BENJAMIN J. BUFFINGTON
LEGACY & EXIT PLANNING LLC, ET AL.
Session November 17, 2016
from the Chancery Court for Shelby County No. CH-11-1283
Walter L. Evans, Chancellor
plaintiff in this case, Benjamin Buffington ("Mr.
Buffington"), is a former member of Legacy & Exit
Planning, LLC ("Legacy"). Mr. Buffington sued the
Appellants on the basis that they had not made certain
required contractual payments incident to his departure from
Legacy. In response, the Appellants asserted various
counterclaims predicated upon Mr. Buffington's
acquisition of a company that had been a former client of a
company affiliated with Legacy. The trial court dismissed the
Appellants' counterclaims upon Mr. Buffington's
motion for partial summary judgment, and following a trial,
it held that the Appellants were jointly and severally liable
for the outstanding payments owed to Mr. Buffington. Having
reviewed the record transmitted to us on appeal, we affirm
and remand for further proceedings consistent with this
R. App. P. 3 Appeal as of Right; Judgment of the Chancery
Court Affirmed and Remanded.
Michael G. McLaren and Kristine E. Nelson, Memphis,
Tennessee, for the appellants, Legacy & Exit Planning,
LLC and Executive Financial Services, Inc.
J. Heflin and Jack F. Heflin, Memphis, Tennessee, for the
appellee, Benjamin J. Buffington.
B. Goldin, J., delivered the opinion of the Court, in which
Brandon O. Gibson, J., and David R. Farmer, Sp. J., joined.
B. GOLDIN, JUDGE
AND PROCEDURAL HISTORY
Buffington founded Legacy in the fall of 2006 with Kelly
Finnell ("Mr. Finnell"). Legacy was in the business
of providing consulting services with respect to employee
stock ownership plans ("ESOPs") and often worked
closely with another company owned by Mr. Finnell, Executive
Financial Services, Inc. ("EFS"). Legacy's work
was performed and billed under EFS's name, and through
EFS, Legacy also engaged in the business of marketing and
selling retirement plans, stock appreciation rights plans,
and life insurance products. Although Mr. Buffington was
compensated solely by Legacy, he was provided with EFS
business cards, and EFS marketed his services as if he were
an EFS employee.
four years after they founded Legacy, Mr. Buffington and Mr.
Finnell began discussions about the potential dissolution of
Legacy and/or Mr. Buffington's departure from the
company. Although the Legacy Operating Agreement contained a
provision that governed Mr. Buffington's compensation
related to a withdrawal, Mr. Finnell was unwilling to pay Mr.
Buffington under the terms of the Operating Agreement. As a
result, the parties soon began negotiations over the terms of
Mr. Buffington's departure. On October 20, 2010, Mr.
Finnell sent Mr. Buffington an email with a subject line that
read "Transition Agreement." Following receipt of
this email, Mr. Buffington sent Mr. Finnell a letter dated
November 24, 2010. The body of each item of correspondence is
Mr. Buffington subsequently received certain payments to
facilitate his withdrawal from Legacy between November 30,
2010 and December 31, 2010, these payments soon ceased. As
explained by EFS and Legacy in their appellate brief, Mr.
Buffington stopped receiving payments after it was discovered
that he had taken efforts to acquire Mock, Inc.
("Mock"), a former client of EFS. Mock is a
Tennessee corporation that, among other things, provides
electrical motor maintenance and industrial crane servicing.
In August 2010, EFS and Mock had entered into an agreement
under which EFS would prepare a "Transaction
Description" regarding the formation of a potential ESOP
for Mock. According to Legacy and EFS, by virtue of his
acquisition of Mock, Mr. Buffington severed the business
relationship between EFS and Mock.
August 2, 2011, after his payments had ceased, Mr. Buffington
filed suit in the Shelby County Chancery Court against Mr.
Finnell, Legacy, and EFS. In his complaint, Mr. Buffington
averred that an enforceable contract had been created by his
November 24, 2010 letter to Mr. Finnell. He prayed for a
declaratory judgment on this issue and asserted that Legacy
and EFS had failed to make the payments that were required of
them by the contract. In order to correctly determine the
outstanding amounts owed to him, Mr. Buffington also
requested that Mr. Finnell be ordered to provide a full
accounting of the accounts that were mentioned in Mr.
Buffington's November 24, 2010 letter.
