Sharon Kay Story v. Mark Steven Meadows

12/22/2020

IN THE COURT OF APPEALS OF TENNESSEE

AT NASHVILLE

September 3, 2020 Session

SHARON KAY STORY, ET AL. v. MARK STEVEN MEADOWS, ET AL.

Appeal from the Chancery Court for Davidson County

No. 14-1685-II Anne C. Martin, Chancellor

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No. M2019-01011-COA-R3-CV

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This appeal concerns a dispute over ownership of two corporations and five limited liability

companies, operating as Nashville Ready Mix. The ultimate issue on appeal is whether

the Trial Court erred by granting summary judgment in favor of the defendants, Mark

Steven Meadows; Nashville Ready Mix, Inc.; Nashville Ready Mix of Murfreesboro, Inc.;

Nashville Ready Mix of Columbia, LLC; Nashville Ready Mix of Franklin, LLC;

Nashville Ready Mix of Clarksville, LLC; Nashville Ready Mix of Dickson, LLC; and

Nashville Ready Mix of West Nashville, LLC (collectively, “Defendants”). The plaintiffs

in this action, The Meadows Community Property Trust and Sharon Kay Story and Mary

Helen Meadows, as co-trustees of Meadows Community Property Trust, (collectively,

“Plaintiffs”) appeal the Trial Court’s grant of summary judgment in favor of Defendants

and the dismissal of all their claims. Determining that there are genuine issues of material

fact that preclude summary judgment, we reverse the Trial Court’s grant of summary

judgment concerning the issues of statute of limitations, implied partnership, and

accounting and remand for further proceedings. Plaintiffs have waived the issues regarding

unjust enrichment, constructive trust, and de facto merger due to their noncompliance with

Tennessee Rule of Appellate Procedure 27 and Tennessee Court of Appeals Rule 6.

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

Affirmed in Part, and Reversed in Part; Case Remanded

D. MICHAEL SWINEY, C.J., delivered the opinion of the court, in which FRANK G.

CLEMENT, JR., P.J., M.S., and THOMAS R. FRIERSON, II, J., joined.

Thomas V. White, Robert L. Delaney, Lesa H. Skoney, Brandt M. McMillan, and Timothy

N. O’Connor, Nashville, Tennessee, for the appellants, Sharon Kay Story and Mary Helen

Meadows, in their capacity as co-trustees of Meadows Community Property Trust, and The

Meadows Community Property Trust.

George Nolan and Paul J. Krog, Nashville, Tennessee, and C. Patrick Flynn, Brentwood,

Tennessee, for the appellees, Mark Steven Meadows; Nashville Ready Mix, Inc.; Nashville

Ready Mix of Murfreesboro, Inc.; Nashville Ready Mix of Columbia, LLC; Nashville

Ready Mix of Franklin, LLC; Nashville Ready Mix of Clarksville, LLC; Nashville Ready

Mix of Dickson, LLC; and Nashville Ready Mix of West Nashville, LLC.

OPINION

Background

Documentation shows that Mark Steven (“Steve”) Meadows is the sole shareholder

of Nashville Ready Mix, Inc. James Donald (“Don”) Meadows and Mary Helen Meadows

are Steve’s parents. Pamela (“Pam”) Meadows is married to Steve Meadows. 1 According

to Plaintiffs, Don was illiterate. In the 1960s, Don Meadows began the company, Meadows

Landscaping, of which he was the sole owner at that time. Both Don and Mary Helen

worked in the business, and the business was successful. In 1974 after graduating from

high school, Steve Meadows began working at the company as a full-time employee. The

business became more profitable and continued to expand. While Don Meadows was the

sole owner, he reported all profits and losses on his tax returns. In the late 1970s, the

company began doing excavation work and became Meadows Excavating and

Landscaping Company (“Meadows Excavating”).

In 1986, after Steve had been working full time with the company for twelve years,

Don and Steve became equal partners in Meadows Excavating, which was reflected on the

1986 income tax return for Meadows Excavating. Steve made no capital investment in the

company at that time. When Steve became an owner of the company, both Don and Steve

reported profits and losses on their tax returns. During 1986 and 1987, both Don and Steve

were engaged in operating Meadows Excavating. Don also owned and operated a grocery

store and a livestock business.

In September 1987, Steve Meadows and Joe Link entered into a written partnership

agreement for Nashville Ready Mix. Don and Mary Helen had personally guaranteed loans

taken out by Steve to begin Nashville Ready Mix. The Trial Court found that although the

parents never had to pay on the loans they personally guaranteed, “a significant value” was

added with their guarantees on the loans.

In May 1987, Don and Steve purchased real property at Baptist World Center Drive

(formerly Whites Creek Pike) as a new location for Meadows Excavating. Meadows

Excavating parked all its equipment on this site unless it was being used at a job site. Both

1

For the sake of clarity, we often use first names in this opinion. No disrespect is intended.

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Don and Steve had offices at that location. Nashville Ready Mix used this location for

vehicle maintenance and parking since 1987. However, Steve denied that any other

business operations of Nashville Ready Mix occurred at this location. According to

Plaintiffs, Nashville Ready Mix operated its equipment out of this office but never paid

rent. Meadows Excavating initially paid the mortgage on the Baptist World Center Drive

property. At some point, Nashville Ready Mix began paying the mortgage for the Baptist

World Center Drive property, as well as the utilities, maintenance, insurance, and property

taxes associated with that property. Nashville Ready Mix never paid any rent for its

operations out of this location until the Don and Steve’s falling out in 2013, when it made

one rent payment to Don for $9,000. Nashville Ready Mix also maintained a business

office in a different location.

L. Gino Marchetti, Jr., was a lawyer who had performed work for Meadows

Excavating, Nashville Ready Mix, Don and Mary Helen Meadows, and Steve and Pam

Meadows. Mr. Marchetti represented both Don and Steve in personal matters and their

business needs. The Trial Court found that Mr. Marchetti had “total knowledge about the

structure, ownership, and changes of these entities over time.” Mr. Marchetti described

Don’s role as “Mr. Inside” and Steve’s role as “more Mr. Outside.” According to Mr.

Marchetti, Steve was a good businessman and knew how to take advantage of an

opportunity, and Don would implement what Steve said and move forward with a plan.

Mr. Marchetti explained that Don was “dealing with drivers and keeping the trucks

running, plants operating and so forth, while Steve was out generating the business and

talking with contractors and all that sort of stuff.”

In October 1988, Nashville Ready Mix was converted to a for-profit corporation.

Mr. Marchetti prepared the necessary documents, which stated that there were 2,000 shares

of corporate stock with Steve Meadows and Joe Link each owning 1,000 shares. Steve

bought Mr. Link’s shares in August 1992, and Mr. Marchetti also prepared that paperwork.

The transfer documents identified Steve Meadows and Joe Link as the only owners of

Nashville Ready Mix, Inc. Steve and Nashville Ready Mix paid Mr. Link $185,000 with

the source of those funds being a loan from First American Bank. The note was signed by

Steve Meadows as president of Nashville Ready Mix, Inc.

Two experts hired by Plaintiffs, Rick V. Swafford, CPA/ABV, CVA, and Tonya L.

Cherry, CPA/ABV/CFF, CFE, MACC, provided in their report that after Mr. Link left the

company, six loans to Nashville Ready Mix were personally guaranteed by Don between

1992 and 1994, totaling over $1.8 million. In 1993 and 1994, Don and Mary Helen also

had allowed real property they owned to be listed as collateral on two loans that were used

to purchase the Murfreesboro and Mt. Juliet concrete plants.

David Hinton is a certified public accountant who had performed work for Don

Meadows and Meadows Excavating from 1986 through 2013, as well as work for Steve

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Meadows and Nashville Ready Mix since 1987. Mr. Hinton testified that Nashville Ready

Mix, Inc., is a Subchapter S corporation, and they filed an 1120S return reflecting “the

income and expenses, and the net profit or loss is reflected on a Schedule K-1, which is a

part of that return.” Mr. Hinton further explained that each shareholder receives a Schedule

K-1 and that they include that on their personal tax return. According to Mr. Hinton, a

Subchapter S corporation was not taxed at the entity level for federal income tax purposes.

