792 S.E.2d 269
Va.2016Background
- Frank and Jane Still executed parallel estate plans in the 1990s dividing trust assets between Frank’s children (initially 40%, later 45%) and Jane’s relatives (60%, later 55%).
- In 1999 Frank executed a durable power of attorney naming Jane as agent and LaVerne Lemen as successor; the POA granted very broad authority, including creating inter vivos trusts and managing/changing IRAs and beneficiaries.
- Jane later amended her trust to reduce and then eliminate Lemen and Jeffrey Still’s inheritances; Jane died in 2011 and her trust assets passed to her heirs (Lemen and Still received nothing).
- After Jane’s death, Lemen (as Frank’s attorney-in-fact) amended Frank’s trust and then created two living trusts that disinherited Jane’s heirs and directed Frank’s assets to Lemen and Still; Frank died the day after the trusts were created and Lemen and Still received roughly $1.24 million.
- Jane’s heirs sued for breach of fiduciary duty; an initial suit was dismissed for lack of standing. William Reineck was later appointed curator of Frank’s estate and brought a representative suit; the trial court granted summary judgment for Lemen and Still and awarded them attorney’s fees against Reineck personally.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Lemen exceeded authority under Frank’s POA by creating inter vivos trusts that redirected Frank’s estate to herself and Still | Reineck: POA did not authorize trusts benefitting only Frank’s children or transferring assets to agent; clause requires benefit to wife and descendants | Lemen: POA expressly allowed creation of inter vivos trusts for Frank’s benefit and for the benefit of wife and/or descendants; broad powers include transfers to trusts | Court: POA unambiguously authorized creation of such trusts and distributions to Frank’s descendants; Lemen acted within authority and in Frank’s best interests |
| Whether POA authorized changing an IRA beneficiary | Reineck: POA did not expressly authorize changing beneficiary per Code § 64.2-1622(A) | Lemen: POA’s retirement-account clause granted authority to exercise all rights, privileges, elections, and options for IRAs, which includes beneficiary designations | Court: Specific POA language granting authority over IRAs encompassed changing beneficiaries; allowed |
| Whether trial court could award attorney’s fees under Code § 64.2-795 against a litigant acting in a representative capacity | Reineck: As curator (representative), he was not a party in his personal capacity and statute does not authorize personal liability for fees | Lemen: § 64.2-795 allows courts, as justice and equity may require, to award fees to any party; she sought fees personally because she incurred large defense costs | Court: § 64.2-795 authorizes awards to or from the trust or between parties, but does not permit assessing attorney’s fees personally against a litigant who appears only in a representative capacity; fee award against Reineck personally reversed |
| Whether trial court could recover fees in second suit for fees incurred in first, separate suit | Reineck: Fees from first suit were unrelated and could not be charged in second proceeding against him personally in his representative capacity | Lemen: Sought fees for both suits as part of equitable relief | Court: Court erred to award fees against Reineck personally in the second suit for fees from the first because he was not a party in his individual capacity in the second action; issue left open whether fees could be pursued by other means |
Key Cases Cited
- Jones v. Brandt, 274 Va. 131 (construing unambiguous written instruments de novo)
- Chacey v. Garvey, 291 Va. 1 (American Rule on attorney’s fees; strict interpretation of fee-shifting statutes)
- REVI, LLC v. Chicago Title Ins. Co., 290 Va. 203 (absence of contractual or statutory fee-shifting under American Rule)
- Lansdowne Dev. Co., L.L.C. v. Xerox Realty Corp., 257 Va. 392 (fee-shifting statutes are in derogation of common law and strictly construed)
- Bender v. Williamsport Area Sch. Dist., 475 U.S. 534 (acts by same person in different capacities treated as transactions of different personages)
- Alexander v. Todman, 361 F.2d 744 (representative capacity treated as distinct from individual capacity)
- Airlines Reporting Corp. v. S & N Travel, 58 F.3d 857 (same principle distinguishing representative and individual status)
- Burns v. Equitable Assocs., 220 Va. 1020 (personal representative is proper party to litigate on behalf of estate)