Kultura, Inc. v. Southern Leasing Corp.
| Court | Supreme Court of Tennessee |
| Writing for the Court | REID; ANDERSON |
| Citation | 29 UCCRep.Serv.2d 1046,923 S.W.2d 536 |
| Decision Date | 25 March 1996 |
| Parties | 29 UCC Rep.Serv.2d 1046 KULTURA, INC., Plaintiff-Appellant, v. SOUTHERN LEASING CORPORATION, Defendant-Appellee. |
Page 536
v.
SOUTHERN LEASING CORPORATION, Defendant-Appellee.
at Knoxville.
Douglas L. Dutton, Hodges, Doughty and Carson, Knoxville, for Plaintiff-Appellant.
Frederick L. Conrad, Jr. and Andrew L. Colocotronis, Ambrose, Wilson, Grimm and Durand, Knoxville, for Defendant-Appellee.
REID, Justice.
This case presents for decision the liability of a "UCC-1" filer who fails to timely file a termination statement. The plaintiff, Kultura, Inc., asserts that pursuant to Tenn.Code Ann. § 47-9-404(1) (1992), it is entitled to damages for the loss of the sale of its business and attorney's fees, and the statutory penalty of $100.00, as the result of the defendant's, Southern Leasing Corporation's, failure to file a termination statement under Tennessee's Uniform Commercial Code. The trial court found that Southern Leasing had failed to file the termination statement as required by Section 47-9-404(1) but limited Kultura's damages to the $100.00 statutory penalty. The Court of Appeals held that because the financing statement covered a lease, rather than a security agreement, Section 47-9-404(1) was not applicable and dismissed Kultura's suit. This Court concludes that the decision of the Court of Appeals must be reversed and the judgment of the trial court affirmed.
I.
Kultura owned and operated several frozen yogurt shops, known as "Zack's Famous Frozen Yogurt." In 1987, Kultura entered into certain agreements with Southern Leasing regarding restaurant equipment which it used in its shops. This case involves a lease agreement dated August 7, 1987, concerning equipment located in Kultura's business at the Hamilton Place Mall in Chattanooga. The parties also agreed that Kultura could purchase the equipment for the additional payment of 10 percent of the original cost price. On September 14, 1987, Southern Leasing filed a financing statement in the Tennessee Secretary of State's Office covering that equipment pursuant to Tenn.Code Ann. § 47-9-408 (1992). The UCC-1 stated on its face "True Lease--No security interest."
Kultura completed the lease payments and, on December 20, 1991, purchased the equipment for the agreed amount of $3,670.18.
In early 1992, Kultura began discussing the sale of the Hamilton Place business to Jay Wiston. The parties tentatively agreed upon a purchase price of $70,000.00 for the equipment and Kultura's premises lease. The terms of the agreement required that Kultura deliver clear title to the equipment at the closing. When a title search disclosed the financing statement on the equipment, Wiston refused to execute the purchase agreement until the property was cleared of the incumbrance.
On April 1, 1992, Kultura's attorney sent a letter to Southern Leasing advising that Kultura was selling the property and requesting that it release two financing statements, including the financing statement covering the equipment which is the subject of this suit. The attorneys for the parties discussed by telephone on April 14, 1992, Kultura's request that the financing statement be released. By letter dated May 1, 1992, to Southern Leasing's attorney, Kultura's attorney emphasized the urgent need for a termination statement for the Hamilton Place equipment and demanded compliance with the provisions of Section 47-9-404(1). On May 19, 1992, Kultura's attorney sent a third letter advising Southern Leasing's attorney of the prospective sale. The letter included the following:
Please be advised that if we do not receive the termination statement immediately, my client will be in danger of losing this sale. In addition to the statutory penalty as set out in T.C.A. § 47-9-404, we will also hold your client responsible for any losses sustained if my client's sale falls through. We are unaware of any justification for your client's continued refusal to execute and deliver the required termination statement.
Page 538
On June 4, 1992, Kultura filed a complaint for declaratory judgment and damages. On August 19, 1992, before the suit had proceeded further, Southern Leasing, without notifying Kultura, mailed a termination statement to the Secretary of State's office. On September 11, 1992, Kultura received a copy of a termination statement which had been filed on August 25, 1992. Kultura promptly notified Wiston that the financing statement had been terminated and that it was ready to consummate the sale, but Wiston responded that he was no longer interested in buying the Hamilton Place business.
