### IN THE COURT OF APPEALS OF TENNESSEE AT NASHVILLE Septem ber 6, 2001 Session SCOTT JURGENSMEYER, ET AL 

### . v. JAMES F. PRATER Appeal from the Chancery Court for Davidson County No. 99-305-III Ellen Hobbs Lyle, Chancellor

No. M2000-02986-COA-R3-CV - Filed April 24, 2003

In this consolidated case involving claims of fraud, negligent misrepresentation, breach of contr act, and violations of the Tennessee Consumer P rotectio n Act, the trial court granted summary judgment for the defendant on the ground that he had not acted individua lly a nd his corporation had not been namedas a defend ant. Fo r the following reasons, we rever se and remand the decision of the trial court. Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Chancery Court Reversed and Remanded
P AT RICIA J. C OTT RELL , J., delivered the opinion of the court, in which B EN H. C ANT RELL , P.J., M.S., and W IL LI AM B. C AIN , J., joined. Robin J. Gordon, Nashville, Tennessee, for the appellants Scott Jurgensmey er and Jim Wise. James H. Harris II

I, Nashville, Tennessee, f or the appellee, James F. Prater. OPINION This appeal i s from a

summary judgmen t grant ed to the d

efenda nt, James F . Prater , in a case which consolida

ted two se parate cases, o ne broug

ht by Scott Jurg ensmey

er, and o ne broug

ht by Jim Wise, both of which arose fr om Mr. Prater’s inv olvement in arra ngemen ts to develop perf

ormers in to recording artists. In both situations another person, Mr. Thomas Wayne Oliver, wa s involved and, it could be fairly said, wa s the primary actor. I. Mr. Jurgensmey

er’s Complaint In his complaint, Mr. Jurgensmey er alleged the

following facts. He is a fa rmer re siding in the State of Missouri. In August of 1995, Mr. Jurge nsmeyer met with Mr. Prater and Mr. Oliver to discuss the development

of the musical career of an artist by the name of Hawke Montana. During this conversation, Mr. Oliver and Mr. Prater repre sented to Mr. Jurgensmey er that it would be-2-

possible to secure a recording contract for Hawke Montana

at Curb Records for a sum to be specified at a later date. Mr. Oliver, Mr. Prater, and Mr. Jurgensmey er entered into an oral agr

eement whereby Mr. Jurgensmeyer

would provide the financial backing to secure the record contract, a nd Mr. Prater and Mr. Oliver would secure the r ecording co ntract. Mr. Jurgensmeyer caused to be delivered “a check to Defendant Prate r and Oliver” in the sum of fifty thousand dollars ($50,000.00) to secure the recording agreement with Mr. Chuck Howard as producer. On August 22, 1995, Mr. Oliver and Mr. Prater represented to Mr. Jurgensmeyer that they had procured a recording a greement for Hawke Montana with Curb Records and that Chuck Howard would be the producer for the record. On tha t date, Mr. Oliver and Mr. Prater provided him with a copy of a written agreement between Mr. Oliver and Big Sky

Entertainment, Inc. wher

ein Mr. Oliver represented that he had procured a recording contract with Curb Records for Hawke Montana. The referenced document, a letter, i s signed

solely by M r. Oliver , and discusses the details o f the recording contract, the tasks that must be perf ormed before the contract will be signed, including deliver y of master r ecordings for t

he album, and conc ludes: The investmen

t in this p roject i s $500,000 , as ag reed. $5 0,000 is in e scrow a t this time. The balance of $450,000 should be wire transferred on

receipt of this signed st ateme ntof agr

eement b etween

Big Sky

Ent., I nc. and Wa

yne Oliver En

t. [Ente rpri ses]. The Complaint does not identify Big Sky Entertainment, and

we are unaware from

the record whether th er e i s a ny c on ne ct io n b et we en th at en ti ty and Mr. Ju rgensmeyer. In any event, Mr. Jurgensm ey er’s co mplaint fu

rther a lleged the following facts. A few day s after Mr. Jurgen smeyer re cei ved a copy of the August 22 letter, Mr. Oliver contacted Mr. Jurgensmeye

r to solicit an additional $200,000 “ to p rocure the alleged rec ording agreement

allegedly secured.” Mr. Jurgensmey er alleges that he

sent the money by

wire transfe

r in reliance upon the repres entation s rega rding th e existenc e and de

tails of th e recor ding co ntract. He never allege s to whomhe sent the transf er, but r ather a sserts, “ Defend ant Prate r and Oliv er were

in receipt of a wire transfer” from him for $200,000.
On January

17, 1996, M

r. Oliver and Mr. Pr

ater inf ormed Mr . Jurgens meyer at a meeting that they would no longer work with Hawke Montana bec ause he had bec ome uncooperative. Mr. Jurgensmeyer

agreed with that decision. Mr. Jurgensmeyer alleged that

Mr. Oliver and Mr. Prater agreed t hat the $250,000 would remain in an escrow account to allow him to decide if he wa s interestedin working with another artist. He also alleged that he later aske d that the money be placed in an interest bearing certificate of deposit, butwas informed that it was imperative to keep it in a liquid account.
On February

