Opinion

Ernest B. Williams IV, PLLC v. The Association Of Unit Owners Of The Five Hundred And One Union Building

Court: Court of Appeals of Tennessee
Filed: Apr 7, 2021
Status: Published
On the bench: Judge Arnold B. Goldin
Cited by: 0 cases
Authority: More cited than 15.2%

“The right to appeal is not conditioned upon the filing of a bond for stay.”

How later courts described this case

“The right to appeal is not conditioned upon the filing of a bond for stay.”

Written by the judges who cited it.

The opinion

04/07/2021

IN THE COURT OF APPEALS OF TENNESSEE

AT NASHVILLE

November 10, 2020 Session

ERNEST B. WILLIAMS IV, PLLC ET AL. v. THE ASSOCIATION OF

UNIT OWNERS OF THE FIVE HUNDRED AND ONE UNION BUILDING

ET AL.

Appeal from the Chancery Court for Davidson County

No. 17-966-I Robert E. Lee Davies, Senior Judge

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No. M2019-02114-COA-R3-CV

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This case concerns the termination of a condominium building. At the center of the dispute

on appeal is a disagreement over whether the ordered distribution of the proceeds from the

sale of the condominium real estate was proper. The Appellant, who was a unit owner in

the condominium, takes specific issue with the trial court’s use of a certain appraisal as the

basis for a distribution of sale proceeds. The trial court ruled against the Appellant on this

issue, holding that the subject appraisal became final because it had not been timely

disapproved by unit owners representing at least 25% of the votes in the unit owners’

association as provided in Tennessee Code Annotated section 66-27-318 of the Tennessee

Condominium Act of 2008. In holding that the proposed allocation from the appraisal

should be used, the trial court also ordered that the Appellant pay certain attorney’s fees

and discretionary costs. A request for prejudgment interest against the Appellant, however,

was ultimately denied. On appeal, we affirm the trial court’s judgment in all respects.

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

Affirmed and Remanded

ARNOLD B. GOLDIN, J., delivered the opinion of the Court, in which ANDY D. BENNETT

and W. NEAL MCBRAYER, JJ., joined.

Donald Capparella and Kimberly Macdonald, Nashville, Tennessee, for the appellant,

Wolfgang Sauermann.

Jason M. Pannu, Nashville, Tennessee, and Brian S. Faughnan, Memphis, Tennessee, for

the appellees, The Association of Unit Owners of the Five Hundred and One Union

Building, a Condominium Association, Inc., and Stanley Allen Davis.1

Attorney William N. Bates of Nashville, Tennessee filed a notice on behalf of the Greater

Nashville Regional Council indicating his client’s decision to join in and incorporate the brief filed by the

Keene W. Bartley, Nashville, Tennessee, for the appellee, Top Floor Associates, LLP.

OPINION

BACKGROUND AND PROCEDURAL HISTORY

The Appellant Wolfgang Sauermann (“Mr. Sauermann”) is a former unit owner in

the “501 Building” located at 501 Union Street in Nashville. The Appellees in this matter

consist of ten other former unit owners within the 501 Building, as well as the Association

of Unit Owners of the Five Hundred and One Union Building, a Condominium

Association, Inc. (the “501 Association”). To distinguish between the 501 Association and

the association that was previously in place at the 501 Building, we will refer to the latter

as the “Original Association” herein. In the same vein, references to the “Original Board”

in this Opinion relate to the Board of Directors of the Original Association, whereas

references to the “Board” shall relate to the Board of Directors of the 501 Association.

In late 2015, many of the 501 Building’s unit owners held informational discussions

regarding a potential sale of the building. The following year, on January 27, 2016, the

Original Board voted to investigate the sale of the building as a whole and to assemble the

information needed to present to the unit owners for their consideration. The Original

Board also authorized the Original Association to retain an appraiser to determine the value

of the building.

As of December 15, 2015, a former owner of basement units in the building, Gecko

Ventures, LLC, was delinquent in association dues to the Original Association in the

approximate amount of $55,000.00. Its units were later conveyed to the Original

Association by a deed in lieu of foreclosure in April 2016.

In May 2016, Mr. Sauermann sent an email to fellow unit owners advising that an

appraisal of the 501 Building had been completed by Robert Pickens. The same month, at

a meeting of the Original Board, Mr. Sauermann presented projections which forecasted

the approximate net proceeds each unit owner would receive under the Pickens appraisal

for various sale prices. At a subsequent June 6, 2016 meeting of the Original Board and

some of the unit owners, the unit owners discussed the minimum amounts they would

accept for their respective units in the event of a sale of the 501 Building.

