Estate Of David Holt Ralston v. Hobbs
| Decision Date | 28 October 2010 |
| Docket Number | No. 07-1667CV,No. M2009-02442-COA-R3-CV,07-1667CV,M2009-02442-COA-R3-CV |
| Parties | ESTATE OF DAVID HOLT RALSTON, DECEASED, BY JOHN A. RALSTON, PERSONAL REPRESENTATIVE v. FRED R. HOBBS et Al. |
| Court | Tennessee Court of Appeals |
The personal representative of a decedent's estate filed this action to rescind twelve deeds, all of which were executed by the decedent's attorney-in-fact without the decedent's knowledge and for which the decedent received no consideration, or alternatively for damages. The attorney-in-fact conveyed the property to himself, his mother, and his daughter. The personal representative alleges that the attorney-in-fact breached his fiduciary duty in making the transfers. The trial court agreed, and rescinded the conveyances for property still owned by the attorney-in-fact and awarded monetary damages against the attorney-in-fact for the value of property subsequently conveyed to innocent third parties. The attorney-in-fact appeals claiming, inter alia, the personal representative lacks standing to bring a claim on behalf of the estate involving real property, that the action is barred by the statute of limitations, and that the trial court erred in finding that the durable power of attorney did not authorize him to transfer the property. We have determined the personal representative has standing to maintain this action and the action was timely filed. We affirm the trial court's finding that the attorney-in-fact breached his fiduciary duty by conveying the property to himself, his mother, and his daughter for no consideration to the decedent. We also affirm the rescission of the deeds to property the attorney-in-fact still owns and the award of damages against the attorney-in-fact for the value of the real property that has since been conveyed to innocent third parties.
William Kennerly Burger, Murfreesboro, Tennessee, for the appellants, Fred R. Hobbs, Myrtle Ralston Hobbs, Amanda Hobbs Johnson, and Jonathan Johnson.
Mark S. Dessauer and Rachel E. Ralston, Kingsport, Tennessee, for the appellee, The Estate of David Holt Ralston, Deceased, by John L. Ralston, Personal Representative.
OPINIONThe decedent, David Ralston, owned a substantial interest in valuable real estate throughout his adult life; that is, until he appointed his nephew, Fred Hobbs, as his attorney-in-fact on June 3, 2000. When the power of attorney was executed, David Ralston and his sister, Myrtle Ralston Hobbs, the mother of Fred Hobbs, owned the old family farm and adjoining property as tenants in common, 1 and David Ralston's share of the real property was worth approximately $1,000, 000.
Shortly after being appointed as attorney-in-fact for David Ralston, Hobbs used the power of attorney to execute twelve deeds to convey all of David Ralston's interest in the real estate to himself, or his mother, Myrtle Hobbs, or another uncle, Thomas Ralston. Seven of the deeds were quitclaim deeds; the others were warranty deeds. All of the deeds were signed by Fred Hobbs as the attorney-in-fact for David Ralston; Mr. Ralston did not sign any of the deeds and there is no evidence in the record that he was ever aware of any of the deeds.
None of the twelve deeds were recorded until after David Ralston's death, which was fifteen months after the deeds were executed by Fred Hobbs. David Ralston died on September 12, 2001, and the deeds were not recorded until September 20, 2001.
In September of 2001, following David Ralston's death and the recording of the first twelve deeds, Hobbs executed a new set of deeds to convey the rest of the family farm, which included property that Fred Hobbs previously conveyed on behalf of David Ralston to Myrtle Hobbs and Thomas Ralston, using two additional powers of attorney his mother Myrtle Hobbs and his uncle Thomas Ralston had executed on June 3, 2000.2 This time Fred Hobbsconveyed some of the property to himself and some of it to his daughter, Amanda Hobbs Johnson, for no consideration. He also sold property formerly owned by the decedent, David Ralston, to third parties who were bona fide purchasers for value; however, no consideration was ever paid by Fred Hobbs to David Ralston or his estate.
