Michael Tomlin v. Renal Care Group, Inc. ( 2017 )

11/30/2017
IN THE COURT OF APPEALS OF TENNESSEE
AT NASHVILLE
August 16, 2017 Session
MICHAEL TOMLIN, ET AL. v. RENAL CARE GROUP, INC. ET AL.
Appeal from the Chancery Court for Davidson County
No. 10-1819-IV Russell T. Perkins, Chancellor
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No. M2016-02216-COA-R3-CV
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A real estate consultant brought suit against a renal care company and related corporate
affiliates alleging breach of contract for failing to pay real estate commissions. The
commissions were allegedly owed based upon the consultant’s work in negotiating one
original lease for a dialysis clinic, and based upon several alleged renewals of leases that
had originally been negotiated by the consultant. The parties’ consulting agreement
specified that the consultant was entitled to commissions upon execution of original
leases, and at any subsequent renewals or extensions of the original leases. Because the
order appealed is not final in that it fails to adjudicate at least six of the former
consultant’s claims, this Court lacks subject-matter jurisdiction over the appeal. Tenn. R.
App. P. 3(a). Accordingly, the appeal is dismissed.
Tenn. R. App. P. 3 Appeal as of Right; Appeal Dismissed
ARNOLD B. GOLDIN, J., delivered the opinion of the Court, in which BRANDON O.
GIBSON and KENNY ARMSTRONG, JJ., joined.
Cavender C. Kimble, Birmingham, Alabama, for the appellants, Renal Care Group, Inc.,
and Nephrology Associates, P.C.
Robert L. Delaney, Nashville, Tennessee, for the appellees, Michael Tomlin, and The
Tomlin Company.
OPINION
BACKGROUND AND PROCEDURAL HISTORY
This is an action for breach of consulting contracts. Nephrology Associates, P.C.,1
and Renal Care Group, Inc., (“Appellants”) own and operate dialysis clinics across the
1
The parties stipulated that Nephrology Associates, P.C., is a medical practice professional
country.2 On November 12, 2010, Michael Tomlin (“Appellee”) filed suit in the
Chancery Court of Davidson County alleging that Appellants had failed to pay him real
estate commissions owed under contracts entered into by Appellants’ predecessors in
interest. Specifically, Mr. Tomlin claimed that Appellants had failed to pay his
commission for negotiating the original lease for a dialysis clinic located in East Orange,
NJ, and additionally had failed to pay him commissions owed on renewals of original
leases he negotiated for clinics at seventeen other locations.3
Mr. Tomlin’s claims arose from a business arrangement that he originally entered
into with Dr. Jeffrey Hymes, Dr. Jerome Tannenbaum, and Mr. Steven Harrison. In the
late 1990s, Dr. Hymes, Dr. Tannenbaum, and Mr. Harrison were in the process of starting
a national renal care company,4 and they hired Mr. Tomlin to assist in locating potential
sites and negotiating leases for dialysis clinics. On November 20, 1997, Mr. Tomlin
entered into a “Letter of Agreement” with Dr. Hymes, Dr. Tannenbaum, and Mr.
Harrison.5 Pursuant to the “Letter of Agreement,” Mr. Tomlin was responsible, inter alia,
for locating sites and negotiating leases for dialysis clinics, for which he was to be
compensated on a commission basis. On May 19, 1999, Mr. Tomlin entered into a
corporation composed of nephrologists.
2
The parties have stipulated that Renal Care Group, Inc., is the entity financially responsible for
any judgment that may be entered in Mr. Tomlin’s favor.
3
The parties stipulated that Mr. Tomlin negotiated the original leases for the following eighteen
locations: (1) Tullahoma, TN; (2) Gallatin, TN; (3) Springfield, TN; (4) West Nashville, TN; (5) East
Nashville, TN; (6) Franklin, TN; (7) Madison, TN; (8) Jasper, AL; (9) Round Rock, TX; (10) Austin, TX;
(11) Bastrop, TX; (12) Marble Falls, TX; (13) Harrison, NJ; (14) Sarasota, FL; (15) Pittsburgh, PA; (16)
University City, MO (the parties also refer to the University City location as the St. Louis location); (17)
Fort Payne, AL; and (18) Columbia, TN. The parties stipulated that Mr. Tomlin has been compensated
for commissions due under the original leases in Joint Exhibit 3, except that Mr. Tomlin claimed he was
not compensated for a commission that he alleged he was owed on the original East Orange, NJ lease.
