Foster Business Park, LLC. v. Mark Winfree

IN THE COURT OF APPEALS OF TENNESSEE

AT NASHVILLE

September 11, 2008 Session

FOSTER BUSINESS PARK, LLC., ET AL. v. MARK WINFREE, ET AL.

Appeal from the Chancery Court for Davidson County

No. 04-319-I Claudia Bonnyman, Chancellor

No. M2006-02340-COA-R3-CV - Filed January 15, 2009

Maker and guarantors of promissory note brought action against various parties including the

maker’s former loan officer, the former holder of the note, and the current holder of the note,

alleging that defendants breached their fiduciary duty to the maker, tortiously interfered with the

maker’s negotiations to pay off the note at a discount and violated the Tennessee Consumer

Protection Act. The Chancery Court for Davidson County granted defendants’ summary judgment.

Maker and guarantors appealed. Finding no error, we affirm.

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

RICHARD H. DINKINS, J., delivered the opinion of the court, in which FRANK G. CLEMENT , JR., J.,

and ROBERT W. WEDEMEYER , SP .J., joined.

Barry L. Gardner and Charles G. Blackard, III, Brentwood, Tennessee, for the appellant, Foster

Business Park, Arte’ Corp., Tarun Surti and Lata Surti.

Sam J. McAllester, III and William J. Haynes, III, Nashville, Tennessee, for the appellee, Billy Lowe

and J&B Investments, LLC.

Daniel W. Small and Paul Allen England, Nashville, Tennessee, for the appellee, Mark Winfree and

American Holdings Investments, Inc.

OPINION

I. Procedural History and Facts

A.

The Plaintiffs, debtor under a promissory note and guarantors of the promissory note, filed

the present action on January 30, 2004, against Mark Winfree, the Plaintiffs’ former loan officer,

American Holdings Investments, Inc. (“AHI”), a purchaser of the note, J&B Investments, LLC

(“J&B Investments”), holder of the note, and J&B Investments’ principal owners Billy Lowe and

Jerry Swords1 alleging breach of fiduciary duty and civil conspiracy to breach the fiduciary duty,

intentional interference with a business relationship and civil conspiracy to interfere with a business

relationship, and violation of the Tennessee Consumer Protection Act (“TCPA”) and civil conspiracy

to violate the TCPA in Davidson County Chancery Court. There were two other financial

institutions – The Bank of Nashville (“TBON”) and First State Bank (“First State”) – involved in

the underlying transactions, but neither were made parties to this litigation.2

On November 24, 2004, Mr. Winfree and AHI filed a Motion for Partial Dismissal pursuant

to Tenn. R. Civ. P. 12.02(6) of the claims of breach of fiduciary duty, civil conspiracy to breach the

fiduciary duty, and violation of the TCPA. On January 5, 2005, the trial court dismissed the claims

against AHI for breach of fiduciary duty and violation of the TCPA. The trial court also partially

dismissed the breach of fiduciary duty claim against Mr. Winfree with respect to “actions he carried

out by or on behalf of a financial institution and/or in the scope and course of his duties as an officer

or employee of a financial institution, including the [sic] Bank of Nashville and/or First State Bank.”3

Following discovery Mr. Winfree and AHI filed a Motion for Summary Judgment. After a

hearing, the trial court partially granted the motion by dismissing the remaining breach of fiduciary

duty claim against Mr. Winfree, finding that Mr. Winfree was not a fiduciary with respect to any of

the plaintiffs; the trial court took the remainder of the motion under advisement. On July 17, 2006,

the trial court granted the remainder of Mr. Winfree and AHI’s Motion for Summary Judgment

finding no genuine issue of material fact and concluding that neither Mr. Winfree nor AHI were the

cause of Foster’s or Mr. Surti’s damages under the two remaining claims – intentional interference

with a business relationship and violation of TCPA. On July 27 and 28, 2006, Mr. Lowe and J&B

Investments filed Motion to Alter or Amend the court’s Memorandum and Order of Dismissal to

include Mr. Lowe and J&B Investments in the dismissal and Motion for Summary Judgment,

1

Jerry Swords filed a Motion to Dismiss pursuant to Tenn. R. Civ. P. 12.02(6) on M arch 24, 2004, but before

the motion was heard Mr. Surti filed a Notice of Non-Suit voluntarily dismissing Mr. Swords as a defendant. Mr. Surti

then filed a M otion to Amend on April 2, 2004, in order to file an Amended Complaint containing additional factual

allegations against Mr. Swords. On April 22, 2004, the trial court entered an order which granted Mr. Surti’s voluntary

non-suit as to M r. Swords.

2

The Plaintiffs filed a Second Motion to Amend on February 1, 2005, which would have amended the

complaint by adding TBON as an additional party, adding the claim of usury against J& B Investments and a claim of

misrepresentation against Mr. W infrey. The Defendants filed Responses opposing the Plaintiffs’ Second Motion to

Amend; the record does not reflect an order disposing of Plaintiffs’ motion. There was previous litigation in which

Foster Business Park filed suit against J&B Investments and TBON claiming J&B Investments and TBON had charged

and were attempting to collect a usurious rate of interest. That case was dismissed by the trial court pursuant to Tenn.

R. Civ. P. 12.02(6), which was subsequently affirmed by this Court. See Foster Business Park, LLC v. J&B Investments,

LLC, 2008 W L 269509, ___ S.W.3d ___ (Tenn. Ct. App. Jan. 30, 2008).

3

The trial court dismissed the breach of fiduciary duty claim to the extent that the claim was based on M r.

W infree as Mr. Surti’s and Foster’s banker. Tenn. Code Ann. § 45-1-127 provides that bank officers are not fiduciaries

of their bank clients absent a specific agreement creating such a relationship. There was no specific agreement between

the Plaintiffs, Mr. Surti or Foster Business Park, and Mr. W infree in this regard.

-2-

respectively. On October 9, 2006, the trial court entered Agreed Order of Dismissal, which

dismissed the action with regard to all Defendants.

The issues on appeal are whether the trial court erred by partially dismissing the Plaintiffs’

claim of breach of fiduciary duty pursuant to Tenn. R. Civ. P. 12.02(6) and whether the trial court

erred by granting summary judgment to Defendants with respect to the remaining claims.4

B.

The individual parties in this case, Tarun Surti, Mark Winfree and Billy Lowe, have been

acquaintances since the early 1990s when Mr. Surti began his first business. At the time, Mr.

Winfree worked for the State of Tennessee development office and Mr. Lowe worked for a small

business development non-profit agency. Mr. Winfree and Mr. Lowe offered Mr. Surti advice in

starting a new business including helping him prepare a business plan and seek financing. Mr. Surti

alleges that the three were close friends, that they traveled extensively with one another as they

sought potential lenders for Mr. Surti’s business, and that Mr. Winfree was his “mentor.” Mr. Surti

believed that he had developed a special relationship of trust with Mr. Winfree and Mr. Lowe

because he felt comfortable sharing his personal and business information with them. Mr. Winfree

and Mr. Lowe, however, contend that they never had more than a typical business relationship with

Mr. Surti.

In 1997, Mr. Surti approached Mr. Winfree, who had since joined TBON as a loan officer,

about obtaining a $1.5 million loan for Foster Business Park LLC (“Foster”), a company principally

owned and managed by Mr. Surti, to purchase property located at 1111 Foster Avenue, Nashville,

Tennessee (“Foster Property”). TBON approved the loan and Mr. Surti signed a Construction and

Term Loan Agreement (“Loan Agreement”) with TBON on behalf of Foster. Foster executed a

Promissory Note (“the Note”) in a principal amount not to exceed $1.5 million (collectively, “Foster

Loan”), which was secured by a Deed of Trust on the Foster Property, a Security Agreement, an

Assignment of Rents and Leases, a Fixture Filing, and a Guaranty Agreement signed by Mr. Surti,

Lata Surti (Mr. Surti’s wife), and Arte Corporation (“Arte’”), a company owned by Mr. Surti and

Foster’s sole tenant at the Foster Property (collectively, “Guarantors”). Mr. Surti testified in his

deposition that he understood that when TBON made the Foster Loan that Mr. Winfree was working

for TBON and representing the bank’s interests.

In 2000, Arte’s business began to decline and on March 23, 2000, Foster executed a Change

in Terms Agreement with TBON through Mr. Winfree, the loan officer for the initial transaction.

The agreement reduced the principal of the Note to $1.4 million and changed the repayment

schedule. The Foster Loan was set to mature and become due and fully payable on December 20,

4

In asserting error by the trial court on appeal, Plaintiffs do not distinguish between the Tenn. R. Civ. P.

12.02(6) partial dismissal of the breach of fiduciary duty claim as it related to Tenn. Code Ann. § 45-1-127 and the

Summary Judgment dismissal of the remaining part of the breach of fiduciary duty claim against Mr. W infree. For the

purpose of clarity, we will review the Rule 12 dismissal separately from the dismissal on Summary Judgment.

-3-

2002. Some time during 2002, Mr. Surti negotiated the sale of Arte’s assets after which Arte ceased

making rent payments to Foster.5 Foster did not find another tenant for the Foster Property and Mr.

Surti approached Mr. Winfree in August 2002, about renewing the Foster Loan for a five-year term

with a lower interest rate and interest-only payments in the first year. Mr. Surti contends that Mr.

Winfree agreed that TBON would refinance the Foster Loan before its maturity date and that he told

Mr. Surti that Foster need not make any more payments on the Foster Loan. Mr. Winfree denied

making either statement in his deposition. The language of the Note states that “neither the terms

of the Loan nor this Note may be modified, extended, changed, amended or terminated except in

writing” and nothing in the 2000 Change in Terms Agreement altered this provision. Foster failed

to pay the principal and interest due on September 20, 2002, and did not make any further payments

on the Foster Loan.

In December 2002, Mr. Winfree left TBON to join First State as senior vice-president in

charge of commercial lending. The Foster Loan was transferred to another TBON loan officer,

Orlandus Major. Mr. Surti testified in his deposition that Orlandus Major also told him that he did

not have to make any payments on the Foster Loan. Around the first of January 2003, TBON

transferred the Foster Loan to its special assets division responsible for servicing “seriously

delinquent accounts” and its special assets officer, Ellen Hackett, contacted Mr. Surti to propose a

forbearance agreement (“First Forbearance Agreement”) in order to prevent foreclosure. The

proposed forbearance agreement would allow Foster to make “interest only” payments for a period

of 6 months at 8.5%. Mr. Surti requested that TBON reduce the interest rate to 4.5%, which was

TBON’s prime rate at the time. Ms. Hackett told Mr. Surti that TBON could not agree to the

application of the prime rate and the negotiations on the First Forbearance Agreement ceased.

