# Mount Hopewell Missionary Baptist Church v. Foundation Capital Resources, Inc

> Court of Appeals of Tennessee · February 2, 2021

URL: https://www.frixlaw.com/law-library/cases/4656963

## Case

- **Court:** Court of Appeals of Tennessee
- **Decided:** February 2, 2021
- **Precedential status:** Published
- **Opinion:** Opinion
- **Judges:** Judge Andy D. Bennett
- **Cited by:** 0 later opinions in the Frix Law Library

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## Opinion text

02/02/2021
IN THE COURT OF APPEALS OF TENNESSEE
AT NASHVILLE
Assigned on Briefs December 2, 2020

MOUNT HOPEWELL MISSIONARY BAPTIST CHURCH V.
FOUNDATION CAPITAL RESOURCES, INC.

Appeal from the Chancery Court for Davidson County
No. 19-1103-III Ellen Hobbs Lyle, Chancellor

No. M2020-00107-COA-R3-CV

A church filed a complaint in 2019 against a lending institution asserting causes of action
for fraud and breach of contract based on conduct that occurred in 2008 and 2009. An
earlier complaint the church filed in 2009 was dismissed in 2017 for failure to prosecute,
and the church voluntarily dismissed a second complaint it filed in 2018. The lending
institution moved to dismiss the 2019 complaint based on the running of the statute of
limitations. The trial court granted the motion to dismiss, and the church appeals. We
affirm the trial court’s judgment dismissing the complaint.

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

ANDY D. BENNETT, J., delivered the opinion of the Court, in which CARMA DENNIS
MCGEE, and KRISTI M. DAVIS, JJ., joined.

Isaac T. Conner and Andre Philip Johnson, Nashville, Tennessee, for the appellant, Mount
Hopewell Missionary Baptist Church.

Sye Thomas Hickey, Nashville, Tennessee, for the appellee, Foundation Capital Resources,
Inc.

OPINION

I. PROCEDURAL BACKGROUND

Mount Hopewell Missionary Baptist Church (“Mount Hopewell”) filed a complaint
against Foundation Capital Resources, Inc. (“FCR”) in September 2019 asserting claims
of fraud and breach of contract based on FCR’s foreclosure on Mount Hopewell’s property
in November 2008. Mount Hopewell had filed earlier complaints against FCR in 2009 and
again in 2018 based on the same set of facts. In the complaint filed in 2009, Mount
Hopewell asserted wrongful foreclosure and negligence. The trial court dismissed that case
without prejudice on February 16, 2017, based on Mount Hopewell’s failure to prosecute.
In reliance on the savings statute, Tenn. Code Ann. § 28-1-105, Mount Hopewell refiled
its complaint on February 16, 2018, and asserted claims for breach of contract and fraud.
Mount Hopewell nonsuited its 2018 complaint several months later pursuant to Tenn. R.
Civ. P. 41.01, and the trial court entered an order acknowledging the voluntary dismissal
on September 13, 2018.

Mount Hopewell filed the instant complaint on September 12, 2019, asserting the
same causes of action that it did in its 2018 complaint. FCR moved to dismiss the 2019
complaint, arguing that Mount Hopewell’s claims for fraud and breach of contract were
based on events that occurred in 2008 and were barred by the applicable statutes of
limitation. FCR also contended that the 2019 complaint did not come within the savings
statute because it was not filed within one year of the dismissal of the first lawsuit, which
was dismissed without prejudice in 2017.

The trial court granted FCR’s motion to dismiss by order filed on December 19,
2019. The court acknowledged that the dismissal of Mount Hopewell’s first lawsuit
triggered the savings statute, Tenn. Code Ann. § 28-1-105, which permitted Mount
Hopewell to re-file its complaint against FCR within one year of the date when its initial
complaint was dismissed, February 16, 2017. The trial court found, however, that when
Mount Hopewell nonsuited its 2018 lawsuit in September 2018, the dismissal “operated as
a dismissal on the merits” because it occurred more than a year after the dismissal of the
initial lawsuit. The court also held that Mount Hopewell’s claims for breach of contract
and fraud were barred by the applicable statutes of limitation. Lastly, the court found that
Mount Hopewell’s factual allegations were insufficient to state an actionable claim for
fraud. The court wrote, in part:

Specifically, the facts as pleaded by Plaintiff do not satisfy the essential
requirements that (1) FCR made a representation of a present or past material
fact and (2) FCR concealed or suppressed a material fact because the
allegations in paragraph 62 and subsequent paragraphs (including without
limitation the reference to Exhibit H to the Complaint) do not allege past and
existing facts. The Court finds that Plaintiff’s allegations regarding Exhibit
H to the Complaint and what went on with FCR’s board of directors do not
fit within the requirements for intentional misrepresentation or
misrepresentation by concealment under Tennessee law.

