Joy Roy/Sam Dawkins v. W.T. Diamond ( 1999 )

IN THE COURT OF APPEALS OF TENNESSEE
FILED
October 30, 1999
Cecil Crowson, Jr.
Appellate Court Clerk
AT JACKSON
JOY DAWKINS ROY and SAM )
D. DAWKINS, et ux, )
)
)
Plaintiffs/Appellees, ) Madison Circuit No. 61907 T.D.
)
VS. ) Appeal No. 02A01-9809-CV-00247
)
W. T. DIAMOND, JR., )
)
)
Defendant/Appellant. )
APPEAL FROM THE CIRCUIT COURT OF MADISON COUNTY
AT JACKSON, TENNESSEE
THE HONORABLE J. STEVEN STAFFORD, JUDGE
LLOYD R. TATUM
TATUM & WEINMAN
Henderson, Tennessee
Attorney for Appellant
J. HOUSTON GORDON
Covington, Tennessee
Attorney for Appellees
AFFIRMED
Page 1
ALAN E. HIGHERS, J.
CONCUR:
W. FRANK CRAWFORD, P.J., W.S.
DAVID R. FARMER, J.
In this legal malpractice case, W.T. Diamond Jr. appeals from a jury verdict entered
against him in the Circuit Court of Madison County awarding plaintiffs Joy Dawkins Roy and
Sam D. Dawkins $68,800 in compensatory damages and $25,000 in punitive damages.
Facts and Procedural History
This case involves claims against W.T. Diamond Jr. (“Diamond” or “Appellant”)
arising from Diamond’s role as executor and attorney for the estate of Jennie Ida Buck (“
Buck” or “Deceased”). The proceedings which are pertinent to this appeal took place over
several years in both the probate section of the General Sessions Court of Madison County
and the Madison County Circuit Court, as well as a disciplinary proceeding against
Diamond conducted by the Board of Professional Responsibility. 1
I. Probate Court Proceedings
The long and confusing history of this case began with the death of Jennie Ida Buck
on March 21, 1992. Buck left a holographic will in which, among other things, she appointed
Diamond as executor. On April 10, 1992, Diamond admitted Buck’s will to probate in
common form and was issued letters testamentary. Following a three year period of alleged
inaction and misuse of estate funds, Sam Dawkins, a named beneficiary, filed a petition in
Page 2
probate court seeking to remove Diamond as executor. The petition alleged, inter alia , that
Diamond had notified none of the estate’s heirs of the probate proceedings, filed no
inventory of the estate, failed to maintain the residence, and misappropriated the estate’s
funds. In May 1995, administrators of the estate of Earl Dawkins, also a named beneficiary,
filed a motion to compel inventory and accounting against Diamond. An accounting
revealed that Diamond had made approximately $60,100 in disbursements to his law firm
from the estate of the deceased without approval of the probate court. The probate court
ordered Diamond to reimburse the estate. After several failed attempts at reimbursement,
Diamond eventually tendered a cashier’s check in an amount sufficient to repay the estate
for money he had removed.
In July 1995, the petition to remove Diamond as executor was granted, and Sam
Dawkins and Joy Roy (“Co-administrators” or “Plaintiffs”) were appointed as
co-administrators of Buck’s estate. 2 Diamond subsequently filed a petition, to which the
new co-administrators excepted, seeking fees and expenses for his services rendered. In
March and April 1996, hearings were held in the probate court, at which time the
co-administrators sought payment of $13,317.50 in attorney fees and $17,566.50 in
administrators fees. They also asserted that Diamond should reimburse the estate for fees
and expenses incurred by the co-administrators in trying to get Diamond to account for his
receipts and disbursements.
On August 21, 1996, the Probate Court issued a memorandum opinion, which
indicated that the fees Diamond claimed were excessive and the time upon which he based
his fees was wasteful. As to the fees claimed by both parties, the probate court stated, “the
fees to which the executor (i.e. , Diamond) would have been allowed by the court for services
rendered to the estate would be approximately equal to that incurred by the personal
representatives and their attorney, so that there is no recovery by either party on that issue.”
Page 3
The opinion further stated, “[t]he court makes no finding as to damages incurred by the
estate due to the alleged malfeasance of the Executor and the resulting waste and
deterioration cost thereby, since it is the subject of a separate action pending in the Circuit
Court of Madison County, Tennessee.” The probate court entered an order of final judgment
on February 27, 1997.
