### IN THE COURT OF APP EALS OF TENNESS EE AT KNOXVI LLE O ct obe r 17, 200 3 S es sio n

ARTHUR CREECH, ET AL 

### . v. ROBE RT R. ADDINGTO N, ET AL 

### .

Appeal f romthe Circ uit Court for Sevier County No. 97-16-II Ric hard R. Vance, Judge
F ILED JANUARY 7, 2004
No. E2003-00842-COA- R3-CV

The plaintiffs leased land in Mississ ippi from D.C. P arke r and Richa rd B . Flowe rs (“ Def

endants” ) for the pur

pose of building motels on the land. Plaintiffs c laim the y wer e told by

Def endants’ a g ent that financ ing was in pla ce to build immediately and that this repr esentation induced them to enter into the leases. F inancing never materia liz ed and the motels never w ere built. P laintiffs sued Def endants, the pa

rties ex p ec t ed to provide financ ing, and others. De fendants filed a motion for summary judgme nt, which the Tria l Court gr anted. Plaintiffs appe al. We vacate and r emand.

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 V ac at e d; Ca se Re m ande d.

D. M I CH A EL S WI NEY , J ., delivere d the opinion of the court, in which H ER SCH EL P. F RAN KS , J ., and C H A RLES D. S US ANO , J R ., J ., joined.

David H. Parton, Gatlinburg , T e n n e s s ee, f or the Appe llants, Arthur Cree ch and w ife, Gle nda Cree ch; Claude Hatfield and wife , Debor ah Hatfield; Way ne Martin and wife, Alice Martin; Bre nt Chit wood a n d M ar v i n B

. C h i t w o o d , J r . , d/ b / a T r i a d P ar t n e r s ; D ar l e n e R e i n i e r ; V i c k i J a c o b s ; J o a n n L

. ( M a d d y) Wolfe; L aure l Group, I nc.; and Golde n Girls, I nc. Rick L . Powers and D an D. Rhea, Knox ville, Tenne ssee, f or the Appe llees, D.C. Parke r and Richa rd B . F low e rs .T he f ac t s o f t his case are m o re i nv o l ve d tha n w e d i scu ss in this O p i nio n. Fo r p urp o ses o f clarit y, we d i scu ss 1

o n ly t h e fac ts d ire c tly re le v a n t t o the issu e s o n a p p e a l.

O n ly a fe w o f t h e na m e d P la in ti ff s a tten d e d the O c to b e r m e e ting . T h e se P la intiff s the n c o n ta c te d fam ily 2

m em b ers and f

ri end s who b ecam e i nvo l ved i n t he T uni ca i nvest m ent

. Fo r purpo ses of si m p l i ci t y , we wi l l ref er t o t he g ro u p w h o a tten d e d the m e e ting a s “P la intiff s” w ith the u n d e r s ta n d in g tha t no t all o f t h e na m e d P la intiff s a c tua lly at t end ed t hi s m eet i ng. -2- OP IN ION
Bac kgr ound 1 The plaintiffs in this lawsuit are : Arthur Cree ch and w ife, Gle nda Cree ch; Claude Hatfie ld and wife , Debor ah Hatfield; Way ne Mar t i n and wife , Alice Ma rtin; Bre nt Chit wood and M ar v i n B

. C h i t w o o d , J r . , d / b / a T r i a d P ar t n e r s ; D ar l e n e R e i n i e r ; V i c k i J a c o b s ; J o a n n L

. ( M a d d y) Wolfe; L aure l Group, I nc.; and Golde n Girls, I nc. (“ Plaintiffs”).

I n October

of 1993, sever al of the Plaintiffs , along with others, attende d a mee ting 2 held at the L aure l I nn in Gatlinburg , Tenne ssee. At that meeting , L loy d and B etty L ink (“the Links”) spoke re g ardi n g potential rea l estate investment and de velopment opportunities in Tunica, Mis sis sip pi. At

that ti me , se ve ra l c a sin o g a mbl ing bo a ts we re do c ke d inTu nic a a ndso me pe op le anticipat ed a co n s truction “boom” oc curring on the land nea r the c asino boats. Anticipated development include d motels, restaurants, and entertainment venues.

