Charles Smith, of the Estate of Ethel Rogers Smith v. Jerry Smith ( 2007 )

IN THE COURT OF APPEALS OF TENNESSEE
AT KNOXVILLE
May 15, 2007 Session
CHARLES SMITH, EXECUTOR OF THE ESTATE OF ETHEL ROGERS
SMITH v. JERRY SMITH
Appeal from the Chancery Court for Hamblen County
No. 2000-200 Thomas R. Frierson, II, Chancellor
No. E2006-01372-COA-R3-CV - FILED MAY 30, 2007
The issue in this case is whether the trial court erred in denying the plaintiff’s Tenn. R. Civ. P. 60.02
motion for relief from judgment. Following a bench trial and judgment in favor of the defendant,
a third party provided additional materials pursuant to an agreed discovery order, which were not
previously disclosed to the parties before trial. The plaintiff filed a motion pursuant to Rule 60.02,
requesting that the judgment be set aside based on this newly discovered evidence. The plaintiff also
argued that the doctrines of equitable estoppel and judicial estoppel should be applied to grant relief
from the judgment. The trial court denied the motion, and the plaintiff appealed. After careful
review, we find that the trial court incorrectly applied the law in deciding on the plaintiff’s Rule
60.02 motion. Therefore, we vacate and remand.
Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Chancery Court Vacated; Case
Remanded
SHARON G. LEE, J., delivered the opinion of the court, in which HERSCHEL P. FRANKS, P.J., and D.
MICHAEL SWINEY , J., joined.
Christopher P. Capps, Morristown, Tennessee, for the Appellant, Charles Smith, Executor of the
Estate of Ethel Rogers Smith.
Douglas R. Beier, Kingsport, Tennessee, for the Appellee, Jerry Smith.
OPINION
I. Background
This is the third time this case has been before us, and we rely on our first opinion for an
introduction to the facts of this lawsuit:
Ethel Rogers Smith (“Ethel”) executed a will in 1991 that provided
that her property would go to her husband, if he survived her, and if
not, would be split equally between her two sons, Charles Smith
(“Charles”) and Jerry Smith (“Jerry”). Ethel's husband predeceased
her. Ethel executed a Durable Power of Attorney with Springing
Clause in 1994, naming Jerry as her attorney-in-fact. Although the
power of attorney never became operative under its terms, Ethel and
Jerry treated it as though it were operative and Jerry signed numerous
documents as his mother's attorney-in-fact. Ethel died in February of
2000. The majority of Ethel's money is in a SunTrust Securities
account held as joint tenants with right of survivorship with Jerry.
Ethel and Jerry opened the SunTrust account in March of 1999 with the proceeds from the
sale of Ethel’s home. Ethel later added other money to the account from other investments that had
matured. Testimony at trial indicated that Ethel consulted with a SunTrust broker, John Brice, as
to the best way to invest her money so that she could pay her bills with the interest earned from the
account. Charles, as executor of Ethel’s estate, (the “Estate”) sought to void the transaction which
created the joint account, alleging that Jerry exercised undue influence over his mother. If the
transaction was voided, the account, which was worth approximately $200,000, would be returned
to Ethel’s estate for distribution according to the terms of her will, rather than passing directly to
Jerry as joint tenant of the account with right of survivorship.
On the first appeal of this case, we held that a confidential relationship existed between Jerry
and Ethel, which gave rise to a presumption of undue influence in the creation of the SunTrust
account. We remanded the case to the trial court for a determination as to whether Jerry had rebutted
that presumption by clear and convincing evidence. The trial court ruled that Jerry did not rebut the
presumption, primarily on the basis that Ethel did not receive independent advice before opening the
joint account with Jerry.
When the case was appealed to us for the second time, we ruled that independent advice is
but one way to rebut a presumption of undue influence. Upon review of the record, we concluded
as follows:
The proof showed the transactions were fair to Ethel by clear and
convincing evidence, since it is undisputed that Ethel’s mind was
good and she made her own financial decisions, participated in
transactions which benefitted her and were designed to give her
money to pay her monthly bills and she was not impoverished
thereby.
We reversed the trial court’s ruling again and remanded with directions to release the
proceeds of the SunTrust account to Jerry.
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Less than two weeks after we released our decision, the Estate filed a motion for relief from
the judgment pursuant to Tenn. R. App. P. 60.02 on the basis of newly discovered evidence. The
items which are the subject of the Rule 60.02 motion were provided to the parties for the first time
as a result of an Agreed Discovery Order entered on May 1, 2004. Pursuant to the Order, SunTrust
produced a multitude of documents relating to the joint account of Ethel and Jerry, including a letter,
dated December 14, 1999, handwritten by Jerry and signed by both himself and Ethel, directing Mr.
Brice to move the assets of the joint account into an individual account in Jerry’s name only, and an
application filled out by Jerry to open the new individual account. The account application was also
dated December 14, 1999, although the final page indicates that the request was not approved until
April 6, 2000, more than two months after Ethel’s death. Although Jerry was questioned in depth
about the joint account held by himself and Ethel, including inquiries about how the funds were used
and where they were held following Ethel’s death, he failed to disclose the existence of the letter or
the application for the individual account. In fact, Jerry misrepresented the location of the joint
account assets at the time his attorney filed his answer in this lawsuit, stating that they were still
being held in the joint account, even though the funds had already been moved into his individual
account before the suit was commenced.
