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Nationwide Investments, LLC v. Pinnacle Bank

Court of Appeals of Tennessee, Nashville

September 16, 2019


          Session August 14, 2019

          Appeal from the Circuit Court for Davidson County No. 17C2661 Thomas W. Brothers, Judge.

         In this case, the plaintiff-appellant, Nationwide Investments, LLC, brought suit against Pinnacle Bank for, among other things, an alleged violation of the state's Financial Records Privacy Act. The case was dismissed at summary judgment, and sanctions were imposed against the plaintiff and its counsel. Although the plaintiff and its counsel now appeal, raising several issues for our review, for the reasons stated herein, we affirm.

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

          Charles Walker, Nashville, Tennessee, for the appellant, Nationwide Investments, LLC.

          Charles Walker, Nashville, Tennessee, Pro se. [1]

          David M. Smythe, Nashville, Tennessee, for the appellee, Pinnacle Bank Financial Partners, Inc, d/b/a Pinnacle Bank.

          Arnold B. Goldin, J., delivered the opinion of the Court, in which J. Steven Stafford, P.J., W.S., and Carma Dennis McGee, J., joined.




         This appeal arises out of a lawsuit between Nationwide Investments, LLC ("Nationwide") and Pinnacle Bank ("the Bank"). Nationwide's counsel in this appeal, Charles Walker, is also its sole member and owner. Prior to the onset of the present litigation, Mr. Walker was a debtor in a Chapter 11 bankruptcy case. The Bank was a secured creditor in the bankruptcy case, with multiple mortgage loans.

         At the time of the bankruptcy case filing, on February 29, 2016, Mr. Walker owned approximately forty residential properties. It should be further noted that, immediately prior to the bankruptcy case filing, Family Trust Services, LLC ("First Family")[2] had obtained a prejudgment attachment order in the Davidson County Chancery Court against all rental real properties owned by Mr. Walker. In Mr. Walker's Chapter 11 bankruptcy petition, which had been filed in the United States Bankruptcy Court for the Western District of Tennessee, he requested that the attachment order be stayed. The bankruptcy matter was thereafter transferred to the United States Bankruptcy Court for the Middle District of Tennessee.

         On March 23, 2016, attorney David Smythe filed a notice of appearance on behalf of the Bank in the bankruptcy case. Nearly two months later, on May 16, 2016, Steven Lefkovitz filed a notice of appearance on behalf of Mr. Walker in the bankruptcy matter.

         Previously, in February 2015, the Bank had entered into a mortgage loan transaction with Nationwide with regard to a property at 1125 Sunnymeade Drive in Nashville. As is relevant here, the Bank received a lender's title policy as part of this transaction. On June 2, 2016, in connection with Mr. Walker's bankruptcy proceeding, Mr. Smythe received service of a subpoena duces tecum issued by attorney Paul Krog on behalf of his client, First Family, seeking production of the title policy for the 1125 Sunnymeade Drive property. Indeed, in pertinent part, the subpoena requested that the Bank produce, on June 20, 2016, the following:

         1. Any policy of title insurance written for the benefit of the lender in connection with the transaction in the course of which the deed of trust presently found in the records of the Davidson County Register of Deeds as document number 20150225-0016193 and appended hereto was executed.

         Notably, no other records were requested by the subpoena, and the subpoena specifically indicated that it had been served as specified in Tennessee Code Annotated section 45-10-106. The Bank eventually would respond to the subpoena and produce the title policy, with Mr. Smythe confirming in a letter to Mr. Krog on June 16, 2016 that no motion to quash the subpoena had ever been timely filed. The letter indicated that it was also being mailed to Mr. Lefkovitz, counsel for Mr. Walker.

         On June 24, 2017, Mr. Walker filed an objection to the Bank's secured mortgage claims in the bankruptcy case, challenging the Bank's entitlement to attorney's fees. Thereafter, on July 28, 2017, Mr. Walker filed an amended objection in which he also accused Mr. Smythe of acts of unethical conduct. After an objection hearing was held in the bankruptcy court in August 2017, the bankruptcy court entered two orders in early September 2017 awarding the Bank attorney's fees and costs in conjunction with its claims. Mr. Walker soon filed notices of appeal concerning these orders, and on October 23, 2017, the present litigation commenced in the Davidson County Circuit Court ("the trial court"). On that date, Nationwide filed its complaint asserting that the Bank had, among other things, violated Tennessee's Financial Records Privacy Act. In pertinent part, Nationwide asserted that the Bank had "disclosed Nationwide's financial records to a third party (known as a business competitor) without Nationwide's consent."

         Following the filing of the complaint, on October 27, 2017, Mr. Smythe sent Mr. Walker a letter indicating that the Bank had complied with the Financial Records Privacy Act and requesting that Nationwide withdraw its complaint. According to the letter, Nationwide's complaint failed to comply with Rule 11 of the Tennessee Rules of Civil Procedure and was not properly filed. Mr. Smythe warned that he would seek sanctions against Mr. Walker, as well as Nationwide, if the complaint was not withdrawn. A second letter, along with a copy of a planned Rule 11 motion for sanctions, was sent to Mr. Walker on November 8, 2017. Therein, warning was given that the motion for sanctions would be filed on December 5, 2017 unless the complaint was dismissed or withdrawn prior to that date.

         The Bank thereafter filed an answer to Nationwide's complaint, and on December 5, 2017, the Bank filed a motion for summary judgment and a motion for sanctions. In a memorandum filed in support of the motion for summary judgment, the Bank argued, among other things, that no timely motion to quash the subpoena from Mr. Krog had ever been filed, that the produced title policy did not qualify as a "financial record," and that, even if the title policy was a "financial record," the Financial Records Privacy Act was followed when the Bank produced a copy of the policy pursuant to the subpoena. In its motion for sanctions, which was brought against Nationwide and Mr. Walker, the Bank asserted that the complaint had been filed in bad faith and submitted that it should be able to tender an affidavit to the court detailing all attorney's fees and expenses incurred by the Bank in seeking dismissal of this "frivolous" lawsuit.

         After Nationwide responded to the motion for sanctions, an agreed order was entered on April 16, 2018 setting hearings on the Bank's motion for summary judgment and motion for Rule 11 sanctions for May 11, 2018. Nationwide thereafter responded to the filed motion for summary judgment on May 7, 2018, and on May 8, 2018, it filed a motion for leave of court to file an amended complaint. On May 25, 2018, the trial court entered a trio of orders denying Nationwide's motion for leave to amend, granting the Bank summary judgment on all claims, and granting Rule 11 sanctions against both Nationwide and Mr. Walker. Because the order on the motion for sanctions did not specify the amount of attorney's fees assessed against Nationwide and Mr. Walker, a finalized sanctions order was thereafter entered on June 19, 2018.

         A notice of appeal was filed on June 25, 2018, but Mr. Walker filed a motion to alter or amend the sanctions order on July 19, 2018. A hearing on Mr. Walker's motion to alter or amend was not held until December 7, 2018, and on that date, Mr. Walker and Nationwide also filed a motion to disqualify the trial court judge pursuant to Rule 10B of the Rules of the Tennessee Supreme Court. The motion to disqualify was promptly denied by written order on December 11, 2018. Subsequently, on December 18, 2018, the trial court entered an order denying Mr. Walker's motion to alter or amend.

         In addition to the notice of appeal that was filed, a petition for recusal appeal was filed in connection with the trial court's ruling on the motion to disqualify. Pursuant to an order of consolidation entered by this Court on January 11, 2019, we are presently tasked with resolving raised issues ...

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