IN THE COURT OF APPEALS OF TENNESSEE

AT NASHVILLE

April 12, 2017 Session

STEPHANIE KELLER ET AL. v. ESTATE OF EDWARD STEPHEN 

MCREDMOND ET AL.

Appeal from the Chancery Court for Davidson County

No. 063004IV Russell T. Perkins, Chancellor

___________________________________

No. M2013-02582-COA-R3-CV

___________________________________

Sibling shareholders, unable to agree on the management of the family business, brought 

their dispute to court. Eventually, the brothers and sisters agreed that the business should 

be dissolved and, under the court’s supervision, sold as a going concern. After soliciting 

bids from the siblings, the court approved the sale of the business’s assets to one brother 

and two of his sisters. Pending the closing, the court ordered the siblings to continue to 

operate the business as usual and to preserve the goodwill of the business, including the 

relationships with employees, suppliers, and customers. The day after the closing, the 

brother who was not part of the winning bidder group opened a competing business. The 

winning bidders sought damages from the competing sibling, claiming that he willfully 

violated court orders, breached his fiduciary duty, and intentionally interfered with 

business relations. After a bench trial, the court awarded the winning bidders 

compensatory damages in an aggregate amount for all claims. In the first appeal, this 

Court reversed, holding that the winning bidders’ claims were derivative, not direct, and 

thus they lacked standing. In Keller v. Estate of McRedmond, 495 S.W.3d 852, 877 

(Tenn. 2016), our supreme court adopted a new standard for determining whether a 

shareholder claim is direct or derivative and, applying that standard, held that the winning 

bidders had standing to pursue their claim that the competing sibling violated the court’s

orders. So our supreme court affirmed in part, reversed in part, and remanded the case to 

this Court to review the remaining issues that were properly raised but not addressed in 

the first appeal. Id. at 882-83. We affirm the trial court’s decision to hold the competing 

sibling in contempt, but we vacate the aggregate award of compensatory damages. 

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

in Part; Vacated in Part; and Case Remanded

W. NEAL MCBRAYER, J., delivered the opinion of the court, in which FRANK G.

CLEMENT, JR., P.J., M.S., and ANDY D. BENNETT, J., joined.

05/31/2018
2

Roger A. Maness, Clarksville, Tennessee, for the appellant, Louis A. McRedmond.

John P. Branham, C. David Briley, and Mandy Strickland Floyd, Nashville, Tennessee, 

for the appellees, Linda McRedmond Orsagh and Anita McRedmond.

Richard K. Smith, Nashville, Tennessee, for the appellee, Estate of Edward Stephen 

McRedmond.

OPINION

I.

In this appeal, we revisit the circumstances surrounding the sale of the assets of a 

closely-held family corporation, McRedmond Brothers, Inc. (“MBI”).1 MBI, among 

other things, owned and operated a grease business that purchased used grease for resale 

to animal feed manufacturers. After the death of the family patriarch, ten McRedmond 

siblings owned all of the shares of MBI. Two siblings, Louis Anthony McRedmond 

(“Louie”) and Edward Stephen McRedmond (“Stephen”), owned the largest block of 

shares and managed the day-to-day operations of MBI.

In 2006, various disagreements between Louie and Stephen began to interfere with 

their joint management of MBI. Complicating matters, an irrevocable Shareholders 

Agreement precluded the other eight siblings from resolving the impasse. The siblings 

split into two camps. In 2008, Louie, along with six of his sisters, filed this action against 

Stephen2and the remaining two sisters in the Chancery Court for Davidson County, 

Tennessee.

3

 Initially, the plaintiffs asked the trial court to “declare the management of 

the corporation [(Louie and Stephen)] deadlocked,” and to “declare the Shareholders 

Agreement terminated.” But after the court concluded that the Shareholders Agreement 

was enforceable, the parties agreed that MBI should be dissolved. 

On September 22, 2008, the court, by agreed order, appointed a receiver to 

immediately take control of MBI’s assets, records and business. In the same order, the 

court directed the receiver to ensure that MBI’s grease business was operated in a manner 

 

1 A more detailed factual and procedural background is set forth in Keller v. Estate of 

McRedmond, 495 S.W.3d 852, 855-66 (Tenn. 2016).

