Paul M. Stroebel
Stroebel & Johnson, P.L.L.C.
Charleston, West Virginia
Attorney for the Appellant
Lonnie C. Simmons
The Opinion of the Court was delivered PER CURIAM.
1. In reviewing challenges to the findings
and conclusions of the circuit court, we apply a two-prong deferential standard
of review. We review the final order and the ultimate disposition under an
abuse of discretion standard, and we review the circuit court's underlying
factual findings under a clearly erroneous standard. Questions of law are
subject to a de novo review. Syl. Pt. 2, Walker v. West Virginia
Ethics Com'n, 201 W.Va. 108, 492 S.E.2d 167 (1997).
2. Under W.Va.Code, 55-7-6 (1985), our wrongful
death statute, the personal representative has a fiduciary obligation to the
beneficiaries of the deceased because the personal representative is merely
a nominal party and any recovery passes to the beneficiaries designated in
the wrongful death statute and not to the decedent's estate. Syl. Pt.
4, McClure v. McClure, 184 W.Va. 649, 403 S.E.2d 197 (1991).
Viola Brown Lauderdale (hereinafter Appellant) appeals from a January 2, 2001, order of the Circuit Court of Kanawha County, under which she was declared entitled to just $100 from the proceeds of a $100,000 settlement previously disbursed to family members other than herself as a result of a summary proceeding seeking review of a compromise of a wrongful death claim arising out of the death of her husband, Michael Wayne Brown (hereinafter Decedent). Appellant contends that the lower court erred by making such a nominal award to a surviving spouse, failing to designate the party responsible for payment of the award, and failing to set aside or amend the March 3, 1994, summary proceeding order which approved the original settlement but failed to set out the specific share of the settlement proceeds due each person entitled to a part of the settlement. Upon review of the record, briefs and argument in this case, we remand this case to the circuit court to determine the share of the settlement fairly due to Appellant.
On August 27, 1993, Decedent's uncle, Robert Parks
(hereinafter Mr. Parks), was appointed administrator of the estate,
allegedly without the knowledge of Appellant. Mr. Parks subsequently initiated
a wrongful death claim on behalf of the estate against the owner of the automobile,
Mr. Neal, and State Farm. In response, State Farm offered to pay the administrator,
Mr. Parks, $100,000 to settle the wrongful death action--the maximum amount
payable under Mr. Neal's insurance policy. On March 3, 1994, a hearing was
held in the summary proceeding initiated in the circuit court to obtain court
approval of the settlement proposed by State Farm and Mr. Parks. Although
Mr. Parks did not attend the summary hearing,
(See footnote 4) his counsel tendered to the
circuit court a release, dated February 17, 1994, and signed by Mr. Parks, expressly declaring that he had the consent of all
beneficiaries entitled to share in the proceeds of the proposed settlement.
While no transcript of the March 3, 1994, hearing exists, the record includes
a letter authored by Judge Paul Zakaib which indicates that some of Decedent's
family, other than Appellant, did participate in the summary hearing. By order
entered March 3, 1994, the circuit court approved the $100,000 settlement,
allowed the administrator's counsel a fee of $40,000 and directed
the administrator to distribute the settlment [sic] amount to the surviving
relatives of Decedent, as dictated by the provisions of West Virginia
Code § 55-7-6. The order did not apportion the settlement among
the relatives or specify them by name.
(See footnote 5)
Appellant received neither notice of the summary
proceeding nor any part of the settlement proceeds. When Appellant discovered
that settlement had occurred, she attempted to protect her right to a share
of the settlement by filing a complaint on December 23, 1994, against Mr.
Neal, State Farm, and Mr. Parks, requesting that the circuit court set aside
the settlement order from the summary proceeding and reopen the wrongful death
action. Appellant also requested that the previously-disbursed settlement
funds be returned to an escrow account pending the outcome of the new action. The case was
assigned to Judge Paul Zakaib, who had also presided over the summary proceeding.
Mr. Neal, State Farm, and Mr. Parks filed motions to dismiss the complaint,
and Appellant filed her response to said motions. The lower court denied the
motions to dismiss Appellant's action by order entered February 23, 1996.
