In Re: The Conservatorship Of Mary Ruth Davis Hudson , 578 S.W.3d 896 ( 2018 )

08/10/2018
IN THE COURT OF APPEALS OF TENNESSEE
AT KNOXVILLE
February 21, 2018 Session
IN RE THE CONSERVATORSHIP OF MARY RUTH DAVIS HUDSON
Appeal from the Chancery Court for Knox County
No. 189670-3 Michael W. Moyers, Chancellor
No. E2017-00810-COA-R3-CV
In this conservatorship action, three of the conservatee’s five adult children filed a
petition for conservatorship over the conservatee in May 2015 and subsequently filed an
emergency petition for conservatorship in June 2015. Following a hearing, the
conservatorship court granted the emergency petition, naming one of the petitioners as
conservator over the conservatee’s property and one of the petitioners as conservator over
the conservatee’s person. The conservatee’s two non-petitioning children subsequently
filed a motion in opposition to the conservatorship and requested that it be dissolved.
The conservatee then filed an answer to the petition and motion to dismiss the
conservatorship. Following various subsequent motions and a hearing conducted in
September 2015, the conservatorship court entered an order in October 2015, inter alia,
appointing East Tennessee Human Resources Agency (“ETHRA”) as an emergency
interim conservator over the conservatee’s property but maintaining the originally named
petitioner as conservator over the conservatee’s person. The conservatorship court
subsequently memorialized these appointments as permanent in an order entered in
December 2015. Upon motions for attorney’s fees filed by the petitioners’ counsel in
January 2016, the conservatorship court found that the attorney’s fees requested were
reasonable and granted them in an order entered in March 2016. On March 29, 2016,
ETHRA filed the last of three successive inventory and property management plans. The
conservatee died on May 2, 2016. Upon multiple motions requesting fees, the
conservatorship court conducted a hearing and subsequently entered an order on June 21,
2016, inter alia, awarding reasonable fees and expenses to the attorney ad litem, the
conservator of the person, and the petitioners’ counsel and former counsel. ETHRA filed
a motion to enter final accounting on August 25, 2016, and concomitantly filed a motion
requesting $9,112.50 in fees for the services of its representative agent. In September
2016, the petitioners’ counsel filed additional requests for attorney’s fees, and in October
2016, ETHRA’s counsel filed a motion for attorney’s fees. On October 6, 2016, ETHRA
filed a motion to close the conservatorship. The petitioners subsequently filed an
objection to the final accounting, and the two non-petitioning children filed separate
objections to the petitioners’ supplemental motions for attorney’s fees filed subsequent to
the conservatee’s death. Following two hearings, the conservatorship court entered an
order on March 28, 2017, granting ETHRA’s motion to close the conservatorship and
motions for its representative’s fees and attorney’s fees. The conservatorship court
declined to consider the petitioners’ pending supplemental motions for attorney’s fees,
referring those to the probate court in a subsequent order. The conservatorship court also
referred any claims arising from the petitioners’ objections to the final accounting to the
probate court. The petitioners have appealed, asserting improper transfer to probate court
of their pending motions requesting attorney’s fees, a lack of itemization of the services
provided by the ETHRA representative, and deficiencies in the final accounting. Having
determined that the conservatorship court improperly transferred to the probate court the
petitioners’ motions for attorney’s fees without making necessary findings of fact and
improperly closed the conservatorship without making findings of fact concerning the
petitioners’ objections to the final accounting, we vacate those portions of the judgment.
We affirm the undisputed grant of attorney’s fees to ETHRA’s counsel. We remand for
entry of findings of fact and conclusions of law concerning the petitioners’ objections to
the final accounting and concerning whether the attorney’s fees requested in the
petitioners’ counsel’s pending attorney’s fee motions were incurred in relation to the
conservatorship and, if so, whether reasonable attorney’s fees should be granted upon
each of these motions. We also direct the conservatorship court to enter an order on
remand directing ETHRA to present a detailed explanation of the basis for its
representative’s claim for fees and expenses for the conservatorship court’s consideration
based upon the factors provided in Tennessee Code Annotated § 34-1-112(a) (2015).
Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Chancery Court
Affirmed in Part, Vacated in Part; Case Remanded
THOMAS R. FRIERSON, II, J., delivered the opinion of the court, in which D. MICHAEL
SWINEY, C.J., and W. NEAL MCBRAYER, J., joined.
Marilyn L. Hudson, Knoxville, Tennessee, Pro Se and for co-appellants, Stephen D.
Hudson and Lou Ann Hudson.
William A. Reeves, Knoxville, Tennessee, for the appellee, East Tennessee Human
Resources Agency as Conservator for the Financial Affairs of Mary Ruth Davis Hudson.
OPINION
I. Factual and Procedural Background
On May 22, 2015, Marilyn L. Hudson (“Marilyn Hudson”), Lou Ann Hudson, and
Stephen D. Hudson (“Stephen Hudson”) (collectively, “Petitioners”), filed a verified
2
petition in the Knox County Chancery Court (“conservatorship court”), seeking
establishment of a conservatorship on behalf of their mother, Mary Ruth Davis Hudson
(“Conservatee”), who was then ninety-one years of age. Petitioners requested that
Marilyn Hudson, an attorney licensed in Tennessee, be named as conservator over
Conservatee’s assets and property and that Lou Ann Hudson, a nurse registered in
Tennessee, be named as conservator over Conservatee’s person. Petitioners
concomitantly filed an affidavit executed by William P. Powers, M.D., a physician who
had examined Conservatee during a recent hospitalization for hemorrhagic colitis and
opined that she was unable to care for herself or manage her finances at that time. The
conservatorship court entered an order on May 27, 2015, appointing attorney Gerald Lee
Gulley, Jr., as a guardian ad litem to represent the interests of Conservatee.
Conservatee previously had executed a power of attorney for health care naming
Lou Ann Hudson in 2010 and a durable power of attorney over finances naming Marilyn
Hudson in 2011. However, on November 12, 2014, Conservatee had executed durable
and health care powers of attorney appointing her eldest child, Harry E. Hudson, Jr.
(“Harry Hudson”), as her attorney-in-fact over all matters. At all times pertinent to this
appeal, Harry Hudson resided in Stockton, California, and was an attorney practicing law
in California.
On June 12, 2015, Petitioners filed a verified petition for appointment of
emergency co-conservators, again seeking to have Marilyn Hudson appointed financial
conservator and Lou Ann Hudson appointed personal conservator. In this second
pleading, Petitioners alleged that Harry Hudson and Conservatee’s youngest child, Carol
Sue Hudson (“Carol Hudson”), who resided in Tennessee, had placed Conservatee in an
inferior nursing home in Knoxville upon Conservatee’s recent release from the hospital
and that Conservatee was suffering from neglect and poor environmental conditions.
Petitioners further alleged that Harry Hudson and Carol Hudson had acted to have
Petitioners banned from visiting Conservatee and that Conservatee was in danger of
substantial harm if the emergency conservatorship were not granted. Following an ex
parte hearing, the conservatorship court entered an order on June 12, 2015, granting the
petition insofar as the court appointed Lou Ann Hudson as emergency conservator over
Conservatee’s person and Marilyn Hudson as emergency conservator over Conservatee’s
finances. The court also set a hearing for June 15, 2015.
On June 15, 2015, Harry Hudson and Carol Hudson filed a motion in opposition to
the order appointing emergency co-conservators, attaching several exhibits. The
conservatorship court conducted a hearing on this day, with Chancellor Clarence E.
