Roy Malone v. Scott Probasco ( 2003 )

IN THE COURT OF APPEALS OF TENNESSEE
AT KNOXVILLE
August 21, 2003 Session
ROY MICHAEL MALONE, SR., v. SCOTT L. PROBASCO, JR.,
Appeal from the County Circuit Court for Hamilton County
No.02-C-824 W. Frank Brown, III, Judge
FILED JANUARY 8, 2004
No. E2002-03135-COA-R3-CV
In this appeal from the Circuit Court for Hamilton County the Plaintiff/Appellant, Roy Michael
Malone, Sr., argues that the Trial Court erred in granting the Defendant/Appellee, Scott L. Probasco,
Jr., a summary judgment. We affirm and remand.
Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Circuit Court Affirmed; Cause
Remanded
HOUSTON M. GODDARD , P.J., delivered the opinion of the court, in which HERSCHEL P. FRANKS and
CHARLES D. SUSANO, JR., JJ., joined.
Michael E. Richardson, Chattanooga, Tennessee, for the Appellant, Roy Michael Malone
Charles J. Gearhiser, Chattanooga, Tennessee, for the Appellee, Scott L. Probasco, Jr.
OPINION
At some time in the 1980's Mr. Malone began purchasing tracts of real property in an area
of Chattanooga bordered by Martin Luther King Boulevard near the campus of the University of
Tennessee at Chattanooga (hereinafter “UTC'). Assertedly, Mr. Malone anticipated that UTC would
eventually seek to expand its campus into this area (hereinafter “the target area”) and that there
would be a resulting increase in the value of property located there. In 1988 Mr. Malone approached
American National Bank and Trust Company with the intent of securing a loan of funds which
would enable him to continue acquiring property in the target area at which time he was introduced
to Mr. Probasco who was then chairman of the bank's board of directors. Apparently the property
Mr. Malone was seeking to acquire constituted a slum area of Chattanooga that had experienced a
high crime rate and Mr. Probasco indicates in testimony that he was strongly in favor of its
redevelopment. Consequently, Mr. Probasco began personally lending Mr. Malone money which
allowed Mr. Malone to continue purchasing property there.
In 1989 Tommy Haymes, an accountant who had in the past been employed by Mr. Malone,
drafted a proposed partnership agreement relative to the business relationship of the parties. Mr.
Haymes testifies that this agreement was drafted at the request of Mr. Probasco and that it was his
understanding, based upon discussions he had with Mr. Probasco, that under this agreement Mr.
Malone and Mr. Probasco “would have an equal ownership in the company.” The agreement was,
however, never executed.
In May of 1990 Mr. Probasco and Mr. Malone signed an agreement denominated
“Management Agreement” which designates Mr. Malone as “Manager” and Mr. Probasco’s attorney,
Thomas Caldwell, as “Trustee” for “a Principal known to Manager (‘Trustee’).” It is not disputed
that Mr. Probasco is the “Principal” referred to in the Management Agreement. The Agreement
recognizes that Mr. Probasco has invested substantial sums of money in, and assumed substantial
mortgage loans with regard to, properties in the target area and that these properties, along with other
properties to be transferred to Mr. Malone, are held in trust by Mr. Malone for the benefit of Mr.
Probasco. The Agreement further sets forth the duties of Mr. Malone regarding such matters as
collection of rents, repair maintenance, payment of taxes and maintenance of insurance. The
Agreement additionally provides that , “[a]s full compensation for his services as Manager and his
services in assembling the Properties, Manager will receive a sum equal to Fifty Percent (50%) of
the amount of proceeds realized from the ultimate sale or other disposition of the Properties in excess
of the total Investment made by Trustee’s Principal, or on his behalf, in the Properties.” The
Agreement also states that Mr. Malone, as Manager, acknowledges that he has no ownership interest
in the subject properties and that he “is merely an agent with respect to the Properties and that no
joint venture, partnership, or other similar arrangement exists between Manager and Trustee or
Trustee’s Principal.” (Emphasis added.) Finally, the agreement acknowledges that Manager is an
independent contractor.