September 2, 2011, Legacy, EFS, and Mr. Finnell filed an
answer to the complaint wherein they denied that Mr.
Buffington was entitled to any of his requested relief.
Contemporaneous with the filing of their answer, they also
asserted a number of counterclaims predicated upon Mr.
Buffington's efforts in acquiring Mock. Mr. Buffington
filed an answer to the asserted counterclaims on September
22, 2011 and denied that a recovery was available against him
on any theory or basis.
January 17, 2012, following some initial discovery, Mr.
Buffington filed a motion for partial summary judgment
requesting that the counterclaims asserted against him be
dismissed. The motion was supported by a number of
affidavits, a legal memorandum, and a statement of undisputed
material facts. In pertinent part, Mr. Buffington asserted
that he did not discuss acquiring Mock until after he had
left Legacy's employ. Moreover, he asserted that by the
time discussions regarding his potential acquisition of Mock
took place, it had already been determined that an ESOP
transaction was not feasible.
November 21, 2013, following the exchange of further
discovery, Mr. Buffington filed a supplemental memorandum in
support of his motion for partial summary judgment. Mr.
Buffington asserted that the additional discovery that had
taken place confirmed the facts underpinning his motion for
partial summary judgment. On November 26, 2013, Mr. Finnell,
Legacy, and EFS filed a response to Mr. Buffington's
motion for partial summary judgment. On the same date, they
also filed a response to Mr. Buffington's statement of
undisputed material facts and set forth additional material
facts that they claimed were not in dispute. A few weeks
later, on December 9, 2013, Mr. Finnell, Legacy, and EFS
filed a supplemental memorandum in opposition to Mr.
Buffington's motion for summary judgment. This filing was
soon followed by Mr. Buffington's submission of a second
supplemental memorandum in support of his motion on December
hearing on Mr. Buffington's motion for partial summary
judgment was held on December 17, 2013. Over a month later,
by order entered January 29, 2014, the Chancery Court granted
Mr. Buffington's motion and dismissed all of the
counterclaims that had been asserted against him. In
connection with its dismissal of the counterclaims, the
Chancery Court determined that the October 20, 2010 and
November 24, 2010 correspondence between Mr. Buffington and
Mr. Finnell created a binding contract.
April 21, 2014, a consent order was entered substituting
counsel for Mr. Finnell, Legacy, and EFS. The newly
substituted counsel subsequently filed a motion on behalf of
his clients asking the trial court to reconsider its January
29, 2014 order. Within their motion to reconsider, Legacy,
EFS, and Mr. Finnell argued that certain evidence material to
each of the counterclaims was not considered at summary
judgment. Specifically, they noted that "multiple key
pieces of evidence . . . were not specifically brought to the
Court's attention by counsel or specifically addressed by
the Court in making its ruling." On August 27, 2014, the
trial court entered an order denying the motion to
April 1, 2015, prior to a trial on his claims, Mr. Buffington
filed a motion in limine requesting that the trial court
exclude from trial all evidence that would be offered by the
Defendants to undermine or contradict matters already
determined in the trial court's January 29, 2014 order.
The trial court granted this motion by order entered April
30, 2015 and stated that the "facts determined by the
Court [in its January 29 order] were determined not only for
purposes of dismissal of the counterclaim[s] but also for
purposes of any affirmative defenses which would be based on
contradicting those facts."
hearing on Mr. Buffington's claims took place in July
2015. At the conclusion of the proceedings, the trial court
invited the attorneys on both sides to submit proposed
findings of fact and conclusions of law. The trial court
issued its own findings of fact and conclusions of law on
December 10, 2015, and on January 6, 2016, it entered a final
order of judgment. Pursuant to its final order, the trial
court held that Legacy and EFS were jointly and severally
liable to Mr. Buffington for $99, 351.90. According to the
trial court, this sum comprised the amount of contract
damages owed to Mr. Buffington and the prejudgment interest
that had accrued. In addition to this award, the trial court
determined that Legacy, EFS, and Mr. Finnell were jointly and
severally liable to Mr. Buffington for certain attorney's
fees and costs. Following the entry of the trial court's
judgment, Legacy and EFS filed a timely appeal.
their appellate brief, Legacy and EFS (collectively "the
Appellants") raise the following issues for our review,
restated verbatim as follows:
1. Whether the trial court erred in finding that Legacy &
Exit Planning, LLC and Executive Financial Services, Inc. are
jointly and severally liable to Plaintiff in contract
damages, given that the parties to the subject contract were
Benjamin J. Buffington and Legacy & Exit Planning, LLC,
alone, and not Executive Financial Services, Inc.
