Estate of Thomas R. Ralston v. Estate of Fred R. Hobbs ( 2012 )

IN THE COURT OF APPEALS OF TENNESSEE
AT NASHVILLE
February 14, 2012 Session
ESTATE OF THOMAS R. RALSTON v. ESTATE OF FRED R. HOBBS
Appeal from the Chancery Court for Rutherford County
No. 060310-CV David M. Bragg, Chancellor
No. M2011-01037-COA-R3-CV - Filed April 18, 2012
The defendant appeals from an Order of Sale of real property, which was sold pursuant to
Tennessee Rule of Civil Procedure 69.07 to satisfy a money judgment against the defendant.
We have concluded that the defendant waived many of the issues raised and, as for its issue
challenging the sufficiency of the notice of the sale, the sale may not be set aside on this
ground because Rule 69.07(4) expressly provides that bona fide purchasers for value at the
sale shall take free of any defects concerning notice. The purchaser here is a bona fide
purchaser for value; thus, we affirm.
Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Chancery Court Affirmed
F RANK G. C LEMENT , J R., J., delivered the opinion of the Court, in which P ATRICIA J.
C OTTRELL, P.J., M.S., and A NDY D. B ENNETT, J., joined.
William Kennerly Burger, Murfreesboro, Tennessee, for the appellant, Estate of Fred R.
Hobbs.
John H. Baker III, Murfreesboro, Tennessee, for the appellee, Estate of Thomas R. Ralston.
OPINION
This is the second appeal resulting from an extremely contentious family dispute
arising from the misuse of a power of attorney to fraudulently convert real property and bank
accounts. In the first appeal, we held that the defendant, Fred Hobbs, a nephew of Thomas
R. Ralston and his attorney-in-fact, was liable to the estate of his deceased uncle for
breaching his fiduciary duties and remanded the case to the trial court to, inter alia,
determine damages.1 See Thomas R. Ralston v. Fred R. Hobbs, 306 S.W.3d 213 (Tenn. Ct.
App. 2009). On remand, the trial court determined that Fred Hobbs had fraudulently
converted $477,847.50 of his uncle’s assets and entered a judgment against Fred Hobbs in
that amount.
During the trial court proceedings following the entry of the judgment for damages,
both Thomas R. Ralston and Fred Hobbs died. Fred Hobbs’s wife, Sherry Hobbs, was named
Executrix of Hobbs’s estate and she was substituted as a party in this action. A petition to
probate the will of Thomas Ralston was filed in the Williamson County Chancery Court, the
will was admitted, and a nephew, Joseph Edwin Ralston, was appointed Executor of Thomas
Ralston’s estate. Joseph Ralston was then substituted for his uncle as a party in this action.2
A will contest was subsequently filed in the Williamson County Chancery Court to
challenge the will naming Joseph Ralston as Executor of Thomas Ralston’s estate. In that
case it is asserted that a previous will of Thomas Ralston, which named his sister, Myrtle
Ralston Hobbs as Executrix of his estate, is the true Last Will and Testament of Mr. Ralston,
not the will that named Joseph Ralston as Executor.3 The judge in the probate case stayed the
will contest proceedings and authorized Joseph Ralston to continue to serve as Executor of
Thomas Ralston’s estate, pending further orders of the court.
On August 27, 2010, the Estate of Thomas Ralston filed a motion to sell the real estate
interests of Fred Hobbs pursuant to Tennessee Rule of Civil Procedure 69.07 in order to
satisfy the judgment. The motion sought the appointment of the Rutherford County Clerk and
Master to conduct the sale of the real estate interests. The Estate of Fred Hobbs filed an
objection to the sale. On November 23, 2010, the trial court entered an initial order of sale.
