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Clear Water Partners, LLC v. Benson

Court of Appeals of Tennessee, Knoxville

January 26, 2017


          Session: October 18, 2016

         Appeal from the Chancery Court for Knox County No. 190254-2 Clarence E. Pridemore, Jr., Judge

         A purchaser of property filed a complaint against numerous individuals asserting intentional interference with its business relationships and tortious interference with its contracts based on the individuals' alleged misconduct aimed at preventing the development of the property the purchaser was attempting to acquire. The defendants filed motions to dismiss based on Tennessee Rules of Procedure 10.03 and 12.02(6), which the trial court granted. The trial court also awarded the defendants their attorneys' fees pursuant to Tenn. Code Ann. § 4-21-1003(c). The plaintiff appealed, and we find the plaintiff properly stated a claim for tortious interference with business relationships and civil conspiracy; the plaintiff did not state a claim for tortious interference with contracts; and the defendants are not entitled to an award of their attorneys' fees at this stage of the proceedings.

         Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Chancery Court Affirmed in Part, Vacated in Part, and Remanded

          David J. Silvus, Clarksville, Tennessee, for the appellant, Clear Water Partners, LLC.

          John A. Lucas and Nicholas W. Diegel, Knoxville, Tennessee, for the appellees, Charles E. and Rebecca Benson, Russ and Tracy Ford, Frank and Belinda Gambuzza, Cheryl and Dennis Hatcher, Mark and Kathy Jackson, Glenn Loy, Mark and Virginia Smothers, Robert Whitaker, Michael and Sherry Whitaker, Sharon Boyce, Jack Woodall, and Susannah Sayre; and Gregory W. O'Neal, Memphis, Tennessee, for the appellee, David Kiger.

          Andy D. Bennett, J., delivered the opinion of the court, in which D. Michael Swiney, C.J., and Thomas R. Frierson, II, J., joined.



         I. Procedural Background

         Clear Water Partners, LLC ("Clear Water") is a limited liability company that filed a complaint in September 2015 against twenty-three individual defendants based on allegations that the individuals acted improperly to interfere with its plans to purchase and develop real property in Knox County, Tennessee. According to its complaint, Clear Water paid $6, 000 to Gloria L. Melgaard Trusts (the "Trusts") for the option of purchasing and developing approximately 111 acres of real property. Its purchase was contingent on the approval of a development plan, obtaining rezoning approval, and the performance of certain site development work. Clear Water alleges it contracted with Paul J. Murphy, III to sell about thirty acres of the property to him once Clear Water executed its option contract with the Trusts and paid the $6, 000. According to Clear Water, Mr. Murphy voided his contract with Clear Water on April 18, 2014, due to "improperly motivated conduct and/or improper means" of twenty-three named individuals (the "Defendants"), causing Clear Water to suffer monetary damages.

         Clear Water alleges that it then contracted to sell the same thirty or so acres of property to Belle Investment Company, Inc. ("Belle Investment"), and that Belle Investment required Clear Water to make certain changes to the plans that were different from the specifications Mr. Murphy had requested, and that these changes caused Clear Water to incur damages. With regard to seventy or so acres of the remaining property, Clear Water asserts it submitted a rezoning application to the Knoxville/Knox County Metropolitan Planning Commission ("MPC") in July 2013 to classify the seventy acres as "low density" residential use. Clear Water claims it submitted a development plan seeking approval of a multi-family dwelling development as well as for a use-on-review request for approval of a marina for the adjoining property that it was not seeking to develop into multi-family dwellings.

         According to Clear Water, the Defendants, individually and through their attorney/agent, "vigorously opposed" its rezoning application and development plans for apartments as well as the use-on-review for the construction of a marina on the adjoining property. Clear Water alleges the Defendants created false e-mail accounts that appeared to be from residents of neighborhoods around the proposed development to send to MPC members and County Commissioners for the purpose of opposing the proposed development. Clear Water alleges that defendant Susannah Sayre sent a flyer containing false and misleading information home with approximately 833 elementary school children encouraging parents of the children to oppose the proposed development. Clear Water further alleges that defendant Charles E. Benson circulated to residents living near the proposed development a different flyer containing false and misleading information about the development. Clear Water also asserts that defendant David Kiger, who owns a marina located approximately one mile from the proposed marina, submitted an affidavit containing materially false and misleading information regarding the proposed marina to both the MPC and the BZA in an effort to cause the agencies to deny Clear Water's request to develop a marina.

         Clear Water asserts that its rezoning application, development plan, and use-on-review were placed on the MPC's agenda for its September 12, 2013, meeting. Due to the Defendants' opposition, the MPC postponed reviewing Clear Water's applications for sixty days, and on November 14, 2013, the MPC approved the rezoning classification, the development plan for the apartment complex, and the use-on-review for the marina. Then, on December 16, 2013, the Knox County Commission (the "Commission") approved the rezoning application as recommended by the MPC.

         The Defendants appealed the MPC's decision to the Board of Zoning Appeals ("BZA") on November 14, 2013. Clear Water asserts that the materials the Defendants submitted to the BZA contained materially false and misleading information about both the planned development and the marina. On February 26, 2014, the BZA upheld the MPC's decision to approve the development plan and reversed the MPC's decision to approve the use-on-review for the marina. Clear Water alleges that as a result of the delays to the project caused by the Defendants, it had to pay an additional $20, 000 to the Trusts to extend its option contract to purchase the property at issue.

