Deed found to be valid despite allegations of undue influence

In Estate of Bane (Tenn. Ct. App. 3/23/2022), Martha Bane gave her son, John Bane, a power of attorney with “full power and authority to do and perform all acts and things whatsoever requisite and necessary to be done . . . as I might or could do if acting personally.” She also executed a deed on October 20, 2003, conveying eight acres to John and his wife, Anne.

Sometime in 2006, a rift formed in the family; two of Martha’s other children, David and Roy, began manging Martha’s affairs. At some point in 2006, John’s power of attorney was revoked. On December 15, 2008, Martha filed a complaint for cancellation of deed against John and Anne. The complaint alleged that John exerted undue influence over Ms. Bane and fraudulently induced her to convey real property to them in 2003. John and Anne were served by publication after it was alleged they could not be found. Later, Ms. Bane took a default judgment.

Ms. Bane later filed a second suit to set aside an intervening deed of trust John and Anne executed in favor of Anne’s father. This suit was answered, and John and Anne filed a motion to set the default aside. The second suit named John, Anne and Anne’s father (beneficiary of the intervening deed of trust) as defendants. The trial court consolidated the two cases and the default being set aside. After a number of discovery disputes, the court held a hearing where the only witnesses were John and Thomas Bane, another brother. Ms. Bane failed to appear, citing age related infirmities. The trial court dimissed Ms. Bane’s claims with prejudice, finging the original deed was valid and set aside a Clerk & Master’s deed that was filed after the default judgment.

In the first appeal of this case, Bane v. Bane, No. E2018-00790-COA-R3-CV, 2019 WL 2714081 (Tenn. Ct. App. June 28, 2019), the Court of Appeals remanded, holding that the trial court was require dto enter specific findings of fact sufficient to set aside the default before doing so. On June 25, 2020, the trial court entered findings of fact and conclusion of law setting aside the default because:

1) personal service was never attempted and no summonses were ever issued or returned; 2) the notice by publication was invalid because Plaintiff did not comply with the relevant statutes; 3) Defendants did not waive the right to challenge process and jurisdiction by appearing for the hearing on costs in 2010; and 4) Mr. Kingery was a necessary and indispensable party to the first action due to the deed of trust on the subject property. The trial court found that “[Ms. Bane’s] aim was to divest title from the Defendant[s] and to revest it in herself[,]” and concluded that Defendants were not prohibited from bringing their Rule 60.02 motion because “the reasonable time requirement [of that rule] does not apply to a void judgment.”

On appeal, Ms. Bane admitted that the original 2009 default was void for lack of personal jurisdiction. She nonetheless argued it should be upheld under the exceptional circumstances doctrine. The Court of Appeals rejected that argument.

Ms. Bane then argued the original 2003 deed was the product of undue influence and that she had a confidential relationship with John. The record showed that John used the power of attorney, which gives rise to a presumption of undue influence. Even though Ms. Bane signed the deed, the “presumption of undue influence extends to all dealings between persons in fiduciary and confidential relations, and embraces gifts, contracts, sales, releases, mortgages and other transactions by which the dominant party obtains a benefit from the other party.” Relevant circumstances the court could consider include: the decedent’s advanced age and/or physical or mental deterioration; the dominant party’s active involvement in the transactions at issue; secrecy concerning the transaction’s existence; the lack of independent advice; the decedent’s illiteracy or blindness; the unjust or unnatural nature of the transaction; the decedent being in an emotionally distraught state; discrepancies between the transaction and the decedent’s expressed intentions; and fraud or duress directed toward the decedent.

Nonetheless, the Defendants rebutted the presumption at trial by establishing a complete absence of suspicious circumstances surrounding the 2003 deed. The deed was executed by Ms. Bane at a time when she was making similar conveyances to her other children and getting her affairs in order.

The court rejected Ms. bane’s argument that her deposition testimony was improperly excluded at trial since no proffer was made. Finally, the Court rejected an argument that proof should be reopened or the judgment altered to allow a document allegedly signed by John. Rule 59.04, which applies to newly discovered evidence, requires the moving party to show that the evidence was unknown prior to or during trial and could not have been known to him through the exercise of reasonable diligence. Ms. Bane made no such showing.