Court Opinion

ID: 9913488
Source: CourtListenerOpinion
Date Created: 2023-12-27 22:09:33.709919+00
Date Added: 2024-06-11T13:00:46.456892
License: Public Domain

12/27/2023
                IN THE COURT OF APPEALS OF TENNESSEE
                           AT KNOXVILLE
                         Assigned on Briefs December 4, 2023

       CHARLES MELTON, INDIVIDUALLY AND AS PERSONAL
     REPRESENTATIVE FOR THE ESTATE OF BETTY RUTH SHAW
                MORGAN v. MICHAEL MELTON

                 Appeal from the Chancery Court for Knox County
                No. 197562-2 Richard B. Armstrong, Jr., Chancellor
                      ___________________________________

                           No. E2023-00649-COA-R3-CV
                       ___________________________________

This is an action against the former attorney-in-fact of the decedent for breach of fiduciary
duties and conversion. The trial court granted summary judgment against the attorney-in-
fact and awarded damages to the estate. The attorney-in-fact appeals, contending the trial
court did not have subject matter jurisdiction over the matters at issue because the power
of attorney was based on Texas law and the actions alleged in the petition were performed
in Texas, where he was a resident; however, he does not challenge the court’s personal
jurisdiction over him. He also contends that summary judgment was inappropriate because
material facts were in dispute. Finding no error, we affirm.

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

FRANK G. CLEMENT, JR., P.J., M.S., delivered the opinion of the court, in which ARNOLD
B. GOLDIN and KRISTI M. DAVIS, JJ., joined.

Daniel W. Starnes, Knoxville, Tennessee, for the appellant, Michael Melton.

David Kidd, Knoxville, Tennessee, for the appellees, Charles Melton, individually, and as
Personal Representative for the Estate of Betty Ruth Shaw Morgan.

                                        OPINION

                           FACTS AND PROCEDURAL HISTORY

      At all times material to this action, Betty Ruth Shaw Morgan (“Ms. Morgan” or
“Decedent”), was a resident of Knox County, Tennessee. She died intestate on September
18, 2017, and is survived by two sons, Charles Melton (“Charles”), a resident of Tennessee,
and Michael Melton (“Michael”), a resident of Texas.1

       On October 6, 2017, the Knox County Probate Court appointed Charles to serve as
personal representative for the Estate of Betty Ruth Shaw Morgan (“the Estate”). Because
Ms. Morgan owned property in Texas, Charles also filed a petition to be granted letters of
administration over her ancillary estate there. But Michael objected to the appointment,
and as of the filing of this appeal, Ms. Morgan’s Texas estate had no personal
representative.

        Charles, individually and as Personal Representative for the Estate of Betty Ruth
Shaw Morgan, commenced this action on March 1, 2019, in the Chancery Court for Knox
County, Tennessee. Charles alleged in the complaint that Ms. Morgan had been a resident
of Knox County, Tennessee, for at least eight years; that Michael brought a Durable Power
of Attorney form to Ms. Morgan’s house in Knoxville that named Michael as her attorney-
in-fact for virtually all of her real estate and financial matters; that Ms. Morgan executed
the power of attorney on June 20, 2017; and that Michael breached his fiduciary duty to
her by misappropriating a large portion of her estate for his own use and benefit in the
weeks before she died. In particular, Charles alleged that Ms. Morgan had approximately
$480,000 in various bank accounts when she executed the power of attorney, $285,000 of
which was held in accounts that named Charles as the pay-on-death beneficiary. Charles
averred that, as a result, the Estate suffered damages in the amount of $164,173 and he
suffered damages in the amount of $155,000. Based on these allegations, Charles asserted
claims for breach of fiduciary duty and conversion.2

        Michael responded to the complaint by filing a motion to dismiss for lack of subject
matter jurisdiction under Tennessee Rule of Civil Procedure 12.02(1).3 Michael argued that
the court lacked jurisdiction because the power of attorney was subject to Texas law;
Michael was a resident of Texas; and the accounts from which he allegedly transferred
money were in Texas. Charles filed a response in opposition to the motion, stating, inter
alia, that Michael traveled to Tennessee to obtain the power of attorney from Ms. Morgan;
that Michael performed his services, at least in part, in Tennessee; and that Michael
breached his fiduciary duty to a resident of Tennessee, Ms. Morgan. Therefore, Charles
argued, the cause of action arose in Tennessee. Charles also noted that Michael had not

