Session January 26, 2017
from the Probate Court for Unicoi County No. PR766 David R.
probate matter, the decedent was a party to divorce
proceedings in Georgia with her estranged husband at the time
of her death. The decedent and her husband had executed a
separation agreement as part of those proceedings, wherein
they agreed that each party would individually maintain
ownership of specified marital assets and execute any
documents necessary to effectuate the agreement as to each
asset. The decedent passed away before the respective
transfers of property were made, and her personal
representative filed an action seeking to enforce the terms
of the settlement agreement. The trial court conducted a
hearing in this matter and determined that the agreement had
been rescinded by the husband, such that all jointly owned
marital assets passed to him at the decedent's death. The
personal representative has appealed. We determine that the
husband did not have a proper basis for rescission of the
settlement agreement and that any purported rescission was
ineffective. We therefore reverse the trial court's order
dismissing the petition filed by the personal representative
and awarding ownership of all marital assets to the husband.
We remand this matter to the trial court for further
proceedings regarding enforcement of the agreement.
R. App. P. 3 Appeal as of Right; Judgment of the Probate
T. Settlemyre and Ronald W. Woods, Greeneville, Tennessee,
for the appellant, Mary Lee Fennessy, as personal
representative of the Estate of Madelyn Cleveland.
Russell W. Adkins and William S. Lewis, Kingsport, Tennessee,
for the appellee, Donald Cleveland.
R. Frierson, II, J., delivered the opinion of the court, in
which D. Michael Swiney, C.J., and John W. McClarty, J.,
R. FRIERSON, II, JUDGE
Factual and Procedural Background
Cleveland ("Decedent") passed away on September 22,
2014, following a battle with cancer. At the time of her
death, Decedent was involved in divorce proceedings in
Georgia with her estranged spouse, Donald Cleveland. Decedent
and Mr. Cleveland had been separated since July 2012 and had
executed a separation agreement ("Agreement")
dividing their marital assets on July 13, 2014. This
Agreement provided, inter alia, that Decedent was to
retain as her property the parties' jointly owned
residence in Erwin, Tennessee ("Tennessee
Residence"), as well as a Fidelity Individual Retirement
Account ("Fidelity IRA") that was opened during the
marriage in Decedent's name. Mr. Cleveland was to retain
as his property the parties' jointly owned residence in
Georgia ("Georgia Residence") and a separate
financial account. Both parties were to execute quitclaim
deeds to effectuate the respective transfers of real
property. Mr. Cleveland was also to receive certain items of
personalty that were housed in the Tennessee Residence and
was to maintain ownership of his vehicle, which was titled
jointly. The Agreement further provided that each party would
execute "any documents required to effect the terms of
this Agreement and to perform any other legal act required to
implement or effect the terms and intent of this Agreement,
" and that the Agreement would be governed by Georgia
to her death, Decedent had executed a last will and testament
wherein she devised her real property to her daughter, Mary
Lee Fennessy, and named Ms. Fennessy as her personal
representative. Decedent bequeathed her Fidelity IRA and
other personal property to her sister, Brenda Tinker.
Following Decedent's death, Ms. Fennessy probated
Decedent's will in the Unicoi County Probate Court
("the trial court"). Ms. Fennessy, on behalf of
Decedent's estate ("the Estate"), requested
that the trial court enter a temporary restraining order
prohibiting Mr. Cleveland from entering the Tennessee
Residence and removing Decedent's personalty or conveying
the residence to a third party. The trial court granted the
temporary restraining order.
Fennessy also filed a petition seeking a declaratory judgment
on behalf of the Estate to determine the ownership of the
Tennessee Residence and the Fidelity IRA. Mr. Cleveland filed
an answer, stating that the Agreement was "never
executed due to delays and inappropriate demands by Mrs.
Cleveland's daughter, Mary Lee Fennessy, who handled
Madelyn Cleveland's affairs during her illness." Mr.
Cleveland subsequently filed an amended answer, stating that
he had rescinded the agreement on September 10, 2014, due to
Decedent's or Ms. Fennessy's non-performance.
Cleveland thereafter filed a counter-complaint against the
Estate and third-party complaint against Ms. Fennessy, in her
individual capacity and as personal representative of the
Estate. Mr. Cleveland alleged, inter
alia, that Ms. Fennessy had knowingly given false
information to the funeral home, thereby causing
Decedent's certificate of death to incorrectly state that
she was divorced. Mr. Cleveland also alleged that Ms.
Fennessy had used this "fraudulent" death
certificate to improperly withdraw funds from the Fidelity
IRA. Mr. Cleveland further alleged that Ms. Fennessy, on
behalf of the Estate, had wrongfully obtained a temporary
restraining order denying him access to the Tennessee
Residence even though legal title to the residence passed to
him by operation of law upon Decedent's death. Mr.
Cleveland sought a temporary injunction prohibiting
distribution of the funds from the Fidelity IRA. Over Ms.
Fennessy's objection, the trial court allowed the filing
of the counter-complaint and third-party complaint. The court
also entered a temporary injunction, ordering $58, 000.00 to
be moved from the Estate's account into a separate
account. Mr. Cleveland thereafter amended his
counter-complaint and third-party complaint pursuant to an
agreed order, adding additional allegations against Ms.
Fennessy in both her individual and representative
trial court conducted a bench trial on November 9, 2015,
regarding the Estate's petition for declaratory judgment
and Mr. Cleveland's amended counter-complaint and
third-party complaint. The trial court subsequently entered a
judgment on March 3, 2016, dismissing the Estate's
petition against Mr. Cleveland and also dismissing Mr.
