DREW, J.
The heirs have been litigating this succession for over 27 years.
The underlying dispute is the unsuccessful (to date) effort by one group of Anthony's heirs to collect the foregoing judgment owed to Anthony's estate by Joe Scurria (the decedent's brother) and Billy Hodge (the decedent's nephew by marriage). The administratrix and those heirs aligned with her have asserted in this and other pending litigation that Joe Scurria and Billy Hodge fraudulently engaged in numerous financial maneuvers to put their assets beyond the reach of their creditors, thereby improperly avoiding payment of the judgment in favor of Anthony's estate. Because the judgment debtors maintained possession of the properties transferred to various legal entities, the administratrix alleged that the transfers were presumed to be fraudulent simulations. Notwithstanding the foregoing, what we have before this court for review is the partial judgment of possession in favor of some of the heirs allied with the judgment debtors.
For the following reasons, the judgment is reversed. The matter is remanded for further proceedings deemed necessary by the adversaries.
At his 1983 death, Anthony had eight heirs including his brothers, sisters, and a niece, many of whom have since died, leaving
Judge Caraway, writing the opinion in Scurria v. Hodge, supra, set out the background. In 1979, Anthony (whose succession is at issue), his brother, Joe Scurria, and a nephew by marriage, Billy Hodge, formed the Tallulah Cablevision Corporation ("TCC"). Each shareholder received 50 shares of stock. TCC borrowed $150,000 from a bank with each shareholder signing the loan and each shareholder advancing the corporation $70,000. Anthony was president and executed TCC promissory notes to each shareholder for the $70,000 loans. Anthony also made other loans to the corporation. At his death, the $70,000 loan was outstanding along with $27,500 in other loans.
Following Anthony's December 1983 death, two of decedent's brothers, Joe and Sam, were named co-administrators of Anthony's estate. Leroy Smith, Jr., was retained as attorney for the succession.
Smith hired CPA Harry G. Frazer to value the assets for estate purposes. Frazer acknowledged he had no particular expertise at valuing cablevision systems but set the value of Anthony's one-third interest in TCC at $195,050.
The first documented TCC shareholders' meeting was held on February 27, 1984, at which Billy Hodge and Joe Scurria were elected directors of TCC. Joe acted as administrator of Anthony's succession at the meeting and voted the shares of the succession. In February 1984, the directors listed TCC for sale for $3,000,000 with a media brokerage firm. No sale was made and the brokerage contract was terminated.
Funds were needed to pay inheritance taxes. Each of the heirs would have
Four months later in January 1985, Joe Scurria and Billy Hodge listed TCC for sale at $2.3 million and sold it for $1.9 million on May 30, 1985. On May 29, 1986, Philip Scurria sued Joe Scurria and Billy Hodge, alleging that as officers and majority shareholders of TCC, the pair violated their fiduciary duties and that Joe Scurria violated his fiduciary duties as co-administrator of Anthony's estate. Later, Philip sued to have the succession reopened and was appointed provisional administrator. Philip, as provisional administrator of the succession, then brought an action against Joe Scurria, Billy Hodge, and TCC with the same allegations.
Following completion of plaintiffs' evidence at the 1997 trial, the trial court found the evidence did not prove intentional fraudulent misrepresentations by Joe Scurria and Billy Hodge and dismissed the claims of fraud. After the defense was heard, the trial court found that neither Joe Scurria nor Billy Hodge breached any fiduciary duties to Anthony's succession.
In Scurria, supra, this court reversed the trial court's judgment. To overcome the appearance of self-dealing to the possible detriment of the succession, Joe Scurria and Billy Hodge had to prove that the transaction was an arms-length sale, i.e., that the purchase price paid by the fiduciary was the equivalent of the fair market value. Further, we held that a succession administrator is required to know the fair market value of a succession asset to be sold. Based upon the evidence adduced, this court found that the $100,000 purchase price the succession received from Joe Scurria and Billy Hodge was far below the fair market value. Additionally, this court determined that Joe Scurria and Billy Hodge breached their fiduciary duties to the succession.
