Session July 12, 2016
from the Chancery Court for Williamson County No. 43096
Michael Binkley, Chancellor
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.
R. App. P. 3 Appeal as of Right; Judgment of the Chancery
Alexander Fardon, Nashville, Tennessee, for the appellant,
Douglas S. Johnston, Jr., Nashville, Tennessee, for the
appellees, Lynn Moore, and Sandcliffs Media, LLC.
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 
NEAL McBRAYER, JUDGE.
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.
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
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.
addition to the real property, Mr. Lewis also acquired rights
in Moore Media. Specifically, the contract provided as
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 ...