Friday, October 23, 2009

Court reviews claim of fraud and misrepresentation in a case about drilling for oil on personal property

BETTY L. DAVIS v. A. V. CONNER AND TIMOTHY BRYAN CONNER (Tenn. Ct. App. October 23, 2009)

This case involves a claim of promissory fraud. The plaintiff is an elderly widow who lives on a farm. The defendant is in the oil business. The defendant approached the widow about drilling for oil on her farm. He told the plaintiff that if she invested in the oil wells, he would match her investment equally and manage the oil wells on her property. He proposed that they share in any profits 65% to the plaintiff widow, and 35% to the defendant. The widow agreed. Over several years, the widow invested over $100,000 in five oil wells. Some of the wells produced oil, and the resulting profit was shared 65%/35%. The widow later discovered that the defendant had not, in fact, invested any of his own money in the oil wells, and that he was mismanaging them.

The widow then filed this lawsuit against the defendant for misrepresentation, fraudulent inducement, and mismanagement of the oil wells. After a bench trial, the trial court awarded the widow compensatory damages and punitive damages. It also divested the defendant of any future interest in the oil wells on the widow's property. The defendant now appeals. We affirm the trial court's decision in all respects.

Opinion may be found at:
http://www.tba2.org/tba_files/TCA/2009/davisb_102309.pdf

Tuesday, October 13, 2009

Court reviews enforceablity of an indemnity agreement

WENDELL P. BAUGH, III, ET AL. v. HERMAN NOVAK, ET AL. (Tenn. Ct. App. October 13, 2009)

(CORRECTION page 9 second paragraph line 7, line 8 and page 10 line 1)

This case arises out of a business agreement between the parties. Plaintiffs executed a note to purchase a company. The note contained a stock transfer restriction. Subsequently, Plaintiffs entered into a business agreement with Defendants. The subject of that agreement is disputed in this lawsuit, but Plaintiffs contend that Defendants purchased one-half of the company and executed an indemnity agreement to indemnify Plaintiffs for one-half of the note on the purchase of the company. After operating for nearly ten years, the company failed.

At trial, Plaintiffs sought to enforce the indemnity agreement, and Defendants counterclaimed to recover $73,000.00 that they paid to Plaintiffs before they allegedly executed the contract. The trial court found in Plaintiffs' favor. Defendants now appeal claiming that the trial court made several evidentiary errors, that the contract is unenforceable because it violated the statute of frauds, that parol evidence regarding the terms of the contract was inadmissible, and that the corporation cannot continue its existence and sell stock after dissolution. We reverse the trial court's determination based on our finding that the contract is unenforceable as a matter of public policy.

Opinion can be found at:
http://www.tba2.org/tba_files/TCA/2009/baughw_CORR_101309.pdf

Friday, October 2, 2009

Court reviews whether trial court properly disbursed funds for a constructive trust

LAFOLLETTE MEDICAL CENTER, et al., v. CITY OF LAFOLLETTE, et al. (Tenn. Ct. App. October 2, 2009)

In this second appeal of this case, the Trial Court had entered an Agreed Order for disbursement of the funds which stated the parties had determined that the purpose of the constructive trust would best be shared out by transferring the funds to a newly created non-profit corporation known as the Lafollette Medical Foundation (the funds had been held by the Clerk of the Court). The Court directed that the trust fund would be placed in the foundation with the monies retained for potential liabilities, and the charter of the LaFollette Medical Foundation, Inc., was filed with the Court, as well as its by-laws.

The City of LaFollette filed a Motion to Set Aside the Order pursuant to Rule 60, Tenn. R. Civ. P., along with affidavits. The Court conducted a hearing and filed a Memorandum Opinion finding that its order was not void because the City had been found to have no interest in the fund and the City had actual knowledge of the Foundation and its rules, and transferring the money to the Foundation best served the interest of the public rather than the money being held by the Court. The City of LaFollette appealed to this Court. We affirm the Judgment of the Trial Court.

Opinion may be found at:
http://www.tba2.org/tba_files/TCA/2009/lafollette_100209.pdf