Brian M. Haslett v. Barry Gregory ( 2018 )

12/17/2018
IN THE COURT OF APPEALS OF TENNESSEE
AT NASHVILLE
Assigned on Briefs October 29, 2018
BRIAN M. HASLETT ET AL. v. BARRY GREGORY ET AL.
Appeal from the Chancery Court for Davidson County
No. 16-886-I Claudia Bonnyman, Chancellor
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No. M2018-01952-COA-T10B-CV
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The defendants moved to disqualify the chancellor after the denial of their motion for
summary judgment. As grounds for disqualification, the defendants submitted that the
chancellor had violated the Code of Judicial Conduct in denying their motion for
summary judgment and in not promptly entering an order on a motion to compel. After
the chancellor’s denial of the motion to disqualify, this accelerated interlocutory appeal
followed. Because the motion identified no justifiable basis for the chancellor’s
disqualification, we affirm.
Tenn. Sup. Ct. R. 10B Accelerated Interlocutory Appeal as of Right; Judgment of
the Chancery Court Affirmed and Case Remanded
W. NEAL MCBRAYER, J., delivered the opinion of the court, in which THOMAS R.
FRIERSON II and ARNOLD B. GOLDIN, JJ., joined.
Eugene N. Bulso, Jr., Nashville, Tennessee, for the appellants, Barry A. Gregory; Billy
G. Gregory; Estelle A. Gregory; Scott Stephens; and Priority Trust Services MCD Trust
#7756372.
OPINION
I.
On August 9, 2016, in the Chancery Court for Davidson County, Tennessee, Brian
M. Haslett and Tina G. Haslett filed suit against Barry Gregory; his parents Billy G.
Gregory and Estelle A. Gregory; Scott Stephens; and Priority Trust Services MCD Trust
#7756372.1 As the chancery court later described, the suit arose from the plaintiffs
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The suit also named as defendants S. Madison Roberts IV and Daphne M. Davis. References to
quitclaiming their home to a third-party in the face of an impending foreclosure/tax sale:
The Plaintiffs were delinquent in their real property tax payments and their
home was scheduled for the Clerk and Master tax sale. According to the
Plaintiffs, shortly before the tax sale, the Defendant Barry Gregory
persuaded them to sign a quitclaim deed conveying their property to the
entity, “Priority Trust Services MCD Trust #7756372,” without payment or
other consideration. According to the Plaintiffs, they were also in default
of their mortgage held by the Bank of America and serviced by the
similarly named “Priority Trustee Services of TN, L.L.C.” The Plaintiffs
contend that they transferred their real property to Priority Trust Services
MCD Trust #7756372 because Barry Gregory deceptively caused them to
believe that he was associated with or represented Priority Trust Services of
TN, L.L.C. and was speaking for the Bank of America. The Plaintiffs also
contend that promises were made by Barry Gregory that they could remain
in their home for the year and that he would take care of the mortgage. The
deed that the Plaintiffs were persuaded to sign named an attorney, Daphne
Davis, as the deed preparer with an address at the Bank of America Plaza.
The deed included the term “FORECLOSURE #668732161405.” Barry
Gregory testified in his deposition that Daphne Davis did not prepare the
deed to his trust, that he prepared the deed, and that he inserted a false
foreclosure reference in the deed to mislead investors. Barry Gregory is a
real estate investor who has purchased thousands of properties, some of
them at tax sales. It appears that Mr. Gregory also buys properties from
delinquent taxpayers before tax sales, hoping to generate profits from the
transactions.
Barry Gregory’s parents, the Defendants Billy and Estelle Gregory,
purchased the Plaintiffs’ real property at the delinquent tax sale for an
amount that the Plaintiffs contend, was about half of its market value. The
Plaintiffs claim that their home was then sold for its market value, double
the amount of the tax sale price.
