Court Opinion

ID: 4682640
Source: CourtListenerOpinion
Date Created: 2021-04-30 07:03:27.076616+00
Date Added: 2024-06-11T08:04:10.040156
License: Public Domain

FIFTH DIVISION
                          MCFADDEN, C. J.,
       RICKMAN, P. J., and SENIOR APPELLATE JUDGE PHIPPS.

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                                                                       April 27, 2021

In the Court of Appeals of Georgia
 A21A0001. GILLER et al. v. SLOSBERG.

      PHIPPS, Senior Appellate Judge.

      This contentious case involves a family dispute among siblings which arose

after their elderly father revoked an existing power of attorney, executed a new power

of attorney, and made changes to certain financial accounts relating to his estate-

planning strategy. See Slosberg v. Giller, 341 Ga. App. 581 (801 SE2d 332) (2017)

(affirming in part and reversing in part the superior court’s grant of summary

judgment to both parties on various issues). The case is now before this Court a

second time. In this appeal, sisters Suzanne Giller and Lynne Amy Seidner1 seek to

reverse a jury verdict and superior court judgment in favor of their brother, Robert

      1
          Seidner’s first name is also spelled “Lynn” in the record.
Slosberg. For the reasons that follow, we reverse the judgment of the superior court

and remand the case for further proceedings consistent with this opinion.

       This case does not involve a will. Rather, it concerns three documents which

purported to distribute much of the assets of the father, David K. Slosberg: the David

K. Slosberg Asset Protection Trust II, dated January 17, 2014 (Trust #2), a

beneficiary form designating Giller and Seidner as beneficiaries of their father’s IRA

Account with First National Bank & Trust (“FNBT”) (the “IRA Account”), and a

beneficiary form designating Giller, Seidner, and Slosberg as beneficiaries of their

father’s Agency Account with FNBT (the “Agency Account”), with Giller and

Seidner each receiving forty percent of the assets and Slosberg receiving twenty

percent. Slosberg believed that Giller and Seidner exerted undue influence over their

father and caused their father to execute these three documents, drastically reducing

his right to their father’s assets.

       Approximately one year before their father died, Slosberg filed suit against

Giller and Seidner. After their father’s death, Slosberg filed his third amended

complaint, which is the operative pleading for this appeal. The amended complaint

included a number of claims, including claims for undue influence, fraud, conversion,

and trover against Giller and Seidner based on allegations that their father’s actions

                                          2
were the result of diminished mental capacity and undue influence. The complaint

sought, among other relief, the imposition of a constructive trust to the extent Giller

and Seidner had absconded with assets to which Slosberg was entitled, and injunctive

relief to prohibit Giller and Seidner from transferring or receiving any assets of their

father, including, inter alia, Trust #2, the IRA Account, and the Agency Account until

the court determined whether the execution of these document was the result of undue

influence. Giller and Seider answered and asserted counterclaims against Slosberg for

defamation and tortious interference, seeking both a declaratory judgment and

equitable relief.

      Following a two and one-half week trial, the jury found in favor of Slosberg

on his claims for undue influence as to all three documents: Trust #2, the IRA

Account, and the Agency Account.2 The superior court entered final judgment on the

jury’s verdict, ruling “that the challenged documents pertaining to the Accounts are

void and are hereby set aside, as are any transfers made pursuant to those documents.”

The superior court further noted that the evidence produced at trial demonstrated that

the total amount contained in the accounts at the time of the father’s death was

      2
        The jury found in favor of Giller and Seidner on Slosberg’s claim for tortious
interference with gift expectancy. In addition, the jury found that Slosberg was not
entitled to recover attorney fees and expenses of litigation or punitive damages.

                                           3
$2,372,000.01, and that all assets contained in these three accounts “had been

distributed by FNBT, either to [Giller and Seidner] or into the registry of the Court,

apart from $140,413.67 held in the IRA account as of December 31, 2018.” The

superior court, therefore, imposed a constructive trust in favor of Slosberg for

$1,056,482.31, which the court determined was Slosberg’s one-third share of the

accounts, plus prejudgment interest, post judgment interest, and costs. Specifically,

the superior court’s judgment stated:

      The Court directs that the Clerk distribute to [Slosberg] all monies held
      in the registry of the Court with respect to this matter, totaling
      $568,919.96 as of June 28, 2019. The Court further directs that any
      monies retained by FNBT in the Accounts be distributed to [Slosberg].
      To the extent that these monies are insufficient to satisfy this Judgment,
      [Giller and Seidner] are liable as constructive trustees for any unpaid
      balance.

