Klaus Tschira and Gerda Tschira v. Ben H. Willingham, Jr. And Corim, Inc.

135 F.3d 1077, 48 Fed. R. Serv. 981, 1998 U.S. App. LEXIS 1433, 1998 WL 37139
CourtCourt of Appeals for the Sixth Circuit
DecidedFebruary 3, 1998
Docket96-5537
StatusPublished
Cited by19 cases

This text of 135 F.3d 1077 (Klaus Tschira and Gerda Tschira v. Ben H. Willingham, Jr. And Corim, Inc.) is published on Counsel Stack Legal Research, covering Court of Appeals for the Sixth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Klaus Tschira and Gerda Tschira v. Ben H. Willingham, Jr. And Corim, Inc., 135 F.3d 1077, 48 Fed. R. Serv. 981, 1998 U.S. App. LEXIS 1433, 1998 WL 37139 (6th Cir. 1998).

Opinion

OPINION

FLOYD R. GIBSON, Circuit Judge.

In this case, a jury found that Appellants, Corim, Inc. a real estate investment firm, and its President, Ben H. Willingham, Jr., 1 breached a fiduciary duty and committed fraudulent misrepresentation during the course of a real estate transaction between Appellants and Appellees, Klaus and Gerda Tschira, 2 citizens and residents of Germany. Appellants contend that the district court made the following errors: (1) incorrectly instructed the jury that a fiduciary relationship existed between Willingham and the Tsehiras; (2) improperly allowed the Tschi-ras to introduce into evidence bank statements tending to show Corim’s deception of other investors; (3) incorrectly refused to direct a verdict in appellants’ favor on the issue of intentional misrepresentation; and (4) improperly refused to answer several questions posed by the jury during deliberations; and (5) improperly refused to grant Appellants’ post-trial motion to interrogate the jury. Because we conclude that the district court 3 ruled correctly on each of these issues, we affirm.

In 1988, Klaus Tschira benefitted financially when the company he helped to create, SAP AG (“SAP”), went public in Germany. In search of investment opportunities, Klaus learned through a German real estate broker, Claus Schenk, that Appellants were soliciting investors for commercial property in the southeastern United States. Intrigued by this information, Klaus, who was joined by other SAP founders, attended a meeting in Walldorf, Germany at which Willingham, who speaks fluent German, made a presentation. According to trial testimony, Willing-ham explained that Corim proposed to obtain buildings for purchase by investors at a “fair market price”; Corim then intended to enter into management contracts with the new owners. By the terms of the management contracts, Corim and Willingham would lease the buildings from the investors and, in return, would then pay the investors a contractually established rent amounting to approximately eight percent annually of the purchase price of the building. Klaus testified that he inquired as to how Willing-ham and Corim would earn a profit, and Willingham responded that Corim would receive revenue via the difference between the rents Corim would charge for its subleases and the rent Corim itself paid the investors.

The Tsehiras found the investment attractive and initially agreed to buy four buildings in various southern cities and lease those properties back to Corim. The Tsehiras did not procure independent American counsel for these transactions, as they claim to have regarded Willingham as their trusted agent. Indeed, whether Willingham was or was not the Tsehiras’ agent is a disputed issue in this case. The controversy centers around a Letter (the “Letter”) which was originally drafted by Berthold Wipfler, the Tsehiras’ tax advisor, and which the parties used in each of their transactions. The Letter, transcribed in German, was expressly designed to confirm in detail “all rights, obligations agreements, etc. concerning” the property purchase at issue. J.A. at 181. At one point, the Letter clarifies that the “auftragsverhalt-nis” between Willingham and the Tsehiras *1081 would be governed by German law, but that American law would control all other aspects of the deal. The meaning of “auftragsver-háltnis” is at the heart of this appeal. The Tsehiras contend that the parties intended for the term to create a German law “mandate relationship,” similar to an agency relationship in the United States, with all of its concomitant fiduciary duties, between the persons involved. Willingham, on the other hand, strenuously asserts that the term was solely meant to convey that the parties stood in the position of buyer and seller and that the “auftragsverháltnis” actually means “contractual relationship.”

