Clear Water Partners, LLC v. Charles e. Benson

IN THE COURT OF APPEALS OF TENNESSEE

AT KNOXVILLE

October 18, 2016 Session

CLEAR WATER PARTNERS, LLC v. CHARLES E. BENSON, ET AL.

Appeal from the Chancery Court for Knox County

No. 190254-2 Clarence E. Pridemore, Jr., Judge

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No. E2016-00442-COA-R3-CV – Filed January 26, 2017

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A purchaser of property filed a complaint against numerous individuals asserting

intentional interference with its business relationships and tortious interference with its

contracts based on the individuals‟ alleged misconduct aimed at preventing the

development of the property the purchaser was attempting to acquire. The defendants

filed motions to dismiss based on Tennessee Rules of Procedure 10.03 and 12.02(6),

which the trial court granted. The trial court also awarded the defendants their attorneys‟

fees pursuant to Tenn. Code Ann. § 4-21-1003(c). The plaintiff appealed, and we find

the plaintiff properly stated a claim for tortious interference with business relationships

and civil conspiracy; the plaintiff did not state a claim for tortious interference with

contracts; and the defendants are not entitled to an award of their attorneys‟ fees at this

stage of the proceedings.

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

Affirmed in Part, Vacated in Part, and Remanded

ANDY D. BENNETT, J., delivered the opinion of the court, in which D. MICHAEL SWINEY,

C.J., and THOMAS R. FRIERSON, II, J., joined.

David J. Silvus, Clarksville, Tennessee, for the appellant, Clear Water Partners, LLC.

John A. Lucas and Nicholas W. Diegel, Knoxville, Tennessee, for the appellees, Charles

E. and Rebecca Benson, Russ and Tracy Ford, Frank and Belinda Gambuzza, Cheryl and

Dennis Hatcher, Mark and Kathy Jackson, Glenn Loy, Mark and Virginia Smothers,

Robert Whitaker, Michael and Sherry Whitaker, Sharon Boyce, Jack Woodall, and

Susannah Sayre; and Gregory W. O‟Neal, Memphis, Tennessee, for the appellee, David

Kiger.

OPINION

I. PROCEDURAL BACKGROUND

Clear Water Partners, LLC (“Clear Water”) is a limited liability company that

filed a complaint in September 2015 against twenty-three individual defendants based on

allegations that the individuals acted improperly to interfere with its plans to purchase

and develop real property in Knox County, Tennessee. According to its complaint, Clear

Water paid $6,000 to Gloria L. Melgaard Trusts (the “Trusts”) for the option of

purchasing and developing approximately 111 acres of real property. Its purchase was

contingent on the approval of a development plan, obtaining rezoning approval, and the

performance of certain site development work. Clear Water alleges it contracted with

Paul J. Murphy, III to sell about thirty acres of the property to him once Clear Water

executed its option contract with the Trusts and paid the $6,000. According to Clear

Water, Mr. Murphy voided his contract with Clear Water on April 18, 2014, due to

“improperly motivated conduct and/or improper means” of twenty-three named

individuals (the “Defendants”), causing Clear Water to suffer monetary damages.

Clear Water alleges that it then contracted to sell the same thirty or so acres of

property to Belle Investment Company, Inc. (“Belle Investment”), and that Belle

Investment required Clear Water to make certain changes to the plans that were different

from the specifications Mr. Murphy had requested, and that these changes caused Clear

Water to incur damages. With regard to seventy or so acres of the remaining property,

Clear Water asserts it submitted a rezoning application to the Knoxville/Knox County

Metropolitan Planning Commission (“MPC”) in July 2013 to classify the seventy acres as

“low density” residential use. Clear Water claims it submitted a development plan

seeking approval of a multi-family dwelling development as well as for a use-on-review

request for approval of a marina for the adjoining property that it was not seeking to

develop into multi-family dwellings.

According to Clear Water, the Defendants, individually and through their

attorney/agent, “vigorously opposed” its rezoning application and development plans for

apartments as well as the use-on-review for the construction of a marina on the adjoining

property. Clear Water alleges the Defendants created false e-mail accounts that appeared

to be from residents of neighborhoods around the proposed development to send to MPC

members and County Commissioners for the purpose of opposing the proposed

development. Clear Water alleges that defendant Susannah Sayre sent a flyer containing

false and misleading information home with approximately 833 elementary school

children encouraging parents of the children to oppose the proposed development. Clear

Water further alleges that defendant Charles E. Benson circulated to residents living near

the proposed development a different flyer containing false and misleading information

about the development. Clear Water also asserts that defendant David Kiger, who owns a

marina located approximately one mile from the proposed marina, submitted an affidavit

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containing materially false and misleading information regarding the proposed marina to

both the MPC and the BZA in an effort to cause the agencies to deny Clear Water‟s

request to develop a marina.

Clear Water asserts that its rezoning application, development plan, and use-on-

review were placed on the MPC‟s agenda for its September 12, 2013, meeting. Due to

the Defendants‟ opposition, the MPC postponed reviewing Clear Water‟s applications for

sixty days, and on November 14, 2013, the MPC approved the rezoning classification, the

development plan for the apartment complex, and the use-on-review for the marina.

Then, on December 16, 2013, the Knox County Commission (the “Commission”)

approved the rezoning application as recommended by the MPC.

The Defendants appealed the MPC‟s decision to the Board of Zoning Appeals

(“BZA”) on November 14, 2013. Clear Water asserts that the materials the Defendants

submitted to the BZA contained materially false and misleading information about both

the planned development and the marina. On February 26, 2014, the BZA upheld the

MPC‟s decision to approve the development plan and reversed the MPC‟s decision to

approve the use-on-review for the marina. Clear Water alleges that as a result of the

delays to the project caused by the Defendants, it had to pay an additional $20,000 to the

Trusts to extend its option contract to purchase the property at issue.

