In Re Trust of Katherine D. Graham ( 2022 )

11/17/2022
IN THE COURT OF APPEALS OF TENNESSEE
AT NASHVILLE
October 18, 2022 Session
IN RE TRUST OF KATHERINE D. GRAHAM
Appeal from the Probate Court for Davidson County
No. 20P-1787 David Randall Kennedy, Judge
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No. M2021-00967-COA-R3-CV
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Decedent created a trust and named one of the beneficiaries and Appellee, a third-party
bank, as co-trustees. The trust beneficiaries petitioned for Appellee’s removal and for the
substitution of another beneficiary as co-trustee. The petitioners also sought an order
directing Appellee to reimburse the trust for fees paid to Appellee as co-trustee. The trial
court held that Appellee administered the trust diligently and without any malfeasance,
misfeasance, or non-feasance. As such, the trial court implicitly found that Appellee was
entitled to its fees. The trial court further found that it would violate a material purpose of
the trust to appoint, as co-trustee, another related beneficiary. Ultimately, the trial court
declined to remove Appellee and to substitute another beneficiary as co-trustee. Appellant
is the only petitioner/beneficiary to appeal. Although we conclude that the trial court erred
in its material purpose finding, for reasons discussed below, we affirm the trial court’s
decision not to remove Appellee as co-trustee. Further, we affirm the trial court’s denial
of the petitioners’ request that Appellee reimburse the trust for its fees. Appellee’s motion
for appellate attorney’s fees is denied.
Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Probate Court
Affirmed and Remanded
KENNY ARMSTRONG, J., delivered the opinion of the court, in which J. STEVEN STAFFORD,
P.J., W.S., and ARNOLD B. GOLDIN, J., joined.
John Thomas Ferguson, Chesterfield, Virginia, appellant, pro se.
Paul A. Gontarek, Nashville, Tennessee, for the appellee, Truxton Trust Company.
OPINION
I. Background
On August 24, 2019, Katherine Dinkins Graham (“Decedent”) died testate. Before
her death, Decedent executed a Last Will and Testament (the “Will”) and a Second Codicil.
The Will appointed Appellant John Thomas Ferguson, Decedent’s nephew, and Charles G.
Cornelius, an attorney, as co-executors of Decedent’s Estate. The Will provided for a
number of specific bequests before leaving the residuary estate to the Katherine D. Graham
Trust (the “Trust”). In pertinent part, the Trust provided for the following: (1) the net
income from the Trust would be distributed to Janice Dinkins Ferguson, Decedent’s sister,
during her lifetime; (2) after Mrs. Ferguson’s death, the net income would be paid in equal
shares to Janice Ferguson Hadden, Decedent’s niece, and Mr. Ferguson;1 and (3) at the
death of Ms. Hadden and Mr. Ferguson, the Trust assets would be distributed to their
children, Decedent’s grandnieces.2
In Item IV A of the Will, Decedent appointed Mrs. Ferguson and Mr. Cornelius as
co-trustees of the Trust. Item VII C of the Will provided that, in the event Mrs. Ferguson
or Mr. Cornelius could not serve as co-trustee, Ms. Hadden would be appointed; if Ms.
Hadden could not serve, Mr. Ferguson would be appointed. In Item III of the Second
Codicil, Decedent specifically amended Item IV A of the Will. In this amendment, she
removed Mr. Cornelius as co-trustee of the Trust and substituted Appellee Truxton Trust
Company (“Truxton”) as co-trustee with Mrs. Ferguson. Decedent did not amend Item VII
C of the Will, which appointed successor co-trustees. In the Second Codicil, Decedent also
removed Mr. Cornelius as co-executor and substituted Truxton to serve as co-executor of
her Estate, along with Mr. Ferguson.
After Decedent’s death, Truxton’s and Mr. Ferguson’s relationship quickly soured.
As discussed further, infra, Mr. Ferguson was hostile and verbally abusive towards Truxton
employees and other professionals working with him to administer Decedent’s Estate. Mr.
Ferguson emailed Truxton employees, cursing them and threatening litigation if Truxton
did not comply with his demands. Despite being co-executor of the Estate, Mr. Ferguson
refused to cooperate with Truxton in the administration of the Estate.3
Giving rise to the immediate appeal, on October 14, 2020, Mrs. Ferguson, Ms.
Hadden, and Mr. Ferguson (together, the “Petitioners”), as qualified beneficiaries of the
Trust, filed a petition to modify the Trust in the Seventh Circuit Court for Davidson County,
Tennessee, Probate Division (the “trial court”). On November 25, 2020, the Petitioners
1
Ms. Hadden and Mr. Ferguson are the children of Mrs. Ferguson.
2
Ms. Hadden has one daughter, and Mr. Ferguson has three daughters.
3
As mentioned in Truxton’s appellate brief, by order of March 22, 2022, the trial court removed Mr.
