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In re Estate of Darken

Court of Appeals of Tennessee, Nashville

December 20, 2016


          Session: October 10, 2016

         Appeal from the Chancery Court for Williamson County No. P5663 James G. Martin, III, Chancellor

         The sons of the decedent challenge the executrix's administration of the decedent's estate, contending that she breached her fiduciary duty by, inter alia, refusing to provide them with certain documents and by converting personal property they claim their father intended for them. They also claim that the antenuptial agreement their father entered into with the executrix prior to their marriage established a trust that nullifies the specific bequest in their father's will that gives his tangible personal property to the executrix. The executrix denied breaching any of her duties or converting any assets. She also disputed the contention that the antenuptial agreement created a trust. The trial court found that the executrix had not breached her fiduciary duties or converted any assets and that the antenuptial agreement did not create a trust. The court also ordered that the estate pay the fees of the attorney who represented the executrix in her fiduciary capacity. The decedent's sons appeal, challenging each of the foregoing rulings. They also contend that the trial court erred in limiting their cross examination of the executrix at trial. We affirm in all respects.

         Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Chancery Court Affirmed

          Michael E. Richardson, Chattanooga, Tennessee, for the appellants, Eric Darken and Brett Darken, Trustees of The Elwood R. Darken Trust and The Nancy L. Darken Trust.

          Paul T. Nowak, Franklin, Tennessee, for the appellee, Cherry Lane Darken.

          Frank G. Clement, Jr., P.J., M.S., delivered the opinion of the Court, in which Richard H. Dinkins and Kenny W. Armstrong, JJ., joined.



         The matters at issue arise from the administration of the estate of Elwood R. Darken. The parties to this action are Eric Darken and Brett Darken ("Plaintiffs") and Cherry Lane Darken ("Defendant"). Plaintiffs are the adult sons of Elwood Darken, the decedent, and Nancy L. Darken, who died in 1997. Defendant, who is the decedent's surviving spouse, served as the executrix of his estate and is the beneficiary of a specific bequest. The residuary beneficiary of the decedent's estate is the Elwood R. Darken Living Trust. Plaintiffs are the successor trustees and sole beneficiaries of that trust.

         In 1992, during his marriage to Nancy, Mr. Darken executed a will that appointed his then-wife "Nancy L. Darken" as the executor of his estate. The will states in pertinent part:

I give and bequeath to my wife, if she shall survive me, all the tangible personal effects including any household furniture and furnishings, automobiles, books pictures, jewelry, art objects, hobby equipment and collections, wearing apparel, and other articles of household or personal use or ornament (excluding cash, choses in action, stocks, bonds or other incorporeal personal property), which I may own at the time of my death . . . .

         In 1999, Mr. Darken married Defendant. Prior to the marriage they executed an antenuptial agreement, the validity of which is not challenged. The agreement stated that Mr. Darken would keep sole ownership and control of the assets listed in "Exhibit A", a collection of documents that included a schedule of assets titled "Specific items designated to Brett Darken and Eric Darken on equal basis" ("Items Schedule"). The Items Schedule listed 27 items of personal property, including "41 one ounce gold Eagle coins." Section 9 of the antenuptial agreement states that "this Agreement shall not be construed as placing any limitation on the rights of either party to make voluntary inter vivos and/or testamentary transfers of his or her assets to his or her spouse."

         In 2004, Mr. Darken executed a codicil that removed references to Nancy Darken from his will and replaced them with references to Defendant. In relevant part, the codicil states: "In all respects, my said Last Will and Testament is hereby modified such that any references therein to 'my wife' or to 'NANCY L. DARKEN' including, but not limited, to any inheritance thereunder or any fiduciary appointment, shall henceforth be modified to mean Cherry Lane Darken." (emphasis in original). Attorney Randle Davis, who served as Mr. Darken's personal attorney for years, prepared the 1992 will and the 2004 codicil.

         Mr. Darken died on April 6, 2010. By order entered on May 20, 2010, his 1992 will and the 2004 codicil were admitted to probate, and Defendant was issued letters testamentary as the executrix. Mr. Davis, who drafted and filed the 2010 petition to open the probate estate, has represented Defendant in her capacity as the executrix throughout these proceedings.

         Shortly after their father's death, Plaintiffs began requesting documents from Defendant including the antenuptial agreement, all schedules associated with the antenuptial agreement, and documents concerning various family trusts that Mr. Darken had managed. In June and July of 2010, Mr. Davis sent three memoranda to Plaintiffs and Defendant. The first of these documents is a "flow chart" of Mr. Darken's assets based on the information that was available at that time. It states that Mr. Darken was a private person who used Mr. Davis as a resource to answer specific questions. According to this memo, "[o]ther than [Mr. Darken] himself, there is not one person who knows [his] overall plan." Mr. Davis concluded the June 2010 memo by suggesting that the parties have a meeting soon.

