Collins v. Greene County Bank

• Decision Date: 01 November 1995
• Citation: 916 S.W.2d 941
• Parties: Jerry COLLINS, d/b/a Westside Equipment Company, Inc., Plaintiff-Appellant, v. GREENE COUNTY BANK, Defendant-Appellee.
• Court: Tennessee Court of Appeals

Page 941

916 S.W.2d 941

Jerry COLLINS, d/b/a Westside Equipment Company, Inc. Plaintiff-Appellant, v. GREENE COUNTY BANK, Defendant-Appellee.

Court of Appeals of Tennessee Eastern Section.

Nov. 1, 1995.

Permission to Appeal Denied by

Supreme Court Feb. 26, 1996.

Appeal from Chancery Court, Greene County; Dennis H. Inman, Chancellor.

J. Ronnie Greer, Greeneville, for Plaintiff-Appellant.

Kenneth Clark Hood, Rogers, Laughlin, Nunnally, Hood & Crum, Greeneville, for Defendant-Appellee.

OPINION

FRANKS, Judge.

In this dispute between plaintiff borrower and defendant lender, the Trial Court entered summary judgment for the defendant and plaintiff has appealed.

Plaintiff Collins began operating West Side Tractor Company, Inc. (WST) for its owner, Kenneth Malone in 1986. Plaintiff and Malone agreed that Plaintiff would become the owner of WST in exchange for paying the company's debts. Plaintiff simultaneously owned and ran West Side Equipment Company (WSE), a used equipment trading business. The business arrangement between Plaintiff and Malone continued until 1992, when WST became delinquent with its dealers and suppliers and closed.

In 1990, Plaintiff pledged his home and farm as collateral for a $125,000 loan for WST from defendant Greene County Bank. Ultimately, defendant foreclosed on the property and plaintiff's efforts to prevent the foreclosure through litigation failed.

Plaintiff then filed this action alleging that illegal holds had been placed on his checking account, that oral representations regarding the cross-collateralization clause in the deed of trust constituted fraudulent inducement to enter a contract, and that statements by bank officials constituted tortious interference with the business relationship between plaintiff and Malone.

The Trial Court granted summary judgment on all issues. After giving Appellant an additional two weeks to file notices of holds that had been placed on his account, the Court found that none of the holds produced were within the regulation's one year limitations period. The Court also concluded that res judicata and collateral estoppel barred the claim of fraudulent inducement to enter a contract. Further, the court determined that the business relationship allegedly interfered with was prospective in nature and this jurisdiction does not recognize a cause of action for prospective interference.

Plaintiff claims that Greene County Bank violated 12 C.F.R. 229 ¹ et seq. (commonly known as Regulation CC) by placing improper holds on his checking accounts. The statute of limitations for Regulation CC provides that actions must be brought "within one year after the date of the occurrence of the violation involved." 12 C.F.R. 229.21 (1992). At the hearing on the motion for summary judgment and after being given an additional two weeks, plaintiff could not produce any hold notices dated within one year of the filing of the suit.

Plaintiff argues that the holds represented a continuing occurrence and the statute of limitations began to run, for all violations, from the date of the last hold. This argument is without merit. The last hold notice is dated more than one year from the filing of the suit and is itself outside the limitations period, and while a "continuing violation" theory has been used to prevent the statute of limitations from barring employment discrimination, see, e.g., Havens Realty Corp. v. Coleman, 455 U.S. 363, 102 S.Ct. 1114, 71 L.Ed.2d 214 (1982), the cases cited by plaintiff fail to provide any rationale for application of the theory to these circumstances. Plaintiff received written notices informing him of each alleged violation. There was no concealment of his rights or lack of opportunity to pursue these claims as soon as they arose and we find no reason why the statute of limitations should not bar this claim.

Plaintiff asked the Trial Court to alter or amend the summary judgment on the basis of his discovery of a notice of a hold on his bank account that had occurred within the one year statute of limitations period, and alleged alterations ² of a bank document. The motion was denied.

