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Estate of Johnson
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MAINE SUPREME JUDICIAL COURT Reporter of Decisions
Decision: 2001 ME 39
Docket: Cum-00-378
Argued: November 8, 2000
Decided: February 23, 2001
Panel:WATHEN, C.J., and CLIFFORD, RUDMAN, DANA, SAUFLEY, ALEXANDER, and
CALKINS, JJ.
ESTATE OF PHYLLIS B. JOHNSON
WATHEN, C.J.
[¶1] Bruce Johnson appeals from a judgment entered in the
Cumberland County Probate Court (Childs, J.) distributing proceeds from a
Florida wrongful death insurance settlement to the Estate of Phyllis Johnson
and imposing sanctions against him for misrepresenting the amount of the
settlement. He argues that under the Florida wrongful death statute the
court erred in allocating the proceeds to the Estate and that it abused its
discretion in awarding sanctions. Because we agree that the Probate Court
acted beyond its authority in allocating the proceeds to the Estate, we vacate
that portion of the judgment and remand for further consideration of
sanctions.
[¶2] The facts may be summarized as follows: The decedent, Phyllis
Johnson, a resident of Falmouth, Maine, died in March 1997 in Florida
when as a pedestrian she was struck by an automobile. She was survived by
one son, Bruce Johnson, and two grandchildren, Keadron and Srnka,
children of her predeceased son, David Johnson. The decedent's will
provided for a specific bequest and for the remainder of the estate to be
divided in equal shares to sons David and Bruce, in this case with David's
share passing to his children. Bruce filed an application for informal probate,
through Maine counsel, and was appointed personal representative of the
Estate in April 1997.
[¶3] In this capacity, he retained Florida counsel to pursue a
wrongful death claim in Florida. Although he originally contacted the Florida
counsel through Maine counsel, he then asked the Florida counsel to deal
directly with him. The Florida counsel reached settlements with three
insurance carriers on behalf of Bruce, as personal representative of the
Estate, without the necessity of filing any formal wrongful death action in
court. He obtained full policy coverage of $10,000 from the insurer of the
owners of the vehicle that hit Phyllis, and $25,000 from the insurer of the
driver. On November 3, 1997, after deducting the firm's fees and expenses,
he sent Bruce, in his capacity as personal representative of the Estate, a
check in the amount of $23,273.82. He also obtained full policy coverage of
$65,000 ($100,000 less $35,000) from the decedent's insurer who
provided coverage for uninsured or underinsured motorists. On November
13, 1997, after deducting the firm's fees, counsel sent Bruce, as personal
representative, a check in the amount of $43,333.34.
[¶4] In October 1998, Bruce filed a petition for order of complete
settlement of estate pursuant to 18-A M.R.S.A. § 3-1001 (1998). The
grandchildren filed an objection to the proposed settlement in part because
Bruce failed to account for the wrongful death settlement proceeds, to
which they argued they were entitled to one-half. The parties eventually
agreed on all issues of distribution except the wrongful death settlement.
The parties filed a stipulation of facts for purposes of interpreting the
Florida wrongful death statute and submitted memoranda of law setting forth
their arguments for interpreting the Florida law. The stipulation recited a
total recovery of $65,000. The court found that the Estate could recover any
funeral or medical expenses incurred, but that there was insufficient
evidence to determine any prospective net accumulated earnings for the
Estate to recover. It also found that Bruce, in his claim for lost support as a
survivor within the meaning of Fla. Stat. Ann. § 768.21(1), had only
demonstrated a loss of $9,000 and awarded the remainder of the settlement
to the Estate as a "windfall."
[¶5] Bruce filed a motion for amendment of the judgment pursuant
to M.R. Civ. P. 59(e), and the court allowed additional evidence as to Bruce's
claim for loss of parental companionship, instruction, guidance, and mental
pain and suffering pursuant to section 768.21(3) of the Florida Statutes. A
telephonic hearing of testimony of the Florida attorney, was conducted and
various records from his file were admitted. During this hearing, the
attorney testified that the insurance proceeds were not $65,000, but
$100,000, and that proceeds were paid to Bruce as personal representative
in two checks, one from the liability insurers for approximately $23,000 and
one from the uninsured insurer for approximately $43,000. Based on this
revelation, the grandchildren filed a motion for sanctions. The court
entered judgment leaving the allocation as originally ordered, $9,000 to
Bruce and the balance to the Estate, on the basis that Bruce failed to
demonstrate loss of parental companionship. The court also awarded
attorney fees to the grandchildren as a sanction against the personal
representative. Bruce appeals.
I. Choice of Law
[¶6] As a preliminary matter, there is sufficient justification for the
parties and the Probate Court's application of Florida law, rather than Maine
law, in this case. Maine has adopted the "most significant contacts and
relationships" test provided in Restatement (Second) of Conflict of Laws §
146. See Collins v. Trius, Inc., 663 A.2d 570, 572 (Me. 1995). The rule
provides: "In an action for a personal injury, the local law of the state where
the injury occurred determines the rights and liabilities of the parties,
unless, with respect to the particular issue, some other state has a more
significant relationship . . . to the occurrence and the parties. . . ."
