Tennison Brothers, Inc. v. William H. Thomas, Jr.

12/15/2017

IN THE COURT OF APPEALS OF TENNESSEE

AT JACKSON

September 20, 2017 Session

TENNISON BROTHERS, INC., ET AL. v. WILLIAM H. THOMAS, JR.

Direct Appeal from the Chancery Court for Shelby County

No. CH-08-1310 Jim Kyle, Chancellor

No. W2016-00795-COA-R3-CV

This appeal involves parties with interests in neighboring properties who competed for

the issuance of a billboard permit. Rather than waiting for the resolution of the

administrative process that would determine which of the two applicants was entitled to a

billboard permit, one party illegally constructed his billboard without a permit in the

midst of the proceedings. Because of his action, the opposing party was unable to

construct a billboard when the litigation ultimately ended in its favor. The party who

prevailed in the administrative process and its landlord both obtained default judgments

against the party who constructed the billboard based on claims of intentional

interference with business relations and inducement to breach a contract. The trial court

appointed a special master to calculate damages and adopted the master’s report in its

entirety, awarding the landlord approximately $1.1 million and awarding the party who

planned to construct the billboard $3.9 million, which included treble damages. We

affirm and remand for further proceedings.

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

and Remanded

BRANDON O. GIBOSN, J., delivered the opinion of the court, in which ANDY D. BENNETT,

J., and J. STEVEN STAFFORD, P.J., W.S., joined.

Jonathan Lynn Miley, Nashville, Tennessee, for the appellant, William H. Thomas, Jr.

Kathy Baker Tennison and Stuart Brian Breakstone, Memphis, Tennessee, for the

appellee, Tennison Brothers, Inc.

Robert L.J. Spence, Jr. and Kristina Alicia Woo, Memphis, Tennessee, for the appellee,

Clear Channel Outdoor, Inc.

OPINION

I. FACTS & PROCEDURAL HISTORY

Tennison Brothers, Inc. owns property near the convergence of two major

interstate highways in Memphis, Tennessee. Due to the volume of traffic on the nearby

interstates, the Tennison Brothers property is a prime location for a billboard. On August

19, 2004, Tennison Brothers entered into a lease agreement with Clear Channel Outdoor,

Inc., whereby Tennison Brothers leased its property to Clear Channel for the purpose of

erecting a billboard. The lease term was to commence on September 1, 2004, and extend

for twenty years. Clear Channel was required to pay Tennison Brothers $1,000 upon

execution of the lease, and when construction of the billboard was complete, its annual

rent obligation would begin at the rate of $15,600 per year with a three percent increase

each year thereafter.

Southern Millwork and Lumber Company owns property adjacent to the Tennison

Brothers property. Days after the execution of the lease between Tennison Brothers and

Clear Channel, on August 23, 2004, Southern Millwork entered into a lease with William

Thomas, Jr., permitting Thomas to construct a billboard on the Southern Millwork

property.

Tennessee’s Billboard Regulation and Control Act provides that no person can

construct a billboard within 660 feet of an interstate highway right-of-way (unless

otherwise provided in the Act) without first obtaining a billboard permit from the

Commissioner of the Tennessee Department of Transportation (“TDOT”). Tenn. Code

Ann. § 54-21-104(a). TDOT Regulations further provide that no two structures shall be

spaced less than 1000 feet apart on the same side of the highway. Tenn. Comp. R. &

Regs. 1680-02-03-.03(1)(a)(4)(i)(I). The site for Clear Channel’s proposed billboard on

the Tennison Brothers property was approximately fifty feet from the site for Thomas’s

proposed billboard on the Southern Millwork property, so only one of the proposed

billboards could legally be constructed.

TDOT Regulations provide that applications will be considered “on a first come,

first served basis.” Tenn. Comp. R. & Regs. 1680-02-03-.03(1)(a)(7)(v).1 Thomas was

the first to apply for a TDOT permit. His application packet was received on August 24,

1

Some of these regulations have been renumbered since this matter began in 2004. We have provided the

current section numbers for clarity, as the renumbering and amendments do not impact our analysis of the

issues on appeal.

2

2004. It included a copy of the lease agreement between Thomas and Southern

Millwork, but the property owner’s signature was not notarized. On August 27, 2004,

TDOT informed Thomas that his application was being returned for failure to have the

property owner’s signature notarized as required by TDOT Regulations.2 That same day,

TDOT received Clear Channel’s application for a permit to construct a billboard on the

Tennison Brothers property. Clear Channel’s application was deemed complete, and it

was ultimately approved. In the meantime, Thomas resubmitted his application with the

required notarization, but TDOT ultimately denied his application in light of the spacing

requirement and Clear Channel’s recently approved application for a billboard at its site

fifty feet away.

Thomas requested a hearing after the denial of his application. As a result, TDOT

voided the billboard permit that Clear Channel had been granted pending the outcome of

Thomas’s appeal. Clear Channel requested a hearing regarding this action as well. After

a hearing regarding both applications, an administrative law judge entered an “Initial

Order” concluding that Clear Channel’s application should have also been rejected

because even though it contained a notarized signature of the property owner, the person

who notarized it served as the real estate manager for Clear Channel. Because Thomas’s

re-submitted application would have been “next in line for review,” the administrative

law judge concluded that Thomas’s re-submitted application should be approved and that

Clear Channel’s previously issued permit should remain “voided.” This initial order

from the administrative law judge was entered on October 20, 2005.

Clear Channel timely filed a petition for reconsideration of the initial order and

then an appeal to the Commissioner of TDOT, such that the initial order never became a

final order.3 Nevertheless, in reliance on the reasoning contained in the initial order,

Thomas proceeded to construct a billboard on the Southern Millwork property despite the

fact that he did not have a permit from TDOT. He acquired a local building permit from

Shelby County, which was also necessary in order to construct a billboard, and built the

2

In 1989, TDOT amended its outdoor advertising rules to address the issue of billboards being placed on

properties without the knowledge or consent of property owners. TDOT regulations were amended to

require the applicant to either show proof of ownership of the property or submit a lease or affidavit

signed by the property owner stating that permission had been given to construct the proposed billboard.

The regulations and the application itself state that the property owner’s signature must be notarized. The

regulations further provide that incomplete applications will be returned without action.

3

“If an administrative judge or hearing officer hears a case alone under § 4-5-301(a)(2), the administrative

judge or hearing officer shall render an initial order, which shall become a final order unless reviewed in

accordance with § 4-5-315.” Tenn. Code Ann. § 4-5-314(b). A petition for appeal from an initial order

may be filed with the agency within fifteen days. Tenn. Code Ann. § 4-5-315(b). Notably, the entry of

an initial order regarding a permit does not equate to the issuance of a permit.

3

structure in November 2005. Unbeknownst to either TDOT, Tennison Brothers, or Clear

Channel, in December 2005, Thomas sold the unpermitted billboard to CBS Outdoor for

$188,600, representing to CBS Outdoor that the permitting matters had been resolved and

that TDOT had been ordered to issue the permit. However, for the next several years,

Thomas continued to participate in the administrative proceedings regarding the TDOT

permits as if he still held a lease on the property and owned the unpermitted billboard.

On May 18, 2006, the Commissioner of TDOT overturned the initial order entered

by the administrative law judge and concluded that Clear Channel’s application was not

improper as a result of the notarization by its real estate manager. The Commissioner

remanded the matter, with instructions, for further consideration by the administrative

law judge. On March 5, 2007, the administrative law judge entered another initial order,

this time concluding that Clear Channel’s application was properly approved and that the

TDOT permit should again be granted to Clear Channel, while Thomas’s application

should be denied. The administrative law judge specifically ruled that the billboard

Thomas constructed without a permit was illegal and “should be immediately removed.”

On July 31, 2007, the Commissioner of TDOT entered a final order affirming the

decision of the administrative law judge. Thomas argued before the Commissioner that

he was justified in constructing the billboard without a permit due to the finding in the

original initial order. However, the Commissioner rejected this argument as “spurious

and utterly without merit.” Simply put, the Commissioner explained, “An Initial Order is

not a permit.” The Commissioner noted that the initial order was appealed and that

TDOT had never issued a permit to Thomas for his proposed billboard. The

Commissioner found that Thomas’s actions in constructing and operating a billboard

without a permit were a clear violation of Tennessee Code Annotated section 54-21-104

and that the illegal billboard should be immediately removed. Even though Thomas no

longer owned the billboard at issue (still unbeknownst to the other parties), Thomas filed

a petition for judicial review of the Commissioner’s final order in the chancery court of

Davidson County pursuant to the Uniform Administrative Procedures Act (“UAPA”),

Tenn. Code Ann. § 4-5-322.

While the UAPA petition for judicial review remained pending in Davidson

County, Tennison Brothers instituted the present action on July 16, 2008, by filing a

complaint for damages in the chancery court of Shelby County, naming Thomas,

Southern Millwork, and Clear Channel as defendants.4 The complaint described the lease

executed in 2004 by Tennison Brothers and Clear Channel for the construction of a

4

Tennison Brothers eventually dismissed its claims against Southern Millwork, so we will not discuss its

role in the lawsuit further in this opinion.

4

billboard and the ensuing litigation regarding the billboard perimts. The complaint

alleged that Thomas constructed his billboard on neighboring property in November 2005

even though no permit for the location was ever issued by TDOT. The complaint

described the orders entered by the administrative law judge and the Commissioner of

TDOT in 2007 instructing Thomas to immediately remove the illegal billboard, but

according to the complaint, the illegally constructed billboard still had not been removed

by the time the complaint was filed in July 2008. According to the complaint, the

defendants refused to remove the billboard and continued to update it and profit from

new advertisements. Tennison Brothers alleged that the illegally constructed billboard

and Thomas’s refusal to remove it interfered with the planned construction of the

billboard on the Tennison Brothers property. The complaint specifically referenced the

1000-feet spacing requirement imposed by TDOT regulations. The causes of action

Tennison Brothers asserted against Thomas included intentional interference with

business relationships and common law and statutory inducement to breach a contract.5

Essentially, Tennison Brothers alleged that Thomas improperly interfered with and

intentionally caused the termination of the lease between Tennison Brothers and Clear

Channel by constructing a billboard without a permit and then refusing to remove it.

Tennison Brothers sought compensatory damages and treble damages pursuant to

Tennessee Code Annotated section 47-50-109 (providing for treble damages for a

statutory claim of inducement to breach a contract). Tennison Brothers also alleged that

Thomas’s actions were malicious and intentional, entitling Tennison Brothers to punitive

damages. The complaint also included a breach of contract claim against Clear Channel.

5

The second count in the complaint was entitled “Common Law and Statutory Inducement to Breach a

Contract and Intentional Interference with a Contract.” We will refer to this count as common law and

statutory inducement to breach a contract. See Buckner v. Goodman, No. E2016-00150-COA-R3-CV,

2016 WL 7479141, at *11 (Tenn. Ct. App. Dec. 29, 2016) (no perm. app. filed) (quoting Whalen v.

Bourgeois, No. E2013-01703-COA-R3-CV, 2014 WL 2949500, at *12 n.2 (Tenn. Ct. App. June 27,

2014)) (“the common law action of ‘intentional interference with contractual relations’ is alternatively

referred to as ‘procurement of breach of contract,’ as well as the statutory action’s title of ‘inducement to

breach a contract’”). The statutory action provides:

It is unlawful for any person, by inducement, persuasion, misrepresentation, or other

means, to induce or procure the breach or violation, refusal or failure to perform any

lawful contract by any party thereto; and, in every case where a breach or violation of

such contract is so procured, the person so procuring or inducing the same shall be liable

in treble the amount of damages resulting from or incident to the breach of the contract.

The party injured by such breach may bring suit for the breach and for such damages.

Tenn. Code Ann. § 47-50-109.

