### IN THE COURT OF APP EALS OF TENNESS EE AT JAC KSON A ugus t 22 , 200 5 S es sio n
V IR GI N IA S TA R RS EG A L v
. U N IT ED A M ER IC A N BA N K, D A V ID CHARLES SEGAL , MARTIN GRUSI N, and RHONDA DIL EONARDO

An Appeal f

romthe Chancer y Court for Shelby Cou nty No. 108413-2 Ar nold B. Goldin, Ch ancellor

No. W2004-02347-C OA-R3-C V - F iled Dece m ber 28, 2005

This is an action for conver sion involving two ex-spouses. The wife was the lone signatory on two tru s t ac counts for the ir daug hters. Without authoriz ation from the wif e, the de fendant bank tr a ns fe rr e d a ll o f the fu nd s in both trus t ac c ou nts to the hu sb a nd ’s a c c ou nt. Th e wi fe the n f ile d th is lawsuit for c onversion, fr aud and br eac h of fiducia ry duty ag ainst the bank, the bank employ ee w ho transfe rre d the funds, and the husband. The defe ndants filed motions for summary judgme nt. As pa rt of the plaint if

f w if e ’s re sp on se , s he a dmi tte d th a t sh e orig ina lly pu t th e mon e y

in to the trus t acc o u n ts in o r d e r

to d e f r a u d c r e d it o r s d u r in g th e ir d iv o r c e
. T h e tria l c o u r t g r a n te d s u mm ary judgme nt to the defe ndants, based i n p ar t on the doctrine of unclea n hands. The pla intiff wife
app e a ls. We a ff

ir m, f ind ing that th e tr ia l c ou rt

pr op e rl y app lie d th e do c tr ine of

un c le a n h a nd s. Tenn. R. App . P . 3 Appeal; Jud gm ent of the Chancery Court is af fi rm 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, inw h ic h W. F RAN K C RAW FORD , P.J ., W.S ., and A L AN E. H I G H ERS , J ., joined.

EdM. Hu rl e y , M e mph is, Te nn e sse e , f or Ap pe lla nt V ir g ini a

Sta rr Se g a l.

Tim W ade H ellen, Memphis, Tenne ssee, a nd Geo rgia A. Robinette, Me mphis, Tennessee , for Appellee s United Americ an B ank and Rhonda DiL eonar do.

Jame s W. S ur

prise , M e mph is, Te nn e sse e , f or Ap pe lle e Da vidCha

rl e s Se g a l.
OP IN ION

The a ctions g iving rise to this litigation t ook place during the divorce of Plaintiff/Appellant Virg inia Starr Seg al (“ Wife”) a nd Def endant/Appe llee Da vid Sega l (“Husba nd”). O n S e p t e m b e r 1 9 , 1990, Wife opened two trust a ccounts at Def endant/Appe llee United American B ank (“ Bank”) f or Hus ban d an d W i f

e ’ s tw o d aught ers , L is a El len S egal (D .O. B. 6/ 5/ 75 ) and S hel lyS egal (D .O. B. 3/27/79). The sig nature car ds for t h e accounts desig nated Shelly and Lisa Seg al as the r espec tiveM ar t i n G r us i n’ s i nv ol vemen t i n t hi s l i t i gat i on s t emm ed f r om hi s s t at us as an at t orn ey for, an d f ormer off i cer 1

o f, the B a n k . W ife’s c la im a g a ins t G ru sin w a s e v e n tua lly d ism isse d w ith p re ju d ic e
. -2- “Owne rs” of

eac h acc ount, and designa t ed W i fe as the c hildren’s “ Guar dian” a nd as a “ J oint Ow ne r/Ad dit ion a l A uth orize d Si g natory .” Wif e wa s th e o n l y

a uth orize d s ig natory

on bo th a c c ou nts

. On the da y

sh e op e ne d th e m, Wi fe de po sit e d $ 5, 00 0 in to e a c h a c c ou nt.

