Tennessee Rand, Inc. v. Automation Industrial Group, LLC

IN THE COURT OF APPEALS OF TENNESSEE
AT KNOXVILLE
July 8, 2010 Session

TENNESSEE RAND, INC. v. AUTOMATION INDUSTRIAL GROUP, LLC,
ET AL.

Appeal from the Chancery Court for Hamilton County
No. 05-0203 W. Frank Brown, III, Chancellor

No. E2009-00116-COA-R3-CV - FILED SEPTEMBER 29, 2010

In the apt words of the trial court, this case is a “complex business divorce case.” The
“divorced” and now adverse entities are Tennessee Rand, Inc. (“Rand”), and Automation
Industrial Group, LLC (“Automation”), formerly Tennessee Rand Automation, LLC. Rand
builds automated robotic equipment such as that used in the automobile industry.
Automation was formed by the principals of Rand and some skilled collaborators for the
purpose of doing the electrical and computer aspects of Rand’s work. The entities fell out
of favor with each other when the principals in Rand – Randy Nunley and Richard Roach –
each a 50% shareholder in Rand, began to have conflicts. Nunley ended up as the sole owner
of Rand and Roach acquired Nunley’s interest in Automation. Rand initiated this litigation
(1) to enjoin Automation from using the name, “Tennessee Rand Automation, LLC,” (2) to
recover the value of assets that Rand had transferred to Automation, and (3) to recover
payments of rent and taxes that Rand had made on buildings occupied by Automation. Rand
also named as defendants numerous principals and officers of Automation, including Roach.
Automation filed a counterclaim seeking an award against Rand for some $6,000,000 in
unpaid labor and expenses. In the bench trial that followed, the counterclaim accounted for
20-plus days of the 25-day trial. By the time the trial court announced its decision in a
written memorandum opinion, the only parties remaining in the case were Rand and
Automation, Roach having previously been dismissed by Rand with prejudice. The trial
court found that the names of the entities were confusingly similar and ordered Automation
to change its name. This was accomplished and is not an issue on this appeal. The trial court
found that Automation was unjustly enriched by Rand’s contribution of assets to Automation
in the amount of $500,000. Also, the trial court found that Automation had been unjustly
enriched in the amount of $162,818.80 by Rand’s payment of rent and taxes on buildings
used by Automation. Despite the prior dismissal of Roach as a defendant, the trial court held
Roach liable to Rand for the rent and tax payments made out of Rand’s account. On
Automation’s counterclaim, the trial court initially awarded it $2,270,759.22 plus
prejudgment interest. Both parties filed a motion to alter or amend. The trial court
determined that Automation was guilty of fraud in the pursuit of its counterclaim and set
aside that part of the judgment with the result that Automation recovered nothing on its
counterclaim. Automation and Roach have appealed raising issues as to the counterclaim,
the unjust enrichment award against Automation based upon the assets it received from
Rand, and the unjust enrichment award against Automation and Roach based on the rent and
tax payments. We affirm in part, reverse in part, and remand for further proceedings.

Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Chancery Court
Affirmed in Part and Reversed in Part; Case Remanded

C HARLES D. S USANO, J R., J., delivered the opinion of the Court, in which H ERSCHEL P.
F RANKS, P.J., and D. M ICHAEL S WINEY, J., joined.

Gary R. Patrick and R. Jonathan Guthrie, Chattanooga, Tennessee, for the appellants,
Automation Industrial Group, LLC, and Richard Roach.

Richard W. Bethea and Tom Greenholtz, Chattanooga, Tennessee, for the appellee,
Tennessee Rand, Inc.

OPINION

I.

Rand began as a machine shop in 1980. It was formed by Randy Nunley and Richard
Roach. Each owned 50% of the stock in the corporation. Nunley, as president, was
responsible for the day-to-day management of the company. Roach, as secretary, was seldom
seen on site. He functioned from a remote office where his staff did the bookkeeping for
numerous entities including Rand and Automation. Roach’s staff typically input data into
a computerized bookkeeping system, paid invoices after they were approved for payment and
processed payroll. It was not unusual for Roach, from his office, to fund money needs of
Rand and Automation by infusing money and signing promissory notes on behalf of the
entities.

Nunley and Roach jointly owned numerous other business interests, including an
airplane and a ranch. Their investments were lucrative enough that they were able to
maintain the “Randy and Richard” bank account into which they deposited their profits and
from which they funded their investments. It was routine for them to make transfers to and
from the Richard and Randy account in amounts up to $500,000. Most of these transfers
were made from Roach’s office.

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 Over time, Rand grew and evolved into a designer and manufacturer of robotic tooling
used in assembly lines. Applications to specific items that were discussed at trial include
Harley Davidson motorcycle frames, lawnmower components manufactured by Electrolux,
a Ford truck cross-member manufactured by Johnson Controls, and automobile seats
manufactured by the Brown Corporation.

Rand’s tooling work is naturally divided into mechanical and electrical. Mechanical
includes the machine frame and moving parts. Electrical includes engineering design,
wiring, and programming. Up until 1997, Rand outsourced the electrical, and concentrated
on the mechanical aspect. One of the major vendors to Rand was Lawson Electric in
Chattanooga. Rand became particular comfortable with the work of two of Lawson’s
employees, an electrical engineer named Jaroslav Tyman, Sr. (“Tyman Senior”), and a
journeyman electrician named Greg Noll. Nunley approached Tyman Senior about joining
forces. The two of them agreed in principle to form a company, to be owned equally by
Nunley and Tyman Senior, which would do the electrical work that Rand had been
outsourcing. The result of the agreement was Automation. The need for an electrician as
well as an engineer led to the inclusion of Noll as a member of the new company. Nunley
allocated half of his ownership to Roach. The resulting ownership percentages were as
follows: Nunley 22.5%, Roach 22.5%, Tyman Senior 45%, Noll 10%. Tyman Senior was
president and manager of Automation from the time of its formation until he was terminated
by Roach in June 2006.1

The arrangement between Rand and Automation was mutually beneficial, and all went
well for a period of time. Disagreements were few and resolved by discussion between
Nunley and either Tyman Senior or Noll. Automation did what was necessary to cover the
work generated by Rand’s contracts; Automation billed Rand for its “time and materials”
plus a mark-up. Typically, Automation’s bills would be submitted to Nunley; Nunley would
approve the invoices and forward them to Roach; and Roach would then pay Automation.
They began using a billing arrangement similar to the one that Lawson had used in its
dealings with Rand. It is undisputed that material was marked-up 21% and thus charged to

1
Tyman Senior retained an interest in Automation but sold enough of his equity ownership to Roach
to make Roach the majority owner. Tyman Senior also sold part of his ownership interest to his son, Tyman
Junior, who was made the new president and manager.

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Rand at 121% of Automation’s cost.2 What happened with respect to labor depends upon
whether Nunley is believed to the exclusion of Automation’s numerous witnesses including
Noll and Tyman Senior. According to Nunley, beginning in 2002, labor was to be billed at
three times the employee’s wage. He testified that the multiplier was never to be changed
and Automation was not to bill extra for overtime. By Nunley’s account, the multiplier was
full and total compensation, and travel time was to be at a lesser rate that Nunley could not
recall.

According to Tyman Senior, Automation began its work for Rand charging $125 per
hour for the engineering work performed by Tyman Senior and $65 per hour for the work
performed by Noll and other journeyman electricians.3 Under this arrangement, Automation
was permitted to bill Rand at 150% of the set rate for their overtime, or $184.50 for Tyman
Senior and $97.50 for the others. As Rand generated more work, Automation hired more
production employees. Some of the added employees were not as productive as Noll and
Tyman Senior and were paid less per hour. This factor, according to Noll and Tyman Senior,
resulted in a modification of the labor billing whereby Automation would bill Rand at 400%
of the rate paid to engineers and 340% of the rate paid to electricians. In Automation’s view,
as expressed by numerous witnesses, this change benefitted Rand because the multiplication
of lower wages resulted in a lower net charge.

At trial, Rand challenged billings by Automation in 2004 and 2005 for electricians at
the rate of 375%. Noll testified at trial that the 375% billing was a modification agreed to
by Nunley as a blanket rate for electricians and engineers that ultimately saved Rand money.
Tyman Senior testified at trial that he recommended an increased rate for electricians to
Nunley and that he, Nunley, did not object. Tyman Senior testified that the drop to 375% for
engineers was a clerical mistake. Both Noll and Tyman Senior attributed the need to increase
the multiplier for electricians to extensive overtime, including travel time, which more often
than not happened at the end of long days or on weekends.

After Tyman Senior testified, the trial court, verbalizing two grounds for doing so,
struck his testimony on two particular subjects. The court granted Rand’s motion to strike
“with regard to the multiplier” and “with regard to his testimony on . . . trial exhibit 500.”
Exhibit 500 was prepared by Rand to show Automation’s inflation of invoices to Rand in

2
There is a dispute as to whether Automation was allowed to mark up expenses such as travel and
lodging expenses. In the early days of Automation’s existence, Rand would typically advance the expense.
For example, Rand would purchase airline tickets and lodging for Automation’s employees. Then, at Rand’s
insistence, Automation started paying its own expenses. Automation added a 21% mark-up to the expenses.
According to Nunley, the mark-up was not supposed to be applied to travel and other routine expenses.
3
This approximates three times their hourly rate.

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2004 and 2005. The court ruled that Tyman Senior lacked personal knowledge and that he
violated the rule of sequestration by obtaining information on these subjects from his son
Jaroslav Tyman, Jr. (“Tyman Junior”) while the case was being tried.4 Tyman Junior was
Automation’s first witness and was on notice that the rule of sequestration had been invoked.