Restatement (Second) of Conflict of Laws § 146 (1969). The same rule
applies in an action for wrongful death. See Restatement (Second) of Conflict
of Laws § 175 (1969). "The law selected by application of the rule of
section 175 determines how the recovery in an action for wrongful death
shall be distributed." Restatement (Second) of Conflict of Laws § 177 (1969).
In this case, the accident and ensuing death occurred in Florida., and there
is no challenge to the application of Florida law.
II. Distribution of Wrongful Death Settlement Proceeds
[¶7] Bruce argues first that the court erred in its interpretation of
the Florida wrongful death statute as it concerns how to distribute any
"excess" proceeds that the court finds are not supported by the evidence in
order to be recoverable under the statute. We agree. Originally, the court
found that the excess was a "windfall" and awarded it to the Estate, in effect
by default. The court clarified its characterization of the excess as a
"windfall" in its subsequent order, but still determined that the excess
belonged to the Estate. The court reasoned that the Florida wrongful death
statute would have applied if Bruce had brought a court action, but the
settlement proceeds were directed to the Estate and became property of
the Estate; that Bruce, as the personal representative, had the duty of
observing the same standard of care applicable to a trustee under 18-A
M.R.S.A. § 7-302; and that the Florida wrongful death statute provides
guidance as to the possible beneficiaries of the settlement funds, but that
the court cannot base an award of damages on speculation. In effect, the
court concluded that Bruce had received more than he was entitled to as a
survivor and awarded the balance to the Estate by default. The court
rejected Bruce's argument that he was entitled to the excess because no one
else could be under the statute and concluded that the record shows that
the settlement was paid to the Estate without any special regard for Bruce's
potential claims.
[¶8] The analysis of the Probate Court is flawed as a matter of law.
Although no wrongful death action was filed in Florida, the underlying basis
for negotiations with the insurance companies was the liability created by
the Florida wrongful death statute. Although the releases signed by the
personal representative were more general to reflect that the settlement
was for any and all liability resulting from the accident that caused the
decedent's death, the personal representative, through Florida counsel,
represented to the insurance companies that it was demanding policy limits
"for the wrongful death of Phyllis Johnson." Moreover, but for the wrongful
death statute, there would be no cause of action in which to recover the
insurance proceeds. The right of action and remedy on account of death by
wrongful act did not exist at common law, but is purely statutory. See Florida
East Coast Ry. Co. v. McRoberts, 149 So. 631, 632 (Fla. 1933). Thus, in this
case, the right of action arising out of the death of Phyllis Johnson is
governed by the Florida Wrongful Death Act, Fla. Stat. Ann. §§ 768.16-
768.27 (1997). The right of action is limited by and should not be extended
beyond the meaning of the terms of the statute creating such cause of action.
See Stokes v. Liberty Mut. Ins. Co., 213 So.2d 695, 697 (Fla. 1968); U.S.
Fidelity & Guaranty Co. v. Reed Const. Corp., 149 So.2d 578, 580 (Fla. Dist.
Ct. App. 1963). A right of action occurs under the Florida statute "[w]hen
the death of a person is caused by the wrongful act, [or] negligence, . . . of
any person, . . . and the event would have entitled the person injured to
maintain an action and recover damages if death had not ensued . . . ." §
768.19. The action must be brought by the "decedent's personal
representative, who shall recover for the benefit of the decedent's survivors
and estate all damages, as specified in this act, caused by the injury resulting
in death." § 768.20.
[¶9] The statute provides that damages may be awarded, in relevant
part, as follows:
(1) Each survivor may recover the value of lost support and
services from the date of the decedent's injury to her or his
death, with interest, and future loss of support and services
from the date of death and reduced to present value. In
evaluating loss of support and services, the survivor's
relationship to the decedent, the amount of the decedent's
probable net income available for distribution to the
particular survivor, and the replacement value of the
decedent's services to the survivor may be considered. In
computing the duration of future losses, the joint life
expectancies of the survivor and the decedent . . . may be
considered.
. . . .
(3) . . . all children of the decedent if there is no surviving
spouse, may also recover for lost parental companionship,
instruction, and guidance and for mental pain and suffering
from the date of injury.
. . . .
(5) Medical or funeral expenses due to the decedent's injury
or death may be recovered by a survivor who has paid them.
(6) The decedent's personal representative may recover for
the decedent's estate the following:
(a) Loss of earnings of the deceased from the date of injury
to the date of death, less lost support of survivors excluding
contributions in kind, with interest. Loss of the prospective
net accumulations of an estate, which might reasonably have
expected but for the wrongful death, reduced to present
money value, may also be recovered:
1. If the decedent's survivors include a surviving spouse or
lineal descendants . . . .
(b) Medical or funeral expenses due to the decedent's
injury or death that have become a charge against her or his
estate or that were paid by or on behalf of decedent,
excluding amounts recoverable under subsection (5).
. . . .
