Countryside Center, LLC v. BPC of Memphis, LLC d/b/a Auto Radio

08/09/2018

IN THE COURT OF APPEALS OF TENNESSEE

AT JACKSON

Assigned on Briefs May 1, 2018

COUNTRYSIDE CENTER, LLC V. BPC OF MEMPHIS, LLC D/B/A AUTO

RADIO ET AL.

Appeal from the Chancery Court for Shelby County

No. CH-15-0755 JoeDae L. Jenkins, Chancellor

No. W2017-01778-COA-R3-CV

The defendant, the alleged guarantor of the obligations of BPC of Memphis, LLC, under

a lease agreement, appeals the grant of summary judgment in favor of the plaintiff,

finding the defendant personally liable for the tenant’s obligations under the lease. BPC,

the tenant, occupied the leased premises from December 2012 until August 2015, at

which time it stopped paying rent. After BPC and the defendant refused the plaintiff’s

demands for payment, the plaintiff commenced this action against BPC and the defendant

as the guarantor. In the answer to the complaint, the defendant denied signing any

document that purports to establish his personal liability. The plaintiff filed a motion for

summary judgment that was properly supported by a statement of undisputed facts and

affidavits pursuant to Tenn. R. Civ. P. 56. The defendant’s response was supported by his

affidavit in which he disputed the plaintiff’s statement of fact that he signed “the lease”

or “the Personal Guarantee section” of the lease. The chancery court granted the

plaintiff’s motion for summary judgment stating, in part, “[i]n the face of the mountain of

evidence in the record submitted by Plaintiff, Defendants had the burden to bring forward

evidence other than Mr. Panchikal’s blanket denial in order to create a genuine issue of

material fact,” and “Defendants failed to meet their burden.” The court also stated it was

“mindful that Defendants have attempted to put into question Paragraphs 10, 21, and 27

in Plaintiff’s Statement of Undisputed Fact.” This appeal followed. We have determined

that the defendant created a genuine dispute of a material fact by stating, inter alia, in his

affidavit that “the documents claimed to bear my signature by the Plaintiffs are a

forgery,” and “I never executed any guaranty section on any lease, contract or other

document.” Accordingly, we reverse and remand for further proceedings.

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

FRANK G. CLEMENT JR., P.J., M.S., delivered the opinion of the Court, in which CHARLES

D. SUSANO JR. and BRANDON O. GIBSON, JJ., joined.

Ted I. Jones, Memphis Tennessee, for the appellant, Bernard Panchikal.

S. Joshua Kahne and Jessica L. Indingaro, Memphis, Tennessee, for the appellee,

Countryside Center, LLC.

OPINION

In 2014, Countryside Center, LLC (“Plaintiff”) purchased a shopping center in

Memphis, Tennessee. As part of the sale, the former owner of the shopping center,

AERL, L.C. (“AERL”), assigned all leases to Plaintiff. One of the leases assigned to

Plaintiff was that of BPC of Memphis, LLC d/b/a Auto Radio (“BPC”) and Bernard

Panchikal (“Defendant”). BPC’s lease agreement and personal guarantee1 purportedly

contained Defendant’s signature.

The five year lease, which commenced in December of 2012, required BPC to pay

an annual rent of $22,612.50 due in monthly installments of $1,884.38 for five years.

Further, the lease agreement purportedly included a personal guarantee from Defendant

for all payments due during the term of the lease and owed under the lease, as well as for

any obligations owed by BPC in the event BPC defaulted. Emails between Defendant and

AERL, which occurred prior to the sale of the shopping center to Plaintiff, reveal that

Defendant attempted to modify the BPC lease to limit Defendant’s personal guarantee in

the event of an approved sublease; however, AERL rejected the proposed changes.

Shortly thereafter, BPC presented fully executed copies of both the lease and the personal

guarantee to AERL on two separate occasions.

During the term of the lease, BPC was habitually late in making rental payments

to Plaintiff, and following May 2015, BPC ceased all further rental payments to Plaintiff.

Despite Plaintiff’s written demands, BPC and Defendant refused to pay the amounts due.

Therefore, on June 8, 2015, Plaintiff filed this action in the Shelby Chancery Court

against BPC and Defendant to recover the unpaid rent money owed to Plaintiff pursuant

to the lease agreement. On July 29, 2015, BPC and Defendant filed an answer denying

Plaintiff’s allegations. In the answer, Defendant asserted that the signatures on both the

lease agreement and the personal guarantee were forgeries and that BPC and Defendant

never signed the documents.

