Allied Sound, Inc. v. Neely

58 S.W.3d 119, 2001 Tenn. App. LEXIS 204, 2001 WL 301158
CourtCourt of Appeals of Tennessee
DecidedMarch 29, 2001
DocketE2000-01095-COA-R3-CV
StatusPublished
Cited by20 cases

This text of 58 S.W.3d 119 (Allied Sound, Inc. v. Neely) 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
Allied Sound, Inc. v. Neely, 58 S.W.3d 119, 2001 Tenn. App. LEXIS 204, 2001 WL 301158 (Tenn. Ct. App. 2001).

Opinions

OPINION

FRANKS, J.,

delivered the opinion of the court,

in which GODDARD, P.J., concurred and SUSANO, J., concurred in part, dissented in part, and filed an opinion.

In this action alleging misrepresentation, concealment and fraud, the Trial Court granted defendants summary judgment on the grounds that it was unreasonable for plaintiff to rely on any representations made by defendants. On appeal, we affirm.

Plaintiff Allied Sound (“Allied”) obtained a judgment against Kingdom Resort, Inc. (“KRI”) in the amount of $725,000.00 for breach of contract. Allied could not collect this judgment because KRI later declared bankruptcy. Then Allied filed this suit against Eddie Neely and Jess Davis, who were the owners of KRI, alleging misrepresentation, concealment and fraud.

In 1988, KRI was constructing a theatrical set in Sevier County to house an outdoor passion play, and Allied submitted a proposal for the installation of sound and lighting equipment for the project. KRI provided Allied with a letter of intent in February 1988 which stated that it would purchase the system from Allied contingent upon securing financing. Allied began ordering equipment and commenced some work on the project, and Link, president of Allied Sound, was made aware that the financing of the sound and lighting equipment would be done through a leasing company.

Link stated that Davis told him in March that the lease financing was “complete and available”, but that they were working on another deal which could save them money. Link was later advised that KRI had selected Century Finance and that Allied should bill Century Finance for progress payments. Davis provided Link with a phone number for Steve Lundergan at Century Finance, and Lundergan represented that Century Finance had been selected and Lundergan would be handling the lease. It was Link’s testimony that Lundergan told him to send the invoices, and that Allied would be paid. Link testified that he received a purchase order from Century on April 21 which stated that other documents would have to be executed by KRI in connection with the lease, but he did not inquire as to what those documents were. The lease stated that it was contingent upon a letter of credit being provided, but Link stated that he did not learn of the letter of credit requirement until July. Link further testified that he would not have moved forward with installation of the equipment had he known of the letter of credit requirement.

Allied worked on the project and submitted invoices to Century, which were never paid. Link met with Davis and Nee[122]*122ly on May 4 to request progress payments on the job, but was told no funds were available. At that meeting, Link testified that Neely and Davis asked him to keep working because the money was set to come in at the end of the construction through the lease, and there was no provision for progress payments. The record establishes that KRI had been denied letters of credit by several banks as of May 4.

Summary judgment was granted previously to Neely and Davis because Allied had recovered a judgment against KRI on the facts before the Court. On appeal, we reversed, finding that since corporations act through their agents, then “if KRI made misrepresentations, some individual or individuals had to make them for it.” The Court further stated that Neely and Davis were the agents alleged to have made misrepresentations for KRI, and that “[tjhere is nothing inconsistent between the misrepresentations charged in the instant case and the representations found in the earlier breach of contract case.” This case was remanded for trial.

After remand, defendants again moved for summary judgment, which was granted, with the Trial Court holding it was unreasonable for Allied to rely upon any representations made by defendants on May 4.

On appeal, Allied insists that there is a disputed issue of material fact as to whether the statements made by Davis constituted fraudulent misrepresentation, and whether Allied’s rebanee on the representations made by defendants was reasonable. Also, plaintiff insists that Davis’ attorney should have been disqualified by the Trial Court.

In determining whether a genuine issue of material facts exists for purposes of summary judgment, we are required to take the strongest legitimate view of the evidence in favor of the non-moving party, and allow all reasonable inferences in favor of that party and discard all countervailing evidence. Byrd v. Hall, 847 S.W.2d 208 (Tenn.1993).

Allied argues that there is a question of fact as to whether the statements made by Davis in March constituted fraudulent misrepresentations. According to Link, Davis represented that the financing was “complete and available”, but that they were working on another deal which would save them money. Davis later told Link that they had selected Century Finance and Alhed should bill Century Finance for the progress payments. At the time the statements were made, KRI was still negotiating with Century regarding the lease, and there were contingencies which KRI had not yet met.

To prove fraudulent misrepresentation, plaintiff must show that there was an intentional misrepresentation of a material fact, made with knowledge of its falsity or reckless disregard for its truth. Hill v. John Banks Buick, 875 S.W.2d 667 (Tenn.Ct.App.1993.) The evidence establishes a disputed issue of material fact as to whether the financing was “complete and available” under the conditions existing between KRI and Century at that time. If, however, a misrepresentation was made in this regard, Allied must prove that it reasonably relied upon the misrepresentation to its detriment. Id.

In order to determine whether plaintiffs rebanee upon Davis’ statements was reasonable, several factors must be considered, including “the plaintiffs business expertise and sophistication”, “the availability of the relevant information” and “the opportunity to discover the fraud.” City State Bank v. Dean Witter Reynolds, Inc., 948 S.W.2d 729, 737 (Tenn.Ct.App.1996.) In this regard, Link admits that he [123]*123was given the name and number of the person at Century Finance with whom the defendants had been dealing, and was invited to call and get more information. Link did speak with Lundergan at Century Finance, and according to Link, he was advised that Century Finance had been selected and that Lundergan would be handling the lease. Lundergan also told Link to send his invoices, and they would be paid. Link also acknowledged that he received a purchase order from Century on April 21 which stated that other documents were required from KRI in connection with the lease, but he did not inquire as to what those documents were. The purchase order specifically states in two places that other documents must be executed by KRI on or before a certain date, or the purchase order is “null and void.”

From the undisputed material evidence and Link’s testimony, we conclude that plaintiffs reliance on Davis’ statement was unreasonable given the fact that plaintiff was put on notice at least by April 21 that there were some conditions on the lease, and should reasonably have inquired as to what those conditions were.

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Allied Sound, Inc. v. Neely
58 S.W.3d 119 (Court of Appeals of Tennessee, 2001)

Cite This Page — Counsel Stack

Bluebook (online)
58 S.W.3d 119, 2001 Tenn. App. LEXIS 204, 2001 WL 301158, Counsel Stack Legal Research, https://law.counselstack.com/opinion/allied-sound-inc-v-neely-tennctapp-2001.