Pridemore, Jr., presiding in Chancellor Michael W. Moyers’s absence. On June 16, 2015,
the conservatorship court entered an order confirming the appointment of Lou Ann
Hudson as personal conservator but removing Marilyn Hudson as financial conservator
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and appointing Harry Hudson as financial conservator in her stead. The court found,
inter alia, that Conservatee’s November 2014 execution of a power of attorney
constituted a valid appointment of Harry Hudson as Conservatee’s attorney-in-fact over
financial matters. The court also entered a separate order on the same day, appointing
attorney Christopher D. Heagerty as an attorney ad litem to protect the rights and
interests of Conservatee pursuant to Tennessee Code Annotated § 34-1-125 (2015). The
conservatorship court, with Chancellor Moyers again presiding, subsequently entered an
agreed order on July 22, 2015, setting the matter for hearing on several contested issues,
including whether Conservatee needed a conservator over her finances and person and if
so, who the conservator or conservators should be.
Conservatee, acting through her attorney ad litem, filed an “Answer and Motion to
Dismiss” on July 30, 2015, asserting that the conservatorship petition failed to state a
claim upon which relief could be granted because she was mentally competent and not in
need of a conservator over her person or finances. In the alternative, she requested that
Harry Hudson be named as her financial conservator. Carol Hudson subsequently filed a
motion to intervene as a petitioner, which was opposed by Petitioners in a response filed
with the conservatorship court.
On September 1, 2015, the conservatorship court entered an order resolving
several motions. The court, inter alia, denied Conservatee’s motion to dismiss for failure
to state a claim upon which relief could be granted. The court also awarded $6,781.00 in
attorney’s fees to the attorney ad litem and $9,070.70 in attorney’s fees and expenses to
Petitioners’ then-counsel, James C. Cone. Following a separate hearing on Carol
Hudson’s motion to intervene, the conservatorship court denied the motion in an order
entered September 8, 2015. Also on September 8, 2015, the court entered an order
allowing Mr. Cone to withdraw from representation and approving substitution of
counsel for Petitioners, who had retained attorneys Douglas J. Toppenberg and Marshall
H. Peterson. The court entered an order amending its September 1, 2015 order but not
disturbing the relevant provisions on November 2, 2015.
Following various subsequent motions and a hearing conducted on September 29,
2015, the conservatorship court entered an order on October 12, 2015, inter alia,
appointing ETHRA as an emergency interim financial conservator and maintaining Lou
Ann Hudson as an emergency interim personal conservator.1 The court directed ETHRA
to “take possession of all financial assets of [Conservatee]” and “ensure that no further
funds are dissipated from the estate of [Conservatee] except to pay for her care and other
necessities.” On appeal, Petitioners assert that they had agreed to the appointment of a
neutral financial conservator but had objected specifically to the appointment of ETHRA,
1
The conservatorship court’s October 12, 2015 order lists the date of this hearing as September 30, 2015,
but a transcript excerpt included in the record is dated September 29, 2015.
4
arguing that ETHRA was “not organized to handle estates as large and diverse as
[Conservatee’s] estate.” Upon a subsequent motion to intervene filed by Mountain
Commerce Bank (“MCB”), the conservatorship court entered an agreed order on
November 2, 2015, allowing MCB to intervene for the purpose of receiving a declaration
of loss from ETHRA concerning a cashier’s check in the amount of $159,677.00, that had
been previously drawn on Conservatee’s MCB account by Marilyn Hudson and had
purportedly not been cashed. In the agreed order, the court directed ETHRA to deposit
the proceeds from the declaration of loss into its Pooled Trust Account (“Pooled Trust”)
and also directed ETHRA to request that all of Conservatee’s funds held by First
Tennessee Bank, Regions Bank, and University of Tennessee Federal Credit Union be
transferred immediately to the Pooled Trust.
Following a hearing conducted on December 15, 2015, the conservatorship court
entered on the same day an “Agreed Final Order Appointing Conservator of the Person
and Conservator of the Property of Mary Ruth Davis Hudson,” naming Mary Lou
Hudson as the personal conservator and ETHRA as the financial conservator through
Carol Silvey Wilson as ETHRA’s representative agent. The court discharged the
guardian ad litem from further duties but maintained the appointment of the attorney ad
litem pending resolution of issues concerning Conservatee’s real property. In declaring
the agreed order final, the conservatorship court stated the following in pertinent part:
The Conservator of the Person, Counsel for the parties, and the
Guardian ad litem shall submit their fee petitions to the Court for review
prior to authorizing [ETHRA], by Carol S. Wilson, representative agent, to
satisfy same from the estate of [Conservatee].
This Order constitutes a final order of this Court, and as such the
parties hereby waive any further hearing in this matter except for such
necessary hearings related to fees, management plan, inventory, and any
other matter that the financial conservator brings before the Court.
(Paragraph numbering omitted.)
On January 5, 2016, Mr. Toppenberg, as counsel for Petitioners and the personal
conservator, and Mr. Peterson, as counsel for the personal conservator, each filed
separate motions for attorney’s fees, requesting total fees in the respective amounts of
$30,604.30 and $18,921.48. Each then filed an amended motion for attorney’s fees on
February 5, 2016, requesting total fees in the respective amounts of $34,852.80 and
$21,099.94. ETHRA filed responses objecting to the fee motions on February 5, 2016,
and February 23, 2016. Through her attorney ad litem, Conservatee filed a motion on
March 4, 2016, requesting to be heard on all issues. Following a subsequent hearing, the
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conservatorship court found the requested attorney’s fees to be reasonable and entered an
order on March 14, 2016, granting that attorney’s fees be paid from the conservatorship
to Mr. Toppenberg in the amount of $34,888.802 and to Mr. Peterson in the amount of
$21,099.94.
ETHRA filed three successive inventories and property management plans,
beginning with an inventory and plan filed on December 8, 2015, and culminating with
an inventory and plan filed on March 29, 2016, in which ETHRA indicated a total asset
value of the conservatorship in the amount of $711,903.37. No objections were filed to
the inventory and property management plans. Conservatee died on May 2, 2016. Upon
Lou Ann Hudson’s motion as the personal conservator, the conservatorship court granted
her control of Conservatee’s remains.
Upon various motions requesting fees, the conservatorship court conducted a
hearing on June 6, 2016. The court subsequently entered an order on June 21, 2016,
terminating the representation of the attorney ad litem and ordering the following:
1. The Attorney Ad Litem, Christopher D. Heagerty, . . . is awarded
his reasonable fees and expenses in the amount of $7,161.50.
2. The Conservator of the Person, Co-Petitioner Lou Ann Hudson, . . .
is awarded her reasonable fees and expenses in the amount of
$50,056.60 for her service as Conservator of the Person of
[Conservatee].
3. Douglas J. Toppenberg, The Toppenberg Law Firm, P.C. . . . is
awarded his reasonable fees and expenses in the amount of
$26,606.45.
4. Marshall H. Peterson, Holbrook Peterson Smith PLLC, . . . is
awarded his reasonable fees and expenses in the amount of
$22,082.50.
5. The Court finds the fee requests made on behalf of Petitioner[s’]
former counsel, J. Christopher Cone are reasonable, and that Co-
Petitioner Marilyn L. Hudson . . . shall be reimbursed in the amount
of $1,351.50 and Co-Petitioner Stephen D. Hudson . . . shall be
2
Although in his amended motion for attorney’s fees, Mr. Toppenberg requested the total amount of
$34,882.80, his corresponding affidavit listed a total request in the amount of $34,888.80, which is the
amount the trial court awarded to Mr. Toppenberg in its March 14, 2016 order.
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reimbursed in the amount of $10,000.00, for the fees previously
paid by them to Mr. Cone.
The total amount of fees granted as payment from the conservatorship via the June 21,
2016 order was $117,258.55. On June 22, 2016, attorney Carolyn Levy Gilliam filed a
notice of appearance on behalf of Conservatee’s estate (“the Estate”). Upon Mr.
Toppenberg’s subsequent motion, the conservatorship court entered an order on August
4, 2016, allowing him to withdraw from representation of Petitioners.
