Vanquish Express, LLC v. Dixie Ohio Xpress, LLC

12/20/2019

IN THE COURT OF APPEALS OF TENNESSEE

AT NASHVILLE

September 4, 2019 Session

VANQUISH EXPRESS, LLC v. DIXIE OHIO XPRESS, LLC, ET AL.

Appeal from the Circuit Court for Sumner County

No. 2016-CV-389 Joe Thompson, Judge

___________________________________

No. M2018-01934-COA-R3-CV

___________________________________

This is an appeal from the trial court’s denial of the defendants’ motion to set aside an

agreed order, which, among other things, dismissed the plaintiff’s complaint with

prejudice. Defendants alleged that their former counsel entered into the agreement

without their authorization. Finding that the defendants submitted no evidence to support

the allegation, the trial court denied the motion. Defendants appeal. We affirm.

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

and Remanded

ARNOLD B. GOLDIN, J., delivered the opinion of the court, in which FRANK G. CLEMENT,

JR., P.J., M.S., and RICHARD H. DINKINS, J., joined.

Casey A Long, Lawrenceburg, Tennessee, for the appellants, Joseph D. Powell, and

Dixie Ohio Xpress, LLC.

William L. Moore, Jr., Gallatin, Tennessee, for the appellee, Vanquish Express, LLC.

OPINION

BACKGROUND AND PROCEDURAL HISTORY

On September 15, 2015, Vanquish Express, LLC (“Plaintiff”) entered into a Lease

Agreement, an Asset Purchase Agreement, and an Employment Agreement with Dixie

Ohio Xpress, LLC (“DOX”) and Joseph D. Powell (together, “Defendants”). Plaintiff is

an intrastate transportation and hauling services company. Mr. Powell is the chief

manager of DOX, which is similarly engaged in the trucking and shipping industry. Per

the Lease Agreement, Plaintiff leased from Defendants a parcel of property (the

“Property”) containing a building, a shop, and a yard; per the Asset Purchase Agreement,

Plaintiff agreed to purchase from Defendants certain items of personal property for a total

of $30,000.00; and, per the Employment Agreement, Plaintiff hired Mr. Powell to

manage the transportation and shipping operations of the company.1 Additionally, Mr.

Powell entered into a covenant not to compete with Plaintiff during the term of his

employment and for a period of twenty-four months thereafter.

On April 4, 2016, Mr. Powell was terminated from his employment with Plaintiff.

The letter notifying Mr. Powell of his termination provided that Plaintiff had received

numerous complaints from co-workers and current customers regarding his negative

language and behavior. The letter also provided that, on March 14, 2016, Plaintiff had

notified Mr. Powell that he needed to vacate his living quarters on the Property by March

28, 2016.2 However, by April 4, 2016, Mr. Powell had not vacated the Property, and he

had informed Plaintiff’s CEO that he did not intend to do so. On April 11, 2016, Plaintiff

filed a Complaint and Application for Temporary Restraining Order, Temporary

Injunction and Permanent Injunction and for Damages (the “Complaint”) against

Defendants in the Sumner County Circuit Court (the “trial court”). In the Complaint,

Plaintiff alleged that Mr. Powell had breached the covenant not to compete by directly

soliciting Plaintiff’s current customers, had intentionally interfered with the Property by

failing to vacate the premises, and had refused to disclose the location of trailers

purchased by Plaintiff. The trial court issued the temporary restraining order on the same

day, prohibiting Defendants from threatening or harassing Plaintiff’s employees, making

disparaging statements about Plaintiff’s business to current customers, soliciting

Plaintiff’s existing or former customers, violating the covenant not to compete,

interfering with Plaintiff’s business operations, copying or retaining Plaintiff’s business

files, disclosing confidential information concerning Plaintiff’s customers, and damaging,

destroying, or disposing of Plaintiff’s property. The order further required that Mr.

Powell vacate the Property. On April 22, 2016, the trial court entered an Agreed Order

on Temporary Injunction, resetting the matter to May 5, 2016 and keeping the temporary

restraining order in effect until that time. Defendants filed a Motion to Lift Restraining

Order on August 19, 2016, which the trial court granted on October 17, 2016.

