Adrian Lynn McWilliams v. Brenda Chaney Vaughn

CourtCourt of Appeals of Tennessee
DecidedJanuary 23, 2019
DocketE2017-01942-COA-R3-CV
StatusPublished

This text of Adrian Lynn McWilliams v. Brenda Chaney Vaughn (Adrian Lynn McWilliams v. Brenda Chaney Vaughn) is published on Counsel Stack Legal Research, covering Court of Appeals of Tennessee primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Adrian Lynn McWilliams v. Brenda Chaney Vaughn, (Tenn. Ct. App. 2019).

Opinion

01/23/2019 IN THE COURT OF APPEALS OF TENNESSEE AT KNOXVILLE December 5, 2018 Session

ADRIAN LYNN MCWILLIAMS ET AL. v. BRENDA CHANEY VAUGHN ET AL.

Appeal from the Chancery Court for Hamilton County No. 03-0219, 11-0697 Jeffrey M. Atherton, Chancellor ___________________________________

No. E2017-01942-COA-R3-CV ___________________________________

Following a bench trial, the Hamilton County Chancery Court determined that Appellants had converted the assets of a check-cashing business, to the detriment of the majority shareholder, Appellee. Appellants argue that the trial court erred in a 2011 decision to grant Appellee partial summary judgment and to prohibit Appellants from raising any claims or defenses based on the Uniform Fraudulent Transfer Act at trial. Because we have determined that the trial court’s 2011 grant of summary judgment to Appellee was erroneous, the decision of the trial court is vacated and remanded

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

J. STEVEN STAFFORD, P.J., W.S., delivered the opinion of the court, in which D. MICHAEL SWINEY, C.J., AND JOHN W. MCCLARTY, J., joined.

Phillip E. Fleenor, Chattanooga, Tennessee, for the appellants, Adrian Lynn McWilliams and Cash Mart, LLC.

Randall D. Larramore, Chattanooga, Tennessee, for the appellee, Brenda Chaney Vaughn

MEMORANDUM OPINION1

1 Rule 10 of the Rules of the Court of Appeals of Tennessee provides:

This Court, with the concurrence of all judges participating in the case, may affirm, reverse or modify the actions of the trial court by memorandum opinion when a formal opinion would have no precedential value. When a case is decided by memorandum opinion it shall be designated “MEMORANDUM OPINION,” shall not be published, and shall not be cited or relied on for any reason in any unrelated case. Background

The present case commenced in 2003 and has been described by the parties as a “business divorce.”2 In 1997, Cash Mart, LLC (“Cash Mart”) registered as a Tennessee limited liability company, and became engaged in the business of check cashing and deferred presentment services. Adrian Lynn McWilliams (“McWilliams” or, collectively with Cash Mart, “Appellants”) and Stuart Vaughn were the initial members of Cash Mart, while Oscar Vaughn (“Mr. Vaughn”) was a long-time employee of Cash Mart. On May 23, 2001, McWilliams and Mr. Vaughn entered into an employment agreement and option contract in which they, along with Cash Mart, agreed that Mr. Vaughn was granted an option to purchase 73.33% of Cash Mart for a sum of $100.00. Around the same time, Stuart Vaughn and McWilliams executed an agreement by which Stuart Vaughn sold his remaining interest in Cash Mart to McWilliams. As such, McWilliams became the sole member of Cash Mart, while Mr. Vaughn continued to be employed with Cash Mart and was tasked with maintaining the books and records for the business along with other various duties.

On February 21, 2003, Appellants filed a verified complaint against Mr. Vaughn in the Chancery Court of Hamilton County (“trial court”). The complaint alleged that Mr. Vaughn was systematically embezzling money from Cash Mart and using Cash Mart credit cards for his personal entertainment and expenses. Appellants asked the court to award Cash Mart a monetary judgment, amount to be determined at trial, as well as a Writ of Possession for all of the books and records of Cash Mart. Moreover, the Appellants asked the court to determine that Mr. Vaughn’s option to purchase 73.33% of Cash Mart was void.

