In the Matter of ESTATE OF John J. GOZA , 2012 Tenn. App. LEXIS 231 ( 2012 )

IN THE COURT OF APPEALS OF TENNESSEE
AT JACKSON
March 20, 2012 Session
IN THE MATTER OF: ESTATE OF JOHN J. GOZA
Direct Appeal from the Probate Court for Shelby County
No. D-10567 Robert Benham, Judge
No. W2011-01303-COA-R3-CV- Filed April 11, 2012
The trial court determined that Petitioner’s petition to turn over assets was barred by the doctrine of
res judicata. We affirm.
Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Probate Court Affirmed and
Remanded
D AVID R. F ARMER, J., delivered the opinion of the Court, in which A LAN E. H IGHERS, P.J.,
W.S., and H OLLY M. K IRBY, J., joined.
Larry E. Parrish, Memphis, Tennessee, for the Petitioner/Appellant, David Morrow.
Kenneth P. Jones, and M. Matthew Thornton, Memphis, Tennessee, for the
Respondent/Appellee, SunTrust Bank.
Robert E. Cooper, Jr., Attorney General and Reporter, William E. Young Solicitor General
and Janet M. Kleinfelter, Deputy Attorney General, for the Intervenor/Appellee, Attorney
General and Reporter.
OPINION
This appeal arises from the trial court’s denial of a petition to turn over assets filed
by Petitioner/Appellant David Morrow (Mr. Morrow) as the Administrator of the Estate of
John J. Goza (Mr. Goza) in the Probate Court of Shelby County in December 2010. It is the
second time the matter of Mr. Goza’s estate has been before this Court. The underlying
substantive issue of this dispute is the construction of a trust established by Mr. Goza’s
mother, Helen B. Goza (Ms. Goza), in 1991 (“the Trust”) and amended by “Amended and
Restated Revocable Trust Agreement[s]” in March 1999 (“the March Agreement”) and April
1999 (“the April Agreement”). Mr. Morrow admits the authenticity of the March and April
Agreements, but asserts that the April Agreement is not valid under Tennessee Code
Annotated § 32-1-104. He asserts that the Trust as amended and restated in the March
Agreement accordingly controls. He further asserts that the March Agreement failed to
provide for the disposition of assets remaining after Mr. Goza’s death, and that these assets
rightfully should pass to Mr. Goza’s estate, and not to a perpetual trust benefitting
organizations serving the mentally disabled as directed in the April Agreement. The trial
court denied Mr. Morrow’s petition on the grounds that it was barred by the doctrine of res
judicata and was contrary to the law of the case in light of our holding in Morrow v. SunTrust
Bank, No. W2010–01547–COA–R3–CV, 2011 WL 334507 (Tenn. Ct. App. Jan. 31,
2011)(“Goza I”). The trial court denied Mr. Morrow’s motion to alter or amend, and entered
final judgment in the matter on July 22, 2011. Mr. Morrow filed a timely notice of appeal.
Issue Presented
Mr. Morrow raises six issues for review in his brief to this Court. The issue presented
by this appeal, as we restate it, is whether the probate court erred by ruling that Mr. Morrow’s
petition to turn over the assets of Mr. Goza’s estate was barred by the doctrine of res judicata
in light of Goza I.
Standard of Review
Whether the trial court erred by determining that a claim is barred by the doctrine of
res judicata presents a question of law which we review de novo, with no presumption of
correctness. Brown v. Shappley, 290 S.W.3d 197, 200 (Tenn. Ct. App. 2008).
Background
The background facts giving rise to this dispute are fully examined in Goza I, and we
restate them only briefly here. Goza I arose from a complaint for declaratory judgment filed
against SunTrust Bank (“SunTrust”), Trustee, by Mr. Morrow and Judy M. Wright (Ms.
Wright) in the Chancery Court for Shelby County. In their complaint, Mr. Morrow and Ms.
Wright, Ms. Goza’s nephew and niece, sought a declaration that the Helen B. Goza Amended
and Restated Revocable Trust failed to provide for the final disposition of the residue of the
Trust for John J. Goza, Ms. Goza’s intellectually disabled son, who died without issue in
September 2007. Goza I, at *2. Plaintiffs sought a declaration that the remaining assets
passed by operation of law to Ms. Goza’s heirs under the law of intestate succession, and for
a declaration that they were Ms. Goza’s sole heirs at law. Id. The Attorney General
intervened in the matter, and moved for summary judgment on the grounds that the April
Agreement superceded the March Agreement and provided for a full disposition of all assets.