On March 7, 2017, the trial court entered an Agreed Order of Compromise and

Settlement (the “Agreed Order”), wherein it was agreed that the Complaint would be

dismissed with prejudice. Additionally, the Agreed Order provided that Plaintiff would

pay to the trust account of Defendants’ attorney, Thomas Boyers, V, the amount of

$4,000.00 “in full satisfaction for the assets purchased by way of the Asset Purchase

Agreement . . . and in full satisfaction of any and all rent for the months of June 2016,

and July 2016.” The Agreed Order also provided the following: that Defendants release

1

Mr. Powell’s employment was set to begin on September 17, 2015 and to extend for one year,

barring termination for any of the reasons set forth in the Employment Agreement.

2

Per the Lease Agreement, Plaintiff had permitted Mr. Powell to reside on the Property; however,

in the March 14, 2016 notification, Plaintiff informed Mr. Powell that it had discovered that the Property

was located in a General Commercial District and, thus, could not be used as residential property.

-2-

all right, title, and interest in all of the property listed in the Asset Purchase Agreement;

that Mr. Powell could retain all of the trailers currently in his possession; and that Mr.

Powell was released from any non-compete provisions contained in the Asset Purchase

Agreement and the Employment Agreement.

On March 17, 2017, Defendants retained new counsel, Casey Long, and filed a

Sworn Motion to Set Aside Agreed Order of Compromise and Settlement (“Motion to Set

Aside”) pursuant to Tennessee Rule of Civil Procedure 60.02 sections (1), (2), and (5),

alleging that their previous counsel, Mr. Boyers, had entered into the Agreed Order

without their authorization. Specifically, Defendants claimed that they did not authorize

Mr. Boyers to accept the amount of $4,000.00 in satisfaction of the assets intended to be

purchased through the Asset Purchase Agreement and that they had not agreed to release

all right, title, and interest in all of the property listed in the Asset Purchase Agreement.

Plaintiff filed a Response in Opposition to the Motion to Set Aside, asserting that

Defendants failed to provide any facts in support of their claim that Mr. Boyers had

entered into the Agreed Order without their authorization. On September 20, 2018, the

trial court entered its final order, denying Defendants’ Motion to Set Aside. In its order,

the trial court first noted that, because Defendants filed their Motion to Set Aside within

30 days of the entry date of the judgment approving the Agreed Order, the motion was

analyzed under Tennessee Rule of Civil Procedure 59.04 rather than Rule 60.02.

Secondly, the trial court concluded that Defendants failed to provide any facts or

evidence to support their claim that their former attorney had acted without their

authorization. Defendants timely appealed.

On November 26, 2018, Defendants filed a Notice of Designation of Record with

the trial court, stating that they would not file a transcript of the proceedings but that they

would file a statement of the evidence. However, on January 3, 2019, Defendants filed a

Notice with the trial court, stating that neither a transcript of the proceedings nor a

statement of the evidence would be filed.

ISSUES PRESENTED

Defendants raise only one issue on appeal, reproduced as follows: Whether the

trial court erred in failing to set aside the entry of the Agreed Order entered on March 7,

2017 in light of Defendants’ counsel’s failure to get consent from Defendants to enter

into such Agreed Order.

Plaintiff raises two additional issues, restated as follows:

1. Whether the issues raised by Defendants are pretermitted because the

findings of the trial court’s order are conclusive and Defendants are bound

by those findings.

-3-

2. Whether the Defendants’ appeal is devoid of merit and, therefore, frivolous.

DISCUSSION

In their Motion to Set Aside, Defendants sought relief pursuant to Tennessee Rule

of Civil Procedure 60.02 sections (1), (2), and (5). Accordingly, Defendants sought relief

on the grounds of mistake, inadvertence, surprise, or excusable neglect, fraud, and any

other reason justifying relief from the operation of the judgment. See Tenn. R. Civ. P.

60.02. The trial court, however, analyzed the motion as a Rule 59.04 motion. As the

courts of this state have held, Tennessee Rules of Civil Procedure 59.04 and 60.02(1)

each provide a vehicle for seeking relief from orders entered as a result of “mistake,

inadvertence, or excusable neglect” by a party’s counsel. Ferguson v Brown, 291 S.W.3d

381, 387 (Tenn. Ct. App. 2008) (citing Campbell v. Archer, 555 S.W.2d 110, 112 (Tenn.

