BRANDON O. GIBSON, J.
This is an appeal from a probate court order denying an Estate's request to enter a writ of scire facias to show cause why a bank acting as trustee of certain funds should not be divested of those funds. The probate court determined in a prior case that the Estate's claim to the funds was barred by res judicata. The court of appeals affirmed the probate court's order and remanded the case for the sole purpose of resolving issues related to an award of attorney's fees to the bank. On remand, the Estate filed its request for a writ of scire facias before the court addressed the issue of attorney's fees. The probate court denied the Estate's motion, stating that it raised the same issues that multiple courts determined were barred by res judicata. The Estate appealed. We affirm the judgment of the probate court and award damages for frivolous appeal under Tennessee Code Annotated section 27-1-122.
This case has an unusual procedural history. Matters related to the Estate of John J. Goza have come before this Court on numerous occasions, and we only briefly restate the underlying facts giving rise to this appeal. For a more thorough recitation of the facts underlying this case, see this Court's opinion in Morrow v. SunTrust Bank, No. W2010-01547-COA-R3-CV, 2011 WL 334507 (Tenn. Ct. App. Jan. 31, 2011) (no perm. app. filed) ("Goza I").
In 1991, Helen B. Goza executed a Trust Agreement that created a Living Trust. Goza I, at *1. The Trust Agreement provided that the trust's assets be used for her benefit and for the benefit of her mentally disabled son, John J. Goza, during each of their lifetimes. Id. Ms. Goza amended the Trust Agreement in March 1999 and April 1999. Id. *1-2. The March 1999 Agreement provided that if John Goza survived Ms. Goza, the trustee should, upon her death, set aside a portion of the trust estate in a separate trust for the benefit of John during his lifetime, with the balance of the estate to be distributed to a Perpetual Trust for the benefit of organizations providing services to the mentally handicapped. Id. at *1. The March 1999 Agreement failed, however, to provide for a complete disposition of the assets remaining in the separate trust at John Goza's death. Id. The April 1999 Agreement provided that upon John Goza's death, $5,000 from the separate trust should be disbursed to the American Diabetes Association, with the remaining balance going into the Perpetual Trust benefitting organizations that serve the mentally handicapped. Id. at *2. Helen Goza died in May 2001 survived by her son. Id. John Goza died in September 2007 without issue. Id.
Goza I arose from a complaint for declaratory judgment filed against the Trustee of the Perpetual Trust, SunTrust Bank ("SunTrust"), by David L. Morrow and Judy M. Wright in Shelby County Chancery Court. Id. Mr. Morrow and Ms. Wright, Ms. Goza's nephew and niece, sought a declaration that the March 1999 Agreement failed to provide a complete disposition of the assets remaining in the separate trust at John Goza's death and, therefore, those should pass to them as Helen Goza's heirs according to the rules of intestate succession. Id. The Attorney General intervened and filed a motion for summary judgment on the grounds that the April 1999 Agreement superceded the March 1999 Agreement and provided for a full disposition of the assets. Id. In response, Mr. Morrow and Ms. Wright requested summary judgment be granted in their favor declaring the April 1999 Agreement null and void because it altered Ms. Goza's unambiguous statement of intent in the March 1999 Agreement. Id. at *3. Following two hearings on the motions, the chancery court granted the attorney general's motion for summary judgment in February 2010. Id. at *4. The chancery court found that the entire sequence of events showed Ms. Goza's intent was to provide a complete disposition of the trust assets to the Perpetual Trust at John Goza's death. Id. Mr. Morrow and Ms. Wright filed a motion to alter or amend the judgment, arguing for the first time that the April 1999 Agreement was legally ineffective to create the Perpetual Trust. Id. They argued that because the Perpetual Trust was ineffective, the proceeds of Ms. Goza's Living Trust should have been distributed to them through intestate succession. Id. In June 2010, the chancery court entered an order denying the motion to alter or amend, and Mr. Morrow and Ms. Wright appealed. Id. at *5.