2. Whether the trial court erred in granting Benjamin J.
Buffington's Motion for Partial Summary Judgment and
dismissing the counterclaim of Legacy & Exit Planning,
LLC and Executive Financial Services, Inc.
3. Whether the trial court erred in striking the affirmative
defenses of Legacy & Exit Planning, LLC and Executive
Financial Services, Inc., as addressed in the trial
court's "Order Granting Plaintiff's Motion in
Limine, " entered on April 30, 2015.
appeal, our review is primarily devoted to two orders. In
addition to examining the propriety of the trial court's
January 6, 2016 final judgment, which incorporated by
reference the trial court's findings of fact and
conclusions of law entered on December 10, 2015, we review
whether the Appellants' counterclaims were erroneously
dismissed pursuant to the partial summary judgment order
entered on January 29, 2014. Review of each of these orders
entails the application of different standards. The January
6, 2016 final judgment was entered following a bench trial.
As a result, we accord the findings of fact established
therein a presumption of correctness and will not disturb
them unless the preponderance of the evidence is otherwise.
C-Wood Lumber Co., Inc. v. Wayne Cnty. Bank, 233
S.W.3d 263, 271-72 (Tenn. Ct. App. 2007) (citations omitted).
In order for the evidence to preponderate against a trial
court's factual finding, "it must support another
finding of fact with greater convincing effect."
Id. at 272 (citation omitted). In contrast to our
review of the trial court's factual findings, we do not
afford any presumption of correctness to the trial
court's legal conclusions. Id.
review of the trial court's January 29, 2014 summary
judgment order involves a question of law. Accordingly, our
standard of review is de novo, and we afford no presumption
of correctness to the trial court's determination.
Maggart v. Almany Realtors, Inc., 259 S.W.3d 700,
703 (Tenn. 2008) (citations omitted). In determining whether
a grant of summary judgment was proper, we are obligated to
make a fresh determination that the requirements of Rule 56
of the Tennessee Rules of Civil Procedure have been
satisfied. Hughes v. New Life Dev. Corp., 387 S.W.3d
453, 471 (Tenn. 2012) (citations omitted). By rule, a motion
for summary judgment should only 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 entitled to a judgment as a
matter of law." Tenn. R. Civ. P. 56.04.
moving party has the ultimate burden of persuading the court
that . . . there are no genuine issues of material fact and
that it is entitled to judgment as a matter of law."
Town of Crossville Hous. Auth. v. Murphy, 465 S.W.3d
574, 578 (Tenn. Ct. App. 2014) (citation omitted). If the
moving party makes a properly supported motion for summary
judgment, the burden of production then shifts to the
nonmoving party to demonstrate the existence of a genuine
issue of material fact. Id. (citation omitted).
Tennessee Supreme Court has recently explained, the proper
framework for evaluating summary judgment orders is found in
its decision in Rye v. Women's Care Center of
Memphis, MPLLC, 477 S.W.3d 235 (Tenn. 2015). See Am.
Heritage Apartments, Inc. v. Hamilton Cnty. Water and
Wastewater Treatment Auth., 494 S.W.3d 31, 39-40 (Tenn.
2016) (noting that although the trial court considered the
motion for summary judgment pursuant to the standard set
forth in Tennessee Code Annotated section 20-16-101 because
the lawsuit had been filed after July 2011, the Rye
standards applied); Wallis v. Brainerd Baptist
Church, __ S.W.3d __, 2016 WL 7407485, at *6 (Tenn.