Ferguson as co-executor of the Estate. Mr. Ferguson filed a separate appeal of his removal, and that appeal
is currently pending in this Court.
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filed an amended petition to remove co-trustee. On December 9, 2020, the Petitioners filed
a second amended petition to remove co-trustee (the “Second Amended Petition”), by
which they sought Truxton’s removal as co-trustee on the ground that Truxton had
committed serious breaches of trust and fiduciary duty. The Petitioners sought Truxton’s
removal under Tennessee Code Annotated section 35-15-706(b)(1), (2), (3), and (4),
discussed further infra. In the Second Amended Petition, the Petitioners requested an
award of their court costs, litigation expenses, and reasonable attorney’s fees. The
Petitioners also requested that the trial court “order Truxton to repay any funds from the
Trust that have been used in this litigation or that were disbursed without the approval of
Janice Dinkins Ferguson, Co-Trustee, including, without limitation, all fees paid by
Truxton to itself from the Trust.” On January 11, 2021, Truxton filed its Answer to the
Second Amended Petition, denying all alleged claims and requesting dismissal with
prejudice.
On May 6, 2021, the trial court began the trial in this matter. Following testimony
from Mrs. Ferguson, Ms. Hadden, and Mr. Ferguson, the Petitioners rested their case-in-
chief, and the trial was adjourned until May 17, 2021. When the trial resumed, Truxton
called two witnesses, Spence Dabbs and Derrick Jones, senior employees of Truxton.
Although there was a court reporter present for the first day of trial, there was no court
reporter present for the second day. Accordingly, the trial court approved a statement of
the evidence for the second day of trial.4
By order of July 23, 2021, the trial court dismissed the Second Amended Petition
with prejudice. In pertinent part, the trial court found that: (1) Mr. Ferguson repeatedly
obstructed the efficient administration of Decedent’s Estate and the Trust; (2) Mr. Ferguson
repeatedly harassed and threatened Truxton’s employees and other professionals involved
in the administration of the Estate and the Trust; (3) there was no evidence that Truxton
committed a breach of trust, failed to cooperate in the administration of the Trust, or that
Truxton was unfit, unwilling, or persistently failed to administer the Trust in accordance
with its terms; (4) Truxton performed admirably during difficult circumstances; (5)
Truxton committed no acts of malfeasance, misfeasance, or non-feasance with respect to
its administration of the Trust; (6) if Ms. Hadden was permitted to serve as co-trustee, Mr.
Ferguson would “likely continue his pattern of controlling behavior and exert pressure on
both Mrs. Ferguson and Ms. Hadden so as to eviscerate any semblance of independence on
their part”; (7) it would violate a material purpose of the Trust to remove and replace
Truxton with a related individual trustee; (8) Decedent intended that an independent co-
trustee serve with Mrs. Ferguson; and (9) a corporate successor co-trustee should be
appointed to replace Truxton. Mr. Ferguson is the only Petitioner to appeal.
4
When a transcript of proceedings is unavailable, a statement of the evidence may be filed in its place. See
Tenn. R. App. P. 24(c).
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II. Issues
Mr. Ferguson raises several issues, as stated in his brief:
1. Whether the Probate Court erred in construing the last will and testament of
Katherine Dinkins Graham and a residuary trust, the Katherine D. Graham Trust
(the “Trust”), created pursuant thereto when it ruled that the appointment of Truxton
Trust Company (“Truxton”) as a co-trustee was a material purpose of the Trust.
2. Whether the Probate Court abused its discretion by denying the petition to remove
Truxton as a co-trustee of the Trust.
3. Whether the Probate Court abused its discretion when it refused to appoint Janice
Ferguson Hadden to serve as successor co-trustee of the Trust, ignoring the clearly
expressed intent of the settlor.
4. Whether the Probate Court abused its discretion when it refused to require Truxton
to repay to the Trust the unauthorized fees that it has paid itself as co-trustee.
5. Whether the Probate Court abused its discretion when it refused to award the
petitioners their attorneys’ fees and costs.
As Appellee, Truxton raises one additional issue:
1. Whether the attorneys’ fees and expenses incurred by Truxton in this appeal should
be awarded against the Appellant and/or the Trust pursuant to Tenn. Code Ann. §
35-15-1004(a).
III. Standard of Review
We review a non-jury case “de novo upon the record with a presumption of
correctness as to the findings of fact, unless the preponderance of the evidence is
otherwise.” Bowden v. Ward, 27 S.W.3d 913, 916 (Tenn. 2000) (citing Tenn. R. App. P.
13(d)). The trial court’s conclusions of law are reviewed de novo and “are accorded no
presumption of correctness.” Brunswick Acceptance Co., LLC v. MEJ, LLC, 292 S.W.3d
638, 642 (Tenn. 2008).
Furthermore, as we have noted many times, because “trial courts are able to observe
witnesses as they testify and to assess their demeanor, . . . trial judges [are best suited] to
evaluate witness credibility.” Wells v. Tennessee Bd. of Regents, 9 S.W.3d 779, 783
(Tenn. 1999) (citing State v. Pruett, 788 S.W.2d 559, 561 (Tenn. 1990); Bowman v.
