Lisa Denise Church v. Shannon Wayne Brown

IN THE COURT OF APPEALS OF TENNESSEE
AT KNOXVILLE
Assigned on Briefs December 10, 2014
LISA DENISE CHURCH v. SHANNON WAYNE BROWN
Appeal from the Circuit Court for Cumberland County
No. CC12013CV5715 John J. Maddux, Jr., Judge
No. E2014-00942-COA-R3-CV-FILED-FEBRUARY 23, 2015
This appeal arises from a claim of fraud in a post-divorce context. Lisa Denise Church
(“Plaintiff”) filed a complaint for fraud in the Circuit Court for Cumberland County (“the
Trial Court”) against her ex-husband, Shannon Wayne Brown (“Defendant”), alleging that
he had misled her during their divorce regarding the valuation of his business interest. This
suit followed an earlier, unsuccessful action on the issue of fraud filed by Plaintiff under
TRCP 60 in the divorce action which had yielded a final judgment after appeal. The Trial
Court granted Defendant’s motion for summary judgment, finding, inter alia, that Plaintiff’s
fraud claim was barred by res judicata. Plaintiff appealed to this Court. We hold that
Plaintiff’s current lawsuit for fraud is a distinct cause of action, namely, common law fraud,
and is not barred by res judicata. However, as the issue of fraud already had been decided
in the earlier post-divorce Rule 60 proceedings, the doctrine of collateral estoppel prevents
Plaintiff from re-litigating the issue of fraud. We affirm the judgment of the Trial Court as
modified.
Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Circuit Court
Affirmed as Modified; Case Remanded
D. M ICHAEL S WINEY, J., delivered the opinion of the Court, in which J OHN W. M CC LARTY
and T HOMAS R. F RIERSON, II, JJ., joined.
W. I. Howell Acuff, Cookeville, Tennessee, for the appellant, Lisa Denise Church.
Kelly A. Tollett and Brett A. York, Crossville, Tennessee, for the appellee, Shannon Wayne
Brown.
OPINION
Background
In 2008, Plaintiff and Defendant executed a Marital Dissolution Agreement
(“the MDA”). The parties acknowledged in the MDA complete disclosure of all marital and
separate property. The parties agreed that Plaintiff would be divested of any interest she had
in a business called Cumberland Components, Inc. Any interest in this business Plaintiff had
would vest in Defendant. In August 2008, the Probate and Family Court for Cumberland
County (“the Probate Court”) granted the parties an absolute divorce incorporating the MDA
by reference.
In November 2010, Plaintiff petitioned the Probate Court to revisit several
issues concerning the MDA. Plaintiff simultaneously filed a motion in the Probate Court
pursuant to Rule 60.02 of the Tennessee Rules of Civil Procedure to allow discovery on the
issue of the valuation of Cumberland Components, Inc. Plaintiff alleged that she had entered
the MDA under the belief that the business interest was of no positive value. Plaintiff
alleged that she had now come to understand that the business interest had a value in the
vicinity of $800,000. In January 2011, the Probate Court held, among other things, that
Plaintiff’s Rule 60.02 motion was “not well taken and is hereby denied.”
Plaintiff appealed this decision of the Probate Court to the Tennessee Court of
Appeals. In our opinion Brown v. Brown, No. E2011-00421-COA-R3-CV, 2012 WL
1267872, at *13 (Tenn. Ct. App. April 13, 2012), Rule 11 perm. app. denied August 15,
2012, this Court in affirming the Probate Court stated: “[W]e find no evidence of record to
support the assertions of [Plaintiff] as to the improper valuation of [Defendant's] company
or that she was fraudulently induced to sign the MDA.”
In September 2012, Plaintiff filed an amended motion based on Rule 60 in the
Probate Court yet again attempting to revisit these issues. In June 2013, Plaintiff filed the
complaint in the Trial Court that is the origin of this appeal. Plaintiff alleged fraud and
sought monetary damages. Defendant filed a motion for summary judgment. In March 2014,
a hearing was conducted on Defendant’s motion. In April 2014, the Trial Court entered an
order granting Defendant’s motion for summary judgment. In relevant part, the Trial Court
stated:
Based upon the record, it appears to the Court that the issue of fraud
raised by the Plaintiff has been or could have been litigated by these same
parties in the prior proceedings of the Probate and Family Court of
Cumberland County, Tennessee, the Tennessee Court of Appeals, and the
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Supreme Court of Tennessee, which have all rendered final judgments as to
the subject matter at hand. The Plaintiff’s claim of fraud is, therefore, barred
under the doctrine of res judicata.