On August 25, 2016, ETHRA filed a “Final Report and Accounting,” setting forth
receipts to the conservatorship in the total amount of $440,271.74; total disbursements in
the amount of $398,754.84; and remaining assets in the amount of $41,516.90. ETHRA
concomitantly filed a “Motion for Reimbursement,” requesting court costs and
reimbursement to ETHRA’s Public Guardianship for the Elderly program in the total
amount of $9,112.50 for services rendered by Ms. Wilson as representative agent. At
issue on appeal are alleged deficiencies in the final accounting, lack of itemization of the
services provided by Ms. Wilson, and additional motions requesting attorney’s fees filed
by Petitioners in September 2016.
Specifically, Mr. Peterson, as counsel for Petitioners and the personal conservator,
filed an “Amended Claim for Attorney’s Fees,” requesting additional attorney’s fees and
expenses in the total amount of $4,073.50 for services rendered from June 6, 2016,
through August 30, 2016. In addition, Mr. Peterson filed a separate “Amended Claim for
Attorney’s Fees,” requesting a supplemental total of $8,938.50 for attorney’s fees and
expenses for services rendered by co-counsel, Mr. Toppenberg, from February 2, 2016,
through September 6, 2016. Attorney William A. Reeves also filed a motion in October
2016, seeking approval of attorney’s fees for his services as counsel representing ETHRA
in the amount of $10,049.04, an amount that is not in dispute on appeal.
On October 6, 2016, ETHRA filed a motion to close the conservatorship. On
October 25, 2016, Carol Hudson, acting through her own individual counsel, attorney
Keith H. Burroughs, filed an objection to the amended claims for attorney’s fees filed by
Petitioners’ counsel, Mr. Peterson and Mr. Toppenberg.3 Carol Hudson averred that any
fees awarded for services rendered by Petitioners’ counsel over a month after
Conservatee’s death would be excessive. In response, Petitioners filed a motion to strike
Carol Hudson’s objection and the notice of appearance of her counsel on the basis that
Carol Hudson’s motion to intervene had been denied. Harry Hudson, acting through his
own counsel, Ms. Gilliam, subsequently filed an objection to Petitioners’ amended claims
3
As noted previously, Mr. Peterson also represented Lou Ann Hudson, who was a co-petitioner, in her
role as personal conservator. For ease of reference, we will hereinafter refer to Mr. Peterson and Mr.
Toppenberg as “Petitioners’ counsel” in relation to their outstanding claims for attorney’s fees.
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for attorney’s fees on November 4, 2016, arguing in agreement with Carol Hudson’s
objection.
On October 31, 2016, Petitioners filed objections to ETHRA’s motion for
reimbursement and final report and accounting, requesting additional documentation in
support of each. As to alleged deficiencies in the final accounting, Petitioners focus on
appeal on checks drawn on a First Tennessee Bank account by Harry Hudson as attorney-
in-fact, allegedly for his own benefit and totaling at least $15,757.70; further alleged
dissipation of a second First Tennessee Bank account ultimately transferred to the Pooled
Trust in the amount of $57,866.04; purportedly insufficient documentation of a $4,022.00
balance in a Regions Bank account; and a 1991 Cadillac Seville, purportedly valued at
$2,500.00.
Upon Petitioners’ subsequent motion, the conservatorship court entered on order
on December 16, 2016, allowing Mr. Peterson to withdraw as Petitioners’ counsel, to be
replaced by Marilyn Hudson as pro se counsel on her own behalf and as counsel for her
co-petitioners. Mr. Peterson then filed another amended claim for attorney’s fees on
January 20, 2017, requesting an additional $4,749.50 in attorney’s fees and expenses for
services rendered through December 7, 2016, for a total outstanding request of $8,823.00.
On March 23, 2017, Mr. Toppenberg filed a second supplemental claim for his attorney’s
fees, requesting an additional $3,640.00 in attorney’s fees and expenses for services
rendered through March 22, 2017, for a total outstanding request of $12,578.50.
The conservatorship court conducted two hearings on non-consecutive days:
January 23, 2017, and March 28, 2017. During the January 23, 2017 hearing, the parties
acknowledged that a probate action had been opened on behalf of the Estate in the Knox
County Probate Court (“probate court”) and that a neutral personal representative of the
Estate had been agreed upon and appointed. This personal representative, attorney
Steven K. Bowling, appeared during the March 28, 2017 hearing in the conservatorship
court.
In an order entered March 28, 2017, the conservatorship court found that ETHRA
had filed the final report and accounting and that ETHRA’s motion to close the financial
conservatorship should be granted. The court thereby closed the conservatorship estate,
discharged ETHRA as the financial conservator, and awarded certain fees and expenses.
Specifically, the court directed ETHRA to pay from the conservatorship (1) $9,112.50 for
Ms. Wilson’s fees as reimbursement to ETHRA’s Public Guardianship Program; (2)
$12,788.20 in attorney’s fees and $262.00 in expenses to Mr. Reeves’s law firm as
counsel for ETHRA; and (3) court costs for the conservatorship. The court further
ordered that the balance of funds held by ETHRA would be paid to the personal
representative of the Estate.
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Concerning Petitioners’ pending motions for attorney’s fees, the conservatorship
court found during the March 28, 2017 hearing that the remaining fee petitions should be
“handled as claims against the estate in probate court.” The court did not initially include
this direction in the written order. On April 7, 2017, Petitioners filed an “objection” to
the March 28, 2017 order, asserting, inter alia, that the conservatorship court did not
include its “referrals” of matters to the probate court in its written order. Petitioners
attached a proposed amended order with said referrals included. The conservatorship
court did not enter the proposed amended order at that time.
Petitioners then filed a notice of appeal from the March 28, 2017 order on April
24, 2017. ETHRA subsequently filed a motion to dismiss the appeal with this Court,
asserting that this Court lacked subject matter jurisdiction because the March 28, 2017
order was not final. On September 21, 2017, this Court entered an order denying the
motion to dismiss while also remanding to the conservatorship court for entry of a final
order. Noting that pursuant to Tennessee Rule of Appellate Procedure 4(d), “[a]
prematurely filed notice of appeal shall be treated as filed after the entry of the judgment
from which the appeal is taken and on the day thereof,” this Court determined that the
notice of appeal should be treated as filed on the date the conservatorship court entered a
written order memorializing all of the rulings at the close of trial on March 28, 2017,
including any referrals to the probate court.
Following a hearing on remand, the conservatorship court entered the proposed
amended order previously filed by Petitioners as the final judgment in the
conservatorship on October 19, 2017. The conservatorship court memorialized its
previous referrals to the probate court, directing specifically in relevant part:
The motions and amended motions for attorney fees and expenses
filed by Marshall H. Peterson and filed by Douglas J. Toppenb[e]rg, as
attorneys for Petitioners, are referred to the jurisdiction of the Probate Court
of Knox County, under the Probate Estate of Mary Ruth Davis Hudson, for
review and disposition by that court.
The issues concerning the losses in value to [Conservatee’s] assets,
as set forth in Petitoners’ Objections to Final Report and Accounting, which
losses include the diminution in value to [Conservatee’s] vehicle due to
damage while under the care of [ETHRA], the unlawful removal of funds
from [Conservatee’s] financial accounts by an unauthorized third party, and
the loss of long term health care benefits due to [ETHRA’s] failure to make
timely application for said benefits, are referred to the jurisdiction of the
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Probate Court of Knox County, under the Probate Estate of Mary Ruth
Davis Hudson, for proper action to recover said losses.
(Paragraph numbering omitted.) This appeal followed.
II. Issues Presented
Petitioners present three issues on appeal, which we have restated as follows:4
1. Whether the conservatorship court erred by declining to consider
supplemental motions for attorney’s fees filed by Petitioners’ former
counsel and referring such motions to the probate court.
