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Van Floyd v. Akins

Court of Appeals of Tennessee, Knoxville

October 31, 2017

KIMBERLY VAN FLOYD et al.
v.
LISA A. SHIRLEY AKINS et al.

          Session April 20, 2017

         Appeal from the Chancery Court for Monroe County No. 16698 Jerri Bryant, Chancellor

         This case concerns a dispute involving Lisa Akins, Kimberly Floyd, and Donna Helms, the three daughters of Eldon Shirley (the deceased). The initial dispute regards a deed from the deceased to Akins, reserving a life estate. Prior to the execution of the deed, the deceased executed a power of attorney appointing Akins as his attorney-in-fact. Thereafter, Floyd filed this action to set aside the deed on the ground of undue influence. She also alleged that Akins converted other assets of the deceased. Helms later filed an intervening complaint adopting the allegations in Floyd's complaint. Helms prayed that the real property deeded to Akins be declared a resulting and/or constructive trust. Akins filed a counterclaim alleging that Helms was indebted to her. Akins asked the court to compel Helms to file an accounting of the funds in dispute. The trial court bifurcated the trial. It first heard the undue influence claim. The court held that the deed was procured by the undue influence of Akins. The second stage of the trial involved the status of other assets and accounts. The court determined that specific payments to Helms were loans. The court found that other payments to and charges made by Helms involved no promise to repay and were gifts or payments for the care of the deceased. Akins appeals. We affirm.

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

          Joseph J. Levitt, Jr., Knoxville, Tennessee, for the appellant,

          Lisa A. Shirley Akins. Melanie E. Davis, Maryville, Tennessee, for the appellee,

          Kimberly Van Floyd. Martha Meares, Maryville, Tennessee, for the appellee, Donna Kay Helms.

          Charles D. Susano, Jr., J., delivered the opinion of the court, in which D. Michael Swiney, C.J., and John W. McClarty, J., joined.

          OPINION

          CHARLES D. SUSANO, JR., JUDGE

         I.

         In May 2003, the deceased's wife, Evelyn Shirley, passed away. Upon his wife's death, the deceased became the sole owner of ninety acres of farm land (the farm property). Prior to his wife's death, the deceased, due to his poor health, was totally dependent on her. After her death, the daughters agreed that the deceased would not be able to take care of himself. They agreed that he needed to move to Tennessee where his daughters lived. The deceased moved to Tennessee to live with Akins on the farm property.

         On June 4, 2003, Akins took the deceased to his bank where he added her to his bank account as a joint account holder with right of survivorship. On July 17, 2003, the deceased executed a power of attorney designating Akins as his attorney-in-fact. That same day, the deceased executed a deed conveying the farm property to Akins. He reserved a life estate. Prior to his death, multiple assets belonging to the deceased were placed in Akins's name, including a truck, a mobile home, and $50, 000 in certificates of deposit which had been purchased with his funds.

         Beginning in 2003 and for a number of years, Akins and the deceased provided financial assistance to Helms. This assistance came in the form of money from the joint bank account, money from Akins's personal bank account, and charges by Helms on a credit card in Akins's name. Checks were written to Helms from the joint account both before and after the deceased passed away. Some of the checks contained a notation indicating that they were loans while other checks had no such notation.

         On September 4, 2007, Akins wrote a check payable to cash from the joint account for $10, 000. This distribution was authorized by the deceased. It was to be used by Helms's daughter to purchase a car. Akins, however, determined that Helms's daughter did not need a car. She never used the money to purchase the vehicle nor was the money returned to the deceased.

         The deceased held an individual retirement account with Edward Jones. In 2009, he designated Floyd as the sole beneficiary of the account.

         On February 16, 2010, the deceased passed away. On June 4, 2010, Floyd filed a complaint seeking to set aside the deed conveying the farm property to Akins. She alleged that a confidential relationship existed between Akins and the deceased and that Akins made fraudulent representations to the deceased. She claimed that Akins told the deceased that Helms wanted to sell the farm property and that, if he deeded it to Akins, she would ensure that the property was not sold. She also asserted that Akins told the deceased that deeding the property to Akins would protect it in case he was ever placed in a nursing home. Floyd asked the trial court to set aside the deed to the farm property on the basis of undue influence or for want of consideration. Floyd also asserted that Akins transferred assets of the deceased to herself. Floyd asked the court to order Akins to provide an accounting of all assets of the deceased that came into her possession. She sought a judgment for conversion of the deceased's assets.

