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McLaughlin v. McLaughlin

Court of Appeals of Tennessee, Knoxville

October 28, 2019

DR. VICTOR W. McLAUGHLIN, M.D.
v.
ELIZABETH KING McLAUGHLIN A/K/A REV. ELIZABETH KING

          Session: July 18, 2019.

          Appeal from the Chancery Court for Anderson County No. 16CH7875 M. Nichole Cantrell, Chancellor No. E2018-01319-COA-R3-CV

         The plaintiff filed this action on a sworn account, seeking to recover $20, 451.00 that he had allegedly loaned in several money transfers to the defendant, plus prejudgment interest and costs. In her answer to the complaint, the defendant denied all substantive allegations but failed to raise any affirmative defenses. At trial, the defendant stipulated to having received the money transfers. However, she requested that the court allow her to orally swear under oath that the transfers did not constitute a valid debt. The trial court found that the defendant was attempting to assert an affirmative defense that the transfers constituted gifts rather than loans and that she had waived such a defense pursuant to Tennessee Rule of Civil Procedure 8.03 by failing to raise it in her responsive pleading. The trial court entered a judgment in favor of the plaintiff in the total amount of $33, 942.69, including prejudgment interest. The defendant filed a motion to alter or amend, requesting that the judgment be vacated on the ground that under Tennessee Code Annotated § 24-5-107 (2017), she should have been allowed to raise any defense orally at trial. Following a hearing, the trial court found that because the defendant had elected to file a responsive pleading, she was required to raise the affirmative defense in the pleading. The trial court thereby declined to vacate the judgment. The defendant has appealed. Discerning no reversible error, we affirm.

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

         Affirmed; Case Remanded

          Sal W.Varsalona and Elizabeth M. Burrell, Clinton, Tennessee, for the appellant, Elizabeth King McLaughlin a/k/a Rev. Elizabeth King.

          Joseph J. Levitt, Jr., Knoxville, Tennessee, for the appellee, Dr. Victor W. McLaughlin, M.D.

          Thomas 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.

          OPINION

          THOMAS R. FRIERSON, II, JUDGE.

         I. Factual and Procedural Background

         The plaintiff, Victor W. McLaughlin, M.D. ("Dr. McLaughlin"), is the former father-in-law of the defendant, Elizabeth King McLaughlin a/k/a Rev. Elizabeth King ("Ms. King").[1] On March 11, 2016, Dr. McLaughlin filed a complaint in the Anderson County Chancery Court ("trial court"), averring that during a time period spanning June 8, 2010, through July 31, 2012, Ms. King had received twenty-seven loans from him in the total principal amount of $20, 451.00. He requested a judgment in the total amount of $31, 085.15, including the principal and accrued interest, plus ten-percent prejudgment interest and discretionary costs. Dr. McLaughlin attached to his complaint a "Sworn Account," executed by him and stating that the amount requested was "justly due and owing" to him by Ms. King. On April 25, 2016, Ms. King filed an answer, denying all substantive allegations but asserting no affirmative defense. Ms. King's answer was signed by her attorney on her behalf. The answer was not signed by Ms. King personally, and no affidavit was attached.

         The trial court conducted a hearing on July 25, 2017. No transcript or statement of the evidence for this hearing is in the appellate record. However, the record does contain an exhibit presented during the hearing by Dr. McLaughlin and stipulated to by Ms. King ("Stipulated Exhibit"). The Stipulated Exhibit, titled, "Plaintiff's loans to Defendant with simple interest at 10% per annum," reflects that Ms. King acknowledged receiving twenty-seven money transfers from Dr. McLaughlin's bank account to her bank account between the dates of June 8, 2010, and July 31, 2012. Each transfer is listed under a column labeled, "Loan," and the Stipulated Exhibit concludes with the following:

Total Principal

$20, 451.00

Total Accrued Interest

13, 491.69

Total Owed

$33, 942.69

         On August 18, 2017, the trial court entered a "Final Judgment," granting to Dr. McLaughlin a money judgment in the amount of $33, 942.69 and assessing costs against Ms. King. Noting that it had considered the pleadings, the Stipulated Exhibit, the arguments of counsel, and the record as a whole, the trial court specifically found:

a) That from time to time between June 8, 2010 and July 31, 2012, [Ms. King] did receive bank transfers from [Dr. McLaughlin] totaling $2[0], 451.00.[2]
b) That [Dr. McLaughlin] contends that each of these transfers was a loan to [Ms. King].
c) That [Ms. King] denies owing [Dr. McLaughlin] any money.
d) That there is case law presumption that such transfers are a loan and not a gift.
e) That under that case law presumption the burden of proof shifts to [Ms. King] to prove the affirmative defense that such transfers were a gift and not a loan.
f) Tennessee Rules of Civil Procedure, Rule 8.03 states that affirmative defenses shall be pled in responsive pleadings.
g) That [Ms. King's] pleadings in this case do not raise any affirmative defense.
h) That because [Ms. King] has failed to plead any affirmative defense she may not seek to prove an affirmative defense at trial. Any such defense is waived.
i) That [Dr. McLaughlin] is entitled to recover $20, 451.00 in principal loans to [Ms. King] and interest in the amount of $13, 491.69, for a total of $33, 942.69.

         Ms. King filed a "Motion to Alter or Amend/Reconsider," pursuant to Tennessee Rule of Civil Procedure 59.04, on September 7, 2017, requesting that the trial court vacate the final judgment and reset for trial. Ms. King stated in her motion that during the July 25, 2017 hearing, her counsel had informed the trial court that Ms. King "was prepared to orally deny the Complaint on Sworn Account and proceed with the trial." As noted in the trial court's order, the court denied Ms. King's counsel's request and took the matter under advisement, ultimately concluding that Ms. King was required to raise an affirmative defense in her pleadings pursuant to Tennessee Rule of Civil Procedure 8.03. In her motion to alter or amend, Ms. King requested that she "be allowed to orally deny the Complaint on Sworn Account, as dictated in T.C.A. § 24-5-107, and proceed with the evidentiary trial," or, alternatively, that she "be allowed to present evidence in support" of her position. Dr. McLaughlin filed a response objecting to the motion to alter or amend.

         Following a hearing, the trial court entered an order on November 9, 2017, denying Ms. King's request to vacate the judgment. However, the trial court, sua sponte upon consideration of the record, amended the previous order by vacating the award of interest. The court found that "there was no evidence offered by [Dr. McLaughlin] at the time of the trial that would provide proof that [Dr. McLaughlin] was entitled to interest on the princip[al] of $20, 451.00." In this order, the trial court directed the parties to "appear before this Court to offer proof and argument regarding the interest amount owed, if any" upon the principal awarded to Dr. McLaughlin.

         In denying Ms. King's request to vacate the award of principal, the trial court specifically found:

Upon the calling of the case and the beginning of the trial, the parties entered into a [Stipulated Exhibit]. The stipulation was that [Ms. King] acknowledges that she received from [Dr. McLaughlin] numerous amounts of money via check totaling the amount of $20, 451.00. Upon the stipulation being made [Dr. McLaughlin] moved for a Judgment on the Pleadings.
* * *
[Dr. McLaughlin] argued that [Ms. King] availed [herself] of the option to enter an Answer to the Complaint instead of relying on the statu[te] T.C.A. ยง 24-5-107(b) which would allow [Ms. King] to appear and orally deny the account under oath and that T.R.C.P. [8.03] applies ...

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