James L. Davidson v. Jeremy Howard Johnson ( 2024 )

10/25/2024
IN THE COURT OF APPEALS OF TENNESSEE
AT NASHVILLE
September 5, 2024 Session
JAMES L. DAVISON ET AL. v. JEREMY HOWARD JOHNSON ET AL.
Appeal from the Chancery Court for Rutherford County
No. 22CV-373 Bonita Jo Atwood, Judge
___________________________________
No. M2024-00412-COA-R3-CV
___________________________________
Appellants filed a complaint for declaratory judgment and breach of contract to enforce a
purchase and sale agreement, which was allegedly entered by and between Appellants and
Appellees. In their answer, Appellees asserted, as an affirmative defense, that Appellants
had no standing to enforce the contract because they were not parties to it. On Appellees’
motion for summary judgment, the trial court concluded that Appellants were not parties
to the contract and had no standing to bring an action to enforce it. Discerning no error,
we affirm.
Tenn. R. App. 3 Appeal as of Right; Judgment of the Chancery Court
Affirmed and Remanded
KENNY ARMSTRONG, J., delivered the opinion of the court, in which ANDY D. BENNETT
and JEFFREY USMAN, JJ., joined.
R.H. Pursell and Edward A. Hadley, Nashville, Tennessee, for the appellants, James L.
Davison, and Rachel B. Davison.
L. Gilbert Anglin and L. Garrett Anglin, Murfreesboro, Tennessee, for the appellees,
Jeremy Howard Johnson, and Brandi Lee Johnson.
OPINION
I. Background
On November 24, 2021, James L. Davison and Rachel B. Davison (together,
“Appellants”) signed a Purchase and Sale Agreement (the “Agreement”) for property
located at 5740 Johnson Road in Murfreesboro, Tennessee (the “Property”). Although
Appellants signed the Agreement above the “Buyer” signature lines, they were not listed
as the “Buyer[s]” in the body of the Agreement; the Davison Family Trust (the “Trust”)
was listed as the “Buyer.” While Appellants are co-trustees of the Trust, there is no
language to indicate that they signed the Agreement in their fiduciary capacity. In the
Agreement, the sellers were listed as Jeremy Howard Johnson and Brandi Lee Johnson
(together, “Appellees”).1
On November 29, 2021, Appellees informed the Trust/Appellants that Appellees
were unwilling to move forward with the sale of the Property. On January 13, 2022,
Appellees re-asserted that they were not selling the Property. On January 18, 2022,
Appellants’ attorney sent a letter to Appellees’ attorney asserting that a valid contract for
sale existed between Appellants, individually, and Appellees. On January 21, 2022,
Appellees’ attorney responded to the letter stating that there was no binding and
enforceable contract between these parties.
On March 4, 2022, Appellants filed a complaint for declaratory judgment and
breach of contract in the Chancery Court for Rutherford County, Tennessee (the “trial
court”). Therein, Appellants alleged that they submitted the Agreement to Appellees and
Appellees accepted Appellants’ offer to purchase the Property. Appellants also alleged
that they were purchasing the Property in their individual capacity. Furthermore, they
alleged that there was a genuine dispute concerning the “proper construction of the
language and meaning of the Agreement” and asked the trial court to determine that a valid
and enforceable agreement existed between the parties. Appellants also alleged that
Appellees breached the enforceable agreement by refusing to allow various inspections of
the Property and by failing to close on the sale of the Property. Appellants asked the trial
to order specific performance of the Agreement, requiring Appellees to sell the Property to
Appellants. In the alternative, Appellants asked for damages of $500,000.00.
On May 10, 2022, Appellees filed an answer denying that a valid and binding
contract existed between the parties. As an affirmative defense, Appellees also asserted
that Appellants lacked standing to bring the cause of action because the Trust, as opposed
to the Appellants individually, was the “Buyer”.
On May 4, 2023, Appellees filed a motion for summary judgment arguing that
Appellants lacked standing to sue to enforce the Agreement on behalf of themselves
individually because they were not parties to the Agreement. On June 5, 2023, Appellants
filed a response to the motion. In the response, Appellants agreed that summary judgment
was appropriate, but they argued that the trial court should conclude that Appellants,
individually, were the buyers under the Agreement. As such, Appellants argued that the
1
Although it appears that Mr. Johnson accepted the offer to purchase by his signature on the Agreement,
the parties debate whether Ms. Johnson accepted the offer. Ms. Johnson’s signature does not appear within
the box stating that the seller accepts the offer; rather, her signature appears next to the line showing that
she acknowledged receipt of the Agreement. Whether Ms. Johnson accepted the offer is not at issue in this
appeal.
