154 So. 3d 101
Ala.2014Background
- Regions Bank served as trustee of the J.F.B. Lowrey Trust (timberland corpus) and was sued in 2007 by beneficiaries Sam G. Lowrey, Jr., and Shelby Jones for alleged breach of fiduciary duty after Hurricane Ivan damaged standing timber. Beneficiaries sought ~ $13 million.
- The trial court found for Regions on the breach claims after a bench trial and initially denied Regions’ motion for reimbursement of attorney fees without an evidentiary hearing.
- On appeal this Court (101 So.3d 210) held Regions was entitled to seek reimbursement under § 19-3B-709 and related provisions and remanded for an evidentiary hearing to determine reasonable fees and costs.
- On remand the trial court heard evidence, disallowed specific categories of fees (including fees for contacting numerous experts and costs related to an expert not called), denied interest, and additionally applied a 27% percent reduction—resulting in an award of $312,257.36 to Regions; Regions appealed.
- The Alabama Supreme Court concluded the trial court exceeded its discretion by combining categorical (line-by-line) disallowances with a percentage reduction that exceeded the opposing expert’s recommended reduction, improperly denied interest, and improperly disallowed fees incurred pursuing reimbursement; the case was reversed and remanded for recalculation consistent with the appellate mandate.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Entitlement to reimbursement from trust under § 19-3B-709 for defense costs | Beneficiaries/AlaTrust: many billed items were unreasonable or not taxable to the trust | Regions: statutes and trust terms authorize reimbursement for reasonable defense expenses; Regions defended successfully | Regions entitled to reimbursement for reasonable defense costs; remanded to reassess reasonableness |
| Method and scope of reductions (line-by-line vs percentage) | AlaTrust: trial court should either perform line-by-line cuts or apply a percentage reduction (proposed ~27–34%) | Regions: fees billed were reasonable; percentage cuts inappropriate; attorney prep need not produce called witnesses to be reasonable | Trial court abused discretion by applying both categorical line-item disallowances and an additional percentage cut that exceeded opposing expert’s recommendation; must reconsider reasonableness using proper standards |
| Reimbursement for fees incurred pursuing reimbursement (fees to litigate fee claim) | AlaTrust: such fees are not taxable to trust | Regions: fees to obtain reimbursement are proper trust expenses because defending trustee and pursuing reimbursement advance settlor’s purpose | Court held trustee may be reimbursed for fees incurred in seeking reimbursement; denial was improper |
| Interest on advanced litigation costs | AlaTrust: interest not warranted or unsupported | Regions: trust instrument and statute authorize reimbursement with reasonable interest; Regions calculated 6% | Trial court erred in denying interest; trustee entitled to reasonable interest and must present competent evidence of rate on remand |
Key Cases Cited
- Regions Bank v. Lowrey, 101 So.3d 210 (Ala. 2012) (prior appellate remand holding trustee entitled to reimbursement inquiry)
- Farlow v. Adams, 474 So.2d 53 (Ala. 1985) (trustee may be reimbursed for defense of attacks on administration; defending trustee advances settlor’s purpose)
- Kiker v. Probate Court of Mobile Cnty., 67 So.3d 865 (Ala. 2010) (standards and deference for trial-court attorney-fee determinations)
- Hart v. Jackson, 607 So.2d 161 (Ala. 1992) (fees awarded only by statute, contract, or special equity)
- Van Schaack v. AmSouth Bank, N.A., 530 So.2d 740 (Ala. 1988) (factors for evaluating reasonableness of attorney fees)
- Peebles v. Miley, 439 So.2d 137 (Ala. 1983) (origin of multifactor approach and trial-court discretion for fee-setting)