Ede Goza v. Suntrust Bank

IN THE COURT OF APPEALS OF TENNESSEE
AT NASHVILLE
January 23, 2015 Session
EDE GOZA, ET AL. v. SUNTRUST BANK
Appeal from the Chancery Court for Shelby County
No. CH-13-1314, CH-13-1316 Kenny W. Armstrong, Chancellor
________________________________
No. W2014-00635-COA-R3-CV – Filed July 22, 2015
_________________________________
This appeal arises from the dismissal of an action challenging the validity of and
distribution of assets from a trust. The trial court held the suit was barred by the doctrine
of res judicata. Because the plaintiffs in this action are in privity with previous
challengers of the trust for purposes of res judicata, we affirm the dismissal.
Tenn. R. App. 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 ANDY D. BENNETT
and RICHARD H. DINKINS, JJ. joined.
Larry E. Parrish, Memphis, Tennessee, for the appellants, Ede Goza and Shirley Sue
Noble Shaw.
Kenneth P. Jones and M. Matthew Thornton, Memphis, Tennessee, for the appellee,
Suntrust Bank, N.A.
Herbert H. Slatery III, Attorney General & Reporter; Joseph F. Whalen, Acting Solicitor
General; and Janet M. Kleinfelter, Deputy Attorney General; Nashville, Tennessee, for
the appellee, Tennessee Attorney General.
OPINION
I. FACTUAL AND PROCEDURAL BACKGROUND
This is our seventh decision relating to the assets of the late Helen B. Goza. See
Morrow v. SunTrust Bank, No. W2010-01547-COA-R3-CV, 2011 WL 334507 (Tenn. Ct.
App. Jan. 31, 2011) [hereinafter “Goza I”] (an appeal from the Chancery Court for
Shelby County); In re Estate of Goza, 397 S.W.3d 564 (Tenn. Ct. App. 2012) [hereinafter
“Goza II”] (an appeal from the Probate Court for Shelby County), perm. app. denied,
(Tenn. Sept. 20, 2012); Estate of Goza v. Wells, No. W2012-01745-COA-R3-CV, 2013
WL 4766544 (Tenn. Ct. App. Sept. 4, 2013) [hereinafter “Goza III”] (an appeal from the
Circuit Court for Shelby County), perm. app. denied, (Tenn. June 13, 2014); In re Estate
of Goza, No. W2013-00678-COA-R3-CV, 2014 WL 7235166 (Tenn. Ct. App. Dec. 19,
2014) [hereinafter “Goza IV”] (an appeal following the remand of Goza II); In re Estate
of Goza, No. W2013-02240-COA-R3-CV, 2014 WL 7246509 (Tenn. Ct. App. Dec. 19,
2014) [hereinafter “Goza V”] (a second appeal following the remand of Goza II), perm.
app. denied, (Tenn. May 19, 2015); In re Estate of Goza, No. W2013-02759-COA-R3-
CV, 2014 WL 7246147 (Tenn. Ct. App. Dec. 19, 2014) [hereinafter “Goza VI”] (a third
appeal following the remand of Goza II), perm. app. denied, (Tenn. May 18, 2015). We
provide only a brief recitation of the underlying facts. A more complete review of the
facts can be found in Goza I.
During her life, Helen B. Goza created a living trust to provide for herself and her
son, John J. Goza. Goza I, 2011 WL 334507, at *1. In March 1999 and again in April
1999, Ms. Goza executed two separate amended and restated revocable trust agreements,
which amended the original living trust agreement. Id. at *1-2. The March 1999
agreement provided for certain changes to the disposition of the trust corpus upon the
death of Ms. Goza. Id. at *1. If her son survived her, the agreement placed a portion of
the trust estate into a separate trust for her son’s benefit with the balance of the trust
estate being placed in a perpetual trust for organizations serving the mentally disabled.
Id. at *1. However, the March 1999 agreement did not provide for a full distribution of
assets held in the trust for Mr. Goza upon his death. Id. The April 1999 agreement
corrected this oversight. Upon Mr. Goza’s death, after a $5,000 donation to the
American Diabetes Association, that the remainder of the trust for the benefit of Mr.
