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Wheeler Bonding Co., Inc. v. 1St Stop Bonding LLC

Court of Appeals of Tennessee, Nashville

December 13, 2019

WHEELER BONDING CO., INC.
v.
1ST STOP BONDING LLC. ET AL.

          Session September 4, 2019

          Appeal from the Chancery Court for Davidson County No. 15-1142-IV Russell T. Perkins, Chancellor

         Following a nonsuit by the original plaintiff, one of the original defendants was granted a default judgment with respect to his counterclaim. The original plaintiff thereafter moved to set the default judgment aside after the entry of final judgment, and later, attempted to re-file its previously nonsuited claims. After the trial court denied the motion to set aside and entered an order striking the original plaintiff's re-filed claims, this appeal followed. We reverse the denial of the motion to set aside and vacate the default judgment. The striking of the re-filed claims is affirmed.

         Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Chancery Court Reversed in part, Vacated in part, Affirmed in Part and Remanded

          Mark Hammervold, Nashville, Tennessee, for the appellant,

          Wheeler Bonding Co., Inc.. Michael G. Hoskins, Nashville, Tennessee, for the appellees, 1st Stop Bonding, LLC and Wayne Parker.

          Arnold B. Goldin, J., delivered the opinion of the Court, in which Andy D. Bennett and W. Neal McBrayer, JJ., joined.

          OPINION

          ARNOLD B. GOLDIN, JUDGE

         BACKGROUND AND PROCEDURAL HISTORY

         This appeal concerns a business dispute involving Wayne Parker and two competing bonding companies, Wheeler Bonding Company, Inc. ("WBC") and 1st Stop Bonding, LLC ("1st Stop"). WBC, which has been duly licensed and registered in Tennessee since 1986, acts as a surety and provides bail bonds to those who have been charged with a criminal offense. Its principal location is in Nashville. 1st Stop, whose principal location also is in Nashville, operates a similar business to WBC. Wayne Parker is a licensed bail bonding agent formerly affiliated with WBC.

         The present litigation ensued on September 22, 2015 when WBC filed a sworn complaint against 1st Stop and Mr. Parker[1] in the Davidson County Chancery Court ("the trial court"). Therein, WBC alleged that its owner, Charles Wheeler, had begun to suspect that Mr. Parker was acting outside of the terms of his exclusive contract with WBC. Whereas Mr. Parker had historically been one of WBC's most productive agents, WBC's complaint alleged that Mr. Wheeler had noticed a "precipitous drop in Parker's productivity" beginning in June 2015. According to the complaint, an investigation into Mr. Parker's production decline revealed, among other things, the following:

• Mr. Parker had purchased a $75, 000.00 certificate of deposit in the name of "1stStop Bonding" to establish 1st Stop as a bonding company and competitor of WBC.
• 1st Stop had collected fees for bonds that individuals believed were written by Mr. Parker.
• Certain WBC client files were removed to the offices of 1st Stop.

         A number of legal claims were ultimately asserted by WBC, including a request for injunctive relief and a claim for money damages based on an alleged breach of contract. An amended complaint was later filed in February 2016, and thereafter, Mr. Parker and 1st Stop filed answers.[2]

         For his part, Mr. Parker filed a counterclaim against WBC incident to the filing of his February 23, 2016 answer. In his counterclaim, Mr. Parker alleged his contract with WBC obligated WBC to deposit certain commission funds into an "Agent Security Account." The counterclaim further alleged that WBC had breached this obligation and further claimed that WBC had spent funds in Mr. Parker's account without his knowledge or opportunity to object. WBC filed an answer to the counterclaim, specifically praying that it be dismissed with prejudice.

         On September 21, 2017, the trial court held a combined discovery and pretrial conference, at which time counsel for WBC elected to take a voluntary nonsuit of WBC's claims. Although WBC asserts that this action was taken without its consent, an order dismissing WBC's claims against Mr. Parker and 1st Stop, without prejudice, was entered on October 4, 2017. This order provided that Mr. Parker would "proceed with his counterclaim in the capacity of a plaintiff" Effective January 10, 2018, WBC's counsel was temporarily suspended from the practice of law by the Supreme Court of Tennessee. Among other things, the suspension order directed WBC's counsel to "comply with Tenn. Sup. Ct. R. 9 in all respects." As is relevant here, this required giving appropriate notice of the suspension:

By no later than ten days after the effective date of the order, the respondent attorney shall notify or cause to be notified by registered or certified mail, return receipt requested:
(a) all clients being represented in pending ...

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