1
The decedent, Thomas Ralston, was one of five children, all of whom grew up on the family farm
near Eagleville, Tennessee. One of his brothers, David Ralston, and their only sister, Myrtle Ralston Hobbs
inherited most of the real estate from their parents and siblings. Following the death of their father in 1966,
David Ralston and one of the brothers, Andrew Ralston, operated the family farm as equal partners, and they
employed their sister, Myrtle Hobbs, and the decedent, their brother, Thomas Ralston, who also lived on the
family farm, to help work the farm. A fifth sibling, John Ralston, left the family farm at an early age. The
defendant, Fred Hobbs, the son of Myrtle Ralston Hobbs, lived with his mother on the family farm from the
time he was two years old until he married in 1971. For a detailed summary of the family history, see Thomas
R. Ralston v. Fred R. Hobbs, 306 S.W.3d 213 (Tenn. Ct. App. 2009).
2
Fred Hobbs died on June 24, 2010. Thomas Ralston died on November 25, 2010. Sherry Hobbs, as
Executrix, was substituted for Fred Hobbs on September 27, 2010. Joseph Ralston, as Executor, was
substituted for Thomas Ralston on January 24, 2011.
3
Myrtle Ralston Hobbs has also died; her granddaughter, Amanda Hobbs Tanner, was substituted
as the party as Executrix of her grandmother’s estate.
-2-
Fred Hobbs’s estate then filed a Motion to Stay the sale of the property contending that the
will contest in Thomas Ralston’s estate was grounds for a stay pending resolution of the
issues in that estate. The trial court denied the motion.
A proposed Order of Sale was submitted by the Estate of Thomas Ralston on February
25, 2011. On March 2, 2011, the Estate of Fred Hobbs filed an objection to the Order of Sale
arguing that the order purported to divest Fred Hobbs’s widow, Sherry Hobbs, of her interest
in her husband’s estate and that Sherry Hobbs was not a party to the litigation. An Agreed
Order, entered on April 6, 2011, added Sherry Hobbs in her individual capacity as a party.
The agreed order also provided that any issue of the widow’s claim for a year of support was
a matter for the probate court to resolve; it was not an issue for determination by the trial
court in this case. Thereafter, the trial court approved the Order of Sale.
The Estate of Fred Hobbs then filed a Motion for Clarification of the Property Status.
The motion stated that the Order purportedly sold interests of real property at issue in the
Williamson County will contest, which property was also at issue in a separate action, Estate
of David Ralston v. Fred Hobbs, No. M2009–02442–COA–R3–CV, 2010 WL 4272692(Tenn. Ct. App. Oct. 28, 2010). The trial court found that it did not need to clarify the
interests of the property listed in the Order of Sale because the real property was properly
described, that the trial court had the authority in the Estate of David Ralston v. Hobbs to set
aside the specific interests improperly conveyed by Fred Hobbs without setting aside entire
conveyances, and that it had no authority to alter, amend, modify, or vacate the trial court’s
ruling in the Estate of David Ralston v. Hobbs action.
Thereafter, the Estate of Fred Hobbs filed a motion for interlocutory appeal, which
was denied. A new Order of Sale was entered on April 25, 2011. On May 9, 2011, the Estate
of Fred Hobbs filed this appeal to challenge the Order of Sale.
The property was sold at auction on June 8, 2011. An order confirming the sale of the
property to Headwaters of the Harpeth, LLC was entered on July 20, 2011.
A NALYSIS
Appellant, the Estate of Fred Hobbs, contends that the trial court erred in denying the
motion to stay and in entering an Order of Sale for the real property. It contends that the sale
of the real property should be set aside because the notice of the sale failed to comply with
the statutory requirements regarding the advertisement and conduct of the sale because, it
contends, the notice did not define the undivided interest of Fred Hobbs based upon the
decision in Estate of David Ralston v. Fred Hobbs, 2010 WL 4272692.
-3-
Appellee, the Estate of Thomas Ralston, argues that the issues raised by Appellant
have been waived or are moot because the court ordered sale has been concluded. We agree.
