### IN THE COURT OF APPEALS OF TENNESSEE AT JACKSON April 30, 2001 Sessi

on WALTER CHANDLER v. D. CANALE & CO., ET AL Appeal from the Chancery Court for Shelby County No. 103892-2 Floyd Peete, Jr., Chancellor

No. W2000-02067-COA-R3-CV - Filed May 25, 2001

Plaintiff appeals from a grant of summary judgment in favor of the defendants. Th e complaint alleged the plaintiff had a partnership with the defendants and accused the defendants of breach of contract. The trial court granted summary judgment for the def e ndan ts on the basis of judicial estoppel, concluding the plaintiff had previously testified under oath in prior litigation that he had no ownership interest in the business. We affirm the judgment of the trial court. Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Chancery Court Affirmed J OE G. R ILEY , Sp. J., delivered the opinion of the court , in which W

. F RANK C RAWFORD , P. J., W. S., and D AVID R. F ARMER , J., joined. Fred M. Ridolphi, Jr., Memphis, Tennessee, for the appellant, Walter Chandler. Oscar C. Carr, III and

Jeffery A. Jarratt, Memphis, Tennessee, for the appellees, D. Canale & Co., et al. OPINION This is an appeal by the plaintiff, Walter Chandler, from an order of the trialcourt granting summary judgment in favor of the defendants. Plaintiff brought suit alleging hi s busine ss relationship with th

e defendants

was a partnership. He alleged breach of contract, breach of good faith, breach of fiduciary duty, a nd breach of f air dealing, for which he sought an acc ounting, partition, and damages. Summary judgment was grante d in favor of the defendants after the tri al court ruled that there was no genuine issue of material fact, and the plaintiff was judicially estopped from asserting that he had an ownership interest in the disputed business, the Airkem

distributorship. We affirm.-2- BACKGROUND The complaint alleges the followingfacts. In the early 1960's, the plaintiff and John Canale entered into a partnership or joint ventureagreement to op erate Airkem. A

irkem is a distributorship anda division of D. Canale & Co., and was created as an industrial cleaning supply and janitorial service business. The par ties were to sh

are profits e

qually; John Canale advanced capital to the business; and the plaintiff repaid John Canale for his advance. The plaintiff was responsible for the daily operational and management decisions of the business. The defendants refused to pay plaintiff his equal share of the actual profits, and the defendants minimized and diminished the plaintiff’s equal share by charging the partnership with non-r el ated costs an d expenses incurred by other D. Canale & Co. divisi

ons. The defendants’ answer denied the existence of a partnership. It further asserted the plaintiff was an employee; he received 50% of the net profits as employ ee compensat

ion; an d the plaintiff was estopped from asserting the existence of a partnership. In a deposition for the present litigation, when asked if he h ad “e ver t est ifi ed ei the r by a deposition or in a trial . . . tha t [he] had no ownership in the Airkem Division,” the plaintiff answered, “no.” The plaintiff’s sworn response was inaccurate since the plaintiff had testified in two previous lawsuits that he had no ownership interest in Airkem. Chandler was deposed on August 25, 1986, and May 25, 1988, in Ferrell v. D. Canale and Company

. In that suit, F

errell was a former employee who sought damages for wrongful discharge. In Chandler’s August 25, 1986, deposition, the following exchange took place: Question: [A]ll right, and the Airwick [sic] Division, is that a s u bsidiary or

division of

the D. J. [sic

] Canale [Co

mpany] ? Answer: I wou ld s ay it ’s a div isi on o f D. Can ale and Com pan y. Question: Oka y. And do you own part of that division or do you own part

of D. J. [ sic ] Ca nal e and Com pan y? Answer: [W]hat I k now is I’ve got a privilege-sharing profit [sic] wi th Mr

. Canale. Question: So it is compensation? Answer: Yes, sir. Question: (continuing) . . . arrangement rather than an ownership? Answer: I own absolutely not one can down there.-3-

Question: All right. Answer: I wish I did. On May 2 5, 1986, Chandler was again deposed in the Ferrell litigation, and the following exchange took place: Question: Have you had a chance to review y our deposition before starting here today, Mr. Chandler? Answer: Briefly, y

es. Question: In reviewing that deposition, was there anyth ing in there that you noted that you think you need to clarify or change? Answer: No, I don’t think so.

. . . . Question: Well, let me ask you this, what was the compensation basis for which you were to be compensated in the y ears 1983 through ‘85?

. . . . Answer: My arrangement with Mr. Canale is tied to the bottom line. Question: And that would be ne t profit? Answer: Yes, net profit of that division after

expenses.

. . . . Question: Whatpercentage or how were y

ou to be compensated based upon the final figure in the bottom line? Answer: We had 50/50. Chandler testified by

deposition on Novem

ber 1, 1991, in Airkem

Professional Products v. John J. Heirigs Construction Co. In that litigation, Airkem sued Heirigs Construction concerning payment for services rendered to Heirigs . The following e xchange to ok place during Chandler’s swo rn d epo sit ion tes tim ony: Question: Wha t is your pos iti on a t D. Can ale Com pan y?-4-

Answer: I manage the Airkem Division.

