Court Opinion

ID: 6553746
Source: CourtListenerOpinion
Date Created: 2022-07-19 22:33:11.363317+00
Date Added: 2024-06-11T15:56:10.544418
License: Public Domain

John B. Robbins, Judge, dissenting. Our court holds today that an administratrix, in the exercise of her fiduciary duties, may settle a wrongful-death and survival action by allocating all of the recovery to the wrongful-death prong of the action, settling around and to the detriment of the claims of the estate’s creditors, and do so without notice to the creditors of record! I agree with the majority opinion’s recitation of facts concerning the decedent’s death, appointment of an administratrix, and the wrongful-death and survivor action filed by the adminis-tratrix. Although not recited in the majority opinion, it is undisputed that the estate’s attorney sent a letter in May 2000 to one of the medical providers at issue, informing it that if it had any outstanding medical bill on behalf of the decedent, it should file an affidavit to claim against the estate in the probate court and send a copy to the law office representing the estate. The majority opinion reflects that a timely claim was filed by appellant on behalf of this medical provider and the local hospital. Thereafter, on August 21, 2001, the administratrix petitioned the trial court to approve a settlement of her action representing that “the Petitioner believes that it is in the best interest of the estate and the statutory beneficiaries for the settlement to be consummated.” The administratrix advised the court that the settlement would require that she “execute releases of all claims and dismiss the existing wrongful death lawsuit.” The administratrix further sought authorization to distribute the settlement proceeds to the statutory beneficiaries after payment of her attorney’s fee, expenses, and after paying any valid debts of the estate. The trial court granted the petition on October 4, 2001, and authorized the administratrix to execute all releases necessary to effect the settlement. However, the court directed that after payment of the attorney’s fee, the net proceeds were to be held pending publication of the statutory probate notices to creditors. First publication of notice occurred on October 10, 2001. Appellant had previously filed its claims on behalf of Pine Bluff Radiologists and Jefferson Regional Medical Center on June 28, 2001. The timeliness and validity of appellant’s claims are not now in dispute. The nature of the action filed by the administratrix is acknowledged in the majority opinion as both a wrongful-death action and a survival action. This characterization is appropriate inasmuch as the administratrix was seeking both mental anguish suffered by the statutory beneficiaries and compensatory damages suffered by the decedent’s estate, including funeral expenses, medical expenses, and the decedent’s pain and suffering. Where I differ from the majority is in its affirmance of the trial court’s decision to approve a settlement and distribution without notice to appellant creditors that required the administra-trix to release all claims of the estate, which obviously included the survival-action prong of the pending suit, for $50,000, all ofwhich would be allocated to the wrongful-death prong of the action; and none whatsoever allocated to the survival prong of the action.1 The consequence of this decision rendered the estate insolvent with no funds available for payment of the claims of the radiologist and hospital that provided emergency medical services in an effort to save the life of the decedent. The tension between our probate laws and the wrongful death act is brought into focus by the proceedings in this case. It is without dispute that the sums recovered under Ark. Code Ann. § 16-62-102 (Supp. 2003), known as the wrongful-death act, do not become an asset of the decedent’s estate and are not subject to the debts of the decedent. The provisions of this statute make the point very clear, as has the supreme court over the years since its enactment. See, e.g., Douglas v. Holbert, 335 Ark. 305, 983 S.W.2d 392 (1998); Brewer v. Lacefield, 301 Ark. 358, 784 S.W.2d 156 (1990); Dukes v. Dukes, 233 Ark. 850, 349 S.W.2d 339 (1961); Missouri Pac. R.R. v. Keeton, 209 Ark. 605, 191 S.W.2d 954 (1946). On the other hand, the personal representative of a decedent’s estate has a fiduciary duty to pursue claims held by the estate for the benefit of the heirs and creditors of the estate. It is a violation of this duty for the personal representative to seek a settlement that allocated all of the recovery to the statutory beneficiaries (including the personal representative herself) for their mental anguish, and nothing to the estate for payment of medical services rendered in an effort to save the decedent’s life. This is fundamentally wrong. The creditors were not given notice that such a settlement and allocation were being made. Although the probate' court may authorize settlements of such actions pursuant to Ark. Code Ann. § 28-49-104,1 submit that to do so without at least requiring some form of notice to the known and identified creditors is an abuse of discretion. See Ark. Code Ann. § 28-1-112(a). While correction of this conflict between our probate code and the wrongful-death act could best be made legislatively, we could alleviate some of the appearance of self-dealing and violation of a personal representative’s fiduciary duty by requiring the trial court, at a minimum, to have the personal representative, who is seeking approval of a settlement of a dual action such as we have here, give notice to all interested parties, i.e., all parties who will be benefited or prejudiced by such approval, so that they could be heard in the matter. The trial court erred in this case in not requiring this. In summary, the administratrix erred when she violated her fiduciary duty to the estate by settling the estate’s survival action without the estate receiving any benefit; the trial court erred in authorizing the settlement of the wrongful-death action and survival action with all proceeds being allocated to the wrongful-death action and without notice to the insolvent estate’s creditors; and our court errs in approving these actions. I respectfully dissent and am authorized to state that Judges Hart, Bird, and Vaught, join in this opinion.   The majority suggests that the trial court’s references in its letter opinion that it is a wrongful-death settlement constitutes a finding of fact that the entire proceeds were attributable solely to the wrongful-death prong of the actions. If this was a finding of fact, it was clearly erroneous inasmuch as the settlement required the administratrix to release ALL claims of the estate in order to recover the settlement proceeds.