IN THE COURT OF APPEALS OF TENNESSEE
AT KNOXVILLE
June 17, 2008 Session
STATE OF TENNESSEE, ET AL. v. GOOD TIMES, LTD., ET AL.
Appeal from the Circuit Court for Knox County
No. 1-403-04 Dale C. Workman, Judge
No. E2007-1172-COA-R3-CV - FILED SEPTEMBER 23, 2008
The State of Tennessee (“State”)1 sued Good Times, Ltd. (“Good Times”) and others with regard
to real property deeded to the State by Good Times after the State was sued for inverse
condemnation by Good Times’ lessee, Pun Wun Chan d/b/a #1 China Buffet (“China Buffet”). The
State claimed that it was entitled to indemnity from Good Times in the inverse condemnation action
under its warranty deed. The Trial Court consolidated the State’s case against Good Times with the
inverse condemnation action and then bifurcated the trial. The inverse condemnation case was tried
before a jury and China Buffet was awarded a judgment against the State. The Trial Court then
granted summary judgment to Good Times in the State’s case against Good Times and dismissed
the State’s case. The State appeals to this Court. We vacate the grant of summary judgment to Good
Times, grant the State summary judgment against Good Times, and remand this case to the Trial
Court for a determination of the amount of damages, and for further proceedings as necessary with
regard to all other parties and claims.
Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Circuit Court Vacated;
Case Remanded
D. MICHAEL SWINEY , J., delivered the opinion of the court, in which HERSCHEL P. FRANKS, P.J., and
SHARON G. LEE, J., joined.
Robert E. Cooper, Attorney General and Reporter, and Cynthia L. Paduch, Senior Counsel for the
Appellant, State of Tennessee.
R. Louis Crossley, Jr., Knoxville, Tennessee for the Appellees, Good Times, Ltd., a Tennessee
Limited Partnership; and Nicholas Cazana.
1
Knox County, Tennessee was also a named party in this suit and in the inverse condemnation suit. Knox
County took a voluntary dismissal and is not involved in the appeal currently before this Court.
Michael J. King, Kevin N. Perkey, and Meghan H. Morgan, Knoxville, Tennessee for the Appellee,
Elizabeth James.
E. Jerome Melson, Knoxville, Tennessee for the Appellee, Knoxville Association of Realtors, Inc.
OPINION
Background
In 1998, China Buffet and Good Times entered into an agreement for China Buffet
to lease real property located at 6300 Papermill Road in Knoxville, Tennessee (“the Property”) from
Good Times for use as a restaurant. In early 2002, the State notified Nicholas Cazana, the general
partner of Good Times, that it would be taking a portion of the Property for road construction. In
lieu of condemnation proceedings, Good Times agreed to sell a portion of the Property to the State
for $222,000. Cazana executed an Agreement of Sale which contained a space for listing the name
of any lessee of any portion of the Property or any other party who had any interest in the Property.
This space was left blank.
In October of 2002, Cazana executed a Warranty Deed (“Warranty Deed”) conveying
from Good Times to the State a portion of the Property in fee simple along with drainage, slope, and
construction easements. In pertinent part, the Warranty Deed provides:
The consideration mentioned herein includes payment for the property taken, also
payment for any and all incidental damages to the remainder compensable under
eminent domain.
***
This conveyance is made in consideration of Two Hundred Twenty-Two Thousand
and no/100 ($222,000.00) Dollars, cash in hand paid, the receipt of which is hereby
acknowledged.
TO HAVE AND TO HOLD said land, with the appurtenances, estate, title and
interest thereto Belonging to the said State of Tennessee. And it does covenant with
the said State of Tennessee that it is lawfully seized and possessed of said land in fee
simple, have a right to convey it and the same is unencumbered.
AND IT DOES FURTHER COVENANT and bind itself, its agents and
representatives, to Warrant and forever defend the title to said land to the said State
of Tennessee against the lawful claims of all persons whomsoever.
After road construction commenced, China Buffet sued the State for inverse
condemnation claiming that while the State had compensated the landlord, Good Times, it had not
compensated China Buffet for its loss of parking spaces and use of the front of the entrance to the
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restaurant. The State sought to add Good Times as a defendant to the inverse condemnation suit.
