Court Opinion

ID: 4692445
Source: CourtListenerOpinion
Date Created: 2021-06-03 13:21:15.346622+00
Date Added: 2024-06-11T08:05:16.303808
License: Public Domain

PRESENT: All the Justices

STAVROS P. GALIOTOS, A/K/A STEVE P.
GALIOTOS, CO-EXECUTOR OF THE ESTATE
OF IRENE A. GALIOTOS
                                                                    OPINION BY
v. Record No. 200504                                       JUSTICE S. BERNARD GOODWYN
                                                                     June 3, 2021
TASOS A. GALIOTOS, CO-EXECUTOR OF
THE ESTATE OF IRENE A. GALIOTOS,
ET AL.

TASOS A. GALIOTOS, CO-EXECUTOR OF
THE ESTATE OF IRENE A. GALIOTOS

v. Record No. 200667

STAVROS P. GALIOTOS, A/K/A STEVE P.
GALIOTOS, CO-EXECUTOR OF THE ESTATE
OF IRENE A. GALIOTOS, ET AL.

             FROM THE CIRCUIT COURT OF THE CITY OF VIRGINIA BEACH
                            H. Thomas Padrick, Jr., Judge

         In these appeals regarding two brothers’ prolonged disputes concerning the

administration of their late mother’s estate, we consider whether the circuit court erred in

removing both brothers from their fiduciary roles, and replacing them with a disinterested third

party.

                                         I. BACKGROUND

         Anthony Galiotos (Anthony) and Irene Galiotos (Irene), husband and wife, amassed a

significant number of commercial real estate properties during their marriage, along with other

valuable assets. Anthony died testate in 2006, survived by Irene and their three sons: Stravos

Galiotos (Steve), Tasos Galiotos (Tasos), and Paul Galiotos (Paul).
       On June 23, 2016, Irene died testate. In her will, Irene nominated and appointed Steve

and Tasos to serve as co-executors of her estate (the Estate). She provided that “[i]f either is or

becomes unable or unwilling to serve as Co-Executor hereunder, the other shall continue to serve

without the necessity of a successor Co-Executor.” On August 1, 2016, Steve and Tasos

qualified as co-executors of the Estate. The brothers have had numerous disputes and

misunderstandings between each other as they have attempted to carry out their duties as co-

executors of the Estate.

       After Steve and Tasos had been disagreeing for some time, the attorney who was

representing the Estate informed the brothers that because she represented the interests of the

Estate, she could not represent either Steve or Tasos regarding any legal disputes against the

other. Ultimately, counsel for the Estate informed both Steve and Tasos that, in her opinion,

both were permitted to hire legal counsel at the expense of the Estate, to represent them

separately in their roles as fiduciaries. Both brothers hired separate legal counsel.

       The brothers continued to have difficulty in reaching agreements concerning the

administration of the Estate. The disagreements between the brothers resulted in the hiring of

several different accounting firms as well as legal representatives. It also resulted in disputes

concerning the payment of counsel by the Estate, the proper distribution method for the interests

in the various LLCs, partnerships and property interests, and many other issues. As one brother

testified at trial, “[W]e had disagreements. We couldn’t agree on simple trivial matters. We

couldn’t agree on important matters.” These disagreements culminated in legal action.

       Tasos filed a petition in the Circuit Court of the City of Virginia Beach seeking to remove

Steve as co-executor. In the petition, Tasos claims that Steve has failed to fulfill his duties as an

executor and has “engaged in a campaign of obstructionism concerning the administration of the

                                                  2
Estate . . . in an effort to force Tasos to accede to his demands,” and that Steve has refused to

work cooperatively with Tasos in administering the Estate.