The parties also stipulated that a direct subsidiary of Appellant is a current tenant at all nineteen original
locations, except for clinics at the following locations: Tullahoma, TN, vacated in 2012; Fort Payne, AL,
vacated in 2009; and Columbia, TN, vacated in 2008. Because Mr. Tomlin stipulated that he was
compensated for the original Fort Payne, AL lease and the original Columbia, TN lease and that those
locations were vacated before the leases’ initial ten (10) years terms expired, he did not assert claims
related to those locations at trial.
4
In February 1998, the original company was subsumed into Dialysis Associates, LLC. Dialysis
Associates, LLC, also did business under the names “NEWCO” and National Nephrology Associates.
National Nephrology Associates, Inc., managed the clinics owned by Dialysis Associates, LLC.
Following an investment from a venture capital firm in December 1998, National Nephrology Associates,
Inc., purchased Dialysis Associates, LLC. In 1999, National Nephrology Associates, Inc., merged with
Renal Care Group, Inc. Renal Care Group, Inc., has since been acquired by Fresenius Medical Care of
North America, a national health care business.
5
The original company is referred to in the “Letter of Agreement” as “Newco.”
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second agreement labeled, “Consulting Agreement,” with the original renal care
company’s successor in interest, National Nephrology Associates, Inc. The “Consulting
Agreement” contained, inter alia, the following provision:
2. Compensation; Reimbursement. In consideration of Consultant’s
consulting services set forth in Paragraph 1 above, the Company shall pay
to Consultant or his assigns the following:
a. The Company shall pay Consultant a four percent (4%) commission on
the gross rental payments of all leases upon signing of the lease and at the
renewal or extension of such leases. This commission is based on the rental
rate negotiated by Consultant only; however, the four percent (4%)
commission shall also be paid on any amount the lessor agrees to pay
toward renovation or other improvements.
The parties made several joint stipulations before the case proceeded to a bench
trial. The parties stipulated that, pursuant to the agreement, Mr. Tomlin negotiated the
original leases for dialysis clinics at the following eighteen locations: Tullahoma, TN;
Gallatin, TN; Springfield, TN; West Nashville, TN; East Nashville, TN; Franklin, TN;
Madison, TN; Jasper, AL; Austin, TX; Round Rock, TX; Bastrop, TX; Marble Falls, TX;
Harrison, NJ; Sarasota, FL; Pittsburgh, PA; University City, MO; Columbia, TN; and
Fort Payne, AL. The parties further stipulated that Mr. Tomlin was paid his commissions
on the original leases; however, Mr. Tomlin claimed he was entitled to a commission on
the original East Orange, NJ lease. Appellants denied that Mr. Tomlin negotiated the
original East Orange, NJ lease, and denied that he was entitled to a commission. The
parties stipulated that the dialysis clinics located in Tullahoma, TN, Fort Payne, AL, and
Columbia, TN have been vacated. However, the parties stipulated that the dialysis clinics
at the remaining sixteen locations remain open, and that those clinics are currently
operated by a direct subsidiary of Renal Care Group, Inc. Concerning the scope of Mr.
Tomlin’s claims, the parties stipulated in paragraph eighteen of the joint “Stipulations of
Facts for Trial” that, “[p]laintiff [sought] to recover commissions that may be due under
the lease documents in Joint Exhibit 3 other than the original leases; except that Plaintiff
also seeks to recover a commission on [the] East Orange, NJ original lease.” Joint
Exhibit 3 contains leases from seventeen locations.6
After prolonged discovery and several continuances, on September 13, 2013, the
case proceeded to a bench trial. On July 11, 2016, the trial judge issued a “Memorandum
and Order.” The trial court found the 1999 “Consulting Agreement” to be controlling
6
Specifically, Joint Exhibit 3 contains leases for clinics located in the following locations: (1)
Tullahoma, TN; (2) Gallatin, TN; (3) Springfield, TN; (4) West Nashville, TN; (5) East Nashville, TN;
(6) Franklin, TN; (7) Madison, TN; (8) Jasper, AL; (9) Round Rock, TX; (10) Austin, TX; (11) Bastrop,
TX; (12) Marble Falls, TX; (13) Harrison, NJ; (14) Pittsburgh, PA; (15) Sarasota, FL; (16) University
City, MO; and (17) East Orange, NJ.
