Probate

Probate attorneys involved in probate litigation which generates other litigation may want to consider this opinion:

Bank One v. Jeannene Surber, Case No. 29A04-0712-CV-711

This action was predicated on the claim that Bank One was negligent and breached its contract with plaintiff by losing a signature card to a bank account which, but for Bank One’s actions, would have passed directly to plaintiff upon her husband’s death rather than into her husband’s estate.  This fact pattern spawned two actions; one in the husband’s estate and this action.  In the estate action, a mediated settlement agreement was reached.  Bank One did not participate in or sign the mediated settlement agreement. In this action, a judgment was entered against Bank One following a bench trial.  On appeal, several issues were raised but, for purposes of this blog, only two issues will be discussed.

The first issue was the effect of the mediated settlement agreement entered in the estate action.  This agreement contained release language which extended to “all other persons or entities who might be liable.” According to Bank One, plaintiff released her claims against Bank One when she entered the mediated settlement agreement.  This contention was rejected by both the trial court and the Court of Appeals. The Court of Appeals first noted that a release “works only to release those parties to the agreement unless it is clear from the document that others are to released as well” citing a 1992 Indiana Supreme Court.  The Court then held that while the agreement did contain the language relied on by Bank One, the agreement also included language which contradicted that language and therefore it was not clear that the signatories to the agreement intended to release anyone that was not a party to the agreement.  The Court also held that under “the stranger to the contract rule”, parol evidence could be considered and the plaintiff’s testimony that she did not intend to release Bank One, coupled with the contradictory provisions of the agreement, enabled the trial court to properly conclude that the agreement did not release Bank One.

The second issue was whether the plaintiff could recover her attorney fees incurred in the estate action under the “third party litigation exception.”  The Court found that the elements of this exception are:  (1) the plaintiff became involved in a legal dispute because of the defendant’s breach of contract or other wrongful act; (2) the litigation was with a third party and not the defendant; and (3) the fees were incurred in the third-party litigation.  In this instance, the plaintiff satisfied the first two elements but it was unclear whether she had established the third.  In particular, the Court noted that fees incurred by the plaintiff as the personal representative of her husband’s estate were chargeable against the estate and were not personally incurred by plaintiff.  Plaintiff could, however, recover those attorneys she personally incurred in the estate litigation that were the direct result of the dispute over the funds in the account.  It should also be noted that the Court also held that on remand, the trial court could consider evidence of plaintiff’s attorneys fees in this action at the trial court level, assess whether an award of attorney fees is warranted and determine the amount.

Issues of setoff and prejudgment interest were also addressed by the Court. The opinion was handed down on January 14, 2009 and a full text copy of the opinion can be found here for those that may be interested in reading this decision.