The other cause of action asserted, intentional interference with business relations, “extends

beyond situations in which there exists a valid contractual relationship.” Trau-Med of Am., Inc. v. Allstate

Ins. Co., 71 S.W.3d 691, 699 (Tenn. 2002). However, the basis for the intentional interference with

business relations claim asserted by Tennison Brothers was not any business relationship outside of its

lease agreement with Clear Channel. Tennison Brothers alleged that it had a business relationship with

Clear Channel “in that [Tennison Brothers] entered into a lease agreement” with Clear Channel.

5

Tennison Brothers alleged that its lease agreement with Clear Channel was breached

based on “a breach of the implied reasonable time of performance,” as almost four years

had passed since the lease agreement was executed.

Clear Channel filed an answer and a cross-complaint against Thomas (and

Southern Millwork). In its answer to the breach of contract claim, Clear Channel

admitted that performance under the lease agreement had been delayed as a result of the

actions of Thomas, but Clear Channel denied that it had breached its lease agreement

with Tennison Brothers. Then, in its cross-complaint, Clear Channel asserted various

causes of action against Thomas, including intentional interference with a business

relationship. Clear Channel also alleged that Thomas’s tortious interference “procured a

breach or violation” of the contract between Tennison Brothers and Clear Channel,

entitling Clear Channel to compensatory damages and treble damages pursuant to the

statute governing a claim for statutory inducement to breach a contract.

In December 2008, Thomas filed answers to the original complaint filed by

Tennison Brothers and the cross-complaint filed by Clear Channel.6 Due to ongoing

discovery disputes, the trial judge, Chancellor Arnold Goldin, appointed a special master

to make recommendations concerning motions to compel that were filed against Thomas.

In a May 2009 report, the special master found that Thomas was served with discovery in

September 2008 shortly after the complaint was filed and that his responses since then

were “deficient as a matter of law.” Thomas, who is himself a licensed attorney, raised

general objections to all discovery rather than objecting to each individual request. The

special master deemed his responses “woefully insufficient.” In August 2009, the trial

court adopted the report of the special master and his recommendation that Thomas be

required to answer the discovery subject to some qualifications.

Tennison Brothers subsequently filed a third motion to compel seeking sanctions,

and Clear Channel filed a motion for sanctions and default judgment because Thomas

still had not adequately responded to the discovery filed over a year earlier, despite the

special master’s report and the trial court’s order. In November 2009, the trial court

entered an order striking Thomas’s answers and granting default judgment in favor of

Clear Channel and Tennison Brothers. The trial court noted that Thomas had refused to

produce “even one document” responsive to the discovery requests of Tennison Brothers

or Clear Channel despite two orders from the court requiring him to do so, and the court

6

In August 2008, the trial court entered a temporary restraining order prohibiting Thomas from selling or

attempting to transfer any rights to the unpermitted billboard. Thomas still did not inform the trial judge

or the plaintiffs that he had already sold his rights to the billboard in December 2007.

6

found that Thomas had displayed “a clear record of willful delay and contumacious

conduct.” Although default judgment was entered against Thomas, the issue of damages

would be determined at a later hearing.

Also in November 2009, Thomas was ordered to testify after failing to comply

with written discovery requests. During his testimony, Thomas revealed for the first time

that he no longer had an interest in the unpermitted billboard because he had sold his

leasehold interest in the real property as well as the billboard structure itself to CBS

Outdoor in December 2005. As a result of this disclosure, the trial court entered an order

“joining” CBS Outdoor as a party defendant pursuant to Tennessee Rule of Civil

Procedure 19.01 and granted the parties leave to amend their pleadings. Tennison

Brothers amended its complaint to also assert claims against CBS Outdoor for intentional

interference with business relationships and common law and statutory inducement to

breach a contract. CBS Outdoor filed an answer admitting that it purchased the billboard

and lease from Thomas but claiming that it was unaware of the TDOT orders requiring

removal of the billboard until it was joined in this litigation. Tennison Brothers

eventually settled its claims against CBS Outdoor for $5,000, and an agreed order of

dismissal was entered dismissing CBS Outdoor from the case.

The revelation about the sale of the billboard also prompted Clear Channel and

TDOT to file a motion to dismiss Thomas’s UAPA petition for judicial review, which

was still pending in Davidson County, for lack of standing and mootness. The Davidson

County Chancery Court granted the motion and dismissed the UAPA proceeding for lack

of standing and mootness. This Court ultimately affirmed the dismissal based on lack of

standing and mootness, concluding that Thomas had “render[ed] himself ineligible to

receive the permits” by selling his interest in both the real property and the billboard

structure itself. See Thomas v. Tenn. Dep’t of Transp., No. M2010-01925-COA-R3-CV,

2011 WL 3433015, at *8 (Tenn. Ct. App. Aug. 5, 2011). After this Court affirmed

dismissal of Thomas’s UAPA petition for judicial review of the TDOT decision, TDOT

finally re-issued the billboard permit to Clear Channel. However, despite having

obtained the necessary TDOT permit, Clear Channel was still unable to legally construct

a billboard on the Tennison Brothers site because the necessary local permit from Shelby

County had been obtained by Thomas in connection with his construction of the

unpermitted billboard in 2005 and transferred to CBS Outdoor.7 The unpermitted

7

The Shelby County permit Thomas obtained would have become null and void if construction had not

commenced within six months. By illegally constructing the billboard in the midst of the administrative

proceeding regarding the TDOT permit, Thomas was able to avoid forfeiture of the local permit. He

admits that “both permits are required in order to legally construct a billboard.”

7

billboard still remained standing. TDOT eventually voided the permit it issued to Clear

Channel after 180 days due to its failure to build.

In April 2010, Tennison Brothers filed yet another motion for sanctions against

Thomas in the present litigation due to his failure to appear for his deposition and his

continued refusal to produce requested documents. As a sanction, Tennison Brothers

proposed that Thomas be prohibited from presenting any evidence at the hearing on

damages. In June 2010, the trial court entered an order concluding that Thomas failed to

appear at his deposition without justification, and as a result, he would not be allowed to

present proof related to damages. The court clarified, however, that Thomas would be

allowed to cross-examine the witnesses presented by other parties related to damages.

After this ruling, the case was transferred to another division of chancery court for

hearing by another chancellor, Chancellor Kenny Armstrong. At that point, Thomas filed

a motion to set aside the default judgment entered by Chancellor Goldin, arguing that the

decision was extreme and unwarranted. After a hearing, Chancellor Armstrong denied

the motion to set aside the default judgment.

The hearing on damages (or writ of inquiry of damages)8 was finally held on

January 7, 2013, three years after the default judgment was granted. The billboard

Thomas constructed still remained standing as of the date of the hearing in 2013, despite

the TDOT order to immediately remove it back in 2007. The only witnesses to testify

were the manager of Tennison Brothers and the real estate manager for Clear Channel.

Numerous exhibits were also introduced, including a report from an expert witness and

valuation analyst retained by Clear Channel, and some deposition testimony was also

read into the record. Although other claims were mentioned in the complaints, at the

hearing on damages, Tennison Brothers and Clear Channel only sought to recover

damages for intentional interference with business relations and common law and/or

statutory inducement to breach a contract. Tennison Brothers calculated its damages

based on the annual lease payments that it would have received from Clear Channel if

Clear Channel had been able to construct its billboard in accordance with the twenty-year

lease. Clear Channel calculated its damages based on the projected lost profits from

advertisements on the proposed billboard that it was unable to construct. Clear Channel’s

expert calculated its lost profits based on similar billboards located in Memphis. In

addition to hearing testimony regarding damages, Chancellor Armstrong also instructed

8

A “writ of inquiry” is “[a] writ ordering the sheriff to empanel a jury and act as judge in a trial held to

determine the amount of damages suffered by a plaintiff who has won a default judgment on an

unliquidated claim.” Black’s Law Dictionary (10th ed. 2014).

8

the plaintiffs that “you’ve still got to prove your claim,” despite the previous entry of a

default judgment against Thomas. Thomas argued that the claims for damages should be

dismissed because he had sold the unpermitted billboard and no longer maintained

control over it. In response, the plaintiffs argued that Thomas’s liability had already been

determined by the entry of a default judgment, and therefore, his arguments regarding

lack of control were irrelevant.

On July 10, 2013, the trial court entered its written order containing findings from

the writ of inquiry of damages. At the outset, the trial court examined the effect of

Chancellor Goldin’s 2009 order striking Thomas’s answers and granting default

judgment against him in favor of Tennison Brothers and Clear Channel. The court

acknowledged that because of the default judgment, the court was required to “consider

as true” the well-pled allegations contained in the complaints, but the court went on to

find that some of the allegations in the complaints were not “consistent with the proof in

the record.” Despite the contrary allegations in the complaints, the court concluded,

based on the “proof presented,” that Thomas did not have an improper motive, as

required to support a claim of intentional interference with business relationships. The

trial court also concluded that a breach of the underlying contract between Tennison

Brothers and Clear Channel did not occur, as required to support a claim of common law

or statutory inducement to breach a contract. As such, the trial court ultimately denied all

claims for damages asserted by Tennison Brothers and Clear Channel. Tennison

Brothers and Clear Channel appealed to this Court.

On appeal, this Court concluded that the trial court “erred in considering the issue

of liability because the well-pled facts contained in the Appellants’ respective complaints

were dispositive on that question upon the grant of default judgment.” Tennison Bros. v.

Thomas, No. W2013-01835-COA-R3-CV, 2014 WL 3845122, at *1 (Tenn. Ct. App.

Aug. 6, 2014) (“Tennison I”).9 However, we went on to consider the issue of liability as

well, reasoning that appellate courts may consider “the sufficiency of the . . . complaint to

sustain the decree of judgment.” Id. at *8 (citing 5 C.J.S. Appeal & Error § 718 (1993);

Edington v. Michigan Mut. Life Ins. Co., 183 S.W. 728, 729 (Tenn. 1915)). Engaging in

the same analysis applicable to a Rule 12.02(6) motion to dismiss, we examined the

sufficiency of the complaints filed by Tennison Brothers and Clear Channel to determine

whether the causes of action were sufficiently pled. Id. In other words, we looked to the

complaints to determine whether they sufficiently alleged all of the requisite elements of

each cause of action asserted. Id. at *9. Ultimately, we concluded that both Tennison

9

We noted that Thomas did not raise any issue on appeal regarding whether the entry of the default

judgment was proper. Id. at *7.

9

Brothers and Clear Channel pled facts sufficient to satisfy the prima facie requirements

for claims of intentional interference with business relationships and inducement to

breach a contract. Id. at *13-14. Accordingly, we concluded that Tennison Brothers and

Clear Channel “are entitled to damages against Mr. Thomas for the foregoing causes of

action,” and we remanded “for a determination of the appropriate damages.” Id. at *15.

We said that Tennison Brothers and Clear Channel were “entitled to elect between treble

damages and punitive damages” on remand. Id.

The proceedings on remand took place before Chancellor Jim Kyle. Despite this

Court’s opinion in Tennison I, on remand, Thomas insisted that the trial court was still

required to determine not only the amount of damages but also whether Tennison

Brothers and Clear Channel were entitled to damages. Thomas argued, again, that neither

plaintiff was entitled to recover damages from him because he sold the unpermitted

billboard in 2005 and no longer maintained control over it. He also argued that the trial

court was not required to follow our decision in Tennison I because it was wrongly

decided. For instance, despite the allegations in the plaintiffs’ complaints that the

unpermitted billboard structure was “illegal,” and despite the final order from the TDOT

administrative proceeding deeming the billboard “illegal,” Thomas insisted that the

unpermitted billboard was not illegal and that it did not actually interfere with Clear

Channel’s ability to construct a billboard on the Tennison Brothers property. The factual

basis for this argument was that the unpermitted billboard was currently advertising for

the store located on the Southern Millwork property, and therefore, according to

Thomas’s interpretation of the TDOT regulations, the sign would no longer need a permit

from TDOT, was not illegal, and would not be considered for purposes of the TDOT

spacing requirement.