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trial court should enforce the Agreement. Alternatively, Appellants cited Tennessee Code
Annotated section 35-15-1010(a) for the proposition that, even if the Trust was the buyer,
Appellants had personal liability under the Agreement and, as such, had standing to enforce
it. Appellants argued that, if they had personal liability under the Agreement, they had
standing to enforce it.
On September 28, 2023, the trial court heard the motion for summary judgment. On
October 4, 2023, Appellees submitted additional briefing. On October 13, 2023,
Appellants filed a response to same.
By order entered February 20, 2024, the trial court granted Appellees’ motion for
summary judgment. Relying on Shams Properties, LLC v. All Natural Lawns &
Landscapes, LLC, No. M2021-01543-COA-R3-CV, 2023 WL 2998872 (Tenn. Ct. App.
Apr. 19, 2023), discussed further infra, the trial court concluded that the language in the
Agreement was clear and unambiguous and did not indicate that Appellants, individually,
were the buyers. Rather, the trial court concluded that the Trust was the buyer. Because
the Agreement was clear and unambiguous, the trial court did not look beyond its four
corners and concluded that Appellants did not have standing to enforce the Agreement.
The trial court also found Appellants’ alternative argument concerning Tennessee Code
Annotated section 35-15-1010(a) to be unpersuasive. Specifically, the trial court
concluded that “[t]here is no case law that stands for [Appellants’ alternative argument]
and [found] that in the context of trust law, there is a difference between having personal
liability under a contract and having standing to enforce it when a trustee fails to disclose
their fiduciary capacity.” Appellants filed a timely appeal.
II. Issues
Appellants raise three issues for review, as stated in their brief:
1. Whether the trial court erred by ruling as a matter of law that T.C.A. 35-15-1010(a)
is inapplicable to this case.
2. Whether a trustee who signs a contract is personally liable on the contract pursuant
to T.C.A. 35-15-1010(a) when the trustee does not indicate the trustee’s fiduciary
capacity in the agreement.
3. Whether the trial court erred as a matter of law in finding the contract clear and
unambiguous and not considering extrinsic evidence to determine the intentions and
the parties to the agreement.
III. Standard of Review
A trial court’s decision to grant a motion for summary judgment presents a question
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of law. Therefore, our review is de novo with no presumption of correctness afforded to
the trial court’s determination. Bain v. Wells, 936 S.W.2d 618, 622 (Tenn. 1997). This
Court must make a fresh determination that all requirements of Tennessee Rule of Civil
Procedure 56 have been satisfied. Green v. Green, 293 S.W.3d 493, 514 (Tenn. 2009).
When a motion for summary judgment is made, the moving party has the burden of
showing that “there is no genuine issue as to any material fact and that the moving party is
entitled to a judgment as a matter of law.” Tenn. R. Civ. P. 56.04. The Tennessee Supreme
Court has explained that when the party moving for summary judgment does not bear the
burden of proof at trial, “the moving party may satisfy its burden of production either (1)
by affirmatively negating an essential element of the nonmoving party’s claim or (2) by
demonstrating that the nonmoving party’s evidence at the summary judgment stage is
insufficient to establish the nonmoving party’s claim or defense.” Rye v. Women’s Care
Center of Memphis, MPLLC, 477 S.W.3d 235, 264 (Tenn. 2015) (italics omitted).
Furthermore,
“When a motion for summary judgment is made [and] . . . supported as
provided in [Tennessee Rule 56],” to survive summary judgment, the
nonmoving party “may not rest upon the mere allegations or denials of [its]
pleading,” but must respond, and by affidavits or one of the other means
provided in Tennessee Rule 56, “set forth specific facts” at the summary
judgment stage “showing that there is a genuine issue for trial.” Tenn. R. Civ.
P. 56.06. The nonmoving party “must do more than simply show that there
is some metaphysical doubt as to the material facts.” Matsushita Elec. Indus.
Co., [Ltd. v. Zenith Radio Corp.], 475 U.S. [574,] 586, 106 S. Ct. 1348[(1986)]. The nonmoving party must demonstrate the existence of specific
facts in the record which could lead a rational trier of fact to find in favor of
the nonmoving party.
Rye, 477 S.W.3d at 265. With the foregoing in mind, we turn to the substantive issues.