Further, the Court finds that the issue of fraud as alleged by the
Plaintiff, if fraud indeed existed, would take the form of intrinsic fraud, as it
would be within the subject matter already litigated. Based upon current law
and precedent, in order for this Court to sustain a claim of fraud in the current
matter, the Plaintiff would have to make a claim of extrinsic fraud. The
Plaintiff has failed to make a claim as to matters not at issue in prior litigation
which prevented her from having a fair hearing. Therefore, Plaintiff has no
basis for relief or re-litigation of the issue of fraud.
Plaintiff timely appealed to this Court.
Discussion
Although not stated exactly as such, Plaintiff raises the following issues on
appeal: 1) whether the Trial Court erred in holding that Plaintiff’s claim of fraud was barred
by res judicata; 2) whether the Trial Court erred in holding that Plaintiff had to make a claim
of extrinsic fraud to go forward; and, 3) whether the doctrine of collateral estoppel bars
Plaintiff’s claim. Defendant raises his own issue on appeal: whether Plaintiff’s appeal is
frivolous and he, therefore, should recover his attorney’s fees.
This case was disposed of by summary judgment. With regard to summary
judgments, this Court explained in Estate of Boote v. Roberts:
The trial court’s resolution of a motion for summary judgment is a
conclusion of law, which we review de novo on appeal, according no
deference to the trial court’s decision. Martin v. Norfolk S. Ry. Co., 271
S.W.3d 76, 84 (Tenn. 2008). Summary judgment is appropriate only when the
moving party can demonstrate that there is no genuine issue of material fact,
and that it is entitled to judgment as a matter of law. Tenn. R. Civ. P. 56.04;
see Hannan v. Alltel Publ’g Co., 270 S.W.3d 1, 5 (Tenn. 2008); Byrd v. Hall,
847 S.W.2d 208, 214 (Tenn. 1993).
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This action was filed [after July 1, 2011]. Therefore, the trial court was
required to apply the summary-judgment standard set forth in Tennessee Code
Annotated § 20-16-101.1 That statute provides:
In motions for summary judgment in any civil action in
Tennessee, the moving party who does not bear the burden of
proof at trial shall prevail on its motion for summary judgment
if it:
(1) Submits affirmative evidence that
negates an essential element of the nonmoving
party’s claim; or
(2) Demonstrates to the court that the
nonmoving party’s evidence is insufficient to
establish an essential element of the nonmoving
party’s claim.
Tenn. Code Ann. § 20-16-101 (Supp. 2012).2
Estate of Boote v. Roberts, No. M2012-00865-COA-R3-CV, 2013 WL 1304493, at **8-9
(Tenn. Ct. App. March 28, 2013), no appl. perm. appeal filed (footnotes in original but
renumbered). As a practical matter, this case presents pure questions of law.
We first address whether the Trial Court erred in holding that Plaintiff’s claim
of fraud was barred by res judicata. In Lien v. Couch, 993 S.W.2d 53 (Tenn. Ct. App. 1998),
this Court discussed various aspects of the doctrine of res judicata. We stated:
Res judicata is a claim preclusion doctrine that promotes finality in
litigation. See Moulton v. Ford Motor Co., 533 S.W.2d 295, 296 (Tenn. 1976);
Jordan v. Johns, 168 Tenn. 525, 536-37, 79 S.W.2d 798, 802 (1935). It bars
a second suit between the same parties or their privies on the same cause of
1
Section 20-16-101 is applicable to all cases filed on or after July 1, 2011.
2
Section 20-16-101 was enacted to abrogate the summary-judgment standard set forth in Hannan,
which permitted a trial court to grant summary judgment only if the moving party could either (1)
affirmatively negate an essential element of the nonmoving party’s claim or (2) show that the nonmoving
party cannot prove an essential element of the claim at trial. Hannan, 270 S.W.3d at 5. The statute is
intended “to return the summary judgment burden-shifting analytical framework to that which existed prior
to Hannan, reinstating the ‘put up or shut up’ standard.” Coleman v. S. Tenn. Oil Inc., No. M2011-01329-
COA-R3-CV, 2012 WL 2628617, at *5 n.3 (Tenn. Ct. App. July 5, 2012).
