# FILED
July 2, 1997 Cecil W. Crowson Ap pellate Cou rt Clerk HELE N S. ROGERS, ) ) Plaintiff/Appellee, ) Appeal No. ) 01-A-01-9611-CV-00500 v. ) ) Davidson

Circuit TOM E. WATTS, JR., ) No. 95C-1848 ) Defend ant/Appe

llant. )

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

APPEAL FROM THE CI RCUIT COURT FOR DAVI DSON COUNTY AT NASHVIL

LE, TENNESSEE

THE HONORABLE TH OMAS BROTHERS, JUDGE

HELE N SFI KAS ROGERS, pro se Suite 1550 SunTrust Bank Building 201 Four th Avenue

North Nashville, Tennessee 37219

THOMAS E. WATTS, JR., pr o se 201 Four th Avenue

North Suite 1260 P. O. Box 198494 Nashville, Tennessee 37219

AFFIRMED AND REMANDED

SAMUEL L . LEWIS, JUDGE-2- 

## OPINION
This is an appeal by

defendant

/appellant , Thomas E. W atts, Jr ., fro m the decision of the Six th Circuit C ourt of Da vidson County

finding Mr . Wat

ts liable f or malic ious prosecution and awarding plaintiff/appellee, Helen S. Roger s, $18,000 .00 in dam ages. T

he facts out of whic h this m atter ar ose are a s follows.

Mr. Watts and Mrs. Rogers are attorney s who wer e involved in

a lawsuit before the United States D istrict C ourt. Mr . Wat ts repres ented the p laintiffs against the defen dant, Dr . Kanza . The courtentered a default judgment against Dr. Kanza, and the parties began sett lement negotiati ons with the assistance of a United States SixthCircuit Court of Appeals attorney. Mr. Robert A. Weaver r etained Mrs. Rogers to try to settle the case.

On 8 Septem

ber 1992, Mrs. Rogers received a fax from Mr. Weaver

which stated a Harr

y O’ Connor in the

United K ingdom w as prepar

ed to com mit $75 ,000.00 toward a final settlem

ent of all claim s by thos e who had b een a warded a judgm ent against Dr. K anza. W

orking throu gh the settlement attorney, Mrs. Rogers and Mr. Watts reached

a settlem ent on behal f of their

clients. Pursuant to the agreement, Dr

. Kanza was to pay Mr. W atts’ c lients $65,000.00 . Mr. W atts confirmed the partie s’ agreem ent by l etter dat

ed 14 September

1992. Nothing in the settlement agreem ent or the letter set

a deadline

for paym ent of the monies, but Mr. W atts sought payment befo re 24 Sep tembe r 1992 in the

14 September

1992 letter . On 16 S eptem ber 1992, M

rs. Rogers se nt Mr. W atts a letter and enclosed the proposed settlement do cuments Mr. Watts had requested

. The letter read: “Th e set tl emen t mon ies are to be w ire -tr ans fer red in to my trust acc ount around the first of n ext week

and I wil l let y ou know when we can compl ete the settlement.” W hen the money had not arrived on 22 Septem ber 1992, Mr. Watts wrote Mrs

. Rogers and stated : “Obv ious ly t hi s is no t a ma tt er w it hi n yo ur c on tro l, b ut my previous dealings w ith Mr. Kanza ha ve dest royed all belie f that he i s a ma n of his word. If someone other

than Kanza is paying the money, based on their performance to date, they are of the sam e bolt of cloth.” Mr. Watts further s tated he w ould dis avo w the set tle ment i f th e fun ds w ere n ot d eli ver ed t o hi m by the nex t da y.-3-

Mrs. Rogers re ceived a f ax from Robe rt Weav er advising her that Mr. O’Conn or’s assistant

had stated tha

t the delay

in transfe

rring the f

unds was due

to a drastic drop in the E

nglish pound an d that O’ Connor wa s meeting with his bank and would try to get all of it sorted out. Mr. W eaver stated he tho ught Mr. O ’Connor would come through wi th the funds. Mrs. Rog ers conve yed the messa ge to Mr. Watts concernin g the drop in c urrency and the fa

ct the sett leme nt moni es could not

be paid at that time. Mr. Watts d eemed this “unaccept able.”