None of the Plaintiffs had met the Links prior to this October mee ting. Plaintiffs we re invited to the meeting by H. Earl Allen, II I , a re ntal ag ent and mana g er at L aure l I nn. Severa l of the Plaintiffs owned condos at the L aure l I nn. Mr. Allen cla ims that severa l of the Plaintiffs had aske d if he knew of rea l e state investment opportunities. Mr. Allen met L loy d L ink throug h a friend and arr ang ed for

the Links to make their pre sentation.
Pla int if fs a lle g e that the L ink s r e pr e se nte d at th e Oc tob e r m e e tin g that f inanc ing to bu ildmul ti- mil lio n do ll ar mot e ls w a s in pla c e a ndthat c on str uc tio n w ou ld b e g in i mme diate ly if Pla int if fs le a se d landow ne d b y

De fe nd a nts . Pl a int if

fs c la im that L loy d Link tol d the m tha t th e on ly way to ge t the land was throug h him. Plaintiffs a lso c laim that the y wer e told that they neede d to act quickly if they wanted to pa

rticipatein

th is in v e s tment opportunitybeca use there wer e other

potential investors who would take the dea l if they did not.
As a re sult of this m eeting , Plaintiffs decided to invest money to le as e l and owned by Def endants. Doc uments purportin g t o b e contracts for the sa le of c ommercia l rea l estate we re signe d at the mee ting by

Arthur Cre ech f

or the L aure l Group, I nc. an d J o an n L . Maddy , Dar lene Re ini e r, a ndVi c ki S . Jac ob s f or the Go lde n G ir ls, I nc . T he se do c ume nts na me d Lloy d a ndB e tty L ink d/b/a L ink and Associate s as escrow ag ents for Defe ndants. The documents never wer e sig ned by De fe nd a nts . A lth ou g h th e do c ume nts sig ne d at th e me e tin g pu rp orte d to be c on tr a c ts f or the sa le of l and, Plaintiffs understood that they wer e g oing to lea se the land, not purc hase it. Plaintiffs g aveP l ainti f f s rea ch ed a m ed i ated ag ree m en t wit h M r. A l l en an d sett l ed wit h the re m aining d efen d an t s. 3
-3- some money

to the L inks at the meeting as a dow n-payment on the lease s. P l ai n t iffs formed two g roups and incor

porate d in Missi ssippi as the L aure l Group, I nc. and t h e Go lden Girls, I nc. Mr. Allen was named pre sident of both corpor ations.

Further discussions ensued involving Plaintiffs, Mr. Allen, and som e o f t h e other defe ndants. I n addition, severa l of the Plaintiffs went to Tunica to view the prope rt y . Plaintiffs c la im the y

we re a ssu re d mu lti ple tim e s th a t f inanc ing wa s in p la c e a ndthat c on str uc tio n w ou ld b e g in imm e diate ly , a ndthat th e y we re s ho wn do c ume nts that le d th e m to be lie ve the se re pr e se ntatio ns . Howeve r, Plaintiffs have no w ritten commitment reg arding the alleg edly promised financ ing.
Mr. Allen and se vera l of the Plaintiffs went t o T u n i ca in Dece mber of 1993, and a g round lea se for

a par cel of

Def endants’ pr operty was sig ned on beha lf of the L aure l Group and one on behalf of the Golde n Girls. The lease s, which are substantially the same, wer e for a twenty -y ear term with an opti on to rene w and contained specific pr ovisions allowing Plaintiffs to build a motel on eac h g roup’s pa

rce l within a six month time f rame . The lease s provided for what would happe n if the motels wer e built w ithin the six -month time f rame and for what would happen if the y wer e not built withi n the allotted time.