1, 1996, Mr. Prater and Mr. Oliver represented to Mr. Jurg ensmeyer that they would return Mr. Jurgensmeyer’s investment if he did not want to work with the new artist. On May-3-

1, 1996, Mr. Oliver and

Mr. Prater telephoned Mr. Jurgensmey er “with respect to [his] declining the off er . . . to invest in the new artist.” In that conversa tion, Mr. Jurgensmeyer request ed th e immediate

return of the $250,000. Two day s later, Mr. Jurgensmey er met with Mr. Oliver and Mr. Prater in Nashville, and Mr. Oliver and Mr. Prater tol d him that $2 50,000 would be pai d to him within two w eeks. When the money was not re turned, Mr. Jurgensmey er made other requests for it, and none has never been

returne d to him. Some time later Mr. Jurgensmey er learned from representa tives of Curb Records that no recording ag reement ever

existed in connection with Mr. Oliver, Mr. Prater, or Hawke Montana and there had been no agreement by Chuck Howard

to produce such a record.
II . Mr. Wise’ s Complaint Beginningin 1995, Mr. Wise met with Mr. Prater and Mr. O liver to

discuss the development of Mr. Wise’scaree

r as a mus ical rec ording a rtist, and they met or co mmunicated regularly thereafter. During initial conversations, Mr. Oliver and Mr. Prater told Mr. Wise that it would be possible to secure a

record ing con tract fo r him with A

tlanticRecords for a sum to be specified later. Mr

. Wise then entered into an oral agreeme nt with Mr. Prater and Mr. Oliver wher eby Mr. Wis e agreed to provide the necessary

financial backing to secure a r ecording contract

and Mr. Prater and Mr. Oliver agreed to secure the contract. Later, Mr. Prater and Mr. Oliver represented to Mr. Wise that a r ecording agree

ment had been procured for Mr. Wise at Polydor

or Atlantic Records and that Norro Wilson would be the producer for the recording. Prior to October 10, 1995, Mr. Oliver r epresented that he had spoken with Rick Blackburn, the president of Atlantic Records, regar ding the recording ag

reemen t and tha t Mr. Blackburn

had ag reed to s ign Mr. Wi se to such an agreement. On Octobe r 10, 1995, Mr. Wise was provided“a copy

of a written memorialization of the prior oral agree ment” between

himself and Mr. Oliver and Mr. Prater

“wherein M r. Oliver and Defendant Prater re presented that a recording agreement

had been procured for

Plaintiff withPolydor or Atlantic Records a nd that Norro Wilson would be the producer for such recor ding.” The unsigned letter agreement dated October 10, 1995, is from Mr. O liver, ha s no signa ture line for Mr. Pr

ater, is a ddresse d to Mr. Wis e , and has blank signaturelines for Mr. Oliv er and Mr. Wise. It states “as pe r our agreement” Mr. Oliver had proc uredthe recording agre ement for Mr. Wise with Polydor Records or Atlantic Records o f Nashville, with th e producer to be Norro Wilson. It stated the a greement would be signed upon delivery of the album and the album project would take a few months to complete. It further stated: The investmen

t by Jim Wise in this proje ct is $600, 000, as a greed . $300,000

is in escrow at this time and the balance of $300,000 should be placed in escrow by Jan. 15, 1996. Mr. Oliver w ill advise you as to the d

istributio n of the f

unds. He will also co or di na te al l m ee ti ng s b et we en th e a rt is t, pr od uc er an d t he re co rd co mp an y.-4-

Mr. Wise paid f

ifty tho usand doll ars ($5 0,000 .00) f or use in sec uring t he reco rding a greemen t and in reliance on the representations that such an ag reement had been procured. His complai nt alleges he “delivered” the sum to Mr. Oliver and Mr. Prater. Prior to pr ov id in g a ny additio nal funds to Mr. Oliver, Mr. Wise discovered from Mr. Blackburn

at Atlant

ic Recor ds that Atl antic Rec ords had n ever ag reed to s ign Mr. Wi s e to a recording agreement and that Mr. Blac kburn h ad neve r spoken with Mr. Oliver or Mr. Prater rega rding suc h an agreement. Mr. Wise also discovered that Nor ro Wilson was not approved by Polydor or Atlantic Records as a producer for a r ecording agree

ment for Mr. Wise. Mr. Wise never received any

of his $50,000 back.