On March 31, 2017, Defendant filed a motion for summary judgment. However,

the motion was not accompanied by a memorandum of law or a statement of undisputed

1

The words “guarantee” and “guaranty,” which share the same meaning, are used

interchangeably throughout the record. “Guarantee” is the spelling used in the original lease agreement;

therefore, it is the spelling we use in this opinion. However, when quoting from the record, we leave all

instances of “guaranty” as they appear.

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facts as Tenn. R. Civ. P. 56 requires. On June 17, 2017, Plaintiff filed a cross motion for

summary judgment that was properly supported by a memorandum of law, a statement of

undisputed material facts, two affidavits, and exhibits indicating, inter alia, Defendant’s

agreement with the terms of the lease and record of performance and payments made

without objection, albeit late, for a period of time.

On July 26, 2017, Defendant and BPC filed a joint response to Plaintiff’s cross

motion; however, they did not file a memorandum of law or a separate statement of

disputed facts. Instead, Defendant and BPC filed a response to Plaintiff’s motion for

summary judgment along with Defendant’s affidavit. In the two page response to

Plaintiff’s motion for summary judgment, Defendant and BPC disputed only three of the

seventy-five paragraphs in Plaintiff’s statement of undisputed material facts, stating:

The liability of the limited liability company is not disputed and virtually

all of the facts set forth by the Plaintiff’s [sic] are not disputed as outlined

in their motion. There are three key exceptions. Number 10, Number 21,

and Number 27 are disputed because Bernard Panchikal has sworn that

those statements are untrue-- see his affidavit filed this same date and his

deposition heretofore filed on May 1, 2017.

Defendant’s affidavit stated:

I never signed a guaranty agreement or any document with the Plaintiffs, or

any of its predecessors, which would make me personally responsible for

any of the rent claimed in this suit. In turn, it would be impossible for any

person to claim that I signed a guaranty agreement in front of them as I

never signed any such agreement. I absolutely deny that I signed a guaranty

agreement with the Plaintiffs and any document or documents that purports

to establish my personal liability is a forgery.

Further, Defendant specifically disputed paragraphs 10, 21, and 27 in Plaintiff’s

statements of undisputed facts by denying “signing” the lease agreement and the personal

guarantee as follows:

1) Number 10 is untrue and disputed because I never signed any guaranty.

2) Number 21 is untrue and disputed because the documents claimed to

bear my signature by the Plaintiffs are a forgery.

3) Number 27 is incorrect and disputed because I never executed any

guaranty section on any lease, contract or other document.

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On August 8, 2017, the chancery court granted Plaintiff’s motion for summary

judgment against BPC and Defendant, holding that there was no genuine issue of material

fact. The court stated “[i]n the face of the mountain of evidence in the record submitted

by Plaintiff, Defendants had the burden to bring forward evidence other than Mr.

Panchikal’s blanket denial in order to create a genuine issue of material fact,” and

“Defendants failed to meet their burden.” The court also stated it was “mindful that

Defendants have attempted to put into question Paragraphs 10, 21, and 27 in Plaintiff’s

Statement of Undisputed Fact.” However, the court found “that simply denying the truth

of those paragraphs is not sufficient to meet Defendants’ legal burden, and the

Defendants have not met their legal burden which would be necessary to survive

Plaintiff’s Cross Motion for Summary Judgment.” Defendant timely filed a notice of

appeal on September 7, 2017; BPC did not appeal.

ISSUE

The only issue on appeal is whether the chancery court erred in granting Plaintiff’s

Motion for Summary Judgment after finding no genuine issue of material fact existed.

ANALYSIS

This court reviews a chancery court’s decision on a motion for summary judgment

de novo without a presumption of correctness. Rye v. Women’s Care Ctr. of Memphis,

MPLLC, 477 S.W.3d 235, 250 (Tenn. 2015) (citing Bain v. Wells, 936 S.W.2d 618, 622

(Tenn. 1997)). Accordingly, this court must make a fresh determination of whether the

requirements of Tenn. R. Civ. P. 56 have been satisfied. Id.; Hunter v. Brown, 955

S.W.2d 49, 50-51 (Tenn. 1997). In so doing, we consider the evidence in the light most

favorable to the non-moving party and draw all reasonable inferences in that party’s

favor. Godfrey v. Ruiz, 90 S.W.3d 692, 695 (Tenn. 2002).

Summary judgment should be granted when “the pleadings, depositions, answers

to interrogatories, and admissions on file, together with the affidavits, if any, show that

there is no genuine issue as to any material fact and that the moving party is entitled to a

judgment as a matter of law.” Tenn. R. Civ. P. 56.04. A fact is material “if it must be

decided in order to resolve the substantive claim or defense at which the motion is

directed.” Byrd v. Hall, 847 S.W.2d 208, 215 (Tenn. 1993)). A “genuine issue” exists if

“a reasonable jury could legitimately resolve that fact in favor of one side or the other.”

