Nelson E. Bowers, II v. Estate of Katherine N. Mounger
542 S.W.3d 470
Tenn. Ct. App.2017Background
- McKenzie Loudon Properties, LLC (MLP) contracted to buy 1,240 acres from the Estate of Katherine M. Mounger for $15.2M in May 2007 and paid $150,000 in earnest money/extension payments that the Estate deposited. Closing never occurred amid a title dispute involving deeds recorded by Charles Mounger on November 8, 2007.
- MLP was administratively dissolved in 2008. Greg Steele assigned his membership interest in MLP to Nelson E. Bowers, II on March 27, 2013; Bowers later became sole member and in 2015 executed an assignment purporting to transfer MLP’s rights to him personally to recover monies owed to MLP.
- Bowers sued the Estate (initially in his own name) in May 2013 asserting breach of contract, unjust enrichment, and quantum meruit to recover the earnest money. He filed an amended complaint after executing the 2015 assignment.
- The Estate sought and obtained leave to amend an admitted request for admission (correcting an admission about the date title became unmarketable from October 8 to after November 8, 2007).
- The trial court granted summary judgment for the Estate, holding Bowers lacked standing and the court lacked subject-matter jurisdiction; Bowers appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Bowers had standing to sue after amending his complaint/assigning MLP’s rights | Bowers argued the amended complaint (and the 2015 assignment from himself as sole member of MLP) made him the real party in interest and cured any standing defect | Estate argued standing should be judged at time of original filing and that LLC law prevented a member from suing for LLC property | Court reversed: review looks to operative (amended) complaint; Bowers, as assignee of MLP’s rights via winding-up/assignment, had standing |
| Whether Tennessee LLC Act barred assignment of LLC property to a member | Bowers: Act permits winding up and distribution of assets to members; sole member may assign LLC’s claim to himself | Estate: LLC is distinct entity; member lacks interest in specific LLC property and generally may not be proper party | Court held the Act allows winding-up distributions and the sole member’s assignment to himself was not prohibited; trial court erred |
| Whether allowing Estate to amend responses to requests for admission was improper/prejudicial | Bowers: amendment prejudiced his summary judgment motion and increased litigation costs | Estate: amendment corrected clerical error and preserved merits adjudication | Court affirmed trial court’s discretion under Tenn. R. Civ. P. 36.02; no showing of prejudice in maintaining action on the merits |
| Whether the claim is conversion (barred by 3-year statute) vs. breach of contract | Bowers: asserts breach of contract as assignee of MLP’s contractual rights | Estate: argues claim is conversion and time-barred, and that Bowers was not a party to the contract | Court held Bowers steps into MLP’s shoes via assignment and may assert breach of contract; statute-of-limitations/conversion issues not resolved on this record and left to trial court on remand |
Key Cases Cited
- Rye v. Women’s Care Ctr. of Memphis, MPLLC, 477 S.W.3d 235 (Tenn. 2015) (summary judgment standard and Rule 56 principles)
- Meyer Laminates (SE), Inc. v. Primavera Distributing, Inc., 293 S.W.3d 162 (Tenn. Ct. App. 2008) (trial court discretion to permit withdrawal/amendment of admissions)
- SunTrust Bank, Nashville v. Johnson, 46 S.W.3d 216 (Tenn. Ct. App. 2000) (assignee ‘steps into the shoes’ of assignor for contract rights)
- Concrete Spaces, Inc. v. Sender, 2 S.W.3d 901 (Tenn. 1999) (breach of contract as common-law claim)
- Warth v. Seldin, 422 U.S. 490 (U.S. 1975) (standing doctrine and injury-in-fact requirement)
- DaimlerChrysler Corp. v. Cuno, 547 U.S. 332 (U.S. 2006) (standing enforces case-or-controversy limits)
- Valley Forge Christian College v. Americans United for Separation of Church & State, Inc., 454 U.S. 464 (U.S. 1982) (judicial cognizability of injury in standing analysis)
- Rockwell Int’l Corp. v. United States, 549 U.S. 457 (U.S. 2007) (operable principle that amended complaint governs jurisdictional analysis)
- Northstar Fin. Advisors Inc. v. Schwab Invs., 779 F.3d 1036 (9th Cir. 2015) (time-of-filing rule inapplicable where plaintiff cures standing via amended pleading)