Wednesday, March 31, 2010

Attorney General reviews whether a corporation would be required to file a report of its independent expenditures in the same manner as a political campaign committee under Tennessee‟s current campaign finance laws.

Filing of Disclosure Statements By Corporations For Independent Expenditures
TN Attorney General Opinions
Date: 2010-03-31
Opinion Number: 10-39

In this opinion, the Attorney General reviews whether a corporation would be required to disclose contributions or independent expenditures in the same manner as a political campaign under current Tennessee campaign finance laws. The Attorney General reviews Citizens United v. Federal Election Comm’n and its effect on current Tennessee law, and determines that current Tennessee law does not require corporations making independent political contributions to file statements disclosing such expenditures under the Campaign Financial Disclosure Act. The Attorney General also determines, however, that the Citizens United case holds that legislation requiring such disclosure by corporations would not violate the First Amendment.

"Under the plain language of Tenn. Code Ann. § 2-10-102(12)(B), if a corporation is making expenditures to support or oppose a measure, then it meets the definition of a political campaign committee and, therefore, would be required to file disclosure statements in accordance with the requirements of Tenn. Code Ann. §§ 2-10-105 and -106. However, to the extent a corporation makes expenditures to support or oppose any candidate for public office, it does not meet the definition of political campaign committee set forth in Tenn. Code Ann. § 2-10-102(12)(A) or (C) and, therefore, would not be required to file statements disclosing its contributions and expenditures." Id.

Full Opinion available at:
http://www.tba2.org/tba_files/AG/2010/ag_10_39.pdf

Court reviews order to comply with request to inspect corporate records and to pay attorney's fees

BETH PROFFITT v. SMOKY MOUNTAIN WOODCARVERS SUPPLY, INC. (Tenn. Ct. App. March 31, 2010)

The plaintiff filed this action seeking to review the business records of the defendant, asserting under oath that she is a 25 percent shareholder of the defendant corporation. The defendant moved to dismiss. The trial court found that the plaintiff had complied with the requirements of Tenn. Code Ann. section 48-26-104(a) - the corporate records statute - and ordered the defendant to comply with the request to inspect and/or copy corporate records. The trial court also ordered the defendant to pay the plaintiff's attorney fees. We reverse.

Opinion available at:
http://www.tba2.org/tba_files/TCA/2010/proffittb_033110.pdf

Court reviews whether trial court properly ruled a contract unenforceable due to one party's not having a broker's license

CHRISTENBERRY TRUCKING & FARM, INC. v. F&M MARKETING SERVICES, INC. (Tenn. Ct. App. March 31, 2010)

Christenberry Trucking & Farm, Inc., initiated this litigation against F&M Marketing Services, Inc., with a complaint seeking a declaration that Christenberry had not contracted to pay F&M a commission on loads Christenberry hauled for UPS/Dell Computer ("the UPS/Dell account"). F&M filed an answer and counterclaim asking for a determination that there was a contract with respect to the UPS/Dell account under which Christenberry was obligated to pay F&M a commission of 6%. F&M's counterclaim also asked for an accounting and attorney's fees. The case was tried without a jury, after which Christenberry was allowed to amend its pleadings to allege that if there was a contract it was illegal and unenforceable because F&M is not licensed as a broker by the Interstate Commerce Commission ("the ICC").

The trial court found that there was a contract between Christenberry and F&M, but that the contract was rendered illegal and unenforceable because of F&M's lack of a broker's license. F&M hired new counsel who filed a notice of appeal that did not contain the signature of its trial counsel. Christenberry filed a motion with the trial court to strike the notice of appeal. Six days later, F&M filed an amended notice of appeal which bore, in addition to the signature of its new appellate counsel, the signature of its counsel of record in the trial court. F&M argues on appeal that it was not required to be licensed and, alternatively, that the contract should not be nullified for its lack of a license, even if one was required. Christenberry argues that the notice of appeal is ineffective. We vacate the judgment of the trial court and remand for further proceedings.

Opinion may be found at:
http://www.tba2.org/tba_files/TCA/2010/christenberry_033110.pdf

Tuesday, March 30, 2010

Small Business Advocate created within Tennessee's Office of the Comptroller

The Senate Commerce Labor and Agriculture Committee has voted to create a small business advocate within the Office of the Comptroller of the Treasury, utilizing existing personnel.