Following the breakdown of the First Forbearance Agreement negotiations, Mr. Surti met

with TBON President, Hunter Atkins, to discuss the delinquency status of the Foster Loan. Mr. Surti

told Mr. Atkins that he was having cash flow problems and was unable to service the debt. TBON

provided Mr. Surti with three names to contact regarding auctioning the property. Ms. Hackett wrote

in the January 31, 2003, Criticized Asset Report for the Foster Loan that Mr. Surti had agreed to

obtain proposals and enter an agreement to have the Foster Property auctioned. However, by the end

of January 2003, and after continued delays Ms. Hackett felt that Mr. Surti was misleading her about

his intentions to auction the property and was merely stalling; therefore, on January 31, TBON sent

Foster a demand letter requiring full payment of the Foster Loan by February 10 or it would initiate

foreclosure proceedings, which the bank tentatively set for March 15. Mr. Surti asserted in his

deposition and his Affidavit that he never intended to sell the Foster Property. He did, however,

apparently communicate with at least one auction company, Furrow Auction Company, in January

2003, because he received an appraisal letter that determined the fair market value of the Foster

5

Apparently Mr. Surti completed a transaction which sold the assets of Arte’ to a company in Mexico. In

August 2002, Mr. Surti told Mr. W infree that he was having trouble getting the payments from the sale of assets

transactions and apparently was involved in some litigation to resolve the dispute with the Mexican company. The record

does not indicate how or whether that dispute was resolved.

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Property was between $1.3 and $1.6 million and the liquidation value between $822,000 and $1

million.6

During the month of January 2003, and while Mr. Surti was engaged in the above described

communications with TBON, Mr. Surti pursued various other options to pay off the Foster Loan.

Mr. Surti hired a broker to help him find financing from various financial institutions, but he also

approached Mr. Winfree, now at First State, about whether First State could refinance the Foster

Loan. Mr. Surti told Mr. Winfree that the Foster Loan was in default, that he was still having cash

flow problems and that TBON had begun the process of foreclosure. He did not, however, provide

Mr. Winfree with any financial information about Foster or the Furrow Auction Company appraisal

of the Foster Property. Mr. Winfree advised Mr. Surti that First State could not provide financing

since Foster had no identifiable cash flow and that Mr. Surti’s best option was to sell the building.

Mr. Winfree suggested Mr. Surti connect with Mr. Lowe who often helped businesses find financing

through his business consultancy, Southern Business Group. Mr. Winfree told Mr. Lowe that Mr.

Surti might be able to use Mr. Lowe’s assistance and asked whether Mr. Lowe had time to take on

another client. Mr. Lowe indicated that he was interested.

Based on his conversation with Mr. Winfree, Mr. Lowe contacted Mr. Surti and the two met

at the Foster Property in early January 2003. Mr. Surti gave Mr. Lowe a tour of the facility and

described his situation. Mr. Surti told Mr. Lowe that Foster did not have a tenant for the building;

that Mr. Surti had some health issues; that Foster was past due in its payments and owed TBON

approximately $1.2 Million on the Foster Loan; and that Mr. Surti had thus far been unable to

refinance the Foster Loan. Mr. Lowe did not tell Mr. Winfree about what Mr. Surti told him nor did

he ask Mr. Winfree to confirm any of the information that Mr. Surti told him. Mr. Lowe did not

think Mr. Surti was likely to refinance the loan because Foster had no income, tenant or active

operation and was six months behind on its payments; Mr. Surti, however, contends that Mr. Lowe

told him that he felt “really strongly” that he could find financing. Mr. Surti and Mr. Lowe did not

have a written agreement, but Mr. Lowe told Mr. Surti that he would “look around and see if [he]

knew anybody that was interested in refinancing or acquiring [Mr. Surti’s] warehouse.” Mr. Lowe

also looked for a possible tenant for the Foster Property and talked with a couple that had a molding

business as well as to Mr. Swords about leasing space at the Foster Property. In a subsequent

meeting between Mr. Surti and Mr. Lowe during January 2003, Mr. Surti told Mr. Lowe that “he was

going to give the [Foster] property back to the bank, that he was - - he didn’t want to deal with it;”

Mr. Surti also told Mr. Lowe that he was considering auctioning the Foster Property or taking

bankruptcy action to delay foreclosure by TBON. Mr. Lowe advised Mr. Surti to get an attorney’s

advice before taking any action and to make sure that Foster got a release so that if TBON sold the

Foster Property for less than what Foster owed that they were not able to get a deficiency judgment

against Foster and/or Mr. Surti.

6

Mr. Surti did not share this valuation from Furrow Auction Company with TBON, Mr. W infree or Mr. Lowe.

However, TBON later received a copy of this appraisal report from its own appraiser, Pat McGuigan.

-5-

On February 6, 2003, Mr. Lowe chartered the company, Lowe & Associates, in order to have

an entity through which to purchase the Foster Property.7 Mr. Lowe asked Mr. Surti for a property

valuation and Mr. Surti faxed him the first two pages of a 1997 appraisal of the Foster Property

valuing the property at approximately $3.2 million. Mr. Surti did not provide Mr. Lowe with a copy

of the more recent Furrow Auction Company valuation. Based on research of comparable warehouse

sales prices and average per-foot prices in the area, Mr. Lowe valued the property somewhere

between $1.7 million and $2 million, but he also believed that the building needed several hundred

thousand dollars worth of repairs due to its poor condition – there were numerous leaks in the roof,

water on the floor, insufficient roof lights, no walls in the office area, exposed wiring, missing

ceiling tiles, water damage in some of the offices, carpet damage, and an inoperative elevator, among

other things. Mr. Surti disputes that the building was in “poor condition.” Some time during the

first week of February 2003, Lowe & Associates made an offer, contingent on obtaining financing,

to buy the building for “an amount sufficient to retire the Seller’s existing obligation to [TBON] and

to secure a complete unconditional release of indebtedness of the Seller and any personal guarantors

on said indebtedness but in no event shall the Purchase Price exceed $1.4 million.” On February 10,

Mr. Surti rejected the offer telling Mr. Lowe that he wanted a written agreement without

contingencies. Mr. Lowe then approached Mr. Winfree about securing financing from First State

in order to buy the Foster Property.

Around the same time, Mr. Surti telephoned Mr. Winfree and told him that “he had to get

out of the trap because [TBON] was about to take the building.” Mr. Winfree believed after talking

with both Mr. Lowe and Mr. Surti that they were close to a deal to sell the building and they both

told him that he could use the information that he already had to see if he could get First State to

approve the financing. Mr. Winfree then began working on a credit memorandum to submit to First

State for approval. When Mr. Surti told Mr. Winfree that “[TBON] was coming down strong on the

[N]ote and they weren’t going to back off,” Mr. Winfree thought that First State’s purchase of the

Note would stop the foreclosure and give Mr. Surti and Mr. Lowe time to get their deal done.

However, because of the Foster Loan’s delinquency status First State could not buy it without some

assurance that the collateral would be purchased by Mr. Lowe. Mr. Winfree testified in his

deposition that “the only way that I was even going to consider buying the [N]ote was if I had a

signed purchase agreement between [Mr. Surti] and [Mr. Lowe].”

In mid-February, Mr. Winfree contacted Ms. Hackett at TBON to see whether TBON was

willing to sell the Note. Ms. Hackett told Mr. Winfree that TBON was willing to sell the Note for

$1,271,971.99 (the unpaid principal balance). Mr. Winfree testified in his deposition that he did not

give this information to Mr. Lowe. On February 14, 2003, Ms. Hackett sent an email to Mr. Atkins

informing him that First State had approved the purchase of the Foster Loan, but that the purchase

was contingent on Mr. Surti’s acceptance of an “unidentified transaction,” i.e., the sale of the Foster

Property to Mr. Lowe. In anticipation of the sale of the Foster Loan to First State, Ms. Hackett sent

Mr. Winfree a confidentiality agreement, which, if signed, would permit TBON to provide First State

7

Lowe & Associates changed its name to J&B Investments, LLC, on April 15, 2003, after Mr. Jerry Swords

became a member of the enterprise.

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with confidential information about the Foster Loan. There is some dispute about whether Mr.

Winfree actually signed the confidentiality agreement, but regardless both Mr. Winfree and Ms.

Hackett testified that Ms. Hackett never provided Mr. Winfree with any of TBON’s information on

Foster or Mr. Surti or the fact that TBON was negotiating a forbearance agreement with Mr. Surti.8

Ms. Hackett testified that all discussions between Ms. Hackett and Mr. Winfree were “arm’s length,”

and that she never spoke to or had any contact with Mr. Lowe.

In anticipation that First State would be unable to purchase the Foster Loan from TBON

because of limits on buying substandard, non-performing, loans, Mr. Winfree talked with the

president of AHI, Eddie Cardin, about AHI purchasing the Foster Loan from TBON. AHI was at

the time a subsidiary of First State and was created to buy such loans.9 Mr. Carden expressed an

interest in AHI purchasing the Foster Loan, but took no action at that time.

Towards the end of February 2003, Mr. Surti’s broker put him in touch with Bruce Latimer,

a commercial loan officer in Mr. Winfree’s group at First State. Mr. Surti asked Mr. Latimer to

come to his home on February 26, where Mr. Surti gave Mr. Latimer his personal financial statement

and asked that it be kept confidential. Mr. Latimer did not know at the time that Mr. Winfree had

already told Mr. Surti that First State could not finance the Foster Loan pay off. Mr. Latimer told

Mr. Surti that he would need additional information on which to base a credit decision and two days

later Mr. Surti faxed him the first two pages of his 2001 personal tax return. After reviewing these

papers, Mr. Latimer advised Mr. Surti that First State could not help. Mr. Latimer told Mr. Winfree

about his meeting with Mr. Surti including statements Mr. Surti made that he might sue Mr. Winfree,

but Mr. Latimer did not share the financial statement or tax return Mr. Surti gave him with Mr.

Winfree. Mr. Winfree told Mr. Latimer that Mr. Latimer could do his own analysis of the situation

and that if Mr. Latimer felt that he could bring a proposal to the approval committee that Mr. Latimer

was free to do so, but that Mr. Winfree did not want to see the information or be involved in the

decision.

Some time during the last week of February, Mr. Surti sought to resume negotiations with

TBON and began discussing another forbearance agreement (“Second Forbearance Agreement”).

Mr. Surti offered $1 million to satisfy the Foster Loan and TBON countered with $1.2 million;

however, TBON later agreed after Pat McGuigan, TBON’s appraiser, provided Ms. Hackett with the

8

The Plaintiffs point to Mr. W infree’s alleged failure to sign the confidentiality agreement as evidence that he

disclosed confidential information about Mr. Surti and his companies, since, they suggest, otherwise he would have

agreed to sign the agreement. W e find no evidence upon which to draw such inferences. To the contrary, there is no

evidence in the record to suggest that Mr. W infree was given or otherwise obtained any confidential information about

the Foster Loan, Foster, or Mr. Surti when he left TBON. M r. Surti testified in his deposition that he did not give Mr.

W infree any confidential business information after Mr. W infree joined First State. Ms. Hackett testified in her

deposition that she did not give Mr. W infree any confidential information about the Foster Loan. The fact that Mr.

