Direct Appeal from the Circuit Court for Fayette County, No. 24CC12013CV72 J. Weber McCraw, Judge
Philip B. Seaton, Memphis, Tennessee, for the appellant, Susan Isbell.
Betty Stafford Scott, Medina, Tennessee, and Linda L. Holmes, Memphis, Tennessee, for the appellees, William G. Hatchett and Julia D. Hatchett.
BRANDON O. GIBSON, J., delivered the opinion of the Court, in which J. STEVEN STAFFORD, P.J., W.S., and ROGER A. PAGE, Sp. J., joined.
BRANDON O. GIBSON, JUDGE.
Background and Procedural History
Prior Litigation Involving Mr. Hatchett and Ms. Isbell
Plaintiff/Appellant Susan Isbell and Defendant/Appellee William G. Hatchett are former business associates as well as family members - Mr. Hatchett is married to Ms. Isbell's sister, Defendant/Appellee Julie Day Hatchett. For several years preceding 2009, Ms. Isbell worked as an independent contractor for Hatchett Hospitality, Inc., a Tennessee corporation solely owned by Mr. Hatchett. The termination of the business relationship between Ms. Isbell and Mr. Hatchett in 2009 gave rise to a dispute over commissions Ms. Isbell claimed to be owed. In September 2010, Ms. Isbell filed a lawsuit against Hatchett Hospitality in Shelby County Circuit Court seeking payment of the alleged commissions. In May 2012, Ms. Isbell filed a separate lawsuit in Shelby County Chancery Court against Mr. Hatchett individually as well as Hatchett Hospitality and several other entities in which she sought to pierce the corporate veil and hold Mr. Hatchett individually liable for the allegedly unpaid commissions.
On August 1, 2012, Mr. Hatchett was deposed in connection with both of the pending lawsuits. A transcript of the deposition reflects that the parties reached an agreement to settle both pending lawsuits that day. Pursuant to the settlement, Mr. Hatchett, individually, agreed to pay $225, 000 to Ms. Isbell in installments over the course of several years. The first installment in the amount of $30, 000 was due on or before September 1, 2012, with the remaining balance of $195, 000 to be paid in quarterly installments of $15, 000 commencing on January 1, 2013. As collateral for his obligation, Mr. Hatchett agreed to grant Ms. Isbell a security interest in his ownership interest in a Knoxville hotel. Mr. Hatchett further agreed that in the event two other hotels in which he was a partial owner were liquidated or sold prior to completion of the installment payments, all proceeds he received would be utilized to satisfy his outstanding obligation to Ms. Isbell. In return, Ms. Isbell agreed to dismiss both lawsuits with prejudice within five business days of receipt of Mr. Hatchett's initial $30, 000 payment. The parties' agreement was subsequently reduced to writing, which was not executed.
Despite the terms of the settlement agreement, Mr. Hatchett failed to make the initial $30, 000 payment by September 1, 2012. Mr. Hatchett explained that he was not able to comply with the settlement agreement because he was involved in divorce proceedings and his compliance would violate an injunction against dissipation of marital assets issued by the Fayette County Chancery Court. Ms. Hatchett filed a complaint for divorce against Mr. Hatchett in April 2006 in Fayette County that had not yet been resolved in September 2012. On April 21, 2006, pursuant to Tennessee Code Annotated section 36-4-106,  the court ordered a temporary injunction ("Section 36-4-106 injunction-) to prevent Mr. Hatchett or Ms. Hatchett from "transferring, assigning, borrowing against, concealing or in any way dissipating or disposing, without the consent of the other party or an order of the Court, of any marital or separate property.”
Hatchett Motion to Lift Injunction in Fayette County Chancery Court
On September 17, 2012, Mr. Hatchett filed a motion in Fayette County Chancery Court asking the court to lift the Section 36-4-106 injunction so that he could comply with the settlement agreement. Mr. Hatchett's motion stated that after prolonged negotiations, he reached a settlement agreement with Ms. Isbell to resolve two lawsuits she filed against him and various entities under his control. The motion stated that Ms. Hatchett was not a party to either of Ms. Isbell's lawsuits and that Ms. Hatchett was "adamantly opposed to the use of her personal property as collateral as proposed by [Mr. Hatchett].- The motion did not include any information regarding the relative size of the Hatchetts' marital estate, nor did it state the amount of Mr. Hatchett's settlement with Ms. Isbell.
The Fayette County Chancery Court entered an order rejecting Mr. Hatchett's motion on October 3, 2012. In its order, the court noted that "the value of the marital property which [Mr. Hatchett] seeks to pledge pursuant to the proposed settlement or the extent of his marital interest in such property in any division of marital [property] has not yet been determined by this Court . . . .- The court found that allowing Mr. Hatchett to use marital funds to make settlement payments to Ms. Isbell would ...