Melton v. Melton

• Docket Number: E2023-00649-COA-R3-CV
• Decision Date: 27 December 2023
• Parties: CHARLES MELTON, INDIVIDUALLY AND AS PERSONAL REPRESENTATIVE FOR THE ESTATE OF BETTY RUTH SHAW MORGAN v. MICHAEL MELTON
• Court: Tennessee Court of Appeals

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CHARLES MELTON, INDIVIDUALLY AND AS PERSONAL REPRESENTATIVE FOR THE ESTATE OF BETTY RUTH SHAW MORGAN
v.
MICHAEL MELTON

No. E2023-00649-COA-R3-CV

Court of Appeals of Tennessee, Knoxville

December 27, 2023

Assigned on Briefs December 4, 2023

Appeal from the Chancery Court for Knox County No. 197562-2 Richard B. Armstrong, Jr., Chancellor

This is an action against the former attorney-in-fact of the decedent for breach of fiduciary duties and conversion. The trial court granted summary judgment against the attorney-in-fact and awarded damages to the estate. The attorney-in-fact appeals, contending the trial court did not have subject matter jurisdiction over the matters at issue because the power of attorney was based on Texas law and the actions alleged in the petition were performed in Texas, where he was a resident; however, he does not challenge the court's personal jurisdiction over him. He also contends that summary judgment was inappropriate because material facts were in dispute. Finding no error, we affirm.

Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Chancery Court Affirmed

Daniel W. Starnes, Knoxville, Tennessee, for the appellant, Michael Melton.

David Kidd, Knoxville, Tennessee, for the appellees, Charles Melton, individually, and as Personal Representative for the Estate of Betty Ruth Shaw Morgan.

FRANK G. CLEMENT, JR., P.J., M.S., delivered the opinion of the court, in which ARNOLD B. GOLDIN and KRISTI M. DAVIS, JJ., joined.

OPINION

FRANK G. CLEMENT JR., P.J., M.S.

FACTS AND PROCEDURAL HISTORY

At all times material to this action, Betty Ruth Shaw Morgan ("Ms. Morgan" or "Decedent"), was a resident of Knox County, Tennessee. She died intestate on September

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18, 2017, and is survived by two sons, Charles Melton ("Charles"), a resident of Tennessee, and Michael Melton ("Michael"), a resident of Texas.^[1]

On October 6, 2017, the Knox County Probate Court appointed Charles to serve as personal representative for the Estate of Betty Ruth Shaw Morgan ("the Estate"). Because Ms. Morgan owned property in Texas, Charles also filed a petition to be granted letters of administration over her ancillary estate there. But Michael objected to the appointment, and as of the filing of this appeal, Ms. Morgan's Texas estate had no personal representative.

Charles, individually and as Personal Representative for the Estate of Betty Ruth Shaw Morgan, commenced this action on March 1, 2019, in the Chancery Court for Knox County, Tennessee. Charles alleged in the complaint that Ms. Morgan had been a resident of Knox County, Tennessee, for at least eight years; that Michael brought a Durable Power of Attorney form to Ms. Morgan's house in Knoxville that named Michael as her attorney-in-fact for virtually all of her real estate and financial matters; that Ms. Morgan executed the power of attorney on June 20, 2017; and that Michael breached his fiduciary duty to her by misappropriating a large portion of her estate for his own use and benefit in the weeks before she died. In particular, Charles alleged that Ms. Morgan had approximately $480,000 in various bank accounts when she executed the power of attorney, $285,000 of which was held in accounts that named Charles as the pay-on-death beneficiary. Charles averred that, as a result, the Estate suffered damages in the amount of $164,173 and he suffered damages in the amount of $155,000. Based on these allegations, Charles asserted claims for breach of fiduciary duty and conversion.^[2]

Michael responded to the complaint by filing a motion to dismiss for lack of subject matter jurisdiction under Tennessee Rule of Civil Procedure 12.02(1).^[3] Michael argued that the court lacked jurisdiction because the power of attorney was subject to Texas law; Michael was a resident of Texas; and the accounts from which he allegedly transferred money were in Texas. Charles filed a response in opposition to the motion, stating, inter alia, that Michael traveled to Tennessee to obtain the power of attorney from Ms. Morgan; that Michael performed his services, at least in part, in Tennessee; and that Michael breached his fiduciary duty to a resident of Tennessee, Ms. Morgan. Therefore, Charles argued, the cause of action arose in Tennessee. Charles also noted that Michael had not

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challenged the fact that the court had personal jurisdiction over him and that he was only challenging subject matter jurisdiction.