Aside from any TDOT permitting issues, Thomas admitted that Clear Channel was

still unable to construct its proposed billboard due to the fact that it did not hold the

necessary Shelby County permit for a billboard. The Shelby County permit was

admittedly obtained by Thomas and transferred to CBS Outdoor in connection with the

sale of the billboard Thomas constructed in 2005. Because of a spacing requirement in

the Shelby County ordinance, Thomas admitted that “as long as CBS [Outdoor] holds the

local permit, Clear Channel can never receive a local permit for the Tennison site even if

it were to apply for it and, most importantly, even if it properly held the TDOT permit.”

However, Thomas claimed that his actions in connection with the local Shelby County

permit could not be considered in this litigation because the complaints only specifically

mentioned the TDOT permit, not the Shelby County permit. In sum, Thomas claimed

that his allegedly wrongful conduct as stated in the complaints was not the legal cause of

the plaintiffs’ damages. In response, Clear Channel and Tennison Brothers argued that

10

Thomas should not be permitted to relitigate issues of causation and the legality of his

actions due to the entry of the default judgment and this Court’s decision in Tennison I.

Chancellor Kyle referred the matter to a special master for a determination of the

amount of damages and Thomas’s financial status as it related to the issue of punitive

damages. The trial court’s order directed the special master to calculate damages against

Thomas for the causes of action of intentional interference with business relationships

and inducement to breach a contract. The special master was directed to submit a report

outlining his findings to the court for a final determination of damages.

The parties’ attorneys met with the special master and decided to rely on the

testimony and exhibits presented at the original writ of inquiry hearing before Chancellor

Armstrong rather than presenting additional live testimony. Nonetheless, the special

master held a hearing, and additional exhibits and calculations were submitted for his

consideration. On August 14, 2015, the special master issued a 33-page report as to the

calculation of damages. Although the twenty-year lease between Clear Channel and

Tennison Brothers commenced on September 1, 2004, the special master determined that

damages should be calculated beginning April 1, 2007. As noted above, the lease

provided that annual rent would be owed once construction of the billboard was

complete. The special master reasoned that Clear Channel could have constructed the

billboard after the administrative law judge ruled in March 2007 that Thomas’s billboard

was illegal and must be immediately removed. The special master calculated the

compensatory damages owed to Tennison Brothers by looking to the annual rent

provided in the lease that would have been owed for the remainder of the twenty year

term, extending through September 2024. The special master found that the amount of

compensatory damages should be trebled and that prejudgment interest should be added,

but also, a credit of $5,000 should be deducted for the amount Tennison Brothers had

already received in its settlement with CBS Outdoors. The special master did not make a

specific recommendation regarding a total sum owed to Tennison Brothers because the

total would depend on the date of the final order entered by the trial court.

Next, the special master considered the report filed by Clear Channel’s expert

witness regarding its lost profits. The special master found the expert’s testimony

credible and his opinions to be based on appropriate data. The special master accepted

the expert’s calculation that Clear Channel’s lost net profits each month equaled $6,200.

The special master concluded that this amount of compensatory damages should be

awarded for the same period, from April 1, 2007, through September 2024, and trebled

pursuant to the applicable statute. However, the special master did not recommend an

11

award of prejudgment interest because the amount owed was not easily calculable. The

special master also made a recommendation as to punitive damages, if elected by either

plaintiff.

The trial court held a hearing to hear the parties’ arguments regarding the special

master’s report. Tennison Brothers and Clear Channel notified the court of their intention

to elect treble damages rather than punitive damages. At the hearing, the special master

testified as to how he followed the instructions of the court and calculated the parties’

damages. Thereafter, the trial court entered an order confirming and adopting the special

master’s report in its entirety. The trial court subsequently entered a final judgment

awarding Tennison Brothers $1,094,670.94 and awarding Clear Channel $3,906,000.

Thomas filed a one-hundred-page motion to alter or amend, which the trial court denied.

After a Rule 54.02 certification, Thomas timely filed a notice of appeal to this Court.10

II. ISSUES PRESENTED

Thomas raises twelve issues, which we quote from his brief on appeal (but list in a

different order):

1. Whether portions of the order previously entered [by Chancellor

Goldin] limiting Thomas’[s] ability to present a defense are

unconscionable and should be declared void;

2. Whether Clear Channel’s and Tennison’s complaints fail to state a

claim upon which relief can be granted, therefore Thomas cannot be

held liable for their alleged claims;

3. Whether the trial court and the parties applied an erroneous

interpretation to the Court of Appeals decision [in Tennison I] which

resulted in manifest injustice contrary to all legal standards of

fairness and legality;

10

This Court entered an order staying the proceedings on appeal due to the fact that Thomas filed for

bankruptcy protection. Thereafter, the bankruptcy court granted relief from the automatic stay to allow

this appeal to proceed.

12

4. Whether the ruling by the Court of Appeals [in Tennison I]

addressed all relevant and indispensable legal issues and if not was

the trial court required to address them before it could make an

assessment of “appropriate damages” as mandated by the Court of

Appeals;

5. Whether even if Clear Channel’s and Tennison’s complaints had

stated valid claims, the parties have failed to prove a causal nexus

between Thomas’s (purely technical) wrongful conduct and their

claimed damages and therefore are entitled to merely nominal

damages;

6. Whether the trial court was legally entitled to blindly adopt the

special master’s report without further consideration of key legal

issues after failing to properly instruct the special master as to

findings of fact and conclusions of law;

7. Whether the parties established with certainty and by competent,

non-speculative evidence their entitlement to their claimed damages;

8. Whether the parties are entitled to future damages;

9. Whether the evidence in the record (regardless of who proffered it)

demonstrated that the parties failed to mitigate their claimed

damages;

10. Whether the parties demonstrated that they are both legally and

factually entitled to recover treble and/or punitive damages;

11. Whether the trial court should have stricken the deposition testimony

of TDOT employees . . . entered into evidence by Defendant

[Thomas] as unimpeachable proof that the parties’ claims are false

as a matter of law;

13

12. What impact does the Tennessee Billboard Act having been declared

unconstitutional have on the present matter.

Clear Channel and Tennison Brothers ask this Court to affirm the trial court’s awards in

their entirety. For the following reasons, we affirm the decision of the chancery court

and remand for further proceedings.

III. DISCUSSION

A. Discovery Sanctions

We begin with Thomas’s argument that the order entered by Chancellor Goldin

limiting Thomas’s ability to present evidence regarding damages is unconscionable and

void. To briefly recap, the order at issue was entered on June 4, 2010.11 At that point, the

trial court had already entered an order imposing discovery sanctions against Thomas on

November 20, 2009, striking his answers and granting default judgment against him

because he refused to comply with two prior orders regarding discovery. Although

Thomas is a licensed attorney, the special master deemed his discovery responses

“woefully insufficient,” and the trial court found that Thomas had failed to produce even

one document responsive to the discovery requests of Tennison Brothers and Clear

Channel, which were propounded a year earlier. The trial court found that Thomas had a

clear record of willful delay and contumacious conduct in this proceeding.12

11

Thomas did not raise any issue on appeal in Tennison I to suggest that this order was improper.

However, he claims that he was not required to challenge this discovery sanction in Tennison I because

Chancellor Armstrong ultimately entered judgment in his favor after the writ of inquiry hearing, so he

was the prevailing party in the trial court and asking this Court to affirm the trial court’s judgment.

Failure to raise issues in a first appeal may result in a waiver of those issues in a subsequent appeal. See,

e.g., Moore v. Taylor, No. M2013-01590-COA-R3-CV, 2014 WL 2999744, at *3 (Tenn. Ct. App. June

30, 2014); State v. Stewart, 439 S.W.3d 906, 908 (Tenn. Crim. App. 2013); Tindell v. West, No. E2012-

01988-COA-R3-CV, 2013 WL 6181997, at *6 (Tenn. Ct. App. Nov. 25, 2013); Melton v. Melton, No.

M2003-01420-COA-R10-CV, 2004 WL 63437, at *3 (Tenn. Ct. App. Jan. 13, 2004). However, “an

appellee is only required to raise as issues what it believes to have been errors committed by the trial

court as issues for which the appellee seeks relief from the judgment.” In re Estate of Ross, No. M2013-

02218-COA-R3-CV, 2014 WL 2999576, at *2 (Tenn. Ct. App. June 30, 2014); see Tenn. R. App. P.

27(b) (“If appellee is also requesting relief from the judgment, the brief of the appellee shall contain the

issues and arguments involved in his request for relief…”). We will assume for the sake of argument that

this issue was not waived but conclude that it does not entitle Thomas to relief in any event.

12

“Contumacious is defined as ‘scornful’ or ‘recalcitrant.’” Am. Exp. Centurion Bank v. Lowrey, No.

E2011-01247-COA-R3-CV, 2013 WL 937831, at *5 (Tenn. Ct. App. Mar. 11, 2013) (quoting Bryan

Garner, A Dictionary of Modern Legal Usage 220 (2nd ed. 1995)). Contumacious conduct means

“‘[w]illfully stubborn and disobedient conduct.’” Id. (quoting Black’s Law Dictionary 298 (5th ed.

14

Even after the entry of this order, Thomas still refused to cooperate. He

admittedly refused to appear at his own deposition because the trial court had granted a

protective order precluding Thomas from deposing an employee of Tennison Brothers.

After Thomas refused to appear at his deposition, Tennison Brothers filed a second

motion for sanctions asking the trial court to prohibit Thomas from presenting any

evidence or defenses regarding damages. The trial court granted this motion based on its

finding that Thomas was not justified in refusing to appear for his deposition or failing to

produce the documents requested in the notice duces tecum.

Tennessee Rule of Civil Procedure 37.04 provides that if a party fails to appear for

his or her deposition, after being served with proper notice, the court on motion “may

make such orders in regard to the failure as are just, and among others it may take any

action authorized under paragraphs (A), (B), and (C) of Rule 37.02.” The referenced

paragraphs of Rule 37.02 specifically authorize the entry of “[a]n order refusing to allow

the disobedient party to support or oppose designated claims or defenses, or prohibiting

that party from introducing designated matters in evidence[.]” Tenn. R. Civ. P. 37.02(B).

The trial court’s choice and imposition of such a discovery sanction will not be disturbed

absent an abuse of discretion. Langlois v. Energy Automation Sys., Inc., 332 S.W.3d 353,

356 (Tenn. Ct. App. 2009) (citing Pegues v. Ill. Cent. R.R. Co., 288 S.W.3d 350, 353

(Tenn. Ct. App. 2008)). “‘We will reverse a trial court’s decision to impose sanctions

only if the court ‘has acted unreasonably, arbitrarily, or unconscionably.’” Id. (quoting

Hodges v. Attorney General, 43 S.W.3d 918, 921 (Tenn. Ct. App. 2000)).

Here, we readily conclude that Chancellor Goldin acted reasonably in his decision.

One would think that the trial court’s first discovery sanction, the entry of default

judgment, would have caused Thomas to “‘feel duly chastened’” and “‘comply promptly

with future discovery orders.’” Id. at 357 (quoting Nat’l Hockey League v. Metro.

Hockey Club, Inc., 427 U.S. 639, 642-43 (1976)). Unfortunately, it did not have that

effect. Because Thomas persisted in his disobedient conduct and brazenly refused to

appear at his deposition, the trial court’s imposition of this additional sanction was not

arbitrary or unconscionable. Given Thomas’s long record of contumacious conduct in

this case, “the punishment fits the offense.” Id.