On December 31, 1991, Mr. Probasco conveyed by quitclaim deed the properties at issue to
the University of Chattanooga Foundation (hereinafter “UCF.”)for the future use of UTC. Mr.
Probasco confirms that Mr. Malone “didn’t much want” him to give the property away and in his
brief Mr. Malone states that he had wanted to continue to acquire properties in the target area and
hold them as he felt that they would greatly appreciate in value in the future. Mr. Malone attests that
one of the quitclaim deeds which apparently bears his signature was, in fact, not signed by him and
that another of these deeds, if signed by him, was not signed in December of 1991, but in April of
1992. Mr. Malone asserts that he actually learned of the transfer of the properties to UCF from a
newspaper article dated December 31, 1991.
On April 22, 1992, Mr. Malone and Mr. Probasco executed a document titled “Letter of
Agreement” which purports to confirm an oral agreement which the two reached on December 23,
1991, at a conference in Mr. Probasco’s office. This Letter of Agreement recites that Mr. Malone
and Mr. Probasco agreed that the Management Agreement is replaced by the understandings reached
by the parties in the December meeting including the following: 1) that all property in the target area
managed by Mr. Malone as trustee for Mr. Probasco’s benefit would be contributed by Mr. Probasco
to UCF on or before December 31, 1991; 2) “that the entire management fees to which Malone
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would be entitled were to be computed in the manner outlined in Paragraph 4 of this Agreement
instead of the manner set forth in the Management Agreement.” Paragraph 4 of the Letter of
Agreement provides that, in full payment of management fees to which Mr. Malone was entitled
under the May 1990 Management Agreement, Mr. Probasco would transfer to Mr. Malone the
beneficial interest in, and income and any sales proceeds from, the management, sale or disposition
of, certain remaining properties in excess of outstanding loans against them. In addition, Paragraph
4 provides that Mr. Malone will pay the outstanding loans on these properties and, in return for
services required of him in that regard, and to further compensate him for fees due him under the
Management Agreement, Mr. Probasco will himself make the monthly loan payments due on the
properties for a limited specified period of time in an amount totaling $41,365.80; 3) that Mr.
Probasco “would make certain loans to Malone to assist him in carrying the remaining debt on the
property and to assist him in making certain purchases of property on Houston Street“ and 4) that
“[t]his agreement replaces all prior understandings of the parties whether oral or in writing.”
On April 25, 2002, Mr. Malone filed a complaint in the Circuit Court for Hamilton County
in which he alleges, inter alia, the following: 1) that Mr. Malone and Mr. Probasco became partners
after their meeting in 1988 1; 2) that Mr. Probasco contributed the properties in the target area to
UCF without the consent of Mr. Malone and over his objection; 3) that Mr. Probasco received a
direct benefit from giving the properties to UCF because he was able to take a resulting federal
income tax deduction and that Mr. Probasco received an indirect benefit as a stockholder of Suntrust
Bank because, as a customer of Suntrust, UCF is charged fees based upon the value of its assets; 4)
that the December 30, 1991, quitclaim deeds by which Mr. Probasco transferred the properties to
UCF and which purport to bear the signature of Mr. Malone and his ex-wife were, in fact, not signed
by Mr. Malone or his ex-wife and were ineffective to convey title; 5) that when Mr. Malone and Mr.
Probasco met in December of 1991 Mr. Probasco proposed that, if Mr. Malone would allow him
to convey the properties to UCF, he would relinquish ownership in other properties the partnership
had acquired, loan Mr. Malone monies in the future and, if the properties conveyed to UCF “became
worth what Malone was telling Probasco they would become worth, that Probasco would ‘take care
of Malone, and see to it that Malone was compensated for one- half of the increase in value’”; 6) that
“throughout this relevant time frame” Mr. Probasco owed Mr. Malone certain fiduciary duties as a
result of their partnership and because of “the special and unique relationship of the parties”; 7) that
Mr. Probasco breached his fiduciary duty as Mr. Malone’s partner by failing to disclose to Mr.
