Dorothy Lewis v. Sam Lewis

IN THE COURT OF APPEALS OF TENNESSEE
AT KNOXVILLE
October 30, 2014 Session
DOROTHY LEWIS v. SAM LEWIS ET AL.
Appeal from the Circuit Court for Polk County
No. 12-CV-49 J. Michael Sharp, Judge
No. E2014-00105-COA-R3-CV-FILED-APRIL 27, 2015
Dorothy Lewis and Roscoe Lewis, although not legally married, held themselves out as
husband and wife for over 41 years. At an earlier time, Roscoe Lewis had been married.
He had three sons by that marriage, one of whom is the defendant Sam Lewis. In 2010,
after Roscoe Lewis‟ health declined, Sam Lewis took care of his father and Dorothy. On
April 7, 2011, Sam Lewis took his father to several banks. While there, Roscoe Lewis
authorized the banks to add the names of Sam Lewis and Dorothy to multiple accounts
that had previously been only in Roscoe Lewis‟ name.1 On April 26, 2011, Dorothy and
Roscoe Lewis each executed an individual power of attorney granting Sam Lewis
authority and control over their financial and medical decisions. On that same day,
Dorothy and Roscoe Lewis executed a warranty deed conveying a remainder interest in
their home and farm to Sam Lewis and his wife Lora Lewis for $40,000, less than one-
third of the fair market value as found by the trial court. On March 9, 2012, two days
before Roscoe Lewis died, Sam Lewis withdrew funds totaling over $600,000 from the
accounts held jointly in the names of Sam, Roscoe, and Dorothy Lewis. He placed the
withdrawn funds in accounts held in the names of Sam Lewis and his wife, Lora Lewis.
Dorothy Lewis brought this action alleging, among other things, that the real estate and
bank account transfers should be rescinded because of Sam Lewis‟ undue influence on
his father and Dorothy. The trial court found and held (1) that Sam Lewis exercised
undue influence over them and (2) that he committed conversion and fraud. The court‟s
judgment against Sam Lewis included an award of attorney‟s fees to Dorothy Lewis. The
same fees were also awarded against a constructive trust established by the trial court.
On appeal, we hold that the trial court‟s award of attorney‟s fees against the constructive
trust is not supported by the evidence or by any legal or equitable principle. As a
consequence of this holding, we reverse the trial court‟s order granting attorney‟s fees
1
As will be seen, five of these accounts designated Dorothy Lewis as the “pay-on-death
beneficiary.”
1
against the constructive trust created by the trial court for the use and benefit of Dorothy
Lewis during her lifetime. In all other respects, we affirm the trial court‟s judgment.
Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Chancery Court
Affirmed in Part and Reversed in Part; Case Remanded
CHARLES D. SUSANO, JR., C.J., delivered the opinion of the court, in which D. MICHAEL
SWINEY and THOMAS R. FRIERSON, II, JJ., joined.
H. Franklin Chancey, Cleveland, Tennessee, for the appellant, Sam Lewis.
Joshua H. Jenne and Michael E. Jenne, Cleveland, Tennessee, for the appellee, Dorothy
Lewis, in her individual capacity and by Roy Waters, her brother and next friend.
Ginger Wilson Buchanan, Cleveland, Tennessee, administrator for the appellee, estate of
Roscoe Lewis.
OPINION
I.
Roscoe Lewis and Laura Lee Lewis were married on December 17, 1949. As
previously noted, they had three sons. They separated on November 16, 1970, and were
divorced by final order of a Georgia court, executed on December 4, 1972 and entered of
record on March 28, 1973. Dorothy Lewis alleges that she and Roscoe Lewis were wed
in a church ceremony in Alabama in February of 1972. On this point, the trial court
found as follows:
Roscoe Lewis purportedly married Dorothy Lewis on
February 14, 1971, somewhere in the State of Alabama (this
is based upon a prior hearing of this court, wherein Dorothy
Lewis testified that she and Roscoe Lewis were married in a
small church somewhere in Alabama). However, the court
finds, based upon the trial exhibits entered with the court, that
the State of Alabama Department of Public Health Center for
Health Statistics and Office of Vital Records issued a
certificate of failure to find any record of marriage to exist for
Roscoe Lewis and Dorothy Lewis, the records having been
searched for the years 1970 through 1980. . . . However,
[Dorothy Lewis] presented proof through a copy of a page
from the family bible, “certificate of marriage” certifying that
2
Roscoe Lewis and Dorothy Waters were married on February
2, 19712 in holy matrimony.
* * *
The court finds that at all times from and after February of
1971, Roscoe and Dorothy Lewis held themselves out to be
man and wife, and the evidence before the court is that they
lived together at all times as man and wife from February of
1971 through the date of Roscoe Lewis‟ death on March 11,
2012. . . . [A]t all times from February 1971 through March
11, 2012, Roscoe Lewis and Dorothy Lewis held most of
their bank accounts together as man and wife, and generally
speaking, conducted their business affairs as man and wife.
During the last decade of Roscoe Lewis‟ life, Dorothy Lewis suffered from
significant mental disabilities. The trial court, relying, among other proof, on the
testimony of her personal physician, found that she was mentally incompetent during this
time, as further discussed below. In 2010, Roscoe Lewis‟ physical health began a serious
decline. Sam Lewis started taking care of his father and Dorothy Lewis on a full-time
basis around December of 2010.
On April 7, 2011, Sam Lewis drove his father to three financial institutions:
BB&T, United Community Bank, and Copper Basin Federal Credit Union. Dorothy
Lewis was with them for the trip to BB&T, but Sam Lewis dropped her off at her house
before the other banks were visited. At the banks, the account holder names on numerous
accounts owned by Roscoe Lewis were changed to add the names of Sam Lewis and
Dorothy Lewis. Prior to the change, five of the accounts had been owned by Roscoe
Lewis with Dorothy Lewis designated as the pay-on-death beneficiary. The total amount
of money in these five accounts at that time approximated $520,000. Two other accounts
were owned by Roscoe Lewis with no pay-on-death beneficiary. There was about
$100,000 in those two accounts.
On April 26, 2011, Roscoe and Dorothy Lewis executed several legal documents
drafted by attorney Laura Crawford, who visited their home on that date. They each
executed two durable powers of attorney in favor of Sam Lewis, one for healthcare
decisions and the other for financial matters. They also executed a warranty deed
2
There was some proof presented suggesting that the ceremony occurred on February 2, 1971,
and other proof that it happened on February 14. Obviously, this discrepancy is not material to our
analysis.