Mr. Hinson testified that Nashville Ready Mix, Inc. provided Steve Meadows a Schedule

K-1, which reflected the company’s profits and losses during each tax year. He further

testified that the company had not provided a Schedule K-1 to Don Meadows and that Don

had not requested a Schedule K-1. Mr. Hinton also testified that Steve Meadows was

responsible for paying taxes on the profits of Nashville Ready Mix and that Don had never

been responsible for paying those taxes. Don Meadows never suggested to Mr. Hinton that

the profits and losses of Nashville Ready Mix should be included in his tax returns. Don

had not reported ownership of Nashville Ready Mix on his tax returns or financial

statements, and he had not informed Mr. Hinton of such ownership. Both Steve and Don

had reported the ownership of Meadows Excavating on their tax returns and financial

statements. Both had taken money out of the company on occasion, although Don did so

more than Steve.

In March 1994, there was a lawsuit between Steve, Nashville Ready Mix, and Joe

Link in the Davidson County Chancery Court. During that action, Gino Marchetti

represented Nashville Ready Mix, Inc., and Steve, as the sole shareholder of Nashville

Ready Mix, Inc., and had stated such to the Chancery Court. Also in 1994, Nashville Ready

Mix had a dispute with the Metro Government of Nashville, and Mr. Marchetti represented

to the individual with the Metro Government that Steve Meadows was the sole owner of

Nashville Ready Mix. From 1994 through 1998, Nashville Ready Mix opened six new

locations as either a corporation or LLC, including locations in Mt. Juliet in 1994,

Murfreesboro in 1994, Columbia in 1996, Franklin in 1996, Clarksville in 1998, and

Dickson in 1998. In March 2000, Nashville Ready Mix opened another new location in

La Vergne. Mr. Marchetti drafted operating agreements concerning the LLC entities that

reflected that Steve owned ninety-nine percent and Pam owned one percent of the Franklin

and Dickson LLC companies. The operating agreement for Nashville Ready Mix of

Columbia, LLC, reflected that Steve and Pam were the members of the LLC but stated in

another place that Steve owned ninety-nine percent and Don owned one percent.

Pam Meadows, who previously worked as a bookkeeper for Meadows Excavating,

testified during a deposition that Don and Mary Helen Meadows did not have a personal

bank account and that all of their living expenses were paid directly from Meadows

Excavating. Pam further testified that the majority of her and Steve’s living expenses were

paid by Meadows Excavating until they both began working full time at Nashville Ready

Mix in 1994. After that, she and Steve paid for their living expenses through Nashville

Ready Mix. Pam testified that Don and Mary Helen’s living expenses were subsequently

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paid by Nashville Ready Mix beginning in 2000 or 2002. Pam further testified in a

deposition that Don Meadows used blank, signed checks from Nashville Ready Mix’s

account to purchase cars, memorabilia, “stuff for his farm, parts for his tractor, just

whatever he needed or wanted at the time” and that sometimes he would tell her in advance

what he was purchasing but sometimes he would not. According to Pam Meadows, the

checks were used in the beginning to buy parts as needed but Don began using the checks

for “personal reasons.” However, neither Don nor Mary Helen had check-signing authority

on any Nashville Ready Mix account.

In 2000, Don and Mary Helen Meadows were placed on the payroll at Nashville

Ready Mix and were paid salaries. Their salaries increased throughout the years. In

February 2002, there was a significant change in how Meadows Excavating operated. It

began limiting its operations and engaged in a transaction with Nashville Ready Mix. Steve

and Nashville Ready Mix argue that the change in 2002 was a “bailout” of Meadows

Excavating due to a rapid decline in Meadows Excavating and its inability to make payroll

and pay its bills. Plaintiffs argue that Nashville Ready Mix and Meadows Excavating had

merged. During this time, Meadows Excavating continued operating, keeping a separate

bank account, maintaining revenue, filing tax returns, owning property, and keeping its

own books. It made distributions to both Don and Steve. It took depreciation on separately

owned assets, including the vehicles. However, Nashville Ready Mix took over the

obligation on the notes and expenses for the vehicles owned by Meadows Excavating.

Nashville Ready Mix also took over the drivers of the vehicles as Nashville Ready Mix

employees and included the vehicles on Nashville Ready Mix’s insurance policy. At that

time, Nashville Ready Mix stopped paying haul bills to Meadows Excavating.

Nashville Ready Mix opened a new location in West Nashville in 2004. In May

2009, Meadows Excavating was converted to an LLC company. A significant amount of

money had been transferred from Nashville Ready Mix to an account labeled

“Intercompany – Meadows.” The Trial Court classified this money as undocumented loans

to Don Meadows. However, Plaintiffs’ experts concluded that this arrangement was Don

sharing in the profits of Nashville Ready Mix throughout the years. Mr. Swafford and Ms.

Cherry’s report stated that Don was permitted to spend the profits of Nashville Ready Mix

on purposes including “personal utilities for the home and farm, home repairs on multiple

properties and houses owned by Donald Meadows, farming expenses, expenses of the Halls

grocery store, personal expenses such as cars, fencing, flea market spending, doctor bills

for Don and various other family members, property taxes, insurance, etc.”

In 2010, the Internal Revenue Service placed a tax lien on the personal residence of

Steve and Pam for Nashville Ready Mix’s profits, but according to Mr. Hinton, a tax lien

was not placed on any property belonging to Don Meadows. In 2013, Steve and Don had

a falling out, and Don was expelled from Nashville Ready Mix. In August 2014, Don and

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Mary Helen set up a trust called the Meadows Community Property Trust, which did not

involve Steve Meadows.

In December 2014, Don Meadows filed the complaint in the present action against

Steve Meadows and the Nashville Ready Mix entities. Mr. Marchetti initially represented

Don Meadows in this action. After a motion filed by Defendants seeking to disqualify Mr.

Marchetti, the Trial Court disqualified him from representing Don Meadows in this action

because he had represented Steve Meadows and Nashville Ready Mix in matters

substantially related to this proceeding. Steve Meadows and Nashville Ready Mix filed an

answer to the complaint and a countercomplaint.2 An amended complaint was filed by

Don in May 2015, followed by Defendants’ amended answer.

Don Meadows subsequently died in February 2016, and representatives of his estate

and the Meadows Community Property Trust were substituted as parties to this action in

May 2016. The estate was dismissed as a party to this action. Sharon Kay Story and Mary

Helen Meadows were co-trustees of the Meadows Community Property Trust. Plaintiffs

filed a second amended complaint in November 2016, which included claims for an

accounting, equitable estoppel, breach of implied contract, constructive trust, unjust

enrichment, and de facto merger.

In April 2017, Defendants filed a “Motion for Summary Judgment Based Upon

Statute of Limitations and Doctrine of Laches,” requesting that Plaintiffs’ claims of

accounting, equitable estoppel, breach of implied contract, constructive trust, unjust

enrichment, and de facto merger be dismissed as being barred by the applicable statute of

limitations, pursuant to Tennessee Code Annotated § 28-3-109(a)(3), and by the equitable

doctrine of laches. In June 2017, Plaintiffs filed a memorandum in opposition to the motion

for summary judgment, stating that (1) granting summary judgment would require the Trial

Court to draw both negative inferences and disputed facts against the nonmoving party, (2)

there were genuine issues of material fact precluding summary judgment on this issue, (3)

Defendants had not negated an essential element of Plaintiffs’ claim, (4) the claims were

filed within the prescribed statute of limitations period, (5) the doctrine of laches was not

applicable, and (6) Plaintiffs had not had an opportunity to conduct adequate discovery in

this matter. Also in June 2017, Defendants filed a reply in support of their motion for

summary judgment, alleging that (1) Plaintiffs had relied upon “outdated information from

witnesses who lack the requisite personal knowledge and foundational information

required to make their testimony admissible,” (2) the factual disputes were not material

such to preclude summary judgment on this issue, and (3) Plaintiffs had not properly

addressed Defendants’ argument concerning the doctrine of laches.

