02/09/2018
IN THE COURT OF APPEALS OF TENNESSEE
AT NASHVILLE
June 6, 2017 Session
P. ROBERT PHILP, JR. v. SOUTHEAST ENTERPRISES, LLC, ET AL.
Appeal from the Chancery Court for Wilson County
No. 2012-CV-403 Charles K. Smith, Chancellor
___________________________________
No. M2016-02046-COA-R3-CV
___________________________________
The tenant of office building sued the landlord, a limited liability company, and its two
owners for various causes of action arising out of his eviction. Following a nine-day trial
the court held that the tenant had been wrongfully evicted and his property converted, and
awarded the tenant nominal damages of $1.00 for the eviction, $23,130.00 for conversion
of his personal property located in the building, $5,000.00 in punitive damages, costs of
$2,395.00 and pre-judgment interest of $6,224.27. The tenant appeals the awards of
damages and costs, and contends that interest should be 10 percent rather than the 5.5
percent awarded. The landlord contends that the holding that the tenant was wrongfully
evicted should be reversed, that the tenant was not entitled to an award of damages for
conversion, and that the individual owners should not be held liable for the damage
awards. Upon a thorough review of the record, we modify the award of damages for
conversion of the tenant’s property and remand the case for the court to award interest
from the date the property was converted; we affirm the decision to award punitive
damages, vacate the amount of damages, and remand for the court to make specific
findings of fact and conclusions of law relative to the appropriate factors and enter
judgment accordingly; in all other respects, the judgment is affirmed.
Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Chancery Court Modified
in Part, Vacated in Part and Affirmed in Part; Case Remanded
RICHARD H. DINKINS, J., delivered the opinion of the court, in which FRANK G.
CLEMENT, JR., P. J., M. S., and ANDY D. BENNETT, J., joined.
P. Robert Philp, Nashville, Tennessee, Pro Se, appellant.
Dean Robinson, Mt. Juliet, Tennessee, for the appellees, Southeast Enterprises, LLC;
Thomas M. Davis, Individually; and Bobby Eastland, Jr., Individually, appellees.
OPINION
I. FACTUAL AND PROCEDURAL BACKGROUND
On September 28, 2007, Robert Philp (“Plaintiff”) entered into a lease agreement
for space in an office building which was under construction in Mount Juliet, Tennessee,
for the purpose of developing a professional office-services facility. Southeast
Enterprises, LLC, was named in the lease as landlord; Thomas Davis and Bobby
Eastland, the owners of Southeast, signed the lease as landlords (collectively
“Defendants”). The lease agreement was for an initial five-year term, to begin on the
date when all construction was completed; rent was to be $11,038.50 per month. Plaintiff
took possession on August 4, 2008, and installed a telecommunications system and
decorated the office building with wall art, furniture, kitchen appliances, window blinds,
and other office accessories.
Plaintiff paid the rent for August, September, and October 2008; he failed to pay
November 2008 rent on the due date and, after meeting with Defendants, received an
extension until November 17. When Plaintiff failed to meet the extended date,
Defendants’ attorney sent Plaintiff a letter stating that he had to pay November and
December rent by November 29, or the lease would terminate, and Defendants would
demand that he pay the balance owed through the term of the lease. By December 6,
2008, Defendants had not received payment, whereupon they changed the locks on the
doors and posted a notice on the building entrance stating that Plaintiff had been evicted.
Plaintiff filed suit in Wilson County Chancery Court on January 5, 2009, seeking
recovery of his personal property and damages; that case was non-suited on December
13, 2011. Plaintiff filed the instant suit on December 11, 2012,1 asserting causes of
action including breach of contract, conversion, intentional interference with business
relations, fraudulent inducement, wrongful eviction, defamation, and intentional and
negligent misrepresentation. Defendants answered and counter-claimed for damages for
breach of the lease. Following a multitude of procedural and pre-trial motions, a nine-
day, non-jury trial was held in May 2016.
On May 25, 2016, the court made oral findings of fact and conclusions of law,
which were incorporated into an order, entered July 5, 2016; following hearings on
various post-trial motions, the court entered final judgment on September 13, 2016. The
court found in favor of plaintiff on his claims for wrongful eviction, conversion of
1
Between the filing of the first and second suits, Mr. Philp filed for bankruptcy; the record before us
does not contain any filings from the bankruptcy court.
2
personal property, and punitive and exemplary damages; the court awarded Plaintiff a
total of $36,750.87 in damages, discretionary costs and prejudgment interest.2
Plaintiff appeals, raising ten issues for resolution. With respect to damages,
Plaintiff contends that the awards for wrongful eviction and punitive damages were
inadequate; that the court did not award the full measure of allowable damages for
conversion; and that the court erred in failing to award damages for fraudulent
inducement, promissory fraud, intentional or negligent misrepresentation, detrimental
reliance, and gross negligence. The remaining issues asserted by Plaintiff are that the
court erred in granting Defendant’s motion to remove the case from the jury docket; in
not ruling on Plaintiff’s claims for breach of the implied covenant of good faith and fair
dealing, and tortious interference with business relationships; in not awarding him
additional costs; in not awarding pre-judgment interest at a rate of 10%; and in using the
incorrect starting date for calculating interest.
While not raising specific issues for resolution, Defendants contend that the
holdings against Defendants for wrongful eviction and conversion of personal property
should be reversed. Defendants additionally argue that, should the court uphold the
damages award, the individual defendants, Thomas Davis and Bobby Eastland, Jr.,
should not be held jointly and severally liable with Southeast Enterprises, LLC.
II. STANDARD OF REVIEW
Appellate review of non-jury cases is de novo upon the record, accompanied by a
presumption of correctness of the trial court’s findings unless the evidence preponderates
against those findings. See Tenn. R. App. P. 13(d). Conclusions of law, however, are
reviewed under a pure de novo standard, according no deference those made by the lower
court. Jones v. Garrett, 92 S.W.3d 835, 838 (Tenn. 2002) (citing The Bank/First Citizens
Bank v. Citizens & Assocs., 82 S.W.3d 259, 262 (Tenn. 2002)).
2
The damage award was apportioned as follows:
Wrongful eviction: $1.00
Conversion of personal property: $23,130.00
Punitive and exemplary damages: $5,000.00
Discretionary costs: $2,395.60
Pre-judgment interest on the full amount of the judgment from December 11, 2012:
$6,224.27
Defendants were held jointly and severally liable on the judgment.
3
III. ANALYSIS
A. Jury Trial
Neither the complaint Plaintiff filed in December 2012 nor the amendment to the
complaint he filed in July 2013 contained a jury demand. Plaintiff argues on appeal, as
he did in the trial court, that a Notice of Jury Demand he filed on November 10, 2015,
complied with the applicable rules. We disagree.
We review a trial court’s decision to deny a jury trial for an abuse of discretion.
Caudill v. Mrs. Grissom’s Salads, Inc., 541 S.W.2d 101, 105 (Tenn. 1976). An abuse of
discretion occurs if a trial court causes an injustice to a party by “(1) applying an
incorrect legal standard, (2) reaching an illogical or unreasonable decision, or (3) basing
its decision on a clearly erroneous assessment of the evidence.” Lee Med., Inc. v.