According to Clear Water‟s complaint, the Defendants filed a petition for

certiorari with the Circuit Court of Knox County on March 28, 2014, challenging the

BZA‟s approval of the development plan, and it filed a petition seeking review of the

BZA‟s decision to deny the use-on-review for the marina. On June 16, 2015, the trial

court upheld the BZA‟s decision with regard to both the development plan and the

marina, and the Defendants appealed the trial court‟s decision to uphold the BZA‟s

approval of the development plan to the Court of Appeals.1

During the pendency of the petitions for certiorari, Clear Water was having a

boundary survey performed pursuant to the terms of the development plan. The survey

required accessing the neighboring property, which was owned by Glenn Loy, Michael

Whitaker, and June Whitaker, all of whom are named defendants. These defendants

refused the surveyor access to their property, making it necessary for Clear Water to

obtain a court order requiring the defendants to allow this access. During this same

period, Clear Water alleges that another defendant, Cheryl Hatcher, made a false claim to

the United States Fish and Wildlife Service (“FWS”) that Clear Water was disturbing or

destroying blue heron nests. Clear Water asserts that this conduct by these defendants

further delayed the development of the property and caused Clear Water to incur

additional and unnecessary expenses.

1

The current appeal is unrelated to the Defendants‟ appeal of the BZA‟s decision.

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Finally, Clear Water alleges that defendant Rebecca Benson published false

statements about John Huber, one of the principals of Clear Water, to at least one other

person in the form of an e-mail. According to Clear Water, this e-mail falsely stated that

Huber has told “so many lies” and that Mr. Huber intended to build a roadway through

the Woodland Springs subdivision, which Clear Water asserts was not true.

The causes of action Clear Water asserts against the Defendants include claims for

tortious interference with its business relationships, tortious interference with its

contracts, and civil conspiracy. Clear Water seeks compensatory damages in an amount

not to exceed $550,000 and requests punitive damages as well.

In November 2015, twenty-one of the Defendants filed a motion to dismiss the

complaint pursuant to Rule 10.03 of the Tennessee Rules of Civil Procedure. The

Defendants argued that Clear Water‟s complaint was based on particular contracts and

that Clear Water failed to attach any of the contracts to its complaint as Rule 10.03

required. Then, in December 2015, fifteen of the Defendants filed a different motion to

dismiss pursuant to Rule 12.02(6) of the Tennessee Rules of Civil Procedure on the basis

that Clear Water had failed to state a claim upon which relief could be granted as to these

individuals. The Defendants also argued that their activities petitioning the government

in opposition to Clear Water‟s planned development and participating in litigation

appeals were privileged.

The trial court held a hearing on both of the motions to dismiss on December 14,

2015, and it granted both of the motions by orders dated December 28, 2015. With

respect to the Defendants‟ Rule 12.02(6) motion, the court stated:

After argument of respective Counsel here today and a review of the

record as a whole, this Court finds that the Plaintiff‟s complaint includes

factual allegations about some Defendants, but does not contain any factual

allegations about the unnamed Defendants that Mr. Lucas and Mr. O‟Neal

represent here today.

This Court also finds the acts alleged in the Plaintiff‟s complaint are

privileged pursuant to TCA 4-21-1003; therefore, the Defendants‟ motion

to dismiss pursuant to Rule 12.06 is hereby granted as to the named

Defendants for failure to state a claim upon which relief can be granted, as

well as privileged pursuant to TCA 4-21-1003. This includes all claims,

including any unraised claims for defamation or other claims arising from

litigation.

As to attorney fees, this Court will award reasonable attorney fees

pursuant to TCA 4-21-1003, due to no named exceptions being raised on

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behalf of the Plaintiffs prohibiting the Defendants from covering such. And

that‟s my order.

The trial court then ruled on the Defendants‟ Rule 10.03 motion as follows:

There is no doubt in my mind that this whole thing is founded upon

a breach of contract between these different parties.

There‟s three alleged contracts in here in this complaint, and for that

reason I‟m going to grant the motion to dismiss pursuant to 10.03. There‟s

three exceptions in the 10.03, but they don‟t meet any of those three

exceptions.

It‟s not public records. It‟s not filed as public records. It‟s not

inaccessible to the pleaders. The adverse party apparently does not have it,

and it‟s not an insurance claim. I‟m going to grant that motion also.

The Defendants‟ attorneys filed an application for their fees and expenses in

January 2016, and the trial court issued an order on February 4, 2016, awarding the Rule

12 Defendants $25,535 for attorneys‟ fees and costs pursuant to Tenn. Code Ann. § 4-21-

1003.

On January 20, 2016, Clear Water filed a motion pursuant to Rules 59 and 60 of

the Tennessee Rules of Civil Procedure to alter or amend the judgment granting the

Defendants‟ Rule 10 motion to dismiss. Clear Water pointed out that its complaint

includes a claim for tortious interference with existing or prospective business

relationships in addition to a claim for tortious interference with contract, and that the

business relationships claim does not require that there be a contract or that it be

breached. Clear Water also argued that the law does not require a contract to be attached

to a complaint for a plaintiff to state a claim for tortious interference with contract.

The Defendants moved to strike Clear Water‟s motion to alter or amend, asserting

that the trial court lacked jurisdiction over the case because Clear Water‟s motion was an

unauthorized motion for reconsideration rather than a true motion to alter or amend. By

order entered on March 3, 2016, the trial court agreed with the Defendants‟ argument and

granted their motion to strike Clear Water‟s motion to alter or amend, finding that the

court lost jurisdiction over the case after January 27, 2016, which was thirty days

following the date of its order granting the Rule 10 Defendants‟ motion to dismiss. On

the same day, the court entered an alternative order denying Clear Water‟s motion to alter

or amend “even if the Court were to construe Plaintiff‟s Motion as a motion to alter or

amend filed pursuant to Rule 59.”