Id. Following an August 2009 hearing, the parties agreed that the validity of the April
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Agreement was the dispositive issue. Following a hearing in November 2009, the trial court
granted the Attorney General’s motion for summary judgment and Mr. Morrow and Ms.
Wright appealed.
While the appeal was pending in Goza I, in October 2010 Mr. Morrow filed a petition
for grant of letters of administration in the Probate Court for Shelby County. In his petition,
Mr. Morrow asserted that Mr. Goza had died in September 2007; that Mr. Goza was never
married and had no children by birth or adoption; and that Mr. Morrow and Ms. Wright were
Mr. Goza’s first cousins and heirs at law. Ms. Wright filed an agreement to waive inventory,
the right to serve as personal representative, and bond. The probate court granted Mr.
Morrow’s petition on October 21, 2010.
In December 2010, Mr. Morrow, acting as Administrator of Mr. Goza’s estate, filed
a petition in the probate court to require SunTrust to turn over the assets of the Trust to Mr.
Goza’s estate. In his petition, Mr. Morrow asserted SunTrust was not entitled to funds
remaining in its control; that the Trust asserted by SunTrust did not exist; and that in the
earlier proceedings SunTrust had asserted it was “neutral in the matter,” despite assertions
that it would follow the terms of the April Agreement unless contrary instructions were given
by the court.
The probate court set the matter to be heard on February 15, 2011. Before the hearing
occurred, on January 31, 2011, we issued our opinion in Goza I. SunTrust filed a response
to Mr. Morrow’s petition asserting the matter was barred by the doctrine of res judicata
and/or the law of the case doctrine where this Court had affirmed the chancery court’s
determination that the April 1999 Agreement validly provided for the disposition of assets
remaining in the Trust. The parties agreed to continue the matter until May 2011, and in
March 2011 Mr. Morrow filed a motion to mediate. The motion was granted and the parties
went to mediation in May 2011. A settlement was reached and approved by the Attorney
General in accordance with Tennessee Code Annotated §§ 35-13-110 and 35-15-110.
Notwithstanding the settlement, Mr. Morrow pursued the May 2011 hearing, and the
Attorney General intervened in the matter. The trial court denied the petition as being barred
by res judicata and/or the law of the case. Mr. Morrow filed a motion to alter or amend,
asserting res judicata did not apply to the prior declaratory judgment action and rearguing
that res judicata does not preclude the current claim because the parties to the two actions
were not identical.
On appeal, Mr. Morrow asserts the trial court erred in its determination that the
present case is barred by res judicata. Mr. Morrow asserts the trial court misstated the facts
and law applicable to this case. He further submits that the matter is not barred by res
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judicata because this case is an in rem matter, whereas Goza I was an in personam case;
because Goza I was a declaratory judgment case and this is an asset garnering case; and
because the plaintiff in Goza I acted in an individual capacity and the Plaintiff here is acting
in his capacity as the Administrator of Mr. Goza’s estate. The Attorney General and
SunTrust (collectively, “Appellees”), on the other hand, assert the only issue in both Goza
I and this case is whether the April Agreement provides for the disposition of assets
remaining in the Trust as a matter of law. They submit that whether Mr. Morrow filed suit
in his individual capacity representing Mr. Goza’s heirs at law, or as the Administrator of Mr.
Goza’s estate, is irrelevant because both lawsuits claim the same assets on behalf of the same
heirs and involve an identical issue of law. With this background in mind, we turn to the
issue presented by this appeal.
