Smith v. Wachovia Bank, N.A., No. 1071239 (Ala. 9/30/2009)
| Decision Date | 30 September 2009 |
| Docket Number | No. 1071239.,No. 1071189.,1071239.,1071189. |
| Parties | Fletcher Mitchell Smith, as personal representative of the estate of Jo Everett McLeod, deceased, v. Wachovia Bank, N.A., as personal representative of the estate of William Wynn McLeod, deceased. Wachovia Bank, N.A., as personal representative of the estate of William Wynn McLeod, deceased, v. Fletcher Mitchell Smith, as personal representative of the estate of Jo Everett McLeod, deceased. |
| Court | Alabama Supreme Court |
Appeals from Jefferson Circuit Court (CV-07-2883).
In case no. 1071189, Fletcher Mitchell Smith, as the personal representative of the estate of Jo Everett McLeod ("the wife"), deceased, appeals from a judgment against Smith; Smith's wife, Maria Smith ("Maria"), the wife's niece; and the wife's estate in a breach-of-contract action filed by Wachovia Bank, N.A. ("Wachovia"), in its capacity as the personal representative of the estate of William Wynn McLeod ("the husband"), deceased. In case no. 1071239, Wachovia cross-appeals from the trial court's declaration that certain equitable claims asserted by Wachovia were rendered moot by the judgment in Wachovia's favor. We reverse and remand in both cases
The husband and wife were married in 1957. No children were born to them during their approximately 49-year marriage. The record reflects that despite filing joint tax returns, the husband and wife for the most part kept their finances separate.
The record suggests that the separate financial arrangements of the husband and wife and the terms of the husband's will, as set out below, were the husband's response to marital difficulties between the husband and the wife and his attempts to leave the wife an amount equal to or only slightly larger than the wife's statutory elective share. See. § 43-8-70, Ala. Code 1975. The testimony of Katherine N. Barr, an attorney who prepared a will for the husband in 1995, indicated that the husband was "very fearful" of the wife, that he was afraid to file for divorce, and that he took extreme steps to keep the wife unaware of his estate-planning activities. Similarly, Lynn Baxley Ault, the attorney who, purportedly following the wife's becoming aware of the contents of the 1995 will, prepared a new will for the husband in 1996, indicated both her concern and the husband's fear that the wife would contest his will. According to Ault, the husband informed her "that he did not want [the] wife to receive `one penny more' than the elective share." Ault further noted that the marital relationship between the husband and the wife appeared to be "poor" and obviously one of "mutual distrust" and that the husband "seemed afraid of his wife." Ault specifically observed during trial that the
husband "seemed to be ... cowed by [the wife]" and that "[h]e did not want to confront her." She further stated that the husband was extremely secretive about his estate plans because, she said, "[she] got the impression he was afraid [the wife] might react to him in a way that would be very unpleasant for him."
On April 25, 2005, the husband, then elderly and ailing, executed a durable power of attorney naming the wife his attorney-in-fact. Specifically, the power of attorney granted the wife broad powers "to act in, manage, and conduct all [the husband's affairs] ... for [the husband's] use and benefit." (Emphasis added.) According to its terms, the power of attorney became effective "upon the disability, incompetency, or incapacity of the [husband]." It is unclear from the record whether the wife knew that the husband had executed the power of attorney or when she discovered it.
Beginning in late 2006, after the husband was moved into a nursing home following the wife's cancer diagnosis and ensuing treatment, the wife used the power of attorney to transfer stock certificates previously held solely in the husband's name into either jointly held accounts or accounts
held solely in the wife's name. The assets transferred by the wife totaled $604,368.50. The wife also consolidated several Wachovia checking accounts, some of which were solely in the husband's name, and prematurely cashed out an $85,000 certificate of deposit held solely in the husband's name. According to Maria, the wife's transfer of the assets into her own name and/or jointly held accounts reflected both the wife's displeasure that two-thirds of the husband's estate was to be left to his niece and nephew and a desire that everything be "`equally divided.'" There was also testimony indicating that the wife undertook the consolidation of assets to liquidate the assets in order to finance the anticipated future health-care costs of both the husband and the wife. The above-described transactions, which allegedly occurred without the husband's knowledge, left the husband as the possessor of individually titled assets totaling one dollar and twelve cents.
