478 S.W.3d 596
Tenn. Ct. App.2015Background
- James and Betty Cartwright created multiple trusts for their adopted children, Alan and Alice; the ACC Grantor Trust (1978) governed distributions to Alan and was amended in 1995 and 1996 (reducing an annual cap from $84,000 to $60,000 and adding pour‑over language sending distributions from other family trusts into the ACC Trust).
- Alan signed the amendments; Alice later became co‑trustee and made distributions (typically $5,000–$7,000/month) and paid many of Alan’s expenses from trust funds.
- Alan sued (cross‑claim) alleging trustees breached fiduciary duties and that the Amendments were procured by undue influence (and that Exhibit A listing related trusts was fabricated); many other claims were nonsuited or dismissed before appeal.
- On initial appeal (Cartwright I), this Court reversed summary judgment only as to undue influence, concluding a fact question existed whether Alice (a fiduciary and contingent beneficiary) benefited from the Amendments such that a presumption of undue influence might arise.
- On remand discovery, defendants submitted an expert (Thompson) showing Alan received more overall from 1995–2011 than he would have without the Amendments; plaintiff’s expert reports were excluded or untimely; the trial court granted summary judgment for defendants, denied plaintiff’s partial summary judgment on unrelated 1996 trusts, and awarded attorneys’ fees and costs.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the Amendments were procured by undue influence and whether Alice received a benefit from them | Alan: the Amendments (and related documents) were procured by undue influence; the pour‑over and cap could have increased corpus for Alice (contingent beneficiary) and thus a presumption arises | Defs: expert accounting shows Alan received more overall with the Amendments; Alice did not receive a cognizable benefit and Alan suffered no damages | Court granted summary judgment to defendants: defendants negated damages with expert proof; Alan failed to raise a genuine dispute of material fact |
| Whether discovery/evidence about the 1996‑1 and 1996‑2 trusts was relevant on remand | Alan: creation/funding of 1996 trusts conferred benefits on Alice and are relevant to undue influence | Defs: those claims were nonsuited earlier and outside the narrow remand issue; not relevant to damages on remand | Court refused to entertain claims about the 1996 trusts; denied Alan’s partial summary judgment and barred untimely supplementation |
| Whether expert reports proffered by Alan should have been admitted | Alan: his valuation expert’s reports supported damages | Defs: Mercer’s methodology was irrelevant to remand scope and untimely; other proffers (Heath) were late and irrelevant | Court struck Alan’s experts/reports as untimely or irrelevant under the narrow remand scope; relied on defendants’ expert |
| Meaning of “net income” and allocation of capital gains | Alan: “net income” includes all earnings (including capital gains); raises latent ambiguity and factual dispute | Defs: statute and trust law allocate capital gains to principal; trust grants trustee discretion; meaning is legal and controlled by Tennessee Uniform Principal & Income Act | Court held “net income” is governed by Tennessee law/Uniform Principal & Income Act; capital gains are principal unless trust provides otherwise; no fact issue created by Alan’s subjective belief |
Key Cases Cited
- Hannan v. Alltel Publ’g Co., 270 S.W.3d 1 (Tenn. 2008) (summary judgment burden shifting and standards)
- Matlock v. Simpson, 902 S.W.2d 384 (Tenn. 1995) (presumption of undue influence where confidential relationship and benefit to dominant party)
- Richmond v. Christian, 555 S.W.2d 105 (Tenn. 1977) (same principle regarding confidential relationships and presumptions of undue influence)
- Martin v. Norfolk S. Ry., 271 S.W.3d 76 (Tenn. 2008) (movant’s methods for negating essential element of nonmoving party’s claim)
- Byrd v. Hall, 847 S.W.2d 208 (Tenn. 1993) (summary judgment standards and burdens)
- McCarley v. West Quality Food Serv., 960 S.W.2d 585 (Tenn. 1998) (nonmoving party’s burden to present specific facts creating genuine factual dispute)