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Holland v. Sullivan

Court of Appeals of Tennessee, Nashville

September 7, 2017


          Session April 11, 2017

         Appeal from the Circuit Court for Davidson County No. 16C86 Joseph P. Binkley Jr., Judge

         The issues in this appeal arise from two very unorthodox agreements and the defendants' actions to avoid the consequences of the agreements. The agreements are unorthodox because, inter alia, each purports to be a "Bill of Sale" of an automobile when in fact each is a loan agreement for which the certificate of title is held by the lender as security. To complicate matters, the defendant who signed both agreements only owned one of the vehicles; his wife owned the other, and it is disputed whether the husband was authorized to act on her behalf. When the husband failed to pay either debt, the lender attempted unsuccessfully to possess the vehicles. Immediately thereafter, the husband and wife applied for and obtained new certificates of title and then used one of the duplicate titles to sell one of the automobiles to a third party. Thereafter, the lender commenced this action against the husband and wife for breach of contract, slander of title, and conspiracy to commit slander of title. The lender sought both compensatory and punitive damages. Following a bench trial, the court found the husband liable for breach of contract, and found the husband and wife jointly liable for slander of title and conspiracy to commit slander of title. The court then awarded compensatory damages in the amount of $32, 456.89 and punitive damages in the amount of $30, 000. The defendants appealed contending the trial court erred in failing to consider their affirmative defenses and in failing to hold that the Tennessee Title Pledge Act, Tenn. Code Ann. §§ 45-15-101 to -120 barred any recovery. They also contend that the evidence does not support a finding that the husband breached the contract or that they were jointly liable for slander of title and for conspiracy to commit slander of title. They further argue the trial court erred in awarding punitive damages. We affirm.

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

          Shannon L. Crutcher, Nashville, Tennessee, for the appellants, Brian Sullivan and Tamara J. Sullivan.

          Casey Adam Long, Franklin, Tennessee, for the appellee, Damon Holland.

          Frank G. Clement Jr., P.J., M.S., delivered the opinion of the Court, in which Andy D. Bennett and John W. Mcclarty, J., joined.


          FRANK G. CLEMENT JR., P.J., M.S.

         On August 28, 2013, Damon Holland and Brian Sullivan executed a written agreement titled "Bill of Sale" that conveyed a 2013 BMW to Mr. Holland for $30, 000. Concurrent with the execution of the Bill of Sale, Mr. Holland gave Mr. Sullivan $30, 000, and Mr. Sullivan delivered to Mr. Holland the certificate of title to the BMW. But for Mr. Holland taking possession of the BMW, it would appear that a routine sales transaction had been concluded as of August 28, 2013. Well, it was neither routine nor concluded.

         As the following reveals, the transaction was unorthodox, at best, for several reasons. One unorthodox aspect is that the Bill of Sale included a provision titled "Agreement to Resale Back to Brian Sullivan." Pursuant to this provision, Mr. Sullivan could repurchase the BMW within 10 days of the purchase date (August 28, 2013) for $33, 000; within 33 days for $35, 000; or, if beyond September 30, 2013, for $35, 000 plus $5, 000 for each additional month beyond September 30, 2013. Another unorthodox aspect of the transaction is that the parties had an oral agreement that Mr. Sullivan could retain possession of the BMW for an indeterminate time while Mr. Holland retained the certificate of tile. Another complicating factor is that, although Mr. Sullivan signed the Bill of Sale for the BMW, he did not own the BMW, and he did not have a power of attorney to sign a bill of sale. The registered owner of the vehicle was Mr. Sullivan's wife, Tamara Sullivan and while the certificate of title bore the signature "Tamara Sullivan, " she denied having signed the title.

         Two months later, Mr. Holland and Mr. Sullivan entered into an agreement pursuant to which Mr. Sullivan purportedly sold a 2013 Land Rover, which Mr. Sullivan owned, to Mr. Holland for $22, 000. It was entitled "Bill of Sale of Motor Vehicle" but, unlike the previous bill of sale, this one did not contain a buy-back provision. Nevertheless, both Mr. Holland and Mr. Sullivan acknowledged that they had a "handshake agreement" to that effect and on terms similar to the prior agreement.

