United States District Court, M.D. Tennessee, Columbia Division
WILLIAM J. HAYNES, Jr., Senior District Judge.
Plaintiff, Patricia Porter Kryder, a Tennessee citizen, filed this action under state contract law and the Declaratory Judgment Act, T.C.A. § 29-14-101, et. seq. against the Defendants James Kemmler Rogers, a California citizen, and Jennifer Rogers-Etcheverry, a California citizen with a durable power of attorney over Defendant James Rogers. The Defendants removed the action to this Court under 28 U.S.C. § 1332, the federal diversity statute, without objection.
Plaintiff's claims arise out of a promissory note made payable to Defendant Rogers. Plaintiff asserts state law claims for breach of contract and procurement of breach, breach of the implied duty of good faith and fair dealing, quantum merit, accounting, and declaratory judgment. Defendants assert counterclaims of promissory note/breach of contract, unjust enrichment, equitable lien, injunctive and declaratory relief, and lien lis pendens.
Before the Court is Plaintiff's motion for partial summary judgment (Docket Entry No. 61) on the following two issues:
(1) Count 1 of the Amended Counter-Claim seeks repayment of principal on a term note which under the four corners of the term note is not due until December 31, 2020, and without an acceleration clause in the promissory note, unpaid interest is the only remedy available to the Defendants as a matter of law.
(2) When Defendant Jennifer Rogers-Etcheverry accelerated the principal balance on the term note she breached the terms of the promissory note as alleged in Count I and Count II of the Complaint.
In sum, Plaintiff contends that, under Tennessee law, Defendant Rogers-Etcheverry improperly accelerated the promissory note and, in so doing, breached the terms of the promissory note. Defendants filed a response in opposition (Docket Entry No. 72) contending that Defendants' Second Amended Answer and Counterclaim (Docket Entry No. 70) does not seek acceleration of the promissory note, rendering the issue moot, and that, under Tennessee law, there is no cause of action for breach of the implied duty of good faith and fair dealing.
For the reasons stated herein, Plaintiff's motion for partial summary judgment (Docket Entry No. 61) should be denied.
A. Review of the Record
On January 15, 2010 Plaintiff, Patricia Kryder, signed a promissory note (Docket Entry No. 19-1) payable to Defendant James Rogers. (Docket Entry No. 71, Counter-Plaintiff's Response to Counter-Defendant's Statement of Material Undisputed Facts at ¶ 1). The original principal amount of the January 15, 2010 promissory note was $50, 000.00, payable on or before December 31, 2020. Id.
On April 16, 2010, Plaintiff signed a second promissory note (Docket Entry No. 19-2), payable to Defendant James Rogers, that replaced the January 15, 2010 promissory note. Id. at ¶ 2. The original principal amount of the April 16, 2010 promissory note was $100, 000.00, payable on or before December 31, 2020. Id.
It is undisputed that the April 16, 2010 promissory note does not provide for acceleration of the principal balance at any time prior to December 31, 2020. Id. at ¶ 8. Although the principal balance under the April 16, 2010 promissory note is not due until December 31, 2020, the promissory note does provide for the monthly payment of interest. Id. at ¶¶ 5-6. Plaintiff paid monthly interest from May 2010 through December 2011. Id. at ¶ 7.
Defendant James Rogers was the original holder of the April 16, 2010 promissory note. Id. at ¶ 3. Prior to becoming mentally incompetent, Rogers executed a general durable power of attorney, appointing Rogers-Etcheverry as his attorney-in-fact. (Docket Entry No. 70, Second Amended Answer and Counterclaim, Exhibit D). On August 14, 2014, Rogers-Etcheverry filed a suggestion of death (Docket Entry No. 75) of Defendant James Rogers. Subsequently, this Court granted Defendant Rogers-Etcheverry's motion to substitute as real party in interest in her capacity as Special Administrator of the estate of the deceased counter-plaintiff, James Rogers. (Docket Entry Nos. 82 and 85). Following the death of Defendant James Rogers, Defendant Rogers-Etcheverry is in possession of the original signed April 16, 2010 promissory note. (Docket Entry No. 71-1, Declaration of Jennifer Rogers-Etcheverry).
On September 11, 2012, counsel for Rogers-Etcheverry sent Plaintiff a letter that states in relevant part:
The purpose of this letter is to advise you of our representation and notify you that the May 19, 2012, agreement with my client to "pause" payments is no longer in effect. We therefore request that either the principal sums be paid immediately, or, if you lack sufficient funding for that option, that the notes be made current and you come within compliance of their terms on or before October 1, 2012.
(Docket Entry No. 62-1, Letter from Edward M. Yarbrough to Patricia Porter Kryder).
In addition, Count I of Defendants' Amended Counterclaim asserts that:
As a direct and proximate result of said breaches of the contractual obligations to Rogers, Counter-Defendant Kryder is liable to the Counter-Plaintiff for at least $100, 000.00 in actual damages, plus interest, reasonable attorneys' fees, court costs and other expenses incurred by Counter-Plaintiff.
(Docket Entry No. 19, Amended Counterclaim at 7).
Yet, on July 30, 2014, the Court granted Defendants' motion for leave to file a second amended answer and counterclaim. (Docket Entry No. 69). Defendants subsequently filed a Second Amended Answer and Counterclaim, for which Count I asserts that:
As a direct and proximate result of said breaches of the contractual obligations to Rogers, Counter-Defendant Kryder is liable to the Counter-Plaintiff for actual damages in the amount of unpaid interest pursuant to the Note, reasonable attorneys' fees, court costs and other expenses incurred by Counter-Plaintiff. Counter-Plaintiff is not currently seeking a judgment for the entire principal balance of the Note but rather is seeking a judicial foreclosure on the Property under the Deed of Trust that Counter-Plaintiff is asking this Court to enforce and put in place due to Counter-Defendant's default on the Note.
(Docket Entry No. 70, Second Amended Answer and Counterclaim at 15).
Plaintiff contends that both the letter from Rogers-Etcheverry's counsel and Count I of the Amended Counterclaim constitute improper acceleration of the promissory note and, as a result, ...