Wednesday, December 14, 2011

Court reviews whether an LLC properly executed its security agreement with a bank in a case involving an action to recover collateral

REGIONS BANK v. BRIC CONSTRUCTORS, LLC, F/K/A BRIC CONTRACTORS, LLC, AND PATRICIA MCINTOSH (Tenn. Ct. App. December 14, 2011)

This is an action to collect a debt and to recover collateral. The defendant LLC obtained a line of credit from the plaintiff bank. The LLC borrowed against the line of credit to purchase certain property, and the property was pledged as collateral. Several months later, the line of credit was converted into a fixed amount loan over a longer term, and a new security agreement was executed pledging the same collateral. On the same day, the LLC obtained another line of credit secured by the LLC's accounts receivable. The next day, the LLC took an advance on the new line of credit. The LLC made monthly payments on both obligations for almost a year, and then it defaulted.

The plaintiff bank filed this lawsuit against the LLC and its principal to collect on the loans and to recover the collateral. The LLC contended that the principal of the LLC did not sign key documents, did not authorize advances, and did not authorize the pledge of the collateral. After a bench trial, the trial court held in favor of the bank based on, among other things, its finding that the principal of the LLC had ratified any allegedly unauthorized advances made under the lines of credit. The defendants now appeal. We reverse the finding of ratification as to one advance and remand for further findings; in all other respects, the decision of the trial court is affirmed.

Opinion available at:
http://www.tba2.org/tba_files/TCA/2011/regionsbank_121411.pdf

UPDATE (4/2012): The opinion filed in this case on December 13, 2011, is withdrawn. The court has refiled the opinion with changes on pages 32-34 under the subheading “Forged Signatures."

The corrected opinion is available at: https://www.tba.org/sites/default/files/regionsbank_CORR_033012.pdf

Tuesday, December 13, 2011

Court reviews an order compelling arbitration in a case involving a lease-purchase agreemente

DAVID WHITE v. EMPIRE EXPRESS, INC. AND EMPIRE TRANSPORTATION, INC. (Tenn. Ct. App. December 13, 2011)

The case involves a lease-purchase agreement. The plaintiff truck driver worked for the defendant hauling company. He entered into a lease-purchase agreement with the co-defendant leasing company, affiliated with the employer hauling company, to purchase the truck he drove in his employment. At the end of the lease, the leasing company refused to transfer title to the truck to the plaintiff. The plaintiff then filed this lawsuit against both defendant companies, alleging breach of contract, conversion, and violation of the Tennessee Consumer Protection Act. The defendants asserted the affirmative defenses of set-off and recoupment based on the plaintiff's employment agreement.

After a bench trial, the trial court held in favor of the plaintiff on all of his claims. However, based on an arbitration provision in the employment agreement, it granted the plaintiff's motion to dismiss and to compel arbitration of the defendants' affirmative defenses of set-off and recoupment. The defendants now appeal. In light of the trial court's order compelling arbitration, we dismiss the appeal and remand for entry of an order staying the proceedings pending the arbitration.

Opinion available at:
http://www.tba2.org/tba_files/TCA/2011/whited_121311.pdf

Friday, December 9, 2011

Court reviews a motion to enforce the terms of a settlement for breaching a partnership agreement

KIMBERLIE LOIS EDMONSON v. TERRY LYNN WILSON (Tenn. Ct. App. December 9, 2011)

In this case, Kimberlie Lois Edmonson ("Ms. Edmonson") filed suit against Terry Lynn Wilson ("Mr. Wilson") for breach of an alleged partnership agreement. Prior to trial, the parties reached an agreement. Following the announcement of the agreement in court by counsel, Ms. Edmonson refused to honor the agreement. Mr. Wilson filed a motion to enforce the agreement, and the trial court denied the motion. The case proceeded to a bench trial, and the court held in favor of Ms. Edmonson. Mr. Wilson appeals. We hold that the court should have enforced the settlement agreement and reverse the decision of the court.

Opinion available at:
http://www.tba2.org/tba_files/TCA/2011/edmonsonl_120911.pdf

Monday, December 5, 2011

On Cyber Monday, Feds Shut Down 150 Web Sites

Federal authorities on Monday announced the seizure of 150 domain names for Web sites that featured alleged knock-offs of authentic jerseys, handbags, sports equipment and other items.

The results of the undercover operation "In Our Sites" top last year's crackdown, when investigators shut down 82 web sites.

In most cases, the person or people operating the commercial sites do not challenge the domain name seizure in court, Lanny Breuer, the assistant attorney general for the Justice Department’s criminal division, told reporters.

Read the full story at the Legal Times Blog.