Beckwith v. LBMC, P.C., No. M2017-00972-COA-R3-CV

CourtCourt of Appeals of Tennessee
Writing for the CourtW. NEAL MCBRAYER, JUDGE
Docket NumberNo. M2017-00972-COA-R3-CV
Decision Date21 March 2019


No. M2017-00972-COA-R3-CV


December 6, 2017 Session
March 21, 2019

Appeal from the Circuit Court for Williamson County
No. 2016-40
Michael Binkley, Judge

A business retained a professional accounting firm to value its common stock and stock options. Almost four years after the requested valuation report was provided, the president of the business claimed that one of the firm's accountants had disclosed confidential information about the valuation to a third party. The president and the accounting firm entered a tolling agreement for his individual claim. But after attempts to resolve the dispute failed, the president and the business filed a complaint against the accounting firm for breach of contract, accounting malpractice, and breach of fiduciary duty. The accounting firm moved for summary judgment, claiming the suit was barred by the statute of limitations. Applying the one-year statute of limitations for accounting malpractice actions and concluding that the tolling agreement established a filing deadline for the president, the trial court ruled that the plaintiffs' claims were untimely. Upon review, we conclude that the tolling agreement paused the running of the statute of limitations on the president's confidentiality claim. So we vacate the dismissal of the president's confidentiality claim. We affirm the judgment of the trial court in all other respects.

Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Circuit Court Affirmed in part; Vacated in Part; and Case Remanded

W. NEAL MCBRAYER, J., delivered the opinion of the court, in which ANDY D. BENNETT and RICHARD H. DINKINS, JJ., joined.

Mark Hammervold and Brian Manookian, Nashville, Tennessee, for the appellants, LBDB Holdings, LLC, and Larry Beckwith.

John A. Day and Joy Burns Day, Brentwood, Tennessee, for the appellee, LBMC, P.C.

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Eco-Energy Holdings, Inc. hired Lattimore Black Morgan & Cain, PC, an accounting firm, to value its common stock and stock options for financial reporting purposes. A letter from Lattimore memorialized the terms of the engagement, which an authorized representative of Eco-Energy signed. Lattimore agreed to provide its professional opinion of the fair value of "the underlying common stock of [Eco-Energy] as of July 9, 2010," and "252,000 stock options granted as of July 9, 2010 and August 26, 2010" based on information provided by Eco-Energy. Lattimore also promised to "use [its] best efforts to keep strictly confidential the report, its existence, and content, as well as the identity of [Eco-Energy] and other identifying information."

On May 3, 2011, Lattimore delivered its valuation report. At that time, Eco-Energy expressed no dissatisfaction with Lattimore's services. But on April 23, 2015, Larry Beckwith, president and majority shareholder of Eco-Energy, notified Lattimore that a Lattimore employee had "revealed confidential information" about the valuation the previous year, causing Mr. Beckwith to incur financial losses.

A few days later, Mr. Beckwith and Lattimore entered into an "Agreement to Toll Statute of Limitations." Eco-Energy was not a party to the agreement. The tolling period was modified four times. The final modification ended the tolling period on January 22, 2016.

On January 22, 2016, due to inclement weather conditions, Eco-Energy and Mr. Beckwith sent a complaint against Lattimore via facsimile to the Circuit Court Clerk for Williamson County, Tennessee.1 On January 26, 2016, the plaintiffs filed the original of the complaint and paid the filing fee. The complaint asserted three theories of recovery: breach of contract, professional negligence/accounting malpractice, and breach of fiduciary duty. All the theories relied on allegations that Lattimore drastically inflated the fair value of Eco-Energy instead of using "sound accounting principles" and "independent accounting analysis" and disclosed "the existence and substance of the 2011 valuation of [Eco-Energy] to a third party." According to the complaint, Lattimore's wrongful conduct caused the plaintiffs "significant damages."

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The trial court dismissed the complaint on summary judgment, concluding that the complaint was untimely.2 The court held that all the plaintiffs' claims were subject to the one-year statute of limitations for accounting malpractice. See Tenn. Code Ann. § 28-3-104(c)(1) (2017). Based on the plaintiffs' claims accruing on July 28, 2014, the court determined that the complaint was too late absent tolling. The court read the tolling agreement as extending the deadline for Mr. Beckwith's confidentiality claim. But because the tolling agreement imposed a "filing deadline" of January 22, 2016, the court concluded that Mr. Beckwith's confidentiality claim was also untimely. The court did not deem the facsimile transmission of plaintiffs' complaint on January 22, 2016, sufficient to toll the statute of limitations.


