# FILED September 13, 1996 Cecil W. Crowson Ap pellate Cou rt Clerk B&L CORPORATI

ON d/b/a ) U.C. CONSU

LTAN TS, ) ) Plaintiff /Appella nt, ) Appeal No.01-A-01-9506-CH-00274 ) v. ) Davidson Chancery No. ) 94-261-I ) ) STEPHEN L. THOMAS and ) THOMAS & THORNGREN, INC., ) ) ) Defend ants/Appe

llees. )

COURT OF APPEALS OF TENNESSEE MIDD LE S EC TION AT N AS HVILLE

ON APPEAL FROM THE CHANCERY COURT FOR DAVI DSON COUNTY HONORABLE I

RVIN H. KI

LCREASE JR., CHANCELL OR

J. MICHAEL JACOBS STEVEN B. McCLOUD ATTORNEYS FOR THE APPELL ANT 311 White Bridge Rd. Nashville, TN 37209
CRAIG V. GABB ERT C. MAR K P ICKR ELL ATTORNEYS FOR THE APPELL EES 1800 First American Center 315 Dead erick St. Nashville, TN 37238

AFFIRMED I

N PART, REVERSED IN PART, AND REMANDED

SAMUEL L . LEWIS, JUDGE1 Appeal no. 01- A-01- 9412-CH- 00563, B&L C orp. d/b/a U.C. Consultants v. Thom as & Thorng ren, et al. 199 5 Tenn.A

pp. LE XIS 5 55, (Ten

n.Ct.A pp. 8/2 5/95). 2 

### OPINION

I
.
This is the second appeal of a case involving a N ashville business, B&L Corpora tion, and four of its former employ ees. In 1994 B& L sued the four in the Chancer y Court for Davidson County claiming they

violated covenants not to compete, breached fiduciar y duties, converte d U.C. property, unfa

irly competed, and be

nefited from unjust enrichment. The chancery court grante d one def

endant, K ris Thorn gren, summary

judgmen t. B&L then appe aled to th

is court, and we reversed the chance ry court’s judg

ment on several issues. 1 Later, the chanc ery cour t grante d summary

judgmen t in favor of defe ndant Step

hen Thoma s. The ch ancery court al so granted the corporate def

endant Thomas & Thorngren I nc.’s motion for summary judg ment. B&L appe als from those judgments. B&L argues that the chancery

court erred in ruling that Mr. Thomas’ employment ag

reement expired prior to his departure from B& L. B&L also faults the chancery court’s decision to grant Stephen Thomas and Thomas & T horngren summary judgment, and to award Stephen Thomas his legal fees and costs. We have determined that Stephen Thomas, and Thomas & Thorngren I nc. are not entitled to summary judgment as to all of the issues in their case. Therefore, we pa rtially rever se the chancery court.

II.
The Appe llant, B& L Corp oration, (d/b/a U. C. Consulta nts) provides unem

ploy ment cost control and Targeted Job Tax Credit consultation to a national client base. Michael Br odbine organized B&L

in 1981, and has been its primary manager since its inception.2 An em ploye e stock

owners hip plan

is a v ehicle t

o transf er owne rship of a business to i ts employees via a sale of the c ompany’s stock. 3 B&L hired Stephe

n Thomas on January 9, 1982. On June 10, 1982, Thomas signed a n employment ag

reement and began working as a vice-president. Mr. Thomas also became a 20% shareholder and a member of U.C.’s board of directors.

Mr. Thomas’ positio n as vice-pres ident and di rector afforded h im direct acces s to B&L clients. He was privy

to customer lists, contract rates, contract expiration dates, and other confidential information involving B&L ’s competitive secrets.
In late 1992, Michael Br

odbine approached Steve Thomas and Kris Thorng ren, also a vice-president at B&L . Brodbine discussed with them the possibility of B &L employ ees purchasing the company

using an employee stock ownership plan. 2 Evidently, purchasing the company in the man

ner Br odbine de scribed

did not inte

rest Thomas or Tho

rngre n for in December of 199 3, they formed their own corporati on. Initially they named the ent ity K&S Services Inc. Mr. Thomas testified in his deposition that he and Mr . Thorngren rented office space, had telephone service installed, and a rranged for some office

equipment. Thomas and Th or ng re n a ls o e xt en de d o ff er s o f e mp lo yme nt to De fe nd an t G we n B en so n a nd Je an Do nn el ly, then both employees of B &L as were Thomas and Thorngren.

On Januar

y 4, 1994, Thomas and Th orngre n approa ched Mr. Brodbine with an o ffer to buy the company . Brodbine refused the offer, a nd an intense discussion ensued which culminated in Thomas and Thorngren leaving B&L’s off

ices. It is unclear whe

ther Brodbine fired Th orngre

n and Thom as, or whether the two quit o f their own accor d. Howev er, both Thomas and Thorngren admitted to having cle aned out their desks and removed all personal possessions at B&L bef

ore the meeting with Brodbine.
Neither Mr. Thomas nor Mr. Thorngren disputes that their c orporation is in direct competition with B&L. B& L claims that the competition has wrongf ully resulted in many contrac t cancellations, a

nd estimat

es that Th omas & Thorngre n have us urped 50 % perce nt of its4

gross revenues.

