644 S.W.3d 85
Tenn. Ct. App.2021Background
- Jean Ellis (aged 83, terminally ill with pancreatic cancer) appointed her niece Christina Duggan as attorney-in-fact via a durable power of attorney in 2012; the POA form contained an initialed prohibition on non‑charitable gifts by the agent.
- In July–August 2015 Christina caused (1) a $1,000 earnest check from Jean’s account, (2) a $175,000 check payable to Christina (signed by Jean), and (3) the surrender of a Prudential annuity (via POA) that funded the transfer; Jean’s liquid assets were insufficient to cover the gift without liquidating the annuity.
- Chambliss Bahner attorneys (Ryan Barry) and a care‑coordinator/paralegal (Sally Brewer, a certified dementia practitioner affiliated with the firm) became involved after Christina sought a document to memorialize the gift; Barry spoke with Jean by phone and Brewer performed an in‑home cognitive screening before Jean executed a written Transfer and Assignment.
- Jean revoked Christina’s powers of attorney in November 2015 and died in February 2016; the residuary beneficiaries (grandsons) were assigned the estate’s claim and sued Christina for undue influence, breach of fiduciary duty, and related claims.
- After a five‑day bench trial the chancery court found (and the Court of Appeals affirmed) that: a confidential fiduciary relationship existed, multiple suspicious circumstances supported a presumption of undue influence, Christina failed to rebut that presumption by clear and convincing evidence, and judgment for $176,000 was ordered against Christina.
- The chancery court denied plaintiffs’ request for attorney fees; the Court of Appeals reversed that denial and remanded for a reasonable award of fees for trial and appeal.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the $175k transfer was the product of undue influence | The residuary beneficiaries: confidential relationship + suspicious circumstances (decedent’s frailty, agent’s active role, secrecy, self‑dealing, POA violated) created a presumption of undue influence that Christina failed to rebut | Christina: Jean intended the gift, received independent advice from Chambliss Bahner and a cognitive screening, and had capacity; therefore no undue influence | Court affirmed: presumption arose and multiple suspicious circumstances existed; Chambliss Bahner’s involvement did not constitute fully informed, independent advice sufficient to rebut the presumption; transfer set aside and $176,000 awarded against Christina |
| Whether Chambliss Bahner’s advice and Brewer’s cognitive screening constituted independent advice that rebuts undue influence | Plaintiffs: the firm’s input was after Christina had already orchestrated checks and was not fully informed or sufficiently independent to dispel the presumption | Christina: telephone advice from Barry and an in‑home screening by Brewer were competent, independent advice that validated Jean’s intent | Court held advice was not the sort of private, fully informed, disinterested counsel required by Turner/Richmond; timing, incomplete information, and Christina’s prior conduct undermined the firm’s persuasiveness |
| Whether Christina violated the POA and breached fiduciary duties by cashing the annuity and taking the gift | Plaintiffs: Christina used POA to liquidate annuity without permission and self‑dealt, violating the POA prohibition on non‑charitable gifts and fiduciary duties | Christina: contended Jean directed the actions and that she believed she had authority or Jean’s consent | Court held Christina violated the POA prohibition on gratuitous self‑gifts and engaged in self‑dealing and disloyalty to Jean; conduct supported liability |
| Entitlement to attorney fees for plaintiffs (assignees of estate) | Plaintiffs: Christina’s deliberate abuse of fiduciary trust supports fee award under equitable/common‑law exceptions (cases awarding fees against fiduciaries who enrich themselves) | Christina: no statutory or contractual basis; American Rule bars fee awards absent recognized exception | Court reversed trial court: precedent permits awarding fees where fiduciary deliberately uses position to enrich self (Martin v. Moore et al.); remanded to determine reasonable fees for trial and appeal |
Key Cases Cited
- Matlock v. Simpson, 902 S.W.2d 384 (Tenn. 1995) (confidential relationship + benefit to dominant party creates presumption of undue influence)
- Richmond v. Christian, 555 S.W.2d 105 (Tenn. 1977) (defines proper independent advice as private, competent, and disassociated from donee’s interests)
- Turner v. Leathers, 232 S.W.2d 269 (Tenn. 1950) (formulation of the independent advice requirement applied in undue‑influence cases)
- Martin v. Moore, 109 S.W.3d 305 (Tenn. Ct. App. 2003) (permits award of attorney’s fees against fiduciary who deliberately uses position to enrich self)
- Parish v. Kemp, 179 S.W.3d 524 (Tenn. Ct. App. 2005) (presumption of undue influence applies broadly to fiduciary dealings and gifts)