Court Opinion

ID: 1080147
Source: CourtListenerOpinion
Date Created: 2013-10-09 20:38:13.297318+00
Date Added: 2024-06-11T12:56:57.809267
License: Public Domain

IN THE COURT OF APPEALS OF TENNESSEE, WESTERN SECTION
                             AT JACKSON

             _______________________________________________________

                                    )
WADE SPURLING, D.C.,                )     Shelby County Chancery Court
                                    )     No. 107260-3
   Plaintiff/Appellant.             )
                                    )
VS.                                 )     C.A. No. 02A01-9609-CH-00225
                                    )
KIRBY PARKWAY CHIROPRACTIC, )
INC., UNION CHIROPRACTIC, INC., )
BEHRMAN CHIROPRACTIC CLINIC- )
                                              FILED
WESTOWN, INC., and MICHAEL          )
PLAMBECK, D.C. individually and     )    December 9, 1997
as OWNER, OFFICER and/or            )
DIRECTOR OF KIRBY PARKWAY           )    Cecil Crowson, Jr.
                                         Appellate C ourt Clerk
CHIROPRACTIC, INC., UNION           )
CHIROPRACTIC, INC., and             )
BEHRMAN CHIROPRACTIC                )
CLINIC-WESTOWN, INC.,               )
                                    )
   Defendants/Appellees.            )
                                    )
______________________________________________________________________________

From the Chancery Court of Shelby County at Memphis.
Honorable D. J. Alissandratos, Chancellor

Patricia L. Penn, Memphis, Tennessee
Attorney for Plaintiff/Appellant.

Valerie Barnes Speakman, JACKSON, SHIELDS, YEISER & CANTRELL,
Cordova, Tennessee
Attorney for Defendants/Appellees.

OPINION FILED:

AFFIRMED AND REMANDED

                                         FARMER, J.

HIGHERS, J.: (Concurs)
LILLARD, J.: (Concurs)
                The plaintiff, Wade Spurling, D.C., appeals from the order of the trial court granting

the defendants’ motion to dismiss for failure to state a claim upon which relief can be granted

pursuant to Rule 12.02(6) T.R.C.P. Spurling filed a complaint titled “Complaint For Deceit in

Inducement to Contract, Promissory Fraud, Fraud, Intentional Interference With Performance of

Contractual Obligations and Breach of Contract.” The complaint alleges that Plaintiff owned and

operated Spurling Chiropractic Clinic (SCC). He entered into negotiations with Defendant Michael

K. Plambeck (Plambeck) for Plambeck to purchase SCC.

                Attached to the amended complaint is a copy of a proposed contract which, according

to the complaint, was faxed to Spurling. After obtaining approval from Plambeck’s agent, Spurling

marked through certain provisions that he did not accept, signed the contract and faxed it back to

Plambeck’s agent. This document provides that any controversy arising out of or relating to this

agreement shall be settled through binding arbitration. The same clause is contained in the contract

which is attached to a motion to stay proceedings and to compel arbitration filed by Defendants

Plambeck and Kirby Parkway Chiropractic, Inc. Following a hearing on these motions, the trial

court ordered that the motions be held in abeyance and gave the plaintiff an opportunity to file an

amended complaint. Following the filing of the amended complaint, the motions were granted.

                Parties are entitled to a judicial determination of the issue of rescission of a contract

despite the fact that there is an arbitration clause in the contract. As this Court said in City of Blaine

v. John Coleman Hayes and Assoc., Inc., 818 S.W.2d 33, 38 (Tenn. App. 1991):

                        In 1983, when the Tennessee legislature passed the Uniform
                Arbitration Act, they had full knowledge of the long established right
                of a person to seek rescission of a contract procured by fraud. With
                this knowledge, we find it logical for the legislature to intend to
                except actions for rescission from a decision by arbitrators and giving
                the language of the statute its usual and ordinary meaning, the
                legislature did just that. . . .

                        ....

                        . . . Should the contract be rescinded there is no contract
                containing an arbitration clause and the rights of the parties can be
                fully adjudicated by the court. Should the contract not be rescinded
                the parties may then proceed to a determination of their disputes
                under the arbitration provisions.
Id. at 38.

               The question then becomes whether or not the plaintiff has sufficiently alleged fraud

which would then require a determination by the trial court whether the contract should be rescinded.

A motion to dismiss pursuant to Rule 12.02(6) T.R.C.P. for failure to state a claim upon which relief

can be granted tests only the sufficiency of the complaint. The failure to state a claim is determined

by an examination of the complaint alone. The allegations contained in the complaint are considered

alone and taken as true. Cook v. Spinnaker’s of Rivergate, Inc., 878 S.W.2d 934, 938 (Tenn. 1994).

               All pleadings shall be so construed as to do substantial justice. Rule 8.06 T.R.C.P.

However, when averring fraud, the circumstances constituting fraud shall be stated with particularity.

Rule 9.02 T.R.C.P. It is not necessary to actually employ the word “fraud” as fraud is a legal

conclusion drawn from the facts. Sullivant v. Americana Homes, Inc., 605 S.W.2d 246, 249 (Tenn.

App. 1980).

               The portions of the complaint, as amended, upon which Plaintiff relies as having

stated a cause of action based upon fraud are as follows:

                       3. On July 3, 1995, Plaintiff received a proposed contract by
               facsimile from Plambeck’s agent. The contract, a copy of which is
               attached as Exhibit “A” hereto, was designated “Employment
               Agreement” between Plambeck and Plaintiff and did not address the
               “second clinic” issue. After obtaining approval from Plambeck’s
               agent Sid Weigand (hereinafter “Weigand”), Plaintiff marked through
               certain provisions that he did not accept, signed the contract and
               faxed it back to Plambeck’s agent at his Arlington, Texas offices.

