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

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

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

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

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

Growth in software patents draws mixed reactions

A story from National Public Radio looks at the issue of patents in the software industry and the growing number of lawsuits being filed by so-called "patent trolls," which amass patents and then demand companies license the technology. Many of these patents are so broad, engineers say, that everyone's guilty of infringement. And computer programmers and enterpenuers say the practice is hindering innovation.

Read the full story here.

Women-Owned Small Business Federal Contract Program

Latest News Release: February 1, 2011 – SBA Expands Access to Federal Contracting Opportunities for Women-Owned Small Businesses

Memo from the Administrator:

On October 7, 2010, the U.S. Small Business Administration published a final rule effective February 4, 2011, aimed at expanding federal contracting opportunities for women-owned small businesses (WOSBs). The Women-Owned Small Business (WOSB) Federal Contract program authorizes contracting officers to set aside certain federal contracts for eligible:

Women-owned small businesses (WOSBs) or
Economically disadvantaged women-owned small businesses (EDWOSBs)

http://www.sba.gov/content/contracting-opportunities-women-owned-small-businesses

Court Reviews Whether an Employee Relinquished a Promised Ownership Interest When He Signed a Subsequent Employment Contract

STEPHEN BROWN v. COLUMBIA PRECAST, LLC, ET AL. (Tenn. Ct. App. July 22, 2011)

An employee was promised 10% ownership interest in the company he worked for if he stayed with the company for six years. When the time came to transfer the employee's 10% interest to him, however, the parties learned that the tax laws then in effect made the transfer impractical at that time. The parties therefore decided to delay the transfer.

The parties entered into a contract the following year which the employer interpreted to mean that the employee was giving up his 10% ownership interest in exchange for a raise in his salary plus 10% of the company's net profits each year. The employee claimed he did not give up his 10% ownership interest and sued the company and former majority owner for his 10% interest when the company was sold a few years later.

The trial court concluded the employee did not give up his 10% ownership interest by signing the later agreement and awarded the employee 10% of the company's net profits for the years following the employee's termination plus 10% of the ultimate purchase price. We affirm the trial court's judgment.

Opinion may be found at:
http://www.tba2.org/tba_files/TCA/2011/brownss_072211.pdf

State Supreme Court remeasures height of discovery hurdle

Coming out of Habitat case, standard required to sue employer unchanged
Published July 22, 2011 by Philip Nannie

Employers take note.

The good news is the state's highest court didn't make it easier for an employee to sue a company. The bad news is it didn't make it any harder, either.

Tennessee Supreme Court judges on Thursday issued an important ruling clarifying the burden of proof for employees suing for retaliatory discharge. Representatives of the state's largest employers were anticipating this decision, the result of which won't make future firings any easier.

Complete article may be found at: http://nashvillepost.com/news/2011/7/22/state_supreme_court_remeasures_height_of_discovery_hurdle

Knoxville Region is #1 in Green Job Growth

Knoxville is the nation’s fastest growing area for green jobs according to a report, “Sizing the Clean Economy: A National and Regional Green Jobs Assessment,” released by the Brookings Institute. Knoxville saw green jobs grow by 14.6 percent annually between 2003 and 2010. During that period the region added 10,000 green jobs, and now clean economy jobs account for 4.9 percent of all jobs in the Innovation Valley. The measure of the concentration of green jobs ranks Knoxville 2nd in the nation.

Complete article may be found at:
http://www.knoxvilleoakridge.com/news-releases/knoxville-region-1-green-job-growth

Forbes Ranks Nashville #6, Knoxville #26, and Clarksville #87 “Best Places For Business and Careers”

Forbes: The Best Places for Business and Careers

Forbes recently issued a list of the Top 100 best cities for businesses and careers, and several Tennessee cities made the list:

6 – Nashville
26 – Knoxville
87 – Clarksville

According to their methodology, they looked at the 200 largest metropolitan statistical areas in the United States. They considered 12 metrics relating to job growth (both past and projected), costs (business and living), income growth, educational attainment and projected economic growth. They also factored in quality of life elements such as crime rates, cultural and recreational opportunities, and net migration patterns. Finally, they included the number of highly-ranked colleges in an area according to their annual college rankings.