3
conveying a remainder interest in the marital3 real property ‒ being their house and
approximately fourteen acres ‒ to Sam Lewis and his wife, Lora Lewis. Dorothy and
Roscoe Lewis retained a life estate. In consideration for the transfer, Sam and Lora
Lewis executed a promissory note and deed of trust in the amount of $40,000. The
promissory note provided for “interest at the rate of ZERO percent (0%) per annum in
400 monthly installments of principal in the amount of $100.00 each.” (Capitalization in
original.) The trial court found that the fair market value of the marital residence at that
time was “a little in excess of $130,000.”
Roscoe Lewis‟ health, including a condition of adenocarcinoma,4 continued to
decline due to his several illnesses. On March 6, 2012, he was admitted to the hospital.
He died five days later. On March 9, 2012, while Roscoe Lewis was still alive, Sam
Lewis withdrew the funds in the accounts held in the joint names of Sam Lewis, Roscoe
Lewis, and Dorothy Lewis. He deposited these funds, over $600,000, in three accounts,
all of which were in his name and the name of his wife. One of the accounts designated
the daughter of Sam and Lora Lewis as the pay-on-death beneficiary. Sam Lewis did not
tell either Roscoe or Dorothy Lewis about these transfers. He admitted that, after the
transfers, Dorothy Lewis no longer had access to the funds. As previously noted, Roscoe
Lewis died on March 11, 2012, at the age of 83.
After Roscoe Lewis‟ death, Dorothy Lewis‟ brother, Roy Waters, came from
Georgia to assist his sister. Both Sam Lewis and Waters testified that a day or two after
the funeral, Sam Lewis told Waters to get off his property ‒ the former marital residence
of Roscoe and Dorothy Lewis, where Dorothy Lewis was then still residing. At some
point shortly after Roscoe‟s funeral, Dorothy Lewis asked Waters to take her to BB&T to
see how much money was in the bank accounts there. They discovered that all, or nearly
all, of the funds had been removed by Sam Lewis. Shortly thereafter, Dorothy Lewis
went to live with her brother in Georgia.
Dorothy Lewis filed her complaint on March 23, 2012. She alleged that Sam
Lewis wrongfully appropriated and converted the funds in the bank accounts by the
exercise of undue influence, fraud and deceit, and breach of fiduciary duty. She asked
the trial court, among other things, to rescind the real estate transaction regarding the
marital real property. Later, when Dorothy Lewis‟ mental capacity was called into
question, an amended complaint was filed in her individual capacity and by her next
friend and brother, Roy Waters. After Dorothy Lewis suffered a debilitating stroke, Roy
Waters and his son were named her co-conservators.
3
We recognize that “marital” is not an appropriate modifier since these parties were never
married. We use it, however, as a convenient way of referring to their jointly owned property.
4
A type of cancer that forms in mucus-secreting glands throughout the body.
4
After a two-day bench trial, the court found and held that: (1) Roscoe and Dorothy
Lewis were never “legally” married and, consequently, did not own the marital residence
and other joint assets as tenants by the entireties; (2) the transfer of the marital residence
“fails due to the incompetency of Dorothy Lewis as well as the mental capacity of
Roscoe Lewis at the time, as well as the undue influence and coercion of Sam Lewis”; (3)
the transfer of ownership of the bank accounts at issue was the product of undue
influence resulting from a confidential relationship abused by Sam Lewis; and (4) Sam
Lewis was guilty of fraud and conversion of funds rightfully belonging to Dorothy Lewis.
Based upon these findings, the trial court held that the marital real estate was
owned one-half by Dorothy Lewis and one-half by Roscoe Lewis‟ estate, as tenants in
common, and ordered that it be sold and the proceeds divided accordingly. Regarding the
monies in the bank accounts, the trial court ordered as follows:
[A]ll of the funds shall be returned to their status prior to any
changes of ownership that were made on April 7, 2011. . . .
All bank accounts, other than the two accounts noted above,
had [pay-on-death] beneficiary designations, which shall
control the payment of those accounts based upon the death
of Roscoe Lewis.
With regard to any accounts payable to the estate of Roscoe
Lewis at his death, as there was no [pay-on-death] beneficiary
designation controlling those accounts at this death, the court
finds that those accounts shall be paid into the estate of
Roscoe Lewis, and the funds used as set out herein.
With regard to all of the funds payable to the estate of Roscoe
Lewis, . . . there is no question that Roscoe Lewis intended
his funds and/or assets to be used for the use and benefit of
Dorothy Lewis for the remainder of her life. He expressly
indicated this to his son Sam Lewis, and the court finds that
based upon the fact that he held himself out to be the husband
of Dorothy Lewis for a period in excess of 41 years in the
community, and that they spent all of their 41 years together
in the same home, working toward the same apparent goals
and ambitions, the court finds that the funds belonging to the
estate of Roscoe Lewis shall be deposited into and held in a
constructive trust for the use and benefit of Dorothy Lewis for
5
the remainder of her life. A trustee shall be appointed to
oversee this trust.
The trial court further ordered “that Sam Lewis shall be responsible for the attorney fees
and court costs of Dorothy Lewis, as well as the costs incurred in this matter.” The sole
ground stated by the trial court to support the award of attorney‟s fees was the trial
court‟s finding that Sam Lewis was guilty of fraud, a cause of action now appropriately
called intentional misrepresentation.5
Sam and Lora Lewis filed a motion to alter or amend, and the estate of Roscoe
Lewis filed a motion for clarification of the trial court‟s order. Dorothy Lewis died on
December 18, 2013. The trial court entered a final order addressing the remaining
motions on January 24, 2014, stating in pertinent part as follows:
The Court at a hearing conducted January 7, 2014 in
chambers, . . . reiterated . . . that the assets of Roscoe Lewis,
including the bank accounts solely in the name of Roscoe
Lewis existing as of April 7, 2011, and Roscoe Lewis‟ 50%
of the proceeds realized from the sale of the real property,
should be placed into Trust for the use and benefit of Dorothy
Lewis during her natural lifetime. . . . [A]ll expenses
associated with her care and maintenance from and after the
death of Roscoe Lewis until Dorothy Lewis‟ death which
occurred December 18, 2013 shall be paid from said Trust
and reimbursed to the Conservator, Roy Waters, as herein
provided. In addition, it is the intention of the Court and
Order that the attorney fees and expenses which were
incurred on behalf of Dorothy Lewis and awarded to Jenne,
Scott & Jenne totaling $92,675.76 be paid from said Trust
funds. Upon payment of said amount to Jenne, Scott & Jenne
from said Trust funds, Jenne, Scott & Jenne and for the Estate
of Dorothy Lewis shall assign to said Trust the Judgment
rendered against Sam Lewis for attorney fees and expenses
totaling $92,675.76.
