Montigue v. Jones

          APPEAL FROM THE SEBASTIAN COUNTY CIRCUIT COURT, GREENWOOD DISTRICT [NO. 66GPR-12-17] HONORABLE SHANNON L. BLATT, JUDGE

          Booth Law Firm, P.L.C., by: Frank W. Booth, for appellant.

          Medlock & Gramlich, LLP, by: G.E. Bryant III "Trae," for appellee.

          ROBERT GLADWIN, JUDGE

         The appellant, Connie Montigue, and the appellee, Donna Jones, are sisters. Their father, Freddie Graham, died in 2011. In 2013, Montigue, individually and as the personal representative of her father's estate, filed a petition for a declaratory judgment seeking to void several transfers of real and personal property that Mr. Graham made to Jones in the years and months before his death. Montigue alleged that Jones applied undue influence on her father, who, particularly in the months before his death, also lacked the mental capacity to execute the transfers. Jones filed a counterclaim for a judgment declaring that the transfers validly extinguished any interest that Montigue had in her father's property.

         After a bench trial, the circuit court granted Jones's motion for a directed verdict and entered a final order denying Montigue's petition for a declaratory judgment. The order also granted Jones's counterclaim. We reverse the circuit court's judgment and remand the case for further proceedings.^[1]

         I. Background Facts

         Starting in 1997, Mr. Graham executed a series of documents that transferred, or purported to transfer, his twenty-three-acre property in Lavaca, Arkansas, to Jones. The first was a warranty deed that he executed on April 21, 1997. Mr. Graham purportedly transferred the property to Jones in exchange for "one dollar and other valuable consideration." There is no indication, however, that the deed was recorded.

         Mr. Graham next executed a warranty deed on April 22, 2003. In exchange for one dollar, the deed purported to transfer the same twenty-three-acre property to himself and Jones as "joint tenants with right of survivorship, and not as tenants in common." Like the first, there is no indication that this deed was recorded.

         A little over two years later, on October 5, 2005, Mr. Graham executed a beneficiary deed providing that the twenty-three-acre property would transfer to Jones at his death. Unlike the previous two deeds, the beneficiary deed was recorded the following day.

         Mr. Jones followed the beneficiary deed with a last will and testament, which he executed on January 19, 2007. The document appointed Jones as the executor of Mr. Graham's estate, and it bequeathed "whatever vehicle [he] own[s] at the time of [his] death" to Jones. It also bequeathed various items of personal property to Jones's son, Brian, including Mr. Graham's John Deere tractor, a utility trailer, a four-wheel ATV, and "all guns which [he] own[s] at [his] death." Significantly, Mr. Graham also bequeathed

all the rest, residue and remainder of [his] estate, whether real, personal or mixed and wheresoever situated or to which [he] may in any way be entitled at the time of [his] death to [his] daughters, Donna R. Jones and Connie J. Montigue, to share and share alike equally among the two of them.

         Mr. Graham also executed a declaration in which he acknowledged the prior beneficiary deed to Jones and stated the following:

The purpose of this [declaration] is to establish in writing that it is my desire that Donna R. Jones hold a $50, 000.00 interest in said real property in trust for my daughter, Connie J. Montigue. That Donna R. Jones shall not be obligated to pay any sum or interest to Connie J. Montigue until such time as such real property is sold. Donna R. Jones is instructed that upon said property being sold that she is to pay to Connie J. Montigue the sum of $20, 000.00 within a reasonable period of time after closing. That Donna R. Jones is directed to pay an additional $20, 000.00 to Connie J. Montigue one (1) year thereafter. Donna R. Jones is further instructed to pay the sum of $10, 000.00 to Connie J. Montigue one (1) year thereafter for a total payment of $50, 000.00 to Connie J. Montigue.

         Mr. Graham apparently was hospitalized for a stomach infection on or about December 8, 2008. While hospitalized, he executed a durable power of attorney that appointed Jones as his attorney-in-fact. The power of attorney authorized Jones "to do any and all necessary acts concerning the management of [Mr. Graham's] estate," as well as "the right to approve or authorize medical treatment, surgery, the giving of medication, or other related health decisions."

The durable power of attorney was followed by a ratification that Mr. Graham and Jones executed on December 15, 2008. The ratification provides, in pertinent part, that

it is [Mr. Graham's] intent and that he has conferred with his daughter, Donna R. Jones, and that she understands that her ownership of [the twenty-three-acre property] by virtue of the Beneficiary Deed is subject to the terms of this Declaration and subject to the terms of the original declaration as ratified by this agreement and that she consents and agrees to the terms of the original Declaration of Freddy R. Graham in so far as it pertains to this particular real property and she agrees, understands, and ratifies the terms of this ratification of such declaration of Freddy R. Graham.

To-wit: Donna R. Jones shall be entitled to hold the real property for so long as she desires, but that in the event said real property is sold that she shall pay Connie J. Montigue the sum of $50, 000.00.

         Also on December 15, Mr. Graham executed a series of beneficiary deeds in Jones's favor that transferred minerals and mineral rights that he owned in Crawford, Sebastian, Logan, Johnson, and Franklin Counties.

         Three years later, on March 3, 2011, Mr. Graham suffered a stroke and was hospitalized. Shortly thereafter, on March 11, Mr. Graham executed two bills of sale that transferred to Jones the personal property that he bequeathed in his will. Specifically, he signed documents that transferred his 2009 Chevrolet pick-up truck to Jones and his four-wheeler, tractor, guns, and crossbow to his grandson, Brian Jones.

