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Kryder v. Estate
Citation: 296 F. Supp. 3d 892Docket: No.: 1:13–cv–00048
Court: District Court, M.D. Tennessee; November 2, 2017; Federal District Court
A dispute over the enforceability of a Promissory Note between Patricia Porter Kryder and James Kemmler Rogers has evolved into a lengthy legal battle spanning state and federal courts. The conflict began with Kryder filing a declaratory judgment action in the Chancery Court of Giles County, Tennessee, which was later removed to federal court based on diversity jurisdiction. After nearly four years and multiple attempts at settlement, Jennifer Rogers-Etcheverry, as the special administrator of Rogers' estate, filed a Motion for Summary Judgment, marking her second attempt to resolve the matter, while the parties have collectively made three similar motions. The background involves a non-traditional landlord/tenant arrangement established in 2007, where Rogers resided at Kryder's property in exchange for caretaking services and rent that was flexible based on his financial situation. In January 2010, they agreed that Rogers would pay a lump sum of $50,000 to settle his rent obligations, formalized in a Promissory Note. Following a fire that damaged Kryder's property, Rogers agreed to reimburse her for damages. A second Promissory Note for $100,000 was executed on April 16, 2010, consolidating previous amounts owed, with reductions based on rent and fire loss reimbursements. In May 2012, following Rogers' serious car accident, Etcheverry traveled to Kryder's property without permission and removed important documents related to their business transactions. This incident has further complicated the ongoing litigation. Etcheverry admitted to law enforcement that she removed documents and property while Rogers was hospitalized. Kryder alleged that on June 3, 2012, Etcheverry took Rogers' personal property from Kryder's residence, after which Etcheverry and Rogers flew to California. On September 12, 2012, when Rogers was reportedly "mentally incapacitated," Etcheverry, through her attorney, sent Kryder a letter claiming unpaid interest on two Promissory Notes and demanding payment, despite the $100,000 Note acknowledging the satisfaction of the $50,000 Note. A subsequent letter on February 20, 2013, demanded full payment of the April 16, 2010 Note by March 15, 2013. Kryder responded that Rogers owed her $40,000 for past due rent, pasture fees, and fire-related damages. Consequently, Kryder asserted claims for breach of contract, breach of the implied duty of good faith and fair dealing, and quantum meruit against Rogers and Etcheverry, seeking an accounting and a declaration regarding the application of prepaid interests, rent debts, and damages against the Promissory Note. After the case was moved to court on May 16, 2013, Kryder filed an Amended Complaint reiterating her claims. Etcheverry and Rogers responded with an Answer and Counterclaim, which they amended twice. In the Second Amended Answer and Counterclaim, they denied most allegations but acknowledged an agreement allowing Rogers to live at the Lynnville residence without rent in exchange for maintenance duties. They conceded that two Promissory Notes for $50,000 and $100,000 were executed but claimed the funds were for attorney's fees, not rent or damages. Etcheverry stated she entered the residence with a key from her father and removed personal belongings with Kryder's permission. The Counterclaim alleges breach of contract and unjust enrichment, seeking equitable relief through a lien on Kryder's property to secure the Notes. Etcheverry filed the Second Amended Answer as attorney-in-fact for the incapacitated Rogers. Following Rogers' death on June 11, 2014, Etcheverry requested substitution as Counter-Plaintiff in her capacity as Special Administrator of Rogers' estate. On December 19, 2014, Judge William J. Haynes granted a motion related to the case, despite Kryder's subsequent Motion to Reconsider, which argued for jurisdiction in the Giles County Chancery Court for Rogers' estate claims. Judge Haynes dismissed these arguments and confirmed a substitution order on March 9, 2015. The current proceedings involve Etcheverry's Motion for Summary Judgment, rendering many allegations from the parties' pleadings largely irrelevant, although they are provided for context due to ineffective Local Rule 56.01 submissions. Key agreed-upon facts include: 1. Rogers resided on the Lynnville property from 2007 until his injury in a car accident on May 18, 2012. 2. Kryder executed two Promissory Notes in favor of Rogers, one for $50,000 (January 15, 2010) and one for $100,000 (April 10, 2010), the latter replacing the former and secured by a Deed of Trust, with Kryder responsible for related costs and a 4% annual interest. 3. The Promissory Notes lacked an acceleration clause, requiring full payment by December 31, 2020. 4. Rogers advanced Kryder $56,633.17 on a credit card post-Note execution. 5. Kryder made monthly interest payments to Rogers from May 2010 to December 2011. 6. A fire on January 11, 2010, caused significant damage to Kryder's property. 