II. Circuit Court Proceedings
In April of 1995, Sam Dawkins and Elizabeth Dawkins commenced a pro se action
against Diamond in Madison County Circuit Court for damages resulting from his failure to
perform his duties as attorney and executor for Buck’s estate. Subsequently, on October
18, 1995, Joy Roy and Sam Dawkins commenced a legal malpractice action against
Diamond for “malfeasance” in his capacity as attorney and executor for Buck’s estate.
Diamond sought dismissal of the second case because the previous pro se suit against him
was still pending.
On August 14, 1997, an order was entered non-suiting the first circuit court action.
On that same date, the court denied Diamond’s motion to dismiss the second action. The
second action went to trial and a jury awarded the plaintiffs $68,800 in compensatory
damages and $25,000 in punitive damages. Diamond filed a motion for a new trial
claiming, inter alia, that the court erred in failing to dismiss all claims for damages for “
additional fees and expense charged to the estate of Jennie Ida Buck” because such claims
were previously litigated before the probate court. Alternatively, Diamond asked that the
Circuit Court reduce the award to $32,800. 3 Diamond’s motions were denied and he
appealed to this court presenting the following issues for determination:
1) Whether the trial court erred by refusing to dismiss the
plaintiffs’ damage claim for additional fees and expense
charged to the estate of Jennie Ida Black.
2) Whether the trial court erred in denying Diamond’s motion to
Page 4
dismiss for prior suit pending.
3) Whether the trial court erred in permitting plaintiffs’ counsel to
introduce into evidence the findings of fact and judgment from a
professional responsibility disciplinary proceeding.
4) Whether the punitive damages award was supported by the
evidence.
Law and Analysis
I. Damage claim for administration fees and attorney fees
The jury awarded the plaintiffs $68,800 in compensatory damages, which were
broken down into two components. Thirty-two thousand dollars ($32,000) represented
damages for the “deterioration and waste of the assets of Jennie Ida Buck” caused by the
Defendant, and $36,000 was awarded for damages “resulting from additional fees and
expense charged to the Estate of Jennie Ida Buck.” It is the latter amount of $36,000
which the Appellant challenges. Appellant claims that the trial court erred in allowing the jury
to consider the plaintiffs’ claim for additional fees and expenses. Appellant argues that this
issue was fully litigated in the probate court and was, therefore, barred by either res judicata
or collateral estoppel.
The Tennessee Supreme Court described res judicata and its related counterpart,
collateral estoppel, as follows:
The doctrine of res judicata 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 litigated in
the former suit. Collateral estoppel operates to bar a second
suit between the same parties and their privies on a different
cause of action only as to issues which were actually litigated
and determined in the former suit.
Goeke v. Woods, 777 S.W.2d 347, 349 (Tenn.1989) (quoting Massengill v. Scott, 738
S.W.2d 629, 631 (Tenn.1987)).
Res judicata and collateral estoppel apply only if the prior judgment concludes the
rights of the parties on the merits. A.L. Kornman Co. v. Metropolitan Gov't of Nashville &
Page 5
Davidson County, 391 S.W.2d 633, 636 (Tenn. 1965). A party defending on the basis of
res judicata or collateral estoppel must demonstrate that: 1) the judgment in the prior case
was final and concluded the rights of the party against whom the defense is asserted, and 2)
both cases involve the same parties, the same cause of action, or identical issues.
Richardson v. Tennessee Bd. of Dentistry, 913 S.W.2d 446 (Tenn. 1995) (citing Scales v.
Scales, 564 S.W.2d 667, 670 (Tenn. App. 1977). In this regard, the only issue raised
before this court is whether the decision of the probate court regarding “fees and expense”
was identical to the claim in the circuit court for “additional fees and expense.” Although the
use of the words “fees and expense” may imply that the answer is yes, this question does
not turn on the choice of language.
