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McReynolds v. Matthews

United States District Court, S.D. Mississippi, Southern Division

January 3, 2018

AIMEE MCREYNOLDS PLAINTIFF
v.
THOMAS M. MATTHEWS, III, MATTHEWS & MATTHEWS, PLLC, AND JOHN AND JANE DOES 1-5 DEFENDANTS

          MEMORANDUM OPINION AND ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS' MOTION [120] FOR SUMMARY JUDGMENT

          HALIL SULEYMAN OZERDEN UNITED STATES DISTRICT JUDGE.

         BEFORE THE COURT is the Motion [120] for Summary Judgment filed by Defendants Thomas M. Matthews, III and Matthews & Matthews, PLLC (“Matthews”). In this case, Plaintiff Aimee McReynolds (“McReynolds”) brings a legal malpractice claim against Matthews relating to the administration of the Estate of Jack Dick, Deceased, Cause No. 2013-0065-PR-G, in the Chancery Court of Pearl River County, Mississippi. McReynolds was the sole beneficiary under the decedent Jack Dick's handwritten Will. Shortly after Dick passed away, McReynolds retained Matthews in April 2013 to probate Dick's Will. McReynolds claims that Matthews failed to administer the Estate in a timely and proper manner, causing her to suffer monetary damages.

         Matthews now moves for summary judgment on several of McReynolds' claims of negligence, breach of fiduciary duty, and damages. The Motion has been fully briefed. For the reasons that follow, the Court finds that the Motion should be granted as to McReynolds': (1) breach of the standard of conduct claims; (2) claim for damages in attorneys' fees paid to the Law Office of B. Ruth Johnson in the underlying Estate proceedings; and (3) claim for punitive damages. These claims will be dismissed.

         The Court finds that the Motion should be denied as to McReynolds': (1) breach of the standard of care claim that Matthews' alleged negligence caused the Will contests by Dick's half-siblings to not be time-barred; (2) breach of the standard of care claim that Matthews' negligence caused her to be removed as Administratrix; (3) breach of the standard of care claim for lost income caused by liquidation of Dick's investments; (4) breach of the standard of care claim that Matthews caused Dick's Estate to incur higher taxes by declaring Dick a Mississippi resident; and (5) breach of the standard of care claim that Matthews caused penalties to be incurred for filing the Estate's tax returns late. These claims will proceed to trial.

         I. BACKGROUND

         A. Factual Background

         1. McReynolds Meets and Befriends Jack Dick

         In December 2008, 80-year-old Jack Dick met McReynolds at an establishment known as Arety's Angels in Pensacola, Florida, where McReynolds worked as a waitress at the time. Mar. 28, 2016 Pl. Dep. [120-1] at 25. The two became friends; according to McReynolds, they loved each other “like family.” May 23, 2017 Pl. Dep. [128-1] at 169-70. In August 2009, Dick began renting a room from McReynolds at her home in Pensacola. In exchange, Dick paid McReynolds' mortgage. Id. at 23, 46. Up until March 2013, Dick would stay overnight in his bedroom at McReynolds' home for seven to fourteen days each month. Id. at 23-24. Dick spent the remainder of his time at his property in Pearl River County, Mississippi. Id.; Hearing Tr. [120-3] at 20-21.

         Starting in 2009, Dick gave McReynolds spending money in the amount of “$100 on occasion.” Mar. 28, 2016 Pl. Dep. [128-18] at 148. Before Dick died, he was supplying McReynolds with $500 a week. On June 28, 2012, Dick executed an entirely handwritten, “holographic” Will naming McReynolds his sole beneficiary. Dick's Will [120-5]. This Will listed Dick's property, including a “brokerage account” of “two million” dollars. Id. Dick passed away on March 31, 2013. Death Certificate [120-2].

         2. McReynolds Hires Matthews to Probate Mr. Dick's Will

         On April 3, 2013, McReynolds retained Matthews to probate the Will for a flat fee of $10, 000.00. May 23, 2017 Pl. Dep. [128-1] at 23, 82. That same day, Matthews filed a Petition to Probate the Last Will and Testament of Jack W. Dick, CTA, [1] in the Chancery Court of Pearl River County, Mississippi, and the Chancery Clerk recorded the original Will in the Will Book. Pet. for Probate [120-6]. The Chancellor apparently did not grant the original petition, so Matthews filed an Amended Petition. See Am. Pet. for Probate [128-6]. The Amended Petition stated that Dick was a Mississippi resident when he died “on the 31st day of March, 2013 or April 1, 2013.” Id. at 1. The Amended Petition sought an order from the court authorizing liquidation of Dick's financial accounts and placement of the funds into the court's registry. Id. at 2.

         On April 9, 2013, the Chancery Court entered its Judgment appointing McReynolds as Administratrix. April 9, 2013 Judgment [128-7]. The Judgment directed McReynolds to retain an appraiser and file all necessary inventories, appraisals, and final accounts as required by state law. Id. at 2. In lieu of McReynolds filing an additional bond, the court ordered the liquidation of Dick's financial accounts to be deposited into the court's registry. Id. The Judgment did not state that Dick's Will was probated nor did it include the word “probate.” Id. at 1-2.

