IN THE COURT OF APPEALS OF TENNESSEE
AT JACKSON
AUGUST 22, 2005 Session
ARTHUR W. ANDERSON, SR., ET AL. v. JAMES W. RAYNER, ET AL.
Direct Appeal from the Circuit Court for Shelby County
No. 93283-6 T.D. George H. Brown, Judge
No. W2004-00485-COA-R3-CV - Filed December 28, 2005
This is the second time that this case has been on appeal. In this appeal, we are asked to determine
if the trial court erred when it granted summary judgment to the defendants. The defendants assert
that summary judgment was appropriate based on the claims and defenses raised at trial, including
res judicata, law of the case, and statute of limitations. We affirm.
Tenn. R. App. P. 3; Appeal as of Right; Judgment of the Circuit Court Affirmed
ALAN E. HIGHERS, J., delivered the opinion of the court, in which W. FRANK CRAWFORD , P.J., W.S.,
and DAVID R. FARMER , J., joined.
Edwin C. Lenow, Memphis, TN, for Appellants
David J. Cocke, John S. Wilson, III, Memphis, TN, for Appellees
OPINION
I. FACTS & PROCEDURAL HISTORY
This the second time that this case has been before the Court, and the pertinent factual and
procedural history is set out in the Court’s opinion, which we quote:
The Plaintiffs’ version of the facts in this case is as follows.
In late 1992 and early 1993, Plaintiffs/Appellants Arthur W.
Anderson, Sr. and Jerry Hollingsworth (“Anderson,” “Hollingsworth”
or, collectively, “Plaintiffs”[ or “Appellants”]) conceived of a plan to
create a multi-faceted real estate development in Oxford, Mississippi.
Plaintiffs approached Defendant Edwin S. Roberson (“Roberson”)
and Paul Anderson, Arthur Anderson’s nephew, in order to raise
money for the development project.
Arthur Anderson indicated that he could participate in the
project as long as he would not need to sign individually on a large
loan. At this early stage, however, Plaintiffs did not anticipate such
large loans would be necessary, since they planned on the City of
Oxford taking ownership of the golf course, and financing the
purchase through Certificate of Participation Bonds. Mr. Roberson
apparently approached his immediate supervisor, Defendant John S.
Wilson (“Wilson”), and Defendant James Rayner (“Rayner”), for the
initial $200,000 seed money needed. Plaintiffs contemplated that
they, along with Paul Anderson, would control 60% of the project,
while Defendants would control the remaining 40%.
In April, 1993, Defendants informed Plaintiffs that they no
longer intended to pursue Oxford City bond financing, but that they
believed private financing of both the golf course and the first phase
of the residential development to be the best choice for funding the
project. Rayner allegedly told Anderson that if Plaintiffs would give
Rayner an additional 10% of the project, Plaintiffs would “never have
anything else to worry about, the money would be there.”
It was at this point that the dealings between the parties began
to deteriorate. Anderson agreed to give Rayner the additional 10%
interest in the development, and Plaintiffs apparently believed this
meant that they would share in the project equally with Defendants.
However, shortly thereafter, Paul Anderson dropped out of the project
because he was unwilling to sign the large loan required under the
private financing scheme. Defendants kept the 10% Anderson had
given Rayner, as well as Paul Anderson’s 10% share, which
Defendants Roberson and Wilson apparently divided between
themselves. This left Defendants with a 60% stake in the project and
control over the development corporation to be formed.
At approximately the same time Plaintiff Anderson was
approached about giving Defendants 10% of his share of the project,
Defendant Wilson extended Plaintiff Jerry Hollingsworth a $20,000
loan. Plaintiffs allege that Defendants promised Hollingsworth a
$50,000 developer’s fee at the closing of the bank loan for the
development project. Based upon these representations,
Hollingsworth apparently entered into a $40,000 settlement
agreement to repay the Bank of Bartlett on a separate matter. Shortly
before the loan closed on August 6, 1993, Roberson told
Hollingsworth that the $20,000 loan and the entire Bank of Bartlett
-2-
obligation would be taken care of if Hollingsworth waived the
$50,000 development fee. Hollingsworth agreed.
Defendant Grand Oaks, Inc., (“Grand Oaks” or the
“Corporation” [or collectively with Rayner, “Appellees”]) was
formed in July of 1993 under Mississippi law, and Defendant
Roberson signed the articles of incorporation on August 6, 1993, the
same date as the loan closing. The Grand Oaks Shareholders’
Agreement, dated July 1, 1993, provided that the Corporation’s 1,000
shares of stock be divided: 25%, 20% and 15% to Defendants Rayner,
Wilson and Roberson, respectively; and 20% each to Plaintiffs
Anderson and Hollingsworth.