II I. Causes of Action and the Tria l Court’s Ruling Mr. Jurgensmeye

r’s complaint against Mr. Prater alleg ed: (1) Mr. Prate

r had bre ached a

n oral ag reemen t with Mr. Jur

gensme ye r by failing to procure a recording contract for Hawke Montana, by

failing to keep funds sent

by Mr. Jurgensmeyer

in an escrow account solely for use in pro curing

the rec ording c ontract , and by failing

to return his money when no r ecord deal materialized. (2) Mr. Prater knowingly made fraudulent statements and misrepres entati ons to induce Mr. Jurgensmey er to invest substantial sums of money by p romising profits from recordings and that Mr. Prater f raudule ntly used the m

oney so invested

for his and Mr. O liver’s p ersonal benefit and not to p

rocure a recor ding co ntract. (3) Mr. Prater negligently made misrepresentations regarding the procur ement of a recording co ntract for Hawke Montana and reg arding the arrange ment with Mr. Jurgensmeyer

. (4) Mr. Prater and Mr. Oliver engag e d in fraudulent activities and schemes by making fraudulent misrepresentations, all of which constituted unfair and deceptive trade pr actice s under th

e Tenne ssee Cons umer Prot ection Act. Mr. Wise’s complaint alleged thesame causes of action on the facts set out above, e xcept he apparently r

elies on both an oral and a written contract. After the trial court consolidated the two cases, Mr. Prater filed a motion for summary judgment on the basis that he had “conducted all busine ss pertine nt to these proceedings by and throu gh his corporation, Prater Enterprises.” After a hearing on the motion, the trial court filed a memorandum

and order w hich granted Mr. Prater’s motion for summary judgment on the ground that the plaintiffs failed to raise genuine issues of materia l fact that Mr. Prater

engaged in the alleg ed conduct individually. The court

found that the record

established that all actions taken by Mr. Prater were in his capacity a s an agent/employee of Prater Enterprises, I nc. Because there was no fa ctual1 The trial court noted th at in thei r papers in opposition to summary judgment, the pl aintif fs asked to add the corpora ti on as a defendant. Because this request was not made by proper mo tion to amend with a pr opo sed a men dme nt, the co urt dete rmine d that it lack ed au thority to g rant the r equ est.

2 The para grap h iden tifying the de fenda nt refers to “James F. Prater, indiv iduall y and/or d/b/a/ Prater Boo king & Management.” I n his answers to both compla int s, Mr. Prat er denied t hat he d id business as Prater Booking and M anag eme nt, stating, “T o the c ontra ry, at all times p ertinen t to this comp laint, Prater did bu siness and is doing b usiness by, t hrough, and in t

he name of hi s corporat ion, Prater Enterpr ises , Inc. ” -5- issue as to Mr. Prater’s individual liability, and bec ause th e plaintiffs had not also sued the corporation (the principal), 1 the cour t gran ted summary judgment. In explaining its decision, the court stated:
Tennessee law does provide that it is not necessary that a particular

act or f ailure to act be expressly

authorize d by

the princ ipal to bring it

within the scope of the agent’s au th or it y. Conductis within the scope of the agent’s authority

if it occurs while the agent is engaged in the duties that the ag ent was a uthorized to perform and if the conduct relatesto those

duties. But the law requires that if the wrongful act is that of an agent, either the age

ntand principal, or the principal must be sued because the principal is the responsible party. Where, as here, the plaintiffs assert the defendant is liable for his acts as an agent, Memorandum of Law in Response to Defendant’s Motion for S um mary Judgment at 2, it is not pro

per to sue the individ

ual age nt, withoutalleging agency, beca use the individual is not the responsible party, the principa l is. (emphasis added).
At this point, we simply note that the Memorandum of L aw referenced by

the trial court does notappear i n t he record before us. The complaints do not alleg e that Mr. Prater was acting as an agent for anyone

or any en ti ty. 2 In his an swers , Mr. P rater a ssert ed he d id bu sines s by and th rough his corporation, but, as an affirmative defense, Mr. Pra ter stated that the complain ts failed to state a claim because there were no a llegation s of wron gful conduct against Mr. Prater; that a ll the allegations were jointly ag ainst Mr. Prater and a third-party, Way

ne Oliver; and that M

r. Prate r did not participate wit

h Mr. Olive

r in any wrongf ul conduct. It was Mr. Prater’s motion for summary judgment that

raised the issue whether he could have individual liability because he a cted by and throug

h his corporation. Although the record does not include the memorandum filed in response to t he motion, we can presume from the trial court’s mention of the ar

gument, as well as the br iefs file d in this court, that t he plaint iffs arg ued ther ein that, even if Mr. Prater had been actin g throu gh his corporation, he was an undisclosed agent who could be held personally

liable.3 The record before us includ es a statement of und isp uted fact s on ly with rega rd to M r. Jurge nsme yer’s

co mpla int. The rec ord a ls o cont ain s r espo nse s t o st ate ment s of undi spu ted fa cts in both cas es, so w e can ass ume statem ents were filed as to bo th comp laints. Sinc e th e res ponses do not incl ude the s ubstance of th e statements t o which they respond , however, this court is unawa re of the statements.