Court Reviews Whether an Implied Partnership Existed Between Two Parties and Whether Certain Property was Subject to Divestiture

REBECCA GRIBBLE WADDELL v. GREGORY C. RUSTIN (Tenn. Ct. App. July 7, 2011)

This case stems from a lawsuit over an alleged implied partnership. Rebecca Gribble Waddell ("Waddell") and Gregory C. Rustin ("Rustin") were involved romantically for a number of years. After the couple separated, Waddell sued Rustin in the Chancery Court for Jefferson County ("the Trial Court"), alleging, among other things, that a partnership existed between Waddell and Rustin.

The Trial Court held, inter alia, that there was no partnership between Waddell and Rustin and ordered divestiture of certain property from Waddell to Rustin. Waddell appeals to this Court, and both parties raise multiple issues. Rustin also argues that this appeal is frivolous. We affirm the judgment of the Trial Court on all issues except for that concerning divestiture of certain property from Waddell, which we reverse. We decline to hold this appeal frivolous. We affirm, in part, and, reverse, in part.

Full opinion available at:
http://www.tba2.org/tba_files/TCA/2011/waddellr_070711.pdf

Attorney General: Amazon can be pushed on taxes

TN Attorney General Issues Opinion Upholding a Bill that would Require Amazon to Pay State Sales Taxes (Nashville Business Journal)

Tennessee's Attorney General issued an opinion upholding the constitutionality of a proposed bill that would require Amazon to pay state sales taxes. The opinion supports the argument that the building of distribution centers in Tennessee creates a physical presence, or “nexus,” which can trigger sales-tax requirements; however, the Attorney General declined to explicitly state that Amazon, which is building several distribution centers in Tennessee, has a sales-tax obligation to the state.

You can read the full text of the opinion here:
http://www.tba2.org/tba_files/AG/2011/ag_11_52.pdf

Court Reviews Whether the Tennessee-Based Income of a Delaware Limited Partnership are subject to Taxation in Tennessee

H.J. HEINZ COMPANY, L.P. v. LOREN L. CHUMLEY, COMMISSIONER OF REVENUE, STATE OF TENNESSEE (Tenn. Ct. App. June 29, 1011)

Plaintiff/Appellant H.J. Heinz Company, LP, is a Delaware limited partnership that manufactures, sells and distributes food products. Plaintiff operates a facility in Nashville, Tennessee. The issue in this case is whether Plaintiff's income from its investment in HJH One, LLC, is subject to taxation, on an apportionment basis, in Tennessee.

The trial court determined that the earnings constituted business earnings as defined by the relevant statutes, and that the Department of Revenue's assessment of franchise and excise taxes on the earnings was constitutional. The trial court further determined that the apportionment formula used by the Department was correct. The trial court awarded summary judgment to the Commissioner, and Plaintiff appeals. We affirm.

Opinion may be found at:
http://www.tba2.org/tba_files/TCA/2011/hjheinz_062911.pdf

TN Supreme Court Reviews Whether Various Agreements for the Sale of a Corporation were Contrary to Public Policy and, Thus, Unenforceable

WENDELL P. BAUGH, III ET AL. v. HERMAN NOVAK ET AL. (Tenn. May 20, 2011)



This appeal raises the issue of whether a contract for the sale of an interest in a corporation and related indemnity agreements are unenforceable because they are contrary to public policy.

The sellers of the corporate interest filed suit against the purchasers in the Chancery Court for Williamson County seeking damages for the purchasers' alleged breach of their indemnity agreement. The purchasers counterclaimed asserting, among other things, that the sellers had fraudulently induced them to purchase the interest in the corporation.

Following a bench trial, the trial court awarded a $201,715.50 judgment to the sellers and dismissed the purchasers' counterclaim. On appeal, the Court of Appeals, on its own motion, invalidated the stock purchase agreement and the related indemnity agreements on the ground that they were contrary to the public policy reflected in Tenn. Code Ann. section 48-16-208 (2002). Baugh v. Novak, No. M2008-02438-COA-R3-CV, 2009 WL 2474714 (Tenn. Ct. App. Aug. 13, 2009).

We granted the sellers' Tenn. R. App. P. 11 application for permission to appeal and now find that the Court of Appeals erred by finding that the agreements at issue in this case were contrary to public policy. We have also determined that the evidence fully supports the trial court's decision to dismiss the purchasers' counterclaim for fraudulent inducement. 


Opinion available at:

http://www.tba2.org/tba_files/TSC/2011/baughw_052011.pdf