# FILED March 1, 1996 Cecil Crowson, Jr. App ellate C ou rt Clerk I N THECOUR

TOFAPPEALSOFTENNES SEE EA STER N SEC TI O N

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GY, I NC. , a n d ) ANDER S ON C OUNTY W G I , IN C. ) 03A 01- 9506- C

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c C R OM E, LTD. , I NC. ) AFFI R M ED I N PAR

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ppe l l a nt s ) a n dR EM ANDED

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HNOLOGI ES , I NC. H. BR UC EGUYTON OFKNOXVI LLEFOR APPELLEES

O PI N I O N

G odda r d, P. J .2 The D e f e nda nt s a ppe a l a s um m a r y j udgm

e nt e nt e r e d i n f a v or o f t he Pl a i nt i f f s f or t he enf or cem e nt o f a s e t t l e m

e nt a gr eem e nt . The f act s o f t hi s cas e ar e s o m e w h a t co m

p l e x . Ca n o ni e Ene r gy, I nc . ( C

EI ) a nd W

G I , I nc . ( W

G I ) , w hi c h s ha l l be c o lle c tiv e l yr e f e r r e dtoa s Pl a i ntif f s , e nt e r e dint oa v e nt ur e w i t hA m e r i canR

e s o ur ce M

a n a g e m e nt , I n c . ( A

R M ) , A m e r i canEn e r g y Expl or a t i on, I nc . , ( A EX ) a nd C

oa l C r e e k M a nuf a c t ur i ng C

om pa ny ( C o a l C r eek) . The v e nt ur e , cal l e d"t he Bl u e G e m Pr oj ect , " w

a s f or t he e xpl or a t i on of oi l a nd na t ur a l ga s i n A nde r s on a nd M

or ga n c ount i e s . The ve nt ur e a l s o i nc l ude d t he dr i l l i ng a nd c ons t r uc t i on of oi l a nd na t ur a l ga s w e l l s a nd t he s a l e of oi l a nd na t ur a l ga s pr oduc e d by t hos e w e l l s . U nde r t he a gr e e m

e nt , t he Pl a i nt i f f s w e r e t o c ont r i but e ni ne m i l l i on dol l a r s ove r a s e ve n- ye a r pe r i od. A R M a nd A EX a gr e e dtoc o nt r i but e int e r e s t s inc e r t a i ne xi s tingo il a n d n a t ur a l g a s w

e l l s a n dint e r e s t s inm i ne r a l r i ght s le a s e s , a n d C oa l C r e e k a gr e e d t o c ont r i but e a n opt i on t o dr i l l oi l a nd na t ur a l ga s w

e l l s on a ppr oxi m

a t e l y s e ve nt y t hous a nd a c r e s of l a nd. The a gr e e m e nt pr ovi de d t ha t A R M w a s t o a c t a s t he ope r a t i ng m

a na ge r of t he pr oj e c t a nd w a s t o pr ovi de a l l ope r a t i on s e r vi c e s . I n c onne c t i on w i t h s uc h dut i e s , A R M hi r e d A

G Tt o pe r f or m

t he a c t ua l c ons t r uc t i on a nd ope r a t i on of t he pr oj e c t ' s w e l l s .3 I n N ove m be r of 1993, t he Pl a i nt i f f s f i l e d s ui t a l l e gi ng t ha t t he y w

e r e f r a udul e nt l y i nduc e d t o pa r t i c i pa t e i n t he Bl ue G e m Pr oj ect andal l e g i n gt h a t A G T, as t he al t e r eg oo f A R M , w r ongf ul l y c ha r ge d a m a r kup on m

a t e r i a l s s uppl i e d f or t he pr oj e c t a nd w r ongf ul l y c ha r ge d f or t he e qui pm e nt a nd s e r vi c e s pur s ua nt t o t he pr i ce l i s t i nt he exp l or a t i o nagr eem e nt . N

a m e das de f e nd a nt s i n t he s ui t w

e r e A R M , A G T, A EX , C oa l C r e e k, M

a r k H ol br ook, R

odne y K i ng, Be r r od, I nc . , a nd R i c ha r d Ca s t or . H ol br ook w

a s t he pr e s i de nt of A

R M a nd A EX . K i ng w a s a f or m

e r pr e s i de nt of A G Ta nd t he c ur r e nt pr e s i de nt of Be r r od, I nc . , t he s ol e s ha r e hol de r of A EX . Ca s t or w

a s t he pr e s i de nt of A G T. I n M a y 1994, Ca s t or a nd H ol br ook be c a m

e i nt e r e s t e d i n t he p o s s i b ilityo f s e ttlingthi s la w s uit. Ca s t or c o nt a c t e dthe Pl a i nt i f f s ' r e pr e s e nt a t i v e s todi s c u s s thi s p o s s i bi l i t y . The Pl a i nt i f f s a nd H

ol br ook a gr e e d t ha t t he di s c us s i ons w oul d t a ke pl a c e i n Pl a i nt i f f s ' of f i c e s i n Sout h H a ve n, M

i c hi ga n. Pr e s e nt a t t he m

e e t i ng w

e r e : H

ol br ook, Ca s t or , Tony Ca noni e , Sr . , a n i nve s t or i n t he Bl ue G e m Pr oj e c t , J e r r y Ca noni e , pr e s i de nt of C EI , Tony Ca noni e , J r . , c ha i r m a n of t he boa r d of di r e c t or s of C EI , a nd C

l a ude W

oods , pr e s i de nt of W G I . K i ng di d not a t t e nd t he m eet i n g , n or w

a s he m

a de aw a r e t h a t i t w

a s t a ki n gp l ace.