       1
           Ms. Morgan’s husband predeceased her.
       2
         The complaint also alleged that Ms. Morgan was not competent to execute the power of attorney
and that Michael exerted undue influence over her to obtain the power of attorney. Each of these claims
was voluntarily dismissed, leaving only the claims for breach of fiduciary duty and conversion.
       3
           As Charles correctly points out, Michael has not challenged the court’s personal jurisdiction over
him.

                                                    -2-
challenged the fact that the court had personal jurisdiction over him and that he was only
challenging subject matter jurisdiction.

       After a hearing, the trial court denied Michael’s Motion to Dismiss for lack of
subject matter jurisdiction without explanation.

       Michael then filed an answer to the complaint, denying that he breached his
fiduciary duties to Ms. Morgan or that he converted her property to his own. However,
Michael admitted to most of the remaining factual allegations, including that their mother
was a resident of Knox County, Tennessee, where the power of attorney was executed.

       Thereafter, Charles filed a motion for summary judgment supported by a
memorandum of law and a statement of undisputed material facts. Michael filed a response
opposing the motion along with a memorandum of law and a response to Charles’s
Statement of Undisputed Material Facts. Again, Michael admitted to all but one of the
factual statements. But he also filed a statement of “additional” undisputed facts in which
he denied that he breached his fiduciary duty or converted Ms. Morgan’s funds.

       In an order entered on October 30, 2020, the trial court granted Charles’s Motion
for Summary Judgment. The trial court held that Michael’s affidavit failed to establish a
dispute of material fact and whether he breached his fiduciary duties and whether his
actions constituted conversion were questions of law:

      [Charles], in [his] Statement of Undisputed Material Facts, painstakingly and
      thoroughly document[s Michael’s] actions as they pertain to Decedent’s
      accounts. [Michael’s] response to [Charles’s] Statement [of Undisputed
      Material Facts] admits, with the exception of the date of the execution of the
      Power of Attorney noted above, that [Michael] took every action listed by
      [Charles]. Because every fact was admitted to and not disputed, the Court
      hereby adopts and incorporates [Charles’s] Statement of Undisputed
      Material Facts with the sole exception of the execution date of the Power of
      Attorney.

      [Michael], however, argues that there are genuine issues of material fact in
      dispute. Specifically, [Michael] disputes that he misused his authority under
      the Power of Attorney or breached his fiduciary duties under the same and
      that those actions do not constitute conversion. The Court notes that these are
      legal conclusions and not disputed facts that would defeat a motion for
      summary judgment. . . .

                               .      .      .      .

                                           -3-
      The Court is left with [Charles’s] Statement of Undisputed Material Facts to
      which [Michael] admitted in its entirety. In that Statement, Decedent
      executed a Power of Attorney in favor of [Michael]. Under authority of that
      Power of Attorney, [Michael] drained the bank account of Decedent and used
      the funds to buy himself multiple vehicles and a recreational vehicle.
      [Michael] also caused cashier checks to be issued to himself and Charles.

        Based on these and other undisputed facts, the court determined that Charles was
entitled to judgment as a matter of law on his breach of fiduciary duty and conversion
claims:

      The type of self-dealing as exhibited by [Michael] is a classic example of a
      breach of fiduciary duty. Not only did [Michael] drain Decedent’s bank
      accounts, [but he also] did not use any of that money for Decedent’s benefit.
      The sole fact in the record before the Court that shows that [Michael] acted
      in the benefit of the Decedent in his actions under the Power of Attorney is
      the paying of one of Decedent’s bill[s]. This bill was paid for by the very
      [few] funds left in one of Decedent’s bank account[s]. The other actions all
      exhibit a lack of good faith towards Decedent’s property. The Court finds
      that [Michael] breached his fiduciary duties in his self-dealing with
      Decedent’s property.