2

The countercomplaint filed by Defendants was pending in the Trial Court when this appeal was initiated

and is not the subject of this appeal.

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The Trial Court heard arguments in July 2017 concerning the summary judgment

motion. The Trial Court subsequently entered an order denying the motion for summary

judgment and incorporating its ruling from the verbatim transcript of the hearing. At the

hearing, the Trial Court announced its ruling in court denying the motion for summary

judgment. In its oral ruling, which was incorporated as part of its March 2018 order

denying summary judgment, the Trial Court found that on the summary judgment issue

concerning the statute of limitations and laches, “the plaintiffs as the nonmoving party have

demonstrated the existence of specific facts in the record which could lead a rational trier

of fact to find in favor of the nonmoving party.” The Trial Court found as follows in

pertinent part:

Here, the parties do not dispute that Don Meadows and Steve

Meadows continued to work together at the Nashville Ready Mix businesses

until March 2013, when Don Meadows became estranged from his son and

was barred from the premises of Nashville Ready Mix. Up to that point, this

Court finds that a reasonable person could assume that the business

relationship between these two parties would amicably continue, that they

would at some point amicably agree to a division of any ownership interest

that exists, and in this -- standing in the shoes of Mr. Don Meadows, that he

would have no need to initiate litigation to obtain the value of any

contributions made to the partnership by Mr. Don Meadows because

everything was going well. There was no problems. There was no reason

for him to initiate litigation. This is particularly true in the context of a family

situation where a father and son and other relatives are involved.

In other words, this Court finds that up until that point, any partnership

or contract that Don Meadows believed existed had not been terminated or

been denied to exist by the defendant Steve Meadows. And this was the

point, the turning point where Mr. Don Meadows would have realized that

the current situation has changed and that Mr. Steve Meadows is asserting

that Mr. Don Meadows has no interest in these businesses.

The Trial Court further found that because the burden of establishing that a partnership

existed was with Plaintiffs and “to the extent that evidence is stale [and] witnesses are not

available, this Court finds that that’s going to prejudice the plaintiffs more than the

defendants in this case.” The Trial Court, therefore, entered an order in March 2018

denying Defendants’ motion for summary judgment concerning the issues of the statute of

limitations and the doctrine of laches.

A new chancellor was elected in 2018. Thereafter, four additional motions

concerning summary judgment were filed. In February 2019, Defendants filed a motion

for partial summary judgment concerning the claim for de facto merger, alleging that (1)

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the doctrine of de facto merger is intended to apply to prevent debtors from defrauding

creditors and that it is not applicable to the present case and (2) even if de facto merger

applied, Plaintiffs cannot prove the basic elements of a de facto merger. Also in February

2019, Defendants filed a motion for partial summary judgment concerning Plaintiffs’ claim

for unjust enrichment, arguing that (1) there is no genuine issue of material fact as to the

claim of unjust enrichment, (2) Plaintiffs presented no proof to demonstrate the value of

any purported contributions Don made to Nashville Ready Mix, and (3) the “family-gift

presumption” applies. Plaintiffs filed a response in opposition to those partial summary

judgment motions, arguing that (1) genuine issues of material fact preclude summary

judgment concerning both de facto merger and unjust enrichment, (2) evidence has

established that Don “conferred a benefit on the defendants that they appreciated,” (3)

allowing Defendants to retain that benefit would be unjust if Don is not declared an owner

of Nashville Ready Mix, and (4) genuine issues of material fact preclude the Trial Court’s

application of the family-gift presumption.

In March 2019, Defendants filed a motion for the Trial Court to revise its previous

summary judgment ruling concerning the statute of limitations. Also in March 2019,

Defendants filed a motion for partial summary judgment concerning Plaintiffs’ claims of

implied partnership, implied contract, and constructive trust, alleging that (1) Plaintiffs had

not sufficiently pled the claim of implied partnership, (2) Tennessee Code Annotated § 61-

1-202(b) precludes Plaintiffs from seeking an implied partnership, (3) Plaintiffs have

presented no evidence concerning the value of Don’s purported contributions made to

Nashville Ready Mix to support an implied partnership or implied contract claim, (4)

Plaintiffs presented no proof regarding the value of Don’s contributions or losses to support

their constructive trust claim. In April 2019, Plaintiffs filed a response in opposition to

Defendants’ motion, arguing that (1) Plaintiffs sufficiently pled “breach of implied

contract, which is governed by the law of implied partnership,” (2) Tennessee Code

Annotated § 61-1-202(b) does not preclude a claim of implied partnership because

Plaintiffs are not alleging that the Nashville Ready Mix entities are implied partnerships

but that the implied partnership is between Don and Steve Meadows and the Nashville

Ready Mix entities are assets to that implied partnership formed pursuant to common law,

(3) implied partnership law does not require proof of the exact value of Don’s purported

contributions, (4) Plaintiffs’ damages consist of the denial of Don’s “rightful ownership

interest,” and (5) genuine issues of material fact preclude summary judgment on these

issues.

On two separate dates in April 2019, the Trial Court conducted hearings concerning

the summary judgment motions and took the matters under advisement. The Trial Court

subsequently granted Defendants’ motions for partial summary judgment concerning the

claims of breach of implied contract or partnership, de facto merger, unjust enrichment,

and constructive trust. The Trial Court also granted Defendants’ motion to revise the Trial

Court’s previous ruling denying summary judgment based on the action violating the

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statute of limitations. The Trial Court disagreed with the previous Chancellor’s decision,

vacated the previous decision, and ruled that Plaintiff’s claims were untimely. The Trial

Court, therefore, dismissed all of Plaintiffs’ claims against Defendants.

In May 2019, the Trial Court issued its oral ruling, making findings of fact and

conclusions of law. The Trial Court concluded as follows concerning the pending motions

before the court.

So first I’m going to deal with the implied partnership and implied contract

claims. The first issue the defendant raised in its motion is that the plaintiffs

did not plead an implied partnership and that the claim is barred. While

implied partnership is not specifically pled, the Court reads the implied

contract claim, which is set out in paragraph 53 of the second amended

complaint, as being sufficient to meet the Rule 8 pleading -- notice pleading

standard, and the Court does consider implied partnership to be pled as a

claim.

The Court also agrees that the standard -- the burden of proof is clear and

convincing evidence as set out in the Story versus Lanier case, which is at

166 S.W.3d 167, and that’s on page 175 of that case, which is a 2004 Court

of Appeals case.

The second issue that the defendant raises in his motion is that TCA 61-1-

202(b) applies to bar the plaintiffs’ claim that this business was part of a

partnership and not a corporation. And essentially that statute says that you

cannot disregard a corporate form otherwise recognized by the statutes for

claiming a partnership. This is a 2001 statute, and it’s based on the Uniform

Partnership Act of 1997. And in the comments, the quote is, “Subsection (b)

provides that business associations organized under other statutes are not

partnerships. These statutory associations include corporations, limited

partnerships, and limited liability companies. . . . That continues the UPA

concept that general partnership is the residual form of for-profit business

associations existing only if another form does not.”

There is no question in this case that Nashville Ready Mix has been a

corporation since October 18th of ‘88 and that the individual satellite

locations are LLCs. Based on the statute, the Court simply cannot disregard

those forms to imply a partnership between Donald Meadows and Steven

Meadows to own the Nashville Ready Mix entities.

Now, the plaintiffs argue that all of the businesses together form a partnership

and it’s not a matter of just looking at the individual businesses, but that you

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have to look collectively at the combination of businesses. And they ask the

Court to apply the statutory definition in TCA 61-1-202(c) and the language

from the Tennessee Supreme Court’s 1991 decision in Bass v. Bass. And

that case was prior to the Revised Uniform Partnership Act, but it uses similar

language from 61-1-202(c), talking about people who place their money,

assets, labor, or skill in commerce with the understanding that profits will be

shared between them.