Pla int if fs pa id $ 12 5, 00 0 to le a se e a c h of the tw o pr op e rt ie s. Ho we ve r, De fe nd a nts claim to ha ve asked for and rec eived only $100,000 per property

. Appar ently , the L inks r etained the extra $25,000 on eac h lease . Def endants c laim that the L inks were n o t acting as the ir ag ents but rathe r that the y ha d an un de rs tand ing wi th the L ink s tha t if the L ink s f ou ndle sse e s f

or De fe nd a nts ’ property , the Links could retain a ny amount obtained above Def endants’ a sking p ri ce . Severa l chec ks show payments from Def endants to the L inks. Some of these c hecks c ontain notations such as ‘f inder’s f ee.’ Def endants a lso filed 1099 forms showing payments to the L inks.
The fina ncing to build the motels t hat Plai n t i ff s claim they wer e promised ne ver materia liz ed. Plaintiffs attempted to ar rang e for financ ing f

rom anothe r s o urce , but were unsucce ssful. The motels neve r we re buil t

. I n addition, the casinos did not stay in Tunica, but instead moved to another loc ation closer to Me mphis. P laintiffs wer e lef t with costlylease s on cotton fields. Def

endants e ventually

exercised de fault provisions contained in the documents, and the lease s were terminated.

Plaintiffs sued a number

of parties including Def

endants, Mr. A llen, the Links, and the parties who wer e expected to pr ovide financ ing. T he Links and another party we re dismiss ed fr om the su it b a se d u po n th e statut e of fr aud s. Defend a nts fi le d a mot ionfo r s umm ary

jud g me nt, which the Trial Court gr anted. I n its orde r g ranting summary judgme nt, the Trial Court f ound there 3 wer e no disputed g enuine issues of material fa ct. The Trial Court stated in its memora ndum opinion that the ce ntral theme of the lawsuit had to do with w hether misrepre sentations wer e made reg arding financ ing. T he Tria l Court found there w as no evidenc e that De fendants misreprese nted anything with respec t to the financing . Rather, De fendants simpl y wer e suppl y ing the land t o be lea sed. The-4-

Tria l Co urt f

ou ndthat th e re wa s “no dir e c t pr oo f that [De fe nd a nts ] ma de a ny mis re pr e se ntatio n to induce a ny one...” and further, t hat t here was no breac h of the lea se. Plaintiffs appea l the g rant of summary judgme nt. Discussion Plaintiffs present one issue for r eview: whe ther the Trial Court erre d in gr anting Def endants s u m m ar y

judgme nt. Defe ndants phrase the issues diffe rently as: 1) whe ther a n independe nt broker’ s repr esentat i o n s rega rding construction fina ncing are ratified by landowner s who mere ly

lease their land; and 2) whether investors who undertook the obliga t i on to build are entitled to rescind their

lease on the g round of mutual mi s t ak e when a nticipated construc tion financ ing f

alls throug h. The dispos itive issue on appea l, howeve r, i s whether the Trial Court er red in gr anting summary

judgme nt. As our Supreme Court has instructed:
The standa

rds governing an appe llate court’s revie w of a motion for summary judgme nt are well settled. Sinc e o u r i n q u i ryinvolves purely a question of law , no pr e su mpt ionof

c or re c tne ss attac he s to thelow e r c ou rt ’s jud g me nt, a ndou r t a sk is c on fi ne d to re vie wi ng the re c or d to de te rm ine wh e the r the re qu ir e me nts of Te nn . R. Civ. P. 56 have be en met. See H unter v. Brown, 955 S.W .2d 49, 50-51 (Te nn. 1997); Cowden v. Sovran Bank/Central South, 816 S.W .2d 741, 744 (Tenn. 1991)