Id.

“The moving party has the ultimate burden of persuading the court that there are

no genuine issues of material fact and that the moving party is entitled to judgment as a

matter of law.” Martin v. Norfolk S. Ry. Co., 271 S.W.3d 76, 83 (Tenn. 2008) (citing

Byrd, 847 S.W.2d at 215). Tennessee Rule of Civil Procedure 56.03 requires the moving

party to support its motion with “a separate concise statement of material facts as to

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which the moving party contends there is no genuine issue for trial.” Tenn. R. Civ. P.

56.03. “Each fact is to be set forth in a separate, numbered paragraph and supported by a

specific citation to the record.” Id.

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

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

fact exist. Martin, 271 S.W.3d at 84 (citations omitted).

“[W]hen a motion for summary judgment is made [and] ... supported as

provided in [Tennessee Rule 56],” to survive summary judgment, the

nonmoving party “may not rest upon the mere allegations or denials of [its]

pleading,” but must respond, and by affidavits or one of the other means

provided in Tennessee Rule 56, “set forth specific facts” at the summary

judgment stage “showing that there is a genuine issue for trial.” Tenn. R.

Civ. P. 56.06. The nonmoving party “must do more than simply show that

there is some metaphysical doubt as to the material facts.” Matsushita Elec.

Indus. Co., 475 U.S. at 586, 106 S. Ct. 1348. The nonmoving party must

demonstrate the existence of specific facts in the record which could lead a

rational trier of fact to find in favor of the nonmoving party.

Rye, 477 S.W.3d at 265. The nonmoving party may satisfy its burden of production by:

(1) pointing to evidence establishing material factual disputes that were

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

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

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

affidavit explaining the necessity for further discovery pursuant to Tenn. R.

Civ. P., Rule 56.06.

Martin, 271 S.W.3d at 84 (citations omitted).

The nonmoving party’s evidence must be accepted as true, and any doubts

concerning the existence of a genuine issue of material fact shall be resolved in favor of

the nonmoving party. Id. (citing McCarley v. W. Quality Food Serv., 960 S.W.2d 585,

588 (Tenn. 1998)). Furthermore, “[t]he court is not to ‘weigh’ the evidence when

evaluating a motion for summary judgment.” Byrd, 847 S.W.2d at 211 (citing Hamrick v.

Spring City Motor Co., 708 S.W.2d 383, 389 (Tenn. 1986)) (“Summary judgment is not

ordinarily the proper procedure for determining whether a prima facie case has or has not

been overcome by countervailing evidence.”); Rollins v. Winn Dixie, 780 S.W.2d 765,

767 (Tenn. Ct. App. 1989).

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However, a party cannot create a genuine dispute of a material fact based on a

conclusory statement. See Lee v. Franklin Special Sch. Dist. Bd. of Educ., 237 S.W.3d

322, 331 (Tenn. Ct. App. 2007) (“Mere conclusory statements are insufficient to create a

dispute of fact when the moving party presents specific facts sufficient to support a

motion for summary judgment.”); see also Pryor v. Rivergate Meadows Apartment

Assocs. Ltd. P’ship, 338 S.W.3d 882, 887 (Tenn. Ct. App. 2009) (“A conclusory

statement, such as ‘[the movant] believes itself to have a good and valid defense,’ is

insufficient.”) (citation omitted).

In this case, Plaintiff filed a motion for summary judgment, a memorandum in

support of the motion, and a statement of undisputed material facts. Further, Plaintiff

submitted two affidavits in support and attached exhibits showing Defendant’s apparent

agreement with the terms of the lease, that the affiants observed Defendant sign the lease

and guarantee, as well as demonstrated a record of performance and payments made

without objection for a period of time. In pertinent part, paragraphs 10, 21, and 27 in

Plaintiff’s statement of undisputed material facts read as follows:

10. Bernard Panchikal signed the lease on behalf of BPC, and further

executed a personal guarantee that assumed “full responsibility for any

payments due and owing under this lease and any other obligations under

the lease in the event of default by BPC of Memphis, LLC and Bernard

Panchikal agrees to indemnify and reimburse the Landlord for any costs,

including attorneys’ fees, the Landlord incurs in the event of default by

BPC Memphis, LLC, under the terms of this lease.”

•••

21. A signature of the name “Bernard Panchikal” appears on the Personal

Guarantee section on this version of the lease.

•••

27. Bud Worsham personally witnessed Bernard Panchikal execute both the

lease itself and the “Personal Guarantee” section.

Therefore, Plaintiff satisfied its burden of production under Tenn. R. Civ. P. 56. As a

consequence, Defendant was required to respond with “specific facts” showing there was

a genuine issue for trial. Rye, 477 S.W.3d at 264 (citing Tenn. R. Civ. P. 56.03).