Thomas argues on appeal that he has been unlawfully denied his due process

“right to present a defense.” We do not agree. The only cases cited by Thomas on appeal

with regard to this issue deal with the rights of an accused to present a defense in a

criminal trial. Even in that setting, however, the criminal defendant’s due process right to

present a defense “‘must yield to other legitimate interests in the criminal trial process.’”

State v. Williams, No. W2013-01593-CCA-R3-CD, 2015 WL 1453389, at *14 (Tenn.

1979)).

15

Crim. App. Mar. 27, 2015) (quoting State v. Brown, 29 S.W.3d 427, 432 (Tenn. 2000)).

“So long as the rules of procedure and evidence are not applied arbitrarily or

disproportionately to defeat the purposes they are designed to serve, these rules do not

violate a defendant’s right to present a defense.” State v. Flood, 219 S.W.3d 307, 316

(Tenn. 2007); see, e.g., State v. Huskey, No. E1999-00438-CCA-R3-CD, 2002 WL

1400059, at *85 (Tenn. Crim. App. June 28, 2002) (noting that the imposition of

sanctions to preclude the testimony of defense experts in appropriate circumstances does

not violate a defendant’s right to present a defense). In the case at bar, the trial court’s

discovery sanction complies with the applicable Rules of Civil Procedure and was not

imposed in an arbitrary or disproportionate manner. We discern no violation of

Thomas’s due process “right to present a defense.”

B. Failure to State a Claim

The next issue Thomas raises is “[w]hether Clear Channel’s and Tennison’s

complaints fail to state a claim upon which relief can be granted[.]” As Thomas notes,

this Court considered this exact issue in Tennison I.13 At the outset, we explained that

because of the entry of default judgment, “the trial court erred in considering the issue of

liability because the well-pled facts contained in the Appellants’ respective complaints

were dispositive on that question upon the grant of default judgment.” Tennison I, 2014

WL 3845122, at *1. Still, we went on to review the sufficiency of the complaints in

order to determine whether Clear Channel and Tennison Brothers set forth sufficient facts

to demonstrate the prima facie elements of each cause of action asserted. Id. We

concluded that such review was appropriate on appeal, with the following explanation:

Thus, appellate courts may review default judgments for

fundamental error, i.e., error “apparent on the face of the record and going

to the very foundation of the action.” 5 C.J.S. Appeal & Error § 718

(1993). Consequently, on appeal from a default judgment or decree, an

appellate court may consider the issue of subject matter jurisdiction, as well

as “the sufficiency of the ... complaint to sustain the decree of judgment.” 5

C.J.S. Appeal & Error § 718 (1993); accord Edington v. Michigan Mut.

Life Ins. Co., 183 S.W. 728, 729 (Tenn. 1915) (stating that, on appeal from

default judgment, appellate court reviews sufficiency of complaint by same

standard by which court considers motion to dismiss).

13

Thomas argues on appeal that this Court should reengage in the Rule 12.02(6) analysis because the law

of the case doctrine has an exception in the case of a clearly erroneous decision that would result in

manifest injustice if allowed to stand. See State v. Davidson, 509 S.W.3d 156, 229 (Tenn. 2016).

16

Id. at *8. Although we did not specifically cite Nickas v. Capadalis, 954 S.W.2d 735,

739-40 (Tenn. Ct. App. 1997), as the source of this passage, the Nickas Court used

substantially similar language in its 1997 opinion. After noting the “general rule [that]

the defendant against whom a default judgment has been entered is thereafter precluded

from litigating any substantive issues in the lawsuit, except for the establishment of the

amount of damages,” the Nickas Court said:

Nevertheless, appellate courts may review default judgments for

fundamental error, i.e., error “apparent on the face of the record and going

to the very foundation of the action.” 5 C.J.S. Appeal & Error § 718

(1993). Thus, on appeal from a default judgment or decree, an appellate

court may consider the issue of subject matter jurisdiction, as well as “the

sufficiency of the bill or the complaint to sustain the decree of judgment.” 5

C.J.S. Appeal & Error § 718 (1993); accord Edington v. Michigan Mut.

Life Ins. Co., 134 Tenn. 188, 183 S.W. 728, 729 (1915) (stating that, on

appeal from default judgment, appellate court reviews sufficiency of

complaint by same standard by which court considers motion to dismiss).

Id. In 2001, Tennessee Rule of Appellate Procedure 13 was amended in response to the

Nickas case to add subsection (f), which provides:

(f) Default Judgments. A defaulted defendant cannot raise on appeal the

defense of failure to state a claim upon which relief can be granted . . . .

The advisory commission comment to the 2001 amendment states:

New Rule 13(f) overrules decisions such as Nickas v. Capadilas, 954

S.W.2d 735 (Tenn. App. 1997). That opinion relied on the pre-Rules

precedent of Edington v. Michigan Mutual Life Ins. Co., 134 Tenn. 188,

183 S.W. 728 (1915).14 When the Rules of Civil Procedure took effect on

January 1, 1971, however, Edington was no longer controlling because the

holding conflicted with Rule 12.08 of the Civil Rules concerning waiver of

14

In Edington, the defendant failed to answer within the time allowed by law, and an order pro confesso

was taken whereby all of the facts stated were adjudged to have been admitted. Edington, 183 S.W. at

729. On appeal, the supreme court analyzed “whether the bill makes a case, assuming to be true all the

facts therein stated.” Id.

17

defenses not raised by motion to dismiss or answer. See Tenn. Code. Ann.

§ 16-3-406: “After such rules shall have become effective, all laws in

conflict therewith shall be of no further force or effect.”15

Because Tennessee Rule of Appellate Procedure 13(f) overruled decisions such as

Nickas, and Edington is no longer controlling, we conclude that this Court should not

have engaged in a Rule 12.02(6) analysis in Tennison I in order to review the sufficiency

of the complaints to determine whether they stated a claim after entry of the default

judgment. Accordingly, we decline to address Thomas’s argument on appeal regarding

whether the complaints stated a claim for which relief can be granted and whether this

Court’s Rule 12.02(6) analysis in Tennison I was flawed. According to the plain

language of Rule 13(f), “[a] defaulted defendant cannot raise on appeal the defense of

failure to state a claim upon which relief can be granted[.]” Tenn. R. App. P. 13(f).16

C. Scope of Remand after Tennison I

Thomas presents three issues on appeal that are somewhat vague but generally

question the scope of remand after this Court’s decision in Tennison I. His issues suggest

that the trial court and the parties erroneously interpreted Tennison I and failed to address

15

See also John R. Hardin, Asserting Failure to State A Claim After Default Judgment Under Both the

Federal and Tennessee Rules of Civil Procedure, 30 U. Mem. L. Rev. 131, 152-53 (1999) (suggesting

that courts were wrong to hold that a defaulting defendant could challenge the legal sufficiency of the

complaint for the first time on appeal after the adoption of the Rules of Civil Procedure because the Rules

provide that a defendant waives his right to raise the issue of whether the complaint states a claim upon

which relief may be granted if the defense is not raised by the time of trial on the merits).

16

We recognize that this Court has applied the Rule 12.02(6) analysis after the entry of default judgment

in a number of other cases besides Tennison I, relying on Nickas and cases like it, even after the

amendment to Rule 13. Professors Banks and Entman have noted this inconsistency:

When the plaintiff’s claim is for unliquidated damages, the plaintiff is required to present

proof of the amount and the defendant who has been adjudged to be in default is entitled

to litigate the issue of damages although the defendant is foreclosed from contesting

liability. There is also authority for the proposition that because a party in default does

not admit mere conclusions of law, the party may challenge the legal sufficiency of the

complaint either at the hearing on the plaintiff’s application for a default judgment or on

appeal. Such holdings, however, seem inconsistent with the rule that the defense of

failure to state a claim is waived if not presented at trial on the merits.

Robert Banks, Jr. & June F. Entman, Tennessee Civil Procedure § 9-3(a) (3d ed. 2009) (citing various

cases relying on pre-Rules authority). According to the comment to Rule 13(f), it was meant to overrule

“decisions such as” Nickas because they rely on “pre-Rules precedent.” Unfortunately, Rule 13(f) has not

been cited by any Tennessee appellate court, based on our research. However, its language is clear and

cannot be ignored.

18

“indispensable legal issues” that required consideration on remand before the trial court

could make an assessment of damages. For instance, he argues that Clear Channel and

Tennison Brothers were still required to prove “a causal nexus” between Thomas’s

conduct and their claimed damages in order to recover any more than nominal damages.

As support for his arguments, Thomas relies heavily on the Tennessee Supreme Court’s

decision in Adkisson v. Huffman, 469 S.W.2d 368 (Tenn. 1971). However, we conclude

that Adkisson does not require the analysis Thomas suggests.

The Adkisson case arose out of a writ of inquiry hearing after the entry of a default

judgment, and the pivotal issue was whether the defaulted defendant-driver could

introduce evidence to show remote contributory negligence of the deceased pedestrian he

struck.17 Id. at 369. The Court concluded that such evidence was impermissible and

examined numerous cases discussing the effect of a default judgment:

It is laid down in all the books on practice, and is unquestionable, that a

judgment by default is an admission of the cause of action. As a necessary

consequence, upon an inquiry of damages, evidence showing that no cause

of action existed is inadmissible.

Id. at 368 (quoting Union Bank v. Hicks, Ewing & Co., 23 Tenn. 327 (1843)) (internal

quotation omitted). To illustrate the point, the supreme court discussed Warren v.

Kennedy, 48 Tenn. 437 (1870), where the plaintiff brought suit for damages for

conversion of a mare and seven mules. Judgment by default was entered against the

defendant, and upon a writ of inquiry, the defendant defended on the ground that there

was no evidence that he had anything to do with the taking of the property. Id. at 372.

The Warren court deemed this impermissible, explaining that

the defendant, in suffering judgment by default, admitted that he had

wrongfully taken the property, and there was no necessity to prove that fact

before the jury. The only proof that was incumbent on the plaintiff to

make, was as to the value of the property thus admitted to have been

wrongfully taken[.]

17

Note that this was prior to the adoption of comparative fault in McIntyre v. Balentine, 833 S.W.2d 52

(Tenn. 1992).

19

Id. (quoting Warren, 48 Tenn. at 440). The Warren court explained that the defendant’s

defense on the ground that he had nothing to do with the taking “would have been proper

if he had pleaded not guilty; but the judgment by default, if it admitted anything, was

equivalent to an admission that he caused and procured it to be done.” Warren, 48 Tenn.

at 443.

The Adkisson court provided further guidance with the following quote:

As judgments by default were entered, the complaints are now

directed to a review of the assessment of damages. A judgment by default

is an admission of the truth of the cause of action and of the several

averments of facts in the declaration, and of the fair inferences and

conclusions of fact to be drawn from the averments. It establishes the

plaintiffs’ right to maintain the actions and to recover some damages. It has

the same effect, in law cases, as a judgment pro confesso in equity, which

admits the allegations of facts in the bill. A final judgment may be

immediately entered when the amount is ascertainable by simple

calculation from the papers, but in other cases, where the amount is not

liquidated, the judgment is interlocutory, and the damages must be

ascertained by a jury upon proof.18 Upon this question both sides have an

equal right to be heard, but the proof must conform to the averments of the

declaration, as in other cases. [citations omitted]

....

Hence, after default, the burden of proof to show damages, other

than nominal damages is on the plaintiff; and proof, both in aggravation

and mitigation of damages, is open to consideration by the jury in assessing

the damages, the same as in other cases. See 17 C.J. 1049, Sec. 353-4.

18

Tennessee Code Annotated section 25-108 (repealed 1972) provided that

[i]f the defendant fail to appear and defend at the time prescribed by law, judgment by

default may be taken against him. In such case, the judgment is final if the amount of the

plaintiff’s claim can be ascertained by simple calculation from the papers; when the

amount cannot be thus readily ascertained, the damages will be assessed by a jury

impaneled at the same term for the purpose.

