Marthann Bush v. Teachers Insurance & Annuity ( 2007 )

[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
________________________ FILED
U.S. COURT OF APPEALS
No. 07-10162 ELEVENTH CIRCUIT
DEC 05, 2007
________________________
THOMAS K. KAHN
CLERK
D.C. Docket No. 05-00378 CV-C-S
MARTHANN BUSH,
Plaintiff-Counter Defendant-
Cross Defendant-Appellee,
versus
BONITA BUSH FLYNT,
JOHN MARTIN BUSH,
HENRY BRACKIN BUSH,
Defendants-Counter Defendants-
Counter Claimants-Appellants.
________________________
Appeal from the United States District Court
for the Middle District of Alabama
________________________
(December 5, 2007)
Before BIRCH, CARNES and COX, Circuit Judges.
PER CURIAM:
1. Background
Dr. John Bush (“Dr. Bush”) died on November 29, 2004. During his lifetime,
he entered into several contracts with TIAA-CREF that required payment of certain
benefits to named beneficiaries upon his death.
About a week before Dr. Bush’s death, his children, Bonita Flynt, John Bush,
and Henry Bush (“the Bush children”), learned that Dr. Bush’s wife (their step-
mother), Marthann Bush (“Marthann”), was attempting to change the beneficiary
designations on some of the TIAA-CREF contracts. In response to this unwelcome
news, John Bush, acting pursuant to a power of attorney given him by Dr. Bush in
March 2001, completed forms on November 24, 2004, to remove Marthann as the
sole beneficiary on two of the TIAA-CREF contracts (“the C and U contracts”). John
Bush mailed the forms to TIAA-CREF in February 2005, more than two months after
Dr. Bush’s death. John Bush stated in his affidavit that the reason for this delay was
that a TIAA-CREF official told him that they were in possession of a power of
attorney from Dr. Bush naming Marthann as his attorney-in-fact. (Marthann had
obtained this power of attorney from Dr. Bush while he was in an impaired state, and
it is undisputed that it was invalid.) TIAA-CREF and John Bush apparently believed
that John Bush’s power of attorney was void.
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This litigation ensued. The Bush children sought a declaration that their
attempt to change the beneficiaries of the C and U contracts was effective, even
though the appropriate forms were mailed after Dr. Bush’s death. They also sued
Marthann for fraud, conversion, and deceit.
The district court granted partial summary judgment in favor of Marthann,
holding that John Bush’s act of mailing the change of beneficiary forms after Dr.
Bush’s death was ineffective since his power of attorney expired upon Dr. Bush’s
death. Thus, the court held, Marthann remained the sole beneficiary of the C and U
contracts. And, following a bench trial, the district court found against the Bush
children on their Alabama state law claims against Marthann alleging fraud,
conversion, and deceit. The Bush children challenge both rulings on this appeal.
2. The Contract Claims
The district court held, as a matter of law, that John Bush’s power of attorney
expired when Dr. Bush died. Thus, the court reasoned, John Bush had no power to
mail the change of beneficiary forms, since this was an act pursuant to powers granted
by a power of attorney.
The Bush children contend that summary judgment with respect to the
disposition of the C and U contracts should be reversed because Marthann did not
attach the contracts as exhibits to her summary judgment motion. They also argue that
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the district court erred by holding that John Bush’s power of attorney was not coupled
with an interest. Alternatively, they argue that John Bush’s power of attorney was
coupled with an interest, and thus the powers conferred by it extended past Dr. Bush’s
death. Finally, the Bush children contend that John Bush’s act of mailing the change
of beneficiary forms to TIAA-CREF was effective since he was acting as a bailee of
his late father, rather than an agent. We address each argument in turn.
The disputed issues before the district court involved the change of
beneficiaries. And the contract provisions relating to change of beneficiary were
before the court as attachments to an affidavit filed by John Bush. (R.1-33, Ex. A.)
Thus, the fact that Marthann did not attach the contracts as exhibits to her summary
judgment motion is irrelevant.
The district court recognized the general rule that the authority conferred upon
John Bush by the power of attorney expired upon Dr. Bush’s death. The court then
held that his power of attorney was not coupled with an interest, which would be an
exception to the general rule, allowing it to continue after Dr. Bush’s death. The
district court did not err in deciding summary judgment on an issue that the parties
did not brief. And, we find no error in the determination that John Bush’s power of
attorney was not coupled with an interest.
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The Bush children also contend that John Bush acted as a bailee for Dr. Bush
when he mailed the change of beneficiary forms. Thus, they argue, his powers and
duties as a bailee for his late father continued after his death and the change of
beneficiaries was effective. We reject this argument. The Bush children cite only one
case, Cutcliffe v. Chestnut, 190 S.E. 2d 800 (Ga. App. 1972), to support this position.
Cutcliffe involved a decedent who had given a friend money and authorized him to
purchase stock on his behalf and await his instructions. Then, the decedent died.
When the decedent’s estate demanded the stock, the court ruled that when the
decedent requested that his friend hold the stock, the friend became the custodian of
the stock and bound by the laws of bailment rather than agency.
Cutcliffe is readily distinguishable from this case. Dr. Bush did not ask John
Bush to be a custodian of the change of beneficiary documents. John Bush undertook
the changes as an agent rather than a bailee. We see no reason to depart from the
general rule that John Bush’s power of attorney expired upon Dr. Bush’s death.
We find no error in the district court’s decision to grant partial summary
judgment in favor of Marthann on the C and U contracts.
3. The Tort Claims
After a bench trial, the district court found in favor of Marthann on all state
law claims brought by the Bush children. The court held that the claims failed
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because the Bush children could point to no duty that Marthann owed them, and,
in the alternative, failed to demonstrate any reliance on any alleged fraudulent
misrepresentation. The crux of the Bush children’s state law claims against
Marthann was that they did not mail the change of beneficiary forms to TIAA-
CREF because they believed that Marthann’s fraudulently obtained power of
attorney was valid.
The Bush children argue that we should reverse the district court on the
state law claims, because it applied an outdated “justifiable reliance” standard.
They also contend that Marthann owed them a duty to refrain from deceiving
them.
“Reasonable reliance” is the correct standard under Alabama law. See
Foremost Ins. Co. v. Parham, 693 So. 2d 409 (Ala. 1997). So, the Bush children
are correct that the district court applied the wrong reliance standard, but the error
was harmless. Marthann made no representations to John Bush upon which he
relied in deciding when to mail the change of beneficiary forms. The absence of
any reliance by John Bush defeats the fraud and deceit claims.
The question of duty is irrelevant, since there is no proof of fraud or deceit.
AFFIRMED.
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