Senate Bill 3484 calls for the advocate to mediate and assist with resolution of issues concerning small business owners and state departments and agencies. The bill also requires the small business advocate to prepare an annual report on their office's activities, findings and recommendations to the governor, members of the General Assembly and the heads of the affected departments and agencies to make sure officials are notified about any problems or concerns.

Court reviews motion to dismiss in a damages and recission of a financing contract case

DANIEL WALKER ET AL. v. FRONTIER LEASING CORPORATION (Tenn. Ct. App. March 30, 2010)

Daniel Walker and W&W Golf Management, Inc., dba Cedar Hills Golf Club ("the plaintiffs") filed this action against Frontier Leasing Corporation, demanding in their amended complaint, damages and rescission of the lease financing contract the plaintiffs had signed with Frontier's assignor, C and J Leasing Corp.

The complaint attached a copy of the contract and a copy of a judgment that the plaintiffs had previously secured against C&J1 awarding them damages and rescission of the subject contract. The complaint alleged that Frontier had full knowledge of the complaint against C&J and that Frontier took the assignment of the contract with knowledge that a judgment would be entered against C&J rescinding the contract. The complaint alleged that the plaintiffs' lessor, Royal Links USA, was an agent of both C&J and Frontier and that the agent induced the plaintiffs to sign the finance contract by misrepresentations.

Frontier moved to dismiss the complaint pursuant to Tenn. R. Civ. P. 12.02 on five grounds: (1) failure to state a claim, (2) lack of personal jurisdiction over Frontier, (3) a contract provision calling for the state of Iowa to be the forum for any dispute, (4) failure to plead fraud with particularity, and (5) a "hell or high water" legal obligation on the part of the plaintiffs to perform as lessees despite any breach by Royal Links as the supplier of the leased goods. The plaintiffs were allowed to file their amended complaint before the motion was heard. The trial court granted the motion to dismiss in an order that does not state the court's reasoning. The plaintiffs appeal. We affirm.

Opinion available at:
http://www.tba2.org/tba_files/TCA/2010/walkerd_033010.pdf

Thursday, March 25, 2010

Court reviews whether the TN Dealer Protection Act applies to the termination of a sales and service agreement between a distributor and a manufacturer

CONSTRUCTION CRANE AND TRACTOR, INC. v. WIRTGEN AMERICA, INC. (Tenn. Ct. App. March 25, 2010)

Distributor of road construction equipment sought an injunction and declaratory judgment against the manufacturer of such equipment following the manufacturer's termination of its sales and service agreement with the distributor without cause in accordance with the terms of the agreement. Distributor asserted that such termination violated the Tennessee Dealer Protection Act, Tenn. Code Ann. section 47-25-1301 et seq.

The trial court found that the statutory provision prohibiting manufacturers from terminating a dealer's relationship with the manufacturer without cause was inapplicable to the parties because the operative agreement between the parties pre-dated the 1999 amendments to the Tennessee Dealer Protection Act prohibiting such terminations. Distributor appeals. Finding no error, we affirm.

Opinion may be found at:
http://www.tba2.org/tba_files/TCA/2010/wirtgenamerica_032510.pdf

Friday, March 19, 2010

Court reviews validity of a service mark license agreement in a service mark case

GUESTHOUSE INTERNATIONAL, LLC v. SHONEY'S NORTH AMERICA CORPORATION AND SHOLAND, LLC (Tenn. Ct. App. March 19, 2010)

This appeal involves a licensing agreement for service marks protected under trademark laws. One of the defendants is the owner of the service marks, which are used at both restaurants and motels. This original owner of the service marks sold the motel business along with the service marks, but it retained the restaurant business. After using the service marks for many years, the owner of the motel business decided to convert its motels from the service mark brand to another brand. Eventually, the owner of the motel business sold its motels to the plaintiff, and it included in the sale its rights under the service mark license agreement. Soon after that, the owner of the service marks sold its restaurant business and its service marks to the other defendant herein. When the plaintiff motel business attempted to franchise new motels using the service mark name, the defendant new owner of the service marks objected and terminated the license agreement.