I n J anuary

1996, while in t h e throes of he r divorce from Husba nd, Wife took advanc es on cre dit cards in the joint names of H usband and Wife. These advanc es t otaled som e $28,000. Wife would later e x plain that the $28,000 adva nces w ere nece ssary for he r living e x penses during the div or c e . O n Jan ua

ry 29 , 1 99 6, P lai nt if

f dep os ite d th e $2 8, 00 0, min us $5 00 in c a sh , in to S he lly Seg al’s t ru s t acc ount at the B ank. Af ter the de posit, S helly

Seg al’s trust ac count containe d $34,858.91, and Lisa Seg al’s trust ac count containe d $9,285.40.

On Fe bruary

2, 1996, Husband opened t wo new custodial acc ounts at t he Bank in the na mes of She lly R. Se g a l, M ino r, a nd L isa El le n Seg a l, Min or . Hus ba ndwa s li ste d a s th e g ua rd ia n o n b oth
acc ounts. That same day , Husband a pproac hed De fendant/Appellee Rhonda D iL eonar do, a B ank
e mpl oy e e , a ndre qu e ste d that sh e tr a ns fe r the $3 4, 85 8. 91 in thetrus t a c c ou nt i n th e na me of She lly Se g a l a ndWif

e , a s w e ll a s the $9 ,2 85 .4 0 in the trus t a c c ou nt in the na me of L isa Se g a l a nd Wif e , to the n e w a c c o u n ts th a t H u s b a n d h a d s e t u p f o r Sh e ll y a n d L is a Se g a l. T h is w a s d o ne without the knowledg e or c onsent of Wife. Without notify ing Wife or acquiring he r authorizati o n for the tr a ns fe r, Ms. Di L e on ard o tr a ns fe rr e d th e fu nd s. Hu sb a ndthe n u se d th e fu nd s to re pay the de bt t o the cr edit car d company

cre ated whe n Wife drew the $28,000 advanc e on the couple’ s cre dit card.

On Oc tob e r 2 4, 19 96 , Pl a int if f f ile d a la ws uit

in the She lby

Cou nty Chanc e ry

Cou rt a g a ins t Husband, the B ank, Mar t i n Gr u s in, and B ank employ ee Rhonda DiL eonar do. The c omplaint 1 alleg ed that the f

unds were withdrawn a s a re sult of a co nspiracy betwee n Ms. DiL eonar do and Husband. It alleg ed fr aud, conve rsion, and b re ac h o f fiduciary duty . Wife sought c ompensatory damag es in the a m o u n t o f $44,144.31, re prese nting the amounts alleg edly converted from he r acc ounts, and $100,000 for br eac h of fiduciary duty , outrag eous conduc t, and extreme emotional and
me nta l a ng uis h. I n a dd iti on , Wif e so ug ht p un iti ve da ma g e s in the a mou nt o f $ 50 0, 00 0, a lle g ing that, collectively , the Def

endants a cted willfully , maliciously , deliberately , and outra g eously

. I n th e ir a ns we r, the De fe nd a nts a dmi tte d th a t th e su ms were with dr a wn fr om Wi fe ’s trus t acc ounts pursuant to Husband’s r equest, but denie d any conspirac y , fraud, or bre ach of fiduciary duty . As an a ffirmative defe nse, the Def endants asserted that Wife failed to state a claim upon which relief could be g rante d beca

use the accounts actually belong ed to the daughter s, not Wife, and that
o n l y t h e d a u g h t e r s o r

s o m e o n e a c t i n g o n t h e i r

b e h a l f c o u l d s e e k t o r e c o v e r

t h e f u n d s
. C o n s e q u e n t l y, a c c or din g to the de fe nd a nts , Wif e la c ke d s ta nd ing to f

ile the la ws uit

. Wife moved for pa

rtial summary judgme nt, arg uing that, as a matter of law, she was e ntitled to damag es for

the improper tr ansfe r of the funds. After that, daug hters S helly Seg al and L isa Seg al (collect i v ely

“Daug hters”) moved to intervene as parties plaintiff in the cause. The D aug hters-3-

a lle g e d that the y we re the re a l pa rt ie s in int e re st wi th re sp e c t to the mon ie s in th e tr us t ac cou nts