Plaintiff Hollingsworth alleges that, in spite of Defendants’
agreement to take care of his debt to Bank of Bartlett, Defendants
later informed him that the debt was still outstanding. Rather than
default on the Bank of Bartlett agreement, Hollingsworth claims
Defendants put him in a position of “financial duress” which forced
him to enter into a stock pledge agreement, which, Hollingsworth
believed, would allow him to sell or borrow against his stock in the
new corporation. Hollingsworth claims that, unbeknownst to him,
Defendants had added language in the agreement which provided that
Hollingsworth’s right to sell or borrow against his stock was “subject
to the restrictions and by-laws of the corporation.” Since the
shareholders’ agreement provided a sixty (60) day right of first refusal
on any sale of company stock, Hollingsworth was effectively
prevented from using his stock to raise money.
Plaintiffs also allege they were told that the law firm
Defendants had selected to form the new corporation and draft
documents associated with the incorporation was acting on behalf of
the corporation. They allege that they later found out that the firm in
question had contracted with the Defendants, individually, and that
the corporate documents reflected an initial stock authorization of
10,000 shares, whereas Plaintiffs and Defendants had initially only
agreed to issuing 1,000 shares.
Plaintiffs also claim that Defendants held a secret meeting in
Memphis, which Plaintiff Hollingsworth found out about and
attended. The meeting was between Defendant Rayner and
representatives of the Marriot Corporation (“Marriot”), the entity
tapped to manage the hotel property. At the meeting, Defendant
Rayner allegedly told Marriot representatives that he had decided to
-3-
develop and own the hotel property himself, and that Plaintiffs had no
financial interest in the project.
A few days before one of Hollingsworth’s notes to Rayner
became due, Rayner allegedly informed Hollingsworth that he would
not renew the note, and that Hollingsworth would have to pay the
note or forfeit his stock in the corporation, pursuant to the stock
pledge agreement. In order to avoid the loss of his interest in the
Corporation, Hollingsworth found an investor who was willing to let
Hollingsworth borrow against his stock. Hollingsworth alleges that
Rayner found out about Hollingsworth’s plans and contacted the
investor to advise him that Hollingsworth was subject to the right of
first refusal terms in the shareholders’ agreement. Hollingsworth
alleges that Rayner then contacted him to advise him that Rayner
already had a judgment against Hollingsworth’s stock, which was,
apparently, untrue. Given no alternative, Hollingsworth claims he was
forced to transfer his stock to Rayner on May 6, 1994, giving
Defendants an 80% stake in the Grand Oaks, Inc.
Plaintiffs allege that, since May of 1994, Defendants have
engaged in such tactics as: attempting to dilute Anderson’s remaining
stock in the corporation; attempting to privately purchase choice
segments of the real estate development; assigning corporate notes to
themselves, individually; pulling private consumer credit reports on
Plaintiffs; and appointing their friends as “independent directors”
pursuant to the Mississippi Independent Directors Statute.
....
Plaintiffs Anderson and Hollingsworth originally filed this
action as two separate cases in May of 1994. The two cases were
consolidated and set for trial in October of 1997. Before trial,
Plaintiffs nonsuited the case, refiling it several months later. Plaintiffs
alleged several causes of action: intentional infliction of emotional
distress; breach of fiduciary duty; fraud in the inducement; tortious
interference with existing and prospective business; and conversion.
On January 20, 1998, Defendant, John S. Wilson, through his
executor, filed a Motion for Partial Dismissal on the basis that the
cause of action by Plaintiffs against Wilson did not survive his
-4-
death.[1] The trial court granted this motion on July 21, 1998. On
January 20, 1998, Defendants, Rayner and Grand Oaks, filed a
motion to dismiss for lack of in personam jurisdiction, and the trial
court granted the motion by order entered May 25, 2000. By order
entered June 23, 2000, the trial court denied Plaintiffs’ Tenn.R.Civ.P.
59 motion and amended its order of dismissal by making it a final
order pursuant to Tenn.R.Civ.P. 54.02.
Anderson v. Roberson, No. W2000-01879-COA-R3-CV, 2001 Tenn. App. LEXIS 827, at *1-9
(Tenn. Ct. App. 2001) (footnotes omitted) [hereinafter “Anderson I”].
During the time this case was on appeal regarding Rayner’s and Grand Oak’s motion to
dismiss, Roberson and Wilson separately filed motions to dismiss, or in the alternative, for summary
judgment on all the remaining claims against them. The circuit court granted both motions for
summary judgment. Appellants failed to timely appeal this judgment.