Burnette v. Sundeen, 152 S.W.3d 1, 4 (Tenn. Ct. App. 2004) (quoting Tenn. Code Ann. § 25-108

(repealed 1972). Tennessee Rule of Civil Procedure 55.01 adopted the substance of this statute and

provides that upon entry of default judgment, “‘[i]f, in order to enable the court to enter judgment or to

carry it into effect, it is necessary to take an account or to determine the amount of damages . . . the court

may conduct such hearings . . . as it deems necessary and proper[.]’” Id. (quoting Tenn. R. Civ. P. 55.01).

20

Adkisson, 469 S.W.2d at 373 (quoting Grace v. Curley, 3 Tenn. App. 1 (1926)). In sum,

then, a default judgment “admits that plaintiff has stated a cause of action in the

pleadings,” and evidence that “questions the right of action” is inadmissible at the writ of

inquiry hearing. Id. (quoting Wileman v. Mayor and Aldermen of Town of Tullahoma,

195 S.W.2d 325 (Tenn. Ct. App. 1946)).

On appeal, Thomas claims that despite the entry of a default judgment against

him, Tennison Brothers and Clear Channel still had the burden to prove that the damages

they sought to recover were caused by Thomas’s conduct. He insists that a plaintiff who

prevails by entry of a default judgment is not entitled to recover damages that have no

relation to the purported wrongful conduct of the defendant. We do not disagree with this

latter statement. This Court has recognized that “the mere entry of a default judgment in

favor of a party does not, ipso facto, entitle that party to carte blanche damages. Rather, a

trial court may only award those damages to which the party is legally entitled.” Ace

Design Grp., Inc. v. Greater Christ Temple Church, Inc., No. M2016-00089-COA-R3-

CV, 2016 WL 7166408, at *6 (Tenn. Ct. App. Dec. 8, 2016) (no perm. app. filed). For

example, in Flynn v. People’s Choice Home Loans, Inc., 440 F. App’x 452, 456 (6th Cir.

2011), the plaintiff who obtained a default judgment in a wrongful foreclosure action

could not recover medical expenses incurred by himself and his wife because he failed to

demonstrate “that the foreclosure of his property caused the ailments leading to those

medical expenses.” See also Patterson v. Rockwell Int’l, 665 S.W.2d 96, 101 (Tenn.

1984) (explaining that after entry of default judgment, the trial court was required to

determine the extent of the plaintiff’s disability and the benefits to which the plaintiff was

entitled from the evidence introduced before the court).

Only losses “directly and proximately resulting” from wrongful interference with a

contract may be included within the measure of damages. Dorsett Carpet Mills, Inc. v.

Whitt Tile & Marble Distrib. Co., 734 S.W.2d 322, 324 (Tenn. 1987). However, the

issues that Thomas wanted to pursue on remand regarding (what he calls) “causation of

damages” are not really issues regarding the extent of the damages he caused; they are

issues that impermissibly seek to question “the right of action” after the entry of a default

judgment.19 Adkisson, 469 S.W.2d at 373 (quotation omitted). For example, Thomas

19

Thomas principally relies on another quote from Adkisson:

As the default admits a cause of action, proof thereof need not be offered, and plaintiff is

entitled to nominal damages without introducing evidence. . . . Generally speaking, all

evidence conforming to the pleadings and tending to show the amount of the demand or

matters in aggravation of the injury is admissible; while under like limitations evidence

tending to mitigate or reduce the damages is admissible on behalf of defendant. Evidence

of matters which would have constituted a good plea in bar to the cause of action is

21

argues that “it was not [his] conduct . . . that kept Clear Channel from building its own

billboard” because his billboard was not actually illegal or an interference and in any

event he no longer controlled it. Thomas insists that Clear Channel was unable to

construct its billboard due to its own failure or inability to procure the local permit from

Shelby County. However, like the defaulted defendant in the mare and mule case,

Thomas cannot now argue that he did not have “anything to do with it.” Warren, 48

Tenn. at 443. “[T]he judgment by default, if it admitted anything, was equivalent to an

admission that he caused and procured it to be done.” Id. A default judgment “admits

the allegations in the bill” and “admits that plaintiff has stated a cause of action in the

pleadings.” Adkisson, 469 S.W.2d at 372, 374 (quotations omitted).

Thomas asks this Court to consider a decision from the Texas Supreme Court

examining the subject of causation as it relates to a default judgment. However, the

court’s discussion only confirms our point regarding Thomas’s arguments. In Morgan v.

Compugraphic Corp., 675 S.W.2d 729, 731 (Tex. 1984), the court explained that there

are two distinct aspects of causation:

In a personal injury case, the plaintiff typically alleges that the

defendant’s conduct caused an event—an automobile accident, a fall, or in

this case, the release of chemical fumes—and that this event caused the

plaintiff to suffer injuries for which compensation in damages should be

paid. Thus, at trial the plaintiff must establish two causal [n]exuses in order

to be entitled to recovery: (a) a causal nexus between the defendant’s

conduct and the event sued upon; and (b) a causal nexus between the event

generally held to be inadmissible. It may, however, happen that evidence which might, if

used, have been available to prevent a judgment may after judgment be available to

reduce the damages to a mere nominal sum.

Adkisson, 469 S.W.2d at 374 (quoting Boyd v. Merchants Delivery Co. and Clarkson, 7 Tenn. App. 416

(1928)) (emphasis added). Ignoring the previous sentence containing the general rule, Thomas broadly

interprets the last sentence to mean that he can continue to use evidence that might have prevented a

judgment to reduce damages after default. Specifically, he seeks to dispute “the actual causes of Clear

Channel’s failure to construct its billboard,” claiming that such evidence is “relevant to the determination

of damages.” We disagree with Thomas’s broad interpretation. The Boyd case recognized the possibility

that evidence might pertain to both liability and damages, as the defaulted defendant in that case sought to

introduce the record of an earlier judgment, which had been paid, to reduce damages. Id. at 427. The

Boyd court concluded that this was competent evidence regarding the reduction of damages, even though

it might have also been competent evidence to prevent liability before the default as well. Id. However,

the court also noted that after a default, “evidence is inadmissible to show that no cause of action existed,”

id. at 424, and therefore, the defendant could not use such evidence after default to “defeat plaintiff’s right

to recover at least nominal damages.” Id. at 427. Here, Thomas is not attempting to reduce his damages

but to eliminate his liability by impermissibly attempting to show that no cause of action existed.

22

sued upon and the plaintiff’s injuries.

The causal nexus between the defendant’s conduct and the event

sued upon relates to the liability portion of plaintiff’s cause of action. Here,

we use the term “liability” to mean legal responsibility for the event upon

which suit is based. In a negligence action, liability is usually established

by proving that the defendant’s negligence was a proximate cause of the

event sued upon; in a products liability action in which a manufacturing

defect is alleged, liability is established by proving that a product was

placed in the stream of commerce containing a defect which was a

producing cause of the event made the basis of suit. It is this causal nexus

between the conduct of the defendant and the event sued upon that is

admitted by default. From the rule that a default judgment conclusively

establishes the defendant’s liability, it follows that a default judgment

admits that the defendant’s conduct caused the event upon which the

plaintiff’s suit is based.

. . . . The [second] causal nexus between the event sued upon and the

plaintiff’s injuries is strictly referable to the damages portion of the

plaintiff’s cause of action. Even if the defendant’s liability has been

established, proof of this causal nexus is necessary to ascertain the amount

of damages to which the plaintiff is entitled. This is true because the

plaintiff is entitled to recover damages only for those injuries caused by the

event made the basis of suit; that the defendant has defaulted does not give

the plaintiff the right to recover for damages which did not arise from his

cause of action. See Mitchell v. Town of Ahoskie, 190 N.C. 235, 129 S.E.

626 (1925). To hold, as we do, that a defaulting defendant does not admit

that the event sued upon caused [] plaintiff’s alleged injuries is entirely

consistent with the rule that a judgment taken by default admits all

allegations of fact set out in the petition, except for the amount of damages.

Proving that the event sued upon caused the plaintiff’s alleged injuries is

part and parcel of proving the amount of damages to which the plaintiff is

entitled. The causal nexus between the event sued upon and the plaintiff’s

injuries must be shown by competent evidence.

In the case before us, Thomas has blurred the distinction between the two causal nexuses.

Despite the entry of the default judgment, Thomas maintains that his conduct did not

cause the damages incurred by Clear Channel and Tennison Brothers. However, using

the language of the Texas court, the causal nexus between Thomas’s “conduct and the

event sued upon,” relating to his liability, has already been “admitted by default.” Id. at

23

732. That was the first causal nexus -- related to his legal responsibility for the event

sued upon. See id. Because “a default judgment conclusively establishes the defendant’s

liability, it follows that a default judgment admits that the defendant’s conduct caused the

event upon which the plaintiff’s suit is based.” Id. In other words, the entry of default

judgment established that Thomas’s conduct – his improper interference with the contract

between Clear Channel and Tennison Brothers -- resulted in their inability to construct

their billboard. While it is true that Clear Channel and Tennison Brothers were only

entitled to recover damages for “injuries caused by the event made the basis of suit,”

arising from the cause of action, Thomas cannot continue to litigate his liability or legal

responsibility for that event. Id. The default judgment established his liability on the

causes of action.20

On remand after Tennison I, the trial court correctly concluded that the scope of

the remand was “for a determination of the appropriate damages” and appointed a special

master to report on the calculation of damages. Thomas attempted to argue before the

special master and to the trial court numerous issues regarding the legality of his

billboard, his lack of control over it due to the sale, the local permitting issues, and other

matters. The special master declined to consider these issues regarding Thomas’s

actions, as they related to causation. The special master reasoned that it had already been

established that Clear Channel and Tennison Brothers were precluded from building their

20

Thomas also argues that Discover Bank v. Morgan, 363 S.W.3d 479 (Tenn. 2012), requires a plaintiff to

establish causation as it relates to the defendant’s conduct or liability even after entry of default judgment.

We disagree. In that case, a plaintiff obtained a default judgment against Discover, a credit card issuer,

for violation of the Tennessee Consumer Protection Act. Id. at 484. After a hearing, the trial court

awarded the plaintiff damages for loss of credit. Id. at 486. As a matter of first impression, the supreme

court considered whether a loss of available credit qualifies as “an ascertainable loss” and “actual

damages” that can be recovered under the TCPA. Id. at 496-97. The court concluded that such damages

should be recoverable “where the plaintiff suffers a demonstrable loss of credit, proximately caused by

the defendant, resulting in actual harm.” Id. at 483. The court looked to the allegations of the complaint

and the proof presented at the damages hearing but found insufficient information to support the

assessment of damages. Id. at 498-99. In the end, the court found it appropriate to remand for the

plaintiff to have a new hearing on damages “[b]ecause [the court had] never previously determined the

requirements to prove damages for loss of consumer credit.” Id. at 499. On remand, the plaintiff would

be given “the opportunity to prove that she has suffered a demonstrable loss of credit, proximately caused

by Discover, that resulted in actual harm to her -- in enough detail to allow the trial court to make a fair

and reasonable assessment of the actual damages.” Id. at 500. The court remanded for this determination

even though a default judgment had been entered against Discover. However, we do not read the court’s

opinion as requiring a re-examination of the type of causation issues that Thomas seeks to present in this

appeal after default judgment. Compare Clark v. Sputniks, LLC, 368 S.W.3d 431, 436 (Tenn. 2012)

(explaining that due to a default judgment, the following allegation from the complaint was conclusively

established: “That as a proximate result of the negligence of the defendants . . . for its [sic] failure to take

reasonable steps to protect its customers from foreseeable dangerous conditions, the plaintiff’s husband []

was killed.”).