As of December 1, 2003, Rand and Automation both believed that invoicing and
payments were current between the two companies. In late 2003, maybe earlier by the
account of Tyman Senior, Nunley announced that he was interested in selling Rand and
wanted to make the company look good financially. It is undisputed that the sales price of
Rand was to be a multiple of a standard business valuation tool, EBITDA, an acronym for
“Earnings Before Interest, Taxes, Depreciation and Amortization.” The financial figures
used in the EBITDA calculations were to be confirmed by an audit. In December 2003,
Nunley instructed Tyman Senior to hold invoices. The stated reason was to make Rand “look
better.” Tyman Senior, based on assurances that the invoices would be paid and out of his
respect for the business acumen of Nunley, held approximately $1,000,000 in invoices that
would otherwise have been billed in December 2003. Instead of sending the invoices, Tyman
Senior held them at his desk. According to Tyman Senior, he continually pressed Nunley to
allow him to send the invoices. Tyman Senior testified that Nunley always responded that
the sale of Rand was about to be completed. Tyman Senior testified that at the time this was
happening he had no doubt the invoices would be paid – it was just a matter of when.
According to Tyman Senior, twice in 2004, Automation held invoices at the insistence of
Nunley. One group of held invoices, for the January to April 2004 time frame, was
approximately $551,000 in total. Rand allowed an amount to be billed at that time equal to
the amount held. Another group represented approximately $1.3 million in invoices for the
time period of April to October 2004. Tyman was later instructed to hide these charges by
over billing other projects, but, on two separate attempts, Rand “vetoed” the inflated
invoices because it was uncomfortable with the inflation of costs on the projects to which the
charges were shifted. Eventually, Rand, according to Tyman Senior, instructed Automation
to submit the $1.3 million bill and the $551,000 as special invoices for “engineering and
consulting” so as not to skew the figures produced by Rand’s audit conducted for the purpose
of the pending sale.

Although the trial court found it unlikely that Automation held invoices in the amount
of $1.3 million, Rand, significantly, produced in discovery a matching purchase order for
“engineering and consulting services” in the amount of $1.3 million. Rand’s purchase orders

4
Tyman Senior carried personal notes to the witness stand which he used until counsel for Rand saw
the notes and objected. Counsel for Rand was allowed to question Tyman Senior about the notes. Tyman
Senior admitted that some of the information in his notes came from his son in response to questions Tyman
Senior posed to him.

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were the subject of numerous motions to compel by Automation. The first time, Rand
produced a copy which redacted the information that linked the purchase order to the special
invoice. Rand only produced the unredacted copy after being ordered to do so. Also, one
copy of the invoice bears a signature approving the invoice. Nunley testified that he
approved the invoice with plans to “fight it out” later. It is noteworthy that Nunley admitted
that he did instruct Automation to hold one set of invoices in 2004 – a set that amounted to
approximately $550,000. Nunley admitted that the reason behind holding the invoice was
to raise the EBITDA factor. Nunley, however, testified that holding of the invoices was
Roach’s idea. Also, Nunley signed a bonus check to Noll and Tyman Senior at the end of
2004 in the approximate amount of what they would have received had the “held” invoices
been billed. It is also undisputed that, in 2004, at Nunley’s urging, Nunley’s personal
assistant had Automation’s office manager alter information in Automation’s job cost data
base. Nunley admits that he rewarded the office manager by having his assistant procure and
give the office manager a $500 gift certificate to a major department store. According to
Nunley, he merely had the words “previous billing” deleted because, for the entries which
he had altered, there was no “previous billing.” Automation contends that the circumstances
corroborate their contention that invoices were in fact held at Nunley’s request and that he
wanted the language “previous billing” deleted to keep potential buyers of Rand from asking
questions.

In the process of trying to sell Rand, brokers engaged by Rand worked with two
groups of investors. The first was T.A. Associates. The second was American Capital. Each
group executed a letter of intent contemplating an acquisition of Rand. Both Roach and
Nunley signed the first letter of intent with T.A. Roach did not sign the second letter with
American Capital, dated January 19, 2005, because, according to his testimony at trial, he had
then learned of the held invoices and had no confidence that the financial condition of Rand
was as portrayed. The second letter of intent also conditioned the sale upon certain
Automation employees, including Noll, moving to Rand. Noll refused to move. According
to Nunley, the potential buyers remained interested, but he, Nunley, became disinterested for
unspecified reasons.

On February 21, 2005, Rand locked Automation out of its facilities. This event has
been referenced by the parties and the trial court as “the Split.” We will continue with that
terminology.

The Split was followed by a division between Nunley and Roach of all their assets and
liabilities. As part of that division, Roach acquired Nunley’s interest in Automation and
Nunley acquired Roach’s interest in Rand. Nunley is now the sole stockholder in Rand and
Roach, after acquiring some of Tyman Senior’s interest in Automation, owns the controlling
interest in Automation. The only disputes that Nunley and Roach have been unable to

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resolve are the monetary claims at issue in this case. The billing issues that we have outlined
and will discuss in more detail below are the focal point. There are two other monetary
claims that must be discussed.

One claim is that Rand paid rent and taxes on property that Automation occupied for
which Rand is due reimbursement. There is no dispute that from November 2003 forward
Automation occupied a building at 106 Spring Street in Chattanooga owned by Nunley and
Roach. Previously, the building had been occupied by Rand, and Rand had paid Roach and
Nunley $9,200 – $4,600 each – per month rent on the building. Rand also paid the property
taxes on the property. After Rand left and Automation moved in, Rand continued to make
the rent payments until the Split. The payments were made by checks signed by Roach. The
payments during Automation’s occupation total $147,200. The same scenario occurred with
respect to the property taxes. Rand paid $15,618.80 in property taxes on 106 Spring Street
between November 2003 and the Split, for which it seeks reimbursement from Automation.

Even though the amounts are not in dispute there is a dispute as to whether
Automation is obligated to reimburse Rand. There is no proof of an express agreement on
Automation’s part to pay a monthly rent on the building equal to what Rand had paid. There
is no written lease and certainly no assignment or sublease. There is evidence that Rand used
the 106 Spring Street building for overflow projects even after Automation moved into the
building.

The other monetary dispute concerns property that Rand shipped to Automation’s
plant after acquiring it from a Canadian manufacturing company named Dieco in May 2004.
Both Rand and Dieco were working in 2003 on projects for Brown Corporation. Rand’s
contract with Brown required Rand to demonstrate that the robotic welding equipment it was
installing for Brown would function. Dieco’s work product – bent metal tubing – was
necessary for Rand’s demonstration that its welding equipment would work. Dieco was
struggling financially so Rand loaned Dieco $500,000 and took a security interest in all of
Dieco’s assets. Dieco defaulted on the loan and Rand foreclosed. Rand shipped most of the
assets to Automation’s plant at 106 Spring Street. It is undisputed that some of Dieco’s
equipment was not shipped to Automation. Two cranes, for example, were left in Canada.

After discussions with Rand, Automation undertook to complete Dieco’s contract.
Noll testified that Rand, through Nunley, offered the Dieco assets to Automation as a gift if
Automation would complete the Brown project. On cross-examination, Noll admitted that
Nunley did not use the word “gift.” Nunley admitted there were discussions but denied
making a gift of the Dieco assets to Automation. Automation paid Dieco approximately
$84,000 to help it close out its operation. Automation also paid approximately $42,000 in
shipping costs. Rand was able to complete its contract and receive payment of approximately

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$3 million from Brown. Automation claims, through its financial records, that it lost money
on the Brown job, but Automation has been able to expand its business into tube bending
with the Dieco assets. There is no document recording or memorializing a transfer from
Rand to Automation of the collective assets. There is, however, one account receivable from
Lear Corporation which was transferred by written assignment from Rand to Automation.
The proof at trial was that the creditor would not pay without assurance that it was paying
the right entity.

Only after the Split did Rand send an invoice to Automation, dated February 25, 2005,
purporting to charge $500,000 for the Dieco assets. Later, Rand claimed that the assets were
worth $1.3 million and during trial amended the claim to assert that the assets were worth
$1.9 million.

By letter dated February 24, 2005, one day before the Dieco invoice, Rand confirmed
that it was terminating Automation and cancelling all outstanding work orders. The letter
specifically addressed outstanding invoices as follows:

The summary billing information previously furnished on
[Automation]’s invoices does not provide us with enough detail
to properly review the charges incurred. In order that [Rand]
may process payments to [Automation] as quickly as possible,
we are requesting that [Automation] supply to us detailed job-to-
date supporting documentation (from the job’s inception through
February 20, 2005) for each . . . Rand project for which any
[Automation] invoice was submitted to us with a date of August
1, 2004 or later. This supporting documentation for each such
project should include the following:

Detail of Labor Charges – Date and hours charged for each day
by [Automation] employee and their respective hourly billing
rate (this detail should total to the total job-to-date labor billed).

Detail of Material Charges – Detailed bill of materials
(including descriptions, quantity, supplier name, unit and
extended costs that total to the job-to -date material billed) and
a copy of related supporting vendor invoices. Also indicate the
physical delivery date of the material to . . . Rand’s facility or to
the . . . Rand customer’s facility if drop shipped.

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 Itemized listing of all invoices rendered to . . . Rand related to
this project including [Rand] job #, [Rand] invoice #, invoice
date, invoice amount, . . . Rand purchase order # and . . . Rand
job # (including a job-to-date total billed), including any
previously unsubmitted invoices for all work through February
20, 2005.

(Underling in original). Nunley testified that he signed the termination letter without reading
it and did not even know what it said.

At trial, Automation took the position that it was not relying upon its invoices to prove
its counterclaim. Automation argued Rand’s demand that Automation hold invoices in 2003
and 2004 created so much confusion that the invoices were not the best evidence of the
amount owed. Instead, Automation commissioned Tyman Junior, who designed and
implemented Automation’s job cost database, to comply with Rand’s demand in its
termination letter and reconstruct the amount owed Automation using the “job-to-date”
database.

