banc-of-america-investment-services-inc-v-christina-tucker-davis-as-of ( 2009 )

IN THE COURT OF APPEALS OF TENNESSEE
AT KNOXVILLE
September 16, 2008 Session
BANC OF AMERICA INVESTMENT SERVICES, INC., v. CHRISTINA
TUCKER DAVIS, as Executrix of the Estate of STEPHEN G. TUCKER,
deceased, and DOROTHY TUCKER WATERS, and TERESA CURETON
Direct Appeal from the Chancery Court for Hamilton County
No. 02-0662 Hon. W. Frank Brown, Chancellor
No. E2008-00559-COA-R3-CV - FILED FEBRUARY 5, 2009
In this interpleader action, plaintiff held an IRA account established by decedent. When decedent
died dispute arose between his companion and his blood relatives, because he had designated his
companion as the sole beneficiary of his IRA account, but in his Will he gave the IRA account to
his relatives. The contending parties raised this dispute in their pleadings and after an evidentiary
hearing, the Trial Court ruled that the designee on the IRA account was entitled to the proceeds
because the relatives did not carry the burden of proof to establish undue influence was exercised
on the decedent when he established the IRA account. We affirm the Judgment of the Trial Court
and remand with the cost of the cause taxed to appellants.
Tenn. R. App. P.3 Appeal as of Right; Judgment of the Chancery Court Affirmed.
HERSCHEL PICKENS FRANKS, P.J., delivered the opinion of the Court, in which CHARLES D. SUSANO ,
JR., J., and D. MICHAEL SWINEY , J., joined.
Bruce D. Gill, and James F. Exum, III., Chattanooga, Tennessee, for appellants.
James R. Kennamer, Chattanooga, Tennessee, for appellee.
OPINION
Banc of America Investment Services, Inc., (“Banc”) brought this Interpleader action
against defendants Christina Tucker Davis, as Executrix of the Estate of Stephen G. Tucker,
deceased, Dorothy Tucker Waters, and Teresa Cureton. Banc alleged that decedent maintained an
IRA account through the Banc’s Chattanooga office, and Davis was the decedent’s sister, and
executrix and beneficiary of his estate pursuant to his will. Further, that Waters was decedent’s
mother and also a beneficiary of his estate, and that Cureton was decedent’s former girlfriend and
a beneficiary of his IRA account.
Banc alleged that on September 29, 1999, decedent opened an IRA at its Chattanooga
branch, and listed Cureton as the sole beneficiary. Then, on September 2, 2000, decedent executed
his Last Will and Testament, leaving 25% of his IRA to each of the following: Davis, Waters, Toby
Tucker (his son), and Joey Tucker (his son). On December 22, 2000, decedent appointed his sister,
Christina Tucker Davis, to be Executrix of his estate, and decedent died on December 26, 2000.
Plaintiff alleged that on November 21, 2001, Cureton submitted a request seeking
payment of the funds from the IRA, and Davis and Waters contested Cureton’s entitlement to the
proceeds, and claimed superior rights under the Will. The value of the IRA was approximately
$119,791.00, and Banc sought direction from the Court on how to distribute the funds.
Davis and Waters’ pleadings asserted that Cureton was not a valid beneficiary of the
IRA because the beneficiary designation was procured through undue influence. Alternatively, the
Court found that Cureton was the lawful beneficiary of the IRA, and the Court should offset the
value of decedent’s assets which Cureton converted to her own use after his death.
Cureton answered, asserting that she was the lawful beneficiary of the IRA, and filed
a Counterclaim, asking for attorney’s fees and interest on the funds, which she claimed were being
wrongfully withheld from her. Cureton filed a Motion for Summary Judgment, and attached
affidavits. The Court then entered a Memorandum Opinion which discussed the requirements for
finding that undue influence was exercised, and found that a presumption of undue influence had
arisen, based on the fact that Cureton and the decedent had a confidential relationship, that there
were “suspicious circumstances” surrounding the designation of Ms. Cureton as beneficiary (i.e.
decedent’s mother’s name was redacted from the form, and decedent later designated the funds to
go to someone else in his Will).