The Trial Court denied the motion to add Good Times as a defendant in that suit, but consolidated
the inverse condemnation suit with a separate suit filed by the State against Good Times and others.
The Trial Court then refused to grant a continuance but instead bifurcated the actions for trial. The
inverse condemnation action proceeded to trial before a jury. China Buffet obtained a judgment
against the State for $98,800, which was affirmed by this Court in Pun Wun Chan, d/b/a #1 China
Buffet v. State, No. E2005-01391-COA-R3-CV, 2006 Tenn. App. LEXIS 301 (Tenn. Ct. App. May
9, 2006), no appl. perm. appeal filed (“China Buffet”).
In the suit filed by the State against Good Times and the individual defendants
seeking indemnity under the Warranty Deed, Good Times filed a Third Party Complaint against the
Knoxville Association of Realtors, Inc. who purchased the remainder of the Property from Good
Times after the conveyance to the State. The State filed a motion for summary judgment. Good
Times and Cazana also filed a motion for summary judgment. Defendant Elizabeth James, a limited
partner of Good Times, filed a motion to dismiss or for summary judgment alleging, in part, that she,
as a limited partner, could not be held liable for the obligations or debts of Good Times. After a
hearing on the motions, the Trial Court entered a Final Order April 30, 2007, inter alia, granting
Good Times summary judgment, denying the State summary judgment, and dismissing all of the
State’s claims against Good Times and the individual defendants. The third-party claims of Good
Times against the Knoxville Association of Realtors, Inc. were dismissed as moot. The State appeals
the April 30, 2007 order to this Court.
Discussion
Although not stated exactly as such, the State raises two issues on appeal: 1) whether
the Trial Court erred in granting summary judgment to Good Times; and, 2) whether the Trial Court
erred in denying summary judgment to the State. Elizabeth James raises an issue on appeal
concerning whether she, as a limited partner of Good Times, can be held liable for debts of Good
Times.
Our Supreme Court has described the process for reviewing a trial court’s grant of summary
judgment as follows:
The standards governing an appellate court’s review of a
motion for summary judgment are well settled. Since our inquiry
involves purely a question of law, no presumption of correctness
attaches to the lower court’s judgment, and our task is confined to
reviewing the record to determine whether the requirements of Tenn.
R. Civ. P. 56 have been met. See Hunter v. Brown, 955 S.W.2d 49,
50-51 (Tenn. 1997); Cowden v. Sovran Bank/Central South, 816
S.W.2d 741, 744 (Tenn. 1991). Tennessee Rule of Civil Procedure
56.04 provides that summary judgment is appropriate where: (1) there
is no genuine issue with regard to the material facts relevant to the
claim or defense contained in the motion, see Byrd v. Hall, 847
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S.W.2d 208, 210 (Tenn. 1993); and (2) the moving party is entitled
to a judgment as a matter of law on the undisputed facts. See
Anderson v. Standard Register Co., 857 S.W.2d 555, 559 (Tenn.
1993). The moving party has the burden of proving that its motion
satisfies these requirements. See Downen v. Allstate Ins. Co., 811
S.W.2d 523, 524 (Tenn. 1991). When the party seeking summary
judgment makes a properly supported motion, the burden shifts to the
nonmoving party to set forth specific facts establishing the existence
of disputed, material facts which must be resolved by the trier of fact.
See Byrd v. Hall, 847 S.W.2d at 215.
Staples v. CBL & Assocs., Inc., 15 S.W.3d 83, 88 (Tenn. 2000).
We first address whether the Trial Court erred in granting summary judgment to
Good Times. An argument was raised that the decision in China Buffet collaterally estopped the
State from seeking indemnity from Good Times under the Warranty Deed. A “question of whether
collateral estoppel applies is a question of law, ….” Tareco Properties, Inc. v. Morriss, No. M2002-
02950-COA-R3-CV, 2004 Tenn. App. LEXIS 774, at *43 n.20 (Tenn. Ct. App. Nov. 18, 2004), no
appl. perm. appeal filed.