W infree did not sign the confidentiality agreement with TBON is more indicative that First State did not intend to buy

the Foster Loan from TBON.

9

According to Mr. W infree’s deposition testimony, AHI was merged into First State at some point after AHI

purchased the Foster Loan from TBON.

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appraisal letter that Mr. Surti had received from the Furrow Auction Company, which determined

that the liquidation value ranged from $822,000 to $1,096,000. The terms of the Second

Forbearance Agreement required Mr. Surti to make an initial, non-refundable deposit payment of

$200,000 by March 7 with the remaining $800,000 due by March 26.

On March 5, 2003, Ms. Hackett sent Mr. Surti an email with the wire transfer instructions

for the funds due under the agreement. On March 6, Mr. Surti’s and Foster’s attorney, Joe Rusnak,

sent TBON attorney, Charles Reasor, III, an email stating that Mr. Surti objected to certain language

in paragraph 9 of the Second Forbearance Agreement relating to how the payoff would be reported

to credit reporting agencies. Mr. Surti wanted the following language, “at the request of the

Borrower, the Lender agrees to promptly notify all credit reporting agencies that the Indebtedness

has been ‘settled in full’ and not charged off to bad debt.”10 Mr. Surti testified in his deposition that

he was not willing to sign the Second Forbearance Agreement without his proposed language. Ms.

Hackett testified in her deposition that TBON could not agree to Mr. Surti’s proposed language

because TBON was going to have to write off some of the Foster Loan as bad debt and TBON was

not willing to make a false statement to the credit reporting agencies.

On Friday March 7, Ms. Hackett waited in her office to receive notification that the wire

transfer had been received from Mr. Surti, but by the close of business Ms. Hackett had not heard

from either Mr. Surti or his attorney nor had she received the $200,000 deposit. Ms. Hackett

telephoned Mr. Reasor and told him that the forbearance negotiations with Mr. Surti were over and

that the bank should take whatever action it could to collect the debt. On the following Monday,

March 10, Mr. Reasor faxed a letter to Mr. Rusnak notifying him that the forbearance negotiations

were being terminated and that TBON intended to move forward with foreclosure. TBON

tentatively scheduled the foreclosure sale date for April 10, 2003. Ms. Hackett made note of these

events in her February 28 Criticized Asset Report.11

Mr. Surti contends that there was no March 7 deadline and that Ms. Hackett merely wanted

to find a way to end negotiations in order to sell the Foster Loan to Mr. Winfree. Mr. Surti attested

that he felt ill on March 7 after working with a roofing contractor at the Foster Property and spent

much of the day at Skyline Medical Center and was, thus, unable to discuss the Second Forbearance

Agreement with his attorney. The Defendants asserted in their Statement of Undisputed Facts in

support of their Motion for Summary Judgment that the hospital had no record of Mr. Surti’s alleged

visit on March 7 or any day between March 7 and March 10. Mr. Surti contends that the doctor he

saw on March 7 was a family friend, but he provided no explanation for the lack of hospital records.

Mr. Surti never attempted to resume negotiations, pay the deposit or sign the Second Forbearance

Agreement on or after March 7.

10

The original language proposed by TBON stated that, “in the event that Lender files a credit report to the

credit agency regarding the Indebtedness, Lender shall report to such credit agency that the Indebtedness was ‘settled

in full.’”

11

The Criticized Asset Report provides the status of delinquent notes, stating the outstanding balance as of the

date of the document, but the text of the document may include events up to 10 days after the date of the report.

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On March 12, Mr. Lowe sent Mr. Surti a second purchase offer; this time for the same price,

but the offer was no longer contingent on Mr. Lowe obtaining financing. The offer stated the

deadline for acceptance as March 14 at 3:00 p.m. Mr. Surti never responded to this offer. Mr.

Winfree testified in his deposition that on either March 12 or 13, he told Mr. Cardin at AHI that it

did not appear that Mr. Surti and Mr. Lowe were going to complete the sale of the Foster Property

and, therefore, First State was “out.” He told Mr. Cardin that if AHI wanted to continue with the

purchase of the Foster Loan that was AHI’s business.

Meanwhile, sometime during the week of March 10, Ms. Hackett at TBON began

communicating with Mr. Cardin at AHI about a purchase agreement on the Foster Loan; the sale of

the Foster Loan to AHI was consummated on Friday, March 14 for $1,271,000.00. On March 17,

TBON notified Mr. Surti that the Foster Loan had been sold. On the same day AHI notified Mr.

Surti that it was initiating foreclosure proceedings; a foreclosure sale was scheduled for May 23. Mr.

Surti submitted an affidavit stating that he attempted to contact AHI on several occasions in order

to “settle the account,” but that he received no response. At some point in April or May 2003, during

the course of discussing another business matter Mr. Lowe asked Mr. Winfree if he knew what had

happened with Mr. Surti’s Foster Property. Mr. Winfree told him that the Note had been purchased

by AHI, but that he did not know the status. Mr. Lowe asked Mr. Winfree to look into the matter

because J&B Investments was still interested in acquiring the property. After looking into it, Mr.

Winfree called Mr. Lowe back and told him that the Foster Property was being foreclosed on and

provided Mr. Lowe with the contact information of the attorney handling the foreclosure, Mr.

Mangrum. Mr. Lowe began communicating with Mr. Mangrum, an attorney representing AHI in

the foreclosure proceeding, about the date the Foster Property was set for auction. On May 23, 2003,

the date of the foreclosure sale, Foster filed a Chapter 11 bankruptcy petition, which stayed the

foreclosure. Mr. Lowe learned from Mr. Mangrum that Foster had filed for bankruptcy.

On July 15, 2003, Mr. Lowe’s company, now J&B Investments, arranged to buy the Foster

Loan from AHI for $1.4 million. The purchase was financed by First State, which had previously

approved Mr. Lowe’s application for financing for the purpose of acquiring the Foster Property in

late February/early March, with Mr. Winfree signing the financing documents for First State.

Pursuant to the Foster Chapter 11 bankruptcy plan, Foster paid $1.5 million to J&B Investments “in

full satisfaction of the loan obligation.”

II. Analysis

A. Rule 12 Dismissal

The Plaintiffs contend on appeal that “the trial court erred in finding that Mr. Winfree owed

no fiduciary duty to the Appellants because of Tenn. Code Ann. § 45-1-127.”12 The Appellants

argue that because “fiduciary duty may be of any kind of relationship which implies confidence, as

12

Plaintiffs do not challenge the trial court’s Tenn. R. Civ. P. 12.02(6) dismissal of the breach of fiduciary duty

and violations of T.C.P.A. claims against AHI.

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. . . confidential friend and advisor, indeed any relationship of confidence between persons which

gives one dominion or influence over the other,” Roberts v. Chase, 166 S.W.2d 641, 650 (Tenn. Ct.

App. 1942), and because “Mr. Winfree was a long time friend and advisor who possessed, by virtue

of his position, confidential financial and business information regarding Mr. Surti and his business”

and that Mr. Winfree was “bound by statutory duties and internal policies to keep that information

confidential and to not engage in conduct which is in conflict with the Appellants’ interests.”

The purpose of a Tenn. R. Civ. P. 12.02(6) motion to dismiss is to determine whether the

pleadings state a claim upon which relief can be granted. A Rule 12 motion only challenges the legal

sufficiency of the complaint. It does not challenge the strength of the plaintiff’s proof. See Bell ex

rel. Snyder v. Icard, Merrill, Cullis, Timm, Furen & Ginsburg, P.A., 986 S.W.2d 550, 554 (Tenn.

1999). In reviewing a motion to dismiss, we must liberally construe the complaint, presuming all

factual allegations to be true and giving the plaintiff the benefit of all reasonable inferences. See

Pursell v. First American National Bank, 937 S.W.2d 838, 840 (Tenn. 1996); see also Trau-Med of

Am., Inc. v. Allstate Ins. Co., 71 S.W.3d 691, 696-97 (Tenn. 2002). Thus, a complaint should not

be dismissed for failure to state a claim unless it appears that the plaintiff can prove no set of facts

in support of his or her claim that would warrant relief. See Doe v. Sundquist, 2 S.W.3d 919, 922

(Tenn. 1999); Fuerst v. Methodist Hospital South, 566 S.W.2d 847, 848 (Tenn. 1978). Making such

a determination is a question of law. Our review of a trial court’s determinations on issues of law

is de novo, with no presumption of correctness. Frye v. Blue Ridge Neuroscience Center, P.C., 70

S.W.3d 710, 713 (Tenn. 2002); Bowden v. Ward, 27 S.W.3d 913, 916 (Tenn. 2000).

The Complaint here alleged that Mr. Winfree “breached a fiduciary duty owed to Mr. Surti,

individually and as a representative of Foster Business Park, LLC. [Mr. Winfree] utilized

confidential financial information conveyed to [him] by Mr. Surti in confidence for [his] own

financial gain to the detriment of Plaintiffs.” The trial court granted Mr. Winfree’s Tenn. R. Civ.

P. 12.02(6) Motion for Partial Dismissal, but only with respect to Mr. Winfree’s “actions he carried

out by or on behalf of a financial institution and/or in the scope and course of his duties as an officer

or employee of a financial institution, including the [sic] Bank of Nashville and/or First State Bank”

on the basis of Tenn. Code Ann. § 45-1-127. In explaining its ruling, the trial court reasoned that

only a partial dismissal was appropriate at that stage of the case because “Plaintiffs have alleged

sufficient facts to state a claim for breach of fiduciary duty for actions carried out by Mr. Winfree

unrelated to his employment by a financial institution.”

Tenn. Code Ann. § 45-1-127 provides that financial institutions and their officers cannot be

“deemed or implied to be acting as fiduciary or have a fiduciary obligation or responsibility to its

customers or to other parties . . . unless there is a written agreement” to act in that capacity. Given

that there was no allegation of a written agreement between Mr. Winfree and the Plaintiffs to act as

a fiduciary, we find that the trial court properly dismissed the breach of fiduciary duty claim to the

extent that the claim was based on Mr. Winfree’s actions as an officer or employee or on behalf of

a financial institution; consequently, we affirm the Rule 12.02(6) dismissal of this claim.

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B. Summary Judgment

The Plaintiffs contend that the trial court erred in granting summary judgment to the

Defendants because there were genuine issues of material fact. In their brief to this Court, however,

the Plaintiffs failed to reference which parts of the record support their arguments and with regard

to two of their issues – whether the trial court erred in dismissing the Plaintiffs’ claims for

intentional interference with a business relationship and violation of the TCPA – the Plaintiffs fail

to cite any authority supporting their conclusory argument that there are disputed facts without saying

which facts are in dispute. The Plaintiffs merely assert that “[t]he Affidavit of Mr. Surti clearly

establishes facts that give rise to disputed material facts that must be resolved” without saying which

facts set forth by the Defendants that the Affidavit actually disputes.13

As the appellant, the Plaintiffs had the burden to make citations in their brief to appropriate

authorities and reference the record to support their argument on appeal. Tenn. R. App. P. 27(a);14

State v. Weaver, No. M2001-00873-CCA-R3-CD, 2003 WL 1877107, *16 (Tenn. Crim. App. Apr.