Mr. O’Connor

faxed a l etter dat

ed 24 September

1992 direct

ly to Mr. W atts which stated: “I cannot hon estly state that the English pound situation was the m ain
causebecause of the drop in exchange rates

. This wa s not the major ca use of the del ay, but the fact we posted several irrevocable letters of credit in our nam e as security based on profit returns of subject contract.” On 25 Septem ber Mrs. Rogers acknowledged the direc t conversa tions Mr. O’Connor had wi th Mr. W atts and attempted to confirm

that the origina

l settlement was possible as long as it was completed in ap proximately two weeks

.
Mrs. Rogers le arned fr

om a l etter tha

t Mr. W atts had pr

omi sed the settle m ent

monies to another person on behalf of his client and that Mr. Watts had told the cr

editor the

money would be a

vailable by 24 Septem

ber 1992. Mr. W atts’ letter further stated: “In my

view, I do not believe

the creditor

has any claim against
me personall y, but

in the unlike ly and u nfortunate event that I am sued, of course, I will hav e no opt ion oth er th an t o pa ss t he re spo nsi bil ity o n to you, a nd p resu mably, youwould wa

nt to pass it o n to your

clients. ” Mrs. Rogers res ponded t o this le tter that no def

inite payment d ate had ev er been gi ven. Mr. Watts advised Mrs. Rogers thathe had been sued in a letter dated 3 Novem ber 1992. He enclosed a copy of a general s essions wa

rrant and stated, “[a ]s y et, I ha

ve not decided what

my response will be, but I thought I ought to keep you up to date on this development.”

The gen eral sess ions court f ound Mr. W atts guilty

of neglige nce and entere d judgm ent in favor of the third par ty credito r. Mr. Watts appealed to the Sum ner County Circuit Court and f

iled a thir d party compl aint again stMrs. Rog ers for f raud and fraudulen t misrepresent ation. At the end of the proof, Mr. Watts m oved to am

end the third-par

ty com plaint to inc lude a cla

im of negligent m

isrepres entat ion. The-4-

circuit court found Mr. Watts guilty of negligence, denied the motion

to amend the compl aint, and dismissedthe third-party complaint. Mr. Watts appealed to this court which reverse d and dism

issed the judgment against Mr. W atts and dismissedas mo ot Mr. Watts’s appealof the dis missal of the th ird-party complain t. McFarlin v. Watts , 895 S.W.2d 687 (Tenn. A pp. 1994). The third-party creditor filed an applicati on for perm ission to appeal to the Tennessee Supreme Court. The supreme court denied the applicati on on 6 Marc h 1995.

In the meantim

e, Mrs. Rogers filed a com plaint for mali cious prose cution against Mr. W atts in the

Davidson C ounty C ircuit Cou rt on 14 November 1994. Mr. Watts filed a m

otion to dism

iss and arg ued the court sh ould dism iss the com

plaint because the case which formed the basis of the claim was not final. The court granted the mo tion.

Mrs. R ogers re- filed her

compl aint in the D avidson Count y Cir cuit Cou r t
on 9 June 1995. Mr. W atts moved to strike portions o f the com plaint involv ing dealings between the parties in 1983. From 1980 to 1983, Mrs. Rogers, other attorney s, and Mr. Watts shared of fic e space. The atto rneys had agree d Mr. W atts would pay the rent and the remaining at torneys, i ncl uding Mrs. Rogers, would pay the other off

ice expen ses. In 1983, th e other attorneys and Mrs. Rogers learned Mr. Watts ha d not paid the

rent for many months and the lan dlord had se nt an e victio n notice. Mrs. Rogers and the other attorneys m oved out atthe end of t

he next m onth and formed their own association. The c ourtdenied the motion to strike t

hese fac ts from the com plaint. Mr. Wa

tts then file d a mot

ion in lim

ine objec ting to any
ev idence of the parties’ dealings as being to remote and not tending to prove an essential elem

ent of the c laim. The cour t took the motion under a

dvisem ent and later denied it. After a trial, the court awar ded Mrs. Rog ers a j udgmen t against Mr. Wa

tts in the amount of $18,00 0.00.

On appeal, Mr. W atts rais es t wo issues. First, he contends Mrs. Rogers failed to pro ve each el emen t of her c laim for m alicious pr osecution a

nd second, he argues the court er

red when it allowe d evidence

of theparties’ dealings in the earl y 1980's. We first

discuss Mr. Watts’s issue of whether Mrs. Rogers carried her burden of proof a s to her ca

use of act ion for malicious pr

osecution.-5-

This court has s et out the e leme nts necessa ry to establish a cla

im fo r malicious pro secution

. In deciding a malicious prosecution case, the trier of f a ct need only focu s on thr ee is sue s: ( 1) we re th e un der lyi ng judici al proceedin gs initi ated by