Beecher, 312 S.W.3d 515, 524 (Tenn. 2010). “The abuse of discretion standard of review
envisions a less rigorous review of the lower court’s decision and a decreased likelihood
that the decision will be reversed on appeal.” Id. (citing Beard v. Bd. of Prof’l
Responsibility, 288 S.W.3d 838, 860 (Tenn. 2009); State ex rel. Jones v. Looper, 86
S.W.3d 189, 193 (Tenn. Ct. App. 2000)). This standard of review “does not, however,
immunize a lower court’s decision from any meaningful appellate scrutiny.” Lee Med.,
312 S.W.3d at 524 (citing Boyd v. Comdata Network, Inc., 88 S.W.3d 203, 211 (Tenn. Ct.
App. 2002)).
The right of trial by jury is a constitutional right. Tenn. Const. Art. I, § 6. The
right in civil cases is not self-enforcing, rather “[a] party who desires a jury trial must file
and serve a timely demand for a jury in accordance with Tenn. R. Civ. P. 38.02.”3
3
Tennessee Rule of Civil Procedure 38.02 provides:
Any party may demand a trial by jury of any issue triable of right by jury by demanding
the same in any pleading specified in Rule 7.01 or by endorsing the demand upon such
pleading when it is filed, or by written demand filed with the clerk, with notice to all
parties, within 15 days after the service of the last pleading raising an issue of fact.
Tennessee Rule of Civil Procedure 7.01 reads:
There shall be a complaint and an answer; and there shall be a reply to a counterclaim
denominated as such; an answer to a cross-claim, if the answer contains a cross-claim; a
third-party complaint, if a person who was not an original party is summoned under the
provisions of Rule 14; and there shall be a third-party answer, if a third-party complaint is
served. No other pleading shall be allowed, except that the court may order a reply to an
answer or to a third-party answer.
The Advisory Commission Comment to Rule 7.01 clarifies that the rule adopts the federal
practice of cutting off pleadings after complaints and answers.
4
Nagarajan v. Terry, 151 S.W.3d 166, 174 (Tenn. Ct. App. 2003). “Parties who fail to
comply with [Rule] 38 have not properly requested a jury trial and will be deemed to
have waived their right to a jury trial. Id. (citing Tenn. R. Civ. P. 38.05; Gribble v.
Buckner, 730 S.W.2d 630, 633 (Tenn. Ct. App. 1986).
In his brief, Plaintiff states that “Plaintiff had timely filed the Notice of Jury
Demand within 15 days of pleading (his Rule 7.02 Motion) raising a question of fact, as
required by Tennessee Rule of Civil Procedure 38.02.” Rule 7.02, however, only
instructs that “[a]n application to the court for an order shall be by motion. . . .”; it is not a
motion per se. In his brief, Plaintiff does not name or cite to a specific motion which he
contends complies with either Rule 7.01 or Rule 38.02. In our review of the record, the
only motion which was filed within 15 days prior to the Notice of Jury Demand was a
motion filed on October 26, 2015, in which Plaintiff sought to enforce an order entered
on August 29, 2014, requiring Defendants to return some of Plaintiff’s personal property
to him, for monetary sanctions, and for civil contempt; Plaintiff did not request or
demand a jury in the motion. The motion was heard on November 3, and the court
entered an order on November 23 granting the Plaintiff relief; the court reserved the
monetary sanctions and civil contempt for trial.4 Plaintiff filed another motion on
November 23 seeking to enforce the ruling of November 3; this motion included the
words “Jury Demand” in the caption.
We also note from the record that the case had been set pursuant to Defendants’
motion by order entered September 21, 2015. Plaintiff opposed the motion, citing inter
alia, the anticipated large number of witnesses and suggesting that a two week trial
would be appropriate; he made no mention of a jury. As suggested in Plaintiff’s
response, the court set aside two weeks for trial.
On February 29, 2016, the court entered an order setting a pre-trial conference for
the first day of trial “following jury selection and empanelment.” Defendants filed their
motion to remove the case from the jury docket on April 5; the order granting
Defendants’ motion was entered April 18. In the order granting the motion the court
ruled:
That Plaintiff had originally made a proper jury demand in his
verified complaint in his previous case filed January 5, 2009, and bearing
Docket No. 09003, but a Voluntary Dismissal of that case was filed on
December 7, 2011, and the Order dismissing the original case was filed on
December 13, 2011.
4
It is apparent from the record that the court ruled from the bench on November 3. An order was also
entered on this motion on November 30; the only difference between the orders is that the one entered
November 23 was prepared by Plaintiff and the one entered on November 30 was prepared by defense
counsel.
5
That Plaintiff failed to demand a jury in the TRCP 7.01 pleadings in
the present case, and the only jury demand filed by Plaintiff was a Notice of
Jury (12) Demand filed on November 10, 2015.
That on November 23, 2015, Plaintiff filed Motions To Enforce
Injunction For Return Of Personal Property, For Monetary Sanctions, And
For Civil Contempt in the present case with Jury Demand (12) noted on the
motions but those motion are not TRCP 7.01 pleadings, and even if
construed as supplemental pleadings, Plaintiff would not be entitled to a
jury trial pursuant to the authority of Hardeman County Bank v. Stallings,
917 S.W. 2d 695 (1995).
That pursuant to TRCP 38.02 Plaintiff has failed to make a proper
demand for a jury trial in this case.
Neither the motion nor the Notice of Jury Demand is a pleading identified in Rule 7.01;
consequently, Plaintiff did not satisfy the requirement of Rule 38.02.
Plaintiff also argues that the Defendants have been “on notice” of a jury trial from
the jury demand which was included in the complaint in the case filed in 2009. His
argument in this regard is unavailing; the 2009 case was voluntarily dismissed. The entry
of the order approving Plaintiff’s voluntary dismissal meant that “the case [was], for all
intents and purposes, over.” Barnett v. Elite Sports Med., No. M2010-00619-COA-R3-
CV, 2010 WL 5289669, at *2 (Tenn. Ct. App. Dec. 17, 2010). “If the action is refiled, it
proceeds as a new action.” Id. The case currently before the court was filed in 2012 and
has proceeded as a new action; Plaintiff did not include a jury demand in the appropriate
pleadings in this case. The court did not err in granting Defendant’s motion to try the
case on the non-jury docket.5
B. Damages
The standard of review we employ for damage awards in non-jury cases was set
forth in Memphis Light, Gas & Water Div. v. Starkey:
In the appeal of a damages award, the appellate review of “[w]hether the
trial court has utilized the proper measure of damages is a question of law
that we review de novo.” Beaty v. McGraw, 15 S.W.3d 819, 829 (Tenn. Ct.
App. 1988); see also Taylor v. Fezell, 158 S.W.3d 352, 357 (Tenn. 2005).
