Tammy L. Haggard v. Santos Aguilar ( 2010 )

IN THE COURT OF APPEALS OF TENNESSEE
AT KNOXVILLE
August 31, 2010 Session
TAMMY L. HAGGARD v. SANTOS AGUILAR, ET AL.
Appeal from the Chancery Court for Hamblen County
No. 2009-307 Thomas R. Frierson, II, Chancellor
No. 2009-02452-COA-R3-CV - FILED DECEMBER 7, 2010
This appeal involves the question of whether the trial court properly dismissed Plaintiff’s
action when another related lawsuit, filed prior to this Hamblen County Chancery Court
action, was pending in Knox County Chancery Court. We hold that the trial court properly
dismissed Plaintiff’s action under the prior suit pending doctrine. Accordingly, we affirm.
Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Chancery Court
Affirmed; Case Remanded
J OHN W. M CC LARTY, J., delivered the opinion of the Court, in which H ERSCHEL P. F RANKS,
P.J., and C HARLES D. S USANO, J R., J., joined.
Dudley W. Taylor, Knoxville, Tennessee, for the appellant, Tammy L. Haggard.
Santos Aguilar, Sevierville, Tennessee, pro se appellee.1
Stephen C. Daves, Knoxville, Tennessee, for the appellee, John P. Doyle.
OPINION
I. FACTUAL BACKGROUND
Santos Aguilar, through his counsel, John P. Doyle, (collectively “Defendants”) filed
a suit against Labor Support Management, Inc. (“LSM”) and Tammy L. Haggard, President
1
The appellee, John P. Doyle, acted as counsel for Mr. Aguilar during the initial suit in the Knox
County Chancery Court. Mr. Aguilar has not filed a brief or otherwise participated in this appeal. From the
record, it also appears that Mr. Aguilar did not file any responsive pleadings to the suit filed by Ms. Haggard
in the Hamblen County Chancery Court.
of LSM, in the Chancery Court of Knox County, Tennessee. In the complaint, Mr. Aguilar,
as a shareholder of LSM, alleged various causes of action, including derivative claims
against Ms. Haggard. Mr. Aguilar later filed an amended complaint (“Aguilar Complaint”),
where he alleged that Ms. Haggard used LSM’s assets “to pay for improvements to real
property and residence titled in her name in Hamblen County, Tennessee.” Under a theory
of constructive trust, Mr. Aguilar requested that the Knox County court “affix” a lien lis
pendens to Ms. Haggard’s property. The amount of the claim was $100,000. Thereafter, Mr.
Doyle - Mr. Aguilar’s counsel - filed a notice of a lien lis pendens on Ms. Haggard’s property
in the Register of Deeds Office for Hamblen County, Tennessee.
In response, Ms. Haggard filed an answer and counter-claim, denying liability, raising
various affirmative defenses, and alleging that Mr. Aguilar obtained his shares of stock
through coercion. At some point during litigation, Ms. Haggard learned of the lien lis
pendens on her property, and through counsel, demanded that Mr. Doyle remove the lien lis
pendens. Ms. Haggard learned of the lien lis pendens during the closing stages of a
transaction to sell the property. The parties could not come to an agreement regarding the
lien lis pendens, and Ms. Haggard subsequently filed a suit against Mr. Aguilar and Mr.
Doyle in the Hamblen County Chancery Court.2 In Ms. Haggard’s complaint, she sought
a declaratory judgment to declare the lien lis pendens void and an award of compensatory and
punitive damages. Shortly after filing the complaint, Ms. Haggard also filed a motion for
summary judgment asking the trial court to determine that “the filing of the lien lis pendens
by Defendants in this cause was improper and therefore, does not constitute an encumbrance
on the title with the issue of damages to be reserved.”
Mr. Doyle responded to Ms. Haggard’s pleadings by filing an answer, a response to
the motion for summary judgment, and a motion to dismiss under the doctrine of prior suit
pending. Mr. Doyle referenced the suit he filed on behalf of Mr. Aguilar in the Knox County
court and attached the Aguilar Complaint and Ms. Haggard’s answer as exhibits to the
motion to dismiss.
The trial court conducted a hearing on Mr. Doyle’s motion to dismiss. After finding
that the elements of the prior suit pending doctrine were met, the trial court dismissed Ms.
Haggard’s suit. Ms. Haggard then filed a timely notice of appeal, claiming that the trial
court’s grant of the motion to dismiss was improper.
