Saturday, August 30, 1997
McMillon ordered to pay stiff damages to estate
By ANTHONY WILSON / Abilene Reporter-News
A federal bankruptcy judge attacked former county judge James
McMillon's ethics Friday and then ordered him to pay a six-figure
sum to an estate he mishandled.
Accusing McMillon of "self dealing" in the matter,
U.S. Bankruptcy Judge John C. Akard ordered the attorney to repay
his $50,000 executor's fee, two loans of $6,500, attorneys' fees
and court costs to the estate of Rosalyn Skiles Awtry. McMillon
also must pay triple that cost in punitive damages.
The total judgment is expected to exceed $200,000.
"This court is upset about this matter," Akard said.
"This matter is egregious."
McMillon and his attorney hustled from the courtroom, declining
comment.
The verdict should finally allow Awtry's assets to be transferred
to the lone surviving beneficiary -- a charitable trust -- nine
years after her death.
Awtry passsed away at age 82 in August 1988, leaving the bulk
of her $600,000-plus estate to her sister, Sammie Kathleen Skiles,
and to their trust fund.
But court documents and testimony revealed McMillon botched
the handling of the estate in numerous ways:
-- He failed to give a $150,000 gift to the Episcopal Church
of the Heavenly Rest. When the church finally received its money
in 1993, it filed a complaint with the State Bar of Texas.
The bar subsequently reprimanded McMillon publicly.
-- He loaned his brother, Larry McMillon, $3,500 without securing
any collateral. The loan was eventually repaid with interest,
though testimony showed a promissory note was not drafted until
three years after the transaction.
Even McMillon's attorney, Thomas Wheeler, criticized the loan
as "imprudent."
-- He purchased an $84,000 annuity on his life with funds from
the estate.
McMillon claimed the move was a good investment, though the
plaintiff's attorney Clinton Nix argued his duty was to distribute
the estate's assets rather than to produce earnings.
-- He failed to provide a complete inventory and accounting
of the estate's assets.
Plaintiff Mary Glover, who was serving as Skiles' guardian
when she replaced McMillon as administrator of the Awtry estate,
was forced to search for assets, such as other loans and oil and
gas interests, without McMillon's help. Neither she or Akard are
convinced all the assets have been accounted for.
McMillon's failures eventually resulted in contempt of court
citations, fines and his removal as estate executor.
-- He neglected to forward oil royalty checks to Glover to
deposit in Skiles' estate.
-- He loaned approximately $6,500 to two businesses. McMillon
claimed they were not loans; Akard said he did not believe his
testimony.
"And you're still saying those fees you paid yourself
were justified?" Nix asked McMillon.
"Yes, sir," McMillon replied.
"And that you're not indebted to Mrs. Autry's estate?"
"Yes, sir."
McMillon confessed "errors were made" but blamed
most on forces beyond his control. He justified the mistakes by
noting they never cost the Awtry estate any money, though Glover
has paid attorneys' fees from the funds while pursuing damages.
Glover, also a probate attorney, sued McMillon in 1994 alleging
he had breached his fiduciary duties to the estate.
Last August, McMillon filed for Chapter 7 bankruptcy, freeing
him from the threat of damages until Glover transferred her suit
to federal bankruptcy court.
In their bankruptcy petition, McMillon and his wife Sarah sought
a liquidation of debts totaling $197,924. They listed assets of
$191,035.
While McMillon asked the bankruptcy judge to discharge him
from any debts, both Glover and Nix urged Akard to make McMillon
an example for the legal community.
"He owed the estate the highest level of loyalty and conduct,"
Glover said from the witness stand. "He breached that. He
should be ordered to pay substantially as an example to other
attorneys and executors that they're not going to get away with
this."
Nix, in his closing argument, raged at his peer's conduct.
"As attorneys, we have a bad reputation," he said.
"We have enough problems as it is. The message he's sending
to the public is that lawyers can get away with this kind of action.
Send a message that this won't be tolerated."
McMillon, who ruled on probate matters as county judge from
1979-85, is also facing other legal troubles.
A suit regarding his management of an incapacitated widow's
estate is still pending in state district court. That suit charges
McMillon loaned himself $50,000 from the woman in 1993, two months
after she named him trustee of her estate.
He repaid the debt and 10 percent interest, but not until after
the woman's son discovered the loan.
The State Bar has investigated the matter and is expected to
issue a ruling this fall.
Rick Yeager, an Austin attorney representing the woman's son,
expects to issue a similar challenge to Glover's in bankruptcy
court in December, following some anticipated "administrative
action" against McMillon.
Skiles, Awtry's sister, died in 1994. The sisters' combined
assets will benefit local charities.
McMillon could appeal Akard's ruling to U.S. District Judge
Sam Cummings. He wouldn't say Friday whether he would.
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Abilene Reporter-News / Texnews / E.W. Scripps Publications
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