Iowa Court of Appeals Allows Son Opportunity to Prove Undue Influence Claim against His Siblings at Trial

Davis v. Davis, No. 13-559, 2014 Iowa App. LEXIS 718 (Iowa Ct. App. Jul. 16, 2014)

Overview

The Iowa Court of Appeals has ruled that a district court improperly awarded summary judgment in favor of three siblings in the fourth sibling’s action alleging undue influence over their mother by the defendants.

Facts of the Case

The father and mother had six children. The father, who died in 1999, and two of the siblings predeceased the mother. During the father’s lifetime, the plaintiff had assisted him with his farming operation. He had leased farmland from his father and later his mother. Animosity between his siblings began to arise after the father’s estate sought to recover money owed by two of the defendants to the father. The mother had a stroke in 1994 and from then on required assistance with physical activities. She suffered several other strokes before dying in 2011.

In July of 2009, the mother had sent letters to her four surviving children, informing them that she was intending to gift her property to her children through a drawing at her lawyer’s office. The letters stated that the drawing would determine what parcel of ground each sibling would receive. The drawing was held as scheduled, and each of the four siblings drew an envelope out of a wastebasket. Each envelope contained a description of a parcel of land. The mother then signed deeds gifting the respective parcels to the children. She did not, however, deliver them that day.

Eight days after the drawing, the mother sent a letter to her attorney stating that she had reasons to reconsider delivering the deed to the plaintiff. The following February, the mother decided not to deliver the deed to the plaintiff, but to gift it to the defendants (the three remaining siblings) instead. She made the transfer about a year before she died.

Four months after the mother’s death, the plaintiff filed his action against the defendants, claiming that the transfer of real estate to the defendants was the product of undue influence. He alleged that the mother did not have the mental capacity at the time to make the gifts and that one or more of the defendants had a confidential relationship with the mother.

Undue influence can be show where (1) a grantor was subject to undue influence; (2) the grantee had the opportunity to exercise such influence and effect the wrongful purpose; (3) the grantee had the disposition to unduly influence the grantor for the purpose of procuring an improper favor; and (4) the result clearly appears to be the effect of undue influence. Where the transfer in question is to a grantee standing in a confidential or fiduciary relationship to the grantor, the transfer is presumptively fraudulent and therefore presumptively the product of undue influence.

Trial Court Decision

The district court granted summary judgment for the defendants, finding that there were no genuine issues of material fact regarding whether there was a confidential relationship between the mother and at least one of the defendants, whether the mother was susceptible to undue influence, or whether the gifts were the product of undue influence.

Iowa Court of Appeals

The Iowa Court of Appeals reversed and remanded, finding that there were genuine issues of material fact as to all of those questions.

The court began by defining a “confidential relationship” as one in which a continuous trust is reposed by one person in the skill and integrity of another.” A confidential relationship, the court found, is more likely to exist where there is a family relationship. The plaintiff had submitted much evidence that two of the defendants had a lot of influence over the mother. They usually brought her to the attorney’s office and spoke to the attorney on her behalf. They were heavily involved in her personal and business affairs and appeared to make many of her financial decisions for her. Given the evidence, the court concluded that the district court improperly granted summary judgment to the defendants on the question of a confidential relationship. The determination was important because if a confidential relationship was found, the transfer of property to those persons with whom the mother had the confidential relationship would presumptively be the product of undue influence.

The court next determined that the district court erred in finding no genuine issue of material fact as to whether the mother was susceptible to undue influence. A person in a weakened condition is more readily subject to influence, and the mother had suffered at least two strokes and was in a nursing home, dependent upon caretakers to transport her to appointments. There was also evidence presented that the mother was sometimes confused about financial matters.

Finally, the court ruled that there were genuine issues of material fact as to whether the transfer of property to the defendants was the product of undue influence. Inequality of distribution was a factor to be considered, and the facts established that the mother distributed property to only three of her six children (two of whom were deceased but left heirs). This unnatural result, which may or may not have been the product of undue influence, was a proper factor to consider. It raised a genuine issue of material fact.

On remand, the plaintiff will have an opportunity to attempt to prove his claims at trial. If a confidential relationship is established between the mother and one of the defendants, it will be up to that defendant to prove that the mother acted freely, intelligently, and voluntarily in making the transfer. That is a tall order.

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