The amount of damages awarded, however, is a question of fact so long as
the amount awarded is within the limits set by the law. Beaty, 15 S.W.3d at
5
After the conclusion of the trial, as well as in a Motion for a New Trial, Plaintiff renewed his argument
that proper demand for a jury had been made. Our holding that the court did not err in granting
Defendants’ motion to have the case tried in the non-jury docket renders moot Plaintiff’s argument that
the trial court erred in denying his Motion for a New Trial on this basis.
6
829. Thus, in a non-jury case such as this, we review the amount of
damages awarded by the trial court with a presumption of correctness,
unless the preponderance of the evidence demonstrates otherwise. See
Tenn. R. App. P. 13(d); Beaty, 15 S.W.3d at 829 (citing Armstrong v.
Hickman County Highway Dep’t, 743 S.W.2d 189, 195 (Tenn. Ct. App.
1987)). Great weight is given to factual findings that are based on the trial
court’s assessment of witness credibility. Smith v. Smith, 93 S.W.3d 871,
875 (Tenn. Ct. App. 2002). This is because the “trial judge as the trier of
fact had the opportunity to observe the manner and demeanor of all of the
witnesses as they testified from the witness stand.” Whitaker v. Whitaker,
957 S.W.2d 834, 837 (Tenn. Ct. App. 1997); McCaleb v. Saturn Corp., 910
S.W.2d 412, 415 (Tenn. 1995).
244 S.W.3d 344, 352-53 (Tenn. Ct. App. 2007).
1. Award For Wrongful Eviction
Plaintiff argues that the award of $1.00 for wrongful eviction is inadequate
because the eviction caused Plaintiff’s business to shut down. Defendants contend that
the holding that Defendants wrongfully evicted Plaintiff should be reversed because
Plaintiff breached the lease agreement by not paying rent. Inasmuch as liability is a
prerequisite to an award of damages, we address Defendant’s contention first.
In the Findings of Fact and Conclusions of Law, the trial court included the
following paragraphs, which are pertinent to this claim:
32. So on December 6, 2008, Defendants posted a notice at the building
site stating that Mr. Philp had been evicted, and they changed the locks on
the door and locked him out, and stating that any tenants were to
communicate with them.
***
37. Plaintiff’s position is that the method of eviction was illegal and
improper and that none of his statutory and constitutional rights of notice or
a day in court were provided. Defendants just came in and changed the
locks, and Plaintiff thought that was illegal and improper.
***
48. The commencement date for the lease was August of 2008. The Court
finds that Plaintiff breached the contract by not paying his rent timely for
the months of November and December, and the Court finds that
Defendants had a right to terminate the lease. However, the Court finds
that the method of termination was wrong. The Court finds that it was a
wrongful eviction.
7
Defendants do not contest the court’s findings; citing rights available to them
under paragraph 14 of the lease,6 they argue that they “elected to meet the dilemma by
pursuing a common-sense self-help approach to the serious problem created by Plaintiff’s
default.” Upon our review, paragraph 14 does not allow the action Defendants pursued in
this case of bypassing legal process, changing the locks on the door and locking Plaintiff
out. We agree with the trial court’s holding that Defendants’ actions constituted
wrongful eviction.
Plaintiff has failed to cite in his brief any evidence or authority to support his
claim that the damage award for wrongful eviction was inadequate; the only citations are
to the Findings and Conclusions and the Final Judgment.7 Plaintiff’s proof of damages
for this claim consisted primarily of the testimony of Mr. Don Cunningham.8 With
respect to the award of $1.00 for damages for wrongful eviction, the court held:
The Court gives nominal damages of $1 under the tort claim for damages.
Plaintiff did not prove any damages for the tort claim of wrongful eviction.
The Court did not accept Mr. Cunningham’s (Plaintiff’s expert’s) opinion.
6
Paragraph 14 details the rights of the landlord upon default by tenant, which include the right to
terminate the lease and acceleration of all remaining payments, as well as the right to reimbursement of
expenses incurred as a result of tenant’s failure to perform its obligations, costs of securing another
tenant, and costs of altering the property in order to accommodate a new tenant.
7
In the section of his brief devoted to this issue, Plaintiff argues:
The wrongful eviction directly caused about two and a half years of fighting off lawsuits
and collections, culminating in Plaintiff’s no-asset bankruptcy in June 21011. . . . The
court awarded nothing for the loss of Plaintiff’s business. But for the wrongful eviction
and conversion, Plaintiff would have remained in business and likely survived the storm.”
As noted above, contrary to the requirements of Tennessee Rule of Appellate Procedure 27(a), there are
no citations to testimony, exhibits or other authority supporting this argument.
8
Mr. Cunningham’s testimony is contained in pages 2013-2164 of a 17 volume transcript consisting of
over 2,500 pages. Despite the requirements of Tennessee Rule of Appellate Procedure 27(a)(7) and
Tennessee Court of Appeals Rule 6, neither Plaintiff nor Defendants have favored this court with a
citation to any testimony of Mr. Cunningham to support their respective arguments, where any objection
was made to any testimony, or where the court ruled in any manner relative to the testimony of Mr.
Cunningham during the course of trial. This court is under no obligation to search the record. See
Eldridge v. Eldridge, 137 S.W.3d 1, 11 n.3 (Tenn. Ct. App. 2002) (quoting Schoen v. J.C. Bradford &
Co., 642 S.W.2d 420, 427 (Tenn. Ct. App. 1982) (“[W]e are “not under a duty to minutely search a
voluminous record to verify numerous unsupported allegations.”)). We shall assume that neither party
challenges Mr. Cunningham’s qualifications as an expert witness, or any testimony of Mr. Cunningham
cited by, relied upon, or rejected by the court in its ruling.
8
As the trier of fact, the trial court’s assessment of witness credibility is given great
weight. Memphis Light, Gas & Water Div., 244 S.W.3d at 353 (Tenn. Ct. App. 2007);
Whitaker v. Whitaker, 957 S.W.2d 834, 837 (Tenn. Ct. App. 1997) (holding the “trial
judge as the trier of fact had the opportunity to observe the manner and demeanor of all
of the witnesses as they testified from the witness stand”). The trial court stated it did not
accept Plaintiff’s expert’s opinion. The court also noted Plaintiff’s expert testified that
the crash of the economy in 2008 was a contributing factor to the failure of Plaintiff’s
business. Moreover, Plaintiff has failed in his brief to specify the amount and nature of
the damages sought for wrongful eviction. We afford the trial court’s assessment of Mr.
Cunningham’s witness credibility great weight and, in the absence of any evidence to the
contrary, affirm the award of $1.00 for wrongful eviction.
2. Award For Conversion of Personal Property
The trial court awarded $23,130.00 to Plaintiff for Defendants’ conversion of his
personal property, which Plaintiff contends is inadequate. Although Defendants have not
assigned specific error to the holding that they converted Plaintiff’s personal property, in
our discretion we address the sufficiency of the evidence to support the award. See
Tennessee Rule of Appellate Procedure 13(b).
