DELWIN L. HUGGINS ET AL.
R. ELLSWORTH McKEE ET AL.
Session November 25, 2014
Appeal from the Chancery Court for Hamilton County No. 07-1061 Jon Kerry Blackwood, Judge
Thomas R. Frierson, II, J., delivered the opinion of the court, in which D. Michael Swiney and John W. McClarty, JJ., joined.
John P. Konvalinka and Cody M. Roebuck, Chattanooga, Tennessee, for the appellant, John P. Konvalinka.
Anthony A. Jackson and Bruce C. Bailey, Chattanooga, Tennessee, for the appellee, Alternative Fuels, LLC.
THOMAS R. FRIERSON, II, JUDGE
I. Factual and Procedural Background
The trial court originally dismissed Mr. Konvalinka's claims against both Mr. McKee and AF in an order entered in January 2012. As Mr. Konvalinka subsequently appealed the decision, this Court affirmed the dismissal as to the claims against Mr. McKee but reversed as to the claims against AF. See Huggins v. McKee, 403 S.W.3d 781 (Tenn. Ct. App. 2012). In pertinent part, this Court stated the facts giving rise to the action as follows:
AF was a business that developed alternative fuel sources. Specifically, AF dealt in methane gas for the generation of electricity. Both Huggins and McKee apparently have ownership interests in AF. In December 2007, Huggins filed a complaint against the Defendants. In his complaint, Huggins alleged that McKee effectively shut him out of AF resulting in his claimed damages. In February 2008, the Defendants filed an answer and McKee filed a counterclaim seeking at least $1, 500, 000 alleging that Huggins was incompetent and drove AF into the ground.
In July 2009, Huggins filed for bankruptcy. In April 2010, the U.S. Bankruptcy Court for the Eastern District of Tennessee ("the Bankruptcy Court") entered an agreed order approving Konvalinka's purchase of the claims asserted by Huggins against the Defendants, and Konvalinka subsequently was joined in the Trial Court as a plaintiff in this case. In May 2011, the Defendants filed a motion to amend answer and counterclaim, requesting to be allowed to amend their answer and McKee's counterclaim to assert a setoff against Konvalinka. Also in May 2011, the Trial Court entered an order granting the Defendants' motion to amend.
. . .
In November 2011, the Bankruptcy Court entered an order holding that Konvalinka lacked standing to object to a proposed compromise in Huggins's bankruptcy proceeding.[FN1] The Bankruptcy Court subsequently entered an order granting and approving a compromise and settlement stating in relevant part:
[FN1] The Bankruptcy Court's opinion may be found at In re Huggins, 460 B.R. 714 (Bankr.E.D.Tenn. 2011).
ORDERED that for the purpose of the Trustee's distribution to unsecured creditors only, R. Ellsworth McKee's Proof of Claim, Claim No. 2, will be treated as follows:
(a) Mr. McKee's claim is subordinated in right of payment to the extent of $16, 117, 938 of Claim No. 2, to the claims of remaining unsecured creditors who properly filed claims within the time set out in the Trustee's Notice of Need to File ...