However, considerable trial testimony focused on criticizing or explaining eight “sets”
of invoices generated by Automation and received by Rand after November 2004. The
invoices, by “set” number, date generated, and amount, are as follows:

Set
1 Nov. And Dec. ‘04 $2,323,225.39
2 Nov. And Dec. ‘04 $2,846,819.12
3 Nov. And Dec. ‘04 $1,419,238.32
4 April and May ‘04 $ 551,803.54
5 Nov. 04 $1,319,200.54
6 Feb. 2005 $1,789,555.54
7 April 12, 2005 $3,704,904.48
8 May 4, 2005 $ 2,286.34

The testimony and even the “facts” in the briefs concerning the listed invoices are confusing
at best. We are presented with Rand’s position that the invoices mean nothing and must all
be fraudulent contrivances, and the contrasting position of Automation as exemplified by
Tyman Junior’s explanation of invoices, many of which he did not prepare and would not
have been responsible for either holding or sending. Interspersed is testimony of Tyman
Senior and Noll, both of which relied, to some extent, on sources other than their personal
knowledge to supplement or “refresh” their memory. Nevertheless, there is some common
ground as to the invoices from which some useful information can be gleaned. The first and

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second sets of invoices are not real figures but inflated by some amount of held invoices that,
according to Automation, the parties were trying to work into the mix. Only the third
through the sixth sets represent nonduplicative invoices, the sum of which is approximately
$5.0 million.5 If the seventh set, sent to Rand shortly after the split, is read in the context of
Rand’s previous request for an understanding of the total amount owed (with credit for
payments made implied), the seventh set roughly approximates the non-duplicative billing
in 2004-2005 ($5.0 million) minus payments of approximately $1.3 million ($500,000 and
$800,000). Tyman Junior testified that Automation had received no payments from Rand
since the termination letter. Shortly before the termination letter, in early 2005, Automation
received one payment of $833,507.66. Automation also concedes in its brief that in April
and May of 2004 it received payments from Rand of approximately $550,000. This payment
corresponds to the invoices billed in early 2004 that matched another $550,000 that were
held.

Tyman Junior stated that the termination letter asked for a level of detail more than
had ever been demanded between the related companies. Noll testified that, before the Split,
the dealings between the two companies were informal with Nunley calling the shots on a
day-to-day basis. Nunley admitted that at no time before the termination letter did he send
written notification to Automation complaining of their billing practices. Nunley testified
at trial that he had orally complained to Automation of overbilling, but was impeached with
his deposition testimony to the contrary.

Tyman Junior has had some experience with Automation dating back to part time
work while he was a student. Tyman Junior designed and implemented the job cost system
presently in use by updating a system his father had previously used. Tyman Junior testified
that using the material in the job costing database, he first calculated the amount due from
Rand as $5,995,000 and provided his findings to Rand. As the terminology implies, the job
cost database is the system that Automation employs to track its cost on a given job and from
which it generates its invoices to customers, including Rand. The data in the job cost
database that is pertinent to this case is labor, material cost and expenses. Engineers enter
their time directly into the job cost database. Other employees record their time on a time
sheet and office personnel then enter the time into the system. Either way, time is recorded
by project number, amount of time, and description. Labor entries are consecutively
numbered to prevent random insertion of false time entries.

Material costs are largely of two types – direct purchases and stock materials. Direct
purchases, as the description suggests, consist of materials that are purchased by Automation
for use on a particular job. These materials are matched to a Rand project by project number.

5
According to Rand, even the third set duplicates part of the $550,000 in held invoices.

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Data entry includes date of invoice, amount, Rand project number and purchase order
number. Stock materials are materials Automation keeps on hand, in stock, for use as needed
on any given job. This material is allocated to a particular job when the employee that is
going to use the material records it in the “stock charge out book.”

Expenses are simply those incidental charges, typified by travel and lodging, incurred
by workers on a given project. Some are credit card charges. Some of these are on a
company credit card and some are not. Sometimes an employee will borrow a card, often a
company card, from another employee who is not working on the same project. This is the
explanation given by Automation to charges reflected under the name of an employee who
had no time on projects to which expenses were charged. Occasionally, a credit receipt will
be lost and will be manually recreated and entered into the system.

Tyman Junior and numerous Automation employees described the process by which
the labor, materials and expenses are recorded and entered into the system. Automation’s
office manager, Misty Frizzell, testified that she always tries to be careful to assure that only
accurate information is honestly recorded. Misty was not asked a single cross-examination
question by Rand.

Tyman Junior assembled into project folders the job cost for each job Automation had
worked on in the 2004-2005 time frame. Each project folder purported to reflect the total
cost incurred, utilizing the labor multiplier and material and expense mark up of 21%.

In late 2004 or early 2005, Rand hired a CPA named Ken Baker to assist in gathering
information to accomplish the sale of the company. It was Baker who received and
responded to Tyman Jr’s presentation of $5,995,000 as the amount due Automation. Baker
analyzed in detail Automation’s claim as constructed by Tyman Junior and found numerous
problems. We will give the highlights. Baker found that Automation employees had
improperly recorded time for cleaning their work areas and for performing routine
maintenance around the building and grounds. Baker also found that Automation employees
charged time to Rand projects for ordering materials and for handling materials once
delivered. Baker criticized some time descriptions, such as “tooling” and “sleeving” and
“wiring.” Also Baker found that the multiplier had been improperly increased above 3.0 to
3.75 for some employees. Baker found that more materials were charged to some projects
than there were component parts in the project. By far, the largest single entry challenged
by Baker was an invoice for Greg Noll’s time in the amount of $400,000.

According to Tyman Junior, he worked through all of Baker’s objections and removed
any questionable charges. Notably, the invoice for Greg Noll’s time was removed as a basis
for the claim before the case went to trial. Nevertheless, Noll was questioned concerning the

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charge. Noll testified that as a supervisor, he usually did not bill for his time. However, Noll
testified that he billed for his work approximately 10% of the time, especially if he was
acting in more of a production role than a supervisor. Noll explained that when Automation
was created, Nunley received nearly one half the ownership interest in the company in
exchange for his commitment that Rand would use Automation for all its electrical and
computer programming work. Noll felt that Rand’s sudden severing of all ties with
Automation altered the equation and justified Noll in billing Rand for his time. Noll further
felt justified in charging Rand for his time because, in the months leading up to the
termination, he worked almost exclusively at Rand’s site on Rand’s projects, often with his
tools beside the production workers, with the result that Rand made a considerable profit.
Nevertheless, Noll testified that when Rand questioned the charge, it was removed because
Automation preferred to remove anything questionable rather than force the issue. At one
point during the re-direct examination of Noll, the court sustained an objection to Noll
talking about the invoice as irrelevant:

The Court: Let me ask you a question. He said 17 times he’s
kicked the $400,000 out. What relevance does it have to my
ultimate decision?

Mr. Patrick [Counsel for Automation]: I don’t think it has any.

The Court: Sustained.

As to the other charges, Tyman Junior testified that few of the criticisms were
justified. Tyman did, however remove any labor charges that did not contain a description
of the service performed, and he removed any direct material charge which he could not
substantiate with an invoice. Automation produced in discovery copies of all invoices for
each job folder as well as employee time sheets. The weight of the testimony at trial was to
the effect that CPA Baker was inexperienced in this particular manufacturing environment
and that he therefore did not understand that descriptions such as “tooling”, “sleeving cable”
and “wiring” were routine tasks that were well understood. Also, Baker’s criticism of too
many parts on one project was wrong because, for example, instead of one robotic arm which
might have required 10 sensors, there were four robotic arms which would have required 40
sensors. Further, there was persuasive testimony to the effect that building and implementing
a component of robotic tooling is as much an art as a science and that the initial plans and
bill of materials will usually change as a given machine evolves from drawings and raw
materials to become part of a working assembly line. Numerous Automation witnesses
testified that they charged for cleaning because Nunley insisted that the plant be kept clean,
especially when visits from Rand customers were scheduled.

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 Tyman Junior also testified that when he went to the job cost system to extract the
information demanded by Rand, he found that Automation had not charged Rand for some
of the work that it had done in 2002 and 2003 for work that was uncompleted as of January
2004. Tyman testified that this added $665,000 to Automation’s claim.

In the course of discovery, Automation produced its job cost system in digital form.
Automation sought from Rand its, Rand’s, job cost system under the theory that the data in
Rand’s system would demonstrate that Automation’s charges were “in line” with Rand’s
expectations. Primarily, Automation contended that its billing was in line with charges to
Rand from other vendors and to the ultimate customer from Rand. Rand resisted the
discovery and the trial court denied Automation’s motion to compel Rand to produce its job
cost system. Automation points out that it had a similar problem acquiring Rand’s purchase
orders, and that when it did secure unredacted copies of the purchase orders on the eve of
trial through an order compelling production, it was able to match exactly a purchase order
to the aforementioned $1.3 million consulting and engineering invoice.

On the morning of trial, Automation moved to exclude voluminous exhibits that Rand
produced just seven days before trial (“the 7 day documents”). Rand resisted the motion,
arguing that the exhibits contained no new documents – they were simply the analysis of
information previously supplied. The court denied the motion to exclude but gave
Automation the option of a continuance or additional discovery during breaks in the trial.

The trial court took the case under advisement and later entered a fairly detailed
memorandum opinion and order approximately 90 days after the trial ended. It found that
the question was not whether Rand owed Automation for work done on Rand projects, but,
rather, how much Rand owed Automation.

The first aspect of Automation’s claim that the court addressed was the claim that
$33,867.76 of material in Automation’s stockroom should be Rand’s responsibility because
it was specifically acquired for Rand’s jobs and was otherwise worthless to Automation. The
court denied this aspect of the claim for three reasons. First, the court believed Automation
had been invited to make such a claim in direct response to Rand’s termination letter but did
not. Second, the court believed that the materials were such that they remained useful for
other projects. Third, the court held that in making the claim, Automation bore the burden
of showing that the material could not be returned for credit, which burden Automation did
not bear.

The second aspect was Automation’s claim that Rand owed $6,075,208 for labor,
material and expenses Automation incurred directly on Rand contracts. The court noted
Rand’s defense that Automation was “guilty of fraud in presenting its claim,” but the trial

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court did not make a specific finding of fraud. The court specifically rejected Rand’s
contention that Automation could not increase its labor charge or multiplier.