By order entered October 5, 1992, the trial court found that because Southern Leasing had filed the termination statement, the only issue remaining was Kultura's claim for damages. At the initial hearing on damages, the trial court ruled that not only had Southern Leasing violated Section 47-9-404(1), but it also was guilty of tortious interference with a prospective contractual relationship. The trial court first held that Kultura had sustained damages in the amount of $45,000.00 due to the loss of sale. However, the court, not being satisfied with the assessment of damages, allowed the parties to present additional proof on that issue. On the subsequent hearing, the court concluded that Kultura had failed to prove any...
To continue reading
Request your trial
-
BellSouth Telecommunications, Inc. v. Greer
...beyond its intended scope. Perry v. Sentry Ins. Co., Page 673 938 S.W.2d 404, 406 (Tenn.1996); Kultura, Inc. v. Southern Leasing Corp., 923 S.W.2d 536, 539 (Tenn.1996). At the same time, courts must avoid inquiring into the reasonableness of the statute or substituting their own policy judg......
-
Roberts v. Sanders, M1998-00957-COA-R3-CV
...litigant's lawyer. State v. Brown & Williamson Tobacco Corp., 18 S.W.3d 186, 194 (Tenn. 2000); Kultura, Inc. v. Southern Leasing Corp., 923 S.W.2d 536, 540 (Tenn. 1996); Brooks v. Lambert, 15 S.W.3d 482, 485 (Tenn. Ct. App. 1999). Viewed from a lawyer's perspective, the American Rule requir......
-
Lingham Rawlings, LLC v. Gaudiano (In re Lingham Rawlings, LLC), Case No. 10-32769
...specifically or expressly provide for attorney fees, the recovery of fees is not authorized. See, e.g., Kultra, Inc. v. S. Leasing Corp., 923 S.W.2d 536, 540 (Tenn. 1996) (holding that the term "any loss" does not include an award for attorney fees).Cracker Barrel Old Country Store, Inc. v.......
-
Realty Shop, Inc. v. RR Westminster Holding
...S.W.2d 759, 761 (Tenn.1998); Perry v. Sentry Ins. Co., 938 S.W.2d 404, 406 (Tenn.1996); Kultura v. 7 S.W.3d 602 Southern Leasing Corp., 923 S.W.2d 536, 539 The search for a statute's purpose begins with the words of the statute itself. See Neff v. Cherokee Ins. Co., 704 S.W.2d 1, 3 (Tenn.19......
-
BellSouth Telecommunications, Inc. v. Greer
...beyond its intended scope. Perry v. Sentry Ins. Co., Page 673 938 S.W.2d 404, 406 (Tenn.1996); Kultura, Inc. v. Southern Leasing Corp., 923 S.W.2d 536, 539 (Tenn.1996). At the same time, courts must avoid inquiring into the reasonableness of the statute or substituting their own policy judg......
-
Roberts v. Sanders, M1998-00957-COA-R3-CV
...litigant's lawyer. State v. Brown & Williamson Tobacco Corp., 18 S.W.3d 186, 194 (Tenn. 2000); Kultura, Inc. v. Southern Leasing Corp., 923 S.W.2d 536, 540 (Tenn. 1996); Brooks v. Lambert, 15 S.W.3d 482, 485 (Tenn. Ct. App. 1999). Viewed from a lawyer's perspective, the American Rule requir......
-
Lingham Rawlings, LLC v. Gaudiano (In re Lingham Rawlings, LLC), Case No. 10-32769
...specifically or expressly provide for attorney fees, the recovery of fees is not authorized. See, e.g., Kultra, Inc. v. S. Leasing Corp., 923 S.W.2d 536, 540 (Tenn. 1996) (holding that the term "any loss" does not include an award for attorney fees).Cracker Barrel Old Country Store, Inc. v.......
-
Realty Shop, Inc. v. RR Westminster Holding
...S.W.2d 759, 761 (Tenn.1998); Perry v. Sentry Ins. Co., 938 S.W.2d 404, 406 (Tenn.1996); Kultura v. 7 S.W.3d 602 Southern Leasing Corp., 923 S.W.2d 536, 539 The search for a statute's purpose begins with the words of the statute itself. See Neff v. Cherokee Ins. Co., 704 S.W.2d 1, 3 (Tenn.19......