Alan C. Cartwright v. Alice Cartwright Garner

09/19/2018
IN THE COURT OF APPEALS OF TENNESSEE
AT JACKSON
June 27, 2017 Session
ALAN C. CARTWRIGHT v. ALICE CARTWRIGHT GARNER ET AL.
Appeal from the Chancery Court for Shelby County
No. CH-14-0401-3 James R. Newsom III, Chancellor
___________________________________
No. W2016-01424-COA-R3-CV
___________________________________
A trust beneficiary sued co-trustees for breach of their fiduciary duties and for procuring
the creation of two trusts through undue influence. The trustees moved to dismiss for
failure to state a claim upon which relief can be granted. Following the hearing on the
motion to dismiss, the trust beneficiary moved to amend his complaint. Prior to ruling on
the motion to amend, the trial court granted the motion to dismiss based on the expiration
of the statute of limitations and the grounds of res judicata and collateral estoppel.
Subsequently, the trial court denied the motion to amend. On appeal, the trust
beneficiary asserts the trial court abused its discretion by not granting his post-hearing
motion to amend. The trust beneficiary also argues that the court erred in dismissing his
complaint. We conclude the court did not err in denying his motion to amend. We
further conclude that the trial court properly dismissed the complaint on the ground of res
judicata.
Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Chancery Court Affirmed
and Case Remanded
W. NEAL MCBRAYER, J., delivered the opinion of the court, in which J. STEVEN
STAFFORD, P.J., W.S., and BRANDON O. GIBSON, J., joined.
Jerry E. Mitchell and Laura L. Deakins, Memphis, Tennessee, for the appellant, Alan C.
Cartwright.
David Wade and Andrew Gardella, Memphis, Tennessee, for the appellees, Alice
Cartwright Garner and Alan L. Garner.
OPINION
I.
A.
On March 14, 2014, in the Chancery Court for Shelby County, Tennessee, Alan C.
Cartwright filed a complaint against his sister, Alice Cartwright Garner, and his brother-
in-law, Alan L. Garner. The complaint accused the Garners of “multiple and serious
breaches of fiduciary duty” in their capacity as trustees of several trusts of which
Mr. Cartwright was a beneficiary. This was not the first time, nor would it be the last,
that Mr. Cartwright would sue his sister and brother-in-law. See Cartwright v. Garner,
751 F.3d 752 (6th Cir. 2014); Cartwright v. Garner, No. W2016-01423-COA-R3-CV,
2018 WL 3814632 (Tenn. Ct. App. Aug. 10, 2018); Cartwright v. Jackson Capital
Partners, Ltd. P’ship, 478 S.W.3d 596 (Tenn. Ct. App. 2015); Cartwright v. Jackson
Capital, No. W2011-00570-COA-R3-CV, 2012 WL 1997803 (Tenn. Ct. App. June 5,
2012).
In Cartwright v. Jackson Capital (Cartwright I), we recounted the facts that
provide context to the present appeal. 2012 WL 1997803, at *1. Mr. Cartwright and
Ms. Garner are the adopted children of James and Betty Cartwright. Id. Prior to his
death in 1994, James Cartwright “placed the wealth that he and his wife accumulated into
numerous trusts for the benefit of his family members and others.” Id. One such trust
was the Alan Cook Cartwright Grantor Trust, also known as the ACC Grantor Trust. Id.
at *3.
The ACC Grantor Trust “‘provide[d] for [Alan Cartwright’s] personal financial
security by preserving his property against his own spend thrift actions,’ as
[Alan Cartwright] was ‘not experienced in financial matters.’” Id. The trust agreement
limited Alan Cartwright “to drawing 75% of the net income of the ACC Grantor Trust for
his use or benefit.” Id. The “[a]greement could only be amended or terminated upon
written agreement of the trustee and [Alan Cartwright].” Id.
Following James Cartwright’s death, Betty Cartwright succeeded him as trustee of
the ACC Grantor Trust. In 1995 and 1996, Mrs. Cartwright and Alan Cartwright
executed amendments to the ACC Grantor Trust that placed monetary caps on the net
annual income of the trust distributable to Mr. Cartwright such that Mr. Cartwright would
receive the lesser of the cap amount or 100% of the net annual income from the trust. Id.
The amendments also added to the corpus of the ACC Grantor Trust future distributions
from other trusts in which Mr. Cartwright was beneficiary. Id.
