Family Tr. Servs. v. Green Wise Homes LLC

• Decision Date: 21 November 2022
• Docket Number: M2021-01350-COA-R3-CV
• Parties: FAMILY TRUST SERVICES LLC ET AL. v. GREEN WISE HOMES LLC ET AL.
• Court: Tennessee Court of Appeals

FAMILY TRUST SERVICES LLC ET AL.
v.
GREEN WISE HOMES LLC ET AL.

No. M2021-01350-COA-R3-CV

Court of Appeals of Tennessee, Nashville

November 21, 2022

Session August 2, 2022

Appeal from the Chancery Court for Davidson County No. 15-0780-BC Anne C. Martin, Chancellor

This appeal involves claims by four plaintiffs against an attorney, his business partner, and the attorney's and partner's limited liability company. The plaintiffs claim that the defendants fraudulently redeemed properties sold via tax sales, utilizing forged or fraudulent documents. Following a bifurcated jury trial, the plaintiffs' claims were dismissed except for the claim of one plaintiff against the attorney defendant, which resulted in a verdict for damages in the amount of $53,450. The trial court subsequently denied a motion for new trial filed by the plaintiffs. The plaintiffs have appealed. Upon thorough review, we conclude that the trial court's denial of the plaintiffs' motion for new trial should be reversed. However, we affirm the trial court's pre-trial determination that judgment on the pleadings was appropriate concerning the plaintiffs' claims of unjust enrichment and "theft" of the right of redemption. We further affirm (1) the trial court's grant of summary judgment in favor of the defendants concerning the plaintiffs' claim based on Tennessee Code Annotated § 66-22-113 and (2) the court's denial of the defendant company's motion to dissolve the lien lis pendens on its property. The remaining issue raised by the defendants is pretermitted as moot. We remand this matter to the trial court for a new trial.

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

Eugene N. Bulso, Jr., and Paul J. Krog, Brentwood, Tennessee, for the appellants, Glenna Ponce Davis, Carl Chambers, Debra Irvin, and Dorothy Booher.

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Henry E. Hildebrand, IV, and Denis G. Waldron, Nashville, Tennessee, for the appellees, Green Wise Homes LLC, Charles E. Walker, and Jon Paul Johnson.

Thomas R. Frierson, II, J., delivered the opinion of the court, in which Frank G. Clement, Jr., P.J., M.S., and Andy D. Bennett, J., joined.

OPINION

THOMAS R. FRIERSON, II, JUDGE

I. Factual and Procedural Background

On June 30, 2015, Family Trust Services, LLC, and Billy Gregory filed a class action complaint in the Davidson County Chancery Court ("trial court"), naming REO Holdings, LLC; Charles E. Walker; Jon Paul Johnson; Julie Coone; and Merdan Ibrahim as defendants. The plaintiffs alleged that the defendants were liable for damages and other relief based on claims of fraud, conspiracy, racketeering, and violations of various statutes for allegedly operating a criminal enterprise in connection with real property tax sales over a period of at least five years. The plaintiffs described this alleged fraudulent activity as follows:

The Defendants' general modus operandi consists first of identifying, from among properties that have been sold in satisfaction of unpaid real property taxes, properties with absentee owners or owners otherwise unlikely to investigate or assert their interests. Then, if necessary, the Defendants create false instruments, such as affidavits of heirship that identify certain persons as having interests in the real property in question; the Defendants append forged signatures and notary acknowledgements to these documents. The Defendants then create false deeds, again appending forged signatures and notary acknowledgements. On the basis of these instruments and the pretended title they convey, the Defendants commence redemption processes on the respective properties. In many instances, the Defendants obtain decrees of redemption purporting to vest title to the redeemed properties in them as a result of this course of conduct

In the course of this process, the Defendants electronically or photostatically copy the signatures and stamps of various notaries public- from Tennessee and other States throughout the Union-from previously recorded instruments and then append these images to the false documents they create to support their redemption claims

(Paragraph numbering omitted.)

The plaintiffs specifically identified at least eight separate tracts of real property in various Tennessee counties that they alleged had been fraudulently redeemed by the defendants following the properties' respective tax sales. According to the plaintiffs, they sought to bring their action on behalf of themselves and any person who owned an

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interest in real property that had been fraudulently redeemed from a tax sale by the defendants and all persons who had purchased property at a tax sale that was subsequently fraudulently redeemed by the defendants. The plaintiffs claimed that the requirements of Tennessee Rule of Civil Procedure 23 were met, including that the plaintiffs were adequate representatives of the class. In support of their claims, the plaintiffs attached copies of the purportedly fraudulent documents. The plaintiffs also sought a temporary injunction preventing the defendants from, inter alia, recording any property transfer documents in Tennessee. The trial court issued a temporary injunction to this effect on July 27, 2015.

