Ellis v. Duggan
| Decision Date | 10 September 2021 |
| Docket Number | E2020-00723-COA-R3-CV |
| Citation | 644 S.W.3d 85 |
| Parties | Hunter Ryan ELLIS, et al. v. Christina L. DUGGAN, et al. |
| Court | Tennessee Court of Appeals |
Michael M. Thomas and W. Neil Thomas, III, Chattanooga, Tennessee, for the appellant, Christina L. Duggan.
David L. Moss, Signal Mountain, Tennessee, for the appellees, Hunter Ryan Ellis and Nicholas Ray Ellis.
Linda J. Norwood, Chattanooga, Tennessee, for the appellee, Michael David Ellis, II, individually and as guardian for William David Ellis.
This is a case involving allegations of undue influence. The plaintiffs are the grandchildren of the decedent. The sole defendant at issue on appeal is the decedent's niece, who also held power of attorney for the decedent during the last years of her life. The transaction at issue occurred roughly six months before the decedent died and consisted of a gift of $176,000 to the niece for the purchase of a house. The executor of the decedent's estate declined to pursue the claim for undue influence and assigned the cause of action to the decedent's four grandsons, who were the residuary beneficiaries of the estate. After a five-day bench trial, the trial court found that a confidential relationship existed between the decedent and the defendant niece and that multiple suspicious circumstances existed to support a finding of undue influence. As such, the trial court entered a judgment against the defendant niece for $176,000. However, the trial court denied the plaintiffs’ request for attorney fees on the basis that they were "not available under the current caselaw relating to undue influence." The defendant niece appeals, challenging the finding of undue influence. The plaintiffs appeal the denial of their request for attorney fees. Having carefully reviewed the voluminous record, we affirm the finding of undue influence and the judgment against the defendant niece. We reverse the denial of the plaintiffs’ request for attorney fees and remand for a reasonable award of attorney fees incurred by the plaintiffs in the trial court and on appeal.
Jean Ellis was born in 1931 and married O. David "Dave" Ellis in 1950. Jean and Dave had two children, Rick and Mike.1 During their fifty-year marriage, Jean and Dave accumulated considerable wealth. When Dave died in 2002, a substantial portion of that wealth passed to Jean. Dave's will also set up a family trust for the benefit of Jean during her lifetime, with the remainder to go to his heirs. After Dave died, Jean resided alone on the family farm in Signal Mountain, Tennessee, and one of her grandsons resided in a smaller home on the farm. Jean's younger sister, Judy Morgan, lived nearby in Soddy Daisy. Judy's daughter, Christina L. Duggan, lived in Chattanooga.
In late 2011, Jean's son Mike moved in with Jean after he was diagnosed with early onset dementia
and became unable to care for himself. Jean and Mike were very close, and she was very protective of him. One of Jean's biggest fears was her uncertainty regarding what would happen to Mike if she died. In 2012, at the age of 81, Jean updated her estate plan in consultation with attorney Stephen Jett at the law firm of Chambliss, Bahner, & Stophel. Mr. Jett had represented Jean and Dave in various estate planning matters over the years (although another firm handled the probate of Dave's estate). After meeting with Mr. Jett, Jean decided to revise her will and to execute a power of attorney naming her niece Christina as her attorney-in-fact. Christina was a physical therapist and was in the process of starting a new elder care business, called Care Connections, in which she would serve individuals in the capacity of "care manager." Mike was also in need of care, but it was decided that Rick would be designated as attorney-in-fact for Mike. Mr. Jett directed a new associate at the firm, Ryan Barry, to draft the relevant documents. At that time, Jean's estate was worth somewhere around $2.4 million. Jean initially planned to include in her will specific bequests of $50,000 to her sister Judy and $50,000 to her niece Christina, with the residue being divided amongst a trust for Mike, her other son Rick, and her grandchildren. During the meeting with Mr. Jett, which Christina also attended, Jean decided to increase the gift to Christina from $50,000 to $75,000. Later, Jean called Mr. Jett to say she had decided instead to include a specific bequest of $70,000 to Christina and to give Christina a present gift of $5,000 to assist her with the new business she was starting.2 Aside from one smaller gift to a neighbor, the remainder of Jean's estate would be left to Rick, the trust for Mike, and the grandchildren.
