In Giller v. Slosberg, an 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. Giller and Seidner (sisters) appealed a judment following a jury verdict in favor of their brother, Slosberg.
Slosberg believed his sisters exerted undue influence of their father, causing a drastic reduction in his inheritance. He filed suit prior to his father’s death, amending his suit after his father died. Among the claims in his suit were undue influence, fraud, conversion and trover. He also sought imposition of a constructive trust to the extent his sisters absconded with assets to which he was entitled. After a two and one-half week trial, a jury found in favor of Slosberg. The trial court entered a judgment in favor of Slosberg and set aside the documents benefiting his sisters. The trial court then imposed a constructive trust against Giller and Seidner, in favor of Slosberg, in the amount of $1,056,482.31.
One issue the sisters argued on appeal was that the trust Slosberg claimed entitlement under included a no-contest or in terrorem clause. On appeal, the Court sided with the sisters after first noting that, although in terrorem clauses are not favored, they are permitted. See OCGA §53-12-22. The sisters argued the no contest clause must be enforced to protect their father’s plain and unambiguous estate plan. “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.”
The imposition of a constructive trust was also reversed. Although the trial court had authority to impose a constructive trust, it can do so only after a finding of fraud or unjust enrichment. “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.” Even if there was a finding of unjust enrichment, the constructive trust imposed by the court included Slosberg’s alleged interest in the trust that was disallowed because of the in terrorem clause.
Chief Judge McFadden dissented from the majority. He wrote “[u]nder 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.” Further, “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. … 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. … The majority invests extraordinary potency in those disfavored clauses. Under today’s decision they can substitute for capacity and animate stillborn instruments.”
In our humble opinion, Chief Judge McFadden was the only judge paying attention. The law should never reward injustice and should not aid wrong-doers in building a legal wall that protects them from scruitiny. Clearly the jury thought the sisters acted unjustly. The verdict alone, arguably, made a case for unjust enrichment. Unless and until it becomes the appellate court’s job to second guess the fact-finder, the jury verdict concluded the sisters acted improperly and they should not be shielded from accountability. To avoid any repetition of this result, we suggest attention be paid to OCGA § 9-11-49 and OCGA § 9-12-2 regarding special verdicts.
See also Petition for Accounting Does Not Trigger In Terrorem Clause
Subsequent history, Slosberg Revisited
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