      Giller and Seidner filed a motion for judgment notwithstanding the verdict and

for new trial, which the superior court denied. This appeal followed.

      We first note that Giller and Seidner do not claim that the evidence was

insufficient to support the jury’s findings or in any way challenge the jury’s findings

that they wrongfully procured the three documents and their assets through the

exercise of undue influence over their father. Rather, they attack the superior court’s

                                          4
final judgment, arguing that (1) the in terrorem clause contained in Trust #2 precluded

Slosberg from receiving any assets from that trust, (2) the superior court’s imposition

of a constructive trust in Slosberg’s favor usurps the probate court’s jurisdiction, and

(3) the final judgment awarded damages above those to which Slosberg was entitled.3

These issues appear to raise mixed questions of fact and law. With mixed questions

of fact and law, this Court accepts the trial court’s findings on disputed facts and

witness credibility unless clearly erroneous, but independently applies the legal

principles to the facts. Garden Club of Ga. v. Shackelford, 274 Ga. 653, 655 (1) (560

SE2d 522) (2002); Suggs v. State, 272 Ga. 85, 88 (4) (526 SE2d 347) (2000).

      1. Giller and Seidner assert that the superior court erred in allowing Slosberg

to “enjoy the benefits he forfeited by initiating actions disallowed by the no-contest

clause” in their father’s trust. Specifically, they argue that the superior court’s final

judgment is inconsistent with the valid and enforceable in terrorem clause4 contained

      3
        “For convenience of discussion, we have taken the enumerated errors out of
the order” in which Giller and Seidner have listed them. Foster v. Morrison, 177 Ga.
App. 250, 250 (1) (339 SE2d 307) (1985).
      4
         An in terrorem clause is “[a] provision designed to threaten one into action
or inaction; esp., a testamentary provision that threatens to dispossess any beneficiary
who challenges the terms of the will.” Black’s Law Dictionary (10th ed. 2014), pp.
947, 1209.

                                           5
in Trust #2, which provides that benefits revoked under the clause become a part of

the remainder of the Trust Estate. They further assert that not only was Slosberg not

entitled to benefits under Trust #2 because of the in terrorem clause, but they were

entitled to judgment in their favor on the undue influence claim as to the trust.5 We

conclude that Slosberg forfeited any benefits under Trust #2 by violating the trust’s

in terrorem clause, and the superior court erred in not only awarding a constructive

trust based on any benefits he would have received under the trust, but also in

permitting the claim to proceed to the jury. We note that neither the IRA Account nor

the Agency Account contained in terrorem clauses, and our decision in this division,

therefore, is limited to Trust #2.

      The statute addressing the rules for trust in terrorem clauses when the trust at

issue was executed in 2014 stated:

      (a) A trust may be created for any lawful purpose.

      5
        Giller and Seidner moved for partial summary judgment on the ground that
Slosberg’s claim for undue influence was barred by the in terrorem clause in Trust #2.
The superior court denied the motion. Giller and Seidner raised the same issue during
a directed verdict at the close of evidence, and that motion also was denied. They
again raised the issue in their motion for judgment notwithstanding the verdict, and
the superior court again denied it, noting that “the Court previously considered and
rejected [the argument] on summary judgment and at directed verdict.”

                                          6
    (b) A condition in terrorem shall be void unless there is a direction in the
    trust instrument as to the disposition of the property if the condition in
    terrorem is violated, in which event the direction in the trust instrument
    shall be carried out.
OCGA § 53-12-22 (2014).6 “[A]lthough in terrorem clauses are permitted by statute

. . . they are not favored in the law. Furthermore, because in terrorem clauses result

in forfeitures, they must be strictly construed.” Callaway v. Willard, 321 Ga. App.

349, 353 (1) (739 SE2d 533) (2013) (citations and punctuation omitted).

      The in terrorem clause at issue here in Trust #2 provided:

      [S]hould my son, Robert Kenneth Slosberg, or his legal representative,
      or either of my daughters, or their legal representatives[,] contest or
      initiate legal proceedings to contest the validity of this Trust or my Last
      Will and Testament executed by me and dated October 31st, 2013, or
      any provision from being carried out in accordance with its terms as I
      expressed (whether or not in good faith and with probable cause), then
      all the benefits provided herein for my son and/or for my daughters are
      revoked and annulled. Such benefits, if not a part of the residue of my
      estate, shall go over to and become a part of the remainder of my Trust
      Estate.

