Monday, August 29, 2011

Court reviews whether guarantors are liable for loans obtained through fraudulent means without their knowledge

SECURAMERICA BUSINESS CREDIT v. KARL SCHLEDWITZ and TERRY LYNCH (Tenn. Ct. App. August 29, 2011)

This is a guaranty case. Appellants personally guaranteed a line of credit for their trucking company. Later, Appellants sold the trucking company to two employees, but were not released by the Appellee lender from their guaranties.

Under new ownership, the company falsified borrowing documents so that more money was extended on the line of credit than was collateralized per the loan agreement. This was done with the complicity of the lender, but without the knowledge of the guarantors. The debtor trucking company defaulted, and the lender sought repayment of the loan from the guarantors.

Following a bench trial, the trial court found Appellants liable for their personal guaranties, but denied prejudgment interest and punitive damages due to what the court characterized as the fraudulent actions of Appellee. In an apparent clerical mistake, on the same date that the trial court entered its final judgment, it also entered an order voluntarily dismissing all claims against Appellants. More than a year later, the trial court entered an order clarifying its prior order of dismissal.

After a thorough review of the record, we conclude that: (1) the trial court properly afforded Appellee relief under Tenn. R. Civ. P. 60.01 to clarify its prior order of dismissal; and (2) the trial court made incomplete and contradictory findings of fact and conclusions of law, such that further appellate review is precluded. Consequently, we vacate and remand for additional findings.

Opinion available at:
http://www.tba2.org/tba_files/TCA/2011/securamerica_082911.pdf

Monday, August 15, 2011

Court reviews whether employer had just cause to terminate employee in violation of an employment contract

VICKI L. HUTCHINGS, v. JOBE, HASTINGS & ASSOCIATES (Tenn. Ct. App. August 15, 2011)

Plaintiff and defendant entered into a contract of employment for a term of three years, wherein plaintiff would prepare tax returns for defendant tax firm. Defendant terminated plaintiff's employment before the three year term had expired and plaintiff appealed to this Court to reverse the Trial Court's finding of breach of contract and award her damages for the breach. We hold that the evidence does not preponderate against the Trial Court's finding that the employer had just cause to terminate plaintiff. We affirm the Judgment of the Trial Court.

Opinion available at:
http://www.tba2.org/tba_files/TCA/2011/hutchingsv_081511.pdf

Friday, August 12, 2011

Court reviews whether a subsequent agreement was a new agreement or a renewal of an old agreement

BSG, LLC v. CHECK VELOCITY, INC. (Tenn. Ct. App. August 12, 2011)

BSG, LLC introduced CheckVelocity to Weight Watchers. In 2005, CheckVelocity and Weight Watchers entered into an agreement whereby CheckVelocity provided check collection services. BSG, in accordance with its agreement with CheckVelocity, was to receive compensation for its introduction of CheckVelocity to Weight Watchers in the form of residual fees during the time of the CheckVelocity - Weight Watchers agreement and any renewal agreements. In 2008, CheckVelocity and Weight Watchers entered into a new agreement in which credit card collection services were added and the check collection services were continued unchanged. CheckVelocity stopped paying the residual fees because it considered the Weight Watchers agreement to be a new agreement, not a renewal of the old one. BSG sued. The trial court considered the 2008 agreement to be a new agreement, not a renewal, and ruled for CheckVelocity. BSG appealed. We reverse.

Opinion available at:
http://www.tba2.org/tba_files/TCA/2011/bsg_081211.pdf

Thursday, August 11, 2011

Legal agreements are NOT for when things go well

One of those basic realities of entrepreneurship is the fact that you can't get there by yourself. You will need help and it will likely come in the form of partners. Manufacturing, sales, marketing, finance, accounting, and the list goes on. Perhaps a typical scenario goes like this: you have a hot new technology but you need someone to help you make it. Your intellectual property outlines a basic concept for making the product and your challenge is to figure out how to scale up in a manufacturing environment. So you meet with a few manufactures who are excited about working with you as you are equally excited about making your stuff. You like one particular company and you sign a Memorandum of Understanding (MOU) or a Letter of Intent (LOI) and start the process of figuring out how to make your stuff. Through several trial runs, you determine the right mix of materials, the best temperature and pressure and your product turns out to be better than expected. The question is who owns this new intellectual property? You? Everybody? Nobody?

Benjamin K. Riley has written a fine article on the Fortune Blog called Three Legal Lessons For Startups in which he goes into some detail about the importance of legal agreements between business partners and joint ventures. Different legal agreement types carry different weight when it comes to ownership of intellectual property and it's important to understand these differences and make sure your trade secrets stay a secret.

Complete article may be found at:
http://www.outofthegarage.com/outofthegarage/2011/2/25/legal-agreements-are-not-for-when-things-go-well.html

Wednesday, August 3, 2011

Court reviews a claim against a used car business for issues including misrepresentation, fraud, and conversion

ASHRAF M. SAWERES v. ROYAL NET AUTO SALE, INC., ET AL. (Tenn. Ct. App. August 3, 2011)

This appeal arises out of an action in which the plaintiff asserted a claim that the agent of a used car business in which the plaintiff allegedly invested committed misrepresentation, fraud, and conversion, and violated the Tennessee Consumer Protection Act in failing to give him stock in the business or compensate him for work performed at the business. Plaintiff also asserted a claim based on defendants' alleged failure to repair his vehicle. The trial court held that plaintiff had not established the necessary elements for any of his claims and dismissed the case; plaintiff appeals. Finding no error, we affirm.

Full Opinion available:
http://www.tba2.org/tba_files/TCA/2011/saweresa_080311.pdf