### IN THE COURT OF APP EALS OF TENNESS EE AT JAC KSON O ct obe r 25, 200 6 S es sio n
STEVE WHE RRY AND 

### MARY HOPKI NS, C O 

### -E X ECUTORS OF THE 

### E STAT E OF 

### MARGARET ARCHER, D ECEAS ED
v. 

### UNION PLANTE RS BANK, N.A.
An Appeal f

romthe Chancer y Court for Shelby Cou nty No. CH-02-1459- 1 WalterL. Evan s, Chancellor

No. W2006-00256-C OA-R3-C V - F iled Fe bruary 9, 2007

This case involves the alleg ed neg lige nt a dminist ration of a trust. In 1964, the plaintiffs’ de cede nt established a $1.7 milli on trust and named herse lf as the sole benef iciary

. The defe ndant bank wa s na me d a s th e trus te e a ndwa s g ive n s ole dis c re tio n to man a g e the trus t inve stm e nts

. F ro m 1964 un til the de c e de nt’ s d e a th i n 1 99 9, the ba nk ma na g e d th e trus t f

un d a ndse nt the deced ent mon thl y statements d e sc ri bin g the trus t a c tiv iti e s. Whe n th e trus t te rm inate d, it w a s w orth a pp ro xima te ly $880,000. The plaintiffs, c o-executors of the dece dent’s estate, broug ht this action on behalf of the
e s tate f o r n e g li g e n t a d mi n is tr a ti o n o f th e tr u s t, ar g u in g th a t th e b a n k

n e g li g e n tl y

f a il e d to ma xim iz e the rate of re turn on the trust a ssets. The bank filed a motion for summary judgme nt based on, inter ali a , the doctrine of ratification, asserting that the dec edent ha d ratified the bank’s mana g ement of the trust assets by

failing to object to it s d ecisions over the thirty -five- y ear life of the tr

ust. The plaintiffs arg ued that the de cede nt was not sufficie ntly sophisticated in financ ial matters to ratify the bank’s a ctions. The trial c ourt g rante d the bank’ s motion for summary judgme nt. The plaintiffs now
app e a l. We a ff

ir m, con clu ding that, i n li g ht o f the un dis pu te d f a c ts that th e de c e de nt w a s le g a lly competent a nd was fully informed of

the bank’ s actions in m an agi n g the trust investments, the de c e de nt’ s le ve l of

so ph ist ic a tio n in fi na nc ia l matte rs is i mmate ri a l.
Tenn. R. App . P . 3 Appeal as of Right; Judgme nt of th e Chancer y Court is Aff irm ed

H OL L Y M. K I RBY , J. , d e li v e r e d th e o p in io n o f th e Co u r t, in w h ic h W. F RAN K C RAW FORD , P.J ., W.S ., and D AVI D R. F ARMER , J ., joined.

J ames D. R

. R o b er t s , J r., and Janet L . L ay man, Nashville, Te nnessee , for the a ppellants, Steve Wherry and Mary

Hopkins, co-e x ecutor s of the Estate of Marg are t Arche r, dec ease d.

Clifford D. Pierc e, Jr., and Scott B. Ostrow, Memphis, Tenne ssee, for t he appellee, Union Planter s Ba nk, N.A.T his am o un t d o es no t inc l ud e f un d s d i st ribu t ed fo r the years 1 9 8 7 t hro ug h 1 9 9 1 , b ec au se the re co rd s fo r t ho se 1
ye a rs w e re no t f

o u n d

. -2- OP IN ION On September

15, 1964, Marg are t Wherry Roz ier, who la ter be came Marg are t Roz ier Ar cher (“Mr s. Arche r”) , funded a living tr ust with assets of approximately $1.7 in municipal bonds and marke table stocks. Mrs. Ar cher was de signated as the sole life time benef iciary of the trust, with her estate be ing the residual be nefic iary . At th e inception of the trust in 1964, she appointed De fe nd a nt/Ap pe lle e Un ion Pla nte rs B a nk , N. A. , no w Re g ion s B a nk (“ the B a nk ” ), a s th e trus te e to
a dmi nis te r the trus t. T he B a nk c on tin ue d a s tr

us te e un til Mr s. Arch er’s deat h in 19 99 . T he trus t instrument allowed Mrs. Ar cher t o draw on the cor pus of the trust, which she did reg ularly . The Ba nk sent Mrs. Arc her a nd/or her de signe e monthly statements delineating the tr ust activities and the status of the trust.
The undisputed evide nce show s that Mrs. Arc her had a fairly aff luent lifesty le, desc ribed a s

