IN THE COURT OF APPEALS OF TENNESSEE
AT KNOXVILLE
May 13, 2004 Session
ROBERT WILLIAM ARNDTS, BY CONSERVATOR, CAROL ZELIFF,
DARRELL R. SMITH, v. VIOLET A. BONNER AND TOMMY L. RAINES
Direct Appeal from the Chancery Court for Bradley County
No. 01-390 Hon. Jerri Bryant, Chancellor
No. E2003-02257-COA-R3-CV Filed July 7, 2004
Action was filed by plaintiff’s Conservator to recover assets transferred by his wife prior to her
death. The Trial Judge awarded certain assets to plaintiff and plaintiff appealed.
Tenn. R. App. P.3 Appeal as of Right; Judgment of the Chancery Court Affirmed.
HERSCHEL PICKENS FRANKS, P.J., delivered the opinion of the court, in which CHARLES D. SUSANO ,
JR., J., and H. DAVID CATE , SP .J., joined.
Lyn Dechman, Chattanooga, Tennessee, for Appellant.
B. Prince Miller, Jr., Cleveland, Tennessee, for Appellees.
OPINION
This action was filed by Robert Arndts, by Conservator, seeking to void transfers of
certain assets made by his late wife, Gladys, to her children before her death. The defendants, Violet
Bonner and Thomas Raines, are the natural children of Gladys and the stepchildren of plaintiff.
Plaintiff alleged that Gladys knew she had an inoperable brain tumor and made transfers of cash,
CD’s, a car, and realty to her children before her death on December 1, 2001. Plaintiff alleged that
as a result of these transfers, he was left without assets except his social security and retirement, and
that he was in a nursing home, and had no means to pay for the same, and had been denied Medicaid
due to the transfer of assets. Plaintiff further alleged that defendants acted in concert with Gladys
in violation of Tenn. Code Ann. §71-6-120, and sought compensatory damages and attorneys fees.
Plaintiff attached a copy of his marriage certificate, showing that he and Gladys were
married in October 1980, and attached a copy of a deed showing that Gladys had deeded property
on Old Parksville Road to her children. Various bank documents showing jointly held property with
his wife were also attached.
Defendants answered and basically denied plaintiff’s allegations, and averred that the
property at issue was not marital or was not subject to distribution upon Gladys’ death as alleged in
the Complaint.
Plaintiff’s Conservator, Carol Zeliff, testified she was Mr. Arndts’ daughter, that
Arndts had been in the nursing home since April 2001. She testified that she had been notified that
Gladys had an inoperable brain tumor in October, and had been placed in hospice. The Conservator
testified that her father had an income of $2,760.00 per month, and that the private pay charges at
his nursing home were about $3,150.00 per month. She testified that she applied for Medicaid for
her father, but was told that he was disqualified due to improper transfer of his assets. She testified
she closed two small bank accounts her father had held jointly with Gladys at First Citizens Bank,
and that one contained $66.00 and the other contained $104.00, and that she used this money for her
father. She testified that her father and Gladys owned two cars, a 1996 Mercury Sable and a 1987
Chevy van. She testified that the Sable was transferred to Ms. Bonner.
On cross-examination, the Conservator admitted that her father had not been able to
drive a car for at least five years, and that her father did receive approval for Medicaid on December
12, 2001.
Gena Near testified that she was employed by First Citizens Bank, as senior customer
service representative, and that in October 2001, the bank received a notarized letter from Gladys
stating that she was ill and that her daughter would be taking care of her financial business. Near
testified that the letter instructed the bank to allow Bonner to cash out CD’s and put the money into
a savings account in the names of Gladys, Ms. Bonner, and Mr. Raines, which they did. The bank
also received a power of attorney document.
Near testified that six CD’s jointly held by Mr. and Mrs. Arndts were cashed out by
Violet Bonner acting as attorney in fact for Gladys. The cash received for these CD’s totaled
$15,407.97. This money was deposited into an account (hereinafter “account #25") which was held
by Gladys, Ms. Bonner, and Mr. Raines. Account #25 was opened on September 5, 2001, with an
initial deposit of $14,355.19.
Near testified that Mr. and Mrs. Arndts had a savings account in both of their names
(hereinafter account #43). Near testified that the balance of that account was $14,355.19, and that
this money was transferred into account #25 when it was opened. Near testified that account #25
was later closed and the balance of $42,797.80 was withdrawn, but she did not know who closed it.