Whether to grant a new trial based on newly discovered evidence is discretionary with the trial judge. Seay v. City of Knoxville, 654 S.W.2d 397 (Tenn.App.1983). The moving party must demonstrate that the new evidence was not known prior to or during trial and that it could not have been ascertained by the exercise of reasonable diligence. Also to be considered by the Trial Judge is whether a new trial based on such evidence would change the result. Leeper v. Cook, 688 S.W.2d 94 (Tenn.App.1985).

Plaintiff found the hold slips by searching through his records and the bank document, allegedly altered, was turned over to plaintiff during discovery. Accordingly, plaintiff was in possession of the records and document while the case was being litigated. He was given additional time after the hearing on the summary judgment to timely produce hold notices. We agree with the Trial Judge that plaintiff did not exercise reasonable diligence in presenting these claims and affirm his denial of the motion to alter or amend the judgment.

Next, plaintiff insists res judicata and collateral estoppel should not bar his action.

A determination of whether an action is barred by res judicata is an appropriate use of summary judgment. Byrd v. Hall, 847 S.W.2d 208 (Tenn.1993).

Res judicata bars a second suit between the same parties on the same cause of action as to all issues which were or could have been litigated in the former suit. Scales v. Scales, 564 S.W.2d 667 (Tenn.App.1977). The party asserting the defense must demonstrate: (1) that the underlying judgment was rendered by a court of competent jurisdiction; (2) that the same parties were involved in both suits; (3) that the same cause of action was involved in both suits; and (4) that the underlying judgment was on the merits. Lee v. Hall, 790 S.W.2d 293, 294 (Tenn.App.1990).

Collateral estoppel, in contrast, bars a second suit between the same parties on a different cause of action where the issues were actually litigated and determined in the former suit. Scales. Plaintiff argues the judge incorrectly granted summary judgment because the third element of res judicata, i.e., the same cause of action, was not met.

The prior litigation sought to enjoin the foreclosure on Appellant's farm and home. Those properties had been pledged under a 1990 loan agreement. A cross-collateralization clause in that agreement stated that the collateral from the loan was also to be used as security for other loans outstanding to WSE and WST, and the deed of trust was not to be released until the loans outstanding had been paid. Plaintiff claims that he was not aware of this cross-collateralization clause when he signed the document.

Plaintiff argues the previous litigation sought to prevent foreclosure on his farm because the Bank had impaired his ability to pay through the wrongful repossession of his equipment. He distinguishes the previous claims from his present claim, which is characterized as fraudulent inducement to enter into the Deed of Trust containing cross-collateralization language. He argues that the oral representations were made to him indicating that his farm and home would be released upon repayment of the loan.

The Trial Court dealing with the prior litigation addressed the cross-collateralization clause during the plaintiff's effort to enjoin the foreclosure:

Now the first matter--that is, the offer to discharge the note directly secured by the deed of trust--that, of course, is the cross-collateralization clause issue. I've dealt with it. The Court of Appeals has dealt with it. I'm bound by it. Those clauses are valid, and failure to read the language, and I'm sure Mr. Collins is telling the truth. He didn't read the language. He didn't realize the significance of it, but the case are literally legion in this state that say that failure to read language that is there to read is not a defense to enforcement of that language.

The Trial Court held this claim was barred under either res judicata or collateral estoppel because the prior action's

sole purpose [was] the enjoining of the foreclosure by the bank on the deed of trust. At that time, everything that could have been known about that situation was known. There were no belated revelations of fact. The only thing that occurred after that suit was the foreclosure and it occurred because the Court refused to enjoin it ... Collins' claim that the bank fraudulently induced him to enter into that cross collateralization agreement or misrepresented facts to him such that he signed it with a misapprehension of its effect ... could and should have been raised at that time within the confines of that suit since it did have as its sole purpose ... that foreclosure sale ... Mr. Collins is barred by collateral estoppel in that regard...."

The statute governing injunctions of foreclosures requires...