The following fall, on November 8, 2016, the unit owners met at a special meeting

where they approved the adoption of the Tennessee Condominium Act of 2008 to govern

the Original Association and the 501 Building. The unit owners of the Original Association

also approved amended and restated bylaws and a name change to the 501 Association,

condominium association and Mr. Davis. With the exception of Top Floor Associates, LLP, the other unit

owner Appellees have not filed briefs in this appeal.

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and they further agreed to operate the 501 Association as a nonprofit corporation. The

Board was also elected, and notice for a second special meeting to take place on November

29, 2016 was approved. An amended and restated declaration for the 501 Association,

which was approved at the November 8 meeting, was recorded with the Davidson County

The ownership interests of the unit owners in the common elements of the 501

Building and the voting interest of the unit owners were allocated in the same manner under

the amended and restated declaration as they were in the original declaration of horizontal

property regime. Specifically, the ownership interests of the unit owners in the common

elements, the voting interest of the unit owners, and the “Grossed Up Percentage

Ownership” were allocated as follows:

Entity/ Owner Percentage Grossed Up

Ownership Percentage

(Declaration) Ownership

Wolfgang Sauermann 9.4494% 10.4532%

Angela Evans 3.4588% 3.8262%

Westchester Partners 3.4588% 3.8262%

TOSS 3.7165% 4.1114%

David Downard 2.9493% 3.2626%

Aubrey Givens 3.2071% 3.5478%

Stan Davis 13.3317% 14.7479%

Audrey Anderson 3.7165% 4.1114%

Richard Braun 9.6152% 10.6366%

GNRC 23.2046% 25.6696%

Top Floor 14.2892% 15.8071%

501 Association Basement Units 9.6029%

TOTALS 100.00% 100.00%

At the scheduled second special meeting on November 29, 2016, over 80% of the

members of the 501 Association agreed to sell the 501 Building and to terminate the 501

Building as a condominium and the 501 Association. It was further agreed that the 501

Association was authorized to enter into a listing agreement with Colliers International as

the seller’s broker, and Mr. Sauermann was given approval to perform services as an

owners’ representative and to be compensated with a referral fee, payable out of the

brokerage fee.

The 501 Association ultimately agreed to sell the 501 Building to 501 Union Level

Office, LLC for $8,850,000. Moreover, in an effort to comply with the Tennessee

Condominium Act of 2008, specifically Tennessee Code Annotated section 66-27-318, the

501 Association retained Mr. Pickens again to perform an updated appraisal. Under the

foregoing statutory section, proceeds of a sale must be distributed in accordance with a

valuation made “immediately before the termination, as determined by one (1) or more

independent appraisers selected by the association.” See Tenn. Code Ann. § 66-27-318(e),

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(h)(1). Mr. Pickens later prepared an appraisal, which was dated July 31, 2017.

Upon receipt of the Pickens appraisal, which was sent out to all unit owners on

August 12, 2017, disputes arose almost immediately concerning the valuations. In the

meantime, on August 14, 2017, the sale of the 501 Building to 501 Union Level Office,

LLC closed.

As is relevant here, the Tennessee Condominium Act of 2008 provides that “[t]he

decision of the independent appraisers . . . becomes final unless disapproved within thirty

(30) days after distribution by unit owners of units to which at least twenty-five percent

(25%) of the votes in the association are allocated.” Tenn. Code Ann. § 66-27-318(h)(1).

On August 29, 2017, a meeting of several unit owners was held by telephone. During the

meeting, Westchester Partners, the Greater Nashville Regional Council, the Tennessee

Organization of School Superintendents, Stanley Davis, and Top Floor Associates, LLP

decided they would formally disapprove the Pickens appraisal. It is undisputed that these

particular parties disapproved the appraisal within 30 days of its distribution.2

In recognition of the fact that the appraisal had been disapproved by substantially

more than the requisite statutory threshold of association votes, Mr. Sauermann, who was

then a Board member, emailed the 501 Association’s then-President, Angela Evans, on

August 30, 2017, stating in relevant part as follows:

[W]e will have to order a new appraisal. The Board can approve the terms

and conditions for ordering an independent appraisal to comply with the

Statute. The new appraisal will have to be performed based on the status of

the 501 Building and the Market Conditions as of 7/31/2017 or before the

closing of the sale.

