### IN THE COURT OF APPEALS OF TE NNESSEE AT KNOX VILLE Ma y 10, 200 5 S es sio n
THE CENTER FOR DIG ESTI VE DIS ORDERS AND CLINI CAL RESEARCH, P.C., v. RONALD J . CALISH ER, In di vi dua ll y a nd NORMAN A

. LA Z ER IN E, In di vid ua lly

Direc t Appeal from the Circ uit Court for Ham ilton Coun ty No. 00-C- 2224 Hon. W. Neil Th om as, Circuit Judge

No. E2004-02309-COA- R3-CV - F ILED AUGU ST 30, 2005

Pla int if f sue d de fe nd a nts a lle g ing br e a c h o f c on tr a c t a ndtortio us c on du c t onthe pa rt of de fe nd a nts
res u l t i n g in damag es to plaintiff. The T rial Court g rante d defe ndants summary judgme nt and plaint if f h a s a pp e a le d. On app e a l, w e a ff ir m th e Judg me nt o f the Tria l Co urt.

Te nn. R . A pp. P .3 App e al a s o f Rig ht ; J udgm e nt of t he Ci r c uit

Co ur t A ffirm e d.

H ER SCH EL P I CKE N S F RAN KS , P.J ., delivere d the opinion of the court, in which C H A RLES D. S US ANO , J R ., J ., and S HAR ON G. LEE , J ., joined.

John P. K on va lin ka

a ndMathe w D . B ro wn fi e ld, Chatta no og a , T e nn e sse e , f or app e lla nt.

G. Michae l Luhowiak and N eil A. B runetz , C h at t anooga, T ennesse e, for appellee , Norman A

. L azerine.

Sam D. Elliott , Chattanoog a, Te nnessee , for a ppellee, Rona ld J . Calisher.

OP IN ION

This a ction arises as a result of a contra ct enter ed betwe en plaintiff, The Center f or Dig estive Disorde rs and Cl i n i cal Rese arc h, P.C., and Calisher and L azerine A ssociates, Inc. The “Ag ree ment” wa s si gn ed on beha lf of the c orporation by Ronald J . Calisher, as its President and Chief Executive Off

icer , and on beha lf of the plaintiff by Dr. R i ch ar d Krause. The Contra ct-2-

provid e d th a t Ca li s h e r & L a ze r in e A s s o c iate s , I n c

. , w o u ld p r o v id e s e r v ic e s f o r th e d e sign a nd development of

an outpatient endoscopy cente r t o be constructed in Chattanoog a, Tennessee

. I t was a turnke y projec t, and ar chitectur al eng ineering f irms in Kno x v i lle wer e enlisted to assist in the projec t. The building’ s desi gn d i d n o t meet ce rtain re quirements of the Hea lth Fac iliti es Commi ssion, which refu s ed t o g rant a waiver . I t was there fore nece ssary to modify

the fa cility ’s desi gn i n t o two proce dure r ooms instead of the orig inal three planned. As a result, the fa cility ’s schedule d opening was de lay ed appr ox imately ninety day s, causing the plaintiff loss of re venue and inc re a se d c on str

uc tio n e xpe ns e s. Arbitration proc eeding s as re quired by the Contract be tween pl ai n t iff and Ca lisher and L azerine A ssociates, Inc., we re instituted on Dec ember 22, 1998. On Fe bruary 2, 2000, plaintiff
was a war ded $416,374.93 in arbitration. Subsequent to the arbitration awar d, Calisher & L azerine, I nc., filed a Chapter Seven bankruptc y and plainti ff inst ituted this action after the ar bitration awa

rd was discha

rg ed throug h bankruptc y

.
I n g ranting the defendants sum mary judgme nt, the Trial Court desc ribed this action
a s f oll ow s:
Pla int if f’ s Co mpl a int , f

ile d o n D e c e mbe r 15, 20 00 , all e g e d th a t D e fe nd a nts “negligently , rec klessly , and/or improperly desig ned and/or

constructe d and/or supe r v is e d th e d e s ig n a n d c o n s tr u c ti o n o f Pl a in ti f f ’ s e n d o s c o p y

c e n te r , ” a nd

“ ne g lig e n t l y , r e c k l e s s l y

a n d/ o r i m p r o p e r l y

f a i l e d t o h i r e p e r s o n n e l w i t h a d e q u a te skills and training to desig n, construct, a nd to supervise the de sign and construction” of the fa cility

. The Complaint alleg es that Calisher a nd L azerine ow ed the Clinic a duty of ca re inde pendent of any contra ctual duty“by failing to adequately

rende r the
s er v i ce s at issue, and ha ving misre prese nted their a bilityto rende r those services.” Th e Pla int if

f pr a y s th a t th e Cou rt

“ de c lare that D e fe nd a nts ne g lig e ntl y , w ro ng fu lly and/or re cklessly

failed to provide adequat e co nsultation, design, c onstruction, eng ineering, a

rchitec tural, super visory , and per sonnel servic es for the benefit of the Plaintiff, with such service s failing to meet the applica ble s tandar d of care for such profe ssional service s, in breac h of their oblig ations to the plaintiff,” a nd seeks da ma g e s, c os ts, a tto rn e y s’ fe e s, pr e -j ud g me nt i nte re st, a nd a ny a nda ll o the r r e lie f t o which it may

be entitled.
Our reading of t he plainti ff’ s Complaint, reveals that plaintiff e ssentially char g es the defe ndants with brea ch of c ontrac t and/or tortious conduct that da mag ed the plaintiff.