Defendants contend that the holding that Defendants converted Plaintiff’s personal
property should be reversed because an Order entered prior to trial resolved the issue of
the return of Plaintiff’s personal property. Defendants also contend that they could have
pursued their remedy under paragraph 16 of the Lease, which provided that if the tenant
attempts to remove personal property from the building without having first paid the
landlord all monies due, the landlord has the right to store or dispose of any of the
tenant’s personal property in the building, but that they “allowed their actions to be
controlled by the Court during the proceedings.”
In the Findings of Fact and Conclusions of Law, the trial court included the
following paragraphs pertinent to its holding that Defendants converted Plaintiff’s
property:
32. So on December 6, 2008, Defendants posted a notice at the building
site stating that Mr. Philp had been evicted, and they changed the locks on
the door and locked him out, and stating that any tenants were to
communicate with them.
***
34. By locking Plaintiff out, Defendants maintained possession of all of
Plaintiff’s property inside the building. While Plaintiff had possession of
the property, it was referred to as Providence Business Center; after he was
locked out, the building was referred to as Brookside Landing.
***
9
35. Trial Exhibit No. 129 is a list of all of Plaintiff’s property that was
locked inside the building when they changed the locks and converted his
property.
***
53. Defendants did commit conversion of Plaintiff’s personalty. Trial
Exhibit No. 160 was the Plaintiffs testimony as to the value of those items
that were not returned and that are still in Defendants’ building. Plaintiff
sent a letter to Defendants telling them that he had items of property in the
building and to secure them. Plaintiffs position is that his damages for
conversion are the cost of his investment, rather than present-day value.
Defendants have nothing to contradict this.[9]
Defendants do not contest the findings or cite to evidence which they contends
preponderates against it; they cite to an order entered on November 30, 2015, and argue
that all issues of the return of Plaintiff’s personal property were resolved. This argument
is without merit. The order was entered on motions filed by Plaintiff to enforce an earlier
judgment for the return of personal property, for sanctions, and for civil contempt; the
order acknowledges that Plaintiff’s property is still in the building and orders that
Defendants should return certain items of Plaintiff’s personal property. . . .” The order
concludes by stating:
3. That the dispute and legal issue of the status of any other personal
property that is attached to the building shall be resolved upon the trial of
this cause.
4. That the issues of monetary sanctions and civil contempt should be
reserved for trial.
There is no indication in the order that it was intended to, or did, address Plaintiff’s claim
of conversion, and Defendants fail to cite any evidence in support of their argument that
the order “finally resolv[ed] all issues related to Plaintiff’s pursuit [of the return of his
business property].”
In like fashion Defendants’ argument they could have pursued remedies under
paragraph 16 of the lease but, rather, “allowed their actions to be controlled by the Court
during the proceedings” is unavailing. Paragraph 16, entitled “Abandonment,” states:
If Tenant removes or attempts to remove personal property from the
Property other than in the usual course of occupancy, without having first
paid Landlord all monies due, the Property may be considered abandoned,
and Landlord shall have the right, without notice, to store or dispose of any
9
The court then listed the specific awards for the various converted items of personal property.
10
personal property remaining on the Property after the termination of this
Lease. Any such personal property shall become Landlord’s personal
property.
Defendant does not explain the manner by which this paragraph precludes a
determination that Plaintiff’s property was converted under the circumstances presented
in this case, and we fail to discern such, particularly where, as here, the court found that
Defendants bypassed legal process and changed the locks on the door.
Conversion has been defined as:
[T]he appropriation of another’s property to one’s own use and benefit, by
the exercise of dominion over the property, in defiance of the owner’s right
to the property. A cause of action for conversion occurs when the alleged
wrongdoer exercises dominion over the funds in “defiance of the owner’s
rights.”
Ralston v. Hobbs, 306 S.W.3d 213, 221 (Tenn. Ct. App. 2009) (citations omitted;
emphasis added in original).
Defendants’ actions of wrongfully evicting Plaintiff from the property allowed
them to exercise dominion and maintain control over Plaintiff’s personal property.
Accordingly, we affirm the holding that Defendants converted Plaintiff’s property and
proceed to address the amount of the award of damages.
The pertinent Findings of Fact and Conclusions of Law regarding damages for
conversion were as follows10:
45. Plaintiff testified as to the value of the property that Defendants failed
to return; however, the Court notes that this exceeded the value placed on
the same items in his sworn bankruptcy petition.
***
60. The Court is awarding damages for these items because there was a
wrongful eviction and conversion of Plaintiffs property. There is nothing to
indicate that Mr. Philp was lying and seemed to be supported in terms of
the items listed in the bankruptcy petition, which was mostly synonymous
with the items listed in Trial Exhibit No. 160 and also listed in Trial Exhibit
No. 30, where Plaintiff had to list all of his property. This is some penalty
for the improper method of removing a tenant. The Court is not awarding
the cost of renewing the bond for the property.
10
Citations to the transcript are omitted.
11
61. The Court is awarding Plaintiff the total amount of the items listed
against Defendants. Conversion is merely the assumption or control of
property that is inconsistent with the rights of ownership. Conversion
consists of use and enjoyment of personal property of another without the
owner’s consent. Defendants testified that they did use the blinds and
various items of furniture and equipment, etc. Conversion allows for
recovery of all injuries sustained as a natural and proximate result of
Defendants’ wrongdoing. Defendants are relieved of the obligation of
returning these items, since they are ordered to pay for them.
62. The Court has awarded Plaintiff full value for the items that were
converted and not returned. The Court is sorry Plaintiff lost his watercolor
painting that was given on behalf of his father. The Court knows this is
emotional to him, but there is nothing the Court can do about that.
***
71. The Court is awarding no special or general damages on the tort claims.
The Court knows that Plaintiff’s father’s painting is worth a lot more to
Plaintiff than just fair market value but is not awarding any more damages.
Plaintiff contends that the measure of damages for conversion should have been for the
full cost of Plaintiff’s investment plus moving and storage expenses, loss of use and
rental value, and wear and tear, rather than the present day value which served as the
basis of the award.
The law applicable to this award was succinctly set forth in Lance Prods. v.
Commerce Union Bank:
As a general rule, plaintiff’s damages in an action for conversion are
measured by the sum necessary to compensate him for all actual losses or
injuries sustained as a natural and probable result of the defendant’s wrong.
However, consequential damages must be proved with reasonable
certainly.
The ordinary measure of damages for conversion is the value of the
property converted at the time and place of conversion, with interest.
In special damages are pleaded and proved, plaintiff may recover for
all injuries or losses sustained as a proximate result of the conversion, but
there can be no recovery for losses or injuries which are too remote or
uncertain, or which the plaintiff could have avoided by the exercise of
ordinary diligence.
Where damages, though the natural results of the acts complained of,
are not the necessary result of it, they are termed “special damages” which
the law does not imply and which must be alleged in order that evidence on
the subject may be admissible.
12
It is generally held that special damages must be particularly averred
in the complaint to warrant proof thereof or a recovery therefor.
