Wrong Ruling in Lorenzen Wright Case? Appeals Court Rules that Lower Court had no Authority to Investigate Ex-Wife’s $1 Million Apparent Misappropriation

Update: According to the Commercial Appeal, a court is contemplating removing Sherra Wright as Trustee of the Insurance Proceeds Trust (the article does not relate which, but I expect that it is the Circuit Court).  Click here to read more.

In an opinion dated March 27, 2014, the Tennessee Court of Appeals ruled that a Probate Court Judge exceeded his authority when he appointed an attorney (known as a Guardian ad litem) to investigate how Sherra Wright spent the nearly $1 million dollars that she was in charge of for the benefit of Lorenzen Wright’s children.

This particular proceeding was the latest in a series of cases involving the children and their inheritance from their father, Lorenzen Wright.

In this proceeding, Sherra Wright (the mother of Lorenzen Wright’s children) and Herbert Wright (Lorenzen Wright’s father, and the grandfather of the children) fought over who should be named the Guardian over the children’s finances.  Whoever the court selected would be in charge of Lorenzen Wright’s death benefit from the NBA players association death benefit of $184,000.

In a prior proceeding in a different local court (circuit), Sherra Wright had already been put in charge of a $1 million dollar trust that derived from the proceeds of an insurance policy on Lorenzen Wright’s life.  She was named the Trustee of the so-called “Insurance Proceeds Trust,” and was required to account to the Circuit Court annually.  The Trust was for the sole benefit of the children.

When it came out in the Guardianship proceedings that Sherra Wright may have misspent significant amounts of this money, Judge Benham demanded to see an accounting (i.e., how the money was spent).  Sherra Wright provided the accounting to Judge Benham, and immediately withdrew her request to be appointed the Guardian for the minors.

The accounting revealed that of the $1,090,146.00 placed in the Insurance Proceeds Trust on August 1, 2011, only $116,858.57 in liquid assets remained (as of July 31, 2012).  Sherra Wright had spent $973,287.43 in only 13 months.

The Probate Judge (Judge Robert Benham) named Herbert Wright as the Guardian for the children.

In seeking to protect the children, Judge Benham also appointed an attorney to investigate Sherra Wright’s exorbitant spending of trust assets and to consider the pursuit of legal action against her such as recovery of assets (if possible) on behalf of the minors.

The Tennessee Court of Appeals held that Judge Benham was without power to appoint a guardian ad litem to investigate issues unrelated to the issue of Herbert Wright’s fitness to serve as Guardian.   In other words, the Tennessee Court of Appeals held that the Probate Court did not have the power to take necessary actions to protect the interests of Lorenzen Wright’s minor children.  At least not at that time and not in that manner.

The Court of Appeals acknowledged that the Probate Court had the discretion to appoint a Guardian ad litem “as justice requires”  and that the Probate Court did not need the parties’ permission to do so.

The law explicitly requires such a Guardian ad litem to investigate the children’s assets.  Likewise, the Tennessee Code is filled with examples of how Guardians ad litem have the authority (if not the obligation) to pursue legal action to protect the minors and disabled parties that they represent.

The Probate Court has the mandate to protect the minors and disabled persons that come before it.  The Probate Court is unique from other courts (except perhaps Juvenile Court), the minors and disabled persons that come under its jurisdiction cannot speak for themselves or defend themselves and it is the Probate Court’s unique obligation to take such actions it deems necessary to protect those that cannot protect themselves.

Though I can see some value in not allowing a Court to venture into another Court’s domain (i.e., the Probate versus Circuit in this case), where the welfare of minor children is involved, the Probate Court should be entitled to enormously wide discretion to take actions to protect the children, their assets and their well-being. 

In my opinion (for whatever that is worth) the Court of Appeals got this wrong.

That being said, that does not mean that Sherra Wright will not have to account for what it appears that she has done.  Since he is the children’s guardian, Herbert Wright has the power to protect the children and pursue legal action against Sherra Wright.

Read the Tennessee Court of Appeals opinion here: In re: Guardianship of Minor Children of Lorenzen Wright.

In the interests of full disclosure, I worked for the trial court judge, Probate Court Judge Robert Benham.

Stay Tuned.

Rob Malin

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