Ingram v. Sohr

• Decision Date: 31 July 2013
• Docket Number: No. M2012-00782-COA-R3-CV,M2012-00782-COA-R3-CV
• Parties: H. PRESTON INGRAM ET AL. v. SCOTT T. SOHR, INDIVIDUALLY AND AS TRUSTEE OF THE SCOTT T. SOHR FAMILY 2007 GRANTOR RETAINED ANNUITY TRUST ET AL.
• Court: Court of Appeals of Tennessee

H. PRESTON INGRAM ET AL.
v.
SCOTT T. SOHR, INDIVIDUALLY
AND AS TRUSTEE OF THE SCOTT T. SOHR
FAMILY 2007 GRANTOR RETAINED ANNUITY TRUST ET AL.

No. M2012-00782-COA-R3-CV

COURT OF APPEALS OF TENNESSEE AT NASHVILLE

June 4, 2013 Session
Filed July 31, 2013

Appeal from the Chancery Court for Davidson County No. 10725-II Carol L. McCoy, Chancellor

This complex litigation arises out of a series of disputes between two former partners and members in more than twenty partnerships and limited liability companies that were in the business of real estate development. Following a tumultuous six year business relationship, in an attempt to extricate themselves from their business relationships, the parties executed a Membership Interest and Exchange Agreement, which distributed the entities so a portion were solely owned by one former partner/member and the others were solely owned by the other former partner/member. After closing on the Exchange Agreement, the plaintiff commenced this action against his former business partner alleging fraud, violation of the Tennessee Consumer Protection Act, breach of contract, breach of fiduciary duty, and fraudulent transfer of which most, but not all, of the claims arose from the Exchange Agreement. The complaint was later amended to add additional claims. The defendant filed a Counter-Claim alleging that the plaintiff was also in breach of the Exchange Agreement. The trial court dismissed several of the plaintiff's claims on summary judgment. The remaining issues were tried. At the close of the plaintiff's proof during the jury trial, the trial court granted a directed verdict in favor of the defendant on some, but not all, of the remaining claims. At the conclusion of the jury trial, the jury entered a verdict for the defendant on the remaining claims. Although the jury found the defendant in breach of three provisions of the Exchange Agreement and a partnership agreement of a jointly owned company, the jury awarded no damages based upon the plaintiff's prior knowledge and acquiescence of the breaches. Thereafter, each party sought to recover their respective attorney's fees pursuant to § 11(l) of the Exchange Agreement. The trial court held that defendant was the prevailing party; therefore, the trial court granted the defendant's motion to recover his attorney's fees pursuant to § 11(l) of the Exchange Agreement and awarded attorney's fees and costs to the defendant. The trial court also awarded the defendant indemnity under the bylaws of one corporation and the partnership agreement of another. The trial court also assessed discretionary costs against the plaintiff. On appeal, the plaintiff raises

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numerous issues relating to the dismissal of his claims on summary judgment and directed verdict, the instructions given to the jury, the trial court's ruling on a post-trial motion to amend the defendant's answer, attorney's fees and costs, and indemnity. We affirm the trial court's rulings on summary judgment and directed verdict in all respects. We affirm the trial court's ruling on attorney's fees and costs under the Exchange Agreement, holding that as the trial court correctly determined the defendant was the prevailing party for those purposes. We also affirm the trial court's determinations that the defendant was entitled to indemnification under the provisions of the Partnership Agreement and indemnification under the bylaws of IS Investment, Inc.

Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Chancery Court Affirmed and Remanded

FRANK G. CLEMENT, JR., J., delivered the opinion of the Court, in which ANDY D. BENNETT and RICHARD H. DINKINS, J.J., joined.

Eugene N. Bulso, Jr. and Steven A. Nieters, Nashville, Tennessee, for the appellants, H. Preston Ingram and IS Investment, Inc.

W. Scott Sims and Jason W. Callen, Nashville, Tennessee, for the appellees, Scott Sohr and SIS Development, LLC.

OPINION

H. Preston Ingram, the plaintiff, was introduced to Scott Sohr, the defendant, by a mutual business acquaintance in the early 1990's. Thereafter, the parties purchased and developed several parcels of real estate together. In 2003, the parties entered into their first partnership, Stonegate Land Company, that gave rise to this action. Following the formation of Stonegate, the parties created several other jointly owned business entities as they acquired real estate for development. Their general practice was that when a property was acquired, they formed a new entity, usually an LLC, to hold title to the property. By the end of the partnership, the parties jointly owned more than twenty entities that held title to more than twenty-five parcels of real estate. One of these entities was IS Investment, Inc., which is also a plaintiff in this action. IS Investment held a $20 million line of credit that the parties used to purchase other property. IS Investment, which also paid the expenses for other Stonegate companies, was housed in a building owned by Sohr on Trousdale Drive, and Sohr was responsible for the day to day management of the corporation. Another entity at issue was Prescott Land Investments, a general partnership owned by Ingram and Sohr.