The court ultimately found that Rand was responsible for unpaid charges in the
amount of $2,270,759.22, largely based on information other than the Automation invoices
or Tyman Junior’s reconstruction of job cost. The trial court took particular note that
Automation had issued credit memos in April 2005 in the amount of $1,530,103.75.
According to its internal financial reports, Automation’s total receivables at the end of 2004
was $4,333,433.00. Accounts receivable aging reports showed Rand owing $2,846,819.12
as of December 31, 2004 and $3,800,866.97 as of February 21, 2005, or the time of the Split.
The court noted that this amount matched Automation’s customer ledger for Rand. “The
court believes the calculation set forth above [giving $1,530,103.75 credit issued April 2005
against $3,800,866.97 owed as of February 21, 2005], according to [Automation’s] financial
records, is correct.” The court explained its method as follows:

The court has used [Automation]’s Financial Statement,
customer ledger, and accounts receivable aging report detail to
limit [Automation]’s Claim against [Rand]. It is only fair and
natural to limit [Automation] to the account receivable listed in
its tax returns, accounts receivable aging detail report, and
customer ledger. These documents list the balance due, after
crediting [Rand] with payments of $835,507.68 to
[Automation]. These payments were recorded between January
4-21, 2005. However, the [Automation] documents do not show
the April credits from [Automation].

There was one troubling aspect of the customer ledger. The
court saw no payments close to totaling over $550,000.00 like
Trial Exhibit 606 for April or May of 2004. This raises a
question as to whether [Rand] has been given credit for all of its
payments to [Automation].

The court also listed five credibility concerns that caused it to favor Rand in its
evaluation of the amount due. First, trial exhibit 500 was more a “hodgepodge” than a
systematic billing. Second, the court found Automation’s invoice for Noll’s work in the
amount of $400,000 was unbelievable. Third, the court saw Noll’s invoice as an indication
that other inflated invoices existed. Fourth, the trial court expressed puzzlement as to why
the job cost system would not match invoicing. And fifth, the fact that Automation issued
credits yet the claim always hovered around $6,000,000 caused some concern. Without
specifically finding that any of Automation’s witnesses were not credible, the court expressed

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general concerns with both Noll and Tyman Junior. The court did not believe that
Automation held invoices of $1.3 million, partly because Roach had admittedly become upset
when he learned about the $550,000 in held invoices without any such demonstration
regarding the $1.3 million in held invoices. Finally, the court viewed Roach’s personal
attacks against Nunley and Roach’s admission from the stand that he had no personal
knowledge upon which to base the attacks, as having some link to inflated billings,
apparently done to fund Automation with a view to the oncoming Split.

The court held that Rand did not give the Dieco assets to Automation. The court
found that the elements of unjust enrichment were present under Freeman Industries v.
Eastman Chemical Co., 172 S.W.3d 512, 525 (Tenn. 2005), the essence of that case being
that a party receives a benefit under circumstances that would make it unequitable to retain
the benefit without payment. One factor that swayed the court considerably was Tyman
Senior’s admission that Automation had billed over $5 million for tube bending after
acquisition of the Dieco assets. However, the court did not accept Rand’s contention that
the assets were worth $1.9 million. The court looked to numerous factors, including the
amount of the initial loan of $500,000 to Dieco from Rand and the amount of Rand’s first
invoice of $500,000 to Automation, and set the award at $500,000.

As to Rand’s claim for reimbursement of rent and taxes, the trial court held
Automation liable for the full amount claimed of $162,818.80. The court rejected
Automation’s argument that it could not be held liable because it had not agreed to the
amount being paid by Rand. The court reasoned that an express agreement is not necessary
for a recovery based on quantum meruit. The court also rejected Automation’s argument that
the payment by Rand to the property owners did not necessarily reflect fair rental value. The
court stated that the amount paid most likely reflected a fair value and that if Automation had
not been satisfied with the amount, it should have tried to negotiate an amount it thought
reasonable. The court held that, of all the claims made in the case, this one was the most
certain.

Even though Rand had dismissed its claims of slander, breach of fiduciary duty and
interference with business relations against Roach with prejudice, the trial court nevertheless
entered judgment against Roach and in favor of Rand on the rent and taxes reimbursement
claim. The sum total of the court’s rationale is as follows:

[O]n the basis of an issue tried by consent or implication, [Rand]
may also be due a judgment for $162,818.80 against Richard
Roach for conversion, negligence or mistake as Mr. Roach was
in control of the payment of bills. Mr. Roach, whether he used
[Rand’s] funds on purpose, by negligence or by mistake, should

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 have to reimburse [Rand] for its lost monies if [Rand] does not
recover from [Automation]. The court will make this finding an
alternate judgment if [Automation] is found not to be liable to
[Rand] for $162,818.80 or any part of said sum.

The court awarded prejudgment interest on all the monetary awards. On
Automation’s award, the court allowed 5% interest from April 25, 2005, on approximately
$550,000 and 1.25% on approximately $1.7 million for a total of $256,705.19. The court
awarded 4% on the Dieco assets from May 30, 2006, for a total of $45,000. On the rent and
taxes claim, the court awarded 6% from May 30, 2006, for a total of $21,899.53.

As we have previously stated, both Rand and Automation, joined by Roach, filed a
motion to alter or amend. In granting Rand’s motion to alter or amend, the trial court
transformed its non-specific “credibility” concerns into a finding of fraud. The court
analyzed the motion as follows:

The questions . . . presented in this part of the case . . . are two.
One, did [Automation] submit fraudulent documents in an effort
to collect money from [Rand]. Two, if so, what is the legal
consequence of such fraud.

The court has reviewed the Memorandum Opinion filed herein
on August 29, 2008. [Automation]’s account receivable claim
was discussed from page 33 to page 44. Some conclusions from
the opinion are as follows:

(1) [Automation] prepared false invoices for collection of its
claim(s) against [Rand]. The amounts shown on the invoices
vary considerably. A summary of the invoices [Automation]
prepared for [Rand] is set forth on page 36 of the Memorandum
Opinion filed on August 29, 2008.

(2) [Automation] issued to [Rand] certain credit memos for
specific entries or charges set forth in the invoices. These credit
memos were based upon [Rand]’s specific complaints about
certain charges. [Automation] admitted to some errors in its
billing. For example, one invoice to [Rand] was for $400,000
for Greg Noll’s supervision of work at [Rand]’s facilities.

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(3) [Automation]’s customer ledger does not show payments of,
or close to, the $552,853.70 paid to [Automation] by [Rand]
based upon a list of outstanding billings to [Rand] submitted on
April 24, 2004. The payment of $552,853.70 was approximately
one-half (½) of [Automation]’s new or previously unbilled
amounts to [Rand]. This raises a question of whether
[Automation] gave [Rand] credit for such payment, which was
one-half (½) of the unbilled amounts submitted to [Rand] by
[Automation]. The other part of the billing was not initially paid
but “held.” . . .

(4) The court discussed on page 42 of the Opinion filed on
August 29, 2008 five reasons why the court could not believe all
of the financial documents submitted by [Automation]. The
court’s opinion on these issues has not changed.

(5) Certain actions at or during trial by [Automation] officers,
or failure to act previously, generated concern about
[Automation]’s position. Some of these factors were mentioned
under the credibility issue discussed on pages 42,43 and 44 of
the Memorandum Opinion . . . . The court’s opinion on these
issues has not changed.

(6) The court based its decision on the account receivable
amount shown due from [Rand] in [Automation]’s financial
documents because the amounts claimed would be factored into
the income tax return of [Automation]. Yet, in its post-trial
position, [Automation] claims that it was owed more than
[Automation] listed as the account receivable amount in its
financial records. The reason stated for not declaring or listing
all receivable amounts was that [Automation] had to pay tax on
the amount of receivables listed. Because of cash flow issues,
[Automation] failed to list the total of all of the account
receivables claimed from [Rand] because [Automation] could
not afford to pay taxes on such a large amount. Such action
amounts to fraud on the United States. These acts constitute
“unclean hands.”

(7) The “facts” smell bad. [Rand] made efforts in August and
October of 2004 for [Automation] to submit all of its billings to

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 [Rand]. Indeed, [Automation]’s customer ledger [showed a]
zero balance due from [Rand] as of November 3, 2004. . . .
There remained a zero balance until December 28, 2004, when
[Automation] added invoice amounts due from [Rand]. These
invoices, 45 dated December 28, 2004 and two dated December
29, 2004, totaled $2,846,819.12 . . . . According to Trial Exhibit
500, the $2,846,819.12 in invoices are set forth in the Second
Set of Invoices received by [Rand] on or around December 28,
2004. [Automation]’s third set of invoices was received [by
Rand] on or about December 29, 2004, and these invoices, for
the same period of time, totaled $1,419,238.52. Later, on
January 17, 2005, Mr. Noll told [Rand] that there was nothing
big in the pipeline due [Automation], mostly repair and service
work. Yet, [Automation] sent [Rand] large invoices in February
and April of 2005. . . . [Rand] paid [Automation] $835,507.68
between January 4-21, 2005.

Based upon the Nashville Ford Tractor decision, this court
must deny [Automation] any recovery of its account receivable
claim against [Rand]. Nashville Ford Tractor [,the dealer,] was
admittedly due some unpaid rents. Yet its falsely adding a
location of the equipment used to place all equipment under one
payment bond and other documentation to support that claim
resulted in the lessor’s loss of all monies due it. [Automation]
must bear the same consequence.

(Underlining in original, some record citations and headings omitted). Otherwise the court
left its original judgment undisturbed.

II.

Automation6 raises the following issues on appeal which we have restated and
consolidated to eliminate duplication:

Whether the trial court erred in nullifying Automation’s claim
in its entirety for fraud based on Nashville Ford Tractor, Inc.

6
Rand makes the request in the “conclusion” of its brief that we remand the case to the trial court to
consider an award of attorney’s fees as a sanction. This matter is not mentioned in Rand’s “Statement of
Issues Presented” and there is no supporting authority cited. We decline Rand’s request.