In Cartwright v. Jackson Capital Partners, LP (Cartwright II), we discussed the
creation of two additional trusts, the Alan Cook Cartwright 1996–1 Irrevocable Trust and
2
the Alan Cook Cartwright 1996–2 Irrevocable Trust, in 1996. 478 S.W.3d at 608.
According to Alan Cartwright, these trusts were created to benefit his sister and brother-
in-law and their children and were made possible by another provision of one of the
amendments to the ACC Grantor Trust. Id. The provision provided that Mr. Cartwright
could request that the trustee “make additional distributions of principal from the [ACC
Grantor Trust] to enable [Mr. Cartwright] to make gifts to the issue of his sister, ALICE
CARTWRIGHT GARNER, in such amounts as he desires.” Id.
On January 1, 2000, Mr. Cartwright’s sister, Ms. Garner, became a co-trustee of
the ACC Grantor Trust with her adoptive mother. Cartwright I, 2012 WL 1997803, at
*4. According to Mr. Cartwright, Ms. Garner, unlike himself, “had been working closely
with [their] father in the management of the Cartwright family business and had obtained
intimate familiarity with and the [sic] working knowledge of all of the trusts.” A few
years later, the litigation began.
B.
In 2004, following a remarriage, Betty Cartwright filed a complaint in the
Chancery Court for Shelby County, Tennessee, against her children, son-in-law, eighteen
trusts, and two business entities. Id. at *1. The complaint alleged, among other things,
that Ms. Garner “had breached fiduciary duties, engaged in self-dealing, and created
impermissible conflicts of interest” and sought her removal as trustee of trusts of which
Mrs. Cartwright was a beneficiary. Id. The complaint also alleged that Ms. Garner “and
her husband had breached their fiduciary duties as general partners of the family limited
partnership, and it sought to have the family limited partnership dissolved.” Id.
Mr. Cartwright and the trusts were named as “Declaratory Defendants.” Id.
Mr. Cartwright answered his mother’s complaint and asserted a cross-claim
against his sister and brother-in-law. His claims against his sister and brother-in-law
mimicked those of his mother.
“To the extent that the allegations in the Complaint are found to be true,
they are equally applicable to Alan Cartwright, and therefore, they are
adopted and incorporated herein by reference as completely and fully as if
restated herein verbatim[.]” [Mr. Cartwright] alleged that he had also been
deprived of assets as a trust beneficiary, and he sought removal of
[Ms. Garner] as trustee, in addition to access to the trust corpus to the
extent that the court deemed appropriate.
Id.
After Mrs. Cartwright’s death in 2005, the court dismissed her claims. But Alan
Cartwright’s cross-claim remained. Id.
3
Presaging his approach to litigation, in 2007, Mr. Cartwright filed a separate
complaint against essentially the same defendants named in his cross-complaint, but this
time in the Circuit Court for Shelby County. The new complaint alleged “a conspiracy to
convert [Mr. Cartwright’s] trust funds to the defendants’ own benefit, and a conspiracy to
cause a breach of the fiduciary duties owed to him in order to deprive him of his
property.” Id.
Unsurprisingly, the defendants in the circuit court action moved to dismiss or, in
the alternative, to transfer the case to chancery court. Id. at *2. Mr. Cartwright “opposed
the motion to dismiss or transfer by emphasizing the differences in the subject matter of
the two lawsuits.” Id. at *2. He explained that “the chancery court suit sought equitable
relief due to trust mismanagement,” while the circuit court “sought damages [in tort] due
to an alleged conspiracy to convert assets from a number of different trust properties.”
Id. Unconvinced, the circuit court transferred the case to chancery court. Id.
The chancery court dismissed the transferred case, but granted Mr. Cartwright
leave to amend his cross-claim to include additional allegations. Id. Mr. Cartwright then
amended his cross-claim “to allege conspiracy to commit the tort of conversion of his
property, and to request $50 million in damages.” Id.
The Garners and the other defendants moved for partial summary judgment on
Mr. Cartwright’s breach of fiduciary duty claim. Id. As grounds, Ms. Garner and her
husband, who by this time was a co-trustee, asserted that the undisputed facts showed that
they fully complied with the terms of the trust documents and that Mr. Cartwright
received all the distributions to which he was entitled. Id. at *3. Mr. Cartwright opposed
the motion by arguing, among others things, “that the trust documents were void . . .
because he executed the documents due to undue influence.” Id. at *15.