2. Whether the conservatorship court erred by granting an award of
fees and expenses to ETHRA for Ms. Wilson’s services without
requiring that the corresponding application for fees and expenses be
itemized.
3. Whether the conservatorship court erred by closing the
conservatorship and approving ETHRA’s final accounting over
Petitioners’ objections while referring to the probate court alleged
accounting deficiencies and losses involving Conservatee’s bank and
investment accounts, allegedly misappropriated funds, and vehicle.
III. Standard of Review
We review a non-jury case de novo upon the record with a presumption of
correctness as to the findings of fact unless the preponderance of the evidence is
otherwise. See Tenn. R. App. P. 13(d); Bowden v. Ward, 27 S.W.3d 913, 916 (Tenn.
2000). We review questions of law, including those of statutory construction, de novo
with no presumption of correctness. Bowden, 27 S.W.3d at 916 (citing Myint v. Allstate
Ins. Co., 970 S.W.2d 920, 924 (Tenn. 1998)); see also In re Estate of Haskins, 224
S.W.3d 675, 678 (Tenn. Ct. App. 2006).
As to our review of the conservatorship court’s award of attorney’s fees, “‘[t]he
allowance of attorney’s fees is largely in the discretion of the trial court, and the appellate
4
Although Petitioners also initially argued in their principal brief on appeal that the conservatorship court
had erred by failing to memorialize its referrals to the probate court of Petitioners’ supplemental motions
for attorney’s fees and accounting objections, Petitioners acknowledged in their reply brief that the
conservatorship court had subsequently memorialized these referrals in its October 2017 amended order
entered on non-dispositional remand from this Court.
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court will not interfere except upon a clear showing of abuse of that discretion.’” In re
Conservatorship of Lindsey, No. W2011-00196-COA-R3-CV, 2011 WL 4120664, at *4
(Tenn. Ct. App. Sept. 16, 2011) (quoting Taylor v. Fezell, 158 S.W.3d 352, 359 (Tenn.
2005)). “[A] trial court will be found to have ‘abused its discretion’ only when it applies
an incorrect legal standard, reaches a decision that is illogical, bases its decision on a
clearly erroneous assessment of the evidence, or employs reasoning that causes an
injustice to the complaining party.” In re Estate of Greenamyre, 219 S.W.3d 877, 886
(Tenn. Ct. App. 2005), perm. app. denied (Tenn. Mar. 12, 2007) (internal citations
omitted).
IV. Referral to Probate Court of Petitioners’ Attorney’s Fee Motions
Petitioners contend that the conservatorship court erred by declining to hear their
remaining motions for attorney’s fees and referring said motions to the probate court.
Specifically at issue are Petitioners’ former counsel’s supplemental claims for attorney’s
fees, which were filed subsequent to the conservatorship court’s June 21, 2016 order
awarding reasonable attorney’s fees and expenses in the amounts of, respectively,
$22,082.50 to Mr. Peterson and $26,606.45 to Mr. Toppenberg. The supplemental claims
include Mr. Peterson’s amended claims for attorney’s fees and expenses in the total
amount of $8,823.00 for services rendered from June 6, 2016, through December 7, 2016,
and Mr. Toppenberg’s amended claims for attorney’s fees and expenses in the total
amount of $12,578.50 for services rendered from February 2, 2016, through March 22,
2017.
During the March 28, 2017 hearing, the conservatorship court declined to consider
Petitioners’ pending motions for attorney’s fees except to direct that they “be handled as
claims against the estate in probate court.” On remand from this Court’s non-
dispositional order, the conservatorship court in its amended order expressly referred the
supplemental motions for attorney’s fees filed by Mr. Peterson and Mr. Toppenberg to
the probate court “for review and disposition by that court.” On appeal, ETHRA asserts
that referral to the probate court was within the conservatorship court’s broad discretion
in deciding whether to award attorney’s fees. Upon careful review, we conclude that the
conservatorship court, as the court familiar with the conservatorship proceedings, was the
appropriate forum for a determination of whether the remaining attorney’s fees requested
by Petitioners were related to the conservatorship and thereby awardable as money
judgments within the conservatorship proceedings. The conservatorship court could then
properly refer Petitioners and their former counsel to the probate court for recovery of
said money judgments from the Estate.
In considering claims for attorney’s fees, Tennessee courts adhere to the
“American Rule.” See Cracker Barrel Old Country Store, Inc. v. Epperson, 284 S.W.3d
11
303, 308 (Tenn. 2009) (explaining that “[u]nder the American rule, a party in a civil
action may recover attorney fees only if: (1) a contractual or statutory provision creates a
right to recover attorney fees; or (2) some other recognized exception to the American
rule applies, allowing for recovery of such fees in a particular case.”). In this action, it is
undisputed that the conservatorship court had the authority, in its discretion, to grant
attorney’s fees to Petitioners based on Tennessee Code Annotated § 34-1-114 (2015),
which provides:
(a) The costs of the proceedings, which are the court costs, the guardian
ad litem fee and expenses incurred by the guardian ad litem in
conducting the required investigations, the required medical
examination costs, and the attorney’s fee for the petitioner, may, in
the court’s discretion, be charged against the property of the
respondent to the extent the respondent’s property exceeds the
supplemental security income eligibility limit, or to the petitioner or
any other party, or partially to any one or more of them as
determined in the court’s discretion. In exercising its discretion to
charge some or all of the costs against the respondent’s property, the
fact a conservator is appointed or would have been appointed but for
an event beyond the petitioner’s control is to be given special
consideration. The guardian ad litem fee and the attorney’s fee for
the petitioner shall be established by the court. If a fiduciary is cited
for failure to file an inventory or accounting, the costs incurred in
citing the fiduciary, in the discretion of the court, may be charged to
and collected from the cited fiduciary.
(b) If the principal purpose for bringing the petition is to benefit the
petitioner and there would otherwise be little, if any, need for the
appointment of a fiduciary, the costs of the proceedings may be
assessed against the petitioner, in the discretion of the court.5
We note at the outset that “[s]ubject matter jurisdiction relates to a court’s
authority to adjudicate a particular type of case or controversy brought before it.” In re
Estate of Trigg, 368 S.W.3d 483, 489 (Tenn. 2012). Pursuant to Tennessee Code
Annotated § 16-16-201(a) (Supp. 2017), the chancery court in Knox County has
5
In addition, Tennessee Code Annotated § 34-1-113(c) (2015), concerning payments made by a
fiduciary, authorizes the fiduciary of a conservatorship to pay from the property of the conservatee “other
expenses” not contemplated elsewhere in the statutory subsection with the approval of the trial court
“upon a determination that they are reasonable and: (1) They protected or benefited the minor or person
with a disability or such person’s property; or (2) That their payment is in the best interest of the minor or
person with a disability.”
12
“exclusive jurisdiction over the probate of wills and the administration of estates of every
nature, including the estates of decedents and of wards under guardianships or
conservatorships and all matters related thereto . . . .” See generally In re Estate of Trigg,
368 S.W.3d at 494. According to Rule 17 of the Local Rules of Practice for Knox
County Chancery Court, conservatorship matters in Knox County are heard by the
chancery court while matters related to the probate of will and administration of estates
are heard by the probate division of the chancery court.
By statute, “[w]hen the person with a disability dies . . . the conservatorship shall
terminate.” Tenn. Code Ann. § 34-3-108(e) (Supp. 2017); see In re Blessing, No. 01A01-
9712-CH-00691, 1998 WL 862480, at *12 (Tenn. Ct. App. Dec. 14, 1998). Although the
conservatorship terminates with the conservatee’s death, Tennessee Code Annotated §
34-3-108(e) does provide for a 120-day winding-up period during which the conservator
must file a final statement. The conservatorship court retains subject matter jurisdiction
over the conservatorship pending the court’s approval of the final statement. See In re
Blessing, 1998 WL 862480, at *12 (“The conservator must, however, make a final
settlement within 120 days and the conservatorship court retains jurisdiction for this
winding up of the conservatorship.”).
