1 Rule 10 (Court of Appeals). Memorandum Opinion . -- (b) The Court, with the

concurrence of all judges participating in the ca se, may affirm, reverse or modify the actions of the trial court by memorandum opinion when a formal opinion would have no prec edential value. When a case is decided by memora ndum opinion it shall be designated "MEMORANDUM OPINION," shall not be published, and shall not be cited or relied on for any reason in a subsequent unrelated case

. 

# FILED
June 23, 1997 Cecil Crowson, Jr . App ellate C ou rt Clerk IN THE COURT OF APPEALS OF TENNESSEE WESTERN SECTION AT JACKSON

______________________________________________ GERALD WHIT E, d//b/a GERA LD FROM THE HARDIN COUNTY WHITE TRUCKING COMPANY, CIRCUIT COURT, No. 2243; THE HONORABLE C. CREED Plaintiff -Appella nt, McGINLEY, JUDGE Vs. C.A. No. 02A01-9605-CV-00129 AFFIRMED AQUARIUS INDUSTRIES, INC., d/b/a AQUARIUS-PINNACLE, INC., Jeffrey Parrish; Reynolds & Reynolds PINNACLE

FIBERGLASS, I

NC. and of Jackson, For Appellant PRAXIS INDUSTRIES, INC., John Cook and Jennie D. Latta; Defend ants-App ellees. Krivche r, Magids , Neal, Co ttam & Campbell, P.C., of Me

mphis For Appellee

____________________________________________________________________ ________ MEMORANDUM OPINION 1

__________________________________________________________________________ CRAWFORD, J. This appeal a

rises out o f an act

ion to collect a debt . Plaintiff , Gerald White, d/b/a Ger

ald White Trucking Company (White), appealsfrom the o rder gr anting sum

mary judg ment in

favor of defendant, Praxis Industries, Inc. (Praxis). Pinnacle Fiberglass Corporation (Pinnacle) was a Tennessee corporation engaged in the manuf acture of fiber

glass bat htubs and s howers in

Savanna h, Tenne ssee. Dr . Lowell F

. Stonecipher

(Stoneci p her) owned 99. 13% of the common sto ck of Pinna

cle and w as also its president and the sole member of its board of directo rs. White contracted with Pinnacle to haul its bathtubs and showers to various locations throughout the United States. During 1993 and the first quarter of 1994, Pinnacle experienced f in ancial difficulties. Stonecipher made significant

unsecur ed loans t

o Pinnacle

during thi s time to he

lp the com

pany mee

t cash shortfa lls. From April of 1994 forward, however, Stonecipher made $865, 444.17 in s ecured2 The original secured loan was in the amount of $450,000.00, and a UCC-1

Financing Statement was filed with the Tennessee Secretary of State on April 14, 1994 evidencing this loan. The secured loan agreeme nts were modified as the cash needs of the company increased. To reflect these modifications, Stonecipher subsequently filed UCC-3 forms amending the description of the collateral and incre asing the maximum principal indebtedness to $1,500,000.00. 2 loans to Pinnacle that were perfected by financing statements filed with the secretary of state. 2

On Decemb er 7, 199 4, Praxis w as incor porated with Stonec ipher as its sole shareholder and chairman of

its board of directors. On December 8, 1994, Stonecipher made demand

upon Pinnacle for the repayment of his secured loan. On De cember 15, 1994, LRS Real Estat e Holding, LLC (LRS) was organized by Stonecipher and his two sons, Lowell F. Stonecipher, Jr. and Christopher Scott Stonecipher. On December 30, 1994, S tone cipher, acting as a secured credi tor of Pinnacle, sold all of Pinnacle’s operating assets to Praxis for a total purchase price of $1,476,271.45. On that same day, Pinnacle e xec uted a qui t claim de ed conve

ying all of

its real propert

y to LRS and a le ase whereb y Praxis a greed to pay $15,9 00.00 per

month to LRS to lease the premises formerly owned by Pinnacle. Also on December 30, 1994, LRS executed an assignment

of leases and rents in favor of First Bank to more fully secure First Bank for monies it pre viously loaned Pinnacle and also executed an assignment and transfe r of all existing and future accoun

ts rece ivable of Praxis to Norfolk Funding, Inc. (Norfolk) and Brotherhood Bank & Trust Company (Brotherhood Bank). On November 9, 1994, White fileda compla int again st Aquari

us Industr ies, Inc ., d/b/a Aquariu s-Pinnac le Inc. (A quarius) , allegin g that, de spite rep eated de mands for

payment, Aquarius refused to pay $133,920.16 that it owed to White f or freight hauling services. On December