         On April 9, 2013, Matthews became aware of Charles Dick, Jack Dick's half-brother, and that he possibly would contest Dick's Will. Def. Dep. [128-4] at 69. As part of an attempt to determine if Charles would challenge the Will, Matthews told Charles that Dick's estate was worth in excess of $2 million. Id. at 72.

         3. McReynolds Terminates Matthews

         McReynolds contends that after October 2013, she had minimal communication with Matthews despite her numerous attempts to contact him. Pl. Aff. [128-8] at ¶ 4. According to McReynolds, she emailed Matthews monthly from August 2014 to February 2015. Id. McReynolds also testified that she called Matthews but could never reach him. May 23, 2017 Pl. Dep. [128-1] at 116. McReynolds stated that she had “six or seven different phones in the course of four years, ” but lived at the same address and had the same e-mail address during the time Matthews represented her. Id. at 118; Pl. Aff. [128-8] at ¶ 4.

         On March 3, 2015, McReynolds sent a letter to Matthews, terminating his services effective immediately, and indicating her new representation by the law firm of Copeland, Cook, Taylor & Bush, P.A. (“Copeland”). Letter [120-13]. On April 10, 2015, Copeland, on behalf of McReynolds, filed in the Chancery Court a Petition to Admit Will to Probate Nunc Pro Tunc to April 9, 2013. Pet. [128-14]. The Petition took the position that “[t]hrough error and/or oversight, the Judgment entered on April 9, 2013, does not formally admit to probate the holographic” Will. Id. at 1. McReynolds suggested that the Will “was, in fact, admitted to probate on April 9, 2013, but the Judgment simply mistakenly neglected to state so.” Id. at 2. The Petition sought from the Chancery Court a decree that the Will “was in fact admitted to probate” on April 9, 2013, and “that the two-year statute of limitations for any contests of the [Will] shall have begun to run on April 9, 2013[.]” Id.

         On April 13, 2015, the Chancery Court entered a Decree Admitting Will to Probate Nunc Pro Tunc to April 9, 2013. Decree [128-15]. The Chancery Court found that the Will “was, in fact, admitted to probate on April 9, 2013, but that the Judgment simply mistakenly neglected to state so.” Id. at 2. The Decree ordered that the Will be admitted to probate effective April 9, 2013, and that the two-year statute of limitations for any contests to the Will began to run on April 9, 2013. Id.

         One week later, on April 20, 2015, McReynolds petitioned the court for a $100, 000.00 loan from the Estate. Pet. to Borrow Funds [128-17]. McReynolds asserted that “[d]ue to health problems, [she] has not worked since mid-2014, and she is currently falling behind on many of her personal bills and expenses, ” including owing $70, 164.45 on her mortgage, “which amount must be paid on or before May 5, 2015, in order to avoid foreclosure.” Id. at 2. At a hearing held on April 21, 2015, the Chancery Court denied the Petition to Borrow Funds. See Letter to Chancery Ct. [120-38] at 1.

         4. The Chancery Court Removes McReynolds as Administratrix and Probates the Will in Solemn Form

         On May 7, 2015, the Chancery Court held another hearing with McReynolds. Hearing Tr. [128-11] at 1-2. The court stated: “Let me tell you why you-all are here. The Court will sua sponte, on its own, set aside its orders validating the holographic will.” Id. at 2. The court noted that under Mississippi law, an inventory must be prepared and filed within ninety days of the grant of letters of administration appointing an estate's administrator. Id. at 2-3. The Chancery Court inquired of McReynolds whether she had prepared an inventory, and McReynolds replied, “I was not informed that I was supposed to prepare one.” Id. at 6.

         The court observed that the “petition indicated that Mr. Dick departed this life on the 31st day of March 2013 or April 1st, 2013.” Id. at 3. The court asked for a copy of the death certificate to verify Dick's date of death, but neither McReynolds nor her counsel had one. Id. at 3-4. The court next noted that the Will was notarized on June 28, 2012, but was not prepared until one day later on June 29, 2012. Id. at 5. The court stated that “though holographic wills are not required to be dated, when one is in fact dated, the Court has to take notice of it.” Id.

         The court asked of McReynolds whether she had complied with the April 9, 2013 Judgment, including the order to retain the services of an appraiser. Id. at 7. McReynolds responded, “Actually, ma'am, Mr. Matthews told me he would do it. I asked him if I were to do it and he said he would handle it and get the appraisal done.” Id. The Chancery Court told McReynolds that she “failed to comply with the order of this Court, ” and “will be immediately removed and replaced[.]” Id. The court ordered the Will to be probated in solemn form and for “a notice sent out for any and all heirs at law known and unknown, [as] that process was never completed.” Id. at 10.

