Court Opinion

ID: 1046935
Source: CourtListenerOpinion
Date Created: 2013-10-08 02:40:56.136261+00
Date Added: 2024-06-11T12:17:32.059833
License: Public Domain

IN THE COURT OF APPEALS OF TENNESSEE
                            AT NASHVILLE
                               November 15, 2011 Session

CYNTHIA H. KOVACS-WHALEY, DIRECTOR AND SHAREHOLDER OF
 WELLNESS SOLUTIONS, INC. v. WELLNESS SOLUTIONS, INC. ET AL.

                 Appeal from the Chancery Court for Davidson County
                      No. 09147-II   Carol McCoy, Chancellor

                No. M2011-00089-COA-R3-CV - Filed March 16, 2012

Plaintiff, an employee, shareholder, and director of Wellness Solutions Inc., filed this action
against the Company and shareholders Steven Scesa and Laura Reaves following the
termination of Plaintiff’s employment with Wellness Solutions, Inc., asserting a shareholder
derivative action and claims for breach of fiduciary duty and duty of good faith. Following
her termination and the initiation of this action, the Company exercised a call option
contained within the Shareholders’ Agreement and purchased Plaintiff’s stock. Plaintiff then
amended her complaint to include claims for breach of contract and false light invasion of
privacy against Mr. Scesa. The trial court summarily dismissed all of Plaintiff’s claims. We
reverse the summary dismissal of Plaintiff’s claim for breach of contract finding there are
genuine issues of material fact. We also reverse the summary dismissal of Plaintiff’s claim
for false light invasion of privacy finding that Mr. Scesa, as the moving party, failed to
negate the essential element of damages or demonstrate that Plaintiff cannot prove the
essential element of damages at trial. We affirm the summary dismissal of Plaintiff’s claims
for breach of fiduciary duty, breach of the duty of good faith, and breach of the duty of
loyalty upon the finding the Defendants demonstrated that the business judgment rule applies
to their decisions at issue, which negates an essential element of each of these claims.
Further, we deny Defendants’ request for attorneys’ fees pursuant to Tennessee Code
Annotated § 47-56-401(c) upon the finding that Plaintiff did not properly bring a
shareholder’s derivative action.

       Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Chancery Court
                 Reversed in Part, Affirmed in Part, and Remanded

F RANK G. C LEMENT, J R., J., delivered the opinion of the Court, in which P ATRICIA J.
C OTTRELL, P.J., M.S., and A NDY D. B ENNETT, J., joined.
Edward A. Hadley, Nashville, Tennessee, for the appellant, Cynthia H. Kovacs-Whaley, on
behalf of and as Director of Wellness Solutions, Inc., and as a Shareholder of Wellness
Solutions, Inc.

Russell B. Morgan and Emily R. Walsh, Nashville, Tennessee, for the appellees, Wellness
Solutions, Inc., Steven L. Scesa and Laura S. Reaves.

                                                OPINION

       Cynthia Kovacs-Whaley, (Plaintiff) was formerly a shareholder, employee, and
director of Wellness Solutions, Inc. (“the Company”). This action arises from the termination
of Plaintiff’s employment with the Company and the subsequent removal of her as a director
and the unilateral purchase of all of her shares in the Company upon the exercise of a Call
Option in the Shareholders’ Agreement.

        The Company, which was formed in July 2005, is in the business of providing nurse
practitioners, psychologists, and other medical professions to nursing home facilities. The
original shareholders and directors of the company are Steven L. Scesa and his sister, Laura
S. Reaves. On September 19, 2005, Plaintiff and Mitzi Wood-Von Mizenor,1 acquired a
minority interest in the Company by entering into a Shareholders’ Agreement. At the time,
defendants Scesa and Reaves owned 280 shares of the Company each, Ms. Wood-Von
Mizenor owned 180 shares, and Plaintiff owned 260 shares. That same day, Plaintiff and
Wood-Von Mizenor were elected Vice-Presidents of the Company, and additional directors
of the Company to serve along with Scesa and Reaves.

       In June 2008, the Company purchased Wood-Von Mizenor’s shares by mutual
agreement for $1,000 per share. Thereafter, Reaves and Scesa owned 68 percent of the stock
(34 percent each) and Plaintiff owned 32 percent.