The Tennessee Supreme Court, in King v. Brooks, stated that "[u]nder the doctrine of
collateral estoppel, when an issue has been actually and necessarily determined in a former
action between the parties, that determination is conclusive upon them in subsequent
litigation." 562 S.W.2d 422, 424 (Tenn. 1978) (citing Shelley v. Gipson, 400 S.W.2d 709(Tenn. 1966); See also A.L. Kornman Co. v. Metropolitan Government of Nashville and
Davidson County, 391 S.W.2d 633 (Tenn. 1965). In the present case, the probate court
entertained two issues that are relevant to this appeal. First, Diamond had filed a petition
seeking fees and expenses he incurred as the executor and attorney for the estate of Jennie
Ida Buck. Also, the new co-administrators filed a motion seeking reimbursement of
$21,522 in fees and expenses from Diamond, as well as additional fees that would be
incurred as a result of Diamond’s alleged malfeasance. On the issue of fees and expenses
due both parties, the probate court stated:
1. The Petition for Fees and Expenses filed by W.T. Diamond,
Jr., and the Motion for Reimbursement of Fees and Expenses
filed by the current Co-Administrators are each hereby granted
in part and denied in part. The Court holds, in accordance with
its Memorandum Opinion, that the amount of fees and
expenses to which Mr. Diamond is entitled and the amount of
fees and expenses as to which the current Co-Administrators
Page 6
are entitled to reimbursement are the same and that said
sums should be set off, one against the other, with neither party
entitled to additional recovery on their respective petition and/or
motion.
2.The Exceptions to Accounting filed by the current
Co-Administrators are disposed of as follows:(a)to the extent
that said Exceptions to Accounting constitute claims for
damages that are the subject of a separate action pending in
the Circuit Court of Madison County, Tennessee, this Court
declines herein to make a ruling on the same , finding that the
Circuit Court is the appropriate forum for those claims to be
determined;(b)in all other respects, the Exceptions to
Accounting are denied and
dismissed.
(emphasis added).
The appellees characterize the $36,000 as damages that resulted from Diamond’s
malfeasance in his role as executor and attorney. Through this characterization, appellees
argue that the $36,000 judgment is not barred because the probate court specifically made
no finding as to damages. This is undoubtedly a true statement of what the probate court
said. It is also true that the $36,000 was meant to cover damages caused by Diamond’s
malfeasance. However, those “damages” come in the form of fees and expenses incurred
by the co-administrators and their attorney. In fact, the pertinent jury interrogatory uses the
words “fees and expenses.” There can be little doubt that the $36,000 was awarded to
compensate the plaintiffs for fees and expenses. The question is whether the probate
decision foreclosed the ability of the plaintiffs to recover any fees and expenses, or rather,
did the probate decision only foreclose their ability to recover a portion of their fees and
expenses. If the answer is the latter, then no preclusion doctrine will apply.
The difficulty of this issue lies in the less than clear language used by the probate
court. As such, we are left to interpret the Memorandum Opinion and Final Order of the
probate court in order to decide this issue. We regard the probate court decision as
fashioning a remedy which basically maintained the status quo. In other words, we read the
Page 7
decision as recognizing that certain things have to be done in the execution of an estate,
and the estate should have to pay for those services. In performing their duties, the personal
representatives and the attorney incur expenses and earn fees from the estate. Had
Diamond done his duty, he would have been entitled to reasonable fees and expenses.
Since he did not perform the duties, the new co-administrators and their attorney had to
perform the duties required in executing the estate. Since those duties would have to have
been performed anyway, the estate is no worse off for having to pay. This can be referred to
as the normal expenses involved in closing an estate.
At this point, we wish to emphasize certain facts of this case. Diamond was never
paid any money by the estate of Jennie Ida Buck. 4 The co-administrators asked the probate
court to make Diamond pay them for their services. If this had been allowed, Diamond
would have been forced to pay the normal expenses incurred in closing the estate of Jennie
Ida Buck, while the estate would never have paid anything to anyone. Therefore, as we
perceive the record, the only issue dealt with by the probate court was the question of who
pays the normal expenses involved in closing the estate. The answer to that question has to
be that the estate pays.
Nancy Choate, the attorney for the estate after Diamond, alleged that she incurred
fees and expenses of $7,522. The co-administrators, Sam Dawkins and Joy Roy, alleged
fees and expenses totaling $14,000. We regard this total amount of $21,522 as the amount
which the probate court set off against the fees and expenses to which Diamond would
have been entitled had he performed his duties. 5 We point out that no “damages” are
involved because, presumably, the $21,522 in fees and expenses would have been incurred
anyway.6
It appears that the probate court intended its decision to go no further than this point.