Bowman, 836 S.W.2d 563, 566 (Tenn. Ct. App. 1991)); see also Richards v. Liberty Mut.
Ins. Co., 70 S.W.3d 729, 733 (Tenn. 2002) (“As this Court has repeatedly emphasized, a
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reviewing court must give ‘considerable deference’ to the trial judge with regard to oral,
in-court testimony as it is the trial judge who has viewed the witnesses and heard the
testimony.”). As such, “appellate courts will not re-evaluate a trial judge’s assessment of
witness credibility absent clear and convincing evidence to the contrary.” Wells, 9 S.W.3d
at 783 (internal citations omitted).
Moreover, while we are cognizant of the fact that Mr. Ferguson is representing
himself in this appeal,5 it is well-settled that “pro se litigants are held to the same procedural
and substantive standards to which lawyers must adhere.” Brown v. Christian Bros. Univ.,
428 S.W.3d 38, 46 (Tenn. Ct. App. 2013). This Court has held that “[p]arties who choose
to represent themselves are entitled to fair and equal treatment by the courts.” Hodges v.
Tenn. Att’y Gen., 43 S.W.3d 918, 920 (Tenn. Ct. App. 2000) (citing Paehler v. Union
Planters Nat’l Bank, Inc., 971 S.W.2d 393, 396 (Tenn. Ct. App. 1997)). Nevertheless,
“courts must not excuse pro se litigants from complying with the same substantive and
procedural rules that represented parties are expected to observe.” Young v. Barrow, 130
S.W.3d 59, 63 (Tenn. Ct. App. 2003) (citing Edmundson v. Pratt, 945 S.W.2d 754, 755
(Tenn. Ct. App. 1996); Kaylor v. Bradley, 912 S.W.2d 728, 733 n.4 (Tenn. Ct. App. 1995)).
With the foregoing in mind, we turn to address the substantive issues.
IV. Analysis
A. Removal of Truxton
Mr. Ferguson argues that the trial court erred when it declined to remove Truxton
and substitute Ms. Hadden as co-trustee. Tennessee Code Annotated section 35-15-706(b)
provides four enumerated factors under which a court may remove a trustee. Tenn. Code
Ann. § 35-15-706(b) (“The court may remove a trustee if . . . .”) (emphasis added). As this
Court has explained, “may” is a permissive term that is “generally regarded as directory or
discretionary.” In re Estate of Edmonds, No. W2018-01783-COA-R3-CV, 2019 WL
2304053, at *6 (Tenn. Ct. App. May 30, 2019) (quoting Baker v. Seal, 694 S.W.2d 948,
951 (Tenn. Ct. App. 1984)). “Given the permissive language used in [section 35-15-706],
it appears that the trial court retains discretion with regard to its removal decisions.” In re
Estate of Edmonds, 2019 WL 2304053, at *6. Accordingly, we review the trial court’s
decision not to remove Truxton as co-trustee under an abuse of discretion standard. “‘An
abuse of discretion occurs when the trial court . . . appl[ies] an incorrect legal standard,
reaches an illogical result, resolves the case on a clearly erroneous assessment of the
evidence, or relies on reasoning that causes an injustice.’” C.W.H. v. L.A.S., 538 S.W.3d
488, 495 (Tenn. 2017) (quoting Armbrister v. Armbrister, 414 S.W.3d 685, 693 (Tenn.
2013)). Because the Petitioners alleged that Truxton’s removal was permitted under all
four factors, we address each in turn below.
5
Although pro se, at oral argument, Mr. Ferguson explained that he is a retired attorney. We also note that
the Petitioners were represented by counsel at trial.
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1. Section 35-15-706(b)(1)-(3)
Under the first three factors, a court may remove a trustee if:
(1) The trustee has committed a serious breach of trust;
(2) Lack of cooperation among co-trustees substantially impairs the
administration of the trust;
(3) Because of unfitness, unwillingness, or persistent failure of the trustee to
administer the trust effectively, the court determines that removal of the
trustee best serves the interests of the beneficiaries;
Tenn. Code Ann. § 35-15-706(b)(1)-(3). Concerning these provisions, the trial court
found:
12. The Petitioners have presented no evidence to show that Truxton has
committed any breach of trust, has failed to cooperate in the administration
of the Trust, or that Truxton is unfit, unwilling, or has persistently failed to
administer the Trust in accordance with its terms. To the contrary, the
evidence presented demonstrates that Truxton has worked diligently to fulfill
its fiduciary duties in the midst of a difficult situation brought about by Mr.
Ferguson, and given the circumstances, Truxton has performed admirably.
13. The Court expressly finds that Truxton has committed no acts of
malfeasance, misfeasance, or non-feasance with respect to its administration
of the Trust.