On remand, Rayner and Grand Oaks jointly filed a motion for summary judgment alleging,
among other claims and defenses, lack of personal jurisdiction, collateral estoppel, statute of
limitations, and law of the case. Rayner and Grand Oaks also filed motions to strike the affidavit
of Anderson and to strike portions of the affidavit of Hollingsworth. Subsequently, the circuit court
entered an order granting Rayner’s and Grand Oaks’ motion to strike the affidavit of Anderson,
motion to strike portions of the affidavit of Hollingsworth, and motion for summary judgment.
II. ISSUES PRESENTED
Appellants have timely filed a notice of appeal and present the following issue for review:
1. Whether the circuit court erred when it granted Defendants’ motion for summary judgment.
Appellees have also presented the following issues for review:
2. Whether Appellants have waived their appeal of issues not brought within this appeal;
3. Whether Appellants’ claim for damages in connection with the April 7, 1993 transaction are time
barred; and
4. Whether Appellants’ argument that Rayner failed to respond timely to the requests for admissions
propounded require reversal.
For the following reasons, we affirm the decision of the circuit court.
1
The partial dismissal granted to W ilson applied only to any claims related to defamation and punitive damages.
-5-
III. STANDARD OF REVIEW
A court may grant summary judgment “only when the moving party demonstrates that there
are no genuine issues of material fact and that he or she is entitled to a judgment as a matter of law.”
Penley v. Honda Motor Corp., 31 S.W.3d 181, 183 (Tenn. 2000) (citing Tenn. R. Civ. P. 56.03;
Byrd v. Hall, 847 S.W.2d 208, 210 (Tenn. 1993)). “The moving party has the burden of proving that
its motion satisfies these requirements.” Bain v. Wells, 936 S.W.2d 618, 622 (Tenn. 1997) (citing
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 then shifts to the nonmoving party to set
forth specific facts . . . establishing that there are indeed disputed, material facts creating a genuine
issue that needs to be resolved by the trier of fact . . . .” Byrd, 847 S.W.2d at 215.
“On a motion for summary judgment, the court must take the strongest legitimate view of
the evidence in favor of the nonmoving party, allow all reasonable inferences in favor of that party,
and discard all countervailing evidence.” Calabro, 15 S.W.3d at 875 (citing Bain, 936 S.W.2d at
622). “Then, if there is a dispute as to any material fact or any doubt as to the conclusions to be
drawn from that fact, the motion must be denied.” Byrd, 847 S.W.2d at 211 (citing Poore v.
Magnavox Co., 666 S.W.2d 48, 49 (Tenn. 1987); Dooley v. Everett, 805 S.W.2d 380, 383 (Tenn. Ct.
App. 1990)). Appellate courts review a trial court’s grant of summary judgment de novo with no
presumption of correctness. Warren v. Estate of Kirk, 954 S.W.2d 722, 723 (Tenn. 1997) (citing
Carvell v. Bottoms, 900 S.W.2d 23, 26 (Tenn. 1995)).
IV. DISCUSSION
On appeal, Appellants assert that the circuit court erred when it granted Defendants’
summary judgment motion on the grounds of statute of limitations, res judicata, and law of the case.
This Court found in Anderson I that Tennessee courts could not exercise personal jurisdiction
under a traditional theory over Appellees for their actions arising out of this dispute. Anderson I,
2001 Tenn. App. LEXIS 827, at *17-18. However, we did find that Appellees may be subject to the
jurisdiction of a Tennessee court in this case under the conspiracy theory of jurisdiction. Id. at *20.
We noted that, after an evidentiary hearing, the circuit court could determine that there were “no
facts [to] sustain the allegation that a conspiracy exists.” Id. While Appellants appealed the order
granting Rayner’s and Grand Oaks’ motion to dismiss, the circuit court granted summary judgment
to Roberson and Wilson, finding no conspiracy as a matter of law to exist between them and Rayner
and Grand Oaks. Appellants failed to timely appeal the order granting summary judgment to
Roberson and Wilson. Appellees have asserted that the circuit court’s decision granting summary
judgment to Roberson and Wilson is res judicata as to the issue of conspiracy with regards to
Appellees and that, pursuant to Anderson I, the circuit court was proper in granting summary
judgment because it lacked personal jurisdiction over Appellees. Thus, our analysis hinges on
whether the doctrines of res judicata and collateral estoppel bar Appellants from litigating the issue
of conspiracy against Appellees.
