On July 18, 2013, a jury in Davidson County, Tennessee returned a verdict for a client of the firm who was represented by attorney J. Ross Pepper. The firm’s client was the defendant (“Defendant”) in an undue influence case. The plaintiff (“Plaintiff”) in the case also alleged that the Defendant had breached his fiduciary duties, committed the tort of conversion with respect to certain funds and bank accounts, and exercised undue influence with respect to beneficiary designations made on his sister’s pension, life insurance policies, and IRA.
The case involved the sister (“Sister”) of the Defendant who passed away in September of 2011. The deceased Sister’s niece, the Plaintiff, alleged that the Defendant had used undue influence to procure an amendment to the Sister’s revocable living trust that made him the exclusive beneficiary of the trust. The Plaintiff also alleged that the Defendant should be held liable for breach of fiduciary duty because he made imprudent investments, and used monies of Sister’s trust for purely personal expenses.
The proof at trial showed that Sister had started the living trust in 2004; amended it in 2006 to provide for a more substantial distribution to her brother, Defendant; amended it in 2009 to reduce her brother’s distribution to the same as it was under the 2004 trust; and, then, amended it again for the last time, about 19 months before her death, to make her brother, the Defendant, the sole beneficiary of the trust (except for certain minor specific bequests totaling about $15,000.00). At Sister’s death, the trust assets were worth close to 1 million dollars.
The proof offered at trial on behalf of the Defendant included evidence that his sister was totally mentally competent at all times; that he provided care and support to her for nearly four years when no other family member was willing to do so; and that the only other sibling of Sister was far wealthier than Defendant.
To rebut the claims of undue influence, the attorney who represented Sister in preparing her final trust amendment was called as a witness. She testified that she met alone with Sister on two occasions, and that Sister, by all appearances, was making the trust amendment without being coerced by anyone.
The trial judge, Randy Kennedy, before the jury deliberated, instructed the jurors that, as a matter of law, the Defendant had a confidential relationship with Sister, and that he was her fiduciary. He further instructed the jury, consistent with Tennessee law, that, since Defendant had a confidential relationship with Sister, he had the burden of proving by clear and convincing evidence that the last amendment to Sister’s trust was not the product of undue influence.
After deliberating for about two hours on the fourth day of the trial, the jury found that the Defendant had carried his burden of proving that the last trust amendment and the beneficiary designations were not the product of undue influence. The jury also determined that the Defendant had not committed the tort of conversion by transferring money in his Sister’s accounts, and had not breached any fiduciary duties to his Sister.
An interesting twist in the case was that the Defendant admitted that, during his Sister’s life, she had loaned him about $168,000.00 from her trust monies. In closing arguments, it was argued that the loans had been made with the consent and knowledge of the Sister.
The jury’s verdict in this case highlights the importance, among other things, of presenting at trial in an undue influence case, if available, evidence of the wealth of other family members; of the care and support provided by a beneficiary sued for undue influence; and of independent legal advice provided to the person who executed the will, trust, or trust amendment. The case is styled In Re Estate of Linda A. Farmer v. Randy Farmer, Davidson County, Tennessee, Circuit Court, number 11P-1469. It was assigned to the Seventh Circuit, Probate Division, with Judge Randy Kennedy presiding.