2

Stephen McRedmond passed away during the course of litigation, and his estate was substituted 

as a party.

3 The court later consolidated the action with a declaratory judgment action filed by MBI against 

all of the siblings.
3

that would “protect its value” and ordered current employees, including Louie, to 

“continue to conduct the Grease Business in the ordinary course of business, reporting 

directly to the Receiver.” The court also enjoined all parties from taking any actions “as 

to the business or assets of [MBI].” 

In January 2009, the receiver reported to the court that MBI’s assets would be 

worth more to the siblings than to other potential buyers. The receiver proposed selling 

the business assets to the siblings as a “going concern.” After resolution of any creditors’ 

claims, the receiver would distribute the remaining proceeds to the ten siblings pro rata

based upon their ownership of MBI. The court approved the receiver’s plan.

Stephen and two sisters, Anita McRedmond and Linda McRedmond Orsagh, 

submitted the winning bid. The only other bidder was Louie, who submitted a bid for the 

grease business assets only. The receiver and the winning bidders executed an Asset 

Purchase Agreement for the grease business assets and other MBI holdings. The grease 

business assets included “the names and any derivations of the names of the business 

entities which currently own and operate the Businesses [and] the goodwill associated 

with the foregoing.” 

On April 1, 2009, the court entered an order approving the receiver’s sale of 

assets, attaching to the order the Asset Purchase Agreement. Pending the sale, the order 

directed the current officers and directors of MBI, namely Louie and Stephen, to:

1. Conduct the Business only in the usual, regular and ordinary 

course, preserve the organizational structure of the Business, and preserve 

intact for the Buyer the goodwill of the Business and the present 

relationship between the Business and the employees, suppliers, clients, 

customers, and others having business relations with the Seller. 

. . . . 

4. Take all action and . . . do all things necessary, proper or advisable 

in order to consummate and make effective the transactions contemplated 

by the agreement of the Buyer to purchase the Business . . . .

The sale closed on April 8, 2009. Later that day, Louie resigned as employee, 

officer, and director of MBI. 

Shortly after the closing, the winning bidders discovered that Louie had been 

preparing to open his own competing grease business. On March 5, 2009, Louie or his 

agent filed a charter for his new business, L.A. McRedmond, Incorporated (“LAMI”), 

with the Tennessee Secretary of State. Also in March 2009, Louie opened a bank 

account and began buying equipment for LAMI, which he asked MBI employees to 

deliver to him at the MBI grease plant. Prior to closing, Louie discussed his plans for 
4

LAMI with at least two MBI employees and asked them to work for him after the sale 

and allegedly solicited the business of MBI’s largest customer. During his last few days 

before he resigned, Louie allegedly stopped ordering loads of grease for MBI so that its 

inventory was almost completely depleted by the date of closing. 

The day after closing, LAMI, fully operational as a competing grease business,

received its first shipment of grease for resale. LAMI then admittedly targeted MBI’s 

vendors and customers using the same grease plant historically used by MBI. According 

to Anita, Louie’s actions “paralyzed” the new MBI4(“New MBI”) because, without 

inventory, it was unable to fill grease orders. By the time the grease inventory was 

replenished to normal levels, LAMI had captured New MBI’s major customers. 

The winning bidders sought relief from the trial court. The court entered an order 

granting their motion for a temporary injunction, enjoining Louie from operating a grease 

business at the MBI grease plant facility and from interfering with the operations of New 

MBI. This injunction would later be made permanent. 

The court also allowed the winning bidders to amend their answers to the original 

complaint to include counterclaims against Louie. The winning bidders essentially 

asserted three claims: (1) Louie willfully and intentionally violated the court’s orders; (2) 

Louie violated his fiduciary duty to MBI; and (3) Louie intentionally interfered with 

MBI’s business relations.

After a three-day bench trial, the court ruled in the winning bidders’ favor on all 

three claims. The court found that Louie intentionally took steps to deplete the inventory 

of the grease business prior to the sale, set up a competing business on the existing MBI 

premises, recruited valuable employees away from MBI, and solicited MBI’s largest 

customer. The court determined that Louie’s conduct violated its orders of September 

22, 2008, and April 1, 2009, and his conduct damaged the winning bidders. The court 

also found that Louie’s actions violated his fiduciary duty to MBI and constituted 

intentional interference with business relations. 

