Hasty v. Castleberry
293 Ga. 727
| Ga. | 2013Background
- William G. Hasty Jr. served as executor of his father’s estate and trustee of a marital trust funding his mother, Hazel Hasty; the trust initially held over $6 million, largely in Wachovia stock.
- While the mother was ill (2005–2009), William had her sign a power of attorney and removed $1,000,000 from the marital trust, used trust stock as loan collateral, and caused transfers that resulted in a $1,000,000 gift to Reinhardt University.
- Joan (remainder beneficiary) sued William (May 2011) for breach of fiduciary duty (Reinhardt transfer and alleged imprudent retention of Wachovia stock) and for excessive executor’s fees.
- Trial court granted partial summary judgment to Joan on the breach claim relating to the $1M transfer, found factual issues as to investment mismanagement and excessive fees, and denied William’s summary judgment defenses.
- Supreme Court reviewed whether equitable defenses applied, which statute of limitations governed, whether the $1M transfer exceeded trustee powers or involved a conflict, whether retaining concentrated Wachovia stock was imprudent, and whether fees may have been excessive.
Issues
| Issue | Plaintiff's Argument (Joan) | Defendant's Argument (William) | Held |
|---|---|---|---|
| 1. Applicability of equitable defenses (laches, unclean hands, estoppel) | Equitable defenses don’t bar Joan’s legal action for money damages | Equitable doctrines apply because trust administration is equitable | Laches and unclean hands unavailable in an action at law; equitable estoppel argued but not supported by record; trial court correctly rejected these defenses |
| 2. Statute of limitations for breach-of-trust claims (OCGA §53-12-307) | Claim timely under six-year discovery rule because no adequate written “report” was given | Two-year period applies because Joan saw a letter from accountants in 2005 that allegedly disclosed the claim | "Report" under statute requires trustee report content (per OCGA §53-12-243); accountants’ letter was not such a report; six-year period applies; Joan’s May 2011 suit was timely |
| 3. Breach for $1M transfer to Reinhardt (authority to encroach principal) | Transfer exceeded trustee power because Will allows principal encroachment only for wife’s support/maintenance or similar needs | Relied on accountants’ tax advice and acted in good faith; power to invest generally broad | Trustee has no authority under Will to encroach principal to make charitable gift; reliance on professional advice does not create powers not granted by trust; summary judgment for Joan on breach was proper |
| 4. Conflict of interest from serving as Reinhardt campaign co-chair | William’s dual role created a conflict and breached duty of loyalty | Serving as co-chair did not inherently conflict with trustee duties | No inherent conflict as matter of law; serving as co-chair alone did not automatically create a conflict; trial court erred to the extent it held otherwise |
| 5. Investment management — retention of concentrated Wachovia stock | Retention was imprudent given dangerous concentration and expert testimony | Retention was permitted by trust language and prior dividends supported income needs; settlor’s alleged oral wish favored retention | Genuine factual dispute exists about prudence/diversification; summary judgment inappropriate on this issue |
| 6. Excessive executor’s fees (OCGA §53-6-60) | Accountants’ calculations suggest overcollection (possible $184,307+ excess) | Fees were justified and used to reduce potential estate tax liability | Factual issues exist about calculation and whether fees exceeded statutory commissions; trial court properly left this to factfinder |
Key Cases Cited
- Durham v. Durham, 291 Ga. 231 (addressing whether trust matters are equitable for appeal purposes)
- Marsh v. Clarke County School Dist., 292 Ga. 28 (laches is an equitable defense not available in actions at law)
- Holmes v. Henderson, 274 Ga. 8 (unclean hands does not apply to actions at law)
- Robinson v. Boyd, 288 Ga. 53 (equitable estoppel can apply in an action at law)
- Slakman v. Continental Cas. Co., 277 Ga. 189 (statutory construction rules)
- DeKalb County v. J & A Pipeline Co., 263 Ga. 645 (construing statutes in the context of the whole legal scheme)
- Retention Alternatives, Ltd. v. Hayward, 285 Ga. 437 (statutes construed in harmony with existing law)
- Mayfield v. Heiman, 317 Ga. App. 322 (close of loan transaction can trigger limitations period)
- Citizens & Southern Nat. Bank v. Haskins, 254 Ga. 131 (trustee must balance life beneficiary and remaindermen)
- SunTrust Bank v. Merritt, 272 Ga. App. 485 (trustee duty to preserve corpus and balance interests)
- Griffith v. First Nat. Bank & Trust Co., 249 Ga. 143 (follow settlor’s intent in trust administration)
- Harp v. Pryor, 276 Ga. 478 (fiduciary conflict-of-interest principles)
- Moore v. Self, 222 Ga. App. 71 (when dual roles make it humanly impossible to act fairly)
- Namik v. Wachovia Bank of Ga., 279 Ga. 250 (limitations on admissibility of oral instructions contrary to a will)