The Court appreciates the importance of that concept in the law and -- and

really, as part of applying that, has to look at the equities. And the Court

simply cannot find the larger family implied partnership given the documents

and the titles that clearly show the parties’ intentions about ownership.

The trust owns the farm and the grocery. The documents show that

Excavating and -- the ownership of Meadows Excavating and Nashville

Ready Mix is clear. And, you know, the Court can’t ignore that or turn the

corporate law, the contract law on its head. You know, applying the equities,

as the Court sees it from these findings, the Court does not see a contribution

of measurable value of time, energy, and resources from Donald Meadows

such that he earned some sort of partnership interest in the Ready Mix

entities.

The Court finds it significant that he was working under a W-2 arrangement,

that Excavating was completely separate until 2002, and even then Donald

Meadows became an employee of Ready Mix. Meadows Excavating

continued as a separate entity. Nashville Ready Mix took on the employees

and paid for the trucks, the consideration for which was free hauling and

ensuring that the debt personally guaranteed by Donald and Steven Meadows

was paid. Donald Meadows never got a K-1. He was never responsible for

taxes on the profits of Nashville Ready Mix. He got W-2s for 14 or 15 years

during his employment there. And he knew the difference because he’d

owned other businesses and he had received K-1s for other businesses. The

Court simply cannot disregard all that evidence regarding what the

relationship was and what the parties knew or should have known their

relationship to these entities was.

The Nashville Ready Mix satellite entities were owned by Steven Meadows

or leased by Nashville Ready Mix. That information was available to the

world through the register of deeds office in terms of the properties. And

that’s the reason that people have to file things with the register of deeds

office; it puts people on notice on what the ownership is.

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The Court also finds significant that all of these individuals and entities had

the same lawyer drafting all these documents over all these years and just

does not believe that that could not have been known.

Also, Meadows Excavating and Nashville Ready Mix kept separate bank

accounts. They invoiced between them and had different property

ownership. The financial information in the records supports the defendants’

theory that Ready Mix bailed out Excavating in 2002. The Court looks at the

decline in revenues in Excavating from $4.46 million in 1990 to 1.4 million

in 2001 to a loss of $107,000 in 2000 and $151,000 in 2001. The trucks were

never sold. They continued to be owned by Excavating. And Ready Mix

assumed the overhead and the debt, but even -- even -- the -- the trucks have

been sold in the context of one of the cases, which we’ll talk about towards

the end of this, but -- but, you know, that money is still being held and is still

disputed as owned by both of the owners of Excavating. The Court simply

cannot ignore the corporate and LLC documents or the formalities associated

with those regarding ownership.

The plaintiffs argue that all of the businesses should be considered as one

enterprise, but as Steven Meadows’ counsel pointed out, that does not include

exempted businesses such as the farm and the store. The Court found very

convincing the quote “What’s mine is mine and what’s yours is mine.” When

the Court tries to look at all of this as a family enterprise, it appears that

Donald Meadows thought he had the right to exempt out what he wanted to

have exempted out but then wanted his part of this other business that he

never paid taxes on, never took risk on, never reported on his financial reports

or taxes, and -- and the Court simply can’t ignore that.

And the position that the plaintiffs are taking is -- are very inequitable given

the contributions of value and the distributions of profits and risk. The

totality of the evidence must be considered, the tax returns, the financial

statements, and the corporate documents, and they overwhelmingly support

Steven Meadows’ position that he is the sole owner of Nashville Ready Mix.

Thus, the plaintiffs’ motion to dismiss the – I’m sorry, the defendants’

motion to dismiss the plaintiffs’ implied contract or implied partnership

claims heard on April 18th of 2019 is granted. The Court finds that there is

not an implied partnership or implied contract of ownership for Nashville

Ready Mix between Donald Meadows and Steven Meadows. These entities

were either corporations or limited liability companies whose corporate

forms cannot be disregarded pursuant to Tennessee Code Annotated 61-1-

202(b).

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Additionally, the Court finds that the plaintiffs have not demonstrated with

clear and convincing evidence that the combination of claimed business

interests, including Nashville Ready Mix and Meadows Excavating,

constitute an implied partnership between Donald Meadows and Steven

Meadows. They were partners in Meadows Excavating pursuant to a written

partnership agreement. Donald Meadows did not contribute measurable

value to Nashville Ready Mix in terms of time, energy, or resources

sufficient to create an interest. Moreover, applying the equities to the

situation, he took more than he gave and left those businesses and his life

owing Steven Meadows significant money through inequitable distributions

from Meadows Excavating and monies loaned to him from Nashville Ready

Mix.

So that’s the implied partnership contract claim.

The next claim is unjust enrichment. The elements of unjust enrichment are

set out in the Freeman Industries versus Eastman Chemical Company case,

a 2005 Tennessee Supreme Court case found at 172 S.W.3d 512. Those

elements are that a benefit was conferred, there was an appreciation of that

benefit, there was an accepting of that benefit through an equitable retention

without payment for value, and the benefit must be measurable. This is a

quasi contract claim and is to be considered by the Court absent a contract

otherwise.

The most significant requirement is the enrichment of the defendant be

unjust, and that’s set out at page 525 of the Freeman Industries case. There

is no showing of a measurable benefit conferred by Donald Meadows for

which he was not paid. He did -- he and – and Mary Helen Meadows

guaranteed early loans to Steven and Pam Meadows so that Nashville Ready

Mix could be funded. But the Court assumes and applies the family gift

presumption. The loans were of limited amount given the total amount of

debt and loans taken by the business over time. Donald Meadows was not

obligated to repay the loans. The loans were also guaranteed by Steven and

Pam Meadows, so they were a limited risk to Donald Meadows. He took

more than he gave to Nashville Ready Mix. He borrowed and didn’t pay

taxes and didn’t repay those loans. They can’t go back and be reclassified as

something else; estoppel would apply to -- to keep him from doing that. Any

possible measurable contribution made by Donald Meadows was offset by

Steven Meadows taking on liabilities and risks for the business. And the

Court finds it significant, the tax liens and the amount of the tax liens and the

fact that those were solely borne by Steven and Pamela Meadows.

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Thus, the defendants’ motion to dismiss the plaintiffs’ unjust enrichment

claim heard on April 12th, 2019, is granted. The Court finds that the

plaintiffs have not met their burden that Donald Meadows conferred a

measurable benefit upon Nashville Ready Mix and/or Steven Meadows for

which there was unjust enrichment. On the contrary, applying the equities

to the situation, Donald Meadows took more than he gave and left those

businesses and his life owing Steven Meadows significant money through

inequitable distributions from Meadows Excavating and monies loaned to

him from Nashville Ready Mix.

The next cause of action the Court considered is the de facto merger. This is

also an equitable doctrine that all the case law the Court could find is applied

for creditors when debtors transfer assets, and they essentially transfer assets

from a business and retain no assets and go out of business.

There’s not a ton of case law on this claim. There’s a 1913 Supreme Court

case, Jennings, Neff & Company versus Crystal Ice Company, which is 159

S.W. 1088. There’s a Sixth Circuit case that I believe Judge Echols decided,

which is IBC Manufacturing Company versus Velsicol, V-E-L-S-I-C-O-L,

Chemical Corp., which is at 187 F.3d 635. Those are the cases that discuss

this doctrine the most.

The Court finds that this doctrine is not applicable for this purpose because

it’s already found that there’s no partnership or unjust enrichment, so

essentially there’s no claim or creditor claim by Donald Meadows for which

this equitable doctrine would apply. And the Court does not find any sort of

merger between Meadows Excavating and Nashville Ready Mix. Again, the

important facts the Court finds is that Meadows Excavating continued

operations, kept separate bank accounts, had other customers, had revenue,

Meadows Excavating continued to make distributions to Donald Meadows

and Steven Meadows, continued to file tax returns, continued to take

depreciation on separately owned assets, the vehicles. It was converted to an

LLC after the 2002 events. It continued to own property and keep its books

there, and as the Court has already said, the financial information provided

supports the concept of the bailout theory rather than the merger theory.