Malone that he was serving as a Trustee for UCF and by failing to disclose his relationship with
Suntrust Bank; 8) that Mr. Probasco assured Mr. Malone that he “would always be treated as a 50/50
partner” and that Mr. Malone “relied upon the partnership representations of Probasco” when he
signed the Letter of Agreement which altered the parties legal relationship, that, accordingly, Mr.
Probasco assurances that the parties’ partnership relationship would continue constitutes fraud in the
inducement and because of these misrepresentations the Letter of Agreement should be set aside;
9) that, both before and after the transfer of the subject properties to UCF, the value of the properties
has substantially appreciated and “[o]ne half of such appreciation in value should be awarded
1
Although the complaint also alleges that Mr. M alone and M r. Probasco signed a partnership agreement there
is no evidenc e of such agreement and apparently M r. Malone does not assert that alleg ation in this appeal .
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Malone as an equal partner in the Malone/Probasco Partnership, or in the alternative should be
awarded Malone based upon the representations of Probasco that Malone would always be entitled
to a fifty (50%) percent share of the profits.”; and 10) that in giving the subject properties to the
Foundation, Mr. Probasco breached the parties’ partnership agreement and, therefore, Mr. Malone
is entitled to one-half of the appreciated value of the properties.
On August 19, 2002, Mr. Probasco filed a motion for summary judgment and after a hearing
before the Trial Court on October 30, 2002, the Court granted the motion for summary judgment and
dismissed Mr. Malone’s complaint based upon the following grounds as set forth in its order of
November 6, 2002:
1. Relative to the allegation of forged deeds, in connection with the recision
and/or cancellation of documents, to be entitled to equitable relief, one must be
diligent in pursuing a remedy. The record shows that the plaintiff was aware, as
a result of a newspaper article dated December 31, 1991, that properties which
were the subject of the deeds in question were transferred to the American
National Bank on behalf of the [University of Chattanooga] Foundation.
2. The parties’ agreements relative to the targeted property dated May __, 1990
and April 22, 1992, clearly indicate that the plaintiff was a manager acting for a
principal rather than a partner, as alleged by the plaintiff. The April 22, 1992
Letter of Agreement is obviously an effort to resolve any outstanding agreements
and issues between the parties, and specifically states that it replaces all other
agreements, oral or written as to the targeted property. The record is obvious that
plaintiff was having financial difficulties with the defendant assuming debt as
shown by the May 1990, April 22, 1992, and also documents at Tab 11 filed in
support of the motion, and the defendant acting as Trustee for the defendant.
3. The Court is of the opinion that the three year statute of limitations for fraud
at T.C.A.§ 28-3-105 and/or the six year statute of limitations at T.C.A. 28-3-109
(for breach of contract/partnership) are applicable. The record shows that the
plaintiff either knew or should have known that he was not going to receive the
profits that he claims defendant promised him, because the property itself was in
the hands of a third party as of December 31, 1991, and the record shows the
plaintiff was aware of that fact on or about that date.
4. For much the same reasons as stated in the proceeding paragraph, the doctrine
of laches applies as well. The record shows that the defendant is prejudiced by his
fading memory, and the rights of third parties, the University of Tennessee at
Chattanooga and the University of Chattanooga Foundation, have intervened in
the ten years since the April 22, 1992 Letter of Agreement.
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5. The Court is of the opinion that the Statute of Frauds may also apply, insofar
as defendant’s alleged promise relates to an interest in real estate (the targeted
area) and the alleged promise was possibly one that could not be performed in one
year.
6. The Court notes that there is no written partnership agreement. Therefore, the
claims of partnership based upon the alleged oral agreements of the parties
directly contradict the May __, 1990 Management Agreement (and other
documents executed on that date), and are therefore barred by the application of
the parol evidence rule. Likewise, the alleged promise made by defendant to
induce plaintiff’s signature on the April 22, 1992 Letter of Agreement to the effect
that plaintiff’s claims relative to the targeted area survived that agreement both
directly contradict that agreement and are also barred by the application of the
parol evidence rule.
In the instant appeal Mr. Malone contends that the Trial Court erred in granting Mr.