Priority Trust Services MCD Trust #7756372 then sought to be
awarded approximately $134,000 in excess funds remaining after all taxes
and interest were paid from the purchase funds. At the time of the sale, the
delinquent tax statutes provided that excess funds are awarded to delinquent
taxpayers. Thus, the Court awarded the excess funds to the Plaintiffs who
then divided the money with Priority Trust Services MCD Trust and the
Defendant purchasers in accordance with a written agreement. The
Plaintiffs claim that in September 2015, after the agreement was executed
the defendants in this opinion exclude Mr. Roberts and Ms. Davis.
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and the excess funds were divided, they learned that their mortgage
servicer, Priority Trustee Services of TN, L.L.C., was not the Priority Trust
Services, MCD Trust #7756372 to whom they conveyed their home. The
Plaintiffs claim they also learned that neither the actual mortgage servicer
Priority Trustee Services of TN, L.L.C. nor the Bank of America were
involved in the transfer of the [sic] their home or in the division of the
excess funds. Instead, the Plaintiffs learned that Barry Gregory was the
sole owner of the trust.
The defendants think little of the suit. They question the motivations behind the
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suit. And they question the suit’s legal merit. According to the defendants, the plaintiffs
signed a settlement agreement “resolving the very claims . . . asserted in . . . [the]
Complaint.” Additionally, they argue that their dealings with the plaintiffs do not come
within the purview of the Tennessee Consumer Protection Act (“TCPA”), which forms
the basis for some of the plaintiffs’ claims.
The defendants moved for summary judgment. Among other things, the
defendants argued that they were entitled to summary judgment because defendant Barry
Gregory made no representations on which the plaintiffs relied, the parties executed a
release that barred all of the asserted claims, the plaintiffs’ dealings with the defendant
did not “affect[] the conduct of any trade or commerce” so as to fall within the TCPA,
and the plaintiffs’ TCPA claims were time barred.
The chancery court denied the motion for summary judgment from the bench and
instructed counsel for the plaintiffs to prepare a proposed order. The defendants claim
that the court “provided no explanation or legal grounds for [its] decision.” In particular,
the defendants fault the court for “offer[ing] no analysis or grounds for denying
defendant’s [sic] Motion [for Summary Judgment] regarding, inter alia, plaintiffs’ TCPA
claim and conspiracy claim” and that its justification for not granting summary judgment
on plaintiffs’ fraud claim “had no relation to the evidence, the elements of that claim, or
the defendants’ argument.”
Before the court could enter its order denying the motion for summary judgment,
the defendants moved to disqualify the chancellor. As grounds for the motion to
disqualify, the defendants accused the chancellor of violating the rules of the Code of
Judicial Conduct, primarily in connection with the denial of summary judgment. See
TENN. SUP. CT. R. 10. The defendants also cited a delay in the entry of an order on a
motion to compel.
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According to the defendants, the plaintiffs’ attorney induced the plaintiffs to file suit as a means
to exact “a measure of revenge for what [the plaintiff’s attorney] perceived to be the misfortune such
defendants had caused him” from an earlier suit. We gave a brief description of the earlier suit in Family
Trust Servs., LLC v. Reo Holdings, LLC, No. M2016-02524-COA-R3-CV, 2018 WL 2203216 at *1
(Tenn. Ct. App. May 14, 2018), perm. appeal denied, (Tenn. Sept. 13, 2018).
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Specifically, with respect to their motion for summary judgment, the defendants
alleged that the chancellor “blatantly violated [Tennessee] Rule [of Civil Procedure]
56.04’s requirement that the court state the legal grounds upon which it denied
defendants’ Motion.” According to the defendants, the chancellor’s omission amounted
to a violation of Rule 1.1 of the Code of Judicial Conduct, which requires a judge to
“comply with the law.” The defendants also accused the chancellor, in making her oral
ruling on summary judgment, of misstating the deposition testimony of one of the
plaintiffs. The defendants asserted that this misstatement violated the requirement under
Rule 2.5 that a judge perform judicial duties competently.