       In October 2008, Scesa asked Plaintiff and Reaves to sign an Employee Non-
Disclosure Agreement, an Intellectual Property Agreement, and an Executive Employment
Agreement, which contained a non-compete clause. Reaves signed all three agreements on
October 31, 2008. Plaintiff, however, refused to sign the agreements until Scesa provided
financial reports and disclosed to her what her salary would be under the Employment
Agreement. The requested information was not provided and Plaintiff did not sign any of the
agreements.

       1
           Wood-Von Mizenor is not a party to this litigation.

                                                     -2-
       At a special meeting of the Board of Directors on December 22, 2008, Plaintiff’s
employment with the Company was terminated by a majority vote of the directors,
specifically Scesa and Reaves.

        One month later, on January 23, 2009, Plaintiff filed this action in the Davidson
County Chancery Court against the Company and Scesa and Reaves, individually
(collectively “Defendants”). In the original complaint, Plaintiff asserted a shareholder
derivative action pursuant to Tennessee Code Annotated § 48-17-401, a claim for breach of
fiduciary duty and duty of good faith, and a direct action against Defendants. Plaintiff further
sought an injunction to restore her to her duties with the Company and to prevent Defendants
from taking any further adverse action against her. The chancery court denied Plaintiff’s
request for an injunction. Defendants filed an Answer and Counter-Claim asserting that
Plaintiff breached the duty of loyalty and violated an obligation to work exclusively for the
Company. Defendants also sought attorneys’ fees pursuant to Tennessee Code Annotated §
48-17-401.

       In the meantime, on February 29, 2009, Plaintiff was notified that the Company was
exercising the call option as described in paragraph 6 of the Shareholders’ Agreement and
would be purchasing her stock. Paragraph 6 provided that:

       (a) Option. At any time (x) on or after the date hereof through August 30, 2015
       and (y) after August 30, 2015 in the case of any Shareholder’s death,
       incompetence or the assertion of power with respect to such Shareholder’s
       Common shares by any person other than another Shareholder (including, but
       not limited to, pursuant to a power of attorney), the Company shall be entitled
       to purchase, at its sole option, and each Shareholder (or such Shareholder’s
       personal representative in the case of death or incompetence or the person
       asserting power with respect to such Shareholder’s Common Shares, in each
       case in this Section 6) shall be obligated to sell, all or any part of his or her
       Common Shares, for cash, upon not less than thirty (30) days’ nor more than
       sixty (60) days’ notice provided in the manner specified in Section 6(b), at a
       purchase price per share of Common Stock owned by such Shareholder equal
       to the greater of (I) Ten Dollars ($10.00) per share if the Company shall have
       given its Option Notice to such Shareholder on or before December 31, 2006,
       (ii) Twenty-Five Dollars ($25.00) per share if the Company shall have given
       its Option Notice to such Shareholder on or after January 1, 2007 and on or
       before August 30, 2010, (iii) Fifty Dollars ($50.00) per share if the Company
       shall have given its Option Notice to such Shareholder on or after August 31,
       2010, or (iv) the Per Share Stock Value.

                                              -3-
        The Per Share Stock Value was defined by the Shareholders’ Agreement as follows:

        “Per Share Stock Value” means, as of the date of determination (which shall
        be as of the close of business on the date either the Company gives notice
        pursuant to Section 6(b)(I) or a Shareholder gives notice pursuant to Section
        7), the appraised fair market value per share of the Company’s Common Stock
        as of the date of the determination of the Per Share Stock Value, as set forth
        in an appraisal obtained by the Company (at the Company’s sole expense
        pursuant to a notice pursuant to Section 6(b)(ii) given on or before August 30,
        2010, or at such Shareholder’s sole expense pursuant to Section 7) performed
        by an appraiser reasonably acceptable to the Company and such Shareholder;
        provided, that in the case of the inability of the Company to purchase, all of the
        shares of Common Stock subject to such notice pursuant to Section 7 of this
        Agreement, the greater of the price determined pursuant to the process above
        as of the date such Shareholder’s shares of Common Stock (a) would have
        been purchased if the “put” or purchase obligation was originally honored in
        accordance with its terms, or (b) the date they are in fact purchased. The Per
        Share Stock Value shall be calculated by the certified public accountant or
        accounting firm that audited the Company’s financial statements for the most
        recently ended fiscal year of the Company as of the date of determination
        thereof.