H ol br ook a l l e ge s t ha t dur i ng t he s e t t l e m e nt di s c u s s i o n s , th e Pl a i ntif f s m a de r e f e r e n c e tothe p o s s i b ility t ha t c r i m

i na l c ha r ge s m

i ght be br ought a ga i ns t H ol br ook a nd hi s f a m i l y, w ho w e r e s ha r e hol de r s a nd di r e c t or s of M c C r om e , I nc . ,4

H ol br ook' s f a m

i l y c or por a t i on. M c C r om e w a s not a n or i gi na l pa r t y t othe la w

s uit, b ut it di do w na nint e r e s t inthe Bl u e G e m Pr oj e c t a s of M

a y 1994, a nd t he Pl a i nt i f f s l a t e r a m e nde d t he i r c om pl a i nt t o a dd a c l a i m a ga i ns t M

c C r om e . H ol br ook f ur t he r a l l e g e s t h a t t he r e w a s al s odi s c u s s i o nt h a t s i m i l a r ch a r g e s cou l d be br ought a ga i ns t K i ng a nd hi s f a m

i l y m e m be r s . The r e w

e r e a l s o a l l e g a t i o n s t h a t K i n gh a den g a g e di next r a m a r i t a l af f a i r s and t ha t t he s e a f f a i r s w oul d be e xpos e d i f t he l i t i ga t i on c ont i nue d. H ol br ook f ur t he r a l l e ge s t ha t t he Pl a i nt i f f s t hr e a t e ne d t o f or c e bot h t he K

i ng a nd H

ol br ook f a m

i l i e s i nt o ba nkr upt c y.

The s e t t l e m

e nt m eet i n gw

a s he l di nt he o f f i ces o f C EI a ndat t he endo f d a yo n e , a dr a f t o f t he agr eem e nt w a s r eache d . Tha t ni ght , t he Pl a i nt i f f s , H ol br ook a nd Ca s t or s oc i a l i z e d t oge t he r . H

ol br ook a nd Ca s t or r e t ur ne d t o t he i r hot e l r oom l a t e r t ha t e ve ni ng. H

ol br ook c a l l e d hi s w i f e , but he di d not di s c us s t he s e t t l e m

e nt ne got i a t i ons w i t h he r . N

e i t he r H

ol br ook nor Ca s t or co nt act e dt he i r at t or n e y s .

The ne xt da y ne got i a t i ons r e s um e d. H ol br ook r e que s t e d t h a t s o m

e ch a n g e s b e m

a de i nt he dr a f t s e t t l e m e nt agr eem

e nt and t he c ha nge s w

e r e m a de . H

ol br ook a s s e r t s t ha t t he Pl a i nt i f f s t he n a gr e e d t ha t H

ol br ook a nd Ca s t or ' s s e t t l e m e nt of f e r w

a s s uf f i c i e nt t oc o v e r K

i n ga s w

e ll a n dth a t the Pl a i ntif f s w o u l dr e l e a s e K

i n g a nd Be r r od, I nc . , K i ng' s f a m

i l y c or por a t i on, f r om a l l c l a i m

s i f K i ng w oul d a gr e e t o be bound by t he t e r m s of t he s e t t l e m

e nt a gr eem e nt . H

o w e v e r , t he s e t t l e m e nt agr eem

e nt i t s e l f pr o v i de s5

t ha t t he Pl a i nt i f f s w o u l ddi s m

i s s the s ui t o nl ya s toA R M , A G T, H ol br ook, A

EX , Ca s t or a nd M

c C r om e . I t f ur t he r s t a t e d t ha t t he s e t t l e m

e nt agr eem

e nt di dn o t af f ect cl a i m s ag a i n s t Be r r o d , I n c . , a nd K i ng.

Pr i or t o t he s i gni ng of t he s e t t l e m e nt a gr e e m

e nt , Ca s t or to l dthe Pl a i ntif f s th a t inA pr il o f th a t y e a r he s ubm i t t e d a l e t t e r of r e s i gna t i on a s pr e s i de nt of A G Ta nd t ha t , a s a r e s ul t , he m a y not ha ve t he ne c e s s a r y a ut hor i t y t o e xe c ut e t he s e t t l e m

e nt agr eem

e nt o nb e h a l f o f A G T. H o w e v e r , t he r e a ppe a r s t o be s om e que s t i on ove r w he t he r Ca s t or ' s l e t t e r of r e s i gna t i on w

a s a c c e pt e d by A

G T. Ca s t or s a i d he w a s t ol d t ha t t he r e s i gna t i on w oul d not be a c c e pt e d unt i l s om e one c oul d be f o un dtota ke hi s p l a c e . Thu s , a t the tim e o f the s e ttle m

e nt , Ca s t or t hought hi s r e s i gna t i on ha d not be e n a c c e pt e d a nd t ha t he s t i l l ha d a ut hor i t y t o a c t a s pr e s i de nt of A G T. The a gr e e m

e nt w a s t he n s i gne d by t he pa r t i e s . H ol br ook s i gne d t he a gr e e m e nt on be ha l f of hi m

s e l f , A

R M , A EX , a nd M

c C r om e . Ca s t or s i gne d t he a gr e e m e nt of be ha l f of hi m s e l f a nd A