         This meeting never occurred. In an email exchange between Plaintiffs and Mr. Davis on July 13, 2010, Brett Darken stated that: "In order to have an informed conversation, we all need to be working from the same set of facts. Once we get this documentation, we can then set a time and agenda for the meeting." Mr. Davis sent a follow-up memo on July 16, 2010, again seeking to organize a meeting between Plaintiffs and Defendant. On July 21, 2010, Mr. Davis sent another memo that included additional charts of Mr. Darken's assets.

         During that same month, Defendant gave Plaintiffs a handwritten list of the assets of the trusts Mr. Darken had managed. This list included account numbers, account balances, and contact information for the various financial institutions that controlled the listed assets.

         Nevertheless, Plaintiffs continued to request additional documentation. In 2011, Defendant provided Plaintiffs with a copy of the antenuptial agreement that did not include any of the exhibits to the agreement. Additionally, Mr. Davis, with the consent of Defendant, made his entire estate file available to Plaintiffs' counsel, who reviewed the file and was permitted to make copies of it.[1]

         On August 15, 2012, Defendant filed a motion for executor fees and attorney fees, and she submitted her final accounting to the court on September 11, 2012. One week later, Plaintiffs timely filed an Objection to Application for Fees. Following a hearing on September 28, 2012, the Clerk and Master awarded Randle Davis over $33, 000 in attorney's fees and expenses for services in connection with the administration of the estate through August 14, 2012. The Clerk and Master also recommended that the trial court approve the final accounting, following which Plaintiffs filed an exception to the final accounting.

         On December 27, 2012, Plaintiffs filed a Motion to Remove Executrix, Appoint Successor Co-Executors and Require Return of Certain Assets. On January 28, 2013, the Clerk and Master entered an Order finding that the duties of the executrix were completed but noting that the estate could not be closed pending resolution of Defendant's Motion for Executor Fees and Plaintiffs' Exceptions to Final Accounting and Motion to Remove Executrix. The Clerk and Master directed Defendant to retain counsel to represent her in an individual capacity because Mr. Davis could only represent her in her capacity as the executrix of the estate.[2] The order reserved ruling on all other pending motions and claims. Subsequently, Plaintiffs filed a motion to remove Mr. Davis as the attorney for the estate.

         On July 1, 2013, the trial court held a hearing on the pending motions and the recommendations of the Clerk and Master. In the order that followed, the trial court instructed Plaintiffs to file an amended complaint setting forth all civil claims against Defendant; ordered the depositions of Defendant and Mr. Davis; and reserved ruling on all other motions. In a separate order, the trial court denied the motion to remove the executrix and to disqualify and remove Mr. Davis as attorney for the estate.

         On July 18, 2013, Defendant filed a motion for court approval of Mr. Davis' final attorney's fees, requesting over $37, 000 in supplemental fees for the period from August 15, 2012 through August 7, 2013.

         On July 23, 2013, Plaintiffs filed their amended complaint alleging, inter alia, breach of fiduciary duty, breach of contract, conversion of trust assets, and attempted conversion of estate assets. Plaintiffs alleged that Defendant refused to disclose trust documents and the antenuptial agreement. Plaintiffs also contended that the personal property identified in the Items Schedule, including the gold coins, was property of an express trust created in the antenuptial agreement of which they were the sole beneficiaries.

         In an order entered on August 26, 2013, the court found that the executrix had completed her duties of administration and relieved her from all further duties except for the liability, if any, for her actions as executrix. The remaining motions for fees, objections to the final accounting regarding personal property and issues related to the antenuptial agreement were reserved.

         The case was tried on July 2 and 3, 2014. Mr. Davis testified that he made his legal files regarding Mr. Darken available to Plaintiffs' first attorney, Paul Hayes. Mr. Hayes was allowed to review the file and choose which documents he wanted to copy. According to Mr. Davis, Mr. Hayes "tagged a little over 100 pages, " and Mr. Davis made copies of them. Mr. Davis did not review the pages Mr. Hayes marked. Instead, he gave them to his administrative assistant so that they could be copied.

         Mr. Davis also testified that Mr. Darken was "very private when it came to financial information and data." Mr. Darken provided Mr. Davis with limited information and asked questions about specific issues based on that information. According to Mr. Davis, "no one individual had all of the information" about Mr. Darken's finances and assets.

         Eric Darken testified that he used the handwritten list of trust assets to contact many of the financial institutions. He stated that Plaintiffs did not ask these institutions for backup copies of the trust documents because they "wanted to get the originals from [Defendant]." Similarly, Brett Darken testified that Plaintiffs were able to transfer or obtain control of "60 to 80 percent of the trust stuff . . . " within six months of receiving the handwritten list of assets. When asked what trust documents Plaintiffs needed but were not provided, Brett stated: "What did I need that I wasn't provided -- oh, nothing."