On appeal, Mr. Ferguson alleges that Truxton: (1) acted “a number of times and in
a number of respects without seeking or obtaining the agreement of” Mrs. Ferguson; (2)
“unilaterally and without the knowledge of [Mrs. Ferguson] establish[ed] an account for
the Trust with itself under its sole control”; (3) transferred assets of the Estate into the Trust
account; (4) paid itself fees as co-trustee;6 (5) failed to cooperate with Mrs. Ferguson; and
(6) persistently failed to administer the Trust effectively. We note that Mr. Ferguson makes
these allegations in his appellate brief without providing citations to the record to support
them.7 See Tenn. R. App. P. 27(a)(7)(A) (providing that an appellant’s brief shall contain
6
We address Truxton’s fees, infra at IV B.
7
Mr. Ferguson’s “argument” regarding Tennessee Code Annotated section 35-15-706(b)(3) not only fails
to provide record citations but also fails to make any substantive argument. Mr. Ferguson’s entire
discussion in this portion of his brief is:
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an argument setting forth, in pertinent part, the contentions of the appellant with respect to
the issues presented and “appropriate references to the record”).
From our review, the record does not support Mr. Ferguson’s allegations. Indeed,
the Petitioners failed to present any evidence that Truxton committed a serious breach of
trust, that a lack of cooperation between Mrs. Ferguson and Truxton substantially impaired
the administration of the Trust, or that Truxton was unfit, unwilling, or persistently failed
to administer the Trust effectively such that Truxton’s removal best served the interests of
the beneficiaries. Tenn. Code Ann. § 35-15-706(b)(1)-(3). To the contrary, the record
shows that, although the Petitioners did not want Truxton to serve as co-trustee, Truxton
fulfilled its fiduciary duties and administered the Trust effectively, despite a lack of
communication from Mrs. Ferguson and abusive communications from Mr. Ferguson,
discussed further infra.
Turning to the record, Mr. Dabbs, a licensed attorney who helped administer the
Trust, testified concerning the Trust’s formation, administration, and Truxton’s
communications with Mrs. Ferguson regarding same. The record shows that, on July 26,
2020, Mr. Ferguson, as co-executor of the Estate, emailed Mr. Dabbs stating, in pertinent
part, that, as executors of the Estate, they should transfer the remaining cash and all non-
cash assets of the Estate to the Trust before July 31, 2020.8 Although Mrs. Ferguson
testified that she “was not informed that this [T]rust was being funded,” Mr. Dabbs testified
that he called Mrs. Ferguson on July 31, 2020 to inform her of the partial funding. Mr.
Dabbs further testified that Mrs. Ferguson did not object to the funding, and that she
thanked Truxton for its work. Given the trial court’s finding that Truxton “committed no
acts of malfeasance, misfeasance, or non-feasance with respect to its administration of the
Trust,” it is apparent from the final order that the trial court implicitly credited Mr. Dabbs’
testimony over that of Mrs. Ferguson. See Magness v. Couser, No. M2019-01138-COA-
R3-CV, 2020 WL 1983797, at *3 (Tenn. Ct. App. Apr. 27, 2020) (quoting Williams v. City
of Burns, 465 S.W.3d 96, 120 (Tenn. 2015)) (“This Court is ‘required to defer to the trial
court’s credibility findings, including those that are implicit in its holdings.’”); see also
Wells, 9 S.W.3d at 783 (stating that “appellate courts will not re-evaluate a trial judge’s
assessment of witness credibility absent clear and convincing evidence to the contrary”).
TUTC Section 35-15-706(b)(3) provides for the removal of a trustee who persistently fails
to administer the trust effectively. In the case at bar, Truxton’s persistent failure to
administer the Trust to best serve the interests of the beneficiaries is grounds for its removal
under TUTC Section 35-15-706(b)(3).
Such a “skeletal argument” could result in Mr. Ferguson’s waiver of this issue. Sneed v. Bd. of Prof’l
Responsibility of Sup. Ct., 301 S.W.3d 603, 615 (Tenn. 2010) (“It is not the role of the courts, trial or
appellate, to research or construct a litigant’s case or arguments for him or her, and where a party fails to
develop an argument in support of his or her contention or merely constructs a skeletal argument, the issue
is waived.”). However, for completeness, we review, infra, whether the trial abused its discretion when it
declined to remove Truxton under Tennessee Code Annotated section 35-15-706(b)(3).
8
This email was entered into evidence as trial exhibit number 5.
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There is nothing in the record that would lead us to disturb the trial court’s credibility
finding.
Concerning the Trust’s administration, Mr. Dabbs testified that Truxton sent Mrs.
Ferguson monthly statements of the Trust’s assets and activities. In her testimony, Mrs.