Sam Lewis timely filed a notice of appeal.
5
In Hodge v. Craig, 382 S.W.3d 325, 342-43 (Tenn. 2012), the Supreme Court observed that
“intentional misrepresentation,” “fraudulent misrepresentation,” and “fraud” are different names for the
same cause of action, and suggested that the term intentional misrepresentation “should be used
exclusively henceforth.”
6
II.
The issues presented are as follows:
(1) Whether the trial court erred in its determination that the
marriage of Roscoe Lewis and Dorothy Lewis was bigamous
and therefore void.
(2) Whether the trial court erred in finding that Sam Lewis
abused a confidential relationship and exercised undue
influence over his father, Roscoe Lewis, and Dorothy Lewis.
(3) Whether the trial court erred in its award of the real estate
and bank accounts at issue.
(4) Whether the trial court erred in its award of attorney‟s fees
and costs against Sam Lewis in the amount of $92,675.76 and
in taxing those expenses to the constructive trust created by
the trial court.
(5) Whether the appellee, estate of Dorothy Lewis, should be
awarded attorney‟s fees and expenses incurred on appeal.
III.
Our review of this non-jury case is de novo upon the record of the proceedings
below with a presumption of correctness as to the trial court‟s factual findings, a
presumption we must honor unless the evidence preponderates against those findings.
Tenn. R. App. P. 13(d). “When the resolution of an issue depends upon the credibility of
witnesses, „[t]he weight, faith, and credit to be given to any witness‟s testimony lies in
the first instance with the trier of fact, and the credibility accorded will be given great
weight by the appellate court.‟ ” In re Conservatorship of Tate, No. M2010-01904-
COA-R3-CV, 2011 WL 6935342 at *3 (Tenn. Ct. App. M.S., filed Dec. 29, 2011). We
review the trial court‟s conclusions of law de novo with no presumption of correctness.
Oakes v. Oakes, 235 S.W.3d 152, 156 (Tenn. Ct. App. 2007).
7
IV.
A.
The estate of Dorothy Lewis, citing several earlier Tennessee cases,6 argues that
she was validly and legally married to Roscoe Lewis, and, in the alternative, the doctrine
of estoppel by marriage should apply under these circumstances, i.e., where they held
themselves out as married for over forty-one years. She relies on these arguments to
overcome any denial of or challenge to the marriage. The trial court ruled as follows on
this issue:
While this court is deeply troubled by the fact that there is no
question . . . that Dorothy Lewis as well as Roscoe Lewis
believed themselves to be legally and validly married, the
court finds that Roscoe Lewis . . . did not in fact become
legally and validly divorced until December 4, 1972.
Therefore, based upon the applicable law as set out by the
Tennessee Supreme Court, this court has no choice but to find
that Roscoe Lewis and Dorothy Lewis‟ marriage was a
bigamous marriage that is prohibited by statute, and it is
therefore void. This court has no alternative but to find that
the marriage of Roscoe Lewis and wife Dorothy Lewis, for
legal purposes, must be treated as if it has never been. . . .
Therefore, the court finds that Roscoe Lewis and Dorothy
Lewis must stand in the same relationship as if their marriage
never occurred. This court cannot recognize a bigamous
marriage, nor can the bigamous marriage of Roscoe Lewis
and Dorothy Lewis be ratified by them, by their actions or
otherwise. The court finds that the application of marriage by
estoppel in this case would result in this court‟s recognition of
a void marriage that the parties cannot ratify, and neither can
this court. The court finds that the application of marriage by
estoppel in this case would contravene T.C.A. § 36-3-102.7
6
See King v. Clinchfield R.R. Co., 131 F. Supp. 218 (E.D. Tenn. 1955); Hale v. State, 164
S.W.2d 822 (Tenn. 1942); Smith v. N. Memphis Savings Bank, 89 S.W. 392 (Tenn. 1905); Bohlen-Huse
Coal & Ice Co. v. McDaniel, 257 S.W. 848 (Tenn. 1924); Madewell v. U.S., 84 F. Supp. 329 (E.D. Tenn.
1949); Bryant v. Townsend, 221 S.W.2d 949 (Tenn. 1949); Bower v. Lunney, 178 S.W.2d 91 (Tenn. Ct.
App. 1943).
7
Tenn. Code Ann. § 36-3-102 provides that “[a] second marriage cannot be contracted before the
dissolution of the first.”
8
(Footnote added; internal citations omitted).
The trial court correctly noted that the controlling principles on this issue were set
forth by the Supreme Court in the 2006 case of Guzman v. Alvares, 205 S.W.3d 375
(Tenn. 2006). In Guzman, the High Court said:
Except as restricted by constitutional provisions, the
inception, duration, status, conditions, and termination of a
marriage in Tennessee are subject to state legislative power
and control. Crawford v. Crawford, 198 Tenn. 9, 277 S.W.2d
389, 391 (1955); see Martin v. Coleman, 19 S.W.3d 757, 760
(Tenn. 2000). Common-law marriages are not recognized in
Tennessee. Martin, 19 S.W.3d at 760. Our state‟s legislature
also prohibits bigamous marriages. See Tenn. Code Ann. §
36–3–102 (2005) (“A second marriage cannot be contracted
before the dissolution of the first.”). Tennessee Code
Annotated section 36–3–306 (2005) further provides that
“[n]o marriage shall be valid, whether consummated by
ceremony or otherwise, if the marriage is prohibited in this
state.”
* * *
We next examine whether a marriage in this case can be
created by estoppel. In a case of marriage by estoppel, the
marriage is presumed to be valid even though it is not
technically lawful. Crawford, 277 S.W.2d at 391. Marriage
by estoppel is invoked “to prevent fraud as well as to preserve
the rights of innocent third persons who would be adversely
affected by the conduct of the parties.” Id. This doctrine is
applicable only in exceptional circumstances. Martin, 19
S.W.3d at 760.