         The Chancery Court set aside “any decrees entered by this Court admitting this will to probate; namely, the order dated April 13, 2015, ” and the “decree validating holographic last will and testament of Jack Dick[.]” Id. at 11. The court did so based on the court's “in-camera review” of the record prior to the hearing and because the Will “is dated June 29, 2012; however, it is executed a day prior to its preparation, so the Court has concerns as to the validity of it.” Id. at 11.

         On May 15, 2015, the Chancery Court entered an Order that incorporated its rulings at the May 7, 2015 hearing. Order [128-10]. The Order noted that “to date, no inventories, appraisals, or accounts have been filed in this Estate proceeding, and no funds relating to this case have been tendered into the Court Registry.” Id. at 2. The Court expressed its “concerns regarding, inter alia, the fact that the exact date of death of Jack W. Dick is unknown” and that the Will “is dated ‘June 29, 2012' on top of the first page, but the attestation by the notary public on the second page is dated ‘June 28, 2012.'” Id. The Chancery Court Order: (1) set aside the decrees admitting the Will to probate and validating the Will; (2) probated the Will in solemn form; and (3) removed McReynolds as Administratrix. Id. at 3.

         5. McReynolds Hires New Counsel and Defends against the Will Contests

         After McReynolds was removed as administratrix, Copeland advised her that she needed to hire another attorney. Pl. Aff. [128-8] ¶ 21. On October 9, 2015, McReynolds retained her present counsel, the Law Office of B. Ruth Johnson (“Johnson”), on a contingent fee basis and signed a 1% contingency fee agreement. Fee Agreements [120-23] at 1. On October 13, 2015, Mr. Dick's two half-siblings initiated a contest to the Will. Resp. to Pet. to Probate Will [120-22]. McReynolds subsequently amended her contingency fee agreement with Johnson, increasing the fee three times: first, to 15% on October 20, 2015; second, to 25% on March 28, 2016; and finally third, to 33 1/3% on May 31, 2016. Fee Agreements [120-23].

         On July 11, 2016, McReynolds settled the will contest for $85, 000.00. Settlement Statement [120-24]; Chancery Ct. Docket [128-13] at 8. McReynolds paid Johnson over $800, 000.00 to defend the will contest and represent her in the Estate proceedings. Hines Report [120-25] at 14. On July 19, 2016, the Chancery Court entered a Decree Closing Estate, and on August 1, 2016, McReynolds received the remaining funds held in the court's registry. Chancery Ct. Docket [128-13] at 9; Pl. Aff. [128-8] ¶ 28.

         B. Procedural History

         1. McReynolds' Complaint

         On April 8, 2016, McReynolds filed a Complaint alleging legal malpractice against Matthews in the Circuit Court of Pearl River County, Mississippi. Compl. [1-1]. Matthews was not served until July 28, 2016. Not. of Removal [1] at 3. Matthews removed the case to this Court on the basis of diversity jurisdiction on August 26, 2016. Id. at 1-2.

         On January 9, 2017, McReynolds filed an Amended Complaint. Am. Compl. [14]. Central allegations include that “[f]rom October 23, 2013 through March 16, 2015, Matthews failed to communicate with McReynolds, filed no pleadings on behalf of McReynolds, and took no action toward concluding the probate of Dick's Will.” Id. at 4. McReynolds advanced claims of breach of fiduciary duty and negligence. Regarding her negligence claim, McReynolds alleged that Matthews negligently: (1) failed to have Dick's tax returns timely filed, which caused the Estate to incur penalties; (2) had the income earning account of Dick liquidated and deposited into a non-income earning account, which caused Dick's estate to forego “a substantial amount of income and dividends from June 16, 2015 through closing of the Estate;” and (3) failed to probate Dick's Will in common form, and but for this act, the contest of Dick's half-siblings would be time-barred and McReynolds would not have incurred attorneys' fees to represent her interest in the Estate. Id. at 10-12.

         McReynolds' breach of fiduciary duty claim asserts that Matthews breached this duty by failing “to have Dick's state and federal tax returns timely filed and to timely pay the state and federal taxes owed by Dick, ” which caused the Estate to “incur[] penalties and interest expenses, ” and by “[h]aving the income earning account of Jack W. Dick liquidated and deposited into a non-income earning account creating unnecessary tax consequences and foregoing substantial income and dividend earnings.” Id. at 8-9. The Amended Complaint seeks compensatory and punitive damages. Id. at 12.

         2. McReynolds' Experts

         On April 10, 2017, McReynolds timely designated two experts, Robert E. Williford, Esq. (“Williford”), and Joseph E. Hines, CPA, MAFF, CFF (“Hines), and submitted their reports. Designation of Expert Witnesses [126-5] at 1. Williford was designated as an expert on “the legal, ethical and fiduciary duties of an attorney in the administration of estates, ” id. at 4, while Hines was tendered to offer expert testimony in the fields of accounting and financial analysis, see Id. at 28, 59. Williford's timely April 10, 2017 report (“First Report”) opined as to Matthews' duties and breaches, id. at 7-20, and took the ...


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