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Clear Water filed two notices of appeal: one on March 4, 2016, and the other on

April 1, 2016. On appeal, Clear Water contends the trial court erred by ruling (1) that its

complaint failed to state a cause of action with respect to the Rule 12 Defendants; (2) that

its complaint should be dismissed pursuant to Rule 10.03 of the Tennessee Rules of Civil

Procedure; (3) that the Rule 12 Defendants are entitled to recover their attorneys‟ fees

pursuant to Tenn. Code Ann. § 4-21-1003; and (4) that its motion to alter or amend

should be stricken.

II. ANALYSIS

A. Rule 12.02(6) Motion to Dismiss

1. Standard of Review

A party that files a motion pursuant to Rule 12.02(6) asserts that the plaintiff has

failed to state a claim upon which relief can be granted. TENN. R. CIV. P. 12.02(6). The

motion “challenges only the legal sufficiency of the complaint, not the strength of the

plaintiff‟s proof or evidence.” Webb v. Nashville Area Habitat for Humanity, Inc., 346

S.W.3d 422, 426 (Tenn. 2011); see also Willis v. Tenn. Dep’t of Corr., 113 S.W.3d 706,

710 (Tenn. 2003). A Rule 12.02(6) motion is resolved by examining the complaint

alone; if the plaintiff can prove any set of facts in support of the claims asserted that

would entitle it to relief, the trial court should deny the motion to dismiss. Webb, 346

S.W.3d at 426 (citing Leggett v. Duke Energy Corp., 308 S.W.3d 843, 851 (Tenn. 2010);

Crews v. Buckman Labs. Int’l, Inc., 78 S.W.3d 852, 857 (Tenn. 2002)). The party filing

the motion „“admits the truth of all the relevant and material allegations contained in the

complaint, but . . . asserts that the allegations fail to establish a cause of action.‟” Phillips

v. Montgomery Cnty., 442 S.W.3d 233, 237 (Tenn. 2014) (quoting Webb, 346 S.W.3d at

426) (additional citations omitted). When ruling on Rule 12.02(6) motions, courts are to

„“construe the complaint liberally, presuming all factual allegations to be true and giving

the plaintiff the benefit of all reasonable inferences.‟” Id. (quoting Webb, 346 S.W.3d at

426) (further citations omitted). The determination of whether a complaint should be

dismissed for failure to state a claim is a question of law that appellate courts review de

novo, with no presumption of correctness afforded to the trial court‟s decision. Id.;

Webb, 346 S.W.3d at 426.

2. Civil Conspiracy

The following Defendants joined together to file the Rule 12.02(6) motion in

December 2015: Charles W. and Mary Benson, Russ and Tracy Ford, Frank and Belinda

Gambuzza, Dennis Hatcher, Mark and Kathy Jackson, Mark and Virginia Smothers,

Robert Whitaker, Sherry Whitaker, Sharon Boyce, and Jack Woodall (“Rule 12

Defendants”). The basis of their motion was that Clear Water included no specific

factual allegations in its complaint about any of these individuals. Clear Water responded

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that it asserted a claim for civil conspiracy against all of the Defendants, some of whom

were identified by name as engaging in particular activities, and some of whom were not.

In paragraph 75 of its complaint, Clear Water alleged:

At all times pertinent herein the Defendants were a combination of two or

more persons who, each having the intent and knowledge of the other‟s

intent, accomplished by concert the goal of intentionally interfering with

the Plaintiff‟s contractual relationships and/or business relationship, with

unlawful purpose, unlawful means, or both. Such civil conspiracy resulted

in actual damage to the Plaintiff.

The Tennessee Supreme Court has stated that “[a]n 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 Am.,

Inc. v. Allstate Ins. Co., 71 S.W.3d 691, 703 (Tenn. 2002). The elements of the cause of

action include: “(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) resulting injury.” Kincaid v.

SouthTrust Bank, 221 S.W.3d 32, 38 (Tenn. Ct. App. 2006) (citing Morgan v. Brush

Wellman, Inc., 165 F.Supp.2d 704, 720 (E.D. Tenn. 2001)). A conspiracy is actionable

only if the underlying predicate tort was committed as part of the conspiracy. Watson’s

Carpet & Floor Coverings, Inc. v. McCormick, 247 S.W.3d 169, 180 (Tenn. Ct. App.

2007). If a conspiracy is proven, each conspirator is liable for his or her co-conspirators‟

wrongful acts and for the damages resulting to the plaintiff. Trau-Med, 71 S.W.3d at

703.

A review of the complaint reveals that Clear Water alleged the Defendants acted

with a common design to interfere with the contracts and business relationships Clear

Water had with the Trusts, with Paul J. Murphy, III, and with Belle Investment. Clear

Water alleged that the Defendants interfered with its relationships by creating false e-mail

accounts to cause members of the MPC and County Commissioners to believe there was

more opposition to the proposed development; that the Defendants, through their attorney

and agent, sought unnecessary postponements of Clear Water‟s rezoning application,

development plan, and use-on-review for the marina for the purpose of causing delay and

increasing the expenses and costs to Clear Water; that the Defendants published false and

misleading information about the proposed development on a website they maintained to

prevent the proposed development; and that the Defendants submitted false information

to the BZA regarding the effects of the proposed development on existing homes. Thus,

Clear Water articulated overt acts by the Defendants to support its claim for civil

conspiracy against the Defendants so long as we find Clear Water‟s predicate act(s) were

sufficient to withstand the Defendants‟ motion to dismiss. See Emerson v. Machamer,

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431 S.W.2d 283, 286 (Tenn. 1968) (explaining overt acts of the conspiracy are what

cause damages).