Near testified that a cashier’s check for the balance was issued to Violet Bonner or Tommy Raines.
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Near further testified that Mr. Arndts’s name was on two checking accounts in
September 2001, (hereinafter referred to accounts #54 and 61). She testified that both account #54
and account #61 were held in the names of Mr. or Mrs. Arndts or Violet Bonner, and that Bonner
was added to both accounts in March of 2001.
Near testified that a check for $10,000.00 was written on account #54 on October 25,
2001, and their records did not show where the money went. She said that account #54 was closed
in November by a withdrawal of the remaining balance of $66.93 by Ms. Zeliff.
Near testified that account #61 had a $20,000.00 check written on it in June 2001, but
their records did not show to whom the check was written. She said that account #61 was closed in
November by Ms. Zeliff, and the remaining balance of around $100.00 was withdrawn.
Near testified that the only account which remained open when Gladys died was a
checking account in her name along with either Ms. Bonner or Mr. Raines, which contained $245.94
at the time of trial.
The next witness, Beverly Mayfield, testified that she worked for First Tennessee
Bank, and that Gladys had 4 CD’s at First Tennessee in November 2001. Three of those CD’s were
held jointly with her sisters, and were for $10,000 each. Mayfield testified that Gladys’ sisters
eventually got the money from these CD’s, and Gladys also had a $20,000.00 CD which was held
jointly with Ms. Bonner and Mr. Raines. She testified that this CD did not appear to have been set
up with rights of survivorship, but this CD was cashed on December 12, 2001, by Ms. Bonner and
Mr. Raines.
Mayfield testified there was also a checking account opened in October 2001 with
a $10,000.00 initial deposit, which was held by Gladys, Ms. Bonner and Mr. Raines, and that the
$10,000.00 initial deposit was made by check from First Citizens Bank, which indicated that it came
from account #54. Another deposit was made by cashier’s check from First Citizens for $34,734.52.
That same amount was then withdrawn on December 12, 2001, by cashier’s check to Ms. Bonner
or Mr. Raines. The remaining funds in the account were withdrawn on January 14, 2002, and
cashier’s checks were made to Ms. Bonner and Mr. Raines.
After hearing numerous other witnesses, and at the conclusion of the proof, the Court
discussed that the elements of fraudulent intent had been considered and there was no intent to
defraud Mr. Arndts when the real property was conveyed, because he had no interest in same. The
Court found that Mrs. Arndts gave the Mercury Sable to Bonner because she wanted her to use it to
take her for treatments, and there was no intent to defraud in that transfer. The Court found that the
van was now Mr. Arndts’ property, as it had been titled jointly.
The Court held the $10,000.00 cashier’s check and the $34,734.00 in the First
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Citizens account, which came from the cashing of the CD’s, were transferred without consideration
and was close in time to Mrs. Arndts’ death. She held the source of the funds was from both parties,
and found that Mr. Arndts was not provided for by will and ordered those funds to be paid back to
Mr. Arndts.
Defendants filed a Motion for Alteration or Amendment of Judgment, asserting that
three of the CD’s that were cashed out and which constituted part of the $44,000.00 ordered to be
returned to Mr. Arndts were always owned by Mrs. Arndts with her children, and Mr. Arndts had
no ownership interest in same. Defendants also asserted that account #54 was identified as joint, but
was treated during the marriage as Mrs. Arndts’s sole property, and only contained funds from her
social security checks. Defendants further asserted that the initial deposit of $14,355.00 which was
put into the account Mrs. Arndts opened on September 5, 2001 and titled to herself and her children
(which was part of the $44,000.00 judgment) came from life insurance proceeds Mrs. Arndts
received when her son died, and that the transfer occurred before Mrs. Arndts knew she was ill.
Responding to these Motions, the Trial Court found that the three CD’s that did not
have Mr. Arndts’ name on them were not fraudulently transferred, and thus sustained the motion as
to those. The Court also found that the account #54 was a joint account held in both names, and
overruled the motion with regard to that account. The Court further found that the transfer of
$14,355.00 made on September 5, 2001, was not fraudulent, and should not be returned to Mr.
Arndts.
Plaintiff then appealed from the Final Judgment.
The issues presented on appeal are:
1. Whether the transfers of the jointly and/or individually held property
should be voided pursuant to Tenn. Code Ann. §31-1-105 as fraudulent
conveyances?
2. Whether the transfers of such property were made to defeat Mr. Arndts’
elective share?