24

billboard because of Thomas’s erection of a billboard and his refusal to remove it. At the

hearing on the special master’s report, the trial judge likewise suggested that the issue on

remand was limited to how much Clear Channel and Tennison Brothers lost due to their

inability to construct a billboard. In other words, he added, the issue was “not whether

there is an amount, but what is the amount[.]” Having thoroughly reviewed the record,

we reject Thomas’s assertion that the trial court erroneously interpreted the scope of

remand after Tennison I or failed to address indispensable legal issues that required

consideration before the trial court could make an assessment of damages. “[A] plaintiff

may obtain a default judgment without a hearing on the merits.” Henry v. Goins, 104

S.W.3d 475, 481 (Tenn. 2003). “[U]pon entry of a proper default judgment, the

subsequent proceedings should be confined to the establishment of the amount of

damages.” Witter v. Nesbit, 878 S.W.2d 116, 119 (Tenn. Ct. App. 1993). The entry of a

default judgment “establishes the non-defaulting party’s right to maintain the action and

recover some damages.” Husk v. Thompson, No. M2016-01481-COA-R3-CV, 2017 WL

3432686, at *4 (Tenn. Ct. App. Aug. 10, 2017) (no perm. app. filed) (citing Sherick v.

Jones, No. 87-351-II, 1988 WL 55028, at *6 (Tenn. Ct. App. June 3, 1988)). Although

the trial court may immediately enter final judgment without a determination by proof

when the amount of damages is liquidated, the amount of unliquidated damages “remains

an open question to be determined by proof.” Id. However, as we ultimately concluded

in Tennison I, Clear Channel and Tennison Brothers “are entitled to damages against Mr.

Thomas for the foregoing causes of action.” Tennison I, 2014 WL 3845122, at *15. We

now turn to examine the issues raised by Thomas on appeal regarding the calculation of

damages.

D. Damages

In Tennison I, we discussed “the types of damages allowed in this case” for

purposes of the remand. Id. We explained that “‘[o]ne who is liable to another for

interference with a contract or prospective contractual relation is liable for damages for []

the pecuniary loss of the benefits of the contract or the prospective relation.’” Id.

(quoting Dorsett, 734 S.W.2d at 324). Tennessee Code Annotated section 47-50-109

provides that “in every case where a breach or violation of such contract is so procured,

the person so procuring or inducing the same shall be liable in treble the amount of

damages resulting from or incident to the breach of contract.” In fact, this statute

“‘mandates the trebling of the amount of damages resulting from or incident to the breach

of contract.’” Tennison I, 2014 WL 3845122, at *15 (quoting Dorsett, 734 S.W.2d at

324). We said that Tennison Brothers and Clear Channel were entitled to elect between

treble damages and punitive damages on remand, and in accordance with this directive,

both plaintiffs elected treble damages. The special master and the trial court calculated

the rent that Tennison Brothers would have been owed under the lease and adopted the

25

expert witness’s estimation of the lost profits that Clear Channel would have realized

from advertisements on the proposed billboard. The trial court ultimately awarded

Tennison Brothers $1,094,670.94 and Clear Channel $3,906,000. Thomas raises several

issues challenging these awards of damages.

1. The Role of the Special Master

First, Thomas suggests that the trial court did no more than “rubber stamp” or

“blindly adopt” the special master’s report without exercising independent judgment. He

argues that the trial court approved the special master’s report without independent

consideration of the pertinent issues and insists that the trial court was required to “make

the ultimate determination” on the issues.

Rule 53.01 of the Tennessee Rules of Civil Procedure authorizes trial courts to

refer matters to special masters. “The practice of referring damages issues to a special

master is common in Tennessee.” Vraney v. Med. Specialty Clinic, P.C., No. W2012-

02144-COA-R3-CV, 2013 WL 4806902, at *34 (Tenn. Ct. App. Sept. 9, 2013) (citing

Clear Channel Outdoor, Inc. v. A Quality, Inc., No. W2007-00213-COA-R3-CV, 2008

WL 2901345, at *7 (Tenn. Ct. App. July 29, 2008)). However, Rule 53.04 requires the

trial court to “act upon the report of the master.” Tenn. R. Civ. P. 53.04(2).

This rule requires the judgment of the trial court. The court cannot abdicate

to the master its responsibility to make a decision on the issue in question.

It must do more than “rubber stamp” what the master has done. Should it

decide to confirm the master’s report, it must be satisfied, after exercising

its independent judgment, that the master is correct in the decision he has

made.

Peacher-Ryan v. Heirs At Law of Ruth James Gaylor, No. W2013-02801-COA-R3-CV,

2015 WL 1598072, at *5 (Tenn. Ct. App. Apr. 9, 2015) (no perm. app. filed) (quoting

Lakes Property Owners Ass’n, Inc. v. Tollison, No. 03A01-9402-CV-00038, 1994 WL

534480 (Tenn. Ct. App. Oct. 4, 1994)). The trial court “may adopt the report or may

modify it or may reject it in whole or in part or may receive further evidence or may

recommit it with instructions.” Tenn. R. Civ. P. 53.04(2). Thus, the trial court is entitled

to adopt a special master’s report in full. Varner Constr. Co. v. Marrs, No. W2000-

01029-COA-R3-CV, 2002 WL 818234, at *4 (Tenn. Ct. App. Apr. 18, 2002). “While the

trial court need not issue separate findings and conclusions, it should not simply adopt the

26

report without consideration.”21 Hardin v. Hensley-Hardin, No. E2014-01506-COA-R3-

CV, 2015 WL 9271557, at *8 (Tenn. Ct. App. Dec. 18, 2015), perm. app. dismissed

Tenn. Mar. 10, 2016) (citing Filmtech v. McAnally, No. E2011-00659-COA-R3-CV,

2011 WL 6780176, at *2-3 (Tenn. Ct. App. Dec. 22, 2011)). Ultimately, “‘[t]he

judgment is to be that of the trial court, and not the master.’” In re Estate of Burnette,

No. E2014-02522-COA-R3-CV, 2016 WL 626041, at *5 (Tenn. Ct. App. Feb. 16, 2016)

(no perm. app. filed) (quoting Lakes Property Owners, 1994 WL 534480, at *3-4).

“Conducting a full hearing on objections and an independent review of the record

indicates an exercise of independent judgment.” Brady v. Brady, No. M2014-01598-

COA-R3-CV, 2015 WL 9946259, at *3 (Tenn. Ct. App. Aug. 18, 2015) (no perm. app.

filed) (citing Tarver v. Garrison’s Custom Cabinets, Inc., No. W2006-01765-COA-R3-

CV, 2007 WL 3194566, at *2 (Tenn. Ct. App. Oct. 31, 2007)).

Here, the trial judge conducted a full hearing and heard the parties’ arguments

regarding their objections to the master’s report. The trial judge noted that it was his task

to determine whether to accept the special master’s report, reject it, or modify it. The

trial judge stated that he had read all of the parties’ lengthy memoranda submitted prior to

the hearing, and he questioned the attorneys regarding specific points they made. Then,

the trial judge directed the special master to testify regarding how he followed the trial

judge’s instructions in the order of reference and how he calculated the plaintiffs’

damages in his report. Each attorney was allowed to examine the special master during

his testimony before the trial judge. All of the exhibits relied on by the special master

were tendered into the record as well as some additional exhibits. After the parties

submitted proposed findings of fact and conclusions of law, the trial court entered an

order confirming and adopting the special master’s report and awarding damages to Clear

Channel and Tennison Brothers in the amounts recommended by the special master. The

trial court appropriately exercised independent judgment in its decision to adopt the

special master’s report and did not “blindly” adopt it.

The fact that the chancellor adopted the special master’s report in its entirety

impacts our standard of review on appeal. A concurrent finding of a special master and

chancellor is conclusive on appeal, except where the finding is on an issue not properly

referred, where it is based on an error of law or a mixed question of fact and law, or

where it is not supported by any material evidence. In re Conservatorship of Duke, No.

M2015-00023-COA-R3-CV, 2015 WL 5306125, at *6 (Tenn. Ct. App. Sept. 3, 2015) (no

perm. app. filed); Delta Dev. Corp. v. F. Fani Gulf Int’l, 393 S.W.3d 185, 200 (Tenn. Ct.

21

“The findings of a master, to the extent that the court adopts them, shall be considered as the findings of

the court.” Tenn. R. Civ. P. 52.01.

27

App. 2012); see Tenn. Code Ann. § 27-1-113 (“Where there has been a concurrent

finding of the master and chancellor, which under principles not obtaining is binding on

the appellate courts, the court of appeals shall not have the right to disturb such

finding.”). This standard of review is similar to that applied when reviewing a jury

verdict -- we must affirm if there is any material evidence to support the trial court’s

concurrence. Delta Dev. Corp., 393 S.W.3d at 200. The proper measure of damages is a

question of law, but the actual calculation of damages is a question of fact. Hanson v.

J.C. Hobbs Co., No. W2011-02523-COA-R3-CV, 2012 WL 5873582, at *13 (Tenn. Ct.

App. Nov. 21, 2012); Poole v. Union Planters Bank, N.A., 337 S.W.3d 771, 789 (Tenn.

Ct. App. 2010).

2. Certainty of Damages

The next two issues raised by Thomas on appeal are “[w]hether the parties

established with certainty and by competent, non-speculative evidence their entitlement

to their claimed damages,” and “[w]hether the parties are entitled to future damages.”

Thomas suggests that the damages awarded to Tennison Brothers and Clear Channel in

this case were impermissibly based on speculation or guesswork. According to Thomas,

“The present matter is a textbook example of when the existence of damages is

uncertain[.]” Thomas argues that we cannot be certain that any profits would have been

realized from the proposed billboard during the twenty-year lease. Regarding “future

damages,” Thomas contends that Clear Channel and Tennison Brothers were required to

prove with certainty that they would never be able to construct their billboard for the

remainder of the twenty-year lease, which, he claims, would require “affirmative

evidence” proving that CBS Outdoor will not decide to remove its billboard or cede the

local permit to Clear Channel during that time.

In general, the existence of damages cannot be uncertain, speculative, or remote,

but the amount of damages may be uncertain if the plaintiff lays a sufficient foundation to

allow the trier of fact to make a fair and reasonable assessment of damages. Hannan v.

Alltel Publ’g Co., 270 S.W.3d 1, 10 (Tenn. 2008) overruled on other grounds by Rye v.

Women’s Care Ctr. of Memphis, MPLLC, 477 S.W.3d 235 (Tenn. 2015). In other words,

uncertain or speculative damages are prohibited when the existence of damages is

uncertain, not the amount. White v. Johnson, 522 S.W.3d 417, 423 (Tenn. Ct. App.

2016). “[T]he amount of future damages is necessarily ‘speculative and imprecise’ to

some degree.” Rye, 477 S.W.3d at 286 (quoting Overstreet v. Shoney’s, Inc., 4 S.W.3d

694, 704 (Tenn. Ct. App. 1999)).

28

For a claim of statutory inducement to breach a contract, Tennessee Code

Annotated section 47-50-109 requires a calculation of “the amount of damages resulting

from or incident to the breach of the contract.” As we said in Tennison I, “‘[o]ne who is

liable to another for interference with a contract or prospective contractual relation is

liable for damages for [] the pecuniary loss of the benefits of the contract[.]’” Tennison I,

2014 WL 3845122, at *15 (quoting Dorsett, 734 S.W.2d at 322).22 “Where the injury

involved is interference with a business relationship, the plaintiff’s loss of profits that

result from the wrongful act are a proper item to be included in the measure of damages.”

Dorsett, 734 S.W.2d at 324. In this calculation, “generally the lost profit element of

damage must be measured by the loss sustained by the plaintiff’s business.” Id. at 325.

