Paul Sudmeier, as Guardian of the Person and Estate of Ingrid Jennings, Incompetent v. Bill Wallace, et al.Annotate this Case
ARKANSAS COURT OF APPEALS
NOT DESIGNATED FOR PUBLICATION
PAUL SUDMEIER, AS GUARDIAN
OF THE PERSON AND ESTATE OF
INGRID JENNINGS, INCOMPETENT
BILL WALLACE, RILENE WALLACE,
COMPANY OF ARKANSAS, and
FIRST UNION NATIONAL BANK OF
October 13, 2004
APPEAL FROM THE WASHINGTON
COUNTY CIRCUIT COURT
HONORABLE MICHAEL H.
MASHBURN, CIRCUIT JUDGE
John F. Stroud, Jr., Chief Judge
Paul Sudmeier, in his capacity as guardian of the person and estate of his mother, Ingrid Jennings, appeals the finding of the Washington County Circuit Court that Jennings was competent when she executed a deed on August 24, 2000. Specifically, Sudmeier argues that the trial court erred in ruling that he failed to meet his burden of proof to show that at the time the deed was executed, Jennings lacked the mental capacity to execute said deed and that she was under undue influence at the time the deed was executed to Bill Wallace. We affirm.
At trial, appellant, who lived in Meridian, Idaho, testified that he was his mother's court-appointed guardian as well as the successor trustee for the Paul Jennings Family Trust. He related that in the late summer of 2000, he had determined that his mother could no longer
handle her rental properties in Springdale, Arkansas, and had contacted one of her friends for help in determining market values of the three properties so that he could list them for sale. When the friend attempted to visit one of the properties, the tenant, Bill Wallace, refused her request; when Sudmeier contacted Wallace, Wallace told him that he had purchased the property from Jennings. Sudmeier stated that this information was a total surprise because he had not seen a deposit to Jennings's checking account that would represent the equity in that property. When Sudmeier found out about the deed to Wallace, he asked his mother about it, and she denied that she had sold the property. He said that he had to discuss the issue with her twelve to fifteen times before she acknowledged that the sale had probably taken place.
Sudmeier said that approximately nine months prior to his mother's execution of the deed to Wallace, in November and December 1999, she had been hospitalized at Washington Regional Medical Center and Brookstone after she had been found lost and disoriented in Missouri. She had told Sudmeier that she was going to Iowa to collect the million-dollar prize in the Publisher's Clearinghouse Sweepstakes. Sudmeier said that his involvement in that hospitalization was limited; that to his knowledge his brother James had no involvement with the hospitalization; and that his sister, Marilyn Berg, was the person who had almost exclusive interaction with their mother and the hospital staff during that time.
Sudmeier said that his mother was in denial during that hospital stay because she never believed that there was anything wrong with her, and she never accepted the diagnosis of dementia made during that hospital stay. Sudmeier stated that he was surprised at that diagnosis as well because no one had ever "put a label on it." He said that his understanding of dementia was that it was "an inability to comprehend and engage in normal, rational thinking" and that it was a progressive illness that would just get worse over time.
After the diagnosis of dementia, Sudmeier and his sister, who lived in Wisconsin, agreed that one of them should go to Springdale every three or four months to check on their mother and to have more "personal contact" than they had previously; he thought that his sister went to Springdale in the spring and that he went in July 2000, prior to his mother's execution of the deed in question. He also said that he talked to his mother on the phone a lot, but that they were not conversations, per se, because she was unable to hold a train of thought for very long and was difficult to converse with during the phone conversations.
Sudmeier said that when he arrived in July 2000, his mother told him that she recognized his face, but could not place him; when he told her that he was her son, she let him inside. Upon review of her files and records, he said that it became very clear to him that she had lost her ability to stay organized; however, he did not immediately take steps to put her in a nursing home because it was "never suggested to me that that was the thing to do" and he did not feel that it was appropriate. Instead, he and his sister enlisted the help of local governmental agencies and adult protective services to attempt to accommodate their mother's wishes to stay in her own home. Sudmeier said that the fact that his mother was able to dress herself and make and eat meals indicated to him that her diagnosis of dementia was not causing a problem at that time.
He said that he found many notes and memoranda in his mother's files, and some documents that had to do with the Bill Wallace transaction. He also found a copy of a $3500 check written on one of his mother's accounts that she did not use often made out to Bill Wallace. The date of the check was August 18, 2000, six days prior to the date of the execution of the deed, and although the signature was his mother's, the name on the check and the amount of the check was not in her handwriting.