Ferguson acknowledged receipt of the monthly statements and conceded that she reviewed
the statements each month. Mr. Jones, the Senior Managing Director for Truxton and
Truxton’s Chief Fiduciary Officer, testified that Mrs. Ferguson never responded to these
monthly updates. Similarly, Mr. Dabbs testified that he could not recall any instance where
Mrs. Ferguson questioned or complained of the activities undertaken by Truxton as co-
trustee, although he noted instances where Truxton attempted to contact Mrs. Ferguson and
received no response from her. In her testimony, Mrs. Ferguson admitted that there were
occasions where she “did not acknowledge [Truxton’s] communication because [she] did
not agree with it.” However, Mrs. Ferguson also testified that she never complained to any
representative of Truxton concerning the manner in which Truxton administered or
invested Trust assets.9 Regardless, despite Mrs. Ferguson’s testimony, the record shows
that, since the Trust’s partial funding in July 2020, Truxton’s investment decisions have
resulted in approximately a $200,000.00 net gain to the Trust’s assets. Such results do not
evidence malfeasance, misfeasance, or non-feasance on Truxton’s part.
Finally, Mr. Dabbs testified that: (1) Truxton had not engaged in any actions that
would rise to the level of a breach of trust in its administration of the Trust; (2) Truxton
had acted at all times in good faith and for the benefit of the Trust; and (3) Mr. Dabbs and
his colleagues had cooperated and attempted to work with both Mr. Ferguson, as co-
executor of the Estate, and Mrs. Ferguson, as co-trustee, of the Trust. Similarly, Mr. Jones
testified that, in his opinion, Truxton’s actions in no way rose to the level of “serious breach
of trust.” In view of the trial court’s credibility finding, and from the entire record, the
evidence does not preponderate against the trial court’s substantive finding that Truxton
committed no acts of malfeasance, misfeasance, or non-feasance. Accordingly, we affirm
the trial court’s conclusion that Truxton’s removal was not warranted under Tennessee
Code Annotated section 35-15-706(b)(1)-(3).
2. Section 35-15-706(b)(4)
Turning to the final factor, a court may remove a trustee if:
(4) There has been a substantial change of circumstances or removal is
9
We note that Mrs. Ferguson testified that she wrote a letter to “Mr. Stumb,” the Chairman of Truxton’s
Board of Directors, and, although she did not “specifically register a complaint,” she asked Truxton to
resign because she “felt that [her] best interests were not being served.” Mrs. Ferguson testified that she
wrote this letter prior to the Trust’s funding. It is perplexing to this Court why Mrs. Ferguson’s believed
her best interests were not being served when the Trust had yet to be funded. Regardless, the letter was not
presented as evidence to the trial court and is not part of the appellate record.
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requested by all of the qualified beneficiaries, the court finds that removal of
the trustee best serves the interests of all of the beneficiaries and is not
inconsistent with a material purpose of the trust, and a suitable co-trustee or
successor trustee is available.
Tenn. Code Ann. § 35-15-706(b)(4). As the Tennessee Supreme Court has explained,
when construing a statute, “[o]ur analysis naturally begins with the words used in the
statute,” Womack v. Corr. Corp. of Am., 448 S.W.3d 362, 366 (Tenn. 2014) (citing Shore
v. Maple Lane Farms, LLC, 411 S.W.3d 405, 420 (Tenn. 2013)), and we must interpret
those words under their “natural and ordinary meaning in the context in which they appear
and in light of the statute’s general purpose.” Id. (quoting Mills v. Fulmarque, Inc., 360
S.W.3d 362, 368 (Tenn. 2012)). Given the Tennessee Legislature’s use of the conjunctive,
“and,” under the plain language of the statute, the trial court had the discretion, but was not
required, to remove Truxton if all of the qualified beneficiaries requested Truxton’s
removal and the trial court found each of the following: (1) that Truxton’s removal best
served the interests of all of the beneficiaries; (2) that Truxton’s removal was not
inconsistent with a material purpose of the trust; and (3) that a suitable successor co-trustee
was available. Tenn. Code Ann. § 35-15-706(b)(4). It is undisputed that all of the qualified
beneficiaries requested Truxton’s removal. Accordingly, we review the remaining
elements below.
We begin our review with the trial court’s finding that Truxton’s removal as co-
trustee and the appointment of a related individual co-trustee would violate a material
purpose of the Trust. In making this finding, the trial court reasoned:
20. The provisions of the Decedent’s Will and Second Codicil demonstrate
that the Decedent intended that an independent co-trustee would serve with
Mrs. Ferguson. The Decedent could have appointed Mr. Ferguson or Ms.
Hadden to serve with their mother as a co-trustee, but twice she declined to
do so, first in her original Will when she appointed an independent attorney,
Charles G. Cornelius, to serve with Mrs. Ferguson, and then again in her
Second Codicil, in which she appointed Truxton to serve as a co-trustee with
Mrs. Ferguson in place of Mr. Cornelius.
We do not interpret such a material purpose from the plain language of Decedent’s Will
and Second Codicil. As discussed, supra, in Item IV A of the Will, Decedent appointed
Mrs. Ferguson and Mr. Cornelius as co-trustees of the Trust. Item VII C of the Will named
successor co-trustees in the event Mrs. Ferguson or Mr. Cornelius could not serve.
