05/27/2020
IN THE COURT OF APPEALS OF TENNESSEE
AT NASHVILLE
May 6, 2020 Session
LEGACY FIVE LEASING, LLC, ET AL. V. BUSFORSALE.COM, LLC
Appeal from the Circuit Court for Sumner County
No. 83CC1-2018-CV-530 Joe Thompson, Judge
No. M2019-01615-COA-R3-CV
A bus and a trailer sustained water damage when the lot where they were stored flooded
following a rainstorm. The owner of the bus and trailer sued the operator of the lot,
alleging negligence, gross negligence, and breach of contract. Before filing the
complaint, the owner disposed of the bus and trailer. The trial court granted the lot
operator’s motion to dismiss the negligence and breach of contract causes of action. The
trial court then dismissed the owner’s claim for gross negligence due to spoliation of
evidence. The owner appealed the dismissal of its gross negligence claim, and we affirm
the trial court’s judgment.
Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Circuit Court Affirmed
ANDY D. BENNETT, J., delivered the opinion of the Court, in which RICHARD H. DINKINS
and W. NEAL MCBRAYER, JJ., joined.
George M. Johnson, Brentwood, Tennessee, and Michael A. Durr, Knoxville, Tennessee,
for the appellants, Legacy Five Leasing, LLC, and Legacy Five, Inc.
Benjamin Ealey Goldammer, Nashville, Tennessee, for the appellee, Busforsale.com,
LLC.
OPINION
I. FACTUAL AND PROCEDURAL BACKGROUND
In April 2016, Legacy Five Leasing, LLC purchased a Prevost X3-45 VIP bus that
it leased to the gospel singing quartet known as Legacy Five, Inc., which purchased a
trailer for the bus to transport a piano and sound equipment. (The two entities will be
referred to together as “Legacy Five.”) Busforsale.com (“Busforsale”) operates a
business in Goodlettsville that leases space on an open lot for long-term bus parking and
storage. In November 2016 Legacy Five leased a space from Busforsale to store its bus
and trailer. As part of its agreement with Busforsale, Legacy Five signed a statement
acknowledging that Busforsale “assume[d] no liability or responsibility for damages to
[the bus and/or trailer] due to theft, vandalism, fire, flood or other acts of God or man,”
and that Legacy Five’s bus and trailer “[would] be parked in a floodway or floodplain.”
On August 31 and September 1, 2017, a rainstorm caused Busforsale’s lot to
flood. Legacy Five asserted that its bus and trailer sustained water damage as a result of
the flood and filed a complaint against Busforsale the following May in which it asserted
claims for negligence, gross negligence, and breach of contract. Busforsale moved to
dismiss the complaint pursuant to Tenn. R. Civ. P. 12.02(6), arguing that Legacy Five
failed to state a claim upon which relief could be granted. The trial court granted
Busforsale’s motion in part, dismissing the negligence and breach of contract claims.
The court found, however, that Legacy Five’s pleadings did not warrant dismissal of the
gross negligence claim.
The parties engaged in discovery, and in April 2019, Busforsale moved for
summary judgment with respect to the gross negligence claims or, in the alternative,
discovery sanctions based on Legacy Five’s “spoliation of evidence.” In support of its
request for discovery sanctions, Busforsale asserted that Legacy Five sought over
$500,000 in damages, but that it “discarded and/or destroyed all of the evidence in
support of its claim without providing Busforsale with an opportunity to inspect the
property.” The trial court granted Busforsale’s request for discovery sanctions by
dismissing Legacy Five’s remaining claim and denied Busforsale’s motion for summary
judgment. The court based its decision to dismiss the complaint on Tenn. Rs. Civ. P.
34A.021 and 37.2
Legacy Five appealed the trial court’s judgment, arguing the court abused its
discretion by dismissing the gross negligence claim on the basis of spoliation of evidence.
Busforsale contends the trial court properly dismissed Legacy Five’s gross negligence
claim, but it argues the court erred in denying its motion for summary judgment.