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v. Great American Insurance Company, 194 S.W.3d 415
(Tenn. Ct. App. 2005).

Whether the trial court erred in reversing its award to
Automation on Rand’s motion to alter or amend, in the absence
of newly presented evidence or legal authorities.

Whether the trial court erred in refusing to grant Automation’s
motion to alter or amend the amount of its monetary award
against Rand to the full amount claimed by Automation.

Whether the trial court erred by not allowing Automation
discovery of Rand documents that would have allegedly
substantiated Automation’s invoices.

Whether the trial court erred in not excluding documents
introduced by Rand on the issue of Automation’s invoice claim
that were not produced in discovery.

Whether the trial court erred in entering a judgment against
Richard Roach after he had been dismissed from the case with
prejudice.

Whether the trial court erred in striking portions of the testimony
of Tyman Senior.

Whether the trial court erred in its credibility determinations.

Whether the trial court erred in finding that Automation was
unjustly enriched by Rand’s contribution of assets and that they
were not a gift from Rand.

Whether the trial court erred in finding that Automation was
unjustly enriched by Rand’s payment of taxes and rent on
buildings occupied by Automation.

Whether the trial court erred in its award of discretionary costs
to Rand by including costs that are not allowable under Tenn. R.
Civ. P. 54.04(2).

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 III.

The trial court’s factual findings are reviewed de novo, but are accorded a
presumption of correctness unless the evidence preponderates against those factual findings.
Tenn. R. App. P. 13(d); Money & Tax Help, Inc. v. Moody, 180 S.W.3d 561, 565 (Tenn. Ct.
App. 2005). A trial court’s findings which hinge on credibility will not be overturned absent
“clear, concrete and convincing evidence” to the contrary. Tennessee Valley Koalin Corp.
v. Perry, 526 S.W.2d 488, 490 (Tenn. Ct. App. 1974); see Wells v. Tennessee Bd. of
Regents, 9 S.W.3d 779, 783 (Tenn. 1999). If the trial court makes no factual findings, we
simply review the judgment de novo for the preponderance of the evidence, without a
presumption of correctness. Kesterson v. Varner, 172 S.W.3d 556, 566 (Tenn. Ct. App.
2005). A trial court’s conclusions of law are reviewed de novo with no presumption of
correctness. Vantage Technology, LLC v. Cross, 17 S.W.3d 637, 644 (Tenn. Ct. App.
1999). We review evidentiary rulings of the trial court for abuse of discretion. White v.
Vanderbilt Univ., 21 S.W.3d 215, 222 (Tenn. Ct. App. 1999). Failure to follow the
controlling legal standards to the prejudice of one of the parties constitutes an abuse of
discretion. See Overstreet v. Shoney’s, Inc., 4 S.W.3d 694, 709 (Tenn. Ct. App. 1999). A
trial court’s decision on a motion to alter or amend a judgment is also reviewed for abuse
of discretion. Chambliss v. Stohler, 124 S.W.3d 116, 120 (Tenn. Ct. App. 2003). Although
it is not the function of a motion to alter or amend to relitigate a matter that has been fully
adjudicated, it is permissible under a Tenn. R. Civ. P. 59 motion for a “trial court to revisit
and rectify errors that were made when the court overlooked or failed to consider certain
matters.” Morrison v. Morrison, No. W2001-02653-COA-R3-CV, 2002 WL 31423848 at
* 2 (Tenn. Ct. App. W.S., filed Oct. 29, 2002). Finally, a trial court’s decision on discovery
motions whether to limit or permit discovery is reviewed for abuse of discretion. E.g., Frye
v. St. Thomas Health Servs., 227 S.W.3d 595, 600 (Tenn. Ct. App. 2007).

IV.

A.

We begin by commending the trial court for its attempt to make sense of the mass of
information presented in this case. The testimony on the counterclaim alone consumes some
5000 pages of transcript, with approximately 150 accompanying exhibits, many of which are
voluminous. The transcript is especially hard to decipher because the testimony is
interspersed with argument and what borders on testimony by the lawyers. The pattern
established in the trial court is continued in the voluminous briefs. Even when the parties
agree about a fact or point of law, which is seldom, they disagree about its impact. Now it
is our turn to try to condense this massive project into a manageable discussion of the issues.

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 B.

We begin with the issue of whether the trial court abused its discretion in granting
Rand’s motion to alter or amend on the basis of Nashville Ford Tractor. The answer to this
question boils down to whether the trial court was correct in finding fraud of the nature
presented in that case. Before we can complete our mission, we must determine whether the
fraud such as alleged here may be proven by a preponderance of the evidence or whether it
must be shown by clear and convincing evidence. See Estate of Acuff v. O’Linger, 56
S.W.3d 527, 529 (Tenn. Ct. App. 2001). According to Acuff, there are two lines of cases and
the level of proof depends upon which side of the line a particular case falls. Id. The line
of demarcation is not altogether clear. Id. In general, tort cases based on misrepresentation
can be won based on a preponderance of the evidence, but for a party to successfully defend
against enforcement of a contract on the basis of fraud, the party must show the predicate
facts by clear and convincing evidence. Id. at 531. This present case, we believe and so
hold, falls closer to the latter than the former. We must, therefore review the proof to
determine whether it is such as to establish in the trier of fact an abiding conviction that it
is highly probable Automation was guilty of fraud. Id. at 535-36.

C.

Before focusing on the central issue, we will briefly address one of the arguments that
seems to swirl around the vortex. Automation, apparently nervous over the content of some
of the invoices, argues that it did not rely on the “invoices” to prove its case. Rather,
Automation says it relied on a spreadsheet of numbers produced from its job cost database.
On this point, we agree with Rand that if Automation submitted fraudulent invoices as the
basis for its claim, then it should not be allowed, after it is caught, to simply turn away from
the invoices and chart another course toward the same goal.

D.

With this understanding, we proceed directly to the trial courts’ seven numbered
findings upon which it based its reversal of the original judgment. The first finding was that
Automation prepared false invoices as reflected in the eight sets we have set forth above,
which were sent to Rand after November 2004. The trial court specifically mentioned the
variation in amounts as a basis for its finding. We agree with the thrust of Automation’s
position that confusion and variation in the eight sets of invoices is largely the result of
Rand’s admitted attempt to defer at least some expenses to make it “look better” to potential
buyers and drive up the sales price under the EBITDA factor. Even though Rand admitted
directing Automation to hold the $550,000 group of invoices, it denied directing Automation

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to hold the $1.3 million group of invoices and convinced the trial court of its position.

Normally, we would defer to the trial courts “credibility” finding, but in this case there
is direct “concrete” documentary evidence that contradicts the trial court’s finding. See
Perry, 526 S.W.2d at 490. That evidence is the purchase order issued by Rand for $1.3
million in consulting and engineering – a document that Rand attempted mightily to hide
from discovery. Also, one copy of the invoice was admittedly approved by Rand. The
evidence more than preponderates in favor of finding that the invoices then sent by
Automation contained a mixture of current billing and previously held billing. Moreover,
Rand’s complicity in the variation and confusion in the invoices is corroborated by the fact
that Rand paid, by way of a hidden bonus, an Automation employee to enter Automation’s
database and alter invoices. Further, Nunley paid Noll and Tyman Senior a bonus as if the
$550,000 and $1.3 million amounts had been billed. We believe, and so hold, that there is
clear and convincing evidence of fraud on the part of Rand, not Automation, that generated
the majority of the confusion as to Automation’s billings to Rand.

The second finding that the trial court cited as evidence of fraud was Automation’s
admission of erroneous billing. The only erroneous invoice that the trial court referenced
directly was the $400,000 invoice for Mr. Noll’s time. Rand describes Noll’s invoice as
“[o]ne of the most egregious examples of outright fraud” in the record. While we believe it
is the most egregious example of an invoice created with the idea of padding the claim, we
think that even it does not rise to the level of fraud that will preclude a claim as discussed in
Nashville Ford Tractor. Before we discuss distinctions, we will provide a snapshot of the
Nashville Ford Tractor case. Equipment dealer Nashville Ford Tractor, Inc. leased two
excavating machines and one wheel loader to Murrell. Murrell contracted with Webster, the
prime contractor, to perform work on at least two projects, the Lock Four Road project and
the Gallatin Industrial Center project. Murrell abandoned the work and left it for Webster
to finish. Murrell did not pay the dealer for the use of the equipment. The dealer made a
claim against the prime contractor’s performance bond on the Lock Four Road project.
Knowing full well that at least two pieces of the equipment were used on other jobs, the
dealer not only falsely represented that all three pieces were used exclusively on the Lock
Four Road project, but went so far as to alter the lease documents to reflect that the
equipment was leased for that particular project. Unfortunately for the dealership, there were
other copies of lease documents around that demonstrated the alteration. On appeal, we held
that the fraud on the dealership’s part precluded it from recovering any part of its claim
against the bond. Id. at 428.

We see two significant differences between this present case and Nashville Ford
Tractor. First, even after the alteration was called to the dealership’s attention it continued
to rely, even on appeal, “to this day, . . . on the altered lease agreements rather than

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attempting to provide the unaltered versions to the court and the other parties.” Id. at 427.
Automation witnesses, including Noll, testified that when CPA Baker raised concerns about
Automation’s billing, it examined specific concerns and attempted to remove all questionable
charges. Noll’s invoice was specifically removed from the claim over a year before the case
came to trial. The trial court must have believed that Automation and Noll attempted to do
the right thing as to this particular charge because, as we noted in our recitation of facts,
when Automation attempted on redirect to have Noll explain the invoice at length, the trial
court cut him off. The court reasoned that the removal of the invoice from the claim was all
that mattered.