The trial court ordered a stay of enforcement of the judgment and directed the parties to
proceed with limited discovery regarding the new documents obtained from SunTrust. After
conducting an evidentiary hearing on March 16, 2006, the trial court denied the Estate’s motion for
Rule 60.02 relief and directed that the proceeds of the SunTrust account be released to Jerry. The
Estate appeals.
II. Issue Presented
The issue before us is whether the trial court erred in denying the Estate’s motion for relief
from the judgment pursuant to Tenn. R. Civ. P. 60.02.
III. Analysis
A trial court is vested with wide discretion in ruling on a Rule 60.02 motion, and we will not
disturb the trial court’s decision unless it has abused its discretion. Brown v. Weik, 725 S.W.2d 938,
947 (Tenn. Ct. App. 1983). According to the Tennessee Supreme Court, “A trial court abuses its
discretion only when it applies an incorrect legal standard, or reaches a decision which is against
logic or reasoning that causes an injustice to the party complaining.” Eldridge v. Eldridge, 42
S.W.3d 82, 85 (Tenn. 2001) (internal quotations omitted). Therefore, we must uphold the trial
court’s ruling as long as reasonable minds could disagree about its correctness. DeLong v.
Vanderbilt University, 186 S.W.3d 506, 511 (Tenn. Ct. App. 2005).
The Estate argues that it is entitled to relief from the trial court’s judgment, pursuant to Tenn.
R. Civ. P. 60.02(1), (2), and (5), on the basis of evidence provided to the parties by SunTrust after
the trial concluded. Rule 60.02 provides in pertinent part:
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On motion and upon such terms as are just, the court may relieve a
party or the party's legal representative from a final judgment, order
or proceeding for the following reasons: (1) mistake, inadvertence,
surprise or excusable neglect; (2) fraud (whether heretofore
denominated intrinsic or extrinsic), misrepresentation, or other
misconduct of an adverse party; . . . or (5) any other reason justifying
relief from the operation of the judgment.
Tenn. R. Civ. P. 60.02.
In its memorandum opinion denying the Estate’s Rule 60.02 motion, the trial court stated as
follows:
SunTrust Securities and SunTrust Bank are not parties to the action
at bar. Any mistake or excusable neglect on behalf of these entities
does not provide a basis under T.R.C.P. 60.02(1) for Plaintiff to be
granted relief from the judgment entered. Moreover, Plaintiff has
failed to show that any mistake or excusable neglect of the Defendant
occurred which would provide a basis for relief from the Judgment.
Accordingly, Plaintiff’s motion seeking relief from the Judgment
entered due to any mistake or excusable neglect is overruled.
In Jerkins v. McKinney, 533 S.W.2d 275, 281 (Tenn. 1976), the appellant filed a Rule 60.02
motion based on a court clerk’s failure to notify the appellant’s counsel that its motion for a new trial
had been denied. Our Supreme Court reversed the trial court’s denial of that motion, stating that
“[t]here is no merit to the insistence that Rule 60.02 applies only to acts of omission or commission
of the parties.” Id.
Based on the Supreme Court’s holding in Jerkins, we find that the trial court in the case at
bar abused its discretion by incorrectly applying Tennessee law. Mistake, inadvertence, surprise, or
excusable neglect on the part of SunTrust could serve as the basis for granting a Rule 60.02 motion,
even though SunTrust is not a party to the lawsuit.
However, not every mistake or act of excusable neglect merits relief under Rule 60.02. In
fact, relief should only be granted when it is evident that introduction of the newly discovered
evidence at a subsequent trial would change the outcome of the case. Brown v. Weik, 725 S.W.2d
at 947; S.M.R. Enterprises, Inc. v. Southern Haircutters, Inc., 662 S.W.2d 944, 950 (Tenn. Ct.
App. 1983); Bean v. Commercial Securities Co., 156 S.W.2d 338, 347 (Tenn. Ct. App. 1941). In
Smith v. Steele, we provided the following guidance for trial courts faced with this situation:
Newly discovered evidence that is merely cumulative, or such as can
have no other effect than to impeach a witness, unless the testimony
of the witness who is sought to be impeached, was so important to the
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issue and the evidence impeaching the witness so strong and
convincing that a different result must necessarily follow, is not
sufficient to justify the Court in granting a new trial, upon proper
application therefor.
Smith v. Steele, 313 S.W.2d 495, 507 (Tenn. Ct. App. 1956). Given the posture of the dispute
between Jerry and Charles, Jerry’s credibility played an important role in the trial court’s rulings.
It is not our duty to substitute our judgment for that of the trial court, which has seen and heard the
witnesses firsthand. Therefore, we remand this case to the trial court so that it may reconsider the
Estate’s motion for relief from judgment in light of the correct law, as we have discussed here.
Because the trial court erred in its application of Rule 60.02, we need not reach the Estate’s
remaining arguments.
IV. Conclusion
After careful review, we hold that the trial court erred by denying the Estate’s motion for
relief from judgment pursuant to Tenn. R. Civ. P. 60.02(1) because it incorrectly applied the law to
the facts of this case. We vacate the judgment of the trial court and remand for further proceedings
consistent with this opinion. All costs of appeal are taxed against the Appellee, Jerry Smith.
_________________________________________
SHARON G. LEE, JUDGE
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