When one of the parties to the purported marriage seeks to
invoke the doctrine of marriage by estoppel in a case against
the other party to the marriage, this Court has refused to apply
the doctrine when the parties entered into a bigamous
marriage, regardless of either party‟s knowledge of the
impediment.
* * *
9
In accordance with section 36–3–102, parties seeking to enter
into a subsequent marriage lack the capacity to marry until
each party‟s prior marriage is dissolved.
Because bigamous marriages are prohibited by statute, such
marriages are void from the beginning. The parties to a
bigamous marriage stand in the same relationship as if the
subsequent marriage never occurred. Bigamous marriages
are not recognized by the courts and cannot be ratified by the
parties.
. . . The application of marriage by estoppel to a void,
bigamous marriage under these circumstances would result in
the court‟s recognition of a void marriage that the parties
cannot ratify. Furthermore, application of the doctrine would
contravene Tennessee Code Annotated sections 36–3–102
and 36–3–306 and the public policy of this state by
condoning the bigamous marriage.
We conclude that the applicable statutes, our prior case law,
and the public policy of this state prohibit the application of
the marriage by estoppel doctrine to void, bigamous
marriages.
Id. at 379-81 (internal citations omitted). In accordance with these principles, the trial
court correctly held that the marriage at issue here was bigamous, void, and cannot be
made valid by the doctrine of estoppel.
B.
Sam Lewis argues that the trial court erred in finding that he exercised undue
influence by abusing or taking advantage of a confidential relationship with his father,
Roscoe Lewis, and Dorothy Lewis.
In Austin v. Wilds, No. E2013-01310-COA-R3-CV, 2014 WL 1607356 (Tenn. Ct.
App. E.S., filed Apr. 22, 2014), we recently discussed the principles applicable to a claim
of undue influence, stating as follows in pertinent part:
Courts apply the doctrine of undue influence “when one
party, such as a grantee, is in a position to exercise undue
10
influence over the mind and the will of another, such as a
grantor, due to the existence of a confidential relationship.”
Brown v. Weik, 725 S.W.2d 938, 945 (Tenn. Ct. App. 1983).
In Iacometti v. Frassinelli, we discussed the nature of a
confidential relationship as follows:
It is that relationship where confidence is placed
by one in the other and the recipient of that
confidence is the dominant personality, with the
ability, because of that confidence, to influence
and exercise dominion over the weaker or
dominated party, such as nurse and invalid,
trusted business adviser and friend etc. Proof of
the existence of the normal family relationship
between a parent and adult child, standing
alone, does not give rise to an inference or
presumption that either one exercises any
dominion and control over the other.
Iacometti v. Frassinelli, 494 S.W.2d 496, 499 (Tenn. Ct.
App. 1973). A trial court‟s conclusions regarding whether a
confidential relationship existed or a person exercised undue
influence over another are questions of fact. Gibson v.
Gibson, No. W2004-00005-COA-R3-CV, 2004 WL 2464271,
at *3 (Tenn. Ct. App. W.S., Nov. 2, 2004).
In Tennessee, a presumption of undue influence arises when
there is a confidential relationship followed by a transaction
in which the dominant party receives a benefit from the other
party. Matlock v. Simpson, 902 S.W.2d 384, 386 (Tenn.
1995). The burden of proof for these elements rests with the
party who alleges the confidential relationship. Smith v.
Smith, 102 S.W.3d 648, 653 (Tenn. Ct. App. 2002).
However, once that party establishes a presumption of undue
influence, the burden of proof shifts to the dominant party to
rebut the presumption by clear and convincing evidence of
the fairness of the transaction. Id.
2014 WL 1607356 at *8 (quoting In re Estate of Price, 273 S.W.3d 113, 125 (Tenn. Ct.
App. 2008) (internal citations omitted)).
11
As this court has further stated regarding the undue influence doctrine:
“The most common way of establishing the existence of
undue influence is „by proving the existence of suspicious
circumstances warranting the conclusion that the [action] was
not the [decedent‟s] free and independent act.‟ ” Estate of
Hamilton v. Morris, 67 S.W.3d 786, 792 (Tenn. Ct. App.
2001). The most frequently used “suspicious” circumstances
are: “(1) a confidential relationship between the testator and
the beneficiary; (2) the testator‟s poor physical and mental
condition; and (3) the beneficiary‟s involvement in the
procurement of the will in question.” Id. However, other
suspicious circumstances are also recognized: “(1) secrecy
concerning the will‟s existence; (2) the testator‟s advanced
age; (3) the lack of independent advice in preparing the will;
(4) the testator‟s illiteracy or blindness; (5) the unjust or
unnatural nature of the will‟s terms; (6) the testator being in
an emotionally distraught state; (7) discrepancies between the
will and the testator‟s expressed intentions; and (8) fraud or
duress directed toward the testator.” Id. at 792-93 .
Although there exists no prescribed number of suspicious
circumstances which must be met in order to invalidate an
action, “the doctrine of undue influence is applicable only
where there is a confidential relationship[.]” “Confidential
relationships can assume a variety of forms, and thus the
courts have been hesitant to define precisely what a
confidential relationship is.” Kelley v. Johns, 96 S.W.3d 189,
197 (Tenn. Ct. App. 2002). However, “[i]n general terms, it
is any relationship that gives one person the ability to exercise
dominion and control over another.”
Confidential relationships come from two sources: “(1) „legal
confidential relationships‟ and (2) „family and other
relationships.‟ ” In re Estate of Brevard, 213 S.W.3d at 302-
03. “A „legal confidential relationship‟ is a „fiduciary
relationship . . . or any other relationship where the law
prohibits gifts or dealing between the parties.‟ ” Id.
Fiduciary relationships are confidential per se, but do not
“make out a prima facie claim of undue influence unless the
contestant establishes an additional suspicious
12
circumstance[.]” Id. However, family relationships are not
confidential per se and thus, “the contestants must prove the
elements of domination and control in order to establish the
existence of a confidential relationship.” Id. Proof of a
family relationship “coupled with proof of domination and
control” establishes a confidential relationship, “but does not
make out a prima facie claim of undue influence unless an
additional suspicious circumstance exists.” Id. Thus, the
existence of a fiduciary relationship presumes a confidential
relationship, while a family relationship requires proof of
“domination and control” to establish that a confidential
relationship exists.