Thomas cites Hannan for the notion that “no recovery is available for loss of

profits when it is uncertain whether any profits would have been made.” Hannan, 270

S.W.3d at 10. However, “an injured party may recover lost anticipated profits when their

nature and occurrence have been established with reasonable certainty.” Waggoner

Motors, Inc. v. Waverly Church of Christ, 159 S.W.3d 42, 58 (Tenn. Ct. App. 2004)

(citing Baker v. Hooper, 50 S.W.3d 463, 470 (Tenn. Ct. App. 2001); Tire Shredders, Inc.

v. ERM–North Cent., Inc., 15 S.W.3d 849, 857 (Tenn. Ct. App. 1999); 1 Recovery Of

Damages For Lost Profits § 1.4, at 9). This “reasonable certainty” standard applies to

evidence regarding the existence of damages. Id. It is a flexible standard allowing courts

to take the particular facts of each case into consideration. Id. (citing Texas Instruments,

Inc. v. Teletron Energy Mgmt., Inc., 877 S.W.2d 276, 279 (Tex. 1994)). “The existence of

damages has been proven with reasonable certainty when the mind of a prudently

impartial person is satisfied that the injured party has been damaged.” Id. (citing Brevard

County Fair Ass’n, Inc. v. Cocoa Expo, Inc., 832 So.2d 147, 153 (Fla. Dist. Ct. App.

2002); Welch v. U.S. Bancorp Realty & Mortgage Trust, 286 Or. 673, 596 P.2d 947, 963

(1979)).

Less certainty is required with regard to the amount of damages. Id. “Once an

injured party proves that it has been damaged, the amount of the damages need not be

proved with certainty or mathematical precision.” Id. (citing McClain v. Kimbrough

22

Dorsett was decided in 1987 and involved damages for a claim of statutory inducement to breach a

contract. Dorsett, 734 S.W.2d at 324. In 2002, the Tennessee Supreme Court adopted the tort of

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

S.W.3d 691, 701 (Tenn. 2002). Since then, the Dorsett measure of damages for “[o]ne who is liable to

another for interference with a contract or prospective contractual relation” has also been applied to

claims for intentional interference with business relationships. See, e.g., Springfield Investments., LLC v.

Glob. Investments, LLC, No. E2014-01703-COA-R3-CV, 2015 WL 5064090, at *17 (Tenn. Ct. App.

Aug. 27, 2015) (no perm. app. filed).

29

Constr. Co., 806 S.W.2d 194, 200 (Tenn. Ct. App. 1990)). The amount of lost profit

damages awarded “may be based on estimates.” Id. (citing Hill v. Republic of Iraq, 328

F.3d 680, 684 (D.C. Cir. 2003); Sostchin v. Doll Enters., Inc., 847 So.2d 1123, 1128 (Fla.

Dist. Ct. App. 2003)). Of course, definite proof regarding the amount of damages is

desirable as far as reasonably possible, but “it is even more desirable that an injured party

not be deprived of compensation merely because it cannot prove the extent of the harm

suffered with complete certainty.” Id. (citing Restatement (Second) of Torts § 912 cmt. a

(1979)).

Tennison Brothers had an existing twenty-year lease agreement with Clear

Channel whereby it would have received annual rent of $15,600, with a three percent

increase each year thereafter, once the proposed billboard was constructed. As Clear

Channel was unable to construct the billboard, the existence of damages for Tennison

Brothers was reasonably certain. Tennison Brothers also provided sufficient evidence to

calculate the amount of its damages based on the annual rent payments it would have

received pursuant to the lease.

The existence of damages for Clear Channel was also sufficiently established with

reasonable certainty. Clear Channel’s real estate manager testified at the writ of inquiry

hearing that the Tennison Brothers property, located at the junction of Interstate 40 and

Interstate 240, was a prime location for a billboard. He said on a scale of one to ten, this

was “a 10 location.” He testified that Clear Channel constructed five digital billboards in

Memphis in 2007 and that the Tennison Brothers site was also slated for a digital

billboard. Clear Channel’s real estate manager testified that Clear Channel had

advertising contracts in place for the digital display, which were “a hot product in the

outdoor advertising industry.” This evidence sufficiently demonstrates that Clear

Channel has been damaged by its inability to construct the billboard. Had Thomas not

interfered, Clear Channel would have constructed its digital billboard at the Tennison

Brothers site and earned substantial profits over the term of the twenty-year lease.

Considering data from other billboards, Clear Channel’s expert valuation analyst

projected that Clear Channel lost $6,200 per month in lost net profits. Even though the

calculation of lost profits necessarily entailed some uncertainty, we conclude that Clear

Channel provided a sufficient foundation to allow the trier of fact to make a fair and

reasonable assessment of damages. See Waggoner Motors, 159 S.W.3d at 58 (“The

amount of lost profits damages may be based on estimates.”). We find no support for

Thomas’s assertion that Clear Channel was required to somehow affirmatively prove,

“definitively,” that CBS Outdoor would never surrender its local permit to enable Clear

30

Channel to construct a billboard during the remainder of the lease term. “[D]efendants

should not be permitted to complain about the lack of exactness or precision in the proof

regarding the amount of damages when their wrongdoing created the damages in the first

place.” Id. “Since lost profits can rarely be computed down to the last penny, the

evidence needed to support an award for lost profits need only provide a reasonable or

rational basis for calculating what the lost profits would have been.” Id. at 59 (citing 1

Recovery Of Damages For Lost Profits § 5.5, at 391). Nothing in the record suggests that

Clear Channel would be able to construct its billboard during the remainder of the twenty

year lease. By the time damages were awarded in 2016, most of the twenty year lease

term, which commenced in 2004, had already passed. And, as Thomas himself stated

before the trial court, “what would be CBS Outdoor’s incentive to now remove its

billboard and cede its local permit to a business competitor like Clear Channel? . . . [I]t is

no mystery as to why CBS Outdoor has not voluntarily surrendered its local permits; it is

a matter of business.”

On appeal, Thomas also argues that damages should not have been calculated

based on profits for a digital billboard because Clear Channel never applied for a digital

billboard permit. However, Clear Channel’s real estate manager testified that when this

matter arose in 2004, TDOT did not require a specific type of permit differentiating

between a digital or traditional vinyl billboard. He testified that Clear Channel planned

to construct a digital billboard at the Tennison Brothers property when the other digital

billboards were constructed in 2007, and TDOT did not begin requiring a special permit

for digital boards until after 2007. Accordingly, the lack of a digital billboard permit

should not impact Clear Channel’s ability to calculate damages based on a digital

billboard.23

In summary, material evidence supports the concurrent finding of the special

master and the chancellor regarding the calculation of the parties’ damages in this case.

23

Thomas also suggests that Clear Channel’s damages should not be based on a dual-sided digital

billboard. However, he cites to no location in the voluminous record to demonstrate that damages were in

fact calculated based on a dual-sided digital billboard. To the contrary, Clear Channel’s expert witness

testified during his deposition that unlike the other ten billboards he was using for comparison, this board

“was to be a dual panel digital board,” but, he added, “I have not made a specific calculation for any

doubling of revenue in terms of attempting to measure lost profits rather, thinking that any incremental

revenue would add an element of conservatism to the estimate of lost net profits.” (Emphasis added.)

Notably, aside from these narrow issues, Thomas does not otherwise challenge the expert’s

method of calculating lost net profits or argue that damages should not have been calculated based on lost

net profits.

31

3. Mitigation

Next, Thomas argues that Tennison Brothers and Clear Channel failed to mitigate

their damages. The special master noted caselaw suggesting that “in a case of this

nature,” mitigation of damages is not an appropriate consideration. In Howard v. Haven,

281 S.W.2d 480, 486 (Tenn. 1955), the Tennessee Supreme Court recognized that the

statutory action for procurement of breach of contract contains “no provision in the law

authorizing any mitigation of the penalty imposed upon the wrongdoer.” In fact, the

court said that a mitigation requirement “would be contradictory of the manifest purpose

of the statute.” Id. “[I]t is a strange paradox that the defendant who has, in wilful

violation of law, deprived the complainant of the fruits of his contract, should now claim

the right to be exonerated at the hands of the very person he has defrauded.” Id. After

acknowledging this caselaw, however, the special master found that Thomas’s argument

regarding mitigation was meritless in any event. The special master noted that the burden

of proving that a plaintiff failed to mitigate damages is on the defendant, and nothing in

the record supported a finding that either Tennison Brothers or Clear Channel failed to

mitigate their damages.

We likewise conclude that Thomas’s argument regarding mitigation is meritless.

According to Howard v. Haven, mitigation of damages is not a consideration for a claim

of statutory inducement to breach a contract. Id. at 486. Both Tennison Brothers and

Clear Channel elected to receive treble damages for this statutory claim. We discern no

merit in Thomas’s argument that mitigation somehow became relevant to the damage

award due to the fact that the parties alternatively asserted claims for intentional

interference with business relationships or common law inducement to breach a contract.

All of the causes of action asserted by the plaintiffs sought damages based on their

inability to construct the billboard. The damages claimed for each theory of recovery

overlapped, but the plaintiffs were entitled to only one recovery.24 See Shahrdar v. Glob.

Hous., Inc., 983 S.W.2d 230, 237-38 (Tenn. Ct. App. 1998). They elected to receive

treble damages pursuant to the statutory action, for which mitigation of damages is not an

issue.

In any event, we also concur in the finding of the special master and chancellor

24

Some debate has arisen as to whether a party can assert a claim for intentional interference with

business relationships in cases involving a formal contract. See Clear Water Partners, LLC v. Benson,

No. E2016-00442-COA-R3-CV, 2017 WL 376391, at *6-7 (Tenn. Ct. App. Jan. 26, 2017) (no perm. app.

filed). In this case, the plaintiffs pursued both intentional interference with business relationships and

inducement to breach a contract and obtained a default judgment as to both claims. It is not necessary for

purposes of this opinion to decide whether a party should be permitted to pursue both claims because the

default judgment was an admission of the causes of action.

32

that Thomas failed to prove that the damages alleged could have been mitigated by the

plaintiffs. Thomas suggests that Clear Channel could have built its billboard when it

finally received the TDOT permit around 2011, but at the same time, he acknowledges

that Clear Channel did not have and could not acquire the local permit to do so.

Alternatively, Thomas argues that Tennison Brothers could have mitigated its damages

by insisting, when it settled its claims against CBS Outdoor, that CBS Outdoor give up

the local permit. He does not explain, however, how Tennison Brothers could have

forced CBS Outdoor to do so. Thomas has not demonstrated that he is entitled to relief

with regard to this issue.

4. Treble or Punitive Damages

Next, Thomas argues that neither plaintiff demonstrated an entitlement to either

punitive or treble damages. Both plaintiffs elected treble damages, so there is no need for

us to consider Thomas’s argument regarding punitive damages. With regard to the

recovery of treble damages, Thomas argues that Clear Channel cannot recover treble

damages in this case because its complaint did not include a claim for statutory

inducement to breach a contract. This particular argument is different than Thomas’s

previous arguments about whether the complaints stated a claim for each of the causes of

action. Here, he argues that Clear Channel’s complaint did not even allege statutory

inducement to breach a contract. This is an issue appropriate for review on appeal. See,

e.g., Clark v. Sputniks, LLC, 368 S.W.3d 431, 439 (Tenn. 2012) (“Plaintiffs cannot

extend the default judgment to matters outside the issues raised in the pleadings.”).

Tennessee Rule of Civil Procedure 54.03 states that “[a] judgment by default shall

not be different in kind from or exceed in amount that prayed for in the demand for

judgment.” The policy behind this rule is that

[i]t would be fundamentally unfair to have the complaint lead defendant to

believe that only a certain type and dimension of relief was being sought

and then, should he attempt to limit the scope and size of the potential

judgment against him by not appearing or otherwise defaulting, allow the

court to give a different type of relief or a larger damage award.

