proceeds equally between the wrongful-death beneficiaries: the Administratrix, Seth, Aiden, David Jr., and Allison. The chancellor also awarded the attorneys a fee based on forty percent of the settlement proceeds distributed to each of the beneficiaries, again including the Administratrix and the unrepresented heirs, David Jr. and Allison.

¶8. Huber, guardian and parent of minors David Jr. and Allison, now appeals the chancellor's award of attorneys' fees from the Allstate settlement proceeds aw arded to D avid Jr. and Allison, because the Administratrix and the attorneys pursued legal claims adverse to the minors and because the Administratrix and her attorneys proceeded without the informed consent of the unrepresented heirs.[1] Finding error, we reverse the judgment and remand for further proceedings consistent with this opinion.

FACTS

¶9. On February 28, 2006, sixteen-year-old Dane was killed in a single-vehicle car accident. As stated, in February 2007, the Administratrix, Dane's mother, petitioned to probate Dane's estate in chancery court, and the chancellor named her administratrix. On January 13, 2007, the Administratrix retained attorney Kihyet to pursue a wrongful-death lawsuit, arising from the death of her son, against Allstate, the insurer of the driver at fault in the accident causing Dane's death. The Administratrix entered into a contingency-fee contract with Kihyat, which provided for a forty percent fee from any recovery obtained for the Administratrix.

¶10. During the course of asserting the first wrongful-death claim against Allstate, the Administratrix and her counsel discovered the existence of David Jr. and Allison as wrongful-death beneficiaries and sought joinder by Huber, on behalf of David Jr. and Allison. Prior to this time, the Administratrix was unaware that her ex-husband and Dane's father, David Sr., had two children, David Jr. and Allison, with Huber. As a result, on December 12, 2008, Huber, the mother of David Jr. and Allison, joined the Administratrix's Petition for Probate of Estate, Appointment of Administratrix, Issuance of Letters of Administration, and Determination of Heirship, on behalf of her minor children. Kihyet subsequently negotiated a wrongful-death settlement in the amount of $100, 000 with Allstate on behalf of the driver of the truck involved in the accident.

¶11. In September 2009, the Jackson County Chancery Court approved the $100, 000 settlement with the truck driver's insurer, Allstate, and ordered that proceeds be distributed equally among Dane's adjudicated wrongful-death beneficiaries — the Administratrix; Seth (Dane's brother); Dane's two half-brothers, Aiden and David Jr.; and Dane's half-sister, Allison.

¶12. Then, the Administratrix asserted a second claim for benefits arising from Dane's death against her ex-husband Kenneth's[2] Allstate Indemnity Company commercial-vehicle insurance policy. In response, Allstate filed a complaint for a declaratory judgment in the United States District Court for the Southern District of Mississippi on December 10, 2008, alleging that Kenneth's Allstate policy at issue failed to cover Dane, the decedent, as an insured. As acknowledged, due to the complexity of the issues, the Administratrix and Kihyat then sought the assistance of Attorney Castigliola to defend both Dane's estate and the Administratrix against Allstate's complaint for the declaratory judgment and to also pursue a counterclaim against Allstate for uninsured-motorist coverage for Dane. On January 12, 2009, Kihyat and Cartigliola then filed an answer to Allstate's complaint and also asserted a counterclaim alleging that Allstate had wrongfully denied coverage, and seeking recovery of $2.9 million in damages. However, the record shows the Administratrix provided no notice to, and received no informed consent from, David Jr. and Allison in the decision to retain Castigliola to assist in the federal court proceedings.

¶13. Huber claim ed that during the first wrongful-death settlement (against the tortfeasor), "once the attorneys identified [David Jr. and Allison] as potential beneficiaries, the attorneys brought [Huber] into the litigation and never advised her that she should retain independent counsel." However, during the process of negotiating the $250, 000 Allstate insurance settlement stemming from the wrongful-death claim against Borries's insurer, the record shows that the Administratrix changed positions, and then attempted to exclude David Jr. and Allison from receiving any proceeds.