7. Etcheverry assisted Kryder at the Lynnville property in April 2012, with no payment demands made on the Promissory Note during that time. 8. Payment requests were sent by Etcheverry's counsel on September 11, 2012, and February 20, 2013. 9. Rogers passed away on June 11, 2014, following which Etcheverry's Motion to Substitute was granted. The standard for summary judgment emphasizes that it is appropriate only when no genuine material fact issues exist, with facts interpreted in favor of the nonmoving party, without weighing evidence or assessing witness credibility. A mere scintilla of evidence is insufficient to avoid summary judgment. Etcheverry seeks summary judgment regarding her counterclaims and Kryder's claims. Kryder's claims, which include breach of contract, breach of the implied duty of good faith, quantum meruit, accounting, and declaratory judgment, are based on allegations that Rogers did not meet his obligations under the Promissory Note, specifically failing to apply pre-paid interest, credit monthly rent and pasture fees, and cover losses from a fire. Kryder supports her claims with two affidavits. However, her claims are dismissed for both procedural and substantive reasons. Procedurally, Kryder's claims fail because Etcheverry was not properly substituted as a party defendant under Rule 25 of the Federal Rules of Civil Procedure after Rogers' death. The rule mandates that a motion for substitution must be filed within 90 days following a suggestion of death, or the action against the deceased will be dismissed. In this case, the only substitution motion was filed by Etcheverry, who requested to be substituted as Special Administrator of Rogers' estate, which was granted. Judge Haynes clarified that the order allowed Etcheverry to act as the Counter-Plaintiff in place of Rogers, confirming the limited scope of the substitution. Etcheverry was recognized solely as the Counter-Plaintiff and was not intended to substitute as a Defendant in the case. Although the Kern County Superior Court allowed her to cross-complain, there was no rationale for her to take on the role of Defendant. Kryder failed to submit a motion for substitution, which was necessary. Citing Watts v. Novartis Pharm. Corp., Kryder asserted that courts take a flexible approach regarding party substitutions under Fed. R. Civ. P. 25, but this case did not assist her as it focused on heir substitution and timeliness of the motion. Moreover, while Rule 25(a) allows discretion for substitution, it assumes a motion has been made, as supported by Kaplan v. Lehrer. Even if Kryder had no obligation to file a motion, significant reasons exist for granting summary judgment against her, particularly due to Tennessee's Dead Man's Statute. This statute restricts testimony about transactions with a deceased individual unless called by the opposing party, aiming to protect estates from unfounded claims. The statute applies equally to interested parties and limits their testimony regarding communications that could affect the decedent's estate. Kryder contended that the statute's purpose is exclusion of testimony, not claims, which is generally accurate; however, evidence for summary judgment must be admissible at trial per Federal Rule of Civil Procedure 56(e). Exclusion of evidence under the federal rule for summary judgment motions is mandated when such evidence would be barred at trial by the state's Dead Man's Statute. Relevant case law, including Pro Bono Invs. Inc. v. Gerry and Broyles v. Woodson, underscores this principle. The Dead Man's Statute's testimonial prohibition applies in summary judgment proceedings, as established in Ball ex rel. Hedstrom v. Kotter. Kryder argues for a strict interpretation favoring testimony admission, citing In re Johnson v. Hall as a precedent; however, the circumstances in that case differ significantly from the current matter. Here, Kryder seeks to recover based on alleged oral agreements with Rogers, who is deceased, which is barred by the Dead Man’s Statute. Kryder also references In re Estate of Jenkins to suggest that loose records may allow testimony about decedent's intent, but the court's analysis did not undermine the Dead Man's Statute's applicability. Additionally, the statute of limitations poses a barrier to Kryder's claims, as her suit regarding losses from a fire on January 11, 2010, was not filed until April 15, 2013, exceeding the allowable period. Under Tennessee law, personal or real property injury claims must be filed within three years, according to Tenn. Code Ann. 28-3-105. Kryder’s lawsuit is time-barred as more than three years passed since the fire incident; however, she invokes the discovery rule, arguing she was unaware of her claims until later. She cites that unnamed insurance representatives indicated in fall 2011 that Rogers was responsible for the fire, and an unidentified neighbor claimed in May 2012 that Rogers confessed to causing the fire. Additionally, she received a fire report on May 28, 2010, indicating the fire was due to an unattended heat source. The discovery rule allows for tolling the statute of limitations until a plaintiff knows, or should reasonably know, of the injury and its cause. Nevertheless, mere