### IN THE COURT OF APPEALS OF TENNESSEE AT JACKSON October 14, 2002 Se ssion MARK VII TRAN SPORTATION CO MPANY, IN C. v. JOSEPH BELA SCO, ET AL 

### . Direct Appeal from the Circuit Court for Shelby County No. 97423 T.D. Kay S. Robilio, Judge

No. W2002-00450-COA-R3-CV - Filed Dec ember 30, 2002

Thi s appeal arises from a declara tory judgment a

ction filed by Mark VI

I Transportation Co., Inc. , in which it sought a

judgment declaring the parties’ r espective rights and obligations under an asset purchas e agreement. Th e trial c ourt awa

rded summary

judgmen t to the Defendant . We affir m. Tenn. R. App.P. 3 Appe al as of Right ; Judgme nt of the Cir

cuit Cour

t Affirme d; and Remanded
D AV ID R. F ARMER , J., delivered the opinion of the court, in wh ich A LAN E. H IGHERS , J R . and F RANKL IN M URCHI SON , S P
. J., joined.
J. Kim bro ugh Jo h nso n an d C rai g C. Co nl ey, M emp hi s, T enn ess ee, for th e ap pel lan t, Mar k VII Transportation Co., Inc.
Tim Edwardsand James F . Horner , Memphis, Tenness ee, for the appe llees, Jose ph Bela sco and E

lite Worldwide Services, Inc. OPINION Mark VII Transportation Co, Inc., (“Ma rk VII ”), a Delaware corporation with its principle place of busine ss i n Memph is, Tenne ssee, co mmenced this caus e of act

ion in Octo

ber of 19 98 in Shelby County Circuit Court as a declara tory judgment action. The Defendant, Joseph Belasco (Mr. Belasco), is a

resident of

New Jersey and w as the sole stockholder of Elite Worldwide Services, I nc., (“Elite Services”) a New Jersey corporation. The crux of the dispute between these part ies is the amount owed Mr. Belasco by

Mark VII under a lease for property locatedin Ne wa rk , N ew Je rs ey, and an asset purchase agr eement for Elite Services. I n its complaint, Mark VII asserted:
Due to the defendant’s threats to attempt to enforce the ter ms of the Agreement

and the dispute as to the amount owed under the Agreement, the Plaintiff has filed thiscause

of action for the Court to determine the amount owed Defenda nt under the Agree ment.-2- A genuine and re al contr oversy exists betw een the p arties f or which it is appropr iateand nec essary

for the Co

urt to ente

r a judg ment dec laring

th e p arties’ respective rights and obligations, if any , under the Agreement.
Mark VII submitted that under the terms of the Agreement, it owed Mr. Be lasco $27,684.00. Mark VII also praye d for costs and other relief to which it was entitled.
The asset purchase agree

ment (“the Agreement”) at dispute pr

ovided fo r the sale of all ass ets of Elite Services to Mark VII . These were described as including : all inven t ory and suppli es; accoun ts receiv able; eq

uipment; customer

lists, cont racts a nd busines s value; f

ixtures and

leaseho ld impr ovements ; cash and prepaid expenses and deposits; promotional materials, records, files a nd intangi bles, including

goodwill; service marks and the right to recover for any past infringement of the mark; all rights under transportation, real estate a nd licen se cont racts and leases; all other property a

nd assets, wherever located and whethe r or not reflected on its balance sheet. Mar k VII also agreed to employ

all of the personnel employ ed by Elite Service s as of the closing date a

t their c urrent salaries, with fringe benefits, including Mr. B elasco. Under the Agree ment, Mar

k VI I assumed and agreed to dis charge unpaid obligations and liabilities described on Schedule A as attached to the Agreement. Schedule A enumera ted several long-term debts of Elite Services to be assumed by

Mark VII , including a promissory note of $83,584.00 to Mr. Belasco. Total long-term debt was listed at $102,831.00. The purchase price to be paid by Mark VII consisted of: Buyer ’s [Mark VI