1977)). Rule 59.04 also provides an avenue for relief “when the controlling law changes

before the judgment becomes final; when previously unavailable evidence becomes

available; or to correct a clear error of law or to prevent injustice.” In re M.L.D., 182

S.W.3d 890, 895 (Tenn. Ct. App. 2005). While the avenues for relief are similar under

both rules, the time in which such relief must be requested is different. Rule 59.04 allows

a party to seek relief from a judgment within thirty days after being entered. See Tenn. R.

Civ. P. 59.04 (“A motion to alter or amend a judgment shall be filed and served within

thirty (30) days after the entry of the judgment.”) (emphasis added). Conversely, Rule

60.02 affords a party a means to seek relief from a final, non-appealable judgment, after

30 days of the entry of the judgment. See Tenn. R. Civ. P. 60.02 (“On motion and upon

such terms as are just, the court may relieve a party or the party’s legal representative

from a final judgment, order or proceeding for the following reasons . . . .”) (emphasis

added). Here, the Agreed Order was entered on March 7, 2017, and Defendants filed

their Motion to Set Aside on March 17, 2017. Because Tennessee courts “look to the

substance of a motion, not its title[,]” Parker v. Vanderbilt Univ., 767 S.W.2d 412, 421

n.1 (Tenn. Ct. App. 1988), Defendants’ motion is properly analyzed under Rule 59.04, as

correctly noted by the trial court. On appeal, we review the trial court’s denial of a Rule

59.04 motion to alter or amend a judgment under an abuse of discretion standard.

Whalum v. Marshall, 224 S.W.3d 169, 174 (Tenn. Ct. App. 2006) (citing Chambliss v.

Stohler, 124 S.W.3d 116, 120 (Tenn. Ct. App. 2003)). A trial court abuses its discretion

only when it “applies an incorrect legal standard, or reaches a decision which is against

logic or reasoning or that causes an injustice to the party complaining.” Eldridge v.

Eldridge, 42 S.W.3d 82, 85 (Tenn. 2001) (quoting State v. Shirley, 6 S.W.3d 243, 247

(Tenn. 1999)).

Here, Defendants, in a simple, declaratory statement, alleged that Mr. Boyers

entered into the Agreed Order without their authority to do so. Noting Defendants’ lack

of proof in support of their Motion to Set Aside, the trial court found the following:

-4-

Here, however, the Defendants have offered nothing more than allegations

that their former attorney acted without their consent. At this stage of the

proceedings, there are no facts before the Court that would support such a

claim. Curiously absent is any proof whatsoever from Defendant’s former

attorney with respect to his lack of authority. The Defendants certainly had

the ability to subpoena their former attorney—either to court or for a

deposition—to provide some factual basis for the Court to analyze when

considering their motion. Absent such proof, the Court has no basis upon

which to set aside an Agreed Order that was entered into in good faith by

the Plaintiff in this case.

After our review of the record, we agree with the trial court’s conclusion that Defendants

failed to provide an evidentiary basis upon which to set aside the Agreed Order. The

record contains no evidence introduced in support of Defendants’ Motion to Set Aside,

and, moreover, the record on appeal contains neither a transcript of the proceedings nor a

statement of the evidence. Because the errors alleged by Defendants are not reflected in

the technical record, and because the trial court’s findings of fact are presumed to be

correct in the absence of a transcript or statement of the evidence, see Burris v. Burris,

512 S.W.3d 239, 248 (Tenn. Ct. App. 2016), we must affirm the trial court’s denial of

Defendants’ Motion to Set Aside.

In their brief on appeal, however, Defendants cite to McNeese v. Williams as

justification for relief. There, the parties had similarly entered into a settlement

agreement, which was subsequently entered by the trial court. McNeese v. Williams, No.

M2015-01037-COA-R3-CV, 2016 WL 937168, at *1 (Tenn. Ct. App. Mar. 10, 2016).

