Teague v. Kidd

TAMALA TEAGUE, AS SUCCESSOR PERSONAL REPRESENTATIVEOF THE ESTATE OF LOLA LEE DUGGAN v. GARNETT KIDD ET AL.

No. E2019-00330-COA-R3-CV

COURT OF APPEALS OF TENNESSEE AT KNOXVILLE

July 19, 2019 Session

September 12, 2019

Appeal from the Chancery Court for Polk County

No. 2017-CV-25

Jerri Bryant, Chancellor

This case implicates the doctrine of res judicata. Tamala Teague (plaintiff) is the administrator of the estate of Lola Lee Duggan. Garnette Kidd and William Kidd (defendants) are Ms. Duggan's daughter and son-in-law. In a previous lawsuit, the trial court determined that defendants wrongfully took more than $100,000 of Ms. Duggan's assets and used some of that money to purchase 132 acres of real estate. After a bench trial, the court, in that first case, awarded money damages to Ms. Duggan's estate. A few years later, plaintiff filed a second complaint against the defendants. The complaint alleged the same facts that precipitated the previous lawsuit. This time, however, plaintiff sought a different remedy - the entry of an order declaring the existence of a constructive trust with respect to the 132 acres of real estate. The trial court ruled that the doctrine of res judicata barred plaintiff from pursuing this alternative remedy in a second suit against the same defendants on the same cause of action. Accordingly, the court granted defendants' motion to dismiss and denied plaintiff's motion for summary judgment. Plaintiff appeals. We affirm.

Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Chancery Court Affirmed; Case Remanded

CHARLES D. SUSANO, JR., J., delivered the opinion of the court, in which D. MICHAEL SWINEY, C.J., joined. JOHN W. MCCLARTY, J., filed a dissenting opinion.

Andy D. Lewis, Chattanooga, Tennessee, for the appellant, Tamala Teague, as successor personal representative of the estate of Lola Lee Duggan.

H. Franklin Chancey, Cleveland, Tennessee, for the appellees, Garnett Kidd and William Beauford Kidd.

OPINION

I.

In June 2001, defendants moved in with Ms. Duggan, who had been diagnosed with Alzheimer's disease. Mrs. Kidd had access to Ms. Duggan's bank accounts. Mr. Kidd prepared her tax returns. In July 2001, Ms. Duggan executed a durable power of attorney, which designated Mrs. Kidd as her attorney-in-fact. Approximately five years later, defendants placed Ms. Duggan in a nursing facility. She died in September 2007.

Donald Duggan, the first administrator of the estate,¹ discovered evidence that more than $150,000 of Ms. Duggan's assets had "disappeared" during the time that she was in the exclusive care of the defendants. Mr. Duggan filed a complaint against the defendants seeking "to recover funds unlawfully converted through fraud, false dealing and misapplication of trust by Defendant[s]." He requested "that a Lien Lis Pendens be placed against the real property acquired by Defendants in this cause to secure any judgment which may be obtain[ed] by the Estate." (Emphasis in original.) The complaint also prayed for the following forms of relief:

1. That process issue to Defendants in a way and manner as required by law.

2. That upon the hearing of this cause the Estate recover from Defendants all sums wrongfully and fraudulently converted by Defendants to their o[w]n individual use.

3. That Plaintiff have and recover judgment for attorney's fees, prejudgment interest at the statutory rate of 10% and for punitive damages in amount equal to those funds which have been wrongfully converted fraudulently by Defendants in this cause.

4. That Plaintiff have such additional general and equitable relief to which it may be entitled upon the hearing of this cause.

The complaint did not request any alternative remedies, such as the entry of an order declaring the existence of a constructive trust.

After a bench trial, the court ruled that "defendants are liable to the Estate for the wrongful taking of $176,367.31 and that prejudgment interest at the statutory rate of 10% should be awarded from February 21, 2006 through April 19, 2011." This resulted in a total judgment of $267,305.31. In a subsequent order, the court stated that defendants had used Ms. Duggan's assets to purchase the 132 acres of real estate at issue in the present case.

Defendants in the first case appealed. This Court affirmed the judgment against Mrs. Kidd but reduced the award of damages to $117,679. Teague v. Kidd, No. E2011-02363-COA-R3-CV, 2012 WL 5869637, at *7 (Tenn. Ct. App., filed Oct. 3, 2012). We reversed the judgment against Mr. Kidd because "the evidence simply did not establish that [he] possessed a confidential relationship that would have allowed him to exercise dominion and control over [the] [d]ecedent." Id. at *8. On remand, the trial court entered an amended final judgment in accordance with this Court's mandate.