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because it superseded the earlier “Letter Agreement.” After interpreting the “Consulting
Agreement,” the trial court ruled on at least one of Mr. Tomlin’s claims for commissions
based upon leases for the following eleven locations: (1) Tullahoma, TN;7 (2) Gallatin,
TN;8 (3) Springfield, TN;9 (4) West Nashville, TN;10 (5) East Nashville, TN;11 (6)
Franklin, TN;12 (7) Jasper, AL;13 (8) Round Rock, TX;14 (9) Austin, TX;15 (10) Harrison,
7
Mr. Tomlin made one (1) claim related to one (1) alleged renewal of the original Tullahoma, TN
lease. The original Tullahoma, TN lease was entered into on November 14, 1997, for an initial term of
eleven (11) years and six (6) months. The trial court ruled Mr. Tomlin was entitled to a commission on
the “First Amendment” to the Tullahoma, TN lease, which was executed on December 10, 2008.
8
Mr. Tomlin made one (1) claim related to one (1) alleged renewal of the original Gallatin, TN
lease, originally executed on April 20, 1998, for an initial term of ten (10) years. The trial court ruled that
Mr. Tomlin was not entitled to a commission on the “First Amendment” to the Gallatin, TN lease, which
was executed on March 3, 2008, and except as specifically amended, reaffirmed the provisions of the
original lease, including ¶ 29 of the original lease.
9
Mr. Tomlin made one (1) claim related to one (1) alleged renewal of the original Springfield,
TN lease, originally executed on May 20, 1998, for an initial term of ten (10) years. The trial court ruled
that Mr. Tomlin was entitled to a commission based upon the “First Amendment to Lease” to the
Springfield, TN lease, which was executed on July 20, 2009, and except as specifically amended,
reaffirmed the provisions of the original lease, including ¶ 29 of the original lease.
10
Mr. Tomlin made one (1) claim related to one (1) alleged renewal of the original West
Nashville, TN lease, originally executed on May 28, 1998, for an initial term of ten (10) years. The trial
court ruled that Mr. Tomlin was entitled to a commission based upon the “First Amendment” to the West
Nashville, TN lease. The “First Amendment” was executed on March 28, 2008, and, except as
specifically amended, reaffirmed the provisions of the original lease, including ¶ 29 of the original lease.
11
Mr. Tomlin made two (2) claims related to two (2) alleged renewals of the original East
Nashville, TN lease, originally executed on July 1, 1998, for an initial term of ten (10) years. The trial
court ruled that Mr. Tomlin was entitled to a commission based upon the “First Amendment” to the East
Nashville, TN lease; however, the trial court ruled Mr. Tomlin was not entitled to a commission based
upon the “Second Amendment” of the lease because the court concluded the “Second Amendment” was
not a renewal. The “First Amendment” and “Second Amendment,” executed on April 29, 2008, and
November 20, 2009 respectively, except as specifically amended, reaffirmed the provisions of the original
lease, including ¶ 26 of the original lease.
12
Mr. Tomlin made three (3) claims related to three (3) alleged renewals of the original Franklin,
TN lease, originally executed on December 14, 2008, for an initial term of ten (10) years. The trial court
ruled that Mr. Tomlin was not entitled to commissions based on any of his three (3) claims in connection
with the Franklin, TN original lease.
13
Mr. Tomlin made one (1) claim related to one (1) alleged renewal of the original Jasper, AL
lease, originally executed on April 30, 1999, but effective on May 1, 1999. The trial court held that
Appellants exercised an option to renew the original Jasper, AL lease, and that Mr. Tomlin was entitled to
a commission on the renewal.
14
Mr. Tomlin made one (1) claim related to one (1) alleged renewal of the original Round Rock,
TX lease, originally executed September 10, 1999, and modified and ratified on September 10, 1999, for
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NJ;16 and (11) East Orange, NJ.17 The trial court also entered a declaratory judgment in
Mr. Tomlin’s favor stating, “[t]he court hereby declares that Mr. Tomlin is entitled to
receive future commissions of 4% of gross rental payments of all renewal or extension
leases, based on the rental rate he negotiated, as well as on any amounts the lessor agrees
to pay toward renovation or other improvements[.]”