II. STANDARD OF REVIEW
Trial courts have “broad discretion” to impose sanctions for the purpose of
preserving the integrity of the discovery process. Tatham v. Bridgestone Ams. Holding,
Inc., 473 S.W.3d 734, 742 (Tenn. 2015) (citing Mercer v. Vanderbilt Univ., Inc., 134
S.W.3d 121, 133 (Tenn. 2004)); see also Funk v. Scripps Media, Inc., 570 S.W.3d 205,
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Rule 34A.02 provides that “Rule 37 sanctions may be imposed upon a party or an agent of a party who
discards, destroys, mutilates, alters, or conceals evidence.”
2
Rule 37.02(C) includes dismissal of an action as one of several available discovery sanctions if a party
fails to provide or permit discovery.
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210 (Tenn. 2019) (“Trial court decisions on pretrial discovery disputes are reviewed
using an abuse of discretion standard.”). This authority “is rooted in the trial court’s
inherent power to ensure the proper administration of justice.” Tatham, 473 S.W.3d at
742 (citing Lyle v. Exxon Corp., 746 S.W.2d 694, 699 (Tenn. 1998)); see also Mercer,
134 S.W.3d at 133 (“[T]rial judges have the authority to take such action as is necessary
to prevent discovery abuse” and “have wide discretion to determine the appropriate
sanction to be imposed.”). This discretion to impose sanctions extends to cases in which
a party destroys evidence. See, e.g., Mercer, 134 S.W.3d at 133; Gardner v. R & J
Express, LLC, 559 S.W.3d 462, 467-68 (Tenn. Ct. App. 2018); Gross v. McKenna, No.
E2005-02488-COA-R3-CV, 2007 WL 3171155, at *6-7 (Tenn. Ct. App. Oct. 30, 2007).
The Tennessee Supreme Court recently revisited the abuse of discretion standard
and reaffirmed the limitations of an appellate court’s review of a trial court’s
discretionary decision:
“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. It reflects an awareness that the
decision being reviewed involved a choice among several acceptable
alternatives. Thus, it does not permit reviewing courts to second-guess the
court below, or to substitute their discretion for the lower court’s. The
abuse of discretion standard of review does not, however, immunize a
lower court’s decision from any meaningful appellate scrutiny.
Discretionary decisions must take the applicable law and the relevant
facts into account. An abuse of discretion occurs when a court strays
beyond the applicable legal standards or when it fails to properly consider
the factors customarily used to guide the particular discretionary decision.
A court abuses its discretion when it causes an injustice to the party
challenging the decision 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.”
Harmon v. Hickman Cmty. Healthcare Servs., Inc., 594 S.W.3d 297, 305 (Tenn. 2020)
(quoting Lee Med., Inc. v. Beecher, 312 S.W.3d 515, 524 (Tenn. 2010) (citations
omitted)). The Harmon Court then described how appellate courts were to determine
whether a trial court had properly exercised its discretion:
“To avoid result-oriented decisions or seemingly irreconcilable precedents,
reviewing courts should review a lower court’s discretionary decision to
determine (1) whether the factual basis for the decision is properly
supported by evidence in the record, (2) whether the lower court properly
identified and applied the most appropriate legal principles applicable to the
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decision, and (3) whether the lower court’s decision was within the range of
acceptable alternative dispositions.”
Id. (quoting Lee Med., 312 S.W.3d at 524).
III. ANALYSIS
Our Supreme Court has reviewed cases in which trial courts considered requests to
dismiss lawsuits due to the spoliation of evidence when the spoliation was not due to
either party’s intentional misconduct. See Tatham, 473 S.W.3d at 744-45. The Tatham
Court recognized that “intentional misconduct is not a prerequisite for a trial court to
impose sanctions for the spoliation of evidence.” Id. at 746. Instead, the Court wrote,
“the analysis for the possible imposition of any sanction for the spoliation of evidence
should be based upon a consideration of the totality of the circumstances,” and “should
be made on a case-by-case basis.” Id. at 746. The Court set forth the following factors
for a trial court to consider when determining the type of sanction, if any, to impose for
the spoliation of evidence:
(1) the culpability of the spoliating party in causing the destruction of the
evidence, including evidence of intentional misconduct or fraudulent intent;
(2) the degree of prejudice suffered by the non-spoliating party as a result
of the absence of the evidence;
(3) whether, at the time the evidence was destroyed, the spoliating party
knew or should have known that the evidence was relevant to pending or
reasonably foreseeable litigation; and
(4) the least severe sanction available to remedy any prejudice caused to the
non-spoliating party.