         After the close of Plaintiffs' proof, Defendant moved for involuntary dismissal under Tenn. R. Civ. P. 41.02(2). The trial court granted the motion regarding the claim for breach of fiduciary duty because Plaintiffs had not submitted competent proof of damages. The trial court stated that trial would continue regarding the other issues. When Defendant elected to rest her case without presenting additional evidence, the trial court called Defendant as a witness for the purpose of examining her concerning the circumstances regarding the execution of the antenuptial agreement. Prior to calling Defendant as a witness, the trial court gave each party the opportunity to object to its decision to call Defendant, and both parties stated that they had no objection.

         The trial court questioned Defendant about the antenuptial agreement and the property listed on the Items Schedule. Defendant testified that she and Mr. Darken "mutually agreed to end the prenuptial agreement" after five years of marriage. According to Defendant, she did not have a copy of the agreement because she and Mr. Darken had destroyed their copies.

         On August 21, 2014, the trial court entered an order reiterating its decision to grant Defendant's motion for involuntary dismissal and making other findings about the merits of the case.[3] Plaintiffs filed a motion to alter or amend, which the court granted because it had signed the August 2014 order without allowing Plaintiffs to file a competing order and because it had not allowed the parties to cross-examine Defendant. Subsequently, the parties entered an agreed order stating that Defendant would be recalled to the witness stand for cross-examination "limited to the scope of the direct examination by the Court at trial."

         In January 2015, the court recalled Defendant to the stand and allowed both parties' attorneys to examine her. As provided in the agreed order, the scope of the parties' cross-examination of Defendant was limited to the scope of the trial court's direct examination. Once again, Defendant testified that she did not have a copy of the antenuptial agreement and that after five years of marriage she and Mr. Darken "decided, mutually, to put aside all of this prenuptial agreement, to merge our properties." According to Defendant, executing the 2004 codicil was an easy way to merge Mr. Darken's property with hers.

         In March 2016, the court entered a final order in which it reaffirmed the findings in its previous orders and rejected the claims in the amended complaint. The court found that Defendant had not breached her fiduciary duty because the antenuptial agreement and trust documents were not property of the estate; thus, Defendant had no duty to provide them to Plaintiffs. Moreover, the trial court found that even if Defendant had such a duty, she did not have a copy of the antenuptial agreement or schedules to produce because Mr. Darken and she revoked the agreement in 2004 by destroying the documentation. Regarding the trust documents, the court found that Defendant's July 2010 handwritten statement was sufficient disclosure because Plaintiffs were able to use that statement to obtain control of the relevant trust assets and could have asked various financial institutions for the trust documents they sought.

         The court also rejected Plaintiffs' argument that their damages for breach of fiduciary duty were the costs of this litigation. The court found that Plaintiffs received a copy of the antenuptial agreement in 2011 and another copy that included all exhibits in 2013. Moreover, the trial court found that "[a]ccess to the complete document had no deterrent effect on Plaintiffs' decision to continue incurring 'enormous time and expense' in proceeding to trial."

         As for the claim that Defendant converted the coin collection and other personal property, the court found that the decedent made a testamentary gift of the property listed on the Items Schedule to Defendant. The court rejected Plaintiffs' argument that the antenuptial agreement established an express trust concerning tangible personal property listed on the Items Schedule. The court noted that Section 9 of the antenuptial agreement allowed the decedent to make such testamentary gifts to her and that the decedent did just that when he executed the 2004 codicil, which altered his will by replacing every reference to Nancy with Defendant. As a result, Mr. Darken specifically bequeathed to Defendant "all tangible personal effects . . . (excluding cash, choses in action, stocks, bonds, or other incorporeal personal property)." Further, the court found that the definition of "all tangible personal effects" encompassed everything listed in the Items Schedule, including the gold coins, which "are not cash and are not legal tender." Thus, the property at issue was specifically bequeathed to Defendant pursuant to the 2004 codicil.

         Finally, the trial court ordered the estate to pay the balance of the attorney's fees charged by Mr. Davis for representing Defendant in her capacity as executrix. However, the trial court denied Defendant's request for an additional $23, 000 in attorney's fees that she incurred defending claims against her in an individual capacity.[4] This appeal followed.

         Standard of Review

         In cases such as this where the action is "tried upon the facts without a jury, " Tenn. R. Civ. P. 52.01 states that the trial court shall find the facts specially and shall state separately its conclusions of law and direct the entry of the appropriate judgment. The underlying rationale for the Rule 52.01 mandate is that it facilitates appellate review by "affording a reviewing court a clear understanding of the basis of a trial court's decision, " and enhances the authority of the trial court's decision. In re Estate of Oakley, No. M2014-00341-COA-R3-CV, 2015 WL 572747, at *10 (Tenn. Ct. App. Feb. 10, 2015) (quoting Lovlace v. Copley, 418 S.W.3d 1, 34 (Tenn. 2013)). In the absence of findings of fact and conclusions of law, "this court is left to wonder ...

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