       Tasos cites several examples to support his claim that Steve has violated his fiduciary

duties as a co-executor. He notes Steve’s insistence that the brothers be given specific properties

rather than having co-ownership of the Estate’s assets, as Tasos claims his mother’s will

requires; Steve’s refusal to consent to the acceptance of a third party’s offer to purchase a piece

of property owned by the Estate, at an amount that exceeded the appraised value of the property;

Steve’s having a bank release the proceeds of a particular certificate of deposit owned by Irene

(hereinafter, the CD), to himself and his children “without the consent or acknowledgement of

Tasos;” Steve’s refusal to allow the Estate to make distributions to beneficiaries from the profits

of a company owned by the Estate, which was contrary to how the profits were handled

previously; Steve’s failure to provide notice and an opportunity for Tasos to purchase the

Estate’s interest in the Executive Cove property, in accordance with the operating agreement

regarding that property; and Steve’s insistence, contrary to the terms of Irene’s will, that certain

property in Greece that the Estate owned, be gifted to their aunt.

       Additionally, Tasos asserts that Steve demanded that only his expenses be reimbursed,

refusing to agree that Tasos and Paul be reimbursed as well. Tasos also avers that his brothers,

Steve and Paul, conspired against him in an attempt to gain control of assets that Tasos

independently owned, in furtherance of Steve’s plans regarding distribution of the assets of the

Estate. Tasos also asserts in his petition that “the administration of the Estate is deadlocked,”

and attributes that deadlock to Steve’s actions, specifically Steve’s “intransigence in refusing to

perform his duties as executor in an evenhanded and fair manner, and considering his inability to

                                                  3
work cooperatively and collaboratively with Tasos in order to further advance the interests of the

Estate.”

       Steve filed an answer and counterclaim. In his counterclaim, Steve claims that Tasos has

breached his fiduciary duty as a co-executor and should be removed. He states that Tasos has

refused to pay legitimate Estate expenses owed to previous attorneys and law firms and to

reimburse Steve for expenses incurred when he travelled from New York for Estate business.

Steve also asserts that Tasos, in derogation of his fiduciary duty to the Estate and over Steve’s

objection, purchased the Estate’s interest in Executive Cove, which was co-owned with Tasos,

and that Tasos “self-servingly accepted his own unauthorized offer,” by the Estate to Tasos, for

the below-market sale of that property to Tasos. Steve asks the circuit court to declare that Tasos

violated his fiduciary duty and that the Estate’s transaction with Tasos concerning the Executive

Cove property be declared null and void, or in the alternative, that the circuit court find the

“purported purchase price is below-market, unfair, improperly discounted and inaccurate.” Steve

also claims that the brothers were at an impasse regarding any distribution of the Estate’s

property in Greece.

       In his counterclaim, Steve not only seeks a declaratory judgment that Tasos’ actions in

redeeming the Estate’s interest in Executive Cove for himself are improper and unauthorized, but

also that the Estate pay the fees that it owes and that the Estate engage a particular law firm to

assist the Estate with its property in Greece. Steve also asks that Tasos be found in breach of his

fiduciary duty to administer the Estate prudently, and that he be held personally liable for any

and all damages, attorneys’ fees, costs and expenses to the Estate and its beneficiaries as a result

of his breach of fiduciary duties and obligations. Steve requests that Tasos be removed as a co-

executor because of his breaches of fiduciary duty and persistent failure to administer the Estate

                                                  4
effectively, his “demonstrated [] unwaivable and significant conflict of interest regarding the

Estate and its assets that has caused him to act improperly in his own self-interest” and because

Tasos’ continued service as co-executor would be harmful to the Estate.

        In October 2019, the circuit court held a bench trial on Tasos’ and Steve’s claims, by

each, that the other should be removed as a co-executor. After the witnesses were sworn in,

Tasos moved to exclude the non-party witnesses from the courtroom. Paul indicated to the

circuit court that he was a party and should not be excluded. Tasos stated that Paul was not a

party, whereas Steve indicated he had no position on the matter and was fine with Paul

remaining in the courtroom. The circuit court allowed Paul to remain in the courtroom, despite

Tasos’ objection, but all other non-party witnesses were excluded.