The Court found that the affidavits filed by Cureton did not establish, by clear and
convincing evidence, that the transaction was fair or that decedent actually received independent
advice. The motion for summary judgment was denied.
The trial was held on December 13, 2007. The parties and other witnesses testified
at the evidentiary hearing and the Trial Court then entered a Memorandum Opinion and Order and
found that Davis was the named Executrix of decedent’s estate, and that Cureton was decedent’s
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girlfriend. The Court held that Cureton and decedent lived together, with some periods of
separation, for about 13 years, and on September 29, 1999, decedent met with Whitten of Banc, and
completed an IRA application, and that decedent listed Cureton and Waters as equal 50/50
beneficiaries. The Court found that decedent returned to Banc later that day, and had scratched
through Waters’ name and left Cureton the only beneficiary.
The Court held that decedent suffered from diabetes, and was hospitalized in the
summer of 2000. Decedent was later placed in a nursing home, and returned to the hospital before
he died. The Court said that for 5-6 months before his death, decedent’s relationship with Cureton
was strained at times, and that Davis spent a lot of time assisting her brother during his final months.
The Court found that decedent passed away on December 26, 2000, and subsequently,
Cureton applied to Banc to receive the proceeds of the IRA.
The Court found that the IRA application executed by the decedent stated that it
would remain in effect until another properly executed form was delivered to National Financial
Services Corporation, and that the parties agreed that decedent never executed any change of
beneficiary form. The Court held that the document stated that its terms would be governed by the
law of Massachusetts, and that Massachusetts enforced a contract’s requirements for changing a
beneficiary designation, (and that Tennessee does as well). The Court held that the contract required
another properly executed beneficiary form, and that no such form was executed. The Court noted
that the provisions of the Employee Retirement Income Security Act, 29 U.S.C. §1001 et seq., stated
that ERISA pre-empted any state statutes to the contrary, and further provided that retirement plans
must be administered in accordance with plan documents. Thus, the Court reasoned, just as a state
statute could not change the provisions of this IRA plan, neither could decedent’s Will.
As to the allegations of undue influence by Cureton, the Court found that the prior
summary judgment ruling was not res judicata on the issue of a confidential relationship, because
the Court had allowed Cureton to amend her answer to expressly deny this relationship. The Court
noted that proof of a confidential relationship was not enough to show undue influence, but there was
also a requirement of other suspicious circumstances that would give rise to the presumption.
The Court found that Davis had failed to show a confidential relationship between
Cureton and decedent, and observed that just because they lived together was not sufficient, and
noted that even familial relationships were not per se confidential without the requisite showing of
dominion and control. The Court held that decedent had sufficient assets and income of his own
such that he was not financially dependent on Cureton, and there was no proof that he was physically
dependent on her either. The Court found that Cureton and decedent “occupied a relationship similar
to many married couples”, and they lived together, purchased real estate together, and held
themselves out as married. Also, that when decedent filled out IRA application he had the benefit
of independent advice, and Cureton testified that she did not know he had made her the sole
beneficiary until after they left the bank.
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In conclusion, the Court ruled in favor of Cureton and dismissed Davis’ cross-claim
against Cureton, as there was insufficient proof that Cureton had taken anything from decedent. The
issue raised on appeal is whether a confidential relationship existed between decedent and Cureton?
The parties agree that Kelley v. Johns, 96 S.W.3d 189 (Tenn. Ct. App. 2002), is the
lead case regarding undue influence. In that case, this Court explained:
Invalidating a will because of undue influence is generally not a simple undertaking.