Holder v. Drake, 908 S.W.2d 393, 395 (Tenn. 1995) (quoting Qualls v. Qualls, 589

S.W.2d 906, 910 (Tenn. 1979)). For instance, in Qualls, the court held that a default

judgment could not award alimony where the complaint contained no allegation or prayer

with respect to alimony. Qualls, 589 S.W.2d at 910.

In the case at bar, Clear Channel’s cross-complaint against Thomas set forth a

33

claim for intentional interference with business relations but also alleged that Thomas’s

tortious interference “procured a breach or violation of [Clear Channel’s] contract with

Tennison Brothers thus entitling [Clear Channel] to treble damages.” (As Thomas

acknowledges in his brief on appeal, treble damages “are uniquely recoverable under the

statutory claim for procurement of a breach of contract only.”). As we noted in Tennison

I, Clear Channel basically “relie[d] upon the facts averred in connection with the [claim

of] intentional interference with business relationships to also support its claim for

damages based upon Mr. Thomas’s alleged interference with contract.” Tennison I, 2014

WL 3845122, at *14. In the ad damnum clause of the complaint, Clear Channel

specifically requested to “be awarded treble damages in accordance with Tenn. Code

Ann. § 47-50-109[.]” Although the complaint could have been drafted in a clearer

manner, we conclude that it sufficiently included a claim for statutory inducement to

breach a contract pursuant to Tennessee Code Annotated section 47-50-109. It put

Thomas on notice that Clear Channel was seeking treble damages pursuant to section 47-

50-109 because Thomas allegedly procured a breach or violation of Clear Channel’s

contract.25

Thomas also argues that the trial court’s treble damage award impermissibly

resulted in a double recovery for a single injury. Thomas relies on the following

language from Dorsett:

In an action for interference with a contract by inducing or causing a third

person to break the contract with the other, the fact that the third person is

liable for the breach does not affect the amount of damages awardable

against the actor; but any damages in fact paid by the third person will

reduce the damages actually recoverable on the judgment.

Dorsett, 734 S.W.2d at 325 (quoting Restatement (Second) of Torts § 774A). However,

this language does not entitle Thomas to relief in this case. The key language is in the

latter phrase – “any damages in fact paid.”

The damages recoverable for the pecuniary loss of a contract “are common to both

the action for breach and the action for inducement.” TSC Indus., Inc. v. Tomlin, 743

S.W.2d 169, 172 (Tenn. Ct. App. 1987). Accordingly, “any payments made by the one

who breaches the contract must be credited in favor of the one who induced the breach.”

Id. For example, in Reinhart v. Knight, No. M2004-02828-COA-R3-CV, 2005 WL

25

Alternatively, Thomas argues on appeal that Clear Channel is not the proper party to assert a claim for

statutory inducement to breach a contract because it is the party who allegedly breached that contract.

Again, however, this type of argument, seeking to defeat the cause of action, is not one that we can

consider on appeal after the entry of a default judgment admitting the existence of the cause of action.

34

3273072, at *2 (Tenn. Ct. App. Dec. 2, 2005), this Court considered whether a plaintiff

was entitled to recover the full amount of a judgment for breach of contract from one

defendant and the full amount of a judgment for statutory treble damages for procurement

of breach of the same contract from another defendant. In other words, we considered

whether the defendant who is liable for statutory treble damages for procuring a breach of

contract is entitled to an offset in the amount paid by a co-defendant in satisfaction of a

judgment for breach of contract. Id. at *1. We concluded that an offset was appropriate:

[T]he treble damages award made pursuant to a statutory cause of action for

procurement of breach of contract includes an element of pecuniary

compensatory damages for the breach. Consequently, to avoid a double

recovery for a single injury, to the extent a payment made by a defendant

for pecuniary loss due to contract breach overlaps a judgment for

procurement of the breach, the procuring defendant is entitled to an

offsetting credit in the amount paid by the breaching defendant.

Id. at *5 (emphasis added). However, we also explained:

The fact that the plaintiff may have a cause of action against the person

who has broken his contract does not prevent recovery against the

defendant who has induced or otherwise caused the breach, or reduce the

damages recoverable from him. . . . Even a judgment obtained for breach of

the contract if it is not satisfied does not bar or reduce recovery from the

one who has caused the breach. But since the damages recoverable for

breach of the contract are common to the actions against both, any

payments made by the one who breaks the contract or partial satisfaction of

the judgment against him must be credited in favor of the defendant who

has caused the breach.

Conversely, an action or judgment against the one who causes the

breach without satisfaction will not bar or reduce recovery from the one

who breaks the contract; but to the extent that there is duplication of the

damages any payments made by the tortfeasor must be credited in favor of

one who has broken the contract.

Reinhart, 2005 WL 3273072, at *4-5 (quoting Restatement (2d) of Torts § 774A,

comment e) (emphasis ours).

Based on this language, the fact that a plaintiff may have a potential cause of

action against another for breach of contract does not bar recovery against the one who

35

induced or caused the breach, nor does it reduce the damages recoverable from him. In

this case, neither plaintiff has obtained a judgment for breach of contract damages or

received payments in satisfaction of such a judgment. Thomas is not entitled to any

credit because there have been no “damages in fact paid” based on breach of contract.

Dorsett, 734 S.W.2d at 325.

E. Deposition Testimony

Next, Thomas argues that the trial court erred in striking deposition testimony of

TDOT employees that he sought to introduce in order to prove that “the parties’ claims

are false as a matter of law.” Thomas claims that this deposition testimony would show

that the billboard he constructed does not in fact interfere with Clear Channel’s ability to

obtain a TDOT permit. The referenced deposition testimony was obtained in the context

of a separate lawsuit. Thomas sought to introduce the deposition testimony on remand,

after the hearing before the chancellor to consider the special master’s report but before

the written order was entered awarding damages. Thomas attached the deposition

transcripts to objections he filed regarding proposed findings of fact and conclusions of

law. The trial court granted Clear Channel’s motion to strike these exhibits from the

record, as the exhibits did not go to the issue remaining before the court and were beyond

the scope of the determination of damages. We discern no error in the trial court’s

decision. At that point in the litigation, Thomas’s liability had already been established

by the entry of default judgment, and a previous order prevented Thomas from submitting

proof related to damages. As such, the trial court was justified in refusing to consider the

deposition testimony.

F. Constitutionality of the Tennessee Billboard Act

For his final issue, Thomas asks: “[w]hat impact does the Tennessee Billboard Act

having been declared unconstitutional have on the present matter.” The ruling that

Thomas references was issued by a federal district court in another case involving

Thomas. In Thomas v. Schroer, 248 F.Supp.3d 868, 877-78 (W.D. Tenn. 2017), Thomas

argued that TDOT violated his First Amendment rights when it sought to remove a

noncommercial billboard Thomas owned, which displayed an American flag, pursuant to

the Billboard Regulation and Control Act (“Billboard Act”), Tennessee Code Annotated

§§ 54-21-101, et seq. The district court concluded that the Billboard Act was “a content-

based regulation that implicates Thomas’s noncommercial speech,” and therefore, it was

subject to strict scrutiny. Id. at 878. The district court ultimately concluded that the

Billboard Act did not survive strict scrutiny, and therefore, it ruled that the Billboard Act

is unconstitutional. The court added,

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[I]f it were clear from the face of the statute that the Tennessee legislature

would have enacted the Billboard Act with the unconstitutional on-

premises/off-premises distinction omitted, the Court could sever the

unconstitutional provisions while the Billboard Act’s constitutional

provisions stay in effect. . . . The Court, however, is unpersuaded that the

Billboard Act, as written, is severable in this manner.

Id. at 895 n.12.

On appeal, Thomas argues that any issues or arguments regarding the alleged

illegality of his billboard are now moot. He claims that the district court’s ruling

eliminates all of his past and future liability in this case because the Billboard Act was

“unconstitutional ab initio,” the billboard he constructed “was thus legal at all times,” the

plaintiffs “could have” constructed their billboards if they wanted to do so, and the

plaintiffs “could never have sustained their causes of action.” Thomas argues that

because of the district court’s ruling regarding unconstitutionality, the parties’ complaints

in this case failed to state a cause of action as a matter of law.

Once again, we conclude that Thomas cannot pursue this argument on appeal due

to the entry of default judgment against him. Because the default judgment established

Thomas’s liability for the causes of action asserted, he cannot continue to litigate the

legality of his billboard or whether his actions actually prevented Clear Channel from

constructing its billboard. The default judgment conclusively established Thomas’s

liability, admitting that his interference with the contract between Tennison Brothers and

Clear Channel resulted in their inability to construct a billboard.26

Thomas claims that the district court’s ruling regarding constitutionality renders

the plaintiffs unable “to recoup under said unconstitutional provisions” in the future.

However, the plaintiffs in this case are not attempting to “recoup” under the Billboard

Act. They are entitled to damages for the tort claims set forth in their complaints, for

which they obtained a default judgment.

Thomas also suggests in his brief that “this Honorable Court must conclude that

the provisions of the Billboard Act under which Appellees claims for damages are

founded are in fact unconstitutional.” However, Thomas presents no argument

substantively analyzing the constitutionality of the Act for purposes of this appeal, and he

did not notify the Attorney General of his intention to challenge the constitutionality of

26

Furthermore, Thomas admits that aside from any issues regarding the TDOT permit, Clear Channel will

never be able to build its billboard as long as CBS Outdoor continues to hold the local permit that was

transferred to it by Thomas.

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the Act in this appeal. As a result, to the extent that Thomas attempts to raise a

constitutional challenge in the context of this appeal, his argument is waived. Before we

can consider an attack on the constitutionality of a statute, the record must reflect

compliance with Tennessee Rule of Civil Procedure 24.04, Tennessee Rule of Appellate

Procedure 32, and Tennessee Code Annotated section 29-14-107(b), which all require

that notice be provided to the Attorney General. See, e.g., In re Cannon H., No. W2015-

01947-COA-R3-JV, 2016 WL 5819218, at *7 (Tenn. Ct. App. Oct. 5, 2016), perm. app.

denied (Tenn. Feb. 21, 2017).

Thomas also suggests in his brief that the trial court erred in denying a “motion to

determine the real party of interest,” which he filed shortly before the final order was

entered in this case. However, the twelve issues Thomas raised on appeal did not

mention this ruling or suggest that it was erroneous. “[A]n issue may be deemed waived

when it is argued in the brief but is not designated as an issue in accordance with Tenn.

R. App. P. 27(a)(4).” Hodge v. Craig, 382 S.W.3d 325, 335 (Tenn. 2012). “‘An item not

listed as an issue presented for review is considered waived as this Court is under no

obligation to search for, or derive, issues that are not specifically stated in accordance

with Rule 27(a)(4).’” PNC Multifamily Capital Institutional Fund XXVI Ltd. P’ship v.

Bluff City Cmty. Dev. Corp., No. W2012-01611-COA-R3-CV, 2013 WL 3806345, at *5

n.3 (Tenn. Ct. App. July 18, 2013) (quoting Coleman v. Lauderdale Cnty., No. W2011-

00602-COA-R3-CV, 2012 WL 475606, at *3 n.4 (Tenn. Ct. App. Feb. 15, 2012).

Similarly, the issues Thomas attempts to raise for the first time in his reply brief are

waived. Issues cannot be raised for the first time in a reply brief. See Owens v. Owens,

241 S.W.3d 478, 499 (Tenn. Ct. App. 2007) (“A reply brief is a response to the

arguments of the appellee. It is not a vehicle for raising new issues.”).

IV. CONCLUSION

For the aforementioned reasons, the decision of the chancery court is hereby

affirmed and remanded for further proceedings. Costs of this appeal are taxed to the

appellant, William H. Thomas, Jr., and his surety, for which execution may issue if

necessary.

_________________________________

BRANDON O. GIBSON, JUDGE

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