Goza be deposited into the perpetual trust for organizations serving the mentally disabled.
Id. at *2.
Ms. Goza died in May 2001, survived by her son. Id. Mr. Goza passed away in
September 2007. Id.
A. GOZA I
In Goza I, David L. Morrow and Judy M. Wright1 filed a complaint for declaratory
judgment in Shelby County Chancery Court against SunTrust Bank (“SunTrust”), the
trustee of the perpetual trust. Id. Mr. Morrow and Ms. Wright claimed that, because the
March 1999 agreement failed to provide for the complete disposition of assets following
Mr. Goza’s death, the residue from the separate trust should pass to them as Ms. Goza’s
heirs through intestate succession. Id. Because the heirs’ claim involved the assets of a
charitable trust, the Attorney General intervened under Tennessee Code Annotated § 35-
1
Mr. Morrow and Ms. Wright are Ms. Goza’s nephew and niece, respectively. Id. at *1.
2
13-110 (2007). Id. SunTrust and the Attorney General each argued that the April 1999
amendment superseded the March 1999 amendment and provided for a full disposition of
the trust assets. Id. The chancery court granted the Attorney General’s motion for
summary judgment, finding that the April 1999 amendment distributed all of the separate
trust’s assets following Mr. Goza’s death. Id. at *4. Therefore, no assets remained to
pass under the laws of intestacy. Id.
On appeal, the heirs argued that the chancery court lacked subject matter
jurisdiction and that it effectively entered an advisory opinion declaring the trust
effective. Id. at *5. We found that the heirs’ request for declaratory judgment put at
issue—and the chancery court necessarily decided—the validity of the trust, as well as
the distribution of the separate trust’s assets following Mr. Goza’s death. Id. at *8. We
concluded that there was a justiciable controversy between the parties and affirmed the
chancery court’s grant of summary judgment. Id.
B. GOZA II
As our decision was pending in Goza I, Mr. Morrow initiated proceedings in
Shelby County Probate Court, which would eventually lead to our decisions in Goza II,
IV, V, and VI. Goza IV, 2014 WL 7235166, at *2. The probate court appointed
Mr. Morrow administrator of Mr. Goza’s Estate (the “Estate”).2 Goza II, 397 S.W.3d at
566. As administrator, Mr. Morrow filed a petition seeking to compel SunTrust to turn
over the assets of the perpetual trust. Id. at 566-67. Following the issuance of our
opinion in Goza I, the probate court found the Estate’s petition was barred by the
doctrines of res judicata and/or the law of the case. Id. at 567.
In Goza II, we affirmed the trial court’s decision. Id. at 571. We concluded that
the Estate’s claims were barred by res judicata because the Estate stood in the same legal
relationship with regard to the subject matter as Mr. Morrow and Ms. Wright had in Goza
I. Id. We also awarded attorneys’ fees on appeal and remanded to the probate court for
consideration of SunTrust’s request for an award of attorneys’ fees incurred during the
probate proceedings. Id. at 571-72.
C. GOZA III
Following our decision in Goza I, but before we issued our opinion in Goza II,
Mr. Morrow filed yet another lawsuit on behalf of the Estate against SunTrust and several
of its employees, this time in Shelby County Circuit Court. Goza III, 2013 WL 4766544,
at *1. SunTrust filed a motion to dismiss, arguing that the circuit court lacked subject
matter jurisdiction because the case involved the administration of a trust. Id. The circuit
2
In Goza I, Mr. Morrow claimed a right to the trust assets as Ms. Goza’s nephew and intestate heir. Here,
Mr. Morrow sought to be appointed administrator as Mr. Goza’s heir under the laws of intestacy.
3
court agreed, finding that each of the Estate’s claims were premised on the non-existence
of the perpetual trust and that the existence of the trust had been established in Goza I.
Id. Therefore, res judicata barred the court from addressing the issue. Id.
The Estate’s appeal resulted in our decision in Goza III. We noted in Goza III that
we had upheld the validity of the perpetual trust twice, in Goza I and II. Id. at *4.