After a hearing, the trial court denied Michael's Motion to Dismiss for lack of subject matter jurisdiction without explanation.

Michael then filed an answer to the complaint, denying that he breached his fiduciary duties to Ms. Morgan or that he converted her property to his own. However, Michael admitted to most of the remaining factual allegations, including that their mother was a resident of Knox County, Tennessee, where the power of attorney was executed.

Thereafter, Charles filed a motion for summary judgment supported by a memorandum of law and a statement of undisputed material facts. Michael filed a response opposing the motion along with a memorandum of law and a response to Charles's Statement of Undisputed Material Facts. Again, Michael admitted to all but one of the factual statements. But he also filed a statement of "additional" undisputed facts in which he denied that he breached his fiduciary duty or converted Ms. Morgan's funds.

In an order entered on October 30, 2020, the trial court granted Charles's Motion for Summary Judgment. The trial court held that Michael's affidavit failed to establish a dispute of material fact and whether he breached his fiduciary duties and whether his actions constituted conversion were questions of law:

[Charles], in [his] Statement of Undisputed Material Facts painstakingly and thoroughly document[s Michael's] actions as they pertain to Decedent's accounts [Michael's] response to [Charles's] Statement [of Undisputed Material Facts] admits, with the exception of the date of the execution of the Power of Attorney noted above, that [Michael] took every action listed by [Charles]. Because every fact was admitted to and not disputed, the Court hereby adopts and incorporates [Charles's] Statement of Undisputed Material Facts with the sole exception of the execution date of the Power of Attorney.

[Michael], however, argues that there are genuine issues of material fact in dispute. Specifically, [Michael] disputes that he misused his authority under the Power of Attorney or breached his fiduciary duties under the same and that those actions do not constitute conversion. The Court notes that these are legal conclusions and not disputed facts that would defeat a motion for summary judgment.... ....

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The Court is left with [Charles's] Statement of Undisputed Material Facts to which [Michael] admitted in its entirety. In that Statement, Decedent executed a Power of Attorney in favor of [Michael]. Under authority of that Power of Attorney, [Michael] drained the bank account of Decedent and used the funds to buy himself multiple vehicles and a recreational vehicle. [Michael] also caused cashier checks to be issued to himself and Charles.

Based on these and other undisputed facts, the court determined that Charles was entitled to judgment as a matter of law on his breach of fiduciary duty and conversion claims:

The type of self-dealing as exhibited by [Michael] is a classic example of a breach of fiduciary duty. Not only did [Michael] drain Decedent's bank accounts, [but he also] did not use any of that money for Decedent's benefit. The sole fact in the record before the Court that shows that [Michael] acted in the benefit of the Decedent in his actions under the Power of Attorney is the paying of one of Decedent's bill[s]. This bill was paid for by the very [few] funds left in one of Decedent's bank account[s]. The other actions all exhibit a lack of good faith towards Decedent's property. The Court finds that [Michael] breached his fiduciary duties in his self-dealing with Decedent's property. ....

[Michael] has admitted that his actions in his dealings with Decedent's bank accounts were intentional. Furthermore, [Michael] has admitted that it was his intent to remove the money from Decedent's accounts and [that] the only reason he did not [remove money from] some of the accounts was due to his lack of knowledge of those accounts. [Michael] used the funds from Decedent's accounts to purchase two vehicles as well as a recreational vehicle for himself. He also transferred some of the funds to his brother, [Charles]. The record also shows that [Michael] was not entitled to any of the money that he withdrew at the time he exercised his authority under the Power of Attorney.

After further proceedings, Charles was awarded a judgment against Michael for $81,128.83 in compensatory damages, to accrue pre-judgment interest at the rate of ten percent (10%) per annum from March 1, 2019. The court also...