15, 2003) (citing Tenn. R. App. 27(a)(4), (7)); see also Vineyard v. Betty, No. M2001-00642-COA-

R3-CV, 2002 WL 772870, *3 (Tenn. Ct. App. Apr. 30, 2002); State v. Bunch, 646 S.W.2d 158, 160

(Tenn. 1983); McDonald v. Onoh, 772 S.W.2d 913, 914 (Tenn. Ct. App. 1989). While Plaintiffs’

statement of the facts section provides some references to the record, the Plaintiffs’ argument is

wholly deficient of references to the record to support their assertions that there are genuine issues

of material fact. Moreover, the Plaintiffs’ argument contains little more than conclusory allegations,

which are only supported by argument of their counsel, neither of which constitute evidence we can

consider. See Vineyard, 2002 WL 772870, *3 (citing State v. Roberts, 755 S.W.2d 833, 836 (Tenn.

Crim. App. 1988)).

In the case of Lykins v. Key Bank USA, N.A., No. E2005-01572-COA-R3-CV, 2006 WL

2482963, *4-5 (Tenn. Ct. App. Aug. 29, 2006), we were presented with an appellant’s brief that

contained no citation to the record. After discussing the appellant’s failure to comply with the Tenn.

R. App. P. 27(a)(6), we discussed Rule 6(b) of the Rules of the Court of Appeals which provides that

[n]o complaint of or reliance upon action by the trial court will be considered on

appeal unless the argument contains a specific reference to the page or pages of the

record where such action is recorded. No assertion of fact will be considered on

13

The Affidavit of Mr. Surti, which the Plaintiffs reference, was submitted to the trial court in response to the

Defendants’ Motion for Summary Judgment.

14

Tenn. R. App. P. 27(a)(7) provides in relevant part:

(7) An argument, which may be preceded by a summary of argument, setting forth the contentions of

the appellant with respect to the issues presented, and the reasons therefor, including the reasons why

the contentions require appellate relief, with citations to the authorities and appropriate references to

the record (which may be quoted verbatim) relied on....

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appeal unless the argument contains a reference to the page or pages of the record

where evidence of such fact is recorded.

Lykins, 2006 WL 2482963, *4-5 (Tenn. Ct. App. Aug. 29, 2006) (quoting Tenn. R. Ct. App. 6(b))

(emphasis added).

A similar situation arose in Bean v. Bean, 40 S.W.3d 52 (Tenn. Ct. App. 2000), where the

brief failed to comply with Tenn. R. App. P. 27 and Rule 6 of the Rules of the Court of Appeals.

In Bean, the deficiencies resulted in a dismissal of the appeal. There, we held:

Courts have routinely held that the failure to make appropriate references to the

record and to cite relevant authority in the argument section of the brief as required

by Rule 27(a)(7) constitutes a waiver of the issue. . . . Because of the numerous

deficiencies in Appellant’s brief, we decline to address the issues raised. As noted

in England v. Burns Stone Co., Inc., 874 S.W.2d 32, 35 (Tenn. Ct. App. 1993),

parties cannot expect this court to do its work for them. This Court is under no duty

to verify unsupported allegations in a party’s brief, or for that matter consider issues

raised but not argued in the brief.

Bean, 40 S.W.3d at 55-56 (citations omitted).

Rule 1 of the Rules of the Court of Appeals permits this Court to review a party’s issues on

appeal despite apparent citation deficiencies in order to expedite a decision upon the matter.15

While, as stated in Bean, we are under no duty to verify unsupported allegations in the Plaintiffs’

brief or to consider an issue raised but not properly argued in their brief, Bean, 40 S.W.3d at 55-56

(citing Duchow v. Whalen, 872 S.W.2d 692, 693 (Tenn. Ct. App. 1993); Airline Constr., Inc. v. Barr,

807 S.W.2d 247 (Tenn. Ct. App. 1990)), we will nevertheless review the issues presented on appeal

in an effort to move this case toward resolution.

Tenn. R. Civ. P. 56.03 provides that summary judgment is only appropriate where the

pleadings, depositions, answers to interrogatories, and admissions on file, together with the

affidavits, if any, show: (1) there is no genuine issue with regard to the material facts relevant to the

claim or defense contained in the motion, Byrd v. Hall, 847 S.W.2d 208, 210 (Tenn.1993); and (2)

the moving party is entitled to a judgment as a matter of law on the undisputed facts. Anderson v.

Standard Register Co., 857 S.W.2d 555, 559 (Tenn.1993); Tenn. R. Civ. P. 56.03. The moving party

has the ultimate burden of persuading the court that there are no genuine issues of material fact and

that the moving party is entitled to judgment as a matter of law. Byrd, 847 S.W.2d at 215. Courts

must view the evidence in the light most favorable to the nonmoving party and must also draw all

15

Rule 1 of the Rules of the Court of Appeals of Tennessee permits “for good cause, including the interest of

expediting a decision upon any matter, this Court . . . [to] suspend the requirements or provisions of any of these rules

in a particular case on motion of a party, or on its own motion, and may order proceedings in accordance with its

discretion.”

-12-

reasonable inferences in the nonmoving party's favor. Byrd, 847 S.W.2d at 210-11. Courts should

grant a summary judgment only when both the facts and the conclusions to be drawn from the facts

permit a reasonable person to reach only one conclusion. Id.; Carvell v. Bottoms, 900 S.W.2d 23,

26 (Tenn.1995).

The Tennessee Supreme Court recently clarified the analysis for determining whether the

moving party has met its burden of proof on a motion for summary judgment. See Martin v. Norfolk

Southern Railway Co., No. E2006-01021-SC-R11-CV, 2008 WL 4890252, ___ S.W.3d ___ (Tenn.

Nov. 14, 2008); Hannan v. Alltel Publ’g Co., No. E2006-01353-SC-R11-CV, 2008 WL 4755788,

___ S.W.3d ___ (Tenn. Oct. 31, 2008). The Martin court explained the analysis as follows:

The moving party may make the required showing and therefore shift the burden the

burden of production to the nonmoving party by either: (1) affirmatively negating an

essential element of the nonmoving party’s claim; or (2) showing that the nonmoving

party cannot prove an essential element of the claim at trial. Hannan v. Alltel Publ’g

Co., ___ S.W.3d ___, ___ (Tenn. 2008); see also McCarley, 960 S.W.2d [585,] 588

[(Tenn. 1998)]. Both methods require something more than an assertion that the

nonmoving party has no evidence. Byrd, 847 S.W.2d at 215. Similarly, the

presentation of evidence that raises doubts about the nonmoving party’s ability to

prove his or her claim is also insufficient. McCarley, 960 S.W.2d at 588. The

moving party must either produce evidence or refer to evidence submitted by the

nonmoving party that negates an essential element of the nonmoving party’s claim

or shows that the nonmoving party cannot prove an essential element of the claim at

trial. Hannan, ___ S.W.3d at ____. We have held that to negate an essential element

of the claim, the moving party must point to evidence that tends to disprove an

essential factual claim made by the nonmoving party. See Blair v. W. Town Mall,

130 S.W.3d 761, 768 (Tenn. 2004).

Martin,___ S.W.3d at ___.

The Martin court further explained:

If the moving party makes a properly supported motion, then the nonmoving party

is required to produce evidence of specific facts establishing that genuine issues of

material fact exist. McCarley, 960 S.W.2d at 488; Byrd, 847 S.W.2d at 215. The

nonmoving party may satisfy its burden of production by:

(1) pointing to evidence establishing material factual disputes that

were over-looked or ignored by the moving party; (2) rehabilitating

the evidence attacked by the moving party; (3) producing additional

evidence establishing the existence of a genuine issue for trial; or (4)

submitting an affidavit explaining the necessity for further discovery

pursuant to Tenn. R. Civ. P., Rule 56.06.

-13-

McCarley, 960 S.W.2d at 588; accord Byrd, 847 S.W.2d at 215 n.6. The nonmoving

party’s evidence must be accepted as true, and any doubts concerning the existence

of a genuine issue of material fact shall be resolved in favor of the nonmoving party.

McCarley, 960 S.W.2d at 588.

Martin,___ S.W.3d at ___.

When reviewing the evidence on motion for summary judgment, a court must first determine

whether a factual dispute exists; if a factual dispute exists, the court must then ascertain whether the

fact is material to the claim or defense upon which the summary judgment is predicated and whether

the disputed fact creates a genuine issue for trial.” Eskin v. Bartree, 262 S.W.3d 727, 732 (Tenn.

2008); McCarley, 960 S.W.2d at 588. “A disputed fact is material if it must be decided in order to

resolve the substantive claim or defense at which the motion is directed.” Martin,___ S.W.3d at ___

(quoting Byrd, 847 S.W.2d at 215). A disputed fact presents a genuine issue if “a reasonable jury

could legitimately resolve that fact in favor of one side or the other.” Id.

1. Breach of Fiduciary Duty Claim

The Complaint alleged that Mr. Winfree “breached a fiduciary duty owed to Mr. Surti,

individually and as a representative of Foster Business Park, LLC. [Mr. Winfree] utilized

confidential financial information conveyed to [him] by Mr. Surti in confidence for [his] own

financial gain to the detriment of Plaintiffs” and that Mr. Lowe and J&B Investments conspired with

Mr. Winfree to breach the fiduciary duty. The Complaint alleged that Mr. Surti and Mr. Winfree

“had a history . . . which spanned over twelve years,” and had started when Mr. Surti sought Mr.

Winfree’s advice in starting a new business prior to Mr. Winfree’s employment with TBON. The

Complaint further alleged that Mr. Surti continued to seek Mr. Winfree’s “advice and aid” after Mr.

Winfree began his employment with TBON and that while at TBON Mr. Winfree acquired

knowledge regarding the Foster Business Park Loan, which he utilized “for financial gain” after he

transferred to First State Bank.

Under Tennessee common law, there are two principal types of fiduciary status.16 The first

category of common law fiduciary status consists of relationships that are fiduciary per se,

sometimes referred to as legal fiduciary, such as between a guardian and ward, an attorney and client,

or conservator and incompetent. See Kelly v. Allen, 558 S.W.2d 845, 848 (Tenn. 1977); Mitchell v.

Smith, 779 S.W.2d 384, 389 (Tenn. Ct. App. 1989); Parham v. Walker, 568 S.W.2d 622, 625 (Tenn.

Ct. App. 1978). The second category consists of relationships that are not per se fiduciary in nature,

but arise in situations where one party exercised “dominion and control over another.” Kelley v.