. . . . Question: Is Airkem a totally owned entity which is a division of D. Canale? Answer: It is. Question: Is it

a separat e cor pora tion o r simp ly a n ope ratin g div ision ? Answer: An operating division. Question: Do you have any owners

hip interest in Airk

em? Answer: No. Question: (continuing) or in D. Canale? Answer: It is a family-owned business . . . . The Canales own the business. Question: As man

ager of Air kem, w ho do y ou re port t o? Answer: Me. Question: You have no superior in the D. Canale organization? Answer: Well, I would say Mr. Cana le wo uld be. [W]ell, he would be my superior, I g

uess. The plaintiff later a

ttempted to explain hi

s prior sworn testi

mony, whic

h was directly contradictory to his current allegation that he was a partne r. The plaintiff stated: I just didn’t t

ell them. I did

n’t feel like it was any of their business. What John [Canale] and myself h

ad together, I

felt like that was confid ential. We did not advertise the fact that he and I had a joint re

lationship, busines s venture . . . . I felt like that was of a c

onfidential natur

e, and I didn’ t want to divulge it

. The pla int ifffur the r ex pla ine d hi s pr ior tes tim ony: Question: Mr. Chandler, bef ore I ask you any questions about tha

t, is that what you were trying

to do in this case, g

et your wish

to own a part of D. Canale’s Airwick [sic] Division?-5-

Answer: I don’t understand you. Question: In your previous testimony back in 1986, you testified that you don’t even own a can down there. Answer: That’s right. Question: But you wished you did. Answer: Sure. At the time I wasn’t about to tell anybody wh at kind of arrangement I had with John Canale. Question: You wanted to kee p that a secret? Answer: Yes, I did. Bas edupon the aforementioned testimony, the Chancellor granted the defe ndants’ motion for summary

judgment on the ba

sis of judicial esto

ppel.

SUMMARY JUDGMENT The trial court’s grant of summary judgment is not entitled to a presumption of correctness on appeal. McCl ung v. Delta Squa re Ltd. Partne

rship , 937 S.W.2d

891, 894 (T

enn. 1996 ). We review de novo whether the requirements of Tenn. R. Civ. P. 56 have been met. Mason v. Seaton , 942 S.W.2d 470, 472 (Tenn. 1997). Pursuant to Ru le 56, summary judgment may only be granted where there is no genuine, material factual dispute, and when the moving party is en title d to judgment as a matter of law. Bain v. Wells , 936 S.W.2d 618, 622 (Tenn. 1997). When ruling on a motion for summary judgment, we must view the evidence in the li

ght most favorab

le to the party opposing the motion, drawing all rea so nable inferences in favor of the nonmoving party and discarding all countervailing evidence. White v. Lawrence , 975 S.W.2d 525, 529 (Tenn. 1998).

JUDICIAL ESTOPPE

L A. Doctrine of Judicial Estoppel Judicial estoppel arises from “sworn statements made in the course of judicia

l proceedings, generally in a former litigation, and [is] based on public policy upholding the sanctity of a n oath and noton prejudice to [an

] adverse party

by reason thereof, as

in the case of equitable estoppel.” Allen v. Neal , 396 S.W.2d 34 4, 346 (Tenn . 1965) (cit ing Sartain v. Dixie Coal & Iron Co. , 150 Tenn. 633, 650, 266 S.W. 313 (1924)) ; see also Marcus v. Marcus , 993 S. W.2d 596, 6 02 (Tenn. 1999). The doctrine of judicial estoppel also applies to sworn testimony given in a deposition. See Shell v. Law ,-6-

935 S.W.2d 402, 408 (Tenn. Ct. App. 1996) (citation omitted). Furthermore, the purpose of judicial estoppel “is to safeguard the admini stration of justice by placing

a restraint upon t

he tendency

to reckless and false swearing and

thereby preserve the public confidence in the purity andefficiency of j udicial proceedings.” Melton v. Anderson , 32 Tenn. App. 335, 222 S.W.2d 666, 66 9 (1948 ) (citation omitted). The policy underlying the doctrine is to prevent a party from gaining an unfair advantage by taking in

consistent positions

on the same issue in

different lawsu

its. Car vell v. Bottoms , 900 S.W.2d 23 , 30 (Tenn. 1 995). Anythi ng short of a willf

ully false st

atement is insufficient

to invoke judicial estoppel. State ex. rel. Scott v. Brown , 937 S.W.2d 934, 936 (Tenn. Ct. App. 1996) (citations omitted). B. Analysis In three prior depositions, the plaintiff testi fied that he had no ownership interest in the Airkem business. However, the plaintiff argues that judicial estoppel is inapplicable because (1) he and the defenda