“ Ta ra -l ike ,” su pp orte d in pa

rt by re g ula r p a y me nts ma de to h e r f

ro m th e trus t. R e c or ds sh ow that,
ov er t h e d uration of the tr ust, Mrs. Arche r direc ted the B ank to distribute trust monies to her chec king a ccount f

or her use a n d benef

it in amounts rang ing f

rom $2,000 to $7,500 per month. Dur in g h e r e n ti r e li f

e , M r s

. A r c h e r n e v e r h e ld a jo b o r p r o v id e d f o r h e r s e lf f

in ancia lly . She employ ed seve ral domestic e mploy ee s , including c ooks, maids, butlers, and cha uffe urs. The sa laries for many of these employ ees wer e paid direc tly from the trust. On occ asion, Mrs. Arc her a lso made g i ft s t o v arious fa milymembers out of the trust. Her g ifts to her brother totaled at lea st $30,000. F or the y e ars 19 94 thr ou g h 1 99 9, sh e dir e c te d th e B a nk to make a nn ua l $10, 00 0 g if ts to fou r f

a mil y me mbe rs . A ll t old , f

ro m 19 64 thr ou g h 1 99 9, the trus t di st ri bu te d at le a st $ 2, 29 9, 04 6 at Mr s. Arc her’ s direction. 1

I t is un dis pu te d th a t Mr s. Ar c he r n e ve r o bje c te d to a ny of the B a nk ’s inv e stm e nt d e c isi on s, a nda lmo st n e ve r i nte rf

e re d w ith the B a nk ’s a sse t ma na g e me nt. On a sin g le oc c a sio n in 19 77 , M rs

. Ar c he r r e qu e ste d th a t th e B a nk se ll some se c uriti e s for c a sh

. At no oth e r t ime didsh e dir e c t th e sa le or purc hase of

any investments.

Mrs. Arc her’ s husban d , R o b ert Ar cher , died in the late 1980s. B y then, Mrs. Arc her w as almost ninety

y ear s old. U pon her husba nd’s death, she bec ame solely responsible for

manag ing he r ow n f inanc ia l a ff

a ir s. I n Se pte mbe r 1 99 0, Mr s. Ar c he r a sk e d th e B a nk to b e g in p a y ing he r m on thl y bil ls, su c h a s u til iti e s, ta xes, ins ur a nc e , a ndg ro c e ri e s, on he r b e ha lf ou t of t he trus t. In th e e arl y 19 90 s, the trus t st a te me nts that had pr e vio us ly be e n sen t to Mr s. Ar c he r we re ins te a d sen t to Mr s. Arc her’ s niece , Plaintiff/App el l ant M ary Wherry Hopkins (“Hopkins” ), who he lped Mrs. Arc her wi th h e r d a ily

a ff a ir s. I n 1 99 3, Mr s. Ar c he r g rante d a g e ne ra l po we r of a tto rn e y to Ho pkins a ndto Ho pkins ’ b ro the r, Pla int if f/Ap pe lla nt S te ve Whe rry (“ Whe rry ” ). Ho pkins a nd Whe rry he lpe d M rs

. Ar c he r m a na g e he r f

inanc ia l a ff

a ir s u nti l he r d e a th o n July 16 , 1 99 9, a t th e a g e of

nin e ty -e ig ht.T he B an k ha d ac ce p t ed resp o nsib i l i t y f o r p aying M rs. A rch er’s ho m eo w ne rs’ i nsur an ce and t axe s f ro m t he t rust 2
f u n d.

