### IN THE COURT OF APPEALS OF TENNESSEE AT KNOXVILLE May 9, 2001 Sess

ion RAYMOND L. COX v. THOMAS R. HICKS Direct Appeal from the Chancery Court for Anderson County No. 98CH6453 Hon. William E. Lantrip, Judge

FILED AUGUST 7, 2001 No. E2000-01141-COA-R3-CV

This dispute between two businessmen involves issues on the nature and extent of a partnership and the intera ction and enforcement of a mediation settlement agreement. Plaintiff appeals the limitation placed on the partnership agreement and enforceme

nt of the mediation a

greement by

the Trial Court. We affirm. Tenn. R. App. P.3 Appe al as of Right; Judgme

nt of the Chancery Co

urt Affirmed.
H ERSCHEL P ICKENS F RANKS , J., delivered the opinion of the court, in which C HARLES D. S USANO , J R ., J., and D. M ICHAEL S WINEY , J., joined.

Vivian L. Cran

dall, Oak Ridge,

Tennessee, for

Appellant. George H. Buxton, III

, and Harold P. Cousins, Jr., Oak Ridge, Tennessee, for Appellee.

OPINION

This is a dispute between Raymond Cox (Cox) and Thomas Hicks (Hicks), who are in the business

of buying and developing land in Anderson County , Tennessee. In 1996, Cox and Hicks pu rchased a tract of land known as the “Hillon Property” which was convey ed to them by Warranty Deed. They

next entered into a

contract to purc

hase the Onelda Human property, and on August 27, 1997, they entered into a written partnership agreeme nt, which stated in part that these parties would generally acquire and develop rea l property and engage in residential and c ommercial development.-2- At that time, Hicks suggested to Cox that they purchase another parcel known as the Maples Pro pert y, and they did obtain an option to purchase that property in September of 1997. The parties ultimately ob

tained a Warrant

y Deed to the Human property in December, 1997 and the deed to the Maples property in February of 1998.
In 1997, Hicks joined w

ith the Tim Georg

es to purchase prope

rty known as the Price pro pert y, and in

September of 1998, Hicks along with Tim George and Mike Malicoate purchased an industrial trac

t known as the Weave

r Tract. These purchases by Hicks led

to Cox filing this action against Hicks alleging that he andHicks had a partnership, and that Hicks had breached his fiduciary

duties as a

partner by failing to include Cox in the purchase and development of the pro pert ies refe rred to a s th e “P ric e Pr ope rty” and the “Weaver Residential Property.”

Hicks filed his first M

otion for Partial Summary Judgment, stating there was no agreement

or discussion to do a

ny further development bey

ond the Hillon, Huma

n and Maples trac

ts withCox. The Trial Court gra nted Hicks summary

judgment as to

the Weaver property, but not as to t he P ric e pro pert y.

Sub seq uen tly, Hicks filed a Counter-Complaint, asking the Court to require sp

ecific performance

of a Mediation Settleme

nt Agreement th

at had been ente

red by Hick

s and Cox with regard to the dissolution of their partnership

and distribution of jointly-held property not in dispute. The Mediation Settlement Agreement (MSA), dated September 21, 1999, provided that H icks would purchase the property mentioned

therein from Cox, based upon a calculation of the fair market value less the indebtedness owed. The MSA provided that each party would chose an appr aiser andthose two appraisers would pick a third. The mediator would then take the two appraisals closest in value to each other and average those values to arrive at the Fair Appraised Value of the jointly ow ne d pro pert y. Cox refused to perform once the appraised value was determined. The Trial Court Ordered the MSA be specifically performed, but reserved the issue for trial of whether Hicks’ calculations of the amount due were appropriate, or whether additional sums were due.

Following trial on the remaining issues, the Trial Court found there was no writing describing the land associat ed with the partnership, and there was no meeting of the mindsto include the Price or Weaver Industrial Tracts. The Court entered Judgment for Hicks.

On appeal, the issues before the Court are whether the

Trial Court erre

d in granting partial summary judg

me nt for the Defendant and thereby requiring spe cific performance of the Mediation Settlement Agreement, and whether the Trial Court erred in finding that the partner ship agreement did n

ot extend to cover th

e acquisition and d

evelopment of the

disputed properti

es?