As to damages, the court found that the winning bidders “did not receive what 

they bargained for in purchasing the ‘going concern’ assets of the grease business for 

$758,000.00.” Rather, they “received approximately half of what they bargained for, 

something that was much closer in value to [Louie’s] bid of $360,000.00.” Thus, the 

court awarded the winning bidders “compensatory damages in the aggregate amount of 

$375,000.00.” In a footnote, the court explained that it was “merg[ing] all the damages 

for violating the Court’s Orders, intentional interference with business relations, and 

 

4 Before the closing, the winning bidders formed and capitalized a new corporation and assigned 

their rights and responsibilities under the Asset Purchase Agreement to this new entity. After the closing, 

MBI changed its name so that the new corporation could take the name “McRedmond Brothers, Inc.” 
5

breach of fiduciary duties into the aggregate compensatory damages award.” The court 

certified the order as final under Rule 54.02 of the Tennessee Rules of Civil Procedure 

and found that there was no just reason for delay. Louie then appealed to this Court.

We reversed the trial court’s decision, holding that the winning bidders, as 

individual shareholders, lacked standing to assert the claims alleged. In re Estate of 

McRedmond, No. M2013-02582-COA-R3-CV, 2014 WL 6324283, at *20 (Tenn. Ct. 

App. Nov. 14, 2014), aff’d in part, rev’d in part sub nom. Keller v. Estate of 

McRedmond, 495 S.W.3d 852 (Tenn. 2016). Applying then-current Tennessee law for 

determining whether a shareholder claim is direct or derivative, we determined that all 

three claims were derivative. Id. at *17-20. 

Our supreme court granted permission to appeal and adopted a new analytical 

framework for such determinations. Keller v. Estate of McRedmond, 495 S.W.3d 852, 

877 (Tenn. 2016). The court then applied the new approach to each of the winning 

bidders’ claims to determine whether they as individual shareholders had standing to 

pursue the claims. Id. at 877-82. The court affirmed our holding that the winning 

bidders did not have standing to assert a claim based on Louie’s breach of fiduciary duty 

to MBI or intentional interference with business relations. Id. at 880-81. But the 

supreme court held the winning bidders did have standing to pursue the civil contempt 

claim against Louie for any actual damages arising out of his violation of the trial court’s 

orders. Id. at 879-80. The court then remanded the case so that we could address, in our 

discretion, any remaining issues properly raised by the parties in the first appeal that had 

not yet been decided. Id. at 882 & n.38.

II.

On August 4, 2016, we ordered the parties to file supplemental briefs addressing 

the remaining issues. Louie presented three issues5for our review: (1) whether he 

intentionally violated the court’s orders; (2) if so, whether the winning bidders were 

actually harmed by his conduct; and (3) whether the damages award was supported by the 

evidence.6

 

 

5 Although Louie also argued a fourth issue, the issue only appeared in his supplemental brief and 

was not designated as an issue presented for review. Thus, we consider this issue waived. See Forbess v. 

Forbess, 370 S.W.3d 347, 356 (Tenn. Ct. App. 2011) (“We may consider an issue waived where it is 

argued in the brief but not designated as an issue.”).

6 We are unpersuaded by the winning bidders’ argument that Louie did not raise the first two 

issues in his original brief in this Court. By raising the issue of whether the trial court erred in finding 

that his pre-closing conduct was improper, he preserved the issue of whether his pre-closing conduct 

violated the court’s orders and harmed the buyers.
6

Under Tennessee Code Annotated § 29-9-102(3) (2012), courts have the power to 

“issue attachments, and inflict punishments for contempts of court” for “[t]he willful 

disobedience or resistance of any officer of such courts, party, juror, witness, or any other 

person, to any lawful writ, process, order, rule, decree, or command of such courts . . . .” 

Contempt may be either civil or criminal in nature. Doe v. Bd. of Prof’l Responsibility, 

104 S.W.3d 465, 473 (Tenn. 2003). Civil contempt, which is at issue here, is intended to 

benefit a private party who has suffered a violation of rights, and “the quantum of proof 

necessary to convict is a preponderance of the evidence.” Id. at 473-74.