Following the filing of the complaint, in May of 2003, Mr. Vaughn married Brenda Chaney Vaughn (“Appellee” or “Mrs. Vaughn”) and only fourteen days later, Mr. Vaughn exercised his option to purchase 73.33% of Cash Mart by notifying Appellants via letter and enclosing a check for $100.00. Concomitantly, Mr. Vaughn transferred his interest in Cash Mart to Mrs. Vaughn. In the meantime, McWilliams incorporated a new business called America’s Cash Mart (“ACM”) and began operating ACM in all of Cash Mart’s previous locations.

Mrs. Vaughn filed an intervening complaint in the instant action on November 18, 2003, alleging that she was the majority shareholder of Cash Mart and as such had an 2 At the outset, we must note that the record in this case is particularly voluminous, yet a substantial amount of the record is inapposite to the dispositive issues in this appeal. Because these parties have chosen to conduct themselves in an unnecessarily litigious manner, the procedure followed by the parties and the trial court has been difficult to discern in this appeal. Rather than tax the length of this Opinion with details of the parties’ superfluous disputes over the past sixteen years, we have opted to include only the facts and events that are salient to the resolution of this appeal. -2- interest in the subject of the litigation. Mrs. Vaughn further alleged that McWilliams was liable for breach of contract, intentional interference with a business relationship, conversion of Cash Mart’s assets, and violation of his fiduciary duty of loyalty. On January 2, 2004, the trial court ruled, upon motion for partial summary judgment filed by Mr. Vaughn, that the employment and option contract entered into by Appellants and Mr. Vaughn in 2001 was a valid and enforceable contract.

In the meantime, the trial court allowed Mrs. Vaughn’s intervention as a plaintiff, and Mrs. Vaughn filed an amended complaint adding ACM as a defendant.3 The amended complaint alleged that ACM converted Cash Mart’s assets and that ACM was the alter ego of McWilliams. Appellants responded to Mrs. Vaughn’s complaint by arguing that she failed to state a claim for which relief could be granted and that the transfer of interest in Cash Mart from Mr. Vaughn was fraudulent and should thus be set aside.

Next, Appellants filed a motion for partial summary judgment on April 12, 2004, asking the court for a judgment on the amount of money and assets that Mr. Vaughn had embezzled from Cash Mart; specifically, Appellants alleged the total amount to be $252,202.54, and further averred that the undisputed material facts supported Appellants’ calculations. Appellants also asked the trial court to bifurcate the matters into two separate trials,4 and again alleged that the transfer of Mr. Vaughn’s interest in Cash Mart to his wife was fraudulent and should be set aside. Appellants requested that all matters should be stayed pending a resolution of the question of whether the transfer to Mrs. Vaughn was fraudulent.

It is rather difficult to discern the outcome of Appellants’ motion because of the state of the record in this case, although it appears that the trial court held a hearing on the motion on May 4, 2004. However, there is no resultant order from the May 4, 2004 hearing, nor is there a transcript of the proceedings. Thus, it is unclear how this first motion for summary judgment was resolved. Regardless, on July 8, 2004, Appellants filed an amended complaint against both Mr. and Mrs. Vaughn, alleging fraudulent breach of trust, and arguing that the contract between Mr. Vaughn and Appellants was invalid.5 The trial court held another hearing July 28, 2004, in which it determined that the two matters would be bifurcated into separate trials, and that “matters related to . . . Fraudulent Conveyance are to be heard in a separate trial.” This order was entered August 25, 2004.

3 ACM was later voluntarily dismissed and is not a party to this appeal. 4 To be clear, the first matter involves McWilliams and Cash Mart versus Mr. Vaughn; the second matter involves Mrs. Vaughn versus McWilliams, Cash Mart, and America’s Cash Mart.

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Bluebook (online)
Adrian Lynn McWilliams v. Brenda Chaney Vaughn, Counsel Stack Legal Research, https://law.counselstack.com/opinion/adrian-lynn-mcwilliams-v-brenda-chaney-vaughn-tennctapp-2019.