Barbara Jarnigan v. Claude Moyers , 568 S.W.3d 585 ( 2018 )

03/02/2018
IN THE COURT OF APPEALS OF TENNESSEE
AT KNOXVILLE
September 13, 2017 Session
BARBARA JARNIGAN ET AL. V. CLAUDE MOYERS
Appeal from the Chancery Court for Hamblen County
No. 2016-CV-143 Douglas T. Jenkins, Chancellor
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No. E2016-02398-COA-R3-CV
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This case involves allegations of fraud and undue influence with respect to the
estate of Brenda Vargo (the deceased). Following the deceased’s death, four
surviving family members discovered that they were no longer designated as
“payable-on-death” beneficiaries on several of the deceased’s bank accounts.
These family members filed suit against Claude Moyers (Mr. Moyers), alleging
that Mr. Moyers’s wife, Wanda Moyers (Mrs. Moyers), persuaded the deceased,
“through fraud or undue influence,” to close some of her bank accounts and to
name Mr. Moyers as the sole payable-on-death beneficiary on the remaining
accounts. Following a bench trial, the court determined that Mrs. Moyers had a
confidential relationship with the deceased; hence, creating a rebuttable
presumption of undue influence. The trial court imputed the undue influence of
Mrs. Moyers to Mr. Moyers. Ultimately, the trial court determined that Mr.
Moyers failed to rebut the presumption of undue influence by clear and convincing
evidence. Consequently, the court divested Mr. Moyers of his interest in the
disputed funds. Mr. Moyers appeals. We reverse and remand for further
proceedings.
Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Chancery Court
Reversed; Case Remanded
CHARLES D. SUSANO, JR., J., delivered the opinion of the court, in which D.
MICHAEL SWINEY, C.J., and JOHN W. MCCLARTY, J., joined.
Link A. Gibbons, Morristown, Tennessee, and Katherine A. Young, Knoxville,
Tennessee, for the appellant, Claude Moyers.
Mark A. Cowan, Morristown, Tennessee, for the appellees, Barbara Jarnigan,
Wanda Lovin, Mattie Noe, and Peggy Light.
OPINION
I.
The deceased first met Mrs. Moyers in 2005 or 2006 when Mrs. Moyers
began preparing the Vargos’ taxes. However, the parties agree that Mrs. Moyers
did not become a close friend of the deceased until the deceased’s husband passed
away in March 2014. Thereafter, Mrs. Moyers spent significantly more time with
the deceased. The two women spoke over the telephone frequently. Mrs. Moyers
also began driving the deceased to the grocery store and doctor’s appointments.
Mr. Moyers did not develop a personal relationship with the deceased until
the early months of 2015. He testified that he began visiting the deceased at home
in January 2015. The plaintiffs contend that Mr. Moyers did not begin spending
time with the deceased until after March 31, 2015. According to Mr. Moyers, he
spent considerable time sitting and talking with the deceased, taking her out to eat,
and helping her around the house. At least one plaintiff testified that the deceased
“loved” both Mr. and Mrs. Moyers. Before this litigation ensued, plaintiffs also
asked Mr. Moyers to be a pallbearer at the deceased’s funeral.
On April 23, 2015, Mrs. Moyers drove the deceased to the TVA Employees
Credit Union, where she helped the deceased open several new bank accounts. At
that time, the deceased listed the plaintiffs, in various combinations, as payable-
on-death beneficiaries on different accounts. On May 11, 2015, the deceased
executed a new general membership agreement with the bank in which she
designated Mr. Moyers as the payable-on-death beneficiary. The execution of that
document revoked and superseded all prior agreements between the deceased and
the bank, thus extinguishing any legal interest the plaintiffs had in the funds.
Sometime later, the deceased closed three of the accounts on which most of the
plaintiffs had originally been named as beneficiaries. Only four accounts
remained open at the time of the deceased’s death. Of those four accounts, only
one account had previously listed any of the plaintiffs as beneficiaries. Plaintiff
Brenda Jarnigan was the original beneficiary on that account.