        The parties made opening statements, then Tasos presented his case. Tasos’ case-in-chief

included testimony from three witnesses: himself, a business valuation analyst, and Paul. Paul’s

testimony was fairly short and primarily concerned e-mails, which were admitted into evidence.

He also testified regarding his role in the dispute between his two brothers, including how he

often would try to get each brother to understand the other’s perspective. Steve’s evidence

consisted of the two accountants, who had resigned because of the discord between the brothers,

and Steve’s own testimony. Steve did not testify until near the end of the trial, after Paul had

testified.

        At the conclusion of the trial, the circuit court noted the numerous different accountants

and law firms that had been hired and subsequently resigned, the disagreements regarding the

distribution of the Estate, and the general tone of discord between the brothers. The circuit court

ruled that, in the best interest of the Estate, both Steve and Tasos should be removed from their

roles as co-executors of their mother’s Estate. The circuit court appointed a disinterested third

                                                 5
party, Stephanie Smith (Smith) who is a Commissioner of Accounts, to serve as administrator of

the Estate. *

        The circuit court stated from the bench that both Tasos and Steve frequently acted in their

own best interest and that each brother’s conduct, at times, led to frustration by the other in his

efforts to administer the Estate. In reaching its conclusion, the circuit court also noted that “the

parties [were not] getting along, not speaking to each other, and exchanging some pretty brutal

e-mails” and the circuit court was confident that the parties would not be able to resolve their

conflicts and jointly administer the Estate effectively.

        The circuit court stated, regarding Steve’s conduct, that while the CD was payable on

death and not part of the Estate, it felt Steve “should have held off on that” because there was a

dispute as to who was entitled to the proceeds. The circuit court explained that while it thought

that it was not prudent of Steve to have redeemed the CD, it could not find that Steve breached

his fiduciary duty to the Estate in doing so. Concerning Tasos’ conduct in regard to Executive

Cove, the circuit court noted that Tasos “acted in a unilateral fashion” and should not have done

what he did. The circuit court stated that Tasos’ conduct was not prudent, but declined to

explicitly rule that Tasos breached his fiduciary duty. The circuit court declined to set aside

Tasos’ redemption of the Executive Cove interest, but provided that Smith, upon becoming the

administrator of the Estate, could litigate the issue in a new proceeding if she felt it necessary

and prudent to do so.

        The circuit court also noted that it found there was no conspiracy and that both Steve and

Tasos “kind of beat up on each other for reasons unclear to [the court].” Explaining its reasoning

        *
         On motion, Smith was added as a party to this appeal. However, Smith has not taken
any position regarding this appeal.

                                                  6
summarily, the circuit court noted that Tasos and Steve were “hopelessly deadlocked” regarding

what to do with the administration of the Estate.

       The circuit court denied attorneys’ fees for both Steve and Tasos and ruled that neither

would receive compensation for serving as an executor. On January 13, 2020, the circuit court

entered an order consistent with its rulings from the bench.

       Steve and Tasos filed separate appeals.

                                             II. ANALYSIS

       On appeal, Steve argues that the circuit court erred in removing him as co-executor of the

Estate but asserts that the circuit court was correct to remove Tasos. In parallel, Tasos argues

that the circuit court erred in removing him as co-executor of the Estate but avers that the circuit

court was correct to remove Steve. Both Steve and Tasos assert that the circuit court erred in

denying their respective legal fees, costs, and fiduciary compensation. Additionally, Steve

assigns error to the circuit court’s failure to set aside Tasos’ redemption of the Estate’s interest in

Executive Cove. Further, Tasos assigns error to the circuit court’s refusal to exclude Paul from

the courtroom during testimony. We address each of these issues in turn.

                                   A. Removal of Co-Executors

       Tasos argues that the circuit court erred in removing him as co-executor of the Estate. He

contends that the circuit court committed a “clear error of judgment” in removing him because

Steve is the one who caused the deadlock and committed a breach of trust. Tasos asserts that he

was acting in the best interests of the Estate and Steve’s actions amounted to “obstructionism”

and self-dealing, leading to the deadlock.

