Strauss v. Wyatt, Tarrant, Combs, Gilbert & Milom

• Citation: 911 S.W.2d 727
• Parties: Leon STRAUSS, Charlotte Strauss, and Leon's Murfreesboro Road, Inc., Plaintiffs/Appellants, v. WYATT, TARRANT, COMBS, GILBERT & MILOM, et al., Defendants/Appellees.
• Decision Date: 30 June 1995
• Court: Court of Appeals of Tennessee

Page 727

911 S.W.2d 727

Leon STRAUSS, Charlotte Strauss, and Leon's Murfreesboro

Road, Inc., Plaintiffs/Appellants, v. WYATT, TARRANT, COMBS, GILBERT & MILOM, et al., Defendants/Appellees.

Court of Appeals of Tennessee,

Middle Section.

June 30, 1995.

Rehearing Denied Aug. 4, 1995.

Permission to Appeal Denied by

Supreme Court Nov. 27, 1995.

Richard Militana, Lewisburg, for plaintiffs/appellants.

John P. Branham, Donald Capparella, Branham R. Day, P.C., Nashville, for defendants/appellees.

OPINION

CANTRELL, Judge.

In this action for attorney malpractice the Chancery Court of Davidson County granted summary judgment to the defendants. We affirm on the ground that the advice of the defendants was not the proximate cause of the damages claimed by the plaintiffs.

I.

In 1990, the plaintiffs, Leon and Charlotte Strauss, were approached by a real estate broker with a proposal to sell them a one-half interest in a commercial building in Nashville. The property was leased to a seafood restaurant for $8,250 per month, with the lessee paying the taxes, utilities, insurance and maintenance. The investment proposal projected a yearly return to the plaintiffs of fifteen percent on an investment of $220,000.

The title to the property, subject to a first and second mortgage, was held by Murfreesboro Road Partners, a joint venture of Wayne B. Glasgow and George Holder, Jr. Mr. Glasgow offered to guarantee the payments to the plaintiffs and agreed to repurchase their interest at the end of five or ten years for the amount of their initial investment.

Mr. and Mrs. Strauss consulted Ralph Levy, Jr. and Parker Duncan, members of the law firm of Wyatt, Tarrant, Combs, Gilbert & Milom. The defendants advised Mr. and Mrs. Strauss that purchasing an interest in the property directly might activate a "due on sale" clause in each of the mortgages and that the fifteen percent return on a loan would violate the state usury laws. Instead, the lawyers advised the Strausses to form a corporation and buy an interest in Murfreesboro Road Partners, the entity that held the title to the building. Mr. Glasgow represented to the lawyers that Mr. Holder's interest in Murfreesboro Road Partners had been acquired by M.G. Investments, Inc. (MGI), a corporation in which Mr. Glasgow was the principal officer. A notarized acquisition agreement containing Mr. Holder's signature memorialized the transfer.

Mr. and Mrs. Strauss followed the defendants' advice and formed Leon's Murfreesboro Road, Inc. (Leon's) which then purchased from MGI the interest formerly held by Mr. Holder. Wayne Glasgow signed the acquisition agreement as president of MGI. He also personally guaranteed monthly payments of $2,750 to Mr. and Mrs. Strauss.

Leon's initial acquisition was signed on December 3, 1990. On June 6, 1991 Leon's acquired an additional thirty-five percent interest in Murfreesboro Road Partners from Mr. Glasgow. At that time Mr. and Mrs. Strauss described their investment as "performing very well." For a total investment of $370,000 Leon's was receiving $4,625 per month, and the payments were personally guaranteed by Mr. Glasgow.

Leon's received the monthly payments through November of 1991 when Mr. Glasgow stopped making the monthly payments to Leon's and also stopped paying the mortgages on the property. George Holder, Jr. and Murfreesboro Road Partners filed for bankruptcy, and Mr. Holder's trustee in bankruptcy contended that the document transferring Mr. Holder's interest in Murfreesboro Road Partners to MGI was a forgery. Mr. and Mrs. Strauss then agreed to purchase the building through the bankruptcy court for $590,000,...