### IN THE COURT OF APPEALS OF TENNESSEE AT NASHVILLE April 1998 Session AMERICAN CABLE CORP. v. ACI MANAGEMENT, INC., ET AL 

### .

Appeal from the Chancery Court for Davidson County No. 95-74-I Irvin H. Kilcrease, Jr., Chancellor

No. M1997-00280-COA-R3-CV - Filed September 14, 2000

This appeal involves a legal dispute arising out of a contract to insta

ll television cable

in Alabama andMississippi. After t he corporat ion that installed th e cable did not re

ceive full pay

ment for its work, it filed suit in

the Chancery Court for Davidson County Tennessee against the corporation and partner ship that hired it and the president of the d

efendant corpo

ration. The trial

court g ranted a summary judgment dismissing the claims against the defendant corporat ion’s president, and the installer took adefault judgmen

t against the cor

poration for $1,0

59,743. On this appe

al, the installer takes issue with the summary judgment dismissing its claims against the defendant corporation’s president. We have determine d that the trial cou

rt properly

granted the summ

ary judgme

nt because the installer failed to demons trate that i t will be able to prove all the essential elements of its tort claims against th

e defendant cor

poration’s presi

dent.
Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Chancery Court Affirmed

W ILLI AM C. K OCH , J R ., J., delivered the opinion of the court, in which H ENRY F. T ODD , P.J., M.S., and J ERRY S MITH , J., joined.

W. Gary Blackburn and William J. Shreffler, Nashville, Tennessee, for the appellant, America n Cable Corporation.

H. Frederick Humbracht, Jr., Nashv ille, Tenn essee, for t he appellee , Vince King.

OPINION

ACI Manageme

nt, Inc. (“ACI”) was the general partner of a Brookridge Cable Special Purpose Partnership (“Brookridge”). ACI and Brookridg e obtained contracts to install television cable in Alab ama and Mississippi. In Decembe

r 1993, they

entered into an or

al contract with AmericanCable Corporation (“American Cab

le”) to install

four hundred miles of cable in Cullman, Alab ama and Hatton, Alabama and in Iuka, Mississippi. The parties agreed that America n Cabl e would perform the work

and then submit

invoices for the c

ompleted work to

ACI and Brookridge. These invoices we

re to be pay

able within thirty

days.1 The order vo luntarily dismissing A CI’s claims against Brookside is n ot in the re

cord. Counsel inf

ormed the court during oral argument of the disposition o f these claims. It is und isputed that B rookside is not a party to this a ppeal.

-2- American Cable commenced work and began submitting invoices to ACI and B rookridge. At first, ACI and Brookridg

e paid these invoices in a timely manner; however, their pay ments began to fa ll behind before the contract had been in effect for a full fiscal quarter. By the third week of March1994, ACI and Brookridge owed American Cable $450,000 for work that had already been performed

and invoiced. Even though the relationship between t he parties began to deteriorate, AmericanCable cont inued to wo rk and to su bmit invo ices. By mid-Ma y 1994, ACI and Bro okridge still owed American Cable $300,000.

At this point, American Cable sought assurances from ACI and Brookridge that it would be paid for the work being performed. Vincent King, ACI’s pre sident, told Amer ican Cable that its invoices would be paid and in structed Am erican Cabl e to contin ue working. Mr. King appare ntly also told American Cab

le that it would not b

e paid until the subscribers in the three cities where cable was being laid be

gan to purchase cable

subscriptions.American Cable continued working, but ACI and Brookridge paid only $25,000 of the invoiced charges. When the work was fully performed in August, 1994, American Cable’s outstanding, overdue invoices amounted

to $444,134.53. Mr. King acknowledged that ACI and Brookridge owed the money and a

ssured American

Cable that it would be paid. During the remainder of 1994, ACI and Brookridge paid American Cable another $175,330.
In January 1995, American Cable filed suit in the Cha nc ery Court fo

r Davidson County against ACI, Brookridge, and Mr. King. The claims asserted against Mr. King included promissory fraud and un

just enric hment. ACI, Br ookridge, an d Mr. King de nied liabi lity, and Brook ridge counterclaimed

against American Cable for delay in performing the work. Prior to

trial, American Cable voluntari ly dismissed Brookridge as a p art y. 1 In March 1996, the trial court granted summary judgment dismissing all the personal claims against Mr. King. Three months later, on June 17, 1997, the trial court

awarded American Cable a $1,059,743 judgment against ACI. American Cable now appeals from the

summary judg

ment dismissing Mr.