      6
        The statute was amended, effective January 1, 2021, to add a clause to
subsection (b) (“except as otherwise provided in subsection (c) of this Code section”)
and a new subsection (c) that reads: “(c) A condition in terrorem shall not be
enforceable against an individual for: (1) Bringing an action for interpretation or
enforcement of a trust instrument; (2) Bringing an action for an accounting, for
removal, or for other relief against a trustee; or (3) Entering into a settlement
agreement.” The result we reach in this case would be the same under current Georgia
law.

                                          7
Giller and Seidner argue that the in terrorem clause reflects their father’s “plain and

unambiguous intent . . . to preserve the sanctity of the plan he, over a period of years,

created for his assets and his children.” While this argument ignores Giller and

Seidner’s undisputed role in unduly influencing their father to secure the trust

containing the in terrorem clause, we are constrained to conclude that Slosberg’s

“initiation of legal proceedings triggered the [trust’s] in terrorem clause[.]” Norman

v. Gober, 292 Ga. 351, 354 (1) (737 SE2d 309) (2013).

      Although Slosberg attempts to distinguish Duncan v. Rawls, 345 Ga. App. 345

(812 SE2d 647) (2018), that case is directly on point and leads us to the inescapable

conclusion that the in terrorem clause in Trust #2 bars any claim attacking the trust,

including a claim that the trust was executed as the result of undue influence. Duncan

concerned “whether and under what circumstances Georgia public policy prohibits

enforcement of an in terrorem, or no contest, provision of a trust.” Id. at 345. The case

involved beneficiaries of a trust, allegedly in good faith and upon probable cause,

challenging the legal validity of the trust based on a claim of undue influence. Id.

“We conclude[d] that because the legislature, not this Court, determines Georgia

public policy, the trial court did not err by enforcing the in terrorem clause against a

                                           8
claim of undue influence and therefore granting partial summary judgment to the

trustees on that claim.” Id. Specifically, this Court held as follows:

      Under Georgia law, a trust may be attacked where the trust results from
      undue influence. But . . . in terrorem clauses protecting against such a
      challenge are allowed under Georgia law with only one codified
      limitation, that being the alternative disposition provision discussed
      above. The parties have not cited any other statutory limitation on such
      clauses, and we find none, let alone a good faith/probable cause
      exception to enforcement of an in terrorem clause.

Id. at 348 (1) (b) (citation omitted).

      A similar analysis was applied in Howell v. Bates, 350 Ga. App. 708, 715 (3)

(830 SE2d 250) (2019), where this Court affirmed the trial court’s ruling that the

petitioner had violated an in terorrem clause and forfeited her distribution under a

trust. The trust in that case provided that

      if a person contested or initiated legal proceedings either to challenge
      the validity of the Trust, the Will, or of any provision in either
      document, or to prevent any provision in either document from being
      carried out in accordance with its terms (whether or not in good faith
      and with probable cause), then all benefits provided for such person
      under the Trust and the Will would be revoked and annulled.

Id. at 714 (3) (punctuation and footnote omitted). This Court specifically held that by

filing actions challenging the validity of a will with an in terrorem clause, including

one in which the petitioner claimed the will was invalid due to alleged undue

                                              9
influence, the petitioner “clearly violated the plain language of the ‘no contest’ clause

in the Trust.” Id. at 715 (3) (b).

      While we sympathize with Slosberg, and we agree that it is poor public policy

to permit individuals exerting undue influence over the creation of trusts to immunize

their actions by including in terrorem clauses in the trusts, we must exercise judicial

restraint because “[t]he legislature, and not the courts, is empowered by the

Constitution to decide public policy, and to implement that policy by enacting laws.”

Duncan, 345 Ga. App. at 350 (1) (b) (punctuation omitted). To that end, this Court

repeatedly has stated that

      [s]tatutes should be read according to the natural and most obvious
      import of the language, without resorting to subtle and forced
      constructions, for the purpose of either limiting or extending their
      operation. In reviewing a statute, we presume that the legislature enacts
      all statutes with knowledge of the existing laws.

Howell, 350 Ga. App. at 712 (2).