Ms. Evans resigned from the Board on August 30, 2017, and on September 1, 2017, other

Board members asked Mr. Sauermann to resign from the Board as well. He agreed to do

so.

In light of the lack of a resolution then existing concerning how the proceeds from

the sale of the 501 Building were to be distributed, the present litigation was commenced

in the Davidson County Chancery Court by way of the filing of a “Petition for Interpleader”

by Ernest B. Williams IV, PLLC and its subsidiary American Realty Title, LLC. These

parties were identified in the petition as the 501 Association’s attorneys and escrow agent,

respectively. Named as Respondents were the eleven former unit owners, including Mr.

Sauermann, and the 501 Association. The Petitioners stated that they sought “to interplead

the net sale proceeds into Court for the Court to determine the amount of each of the

We note that there was an allegation in this case that Mr. Sauermann improperly influenced Mr.

Pickens in connection with the appraisal.

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Respondents’ right to, interest in and proportionate claim to the net sale proceeds.” In a

subsequently-entered “Agreed Order Depositing Sale Proceeds Into Court Registry,” the

trial court ordered the sale proceeds remaining in the Petitioners’ possession be deposited

into court and held that “Petitioners shall be discharged from all liability, claims, actions,

and causes of action of any nature regarding the Sale Proceeds.” The record reflects that

the funds from the closing were in fact later deposited by the Petitioners into court.

While the interpleader action was pending, the Board approved the 501 Association

to obtain quotes from three independent appraisal firms to conduct a new appraisal of the

501 Building. The Board also approved a protocol for the appraisal. From the three

proposals ultimately received, the Board chose Colliers International to conduct the new

appraisal.

The report prepared by Colliers International (the “Colliers Appraisal”), which was

dated November 2, 2017, was sent to all unit owners via email on November 6, 2017. A

hard copy was also mailed via U.S. Mail. In contrast to the last appraisal prepared by Mr.

Pickens, the Colliers Appraisal was not disapproved by 25% of the unit owner votes. In

fact, the following unit owners signed a ballot to approve the Colliers Appraisal: Top Floor

Associates, LLP, Stanley Davis, the Greater Nashville Regional Council, Aubrey Givens,

Richard Braun, David Downard, Angela Evans, Westchester Partners, and the Tennessee

Organization of School Superintendents.

On November 17, 2017, the 501 Association moved the trial court to approve the

Colliers Appraisal. Thereafter, on November 29, 2017, Mr. Sauermann filed an answer to

the interpleader petition and a cross-claim, asserting that the effort to approve the Colliers

Appraisal was violative of the Tennessee Condominium Act because the majority of unit

owners had “gang[ed] up” on him “by disapproving an appraisal favorable to him and then

ordering another appraisal . . . until one is . . . obtained that values Mr. Sauermann’s unit(s)

low enough to please the majority.”

Following a trial, in a memorandum order dated July 16, 2018, the trial court

approved the Colliers Appraisal’s proposed allocation of sale proceeds. In relevant part,

the trial court stated as follows:

Mr. Sauermann contends he has the right to challenge the Colliers’

appraisal on methodology or defects by comparing it to the disapproved

Pickens appraisal or to an appraisal which he ordered. Mr. Sauermann

contends he has the inherent right to challenge an appraisal which was not

disapproved by unit owners to which at least 25% of the votes in the

Association are allocated. The Court disagrees.

There is nothing in the condominium statute which provides a unit

owner or group of unit owners, who are unable to muster 25% of the votes

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to disapprove an appraisal, to challenge the unit owners, to which at least

75% of the votes in the Association are allocated, who do not vote to

disapprove the appraisal. Any argument regarding the appraiser’s

methodology or defects, must take place within thirty days after the

distribution of the appraisal to the unit owners, and then those unit owners

who are dissatisfied must convince enough unit owners to which at least 25%

of the votes in the Association are allocated to vote to disapprove the

appraisal.

....

The Colliers’ appraisal was not disapproved within thirty days after

distribution by unit owners representing 25% of the votes in the Association;

therefore, the Colliers’ appraisal has become “final.”

(internal footnotes omitted). In the conclusion of its order, the trial court held that Mr.

Sauermann would be responsible for attorney’s fees, costs, and expenses that would be

determined at a later hearing.

On October 31, 2018, the trial court entered an order awarding certain discretionary

costs, attorney’s fees, and prejudgment interest against Mr. Sauermann. The award of

prejudgment interest was later vacated, and on October 30, 2019, the trial court entered its

“Final Judgment,” wherein the distributions awarded to each party were detailed. Although

the trial court subsequently ordered that its judgment would be stayed upon the posting of

a $2,000,000 bond by Mr. Sauermann, the requisite bond was never filed. This appeal

followed.