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The business relationship between Sohr and Ingram was terminated upon the closing of a Membership Interest Exchange Agreement ("Exchange Agreement") on July 8, 2009.¹ In the Agreement, the business entities jointly owned by Sohr and Ingram were transferred so that each party became the sole owner of specific entities.²

On April 28, 2010, following the closing of the Exchange Agreement, Ingram and IS Investment, Inc., commenced this action against Sohr, individually, and as Trustee of the Scott T. Sohr Family 2007 Grantor Retained Annuity Trust ("GRAT") asserting claims of fraud, violation of the Tennessee Consumer Protection Act, breach of contract, breach of fiduciary duty, and fraudulent transfer.³ Thereafter, Ingram filed a First Amended Complaint adding an allegation that Sohr invalidated Ingram's title to a 2008 BMW Alpina; Ingram also sought a temporary injunction for the return of the title to the BMW from Sohr.⁴ Sohr filed an Answer to the First Amended Complaint on June 28, 2010.

In January 2011, the trial court granted leave for Ingram to file a Second Amended Complaint wherein Ingram asserted additional claims of breach and sought a declaratory judgment on several issues. Sohr then filed a Counter-Claim seeking $21,710.908, for Ingram's alleged breach based upon the same legal argument as a breach alleged by Ingram. On March 28, 2011, Sohr filed a Third Party Complaint against Prescott Land Investments.

On October 15, 2010, Sohr filed his First Motion for Summary Judgment seeking summary dismissal of the claims against him. Following a hearing, the trial court granted the motion in part and denied the motion in part. The trial court summarily dismissed the following claims against Sohr: Fraud (Count I); violation of the Tennessee Consumer Protection Act (Count II);⁵ any breach of fiduciary duty or fraud claims related to the Gladstone purchases referenced in the First Amended Complaint; any breach of fiduciary duty or fraud claims related to the Riverwatch purchase referenced in the First Amended Complaint; any breach of fiduciary duty or fraud claims related to the monetary distributions

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to Ingram & Sohr by IS Investment made in the First Amended Complaint; and any breach of fiduciary duty or fraud claims related to the monetary distributions made to Ingram and Sohr by SIS Development referenced in the First Amended Complaint. The trial court denied Sohr's motion for partial summary judgment on numerous other claims, announcing its reasoning for the grant or denial of summary judgment from the bench. The trial court's basis for dismissal of the fraud claim, which was based upon the alleged failure to disclose an appraisal by Thomas Fuller regarding one of the properties, was that there was no failure to disclose as Ingram and his agents were fully aware of the appraisal. Notably, while the trial court dismissed the majority of the fraud claims, the breach of contract claims relating to the same pieces of property, such as the Riverwatch property, survived.

Following the trial court's ruling, Sohr filed a motion to reconsider the trial court's summary judgment ruling, inter alia, the trial court's decision to not dismiss Ingram's claims that Sohr's transfer of assets to the GRAT constituted a fraudulent transfer. On May 3, 2011, the trial court granted the motion and entered an order dismissing the claim finding no genuine issue of material fact existed and the evidence established that Sohr received the reasonably equivalent value in the transfer at issue.

Ingram filed a Motion for Partial Summary Judgment on March 25, 2011, and thereafter, Sohr filed a Second Motion for Partial Summary Judgment. The motion by Sohr sought dismissal of the claims that: Sohr breached an implied agreement to leave the Atkins Note and Woodmont Receivable out of the Exchange Agreement, that Sohr breached § 7(l) of the Exchange Agreement, that Sohr breached the express warranty in § 7(n) of the Exchange Agreement, and that Sohr violated the Tennessee Securities Act of 1980 in connection with the Exchange Agreement transaction. Following a hearing, the trial court denied Ingram's motion in all respects and granted Sohr's motion in all respects. The trial court announced its reasoning for its grant of summary...