In Beaty v. McGraw this Court discussed the doctrine of collateral estoppel at length
stating:
Collateral estoppel is an issue preclusion doctrine devised by
the courts. See Dickerson v. Godfrey, 825 S.W.2d 692, 694 (Tenn.
1992); Goeke v. Woods, 777 S.W.2d 347, 349 (Tenn. 1989); Morris
v. Esmark Apparel, Inc., 832 S.W.2d 563, 565 (Tenn. Ct. App. 1991).
Like other preclusion doctrines, its purposes are to conserve judicial
resources, to relieve litigants from the cost and vexation of multiple
lawsuits, and to encourage reliance on judicial decisions by
preventing inconsistent decisions. See Allen v. McCurry, 449 U.S.
90, 94, 101 S.Ct. 411, 414-15, 66 L.Ed.2d 308 (1980); Disimone v.
Browner, 121 F.3d 1262, 1267 (9th Cir. 1997).
* * *
The party seeking to rely on the doctrine of collateral estoppel
has the burden of proof. See Dickerson v. Godfrey, 825 S.W.2d at
695. To invoke the doctrine successfully, the party must
demonstrate:
1. that the issue sought to be precluded is identical to the
issue decided in the earlier suit;
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2. that the issue sought to be precluded was actually
litigated and decided on its merits in the earlier suit;
3. that the judgment in the earlier suit has become final;
4. that the party against whom collateral estoppel is
asserted was a party or is in privity with a party to the
earlier suit; and
5. that the party against whom collateral estoppel is
asserted had a full and fair opportunity in the earlier
suit to litigate the issue now sought to be precluded.
Beaty v. McGraw, 15 S.W.3d 819, 824-25 (Tenn. Ct. App. 1998) (footnotes omitted).
The issue of whether the State could seek indemnity from Good Times under the
Warranty Deed was not litigated in China Buffet. Rather, this issue was specifically reserved when
the two actions were bifurcated for trial. A careful and thorough review of the record on appeal
reveals that this issue was neither litigated nor decided in China Buffet. Given this, the State is not
collaterally estopped from seeking indemnity from Good Times under the Warranty Deed as a result
of the decision in China Buffet.
Good Times argues on appeal that the State cannot seek indemnity against Good
Times under the Warranty Deed because the damages awarded in China Buffet were damages
suffered as a result of diminished value of the leasehold in the remaining property, not in the smaller
parcel conveyed to the State under the Warranty Deed. Good Times asserts that the warranties in
the Warranty Deed apply only to the small portion of real property deeded to the State and that China
Buffet was not awarded any damages with regard to this particular portion of the real property. In
its brief on appeal, Good Times asserts that China Buffet “never made any claim based upon the
value of his interest in the property conveyed to the State by Good Times.” (emphasis in original).
Good Times is mistaken. China Buffet had a leasehold interest in the entire property
including the portion deeded to the State. China Buffet claimed, and was awarded, incidental
damages to its interest in the entire property because “the fair market value of the property has been
affected by a significant and permanent loss of parking space, which has resulted in the loss of access
to and utility of the restaurant.” China Buffet, at ** 7-8.
Good Times also argues that prior to the execution of the Warranty Deed, the State
represented to Cazana that the money being paid for the portion of the Property being deeded to the
State was all for the landlord. It is a well established substantive rule of law that prior
representations are deemed to have merged into the written contract or deed. Minor v. Belk, 360
S.W.2d 477, 483 (Tenn. Ct. App. 1962). Plus, the Agreement of Sale executed by Cazana on behalf
of Good Times provided a space for Good Times to disclose the names of lessees or any other party
who had any interest in the property being conveyed and that space was left blank. Cazana could
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have filled in this blank and taken this opportunity to inform the State that China Buffet had not been
compensated by Good Times for its interest in the Property. He did not. The Warranty Deed, again
executed by Cazana on behalf of Good Times, provides:
The consideration mentioned herein includes payment for the property taken, also
payment for any and all incidental damages to the remainder compensable under
eminent domain.