The chancery court granted partial summary judgment “on the issues surrounding
the terms of the family limited partnership documents and the trust documents; whether
[Mr. Cartwright] received the distributions to be made to him under the trust documents;
and whether the defendants breached their fiduciary duties in conducting their
responsibilities as trustees.” Id. at *8. On the issue of the amendments to the ACC
Grantor Trust, the court declined to give Mr. Cartwright’s allegations of undue influence
“weight” given the passage of time and the death of his parents. Id. Mr. Cartwright then
voluntarily dismissed his remaining claims and sought an appeal.1 Id.
1
In addition to seeking an appeal, Mr. Cartwright also filed suit in the United States District
Court for Western District of Tennessee against the Garners and others. Cartwright v. Garner, No. 2:12-
CV-01025-JPM-dkv, 2012 WL 12871904, at *1 (W.D. Tenn. Sept. 28, 2012), aff’d, 751 F.3d 752 (6th
Cir. 2014). In the federal case, Mr. Cartwright claimed that the Garners and other defendants had
“manipulated and mismanaged assets” of several trusts, including the ACC Grantor Trust, “and
wrongfully diverted some of those trust assets” to FSTW, LLC, a limited liability company allegedly
4
In Cartwright I, this Court “affirm[ed] the trial court’s decision . . . on the issues
surrounding the terms of the trust documents, and whether Alan [Cartwright] received the
distributions to be made to him under the trust documents as written.” Id. at *11. But
because the caps under the amendments created the potential for “more money to remain
in the corpus of the ACC Grantor Trust for potential future distribution to [Ms. Garner] as
a contingent beneficiary,” we could not exclude the possibility that Ms. Garner personally
benefitted from the amendments. Id. at *13. Given that receipt of a benefit would raise a
presumption that some improper advantage was taken, we concluded that “a genuine
issue of fact exist[ed] regarding the ultimate issue of whether undue influence was used
to accomplish” the execution of the two amendments to the ACC Grantor Trust. Id. at
*13-14. Thus, we reversed on the undue influence question and remanded for further
proceedings. Id. at *15.
Following the remand and after additional discovery, the Garners and the other
defendants again moved for summary judgment. Cartwright II, 478 S.W.3d at 610. The
defendants relied, in part, on a report prepared by N. Gordon Thompson, a certified
public accountant, certified financial planner, and certified valuation analysist. Id. at
610-11. The Thompson report showed, among other things, that Mr. Cartwright received
“$1,336,483 more in distributions between 1995 and 2011 than he would have received
without the Amendments [to the ACC Grantor Trust].” Id. So the defendants argued that
they “affirmatively negated essential elements of Alan [Cartwright’s] claim by showing
that Alice [Garner] did not receive a benefit from the execution of the Amendments, and
Alan [Cartwright] suffered no damages.” Id. at 611.
The remand court granted summary judgment to the defendants. Id. at 612. The
court determined that there was no genuine issue of material fact and that Mr. Cartwright
had not overcome the Thompson report’s analysis of the impact of the amendments to the
ACC Grantor Trust. Id. at 612-13. The court “concluded that the defendants
successfully negated essential elements of [Mr. Cartwright’s] claim by showing, through
the Thompson report, that [Mr. Cartwright] ‘received over a million dollars more than he
would have received absent the signing of the amendments.’” Id. at 613.
It was on remand that the consequences of Mr. Cartwright’s voluntary dismissal of
his claims not covered by the court’s original grant of summary judgment, the summary
judgment reviewed in Cartwright I, became clear. It was also at this point that
Mr. Cartwright perhaps began to regret his decision. Mr. Cartwright “sought to discover
facts on remand regarding the creation and funding of two additional trusts—the Alan
Cook Cartwright 1996–1 Irrevocable Trust and the Alan Cook Cartwright 1996–2
Irrevocable Trust.” Id. at 608. Although discovery regarding the trusts was permitted,
because of the limited scope of the remand, the court held that Mr. Cartwright “could not
owned by the Garners. Id. & n.2. The district court dismissed the case for lack of subject matter
jurisdiction, which was affirmed on appeal. Cartwright v. Garner, 751 F.3d at 763.
5
secure any relief on remand related to the other trusts.” Id. at 609. For the same reason,
the court further held that “there [was] no need for inquiry into matters relating to the
current value of assets held in trust.” Id. at 610.