On February 21, 2007, the wife died at the age of 81 years. The wife's will, which she executed in 2006, named Smith as the personal representative of her estate. Pursuant to the terms of the wife's will, her estate was to be divided
as follows: 50% to Shannon Everett, a nephew of the wife; 37.5% to Smith and Maria; and 12.5% to Geri and Ricki Price, the wife's grandnephew and his wife.1
Following the wife's death, Julia Roth, the conservator for Jefferson County, was appointed conservator of the husband's estate. Although Roth discovered the transfers made by the wife pursuant to the power of attorney, disclosed them to the husband's heirs, and reportedly considered filing a declaratory-judgment action seeking a determination as to the propriety of the transfers, no legal action was taken before the husband's death on June 27, 2007. Roth was, however, able to recover some of the husband's assets that had been transferred by the wife.
The husband's will named Wachovia as the personal representative of his estate. It provided that Elaine Autrey and William Carlisle McLeod, the husband's niece and nephew, were his sole heirs should the wife predecease him.
On August 20, 2007, Wachovia filed the underlying action against Smith (both in his individual and representative capacities) and Maria. Wachovia's complaint included claims of abuse of a confidential relationship, undue influence, breach of fiduciary duty, breach of contract, conversion, fraud, money had and received, and conspiracy. In addition to restitution and "exemplary damages," Wachovia sought an accounting and the imposition of a constructive trust on all transferred assets, which it estimated totaled approximately $1,170,000.
In January 2008, Smith and Maria filed a counterclaim in which they asserted claims of abuse of process and libel, slander, and defamation against Wachovia. Wachovia amended its complaint, omitting the fraud count and reducing its requested damages to $668,779.09. Shannon Everett, the majority beneficiary under the wife's will, intervened in the action to "unite with the defendants in defending the claims made by [Wachovia]" and in order "[t]o protect [his] interests as... a beneficiary of [the wife's] will."2
The trial court severed the counterclaims filed by Smith and Maria, ordering that they would be considered post-judgment should the defendants prevail at trial. The trial court also severed Wachovia's equitable and legal claims, indicating that it would rule on the equitable claims following trial on the legal claims. Trial began on February 25, 2008. At the conclusion of Wachovia's case, and again at the close of all the evidence, Smith, Maria, and Everett jointly moved for a judgment as a matter of law {"JML") on grounds that Wachovia had failed to present sufficient evidence; the trial court partially granted that motion, dismissing all tort-based claims as having abated upon the husband's death and dismissing all claims against Smith and Maria individually. However, the remaining breach-of-contract claim was submitted to the jury, which returned a verdict in Wachovia's favor and awarded the husband's estate $668,779.09 in damages.
On March 21, 2008, Wachovia submitted legal authority in support of its equitable claims. Smith, in his capacity as personal representative of the wife's estate, filed a postjudgment motion for a JML or, in the alternative, for a
new trial or a remittitur, again arguing that Wachovia's breach-of-contract claim had been erroneously submitted to the jury and that the trial court erred in excluding certain items of evidence offered by the defendants at trial. Following a hearing, the trial court denied that motion. In its final order, the trial court also declared Wachovia's requests for equitable relief moot because, it concluded, the husband's estate had been fully compensated by the jury's award on the breach-of-contract claim. It further entered a summary judgment in favor of Wachovia as to the counterclaims asserted by Smith and Maria. The trial court entered an amended final judgment on April 18, 2008, clarifying that the judgment was entered solely against the wife's estate and not against either Smith or Maria individually. Smith appeals the judgment in favor of Wachovia on the breach-of-contract claim (case no. 1071189);3 Wachovia cross-appeals from that part of the judgment holding that its equitable claims are moot (case no. 1071239).
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