4 M r. Ruc k is M r. Pra ter’s acc ounta nt and his aff idavit stat es that has prepared the f ederal income tax returns for Pra te r En te rp ri se s s in ce it s i nc ept io n i n 1 993

. Hi s aff

idavit indic a tes tha t he has n ever known Mr. Prate r to do busine ss othe r than as Pra ter En terprise s.

5 On appeal, Mr. W ise and Mr. Jurg ensmey er f il ed a mot ion i n th is court to s uppleme nt t

he re cord t o inc lude the aff idavi t of M r. Jurge nsme yer, a letter fro m M r. Olive r to B ig Sky E ntertainm ent, and a letter fro m M r. Olive r to Mr. W ise, that they ar gued were in adv ertently o mitted from th e techn ical rec ord by t he tri al court clerk . We denied that moti on becaus e dis putes concer nin g th e cont ent of the rec ord on ap pea l should be sub mitted to and sett led by t he tri al cou rt. Ten n. R. A pp. P . 24(e ). Subsequent to our denial of that motion, a reply brief

fil ed by M r. Wise and M r. Jurgensmey er stat es that “t he Chancery Court . . . has entered an Order . . . t o file a s upplemental record [containing t he aforementioned documents].” Mr. W ise and M r. Jurge nsme yer attac hed these d ocu men ts to th eir r eply bri ef. Mr. Prater also attached these docum ents to his brief in response to the re ply brie f and a ddr essed the co ntent o f the do cum ents in his argum ent. B ecau se the p arties d o no t dispu te that these doc ume nts were f iled with t

he trial court and the tri al court approved thei r incl usion i n a supplemen tal reco rd, we will consi der the docume nts in de ter mini ng whe ther the gran t of summary j udgment was appropriat e. -6- IV. Evidence on Summary Judgment
In support of

his motion for summary judgme nt, Mr. Prater filed his own affidavit, a statement of undisputed facts pursuant to Tenn. R. Civ. P. 56.03, 3 the charter of Prater E nterpris es, Inc., a certif

icate of corporate existence for Prater Enterpr ises, Inc. authenticated by the Office of the Tennessee Secretary

of State, the affidavit of Mr. Oliver, and the affidavit of D onald Ruck. 4
In response

to the motio n for su m mary judgment, Mr. Wise and Mr. Jurgensmeye r responded to the state

ment of unconteste d facts a nd filed “Late

Filed Exhib its to Plaint

iffs’ Re sponses to Defendant’s Motions fo

r Summary

Judgment”which inc luded the affida vit of Mr

. Wise and exce rpts from the deposition of Mr. Prater. 5
Mr. Prater testified that he provides, t hrough hi s corporation, services in the music and entertainment

business, including

working with new a

rtists todevelop them so the y c an succe ssfully fulfill the requirements of a recording contra ct if on e is offe

red to the m. This pro cess inc ludes a number of activities and areas and is usually a twelve to e ighteen month process “to prepare an artist to become a star.”
Mr. Prater testified that

Mr. Jurgensmeyer

did not hire him or his corporation, did not negotia te a fee f or his ser vices, a nd did not pa

y him or his co

rporatio n. In st ead, he asserts, Mr. Oliver hired

Prater Enterprises to work with Hawke Montana and paid Prater Enterprise s $50,000 as a one time fee “to act, in essence, asan interim manager for Mr. Montana and to get him ready for the recording ag

reement Mr. Oliver was try ing to secure for Mr. Montana.”-7-

Mr. Prater began pr

ovidin g those services until he decided he could not work with Mr. Montana any long er

because he had become unc ooperat ive. At tha

t point, according to Mr. Prater, he and Mr. Oliver

met with M r. Jurgensmeye r and informed him they w ould not work with Mr. Montana anymore, a

nd Mr. Jurgensmeye

r agreed. They

met a month later, and Mr. Oliver offered to return th

e money Mr. Jurge

nsmey er had in vested or to find an other ar

tis t. Mr. O liver found another artist, but Mr. Jurgensmeyer did not ag

ree tofinance this artist’s preparation and demanded that Mr. O liver re

turn his mo ne y. Mr. Prate r testified he had a

greed with Mr. O liver to w ork with the new artist under the same agre ement and for the one-time fee he had a lready been paid. Mr. Prater’ s affida

vit concl udes:
I di d n ot pa rt ic ip at e i n n or do I ha ve an y i ndepende nt knowledge of the financial arrang ements between Mr. Oliver and the plaintiff. I never neg otiated for or received any payment from Plaintiff

and I never received any

compensation for

my services other than that paid to Prater Enterprises, I nc. by Mr. Oliver. The only acts tha t I pe rformed releva nt to these pr oceedings are the services tha

t I rendered on behalf of Mr. Montana at Mr. Oliver’s request. I performed no services for the plaintiff. The only involveme