      A review of OCGA § 53-12-22, which addresses in terrorem clauses in trusts,

and OCGA § 53-4-68, which addresses in terrorem clauses in wills, indicates that

Duncan, supra, was correctly decided. After our decision in Duncan, a full court

opinion that included a special concurrence and two dissents, the legislature amended

both OCGA §§ 53-12-22 and 53-4-68, adding three identical circumstances under

                                           10
which in terrorem clauses shall not be enforceable in trusts or wills. OCGA §§ 53-12-

22 (c), 53-4-68 (c). The legislature did not, however, choose to add or amend the trust

statute to void in terrorem clauses in trusts that are impossible, illegal, or against

public policy, as they are in wills. See OCGA § 53-4-68 (a) (“Conditions in a will that

are impossible, illegal, or against public policy shall be void.”). Instead, the

legislature retained OCGA § 53-12-22 (a), which merely states, “[a] trust may be

created for any lawful purpose.” “Because the legislature is presumed to act with full

knowledge of the existing state of the law, it follows that the legislature chose not to

adopt a good faith/probable cause exception to enforcement of no contest clauses in

trusts.” Duncan, 345 Ga. App. at 349-350 (1) (b). Strictly construing the in terrorem

clause, which we are obligated to do, Callaway, 321 Ga. App. at 353 (1), and

presuming the legislature enacted and amended OCGA § 53-12-22 with knowledge

of the existing laws, which we are obligated to do, Howell, 350 Ga. App. at 712 (2),

we conclude that the superior court erred in failing to find that the in terrorem clause

in Trust #2 resulted in Slosberg’s forfeiture of benefits under Trust #2.

      Moreover, the superior court further erred in permitting the undue influence

claim regarding Trust #2 to proceed to the jury. The Georgia Supreme Court and this

                                          11
Court have stated that, under language similar to the in terrorem clause at issue, the

mere “initiation” of legal proceedings triggers the trust’s in terrorem clause. See

Norman, 292 Ga. at 354 (1). With that in mind, both appellate courts have affirmed

summary judgment rulings finding that an in terrorem clause bars an individual from

proceeding with an action – even one claiming undue influence. See Norton v.

Norton, 293 Ga. 177, 179 (744 SE2d 790) (2013) (affirming trial court’s grant of

summary judgment to defendants after finding that filing a caveat claiming undue

influence extinguished any and all interests the plaintiffs had under the will due to an

in terrorem clause); Duncan, 345 Ga. App. at 345 (“[T]he trial court did not err by

enforcing the in terrorem clause against a claim of undue influence and therefore

granting partial summary judgment to the trustees on that claim.”). See also In re

Estate of Johnson, 352 Ga. App. 164, 167-168 (834 SE2d 283) (2019) (affirming

probate court’s decision that proposed declaratory judgment action, if filed, would

“trigger” and violate the in terrorem clause). This case law leads us to the inescapable

conclusion that the in terrorem clause in Trust #2 barred Slosberg from pursuing his

undue influence action as to that trust, and the superior court erred in permitting the

issue to go to the jury and accepting the jury’s verdict on that claim.

                                          12
      2. Because the in terrorem clause discussed in Division 1 applies only to Trust

#2 and not the IRA Account or the Agency Account, we turn to Giller and Seidner’s

next enumeration of error.

      Giller and Seidner assert that “[t]he trial court’s award of a constructive trust

improperly usurps the probate court’s jurisdiction.” Giller and Seidner do not assert

that the superior court lacked jurisdiction to determine whether the three documents

were procured by undue influence; rather, they assert that the superior court did not

have authority to create a constructive trust because its authority is limited to a

decision about whether the documents should be set aside.7 According to Giller and

Seidner, once the superior court invalidated and set aside the documents at issue in

this case, all assets should have reverted to the father’s estate for distribution by the

probate court. We find that, as a general rule, a superior court has the authority to

create a constructive trust to correct fraud or unjust enrichment. However, because

      7
         To the extent that Giller and Seidner have attempted to expand this
enumeration of error to include any argument unrelated to the superior court’s award
of a constructive trust, such as whether the superior court had jurisdiction to hear any
of Slosberg’s claims, those argument will not be considered. See, e.g., Steed v. Deal,
225 Ga. App. 35, 35 (2) (482 SE2d 527) (1997) (a party may not expand her
enumeration of error by arguments and citation in the brief).