Mr. Cartwright moved “to ‘amend and supplement’ his original pleading, which
was filed in 2004, in order to add ‘supplemental causes of action’ alleging, among other
things, that the defendants used undue influence to obtain his signatures on the
documents creating the 1996–1 and 1996–2 trusts.” Id. But the remand court denied the
motion, “finding the proposed amendment untimely, prejudicial, and futile in light of the
narrow issues on remand, ‘namely, whether undue influence accompanied the signing of
the Amendments to the ACC Grantor Trust.’” Id. at 611.
Mr. Cartwright appealed the remand court’s grant of summary judgment, which
we affirmed in Cartwright II. Id. at 628. But he also filed two additional cases in
Chancery Court for Shelby County against the Garners and other defendants. We
considered one of those two cases in Cartwright v. Garner (Cartwright III), 2018 WL
3814632. In Cartwright III, Mr. Cartwright asserted what he characterized as tort claims
against the Garners, claims he had voluntarily dismissed to pursue his appeal in
Cartwright I. See id. at *1.
C.
The other case filed by Mr. Cartwright is the subject of this appeal. Like in
Cartwright III, Mr. Cartwright again asserts claims previously raised, but rather than tort
claims, the claims arise from alleged breaches of fiduciary duty by the Garners. The
complaint states that Mr. Cartwright had intended such claims to have been tried in
connection with his cross-claim. But because of the limited scope of the remand
following Cartwright I and the denial of his motion to amend, the complaint purportedly
serves “to protect [Mr. Cartwright’s] rights in the event any part of his appeal is
unsuccessful.”
The Garners moved to dismiss the complaint based on the statute of limitations.
Alternatively, they argued that dismissal was appropriate based on res judicata, collateral
estoppel, equitable estoppel, and laches. They also sought an award of attorney’s fees,
costs, and expenses under Tennessee Code Annotated § 20-12-119, which permits such
an award in the event of a dismissal for failure to state a claim upon which relief can be
granted. See Tenn. Code Ann. § 20-12-119(c) (Supp. 2017).
Mr. Cartwright responded with a series of amendments to his complaint. He first
filed a motion to amend proposing to add two counts to the complaint. Both counts
related to the Thompson report, which was the expert report relied on by the Garners
following the remand in Cartwright I. The court set the motion to amend to be heard on
6
October 30, 2015,2 but the court continued the hearing to November 13, 2015, “due to
the Tennessee Supreme Court’s denial of [Mr. Cartwright’s] application for permission to
appeal [from Cartwright II].”
One day before the rescheduled hearing, Mr. Cartwright filed and served an
amended and substituted revised motion to amend complaint.3 In the cover letter hand
delivered to the court, Mr. Cartwright’s counsel “offer[ed] apologies . . . for making
some changes to the proposed Amended Complaint submitted earlier, and if a
continuance is appropriate, [he] would support that.” Mr. Cartwright’s counsel later
explained that the amended and substituted revised motion to amend complaint was
intended to replace the previous motion to amend complaint. The court took the matter
under advisement.
The next month, Mr. Cartwright withdrew the amended and substituted revised
motion to amend complaint “pursuant to the direct instructions from Alan C. Cartwright
to counsel to withdraw same.” Consequently, the court set the hearing date on the
Garners’ motion to dismiss for January 8, 2016.
The day before the hearing on the motion to dismiss, Mr. Cartwright filed an
amendment to his complaint. “Plaintiff’s Amendment to Complaint” was less an
amendment and more a defense of the timing of Mr. Cartwright’s complaint. The
amendment explained that Mr. Cartwright’s receipt of the Thompson report in the
original litigation triggered the running of a new limitation period under the statute of
limitations. But his claims were not just limited to the Thompson report, Mr. Cartwright
also asserted that his “claims include the years 2012 and 2013, which were not a part of
the Thompson Report.” And he concluded the amendment with the following sentence:
“This Amendment is brought to include the claim for 2014 also.”
The amendment also included a specific claim that the “gifts” used to fund the
Alan Cook Cartwright 1996–1 Irrevocable Trust and the Alan Cook Cartwright 1996–2
Irrevocable Trust were the product of undue influence. Presumably with reference to
Cartwright I and Cartwright II, Mr. Cartwright complained that “[t]he issues of whether
the 1996-1 and 1996-2 trust gifts to [the Garners] or the ‘cap’ and ‘pour over’ provisions
2
The parties agree that a series of transitions in chancellors caused a delay in this case.