. Shelly Seg al attac hed an a ffidavit to the motion to intervene

. I n her aff idavit, ShellySeg al claimed that she was awa

re of the transf ers pur suant to Husband’s r equest a nd did not object to the $27,500 amount being used to pay back the marital debts cr eate d when Wife took the $28,000 in advances on the mari ta l c re dit

c ard s.
Af te r b e ing pe rm itt e d to int e rv e ne , th e Daug hte rs f ile d a mot ionto d ism iss Wif

e ’s c omp la int

. The motion to dismi ss arg ued that Wife lac ked standing to sue beca use the Daug hters we re the leg al
ow ne rs of the trus t a c c ou nts a nd , at the tim e of the fi lin g of the mot ion to d ism iss , b othwe re a du lts

. Wife’s response arg ued that the Daug hters wer e not the leg al owner s of the funds be cause they wer e both minors when the ac counts wer e orig inally cre ated. The trial court denied the Daughte rs’ motion t o d i s m i s s W i fe ’s l aw s u i t , fi n d i n g t h at t h e m o t i o n wa s “p re m at u re at t h i s t i m e b ec au s e t h e p l ea d i n gs state a suf ficient c ause of

action which w arr ants a trial of this matter.”

On J uly 8, 1998, the Def

endants c ollectively

filed a motion for summary judgme nt, arg uing that Wif e wa s u na ble to e sta

bli sh a ny da ma g e s b e c a us e sh e wa s n ot the ow ne r o f the a c c ou nts in question. Wi fe’ s response to the motion asse rted that she was the owner of the a ccounts in question and denie d the contention that she suffe red no damag e as a r esult of the unauthorized transfer . On Marc h 17, 1999, Chance llor Floy d Peete denied the Def endants’ motion for

summary judgme nt. He did not elaborate on the re asons for his ruling

. I n the following sever al y ear s, Chancellor Pee te died and Cha ncellor A rnold Goldin assumed the benc h. The proce eding s in the divorce betwee n Husband a nd Wife proce eded. N early five y ear s afte r the De fenda nts’ orig inal motions for summary judgme nt w ere denied, on J anuary 9, 2004, the Ba nk and Rhonda DiL eonar do filed anothe r motion for summary judgme nt. Sim ila r to the 1998 mot ion fo r s umm ary

jud g me nt, thi s motio n ar g ue d tha t the Wif e wa s not the ow ne r o f the fu nd s in the B a n k tr

u s t a c c o u n ts a n d s u f

f e r e d n o d a ma g e s a s a r e s u lt o f th e u n a u th o r iz e d tr a n s f e rs. The movants attache d a R u l e 56 list of undisputed fac ts to their summary judgme nt motion. I n it, the
mov a nts re fe rr e d to bo th the sig natur e c ard s a nd Rho nd a Di L e on ard o’ s d e po sit ion to d e mon str a te that Wife was n o t t h e owner of the funds in the B ank ac counts. Additionally , the movants relied upon Wife’s deposition testimonyin the divorce action ag ainst Husband, in which she stated that the money she plac ed in the B ank ac counts fo r t he Daug hters wa s a g ift to the Daug hters. Other deposition testimonyfrom the Wife in d i ca t ed t hat the funds we re r eporte d on the Daug hters’ ta x returns, not the Wife’ s.
On Fe bruary

26, 2004, Wife fil ed her response to the Def endants’ motion for summary judgme nt. Wi fe a

rg ued that (1) the establishment of the B ank ac counts was not intende d as a g ift for the D aug hters, but instead “ was a wa y t o h i d e and preve nt funds from g etting in the hands of judgme nt cre ditors,” (2) she did not authorize the Ba nk’s t ransf er of the funds, and (3) she wa s the only person authorized to withdraw any funds from the ac counts bec ause she was the ow ner of the
acc ounts. Additionally , Wife arg ued that there was a fac t question as t o whether she wa s the owner of the funds that she orig inally deposited in the B ank ac counts.A f t er t he t ri al co urt had grant ed al l of the D efend ant s’ m o t i o ns fo r s um m ary judgm ent , t he D aught ers 2

v o lun ta rily d ism isse d the ir c la im s. -4- Wit h her r esponse, Wife filed an aff idavit setting forth the fac ts r eg arding her e stablishment of the B ank trust a ccounts, the subsequent deposits made into the ac counts, the circ umstances surrounding the unauthorized transf er of those funds, and Husband’s disposi tion of those funds once the B a nk tr a ns fe rr e d th e mon ie s to him . In h e r a ff ida vit , Wif

e state d a s f

oll ow s:
I set up these a ccounts on the advice of my lawy er, Ted W inestone. We wer e aw are that judgm en t s could be ha nded down a g ainst me by cre ditors of my

fathe r’s business. . . . These acc ounts wer e, Iadmit, a ruse. I never intended that these funds would g o to my

children.