16

All fiduciary relationships are confidential relationships, but not all confidential relationships are fiduciary

relationships. A fiduciary relationship connotes a legal relationship, a confidential relationship includes not only

fiduciary relationships but also every other relationship in which confidence is rightly reposed and exercised. Steven

W . Feldman, Tennessee Practice: Contract Law and Practice § 6.13, at 504 (2006) (“Tennessee Practice: Contract Law

and Practice”).

-14-

Johns, 96 S.W.3d 189, 197 (Tenn. Ct. App. 2002); Matlock v. Simpson, 902 S.W.2d 384, 385-86

(Tenn. 1995); Kelly v. Allen, 558 S.W.2d at 848. This relationship, often called a “confidential

relationship,” “is not merely a relationship of mutual trust and confidence, but rather it is one ‘where

confidence is placed by one in the other and the recipient of that confidence is the dominant

personality, with ability, because of that confidence, to influence and exercise dominion and control

over the weaker or dominated party.’” Kelley v. Johns, 96 S.W.3d at 197 (citing Iacometti v.

Frassinelli, 494 S.W.2d 496, 499 (Tenn. Ct. App. 1973)). The person upon whom the trust and

confidence is imposed is under a duty to act for and to give advice for the benefit of the other person

on matters within the scope of the relationship. McRedmond v. Estate of Marianelli, 46 S.W.3d 730,

738 (Tenn. Ct. App. 2000); Restatement (Second) of Torts § 874 cmt. a (1979).

Relationships that are not fiduciary per se “require proof of the elements of dominion and

control in order to establish the existence of a confidential relationship.” Kelley v. Johns, 96 S.W.3d

at 197 (citing Matlock v. Simpson, 902 S.W.2d at 385-86; Kelly v. Allen, 558 S.W.2d at 848.

Moreover, a confidential relationship cannot be unilateral, rather both parties must understand that

a special trust or confidence has been reposed. See Craggett v. Adell Ins. Agency, 635 N.E.2d 1326,

1331-32 (Ohio Ct. App. 1993); Westlake Vinyls, Inc. v. Goodrich Corp., 518 F.Supp.2d 902, 917-18

(W. D. Ky. 2007); Quinn v. Phipps, 113 So. 419, 421 (Fla. 1927); Steele v. Victory Sav. Bank, 368

S.E.2d 91, 94 (S.C. Ct. App. 1988).

The relationship between a lender and his customer, as in the present case, falls within the

latter category. “Although fiduciary relationships may arise whenever confidence is reposed by one

party in another who exercises dominion and influence, the dealings between a lender and borrower

are not inherently fiduciary absent special facts and circumstances.” Oak Ridge Precision Industries,

Inc. v. First Tennessee Bank Nat. Ass'n, 835 S.W.2d 25, 30 (Tenn. Ct. App. 1992) (no fiduciary

relationship where plaintiff/debtor represented itself as an entity that had become too large and

sophisticated to rely on small banks, such as the defendant, for its needs and described its

relationship with the defendant/lender as one in deterioration). Because confidential relationships

can assume a variety of forms, the courts have been hesitant to define precisely what a confidential

relationship is and the court must look to the particular facts and circumstances of the case to

determine whether one party exercised dominion and control over another, weaker party. See e.g.,

Roberts v. Roberts, 827 S.W.2d 788 (Tenn. Ct. App. 1991) (the fact that the defendant, deceased’s

brother, transported deceased on local trips and on one occasion arranged the renewal of a certificate

of deposit for deceased is not sufficient to establish a confidential relationship); Kelley v. Johns, 96

S.W.3d at 197 (evidence that two persons are members of the same family, without more is

insufficient to prove confidential relationship); see also Warren v. Percy Wilson Mtge. & Fin. Corp.,

472 N.E.2d 364 (Ohio 1984) (no fiduciary status arising from advice given in routine business

relationship between debtor and creditor);Umbaugh Pole Bldg. Co. v. Scott, 390 N.E.2d 320 (Ohio

1979) (creditor's provision of advice and counseling to debtor in a congenial atmosphere not enough

to create a confidential or fiduciary relationship); Blon v. Bank One, 519 N.E.2d 363 (Ohio 1988)

(no fiduciary status conferred in arm's-length business transaction).

-15-

i. Mark Winfree

In light of the trial court’s dismissal of the per se fiduciary duty claim, which we have

affirmed, any claim of breach of fiduciary duty must be based on a confidential relationship, which

is proven by demonstrating that confidence was placed by one in the other and the recipient of that

confidence was able to influence and exercise dominion and control over the weaker or dominated

party. See Kelley v. Johns, 96 S.W.3d at 197. In order to prevail on his Motion for Summary

Judgment, therefore, Mr. Winfree was required to produce evidence or refer to evidence previously

submitted by the Plaintiffs that establishes that there was no confidential relationship between Mr.

Surti and himself. See Hannan, No. E2006-01353-SC-R11-CV, 2008 WL 4755788 at * ___, ___

S.W.3d at ___ (“The moving party must either produce evidence or refer to evidence submitted by

the nonmoving party that negates an essential element of the nonmoving party’s claim or shows that

the nonmoving party cannot prove an essential element of the claim at trial”). The existence of a

confidential relationship requires proof that Mr. Winfree, by virtue of the trust and confidence Mr.

Surti placed in him, exercised dominion and control over Mr. Surti or his companies.

In his Statement of Undisputed Facts in Support of Their [sic] Motion for Summary

Judgment, Mr. Winfree points to statements Mr. Surti made in his deposition in which he admits Mr.

Winfree never exercised dominion or control over him or his companies in making personal or

business decisions. In Mr. Surti’s deposition, the following exchange took place between Mr.

Winfree’s attorney and Mr. Surti:

Q. Would you say that [Mr. Winfree] controlled your life?

A. No.

Q. Would you say that he dominated your family?

A. No.

Q. Did he dominate your, your business life?

A. No.

Q. Is it fair to say that, you, you’ve told me earlier that you ran Foster Business Park.

A. Correct.

Q. You also ran Arte’; did you not?

A. Correct.

Q. You were the Chief Executive Officer, if there was such a thing, you were the

Chief Executive Officer?

A. Right.

Q. And Mark Winfree did not exe–, exert dominion or control over any of those

companies or over your family life; isn’t that true?

A. Right.

The above exchange took place following an explanation by Mr. Surti about the close

personal and business relationship he had with Mr. Winfree in which Mr. Surti stated “we had lots

of discussions where I would take his advice and his advice was very important to me.” Mr. Winfree

also points to statements made by Mr. Surti in his deposition that he understood that when he met

-16-

Mr. Winfree, Mr. Winfree was employed by the State of Tennessee in the Tennessee State

Development Office and that when Mr. Winfree began working for TBON, and subsequently First

State, Mr. Winfree was representing those banks’ interests, not Mr. Surti’s or his companies. The

following exchange between Mr. Winfree’s attorney and Mr. Surti took place:

Q. When [Mr. Winfree] was an employee of The Bank of Nashville, did you

understand that he was working for The Bank of Nashville?

A. Yes Sir.

Q. And that he represented The Bank of Nashville?

A. Yes.

Q. And you understood, didn’t you, that his interest and The Bank of Nashville’s

interest were not always the same as your interests?

A. Ask that question one more time, please.

Q. Okay. Did you give The Bank of Nashville a Deed of Trust on Foster Business

Park?

A. Yes.

Q. And what was the point of that, giving them the Deed of Trust? It was so if you

didn’t pay the loan, they could foreclose on the property; wasn’t it?

A. That’s, yeah, it’s a collateral.

Q. Right. And so, you understood that, at least in that instance, Mr. Winfree is

representing the bank, and his interest and your interest, the bank’s interest and

Foster’s business are not the same, are they?

A. Right.

Q. Because if the, if you don’t pay the bank, they’re going to take the property?

A. Correct.

Q. And you understood that?

A. Yeah.

Q. And you understood that was [Mr. Winfree’s] role?

A. Right.

Q. Right. You may have regarded him as a friend, but his role is to represent The

Bank of Nashville; wasn’t it?

A. Uh-huh. [Affirmative.]

...

Q. You understood that, when he moved to First State Bank, he was representing

First State Bank?

A. Correct.

We find these facts were sufficient to shift the burden of production to the Plaintiffs, the

nonmoving party. The Plaintiffs were required to point to evidence establishing material factual

disputes that were either over-looked or ignored by Mr. Winfree; rehabilitate the evidence attacked

by Mr. Winfree; produce additional evidence establishing the existence of a genuine issue for trial;

or submit an affidavit explaining the necessity for further discovery. See Martin, No. E2006-01021-

SC-R11-CV, 2008 WL 4890252 at * ___, ___ S.W.3d at ___ (citing McCarley, 960 S.W.2d at 588;

-17-

accord Byrd, 847 S.W.2d at 215 n.6). Mr. Surti was unable to rehabilitate the evidence cited by Mr.

Winfree to negate the element of “dominion and control.” In fact, Plaintiffs’ Response to the

Statement of Undisputed Facts shows that Mr. Surti admitted this fact:

2. By Mr. Surti’s own admission, Mr. Winfree never exercised dominion or control

over Mr. Surti or his companies. (Surti depo., p.44, 1.3-9, 18-21). Mr. Surti

understood that when Mr. Winfree went to work for The Bank of Nashville

(ATBON@) [sic], he was representing the Bank’s interest, not Mr. Surti’s or his

companies. (Mr. Surti depo., p.45, 1.44 - p.47, 1.9).

RESPONSE: Admitted for the purposes of ruling on this motion only.

The Plaintiffs, in an effort to point to over-looked or ignored evidence, disputed the statement that

“Mr. Winfree had no non-business relationship with Mr. Surti. The two did not go to functions or

events together. (Winfree depo., p.23, 1.7-12)” by stating in their Response to the Statement of

Undisputed Facts that “Mr. Winfree was a close friend and advisor who had been to the Surti’s home

on several occasions and who regularly lunched with Mr. Surti. (Exhibit 18, Surti Dep.) [sic].” This

fact, assuming its truth, without more does not establish the existence of a confidential relationship.

The Plaintiffs also failed to produce additional evidence establishing the existence of a genuine issue

for trial or the need to seek further discovery.