Thereafter, Appellant filed numerous motions in
what appeared to be attempts to have the circuit court take action on her
case. Additionally, Appellant filed a motion on September 18, 1996, seeking
recusal of Judge Zakaib, asserting that the judge might be called as a witness
because he had presided over the wrongful death summary proceeding in which
the settlement had been approved. As a result, the case was reassigned to
Judge Andrew MacQueen on June 19, 1997. Although Appellant filed several motions
requesting that the court rule on the issue of setting aside the settlement
order, no significant court action occurred in the matter until April 21,
1999, when the lower court entered a memorandum order. In that order, the
court deferred its ruling on Appellant's motions to set aside the settlement
order in the summary proceeding until a hearing could be held concerning the
interests of all statutory beneficiaries and the duties a settling insurer
would owe to such beneficiaries.
On July 15, 1999, Mr. Parks' counsel filed a supplement
to the record below, indicating that he had attempted by certified letters to
notify the settlement beneficiaries and Mr. Parks of the upcoming hearing. As
a result, Mr. Parks' counsel discovered that one beneficiary was deceased and
another incarcerated. The letter to a third beneficiary was returned as undeliverable.
The supplement also included an affidavit of Mr. Parks, a resident of Georgia,
stating that Mr. Parks is disabled and receiving social security disability
benefits as his only income. Consequently, Appellant was the only statutory
beneficiary to appear and present evidence at the hearing held on July 21, 1999,
for the purpose of reconsidering the proper distribution of the settlement proceeds.
By order entered December 27, 2000, the circuit court awarded Appellant $100
of the previously disbursed settlement proceeds. It is from this order that
Appellant now appeals.
In the summary proceeding at which the $100,000
wrongful death settlement was approved, the circuit court elected to accept
the representation in the release signed by the administrator, Mr. Parks,
that all of the lawful beneficiaries were in agreement regarding the
distribution of the settlement proceeds and the trial court did not specify
any allocation of the shares of that settlement to which the various persons
were entitled in the order approving the settlement. In fact, the administrator
had not reached an agreement with all of the beneficiaries entitled
to share in the settlement, and, specifically, had not obtained consent from
Appellant to the proposed distribution.
Consequently, there is no release of Appellant's
claim to a share of the settlement and she has now made claim upon the person
responsible for the distribution of the settlement. The individual ultimately responsible for distributing the
money is Mr. Parks, the administrator of the estate. In syllabus point four
of McClure v. McClure, 184 W.Va. 649, 403 S.E.2d 197 (1991), we recognized
the fiduciary duty of a personal representative in such cases:
Under W.Va.Code, 55-7-6 (1985), our wrongful death statute, the personal representative has a fiduciary obligation to the beneficiaries of the deceased because the personal representative is merely a nominal party and any recovery passes to the beneficiaries designated in the wrongful death statute and not to the decedent's estate.
This Court further noted in McClure, [w]e have been sensitive to problems that may occur between the beneficiaries of a wrongful death suit and the personal representative. 184 W.Va. at 654, 403 S.E.2d at 202. Additionally, we stated in McClure that upon a showing that a personal representative has violated his fiduciary duties, he may be discharged from his position and replaced by another representative. Id. at 655, 403 S.E.2d 203; see also Syl. Pt. 4, Welsh v. Welsh, 136 W.Va. 914, 69 S.E.2d 34 (1952). Lastly, we note that although Mr. Parks comes to this Court representing that he is virtually without funds, he qualified for his position as administrator by taking the required oath and giving a $20,000 bond, with a surety, conditioned that he will faithfully perform the duties of his office to the best of his judgment. W. Va. Code § 44-1-6 (1923) (Repl. Vol. 1997). Clearly, Appellant's claim for a proper share of the proceeds of the settlement of the wrongful death action lies against the administrator and his surety. (See footnote 9)
In its order entered on January 2, 2001, the circuit
court determined in the instant action that Appellant was entitled only to
a $100 award from the settlement. We have carefully reviewed that order and
the transcript of the July 21, 1999, hearing on which it is based. We are
unable to discern from the order or the transcript any findings of fact or
conclusions of law (other than the ultimate determination of Appellant's entitlement
to $100) that would enable us to give a meaningful review to the decision
of the lower court fixing that award as a fair and just share
of the settlement recovered or to determine whether the circuit court abused
its discretion in fixing such award. The best this Court can surmise is that
the size of the award may have been based in part upon the belief of the lower
court that there was no money left to be distributed. Insofar as such a perception
may have played a part in the lower court's ruling, we also find no reference
to or examination of the possibility that a $20,000 surety bond remains available
to the court at the present time to satisfy Mr. Parks' fiduciary duty to Appellant.