                       ....

                       5. On or about July 17, 1995, Plambeck arrived at the SCC
               offices in Memphis with a revised contract for Plaintiff to sign.
               Plambeck represented to Plaintiff that the only difference between the
               revised contract the contract Plaintiff has signed and faxed to
               Plambeck’s Arlington office on July 3, 1995 were that (1) the
               provisions Plaintiff had crossed out were, as a matter of fact, deleted
               and (2) provisions giving Plaintiff his ten (10%) percent interest in
               the second clinic were, as a matter of fact, included. Plaintiff, relying
               on these false representations and statements of Plambeck, signed the
               contract with Plambeck on a signature page similar to Page 16 of the
               document attached as Exhibit “A” hereto. At that time, Plaintiff was
               not given a copy of this contract document and has been refused a
               copy of same upon subsequent requests for a copy.
                       6. Rather than complying with Plaintiff’s request for a copy
               of the contract executed by him and Plambeck on July 17, 1995, a
               copy of a purported “Employment Agreement”, a copy of which is
               attached as Exhibit “B” hereto, was forwarded to Plaintiff by
               facsimile on or about October 31, 1995. A highly significant and
               obvious difference between these two documents is that the signature
               of Plambeck in Exhibit “B” is on one page and Plaintiff’s signature
               is on the succeeding page.

               At the hearing on the motions following the amended complaint, the trial court made

the following observations before issuing his ruling:

                       THE COURT: . . . . I think I understand what you’re
               accusing orally. I didn’t see this in the writing because it’s not that
               clear. Orally, if I understand you correctly, here’s what you’re saying
               happened: My client, you say, signed a document.

                       MS. PENN: Yes.

                       THE COURT: He has now been sent a purported original
               document, a completely different document with pages that have been
               substituted. Signatures have either been substituted by forgery or
               have been substituted by taking a signature page from the original
               document.

                       MS. PENN: Or cut out and pasted up, Your Honor. We don’t
               know how it was done because the October 31 document that was
               sent to us was sent by fax, and as the Court knows --

                       ....

                       THE COURT: The problem is this: The Court has been asked
               once before to, in essence, dismiss the fraudulent allegation you made
               since the arbitration. The Court says, No, I’m going to give you a
               chance to amend your pleadings so you can be very specific about
               fraud.

                        The thing I hear you all relying on heavily today orally, but
               not in the amended pleading, is -- and it’s really quite simple, and
               there is law to cover that, if indeed they said here is his signature page
               and this is the original signature page. You say, yes, what they did,
               they threw off all the previous pages, threw them away, and
               substituted others. That is fraud. I don’t have that allegation in
               writing.

                       If it is indeed, well, they forged his signature, that would be
               fraud, but I don’t have that allegation in writing. If it is indeed they
               clipped out the signature somehow and tried to duplicate it, that’s
               fraud. I don’t have that in writing, and it’s a very simple thing to ask
               your client: Is this your original signature or not on this original
               document that we have requested in our request for production that’s
               been produced?

                      But no request for production has been made. So your client
               doesn’t say that is or is not, or if he were saying, I’m confused, I don’t
               know, let’s hire a signature expert, and now where I’m at is I’m
                hearing oral allegations but not written allegations.

                       MS. NICHOLS: Your Honor, in Section II, paragraph 6
                makes that allegation.

                       THE COURT: I just read that three times, and you read it to
                me, and, frankly, I don’t see that. All it says is that the signature in
                Exhibit B is on one page. Plaintiff’s signature is on the succeeding
                page. It isn’t a denial that’s his original signature. It is not a
                statement there is a forgery. It isn’t a straight out allegation that the
                documents received had been deliberately thrown away and other
                documents substituted.

                        ....

                        THE COURT: I have read those.

                         Let me ask you, is it your client’s assertion orally through you
                that what has happened is that he negotiated a deal, he saw the
                original contract, he signed the original contract or facsimile or what
                he thought was the original deal, and they now have taken his
                signature page and either forged his signature, substituted his original
                signature, and completely substituted all of the pages in front of it?
                Is that his position?

                        MS. PENN: In some manner, Your Honor.

                       THE COURT: Then why don’t I have that pled? That’s a
                simple enough straight forward thing. This is real simple because I
                may not be a lawyer. I may be in the medical field, but it is real
                simple. They have forged my signature. Does your client say it’s a
                forgery by the way?

                        MS. PENN: No.

                        THE COURT: It’s not a forgery.

                        ....

                      Does your client say that they cut and pasted his signature
                form whatever document to be on the document they seek to enforce
                now? Does he say that?

                        MS. PENN: That’s what we believe happened.

                        THE COURT: Where does it say they cut and pasted?

                       MS. PENN: It is not specifically stated in this document that
                they cut and pasted it because we have not seen the original
                document.

                After carefully reviewing the complaint we have come to the same conclusion as the

chancellor in that the plaintiff has alleged to plead fraud with particularity. The judgment of the trial

court is affirmed and the cost of this cause are taxed to the appellant.
                                 ____________________________________
                                 FARMER, J.

______________________________
HIGHERS, J. (Concurs)

______________________________
LILLARD, J. (Concurs)