                                 .      .         .   .

      [Michael] has admitted that his actions in his dealings with Decedent’s bank
      accounts were intentional. Furthermore, [Michael] has admitted that it was
      his intent to remove the money from Decedent’s accounts and [that] the only
      reason he did not [remove money from] some of the accounts was due to his
      lack of knowledge of those accounts. [Michael] used the funds from
      Decedent’s accounts to purchase two vehicles as well as a recreational
      vehicle for himself. He also transferred some of the funds to his brother,
      [Charles]. The record also shows that [Michael] was not entitled to any of
      the money that he withdrew at the time he exercised his authority under the
      Power of Attorney.

      After further proceedings, Charles was awarded a judgment against Michael for
$81,128.83 in compensatory damages, to accrue pre-judgment interest at the rate of ten
percent (10%) per annum from March 1, 2019. The court also awarded judgments against
Michael for punitive damages in the amount of $150,000 and for attorney’s fees and
expenses in the amount of $18,473.04.

      This appeal followed.

                                            -4-
                                           ISSUES

       The issues, as framed by Michael, read:

       1. Whether the trial court erred in denying Respondent/Appellant’s Motion
          to Dismiss for lack of subject matter jurisdiction as the Power of Attorney
          was a Texas Statutory Durable Power of Attorney governed by the State
          of Texas and all the actions alleged by in the Petition were performed in
          Texas and the Respondent/Appellant was and is a resident of Texas.

       2. Whether the trial court erred in finding that Respondent/Appellant’s
          statements contained in his affidavit were insufficient to establish a
          dispute as to a genuine material fact to defeat Petitioner/Appellee’s
          Motion for Summary Judgment.

                                  STANDARD OF REVIEW

       This court reviews a trial court’s decision on a motion for summary judgment de
novo without a presumption of correctness. Rye v. Women’s Care Ctr. of Memphis,
MPLLC, 477 S.W.3d 235, 250 (Tenn. 2015). Accordingly, this court must make a fresh
determination of whether the requirements of Tennessee Rule of Civil Procedure 56 have
been satisfied. Id.; Hunter v. Brown, 955 S.W.2d 49, 50 (Tenn. 1997). In so doing, we
accept the evidence presented by the nonmoving party as true, consider the evidence in the
light most favorable to the nonmoving party, and draw all reasonable inferences in that
party’s favor. Godfrey v. Ruiz, 90 S.W.3d 692, 695 (Tenn. 2002).

       Summary judgment should be granted when “the pleadings, depositions, answers to
interrogatories, and admissions on file, together with the affidavits, if any, show that there
is no genuine issue as to any material fact and that the moving party is entitled to a judgment
as a matter of law.” Tenn. R. Civ. P. 56.04. “The moving party has the ultimate burden of
persuading the court that there are no genuine issues of material fact and that the moving
party is entitled to judgment as a matter of law.” Martin v. Norfolk S. Ry. Co., 271 S.W.3d
76, 83 (Tenn. 2008). As our Supreme Court explained in Rye v. Women’s Care Center of
Memphis, MPLLC:

       [W]hen the moving party does not bear the burden of proof at trial, the
       moving party may satisfy its burden of production either (1) by affirmatively
       negating an essential element of the nonmoving party’s claim or (2) by
       demonstrating that the nonmoving party’s evidence at the summary judgment
       stage is insufficient to establish the nonmoving party’s claim or defense.

477 S.W.3d at 264 (emphasis in original). However, “if the moving party bears the burden
of proof on the challenged claim at trial, that party must produce at the summary judgment

                                             -5-
stage evidence that, if uncontroverted at trial, would entitle it to a directed verdict.” TWB
Architects, Inc. v. Braxton, LLC, 578 S.W.3d 879, 888 (Tenn. 2019).

