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Wylie v. Estate of Cockrell

Supreme Court of Alabama

November 17, 2017

Margie Wylie
Estate of Derrell Cockrell, Timothy Cockrell, Miranda Cockrell, Janet Cockrell, Dakoda Zarlip, and Kanada Zarlip

         Appeal from Montgomery Circuit Court (CV-13-901826)


          MURDOCK, Justice.

         The opinion of September 30, 2016, is withdrawn, and the following is substituted therefor.

          Margie Wylie appeals from the Montgomery Circuit Court's affirmance of the Montgomery Probate Court's decision removing her as personal representative of the estate of Derrell Cockrell, appointing a successor personal representative for the estate, and assessing over $19, 000 in costs against Wylie. We affirm the judgment of the circuit court in part and reverse it in part.

         I. Facts

         In 1996, Derrell Cockrell ("Derrell") formed Alabama Steel Erectors, L.L.C. ("ASE"), a company that constructed metal buildings. The articles of organization of ASE stated that Derrell and Wylie were ASE's initial members and that "[o]perational management in [ASE] shall be solely vested in Derrell Thomas Cockrell." The articles also stated that "[r]emaining members shall have the right to continue the business of [ASE] following the death, retirement, resignation, expulsion, bankruptcy, or dissolution of a member or upon the occurrence of any other real event which terminates the continued membership of a member." The "operating agreement" of ASE reiterated that Derrell would have "sole operational authority in [ASE], " but it added that "the duties of bookkeeping have been assigned to Marge Wylie." The operating agreement also provided that "both parties shall not be entitled to one-half of each of the profits from the operation of [ASE]" and that "the share of profits and losses shall be determined by the managing partner, Derrell Thomas Cockrell." According to testimony in the hearing in the probate court, as well as a 2009 federal tax return for ASE, Derrell held a 90 percent interest and Wylie held a 10 percent interest in ASE.

         Derrell died on October 4, 2009. On November 30, 2009, the Montgomery Probate Court issued letters testamentary to Wylie as personal representative of Derrell's estate. Derrell's will devised his "house and curtilidge [sic] located at 463 Larkwood Drive, Montgomery, Alabama, " to Karen Jankowski, a woman described by witnesses in the probate-court hearing as Derrell's girlfriend who had been living with him before his death. In his will, Derrell left "all [his] guns, [his] boat and [his] 1996 Pick Up Truck" to his brother, Edwin Cockrell. The will further provided:

"I hereby give and devise all of the rest, residue and remainder of all property owned by me or in which I have an interest, wherever located, whether real, personal, or mixed, as follows:
"A. A One-fourth share each to Janet Cockrell, Dakoda Zarlip, and Kanada Zarlip, per stirpes.
"B. A One-fourth share split between Miranda Cockrell and Timothy Cockrell, per stirpes."

         Timothy Cockrell and Janet Cockrell are Derrell's children. Miranda Cockrell is Timothy's daughter, i.e., Derrell's granddaughter. The relationship, if any, of Dakoda Zarlip and Kanada Zarlip to Derrell is not reflected in the record. Timothy, Janet, Miranda, Dakoda, and Kanada are hereinafter collectively referred to as the "residuary devisees." We note that, at some point in the estate-administration proceedings, the probate court appointed a guardian ad litem to protect the interests of Miranda, Dakoda, and Kanada, who are minors.

         With regard to Wylie's duties as personal representative of Derrell's estate, the will provided that Derrell

"relieve[d Wylie] ... from making any inventory or accounting to any person or Court for [her] administration of my estate; ... [gave] and grant[ed] to [Wylie] full power and authority in the administration of my estate, including full power and authority to manage, operate or liquidate any business or businesses in which I may be engaged at the time of my death, as full to all intents and purposes as I myself could do, if I were living."