the defen dant final ly ter minat ed in the plai ntiff’s favor, would the f acts and c ircum stances kno wn to the defendant at the time he or she initiated the judicia

l proceed ings have led an ordi narily

prudent per son t o believethat the pe rson accused was guilty

of the cr ime c harged, and (3) w he ther the defendant initiated t

he jud i cial proceedings against the plaintiff with malice. Lantroop v. Moreland , 849 S.W.2d 793, 797 (Tenn. A pp. 1992) (citations omitted). Finality The underlying judicial proceeding was finally ter minated in Mrs. R ogers’ favor. This court d ismissed the underlying ju dicial pro ceeding o n appeal. Add iti ona lly, Mr. W atts, in response to a questio n from

the trial judgein the insta

nt
c ase, admit

ted he had a

bandoned his a

ttemp t to procee d on the fra udulent misre presenta tion cause of action. A

court may con sider aba

ndonme nt of a ca

use of actionwhen determinin g finalit y. See Chri stia n v. La

pid us , 833 S.W .2d 71, 74 (Tenn. 1992 ).

Probabl e Cause

Mr. Watts bases his probable c ause argu ment o n the claim that a cond

ition of the settlement w as availa bility of the m

one y . Mr. Watts adm

its, however, that when he sued Mrs. Rog ers he ass umed Mrs. Roge rs knew of

this conditi on, but Mr. Watts made

this demand to Mr. Jones, Mrs. Rogers’ partner, in earlie r negotiat ions prior to Mrs. Rogers’ involvement in the case. More over, Mr. Jone s unconditiona lly denied he had such a conversa tion with Mr. Wa

tts, and the trial cour

t resolved this credibili ty issue in favor of Mrs. Rogers. Also, Mr. McFa ll, t he s ett lemen t at tor ney, denied Mr. W atts’ c laim and sta ted “I have absolutely norecollec tion that T om W atts
ever made an issue of

the availa

bility or not of

settlement funds.” He further stated he did not rec all Mr. Watts requiringthe money be in Mrs. R ogers’ escrow account as a condit

ion of negoti ating a set

tlement.-6-

Mr. Watts contends in his brief Mrs. Rogers’ course of co nduct was fraudule nt. This contention flies in the face of the requirements for fraud under the laws of this st ate. Mr. W atts testif ied inthe instant

case that after th e genera

l sessions court ’s judgment was entered against him

he review ed the situa

tion, res earched

the law, and conc luded Mrs . Rogers’ repres entation s were fraudul ent under the law.

“Fr aud is never pre sumed in the absenc e of a conf

idential r elationshipand the burden of proof is on the party asserting the fraud.” Pic cadilly Sq uar e v. Intercon tinental Constr. C o. , 782 S.W. 2d 178, 184 ( Tenn. 1989). A plaintiff must cle arly prove alle gations of fraud. Pipkin v. Lentz , 49 Tenn . App. 2 06, 222, 35 4 S.W. 2d 87, 94 (1961 ) (citing Bevins v. Liv esay , 32 Tenn

. App. 1, 8, 221 S. W.2d 10 6, 109, (194 9)). In order to su stain a ca use of act

ion for fraudule nt misre presenta tion, the plainti ff m

ust show that: 1) the defen dant ma de a re presenta

tion of an e xisting or pa st fact; 2 ) the represe ntationwas fal se when m ade; 3) the

represe ntation wa s in r egard to a m aterial fact; 4) the false represe ntationwas mad e either knowingly

or without

belief in its truth or

reckless ly; 5) plaintiff reasonably relied on the misre presented mate

rial fac t; 6) plainti ff suffered d amage as a result o f the misrepresen tation. Metropolitan Gov’t of Nashville and Davidson County v. McK inney , 8 52 S.W .2d 233, 237 (Tenn . App. 1 992). Mr . Wat ts adm itted whe n questioned

by the trial court that this was the law.

Atbest, any

represe ntationmade

by Mrs . Rogers concerne d afuture fact as to when sett

lement moni es were

to be trans ferred into her tr ust a ccount. The trial judgefoundMr. W atts did not h ave any r easonable grounds upon which to conc lude Mrs. Rogers’ statem

ents were fraudulent. The trial court stated “the evidenc e sim

ply did not support s uch a fin ding but, in f act, the evidence was devoid

of probabl e cause.” We agree.