We review a court’s decision to hold a person in civil contempt under the abuse of 

discretion standard. Konvalinka v. Chattanooga-Hamilton Cty. Hosp. Auth., 249 S.W.3d 

346, 358 (Tenn. 2008). “A court abuses its discretion when it causes an injustice to the 

party challenging the decision by (1) applying an incorrect legal standard, (2) reaching an 

illogical or unreasonable decision, or (3) basing its decision on a clearly erroneous 

assessment of the evidence.” Lee Med., Inc. v. Beecher, 312 S.W.3d 515, 524 (Tenn. 

2010) (citations omitted).

Defiance of a court order may constitute contempt if four elements are present:

First, the order alleged to have been violated must be “lawful.” Second, the 

order alleged to have been violated must be clear, specific, and 

unambiguous. Third, the person alleged to have violated the order must 

have actually disobeyed or otherwise resisted the order. Fourth, the 

person’s violation of the order must be “willful.”

Konvalinka, 249 S.W.3d at 354-55 (footnotes omitted). Louie does not dispute that the 

first two elements were met. But he contends that he did not actually disobey the orders 

and that his alleged violation was not willful. The third and fourth elements of a civil 

contempt claim are questions of fact, which we review de novo with a presumption of 

correctness unless the evidence preponderates otherwise. Id. at 356-57; Tenn. R. App. P. 

13(d). 

The trial court found Louie violated two of its orders by intentionally depleting 

MBI’s grease inventory before the sale, recruiting valuable employees away from MBI, 

and soliciting the business of MBI’s largest customer. The court’s September 2008 order 

directed MBI employees, including Louie, to “continue to conduct the Grease Business in 

the ordinary course of business.” And the court’s April 2009 order instructed MBI’s 

employees to “[c]onduct the Business only in the usual, regular and ordinary course, 

preserve the organizational structure of the Business, and preserve intact for the Buyer 

the goodwill of the Business and the present relationship between the Business and the 

employees, suppliers, clients, customers, and others having business relations with the 

Seller.” Louie claims that he was merely preparing to compete with his siblings, an 
7

activity not prohibited by the court’s orders. But the record shows that Louie’s preclosing activities went beyond mere preparation to compete.

7

 

Contrary to the court’s orders, Louie did not conduct MBI’s business “only in the 

usual, regular and ordinary course.” Louie asked MBI employees to use an MBI tractor 

to deliver two tankers he purchased for LAMI to the MBI premises. And the evidence 

shows that Louie, the person responsible for maintaining inventory before closing, left 

virtually no inventory in stock on the date of closing. When asked whether he allowed 

the tanks and tankers to be empty because he knew he was going to resign, Louie 

answered “Yes.” According to Louie, he only “bought enough [grease] to ensure the 

sales [he] made would be fulfilled.” 

Louie also did not “preserve intact for the Buyer the goodwill of [MBI] and the 

present relationship between [MBI] and the employees, suppliers, clients, customers, and 

others having business relations.” Before closing, Louie convinced key MBI employees 

to work for his competing grease business. And he told customers that MBI’s assets were 

being sold, that he “may be starting a new business,” and that he “would like to continue 

selling grease to them.” Although Louie denied soliciting business from MBI’s largest 

customer before the sale, the court apparently discredited this testimony by finding 

otherwise. See Richards v. Liberty Mut. Ins. Co., 70 S.W.3d 729, 733-34 (Tenn. 2002) 

(“[F]indings with respect to credibility and the weight of the evidence . . . may be 

inferred from the manner in which the trial court resolves conflicts in the testimony and 

decides the case.”). We will not second guess the court’s credibility determination. 

The evidence also does not preponderate against the court’s finding that Louie’s 

violation was willful. Willful conduct in the civil contempt context 

consists of acts or failures to act that are intentional or voluntary rather than 

accidental or inadvertent. Conduct is ‘willful’ if it is the product of free 

will rather than coercion. Thus, a person acts ‘willfully’ if he or she is a 

free agent, knows what he or she is doing, and intends to do what he or she 

is doing.

Konvalinka, 249 S.W.3d at 357 (quoting State ex rel. Flowers v. Tenn. Trucking Ass’n 

Self Ins. Group Trust, 209 S.W.3d 602, 612 (Tenn. Ct. App. 2006) (citations omitted)). 