IV. Analysis
Here, the core issue is whether Appellants had standing to file a complaint for
declaratory judgment and breach of contract to enforce the Agreement. Under the
Declaratory Judgment Act, a court has “the power to declare rights, status, and other legal
relations[.]” Tenn. Code Ann. § 29-14-102(a). “Any person interested under a . . . written
contract . . . may have determined any question of construction or validity arising under
the . . . contract . . . and obtain a declaration of rights, status or other legal relations
thereunder.” Tenn. Code Ann. § 29-14-103. In short, a complaint for a declaratory
judgment asks a court to “proclaim the rights of the litigants without ordering execution or
performance.” Colonial Pipeline Co. v. Morgan, 263 S.W.3d 827, 837 (Tenn. 2008)
(citing 26 C.J.S. Declaratory Judgments § 1 (2001)). “‘[A] plaintiff seeking a declaratory
judgment ‘must allege facts [in the complaint] which show he [or she] has a real, as
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contrasted with a theoretical, interest in the question to be decided and that he [or she] is
seeking to vindicate an existing right under presently existing facts.’’” Reguli v. Guffee,
No. M2015-00188-COA-R3-CV, 2016 WL 6427860, at *3 (Tenn. Ct. App. Oct. 28, 2016)
(quoting Johnston v. Swing, No. M2012-01760-COA-R3-CV, 2013 WL 3941026, at *5
(Tenn. Ct. App. July 26, 2013) (quoting Burkett v. Ashley, 535 S.W.2d 332, 333 (Tenn.
1976))).
The justiciability doctrine of standing is a threshold requirement for declaratory
judgment actions and is a viable defense to such actions. See Colonial Pipeline Co., 263
S.W.3d at 838; Reguli, 2016 WL 6427860, at *2. “The doctrine of standing is used to
determine whether a particular plaintiff is entitled to judicial relief.” Wood v. Metro.
Nashville & Davidson Cnty. Gov’t, 196 S.W.3d 152, 157 (Tenn. Ct. App. 2005) (citing
Knierim v. Leatherwood, 542 S.W.2d 806, 808 (Tenn. 1976); Garrison v. Stamps, 109
S.W.3d 374, 377 (Tenn. Ct. App. 2003)). As this Court has explained:
[The doctrine of standing] requires the court to determine whether the
plaintiff has alleged a sufficiently personal stake in the outcome of the
litigation to warrant a judicial resolution of the dispute. SunTrust Bank v.
Johnson, 46 S.W.3d 216, 222 (Tenn. Ct. App. 2000); Browning-Ferris
Indus. of Tennessee, Inc. v. City of Oak Ridge, 644 S.W.2d 400, 402 (Tenn.
Ct. App. 1982). To establish standing, a plaintiff must show: (1) that it has
sustained a distinct and palpable injury, (2) that the injury was caused by
the challenged conduct, and (3) that the injury is one that can be addressed
by a remedy that the court is empowered to give. City of Chattanooga v.
Davis, 54 S.W.3d 248, 280 (Tenn. 2001); In re Youngblood, 895 S.W.2d
322, 326 (Tenn. 1995); Metropolitan Air Research Testing Auth., Inc. v.
Metropolitan Gov’t, 842 S.W.2d 611, 615 (Tenn. Ct. App. 1992).
City of Brentwood v. Metro. Bd. of Zoning Appeals, 149 S.W.3d 49, 55-56 (Tenn. Ct.
App. 2004) (emphases added).
Concerning standing in the context of a contract dispute, “‘[g]enerally, contracts are
presumed to be ‘executed for the benefit of the parties thereto and not third persons.’’”
Elvis Presley Enterprises, Inc. v. City of Memphis, No. W2019-00299-COA-R3-CV, 2022
WL 854860, at *9 (Tenn. Ct. App. Mar. 23, 2022) (quoting Owner-Operator Indep.
Drivers Ass’n, Inc. v. Concord EFS, Inc., 59 S.W.3d 63, 68 (Tenn. 2001) (quoting Oman
Constr. Co. v. Tenn. Cent. Ry. Co., 370 S.W.2d 563, 572 (Tenn. 1963))). Although a third
party may seek to recover under a contract, “‘the third party bears the burden of proving,
from the terms of the contract or the circumstances surrounding its execution, that, at the
time of contracting, he [or she] was an intended third-party beneficiary of the contract.’”