Defendant filed a response to the motion for summary judgment, an affidavit, and

a statement of facts in which he disputed paragraphs 10, 21, and 27. In his affidavit

Defendant stated:

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I never signed a guaranty agreement or any document with the Plaintiffs, or

any of its predecessors, which would make me personally responsible for

any of the rent claimed in this suit. In turn, it would be impossible for any

person to claim that I signed a guaranty agreement in front of them as I

never signed any such agreement. I absolutely deny that I signed a guaranty

agreement with the Plaintiffs and any document or documents that purports

to establish my personal liability is a forgery.

Except for the factual statement in the last sentence, Defendant merely provided

conclusory statements. In essence, Defendant denied signing any document that makes

him “personally responsible for any of the rent claimed in this suit,” which is a legal

conclusion, not a statement of fact. “All affidavits used either to support or to oppose a

motion for summary judgment must meet the requirements of Tenn. R. Civ. P. 56.06 that

(1) the affidavit must be made on the affiant’s personal knowledge, (2) the affiant’s

statements must otherwise be admissible in evidence, and (3) the affiant is competent to

testify regarding the substance of the affidavit.” Church v. Perales, 39 S.W.3d 149, 166

(Tenn. Ct. App. 2000). Because Defendant is not competent to render a legal opinion as

to his liability under the lease and guarantee agreement, the conclusory statements are not

admissible. However, in addition to the statement of fact in the last sentence above,

Defendant also denied signing the lease agreement and the personal guarantee.

Specifically, in paragraph 8 of his affidavit Plaintiff stated:

1) Number 10 is untrue and disputed because I never signed any guaranty.

2) Number 21 is untrue and disputed because the documents claimed to

bear my signature by the Plaintiffs are a forgery.

3) Number 27 is incorrect and disputed because I never executed any

guaranty section on any lease, contract or other document.

In determining whether or not a genuine issue of material fact exists for purposes

of summary judgment, courts must take the strongest legitimate view of the evidence in

favor of the nonmoving party, allow all reasonable inferences in favor of that party, and

discard all countervailing evidence. Byrd, 847 S.W.2d at 210-11 (modified by Hannan v.

Alltel Publ’g Co., 270 S.W.3d 1 (Tenn. 2008)). “The court is not to ‘weigh’ the evidence

when evaluating a motion for summary judgment.” Id. at 211 (citations omitted). If there

is a dispute as to any material fact or any doubt as to the conclusions to be drawn from

that fact, the motion must be denied. Id. (citing Poore v. Magnavox Co. of Tenn., 666

S.W.2d 48, 49 (Tenn. 1984) (“[I]f the mind of the court entertains any doubt whether or

not a genuine issue exists as to any material fact it is its duty to overrule the motion.”)).

The phrase “genuine issue” contained in Rule 56.03 refers to genuine

factual issues and does not include issues involving legal conclusions to be

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drawn from the facts. The critical focus is limited to facts deemed

“material”, which is to say those facts that must be decided in order to

resolve the substantive claim or defense at which the motion is directed.

Byrd, 847 S.W.2d at 211 (internal citations omitted).

In granting Plaintiff’s motion for summary judgment, the trial court appears to

have impermissibly weighed Plaintiff’s “mountain of evidence” against Defendant’s

affidavit. Summary judgment hearings do not involve weighing of evidence. See

Hamrick, 708 S.W.2d at 388; see also Byrd, 847 S.W.2d at 211. Rather, the trial court is

to determine whether any material factual issues exist. See Kinsler v. Berkline, LLC, 320

S.W.3d 796, 801 (Tenn. 2010) (citations omitted). If so, summary judgment must be

denied. Id.

Although Plaintiff’s evidence could be found to be more persuasive than

Defendant’s evidence, the factual statements in Defendant’s affidavit, taken as true, as we

are required to do at the summary judgment phase, create a genuine issue of material fact

as to whether Defendant’s signatures were forgeries on the lease and personal guarantee.

Based on Defendant’s response and his supporting affidavit, a reasonable person could

reach more than one conclusion as to whether Defendant signed the lease agreement and

personal guarantee, which is a material fact to be decided. Accordingly, this genuine

dispute of a material fact precludes summary judgment against Defendant.

Because Defendant raised a genuine issue of material fact in his response to the

motion for summary judgment and affidavit, we reverse the chancery court’s grant of

summary judgment to Plaintiff.

IN CONCLUSION

The judgment of the chancery court is reversed, and this matter is remanded for

further proceedings. Costs of appeal are assessed against Plaintiff.

________________________________

FRANK G. CLEMENT JR., P.J., M.S.

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