Rogers v. First National Bank, No. M2004-02414-COA-R3-CV (TN 2/14/2006)
| Decision Date | 14 February 2006 |
| Docket Number | No. M2004-02414-COA-R3-CV.,M2004-02414-COA-R3-CV. |
| Parties | HELEN SFIKAS ROGERS, Temporary Guardian for the Estate of Reuben K. Richards v. THE FIRST NATIONAL BANK, TERRY W. CHRISTIAN and wife, ZELDA E. CHRISTIAN, and MARYILY CUNNINGHAM. |
| Court | Tennessee Supreme Court |
Joseph D. Baugh, Franklin, Tennessee, for Appellant, Helen Sfikas Rogers
Scott C. Williams, Keli J. Stewart, Nashville, TN, for Appellee, First National Bank
Douglas Thompson Bates, III, Centerville, TN, for Appellees, Terry W. Christian and wife, Zelda E. Christian
Alan E. Highers, J., delivered the opinion of the court, in which W. Frank Crawford, P.J., W.S., and David R. Farmer, J., joined.
In 1997, an elderly gentleman executed a power of attorney appointing his only daughter as his attorney-in-fact. Shortly thereafter, the daughter began to withdraw funds from her father's accounts held at the bank. The father's mental and physical condition deteriorated to such a state that he had to be placed into a nursing home facility. The daughter subsequently entered into a transaction to convey her father's real property. Ultimately, the father was forced to seek assistance from TennCare to pay for his nursing home obligations. TennCare subsequently brought suit against the father seeking reimbursement of funds expended on his behalf. The probate court appointed a temporary guardian to represent the father's interest. The father's guardian brought suit against the bank, the buyers of his real estate, and the daughter seeking to rescind the land sale contract, recover the funds dissipated from his accounts, or to impose a constructive trust. The daughter was dismissed from the suit after she relinquished control of certain items purchased with the proceeds from these transactions to the guardian. As for the bank, the guardian took the position that the bank owed the father a fiduciary duty to protect his accounts from dissipation by the daughter. In regards to the buyers of the father's real property, the guardian contended that they had notice of a problem with the transaction due to the daughter's mental instability, the unreasonably low price paid by the buyers, the existence of a contingency clause in the contract, and the fact that the father was in a nursing home. The bank and the buyers moved for summary judgment, and the trial court granted both motions. We affirm.
Reuben Richards ("Richards") was a long-time resident of Hickman County, Tennessee, and he owned approximately 115 acres of real property located in that county. Richards and his wife, who is presently deceased, had one child together, Marilyn Cunningham ("Cunningham"), who resided in Davidson County, Tennessee. Due to his increasing age, Richards began to experience forgetfulness and a lack of mobility. He had been a customer of the First National Bank (the "Bank") in Centerville, Tennessee, for many years. In 1997, Richards approached Lorraine Bates ("Bates"), then president of the Bank, seeking her assistance with planning for his future care. As a result of their conversations, Bates prepared a power of attorney for Richards, and on April 1, 1997, Richards executed the power of attorney naming Cunningham as his attorney-in-fact. The power of attorney provided Cunningham with the general authority to handle matters related to Richards' person and property. Specifically, it provided as follows: "This Power of Attorney shall include but not be limited to the right to sign checks on my accounts, withdraw funds from my account, make deposits, sell stocks, bonds or other securities, sell my personal property or real estate and collect any money due me."
According to Cunningham, she has suffered from schizophrenia and bipolar disorder since the mid-1980s. Cunningham took medications for these disorders and was hospitalized on several occasions due to her mental illness. Following the execution of the power of attorney, Cunningham began to withdraw funds from Richards' accounts at the Bank. Cunningham asserted that she had difficulty dealing with the employees of the Bank when she was not taking her medication and would attempt to withdraw funds from Richards' accounts. Over time, Cunningham withdrew a sizeable amount of funds from Richards' accounts held at the Bank for her own personal use. In 2001, Richards' condition deteriorated to such a state that he could no longer live independently. He was ultimately diagnosed with Alzheimer's disease and other age related illnesses. As a result, he was admitted into a nursing home facility in Nashville, Tennessee. That same year, Cunningham sold the timber off of Richards' land.
