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Ellis v. Thompson

Court of Appeals of Arkansas, Division IV

December 4, 2019

MARGARET ELLIS APPELLANT
v.
ROGER THOMPSON AND FRANCES THOMPSON APPELLEES

          APPEAL FROM THE CROSS COUNTY CIRCUIT COURT [NO. 19CV-08-75] HONORABLE CHALK MITCHELL, JUDGE.

          Andrea Brock, for appellant.

          Woodruff Law Firm, P.A., by: Jennifer Woodruff Douglas; and Chrestman Group, PLLC, by: Keith L. Chrestman, for appellees.

          WAYMOND M. BROWN, JUDGE.

         This is a dispute between siblings over their late father's estate. Appellant Margaret Ellis sued her brother and sister-in-law, appellees Roger Thompson and Frances Thompson, for an accounting, to set aside certain gifts allegedly made to Roger, and for various torts arising out of Roger's alleged mishandling of the property of Edward Thompson, the now deceased father of Margaret and Roger, as a signatory on Edward's bank accounts, and under a power of attorney granted to Roger. After a bench trial, the circuit court ruled that the statute of limitations barred some of Ellis's claims, that she lacked standing to bring other claims, that the alleged gifts would not be set aside, and that Roger's accounting was adequate. We affirm the circuit court.

         Facts and Procedural History

         Edward Thompson was the father of four children: appellant Margaret Ellis, appellee Roger Thompson, Phillip Thompson, and Barbara Mugge. Roger and Frances Thompson are husband and wife. In August 1997, Edward executed a power of attorney appointing Roger as his attorney-in-fact to act on Edward's behalf and for all purposes. That power of attorney was recorded on January 31, 2002.

         On November 12, 1997, Roger and Frances were added as "agents" authorized to sign on Edward's accounts at First National Bank and were listed as "authorized signers" only.

         On December 21, 2000, Roger and Phillip Thompson and their wives purchased two tracts totaling approximately 685 acres from Edward. They executed a promissory note for the purchase price in the amount of $256, 556. The terms of the note were seven annual payments of $39, 017.28 at 6 percent interest, and if not paid timely, then the entire note would bear interest at 10 percent. The note also contains an undated, typed statement signed by Edward that the note was to be canceled and forgiven in the event of his death. A copy of the note containing handwritten statements purportedly signed by Edward that payments were waived by gift on various dates was introduced into evidence.[1]

         In 2002, Edward received over $400, 000 from the estate of his mother, Rosa Thompson, who died in 1997.

         Edward died on July 18, 2006. Upon Edward's death, Roger opened the estate and was appointed personal representative. Ellis responded with a petition to set aside the will and to contest the will. On January 24, 2007, an agreed order was entered setting aside the will. On February 21, 2007, Roger filed an inventory in the probate case, and Ellis filed an objection to the inventory, claiming that it understated the decedent's property.

         Ellis filed the present case on May 21, 2008, separate from the probate case, asserting causes of action for breach of fiduciary duty and conversion and seeking an accounting and damages. Ellis alleged that Roger had failed to properly inventory Edward's property upon Edward's death; that Roger had transferred property from Edward to himself using the power of attorney; that Roger had failed to account for the inheritance Edward received from his mother's estate; that Roger and Phillip failed to pay the purchase price for the real property they purchased from Edward, claiming that Edward waived the payments as gifts; that Edward was incompetent to make gifts; and that Roger and Frances had converted Edward's property for their own use.

         On June 12, 2008, Roger and Frances answered Ellis's complaint, denying that she had any causes of action. They also asserted various affirmative defenses, including lack of standing and the statute of limitations.

         On September 24, 2014, the circuit court entered an order directing Roger and Frances to submit an accounting by October 22, 2014, and to make a good-faith effort to obtain all the records necessary to complete the accounting.[2]

         On October 23, 2014, Roger filed an affidavit averring that he had, with his attorney's assistance, reviewed Edward's available bank records dating back to 2002 and had compiled a partial list of checks written on the account. He asserted that most of the checks were written with Edward's knowledge and permission or based on his (Edward's) previous customs. Roger stated that the checks written for cash were to pay Edward's caretaker or to reimburse her for Edward's household expenses. He also said that he did not sign any checks pursuant to the power of attorney because he had been added to the account to help pay his father's bills that he was instructed to pay. The affidavit stated that neither Edward nor Roger used the checks in sequential order and that Roger did not have copies of some checks. Finally, Roger said that checks were consistently written for certain routine expenses, including Edward's medications, car tags, insurance, and monthly utility payments.

         On December 17, 2014, Ellis filed a pleading raising multiple issues. First, she objected to the affidavit filed by Roger as being an accounting. She asserted that the affidavit lacked sufficient documentation to be considered an accounting. Ellis further alleged that on December 12, 2014, Roger did file an accounting in the probate case that showed he was self-dealing by paying his farming operations from estate funds without probate court authorization.

         A hearing on Ellis's objections was held in March 2016, and the court ruled that Roger's affidavit was not sufficient as an accounting. On the day of the hearing, Roger and Frances amended their prior accounting with a spreadsheet prepared by counsel.

         On March 30, 2016, Ellis filed a renewed objection to Roger's accounting. She repeated her original objections to Roger's October 2014 affidavit. As for the updated accounting, Ellis asserted that numerous checks were missing, that income was omitted, that receipts and disbursements were unaccounted for, that Roger and Frances may have destroyed financial records, and that checks listed in the previous spreadsheet were not included in the revised spreadsheet. Ellis further objected to numerous disbursements as not being proper expenses, such as checks for cash, checks for Roger and his children, and checks to Roger's farming operations. She also asserted that Roger failed to account for any CDs or the promissory note and that documentation was lacking for the disbursements.

         At trial, the court, with the agreement of the parties, bifurcated the issues, with Roger and Frances presenting their case first as they had the burden of proof to show they handled Edward's accounts properly. At the conclusion of Roger and Frances's case, the circuit court ruled from the bench and found that, based on the circumstances, the accounting was adequate and showed how the money had been spent three years before Edward's death. The court found no evidence showing a pattern of self-dealing.

         Ellis then presented her case for breach of fiduciary duty and conversion. Ellis did not believe Edward was competent and thought he was influenced by Roger and Frances. She presented evidence that Edward had Alzheimer's and dementia and that there was evidence possibly indicating Parkinson's and depression. She also produced evidence that Edward owned several CDs but that his ...


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