ISSUES PRESENTED

This appeal presents several issues for our review. Mr. Sauermann challenges the

trial court’s reliance on the Colliers Appraisal and the court’s awards of attorney’s fees and

discretionary costs. The 501 Association and Stanley Davis, as Appellees, challenge the

trial court’s ultimate denial of prejudgment interest. For its part, Appellee Top Floor

Associates, LLP, maintains that it should receive attorney’s fees in connection with its

defense of this appeal.

DISCUSSION

Justiciability

The appeal by Mr. Sauermann challenges the propriety of the trial court’s reliance

on the Colliers Appraisal, as well as the court’s award of attorney’s fees and discretionary

costs. As a threshold consideration, however, we must address an issue raised in the brief

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filed by the 501 Association and Stanley Davis challenging the justiciability of this dispute.

According to the argument set forth by the 501 Association and Mr. Davis, the case is now

moot due to Mr. Sauermann’s failure to post the bond set by the trial court. These

Appellees reason that because the proceeds of the sale have now been distributed in the

absence of a bond, Tennessee Code Annotated section 66-27-318(e) supports the notion

that the “501 Association no longer exists.” There is no question that the statutory section

referenced by the 501 Association and Mr. Davis provides that “the association continues

in existence” until the sale proceeds have been distributed. Tenn. Code Ann. § 66-27-

318(e). Respectfully, however, we do not consider this statutory section to compel the

conclusion that the 501 Association should be considered non-existent under the present

context. The sale proceeds may well have been distributed by dint of Mr. Sauermann’s

failure to post a bond,3 but there is a live controversy as to how the sale proceeds should

be allocated among the unit owners. Mr. Sauermann is not required to post a bond for a

stay to pursue an appeal on that question, see Sec. Bank & Trust Co. of Ponca City, Okl. v.

Fabricating, Inc., 673 S.W.2d 860, 866 (Tenn. 1983) (“The right to appeal is not

conditioned upon the filing of a bond for stay.”), and if he is successful herein, it would

necessarily follow that the prior ordered distribution was not the final one. As we construe

the statute, the 501 Association exists until there is a final conclusion on the distribution of

the sale proceeds. See Tenn. Code Ann. § 66-27-318(e) (“Until the sale has been concluded

and the proceeds thereof distributed, the association continues in existence with all powers

it had before termination.”). Additionally, despite the justiciability argument offered by

the 501 Association and Mr. Davis, we note that their counsel effectively admitted at oral

argument that the 501 Association still exists for certain purposes. Indeed, when answering

a question from a member of the judicial panel, counsel agreed that the 501 Association

could receive and distribute funds if attorney’s fees were awarded. We therefore reject the

invitation to hold that the 501 Association no longer exists so as to establish that the other

questions presented to us are moot.

Propriety of the Trial Court’s Reliance on the Colliers Appraisal

Having dispensed with the above issue, we now turn our attention to the heart of the

dispute among the parties, i.e., whether the Colliers Appraisal was properly utilized in

determining how the condominium sale proceeds should be allocated among the unit

Although we might speculate that a distribution of proceeds has in fact occurred given that Mr.

Sauermann does not specifically contest this alleged fact by way of his reply brief, the factual predicate for

the justiciability argument (the distribution of proceeds) has, to our knowledge, never been properly

substantiated by the 501 Association and Mr. Davis on appeal. Specifically, their brief provides no citation

to support their factual assertion (which is unsurprising given that it relates to something that would have

occurred post-judgment), nor have they filed a motion for this Court to consider post-judgment facts relating

to the matter. This alone would countenance against their request for relief, even assuming arguendo that

we were persuaded by the legal argument. Rule 14 of the Tennessee Rules of Appellate Procedure instructs

that a motion “to consider post-judgment facts . . . shall be made in the manner provided in Rule 22.” Tenn.

R. App. P. 14.

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owners. In our view, the necessary question that is squarely presented pertains to the trial

court’s conclusion that the Colliers Appraisal became final when it was not disapproved

within thirty days after distribution by unit owners representing 25% of the votes in the

501 Association. As previously outlined, the trial court held that if Mr. Sauermann wanted

to challenge the Colliers Appraisal from becoming final, it was incumbent upon him to

marshal at least 25% of the votes in the 501 Association to disapprove the appraisal, stating: