IN THE COURT OF APPEALS OF TENNESSEE

AT JACKSON

Assigned on Briefs October 28, 2009

OLIN MORRIS, Successor Trustee of the U.A.B. Holding Trust v. MARTIN

A. GRUSIN, Former Trustee of U.A.B. Holding Trust, ET AL.

Direct Appeal from the Circuit Court for Shelby County

No. CT-004288-06 Karen R. Williams, Judge

No. W2009-00033-COA-R3-CV - Filed December 22, 2009

A Trust was created in 1985. In both 1997 and 1999, the grantor consented to the use of the

Trust’s stocks for the benefit of a separate entity, of which the Trust owned a one-half

interest. In 2001, an agreement was entered whereby the Trust’s stocks were pledged to a

bank in return for a loan to the Trust. The Trust then transferred the loan monies to the

separate entity to pay off the separate entity’s indebtedness. After the Trustee’s resignation,

the successor Trustee brought suit, alleging breach of fiduciary duties, civil conspiracy, and

misappropriation and conversion. The trial court granted the defendants’ motion to dismiss,

finding that they had not engaged in unlawful conduct. Plaintiff appeals, and we affirm. 

Tenn. R. App. P. 3; Appeal as of Right; Judgment of the Circuit Court Affirmed

ALAN E. HIGHERS, P.J., W.S., delivered the opinion of the Court, in which HOLLY M. KIRBY,

J., and J. STEVEN STAFFORD, J., joined.

Robert D. Flynn, Michael R. Flynn, Memphis, Tennessee, for the appellant, Olin Morris,

Successor Trustee of the U.A.B. Holding Trust

Randall D. Noel, Memphis, Tennessee; Donna Brown Jacobs, John A. Crawford, Jr.,

Memphis, Tennessee for the appellees, CBC World Markets Corporation and John Ashby
 We note that the Trust Agreement is poorly copied, and thus, certain parts are illegible. 1

 Tennessee Code Annotated section 35-618, now Tennessee Code Annotated section 35-50-110, 2

provided in part:

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I. FACTS & PROCEDURAL HISTORY

On June 3, 1985, William B. Tanner (“Tanner”), as grantor, created the U.A.B.

Holding Trust (“Trust”) for the benefit of his grandchildren. Martin A. Grusin (“Grusin”)

was named Trustee, and the Trust was funded with stock of what would eventually become

Regions Bank. The Trust Agreement provided, in relevant part, as follows:1

(a) I empower the Trustee . . . without authorization or approval of any

court, to acquire, by purchase or otherwise, and retain, temporarily or

permanently, any and all kinds of realty and personalty, even common stocks

and unsecured obligations, without diversification as to kind or [illegible]; sell

or otherwise dispose of any such property, publicly or privately, wholly or

partly on credit, delegate-discretion and distribute in kind or money or partly

in each.

(b) The Trustee shall not be liable for any investment or management

decisions regarding the assets of this Trust made during the Grantor’s lifetime

if he has obtained the written consent or written approval of the Grantor . . . .

This clause shall not be interpreted to limit the Trustee’s control of the assets

of the trust but shall allow him a means of making investments and

management decisions without fear of reprisals or other persons “secondguessing him.” This clause is considered necessary by the Trustee due to the

fact that it is anticipated that the proper administration of the assets of this

Trust will require numerous management decisions which are best efforts,

good faith judgment decisions.

. . . . 

The Trustee herein is authorized to exercise the introductory paragraph

of the thirty-two (32) enumerated powers found in the 1963 Public Acts of the

state of Tennessee, Chapter 110, Section 3 (Tennessee Code Annotated, Sec.

35-50-110), and I hereby incorporate by reference said Code section in its 2
Without diminution or restriction of the powers vested in him by law, or elsewhere in this

instrument, the fiduciary, without the necessity of procuring any judicial authorization

therefor, or approval thereof, shall be vested with, and in the application of his best

judgment and discretion in behalf of the beneficiaries of this instrument shall be authorized

to exercise, the powers hereunder specifically enumerated:

. . . . 

 32. To do any and all other things, not in violation of any other terms of this instrument,

which, in the judgment of the fiduciary, are necessary or appropriate for the proper

management, investment and distribution of the assets of the estate in accordance with the

provisions of the instrument, and in his judgment are for the best interests of the estate and

its beneficiaries.

Tenn. Code Ann. § 35-618 (1977). 

 Both the 1997 and the 1999 consents to pledge state that “This authorization is given based upon 3

the fact that the UAB Trust is the owner of fifty (50%) percent interest in Tanner Equities, L.L.C.” They

also state that both parties “recognize[] and agree[] that the pledging of securities of the UAB Trust . . .

constitute[s a] valid and prudent investment for the UAB Trust, enhancing the income of the UAB Trust and

Tanner Equities, L.L.C.” 

 This document is not included in the record before us. 4

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entirety as if copied herein verbatim. These powers are granted,

notwithstanding that said statute may be amended or repealed hereafter.

On or about March 24, 1997, Tanner Equities, LLC (“Tanner Equities”) was created

as an entity separate from the Trust. However, the Trust held a fifty percent ownership

interest in Tanner Equities. Both the Trust and Tanner Equities held securities and trading

accounts with Prudential Securities (“Prudential”), with John Ashby (“Ashby”) acting as

broker. On May 6, 1997, Tanner and Grusin executed a “Consent of Trustee to Pledge”

document, authorizing Prudential “to use the securities in the account of the UAB Trust up

to the margin limit for the benefit of the Tanner equities, L.L.C. account.” 

In May of 1999, Ashby left Prudential and became an officer and employee of

Oppenheimer & Company, Inc. (“Oppenheimer”). The following month, the Trust’s

securities were transferred from a Prudential account to a new account with Oppenheimer.

A second “Consent to Trustee to Pledge” document was executed by Tanner and Grusin,

authorizing Oppenheimer “to use the securities in the account of the UAB Trust up to the

margin limit for the benefit of the Tanner Equities, L.L.C. account.”3

By October 2, 2001, Tanner Equities allegedly had an unsecured margin of

indebtedness of $14,970,621.00 in the Oppenheimer account. On that date, an “Equity

Protection Agreement” was allegedly brokered between the Trust and Commerz Bank. 4
 The amended complaint stated that Oppenheimer & Co. purchased CIBC Oppenheimer from CIBC 5

World Markets Corp. in January of 2003, and that CIBC Oppenheimer Co. is now named Oppenheimer &

Co, Inc. According to Morris, CIBC World Markets Corp. “contractually agreed to retain responsibility for

claims such as these presented by the allegation of this Amended Complain which pre-date the sale in

January [of] 2003[.]” Thus, Morris voluntarily dismissed its claim against Oppenheimer & Co., Inc. on

October 9, 2007.

 The trial court’s “Order Granting Defendants’ Motion to Dismiss” of December 4, 2008, 6

incorporated its November 26, 2008 correspondence.

 The trial court mistakenly stated that the Trust was created in 1987; however, there is no indication 7

that this error affected its analysis.

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Under the Equity Protection Agreement, the Trust purportedly delivered 612,000 shares of

Regions Bank stock to Commerz Bank in exchange for a loan of $14,970,621.00 to the Trust.

The Trust then, allegedly, used those funds to pay off Tanner Equities’ margin of

indebtedness to Oppenheimer. 

