Triple Rock v. A.C. Rainey ( 2003 )

IN THE COURT OF APPEALS OF TENNESSEE
AT NASHVILLE
February 7, 2003 Session
TRIPLE ROCK, LLC d/b/a COMMERCIAL TEN, ET AL. v.
A.C. RAINEY, ET AL.
Appeal from the Chancery Court for Davidson County
No. 98-1372-III Ellen Hobbs Lyle, Chancellor
No. M2000-01115-COA-R3-CV - Filed June 10, 2003
Triple Rock LLC, d/b/a Commercial Ten, Perry Dale, and Earl H. Young, Jr., sued A.C. Rainey and
others for damages allegedly resulting from the Defendants’ misappropriation, conversion, or
negligent handling of moneys allegedly owed to the limited liability company. The trial court
granted partial summary judgment in favor of Defendant, Attorney Mark Moore, on his Motion to
Dismiss for failure to state a claim. Then, upon Plaintiffs’ Motion for Summary Judgment and the
response of the remaining Defendants thereto, the trial court entered summary judgment in favor of
the Defendants, A.C. Rainey, Miller Kimbrough, MGK Realty, and Mary Snyder. From these two
orders Plaintiffs appeal. We affirm.
Tenn. R. App. P. 3 Appeal as of Right ; Judgment of the Chancery Court Affirmed
WILLIAM B. CAIN , J., delivered the opinion of the court, in which BEN H. CANTRELL , P.J., M.S., and
W. FRANK BROWN , III, SP . J., joined.
Thomas J. Drake, Jr., Nashville, Tennessee, for the appellant, Tripple Rock, LLC d/b/a Commercial
Ten, Perry Dale, and Earl Young, Jr.
John I. Harris, III, Nashville, Tennessee, for the appellees, Albert C. Rainey, Miller Kimbrough,
MGK Realty Services, Inc., Gary Lufkin and Q-Change Ltd., LLC.
Jaimee S. Wilson, Murfreesboro, Tennessee, for the appellee, Mark Moore.
OPINION
This appeal comes to the Court upon review of the grant of two motions for summary
judgment.1 “Since our inquiry involves purely a question of law, no presumption of correctness
1
The trial court viewed Attorney Mark Moore’s Motion to Dismiss as a Motion for Summary Judgment under
Tennessee Rules of Civil Procedure 56.
attaches to the lower court’s judgment, and our task is confined to reviewing the record to determine
whether the requirements of Tenn. R. Civ. P. 56 have been met. Cowden v. Sovran Bank/Central
South, 816 S.W.2d 741, 744 (Tenn. 1991).” Bain v. Wells, 936 S.W.2d 618, 622 (Tenn. 1997); Tenn.
R. App. P. 13; see also Planters Gin Co. v. Federal Compress & Warehouse Co., Inc., et al., 78
S.W.3d 885, 889 (Tenn. 2002). The standard of review is well settled. This Court reviews the
record de novo to determine first whether any genuine issue of material facts exist, and second
whether the Defendant is entitled to judgment as a matter of law. As has been noted by our supreme
court, summary judgment may be granted to a non-movant. See Thomas v. Transport Insurance Co.,
532 S.W.2d 263, 266 (Tenn. 1976). The rendering court, however, must take meticulous care to
determine first that the movant had a full and fair opportunity to meet the proposition that there are
no genuine issues of material fact and second, that the non-movant is entitled to judgment as a matter
of law. Ibid. If, on de novo review, this Court finds a genuine issue of material fact, by necessity
the Defendant is not entitled to a judgment as a matter of law. If no genuine issue of material fact
exists, then it falls upon this Court to decide the legal conclusions de novo to determine whether the
Defendant was so entitled to summary judgment.