Specifically, Item VII C stated:
In the event that my sister [Mrs. Ferguson] or CHARLES G. CORNELIUS
shall at any time be unable to serve as a Co-Trustee, then I appoint my niece,
JANICE FERGUSON HADDEN, as a Co-Trustee, without bond. If for any
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reason JANICE FERGUSON HADDEN is unable to serve as a Co-Trustee
of any Trust at any time, then I appoint JOHN THOMAS FERGUSON, as
substitute Co-Trustee, also without bond. In any other cases where a
substitute Co-Trustee is needed, I direct that the existing Co-Trustee shall
seek a qualified replacement Co-Trustee and obtain the approval of a Court
of competent jurisdiction for such replacement. I waive bond for all
substitute and successor Trustees or Co-Trustees.
Importantly, when Decedent changed portions of her Will by way of the Second Codicil,
she declined to delete or change Item VII C, discussed above. Concerning the Trust, the
only provision Decedent altered in the Second Codicil was Item IV A, wherein she
removed Mr. Cornelius as a co-trustee and substituted Truxton in his place. On this Court’s
reading, with Truxton’s substitution for Mr. Cornelius in Item VII C, the Will then read:
“In the event that my sister or [Truxton] shall at any time be unable to serve as a Co-
Trustee, then I appoint my niece, Janice Ferguson Hadden, as a Co-Trustee[.]” Truxton
appears to agree with our interpretation. At oral argument, when asked “If Truxton
couldn’t serve, does it name a successor trustee?” Truxton’s attorney responded, “That’s
where Ms. Hadden comes in. So, Ms. Hadden is specifically named in the instrument to
serve as a successor if for some reason Truxton . . . is unable to serve further as co-trustee.”
By Truxton’s own admission, Ms. Hadden was named to serve as a successor trustee if
either a related co-trustee, i.e., Mrs. Ferguson, or an independent co-trustee, i.e., Truxton,
could not serve. Indeed, it appears that Decedent intended for Ms. Hadden to serve as
successor co-trustee, regardless of whether she replaced a related or independent co-trustee.
As such, it was not a material purpose of the Trust that one co-trustee be an independent
third-party, and the trial court’s conclusion otherwise was error. See Tenn. Code Ann. §
35-15-706(b)(4).
Our conclusion concerning the trial court’s material purpose finding is not
dispositive of the issue before us. As discussed, supra, a court must find all three elements
in (b)(4) before it has the discretion to remove a trustee under this section. We recall the
remaining elements: (1) that Truxton’s removal would best serve the interests of all of the
beneficiaries; and (2) that a suitable successor co-trustee was available. Tenn. Code Ann.
§ 35-15-706(b)(4). We consider these remaining elements together.
As an initial matter, we note that, in the Second Amended Petition, the Petitioners
did not specifically request that Ms. Hadden replace Truxton as co-trustee. However, in
reviewing the transcript of the evidence from the first day of trial as well as Mr. Ferguson’s
appellate brief, it appears that this was the Petitioners’ intent. It is clear that the trial court
was concerned with Mr. Ferguson’s influence over Ms. Hadden should the trial court
appoint her co-trustee. In its final order, the trial court specifically noted that it had “an
opportunity to observe [the Petitioners’] respective personalities and demeanors.” Based
on these observations, as well as the evidence concerning Mr. Ferguson’s past interactions
with Truxton, the trial court opined that, “if Ms. Hadden were permitted to serve as a co-
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trustee of the Trust with Mrs. Ferguson, Mr. Ferguson would most likely continue his
pattern of controlling behavior and exert pressure on both Mrs. Ferguson and Ms. Hadden
so as to eviscerate any semblance of independence on their part.” Implicit in this finding
is the trial court’s conclusion that Truxton’s removal, and Ms. Hadden’s appointment,
would not best serve the interests of all of the beneficiaries; consequently, the trial court
also implicitly concluded that Ms. Hadden was not a suitable successor co-trustee. See
Tenn. Code Ann. § 35-15-706(b)(4); Hollingsworth v. Hollingsworth, No. 02A01-9103-
CV-00043, 1991 WL 220613, at *2 (Tenn. Ct. App. Oct. 31, 1991) (holding that certain
findings of fact are implicit in the trial court’s rulings and are to be reviewed with a
presumption of correctness). As discussed, supra, this Court gives trial courts
“considerable deference” concerning in-court testimony, where it is the trial judge who has
observed witnesses as they testify and has assessed their demeanor. See Wells, 9 S.W.3d
at 783 (citing Pruett, 788 S.W.2d at 561; Bowman, 836 S.W.2d at 566); see also Richards,
70 S.W.3d at 733. This Court “will not re-evaluate a trial judge’s assessment of witness
credibility absent clear and convincing evidence to the contrary.” Wells, 9 S.W.3d at 783(internal citations omitted).