Probasco’s motion for summary judgment and presents four issues for our review which we restate
as follows:
1) Did the Trial Court err in failing to address Mr. Malone’s allegation that a fiduciary
relationship existed between himself and Mr. Probasco?
2) Did the Trial Court improperly apply the parol evidence rule to exclude evidence offered
by Mr. Malone as regards the Management Agreement of May, 1990 and the Letter of Agreement
of April, 1992?
3) Did the Trial Court err in concluding that Mr. Malone and Mr. Probasco were not
partners?
4) Did the Trial Court err in concluding that Mr. Malone’s causes of action were time barred
under the statutes of limitation set forth at T.C.A 28-3-105 and T.C.A. 28-3-109 and under the
doctrine of laches?
The standard governing our review of a trial court's decision to grant a motion for summary
judgment is well settled. Because the trial court's judgment involves purely a question of law, it is
not entitled to a presumption of correctness. Carvell v. Bottoms, 900 S.W.2d 23 (Tenn. 1995). Our
sole task in reviewing such a judgment is to determine whether the requirements of Rule 56 of the
Tennessee Rules of Civil Procedure have been met. Mason v. Seaton, 942 S.W.2d 470 (Tenn. 1997).
As stated by the Supreme Court of this State in Byrd v. Hall, 847 S.W.2d 208 (Tenn. 1993)
at page 214:
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Rule 56 comes into play only when there is no genuine issue as to any material
fact and the moving party is entitled to a judgment as a matter of law. Thus, the
issues that lie at the heart of evaluating a summary judgment motion are: (1)
whether a factual dispute exists; (2) whether the disputed fact is material to the
outcome of the case; and (3) whether the disputed fact creates a genuine issue for
trial. (emphasis in original)
The first issue we address is whether the Trial Court erred in failing to address Mr. Malone’s
allegations that a fiduciary relationship existed between himself and Mr. Probasco. Mr. Malone
contends that the sole reason he signed the Management Agreement and Letter of Agreement was
that Mr. Probasco told him to do so and that Mr. Probasco always told him that he would look after
his (Mr. Malone’s) interest and that the two would be partners notwithstanding what was stated in
the written agreements. Mr. Malone asserts that the alleged fiduciary duty he was owed by Mr.
Probasco “imposed upon Probasco the obligation of the utmost good faith and integrity in his
dealings with Malone, in respect to their business transactions.” Apparently Mr. Malone’s argument
is that Mr. Probasco breached this alleged fiduciary duty by making false assurances regarding the
nature of their business relationship and the manner in which Mr. Malone would be compensated
for his services. We also note that Mr. Malone’s complaint asserts that Mr. Probasco breached a
fiduciary duty by failing to disclose his position as a trustee for UCF and by failing to disclose his
relationship with Suntrust Bank.
In making his argument that there was a fiduciary relationship between himself and Mr.
Probasco, Mr. Malone relies upon unspecified references to the record set forth in his Statement of
Facts asserting that “[g]iven the factual background, as previously outlined in this Brief, it is
uncontradicted in this record that Probasco owed Malone a fiduciary duty.” As best we can
ascertain, the references in the Statement of Facts to which Mr. Malone alludes are those which
indicate that Mr. Probasco “liked” Mr. Malone and wanted to see him “make it and make it on his
own.” Mr. Malone also apparently relies upon references to testimony that he and Mr. Probasco had
conversations wherein they had discussed the possibility that Mr. Probasco might be Mr. Malone’s
biological father, a fact which Mr. Probasco denies. The only specific references to the record made
by Mr. Malone in the argument portion of his brief relate to assertions that he signed the
Management Agreement and the Letter of Agreement because he was told do so by Mr. Probasco
and that certain promises were made to Mr. Malone by Mr. Probasco to induce his signature.
Neither of these latter assertions, if true, constitutes evidence that there was a fiduciary relationship
between the parties.