Page 8
After having disposed of the issues relating to the fees and expenses incurred in the normal
course of executing the estate, the probate court left the issue of “damages” to the circuit
court 7 (“to the extent that said exceptions to accounting constitute claims for damages . . .
this court declines herein to make a ruling on the same, finding that the Circuit Court is the
appropriate forum for those claims to be determined”). As the circuit court correctly
determined, the only issue for the jury was whether the plaintiffs sustained any damages in
excess of the $14,000 for Sam Dawkins and Joy Roy, and $7,522 for Ms. Choate.
Having determined that the issue of damages was correctly submitted to the jury, we
turn to the question of whether the verdict was supported by the evidence. Forrester v.
Stockstill, 869 S.W.2d 328, 329 (Tenn. 1994)(when reviewing a judgment based on a jury
verdict, appellate courts are limited to determining whether there is material evidence to
support the verdict); See also Electric Power Bd. v. St. Joseph Valley Structural Steel Corp.,
691 S.W.2d 522, 526 (Tenn.1985); Crabtree Masonry Co. v. C & R Constr., Inc., 575
S.W.2d 4, 5 (Tenn.1978). Ms. Choate testified that she was paid over $20,000 in fees. Of
this amount, she testified that approximately $13,500 derived from issues relating to
Diamond’s malfeasance. According to Ms. Choate, had Diamond performed his duties as
executor and attorney, the estate would not have incurred the additional amount of expenses
and fees. Ms. Choate also testified that the co-administrators were paid some $20,000
more than they would have been paid absent Diamond’s actions in handling the estate. The
testimony of Sam Dawkins indicated that he and Joy Roy incurred approximately $36,000 in
fees and expenses over and above the $14,000 they requested in the probate court. Taking
the strongest legitimate view of the evidence in favor of the verdict, assuming the truth of all
that tends to support it, allowing all reasonable inferences to sustain the verdict, and
discarding all to the contrary, Crabtree, 575 S.W.2d at 5, it is clear to us that the jury verdict
in this case was supported by material evidence. We find no error in the jury verdict as it
relates to the $36,000.
Page 9
II. Prior suit pending
The appellant also argues that the Circuit Court erred in denying his motion to
dismiss on the basis of prior suit pending. This argument is based on the fact that the pro
se action was still pending when the second action was filed. In essence, both claims were
pending at the same time. Appellees respond by pointing out that the original action was
non-suited, thereby curing any technical problems. 8
Initially, Appellant’s argument appears persuasive. The Tennessee Supreme Court
has addressed the issue of prior suit pending and seems to fashion the doctrine in such a
way so as to encompass the present case. See Cockburn v. Howard Johnson, Inc., 385
S.W.2d 101 (Tenn. 1964) (stating that “[i]n Tennessee, a suit is subject to a plea in
abatement 9 where there is pending another suit on the same subject.”). The court went on
to enumerate the factors that must exist in order for a plea in abatement to lie:
The essentials of such a plea are that the two suits must involve
the identical subject matter and be between the same parties
and the former suit must be pending in a court in this state
having jurisdiction of the subject matter and the parties. A plea,
whether it be in abatement or in bar, must contain these
elements.
Id. at 102 (citing Higgins & Crownover, Tennessee Procedure in Law Cases, Sec. 518(6)).
In the present case, the subject matter of both circuit court cases was identical. Both
cases were, in effect, malpractice cases against Diamond arising out of his performance as
administrator and attorney for the estate of Jennie Ida Buck. Also, both actions were in the
same court, with that court having jurisdiction over the parties and the subject matter. One
seeming problem is the fact that the plaintiffs in the two cases were different. In the first
case, Sam and Elizabeth Dawkins were the plaintiffs, while Sam Dawkins and Joy Roy
were the plaintiffs in the second case. Even though the plaintiffs are not identical in both
cases, we consider them sufficiently similar so as to make no practical difference. See
Page 10
Cockburn, 385 S.W.2d at 102 (“The defendants in these two cases are not identical but are
in effect the same”).
If we were to stop here, it might appear that Appellant’s argument has validity.
However, we are persuaded that taking the non-suit in the first circuit court action avoided
the bar imposed by the doctrine of prior suit pending.