Our review of

the motion for summary judgment involves purely questions of law, no presumption of correctness attaches to the lower court’s judgment. Bain v. Wells, 936 S.W.2d-3-

618, 622 (Tenn. 1997).

Summary judgment is appropriate where there is no genuine issue with regard to the material facts relevant to the claim or defense contained in the motion, Byrd v. Hall, 847 S.W.2 d 208, 210-211 (Tenn. 1993). The movingparty is entitled to a judgment as a matter of law on the undisputed facts. Anderson v. Standard Regi ster Co. , 85 7 S.W.2d 555, 559 (Tenn. 1993). The moving party has

the burden of proving that its motion satisfies the requirements of Tenn. R. Civ. P. 56. Bain

. In this case th ese facts are n

ot in dispute. On Sept

ember 24, 1999, Cox a

nd Hicks, represented

by counsel, agreed

to enter into a Mediation Settlement Agreement to dissolve, windup andterminate the par

tnership and to

resolve all issues concerning their co-owned real property. The MSA lis ted the thr ee gr oup s of und isp ute d, j oin tly- own ed, real pro pert y:

(a) Lots in Phase One and Phase Two of Glen Alpine Subdivision; (b) Commercial tract being one acre, tract located on the north side of Sta t e Highway 61. (c) The Human/ Hillon Tracts be ing approximately 8.3 acres located on State Highway 61. The MSA provided that H icks would purcha

se from Cox the afor

ementioned trac

ts based upon the “Fair Appraised Value

” less the indebte

dness owned to

Home Federal Bank and other set-offs. The purchase price

would be one-half

of the net equity

in said propertie

s. The MSA set forth the following procedure for determining “Fair Appraised Value”: 2. Fair Appraised Value. The Fair Appraised Value shall be de

termined as follow

s: (A) COX shall pick one MAI ap praiser and HI CKS shall select one MAI appraiser. (B) The two appraisers shall jointly select a third MAI appraiser from Knox County, Tennessee. (C) Appraisals shall be subm it ted to the mediator and upon submission of the thr

ee appraisals,

the mediator shall select the two appraisals that are closest together

numerically. Those two

appraisals shall be averaged and

that average

value shall be the

Fair Appraised Val ue o f al l jo int ly ow ned pro pert y. The MSA further

provided that “the

parties shall immed

iately prepare a description of each of the tracts to be a

ppraised and subm

it the same to

their respective

appraisers.” T

he MSA didnot provide any specific methodology , guidelines, or requirements upon which the a ppraisals-4-

were to be made by the selected appraisers.

Cox selected as his appraiser Ho p Bailey, H

icks selected L

ewis Pipkin, and the two appraisers then selected William S. Broome as the third appraiser. Bailey found the total value of the property to be $2,180,000.00; Pipk in val ued the total property at $1,210,000.00; and William Broome appraised the pr

operty at $1,219,000.00. F

ollowing the for

mula set forth in the MSA, the mediator found the Fair Appraisal Value of the property

to be $1,214,500.00

before any

adjustments. Cox objected to the results because in his opinion, “Defendant fraudulently supplied the appraisers with inaccurate information to reduce the valu e of the property.” He argued that “there is nothing in the record to establish the facts used by the appraisers were accurate infor mation. Cox submitted an affidavit in which he said:

3. The appraisals were to be based upon the lot prices that were jointly agreed to by Mr. Hicks and myself when we be gan the Glen Alpine Dev elopment. These agreed upon lot prices are listed in a price sheet

for Phase I dated August 1, 1997 and fo rP hase II dated August 10, 1998. . . . I submitted these agreed lot prices to Mr. Bailey for his use in his appraisal. 4. When I received Mr. Pipkin’s report, I noticed on page 24 that he used completely different lot prices in his evaluation. I learned that Mr. Hicks provided Mr. Pipkin with a price sheet dated December 1, 1999, which listed the lots at lower prices than those we ag

reed upon in

Exhibit G. . . . Mr. Hicks and I never agree

d to reduce the lot prices.
* * *
6. Mr. Pipkin and Mr. Broome also relied on incorrect information regarding the cos t to exc avat e th e com mer cia l pr ope rty. Both appraisers used an estimate dated December

29, 1999 in the amount of $538,886. 00. . . Mr. Hicks an d I had previo

usly determinedthat the cost of excavating the commercial property would be in the range of $160,000.00 to $200,000.00.
Cox offered no competent evidence that the 1999 price list supplied by

Hicks was a knowing or rec kless m isrepresentatio n, and in order to p

revail on a claim o

f misrepresenta

tion, it must be shown that the party made a knowingly or recklessly false misrepresentation as to material facts, which were justifiably relied upon by the othe r, and that he suffered damages as a result

of that reliance. Speaker v. Cates Co. , 879 S.W.2d 811, 816 (Tenn. 1994).