3. Whether defendants violated Tenn. Code Ann. §71-6-120 (elder abuse and
exploitation statute) by assisting in asset transfers, and should be held
liable for damages and attorney’s fees pursuant to the statute?
The assets which appellant appears to be seeking are as follows:1
1
Appellant also raises an issue regarding the CD’s that Mrs. Arndts held jointly with her
sisters, which contained money that was given to them by their mother. Appellant did not raise this
issue at trial, however, and it cannot be raised for the first time on appeal. Further, Mrs. Arndts’
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1) $14,355.00 which was taken from joint savings account and put into
account titled to Mrs. Arndts and her children on September 5, 2001;
2) Real property owned by Mrs. Arndts and deeded to children in October
2001;
3) Mercury Sable automobile;
4) $20,000.00 which was taken from account #61 by way of cashier’s check
in June 2001, and purportedly used to open $20,000.00 CD at First
Tennessee in August 2001, and
5) Three CD’s owned by Mrs. Arndts, which did not have Mr. Arndts’ name
on them.
The Trial Court’s Amended Judgment awarded Mr. Arndts $17,531.26, and appellees
have not appealed this award.
Tenn. Code Ann. §31-1-105 provides:
Any conveyance made fraudulently to children or others, with an intent to defeat the
surviving spouse of the surviving's spouse distributive or elective share, is, at the
election of the surviving spouse, includable in the decedent's net estate under §
31-4-101(b), and voidable to the extent the other assets in the decedent's net estate
are insufficient to fund and pay the elective share amount payable to the surviving
spouse under § 31-4-101(c).
Pursuant to Tenn. Code Ann. § 31-4-101, Mr. Arndts would be entitled to an elective share of 40%
of Mrs. Arndts’ net estate due to the length of their marriage.
The factors to consider in determining whether a conveyance is fraudulent are:
1) whether the transfer was made with or without consideration,
2) the size of the transfer in relation to the decedent’s total estate,
3) the time between the transfer and the death of the decedent spouse,
4) relations which existed between the husband and wife at the time of the transfer,
sisters received this money, and they were not made defendants to this action. Thus, this issue is
without merit.
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5) the source from which the property came,
6) whether the transfer was illusory, and
7) whether the surviving spouse was adequately provided for in the will.
Finley v. Finley, 726 S.W.2d 923 (Tenn. Ct. App. 1986). In such cases, the facts and circumstances
of the given case control. In re Estate of Parsley, 864 S.W.2d 36 (Tenn. Ct. App. 1988). The Court
is required to determine whether there is a fraudulent intent since “intent to defeat the rights of the
surviving spouse must be found to exist at the time of the transfer in order to make the statute
applicable.” Warren v. Compton, 626 S.W.2d 12, 17 (Tenn. Ct. App. 1981).
As to the $14,355.00 which was taken from a joint savings account and put into an
account titled to Mrs. Arndts and her children on September 5, 2001, the Court initially ordered these
monies to be returned to Mr. Arndts, but later amended the judgment, stating that it was “not a
transfer in violation of the statute”. Taking into account the above factors, the evidence supports the
Trial Court’s ruling on this issue. The factor which weighs in plaintiff’s favor is the transfer was
made without consideration and came from joint funds. However, other factors favor defendants in
that the size of the transfer was just a small portion of decedent’s total estate at the time, and that the
Arndts had a good relationship and she was taking care of him daily. The transfer was made within
a few months of her death, but well before she knew or had reason to know that she was terminally
ill, and the transfer was not illusory .See Warren v. Compton, 626 S.W.2d 12, 19 (Tenn. Ct. App.
1981).(for a discussion of illusory).
The proof regarding this transfer was that Mrs. Arndts’ sister advised her to put the
money into an account titled to Mrs. Arndts and her children, because Mr. Arndts was in the nursing
home and would not be able to handle financial transactions, and Mrs. Arndts might in the future
need her children to be able to pay bills, etc. There is no proof that she had an intent to defeat Mr.
Arndts’ rights as a surviving spouse. We affirm the Trial Court’s ruling on this issue.
Regarding the real property Mrs. Arndts deeded to the children in October 2001, the
evidence shows that Mrs. Arndts owned said real property prior to her marriage to Mr. Arndts and
was titled solely in her name. Mr. Arndts brought no real property into the marriage. The couple
lived in a mobile home on Mrs. Arndts’ property and her son lived in the house on the property, until
approximately 2-3 years before Mrs. Arndts’ death, when the couple moved into her mother’s house
“in town”. Arndts signed a Quitclaim deed relinquishing any interest he might have in the property
in March 2001, and the evidence shows that the parties always treated this property as belonging to
Mrs. Arndts.