B&L sued its forme

r employees on January

26, 1994. B&L’s c omplaint sought monetary relief and injunctive relief on seven gr ounds. Count one alleges that Thomas, along with the other individual defendants Kris Thorngren, Gwe n Benson, and Jean Donnellyviolated noncompetition agreements with B&L . Count two alleges breach of fiduciary duties by the defendants. Count three alleges that the def endants converted personal property owned by B &L. Count four alleges tortious interference with contr act. Count five alleges unfair competition. Count six alleges unjust enrichment, and count seven requests injunctive relief.
B&L alleg ed two causes of action against Thomas & Thorngren I

nc.: first, that Thomas and Thorngren procured the br each of certain contracts; and sec ond, that Thomas & Thorngren, have been unjustly e

nriched.
The chancery

court determined that the non-compete covenants sig ned by Stephen Thomas expired by 1986. On Fe bruary 3, 1995, the

court granted defendant Thomas’ and Thomas & Thorngren I

nc.’s motion for summary judg ment. Finally, on Marc

h 10, 1995, the court granted defendant Thomas’ motion for an award of attorney s fees and costs. B&L then initiated this appeal.

III
.

This cour t review s summary

judgmen t decision s de novo upon the record with no presumption of correctness. Brenner v. Textron Aerostructures, 874 S.W.2d 579, 582 (Tenn.App. 1993). We evaluate whether the requirements of Te nn.R.Civ.P. 56 have been met. Those re quireme

nts includ e: 1) whe ther a f actual d ispute exist s, 2) whe

ther the disputed f

act is material to the outcome of the case, and 3)whethe r the disputed material fact creates a g enuine5

issue for trial. Id. citing Byrd v. Hall, 847 S.W.2d 208 (Tenn. 1993). In ma king the se determinations, the court must view the evidence in a light most favorable to the non-moving party and a

llow all reasonable inferences in his favor. Id.
Summary judgment is appropr iate when there is no genuine issue of disputed materia l fact an d the movin g party is entitle d to judgm

ent as a m atter of

law. Ten

n.R.Civ.P. 5 6.03; Byrd v. Hall at 214. A fact is “materi al if it must be decid ed in orde r to reso lve the su

bstantive claim or defense at which the motion is directed.” Id. at 215. A “gen uine issue ” of mate

rial fact exists if “a reasonable jury

could legitimately r

esolve that fact in favor of one side or the other.” Id. The party se eking summary judgment must demonstrate to the court that there is no genuine issues of material fact for trial and that they are entitled to judgment as a matter of law. Id. If the moving pa

rty carrie s this burd

en, the no n-moving

party must then c ome forw ard with s pecific facts that rebut the moving party ’s argument and establish the existence of a g enuine issue of material fact. Id. Mere allegations or gene ral denials will not suffice to rebut a moving party ’s well-supported arguments. Tenn.R.Civ.P. 56.05.

IV.
The chancery

court determined that Stephen Thomas’ employ ment contract terminated after one y ear and that the non-competition provision of that contract expired no more than two ye ars afte r that da te. Mr. Th omas’ emp loy ment ag reemen t provide d in part:
Term of Employment The term of Executive’s employ ment hereunder commenced on the 9th day of January , 1982, and shall continue thereafter for a pe riod of one (1) y ear, or until the next regular annual shareholde rs meeting, now scheduled for the third Wednesday in October, 1982, at which time the contract may be renewed or reneg otiated between the Corporation’s Board of Director’s a nd Executive.

Covenant Not to Compe

te6 In consideration of the employ ment hereunder, Executive hereby agrees that during the ter

m of his employment by

the Corporation and for a period of two (2) y ears af ter the te rmination of said employment, Executive will not directly or indirectly own, ha

ve a proprie tary interest of any kind in, be

employ ed by , or serv e as a consultant to or in any other c apacity, e ngage in the business of tax compensation consultation without the express written consent of the Corporation. Executive agrees that breac h of this covenant conta ined h erein s hall r esult in irr eparab le and conti nuin g damage to the Corporation for which there is no adequate reme dy at law and in the event of any

breach of any

such agreement, the Corporation shall be entitled to injunctive and such other an further relief, including

damage s, as may

be prope r. This co venant sh all not apply if Corporation ref uses to offer to extend this contract after the expiration of its terms.
We believe the chancery

court was correct in finding that the employ ment contract terminated after one y

ear. The contract states the “ term of Executive’s employment hereunde r commenced on the 9th day of January 1982, and shall continue thereafter for a period of (1) year, or until the next regular annual shareholders’ mee ting . . . at which time the contract may be renewed or renegotiate d between the Corporation’s Board of Directors and Executive.” B&L ’s Board of Directors never r enewed or renegotiated Mr . Thomas’ contract. Thus, we consider the term of Mr. Thomas’ contract to have been one year, e xpiring on January 9, 1983.