King as a defen

dant.

I. A PPELLATE R EVIEW OF S UMMARY J UDGMENTS

As we have said many times, summary judg ments are not some sort of disfavored procedural shortcut. Bradley v. McLeod , 984 S.W.2d 929, 932 (T enn. Ct. App. 1998) ; Mansfield v. Colonial Freight Sys. , 862 S.W.2d 527, 530 (Tenn. Ct. App. 1993). They are, instead, part and parcel of the pretrial proceedings in

most civil cases. Their salutary purpose is “to enable the courts to pierce the pleadings to determine whether the case justifies the time and expense of a trial.” Byrd v. Hall, 847 S.W.2d 208, 210 (Tenn. 1993). Accordingly, a summary judgment motion can providea relatively quick and efficient means of

concluding a case when

the law is clear and when the material facts are notgenuinely

disp uted. Smith v. Bridgestone/Firestone, Inc. , 2 S.W.3d 197, 200 (Tenn. Ct. App. 1999).2 This is not a novel o r unheard o f tactic among credi tors’ lawy

ers who have been known t o refer to it

as “inviti ng everyone to t

he party.”
-3- The party seeking the summary judgment bears theburden of demonstrating that no genuine dispute of material fact exists and that it is entitled to a judgment as a matter of l aw. Shad rick v. Coker , 963 S.W.2d 726, 731 (T enn. 1998); Belk v. Obion County , 7 S.W.3d 34, 36 (Tenn. Ct. App. 1 999). Once the moving party carries its burden, the nonmoving par ty must come forw ard wit h evidence to demonstrate tha t there are suff

icient factual di

sputes to warran

t a trial. The nonmoving party may carry its burden by

(1) pointing to evidence either overlooked or ignored by the moving party that creates a m aterial factual dispute, (2) rehabilitating evidence challenged by the moving part y, (3) producing additional evidence that creates a material factual dispute, or (4) submitting an affida vitin ac cord ance wit h Te nn. R. C iv. P. 5 6.0 7 req ues tin g add iti ona l ti me f or d isc ove ry. McCarley v. West Quality Food Serv. , 950 S.W.2d 585, 588 (Tenn. 1998); Byrd v. Hall, 847 S.W.2d at 215 n.6; DeVore v. Deloitte & Touche , No. 01A01-9602-CH-00073, 1998 WL 68985, at *3 (Tenn. Ct. App. Feb. 20, 1998) (No Tenn. R. App. P. 11 application filed). Nonmoving parties who do not carry their b urden face summary dismissal of the challenged claim because, as our courts have repeatedly

observed, the “failure of proof concerning an essential elemen t o f a cause of action necessarily

rende rs all other fact s immaterial.” Alexander v. Memphis Individual Practice Ass’n , 870 S.W.2d 278, 280 (Tenn. 1993); Strauss v. Wyatt, Tarrant, Comb s, Gilbert & Milom , 911 S.W.2d 727, 729 (Tenn. Ct. App. 1995).