nt of my corpora tion was to

make my service s availa

ble and to receive the pay

ment from Mr. Oliver.
Mr. Oliver testifiedby

affidavit that Mr. Jurgensmeyer had engaged his services to develop the ca reer of an artist known as Hawke Montana. He furthe r stated that he met with Mr. Jurgensmeyer, Mr. Prater, and Mr. Montana in August of 1995 and shortly thereafter M r . Jurgensmeyer

transferred to him $250,000. “This amount was to p ay for my fees and the expenses associated with developing Mr. Montana.”
Mr. Oliver also testified that after the August meeting he engaged the ser vices of Mr. Prater to provide interim manag ement se rvic es for M r. Mon tana w hile M r. Oli ver wor ked on securi ng a recording contract. He agree d to pay Mr. Prater a one-time fee of $50,000 for his services; they anticipatedit would take 12 to 18 months to get a recording con tr act or determine one was not available. Mr. Oliver paid Prater Enterprises, I nc. the entire $50,000 by

check soon after

he received the funds from Mr. Jurgensmey er. Mr. Oliver testified that Mr. Prater performed the manage ment services until they decided the arrangement with Mr. Montana wa s not going to work.
Mr. Prater in

cluded mo st

of these statements in his Rule 56 Statement of Undispute d Facts. In response, Mr. Jurgensmeye r disputed a

number of them, specifically stating that in August of 1995 he had engaged

both Mr. Pr

ater and Mr. Olive

r to provi de servi ces to prepare Hawke Montana for a record agreement a

nd that the $50,000 fee Mr. Prater received had come from money tendered by Mr. Jurgensm

ey er. I n addition , Mr. Jurg ensmey er’s re sponse

stated that Mr. Pr

ater ha d been pr esent, along with Mr. O liver, du

ring al most all discussions regarding the monetary arrangement necessa

ry to secur e the alleged recording

contract.-8-

Neither the affidavit of Mr. Prater nor the affidavit of Mr. O liver that are included in the record presented to us addresses any of the particular

circumstances regarding

the arr angeme nt with Mr. Wise. The St

atement o f Undispu

ted Facts which is included in the rec ord also d

oes not ad dress any facts sp ecific t

o Mr. Wise’ s complain

t or alleg ations. Mr . Wise testified by aff idavit that Mr. Prater, along w ith Mr. Oliv er, ente red into an oral a greem ent with him to secur

e a rec ording c ontract

. He also testi fied tha

t Mr. Prate

r, as well as Mr. Oliver, made oral misrepresentations that a contract had been procured. He also stated that Mr. Prater was present during and particip ated in a

lmost all convers ations re garding the financial arrang ements fo

r the re cording

contract. Mr. Wise testfied, “At no time prior to the filing of this lawsuit did Defendant hold himself outto me as a corporation.” Mr. Jurgensmey er made the same stat

eme nt. Mr. Prater does not dispute this assertion.
V. Plai ntiffs sued only Mr. Prater, not his corpor ation. The issue of whether an agent f or a corporation ca n be in di vi dua ll y lia bl e fo r mi sre pre sen tat io ns h as b een add res sed pre vi ous ly. In Brungard v. Capric e Recor

ds, Inc. , 608 S.W.2d 585 (Tenn. Ct. App. 1980), the individuals argued they could not be liable on the contracts of their corporation, but the court found this argument had no application to the plaintiff’s claims in tort for fraudulent misrepresentation. Id . 608 S.W.21d at 590. F ollo wing Brungard , we held:
A corporation acts through its agent s. An agen t is one who undertakes to transact somebusiness or to manage some affair, for another by a

uthority and on acc ount of the la tter , and to render an account of it. Security Federal Sav. and Loan Ass’n. v. R iviera, Ltd. , 856 S.W.2d 709, 715 (Tenn. App. 1992). We note that “an agent cannot escape liability

for torti ous acts, including fraud or misrepre sentation , again st third persons simply because the agent was acting within the scope of the age ncy or at the direction of the employ er.” Br ungard v. Caprice Records, Inc. , 608 S.W.2d 585, 590 (Ten

n. App. 19 80). . . . I

f KRI [the corp oration] ma

de misrep resenta tions, someindividual or individuals had to make them for it. The com plaint in this litigation identifies those individuals as Neely a nd Davis [officers and directors of the corp orat ion]. Allied Sound, Inc. v. Neely , 909 S.W.2d 815, 821 (Tenn. Ct. App. 1995). Thus, an individual may be liable for fraud or misrepresentation even when acting a s an agent for a corporation. In Allied , the plaintiff had, in an earlier suit, obtained a judgment ag ainst the individua ls’ principa

l, the cor poration . This court found that ju dgment d id not preclude the action agains tthe individuals. “An officer or director of

a corporation who commits or participates in the commission of

a tort is lik

ewise lia ble to thir d partie s regardless of the liability of a corporation .” Brungard , 608 S.W.2d at 590-91 (citing Cooper v. Cordova Sand and Gravel Co., Inc. , 485 S.W.2d 261, (Tenn. Ct. App. 1971)) (emphasis added).-9-