On August 5, 2016, the trial court issued a judgment in favor of Mr. Tomlin for
$192,298 for the commissions owed on the renewals or extensions for the following
leases: Tullahoma, TN; Springfield, TN; West Nashville, TN; First Amendment to East
Nashville, TN; Jasper, AL; Round Rock, TX; and the November 2000 and July 2002
modifications to the original Harrison, NJ lease. The court ordered that no commissions
were owed on the following locations: Gallatin, TN; the second Amendment to East
Nashville, TN; Franklin, TN; Austin, TX; and the third Amendment to Harrison NJ. On
September 6, 2016, Appellants filed a motion to alter, amend, or vacate the judgment.
Also on September 6, 2016, Appellee filed a motion for an award of discretionary costs.
After a hearing, the trial court denied Appellants’ motion to alter, amend, or vacate the
judgment and granted Mr. Tomlin’s motion for discretionary costs. Appellants timely
appealed.
an initial term of eleven (11) years. The trial court ruled that Mr. Tomlin was entitled to a commission on
the “First Amendment to Lease Agreement,” executed November 23, 2009.
15
Mr. Tomlin made two (2) claims related to two (2) alleged renewals of the original Austin, TX
“Sublease Agreement,” originally executed on September 10, 1999. The trial court ruled that both
amendments were new leases, and Mr. Tomlin was not entitled to commissions based on either of his
claims. The trial court also held that the statute of limitations had tolled on Mr. Tomlin’s claims in
connection with the Austin, TX alleged renewals.
16
Mr. Tomlin made three (3) claims related to three (3) alleged renewals of the original Harrison,
NJ lease. The trial court held that Mr. Tomlin was entitled to be paid a commission based upon the first
and second amendments to the original Harrison, NJ lease, but that he was not entitled to be paid a
commission on the third lease because it was an entirely new agreement. The court also ruled that the
statute of limitations did not preclude Mr. Tomlin’s claims, even though the first two amendments took
place in November 2000 and July 2001 respectively, because Mr. Tomlin did not discover that the
original leases had been amended until this litigation ensued.
17
Mr. Tomlin made two (2) claims related to commissions he alleged he was owed based upon
the East Orange, New Jersey lease. First, Mr. Tomlin claimed that he was entitled to a commission on the
original lease that he alleged he negotiated for the East Orange, New Jersey location. Second, Mr. Tomlin
asserted a second claim based upon a commission he alleged he was owed based upon an amendment to
the original East Orange, New Jersey lease. The amendment was executed on January 6, 2008. The
court held Mr. Tomlin was not entitled to a commission on the original lease, because his claim was
precluded based upon the doctrine of res judicata.
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ANALYSIS
Although the parties have each raised several substantive issues for our review,
Tennessee Rule of Appellate Procedure 13(b) requires this Court to first consider whether
we have subject-matter jurisdiction. Tenn. R. App. P. 13(b); Person v. Kindred
Healthcare, Inc., No. W2009-01918-COA-R3-CV, 2010 WL 1838014, at *2 (Tenn. Ct.
App. May 7, 2010). It is well-settled law that, “[u]nless an appeal from an interlocutory
order is provided for by the rules or by statute, appellate courts have jurisdiction over
final judgments only.” Bayberry Assocs. v. Jones, 783 S.W.2d 553, 559 (Tenn. 1990)
(citation omitted); see also In re Estate of Henderson, 121 S.W.3d 643, 645 (Tenn. 2003)
(noting that an appeal as of right may be taken only after the entry of a final judgment).
Tennessee Rule of Appellate Procedure 3(a) provides:
In civil actions every final judgment entered by a trial court from which an
appeal lies to the Supreme Court or Court of Appeals is appealable as of
right. Except as otherwise permitted in rule 9 and in Rule 54.02 Tennessee
Rules of Civil Procedure, if multiple parties or multiple claims for relief are
involved in an action, any order that adjudicates fewer than all the claims
or the rights and liabilities of fewer than all the parties is not enforceable
or appealable and is subject to revision at any time before entry of a final
judgment adjudicating all the claims, rights, and liabilities of all parties.
A final judgment is one that completely defines the parties’ rights and leaves
nothing else for the trial court to do. Davis v. Davis, 224 S.W.3d 165, 168 (Tenn. Ct.