The second distinction is that Noll had a colorable innocent explanation for the
invoice, even though he agreed to its removal as questionable. It was not unknown for Noll
to charge for his time, especially when his work was more production than administrative.
For this work, he was primarily at Rand’s facility working with his tools beside production
workers. And, while he might not normally have thought about charging for all his time, he
thought in this instance that Nunley had wronged Automation by depriving it of the very
thing that Nunley had promised in exchange for an ownership interest. As we have noted,
Noll might have had even more to say on the issue had opposing counsel and the court not
cut him off.

The third subject that the trial court offered was more a question than a finding. The
court had some concern that Automation had not recorded a credit for payment on the group
of billed invoices that corresponded to the $550,000 in held invoices. Automation contends
in its brief that it did give Rand credit for the payment and offers citation to exhibits that
confirm its position. Under the circumstances, knowing that Automation was holding some
invoices as virtually non-existent at Rand’s request, we will not fault Automation to the point
of ignoring its claim even if it did fail to record all payments until it could see how the “held”
invoices were going to be handled by Rand.

The fourth subject that the trial court raised was its “reasons why the court could not
believe all of the financial documents submitted by [Automation].” Our previous discussion
has made clear that we disagree strongly with the trial court about the driving force behind
the confusion in Automation’s invoices. We will not break that discussion down by number
here, partly because most of the other reasons are discussed in part or in whole elsewhere.
Moreover, since Automation’s fraud must be proven by clear and convincing evidence, it is
not enough that we reject some of Automation’s invoices as unproven or some of its proof
as unbelievable.

The fifth subject listed by the trial court was “[c]ertain acts at or during trial by
[Automation] officers.” In the absence of specific findings we can only discern three matters

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to which the trial court might have been referring. The first is Mr. Noll’s demeanor in being
unusually slow to answer questions and his creation during trial of a list of Dieco assets
delivered to Automation. As we have indicated, fraud is not proven by the fact that one of
a party’s witnesses is unbelievable on a specific point. Juries are routinely instructed that
they can believe a witness on one point and disbelieve him or her on another. 8 Tennessee
Practice, Tennessee Pattern Instructions, Civil § 2.22 (2009). A second matter was Tyman
Junior’s role in preparing his father to testify despite the rule of sequestration, and his being
impeached about which Dieco assets were directly assigned to Automation. In addition to
reiterating the distinction between credibility and outright fraud, we note that the Dieco
assets had little to do with the counterclaim, and that the trial court refused to strike Tyman
Junior’s testimony as a sanction. The third matter that the trial court alluded to was Roach’s
perceived failure to object to Rand’s request to hold the $1.3 million of invoices, despite his
protest of the $550,000 in held invoices. As we have discussed, this silence by Roach was
taken by the trial court to negate the suggestion by Automation that $1.3 million in invoices
were held at the request of Rand, but the documents prove to this Court that invoices
approximating that amount were, in fact, held. In short, we do not believe the fifth finding
weighs heavily against Automation.

The sixth matter that the trial court weighted against Automation was the fact that it
claimed over $6 million was owed but reported only $4.3 million in total accounts receivable
on its income tax return. The only justification offered by Automation, according to the trial
court, was that it could not afford to pay taxes on the full amount. On appeal, Automation
elaborates on its position. Automation points out that normally Rand will approve invoices
before they are booked. It was the “approved’ invoices that were therefore reported as
receivables with the others being, at least impliedly, in dispute. Automation’s explanation
makes abundant sense to this Court, especially in light of the outcome. To uphold the trial
court we would need to hold that even though Rand only really owed Automation
approximately $2.2 million, it was required to report on its tax return that Rand owed it $6
million. We realize that tax returns could later be amended to show that what was thought
to be $6 million was actually $2.2 million, but, by the same token, they could be amended
to show that what was thought to be $4.3 million in receivables turned out to be $6 million.
We are especially uncomfortable in denying Automation recovery on the basis of one entry
in a tax return.

The final matter mentioned by the trial court as the basis for fraud is that the facts
“smell bad.” We do not disagree with that conclusion, but we find and hold that most of the
bad smell must have been coming from Rand’s side of the courtroom. The “smell” finding
was made in the context of Rand’s alleged insistence that Automation bring its invoicing
current. Automation witnesses explained, however, that Rand’s left hand, that was asking
for invoices, did not know what Rand’s right hand, i.e., Nunley, was doing, i.e., asking

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Automation to hold invoices. There is no room for doubt that Rand directed Automation to
hold some quantity of invoices hoping to improve its EBITDA factor and gain up to six times
the amount of the held invoices. This action, and the attempt to work the held invoices into
the stream of billing in an unidentifiable manner, undoubtedly caused much of the delay for
which the trial court erroneously penalized Automation.

In summary, we hold that the present case is much different on the facts from that of
Nashville Ford Tractor. We have elaborated above on the obvious distinctions. The trial
court offered numerous categories of justifications for placing this case within the realm of
Nashville Ford Tractor; but there is certainly no finding of fraud by clear and convincing
evidence. As to the justifications offered by the trial court, we have disagreed with some,
and otherwise have not agreed that the somewhat casual justifications support a finding of
fraud by the requisite proof. Accordingly, we hold that the trial court abused its discretion
in completely denying Automation recovery under Nashville Ford Tractor.

We do not reach the issue of whether the trial court erred in granting the motion to
alter or amend in the absence of newly discovered evidence or a change in the law. We
reiterate that it is permissible under a motion to alter or amend for a trial court to “revisit and
rectify errors.” Morrison, 2002 WL 31423848 at *2.

E.

The next issue we will address is whether the evidence preponderates against the trial
court’s finding that Rand only owed Automation $2.2 million plus. This discussion will
encompass several of the issues we have enumerated above because our reasoning applies
equally to all. Our starting place is with the general law of damages. When damages are
certain, it is permissible to award damages though there be some uncertainty as to the
amount. BancorpSouth Bank, Inc. v. Hatchel, 223 S.W.3d 223, 230 (Tenn. Ct. App. 2006).
That general rule has considerable sway in the present case. We agree with the trial court
that there is little doubt that Automation performed work for which is was not paid. We also
agree that the proof as to exactly what remains unpaid leaves much to be desired. One factor
that we have already mentioned that weighs in favor of allowing Automation a recovery
despite some uncertainty is Rand’s role in creating this confusing mess. “[T]he most
elementary conceptions of justice and public policy require that the wrongdoer shall bear the
risk of the uncertainty which his own wrong has created.” Hamilton v. Stardust Theatre,
Inc., No. M2001-00678-COA-R3-CV, 2002 WL 1284280 at *5 (Tenn. Ct. App. M.S., filed
June 11, 2002)(quoting Broan Manuf. v. Associated Dist., Inc., 923 F.2d 1232, 1236 (6 th Cir.
1991)).

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 With these considerations in mind, we recognize Automation’s argument that the trial
court erred in deducting the $1.5 million credit from its accounts receivable figure and in not
adding held invoices of approximately $550,000 to the accounts receivable figure. We also
recognize other arguments of similar effect, i.e., that the trial court failed to accept some
charges that it should have accepted and gave credits where it should not have given them.
We, however, cannot agree that the evidence preponderates against the trial court’s finding.
Even though we have disagreed that the problems with Automation’s proof can be equated
to clear and convincing proof of fraud, we do agree that there were many problems with
Automation’s proof. We, again, commend the trial court for finding a thread of truth in this
situation and following it to a logical end. From whatever direction it is followed, that thread
always leads to the belief that Automation held approximately $2 million in invoices at
Rand’s request and later worked those charges into another billing. Also, whether it is
payables, or receivables, or tax returns that one believes, it appears fairly clear that everyone
in the know thought that Rand owed Automation approximately $3.8 million at the time of
the split, after giving Rand credit for payments of approximately $550,000 in 2004 and
$833,000 in January 2005. It was after this date that Automation issued a credit in the
approximate amount of $1.5 million. We believe the trial court chose a logical route through
a confusing situation. We hold that the evidence does not preponderate against the finding
that Rand owes Automation $2,270,759.22.

Although neither party has asked us to deal with the trial court’s award of
prejudgment interest on Automation’s counterclaim, we will address it briefly. The court
calculated interest from the date the claim was made. Its award is based on a rate of 5% on
$550,000 and a rate of 1.25% on the remainder. The award is certainly within the reasonable
bounds of discretion. Consistent with our handling of Automation’s claim, we reinstate this
award of prejudgment interest.

F.

In light of our holding, it should be obvious that we disagree with Automation’s
argument that the trial court erred in not allowing its full claim for $6,109,075.58 as
calculated in its “job cost to date” spreadsheet. Automation criticizes the trial court for its
failure to discuss its spreadsheet and underlying data. What the trial court held that we
believe did address the substance of Automation’s position was that whether it looked at the
invoices or the spreadsheet, it believed that Automation included more charges in its claim
than it possibly could have been owed. The evidence does not preponderate against that
finding. The figures in Automation’s spreadsheet are no better than the data input and/or the
functional integrity of the computer operation performed on the data. The record in this case
demonstrates that whether through inadvertence or intent, data was entered that generated
charges that should not have been made. Also, the record demonstrates that the computer is

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subject to some human intervention. Further, the record demonstrates that the human closest
to the data and the computer is Tyman Junior whom the trial court found to be less than
100% credible. It seems to us that the only way the trial court or this Court should consider
awarding the exact figure recited on Automation’s spreadsheet is if we found its field
recording, its date entry, its computer security measures, and its presenting witness to be
completely, 100% reliable. That is not the case.

Rand makes the countervailing argument, stated several times in several ways as has
become the practice in this litigation, that we should affirm the trial court’s dismissal of
Automation’s counterclaim on the basis that the invoices are just too unreliable to support
a judgment. Rand argues that the mere recording of the unreliable invoices in financial
statements proves nothing. The death blow, Rand argues, is Automation’s abandonment of
the invoices as the basis of recovery. While the argument makes for interesting conversation,
it is not a basis for denying Automation all relief.

Rand’s argument, when examined beyond the exterior layer, is founded upon several
sets of fallacies. It assumes that the trial court made several findings that it did not make.
For example, Rand argues that the invoices must be inflated beyond any point of reliability
because they use a labor multiplier greater than the 3.0 that Nunley approved. However, the
trial court explicitly found that Automation was not bound to a 3.0 multiplier.