Clear Water also alleged that the Defendants were commanding, directing, and/or

knowingly authorizing their attorney in furtherance of the civil conspiracy described in

the complaint, and that the Defendants were vicariously liable for their attorney/agent‟s

acts and omissions. The Defendants contend Clear Water failed to allege that the

Defendants‟ attorney engaged in tortious interference with Clear Water‟s business

relations. However, Clear Water asserted that the Defendants‟ attorney “explicitly

represented to the BZA” that a mock-up created by the Defendants and/or their attorney

was “an intentional or reckless factual misrepresentation of the appearance of the

development plan approved by the MPC” and that the attorney knew or should have

known that the mock-up was false and misrepresented the location, nature, and

appearance of the planned development. Thus, we find Clear Water has stated a claim

for vicarious liability on the part of the Defendants for their attorney‟s conduct. See

Givens v. Mullikin, ex. rel. Estate of McElwaney, 75 S.W.3d 383, 395 (Tenn. 2002)

(recognizing that client may be vicariously liable for acts or omissions of attorney when

acts or omissions are “directed, commanded, or knowingly authorized” by client); Trau-

Med., 71 S.W.3d at 697 (finding insurer may be vicariously liable for attorney‟s conduct

where insurer controls details of attorney‟s performance, dictates strategy or tactics, or

directs attorney‟s conduct of litigation).

3. Intentional Interference with Business Relationships

Clear Water‟s civil conspiracy claim hinges on the viability of the torts Clear

Water asserts against the Defendants. The Rule 12 Defendants allege Clear Water has

failed to state a claim for tortious interference with business relationships because Clear

Water had a contractual relationship with the Trusts, Mr. Murphy, and Belle Investment.

According to the Defendants, “the tort of intentional interference with business

relationships does not apply where there is a contractual relationship between the Plaintiff

and the third party.”

The Tennessee Supreme Court expressly adopted the tort of intentional

interference with business relationships in Trau-Med of Am., Inc. v. Allstate Ins. Co., 71

S.W.3d 691 (Tenn. 2002). The Court explained that the elements of the tort include 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

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defendant‟s improper motive or improper means; and finally, (5) damages

resulting from the tortious interference.

Trau-Med, 71 S.W.3d at 701 (footnotes and citation omitted). In its complaint, Clear

Water alleged that the Defendants had knowledge of its business and/or contractual

relationships with the Trusts and with a purchaser of the property once the development

was approved and Clear Water completed certain work on the project and that the

Defendants intended to interfere with Clear Water‟s development of the property that was

the subject of its business relationship with the Trusts and Belle Investment. Clear Water

contends that its existing contracts with the Trusts and Belle Investment were not the

basis for its claim of tortious interference with business relationships. Rather, Clear

Water asserts that its claim was based on the necessity of continuing to negotiate with the

Trusts, Mr. Murphy, and Belle Investment in an effort to develop the property as a result

of the Defendants‟ misconduct and the excess and unnecessary costs and expenses it

incurred as a result of the Defendants‟ improper conduct.2

The Trau-Med Court expressly adopted comment c of the Restatement (Second) of

Torts § 766B, which states:

“The relations protected against intentional interference by the rule stated in

this Section include any prospective contractual relations, except those

leading to contracts to marry, if the potential contract would be of

pecuniary value to the plaintiff. Included are interferences with the

prospect of obtaining employment or employees, the opportunity of selling

or buying land or chattels or services, and any other relations leading to

potentially profitable contracts. Interference with the exercise by a third

party of an option to renew or extend a contract with the plaintiff is also

included. Also included is interference with a continuing business or other

customary relationship not amounting to a formal contract.”

Trau-Med, 71 S.W.3d at 701 n.4 (quoting RESTATEMENT (SECOND) OF TORTS § 766B

(1979), comment c) (emphasis added). As the quoted portion notes, a defendant‟s

interference with any prospective contractual relationship or exercise of an option to

renew or extend a contract is explicitly covered by the tort of intentional interference with

business relationships.

2

Clear Water stated in paragraph 73 of its complaint that the Defendants‟ actions,

assertions, allegations, and delaying tactics constituted tortious interference with Clear Water‟s

reasonable business expectancies. In paragraph 74, Clear Water asserted that the Defendants‟

false or reckless statements were made with the intent to cause a breach or termination of Clear

Water‟s business relationships with the Trusts.

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The only real question, then, with regard to Clear Water‟s claim for tortious

interference with its business relationships, is whether its current contractual relationships

bar it from asserting this tort with respect to its future contractual or other business

relationships with the same third parties. Clear Water relies on the case Tennison

Brothers, Inc. v. Thomas, No. W2013-01835-COA-R3-CV, 2014 WL 3845122 (Tenn. Ct.

App. Aug. 6, 2014), to argue that they do not. In Tennison Brothers, the plaintiff,

Tennison Brothers, owned real property and entered into a lease agreement pursuant to

which Clear Channel Outdoor (“CCO”) had the right to erect a billboard on its property.

Tennison Brothers, 2014 WL 3845122, at *1. A neighboring landowner had a competing

right to erect a billboard on his property, but both billboards could not be erected

concurrently under the governing code. Id. at *2. Tennison Brothers sued its neighbor

and other related parties for tortiously interfering with its business relationship with

CCO, among other claims. Id. at *2. The only business relationship with which

Tennison Brothers asserted the defendants interfered was its lease agreement with CCO,

and this contractual relationship was not addressed as an issue by either the trial court or

the Court of Appeals. See id. at *5 and *12. The Court of Appeals recited the allegations

of Tennison Brothers‟ complaint relating to its tortious interference claim, which

included the averment that Tennison Brothers‟ and CCO‟s business relationship was

based on a lease agreement. Id. at *12. The Tennison Brothers Court then concluded

that Tennison Brothers had “pled facts sufficient to satisfy the prima facie requirements

for the intentional interference with business relationships tort.” Id. at *13.

The Defendants rely on two federal court opinions interpreting Tennessee law to

argue that Clear Water‟s contracts bar it from asserting a claim for tortious interference

with business relationships. In Crouch v. Pepperidge Farm, Inc., 424 Fed. Appx. 456 (6th

Cir. 2011), the Sixth Circuit cited Trau-Med for the proposition that the Tennessee tort of

wrongful interference with a business relationship “protects non-contractual business

relationships” and refused to allow the plaintiff to apply this claim to his contractual

relationship with a third party. Crouch, 424 Fed. Appx. at 461. In a similar vein, the

District Court for the Western District of Tennessee issued an opinion stating that a

plaintiff‟s claim for intentional interference with business relationships is limited to non-

contractual relationships. Lick Branch Unit, LLC v. Reed, No. 3:13-cv-203, 2014 WL

546696, at *15 (E.D. Tenn. Feb. 10, 2014). The district court cited Trau-Med and

referred to comment c of the Restatement (Second) of Torts § 766B that the Trau-Med

Court expressly adopted to explain its decision not to apply the tort to relationships that

involve a formal contract. Id.

