ARIANNA A. GEORGE ET AL.
TESSA G. DUNN
Session Date: August 9, 2016
from the Chancery Court for Knox County No. 189422-1 John F.
Theodore R. Kern, Knoxville, Tennessee, for the appellant,
Tessa G. Dunn.
W. Taylor, Knoxville, Tennessee, for the appellees, Arianna
A. George and Alexa C. George.
R. Frierson, II, J., delivered the opinion of the court, in
which D. Michael Swiney, C.J., and Frank G. Clement, Jr.,
P.J., M.S., joined.
R. FRIERSON, II, JUDGE
Factual and Procedural Background
prior action filed on behalf of the beneficiaries also came
before this Court on appeal. See Taylor v. George,
No. E2014-00608-COA-R3-CV, 2015 WL 1218658 (Tenn. Ct. App.
Mar. 16, 2015), perm. app. denied (Tenn. June 11,
2015). The trusts at issue were created through the Last Will
and Testament of Gloria G. George ("Decedent"), who
died in 2007 as a resident of Maryland. In her will, which
was probated in Maryland, Decedent provided for the
establishment of separate trusts for each of her two
granddaughters, the plaintiffs, Arianna A. George and Alexa
C. George (collectively, "Plaintiffs"), to be
initially funded with $50, 000.00 each. Decedent named as
trustee her daughter, the defendant, Tessa G. Dunn, who is
Plaintiffs' aunt. Plaintiffs are the children, now
adults, of Decedent's son, James T. George, and his
former wife, Melissa L. Taylor. Decedent also established a
trust for Mr. George in her will, for which Ms. Dunn was the
trustee. See Taylor, 2015 WL 1218658, at *2.
will originally established Plaintiffs' trust funds with
the following provisions:
a. If my son is then living, and if he has an obligation to
make any payment to his former wife, Melissa L. George,
pursuant to the Final Order of Separate Maintenance and
Support dated November 27, 2001 and the Property and
Separation Agreement dated November 27, 2001, and if Melissa
L. George shall execute a receipt and release acknowledging
satisfaction of said obligation in part (in the case of my
son's older living child) or in whole (in the case of my
son's younger living child), then:
(1) Upon such child attaining age eighteen (18), my Trustee
shall distribute Forty Thousand Dollars ($40, 000) from such
child's trust to Melissa L. George for the express
purpose of providing for such child's college,
professional, and/or postgraduate education.
(2) With respect to the balance of such child's trust, my
Trustee may expend such amounts of the net income, and to the
extent the net income is insufficient then of the principal,
of the trust as is necessary or appropriate, in my
Trustee's sole and absolute discretion, for the college,
professional, and/or post-graduate education of such child.
of the 2001 Final Order of Separate Maintenance and Support,
entered by a South Carolina court, Mr. George had agreed that
he owed Ms. Taylor $80, 000.00 in unpaid spousal and child
support. See Taylor, 2015 WL 1218658, at *1.
30, 2009, Ms. Taylor, acting on her own behalf and as next
friend of Plaintiffs, filed an action against Mr. George and
Ms. Dunn in the Knox County Chancery Court ("trial
court"). Ms. Taylor alleged, inter alia, that
Mr. George and Ms. Dunn had conspired to compel her to sign a
release, as required by Decedent's will, in return for a
$70, 000.00 settlement of the $80, 000.00 divorce judgment
while failing to inform her that the $70, 000.00 would be
deducted from Plaintiffs' trust funds. Id. at
*2. Ms. Dunn had written a $35, 000.00 check from each
Plaintiff's respective trust fund, and Mr. George had
then delivered the $70, 000.00 payment to Ms. Taylor's
husband, Plaintiffs' current counsel, Dudley W. Taylor.
Id. Ms. Taylor sought declaratory judgment regarding
the parties' rights and liabilities, enforcement of the
$80, 000.00 divorce judgment, and a finding that Ms. Dunn had
breached her fiduciary duties. Id. Ms. Taylor
deposited the $70, 000.00 check she had received into the
registry of the trial court. Id.
August 31, 2012, the trial court entered an agreed order
dismissing with prejudice the claims filed against Ms. Dunn
on behalf of Plaintiffs. The agreed order provided that the
funds held by the court would be released to Ms. Dunn as
trustee so that she could restore the funds to
Plaintiffs' trust accounts. Id. The order
further provided that the funds would be disbursed by Ms.
Dunn "from the respective trusts for the benefit of
Alexa C. George and Arianna A. George pursuant to the terms
of the trust agreement[.]"
remaining parties proceeded to trial on the claims brought in
Ms. Taylor's name against Mr. George and Ms. Dunn. The
trial court ultimately dismissed the claims against Ms. Dunn
while upholding the divorce judgment against Mr. George and
assessing prejudgment and postjudgment interest.
Taylor, 2015 WL 1218658, at *1. In upholding the
trial court's judgment, this Court concluded:
[T]he evidence supported the trial court's finding that
Ms. Dunn and Mr. George did act in concert and conspire to
deplete Mr. George's trust assets so that Ms. Taylor
would be unable to collect her judgment against the trust. As
the trial court also properly found, however, there was no
proof of an underlying tortious or wrongful act that would
support Ms. Taylor's conspiracy claim. The will provided
Ms. Dunn, as trustee, discretion to make disbursements of Mr.