-6-
As our supreme court has noted,
The doctrine of collateral estoppel or estoppel by judgment is
an extension of the principle of res judicata, and is generally held to
be applicable only when it affirmatively appears that the issue
involved in the case under consideration has already been litigated in
a prior suit between the same parties, even though based upon a
different cause of action, if the determination of such issue in the
former action was necessary to the judgment . . . .
Res judicata bars a second suit between the same parties and
their privies on the same cause of action as to all issues which were
or could have been litigated in the former suit. Collateral estoppel
operates to bar a second suit between the same parties and their
privies on a different cause of action only as to issues which were
actually litigated and determined in the former suit.
Massengill v. Scott, 738 S.W.2d 629, 631-32 (Tenn. 1987) (citations omitted). “In order for res
judicata to apply, however, the prior judgment must conclude the rights of the parties on the merits.”
Goeke v. Woods, 777 S.W.2d 347, 349 (Tenn. 1989) (citing A. L. Kornman Co. v. Metro. Gov’t of
Nashville and Davidson County, 391 S.W.2d 633, 636 (1965)). “One defending on the basis of res
judicata or collateral estoppel must demonstrate that 1) the judgment in the prior case was final and
concluded the rights of the party against whom the defense is asserted, and 2) both cases involve the
same parties, the same cause of action, or identical issues.” Richardson v. Tenn. Bd. of Dentistry,
913 S.W.2d 446, 459 (Tenn. 1995) (citing Scales v. Scales, 564 S.W.2d 667, 670 (Tenn. Ct. App.
1977)).
When the circuit court granted Roberson’s and Wilson’s motions for summary judgment, it
necessarily found as a matter of law that there was no conspiracy between Roberson, Wilson, and
Appellees. In addition to granting summary judgment, the circuit court entered a final judgment in
its order in favor of Wilson and Roberson. This decision was not timely appealed. Thus, this final
judgment concluded the rights on the merits between Appellants, Roberson, and Wilson. See Byrd,
847 S.W.2d at 210 (stating that “a motion for summary judgment goes directly to the merits of the
litigation”). Further, Appellants have asserted the same issues and cause of action against Appellees.
Thus, doctrines of res judicata and collateral estoppel will bar Appellants from litigating whether a
conspiracy existed between Appeellees, Roberson, and Wilson against Appellees if Appellees were
in privity with Roberson and Wilson.
“[A]lleged co-conspirators are ‘in privity’ with one another for res judicata purposes.”
Discon Inc. v. Nynex Corp., 86 F. Supp. 2d 154, 166 (W.D.N.Y. 2000) (citations omitted); McIver
v. Jones, 434 S.E.2d 504, 506 (Ga. Ct. App. 1993); see In re Teletronics, 762 F,.2d 185, 192 (2d
Cir. 1984) (concluding that alleged co-conspirator was entitled to res judicata effect of an earlier
decision for another co-conspirator); Press Publ’g v. Matol Botanical Int'l, Ltd., 37 P.3d 1121,
-7-
1128 (Utah 2001) (stating that “final adjudication of plaintiff’s claims bars subsequent litigation
concerning the same subject matter against officers or owners of a closely held corporation, partners,
co-conspirators, agents, alter egos or other parties with similar legal interests”).
Thus, the doctrines of res judicata and collateral estoppel bar Appellants from litigating
whether Roberson, Wilson, and Appellees engaged in a conspiracy against Appellants in this case.
Appellees, as a matter of law, have not engaged in a conspiracy with Roberson and Wilson. As this
court stated in Anderson I, Tennessee courts do not have personal jurisdiction against Appellees if
no conspiracy exists. Anderson I, 2001 Tenn. App. LEXIS 827, at *19. Under the law of the case,
Tennessee courts do not have personal jurisdiction over Appellees. Memphis Publ’g Co. v. Tenn.
Petroleum Underground Storage Tank Bd., 975 S.W.2d 303, 306 (Tenn. 1998) (stating that “under
the law of the case doctrine, an appellate court’s decision on an issue of law is binding in later trials
and appeals of the same case if the facts on the second trial or appeal are substantially the same as
the facts in the first trial or appeal” (citations omitted)). Accordingly, the decision of the circuit
court is affirmed. Thus, all other issues in this case are pretermitted.
V. CONCLUSION
For the foregoing reasons, we affirm the decision of the circuit court. Costs of this appeal
are taxed to Appellants, Arthur W. Anderson, Sr. and Jerry Hollingsworth, and their surety, for
which execution may issue if necessary.
___________________________________
ALAN E. HIGHERS, JUDGE
-8-