Id. at 746-47. Recognizing that dismissing an action “is a severe sanction,” the Tatham
Court held that “‘such a sanction would be appropriate in circumstances where any less
severe remedy would not be sufficient to redress the prejudice caused’ to the non-
spoliating party by the loss of the evidence.’” Id. at 747 (quoting Cincinnati Ins. Co. v.
Mid-South Drillers Supply, Inc., No. M2007-00024-COA-R3-CV, 2008 WL 220287, at
*4 (Tenn. Ct. App. Jan. 25, 2008)).
The trial court in the case at bar dismissed Legacy Five’s gross negligence claim
against Busforsale due to Legacy Five’s spoliation of the evidence that formed the basis
of its claim. Busforsale filed a statement of undisputed facts when it moved for summary
judgment or, in the alternative, discovery sanctions, and Legacy Five did not file a
responsive pleading disputing any of those facts. The trial court properly treated the facts
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Busforsale included in its statement as true for purposes of ruling on Busforsale’s motion.
See Cardiac Anesthesia Servs., PLLC v. Jones, 385 S.W.3d 530, 539 (Tenn. Ct. App.
2012) (“It is well-settled that, when a non-moving party fails to respond to the moving
party’s statement of undisputed facts, the court may consider the facts admitted.”). The
trial court recited the facts it deemed to be true as follows:
The flood event that damaged plaintiffs’ bus occurred on August 31-
September 1, 2017. Four (4) days later, on September 5, 2017, Scott
Fowler, a co-founder of plaintiff Legacy Five, Inc., confronted John
Spellings, defendant’s owner, about his actions, or lack thereof, with
respect to the flood event. In short, plaintiff knew four (4) days after the
event that it would be involved in a legal dispute with defendant.
Nonetheless, it transferred the bus, trailer and equipment to third parties
without affording the defendant the opportunity to evaluate the plaintiffs’
claim for damages.
The court then applied the four factors the Tatham Court directed trial courts to address
when a defendant seeks the dismissal of an action due to spoliation of evidence. The
court wrote:
With regard to the first factor, the plaintiffs in this case transferred
the bus, trailer and equipment to third parties with knowledge that a legal
dispute was imminent and without affording the defendant the opportunity
to evaluate the plaintiffs’ claim for damages. While there is no evidence of
intentional conduct or fraud, plaintiffs are nonetheless culpable for the
destruction of the evidence.
With regard to the second factor, there is no question that defendant
is prejudiced by the absence of the evidence. The plaintiffs are seeking
$500,000 in damages, but with no opportunity to inspect or examine the
bus, the trailer, or any of the equipment, the defendant cannot adequately
assess the validity of the plaintiffs’ repair estimates and expert valuations or
the value of their claim.
Regarding the third factor, the plaintiffs knew on September 5, 2017
that they would be in a legal dispute with the defendant regarding the
damage. Despite this, the very next day the plaintiffs relinquished the bus to
their insurance carrier, the trailer was sold, and the equipment was either
discarded or transferred to the insurance carrier, leaving defendant without
the ability to inspect and in a disproportionate posture with Plaintiffs.
The trial court determined that dismissing Legacy Five’s action was the appropriate
sanction to impose because no less severe remedy would sufficiently redress the
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prejudice Busforsale suffered as a result of the loss of the bus, trailer, and equipment that
formed the basis of Legacy Five’s claim.