         On August 9, 2011, Helms filed an intervening complaint. She adopted the allegations in Floyd's complaint. She also asked the court to declare the farm property a resulting and/or constructive trust.

         On November 2, 2011, Akins filed a counterclaim. In her counterclaim, she alleged that she loaned Helms money and allowed her to use her credit card. She asked the court to grant her credit for the value of payments made to Helms and charges made by Helms on Akins's credit card. She also claimed that Helms and Floyd each received cash and property from their parents in excess of one-third of the value of the assets she received from their parents.

         In the first phase of the trial, the court heard the issue of undue influence with respect to the deed to the farm property. On July 12, 2013, the trial court entered an order setting aside the deed to the farm property on the basis of undue influence. The court found that the execution of the power of attorney in favor of Akins created a confidential relationship between Akins and the deceased. The court also found numerous suspicious circumstances in the way Akins handled the deceased's affairs and found that the deceased was in a deteriorating mental and physical condition. Based on the circumstances surrounding the execution of the deed, the trial court set aside the deed to the farm property.

         On August 7, 2015, the trial court entered an order resolving the remaining issues. The court also filed a master asset list that classified each asset as an estate asset or a non-estate asset. Pertinent to this appeal, the trial court classified the following assets: (1) three checks totaling $3, 000 written to Helms prior to the deceased's death were loans and returnable as assets of the estate; (2) a $10, 000 check authorized by the deceased to purchase a vehicle for Helms's daughter and deposited into Akins's personal bank account is an estate asset and should be returned to the estate; and (3) the deceased's Edward Jones account was a gift to Floyd and is a non-estate asset. The court also found that the parties stipulated that a single wide trailer, a modular home, and land in Scottsboro, Alabama are assets of the estate. The court determined that Helms owed Akins $1, 000 for living expenses that Akins paid to her. Finally, the court found that there was no agreement for Helms to repay Akins for transfers from Akins's personal bank account to Helms's bank account or for Helms's use of a credit card for which Akins was responsible. Akins appeals.

         II.

         Akins raises the following issues:

Whether the deed recorded on August 2, 2003, from the deceased to Akins reserving a life estate was obtained as a result of undue influence, and thereby void;
Whether the court should have awarded Akins $14, 738.93 instead of $3, 000 for checks written to Helms from the joint account while Helms was living on the farm property prior to the death of the deceased;
Whether the trial court should have awarded Akins $7, 500 from Helms for checks Akins wrote to Helms after the death of the deceased from the joint account;
Whether the court should have awarded Akins $13, 300 from Helms for bank transfers from Akins's bank account to Helms's bank account after Helms filed bankruptcy;
Whether the $10, 000 that was intended to purchase a car for Helms's daughter should be returned to the estate by Helms or by Akins;
Whether the court should have awarded Akins $17, 310.20 from Helms for the use of Akins's credit card;
Whether the court erred in awarding the Edward Jones investment account to Floyd instead of to the estate or one-third to Akins;
Whether the court erred in finding that the parties stipulated that the single wide trailer, modular home, and Scottsboro land are all part of the estate; and
Whether the court should have permitted each co-plaintiff to cross-examine each plaintiff and each plaintiff's witness.

         III.

         In this non-jury case, our standard of review is de novo upon the record of the proceedings below; however, the record comes to us burdened with a presumption of correctness as to the trial court's factual determinations, a presumption we must honor unless the evidence preponderates otherwise. Tenn. R. App. P. 13(d); Wright v. City of Knoxville, 898 S.W.2d 177, 181 (Tenn. 1995). There is no presumption of correctness as to the trial court's legal conclusions. Kendrick v. Shoemake, 90 S.W.3d 566, 569 (Tenn. 2002); Campbell v. Florida Steel Corp., 919 S.W.2d 26, 35 (Tenn. 1996).