Here, there is evidence to support the trial court’s concern regarding Mr. Ferguson’s
pattern of controlling and obstructive behavior. As discussed, supra, the record includes
multiple emails from Mr. Ferguson to Truxton employees and to a real estate agent who
was engaged to help sell real property belonging to the Estate. In these emails, Mr.
Ferguson is condescending, harassing, and controlling. For example, in one June 29, 2020
email to Truxton employees concerning the sale of real property, Mr. Ferguson wrote, in
part:
I will update you on the repairs when practically possible. Please do not
interfere in the work that is being done to get the sale closed. If you need
some more chardonnay or some more legos to build models with your kids,
let me know.
On review of the other emails surrounding this exchange, it is clear that Truxton employees
were working diligently with the real estate agent to timely close the sale, but it was Mr.
Ferguson who was disruptive and uncooperative. Nevertheless, Mr. Ferguson instructed
Truxton, co-executor of the Estate, not to interfere in the sale, exemplifying his need to
dominate and control those around him. This is merely one example of Mr. Ferguson’s
problematic behavior; several other emails Mr. Ferguson sent contain expletives that we
will not repeat here.
Unfortunately, it appears that Mr. Ferguson directed his ire at both related and
unrelated parties. Mr. Jones testified concerning a conversation he had with Ms. Hadden
during the process of selling Decedent’s condominium. Mr. Jones testified that Mr.
Ferguson loudly berated both his mother and his sister to the point that the real estate agent
left the condominium because she was uncomfortable with the situation. Mr. Jones
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testified that the interaction was so distressing he felt the need to follow up with Ms.
Hadden to ensure that she was okay. Mr. Jones also testified to a conversation he had with
Mrs. Ferguson wherein Mrs. Ferguson wished Truxton “good luck” in dealing with Mr.
Ferguson because they were “going to need it.” In her testimony, Ms. Hadden
acknowledged that her brother is “hardheaded.” Based on our review, Mr. Ferguson’s
behavior exemplified in the record is abusive and controlling. The evidence preponderates
in favor of the trial court’s concern that, should Truxton be removed and Ms. Hadden
substituted as co-trustee, Mr. Ferguson would likely exert pressure on both Ms. Hadden
and Mrs. Ferguson to meet his demands, thus dismantling the required independence or
impartiality of the co-trustees. See Tenn. Code Ann. § 35-15-803 (“If a trust has two (2)
or more beneficiaries, the trustee shall act impartially in investing, managing, and
distributing the trust property, giving due regard to the beneficiaries’ respective interests.”).
Even more troubling is the evidence in the record showing that Mr. Ferguson has a history
of making poor financial decisions, that he has made certain self-serving financial
decisions, and that he has not always been honest or transparent concerning financial
matters related to the Estate’s administration. In short, Truxton’s removal and Ms.
Hadden’s appointment would likely lead to Mr. Ferguson’s improper administration of the
Trust, which would best serve the interest of only one beneficiary, Mr. Ferguson. Tenn.
Code Ann. § 35-15-706(b)(4).
Given the “particular family dynamics involved in this case,” the trial court found
that the only suitable successor co-trustee would be an unrelated corporate trustee. Based
on the record and for the reasons discussed above we agree. The trial court held that it
would remove Truxton under Tennessee Code Annotated section 35-15-706(b)(4) if the
Petitioners first identified “a suitable Tennessee corporate fiduciary to serve with Mrs.
Ferguson as a successor co-trustee of the Trust[.]” The Petitioners declined to seek an
alternate corporate co-trustee, and instead appealed the trial court’s decision not to appoint
Ms. Hadden. For the many reasons discussed, supra, we cannot conclude that the trial
court abused its discretion in declining to remove Truxton and appoint Ms. Hadden co-
trustee of the Trust under Tennessee Code Annotated section 35-15-706(b)(4).
B. Truxton’s Fees as Co-Trustee
Mr. Ferguson next argues that the trial court abused its discretion when it denied the
Petitioners’ request that Truxton repay to the Trust all of the fees that it previously paid
itself as co-trustee. The trial court’s denial of such request is implicit in its findings that
Truxton “has worked diligently to fulfill its fiduciary duties” and has “committed no acts
of malfeasance, misfeasance, or non-feasance with respect to its administration of the
Trust.” In short, the trial court implicitly found that Truxton was entitled to the fees it paid
itself for the work performed as co-trustee. Having affirmed the trial court’s holding that
Truxton administered the Trust diligently and in keeping with its fiduciary duties, we agree
that Truxton was due compensation for its services.
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The terms of the Trust did not specify an amount for the co-trustees’ compensation.
Rather, Item VII A of the Will provided:
My Trustees shall pay all expenses of the Trust[] including legal
compensation to themselves and shall render annual reports of income,
expenses, and investments to those persons entitled to the income therefrom.