When reviewing a sum

mary judgm

ent on appeal, we

must consi de r the same materi als considered

by the trial court to decide anew whether the summary judgment was appropriate. Hunter
v. Brown , 955 S.W.2d 49, 50-51 (Tenn. 1997); Mason v. Seaton , 942 S.W.2d 470, 472 (Tenn. 1997); Hart v. Tourte , 10 S.W.3d 263, 267-68 (Tenn. Ct. App. 199

9). Summary j udgments enj oy no presumption of correctness on appeal. Nelson v. Martin , 958 S.W.2d 643, 646 (Tenn. 1997); City of Tu llahoma v. Bedford

County , 938 S.W.2d 408, 412 (Tenn. 1997). Thus, when we review a summary judgment, we vie

w all the evidenc

e inthe light most favorable to the nonmoving party, and
we resolve all factual inferencesin the nonmoving party’s favor. Luther v. Compton , 5 S.W.3d 635, 639 (Tenn. 1999); Muhlheim v. Knox County Bd. of Educ. , 2 S.W.3d 927, 929 (Tenn. 1999 ). W e will fin d su mma ry judgments appropriate only when the governing law applied to the unc ontroverted facts permits only one conclusion — that the moving party is entitled to a judgment as a matter of law. See McCall v. Wilder , 913 S.W.2d 150, 153 (T enn. 1995); Belk v. Obion Count y , 7 S.W.3d at 36-37.

II. T HE C LAIMS A GAINST M R . K ING
AmericanCable’s sole argument on appeal is that the trial court erred by g ranting a summary judgment dismissing its clai ms against Mr. King personally. Mr. King chara cterizes American Cable’s tactics as nothing more than “a collection effort where the [creditor] attempted to bring in the presiden t of one of the defendants simply to apply pre ssure.” 2 Whatever American Cable’s motives, we have determined that it has not demonstrated that it will be able to prove all the essential elements o f its promi ssory fraud or n egligent mis representat ion claims against Mr. King.-4- A. P ERSONAL L IABILITY OF C ORPORATE O FFICERS The law distingui

shes between cor

porations and thei

r officers and d

irectors. Corporations
are distinct legal entities. General Tel. Co. v. Boyd , 208 Tenn. 24, 29, 343 S.W.2d 872, 875 (1960); Jackson Mobilphone Co. v. Tennessee Pub. Serv. Comm’n , 876 S.W.2d 106, 115 (Tenn. Ct. App. 1993). Corporate offic

ers and director

s are considere

d agents of the corporation. As agents, they are not personally liable for the corporation’s debts. Schlater v. Hayni e , 833 S.W.2d 919, 924 (Tenn. Ct. App. 1991); Bowman v. Home Med. Co. , 7 Tenn. Civ. App. (Higgins) 265, 285 (1917); 3A James Solheim & Kenneth Elkins, Fletcher’s Cyclopedia on the Law of Private Corporations § 1117 (rev. perm. ed. 1994).

The relation between corporations and their creditors is one based on contract. Bowman v. Home Med. Co. , 7 Tenn. Civ. App. (Higgins) at 287. A corporation’s contracts do not pe rsonally bind the corporate officers who execute them. Bill Walker & Assoc ., Inc. v. Parrish , 770 S.W.2d 764, 770 (Tenn. Ct. App. 1989). Ordinarily, an officer of a corporation can be held personal

ly liable to a disappointed creditor of the corporation only if the officer’s own conduct toward that party has be en tortious. Schlater v. Hayni e , 833 S.W.2d at 924; Bowman v. Home Med. Co. , 7 Tenn. Civ

. App. (Higgins) at 285. When a corporate officer has engaged in tortious conduct, he or she may be liable to third-parties, and this liability is separate and independent from any liability the corporation may have. Judds v. Pritchard

, No. 01A0 1-9701-CV

-00030, 19

97 WL 589070, at *3 (Tenn. Ct. App. Sept. 24, 1997) (No Tenn. R. App. P. 11 applic ation filed); Brungard

v. Caprice Records, Inc. , 608 S.W.2d 585, 590-91 (Tenn. Ct. App. 1980).

It is beyond re

asonable dispute that Mr. Kin

g cannot be per

sonally liable to America

n Cable for ACI’s contra

ctual debt. Realizi

ng this, America

n Cable argues t

hat Mr. King’s lia

bi lity is not d erived fr om ACI’s contr actual obligati

ons, but rather is b

ased on his own tort

ious acts. Acco rdi ngly, we turn to

American Cable’s promissory f raud and neglig

ent misrepresen

tation claims against Mr. King.