We agree with the trial court’s finding that “it is undisputed Defendant Winfree acted at all

times relevant to this case, from 1997 to and through 2003, as an officer of either [TBON] or of First

State Bank in his dealings with the plaintiffs.” We also agree with the trial court’s conclusion that

“as provided in T.C.A. [sic] § 45-1-127, Mr. Winfree was not a fiduciary with respect to any of the

plaintiffs.” Finally, we conclude that there is nothing in the record to show that Mr. Winfree had,

at any time relevant to this case, a confidential relationship with Mr. Surti in which he exercised any

dominion or control over Mr. Surti or any of his companies. Mr. Surti was an experienced

businessman who owned multi-million dollar commercial real estate and had managed several

companies over more than twenty years and clearly understood the nature of his relationship with

Mr. Winfree as his lender, i.e., that Mr. Winfree, when employed by TBON and First State,

represented his employer’s interests and not those of Mr. Surti or any of his companies. Moreover,

Mr. Surti confirmed in his deposition that neither he nor his companies were ever under the

dominion or control of Mr. Winfree. Mr. Surti never rehabilitated his deposition statements nor

produced new evidence showing that Mr. Winfree had either a legal or per se fiduciary relationship

or that Mr. Surti placed confidence in Mr. Winfree who was then able to influence and exercise

dominion and control over Mr. Surti or his companies. Since Mr. Winfree was able to negate an

essential element of the breach of fiduciary duty claim – that Mr. Winfree owed no duty to Mr. Surti

because there was neither a legal, or per se, fiduciary relationship nor was there a confidential

relationship – we affirm the trial court’s summary judgment dismissing the breach of fiduciary duty

claim against Mr. Winfree.

-18-

ii. Billy Lowe and J&B Investments, Inc.

The Plaintiffs allege that Mr. Lowe and J&B Investments conspired with Mr. Winfree

causing him to disclose Foster’s and Mr. Surti’s confidential information to them in order to first

facilitate their attempts to purchase the Foster Property and later their acquisition of the Foster Note

and collateral package. The Plaintiffs allege that Mr. Winfree must have told Mr. Lowe confidential

information about Foster and Mr. Surti including the principal amount owed on the Foster Loan,

which Mr. Winfree obtained from TBON, because otherwise Mr. Lowe’s offer to purchase the Foster

Property for $1.4 million was too coincidental.

“An actionable civil conspiracy is a combination of two or more persons who, each having

the intent and knowledge of the other’s intent, accomplish by concert an unlawful purpose, or

accomplish a lawful purpose by unlawful means, which results in damage to the plaintiff.” Trau-

Med of America, Inc., 71 S.W.3d at 703; see Brown v. Birman Managed Care, Inc., 42 S.W.3d 62,

67 (Tenn. 2001) (citing Dale v. Thomas H. Temple Co., 208 S.W.2d 344, 353 (Tenn. 1948)). The

elements for civil conspiracy under Tennessee common law, therefore, are: (1) a common design

between two or more persons; (2) to accomplish by concerted action an unlawful purpose, or a lawful

purpose by unlawful means; (3) an overt act in furtherance of the conspiracy; and (4) injury to person

or property resulting in attendant damage. Braswell v. Carothers, 863 S.W.2d 722, 727 (Tenn. Ct.

App. 1993). In addition, civil conspiracy requires an underlying predicate tort allegedly committed

pursuant to the conspiracy. Morgan v. Brush Wellman, Inc., 165 F.Supp.2d 704, 721 (E.D. Tenn.

2001) (citing Tenn. Publ’g Co. v. Fitzhugh, 52 S.W.2d 157, 158 (Tenn. 1932)).

Conspiracy is not a cause of action, but a legal doctrine that imposes liability on persons who,

although not actually committing a tort themselves, share with the immediate tortfeasors a common

plan or design in its perpetration. Freeman Mgmt. Corp. v. Shurgard Storage Centers, LLC., 461

F.Supp.2d 629, 642-643 (M.D. Tenn. 2006). By participating in a civil conspiracy, a coconspirator

effectively adopts as his or her own the torts of other coconspirators within the ambit of the

conspiracy. In this way, a coconspirator incurs tort liability co-equal with the immediate tortfeasors.

Id.; see also Applied Equipment Corp. v. Litton Saudi Arabia Ltd., 869 P.2d 454, 457 (Cal. 1994);

Accord. Beck v. Prupis, 529 U.S. 494, 503 (2000) (noting it was “sometimes said that a conspiracy

claim was not an independent cause of action, but was only the mechanism for subjecting co-

conspirators to liability when one of their members committed a tortious act”).

The trial court found that the Dismissal Order which granted summary judgment to Mr.

Winfree and AHI warranted an award of judgment as to Mr. Lowe and J&B Investments as a matter

of law. Because we have affirmed the trial court’s judgment that Mr. Winfree had no fiduciary duty

to any of the Plaintiffs, we find that summary judgment was also proper as to the alleged civil

conspiracy to breach a fiduciary duty claim against Mr. Lowe and J&B Investments.

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2. Intentional Interference with a Business Relationship

The Complaint alleged that Defendants Winfree and AHI intentionally interfered with

Foster’s business relationship with TBON and that Defendants Lowe and J&B Investments conspired

to commit the tort of intentional interference with that relationship. The Plaintiffs contend that Mr.

Winfree interfered with Mr. Surti’s negotiations with TBON to enter into a Forbearance and Release

Agreement that would have allowed Foster to pay off the Foster Loan for $1 million, a reduction

from the principal and interest owed of almost $500,000. According to the Plaintiffs, the period

between December 2002 and March 14, 2003, was a critical period during which Mr. Winfree and

AHI behaved in a wrongful manner and caused TBON to abandon the Second Forbearance

Agreement negotiations and that Mr. Winfree and AHI’s alleged wrongful conduct was connected

to TBON’s decision to sell the Foster Loan at a discount to AHI rather than settle the default with

Foster. The Plaintiffs assert that Mr. Winfree’s goal was to enable Mr. Lowe to buy the Foster

Property even though Mr. Surti did not want to sell to Mr. Lowe. Mr. Winfree’s motive, according

to Mr. Surti, was that AHI or First State would buy the secured note for $1.2 million and resell the

note to Mr. Lowe for $1.4 million. First State would then provide the purchase funds to Mr. Lowe,

Mr. Winfree and First State would have a good loan on the bank’s books and, ultimately, First State

and Mr. Winfree would benefit.

The tort of intentional interference with a business relationship was expressly recognized in

Tennessee in Trau-Med of America, Inc. v. Allstate Ins. Co., 71 S.W.3d 691 (Tenn. 2002). The court

stated that “liability should be imposed on the interfering party provided that the plaintiff can

demonstrate the following:

(1) an existing business relationship with specific third parties or a prospective

relationship with an identifiable class of third persons;

(2) the defendant’s knowledge of that relationship and not a mere awareness of the

plaintiff’s business dealings with others in general;

(3) the defendant’s intent to cause the breach or termination of the business

relationship;

(4) the defendant’s improper motive or improper means; and

(5) damages resulting from the tortious interference.”

Trau-Med of America, Inc. , 71 S.W.3d at 701 (internal citations removed).

The relations protected against intentional interference include “any prospective contractual

relations, except those leading to contracts to marry, if the potential contract would be of pecuniary

value to the plaintiff.” Id. at note 4 (citing Restatement (Second) of Torts § 766B comment c).

Whether a defendant acted “improperly” or possessed an “improper” motive is “dependent on the

particular facts and circumstances of a given case,” and as a result there is no precise, all-

encompassing definition of the term “improper;” however, the Trau-Med court provided some

guidance. Examples of “improper means” include “those means that are illegal or independently

tortious, such as violations of statutes, regulations, or recognized common-law rules; violence,

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threats or intimidation, bribery, unfounded litigation, fraud, misrepresentation or deceit, defamation,

duress, undue influence, misuse of inside or confidential information, or breach of a fiduciary

relationship; and those methods that violate an established standard of a trade or profession, or

otherwise involve unethical conduct, such as sharp dealing, overreaching, or unfair competition.”

Id. To prove “improper motive,” the plaintiff must “demonstrate that the defendant’s predominant

purpose was to injure the plaintiff.” Id. at note 5; see Leigh Furniture & Carpet Co. v. Isom, 657

P.2d 293, 307-308 (Utah 1982).

i. Mark Winfree and AHI

As the moving party on summary judgment, Mr. Winfree and AHI had the burden of

affirmatively negating an essential element of the nonmoving party’s claim or showing that the

nonmoving party cannot prove an essential element of the claim at trial. Martin, supra. Mr. Winfree

and AHI negated an essential element of the Plaintiffs’ claim by showing that their actions did not

cause the Plaintiffs’ damages.

It is undisputed that Foster and Mr. Surti had an ongoing business relationship with TBON

since at least 1997 when TBON issued the Foster Loan and that Mr. Winfree knew of this

relationship as he had been Mr. Surti’s loan officer while employed by TBON. It is also undisputed

that Mr. Winfree knew that the Foster Loan was in default because Mr. Surti told him about it when

seeking Mr. Winfree’s and First State’s help in refinancing the loan. Mr. Winfree and AHI contend

that the Plaintiffs cannot prevail under the tortious interference theory because it was Foster’s default

on the Foster Loan and Mr. Surti’s failure to agree to the Second Forbearance Agreement that caused

the Plaintiffs’ damages not Mr. Winfree or AHI.

The Defendants showed that Foster defaulted on its loan obligations when it stopped making

payments in September 2002 and failed to cure the default thereafter. Because the Foster Loan was

in default and classified as a criticized asset, TBON was preparing to foreclose on the Foster

Property and Ms. Hackett testified in her deposition that she was working simultaneously on various

fronts “to get this credit resolved.” One of the ways in which Ms. Hackett was working to resolve

the credit issue with Foster was by negotiating a Forbearance and Release Agreement with Mr. Surti.

The Defendants showed through Ms. Hackett’s deposition testimony and TBON records that the

Second Forbearance Agreement negotiations between Mr. Surti on behalf of Foster and Ms. Hackett

at TBON were at an impasse as of March 6, 2003. Foster’s attorney, Joe Rusnak, sent an email to

TBON attorney, Charles Reasor, III, stating that Mr. Surti could not agree to certain language in the

Second Forbearance Agreement. Ms. Hackett testified in her deposition that TBON could never

agree to Mr. Surti’s proposed language. The following exchange took place between the

Defendant’s counsel and Ms. Hackett:

Q. That appears to me to be an e-mail from Mr. Rusnak to Mr. Reasor. Mr. Rusnak

says, [“]please advise Mr. Reasor that the proposed revised language at Paragraph 9

is not acceptable. We respectfully insist on the language of my previous draft.[”]

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And then, he puts a paragraph in there that he, apparently, wants included in

paragraph 9 of the [Second] Forbearance Agreement.

A. Uh-huh. [Affirmative.]

Q. Do you recall negotiations, regarding this language, what has to do with, which

has to do with how the bank is going to report this transaction to the credit agencies?

A. There was an issue with regards to that, yes. As, as far as they had asked us to,

basically, say it was settled in full.

Q. Okay. And not charged off to bad debt, it says there in the –

A. Yes.

Q. And was the bank willing to do that?

A. No.

Q. Was the bank ever going to be willing to do that?

A. No.

Q. Why not?

A. Because that’s not what was taking place.

Q. You were going to have to charge off some of this to bad debt?

A. Yes.

Q. So, the bank, I take it, was not willing to make false statement to credit reporting

agencies?

A. That’s correct.

The Defendants also showed that Ms. Hackett’s decision to cease negotiations with Foster

and Mr. Surti on the Second Forbearance Agreement was not influenced by any of the Defendants.