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action with respect to all the issues which were or could have been litigated in
the former suit. See Richardson v. Tennessee Bd. of Dentistry, 913 S.W.2d
446, 459 (Tenn. 1995); Collins v. Greene County Bank, 916 S.W.2d 941, 945
(Tenn. Ct. App. 1995).
Parties asserting a res judicata defense must demonstrate that (1) a court
of competent jurisdiction rendered the prior judgment, (2) the prior judgment
was final and on the merits, (3) the same parties or their privies were involved
in both proceedings, and (4) both proceedings involved the same cause of
action. See Lee v. Hall, 790 S.W.2d 293, 294 (Tenn. Ct. App. 1990). A prior
judgment or decree does not prohibit the later consideration of rights that had
not accrued at the time of the earlier proceeding or the reexamination of the
same question between the same parties when the facts have changed or new
facts have occurred that have altered the parties' legal rights and relations. See
White v. White, 876 S.W.2d 837, 839-40 (Tenn. 1994).
The principle of claim preclusion prevents parties from splitting their
cause of action and requires parties to raise in a single lawsuit all the grounds
for recovery arising from a single transaction or series of transactions that can
be brought together. See Bio-Technology Gen. Corp. v. Genentech, Inc., 80
F.3d 1553, 1563 (Fed. Cir. 1996); Hawkins v. Dawn, 208 Tenn. 544, 548, 347
S.W.2d 480, 481-82 (1961); Vance v. Lancaster, 4 Tenn. (3 Hayw.) 130, 132
(1816). The principle is subject to certain limitations, one of which is that it
will not be applied if the initial forum did not have the power to award the full
measure of relief sought in the later litigation. See Davidson v. Capuano, 792
F.2d 275, 279 (2d Cir. 1986); Carris v. John R. Thomas & Assocs., P.C., 896
P.2d 522, 529-30 (Okla. 1995); see also Rose v. Stalcup, 731 S.W.2d 541, 542
(Tenn. Ct. App. 1987) (holding that a subsequent action was not barred
because the initial court did not have jurisdiction over the claim). Thus, the
Restatement of Judgments points out:
The general rule [against relitigation of a claim] is largely
predicated on the assumption that the jurisdiction in which the
first judgment was rendered was one which put no formal
barriers in the way of a litigant's presenting to a court in one
action the entire claim including any theories of recovery or
demands for relief that might have been available to him under
applicable law. When such formal barriers in fact existed and
were operative against a plaintiff in the first action, it is unfair
to preclude him from a second action in which he can present
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those phases of the claim which he was disabled from presenting
in the first.
Restatement (Second) of Judgments § 26(1)(c) cmt. c (1982).
Lien v. Couch, 993 S.W.2d at 55-56.
The first three elements of res judicata appear to be met in this case. It is much
less clear, however, that the fourth element concerning the same cause of action is met. To
resolve this question, we look to the law regarding avenues of relief from a judgment on the
basis of fraud. Regarding relief from a judgment on the basis of fraud, this Court, analyzing
the Tennessee Supreme Court opinion of Black v. Black, 166 S.W.3d 699 (Tenn. 2005),
stated:
Black offers a thorough analysis of the availability of actions for fraud both
within and outside the parameters of Rule 60.02. A party may seek relief from
judgment within one year of entry of the judgment in the case in which the
fraud occurred, or through an independent action for fraud on the court of an
extrinsic nature under the “savings” clause of the Rule. Apart from Rule
60.02, a party may bring a claim for damages based on another party's
fraudulent conduct in a common-law action for fraud.
Warwick v. Warwick, No. E2011-01969-COA-R3-CV, 2012 WL 5960850, at *9 (Tenn. Ct.
App. Nov. 29, 2012), no. appl. perm. appeal filed.
Based on Warwick and Black, it appears that Plaintiff had an additional avenue
of relief outside of Rule 60. Indeed, Plaintiff is adamant in her briefs on appeal, and the
record reflects, that this latest complaint is not rooted in Rule 60. Rather, this current matter
concerns an allegation of common law fraud. In our judgment, therefore, Plaintiff’s earlier
failed legal efforts under Rule 60 do not preclude her under res judicata from proceeding on
this distinct common law fraud cause of action. Res judicata does not bar Plaintiff’s present
cause of action, and we modify the Trial Court’s judgment accordingly. Our holding on this
issue moots and subsumes the second issue on appeal regarding extrinsic versus intrinsic
fraud.