       Correspondingly, Steve argues that the circuit court erred in removing him as co-executor

of the Estate. He asserts that an executor may only be removed if he committed fraud, breached

                                                    7
trust, was grossly negligent, or breached his fiduciary duty. Thus, he avers that the circuit court

did not make any findings that support his removal. Steve argues that his conduct relating to the

CD and “deadlock” are improper bases for his removal.

       A trial court is afforded considerable latitude when faced with the decision of whether to

remove an executor. Clark v. Grasty, 210 Va. 33, 37 (1969). Such latitude is necessary in those

situations because the trial court, having heard from the parties and witnesses itself, is best suited

to make determinations regarding the facts and whether an executor’s continued service would

benefit the estate. See Reynolds v. Zink, 68 Va. (27 Gratt.) 29, 31-32 (1876). Thus, we review

the circuit court’s decision to remove both Steve and Tasos as co-executors for abuse of

discretion.

       When we say that a circuit court has discretion, we mean that “the [circuit] court has a

range of choice, and that its decision will not be disturbed as long as it stays within that range

and is not influenced by any mistake of law.” Landrum v. Chippenham and Johnston-Willis

Hosps., Inc., 282 Va. 346, 352 (2011) (internal quotation marks omitted). There are three

principal ways in which a circuit court can abuse its discretion:

       when a relevant factor that should have been given significant weight is not
       considered; when an irrelevant or improper factor is considered and given
       significant weight; and when all proper factors, and no improper ones, are
       considered, but the court, in weighing those factors, commits a clear error of
       judgment.

Id. (internal quotation marks omitted). “Thus, only when reasonable jurists could not differ can

we say an abuse of discretion has occurred.” Sauder v. Ferguson, 289 Va. 449, 459 (2015)

(internal quotation marks omitted).

       The circuit court may revoke and annul the powers of an executor for any cause, as long

as the removal of an executor appears proper. Code § 64.2-1410(A). The critical inquiry is

                                                  8
whether it is in the best interest of the estate that the executor, or executors, be removed. Clark,

210 Va. at 37. To that end, removal of an executor who is guilty of fraud, breach of trust, or

gross negligence would surely benefit the estate. See id. at 38. However, those are not the only

justifications that would warrant removal of an executor. We have previously indicated that

“friction” between individuals can justify the removal of an executor when removal would

achieve some beneficial end. Id. at 37-38. Ultimately, the determination of whether the removal

of an executor would be in the best interest of the estate is left to the broad discretion of the trial

court.

         It is undisputed that Steve and Tasos were not getting along and that as a result, the

administration of the Estate was suffering. While Steve and Tasos were co-executors, several

different legal representatives and accountants were hired to help with the administration of the

Estate; evidence showed that the conflict between the brothers led to numerous subsequent

resignations, at the expense of the Estate. Additionally, Steve and Tasos could not agree on how

to distribute the assets of the Estate. Admittedly, the brothers could not even agree on simple

trivial matters, much less important ones, and their co-administration of the Estate was not

effective.

         In this instance, we cannot say that the circuit court abused its discretion and thus erred in

removing both Steve and Tasos from their roles as co-executors. The strife and conflict between

the brothers, as it relates to the administration of the Estate, is extensive and well-documented.

The circuit court found that there was significant friction between the co-executors,

characterizing Steve and Tasos as “hopelessly deadlocked.” As a result, the circuit court

concluded that it would be in the best interests of the Estate to remove both co-executors and

appoint Smith, a disinterested third party, as administrator so that the administration of the Estate

                                                   9
could proceed. In other words, the circuit court found that there was failure to cooperate

between Steve and Tasos, which hindered the administration of the Estate to its detriment, and

used that as a basis for concluding that removing both of the co-executors, and replacing them

with a disinterested third party, was in the best interests of the Estate. Based on our review of

the record, we cannot conclude that this decision was an abuse of the circuit court’s discretion.