3
Amending or seeking to amend his complaint just prior to a hearing seems to be a commonly
employed strategy of Mr. Cartwright. See, e.g., Cartwright III, 2018 WL 3814632, at *1 (noting that
Mr. Cartwright’s amendment to complaint was filed one day before the hearing on the defendants’ motion
to dismiss). According to the Garners, two days before the October 28, 2015, hearing on the motion to
amend complaint, Mr. Cartwright served, but did not file, an amended motion to amend complaint. In a
cover letter accompanying the motion, Mr. Cartwright explained that the late “modifications were
stimulated by the recent denial of our petition to the Supreme Court on an earlier case” and that “there
will certainly be no opposition from [Mr. Cartwright’s] counsel” if the Garners desired more time.
7
were products of undue influence that caused economic harm to Alan Cartwright have
never been decided.”
The court held a two-day hearing on the Garners’ motion to dismiss.4 On
February 16, 2016, before the court ruled on the motion to dismiss, Mr. Cartwright filed
another amended and substituted revised motion to amend complaint, which was
substantially similar to the motion that had been withdrawn by Mr. Cartwright in
November 2015.
On February 23, 2016, the court granted the Garners’ motion to dismiss on the
grounds that the complaint was time barred, res judicata, and collateral estoppel.
Mr. Cartwright filed a motion to alter or amend, seeking “to further clarify the Court’s
legal basis for its findings and conclusions.” Mr. Cartwright also sought to have the
order reflect whether the court considered the “Plaintiff’s Amendment to Complaint”
filed the day prior to hearing.
On April 26, 2016, even though the court had not yet ruled on the February 2016
motion to amend complaint, Mr. Cartwright filed another motion to amend complaint.
Attached to the motion to amend was yet another proposed amended complaint,
consisting of a copy of the amended complaint attached to the February 2016 motion with
handwritten revisions, additions, and deletions.
The court denied Mr. Cartwright’s motion to alter or amend and April 26 motion
to amend complaint and certified the order as final under Rule 54.02 of the Tennessee
Rules of Civil Procedure.5 The court found that the February 2016 motion included “a
verbatim copy of the proposed amended complaint” that Mr. Cartwright attached to the
motion to amend filed in November 2015 and later withdrew. The court also explained
that “it already considered the matters contained in the proposed amended complaint both
through the written and oral argument on Defendants’ Motion to Dismiss.” As a result,
the court concluded that the April 2016 motion to amend complaint “should be denied on
the grounds that the proposed amendment to the Complaint that Plaintiff attached to the
April 26, 2016 Motion to Amend is futile.”
4
The parties also presented arguments on the motion to dismiss filed in Cartwright III.
Cartwright III, 2018 WL 3814632, at *1 n.2. According to Mr. Cartwright, the hearing lasted nine hours.
5
The court withheld rulings on the Garners’ request for attorney’s fees under Tenn. Code Ann.
§ 20-12-119(c) and their motion for sanctions under Rule 11 of the Tennessee Rules of Civil Procedure.
8
II.
A. DENIAL OF THE MOTION TO AMEND
On appeal, Mr. Cartwright argues that the court erred in denying his motion to
amend that was filed after the hearing on the Garners’ motion to dismiss but before the
court entered an order ruling on the motion to dismiss. Under Rule 15.01 of the
Tennessee Rules of Civil Procedure, “[a] party may amend the party’s pleadings once as
a matter of course at any time before a responsive pleading is served.” Tenn. R. Civ. P.
15.01. “Otherwise a party may amend [his] pleadings only by written consent of the
adverse party or by leave of court, and leave shall be freely given when justice so
requires.” Id. The decision of “[w]hether to grant a Rule 15 Motion to Amend is within
the sound discretion of the trial court.” Conley v. Life Care Centers of Am., Inc., 236
S.W.3d 713, 723 (Tenn. Ct. App. 2007). In exercising its discretion, the court may
consider “lack of notice, bad faith by the moving party, repeated failure to cure
deficiencies by previous amendments, undue delay in the filing of the motion, undue
prejudice to the opposing party, and futility of the proposed amendment.” Id. at 723-24
(citing Hall v. Shelby Cty. Ret. Bd., 922 S.W.2d 543, 546 (Tenn. Ct. App. 1995)).