2016) (noting that the Rye standards do, in fact,
apply to cases commenced after July 1, 2011). Consequently,
our review is guided by the following standards:
[I]n Tennessee, as in the federal system, when the moving
party does not bear the burden of proof at trial, the moving
party may satisfy its burden of production either (1) by
affirmatively negating an essential element of the nonmoving
party's claim or (2) by demonstrating that the nonmoving
party's evidence at the summary judgment stage
is insufficient to establish the nonmoving party's claim
or defense. We reiterate that a moving party seeking summary
judgment by attacking the nonmoving party's evidence must
do more than make a conclusory assertion that summary
judgment is appropriate on this basis. Rather, Tennessee Rule
56.03 requires the moving party to support its motion with
"a separate concise statement of material facts as to
which the moving party contends there is no genuine issue for
trial." Tenn. R. Civ. P. 56.03. "Each fact is to be
set forth in a separate, numbered paragraph and supported by
a specific citation to the record." Id. When
such a motion is made, any party opposing summary judgment
must file a response to each fact set forth by the movant in
the manner provided in Tennessee Rule 56.03. "[W]hen a
motion for summary judgment is made [and] ... supported as
provided in [Tennessee Rule 56], " to survive summary
judgment, the nonmoving party "may not rest upon the
mere allegations or denials of [its] pleading, " but
must respond, and by affidavits or one of the other means
provided in Tennessee Rule 56, "set forth specific
facts" at the summary judgment stage
"showing that there is a genuine issue for trial."
Tenn. R. Civ. P. 56.06. The nonmoving party "must do
more than simply show that there is some metaphysical doubt
as to the material facts." Matsushita Elec. Indus.
Co., 475 U.S. at 586, 106 S.Ct. 1348. The nonmoving
party must demonstrate the existence of specific facts in the
record which could lead a rational trier of fact to find in
favor of the nonmoving party. If a summary judgment motion is
filed before adequate time for discovery has been provided,
the nonmoving party may seek a continuance to engage in
additional discovery as provided in Tennessee Rule 56.07.
However, after adequate time for discovery has been provided,
summary judgment should be granted if the nonmoving
party's evidence at the summary judgment stage
is insufficient to establish the existence of a genuine issue
of material fact for trial. Tenn. R. Civ. P. 56.04, 56.06.
The focus is on the evidence the nonmoving party comes
forward with at the summary judgment stage, not on
hypothetical evidence that theoretically could be adduced,
despite the passage of discovery deadlines, at a future
Rye, 477 S.W.3d at 264-65 (emphasis in original).
Court's Order on Mr. Buffington's Motion in
begin our discussion by addressing the last of the
Appellants' raised issues. As phrased in the
"Statement of the Issues" section of their brief,
the Appellants' third issue invites us to consider
whether the trial court erred in striking their affirmative
defenses in its April 30, 2015 order. We can dispense with
this question rather quickly.
trial court's April 30, 2015 order was entered in
response to Mr. Buffington's motion in limine that
requested the exclusion of any evidence that might be offered
to contradict matters already determined in the trial
court's January 29, 2014 partial summary judgment order.
In granting the relief requested in Mr. Buffington's
motion in limine, the trial court ruled that the facts in its
January 29, 2014 order were "determined not only for
purposes of dismissal of the counterclaim[s] but also for
[the] purposes of any affirmative defenses which would be
based on contradicting those facts." Contrary to the
suggestion embedded in the Appellants' phrasing of their
third issue, the trial court's April 30, 2015 order did
not "strike" or otherwise dismiss their affirmative
defenses. As we read the order, it merely held that any facts
established in the court's prior summary judgment order
could not be attacked anew at trial with contradictory
evidence. To the extent that the plain language of the
Appellants' third issue challenges the alleged striking
of their affirmative defenses, it misapprehends the actions
of the trial court and thus fails to present an issue that is
capable of redress. Again, the trial court's April 30,
2015 order did not strike the Appellants' affirmative
defenses. The order merely prohibited the introduction of
evidence at trial that might be offered to contradict the
facts established in the partial summary judgment order that
had been entered previously.
event, despite the phrasing of the Appellants' third
issue, we note that the argument section of their brief is
devoid of any discussion about their affirmative defenses. As
developed in the body of their brief, the Appellants'
objection to the trial court's April 30, 2015 order is
related solely to the dismissal of their counterclaims. They
note that Mr. Buffington's motion in limine was
predicated on the assumption that their counterclaims were
properly dismissed. Because they contend that their
counterclaims were erroneously dismissed, they argue that the
April 30, 2015 order should be reversed in connection with
any reversal of the trial court's order granting partial
summary judgment. Indeed, in concluding their argument
section on this issue, they submit as follows: "The
counterclaim should proceed to trial and all relevant and
material evidence should be allowed." We would not
dispute this notion. If we were to reverse the trial
court's dismissal of any ...