Mr. and Mrs. Moyers both testified that they had absolutely no involvement
with the deceased’s decision to name Mr. Moyers as a beneficiary or her decision
to close some of her accounts. According to Mr. and Mrs. Moyers, they did not
drive the deceased to the bank when she made those changes; nor did they provide
the deceased with certain personal information (such as Mr. Moyers’s Social
Security Number) that would have been required. In fact, Mr. and Mrs. Moyers
claim they were unaware that the deceased had named Mr. Moyers as a
beneficiary until after the deceased’s death. Plaintiffs offer no direct evidence that
Mr. and Mrs. Moyers had personal knowledge of the deceased’s desire to name
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Mr. Moyers as a payable-on-death beneficiary. Nor do the plaintiffs offer
evidence that Mrs. Moyers provided the deceased with transportation on her May
11, 2015 trip to the bank. Instead, plaintiffs merely assert that “[Mrs. Moyers]
started moving money around and had her husband’s name put on a document
purporting to trump all of the plaintiffs’ beneficiary designations.” The plaintiffs
also claim that “[i]n all likelihood” the deceased would not have closed some of
her other accounts “had [Mrs. Moyers] not interfered.”
II.
Mr. Moyers raises four issues on this appeal, which we have restated
slightly:
Whether the trial court lacked subject matter
jurisdiction over this case because of the plaintiffs’
alleged lack of standing.
Whether the trial court erred in declining to grant Mr.
Moyers’s motion for a directed verdict.
Whether the trial court erred in finding that Mrs.
Moyers exerted undue influence over the deceased.
Whether the trial court erred in imputing the undue
influence to Mr. Moyers.
III.
A.
The threshold issue in this case is whether the trial court lacked subject
matter jurisdiction. Although Mr. Moyers did not raise this issue before the trial
court, parties cannot waive their ability to challenge a court’s lack of subject
matter jurisdiction. Tenn. R. Civ. P. 12.08. In fact, appellate courts have a
responsibility to determine whether subject matter jurisdiction exists “whether or
not presented for review.” Tenn. R. App. P. 13(b); see also Dishmon v. Shelby
State Comm. College, 15 S.W.3d 477, 480 (Tenn. Ct. App. 1999). This inquiry is
a question of law, which we consider de novo. Chapman v. DaVita, Inc., 380
S.W.3d 710, 712-13 (Tenn. 2012) (quoting Northland Ins. Co. v. State, 33 S.W.3d
727, 729 (Tenn. 2000)).
Mr. Moyers argues that the trial court lacked subject matter jurisdiction
because of the plaintiffs’ alleged lack of standing. As Mr. Moyers correctly
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observes, lack of standing does not usually defeat a court’s subject matter
jurisdiction; however, “[w]hen a statute creates a cause of action and designates
who may bring an action, the issue of standing is interwoven with that of subject
matter jurisdiction and becomes a jurisdictional prerequisite.” Osborn v. Marr,
127 S.W.3d 737, 740 (Tenn. 2004) (citing Grom v. Burgoon, 672 A.2d 823, 824
(Pa Super. Ct. 1996)).
Here, Mr. Moyers argues that a constellation of Tennessee statutes
regulating banks and financial institutions creates the plaintiffs’ undue influence
cause of action. Specifically, Mr. Moyers points to Tenn. Code Ann. §§ 45-2-704,
-706, and -710. Section 704 permits the creation of payable-on-death accounts
and shields banks from liability when disbursing funds to designated beneficiaries.
If a third party challenges the bank’s ability to disburse funds to a designated
beneficiary, section 706 provides that a bank does not have to recognize the
adverse claimant until the claimant can procure a “restraining order, injunction or
other appropriate process against the bank from a court of competent jurisdiction.”
Section 710 places a statute of limitations on when third parties may bring such
actions. If the bank so chooses, it may file an interpleader action and ask a court
to determine the rights of the relevant parties. Tenn. Code Ann. § 45-2-704(b)(8).