While the appeal in Goza I was still pending, Mr. Morrow initiated separate proceedings in Shelby County Probate Court that would eventually lead to this Court's opinion in In re Estate of Goza, 397 S.W.3d 564 (Tenn. Ct. App. 2012), perm. app. denied (Tenn. Sept. 20, 2012) ("Goza II"). In October 2010, Mr. Morrow filed a petition in probate court requesting to be appointed personal representative of Mr. Goza's estate ("the Estate"). Goza II, at 566. The probate court granted the petition. Id. Acting in his capacity as personal representative of the Estate, Mr. Morrow filed a petition in the probate court to require SunTrust to turn over the trust assets in its possession to the Estate. Id. at 566-67. SunTrust replied, asserting that it would follow the terms of the April 1999 Agreement unless given contrary instructions by the court. Id. at 567. Prior to oral arguments on the petition, this Court issued its opinion in Goza I, affirming the chancery court's determination that the April 1999 Agreement validly provided for the disposition of the trust assets to the Perpetual Trust. Id. In light of this Court's opinion in Goza I, the probate court denied the Estate's petition as being barred by res judicata and/or the law of the case on May 27, 2011. Id. SunTrust requested a reimbursement for its attorney's fees incurred in defending the matter, which the probate court denied without prejudice. Id. at 571. The Estate appealed, and this Court affirmed in its opinion in Goza II, which was issued in April 2012. Id. This Court held that the Estate's claim was barred by res judicata because the Estate stood in the same legal relationship with regard to the subject matter of the litigation as Mr. Morrow had in Goza I. Id. The Goza II court also awarded SunTrust attorney's fees incurred on appeal and, because the probate court had not exercised its discretion on the issue of attorney's fees, remanded the matter to the probate court to determine whether an award of attorney's fees and costs incurred in the probate court was warranted. Id. at 571-72.
Meanwhile, in September 2011, Mr. Morrow initiated yet another lawsuit against SunTrust and several of its employees in his capacity as the Estate's personal representative, this time in Shelby County Circuit Court. The circuit court proceedings led to this Court's opinion in Estate of Goza v. Wells, No. W2012-01745-COA-R3-CV, 2013 WL 4766544 (Tenn. Ct. App. Sept. 4, 2013), perm. app. denied (Tenn. June 13, 2014) ("Goza III"). SunTrust filed a motion to dismiss, arguing that the circuit court lacked subject matter jurisdiction because the case concerned administration of a trust.
While the appeal in Goza III was pending before this Court, proceedings continued in the probate court on remand from Goza II. The present appeal arises from those proceedings. In November 2012, Mr. Morrow requested to resign his position as the Estate's personal representative so that his attorney, Larry Parrish, could be appointed in his place. In February 2013, the probate court denied Mr. Morrow's request.
Notwithstanding the probate court's denial of his resignation, the Estate's counsel initiated further proceedings on the Estate's behalf premised on the belief that Mr. Morrow's resignation was effective. In April 2013, the Estate filed a motion requesting that the probate court issue a writ of scire facias requesting that SunTrust appear and show cause why it should not be divested of the trust assets remaining in its possession. The Estate asserted that the judgments of Goza I and Goza II only applied to Mr. Morrow and did not preclude the Estate from challenging the existence of the Perpetual Trust so long as Mr. Morrow was no longer the Estate's personal representative. Less than a week later, SunTrust filed a motion to strike the Estate's motion for writ of scire facias. The probate court conducted a hearing on the competing motions and issued a memorandum opinion and order on June 4, 2013.
In its June 4 order, the probate court denied the Estate's motion for writ of scire facias. In part, the probate court stated:
The probate court did not hide its frustration with the Estate's continued attempts to challenge the existence of the Perpetual Trust:
(Internal citations omitted.)
On June 12, 2013, the Estate filed a motion to alter or amend the judgment, once again challenging the existence of the Perpetual Trust and claiming its right to the funds in SunTrust's possession. The Estate filed over 250 pages of supplements and memorandums accompanying the motion. On September 3, 2013, the probate court denied the Estate's motion to alter or amend the June 4 order. On October 2, the Estate filed a notice of appeal pursuant to Rule 3 of the Tennessee Rules of Appellate Procedure. The court of appeals assigned the appeal number W2013-02240-COA-R3-CV to the appeal.
Meanwhile, proceedings continued in the probate court to resolve the attorney's fees issues for which the case was remanded in Goza II. The probate court entered a final judgment on attorney's fees in November 2013. The Estate did not appeal the final judgment on attorney's fees.
