The Center for Digestive Disorders and Clinical Research, P.C. v. Ronald J. Calisher, Individually and Norman A. Lazerine, Individually ( 2005 )

IN THE COURT OF APPEALS OF TENNESSEE
AT KNOXVILLE
May 10, 2005 Session
THE CENTER FOR DIGESTIVE DISORDERS AND CLINICAL
RESEARCH, P.C., v. RONALD J. CALISHER, Individually and NORMAN
A. LAZERINE, Individually
Direct Appeal from the Circuit Court for Hamilton County
No. 00-C-2224 Hon. W. Neil Thomas, Circuit Judge
No. E2004-02309-COA-R3-CV - FILED AUGUST 30, 2005
Plaintiff sued defendants alleging breach of contract and tortious conduct on the part of defendants
resulting in damages to plaintiff. The Trial Court granted defendants summary judgment and
plaintiff has appealed. On appeal, we affirm the Judgment of the Trial Court.
Tenn. R. App. P.3 Appeal as of Right; Judgment of the Circuit Court Affirmed.
HERSCHEL PICKENS FRANKS, P.J., delivered the opinion of the court, in which CHARLES D. SUSANO ,
JR., J., and SHARON G. LEE, J., joined.
John P. Konvalinka and Mathew D. Brownfield, Chattanooga, Tennessee, for appellant.
G. Michael Luhowiak and Neil A. Brunetz, Chattanooga, Tennessee, for appellee, Norman A.
Lazerine.
Sam D. Elliott, Chattanooga, Tennessee, for appellee, Ronald J. Calisher.
OPINION
This action arises as a result of a contract entered between plaintiff, The Center for
Digestive Disorders and Clinical Research, P.C., and Calisher and Lazerine Associates, Inc. The
“Agreement” was signed on behalf of the corporation by Ronald J. Calisher, as its President and
Chief Executive Officer, and on behalf of the plaintiff by Dr. Richard Krause. The Contract
provided that Calisher & Lazerine Associates, Inc., would provide services for the design and
development of an outpatient endoscopy center to be constructed in Chattanooga, Tennessee. It was
a turnkey project, and architectural engineering firms in Knoxville were enlisted to assist in the
project. The building’s design did not meet certain requirements of the Health Facilities
Commission, which refused to grant a waiver. It was therefore necessary to modify the facility’s
design into two procedure rooms instead of the original three planned. As a result, the facility’s
scheduled opening was delayed approximately ninety days, causing the plaintiff loss of revenue and
increased construction expenses.
Arbitration proceedings as required by the Contract between plaintiff and Calisher
and Lazerine Associates, Inc., were instituted on December 22, 1998. On February 2, 2000, plaintiff
was awarded $416,374.93 in arbitration. Subsequent to the arbitration award, Calisher & Lazerine,
Inc., filed a Chapter Seven bankruptcy and plaintiff instituted this action after the arbitration award
was discharged through bankruptcy.
In granting the defendants summary judgment, the Trial Court described this action
as follows:
Plaintiff’s Complaint, filed on December 15, 2000, alleged that Defendants
“negligently, recklessly, and/or improperly designed and/or constructed and/or
supervised the design and construction of Plaintiff’s endoscopy center,” and
“negligently, recklessly and/or improperly failed to hire personnel with adequate
skills and training to design, construct, and to supervise the design and construction”
of the facility. The Complaint alleges that Calisher and Lazerine owed the Clinic a
duty of care independent of any contractual duty “by failing to adequately render the
services at issue, and having misrepresented their ability to render those services.”
The Plaintiff prays that the Court “declare that Defendants negligently, wrongfully
and/or recklessly failed to provide adequate consultation, design, construction,
engineering, architectural, supervisory, and personnel services for the benefit of the
Plaintiff, with such services failing to meet the applicable standard of care for such
professional services, in breach of their obligations to the plaintiff,” and seeks
damages, costs, attorneys’ fees, pre-judgment interest, and any and all other relief to
which it may be entitled.
Our reading of the plaintiff’s Complaint, reveals that plaintiff essentially charges the
defendants with breach of contract and/or tortious conduct that damaged the plaintiff.
As to the claimed breach of contract, there is no disputed issue of material fact. The
record establishes the Contract was between plaintiff and Calisher and Lazerine Associates, Inc. Dr.
Krause testified:
Q. You signed a contract with the two individuals? What do you base that on?
Do you have a contract with these gentlemen as individuals?
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A. Those were the only two people that I knew so –
Q. Well, I’m going to pass to you what has been previously marked as Exhibit
5, which was attached to your complaint as Exhibit A. Is that the contract
that you’re referring to?
A. If I signed it, it is. Yes.
Q. All right, sir. And does that contract reflect that it’s with an entity called
Calisher & Lazerine Associates, Inc. or does it reflect that it’s a contract with
two individuals?
A. It says Associates, Inc., yes.
Q. And at the time you signed it you read the contract over, did you not?
A. Probably glanced at it.
The Trial Court in its opinion granting summary judgment set forth several reasons
why the corporate veil should not be pierced. However, the Complaint does not ask to pierce the
corporate veil, rather, it seeks to hold the two individual defendants personally liable for their alleged
tortious conduct. Under Tennessee law, an agent of a corporation may be personally liable to another
party for the agent’s tortious conduct which injures another, despite the lack of privity. See, John
Martin Co., v, Morse/Diesel, Inc., 819 S.W.2d 428 (Tenn. 1991).
