In this week’s edition of Alabama Law Weekly Update, we discuss an Alabama Supreme Court case that offers guidance on the awarding of a Personal Representative’s fee from wrongful-death proceeds.

Rodgers v. McElroy, No. 2121039 (Ala. April 18, 2014) (reversing the trial court’s awarding of a fee from the wrongful-death proceeds to compensate the attorney personal representative, and holding that trust and equitable principles allow the awarding of a fee, but only if the award is set by the court considering the wrongful death action).

For the second time, the Supreme Court considered the issue of compensation to Attorney and Jefferson County Administrator Elizabeth McElroy from wrongful death proceeds for her services as personal representative of the estate of Ron’Drequez Cortez White arising from a motor vehicle accident.  In this opinion, the Supreme Court again parsed the language of the probate code dealing with a Personal Representative’s compensation and § 6-5-410 of the Ala. Code, which is one of Alabama’s wrongful-death statutes.

Applying the rules of construction, the Court originally held that “because the recovery in the wrongful-death action was not for the estate,” but, rather, for the heirs at law outside of the estate’s creditors and administration expenses, the personal representative could not take a fee from the wrongful-death proceeds, although the result is an inequitable one.

On remand, the trial court, which was dealing with only estate administration issues, found that despite the Alabama Supreme Court’s ruling, “general rules of trust law permit a personal representative compensation in wrongful death actions,” and awarded McElroy a fee of $15,750 as compensation for her services as “personal representative, attorney and statutory trustee of wrongful death proceeds.”  Rodgers, one of the decedent’s next of kin, again appealed the judgment.

In its holding, the Alabama Supreme Court clarified that if McElroy was to be awarded a fee from the wrongful-death proceeds, “the trust res from which such an award could have been paid should have been created by the court in the wrongful-death action against the driver of the other vehicle involved in the car accident in which White was killed.”  Despite noting that the result is “unfair and inequitable to the personal representative,” the judgment of the trial court awarding McElroy’s fee was reversed and remanded.