WhileCox claims the parties had agreed that the appraisals woul d be based on the agreed upon price list from 1997, thus making the 1999 price list a “fraudulent misrepresentation”, the MSA makes no mention of what the appraiser should rely u

pon in arriving at the “fair appraised value”. Specifically

, there is no refe

rence to the lot pr

ices that Cox say

s were used in

set ting the-5-

value of the excavation estimate. Cox is therefore at tempting to alter

the written docume

nt with parol evidence, despi

te the fact that th

e MSA is clear and

unambiguous. Our courts have held that a settlement agreement is merely a contract betwee n the parties to lit igation, and as such, the formation, construction and enforceability of a se ttlement agreement

is governed by the law of contracts. See Sweeten v. Trade Envelopes, Inc., 938 S.W.2d 383, 385 (Tenn. 1996); Environmental Abatement, Inc. v. Astrum R.E. Corp. , 27 S.W.3d 530, 539 (Tenn. Ct. App. 2000). More over, a contrac

t must be interpreted and enforced according to its clear, plain and unambiguous terms. Bob Pearsall Motors, Inc., v. Regal Chrysler-P lymouth, Inc., 521 S.W.2d 578, 580 (Tenn. 1975); Gates, Dunca n & Vancamp Co. v. Levantino , 962 S.W.2d 21, 25 (Tenn. Ct. App. 1997). Be cause the MSA doe

s not contain

any a mbiguities, the parties may not introduce extrinsic

evidence to intro

duce additional te

rms into the agre

ement. Cox also fails to present

evidence that the

appraisers rel

ied upon the 1999 pr

ice list to Cox ’s detri ment. He alleges such reliance in his affidavit, but lacking are any depositions or affidavits of appraisers s

tating that their appraisals would have been different had they not been giventhat price list. Broome indicates in his appraisal report that he was given both price lists, and also reviewed th

e lots which had al

ready bee n sold. Broome fur

ther states:
To estimate

the market value of

subdivisions, the appraiser will typically determine a current market value

for each of the remaining subdivision lots and then determine an absorption sched

ule, which will

calculate the e

stimate remaining

time to sell

these lots. In this scenario, lots that are e stimat ed to sell at some po int in the future wi

ll be discounted in price to obtain a current market value.
For the sub ject subdivision, this format of estimating current market value will be difficult to implementdue to the past sales history of the subdivision. In the first y ear (1997) 17 lots were sold, where 9 lots were sold in year 2 (1998) and only 2 lots were sold last year ( 1999). Due to this ir regular sales

patterns it would be

difficult if not impossible to determine a [sic] absorption schedule for the subdivision.
For this same reason, an alternative solution would be to sell the remaining lot s a t auction

. A local auctioneer who is familiar with the Glen Alpine Subdivision was contacted and estimated that

the subject lots would bring between 60% and 70% of list price or $17,500 to 22,500 per lot at auction. Under

this scenario, al

l lots would be discounted up front and a [sic] absorption schedule would not be necessary.
For the purposes of appraising the remaining 49 sub jec t lots, a median value or $20,000 per lot will be used. This figure would be discounted b y 10 % for the auctioneer’s commission, lea ving a current market value of $18,000 per lot or $882,000.
The foregoing establishes that Broome used his own method for valuing the lots, and-6-

likewise, Pipkin also did more than merely rel yupon the prices furnished by Hicks. In Pipkin’s analysis, he

states: As discussed in the report, the value of 49 remaining l

ots in Glen Alpine S/D is estimated by

discounted cash flow analysis. Due to reported sales for 1999 and the declining lots sales since development of Glen Alpine S/D, a relatively lengthysellout pe riod is projected. As a result, an a uction may r

esult in an equal or

possib l y greater value. However, for the purposes of this appraisaland given the unc ertainty associated

with auction sales , the s ubdivision develop ment approach is u

sed to provide an indication of present worth. Pipkin also discus ses two similar subdivision: Norris Woods S/D and Mill Creek Meado ws. Both of these subdivisions experienced a decline in sales in recent years. Pipki n als o spoke with several loca