Cleveland's third-party complaint against Ms. Fennessy
individually. The court awarded a judgment to Mr. Cleveland
on his counter-claim against the Estate in the amount of $57,
185.66. The court further determined Mr. Cleveland to be the
owner of the Tennessee Residence.
trial court made separate findings of fact and conclusions of
law, which were incorporated into its judgment. The court
found that Decedent and Mr. Cleveland signed the Agreement on
July 13, 2014, without undue influence or duress. The court
also determined, however, that with regard to the transfers
of real property, the Agreement required the execution of
quitclaim deeds in order to effectuate such transfers and
therefore did not automatically divest title from Mr.
Cleveland. The trial court found that the Tennessee Residence
was titled to Decedent and Mr. Cleveland as tenants by the
entirety, which established that title would immediately pass
to the surviving spouse, Mr. Cleveland, upon Decedent's
death pursuant to Tennessee law. As the court noted with
regard to the transfers of real property, "the agreement
wasn't the  final say . . . ."
the Fidelity IRA, the trial court determined that the
Agreement did not specifically provide that Mr. Cleveland
waived his rights as a beneficiary. The court found that
although Decedent had taken steps to remove Mr. Cleveland as
named beneficiary, the IRA agreement provided that the IRA
would pass to the surviving spouse if no beneficiary was
designated. The court noted that although the
Agreement provided that Decedent would retain ownership of
the account, "who retains the ownership of the account
is one issue but [who is] named beneficiary on the account is
an entirely separate issue." The court thus determined
that the funds withdrawn from the Fidelity IRA should be
restored to Mr. Cleveland.
trial court initially determined that the Agreement had not
been rescinded. When announcing its findings of fact and
conclusions of law to the parties, the trial judge stated:
I don't think that the separation agreement was
rescinded. The letter, which Mr. Cleveland introduced,
authored by his lawyer from Georgia had language to the
effect in it. And I can't remember what the Exhibit
number is, Gentlemen, but had language to the effect that the
separation agreement was rescinded. But in the immediately
following paragraph it stated that, language to the effect,
hey, let's get together and get this thing worked out.
Language which was, which tended to demonstrate that Mr.
Cleveland wanted to, not reconcile the marriage but reconcile
the settlement process and get the agreement back on track.
trial court also determined, however, that "it was the
intention of the parties that the separation agreement would
be fully implemented upon the divorce and upon the execution
of certain other documents . . . ." As a result of these
findings, the trial court dismissed the petition of the
Estate and awarded ownership of the Tennessee Residence and
the funds from the Fidelity IRA to Mr. Cleveland. The court
thereafter denied Mr. Cleveland's request for prejudgment
Estate subsequently filed a motion to alter or amend, arguing
that the trial court should have enforced the Agreement's
provision requiring Mr. Cleveland to convey his interest in
the Tennessee Residence. Ms. Fennessy, as personal
representative, asserted that she possessed the right to
enforce the Agreement and seek an order requiring Mr.
Cleveland to execute a quitclaim deed as provided in the
Agreement. On July 19, 2016, the trial court filed
supplemental findings of fact and conclusions of law, which
the court stated would supersede its earlier findings and
conclusions to the extent any conflict existed. The trial
court altered its earlier finding regarding the Agreement,
determining that Mr. Cleveland had validly rescinded the
contract. The trial court found that Decedent did not
"substantially comply with the spirit and letter of the
contract or complete her obligations within a reasonable
time, " thus affording a basis to allow Mr. Cleveland to
rescind pursuant to Georgia law. The court also found that
the "Georgia divorce court never approved the Separation
Agreement, and neither party performed their obligations
under the Separation Agreement." The court determined
that the Agreement was rescinded by letter dated September
10, 2014, following a sixty-day period when "Mr.
Cleveland . . . made multiple attempts to arrange to pick up
Mr. Cleveland's personal belongings." The trial
court accordingly denied the motion to alter or amend. The
Estate timely appealed.
Estate presents the following issues for our review, which we
have restated slightly:
1. Whether the trial court erred by determining that Mr.
Cleveland properly rescinded the Agreement and was excused
from performance thereunder.
2. Whether the trial court erred by denying the Estate's
request that Mr. Cleveland be required to execute and deliver
a quitclaim deed to the Tennessee Residence to quiet title in
the name of the will beneficiary.
3. Whether the trial court erred by failing to find that Mr.
Cleveland, in the Agreement, waived his interest as a
beneficiary in the Fidelity IRA.
4. Whether the trial court erred by admitting parol evidence
in the form of testimony presented by Mr. Cleveland and his
attorney regarding the Agreement and rescission.
Standard of Review
action, the trial court applied Georgia substantive law
pursuant to the choice of law provision contained in the
Agreement. As this Court has previously explained with regard
to the requisite analysis concerning choice of law:
"Tennessee will honor a choice of law clause if the
state whose law is chosen bears a reasonable relation to the
transaction and absent a violation of the forum state's
public policy." Bourland, Heflin, Alvarez, Minor
& Matthews, PLC v. Heaton,393 S.W.3d 671, 674
(Tenn. Ct. App. 2012) (citing Wright v. Rains, 106
S.W.3d 678, 681 (Tenn. Ct. App. 2003)). Here, the parties
chose the law of Nebraska, where the Theater is
headquartered, to ...