B. T HE P ROMISSORY F RAUD C LAIM In order to make out a claim for promissory fra ud against Mr. King, American Cable must allege and prove that he

promised to

perform some act in the future and that at the time he made the promise he had no intent ion to ho nor it. Axline v. Kutner , 863 S.W.2d 421, 423 (T enn. Ct. App.1993); Dobbs v. Guenther , 846 S.W.2d 270, 274 (T enn. Ct. App. 1992); Oak Ridge Precision Indus., Inc. v. First Tenn. Bank , 835 S.W.2d 25, 28 (Tenn. Ct. App. 1992). When faced with Mr. King’s summary judgment motion, American Cable was obligated to demo

nstrate that it wou

ldbe able to prove that Mr. King lacked any intention of paying American Cable during the summer of 1994 when he stated that American Cable’s invoices would be paid.

The evidentiary record on this point is not particularly we ll developed. When we match the facts in the affidavits a

nd depositions with

American Cable’s legal arguments, American Cable is3 Lewis Carroll, The Annot ated Al ice: Al ice’s Adv entures in Won derland & Thro ugh the Loo king Glass 231 (1960 ).

4 Tenn. R. Civ . P. 9.02 wi th regar d to pleadi

ng fraud.

5 This rule w as ref

lecte d in th e Lati n maxim odiosa non praes umitur (odious things are not presumed). It was based on the charit

able notion th

at individual deportment, for the most part, i s consisten

t with t he socially

desirable ideal of good moral con duct. 1 Sp encer A. G ard, Jones on Evidence § 3:11 (1 972) ( d iscussing the pr esumption in the context of criminal ca ses).
-5- simply asking us (and presumably the jury) to infer that Mr. King must never have intended to pay its invoices beca

use all of American

Cable’s invoices were not paid. In addition to its pronounced cir cul ari ty, this argument brings to mind Tweedledee’sdefinition of log ic: “[I]f it was so, it might be; and if it were so, it would be; but as it isn’t, it ain’t.” 3
Getting at a person’s intent can be a tricky proposition, made no less difficult because intent andaction are usually separ ated in t ime and because intentions are some

times only impe

rfectly carried into action. Actions are only crude gauges of the intent behind them, but they

are frequently the on ly ga uges available . In addition, p eople can sometim

es be less than ca

ndid about their intentions or motives. Thus, jud ges and juries,

lacking the abil

ity to look into a person’s mind, are left to deduce a person’s intent from his or her actions or from other circumstantial evidence. State
v. Washington , 658 S.W.2d 144, 146 (T enn. Crim. App. 1983 ); Burns v. State , 591 S.W.2d 780, 784 (Tenn. Crim. App. 1979).

As in other cases where intent is an issue , a party may pr ove an intent to defraud using conduct or other circumstantial evidence. Metropolitan Life In s. Co. v. Hedgepath

, 182 Tenn. 296, 300, 185 S.W.2d 906, 907 (1945). However, proving fraudulent intent, like plead ing frau d, 4 is particularly

demanding. Outside of cases involving fiduciary relationships, fraud c an never be presumed. In re Ashley , 5 B.R. 262, 266 (B ankr. E.D. Tenn. 1980); Sna

pp v. Moore , 2 Tenn. (2 Overt.) 236, 239 (1814); Hiller v. Hailey , 915 S.W.2d 800, 803 (Tenn. Ct. A pp. 1995). This rule

is part of the law’s large

r, overarching

view that where t

he same set of cir

cumstances can g

ive rise to opposite inferences, the law presumes innocent acts rather than intentional misconduct. Memphis Cotton Press &

Storage Co. v. Hanson , 4 Tenn. App. 293, 301 (1926). 5 Thus, no inference of fraud should be made fromcircumstances that equally permit reasonable inference s of non-fraudulent conduct. In re Homer , 45 B.R. 15, 22 (Bankr. W.D. Mo. 1984).