        No audit had been performed on the Company in the most recently ended fiscal year
prior to the exercise of the call option, which was 2008. Vic Alexander, a CPA with Kraft
CPAs, PLLC, had prepared financial statements and tax returns for the Company; however,
he declined to perform the stock valuation citing a conflict. Mr. Alexander recommended
Thomas Price with Price CPAs as an alternative.

       Before deciding to utilize Mr. Price to value the stock, Mr. Scesa engaged in informal
communications with Mr. Price about pricing the stock. On February 21, 2009, Mr. Scesa
received an informal valuation of Plaintiff’s stock from Mr. Price. After obtaining the
informal valuation from Mr. Price, the Company notified Plaintiff that it was exercising the
call option and that it would purchase all of her shares pursuant to paragraph 6 of the
Shareholders’ Agreement. Notice of the call was provided to Plaintiff by letter on February
25, 2009. That same day, Plaintiff, through her attorney, objected to the selection of Mr.
Price as the appraiser in an email.2 Plaintiff’s objection notwithstanding, the Company used
Mr. Price’s valuation report to establish the per share value, which was $129.04, and on April

        2
         It is unclear from the record how Plaintiff became aware that Thomas Price would be the appraiser
of the Per Share Stock Value.

                                                   -4-
10, 2009, Plaintiff was paid $33,549.92 for all of her shares in the Company. Effective April
10, 2009, Plaintiff was no longer affiliated with the Company in any manner.

        On January 4, 2010, Plaintiff filed an Amended Complaint asserting claims for breach
of the duties of loyalty and good faith and breach of fiduciary duty, as well as breach of the
Shareholders’ Agreement. Plaintiff also asserted a false light invasion of privacy, defamation,
and business defamation claim against Scesa alleging that Scesa made false representations
to a business colleague that Plaintiff was terminated for taking money from the Company.

        Following discovery, Plaintiff and Defendants filed competing motions for summary
judgment, each seeking dismissal of claims asserted against them respectively. In an order
entered August 31, 2010, the trial court held that no derivative shareholder’s cause of action
existed because the statutory grounds did not exist. As to Defendants’ motion for summary
judgment seeking the dismissal of the claims asserted by Plaintiff, the court ruled in their
favor finding there was no genuine issues of material fact and that as a matter of law,
Defendants had not breached the Shareholders’ Agreement or the duties of loyalty, good
faith, and fiduciary duty, and further found that Defendants were entitled to rely on the
business judgment rule. The court found that the Shareholders’ Agreement was valid and
enforceable and that Defendants properly utilized the call option. The court ruled in
Defendant Scesa’s favor on the false light claim because of “lack of any proof of damages.” 3
The court also ruled in Plaintiff’s favor on her motion for summary judgment and dismissed
the Company’s breach of loyalty claim against her on the finding it failed to demonstrate that
Plaintiff worked for other companies in excess of the time approved by the Company.4

        On September 20, 2010, Plaintiff filed a motion to alter or amend the judgment
contending there are genuine issues of material fact as to whether Thomas Price was a
reasonably acceptable appraiser and as to interest paid to Scesa on deferred salary and loan
payments, which related to Plaintiff’s claims for breach of fiduciary duty and breach of the
duties of loyalty and good faith. Plaintiff also contended that there were genuine issues of
material fact on her claim for false light invasion of privacy. In support of her motion,
Plaintiff filed an affidavit of her own and an affidavit of her expert on the value of her stock,
Robert Whisenant, C.P.A., whose deposition was previously filed with the court.

       The court issued an Order on December 8, 2010, denying Plaintiff’s motions. The
court ruled that the additional affidavits filed in support of her motion failed to comply with
Tennessee Rule of Civil Procedure 59 and therefore would not be considered. Further, the

       3
           Plaintiff conceded the defamation claims; therefore, the trial court dismissed those claims.
       4
           Defendants do not challenge this ruling by the trial court on appeal.