                                           13
there has been no finding of fraud or unjust enrichment in this case, we agree that the

constructive trust imposed here was improper.

      It is well settled that Georgia probate courts are vested with “original,

exclusive, and general jurisdiction” over, inter alia, the probate of wills and “[a]ll

other matters and things as appertain or relate to estates of deceased persons[.]”

OCGA § 15-9-30 (a) (1), (11). However, it is equally well settled that OCGA § 53-7-

60 grants superior courts concurrent jurisdiction with probate courts “over the

settlement of accounts of personal representatives.”

      Although superior courts are reluctant to interfere in the administration
      of estates, they may do so where there is a danger of loss or other injury
      to a party’s interest, or where equitable interference is necessary for the
      full protection of the rights of the parties in interest.

Lee v. Lee, 260 Ga. 356, 356 (1) (392 SE2d 870) (1990) (citation omitted).

Accordingly, “a superior court can exercise its concurrent jurisdiction over the

administration of estates when complete and adequate remedies at law are

unavailable.” Jonas v. Jonas, 280 Ga. App. 155, 161 (3) (b) n.15 (633 SE2d 544)

(2006).

      “Trusts are peculiarly subjects of equity jurisdiction.” OCGA § 53-12-6 (a).

And, such jurisdiction lies in the superior court, not the probate court. In re Longino,

                                          14
281 Ga. App. 599, 602 (3) (636 SE2d 683) (2006). Regarding constructive trusts,

OCGA § 53-12-132 (a) provides that “[a] constructive trust is a trust implied

whenever the circumstances are such that the person holding legal title to property,

either from fraud or otherwise, cannot enjoy the beneficial interest in the property

without violating some established principle of equity.”8 A request for the imposition

of a constructive trust is not an independent cause of action, but is a device by which

property might be recovered if a party succeeds on a claim of fraud or unjust

enrichment. See Morrison v. Morrison, 284 Ga. 112, 113 (1) (663 SE2d 714) (2008);

St. Paul Mercury Ins. Co. v. Meeks, 270 Ga. 136, 138 (2) (508 SE2d 646) (1998); see

also Lee, 260 Ga. at 357 (1) (“[A] constructive trust may be imposed where property

has been acquired by fraud, or where, though not acquired by fraud it is against equity

that it should be retained by the person who holds it.”); Jonas, 280 Ga. App. at 162

(3) (c) (A constructive trust “is a remedial device created by a court of equity to

prevent unjust enrichment.”) (citation and punctuation omitted). “Unjust enrichment

applies when as a matter of fact there is no legal contract, but when the party sought

      8
        This statute was revised effective 2010; however, the language in OCGA §
53-12-132 (a) is identical to that used in former Code Section 53-12-93 (a). See
Edwards v. Edwards, 267 Ga. 780, 781 (2) (482 SE2d 701) (1997). Therefore, case
law prior to 2010 provides guidance regarding the imposition of constructive trusts.

                                          15
to be charged has been conferred a benefit by the party contending an unjust

enrichment which the benefitted party equitably ought to return or compensate for.”

Tuvim v. United Jewish Communities, Inc., 285 Ga. 632, 635 (2) (680 SE2d 827)

(2009) (citation and punctuation omitted).

      The questions then are whether “equitable interference is necessary for the full

protection” of Slosberg’s rights, and whether it is against equity to allow Giller and

Seidner to retain any of the assets included in the IRA Account and Agency Account

which they acquired through undue influence over their father. Lee, 260 Ga. at 356-

357 (1). These questions necessarily turn on whether Giller and Seidner were unjustly

enriched because, as the Georgia Supreme Court inferred in Tuvim, a superior court

can impose a constructive trust if the evidence supports a finding that parties were

unjustly enriched. Tuvim, 285 Ga. at 634-635 (2).

      In Tuvim, the Supreme Court found that the superior court erred in imposing

a constructive trust on certain financial instruments because no party received any

unjust enrichment. 285 Ga. at 634-635 (2). According to the Court, because there was

no evidence of unjust enrichment, “the financial instruments . . . would simply

become a part of [the] estate[,]” and “any financial benefit that [the party] would be

entitled to receive would involve application of the laws of intestacy, not any sort of

                                          16
unjust enrichment.” Id. at 635 (2). This holding inferred that a constructive trust

would have been warranted if evidence of unjust enrichment existed. Similarly, in

Jonas, this Court found that a superior court properly refused to dismiss a

granddaughter’s claim requesting the imposition of a constructive trust on life

insurance proceeds her grandmother had received from the grandfather’s estate

because her grandmother would have been unjustly enriched by receiving the money.