        To survive when a party files a properly supported motion for summary judgment
pursuant to Rule 56, the nonmoving party “may not rest upon the mere allegations or
denials of [its] pleading,” but must respond and set forth specific facts by affidavits—or
one of the other means provided in Tennessee Rule of Civil Procedure 56—establishing
that there is a genuine issue for trial. Rye, 477 S.W.3d at 265 (quoting Tenn. R. Civ. P.
56.06). “Whether the nonmoving party is a plaintiff or a defendant—and whether or not
the nonmoving party bears the burden of proof at trial on the challenged claim or defense—
at the summary judgment stage, ‘[t]he nonmoving party must demonstrate the existence of
specific facts in the record which could lead a rational trier of fact to find in favor of the
nonmoving party.’”4 TWB Architects, Inc., 578 S.W.3d at 889 (alteration in original)
(quoting Rye, 477 S.W.3d at 265).

                                                ANALYSIS

                                  I. SUBJECT MATTER JURISDICTION

       Michael contends that the court lacked subject matter jurisdiction5 because
Decedent executed a “Texas” power of attorney form, which he contends was governed by
the laws of the State of Texas, and because the actions alleged in the petition were
performed in Texas, where he was a resident. Nevertheless, as Michael acknowledges in
his appellate brief, “There is little question that the trial court . . . would have subject matter
jurisdiction to hear a breach of fiduciary duty claim that arose out of a breach of the
Tennessee Uniform Durable Power of Attorney Act.”

       “Subject matter jurisdiction refers to the power of a court to adjudicate the particular
category or type of case brought before it.” Turner v. Turner, 473 S.W.3d 257, 269–70
(Tenn. 2015). Jurisdiction of the subject matter is conferred by the Constitution and
statutes. Kane, 547 S.W.2d at 560. The question of whether a court has subject matter
jurisdiction “is a pure question of law, which is reviewed de novo, with no presumption of
correctness in the trial court’s decision.” Blair v. Tennessee Bd. of Prob. & Parole, 246
S.W.3d 38, 40 (Tenn. Ct. App. 2007) (citing Nelson v. Wal-Mart Stores, Inc., 8 S.W.3d
625, 628 (Tenn. 1999)).

        4
         As the Supreme Court explained in TWB Architects, Inc. v. Braxton, LLC, “[t]his is the standard
Tennessee courts must apply when ruling on summary judgment motions regardless of which party bears
the burden of proof at trial.” 578 S.W.3d at 889.
        5
          Michael does not challenge the fact that the court has personal jurisdiction over him. Jurisdiction
of the subject matter is conferred by the Constitution and statutes; jurisdiction of the parties is acquired by
service of process. Kane v. Kane, 547 S.W.2d 559, 560 (Tenn. 1977).

                                                    -6-
        Chancery courts are courts of general jurisdiction. In re D.Y.H., 226 S.W.3d 327,
330 (Tenn. 2007). Under Tennessee Code Annotated § 16-11-101, chancery courts have
“all the powers, privileges and jurisdiction properly and rightfully incident to a court of
equity.” (Emphasis added). As is further explained in Gibson’s Suits in Chancery, “the
equitable or inherent jurisdiction of the Chancery Court includes all cases of an equitable
nature.” William H. Inman, GIBSON’S SUITS IN CHANCERY § 3 (7th ed. 1988). These cases
include “all actions to prevent the doing of an illegal or inequitable act to the injury of
plaintiff’s property rights, or interests.” Id. Moreover, under Tennessee Code Annotated
§ 16-11-102, chancery courts have “concurrent jurisdiction, with the circuit court, of all
civil causes of action, triable in the circuit court, except for unliquidated damages for
injuries to person or character, and except for unliquidated damages for injuries to property
not resulting from a breach of oral or written contract; and no demurrer for want of
jurisdiction of the cause of action shall be sustained in the chancery court, except in the
cases excepted.” Tenn. Code Ann. § 16-11-102 (emphasis added).

        Michael has not argued that Charles’s claims fell under “the cases excepted” in § 16-
11-102. Instead, Michael asserts that the power of attorney was subject to Texas Estate
Code Annotated § 751.031, which he interprets as authorizing attorneys-in-fact to make
gifts to themselves if the attorney-in-fact is “an ancestor, spouse, or descendant of the
principal.” See Tex. Est. Code Ann. § 751.031(c). Michael also relies on Texas Estate Code
Annotated § 751.032(d), which permits an attorney-in-fact to gift a principal’s property
“consistent with the principal’s objectives” or “best interest.” Id.