Thus, the motion to dismiss the plaintiffs’ de facto merger claim heard on

April 12th, 2019, is granted. The Court finds that this equitable doctrine is

not applicable to the situation because Meadows Excavating as the purported

transferring company did not divest itself of all assets or go out of business,

and any actions it did take was not to defraud Nashville Ready Mix. Rather,

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the Court finds that the bailout scenario put forth by the defendant is what

occurred, taking into consideration Meadows Excavating’s lack of

profitability, liabilities, and the cost to the owners to maintain operations and

pay debts at the pre-2002 level.

The other two claims that have been made are claims for accounting and

constructive trust, and as Mr. DeLaney discussed with the Court last time,

those sort of follow from the ownership claim as mechanisms to determine

interest. The Court finds that the plaintiffs are not entitled to an accounting

of Nashville Ready Mix’s businesses because Donald Meadows did not have

any ownership in those entities prior to his death. This was an equitable

remedy for preserving assets. The claim is thus moot. The summary

judgment motion as to that claim is granted.

Similarly, regarding the constructive trust claim, the Court finds that the

plaintiffs are not entitled to a finding that a constructive trust should be

ordered to hold any of Nashville Ready Mix’s or Steven Meadows’ assets

because Donald Meadows did not have any ownership interest in the

Nashville Ready Mix entities prior to his death, nor does Steven Meadows

owe him any money based on the Meadows Excavating and Nashville Ready

Mix operations. A constructive trust is an equitable vehicle for preserving

assets. That claim is moot, and summary judgment is granted on that.

The last issue the Court was asked to consider was the statute of limitations

issue. And I put this one last because I struggled the most with this, because

the Supreme Court specifically decided not to adopt a standard for contract

cases and -- and summary judgment – I’m sorry, and statute of limitations in

contract cases.

My predecessor on the bench had applied the Smith v. Hawk case, which is

a 2015 Court of Appeals case, to look at the statute of limitations. And the

standard in that case is when a plaintiff gains information sufficient to alert

a reasonable person of the need to investigate the injury. There was a 2005

Court of Appeals case, Goot v. Metro - that was a breach of contract case,

the Smith case was a tort case where that Court established a standard about

knowledge when the breach of contract is inherently undiscoverable,

essentially establishing a higher bar or a harder bar for people trying to apply

the discovery rule to extend statute of limitations.

There was an older case, the Dietz v. Keith case, which is a 2000 Court of

Appeals case, where the Court had applied the discovery rule to a contract

case. In the Individual Healthcare Specialists case, which was the case from

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the Supreme Court in January of this year, the Court specifically refrained

from adopting the inherently undiscoverable standard from Goot but then

found that it was a moot issue because that standard hadn’t been met.

All of that to say is that it is unclear to this Court what standard it’s supposed

to apply. But the Court observes that under any of those standards, there is

no way that Donald Meadows could not have known prior to six years from

the filing of this lawsuit that there was a dispute about ownership. Any of

those standards would -- one would expect him to have known.

And things that the Court finds significant are the fact that all of the parties

and the entities had the same lawyer preparing this paperwork over the years.

It took me some time to put that timeline together, but all that material came

from the parties, and it is -- it is very clear what the parties’ intentions were

over the years. And he should have known that he was not considered an

owner prior to six years prior to the filing of the lawsuit. Also, the fact that

he was not getting K-1s or carrying ownership on his financial statements

was significant to the Court. I never met Donald Meadows. I don’t know

how sophisticated or not sophisticated he was, but he had a lot of business

interests going where there were different kinds of ownerships, and he was

getting apparently good legal advice and good tax advice about how to treat

all that, and – and certainly he should have known that if he wasn’t getting a

K-1, that he was not an owner.

So the Court finds that the statute of limitations would bar these claims

anyway, because he should have known -- he should have known earlier that

he didn’t have an ownership interest. And any of these facts -- I mean, the

Court looks at them all cumulatively, but there are plenty of facts prior to the

-- prior to the start of a six-year period where he should have known that he

wasn’t an owner. So that is also a significant matter for the Court to consider.

So all of Donald Meadows’ claims in 14-1685-11 are dismissed.

In June 2019, the Trial Court entered its written order granting Defendants’ summary

judgment motions, which adopted its oral ruling. Because Defendants’ counterclaims were

still pending, the Trial Court certified its judgment as final, pursuant to Tennessee Rule of

Civil Procedure 54.02. Plaintiffs timely appealed to this Court.3

3

In their reply brief on appeal, Plaintiffs rely on a demand letter written by Gino Marchetti in 2014. After

briefing was completed on appeal, Defendants filed a motion to strike Part II(b)(1) of Plaintiffs’ reply brief,

alleging that the demand letter was inadmissible hearsay for purposes of summary judgment, that Plaintiffs

had been precluded from questioning Mr. Marchetti about the letter due to attorney-client privilege, and

that Plaintiffs had sought to rely on the letter for the first time in their reply brief. Plaintiffs have not raised

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Discussion

Although not stated exactly as such, Plaintiffs raise the following issues for our

review on appeal: (1) whether the Trial Court erred in its application of summary judgment

law to the present case; (2) whether the Trial Court erred in its application of Tennessee

law concerning implied partnerships and in its dismissal of the claims of unjust enrichment,

constructive trust, estoppel, and accounting; (3) whether the Trial Court erred by granting

Defendants’ motion to revise the prior ruling of the Trial Court and granting summary

judgment in favor of Defendants based on the statute of limitations; and (4) whether the

Trial Court erred in its application of the law regarding de facto merger. Additionally,

Defendants raise the following additional issue for review, which has been restated: (1)

whether Plaintiffs waived the issues concerning unjust enrichment, constructive trust,

estoppel, accounting, and de facto merger due to their failure to properly brief those issues

on appeal.

A party is entitled to summary judgment only if the “pleadings, depositions, answers

to interrogatories, and admissions on file, together with the affidavits . . . 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. In Rye v. Women’s Care Ctr. of Memphis,

MPLLC, our Supreme Court adopted the following standard when considering a motion

for summary judgment filed by the party who does not bear the burden of proof at trial, as

are Defendants in this case:

[I]n Tennessee, as in the federal system, when the moving party does not bear

the burden of proof at trial, the moving party may satisfy its burden of

production either (1) by affirmatively negating an essential element of the

nonmoving party’s claim or (2) by demonstrating that the nonmoving party’s

evidence at the summary judgment stage is insufficient to establish the

nonmoving party’s claim or defense. . . . “[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. . . . [S]ummary judgment

should be granted if the nonmoving party’s evidence at the summary

the admissibility of the letter as an issue on appeal. To the extent that Plaintiffs include portions of this

letter in their reply brief, we grant Defendants’ motion to strike. We, however, need not and do not make

any decision as to the admissibility at trial of this letter or Attorney Marchetti’s testimony on the matters

discussed in the letter.

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judgment stage is insufficient to establish the existence of a genuine issue of

material fact for trial. Tenn. R. Civ. P. 56.04, 56.06. . . .

477 S.W.3d 235, 264-65 (Tenn. 2015) (emphasis in original), cert. denied, 136 S. Ct. 2452,

195 L. Ed. 2d 265 (2016). “Whether the nonmoving party is a plaintiff or a defendant—

and whether or not the nonmoving party bears the burden of proof at trial on the challenged

claim or defense—at the summary judgment stage, ‘[t]he 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.’” TWB Architects, Inc. v. The Braxton, LLC,

578 S.W.3d 879, 889 (Tenn. 2019) (quoting Rye, 477 S.W.3d at 265).

This court reviews a trial court’s ruling on a motion for summary judgment de novo

with no presumption of correctness, as the resolution of the motion is a matter of law. Rye,

477 S.W.3d at 250 (citing Bain v. Wells, 936 S.W.2d 618, 622 (Tenn. 1997); Abshure v.

Methodist Healthcare–Memphis Hosp., 325 S.W.3d 98, 103 (Tenn. 2010)). We view the

evidence in favor of the non-moving party by resolving all reasonable inferences in its

favor and discarding all countervailing evidence. Stovall v. Clarke, 113 S.W.3d 715, 721

(Tenn. 2003); Godfrey v. Ruiz, 90 S.W.3d 692, 695 (Tenn. 2002).