T h o ugh t he co m p l ai nt m akes al l egat i o ns t hat t he B ank f raudulent l y co ncealed t rus t do cum ent s f rom t he 3
p la intiff s, c la im s b a se d o n inte n tio n a l m isc o n d u c t ha v e no t b e e n p u rs u e d a n d a re no t at issu e in this a p p e a l.
-3- Th e trus t te rm inate d u po n M rs . A rc he r’ s d e a th. At that ti me , it wa s w orth a pp ro xima te ly $880,000. Hopkins and Wherry wer e appointed a s the co-e x ecutor s of Mrs. Arc her’ s estate.

I n J uly 1999, following Mrs. Arc her’ s death, W herry reque sted a complete acc ounting of the tr us t activ iti e s, a ndHo pkins a ndWhe rry re vie we d th e trus t do c ume nts re c e ive d. Th e y c a me to be lie ve that th e B a nk

ha d c omm itt e d s e ve ra l ac ts of ma lf e a sa nc e re la te d to the a dmi nis tr a tio n o f M rs

. Ar c he r’ s trus t. Th e y dis c ov e re d that the B a nk ha d ne g lig e ntl y a llo we d M rs . A rc he r’ s h ome ow ne rs ’ insurance to lapse, that it had neg lige ntly paid a third party ’s taxes with funds from Mrs. Arc her’ s trust, and that it had allowed a third party

to pay Mrs. Arc h er ’s t ax es

. The B ank fully corr ecte d 2 the se mis take s and the plaint if fs do no t see k to re c ov e r da ma g e s f or the se a c ts o f m a lf

e a sa nc e in this lawsuit. Howeve r, Wherry and Hopkins ar g ue that these neg lige nt acts evidenc e the B ank’s f ailure to properly

manag e the trust.

On Au g us t 1, 20 02 , H op ki ns a ndWhe rry , a s c o- e xec uto rs of Mr s. Ar c he r’ s e state (collec tively , “plaintiffs” ), filed the instant law suit ag ainst the Ba nk. The plaintiffs a lleg e seve ral the orie s o f r e c ov e ry

re la te d to the B a nk ’s mis ma na g e me nt o f M rs

. Ar c he r’ s trus t, arg uin g prima ri ly that the B ank, as truste e, neg lige ntly invested Mrs. Ar cher ’s t rust funds, contrary to the t erms of the trust a g ree ment. The plaintiffs soug ht $98,569,009.07 in compensatory damag es and $10,000,000 3 in p un iti ve da ma g e s.
Di s co very

ensued. The plaintiffs’ discove ry depositions were taken. Mrs. A rche r wa s described in the deposit ions as financ ially unsophisticated, believing that it was “tac ky ” for ladies to d isc us s f

inanc ia l matte rs . D uring the c ou rs e of dis c ov e ry , th e plai nt if

fs ex plai ne d th a t th e ir damag e ca lculation was ba sed on their belief that, had the B ank prope rly diversified the corpus of the trust during its ex istence, it would have earned the mar ket ave rag e rate of return of 12.3% af ter de du c tio ns fo r e xpe ns e s a ndwi thdra wa ls.

On October 2 4 , 2 005, the B ank filed a motion for summary

judgme nt, arg uing that it was entitled to summary

judgme nt based on the statute of limit ations and/or the doc trines of ratification and lac hes. The Ba nk arg ued that the plaintiffs’ claims wer e barr ed by the doctrine of ratification beca use Mrs. Ar cher

was leg ally competent, was informed of the investments made by the B ank on beha l f of the trust, and f

ailed to complain about the tr ust investments during the thirty -five y ear period in which the Ba nk manag ed the trust. By her silence, the Bank a rg ued, she r atified the B ank’s investment decisions. The B ank further a rg ued that, bec ause of the e x treme de lay in filing the lawsuit and t he undue pr ejudice that would result to the Ba nk, the lawsuit was ba rre d by the doctrine of lac hes and/or the applicable statute of limitations. Att ache d to the Ba nk’s memora ndum of law
wer e copie s of the trust ag ree ment, excerpts from the pla intiffs’ depositions, and the af fidavit of a Ba nk repr esentativ e with rec ords re g arding the trust activities. The plaintiffs oppose d the B ank’s-4-

motion for summary

judgme nt, arg uing that Mrs. Arc her c ould not have ratified the B ank’s de cisions beca use she lac ked the capa

bility , motivation, or basic interest in involving herself in t he handling of the trust . They