Mount Hopewell appeals the trial court’s dismissal of its 2019 complaint, arguing
that (1) the factual allegations in the 2019 complaint properly addressed each element of
fraud and identified FCR’s fraudulent misrepresentations, (2) the discovery rule extended
the statute of limitations for fraud until December 27, 2016, and (3) the 2018 and 2019
complaints were filed within the three-year statute of limitations applicable to fraud, and

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the 2019 lawsuit was filed within a year of the order acknowledging Mount Hopewell’s
nonsuit of the 2018 lawsuit. FCR asserts that Mount Hopewell’s appeal is frivolous and
contends that it is entitled to an award of damages pursuant to Tenn. Code Ann. § 27-1-
122.

II. ANALYSIS

A. Rule 41.01 and Tennessee’s Savings Statute

We will first address the interplay between Tenn. R. Civ. P. 41.01, the rule
concerning voluntary nonsuits, and Tenn. Code Ann. § 28-1-105, known as the savings
statute. Rule 41.01 provides, in pertinent part, as follows:

(1) Subject to the provisions of . . . any statute, and except when a motion for
summary judgment made by an adverse party is pending, the plaintiff shall
have the right to take a voluntary nonsuit to dismiss an action without
prejudice by filing a written notice of dismissal at any time before the trial of
a cause and serving a copy of the notice upon all parties . . . .

(2) Notwithstanding the provisions of the preceding paragraph, a notice of
dismissal operates as an adjudication upon the merits when filed by a plaintiff
who has twice dismissed in any court an action based on or including the
same claim.

As the rule states, “[s]ubject to the provisions of any statute,” a plaintiff is permitted to take
a voluntary nonsuit two times with impunity, but the third time a plaintiff voluntarily
dismisses an action, the dismissal “operates as an adjudication upon the merits.” The
savings statute, upon which Mount Hopewell relies, provides the following, in relevant
part:

If the action is commenced within the time limited by a rule or statute of
limitation, but the judgment or decree is rendered against the plaintiff upon
any ground not concluding the plaintiff’s right of action, or where the
judgment or decree is rendered in favor of the plaintiff, and is arrested, or
reversed on appeal, the plaintiff, or the plaintiff’s representatives and privies,
as the case may be, may, from time to time, commence a new action within
one (1) year after the reversal or arrest.

Tenn. Code Ann. § 28-1-105(a).

This court has interpreted the savings statute to allow a plaintiff to refile a complaint
regardless of whether the plaintiff voluntary nonsuits the action or whether the case is
dismissed by the court without prejudice for failure to prosecute, as occurred here. See

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Payne v. Matthews, 633 S.W.2d 494, 496 (Tenn. Ct. App. 1982). The Payne court
considered Rule 41.01 in the context of the savings statute to determine whether Rule 41.01
enlarges the one-year time period set forth in the savings statute. The court first addressed
the savings statute, writing, “It has long been held that after the taking of any nonsuit to
the original action, any additional suits would have to be filed within one year of the first
nonsuit to be within the purview of T.C.A. Sec. 28-1-105.” Id. at 495-96. The court then
recognized that “[w]hile Rule 41.01 T.R.C.P. gives a litigant the right to take two voluntary
nonsuits, this right is subject to the provisions ‘of any statute,’ namely T.C.A. 28-1-105.”
Id. at 496. Thus, the Payne court concluded, “regardless of how an inconclusive dismissal
of an action is had, in order for a suit to survive, it must have been filed within one year of
the date of dismissal of the original action[.]” Id.; see also Freeman v. CSX Transp., Inc.,
No. M2010-01833-COA-R9-CV, 2011 WL 1344727, at *7 (Tenn. Ct. App. Apr. 7, 2011)
(“[T]he savings statute limits the time within which a plaintiff can refile its case to a single
one-year period following the non-merits dismissal of the last case filed within the
applicable statute of limitations.”); Lillard v. Pinckley, No. 01-A-01-9506-CV00268, 1995
WL 656886, at *2 (Tenn. Ct. App. Nov. 9, 1995). The Freeman court explained that “[t]he
savings statute is limited to actions not resolved on their merits and only applies when an
action was originally brought within the statute of limitations.” Freeman, 2011 WL
1344727, at *11. The 2006 Advisory Commission Comment to Rule 41.01 reinforce this
interpretation, stating the following in relevant part:

Although Rule 41.01(2) allows two nonsuits without prejudice, a
plaintiff must carefully consider the separate issue of whether the saving
statute, T.C.A. § 28-1-105, authorizes a recommencement of the plaintiff’s
action after a nonsuit. A plaintiff should note that taking a second nonsuit,
which is permitted by Rule 41.01(2), does not initiate a second one-year
period for recommencing the action under the saving statute.

TENN. R. CIV. P. 41.01 2006 advisory comm’n cmt.

Putting aside for the moment Mount Hopewell’s argument that its fraud claim was
tolled due to FRC’s fraudulent concealment of material facts, we note that the parties agree
that Mount Hopewell’s breach of contract claim is subject to a six-year of limitation, see
Tenn. Code Ann. § 28-3-109(a)(3), and that its fraud claim is subject to a three-year statute
of limitations, see Tenn. Code Ann. § 28-3-105(1); Hulan v. Coffee Cnty. Bank, No.
M2018-00358-COA-R3-CV, 2019 WL 354870, at *3 (Tenn. Ct. App. Jan. 28, 2019). In
the case at bar, Mount Hopewell filed its initial complaint against FRC in 2009, and that
complaint was dismissed without prejudice by the trial court on February 16, 2017. Mount
Hopewell refiled its complaint against FRC one year later, on February 16, 2018, and then
nonsuited those claims against FRC effective September 13, 2018.1 The savings statute

1
FRC contends that Mount Hopewell’s 2018 complaint did not come within the parameters of the savings
statute because the causes of action and some of the facts asserted in the 2018 complaint differed from those
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extended the time within which Mount Hopewell could refile its complaint against FRC to
one year from the date its initial complaint was dismissed, February 16, 2017. Because the
2019 complaint was not filed within this one-year period, it does not enjoy the protections
offered by the savings statute. As discussed above, Rule 41.01 gives a plaintiff the right to
take two voluntary non-suits, but this rule is subject to the savings statute, and the statute
of limitations for Mount Hopewell’s breach of contract and fraud claims had run by the
time Mount Hopewell filed its 2019 complaint. As a result, Mount Hopewell’s nonsuit of
its 2018 lawsuit operated as a dismissal on the merits of any breach of contract or fraud
claims it had against FCR. For these reasons, we affirm the trial court’s judgment that
Mount Hopewell’s 2019 complaint is barred by the statutes of limitation and the savings
statute.

B. Mount Hopewell’s Fraud Claim

Mount Hopewell states in its 2019 complaint that the causes of action it asserts arose
from “the conduct, transaction, or occurrence set forth in the original pleading filed on July
28, 2009, which is the wrongful foreclosure of Plaintiff’s property by Defendant.” As
Mount Hopewell acknowledges, the statute of limitations for its breach of contract claim
is six years, and the statute of limitations for its fraud claim is three years. Nevertheless,
Mount Hopewell argues, its fraud claim “is not barred by the statute of limitations because
Mount Hopewell could not have been put on notice of FCR’s fraudulent scheme through
its inquiries, dealings, or conversations with FCR until December 2016 when FCR’s board
authorization, produced in discovery, showed that FCR had authority to reinstate the loan
at a time when FCR represented that it could not until more requirements were met.”2
Mount Hopewell states that the fraud “consisted of the lack of disclosure of pertinent
material information” that was set forth in a document titled “Consent Resolutions of the
Board of Directors” (“Consent”). This document was attached as Exhibit H to Mount
Hopewell’s 2019 complaint and was eligible for consideration by the trial court in
addressing FCR’s motion to dismiss. See TENN. R. CIV. P. 10.03 (providing that exhibits
attached to pleadings become “a part of the pleading for all purposes”).