G T. U pon r e t ur ni ng f r om t he s e t t l e m

e nt ne got i a t i ons i n M i c hi ga n, H

ol br ook m

e t w i t h K i ng a nd K

i ng i ni t i a l l y a gr e e d t o t he t e r m s of t he s e t t l e m

e nt a gr e e m

e nt . H

ol br ook t he n m

e t w i t h hi s f a m i l y, t he s ha r e hol de r s a nd di r e c t or s of M c C r om e , a nd a dvi s e d t he m of t he s e t t l e m

e nt m e e t i ng a nd t he a gr e e m e nt i t pr oduc e d. The f a m

i l y m e m be r s t he n vot e d t o a c c e pt t he t e r m s of t he s e t t l e m

e nt agr eem

e nt .6 Shor t l y t he r e a f t e r , H ol br ook a l l e ge s t ha t J e r r y Ca noni e a dvi s e d hi m

t ha t C

EI a nd W

G I w oul d not a gr e e t o r e l e a s e K i ng or Be r r o d , I n c . , o f al l cl a i m s unl e s s K

i n gt r a n s f e r r e dcer t a i n a s s e t s toC

EI . A t a b o ut thi s s a m

e tim e , th e s h a r e h o l de r s a n d di r e c t or s o f Be r r o d , Inc . , m e t todi s c u s s the s e ttle m e nt a gr eem e nt . Be r r o d , I n c . , w a s n o t a p a r t yt ot he s e t t l e m e nt a gr e e m e nt , but i t ow

ne d a l l of A

EX ' s s ha r e s of s t oc k a nd one

- t hi r d of A

R M ' s s ha r e s of s t oc k. The s ha r e hol de r s a nd di r e c t or s vot e d not t o r a t i f y H ol br ook' s e xe c ut i on of t he a gr e e m e nt . N or m a n Be a uc ha m

p, a M i c hi ga n a t t or ne y a nd ow ne r of one - t hi r d of A R M ' s s ha r e s of s t oc k, a l s o r e f us e d t o vot e hi s s ha r e s of s t oc k t o r a t i f y H

ol br ook' s e xe c ut i on of t he a gr e e m e nt . The s ha r e hol de r s a nd di r e c t or s of A G Ta l s o m

e t , a nd t he y vot e d not t o r a t i f yCa s t or ' s ex ecut i o no f t he agr eem e nt . I nthe m

e a ntim e , th e Pl a i ntif f s f ile da m o tio ntos t a y pr oc e e di ngs i n t he Tr i a l C our t ba s e d upon t he r e a c he d s e t t l e m e nt a gr e e m e nt . The Pl a i nt i f f s ' m ot i on r e que s t e d t ha t a s t a y be gr a nt e d a s t o a l l D e f e nda nt s e xc e pt K i ng, Be r r od, I nc . , a nd C oa l C r e e k. A

R M , A EX , a nd H

ol br ook t he n oppos e d t he m ot i on on t he gr ounds t ha t t he s e t t l e m e nt a gr e e m

e nt w a s une nf or c e a bl e . The Pl a i nt i f f s s ubs e que nt l y a m e nde d t he i r c om

pl a i nt t o a dd a n a l t e r n a t i v e cl a i m f or t he enf or cem e nt o f t he s e t t l e m e nt a gr eem e nt . The Pl a i nt i f f s al s oadde da cl a i m ag a i n s t M

c C r o m e f or t he a l l e ge d w

r ongf ul r e c e i pt of a s s e t s f r om A R M a nd a n a l t e r n a t i v e cl a i m f or enf or cem

e nt o f t he s e t t l e m e nt agr eem

e nt .1 A t or ar ound t h i s s a m e t i m e , t h e P l a i n t i f f s appa r e n t l y t ook a vol unt a r y non- s u i t of t h e i r cl a i m s aga i n s t Rodne y K i ng and B e r r od, I n c . Th e r eco r d o n ap p eal d o es no t ap p ear t o i n c l u d e t h e o r d e r o f d i s m i s s a l . H

o w e v e r , t h e Co u r t r eco g n i zed t h e d i s m i s s a l i n an o r d e r t a x i n g co u r t co s t s dat e d M a r c h 2 4 , 1 9 9 5 , an d t h u s , w e t r eat t h e Co u r t ' s awa r d o f sum m a r y j u d g m

e n t as a f i n a l j udgm e n t t h a t i s appe a l a b l e t o t h i s Cour t . 7 The Pl a i nt i f f s s ubs e que nt l y t ook a vol unt a r y non- s ui t a s tothe i r f r a u du l e nt indu c e m e nt c l a i m

s . The Pl a i ntif f s a l s o vol unt a r i l y di s m

i s s e d D

e f e nda nt C

oa l C r e e k. The n i n D

e c e m be r of 1994, a l l D

e f e nda nt s f i l e d a m ot i on f or pa r t i a l s um m a r y j udgm

e nt . The Pl a i nt i f f s a l s o f i l e d a m ot i on f or pa r t i a l s um m a r y j udgm