In this case, we must consider whether Petitioners’ supplemental attorney’s fees
requested were incurred within the conservatorship proceeding as anticipated by
Tennessee Code Annotated § 34-1-114. It is undisputed that other than a few invoice
items submitted by Mr. Toppenberg that were purportedly accrued between February and
May of 2016, the majority of the invoiced fees and expenses at issue were for services
rendered after Conservatee’s death on May 2, 2016. Petitioners acknowledged during the
March 2017 hearing that the amount of funds remaining in the conservatorship according
to ETHRA’s final accounting at that time, $41,516.90, was likely not enough to fund all
fee requests. Petitioners maintain, however, that the conservatorship court should have
reduced all fee requests to money judgments and referred them equally to the probate
court as claims against the Estate.
In support of their argument that the instant fee claims should have been addressed
by the conservatorship court, Petitioners rely on this Court’s decision in In re Blessing, a
conservatorship case in which the conservatorship court was faced with multiple claims
for attorney’s fees after the conservatee had died and a final accounting that indicated
insufficient conservatorship funds to pay the multiple claims. See 1998 WL 862480, at
*5-7. The Blessing conservatorship court sustained all of the fee claims, reduced them to
money judgments, and advised all parties that their remedies for collecting the fee
judgments would be in probate court. Id. at *12. This Court affirmed the
conservatorship court’s judgment in Blessing, noting the conservatorship court’s broad
13
discretion in winding up a conservatorship within the statutory period following the
conservatee’s death. See id. at *12. The Blessing Court concluded in relevant part:
Under Tennessee’s 1992 statutory revision of previous guardianship and
conservatorship statutes as is evidenced in Tennessee Code Annotated Title
34, chp. 11-13, the conservatorship terminates upon death of the
conservatee. Tenn. Code Ann. § 34-13-108(e) (1996). The conservator
must, however, make a final settlement within 120 days and the
conservatorship court retains jurisdiction for this winding up of the
conservatorship. It is obvious from the May 6, 1997 findings of the
chancellor, his judgment of June 19, 1997 awarding fees to all parties, and
his order of September 3, 1997 overruling all objections thereto, that he
believed himself lacking in authority to effect a post-death sale of the home
of [the conservatee] or do anything else other than to, in effect, amend the
final settlement of the co-conservators by awarding fees for the
conservatorship case. He specifically advised all parties and all attorneys
that their remedy for collecting any judgments that he ordered in the
conservatorship proceeding was to file proper claims therefor in the probate
court.
In view of the broad discretion given the chancellor by the
conservatorship statutes, we cannot say that his method of winding up the
conservatorship proceedings exceeded subject matter jurisdiction. The
correctness or incorrectness of the actions of the Probate Court of Wilson
County as reflected by the Rule 14 post-judgment facts recognized in this
court, must await an appeal from the judgment of the probate court and is
not a proper subject of present appellate adjudication. The judgment of the
chancellor is in all respects affirmed and costs are assessed against the
appellants.
Id.
In the present case, the March 28, 2017 hearing transcript reflects that the hearing
was set on a “motion day” in the conservatorship court and had not been initially set for
an evidentiary hearing. The hearing was set to address ETHRA’s motion to close the
conservatorship and the outstanding fee petitions. During the hearing, ETHRA’s counsel
actually requested that the conservatorship court address the fee petitions on the merits,
stating: “In order to close the conservatorship fully and finally, the conservator needs
direction from the Court as to what to pay and what to do with the balance, if there is
any.” Mr. Bowling, appearing as personal representative of the Estate, requested that the
conservatorship court settle the amounts of the fee petitions before closing the
14
conservatorship. Because both Harry Hudson and Carol Hudson, represented by attorney
Keith Burroughs during the hearing, had filed objections to Petitioners’ counsel’s
amended claims for attorney’s fees, all parties acknowledged that an evidentiary hearing
would be necessary in order for the conservatorship court to address the objections and
determine what portion, if any, of the remaining attorney’s fee claims were for services
that were reasonable and necessary to the conservatorship proceedings.6 Nevertheless, at
the close of the hearing, the conservatorship court stated that upon its entry of an order
closing the conservatorship and awarding ETHRA’s requests for attorney’s fees, “[t]hese
other fees can be handled as claims against the estate.”
The conservatorship court did not address its referral of Petitioners’ outstanding
claims for attorney’s fees in its March 28, 2017 order closing the conservatorship. In its
amended order, entered on remand from this Court, the conservatorship court
memorialized the referral to probate court, finding in relevant part:
[T]he Court finding that the Motions by [ETHRA] are proper and should be
approved to the extent set forth herein, and that [ETHRA] has filed its Final
Report and Accounting, and the Court further finding that the fee petitions
of Marshall H. Peterson and Douglas J. Toppenb[e]rg should be treated
differently from those of [ETHRA] and its attorney William A. Reeves, and
thus referred to the jurisdiction of the Knox County Probate Court to
determine the fairness and reasonability of said fee applications and
payment thereon . . . .
***
The motions and amended motions for attorney fees and expenses
filed by Marshall H. Peterson and filed by Douglas J. Toppenb[e]rg, as
attorneys for Petitioners, are referred to the jurisdiction of the Probate Court
of Knox County, under the Probate Estate of Mary Ruth Davis Hudson, for
review and disposition by that court.
6
During the January 2017 hearing, Petitioners, as they had in their previously filed motion to strike,
continued to question Carol Hudson’s standing to raise objections to the attorney’s fee requests and be
represented by Mr. Burroughs during the hearing. Mr. Burroughs asserted that Carol Hudson had
standing at that point in regard to the fee petitions as an heir to Conservatee. The conservatorship court
stated during the January 2017 hearing that it would hold the issue of Carol Hudson’s standing in
abeyance. Mr. Burroughs again appeared during the March 2017 hearing on behalf of Carol Hudson and
raised her objections to Petitioners’ counsel’s fee requests. The conservatorship court did not make an
express ruling as to Carol Hudson’s standing but did allow Mr. Burroughs to argue. Inasmuch as
Petitioners have not raised the issue on appeal of Carol Hudson’s standing to object to the fee petitions,
we determine this issue to be waived. See Tenn. R. App. P. 13(b) (“Review generally will extend only to
those issues presented for review.”).
15
Petitioners particularly take issue with the conservatorship court’s decision to
grant ETHRA’s petition for fees for Ms. Wilson’s services, for which Petitioners had
requested a more detailed accounting, while referring Petitioners’ supplemental requests
for attorney’s fees to the probate court because the decision would result in ETHRA’s
fees being paid from the conservatorship while Petitioners’ counsel’s fees would be
subject to the priority of claims in the probate court. See Tenn. Code Ann. § 30-2-317
(2015) (setting forth the priority of claims against an estate). For its part on appeal,
ETHRA relies on the conservatorship court’s wide discretion in awarding attorney’s fees
to petitioners in conservatorship cases. See Tenn. Code Ann. § 34-1-114. Although we
agree that the conservatorship court has wide discretion in determining whether to award
attorney’s fees, we conclude that in exercising its discretion, the conservatorship court
must properly consider evidence concerning the reasonableness of the fee requests and
whether the fees were incurred in relation to the conservatorship and in benefit of the
conservatee or the conservatee’s property. See id.; Conservatorship of Acree v. Acree,
No. M2011-02699-COA-R3-CV, 2012 WL 5873578, at *6 (Tenn. Ct. App. Nov. 20,
2012), perm. app. denied (Tenn. Mar. 20, 2013) (“When approving expenses to be paid
from the ward’s property, the Court is required to determine whether the expenses are
reasonable and whether they protected/benefitted the ward or his property, or if payment
is in the ward’s best interests.”); Shipe v. Shipe, No. E2003-01647-COA-R3-CV, 2004
WL 1669909, at *3 (Tenn. Ct. App. July 27, 2004) (explaining that the conservatorship
court “was required to make a determination looking at the reasonableness of the fees
requested, the benefit to the ward, and the intent of the petitioner”).