. Te nn e sse e Rul e of

Civ il Pr oc e du re 56.0 4 p ro vid e s th a t su mma ry jud g me nt i s app ro pria te wh e re : ( 1) the re is n o g e nu ine iss ue w ithre g ardto the ma te ri a l f a c ts rele v an t t o t h e cla im or defe nse conta ined in the motion, see By rd v. Hall, 847 S.W .2d 208, 210 (Tenn. 1993); and (2) the m oving party is entitled to a judgment as a matter of law on the undisputed fac ts. See Anderson v. Standard Register Co., 857 S.W. 2d55 5, 55 9 ( Te nn . 1 99 3)

. Th e mov ing pa rty ha s the bu rd e n o f p ro vin g that it s motion satisfies these requir ements. S ee Do w n en v. A llstat e Ins. Co., 811 S.W .2d 52 3, 52 4 ( Te nn . 1 99 1) . Wh e n th e pa rty se e kin g su mma

ry jud g me nt m ake s a

pr op e rl y su pp orte d mo tio n, the bu rd e n shif ts to the no nmo vin g pa

rty to se t forth spe c if

ic fa c ts establishing the exis tence of disputed, material fac ts which must be resolved by the trier of fac t. See B

yrd v. H all, 847 S.W .2d at 215.
To pr op e rl y

su pp ort it s mo tio n, the mov ing pa rty mus t eith e r a ff

ir ma tiv e ly ne g a te a n e sse nti a l e le me nt o f the no n- mov ing pa

rty ’s c la im o r c on c lus ive ly e sta bli sh an af firmative de fense

. See M cCarley v. W

est Quality Food Serv ., 960 S.W .2d 585, 58 8 ( Te nn . 1 99 8) ; R o b in s o n v . O mer, 9 5 2 S .W.2d 423, 426 (Tenn. 1997). I f the movi n g party

fails to neg ate a

claimed ba sis for the suit, the non-moving party ’s bu rd e n to pr od uc e e vid e nc e e sta bli sh ing the e xiste nc e of a g e nu ine iss ue fo r t

ri a l is not trigg ere d and the motion for summary judgme nt must fail. Se e Mc Car ley v . W e st Quality Food Serv., 96 0 S. W.2 d at 58 8; Robinson v. Ome r, 952 S.W .2d at 426. I f the moving pa

rty succe ssfully

neg ates a

claimed ba sis for the ac tion, the n o n -moving-5-

party may not simp l y re s t u p o n the pleading s, but must offer proof to establish the e xiste nc e of

the e sse nti a l e le me nts of the c la im.
The standa

rds g overning t h e as sessment of evide nce in the summary judgme nt context are also we ll established

. C o u rt s must view the evidenc e in the lig ht m os t f

a vo ra ble to the no nm ov in g pa rty a ndmus t a lso dr a w a ll r e a so na ble infere nces in the nonmoving pa rty ’s fa vor. See R obinson v. Ome r, 952 S.W .2d at 42 6; Byrd v. H

all, 847 S.W .2d at 210-11. Courts s hould g rant a summary judgme nt on ly wh e n bot h the f

a c ts andthe inf

e re nc e s to be dr a wn fr om the fa c ts p e rm it a rea sonable person to rea ch onlyone conc lusion. See M cCall v. W

ilder, 913 S.W .2d 15 0, 15 3 ( Te nn . 1 99 5) ; Carvell v. Bottoms, 900 S.W .2d 23, 26 (Tenn. 1995)

. Staples v. CBL & Assocs., Inc ., 15 S.W .3d 83, 88-89 (Te nn. 2000) (f ootnote omitted).
I n its order g ranting summary judgme nt, the Trial Court found there wer e no disputed g enuine issues of materia l fac t. The Trial Court stated in its memorandum opinion that the centra l theme of the lawsuit had to do with w hether misrepre sentations wer e made reg arding financ ing. T he Tria l Co urt f

ou ndthe re wa s n o e vid e nc e that D e fe nd a nts mis re pr e se nte d an y th ing wi th r e sp e c t to the financ ing, and that Def endants simply

wer e supply ing the l an d t o be lea sed. The T rial Court found that there was “ no direc t proof that [ De fe n d an ts] made a ny misrepre sentation to induce any one...” and further , that there was no bre ach of the lease