Sudmeier also found that his mother was spending $600-$1200 per month for sweepstakes, and that she kept a binder on those sweepstakes communications, as well as other binders for psychics and "religious folks." She paid $6000 for her driveway to be resurfaced, and $5000 for a subscription to Wall Street Underground to make money trading yen. All of these things led Sudmeier to believe that he needed to take a more active role in managing his mother's affairs; however, his mother resisted most of his efforts, although she did agree to some matters, including that she needed to sell her rental properties.
On cross-examination, Sudmeier stated that he never functioned as a successor trustee until his mother was declared incompetent, and that he never had any trust obligations until she was declared incompetent. He did not believe that his mother was incompetent in 1999 or 2000 because no one had used the word "incompetent," but he accepted the conclusion that she was incompetent after the diagnosis was given by medical doctors in 2001.
Sudmeier said that he was given a durable power of attorney by his mother and her husband in 1990 that gave him the power to transact their business if there were two medical opinions that stated that they were incapable of doing so, and he began to take action for his mother under that power sometime in early 2000 after she was released from Washington Regional Medical Center. However, he said that he ran into a problem with Arvest Bank in particular regarding the sufficiency of the medical opinions to trigger the durable power of attorney.
With regard to the family trust, the real property placed into the trust included three rental properties, the Jennings's residence, and some land in Wisconsin. Sudmeier testified that one of the rentals was sold to Bill Wallace in August 2000, and that he sold the other two properties in 2001 under his durable power-of-attorney authority. He said that he was paying for his mother's expenses at an assisted-living facility in Minnesota through the funds of the trust; that the trust income provided for her needs as long as she was alive; and that he, his sister, and his brother, although beneficiaries of the trust, would not receive any income or benefits while their mother was alive.
Sudmeier acknowledged that he had received a letter from his brother after their mother was found in Missouri stating that they needed to get their mother some help or into an assisted-living facility where she could get some help. However, Sudmeier said that he did not agree with his brother at that time that she needed to be in a retirement home or an assisted-living facility.
Sudmeier testified that he was unaware that he had the authority to review his mother's medical records and obtain information about her medical condition after she was admitted to Washington Regional in 1999, and he never attempted to exercise his durable power of attorney at Washington Regional to review those records, although he was concerned about whether his mother could take care of herself after she was diagnosed with dementia. He said that he felt adequately apprised of the situation because his sister was keeping him updated on their mother's condition. He said that no one communicated to him in November 1999 that his mother was temporarily incapacitated, although a November 16, 1999 psychiatric progress note stated that the family needed a power of attorney to be in effect because Jennings was temporarily incapacitated by her confusion. Sudmeier said that although he knew there was a problem, he did not understand that someone suffering from dementia would be temporarily incapacitated. He said that he and his sister did not want to overreact, but they arranged for a caretaker to move into the other half of Jennings's duplex on January 1.
Sudmeier remembered a conversation with one of his mother's doctors, Dr. Chambers, in November 1999 where his mother's resistance to having help was discussed, and he said that the subject of obtaining a guardianship probably came up in the conversation as well. However, he said that he did not attempt to obtain a guardianship at that time because there was no recommendation that he do so. Although the doctor noted that his mother was no longer able to make medical or financial decisions in her best interest, he did not take that to mean that she needed a guardian. He said that although the family was appreciative of the doctor's direction, he wondered how they could do the things suggested because his mother was so independent and resistant to having assistance.
Sudmeier took no action from January 2000 until August 2000 to see that his mother saw any mental-health professionals. However, he said that they arranged for medical personnel from the adult protective-care service to come to her house during that time period. Sudmeier recalled talking to another of his mother's doctors, Dr. Nutter; that Dr. Nutter would not release any medical records until he provided her with the power of attorney; and that she did not release all of the records then. He said that he did not request all of the records, but that he had his attorney do so. However, he said that he did not understand the medical records, except for Dr. Nutter's main medical conclusion.
Sudmeier recalled that another doctor, Dr. Dollins, believed that his mother should stop driving at some point, but he could not recall if Dr. Dollins specifically told him when she should stop. He said that although they were not happy about her driving, she was able to make her limited rounds to the grocery store, mailbox, hair appointments, and doctor appointments, and they did not think that it was a problem. He said that they were concerned about her safety and other drivers' safety, but they did not ask for her car to be taken away until several months later, probably the latter part of 2001.