On appeal, Legacy Five does not challenge the facts the trial court recited and
relied on to support its decision. Rather, Legacy Five argues that (1) it “never acted with
an intent to suppress the truth” and (2) Busforsale failed to prove it was prejudiced by the
spoliation. This case is similar to Gardner v. R & J Express, LLC, 559 S.W.3d 462, 463
(Tenn. Ct. App. 2018), a negligence action in which a key piece of evidence was
destroyed before the defendant had an opportunity to inspect it. The plaintiffs in Gardner
were on a highway, driving their over-the-road tractor and hauling a trailer owned by the
defendant, when an axle on the trailer came loose, causing the tractor and trailer to
overturn and injure the plaintiffs. Gardner, 559 S.W.3d at 463. The plaintiffs asserted
that the trailer was the cause of the accident and that the defendant had been negligent in
its inspection and maintenance of the trailer. Id. The defendant contended the plaintiffs
caused the accident by failing to keep the tractor under control and driving too fast. Id.
The defendant further argued that by allowing their insurance company to take possession
of the tractor following the accident, the plaintiffs deprived the defendant of any
opportunity to inspect it. Id. The defendant asked the trial court to sanction the plaintiffs
for destroying evidence that was crucial to its ability to defend the case. Id. The trial
court granted the defendant’s motion by dismissing the plaintiff’s action. Id. at 464-66.
In so doing, the trial court acknowledged that although there was “no evidence of
intentional misconduct or fraudulent intent in Plaintiffs’ destruction of the tractor,”
Plaintiffs knew when they signed the title of the tractor over to their insurer that they
were going to be filing a lawsuit against the defendant and that the tractor would be a key
piece of evidence. Id. at 465. The trial court noted that the defendant was unable to
prove its theory of the case without being able to inspect the tractor. Id. at 466. Because
the plaintiffs had destroyed “a critical piece of evidence” that resulted in “severe
prejudice to the Defendant,” the trial court in Gardner concluded that “dismissal [was]
the only equitable remedy.” Id.
On appeal, the Gardner plaintiffs argued that the trial court abused its discretion
by dismissing its action. Id. at 467. After reviewing the trial court’s decision and the
factors Tatham directed trial courts to consider, this court affirmed the trial court’s
dismissal of the case. Id. at 472-73. We focused on the “deferential standard” we are
required to apply to conclude that the trial court did not abuse its discretion by dismissing
the plaintiffs’ negligence action. Id. at 472.
Legacy Five acknowledges that sanctioning a party for spoliation is a discretionary
decision by a trial court. We cannot reverse a trial court’s exercise of discretion unless
the court applied an incorrect legal standard, reached an illogical or unreasonable
decision, or based its decision on a clearly erroneous assessment of the evidence. See
Harmon, 594 S.W.3d at 305. As the Tatham Court explained, intentional misconduct by
the spoliating party is not required for a court to dismiss an action when evidence
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material to a claim is not available for a party to examine and use as the basis for a
defense. Tatham, 473 S.W.3d at 745-46; see also Gardner, 559 S.W.3d at 468-69.
Despite Legacy Five’s claim that Busforsale failed to prove prejudice, the trial court
found that without the ability to inspect the bus and trailer, Busforsale could not refute
Legacy Five’s claims regarding the condition and value of the bus, trailer, and equipment
that formed the basis of its claims. See Cincinnati Ins. Co., 2008 WL 220287, at *6
(affirming trial court’s dismissal of case due to spoliation where destruction of hose
“made it extremely difficult if not impossible, for the defendants to present an effective
defense to counter plaintiff’s theory” of the case).
“Appellate courts should allow discretionary decisions to stand even though
reasonable judicial minds can differ concerning their soundness.” Mercer, 134 S.W.3d at
133 (citing White v. Vanderbilt Univ., 21 S.W.3d 215, 223 (Tenn. Ct. App. 1999)).
Legacy Five has failed to convince us that the trial court abused its discretion in
dismissing Legacy Five’s complaint. Finding the lower court’s decision “‘was within the
range of acceptable alternative dispositions,’” Harmon, 594 S.W.3d at 305 (quoting Lee
Med., 312 S.W.3d at 524), we affirm the trial court’s judgment. In light of our holding,
Busforsale’s argument that the trial court erred in denying its motion for summary
judgment is pretermitted.
IV. CONCLUSION
The judgment of the trial court is affirmed, and this matter is remanded with costs
of appeal assessed against the appellants, Legacy Five Leasing, LLC and Legacy Five,
Inc., for which execution may issue if necessary.
________________________________
ANDY D. BENNETT, JUDGE
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