Waller v. Evans, No. M2008-00312-COA-R3-CV, 2009 WL 723519 at *6-7 (Tenn. Ct.
App. W.S., filed Mar. 17, 2009) (brackets in original; emphasis added; internal citations
omitted). Although what we said in Waller was in the context of a will contest ‒ one of
the more frequent actions that may involve an undue influence claim ‒ much of it is
generally applicable to a claim of undue influence in another context, such as this one.
The trial court, in its thorough 32-page memorandum opinion and order,
recognized and applied these principles and stated as follows on this point:
[O]n or about April 7, 2011, Sam Lewis‟ name was added to
numerous bank accounts belonging to Roscoe Lewis and/or
Roscoe Lewis and Dorothy Lewis at BB&T, United
Community Bank, and Copper Basin Federal Credit Union.
. . . Sam Lewis is the individual who drove both Roscoe
Lewis and Dorothy Lewis to each of the banks to make the
changes wherein his name was added to the accounts and/or
CDs. The court finds that during the last two years of Roscoe
Lewis‟ life, Roscoe Lewis suffered from serious health
related conditions that ultimately resulted in his death in
March of 2012. The court finds that these bank accounts
were all changed during the time when Roscoe Lewis was
suffering from extreme poor health related issues.
* * *
While the court heard much testimony that Roscoe Lewis was
stubborn, independent, and an independent thinker, the court
is also convinced that Roscoe Lewis deeply loved Dorothy
13
Lewis, who he believed to be his wife. The court believes
that he deeply loved Dorothy Lewis to the point that he, by
his son‟s own admission, thoroughly and directly instructed
his son that he was to take care of Dorothy Lewis when
Roscoe Lewis was dead and no longer able to do so. Sam
Lewis testified, based upon his discussions and agreement
with his father, that he would be responsible to see to and to
take care of Dorothy Lewis after Roscoe Lewis was dead. He
testified that this was his father‟s stated intention.
* * *
[T]his was all done at a time when Roscoe Lewis was gravely
ill, so ill in fact that his son was the person primarily
responsible to take him to and from his doctor‟s
appointments, his son was the one seeing to h[im] and
Dorothy on a nearly daily basis, and his son was the one who
was assisting him in nearly every aspect of his life. Yet, the
testimony remains that he was a stubborn and independent
man most all the days of his life.
* * *
[T]he court finds that Roscoe Lewis was also suffering from
great stress and he was gravely ill at the time this purported
gift and sale took place. This court finds Roscoe Lewis to be
suffering under some outside influence, from his son and
possibly based upon his own personal fears and worries, such
that his mental capacity was impaired enough that he entered
into an unconscionable agreement that defies not only
financial logic, but common sense as well. . . . Based upon all
of the above, the court finds that the transfer of this real estate
fails due to the incompetency of Dorothy Lewis as well as the
mental capacity of Roscoe Lewis at the time, as well as the
undue influence and coercion of Sam Lewis.
* * *
There is no question that there was a power of attorney
executed here. However, the power of attorney was not used
in changing the accounts that were previously just in the
14
name of Roscoe Lewis and Dorothy Lewis. Roscoe Lewis,
Dorothy Lewis, and Sam Lewis simply went to the bank and
executed the requisite documents to make the changes.
However, there is also no question, based upon the testimony
and all of the proof and exhibits presented in this trial, that
Sam Lewis had an agreement with his father to use the funds
to take care of not only Roscoe Lewis but Dorothy Lewis as
well, once Roscoe was gone. The court finds it very moving
that during the times when Roscoe Lewis was gravely ill and
without the knowledge of either Roscoe or Dorothy Lewis,
Sam Lewis later went to the bank and had all of the bank
accounts transferred into another account solely in his name
and his wife‟s name, and/or solely in his name and listing his
wife as a payable on death beneficiary or his daughter as a
beneficiary. This, based upon all of the proof and evidence in
this case, was never Roscoe Lewis‟ intention, nor is there any
proof that this was ever discussed by Roscoe Lewis with Sam
Lewis. It is clear that Sam Lewis took these actions on his
own, without giving Roscoe Lewis or Dorothy Lewis any
notice of these actions. This act of Sam Lewis is found by the
court to be an unlawful conversion by Sam Lewis of these
accounts. Furthermore, the court finds that Sam Lewis
admitted that not only was Dorothy Lewis not aware of his
having changed these accounts, Sam Lewis also admitted in
his testimony that Dorothy Lewis had no access whatsoever
to these accounts, nor, without the filing of this lawsuit,
would Dorothy Lewis ever have known that the monies had
been moved and what the legal account status was after Sam
Lewis made these changes. The court finds that these
circumstances are not only suspicious, given Dorothy Lewis‟
mental deterioration and overall mental and physical capacity,
they are also extremely disturbing, given Roscoe Lewis‟
mental and physical deterioration. The court finds that Sam
Lewis is the one who took Roscoe and Dorothy Lewis to the
banks, and Sam Lewis was the one who was in fact advising
Roscoe Lewis at the time that all of these changes were made.
. . . The court finds that both Roscoe Lewis and Dorothy
Lewis were not only suffering from physical and mental
deterioration, they were of an extremely advanced age and
lacked the business savvy and/or understanding to know the
15
full ramifications of what changing the accounts might have
meant.
It is undisputed that Sam Lewis was attorney-in-fact for Roscoe and Dorothy
Lewis as a result of the powers of attorney for healthcare and financial matters executed
on April 26, 2011. Generally speaking, “a confidential relationship arises as a matter of
law when an unrestricted power of attorney is granted to the dominant party.” In re
Estate of Farmer, No. M2013-02506-COA-R3-CV, 2014 WL 5308226 at *9 (Tenn. Ct.
App. M.S., filed Oct. 15, 2014) (quoting Childress v. Currie, 74 S.W.3d 324, 328-29
(Tenn. 2002)); In re Estate of Price, 273 S.W.3d at 125. As we observed in Estate of
Price,
However, there are exceptions to this rule. In Childress v.