Discussion
We first dispense with Mr. Morrow’s assertion that a declaratory judgment action
cannot have a subsequent preclusive effect. It may. Penn-America Ins. Co. v. Crittenden,
984 S.W.2d 231, 232-33 (Tenn. App. 1998). Further, upon review of the record, we agree
with Appellees that Goza I and the current case present a single, identical issue for
adjudication by the courts: whether the April Agreement validly provides for the disposition
of assets remaining in the Trust established by Ms. Goza. We also agree with Appellees that,
in this case, there is privity between the parties where the Plaintiffs in both lawsuits assert
their right to assets remaining in the Trust under the March Agreement. This issue was fully
adjudicated in Goza I. In Goza I, we stated:
The trial court entered a “Final Order Granting Summary Judgment” on
February 2, 2010. The trial court found as follows:
1. That, at the conclusion of the hearing on August 25, 2009, the only issue to
be dealt with was whether or not the Amended and Restated Revocable Trust
Agreement dated April 9, 1999, was or had been authenticated and to give
Plaintiffs an opportunity to review the document;
2. That there is no dispute about the fact that the Amended and Restated
Revocable Trust Agreement dated April 9, 1999, had been authenticated and
that an opportunity has occurred whereby depositions have been taken;
3. That, after the August 25, 2009 hearing, Plaintiffs have raised three
arguments: one, the doctrine of repugnancy; two, the actions on the part of the
trustee; and, three, whether or not the Amended and Restated Revocable Trust
Agreement dated April 9, 1999 itself is a nullity;
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4. That, with regard to the doctrine of repugnancy, the Court finds that the
doctrine is not applicable to the facts of this case;
5. That, with regard to the actions of the trustee, the Court finds that it is clear
that this issue did not arise until after Mr. John Goza’s death, because there
was no reason for it to arise. At that point, the subsequent Agreement dated
April 9, 1999 was discovered. Accordingly, as to whether or not the actions of
the trustee could be considered relevant to the intent of Mr. Goza, the Court
finds that the timing of the actions of the trustee is such that that should not be
considered;
6. That, with regard to the issue of whether the Amended and Restated
Revocable Trust Agreement dated April 9, 1999 is a nullity, the issue rises and
falls on whether or not the Court is going to base its decision on the initial
paragraphs stating that the Agreement amends or restates the Amended and
Restated Revocable Trust Agreement dated [August 16, 1991], rather than the
Amended and Restated Revocable Trust Agreement dated March 9, 1999.
7. That the Tennessee Supreme Court has made it clear that this Court has to
look at the entire sequence of events and agreements in making that
determination. Here, we have the initial Agreement, the subsequent Amended
and Restated Revocable Trust Agreement dated March 9, 1999, and
subsequent to that, the Amended and Restated Revocable Trust Agreement
dated April 9, 1999. The Court believes that it can take into consideration what
actions Mr. Potter took, the attorney who drafted the Agreement, when he
discovered that there was language missing in the Amended and Restated
Revocable Trust Agreement dated March 9, 1999, and advised Mrs. Goza that
that language should have been different than it was, and he drafted a
subsequent Agreement, explained to her why he did it, presented it to her, and
she signed it.
8. To simply abrogate Mrs. Goza’s intent based on this paragraph rather than
integrating the Amended and Restated Revocable Trust Agreement dated April
9, 1999, into the Amended and Restated Revocable Trust Agreement dated
March 9, 1999, would be completely inapposite to what the intent of Mrs.
Goza was.
9. That it was clear that the language that was contained in the Amended and
Restated Revocable Trust Agreement dated April 9, 1999, provided for
complete disposition and distribution of the trust assets following the death of
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her son and that the language set out in the Amended and Restated Revocable
Trust Agreement dated April 9, 1999, was the intent of Mr[s]. Goza and that
the language in the Amended and Restated Revocable Trust Agreement dated
April 9, 1999, is the language that prevails in this matter.
Based on the findings, the trial court granted the Attorney General’s
motion for summary judgment.
Appellants filed a motion to alter or amend the judgment, arguing for
the first time, among other things, that the April 1999Agreement was legally
ineffective to create the John Goza Trust and the Perpetual Trust because the
Agreement’s attempt to transfer Mrs. Goza’s post-death estate was a prohibited
attempt to make a testamentary disposition by a document which did not
comply with the requirements of Tennessee Code Annotated section
32–1–104, governing the execution of wills. Because the April 1999
Agreement was ineffective to create the purported trusts, Appellants argued,
upon Mrs. Goza’s death in 2001, her living trust terminated and the proceeds
of such trust should have been paid into her estate for distribution to her heirs-
at-law, the Appellants.
The trial court, on June 15, 2010, entered an order denying Appellants’
motion to alter or amend the judgment. Appellants timely appealed from such
order.
Goza I, at *3-5.