T.R.A.P 27(a)(7) provides that the brief of the appellant shall contain “[a]n argument, which
may be preceded by a summary of argument, setting forth the contentions of the appellant with
respect to the issues presented, and the reasons therefor, including the reasons why the contentions
require appellate relief, with citations to the authorities and appropriate references to the record
(which may be quoted verbatim) relied on.” (Emphasis added.)
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Mr. Malone has cited no legal authority in support of his argument that there was a fiduciary
relationship between himself and Mr. Probasco. As we have noted on prior occasion, the failure to
cite authority for propositions argued on appeal constitutes a waiver of the issue. Rhea County v.
Town of Graysville, an unreported opinion of this Court filed in Knoxville on July 25, 2002, and
State v. Brown, 795 S.W.2d 689 (Tenn. Crim. App. 1990). Accordingly, this issue is waived.
The next issue we address is whether the Trial Court improperly applied the parol evidence
rule to exclude oral evidence related to the interpretation of the May 1990 Management Agreement
and the April 1992 Letter of Agreement.
The parties in this case acknowledge that “[a]s a general rule, parol evidence is inadmissible
to contradict, vary, or alter a written contract when the written instrument is valid, complete and
unambiguous, absent fraud or mistake or any claim or allegations thereof.” Whelchel Company, Inc.
v. Ripley Tractor Company,Inc., 900 S.W.2d 691 (Tenn. Ct. App. 1995).
With respect to the Management Agreement, Mr. Malone argues that the parol evidence rule
should not have been applied to exclude his testimony “that he was induced to sign the Management
Agreement by the promises of Probasco that it would not change the parties’ partnership
relationship, and would not change the eventual disposition of the party2.” In support of this
argument Mr. Malone cites Whelchel, ibid., for the proposition that the parol evidence rule does not
exclude oral testimony if the parties have an underlying agreement or collateral contract. Mr. Malone
asserts that he and Mr. Probasco “had an underlying or collateral agreement that they would share
equally in the profits eventually derived from the subsequent disposition of the properties, after both
of them got their investments back.” While we did recognize the admissibility of parol evidence as
to collateral agreements in Welchel, we also noted that “[p]arol proof of ‘inducing representations
‘ or ‘collateral agreements’ to the written contract must be limited to subject matter which does not
contradict or vary terms which are plainly expressed in the writing.” (Emphasis in original.) The
Management Agreement specifically provides that no partnership arrangement exists between the
parties and any oral evidence that Mr. Malone seeks to introduce to prove that the parties were
partners is obviously in direct contradiction with this provision. The Management Agreement also
provides that, as compensation for his services as manager, Mr. Malone will receive “Fifty Percent
(50%) of the amount of proceeds realized from the ultimate sale or other disposition of the Properties
in excess of the total Investment made by Trustee’s Principal, or on his behalf, in the Properties.”
Mr. Malone asserts that his testimony does not contradict the subject matter of the Management
Agreement with respect to the matter of “disposition of the properties” and argues that this provision
of the Management Agreement has the same practical effect as the alleged partnership agreement.
Although Mr. Malone asserts that the parol evidence he seeks to introduce does not contradict the
contract “but merely supplements and/or explains” it, he does not state in what manner the
Management Agreement will be supplemented or explained by such evidence. Mr. Malone’s
argument that the Trial Court erred in excluding parol evidence regarding the Management
2
Although Mr. M alone uses the word “party” we do not understand that reference and w e will assum e that this
is an erro r and that he intended to use the wo rds “partnership property” or “property” instead.
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Agreement is without merit. We additionally note as follows as regards this matter. As set forth
above, the final judgment appealed from in this case decrees that the claims of partnership based
upon alleged oral agreements contradict both the Management Agreement and the Letter of
Agreement and are, therefore, barred under the parol evidence rule. The judgment also provides that
“the alleged promise made by defendant to induce plaintiff’s signature on the April 22, 1992 Letter
of Agreement to the effect that plaintiff’s claims relative to the targeted area survived that agreement
both directly contradict that agreement and are also barred by the application of the parol evidence
rule.” However, the judgment does not specifically address the matter of whether parol evidence is
admissible with respect to Mr. Malone’s rights under the Management Agreement regarding
disposition of the property in the target area and, accordingly, we question whether, under T.R.A.P.
