Moman v. Walden, 86-104-II
| Decision Date | 06 August 1986 |
| Docket Number | No. 86-104-II,86-104-II |
| Citation | 719 S.W.2d 531 |
| Parties | Lincoln W. MOMAN, Plaintiff-Appellant, v. Phil WALDEN, Defendant and Commerce Union Bank, Defendant-Third-Party Plaintiff-Appellee, v. TRIAD ENTERTAINMENT CORPORATION, Peggy Walden, Third-Party Defendants, and Toni Wine Moman, Third-Party Defendant-Appellant. |
| Court | Tennessee Court of Appeals |
Scott F. Siman, Benson & Siman, Nashville, for plaintiff-appellant Lincoln W. Moman and third-party defendant-appellant Toni Wine Moman.
Cyrus L. Booker, Dearborn & Ewing, Nashville, for defendant-appellee Commerce Union Bank.
Plaintiff Lincoln W. Moman filed his complaint against defendant, Commerce Union Bank (Bank), and sought to set aside a "Suretyship Agreement" he and his wife, third-party defendant Toni Wine Moman (Mrs. Moman), had signed guaranteeing $150,000 of a $300,000 debt of Triad Entertainment Corporation (Triad).
Both Momans alleged they signed the "Suretyship Agreement" under economic duress. Moman also sued Phil Walden, a co-owner of the corporation, who had, along with Walden's wife, signed a separate "Suretyship Agreement." Moman sought contribution and indemnity from Walden.
The Bank, in addition to filing its answer, filed a third-party complaint against Triad, Mrs. Moman and Mrs. Walden, and a counterclaim against Moman seeking to enforce the "Suretyship Agreement."
Subsequent to the filing of answers by the defendants, the Bank filed its motion for summary judgment against the Momans.
The only issue before the Chancellor in his consideration of the motion for summary judgment was whether the Bank exercised economic duress in obtaining the Momans' signatures on the "Suretyship Agreement," dated April 19, 1984, guaranteeing $150,000 of Triad's corporate debt.
Tennessee Rule of Civil Procedure 56.03 provides, in pertinent part, as follows:
The judgment sought shall be rendered forthwith 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.
Under Rule 56.03, upon motion, summary judgment shall be entered against a party who failed to make a showing sufficient to establish the existence of an essential element to that party's case and on which the party will bear the burden of proof at trial. If the non-moving party fails to establish the existence of an essential element, there can be no genuine issue as to any material fact since a complete failure of proof concerning an essential element of the non-moving party's case necessarily renders all other facts immaterial. Celotex Corp. v. Catrett, --- U.S. ----, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986).
The Momans admit the execution of the "Suretyship Agreement" but allege that it was executed under economic duress and therefore void. The burden of showing economic duress is on the Momans. If they are unable to show that economic duress was used to obtain the "Suretyship Agreement," then summary judgment is appropriate.
Following our review of the record, we concur with the Chancellor in his finding that the Momans failed to establish that the Bank used economic duress.
The pertinent facts are as follows:
On March 15, 1984, Moman, Phil Walden, and William (Buddy) Killen formed Triad Entertainment Corporation to produce phonograph records.
Prior to March 21, 1984, Buddy Killen, who was a member of Commerce Union's Trust Board, 1 contacted Mrs. Nancy Breeding Chastain, who was at the time employed by the Bank as an account officer and manager of the entertainment industry division, and made a loan request for a $300,000 line of credit for Triad. Killen informed Mrs. Chastain that all three corporate principals and their wives would jointly and severally guarantee the corporate debt.
Killen informed Mrs. Chastain that a party would be held at Hillwood Country Club in Nashville on March 21, 1984, for the purpose of announcing the formation of Triad. He asked Mrs. Chastain to prepare the loan documents and be at the party so they could be signed since all the principals and wives would be together. Killen knew that the loan had not been approved by the Bank's loan committee and that the signing would be with the understanding that "it was not approved."
At the announcement party, Mrs. Chastain presented the note and Suretyship Agreements. Each Suretyship Agreement provided for a guaranty of $300,000.
When the documents were submitted to the principals for signature, Moman objected to signing a guaranty for more than $100,000. Killen then asked Mrs. Chastain if the Suretyship Agreements could be changed from $300,000 to $100,000. Mrs. Chastain informed Killen that that was not what they had discussed and that she would not have authority to make that kind of decision. Killen then stated: "Let's go ahead and make the changes, and we will continue with it and see what the approval process does indicate."
All of Mrs. Chastain's discussions regarding the loan were with Killen, although she does think the other two principals and their spouses were present when the conversation about the change in the Suretyship Agreements took place.
When Mrs. Chastain returned to the Bank, "internal discussions" were had about the best way to present the loan to the Bank's loan committee.
After these discussions, it was decided that the loan could not be presented to the loan committee for approval with a "$100,000 guaranty by each principal." Mrs. Chastain "conveyed to Buddy we could not handle [the loan] on those terms."
The loan was presented to the loan committee on the basis that each of the principals would guarantee $150,000 of the loan.
Mrs. Chastain was transferred to Commerce Union's Chattanooga Bank and, on or about April 9, 1984, James Kellam, III, a Vice-President of Commerce Union, took over the "entertainment industry group" of the Bank and began dealing with Killen in regard to the Triad loan.
The Bank approved the loan provided each of the principals would sign a "Suretyship Agreement" guaranteeing $150,000 of Triad's $300,000 line...
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