Ms. Hackett testified in her deposition that she communicated to Mr. Surti verbally, and possibly

through email, that he had to make a $200,000 deposit by March 7 and that “if that $200,000 deposit

didn’t come in and we didn’t get the documents signed then we were going to continue to move

forward with foreclosure proceedings or what other means of collecting on this debt that we had.”

Ms. Hackett emailed the wire transfer instructions to Mr. Surti on March 5, 2003, so that he could

make the $200,000 deposit by March 7. Ms. Hackett also testified that when Mr. Surti failed to

make the $200,000 deposit or sign the Second Forbearance Agreement on the evening of March 7,

she told TBON attorney, Mr. Reasor, to notify Foster’s attorney that TBON would “go ahead and

move forward . . . in whatever action we can take to collect the debt.” On Monday March 10, Mr.

Reasor faxed Foster’s attorney, Mr. Rusnak, a letter that stated “as a result of [Foster’s] and [Mr.

Surti’s] failure to execute and perform under the [Second Forbearance Agreement] proposed by

[TBON], [TBON] is no longer willing to discuss forbearance with [Foster and Mr. Surti] and has

begun the process of enforcing fully its rights under all documents evidencing and securing the Loan

including, but not limited to, invoking the power of sale under the Deed of Trust.”17

17

The Plaintiffs contend that the “power of sale” language in Mr. Reasor’s letter indicates that on March 10,

2003, TBON already had a deal with the Defendants to sell the Foster Loan to AHI. The “power of sale under the Deed

of Trust” language, however, merely means that TBON was invoking it’s legal authority to initiate foreclosure

proceedings.

-22-

Ms. Hackett was asked in her deposition whether Mr. Winfree or Mr. Lowe had anything to

do with her decision to cease the Second Forbearance Agreement negotiations with Mr. Surti and

she responded, “no.” Her statement is corroborated by the February 28, 2003, Criticized Asset

Report written by Ms. Hackett in early March 2003, which stated:

[a]s Mr. Surti failed to sign the Forbearance Agreement and failed to make the

$200M deposit, TBON is proceeding with foreclosure and has tentatively scheduled

a foreclosure sale date of April 10th. No further negotiations will continue on this

account as TBON has twice attempted to enter a Forbearance Agreement with Mr.

Surti without success.

The Defendants also showed through Ms. Hackett’s deposition testimony that Mr. Surti never made

an attempt to restart the forbearance negotiations by explaining why he had not signed the Second

Forbearance Agreement or delivered the deposit nor did he ever offer to sign the Second Forbearance

Agreement or pay the $200,000 deposit. Ms. Hackett’s deposition revealed the following:

Q. Did they ever come to you and say, we need more time?

A. No.

Q. What happened after, so, did you have any reaction at all from Mr. Rusnak or Mr.

Surti to the letter that was sent by Mr. Reasor to Mr. Rusnak on March the 10th,

informing him that negotiations are done?

A. No response.

Finally, the Defendants showed that neither Mr. Winfree, AHI nor Mr. Lowe received

confidential information from TBON or any other source that would have allowed them to intervene

in Mr. Surti’s Second Forbearance Agreement negotiations with TBON. Mr. Winfree testified in

his deposition that he did not know that TBON was negotiating a forbearance agreement with Mr.

Surti. Mr. Surti testified in his deposition that he told Mr. Winfree about the forbearance

negotiations with TBON, but later in his deposition testimony he recanted that statement and said

that he did not tell Mr. Winfree about the negotiations, but that “someone must have.” Bruce

Lattimer attested that Mr. Surti did not tell him that he was negotiating a forbearance agreement with

TBON; Mr. Lattimer also attested that he did not share any of the financial information given him

by Mr. Surti with Mr. Winfree. Ms. Hackett testified in her deposition that she never provided Mr.

Winfree with any confidential customer information about Foster or Mr. Surti and never told Mr.

Winfree about TBON’s forbearance negotiations with Mr. Surti. Ms. Hackett also testified in her

deposition that she never communicated with Mr. Lowe. Mr. Winfree testified in his deposition that

he did not receive any confidential information about Foster or Mr. Surti from TBON or Mr. Lowe

nor did he give the limited information he had (i.e., the Foster Loan pay off amount he received from

TBON) to Mr. Lowe.

We believe that the above evidence produced by the Defendants negated the essential

elements of improper means or motive and causation and, thus, was sufficient to shift the burden of

production to the Plaintiffs to (1) point to evidence establishing material factual disputes that were

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over-looked or ignored by the moving party; (2) rehabilitate the evidence attacked by the moving

party; (3) produce additional evidence establishing the existence of a genuine issue for trial; or (4)

submit an affidavit explaining the necessity for further discovery pursuant to Tenn. R. Civ. P., Rule

56.06. See McCarley, 960 S.W.2d at 588. In Response to the Defendants Motion for Summary

Judgment, the Plaintiffs pointed to evidence that they asserted the Defendants overlooked. First, the

Plaintiffs pointed to Mr. Surti’s deposition testimony that Mr. Winfree and later Orlandus Majors,

the TBON loan officer responsible for the Foster Loan after Mr. Winfree left TBON, told Mr. Surti

that he did not need to make any more payments on the Foster Loan until it was refinanced. Second,

the Plaintiffs disputed that the Second Forbearance Agreement negotiations with TBON were at an

impasse because, according to Mr. Surti, the essential terms of the agreement had already been

agreed upon. Mr. Surti stated in his Affidavit submitted to the trial court that “[a]t this point in the

negotiations the only unresolved language in the agreement was contained in paragraph 9, and

pertained to how [TBON] would report the transaction to the various credit reporting agencies.” Mr.

Surti also attested that he was never told of the March 7 deadline to execute the agreement or pay

the deposit. He stated the following:

19. On March 6, 2003 [TBON] sent a final draft of the Forbearance and Release

Agreement. March 6, 2003 was a Thursday. The morning of Friday, March 7, 2003,

I met with a roofer at the Foster Business Park property during which time I went up

and down the ladder which provided access to the roof. In late 2002, I had stomach

surgery. The ladder climbing aggravated the area and I began to experience severe

cramps. I immediately went to see my physician, Dr. Wasudev at Skyline Medical

Center who was also a family friend. Dr. Wasudev advised me to rest and take pain

killers until the pain resolved. Due to the illness, I was unable to discuss the

forbearance agreement with Foster Business Park’s attorney, Joe Rusnak or to

respond to [TBON] until March 10, 2003. There was no deadline to execute the

agreement ever communicated to me.

20. Pursuant with the terms of the Forbearance Agreement, I had been able to locate

sufficient financing to pay off the Note for the agreed amount of $1,000,000.00.

21. On March 10, 2003 at 10:53 a.m. before I could respond, [TBON] informed

Foster Business Park, via letter form Charles Reasor, III to Joe Rusnak, that it was

no longer willing to discuss a forbearance agreement with the borrower and

guarantors, and that it had begun the process of enforcing fully its rights under the

loan documents.

Finally, the Plaintiffs made conclusory allegations that Mr. Winfree must have obtained

confidential information about Foster and Mr. Surti that he used to interfere with Mr. Surti’s

negotiations with TBON in an attempt to produce additional evidence to support their contention that

there are material facts in dispute. The Plaintiffs argued that Mr. Winfree and Mr. Lowe must have

had and shared confidential information with each other “as evidenced by the timing of the option

to purchase and later proposed purchase agreement sent by Mr. Lowe to Mr. Surti.” The Plaintiffs

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also stated in their Response to the Defendants’ Statement of Undisputed Facts that “it is clear [Ms.

Hackett] was having ongoing communications with Winfree regarding First State Bank’s purchase

of the note” because of an unauthenticated email allegedly sent by Ms. Hackett to Mr. Winfree on

March 11, 2003, with the statement “F.Y.I.” and a confidentiality agreement attached. The

conclusory nature of these statements do not provide new facts or highlight any overlooked facts.

The trial court found that the Plaintiffs did not have competent proof to show that Mr.

Winfree, AHI or Mr. Lowe received confidential information from TBON or any source which

would have facilitated their intervention in the forbearance agreement negotiations nor did they have

competent information to show that Mr. Winfree, AHI or Mr. Lowe actually intervened in the

forbearance agreement negotiations. The trial court found the following undisputed facts:

Mr. Surti believes that Ms. Hackett gave Mr. Winfree confidential information about

his negotiations with TBON. Foster and Mr. Surti do not however, come forward

with proof that wrongful communications took place between Ms. Hackett and Mr.

Winfree. Mr. Winfree states that he did not have details about the [sic] TBON’s

position except that which Mr. Surti gave him when he was seeking a loan from First

State Bank. Mr. Surti continued to pursue a loan from First State Bank. In February

of 2003, Mr. Surti contacted a second First State Bank loan officer, Mr. Latimer, to

again discuss financing of a negotiated pay off to TBON. Mr. Surti gave Mr. Latimer

his personal financial statement and the first two pages of his 2001 personal tax

return and asked that they be kept confidential. After a review of these papers, Mr.

Lattimer advised Mr. Surti that his bank could not help. Mr. Lattimer states that he

did not share this financial statement or tax return with Mr. Winfree. He was not

aware that Mr. Surti’s request for financing had already been rejected by Mr.

Winfree. Ms. Hackett did not provide Mr. Winfree with customer information and

did not discuss Mr. Surti’s financial condition or the negotiation detail with Mr.

Winfree. Mr. Surti has a suspicion that confidential information was provided Mr.

Winfree and Mr. Lowe by Ms. Hackett but he does not have competent proof that

sensitive information went from Ms. Hackett to Mr. Winfree or from Mr. Winfree

to Mr. Lowe or any other person.

The trial court granted summary judgment concluding that,

Mr. Surti and Foster do not have competent proof to show that Mr. Winfree, [AHI]

or Mr. Lowe received confidential information from TBON (a non-party) which

facilitated their intervention in [Second] Forbearance Agreement negotiations. Mr.

Surti and Mr. [sic] Foster do not have competent information to show that Mr.

Winfree, [AHI] or Mr. Lowe did intervene in the [Second]Forbearance Agreement

negotiations. It was Mr. Surti’s failure to execute and act upon the Second

Forbearance Agreement between March 7 and March 14, 2003, that caused TBON

to sell the note to AHI. After March 7, 2003, TBON withdrew from its settlement

negotiations with Mr. Surti and Foster because Mr. Surti did not accept the offer and

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did not perform as required by TBON. Consequently, the Plaintiffs’ damages were

caused by the default under the loan terms.