e nt s eeki n gt oenf or ce t he s e t t l e m e nt agr eem

e nt ag a i n s t A

R M , A EX , H ol br ook, M

c C r om e , A G Ta nd Ca s t or . O n M a r c h 10, 1995, t he Tr i a l C our t e nt e r e d a n or de r de nyi ng t he D

e f e nda nt s ' m

ot i on a nd gr a nt i ng t he Pl a i nt i f f s ' m ot i on f or s um

m a r y j udgm

e nt a s t o H

ol br ook a nd M

c C r om e , hol di ng t he s e t t l e m

e nt agr eem

e nt v a l i dandenf or ceab l e as t ot h o s e p a r tie s . Inits or de r , th e Tr i a l C o ur t s p e c i f i c a llyf o un dth a t t he r e w

a s n odi s p ut e dm

a t e r i a l f act as t ot he i s s u e o f dur e s s and t ha t t he r e w

e r e no i m

pr ope r pr e s s ur e s or i nf l ue nc e s on H ol br ook a t t he t i m

e he s i g n e dt he s e t t l e m e nt agr eem

e nt . A

s econ dor de r w a s e nt e r e d on M

a r c h 24, 1995, gr a nt i ng t he Pl a i nt i f f s ' m ot i on f or s um

m a r y j udgm

e nt f or e nf or c e m

e nt of t he s e t t l e m e nt a gr e e m

e nt a g a i n s t AR

M , AEX, AGTa n dCa s t or . 1I n doi ng s o, t he Tr i a l C our t f ound t ha t H

ol br ook a nd Ca s t or ha d e i t he r a c t ua l or a ppa r e nt a ut hor i t y t o bi nd t he c or por a t i ons t o t he s e t t l e m e nt a gr e e m

e nt a nd t ha t t he r e w

e r e no di s put e d f a c t s t o s how t ha t A

R M , A EX , or A G Tt ook a ny a c t i on w hi c h w oul d a dve r s e l y a f f e c t or i nva l i da t e t he s e t t l e m

e nt a gr e e m

e nt or w

oul d c ha l l e nge or di s put e t he8

a ut hor i t y of H

ol br ook or Ca s t or . H ol br ook, M

c C r om e , A R M , A EX , a ndA G Tapp eal e d . The app eal s o f t he s e D e f e nd a nt s h a v e b een c ons ol i da t e d. D

e f e nda nt Ca s t or di d not a ppe a l . The D e f e nd a nt s as s e r t t h a t t he Tr i a l C o ur t er r e di n gr a nt i ng t he Pl a i nt i f f s ' m ot i on f or s um

m a r y j udgm

e nt be c a us e t he r e ar e di s p ut e di s s u e s o f m a t e r i a l f act as t ot he i s s u e s o f dur e s s , a ut hor i t y, f a i l ur e of c ons i de r a t i on a nd l a c k of c ons i de r a t i on.

The Supr e m

e C our t of Te nne s s e e , i n Byr d v. H a l l , 847 S . W . 2d 208 ( Te nn. 1993) , s e t f or t h t he pr ope r s um m a r y j udgm

e nt a na l ys i s t o be a ppl i e d i n Te nne s s e e . The r e , t he C our t s a i d i n e va l ua t i ng a s um

m a r y j udgm

e nt m ot i on, t he s e que s t i ons m us t be r e s ol ve d: " ( 1) w

he t he r a f ac t ual di s put e e xi s t s ; ( 2) w he t he r t he di s put e d f a c t i s m a t e r i a l t o t he out c om e of t he c a s e ; a nd ( 3) w he t he r t he di s p ut e df act cr eat e s a ge nui ne is s u e f or tr i a l."

Byr da l s o m

a ke s t he f ol l ow

hol di ngs : s um

m a r y j udgm

e nt s houl d be e m

pl oye d w

he r e t he r e i s no di s put e ove r t he e vi de nc e a nd t he r e i s no i s s ue f or a j ur y t o de c i de . R a t he r , i t i s j us t f or t he c our t t o a ppl y t he l a w . For a pa r t y t o a voi d s um m a r y j u dg m e nt, it m

u s t s h o w

th a t the f a c t indi s p ut e is m a t e r i a l ; m e a ni ng, t hi s f a c t i s one t ha t " m us t be de c i de d i n or de r t o r e s ol ve t he s ubs t a nt i ve c l a i m or de f e ns e a t w

hi c h t he m

ot i on i s di r ect e d . " I f s u c ha di s p ut e d , m a t e r i a l f act do e s exi s t , t he c our t "m

u s t t he nde t e r m

i n e w he t he r t he di s p ut e dm a t e r i a l f act9

c r e a t e s a ge nui ne i s s ue w i t hi n t he m

e a ni ng of R

ul e 56. 03. " H

e r e , " t he t e s t f or a ' g e nui n e i s s u e ' i s w he t he r a r eas o n a b l e j ur y c oul d l e gi t i m

a t e l y r e s ol ve t ha t f a c t i n f a vor of one s i de or t he ot he r . I f t he a ns w e r i s ye s , s um

m a r y j udgm

e nt i s i na ppr opr i a t e ; i f t he a ns w

e r i s no, s um

m a r y j udgm

e nt i s pr ope r be c a us e a t r i a l w oul d be poi nt l e s s . . . . " W he n a ppl yi ng t hi s t e s t , " t he c our t i s t o vi e w