Although the plaintiff here was the Estate, rather than Mr. Morrow as administrator on
behalf of the Estate, the parties were in privity. Id. at *6. Therefore, the Estate was
barred by the doctrine of res judicata from challenging the validity of the trust. Id. We
concluded that the circuit court lacked subject matter jurisdiction over the case under
Tennessee Code Annotated § 35-15-203 (2007)3 and affirmed the dismissal. Id.
D. GOZA IV
Following our remand in Goza II, Mr. Morrow, in his capacity as administrator of
the Estate, filed a number of other motions seeking to attack the validity of the trust. In
November 2012, Mr. Morrow filed a motion requesting that the probate court relieve him
of his role as administrator and appoint his attorney in his stead. Goza IV, 2014 WL
7235166, at *2. This motion was apparently premised on the mistaken belief that, if
Mr. Morrow were replaced as administrator, the Estate would no longer be barred from
bringing its claims by the doctrine of res judicata. Id. The probate court denied the
motion. Id. at *2-3.
The Estate appealed the denial, leading to our decision in Goza IV. On appeal, we
found that the probate court acted within its discretion in denying Mr. Morrow’s motion.
Id. at *5. Furthermore, we concluded that, even assuming a new administrator had been
appointed, the Estate would still be barred from bringing its claims under the doctrine of
res judicata. Id. We stated:
[a]t best, Mr. Morrow’s request to resign as personal administrator was an
honest, though misinformed, attempt to act in the Estate’s best interest; at
worst, it was a subversive attempt to position the Estate to further waste
judicial resources by initiating new lawsuits challenging the validity of the
Perpetual Trust.
Id.
3
Tennessee Code Annotated § 35-15-203 states that chancery courts and other courts of record having
probate jurisdiction “[t]o the exclusion of all other courts, have concurrent jurisdiction over proceedings
in this state brought by a trustee or beneficiary concerning the administration of a trust.” Tenn. Code
Ann. § 35-15-203 (emphasis added).
4
E. GOZA V
Notwithstanding the probate court’s denial of Mr. Morrow’s motion to resign as
administrator, he filed a motion in April 2013 urging the probate court to issue a writ of
scire facias4 requesting that SunTrust appear to show why it should not be divested of
trust assets. Goza V, 2014 WL 7246509, at *2. The probate court denied the motion,
finding that it was barred by res judicata. Id. at *3.
In Goza V, we affirmed the probate court’s decision, reiterating yet again that the
parties were in privity, and res judicata barred the motion. Id. at *6. We even went so far
as to state, “[t]his holding, as we have stressed throughout this opinion, bars the Estate
from initiating further proceedings to challenge the validity of the Perpetual Trust, no
matter who initiates the proceedings on its behalf or the theory on which it attempts to
rely.” Id. at *7 n.7.
F. GOZA VI
Following our remand in Goza II, in an effort to end further litigation over the
assets of Ms. Goza, SunTrust filed an amended petition seeking to admit Ms. Goza’s
1999 will to probate in solemn form and seeking to be appointed administrator of her
estate. Goza VI, 2014 WL 7246147, at *2. Ms. Goza’s 1999 will directed that, after
provision was made for her son, the residue of her estate be placed in trust in accordance
with the agreement creating the living trust. Id. at *1. In the event the trust was not in
existence at that time, Ms. Goza’s assets were to be distributed to SunTrust, as trustee,
and administered in accordance with the terms of the living trust agreement. Id.
The trial court granted the petition, admitting the 1999 will in solemn probate form
and appointing SunTrust the administrator of Ms. Goza’s estate. Id. at *3. The Estate
objected to the order, arguing that the probate court did not have subject matter
jurisdiction to admit the 1999 will in solemn probate form because there was an
outstanding will contest temporarily divesting the probate court of that authority. Id. The
probate court found that the Estate did not have standing to challenge the 1999 will
because it would not have been a beneficiary under a prior 1991 will. Id.