On October 3, 2005, John Ralston, a brother of the decedent, was appointed personal representative of David Ralston's estate. One month later, on November 8, 2005, the personal representative filed this action on behalf of the estate against Fred Hobbs, 3 Myrtle Hobbs, Amanda Hobbs Johnson, and Jonathan Johnson. The Johnsons are the daughter and son-in-law of Fred Hobbs. It is alleged in the complaint that Hobbs was in a confidential relationship with the decedent and that Hobbs breached his fiduciary duty as the decedent's attorney-in-fact when he transferred the decedent's property to himself and other family members for no consideration, as well as selling the decedent's property to third parties. An amended complaint was filed on October 30, 2007, in which the third party purchasers were additionally named as defendants. The amended complaint advanced essentially the same legal theories as the original complaint.4
Fred Hobbs, Myrtle Hobbs, and the Johnsons filed answers to the amended complaint asserting, inter alia, the affirmative defenses of the statute of limitations and estoppel. Some of the third party purchasers responded to the amended complaint by filing a motion for judgment on the pleadings asserting they were bona fide purchasers for value and were without notice that the original conveyances were without value. In July 2008, the trial court granted the motion for judgment on the pleadings thereby dismissing some of the third party purchasers. Thereafter, the estate voluntarily dismissed the remaining third party purchasers. The estate also dismissed its claim against Thomas Ralston, as no property remained titled in his name5 and he had not participated in Hobbs' activities.
The estate's claims against the four remaining defendants, Fred Hobbs, Myrtle Ralston Hobbs, Amanda Hobbs Johnson, and Jonathan Johnson, went to trial on September 14 and 15, 2009. Following a bench trial, the trial court found that Fred Hobbs violated his fiduciary responsibilities as attorney-in-fact for the decedent, that Fred Hobbs' conveyances of the decedent's real property were not fair to the decedent, and that there was no evidence that the decedent had a history of gifting property to his relatives.
In the judgment entered on November 2, 2009, the trial court rescinded the deeds for the properties that were still titled to Fred Hobbs, Myrtle Ralston Hobbs, and/or Amanda Hobbs Johnson. As for the decedent's property that Fred Hobbs subsequently conveyed to the third party bona fide purchasers, the trial court awarded a monetary judgment against Fred Hobbs of $600,982.09, for the value of the property, plus prejudgment interest, for a total award of $962,550.54. Thereafter, the Estate filed a motion for discretionary costs in the amount of $2,316.00, which the trial court granted. An Amended Judgment was entered on February 22, 2010 to correct errors in the previous judgment regarding the deeds that were rescinded.
Fred Hobbs filed a timely appeal; the other three defendants, Myrtle Ralston Hobbs, Amanda Hobbs Johnson, and Jonathan Johnson, did not appeal.
Fred Hobbs raises numerous issues on appeal. First, he contends the personal representative lacks standing to maintain an action for conversion of real property. Second, if the personal representative has standing, he contends this action is barred by the statute of limitations. Third, he insists he did not breach his fiduciary duty to as his uncle. Last, and alternatively, he asserts the trial court erred in calculating the amount of damages.
Hobbs contends that the personal representative does not have standing because the decedent's real property vests in heirs immediately upon the decedent's death. We have determined the personal representative has standing to assert the claim for conversion of real property; because conversion is a tort.6
The complaint states a claim for fraudulent conversion of real property against Fred Hobbs.7 A claim for fraudulent conversion is a tort claim. H& M Enters., Inc. v. Murray, No. M1999-02073-COA-R3-CV, 2002 WL 598556, at *3 (Tenn. Ct. App. Apr. 17, 2002) (citing Kinnard v. Shoney's, Inc., 100 F. Supp. 2d 781, 797 (M.D. Tenn. 2000); Mammoth Cave Prod. Credit Ass'n v. Oldham, 569 S.W.2d 833, 836 (Tenn. Ct. App. 1977)).
Historically, under the English common law, tort claims died with the decedent, however, an exception was carved into the common law with the enactment of the English statute, 4 Edward III, ch. 7, and, thereafter, the personal representative retained the right to bring such suits on behalf of the decedent.8 Ware v. McKeithan (In re Estate of Hendrickson), No. M2008-01332-COA-R9-CV, 2009 WL 499495 at * 7 (Tenn. Ct. App. Feb. 25, 2009) (citing Jack W. Robinson, Sr., Jeff Mobley & Andrea J. Hedrick, Pritchard on Wills and Administration of Estates § 716 (6th ed. 2007)). The law concerning tort actions, such as conversion prior to the death of the decedent, are exclusive to the personal representative, since this is an exception carved in the law, which used to preclude such actions from being pursued after the death of the person harmed. Id. (citing 2 Pritchard § 716). Therefore, civil actions to recover assets taken from the decedent by fraud or deceit are exclusive to the personal representative. See id. (citing Willis v. Smith, 683 S.W.2d 682 (Tenn. Ct. App. 1984); Owens v. Breeden, 661 S.W.2d 887 (Tenn. Ct. App. 1983)).
The personal...
To continue reading
Request your trial