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Lewis v. Moore

Court of Appeals of Tennessee, Nashville

May 31, 2017

LEMUEL LEWIS
v.
LYNN MOORE, ET AL.

          Session July 12, 2016

          Appeal from the Chancery Court for Williamson County No. 43096 Michael Binkley, Chancellor

         In this breach of contract action, the plaintiff entered into a contract with a sole proprietor whereby he purported to purchase 10% of the sole proprietorship. The contract entitled the plaintiff to 10% of the cash withdrawals made from the business's account. It further provided that, should the sole proprietor dissolve the business and form a new entity of which she was a majority owner, the plaintiff would be entitled to 10% of the cash withdrawals taken by the sole proprietor from the new entity. Two years later, the sole proprietor closed the business and formed a new entity, a limited liability company, with another individual. The plaintiff filed suit, alleging breach of contract and violations of the duty of good faith and fair dealing. The trial court found for the sole proprietor, concluding that the sole proprietor was free to close her business at will. It further found that the sole proprietor did not breach the express terms of the contract, nor did she breach her implied duty of good faith and fair dealing, in closing her business and forming the LLC. Discerning no error, we affirm.

         Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Chancery Court Affirmed

          D. Alexander Fardon, Nashville, Tennessee, for the appellant, Lemuel Lewis.

          Douglas S. Johnston, Jr., Nashville, Tennessee, for the appellees, Lynn Moore, and Sandcliffs Media, LLC.

          W. Neal McBrayer, J., delivered the opinion of the court, in which Frank G. Clement, Jr., P.J., M.S., and Richard H. Dinkins, J., joined.

          MEMORANDUM OPINION [1]

          W. NEAL McBRAYER, JUDGE.

         Lynn Moore and her husband owned a home in Brentwood, Tennessee, and obtained a construction loan to build another home nearby on Monroe Lane (the "Monroe Lane Property"). As the July 2012 maturity day for the construction loan approached, Ms. Moore contacted several banks seeking to refinance the loan. But she had no success.

         Finally, one of the banks offered to refinance the loan if Ms. Moore improved her debt-to-equity ratio by selling a vacant lot she owned on Hillsboro Road (the "Hillsboro Road Property"). Unable to immediately locate a buyer, Ms. Moore approached Lemuel Lewis, a long-time friend and former business colleague, to seek his assistance. Though initially hesitant, Mr. Lewis agreed to purchase the Hillsboro Road Property so that Ms. Moore might avoid defaulting on the construction loan.

         On June 20, 2012, Mr. Lewis and Ms. Moore entered into a contract concerning both the Hillsboro Road Property and Ms. Moore's marketing and advertising business, Moore Media. Ms. Moore had owned and operated Moore Media as a sole proprietorship since 2002. The contract provided that Mr. Lewis would purchase the Hillsboro Road Property from Ms. Moore for $300, 000 cash, and in turn, Ms. Moore would repurchase the lot for the same $300, 000 after selling one of her other properties.[2]

         In addition to the real property, Mr. Lewis also acquired rights in Moore Media. Specifically, the contract provided as follows:

Lynn Moore agrees to sell Lem Lewis 10% of Moore Media in exchange for the above transaction plus $10.00. Effective July 1, 2012, Lem will receive monthly payments of 10% of the cash withdrawals taken by Lynn [M]oore.
If Moore Media is dissolved or closes for any reason and Lynn Moore reopens a new company of which she and/or members of her family are the majority owner(s) (cumulatively), Lem Lewis will receive 10% of any draws and/or profits received by Lynn Moore in such new company. The intent of this clause is to insure a continuing investment in any and all future Lynn [M]oore entities in which [she] may be involved. This agreement only extends to ...

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