t he e vi de nc e i n a l i ght f a vor a bl e t o t he nonm ovi ng pa r t y a nd a l l ow

a l l r e a s ona bl e i nf e r e nc e s i n hi s f a vor . " I t i s t he bur de n of t he nonm ovi ng pa r t y t o de m ons t r a t e t ha t t he r e a r e no di s put e d, m

a t e r i a l f a c t s c r e a t i ng a ge nui ne i s s ue f or t r i a l a nd t ha t s um

m a r y j udgm

e nt i s a ppr opr i a t e . I n r e vi e w

i ng t he or de r f or s um m a r y j udgm

e nt , w e c hoos e t oa ddr e s s the is s u e o f a ut h or ityf i r s t. H e r e , th e Pl a i ntif f s ha ve t he bur de n of pr ovi ng t ha t a n a ge nc y r e l a t i ons hi p e xi s t e d be t w e e n H ol br ook a nd A

R M a nd A EX a nd be t w

e e n Ca s t or a nd A

EX . Sl oa n v. H

a l l , 673 S . W

. 2d 548 ( Te nn. A

pp. 1984) . Sl o a na l s o hol ds t he f ol l ow

i ng: " The s c ope a nd e xt e nt of a n a ge nt ' s r e a l a nd a ppa r e nt a ut hor i t y a r e que s t i ons t o be de t e r m i ne d by t he t r i e r of f a c t f r o m

al l t he fac t s andci r c um s t a nc e s i nevi de nc e . " Fur t he r m

or e , a n a ge nt ' s a ut hor i t y m us t be t r a c e a bl e t o t he pr i nc i pa l a nd c a nnot be s how n by t he a ge nt ' s s t a t e m e nt s or a c t i ons a l one . A nd w he n a t hi r d pe r s on " a c t ua l l y know s , or s houl d know

, t he l i m

i t a t i ons of a n a ge nt ' s a ut hor i t y, t he pr i nc i pa l i s not bound by a n a c t t ha t i s be yond s uc h l i m i t a t i o n s . " R

ul e v. Br ot he r hood' s R e l i e f &

C om pe ns a t i on Fund , 36 Te nn. A

pp. 20, 251 S . W

. 2d 309 ( 1952) .10 Looki ng f i r s t t o Ca s t or ' s a ut hor i t y, a di s put e e xi s t s a s t o t he e f f e c t of hi s r e s i gna t i on f r om t he pos i t i on of pr e s i de nt o f A

G T. Ca s t or m

a i nt a i n s th a t de s p ite hi s r e s i g n a tio n he c ont i nue d t o f unc t i on a s pr e s i de nt of A G Ta nd t hought he ha d a ut hor i t y t o s i gn t he s e t t l e m e nt a gr e e m

e nt . H

ow e ve r , unde r t he r ul e of Sl o a n , Ca s t or ' s s t a t e m e nt s al o n e cann o t b e de t e r m i n a t i v e of hi s a ut hor i t y. K i ng, t he f or m

e r pr e s i de nt of A G Tw ho r e c e i ve d Ca s t or ' s le tte r o f r e s i g n a tio n , m a i nt a i n s th a t the r e s i g n a tio n w a s accept e dat t he t i m e i t w a s t e nde r e dandt h a t as s u c h , Ca s t or ha d no a ut hor i t y t o e nt e r i nt o t he s e t t l e m e nt a gr e e m

e nt on be ha l f of A G T. Thus , Ca s t or ' s r e s i gna t i on c r e a t e s a di s put e d i s s ue a s t o w he t he r he ha d a ny a c t ua l a ut hor i t y a t t he t i m e he s i gne d t he s e ttle m

e nt a gr e e m

e nt. W

he t he r the Pl a i ntif f s th o u g ht Ca s t or h a d a ut hor i t y i s a l s o di s put e d. R e vi e w i ng t he e vi de nc e i n t he l i ght m os t f a vor a bl e t o t he D e f e nda nt s , i t a ppe a r s t ha t Ca s t or i nf or m e d t he Pl a i ntif f s o f hi s r e s i g n a tio na n dthe p o s s i b ilityth a t he l a c ke d t he r e qui s i t e a ut hor i t y t o e nt e r i nt o t he a gr e e m e nt . Thu s , s i n ce t he Pl a i nt i f f s w e r e m a de aw a r e t h a t Ca s t or ' s a ut hor i t y t o bi nd A G Tw a s i n que s t i on, t he Pl a i nt i f f s c a nnot now a r gue t ha t t he y a s s um e d Ca s t or ha d a ppa r e nt a ut hor i t y t o a c t f or A G T. The Pl a i ntif f s w e r e w a r n e do f the p o s s i b ilityth a t Ca s t or ha d no a ut hor i t y s i nc e he ha d t e nde r e d a l e t t e r of r e s i gna t i on. The r e f or e , i t a ppe a r s t o t hi s C our t t ha t a ge nui ne i s s ue of m a t e r i a l f act exi s t s : W he t he r Ca s t or di di nf act h a v e t he a ut hor i t y t o e nt e r i nt o t he s e t t l e m e nt a gr e e m

e nt on be ha l f of A G T. Becau s e t hi s i s ani s s u e o f f act t h a t m u s t b e r e s o l v e d , s um m a r y j udgm

