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Stainmaster Carpet & Restoration, LLC v. Music City Messenger Service, Inc.

Court of Appeals of Tennessee, Nashville

June 28, 2019


          Session April 3, 2019

          Appeal from the Chancery Court for Davidson County No. 15-289-II William E. Young, Chancellor

         This appeal arises from an action for declaratory judgment as to the ownership of a business, defamation, and tortious interference with business relations. The plaintiff carpet cleaner alleged that the defendant entrepreneur and his wife loaned money to the plaintiff to expand his carpet cleaning business with the condition that the defendants handle the business's finances and bookkeeping. The defendants asserted that they started a new carpet cleaning business and the plaintiff was merely an employee. Following a jury verdict for the plaintiff, the trial court denied the defendants' motion for a new trial and remittitur. On appeal, the defendants contend that the trial judge failed to fulfill his duty as the thirteenth juror and there was no material evidence to support the jury's verdict or award of damages. After reviewing the record, we find the trial judge fulfilled his role as the thirteenth juror and that there was material evidence to support the jury's verdict and award of damages. Accordingly, we affirm the judgment against the defendants.

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

          Thomas F. Bloom, Nashville, Tennessee, for the appellants, Scott M. Fulner, Pamela Fulner, Music City Messenger Service, Inc., and PIP of Tennessee, Inc.

          W. Carl Spining and William Horace Neal, III, Nashville, Tennessee, for the appellees, Stainmaster Carpet & Restoration, LLC, and James Brandon Walker.

          Randall E. Schisler, appellee, pro se.

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


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

         Factual and Procedural History

         The central issue of this case is a dispute over the terms of an oral agreement made in 2013 by entrepreneurs Brandon Walker and Scott Fulner. Mr. Walker had owned and operated a carpet cleaning business since 2004, and Scott Fulner had owned a variety of businesses since the 1980s. In 1993, Mr. Fulner incorporated Music City Messenger Service, Inc. ("MCM") as a "shell" corporation under which he operated a delivery company and a mortgage company. Mr. Fulner later sold the delivery business and closed the mortgage company, but MCM remained in existence to collect residual payments from a real estate sale. Mr. Fulner and Mr. Walker met in 2009 at a social event, and Mr. Fulner eventually hired Mr. Walker to clean the carpets at Mr. Fulner's home and at the offices of another one of Mr. Fulner's businesses, PIP of Tennessee, Inc., d/b/a Dynamark Graphics Group ("Dynamark").[1]

         In late 2012 or early 2013, Mr. Walker and Mr. Fulner entered into an oral agreement, the terms of which the parties later disputed. The agreement was never reduced to writing, and Mr. Walker and Mr. Fulner were the only persons present at its formation. According to Mr. Walker, he had recently begun operating his carpet cleaning business under the name Stainmaster when Mr. Fulner proposed loaning Mr. Walker money for Mr. Walker to purchase a new van and additional equipment. To ensure repayment of the loan, Mr. Fulner insisted that Stainmaster's finances and bookkeeping be handled by MCM and the loan repayments be automatically deducted from Stainmaster's revenue. As part of the deal, Stainmaster and Dynamark would exchange services, with Dynamark receiving free carpet cleaning and Stainmaster receiving free printing services. When the loans were repaid, Mr. Walker was to retake control of the funds held by Mr. Fulner.

         According to Mr. Fulner, Mr. Walker approached Mr. Fulner because Mr. Walker's carpet cleaning business was failing due to, inter alia, a lack of proper equipment. Although Mr. Fulner was not interested in investing in the existing business or becoming partners in a new venture, he saw an opportunity to leverage his business experience and MCM's existing administrative capabilities to build a new carpet cleaning company. Mr. Fulner's goal was to grow the business and then sell it. Accordingly, Mr. Fulner offered to start the business and hire Mr. Walker as the operations manager. If the business grew, the two men would either split the profit from its sale, or Mr. Fulner would sell the business to Mr. Walker for half of the asking price. Mr. Fulner would use the existing administrative staff of MCM to handle Stainmaster's administrative needs.

         What is undisputed is that the two men reached an agreement of one kind or another and, in March 2013, Mr. Fulner opened a bank account under the name Music City Messengers, d/b/a Stainmaster Cleaning & Restoration ("the Stainmaster Account"). The account was opened with a check for $10, 000 from MCM's primary account. It is also undisputed that the $10, 000 was structured as a loan from MCM, to be repaid in 12 equal payments at 8% interest. Shortly thereafter, a 1998 Ford van was purchased, which Mr. Walker used to perform carpet cleaning services under the Stainmaster name. Stainmaster's clients sent payment to the Dynamark office, where it was accounted for by two MCM employees before being deposited into the Stainmaster Account. The van was insured on a policy in the name of Mr. Fulner, d/b/a Stainmaster. Mr. Fulner also opened a business credit card account under his name and the name of Stainmaster. In May 2013, a 2005 Chevrolet van was purchased for $16, 000 and titled in the name of Music City Messengers, d/b/a Stainmaster. The van was paid for with a loan from Mr. Fulner's wife, Pamela Fulner, to be repaid in 24 equal installments at 8% interest. All of Stainmaster's credit card bills, loan payments, payroll, and operating expenses were paid out of the Stainmaster Account.