II. ISSUE
The sole issue for appeal is whether the trial court erred in granting the motion to
2
For clarification, the Hamblen County Chancery Court is the trial court in this appeal.
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dismiss under the prior suit pending doctrine.
III. STANDARD OF REVIEW
The issue of whether the trial court properly dismissed the suit pursuant to the doctrine
of prior suit pending is a question of law. West v. Vought Aircraft Indus., Inc., 256 S.W.3d
618, 623 (Tenn. 2008). We review the trial court’s conclusions of law under a de novo
standard without any presumption of correctness. Fidelity & Guar. Life Ins. Co. v. Corley,
No. W2002-0263-COA-R9-CV, 2003 WL 23099685, at *3 (Tenn. Ct. App. W.S., Dec. 31,
2003)
IV. DISCUSSION
Ms. Haggard takes issue with the trial court’s grant of the motion to dismiss. She
argues that there was no basis for the trial court to grant the motion. Ms. Haggard claims that
the trial court failed to articulate whether it treated the motion as one for summary judgment
under Rule 56 or as a motion to dismiss under Rule 12.02(6) of the Tennessee Rules of Civil
Procedure.
The trial court dismissed Ms. Haggard’s claim based on the defense of prior suit
pending. The trial court’s order stated:
Plaintiff’s counsel stipulated in open court that he was not disputing that the
parties in the prior suit and in this case were identical. After having reviewed
the record, and having heard further argument of counsel, it is the opinion of
this Court that all of the elements of the defense of prior suit pending are met
and that the lawsuit should be dismissed in its entirety based on this defense.
Under the doctrine of prior suit pending, “where two courts have concurrent jurisdiction over
a matter, the court taking first jurisdiction acquires exclusive jurisdiction over the matter, and
the subsequent action must be dismissed.” Corley, 2003 WL 23099685, at *3 (citation
omitted). To dismiss an action under the doctrine, the following four elements must be met:
(1) the lawsuits must involve the identical subject matter; (2) the lawsuit must involve the
same parties; (3) the lawsuits must be pending in a court having subject matter jurisdiction
over the matter; and (4) the first lawsuit must be pending in a court having personal
jurisdiction over the parties. West, 256 S.W.3d at 623 (citing Cockburn v. Howard Johnson,
Inc., 385 S.W.2d 101, 102 (Tenn. 1964)).
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The doctrine of prior suit pending invokes whether a court has subject matter jurisdiction to
hear a suit. See generally Taylor v. Transmission Corp. of Am., Inc., No.
E2003-02529-COA-R3-CV, 2004 WL 2853300, at *1 (Tenn. Ct. App. E.S., Dec. 13, 2004).
Contrary to Ms. Haggard’s contentions, by dismissing the case under the prior suit pending
doctrine, the trial court dismissed the suit under Rule 12.02(1) of the Tennessee Rules of
Civil Procedure for a lack of subject matter jurisdiction. Thus, it was not necessary for the
trial court to address other grounds for dismissal. We now consider whether the trial court
properly dismissed Ms. Haggard’s suit.
In this case, the first two elements of the prior suit pending doctrine are easily
satisfied. First, Ms. Haggard filed a lawsuit to void the lien lis pendens. Ms. Haggard only
filed her lawsuit after the lien lis pendens interfered with a contract to sell her property.
Instead of challenging subject matter jurisdiction or attacking the validity of the lien lis
pendens in the Knox County court through appropriate motions, Ms. Haggard attacked the
validity of the lien lis pendens in another court by filing a separate lawsuit. Ms. Haggard’s
subsequent action concerns the same subject matter as Mr. Aguilar’s first suit. Second, the
trial court noted in its order that Ms. Haggard’s counsel acknowledged in open court that the
parties are identical in both suits. Without anything in the record to indicate otherwise, the
second suit filed by Ms. Haggard involves the same subject matter and the same parties as
the first suit filed by Defendants.
Turning to the third element, we consider whether the Knox County court has subject
matter jurisdiction to hear the suit. Ms. Haggard argues that the Knox County court does not
have jurisdiction to hear the first suit because it lacks subject matter jurisdiction to resolve
the title issues concerning property located in Hamblen County under Tenn. Code Ann. §
20-3-101 (2010). Section 20-3-101(a) provides as follows:
When any person, in any court of record, by declaration, petition, bill or cross
bill, seeks to fix a lien lis pendens on real estate, or any interest in real estate,
situated in the county of suit, in furtherance of the setting aside of a fraudulent
conveyance, of subjection of property under return of nulla bona, tracing a
trust fund, enforcing an equitable vendor’s lien, or otherwise, that person shall
file for record in the register’s office of the county an abstract, certified by the
clerk, containing the names of the parties to the suit, a description of the real
estate affected, its ownership and a brief statement of the nature and amount
of the lien sought to be fixed.
Tenn. Code Ann. § 20-3-101(a) (2010). Ms. Haggard also cites Tenn. Code Ann. §
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16-11-1143 to support her assertion that the trial court rightfully had jurisdiction to hear the
suit concerning the property. This court has previously tackled the issue of parties initiating
a lawsuit in one county and filing a lien lis pendens in a different county where the property
is situated.
In Knobler v. Knobler, a couple with properties in Williamson County and Davidson
County, initiated divorce proceedings in the Williamson County Chancery Court. 697
S.W.2d 583, 585 (Tenn. Ct. App. 1985). After the Williamson County court entered a
judgment granting the divorce and ordering the sale of the properties in Davidson County,
a judgment creditor obtained a judgment against the husband in the Davidson County
Chancery Court and recorded the judgment in the Register’s Office for Davidson County.
Id. Eventually, the Davidson County court entered an order directing questions concerning
the validity of the judgment creditor’s lien be determined by the Williamson County court.
Id. The Williamson County court then entered orders directing the sales of the Davidson
County properties and transferring the judgment creditor’s lien to the husband’s proceeds
from the sale. Id. at 585. The judgment creditor appealed, claiming that the Williamson
County court did not have jurisdiction over the Davidson County properties. Id. at 584.
Noting the statutory exceptions to Tenn. Code Ann. § 16-11-114, this court held that the
Williamson County court had subject matter jurisdiction over the property located in
Davidson County under Tenn. Code Ann. § 36-4-121. Id. at 585-86. This court further
noted, in dictum, as follows:
We do not mean to say that Mrs. Knobler could not have protected her claim
on the Davidson County property. Under the doctrine of lis pendens the
recording of an abstract of the complaint - if properly drawn - in the Register’s
Office for Davidson County is notice to the world that any interest attempted
to be asserted in the property whether by lien, encumbrance, or transfer would
be subject to the determination of the Chancery Court for Williamson County
in the pending divorce action.
3
Tenn. Code Ann. § 16-11-114(1) (2010) states:
The local jurisdiction of the chancery court is subject to the following rules:
(1) All bills filed in any court seeking to divest or clear the title to land, or to enforce the
specific execution of contracts relating to realty, or to foreclose a mortgage or deed of trust
by a sale of personal property or realty, shall be filed in the county in which the land, or a
material part of it, lies, or in which the deed or mortgage is registered[.]
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Id. at 587.
Similarly, addressing the same issue on interlocutory appeal, this court later held that
a lien lis pendens can be fixed on real property in one county by an action filed in another
county in Figlio v. Shelley Ford, Inc., 1988 WL 63497, at *1 (Tenn. Ct. App. M.S., June 22,
1988). This court reasoned:
Thus, the filing of the abstract is simply to give notice of a pending action
affecting the title or right to possession of the property described in the
abstract. The filing of the abstract does not create the lien. It simply gives
notice that the plaintiff in the pending action has a claim that would adversely
effect the title of a prospective purchaser if the plaintiff is successful in the
litigation. We see no reason why the plaintiff in a suit in one county, alleging
rights in property situated in another county, should be restricted in his ability
to give notice to prospective purchasers or encumbrancers in the county where
the land is located, that the rights of the record owner of the property are in
doubt. . . . It seems to us an absurd result to require the plaintiff to file suits
and lis pendens notices in both counties when the only process effective to
bind subsequent purchasers and encumbrancers is the notice.
Id. at *3. The Figlio court observed that a literal reading of Tenn. Code Ann. § 20-3-101,
a reading advocated by Ms. Haggard, “would restrict a lis pendens lien to property situated
in the county of suit.” Id. at *2. Nevertheless, when reading Section 20-3-101 in context of
other statutes in the Tennessee Code Annotated, Ms. Haggard’s argument fails. As noted in
Figlio, the language of Tenn. Code Ann. § 25-5-107 contemplates that a lawsuit and a lien
lis pendens may be filed in different counties. Id. Tenn. Code Ann. § 25-5-107(a) (2010)
states, in part, “[t]he title to real estate in counties other than the county in which the
judgment or decree is rendered . . . or lis pendens is filed . . . shall not be in any manner
affected, as to third parties. . . .” (emphasis added).4
In the instant case, after reviewing the record and the relevant laws, we find that the
Knox County court properly exercised subject matter jurisdiction in this matter. The third
element of the prior suit pending doctrine is met because Defendants originally filed a suit
4
In interpreting Tenn. Code Ann. § 25-5-107 and explaining its relevance to filing a lien lis pendens
where a lawsuit began in another county, the Figlio court stated: “Although this statute appears in the
chapter of the Code dealing with the lien of a judgment, it is clear from the context that it applies to
proceedings other than one to establish a judgment lien on property outside the county where the judgment
was rendered.” 1988 W L 63497, at *2.
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seeking to enforce the rights of Mr. Aguilar as a shareholder to LSM, a corporation with its
principal office in Knoxville, Tennessee. With regard to Mr. Aguilar’s claims, he alleged
that the trial court had subject matter jurisdiction pursuant to Tenn. Code Ann. § 48-18-109;5
§ 48-26-104;6 § 48-24-301;7 § 49-17-401. Pursuant to the above statutes, the Knox County
court had subject matter jurisdiction to hear Mr. Aguilar’s claims. Because the Knox County
court had the power to adjudicate the claims and rights of the parties concerning the
derivative shareholder claims, it follows that it was not improper for Defendants to file a lien
lis pendens under a constructive trust theory because those claims are inextricably linked to
the lien lis pendens. A notice of a lien lis pendens concerning Ms. Haggard’s property
merely puts third parties on notice that the Knox County action may affect future interests
in the property. While the Hamblen County court has jurisdiction over Ms. Haggard’s
property by virtue of Tenn. Code Ann. § 20-3-101, it does not have subject matter
jurisdiction over Mr. Aguilar’s claims as a shareholder of LSM. The Code provides that the
equity court in the county of the corporation’s principal office is the appropriate forum to
resolve shareholder suits, which in this case is the Knox County court.
Therefore, we observe that the Figlio and Knobler holdings are persuasive. The third
element - the first suit must be pending in a court with subject matter jurisdiction - was
established in the instant case. The Knox County court is the appropriate forum to resolve
Mr. Aguilar’s claims as a shareholder. Because the property in Hamblen County is
connected to Mr. Aguilar’s claims, the filing of the lien lis pendens on that property was also
appropriate. Thus, it follows that the Knox County court maintains subject matter
jurisdiction to hear Mr. Aguilar’s shareholder claims even though those claims involve
5
Tenn. Code Ann. § 48-18-109(a) (2010) provides: “Any court of record having equity jurisdiction
in the county where a corporation’s principal office (or, if none in this state, its registered office) is located
may remove a director of the corporation from office in a proceeding commenced either by the corporation
or by its shareholders holding at least ten percent (10%) of the outstanding shares of any class. . . [.]”
6
Tenn. Code Ann. § 48-26-104(a) (2010) provides: “If a corporation does not allow a shareholder
who complies with § 48-26-102(a) to inspect and copy any records required by that subsection to be available
for inspection, a court of record having equity jurisdiction in the county where the corporation’s principal
office (or, if none in this state, its registered office) is located may summarily order inspection and copying
of the records demanded at the corporation’s expense upon application of the shareholder.”
7
Tenn. Code Ann. § 48-24-301(2010) allows “any court of record with proper venue in accordance
with § 48-24-302 may dissolve a corporation. . . [.]” Tenn. Code Ann. § 48-24-302 states that “[v]enue for
a proceeding brought by any other party named in § 48-24-301 lies in the county where the corporation’s
principal office (or, if none in this state, its registered office) is or was last located.”
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property located in a different county. It is undisputed that the Knox County court had
personal jurisdiction over the parties in this matter, which satisfies the fourth element of the
prior suit pending doctrine. Upon finding that all four elements of the prior suit pending
doctrine were met, we conclude that the trial court correctly dismissed Ms. Haggard’s suit.
Accordingly, we affirm.
V. CONCLUSION
The judgment of the trial court is affirmed. Costs of this appeal are taxed to the
appellant, Tammy L. Haggard. This case is remanded, pursuant to applicable law, for the
collection of costs assessed below.
_________________________________
JOHN W. McCLARTY, JUDGE
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