We affirmed the probate court’s ruling that the Estate lacked standing to challenge
admission of the 1999 will in Goza VI. Id. at *4. We found that “[b]ecause the
Estate . . . would not benefit even if the 1999 Will was set aside, the probate court did not
err in finding that the John Goza Estate lacked standing to contest the 1999 Will.” Id.
4
A “scire facias” is “[a] writ requiring the person against whom it is issued to appear and show cause why
some matter of record should not be annulled or vacated, or why a dormant judgment against that person
should not be revived.” Black’s Law Dictionary 1464 (9th ed. 2009).
5
G. CURRENT PROCEEDINGS
The proceedings currently before us arise from two separate but nearly identical
complaints filed on August 30, 2013, by Ede Goza and Shirley Shaw in Shelby County
Chancery Court. Ede Goza and Shirley Shaw claim to be intestate heirs of Mr. Goza5 and
seek a declaratory judgment that the perpetual trust is invalid and that its assets are
rightfully a part of Mr. Goza’s estate.
On November 17 and 18, 2013, SunTrust filed motions in each of the cases to
transfer, consolidate, and stay the two cases or, in the alternative, to dismiss. The
Attorney General filed motions to intervene in each of the cases, which were granted.
Following a hearing on March 24, 2014, the chancery court entered an order
consolidating the two cases. The chancery court also orally granted SunTrust’s motion to
dismiss on the grounds of res judicata. A final order of dismissal was entered on June 2,
2014. The court concluded that Ms. Ede Goza and Ms. Shaw were in privity with the
parties to our previous decisions and, therefore, their claims were barred by the doctrine
of res judicata. The court denied a request by SunTrust for an award of its attorneys’
fees.
Ms. Ede Goza and Ms. Shaw timely appealed, alleging that the trial court erred in
finding that the doctrine of res judicata barred their claims. By separate motion, they also
argue that the judgment of dismissal is void. SunTrust argues that they are entitled to
attorneys’ fees on appeal.
II. STANDARD OF REVIEW
Whether the trial court erred in dismissing a claim as barred by the doctrine of res
judicata is a question of law subject to de novo review with no presumption of
correctness. Goza II, 397 S.W.3d at 566; Brown v. Shappley, 290 S.W.3d 197, 200
(Tenn. Ct. App. 2008).
III. ANALYSIS
We first address Appellants’ argument that the judgment of dismissal is void.6
“[A] . . . decree is void and subject to collateral attack only where the trial court lacks
5
In her Complaint, Ede Goza claimed to be Mr. Goza’s heir as his first cousin once-removed. Ms. Shaw
claimed her interest as Mr. Goza’s first cousin.
6
On April 20, 2015, Appellants filed with this Court “Appellants’ Motion to Set Aside a Void Judgment,
Memorandum in Support Thereof, Certificate of Consultation and Counsel’s Affidavit.” The motion
alleged that eight judgments, including the judgment appealed from here, entered in connection with the
6
general jurisdiction of the subject matter, rules on an issue wholly outside of the
pleadings, or lacks jurisdiction over the party complaining.” Gentry v. Gentry, 924
S.W.2d 678, 680 (Tenn. 1996); see also Hood v. Jenkins, 432 S.W.3d 814, 825 (Tenn.
2013); Brown v. Brown, 281 S.W.2d 492, 497 (Tenn. 1955) (concluding that in the
absence of subject matter jurisdiction, a court cannot enter a valid, enforceable order).
Appellants’ contention appears to be that, because the chancery court based the
application of res judicata on our decisions in Goza I, II, and III, the order of dismissal is
void because the decisions in the earlier cases are void.
Appellants’ motion is without merit. Appellants invoked the jurisdiction of the
chancery court, and thus, the chancery court had personal jurisdiction over Appellants.