Respectfully, the Trial Court’s decision to grant Defendants summary judgment

reads much more like a decision after a trial rather than one resolving motions for summary

judgment. To a large extent, the Trial Court in arriving at its decision focuses only on the

evidence supporting the Defendants’ motions. Further, the Trial Court appears to decide

the weight of the evidence after making credibility determinations rather than determining

whether the evidence creates a genuine issue of material fact. This approach by the Trial

Court runs throughout its decision to grant Defendants’ motions for summary judgment.

We first address whether the Trial Court erred by reconsidering its prior order

denying summary judgment, entered by the previous chancellor, concerning the statute of

limitations and granting Defendants’ motion for summary judgment in favor of Defendants

upon its finding that Plaintiffs’ action was untimely. We note that the original order

denying summary judgment was not a final order and could be reconsidered by the Trial

Court at any time. See Slaughter v. Duck River Elec. Membership Corp., 102 S.W.3d 612,

615 (Tenn. Ct. App. 2002). Such revision of a non-final summary judgment order will be

overturned only when the trial court has abused its discretion. Harris v. Chern, 33 S.W.3d

741, 746 (Tenn. 2000). The Trial Court’s decision to grant summary judgment, however,

is a question of law, which is reviewed de novo with no presumption of correctness. We

find no abuse of discretion by the Trial Court in its decision to rehear the motion for

summary judgment on the statute of limitations issue.

The statute of limitations for breach of contract actions is six years. See Individual

Healthcare Specialists, Inc. v. BlueCross BlueShield of Tennessee, Inc., 566 S.W.3d 671,

- 17 -

709 (Tenn. 2019). The parties agree that Tennessee Code Annotated § 28-3-109(a)(3)

governs the statute of limitations in this action, which provides a six-year statute of

limitations. This Court has held that “[a] cause of action for breach of contract accrues on

the date of the breach or when one party demonstrates a clear intention not to be bound by

the contract.” Coleman Mgmt., Inc. v. Meyer, 304 S.W.3d 340, 348 (Tenn. Ct. App. 2009).

Defendants argue that events concerning the formation of Nashville Ready Mix,

Inc., occurred from 1986 through 1988, which was twenty-six to twenty-eight years prior

to the filing of Plaintiffs’ complaint, and that the formation of the subsequent corporation

and LLC companies occurred from 1993 through 2005, which was at least nine years prior

to the initiation of this action. Defendants also aver that the “de facto” merger of Meadows

Excavating and the Nashville Ready Mix companies allegedly occurred in 2002, which

was twelve years prior to this action being filed by Plaintiffs. Defendant’s argument

focuses on the formation of Nashville Ready Mix and its various entities. However, we

note that the cause of action would accrue at the breach of such implied contract or

partnership or when a party demonstrates a clear intention to repudiate the contract, which

from the evidence presented by the Plaintiffs could be as late as March 2013 when Don

Meadows was ousted from the company. Since this is a summary judgment motion, facts

must be taken in a light most favorable to the Plaintiffs.

The original Chancellor found that the parties continued working together until

March 2013 when Don was banned from the Nashville Ready Mix property and that prior

to that time, the alleged implied partnership between Don and Steve had not been

terminated or repudiated by Steve and Nashville Ready Mix. The original Chancellor,

therefore, denied the motion for summary judgment on this statute of limitations issue.

However, after revisiting the original judgment order denying Plaintiffs’ motion for

summary judgment, the Trial Court reversed the decision and found that Plaintiffs’ cause

of action accrued more than six years prior to the filing of their complaint no matter what

method is utilized in determining when Plaintiffs’ cause of action accrued. According to

the Trial Court, “there is no way that Donald Meadows could not have known prior to six

years from the filing of this lawsuit that there was a dispute about ownership.” However,

if the breach did not occur until March 2013, the current action which was filed in

December 2014 would be timely as to all claims. The Plaintiffs presented proof supporting

their position that the breach of contract or implied partnership did not occur until March

2013 when Steve barred Don from the premises of Nashville Ready Mix.

We agree with the decision of the first chancellor who held, for summary judgment

purposes, that there are at least disputed issues of material fact as to when this alleged

breach occurred. We, therefore, hold that a genuine issue of material fact exists as to when

Plaintiffs’ cause of action accrued that precludes summary judgment on this statute of

limitations issue. Therefore, we reverse the Trial Court’s grant of summary judgment in

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favor of Defendants as to the issue of whether Plaintiffs’ claims are barred by the prescribed

statute of limitations.4

We next address Plaintiffs’ issue concerning the claim of implied partnership.

Tennessee enacted the Revised Uniform Partnership Act in 2001, and it went into effect in

January 2002. Pursuant to the Revised Uniform Partnership Act, Tennessee Code

Annotated § 61-1-202 (2018) defines a partnership as “the association of two (2) or more

persons to carry on as co-owners of a business for profit . . . whether or not the persons

intend to form a partnership.” Our Supreme Court has provided still applicable guidance

in Bass v. Bass, 814 S.W.2d 38 (Tenn. 1991) when it stated:

In determining whether one is a partner, no one fact or

circumstance may be pointed to as a conclusive test, but each

case must be decided upon consideration of all relevant facts,

actions, and conduct of the parties. Roberts v. Lebanon

Appliance Service Co., 779 S.W.2d 793, 795 (Tenn. 1989). If

the parties’ business brings them within the scope of a joint

business undertaking for mutual profit – that is to say if they

place their money, assets, labor, or skill in commerce with the

understanding that profits will be shared between them – the

result is a partnership whether or not the parties understood that

it would be so. Pritchett v. Thomas Plater & Co., 144 Tenn.

406, 232 S.W. 961, 969-70 (1921).

Moreover, the existence of a partnership depends upon

the intention of the parties, and the controlling intention in this

regard is that ascertainable from the acts of the parties. Wyatt

v. Brown, 39 Tenn. App. 28, 281 S.W.2d 64, 67 (1955).

Although a contract of partnership, either express or implied,

is essential to the creation of partnership status, it is not

essential that the parties actually intend to become partners.

Wyatt, 281 S.W.2d at 67. The existence of a partnership is not

a question of the parties’ undisclosed intention or even the

terminology they use to describe their relationship, nor is it

necessary that the parties have an understanding of the legal

effect of their acts. Roberts, 779 S.W.2d at 795-96. It is the

intent to do the things which constitute a partnership that

determines whether individuals are partners, regardless if it is

4

We cannot help but note that here two different Chancellors reviewed basically the same evidence on this

issue and reached different results. This certainly supports our decision that a rational trier of fact could

find in favor of Plaintiffs.

- 19 -

their purpose to create or avoid the relationship. Wyatt, 281

S.W.2d at 67. Stated another way, the existence of a

partnership may be implied from the circumstances where it

appears that the individuals involved have entered into a

business relationship for profit, combining their property,

labor, skill, experience, or money.

Bass v. Bass, 814 S.W.2d 38, 41 (Tenn. 1991) (footnote omitted).

Defendants and the Trial Court place a great deal of emphasis on the formation

documentation of the corporations and LLC entities of Nashville Ready Mix. Such proof

certainly is relevant, but as already detailed it was not the only proof submitted to the Trial

Court on this issue. Tennessee Code Annotated § 61-1-201 provides that an association

that has been formed under another statute other than the Revised Uniform Partnership Act

“is not a partnership under this chapter.” Just because an association has been formed

under another statute means a partnership cannot be formed “under this chapter,” that is

the Revised Uniform Partnership Act, does not preclude absolutely the formation of a

partnership by other means. Although Bass v. Bass was released in 1991 prior to the

enactment of the Revised Uniform Partnership Act, we hold that the Revised Uniform

Partnership Act does not preclude an existence of implied partnerships, such as that in Bass.