It is difficult to square the result in Tennison Brothers with Crouch and Lick

Branch Unit.3 However, in light of Clear Water‟s assertion that its claim is not based on

3

We also note that it does not appear from the Tennison Brothers opinion that any of the

defendants made the argument that the tortious interference with business relationships claim was not

available to the plaintiff as a result of the plaintiff‟s contractual relationship with CCO. Thus, the

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the contracts it had with the Trusts, Belle Investment, and Mr. Murphy, but instead was

based on future contracts and business relationships with some or all of these third

parties, we need not try to reconcile the discrepancy among these cases. We believe the

fact that Clear Water had contractual relationships with the same third parties with which

it alleged it had business relationships and which formed the basis of its tortious

interference claim is inconsequential so long as the tortious interference claim is based on

future contractual and/or business relationships, not current or prior contractual

relationships. Implicit in comment c of the Restatement (Second) of Torts § 766B is that

a plaintiff asserting this tort may have an existing contract with a third party when the

defendant engages in improper conduct that interferes with the plaintiff‟s future

contractual relationship with that third party. See RESTATEMENT (SECOND) OF TORTS §

766B (1979), comment a (“This section is concerned only with intentional interference

with prospective contractual relations, not yet reduced to contract.”).

4. Judicial Privilege

We now turn briefly to the argument the Rule 12 Defendants made in their motion

to dismiss that any statements they may have made in the course of judicial proceedings

and their participation in litigation appeals were privileged. The Defendants concede in

their brief that this privilege only extends to claims for defamation, see Evans v.

Nashville Banner Publ’g Co., No. 87-164-II, 1988 WL 105718, at *3 (Tenn. Ct. App.

Oct. 12, 1988), and Clear Water has indicated that it is not pursuing any defamation or

slander causes of action against any of the Defendants. Thus, the issue of privilege is no

longer an issue on appeal.

We conclude that Clear Water has stated a claim for civil conspiracy against all of

the Defendants, with tortious interference with its business relationships as the predicate

tort, and that the trial court erred in granting the Defendants‟ Rule 12.02(6) motion with

respect to these claims.

B. Rule 10 Motion to Dismiss

The following Defendants joined together to file a motion to dismiss pursuant to

Rule 10.03: Charles E. and Rebecca Benson, Cheryl and Dennis Hatcher, Mark and

Kathy Jackson, Glen Loy, Mark and Virginia Smothers, Michael and Sherry Whitaker,

Sharon Boyce, Jack Woodall, Susannah Sayre, and David Kiger (“Rule 10 Defendants”).

They argued that Clear Water‟s complaint should be dismissed because it was based on

various contracts with which Clear Water alleged the Defendants interfered, and Clear

Water failed to attach a copy of the contracts as required by Rule 10.03.

Tennison Brothers Court may have had no reason to address this issue head on.

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Rule 10.03 provides as follows:

Whenever a claim or defense is founded upon a written instrument other

than a policy of insurance, a copy of such instrument or the pertinent parts

thereof shall be attached to the pleading as an exhibit unless the instrument

is (1) a matter of public record in the county in which the action is

commenced and its location in the record is set forth in the pleading; (2) in

the possession of the adverse party and this fact is stated in the pleading; (3)

inaccessible to the pleader or is of such nature that attaching the instrument

would be unnecessary or impracticable and this fact is stated in the

pleading, together with the reason therefor. Every exhibit so attached or

referred to under (1) and (2) shall be a part of the pleading for all purposes.

Clear Water did not seek to amend its complaint to attach a copy of its third party

contracts in response to the Rule 10 Defendants‟ motion to dismiss. Instead, it argued

that because its claims against the Defendants were tort claims rather than breach of

contract claims, Rule 10 did not come into play. Alternatively, Clear Water stated in its

response that if the trial court concluded that its claim was founded upon written

instruments and was subject to Rule 10.03, that “Plaintiff ha[d] no objection to amending

its Complaint to include the redacted contracts and extensions that reflect the obligations

of the Plaintiff and the increased costs associated with the conduct complained of in its

Complaint.”4

In ruling on the Rule 10 Defendants‟ motion to dismiss, the trial court did not

acknowledge this offer by Clear Water to amend its complaint for the purpose of

attaching the relevant contracts as exhibits. Instead, the trial court dismissed the

complaint because the “whole thing [was] founded upon a breach of contract between

these different parties” and because the three exceptions set out in Rule 10.03 did not

apply.5

On appeal, Clear Water argues again that because its cause of action is in tort

rather than for breach of contract, Rule 10.03 is not applicable. The language of Rule

10.03 is unambiguous, however, that absent certain circumstances that the parties agree

do not exist here, if “a claim or defense is founded upon a written instrument other than a

policy of insurance, a copy of such instrument or the pertinent parts thereof shall be

attached to the pleading as an exhibit . . . .” TENN. R. CIV. P. 10.03. Clear Water does

4

Clear Water contended that the original purchase price was not material to its claims against the

Defendants and that it would redact this amount from the document if the court required the contract to be

attached as an exhibit to the complaint.

5

The record does not contain a transcript of the hearing, so we do not know if Clear Water‟s

attorney offered to amend the complaint to attach the contracts at issue as exhibits.