The dissent

cites a portion of Buda v. Cassel Brothers, Inc. and concludes thatMr. W atts is not l iable to Mr s. Roger s because Mr. W atts had probabl e cause “ to seek the relief involved in th e orig inal actio n .” We respectf ully dis agree w ith this conclusion. After makin g the state ment quoted in the dissent, the Buda court continued:-7-

If it i s est ablished tha

t the party

instituting t

he procee ding reasonably believes in the existence of t he facts upon which t he claim is based and has reasonab le belief that under

those facts the claim may be valid or has re asonable be lief in reliance upon the advice of counsel , sought i n good faith and g iven afte r full disclosure of all re levant fa cts within

his knowle dge and information, then probable c ause is est ablished. B uda v. Cassel Bros., Inc. , 568 S.W.2d 628 , 631-32 (Ten n. App. 1978 ). As previously

explaine d, we are of the opinion that Mr. Watts c ould not and di d not have
areasonabl e belief that the cl aim of fraudul ent mi srepresentation coul d be valid. Thus, there was no probable cause.

Malice

Malic e may

be infer red in a m

alicious pr

osection ca se from

the lack o f probable cause; however, here, there is ample evidence from which the courtcould find actual malice.

Mrs. Rogers and Mr. Watts practiced law toget her from 1980 to 1983. They had a cl ose business and persona l relatio nship. Mr s. Roger s and Mr. Watts h ad a confronta tion because of monet ary considerat ions, a nd Mrs . Rogers and four other att orn eys who had been practicing with Mr. Watts m oved out of the office and formed their own associ ation. Mrs. Ro gers and two of the other a

ttorney s testifie d as to the facts surrounding the confrontation and to the fact that af t er they left the o ffice th e relations hip between them and Mr. Watts was v ery strained. This was not disputed by Mr. Watts.

In addition to t

he strained r

elationship , Mr. W atts dem onstrated his anger overthe failed settlemen t. Mr. W atts’ te stimony at th e underlying procee ding revealed his frustration over the fact that the general ses s io ns court entered a jud gmen t ag ain st hi m.
Mr. Watts testifiedin the insta nt case tha

t the idea of pursuinga third-pa rty compl aint

against Mrs. Rogers “was not taken prim arily or e ven secon darily or tertiar ily to spite her

or cause h er haras sment or any thing of

that s ort, it was taken purely to protect m

y own p ocket.” The facts, however , suggest ot herwise . Mr. W atts-8-

proceeded under the t

heory of fraudu lent m

isr eprese ntation eve n though he co uld have obtained the

same recover y had he proved negl igent m

isrepres entation. At tria

l, Mr

. Watts a

dmitte d he could ha

ve obtained

the sam e recove ry unde r negl igen t misre presenta tion and would ha

ve had a lesser bur

den. We can not find any evidence in the record establishing a reasonable basis for Mr. Watts’ dec ision to file suit based
on fraudule nt misr

epresent ation rath er th an negligent misrepre sentation. We ca n only infer there w as no reason oth er than ill will. Mr. Watts also sought punitive damages in the third-party complaint against Mrs. Rogers which is more than the m ere indem nity he had said he

was see king.

The dissent al so raises a n issue reg arding the propriety of the dam

age award. Neither party raised this issue on appeal and we do not feel it is necessary to add ress the issue sua spo nte. Ne verthele ss, we a re of the opinion that t

he dam age award was proper. A mali cious prosecution action is one to recover damages caused by a judici al procee ding institute d with malice and w it hout probable cause. Such damages are allowable under such an actionas proximately r

esult to the plaintiff, his pers on, pro per ty, or reputation from a previous unsuccessful civil or criminal proceedin g which was prosecuted without pro b able caus e and with malice. Ryerson v. American S ur. Co. , 213 Tenn. 18 2, 1 85, 373 S .W. 2d 436, 437 ( Tenn. 1963). It is not necessary that the damages result from the particular claim; only that the result from the institution of the judicial proceeding. The d amag es awar ded to Mrs. Roge

rs were a result o f the instit

ution of the

action aga

inst her by

Mr. W atts.

Our review of

this record fails to reveal any e rror. Mr. Wa

tts’ first issue is without mer it. More over, w e have cons idered Mr . Wat ts’ rem aining issue s and arguments and find them to be without merit.
Therefore, it results that the j udgmen t of the tr ial cour t is in all respects affirm ed, and the cause is remanded to the trial court for any further necessa ry proceedings. Costs on appeal are taxed to defendant/appellant, Tom E. Watts, Jr.

_______________________________________ SAMUEL L . LEWIS, JUDGE-9-

CONCUR:

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

BEN H. CANTRELL , JUDGE, DISSENTI

NG IN SEPARATE OPI

NION