In fact, Tennessee Code Annotated § 61-1-104 provides that unless displaced by provisions

of the Revised Uniform Partnership Act, “the principles of law and equity supplement this

chapter.” As such, the common law principles of law and equity still apply concerning

whether an implied partnership has been formed. This is certainly so when Plaintiffs

alleged and submitted evidence that the implied partnership came into existence prior to

the adoption of the Revised Uniform Partnership Act.

Further, Plaintiffs’ claim is that the partnership between Don and Steve was a larger

entity than the separate businesses and that it was the larger partnership entity between Don

and Steve that owned Meadows Excavating and the Nashville Ready Mix entities.

Plaintiffs point to the case of Montgomery v. Montgomery, 181 S.W.3d 720 (Tenn. Ct. App.

2005), for its proposition that a larger partnership existed between Don and Steve and that

this larger partnership owned Nashville Ready Mix. The Montgomery Court cited to the

Revised Uniform Partnership Act and also applied the holding in Bass to determine that an

implied partnership existed between the parties. Id. at 726-30. The Court in Montgomery

affirmed the trial court’s finding that despite having several businesses, there was only one

implied partnership between the parties which had one goal of acquiring assets and making

substantial income. Id. at 729-30. This Court explained that “the Trial Court did not find

that each particular business venture constituted a unique or separate partnership but rather

that there was one partnership between Plaintiff and Defendant which had several business

ventures as partnership assets.” Id. at 730. The Court recognized that the critical finding

was that the parties had devoted “substantially equal amounts of time and effort to the

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partnership and to achieving its goal, not whether they devoted the exact same amount of

time to each separate aspect or asset of the partnership.” Id.

In this case, the Trial Court considered this argument but concluded that it could not

“find the larger family implied partnership given the documents and the titles that clearly

show the parties’ intentions about ownership.” Although we acknowledge that the

formation documentation for the companies may be sufficiently persuasive following trial

to find in favor of Defendants, the Trial Court placed too much emphasis on the

documentation in the summary judgment phase and failed to consider the conflicting

evidence in a light most favorable to the Plaintiffs. Although what is considered a

partnership is generally a matter of law, whether a partnership exists under conflicting

evidence is one of fact. Id. at 726 (quoting Messer Griesheim Indus., Inc. v. Cryotech of

Kingsport, Inc., 45 S.W.3d 588, 605 (Tenn. Ct. App. 2001) (other internal citations

omitted). In this case, there is indeed conflicting evidence concerning whether an implied

partnership existed between Don and Steve.

Plaintiffs argue that the larger partnership entity was formed between Don Meadows

and Steve Meadows around the time that Nashville Ready Mix was first formed. Taking

the facts in a light most favorable to Plaintiffs at this summary judgment stage, Don

Meadows and Steve Meadows had agreed that Steve Meadows would be an equal partner

in Meadows Excavating after employment with the company for twelve years. The 1986

tax return for Meadows Excavating reflects that Don made Steve a partner in Meadows

Excavating some time in 1986. The 1986 tax return was not executed and filed until

October 1987. According to the deposition of David Hinton, Don made Steve a partner in

1986 in order to receive a $50,000 tax benefit for the profits of Meadows Excavating.

Nashville Ready Mix was formed in September 1987. According to Plaintiffs and their

proof submitted at this summary judgment stage, the decision for Don to make Steve a

partner in Meadows Excavating and the formation of Nashville Ready Mix happened

closely in time and are interrelated.

According to Plaintiffs and their proof submitted to the Trial Court, not only had

Steve gained “financial solvency” when he became a partner in Meadows Excavating,

which allowed him to secure loans to begin Nashville Ready Mix, Don also had personally

guaranteed the necessary loans. Plaintiffs further presented proof that Steve had received

a $30,000 distribution from Meadows Excavating in order to form Nashville Ready Mix,

and later that year Nashville Ready Mix received a loan of $10,000 from Meadows

Excavating. Nashville Ready Mix was formed initially as a partnership, with Steve and his

friend, Joe Link, as equal owners of the company. Nashville Ready Mix later became a

corporation with Steve and Joe Link as equal shareholders.

In 1992, Nashville Ready Mix, Inc., began having financial difficulties as evidenced

by a July 1992 letter to Steve and Mr. Link concerning two past due loans, as well as a

- 21 -

letter to Don demanding payment of the full amount of the loans for his guarantee of the

loans. In August 1992, Steve bought out Mr. Link’s shares in the corporation. Plaintiffs

argue that Mr. Link’s exit from Nashville Ready Mix was “precipitated by one bank’s

demand on Don Meadows’s personal guarantees.” Defendants, however, state that Don

did not guarantee the loan to buy out Mr. Link and had not contributed any funds to the

purchase of Mr. Link’s interest in Nashville Ready Mix, Inc. Plaintiffs’ experts provided

in their report that after Mr. Link left the company, six additional loans to Nashville Ready

Mix were personally guaranteed by Don between 1992 and 1994, totaling over $1.8

million. In 1993 and 1994, Don and Mary Helen also had allowed real property they owned

to be listed as collateral on two loans that were used to purchase the Murfreesboro and Mt.

Juliet concrete plants.

David Glasgow worked for Nashville Ready Mix as a mechanic about a year after

they began the company and worked there for approximately four years. He left for a

period of time and returned to Nashville Ready Mix in 2005 as a mechanic. According to

Mr. Glasgow, he was hired after meeting with “Mickey and Don.” Mr. Glasgow described

Nashville Ready Mix as a “family run business.” Mr. Glasgow acknowledged that he

understood Steve owned Nashville Ready Mix but stated that he believed Don owned part

of the company as well. Mr. Glasgow testified that Joe Link had instructed him to do

whatever Don wanted or needed. According to Mr. Glasgow, no one had told him Don

was an owner, but he assumed he was.

Attorney Gino Marchetti represented the parties in several personal and business

matters. Mr. Marchetti prepared the documentation for the formation of Nashville Ready

Mix. In the paperwork, Don was not listed as an owner of Nashville Ready Mix. In his

deposition, Mr. Marchetti described Don’s role in Nashville Ready Mix as “Mr. Inside”

and Steve’s role as “Mr. Outside,” explaining that Don was “dealing with drivers and

keeping the trucks running, plants operating and so forth, while Steve was out generating

the business and talking with contractors and all that sort of stuff.” The contributions Don

Meadows made to the alleged partnership are a disputed issue of fact in this matter.

Another fact at issue concerns whether Don had shared in the income of Nashville

Ready Mix. Pam Meadows testified that Don and Mary Helen Meadows did not have a

personal bank account and that all of their living expenses were paid directly from

Meadows Excavating. Prior to 1994, Meadows Excavating had paid the majority of Pam’s

and Steve’s living expenses as well. After that, they began paying for their living expenses

through Nashville Ready Mix. Beginning in 2000 or 2002, Don and Mary Helen’s living

expenses were paid by Nashville Ready Mix. Don Meadows also used blank, signed

checks from Nashville Ready Mix’s account to purchase cars, memorabilia, “stuff for his

farm, parts for his tractor, just whatever he needed or wanted at the time” and that

sometimes he would tell her in advance what he was purchasing but sometimes he would

not. Pam Meadows testified that the blank checks were intended to allow Don to buy parts

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as needed but that he began using the checks for “personal reasons.” According to

Plaintiffs, both Don and Steve paid for “all of their living expenses, including housing,

taxes, vehicles, insurance, gas, food, farm operations, hobbies, etc. . . . from the business

accounts of either Meadows Excavating or Nashville Ready Mix from about 1985 until

2013.”