764 S.W. 2d 207, 213 (Tenn. Ct. App. 1988) (internal citations omitted).
The trial court based the damage award on the present day value of the personal
property which Plaintiff claimed was not returned, as reflected in various trial exhibits
and materials from Plaintiff’s bankruptcy. Plaintiff did not plead special damages for
conversion in his complaint and does not contest the items for which an award was
made.11 He fails to set forth a cogent argument in his brief that the court erred and has
not identified any evidence which preponderates against the values assigned by the
court.12 These values are reasonable and supported by the evidence; accordingly, we
11
Plaintiff’s Verified Complaint included a section titled “FACTUAL ALLEGATIONS,” consisting of
fifty numbered paragraphs; two of the paragraphs specifically addressed damages:
25. Business and personal property belonging to Plaintiff on the premises include,
without limitation, the following (with estimated costs):
Window blinds on all Providence Business Center leased premises $ 10,000.00
All computer, video, stereo, speakers, and all other equipment, wall presentation panel,
cabinetry and all other items in the conference room (exclusive of leased plants, table and
chairs) $ 15,000.00
All computer, printing and copying equipment and applies $ 3,500.00
All furniture, storage cabinets, chairs, tables, etc. $ 12,500.00
All art work $ 25,000.00
All door stops, waste baskets, items in drawers, office and kitchen supplies $ 1,500.00
All telecommunications equipment and materials $ 25,000.00
All kitchen equipment including but not limited to refrigerators, microwaves, coffee
makers, water filters, and all other appliances, equipment, dishes, glasses, vases, supplies,
paper products, etc. $ 8,500.00
All items in the storage and telecommunications closet, exclusive of items leased by third
parties $ 5,000.00
Indoor and exterior Providence Business Center signage $ 2,000.00
TOTAL ESTIMATED VALUE: $ 112,000.00
26. As a result of Defendants’ actions and the significant amount of monies invested,
Plaintiff has suffered extensive damages and was left in financial ruin.
Pertinent to this issue, the prayer for relief in the complaint requests:
3. Compensatory damages in an amount to be determined at trial.
4. Consequential damages in an amount to be determined at trial.
12
Two portions of Plaintiff’s argument in his brief relative to this issue are illustrative. One portion of
the brief, addressing damages for the various causes of action, the entire argument with specific respect to
conversion states:
13
affirm the trial court’s award of $23,130.00 in damages for Defendants’ conversion of
Plaintiff’s personal property. Consistent with the instruction of Lance Productions, it is
necessary to modify the judgment and remand the case for the trial court to make an
award of interest on the award.13
3. Punitive Damages
Plaintiff contends that the court “erred in awarding only $5,000.00 in punitive
damages against Defendants with collective net assets over $3 million” and that the
award is “insufficient to punish Defendants and deter future misconduct.”
In its ruling from the bench on May 25, 2016, the court awarded punitive damages
of $5,000.00 based on its holdings that Defendants wrongfully evicted Plaintiff and
converted his personal property; this ruling was memorialized as part of the Findings of
Fact and Conclusions of Law entered on July 5, 2016.14 Plaintiff moved the court to
amend or make additional findings and amend the judgment or for a new trial in which he
generally complained of what he asserted was the inadequacy of the money judgment. In
the motion, with specific respect to punitive damages, Plaintiff stated:
At trial Plaintiff asked for an award of $1 million to punish these
Defendants. That would be more appropriate, considering the purpose of
B. The Court found conversion but awarded only partial damages.
The court awarded the value of Plaintiffs’ investment for some property and
awarded estimated present market value (after eight years of conversion) for other
property. The court awarded no tort damages for conversion, which is a tort.
Similarly, another portion of the brief, ostensibly addressing the damage award for conversion, headed
“The trial court erred in failing to award the full value of Plaintiff’s investment in his personal property
which Defendants converted in December 2008.” The section is entirely argumentative and cites
primarily to the court’s oral ruling on May 25, 2016, or to the Findings and Conclusions memorializing
that ruling. The one citation to an exhibit in the record is to a list of property that Defendants were
ordered to return to Plaintiff which was attached to an order entered on August 9, 2013; the list of
property, however, has no monetary value assigned to any of the property.
13
The $6,224.27 interest awarded by the court was pre-judgment interest from the date of filing of the
Amended Complaint; consistent with Lance Productions, interest on the award for conversion should run
from December 6, 2008, the date of conversion.
14
The pertinent portion of the Findings and Conclusions stated:
49. The Court finds punitive damages against the Defendant LLC in the amount of
$5,000 for wrongful eviction and conversion of property. Plaintiff requested punitive
damages, and a person should by punished, to say the least, for illegal, wrongful activity.
The Court’s opinion is that this was illegal, wrongful activity.
14
punitive damages, to punish and to deter future wrongdoing, so that
Defendants get the message. $5,000 is not sufficient. The Court should
conduct a hearing to take evidence on the net assets of each Defendants
[sic], so as to properly assess punitive damages as they were intended.
Pursuant to Plaintiff’s motion, the court held a hearing on punitive damages for July 29.
At the hearing, Plaintiff examined each individual Defendant relative to the assets
held by and net worth of each, and the facts and circumstances of his eviction from the
premises. Plaintiff then testified, largely relative to the factors that the court is to
consider when setting an amount of punitive damages, as set forth in Hodges v. S.C. Toof
& Co.15 On August 18, the court entered an order stating in pertinent part:
1. The Court’s punitive damages award of $5,000 made on May 25,
2016 on the final day of non-jury trial is unchanged and is confirmed.
2. The award is based on specific findings set forth in the Finding
of Fact and Conclusions of Law entered on July 5, 2016, that Defendants
and each of them had the specific intent to evict Plaintiff and to recklessly
convert his personal property, which the Court found to be in violation of
law. Those factual findings of intentional and reckless misconduct by each
of the Defendants, proving by clear and convincing evidence, warrant the
15
The factors are:
(1) The defendant’s financial affairs, financial condition, and net worth;
(2) The nature and reprehensibility of defendant’s wrongdoing, for example
(A) The impact of defendant’s conduct on the plaintiff, or
(B) The relationship of defendant to plaintiff;
(3) The defendant’s awareness of the amount of harm being caused and defendant’s
motivation in causing the harm;
(4) The duration of defendant’s misconduct and whether defendant attempted to conceal
the conduct;
(5) The expense plaintiff has borne in the attempt to recover the losses;
(6) Whether defendant profited from the activity, and if defendant did profit, whether the
punitive award should be in excess of the profit in order to deter similar future behavior;
(7) Whether, and the extent to which, defendant has been subjected to previous punitive
damage awards based upon the same wrongful act;
(8) Whether, once the misconduct became known to defendant, defendant took remedial
action or attempted to make amends by offering a prompt and fair settlement for actual
harm caused; and
(9) Any other circumstances shown by the evidence that bear on determining the proper
amount of the punitive award.
833 S.W.2d 896, 901-02 (Tenn. 1992). The purpose of punitive damages is to deter misconduct. Id.
15
imposition of punitive damages and are confirmed after hearing on July 29,
2016.
3. The award is imposed jointly and severally against the
Defendants, and each of them. Each Defendant is responsible for paying
the award.