                                                      -5-
court held that no reasonable jury could conclude that Plaintiff was reasonable in her
objection to Thomas Price as an appraiser and the prior transaction between the Company
and Ms. Wood-Von Mizenor did not constitute evidence of fair market value. The court also
held that there was no evidence Defendants breached their fiduciary duty. Plaintiff filed a
timely appeal.

                                   S TANDARD OF R EVIEW

       The trial court resolved these issues on motions for summary judgment. Summary
judgment is appropriate when a party establishes that there is no genuine issue as to any
material fact and that a judgment may be rendered as a matter of law. Tenn. R. Civ. P. 56.04;
Stovall v. Clarke, 113 S.W.3d 715, 721 (Tenn. 2003). It is appropriate in virtually all civil
cases that can be resolved on the basis of legal issues alone. Byrd v. Hall, 847 S.W.2d 208,
210 (Tenn. 1993); Pendleton v. Mills, 73 S.W.3d 115, 121 (Tenn. Ct. App. 2001). It is not
appropriate when genuine disputes regarding material facts exist. See Tenn. R. Civ. P. 56.04.
The party seeking summary judgment bears the burden of demonstrating that no genuine
disputes of material fact exist and that the party is entitled to judgment as a matter of law.
Godfrey v. Ruiz, 90 S.W.3d 692, 695 (Tenn. 2002). To be entitled to summary judgment, the
moving party must affirmatively negate an essential element of the nonmoving party’s claim
or show that the moving party cannot prove an essential element of the claim at trial. Martin
v. Norfolk S. Ry. Co., 271 S.W.3d 76, 83 (Tenn. 2008).

        Summary judgments do not enjoy a presumption of correctness on appeal. BellSouth
Adver. & Publ’g Co. v. Johnson, 100 S.W.3d 202, 205 (Tenn. 2003). Because the resolution
of a motion for summary judgment is a matter of law, we review the trial court’s judgment
de novo with no presumption of correctness. Martin v. Norfolk Southern Ry. Co., 271
S.W.3d 76, 84 (Tenn. 2008) The appellate court makes a fresh determination that the
requirements of Tenn. R. Civ. P. 56 have been satisfied. Hunter v. Brown, 955 S.W.2d 49,
50-51 (Tenn. 1977). As does the trial court, the appellate court considers the evidence in the
light most favorable to the nonmoving party and resolve all inferences in that party’s favor.
Martin, 271 S.W.3d at 84; Stovall v. Clarke, 113 S.W.3d 715, 721 (Tenn. 2003); Godfrey v.
Ruiz, 90 S.W.3d 692, 695 (Tenn. 2002). When reviewing the evidence, the appellate court
first determines whether factual disputes exist. If a factual dispute exists, the court then
determines whether the fact is material to the claim or defense upon which the summary
judgment is predicated and whether the disputed fact creates a genuine issue for trial. Byrd
v. Hall, 847 S.W.2d 208, 215 (Tenn.1993).

        A party is entitled to summary judgment only if the “pleadings, depositions, answers
to interrogatories, and admissions on file, together with the affidavits . . . show that there is
no genuine issue as to any material fact and that the moving party is entitled to a judgment

                                               -6-
as a matter of law.” Tenn. R. Civ. P. 56.04. A properly supported motion for summary
judgment must show that there are no genuine issues of material fact and that the moving
party is entitled to judgment as a matter of law. Staples v. CBL & Assocs., Inc., 15 S.W.3d
83, 88 (Tenn. 2000); McCarley v. W. Quality Food Serv., 960 S.W.2d 585, 588 (Tenn. 1998).
If the moving party makes a properly supported motion, then the nonmoving party is required
to establish the existence of the essential elements of the claim. McCarley, 960 S.W.2d at
588; Byrd, 847 S.W.2d at 215. If, however, the moving party does not properly support the
motion, then the nonmoving party’s burden to produce either supporting affidavits or
discovery is relieved and the motion must fail. McCarley, 960 S.W.2d at 588; Martin, 271
S.W.3d at 83.

