IN THE COURT OF APPEALS OF TENNESSEE WESTERN SECTION AT NASHVILLE ______________________________________________
STANLEY HOLDER d/b/a HOLDER’S TOBACCO WAREHOUSE,
Plaintiff-Appellee,
Vs. C.A. No. 01A01-9702-CV-00080 Trousdale Circuit No. 2959-0-10 BILLY M. CELSOR; BILLY F. CELSOR; E. J. PARKER, JR.; ROBERT N. RICKMAN; LEWIS BEASLEY, JR. and HARTSVILLE TOBACCO BOARD OF TRADE,
Defendants-Appellants. ____________________________________________________________________________
FROM THE TROUSDALE COUNTY CIRCUIT COURT THE HONORABLE BOBBY CAPERS, JUDGE
Jacky O. Bellar; Bellar & Bellar of Carthage Eddie Taylor; Donoho, Taylor & Taylor of Hartsville For Appellee
Charles W. Bone and Keith C. Dennen; Wyatt, Tarrant & Combs of Hendersonville For Appellants
REVERSED AND REMANDED
Opinion filed:
FILED August 27, 1997
Cecil W. Crowson W. FRANK CRAWFORD, Appellate Court Clerk PRESIDING JUDGE, W.S.
CONCUR:
ALAN E. HIGHERS, JUDGE
DAVID R. FARMER, JUDGE Defendants, Billy M. Celsor, Billy F. Celsor, E.J. Parker, Jr., Robert N. Rickman, Lewis
Beasley, Jr., and the Hartsville Tobacco Board of Trade, appeal the trial court’s dismissal of the
case based on a lack of jurisdiction. The defendants had motion for summary judgment pending
against the plaintiff, Stanley Holder d/b/a Holder’s Tobacco Warehouse (Holder), on the issue
of the amount of damages allegedly suffered as a result of the wrongful issuance of an injunction.
On September 21, 1992, Holder filed a complaint and motion for a temporary injunction
contesting his allocation of daily sales opportunity for the 1992-93 tobacco season by the
Hartsville Tobacco Board of Trade (Board).1 On October 21, 1992, the trial court granted a
temporary injunction ordering the defendants to recognize Holder’s claim to additional floor
space for the 1992-93 tobacco selling season. On July 6, 1994, the trial court entered a final
order making the temporary injunction a permanent injunction as to the 1992-93 tobacco season.
Holder furnished the injunction bond required by the court. The defendants appealed the trial
court’s final order. On appeal, this Court held that the trial court erred in issuing the injunction
because the trial court “was without jurisdiction to interfere into the actions of a private
corporation.” Holder v. Celsor, 914 S.W.2d 496, 501 (Tenn. App.), perm. app. denied, (Tenn.
1995). This Court reversed the issuance of a mandatory injunction by the trial court and
remanded the cause to the trial court for “further necessary proceedings.” Id.
On remand, the defendants filed a motion for summary judgment on August 9, 1996 with
respect to the damages they allegedly suffered as a result of the issuance of the injunction, and
Holder filed a response thereto. After a hearing on the motion for summary judgment, the trial
court entered an order on January 6, 1997 dismissing the case. In its order, the trial court stated
that, in light of this Court’s opinion stating that the trial court lacked jurisdiction to interfere in
the actions of a private corporation, the trial court did not have jurisdiction to consider the
defendants’ claims for damages incurred as a result of the wrongful issuance of the injunction.
The defendants appeal the trial court’s dismissal and present the following issues for
review, as stated in their brief:
1 The daily sales opportunity is the amount of tobacco that may be sold within a certain tobacco market. Holder took issue with his allocation of daily sales opportunity, asserting that allocation should be based on performance rather than the amount of each warehouse’s floor space.
2 1) Upon remand, following the decision by this Court that the trial court erred in issuing an injunction, did the trial court err in dismissing the defendants’ claim for damages suffered as a result of the wrongful issuance of the injunction for lack of jurisdiction?
2) Are the defendants entitled to summary judgment in light of the failure of the plaintiff to present any competent evidence of a genuine issue of material fact with respect to the damages incurred by the defendants by virtue of the issuance of the injunction?
In their first issue, the defendants contend that the trial court erred in dismissing the case
based on a lack of jurisdiction because a trial court has jurisdiction to award damages to a party
that has been wrongfully enjoined even though the court lacked the authority to issue the
injunction in the first place.
Holder contends that the trial court interpreted this Court’s decision to mean that it lacked
subject matter jurisdiction and that the cases cited by the defendants are distinguishable because
those cases did not involve a lack of subject matter jurisdiction.