As to the claimed br eac h of contra ct, there is no disputed issue of materia l fac t. The
rec ord establishes the Contra ct was be tween pla intiff and Calisher and L azerine A ssociates, Inc. Dr

. Krause testified:

Q. You sig ned a contrac t with the t wo i ndividuals? What do y ou base that on? Do y ou ha ve a

c on tr a c t w iththe se g e ntl e me n a s in div idu a ls?-3- A. Those we re the only two people that I

knew so –
Q. Wel l, I ’m

g oin g to p a ss t o y ou wh a t ha s b e e n p re vio us ly mark e d a s E xhibi t 5, wh ic h w a s a tt a c h e d to y o u r c o mp lain t a s E xh ib it

A

. I s th a t th e c o n tr a ct that y ou’re ref

erring to?

A. I f I

sig ne d it , it

is. Ye s. Q. All rig ht, sir. And does t h at co ntrac t refle ct that it’s with an entity called Ca lis he r & L a zerine As so c ia te s, I nc . o r d oe s it re fl e c t that it ’s a c on tr a c t w ith tw o in div idu a ls?

A. I t say s A sso c ia te s, I nc ., y e s. Q. An d at th e tim e y ou sig ne d it y ou re a d th e c on tr a c t ov e r, didy ou no t?

A. Pr ob ably

g la nc e d at it

. The Trial Court in its opinion g ranting summary judgme nt set forth seve ral re asons why the cor porate veil should not be pierce d. Howeve r, the Complaint does not ask t o p i er ce the corpor ate ve il, rathe r, i t seeks to hold the t wo i ndividual defe ndants persona lly liable for the ir alleg ed tortious conduct. Under Tenne ssee law, an age nt of a corpor ation may be per sonally liable to another party for the ag ent’s torti ous conduct which injures another, despite t he lack of privit y

. See, J ohn Martin Co., v, Morse/Diese l, Inc., 819 S.W .2d 428 (Tenn. 1991)

.

Tenn. R. Civ. P. 56.04 provides that sum mary judgme nt may

be g rante d wher e: (1) there is no ge nuine issue with reg ard to the material fa cts rele vant to the claim or de fense contained in the motion. By rd v . H

all , 847 S.W. 2d 20 8 (T e nn . 199 3) ; and (2 ) the mov ing pa rty is e nti tle d to a judg ment as a matter of law on the undisputed fac ts. Anderson v. Standard Re gister Co., 857 S.W .2d 555, 559 (Tenn. 1993) . Summary judgme nt is appropriate when the undisputed fac ts, and the inf e re nc e s r e a so na

bly dr a wn the re fr om, su pp ort on ly on e c on c lus ion - that the mov ing pa rt y is entitled to judgment a s a matter of law. Brown v. Birman Managed Care, Inc., 42 S.W .3d 62, 66 (T e nn . 2 00 1) ; Ba in v . W

e lls , 936 S.W .2d 618, 622 (Tenn. 1997)

. Th e mov ing pa

rty ha s the bu rd e n o f p ro vin g that it s mo tio n s a tis fi e s th e re qu ir e me nts of Rule 56. Shadrick v . Coker , 96 3 S.W. 2d 72 6, 73 1 ( Te nn . 1 99 8) ; Downen v. Allstate Ins. Co., 811 S.W .2d 523, 524 (Tenn. 1991) . To prevail, the movant must e ither af firmatively

neg ate a n essential element of

the non-moving party ’s claim or c onclusively establish an af

firmative de fense

. McCarley v. W est Quality Food Serv., 96 0 S. W.2 d 5 85 , 5 88 (T e nn . 1 99 8) ; Robinson v. Ome r , 952 S.W .2d 423, 426 (Tenn. 1997)

.

Pla int if f h a s r a ise d th e se iss ue s o n a pp e a l:Th e re lie f s ou g ht b y the Complaint

is: 1 That the Court dec lare the def endants n e g li g e n tl y , wrong fully and/or re cklessly

failed to p ro vid e a de qu a te c on su ltatio n, de sig n, c on struction, e ng ine e ri ng , a rc hit e c tur a l, supervisor, a nd persona l service s for the benef it of t he plainti ff, with such se rvice s failing to meet the applicable standard of car e for such profe ssional se rvice s, and the brea ch of the ir obligations to pl aintiff as se t forth her ein.