The first summary judgment dismissed Triple Rock’s claim of negligence against Attorney
Mark Moore. The second summary judgment dismissed Triple Rock’s claims against A.C. Rainey,
Miller Kimbrough, MGK Realty and Mary Snyder. The majority of Triple Rock’s claims arise out
of two real estate transactions conducted primarily by A.C. Rainey. Triple Rock’s claim against
Attorney Mark Moore arises out of one of these transactions where Mr. Moore, as attorney for the
seller, acted as closing agent on a sale of certain real property in Rutherford County. In addition to
these two claims, Triple Rock also alleged that A.C. Rainey breached his fiduciary duty as a member
of the member-managed limited liability company by failing to contribute equally to the profit and
loss of said company and for failing to account for the funds allegedly misappropriated in these real
estate transactions. After unsuccessfully arguing against Mark Moore’s motion, the plaintiff’s
sought summary judgment against the remaining Defendants. The Defendants, A.C. Rainey, et al.,
urged the trial court to consider its authority under Rule 56 of the Tennessee Rules of Civil
Procedure and award summary judgment in favor of the non-moving Defendants. From the trial
court’s orders of dismissal as to Attorney Mark Moore and summary judgment as to the remaining
Defendants, Triple Rock appeals.
I. THE SUMMARY JUDGMENT IN FAVOR OF THE NON-MOVANTS, A.C. RAINEY,
MILLER G. KIMBROUGH, MGK REALTY, SERVICES, INC., GARY LUFKIN AND Q-
CHANGE LTD., LLC.
What follows are the undisputed facts concerning the summary judgments entered in this
case.
A. The relationship between Triple Rock LLC, A.C. Rainey and Miller Kimbrough
A.C. Rainey, Earl Young and Perry Dale formed Triple Rock LLC on July 27, 1995. The
Company was to engage in the business of buying, selling, managing, leasing, brokering and
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investing in real estate properties and such other related business as the members would agree upon.
In particular, the operating agreement provided the following:
5. Duration - The Company shall commence operation on July 27, 1995,
and shall continue for an indefinite period or otherwise terminate as herein provided.
6. Capital - The initial capital of the Company shall be $ 3,000.00 .
Each Member agrees to contribute cash or property at an agreed valuation as follows:
Member Amount Percent
Earl Harold Young, Jr. see schedule A 33.3%
Albert Carl Rainey, Jr. see schedule A 33.3%
Perry Dale, Jr. see schedule A 33.3%
7. Contribution of Additional Capital - The Members shall contribute
additional capital that they may deem to be necessary to the operation of the
Company in the following amounts: _____________________________________
__________________________________________________________________
8. Salaries: - No member shall receive a salary unless otherwise agreed
upon by the Members.
9. Loans by Members - If any Member shall advance any moneys to the
Company in excess of the Capital contributed as set forth above, the amount of the
moneys so advanced shall be considered as a loan to the Company and shall bear
interest at the rate of eight percent (8%) until repaid and shall have preference in
liquidation over capital account balances.
10. Profits and Losses - The net profits, losses and surplus of the
Company shall be divided in proportion to ownership interest of the Members. Any
salary paid pursuant to paragraph 8 shall be considered an expense of the business
in arriving at net profit or loss.
11. Management - The Members shall participate in the management of
the Company’s business. Notwithstanding anything herein to the contrary, Earl
Harold Young, Jr. shall be responsible for the day-to-day operations of the Company.
Earl Harold Young, Jr. shall be designated as the Chief Manager of the Company and
Perry Dale, Jr. shall serve as Secretary until such time as they resign from their
positions or as otherwise determined by the Members.
....
16. Limitations on Members’ Powers/Limitation of Liability - No
Member shall, without the majority vote of the other Members:
....
(c) Make, execute or deliver any assignment for the benefit of creditors or
any bond, confessions of judgment, chattel mortgage, deed, guarantee, indemnity
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bond, surety bond, or contract to sell or contract of sale of all or substantially all the
property of the Company.
Subsequent to the original organization of this LLC, the business relationships between the
three members began to deteriorate. On August 14, 1997, A.C. Rainey caused the following letter
to be delivered to Earl Young and Perry Dale:
Re: My resignation as an officer and/or Director of Triple Rock, Inc. and
LLC d/b/aCommercial Ten (the Company) and the transfer of my
affiliate broker’s license.
Dear Perry and Ed:
After much thought, I have decided that it is in the best interest of myself, the
Company and both of you for me to resign any office I currently hold with the
Company and to transfer my affiliate broker’s license to another firm effective
August 18, 1997. As I’m sure you both understand, real estate companies and
affiliations come and go and I strongly feel that it is time for me to seek other
opportunities.
I will remain as a stockholder in the Corporation and as a member in the LLC for
meantime, and as such stockholder/member I will remain in touch with both of you
regarding the financial status of the Company. As we have discussed, any
commissions earned while I have been affiliated with the Company will remain with
the Company, at least until the indebtedness of the Company to others is retired. In
the event the indebtedness is retired, we can then sit down to discuss the affairs and
future of the Company.
I will advise you on where I am transferring my license when that decision is made.
I wish both of you and the Company the best of luck in future endeavors. Don’t
hesitate to contact me if you have any questions regarding this matter.
During his affiliation with Triple Rock, A.C. Rainey began working on a purchase of real
property in Rutherford County on behalf of Triple Rock’s client, CMC, LLC, from Tom Hogshead.
Also in the course of his affiliation with Triple Rock, Rainey began work on a lease between Q-
Change, Ltd. and Nippers Corners.
On December 3, 1997, A.C. Rainey faxed the following note to Bert Ferrell at MGK Realty
Services, Inc.:
Bert: The Commission checks on the Hogshead - Matrix sale that comes to this side
of the sale should be 40% Commercial Ten, 40% MGK Realty Services, 20% Folk
Jordan – Mary Snyder.
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Bert we would like for this to be three separate checks. Thanks ACR
This facsimile was then forwarded to Attorney Mark Moore for the purposes of drafting the
settlement statement executed March 12, 1998 by representatives of CMC, LLC and Tom Hogshead,
and for the drawing of the checks to Commercial Ten, MGK Realty Services and Folk Jordan.
At the time of the closing of the Rutherford County property transaction, Triple Rock owed
Libba Rainey, A.C. Rainey’s wife, a total of $21,500.00, said sum representing two demand notes
executed by Triple Rock with Libba Rainey. A.C. Rainey endorsed a check in the amount of
$1,600.00 from Commercial Ten to his wife, Libba Rainey, allegedly in satisfaction of a portion of
Triple Rock’s debt. In exchange for that endorsement, Libba Rainey executed a receipt for those
funds. Likewise, $3,100.00 in commission resulting from the Q-Change lease was endorsed by A.C.
Rainey on behalf of Commercial Ten to Libba Rainey. Libba Rainey executed another receipt which
further adjusted the outstanding debt downward accordingly. After determining that the commis-
sions heretofore thought due Triple Rock were thus directed to Libba Rainey, the Plaintiffs filed suit
against A.C. Rainey for conversion of the $3,100.00 in commissions resulting from the Q-Change
lease and the $4,000.00 in commission that A.C. Rainey caused to be paid to Miller Kimbrough,
Mary Snyder and eventually his wife, Libba Rainey.
For his part, Miller Kimbrough began work as an agent for Triple Rock in 1996. Though not
a member of the member-managed LLC, Mr. Kimbrough’s license as a real estate agent listed his
affiliation with Triple Rock, LLC. The record before us shows that in June 1997 Mr. Kimbrough
changed his affiliation to establish MGK Realty Services, Inc. It also appears from the record that
Mr. Rainey moved his affiliation to MGK Realty while remaining a member of Triple Rock, LLC.
With regard to the complaint against Mr. Rainey, the Plaintiff sought summary judgment on the
following issues: 1) whether Rainey had converted commission due from the Rutherford County
sale; 2) whether Rainey had converted the commission from the Q-Change lease; and 3) Whether
Rainey properly shared in the profit and loss of the LLC. At this point, it is important to note that
the Plaintiffs claimed no breach of the operating agreement. Likewise, they proved no damages
resulting from the assignment of the $4,700.00 in commission allegedly converted. At their core,
the claims of the Plaintiffs are that Mr. Rainey improperly delivered into the hands of others
$4,000.00 due under the Rutherford County sale commission and $3,100.00 due from the Q-Change,
Ltd. lease. As for Miller Kimbrough and MGK Realty Services, Inc., the same reasoning applies.
Each of these two Defendants, according to the Plaintiffs, “improperly” received $1,600.00 in
commissions from the Rutherford County sale. Said the court:
The Court has reviewed the record on this issue, including the Operating Agreement
of the limited liability company and the relevant statutory provisions, which are
identified in the defendants’ reply brief. Based upon the record and applicable
statutes the Court finds, as a matter of law, that there was no written agreement
among the members of the limited liability company concerning compulsory
contributions of additional capital. The Court therefore finds, as a matter of law, that
Rainey, as a member of the limited liability company, has no personal liability to the
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company or the other members for any portion of the operating expenses or losses of
the limited liability company.
Finally, plaintiffs seek a judgment against Miller Kimbrough. Based upon the
record, the Court finds as a matter of law that Kimbrough, and through him, MGK
Realty Services, Inc., was entitled to and did receive the appropriate amount of
commissions on the Hogshead transaction and further that Kimbrough is not liable
under the doctrine of quantum meruit to the plaintiffs.
Based upon the foregoing, the Court finds as a matter of law that there are no
genuine issues of material fact with respect to the issues in this action and that the
defendants, although they are the nonmovants, are entitled to summary judgment at
this time in their favor as a matter of law. See, Thomas v. Transport Insurance Co.,
532 S.W.2d 263, 266 (Tenn. 1976). Accordingly, all claims against defendants
Miller Kimbrough and against MGK Realty Services, Inc., are dismissed with
prejudice. Furthermore, all claims against A.C. Rainey, with the exception of the
claim set forth in Paragraph 3 of the complaint (relating to Q-Change of Nashville),
are dismissed with prejudice. As to the claims which are hereby dismissed, the Court
finds that these claims are distinct from the issues remaining in this action and
therefore that there is no just reason for delay and enters final judgment as to these
claims pursuant to Tennessee Rules of Civil Procedure 54.02.
B. The Nature of the Claim
It is important to note that the Plaintiffs’ claims are for conversion. To establish a prima
facie case of conversion, the plaintiff must show an appropriation of property to the defendants’ own
use in exclusion or defiance of the plaintiff owners present possessory rights. Barger v. Webb, 216
Tenn. 275, 278, 391 S.W.2d 664, 665 (1965); Lance Products, Inc. v. Commerce Union Bank, 764
S.W.2d 207, 211 (Tenn. Ct. App. 1988).
The drafters of the Restatement place a finer point on this interference and exclusion:
(1) Conversion is an intentional exercise of dominion or control over a chattel which
so seriously interferes with the right of another to control it that the actor may justly
be required to pay the other the full value of the chattel.
(2) In determining the seriousness of the interference and the justice of requiring the
actor to pay the full value, the following factors are important:
(a) the extent and duration of the actor’s exercise of dominion
or control;
(b) the actor’s intent to assert a right in fact inconsistent with
the other’s right of control;
(c) the actor’s good faith;
(d) the extent and duration of the resulting interference with
the other’s right of control;
(e) the harm done to the chattel;
(f) the inconvenience and expense caused to the other.
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Restatement (Second) of Torts § 222A (1965).
The curious nature of the LLC’s claims against member A.C. Rainey relies on the allegation
that Mr. Rainey, in arranging the payout of the commissions in the Rutherford County sale, and
endorsing the $3,100.00 check from the Q-Change lease, applied these funds for his own use and
benefit in exclusion of the rights of the LLC and its members. The record before us contains
admissions on behalf of the LLC and specifically by member Perry Dale that Libba Rainey held
notes against Triple Rock, LLC. It is also undisputed from the record that, if indeed Mary Snyder
and Miller Kimbrough worked for the Company, in referring and contributing the perfection of the
sale of the Rutherford County property, they would indeed be owed the very percentages paid at Mr.
Rainey’s direction. The record fails to disclose any appropriation of any portion of the $7,100.00
claimed by Triple Rock, for Rainey’s own use or benefit. Furthermore, it is undisputed that Triple
Rock received full value of the commission dollars paid toward the note held by Libba Rainey. The
Plaintiffs simply argue that since Rainey disposed of these commissions to pay his wife, albeit a
legitimate creditor, they did not have the control that they would have preferred. Indeed, the only
entities who are arguably dispossessed of the $7,100.00 are the other creditors of the LLC, none of
which are parties to this action. As a result, this Court finds no error in the grant of summary
judgment against Plaintiffs on conversion. There is no genuine dispute that Mr. Rainey acted as an
agent of the limited liability company d/b/a Commercial Ten. There may be a dispute as to the
nature and extent of Rainey’s actual authority but for the purposes of the Rutherford County Sale and
the Nippers Corners Lease there can be no dispute that Rainey was cloaked with the apparent
authority of the agent for CMC, et al. and consequently an agent for Triple Rock d/b/a Commercial
Ten. As an agent with the authority to enter into agreements on behalf of his principal, Rainey also
had the authority necessary to effect his principal’s purpose. This includes compensating those
agents who accomplished the referral to Commercial Ten. Since those agents received commissions
as directed by Rainey, none of those agents acted with the requisite intent to satisfy a claim for
conversion.
II. CAUSE OF ACTION AGAINST MARK MOORE
The Plaintiffs’ claim against Mark Moore began as a bare legal conclusion, i.e. “Attorney
Mark Moore improperly paid commissions to MGK Realty Services and Folk Jordan, which
commissions were due to Commercial Ten and is liable to Commercial Ten in the amount of
$4,000.00.” In response to Attorney Moore’s Motion to Dismiss filed on June 5, 1998, said Motion
being supported by an affidavit and therefore considered as a Motion for Summary Judgment,
Plaintiffs asserted the following:
Mark Moore, attorney, in December of 1997, improperly paid portions of the
commission to MGK Realty Services and to Folk Jordan, aiding A.C. Rainey in
converting those funds from Commercial Ten. Mark Moore also gave a check made
payable to Commer[ci]al Ten, to A.C. Rainey, however, A.C. Rainey at the time was
not affiliated with Commer[ci]al Ten. This action sounds in tort, for conversion.
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Prior to the entry of an order on Defendant Moore’s Motion to Dismiss, the Plaintiffs
obtained permission to amend their Complaint.
In the Amended Complaint filed on August 14, 1998, the following is averred as a claim
against Moore:
Attorney Mark Moore was closing agent for a transaction involving Tom
Hogshead as seller and CMC, LLC, as buyer. The transaction consisted of the sale
of real estate in Rutherford County, by contract. Attorney Mark Moore received
funds related to closing the sale of the property, and issued a commission check to
MGK Realty Services in the amount of $1,600.00 and to Folk Jordan in the amount
of $800.00. The contract provided for commission of $8,000.00 to be paid in equal
parts, $4,000.00 each, to Sims Realty and Commercial Ten. (See Exhibit “D”)
Attorney [M]ark Moore had a duty to all parties to conduct the closing of the
transaction according to the contract between the parties, and did not use reasonable
care in closing the sale. Attorney Mark Moore closed the transaction by using a
contract which was not duly executed and complete. Further, Attorney Mark Moore
did not have direction from the parties to the contract to change payment of
commission. MGK Realty Services and Folk Jordan were strangers to the
transaction.
In the alternative, the Plaintiffs allege that Attorney Mark Moore conspired
with A.C. Rainey in converting the commission to MGK Realty Services and Folk
Jordan.
At all times material, Attorney Mark Moore knew or should have known that
Commercial Ten was to be paid $4,000.00 in commission, that Commercial Ten was
located in Davidson County, and Attorney Mark Moore knew that A.C. Rainey, or
MGK Realty, of Nashville, Tennessee, was not authorized to, but nevertheless sent
instructions to pay the commission of $4,000.00, not all to Commercial Ten, but
$1,600.00 to MGK Realty and $800.00 to Folk Jordan.
The Plaintiffs seek $2,400.00 in damages from Attorney Mark Moore.
As a result, Plaintiffs’ conclusory allegation in their original complaint metamorphosed into
a claim of simple negligence due to Mark Moore’s alleged failure to close the Rutherford County
transaction according to the contractual papers before him. They specifically allege in their
Amended Complaint that the contract under which Attorney Moore was to operate required
distribution of $4,000.00 in commission to Triple Rock d/b/a Commercial Ten.
The parties presented the trial court with two versions of the contract for the sale of real
property. The Plaintiffs’ version of the contact for the sale of the Rutherford County property
provided “Sims Realtors, Auctioneers, LLC is to split the commission 50/50 with Commercial Ten
with each broker to receive $4,000.00.”
This contract was attached to the affidavit of Perry Dale, which states, in pertinent part:
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That A.C. Rainey was affiliated with Commer[ci]al Ten as a real estate agent,
and while affiliated with Commer[ci]al Ten, was involved in the sale of property in
Rutherford County, between Tom [H]ogshead and CMC, LLC. A copy of the
Contract for sale of Real Estate is attached hereto as exhibit “A”. Commer[ci]al Ten
was to have received a portion of the commission in agreement with A.C. Rainey.
The contract is denominated as a contract of sale between Tom Hogshead and CMC, LLC.
In the affidavits provided by the Plaintiffs there is no showing that anyone from Triple Rock other
than Mr. Rainey dealt with this particular transaction. Despite the assertion in Mr. Dale’s affidavit
that Mr. Rainey no longer represented Commercial Ten or its alias, Triple Rock LLC, at the time of
closing of the Rutherford County transaction, no one, other than Mr. Rainey, had informed Mr.
Moore of any of the steps he was to take to enforce the clause requiring Sims Realty, a third party
to the agreement, to convey 50% of the commission to Commercial Ten. This fact is interesting
insofar as Commercial Ten would not be entitled to any of the commission without Mr. Rainey’s
efforts on the sale, and on Commercial Ten’s behalf. Mr. Moore, in the affidavit supporting his
motion, denied any knowledge of the Plaintiff’s version of the written contract until after the
transaction had already closed. He alleged that he dealt exclusively with A.C. Rainey. Plaintiffs
presented no evidence directly contradicting this exclusive dealing.
On appeal, the Plaintiffs argue that the existence of two contracts for sale create a genuine
issue of fact material to the question of whether Mark Moore committed “clear and palpable
negligence.” Gray v. Boyle Investment Co., 803 S.W.2d 678 (Tenn. Ct. App. 1990). They argue that
in light of the Western Section’s decision in Gray, this Court should reverse the trial court’s order
dismissing their claim. Gray involved an attorney who, having received money from the purchasers
of real property in connection with closing, failed to inform the purchasers that the property was in
foreclosure and took no corrective measures to protect the purchasers’ interest. The closing attorney
put on no proof in the trial court to rebut the plaintiffs’ allegations. To the contrary, he relied upon
the plaintiffs’ failure to present expert proof of the applicable standard of care. Said the court: “It
appears to this court that when an attorney handling a real estate transaction takes money from a
purchaser to remit to a seller and, at the time of closing, knows that the property is in foreclosure,
but fails to advise purchasers of the foreclosure and takes no corrective measures to protect the
purchasers’ investment, the attorney is guilty of clear and palpable negligence.” Gray, 803 S.W.2d
at 683-84.
The question remains, however, for the purposes of surviving a motion to dismiss: what
constitutes clear and palpable negligence? Understandably, in light of the fact-sensitive nature of
the claim, there is no hard and fast rule. Nonetheless, the phrase “clear and palpable negligence”
appears throughout this state’s case law. See Lazy Seven Coal Sales, Inc. v. Stone & Hinds, PC, 813
S.W.2d 400 at 406 (Tenn. 1991); see also Cleckner v. Dale, 719 S.W.2d 535, 540 (Tenn. Ct. App.
1986).
We find the following to be a proper clarification of the exception sought by the Plaintiffs.
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The lawyer standard of care, except in the most extreme cases, should be
proved using expert testimony. 4 Likewise, whether the lawyer’s conduct in a given
case departed from the applicable standard should also be proved by expert
testimony.
Cleckner v. Dale, 719 S.W.2d 535, 540 (Tenn. Ct. App. 1986)(emphasis added)(footnote in original).
The overarching question, however, is whether Mark Moore’s actions constitute any breach
of duty, much less a breach of such an extreme nature that expert proof of the duty or breach is
unnecessary. The undisputed facts before the trial court establish that there was a disagreement
between A.C. Rainey and Triple Rock as to how the commissions from the sale of real property were
to have been split among the agents representing those parties. This dispute did not arise until after
Moore had closed the transaction and disbursed the commissions as A.C. Rainey had advised.
Viewing the facts in a light most favorable to the Plaintiffs, A.C. Rainey was still a member of the
LLC and at the very least was cloaked with apparent authority; Commercial Ten had no contact with
Mark Moore other than through A.C. Rainey. A.C. Rainey had given certain instructions to Mark
Moore regarding the commissions to be paid; the contracts themselves varied as to payee and amount
of commission. And Moore’s version of the contract which was used at the closing contained none
of the language appearing in the Plaintiff’s version. Nonetheless, the closing statement signed by
the purchaser and the seller noted the portions and the payees of the $8,000.00 commission as Miller
Kimbrough, Commercial Ten and Folk Jordan. It bears noting at this point that the claim against
Attorney Mark Moore is not for breach of contract. Likewise, the actual terms of the contract are
not at issue as they would be in a claim for breach. The only question is whether Mark Moore acted
unreasonably under these admittedly sketchy circumstances. We find that there is no genuine issue
of material fact without expert testimony from the Plaintiffs establishing the duty and breach as
required under Cleckner, 719 S.W.2d 535, 540 (Tenn. Ct. App. 1986) and Lazy Seven, 813 S.W.2d
400 at 406. We further find that no breach of duty occurred under the undisputed facts as presented.
The summary judgment for Mark Moore was proper.
III. ACTIONS AGAINST RAINEY FOR BREACH OF FIDUCIARY DUTY AND FAILURE
TO CONTRIBUTE TO THE PROFITS AND LOSS.
Plaintiffs argue that the summary judgment of the trial court was not proper on their claim
for breach of fiduciary duty and failure to contribute equally to loss and profit. In this Court’s review
of the record, we note that each one of the members of the limited liability company had caused
money to be borrowed from that member’s spouse. While there are numerous creditors of the LLC,
none of those creditors are party to this action. Likewise, the LLC and the remaining members do
not dispute that they received from Libba Rainey a receipt for the full value of the notes paid and can
4
The standard of care applicable to a particular case will vary depending upon the type of legal activity
involved. The standard of care applicable to civil litigators may not be the same standard applicable to lawyers
representing the buyers in a real esta te transaction or to lawyers drafting complicated testamentary instruments. The
varied nature of the practice of law underscores the necessity of expert p roof intended to acquaint the find er of fact with
the applicable standard in each case.
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show no loss suffered thereby. It can be argued as Mr. Young stated in his deposition, that the
payment over of the $7,100.00 to Libba Rainey might have worked a preference in her favor as
against all of the remaining creditors. No present injury has been shown.
As for continuing contributions of additional capital, the LLC’s operating agreement as
quoted above provides for no additional capital contributions. Pursuant to Tennessee Code
Annotated section 48-26-101(a)(3), the operating agreement, if one exists, is required to list those
continuing contributions. In keeping with the concept of limited liability as evidenced in Tennessee
Code Annotated section 48-26-101, et seq., absent any such requirement, an individual member is
shielded from liability for continuing contributions for losses. The fictional entity of the limited
liability company is the party responsible for these obligations. As a result the trial court’s summary
judgment as to breach of fiduciary duty was proper.
The judgment of the court is affirmed. The cause is remanded for further proceedings not
inconsistent with this opinion. Costs are taxed against the Appellants for which execution may issue.
___________________________________
WILLIAM B. CAIN, JUDGE
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