We note that in general, a court with knowledge of the subject proceedings and the
extent of services required by the attorneys involved is in a position to determine the
purpose and reasonableness of the attorney’s fees requested. See, e.g., Beacon4, LLC v. I
& L Invs., LLC, 514 S.W.3d 153, 206 (Tenn. Ct. App. 2016), perm. app. denied (Tenn.
Dec. 15, 2016) (“[U]pon our thorough review of the voluminous record of the five-day
trial and surrounding proceedings, we determine that the chancellor possessed sufficient
knowledge of the case to acquaint him with the factors relevant to determination of a
reasonable award of attorney’s fees.”); Madden Phillips Constr., Inc. v. CGAT Dev.
Corp., 315 S.W.3d 800, 831 (Tenn. Ct. App. 2009), perm. app. denied (Tenn. Mar. 15,
2010) (“There is no indication that the trial judge’s involvement throughout the parties’
legal proceedings, including four days of trial, did not sufficiently acquaint him with the
factors relevant to the determination of a reasonable award.”). In this case, the court with
such knowledge of the conservatorship proceedings was the conservatorship court.
Inasmuch as the conservatorship court in this action made no findings regarding
whether the attorney’s fees requested in Petitioners’ amended claims were reasonable or
were incurred in relation to the conservatorship or in benefit of Conservatee or her
16
property, we vacate the portion of the conservatorship court’s amended order referring
Petitioners’ attorney’s fee claims to the probate court and remand for an evidentiary
hearing on these claims. If the conservatorship court finds that Petitioners’ requested fees
or a portion of those fees are warranted within the conservatorship proceedings, the
conservatorship court should enter a corresponding money judgment or judgments, which
may be pursued further by Petitioners or their counsel in probate court if sufficient funds
are no longer available from the conservatorship. See, e.g., In re Blessing, 1998 WL
862480, at *12.
V. ETHRA Representative’s Claim for Fees and Expenses
Petitioners also contend that the conservatorship court erred by granting an award
of fees and expenses to ETHRA in the amount of $9,112.50 for the services of Ms.
Wilson without requiring that ETHRA satisfy Petitioners’ filed objection requesting
additional information regarding the services rendered. Petitioners maintain that the fees
for Ms. Wilson’s services are “attorney fees,” describing Ms. Wilson as ETHRA’s
“employee attorney,” as distinguishable from ETHRA’s counsel in this matter, Mr.
Reeves.7 ETHRA, however, states that it does not have an “employee/attorney” and
describes Ms. Wilson as “the representative agent of ETHRA’s public
guardian/conservator program.” In any case, Petitioners did include in their objections to
the final report and accounting a request for “information to evaluate” the $9,112.50
amount requested. ETHRA contends that it was not required to provide additional
information regarding these fees and expenses and that the conservatorship court properly
exercised its discretion to determine that the fee request was reasonable in light of the
complex nature of the case. Upon careful review, we determine that upon Petitioners’
objection, the conservatorship court should have required ETHRA to provide more
specific information concerning how it arrived at the figure requested.
It is well settled that a “conservator occupies a fiduciary position of trust of the
highest and most sacred character.” AmSouth Bank v. Cunningham, 253 S.W.3d 636, 642
(Tenn. Ct. App. 2006) (citing Grahl v. Davis, 971 S.W.2d 373, 377 (Tenn. 1998)). When
setting the amount of compensation for services rendered by the fiduciary in a
conservatorship, the conservatorship court is required to consider statutory factors as
follows:
7
Petitioners have not raised an issue on appeal concerning the conservatorship court’s award in its
amended final judgment of attorney’s fees to ETHRA’s counsel, Mr. Reeves, in the amount of
$10,049.04. We note that Mr. Reeves’s “Motion to Approve Attorney’s Fees” was accompanied by an
itemized account of services rendered. Any issue as to Mr. Reeves’s fees has been waived on appeal. See
Tenn. R. App. P. 13(b).
17
The fiduciary may receive reasonable compensation for services rendered.
The court shall set the actual compensation to be paid, taking into account:
(1) The complexity of the property of the minor or person with a
disability;
(2) The amount of time the fiduciary spent in performing fiduciary
duties;
(3) Whether the fiduciary had to take time away from the fiduciary’s
normal occupation;
(4) Whether the services provided the minor or person with a disability
are those the fiduciary should normally have provided had there
been no need for a fiduciary, and
(5) Such other matters as the court deems appropriate.
Tenn. Code Ann. § 34-1-112(a). “When a party having an interest in a disabled person’s
estate challenges a conservator’s final accounting, the burden is on the conservator to
establish the correctness of the accounting.” In re Conservatorship of White, No. 01A01-
9704-PB-00154, 1997 WL 629958, at *5 (Tenn. Ct. App. Oct. 14, 1997).
In the instant action, ETHRA, acting through Ms. Wilson, averred in its motion for
reimbursement that because Conservatee was not indigent and could “bear some of the
expenses for the services rendered by the District Conservator in the exercise of its
fiduciary duty,” the conservatorship court could award reasonable fees and expenses.
ETHRA prayed for relief as follows:
WHEREFORE, the Office of Public Guardian, through its
representative agent, Carol Silvey Wilson, prays that this Court:
1. Permit the Public Guardianship for the Elderly program a reasonable
reimbursement for services and expenses, and respectfully requests
the sum of Nine Thousand One Hundred Twelve Dollars and 50/100
($9,112.50) to be considered.
2. Further, movant prays that she be permitted to reimburse the Public
Conservatorship for the Elderly program from the account of
[Conservatee], after payment of Court costs for this action.
18
The Final Report and Accounting, filed by ETHRA on the same day, did include a
detailed log of receipts to and disbursements from the conservatorship, along with
various documentation of these receipts and disbursements. However, apart from this
accounting, ETHRA submitted no further itemized documentation of the specific services
rendered to arrive at the requested fee amount of $9,112.50.
In support of their argument, Petitioners rely in part on an exchange that occurred
during the March 28, 2017 hearing when Petitioners raised their objection to ETHRA’s
motion for fees and request for detailed information regarding the services rendered. The
transcript reflects the following in pertinent part:
Marilyn Hudson: I’m talking about ETHRA’s claim for fees. I’m
not talking about reimbursement money. I’m
talking about there is a separate motion here for
reimbursement – I think that’s how he captions
it, motion for –
Mr. Reeves: Those are the conservator’s fees. It’s been
filed.
Marilyn Hudson: They’re for –
Mr. Reeves: There’s no requirement that there be any detail.
It is routine. And in this case, frankly, that is a
conservative accounting of the time that was
involved in dealing with this family.
And there’s – you know, I’ve never – I’ve never
had anyone object. That’s a – considering the
fees that have been generated by the acrimony
in this family, for the conservator to charge a
$9,000 fee is –
The Court: Well, it’s a pretty precise number, though, nine
one one –
Mr. Reeves: Right.
The Court: – two point five –
Mr. Reeves: They keep – there are records, but –
19
The Court: Well, if it’s being objected to, then can you
produce records that –
Mr. Reeves: I suppose we can. I’ve never had to do that.
The Court: Well, you know, this is a –
Mr. Reeves: I know.
The Court: This is a case of all sorts of firsts, isn’t it?
Despite the conservatorship court’s oral recognition that upon Petitioners’
objection, ETHRA could “produce records” to specifically support its fee claim, the court
did not subsequently order ETHRA to produce an itemized accounting of the applicable
services rendered. Instead, at the close of the hearing, the conservatorship court orally
found the amount requested to be “reasonable” and approved an award to ETHRA’s
Public Guardianship Program in the amount of $9,112.50. In its March 28, 2017 written
order and subsequent amended order, the conservatorship court found that ETHRA’s
motions were “proper” and “should be approved” but did not make further specific
findings concerning ETHRA’s requested fees for its agent’s services.