On appeal in Goza I, Mr. Morrow asserted that the trial court’s judgment was
“‘nothing other or more than an advisory opinion of no practical benefit . . . i.e., a ‘judgment’
of no force and no effect.’” Id. at *5. He asserted in Goza I that the trial court lacked subject
matter jurisdiction to declare the efficacy of the April 1999 Agreement. Goza I, at *7 n. 7.
We disagreed, stating that
in their supplemental response in opposition to the Attorney Genera’s motion
for summary judgment, Appellants argued that the April 1999 Agreement was
not legally efficacious based upon both the repugnancy doctrine and their
argument that the April 1999 Agreement purported to amend the nullified 1991
Trust Agreement. These arguments were specifically rejected by the trial court.
...
Specifically, their complaint alleged, in part, the following:
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On August 16, 1991, Decedent, as settlor and trustee, established the Helen B.
Goza Revocable Trust.
On March 9, 1999, Decedent, as settlor and trustee, amended and restated the
Goza Trust and executed the Helen B. Goza Amended and Restated Revocable
Trust . . . agreement.
....
Pursuant to Article III of the Amended Goza Trust, upon the death of
Decedent, a trust for Decedent’s son . . . was established contingent on
Decedent's Son surviving Decedent.
....
Decedent’s Son survived Decedent.
....
Decedent’s Son died on September 26, 2007, with no issue.
Article III of the Amended Goza Trust fails to provide for the complete
disposition of the residue or remaining assets of the Son’s Trust upon the death
of Decedent’s Son.
Plaintiffs aver that, if a trust created by a decedent fails to provide for the final
disposition of the residue of such trust, then the residue passes by operation of
law to the heirs at law of Decedent according to the rules of intestate
succession.
Plaintiffs aver that Plaintiffs are the sole heirs at law of Decedent.
Based on these allegations, Plaintiffs requested the court declare “that the
Helen B. Goza Amended and Revocable Trust fails to provide for the final
disposition of the residue of the Trust for John J. Goza[,]” that “the residue of
remaining assets of the Trust for John J. Goza pass by operation of law to the
heirs at law of Helen B. Goza in accordance with the Tennessee laws of
intestate succession[,]” and that “Plaintiffs are the sole heirs at law of Helen
B. Goza.” Both SunTrust and the Attorney General denied that Appellants
were entitled to any of the relief sought. We find where there existed “a
justiciable controversy . . . between persons with adverse interests [,]” . . . at
the time action was taken with regard to a request for declaratory judgment,
such action does not become advisory simply because a contingency is raised
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on appeal, particularly by the party who sought the declaratory judgment. To
hold otherwise would thwart the Act’s purpose of settling uncertainties.
Id. at *7-8 (internal citations omitted).
We agree with Appellees that the question of whether the April Agreement validly
provided for the disposition of assets remaining in the Trust was fully litigated in Goza I, and
that the probate court did not err by dismissing Mr. Morrow’s petition against SunTrust.
“[R]es judicata” broadly refers to ‘[a]n issue that has been definitively settled by judicial
decision.’” Regions Financial Corp. v. Marsh USA, Inc., 310 S.W.3d 382, 392 (Tenn. Ct.
App. 2009) (quoting Black’s Law Dictionary 1336–37 (8th ed. 2004); see Richardson v.
Tenn. Bd. of Dentistry, 913 S.W.2d 446, 459 n. 11 (Tenn. 1995)). It is narrowly defined as
a “claim preclusion doctrine that ‘bars a second suit between the same parties or their privies
on the same cause of action with respect to all issues which were or could have been raised
in the former suit.’” Id. (quoting State ex. rel. Cihlar v. Crawford, 39 S.W.3d 172, 178
(Tenn. Ct. App. 2000)). The party asserting that a claim is precluded carries the burden of
demonstrating that 1) a court of competent jurisdiction rendered the prior judgment; 2) the
same parties or their privies were involved in both lawsuits; 3) both lawsuits concerned the
same cause of action; and 4) that the underlying judgment was a judgment on the merits. Id.
(citation omitted).
The “broad definition” of res judicata in a civil case also generally includes collateral
estoppel, or issue preclusion. State v. Thompson, 285 S.W.3d 840, 848 (Tenn. 2009).
Collateral estoppel “has been described as an extension of the doctrine of res judicata.” Id.