15, 1994, W

hite filed an amendment to his complaint adding Pinnacle as a defendant and making all of

the allegations in the original complaint applicable to Pinnacle. Pinnacle filed

an answer

on Janua ry 5, 1995 stating tha

t th ere wa s no entity

known as A

quarius I ndustrie s, Inc., d/b/a Aquarius-Pinnacle, but that Pinnacle operates under trade names, including Aquarius Industries and Aquarius-Pinnacle. In its answe r, Pinnac le admits t

hat it contracted with W

hite for trucking services, but denie s th at it is liab le to White for any a

mounts unpa

id for tho se service s. On March 2, 1995, White fi led a motion to amend the complaint to add Praxis as3 Pinnacle has since been dissolved and is no longer a functioning corpora tion. 3 defenda nt, whic h the tria

l court granted by an order entered that sa me day. 3 Praxis fil ed its

answer denying the allegations of the amendment on May 5, 1995 and filed its motion for summary judgme nt on November 28, 1995. While the motion for summary judgment was pending, on Februa

ry 6, 1996 , White

filed his motion to amend the complaint for a third time. In this motion, White sought to add LRS, Stonecip her, Nor folk, Brot herhood Bank, and

First Bank as additional defendants. White also sought to add additionalclaims, including fraudulent conveyanceclaims against Praxis and Stonecipher based on an alter

ego theor y, a cha llenge to the validity of Stoneci p her’s security interests for loans made after April 7, 1994, and a fraudulent

conveyanceclaim against LRS based on the transfer of Pinnacle’s rea l property. On March 19, 1996, Praxis filed an objection to White’s motion to amend the complaint. The trial court heard arguments on both motions onMarch 21, 1996. On April 15, 1996 the trial court ent ered an order denying White’s motion to amend the complaint and an or der granting Praxis’s motion for summary judgment. White appeals the judgment of thetrial court.

On appeal, White presents two issues for our review as stated in his brief: 1. Whether

the trial court wa s in erro

r in denyi n g plai ntiff’s motion to am

end his co mplaint. 2. Whether the trial cou

rt was in error g ranting Pr axis Indu stries, Inc.’s motion for summary judgment because there were genuine issues of material fact that should be determined by a finder o f fact. In the first

issue, Wh

ite asser ts that the tr

ial cour t erred in denying his motion to amend the complaint to add ad d itional defendants and additional claims. Rule 15 of the Tennessee Rules of Civ

il Proced ure prov ides in re levant pa rt: A party may amend the part y’s pleadings once as a matter of course at any time

before a respon sive plea

ding is served . . . the partymay so a mend it at any time within fifteen (15) days after [the pleading] is served. Otherwise a party may amend the party’s pleadings only by written consent of the adverse party or by leave of court; and leave shall be f reely given whe

n justice s o requires. Tenn. R. Civ. P. 15.01. After a responsive pleading has b een served, the denial of a motion4

to amend the pleadings lies within the sound discretion of the trial court and will not be reversed absent a showing of an abuse of that di scretion. Hall v. Shelby County Retirement Bd. , 922 S.W.2d 543, 546 (Tenn. App. 1995)(citing Merrim an v. Smith , 599 S.W.2d 548, 559 (Tenn. App. 1979); Welch v. Thuan , 882 S.W.2d 792, 793 (Tenn. App. 1994)). There are se veral considerations a trial judge should evaluate in determining whether to grant or deny a motion to amend. Id. Among the se fact o rs are an undue delay in filing, lack of notice to the opposing party, bad faith by the moving party, repeated failure to cur e deficiencies by p reviou s amendme nts, undue prejudice to the opposing party, and futility of amendment. Id. (citing Merriman , 599 S.W.2d at 559). In light of the factors delineated above, we find ample justification for the trial court’s denial of White’s motion to amend. White had already amended his complaint twice, and by this motion he sought to amend his complaint a third time appro ximately fifteen months after filing his original complaint. In addition, all of t he events t hat White relies on as “new ly discovered” facts occurred on December 30, 1994, approximately two months before he sought to amend the complaint

for a second time to add Praxis as a defendant and ove r a year before

the filing of this moti on. White was fully aware of all these facts a lmost a yea

r befor e he sought to amend the complaint for a t hird time. The motion was thus untimely, thereby constituting an undue delay in filing. M oreover, because White sought to add sever al additional claims, a court’s allowanc e of the a mendment s would und

uly preju dice Pra

xis. Finally, the amendm ents would be futile because granting them would only prolong the litigation and would notlead to a contra ry ultimat e result. The tria

l court did

not abuse

its discre tion in denying the motion to amend. W

hite’s ar gument is w ithout mer

it. The next issue

is two-fold. White first contends that there is a genuine issue of material fact as to whether the transfer was a fr audulent conveyance made with intent to defraud under T.C.A. § 66-3-308 (1993). Section 66-3-308 provides the following:

66-3-308. Conveyanc

es w ith intent to defraud. — Every conveyancemade and every o bl igation incurred with actual inte nt, as distinguished from intent presumed in law, to hinder, delay, or defraud, either

present or future creditors, is fraudulent as to both present and future creditors. T.C.A. § 66-3-308 (1993 & Supp. 1996). White contends that summary judgment was improper4 According to the record, Pinnacle’s assets wer e subject to the following secured claims: Br

iggs Plumbin g Products , $232,000 .00; State of Tenne ssee, $21 1,000.00; GMAC, $18,414.79; National Bank of Commerce, $6,301.50; Internal Revenue Service, $164,056.35; and Lowell F. Stonecipher, $865,444.17. 5 becau s e there is a dispute as to whether Stonecipher intended to hinder, delay, or defraud creditors when it transferred Pinnacle’s a ssets to Praxis. Even if there

is a dispute

as to Stonecipher’s intent in e ntering in to this tra nsaction , this dispute is not material. In Tennessee, a conveyance may no t be setaside as fraudul ent unles s prejudice results to the party seeking relief. Hicks v. So vran Bank , 812 S.W.2d 296, 302 (Tenn. App. 1991). The record

in this cas e indica

tes that, immediately prior to the sale, Pinnacle was subject to liens by

secure d credit

ors exceeding the

value of its assets

. 4 As an unsecured creditor of a fully encumbered corporation, White was not pre judiced by the sal e of Pinnac le’s asse ts to Praxis. This issue is without merit. White also contends that summary judgment was improper on the issueof whether the saleof Pinnacle ’s assetsto Praxis w as a violation of Tennessee’s Uniform Commercial Code - Bulk Transfers, T.C.A. §§ 47-6-101 et seq. :

47-6-102. “Bulk Transfer” — Transf ers of e quipment —Enterprises su bjec t to this chapter — Bulk transfers subject to this chapter. — (1) A “bulk tra nsfer” is any transfer in bulk and not in the ordinary course of the transferor’s business of a ma jor part of the materia ls, supplies, mercha

ndise or other inventory (§ 47-9-109) of an enterprise subject to this chapter. (2) A transfer of a

substantial part of the equipment (§ 47-9-109) of such an enterprise is a bulk transfer if it is made in connection with a bulk transfer of inventory, but not otherwise. (3) The enterpr

i ses subje ct to this chapter a re all tho se whose principal business i s the sale of me rchandi se from stock, including those who

manufacture wha

t they sell

. (4) Except as limited by the following section all bulk transfers of goods located within this state are subject to this chapter. T.C.A. § 47-6-102 (1996). The transfer in this case was made by a secur ed creditor, Stonecipher, who is not an enterpr ise sub ject to th is bulk transfers law because his principal business is not the sale of mercha ndise from stock. Moreove

r, even i f Pinnacl e is deeme d to have made the t ransfe r, White didnot estab lish that Pinnacle is an enterprise subject to this chapter. The record indicates that Pinnacle manufactures bathtubs and showers, but that Pinnacle does so only upon receiving an6

order from a wholesaler. There is no evidence in the re cord tha t Pinnacle ’s princ ipal busin ess is the sale of merc handise

from stock as required under T.C.A. § 47-6-10 2(3). Th is issue is a

lso without merit. We conclude that there is no genuine i ssue of ma terial f act and t hat Praxi s is entitle d to judgmentas a matter of law. Thus, the trial court did not err in granting summary judgment in its favor. Accordingly, the judgment of the trial court is affirmed in all respects. Costs are assessed against appellant for which execution may issue, if nece ssary.

_________________________________ W. FRANK CRAWFORD, PRESIDING J

UDGE, W.S. CONCUR:

____________________________________ ALAN E. HIGH

ERS, JUDGE

____________________________________ HEWITT P. TOMLIN, JR. SENIOR JUD GE