# FILED Dec. 29, 1995 Cecil Crowson, Jr . Appellate Court Clerk IN THE COU RT OF A PPEA LS OF TENN ESSEE WESTERN SECTION AT NA SHVILLE
EXCHEQUER 1982-1 OIL AND ) GASDRILLIN G PA RTNERSHIP , ) ET AL, ) ) Plaintiffs/App ellees, ) Putnam Chancery No. 90-644 ) VS. ) A ppeal No. 01A 01-9502-CH- 00072 ) CHARLES R. M ILLER, JR., CITIZENS ) BANK OF TENNESSEE AND ) WILLIA M A . THORNE, ) ) Defendants/Appellant. )
APPEAL FROM THE CH ANCERY COU RT OF P UTNAM COUN TY

AT COOKEVILLE, TENN ESSEE THE HONORABLE VERNON NE AL, CHANCEL LOR

R. DA LE GRIMES JOSEPH F. WELB ORN, III BASS, BERRY & SIMS Nashvil le, Tennessee Attorneys for Appellant Ci tizens Bank
CL ARK L. SH AW Nashvil le, Tennessee Attorney for Appellees C. WA RREN TRAINOR EHMA NN, VA N DENBER GH & TRA INOR, PC Philadelphia, Pennsylvania Attorney for Appellees

REVERSED

ALAN E. HIGHERS , JUDGE
CONCUR: W. FRA NK CRA

WFORD, P.J., W.S. HEWITT P. TO MLIN, JR., SR. J.
This case comes before us as an inter locutory appeal pursuant t o T.R.A.P. 9. The1 T his suit wa s orig inally filed by a tota l of fifteen limited partn ers hips

. T he cla im s of t he fi ve Key stone

Partner ships; to w it: Ke ysto ne 19 83 -1 O il and Gas Dril li ng Part nershi p; Key stone 1983- 2 Oil an Gas Dril li ng Partner ship; Keyst one 1984-1 Oi l and Gas Dril li ng Partner sh ip; Keyst one 1984-2 Oi l and Gas Dril li ng Pa rtner ship ; and Mid co 1 983 -1 O il and G as D rilling Partn ers hip, are not a t issue in this ap pea l. 2 Appellant, Citizens Bank of Tennessee (hereinafter "Citizens" ), ap peals the chancellor's denial of its Motion for Summary Judg ment against th e Plainti ffs below, agroup of ten limited partnerships; to wit: Exchequ er Associate s Oil and Gas Drilli ng Partners hip 1982-1; Exchequer

1983-1 Oil and Gas Dril ling Part nership; Exchequer 1983- 2 Oil and Gas Dril ling Partner ships; Exchequer Synergy 1983 -1 Oil and Gas Drilling P artners hip; First Energy 1983-1 Oil an d Gas D rillingPartnership; First Ener gy 1984-1 Oil and Gas D rilling Partnership; Overlor

d 1983-1 Oil an d Gas Dril ling Part nership; Overlor d II 1984-1 Oil and Gas Drilli ng Partnership; Overlor d III 1984 Oil and Gas Dril ling Part nership; and Overlord IV 1984 Oil and Gas Drilling Partnership (hereinaf ter "Partnerships"). 1

The Partnerships

were formed in the early 1980's by Commonwealth Enterprises, Inc. (hereinafte r "Com m onwealth") for the purposes of oi l and gas ex ploration and development. All of the Part nerships were formed under th e provisi ons of Tenne ssee's Uniform Limited Partner ship Act. T.C .A. § 61-2-101 et . seq. (1989 & Supp. 1994) Commonweal th was one of two general partners in each of the Partnerships. Each Partnership also had an admini strative partner, w hose role was both t o monit or the operations of the Par

tnershipson behalf ofthe limited par tners and to furni sh the limited partners wi th timely financial reports of the Pa rtnership's activities. The partnership agreementrequired Commonwealth t o segregat e the funds of each of the limited Partnerships . The agreement al so forbade Commonwe alth to use Par tnership funds for its own be nefit.
The Partnership s allege t hat between Ja nuary of 1985 and N ove mber of 1986, Commonwealth stole money from the Partnership' s funds. Specifical ly, the Par tnerships allege that in March of 1985, Citiz ens Bank, throug h its former CEO and C hairman of the Boar d, Charl es R. Mill er, Jr ., ass isted Commonwealth i n misreprese nting Commo nwealth' s year-end financial condition by participating in a false loan transacti on which add ed $1,850,000 to Commonwealth's cash assets and eq uity capi talizati on. As a res ult ofthe3

false loan transaction, the Partnership s allege t hat Commonwealt h's true financi al condition was conceal ed.