It applies when the issue involved in the current case already was litigated in an earlier suit
between the parties or their privies, even where the suits concern different causes of action,
if the determination of the issue in the earlier action was necessary to the judgment. Id.
(citations omitted) The Tennessee Supreme Court has “cited the promotion of finality in the
litigation, the conservation of judicial resources, and the prevention of inconsistent decisions
as policy considerations warranting the application of collateral estoppel in civil litigation.”
Id. (citations omitted). The stated policy of the doctrine is to promote the “inherent reliability
of final judgments.” Id. The party seeking to invoke collateral estoppel carries the burden
of demonstrating that the issue was determined in a previous action between the parties, that
it was necessary to the judgment in the earlier action, and that a final judgment was rendered
in the prior action. Id. (citations omitted).
“‘Where the litigants have once battled for the court’s decision, they should neither
be required, nor without good reason permitted, to battle for it again.’” Beaty v. McGraw,
15 S.W.3d 819, 824 (Tenn. Ct. App. 1998)((quoting Zdanok v. Glidden Co., 327 F.2d 944,
953 (2d Cir. 1964)). Additionally, “‘different parties are in privity if they stand in the same
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relationship to the subject matter of the litigation.’” Trinity Industries, Inc. v. McKinnon
Bridge Co., Inc., 77 S.W.3d 159, 185 (Tenn. Ct. App. 2001. In Aclin v. Speight, we held that
a prior final construction of a Will barred the parties to the earlier Will construction action,
and their privies, from relitigating title to property devised under the Will. We held that the
defendants in that case were “certainly in privity” where they claimed title to the property
through the original beneficiary under the Will. Aclin v. Speight, 611 S.W.2d 54, 55 (Tenn.
App. 1980). We noted in Aclin that “the necessary parties then in existence were parties to
the [prior] Will construction case.” We stated that “[t]he judgment entered therein bound all
parties thereto and those in privy. . . . That construction suit may not now be collaterally
attacked.” Id.
The dispute currently before us is identical to the dispute before us in Goza I. The
only distinction between the two lawsuits, other than the trial courts in which they were filed,
is that Mr. Morrow filed the first suit in his individual capacity and filed the second suit in
his capacity as Administrator of Mr. Goza’s estate. Both actions involve one identical issue
of law. Plaintiffs in both lawsuits stand in the same legal relationship to the subject matter
of the litigation: they claim the remaining assets of the Trust under the March Agreement,
and assert the April Agreement is not valid. The issue has been decided by a court of
competent jurisdiction and cannot be collaterally challenged here.
Holding
In light of the forgoing, we affirm the judgment of the probate court. SunTrust, in its
capacity as Trustee, requests reasonable attorney’s fees and costs incurred in defending this
matter on appeal. It further submits that the probate court denied its requests for attorney’s
fees without prejudice, essentially reserving the issue pending appeal. Upon review of the
record, we note that the trial court “dismissed” SunTrust’s motion for attorney’s fees without
prejudice, and stated that all remaining motions or petitions were “denied . . . without
prejudice” so that the parties could “get on with [their] appeal.”
The Code Provides:
In a judicial proceeding involving the administration of a trust, the court, as
justice and equity may require, may award costs and expenses, including
reasonable attorney’s fees, to any party, to be paid by another party or from the
trust that is the subject of the controversy.
Tenn. Code Ann. § 35–15–1004(a)(2007). The determination of whether an award of
attorney’s fees is warranted under section 35–15–1004(a) lies within the sound discretion of
the trial court. Goza I, at *8 (citing Wachtel v. Shoney’s, Inc., 830 S.W.2d 905, 909–10
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(Tenn. Ct. App. 1991)). The decision whether to award attorney’s fees on appeal is within
the sound discretion of this Court. Fickle v. Fickle, 287 S.W.3d 723, 738 (Tenn. Ct. App.
2008). In light of the entirety of the record, we award SunTrust its reasonable attorney’s fees
incurred on appeal. Because the probate court has not exercised its discretion on this issue,
we remand this matter to the probate court to determine whether attorney’s fees and costs are
warranted in this case. Costs of this appeal are taxed to the Appellant, David Morrow,
Administrator of the Estate of John J. Goza.
_________________________________
DAVID R. FARMER, JUDGE
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