O bv io us ly, a party who ma kes misrepresentations when not acting as an agent for a co rp or at io n o r o th er en ti ty m ay b e l ia bl e p er so na ll y. With regard to the breach of contract claim, Mr. Jurgensmey er and Mr. Wise claim they had an agreement with Mr. Prater. Mr. Pra ter asserts he conducted any activities with regard to the plaintiffs only

through his corpo ration, but also as serts the re was n o agreement wit

h th e plaintiffs on the part of either his corporation or himself individually

. If a cont ract ex isted , the q uesti on of w ho was the co ntract ing pa rty is answered by the circumstances surrounding the making of the agreement. See Ande rson v. Su rbin , 740 S.W.2d 417 (Tenn. Ct. App. 1987). In Anderson , a homeo wner entere d into an agreement for substantial renovat ions to his home. When the homeowner sued the contractor, naming him individually and also his corporate entity, judg ment was awarded against the

contractor individually. On a ppeal, the contractor

asserted that the trial court should not have pierced the corporate veil or disregar ded the corpora te entity . This cou

rt found t his argument

to be irrelevant because questions of piercing the corporate veil arise only

where the corporation has been found liable and the trial court had found no corporate liability, but instead ha d found the homeowner’s dealings had bee n with the defendant in his personal capacity . The court then addressed whether the evidence preponderated ag ainst that finding, and held: Plaintiff testified that Durbin [the contractor] never orally represented himself as having any corpor

ate status and that he never knew of such alleged status until after the parties h ad their

dispute over the quality of the

workmanship and alleged breach by Durbin. T

he defe ndant Dur bin in his testimony did not contradict the plaintiff’s testimonythat he, Durbin, never mentioned either before or during the ne gotiations that he was an agent for a c orporation. Therefore, as we see m atters, in order for appellant to preva il on this point, we must find that other proof, either written o r oral, preponderates in favor of a finding that plaintiff knew or was bound to know that he was dealing with Durbin as an agent for a corporation at the time the agreement wa s struck. This is so because the rule holds that if an agent fails to reveal his true status as agent, he is bound as principal. Louisville & Na shville R. C o. v. McKay & Morgan , 133 Tenn. 503, 182 S.W. 585 (1916). Anderson , 740 S.W.2d at 418.
In Anderson , the relevant facts were that the def endant had

a charter for

his corporation, but the actual corporate name appea red nowhere else in the documentary evidence. The written proposal for the renovation work included the word “Inc.”in two places, but also could be read to be from the individua l. The court determined the proposal was submitted by the individua

l with no qualifying provision s. In addit ion, the si gn placed b y the contra ctor in the home’s front ya

rd did not show any corpora te entity, and none of the c hecks given by

the homeowne r bore “any hint of a de posit to a corpora te account” but w ere mad e out to the

individua

l.-10-

Based on these circumstances, this court found that the evidence pr eponderated in favor of the trial court’s finding that the homeo wner co ntracte d with the d efenda nt in his in di vi du al ca pa ci ty. As the Anderson court also stated, failure to disclose one’s status as an age nt can re sult in in di vi du al li ab il it y. Tennessee follows the venerable common law rule that an agent for an undisclosed principal is personally liable on a c ontra ct. Ander son v. Dur

bin , 740 S.W.2d 417, 418 (Tenn. Ct . App. 198 7). Resta tement (Second) of

Agenc y, § 322 state s, in part : “An agent

purporting to act upon his own account, but in fact making a contract on account of an undisclosed principal, is a party to the contract.” And an age

nt who mak

es a cont ract in h is o wn name , without disclosing the identity of h is p rincipa

l, rende rs himself

persona lly liable, even though the person with whom he deals kno ws that he

is acting as agent, unless it affirmatively appears that it was the mutual intention of the pa

rties to th e contra ct that the

agent shou ld not be bound. Siler v. Perkins , 149 S .W. 106 0, 1061, 126 Tenn. 380, 387 (1912). A party who deals with such an agent may sue either the principal or the agent, but

not both. Holt v. America

n Progressive Life

Ins. Co. , 731 S.W.2d 923, 925 (Tenn. Ct. App. 1987).
CertainInterested Underwriters at Lloyd’s London, England v. Layne , 26 F.3d 39, 43-44 (6th Cir. 1994). VI. Standard of Review The standards for reviewing summary judgments on appeal are we ll s ettled. Summary judgmen ts are proper in virtually

any civil case that can be resolved on the basis of leg al issues alone. Fruge v. Doe , 952 S.W.2d 408, 410 (Tenn. 1 997); Byrd v. H all , 847 S.W.2d 208, 210 (Tenn. 1993); Church v. Perales , 39 S.W.3d 149, 156 (Ten n. Ct. App. 2000)