         IV.

         A.

         On appeal, Akins argues that the trial court erred in setting aside the deed to the farm property on the basis of undue influence. She claims that the deceased was competent and strong willed when he executed the deed. She argues that the deceased's prescribed medication and abuse of alcohol did not affect his will or ability to execute the deed. Akins also asserts that the deceased was not completely reliant on her and was still writing checks and making purchases on his own. According to Akins, she did not tell the deceased that the farm property would go to a nursing home if he did not transfer it to her but Akins noted that information would be good for him to have. With respect to the execution of the power of attorney and the deed, Akins claims that she did not go to the attorney's office with the deceased when he executed these documents and did not influence their execution. Finally, she asserts that the deed was delivered before the power of attorney became effective, and there is no presumption of undue influence in the case.

         Akins claims that the doctrine of laches should apply to bar the action to set aside the deed to the farm property. She argues that the deed was executed in August 2003, but Floyd waited seven years, until June 2010, to file the action challenging the deed. Akins claims that, because of the lapse in time, the deceased could not testify about his intentions and those involved in the execution of the deed had no memory of it. She claims that honoring the deed is fair to the deceased.

         B.

         The trial court found that the execution of the power of attorney from the deceased to Akins created a fiduciary relationship. In its July 12, 2013, order, the court initially found that the execution of the power of attorney created a presumption that any transfer from the deceased to Akins was procured by undue influence and that the burden was on Akins to rebut that presumption. The court, however, later amended and corrected its order "to reflect the execution of the power of attorney creates a confidential relationship but the execution alone does not create a presumption of undue influence."

         The court found that, in addition to the confidential relationship, there were numerous suspicious circumstances. The court found the following suspicious circumstances: (1) Akins's statement to the deceased that deeding her the property would keep a nursing home from getting it; (2) Akins's statement to the deceased that she would divide the farm property equally between the daughters; (3) the medications the deceased was taking along with his dependence on Akins made him susceptible to undue influence; (4) the deceased's depression after the death of his wife predisposed him to rely heavily on Akins; and (5) the deceased was abusing alcohol and prescribed Xanax and hydrocodone, which weakened his will. The court concluded that "[a]ll of these facts amount to suspicious circumstances such that the court finds [Akins] unduly influenced [the deceased] in his financial dealings to her benefit." Akins also failed to prove that the deceased received any independent advice. There were independent witnesses that testified that the deceased's intention was always that the farm property be divided equally and that the deceased was upset when he felt that Akins would not honor his wishes. The court found against Akins on credibility and found evidence of Akins's willingness to manipulate the deceased. Based on the confidential relationship accompanied by suspicious circumstances, the trial court held that Akins unduly influenced the deceased. As a consequence, the court set aside the deed to the farm property.

         C.

         "Courts apply the doctrine of undue influence 'when one party, such as a grantee, is in a position to exercise undue influence over the mind and the will of another, such as a grantor, due to the existence of a confidential relationship.' " In re Estate of Price, 273 S.W.3d 113, 125 (Tenn. Ct. App. 2008) (quoting Brown v. Weik, 725 S.W.2d 938, 945 (Tenn. Ct. App. 1983)). "The most common way of establishing the existence of undue influence is 'by proving the existence of suspicious circumstances warranting the conclusion that the will was not the testator's free and independent act.' " Estate of Hamilton v. Morris, 67 S.W.3d 786, 792-93 (Tenn. Ct. App. 2001). Commonly recognized suspicious circumstances include the following:

(1) a confidential relationship between the testator and the beneficiary; (2) the testator's poor physical or mental condition; (3) the beneficiary's involvement in the procurement of the will in question; (4) secrecy concerning the will's existence; (5) the testator's illiteracy or blindness; (6) the unjust or unnatural nature of the will's terms; (7) the testator being in an emotionally distraught state; (8) discrepancies between the will and the testator's expressed intentions; and (9) fraud or duress directed toward the testator.

Id.

         Although these circumstances are frequently applied "in the context of a will contest-one of the more frequent actions that may involve an undue influence claim- much of it is generally applicable to a claim of undue influence in another context . . . ." Lewis v. Lewis, No. E2014-00105-COA-R3-CV, 2015 WL 1894267, at *8 (Tenn. Ct. App., filed April 27, 2015). This court has extended the application of these factors to set aside a deed on the basis of undue influence. See Francis v. Barnes, No. W2012-02316-COA-R3-CV, 2013 WL 5372851, at *6 (Tenn. Ct. App., filed Sept. 23, 2013). "[T]here exists no prescribed number of suspicious circumstances which must be met in order to invalidate an action . . . ." Lewis, 2015 WL 1894267, at *7.

         "[I]f a contestant [proves] the existence of a confidential relationship, together with a transaction that benefits the dominant party to the relationship or another suspicious circumstance, a presumption of undue influence arises that may be rebutted only be clear and convincing evidence." Kelley v. Johns, 96 S.W.3d 189, 196 (Tenn. Ct. App. 2002). A confidential relationship exists "where confidence is placed by one in the other and the recipient of that confidence is the dominant personality, with ability, because of that confidence, to influence and exercise dominion and control over the weaker or dominated party." Id. "[W]here there is a 'confidential relationship, followed by a transaction wherein the dominant party receives a benefit from the other party, a presumption of undue influence arises, that may be rebutted only by clear and convincing evidence of the fairness of the transaction' " Childress v. Currie, 74 S.W.3d 324, 328 (Tenn. 2002) (quoting Matlock v. Simpson, 902 S.W.2d 384, 386 (Tenn. 1995)). "A confidential relationship is any relationship which gives one person dominion and control over another." Id. Undue influence involves "substituting the will of the person exercising it for that of [another]." In re Estate of Hill, No. E2006-01947-COA-R3-CV, 2007 WL 4224716, at *4 (Tenn. Ct. App., filed November 30, 2007). The essential question is whether the will is that of the person allegedly influenced or that of another. Id.

         D.

         While the record reflects that the power of attorney was not used by Akins in procuring the deed from the deceased, we do find, however, that there was a confidential relationship between Akins and the deceased. Prior to the death of the deceased's wife, the deceased was dependent on her as his caregiver. Upon her death, he was so distraught that he could not attend her funeral. Because of his dependence on his wife, the deceased moved in with Akins immediately after her death. At that time, he was unable to care for himself. He was in a state of deteriorating health and suffered from a multitude of health issues, including COPD, emphysema, and diabetes. He suffered from depression and was in a weakened state. These problems caused him to need the assistance and care of Akins. She had considerable influence over the deceased. Even if the deceased was not completely reliant on Akins as she claims and handled many of his own affairs, she exercised significant influence over him and he was quite reliant on her. Accordingly, we find that Akins exercised sufficient dominion, influence, and control over the deceased to create a confidential relationship.

         We also find that there were other suspicious circumstances. One common suspicious circumstance is the poor physical or mental condition of the grantor. As already discussed, the deceased suffered from many health problems. He had poor physical health to the extent that he moved in with Akins immediately after his wife's death. He also had a poor mental condition in that he suffered from depression and was prescribed medication for that.

         Another frequently relied upon suspicious circumstance is the beneficiary's involvement in procuring the transaction in question. On this issue, the trial court made a credibility determination. Floyd and Helms alleged that Akins told their father that deeding her the farm property would keep it from going to a nursing home. With respect to this statement, the trial court specifically found Floyd and Helms credible. The trial court found that "[t]his statement was intended to influence the action of [the deceased]."

         The trial court's credibility determinations are accorded great weight. The Supreme Court has stated the following:

[A] reviewing court must give "considerable deference" to the trial judge with regard to oral, in-court testimony as it is the trial judge who has viewed the witnesses and heard the testimony. This is particularly true when the credibility of the witnesses and the weight assigned to their testimony are critical issues. Moreover, because there is no requirement that a trial court make express findings of fact regarding a witness's credibility, the absence of such findings does not alter the applicable standard of review. Indeed, the trial court's findings with respect to credibility and the weight of ...

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