The Consent upon which Mount Hopewell relies is dated October 25, 2012, and it
states, in pertinent part, as follows:

WHEREAS, Company [FCR] and Hopewell Missionary Baptist
Church, Inc. (“Hopewell”) have entered into a new loan agreement regarding

set forth in Mount Hopewell’s initial complaint, filed in 2009. However, Mount Hopewell nonsuited the
2018 complaint before a court was able to determine its viability.
2
Mount Hopewell does not contend that the statute of limitations for its breach of contract claim should be
tolled. Thus, Mount Hopewell seems to concede that its breach of contract claim is barred by the six-year
statute of limitations.
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the property located at 2911 Stokers Lane, Nashville, Tennessee 37218 (the
“Property”); and,

WHEREAS, upon completion of the new loan documents and the
purchase money financing for the new loan, Company will re-convey the
Property to Hopewell under the following terms and conditions:

1) Principal loan amount: ONE MILLION FIVE HUNDRED TEN
THOUSAND NINE HUNDRED FIFTY-EIGHT AND 60/100
DOLLARS ($1,510,958.60);
2) Interest rate: 7.25%;
3) At closing, Hopewell shall pay to Company the equivalent of
eleven months of interest-only payments through the payment due
November 2012 based on the New Loan Amount which shall be
paid by certified funds;
4) Hopewell shall make an additional monthly interest-only payment
for a period of one month following closing for the month of
December 2012;
5) The monthly amortizing payments shall begin January 1, 2013,
and shall continue monthly thereafter;
6) There is a ten (10) year balloon payment;
7) Payments are based on a twenty-five (25) year amortization
schedule;
8) There is no prepayment penalty;
9) The origination fee shall be waived by the Company;
10) Effective Date shall be December 1, 2011.

Therefore, be it;

RESOLVED, that the Company shall re-convey the Property to the
Hopewell under the terms of the new loan in the amount of ONE MILLION
FIVE HUNDRED TEN THOUSAND NINE HUNDRED FIFTY-EIGHT
AND 60/100 DOLLARS ($1,510,958.60).

Mount Hopewell asserts that FCR fraudulently concealed the Consent from it and
that, pursuant to the discovery rule, the three-year statute of limitations applicable to fraud
claims was tolled until December 2016, when Mount Hopewell first learned of the Consent
during discovery. “Under the discovery rule, the statute of limitations will only begin to
run when the plaintiff has actual knowledge of the claim, or when the plaintiff has actual
knowledge of facts sufficient to put a reasonable person on notice that [it] has suffered an
injury as a result of wrongful conduct.” Coffey v. Coffey, 578 S.W.3d 10, 22 (Tenn. Ct.
App. 2018).

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To state an actionable claim for fraud, Mount Hopewell must show the following:

(1) intentional misrepresentation of a material fact; (2) knowledge that the
representation was false—that the misrepresentation was made knowingly or
recklessly or without belief or regard for its truth; (3) reasonable reliance on
the misrepresentation by the plaintiff and resulting damages; (4) “that the
misrepresentation relates to an existing or past fact[.]”

Dog House Invs., LLC v. Teal Props., Inc., 448 S.W.3d 905, 916 (Tenn. Ct. App. 2014)
(quoting Stacks v. Saunders, 812 S.W.2d 587, 592 (Tenn. Ct. App. 1990)); see also Brown
v. Birman Managed Care, Inc., 42 S.W.3d 62, 66-67 (Tenn. 2001). Rule 9.02 of the
Tennessee Rules of Civil Procedure requires that “the circumstances constituting fraud . .
. shall be stated with particularity.” As we have explained, “[a] claim of fraud is deficient
if the complaint fails to state with particularity an intentional misrepresentation of a
material fact.” Kincaid v. SouthTrust Bank, 221 S.W.3d 32, 41 (Tenn. Ct. App. 2006). “To
pass the particularity test, the actors should be identified and the substance of each
allegation should be pled.” Id. (citing Strategic Capital Res., Inc. v. Dylan Tire Indus.,
LLC, 102 S.W.3d 603, 611 (Tenn. Ct. App. 2002)).

In its 2019 complaint, Mount Hopewell’s fraud claim is based on the following
assertions:

50. On or about October 25, 2012, Defendant’s Board approved a new loan
and buyback transaction for the Plaintiff, but the Plaintiff was never informed
of this approval and has continued to suffer irreparable harm as a result.
(Exhibit H).

....

54. On or about October 13, 2008, Defendant intentionally misrepresented
to the Plaintiff that the $200,000 payment would stop the foreclosure and
bring the account current and prevent foreclosure.

55. Plaintiff tendered payment and Defendant accepted payment on October
14, 2008 under the impression that the loan was current.