Thereafter, the appellant filed a Rule 60.02 motion to set aside the order, claiming that he

had never authorized his counsel to enter into the settlement agreement. The trial court

denied the motion. Id. at *1-2. On appeal, this Court held that the case “involve[d]

unique and extraordinary circumstances that justif[ied] relief from the operation of the

agreed order entered by the trial court without the consent of both parties.” Id. at *5.

The unique and extraordinary circumstances were that the appellant—prior to the entry of

the agreed order—had notified the trial court that he had withdrawn his consent to the

oral settlement agreement reached by the parties’ attorneys. Id. Even with this notice,

the trial court nevertheless entered the agreed order. Id. Here, however, the record

contains no such facts. Only after the trial court’s entry of the Agreed Order did

Defendants allege Mr. Boyers had entered into the agreement without their authorization,

which, as we noted above, Defendants failed to support with any corroborative evidence.

Accordingly, unlike the McNeese case, there are no “unique and extraordinary

circumstances” in this case that justify relief from the operation of the Agreed Order, and

we conclude that the trial court did not abuse its discretion in denying Defendants’

Motion to Set Aside.

-5-

Finally, we address Plaintiff’s contention that, pursuant to Tennessee Code

Annotated section 27-1-122, Defendants’ appeal is frivolous and that we should award it

the costs or damages incurred in defending this appeal. Tennessee Code Annotated

section 27-1-122 provides the following:

When it appears to any reviewing court that the appeal from any court of

record was frivolous or taken solely for delay, the court may, either upon

motion of a party or of its own motion, award just damages against the

appellant, which may include, but need not be limited to, costs, interest on

the judgment, and expenses incurred by the appellee as a result of the

appeal.

Tenn. Code Ann. § 27-1-122. The decision to award damages for the filing of a frivolous

appeal rests solely in the discretion of this Court. Whalum, 224 S.W.3d at 180-81 (citing

Banks v. St. Francis Hosp., 697 S.W.2d 340, 343 (Tenn. 1985)). “Successful litigants

should not have to bear the expense and vexation of groundless appeals.” Id. at 181

(quoting Davis v. Gulf Ins. Grp., 546 S.W.2d 583, 586 (Tenn. 1977)). An appeal is

frivolous when it had “no reasonable chance of success” or is “so utterly devoid of merit

as to justify the imposition of a penalty.” Id. (citing Combustion Eng’g, Inc. v. Kennedy,

562 S.W.2d 202, 205 (Tenn. 1978); Jackson v. Aldridge, 6 S.W.3d 501, 504 (Tenn. Ct.

App. 1999)). While the McNeese case cited by Defendants is similar to the case

presently before us, it nevertheless bears a significant and distinguishing fact—that the

trial court had notice of the party’s withdrawal of consent prior to its entry of the agreed

order. With such a glaring difference, together with the inadequate state of the record on

appeal, we can only conclude that Defendants’ appeal had “no reasonable chance of

success.” See Whalum, 224 S.W.2d at 180-81. Accordingly, we have determined that

Plaintiff is entitled to an award of attorney’s fees incurred on this appeal, and we remand

this case to the trial court for an assessment of reasonable attorney’s fees in accordance

with Tennessee Code Annotated section 27-1-122.

As a final matter, the record reflects that Plaintiff paid the $4,000.00 described

above to the trust account of Defendant’s previous counsel, Mr. Boyers, pursuant to the

Agreed Order. After Mr. Boyers withdrew as counsel for Defendants, the trial court, on

October 6, 2017, granted Mr. Boyers leave to deposit the $4,000.00 with the Clerk of the

Circuit Court. According to the parties’ briefs on appeal and statements made at oral

argument, the $4,000.00 was then deposited back into Plaintiff’s counsel’s trust account,

where it currently remains. On remand, the trial court shall order Plaintiff to pay to the

trust account for Defendants’ attorney, Casey Long, the $4,000.00 “in full satisfaction for

the assets purchased by way of the Asset Purchase Agreement . . . and in full satisfaction

of any and all rent for the months of June 2016, and July 2016” in accordance with the

Agreed Order.

-6-

CONCLUSION

For the foregoing reasons, we affirm the judgment of the trial court and remand

for further proceedings consistent with this opinion.

_________________________________

ARNOLD B. GOLDIN, JUDGE

-7-