At common law, a plaintiff could not avoid the effect of a plea in abatement by
discontinuing the prior action. Walker v. Vandiver, 181 S.W. 310 (Tenn. 1915) (citing 1
Corpus Juris, p. 94, § 132)(“The rule at common law was to sustain the plea if it was true at
the time it was filed”). However, the holding of early Tennessee cases is that
discontinuance of the prior suit is sufficient to avoid any problems, regardless of whether the
discontinuance came before or after the filing of the plea. Id.; See also Harris v. Penn. Nat.
Hardware Mutual, 7 Tenn. App. 330 (Tenn. App. 1928); Stoll v. United States Fid. & Guar.
co., 10 Tenn. App. 539 (Tenn. App. 1929). The Tennessee Supreme Court, in rejecting the
common law rule, stated:
it is manifest from the authorities above referred to that it has
never been recognized by this court as a rule of law binding
upon the courts of this state, and it is a rule of law opposed to
the policy of our legislation in respect of remedial actions, and
opposed to the general spirit of our legislation which seeks to
have all controversies determined upon their merits rather than
upon the technicalities of the formal procedure of the common
law.
Walker, 181 S.W. at 311.
In the present case, the first circuit court action was discontinued by the order
entered on August 15, 1997. The dismissal of the first action prior to the trial of the second
action was sufficient to avoid any technical problems relating to the doctrine of prior suit
pending. As such, we find that the trial court did not err in denying Appellant’s motion to
dismiss.
Page 11
III. Disciplinary Proceeding as Evidence of Malpractice
The Appellant asserts that the trial court erred in allowing the plaintiffs’ attorney to
introduce into evidence the findings of fact and judgment from a disciplinary proceeding.
This error, according to the appellant, unfairly prejudiced him because it was “tantamount to
a directed verdict in favor of the appellees . . . ”
The first question before this court is whether the findings of the disciplinary
proceeding were relevant in Appellant’s malpractice trial. All relevant evidence is generally
admissible. Tenn.R. Evid. 402. Rule 401 of the Tennessee Rules of Evidence provides the
standard for determining whether evidence is relevant. Relevant evidence is “evidence
having any tendency to make the existence of any fact that is of consequence . . . more
probable or less probable than it would be without the evidence.” Tenn.R.Evid.
401(emphasis added). As the Advisory comments make clear, this is not a high standard.
See Tenn.R.Evid. 401, Advisory Commission Comments (“The theoretical test for
admissibility is a lenient one, as it should be, . . . ”).
There is no doubt that the Code of Professional Responsibility (“the Code”) does not
set the standard for determining the civil liability of an attorney. See Lazy Seven Coal
Sales, Inc. v. Stone & Hinds, P.C., 813 S.W.2d 400 (Tenn. 1991). However, that fact does
not preclude the possibility that violation of the Code is relevant evidence in a subsequent
civil case. Id. at 405 (“the standards stated in the Code are not irrelevant in determining the
standard of care in certain actions for malpractice”). The Tennessee Supreme Court
recognized that the Code may provide guidance in defining a lawyer’s obligation to a client.
Moreover, in some instances, conduct which violates the Code may also be a breach of the
attorney’s standard of care. While violation of the Code, standing alone, will not suffice to
prove civil liability, it seems clear that such a violation may be relevant evidence of a breach
Page 12
of the standard of care.
Appellant’s primary argument is that the admission of the evidence was unfairly
prejudicial and should, therefore, have been excluded. See Tenn.R.Evid. 403.
Undoubtedly, the admission of the judgment and findings of fact from the disciplinary
proceeding was detrimental to Appellant’s defense. See Woodson v. Porter Brown
Limestone Co., Inc., 916 S.W.2d 896, 907 (Tenn. 1996) (noting that extremely persuasive
evidence tends to be prejudicial). However, Rule 403, by its language, places a heavy
burden on the party seeking to exclude the evidence. Id.; See also Tenn.R.Evid. 403. The
rule only excludes evidence if the probative value is substantially outweighed by the danger
of unfair prejudice.