56. Between October 14 and November 18, 2008, Defendant intentionally
misrepresented to the Plaintiff that the loan was current and foreclosure
proceedings were stopped.

57. Defendant, with malicious intent, knowingly and recklessly
misrepresented to the Plaintiff that bringing the loan current would prevent
the foreclosure sale.

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58. Plaintiff reasonably relied on this misrepresentation by the Defendant,
paying $200,000 to the Defendant as a result thereof.

59. Defendant’s misrepresentation related to the balance owed on the loan
to bring the loan current and prevent foreclosure of Plaintiff’s property.

60. In or around August 2012, Plaintiff and Defendant entered into
discussions regarding the reinstatement of the loan.

61. Defendant informed Plaintiff that discussions were ongoing with
management and that a large lump sum payment would be required for the
reinstatement to be considered.

62. Unbeknownst to Plaintiff, on October 25, 2012, the Board of Directors
of Foundation Capital unanimously approved a resolution which stated that
the company “shall” convey the property to Plaintiff once certain conditions
were met. (See Exhibit H).

63. Plaintiff was never informed that the resolution has been signed and
approved, but instead was asked to pay $109,544.52 as a payment for
negotiation of the re-conveyance.

64. On or about January 8, 2013, Plaintiff paid Defendant $109,544.52
which was the exact amount required for the previously approved
reinstatement. (See Exhibits H & I).

65. Subsequently, on or about February 1, 2013 and February 21, 2013,
Plaintiff sent Defendant two payments of $11,106.53.

66. In making these payments, Plaintiff had unknowingly fulfilled the final
obligations required by the Board for reinstatement.

67. The Defendant kept the payments and never informed the Plaintiff of the
approved negotiation nor sent them any of the required paperwork to
complete the reinstatement.

68. Since that time, Plaintiff has continued to pay rent although the property
remains in the Plaintiff’s name.

69. Defendant has repeatedly and substantially misrepresented facts and
deceived Plaintiff in an effort to prevent them from getting their property
back despite Plaintiff’s large continued efforts and large lump sum payments.

-8-
70. As a result of Plaintiff’s reliance upon the representations and
misrepresentations of the Defendant, Plaintiff has incurred considerable
financial loss and damages to Plaintiff’s detriment.

Mount Hopewell’s assertions in paragraphs 54-59 relate to misrepresentations and
actions dating from 2008, and any claims based upon that conduct are barred by the three-
year statute of limitations applicable to fraud claims. The assertions contained in
paragraphs 60-70 relate to the Consent, which Mount Hopewell alleges was fraudulently
concealed from it. As FCR points out, Mount Hopewell fails to identify in its 2019
complaint any intentional misrepresentation of a material fact that FCR made to it. Mount
Hopewell refers to a “reinstatement” of its loan, but nowhere in the Consent does the word
“reinstatement” appear. Moreover, the Consent merely authorized FCR to enter into a new
loan agreement with Mount Hopewell and to re-convey the property to it if a number of
conditions were satisfied. Nowhere in the complaint does Mount Hopewell allege that the
conditions identified in the Consent were satisfied. Further, Mount Hopewell fails to assert
that any misrepresentation by FCR “relates to an existing or past fact,” as it must to
constitute an element of fraud. In the absence of an assertion of an intentional
misrepresentation of an existing or past material fact by FCR, Mount Hopewell has failed
to state an actionable claim for fraud.

In light of our conclusion that Mount Hopewell has failed to assert an actionable
claim for fraud, we need not address whether Mount Hopewell is entitled to rely on the
discovery rule to toll the statute of limitations for its fraud claim until 2016.

C. FCR’s Claim for Damages

FCR asserts that Mount Hopewell’s appeal is frivolous and that it is entitled to an
award of damages pursuant to Tenn. Code Ann. § 27-1-122. According to that statute,

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.

The decision to award damages based on this statute “rests solely in the discretion of this
Court.” Trigg v. Trigg, No. E2014-00860-COA-R3-CV, 2015 WL 66544, at *10 (Tenn.
Ct. App. Jan. 5, 2015). We exercise our discretion to deny FCR damages pursuant to this
statute.

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III. CONCLUSION

The judgment of the trial court is affirmed. Costs of this appeal are assessed against
the appellant, Mount Hopewell Missionary Baptist Church, for which execution may issue
if necessary.

_/s/Andy D. Bennett_______________
ANDY D. BENNETT, JUDGE

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/4656963. Public record. Not legal advice.