Grusin resigned as Trustee in October of 2004, and Olin Morris (“Morris”) was named

successor Trustee. Tanner died in December of 2005. On August 15, 2006, Morris filed a

complaint against Grusin, alleging breach of fiduciary duty and civil conspiracy, and against

Oppenheimer and Ashby, alleging misappropriation and conversion, breach of fiduciary duty,

and civil conspiracy. Morris claimed that Grusin failed to disclose to the beneficiaries that

he had used the Trust’s assets to pay off the Tanner Equities debt “without any expectation

of ever recovering the nearly $15,000,000 from Tanner Equities.” The complaint was

amended on August 24, 2006, to name CIBC World Markets Corporation (“CIBC”) as a

defendant.5

 Ashby and CIBC (collectively, “Defendants”), filed a motion to dismiss pursuant to

Tennessee Rule of Civil Procedure 12.02(6), claiming that Morris’ amended complaint failed

to state a claim upon which relief could be granted. Specifically, Defendants claimed that

Morris’s amended complaint alleged no unlawful conduct by Defendants, as he admitted that

Defendants were authorized to pledge the Trust’s shares. Following a hearing, the trial court

granted Defendants’ motion to dismiss, finding as follows:6

1. This case is a Rule 12 Motion to Dismiss not a Rule 56 Motion for

Summary Judgment.

2. The Trust was created in 198[5] by William B. Tanner. Martin A. 7

Grusin was named the Trustee and was given broad power to act with

the written consent of Mr. Tanner. At the time, Tennessee statutory and
 On appeal, Morris does not challenge the trial court’s finding that these acts are inapplicable. 8

 There is no indication that the trial court’s findings of lawfulness were based on the Trust 9

Agreement’s exculpatory clause. 

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case law permitted this.

3. In 1997, a Consent to Pledge was entered into pursuant to the terms of

the Trust. This was lawful at the time.

4. In 1999, a second Consent to Pledge was entered into. This was lawful

at the time.

5. In October 2001, the Equity Protection Agreement with CommerzBank

was entered into and the margin account was paid off with the

proceeds. This was lawful at the time.

6. In 2002, the Tennessee Legislature passed the Uniform Prudent

Investor Act and in 2004, the Tennessee Legislature passed the

Uniform Tennessee Trust Code. These acts restricted the freedom of

the Trustees and made unlawful the type of transactions taken by

Tanner, Grusin, Ashby and CIBC. However, the 2002 Act and the

2004 Act are not applicable to the case at bar.8

7. Since the acts taken by Defendants and Mr. Tanner were lawful

pursuant to the Trust instrument and the then applicable law, the

Motion to Dismiss is granted.9

II. ISSUES PRESENTED

Appellant has timely filed his notice of appeal and presents the following issue for

review:

1. Did the trial court err in granting the Defendants John Ashby and CIBC World

Markets Motions to Dismiss where the dismissal was based upon an alleged

exculpatory clause in the Trust Agreement?
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III. STANDARD OF REVIEW

First, we must address the standard of review in this case. Defendants urge this Court

to adopt, for purposes of motions to dismiss under Tennessee Rule of Civil Procedure

12.02(6), the United States Supreme Court’s “clarified” standard of review regarding

dismissals pursuant to Federal Rule of Civil Procedure 12(b)(6). (Appellee’s Br7).

Defendants suggest that the “famous observation” in Conley v. Gibson, 355 U.S. 41, 45-56

(1957), abrogated by Bell Atl. Corp. v. Twombly, 550 U.S. 554 (2007), that “a complaint

should not be dismissed for failure to state a claim unless it appears beyond doubt that the

plaintiff can prove no set of facts in support of his claim which would entitle him to relief”

was retired by the United States Supreme Court in Bell Atlantic Corporation v. Twombly, 550

U.S. 544, 561 (2007). Defendants cite the recent case of Ashcroft v. Iqbal, 129 S.Ct. 1937,

1949 (2009), wherein the United States Supreme Court, applying Twombly, stated: 

To survive a motion to dismiss, a complaint must contain sufficient factual

matter, accepted as true, to “state a claim to relief that is plausible on its face.”

[Twombly, 550 U.S. at 570]. A claim has facial plausibility when the plaintiff

pleads factual content that allows the court to draw the reasonable inference

that the defendant is liable for the misconduct alleged. Id.[] at 556 []. The

plausibility standard is not akin to a “probability requirement,” but it asks for

more than a sheer possibility that a defendant has acted unlawfully. Ibid.

