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In re Estate of Potter

Court of Appeals of Tennessee, Jackson

October 11, 2017

IN RE ESTATE OF MARJORIE ROSS POTTER

          April 25, 2017 Session

         Appeal from the Probate Court for Shelby County No. D-5249 Karen D. Webster, Judge

         Beneficiary of decedent's estate appeals the judgment holding that the executor did not breach his fiduciary duty in administering the estate and the award of a fee to the executor. Upon a thorough review of the record, we affirm the decision of the Probate Court.

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

          Patrick B. Mason and Steven C. Ebbers, Germantown, Tennessee, for the appellant, Steven Ross Potter.

          Daniel J. Mickiewicz, Collierville, Tennessee, for the appellee, Carey Potter.

          Richard H. Dinkins, J., delivered the opinion of the court, in which Arnold B. Goldin and Kenny W. Armstrong, JJ., joined.

          OPINION

          RICHARD H. DINKINS, JUDGE

         I. PROCEDURAL HISTORY

         The parties to this appeal, Steven Potter and Carey Potter, are the sons of Marjorie Ross Potter, who died a resident of Memphis, Tennessee, on May 7, 2008. On June 19, 2008, Ms. Potter's will was admitted to probate; Carey Potter was appointed as the executor of her estate.[1] Numerous petitions relating to the administration of the estate were filed by the parties over the course of several years. This appeal involves the rulings on three of those petitions.

         The first petition at issue is a Petition for Executor Fee and Expenses ("Petition for Fees"), filed on August 20, 2013, in which Carey Potter and his counsel requested an award of fees for services performed in the administration of the estate. The second petition is a Petition to Direct the Executor to Distribute Undistributed Tangible Personal Property and Provide Access to Duplicable Personal Property ("Petition to Distribute Property") filed on October 22, 2013, by Steven Potter, in which he requested the court to order Carey Potter to distribute certain family photographs, quilts, and memorabilia to him. The third petition, styled "Petition for Damages due to Executor, Carey Potter's Breaches of Fiduciary Duty" ("Petition for Damages" herein), was filed on April 10, 2014; in this petition, Steven Potter alleged that Carey Potter breached his fiduciary duty as Executor in numerous ways and sought monetary damages.

         On June 3-4, 2015, the Probate Court held a hearing on the petitions. On October 7 the Probate Court entered a thirty-seven page Memorandum Opinion in which it made extensive findings of fact and conclusions of law, including citations to the record and hearing transcript, holding, inter alia, that (1) Carey Potter did not breach his fiduciary duties, (2) the claims raised in the Petition to Distribute Property had been previously raised and resolved in an order entered July 26, 2011, and, consequently, were barred by res judicata, and (3) that Carey Potter was entitled to a fee of $50, 000.[2]

         Steven Potter appeals. He contends that the trial court abused its discretion in failing to find that Carey Potter breached his fiduciary duty, "ignoring the breaches of fiduciary duty" and awarding Carey Potter a fee, by not granting him damages based on Carey Potter's breach of fiduciary duty, and by concluding that the Probate Court's July 26, 2011 Order had a res judicata effect on his Petition to Distribute Property.

         II. STANDARD OF REVIEW

         A trial court abuses its discretion when it fails to consider the applicable law and relevant facts in reaching its decision. Konvalinka v. Chattanooga-Hamilton Cnty. Hosp. Auth. 249 S.W.3d 346, 358 (Tenn. 2008). An abuse of discretion occurs if a trial court causes an injustice to a party by "(1) applying an incorrect legal standard, (2) reaching an illogical or unreasonable decision, or (3) basing its decision on a clearly erroneous assessment of the evidence." Lee Med., Inc. v. Beecher, 312 S.W.3d 515, 524 (Tenn. 2010).[3] Review of the trial court's findings of fact is de novo upon the record, accompanied by a presumption of correctness, unless the preponderance of the evidence is otherwise. See Tenn. R. App. P. 13(d); Kaplan v. Bugalla, 188 S.W.3d 632, 635 (Tenn. 2006). Review of the trial court's conclusions of law is de novo with no presumption of correctness afforded to the trial court's decision. See Kaplan, 188 S.W.3d at 635.

         III. DISCUSSION

         A. Breach of Fiduciary Duty

         Steven Potter asserts that Carey Potter breached his fiduciary duty by "(1) not making the required distribution on a timely basis, (2) not handling tax matters properly as the fiduciary of the estate, and (3) not distributing all of the decedent's tangible personal property in a fair and unbiased manner." Seventeen pages of the Probate Court's Memorandum Opinion were devoted to resolving the allegations that Carey Potter breached his fiduciary duty.

         An executor of an estate occupies a fiduciary position. Mason v. Pearson, 668 S.W.2d 656, 663 (Tenn. Ct. App. 1983). "As such, the executor must deal with the beneficiaries in utmost good faith and 'exercise the same degree of diligence and caution that reasonably prudent business persons would employ in the management of their own affairs.'" In re Estate of Ladd, 247 S.W.3d 628, 637 (Tenn. Ct. App. 2007) (quoting McFarlin v. McFarlin, 785 S.W.2d 367, 369-70 (Tenn. Ct. App. 1990)).

[A]n executor who acts reasonably and in good faith while carrying out his duties will be shielded from liability if his judgment simply turned out to be wrong in light of subsequent events . . . [a]n executor who fails to competently, prudently, and reasonably discharge his duties as required by law, however, finds no protection in his lack of judgment as viewed in hindsight.

In re Estate of Ladd, 247 S.W.3d at 637 (citing 2 JACK W. ROBINSON, SR. & JEFF MOBLEY, PRITCHARD ON WILLS AND ADMINISTRATION OF ESTATES § 734, at 328-29 (5th ed.1994); McFarlin, 785 S.W.2d at 372. However, "courts are cautious not to hold executors liable upon slight grounds." In re Estate of Ladd, 247 S.W.3d at 637 (citing 2 PRITCHARD § 734, at 328). "In order to recover for breach of fiduciary duty, a plaintiff must establish: (1) a fiduciary relationship, (2) breach of the resulting fiduciary duty, and (3) injury to the plaintiff or benefit to the defendant as a result of that breach." Ann Taylor Realtors, Inc. v. John N. Sporup, et al., No. W2010-00188-COA-R3-CV, 2010 WL 4939967 at *3 (Tenn. Ct. App. Dec. 3, 2010) (citing 37 C.J.S. Fraud § 15 (2008)).

         i.Timeliness of ...


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