Tennessee Code Annotated section 35-15-708(a) provides that, “[i]f the terms of a trust do
not specify a trustee’s . . . compensation, and if the settlor, if living, or otherwise a majority
of the qualified beneficiaries . . . have not otherwise agreed, a trustee . . . is entitled to
compensation that is reasonable under the circumstances.” Tenn. Code Ann. § 35-15-
708(a). There is no evidence to show that the beneficiaries agreed to a specific amount of
compensation for Truxton and informed Truxton of that amount. Tenn. Code Ann. § 35-
15-708(a). Accordingly, Truxton was entitled to “compensation that [was] reasonable
under the circumstances.” Tenn. Code Ann. § 35-15-708(a). The only evidence
concerning Truxton’s fees is Mr. Ferguson’s testimony that Truxton paid itself around
$2,000.00 per month. In his appellate brief, Mr. Ferguson asserts that Truxton paid itself
approximately $70,000.00 by the time of trial. There is no document in the record showing
the fee schedule for Truxton’s administration of the Trust, and it does not appear from the
statement of the evidence that either of the Truxton employees testified to a specific amount
of fees. Although each of the Petitioners testified that Truxton’s fees were unreasonable,
they presented no evidence, other than their opinions, as to why Truxton’s fees were
unreasonable. Mr. Ferguson testified, and he alleges in his appellate brief, that Truxton’s
fees were higher than Truist’s or UBS’ fees, but there is no evidence in the record
concerning Truist’s or UBS’ fee schedules. Mr. Jones testified that Truxton’s fees have
remained the same since Decedent first opened her account with Truxton in 2004, and that,
prior to moving her account to Truxton, Decedent paid higher fees at SunTrust.10 We
deduce from this testimony that Decedent was likely aware of—and consented to—
Truxton’s fees when she chose it to serve as co-trustee. Further, Mr. Jones testified that
Truxton recently conducted a market survey for its trust services and found that its fees for
investment and trustee services were in the middle third of its competitors. Given the
foregoing, it does not appear that Truxton’s fees, whatever the specific amount, were
unreasonable. Accordingly, we affirm the trial court’s denial of the Petitioners’ request
that Truxton reimburse to the Trust the amounts it paid itself as co-trustee.
10
We note that, in December 2019, SunTrust merged with BB&T to form Truist Bank. See Kevin Payne
& Mitch Strohm, SunTrust Bank, Now Truist, Review, FORBES (Nov. 11, 2021, 10:13 AM),
https://www.forbes.com/advisor/banking/suntrust-bank-now-truist-review/.
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C. Attorneys’ Fees
1. The Petitioners’ Fees at Trial
Mr. Ferguson’s final argument is that the trial court abused its discretion when it
refused to award the Petitioners their attorney’s fees and costs. In its final order, the trial
court stated:
With respect to attorneys’ fees, the parties may file motions in accordance
with the local rules and applicable law requesting that such fees be charged
to the Trust. Any such motions will be reviewed in accordance with the local
rules and other applicable law.
On review of the record, it appears that the Petitioners failed to file a motion requesting
attorney’s fees and costs, and Mr. Ferguson does not reference any such motion in his
appellate brief. Rather, he simply argues that the trial court abused its discretion when it
“refuse[d] to award attorneys’ fees and costs to the Petitioners.” Because Mr. Ferguson
failed to raise this issue with the trial court, it is waived on appeal. Lawrence v. Stanford,
655 S.W.2d 927, 929 (Tenn. 1983) (“It has long been the general rule that questions not
raised in the trial court will not be entertained on appeal. . . .”).
2. Truxton’s Fees on Appeal
As Appellee, Truxton asks this Court to award it attorney’s fees and expenses
incurred in defending this appeal. In Tennessee, “litigants are responsible for their own
attorney’s fees absent a statute or agreement between the parties providing otherwise.”
Darvarmanesh v. Gharacholou, No. M2004-00262-COA-R3-CV, 2005 WL 1684050, at
*16 (Tenn. Ct. App. July 19, 2005) (citing State v. Brown & Williamson Tobacco
Corp., 18 S.W.3d 186, 194 (Tenn. 2000)). Truxton asks that we award it attorney’s fees
under Tennessee Code Annotated section 35-15-1004(a), which 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). An award of appellate attorney’s fees under this section
lies within this Court’s discretion. In re Estate of Goza, 397 S.W.3d 564, 571 (Tenn. Ct.
App. 2012) (citing Fickle v. Fickle, 287 S.W.3d 723, 737 (Tenn. Ct. App. 2008)). In our
discretion, we decline to award Truxton its attorney’s fees on appeal.
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V. Conclusion
For the foregoing reasons, we affirm the trial court’s final order. The case is
remanded for such further proceedings as are necessary and consistent with this opinion.
Costs of the appeal are assessed to the Appellant, John Thomas Ferguson, for all of which
execution may issue if necessary.
s/ Kenny Armstrong
KENNY ARMSTRONG, JUDGE
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