§ 768.21 (emphasis added). "Survivors" are specifically defined in the
statute as "the decedent's spouse, children, parents, and, when partly or
wholly dependent on the decedent for support or services, any blood
relatives and adoptive brothers and sisters." § 768.18(1). "Net
accumulations" are defined as
[T]he part of the decedent's expected net business or salary
income, including pension benefits, that the decedent
probably would have retained as savings and left as part of her
or his estate if the decedent had lived her or his normal life
expectancy. "Net business or salary income" is the part of
the decedent's probable gross income after taxes, excluding
income from the investments continuing beyond death, that
remains after deducting the decedent's personal expenses
and support of survivors, excluding contributions in kind.
§ 768.18(5) (emphasis added).
[¶10] Thus, pursuant to the statute, the insurance companies
theoretically could have paid the proceeds to the personal representative for
the benefit of (1) Bruce for lost support and/or lost parental companionship,
guidance and instruction and mental pain and suffering; (2) the
grandchildren if they had been dependent on the decedent; and/or (3) the
Estate for loss of prospective net accumulation and funeral expenses. See §
768.21(1), (3), and (6). Because the parties do not appeal the court's
express or implied findings that there was insufficient evidence to find
recovery by the grandchildren as survivors or the Estate for net
accumulations, the only remaining categories within the purview of the
statute under which the insurance companies could have paid the proceeds
would be to Bruce for lost support and/or lost companionship and to the
Estate for funeral expenses. The court found that the Estate should recover
for any funeral expenses it incurred and the parties do not dispute this
finding. The court erred, however, when it found that, although Bruce
demonstrated he was a "survivor" within the meaning of the statute, he did
not demonstrate that he was entitled to the remaining proceeds either for
lost support or lost parental companionship, instruction, and guidance and
thus allocated the "excess" to the Estate. The statute does not include any
provision for the distribution of "excess" damages. Although the statute
allows some discretion as to what may be considered in calculating the
amount of damages, it does not permit discretion in determining the
beneficiaries and the types of damages for each of the beneficiaries.
[¶11] Although we do not approve of a personal representative, who
is required by statute to proceed for the benefit of the survivors and the
Estate, acting only to benefit himself as a survivor, such behavior does not
affect the outcome of this case. The Florida statute provides a mechanism
for other survivors to seek approval of any settlement as to amount or
apportionment among the beneficiaries. See § 768.25; Gregory S. Hansen &
Charles Ian Nash, Litigation Under Florida Probate Code, Wrongful Death
Claims § 12.18 (1997) ("If the settlement occurs before a wrongful death
action is filed, the court has the authority to approve the settlement
agreement and proposed distribution of recovery.") Although the
grandchildren did not seek approval in a Florida court, for practical
purposes, they asked the Probate Court in Maine to make the determination.
Yet, even now they offer no basis for inclusion of themselves as claimants
under the statute. In fact, they stipulated that they only received small cash
gifts for birthdays and holidays. Nor did they challenge the court's finding
that there was insufficient evidence to find recovery by the Estate under §
768.21(6) for net accumulations. Thus, the court erred in looking beyond
the statute to distribute proceeds to the Estate.
III. Sanctions
[¶12] Bruce also argues that the court erred in imposing sanctions
on him "for making payments to himself as the sole survivor entitled to
receive the proceeds under Florida law." The court's stated basis for
imposing sanctions, however, was its finding that "Bruce Johnson breached
his fiduciary [duty] to the Estate by misrepresenting the amount received by
the Personal Representative in connection with the wrongful death claim
which the Estate pursued in Florida." The court noted "the material nature
of his failure to disclose the amount of money he received as Personal
Representative." As discussed above, Bruce stipulated that he had received
approximately $43,000, after attorney fees, for the settlement of the
wrongful death action, and the Probate Court based its original judgment on
this stipulated amount. Not until the evidentiary hearing of the Florida
attorney on the motion to amend the judgment was it discovered that, ten
days before receiving the $43,000, Bruce had directly received as personal
representative an additional $23,000 as settlement from other insurers for
the same wrongful death action. It is within the Probate Court's discretion
to impose sanctions for the personal representative's failure to disclose the
true amount of money he received. See Estate of Dineen, 1998 ME 268, ¶
10, 721 A.2d 185, 188; Estate of Whitlock, 615 A.2d 1173, 1178 (Me.
1992). The Probate Court, however, acted on the assumption that Bruce was
not entitled to the total proceeds exclusive of funeral expenses. We remand
for further consideration in light of our ruling on the allocation of proceeds.
The entry is:
Judgment vacated with respect to the
allocation of proceeds. Judgment
vacated with respect to the imposition of
sanctions for misrepresentation.
Remanded for further proceedings
consistent with the opinion herein.
Attorney for appellant:
Paul S. Bulger, Esq., (orally)
Troubh, Heisler & Piampiano, P.A.
P O Box 9711
Portland, ME 04104-5011
Attorney for appellee:
Edward L. Dilworth III, Esq., (orally)
Dow's Law Offices, P.A.
P O Box 349
Norway, ME 04268
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