Mr. Moyers’s reliance on these statutes is misplaced. Tenn. Code Ann. §§
45-2-704, -706, and -710 collectively provide protection for financial institutions
against third party claims, but the statutes do not independently create a cause
action for third parties against designated beneficiaries. The statute of limitations
imposed by section 710 and the casual references to “adverse claimants” in section
706 merely shows that interested third parties already had causes of action
available to them when the statute was drafted. Indeed, the undue influence cause
of action arises from the common law. See Estate of Glasgow v. Whittum, 106
S.W.3d 25, 31 (Tenn. Ct. App. 2002) (citing Rest. (Second) of Contracts § 177
(1981)). The origin of this cause of action does not change merely because a party
names a bank or financial institution as a co-defendant.1 Because plaintiffs’ undue
influence claim arises from the common law and not a statute, the issue of
standing is not so “interwoven with that of subject matter jurisdiction” so as to be
a “jurisdictional prerequisite.” See Osborn, 127 S.W.3d at 740.
Accordingly, the “subject matter jurisdiction” issue having been decided
adversely to the defendant, we decline to address whether plaintiffs in fact have
standing to sue because Mr. Moyers failed to raise that issue before the trial court.
1
Plaintiffs’ complaint named both Mr. Moyers and TVA Employees Credit Union
as co-defendants. Before trial, however, the court ordered the bank to deposit the
disputed funds with the Clerk and Master. The court then dismissed the bank as a party
in the lawsuit.
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See Tenn. R. App. P. 36(a); ABN AMRO Mortg. Group, Inc. v. Southern Sec.
Federal Credit Union, 372 S.W.3d 121, 126 (Tenn. Ct. App. 2011) (citations
omitted).
B.
Next, we consider whether the trial court erred in denying Mr. Moyers’s
motion for a directed verdict. This is a question of law, which we review de novo
with no presumption of correctness. In Retreat, LLC v. Crusenberry-Gregg, No.
E2009-02148-COA-R3-CV, 2010 WL 3638796, at *2 (Tenn. Ct. App., filed Sept.
21, 2010). We are also guided by the principles set forth in Johnson v. Tennessee
Farmers Mut. Ins. Co., 205 S.W.3d 365 (Tenn. 2006), wherein our Supreme
Court stated:
In reviewing the trial court’s decision to deny a motion
for a directed verdict, an appellate court must take the
strongest legitimate view of the evidence in favor of
the non-moving party, construing all evidence in that
party’s favor and disregarding all countervailing
evidence. A motion for a directed verdict should not
be granted unless reasonable minds could reach only
one conclusion from the evidence. . . . [A]n appellate
court [may not] weigh evidence. Moreover, . . . an
appellate court must not evaluate the credibility of
witnesses. Accordingly, if material evidence is in
dispute or doubt exists as to the conclusions to be
drawn from that evidence, the motion must be denied.
Id. at 370 (citations omitted).
Before deciding whether the trial court erred in denying the motion, we
must first consider whether the motion was directed at the plaintiffs’ undue
influence claim, their fraud claim, or both. At the conclusion of plaintiffs’ case-in-
chief, counsel for Mr. Moyers stated:
Your Honor, I would move for a directed verdict at
this point in time. They’ve not established a
confidential relationship existed. They’ve certainly
not established that Mr. Moyers exercised any
dominion and control, and we’d ask that their
complaint be dismissed at this time Your, Honor.
After engaging in a discussion about undue influence, the trial court ultimately
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denied the defendant’s motion. The court was silent on the issue of fraud.
Although Mr. Moyers did ask for the plaintiffs’ “complaint [to] be
dismissed,” we agree with the plaintiffs that the motion for a directed verdict only
related to the issue of undue influence. Counsel for Mr. Moyers never mentioned
fraud in his motion and instead focused on the lack of a confidential relationship
and absence of dominion and control, facts necessary to prove undue influence.
Furthermore, when the trial court engaged in a discussion of undue influence,
counsel for Mr. Moyers never asked the court for further clarification on the issue
of fraud.
Nevertheless, because the trial court did not make an express finding on the
issue of fraud and because plaintiffs did not present any arguments at trial or in
their appellate brief on the issue of fraud, we decline to address the merits of that
claim. See Tenn. R. App. P. 36(a) (“Nothing in this rule shall be construed as
requiring relief be granted to a party responsible for an error or who failed to take
whatever action was reasonably available to prevent or nullify the harmful effect
of an error.”). Instead, we proceed to consider whether the trial court erred in
denying Mr. Moyers’s motion for a directed verdict on the issue of undue
influence.
