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In re Estate of Eubanks

Supreme Court of Mississippi, En Banc

August 23, 2018

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

          DATE OF JUDGMENT: 07/21/2015

          JACKSON COUNTY CHANCERY COURT HON. JAYE A. BRADLEY JUDGE

          TRIAL COURT ATTORNEYS: MYLES ETHAN SHARP BRENT M. BICKHAM DAVID ELIAS KIHYET VINCENT J. CASTIGLIOLA, JR. KELLY PENDERGRASS HUNTER MATTHEW STEPHEN LOTT TREVOR BRUCE ROCKSTAD RYAN JOSEPH CANON H. BENJAMIN MULLEN JANE PATRICIA HARRIS PERRY

          ATTORNEYS FOR APPELLANT: H. BENJAMIN MULLEN VINCENT J. CASTIGLIOLA, JR.

          ATTORNEY FOR APPELLEE: TREVOR BRUCE ROCKSTAD

          KING, JUSTICE

         ¶1. In the first iteration of this case, the chancery court examined the principles underlying quantum meruit and found that Vincent Castigliola and David Kiyhet, attorneys for the estate of Dane Eubanks, should be awarded attorneys' fees from two minors out of a settlement they, and only they, obtained. After remand from this Court, the chancery court, for the second time, heard arguments as to whether Castigliola and Kiyhet should be awarded attorneys' fees from the two minors based on quantum meruit out of the settlement they obtained. The remand required that the chancery court make specific findings of fact. This time, again without making any findings of fact and without any contradictory evidence being introduced, the chancery court reversed course and found that the factors for quantum meruit were not met. Because the chancery court failed to follow remand instructions by failing to make findings of fact, and, because no contradictory evidence was adduced suggesting the factors for quantum meruit were suddenly not met, this Court reverses and remands the case for a further determination of attorneys' fees.

         FACTS AND PROCEDURAL HISTORY

         ¶2. This case returns to this Court after a remand to the trial court regarding the determination of attorneys' fees. In 2006, sixteen-year-old Dane Eubanks was killed in an automobile accident. He was survived by his father, David Eubanks, [1] his mother, Cecilia Eubanks, his brother Seth Eubanks, his maternal half-brother, Aiden Borries, and his paternal half-siblings, Allison Eubanks and David Eubanks Jr. He was also survived by his former stepfather, Kenny Borries, the father of Aiden. His mother, Cecilia Eubanks, signed a contingency-fee contract with attorney David Kihyet to file a wrongful-death suit. She then filed petitions to probate and to approve the contingency fee contract in the Chancery Court of Jackson County, which were approved. The court appointed Cecilia as administratrix.

         ¶3. Cecilia pursued a wrongful death claim against the driver of the vehicle in which Dane was a passenger. Allstate Insurance Company ("Allstate"), the insurer of the driver, offered to settle the case for $100, 000, the bodily injury limits of the insured's policy. Cecilia filed a complaint to settle the wrongful death claim and to determine the heirs and wrongful death beneficiaries, which Kathy Huber, the mother of Allison and David Jr., joined. The chancery court approved the settlement, named Cecilia, Seth, Aiden, Allison, and David Jr. as the sole heirs and wrongful death beneficiaries, and ordered that the settlement proceeds be distributed equally.[2]

         ¶4. Meanwhile, Cecilia filed an uninsured-motorist claim under Kenny Borries's commercial-vehicle insurance policy with Allstate, arguing that Dane was a "foster child" under that policy. Allstate filed an action for a declaratory judgment in the United States District Court for the Southern District of Mississippi, asking the court to declare that no uninsured motorist coverage existed for Dane under Borries's Allstate policy. The Estate and Cecilia filed a counterclaim arguing that Dane was covered by Borries's policy and that he was entitled to uninsured/underinsured motorist insurance coverage. It noted that "[t]he injuries suffered by Dane Eubanks in the collision in issue resulted in compensable damages for pain, suffering, mental anguish, medical expenses, funeral expenses, loss of future earnings and other damages." Because of the complexity of the federal court litigation, Kihyet associated Vincent Castigliola Jr. as cocounsel.

         ¶5. The parties held a settlement conference, at which they agreed to settle the claims for $250, 000. Kihyet and Castigliola endeavored to maximize the settlement during the conference. Indeed, Allstate represented in federal court that Kihyet and Castigliola refused to settle for a lesser amount for the specific reason that the settlement would have to be split five ways. At the end of the settlement conference, Kihyet and Castigliola indicated to Allstate that they believed that Allison and David Jr. should not share in the settlement. The parties then agreed to allow the chancery court to give final approval to the settlement and to decide any issues surrounding which individuals were entitled to share in the settlement proceeds.

         ¶6. In the chancery court, the Estate and Cecilia maintained that the federal court settlement was for a contract claim and thus enured to the benefit of the Estate, and, accordingly, should be distributed to the heirs of the Estate, not the wrongful death beneficiaries. The Estate and Cecilia argued that Allison and David Jr., as half-siblings, were not heirs under Mississippi law, but conceded that they were wrongful death beneficiaries. Cecilia and the Estate sought clarification from the federal court regarding what claims the federal court case and settlement encompassed. Huber moved to intervene in the motion to clarify, but the district court denied the motion, finding that her children's interests were already represented. The federal court found that there was a valid meeting of the minds to settle "all of the claims by the Estate which included a later division by the Estate to the five adjudicated heirs and wrongful death beneficiaries." It further found that "how the proceeds are divided within the Estate is left to be determined by the Chancery Court."