ignorance does not suffice to toll the statute. The plaintiff is considered to have discovered the cause of action when aware of facts that would alert a reasonable person to the injury resulting from the defendant's actions. Kryder's claims regarding Rogers' responsibility face significant evidentiary issues. The fire report lacks authentication, and her reliance on statements from unidentified individuals does not meet the requirements of Rule 56, which mandates that affidavits must be based on personal knowledge and admissible facts. Statements from unknown parties are classified as hearsay and inadmissible. Furthermore, the neighbor's alleged testimony would be barred by the Dead Man's Statute and could constitute double hearsay if Kryder attempted to reference it. Additionally, Kryder's assertion of ignorance about Rogers' responsibility contradicts her earlier allegations in the Amended and Restated Complaint. Kryder's Complaint alleges that immediately after a fire, she requested Rogers to reimburse her for damages, to which he agreed contingent upon his financial capacity. The Complaint asserts that the principal on a $100,000 Promissory Note would be reduced by the amount Rogers was responsible for regarding the fire damages once determined. These claims indicate that Kryder was aware of Rogers' potential liability well before receiving the fire report or any input from insurance adjusters or neighbors. The Court highlights that allegations in a complaint are largely irrelevant for summary judgment, emphasizing that the nonmoving party must provide specific facts beyond pleadings to establish a genuine issue for trial. Factual assertions in pleadings are treated as judicial admissions, binding the party who made them, which means a party cannot create factual disputes through later conflicting affidavits. Such admissions can also affect the timeliness of a claim. The only viable cause of action not hindered by the Dead Man's Statute or the statute of limitations is Kryder's claim against Rogers and Etcheverry for breaching the implied duty of good faith and fair dealing related to the acceleration of the Note. Kryder alleges that Etcheverry, acting under a power of attorney while Rogers was incompetent, wrongfully sent a demand letter for full repayment of the Note, violating its terms. The letter demanded $166,045.61 and warned of legal action if payment was not made by a specified date. Judge Haynes previously rejected a similar argument regarding a September 11, 2012 letter from counsel about a debt, stating there were no genuine factual disputes and that the court would determine the letter's legal effect. The letter requested payment or compliance by October 1, 2012, and Judge Haynes ruled that this did not constitute improper acceleration. A subsequent letter dated February 20, 2013, was sent by the same attorney, indicating Kryder was in default and providing an opportunity to pay the owed amount by March 15, 2013. While the expectation of full payment may have been unrealistic, Kryder was given a chance to rectify her default. Kryder's claim centers on breach of the duty of good faith and fair dealing; however, Tennessee law does not recognize a tort claim for this breach in contract performance. Since Kryder failed to make interest payments after December 2011, under the "first-to-breach" rule, she cannot claim damages for a subsequent breach. If Kryder asserts that payments ceased due to a reconciliation in December 2011, this implies that no enforceable contract existed, precluding claims of breach or inducement regarding a non-existent contract. A party is entitled to summary judgment if the opposing party fails to provide sufficient evidentiary quality materials showing a triable issue. For a defendant to succeed in a summary judgment motion based on the plaintiff's lack of evidence for an essential claim element, the plaintiff must demonstrate a genuine issue of material fact. In the case of Etcheverry's five-count Counterclaim, Count I relates to a breach of contract claim founded on a Promissory Note. Essential elements of such a claim include: (1) an enforceable contract, (2) nonperformance constituting a breach, and (3) damages resulting from the breach. Etcheverry established all elements: the $100,000 Promissory Note was a signed written agreement; Kryder failed to make required interest payments after December 2011, and the necessary Deed of Trust was not filed. Etcheverry, as the administrator of her father's estate, demonstrated harm due to missed interest payments and lack of security for the loan. Kryder did not dispute the existence of the contract or the payment requirements but argued over the interpretation of the Note regarding future outstanding amounts. The court clarified that if a contract is unambiguous, it must be interpreted as written, focusing on the parties' intentions based on the contract's language. Determining the intent of parties in a contract is a legal question when the contract language is clear and undisputed, leaving no factual issues for the court to resolve. The parties' intent at contract execution is considered definitive and is presumed to be expressed