After reviewing the testimony presented prior to the motion and “tak[ing]
the strongest legitimate view of the evidence” in favor of the plaintiffs, we cannot
say that “reasonable minds could reach only one conclusion” on the issue of undue
influence. Johnson, 205 S.W.3d at 370.
C.
We now turn to the merits of the case, particularly the trial court’s finding
of undue influence. Determining whether undue influence has occurred is a
question of fact. Cartwright v. Jackson Capital Partners, Limited Partnership,
478 S.W.3d 596, 607 (Tenn. Ct. App. 2015) (citations omitted). We must
therefore affirm the trial court’s finding of undue influence unless the evidence
preponderates otherwise. See Tenn. R. App. P. 13(d).
We note at the outset that our undue influence jurisprudence has largely
developed in the context of will contests; however, we have applied the same
principles to disputes regarding payable-on-death bank accounts. See, e.g., Frank
v. Fields, No. E2016-00809-COA-R3-CV, 2017 WL 2304301 (Tenn. Ct. App.,
filed May 26, 2017). In these cases, a party alleging undue influence has the
burden of proving undue influence by either direct or circumstantial evidence.
Mitchell v. Smith, 779 S.W.2d 384, 388 (Tenn. Ct. App. 1989). Because “direct
evidence is rarely available,” most litigants attempt to prove undue influence by
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pointing to “suspicious circumstances” that suggest the deceased did not act freely
and independently. Id. We have previously stated:
The suspicious circumstances most frequently relied
upon to establish undue influence are: (1) the
existence of a confidential relationship between the
testator and the beneficiary; (2) the testator’s physical
or mental deterioration; (3) the beneficiary’s active
involvement in procuring the will.
Other recognized suspicious circumstances include:
(1) secrecy concerning the will’s existence; (2) the
testator’s advanced age; (3) the lack of independent
advice in preparing the will; (4) the testator’s illiteracy
or blindness; (5) the unjust or unnatural nature of the
will’s terms; (6) the testator being in an emotionally
distraught state; (7) discrepancies between the will and
the testator’s expressed intentions; and (8) fraud or
duress directed toward the testator.
Id. (citations omitted). “Although there is no prescribed type or number of
suspicious circumstances . . . , the doctrine of undue influence is only applicable in
Tennessee when it is shown that the person alleged to have exercised undue
influence on the testator was in a confidential relationship with the testator.” In re
Estate of Link, No. M2015-02280-COA-R3-CV, 2017 WL 696841, at *7 (Tenn.
Ct. App., filed Feb. 22, 2017) (citing In re Estate of Brevard, 213 S.W.3d 298,
302 (Tenn. Ct. App. 2006)). Once a party proves that “there is a ‘confidential
relationship, followed by a transaction wherein the dominant party receives a
benefit from the other party, a presumption of undue influence arises, that may be
rebutted only by clear and convincing evidence of the fairness of the transaction.’”
Childress v. Currie, 74 S.W.3d 324, 328 (Tenn. 2002) (quoting Matlock v.
Simpson, 902 S.W.2d 384, 386 (Tenn. 1995)).
The existence of a confidential relationship is a question of fact. Matlock
v. Simpson, 902 S.W.2d at 385. Nevertheless, the term “confidential relationship”
has a very precise legal meaning. We have previously identified two broad
categories of confidential relationships: (1) “legal confidential relationships,”
where the law imposes fiduciary duties on the dominant party; and (2) “family and
other relationships.” Id. at 385-86. We have repeatedly emphasized that “family
and other relationships” are only “confidential” when one party exercises
dominion and control over the other party. E.g., Childress, 74 S.W.3d at 329(“The core definition of a confidential relationship requires proof of dominion and
control.”); Matlock, 902 S.W.2d at 386 (“ ‘[F]amily and other relationships’, . . .
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require proof of the elements of dominion and control[.]”); Kelly v. Allen, 558
S.W.2d 845 (Tenn. 1977) (holding that a normal parent-child relationship is not a
confidential relationship absent “elements of dominion and control . . . .”).
In this case, the plaintiffs allege, and the trial court held, that Mrs. Moyers
had a confidential relationship with the deceased. Nevertheless, there is
substantial evidence that the trial court’s finding of a confidential relationship was
based on an incorrect understanding of that concept. In ruling from the bench, the
court stated:
THE COURT: I don’t think dominion and control is
required as a finding for a confidential relationship.