Currie, our Supreme Court held that “an unexercised power
of attorney does not in and of itself create a confidential
relationship.” Id. at 329. The High Court explained its
reasoning as follows: “When an unrestricted power of
attorney is executed but has not yet been exercised, good
sense dictates that there exists no dominion and control and
therefore no confidential relationship based solely on the
existence of the power of attorney.” Id.
273 S.W.3d at 125.
The trial court correctly stated that Sam Lewis did not exercise his powers of
attorney in changing the names on the bank accounts, because they had not yet been
executed then. They were in effect, however, when Sam Lewis returned to the banks to
withdraw the finds and transfer them to his own accounts. Furthermore, in his answer to
the amended complaint, Sam Lewis stated the following:
It is admitted that Defendant Sam Lewis was designated as
attorney in fact by Durable Power of Attorney (DPA) on
April 26, 2011. This was done at the request of Roscoe and
Dorothy Lewis and with the assistance of their own
independent legal counsel. The defendant never used this
DPA for any purpose except to have the mailing address
changed at about the time of Roscoe Lewis[‟] death, and to
protect the assets of Roscoe Lewis, Dorothy Lewis and Sam
Lewis.
* * *
16
It is admitted that in the days immediately prior to the death
of Roscoe Lewis, [Sam Lewis] caused certain bank accounts
to be transferred from a joint account owned by Roscoe
Lewis, Dorothy Lewis and Sam Lewis into accounts that
were titled to Sam Lewis and his wife Lora Lewis. The
purpose of this action was to protect the assets from Roy
Waters. . . . Out of an abundance of caution, and to preserve
the funds, Sam Lewis had the funds held in joint accounts in
his name, Dorothy Lewis[‟] and Roscoe Lewis[‟] name
transferred over to his and Lora Lewis[‟] name. Sam Lewis
considered these funds to belong to both he [sic] and
Dorothy Lewis, after the death of his father and that these
funds were held by him in a fiduciary capacity, until
transferred to the Clerk of Courts by agreed order. This
authority was clearly vested in him by the [durable power of
attorney] granted to him on April 26, 2011.
(Emphasis added.) Sam Lewis‟ own allegation that the funds “were held by him in a
fiduciary capacity” for Dorothy Lewis is supported by his testimony at trial. Sam Lewis
testified that both Roscoe and Dorothy placed their trust and confidence in him, and that
Roscoe Lewis relied on him to take care of Dorothy. Sam Lewis further testified:
Q: Now, this lawsuit in large part is about you having
transferred these accounts from a joint account with Dorothy
into accounts that were just in yours and your wife‟s name.
A: Yes, sir.
Q: Why did you do that, Mr. Lewis?
A: I did that for solely protection8 for [sic] me and Dorothy ‒
me and Dot. I call her Dot. I don‟t call her Dorothy.
* * *
Q: We talked about this a little bit, Mr. Lewis, but after your
dad‟s death or around the time of your dad‟s death you‟ve
8
There is no proof in the record why the funds were not secure prior to the transfer into the
personal account of Sam Lewis and his wife.
17
acknowledged that the funds that we‟ve discussed were, in
your mind, held for Dorothy‟s benefit? For her protection?
A: Say that again.
Q: You‟ve acknowledged, sir, that after or around the time of
your dad‟s death the bank accounts, the money that we‟ve
talked about, you were holding them for Dorothy‟s
protection?
A: That money after my dad died belonged to me and
Dorothy. Yeah.
Q: And when we talked about this in your deposition, Mr.
Lewis, you indicated to me that if Dorothy needs all of this
money during her lifetime that it‟s hers. Remember telling
me that?
A: My obligation to my dad was to take care of her as long as
she lived, whatever it took.
Q: And if she needed all that money for her reasons ‒
A: I said, so be it.
Considering the above-quoted evidence, and the totality of circumstances as presented by
the proof in the record, we hold that the trial court did not err in finding that a
confidential relationship existed between Sam Lewis on the one hand, and Roscoe and
Dorothy Lewis.
The trial court further correctly found several suspicious circumstances, including
Roscoe Lewis‟ advanced age and poor physical and mental condition near the end of his
life, the discrepancies between the clearly stated intentions of Roscoe Lewis and what
Sam Lewis actually did with the bank account funds and marital residence, and the
secrecy of the surreptitious transfer of funds, made solely for Sam Lewis‟ benefit, two
days before Roscoe Lewis‟ death. “A trial court‟s conclusions regarding whether a
confidential relationship existed or a person exercised undue influence over another are
questions of fact.” In re Estate of Price, 273 S.W.3d at 125. Many of these factual
findings were dependent upon the trial court‟s live observation of the witnesses and its
assessment of their credibility. The trial court specifically made four separate findings in
its memorandum opinion and order that “Sam Lewis‟ testimony . . . is not credible, and
18
that it is completely incredible.” Regarding the source and rightful ownership of the bank
account funds, the trial court found:
While the court heard testimony from Sam Lewis that he
contributed funds to some of the accounts and/or participated
in enterprises wherein funds were earned and later deposited
into these accounts, the court finds absolutely no proof that
this is true. The court finds that all or at least the
overwhelming majority of all of the funds in these bank
accounts came from the personal enterprises of Roscoe Lewis
and Dorothy Lewis and their years of work together, and their
years of very simple and frugal living throughout their more
than 41 years together. The court finds that Sam Lewis‟
testimony was again not credible pertaining to these bank
accounts, and was in fact incredible, given all of the facts and
evidence. The court finds that the realities of the ownership
of these funds in these accounts derive solely from the efforts
of Roscoe Lewis and Dorothy Lewis.
The evidence does not preponderate against these findings of fact made by the trial court.
The trial court also found that “during the last several years (more than 10) of
Roscoe Lewis‟ life, Dorothy Lewis suffered from extreme mental health related issues”
and that she “was mentally incompetent and unable to manage her affairs.” In making
this finding, the court relied on the deposition testimony of Dorothy Lewis‟ treating
physician, who, according to the trial court‟s memorandum opinion and order, testified
that “he did not believe Dorothy Lewis to be mentally competent”; she “would not
understand what signing a power of attorney meant, nor a deed, nor any other financial
document”; she “could be easily manipulated and . . . unduly influenced by others”; that
she “suffered from a low I.Q.” and “was simple-minded”; and “could not manage her
financial affairs, nor . . . her health care affairs.” The issue of Dorothy Lewis‟ mental
capacity was not seriously disputed by Sam Lewis at trial, and he does not argue on
appeal that the trial court incorrectly found her mentally incompetent. The evidence does
not preponderate against the trial court‟s decision to set aside the real estate transfer of
the marital residence on grounds of mental incompetency and undue influence.