280 Ga. App. at 161-162 (3) (c).

      The authority cited by Giller and Seidner do not compel a different result. To

support their argument that a superior court lacks authority to impose a constructive

trust once it sets aside financial documents on the basis of undue influence, Giller and

Seidner cite OCGA § 53-12-45 (c), claiming the statute demands that distributions

of a trust deemed invalid must be returned to the estate. That statute, however, does

not concern the imposition of a constructive trust or declare that a superior court is

authorized only to set aside an invalid trust and must leave distribution of the assets

to the probate court. It merely states that “[a] beneficiary of a trust that is determined

to have been invalid shall be liable to return any distribution received.” OCGA § 53-

12-45 (c).

                                           17
      Giller and Seidner also cite Lewis v. Van Anda, 282 Ga. 763, 765 (1) (653 SE2d

708) (2007), for the proposition that where a trust is invalidated by a superior court,

the property must revert to the estate and be disbursed by the probate court. However,

that proposition was stated in the Lewis opinion as a party’s contention; it was not a

ruling of the trial court or this Court. Id. at 764 (1). In fact, the Lewis opinion

addressed the issue in the context of standing, which is not at issue in this case:

“[U]nless and until the probate court were to determine that [the decedent’s] will is

invalid and that she thus died intestate, [the plaintiff] would have no cognizable

interest in the trust property regardless of whether the trust and related transfers were

invalidated.” Id. at 764-765 (1). In addition, although the superior court in Lewis

exercised its equitable powers to set aside a trust and related transfers procured as a

result of undue influence, there was no mention of unjust enrichment or whether a

constructive trust may have been warranted under the circumstances of that case.

      Turning to the specifics in this case, after the jury found that Giller and Seidner

acquired assets by wrongfully exerting undue influence to cause their father to

execute beneficiary forms for the IRA Account and the Agency Account, the superior

court exercised its discretion to impose a constructive trust over the proceeds of the

assets in those accounts. The superior court was within its authority to impose such

                                           18
a trust if “equitable interference [was] necessary for the full protection” of Slosberg’s

rights and Giller and Seidner were unjustly enriched by retaining any of the assets

they wrongfully procured. Lee, 260 Ga. at 356-357 (1), (2). However, the jury did not

render a verdict regarding fraud or unjust enrichment, and the trial court did not make

any findings in its final order regarding unjust enrichment. The superior court simply

awarded a constructive trust. As we found in Tuvim, without a finding of unjust

enrichment, the assets controlled by the financial instruments involved here “would

simply become a part of [the] estate[,]” and “any financial benefit that [Slosberg]

would be entitled to receive would involve application of the laws of intestacy, not

any sort of unjust enrichment.” Tuvim, 285 Ga. at 635 (2).

      In addition, even if facts supported a finding that Giller and Seidner were

unjustly enriched, the superior court’s final judgment did not limit its constructive

trust award to the amount of any unjust enrichment. Instead, the superior court noted

that “the only evidence introduced regarding damages were the amounts in the three

accounts at issue at the time of [the father’s] death[,]” unilaterally determined that

Slosberg was entitled to one-third of the assets contained in the three accounts at

issue, and imposed a constructive trust for that one-third amount. This usurps the

                                           19
probate court’s jurisdiction to apply the laws of intestacy. See Tuvim, 285 Ga. at 635

(2). Moreover, as we held in Division 1, Slosberg is precluded from receiving any

benefit regarding Trust #2 due to the in terrorem clause contained in that document.

Accordingly, the superior court’s imposition of a constructive trust in the amount of

$790,666.67 was error, the final judgment is reversed, and the case is remanded for

further proceedings consistent with this opinion.

      3. Giller and Seidner contend that the superior court erred in awarding

prejudgment interest and funds that Slosberg already has received. Given that we

have reversed the superior court’s final judgment, we decline to address these issues

on appeal and instead urge the superior court to consider them on remand should the

court determine that the imposition of a constructive trust is still proper.

      Judgment reversed and case remanded. Rickman, P. J., concurs; McFadden,

C.J., dissents.
 A21A0001. GILLER et al. v. SLOSBERG.

      MCFADDEN, Chief Judge, dissenting.