Commonwealth declared bankruptcy in Februaryof 198 7. The Partner ships all ege that they did not

discover

that Common wealth misappropriated their funds unti l April 7, 1987, when the Bank ruptcy Trustee app oint ed an outs ide e ntit y to org anize Commonwealth' s records.

The Partnerships

filed their or iginal C omplaint on Apri l 3, 1990. On December 9, 1991, the Appellant

filed a Motion to D ismiss the c laims of the Partne rships based upon the three year

statute of limit at ions set f orth in T.C.A. § 28-3-105 (1980 & Supp. 1994). That statute states

in pertinent part: Property Tort Actions-- Statutory l iabilities -- The follow ing actions shall be commence d within three (3) years from the accruing of the cause of action: (1) Ac tion s fo r inju ries t o per sona l or re al pro pert y; (2) Acti ons for the detention or conversi on of personal property .

. . Althou gh the chancellor stated that th e Appellant's Motion to Dismiss was "well taken," it gave the Partnerships leave to amend th eir Complaint to add allegations o f fraud ulent concealment, which thePartnerships di d. On April 1, 1993, Appellant filed a Motion for Summary Judg ment

as t o thecla ims set fo rth in the Amended Compl aint, again based upon th e statute of limit ations in T.C.A . § 28-3-105. The chancellor d enied Appe llant' s motion. His order states in pertinent pa rt:

No answer has been fil ed b y the defendant Citizens Bank. W hile a motion for summary judgment may

be filed before an a nswer is filed, all well pl eaded matters in t he complaint not refuted in some manner must be taken as tr ue for the purpose of determining whether th ere are any material facts in dispute and whether a moti on for summary ju dgment should be granted.

. . . . [P]l aint iffs[the Partners hips] did . . . plead that a fi duciary relationship existsor ex isted between them and the defendant s. There is nothi ng in the record refutingthe allegation in the plaintiffs' comp laint that a fiduciary relationship ex i sts or existed between the Ten Plaintiffs and the defendant s.

. . . . Thus in the case at bar there is an allegation of both a f iduciary relationship and a concealment an d the con cealment may4 have been evidence d by silence. Accordingly , the court finds that a dispute of material facts ex ists as to wheth er there was a fiduciary relationshi p between the pa rties, and wheth er the defendants remained silent w hen they had a dut y to speak and whether theirconduct amounted to fra udulent concealment of the plaintiffs' cl aims. Thereafter, an interlocu tory appea l was gra nted to consider the chancellor 's denial of Appellant's Motion for Summary Judgment with regard to the claims of the Partn erships.

Since this appeal i s from a motion for summar y jud gmen t, we must de termine whether the Appellant's

motion satisfies the r

equirements of Tenn. R. Civ . P. 56. Cowden
v. Sovran Bank

/Central South , 816 S.W.2d 741, 744 (Tenn. 1991). It is we ll establi shed that "[n] o pre sump tion of co rrect ness atta ches to de cisio ns gra ntin g sum mary j udgm ent because they i nvolve only qu esti ons o f law. Thus , on a ppe al we must make a fresh determination concerning whether th e requirements of . . . [Rul e 56] have been met ." Gonzalesv. Alman C onst. Co. , 857 S.W.2d 42 (Tenn. A pp. 1993). In Byrd v. Hall , 847 S.W.2d 20 8, 210 ( Tenn. 1993), the Tennessee Suprem e Court stated that summ ary judgmentis proper where (1) there is no genuine iss ue with regard to the mat erial facts relevant to t he claim or defense containe d in the motion, and (2) the m oving party is entitled to judgment as a matter of law. W here the basis of the mov ing party 's motion for
s ummary judgment is a statute of limita tions defense, th e movant has t he burden o f demonstrating that there were no disputesregarding "(1) the statute of limitations pro perly applicable to . . . [the] cause of acti on, (2) the dateon which the cause of action accrued, and (3) the date on which s uit was fil ed." W ilkins v . Third Nat'l Bank of Nashville , 884 S.W.2d 75 8 (Tenn . App. 1 994) (cit ing Carvell v . Botto ms , App. No. 01-A -0109401-CV00032, slip op. at 5 , 1994 Tenn. App. LEX IS 292 (Tenn. App. 1994) , re v'd on oth er grounds 900 S.W.2d 23 (Tenn. 1995)).