C.
On appeal, both Sam Lewis and the estate of Roscoe Lewis challenge the trial
court‟s award of attorney‟s fees against Sam Lewis and against the constructive trust
19
created for Dorothy Lewis‟ use and benefit during her lifetime.9 The general rule
regarding an award of attorney‟s fees is as stated by this Court in Roberts v. Sanders, No.
M1998-00957-COA-R3-CV, 2002 WL 256740 at *10 (Tenn. Ct. App. M.S., filed Feb.
22, 2002):
Tennessee follows the “American Rule” with regard to
awarding attorney‟s fees. Under the American Rule, litigants
are responsible for their own attorney‟s fees no matter
“however wrongful may have been the suit, or however
groundless the defense.” Corinth Bank & Trust Co. v.
Security Nat’l Bank, 148 Tenn. 136, 154, 252 S.W. 1001,
1006 (1923). Each litigant must wage its own fight for justice
with its own resources. James H. Cheek, III, Note, Attorney’s
Fees: Where Shall the Ultimate Burden Lie, 20 Vand. L. Rev.
1216, 1221 (1967). Thus, in the absence of some statutory,
contractual, or equitable ground, a litigant must pay for its
own lawyer and, conversely, cannot be required to pay for
another litigant‟s lawyer. State v. Brown & Williamson
Tobacco Corp., 18 S.W.3d 186, 194 (Tenn. 2000); Kultura,
Inc. v. Southern Leasing Corp., 923 S.W.2d 536, 540 (Tenn.
1996); Brooks v. Lambert, 15 S.W.3d 482, 485 (Tenn. Ct.
App. 1999).
In the present case, there is no statutory or contractual ground supporting the award of
attorney‟s fees. The trial court held that Sam Lewis wrongfully converted the funds in
the bank accounts at issue. However, we have previously held that a finding of
conversion does not necessarily support an award of attorney‟s fees, stating as follows:
The trial court found that the money was wrongfully
converted by Mrs. Kilpatrick. Regardless of whether Mrs.
9
As we have already stated, the trial court ordered that:
[T]he attorney fees and expenses which were incurred on behalf of
Dorothy Lewis and awarded to Jenne, Scott & Jenne totaling $92.675.76
be paid from said Trust funds. Upon payment of said amount to Jenne,
Scott & Jenne from said Trust funds, Jenne, Scott & Jenne and for the
Estate of Dorothy Lewis shall assign to said Trust the Judgment rendered
against Sam Lewis for attorney fees and expenses[.]
While the trial court clearly intended for Sam Lewis to be ultimately responsible for the attorney‟s fees,
this order is tantamount to a judgment against the constructive trust, and we review it as such.
20
Kilpatrick is liable for conversion, such a finding does not
mean that, as a tortfeasor, she is liable for attorney‟s fees.
* * *
[I]n Glazer v. First Am. Nat’l Bank, No. 02A01-9308-CH-
00185, 1995 Tenn.App. LEXIS 348 (Tenn. Ct. App. May 25,
1995) (later reversed on different grounds by Glazer v. First
Am. Nat’l Bank, 930 S.W.2d 546 (Tenn.1996)), this court
specifically held that the trial court‟s award of attorney‟s fees
as part of a consequential damage award to the plaintiff in a
conversion case was not appropriate. The court stated that:
Because there has been no allegation of a
statutory or contractual provision for attorney‟s
fees here, we find that the trial court‟s inclusion
of Plaintiff‟s attorney‟s fees in its award of
damages was unwarranted.
Glazer, 1995 Tenn.App. LEXIS 348, at *15. This conclusion
is consistent with Tennessee‟s adherence to the American
Rule.
Tennessee courts have long rejected attempts to include
attorney‟s fees as a part of damages, “concluding that an
award of attorney‟s fees as part of the prevailing party‟s
damages is contrary to public policy.” John Kohl & Co. P.C.
v. Dearborn & Ewing, 977 S.W.2d 528, 534 (Tenn. 1998).
In John Kohl & Co., the Supreme Court stated it was not
persuaded that legal malpractice claims should be made an
exception to the rule against awarding attorney‟s fees in the
absence of an agreement or statute and held that attorney‟s
fees in legal malpractice suits, “as in other litigation,” may
not be awarded. Id. No exception has been made for
attorney‟s fees in conversion cases, either, and we find no
basis for creating one. Therefore, the appellees cannot
recover their attorney‟s fees from Mrs. Kilpatrick based on a
finding of conversion.
Carmical v. Kilpatrick, No. M2002-00346-COA-R3-CV, 2002 WL 31863293 at *5, 6
(Tenn. Ct. App. M.S., filed Dec. 23, 2002).
21
The trial court based its award of attorney‟s fees on its finding that Sam Lewis
committed fraud or intentional misrepresentation. We have upheld an award of
attorney‟s fees based on a finding of intentional misrepresentation. Francis v. Barnes,
No. W2012-02316-COA-R3-CV, 2013 WL 5372851 at *11 (Tenn. Ct. App. W.S., filed
Sept. 23, 2013) (citing Hodge, 382 S.W.3d at 343)). The trial court‟s findings and
conclusions in this regard are as stated in its order as follows:
At a minimum, the court finds that Sam Lewis has unlawfully
converted all of the funds into his name. However, the court
must go further and find, at least with regard to Dorothy
Lewis, that Sam Lewis committed a fraud against Dorothy
when he changed these accounts, given her mental capacity,
and especially given the fact that Sam Lewis made later
changes wherein he totally removed Dorothy Lewis from all
of the accounts. He admitted he never told her he had done
this and he admitted that Dorothy Lewis had no access or
ownership interest in the accounts once he took the action of
changing the accounts to just his and his wife‟s names. While
the court understands that Roscoe and Sam discussed these
accounts, the court finds that Sam Lewis also committed a
fraud against Roscoe Lewis as well when he converted the
accounts to his own name. The court finds that this was never
Roscoe Lewis‟ intention for so long as Dorothy was alive,
and Sam Lewis knew this and admitted this.