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not deny that its claim for tortious interference with contract is founded upon “written

instruments.” Thus, we conclude that Rule 10.03 applies to this claim by Clear Water. In

response to Clear Water‟s argument that Rule 10.03 does not contemplate dismissal as a

sanction for failing to comply with the rule, we note that Rule 41.02(1) provides that a

plaintiff‟s complaint may be dismissed if the plaintiff fails to comply with the rules set

forth in the Tennessee Rules of Civil Procedure. TENN. R. CIV. P. 41.02(1); see Maynard

v. Meharry Med. Coll., No. 01-A-01-9408-CH-00400, 1995 WL 41598, at *1 (Tenn. Ct.

App. Feb. 1, 1995) (granting defendants‟ motion to dismiss complaint due to failure to

attach copy of contract documents to complaint as required by Rule 10.03).

Clear Water relies on the case Wallace v. National Commerce Bancorporation,

No. 02A01-9205-CV-00143, 1993 WL 44600 (Tenn. Ct. App. Feb. 23, 1993), to argue

that the trial court erred in dismissing its tortious interference with contract claim based

on its failure to comply with Rule 10.03. The plaintiffs in Wallace had checking

accounts with the defendant banks and alleged that the banks improperly charged them

processing fees. Wallace, 1993 WL 44600, at *1. One of the plaintiffs‟ claims was that

the banks breached their common law contractual obligation to deal with their customers

fairly and in good faith. Id. at *2. This claim was based on the parties‟ signature cards,

which were not attached as exhibits to the complaint. Id. at *4. Recognizing the

plaintiffs‟ failure to comply with Rule 10.03, the Wallace Court excused this violation

because “the averments of the complaint concerning the substance of the depositor‟s

agreement [met] the bare minimum requirements to premise the allegation of breach of

the duty of good faith in the performance of the contract.” Id. As a result, the Wallace

Court vacated the trial court‟s dismissal of this claim and remanded the case for further

proceedings. Id. at *7.

Before addressing whether Clear Water included averments in its complaint to

meet the bare minimum requirements upon which to premise its cause of action, as was

the case in Wallace, we must determine whether Clear Water stated a cause of action for

tortious interference with its contracts. The Court of Appeals has stated that a party in

Tennessee can recover for tortious interference with the performance of a contract if the

plaintiff can prove the following:

(1) that there was a legal contract; (2) that the defendant knew of the

existence of the contract; (3) that the defendant intended to induce a breach

of the contract; (4) that the defendant acted maliciously; (5) that the

contract was actually breached; (6) that the defendant‟s acts were the

proximate cause of the breach; and (7) that the plaintiff suffered damages

resulting from the breach.

Lee v. State Volunteer Mut. Ins. Co., Inc., No. E2002-03127-COA-R3-CV, 2005 WL

123492, at *10 (Tenn. Ct. App. Jan. 21, 2005); see also Molloy v. Hrisko, No. M2014-

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01351-COA-R3-CV, 2015 WL 4323028, at *8 (Tenn. Ct. App. July 14, 2015) (citing

Hart v. First Nat’l Bank of Memphis, 690 S.W.2d 536, 540 (Tenn. Ct. App. 1985)).

Clear Water‟s complaint includes the following relevant allegations:

5. CLEAR WATER contracted with Paul J. Murphy III to purchase a

portion of the Property from CLEAR WATER once CLEAR WATER had

executed its option to purchase the subject property. In full or in part, as a

result of the improperly motivated conduct and/or improper means of the

Defendants in concert, Paul J. Murphy III voided that contract on April 18,

2014, costing the Plaintiff actual monetary damages. This contract for

purchase was for approximately 30 acres.

6. The Defendants were aware of the business relationship between the

Plaintiff and Paul J. Murphy III and sought to induce Paul J. Murphy III to

void that business relationship and/or contract by improper means and/or

improper motivation as set out in detail herein below, and as will be more

fully described upon trial of this cause.

7. After the contractual and/or business relationship with Paul J. Murphy III

was destroyed by the Defendants, Plaintiff CLEAR WATER contracted

with Belle Investment Company, Inc. to purchase that same portion of the

Property from CLEAR WATER once CLEAR WATER had executed its

option to purchase the portion of the Property from Gloria Melgaard Trusts

and fulfilled certain other obligations with respect to the Property. All

obligations either have been or will be fulfilled with the exception of the

rezoning, approval of the Development Plan for the apartment complex,

and use-on-review, all of which have previously been fulfilled to the

satisfaction of the Plaintiff and Belle Investment Company, Inc. but have

been delayed by the Defendants through improper motive and means.

8. Belle Investment Company, Inc. required the Plaintiff to substantially

alter the original plans created by the Plaintiff to Paul J. Murphy III‟s

specifications. These changes included, but were not limited to, moving the

entrance to the development, updating the Traffic Impact Study, shift and

change the footprint of the development, creation of new grading, erosion

control, drainage, pedestrian egress, landscaping, clearing, amenity and

utility plans, and resubmission of a different clarifying or explanatory

Development Plans to the MPC for administrative approval. These changes

caused the Plaintiff actual damages.

....

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73. Defendants‟ actions, assertions, allegations, and delaying tactics were

pursued in major part for the purpose of causing harm, loss, and expense to

Plaintiff. Defendants‟ conduct amounts to tortious interference with

Plaintiffs contractual rights; such conduct likewise constitutes tortious

interference with reasonable business expectancies of Plaintiff.

74. The false or reckless statements outlined herein were made with the

intent to cause a breach or termination of the Plaintiff‟s business

relationships with Gloria Melgaard Trusts.

....

78. The Defendants were actually aware of the business and/or contractual

relationship of the Plaintiff with Gloria Melgaard Trusts. The Defendants

were aware that Plaintiff had other business and/or contractual relationships

pursuant to the execution of the Approved Development Plan and that those

relationships included purchase of property from the Plaintiff upon which

to construct an apartment complex, once the development had been

approved and certain work had been completed on the project by the

Plaintiff.

79. The Defendants‟ predominant purpose in the above set-out conduct was

to injure the Plaintiff and make it economically unfeasible for the project to

be completed in an effort to scuttle the project by means other than those

allowed by the law.

