In Re: Estate of Madelyn Cleveland
E2016-01624-COA-R3-CV
| Tenn. Ct. App. | Mar 7, 2017Background
- Madelyn Cleveland and Donald Cleveland executed a separation agreement during pending Georgia divorce proceedings on July 13, 2014, allocating specific marital assets (Tennessee residence and a Fidelity IRA to Madelyn; Georgia residence and other accounts to Donald) and requiring quitclaim deeds to effect real‑estate transfers; the agreement selected Georgia law.
- Madelyn died September 22, 2014 before the promised deed transfers occurred; her daughter Mary Lee Fennessy was appointed personal representative and probated Madelyn’s will in Tennessee probate court.
- The Estate sought a declaratory judgment and a temporary restraining order to prevent Donald from possessing the Tennessee residence or removing personal property; Donald counterclaimed, alleging rescission of the agreement for nonperformance and seeking possession of assets and recovery from the Estate.
- At trial the probate court first found the agreement valid but later, in supplemental findings, concluded Donald validly rescinded the agreement for nonperformance and therefore awarded the Tennessee residence and IRA funds to Donald and granted judgment on his counterclaim.
- On appeal the Tennessee Court of Appeals applied Georgia substantive law and reversed, holding Donald had no valid basis to rescind because (a) his own refusals to perform (e.g., refusing to sign deeds absent retrieval of personalty or holding deeds until final divorce) prevented rescission, and (b) his communications both threatened rescission and simultaneously reaffirmed the agreement, so any purported rescission was ineffective.
Issues
| Issue | Plaintiff's Argument (Estate) | Defendant's Argument (Cleveland) | Held |
|---|---|---|---|
| 1. Whether Donald properly rescinded the separation agreement | Estate: Donald lacked grounds; any delays were not material breaches and Estate offered to perform within a reasonable time | Donald: He rescinded for nonperformance after repeated delay in allowing retrieval of his belongings and execution of deeds | Held: Reversed rescission — Donald had no valid basis; his own refusals and partial affirmations defeated rescission |
| 2. Whether Estate could require Donald to execute a quitclaim deed to the Tennessee residence | Estate: Agreement required quitclaim deed; PR can enforce and quiet title to will beneficiary | Donald: Title remained affected by survivorship (tenancy by entirety) and deeds weren’t executed; he asserted rescission | Held: Remanded — trial court erred in awarding title to Donald; enforcement and construction of deed obligation to be decided on remand |
| 3. Whether Donald waived beneficiary rights in the Fidelity IRA under the agreement | Estate: Agreement and decedent’s actions removed Donald as beneficiary such that he waived rights to IRA funds | Donald: Agreement didn’t explicitly waive beneficiary designation; IRA’s terms control survivorship | Held: Remanded — trial court erred in awarding IRA funds to Donald; ownership issue to be adjudicated on remand |
| 4. Whether parol evidence admitting testimony about the agreement and rescission was improperly admitted | Estate: Parol evidence rule barred testimony that adds to or varies the written agreement | Donald: Testimony explained surrounding circumstances and rescission, not to vary clear terms | Held: Court held evidence on rescission was admissible; but ordered that on remand the trial court must first determine ambiguity before admitting parol evidence to vary contract terms |
Key Cases Cited
- Guthrie v. Guthrie, 594 S.E.2d 356 (Ga. 2004) (settlement agreements from divorce proceedings are enforced under ordinary contract rules even absent a final divorce decree)
- Segars v. Brooks, 284 S.E.2d 13 (Ga. 1981) (divorce proceedings abate on a spouse’s death)
- Vidalia Outdoor Prods., Inc. v. Higgins, 701 S.E.2d 217 (Ga. Ct. App. 2010) (rescission requires material nonperformance to justify termination)
- Martin v. Rollins, Inc., 226 S.E.2d 771 (Ga. Ct. App. 1976) (party seeking rescission must be free from substantial default and have performed obligations)
- Brown v. Ragsdale Motor Co., 16 S.E.2d 176 (Ga. Ct. App. 1941) (rescission requires distinct communication of intent to repudiate the contract)