In 2002, Cunningham contacted Anita Arnold ("Arnold"), a real estate agent, seeking help with selling Richards' real property. Arnold initially estimated the value of Richards' real property to be $164,666.67. Kathy Davis ("Davis"), another real estate agent, noticed the listing advertising Richards' land for sale. Terry and Zelda Christian (the "Christians" or, collectively with the Bank, "Appellees") lived a short distance from Richards' property. Cognizant of the Christians' proximity to Richards' property, Davis contacted the Christians to inquire as to whether they may be interested in purchasing the land. At that time, Terry Christian served as the Assessor of Property for Hickman County. The Christians authorized Davis to offer $ 220,000.00 to Arnold for the purchase of the land. Cunningham, through Arnold, responded with a counteroffer of $230,000.00, which the Christians accepted. All negotiations for the sale of the real property were conducted by the parties' respective real estate agents. On June 29, 2002, Cunningham and the Christians entered into a land sale contract to consummate the transaction. The contract contained the following contingency: "Contingent upon seller Marilyn Cunningham POA for R.K. Richards being able to sell property due to nursing home or DHS provisions regarding R.K. Richards." The Bank agreed to provide the financing to enable the Christians to purchase the property. Before releasing the funds, however, the Bank hired its own appraiser to appraise the property, which resulted in an appraised value of $245,000.00. Further, the Bank's attorney felt that Richards' explicit assent to the transaction needed to be obtained through the execution of a second power of attorney.
Cunningham obtained what purports to be Richards' signature on a document entitled "Amendment to Power of Attorney," which was apparently drafted by the Bank's attorney, although no one from the Bank was present when the document was executed. The amendment specifically granted Cunningham the authority to convey Richards' real property to the Christians. The Bank eventually determined that the original power of attorney executed by Richards vested Cunningham with sufficient authority to convey the property. Accordingly, the sale took place, and Cunningham received the proceeds from the sale. Cunningham used the proceeds to purchase a home in Davidson County, Tennessee, and she bought two new vehicles, both of which she subsequently wrecked. Shortly after purchasing the property, the Christians subdivided the land and conveyed some of the lots to various individuals.
Ultimately, Richards' nursing home expenses proved to be more than he could bear financially, and he was forced to seek assistance from TennCare. The State of Tennessee eventually brought suit against Richards in the Probate Court of Davidson County seeking reimbursement of expenses paid on his behalf. In June of 2003, the probate court appointed attorney Helen S. Rogers ("Rogers" or "Appellant") as temporary guardian for Richards' estate. Rogers subsequently secured the services of an appraiser who opined that, had Richards' real property been sold at auction, it would have sold for between $225,000.00 and $675,000.00. On June 25, 2003, Cunningham, pursuant to an agreed order, voluntarily surrendered to Rogers the home and the two vehicles she purchased with proceeds from the sale of Richards' real property. On June 26, 2003, Rogers, in her capacity as temporary guardian for Richards' estate, filed suit against the Bank, the Christians, and Cunningham in the Chancery Court of Hickman County.
In her complaint, Rogers sought to rescind the land sale contract entered into between Cunningham and the Christians as fraudulently entered into or to impose a resulting or constructive trust on the proceeds of the sale. Rogers also asked the chancery court to enjoin the Christians from further disposing of the real property at issue, and she sought compensatory damages from the defendants for the harm caused by their allegedly wrongful conduct. Further, she sought to impose a constructive trust on any proceeds from the withdrawals made by Cunningham from Richards' accounts held at the Bank. The Bank and the Christians subsequently answered Rogers' complaint by denying the allegations set forth therein. On August 4, 2003, the chancery court entered an order temporarily enjoining the Christians from further disposing of the real property they obtained from Cunningham. In the same order, the court ordered that, pursuant to an oral motion made by Rogers, Cunningham was to be dismissed from the lawsuit, presumably due to her surrender of all assets in her possession to Rogers.
On October 3, 2003, the Christians filed their motion for summary judgment asserting that no genuine issues of material fact existed to rebut the following facts: they were bona fide purchasers of the real property at issue, they paid a reasonable and fair price for the property, and Cunningham had authority to convey the property pursuant to the power of...
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