¶14. On August 17, 2010, the district court ordered a settlement conference between Allstate and the Administratrix, at which the parties agreed to settle the matter for $250, 000, subject to subsequent approval by the Jackson County Chancery Court. The record shows that during the federal court settlement-conference proceedings, Castigliola and Kihyat attempted to exclude David Jr. and Allison as heirs of Dane's estate and reduce their share of the proceeds. Specifically, the Administratrix and her attorneys asserted that the present settlement pertained only to claims pursued by Dane's estate, rather than a settlement of wrongful-death claims. The Administratrix and her counsel asserted that David Jr. and Allison were adjudicated wrongful-death beneficiaries and that as wrongful-death beneficiaries, they would inherit on equal footing. However, as heirs, under the applicable laws of descent and distribution, whole-blood heirs would inherit to the exclusion of David Jr. and Allison as half-bloods. The Administratrix and her counsel asserted that the settlement belonged to the estate and that as half-siblings of Dane, instead of whole-blood heirs, statutory law of descent and distribution excluded them from receiving any proceeds from Dane's estate, and hence from the settlement. See Miss. Code Ann. § 91-1-5[3] (Rev. 2013) (whole-blood heirs shall inherit to the exclusion of half-blood heirs of the same degree); Miss. Code Ann. § 11-7-13 (Supp. 2013) (no such distinction is made for purposes of distribution of wrongful-death proceeds). A June 1, 2010 federal court order reflects efforts by the Administratrix to exclude David Jr. and Allison from participating in the settlement for the second wrongful-death claim in federal court.

¶15. On August 26, 2010, prior to presenting the federal court settlement to the chancellor for approval, Castigliola and Kihyat petitioned for the appointment of a guardian ad litem (GAL) to represent the interests of the minor heirs. Castigliola and Kihyat informed the court that the attorneys would divide the previously approved forty percent contingency fee between them.

¶16. A few days after petitioning the chancery court to appoint a GAL for David Jr. and Allison, on September 3, 2010, the chancellor issued an order approving the forty percent contingency fee for Castigliola and Kihyat and also appointing a GAL, Kelly Dees, for all the minor heirs. The chancellor instructed the GAL to investigate the proposed wrongful-death settlement and file a report recommending to the chancellor whether the proposed settlement would serve the best interests of the minor children. Prior to approval and distribution of the settlement in chancery court, Jane Harris-Perry, who had previously appeared as an attorney for the guardianships of minors David Jr. and Allison in chancery court, filed an entry of appearance in chancery court, dated September 1, 2010, on behalf of Huber, as the mother and next friend of David Jr. and Allison.

¶17. On October 15, 2010, the Administratrix filed a petition in chancery court for authority to settle the claim, with notice to the GAL and Harris-Perry. At a hearing held on October 20, 2010, the chancellor expressed concern over a possible conflict regarding the Administratrix's potential request for the unequal division of the approved settlement proceeds among the wrongful-death beneficiaries, and she ordered the appointment of a second GAL, Matthew Lott.

¶18. On November 16, 2010, the chancellor held a hearing on the Administratrix's petition for authority to settle the claim. Due to confusion as to whether the $250, 000 Allstate settlement constituted the settlement of a wrongful-death claim or proceeds of the Estate, and whether David Jr. and Allison, as half-bloods, could share in the settlement proceeds on equal footing, the chancellor requested that counsel for the Administratrix seek clarification by the federal court as to the terms of the August 2010 settlement conference. Per the chancellor's request, on November 23, 2010, Kihyat and Castigliola filed a motion to clarify in federal district court, seeking for the court to clarify that the Allstate settlement constituted settlement of a claim by the Estate, rather than a wrongful-death claim.

¶19. In response, the district court issued an order on June 1, 2011, wherein the district court judge clarified that during the August 2010 settlement conference:

[T]he parties agreed that any issues regarding the half-siblings['] participation in any settlement proceeds would be determined by the chancery court.
. . . .
The [c]ourt finds there was a valid meeting of the minds that Allstate agreed to pay $250, 000 to the Estate for the settlement of all of the claims by the Estate[, ] which included a later division by the Estate to the ...

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