3, that matter is appropriately raised in this appeal. In any event, as stated, we find Mr. Malone’s
argument as to this matter to be without merit.
We next address Mr. Malone’s argument that the parol evidence rule should not be applied
with respect to the Letter of Agreement signed by the parties on April 22, 1992. Mr. Malone presents
four grounds for this argument.
First, Mr. Malone asserts that the Letter of Agreement states that it memorializes an oral
agreement involving the transfer of real estate which was reached by the parties on December 23,
1991. Mr. Malone asserts that “[u]nder our Statute of Frauds, an oral agreement to convey real estate
is not even enforceable and under Probasco’s position, he transferred the real estate at issue with
nothing more than Malone’s alleged consent. Of course, Malone denies that he consented to the
transfer.” Mr. Malone offers no explanation as to why his assertion that the parties’ oral agreement
to convey the properties was unenforceable is relevant to the issue of admissibility of parol evidence.
He does not cite any authority to support his apparent argument that these assertions relative to the
statute of frauds prove that the Trial Court erred in applying the parol evidence rule with respect to
the Letter of Agreement. As previously noted, the failure to cite authority for propositions argued
on appeal constitutes a waiver of the issue. Rhea County, ibid. Furthermore, although Mr. Malone
denies that he consented to the transfer of the properties, he does not deny that he signed the Letter
of Agreement which acknowledges that did agree to the transfer. Any testimony offered to
contradict that acknowledgment is properly excluded under the parol evidence rule.
Second, Mr. Malone asserts that the Letter of Agreement is ambiguous in that it provides
that Mr. Probasco “would make certain loans to Malone to assist him in carrying the remaining debt
on the property and to assist him in making certain purchases of property on Houston Street.” Mr.
Malone argues that “[t]he general statement that Probasco ‘would make certain loans ‘to Malone is
very ambiguous and therefore parol evidence, at a minimum, should be admissible to explain and
supplement the written document.” Even assuming there is ambiguity with respect to the nature of
these loans, Mr. Malone fails to show how parol evidence of an alleged partnership between the
parties or parol evidence of Mr. Probasco’s alleged agreement to pay him fifty percent of the
increased value of the subject properties upon their disposition is relevant in explaining such asserted
ambiguity.
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Mr. Malone’s third argument that the parol evidence rule should not apply is based upon his
assertion that he alleged both fraud and mistake in this case. In support of this assertion as to
allegations of fraud, Mr. Malone directs us to testimony previously referenced in his brief showing
that “certain promises” were made to him by Mr. Probasco. Specifically, the record shows that Mr.
Malone testified to the effect that Mr. Probasco told him that, if he would go ahead and sign the
Letter of Agreement, “he and I were partners and I would be treated right and that I would get 50
percent of the increased value in the donated partnership properties....” In his complaint Mr. Malone
states that Mr. Probasco’s assurances that Mr. Malone “would always be treated as a 50/50 partner
and would always be entitled to his share of the profits of the Malone/Probasco Partnership.” The
complaint asserts that these assurances constitute fraud in the inducement sufficient to set aside the
Letter of Agreement.
In Oak Ridge Precision Industries, Inc. v. First Tennessee Bank National Association, 835
S.W.2d 25 (Tenn. Ct. App. 1992) we stated as follows at page 29:
The elements of fraud are an intentional misrepresentation with regard to
a material fact; knowledge of the representation’s falsity, i.e., it was made
“knowingly” or “without belief in its truth” or “recklessly” without regard to its
truth or falsity; the plaintiff reasonably relied on the misrepresentation and
suffered damages; and the misrepresentation relates to an existing or past fact.
Stacks v. Saunders, 812 S.W.2d 587, (Tenn. App. 1990). Claims based on
promissory fraud must embody a promise of future action without the present
intention to carry out the promise. Id. at 593.
In light of the above language from Oak Ridge Precision Industries, Inc. we construe
Mr.Malone’s cause of action to be for promissory fraud. We further stated in Oak Ridge Precision
Industries, Inc., ibid. that promissory fraud “must be established by evidence other than either the
failure to keep the promise or the subjective impression of the promisee.” See also Stacks v.