Jean executed her revised will to this effect on December 14, 2012. On the same date, she executed a Durable General Power of Attorney and a Durable Power of Attorney for Health Care, designating Christina as her attorney-in-fact. The General Power of Attorney document was a standard form that contained two alternative gift provisions that could be selected: one that prohibited the attorney-in-fact from making any non-charitable gifts or other gratuitous transfers pursuant to the power of attorney, and a second option that would permit the attorney-in-fact to make non-charitable gifts under certain circumstances. Jean initialed the option that prohibited Christina from making any non-charitable gifts pursuant to the power of attorney. Christina received compensation of around $1,000 per month for her services as power of attorney.
Around the same time when Jean executed these documents, she was diagnosed with an aggressive form of pancreatic cancer
. In early 2013, she underwent major surgery for the removal of portions of her pancreas, small intestine, bile duct, and gall bladder.3 Over the next two years, Christina acted as attorney-in-fact for Jean on numerous occasions using the powers granted in the general power of attorney and the power of attorney for healthcare. Christina did not act in the role of a "caregiver" for Jean. Instead, she helped to manage, monitor, and pay full-time caregivers for Jean who were employed by caregiving agencies. Christina also took Jean to doctor's appointments and helped her with financial matters, such as reviewing Jean's accounts with her periodically to update her on how much money she had. The bank statement for Jean's checking account was sent to Christina's house. Christina would communicate with the trustee of the family trust and request more money when Jean was "running short on funds."
In her role as attorney-in-fact, Christina often communicated with Mr. Jett at Chambliss Bahner in regard to Jean and her financial affairs. In May 2013, Christina informed Mr. Jett that she was having trouble accessing Jean's bank accounts and asked him to contact the bank manager to resolve the issue. She suggested that the bank was unnecessarily requiring Jean to sign additional documents rather than honoring the power of attorney, when Jean was so malnourished that she was "not thinking rationally and will not sign anything, nor is she able to fully comprehend what she is signing." Upon investigation by associate Ryan Barry, he learned Christina was seeking to be added as "a joint owner" of Jean's bank account rather than a mere signatory, and because the power of attorney did not contain gifting powers, the bank would not allow this unless Jean signed a new signature card. The attorneys and bank manager agreed that there was no need for Jean to sign anything if Christina was only a signatory on the account.
Another issue arose in September 2013. Christina asked Mr. Jett about the possibility of the trust purchasing a house for her to live in with Mike and whether she would have to purchase another house on her own once Mike died. Mr. Jett asked Ryan Barry to look at Jean's will and its provisions regarding the trust for her disabled son but noted it seemed to him that Christina was "getting out of bounds." Mr. Barry similarly responded with concern that the proposed course of action could be interpreted as Christina using trust assets for her own benefit.
Later that month, Mr. Jett forwarded marketing materials for Christina's new elder care business to another attorney at Chambliss Bahner, indicating that she was doing an excellent job managing Jean's care. Over time, a "business referral relationship" developed between Chambliss Bahner and Christina, in which Christina would refer clients to Chambliss Bahner for legal services and Chambliss Bahner would refer clients to Christina and/or Care Connections for care management. Thus, Christina worked on several cases with Chambliss Bahner attorneys and staff for mutual clients. The website for Christina's business contained endorsements from an attorney and a paralegal from Chambliss Bahner.
In November 2013, Jean's attorney, Steve Jett, met with Christina and with the trustee of the family trust, Grady Williams, who was a long-time family friend and an accountant, to discuss Jean's financial situation. Mr. Jett summarized the meeting in the following letter addressed to Jean's son, Rick, and Mike's son, Michael, Jr., on November 7, 2013:
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