See Cooper v. Reynolds, 77 U.S. 308, 316-17 (1870) (personal jurisdiction is obtained by
“the voluntary appearance of the party in the progress of the cause.”). The chancery
court had jurisdiction over the subject matter of the litigation under Tennessee Code
Annotated § 29-14-102 (2012), and the dismissal related only to the pleadings before the
court. As to whether Goza I, II & III are void, we note that many of Appellants’
arguments have been made and rejected previously. Even had that not been the case, the
judgments in Goza I, II & III are presumed valid, and that presumption is “conclusive
unless impeached by the record itself.” Dixie Savs. Stores, Inc. v. Turner, 767 S.W.2d
408, 410 (Tenn. Ct. App. 1988); see also State ex rel. Kuntz v. Bomar, 381 S.W.2d 290,
291 (Tenn. 1964). We see nothing that impeaches the presumption of validity.
A. APPLICATION OF RES JUDICATA
Res judicata is “[a]n issue that has been definitively settled by judicial decision.”
Black’s Law Dictionary 1425 (9th ed. 2009); see also Regions Fin. Corp. v. Marsh USA,
Inc., 310 S.W.3d 382, 392 (Tenn. Ct. App. 2009). The doctrine of res judicata is a “rule
of rest” meant to promote finality, prevent inconsistent or contradictory judgments,
conserve resources, and prevent vexatious lawsuits. Jackson v. Smith, 387 S.W.3d 486,
491 (Tenn. 2012); see also Edwards v. City of Memphis, No. W2007-02449-COA-R3-
CV, 2009 WL 2226222, at *3 (Tenn. Ct. App. July 27, 2009). The term “res judicata”
often refers generally to the effect that a judgment may have on subsequent proceedings.
Black’s Law Dictionary, supra; see also Regions, 310 S.W.3d at 392.
One such effect is claim preclusion. The doctrine of claim preclusion “bars a
second suit between the same parties on the same cause of action with respect to all
issues which were or could have been raised in the former suit.” State ex rel. Cihlar v.
Crawford, 39 S.W.3d 172, 178 (Tenn. Ct. App. 2000); see also Jackson, 387 S.W.3d at
491. A party asserting claim preclusion must demonstrate: “(1) that the underlying
assets of the Estate of Helen B. Goza are void. By order entered on June 23, 2015, we denied the motion
to the extent it related to judgments other than the July 2, 2014 order of dismissal.
7
judgment was rendered by a court of competent jurisdiction, (2) that the same parties or
their privies were involved in both 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.”
Jackson, 387 S.W.3d at 491; see also Goza II, 397 S.W.3d at 570; Edwards, 2009 WL
2226222, at *2.
Another possible effect of a judgment is issue preclusion, also known as collateral
estoppel. State v. Thompson, 285 S.W.3d 840, 848 (Tenn. 2009). Collateral estoppel
prevents the redetermination of an issue of law or fact that has already been determined
by a court of competent jurisdiction. Cihlar, 39 S.W.3d at 178. To invoke collateral
estoppel, a party must demonstrate: (1) that the issue was determined in a prior action by
the parties or their privies; (2) that the issue was necessary to the prior judgment; and (3)
that a final judgment was rendered in the prior action. Goza II, 397 S.W.3d at 570-71.
Appellants assert the chancery court erred in dismissing their claims under the
doctrine of res judicata. First, they argue that our prior pronouncements concerning the
validity of the trust documents and the distribution of the estate assets are dicta and,
therefore, not entitled to preclusive effect. Second, they argue that they are not in privity
with the other parties who have sought to raise similar claims. We find neither argument
availing.
The plaintiffs in Goza I raised both the validity of the trust and the distribution of
the assets as issues, and we found them to be part of the basis for a justiciable controversy
in that case. Goza I, 2011 WL 334507, at *8. Even so, res judicata bars not only issues
that were actually decided but also those which “could have been raised” in the former
suit. Cihlar, 39 S.W.3d at 178 (emphasis added). Thus, even if these issues had not been
directly addressed, determination of the issues in this proceeding is properly precluded
under the doctrine of res judicata because the issues could have been raised in Goza I.