I’s] a ss u mption of c ertain li abilities of the Seller as pr ovided in Subsection 1.3 [of

the Agreement] in a total amount equal to the stated book value ( as determined by the a pplication of generally

accepted accounting principles consiste ntly applied) of the Assets acquired by the Buye r from the Seller, plus such cash, if any , necessary

to equal the liabilities assumed by Buy er. The Ag reemen t further provided that:
At Closing, the asse

ts to be tr ansferred and the Purchase Price to be paid (i.e., the liabilitie s to be assumed) shall be based upon the unaudited balance sheet of Seller as of July 31, 1993, with the Purchase Price to be adjusted a s soon as practicable after the August 31, 1993 unaudited balance sheet of the Seller becomes available.
It also provided for an adjustment of assets sold and liabilities assumed on the last day of

the first six months followi ng the c losin g, in a ma nner pro vided by

the Agr eement in Schedule K, with payment to be made

to the party entitled to the adjustment.
The parties closed on the sale on September 21, 1993. The parties ag reed, however, to delay payment by Mark VI

I to Mr. Belasco f

or six months in order that an accounting could be performed and the true value of the assets ascertained. Accord ing toMark VII ’s complaint, the parties agreed1 The Court note s t hat prese nt c ounse l di d not u ndert ake r epres enta ti on of Mark VII unt il April2, 2002. -3- th at Mr . B el as co wo ul d b e g iv en a c re di t p os it io n o n M ar k V II’s bo ok s f or hi s e qu it y in Elit e Service s. The amount to be pa id for thisequity

would be d

etermined six months later, on March 21, 1994. The parties agree

that the unaudited financial statement of Elite Services indicated that Mr. Belasco’s equity, including the promissory note of $83,584.00, was $195,046.00 as of August 31, 1993. Mark VII

contends, however, that in March of 1994, af ter all adjustments and set offs had been determined, Mr. Belasco was entitled to an equity balance of $97,684.07. In its complain t, Mark VI I fur ther ass erts: Plaintiff [Mark VII ] would further show that the Defendant [Mr. Belasco] agreed that Pl ainti ff could deduct from the above equity [the] amount [of] certain rental payments owed De

fendant by Plaintiff. Such re ntal payments equale d $70,000.
Mr. Belasc o answer

ed, deny ing that the rent al pay ments wer

e to be deducted from h

is equity amount and counter-claiming for breach o f the lea se agr eement a nd breac h of the a sset purc

hase agree ment. By mutual co nsent of t

he parti es, in

October of 2000 the

court ap pointed D avid Jones, CPA, to act as Special Master to perform an accounting to determine the amount, if any , owedby Mark VII to Mr. Be

lasco. Th e partie s agre ed that the Specia l Master’ s recomme

ndations w ould

be advisory and non- binding o n the cour t or eithe r party . The Spec ial Ma ster concluded that Mr. Belasco was owed

$140,685. 59, exclusi ve of inte rest, under the asset pur

chase a greem ent. He a lso determinedthat Mr. Belasco had paid $31,082.79 for fire insurance premiums which Mark VI I was obligated to pay u nde r th e le ase agr eem ent . In July o f 2001, Mr . Belas co and El ite Services moved for summary

judgmen t, asking the cour t to adopt th

e finding s of the Special Mast er, and s e ekin g prejudgme nt in terest, costs, and attorney ’s fees. Attached to its motion were a statement of undisputed facts, a

memoran dum in support of the motion, an affidavit of Mr. Belasco and an appendix of exhibits.
Mark VII filed no opposition to Mr. Belasco’s motion for summary judgmen t. 1 In October of 2001, the court awarded summary judgment to Mr. Belasco in the amount of: (1) $140,685.59 due under the asset purchas e agreement, pl

us prejud gment in terest at the rat e of 10% p er annum commenc ing Apr

il 1, 1994, in the amou nt o f $105,553.00, for a total of $246,238.59. (2) $46,105.79 for fire insurance premiums due under the lease agreement, including interest of 10% per annum commencing January 1, 1996. (3) $56,836.40 for attorney s fees and litigation costs.
Mark VII now appeals this award.-4- Issues Presented
The determinative issue raised in this appeal, as we percei ve it, is whether the trial court erred by awarding summary