The issues presented hinge on the proper interpretation of Tennessee statutes and their
application to the facts of this case. Issues involving the construction of statutes and their
application to facts involve questions of law. Memphis Publ’g Co. v. Cherokee Children &
Family Servs., Inc., 87 S.W.3d 67, 74 (Tenn. 2002); King v. Pope, 91 S.W.3d 314, 318
(Tenn. 2002). Therefore, we will review the issues de novo and reach our own independent
conclusions regarding them. King, 91 S.W.3d at 318.
Appellant argues that the statutes governing judicial sales apply and that the Order of
Sale failed to comply with the notice requirements set forth in Tennessee Code Annotated
§ 35-5-101, et seq., and therefore should be set aside. We disagree because the property was
sold pursuant to Tenn. R. Civ. P. 69.07, not Tennessee Code Annotated § 35-5-101.
Appellee moved to sell the property pursuant to Tennessee Rule of Civil Procedure
69.07. Although Rule 69.07 and Tennessee Code Annotated § 35-5-101 are similar in many
respects, they are also two entirely separate means by which to sell property by court order.
For example, Tennessee Code Annotated § 35-5-101 requires the first publication to be made
twenty days prior to the sale; Rule 69.07 requires publication at least thirty days prior to the
sale.
Tennessee Rule of Civil Procedure 69.07 describes the procedure for the sale of realty
as follows:
The sheriff shall sell the debtor’s interest in realty by auction. At least thirty
days before the sale a notice generally describing the realty (including a street
address if available) and stating the time, place, and terms shall be published
in a newspaper of general circulation at the judgment creditor’s expense,
taxable as court costs. Publication shall be repeated two times, with each of the
three publications being separated by at least one week. At least twenty days
before the sale, the judgment creditor shall mail a copy of the published notice
to the judgment debtor and to all persons having an interest of record in the
realty.
....
Bona fide purchasers for value at the sale shall take free of any defects
concerning notice. The sale extinguishes all junior or subordinate liens.
Tenn. R. Civ. P. 69.07(4) (emphasis added).
-4-
The notice contained within the Order of Sale provided descriptions of the parcels to
be sold, references to the deeds, and listed the street addresses where available. More
importantly, the Rule specifically provides that bona fide purchasers for value shall take free
of any defects concerning notice.4 The sale of this property has been concluded and an order
confirming the sale was entered on July 20, 2011.
We also note that Appellant made several objections prior to the sale regarding the
initial exclusion of Sherry Hobbs as a party and the supposed “undefined” interests of Fred
Hobbs; however, Appellant did not specifically raise the issue of “insufficiency of notice”
until this appeal. Thus, the time to raise this exact issue has passed.
Lastly, Appellant contends that the trial court erred in denying its motion to “clarify”
the interests of the real property. Appellant argues that this court’s decision in Estate of
David Ralston v. Hobbs, 2010 WL 4272692, which set aside conveyances made by Fred
Hobbs while acting as power of attorney for David Ralston could be read to have set aside
the entire conveyances thus resulting in a question as to the interests that were for sale at the
auction. Appellant contends that a court may not partially rescind a conveyance and then cites
to a plethora of cases on the rescission of contract provisions. First, we note that the vast
majority of the case law provided by Appellant is inapplicable as it deals with the rescission
of contracts and not conveyances of property. Second, we find that the trial court correctly
determined that there was not a need to “clarify” the property interests. Lastly, we find that
this issue has effectively been rendered moot by the sale of the property.
I N C ONCLUSION
The judgment of the trial court is affirmed, and this matter is remanded with costs of
appeal assessed against the appellant, Sherry Hobbs, Executrix of the Estate of Fred Hobbs.
______________________________
FRANK G. CLEMENT, JR., JUDGE
4
Further, although we find Tennessee Code Annotated § 35-5-106 is not applicable to this sale, if
it were applicable, it should be recognized that the statute provides, if “the officer, or other person making
the sale, proceed[s] to sell without pursuing the provisions of the chapter, the sale shall not, on that account,
be either void or voidable.”
-5-