Elvis Presley Enterprises, Inc., 2022 WL 854860, at *9 (quoting Wallis v. Brainerd
Baptist Church, 509 S.W.3d 886, 899 (Tenn. 2016)) (emphasis in original). Turning to
Appellants’ complaint, they make no argument that they are third-party beneficiaries of the
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Agreement. Rather, their entire argument centers on Appellants, individually, being parties
to the Agreement. Accordingly, the question is whether Appellants, individually, were
parties to the Agreement. If they were not, then they have failed to allege “a sufficiently
personal stake in the outcome of the litigation” and have no standing to enforce the
Agreement. City of Brentwood, 149 S.W.3d at 55 (internal citations omitted).
The trial court correctly noted that the Agreement is a contract and applied the rules
of contract interpretation. Concerning contract interpretation, this Court has explained:
It is a long-held canon of contract interpretation that when the contractual
language of an agreement is clear and unambiguous, the literal meaning
controls the outcome of the dispute. E.g. Dick Broad. Co., Inc. of Tenn. v.
Oak Ridge FM, Inc., 395 S.W.3d 653, 659 (Tenn. 2013); Bob Pearsall
Motors, Inc. v. Regal Chrysler-Plymouth, Inc., 521 S.W.2d 578, 580 (Tenn.
1975); Eleogrammenos v. Standard Life Ins. Co., 149 S.W.2d 69 (Tenn.
1941). In the recent case of Individual Healthcare Specialists, Inc. v.
BlueCross BlueShield of Tennessee, Inc., 566 S.W.3d 671 (Tenn. 2019),
the Tennessee Supreme Court examined Tennessee jurisprudence with
respect to the interpretation of contracts. The Court stated that, “[T]he
cardinal rule upon which all other rules hinge is that courts must interpret
contracts so as to ascertain and give effect to the intent of the contracting
parties consistent with legal principles.” 566 S.W.3d at 688. The Court
further emphasized that the “sole object” of the rules of contract construction
is “‘to do justice between the parties, by enforcing a performance of their
agreement according to the sense in which they mutually understood it at the
time it was made.’” Id. (quoting McNairy v. Thompson, 33 Tenn. 141, 149
(1853)) (other citations omitted) (emphasis added). To this end, Tennessee
courts “demonstrate a definite focus on the written words in the parties’
contract, but they also consider evidence related to the situation of the parties
and the circumstances of the transaction in interpreting those words.” Id. at
692. Nonetheless, the Court noted that there is a “strong strain of textualism
in Tennessee caselaw [that] demonstrates [a] resolve to keep the written
words as the lodestar of contract interpretation.” Id. at 694 (collecting cases).
The Court concluded that “Tennessee courts ‘give primacy to the contract
terms, because the words are the most reliable indicator—and the best
evidence—of the parties’ agreement when relations were harmonious, and
where the parties were not jockeying for advantage in a contract dispute.’ ”
Id. (quoting Feldman, 21 Tenn. Practice § 8:14).
Moorehead v. Tennessee Farmers Mut. Ins. Co., No. M2020-01319-COA-R3-CV, 2021
WL 2935454, at *4 (Tenn. Ct. App. July 13, 2021). Courts are to look beyond the four
corners of a contract only when the language in a contract is unclear or ambiguous.
Whitehaven Cmty. Baptist Church v. Holloway, 973 S.W.2d 592, 596 (Tenn. 1998) (“An
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elementary precept of contract law, however, is that a court will not look beyond the four
corners of a contract or to the parties’ intention when the language of the contract is clear.”)
(citations omitted).
The trial court relied on the reasoning in Shams Properties when it concluded that
the clear and unambiguous language of the Agreement showed that Appellants were not
the “buyers.” Shams Properties involved a dispute over a written commercial
lease/purchase agreement between a landlord and a tenant. 2023 WL 2998872, at *1. The
opening sentence of the lease identified the landlord as Mohammed Shams and the tenant
as All Natural Lawn and Landscapes, LLC (“All Natural”). Id. The lease set out the rights
and obligations of the landlord and the tenant, and All Natural was the only entity identified
as the tenant in the lease. Id. On the last page of the lease, the signatures of Mr. Shams
and Tanya Hans, a member of All Natural, appeared as shown below:
LANDLORD:
TENANT: TENANT:
By: -1; a LiA., 1-16-01-5
Id. at *2. Relevant here, a few years after the landlord and the tenant entered into the lease,
All Natural was administratively dissolved, but Ms. Hans continued to pay rent and
operated a landscaping and gardening business on the property. Id. Years later, Ms. Hans
incorporated said business as A Greener Way, LLC (“Greener Way”). Id. Ms. Hans never
requested or received written consent from the landlord to assign the lease to her,
individually, or to Greener Way. Id. Ten years later, the landlord sought to terminate the
lease, and Ms. Hans refused to vacate the property. Id. Relevant here, the landlord filed a
detainer warrant to recover possession of the property, and Ms. Hans filed a counter-
complaint seeking specific performance of the purchase option in the lease. Id. The
landlord filed an answer to the counter complaint and an amended petition for declaratory
judgment concerning whether the lease gave Ms. Hans a contractual right to exercise the
option to purchase the property in her individual capacity. Id. Relevant here, the landlord
filed a motion for summary judgment, arguing that Ms. Hans could not have exercised the
purchase option because she was not a party to the lease. Id. at *3. The trial court granted
the landlord’s motion for summary judgment, concluding that Ms. Hans, in her individual
capacity, was not a party to the lease because the lease clearly showed that All Natural was
the tenant, and the option to purchase was never assigned to Ms. Hans. Id.