       To make this showing and shift the burden of production, a moving party may: 1)
affirmatively negate an essential element of the nonmoving party’s claim; or 2) show that the
nonmoving party cannot prove an essential element of the claim at trial. Martin, 271 S.W.3d
at 83; Hannan v. Alltel Publ’g Co., 270 S.W.3d 1, 5 (Tenn. 2008); Byrd, 847 S.W.2d at 215
n.5. Whichever approach the moving party takes, both require more than assertions of the
nonmoving party’s lack of evidence. Martin, 271 S.W.3d at 83-84. In addition, the moving
party must present evidence that more than “raises doubts” about the ability of the
nonmoving party to prove its claim at trial. Id. at 84. The moving party must produce
evidence or refer to previously submitted evidence. Id.; accord Hannan, 270 S.W.3d at 5.
Thus, to negate an essential element of a claim, a moving party must refer to evidence that
tends to disprove an essential element of the claim made by the nonmoving party. Martin,
271 S.W.3d at 84.

         Defendants, as the moving party, had the burden to negate an essential element of
Plaintiff’s claims or establish that Plaintiff cannot prove an essential element of her claims
at trial. See Martin, 271 S.W.3d at 83 (citing Hannan, 270 S.W.3d at 5; McCarley, 960
S.W.2d at 588; Byrd, 847 S.W.2d at 215 n.5). Therefore, Defendants were required to shift
the burden of production to Plaintiff by either affirmatively negating an essential element of
Plaintiff’s claims or showing that Plaintiff cannot prove an essential element of her claims
at trial. Martin, 271 S.W.3d at 83; Hannan, 270 S.W.3d at 8-9; McCarley, 960 S.W.2d at
588.

                                           A NALYSIS

        There are several issues raised in this appeal. Plaintiff asserts that the trial court erred
in enforcing the Shareholders’ Agreement. She contends that the trial court erred in
summarily dismissing her claims for breach of fiduciary duty, loyalty, and good faith, and her
false light invasion of privacy claim against Mr. Scesa. For their sole issue, Defendants argue
that the trial court erred in denying Defendants’ request for an award of attorneys’ fees based

                                                -7-
upon its determination that Plaintiff’s action was not a shareholder’s derivative action
pursuant to Tennessee Code Annotated § 48-17-401.

                                 I. B REACH OF C ONTRACT

        The trial court found that the Shareholders’ Agreement was valid and enforceable and
the exercise of the call option under the Agreement did not constitute a breach of contract.
The trial court found that the use of Mr. Price as the appraiser fulfilled the requirement in
section 6 of the Shareholders’ Agreement and satisfied the parties’ intent that a reasonable
appraiser be used. In the trial court’s order denying Plaintiff’s motion to alter or amend, the
court clarified its ruling on this issue finding that “no reasonable jury could conclude that
Plaintiff was reasonable in her objection to Mr. Price as a reasonabl[y] acceptable appraiser
as required by the Shareholders’ Agreement.”

       Plaintiff challenges this decision on several grounds. We have determined that one of
her challenges is dispositive of this issue for purposes of this appeal. We have concluded that
summary judgment should not have been granted on this issue because there is a genuine
dispute concerning whether Plaintiff’s objection to the selection of Mr. Price as the appraiser
to determine the Per Share Stock Value was reasonable under the circumstances of this case.
See Tenn. R. Civ. P. 56.04; see also Stovall, 113 S.W.3d at 721 (stating summary judgment
is only appropriate when there are no genuine issues of material fact and judgment can be
granted as a matter of law).

        The Company exercised the call option pursuant to Section 6 of the Shareholders’
Agreement. Pursuant to the terms of the call option, Plaintiff was obligated to sell her stock
for either $25.00 per share or the Per Share Stock Value, whichever was greater. The
Shareholders’ Agreement defines Per Share Stock Value as the “fair market value per share
of the Company’s Common Stock as of the date of the determination of the Per Share Stock
Value, as set forth in an appraisal obtained by the Company . . . performed by an appraiser
reasonably acceptable to the Company and such Shareholder. . . .” The definition further
states that “[t]he Per Share Stock Value shall be calculated by the certified public accountant
or accounting firm that audited the Company’s financial statements for the most recently
ended fiscal year of the Company as of the date of determination thereof.”