We next address whether the doctrine of collateral estoppel bars Plaintiff’s
claim. Our Supreme Court has stated:
In the context of a civil case, collateral estoppel (also known as issue
preclusion) has been described as an extension of the doctrine of res judicata
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(also known as claim preclusion) and applicable only when “it affirmatively
appears that the issue involved in the case under consideration has already
been litigated in a prior suit between the same parties, even though based upon
a different cause of action, if the determination of such issue in the former
action was necessary to the judgment....” Id. at 631-32. In Gibson v. Trant, 58
S.W.3d 103 (Tenn. 2001), this Court cited the promotion of finality in the
litigation, the conservation of judicial resources, and the prevention of
inconsistent decisions as policy considerations warranting the application of
collateral estoppel in civil litigation. Id. at 113; see also Standefer v. United
States, 447 U.S. 10, 23, n. 18, 100 S. Ct. 1999, 64 L. Ed. 2d 689 (1980) (stating
that the policy behind the doctrine lies in the inherent reliability of final
judgments). Like the federal courts, this Court has held that the party seeking
to invoke collateral estoppel as a bar to litigation “has the burden of proving
that the issue was, in fact, determined in a prior suit between the same parties
and that the issue's determination was necessary to the judgment.” Dickerson
v. Godfrey, 825 S.W.2d 692, 694 (Tenn. 1992); see also Home Ins. Co. v.
Leinart, 698 S.W.2d 335, 336 (Tenn. 1985). A final judgment is essential
under either collateral estoppel or res judicata. Richardson v. Tenn. Bd. Of
Dentistry, 913 S.W.2d 446, 459 (Tenn. 1995).
State v. Thompson, 285 S.W.3d 840, 848 (Tenn. 2009).
We, therefore, move from claim preclusion to issue preclusion. Plaintiff argues
that she could not have brought the present action in the Probate Court because of that court’s
limited power to award the amount of damages Plaintiff seeks. Plaintiff also argues that the
Probate Court made no express findings on the issue of fraud in the valuation of Defendant’s
business interest.
The record reflects that Plaintiff previously pursued this issue of Defendant’s
alleged fraud in the parties’ divorce action. The Probate Court found Plaintiff’s Rule 60
motion not well taken, the Tennessee Court of Appeals affirmed the Probate Court, and the
Tennessee Supreme Court denied permission to appeal. We already have quoted from the
respective courts their resolution of Plaintiff’s fraud allegations, including this Court’s
statement that “[w]e find no evidence of record to support the assertions of [Plaintiff] as to
the improper valuation of [Defendant’s] company or that she was fraudulently induced to
sign the MDA.” Even if not to Plaintiff’s satisfaction, this issue of fraud already has been
litigated and resolved finally. Therefore, the doctrine of collateral estoppel precludes
Plaintiff from re-litigating the specific issue of fraud, even though she rightly argues this is
a new and distinct cause of action. We affirm the Trial Court’s judgment granting
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Defendant’s motion for summary judgment, albeit we modify that judgment such that the
rationale is collateral estoppel and not res judicata.
The final issue we address is Defendant’s contention that this appeal is
frivolous. “‘A frivolous appeal is one that is ‘devoid of merit,’ or one in which there is little
prospect that [an appeal] can ever succeed.’” Morton v. Morton, 182 S.W.3d 821, 838 (Tenn.
Ct. App. 2005) (quoting Industrial Dev. Bd. of the City of Tullahoma v. Hancock, 901
S.W.2d 382, 385 (Tenn. Ct. App. 1995)). Plaintiff’s issues were not so devoid of merit as
to be frivolous, and indeed, while she ultimately lost, she prevailed on some issues on appeal.
We decline to find this appeal frivolous.
Conclusion
The judgment of the Trial Court is affirmed as modified, and this cause is
remanded to the Trial Court for collection of the costs below. The costs on appeal are
assessed against the Appellant, Lisa Denise Church, and her surety, if any.
_________________________________
D. MICHAEL SWINEY, JUDGE
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