The only contract Clear Water allegedly asserts was breached was its contract with

Mr. Murphy.6 However, although Clear Water states that the Defendants were aware of

its business relationship with Mr. Murphy, Clear Water does not allege the Defendants

were aware of its contract with Mr. Murphy. Further, Clear Water fails to specify how

the Defendants‟ acts were the proximate cause of the breach, as it must to state a claim

for tortious interference with its contract. See Lee, 2005 WL 123492, at *10 (“complaint

alleging tortious interference with the performance of a contract must also allege specific

facts that, if true, would support each of the seven elements of the tort”).

Thus, because we conclude Clear Water failed to state a claim for tortious

interference with its contracts, the question whether its claim should be dismissed

because it failed to comply with Rule 10.03 is pretermitted.

6

Clear Water asserts in paragraph 5 of the complaint that Mr. Murphy “voided” the contract he

had with Clear Water. We assume for purposes of this argument that Clear Water intended “voided” to

mean “breached.”

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C. Award of Attorneys‟ Fees

The trial court awarded the Rule 12 Defendants their attorneys‟ fees pursuant to

Tenn. Code Ann. § 4-21-1003(c). This statute, in its entirety, provides:

(a) Any person who in furtherance of such person‟s right of free speech or

petition under the Tennessee or United States Constitution in connection

with a public or governmental issue communicates information regarding

another person or entity to any agency of the federal, state or local

government regarding a matter of concern to that agency shall be immune

from civil liability on claims based upon the communication to the agency.

(b) The immunity conferred by this section shall not attach if the person

communicating such information:

(1) Knew the information to be false;

(2) Communicated information in reckless disregard of its falsity; or

(3) Acted negligently in failing to ascertain the falsity of the information if

such information pertains to a person or entity other than a public figure.

(c) A person prevailing upon the defense of immunity provided for in this

section shall be entitled to recover costs and reasonable attorneys‟ fees

incurred in establishing the defense.

The trial court did not explain how this statute entitled the Rule 12 Defendants to

recover their attorneys‟ fees, and we find the trial court‟s award was erroneously made,

especially at this stage of the proceedings. When they first moved for an award of their

fees, the Defendants asserted they were immune from prosecution for their statements to

the MPC and/or BZA under the doctrine of judicial privilege. However, none of the

Defendants in this case has prevailed on any claim of immunity, which is required before

an award of fees and costs can be granted under this statute. Tenn. Code Ann. § 4-21-

1003(c). Moreover, Clear Water has asserted that the statements the Defendants made to

the MPC and BZA were known to be false when they were made or were made in

reckless disregard of their falsity. The statute is clear that immunity “shall not attach” if

the statements made to a governmental agency are knowingly false or are made in

reckless disregard of their falsity. Tenn. Code Ann. § 4-21-1003(b). Finally, the

Defendants would only be entitled to the defense of judicial privilege if Clear Water were

suing them for defamation, Trau-Med, 71 S.W.3d at 702, and Clear Water has stated that

it is not pursuing any defamation claim against any of the Defendants. For all of these

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reasons, we reverse the trial court‟s award of attorneys‟ fees and costs to the Rule 12

Defendants.

D. Clear Water‟s Motion to Alter or Amend

After the trial court entered its order granting the Rule 10 Defendants‟ motion to

dismiss on December 28, 2015, Clear Water filed a motion to alter or amend “pursuant to

Rules 59 and 60 of the Tennessee Rules of Civil Procedure” on January 20, 2016. Clear

Water argued in its motion that the trial court failed to address its claim for tortious

interference with business relationships when it ruled that Clear Water‟s failure to attach

its contract(s) to the complaint was fatal to Clear Water‟s case. Clear Water also argued

that it is not necessary to attach a contract to a complaint to articulate a claim for tortious

interference with a contract. Clear Water asked the trial court to alter or amend its earlier

judgment to find that Clear Water‟s failure to attach any of its contracts to the complaint

was not fatal to any of the claims asserted in the complaint. In the alternative, Clear

Water asked the court to alter or amend its earlier judgment “to reflect that only the

claims for tortious interference with contract are dismissed for failure to attach any

contracts, as the claims for tortious interference with existing or prospective business

relationships do not require the existence of a contract.”

On February 12, 2016, the Defendants filed a motion to strike Clear Water‟s

motion to alter or amend, arguing that the trial court lacked jurisdiction to rule on the

motion. The Defendants contended that although Clear Water‟s motion purported to be a

motion to alter or amend pursuant to Rule 59, the substance of the motion was one for

reconsideration, which is not permitted under the rules. According to the Defendants, the

trial court‟s order entered on December 28, 2015, became final and non-appealable thirty

days later, on January 27, 2016, unless Clear Water filed a proper motion under Rule 59,

which would toll the thirty-day period for filing a notice of appeal. See TENN. R. CIV. P.

59.01; TENN. R. APP. P. 4(b).

The trial court entered a “Final Order” on February 4, 2016, granting the Rule 12

Defendants‟ motion to dismiss and application for attorneys‟ fees and expenses. Then,

on March 3, 2016, the trial court entered an order granting the Defendants‟ motion to

strike Clear Water‟s motion to alter or amend for the reasons stated in the Defendants‟

motion. The trial court faulted Clear Water for failing to allege in its motion that the

court “committed „clear error,‟” and concluded Clear Water‟s motion was substantively a

motion for reconsideration rather than a motion to alter or amend, despite its title.

Clear Water filed two notices of appeal: first on March 4, 2016, in which it

appealed the trial court‟s “Final Order” entered on February 4, 2016, and second on April

1, 2016, in which it appealed the trial court‟s order granting the Rule 10 motion to

dismiss, the order denying Clear Water‟s motion to alter or amend, and the order granting

the Defendants‟ motion to strike for lack of jurisdiction.