        Plaintiff contends the foregoing is ambiguous and unenforceable. We, however, find
this issue moot because it is undisputed that there was no audit of the Company for the
applicable year, 2008; thus, the second provision of the Shareholders’ Agreement that
pertains to audited financial statements does not apply to the facts of this case.

       Based upon the foregoing and the facts of this case, the applicable definition of Per

                                              -8-
Share Stock Value is the “fair market value per share of the Company’s Common Stock as
of the date of the determination of the Per Share Stock Value, as set forth in an appraisal
obtained by the Company . . . performed by an appraiser reasonably acceptable to the
Company and such Shareholder. . . .” (Emphasis added). Obviously, Mr. Price was
acceptable to the Company. Therefore, the dispositive issue for purposes of summary
judgement as to this claim is whether the appraiser, Mr. Price, was “reasonably acceptable
to the Company and [Plaintiff].”

        Defendants informed Plaintiff of their intent to exercise the call option in a letter dated
February 25, 2009, four days after they obtained an informal valuation from Mr. Price. On
that same day, Plaintiff objected to the selection of Mr. Price as the appraiser, not on the
basis that he was not a competent accountant or appraiser,5 but based upon the fact that Mr.
Scesa obtained an “informal valuation” prior to selecting Mr. Price as the appraiser and
exercising the call option. Plaintiff cited concerns of potential bias and undue influence based
upon these preliminary communications.

        Generally, the determination of reasonableness is a question of fact for the jury. See
Nat’l Mortg. Co. v. Washington, 744 S.W.2d 574, 580 (Tenn. Ct. App. 1987) (citing Smith
v. Sloan, 225 S.W.2d 539 (Tenn. 1949); Hathaway v. Middle Tennessee Anesthesiology,
P.C., 724 S.W.2d 355 (Tenn. Ct. App.1986)) (“Whether any kind of behavior conforms to
a legal standard of reasonable conduct is a mere fact question for the jury, and not a question
of law”). The trial court found that “no reasonable jury could conclude that Plaintiff was
reasonable in her objection to Mr. Price as a reasonabl[y] acceptable appraiser as required
by the Shareholders’ Agreement. We respectfully disagree with this conclusion, believing
that a “reasonable jury” could find that Plaintiff’s objection to Mr. Price, based on the
manner by which Mr. Scesa went about selecting Mr. Price as the appraiser, was
unreasonable.

        It is important to note that no one has questioned the integrity of Mr. Price. What is
at issue is the “show me your cards first” approach implemented by Defendants to select an
appraiser who was “acceptable” to Defendants, and whether that approach constitutes a
“reasonable” basis upon which Plaintiff may conclude that Mr. Price is not “reasonably
acceptable” to her. We believe Mr. Scesa’s conduct that preceded the selection of Mr. Price
is sufficient to create a genuine dispute of a fact that is material to this issue, which is
whether Plaintiff had a reasonable basis upon which to object to Mr. Price as the appraiser
of the Per Share Stock Value pursuant to section 6 of the Shareholders’ Agreement.

        5
         Plaintiff also objected to Price because his experience was with individual medical practices and
not multi-employee companies. However, Price’s qualifications are not at issue on this appeal as both parties
agree he is qualified.

                                                    -9-
       Having concluded that a genuine issue of material fact exists concerning this issue,
we reverse the trial court’s summary dismissal of Plaintiff’s breach of contract claim,
reinstate the claim, and remand this issue to the trial court for further proceedings.

                           II. F ALSE L IGHT INVASION OF P RIVACY

        Plaintiff contends that the trial court erred in summarily dismissing her claim for false
light invasion of privacy against Steven Scesa. Plaintiff alleged that Mr. Scesa made
comments to a business associate that Plaintiff was terminated from the Company for taking
money. The trial court found that Plaintiff had failed to demonstrate any damages and
therefore Scesa was entitled to summary judgment because Scesa demonstrated that Plaintiff
could not establish an essential element of her claim, that of damages. We respectfully
disagree with this decision because Scesa has not established that Plaintiff cannot prove at
trial that she sustained the requisite damages. See Martin, 271 S.W.3d at 83.