From the record, it appears that the trial court considered Mr. Cartwright’s original
complaint as amended by “Plaintiff’s Amendment to Complaint,” filed the day prior to
the hearing on the motion to dismiss, as the operative complaint. Having amended “once
as a matter of course,” Mr. Cartwright was required to either seek leave of court or obtain
the Garners’ written consent to file another amendment. He argues that the trial court
abused its discretion when it entered an order granting the motion to dismiss while his
February 2016 motion to amend complaint was pending. In Mr. Cartwright’s view, the
court should have withheld its ruling on the motion to dismiss until it had ruled on his
post-hearing motion to amend complaint.
Typically, a dismissal based on an original complaint while a motion to amend the
complaint is pending does constitute an abuse of discretion. Henderson v. Bush Bros. &
Co., 868 S.W.2d 236, 238 (Tenn. 1993). But this is not the typical case. Mr. Cartwright
had well over a year after the motion to dismiss to amend his original complaint. The
motion he offered after the hearing on the motion to dismiss proposed an amended
complaint similar to an amended complaint he proposed and then withdrew over a month
prior to the hearing. The delay alone provided ample reason to deny Mr. Cartwright’s
motion to amend.
We also question whether the motions to amend that were filed after the hearing
on the motion to dismiss were filed in good faith. In addition to seeking authority to file
an amended complaint similar to one that he had offered and withdrawn before,
Mr. Cartwright had a habit of amending or seeking amendments to his complaint on the
eve of scheduled hearings on the Garners’ motion to dismiss. So even if the amended
9
complaint was not futile, we conclude the trial court did not abuse its discretion in
denying the motion to amend.
B. GRANT OF THE MOTION TO DISMISS
Mr. Cartwright also argues that the trial court erred in dismissing his complaint as
amended on any of the stated grounds. The court concluded that the motion to dismiss
“should be granted on the basis that Plaintiff’s claim is time-barred under the applicable
statutes of limitation, and that the principles of claim preclusion, that is, res judicata, and
issue preclusion, that is, collateral estoppel, each operate to bar this action.” Because we
conclude that it is dispositive, we focus our analysis on res judicata.
As a preliminary matter, we must consider whether the trial court’s dismissal
based on res judicata should be reviewed as a grant of a motion to dismiss pursuant to
Rule 12 or as a grant of summary judgment pursuant to Rule 56. Tennessee Rule of Civil
Procedure 12.02 provides:
If, on a motion asserting the defense numbered (6) to dismiss for failure to
state a claim upon which relief can be granted, matters outside the pleading
are presented to and not excluded by the court, the motion shall be treated
as one for summary judgment and disposed of as provided in Rule 56, and
all parties shall be given reasonable opportunity to present all material
made pertinent to such a motion by Rule 56.
Tenn. R. Civ. P. 12.02. The parties both argue that the court could consider the
pleadings, orders, and opinions entered in the previous litigation without converting their
motion to dismiss to a motion for summary judgment. We disagree.
Res judicata is an affirmative defense that must be included in an answer. Tenn.
R. Civ. P. 8.03. Res judicata may be raised in the context of a motion to dismiss for
failure to state a claim upon which relief can be granted but only in specific
circumstances.
For a Tenn. R. Civ. P. 12.02(6) motion to be used as a vehicle to assert an
affirmative defense, the applicability of the defense must “clearly and
unequivocally appear[] on the face of the complaint.” In other words, the
plaintiff’s own allegations in the complaint must show that an affirmative
defense exists and that this defense legally defeats the claim for relief.
Jackson v. Smith, 387 S.W.3d 486, 491-92 (Tenn. 2012) (internal citations omitted).
Here, the complaint makes reference to the prior litigation, explaining that
Mr. Cartwright “intended for matters of breach of fiduciary duty to be included in
[Cartwright II], which is now on appeal from an adverse grant of summary judgment.”
10
Under Tennessee law, a “judgment is not final and res judicata where an appeal is
pending.” Creech v. Addington, 281 S.W.3d 363, 377 (Tenn. 2009) (quoting McBurney
v. Aldrich, 816 S.W.2d 30, 34 (Tenn. Ct. App. 1991)). Because the complaint alleged
that the prior litigation was on appeal, we conclude the reference precluded res judicata
from being raised in the context of a motion to dismiss for failure to state a claim.