Noting that Tennessee courts have previously considered the issue of whether a
person signs a document in an individual or representative capacity, the Shams Properties
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Court quoted In re Estate of Dickerson, 600 S.W.2d 714 (Tenn. 1980), for the proposition
that
[w]here an agreement naming in the body of the instrument the parties bound
thereby is signed by a third person not named therein, he [or she] cannot be
regarded as one of the principal obligors, and the question has frequently
arisen as to whether this constitutes a sufficient memorandum to bind him
[or her] as a guarantor or surety for the parties named. In such a case, since
oral evidence is necessary to show the undertaking of a person so signing, it
is generally held that there is not a sufficient memorandum of an agreement
to become surety or guarantor. Thus, where a person not named in a lease as
a party thereto signs the lease, it is held that to allow his [or her] liability as
a guarantor for the lessee to be established by oral evidence would be
violative of the statute [of frauds].
Shams Properties, 2023 WL 2998872, at *5 (quoting In re Estate of Dickerson, 600
S.W.2d at 717 (quoting 72 Am. Jur. 2d Statute of Frauds § 316 (1974))). The Shams
Properties Court went on to consider other cases involving similar issues. Shams
Properties, 2023 WL 2998872, at *5. The Shams Properties Court recognized that
Tennessee courts analyze the substance of contract provisions, i.e., the language used in a
contract, over the form, i.e., the way in which such contracts are signed. First, the Court
cited 84 Lumber Company v. Smith, 356 S.W.3d 380 (Tenn. 2011), finding that the
Tennessee Supreme Court “plac[ed] more significance on the language of the application
than on how [a party] signed it.” Shams Properties, 2023 WL 2998872, at *5.2 Indeed, in
84 Lumber, the Tennessee Supreme Court explained that “[i]n most cases, a representative
who signs a contract is not personally bound to the contract,” but he or she “may be
personally bound . . . when the clear intent of the contract is to bind the representative.”
84 Lumber Co., 356 S.W.3d at 382-83. Such intent must be determined from the contract
2
At issue in 84 Lumber was the following language immediately above the signature line:
BY SIGNING BELOW I HEREBY CERTIFY THAT I AM THE OWNER, GENERAL
PARTNER OR PRESIDENT OF THE ABOVE BUSINESS, AND I DO
UNCONDITIONALLY AND IRREVOCABLY PERSONALLY GUARANTEE THIS
CREDIT ACCOUNT AND PAYMENTS OF ANY AND ALL AMOUNTS DUE BY THE
ABOVE BUSINESS, AND THAT I HAVE READ ALL OF THE TERMS AND
CONDITIONS ON THE REVERSE SIDE OF THIS APPLICATION AND
UNDERSTAND AND AGREE TO THE SAME, AND THAT ALL OF THE
INFORMATION CONTAINED IN THIS APPLICATION IS TRUE AND CORRECT TO
THE BEST OF MY KNOWLEDGE.
84 Lumber Co., 356 S.W.3d at 381-82 (capitalization in original). The Supreme Court concluded that the
foregoing language was unambiguous and established that the individual signing the application agreed to
serve as the guarantor of the account. Id. at 383. The Supreme Court also noted other provisions in the
contract concerning terms and conditions that applied to both the “applicant” and the “personal guarantor.”
Id. From such language, the Supreme Court concluded that “the parties intended that the individual who
signed the contract agreed to be personally responsible for amounts owed on the contract.” Id.