         The parties executed the Bill of Sale of Motor Vehicle on November 6, 2013. Concurrent with the execution of the bill of sale, Mr. Sullivan delivered the signed certificate of title to the Land Rover, and Mr. Holland tendered $22, 000 in cash to Mr. Sullivan but, by agreement of the parties, Mr. Sullivan retained $17, 000 while Mr. Holland retained $5, 000.[1] As Mr. Holland explained, because Mr. Sullivan was still in possession of the BMW and intended to repurchase the BMW, it was agreed that Mr. Holland would apply the $5, 000 to the repurchase price for the BMW. As had been done in the previous transaction, Mr. Sullivan retained possession of the Land Rover while Mr. Holland retained the title to the vehicle as security for the loan.

         On May 20, 2014, Mr. Sullivan delivered two checks to Mr. Holland. One of them, check No. 1435, was payable to Music City Pawn, Mr. Holland's company, in the amount of $71, 210. The other, check No. 1436, was payable to Mr. Holland in the amount of $48, 000. However, Mr. Sullivan stopped payment on both checks before they were negotiated. At trial Mr. Sullivan testified that he stopped payment based on a subsequent agreement with Mr. Holland. He claimed that Mr. Holland agreed to return the titles to both vehicles in exchange for $5, 000. Mr. Holland disputes having made any such agreement.

         Three days later, and at the request of Mr. Holland, Mr. Sullivan wrote a check payable to the order of Tervice Burnett, Mr. Holland's sister and business partner, for $5, 000. Mr. Sullivan added a note in the memo line of the check that stated: "Payment in full for Damon Holland and M.C.P. [Music City Pawn] for all outstanding loans. Replaces Check Numbers 1435 and 1436 for the cash received." Ms. Burnett cashed the check. At trial, Mr. Holland acknowledged that he requested the payment to Ms. Burnett but insisted that he would not have authorized her to cash the check if he had known what was written in the memo line.

         In August 2014, Mr. Holland hired Harpeth Towing to take possession of both vehicles and to deliver them to him. When Harpeth Towing arrived at the Sullivans' home, Harpeth's employees immediately began loading the Land Rover onto the tow-truck. As they were loading it, the Sullivans came out and attempted to stop them, but Harpeth Towing was able to remove the Land Rover. However, the Sullivans prevented Harpeth Towing from removing the BMW.[2]

         Although they had already dug themselves into a deep hole, a point at which most people stop digging, the Sullivans kept digging by driving to the Davidson County Clerk's Office, whereupon they applied for and obtained duplicate vehicle titles to both vehicles. After obtaining duplicate titles, the Sullivans used the duplicate title to sell the BMW to a third party.

         Mr. Holland commenced this action against the Sullivans alleging claims for breach of contract, conversion, slander of title, and civil conspiracy. The Sullivans filed an answer and counterclaim, asserting claims against Mr. Holland for breach of contract and conversion of the Land Rover. In their counterclaim, the Sullivans appear to assert the following affirmative defenses as causes of action: accord and satisfaction; usury; fraud; and unlawful repossession; and that "if these transactions are deemed a title loan, that it is illegal and unenforceable for the amount is over the limits allowed by Tennessee Law."

         The case was tried without a jury over two days. At the conclusion of the trial, the trial court stated its detailed findings of fact and conclusions of law from the bench, and we summarize the findings most pertinent to the issues on appeal as follows:

1. Although both contracts are entitled "Bill of Sale, " the contracts reflect loans rather a sale due to, inter alia, the ambiguity created by the buy-back provisions; the interest charges; the fact that the vehicles remained in the possession of the Sullivans; the fact that Mr. Holland did not sign the titles, record the titles, or pay sales tax on the transfer; and evidence of a similar transaction between the parties that occurred in 2010 with Mr. Sullivan successfully exercising the buy-back provision.
2. Concerning the signatures on the vehicle titles, as to the BMW, the trial court stated, "I don't think Mrs. Sullivan signed [the BMW title]. . . . But . . . I'm not sure it's really that important to anything." As to the title for the Land Rover, the trial court found the signature on the title to be that of Mr. Sullivan. Nevertheless, the court further stated, "It's not that important really whether he sign[ed] it or didn't sign it. The parties intended to give [Mr. Holland] the titles to hold as security for the loans."
3. The trial court found that Mrs. Sullivan's claim that she did not know about the sale of the BMW until the trial was not credible.
4. As to whether the subject loan agreements are illegal and in violation of the Tennessee Title Pledge Act, Tenn. Code Ann. § 45-15-101 through 120, the trial court found that the loan agreements are not subject to the Tennessee Title Pledge Act because the transactions were "person-to-person" rather than "business-to-person." The trial court further found that should the opinion of the court regarding the application of Tenn. Code Ann. § 45-15-101 through 120 be in error, that such cause of action and defense has been waived by the Sullivans for failure to plead such cause of action or defense and having been raised for the first time during final arguments.
5. The Sullivans did not plead the defense of accord and satisfaction prior to trial and it was therefore waived.
6. Mr. Sullivan breached the contract as to the BMW by failing to pay what was owed on the BMW and by failing to turn the vehicle over to Mr. Holland.
7. The Sullivans are liable of conspiracy because of the following: (1) there was a common design between the Sullivans each having intent and knowledge of the others intent to deprive Mr. Holland of his security interest; (2) conspiracy was accomplished by the Sullivans' concerted actions for an unlawful purpose when, after realizing that Mr. Holland was attempting to collect the security for the loan agreements, the Sullivans went to the County Clerk's office to obtain duplicate titles; and (3) overt actions occurred when the Sullivans applied for duplicate titles to both vehicles and sold the BMW.
8. The Sullivans are liable for slander of title for the following reasons: (1) Mr. Holland had an interest in property because he held the titles as securities for the loan; (2) the Sullivans published false statements about the property because they obtained duplicate titles and made false statements about the title to the property; (3) the Sullivans acted intentionally and maliciously because they knew Mr. Holland was attempting to gain possession of both vehicles, the Sullivans failed to inform the tow-service driver that the BMW was in their garage knowing that Mr. Holland sent the service to collect the security, and the Sullivans subsequently obtained duplicate titles; and (4) the foregoing false statements caused Mr. Holland pecuniary loss because Mr. Holland's security interest (the BMW) was sold.
9. The Sullivans are not guilty of conversion or trespass to chattels because they are the true owners of the vehicles.
10. Mr. Holland is entitled to punitive damages because Mr. Holland proved by clear and convincing evidence that the Sullivans acted intentionally.

         Based on these and other findings, the trial court awarded Mr. Holland the 2013 Land Rover as his property, compensatory damages in the amount of $40, 756.89 less the $8, 300 already paid by the Sullivans, and punitive damages in the amount of $30, 000 for a final net judgment of $62, 456.89. Relying on Tenn. Code Ann. § 29-11-107, the trial court held the Sullivans jointly and severally liable for this judgment due to the Sullivans' liability for conspiracy and slander of title.[3] As for Mr. Holland's claims for conversion and trespass to chattels, the court dismissed them on the finding that the Sullivans were the true owners of the vehicles. On February 23, 2016, the trial court entered an order consistent with its oral ruling. From that order, the Sullivans now appeal.


         The issues to be considered are as follows:

1. Whether the trial court erred in failing to consider the affirmative defenses raised by the Sullivans and in finding Tenn. Code Ann. § 45-15-101 to -120 did not apply to the loans made by Mr. Holland.
2. Whether the evidence supports finding Mr. Sullivan liable for breach of contract.
3. Whether the evidence supports finding the Sullivans jointly and severely liable for slander of title.
4. Whether the evidence supports finding that the Sullivans conspired to commit slander of title resulting in each being jointly and severely ...

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