Tamala Teague, As Successor Personal Representative Of The Estate Of Lola Lee Duggan v. Garnett Kidd - Dissent ( 2019 )

IN THE COURT OF APPEALS OF TENNESSEE
AT KNOXVILLE
July 19, 2019 Session
TAMALA TEAGUE,AS SUCCESSOR PERSONAL REPRESENTATIVE OF THE
ESTATE OF LOLA LEE DUGGAN v. GARNETT KIDD,ET AL.
Appeal from the Chancery Court for Polk County
No. 2017-CV-25 Jere Bryant, Chancellor FILED
SEP 12 2019
No. E2019-00330-COA-R3-CV Clerk of the Appellate Courts
Rec'd by
John W. McClarty, J., dissenting.
As noted in the majority's opinion, the first administrator' of the estate of Lola
Lee Duggan sought "to recover funds unlawfully converted through fraud, false dealing
and misapplication of trust by Defendant[s]." He requested "that a Lien Lis Pendens be
placed against the real property acquired by Garnett and William Kidd ("the Kidds" or
"Defendants")2 in this cause to secure any judgment which may be obtain[ed] by the
Estate."(Emphasis in original.). Despite praying "[t]hat [p]laintiff have such additional
general and equitable relief to which it may be entitled upon the hearing of this cause,"
the administrator did not specifically seek the entry of an order declaring the existence of
a constructive trust. Upon trial, appeal, and remand from this court, an amended final
judgment was entered against Mrs. Kidd for $117,679 in damages and $79,052.48 in pre-
judgment interest, for a total judgment of $196,731.48.3 That judgment was not appealed
by the successor administrator ("Plaintiff').4
Years later, Plaintiff filed the second complaint against Defendants, seeking to
enforce a constructive trust to transfer legal title of the 132 acres of real estate to the
estate. The trial court observed that because of the acts of Mrs. Kidd, "[a] trust would
have arisen on the date the property was acquired which was February 22, 2001."
Additionally, the court related that "[i]t is appropriate that this Court convert her to
Trustee for the property, for the benefit of Ms. Duggan." The court noted that "the
imposition of a construct[ive] trust . . . would be appropriate in this matter." However,
the court declined to do so, citing the doctrine of res judicata.
'Donald Duggan, Lola Lee Duggan's son, was the initial administrator of the estate.
2Garnett Kidd is Donald Duggan's sister.
3This court dismissed all claims against William Kidd, finding that he owed no duty to Lola Lee Duggan,
4Donald Duggan died on August 28, 2010, and Tamala Teague was appointed as successor.
1
Plaintiff contends that the constructive trust arose on February 22, 2001, and that
the trial court erred in finding that it has somehow ceased to exist. She relies on State ex
rel. Flowers v. Tenn. Coordinated Care Network, No. M2003-01658-COA-R3-CV, 2005
WL 427990(Tenn. Ct. App. Feb. 23, 2005)("Flowers"), a decision of this court in which
we held that a constructive trust is established at the time of the wrongful act and not at
the time a court declares it to exist.5 Id. at *14. In Flowers, we noted as follows:
Professor Scott in Scott on Trusts, insists the effective date of
a constructive trust is when the asset is wrongfully acquired.
He explains:
Where the title to property is acquired by one person under
such circumstances that he is under a duty to surrender it, a
constructive trust immediately arises. . . . It has been
suggested that the constructive trust does not arise until the
defrauded person brings a suit in equity and the court decrees
specific restitution. The notion seems to be that a
constructive trust is created by the court and that it therefore
does not arise until the court creates it by its decree. . . .
There is no doubt that where the title to property is
wrongfully acquired under such circumstances that the person
acquiring it is under a duty to make restitution, the person
entitled to restitution has such an interest in the property as to
enable him to recover it . . . . This is true . . . before the
person who was wronged has brought a proceeding to recover
the property and long before the court has decreed restitution.
The beneficial interest in the property is from the beginning
in the person who has been wronged. The constructive trust
arises from the situation in which he is entitled to the remedy
of restitution, and it arises as soon as that situation is created.
. . . It would seem that there is no foundation whatever for
the notion that a constructive trust does not arise until it is
decreed by a court. It arises when the duty to make restitution
arises, not when that duty is subsequently enforced.
Scott on Trusts at § 462.4.
Id. at *12-13. The Flowers court observed that
'Admittedly, the Commissioner in Flowers amended her petition to include a claim for imposition of a constructive
trust and moved for summary judgment on her constructive trust claim.