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itself. Id. The Shams Properties Court then turned to MLG Enterprises, LLC v. Johnson,
507 S.W.3d 183 (Tenn. 2016), decided five years after 84 Lumber. The Shams Properties
Court noted that the Tennessee Supreme Court was “[c]ontinuing to develop the substance-
over-form principle set forth in 84 Lumber,” when it focused on the lease’s personal
liability provision and concluded that an individual’s second signature bound him
personally for the tenant’s obligations. Shams Properties, 2023 WL 2998872, at *6 (citing
MLG Enterprises, LLC, 507 S.W.3d at 188). “As the [MLG Enterprises] Court explained,
‘any attempt by [the individual] to avoid the plain meaning of the explicit provision for
personal liability by following his second signature with the words ‘for Mobile Master
Mfg. LLC’ was not effective to vitiate the clear intent of the Lease ‘that the individual who
signed the contract agreed to be personally responsible for amounts owed on the contract.’”
Shams Properties, 2023 WL 2998872, at *6 (citing MLG Enterprises, LLC, 507 S.W.3d
at 188) (quoting 84 Lumber, 356 S.W.3d at 383)).3
Applying the substance-over-form principle, the Shams Properties Court concluded
that the clear and unambiguous language of the lease demonstrated that the parties did not
intend for Ms. Hans to have a right to exercise the option to purchase because the lease
explicitly identified only All Natural as the tenant. Shams Properties, 2023 WL 2998872,
at *7. Differentiating the lease from the contracts at issue in 84 Lumber and MLG
Enterprises, the Shams Properties Court explained that the lease contained “no language
providing Ms. Hans with any personal rights or requiring her to personally assume any
obligations.” Id. “Furthermore, unlike the contracts at issue in 84 Lumber and MLG
Enterprises, the provisions of the [l]ease ma[d]e no reference whatsoever to Ms. Hans.”
Id.Turning back to the instant case, relying on Shams Properties, the trial court
concluded that Appellants “merely initialed and signed the Agreement” and that the “clear
and unambiguous language of the Agreement does not indicate that [Appellants] were
buyers under the Agreement.” Accordingly, the trial court concluded that Appellants did
not have standing to enforce it. We agree. The first paragraph of the Agreement reads:
1. Purchase and Sale. For and in consideration of the mutual covenants
herein and other good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, the undersigned buyer Davison Family
Trust (“Buyer”) agrees to buy and the undersigned seller Jeremy Howard
3
At issue in MLG Enterprises was the following language immediately above the signature line:
In consideration of Landlord entering into this Lease with Tenant, Richard L. Johnson
hereby agrees that he shall be personally liable for all of Tenant’s obligations under this
Lease and executes this Lease for this purpose.
MLG Enterprises, LLC, 507 S.W.3d at 187-88.
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Johnson and Brandi Lee Johnson (“Seller”) agrees to sell all that tract or
parcel of land, with such improvements as are located thereon, described as
follows: All that tract of land known as: 5740 Johnson Rd (Address)
Murfreesboro (City), Tennessee, 37127 (Zip)[.]
The Davison Family Trust is mentioned twice more in the Agreement. First, the
Agreement provides that the name on the deed to the Property would be listed as “Davison
Family Trust.” See Tenn. Code Ann. § 35-15-114(a) (“An estate in real property may be
acquired in the name of the trust . . . .”). Second, the Agreement provides that the Davison
Family Trust would purchase a limited home-protection plan to be funded at closing.
Appellants’ names appear only via their signatures and initials at the end of the contract
above the word “Buyer” as shown below:
WIRE FRAUD WARNING: Never trust wiring instructions sent via email. Cyber criminals are hacking email accounts
and sending emails with fake wiring instructions. These emails are convincing and sophisticated. Always independently
confirm wiring instructions in person or via a telephone call to a trusted and verified phone number. Never wire money
without double-checking that the wirin instructions are correct. NEVER ACCEPT WIRING INSTRUCTIONS FROM
YOUR AGENT OR BROKER. Buyer Initials <5.Z. Buyer Initials
Buyer hereby makes this offer.