We agree with the trial court’s conclusions. Accepting the evidence the Plaintiffs put forth

in response to the Defendants’ motion for summary judgment as true, see McCarley, 960 S.W.2d at

588 (the nonmoving party’s evidence must be accepted as true), the evidence does not discredit or

counter the Defendants’ evidence negating an essential element of Plaintiffs’ claim – that the

Defendants were not the cause of the Plaintiffs’ damages. Mr. Winfree testified in his deposition

that he did not tell Mr. Surti that Foster could stop making payments on the Foster Loan. Moreover,

the Defendants point to the Foster Loan documents, which provide that “neither the terms of the

Loan nor this Note may be modified, extended, changed, amended or terminated except in writing”;

the Plaintiffs never alleged that Mr. Winfree or anyone at TBON had reduced any of their alleged

conversations about Foster being able to stop making payments in writing. Also, Ms. Hackett

testified in her deposition that it was the actions of Mr. Surti, or lack thereof, that influenced her to

end the Second Forbearance Agreement negotiations and that neither Mr. Surti nor Foster’s attorney

attempted to explain the lack of payment on March 7 or to resolve the issue by either making the

$200,000 payment or signing the Second Forbearance Agreement. Therefore, we affirm the

judgment of the trial court.

ii. Billy Lowe and J&B Investments, Inc.

The Plaintiffs allege that Mr. Lowe and J&B Investments conspired with Mr. Winfree and

AHI to interfere with his forbearance negotiations with TBON. The trial court found that the

Dismissal Order which granted summary judgment to Mr. Winfree and AHI warranted an award of

judgment as to Mr. Lowe and J&B Investments as a matter of law. Based on our discussion of an

actionable civil conspiracy above and because we have affirmed trial court’s judgment that neither

Mr. Winfree nor AHI committed the tort of intentional interference of a business relationship, we

find that summary judgment was proper as to the alleged civil conspiracy by Mr. Lowe and J&B

Investments to interfere with Foster’s and Mr. Surti’s business relationship with TBON.

3. Tennessee Consumer Protection Act

The Plaintiffs alleged in the Complaint that the conduct of the Defendants “constitutes unfair

and/or deceptive acts or practices in violation of the Tennessee Consumer Protection Act and a civil

conspiracy to commit those acts” and sought $2 million in compensatory damages and $2 million

in punitive damages as well as treble damages and attorney’s fees as provided by the T.C.P.A. The

Complaint does not explain which alleged facts actually constitute the unfair and/or deceptive acts

or practices. On appeal, the Plaintiffs contend that the trial court erred in granting summary

judgment of the violation of T.C.P.A. claim because there are “disputed facts regarding disclosure

of confidential information known by Mr. Winfree about the [Plaintiffs] and use of the information

to the benefit of the [Defendants] and to the detriment of the [Plaintiffs].” It appears from the

pleadings that the essence of the Plaintiffs’ claim for violations of the T.C.P.A. is that the Plaintiffs

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allegedly gave the Defendants “confidential financial and business information” which was allegedly

utilized for the Defendants’ financial gain.

The T.C.P.A. was enacted to provide statutory remedies beyond common-law fraud actions

for consumers and legitimate business enterprises victimized by unfair or deceptive business acts or

practices that were committed in Tennessee in whole or in part. See Tenn. Code Ann. § 47-18-102;

Tucker v. Sierra Builders, 180 S.W.3d 109, 115 (Tenn. Ct. App. 2005). The T.C.P.A. applies to any

“act or practice which is unfair or deceptive to the consumer or to any other person.” Tenn. Code

Ann. § 47-18-104(b)(27). In order to recover under the T.C.P.A., “the plaintiff must prove: (1) that

the defendant engaged in an unfair and deceptive act or practice declared unlawful by the T.C.P.A.

and (2) that the defendant’s conduct caused an ‘ascertainable loss of money or property, real,

personal, or mixed, or any other article, commodity, or thing of value wherever situated....’” Tucker,

180 S.W.3d at 115 (citing Tenn. Code Ann. § 47-18-109(a)(1)).

The T.C.P.A. does not define the key terms “unfair” and “deceptive,” making the

determination whether a particular act or practice is unfair or deceptive a legal matter to be decided

by the court. See Tucker, 180 S.W.3d at 116. However, whether a specific representation in a

particular case is “unfair” or “deceptive” is a question of fact. Id.; see Davidson v. General Motors

Corp., 786 N.E.2d 845, 851 (Mass. App. Ct. 2003). The General Assembly has instructed us to look

to the federal understanding of these terms in interpreting them in the T.C.P.A. See Tenn. Code Ann.

§ 47-18-115.18 “A deceptive act or practice is one that causes or tends to cause a consumer to believe

what is false or that misleads or tends to mislead a consumer as to a matter of fact.” Tucker, 180

s.W.3d at 116; see Jonathan Sheldon & Carolyn L. Carter, Unfair and Deceptive Acts and Practices

§ 4.2.3.1, at 118-19 (5th ed. 2001). The concept of unfairness is broader than the concept of

deceptiveness and “it applies to various abusive business practices that are not necessarily

deceptive.” Id.; see Unfair and Deceptive Acts and Practices § 4.2.3.1, at 156. “An act or practice

should not be deemed unfair ‘unless the act or practice causes or is likely to cause substantial injury

to consumers which is not reasonably avoidable by consumers themselves and not outweighed by

countervailing benefits to consumers or to competition.’” Id. (citing 15 U.S.C.A. § 45(n)).

i. Mark Winfree

Mr. Winfree contends that he was never given nor obtained any confidential information

regarding Foster or Mr. Surti. In his Motion for Summary Judgment, Mr. Winfree pointed to Mr.

Surti’s contradictory deposition testimony in which he first stated that he told Mr. Winfree about the

$1 million forbearance agreement negotiations with TBON then later stated that he did not tell Mr.

Winfree about the negotiations, but that he assumed someone else did. Ms. Hackett testified in her

deposition that she did not tell Mr. Winfree about the Second Forbearance Agreement negotiations

18

The T.C.P.A. explicitly provides that it is to be “interpreted and construed consistently with the

interpretations given by the federal trade commission and the federal courts pursuant to § 5(A)(1) of the Federal Trade

Commission Act (15 U.S.C. § 45(a)(1)).” Tenn. Code Ann. § 47-18-115.

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between TBON and Mr. Surti. Mr. Winfree also pointed to Mr. Surti’s deposition testimony that Mr.

Surti provided the same allegedly confidential information (i.e., $3.2 million appraisal from 1997,

the fact that the Foster Loan was in default, etc.) to Mr. Lowe. Mr. Winfree also pointed to Mr.

Surti’s deposition testimony where Mr. Surti explained that he intended Mr. Winfree to be a

“resource” for him and to talk to the other prospective banks from which Mr. Surti sought financing

to pay off the Foster Loan. Mr. Winfree testified in his deposition that he did not share any of the

information Mr. Surti told him with Mr. Lowe or AHI nor did he receive any confidential

information about Foster or Mr. Surti from Ms. Hackett, Mr. Lattimer or any other source. Both Ms.

Hackett’s deposition testimony and Mr. Lattimer’s affidavit confirm that they did not provide Mr.

Winfree with any confidential information about Foster or Mr. Surti.

We find that Mr. Winfree produced evidence that negated an essential element of the

Plaintiffs’ claim of violation of the T.C.P.A. – that Mr. Winfree could not have disclosed or misused

information he did not have to the Plaintiffs’ detriment. Having negated an essential element to the

Plaintiffs’ claim, the burden of production shifted to the Plaintiffs to (1) point to evidence

establishing material factual disputes that were over-looked or ignored by the moving party; (2)

rehabilitate the evidence attacked by the moving party; (3) produce additional evidence establishing

the existence of a genuine issue for trial; or (4) submit an affidavit explaining the necessity for

further discovery pursuant to Tenn. R. Civ. P., Rule 56.06. See McCarley, 960 S.W.2d at 588. The

Plaintiffs failed to do so. In their Response to Mr. Winfree’s Statement of Undisputed Facts in

support of his motion for summary judgment, the Plaintiffs made a mere conclusory remark

suggesting that the existence of a March 11, 2003, email from Ms. Hackett to Mr. Winfree which

read “F.Y.I.” and supposedly attached a February 10 that included a confidentiality agreement was

evidence that she and Mr. Winfree were having ongoing communications regarding First State

purchasing the note.19 At the time Ms. Hackett sent the February 10 email, First State was

considering purchasing the Foster Loan. The March 11 email, however, was never authenticated and

Mr. Winfree’s attorney objected to the Plaintiffs’ attorney’s representation that the confidentiality

agreement was attached to the March 11 email. The Plaintiffs produced no other evidence of

communication between Ms. Hackett and Mr. Winfree after Mr. Winfree informed her in mid-

February that First State would not purchase the Foster Loan. The Plaintiffs also produced no

evidence that Mr. Winfree shared the Foster Loan’s principal amount that he received from Ms.

Hackett in mid-February with Mr. Lowe.

In the Memorandum and Order of Dismissal the trial court found:

Because there is no proof of causation, the [P]laintiffs’s claims under the Tennessee

Consumer Protection Act are dismissed. Tenn. Code Ann. § 47-18-109 requires that

19

The March 11 email and confidentiality agreement were shown to Mr. W infree during his deposition and

marked as collective deposition Exhibit 37. M r. W infree’s attorney objected to the Plaintiffs’ attorney’s initial

representation that the confidentiality agreement was actually attached to the email because there was no indication that

the two were originally attached and did not have contiguous pagination. The Plaintiffs’ attorney contended that the

documents came from TBON through the discovery process, but a second Plaintiffs’ attorney admitted that they did not

come from TBON stapled together, but rather he had stapled them together.

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Mr. Surti and Foster show they suffered . . . “an ascertainable loss of money . . . or

thing of value . . . as a result of the use or employment by another person of a unfair

or deceptive act . . . [.]” The Court does not search for deceit or other wrongdoing

where there is only speculative proof of causation, as in this case.

Given the Plaintiffs’ mere conclusory allegations and failure to point to any overlooked facts,

rehabilitate or produce new evidence, or establish the need for additional discovery, we find

summary judgment was proper; consequently we affirm the judgment of the trial court.

ii. Mr. Lowe and J&B Investments, Inc.

The Plaintiffs allege that Mr. Lowe and J&B Investments conspired with Mr. Winfree

resulting in the violation of the T.C.P.A. The trial court found that the Dismissal Order which

granted summary judgment to Mr. Winfree warranted an award of judgment as to Mr. Lowe and J&B

Investments as a matter of law. Based on our above discussion of civil conspiracy and because we

have affirmed trial court’s judgment that Mr. Winfree did not violate the T.C.P.A., we find that

summary judgment was proper as to the alleged civil conspiracy by Mr. Lowe and J&B Investments.

III. Conclusion

For the foregoing reasons, the judgment of the trial court granting summary judgment to

Mark Winfree, Billy Lowe, American Holdings Investments, Inc., and J&B Investments, LLC, and

dismissing this case is affirmed. The case is remanded to the Chancery Court for Davidson County

for collection of costs accrued therein.

Costs of this appeal are assessed to Plaintiffs, Foster Business Park, LLC, Arte’ Corporation,

Tarun Surti, and Lata Surti, and their surety.

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RICHARD H. DINKINS, JUDGE

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