500 Block, LLC v. Bosch
| Decision Date | 12 April 2018 |
| Docket Number | No. E2016-02449-COA-R3-CV,E2016-02449-COA-R3-CV |
| Parties | 500 BLOCK, LLC v. DONALD BOSCH |
| Court | Court of Appeals of Tennessee |
Appeal from the Chancery Court for Knox County
Clarence E. Pridemore, Jr., Chancellor
This case was brought by the landlord of a building that was leased to a limited liability company for purposes of operating a restaurant; the restaurant failed, and the company defaulted on its obligations under the lease and took bankruptcy. The landlord filed suit to recover damages from four persons who had signed agreements guaranteeing performance of the lease to the extent of the guarantors' interest in the lessee. The case proceeded to trial against one guarantor and, after a bench trial, the court dismissed the action, finding that the guaranty lacked consideration and that the guaranty was invalid and unenforceable because only the guarantor signed it. On appeal, the landlord contends that the trial court erred in both respects. Upon a de novo review of the record, we reverse the judgment of the trial court and remand the case for entry of a judgment against the guarantor in the amount of $60,037.97 and for a determination of interest on the judgment.
Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Chancery Court Reversed and Remanded
W. Tyler Chastain and Margo J. Maxwell, Knoxville, Tennessee, for the appellant, 500 Block, LLC.
Thomas S. Scott, Jr. and Christopher T. Cain, Knoxville, Tennessee, for the appellee, Donald A. Bosch.
OPINIONOn July 26, 2008, S&W, LLC, entered into a five-year agreement with 500 Block, LLC, to lease property located at 518 South Gay Street in Knoxville, to be used as a "restaurant facility, a deli selling food and food-related items, a take-out service, and a bar serving food items and alcoholic beverages." The lease was executed by Stephanie Balest on behalf of S&W. Page 21 of the Lease contained a "Lease Guaranty Agreement," which read:
Ms. Balest and Mr. Verbruggen signed the Lease Guaranty Agreement where their names were listed; Mr. Bosch and Mr. Funnel did not.
October 3, 2008, Mr. Bosch and Donald Funnell1 signed Limited Lease Guaranty Agreements in which they guaranteed performance to the extent of their respective ten and twenty percent shares in S&W ("the October 3 guaranty").2 Mr. Bosch's agreement reads in pertinent part:
The restaurant opened on October 21, 2009, and rent commenced on November 21. In September 2010, S&W failed to pay rent and property taxes; 500 Block gave notice of default under the lease to S&W, Ms. Balest, Mr. Verbruggen, Mr. Bosch, and Mr. Donald Funnell. In that letter, 500 Block's counsel stated that "the Landlord is prepared to seek all available remedies in law and at equity against the Tenant and the Guarantors pursuant to the terms of the Lease." Thereafter, S&W filed for bankruptcy, and the lease was terminated by order of the bankruptcy court.
500 Block brought suit on May 9, 2011 against Mr. Verbruggen, Ms. Balest, Mr. Bosch, and Mr. Funnell to recover on the guaranty agreements seeking damages from Mr. Bosch in the amount of $93,426.64, plus late fees, attorney's fees and costs. Mr. Bosch answered, denying liability under the guaranty and asserting as affirmative defenses that the guaranty he signed failed for lack of consideration; that 500 Block failed to mitigate its damage; that 500 Block failed to provide timely and appropriate notices of default; and that 500 Block materially breached the lease.3 500 Block moved for summary judgment twice; both motions were denied. In the order denying the second motion, the court held "that issues of material fact exist as to consideration for the guaranty at issue and Mr. Bosch's defense related to alleged breaches of the Lease Agreement by Plaintiff."
A bench trial was held on November 8, 2016, at which the following witnesses testified: Timothy Hill, a member of 500 Block and its custodian of records; Stephanie Balest; John Craig, chief manager of 500 Block; and Donald Bosch. Seventeen exhibits were entered into evidence. At the conclusion of 500 Block's case in chief, Mr. Bosch moved for dismissal pursuant to Rule 41.02 of the Tennessee Rules of Civil Procedure; the motion was denied. The court then advised counsel that it was "going to give you a ruling up here today" and, without hearing further argument or proof, proceeded to render the following ruling:
A final order was entered on November 18, 2016, incorporating the oral ruling and dismissing the case with prejudice.
500 Block appeals, raising the following issues:
Our scope of review of the findings of fact of a trial court sitting without a jury is de novo, accompanied by a presumption of correctness, unless the preponderance of the evidence is otherwise. Blair v. Brownson, 197 S.W.3d 681, 684 (Tenn. 2006); Nw. Tennessee Motorsports Park, LLC v. Tennessee Asphalt Co., 410 S.W.3d 810, 816 (Tenn. Ct. App. 2011) (citing Wood v. Starko, 197 S.W.3d 255, 257 (Tenn. Ct. App. 2006)). If the trial court made no specific findings of fact, then we must look to the record to determine where the preponderance of the evidence lies. Gooding v. Gooding, 477 S.W.3d 774, 783 (Tenn. Ct. App. 2015) (citing Lovlace v. Copley, 418 S.W.3d 1, 36 (Tenn. 2013); Ganzevoort v. Russell, 949 S.W.2d 293, 296 (Tenn. 1997); Nashville Ford Tractor, Inc. v. Great Am. Ins. Co., 194 S.W.3d 415, 424 (Tenn. Ct. App. 2005). Review of questions of law is de novo with no presumption of correctness. Southern Constructors, Inc. v. Loudon County Bd. Of Educ., 58 S.W.3d 706, 710 (Tenn. 2001).
In this case, the court did not make specific findings of fact; consequently, we shall "conduct our own de novo review to first determine where...
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