While undue influence can be proved either by direct or by circumstantial evidence,
direct evidence is rarely available. Thus, in most cases, the contestants establish
undue influence by proving the existence of suspicious circumstances warranting the
conclusion that the will was not the testator's free and independent act. The courts
have refrained from prescribing the type or number of suspicious circumstances
necessary to invalidate a will because of undue influence. Instead, they have pointed
out that the issue should “be decided by the application of sound principles and good
sense to the facts of each case.”
***
The suspicious circumstances most frequently relied upon to establish undue
influence are: (1) the existence of a confidential relationship between the testator and
the beneficiary; (2) the testator's physical or mental deterioration; and (3) the
beneficiary's active involvement in procuring the will. In addition to proof of a
transaction benefitting the dominant person in a confidential relationship, other
recognized suspicious circumstances include: (1) secrecy concerning the will's
existence; (2) the testator's advanced age; (3) the lack of independent advice in
preparing the will; (4) the testator's illiteracy or blindness; (5) the unjust or unnatural
nature of the will's terms; (6) the testator being in an emotionally distraught state; (7)
discrepancies between the will and the testator's expressed intentions; and (8) fraud
or duress directed toward the testator.
The burden of proof is on the contestant in a will contest case. Without direct
evidence of undue influence, a contestant must establish the existence of more than
one suspicious circumstance to make out a prima facie case of undue influence. Proof
of a confidential relationship alone will not support a finding of undue influence.
However, if a contestant has proved 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 by clear and convincing evidence.
***
Confidential relationships can assume a variety of forms, and thus the courts have
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been hesitant to define precisely what a confidential relationship is. In general
terms, it is any relationship that gives one person the ability to exercise dominion
and control over another. It is not merely a relationship of mutual trust and
confidence, but rather it is one
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.
Iacometti v. Frassinelli, 494 S.W.2d 496, 499 (Tenn. Ct. App.1973).
Fiduciary relationships are confidential per se because of the legal status of the
parties. They automatically give rise to a presumption of undue influence with regard
to transactions that benefit the fiduciary. Examples of such fiduciary relationships
include that between guardian and ward, attorney and client, or conservator and
incompetent. Relationships not fiduciary in nature, even those that are inherently
confidential, such as those between family members, are not confidential per se and
require proof of the elements of dominion and control in order to establish the
existence of a confidential relationship.
Accordingly, evidence that two persons are members of the same family, without
more, lends no support to an undue influence claim. Proof that one family member
exercised dominion and control over another establishes the existence of a
confidential relationship but does not make out a prima facie claim of undue
influence. In addition to proving the existence of a confidential relationship between
two family members, a will's contestant must establish at least one other suspicious
circumstance, such as a transaction benefitting the dominant party in the confidential
relationship.
Id. at 195-197 (internal citations omitted).
Appellant argues that she proved the existence of a confidential relationship between
decedent and Cureton, because decedent was disabled and Cureton provided transportation and
income to decedent during certain periods of time, and because there was evidence that Cureton was
“manipulative”. However, there was testimony that decedent was able to drive himself around until
shortly before his death, that he began receiving his own disability income, received income from
odd jobs, and had his own assets at all times. Moreover, he was always mentally alert (even
described as “brilliant”) and transacted his own business. The evidence established that Cureton was
also disabled and only had $400.00 per month income. She strongly denied that she influenced
decedent’s decision to make her the sole beneficiary of the IRA. The evidence does not preponderate
against the Trial Court’s finding that no confidential relationship existed between Cureton and
decedent. Tenn. R. App. P. 13(d).
The Trial Court noted, assuming arguendo a confidential relationship had been
shown, that fact alone would not be enough to invalidate the beneficiary designation because other
suspicious circumstances must be shown, such as Cureton’s active participation in procuring the
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beneficiary designation, a lack of independent advice, or secrecy concerning the transaction. We
affirm the Trial Court’s Judgment in upholding the terms of the IRA contract.
The cause is remanded with the cost of the appeal assessed to the appellants, Davis,
Tucker and Waters.
______________________________
HERSCHEL PICKENS FRANKS, P.J.
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