        Plaintiff contends the trial court applied an incorrect legal standard in dismissing this
claim on a finding that Plaintiff had no damages because there was no evidence in the record
of damages to Plaintiff’s professional or business reputation. In support of her argument,
Plaintiff cites to West v. Media General Convergence, Inc., 53 S.W.3d 640 (Tenn. 2001),
wherein our Supreme Court recognized a person’s ability to sustain a false light invasion of
privacy claim based upon damages in the form of “evidence of injury to standing in the
community, humiliation, or emotional distress.” Id. at 648.

       As the moving party, defendant Scesa had the burden to negate an essential element
of Plaintiff’s claims for false light invasion of privacy or establish that Plaintiff cannot prove
an essential element of her claims at trial. See Martin, 271 S.W.3d at 83 (citing Hannan, 270
S.W.3d at 5; McCarley, 960 S.W.2d at 588; Byrd, 847 S.W.2d at 215 n.5) (emphasis added).
He did neither; instead, Mr. Scesa relied upon the now overruled “put up or shut up”
procedure of pointing to the record to show that Plaintiff had not introduced evidence of her
damages. Mr. Scesa also pointed to a statement made by Plaintiff that her business had not
yet suffered. However, as West recognizes, damages for false light invasion of privacy may
include damage to one’s reputation, humiliation, or emotional distress. West, 53 S.W.3d at
648. Under the former “put up or shut up” standard for summary judgment, he might have
succeeded; however, following Hannan, the moving party must do more than point to a mere
absence in the record. Hannan, 270 S.W.3d at 8-9. That party must either affirmatively
negate an essential element of the claim or show that Plaintiff cannot prove an essential
element of her claim at trial. Id. In her complaint, Plaintiff alleged that the statement by Mr.
Scesa to a business associate, Brian Zentz, that Plaintiff was terminated for “taking money

                                              -10-
from the company” damaged her professional and business reputation.6 Mr. Scesa, however,
has failed to demonstrate that Plaintiff cannot prove, at trial, that she has sustained injury to
her “standing in the community, humiliation, or emotional distress.” We, therefore, reverse
the summary dismissal of Plaintiff’s false light invasion of privacy claim, reinstate the claim,
and remand this claim for further proceedings.

    III. B REACH OF F IDUCIARY D UTY, D UTY OF L OYALTY, AND D UTY OF G OOD F AITH

        Plaintiff also appeals the trial court’s summary dismissal of her claims of breach of
fiduciary duty, the duty of loyalty, and the duty of good faith. The trial court found that the
business decision of the Defendants in terminating the employment of Plaintiff “negated the
elements she alleges constitute breach of fiduciary duty, duty of good faith, and duty of
loyalty.” Additionally, the trial court found that once Defendants shifted the burden to
Plaintiff, she failed to put forth evidence to overcome Defendants’ business reasons for her
termination and also Plaintiff failed to demonstrate any damages resulting from the alleged
breaches.

        In her complaint, Plaintiff asserted that Defendants breached these duties for a litany
of reasons including that they terminated Plaintiff’s employment, which she asserts was not
in the Company’s best interest; that they misused their positions within the Company to gain
unfair benefit; that Defendants wasted corporate assets; and that Defendants excluded
Plaintiff from decision-making.

       In support of the motion to dismiss this claim, Defendants asserted that the decisions
of which Plaintiff complained were protected under the business judgment rule. In Lewis on
Behalf of Citizens Sav. Bank & Trust Co. v. Boyd, 838 S.W.2d 215 (Tenn. Ct. App. 1992),
this court discussed the business judgment rule as follows:

       Tennessee’s courts have consistently followed a noninterventionist policy with
       regard to internal corporate matters. They have recognized that directors have
       broad management discretion. Chism v. Mid–South Milling Co., 762 S.W.2d
552, 556 (Tenn.1988) (discretion in employing or discharging corporate
       officers); Wallace v. Lincoln Sav. Bank, 89 Tenn. 630, 636, 15 S.W. 448,
       449–50 (1891). Accordingly, they have declined to substitute their judgment
       for that of a corporation’s board of directors when the board has acted in good
       faith and in the exercise of honest judgment in the lawful and legitimate
       furtherance of corporate purposes. French v. Appalachian Elec. Coop., 580

       6
       The record does contain an affidavit from Mr. Zentz that such a statement was made to him by the
Defendant, Steven Scesa.