Where a complaint pleads facts that are “merely consistent with” a defendant's

liability, it “stops short of the line between possibility and plausibility of

‘entitlement to relief.’ ” Id.[] at 557[.]

The Court further explained that “the tenet that a court must accept as true all of the

allegations contained in a complaint is inapplicable to legal conclusions[,]” and that

“threadbare recitals of the elements of a cause of action, supported by mere conclusory

statements, do not suffice.” Id. (citing Twombly, 550 U.S. at 555). The Court adopted a twostep approach to analyzing a complaint challenged under Federal Rule of Civil Procedure

12(b)(6): first, the court identifies conclusory allegations in the complaint that are not

entitled to a presumption of truth; and second, the court considers whether the factual

allegations “plausibly suggest an entitlement to relief.” Id. at 1951. 

Although Tennessee Rule of Civil Procedure 12.02(6) and Federal Rule of Civil

Procedure 12(b)(6) are similar,

The Supreme Courts of the respective states are bound only by decisions of the

Supreme Court of the United States when that Court holds that a given course

of conduct is unconstitutional under the federal constitution.
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Bowman v. Henard, 547 S.W.2d 527, 530 (Tenn. 1977). Thus, the United States Supreme

Court’s standard for dismissal pursuant to Federal Rule of Civil Procedure 12(b)(6) does not

bind the courts of this state regarding dismissals under Tennessee Rule of Civil Procedure

12.02(6). 

The Tennessee Supreme Court, regarding motions to dismiss pursuant to Rule

12.02(6), recently stated: 

A Rule 12.02(6) motion under the Tennessee Rules of Civil Procedure seeks

to determine whether the pleadings state a claim upon which relief may be

granted. Edwards v. Allen, 216 S.W.3d 278, 284 (Tenn. 2007). Such a motion

tests only the legal sufficiency of the complaint, not the strength of the proof.

The resolution of the motion is determined by an examination of the pleadings

alone. Cook ex rel. Uithoven v. Spinnaker's of Rivergate, Inc., 878 S.W.2d 934,

938 (Tenn. 1994) (citing Wolcotts Fin. Servs., Inc. v. McReynolds, 807 S.W.2d

708, 710 (Tenn. Ct. App. 1990)). For purposes of analysis, the motion

contemplates that all relevant and material allegations in the complaint, even

if true and correct, do not constitute a cause of action. In considering a motion

to dismiss, courts must construe the assertions in the complaint liberally; the

motion cannot be sustained unless it appears that there are no facts warranting

relief. Cook, 878 S.W.2d at 938 (citing Fuerst v. Methodist Hosp. S., 566

S.W.2d 847, 848-49 (Tenn. 1978)). On appeal, all allegations of fact by the

Plaintiffs must be taken as true. Stein v. Davidson Hotel Co., 945 S.W.2d 714,

716 (Tenn.1997). Our scope of review is de novo with no presumption of

correctness. Colonial Pipeline Co. v. Morgan, 263 S.W.3d 827, 836

(Tenn.2008); Owens v. Truckstops of Am., 915 S.W.2d 420, 424 (Tenn.1996).

Highwoods Properties, Inc. v. City of Memphis, ---S.W.3d----, 2009 WL 2226091, at *3

(Tenn. 2009). We “review the trial court’s legal conclusions regarding the adequacy of the

complaint without a presumption of correctness.” Rose v. Cookeville Reg’l Med. Ctr., No.

M2007-02368-COA-R3-CV, 2008 WL 2078056, at *4 (Tenn. Ct. App. May 14, 2008) (citing

Marceaux v. Thompson, 212 S.W.3d 263, 267 (Tenn. Ct. App. 2006)). 