The defendants also alleged that the chancellor failed to enter an order on an
unopposed motion to compel, which had been pending over three months. They claimed
that the motion sought “documents necessary to defend the claims asserted against
defendants at trial.” Again according to the defendants, the chancellor’s failure to act on
the motion to compel constituted another violation of Rule 2.5 in that the chancellor did
not perform her judicial duties “promptly and diligently.” Finally, the defendants
submitted that “[a] person of ordinary prudence would conclude from these multiple
violations of the Code of Judicial Conduct—all of which favor plaintiffs—that the Court
is not unbiased, that is, that the Court wants the plaintiffs to win this case.” As such, the
defendants claimed Rule 2.11 required the chancellor’s disqualification.
The chancellor denied the motion to disqualify in an order addressing each of the
alleged violations of the Code of Judicial Conduct. On the motion for summary
judgment, the chancellor noted that even an incorrect decision on the defendants’ motion
would not be a sufficient basis for disqualification. And she observed that there were
disputed issues of material fact and allegations of fraud that made the case unsuitable for
summary judgment. Any error in her characterization of the plaintiffs’ testimony could
be addressed at a trial on the merits. The chancellor also emphasized that an order on the
motion for summary judgment had not been entered and that it was common for her to
correct or modify a ruling by revising a proposed order or to reject a proposed order and
to draft her own.
On the motion to compel, the chancellor explained that the proposed order
compelling the documents was filed electronically and simply overlooked. The first time
the defendants informed the court of their concerns over the delay in entry of the order
was in the motion to disqualify. The chancellor commented that “[i]t would have been
helpful if the Defendants’ attorneys had notified the calendar clerk that they were waiting
on the order” or made some mention of the matter at the hearing on summary judgment.
The defendants petitioned for an accelerated interlocutory appeal of the denial of
their motion to disqualify. The defendants also moved this Court to stay the proceedings
in the chancery court pending the disposition of the appeal. We denied the request.
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II.
A.
Rule 10B of the Rules of the Supreme Court of Tennessee governs the procedure
for “determin[ing] whether a judge should preside over a case.” TENN. SUP. CT. R. 10B.
The rule allows for an accelerated interlocutory appeal as of right from the denial of a
motion for disqualification or recusal. Id. § 2.01. In an accelerated interlocutory appeal,
our review is limited to the trial court’s ruling on the motion for disqualification or
recusal. See id.; Duke v. Duke, 398 S.W.3d 665, 668 (Tenn. Ct. App. 2012) (“[T]he only
order we may review is the trial court’s order that denies a motion to recuse.”). We
review a trial judge’s ruling on a motion to disqualify de novo. TENN. SUP. CT. R. 10B,
§ 2.01.
In an accelerated interlocutory appeal, we may request an answer from the other
parties and briefing. Id. § 2.05. We may also set oral argument. See id. § 2.06. After a
review of the defendant’s petition for recusal appeal and supporting documents, we have
determined that an answer, additional briefing, and oral argument are unnecessary. Thus,
we act summarily on the appeal. See id. § 2.05.
B.
In Tennessee, litigants “have a fundamental right to a ‘fair trial before an impartial
tribunal.’” Holsclaw v. Ivy Hall Nursing Home, Inc., 530 S.W.3d 65, 69 (Tenn. 2017)
(quoting State v. Austin, 87 S.W.3d 447, 470 (Tenn. 2002)); see also TENN. CONST. art.
VI, § 11. Under the Code of Judicial Conduct, a judge must “disqualify himself or
herself in any proceeding in which the judge’s impartiality might reasonably be
questioned.” TENN. SUP. CT. R. 10, Rule 2.11(A). “[T]he test for recusal is an objective
one.” State v. Cannon, 254 S.W.3d 287, 307 (Tenn. 2008). Recusal is required “when a
person of ordinary prudence in the judge’s position, knowing all of the facts known to the
judge, would find a reasonable basis for questioning the judge’s impartiality.” Davis v.
Liberty Mut. Ins. Co., 38 S.W.3d 560, 564-65 (Tenn. 2001) (quoting Alley v. State, 882
S.W.2d 810, 820 (Tenn. Crim. App. 1994)). The decision to recuse is vested in the
judge’s discretion.3 State v. Hester, 324 S.W.3d 1, 72 (Tenn. 2010).
To seek disqualification or recusal, a party must come forward with some
evidence that would give a person of ordinary prudence in the judge’s position a
reasonable basis for questioning the judge’s impartiality. See TENN. SUP. CT. R. 10B
3
The defendants do not argue that recusal was mandatory under either Article 6, Section 11 of the
Tennessee Constitution or Tennessee Code Annotated § 17-2-101 (2009). See Hester, 324 S.W.3d at 72.
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§ 1.01 (“The motion [for disqualification or recusal] shall be supported by an affidavit
under oath or a declaration under penalty of perjury on personal knowledge and by other
appropriate materials.”); Davis v. Tenn. Dep’t of Emp’t Sec., 23 S.W.3d 304, 313-14
(Tenn. Ct. App. 1999) (on petition for rehearing). Here, the evidence relied on by the
defendants is the denial of their motion for summary judgment, including the chancellor’s
ruling from the bench. To them, the oral ruling and the denial of summary judgment
indicates bias on the part of the chancellor. See TENN. SUP. CT. R. 10, Rule 2.11(A)(1)
(“[P]ersonal bias or prejudice concerning a party or a party’s lawyer” are among the
circumstances warranting recusal.). Near the end of their petition for recusal appeal, the
defendants summarize their argument as follows:
The key issue here is whether the trial court’s summary judgment rulings
would cause a person of ordinary prudence to question the trial court’s
impartiality. The answer plainly is yes. No impartial trial court could so
flagrantly disregard the clear mandate of Rule 56.04 even after such
mandate was called to her attention. No impartial trial court could rely on
mere assertions in a pleading to defeat a summary judgment supported by
undisputed evidence that contradicts the assertions in a complaint.[4]
The way the defendants frame the issue for this appeal demonstrates their
fundamental misunderstanding of recusal. The defendants erroneously equate bias with
what may or not be an error of law, denial of a motion that allegedly shows that there is
no genuine issue as to any material fact and that the defendants are entitled to a judgment
as a matter of law.5 See TENN. R. CIV. P. 56.04. As our supreme court explained, “[a]
trial judge’s adverse rulings are not usually sufficient to establish bias.” Cannon, 254
S.W.3d at 308. That is true “even if [the adverse rulings are] erroneous, numerous and
continuous”; there must be something more to justify disqualification. Alley, 882 S.W.2d
at 821; see also Cannon, 254 S.W.3d at 308.
The defendants have failed to show the something more that would be necessary
to justify disqualification. Their claim of partiality relies solely on one adverse ruling,
the denial of their motion for summary judgment. Determining whether that ruling was
in error is beyond the scope of this proceeding. In sum, we are presented with no facts
that would support the proposition that the denial of the motion for summary judgment
4
We omit one case citation from the quoted passage.
5
The defendants compounded their error in the court below by equating what may or may not be
an error of law with a violation of the requirement of Rule 1.1 of the Code of Judicial Conduct. Most
Rule 1.1 violations occur “when a judge violates a criminal law in his or her personal conduct,” although
the failure to follow “clear procedural rules of law” has also been found to be a violation. In re Neely,
390 P.3d 728, 747-48 (Wyo. 2017), cert. denied sub nom. Neely v. Wyoming Comm’n on Judicial
Conduct & Ethics, 138 S. Ct. 639 (2018).
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resulted from the chancellor’s bias or prejudice against the defendants.
III.
The facts asserted by the defendants did not require the disqualification of the
chancellor. Thus, we affirm the denial of the motion for disqualification.
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W. NEAL MCBRAYER, JUDGE
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