Saunders, 812 S.W.2d 587 (Tenn. Ct. App. 1990). Mr. Malone testifies that he believes that Mr.
Probasco intended to keep the promise when he made it in April of 1992.
Q. ... So my question is, at the time you say he made this promise do you have any
reason to believe that he didn’t fully intend to keep it?
A No. I don’t have no reason to believe he didn’t fully intend to keep it. I thought
he would have kept his promise to me.
Q You still believe that today? Today as you sit here you would think he intended
to keep that promise when he made it?
A Do I think back then - yes, he intended to keep the promise. You did get that
I said intended to keep the promise back then? Okay.
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Mr. Malone’s cause of action for promissory fraud fails based upon his own testimony that
when Mr. Probasco made the alleged promise he had the present intention of keeping it.
Mr. Malone also asserts that “issues with respect to mistake are present, since Malone has
testified that he did not sign one of the December 30, 1991, Quitclaim Deeds and that the other
Quitclaim Deed, if signed, was not signed until April of 1992.” Mr. Malone fails to explain how
his alleged failure to sign one deed and his alleged signing of the other deed in April of 1992
constitute mistake and he otherwise references no evidence of mistake.
Finally, Mr. Malone argues that the Trial Court’s exclusion of parol evidence regarding the
Letter of Agreement was erroneous because there was an underlying or collateral agreement between
the parties. Mr. Malone’s argument in this regard is set forth in his brief as follows:
Mr. Probasco made inducing representations to Malone which induced Malone to
sign the April 1992 Letter of Agreement. The April 1992 Agreement is vague, but
it does express that Probasco agrees, in return for Malone’s agreement to let
Probasco covey away real estate, which Probasco apparently had conveyed away
four months prior, to do additional things and make additional loans for Malone
in the future. This underlying collateral agreement can certainly be explained by
Malone and Haymes’ testimony with respect to the future promises made to
Malone by Probasco. Therefore, the testimony of Malone and Haymes with
respect to the promise made by Probasco does not contradict the subject matter of
the contract but does explain and supplement it.
As acknowledged by Mr. Malone in the Management Agreement he signed in May of 1990,
his position in the business relationship between himself and Mr. Probasco was that of manager. As
previously noted, paragraph four of the Letter of Agreement sets forth the means by which the entire
management fees to which he was entitled under the Management Agreement will be computed.
The Letter of Agreement does not provide that Mr. Malone will receive a portion of the increased
value of the properties conveyed to UCF. Accordingly, parol evidence of Mr. Probasco’s alleged
promise that Mr. Malone would receive a portion of the increased value of such properties directly
contradicts the Letter of Agreement and is, therefore, barred under the parol evidence rule. Welchel,
ibid.
The next issue presented for our review is whether the Trial Court erred in concluding that
Mr. Malone and Mr. Probasco were not partners. In its order granting summary judgment the Trial
Court found that the Management Agreement signed by Mr. Malone in May of 1990 indicates that
Mr. Malone “was a manager acting for a principal rather than a partner.” The Court further found
that there is no written partnership agreement and that “the claims of partnership based upon the
alleged oral agreements of the parties directly contradict the May __, 1990 Management Agreement
... and are, therefore, barred by the application of the parol evidence rule.” Our review of the record
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compels us to the conclusion that these findings are well supported and arguments of Mr. Malone
to the contrary are without merit.
The final issue presented for our review is whether the Trial Court erred in concluding that
Mr. Malone’s causes of action were time barred under the statutes of limitations set forth at T.C.A.
28-3-105 and T.C.A. 28-3-109 and under the doctrine of laches. In light of our conclusions relative
to summary judgment, we choose to pretermit the issue relative to statutes of limitations and laches.
For the foregoing reasons we affirm the judgment of the Trial Court and remand for
collection of costs below. Costs of appeal are adjudged against Roy Michael Malone, Sr. and his
surety.
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HOUSTON M. GODDARD, PRESIDING JUDGE
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