In January 2014, the court of appeals ordered that the Estate's appeal from the order of June 4, 2013 be heard along with its appeal from a February 1, 2013 order denying Mr. Morrow's petition to resign as personal representative of the Estate. The Estate's appeal from the February 1 order was assigned the appeal number W2013-00678-COA-R3-CV. The court of appeals ordered that proceedings in each appeal be stayed pending a final judgment in the probate court. SunTrust filed a response in and asserted that the probate court had already entered a final judgment. After reviewing the probate court's orders, the court of appeals lifted the stays in both appeals and ordered that the briefing schedules in each appeal run concurrently. This Court heard oral arguments in each appeal on October 22, 2014, in Nashville. Considering the unusual procedural history of this case, we emphasize that this opinion is concerned only with the merits of appeal W2013-02240-COA-R3-CV from the June 4 order denying the Estate's motion for writ of scire facias.
The issues presented on appeal, as we have restated them, are:
In order to address the Estate's substantive arguments in this case, we must first address the threshold issue of whether this Court has subject matter jurisdiction to hear the appeal. SunTrust contends that this Court lacks jurisdiction to hear the appeal because the probate court's June 4 order was not a final order capable of vesting this Court with jurisdiction. SunTrust points out that the June 4 order did not resolve all of the claims pending before the probate court. Rather, it left unresolved issues related to SunTrust's award of attorney's fees-the only issues for which the case was remanded.
The Estate did not file an application for permission to appeal pursuant to the interlocutory processes described in Rule 9 or Rule 10 of the Tennessee Rules of Appellate Procedure, and the order was not certified as final pursuant to Rule 54.02 of the Tennessee Rules of Civil Procedure. The Estate filed a notice of appeal as of right from the June 4 order pursuant to Rule 3 of the Tennessee Rules of Appellate Procedure.
Under Rule 3, only a final judgment in a civil action is appealable as of right. In re Estate of Ridley, 270 S.W.3d 37, 40 (Tenn. 2011). Tennessee courts have generally defined a final judgment as "one that resolves all the issues in the case, `leaving nothing else for the trial court to do.'" In re Estate of Henderson, 121 S.W.3d at 645 (quoting State ex rel. McAllister v. Goode, 968 S.W.2d 834, 840 (Tenn. Ct. App. 1997)). Conversely, an order that adjudicates fewer than all of the claims or the rights and liabilities of fewer than all of the parties is generally not final or appealable as a matter of right. State ex rel. Garrison v. Scobey, No. W2007-02367-COA-R3-JV, 2008 WL 4648359, at *5 (Tenn. Ct. App. Oct. 22, 2008) (no perm. app. filed).
There are obvious concerns regarding the finality of the probate court's June 4 order. At the time the order was entered, the probate court had not addressed pending issues regarding attorney's fees. However, we recognize the difficulty of applying the final judgment rule of Rule 3 to probate proceedings, which often contain multiple intermediate orders that are final with regard to certain discrete issues. Indeed, many states have significantly relaxed the degree of finality required for appealing an order in probate proceedings. See e.g. Bank of the Ozarks v. Cossey, 2014 Ark.App. 581, ___ S.W.3d ___, at *3 (Oct. 29, 2014 Ark. Ct. App) (stating that Arkansas courts allow an intermediate appeal from almost any probate order); De Ayala v. Mackie, 193 S.W.3d 575, 578 (Tex. 2006) ("Probate proceedings are an exception to the `one final judgment' rule."). The June 4 order, though clearly not final with regard to all of the issues pending before the probate court at the time, is final with regard to the discrete issue of the request for a writ of scire facias.
Though we do not create any exception to the final judgment rule with this opinion, Rule 2 of the Tennessee Rules of Appellate Procedure permits us to suspend the final judgment requirement in our discretion if we find "good cause" to do so. In the past, this Court has exercised that discretion because "judicial economy is best served by addressing the issues on their merits in this appeal." Parker v. Lambert, 206 S.W.3d 1, 4 (Tenn. Ct. App. 2006). Considering the immense amount of resources already expended in this litigation, in which Mr. Morrow and the Estate have already attempted to litigate the same issue in multiple courts, we conclude that in the interest of judicial economy good cause exists for us to suspend the finality requirements of Rule 3.