The greatest fallacy underlying Rand’s argument is that it completely ignores the trial
court’s finding that even after “limiting” Automation’s recovery because of specific
concerns, including reliability of the documentation, Rand owed Automation over $2 million
for services rendered. Despite its finding of fraud on Rand’s motion to alter or amend, the
trial court never changed its finding that Automation did work for which it had not been paid.
At one point Rand argues that the data in the job cost system supports “little more than half”
the amount in one set (number 6) of invoices. Implicit in this fact is that there is hard
evidence to show that Automation had done work for which it has not been paid to the tune
of approximately one-half of the sixth set of invoices. If this pattern holds true for all the
invoices and underlying documentation, Automation could expect to recover one-half of its
claim. Rand is therefore not harmed by a judgment allowing Automation to recover for
one-third of its claim. Accordingly, we reaffirm our holding that the evidence does not
preponderate against the trial court’s finding on the amount owed Automation by Rand.

G.

Before leaving the issues pertaining to damages completely, we must deal with
arguments Automation makes concerning matters that it contends affected its ability to prove
damages. The first of these is Automation’s contention that the trial court erred in denying

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it discovery of Rand’s job cost system which Automation argues would have proved its
damages. Specifically, Automation argues that Rand’s job cost data would have shown “that
Automation’s charges to . . . Rand were in line with . . . Rand’s expectations.” Automation
wants a new trial armed with this material. Rand argues that Automation is simply playing
a “tit-for-tat” game that makes no sense in this particular context. Rand pointed out at the
hearing on the motion to compel that the other vendors were doing “mechanical” as opposed
to electrical work and programming so that any comparison would have been like comparing
apples to oranges. Rand also points out that since Automation has been its competitor since
the Split, there were good reasons for limiting its discovery of what third parties were
charging Rand and what Rand was charging its ultimate customer.

Even if we assume that everything Automation argues is true, it does not prove an
abuse of discretion by the trial court. Under the abuse of discretion standard, we do not
second-guess the trial court or substitute our discretion for that of the trial court. Boyd. v.
Comdata Network, Inc., 88 S.W.3d 203, 211 (Tenn. Ct. App. 2002). It was Automation’s
burden to prove that the labor, materials, and expenses for which it sought recovery were in
fact incurred on Automation projects. Other central issues were whether Automation billed
twice for the same work and whether Rand had in fact paid for work without being given
credit for the payment. The mere fact that charges on some project, or maybe several
collective projects, were hypothetically “in line” with what other mechanical vendors charged
Rand or what Rand charged its customers would have little if any bearing on the real issues
in the case. See Johnson v. Nissan North Amer., Inc., 146 S.W.3d 600, 610 (Tenn. Ct. App.
2004)(employee plaintiff failed to demonstrate value of information in personnel records of
other employees). Therefore, we cannot say that the trial court abused its discretion in
denying the discovery. Further, even if we were convinced that the trial court acted outside
of the bounds of discretion, Automation has not convinced us that the lack of discovery of
Rand’s job cost data “more probably than not affected the judgment.” Tenn. R. App. P. 36
(b).

H.

Automation also argues it was placed at an unfair disadvantage by being forced to deal
with the voluminous 7 day documents introduced by Rand. The 7 day documents include a
CD with 2700 pages of documentation and multiple spreadsheets which purportedly show
overcharges by Automation. Automation moved in limine to exclude the exhibits on two
grounds, i.e., (1) that the trial court had ordered Rand to produce any documents it would use
to show overcharges at least 75 days before trial, and (2) that Automation took the deposition
of Rand’s representative on the subject within that 75 day window and was told that Rand
had not quantified the overcharges. We cannot find in Rand’s 200 plus page “brief” an
argument directed at this issue, but in the hearing held on the morning of trial before the

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proof started, Rand argued that there was no new information, and no new substantive
documents, in the exhibits. Rand argued that it simply took Automation’s documents and
processed them into spreadsheets.

Automation concedes that the trial court offered a continuance and offered to allow
it to take discovery during the course of the trial. Under these circumstances, we can find
no abuse of discretion in the trial court’s refusal to exclude the exhibits. See Bluff Springs
Apartments v. Peoples Bank of the South, No. E2009-01435-COA-R3-CV, 2010 WL
2106210 at *14 (Tenn. Ct. App. E.S., filed May 26, 2010). It is not like the complained-of
documents were the only voluminous exhibit. Automation’s claim, as it explains in its brief,
is made up of 34,000 entries in its job cost system. The record fills 18 boxes. The trial
lasted from February 26, 2008, to May 1, 2008, with numerous open dates. Even if a
continuance was so distasteful to Automation that it could not be tolerated, Automation had
the option of obtaining further discovery concerning the new exhibits during some of the
open dates. We hold therefore that the trial court did not abuse its discretion in not excluding
the 7 day documents.

I.

The final issue we will address that has an arguable potential to impact the amount of
the award on Automation’s counterclaim is whether the trial court erred in striking part of
Tyman Senior’s testimony. The trial court struck Tyman Senior’s testimony “with regard to
the [labor] multiplier” and “with regard to his testimony on . . . trial exhibit 500.”
Automation has not given any reasons in its brief why the trial court was in error as to the
multiplier, therefore, we will consider any issue as to that part of the trial court’s ruling to
be waived. Branum v. Akins, 978 S.W.2d 554, 557 n.2 (Tenn. Ct. App. 1998). Exhibit 500
was introduced by Rand to show that Automation was overbilling. It portrays Rand’s spin
on the eight sets of invoices sent to Rand after November 2004, i.e., that duplicative and
inflated invoices are contained in the billing. Automation, however, concedes that the billing
contains inflated invoices and invoices that duplicate other invoices. Automation’s
explanation is that Rand was the cause of problem because of its demand that Automation
hold invoices and work the charges into the stream. Tyman Senior testified about the events,
but the trial court later struck his testimony on the limited subjects because of the court’s
perception that he lacked personal knowledge and because the court found a violation of the
rule of sequestration.

For what it is worth, we agree with Automation that the testimony “with regard to . . .
trial exhibit 500” should not have been stricken. Having reviewed the record carefully, we
are convinced that Tyman Senior, as the president and manager of Automation at the time
in question, was the person on the front line who had personal knowledge of what was going

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on with the invoices. The fact that his memory may have needed some prompting does not
mean that he had no personal knowledge.

As to Tyman Junior’s input into Tyman Senior’s testimony about exhibit 500, we also
agree with Automation that it was not a violation of the rule of sequestration. The purpose
behind the rule of sequestration is “to prevent one witness from hearing the testimony of
another and adjusting his testimony accordingly.” State v. Harris, 839 S.W.2d 54, 68 (Tenn.
1992). This is accomplished by the following directive in Tenn. R. Evid. 615: “The court
shall order all persons not to disclose by any means to excluded witnesses any live trial
testimony or exhibits created in the courtroom by a witness.” The rule of sequestration “does
not affect the practice of preparing witness by discussing their own testimony with counsel
or others, as long as the actual in-court testimony of other witnesses or the content of exhibits
created in the courtroom is not discussed.” N. Cohen, S. Sheppeard and D. Paine, Tennessee
Law of Evidence § 6.15[9] (9th Ed. 2005). Exhibit 500 was not created in the courtroom and
Tyman Junior did not testify concerning exhibit 500. In fact, Tyman Junior was prevented
from testifying about exhibit 500 by Rand’s objection. Tyman Senior testified that Tyman
Junior’s involvement in his, Senior’s, preparation was to find and furnish data that Senior
requested.

However, we do not believe the exclusion, after the fact, of Tyman Senior’s testimony
prejudiced Automation to the point of affecting the outcome. Automation was able to put
the same story of the held invoices before the court through the admissions of Nunley and
the testimony of Noll among others. Also, we perceive the trial court’s ruling “with regard
to . . . trial exhibit 500” to be something less than a total exclusion of Tyman Senior’s
testimony of the subject of held invoices and substitute invoices. Accordingly, we have
considered Tyman Senior’s testimony on the subject of the held invoices and on Rand’s input
into how those charges were to be worked into the stream of billing. We are convinced that
the evidence does not preponderate against the trial court’s determination of the amount due
Automation on its counterclaim. Therefore, we hold that the error of the trial court “with
regard to . . . trial exhibit 500” was harmless. Tenn. R. App. 36(b).

J.

Automation also argues that the trial court erred in its credibility determinations with
regard to Noll, Tyman Junior, and Roach. As we have previously held, the trial court was
in error in disregarding the proven fact of $1.3 million in held invoices. Obviously, in some
of our holdings above, we have treated Noll and Tyman Senior, in light of the documentary
evidence, as believable and Nunley as unbelievable. Therefore, in our analysis, we have not
adopted and applied the trial court’s determinations across the board. We have also noted,
and reiterate now, that the trial court merely expressed concerns without finding that a given

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witness was completely unbelievable on all subjects. Accordingly, we reject Automation’s
invitation to dissect the testimony of the witnesses point by point and line by line in this
voluminous record. We have, and will throughout this opinion, in accordance with
established precedent, give deference to the trial court’s evaluation of the testimony except
where we have found clear and convincing evidence to the contrary. Wells, 9 S.W.3d at 783.
In those instances, we have tried to make our findings and disagreements known.
Accordingly, we decline Automation’s invitation to reverse the judgment based on a
wholesale reinterpretation of the evidence and reiterate our holding that the evidence does
not preponderate against the trial court’s finding with regard to the amount Rand owes
Automation for work it performed on Rand projects. We will, of course, factor any
credibility issues into our discussion of the other claims at issue.

K.