arg ued that Mrs. Ar cher

was fina ncially

unsophisticated and would ha ve bee n unable to cha lleng e the B ank’s mana g ement of the trust during her life time, and that they , as executors, wer e unaw are of the terms of t he trust until afte r Mrs. Arc her’ s death in 1999. There fore , the plaint if

fs ma int a in, the la ws uit c ou ld not ha ve be e n fil e d b e fo re Mr s. Ar c he r’ s d e a th andsh ou ld
no t be fo un d to be ba

rr e d b y the do c tr ine of

la c he s.
On Dec ember

20, 2005, the trial court hear d oral a rg ument from counse l for the pa rties. At the conclusion of t he oral arg ument, the trial court gr anted summary judgme nt in favor of

the B ank, based on the doctrines of ratification and lache s. R ega rdi ng ratification, the trial court conc luded that Mrs. Arc her’ s “silence on [t he B ank’s] investment decisions constituted her r atifica tion of the bank’s de cision relative to the inve stment where there is no showing that the bank made a ny illega l investments or

any investment[s ] t hat wer e cle arly worthless.” The trial court f urther c oncluded that the plaintiffs’ c laim was bar red by the doctrine of lac hes base d o n t h e fa ct that the alleg ed misconduct spanned the thir t y -five y ear life of the tr

ust, and the B ank would be pr ejudiced by the
c on sid e ra ble pa ssa g e of

tim e . O n Jan ua

ry 5, 20 06 , the tr ia l c ou rt e nte re d a n or de r c on sis te nt w ith its oral ruling , declining to rule on the statute of limit ations issue. The plaintiffs now appea l the trial court’s or der.
On appe al, the plaintiffs make the same arg uments made to the trial court, that Mrs. Arc her
w a s u n s o p h i s t i ca t ed i n fi n an ci al m at t er s , an d t h ats h e w as i n ca p ab l e o f h av i n g t h e k n o wl ed ge nece ssary for e ffe ctive ratifi cation of the Ba nk’s investment dec isions during the thirty -five- y ear exis tence of t he trust. Furthermore , they arg ue, the doctrine of lac hes is not applicable be cause the plaintiffs had no knowle dg e that a c laim ag ainst the Bank ex isted until 1999, at which time they had an opportunity

to review the trust documents and discove r the B ank’s ne g lige nce.

We r e vie w the tr ia l c ou rt ’s g rant o f s umm ary jud g me nt de novo with no presumption of
corr ectne ss. Wa rre n v . Es tat e of Kir k , 95 4 S.W. 2d72 2, 72 3 ( Te nn . 1 99 7) . Su mma ry jud g me nt i s appropriate whe re “ the pleading s, depositions, answers to interr og atories, a nd admissions on file, toge ther with the affidavits, if any , show that there is no ge nuine issue as to any materia l fac t and that the movi ng pa

rt y is e nti tle d to a

jud g me nt a s a

ma tte r o f l a w. ” Te nn . R. Civ . P. 56 .0 4. We mus t view the e vidence in a light most fa vorable to the nonmoving party , g iving that pa rty the bene fit of all rea sonable infe renc es. Warren , 9 5 4 S

. W

. 2 d at 7 2 3 (q u o t i n g Bain v . W e lls , 936 S.W .2d 618, 622 (Tenn. 1997) ). Once t he movi ng party demonstrates that no g enuine issues of material fa ct exist , the non-moving party

must demonstrate, by aff

idavits or otherw ise, that a disputed issue of ma terial fa ct exis ts for trial. By rd

v . Ha ll , 847 S.W .2d 208, 211 (Tenn. 1993)

. We first addre ss the plaintiffs’ claim that the trial court erre d in gr anting the B ank summary jud g me nt b a se d o n th e do c tr ine of ratif ic a tio n. Un de r the do c tr ine of rat if icatio n, wi th f

ull knowledg e of an investment, a competent benef iciary who accepts or a

pproves it ca nnot therea fterT he C o urt i n K n o x C o u n ty s t at ed t hat t hi s r ul e does not appl y “ whe n t he benef i ci ar y i s l ed i nt o an a pp r oval 4

or acce pt anc e o f

t he i nv es t ment by i mp r op er conduc t of t he t r us t ee. ” K n o x C o u n ty , 1 8 2 S .W .2 d a t 9 8 9 . T h e p la intiff s in th is c a se d o no t ar g u e tha t t h is “im p ro p e r c o n d u c t” e x c e p tio n is ap p lica b le he re