         According to Clear Water's complaint, the Defendants filed a petition for certiorari with the Circuit Court of Knox County on March 28, 2014, challenging the BZA's approval of the development plan, and it filed a petition seeking review of the BZA's decision to deny the use-on-review for the marina. On June 16, 2015, the trial court upheld the BZA's decision with regard to both the development plan and the marina, and the Defendants appealed the trial court's decision to uphold the BZA's approval of the development plan to the Court of Appeals.[1]

         During the pendency of the petitions for certiorari, Clear Water was having a boundary survey performed pursuant to the terms of the development plan. The survey required accessing the neighboring property, which was owned by Glenn Loy, Michael Whitaker, and June Whitaker, all of whom are named defendants. These defendants refused the surveyor access to their property, making it necessary for Clear Water to obtain a court order requiring the defendants to allow this access. During this same period, Clear Water alleges that another defendant, Cheryl Hatcher, made a false claim to the United States Fish and Wildlife Service ("FWS") that Clear Water was disturbing or destroying blue heron nests. Clear Water asserts that this conduct by these defendants further delayed the development of the property and caused Clear Water to incur additional and unnecessary expenses.

         Finally, Clear Water alleges that defendant Rebecca Benson published false statements about John Huber, one of the principals of Clear Water, to at least one other person in the form of an e-mail. According to Clear Water, this e-mail falsely stated that Huber has told "so many lies" and that Mr. Huber intended to build a roadway through the Woodland Springs subdivision, which Clear Water asserts was not true.

         The causes of action Clear Water asserts against the Defendants include claims for tortious interference with its business relationships, tortious interference with its contracts, and civil conspiracy. Clear Water seeks compensatory damages in an amount not to exceed $550, 000 and requests punitive damages as well.

         In November 2015, twenty-one of the Defendants filed a motion to dismiss the complaint pursuant to Rule 10.03 of the Tennessee Rules of Civil Procedure. The Defendants argued that Clear Water's complaint was based on particular contracts and that Clear Water failed to attach any of the contracts to its complaint as Rule 10.03 required. Then, in December 2015, fifteen of the Defendants filed a different motion to dismiss pursuant to Rule 12.02(6) of the Tennessee Rules of Civil Procedure on the basis that Clear Water had failed to state a claim upon which relief could be granted as to these individuals. The Defendants also argued that their activities petitioning the government in opposition to Clear Water's planned development and participating in litigation appeals were privileged.

         The trial court held a hearing on both of the motions to dismiss on December 14, 2015, and it granted both of the motions by orders dated December 28, 2015. With respect to the Defendants' Rule 12.02(6) motion, the court stated:

After argument of respective Counsel here today and a review of the record as a whole, this Court finds that the Plaintiff's complaint includes factual allegations about some Defendants, but does not contain any factual allegations about the unnamed Defendants that Mr. Lucas and Mr. O'Neal represent here today.
This Court also finds the acts alleged in the Plaintiff's complaint are privileged pursuant to TCA 4-21-1003; therefore, the Defendants' motion to dismiss pursuant to Rule 12.06 is hereby granted as to the named Defendants for failure to state a claim upon which relief can be granted, as well as privileged pursuant to TCA 4-21-1003. This includes all claims, including any unraised claims for defamation or other claims arising from litigation.
As to attorney fees, this Court will award reasonable attorney fees pursuant to TCA 4-21-1003, due to no named exceptions being raised on behalf of the Plaintiffs prohibiting the Defendants from covering such. And that's my order.
The trial court then ruled on the Defendants' Rule 10.03 motion as follows:
There is no doubt in my mind that this whole thing is founded upon a breach of contract between these different parties.
There's three alleged contracts in here in this complaint, and for that reason I'm going to grant the motion to dismiss pursuant to 10.03. There's three exceptions in the 10.03, but they don't meet any of those three exceptions.
It's not public records. It's not filed as public records. It's not inaccessible to the pleaders. The adverse party apparently does not have it, and it's not an insurance claim. I'm going to grant that motion also.

         The Defendants' attorneys filed an application for their fees and expenses in January 2016, and the trial court issued an order on February 4, 2016, awarding the Rule 12 Defendants $25, 535 for attorneys' fees and costs pursuant to Tenn. Code Ann. § 4-21-1003.

         On January 20, 2016, Clear Water filed a motion pursuant to Rules 59 and 60 of the Tennessee Rules of Civil Procedure to alter or amend the judgment granting the Defendants' Rule 10 motion to dismiss. Clear Water pointed out that its complaint includes a claim for tortious interference with existing or prospective business relationships in addition to a claim for tortious interference with contract, and that the business relationships claim does not require that there be a contract or that it be breached. Clear Water also argued that the law does not require a contract to be attached to a complaint for a plaintiff to state a claim for tortious interference with contract.

         The Defendants moved to strike Clear Water's motion to alter or amend, asserting that the trial court lacked jurisdiction over the case because Clear Water's motion was an unauthorized motion for reconsideration rather than a true motion to alter or amend. By order entered on March 3, 2016, the trial court agreed with the Defendants' argument and granted their motion to strike Clear Water's motion to alter or amend, finding that the court lost jurisdiction over the case after January 27, 2016, which was thirty days following the date of its order granting the Rule 10 Defendants' motion to dismiss. On the same day, the court entered an alternative order denying Clear Water's motion to alter or amend "even if the Court were to construe Plaintiffs Motion as a motion to alter or amend filed pursuant to Rule 59."

         Clear Water filed two notices of appeal: one on March 4, 2016, and the other on April 1, 2016. On appeal, Clear Water contends the trial court erred by ruling (1) that its complaint failed to state a cause of action with respect to the Rule 12 Defendants; (2) that its complaint should be dismissed pursuant to Rule 10.03 of the Tennessee Rules of Civil Procedure; (3) that the Rule 12 Defendants are entitled to recover their ...

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