In non-jury trials, the trial judge’s findings of fact and conclusions of law are
essential and must clearly set forth the reasons for approving a punitive damage award,
demonstrating a consideration of all of the Hodges factors. Culbreath v. First Tenn. Bank
Nat. Ass’n, 44 S.W.3d 518, 528 (Tenn. 2001). The findings of fact and conclusions of
law should explicitly refer to each of the factors, as well as any other factors supporting
the award of punitive damages. Id. at 529. “In the absence of sufficient findings of fact
and conclusions of law as to each of the relevant Hodges criteria, an appellate court
cannot adequately review the trial court’s award of punitive damages.” Id. at 528.
The trial court concluded that clear and convincing evidence demonstrated that the
Defendants intentionally evicted Plaintiff and recklessly converted his personal property;
the court stated in its Findings of Fact and Conclusions of Law that the “Defendants had a
wanton disregard for the fact that Plaintiff would suffer serious harm as a result of the
wrongful eviction and conversion.” These support the imposition of punitive damages,
and we affirm the award. However, neither the Findings of Fact and Conclusions of Law
nor the Order on Plaintiff’s motion to amend the judgment contain sufficient findings as
to each of the relevant Hodges criteria in the court’s determination of the amount of the
punitive damages award. “In the absence of sufficient findings of fact and conclusions of
law as to each of the relevant Hodges criteria, an appellate court cannot adequately
review the trial court’s award of punitive damages.” Id. at 528.16
Accordingly, we vacate the $5,000.00 awarded as punitive damages and remand
this case to the trial court to make specific findings of fact and conclusions of law relative
to the Hodges factors and enter judgment accordingly. Nothing in the judgment
16
Moreover, under the record in this case, our review of the punitive damage award is limited due to the
absence of credibility findings as to the parties, as the court made in the case of Mr. Cunningham. As
noted in In re Estate of Oakley:
As our courts have repeatedly acknowledged, when a trial court has seen and heard
witnesses, especially where issues of credibility and weight of oral testimony are
involved, considerable deference must be accorded to either as to the trial court’s factual
findings. See Seals v. England/Corsair Upholstery Mfg. Co., Inc., 984 S.W.2d 912, 915
(Tenn. 1999). However, that deference disappears when the trial court fails to make
specific factual findings as to the material facts.
No. M2014-00341-COA-R3-CV, 2015 WL 572747, at *12 (Tenn. Ct. App. Feb. 10, 2015) (emphasis in
original).
16
accompanying this Opinion shall require or prohibit the court from reconsidering the
amount of the award.
C. Plaintiff’s Claims for Fraudulent Inducement,17 Promissory Fraud,18
Intentional19 or Negligent Misrepresentation, 20 and Detrimental Reliance21
17
To be successful on a fraudulent inducement claim, the plaintiff has the burden of proving that the
defendant “(1) made a false statement concerning a fact material to the transaction (2) with knowledge of
the statement’s falsity or utter disregard for its truth (3) with the intent of inducing reliance on the
statement, (4) the statement was reasonably relied upon, and (5) an injury resulted from this reliance.”
Baugh v. Novak, 340 S.W.3d 372, 388 (Tenn. 2011).
18
The elements of fraud are “(1) an intentional misrepresentation with regard to a material fact; (2)
knowledge of the representation[’s] falsity, [i.e.,] it was made “knowingly” or “without belief in its truth”
or “recklessly” without regard to its truth or falsity; (3) the plaintiff reasonably relied on the
misrepresentation and suffered damages; (4) and the misrepresentation relates to an existing or past fact.”
Stacks v. Saunders, 812 S.W.2d 587, 592 (Tenn. Ct. App. 1990) (internal citations omitted). Claims
based on promissory fraud, however must “embody a promise of future action without the present
intention to carry out the promise.” Id. (quoting Keith v. Murfreesboro Livestock Market, Inc. 780 S.W.2d
751, 754 (Tenn. Ct. Ap. 1989).
19
Our Supreme Court has held:
To recover for intentional misrepresentation, a plaintiff must prove: (1) that the defendant
made a representation of a present or past fact; (2) that the representation was false when
it was made; (3) that the representation involved a material fact; (4) that the defendant
either knew that the representation was false or did not believe it to be true or that the
defendant made the representation recklessly without knowing whether it was true or
false; (5) that the plaintiff did not know that the representation was false when made and
was justified in relying on the truth of the representation; and (6) that the plaintiff
sustained damages as a result of the representation. Walker v. Sunrise Pontiac–GMC
Truck, Inc., 249 S.W.3d at 311 (quoting Metropolitan Gov’t of Nashville & Davidson
Cnty. v. McKinney, 852 S.W.2d 233, 237 (Tenn. Ct. App. 1992)); see also 8 Tennessee
Practice: Tennessee Pattern Jury Instructions—Civil § 8.36, at 357 (11th ed.2011).
Hodge v. Craig, 382 S.W.3d 325, 343 (Tenn. 2012).
20
Liability for negligent misrepresentation results when (1) the defendant is acting in the course of his
business, profession, or employment, or in a transaction in which he has a pecuniary (as opposed to
gratuitous) interest; (2) the defendant supplies faulty information meant to guide others in their business
transaction; (3) the defendant fails to exercise reasonable care in obtaining or communicating the
information; and (4) the plaintiff justifiably relies upon the information. John Martin Co., Inc. v.
Morse/Diesel, Inc., 819 S.W.2d 428, 431 (Tenn. 1991).
21
Detrimental reliance, more commonly known as promissory estoppel, involves the defendant making a
promise upon which the plaintiff reasonably relied, and the plaintiff showing that the reliance
detrimentally affected the plaintiff. EnGenius Ent., Inc. v. Herenton, 971 S.W.2d 12, 20 (Tenn. Ct. App.
1997).
17
Plaintiff argues that substantial evidence was presented to the trial court to sustain
his claims of fraudulent inducement, promissory fraud, and intentional or negligent
misrepresentation by the Defendants. As all of these causes of action involve either
intent to defraud or the falsity of a statement, we discuss the claims together.
Pertinent to these claims, the Findings of Fact and Conclusions of Law state:
19. The Court does not find in listening to the testimony and reading the
emails that Defendants were intending to mislead or fraudulently inducing
Plaintiff to do anything. Plaintiff had the right to revoke the contract any
time he wanted to, according to Section 2 of the commercial lease
agreement and get his payment back.
***
20. The Court believes that Plaintiff wanted completion of construction to
be as soon as possible. He was financially restricted. The Court believes
that Plaintiff got into the project with not enough money to weather the
storm. The real problem here was the economic crash in September 2008.
***
21. The Court believes that Defendants were trying to please Plaintiff and
tell him “we’ll try to get you in by January 7th and we’ll try - we’ll do our
best.- Defendants were working with subcontractors, etc. The Court
believes that Defendants were attempting to fulfill the dream and wishes of
Plaintiff, but the Court does not find that Defendants ever intentionally tried
to mislead him.