. -5- c omp la in w ith re sp e c t to the inv e stm e nt. Knox Coun ty v . Fo urth & Fir st N at’ l Ba nk , 182 S.W .2d 4 98 0, 98 9- 90 (T e nn

. 19 44). I n T e nn e sse e , r a tif ic a tio n b y

sil e nc e c a n o c c ur

wh e n “ a pa rt y wi th knowledg e of the transac tion fails for a r easona ble time to protest or dissent.” V all e y Fid e lit y Bank & T rust Co. v. Cain Partnershi p, LTD. , 738 S.W .2d 638, 640 (Tenn. Ct. App. 1987). “ Howeve r, there can be no ratification unless a party is informed of the f acts ne cessa

ry to form an opinion.” Id.
The plaintiffs he rein filed this lawsuit on be h al f o f M rs

. Arc her’ s estate. The persona l repr esentative of an estate “succe ed[s] g ener ally to the position of the dece ased in re spect to suing
a ndbe ing su e d in re sp e c t to the a ff a ir s o f the de c e a se d as the y oc c ur re d or exis te d [p]rior

to the de a th of the de cea sed.” W

e s te r n S ur e ty Co

. v . W

ilson , 4 8 4 S

. W.2d 45, 48 (Tenn. Ct. App. 1972). There fore , in analy zing the applica bilityof the doc trine of r atifica tion i n t h i s ca se, the re levant inquiry is whether M rs

. Ar ch er w as a “ competent be nefic iary ” who ha d knowledg e of the Ba nk’s actions and f

ailed to protest or dissent within a re asonable time. Se e Knox Coun ty , 182 S.W .2d at 98 9; V all e y Fid e lit y , 738 S.W .2d at 640.

I n a c c or da nc e wi th the app lic able sta nd ardof re vie w, we vie w the fa c ts i n a lig ht m os t fa vo ra ble to the plaint if

fs . O n a pp e a l, the plaint if

fs do no t di sp ute that Mr s. Ar c he r w a s le g a lly competent or t h at the B ank sent he r monthly statements of the trust’s a ctivities. They arg ue, howeve r, that a dispute remains over whether Mrs. Arc her w as suffic iently financ ially

astute to be
c o n s i d e r e d a

“ c o m p e t e n t ” b e n e f

i c i ar y w h o h a d “ f

u l l k n o w l e d g e ” o f

t h e B a n k ’ s i n v e s t m e n t s

. In support of that arg ument, the pl aintiffs cite their depositi ons in which they both testified that, based
o n t h e i r e x p e r i e n c e s w i t h M r s

. A r c h e r , t h e y b e l i e v e d t h a ts h e l a c k e d t h e s o p h i s t i c a t i o n , c ap ab i l i t y, motivation, and basic interest in f inancial matters to pa

rticipate in any meaning ful way in the trust’s manag ement. Althoug h Mrs. Arc her dire cted the Ba nk to sell some of the trust’s sec urities on one
occa sion in 1977, the plaintiffs contend that this direc tive to the Bank was most likely initiated by he r h us ba nd , Ro be rt

Ar c he r, on he r be ha lf

. Un de r the se c ir c ums ta nc e s, the y arg ue , a fa c t iss ue e xists
a s t o w h e t h e r

M r s

. A r c h e r

w a s c ap ab l e o f r a t i f

y i n g t h e B a n k ’ s a c t i o n s , b y s i l e n c e o r

o t h e r w i s e

. In respon s e , th e B a n k ar g u e s th a t s u mm ar y ju d g me n t w a s ap p r o p r iate b a s e d o n th e d o c trine of ratification. The Bank relies on the undisputed fac ts that ( 1) Mrs. Arc her w as leg ally competent, ( 2) the B ank sent he r a state ment every month de scribing in de tail the trust activities, and (3) during the thirty -five- y ear

life of the tr

ust, Mr s. Arc her never protested or indicated any dissatisfaction with the Ba nk’s ac tions. Cons equently , the B ank maintains, Mrs. Ar cher must be deeme d to have r atified the Ba nk’s investment dec isions. Se e V all e y Fid e lit y , 738 S.W .2d at 640.