Tenn. R. Civ. P. 56.04 provides that summary judgment may be granted where: (1)
there is no genuine issue with regard to the material facts relevant to the claim or defense contained
in the motion. Byrd v. Hall, 847 S.W.2d 208 (Tenn. 1993); and (2) the moving party is entitled to
a judgment as a matter of law on the undisputed facts. Anderson v. Standard Register Co., 857
S.W.2d 555, 559 (Tenn. 1993). Summary judgment is appropriate when the undisputed facts, and
the inferences reasonably drawn therefrom, support only one conclusion - that the moving party is
entitled to judgment as a matter of law. Brown v. Birman Managed Care, Inc., 42 S.W.3d 62, 66
(Tenn. 2001); Bain v. Wells, 936 S.W.2d 618, 622 (Tenn. 1997).
The moving party has the burden of proving that its motion satisfies the requirements
of Rule 56. Shadrick v. Coker, 963 S.W.2d 726, 731 (Tenn. 1998); Downen v. Allstate Ins. Co., 811
S.W.2d 523, 524 (Tenn. 1991). To prevail, the movant must either affirmatively negate an essential
element of the non-moving party’s claim or conclusively establish an affirmative defense. McCarley
v. West Quality Food Serv., 960 S.W.2d 585, 588 (Tenn. 1998); Robinson v. Omer, 952 S.W.2d 423,
426 (Tenn. 1997).
Plaintiff has raised these issues on appeal:
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The Court erred in not finding individual liability for defendants.
(a) The Complaint asserts a breach of contract claim against the defendants;
(b) Defendants misrepresented their corporate status and skills.
The Court erred in not piercing the corporate veil.
(a) This issue involves the credibility of witnesses.
(b) Relevant corporate records were intentionally destroyed.
(c) Defendants disposed of assets despite notice of this claim.
As already noted, there is no disputed issue of fact in that there is no contract
between the parties in this case, and the complaint did not raise the issue of piercing the corporate
veil.1 The remaining issue to be considered is whether the defendants’ “misrepresented their
corporate status and skills”.
Plaintiff argues in its brief that “both defendants are liable for misrepresentations
contained in their promotional brochure, which misstates the parties with whom any business
relationship would be formed by the plaintiff, and which also misstated the defendants’ “in-depth
knowledge of governing codes and regulatory guidelines. As has clearly been shown, defendants
possess no such knowledge, since they did not even know how to obtain current regulations and
guidelines or did not have the desire to do so.” And the argument goes on to charge that the
defendants had “participated to a fraud”.
While the plaintiff relies on a brochure furnished to it, the Development Agreement
recites that plaintiff was contracting with a California corporation and the Agreement specifically
states:
Entire Agreement This Agreement contains the entire agreement concerning the
subject matter of this Agreement between the parties. It supersedes all other
agreement between them concerning the subject matter of this Agreement. Neither
party has made any representations with respect to the subject matter of this
Agreement, nor any representations inducing the execution and delivery of the
Agreement, except the representations specifically stated.
The plaintiff’s argument that it relied on inducing representations of the brochure or other statements
is contrary to the quoted provision in the Development Agreement. See, Clore v. Village Inc., 1986
WL 4950 (Tenn. Ct. App. April 18, 1986), and such evidence is not admissible under the Parol
Evidence Rule.
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The relief sought by the Complaint is:
That the Court declare the defendants negligently, wrongfully and/or recklessly failed
to provide adequate consultation, design, construction, engineering, architectural,
supervisor, and personal services for the benefit of the plaintiff, with such services
failing to meet the applicable standard of care for such professional services, and the
breach of their obligations to plaintiff as set forth herein.
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As to the issue of fraudulent misrepresentation, the elements of fraudulent
misrepresentation for which an agent will be personally liable to third parties are: (1) the
representation of an existing or past fact; (2) the representation was false when made: (3) the
representation was in regard to a material fact; (4) the false representation was made either
knowingly or without belief in its truth or recklessly; (5) the plaintiff reasonably relied on the
misrepresented material fact; and (6) the plaintiff suffered damage as a result. Metropolitan Gov’t
of Nashville and Davidson County v. McKinney, 852 S.W.2d 233, 237 (Tenn. Ct. App. 1992).
Plaintiff’s action for alleged fraudulent misrepresentation fails for two reasons. It is
mandatory that circumstances constituting fraud must be pled with particularity, and the complaint
is deficient on that ground. Tenn.R. Civ. P. 9.02. Further, plaintiff’s reliance on brochures and oral
representations to establish misrepresentation is misplaced because such evidence as has been noted
contradicts the written contract which plaintiff entered for the construction of its clinic. See
Whelchel Co. Inc., v. Ripley Tractor Co., Inc., 900 S.W.2d 691 (Tenn. Ct. App. 1995).
For the foregoing reasons, we affirm the Judgment of the Trial Court and remand,
with the cost of the appeal assessed to The Center for Digestive Disorders and Clinical Research,
P.C.
______________________________
HERSCHEL PICKENS FRANKS, P.J.
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