“Once the Tennessee Supreme Court has addressed an issue, its decision regarding

that issue is binding on the lower courts.” Davis v. Davis, No. M2003-02312-COA-R3-CV,

2004 WL 2296507, at *6 (Tenn. Ct. App. Oct. 12, 2004) (citing State v. Irick, 906 S.W.2d

440, 443 (Tenn. 1995); Payne v. Johnson, 2 Tenn. Cas. (Shannon) 542, 543 (1877)). “The
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Court of Appeals has no authority to overrule or modify [the] Supreme Court’s opinions.”

Bloodworth v. Stuart, 428 S.W.2d 786, 789 (Tenn. 1968) (citing City of Memphis v. Overton,

392 S.W.2d 86, 97 (Tenn. Ct. App. 1963); Levitan v. Banniza, 236 S.W.2d 90, 95 (Tenn. Ct.

App. 1950)); see also Barger v. Brock, 535 S.W.2d 337, 340-41 (Tenn. 1976). Accordingly,

we are not at liberty to adopt the more liberal standard for dismissing complaints for failure

to state a claim urged by Defendants. 

IV. DISCUSSION

A. Exculpatory Clause

On appeal, Morris argues that dismissal based upon the Trust Agreement’s

exculpatory clause was inappropriate. Specifically, he asserts that the exculpatory clause

should be invalidated because “[p]rior to 2002, Tennessee did not have a statute authorizing

exculpatory clauses in trust agreements[,]” and because the exculpatory clause violates the

public policy of this state. He also contends that the exculpatory clause “should not be

enforced because Grusin’s actions constitute willful and/or gross negligence.” 

First, we note that the trial court’s dismissal of Morris’ complaint was not based on

the exculpatory clause, as Morris suggests, but instead was based on its finding that none of

the Defendants engaged in unlawful conduct. We need not address Morris’ arguments

regarding the exculpatory clause because it foreclosed liability only as to Grusin, who has

been dismissed from this case.

B. Civil Conspiracy

Morris also argues that his civil conspiracy claim against Defendants was improperly

dismissed, as “the exculpatory clause would not affect John Ashby and/or CIBC.” Again,

Morris mistakenly argues that the trial court’s dismissal was founded on the Trust

Agreement’s exculpatory clause. Morris contends that even if the exculpatory clause

relieved Grusin from liability, it did not afford immunity to Defendants.

As we stated above, the trial court’s dismissal of Morris’ claims–including civil

conspiracy–was based on its finding that none of the parties engaged in unlawful conduct.

On appeal, Defendants contend that because Morris’ amended complaint acknowledged that

Tanner consented to Grusin’s actions, that Morris has failed to allege unlawful conduct. We

reject this contention because Tanner’s consent fails to conclusively establish lawfulness.
 Regarding the law in force at the time of the events, Morris argues only that the law would not 10

have authorized the Trust Agreement’s exculpatory clause, and that the common law would have invalidated

the exculpatory clause as against public policy. 

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Nonetheless, we uphold the trial court’s dismissal of Morris’ civil conspiracy claim. “The

elements of a cause of action for civil conspiracy are: (1) a common design between two or

more persons, (2) to accomplish by concerted action an unlawful purpose, or a lawful

purpose by unlawful means, (3) an overt act in furtherance of the conspiracy, and (4)

resulting injury.” Kincaid v. SouthTrust Bank, 221 S.W.3d 32, 38 (Tenn. Ct. App. 2006)

(emphasis added) (citing Morgan v. Brush Wellman, Inc., 165 F. Supp. 2d 704, 720 (E.D.

Tenn. 2001)). On appeal, Morris does not challenge the trial court’s finding that Defendants’

actions were lawful, thus we will not address the issue. Without an unlawful act by the 10

Defendants, Morris’ civil conspiracy claim fails. Thus, the trial court’s dismissal is affirmed.

 

V. CONCLUSION

For the aforementioned reasons, we affirm the circuit court’s dismissal. Costs of this

appeal are taxed to the appellant, Olin Morris, Successor Trustee of the U.A.B. Holding

Trust, and his surety, for which execution may issue if necessary.

 

 ALAN E. HIGHERS, P.J., W.S.