e nt i s va c a t e d a s t o D e f e nda nt A

G T. The D

e f e nda nt11

Ca s t or di d not a ppe a l f r om t he Tr i a l C

our t ' s or de r e nf or c i ng t he s e t t l e m

e nt agr eem

e nt . W e now t ur n t o t he i s s ue of H ol br ook' s a ut hor i t y t o bi nd A R M a nd A EX . A t t he t i m

e he s i gne d t he a gr e e m e nt , H ol br ook w a s t he pr e s i de nt of t he s e t w o c or por a t i ons . A s s uc h, H

ol br ook ha s t he a ut hor i t y t o e nt e r i nt o a gr e e m e nt s on be ha l f of t he c or por a t i ons . " A l l c or por a t e or ga ni z a t i ons a c t by a nd t hr ough boa r ds , c om

m i s s i ons , of f i c e r s a nd e m pl oye e s , a nd i f t he y a c t w i t hi n t he a ppa r e nt s c ope of t he i r a ut hor i t y, t he n t he i r a c t i ons a r e t hos e of t he c or por a t i on a nd, t he r e f or e , bi ndi ng on t he s t oc khol de r s or m e m be r s of s uc h c or por a t i ons . " W hite h a v e nU

til. D i s t . of She l by C

ount y v. R

a m s a y , 215 Te nn. 435, 387 S . W . 2d 351 ( 1964) . H

e r e , t he C

our t he l d t ha t t he a c t i ons of t he boa r d' s c om m i s s i one r s w

e r e unque s t i ona bl y bi ndi ng on t he m e m be r s , r e s i de nt s a n db o n dh o l de r s o f the utilitydi s t r i c t. S i m ila r l y , in Bl a s i n g a m

e v . A m e r i canM

a t e r i a l s , I n c . , 654 S . W . 2d 659 ( Te nn. 1983) , t he Supr e m e C our t he l d t ha t t he pr e s i de nt of a c or por a t i on c oul d bi nd t he c or por a t i on t o a c ont r a c t w i t hout t he a ppr ova l of t he Boa r d of D i r e c t or s . I t i s c l e a r t he n t ha t H ol br ook, a s pr e s i de nt of A EX a nd A R M , ha d a ut hor i t y t o bi nd t he c or por a t i ons s o l ong a s he di d not e xc e e d t he s c ope of t ha t a ut hor i t y. I t i s not c l e a r a s t o w ha t t he s c ope of hi s a ut hor i t y m a yh a v e b e e n . W

itho ut thi s de t e r m i n a tio n , it is im p o s s i b l e to know w he t he r H

ol br ook e xc e e de d hi s a ut hor i t y. M a ki ng t hi s de t e r m i na t i o nis f or the tr i e r o f f a c t. Se e Sl o a n , s upr a . A ddi t i ona l l y, t he boa r d of di r e c t or s of bot h A EX a nd A R M vot e d12

not t o r a t i f y H

ol br ook' s s i gni ng of t he s e t t l e m e nt a gr e e m

e nt . C ont r a r y t o t he Tr i a l C our t ' s f i ndi ng, t he s e vot e s a ppe a r t o be act i o n s t h a t m

a yadv e r s e l yaf f ect or i nv a l i d a t e t he s e t t l e m e nt a gr eem e nt . A

t t he l eas t , t he s e v o t e s cer t a i nl yapp ear t o c ha l l e nge or di s put e t he a ut hor i t y of H ol br ook. Si nc e a de t e r m i na t i on w

a s not m

a de a s t o w

he t he r H

ol br ook e xc e e de d hi s a ut hor i t y w

he n he s i gne d t he s e t t l e m e nt a gr e e m

e nt w i t hout t he know l e dge of t he s ha r e hol de r s , s um m a r y j udgm

e nt i s va c a t e d a s t o D e f e nda nt s A

EX a nd A R M . H a vi ng di s c ove r e d one r e a s on w hy s um m a r y j udgm

e nt s houl d not ha ve be e n gr a nt e d a s t o D e f e nda nt s A

G T, A EX , a nd A

R M , w e go no f ur t he r a s t o t he s e D e f e nda nt s . Si nc e i t i s not n ecess a r yt or eacht he o t he r i s s u e s r a i s e db yt he s e D e f e nd a nt s , w e c hoos e not t o do s o.

H ow e ve r , t he r e now

r e m a i ns t he que s t i on of H ol br ook a nd M c C r om e , H ol br ook' s f a m

i l y c or por a t i on. The r e i s no i s s ue of a ut hor i t y he r e be c a us e t he s ha r e hol de r s of M c C r om e , H ol br ook' s f a m i l y, di d not que s t i on H ol br ook' s a ut hor i t y. I n f a c t , t he y vot e d t o r a t i f y t he s e t t l e m e nt a gr e e m

e nt . D

e f e nda nt H

ol br ook a r gue s i ns t e a d t ha t t he s e t t l e m e nt a gr e e m

e nt s houl d not be e nf or cedb ecau s e t he agr eem e nt w a s ex ecut e dun de r dur e s s and be c a us e no c ons i de r a t i on w a s gi ve n t o M