In light of the overall record, briefs and argument
in this appeal, we remand this case to the circuit court for a full hearing
on the record to determine the amount of monetary damages fairly due to Appellant,
arising from the wrongful death of her husband and the failure of the administrator
to perform his fiduciary duty with respect to Appellant and the apportionment
of settlement proceeds. We recognize that some of the beneficiaries may not
be subject to the jurisdiction of, or may be otherwise unavailable to the lower
court, or may be otherwise unavailable. However, a reasonable effort should
be made to serve all interested parties with notice of such hearing, by any
means proper for the service of notice, including publication if necessary.
Among the parties entitled to notice are the administrator and his surety. All
such parties are entitled to participate if present.
Upon determining what sum, if any, is due Appellant,
together with interest and costs, if any, the lower court shall allow as a
credit against such sum the amount of $20,000, representing the aggregate
amount which this Court has been advised the Appellant has been paid to settle
and release claims she asserted against other parties, including the alleged
tortfeasor and his insurer, as a result of the facts and circumstances set
forth in this opinion.
(See footnote 10)
The presence at the hearing of the administrator, in
person or by counsel, and the personal presence of the administrator's counsel,
are necessary in part by reason of the fact that counsel for the administrator
acknowledged during oral argument that the surety on the administrator's bond
was, at the time the bond was given, an employee of the law firm that represented
the administrator in the wrongful death summary proceeding approving the settlement.
Our statutory law expressly prohibits a lawyer from acting as surety:
[A]n attorney-at-law, shall not be taken as surety in any bond required to be given by any fiduciary. When, for any reason, the provisions of this section are violated in the taking of any bond, the bond so given shall not be void, but upon the discovery of such fact a new bond shall be required of the fiduciary.
W.Va. Code § 44-5-4 (1982) (Repl. Vol. 1997). At the hearing required by this opinion, the circuit court shall determine whether the surety on the administrator's bond was taken in the course of her employment by the law firm. Alternatively, counsel for the administrator may prove that the surety acted independently, pursuant to reasons other than her employment by the firm. If it is determined that the surety acted in the course of her employment by administrator's counsel or his law firm, then a new and lawful bond shall be required at the expense of the administrator or the administrator's counsel, or the law firm or any successor law firms, which bond shall be held to be applied to any sums ordered to be paid by the administrator as a result of the hearing, unless (1) the circuit court further finds that sufficient personal assets of the administrator or assets of the decedent's estate are available; or (2) the matter is sooner resolved by settlement.
Accordingly, we hereby vacate the December 27, 2000, order of the Circuit Court of Kanawha County through which Appellant was awarded $100, and remand this cause for further proceedings consistent with this opinion.
The personal representative of the deceased may compromise any claim to damages arising under section five [§ 55-7-5] of this article before or after action brought. What is received by the personal representative under the compromise shall be treated as if recovered by him in an action under the section last mentioned. When the judge acts in vacation, he shall return all the papers in the case, and orders made therein, to the clerk's office of such court. The clerk shall file the papers in his office as soon as received, and forthwith enter the order in the order book on the law side of the court. Such orders, and all the proceedings in vacation, shall have the same force and effect as if made or had in term. Upon approval of the compromise, the court shall apportion and distribute such damages, or the compromise agreed upon, after making provisions for those expenditures, if any, specified in subdivision (2), subsection (c), section six [§ 55-7-6(c)(2)] of this article, in the same manner as in the cases tried without a jury.