We must respectfully disagree with plaintiff and the trial court. In Holder, this Court
noted the well settled principle of law, “that the courts in Tennessee should not interfere in the
affairs of an association or private corporation in the absence of proof of bad faith or fraud on
the part of those intrusted with its management.” 914 S.W.2d at 496. Clearly the court has
jurisdiction to make the determination of whether there is bad faith or fraud, and failure of proof
in this regard does not render the proceeding void ab initio as in the case of lack of subject matter
jurisdiction. To the contrary, it is merely a failure of proof on the part of the plaintiff as in any
other case, thus resulting in the wrongful issuance of the injunction.
The injunction bond required by Tenn. R. Civ. P. 65.05 is specifically for “the payment
of such costs and damages as may be incurred or suffered by any person who is found to have
been wrongfully restrained or enjoined.” Tenn. R. Civ. P. 65.05. “A surety’s liability may be
enforced on motion without the necessity of an independent action.” Tenn. R. Civ. P. 65A.
The trial court issuing an injunction later determined to be wrongfully issued has
jurisdiction to determine the amount of damages incurred by virtue of the wrongfully issued
injunction. See Smith v. Rodgers, 677 S.W.2d 1, 4 (Tenn. App. 1984); James v. Williams, 20
Tenn. App. 420, 99 S.W.2d 831 (1936).
In the case before us, the trial court issued an injunction upon plaintiff posting an
3 injunction bond as required by Tenn. R. Civ. P. 65.05. It was determined that the facts did not
warrant the issuance of the injunction; therefore, the injunction was wrongfully issued. Under
the above authorities, the trial court has jurisdiction to assess damages for the wrongful issuance
of the injunction.
In their second issue, the defendants contend that they are entitled to summary judgment
on the issue of the amount of damages they allegedly suffered as a result of the injunction. They
argue that they established that they lost profits as a result of the injunction and that Holder
failed to set forth specific facts to create a genuine issue of material fact on the issue of damages.
Therefore, they argue that they are entitled to a judgment as a matter of law.
On the other hand, Holder contends that damages must be proven under Tenn. R. Civ.
P. 56.03 and argues that he raised a genuine issue of material fact. In addition, Holder argues
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IN THE COURT OF APPEALS OF TENNESSEE WESTERN SECTION AT NASHVILLE ______________________________________________
STANLEY HOLDER d/b/a HOLDER’S TOBACCO WAREHOUSE,
Plaintiff-Appellee,
Vs. C.A. No. 01A01-9702-CV-00080 Trousdale Circuit No. 2959-0-10 BILLY M. CELSOR; BILLY F. CELSOR; E. J. PARKER, JR.; ROBERT N. RICKMAN; LEWIS BEASLEY, JR. and HARTSVILLE TOBACCO BOARD OF TRADE,
Defendants-Appellants. ____________________________________________________________________________
FROM THE TROUSDALE COUNTY CIRCUIT COURT THE HONORABLE BOBBY CAPERS, JUDGE
Jacky O. Bellar; Bellar & Bellar of Carthage Eddie Taylor; Donoho, Taylor & Taylor of Hartsville For Appellee
Charles W. Bone and Keith C. Dennen; Wyatt, Tarrant & Combs of Hendersonville For Appellants
REVERSED AND REMANDED
Opinion filed:
FILED August 27, 1997
Cecil W. Crowson W. FRANK CRAWFORD, Appellate Court Clerk PRESIDING JUDGE, W.S.
CONCUR:
ALAN E. HIGHERS, JUDGE
DAVID R. FARMER, JUDGE Defendants, Billy M. Celsor, Billy F. Celsor, E.J. Parker, Jr., Robert N. Rickman, Lewis
Beasley, Jr., and the Hartsville Tobacco Board of Trade, appeal the trial court’s dismissal of the
case based on a lack of jurisdiction. The defendants had motion for summary judgment pending
against the plaintiff, Stanley Holder d/b/a Holder’s Tobacco Warehouse (Holder), on the issue
of the amount of damages allegedly suffered as a result of the wrongful issuance of an injunction.
On September 21, 1992, Holder filed a complaint and motion for a temporary injunction
contesting his allocation of daily sales opportunity for the 1992-93 tobacco season by the
Hartsville Tobacco Board of Trade (Board).1 On October 21, 1992, the trial court granted a
temporary injunction ordering the defendants to recognize Holder’s claim to additional floor
space for the 1992-93 tobacco selling season. On July 6, 1994, the trial court entered a final
order making the temporary injunction a permanent injunction as to the 1992-93 tobacco season.
Holder furnished the injunction bond required by the court. The defendants appealed the trial
court’s final order. On appeal, this Court held that the trial court erred in issuing the injunction
because the trial court “was without jurisdiction to interfere into the actions of a private
corporation.” Holder v. Celsor, 914 S.W.2d 496, 501 (Tenn. App.), perm. app. denied, (Tenn.
1995). This Court reversed the issuance of a mandatory injunction by the trial court and
remanded the cause to the trial court for “further necessary proceedings.” Id.