In late 1990, Schenk brought Klaus a Cor-im brochure about One Church Street, a Nashville, Tennessee property. The brochure advertised One Church Street as a five story commercial building erected in 1872, available for $1,985,000. The pamphlet described the property as having “a special architectural character” and said the building had been “recently renovated with substantial effort and expense.” J.A. at 358. Corim guaranteed rent payments of $158,000 the first two years of the lease back, $165,000 the third and fourth years, and $171,000 the fifth year. The Tsehiras expressed interest, and soon thereafter they received the Letter from Willingham. The document guaranteed that the building would be “insured sufficiently, so that it can be restored from the proceeds of the insurance in the event of destruction or damage.” J.A. at 182. The final paragraph of the letter states that “[t]he powers of attorney given to us will only be used according to the forthcoming agreement.” Id. Willingham had signed the copy of the Letter he mailed to the Tsehiras. After reviewing the available materials, the Tsehiras decided to invest in the property. They did not, however, secure independent counsel for the deal, visit One Church Street prior to the purchase, or obtain an appraisal from any source other than Corim.

The Tsehiras and Corim subsequently entered into a Purchase Agreement for the Nashville property. They simultaneously executed a Management Agreement for the building. As arranged by the signatories, the Tsehiras’ funds for the purchase were to flow through a fiduciary account maintained at First Federal Bank in Brunswick, Georgia. The Tsehiras sent a letter to First Federal authorizing the bank to release the funds only upon presentation of, among other things, documents showing a transfer of the property to the Tsehiras by warranty deed, confirmed by a title insurance binder. In the Tsehiras’ absence, Willingham orchestrated the property’s closing on December 14, 1990.

Several years later, the Tsehiras discovered other details surrounding the sale of the Nashville building. Namely, they learned that two closings occurred on December 14, 1990. In the first, One Church Street, Inc., a shell corporation owned by Corim and Will-ingham, purchased the property from its owner, First Atlanta Services Corporation. The selling price in this deal was $774,000. In the second transaction, One Church Street, Inc. sold the building to the Tsehiras for $1,985,000. Schenk, the German national who referred the Tsehiras to Corim, received a $79,400 commission from Corim for his part in the sale. Willingham admitted at trial that the Tsehiras were never advised that the shell company purchased the property and then resold it for an instant profit of $1,211,-000. When the Tsehiras became aware of these facts in the Spring of 1992, they canceled the Management Agreement with Cor-im and brought the instant lawsuit. In 1995, the Tsehiras sold One Church Street for $665,000.

In their Complaint, the Tsehiras claimed that Corim and Willingham breached a fiduciary duty they owed to them pursuant to the “mandate relationship.” In a separate count, they asserted that the Appellants committed the tort of intentional misrepresentation. Two key pieces of evidence at trial were the title and liability insurance policies issued for One Church Street. The title’ insurance policy Willingham forwarded to the Tsehiras indicated that the Ticor Title Insurance Company had provided protection up to $1,985,000.

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Sykes v. Anderson
625 F.3d 294 (Sixth Circuit, 2010)
Kenneth Eid v. Saint-Gobain Abrasives, Inc
377 F. App'x 438 (Sixth Circuit, 2010)
Robert Kessler v. Patrizia Riccardi
363 F. App'x 350 (Sixth Circuit, 2010)
George Fossyl v. Thomas Watson
317 F. App'x 467 (Sixth Circuit, 2009)
Jan K. Voda, M.D. v. Cordis Corporation
476 F.3d 887 (Federal Circuit, 2007)
West v. Media General Operations, Inc.
250 F. Supp. 2d 923 (E.D. Tennessee, 2002)
Bowman v. Corrections Corp. of America
188 F. Supp. 2d 870 (M.D. Tennessee, 2000)
Scroggins v. Yellow Freight Systems, Inc.
98 F. Supp. 2d 928 (E.D. Tennessee, 2000)
Starr Printing Co., Inc. v. Air Jamaica
45 F. Supp. 2d 625 (W.D. Tennessee, 1999)
Schleicher v. Founders Security Life Ins. Co.
Court of Appeals of Tennessee, 1999

Cite This Page — Counsel Stack

Bluebook (online)
135 F.3d 1077, 48 Fed. R. Serv. 981, 1998 U.S. App. LEXIS 1433, 1998 WL 37139, Counsel Stack Legal Research, https://law.counselstack.com/opinion/klaus-tschira-and-gerda-tschira-v-ben-h-willingham-jr-and-corim-inc-ca6-1998.