. They

are not, however , approp riate when genuin e disp utes r ega rding m aterial facts exist. Tenn. R. Civ. P. 56.04. Thus, a motion for summary judgment should be g

ranted o nly

when the undispute d facts, and the in ferenc es reas onably drawn from the undisputed facts, support one conclusion - that the party seeking the summary judgment is entitled to ajudgment as a matter of law. Web ber v. Sta te Farm Mut. Auto, Ins. Co. , 49 S.W.3d 265 (Ten

n. 2001); Brown v. Birman Managed Care, Inc. , 42 S.W.3d 62, 66 (Tenn. 2001); Goodloe v. State , 36 S.W.3d 62, 65 (Tenn. 2001). Summary judgmen ts enjoy no presum

ption of c orrect

ness on ap

peal. Sco tt v. Ashland Healthca re Ctr., Inc. , 49 S.W.3d 2 81, 2 84 (Tenn . 2001); Penley v. Honda Motor Co. , 31 S.W.3d 181, 183 (Tenn. 2000). Accordingly , appellate courts must make a fresh determination that the require ments of Tenn. R. Civ. P. 56 have been satisfied. Hunter v. Brown , 955 S.W.2d 49, 50-51-11-

(Tenn. 1997); Mason v. Seaton , 942 S.W.2d 470, 472 (Tenn. 1997). We must consider the evidence in the light most

favora ble to the non-moving party , and we m ust resolv e allinferences in the nonmoving party' s favor. Doe v. HCA Health Servs., Inc. , 46 S.W.3d 19 1, 196 (Te nn. 2001) ; Memphis Hous. Auth. v. Thompson , 38 S.W .3d 504, 507 (Tenn. 2001). When reviewing the evidence , we must det erm in e fi rst whe th er f act ual di spu tes ex is t. If a fa ctual dispute exists, we must then determin e whether the fact is material to the claim or defe nse upon which the summary judg ment is predicated and whether the disputed fact creates a genuine issue for tr ial. Byrd v. H

all , 847 S.W.2d at 214; Rutherford v. Polar Tank Trailer, Inc. , 978 S.W.2d 102, 104 (Tenn. Ct. App. 1998). The moving pa rt y has the bu rden of p roving t hat its motion sati sfies the require ments of Rule 56, including its entitlement to judgment as a matter of law. Staples v. CBL Assocs., Inc. , 15 S.W.3d 83, 88 (Tenn . 2000); Carvell v. Bottoms , 900 S.W.2d 2 3, 25 (Te nn. 1995) ; Jones v. City of Johnson City , 917 S.W.2d 687, 689 (Tenn. Ct. App. 1995) overruled on other grounds by Hawks v. City of Westmoreland, 960 S.W.2d 10 (Tenn. 1997). When a par ty s eeking

summary judgmen t makes a properl y supported motion, the burde n shifts to t

he nonmoving par

ty, in this cas e Mr. Wise and Mr. Ju rgensmeyer, to set forth specific facts which must be resolved by the trier of fact. Staple s, 1 5 S.W.3d at 88; Byrd , 847 S.W2d at 215.
To properly support its motion, the moving par ty must either affirma

tively neg ate an essential elem en t of the non-moving party ’s claim or conclusively establish an affirmative defense . If t

he moving

party fails to negate

a claimed

basis for the suit, the non-moving party ’s b urden to produce evidence establishing the e xistence of a genuineissue for trial is not triggered and the motion for su mm ar y j udgmen

t must fail. If the

moving party suc cessfully neg ates a claimedbasis for the action, the nonmoving pa rt y ma y n ot si mp ly rest upon the plea dings, but must off

er proof to establish the existence of the

essentia l element s of the c laim. Staples , 15 S.W.3d at 88-89. The nonmoving

party may carry its burde n by : “(1) po inting to

evidence either overlooked or ignored by

the moving party

that creates a material factual dispute, (2) by re habil itat ing the evidence attacked in the moving party ’s papers, (3) by producing additional evidence showing the existence of a genuine issue for trial, or (4) submitting an affidavit explaining why further discovery is necessary

as pr ovided for i n Tenn. R. Civ. P. 56.06.” Staples , 15 S.W.3d at 89 n.2 (citing McCarley

v. W est Qualit y Food Se rv ., 960 S.W.2d 585, 588 (Tenn. 1998)).
Th is court’s role in review of the gra nt of summary judgme

nt is to review the record a n d determine whether the requirements of Tenn. R. Civ. P. 5 6 have been met. Staples , 15 S.W.3d at 88. Our perspective is the same as that of the trial court. Gonzales v. Alman Const. Co. , 857 S.W.2d 42, 44-45 (T enn. Ct. Ap

