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Huddleston v. Harper

Court of Appeals of Tennessee, Knoxville

June 30, 2015

P. MICHAEL HUDDLESTON
v.
KENNETH L. HARPER ET AL.

Session January 15, 2015.

Appeal from the Circuit Court for Blount County No. L-18329 David R. Duggan, Judge.

James S. MacDonald, Knoxville, Tennessee, for the appellant, P. Michael Huddleston.

Lewis S. Howard, Jr., Knoxville, Tennessee, for the appellees, Kenneth L. Harper and Jerry L. Hurst.

Charles D. Susano, Jr., C.J., delivered the opinion of the court, in which D. Michael Swiney and Thomas R. Frierson, II, JJ., joined.

OPINION

CHARLES D. SUSANO, JR., CHIEF JUDGE.

I.

On October 1, 2003, Plaintiff and Harper formed a general partnership known as Harper-Huddleston Properties, or HH Properties. As contemplated by the partnership agreement, they acquired about ten acres of land, improved with a building of approximately 168, 000 square feet (the HH building). According to Plaintiff, in 2008, Harper "assumed managing partner responsibilities for the HH Partnership." In June of 2011, the partners began discussing the possibility of Plaintiff selling his one-half interest to Hurst.

The value of the HH building had been appraised at between $3, 300, 000 and $3, 600, 000. Harper insisted that its actual value was significantly less because the roof had suffered significant hail damage and needed to be replaced at a cost of about one million dollars. In fact, without Plaintiff's knowledge, the partnership, through Harper, had submitted a claim with its insurance company for the damage to the roof. Defendants did not divulge this information to Plaintiff during the negotiations pertaining to the sale price of Plaintiff's interest. In an agreement executed on October 31, 2011, Plaintiff sold his one-half interest to Hurst for $1, 250, 000, which, according to Plaintiff, represented one-half of the estimated $2, 500, 000 value of the roof-damaged building. The assignment and sale agreement contained a "full release" provision stating, "Seller [i.e., Plaintiff] hereby releases the Partnership and all partners . . . from all actions, claims, liabilities, obligations, litigation and other matters relating to or arising from the operation of the Partnership or the business of the Partnership." On November 10, 2011, the parties executed an "addendum to assignment and sale of partnership interest in Harper-Huddleston properties" that, in essence, gave Hurst more time to pay Plaintiff the remaining balance owed on the sale. The insurance claim was approved shortly after the sale of Plaintiff's interest, resulting in two payments to the partnership totaling $1, 068, 761.65.

The day after Plaintiff signed the addendum, Harper contacted him and asked whether he, Harper, could sign Plaintiff's name to an insurance check that named Plaintiff as one of the payees. Plaintiff told Harper, "Yea, I guess I'm okay with that unless you're talking thousands and thousands of dollars." The check, dated November 8, 2011, was in the amount of $566, 662.38. Shortly thereafter, at Plaintiff's insistence, Harper told him the amount of the check. On December 2, 2011, Plaintiff learned that Harper had endorsed Plaintiff's name to the check.

A second insurance check in the amount of $502, 999.27 followed, also with Plaintiffs name listed as a payee. According to Plaintiff, Defendants "beseeched" him to endorse the second check, promising "to make things right with" Plaintiff regarding the two insurance payments. Plaintiff agreed and endorsed the second check. He filed this action shortly after realizing that Defendants had no plans "to make things right."

Defendants filed a motion for summary judgment. Following a hearing, the trial court granted the motion, stating in pertinent part as follows:

There was an assignment and sale agreement. It's not been rescinded. The plaintiff is not seeking to rescind it. It's been ratified and affirmed. The plaintiff and his wife have been released from business debt liability. His name was included on two checks which he endorsed or allowed someone to endorse, and even if, even if, and I'm not finding, but even if there were misrepresentations with respect to the first check as to the amount of the check, it couldn't - all he had to do was say show me the check instead of just saying, well, as long as we're talking a few thousand dollars. How is that a reasonable reliance on anything? He could have said show me the check; what's the amount of the check? If he chose to say fine, sign my name to a check, without further inquiry, he was perhaps careless. Where is there a reasonable reliance on anything that the defendant said? But they've established that his name was on two checks which he either endorsed from the insurance proceeds that he's complaining about . . . His name was on two insurance company checks which he either endorsed or allowed to be endorsed. If he didn't know all the details on the first check, the Court finds that he knew about the details by the time of the second check. He agreed on January 24, 2012 to endorse the insurance check upon Hurst's final payment. The payment was made. He did so endorse. All of the insurance proceeds have been paid to the roofing contractor.
The Court finds that based upon all of those facts being established and that there being no genuine issue of material fact with respect to those facts, and also the finding that there are many things that the plaintiff could have done to protect himself if in fact he thought he was being defrauded, including seeking to rescind the agreement, including. . . asking for monies to be paid into the court.
The Court believes that the defendants have negated essential elements of the plaintiff's claims with respect to whether there was a failure to disclose or whether there were misrepresentations with respect to what was disclosed. The Court believes that the defendants have negated essential elements of the plaintiff's claim for a fraudulent inducement by a conspiracy of silence, that there is no genuine issue of material fact, and I'm going to grant summary judgment to the defendants.

Plaintiff timely filed a notice of appeal.

II.

Plaintiff raises the issue of whether the trial court correctly granted summary judgment to Defendants. Defendants argue that Plaintiff's appeal should be deemed frivolous.

III.

Because the complaint was filed after July 1, 2011, Tenn. Code Ann. § 20-16-101 (Supp. 2014) applies to our analysis of summary judgment in this case. That statute provides:

In motions for summary judgment in any civil action in Tennessee, the moving party who does not bear the burden of proof at trial shall prevail on its motion for summary judgment if it:
(1) Submits affirmative evidence that negates an essential element of the nonmoving party's claim; or
(2) Demonstrates to the court that the nonmoving party's evidence is insufficient to establish an essential element of the nonmoving party's claim.

See also Harris v. Metro. Dev. & Housing Agency, No. M2013-01771-COA-R3-CV, 2014 WL 1713329 at *3 (Tenn. Ct. App. M.S., filed Apr. 28, 2014); Wells Fargo Bank, N.A. v. Lockett, No. E2013-02186-COA-R3-CV, 2014 WL 1673745 at *2 (Tenn. Ct. App. E.S., filed Apr. 24, 2014). As we observed in Harris:

Summary judgment shall be granted "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is ...

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