       Without further citation to legal authority, Michael contends that these sections
establish that he “had the right to convey gifts to himself as agent under the Statutory
Durable Power of Attorney” and that he “cannot be held civilly liable in Tennessee for
actions that are allowed under the Texas Estate Code.” But these arguments are misplaced
because they relate to whether Michael breached his duty—not whether the Chancery
Court of Knox County, Tennessee, had “power . . . to adjudicate the particular category or
type of case brought before it.” Turner, 473 S.W.3d at 269–70;

       Although Michael’s authority to act on behalf of Ms. Morgan was based, in part, on
Texas law, the prayer for relief in the complaint does not seek—and the petitioners were
not granted—title or possession to any Texas real property. The complaint merely seeks an
award of damages for the funds wrongly converted by Michael’s breach of his fiduciary
duty to Mrs. Morgan. Thus, the fact the power of attorney form is a Texas form and the
powers granted to Michael are further explained in the Texas Estate Code does not strip
the Chancery Court of Knox County, Tennessee, of subject matter jurisdiction to determine
whether Michael breached the fiduciary duties he owed to his mother. See Sanders ex rel.
Minter v. Harbor View Nursing & Rehab. Ctr., Inc., No. W2014-01407-COA-R3-CV,
2015 WL 3430082, at *1 (Tenn. Ct. App. May 29, 2015) (construing Minnesota statutory
durable power of attorney to determine scope of fiduciary’s duties).

                                            -7-
       “Whether a court has subject matter jurisdiction to hear a particular controversy
depends upon the nature of the cause of action and the relief sought.” State ex rel. Com’r
of Dep’t of Transp. v. Thomas, 336 S.W.3d 588, 602 (Tenn. Ct. App. 2010) (citing Landers
v. Jones, 872 S.W.2d 674, 675 (Tenn. 1994)). Tennessee chancery courts have concurrent
jurisdiction with circuit courts over “all civil causes of action, triable in the circuit court,
except for unliquidated damages for injuries to person or character, and except for
unliquidated damages for injuries to property not resulting from a breach of oral or written
contract.” Tenn. Code Ann. § 16-11-102. “A liquidated claim exists if the plaintiff has
made a demand for a specific sum . . . because such a claim is certain and known to the
defendant before the suit is filed.” PNC Multifamily Cap. Institutional Fund XXVI Ltd.
P’ship v. Bluff City Cmty. Dev. Corp., 387 S.W.3d 525, 557–58 (Tenn. Ct. App. 2012)
(quoting 22 Am. Jur. 2d Damages § 465).

       This is a civil action for breach of fiduciary duty and conversion seeking damages
in a sum-certain amount. Thus, the Knox County Chancery Court had subject matter
jurisdiction to hear the case.

                                  II. SUMMARY JUDGMENT

        For his second issue, Michael contends the trial court erred in finding that the
statements in his affidavit were insufficient to establish a genuine dispute of material fact
to defeat Charles’s Motion for Summary Judgment. It is important to note that this
challenge is based entirely on the statement of additional undisputed facts that Michael
filed in support of his response to Charles’s Motion for Summary Judgment. It is also
important to note that Michael admitted all but one of the 63 facts set forth in Charles’s
Statement of Undisputed Material Facts, which Charles relied on in support of his motion
for summary judgment.

       As the trial court correctly found:

       [Charles], in [his] Statement of Undisputed Material Facts, painstakingly and
       thoroughly document[s Michael’s] actions as they pertain to Decedent’s
       accounts. [Michael’s] response to [Charles’s] Statement admits, with the
       exception of the date of the execution of the Power of Attorney noted above,
       that [Michael] took every action listed by [Charles]. Because every fact was
       admitted to and not disputed, the Court hereby adopts and incorporates
       [Charles’s] Statement of Undisputed Material Facts with the sole exception
       of the execution date of the Power of Attorney.