nts did not have adversarial positions in the prior case s; (2) his literal r

esponses in the prior litigation are not in conflict with his c

urrent claim

of the existence of a partnership or joint venture; (3) he was not a litigant in the prior litigation; (4) ownership of Airkem was not at is sue in the prior litigation; and (5) he adequately explained his inconsistent testimony by showing

that his prior testimony was not “a willfully false statement of fa ct.” We reject the plaintiff’s assertions. The plaintiff erroneously contends that judicial estoppel is inapplicable because he and the defendants

were not in

adversarial pos

itions in the prior lit

igation. We find no

authority in

this state, nor does the plaintiff cite any, that requires the p arty seeking judicial estoppel to have been in an adversarialposition in the prior proceeding wit

h the pa rty testifying falsely . Such a requirement would be contrary to the purpose of judicial estoppel, for this jurisdiction’s strong public policy of “upholding the sanctity of an oath” is not dependent upon w h ether the parties had adversarial positions. See generally Allen , 396 S.W.2d at 346 (citations omitted). Next, the plaintiff contends that his literal re sponses to the questions asked in his prior depositions were not contrary to his current position. The plaintiff’s prior testimony spe

aks for itself andis clear and unambiguous. A review of the depositions reveals that the plaintiff clearly attested on three separate occasions that he had no ownership interest in the Airkem distributorship. The plaintiff next contends that judicial estoppel is inapplicable because he was not a litigant in the two prior case

s. Although plaintiff was not a named litigant in the prior litigation, this position is a double-edged sword for the plaintiff. If the Airkem distributorship was indeed a partnership as he now claims, then he was, or certainly could have been named as, a litigant in the prior Ferrell suit against Airkem. However, the plaintiff’s argument fails, additionally, because the applicability of judicial estoppel does not

depend upon wheth

er the falsely

attesting perso

n was a named litig

ant in the prior suit. “[W]here one states on oath in former litigation, either in a pleading or in a deposition or on oral testimony, a given fact as true, he will

not be permitted to deny that fact in subsequent litigation,-7-

although the parties may not be the same .” Shell , 935 S.W.2d at 408 (e mphasis added) (citations omitted). We find no authority in this state, nor do

es the plaintiff c

it e any, that re quires the party being estopped to have been a named litigant in the prior proceeding in whi ch the pa rty testified fal sel y. Again, such a r

equireme nt woul d be contrary to the purpose of judicial estoppel. See generally Allen , 396 S.W.2d at 346 (citations omitted). The plaintiff next ass

er ts that judicial estoppel is inapplicable because ownership of the Airkem distributorship was not at issue in the prior litigation. Although ownershi p may no t have been an issue in the prior Heirigs litigation where Airkem was the plaintiff, the ownership of the Airkem distributorship was certainly relevant in the prio r Ferrell suit where Airkem was the defendant. In the Ferrell

suit Chandler could have been named as a party and would have potential personal liability. Members of a partnership are jointly and severally liable for liabilities incurred within the scope of thepartnership. See Tenn. Code Ann. § 61-1-114(a) (Su pp. 2000). Thus, it is appropriate

to prevent the plaintiff f ro m “gaining an unfair advantage by taking inconsistent positions on the same issue in different lawsuits.” Carvell , 900 S.W.2d at 30. The plaintiff’s final argument is that judicial estoppel i

s inapplicable be

cause he adequa

tely explained his inconsistent testimony by showing that his prior testimony was not“a willfully

false statement of fact.” The plaintiff testified that he “felt like [the partnership] was of a confidential nature, and [he] didn’twant to divulge it.” He further stated he “wasn’t about to tell anybody what kind of arrangement [he] had with John Canale” and wanted to kee

p that a secret. T

his explanation clearly demonstrates tha

t th e plai ntiff’s prior false testimony was deliberate and willful. The plaintiff’s alleged desire to conceal the na

ture of his busines s relationship is not an adequate explanation for false testimony. In Hamilton v. Zimmerman , 37 Tenn. 39 (1857), our supreme court applied judicial estoppel in a nearly

ident ical s ituat ion. In Hamilton , the plaintiff alleged that he was a secret partner with the defendant pursuant to a verbal agreement. The defendant denied the existence of a partner ship. Our supreme court held that the plaintiff was j udicially estopped from asserting the existence of a partnership

due to admissions he made in asworn pleading in a prior lawsuit, where he denied the existence of a partnership. Id. at 47. The court further stated “[t]he chief security and safeguard f or the purity and efficiency of the administration of justice is to be found in the proper reverence for the sanctity of an oath.” Id. at 48. Although some policy conce rn s may have changed since Hamilton was decided

just prior to the Civil War

, the goal of pro

moting truth in swor

n testimony is as viable today as it was 150 year s ago.

CONCLUSION The granting of

summary judgment in favor of the defendants is affirmed. Costs of appeal are assesse

d against the plaintiff-appellant, Walter Chandler, and his surety, for which execution ma y issue if necessary.-8- ___________________________________ JOE G. RILEY, SPECIAL JUDGE