When a motion to dismiss is converted to a motion for summary judgment, courts
must use care not to violate the nonmoving party’s right to both fair notice and a
reasonable opportunity to “set forth specific facts showing that there is a genuine issue
for trial.” See Tenn. R. Civ. P. 56.06. In this case, the trial court had before it the
submissions entered by the parties, which included pleadings, depositions, orders,
opinions, and other filings entered in the previous litigation. The court also held a two-
day hearing for the parties to argue extensively on the issues. Under the circumstances,
Mr. Cartwright had both fair notice and a reasonable opportunity to show that there was a
genuine issue of material fact as to the question of whether res judicata applied.
Having determined that the dismissal on res judicata grounds should be reviewed
as a grant of summary judgment, our review is de novo with no presumption of
correctness. See City of Tullahoma v. Bedford Cty., 938 S.W.2d 408, 412 (Tenn. 1997).
Because our inquiry involves purely a question of law, our task is confined to reviewing
the record to determine whether the requirements of Rule 56 of the Tennessee Rules of
Civil Procedure have been met. See Hunter v. Brown, 955 S.W.2d 49, 50-51 (Tenn.
1997). In reviewing the trial court’s decision, we must view all of the evidence in the
light most favorable to the non-moving party and resolve all factual inferences in the non-
moving party’s favor. Luther v. Compton, 5 S.W.3d 635, 639 (Tenn. 1999); Muhlheim v.
Knox Cty. Bd. of Educ., 2 S.W.3d 927, 929 (Tenn. 1999). If the undisputed facts support
only one conclusion, the court’s summary judgment will be upheld because the moving
party was entitled to judgment as a matter of law. See White v. Lawrence, 975 S.W.2d
525, 529 (Tenn. 1998).
Res judicata “bars a second suit between the same parties or their privies on the
same claim with respect to all issues which were, or could have been, litigated in the
former suit.” Jackson, 387 S.W.3d at 491 (citing Creech, 281 S.W.3d at 376; Richardson
v. Tenn. Bd. of Dentistry, 913 S.W.2d 446, 459 (Tenn. 1995)). “[I]t promotes finality in
litigation, prevents inconsistent or contradictory judgments, conserves judicial resources,
and protects litigants from the cost and vexation of multiple lawsuits.” Id. (citing In re
Estate of Boote, 198 S.W.3d 699, 718 (Tenn. Ct. App. 2005); Sweatt v. Tenn. Dep’t of
Corr., 88 S.W.3d 567, 570 (Tenn. Ct. App. 2002)). A party asserting res judicata as a
defense must establish the presence of four elements:
(1) that the underlying judgment was rendered by a court of competent
jurisdiction, (2) that the same parties or their privies were involved in both
11
suits, (3) that the same claim or cause of action was asserted in both suits,
and (4) that the underlying judgment was final and on the merits.
Id. (citing Lien v. Couch, 993 S.W.2d 53, 56 (Tenn. Ct. App. 1998)).
There is no dispute that the underlying judgment in Cartwright II was rendered by
a court of competent jurisdiction, that the same parties were involved in both suits, and
that the underlying judgment was final and on the merits. Mr. Cartwright disputes
whether the same claim or cause of action was asserted in both suits. Two suits are
deemed to be the same cause of action for purposes of res judicata “where they arise out
of the same transaction or a series of connected transactions.” Creech, 281 S.W.3d at
380-81.
From our review, the same claims or causes of action were asserted in both suits.
Mr. Cartwright previously made broad claims of breach of fiduciary duty against the
Garners, including allegations that he had been deprived of assets as a trust beneficiary
based on undue influence in the execution of certain amendments to his trust, one of
which was executed in 1996. See Cartwright I, 2012 WL 1997803, at *4-5. Here,
Mr. Cartwright’s complaint as amended asserted that the Garners “intentionally refused
to produce income or have withheld Alan C. Cartwright’s trust fund income” based on
“machinations done to his trust by the Defendants in 1996.”
Mr. Cartwright argues, however, that the validity of the Alan Cook Cartwright
1996-1 Irrevocable Trust and the Alan Cook Cartwright 1996-2 Irrevocable Trust were
not challenged in the prior action, only the validity of the amendments to the ACC
Grantor Trust. But because of the nature of res judicata, such an argument is unavailing.