It is undisputed that Don did not report income from Nashville Ready Mix

companies on his income tax returns while Steve had reported income from Nashville

Ready Mix on his tax returns. However, Plaintiffs argue the proof shows that Don had

indeed shared in the profits of Nashville Ready Mix or that it is at least a genuine issue of

material fact. There is a question of fact concerning the transfers of money from Nashville

Ready Mix to an account named “Intercompany – Meadows.” The Trial Court classified

approximately $2 million from Nashville Ready Mix to Don Meadows or Meadows

Excavating as undocumented “loans.” Those loans had no promissory notes to correlate

with the amount transferred. Plaintiffs, however, argue that the $2 million was Don sharing

in the profits of Nashville Ready Mix. This is yet another disputed issue of material fact.

Plaintiffs hired experts, Rick V. Swafford, CPA/ABV, CVA, and Tonya L. Cherry,

CPA/ABV/CFF, CFE, MACC, who analyzed the ledgers at Nashville Ready Mix. Mr.

Swafford and Ms. Cherry prepared a report concerning Nashville Ready Mix and stated

that Don was permitted to spend the profits of Nashville Ready Mix on purposes including

“personal utilities for the home and farm, home repairs on multiple properties and houses

owned by Donald Meadows, farming expenses, expenses of the Halls grocery store,

personal expenses such as cars, fencing, flea market spending, doctor bills for Don and

various other family members, property taxes, insurance, etc.” The experts opined that

when Nashville Ready Mix transferred money to the “Intercompany – Meadows” account,

that this arrangement appeared to be a profit-sharing arrangement for Don to share in the

profits of Nashville Ready Mix.

The Trial Court applied the clear and convincing evidence standard at the summary

judgment stage. See Montgomery v. Montgomery, 181 S.W.3d 720, 726 (Tenn. Ct. App.

2005) (“Since there is no written partnership agreement between any of the parties to this

litigation, the party alleging the existence of the partnership carries the burden of proving

that fact by clear and convincing evidence.”) (other internal citations omitted). We note

that although Plaintiffs argue this was error, a review of all the evidence in a light favorable

to Plaintiffs, resolving all factual disputes and making all inferences in favor of Plaintiffs,

a rational trier of fact could find that clear and convincing evidence existed at this summary

judgment stage to support an implied partnership between Don Meadows and Steve

Meadows. As such, we reverse the Trial Court’s order granting summary judgment in

favor of Defendants concerning this issue.

- 23 -

We next address Plaintiffs’ issues concerning unjust enrichment, constructive trust,

and de facto merger. Defendants argue that Plaintiffs have waived these issues on appeal

due to their failure to fully brief them during this appeal. Plaintiffs responded in their reply

brief, denying that they had waived any of their issues on appeal. Plaintiffs further state

that they had explained in their brief the Trial Court’s failure to consider their arguments

or evidence on these claims and that they had “incorporated by reference all of [Plaintiffs’]

detailed arguments as to why genuine issues of material fact preclude summary judgment

on those specific claims, and provided pinpoint citations to the appellate record where those

arguments, citations, and legal authorities can be found.”

Tennessee Rule of Appellate Procedure 27(a)(7) requires an appellant to include an

argument section in their appellate brief setting forth “the contentions of the appellant with

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

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

references to the record (which may be quoted verbatim) relied on.” Additionally,

Tennessee Court of Appeals Rule 6(a) provides the following requirements of an argument

on appeal:

Written argument in regard to each issue on appeal shall contain:

(1) A statement by the appellant of the alleged erroneous action of the trial

court which raises the issue and a statement by the appellee of any action of

the trial court which is relied upon to correct the alleged error, with citation

to the record where the erroneous or corrective action is recorded.

(2) A statement showing how such alleged error was seasonably called to the

attention of the trial judge with citation to that part of the record where

appellant's challenge of the alleged error is recorded.

(3) A statement reciting wherein appellant was prejudiced by such alleged

error, with citations to the record showing where the resultant prejudice is

recorded.

(4) A statement of each determinative fact relied upon with citation to the

record where evidence of each such fact may be found.

In Plaintiffs’ appellate brief, they include a headnote on their section concerning

these issues stating as follows: “The trial court’s ruling dismissing unjust enrichment, de

facto merger, and constructive trust was also error.” In addition to the headnote, Plaintiffs

include four sentences of argument and a footnote directing this Court to the record below

for their arguments concerning these issues. The section on these issues contains no

supporting authority and the only citations to the record point to the arguments made by

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Plaintiffs in the Trial Court. In addition to providing these citations to the record of their

arguments, Plaintiffs attempt to incorporate by reference the arguments made before the

Trial Court in order for them to be considered by this Court on appeal. Plaintiffs make no

further argument on appeal concerning these issues.

It is clear that Plaintiffs have not complied with either Tennessee Rule of Appellate

Procedure 27 or Tennessee Court of Appeals Rule 6 concerning their issues of unjust

enrichment, constructive trust, and de facto merger. We agree with Defendants that

Plaintiffs’ argument concerning these issues is insufficient on appeal. It is not acceptable

on appeal merely to provide citations to the record of various responsive motions or others

filings from the proceedings below where your position was presented to the Trial Court

without developing an argument on appeal as to how the Trial Court erred in its ruling

concerning those motions. Plaintiffs’ brief on these issues is entirely devoid of what is

required by our rules on appeal. As this Court has stated, “[t]he failure of a party to cite to

any authority or to construct an argument regarding his position on appeal constitutes

waiver of that issue.” Newcomb v. Kohler Co., 222 S.W.3d 368, 401 (Tenn. Ct. App. 2006).

Therefore, Plaintiffs’ failure to comply with Tennessee Rule of Appellate Procedure 27

and Tennessee Court of Appeals Rule 6 has resulted in waiver of those issues on appeal.

That portion of the Trial Court’s judgment regarding the issues of unjust enrichment,

constructive trust, and de facto merger is affirmed.

We note that Defendants include the claim of accounting in their statement of the

issues concerning whether Plaintiffs have waived their appeal of the issue. However, they

have not included the claim of accounting in their argument section related to the waiver

issue. In their brief, Defendants request only that this Court “hold that Plaintiffs waived

their challenge to the dismissal of their claims of unjust enrichment, de facto merger, and

constructive trust.”

The Trial Court stated in its oral ruling, which was incorporated into its judgment,

that it was dismissing the claim of accounting as moot. As the trial court stated, the claim

of accounting is an equitable remedy for preserving assets and is related to Plaintiffs’ claim

of implied partnership. If Plaintiffs ultimately are successful on the claims remanded to

the Trial Court, an accounting may well be necessary. If Plaintiffs ultimately are not

successful on those claims on remand, no accounting will be necessary. Based on the

relation of the claim of accounting to the implied partnership claim, we reverse the Trial

Court’s grant of summary judgment concerning the requested accounting and remand to

the Trial Court for further proceedings as necessary concerning this issue.

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Conclusion

Based on the foregoing, we affirm the Trial Court’s judgment granting summary

judgment in favor of Defendants for the claims of unjust enrichment, constructive trust,

and de facto merger. However, we reverse the Trial Court’s grant of summary judgment

in favor of Defendants concerning the statute of limitations, implied partnership, and

accounting. This cause is remanded to the Trial Court for further proceedings consistent

with this Opinion. The costs incurred on appeal are assessed fifty-percent against the

appellants, Sharon Kay Story and Mary Helen Meadows, in their capacity as co-trustees of

Meadows Community Property Trust, and The Meadows Community Property Trust, and

fifty-percent against the appellees, Mark Steven Meadows; Nashville Ready Mix, Inc.;

Nashville Ready Mix of Murfreesboro, Inc.; Nashville Ready Mix of Columbia, LLC;

Nashville Ready Mix of Franklin, LLC; Nashville Ready Mix of Clarksville, LLC;

Nashville Ready Mix of Dickson, LLC, and Nashville Ready Mix of West Nashville, LLC.

_________________________________

D. MICHAEL SWINEY, CHIEF JUDGE

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