The primary issue for this Court's consideration i s when the Pa rtnership's cause of action accrued. The Par tnership's A mended Complaint al leges th at Commonwealt h misappro p riated Partnership funds between Januar y, 1985, and N ovember, 1986. The alleged false loan trans ac tio n, which i s the basis of the Partnership' s claim of fraudulent concealment, occurred i n March 1985. Howeve r, the Partner ships did not file their or iginal5

Complaintuntil Apri l 1990. Arg uing that a cause of action accr ues for pur poses of the statute of li mita tion s when an in jury oc curs, or is d isco vered , or re ason ably s hou ld ha ve been discover

ed, Prescott v . Adams , 6 2 7 S.W.2d 134, 138 (Tenn. App. 1981), the Appellantfiled a properl y supported motion for summary judgment, esta blishing: (1) T .C.A. § 28-3-105 is the applicable statu te of limitations, (2) the Partn ersh ips cause o f action accrued in M arch of 1985, and (3) suit was not filed until April of 1990. As the Appellantcorrectly states, it did not have the initial duty ofestablishin g the absence of facts which wou ld t oll the statu te of limitation s. Carvell , 1994 Tenn. App. LEX IS 292, n. 2. (Tenn. App. 19 94) (citin g Jones v. C oal Creek M ining & M fg. Co. , 133 Tenn. 159, 169, 180 S

. W. 179, 182 (1915); Smith v. Southeast ern Properti es, Ltd. , 776 S.W.2d 106, 109 (Tenn. App. 1989)). Rat her, once theAppellant made a prope rly supported motion f or summary judgment, it was the dut y of th e Part nershi ps, asthe non -mov ing p arty , to co me forward with evidence establishing the exist ence of disputed, mater ial facts. Byrd , 847 S.W.2d at 21 5. As the Tennessee Su preme Court uneq uivocall y stated i n Byrd , "[t]he non-movin g party may not rel y upon t he allegati ons or denials of his pleadings in carrying out this burden as mandated by Rule 56.05" Id.

In the present case the Partne rships, unfort unate ly, failed t o respond to the Appellant's Motion for Summary Judgment w ith affidavits, pleadings, depositions, or other competentevidence tending to establish a material quest ion of fac t as t o the disp osit ive issue: whether th e statute of limit ations barred the Partnershi p's claims. Since the Partnerships

contended that the equitable tolling doctrine of fraud ulent co ncealmen t prevented their clai ms from being ti me-barred, it was incumbentupon the Partner ships to presentsworn ev idence supporti ng that claim. Tenn.R.C iv. P. 56.0 5; Byrd , 847 S.W.2d at 215. The Partnerships f ailed to meet this burden, instead relying solely on the unsworn allegations

set forth in thei r Amended Complain t.

We respectfully disagree w ith the chancel lor's findingthat the alleg ations set forth in the Partnership's Amende d Complaint were sufficient to defeat Appellan t's M otion for Summary Judgment. Our s ummary judgment rul e clearly allows a defending party to6

move for summary j udgment at any time. Tenn. R. Civ. P. 56.02. The rule al so states, without exception, that the non-movi ng party cannot rest on its pleadi ngs, but mus t come forward with addi tional evi dence to support its claim. Tenn. R. Civ. P. 56.05; Byrd , 847 S.W.2d at 215. We do not believe that the drafters of Rul e 56 intended tocreate a loophole in summary judgmentprocedure by sanctioning a narrow

exception i n which th e non-moving party is

allowed t o rely s olely on its pleading s to defeat a motion for summary judgment. We th erefore hold that the Par tnership's A mended Complaint, st anding alone, is insufficient to overcome t he Appellant's Motion for Summary Judgment.

For the reasons st ated herein, the judgment of the chanc ellor is reversed, and summary judgment is entered f or appellant. Costs are taxed to the app ellees.

HIGHERS, J.

CONCUR:

CRAWFORD, P.J., W.S.

TOMLIN, SR. J.