cicr,ao rtrfSeQ ciztkag p etV0
tirzurt 335 P10 CST WW2% 3:42.1CST
"coves,e aves,sauvrso-Pon
11 71reieegl VAGatior.,
7.VING414,870
16
BUYER U1 ER
11/24/2021 o'clock0 am/ pm 11/2412021 at o'clock Dam/ Opm
Offer Date Offer Date
On review, there is no language in the Agreement that would indicate that Appellants were
purchasing the Property in their individual capacity or that they had any individual interest
in the Property. Indeed, the Agreement never references Appellants. Applying the
substance-over-form principles discussed above, we agree with the trial court that the clear
and unambiguous language of the Agreement demonstrates that the parties did not intend
for the Agreement to be between Appellees and Appellants, individually.4 Rather, the
language indicates that the Agreement was entered by and between Appellees and the
Trust, and that Appellants signed their names and initials as trustees of the Trust, even if
they made no such designation next to their signatures. This interpretation conforms to our
case law, which instructs that we analyze the substance of a contract’s provisions, i.e., the
language used, rather than the form, i.e., the way in which it is signed. Shams Properties,
2023 WL 2998872, at *6. Accordingly, we conclude that Appellants, individually, were
not parties to the Agreement. Because they were not parties to the Agreement, Appellants
do not have a “sufficiently personal stake in the outcome of the litigation.” City of
Brentwood, 149 S.W.3d at 55. In short, the trial court correctly determined that Appellants
4
Given that the language in the contract was clear and unambiguous, the trial court was correct not to
consider any evidence beyond the four corners of the contract. See Whitehaven Cmty. Baptist Church,
973 S.W.2d at 596.
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did not have standing to bring this lawsuit.5
Despite the foregoing, Appellants argue that Tennessee Code Annotated section 35-
15-1010(a) confers standing on them to enforce the Agreement. Issues involving statutory
interpretation present questions of law, In re Estate of Stringfield, 283 S.W.3d 832, 834
(Tenn. Ct. App. 2008), which we review de novo with no presumption of correctness.
Brunswick Acceptance Co., LLC v. MEJ, LLC, 292 S.W.3d 638, 642 (Tenn. 2008). When
applying any statute, a court’s duty is to ascertain and fully effectuate the “legislative intent
[of the statute], taking care not to broaden [it] beyond its intended scope . . . .” Womack
v. Corr. Corp. of Am., 448 S.W.3d 362, 366 (Tenn. 2014) (citing Shore v. Maple Lane
Farms, LLC, 411 S.W.3d 405, 420 (Tenn. 2013); Carter v. Bell, 279 S.W.3d 560, 564
(Tenn. 2009)). As the Tennessee Supreme Court has explained, “[o]ur analysis naturally
begins with the words used in the statute,” Womack, 448 S.W.3d at 366 (citing Shore, 411
S.W.3d at 420), and we must interpret those words under their “natural and ordinary
meaning in the context in which they appear and in light of the statute’s general purpose.”
Id. (quoting Mills v. Fulmarque, Inc., 360 S.W.3d 362, 368 (Tenn. 2012)).
We note that, in 2004, the Tennessee Legislature adopted the Uniform Trust Code
(“UTC”) to establish “a comprehensive code to govern trusts.” Williams v. Hardison, No.
M2022-01596-COA-R3-CV, 2024 WL 3657990, at *8 (Tenn. Ct. App. Aug. 6, 2024)
(quoting Tenn. Div. of United Daughters of the Confederacy v. Vanderbilt Univ., 174
S.W.3d 98, 113 n.18 (Tenn. Ct. App. 2005)). Tennessee Code Annotated section 35-15-
1010(a) mirrors section 1010(a) of the UTC. See Unif. Trust Code 2000 § 1010(a).
Relevant here, section 35-15-1010(a) provides:
Except as otherwise provided in the contract, a trustee is not personally
liable on a contract properly entered into in the trustee’s fiduciary capacity
in the course of administering the trust if the trustee in the contract
disclosed the fiduciary capacity.
Tenn. Code Ann. § 35-15-1010(a). Appellants argue that this section of the statute provides
that “[a] trustee must disclose the trustee’s fiduciary capacity in the contract to avoid
personal liability under the contract.” Appellants further argue that, because “there is no
language in or around [Appellants’] signatures designating any fiduciary or representative
capacity . . . [Appellants] would have personal liability under the Agreement, and therefore
have standing to enforce the Agreement.” We do not interpret the foregoing language in
the same manner as Appellants.
As the trial court explained, personal liability and standing are two distinct concepts.
This case focuses on whether Appellants had standing to bring a lawsuit to enforce the
5
The question of whether Appellants would have standing in a separate suit seeking the earnest money they
paid is outside the scope of this appeal.