Finding the fair market value of TCC to have been $1.9 million, this court placed the net value of TCC at $1,550,000 (less debts and brokerage commission). Therefore, the court ordered Joe Scurria and Billy Hodge to pay to the succession $516,666.67 (less the $100,000 the two paid the succession in the contested sale) plus interest from the date of judicial demand. All of the succession's subsequent efforts to collect that judgment have been unsuccessful.
After the death of provisional administrator Philip Scurria on May 4, 2000, Angelina Scurria Ilardo, sister of Anthony, sought in July 2000 to be named administratrix of Anthony's succession, noting that the only asset was the judgment owed the succession. On August 15, 2000, Ilardo was appointed administratrix.
In 2007, Joseph Scurria filed a motion seeking to have the succession closed, since the matter had been pending for 24 years and since the succession had no debt and required no administration. Alternatively, Joseph Scurria requested Ilardo be removed as administratrix because she had filed no annual accounting, failed to fulfill her obligations to the succession timely, and mismanaged the estate by failing to close it and by permitting her animosity toward family members to interfere with her duties. The final allegation was that Ilardo was unfit to be administratrix due to bad moral character.
On December 23, 2008, 11 of Anthony's heirs
On the same day, the same group of 11 heirs filed a rule seeking to be placed in possession of the succession. The 11 heirs relied upon La. C.C.P. arts. 3362 and 3371 to assert that other heirs concurred in being placed in possession, no longer wished Ilardo to act on their behalf, and sought her removal as administratrix.
Ilardo objected to the proceedings because the moving parties did not comply with court rules. Additionally, the administratrix sought a continuance of the hearing and sought to quash the subpoena served on her counsel. Her objection also alleged that Philip Scurria informed counsel for the administratrix that he did not engage Leroy Smith (movants' attorney) to file pleadings for him. The trial judge reset until March 5, 2009, the hearing on the requests to remove the administratrix and to place some of the heirs in possession of the estate
On February 11, 2009, Ilardo filed a motion seeking to have Leroy Smith, Jr., disqualified to represent anyone in this proceeding (the Succession of Anthony Scurria, # 2619), Ilardo v. Scurria (# 07-343), and Ilardo v. Scurria (#07-174). Ilardo alleged that Smith had a conflict of interest due to his prior representation of the Succession of Anthony Scurria and because he was a key fact witness.
The following testimony was adduced at the March 5, 2010, hearing:
Josephine Phillips Hodge
Dr. Samuel Scurria
Charles Michael Finlayson
The parties stipulated that the testimony of Sara Ann Finlayson and Billye Jo Finlayson would be the same as their brother.
Attorney Tim O'Dowd sent to the court and to counsel a letter stating he represented and had the powers of attorney from Joe Scurria, judgment debtor, and his children Jennie Sue "GiGi" Ball, Maria Scurria O'Dowd (married to attorney O'Dowd) and Larry Scurria (heirs of Jennie Scurria along with the three Finlaysons). The parties also stipulated that the testimony of Joe Scurria, Jennie Sue "GiGi" Ball, Maria Scurria O'Dowd, and Larry Scurria would be the same as Charles Michael Finlayson.
Placed into the record at the hearing were the two powers of attorney executed by Marie P. Michele and Dr. Sandra Scurria in favor of Josephine P. Hodge plus the Judgment of Possession in the Succession of Jennie S. Scurria naming her six heirs (listed above) to all her property not included in her particular legacies.
The appellate record also contains trial court record # 07-343 (Ilardo, Administratrix v. Joseph Samuel Scurria, et al.) in which the administratrix sought to compel production of financial information from the judgment debtor, Joe Scurria. The most recent minutes therein were dated January 7, 2009, prior to the trial court hearing in the present dispute.
Also placed into this record is the trial court record # 07-174 (Ilardo, Administratrix v. Charles H. (Billy) Hodge, et al.), the most recent minutes of which were also dated January 7, 2009. That action contains the succession's efforts to obtain financial information concerning judgment debtor Billy Hodge and his alleged activities to avoid paying the judgment to the succession.
Over objections by attorneys for the debtors and the heirs aligned with them, the trial court, although questioning their relevance, made a part of the record all the exhibits attached to various motions filed by the administratrix.