l real estate ag

ents who also

indicated that

the residential market in Anderson County had slowed during the pas t two years. He also considered the sell rate, along with the historical lot prices and the list prices in estimating a lot value of $30,000.00. He then deducted the expenses associat

ed with the sale of

these lots in calcu

lating his final va

lue of the lots. Cox also claims

that Hicks misrepresented the cost of excavation of the commercial pro pert y. However, hedoes not present evidence that Hicks provided fa

lse information; he

simply states that they had a previous estimate for the work that was significantly less. Again, there i s nothing in the MSA regarding the basis for the appraisal, and no evidence that the parties had agreed to base the appraisal on the prior estimate. The appraiser were free to base their va luations on any evidence that they found to be credible.

Cox had the burden of provingevery element of fraud. Hiller v. Hailey , 915 S.W.2d 800 (Tenn. Ct. App. 1995). Fraud is never presumed, and

where it is alleg

ed facts sustainin

g it must be clearly ma

de out; the repre

sentation must be in r

egard to a material fact

, must be false

and must be acted upon by party in ignor ance of its falsity, and with a reasonable belief that it was true. Id

. at 802. Cox failed to present evidence to support his claim of fraud, and accordingly, the decision of the Trial Court on this issue is affirmed.

As to the scope of the partnership, our review i s de novo upon the record, with a presumption of correctness as to the Trial Court’s factual determinations, unless the preponderance of the evidence is other

wise. Tennessee

Rules of Appellate

Procedure, Rule 1 3(d); Union Carbide Corp. v. Huddleston , 854 S.W.2d 87, 91 (Tenn. 1993). T he T rial Court’s conclusions of law, however, are afforded no such presumption. Campbell v. Florida Steel Corp

. , 919 S.W.2d 26, 35 (Tenn. 1996). The issue at trial was w hether the Price

tract and Weaver

Industrial Tr

act were within the scope of the Partnership Agreement, such that Hicks breached his fiduc iar y d uty to the partnership, when he purchas ed these tracts in his individual capacity. The Trial Court, in finding in favor of Hicks , found as follows:-7- With reference to the Weaver Industrial property I find that this property was neve r contemplated as being available for purchase until at least September, 199 8

. At all times prior to

this date this land was either optioned to the City of Clinton or was being consider

ed by the City

to be i ncl ude d in an In dus tri al P ark. Sig nif ica ntl y, it was the property owne

r, St eve Weaver, af

ter his negotiat

ions with the city

fell through, w ho contacted defendant Hicks about buying the land. . . . Mr. Weaver’ s testimonyconvinces me th at no effort had be

en made by a

nyone to ac

quire this industrial land other than the City until he sought out Mr Hicks in the fall of 1998. Because I find Mr. Weaver’s testimony cr edi ble, I have serious questions that any drawing could have existed which showed this industrial land.
I further find that the industrial project was significant ly diffe rent in both costs and scope from the residential subdivision undertaken by the parties. While the plaintiff had no e xperience with industrial pro jects, the defen

dant testified to hi

s substantial experience with such projects. . . . With reference to the Price tract, the efforts to acquire this property originated withTim Georg e, whose wife was related to the deceased owner. This land was purchases from the executor of the Price estate by Mr. George wh o then sought participation from Mr Hicks.
* * * * *

. . . Even though a d

rawing of the Weaver residential tract as found in the defendant’s pos session showing a ccess to the Glen

Allen tract,

I can not go further andfind that it has any relevance whatsoever to theWeaver industria l or Price tracts.

The Trial Court heard the testimony of the witnesses and the Court’s findings were basedupon the credibili ty of the witn

esses. The Trial

Court is in the best position to assess credibility

of witnesses, and

where the issue hinges on the credibility of the witnesses, we will not reverse the trial judge unless there is clear, concrete and convincing evidenc e to the co ntr ary. Tennessee Valley Kaolin Corp. v. Perry , 526 S.W.2d 488, 490 (Tenn. Ct. App. 1974). The evidence does not preponderate against the Court’s finding that the Price tract and the Weaver industrial tract were not included within the scope of the partnership.