        Thus, the issue before us is limited to Michael’s contention that the trial court erred
in finding the facts set forth in his Statement of Additional Undisputed Material Facts were
insufficient to establish a genuine dispute of material fact to defeat Charles’s Motion for
Summary Judgment.

                                             -8-
         The only additional fact Michael relies on that pertains to the performance of his
duties as his mother’s attorney-in-fact is indeed conclusory, as the trial court correctly
found. It reads: “As the power of attorney for Betty Ruth Shaw Morgan, Michael Melton
at all times acted with the utmost good faith, honesty, and loyalty to his mother, Betty Ruth
Shaw Morgan.” And as we have previously noted, “[m]ere conclusory statements are
insufficient to create a dispute of fact when the moving party presents specific facts
sufficient to support a motion for summary judgment.” Lee v. Franklin Special Sch. Dist.
Bd. of Educ., 237 S.W.3d 322, 331 (Tenn. Ct. App. 2007) (citing Byrd v. Hall, 847 S.W.2d
208, 211 (Tenn. 1993)).

      And as the trial court correctly held, Michael failed to present or identify facts to
support this conclusory statement:

       [Michael] . . . argues that there are genuine issues of material fact in dispute.
       Specifically, [Michael] disputes that he misused his authority under the
       Power of Attorney or breached his fiduciary duties under the same and that
       those actions do not constitute conversion. The Court notes that these are
       legal conclusions and not disputed facts that would defeat a motion for
       summary judgment.

                                    .      .         .    .

       . . . . The Court is left with [Charles’s] Statement of Undisputed Material
       Facts to which [Michael] admitted in its entirety. In that Statement, Decedent
       executed a Power of Attorney in favor of [Michael]. Under authority of that
       Power of Attorney, [Michael] drained the bank account of Decedent and used
       the funds to buy himself multiple vehicles and a recreational vehicle.
       [Michael] also caused cashier checks to be issued to himself and
       [Charles]. . . .

                                    .      .         .    .

       The type of self-dealing as exhibited by [Michael] is a classic example of a
       breach of fiduciary duty. Not only did [Michael] drain Decedent’s bank
       accounts, [Michael] did not use any of that money for Decedent’s benefit.
       The sole fact in the record before the Court that shows that [Michael] acted
       in the benefit of the Decedent in his actions under the Power of Attorney is
       the paying of one of Decedent’s bill. This bill was paid for by the very little
       funds left in one of Decedent’s bank account. The other actions all exhibit a
       lack of good faith towards Decedent’s property. The Court finds that
       [Michael] breached his fiduciary duties in his self-dealing with Decedent’s
       property.

                                               -9-
With regard to the conversion claim, the court found, in pertinent part:

       [Michael] has admitted that his actions in his dealings with Decedent’s bank
       accounts were intentional. Furthermore, [Michael] has admitted that it was
       his intent to remove the money from Decedent’s accounts and the only reason
       he did not in some of the accounts was due to his lack of knowledge of those
       accounts. [Michael] used the funds from Decedent’s accounts to purchase
       two vehicles as well as a recreational vehicle for himself. He also transferred
       some of the funds to his brother, [Charles]. The record also shows that
       [Michael] was not entitled to any of the money that he withdrew at the time
       he exercised his authority under the Power of Attorney.

       As noted above, Michael’s only challenge to the grant of summary judgment in
favor of Charles is based on the contention that the trial court erred in finding that the
statements in his affidavit in support of his Statement of Additional Undisputed Facts were
insufficient to establish a dispute as to a genuine material fact to defeat Charles’s motion
for summary judgment. Finding no merit to this argument, we affirm the grant of summary
judgment.6

                                      IN CONCLUSION

       The judgment of the trial court is affirmed in all respects, and this matter is
remanded to the trial court for further proceedings consistent with this opinion. Costs of
appeal are assessed against the appellant, Michael Melton, for which execution may issue.

                                                     ________________________________
                                                     FRANK G. CLEMENT JR., P.J., M.S.

       6
         Michael does not challenge the amount of the awards of compensatory damages, punitive
damages, or attorney’s fees. Thus, we do not discuss them in this opinion.

                                            - 10 -