         It is also undisputed that Mr. Walker's role was largely confined to managing the day-to-day cleaning services, and Mr. Fulner's role-through MCM-was largely confined to managing the administrative functions of the business. Mr. Walker hired and trained employees, directed the solicitation of new clients, coordinated services for existing clients, and performed the carpet cleaning. The employees began and ended their day at Mr. Walker's house, where the vans were kept. Although Mr. Walker and the other employees were paid through a payroll service as employees of MCM, Mr. Walker picked up payroll from the Dynamark office and delivered them to Stainmaster's employees.

         In or around March 2014, Mr. Walker was involved in an automobile accident while driving the 1998 Ford van. The insurance company declared the vehicle a total loss and issued a check to Mr. Fulner, d/b/a Stainmaster, for $9, 311.49. The proceeds were deposited into the Stainmaster Account, and shortly thereafter a 2003 Ford van was purchased and titled to Stainmaster Carpet Cleaning. Mr. Walker signed the invoice and vehicle registration for the 2003 Ford van as "owner."

         In June 2014, Mr. Walker hired Randy Schisler as a cleaning technician. Although Mr. Schisler proved less than satisfactory in his role, Mr. Walker saw that Mr. Schisler "had a gift of gab" and thought Mr. Schisler would be good at sales. Thus, Mr. Walker moved Mr. Schisler to a sales position. The next month, Stainmaster had a booth at the 2014 Greater Nashville Apartment Association trade show, where Stainmaster networked with apartment complex managers from the Nashville area. Adding Mr. Schisler and attending the trade show led to an increase in clients. Consequently, a 2002 GMC van was purchased with a second loan from Ms. Fulner and titled to Stainmaster Carpet Cleaning. Like the first, the second loan was to be repaid in 24 equal installments with eight percent interest.

         Until this point, Mr. Walker and Mr. Fulner maintained an amicable relationship. In late 2014, however, Mr. Fulner and Mr. Walker's disparate views of their respective roles in Stainmaster became apparent when they disagreed about whether the Stainmaster vans should be kept at Mr. Walker's house or at Dynamark's office. The growing tension rose to a crescendo in early February 2015.

         On Friday, February 6, 2015, one of Stainmaster's vans was ready to be picked up from a repair shop. Both Mr. Walker and Mr. Fulner showed up, and both claimed ownership of the van. After an argument in the parking lot, it was clear to Mr. Walker and Mr. Fulner that their arrangement was no longer working. They agreed to meet that Sunday morning at the Dynamark offices to discuss the dissolution of their business relationship. At their meeting, Mr. Fulner offered to part ways in exchange for a payment of $36, 000. As with their initial agreement, Mr. Walker and Mr. Fulner later disputed the terms of Mr. Fulner's offer. According to Mr. Walker, Mr. Fulner asked for $36, 000 to pay off the remaining loan balances and to pay for MCM's administrative services. According to Mr. Fulner, he offered to sell the business to Mr. Walker for $36, 000. Either way, the parties agree that their negotiations quickly broke down and Mr. Fulner "fired" Mr. Walker the next day via text message and demanded the return of the van and equipment in Mr. Walker's possession.

         Mr. Walker did not capitulate to Mr. Fulner's demands. Instead, he sent a letter to all of Stainmaster's customers, informing them that future payments should be sent to Mr. Walker's home address instead of Dynamark. Mr. Walker also changed the addresses on the Stainmaster vans to his home address and continued to perform carpet cleaning services under the Stainmaster name. At the same time, Mr. Fulner continued running Stainmaster with Mr. Schisler. Emails were sent to Stainmaster's clients, informing them that Mr. Walker had gone "rogue" and was no longer an authorized representative of Stainmaster. Because of the dueling Stainmasters, several clients refused to tender payment to either party until the dispute was resolved.

         On March 9, 2015, Mr. Walker and Stainmaster Carpet & Restoration, LLC[2](collectively, "Plaintiffs") filed the present action against Mr. Fulner, Ms. Fulner, MCM, Dynamark (collectively, "Defendants"), and Mr. Schisler.[3] The complaint asked for a declaratory judgment that the Stainmaster business belonged to Mr. Walker and requested damages for defamation and tortious interference with business relations. Defendants filed an answer, generally denying the allegations and asserting counterclaims for conversion, defamation, tortious interference with business relations, and fraud.

         The case proceeded to a five-day jury trial on January 22, 2018. The jury found that Mr. Walker was the rightful owner of the Stainmaster business, including its vehicles, equipment, supplies, and accounts, and awarded Mr. Walker $100, 000 against Mr. Fulner.[4] In addition, the jury found that Mr. Fulner communicated defamatory statements about Mr. Walker, damaging his business and reputation and causing a loss of clients of Stainmaster, and awarded $75, 000 against Mr. Fulner on this claim. Finally, the jury found that Mr. Fulner wrongfully interfered with Mr. Walker's business relationships, causing a loss of clients and ...

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