Tennessee Code Annotated § 61-1-120 addresses the duty that one partner owe

s to the other partners and the partnership:

Fiduciary duty of partners. -- (a) Every partner mustaccount to the partnership for any benefit, and hold

as trustee for it a

ny profits de

rived by him

without the consent of the other partners from any transaction connected with the forma tion, conduct, or-8- liq uid ati on o f th e par tne rsh ip o r fro m an y use by hi m of its pro pert y. The Uniform Partnership Act, adopted in this jurisdiction, as well as modern case law establish and recogni ze that the relationship of partners is fiduciary and imposes on them the o bligation of the utmost good faith and integrity in their dealings with one another withrespect to partn

ership affairs. See Lightfoot v. Hardaway , 751 S.W.2d 844, 849 (Tenn. Ct. App. 1988).

The fiduciary nature of the partnership relat ion means tha t a partner has a duty to share with the partnership those business opportunities clearly related to the subject of its operations. See 59A A M . J UR . 2 D Partnership § 443 (1987). However, th is does not mean tha t all business opportunities presented to a partner must be presented to the partnership. Lightfoot

.

Cox attempts to extrapolate from the Lightfoot decision support for his

argument that Hicks breached his fi duciary duty by arguing that unlike the plaintiffs in Lightfoot , Cox had the financial ability to par

ticipate in the purchase of the Weaver and Price properties. However, Lightfoot addresses the situation where the partner is buy

ing partnership

property, and not engaging in a outside enterpr

ise. Therefore

, it does not follow th

at Lightfoot represents the o nly situation i

n which a partner need not present a business opportunity to other partners or the partnership. For example, while a partner’s fiduciary duty extends through the dissolution and winding up of t h e partnership, this duty does not apply to ne

w business comm

enced af ter dissolution. See 59A Am Jur 2d Par tnership § 432. Add itionally, thi

s duty does no

t prevent a partn

er from making p

lans, during the existence of th e partnership, to

begin a future business

after the partn

ershipis dissolved. See Young v. Cooper , 203 S.W.2d 376, 384 (Tenn. Ct. App. 1947).

Moreover, the use of a partn ership opportunit

y t o purchase property is not an improper appropriation wh

ere the partner

ship enterprise is

entered f

or a limited purpose of developing specific real p roperty oth

er than the trac

t purchased and n

ot as a general partnership for the purpose of buying any lands that might be profitably developed. See Mathis v. Meyeres , 574 P.2d 447 (Alaska 19

78); see generally 59A A M . J UR . 2 D Partnership

§ 447 (1987). Hicks and C ox became partners in 1996 when Cox was searching for another individual to assist him in the acquisition and development of the Hillon pr opert ies. After commencing the development of this property, t

he parties enter

ed into a formal, w

ritten, partners

hip agreement

upon Hicks’ request. This agreement did not specify what land was o r was not to be includedin the scope of the partnership. H owe ver, the re wa s te sti mon y tha t th is w as m erel y a formalization of the prio r agr eemen t between the parties, entered for tax and estate planning purposes. While Cox maintains that he and Hicks discussed the possible acquisition of some other surrounding pro

perties, includin

g those disputed in

this case. Hicks maintains that this agreement was confined to the development of the Hillon properties.

The evidence preponderates that the agree ment between the

parties was not a

general investmentbusiness. The partners were not pledge d to spend any

particular porti

on of their time looking after partnership affairs, nor did they agr ee to refrain from buying land individually or from-9-

forming other partne rships to b uy land. In fact, the evidence e stablishes that both Cox and Hicks were involved in other land investment entities formed before and after the partnership

was created. Of significance is the fact that the Price and Weaver investmentopportunities did not come to Hicks as a result of his partnership with Cox. Hicks and George had wo

rked together

in the past on the developmen

t of both residentia

l and commercial p

roperties. As for the Wea ver p rop ert y, Cox admits that the property was not available fo r saleprior to September 1998. Taking into account the Trial Judge’s finding on credibility, we hold that the evidence does no t pre ponderate against the Trial Court’s decision that the Price and Weaver properties were not contemp lated as a part of th e partner ship deve lopment sc

heme, and

Hicks bre

ached no f

iduciary duty ow ing to Cox. Acco rdi ngly, we affirm the Judg ment of the Trial C

ourt, and as sess the cost of the appeal to Ray

mond Cox, and remand t

o the Trial Court.

_________________________ H ERSCHEL P ICKENS F RANKS , J.