Franklin-Murray Development Company, L.P. v. Shumacker Thompson, PC
M2015-01968-COA-R3-CV
| Tenn. Ct. App. | Aug 18, 2017Background
- In 1994 Franklin-Murray Development Co. (FMD) contracted to buy Williamson County land from First American Trust Co. (FATC), paying $100,000 earnest money and agreeing to pay another $100,000 if it did not timely terminate. A federal estate tax lien was discovered and the sale did not close on the scheduled date. FMD did not terminate the contract and continued negotiations.
- FATC sued in October 1994 seeking declaratory relief and $200,000 in liquidated damages for FMD’s alleged failure to perform; FMD retained Shumacker Thompson, P.C. (Defendants) and filed counterclaims and a lis pendens.
- At a December 1994 hearing, counsel for both sides stated they remained willing to close; the court denied FATC’s motion to remove the lis pendens. By March 1995 FATC arranged IRS lien removal and a closing was scheduled; FMD failed to appear and FATC obtained summary judgment and $200,000 damages in June 1995.
- FMD sued its lawyers in 1995 for legal malpractice, fraud/misrepresentation, and breach of fiduciary duty seeking substantial damages. Defendants moved for partial summary judgment on lost profits (granted 2009) and later for summary judgment on remaining claims (granted 2015).
- The trial court held that (1) expert proof on proximate causation was required in this complex malpractice case and defendants’ expert (Cameron) negated causation, and FMD’s disclosures did not supply a contrary causation opinion; and (2) FMD waived its breach claim (and thus lost-profits damages) by continuing negotiations after the original closing date.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether expert proof of proximate causation was required in this malpractice action | FMD: proximate causation could be decided by jury without expert or FMD’s expert disclosures supplied necessary causation proof | Defs: case involves complex commercial/title issues; defendants’ expert negated causation and plaintiff must rebut with expert proof | Held: Expert proof on causation required; defendants’ expert negated causation and FMD failed to present rebuttal expert, so summary judgment proper |
| Whether FMD’s expert disclosures (Pennington) supplied a causation opinion sufficient to avoid summary judgment | FMD: Pennington’s disclosures and deposition supply mixed fact/expert testimony including causation-related opinions | Defs: Pennington’s disclosed opinions address standard of care and related facts but do not establish proximate causation to counter Cameron | Held: Pennington did not offer a contrary causation opinion; Cameron’s affidavit was unrebutted—FMD failed to create a genuine fact issue on causation |
| Whether FMD could recover lost profits despite waiver/election defenses because negotiations were mere settlement talks | FMD: post-breach communications were settlement negotiations and did not waive breach or rights to lost profits | Defs: continued negotiations after the contract date evidenced waiver/estoppel of the original breach and foreclosed lost-profits recovery | Held: Court found undisputed negotiations made time for performance indefinite; FMD waived breach and summary judgment on lost profits was proper |
| Whether this appeal was timely and this Court has jurisdiction (motion to alter or amend vs. motion to reconsider) | FMD: its Rule 59 motion tolled the appeal period and was properly treated as a motion to alter or amend | Defs: FMD’s post-judgment filing was a non-tolling motion to reconsider so appeal was untimely | Held: Appellate court declined to revisit its prior order treating the filing as a Rule 59.04 motion and found the appeal properly before the Court |
Key Cases Cited
- Sanjines v. Ortwein and Assoc., 984 S.W.2d 907 (Tenn. 1998) (elements of attorney malpractice include duty, breach, causation, and damages)
- Spalding v. Davis, 674 S.W.2d 710 (Tenn. 1984) (standard of care for attorneys and requirement of expert proof)
- Gibson v. Trant, 58 S.W.3d 103 (Tenn. 2001) (legal-malpractice elements articulated)
- Shearon v. Seaman, 198 S.W.3d 209 (Tenn. Ct. App. 2006) (plaintiff must show it would have prevailed in underlying action)
- Cleckner v. Dale, 719 S.W.2d 535 (Tenn. Ct. App. 1986) (malpractice cases generally require expert testimony; exception for clear, palpable negligence)
- Bursack v. Wilson, 982 S.W.2d 341 (Tenn. Ct. App. 1998) (requirement that causation be proved by expert where appropriate)
- Chapman v. Bearfield, 207 S.W.3d 736 (Tenn. 2006) (statewide standard of care for Tennessee attorneys)
- White v. Lawrence, 975 S.W.2d 525 (Tenn. 1998) (summary judgment appropriate where reasonable persons must draw only one conclusion)
- Inman, Akers & Inman v. Elk Cotton Mills, 92 S.W. 760 (Tenn. 1905) (principle that parties’ conduct after performance date can affect breach/default rights)