Petitioners also rely on this Court’s decision in In re Conservatorship of Melton,
No. E2014-01384-COA-R3-CV, 2015 WL 4594126 (Tenn. Ct. App. July 31, 2015),
perm. app. denied (Tenn. Mar. 23, 2016). In Melton, the conservator, which was, as here,
ETHRA acting through Ms. Wilson as representative agent, successfully defended an
appeal of an award of attorney’s fees by arguing that such an award was “appropriate
when she was successful in defending the final accounting.” See id. at *7. As this Court
explained:
The record reflects that a portion of Conservator’s requested attorney
fees were not incurred on behalf of the Ward. Conservator requested
attorney fees for services rendered from September 2013 until May 2014, a
period in which the Ward was no longer living. Conservator argues that an
award of attorney fees at trial and on appeal is appropriate when she was
successful in defending the final accounting. Conservator analogizes the
current case to the situation presented in Pitts v. Blackwell, No. M2000-
01733-COA-R3[-CV], 2001 WL 1660829, at *6 (Tenn. Ct. App. Dec. 28,
2001), where this court held that the conservator was not entitled to an
award of attorney fees because the conservator was unsuccessful in
defending the final accounting. 2001 WL 1660829, at *6. In so holding,
20
the court relied upon the reasoning [in] In re Estate of Wallace, 829 S.W.2d
696, 704 (Tenn. Ct. App. 1992), where the court held that an executor of an
estate may charge its necessary and reasonable legal fees against the estate
only when the executor is successful in defending its conduct. Pitts, 2001
WL 1660829, at *6.
Tennessee Code Annotated section 34-1-113(a) provides that a
fiduciary may recoup legal fees incurred on behalf of the ward and “such
other expenses as the court determines are necessary for the fiduciary.”
Exercising its discretion, the trial court only approved the amount of
attorney fees that it determined was “reasonable and necessary” and
expended on behalf of the Ward. We uphold the trial court’s discretionary
decision.
Id. at *7.
Petitioners argue that In re Conservatorship of Melton demonstrates that a
fiduciary, specifically ETHRA in Melton and in the instant action, see id., can be
expected to specifically document and defend its final accounting, including any request
for fees. For its part, ETHRA relies on the discretion afforded the conservatorship court
in awarding fees to the fiduciary based on the statutory considerations delineated in
Tennessee Code Annotated § 34-1-112(a) and notes that the statute does not require an
itemized listing of services rendered. We agree with ETHRA insofar as we see no reason
for the conservatorship court to require itemization of services if no party with an interest
in the estate has objected to the final accounting and request for the fiduciary’s fees and if
the court, upon consideration of the statutory factors provided in § 34-1-112(a), finds the
fees to be reasonable.
However, in this case, Petitioners did object to the final accounting and
specifically requested that the court “require ETHRA to set forth the basis for its claim
for reimbursement of $9,112.50.” Moreover, the conservatorship court entered no
specific findings in its amended final judgment regarding the statutory factors provided in
Tennessee Code Annotated § 34-1-112(a) other than a finding that the motion was
“proper.” We therefore vacate the conservatorship court’s award to the Public
Guardianship Program of ETHRA in the amount of $9,112.50 and remand for entry of an
order directing ETHRA to present a detailed explanation of the basis for its
representative’s claim for fees and expenses. The conservatorship court shall then make
a determination regarding the reasonableness of those fees and expenses based on the
court’s application of the statutory factors.
21
VI. Petitioners’ Objections to Final Report and Accounting
Petitioners further contend that the conservatorship court erred by approving
ETHRA’s final report and accounting and closing the conservatorship over Petitioners’
objections, with a referral to the probate court for the personal representative to pursue
any claims arising from Petitioners’ allegations of accounting deficiencies and losses. On
appeal, Petitioners specifically raise their objections regarding Conservatee’s bank and
investment accounts, allegedly misappropriated funds, and vehicle.8 In response,
ETHRA asserts that Petitioners failed to present evidence in support of their objections
and that the conservatorship court properly referred claims involving Conservatee’s
assets to be pursued, if viable, by the Estate’s personal representative in probate court.
Upon a thorough review of the record, we determine that the conservatorship court
did hear arguments concerning Petitioners’ objections during the January 2017 and
March 2017 non-evidentiary hearings, even directing ETHRA at the close of the January
2017 hearing to provide further documentation of the First Tennessee Bank accounts,
which ETHRA did by the time of the March 2017 hearing. However, although the
conservatorship court closed the conservatorship over Petitioners’ objections, the court
did not specifically address the objections in either its March 2017 order or subsequent
amended order except to refer them to the probate court. Therefore, we are unable to
discern with any certainty the basis upon which the conservatorship court found the
specific objections to be unavailing and thereby found ETHRA’s motion to enter the final
accounting to be “proper.” See In re Conservatorship of White, 1997 WL 629958, at *5
(noting the conservator’s burden to “establish the correctness” of a final accounting when
it is challenged by “a party having an interest in a disabled person’s estate”).
Petitioners’ objections concerning Conservatee’s bank accounts and investments
and allegedly misappropriated funds primarily involve three bank accounts. First, as to a
First Tennessee Bank account ending in 8071 (“Account 8071”), Petitioners aver that
ETHRA failed to sufficiently investigate their allegations that by utilizing his November
2014 appointment as Conservatee’s attorney-in-fact to convert Account 8071 into a joint
account with his right of survivorship, Harry Hudson obtained at least $15,757.70 from
Account 8071 for his own use. As Petitioners note, Mr. Bowling appeared during the
March 2017 hearing and stated that Harry Hudson had closed Account 8071, tendering to
Mr. Bowling (as personal representative of the Estate) a balance of approximately
8
In the “Issues Presented” section of its responsive brief on appeal, ETHRA notes that Petitioners had
also raised as an objection to the final accounting ETHRA’s alleged failure to apply for Conservatee’s
long-term health care insurance benefits. However, Petitioners did not list this objection in their issues
presented on appeal, and they have acknowledged in their reply brief that the objection is now moot
because Mr. Bowling completed the necessary application during the pendency of this appeal, resulting in
a payment to the Estate.
22
$2,600.00. Petitioners insist that in the final accounting, ETHRA failed to account for the
dissipation of funds in Account 8071 and also inaccurately listed the final balance as
$4,931.75.
Second, as to a First Tennessee Bank account ending in 5779 (“Account 5779”),
purportedly created under the authority of Harry Hudson’s November 2014 power of
attorney, Petitioners acknowledge that in February 2016, ETHRA deposited $57,866.04
remaining from the account into the Pooled Trust. They allege, however, that Harry
Hudson had transferred $110,000.00 from Conservatee’s investment and other bank
accounts into Account 5779 prior to ETHRA’s appointment. They assert that ETHRA
delayed too long in transferring these funds and failed to document that all funds in the
account at the time the conservatorship was created were transferred. ETHRA does list
in the final report and accounting as a “potential claim” regarding Account 5779 three
checks drawn on the account in respective amounts of $5,375.00; $5,194.57; and
$1,557.53.
Third, Petitioners assert that ETHRA presented insufficient documentation of the
balance in a Regions Bank account owned by Conservatee, the balance of which was
represented during final accounting in the amount of $4,022.00.