***
25. Plaintiff did a great deal of marketing regarding specific opening dates
in January, February, March, June, and July 2008, all of which were
deferred for various reasons, and some of which had to do with the plans
not being approved by him until November 2007, and then not being
approved by the City of Mount Juliet until later, and not having a building
permit until February 2008. There was no proof as to whose fault this was,
and the Court believes that everyone was trying to get these things done as
fast as possible.
***
47. And Plaintiff is a lawyer, who has dealt with and understands contract
law. Defendants were not learned in the area of law. Had Plaintiff wanted
the term of the lease to begin on January 7, 2008, he should have had it
placed in the lease agreement, that January 7, 2008 is when the lease
begins. He didn’t do this. He chose not to.
***
52. The Court finds no proof of violation by Defendants of the Consumer
Protection Act for unfair practices. Plaintiff has failed to prove either
18
intentional or negligent misrepresentation, causing Plaintiff detrimental
reliance, and that claim is dismissed as to all Defendants.
Plaintiff’s entire argument on this issue is the following:
B. The court failed to consider the preponderance of evidence
establishing fraudulent inducement, promissory fraud, and
intentional or negligent misrepresentation
The trial court denied Plaintiff’s motion to alter or amend to find
intentional or negligent misrepresentation of material facts, false promises,
or fraud by Defendants.
Plaintiff submitted substantial evidence to establish claims for
fraudulent inducement, promissory fraud, promises without intent to
perform, and intentional or negligent misrepresentation.
[citations omitted]22
This argument wholly fails to comply with Rule 27 of the Tennessee Rules of Appellate
Procedure; Plaintiff has not cited to any evidence preponderating against the trial court’s
findings.
The lease agreement entered into on September 28, 2007, provided as the
commencement date the “date when all construction is complete.” While the target dates
for the completion of construction were pushed back from the initial date of January 7,
2008, to August 1, 2008, the commencement date for the term of the lease remained the
same. In addition, when Plaintiff initially suggested the January 7, 2008 target date,
Defendant Davis replied in an email by stating that, while January 7, 2008, was the
target, “we cannot guarantee this date.” There is no evidence that the Defendants
possessed the requisite intent to commit fraud, nor does it suggest that there was a false
statement; the Defendants clearly stated that they could not guarantee the Plaintiff’s
initial suggestion of a January 7, 2008, opening date. We affirm the holdings that
Defendants did not fraudulently induce, commit promissory fraud, or intentionally or
negligently misrepresent facts to the Plaintiff.
D. Gross Negligence, Breach of Implied Covenant of Good Faith and Fair
Dealing, and Tortious Interference With Business Relationships
In ruling on Plaintiff’s claim of gross negligence, the court stated:
22
The citations are to Plaintiff’s trial brief and exhibits filed therewith and to the Order on the motion to
alter or amend.
19
The Court did consider the evidence of grossly negligent installation of the
telecommunications infrastructure which was required by the contract but
did not find it applicable, since there was a breach of the contract for failure
to pay rent and termination of the contract. The Court did not consider that
evidence to be a cause of Plaintiff’s failure to pay rent and failure to find
tenants.
Plaintiff’s entire argument for this issue states:
If Defendants committed “grossly negligent installation of
telecommunications infrastructure which was required by the contract”, as
the trial court found, then the court should have awarded damages for gross
negligence and breach of contract. Instead, the court awarded no damages
for this debacle.
[citations omitted]23
In the Findings and Conclusions, the court reiterated that it had dismissed
Plaintiff’s claims against the individual Defendants for breach of implied covenant of
good faith and fair dealing and tortious interference with business relationships at the
close of Plaintiff’s proof, holding that “any liability that might be incurred would be only
against Southeast Enterprises, LLC.” The court did not specifically address these claims
as to Southeast Enterprises otherwise in the Findings and Conclusions; in the final
judgment, however, after granting Plaintiff judgment on the wrongful eviction,
conversion of personal property, and punitive damages claims, the court stated that “[a]ll
other claims for damages are denied.”
Plaintiff’s entire argument on this issue states:
3. The court erred by failing to rule on Plaintiff’s claims for
breach of the implied covenant of good faith and fair dealing and
tortious interference with business relationships.
Plaintiff prosecuted claims in his Verified Complaint filed December
2012 for torts and breach of contract. The court ruled that there was no
breach of contract, despite finding evidence of grossly negligent
telecommunications infrastructure, which was a breach of the contract to
provide those elements per Plaintiff’s specifications.
Plaintiff’s claims for breach of he implied covenant of good faith
and fair dealing was not addressed in the Findings of Fact and Conclusions
of Law, and neither was Plaintiff’s claim for tortious interference with
23
Again, the only citations are to portions of the Findings of Fact and Conclusions of Law.
20
business relationships. Plaintiff presented substantial evidence at trial to
support recovery of damages for bother claims.[24]
Plaintiff’s argument as to these claims wholly fails to comply with Rule 27(a)(6)
of Tennessee Rule of Appellate Procedure and Rule 6(b) of the Rules of the Court of
Appeals. Failure to make appropriate references to the record and to cite relevant
authority in the argument section of the brief constitutes a waiver of the issue. See Blair
v. Badenhope, 940 S.W.2d 575, 576-77 (Tenn. Ct. App. 1996); Rampy v. IGI Acrylics,
Inc., 898 S.W.2d 196, 210 (Tenn. Ct. App. 1994). This argument is waived.
E. Award of Costs
Plaintiff moved for an award of discretionary costs of $29,846.26; the court
initially awarded him $6,844.76 and, after hearing Defendants’ motion to alter or
amend, reduced the award to $2,395.60. Plaintiff contends that he should have been
awarded the entire amount of his request.
Plaintiff’s entire argument on this issue states:
9. The court erred in failing to award the discretionary costs
submitted by Plaintiff.
A. Plaintiff presented evidence of $29,846.26 in reasonable and
necessary discretionary litigation costs; the court awarded only $2,395.
The Tennessee Supreme Court has held that reasonable and
necessary costs in the preparation and trial of a case may in the court’s
discretion be assessed in favor of the prevailing party. Lock v. National
Union Fire Insurance Co., 809 S.E.2d 483 (Tenn. 1991).
An award of discretionary costs is generally reviewed under an
abuse of discretion standard. See Tenn. Code Ann. Section 20-12-119(a)-
(b); Owens v. Owens, 241 S.W. 3d 478, 496-497 (Tenn. Ct. App. 2007).25
For the reasons stated and the authority cited in the immediately preceding section
of this opinion, we consider this issue waived.
F. Interest on the Judgment
The court awarded interest on the judgment at the rate of 5.5 percent from
24
Again, the only citations are to portions of the Findings of Fact and Conclusions of Law.
25
The only citations are to Plaintiff’s motion for the award and declaration in support.
21
December 11, 2012, the date of filing of the Verified Complaint26; Plaintiff contends that
the rate should be 10 percent in accordance with Tennessee Code Annotated section 47-
14-12327 and that the date of commencement for the prejudgment interest should be the
date of filing of the initial case in 2009.