      Under fundamental and settled law, the verdict and judgment that the trust

before us was procured by undue influence entailed a determination that the grantor

had been without capacity to execute it and therefore that it was void at its inception.

The in terrorem clause falls along with the rest of the instrument. There is nothing to

the contrary in Duncan v. Rawls, 345 Ga. App. 345 (812 SE2d 647) (2018). Adopting

a rule to the contrary entails disapproving decisions of our Supreme Court. So I

respectfully dissent.

      “A person has capacity to create an inter vivos trust to the extent that such

person has legal capacity to transfer title to property inter vivos. A person has

capacity to create a testamentary trust to the extent that such person has legal capacity

to devise or bequeath property by will.” OCGA § 53-12-23.

                                           2
      Here the verdict is an authoritative determination that the grantor lacked the

capacity to create a trust. “For undue influence to be sufficient to invalidate a trust,

it must amount to deception or force and coercion so that the grantor is deprived of

free agency and the will of another is substituted for that of the grantor.” Lewis v. Van

Anda, 282 Ga. 763, 766 (4) (653 SE2d 708) (2007) (citation and punctuation

omitted). See also Mullis v. Welch, 346 Ga. 795, 799 (20 (b) (815 SE2d 282) (2018)

(“[The standard required for invalidation of a trust] is the same standard required for

the invalidation of a will or a deed as the result of undue influence over a

testator/testatrix or grantor.”)

      Wills and trusts executed by one without the legal capacity to do so are void

from the inception. They are stillborn. Their terms are, and always were, entirely

without effect. See JR Const./Elec. v. Ordner Const. Co., 294 Ga. App. 453, 455 (669

SE2d 224) (2008); cf. Smith v. Morris, Manning & Martin, 264 Ga. App. 24, 26 (589

SE2d 840) (2003) (physical precedent only). Including in terrorem clauses.

      Especially in terrorem clauses. “[A]lthough in terrorem clauses are permitted

by statute, OCGA § 53–12–22(b), they are not favored in the law.” Callaway v.

Willard, 321 Ga. App. 349, 353 (1) (739 SE2d 533) (2013) (citation and punctuation

omitted).

                                           3
      There is no affirmative statutory authority in Georgia for [in terrorem
      clauses]. Instead, they are authorized indirectly by [OCGA § 53-12-22
      (b) (“[a] condition in terrorem shall be void unless there is a direction in
      the trust instrument as to the disposition of the property if the condition
      in terrorem is violated, in which event the direction in the trust
      instrument shall be carried out, except as otherwise provided in
      subsection (c) of this Code section.”)]

Dick v. State, 248 Ga. 898, 899 (1), n. 2 (287 SE2d 11) (1982) (discussing

extraordinary motions for new trial). So it is of no consequence whether the void in

terrorem clause before us was, by its terms, purportedly triggered.

      The majority invests extraordinary potency in those disfavored clauses. Under

today’s decision they can substitute for capacity and animate stillborn instruments.

      Our decision in Duncan v. Rawls, supra, does not require that result. It

correctly restated that, while “a trust may be attacked where the trust results from

undue influence . . . in terrorem clauses protecting against such a challenge are

allowed under Georgia law[.]” Duncan, supra at 348 (1) (b). Protection is one thing.

Imposing a high cost for unsuccessful challenges is one thing. Our decision today is

quite another. Under our decision today, an in terrorem clause affords complete

invulnerability.

      It is true that Duncan’s introductory paragraph says that “the trial court did not

err by enforcing the in terrorem clause against a claim of undue influence and

                                           4
therefore granting partial summary judgment to the trustees on that claim.” Id. at 345.

But the beneficiaries’ relevant claim was for a declaration that they had a good faith

basis and probable cause for alleging undue influence and so should not suffer

forfeiture even if their allegations were rejected at trial. About that claim, Duncan’s

holding is that it fails at the threshold. “We therefore conclude that the trial court

correctly held that no good faith/probable cause exception exists.” Id. at 350 (1) (b).

       The trustees’ relevant claim was that, by seeking such a declaration, the

beneficiaries had triggered the in terrorem clause. That claim, Duncan recognizes,

had not been decided below and so was not before us. “The trial court noted that

‘[q]uestions as to whether [the appellants’] actions may have triggered forfeiture of

their distributions under the no contest clause are not before the Court.’” Id. at 350

(2), n. 12.