                                                 -11-
       S.W.2d 565, 570 (Tenn. Ct. App.1978); Range v. Tennessee Burley Tobacco
       Growers Ass’n, 41 Tenn. App. 667, 675, 298 S.W.2d 545, 549 (1955), cert.
       denied, 355 U.S. 813, 78 S. Ct. 11, 2 L. Ed. 2d 30 (1958).

       These decisions squarely align Tennessee with the jurisdictions recognizing
       and following the “business judgment rule.” Levine v. Smith, 591 A.2d 194,
       197–98 (Del.1991); Auerbach v. Bennett, 47 N.Y.2d 619, 419 N.Y.S.2d 920,
       926, 393 N.E.2d 994, 999–1000 (1979); 3A W. Fletcher, Cyclopedia of the
       Law of Private Corporations § 1039 (rev. perm. ed. 1986); Dennis J. Block,
       Stephen A. Radin & James P. Rosenzweig, The Role of the Business Judgment
       Rule in Shareholder Litigation at the Turn of the Decade, 45 Bus.Law. 469,
       489–90 (1990) (“Block, Radin & Rosenzweig”). Thus, like other courts
       following the business judgment rule, we presume that a corporation’s
       directors, when making a business decision, acted on an informed basis, in
       good faith, and with the honest belief that their decision was in the
       corporation’s best interests. Spiegel v. Buntrock, 571 A.2d 767, 774
       (Del.1990); Zapata Corp. v. Maldonado, 430 A.2d 779, 782 (Del.1981).

Lewis, 838 S.W.2d at 220-21.

       Plaintiff opposed the motion contending that there are genuine issues of material fact
concerning Defendants’ undisputed conduct; therefore, the trial court erred in summarily
dismissing this claim. In her brief, Plaintiff further argues that her exclusion from
participation in the company and denial of a reasonable return on investment are sufficient
to establish a claim for oppressive conduct of a minority shareholder.

        We are in agreement with the trial court’s finding that the actions Plaintiff complains
of are covered by the business judgment rule and Plaintiff failed to rebut the presumption that
Defendants acted on an informed basis, in good faith and with the belief their decision was
in the Company’s best interest; therefore, Defendants were authorized to exercise the call
option in the Shareholders’ Agreement. We, therefore, affirm the summary dismissal of
Plaintiff’s claims for breach of fiduciary duty, breach of the duty of loyalty, and breach of
good faith.

                                    IV. Derivative Claim

      Lastly, we address Defendants’ argument that the trial court erred in failing to award
them attorney’s fees pursuant to Tennessee Code Annotated § 48-17-401(d)(2). Plaintiff
attempted to bring a derivative shareholder’s claim pursuant to Tennessee Code Annotated
§ 48-17-401. However, Plaintiff failed to comply with the requirements of the statute in

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bringing her action; specifically, Plaintiff failed to verify her amended complaint as required
by Tennessee Code Annotated § 48-56-401(c). However, Defendants argue that because
Plaintiff’s intent was to pursue a claim under Tennessee Code Annotated § 48-17-401, they
should still be awarded their attorney’s fees pursuant to the statute. We respectfully disagree
having determined, as the trial court did, that Plaintiff did not properly assert a shareholder’s
derivative action, and, therefore Tennessee Code Annotated § 48-17-401(d)(2) is inapplicable
and Defendants are not entitled to their attorney’s fees pursuant to the statute.7

                                              I N C ONCLUSION

      The judgment of the trial court is reversed in part, affirmed in part, and this matter is
remanded with costs of appeal assessed against both parties equally.

                                                                  ______________________________
                                                                  FRANK G. CLEMENT, JR., JUDGE

        7
         Additionally, the statute provides that the Company is entitled to the attorney’s fees if the trial court
finds that “the proceeding was commenced or maintained without reasonable cause or for an improper
purpose,” and there is no indication of that in this action. Tenn. Code Ann. § 48-17-401(d)(2).

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