Sudmeier characterized his and his sister's handling of their mother's affairs as brilliant and totally appropriate, although they did not anticipate the trickery used to obtain title to the rental property in question at the trial. He said that his mother's bills were paid and that she got to stay in her own home longer that she might have. However, he said that he was unaware of the extent of her problems in June 2000 and did not grasp the full significance of dementia. He denied that he was in any position to diagnose where his mother was in the progression of her dementia, and he did not think that someone should have taken over her financial activities in late 1999.
Sudmeier was also questioned regarding the sale of another of his mother's rental properties in January 2001 for which she signed the warranty deed. He said that he was not present at the closing and did not sign the deed, but that he was involved in that transaction, he knew what property was being sold, and he knew the price for which the property was selling. He stated that he did not regard that transaction as a "big deal" because it had no adverse effect on her estate. He also stated that he did not consider his mother to be incompetent in January 2001 when that deed was signed.
Dr. Terry Efird, a psychologist, testified that he assessed and evaluated Jennings on November 3 and 10, 2000, at the request of her attorney, Charlie Davis. He said that Jennings was rambling and would lose her train of thought very often. Jennings believed that her children considered her a money source without end and were trying to get rid of her. She specifically believed that her son Paul was stealing things from her. Efird attempted to administer the Wechsler Memory Scale test, but Jennings was quite resistant, and there were many aspects of the test that he was unable to administer due to her refusal or her inability to perform the task requested. Efird stated that Jennings became very frustrated when she could not perform the task she was asked to do, but she would perform the tasks that she was able to do.
Efird diagnosed Jennings with dementia, which he said was by definition a loss of cognitive functioning in at least two areas, one of which has to be memory. He said that although there were some types of reversible dementia, dementia, in and of itself, was not curable. Efird concluded in November 2000 that Jennings was not able to look after her own finances, and he stated at trial that his conclusion was expressed with a reasonable degree of medical certainty. Efird also reviewed additional medical records since his examination of Jennings, specifically a MRI from the Mayo Clinic that found marked diffused cerebral atrophy. He said that those findings were exactly what was found with dementia, especially when they are classified as "moderate to marked." Efird stated that it was not a close call about whether Jennings should have been able to look after her own finances in November 2000 - in his opinion, she could not do so.
On cross-examination, Efird said that even if a person was diagnosed in November 1999, they may have had dementia in November 1998 or 1997. He could not state the rate of decline Jennings was experiencing; however, he opined that since he concluded that she could not care for her finances in November 2000, that she could not care for her finances in January 2001. He said that while it was true that a person with dementia would have good days and bad days, you do not get better than the day before. Efird said that he did not recall telling Sudmeier that he ought to take some protective steps to take care of Jennings, whether or not there should be a guardianship, whether she should be driving, or discussing her personal safety.
Charlie Davis testified that he met Jennings after her problems in Missouri in late 1999. He said that he prepared a deed at his office on August 24, 2000, at Jennings's direction, and he witnessed her sign that deed on the same date. He explained that two or three days before the deed was executed, Jennings came in and wanted to convey a parcel of property to Bill Wallace. Wallace came with Jennings, and Davis told Wallace that he was not familiar with how the property was held. Davis told Wallace that if he was interested in buying the property, he should go to an abstract company and satisfy himself that Jennings could convey the property, and that Wallace called him and said that he was satisfied Jennings could convey the property. He said that Wallace wanted to come by, but Davis told him not to come unless Jennings came as well.
Davis said that Jennings and Wallace came to his office on August 24, 2000, and in the absence of Wallace, Davis asked Jennings a series of questions to satisfy himself that she knew the value of the property, who her children were, and why she was conveying the property. However, he stated that he could not verify if her responses were correct, and in fact one answer was incorrect, but he said that there were no responses that made him think that there was something wrong. He said that Jennings told him that Wallace was a friend of hers, that he had rented the property for a number of years, and that she would give it to him in exchange for him paying off the mortgage. Davis testified that without question, on the day Jennings signed the deed, she was completely "with it." He said that he understood that Wallace was going to assume the mortgage on the property, and he did not discern that Wallace was exerting any undue influence on Jennings at the time of the execution of the deed. He said that the fact that Jennings was diagnosed in the fall of 1999 with dementia would not change his opinion about her capacity on August 24, 2000, the day she signed the deed, because she was completely and totally at herself on that day. On August 31, 2000, Davis completed an affidavit for his file regarding the events surrounding the August 24, 2000 execution of the deed.