Are you saying that’s one of the elements for a
confidential relationship?
MR. GIBBONS [defendant’s counsel]: That’s correct,
Your Honor. Case law says that’s a core to a
confidential relationship --
THE COURT: Okay.
MR. GIBBONS: -- finding.
THE COURT: Well, I don’t think she was grabbing
her and beating her head against the wall or anything
like that, but she was the one that could get out and run
around. She was the one that was providing ideas and
assistance on what to do with this – as I recall, she
negotiated or stopped the negotiations of a land sale
contract, some fellow that was buying a house or . . .
something of that nature.
So even though I don’t think that’s a requirement of a
confidential relationship, there were certain things in
that relationship wherein Ms. Moyers was the
dominant party. And there was an awful lot of money
going Ms. – going Ms. Moyers’ way, too, it looked
like to me from the proof I heard.
Later, the trial court returned to the question of whether a confidential
relationship existed:
THE COURT: And I think that Ms. Dee Dee Moyers
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tearfully testified at the trial that they had become as
close as a mother and a daughter. So you can tell from
that, that that relationship did get beyond just a
bookkeeper relationship. That’s why I find it’s a
confidential relationship. . . .
These statements strongly indicate that the trial court’s finding of a
confidential relationship was fundamentally flawed. The court, by its own
admission, did not realize that exercise of dominion and control is the core
element of a confidential relationship. The court also equated a mother-daughter
relationship with a confidential relationship, a conclusion our precedents clearly
reject. See Kelly, 558 S.W.2d 845.
Failing to inquire into the extent of Mrs. Moyers’s alleged dominion and
control, the trial court instead concluded that a confidential relationship existed
because Mrs. Moyers talked with the deceased on a regular basis, provided the
deceased with transportation, cashed checks and made ATM withdrawals for the
deceased, provided ideas about financing a “rent to own” house for the deceased’s
former handyman, and collected rent from that handyman. Mr. Moyers correctly
observes that most of these activities occurred months after the deceased changed
the beneficiary status on her bank accounts. The only activities occurring before
the beneficiary change were the frequent conversations between Mrs. Moyers and
the deceased, Mrs. Moyers’s willingness to cash checks on behalf of the deceased,
and Mrs. Moyers’s willingness to provide the deceased with transportation.
Plaintiffs also highlight the fact that Mrs. Moyers drove the deceased to the bank
when she initially created her accounts. Mrs. Moyers also listed her personal
email address on the account. None of these activities, individually or
collectively, amount to the exercise of dominion and control.
To prove the presence of dominion and control, one must point to evidence
that the dominant party “destroy[ed] the free agency” of the weaker party. See
Matlock, 902 S.W.2d at 385 (citing Kelly v. Allen, 558 S.W.2d 845 (Tenn. 1977)).
In Kelley v. Johns, for example, we found that a son exercised dominion and
control over his father. 96 S.W.3d 189, 197 (Tenn. Ct. App. 2002). The father in
that case moved in with his son and daughter-in-law after the death of his wife.
Id. at 192. Eventually, the father’s mental and physical health began to
deteriorate. Id. at 193. He suffered from various ailments that required
hospitalization. Id. He also experienced “bouts of anxiety and confusion” and
had “delusions” about his deceased wife. Id. The father depended on his son for
all his daily needs, including food, shelter, transportation, and maintenance of the
family farm. Id. at 192. To facilitate his son’s caregiving responsibilities, the
father added his son as a joint owner of his bank account and authorized him to
use the account to write checks to himself and others. Id. We held that the son’s
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“unrestrained access to his father’s assets, coupled with the undisputed evidence of
the decline in his father’s physical and mental health and increased dependence on
his son and daughter-in-law, provide material evidence to support the jury’s
finding that a confidential relationship existed . . . .” Id. at 197-98.
Here, Mrs. Moyers did not have “unrestrained access” to the deceased’s
financial assets in the months leading up to the beneficiary change. At most, the
deceased occasionally gave Mrs. Moyers permission to cash checks and to use her
ATM card to make cash withdrawals, which Mrs. Moyers would immediately
deliver to the deceased. Plaintiffs stress that Mrs. Moyers’s email address was
listed on the deceased’s bank account. Plaintiffs also point to the testimony of Mr.