judgment to Mr. Belasco. Mark VI I also appeals the awa

rd of prejudgment interest and attorney’ s fees. Mr. Belascocontendsthat this appeal is frivolous, and seeks damages pursuant to Tenn. Code Ann. § 27-1-122. Standard of Review
We review an award of summary judgment de novo , with no presum ption of c orrect ness afforded to the trial court. Guy v. Mut. of Omaha I ns. Co. , 79 S.W.3d 528, 534 (Tenn. 2002). Summary judgmen t should be

awarde d when the

moving pa

rty can demo nst

rate t hat there are no genuine issues regarding material facts of the cause of action and that it is entitled to a judgment as a matter of law. Ten n. R. Civ. P. 5 6.04; Byrd v. Ha ll , 847 S.W.2d 208, 214 ( Tenn. 199 3); McCarley v. West Quality Food Serv. , 960 S.W.2d 5 85, 588 (T enn. 1998 ). Mere ass ertions that the nonmoving party

has no evidence d

oes not suf

fice to e ntit le the movant to summary judgmen t. McC arley , 960 S.W.2d at 588. The moving party must either c onclusively demonstrat e a n affirmative defense or affirmatively negate an element which is essential to the nonmoving pa rty’s claim. Id. If th

e moving party can demo nstrate t

hat the no nmoving p arty

will not be able to carry its burden of

proof at trial on an essential element of its case, summary judgment is appropriate. Id.
When a party make s a motion fo r summary judgment whic h fulfills the requirements of Tenn. R. Civ. P. 56, th

e burden shifts to the nonmoving party to establish the existence of disputed material facts or that the moving party is not entitled to summaryjudgment as a matter of law. Id. ; Staples v. CBL & Assocs. , 15 S.W.3d 83, 89 (Tenn. 2000). The nonmoving party cannot merely

rely on the pleading s, but must demonstrate that essentia l element s of a cla

im exist by: 1) pointing to evidenc e that creates a factual dispute; 2) re-enforcing evidenc e challenged by the moving party ; 3) offering additional evidence which establishes a material dispute; 4) submitting a Tenn. R. Civ. P. 56.06 affidavit explaining the need for additional time for discovery

. McCarley , 960 S.W.2d at 588. The Summary Judgment Award
As noted above, Mark VII filed no motion in opposition to Mr. Belasco’s July 2001 motion for summary judgme

nt. Mr. Belasco submits that the failure to file such an opposition is fatal to Mark VII ’s appea

l. Mark VI

I co ntends tha

t its burde n to establish that Mr. Belasco was not entitled to summary

judgment was not triggered because the report of the Special Master was first, advisory only and second, identified issues which needed to be resolved by the

court. Mark VII

submits that Mr. Belasc o’s motion f

or summar

y ju dgment w as insuff

icient be cause

the record, and the

Special Master’s report in particular, evidenced the existence of disputed m aterial fac ts . Ma rk V II accordingly

argues that it therefore was not re quired to respond to the motion. Rule 56.03 of the Te

nnessee Rules of Civ

il Proced ure prov ides:-5- In order to assist the Court in as certain

ing whe ther the re are any materia l facts in dispute, any motion for summary judgment made pursuant to R ule 56 o f the Tennessee Ru le s o f C iv il Pr oc ed ur e s ha ll be ac co mp an ie d b y a separat e concis e stat ement of

the material facts as to which the moving party contends there is no genuine issue for

trial. Ea ch fact shall be s et forth i s a separate, numbered parag raph. Each fact shall be supported by a specific citation to the record. Any party opposing the motion f

or summar

y ju dgment m

ust, not l ater than five day s before

the hear ing, ser ve and fi le a res ponse to e ach fact set forth by the movant either (i) agr