The trial court ordered that 10 of the 11 petitioning heirs
The trial court deferred a decision on Ilardo's motion to disqualify Leroy Smith from representing the heirs aligned with the debtors. The administratrix sought supervisory review of the trial court's rulings.
In Writs No. 44,786-CW consolidated with Nos. 44,787-CW and 44,788-CW, this court on June 18, 2009, determined that supervisory jurisdiction was not warranted on the trial court ruling which deferred a decision of the motion to disqualify Smith. As to the partial judgment of possession, the court concluded that it was properly reviewable by appeal and remanded the matter for perfection of the appeal which is now before this court for decision.
On April 15, 2010, however, this appellate panel directed the trial court to rule on the administratrix's February 11, 2009, motion to disqualify Leroy Smith. On April 23, 2010, the appellate panel stayed the appeal and directed the trial court to resolve that issue expeditiously.
On May 14, 2010, the trial judge signed an order finding that the motion to disqualify had "merit in that conflicts of interest may be caused by Mr. Smith's former role as Attorney for the Succession and by his potential role as a witness in the proceeding and therefore Mr. Smith's decision to withdraw was both appropriate and required by this ruling." On the same date, the trial court signed the order granting Leroy Smith's motion to withdraw and enrolling James E. Paxton and Lauri G. Boyd as counsel for defendants. On June 28, 2010, the appellate panel signed an order lifting the previously granted stay.
The judgment debtors and their allies made arguments in brief on appeal about events which occurred after the trial court action, i.e., Billy Hodge's purchase of another heir's interest in Anthony's succession. In a supplemental brief filed in this court, the administratrix objected to any consideration of such subsequent actions outside the appellate record. Alternatively, she requested that if this court chose to consider events taking place outside the record, we should also consider the succession's purchase of another heir's interest in Anthony's succession.
In Martin v. Comm-Care Corp., 37,600 (La.App.2d Cir.10/16/03), 859 So.2d 217, writ denied, 2003-3188 (La.2/6/04), 866 So.2d 225, this court explained that it is well settled that an appellate court cannot review evidence that is not in the record on appeal and cannot receive new evidence. The record on appeal includes the pleadings, court minutes, transcript, judgments and other rulings, unless otherwise designated. La. C.C.P. art. 2128. An appellate court must render its judgment upon the record on appeal. La. C.C.P. art. 2164. Memoranda and exhibits which were not filed into evidence in the trial court are not part of the record on appeal. If a party's appellate brief asserts facts which are not in the record and refers to exhibits which have not been filed into evidence in the trial record, an appellate
La. C.C.P. art. 3362 titled "Prior to Homologation of Final Tableau of Distribution" states:
The comments to the article state, in part:
The first requirement for a majority of heirs to obtain partial possession of a succession is that the matter be tried contradictorily with the administrator. In this case, the administratrix did not show up for the hearing nor did she provide documentation that would have assisted in resolving the dispute. Her position was argued by her attorney, which satisfied the directive that a contradictory hearing be held.
Ilardo, the administratrix, bases her appeal upon the trial court's erroneous granting of the partial judgment of possession in favor of the judgment debtors and the heirs aligned with them.
According to the administratrix, the sole asset of the estate, the uncollected judgment (which she argues now totals almost $1 million with accrued interest) must be reported to the state for inheritance tax purposes.
In Succession of Davis, 43,096 (La. App.2d Cir.3/19/08), 978 So.2d 606, this court found a judgment of possession in an ancillary succession proceeding was premature because the appropriate accountings and final payment of federal estate taxes known to be owed had not been filed or paid. In Davis, supra, no Louisiana inheritance taxes were due and federal estate taxes had been partially paid with the final accounting and payment pending. The present dispute is factually distinguishable because, unlike Davis, it is not possible to determine if or whether any taxes could be due sometime in the future.
Whether any federal estate taxes or Louisiana inheritance taxes may or may not be due on this unpaid judgment depends on the whether the administratrix and her allies are successful in collecting any or all of the judgment. Unless and until Joe Scurria and Billy Hodge pay the judgment in whole or in part to the succession, there is nothing in the estate to report or on which to pay any inheritance or estate taxes which may or may not be due at some time in the future. On this record, we cannot determine if taxes are ever to be due, much less how much and whether sufficient assets exist to pay the obligation.