Automation argues that the judgment against it for reimbursement of rent and taxes
paid by Rand on the premises at 106 Spring Road must be reversed. One argument is simply
that Automation should not be liable because it did not agree to whatever agreement Rand
had with the landlord. We agree with the trial court that if Automation had not liked the
arrangement, it should not have moved into the building without negotiating its own
arrangement with the landlord. Automation cites no law in support of its position and all the
law of which we are aware weighs against Automation. The mere occupation of property
implies an agreement to pay a reasonable rent. Greenwood v. Maxey, 231 S.W.2d 315, 319
(Tenn. 1950).

Also, Automation argues that Rand received a benefit out of property by using the
building for overflow. This may be true, but it is undisputed that Automation was the
primary tenant. Automation’s argument might have been a basis for apportioning part of the
rent to Rand as a subtenant, but Automation is not arguing for that result. Automation simply
wants us to ignore its tenancy. We will not. We therefore hold that the trial court did not err
in holding Automation responsible to reimburse Rand for the rent and taxes paid on the
building at 106 Spring Road.

We have not been shown any reason to disturb the award of prejudgment interest on
the award to Rand related to rent and taxes. Therefore the award of prejudgment interest in
the amount of $21,899.53 is also affirmed.

L.

Our holding that Automation is responsible to reimburse Rand for the rent and taxes
renders the alternative judgment against Roach moot. The trial court specifically made its

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judgment “in the alternative, if the judgment . . . is not upheld against [Automation].” Even
if the judgment against Roach were not rendered moot, we do agree with Automation, and
Roach, that, after the dismissal of Roach “with prejudice,” the trial court erred in sua sponte
entering a judgment against Roach. The trial court’s justification was that the issue was tried
by consent. It is hard to understand how Roach could have consented to the pursuit of the
claim against him when the evidence being presented concerning the rent payments he made
was relevant to the claim against Automation. See George v. Building Materials Corp., 44
S.W.3d 481, 486 (Tenn. 2001). We note that Rand does not even offer an argument in favor
of upholding the judgment against Roach.

M.

The next issue we must address is whether the trial court erred in awarding Rand
$500,000 for the Dieco assets. Automation argues that the proof shows the Dieco assets
were an outright gift. Rand argues that Automation should have known that it expected to
be paid and that Automation was unjustly enriched by the assets, for which it must pay. We
think the preponderance of the evidence shows something in between, namely, that the only
compensation Rand expected out of the Dieco assets was for Automation to take them and
complete the Brown project so that Rand could in turn complete the project and recoup its
investment with profit.

The law concerning a gift is simple. A gift of property is “established by delivery with
an intention to give” the property to the other. Roberts v. Baylor School, No. E2007-00266-
COA-R3-CV, 2008 WL 204114 at *5 (Tenn. Ct. App. E.S., filed January 25, 2008). A gift
can be subject to a condition subsequent, in which case the gift is forfeited if the condition
is not met. Id. Unjust enrichment is a different animal with different elements. It is a way
of implying a contractual understanding between the parties, in the absence of an express
agreement. The main components of unjust enrichment are circumstances showing the
parties to the transaction should reasonably have understood that the person providing the
benefit expected to be paid, and that it would be unjust for the person receiving the benefit
to retain it without payment. Doe v. HCA Health Services, 46 S.W.3d 191, 198 (Tenn.
2001); Paschall’s, Inc. v. Dozier, 407 S.W.2d 150, 155 (Tenn. 1966).

There is no dispute that the reason Rand made a loan to Dieco in the first place, which
loan was secured by the assets in question, was to enable Dieco to complete its work on the
Brown project so that Rand could in turn show that the tooling it was installing for Brown
was operational. There is also no dispute that Automation stepped in, after Dieco defaulted,
and completed Dieco’s part of the project, the result of which was to allow Rand to salvage
its project with a profit. Undoubtedly, Dieco’s failure left Rand, in the words of a popular
song, “in a bind, and willing to make a deal.” The Devil Went Down to Georgia, Charlie

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Daniels, et al. Common experience tells us that Rand was not in a position to drive a hard
bargain. The favorable outcome to both parties was by no means a given. The circumstances
in the present case show that both parties to the transaction reaped a benefit from Automation
taking and using the Dieco assets. Even though the assets proved to be valuable to
Automation in opening up a line of business, the circumstances indicate that their chief value
to Rand, from the time of the loan to Dieco to the time of Dieco’s default and shipment to
Automation, was as a tool in the hands of an ally to allow completion of the Brown project.
Thus, there is nothing unjust in allowing Automation to retain the Dieco assets as a reward
for its role in helping Rand complete the Brown project. It is true that Automation was paid
by Brown, but Automation introduced proof that, disregarding the assets, it sustained a net
loss on the Brown job.

Noll’s testimony on direct examination that Rand, through Nunley, made Automation
a “gift” of the Dieco assets, and Noll’s admission on cross-examination that Nunley did not
use the words “gift” or words to that effect are consistent with our interpretation of what was
happening. We agree with Automation that is logical to believe that Nunley, who was the
man calling the shots at Rand with intentions at the time of selling Rand, would have rather
ownership of the Dieco assets go to Automation as part of an ongoing business, in which
Nunley held an interest, than become a pile of surplus in a corner of a business that was being
sold.

Also, we think it unlikely that Rand would have waited until after the Split to send a
bill to Automation for the assets if it had intended from the outset to be paid something above
and beyond Automation’s completion of the Brown project. We believe the evidence
preponderates in favor of finding that the idea of billing Automation for the Dieco assets was
a product of the Split – an afterthought that Automation’s invoices could be strategically
reduced by the worth of the Dieco assets. The “termination” letter, the invoice for the Dieco
assets and this litigation were all contemporaneous events. It is also noteworthy that the only
part of the Dieco transfer that was documented was the “Lear” account receivable, which was
expressly assigned to Automation for a specific business reason. Therefore, we hold that the
evidence preponderates against the trial court’s finding that Automation owed Rand money
for the Dieco assets.

Because we have found no unjust enrichment with regard to the Dieco assets, it is not
necessary that we make an exact determination as to their worth, however we think it
advisable that we make it clear that the evidence preponderates strongly against Rand’s claim
that the assets were worth anything like $1.9 million dollars. This is important because the
value of the benefit conferred might, in some instances, affect the equities of the situation.
The $1.9 million valuation also shows that Automation was not the only party in this case
that presented an inflated claim. In our opinion, Rand proved that it met or exceeded

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Automation’s ability to inflate a claim in litigation by first sending a bill for $500,000, then
preparing an exhibit reflecting a value of $1.4 million, and then amending that exhibit during
trial to reflect a value of $1.9 million. In short, the evidence does not preponderate against
the trial court’s valuation of the Dieco assets.

Before leaving this issue, we will also comment on the trial court’s observation
concerning a perceived credibility issue with Mr. Noll with regard to the Dieco assets. We
think this is important since we have obviously given some credence to Noll’s account of a
conversation with Nunley about the Dieco assets. It is important to note that there is no
doubt some discussion preceded the shipment of the Dieco assets to Automation. The
question is whether Noll’s account of those discussions is to be believed over Nunley’s.

The trial court’s comments concerning Noll’s credibility were not made in its analysis
of the Dieco assets. Rather, they were made in support of the trial court’s general balancing
of testimony on the billing issues. The trial court’s misgivings with Noll’s credibility
concerned his role in preparing an exhibit during trial which purported to dispute a Rand
exhibit as to the Dieco assets that Automation received. The court’s basis for criticizing Noll
was that Automation employees signed shipping receipts for Dieco assets. Presumably, the
signed receipts conflicted with Noll’s account. The shipping documents by no means
provided an exhaustive list of what was received versus what was missing. Our
understanding of the exhibit to which the trial court referred is not that Noll disputed
receiving several shipments of Dieco assets. Rather, Automation and Noll were trying to
show that the real value was less than what Rand sought because not all the assets that Rand
took through foreclosure in Canada made it to Automation’s plant. It is an undisputed fact
in this case that two cranes were left in Canada and other assets were in such bad condition
that they were not even loaded for shipment. Further, Noll admitted that his account of the
Dieco assets was based on a recent walk through the plant and not on the date of shipment
or receipt.

Since there is not an express finding that Noll’s testimony was not believable on the
subject of how the Dieco assets came to be committed to Rand, we are unable to defer to the
trial court’s general comments. We have made our own determination based on the
preponderance of the evidence. Kesterson, 172 S.W.3d at 566.

Given that we have overturned the monetary award, there is no basis for an additional
award of prejudgment interest. Accordingly the award of $45,000 in prejudgment interest
is reversed.

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 N.

The final issue Automation raises is whether the trial court erred in awarding Rand
discretionary costs that are not recoverable. Discretionary costs are controlled by Tenn. R.
Civ. P. 54.04(2), which, incidentally, Automation does not cite. Since Automation has raised
the issue of discretionary costs, we must look to the Rule for guidance. Discretionary costs
are only recoverable to the “prevailing party.” Our holdings in this case have resulted in a
“new prevailing party” under the guidance of Rule 54.04(2). Accordingly we reverse the
award of discretionary costs in favor of Rand. Automation, as the new prevailing party,
“may request discretionary costs by filing a motion in the trial court” on remand. Id.

V.

The judgment of the trial court is reversed in part and affirmed in part. The order
granting Rand’s motion to alter or amend the earlier judgment on the basis of fraud is
reversed. That part of the original judgment of the trial court awarding Automation judgment
against Rand in the amount of $2,270,759.22 plus prejudgment interest in the amount of
$256,705.19 is reinstated and, as such, is affirmed. That part of the original judgment
awarding Rand a judgment against Automation for reimbursement of rent and taxes plus
prejudgment interest is affirmed. That part of the original judgment awarding Rand a
judgment for the value of the Dieco assets is reversed, as is the award of prejudgment interest
on that claim. The award of discretionary costs in favor of Rand is reversed. Costs on appeal
and at trial are taxed to the appellee, Tennessee Rand, Inc. This case is remanded, pursuant
to applicable law, for collection of the costs at trial as modified by us and for such further
proceedings, if any, as may be required, consistent with this opinion.

_______________________________
CHARLES D. SUSANO, JR., JUDGE

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