2
Professor Scott's view is not universally accepted. A
difference of opinion exists as to the effective date of a
constructive trust according to Bogert, The Law of Trusts and
Trustees, § 472 (2d ed. 1978). The author explains, "Some
courts have taken the position that the constructive trust arises
at the time the property is wrongfully acquired, while other
courts have stated that the trust arises only after the
beneficiary exercises his election to seek a constructive trust
and the court grants such relief, even though the defendant
may be treated as a trustee from the date of his wrongful
acquisition." There are a few bankruptcy cases arising in
Tennessee which hold that constructive trusts do not come
into existence until they are created by a court of equity;
therefore, the effective date of the trust is the date the trust
was created by the court. This rationale appears to be based
on the premise that constructive trusts are judicially created,
thus the effective date is when the court enters an order
creating the trust. We respectfully disagree with the
underlying premise of these cases. Consistent with Professor
Scott, we find that constructive trusts are created not by the
court but by the wrongful act of the constructive trustee
whose duties as trustee emanate the instant of the wrongful
transfer.
Id. at 13 (internal citations omitted).
Henry R. Gibson, as cited in Flowers, observed:
In a Court of Chancery ought to be becomes is; and whatever
a party ought to do, or ought to have done, in reference to the
property of another, will ordinarily be regarded as done. The
rights of the parties will be adjudicated as though, in fact, it
had been done. This maxim is far-reaching in its operation,
and full of beneficent consequences; the doctrines and rules
creating and defining equitable estates or interests being, in a
great measure, derived from it. (emphasis supplied)
Henry R. Gibson, Gibson's Suits in Chancery, § 2.12 (Inman
rev., 8th ed. 2004).
Flowers, 2005 WL 427990 at 13. As noted by Gibson,
If through the ingenuity and subtlety of the human mind bent
on schemes of personal or pecuniary advantages, or intent on
devices for aggrandizement, new remedies should be required
to overcome the insidiousness of any sort of
Machiavellianism, the Court of Chancery, operating in
obedience to these maxims, will devise a remedy adequate to
the emergency, and vindicate the beneficence and capacity of
its inherent powers to do justice in any case, and to right
every wrong, however intricate the case, however great the
wrong, or however powerful the wrongdoer. The powers that
lie dormant in these potent maxims will awaken as the
necessities for their action and they will be found
commensurate with every necessity.
Gibson at § 2.02.
Flowers, 2005 WL 427990 at 14.
In my view, the constructive trust already existed and enabled the court to reach
the property belonging to the estate yet titled in and held by the Kidds. See Holt v. Holt,
995 S.W.2d 68, 71-72 (Tenn. 1999); Akers v. Gillentine, 191 Tenn. 35, 39, 231 S.W.2d
369, 371 (1948). The action at issue was simply a proceeding in equity to compel the
constructive trustee to transfer the property to the estate, i.e., specific enforcement of the
constructive trust. Plaintiff did not mention the prior litigation in the complaint; rather,
she asked the trial court to "enforce the constructive trust in the subject real estate and to
divest legal title out of the Defendants' names and vest legal title in the beneficiary of the
constructive trust . . . ." It was not a second complaint "asserting the same cause of
action as plaintiffs first complaint."
I concede that Tennessee has a long-standing tradition in upholding judgments. As
the Tennessee Supreme Court has stated,
[t]he policy rationale in support of Res Judicata is not based
upon any presumption that the final judgment was right or
just. Rather, it is justifiable on the broad grounds of public
policy which requires an eventual end to litigation. Akin to
statutes of limitations, the doctrine of Res judicata is a 'rule
of rest' and 'private peace'. . . .
.... It is not material on this point whether the finding . . . was
Right or not in the former suit. That cannot be questioned
any more between the same parties or their privies. Right or
wrong the question was finally closed, unless a new trial had
4
been obtained in the same suit. This rule is not alone for the
benefit of the parties litigant, to put an end to strife and
contention between them, and produce certainty as to
individual rights, but it is also intended to give dignity and
respect to judicial proceedings, and relieve society from the
expense and annoyance of indeterminable litigation about the
same matter.
Moulton v. Ford Motor Co., 533 S.W.2d 295, 296 (Tenn.1976) (internal citations
omitted). I believe that the res judicata doctrine should not be invoked in situations
where it defeats the ends of justice. deCancino v. Eastern Airlines, Inc., 283 So. 2d 97
(Fla.1973); see also Universal Construction Co. v. City of Fort Lauderdale, 68 So. 2d
366, 369 (Fla.1953); Greenfield v. Mather, 194 P.2d 1, 8 (Cal. 1948); Wallace v.
Luxmoore, 24 So. 2d 302, 304 (Fla. 1946); Flesche Hernandez v. Marsarm Corp., 613
So. 2d 914 (Fla. Ct. App. 1992); Hight v. Hight, 67 Cal. App. 3d 498, 136 Cal. Rptr. 685
(1977). Although I discern the need for finality and repose in litigation, recognize "that
plaintiff still has a valid money judgment against Mrs. Kidd," and acknowledge that
"[n]othing . . . prevents plaintiff from enforcing the money judgment by any manner
authorized by law," I cannot accept a decision that allows a thief to profit from her
actions. The complaint at issue alleged facts justifying relief and the motion to dismiss
should have been denied.
Accordingly, I respectfully but earnestly dissent from the opinion of the court in
this case.
J01- W. MCCLARTY,JUDGE
5