Finally, as to Conservatee’s vehicle, Petitioners allege that ETHRA ignored their
requests to secure the vehicle in storage and that as a result the vehicle was vandalized
and rendered of nominal value. Petitioners assert that ETHRA failed to account for the
vehicle in its final accounting as part of Conservatee’s personal property. The final
report and accounting reflects that ETHRA listed “Personal Property: located at
residence and . . . Storage” but did not specifically mention the vehicle as part of the
personal property as it had in previous property management plans. Asserting that
ETHRA had at one time valued the vehicle at $2,500.00, Petitioners further assert that
ETHRA should be required to reimburse the conservatorship in the amount of $2,500.00.9
During the January 2017 hearing, Marilyn Hudson, on behalf of Petitioners, raised
the subject objections to entry of the final report and accounting. As to the First
Tennessee accounts as issue, Marilyn Hudson insisted that Conservatee’s funds had not
been fully accounted for while Mr. Reeves maintained that they had been. Marilyn
Hudson and Mr. Reeves described different versions of whether Mr. Bowling had found
the accounting acceptable, and Mr. Bowling was not present. At the close of the hearing,
the conservatorship court orally directed that Mr. Bowling should be before the
9
Petitioners’ citation to the record for this valuation by ETHRA refers to a pleading filed by Petitioners.
None of ETHRA’s property management plans lists a specific value for the vehicle apart from its
inclusion with all of Conservatee’s personal property. We note that during the March 2017 hearing,
Marilyn Hudson stated that the value of the vehicle according to Kelley Blue Book was $2,360.00.
23
conservatorship court if he had objections to the accounting as the Estate’s personal
representative. The court also orally directed Mr. Reeves to “make a diligent inquiry to
find every First Tennessee statement . . . that exists or ought to exist from the time that
ETHRA took over these accounts to the day that [Conservatee] passed away or the day
that ETHRA ceased being the financial conservator.”
Subsequently, during the March 2017 hearing, Mr. Bowling appeared before the
conservatorship court. Mr. Reeves explained to the court that since the January 2017
hearing, ETHRA had “issued a subpoena to First Tennessee Bank for the full two years,
two calendar years, of all of [Conservatee’s] First Tennessee accounts.” He stated that
ETHRA had “obtained and distributed those documents a month ago, roughly, and
reviewed them” and that he had “heard no response or objection to anything that they
contained.” However, Marilyn Hudson continued to voice Petitioners’ objections to the
final accounting. On the point of apparent discrepancies in bank accounts resulting from
funds that had been distributed to beneficiaries since Conservatee’s death, Mr. Reeves
clarified that the final accounting represented the state of Conservatee’s assets at the time
of her death prior to such distribution.
At one point during the March 2017 hearing, the conservatorship court questioned
Marilyn Hudson regarding whether there was “any concern with the final accounting,” to
which she replied in the affirmative. She explained:
Just so you know, Your Honor, it’s not such a concern that we’re not going
to get closed today. I just feel like it’s important for the record for the
Court to know, the accounting today is still – it doesn’t comply with the
statute.
As to the vehicle, when specifically questioned by the conservatorship court
regarding what Petitioners were asking the court to do about the alleged vandalism to the
vehicle, Marilyn Hudson replied: “I want the order that closes this case to reflect that the
– that ETHRA is responsible for the damage of the Cadillac.” The court then stated that a
claim involving the vehicle would be a probate estate claim and explained considering
any damage claims:
[A]ny claim against the estate should be handled in probate, I think. And if
you claim that the estate has been damaged by some party or Mr. Bowling
considers that the estate has been damaged by the actions of some party,
then Mr. Bowling can pursue that upstairs [in probate court].
On appeal, ETHRA asserts that the conservatorship court properly found that all
of the claims raised by Petitioners as objections to the final accounting should be treated
24
as claims under the exclusive control of the Estate’s personal representative in probate
court. In support of this argument, ETHRA relies in part on this Court’s decision in In re
Estate of Hendrickson, No. M2008-01332-COA-R9-CV, 2009 WL 499495, at *7 (Tenn.
Ct. App. Feb. 25, 2009) (reversing the trial court’s grant of a daughter’s motion to
intervene in the estate in an attempt to recover assets allegedly misappropriated from her
deceased mother prior to the mother’s death). The Hendrickson Court stated in relevant
part:
The probate court authorized [the intervenor] to pursue claims
against Defendant on behalf of the estate that the Administrator has chosen
not to pursue. We have determined this was error because it contravenes
the well established law of this State, which for more than two hundred
years, has recognized the exclusive right of the personal representative to
maintain suits to recover debts due to the deceased, but for two exceptions;
where it is established that the personal representative is in collusion with
the debtor, or where the personal representative is refusing to take the
necessary steps and the debt is about to be lost.
Id. at *7 (internal citations omitted). See also Bishop v. Young, 780 S.W.2d 746, 750
(Tenn. Ct. App. 1989), perm. app. denied (Tenn. Nov. 27, 1989) (“In substance, this is a
suit by distributees of an estate to recover alleged assets of the estate for the ultimate
benefit of the distributees. To the extent that it seeks to have the Chancery Court
supersede the function of the Probate Court, it is not well grounded.”).
Insofar as Petitioners’ objections regarding the bank accounts and the vehicle may
result in claims that can be recovered by the Estate, we agree with ETHRA on this point.
However, we emphasize also that “[c]onsistent with the court’s duty under [what is now
codified at Tennessee Code Annotated § 34-3-107(a)(5) (Supp. 2017)] ‘to properly care
for the . . . property of the disabled person,’ the court having jurisdiction over a
conservatorship should approve a conservator’s final accounting only when it fully and
accurately accounts for the disabled person’s estate.” In re Conservatorship of White,
1997 WL 629958, at *5.
In this case, the conservatorship court has not memorialized in its written order
any resolution of Petitioners’ objections other than to refer them to probate court. The
conservatorship court also has not memorialized its rationale for entering the final
accounting over Petitioners’ objections. We decline to speculate as to the
conservatorship court’s reasoning from the transcripts of the January 2017 and March
2017 hearings. As our Supreme Court has explained: “It is well-settled that a trial court
speaks through its written orders—not through oral statements contained in the
transcripts—and that the appellate court reviews the trial court’s written orders.”
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Will. v. City of Burns, 465 S.W.3d 96, 119 (Tenn. 2015) (quoting Anil Constr., Inc. v.
McCollum, No. W2013-01447-COA-R3-CV, 2014 WL 3928726, at *8 (Tenn. Ct. App.
Aug. 7, 2014)). We therefore vacate the portion of the conservatorship court’s order
approving the final report and accounting and closing the conservatorship over
Petitioners’ objections. We remand for entry of findings of fact and conclusions of law
concerning the petitioners’ objections to the final accounting and, when appropriate,
closure of the conservatorship.
VII. Conclusion
For the reasons stated above, we vacate the portions of the conservatorship court’s
judgment transferring to the probate court Petitioners’ counsel’s amended claims for
attorney’s fees. We also vacate the portion of the conservatorship court’s judgment
approving the final report and accounting and closing the conservatorship over
Petitioners’ objections. We remand for (1) entry of findings of fact and conclusions of
law concerning Petitioners’ objections to the final accounting and closure of the
conservatorship when appropriate; (2) entry of findings of fact and conclusions of law
concerning whether the attorney’s fees requested in Petitioners’ counsel’s pending
attorney’s fee motions were incurred in relation to the conservatorship and, if so, whether
reasonable attorney’s fees should be granted upon each of these motions; (3) entry of an
order directing ETHRA to present a detailed explanation of the basis for its
representative’s claim for fees and expenses for the conservatorship court’s consideration
based upon the factors provided in Tennessee Code Annotated § 34-1-112(a); and (4)
collection of costs below. The undisputed grant of attorney’s fees to ETHRA’s counsel is
affirmed. Costs on appeal are taxed to the conservatorship of Mary Ruth Davis Hudson,
with the appellee, East Tennessee Human Resources Agency, in its capacity as financial
conservator of Conservatee’s estate, instructed to remit payment of said costs.
_________________________________
THOMAS R. FRIERSON, II, JUDGE
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