Dr. Ronald McInroe, a psychologist, testified that he assessed Jennings in July 2001, and he determined that Jennings was functioning in the mild range of mental retardation. Although his original diagnosis was dementia NOS, his last report stated dementia of the Alzheimer's type, or frontotemporal dementia, which was progressive dementia. Based upon his testing and the medical records, McInroe concluded that Jennings was not competent on August 24, 2000. McInroe admitted that it was possible that Jennings got the questions right that Davis asked her on that day, but he said that within a 24-hour period, there could be periods of lucidity or periods of significant cognitive dysfunction. He said that even if the answers she gave Davis were true, that would still not change his opinion regarding her competency. He believed that there was a high probability that Jennings could not rationally or factually make decisions regarding her finances in August 2000, based upon the medical records. He also believed that the dementia process, based upon the MRI and the other data, had been going on for a long time, before 1999; however, he could not say with precision the exact date that Jennings became legally incompetent.
Marilyn Berg, Sudmeier's sister and Jennings's daughter, testified that she had conversations with her mother's tenants after her mother was diagnosed with dementia in 1999. One of those conversations was with Rilene Wallace, Bill Wallace's wife. She said that she called the tenants to tell them that her mother was in the hospital and had been diagnosed with dementia, and that if there were any problems with the rental properties, they could call her or Paul.
Marilyn said that when she was in Springdale in July 2000 to meet with her brother Paul, her mother was not running the air conditioner even though it was over 90 degrees outside. When asked why she did not have the air conditioner on, Jennings said that she did not know how to do it. In October 2000, when Berg asked Jennings if she had sold or given a house to Bill Wallace, Jennings told her no. Berg also testified, like Sudmeier, that they were trying to do what they needed to do for their mother's best interest without taking drastic measures.
Bill Wallace testified that Jennings had given him several things, including a sofa, kitchen table, chairs, and silverware. He said that he had not given Jennings anything of monetary value except for rent, and that he was just her friend. He said that Jennings came to his business often to visit. He also said that he did not know that Jennings had been hospitalized for a mental problem until after she deeded him the property in 2000, and that he would not even have talked to her about the property if he had known that, because it would not have been proper for her to have deeded him the property.
Wallace said that the August 24, 2000 transaction was brought up between him and Jennings several days before the deed was signed. He did not recall that she ever told him that she was going to give him the property, but that they talked about the fact that he had been paying rent over the years, and they talked about him assuming the loan and using the rent from over the years to be payment for the property. He said that on the day the deed was signed, he was in the office while Davis asked Jennings questions because he just assumed that he needed to be there.
Wallace admitted that Jennings had given him loans over the years, but he said that all of the loans were not interest free. He remembered one loan she gave him through a credit-card advance, and that he paid the interest on it. He said that he did not see anything wrong with borrowing $3500 from her on August 18, 2000, with no interest, and that they did not talk about whether such a loan was fair to Jennings. He said that Jennings was a lonely lady; that his family paid attention to her; that his family would do different things for Jennings; and that Jennings would in turn do things for them.
Judy Friesen, another of Jennings's tenants, testified that Jennings tried to sell that rental property to her for the mortgage payoff of less than $10,000. However, she declined the offer because it was not fair to Jennings, and she ultimately bought the property for$53,000. She said that she first knew that there was something wrong with Jennings in early 2000.
Amber Friesen, Judy's daughter, testified that she had been hired in December 1999 by Sudmeier and Berg to care for Jennings. She said that she met Bill Wallace shortly after she was hired when he came to see Jennings. The next time she saw Wallace, around August 2000 at her parents' house, he told her that he was going to help Jennings sell her properties; however, Wallace denied making that statement.
Rilene Wallace testified that when she talked to Marilyn Berg in 1999, the only thing she was told was that Jennings was in the hospital with some kind of infection. She did not remember Berg telling her that Jennings had been diagnosed with dementia.
In his written order, the trial judge stated:
I have listened carefully to the testimony of all of the parties and their witnesses. I have read, with some care, the exhibits that were put into evidence, and I have had an opportunity to personally observe the parties and the participants, watched their body language, their demeanor and listened to the tone of their voices as they testified. I have had a full opportunity to judge the consistency or inconsistency of the testimony. I certainly have had an opportunity to come to a conclusion concerning the credibility of the witnesses through personal observation. The findings of fact and conclusions of law that I am about to give rely in no small measure upon the ability to personally observe the witnesses as they testify.
. . . .