                             B. Legal Fees & Fiduciary Compensation

        Tasos asserts that the circuit court’s ruling denying him reimbursement of attorneys’ fees

in this action was clearly erroneous. He argues that he engaged legal counsel pursuant to the

advice from the Estate’s counsel that each co-executor could engage legal counsel at the expense

of the Estate. Tasos contends that he substantially prevailed in the action and that the circuit

court should have awarded his attorneys’ fees. He also argues that “it is beyond question” that

he performed his duties in good faith and that his acts benefitted the Estate; therefore, in his

view, he should be compensated for serving as co-executor.

        Similarly, Steve argues that the circuit court erred in denying him legal fees and costs.

He contends that he retained counsel upon the advice of the Estate’s counsel, and that he did so

in good faith; thus, in his view, he is entitled to fees and costs. Ultimately, Steve asserts that

because the action concerns his performance of fiduciary duties, the law allows him to recover

legal costs and fees for his defense.

        A trial court’s decision to refuse attorneys’ fees is reviewed for abuse of discretion.

Lynchburg Div. of Social Servs. v. Cook, 276 Va. 465, 484 (2008). An executor is entitled to

“any reasonable expenses incurred by him in his capacity as a fiduciary,” which may include

attorneys’ fees. Clare v. Grasty, 213 Va. 165, 170 (1972). While “[a]n executor may, in good

faith, seek the aid of counsel in the [e]xecution of his duties,” he is not entitled to attorneys’ fees

                                                  10
and legal costs simply because they were incurred in good faith. Id. The attorneys’ fees and

costs must be for services that aid the executor in the performance of his duties and are beneficial

to the estate. Id.; see also O’Brien v. O’Brien, 259 Va. 552, 557-58 (2000) (holding that an

executor was rightfully denied attorneys’ fees because the fees “were incurred for his personal

benefit and not to benefit the estate or to aid him in his duties as an executor”).

       Additionally, “[i]t is well settled that the allowance of a commission is within the sound

discretion of the trial court.” Clare, 213 Va. at 170. An executor is only entitled to a

commission “when the executor has faithfully discharged his duties to the estate in his charge”

because his commission “is based upon the services he has rendered in behalf of the estate.” Id.

       In the present case, the circuit court did not abuse its discretion in denying both Steve’s

and Tasos’ requests for their legal fees to be paid by the Estate. Although the hiring of the

numerous attorneys and law firms may have in some way benefitted the Estate, there is ample

evidence to support a conclusion by the circuit court that it was actually done to advance the

individual interests of the competing co-executors, rather than the interests of the Estate. In fact,

the circuit court found that Steve and Tasos had at times pursued their own interests, rather than

the Estate’s, which is what led to the frustration of the Estate’s administration. Similar reasoning

applies to the circuit court’s ruling upon their claims for fiduciary compensation. As such, the

circuit court did not abuse its discretion when it denied Steve’s and Tasos’ claims for legal fees

and fiduciary compensation because there is evidence to support the circuit court’s exercise of its

discretion not to do so.

                                         C. Executive Cove

       Steve argues that the circuit court erred when it declined to set aside Tasos’ purchase of

the Estate’s interest in Executive Cove. He contends that the circuit court should have set aside

                                                  11
the sale, declared the transaction void, or ordered Tasos to pay damages in an amount reflecting

the financial benefit he obtained. Steve asserts that the circuit court found that Tasos breached

his fiduciary duty when he redeemed the Estate’s interest in Executive Cove and avers that such

a finding necessitated that the transaction be set aside. He further argues that the terms of the

Executive Cove operating agreement do not authorize Tasos’ actions. Steve contends that when

Tasos acted unilaterally, in offering the sale of the Estate’s interest in Executive Cove to himself,

he acted beyond the scope of his authority as a co-executor of the Estate.

       The basis of Steve’s counterclaim was his claim that Tasos breached his fiduciary duty

and should therefore be removed as co-executor; all relief requested was incidental to that claim.