The admissibility of evidence is a matter which rests within the sound discretion of
the trial court. State v. Ballard, 855 S.W.2d 557, 562 (Tenn. 1993); State v. Williams, 657
S.W.2d 405, 411-12 (Tenn. 1983); Murray v. State, 377 S.W.2d 918, 920 (Tenn. 1964);
Wright v. Quillen, 909 S.W.2d 804, 809 (Tenn. App. 1995); State v. Rhoden, 739 S.W.2d 6,
13 (Tenn. Crim. App. 1987). This Court will not interfere with the trial court's exercise of its
discretion absent clear abuse. Williams, 657 S.W.2d at 411-12; Murray v. State, 377
S.W.2d at 920; Rhoden, 739 S.W.2d at 13. The evidence was clearly relevant to issues in
dispute in the case. Also, unlike the Lazy Seven case, there was expert testimony in the
present case that Diamond violated the applicable standard of care. In Lazy Seven, the
expert testimony only related to a violation of the Code, not the standard of care. Lazy
Seven, 813 S.W.2d at 407. Therefore, the outcome of that case does not bear on the case
at bar. We find no basis for concluding that the trial judge abused his discretion in admitting
the evidence.
IV. Punitive Damages
Page 13
Punitive damages are intended to punish the defendant for wrongful conduct and to
deter others from similar conduct in the future. Clanton v. Cain-Sloan Co., 677 S.W.2d 441,
445 (Tenn. 1984) (citing Liberty Mutual Ins. Co. v. Stevenson, 368 S.W.2d 760 (Tenn.
1963)). These damages refer to the nature of the defendant's conduct rather than to the
injury plaintiff suffered, Breault v. Friedli, 610 S.W.2d 134 (Tenn. App. 1980), although
actual damages must be found as a predicate for the recovery of punitive damages. Allen
v. Melton, 99 S.W.2d 219, 225 (Tenn. 1936). In awarding punitive damages, the law blends
the interests of society and the aggrieved individual and awards such damages as will
operate to deter others from like conduct. Pridemark Custom Plating, Inc. v. Upjohn Co.,
Inc., 702 S.W.2d 566, 573 (Tenn. App. 1985) (citing Knoxville Traction Co. v. Lane, 53 S.W.
557 (Tenn. 1899)).
In Hodges v. S.C. Toof & Co., 833 S.W.2d 896 (Tenn.1992), our supreme court
determined that punitive damages are available only where a defendant has acted
intentionally, fraudulently, maliciously or recklessly. The court explained:
A person acts intentionally when it is the person's conscious objective
or desire to engage in the conduct or cause the result. A person acts
fraudulently when (1) the person intentionally misrepresents an existing,
material fact or produces a false impression, in order to mislead
another or to obtain an undue advantage, and (2) another is injured
because of reasonable reliance upon that representation. A person
acts maliciously when the person is motivated by ill will, hatred, or
personal spite. A person acts recklessly when the person is aware of,
but consciously disregards, a substantial and unjustifiable risk of such
a nature that its disregard constitutes a gross deviation from the
standard of care that an ordinary person would exercise under all the
circumstances.
Hodges, 833 S.W.2d. at 901.
In Metcalfe v. Waters, the Tennessee Supreme Court recognized that punitive
damages may be awarded in legal malpractice cases provided the standard established in
Hodges is proven by clear and convincing evidence. 970 S.W.2d 448, 451-452 (Tenn.
1998). In reinstating the jury verdict awarding punitive damages, the Metcalfe court
Page 14
concluded that the attorney’s “repeated transgressions and callous disregard for the rights
of his clients” constituted “overwhelming evidence from which the jury could find, at a
minimum, reckless conduct, that is, conduct constituting a gross deviation from the
applicable standard of care.” Id. at 452.
In the present case, there was abundant evidence presented regarding Diamond’s
failure to perform his duties as both executor and attorney. Diamond removed money from
the estate without court approval. According to the expert testimony, Diamond was
unjustifiably slow, if not inactive, in handling the affairs of the estate. The evidence
presented could reasonably support a finding that his conduct constituted a “gross deviation
from the applicable standard of care.” See Metcalfe, 970 S.W.2d at 452. As such, we find
no error in the award of punitive damages.
Conclusion
The judgment entered by the trial court is hereby affirmed in all respects. Costs of
this appeal are taxed to the Appellant, for which execution may issue if necessary.
HIGHERS, J.
Page 15
CONCUR:
CRAWFORD, P.J., W.S.
FARMER, J.
Page 16