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On appeal, the Defendants argue this Court lacks jurisdiction over Clear Water‟s

appeal of the order granting the Rule 10 Defendants‟ motion to dismiss because Clear

Water‟s motion to alter or amend was not a valid motion under Rule 59.04, and, thus, the

motion did not toll the time for filing a notice of appeal.7 The Defendants concede that if

we determine that Clear Water‟s motion to alter or amend was valid, then Clear Water‟s

notice of appeal filed on April 1 was timely.

Motions to alter or amend a judgment are authorized by Tennessee Rule of Civil

Procedure 59.04, which provides: “A motion to alter or amend a judgment shall be filed

and served within thirty (30) days after the entry of the judgment.” The rule does not list

particular grounds upon which a motion to alter or amend should be based. The courts,

however, have addressed the purpose and application of the rule.

“The purpose of a Rule 59.04 motion to alter or amend a judgment is to

provide the trial court with an opportunity to correct errors before the

judgment becomes final.” In re M.L.D., 182 S.W.3d 890, 895 (Tenn. Ct.

App. 2005); Bradley v. McLeod, 984 S.W.2d 929, 933 (Tenn. Ct. App.

1998). Such a motion “permits the trial court to revisit and rectify errors

that were made when the court overlooked or failed to consider certain

matters.” Morrison v. Morrison, 2002 WL 31423848, at *2 (Tenn. Ct. App.

Oct. 29, 2002). The rule affords litigants “a limited opportunity to readdress

previously determined issues and afford trial courts an opportunity to revisit

and reverse their own decisions.” Harris v. Chern, 33 S.W.2d 741, 744

(Tenn. 2000).

Baxter v. Heritage Bank & Trust, No. M2012-02689-COA-R3-CV, 2014 WL 1118072, at

*3 (Tenn. Ct. App. March 19, 2014). The Baxter court explained that a motion filed

pursuant to Rule 59.04 should be granted if the law changes before a judgment becomes

final, new evidence becomes available, or to correct a “clear error of law” or prevent

injustice. Id. at *4 (citing Chambliss v. Stohler, 124 S.W.3d 116, 121 (Tenn. Ct. App.

2003); In re M.L.D., 182 S.W.3d 890, 895 (Tenn. Ct. App. 2005)). „“The purpose of

Tenn. R. Civ. P. 59 motions is to prevent unnecessary appeals by providing the trial

courts with an opportunity to correct errors before a judgment becomes final.‟” Byrnes v.

Byrnes, 390 S.W.3d 269, 275 (Tenn. Ct. App. 2012) (quoting Bradley v. McLeod, 984

S.W.2d 929, 933 (Tenn. Ct. App. 1998)); see Lee, 2005 WL 123492, at *6-8 (treating

plaintiff‟s petition to rehear as a motion to alter or amend based on substance of petition

and purpose of Rule 59.04).

Clear Water is not arguing on appeal that the trial court should have granted its

motion to alter or amend. Rather, it is arguing that its motion to alter or amend was

properly filed and that the trial court erred by granting the Defendants‟ motion to strike it

7

The Defendants acknowledge that Clear Water‟s Rule 12 notice of appeal was timely.

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as an impermissible motion for reconsideration. The Defendants‟ reliance on Goetz v.

Autin, No. W2015-00063-COA-R3-CV, 2016 WL 537818 (Tenn. Ct. App, Feb. 10,

2016), is misplaced. In Goetz, the appellate court found that the plaintiff raised an issue

in his motion to alter or amend that had not been raised when the trial court considered

the defendant‟s motion to dismiss; that the plaintiff argued the trial court failed to draw

reasonable inferences in his favor; and that the trial court erred by considering matters

outside the pleadings. Goetz, 2016 WL 537818, at *6. The Goetz court ultimately

concluded that the motion would be treated as a motion to alter or amend and that the

deadline to file a notice of appeal would be extended pursuant to Rule 59.01, but it

warned that “[p]arties should not attempt to present previously unasserted theories or

legal arguments or relitigate previously adjudicated matters under the guise of filing a

Tenn. R. Civ. P. 59.04 motion to alter or amend.” Id.

The record in this case does not include a transcript of the hearing, so we do not

know what the trial court considered in ruling on the Rule 10 Defendants‟ motion to

dismiss. Further, it is not clear from the order the trial court entered granting the Rule 10

Defendants‟ motion whether the court acknowledged or addressed Clear Water‟s claim

for tortious interference with its business relationships asserted against all of the

Defendants or how much consideration the court gave to whether a contract must be

attached to a complaint when a plaintiff asserts a claim in tort for interfering with

contractual relationships. Contrary to the Defendants‟ argument, Clear Water did not

raise any issue for the first time in its motion to alter or amend, nor did it “simply ask[]

the trial court to change its mind and accept the Plaintiff‟s argument that Rule 10.03 does

not apply to claims for tortious interference with contracts or business relationships.”

Rather, Clear Water properly moved the trial court to address what it considered to be a

clear error of law and/or injustice, thereby providing the trial court with an opportunity to

correct any errors before its judgment became final and avoiding an unnecessary appeal.

Based on our conclusion that Clear Water properly filed a motion to alter or amend

pursuant to Rule 59.04, we vacate the trial court‟s order striking Clear Water‟s motion to

alter or amend. We hold the time for appealing the trial court‟s order granting the Rule

10 Defendants‟ motion to dismiss was tolled pursuant to Rule 59.01 and that Clear

Water‟s notice of appeal filed on April 1, 2016, was timely.

III. CONCLUSION

The trial court‟s judgment dismissing Clear Water‟s claim for tortious interference

with business relationships is vacated; the judgment dismissing the claim for tortious

interference with contractual relations is affirmed; the judgment awarding the Rule 12

Defendants their attorneys‟ fees and expenses is vacated; and the judgment striking the

motion to alter or amend is vacated. This case is remanded to the trial court for further

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proceedings consistent with this opinion. Costs of this appeal shall be taxed to the

Defendants/Appellees, for which execution shall issue if necessary.

_________________________

ANDY D. BENNETT, JUDGE

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