Failure to perform a promise, standing alone, is not competent evidence that the promisor
never intended to perform. World Help v. Leisure Lifestyles, Inc. , 977 S.W.2d 662, 670 (T ex. Ct. App. 1998). In the context of a promissory fraud claim, the mere f act that the promisor f

aile d to perform the promised act is insufficient by itself to prove fraudulent intent. Bryant v. Southern Energy Homes, Inc. , 682 So. 2d 3, 5 (Ala. 1996) (a ffir ming summary

judgment); see also In re Emery , 52 B.R. 68, 70 (Bankr. E.D. Pa. 1985). The r eason is that ordinarily

, where nothing

else is shown, mere failure to perform a promise can be as consistent with an honest intent as with a dishonest one. Murphy v. T.B. O’Toole, Inc. , 87 A.2d 637, 638 (Del. Super. Ct. 1952). Not every broken promise starts with a lie.-6-

Mr. King’s summary

judgment motion required American Cable to demonstrate that it could present some comp et ent and material e vidence that Mr. K

ing never inten

ded to keep his pro

mise when he made it. Lonning v. Jim Walter Homes, Inc ., 725 S.W.2d 682, 685 (Tenn. Ct. App. 1986). AmericanCable could have forestalled the summary judgment in two w ays. First

, it could have pointed to competent evidence tending to establish Mr. K ing’s lack o f present intent. Evidence merely inviting the fact-finder to guess at Mr. King’s intent would not be competent. Black Motor Co. v. Spicer , 160 S.W.2d 33 6, 337 (Ky. C t. App. 1942); Farmer v. State , 208 Tenn. 75, 78, 343 S.W.2d 895, 896 (1961) (observing that no person may be deprived of his or her rights by conjecture). Second, it could have pointed to evidence from which a fact-finder could reasonabl

y infer that Mr. King did not intend to pay American Cable when he promised that it wou

ld be paid. To be permissible, however, such an inference cannot be based onspeculation or co njecture. I

t must be reasonably

drawn from the fa

cts on which it purp

orts to be based, a

nd it must be made in accordance

with correct

and common modes of

reasoning. Patton v. L.O. Brayton & Co. , 184 Tenn. 592, 598, 201 S.W.2d 981, 984 (1947).
American Cable’s promissory fraud claim is supported by evidence of

two facts: first, that Mr. King promised in

May and August 1994 that American Cable would be paid for its work and second, that American Ca ble was not th ereafter paid for its work in full.

However, those f

acts, standing alone, cannot support the inference that Mr. King never intended for American Ca

ble to be paid for its work. Without more, that conclusion would be nothing but spe

culation. To get

past a
summa ryjud gment motion, a non -moving party

must do much more tha n set the stage f

or wild guesses.
The record contains one

other piece of evidence that could possibly shed some light on Mr. King’s intentions when he promi sed Ameri can Cable that it w ould be paid for its

work. This evidence consists of Edward Timmons’s affidavit in which hes tates that Mr. King “asked me to verbally discredit the qua

lity of the work

of . . . American Cable Corporation so that [it] would not have to get paid for th e work it had provi

ded.” If this

statemen t was made before or contemporaneous with Mr, King’s promises that American Cable’s invoices w

ould be paid, it would provide some evidence that Mr. King was looking for way s to avoid paying American Cable.

Mr. Timmons does not, how ever, state whe

n this conversa

t ion took place. Taking Mr. Ti mmons’s statements as true , which we must for

summary judg

ment purposes, we

do not k no w whether it occurred before or after Mr. King promised that American Cable’s invoices would be paid
or even whether it occurred after this law suit was filed. Thus, we are left to guess when the statement was made. Without more details, Mr. Timmons’s statement that Mr. King wanted him to discredit Ame r ican Cable’s work is legally insufficient to create a fa ctual dispute regarding Mr. King’s intent in May

and August 1994. A

merican Cable fa

iled to demonstrate

that it could produce admissible

e viden ce from which a trier-of-fact could reasonably conclude that Mr. King had no intention to pay American Cable when he promised that the company’s invo ic es would be paid. Accordingly