There afte r, Husband f

iled his own motion for summary judgme nt. The statemen t of undisputed fa ct s s u b m itted by Husband wa s nearly

identical to that submitted by the other De fe nd a nts . Wif

e ’s re sp on se was also id e nti c a l w ith on e no ta ble e xce pti on . In Wif

e ’s a ff ida vit
acc ompany ing he r re sponse to Husband’s moti on for summ ary judgme nt, her e x planation re g arding her pur pose for establishing the acc ounts, set forth above , was omitted.

On Marc h 5, 2004, the trial court enter ed an orde r g ranting the motion for summary judgme nt filed by the B ank and B ank employ ee Rhonda DiL eonar do. The tr i al court c oncluded that the Def endants B ank and Rhonda DiL eonar do wer e entitled to a judgme nt, as a matter of law , based on t h e d o ct ri n e o f u n cl ea n h an d s
. T h e t ri al co u rt ex p l ai n ed i t s ru l i n g: Virg inia Seg al relied upon her Affidavit filed in thi s cause on or about F ebrua ry 26, 2004. I n that Affida vit, Vir g inia Seg al states ‘These acc ounts w ere , I admit, a ruse’ and that the a ccounts we re a fraud to de feat judg ment cre ditors. I t is axiom atic in a court of eq u it y

th a t ‘ h e w h o d o e s in e q u it y s h a ll n o t h a v e e q u it y
. ’ V ir g in ia Se g al should not have the aid of this Court in furthering her fraudulent int ent. The a ctions
c omp la ine d of. . .ha ve no t caus e d inju ry to Vir g ini a Se g a l and sh e is n ot e nti tle d to any relief . . .as a matter of law

. On September 7, 2004, the Chance ry Court gr anted Husband’s motion for summary judgme nt as we ll. 2
On appe al, Wife arg ues that the trial c ourt err ed in g ranting the Def endants’ motions for
su mma ry jud g me nt. Wif

e a sse rt s th a t th e B a nk

ill e g a lly tr ans ferre d th e fu nd s in the Daug hte rs ’
acc ounts to Husband, and that Husba nd was without authori z at i o n to remove the funds. The Def endants re spond that the trial court properly applied the doc trine of unc lean ha nds in holding that, as a matter of law , Wife was not entitled to relief

. The summary

judgme n t p ro ce s s is designe d to provide an e fficie nt and inexpensive mecha nism for disposing of c ases; the rules provide a proce dure “ to enable the courts to pierc e the-5-

pleading s to determine whether the case justifies the time and expense of tria l.” By rd v . Ha ll , 847 S.W. 2d20 8, 21 0 ( Te nn . 1 99 3) . Su mma ry jud g me nt i s a

pp ro pria te on ly

wh e n th e movin g pa

rt y demonstrates (1) that ther e ar e no g enuine issues of material fa ct re quiring resolution, and (2) that she is entitled to judgment as a matter of la w. Tenn. R. Civ. P. 56.04; Christenberry v. Tipton , 160 S.W. 3d48 7, 49 1– 92 (T e nn . 2 00 5) ; By rd , 847 S.W .2d at 210. B eca use summary

judgme nt is granted only when ther e ar e no g enuine issues of m aterial fac t, a trial court’s gr ant of a motion for summary judgme nt presents a

leg al, not fac tual, question for this Court. See, e.g., Eadie v. C om plete Co. , 142 S.W. 3d28 8, 29 1 ( Te nn . 2 00 4) ; Go od loe v . St ate , 3 6 S

. W

. 3 d 6 2 , 6 5 ( T e n n
. 2 0 0 1 )

. C o n s e q u e n t l y, the sta ndard for

re vie wi ng a

g rant o f s umm ary

jud g me nt i s de novo , with no presumption of the
corr ectne ss of the trial court’s leg al conc lusions. Chri ste nbe rry , 160 S.W .3d at 491.