George's trust fund assets. Even though Ms. Dunn was
aware of Ms. Taylor's unpaid judgment, Ms. Dunn was not
violating a court order or lien or otherwise acting in a
fraudulent or tortious manner by disbursing trust fund assets
to Mr. George. By transferring funds to Mr. George, Ms. Dunn
initiated actions that she was lawfully entitled to take as
trustee. The fact that Ms. Dunn's actions resulted in
depletion of the trust assets before Ms. Taylor could enforce
her judgment against the trust does not render Ms. Dunn's
actions fraudulent or tortious. See, e.g., Burton v.
Hardwood Pallets, Inc., No. E2001-00547-COA-R3-CV, 2001
WL 1589162 at *5 (Tenn. Ct. App. Apr. 29, 2002) (holding that
there was no fraudulent conduct where a defendant
creditor's lawful actions to collect a debt resulted in
an unsecured creditor's debt going unsatisfied).
Therefore, without the demonstration of the commission of a
tortious or wrongful act by Ms. Dunn, there can be no
cognizable claim of civil conspiracy. We determine that the
trial court properly dismissed Ms. Taylor's claims
against Ms. Dunn in this matter.
Id. at *7.
instant action was commenced on April 13, 2015, when
Plaintiffs filed a complaint alleging that Ms. Dunn had
violated the terms of the August 2012 agreed order and her
fiduciary duty to Plaintiffs by writing checks to herself and
Mr. George against Plaintiffs' trust funds. Ms. Dunn
acknowledges that in September 2012, she wrote two
"reimbursement" checks on each trust account,
ostensibly to reimburse her personal funds and Mr. George for
attorney's fees incurred in defense of the prior action
brought on behalf of Plaintiffs. On September 20, 2012, the
trial court clerk disbursed to Ms. Dunn $70, 734.10,
including the $70, 000.00 provided by the agreed order plus
interest earned. On September 20, 2012, Ms. Dunn wrote two
checks in the amount of $12, 500.00 to Mr. George, one drawn
from each of the Plaintiff's trust funds. On September
21, 2012, Ms. Dunn wrote two checks in the amount of $2,
781.58 to herself, also drawing one check from each of
Plaintiff's trust funds. Ms. Dunn explained in an
affidavit presented to the trial court that although she
initially had utilized monies from Mr. George's trust,
for which she was also the trustee, to pay legal expenses,
she wrote the corresponding "reimbursement" checks
directly to Mr. George because his trust had been dissolved
by that time. The total amount that Ms. Dunn withdrew from
Plaintiffs' combined trust funds was $30, 563.16.
Plaintiffs had requested an award of attorney's fees
"if applicable" in their original complaint,
Plaintiffs filed an amendment to their complaint on April 30,
2015, adding that they sought "their reasonable attorney
fees for the intentional breach by Defendant of her fiduciary
duty . . . ." Ms. Dunn subsequently filed an answer,
documenting her legal expenses for defense of the prior
action and asserting that pursuant to Maryland law governing
the establishment of the trust accounts, she was entitled to
be reimbursed from the trusts for her legal fees incurred in
defense of the prior lawsuit.
Dunn maintains that the legal expenses for which she
reimbursed herself pertained to defense of the action pursued
on Plaintiffs' behalf and not the action pursued by Ms.
Taylor individually. Ms. Dunn also maintains that she met
with Plaintiffs in September 2012, prior to writing the
reimbursement checks, and explained to Plaintiffs that she
would be reimbursing herself from their trust funds for the
substantial legal fees she had incurred in defending against
their prior lawsuit. Plaintiffs deny that such a meeting took
place and deny that Ms. Dunn provided them with advance
notice that she would be withdrawing funds from their trust
accounts as reimbursement for her legal fees.
23, 2015, Plaintiffs filed a motion for summary judgment and
a statement of "Material Facts as to which there is No
Genuine Issue for Trial." Ms. Dunn filed a response and
statement of additional facts on July 27, 2015, inter
alia, acknowledging that she did not obtain consent from
Plaintiffs for the trust withdrawals at issue but asserting
that she did provide them with prior notice of the
a hearing conducted on August 6, 2015, the trial court
granted the parties ten days for supplemental briefing on
applicable Maryland law. Specifically, the court directed in
an order entered August 14, 2015:
After taking into account all documents filed in support of
and against the Motion, the Court elected to defer its ruling
in order to give the parties, through counsel, an opportunity
to research the issue of whether Maryland law offers any
support for the proposition that a trustee of a trust is
protected against claims of the beneficiaries for making
disbursements of trust funds to persons who are not trust
beneficiaries, by reason of giving advance notice of such
intended disbursements, whether or not the beneficiaries
September 24, 2015, the trial court entered a Memorandum
Opinion, granting partial summary judgment in favor of
Plaintiffs. Upon finding that Ms. Dunn had violated the
agreed order and breached her fiduciary duty to Plaintiffs,
the court awarded to each respective Plaintiff the amount of
$15, 281.58, plus prejudgment interest of five percent per
annum calculated from September 20, 2012, on each $12, 500.00
check and from September 21, 2012, on each $2, 781.58 check.
The court also awarded to Plaintiffs reasonable
attorney's fees but reserved the amount for an
evidentiary hearing. The court entered an Order to this
effect on November 6, 2015.
Dunn filed a notice of appeal on December 4, 2015. On January
8, 2016, the trial court entered an order awarding to
Plaintiffs attorney's fees in the amount of $6, 000.00
and costs in the amount of $244.33, contingent upon
Plaintiffs' success on appeal. Upon submission of the
final judgment, this Court treated Ms. Dunn's premature
appeal as timely pursuant to Tennessee Rule of Appellate
Dunn presents three issues on appeal, two of which we
determine to be included in her overall issue of whether the
trial court erred by granting partial summary judgment in
favor of ...