, the trial court c

orrectly g ranted summary

judgment on the pr

omissory fra

ud claim.-7- C. T HE N EGLIGENT M ISREPRES ENTATION C LAIM
Almost two centuries ago, Chief

Justice Best summarized the essence of a misrepresentation claim as follows: “He who affirms either what he does not know to be true, or knows to be false, to another’s prejudice and his own gain, is, both in morality and law, guilty of falsehood, and

must
answer in damages.” Adamson v. Jarvis , 4 Bing 66, 73, 130 E

ng. Rep. 693, 696 (

C.P. 182 7). Tod ay, these principles are e

mbodied in

the elements

of the cause of action for negligent misrepresentation found in Restatement (Second) of Torts § 552 (1977) which has be en adopted by the Tennessee Supreme Court. Thu

s, a plaintiff see

king damages f

or negligent mi

srepresentatio

n must prove:
(1) that the defendant was acting in the cours e of its business, profession, o r employment,

or in a transaction in which it had a pecu ni ary (as opp osed to gratuitous) inte

rest;
(2) that

the defendant supplie

d faulty information meant

to guide others in

their business transactions;
(3) that

the defendant failed to exercise reasonable care in obtaining or communicating the information; and
(4) that the plaintiff

justifiably r

elied upon the info

rmation provided b

y the defen

dant.

Robinson v. Omer , 952 S.W.2d 423, 427 (Tenn. 199 7); Ritter v. Custom Chemicides, Inc. , 912 S.W.2d 128, 130 (Tenn. 1995); John Martin Co. v. Morse/Diesel, Inc. , 819 S.W.2d 428, 431 (Tenn. 1991).

AmericanCable’s negligent misrepresentation claim against Mr. King hinges on the testimonyof its vice preside nt that “Kin

g st ated that ACI and Brookridge were successful a nd financially strong developers of c able projects.”

Assuming, as we mu

st, that Mr. King ma

de this statement, it could only provide a basis for a negligent misrepresentation claim if (1) ACI’s and Brookridge’s financial condition was not successful and financially strong when Mr. King made

the statement and (2) Mr. K ing did not use reasonab le care in ob taining or c ommunicat ing t hi s information.

The appellate reco

rd contains absolu

tely no evid

enc e of either ACI’s or Brookridge’s financial condition while American Cable was performing the work. The suit had been pending for
more than one year

by the time Mr. King filed his summary judgment motion – time enough for AmericanCab le to asc ertain the companies’ financial condition by discovering their books and records. Yet, American Ca ble apparently presented no evidence reg arding thecompanies’ financial condition in May or August 1994 when Mr. King allegedly represented

that their financial condition
was solid. Thus, we find ourselves back on the road t o surmise and conjecture . For all we can t ell from this record, Mr. King’s representations about the companies’ financial condition may very well have been true w

hen he made them.-8-

As tested by a motion for summary judgment, American Cable’s negligent misrepresentation claim has even less factual substance than its promissory fraud claim. Its af fidavits opposing Mr. King’s summary ju

dgmen t motion contain no factual information about ACI’s or Brookridge’s finances in 1994. This information is essential because without it, American Cable cannot prove that the two entities’ financial positions were not strong and that Mr. King failed to use reasonable care in obtaining or communicating the information regarding thei r fi nan cia l co ndi tio n. A ccor din gly, AmericanCable failed to co me forward with competent evidence either to create a genuine fac tual dispute regarding

ACI’s and Brookridge’s financial condition in 1994 or to demonstrate

its ability to prove all the ele

ments of its negli

gent mis representation

claim. In lig

ht of these shortc

omings, the trial court

properly granted the summary judgment dismissing the negligent misrepresentation claims.

III.

We affirm the order dismissing American Cable’s claims against Vincent King and remand the case to the trial court for whatever further proceedings may be required. We also

tax the costs of this appeal to American Cable Corporation and its surety for which execution, if necessary , may issue.

__________ ______________________ _ WILLIA M C. KOCH, JR., JUDGE