         According to testimony from two witnesses at the probate-court hearing, Wylie approached Timothy at Derrell's funeral visitation on October 7, 2009 -- before she had been appointed personal representative of Derrell's estate -- and told him that he would be getting only $5, 000 from Derrell's estate and that he should sign certain documents to acknowledge his entitlement to the money. According to the witnesses, Timothy told Wylie to leave him alone.

         On September 26, 2011, Timothy filed a motion in the probate court pursuant to § 43-2-530, Ala. Code 1975, [1] to require Wylie to file an accounting of the estate.

         Wylie dissolved ASE on October 11, 2011.

         On October 13, 2011, the probate court entered an order requiring Wylie to "appear and file an accounting and vouchers and to give cause ... why [the estate administration] ha[d] not been judicially settled." The probate court reissued identical orders to Wylie on December 2, 2011, and January 12, 2012, all of which ordered Wylie to provide an accounting with vouchers of expenses that had been paid by the estate.

         Timothy's counsel also made repeated attempts to obtain vouchers from Wylie's counsel. He wrote letters requesting such vouchers, and he filed two motions to compel Wylie to provide vouchers, filed on June 25, 2012, and August 3, 2012, respectively. Wylie's counsel never provided the vouchers.

         On April 3, 2012, Wylie filed what she styled a "Petition and Accounting for Final Settlement" of Derrell's estate. The document contained no vouchers documenting expenses paid by the estate, but it did contain copies of several checks written on ASE's bank account and signed by Wylie. In fact, most of the documentation contained in the submission from Wylie consisted of information about ASE's bank account. This was a source of repeated confusion in the probate-court hearing. For example, during one exchange in the hearing, the guardian ad litem was questioning Wylie about a certain expense listed in her accounting:

"[Wylie:] That's -- and this was income that was earned [by ASE] after [Derrell Cockrell's] death.
"[Guardian ad Litem:] But you told the Court it was estate income when you filed it under oath, the estate of Derrell Cockrell. You told the Court when you reported that you had received that for the benefit of the estate.
"[Wylie's counsel]: Judge, I don't know what his point is. I made the point to the Court, yes, that's what it says, but that was a mistake. It's for the company, not the estate. You've got to decide that. Maybe the Court is going to rule that the assets of the company are assets of the estate. I don't know. But he keeps trying to make her say something other than what the documents are.
"We stipulate to the Court that we included, maybe erroneously, matters in this accounting that have to do with the company as opposed to Mr. Cockrell personally. That's what happened, and that's what these facts are."

         Wylie's counsel stated numerous times in the hearing that he had "erroneously included in this accounting money and assets that relate to the business" of ASE. He even admitted that the accounting "was inaccurate and incomplete, " but nothing in the record indicates that Wylie ever filed anything to correct the accounting.

         Following Wylie's filing, Timothy filed a petition to remove Wylie as personal representative of Derrell's estate. On August 30, 2013, the probate court held a hearing on both Wylie's petition for final settlement and Timothy's petition to remove Wylie as personal representative. The probate court heard from four witnesses, with the majority of the testimony coming from Wylie.

         In her testimony, Wylie, among other things, admitted that she did not open an estate bank account and that she did not segregate estate funds from ASE's funds. Wylie stated that she had written checks on ASE's bank account for a total of $46, 000 as repayment for a loan she claimed she had made to ASE, but she also admitted that the loan was an unsecured debt and that there was no documentation to support the loan. Wylie admitted that she paid Jankowski's personal expenses and debts from ASE's account after Derrell's death. Wylie stated that she did this because it was what Derrell wanted, despite the fact that such a request was not included in his will. Wylie admitted that she gave all the furnishings in the house to Jankowski because it was her understanding that the will required this. Wylie stated that she thought that "curtilage" meant furnishings in the house. Wylie admitted that she did not consult an attorney to ascertain the meaning of terms in the will. Wylie admitted that she paid her personal credit-card bills out of the ASE account following Derrell's death, claiming that she had purchased supplies for ASE with her credit card because ASE did not have a corporate credit card. Wylie further stated that she "was living out of the account" and that Derrell did the same when he was alive.