c C r om e i n e xc ha nge f or a gr eei n gt ot he s e t t l e m e nt .13 W e di s c u ss t he dur e ss i ssue f i r s t . Te nn e sse e h a s ge ne r a l l y de f i ne d dur e s s a s t he c ondi t i on of m i nd pr oduc e d by t he i m pr ope r e xt e r na l pr e s s ur e or i nf l ue nc e t ha t pr a c t i c a l l y de s t r oys t he f r e e a ge nc y of a pa r t y, a nd c a us e s hi m t o do a nd a c t or m a ke a c ont r a c t not of hi s ow n vol i t i on, but unde r s uc h w r ongf ul e xt e r n a l pr e s s ur e . R a i ne y v. R

a i ne y , 795 S . W

. 2d 139 ( Te nn. A pp. 1990) . Se e a l s o G ille yv . G

ille y , 778 S . W

. 2d 862 ( Te nn. A

pp. 1989) ( i nt e r na l pr e s s ur e s t ha t a r e of a pa r t y' s ow n m a ki ng a r e not dur e s s ) . To de t e r m i ne w he t he r t he r e i s dur e s s , t he que s t i on i neachcas e i s , w a s t he p e r s o ns i g ni n gt he cont r act s oaf f ect e d by t hr e a t s of t he ot he r pa r t y a s t o be be r e f t of t he qua l i t y of m i nd e s s e nt i a l t o t he m a ki ng of a c ont r a c t . I n ot he r w or ds , w

a s t he pe r s on be r e f t of t he f r e e e xe r c i s e of hi s w i l l pow

e r . Exum v. W a s hi ngt on Fi r e a nd M a r i ne I ns . C

o. , 41 Te nn. A

pp. 610, 297 S . W . 2d 805 ( 1955) . W he t he r dur e s s e xi s t s i s de t e r m i ne d by e x a m i ni n gal l t he ci r c um s t a nces . Si m

ps on v. H

a r pe r , 21 Te nn. A pp. 431, 111 S . W

. 2d 882 ( 1937) . I nthi s c a s e , th e Tr i a l C o ur t de t e r m

i ne dth a t the r e w e r e n odi s p ut e dm a t e r i a l f act s w

i t hr e s p ect t ot he i s s u e o f dur e s s a nd f ur t he r t ha t H ol br ook w

a s not unde r i m

pr ope r e xt e r na l f or ces w

he nhe s i g n e dt he agr eem e nt . W

e agr ee. The Pl a i nt i f f s do not di s put e t he f a c t t ha t s om e s or t of t hr e a t s a s t o t he pos s i bi l i t y of c r i m i na l pr os e c ut i on a nd ba nkr upt c y w e r e c om m uni c a t e d t o H

ol br ook. H

ow e ve r , t he s e t hr e a t s do not c ons t i t ut e s uc h i m pr ope r t hr e a t s a s t o i nva l i da t e H ol br ook' s s i gni ng of t he a gr e e m e nt . H

ol br ook w

a s not f or c e d i nt o t he14

s e ttle m

e nt pr o c e s s ; it w a s he w

h oinitia t e ds e ttle m e nt b y c ont a c t i ng t he Pl a i nt i f f s a nd t he n a gr e e i ng t o m e e t i n t he i r of f i c e s i n M

i c hi ga n. H

ol br ook s t a t e d i n hi s de pos i t i on t ha t he w a s not f or c e d t o s i gn t he a gr e e m e nt a nd t ha t he w a s f r e e t o l eav e t he s e t t l e m e nt di s c u s s i o n s at anyt i m e . H e cou l dh a v e al s o c ont a c t e d hi s l a w ye r or hi s f a m

i l y a t a ny t i m

e . H e c hos e not t o do s o. H

ol br ook w

a s not de pr i ve d of t he f r e e e xe r c i s e of hi s w ill p o w

e r . W e a gr e e w

iththe Tr i a l C

o ur t th a t a nypr e s s ur e s H ol br ook m

a y ha ve be e n unde r a t t he t i m e of t he a gr e e m

e nt w e r e not s uc h i m

pr ope r one s a s t o c ons t i t ut e dur e s s a nd t o i nva l i da t e t he agr eem

e nt . A s f or t he c ons i de r a t i on i s s ue , i n or de r f or a s e t t l e m

e nt agr eem

e nt t ob e enf or ceab l e , l i ke anyco nt r act , c ons i de r a t i on m

us t be gi ve n a nd r e c e i ve d. M i l w ee v . Peacht r e e C ypr e s s I nve s t m

e nt C o. , 510 F. Supp. 279 ( E. D . Te nn. 1977) . I t i s w e ll s e ttle dinTe nn e s s e e th a t the c o ur t w ill no t " i nqui r e int o t he a de qua c y or i na de qua c y of t he c ons i de r a t i on f or a c om pr om i s e f a i r l yandde l i b erat e l ym a de . " Thur m

ond v. W

hi t t a ke r , 1 Te nn. A pp. 111 ( 1925) . R e l e a s i ng c l a i m

s a ga i ns t a pa r t y, w he t he r t he c l a i m

s a r e a c t ua l l y pe ndi ng or not , i s s uf f i c i e nt c o n s i de r a t i o nf or a s e t t l e m e nt agr eem

e nt . Se r v i ce St a m pC o . v . K e t c he n , 10 Te nn. A pp. 59 ( 1929) . Fur t he r m or e , w he r e t he f a c t s a r e un di s p ut e d , w he t he r a r e l eas e con s t i t ut e s ade qu a t e c ons i de r a t i on i s a que s t i on of l a w . A pp l e w hite v . A

