In a case with potentially significant ramifications for other undue influence cases, the Court of Appeals of Tennessee ruled that, just because the Wife and Husband were married (for 17 years, no less), that fact did not establish a confidential relationship. Establishing a confidential relationship in undue influence cases is absolutely critical. A transaction, transfer, will, or payable on death designation, etc. can only be set aside based on the legal cause of action of undue influence if there was a confidential relationship between the giver and receiver. Thus, no confidential relationship = no chance of winning on an undue influence claim. (It is not necessary to prove a confidential relationship to set aside a will or transaction if the giver lacked the mental capacity to understand what he or she was doing).
While it is necessary, in an undue influence case, to prove a confidential relationship, once it is proven, a huge advantage is gained by the party seeking to set aside the will, transaction, or beneficiary designation: A legal presumption arises that the receiving party did use undue influence to obtain the benefit which he or she obtained. In such a case, the defendant (who received the benefit) can expect a judge in a Tennessee court to instruct the jury that the transaction is presumed to have been the result of undue influence unless the defendant proves otherwise by clear and convincing evidence.
In Tennessee, a variety of relationships can give rise to a confidential relationship. There are virtually no bright-line rules about what facts do or do not establish a confidential relationship. Tennessee courts have broadly segregated confidential relationships into two categories: (1) legal relationships; and (2) family and other relationships. The most prevalent type of legal confidential relationship arises when a party holds a power of attorney, but such a relationship could arise in other contexts.
For family relationships to amount to confidential relationships, a party has to prove more than just that the giver and receiver were relatives. A party has to prove what Tennessee courts have referred to as “domination and control” of the dominant party over the weaker party. In the case at hand in this blog, the son (“Son”) sued the Wife after the Husband, Son’s father, died. Son alleged that a number of transfers made by Husband were the result of undue influence by Wife.
What facts in the case supported Son’s claim that Wife and Husband had a confidential relationship? Not very many. Wife drove Husband to meetings with his investment advisor. She also held Husband’s hand when he signed documents because his handwriting was so shaky. In light of the fact that Husband’s investment advisor and his secretary testified that Wife never seemed to give advice to Husband, or to try to influence him when he was doing paperwork, and that Husband seemed alert and competent, Son’s foregoing evidence was held to be insufficient to establish a confidential relationship.
A take away from this case is that domination and control establishes a confidential relationship. It is not the level of intimacy and trust, degree of affection, or number of years of marriage that should directly be considered by a judge or jury trying to decide if a confidential relationship existed. Those factors are not completely irrelevant as any judge or jury would recognize that they might, in certain situations, facilitate the exercise of dominion and control by the stronger spouse or relative.
In my experience, dominion and control can be achieved in a number of ways by a party (whether the party is a spouse, relative or an unrelated person) who is intent on taking advantage of someone else. Some of the ways dominion and control are exercised are very subtle, e.g., creating a fear that there will be a disruption in the family if the dominant party does not get his or her way, that the weaker party may be moved to a nursing home, or that they may not have anyone to take them to receive medical care, to the grocery or to visits with other relatives.