App. 2006) (citation omitted).
In total, the trial court ruled on seventeen of Mr. Tomlin’s claims and issued a
declaratory judgment. As explained in detail below, our exhaustive review of the record
and the trial court’s orders indicate that the trial court did not rule on at least six of Mr.
Tomlin’s claims. Specifically, the trial court failed to rule on Mr. Tomlin’s claims for
commissions allegedly owed based upon lease renewals at the following locations: (1)
Bastrop, TX; (2) Marble Falls, TX; (3) East Orange, NJ; and (4) University City, MO.18
Therefore, the judgment is not final such as to confer subject-matter jurisdiction on this
Court, and we must dismiss this appeal.
18
The trial court may also have failed to rule on claims arising from alleged amendments of
leases for clinics located in Pittsburgh, PA, Sarasota, FL, and Madison, TN. The initial term of these
leases ran for fifteen (15) years. The parties stipulated that a direct subsidiary of Appellant is the current
tenant at all three locations. The leases expired by their own terms during the period of time between the
date of trial and the date when the trial court issued its opinion. Based upon the record, it appears
Appellants have denied that these leases were amended before the expirations of their initial terms.
However, if Appellants did not deny those leases were amended before the time of trial, Mr. Tomlin has
asserted outstanding claims for commissions on alleged renewals related to those locations.
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1. Bastrop, TX; One Claim
The original lease for the clinic located in Bastrop, TX was executed on March 3,
2000, for an initial term of fifteen years. Although the record is unclear concerning the
exact date of the amendment, the record clearly indicates that the Bastrop, TX lease was
amended at some point.19 Mr. Tomlin has claimed he is entitled to a commission on the
“First Amendment” to the original Bastrop, TX lease, alleging that it is a renewal of the
original lease. The trial court failed to rule on Mr. Tomlin’s claim that he is entitled to a
commission on the “First Amendment” to the Bastrop, TX original lease.
2. Marble Falls, TX; Two Claims
The original lease for the clinic located in Marble Falls, TX was executed on
March 3, 2000, for an initial term of fifteen years. The record indicates that the lease was
amended twice, on February 2, 2001 and March 13, 2001, respectively.20 The trial court
failed to rule on Mr. Tomlin’s claims for commissions allegedly owed under the alleged
amendments-renewals of the Marble Falls, TX lease.
3. East Orange, NJ; One Claim
The original lease for the clinic located in East Orange, NJ was executed on March
23, 2001, for an initial term of ten years. Mr. Tomlin claimed he was entitled to a
commission on the original lease, and he also claimed that he was entitled to a
commission for an amendment to the original lease executed on January 1, 2008. The
trial court ruled that Mr. Tomlin’s claim for a commission on the original lease was
barred by res judicata. However, the trial court failed to rule on Mr. Tomlin’s claim for a
commission based upon the alleged amendment-renewal to the original lease.
4. University City, MO; Two Claims
The original lease for the clinic located in University City, MO was entered into
on October 23, 2000, for an initial term of fifteen years. The record indicates that the
lease was amended twice, on May 24, 2002, and July 28, 2002, respectively.21 The trial
court failed to rule on Mr. Tomlin’s claims for commissions allegedly owed under the
amendments to the University City, MO lease.
19
Except as specifically modified, the amendment of the original Bastrop, TX lease ratified and
republished the original lease in its entirety, including paragraph twenty-nine of the original lease.
20
Except as specifically modified, the amendments to the original Marble Falls, TX lease ratified
and republished the original lease in its entirety, including paragraph twenty-nine of the original lease.
21
Except as specifically modified, the amendments to the original University City, MO lease
ratified and republished the original lease in its entirety, including paragraph twenty-nine.
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CONCLUSION
After an exhaustive review of the record, we have determined that the trial court
failed to rule on at least six of Mr. Tomlin’s claims. In the absence of a final judgment,
we do not have subject-matter jurisdiction over this appeal. Accordingly, the appeal is
hereby dismissed, and the case is remanded for further proceedings as may be necessary
and consistent with this Opinion. Costs of the appeal are assessed against the Appellants,
Nephrology Associates, P.C., and Renal Care Group, Inc., and their surety, for all of
which execution may issue if necessary.
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ARNOLD B. GOLDIN, JUDGE
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