The standard of review of prejudgment interest awards was succinctly set forth in
Myint v. Allstate Ins. Co.:
An award of prejudgment interest is within the sound discretion of the trial
court and the decision will not be disturbed by an appellate court unless the
record reveals a manifest and palpable abuse of discretion. This standard of
review clearly vests the trial court with considerable deference in the
prejudgment interest decision. Generally stated, the abuse of discretion
standard does not authorize an appellate court to merely substitute its
judgment for that of the trial court. Thus, in cases where the evidence
supports the trial court’s decision, no abuse of discretion is found.
970 S.W.2d 920, 927 (Tenn. 1998) (internal citations omitted).
In his brief, Plaintiff fails to articulate a cogent argument upon which to conclude
that the court abused its discretion in setting the rate at 5.5 percent. As noted earlier in
this opinion, Plaintiff’s voluntary dismissal of the original action filed in 2009 ended that
case, and present case filed in 2012 proceeded as a new action.
We affirm the award of prejudgment interest at 5.5 percent, to accrue from
December 11, 2012.
G. Liability of the Individual Defendants
The individual Defendants contend that “the Chancellor should be reversed on his
finding that the individual Defendants should be equally liable.” Their brief on this issue
is not a model of clarity; they argue that their counsel moved orally at trial to dismiss
26
In the Findings and Conclusions, which were prepared by Plaintiff and adopted by the court, this was
erroneously referred to as the Amended Complaint.
27
Tennessee Code Annotated section 47-14-123, applicable to commercial instruments and transactions,
provides in pertinent part:
Prejudgment interest, i.e., interest as an element of, or in the nature of, damages, as
permitted by the statutory and common laws of the state as of April 1, 1979, may be
awarded by courts or juries in accordance with the principles of equity at any rate not in
excess of a maximum effective rate of ten percent (10%) per annum….
22
them from the case pursuant to Tennessee Code Annotated section 48-249-114,28 and the
court granted the motion as to certain allegations of the complaint; that the question of
their individual liability came up again at the hearing two days later when the court orally
announced its findings and conclusions;29 and that, since the court ruled on their motion
to dismiss prior to Plaintiff raising the fact that Defendants had not pled section 48-249-
114 as an affirmative defense, it was “totally unnecessary for counsel [for Defendants] to
raise the statute in the motion.” Defendants base much of their argument on the premise
that the court’s oral announcement of findings and conclusions on May 25 prevented the
court from considering the matter further; we do not agree with this premise.
Tennessee Rule of Civil Procedure 41.02 provides that “[i]f the court grants the
motion for involuntary dismissal, the court shall find the facts specially and shall state
separately its conclusions of law and direct the entry of the appropriate judgment.”
Contrary to their premise, neither the oral statement the court made at the May 23 hearing
nor the recitation of findings of fact at the May 25 hearing satisfied Rule 41.02. “It is
well-settled that a trial court speaks through its written orders—not through oral
statements contained in the transcripts—and that the appellate court reviews the trial
court’s written order.” Williams v. City of Burns, 465 S.W.3d 96, 119 (Tenn. 2015).
Consequently, we proceed to address the merits of their argument.
On June 22 the court entered the following order:
On May 25, 2016, the final day of trial in the above-captioned case,
the Court ordered the parties to brief within ten (10) days the following
28
Tennessee Code Annotated section 48-249-114 states in pertinent part:
(a) Limited liability rule.
(1) Except as provided in subsections (d) and (f):
(A) The debts, obligations and liabilities of an LLC, whether arising in
contract, tort or otherwise, are solely the debts, obligations and liabilities
of the LLC;
(B) A member, holder, director, manager, officer, employee or other
agent of an LLC does not have any personal obligation, and is not
otherwise personally liable, for the acts, debts, liabilities or obligations of
the LLC; and
(C) A member, holder, director, manager, officer, employee or other
agent of an LLC does not have any personal obligation, and is not
otherwise personally liable, for the acts or omissions of any other
member, holder, manager, officer, director, employee or other agent of
the LLC.
(2) Notwithstanding subdivisions (a)(1)(B) and (C), a member, holder of financial rights,
director, manager, officer, employee or other agent may be personally liable by reason of
such person's own acts or omissions.
29
These were transcribed and filed with the clerk on July 5.
23
issue: whether Defendants have waived any right to assert Tenn. Code Ann.
Section 48-249-114 (regarding personal liability of LLC members) as
grounds for an oral motion for directed verdict, because they never pleaded
it as an affirmative defense. The Court stated it was withholding judgment
until ruling on this issue. Having read and considered the post-trial briefs
of the parties on this issue, and having heard and considered oral argument
of counsel on May 25, 2016, and good cause appearing, the Court hereby
orders as follows:
Defendants Thomas M. Davis and Bobby Eastland, Jr., have
waived any right to assert Tenn. Code Ann. Section 48-249-
114 and Tenn. Code Ann. Section 48-217-101, regarding
personal liability of LLC Members, because they failed to
plead it as an affirmative defense. Therefore, Defendants
Thomas M. Davis and Bobby Eastland, Jr., are personally
liable for judgment rendered against Defendant Southeast
Enterprises, LLC.
Other than the argument previously addressed, Defendants do not argue that the
ruling that they were individually liable was in error. Both Tennessee Code Annotated
sections 48-249-114 and 48-217-10130 provide limited liability to members, managers
and agents of a limited liability company. As such, the statutes are affirmative defenses
that must be pled in accordance with Tennessee Rule of Civil Procedure 8.03. See
Black’s Law Dictionary (10th ed. 2014) (defining “affirmative defense” as “[a]
defendant’s assertion of facts and arguments that, if true, will defeat the plaintiff’s or
prosecution’s claim, even if all the allegations in the complaint are true.”).
30
Tennessee Code Annotated section 48-217-101 states in pertinent part:
(a) Limited Liability Rule.
(1) Except as provided in subsections (e) and (f), a member, holder of financial interest,
governor, manager, employee or other agent of an LLC does not have any personal
obligation and is not otherwise personally liable for the acts, debts, liabilities, or
obligations of the LLC whether such arise in contract, tort or otherwise.
(2) A member, holder of financial interest, governor, manager, employee or other agent
of an LLC does not have any personal obligation and is not otherwise personally liable
for the acts or omissions of any other member, manager, governor, employee or other
agent of the LLC.
(3) Notwithstanding subdivisions (a)(1) and (2), a member, holder of financial interest,
governor, manager, employee or other agent may become personally liable in contract,
tort or otherwise by reason of such person's own acts or conduct.
24
IV. CONCLUSION
For the foregoing reasons, we modify the award of $23,130.00 in damages for
Defendants’ conversion of Plaintiff’s personal property and remand the case for the trial
court to make an award of interest on the award since December 6, 2008, through the date
of judgment; we affirm the decision to award punitive damages, vacate the $5,000.00
awarded and remand the case for the trial court to make specific findings of fact and
conclusions of law relative to the Hodges factors and to enter judgment accordingly; in
all other respects, the judgment is affirmed.
RICHARD H. DINKINS, JUDGE
25
P. Robert Philp, Jr. v. Southeast Enterprises, LLC
Combined Opinion