The circuit court did not find that Tasos breached his fiduciary duty. It is well established that a

circuit court speaks only through its written orders. See, e.g., Rose v. Jaques, 268 Va. 137, 147

(2004). Even though the circuit court’s comments at the trial could be interpreted as a finding

that there was evidence that Tasos may have breached his fiduciary duty, as regards his actions

concerning the Estate’s interest in the Executive Cove property, the circuit court declined to

incorporate its comments into its written order and it did not actually state from the bench or in

its order that it found that Tasos violated his fiduciary duty.

         In essence, the circuit court concluded that it did not need to resolve the issue of

whether there was a breach of fiduciary duty in order to rule upon whether the co-executors

should be removed. As such, we cannot say that the circuit court erred by declining to set aside

Tasos’ redemption of the Estate’s interest in Executive Cove and indicating that Smith could

bring the issue before the court on behalf of the Estate in a future proceeding, if she deemed it

appropriate and prudent to do so.

                                                  12
                              D. Witness Remaining in Courtroom

       Tasos argues that the circuit court erred in denying his motion to exclude witnesses from

the courtroom, which included Paul. He asserts that under the statute the circuit court must

exclude witnesses once a party makes the motion. Tasos avers the error was not harmless

because allowing Paul to be in the courtroom gave Paul the opportunity to ensure his testimony

fell in line with Steve’s theory of the case and rebutted Tasos’ testimony.

       “The court trying any civil case . . . shall upon the motion of any party, require the

exclusion of every witness.” Code § 8.01-375. There is an exception for individuals who are

named parties; they are permitted to remain in the courtroom. Id. We have previously

emphasized that the purpose of the statute is to “discourage and expose fabrication and collusion

by witnesses and to minimize the likelihood that witnesses will alter their testimony so that such

testimony is consistent with testimony provided by other witnesses.” Motley v. Tarmac Am.,

Inc., 258 Va. 98, 101-02 (1999).

       However, “[a]bsent an error of constitutional magnitude, no judgment shall be arrested or

reversed when it plainly appears from the record and the evidence given at trial that the parties

have had a fair trial on the merits and substantial justice has been reached.” Spruill v. Garcia,

298 Va. 120, 127 (2019) (citing Code § 8.01-678) (internal quotation marks omitted). “Under

the doctrine of harmless error, we will affirm the circuit court’s judgment when we can conclude

that the error at issue could not have affected the court’s result.” Forbes v. Rapp, 269 Va. 374,

382 (2005). “The harmless-error check on judicial power has never been a begrudged

limitation,” instead it is favored by our courts “because it stems from the imperative demands of

common sense.” Our Lady of Peace, Inc. v. Morgan, 297 Va. 832, 853 (2019).

                                                 13
       Paul testified as a part of Tasos’ case-in-chief and long before Steve testified. The focus

of Paul’s testimony was a batch of e-mails, which were also admitted into evidence. He also

testified that Steve and Tasos often would not have empathy for the other’s position, so Paul

would often attempt to get each brother to understand the other’s position. Given the timing and

nature of Paul’s testimony, and the testimony of other witnesses before and after Paul’s

testimony, it plainly appears that Paul’s presence in the courtroom did not prevent Tasos from

receiving a fair trial on the merits. As such, we are of the opinion that to the extent the circuit

court erred in permitting Paul to remain in the courtroom, such error is not a sufficient reason to

reverse the judgment of the circuit court.

                                          III. CONCLUSION

       The circuit court did not abuse its discretion in removing Steve and Tasos as co-executors

based on its conclusion that the brothers were, to the detriment of the Estate, deadlocked

regarding the administration of the Estate. It did not abuse its discretion in denying Steve and

Tasos compensation, legal fees, and costs, nor did it err in declining to set aside the Executive

Cove transaction, in that it did not need to resolve that matter in order to determine whether the

co-executors should be removed. Further, there is no reversible error regarding Paul’s presence

in the courtroom during the trial.

       Accordingly, we will affirm the judgment of the circuit court.

                                                                                            Affirmed.

                                                  14