Neither set of litigants placed into evidence any information about amounts of
The judgment debtors and/or those heirs siding with them made contradictory arguments about the existence of debts of the succession. In 2007 Joe Scurria alleged that the succession's lack of debt justified closing the succession. In conflicting allegations seeking to remove Ilardo as administratrix, Scurria and his allies asserted that she had incurred without authority court costs and other fees on behalf of the succession.
The trial court correctly observed that the value of any claim against the succession was not fixed. While accepting the substance of trial court's foregoing statement, we find neither the administratrix nor those seeking the partial judgment of possession complied with La. C.C.P. art. 3362. Neither made a showing that adequate assets would be retained in the succession to pay any charges or obligations which likewise were not established.
Based on our observations about the possible future tax liability and the lack of evidence on value of potential assets and amounts of succession obligations, we conclude that the judgment of partial possession must be reversed and the matter remanded for further proceedings in the trial court.
(a) Although not necessary to resolve this appeal, we observe that the trial court correctly determined that a judgment of partial possession would not have irreparably harmed the succession. In the context of injunctions, irreparable injury is defined as that which cannot be adequately compensated in money damages or measured by a pecuniary standard. See East Baton Rouge Parish School Bd. v. Wilson, 2008-0536, 15 (La.App. 1st Cir.6/6/08), 992 So.2d 537, 546, writ denied, 2008-1479 (La.12/12/08), 997 So.2d 560. This dispute is all about money with some wanting to collect it and other heirs apparently wishing to forgive the money judgment owed to the estate.
Because La. C.C.P. art. 3362 specifically provides that the administrator continues to administer the remainder if a majority of heirs are placed in partial possession, we observe that the administratrix's assertions of potential irreparable injury do not convince. The trial court reasonably concluded that there was no showing of irreparable injury.
In oral reasons for its decision, the trial court explained that under the rules of statutory interpretation, if a literal interpretation does not lead to absurd results, it should be followed. In this case, "majority" means more than half. The trial court specifically found that movants established that more than half the heirs sought to be placed into possession of their portion of the estate. The administratrix made reasonable arguments that the court should interpret "majority of heirs" as a majority of ownership interest in the succession. However, the legislature could easily have required a majority of the ownership interest in the succession for a partial judgment of possession instead of "a majority of the heirs of an intestate decedent." La. C.C.P. art. 3362. The legislature is where that issue should be addressed.
(c) The administratrix objects that the interests of justice were not served, since some heirs requested the partial judgment of possession without being adequately advised of the legal ramifications of their actions.
The administratrix objects on appeal that the heirs who sought the partial judgment of possession did not receive independent legal advice, since they relied on Leroy Smith, who represented the judgment debtors and had a conflict of interest from previously representing the succession. Additionally, the administratrix correctly observed that the testimony demonstrated that those heirs who aligned with the judgment debtors did not understand the legal consequences of obtaining the partial judgment of possession.
Pointing to La. C.C.P. art. 3001, et seq., the trial court correctly noted any creditor having a claim against a succession could file a contradictory motion against the parties placed into possession to compel them to furnish security. Moreover, heirs placed in partial possession accept possession unconditionally and become personally liable for debts of the succession. The record clearly revealed that those heirs were not aware of those legal consequences. But the administratrix's complaints on behalf of those heirs were not hers to make. If those parties siding with the judgment debtors are aggrieved in the future, they may make complaints for themselves.
Based upon the finding that the showings required by La. C.C.P. art. 3362 were not made, we reverse the partial judgment of possession and remand this matter for further proceedings. This court was provided with neither evidence concerning potential tax liability nor documentation of the amount of the potential assets or liabilities of the succession. The interest of judicial efficiency will be served if the parties resolve this dispute completely in the trial court with sufficient evidence for an adequate review should a further appeal arise. The sparse evidence in this record did not support the relief sought. After a substantial expenditure of trial and appellate court time, the parties are in the same posture they occupied prior to this phase of this unfortunate litigation.
The judgment is reversed and remanded for further proceedings deemed necessary
REVERSED AND REMANDED FOR FURTHER PROCEEDINGS.