The deed clearly and unambiguously provides that the payment includes “any and all incidental
damages to the remainder ….” All means all and not some, or a part, or a portion, or a few. If any
other party in addition to Good Times had any compensable interests in the Property, the clear and
unambiguous language of the Warranty Deed provided that the payment made under the Warranty
Deed was in satisfaction of all of those interests. While Good Times and the State could not through
the Warranty Deed extinguish China Buffet’s interest in the property, Good Times could, and did,
make the warranties to the State contained in the Warranty Deed.
Cazana also claims that the Agreement of Sale and the Warranty Deed were prepared
by the State, that he did not read these documents prior to executing them, and that these documents
are ambiguous and should be construed against the State as the maker. However, this Court has
stated that if a party who is not a victim of fraud “fails to read the contract or otherwise to learn its
contents, he signs the same at his peril and is estopped to deny his obligation, will be conclusively
presumed to know the contents of the contract, and must suffer the consequences of his own
negligence.” Giled v. Allstate Ins. Co., 871 S.W.2d 154, 156 (Tenn. Ct. App. 1993) (quoting Beasley
v. Metropolitan Life Ins. Co., 229 S.W.2d 146, 148 (Tenn. 1950)). The record is devoid of any
evidence showing that Cazana or Good Times was a victim of fraud. As such, they are presumed
to know the contents of the Warranty Deed and must suffer the consequences of their own
negligence. As discussed above, the Warranty Deed is not ambiguous and must be construed
according to its plain language.
The State is not collaterally estopped from seeking indemnity under the Warranty
Deed and the State negated the claims made by Good Times that China Buffet was awarded damages
only as to real property not covered under the Warranty Deed; that prior representations made
regarding the payment controlled instead of the Warranty Deed; and that the Warranty Deed was
ambiguous and should be construed against the State. Good Times was not entitled to summary
judgment as a matter of law. We, therefore, vacate the grant of summary judgment to Good Times.
We next consider whether the Trial Court erred in denying summary judgment to the
State. As discussed, the Warranty Deed in this case clearly and unambiguously provides:
TO HAVE AND TO HOLD said land, with the appurtenances, estate, title and
interest thereto Belonging to the said State of Tennessee. And it does covenant with
the said State of Tennessee that it is lawfully seized and possessed of said land in fee
simple, have a right to convey it and the same is unencumbered.
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AND IT DOES FURTHER COVENANT and bind itself, its agents and
representatives, to Warrant and forever defend the title to said land to the said State
of Tennessee against the lawful claims of all persons whomsoever.
As a matter of law, Good Times had duties to the State under the clear and
unambiguous language of the Warranty Deed. There are no genuine disputed issues of material fact
regarding Good Times’ breach of its duties to the State under the Warranty Deed. In addition, there
are no genuine disputed issues of material fact that the State suffered damages as a result of this
breach as China Buffet obtained judgment against the State in the amount of $98,800. As there is
no genuine issue as to any material fact and the State is entitled to a judgment as a matter of law, we
grant the State summary judgment against Good Times. Further, we remand this case to the Trial
Court for a determination of the amount of damages to be awarded the State with the starting point
being the judgment awarded against the State in favor of China Buffet.
As we have vacated the summary judgment granted to Good Times and granted the
State’s summary judgment, the dismissal of Good Times’ third party claim against the Knoxville
Association of Realtors, Inc. is vacated as well.
From the record before us on appeal we are unable to address the issue raised by
James. Upon remand, the Trial Court is to conduct further proceedings as necessary with regard to
James and any and all other parties and claims.
Conclusion
The judgment of the Trial Court granting summary judgment to Good Times is
vacated. The State is granted summary judgment against Good Times and this case is remanded to
the Trial Court for a determination of the amount of damages to be awarded the State against Good
Times, for further proceedings as necessary with regard to any and all other parties and claims, and
for collection of the costs below. The costs on appeal are assessed against the Appellees, Good
Times, Ltd., a Tennessee Limited Partnership, and Nicholas Cazana.
___________________________________
D. MICHAEL SWINEY, JUDGE
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