Squires, one of the deceased’s co-executors, who stated that the deceased was
concerned about unauthorized online purchases. Mrs. Moyers, on the other hand,
testified that the deceased wanted to use her email address so the deceased could
conduct online banking through Mrs. Moyers’s iPad. According to Mrs. Moyers,
the deceased operated the iPad independently because “she didn’t like everybody
knowing her business, and she wanted to do it herself.” Mrs. Moyers even deleted
the online banking application each time the deceased was finished using it. The
trial court specifically found Mr. Squire’s testimony to be incredible and stated
that it “would probably believe Ms. Moyers over him . . . .”
Additionally, the deceased was not experiencing the kind of mental
deterioration that led to a finding of dominion and control in Kelley. In a
deposition, Dr. Ramaprasad testified that the deceased was “her normal self” when
he saw her on the day before her death. He also stated that he had never known
the deceased to have any competency issues since he had begun treating her in
2004. The plaintiffs themselves do not dispute the deceased’s mental capacity and
offered no evidence tending to show that the deceased was easily manipulated.
In Johnson-Murray v. Burns, we held that the deceased was not subject to
the dominion and control of her stepson and his wife, even though the deceased
relied upon them
to bring her food, to clean her home, to bathe her, to
dress her, to take her to doctor’s appointments, to give
her the medications she required, to pay her bills, to
keep her yard orderly, and to make repairs on the
home. . . . [The deceased’s stepson also] install[ed] a
gate at the entrance of her driveway and require[ed]
visitors to obtain . . . permission to visit her.
525 S.W.3d 625, 636 (Tenn. Ct. App. 2017). Although the court in Burns
admitted the relevance of those facts, the court ultimately concluded that “there
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[was] evidence to support the [jury’s] finding that the Defendants did not exercise
dominion and control over her.” Id. For example, one witness testified that he
never had a problem visiting the deceased after the gate was installed. Id. That
witness also testified that “he could not talk [the deceased] into something she did
not want to do.” Id. Another witness testified that the deceased “was cognizant of
what was going on and still ‘sharp’ when she [wrote her will].” Id. Further, the
deceased’s primary care physician testified that the deceased was in good mental
condition during the relevant time period. Id. at 637. Taken together, this
testimony suggested that the deceased acted freely and independently and was not
subject to the dominion and control of her stepson. See id.
In the present case, Mrs. Moyers provided services similar to that of the
defendants in Burns. Mrs. Moyers took the deceased to the grocery store and to
doctor’s appointments; she sometimes organized the deceased’s medication; she
also cashed checks, collected rent, and made ATM withdrawals for the deceased.
But the trial court, like the court in Burns, specifically found that the deceased
was capable of making her own decisions:
The COURT: Well, I don’t think that anybody proved
[the deceased] incapable of making her own decisions.
I think that she had the mental capacity to do what she
did.
If the deceased was mentally competent to manage her own affairs, it is
unlikely that someone exerted dominion and control over her finances. Absent
any evidence to the contrary, we cannot say that Mrs. Moyers exercised dominion
and control over the deceased merely because she provided companionship and
assistance with transportation and technology. Because Mrs. Moyers did not
exercise dominion and control over the deceased, we conclude that the evidence
preponderates against the trial court’s finding that Mrs. Moyers and the deceased
had a confidential relationship.
As previously stated, “the doctrine of undue influence is only applicable in
Tennessee when it is shown that the person alleged to have exercised undue
influence on the testator was in a confidential relationship with the testator.” In re
Estate of Link, 2017 WL 696841, at *7. Because we conclude that no
confidential relationship existed, the plaintiffs’ undue influence claim fails. It is
therefore unnecessary for us to decide whether the trial court erred in imputing the
presumption of undue influence to Mr. Moyers.
IV.
The judgment of the trial court is reversed. Costs on appeal are assessed to
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the appellees, Barbara Jarnigan, Wanda Lovin, Mattie Noe, and Peggy Light. The
case is remanded to the trial court, pursuant to applicable law, for further
proceedings.
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CHARLES D. SUSANO, JR., JUDGE
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