         After Mr. Graham's release from the hospital, on March 18, Jones filled out an application on his behalf for the Fountain of Youth adult day-care facility in Fort Smith. On the medical-history portion of the application, Jones explained that while Mr. Graham had not been diagnosed with dementia or Alzheimer's disease, he nonetheless had suffered a "mini stroke in the brain" that caused "cognitive issues . . . and confusion." Jones wrote that Mr. Graham's mental state was such that he "[did] not converse a lot unless communicated with," and regarding Mr. Graham's abilities for verbal communication, Jones noted that the staff of the facility "might not get an answer relevant to the question." Jones also indicated that the staff of the facility needed to help Mr. Graham take his medication because he did not understand their names, purposes, dosages, or safety precautions. Jones further provided that the Fountain of Youth staff was not authorized to disclose Mr. Graham's health information to Montigue, Montigue's two daughters, or to Mr. Graham's ex-wife, Lila Cobb.

         Finally, on April 4, 2011, Mr. Graham executed yet another deed regarding his twenty-three-acre property in Lavaca. In this warranty deed, Mr. Graham transferred title to the property to Jones in fee simple, and he revoked "any Beneficiary Deed, any Declaration of Trust, or other document effecting (sic) title to [the] property."

         Mr. Graham died on November 20, 2011. Montigue was appointed administrator of his estate on October 30, 2012. Almost a year later, on July 13, 2013, Montigue filed a petition for a declaratory judgment in which she alleged that an unexecuted 2005 draft of Mr. Graham's last will and testament established that Mr. Graham intended to divide all his property equally between his two daughters. Montigue further alleged that Mr. Graham and Jones were in a fiduciary relationship "under one or more powers of attorney," and after 2005, Mr. Jones signed "a number of instruments" while "acting under [Jones's] guidance and improper influence," resulting in "the conveyance of essentially all of the estate . . . to Jones." According to Montigue, Mr. Graham's stroke in 2011 "[made] him even more dependent on [Jones] and [placed] her in an even stronger position of influence" when Mr. Graham executed the last warranty deed on April 4, 2011. For these reasons, Montigue sought a judgment declaring that

any interest [Mr. Graham] may have had in any real estate in 2005 which was subsequently conveyed to [Jones] in contradiction to the express intent of [Mr. Graham] that the property be divided equally between [Jones and Montigue] [was] void and that all of the real estate owned by [Mr. Graham] or which [Mr. Graham] had an interest in 2005 at the time the [unexecuted] will was drafted be declared to be a part of the probate estate herein.

         Montigue amended her petition for a declaratory judgment on December 23, 2015, after discovering that Mr. Graham actually executed a will in 2007. In addition to a judgment declaring the property transfers void, Montigue sought an alternative judgment declaring that Jones holds title to the assets in trust and that Jones, according to Mr. Graham's testamentary intent, "should distribute one-half of such assets [and income] to herself and one-half . . . to Montigue."

         Jones filed a counterclaim for a declaratory judgment on March 21, 2016. Jones alleged that "[o]n or about April 21, 1997, [Mr. Graham] began finalizing his estate plan with a series of deeds, beneficiary deeds, will, declaration, ratification, power of attorney, and bill[s] of sale[.]" She asserted that Mr. Graham "intended to avoid probate if possible" and "engaged in significant efforts to plan his estate accordingly." Jones further alleged that Mr. Graham "already knew that [his twenty-three-acre] property would pass to [Jones] at the time of his death with [Montigue] having a monetary interest in the property if it was ever sold," and "the only reason" for Mr. Graham to execute the last warranty deed on April 4, 2011, was "to revoke any interest [Montigue] may have in the disputed property." Consequently, Jones requested a judgment quieting title to her and declaring that the warranty deed that Mr. Graham executed on April 4, 2011, extinguished Montigue's interest. Jones alternatively requested a judgment declaring that Montigue was entitled to only $50, 000 after the sale of the property as Mr. Graham provided in the December 15, 2008 ratification.

         Shortly before trial, Montigue filed a motion for partial summary judgment alleging that there was no genuine issue of material fact as to whether Jones and Mr. Graham were in a confidential relationship. Montigue's motion was principally based on Jones's admission, in her answer to Montigue's initial petition for a declaratory judgment, that she had power of attorney and "for several years acted in a fiduciary relationship as an advisor to [Mr. Graham]." The circuit court denied the motion.

         The case proceeded to a final hearing on September 19, 2017. On direct examination by Montigue's counsel, Jones testified that Mr. Graham was hospitalized for two days following his stroke on March 3, 2011. She "took him to [her] house" after he left the hospital, and he stayed in Jones's home for three weeks. Jones also acknowledged that she "had exclusive control" of her father at that time, including when she made the statements concerning Mr. Graham's diminished cognitive ability on the application for the Fountain of Youth. She further testified that she withheld authorization for the Fountain of Youth staff to share Mr. Graham's health information with Montigue, her daughters, and Ms. Cobb because Montigue and the others "never came around [or] cared about him anyway."

         Jones thereafter testified about the circumstances surrounding Mr. Graham's execution of the last warranty deed on April 4, 2011:

Q. Where was the-was the Warranty Deed Prepared? What was the location?

A. It was in Greenwood, Arkansas, at the Walter Law Firm.

Q. Okay. And were you present when the deed ...