Rebecca M. Pomeroy v. Michael L. McGinnis
E2020-00960-COA-R3-CV
| Tenn. Ct. App. | Jul 16, 2021Background
- An annuity purchased with the parties’ mother’s funds named sibling co-owners/beneficiaries: Rebecca Pomeroy and Michael McGinnis. The mother (annuitant) was thereby divested of ownership.
- In April 2012 McGinnis submitted a surrender, Sun Life issued a check payable to both co-owners, McGinnis endorsed Pomeroy’s name without her authorization, deposited the proceeds into accounts he controlled, and disbursed the funds.
- Pomeroy learned of the check only in 2019 through discovery in McGinnis’s divorce and sued for conversion (seeking half the proceeds, prejudgment interest, and punitive damages), pleading unjust enrichment in the alternative.
- The trial court denied McGinnis’s summary-judgment motion, finding Pomeroy was a titled co-owner and that fraudulent concealment raised fact issues sufficient to toll the limitations period.
- After a bench trial the court found McGinnis converted Pomeroy’s one-half interest and fraudulently concealed the transaction; it awarded one-half the proceeds plus prejudgment interest (total adjusted on appeal to $59,674.22).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Ownership of annuity/check proceeds | Pomeroy was a titled joint owner and thus entitled to one-half of the proceeds. | McGinnis contends title was nominal; funds were effectively held in trust/for the mother and Pomeroy had no ownership. | Court held Pomeroy had a one-half ownership interest as a titled co-owner; annuity owners controlled proceeds. |
| Statute of limitations for conversion | Pomeroy: SOL tolled by McGinnis’s fraudulent concealment; claim timely filed in 2019. | McGinnis: conversion claim accrued when check was negotiated in 2012 and is time-barred by the three-year SOL. | Court applied UCC § 47-3-118(g) (three-year SOL for instruments) but held concealment tolled the SOL; claim not time-barred. |
| Fraudulent concealment (tolling) | Pomeroy: McGinnis concealed the surrender, forged her endorsement, deposited funds in accounts she could not access, and she reasonably could not have discovered it. | McGinnis: no duty to disclose; no artifice used; Pomeroy lived in his household and could have discovered facts earlier. | Court found elements of fraudulent concealment proven (duty as co-payee, affirmative concealment/forgery, knowledge, and reasonable diligence excused by concealment). |
| Unjust enrichment (alternative claim) | Pomeroy pleaded unjust enrichment in the alternative. | McGinnis argued unjust enrichment inapplicable. | Court made no specific findings on unjust enrichment; issue not decided on appeal and therefore not addressed. |
Key Cases Cited
- Pero’s Steak & Spaghetti House v. Lee, 90 S.W.3d 614 (Tenn. 2002) (discovery rule does not toll the SOL for conversion of negotiable instruments; fraudulent concealment is the tolling exception)
- PNC Multifamily Capital Institutional Fund XXVI Ltd. P’ship v. Bluff City Cmty. Dev. Corp., 387 S.W.3d 525 (Tenn. Ct. App. 2012) (conversion of checks is actionable; identifiable funds can be treated as chattel for conversion)
- Shadrick v. Coker, 963 S.W.2d 726 (Tenn. 1998) (elements of fraudulent concealment described for tolling a statute of limitations)
- Odom v. Oliver, 310 S.W.3d 344 (Tenn. Ct. App. 2009) (discussing duty to disclose in fraudulent-concealment context)