The plaintiff motel business filed this lawsuit, alleging breach of contract, tortious interference with contract, and violation of the Tennessee Consumer Protection Act. It sought declaratory relief, injunctive relief, and restitution. The new service mark owner asserted that the license agreement was unenforceable based on lack of consideration, waiver, and fraud. The parties filed cross- motions for summary judgment.

The trial court denied the plaintiff's motion for summary judgment and granted summary judgment in favor of the defendants. The trial court concluded, inter alia, that the service mark license agreement assigned to the plaintiff was invalid for lack of consideration and, alternatively, that the plaintiff waived its right to franchise new motels using the service mark name. The plaintiff's complaint was dismissed in its entirety. The plaintiff now appeals.

We reverse, finding, inter alia, that the license agreement was supported by consideration, that no valid basis existed on which to terminate the license agreement, and that the doctrine of waiver is not applicable under the facts in this case. Furthermore, we find that the dismissal of the request for restitution as a remedy for the defendant's breach of contract is premature at this juncture.

Opinion may be found at:
http://www.tba2.org/tba_files/TCA/2010/guesthouse_031910.pdf

Thursday, March 11, 2010

Court reviews whether permit board had sufficient proof to revoke beer license

MALIK YAFAI d/b/a FAMILY MARKET v. METROPOLITAN BEER PERMIT BOARD OF METROPOLITAN GOVERNMENT OF NASHVILLE DAVIDSON COUNTY, TENNESSEE (Tenn. Ct. App. March 11, 2010)

The Metropolitan Nashville Beer Permit Board found that the owner of a grocery store had allowed illegal drugs to be sold on his premises, and it revoked his license to sell beer. The Chancery Court reversed the Board's action, finding that there was insufficient proof that the proprietor actually knew about the illegal activities. We affirm.

Opinion may be found at:
http://www.tba2.org/tba_files/TCA/2010/yafaim_031110.pdf

Friday, March 5, 2010

Court reviews reasonableness of law firm's claimed value in its operating agreement

SHUTTLEWORTH, WILLIAMS, HARPER, WARING & DERRICK, PLLC v. GARY K. SMITH, SMITH, SABBATINI & MCLEARY, PLLC (Tenn. Ct. App. March 5, 2010)

This dispute is between an attorney and his former firm. All parties to this suit appeal the trial court's interpretation of their operating agreement about how the fees and expenses generated by the withdrawing member's cases should be apportioned among them. The operating agreement gave the firm discretion to value the services provided by its other members, but the trial court correctly determined that the firm's claimed value was not reasonable.

We reverse the trial court's holding with regard to the withdrawing lawyer's interest in a member's share of the expenses he is obligated to pay the firm. The trial court is affirmed on the issue of sanctions and as to its refusal to make an award to nonparties.

Opinion may be found at:
http://www.tba2.org/tba_files/TCA/2010/shuttleworth_030510.pdf

Wednesday, March 3, 2010

Court reviews whether death can trigger dissolution of a company pursuant to the company's operating agreement

MITZI BAYNE RUTH, ET AL. v. HOME HEALTH CARE OF MIDDLE TENNESSEE, LLC, ET AL. (Tenn. Ct. App. March 3, 2010)

Mitzi Bayne Ruth, executrix of the Estate of Fred W. Bayne ("Executrix"), the Estate of Fred W. Bayne ("the Estate"), and Home Health Care of East Tennessee, Inc. ("HHC East") sued Home Health Care of Middle Tennessee, LLC ("the Company") and B. Fred Allred, III ("Allred") seeking, among other things, a declaratory judgment that Fred W. Bayne's death was an event triggering dissolution of the Company. Both plaintiffs and defendants filed motions for partial summary judgment.

After a hearing, the Trial Court entered an order granting plaintiffs' motion for partial summary judgment finding and holding, inter alia, that Fred W. Bayne's death was a liquidating event triggering the dissolution of the Company pursuant to the Company's Operating Agreement, and that Allred did not have the right pursuant to the Operating Agreement to purchase Fred W. Bayne's membership interest and continue the Company business. The Company and Allred appeal to this Court. We hold that the Operating Agreement was ambiguous, vacate the award of partial summary judgment, and remand to the Trial Court for further proceedings consistent with this Opinion.

Opinion may be found at:
http://www.tba2.org/tba_files/TCA/2010/ruthm_030310.pdf