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Agreement. As discussed at length above, we conclude they did not, and a review of
section 35-15-1010(a) does not persuade us otherwise. Turning to the words the
Legislature used, we first note that the title of section 35-15-1010 reads: “Limitation on
personal liability of trustee.” Tenn. Code Ann. § 35-15-1010. From the title alone, it
appears that the Legislature intended to employ section 35-15-1010 to limit a trustee’s
personal liability. Indeed, subsection (a) provides that a trustee is not personally liable on
a contract when he or she entered into it in the trustee’s fiduciary capacity while
administering the trust if the trustee disclosed such fiduciary capacity. Tenn. Code Ann. §
35-15-1010(a). Subsections (b) and (c) also limit a trustee’s personal liability under certain
circumstances. Subsection (b) provides that the “debts, obligations and liabilities incurred
by a trustee by reason of the ownership, management or control of trust property in the
trustee’s fiduciary capacity” are enforceable only against the trust without personal liability
being borne by the trustee. Tenn. Code Ann. § 35-15-1010(b). Similarly, subsection (c)
allows personal liability against a trustee for torts committed while administering the trust
only if the trustee is personally at fault due to the trustee’s willful misconduct. Tenn. Code
Ann. § 35-15-1010(c).6 Nowhere in the statute does the Legislature address a trustee’s
rights or standing to enforce a contract as Appellants argue and such interpretation would
have us broaden the statute beyond the Legislature’s intended scope. Womack, 448 S.W.3d
at 366 (citing Shore, 411 S.W.3d at 420; Carter, 279 S.W.3d at 564).
Tennessee case law interpreting section 35-15-1010 is limited, and the cases that
cite the statute are not helpful to our analysis. However, the official comments to the statute
lend some insight into how we should interpret it. Although official comments are not
binding, they are very persuasive in interpreting the statute to which they apply, and we
give them substantial deference. LeTellier v. LeTellier, 40 S.W.3d 490, 493, n.2 (Tenn.
2001). The comments first provide that section 35-15-1010 “generally provides more
protection against personal liability of a trustee than does the [UTC].” Tenn. Code Ann. §
35-15-1010(a), official comment. This comment lends further support to the presumption
that the Legislature’s intended purpose in enacting section 35-15-1010(a) is to protect
trustees from personal liability. The comments also provide:
This section is based on section 7-306 of the Uniform Probate Code.7
However, unlike the Uniform Probate Code, which requires that the contract
6
For completeness, we note that section 35-15-1010(d) provides:
A claim based on a contract entered into by a trustee in the trustee’s fiduciary capacity, on
an obligation arising from ownership or control of trust property, or on a tort committed in
the course of administering a trust, may be asserted in a judicial proceeding against the
trustee in the trustee’s fiduciary capacity, whether or not the trustee is personally liable for
the claim.
Tenn. Code Ann. § 35-15-1010(d).
7
Article VII of the Uniform Probate Code addressed selected issues of trust administration, including trust
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both disclose the representative capacity and identify the trust, subsection (a)
protects a trustee who reveals the fiduciary relationship either by indicating
a signature as trustee or by simply referring to the trust. The protection
afforded the trustee by this section applies only to contracts that are properly
entered into in the trustee’s fiduciary capacity, meaning that the trustee is
exercising an available power and is not violating a duty.
Tenn. Code Ann. § 35-15-1010(a), official comment (emphasis added). The foregoing
comment demonstrates the Legislature’s intention to provide broad protection to trustees.
Rather than requiring that a contract identify the trust and that the trustee identify their
representative capacity, section 35-15-1010(a) allows the trustee to complete one or the
other.
As discussed above, the substance of the Agreement shows that Appellants entered
into it in their representative capacities as trustees of the Trust. Although Appellants did
not sign their names “as trustees” of the Trust, the Trust is referenced throughout the
Agreement. So, while Tennessee Code Annotated section 35-15-1010(a) could apply to
protect Appellants from personal liability, it cannot be used to confer standing on them to
enforce the Agreement in their individual capacities.
V. Conclusion
For the foregoing reasons, we affirm the trial court’s order. The case is remanded
for such further proceedings as may be necessary and are consistent with this opinion.
Costs of the appeal are assessed to the Appellants, James L. Davison and Rachel B.
Davison. Execution for costs may issue if necessary.
s/ Kenny Armstrong
KENNY ARMSTRONG, JUDGE
registration, the jurisdiction of the courts concerning trusts, and the duties and liabilities of trustees. The
Uniform Trust Code was approved in 2000. In 2010, following the widespread enactment of the Uniform
Trust Code, Article VII of the Uniform Probate Code was withdrawn.
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