Notwithstanding previous rulings to the contrary in the probate court and circuit court, both of which were affirmed by this Court, the Estate contends on appeal that it is not barred by res judicata from challenging the existence of the Perpetual Trust. We disagree. The Estate's challenge is barred, yet again, both by res judicata and the law of the case doctrine.
The doctrine of res judicata bars a second suit between parties or their privies on the same claim with respect to all issues which were, or could have been, litigated in a former suit. Jackson v. Smith, 387 S.W.3d 486 (Tenn. 2012) (citations omitted). Its primary purpose is to promote finality in litigation, prevent inconsistent or contradictory judgments, conserve judicial resources, and protect litigants from the cost and vexation of multiple lawsuits. Id. (citations omitted). Res judicata is not based on a presumption that the final judgment in the former suit was right or just. Moulton v. Ford Motor Co., 533 S.W.2d 295, 296 (Tenn. 1976); see also Mullins v. State, 294 S.W.3d 529, 537 n.3 (Tenn. 2009) ("[E]ven an erroneous judgment is entitled to preclusive effect as long as all the other prerequisites have been met."). Rather, it is justified by public policy that requires reliability of final judgments and an end to litigation. State v. Thompson, 285 S.W.3d 840, 848 (Tenn. 2009); Moulton, 533 S.W.3d at 296.
A party asserting a defense of res judicata must demonstrate (1) that the underlying judgment was rendered by a court of competent jurisdiction, (2) that the same parties or their privies were involved in both suits, (3) that the same claim or cause of action was asserted in both suits, and (4) that the underlying judgment was final and on the merits. Jackson, 387 S.W.3d at 491. The probate court's ruling that the Estate's claim is barred by the doctrine of res judicata involves a question of law, which we review de novo on appeal with no presumption of correctness. In re Estate of Boote, 198 S.W.3d 699, 719 (Tenn. Ct. App. 2005).
In the probate court, the Estate argued that its present challenge is not barred by res judicata because it was not initiated by Mr. Morrow on behalf of the Estate.
This Court's opinions in Goza II and Goza III clearly state that the Estate is barred by res judicata from challenging the existence of the Perpetual Trust. It does not matter who acts as personal representative for the Estate when the challenge is made or who initiates the proceedings on behalf of the Estate; the Estate itself is barred from bringing such a challenge.
The Estate further argues that it is not barred from challenging the existence of the Perpetual Trust because all statements that the Perpetual Trust was ever created or is now in existence are based on "ipse dixit"
This argument is yet another failed attempt to circumvent res judicata and challenge the existence of the Perpetual Trust. As we stated previously, the doctrine of res judicata bars a second suit on the same claim with respect to all issues which were, or could have been, litigated in a former suit. Jackson v. Smith, 387 S.W.3d 486 (Tenn. 2012) (citations omitted). In determining the scope of res judicata with regard to claims that could have been brought in a previous suit, Tennessee courts have used the transactional approach found in Second Restatement of Judgments § 24. Creech v. Addington, 281 S.W.3d 363, 379-82 (Tenn. 2009). The transactional approach provides:
Restatement (Second) of Judgments § 24(1). Under that standard, the concept of a transaction is used in a broad sense, connoting a natural grouping of claims arising from a common nucleus of operative facts. Creech, 281 S.W.3d at 380. The questions of whether the April 1999 Agreement was valid and whether it created the Perpetual Trust clearly arise from a common nucleus of operative facts. Accordingly, both questions could have been raised in the chancery court proceedings that ultimately led to our decision in Goza I. Indeed, Mr. Morrow and Ms. Wright did challenge the existence of the Perpetual Trust in a motion to alter or amend filed in the chancery court. Goza I, 2011 WL 334507, at *4. The chancery court denied the motion. Id. at *5. On appeal, we noted that the issues were raised before the chancery court, though they were not raised on appeal. Id. at *7. Because the issue of whether the Perpetual Trust exists could have been brought in the chancery court proceedings, it is barred by res judicata.