lle n , 2 7 Te nn. ( 1 H

um . ) 696 ( 1848) .2 S p e c i f i c a l l y , H o l b r ook and M

c Cr o m e agr e e d t o gi v e t h e P l a i n t i f f s a 4 . 45% w o r k i ng i n t e r e s t i n t h e Bl u e G e m Pr o j e c t as w

e l l as 93 s h a r e s of Te nne s s e e En e r gy Pi p e l i n e ( TEP S CO) or t h e m one y r e c e i v e d f r o m a s a l e of t hos e s h a r e s . I n r e t u r n , t h e P l a i n t i f f s agr e e d t o r e l e a s e H o l b r ook and M

c Cr o m e f r o m a n y cl a i m

ar i s i n g o u t o f t h e l a wsui t , f r o m al l m

o n e t a r y o b l i g a t i o n s and cl a i m s a l l e g e d l y o w

e d t h e Pl a i n t i f f s and an y o t h e r cl a i m ar i s i n g o u t o f t h e Bl u e G e m Pr oj e c t .

3 Th e Tr i a l Co u r t g r a n t e d t h e Pl a i n t i f f s ' m o t i o n t o am

e n d t h e i r c o m p l a i n t o n Oc t o b e r 3 1 , 1 9 9 4 , an d t h e Pl a i n t i f f s s u b sequ e n t l y ad d e d a cl a i m a g a i n s t M

c Cr o m e f o r t h e al l e g e d w r ongf u l r e c e i p t of as s e t s f r o m A RM and i n t h e a l t e r n a t i v e , a c l a i m f o r t h e enf o r c e m e n t of t h e s e t t l e m e n t agr e e m

e n t . 15 I n t he c a s e a t t he ba r , D e f e nda nt H

ol br ook a gr e e d on be ha l f of M

c C r om e t o gi ve up s om

e a s s e t s of t he c om pa ny 2i n or de r t ob e r e l eas e df r o m anycl a i m

s t he Pl a i nt i f f s m i g ht h a v e ag a i n s t M c C r o m e . Th a t n ocl a i m s h a db eenact u a l l yf i l e dag a i n s t M c C r o m e a t the tim

e o f s e ttle m

e nt is n o t di s p o s itiv e . 3I t app ear s t he n t ha t t he Pl a i nt i f f s a nd M c C r om e ga ve s uf f i c i e nt c ons i de r a t i on f or t he s e t t l e m

e nt a gr e e m

e nt , a nd t he r e i s no ne e d f or di s c us s i on a s t o t he va l i di t y of a ny c l a i m s a l l e ge dl y he l d by t he Pl a i nt i f f s or t he a de qua c y of t he Pl a i nt i f f s ' c ons i de r a t i on i n e xc ha nge f or M c C r o m e ' s as s e t s . Thus , f i ndi ng no di s put e d m a t e r i a l f a c t s a s t o t he i s s ue s of dur e s s or c ons i de r a t i on, w e a f f i r m

t he Tr i a l C

our t ' s e nt r y of s um

m a r y j udgm

e nt a s t o M

c C r om e a nd H

ol br ook.

I n a ddi t i on t o t he i r a ppe a l of s um m a r y j udgm

e nt , t he D e f e nd a nt s l a t e r app eal e dt he Tr i a l C o ur t ' s or de r aw

a r di n g di s c r e tio n a r yc o s t s tothe Pl a i ntif f s . The yin s i s t the C o ur t a bus e d i t s di s c r e t i on by i nc l udi ng c os t s i nc ur r e d i nc i de nt t o t he or i gi na l s ui t f or br e a c ho f c o nt r a c t. W hi l e thi s is tr u e , w e ha ve no doubt t ha t t he i nf or m a t i on de ve l ope d i n pr e pa r i ng t he16

or i g i n a l c l a i m

pr o m p t e dthe s e ttle m

e nt a gr e e m

e nt w hi c his the pr i nc i pa l s ubj e c t of t hi s a ppe a l . I n l i ght of t hi s , w e f i nd no a bus e of di s c r e t i on i n a l l ow i ng s uc h f e e s .17 W e a c c or di ngl y a f f i r m t he j udgm

e nt i ns of a r a s t he D e f e nda nt s H

ol br ook a nd M

c C r om e a r e c onc e r ne d, but m odi f y t he di s c r e t i ona r y c os t s a w a r d by r e qui r i ng t he m t o pa y one - f i f t h e a c h of t he a m

ount a w

a r de d by t he C

ha nc e l l or , va c a t e t he j udgm e nt a s t o t he r e m

a i ni ng D

e f e nda nt s , a nd r e m a nd t he c a s e f or f ur t he r pr oc e e di ngs not i nc ons i s t e nt w i t h t hi s opi ni on. O ne - ha l f of t he c os t s of a ppe a l a r e a dj udge d a ga i ns t H ol br ook a nd M

c C r om e a nd one - ha l f a ga i ns t Ca noni e Ene r gy a nd W G I .

_______________________________ H ous t on M

. G odda r d, P. J . CONC UR:

________________________________ H e r s c he l P. Fr a nk s , J .

________________________________ C h a r l e s D

. Su s a n o , J r ., J .