. The Trial Court did n o t , howeve r, addr ess Plaintiffs’ claim that the Links were Def endants’ a g ents and that De fendants w ere liable for their ag ents’ misrepr esentations. I t is clear from the Me morandum Opinion, which i s a t ransc ript of the Tria l Court’s ruling f rom the benc h including que stions and statements by counsel, that Plaintiffs’ co u n s el co n tinued to arg ue that Def endants’ a g ents, the L inks, made these fraudulent misrepre sentations to Plainti ffs. F or example, t h e T ri al C o u rt s t at ed t h at“[ De fe n d an t s ] ar e n o tt h e o n es wh o we re b u i l d i n g h o t el s o r f i n an ci n g... [Defenda nts] wer e selling or lea sing the land.” In res p o n se to this, Pl aintiffs’ c ounsel stated that “their a g ent ce rtainly

was telling people that.” I f the Links were acting as De fendants’ ag ents, and Plaintiffs were induced to lea se the land by fraudulent misrepre sentations made by th e L i nks as Def endants’ a g ents, then Def endants potentially could be liable for those misre prese ntations. See J oh ns on v . LeB on he ur

Chi ldre n’ s M

e d. Ctr

. , 74 S.W .3d 338, 343 (Tenn. 2002) (stating : “When an ag ency re l at i o n ship ex ists, the principal may be bound by

the ac ts of the ag ent per formed on the principal’s be half a nd within the actual or appar ent scope of the a g ency .”).
I n discussing a g ency , our Supreme Court ha s stated:
The e x istence of

an ag ency

relationship , howeve r, “is a que stion of fac t under the circ umstances of

the particular c ase,” and is determine d by examination of agre e me nts a mon g the pa rt ie s o r o f the pa

rt ie s’ a c tio ns . T he princ ipa l’ s rig ht t o control the a cts of the a g ent is a re levant fa ctor whe n determining the ex istence of an-6-

ag ency relationship. The amount of actual control ex erc ised by the principa l over the a g e nt a lso ma y

be de te rm inativ e of

wh e the r an a g e nc y

re la tio ns hip e xists

. Id . (citations omitted).

The que stion of whether t h e L inks were acting as De fendants’ ag ents is a disputed qu e sti on of fa c t. De fe nd a nts ne ith e r n e g a te d a n e sse nti a l e le me nt o f P la int if fs ’ c la im o f D e fe nd a nts ’ lia bil ity ba se d o n th e a c tio ns of

De fe nd a nts ’ a lle g e d a g e nts no r d id D e fe nd a nts c o n c l u s i v e l y e s ta bli sh an aff irmative defe nse as to this theory of liability

. As there is a g enuine issue with r eg ard t o t he mater ia l f a c ts r e g a r d in g w hether

the Links were Def

endants’ a g ents, summary judgme nt is not proper on this iss ue. We do not address the othe r g rounds initiallyarg ued in Defen d an t s ’ motion for summary judgme nt as those issues are not before us in this appeal. We vacat e the Trial Court’s J anuary 4, 2001, order g ranting summary judgme nt to Def endants Parke r and F lowers a nd rema nd this case to the Trial Court.

Conclusion

Th e jud g me nt o f the Tria l Co urt g ranti ng su mma ry jud g me nt t o D e fe nd a nts is vacated, and this cause is remanded to the Trial Court for further procee dings. The costs on appeal are assessed a g ainst the Appellee s, D.C. Parker and Richard B . Flowe rs.

___________________________________ D. MI CHAEL

SW INEY, JUDGE