Summary judgment may be granted only "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Tenn. R. Civ. P. 56.04. Defenses based on statutes of limitations are particularly well suited to summary judgment motions because the facts material to the defense are often undisputed. Cherry v. Williams, 36 S.W.3d 78, 83 (Tenn. Ct. App. 2000). A grant of summary judgment is appropriate when the facts and the reasonable inferences from those facts would permit a reasonable person to reach only one conclusion. Stanfill v. Mountain, 301 S.W.3d 179, 184 (Tenn. 2009).

The statute of limitations is an affirmative defense. Tenn. R. Civ. P. 8.03. As such, a party moving for summary judgment on the grounds that a claim is barred by the statute of limitations has the burden of establishing all of its elements. Carr v. Borchers, 815 S.W.2d 528, 532 (Tenn. Ct. App. 1991). Satisfying this burden requires more than a "conclusory assertion that summary judgment is appropriate," rather the movant must set forth specific material facts as to which the movant contends there is no dispute. Rye v. Women's Care Ctr. of Memphis, MPLLC, 477 S.W.3d 235, 264 (Tenn. 2015).

If a motion for summary judgment is properly supported, the nonmoving party must then come forward with something more than the allegations or denials of its pleadings. Id. at 265. The nonmoving party must "by affidavits or one of the other means provided in Tennessee Rule 56, 'set forth specific facts' at the summary judgment stage 'showing that there is a genuine issue for trial.'" Id. (quoting Tenn. R. Civ. P. 56.06).

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A trial court's decision on a motion for summary judgment enjoys no presumption of correctness on appeal. Martin v. Norfolk S. Ry. Co., 271 S.W.3d 76, 84 (Tenn. 2008); Blair v. W. Town Mall, 130 S.W.3d 761, 763 (Tenn. 2004). We review the summary judgment decision as a question of law. Martin, 271 S.W.3d at 84; Blair, 130 S.W.3d at 763. Thus, we review the record de novo and make a fresh determination of whether the requirements of Rule 56 of the Tennessee Rules of Civil Procedure have been met. Eadie v. Complete Co., 142 S.W.3d 288, 291 (Tenn. 2004); Blair, 130 S.W.3d at 763.


The plaintiffs contend that the trial court erred in granting summary judgment to Lattimore on statute of limitations grounds. In considering a statute of limitations defense, we examine three interrelated elements: "the length of the limitations period, the accrual of the cause of action, and the applicability of any relevant tolling doctrines." Redwing v. Catholic Bishop for Diocese of Memphis, 363 S.W.3d 436, 456 (Tenn. 2012).

1. Applicable Statute of Limitations

The plaintiffs argue that the trial court erred in applying the one-year statute of limitations for accounting malpractice to all their claims. See Tenn. Code Ann. § 28-3-104(c)(1). The determination of the applicable statute of limitations is a question of law, which we review de novo with no presumption of correctness. Benz-Elliott v. Barrett Enters., LP, 456 S.W.3d 140, 147 (Tenn. 2015).

To determine the applicable statute of limitations, we "must ascertain the gravamen of each claim" in the complaint. Id. at 149. Ascertaining the gravamen of a claim is a two-part inquiry:

[A] court must first consider the legal basis of the claim and then consider the type of injuries for which damages are sought. This analysis is necessarily fact-intensive and requires a careful examination of the allegations of the complaint as to each claim for the types of injuries asserted and damages sought.

Id. at 151 (emphasis added). In carrying out the inquiry, we are not bound by "[t]he designation given those claims by either the plaintiff or the defendant." Estate of French v. Stratford House, 333 S.W.3d 546, 557 (Tenn. 2011).

The plaintiffs do not dispute that the statute of limitations for accounting malpractice applies to their professional negligence claims, and Eco-Energy does not appeal the dismissal of its professional negligence claim as untimely. So we need only

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consider the applicable statute of limitations for the plaintiffs' breach of contract and breach of fiduciary duty claims.

a. Breach of Contract Claim

The plaintiffs maintain that the six-year statute of limitations for actions on contracts governs their breach of contract claim. See Tenn. Code Ann. § 28-3-109(a)(3) (2017). Count I is labeled breach of contract. But upon review, we conclude that the legal basis of this claim is accounting malpractice....

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