In sum, this Court's opinion in Goza I was rendered by a court of competent jurisdiction, the plaintiff in Goza I is in privity with the Estate in this case, the Estate's claim in this case could have been brought in Goza I, and the judgment of the court in Goza I was final and on the merits. As such, res judicata bars the Estate from challenging the existence of the Perpetual Trust.
In addition to being barred by the doctrine of res judicata, we find that the Estate's appeal is barred by the law of the case doctrine. The law of the case doctrine was explained by the Tennessee Supreme Court in Memphis Publishing Co., v. Tennessee Petroleum Underground Storage Tank Bd., 975 S.W.2d 303 (Tenn. 1998):
Memphis Publg. Co., 975 S.W.2d at 306 (internal citations omitted).
The issues raised in this appeal are identical to those originally argued before Judge Benham in the probate court and before this Court on appeal in Goza II. Neither the first nor the third exception to the law of the case doctrine apply in this case. The Estate argues that this case falls under the second exception, which states that "the prior ruling was clearly erroneous and would result in a manifest injustice if allowed to stand." Id. For the reasons laid out above, we do not find that the probate court's prior ruling was clearly erroneous or that allowing it to stand would result in manifest injustice. Accordingly, the Estate is also barred by the law of the case doctrine from challenging the existence of the Perpetual Trust.
Finally, SunTrust requests that it be awarded reasonable attorneys' fees and costs because the Estate's appeal was frivolous. Tennessee Code Annotated section 27-1-122 provides:
This statute reflects the view that successful parties should not have to bear the costs and vexation of baseless appeals. Henderson v. SAIA, Inc., 318 S.W.3d 238, 342 (Tenn. 2010). The decision to award damages for a frivolous appeal rests solely in the discretion of this Court. Chiozza v. Chiozza, 315 S.W.3d 482, 493 (Tenn. Ct. App. 2009). In exercising that discretion, however, we must take care not to do so in a manner that would discourage legitimate appeals. Henderson, 318 S.W.3d at 342. Accordingly, imposing a penalty for a frivolous appeal is a remedy reserved for obvious cases of frivolity and should not be asserted lightly or granted unless clearly applicable. Id. (citations omitted).
In the instant case, given the previous judgments of this and other courts on the same issues raised by the Estate, we can only conclude that the Estate's appeal had "no reasonable chance of success." Cf. Whalum v. Marshall, 224 S.W.3d 169, 181 (Tenn. Ct. App. 2006). Our finding should not come as a surprise to the Estate, given the past statements of this Court and the lower courts in dealing with the issue. In 2011, when the Estate first sought to challenge the existence of the Perpetual Trust in probate court, Judge Benham stated that "the current action is questionable if not frivolous at best. . . ." Despite that statement and this Court's opinion in Goza II affirming Judge Benham's order, the Estate sought to again challenge the existence of the Perpetual Trust again on remand, when the case was remanded only for a determination of whether attorneys' fees and costs were warranted. In the June 4 order denying the Estate's motion, Judge Gomes stated that "[t]his latest effort by the Estate to raise the same issues is frivolous" and that "[n]ever has this Court seen such egregious abuse of the system." Most recently, this Court stated in Goza III that the Estate's challenge to the existence of the Perpetual Trust in that case "had no reasonable chance of success" and awarded SunTrust damages pursuant to section 27-1-122. 2013 WL 4766544 at *6. Thus, even in spite of a previous opinion of this Court finding an identical challenge by the Estate to be frivolous, the Estate has once again attempted to challenge the existence of the Perpetual Trust, thereby causing needless waste of judicial resources and further depleting funds held in the Perpetual Trust for the benefit of organizations serving the mentally disabled. Under these circumstances, we find that SunTrust is entitled to reasonable fees and costs pursuant to Tennessee Code Annotated section 27-1-122.
In light of the foregoing, the judgment of the probate court is affirmed. Appellee SunTrust Bank is awarded damages for a frivolous appeal pursuant to Tennessee Code Annotated section 27-1-122. This matter is remanded to the trial court only to assess damages pursuant to section 27-1-122 and for the collection of costs. Costs on appeal are taxed to the Appellant, Estate of John J. Goza, and its surety, for which execution may issue if necessary.
Chancery courts and other courts of record having probate jurisdiction:
