Daniel v. Fletcher Ridge, Inc. ( 1999 )

IN THE COURT OF APPEALS OF TENNESSEE
AT NASHVILLE
FILED
MIKE DANIEL and ) July 16, 1999
DENNY KNIGHT, )
) Cecil Crowson, Jr.
Plaintiffs/Appellants, ) Appellate Court Clerk
) Appeal No.
) 01-A-01-9811-CH-00599
VS. )
) Davidson Chancery
) No. 96-3756-II
FLETCHER RIDGE, INC., )
)
Defendant/Appellee. )
APPEALED FROM THE CHANCERY COURT OF DAVIDSON COUNTY
AT NASHVILLE, TENNESSEE
THE HONORABLE CAROL L. McCOY, CHANCELLOR
JORDAN S. KELLER
LASSITER, TIDWELL & HILDEBRAND, PLLC
213 Fifth Avenue, North
Nashville, Tennessee 37219
Attorney for Plaintiffs/Appellants
SCOTT K. HAYNES
LUTHER WRIGHT, JR.
BOULT, CUMMINGS, CONNERS & BERRY, PLC
414 Union Street, Suite 1600
Nashville, Tennessee 37219
Attorneys for Defendant/Appellee
AFFIRMED AND REMANDED
BEN H. CANTRELL,
PRESIDING JUDGE, M.S.
CONCUR:
KOCH, J.
COTTRELL, J.
OPINION
The issues in this appeal are (1) whether the defendant preserved its
motion for a directed verdict by renewing it at the close of all the proof, and (2)
whether the court erred in granting a directed verdict in accordance with Rule 50.02,
Tenn. R. Civ. Proc. We find that the defendant did preserve its motion and that there
was no proof offered on which to base a verdict for the plaintiff. Therefore, we affirm.
I.
Mike Daniel owned LSI Recording Studio in Nashville and Denny Knight
was a recording engineer at the studio. They had recorded certain songs for artist
Eric Hamilton and had a claim against the masters for their services. Mr. Daniel also
had a management agreement with Eric Hamilton and Jeffery W illiams Younger,
along with a limited right to publish their compositions.
As with many young artists seeking that first recording deal, the legal
affairs of Mr. Hamilton had become quite tangled. In 1994, Fletcher Ridge, Inc.,
through its principal officer, Mr. Fletcher, took an interest in the Eric Hamilton Band.
Fletcher Ridge decided to secure the right to manage the group and to pursue a
contract with a major record label. In order to proceed Fletcher Ridge had to clear up
the competing claims on the management rights and the right to publish the band’s
original material. As a first step, Fletcher Ridge, Inc. purchased an assignment from
Daniel and Knight of their interest in the master records. In the November 1994
agreement, Daniel also agreed to assign his management and publishing rights with
Hamilton and Younger to Fletcher Ridge. Paragraph four of the written agreement
between Daniel, Knight, and Fletcher Ridge, contains this provision:
In the event Daniel’s contractual rights in the
Management Agreement and Publishing Agreements of
Hamilton and Younger attached hereto as Exhibits “B”
and “C” respectively are enforceable, and Fletcher Ridge
is successful in enforcing such rights, Fletcher Ridge
agrees to pay to Daniel the additional sum of Forty-two
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Thousand, Five Hundred Dollars ($42,500.00) within one
(1) year after date of execution of this Agreement, and
Ten Thousand Dollars ($10,000.00) to Knight.
Fletcher Ridge did obtain the record deal for the Eric Hamilton Band and
participates in its management. When they were not paid, Daniel and Knight sued
Fletcher Ridge for the $52,000 mentioned in paragraph four. The complaint also
contained a count alleging fraud in the negotiations over the assignment of the
management and publishing contracts to Fletcher Ridge. At the close of the plaintiffs’
proof Fletcher Ridge moved for a directed verdict. The court granted the motion as
to one of the plaintiffs’ claims but reserved ruling on the fraud count and the claim
related to paragraph four of the agreement. The court said: “As to the rest of the
motion to dismiss, the court will take it under advisement. And it can be renewed at
close of proof, but I would suggest to you, each of you, that you be prepared to have
this matter go to the jury.”
At the close of all the proof counsel for Fletcher Ridge again addressed
the court on the motion for a directed verdict:
MR. WRIGHT: Very briefly. Your Honor, it’s my
understanding, and, Mr. Keller, you can tell me if you
have a different understanding, that you were reserving
your ruling on the remainder of our motion for directed
verdict until the jury gets back.
THE COURT: That’s correct.
MR. WRIGHT: I wanted to make that clear.
Thank you.
The case went to the jury on the fraud count and the paragraph four
claim. The jury returned a verdict for the plaintiffs on paragraph four in the amount
of $42,500 for Mr. Daniel and $10,000 for Mr. Knight. The jury rejected any claim
based on fraud. After the jury returned its verdict the following exchange took place
between the court and counsel for Fletcher Ridge:
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MR. WRIGHT: Your Honor, at this point, I would
move to be heard on my directed verdict motion. We
move for a judgment on a directed verdict.
THE COURT: You want to do the direct verdict
now?
MR. WRIGHT: Well, however, I just wanted to
make sure. That motion hasn’t been ruled on and we
would like an opportunity to be heard on that motion.
THE COURT: It’s my understanding that the
motion for directed verdict would properly be presented
before this matter was put in the hands of the jury. It
would be appropriate for you to make a motion to alter or
amend at this time, but you have to file it and be heard on
a motion date.
MR. WRIGHT: I understand, Your Honor. I’m just
simply saying my understanding is that you were going to
reserve your ruling on the motion for directed verdict until
after the jury rendered their verdict. That was my
understanding.
THE COURT: Well, I anticipated that you would
present it before this matter was given to the jury. I didn’t
realize that you were not waiving it.
MR. WRIGHT: And, Your Honor, I just wanted to
make sure for the record that you understand --
THE COURT: I do.
MR. WRIGHT: -- that that was my understanding.
And we move for a judgment, obviously, on directed
verdict and we’ll file the appropriate papers.
THE COURT: Thank you.
Fletcher Ridge filed a Rule 50.02, Tenn. R. Civ. Proc., motion seeking
relief from the judgment in accordance with its motion for a directed verdict or, in the
alternative, for a new trial. The trial judge granted the motion for a directed verdict.
II.
a. Waiver
The plaintiffs assert that Fletcher Ridge waived its motion for a directed
verdict by not renewing it at the close of all the proof. See Potter v. Tucker, 688
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S.W.2d 833 (Tenn. App. 1985); Johnson v. Woman’s Hospital, 527 S.W.2d 133(Tenn. App. 1975). Based on the record we have quoted, however, we think the
defendant clearly preserved its motion. The court took the motion “under advisement”
at the close of the plaintiffs’ proof and defendant’s lawyer raised the issue again at the
end of the proof just before the court and the lawyers began to put the court’s charge
into its final form.
b. The Directed Verdict
In order to direct a verdict the trial judge must take the strongest
legitimate view of the evidence in favor of the non-moving party, indulge all
reasonable inferences in favor of the non-moving party, and disregard any evidence
to the contrary. Hicks v. Sovran Bank/Chattanooga, 812 S.W.2d 296 (Tenn. App.
1991); Harrogate Corp. v. Systems Sales Corp., 915 S.W.2d 812 (Tenn. App. 1995).
Paragraph four of the agreement promises to pay Daniel and Knight if
the management and publishing agreements with Hamilton and Younger are
enforceable and Fletcher Ridge is successful in enforcing them. The management
and publishing rights were obtained in a contract dated May 15, 1993. In that
agreement Hamilton agreed with Daniel and a third party, Ron Haffkine, to record
certain masters with Daniel and Haffkine serving as producers. Daniel and Haffkine
promised to pursue a recording contract for Hamilton with a major label. At the end
of the lengthy agreement, the parties added this paragraph: “It is further understood
that said producers shall retain management rights (25%) and all publishing rights on
original material.”
The agreement between Hamilton, Daniel and Haffkine was for a period
of one year. In March of 1994 Mr. Hamilton filed a petition in bankruptcy listing the
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production agreement as an obligation for which he sought to be discharged. He
received a discharge in January of 1995.
With respect to the management rights derived from the May 15, 1993
agreement, we think the proof clearly shows that at the time Mr. Daniel signed the
agreement with Fletcher Ridge in November of 1994 his rights to manage Mr.
Hamilton were non-existent. The one year term of the contract between Hamilton and
Daniel/Haffkine had expired and, for good measure, the parties were under the
automatic stay of the bankruptcy court. Therefore the first condition in the assignment
-- that Mr. Daniel have enforceable rights to manage Mr. Hamilton -- could not be met.
The publishing rights present a different problem. The discharge did not
defeat the publishing rights Mr. Daniel acquired prior to Mr. Hamilton’s bankruptcy.
But, those publishing rights were owned by Daniel and Haffkine, not Daniel alone. In
addition, the uncontradicted proof shows that in August of 1993 Mr. Hamilton signed
a separate agreement with Mr. Haffkine covering exactly the same rights as those
contained in the May 1993 agreement with Daniel/Haffkine. Mr. Daniel acknowledged
that Mr. Haffkine claimed the exclusive publishing rights to Mr. Hamilton’s material,
and in working out a record deal for Mr. Hamilton, Fletcher Ridge had to purchase
those rights from Mr. Haffkine.
The “Exhibit C” referred to in Daniel’s agreement with Fletcher Ridge
contained publishing agreements between Eric Hamilton and James Dowell. On the
face of the record, therefore, Mr. Daniel did not have any rights in those compositions.
Mr. Dowell and Mr. Daniel testified that these rights had been assigned to Mr. Daniel,
but the assignment had apparently been lost. The most critical failure of the proof is
the absence of any assignment of these contracts from Daniel to Fletcher Ridge.
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Therefore, we find no proof in the record of any enforceable publishing
rights assigned to Fletcher Ridge by Daniel. The condition precedent to recovering
under their contract for publishing rights has not been met. The chancellor was
justified in granting the Rule 50.02 motion.
We affirm the judgment of the trial court and remand the cause to the
Chancery Court of Davidson County for any further proceedings necessary. Tax the
costs on appeal to the appellants.
_________________________________
BEN H. CANTRELL,
PRESIDING JUDGE, M.S.
CONCUR:
_____________________________
WILLIAM C. KOCH, JR., JUDGE
_____________________________
PATRICIA J. COTTRELL, JUDGE