* * *
Finally, the court must consider the issue of whether or not
Dorothy Lewis is entitled to her attorney fees and the costs in
this action, due to the fraudulent actions and/or undue
influence of Sam Lewis. Based upon all of the above, and
based upon the totality of the circumstances, including not
only the defendant‟s relationship with both Roscoe Lewis and
Dorothy Lewis, their ill health and their lack of knowledge,
sophistication, as well as their mental conditions and physical
conditions and incapacities, the court finds that Sam Lewis is
guilty of fraud in this case. The court finds specifically that
Dorothy Lewis had no way of knowing the ramifications of
her actions, and ultimately, no way of understanding or
knowing what was being done to her throughout the course of
22
this case. The court finds it egregious what has occurred in
this case, and the court takes judicial notice of the fact that
during the pendency of this litigation, Dorothy Lewis has
suffered not only the loss of her significant other of more than
41 years, she also suffered a debilitating stroke almost
immediately after the loss of her loved one, and almost
immediately after learning that all of the monies had been
removed by Sam Lewis. Based upon all of the above, and
based upon all of the findings set out in this order, the court
finds that Sam Lewis shall be responsible for the attorney fees
and court costs of Dorothy Lewis, as well as the costs
incurred in this matter.
The elements of intentional misrepresentation are as follows:
To recover for intentional misrepresentation, a plaintiff must
prove: (1) that the defendant made a representation of a
present or past fact; (2) that the representation was false when
it was made; (3) that the representation involved a material
fact; (4) that the defendant either knew that the representation
was false or did not believe it to be true or that the defendant
made the representation recklessly without knowing whether
it was true or false; (5) that the plaintiff did not know that the
representation was false when made and was justified in
relying on the truth of the representation; and (6) that the
plaintiff sustained damages as a result of the representation.
Hodge v. Craig, 382 S.W.3d 325, 343 (Tenn. 2012).
Francis, 2013 WL 5372851 at *9.
As can be seen from the above-quoted portion of the trial court‟s memorandum
opinion and order, it made no finding that Sam Lewis made a false statement of a past or
present fact. Furthermore, based on our review of the record, the evidence presented
would not support such a finding. While we do not disagree with the trial court‟s
observation that Sam Lewis‟ conduct was “disturbing” and “egregious” under the
circumstances established by the proof, there was no evidence presented sufficient to
establish that he was guilty of an intentional misrepresentation. The award of attorney‟s
fees cannot be supported on this ground.
There is, however, another ground that clearly supports the trial court‟s award of
attorney‟s fees against Sam Lewis. In Martin v. Moore, a case where a wife wrongfully
23
used her power of attorney executed by her disabled husband to withdraw funds from his
bank account, we observed as follows:
[S]everal cases of this court support the proposition that
attorney fees may be awarded against a trustee who breaches
[his or] her fiduciary duty. Brandt v. Bib Enterprises, 986
S.W.2d 586 (Tenn Ct. App. 1998); Marshall v. First
National Bank of Lewisburg, 622 S.W.2d 558 (Tenn. Ct.
App. 1981).
Although attorney fees should not be imposed where there is
merely a technical fault on the part of the fiduciary, 622
S.W.2d at 560, the imposition of such fees on fiduciaries who
deliberately use their position of trust to enrich themselves
creates a disincentive to such behavior. The trial court‟s
finding that Ms. Moore intentionally withdrew her husband‟s
separate funds from his checking account for her sole use and
benefit is an appropriate predicate for the trial court‟s award.
109 S.W.3d 305, 313 (Tenn. Ct. App. 2003). Under Martin and the cases cited therein,
the trial court was supported in awarding attorney‟s fees against Sam Lewis on the
ground of his abuse of his fiduciary duty by deliberately using his position of trust to
enrich himself at the expense of his ward, Dorothy Lewis.
Although the estate of Dorothy Lewis argues on appeal that the trial court‟s award
was justified on the ground of its finding of intentional misrepresentation, the estate has
not argued that it was justified on a finding of abuse of fiduciary duty. Nor did the trial
court base its ruling on this ground, although we have held it to be the correct one. It is
well established, however, that an appellate court “may affirm the judgment on grounds
different from those relied upon by the lower courts when the lower courts have reached
the correct result.” In re Estate of Trigg, 368 S.W.3d 483, 502 n.63 (Tenn. 2012) (citing
State v. Hester, 324 S.W.3d 1, 21 n.9 (Tenn. 2010); Continental Cas. Co. v. Smith, 720
S.W.2d 48, 50 (Tenn. 1986); Hopkins v. Hopkins, 572 S.W.2d 639, 641 (Tenn. 1978)).
Moreover, Tenn. R. App. P. 36(b) provides that “[w]hen necessary to do substantial
justice, an appellate court may consider an error that has affected the substantial rights of
a party at any time, even though the error was not raised in the motion for a new trial or
assigned as error on appeal.” The facts, equities, and applicable law in this case dictate
that “substantial justice” supports the trial court‟s award of attorney‟s fees against Sam
Lewis.
24
The estate of Roscoe Lewis has raised the issue of whether the trial court erred in
awarding attorney‟s fees against the constructive trust created by the trial court for the
use and benefit of Dorothy Lewis, which trust contains all of the assets of the Roscoe
Lewis estate. The estate argues that there is no principle of law providing an exception to
the generally-prevailing American Rule as pertinent to the estate. We agree. We can
find no legal or equitable ground supporting the award against the constructive trust, and
consequently reverse the trial court‟s judgment making this award.
The estate of Dorothy Lewis argues that it should be awarded its attorney‟s fees
and costs on appeal. We do not find this to be an appropriate case for such an award.
V.
The trial court‟s award of attorney‟s fees against the constructive trust for Dorothy
Lewis‟ benefit is reversed. The trial court‟s judgment in all other respects, including the
court‟s award of fees against Sam Lewis, is affirmed.10 Costs on appeal are assessed to
the appellant, Sam Lewis. The case is remanded to the trial court for enforcement of the
trial court‟s judgment, as changed by us, and for collection of costs assessed below.
______________________________________
CHARLES D. SUSANO, JR., CHIEF JUDGE
10
Our decision with respect to attorney‟s fees only pertains to the judgments against Sam Lewis
and the constructive trust. The issues of whether fees are due from the Estate of Dorothy Lewis to her
attorneys, and, if so, the amount of same, are not before us on this appeal.
25