The doctrine of res judicata bars a litigant from asserting in a later lawsuit all
issues “which were or could have been litigated” in the earlier lawsuit. Gerber v.
Holcomb, 219 S.W.3d 914, 917 (Tenn. Ct. App. 2006) (quoting Young v. Barrow, 130
S.W.3d 59, 64 (Tenn. Ct. App. 2003)). Thus, a litigant is precluded from filing lawsuit
after lawsuit against the same parties, or those in privity with those parties, when the
underlying facts at issue are the same but the causes of action are changed, in an effort to
find a court that will rule in the litigant’s favor.
We conclude that the claims asserted in this action not specifically asserted in
Cartwright I “could have been litigated” in the earlier lawsuit. Mr. Cartwright concedes
that he “had been aware of the existence of the [Alan Cook Cartwright] 1996-1 Trust and
the [Alan Cook Cartwright] 1996-2 Trust for some period of time.” The second
amendment to the ACC Grantor Trust, at issue in both Cartwright I and Cartwright II,
was executed on the same day as the agreements to create the Alan Cook Cartwright
1996-1 Irrevocable Trust and the Alan Cook Cartwright ACC 1996-2 Irrevocable Trust.
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In Cartwright II, we made note of that fact that Mr. Cartwright “did not argue that
any other documents creating other trusts, such as the [Alan Cook Cartwright] 1996-1
and [the Alan Cook Cartwright] 1996-2 trusts, were void” even though those trusts were
discussed during the hearing on the motion for summary judgment. Cartwright II, 478
S.W.3d at 618-19. Only following Cartwright I and remand did Mr. Cartwright “attempt
to supplement the record . . . with documents pertaining to the [Alan Cook Cartwright]
1996-1 and [the Alan Cook Cartwright] 1996-2 trusts” to buttress his argument that the
second amendment to the ACC Grantor Trust was procured by undue influence. Id. at
619 n.4.
Still Mr. Cartwright argues that some of his claims cannot be barred by res
judicata because they arose after the judgment that was reviewed in Cartwright I.
Specifically, he claims to have alleged “individual and discrete” breaches of trust that
occurred each year from 2009 through 2014. Ignoring the paucity of factual allegations
to support these claims, Mr. Cartwright’s own pleadings undercut the premise that these
claims were “discrete.” The alleged breaches are all tied to the amendments to the ACC
Grantor Trust. Mr. Cartwright claims “that he was inflicted with a long run aggregate
shortfall by the machinations done to his trust by the Defendants in 1996.”
We conclude that the complaint as amended was barred by res judicata. Thus we
find it unnecessary to address the remaining grounds relied on by the trial court.
C. REQUEST FOR ATTORNEY’S FEES AND COSTS ON APPEAL
The Garners seek an award of attorney’s fees, costs, and expenses incurred on
appeal under the statute for frivolous appeals or the statute for cases involving trust
administration. See Tenn. Code Ann. § 27-1-122 (2017) (allowing a court to award “just
damages against the appellant, which may include, but need not be limited to, costs,
interest on the judgment, and expenses incurred by the appellee as a result of” a frivolous
appeal); Tenn. Code Ann. § 35-15-1004(a) (2015) (allowing a court to “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” in a “judicial proceeding
involving” trust administration). The determination of whether a party is entitled to such
an award on appeal is within the sound discretion of this Court. See In re Estate of Goza,
No. W2013-00678-COA-R3-CV, 2014 WL 7235166, at *6 (Tenn. Ct. App. Dec. 19,
2014) (determining that an award under Tennessee Code Annotated § 35-15-1004(a) “is
within the sound discretion of this Court”); In re Nathaniel C.T., 447 S.W.3d 244, 248
(Tenn. Ct. App. 2014) (determining that an award under Tennessee Code Annotated § 27-
1-122 is within this Court’s discretion).
Under the circumstances of this case, we exercise our discretion to award
reasonable attorney’s fees, costs, and expenses incurred on appeal under the Tennessee
Uniform Trust Code. The fees, costs, and expenses awarded are to be paid by
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Mr. Cartwright personally. This case is remanded to the trial court for a determination of
a reasonable award.
III.
We affirm the trial court’s dismissal of Mr. Cartwright’s complaint as amended on
the ground of res judicata. We remand the case for further proceedings as are necessary
and consistent with this opinion.
_________________________________
W. NEAL MCBRAYER, JUDGE
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