The Trial Court considered the factors set out in Finley and found that since this
property belonged solely to Mrs. Arndts, and since Mr. Arndts brought no property into the marriage
and disclaimed any rights to this property in March 2001, that there was no intent to defraud Mr.
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Arndts of the property by this transfer. The evidence does not preponderate against this ruling.
The proof as to the Mercury Sable automobile was that it was originally registered
in both Mr. and Mrs. Arndts’ names, and was transferred by Mrs. Arndts to Ms. Bonner in late
October 2001. Ms. Bonner testified that she found this car for her mother through her job at an
insurance company, helped her mother purchase it, and later used it to transport her mother for her
treatments at her mother’s request, because her mother had trouble getting in and out of Ms.
Bonner’s SUV. Ms. Bonner testified that her mother wanted her to have the car as a gift, because
Ms. Bonner took a leave of absence from work to take care of her mother and transport her for
treatments. The Court again found that there was no intent to defraud when this transfer was made.
Considering the factors in Finley, it appears that there was some consideration for
this transfer, and the size of the transfer was minimal, and was not illusory, but it was a jointly held
asset and was transferred a little over a month before Mrs. Arndts death. As noted, the spouses had
a good relationship at the time, and there was no proof that Mrs. Arndts had an intent to deprive Mr.
Arndts of the property. Considering the totality of the circumstances, the evidence does not
preponderate against the trial court’s ruling.
As to the $20,000.00 which was taken from account #61 by way of a cashier’s check
in June 2001, and purportedly used to open $20,000.00 CD at First Tennessee in August 2001, the
Trial Court properly found, there was simply insufficient evidence to show the origin of the money.
The bank records did not show who had withdrawn the money, and the record did not establish the
source of the $20,000.00 which purchased the CD in August. The evidence does not preponderate
against the Trial Court’s ruling on this issue.
Finally, as to the three CD’s which did not contain Mr. Arndts’ name, and were
cashed and deposited in an account to Mrs. Arndts and her children, the Court found there was no
intent to defraud with regard to these CD’s since they were held jointly by Mrs. Arndts and her
children before she ever became ill, and this ownership did not change. This issue is also without
merit.
Finally, appellant argues that defendants should have been held liable for damages
and attorney’s fees pursuant to Tenn. Code Ann. §71-6-120, which provides as follows:
(b) In addition to other remedies provided by law, an elderly person or disabled adult
in that person's own right, or by conservator or next friend, shall have a right of
recovery in a civil action for compensatory damages for abuse or neglect, sexual
abuse or exploitation as defined in this part or for theft of such person's or adult's
money or property whether by fraud, deceit, coercion or otherwise. Such right of
action against a wrongdoer shall not abate or be extinguished by the death of the
elderly person or disabled adult, but shall pass as provided in § 20-5-106, unless the
alleged wrongdoer is a family member, in which case the cause of action shall pass
to the victim's personal representative.
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***
(d) Damages shall include compensatory damages and costs where it is proven that
a defendant is liable for abuse or neglect, sexual abuse or exploitation as defined in
this part or for theft of such elderly person's or disabled adult's money or property
whether by fraud, deceit, coercion or otherwise. Costs shall include reasonable
expenses. In addition, if it is proven upon clear and convincing evidence that abuse
or neglect, sexual abuse or exploitation or theft resulted from intentional, fraudulent
or malicious conduct by the defendant, a claimant shall be entitled to recover
reasonable attorneys' fees.
***
(e) In addition to the damages described in (d), a defendant may also be found liable
for punitive damages in accordance with applicable common law standards.
Appellant pled a violation of this statute in the original Complaint, but the Court’s
judgment pretermitted this claim. Apparently, the Trial Court concluded that the claim had no merit.
As to the merits of this claim, it must be noted that the statute expressly talks about
“theft” of the elderly person’s money by fraud, deceit or other means. These transfers were all made
by Mrs. Arndts personally, or at her express direction, and there was no proof that either of these
defendants took anything by fraud or otherwise. We therefore conclude that plaintiff failed to carry
the burden of proof on this issue.
For the foregoing reasons, we affirm the Judgment of the Trial Court’s and remand,
with one-half of the cost assessed to plaintiff and one-half to the defendants.
.
______________________________
HERSCHEL PICKENS FRANKS, P.J.
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