I n this case, the Cha ncery Court determined that Plainti ff/Appe llant Virg inia Seg al was not entitled to relief f

rom the court, as a matter of law, in lig ht of her a dmittedlyfraudulent purpose f or establishin g t he B ank trust ac counts in the Daug hters’ names. This conclusion was r ooted in a fu nd a me nta l te ne t of

Cou rt s o f e qu ity

—th e do c tr ine of

un c le a n ha nd s. I t de ri ve s f ro m th e e qu ita

ble maxi m stated succinc tly

in the treatise, Gi bs on ’s Su its in C ha nc e ry : “ He wh o c ome s in to e qu ity mus t come with cle an hands.” Thom as v. Hedge s , 183 S.W . 2d 14, 16 (Tenn. Ct. App. 1944) ( citing Gi bs on ’s Su its in C

ha nc e ry , 4 2 a nd51 ); se e als o, C.F . Si mm ons Me dic ine Co. v . M ans fi e ld Drug Co. , 2 3 S. W. 1 65 (T e nn . 1 89 3) . T he do c tr ine wa s d isc us se d b y the Te nn e ss ee Sup re me Cou rt in an opinion authore d nearly two hundred y ear s ag o:
I f a c omplainant’s cause of a ction orig inates in iniquity , althoug h he may have the rig ht, as ag ainst his antag onist, the court of chanc ery will turn him out without relief, be c a us e i t w i l l n o t g i v e i t s a i d t o t h e e s t ab l i s h m e n t a n d e n f o r c e m e n t o f a r i g ht s o stained with sin.
Go od win v . Hu nt , 183 2 WL 11 08 , at *1 (T e nn . E rr . & Ap p. Ma rc h 1 83 2) ; se e als o, Sar

tain v . D ixi e Coal & Ir on Co. , 266 S.W

. 3 13, 316 (Tenn. 1924) . The princ iple behind the doctrine re mains unchang ed: The princ iple is ge nera l, and is one of the maxims of the Court, that he who comes into a Court of Equity

aski n g its int erposition in his behalf, must come with cle an ha nd s; a nd if it app e ar f

ro m th e c a se ma de by

him

. . .th a t he ha s h ims e lf be e n g uil ty of unconsc ientious, ine quitable, or immoral conduc t, in and about the same matters wher eof he complains of his adver sary , or if his claim to relief g rows out of, or depends upon, or

is insepara

bly co n necte d with his own prior fraud, he will be
re pe lle d at th e thr e sh oldof the c ou rt

. Cont ine nta l Banke rs Lif

e Ins . Co. o

f t he Sout h, I nc . v . Si mm ons , 56 1 S.W. 2d 46 0, 46 5 ( Te nn . Ct

. Ap p
. 1 9 7 7 ) ( ci t i n g C.F. Sim m ons Medicine Co. v. Mansfield Drug C o. , 23 S.W . 165 (Tenn. 1893) ).

I n the instant ca s e, Wife see ks to recove r funds fr om acc ounts which, she admits, she
e sta bli sh e d f or a fr a ud ule nt pur

po se
. Whil e Wif

e , as the on e a uth orize d sig nator y on the a c c ou nts ,-6-

may have stated a valid claim for the Bank’s unauthorized transfe r of the f unds, we c annot say

that the Cha nc e ry

Cou rt e rr e d in app ly ing the do c tr ine of un c le a n ha nd s to “ re pe l” Wif e “ a t the thr e sh old of the c ourt.”

The de cision of t he trial court is affirmed. Costs of this appeal a re a ssessed ag ainst Appellant V i r g i n i a S t arr S e g a l , a n d h e r

s u r e t y, f o r w h i c h e x e c u t i o n m a y i s s u e , i f n e c e s s ar y.

___________________________________ HOLL Y M. KI RBY, JUDGE