         According to the accounting Wylie submitted with the petition for final settlement, ASE had $145, 000 in its bank account at the time of Derrell's death and it received $206, 000 in income in the two years following his death. In contrast, Wylie testified at trial that

"[t]here wasn't any money in the account when [Derrell] died except for the $55, 000 that was left in the bank account. And then you subtract what was the payables from that, and I think it left something like $10, 000. Then we had -- that was in the account that was available."

         Wylie further testified that the only asset ASE had at Derrell's death was accumulated, undistributed profits of $9, 700. She answered a question as to the value of ASE by stating that Derrell "had 90 percent interest in the profits of the company" -- which she asserted were "like 9 - or $10, 000" -- an amount clearly based on ASE's cash on hand minus its debts at the time of Derrell's death, not its value as a going concern. Wylie also testified that "the value of [Derrell's] interest in the business as of the date of his death ... was like $9, 700, " and Wylie's counsel stated to the probate court: "[T]he only thing [Derrell's] estate was entitled to was the net value of that business on the date of his death, $9, 500."[2] Wylie stated that overall she had distributed $17, 000 to the residuary devisees, which she asserts is more than the amount to which the estate was entitled.

         A federal tax return for the calendar year 2010, filed as a final return for ASE, reflected on a Schedule K-1 for Wylie a beginning share of 10 percent of ASE and an ending share of 100 percent. Wylie's personal tax returns for calendar year 2010 also represented that Wylie held ASE as a sole proprietorship.

         On October 9, 2013, the probate court entered an order denying Wylie's petition for final settlement and removing her as personal representative of Derrell's estate. In the order, the probate court concluded that Wylie had:

"1. ... repeatedly and consistently failed to adhere to and comply with the lawful Orders of the Judge of Probate in this matter;
"2. ... wasted, misappropriated and/or converted multiple assets of the Estate to her own use and benefit or to the use and benefit of others;
"3. ... failed to identify and segregate the assets of the Estate and failed to open a separate estate checking account for the deposit of funds of the Estate of Derrell T. Cockrell, Deceased. [Wylie] proceeded to commingle Estate assets with the assets of [ASE], and continued to operate the business of [ASE] without first identifying and segregating the cash and other assets which were the property of the Estate and subject to probate proceedings under the Will of [Derrell];
"5. ... attempt[ed] to claim and convert the ownership of the assets of [ASE] to her own use and benefit, in contravention of the rights of the beneficiaries under the Will of [Derrell]. In furtherance of this position, Ms. Wylie has made affirmative representations in sworn oral testimony and in written form on personal federal and state tax returns filed with this Court in which she stated that she was the sole owner of [ASE] for the year in which [ASE] was dissolved, and as part of the dissolution process claimed its assets on her individual income tax returns for that year, all in derogation of the terms and conditions of the Will of [Derrell] and the rights of the beneficiaries under the Will."

         The October 9, 2013, order also appointed a successor personal representative for the estate and taxed "costs of this proceeding in the amount of $19, 856.20, which includes a reasonable fee of $18, 045.00 for the services of Carl Pilgrim, Esq., as Guardian ad Litem, ... against the former personal representative, Margie Wylie."

         On October 11, 2013, pursuant to § 12-2-21, Ala. Code 1975, Wylie filed an appeal of the probate court's order to the Montgomery Circuit Court.[3] On September 21, 2015, the circuit court entered an order affirming the probate court's October 9, 2013, order. Wylie appealed to this Court. See Ala. Code 1975, § 12-22-22 ("An appeal to the Supreme Court may be taken from the judgment of the circuit court on an appeal brought to such court under the provisions of this division.").

         II. Standard of Review

         As this Court recently stated in Hardy ex rel. Estate ofCarter v. Hardin, 200 ...

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