In August 2017, plaintiff filed the second complaint against the defendants. The complaint alleged the same facts that precipitated the previous suit. This time, however, plaintiff sought a different remedy - the entry of an order declaring the existence of a constructive trust, which would transfer legal title in the subject property from the defendants to Ms. Duggan's estate. Defendants filed an answer. They denied using Ms. Duggan's money to purchase 132 acres of real estate. They also denied that Ms. Duggan's estate was the equitable owner of the property. Finally, defendants denied that the estate was entitled to obtain legal title to the property by means of a constructive trust.

In October 2018, plaintiff filed a motion for summary judgment, which was accompanied by a statement of undisputed material facts. Plaintiff also attached several exhibits. These exhibits included admissions by the defendants and the following documents from the previous lawsuit: plaintiff's complaint, defendants' answer, the trial court's April 21, 2011 judgment, the court's order denying defendants' motion to alter or amend, this Court's November 21, 2012 opinion, and the April 30, 2013 amended final judgment.

On October 31, 2018, defendants filed a motion to dismiss for failure to state a claim upon which relief can be granted. In substance, defendants asserted the affirmative defense of res judicata. On the same day, defendants filed a response to plaintiff's statement of undisputed material facts and a brief opposing plaintiff's motion for summary judgment. Defendants admitted the truth of all material facts alleged by plaintiff; however, defendants argued that plaintiff was not entitled to judgment as a matter of law. Defendants expressly raised the affirmative defense of res judicata.

On December 13, 2018, the trial court held a hearing on the matter. After the hearing, the court entered a final judgment. The court determined that "it would be equitable to impose a constructive trust[,]" but the court ultimately declined to do so.According to the court, the doctrine of res judicata barred plaintiff from seeking that equitable remedy in a second suit against the same defendants on the same cause of action. Accordingly, the court granted defendants' motion to dismiss and denied plaintiff's motion for summary judgment. Plaintiff appealed.

II.

Plaintiff raises two issues, which we have slightly restated:

Whether the trial court erred by granting defendants' motion to dismiss; and

Whether the trial court erred by denying plaintiff's motion for summary judgment.

III.

A.

We begin by considering whether the trial court erred by granting defendants' motion to dismiss for failure to state a claim upon which relief can be granted. As a preliminary matter, we note that certain "matters outside the pleading" were "presented to and not excluded by the court[.]" Tenn. R. Civ. P. 12.02(6). Normally, this would require the trial court to treat the motion to dismiss as a motion for summary judgment. Id. That was not necessary in this case because the items presented were "subject to judicial notice, matters of public record, orders, items appearing in the record of the case, and exhibits attached to the complaint whose authenticity is unquestioned[.]" See Indiana State Dist. Council of Laborers v. Brukardt, No. M2007-02271-COA-R3-CV, 2009 WL 426237, at *8 (Tenn. Ct. App., filed Feb. 19, 2009) (quoting Wright and Miller, Federal Practice and Procedure, Civil § 1357, p. 376 (3d ed. 2004)), perm. app. denied (Tenn. Aug. 24, 2009).

When reviewing a trial court's decision to grant a Rule 12.02(6) motion to dismiss, we are mindful of the following principles:

A motion to dismiss [for failure to state a claim upon which relief can be granted] "challenges only the legal sufficiency of the complaint, not the strength of the plaintiff's proof or evidence." Webb v. Nashville Area Habitat for Humanity, Inc., 346 S.W.3d 422, 426 (Tenn. 2011) (citation omitted). The relevant and material allegations of the complaint are taken as true, and the plaintiff is afforded the benefit of all reasonable inferences that may be drawn from the allegations.

Webb, 346 S.W.3d at 426; Brown v. Tenn. Title Loans, Inc., 328 S.W.3d 850, 854 (Tenn. 2010). . . . We apply de novo review to the lower court's legal conclusions, including its ruling on the legal sufficiency of the complaint. Webb, 346 S.W.3d at 426.

Estate of Haire v. Webster, 570 S.W.3d 683, 690 (Tenn. 2019).

B.

The trial court granted defendants' motion to dismiss on the basis of res judicata. Plaintiff first argues that defendants waived the res judicata defense by failing to raise the defense in their answer. We disagree.

Although res judicata is an affirmative defense that is ordinarily raised in a defendant's answer, the defense may also be raised in a Rule 12.02(6) motion to dismiss for failure to state a claim upon which relief can be granted. Jackson v. Smith, 387 S.W.3d 486, 491 (Tenn. 2012). Some defenses are waived if they are not asserted in a party's first responsive pleading,² but

the defense of failure to state a claim upon which relief can be granted . . . may also be made by a later pleading, if

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