       So even if the reference to “enforcing” in Duncan’s introductory paragraph can

be read to undertake to do what the majority says it does, it is dicta at most.

       None of the other cases cited by the majority are to the contrary. In none of

them, as detailed in the margin, had an instrument containing an in terrorem clause

                                          5
been found by a jury to be the product of undue influence.1 And none of them stand

for the proposition that an in terrorem clause can supply a lack of capacity and render

an instrument invulnerable to challenge as the product of undue influence.

      There appear to be no previous cases in which our appellate courts have faced

the audacious claim the appellants make here: even though they have been found to

have procured the trust before us by means of undue influence and do not contest that

finding, they nevertheless claim to be fully entitled to all of their ill-gotten gains.

      1
        Howell v. Bates does reject Howell’s “assert[ion] that the [trial] court erred in
finding that she violated the ‘no contest’ provision of the Trust and, thus, forfeited her
right to a distribution under the Trust” by, among other things, filing a caveat
“asserting that the Will was invalid because Bates had exerted ‘undue influence’ over
the decedent.” Howell v. Bates, 350 Ga. App. 708, 710 (830 SE2d 250) (2019). But
as to the merits of the caveat, Appellant Howell argued only “that, because the
probate court has not yet ruled on her caveat to the Will or appointed someone as
administrator of the estate, there was no one to represent the estate’s interests in this
case, so any ruling by the superior court in this case was premature.” Id. at 711. So
while the issue before us today was lurking in the record, it was not addressed.
“Issues merely lurking in the record, neither brought to the court’s attention nor
expressly ruled upon, have not been decided so as to constitute precedent.” Eady v.
Capitol Indem. Corp., 232 Ga. App. 711, 713 (502 SE2d 514) (1998).
       In Norton v. Norton the caveat had already been rejected, and that rejection had
been affirmed on appeal. Norton v. Norton, 293 Ga. 177 (744 SE2d 790) (2013).
       In re Estate of Johnson, as the majority correctly explains, holds that “the
probate court properly concluded that the Johnsons’ declaratory judgment action
would trigger the in terrorem clause[.]” In re Estate of Johnson, 352 Ga. App. 164
(834 SE2d 283) (2019).

                                            6
      But our Supreme Court has assumed the contrary. Its decisions reflect an

assumption that an instrument proven to have been so procured it is void — in

terrorem clause and all.

      In Norman v. Gober the caveat had been brought in the name of a child. Our

Supreme Court concluded that the child was being used by his mother as a catspaw

— in derogation of his own interests. Its analysis reflects an assumption that the in

terrorem clause would be effective only if the caveat action were unsuccessful:

      If Caveator’s action were successful, Caveator’s mother, an heir-at-law, would
      benefit from the non-probate of the Will through intestacy, while Caveator’s
      contingent interest would be concomitantly destroyed. If Caveator’s action
      were unsuccessful, the testamentary share of Caveator’s mother would remain
      intact, while Caveator’s contingent interest would be invalidated by Decedent’s
      in terrorem clause.

Norman v. Gober, 288 Ga. 754, 755 (707 SE2d 98) (2011).

      In Lillard v. Owens our Supreme Court upheld a judgment voiding a will

procured by means of undue influence — including and notwithstanding its in

terrorem clause. The case was a dispute about two competing wills between the

children of a testator’s first marriage and the stepchildren of his second. A will

executed in February of the year of his death “[f]or the most part . . . divided the

testator’s property evenly among all the children[.]” Lillard v. Owens, 281 Ga. 619

                                         7
(641 SE2d 511) (2007). But a will entered in October of that same year, twelve days

before his death, “left most of the testator’s property to [the children of the first

marriage], with bequests to the [stepchildren of the second] and an in terrorem clause.

Id. at 619.

      After a six-day trial, the trial court entered judgment on a verdict upholding the

February will and invalidating the October will — including its in terrorem clause.

Id. at 620. Our Supreme Court affirmed, rejecting the contention that “the evidence

was insufficient to support a finding of undue influence or lack of testamentary

capacity.” Id. at 620 (1).

      It is true that Lillard did not address the question whether “trial court erred in

permitting the claim to proceed to the jury.” Majority, p. 7. But the assumption that

it did not err by doing so is necessarily implicit.

      So to reach the decision the majority reaches today, we need to disapprove our

Supreme Court’s opinions in Lillard and Norman to the extent that they so imply. I

don’t think we can do that.

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