The non- competiti on provisi on in the c ontract states “ during the term of his employment by the Corporation and for a period of two (2) years after the termination of said employment , . . .” Since the plain meaning of the contract sug gests that the term of Mr. Thomas’ contract wa s one yea r, a two yea

r period after termination of said emplo yment would conclude on January 9, 1985. We believe the contract contains no ambiguity concerning expiration and therefore do not consult any leg al rules of construction. We note however, that if we did seek a rule of construction, we would observe precedent which disfa vors non-competition agreements, and strictly construes them ag ainst the employer. Allright Auto Parks, Inc. v. Berry, 409 S.W.2d 361 (Tenn. 1966).
Mr. Thomas and Mr. Thorngren acted in c oncert in their final day s at B&L and a fterwards in their ne

w enterp rise. L egally and fac tually

this appe al and the

Thorng ren appe al are nearly identical. Therefore, the law of the ca se doctrine applies. This doctrine provides we must follow7

a final decision or decree on a for mer appeal in later proceeding s of the same case as long as the evidence remains substantially the same. City of Chattanooga v. Rogers, 299 S.W.2d 660 (Tenn. 1957); Jones v. Jones, 784 S.W.2d 349, 351 n .1 (Tenn.Ct.App. 1989). The law of the case doctrine is ba sed on the public pol

icy agains t reopen

ing matte rs that ha ve been finally decided. Thus, we will apply the same holdings to the Thomas appeal as we did in Throng ren appeal as the remaining issues are indistinguisha ble.
With reg ard to whether Mr . Thomas breache d his fiduc iary duty , conver

ted tangible propert y of B&L , or was u

njustly enriche d, we must r

everse the chancery

court’s decision

to grant M r. Thomas ’ motion fo

r summary

judgmen t. We rema

nd the ca se for a

trial on th

e merits in complete conformity with our pr evious ruling. As to the issues of Thomas procuring the breach of B&L client co ntracts a

nd enjoy ing unjus t enrich

ment, we a

gain ho ld that thos e inquiries should be incorporated into the breach of fiduciary duty examination at trial.
The chancery

court granted summary

judgment for Thomas & Thorngre n Inc. B&

L had alleged two bases for holding Thomas & Thorngren I

nc. liable: procurement of breach of c ontract and unjust

enrichm ent. Thoma s & Thorn gren I nc. does not have a

fiducia ry relation ship with B&L , and thus o we them no duty . Howeve

r, we lea ve open th

e questio n of whet

her Thoma s & Thorngren I

nc. has been unjustly e

nriched or whether it has procured the bre ach of B&L ’s contracts. Therefore, we re verse the chancery

court and remand this issue for trial.
We note that in the Thorngren appeal we held that we would not recognize a claim for the conversion of intangible property . Nevertheless in its brief B&L states that Mr.Thomas “has
conv erte d the

busin ess g ood w ill wh

ich U .C. ha s dev elop ed wi th sev eral of its clients.” We maintain that there is no authority in Tenne ssee for a claim of conversion of intang ible property. Thus we affirm the chancery court to the extent it granted Mr. Thomas’ motion for summary judgment as to the conversion of intangible proper ty.

V.8

Lastly , we turn to the issue of attorney s fees and court costs. The chancer y court awa

rded Mr. Thomas $37,149.94 to defray his legal expenses. The court stated that “under the ter ms of Thomas’ employment contra ct, the losing party

to a suit involving enforcement of the contract must pay the winning pa

rty’s attorney s fees.” As in the Thorngren appe al we disagree and reverse. The employ

ment agreement expired on January 9, 1983, and no longer governs the conduct of the parties. The chancery court also taxed costs to B&L. The disc retion exercised by the chancery

court in a

djudging costs is sub

ject to re view in the

appella te court s which sh ould not reverse except in case of clear a buse. J.M. Huber Corp. v. Square Enterprises Inc., 645 S.W.2d 410, 416 (Tenn.Ct.App. 1982); Bransetter v. Poynter, 222 S.W.2d 2 14 (Tenn.C t.App. 1949). We are not inclined to disturb the award in this instance.
For the foregoing the judg ment of the trial court is reversed in part, and aff irmed in part. The c ase i s rem ande d to th e tri al co urt f or fu rthe r pro cee ding s con siste

nt wit h this opini on. We tax costs on appeal to the Appellees.

___________________________________ SAM UEL

L. LE WI S, J.

CONCUR:

______________________________________ HENRY F. TODD, P.J. M. S.

______________________________________ BEN H. C ANTREL

L, J.