p. 1993). Theref

ore, we must decid

e anew if the mova

nt is entitled to summary judgmen t; that is, w

hether t he mater ial fact s are not

in dispute

and conclusively show

that Mr. Prate r is entitled to judgm

ent.-12- VII . Conclusion The trial court determined there w as no factua l dispute a s to Mr. Pra

ter’s acting in hi s individual or corporate capacity , stating, “ The record before the Court, including the affida vit of Mr. Prater, establish

es that a ll action t aken by the defe ndant wa s in his ca

pacity as an agent/ employee of Prater Enterprises, Inc

. . . .” From our review of the record, we c onclude there are disputes of fact as to whether Mr. Prater participated in the arrangements with Mr. Jurgensmey er and Mr. Wise as an individual or as an agent of his apparently solely-owned c orporation. Whether he was a

cting individually

or on beh alf of hiscorpora tion is irr elevant to his possible liability for fraud or negligent misrepresentation. Thus, even if he were acting as an a

gent of the corpora

tion, he c ould none

theless b e held pe

rsonally responsi ble for a ny m isrepre sentation s. While we disagree

with the trial court

as to whether Mr. Prater’s assertions reg arding his custom of al wa ys conducting business through his corporation constitute undisputed proof that he was acting as an agent of his corporation, we also conclude that even if we agreed with that determination, Mr. Prater was not entitled to judgment because he could still be liable on the tort cla ims. Si mi la rl y, even if

Mr. Prater was acting

as an ag ent for h

is corpor ation, he could als o be held liable on the breach of contract claim bec ause he would havebeen acting as an und isclosed agent. Mr. Prater does not dispute that he never informed the plaintiffs that he was acting on behalf of the corporation. While we disagree with the trial court’s c onclusion that no material disputes exist as to Mr. Prater’s acting as an agent of the corporation, again that conclusion is not dispo sitive bec ause he could nonetheless be held individually liable on the breach of contract claims.
On appeal, Mr. Prater asserts that the summary judgment was appropr

ia te because the plaintiffs failed to come forward in oppositio n to the motion with proof that there was a contractual relationship between each of them and Mr. Prater . Obviously, a party claiming breach

of contract must prove the e xist ence of a contract. Mr. Prater te stified that he never had a contractual relation ship with eithe

r plaintif f and tha t his only business relationship herein was with Mr. Oliver who hired and em ployed hi m. How ever, h e admi ts to takin g part i n the i niti al mee tings and in later meeti ngs and conversations. Of course, the plaintiffs claim an oral agre ement whereby

Mr. Prater, along with Mr. O liver, a

greed to secure a recording c ontract in exchange for the money paid by the plaintiffs. Thus, it appears to us that th e questio n of whet

her a co ntract e

xisted is a dispute of fact and that the “proof” submitted herein consists of contradictory sworn statements by the opposing parties as to the existence of oral agreements. Consequently , we conclude tha t th ere ar e dispute d facts material to whether an agreement e xisted upon which the breach of contract claim can be predicated. As to the claims of negligent misrepresentation, a pla intiff must prove:-13-

(1) that the defendant was act ing in the course of its business, profession, or employment , or in a tra nsaction in which it

had a pe cuniary

(as oppos ed to gratuitous) inte

rest; (2) that the defendant supplied faulty information meant to guide others in their business t ransac tions; (3) that the defendant failed to exercise reasonable c are in obtaining or communicating the information; and (4) that the plaintiff justifiably relied upon the infor mation provided by the d efenda nt. Robinson v . Om er , 952 S.W.2d 4 23, 427 (Tenn. 1997 ); 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). Fraud, on the other hand, is established by proof of a false representation of a n existing or material fact made knowingly , withoutbelief in its truth, or recklessly. The pla intiff must show that he or she reasonably

re lied on the

mi srepresentation and suffered some damage as a result of that reliance on the false representation. Pusser v. Gordon , 684 S.W.2d 639, 641 (Tenn. Ct. App. 1984).
Mr. Prater

did not, in his statement of undisputed facts or in his affidavit, specifically assert that he never made representations to the plaintiffs that c ontracts, including the description of the rec ord co mpany

and prod

ucer inv olved, exis ted. He s imply took the po sition that

his only involvement

was to make his services available through his corpora tion to Mr. Oliver and to receive payment from Mr. Oliver. While the le tters inc luded in the recor d refle ct misrep

resenta tions only by Mr. Oliver, Mr. Jurgensmeye r and Mr. Oliver alleged oral misrepr esentations by Mr. Prater at the meeting s or other

communic ations whe

re he too k part. Based upon the record before us, we conclude that the defendant, Mr. Prater, is not entitled to sum mary

judgmen t becaus e the undi sputed fa cts do not e stablish th at he is e ntitled to s u c h judgm ent as a matter of law. Consequently , we reverse the decision of the trial court a nd remand for further proceedings. Costs are taxed to the appellee, Mr. Prater.

___________________________________ PATRICIA J. COTTREL L, JUDGE