Confession of Error

In the Georgia Supreme Court's decision Thursday in Slosberg v. Giller, the question was whether a "no contest" clause in a will or trust could be challenged on the grounds that the clause itself was the product of undue influence:

Georgia law permits a settlor or testator to include in his trust instrument or will an "in terrorem clause" …[,] also known as a "no-contest clause," … [which] acts as a disinheritance device to dissuade beneficiaries of a trust or a will from challenging the terms of the instrument.

This case involves a contentious family dispute over the effect of an in terrorem clause in a trust instrument that was executed by David Slosberg …, which said that if his son [Plaintiff] … or daughters [Defendants] … challenged the trust, they would forfeit any benefits they were to receive from it. After David died, Plaintiff filed a lawsuit alleging, among other things, that Defendants unduly influenced David to create the trust that contained the in terrorem clause, and at a trial in June 2019, the jury agreed…. Defendants filed a motion notwithstanding the verdict, arguing, among other things, that the in terrorem clause contained in the trust instrument precluded Plaintiff from asserting the undue-influence claim in the first place…. [We conclude] that the in terrorem clause [does not bar] Plaintiff's undue-influence claim and [does not result] in forfeiture of the assets the trust instrument otherwise provided.

Justice Charles Bethel concurred:

I was wrong. At least I'm fairly sure I was.

In Duncan v. Rawls (Ga. App. 2018), a majority of the Court of Appeals held that the trial court was correct in granting summary judgment on the counterclaim asserted by the purported beneficiaries of a trust. My frustration with that ruling led me to call for the judicial recognition of a good faith and probable cause exception for those challenging in terrorem clauses in trust documents. Of course, as the Court clearly demonstrates today, such an exception is not necessary to allow a challenge to the formation of a trust. Thus, I happily concur in the Court's articulation of the correct rule.

{As noted in the opinion of the Court [today], it is possible that a good-faith and probable-cause exception existed in the common law of England in 1776 when it was adopted as the law of Georgia. See Powell v. Morgan, 23 Eng. Rep. 668 (Ch. 1688) (holding that the plaintiff did not forfeit his legacy by contesting the formation of a will because he had probable cause to assert the challenge). Of course, that question is not before us here and was most definitively not before the Court of Appeals in Duncan, where the beneficiaries asked the court to adopt such an exception rather than enforce an already-existing exception. Thus, if my suggestion in Duncan to recognize the exception later proves to have been correct based on its existence in the adopted common law of 1776, it will be a product of pure accident.}

Given the circumstances of that case, the holding in Duncan did not allow the opportunity to challenge the formation of the trust in question there. Because of that, I write to emphasize the Court's disapproval of Duncan to the extent that decision endorsed the summary adjudication of a challenge to formation based solely on the presence of an in terrorem clause when the Court of Appeals concluded that "the trial court did not err by enforcing the in terrorem clause against a claim of undue influence and therefore granting partial summary judgment to the trustees on that claim." Summary adjudication of a challenge to the formation of any legal document based solely on the presence of an in terrorem clause in the document is improper. That was the main thrust of my dissent in Duncan, and it is, in my view, the main takeaway of the Court's opinion in this case.