         ¶7. The chancery court then divided the settlement equally among Cecilia, Seth, Aiden, Allison, and David Jr. The chancery court determined that "since the settlement was to include all claims of the heirs and wrongful death beneficiaries, the proceeds should be divided equally pursuant to the Wrongful Death Statute." The chancery court also awarded attorneys' fees to Kihyet and Castigliola in the amount of their contingency fee of forty percent. It noted that the facts and issues were very close to those found in Pannell v. Guess, 671 So.2d 1310 (Miss. 1996). The court found that "only the attorneys for Cecilia and the Estate contributed to the acquisition of settlement proceeds." It further found that "the sums obtained from Allstate would not have occurred but for their efforts." It determined that, while Allison and David Jr. were not bound by the contingency fee contract, they benefitted from the attorneys' work on the settlement. Based on quantum meruit, the court calculated that attorneys' fees would amount to $226, 000, for which Allison and David Jr. would be responsible for one-fifth each, two-fifths total. It calculated that, even if it discounted the attorneys' hourly rates due to their later having taken an adverse position to Allison and David Jr., quantum meruit would still result in total fees of $156, 875. If the court held Allison and David Jr. to the forty percent contingency fee, the overall award of attorneys' fees for the entire settlement (including the earlier $100, 000 settlement) was $140, 000, which would render the portion Allison and David Jr. were to pay as $28, 000 each, or $56, 000 total. Thus, it ruled that "in light of these calculations that although none of the minor children were bound by the contingency fee contract, the fee imposed therefrom is reasonable and more beneficial to the children than a quantum meruit based calculation." Based on the $250, 000 settlement, the court then awarded attorneys' fees in the amount of $100, 000, with Allison and David Jr. paying their equal shares of that. Huber appealed the award of attorneys' fees against Allison and David Jr., and Cecilia and the Estate cross-appealed, arguing that the chancellor erred by dividing the settlement equally among the wrongful-death beneficiaries.

         ¶8. The Court of Appeals affirmed the chancery court's decision to divide the settlement equally among the wrongful-death beneficiaries. Estate of Eubanks v. Eubanks, 197 So.3d 878, 893-94 (Miss. Ct. App. 2014) ("Eubanks I"). The Court of Appeals also analyzed the attorneys' fee issue in detail, reversing the chancery court judgment and remanding

for further proceedings for the chancellor to determine entitlement to the claimed fee and to provide express findings in support thereof. Any award should also be supported by findings sufficiently distinguishing the legal costs incurred by Castigliola and Kihyat in pursuing legal matters adverse to David Jr. and Allison in the federal court action relating to the Allstate settlement of the second wrongful-death claim.

Id. at 893. The Court of Appeals determined that the trial court's findings lacked "an accounting and explanation of the amount of time and related legal costs spent pursuing claims adverse to David Jr. and Allison in reaching the $250, 000 Allstate settlement of the second wrongful-death claim. The record fails to explain whether the attorneys charged the Estate with costs incurred in federal court related to the motion to clarify." Id. at 887. It emphasized that "[t]he record fails to account for attorneys' time and legal costs incurred in the federal court negotiations and August 2010 settlement conference when attempting to exclude David Jr. and Allison from receiving settlement proceeds and benefits. The record further reflects no deduction for legal costs incurred related to the motion to clarify in federal court." Id. Citing caselaw, the Court of Appeals noted that an "attorney could only charge the minors for compensation for the work actually benefitting the minors." Id. at 888. It determined that "[s]uch determination constitutes the crux of the issue before us now in the instant case." Id. The Court of Appeals concluded that

We thus find the chancellor herein failed to set forth sufficient findings to distinguish the hours Castigliola and Kihyat (the Administratrix's counsel) incurred pursuing matters adverse to David Jr. and Allison in the federal court action and related settlement negotiations when attempting to exclude them from the $250, 000 Allstate insurance settlement. Therefore, the record and the chancellor's related findings failed to provide sufficient support for the attorneys' fees assessed against David Jr. and Allison.

Id. at 892. It held that "[j]urisprudence requires the chancellor to determine that the costs were fair, reasonable, and necessary, and that the costs benefitted the minors. Kihyat and Castigliola also should be held to meet the established standard in proving entitlement to a fee, particularly for the legal costs incurred in the federal court proceedings, since the chancery-court-proceeding costs were already deducted." Id. at 893.

         ¶9. The Estate filed a petition for writ of certiorari with this Court, arguing that Court of Appeals decision was in error. We granted certiorari, and affirmed the Court of Appeals' judgment on the issue of the division of the settlement proceeds. Estate of Eubanks v. Eubanks, 197 So.3d 861 (Miss. 2015) ("Eubanks II"). Regarding the attorneys' fees, "because a majority of justices have not voted to reverse the Court of Appeals, its opinion and holding on this issue for this case must stand." Id. at 871. Four justices opined that the elements of quantum meruit were not met. Four justices opined that quantum meruit was warranted, but would remand the case to the trial court for it to deduct any attorneys' fees incurred in pursuing positions adverse to Allison and David Jr.

         ¶10. On remand, Castigliola and Kihyet introduced the same evidence they had introduced at the last hearing on attorneys' fees, and additionally detailed the hours they spent adverse to Allison and David Jr. At the conclusion of the hearing on the issue, the court noted that "it's unfair that these siblings collected a nice amount of money based on your work." In a two and a half page order, the court summarily found that "insufficient evidence was offered to show that the quantum meruit factors have been met." Again, the court did not make any detailed findings of facts. The Estate appealed to this Court. It argues that the trial court erred by failing to make detailed findings of fact, that ...


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