The Court concludes and finds that Mr. Sudmeier's actions are inconsistent with the belief that his mother was unable to handle her financial affairs or that she failed to meet the legal definition of competency as set forth above.
. . . .
Concerning the date in question in this litigation, attorney Davis testified after questioning Ms. Jennings on matters relating to her competency that, "Without question, on the day the Deed was signed, she was completely with it." Mr. Davis's demeanor on the witness stand convinces this Court that his testimony was both credible and that his conviction on the matter was firm. Mr. Davis also testified that his questioning of Ms. Jennings was to satisfy himself that there was no undue influence in connection with the proposed transfer.
He concluded, after talking to Ms. Jennings, that she was completely and totally "at herself" that day. He additionally concluded that she was not particularly happy about the things that were happening to her properties and she had concluded that she would give the Wallaces the property. The testimony from Mr. Wallace indicates that this was not the first kindness from Ms. Jennings to the Wallace family. It seems clear that Ms. Jennings derived pleasure from her relationship with the Wallace family.
The testimony, taken as a whole, convinces this Court that Ms. Jennings was ruggedly independent and that this independence had resulted in increasing resentment of her children. At the same time that resentment of family members was increasing, she apparently befriended the Wallaces, whose company she enjoyed. While there was some disputed testimony about the motives of the Wallaces, that proof falls short of the proof required to show undue influence or fraud.
The Court concludes, on sharply conflicting evidence, that the Plaintiff has failed to meet his burden of proving by a preponderance of the credible evidence that the Deed in question should be set aside as a result of alleged incompetency by the Grantor, nor has he proven that the Deed should be set aside for fraud or undue influence practiced by the Grantee. . . . Accordingly, Plaintiff's Complaint should be dismissed with prejudice.
Cases to set aside a deed are reviewed de novo on appeal; however, the trial court's findings of fact are not reversed unless they are clearly erroneous. Estate of McKasson v. Hamric, 70 Ark. App. 507, 20 S.W.3d 446 (2000). We defer to the superior position of the trial judge to assess the credibility of the witnesses. Id.
The party challenging the sufficiency of the mental capacity of a grantor to make a deed bears the burden of showing the lack of mental capacity by a clear preponderance of the evidence. Millwee, E'xr v. Wilburn, 6 Ark. App. 280, 640 S.W.2d 813 (1982). Each case regarding mental capacity must be decided on its own facts and circumstances, and some of the factors to be considered are the grantor's age, health, and whether the purchase price is grossly inadequate; evidence of the grantor's mental condition both before and after the execution of the deed is also relevant to her mental condition at the time of the execution of the deed. Estate of McKasson, supra. If the maker of a deed, will, or other instrument has sufficient mental capacity to retain in his memory, without promptings, the extent and condition of his property, and to comprehend how he is disposing of it, and to whom, and upon what consideration, then he possesses sufficient mental capacity to execute such instrument. Estate of McKasson, supra. When it is contended that a deed was obtained through fraud or duress, the proof of such must be by clear, cogent and convincing evidence before the deed can be set aside. Millwee, supra.
It appears that appellant has for the most part abandoned his undue influence argument on appeal, as this issue is only mentioned in passing in his argument, which is mainly directed toward the issue of Ms. Jennings's mental capacity. Nevertheless, we hold that the trial judge did not err in finding that appellant failed to present clear and convincing evidence of undue influence on the part of the Wallaces. At best, the evidence was in dispute as to the motives of the Wallaces; however, the trial judge determined that Ms. Jennings had befriended the Wallaces before and seemed to enjoy their company, and that was why she executed the deed.
With regard to mental capacity, the trial judge expressly found the testimony of Charles Davis, the attorney who prepared the deed and was present at its execution, to be credible with regard to Ms. Jennings's mental capacity. He further found that appellant's actions were inconsistent with a belief that his mother was unable to handle her financial affairs or that she was incompetent. The trial judge is in the best position to determine the credibility of witnesses, and we defer to his determinations on these issues. Because of the sharply conflicting evidence in this case, our appellate standard of review, and the fact that the trial judge determined Davis's testimony to be credible with respect to Ms. Jennings's mental capacity on the date that she executed the deed, we hold that this case must be affirmed.
Due to our holding that Ms. Jennings was competent at the time she executed the deed in question, it is not necessary to address appellees' alternative argument - that even if Ms. Jennings was not competent at the time she executed the deed, appellant should be estopped from attacking the validity of the deed.
Pittman and Crabtree, JJ., agree.