I n V all e y Fid e lit y , c ite d by the B a nk , th e se ttl or of a trus t le a se d a ll o f h e r r e a l pr op e rt y to
a partne rship from which her three daug hters derive d 93% of the profits. The pr operty was lea sed to the pa rt ne rs hip a t a

rate of $7 5, 00 0 pe r y e ar. Ho we ve r, the pa rt ne rs hip -l e sse e a c tua lly

pa id o nly $24,000 per y ear . Throug h their rec eipt of annual f inancial r eports fr om the partne rship, the three daug hte rs ha d kno wl e dg e of the re du c e d p a y me nts

. Id. at 638-40. De spite this knowledge , seven-6-

y ear s after

commence ment of the re duced le ase pay ments, the t hree daug hters sued to re cover the unpaid re nt, i.e., t he differe nce betwee n the $24,000 paid and the $75,000 owed. Af ter a trial, the jury fo un d th a t th e daug hte rs ha d r a tif ie d a nda c qu ie sc e d to the $2 4, 00 0 p e r y ear lea se pa y me nts

. Id. at 639. The daug hters appealed. I n upholding the jury ’s ver dict, the appe llate court describe d ratification as “ ‘c onfirmation af ter co n d uct’ manife sted by acts or sta tements.” Id. at 639-40 (q u o t i n g O s b o r

n C o . v . Bake r , 2 4 5 S.W .2d 419, 421 (Tenn. Ct. App. 1951) ( quotation omitt ed))

. The a ppellate c ourt held that ratification by silence can occur when “ a party

with knowledg e of the t ra n s ac t i o n fails for a

rea sonable time to protest or dissent.” Id. a t 64 0; se e als o W e bb e r v . St

ate Farm Auto. Ins. C

o. , 49 S.W .3d 2 6 5 , 2 7 3 , n.7 (Tenn. 2001) . Thus, beca use the daug hters we re awa re that the partne rship-les s ee h ad been pay ing a reduc ed rate but failed to c omplain about the reduc ed payments until seven y ear s afte r t hey beg an, they wer e deemed to have ratified the reduc ed rent, a nd their cla im under the lea se wa s barr ed. Id. at 639-40.

The plaintiffs cited no authority to support the ir contention that a leg ally co m p et ent be ne fi c iary

su c h a s Mr s. Ar c he r mus t hav e a c e rt a in l e ve l of

fi na nc ia l so ph ist ic a tio n in or de r t o e ff e c tiv e ly ratif y the trus te e ’s inv e stm e nt de c isi on s. Mr s. Ar c he r fu nd e d this trus t andma de he rs e lf the sole bene fi ci ar y t h er eunder. She g rante d the B ank, as truste e, absolute discr etion over the manag ement of the trust f unds. She reta ined unfe ttered pow er to dra w funds fr om the trust for any purpose, a nd the undisputed evidenc e shows that she ex erc ised that power throug hout the l ife of the trus t. M rs . A rc he r r e c e ive d mo nth ly state me nts fr om the trus t, d e sc ri bin g in d e ta il the trus t a c tiv iti e s. Over the cour se of the thirty -five- y ear life of the tr

ust, Mr s. Arc her never protested a ny investment decision by

the B ank. Unde r these c ircumstance s, we find no err or i n the t rial court’s conclusion that Mrs. Arc her r atified the Ba nk’s ac tions in m anag ing thetrust, and in its grant of summary judgme nt in favor of

the B ank. This holding pr etermits any other issues ra ised on appe al.

Th e de c isi on of

the tr ia l c ou rt

is a ff ir me d. Cos ts o n a

pp eal are to be ta xedto A pp e lla nts Ste ve Whe rry

a ndMa ry Ho pkins , c o- e xec uto rs of the Es ta te of

Ma rg are t A rc he r, de c e a se d, a ndthe ir surety , for whic h execution may issue, if nec essary

.

___________________________________

HOLL Y M. KI RBY, JUDGE