Appellants’ second argument is that they are not in privity with the parties who
have already raised claims regarding the trust in our previous decisions. The concept of
privity in the context of res judicata is not identical to the concept as it is used in
discussing contractual relationships. Edwards, 2009 WL 2226222, at *3. For res
judicata purposes, the concept of privity involves an examination of the parties’
relationship to the subject matter of the litigation, not the relationships between the
parties themselves. Trinity Indus., Inc. v. McKinnon Bridge Co., 77 S.W.3d 159, 185
(Tenn. Ct. App. 2001); Cihlar, 39 S.W.3d at 180; Phillips v. Gen. Motors Co., 669
S.W.2d 665, 669 (Tenn. Ct. App. 1984); Edwards, 2009 WL 2226222, at *3. Whether
privity exists depends on an examination of the facts of each particular case. Edwards,
2009 WL 2226222, at *3. “Privity connotes an identity of interest, that is, a mutual or
successive interest to the same rights.” Cihlar, 39 S.W.3d at 180 (citations omitted). “In
other words, privity is not established by parties being legally connected, either by
contract, blood, or some other means, but rather whether they can claim the same legal
8
rights asserted to the subject matter.” Suntrust Bank v. Stoner, No. 3:07-CV-397, 2009
WL 998403, at *2 (E.D. Tenn. Apr. 14, 2009).
To briefly review, the plaintiffs in Goza I claimed an interest in the trust assets as
the intestate heirs of Ms. Goza. Goza I, 2011 WL 334507, at *2. The plaintiff in Goza II
was Mr. Morrow in his capacity as administrator of Mr. Goza’s Estate. Goza II, 397
S.W.3d at 565. In Goza III, the plaintiff was Mr. Goza’s Estate. Goza III, 2013 WL
4766544, at *1. Despite their differing positions, we concluded that all of these parties
were in privity for res judicata purposes. See Goza II, 397 S.W.3d at 571; Goza III, 2013
WL 4766544, at *6. They all had a mutual interest in relation to the trust and the
disposition of its assets.
Appellants here share a mutuality of interest with relation to the subject matter—
the trust and its assets—with the plaintiffs that have come before them. As intestate heirs
of Mr. Goza, they inherit, if at all, through Mr. Goza’s estate. See Aclin v. Speight, 611
S.W.2d 54, 55 (Tenn. Ct. App. 1980) (concluding that unborn heirs are in privity with
prior contestants in a will contest because they had a successive interest in inheriting
through a prior contestant). The chancery court properly dismissed Appellants’
complaints as barred by the doctrine of res judicata.
B. SUNTRUST’S REQUEST FOR ATTORNEYS’ FEES
The Tennessee Uniform Trust Code provides, in part, “[i]n a judicial proceeding
involving the administration of a trust, the court, as justice and equity may require, may
award costs and expenses, including reasonable attorney’s fees, to any party, to be paid
by another party or from the trust that is the subject of the controversy.” Tenn. Code
Ann. § 35-15-1004(a) (2007). The decision to grant attorneys’ fees under this section is
within the discretion of the trial court. Goza I, 2011 WL 334507, at *8 (citing Wachtel v.
Shoney’s, Inc., 830 S.W.2d 905, 909-10 (Tenn. Ct. App. 1991)). We may not reverse the
trial court’s decision to award or deny attorneys’ fees at trial absent an abuse of
discretion. Id. Here, we find no such abuse in the chancery court’s denial of attorneys’
fees at trial nor does SunTrust allege such. The chancery court’s decision denying
attorneys’ fees is affirmed.
The decision to grant attorneys’ fees under the Tennessee Uniform Trust Code on
appeal is within our discretion. Goza II, 397 S.W.3d at 571 (citing Fickle v. Fickle, 287
S.W.3d 723, 738 (Tenn. Ct. App. 2008)). In light of the record, and given our prior
decisions referenced above, we find an award of costs and attorneys’ fees incurred on
appeal is appropriate. Accordingly, we remand this case to the trial court for a
determination of the appropriate amount of attorneys’ fees and expenses to which
SunTrust is entitled.
9
IV. CONCLUSION
For the foregoing reasons, the judgment of dismissal is affirmed. We award
SunTrust reasonable attorneys’ fees and expenses incurred on appeal and remand to the
chancery court for further proceedings consistent with this opinion.
_______________________________
W. NEAL McBRAYER, JUDGE
10