As described above, Louie deliberately took steps to recruit MBI employees, solicit MBI 

customers, and deplete MBI’s grease inventory. His actions were intentional, not 

accidental or inadvertent. 

 

7 To the extent the trial court found that Louie’s post-closing conduct also violated its orders, the 

court erred. After Louie resigned as an officer, director, and employee of MBI he was no longer bound 

by the court’s orders. But because we conclude that Louie’s pre-closing conduct violated the court’s 

orders, the court’s error in considering post-closing conduct was harmless. 
8

The determination that the trial court did not abuse its discretion in holding Louie 

in civil contempt does not end our inquiry. Louie also challenges the court’s decision to 

award compensatory damages to the winning bidders based on his contemptuous conduct. 

Under Tennessee Code Annotated § 29-9-105,

8

trial courts may award compensatory 

damages to a party “for injury arising from the [other party’s] illegal disobedience of the 

court.” Overnite Transp. Co. v. Teamsters Local Union No. 480, 172 S.W.3d 507, 511 

(Tenn. 2005). “The measure of damages is the actual injury sustained as a result of the 

contempt.” Id. Actual damages, or compensatory damages, consist of “[a]n amount 

awarded to a complainant to compensate for a proven injury or loss; damages that repay 

actual losses.” Actual Damages, BLACK’S LAW DICTIONARY (10th ed. 2014); see also 

Compensatory Damages, BLACK’S LAW DICTIONARY (10th ed. 2014) (defining 

compensatory damages as “[d]amages sufficient in amount to indemnify the injured 

person for the loss suffered”).

Louie contends that the evidence preponderates against the court’s finding that his 

violation of the court’s orders actually harmed the winning bidders. We disagree. The 

court-appointed receiver intended to sell the grease business as a going concern. And the 

winning bidders submitted their bid based on the value of the business as a going 

concern. The court’s orders were designed to protect that value through the closing date

“so that the Buyers would receive the benefit of their bargain.” Keller, 495 S.W.3d at 

879. By depleting the grease inventory, recruiting MBI employees for his own 

competing business, and telling customers that MBI’s assets were being sold, Louie

diminished the value of the business assets. Anita testified that the business was 

“paralyzed” by lack of inventory. And by the time New MBI had replenished the missing 

inventory, long-time customers, primed by Louie’s pre-closing statements, were buying 

from LAMI. MBI’s accountant described the cumulative adverse effect of Louie’s 

actions on New MBI: declining sales, decreased profits, and an overall net loss. 

Although the winning bidders did not have standing to recover lost profits, evidence of 

lost profits is “probative of the adverse effect Louie’s conduct had on the value of the 

grease business assets at the time of the closing.” Id. at 881 n.35.

This brings us to the amount of damages awarded by the trial court. Because the 

court awarded a lump sum of $375,000 to compensate the winning bidders for breach of 

fiduciary duty, interference with business relations, and violation of the court’s orders, 

we cannot determine whether the evidence supports the amount of damages awarded. So

we vacate the award of damages and remand this case to the trial court for calculation of 

the winning bidders’ direct damages attributable solely to Louie’s willful violation of the 

 

8 Tennessee Code Annotated § 29-9-105 governs “[i]f the contempt consists in the performance 

of a forbidden act.” Tenn. Code Ann. § 29-9-105 (2012). On appeal, Louie does not dispute the trial 

court’s authority to award damages under this statute. 
9

court’s orders. See id. at 879. The trial court may, in its discretion, conduct a new 

hearing on the amount of such damages. 

III.

Because the evidence does not preponderate against the court’s findings that Louie 

violated the court’s orders and his violation was willful, we affirm the court’s decision to 

hold Louie in civil contempt. But we vacate the court’s aggregate award of damages. 

We remand this case for such further proceedings as are necessary for the court to 

calculate the amount of direct damages to the winning bidders, Anita McRedmond, Linda 

McRedmond Orsagh, and the late Edward Stephen McRedmond, attributable solely to 

Louis Anthony McRedmond’s civil contempt.

_________________________________

W. NEAL MCBRAYER, JUDGE