within the contract itself. A Promissory Note is characterized as an unconditional written promise to pay a specified sum, which in this case is $100,000 from Kryder to Rogers. The note explicitly states this amount and indicates it replaces a previous note for $50,000, consolidating the two amounts into a total of $100,000. The phrase "total amount to become outstanding" refers to consolidating the previous debts rather than suggesting future funds. Additionally, Kryder's reference to "from the date of draw through the date of repayment" does not imply any ambiguity regarding future funding, given the context of two prior notes. As an attorney who drafted the note, Kryder cannot benefit from any alleged ambiguities, as Tennessee law dictates that ambiguities are construed against the drafter. Kryder acknowledges receiving the $100,000, as detailed in her Amended and Restated Complaint, which outlines the advances made by Rogers. Consequently, Etcheverry is entitled to summary judgment on the breach of contract claim since the note lacks an acceleration clause, limiting the breach to unpaid interest and associated legal costs. Additionally, Etcheverry is entitled to an equitable lien to prevent injustice. An equitable lien is a right, not recognized at law, allowing a party to have a fund or specific property applied to the payment of a particular debt. It is characterized not as ownership of the property but as a charge on it, which can be implied by a court based on the parties' intentions and circumstances, even in the absence of an express contract. This lien cannot solely rely on moral obligations but must be grounded in established equitable principles. In the case of Kryder, it was determined that she had agreed to encumber specific property as security for her debt under a Promissory Note, which explicitly stated that it would be secured by a Deed of Trust on specified property. As a result, Etcheverry is entitled to an equitable lien on that property to secure unpaid interest, attorney's fees, and court costs, negating the need to address additional requests for declaratory and injunctive relief or a "Lis Pendens" claim, as these were deemed moot. The remaining issue involves Count Two of the Counterclaim, which alleges unjust enrichment. Kryder received funds from Rogers that exceeded the principal amount of a Note executed in April 2010, with both parties aware of the expectation for repayment. The elements of an unjust enrichment claim include: (1) a benefit conferred upon the defendant by the plaintiff, (2) the defendant's appreciation of that benefit, and (3) acceptance of the benefit under circumstances that make retention inequitable. A significant requirement is that the benefit to the defendant must be unjust, distinguishing it from a gift. Kryder acknowledged that Rogers used his frequent flyer credit card for her benefit, amounting to $56,633.17, which she claimed was for past-due rent and fees. However, there is a dispute over the actual amount and whether Rogers expected repayment, leading the court to determine that summary judgment cannot be granted based solely on the parties' statements. Consequently, Etcheverry's Motion for Summary Judgment is granted on all of Kryder's claims and her counterclaim for breach of contract and equitable lien, while the counterclaim for unjust enrichment is denied. Other remaining counterclaims are deemed moot. Despite efforts for a settlement, including a judicially-conducted conference, the parties failed to reach an agreement, highlighting their animosity. Kryder faced sanctions totaling nearly $35,000 for frivolous filings and an additional $1,000 for failing to comply with discovery orders. Kryder sought to disqualify Etcheverry's counsel due to a prior association between Kryder's former counsel and Etcheverry's counsel; however, this motion was denied following a hearing. The parties are currently in dispute over the case caption, particularly regarding the identification of Kryder as "Patricia Porter Kryder a/k/a Patricia K. Ganier," which Kryder claims is harassing and hurtful. The court will refer to the controlling document as the "Promissory Note," as the April 16, 2010 Promissory Note replaced an earlier note. Kryder's second affidavit mentions a Revocable Trust, which allows Rogers to live rent-free on her property after her death, but does not clarify its relevance to the case. Kryder attempts to link the Revocable Trust to an oral agreement regarding offsets on the Promissory Note, but the court finds this argument unpersuasive as the trust document does not address such matters. Count One of the Complaint alleges breach of contract, subject to a six-year statute of limitations per Tennessee law, but the court notes that Kryder's claims include damages related to a fire at her property rather than solely contractual violations. Ultimately, the court concludes that Etcheverry is entitled to judgment as a matter of law regarding Kryder's breach of the Promissory Note, supported by evidence of Kryder's interest payments, which suggest an additional loan agreement not specified in the Note, although this evidence remains inconclusive and may be weighed by a jury.