-4- The Court er

red in not finding individual liabili ty for de fendants. (a ) T he Complaint

a sse rt s a br e a c h of c on tr a c t c la im a g a ins t the de fe nd a nts ; (b ) D e fe nd a nts mis re pr e se nte d th e ir c or po rate status a ndskill s. Th e Cou rt

e rr e d inno t pi e rc ing the c or po rate ve il. (a ) T his iss ue inv olv e s th e c re dib ili ty of wi tne sse s. (b) Rele vant cor

porate rec ords wer e intentionally destroy ed. (c ) D e fe nd a nts dis po se d o f a sse ts d e sp ite no tic e of thi s c la im.

As alre ady

noted, there is no disputed issue of fac t in that there is no contra ct be tw e e n th e pa

rt ie s in thi s c a se , a ndthe c omp la int didno t raise the iss ue of

pie rc ing the c or

po rate
ve il. Th e re ma ini ng iss ue to b e c on sid e re d is wh e the r the defe nd a nts ’ “ mis re pr e se nte d th e ir 1 corpor ate status and skills”.

Plaintiff arg ues in its b ri ef t h at “both defenda nts are liable for misrepr esentations
c on ta ine d inthe ir

pr omo tio na l br ochure , whic h mi sst a te s th e pa rt ie s w ithwh om any

bu sin e ss re la tio ns hip wo uldbe fo rm e d b y the plaint if

f, a ndwh ic h als o mi sst a te d th e de fe nd a nts ’ “ in- de pth kn ow le dg e of g ov e rn ing c od e s a nd re g ulatory g uid e lin e s. As ha s c le arl y be e n sh own, d efen da nts possess no such knowledg e, since they did not ev en k n o w how to obtain curr ent re g ulations and g uidelines or did not have the desire to do so.” And the ar g ument g oes o n t o ch ar ge t h at the defe ndants had “ participated to a fr aud”.

Whil e the plaintiff r elies on a brochur e furnished to it, the De velopment Ag ree ment
re c ite s th a t pl a int if

f w a s c ontr a c tin g wi th a

Ca lif ornia c or po ratio n a ndthe Ag re e me nt s pe c if ic a lly state s: Entire Agr eeme nt This Ag ree ment contains the e ntire ag ree ment conce rning the

subject matt e r o f th is A g r e e me n t b e tw e e n th e p ar ti e s

. I t s u p e r s e d e s a ll other ag ree ment betwee n them conce rning the s ubject matter of t his Ag ree ment. Neither pa rty ha s ma de a ny

re pr e se ntatio ns wi th res pe c t to the su bje c t matte r o f this Ag ree ment, nor any

repr esentations inducing the e x ecution and de livery of the Ag ree ment, except the re prese ntations specifica lly stated.

Th e plaint if

f’ s a rg ume nt that it re lie d on ind uc ing re pr e se ntatio ns of the br oc hu re or

oth e r s ta te me nts is contrary to the quot ed provision in the Deve lopment Ag ree ment. See, Clore v . Village Inc., 1986 WL 4950 (Tenn. Ct. App. April 18, 1986), and such e vidence is n o t ad m i s s i b le under the Parol Evidence Rule.-5- As to the issue of fraudulent misrepr esentation, the elements of f raudule nt misrepre sentation for w hich an a gent wil l be per sonally liable to third parties a re: (1) the repr esentat i o n o f an e x isting or pa st fact; (2) the re prese ntation was fa lse when ma de: (3) the repr esentation was in reg ard to a materia l fac t; (4) the fa lse repr es en tation was made either kno wi n gl y o r wi thout belief in its truth or rec klessly ; (5) the plaintiff r easona bly relied on the misrepre sented mate rial fa ct; and (6) the plaintiff suffere d damag e as a result. Metropolitan Gov’t of Nashville and Davidson County v. Mc Kinney , 852 S.W .2d 233, 237 (Tenn. Ct. App. 1992).

Pla int if f’ s a c tio n for a lle g e d fr aud ule nt misr e pr e se ntatio n fa ils fo r t wo re a so ns . It is mandatory

that circ umstances c onstitut ing f raud must be pled w ith particularity , and the c omplaint is deficient on that g round. Tenn.R. Civ. P. 9.02. Further, plaintiff’s relianc e on brochur es and or al repr esentations to establish misrepre sentation is misplace d beca use such evidenc e as ha s been note d contr a d ic ts th e w r itte n c o n tr a c t w h ic h p lain ti f f e n te r e d f

o r th e c o n s tr

u c ti o n o f it s c li n ic

. See W helche l Co. Inc., v. RipleyTractor Co., Inc. , 900 S.W .2d 691 (Tenn. Ct. App. 1995).

For the fore g oing r easons, we af firm the Judgment of the T rial Court and re mand, with the cost of the appea l a ssessed to T he Center for Dig estive Disorder s and C l i n i ca l Resear ch, P.C.

______________________________ H ER SCH EL P I CKE N S F RAN KS , P

. J.