eeing t hat the f act is und isputed, (ii) agr

eeing t hat t h e fact is undisputed for purposes of ruling on the motion for summary judgment only , or (iii) demonstrating that the fact is disputed. Each disputed f act mus t be supported by specific cita tion to the record . Such re sponse sha ll be file d with the p apers in opposition

to the motio n for summa ry judgmen t.
In addi tion, the n on-movan t’s respo nse may

contain a concise statemen t o f any additional facts that the non-movant c ontends are material and as to which the non-movant contends there exists a genuine issue to be tried. . . .
The courts consistent ly have empha sized that a party opposing a motion for summary judgment which co mplies with

Rule 56 may

not simply

rest on its plea

dings, but must af

firmativ ely oppos e the motion. See, e.g., Staples , 15 S.W.3d a t 89; McCarley , 960 S.W.2d at 588. Such opposition may be made

by pointing

to the evidence in the record which indicates disputed material facts. McCarley , 960 S.W.2d at 588. Silence, however, does not suffice . Rule 56 mandates that a party opposing a motion fo

r summary

judgmen t must serve a

nd file a response to the motion

. Tenn. R. Civ. P. 56.03.
The statements of

material facts submitted by the parties on a motion for summary judgment are intended to alert t

he court to preci sely

what factual questions are in dispute and point the court to s pecific

evidenc e in the r

ecord th at suppor

ts a party ’s p osition on each of these questions. They ar

e, in short, roadmaps, and without them the c ourt shoul d nothave to proceed further, reg ardless of how readily it might be able to distill the relevant information from the record on its own. Owens v. Bristol Motor Speedway, Inc. , 77 S.W.3d 771 , 774 (Te nn. Ct. App. 2001)( perm. app. denied )(quoting with appr oval Waldridge v. Am. Hoechs t Corp . , 24 F.3d 918, 923 (7 th Cir. 1994)). Although a trial court may , at its discre tion, waiv e the re quireme nts of the rule where appropriate, the court may also re

fuse to consider the factual contentions of a non-complying

party eve n where such facts are ascertainable by the rec ord. Id . Thus the material facts set forth in the statement of the moving party ma

y be dee med admitted in the absence of a statement controverting them by the2 M r. Belasco ’s motion included an affidavit of counsel and itemization of attorney’s fees. -6- opposi n g party. See R OBER T B ANKS , J R
. & J UNE F. E NTMAN , T ENNESSEE C IVIL P ROCEDURE , § 9-4(i) (1999 ) (quo ting Midwest Imports, Ltd. v. Coval , 71 F.3d 1311, 1313 n.1 (7 th Cir. 1995)).
In light o f the re cord in

this case, we find no error in the trial court’s awa rd of summary judgment to Mr. Belasco. Mr. Belasco’s motion substantially complied with the requ irem ents of r ule 56, and Mark

VII was req uired to r espond to t

his motion. Mark

VII , however, made no response, neither attempting to point out

disputed f

acts in the record nor opposing Mr. Belasc o’s request for attorney’sfees 2 or pre-judgment interest. The award of summary

judgment to Mr. Belasco therefore was within the discretion of the trial court.
The award of prej udg ment interest likewise was within the discretion of the trial court. A prejudgment

interest award is based on equitable considerations. Myin t v . Allstate Ins. Co. , 970 S.W.2d 920, 927- 28 (Tenn . 1998). T he purpo se of

the award is to fully c ompensate the plaintiff for the loss of the use of sums to which he was entitled. Id. Even where the amount in dispute is not a sum cer tain, an award of prejudgment intere st based on the judgment amount is not an abuse of discretion where the decision is equitable. Id

. In light of the foregoing, we affirm the judg ment of the

trial cou rt inall respects. Mr. Belasco asks this Court to find this appe al f rivolous; we decline. Costs of this appeal are taxed to the appella nt, Mark VII

Transportation Co., Inc., and its sure ty, for which

execution

may issue if ne ce ss ar y.

___________________________________ DAVID R. FARMER, JUDGE