On August 21, 2015, the defendants, REO Holdings, LLC ("REO"); Charles E. Walker; Jon Paul Johnson; Julie Coone; and Merdan Ibrahim, along with Nationwide Investments, LLC ("Nationwide"), filed a motion to dismiss pursuant to Tennessee Rules of Civil Procedure 9.02 and 12.02(6). These defendants asserted that the plaintiffs lacked standing and that their complaint failed to state a claim upon which relief could be granted.

On October 19, 2015, the plaintiffs, Family Trust Services, LLC; Steven Reigle; Regal Homes Co.; Billy Gregory; and John Sherrod, filed a second amended class action complaint against the defendants, wherein they identified eleven separate tracts of real property that they alleged had been fraudulently redeemed by the defendants. The plaintiffs initiated claims of fraud, slander of title, trespass, ejectment, and civil conspiracy, as well as violations of various statutes, including the Racketeer Influenced and Corrupt Organizations Act ("RICO"), Tennessee Consumer Protection Act ("TCPA"), Tennessee Code Annotated § 66-22-113 (concerning liability of a clerk or officer of the court), and Tennessee Code Annotated § 30-2-712 (concerning affidavits of heirship). The plaintiffs attached several documents in support of their claims.

The defendants filed a supplement to their motion to dismiss, arguing that all claims, except the slander of title and RICO claims by Steven Reigle and the claims of John Sherrod, should be dismissed for lack of standing or for failure to state a claim upon which relief could be granted. Following a grant of permission by the trial court, the plaintiffs filed a third amended class action complaint on November 6, 2015, adding claims of unfair competition, unjust enrichment, intentional interference with business relations, malicious prosecution, and theft of the right of redemption. The plaintiffs also filed a motion seeking to attach certain properties owned by Mr. Walker pending trial.

On January 25, 2016, the defendants filed an additional motion seeking to dismiss certain claims asserted by the plaintiffs in their third amended complaint. The plaintiffs filed a response opposing the defendants' motion. On February 29, 2016, the trial court entered a memorandum and order granting the plaintiffs' motion for prejudgment attachment of Mr. Walker's properties. In doing so, the court found that the plaintiffs had demonstrated the essential elements for acquiring such relief found in Tennessee Code

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Annotated § 29-6-101. Mr. Walker and REO subsequently filed federal bankruptcy actions pursuant to Chapter 11 of the United States Bankruptcy Code. The defendants also filed an amended motion to dismiss.

On March 14, 2016, the trial court entered an order staying the claims against Mr. Walker and REO due to the pending bankruptcy proceedings. The other defendants were ordered to file answers to the third amended complaint by April 8, 2016. On April 7, 2016, the trial court entered an order directing the plaintiffs' counsel to prosecute the charge of criminal contempt against Mr. Walker. Thereafter, the non-bankruptcy defendants filed answers to the plaintiffs' claims, and REO filed notice that the action was being removed to the federal bankruptcy court. Because of the removal, on May 17, 2016, the trial court stayed all proceedings in this action.

On January 11, 2018, the plaintiffs filed a motion seeking to dissolve the stay. The plaintiffs reported that while the action was pending in bankruptcy court, they had settled their claims against Mr. Walker, Mr. Johnson, and REO. The plaintiffs stated that their remaining claims had been severed and remanded to the trial court, and they attached an order from the federal bankruptcy court evincing such. Therefore, on February 7, 2018, the trial court entered an order dissolving the stay and reopening the matter for proceedings concerning the remaining claims and defendants, who were determined to be Julie Coone, Nationwide, and Merdan Ibrahim.

On March 29, 2018, the plaintiffs filed a fourth amended class action complaint. Nationwide subsequently filed a motion to dismiss while Ms. Coone and Mr. Ibrahim filed a joint motion to dismiss. The trial court entered an order denying the respective motions to dismiss on July 6, 2018.

On August 31, 2018, the plaintiffs filed a motion seeking to add Carl Chambers as a party plaintiff and to add Charles E. Walker and Jon Paul Johnson as defendants. The plaintiffs alleged that Mr. Chambers was the grandson and lawful heir of a real property owner whose land was fraudulently obtained by Mr. Walker and REO. The plaintiffs attached a revised fourth amended...