On remand, the defendants filed a motion for summary judgment on August 9, 1996 with
respect to the damages they allegedly suffered as a result of the issuance of the injunction, and
Holder filed a response thereto. After a hearing on the motion for summary judgment, the trial
court entered an order on January 6, 1997 dismissing the case. In its order, the trial court stated
that, in light of this Court’s opinion stating that the trial court lacked jurisdiction to interfere in
the actions of a private corporation, the trial court did not have jurisdiction to consider the
defendants’ claims for damages incurred as a result of the wrongful issuance of the injunction.
The defendants appeal the trial court’s dismissal and present the following issues for
review, as stated in their brief:
1 The daily sales opportunity is the amount of tobacco that may be sold within a certain tobacco market. Holder took issue with his allocation of daily sales opportunity, asserting that allocation should be based on performance rather than the amount of each warehouse’s floor space.
2 1) Upon remand, following the decision by this Court that the trial court erred in issuing an injunction, did the trial court err in dismissing the defendants’ claim for damages suffered as a result of the wrongful issuance of the injunction for lack of jurisdiction?
2) Are the defendants entitled to summary judgment in light of the failure of the plaintiff to present any competent evidence of a genuine issue of material fact with respect to the damages incurred by the defendants by virtue of the issuance of the injunction?
In their first issue, the defendants contend that the trial court erred in dismissing the case
based on a lack of jurisdiction because a trial court has jurisdiction to award damages to a party
that has been wrongfully enjoined even though the court lacked the authority to issue the
injunction in the first place.
Holder contends that the trial court interpreted this Court’s decision to mean that it lacked
subject matter jurisdiction and that the cases cited by the defendants are distinguishable because
those cases did not involve a lack of subject matter jurisdiction.
We must respectfully disagree with plaintiff and the trial court. In Holder, this Court
noted the well settled principle of law, “that the courts in Tennessee should not interfere in the
affairs of an association or private corporation in the absence of proof of bad faith or fraud on
the part of those intrusted with its management.” 914 S.W.2d at 496. Clearly the court has
jurisdiction to make the determination of whether there is bad faith or fraud, and failure of proof
in this regard does not render the proceeding void ab initio as in the case of lack of subject matter
jurisdiction. To the contrary, it is merely a failure of proof on the part of the plaintiff as in any
other case, thus resulting in the wrongful issuance of the injunction.
The injunction bond required by Tenn. R. Civ. P. 65.05 is specifically for “the payment
of such costs and damages as may be incurred or suffered by any person who is found to have
been wrongfully restrained or enjoined.” Tenn. R. Civ. P. 65.05. “A surety’s liability may be
enforced on motion without the necessity of an independent action.” Tenn. R. Civ. P. 65A.
The trial court issuing an injunction later determined to be wrongfully issued has
jurisdiction to determine the amount of damages incurred by virtue of the wrongfully issued
injunction. See Smith v. Rodgers, 677 S.W.2d 1, 4 (Tenn. App. 1984); James v. Williams, 20
Tenn. App. 420, 99 S.W.2d 831 (1936).
In the case before us, the trial court issued an injunction upon plaintiff posting an
3 injunction bond as required by Tenn. R. Civ. P. 65.05. It was determined that the facts did not
warrant the issuance of the injunction; therefore, the injunction was wrongfully issued. Under
the above authorities, the trial court has jurisdiction to assess damages for the wrongful issuance
of the injunction.
In their second issue, the defendants contend that they are entitled to summary judgment
on the issue of the amount of damages they allegedly suffered as a result of the injunction. They
argue that they established that they lost profits as a result of the injunction and that Holder
failed to set forth specific facts to create a genuine issue of material fact on the issue of damages.
Therefore, they argue that they are entitled to a judgment as a matter of law.
On the other hand, Holder contends that damages must be proven under Tenn. R. Civ.
P. 56.03 and argues that he raised a genuine issue of material fact. In addition, Holder argues
that further discovery is necessary on the issue of damages and that the defendants failed to
establish that they were entitled to judgment as a matter of law. Moreover, Holder argues that
the defendants did not comply with Tenn. R. Civ. P. 65A requiring notice before proceeding
against a surety.
At the time the trial court dismissed this case based on lack of jurisdiction, the defendants
had a summary judgment motion pending before the court. Given our reversal of the dismissal,
we decline to rule on this issue in this case without first allowing the trial court the opportunity
to do so.
The defendants also ask that if there is a remand, this Court direct the trial judge to recuse
himself because of bias or a lack of impartiality. We again decline to do as the defendants
request. If grounds exist for recusal, the matter should first be presented to the trial judge.
Accordingly, the order of trial court is reversed, and this cause is remanded for such
further proceedings as necessary. Costs of appeal are assessed against the appellee.
_________________________________ W. FRANK CRAWFORD, PRESIDING JUDGE, W.S. CONCUR:
____________________________________ ALAN E. HIGHERS, JUDGE
____________________________________ DAVID R. FARMER, JUDGE