Womac et al v. First Volunteer Bank

Filing 66

MEMORANDUM. An order shall enter signed by District Judge Curtis L Collier on 1/3/12. (JGK, )

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF TENNESSEE
AT CHATTANOOGA

CHARLES WOMAC, et al.,
Plaintiffs,
v.
FIRST VOLUNTEER BANK,
Defendant.

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Civil Case No. 1:10-CV-00052
Chief Judge Curtis L. Collier

MEMORANDUM
Before the Court is a motion for summary judgment and accompanying memorandum filed
by Defendant First Volunteer Bank (“Defendant”) (Court File Nos. 27, 28). Because Plaintiffs
Charles Womac, Enola G. Womac, and Marian S. Womac (collectively “Plaintiffs”) did not respond
to Defendant’s motion for 118 days–missing the deadline by ninety-seven days–and failed to timely
seek1 or receive additional time, the Court does not consider the Plaintiffs’ responses (Court File

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Plaintiffs’ untimely motion seeking denial or postponement of Defendant’s motion for
summary judgment will be denied (Court File No. 30). Plaintiffs argue Defendant’s motion “was
filed early and before a realistic opportunity for discovery” (id. at p. 1). In addition to missing the
twenty-one day filing deadline, Plaintiffs’ claim fails for numerous reasons. First, the scheduling
order invited filing of dispositive motions “as early as possible” and no later than April 29, 2011
(Court File No. 18). Accordingly, there is no merit to the claim Defendant filed its motion too early.
Second, almost six months had passed for discovery at the time of Defendant’s motion for summary
judgment, and only twenty-three days remained before the discovery period closed on January 28,
2011 (see id. at p. 2). Thus, at the time of Defendant’s motion, both parties had had a sufficiently
“realistic opportunity” for discovery. Third, Plaintiffs’ motion fails to satisfy Fed. R. Civ. P. 56(f)’s
requirement that “a party making such a filing indicate to the district court its need for discovery,
what material facts it hopes to uncover, and why it has not previously discovered the information.”
Ball v. Union Carbide Corp., 385 F.3d 713, 720 (6th Cir. 2004) (quoting Emmons v. McLaughlin,
874 F.2d 351, 357 (6th Cir. 1989)). Plaintiffs do not indicate any facts–material or otherwise–it
hopes to uncover. Finally, to the extent Plaintiffs’ motion seeks primarily to extend the discovery
period, it must be denied in light of Plaintiffs’ failure to conduct any discovery up to this point in
the litigation. In determining whether additional discovery is warranted, the “overarching inquiry

Nos. 34, 35). For the reasons discussed below, the Court will GRANT Defendant’s motion for
summary judgment (Court File No. 27).

I.

RELEVANT FACTS
Plaintiffs own real property, including a farm and residence, in McMinn County,

Tennessee.2 In various loan agreements, Plaintiffs pledged this real property as collateral first to
Benton Banking Company, which was subsequently acquired by Defendant First Volunteer Bank,
and then directly to Defendant. Since late 2008, Plaintiffs have been in default on loans to
Defendant, which in turn has made several attempts to commence foreclosure proceedings.
Plaintiffs’ various legal actions have frustrated Defendant’s attempts to foreclose on the property.
When Defendant first attempted to foreclose in late 2008, Plaintiffs filed for bankruptcy
in March 2009, which automatically stayed the foreclosure process. Plaintiffs failed, however, to
make the required filings and in July 2009 the bankruptcy proceeding was involuntary dismissed.
When Defendant again initiated foreclosure proceedings in August 2009, Plaintiffs sought an

. . . is whether the moving party was diligent in pursuing discovery.” Dowling v. Cleveland Clinic
Found., 593 F.3d 472, 478 (6th Cir. 2010). Neither the record nor the affidavit submitted by
Plaintiffs’ counsel in support of Plaintiffs’ motion shows any diligence by Plaintiffs. Indeed,
Plaintiffs do not controvert Defendant’s claim Plaintiffs have not conducted any discovery at all (see
Court File No. 31, p. 1). Accordingly, denial of Plaintiffs’ untimely motion seeking denial or
postponement of Defendant’s motion for summary judgment (Court File No. 30) is appropriate.
2

Unless otherwise indicated, these facts are based on evidence presented to the Court in
conjunction with Plaintiffs’ previously denied motion for a preliminary injunction (Court File No.
16) and previously denied motion for a stay and a temporary injunction pending interlocutory appeal
(Court File No. 23). As noted above, the Court does not consider affidavits or other exhibits
attached to Plaintiffs’ untimely responses to Defendant’s summary judgment motion (Court File
Nos. 30, 34, 35).
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injunction in Chancery Court in McMinn County. The Chancery Court granted the injunction, but
required Plaintiffs to make $5,000 monthly payments towards their debt until trial. Instead of
making those monthly payments, Plaintiffs filed a voluntary non-suit and commenced this action
in federal court in March 2010.
Plaintiffs assert claims under the Truth in Lending Act, 15 U.S.C. §§ 1601 et seq., the
Real Estate Settlement Procedures Act, 12 U.S.C. §§ 2601 et seq., the Tennessee Consumer
Protection Act, Tenn Code Ann. §§ 47-18-101 et seq., as well as common law claims of civil
conspiracy, fraud and intentional misrepresentation, negligent misrepresentation, fraudulent
concealment, conversion, breach of fiduciary duty, and breach of contract.
As in their Chancery Court action, Plaintiffs moved in this case for a temporary restraining
order enjoining Defendant from foreclosing on the property (Court File Nos. 1, 2). After
considering evidence offered by the parties in their motions as well as arguments made during two
hearings in March and April 2010, the Court denied the Plaintiffs’ motion, concluding Plaintiffs had
failed to demonstrate a likelihood of success on the merits or demonstrate irreparable harm (Court
File No. 16). Plaintiffs then commenced both an interlocutory appeal from the Court’s denial of
injunctive relief (Court File No. 21) and moved for a stay and injunction pending resolution of their
appeal (Court File. No. 19). Because Plaintiffs again failed to show a likelihood of success on the
merits or demonstrate irreparable harm, the Court denied the Plaintiffs’ motion for injunctive relief
and/or a stay pending appeal (Court File No. 23). Subsequently, the Sixth Circuit also denied
Plaintiffs’ motion for a stay pending disposition of the appeal (Court File No. 40).
On January 5, 2011, Defendant made the present motion for summary judgment (Court File
No. 27). Plaintiffs’s untimely responses were not filed until May 3, 2011 (Court File Nos. 34, 35),

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and are thus not considered by the Court in deciding Defendant’s summary judgment motion.
At the final pretrial conference on August 2, 2011, the parties informed the Court Plaintiffs
had filed a second bankruptcy petition on June 13, 2011–four days before the scheduled foreclosure
sale. On August 6, 2011, the Court temporarily closed the case pending the disposition of the
bankruptcy petition (Court File No. 43). On September 23, 2011, the Bankruptcy Court dismissed
Plaintiffs’ bankruptcy petition, and on October 13, 2011, the Bankruptcy Court denied Plaintiffs’
motion for a stay pending appeal. The foreclosure sale then went ahead on October 17, 2011, and
Defendant purchased the property at the foreclosure sale. On November 16, 2011 Plaintiffs filed
a second motion for a preliminary injunction seeking various avenues of relief, including vacation
of the foreclosure sale (Court File No. 47). Approximately a month later, Plaintiffs sought to amend
their second motion for a preliminary injunction to ask the Court to intervene in a state court
proceeding related to the foreclosure (Court File No. 58). Because the state court proceeding was
to occur on December 20, 2011, the Court conducted a hearing on December 19, 2011, at which it
denied Plaintiffs’ motion to amend their second motion for preliminary injunction because the AntiInjunction Act, 22 U.S.C. § 2283, and the United States Supreme Court’s decision in Younger v.
Harris, 401 U.S. 37 (1971), barred such intervention. Because the Court now grants summary
judgment on all claims for Defendant, it does not consider–and therefore denies as moot–Plaintiffs’
second motion for a preliminary injunction.3

II.

STANDARD OF REVIEW

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The Court also denies as moot Defendant’s motion to quash notice of deposition and
subpoena duces tecum (Court File No. 63).
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Summary judgment is proper when “the movant shows that there is no genuine dispute as
to any material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a).
The moving party bears the burden of demonstrating no genuine issue of material fact exists.
Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986); Leary v. Daeschner, 349 F.3d 888, 897 (6th Cir.
2003). The Court should view the evidence, including all reasonable inferences, in the light most
favorable to the nonmoving party. Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S.
574 (1986); Nat’l Satellite Sports, Inc. v. Eliadis Inc., 253 F.3d 900, 907 (6th Cir. 2001).
To survive a motion for summary judgment, “the non-moving party must go beyond the
pleadings and come forward with specific facts to demonstrate that there is a genuine issue for trial.”
Chao v. Hall Holding Co., Inc., 285 F.3d 415, 424 (6th Cir. 2002). Indeed, a “[plaintiff] is not
entitled to a trial on the basis of mere allegations.” Smith v. City of Chattanooga, No. 1:08-cv-63,
2009 WL 3762961, at *2-3 (E.D. Tenn. Nov. 4, 2009) (explaining the Court must determine whether
“the record contains sufficient facts and admissible evidence from which a rational jury could
reasonably find in favor of [the] plaintiff”). In addition, should the non-moving party fail to provide
evidence to support an essential element of its case, the movant can meet its burden of demonstrating
no genuine issue of material fact exists by pointing out such failure to the court. Street v. J.C.
Bradford & Co., 886 F.2d 1472, 1479 (6th Cir. 1989).
At summary judgment, the Court’s role is limited to determining whether the case contains
sufficient evidence from which a jury could reasonably find for the non-movant. Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 248-49 (1986). If the Court concludes a fair-minded jury could
not return a verdict in favor of the non-movant based on the record, the Court should grant summary
judgment. Id. at 251-52; Lansing Dairy, Inc. v. Espy, 39 F.3d 1339, 1347 (6th Cir. 1994).

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III.

ANALYSIS
In this action for damages and equitable relief, Plaintiffs offer a number of theories but little

in the way of specific facts. In resolving Plaintiffs’ first motion for a stay, the Court observed
“Plaintiffs [had] offered very little evidence beyond unsupported assertions contending Defendant
had erroneously calculated the balance outstanding on their loans” (Court File No. 23, p. 3), and
further noted “Plaintiffs offer no argument as to how this dispute over the loan amount satisfies any
of the elements for their claims under the Truth in Lending Act, the Real Estate Procedures Act, the
Tennessee Consumer Protection Act, or their common law claims” (id. at p. 4). Because of their
failure to submit timely responses to Defendant’s motion for summary judgment, Plaintiffs have not
provided any additional evidence or arguments since the Court’s denial of Plaintiffs’ motion for a
stay.
A.

Truth in Lending Act and Real Estate Settlement Procedures Act

Congress passed the Truth in Lending Act (“TILA”), 15 U.S.C. §§ 1601 et seq., to “assure
a meaningful disclosure of credit terms” in order to “avoid the uninformed use of credit” and to
“protect the consumer against inaccurate and unfair credit billing and credit practices,” § 1601(a).
Congress further empowered the Board of Governors of the Federal Reserve System (“Board”) to
issue regulations to achieve TILA’s purposes, § 1604(a), and acting under this authority, the Board
issued Regulation Z, Chase Bank USA v. McCoy, 131 S.Ct. 871, 874 (2011). Regulation Z applies
where credit is regularly offered to consumers, payable by a written agreement in more than four

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installments, and is “primarily for personal, family, or household purposes.” 12 C.F.R. § 226.1(c).4
Finally, Regulation Z sets general and detailed disclosure requirements. See 12 C.F.R. § 226.17–20.
Plaintiffs argue Defendant violated TILA and Regulation Z by failing to provide the requisite
disclosures, or by providing contradictory and confusing information, or alternatively by failing to
provide disclosures to a “regulated lending institution” (Court File No. 1, ¶ 51). Defendant responds
that TILA and Regulation Z do not apply because Plaintiffs’ loans were used for business,
commercial, or agriculture purposes, and therefore the extension of credit was exempted (Court File
No. 27, pp. 14-15). Although the Plaintiffs failed to timely respond to this argument, Plaintiffs’
complaint does suggest the real property at issue in this case is used for both commercial and
residential purposes (Court File No. 1, ¶ 6).
Although Defendant’s argument that TILA and Regulation Z do not apply may ultimately
be correct, the Court, viewing the evidence in the light most favorable to non-moving Plaintiffs, will
assume, without deciding, that TILA and Regulation Z apply. Plaintiffs nonetheless fail to offer
specific facts that demonstrate Defendant did not provide the disclosures required under TILA and
Regulation Z. Instead, Plaintiffs rely on allegations that such disclosures were not forthcoming, and
“mere allegations” do not entitle the Plaintiffs to trial.

Smith, 2009 WL 3762961, at *2-3.

Moreover, Defendant, in an affidavit of its First Vice President Thomas J. Waters, indicates
Plaintiffs “received every disclosure to which they were entitled and that [Defendant] was required
to give, prior to the making of each note and afterwards” (Court File No. 29, ¶ 5). Plaintiffs did not
timely contradict this evidence.

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Accordingly, credit extended “primarily for a business, commercial or agricultural purpose”
is exempt under both TILA,§ 1603(1), and Regulation Z, 12 C.F.R. § 226.3(a)(1).
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The analysis for the Real Estate Settlement Procedures Act (“RESPA”), 12 U.S.C. § 2601
et seq., follows a similar trajectory. Like TILA, RESPA aims, inter alia, to ensure more transparent
transactions by requiring “more effective advance disclosure.” § 2601(b)(1). RESPA applies
broadly to any “federally related mortgage loan,” which includes any loan which “is secured by a
first or subordinate lien on residential real property” and is “made in whole or in part by any lender
the deposits or accounts of which are insured by any agency of the Federal Government,” § 2602(1).
RESPA excludes, however, “credit transactions involving extensions of credit primarily for
business, commercial, or agricultural purposes.” § 2606(a). Regulation X, which implements the
provisions of RESPA, describes disclosure requirements in more detail, including a good faith
estimate the creditor must provide to the prospective debtor. 24 C.F.R. § 3500.7. Plaintiffs allege
Defendant violated RESPA by failing to provide a proper good faith estimate; Defendant responds
that RESPA does not apply because Plaintiffs’ loans were primarily used for business, commercial,
or agricultural purposes.
Although the evidence in the record tends to support Defendant’s argument that RESPA does
not apply, the Court again assumes, without deciding, RESPA’s applicability. Plaintiffs offer no
evidence–not even an affidavit–in support of their claim in the pleadings that they did not receive
a proper good faith estimate pursuant to Regulation X.

Again pertinent is Defendant’s

uncontroverted affidavit that Plaintiffs received all relevant disclosures (Court File No. 29).
Accordingly, under RESPA, as under TILA, Plaintiffs have failed to demonstrate a genuine issue
for trial, and summary judgment for Defendant is appropriate as to Plaintiffs’ claim under each
federal statute.
B.

State Law Claims

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1.

Supplemental Jurisdiction

As a threshold matter, the Court, having dismissed Plaintiffs’ federal law claims, must
determine whether it is appropriate to retain supplemental jurisdiction over Plaintiffs’ state law
claims under 28 U.S.C. § 1367. The exercise of federal supplemental jurisdiction is discretionary.
District courts may decline to exercise supplemental jurisdiction over a state law claim if:
(1) the claim raises a novel or complex issue of State law,
(2) the claim substantially predominates over the claim or claims over which the
district court has original jurisdiction,
(3) the district court has dismissed all claims over which it has original jurisdiction,
or
(4) in exceptional circumstances, there are other compelling reasons for declining
jurisdiction.
28 U.S.C. § 1367(c). In making this discretionary decision, a district court should weigh “the values
of judicial economy, convenience, fairness, and comity.” Carnegie-Mellon Univ. v. Cohill, 484 U.S.
343, 350 (1988); accord Landefeld v. Marion Gen. Hosp., Inc., 994 F.2d 1178, 1182 (6th Cir. 1993)
(district court “should consider the interests of judicial economy and the avoidance of multiplicity
of litigation and balance those interests against needlessly deciding state law issues.”).
Although dismissing state law claims when federal law claims have been dismissed is often
proper, Musson Theatrical, Inc. v. Fed. Exp. Corp., 89 F.3d 1244, 1254-55 (6th Cir. 1996), “[t]here
are, however, circumstances where a district court should retain supplemental jurisdiction even if
all of the underlying federal claims have been dismissed,” Gamel v. City of Cincinnati, 625 F.3d
949, 952 (6th Cir. 2010). In particular, a court may “consider whether the plaintiff has engaged in
any manipulative tactics when it decides whether to remand a case.” Carnegie-Mellon, 484 U.S.
at 357. The Sixth Circuit has identified several factors favoring retention of supplemental
jurisdiction: “(1) the plaintiff ha[s] engaged in forum manipulation by deciding to dismiss his

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federal-law claims only after the case had been on the district court's docket for 11 months, (2) the
parties ha[ve] completed discovery, and (3) the defendants' summary-judgment motions [are] ripe
for decision.” Gamel, 625 F.3d at 952 (discussing Harper v. AutoAlliance Intern, Inc., 392 F.3d
195, 211-212 (6th Cir. 2004)). The Sixth Circuit in Harper also noted “the district court was familiar
with the facts of the case and already had invested significant time in the litigation.” Harper, 392
F.3d at 211.
Mindful of federalism and comity concerns, the Court finds the balance of considerations
here points in favor of retaining supplemental jurisdiction over Plaintiffs’ state law claims. First,
Plaintiffs’ use of various forums, including bankruptcy proceedings, state court, and this Court, as
a means to avoid foreclosure by Defendant strongly suggests manipulative tactics. Second, this case
has been on the Court’s docket for more than eighteen months, and as in Harper, the Court has
invested significant time considering motions and conducting hearings. Third, the parties have
completed discovery. Finally, Defendant’s motion for summary judgment is ripe for decision. In
light of these factors, judicial economy favors retaining supplemental jurisdiction to decide
Plaintiffs’ state law claims.
2.

Civil Conspiracy

Under Tennessee law, a civil conspiracy requires “a combination of two or more persons
who, each having the intent and knowledge of the other's intent, accomplish by concert an unlawful
purpose, or accomplish a lawful purpose by unlawful means, which results in damage to the
plaintiff.” Trau-Med of Am., Inc. v. Allstate Ins. Co., 71 S.W.3d 691, 703 (Tenn. 2002). In TrauMed, the Tennessee Supreme Court adopted the “intracorporate conspiracy immunity doctrine,”
holding “there can be no actionable claim of conspiracy where the conspiratorial conduct alleged

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is essentially a single act by a single corporation acting through its officers, directors, employees,
and other agents.” Id. at 703-04. Thus, to succeed on a civil conspiracy claim, Plaintiffs must allege
more than that employees of Defendant First Volunteer Bank conspired with each other.
Here, Plaintiffs’ civil conspiracy claim fails because they allege only that employees and
officers of Defendant “acted in concert to deprive Plaintiffs of their property and to destroy their
reputation” (Court File No. 1, ¶ 30). Plaintiffs neither allege nor offer evidence of Defendant
conspiring with any other entity. Plaintiffs’ claim is therefore foreclosed by the intracorporate
conspiracy immunity doctrine.
3.

Tennessee Consumer Protection Act

Plaintiffs allege a violation of the Tennessee Consumer Protection Act (“TCPA”). Tenn.
Code Ann. §§ 47-18-101 et seq. To make out a claim under the TCPA, a plaintiff must establish:
(1) an ascertainable loss of money or property; (2) that such loss resulted from an unfair or deceptive
act or practice; and (3) that the act or practice is declared unlawful under the TCPA. Tenn. Code
Ann. § 47-18-109. Although the TCPA imposes no single standard to determine whether an act or
practice is deceptive, the Tennessee Supreme Court has described a deceptive act or practice as “a
material representation, practice, or omission likely to mislead . . . reasonable consumers to their
detriment.” Fayne v. Vincent, 301 S.W.3d 162, 177 (Tenn. 2009) (citing Ganzevoort v. Russell, 949
S.W.2d 293, 299 (Tenn. 1997) (quoting Bisson v. Ward, 628 A.2d 1256, 1261 (Vt. 1993))). Claims
under the TCPA must be brought within one year from a person’s discovery of the unlawful act or
practice. Tenn. Code Ann. § 47-18-110.
Plaintiffs make general allegations that Defendant engaged in unfair and deceptive trade
practices in violation of the TCPA by failing to disclose information connected to the loan, and by

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“presenting the Plaintiff with additional costs and principal amounts not contracted for” (Court File
No. 1, ¶ 37). Defendant responds Plaintiffs have failed to keep records, have suffered no
ascertainable loss, and failed to comply with TCPA’s statute of limitations because they filed this
action more than a year after the final note was made.
Plaintiffs’ claims under the TCPA are indeed time-barred. The alleged violations of the
TCPA center on Defendant’s failure to disclose information at the time each note was made. The
latest of the five notes was made on June 30, 2008 (Court File No. 20-2, p. 4). Assuming, arguendo,
Defendant’s alleged failure to disclose information constituted an “unlawful act or practice” under
the TCPA, Plaintiffs would have discovered this non-disclosure at the date the notes were made.
Thus, Plaintiffs were required to institute an action under the TCPA no later than June 30, 2009.
In fact, Plaintiffs did not commence this action until March 12, 2010.
Even if Plaintiffs had timely filed their TCPA claims, they have offered no evidence that
Defendant engaged in “a material representation, practice, or omission likely to mislead . . .
reasonable consumers to their detriment.” Faye v. Vincent, 301 S.W.3d at 177. Plaintiffs’ allegation
of non-disclosure unsupported by evidence in the record is not sufficient to survive summary
judgment.
4.

Fraud and Intentional
Misrepresentation

Misrepresentation

and Negligent

Plaintiffs bring separate claims under fraud and intentional misrepresentation and under
negligent misrepresentation. In order to establish a claim for fraudulent or intentional
misrepresentation in Tennessee, a plaintiff must show:
1) the defendant made a representation of an existing or past fact; 2) the
representation was false when made; 3) the representation was in regard to a material
fact; 4) the false representation was made either knowingly or without belief in its
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truth or recklessly; 5) plaintiff reasonably relied on the misrepresented material fact;
and 6) plaintiff suffered damage as a result of the misrepresentation.
Walker v. Pontiac-GMC Truck, Inc., 249 S.W.3d 301, 311 (Tenn. 2008) (citation omitted). To make
out a claim for negligent misrepresentation, the plaintiff must establish “that the defendant supplied
information to the plaintiff; the information was false; the defendant did not exercise reasonable care
in obtaining or communicating the information and the plaintiffs justifiably relied on the
information.” Id. (citation omitted).5
In a federal court fraud or mistake action, “a party must state with particularity the
circumstances constituting a fraud or mistake.” Fed. R. Civ. P. 9(b). Specifically, “the plaintiff
must, at a minimum, allege the time, place and content of the misrepresentations; the defendant’s
fraudulent intent; the fraudulent scheme; and the injury resulting from the fraud.” Power & Tel.
Supply Co., Inc. v. SunTrust Bank, Inc., 447 F.3d 923, 931 (6th Cir. 2006).
In alleging fraud and intentional misrepresentation, Plaintiffs offer little more than general
statements that Defendant acted fraudulently. Although Plaintiffs assert Defendant made statements
it knew to be false, Plaintiffs provide no evidence in support of this claim. The statements and
affidavits of Plaintiffs’ personal book keeper, Jim Heading, demonstrate Plaintiffs dispute the
amount of the debt they owe (see, e.g. Court File No. 20, Ex. 1); this evidence does not, however,
show Defendant knowingly made a false representation of material fact. Moreover, Plaintiffs’
complaint fails to “state with particularity the circumstances constituting a fraud,” Fed. R. Civ. P.

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Tennessee has adopted the definition of negligent misrepresentation from the Restatement
of Torts: a party is liable for negligent misrepresentation if he “supplies false information for the
guidance of others in their business transactions, is subject to liability for pecuniary loss caused to
them by their justifiable reliance upon the information, if he fails to exercise reasonable care or
competence in obtaining or communicating the information.” Bennet v. Trevecca Nazarene Univ.,
216 S.W.3d 293, 301 (Tenn. 2007) (quoting Restatement (Second) of Torts § 552 (1997)).
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9(b), and thus does not satisfy Rule 9(b)’s particularity requirement.
Summary judgment for Defendant is also appropriate on Plaintiffs’ negligent
misrepresentation claim. Indeed, in alleging negligent misrepresentation, Plaintiffs repeat, verbatim,
their claim for intentional misrepresentation and fraud.6 Thus, Plaintiffs do not plead the time or
place of the alleged negligent misrepresentation as required under Rule 9(b). Additionally, although
Plaintiffs dispute precisely the amount they owe Defendant, Plaintiffs do not offer evidence
indicating either that this dispute arises out of Defendant’s failure to exercise reasonable care in
communicating information to the Plaintiffs or that Defendant supplied false information.
Defendant, by contrast, has provided copies of all five loans it made to Plaintiffs, as well as the
payment history of those loans (Court File no. 29, Ex 1). Plaintiffs do not controvert this evidence.
5.

Fraudulent Concealment

To establish fraudulent concealment, a plaintiff must establish:
(1) that the defendant took affirmative action to conceal the cause of action or
remained silent and failed to disclose material facts despite a duty to do so; (2) that
the plaintiff could not have discovered the cause of action despite exercising
reasonable care and diligence; (3) that the defendant had knowledge of the facts
giving rise to the cause of action; and (4) that the defendant concealed material facts
from the plaintiff by withholding information or making use of some device to
mislead plaintiff, or by failing to disclose information when he or she had a duty to
do so.
Pero’s Steak and Spaghetti House v. Lee, 90 S.W.3d 614, 625 (Tenn. 2002). Because this cause
of action alleges fraud, Rule 9(b)’s particularity requirements also apply. Evans v. Pearson Enters.,
Inc., 434 F.3d 839, 850 (6th Cir. 2006) (Rule 9(b) applies to fraudulent concealment actions).

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Plaintiffs also add one additional sentence in their claim for negligent misrepresentation
alleging they “suffered economic harm and will eminently [sic] lose control of their property as a
result of the Defendants’ conduct” (Court File No. 1, ¶ 48).
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After stating Defendant “had a duty to disclose all material facts of the transaction to
Plaintiffs,” Plaintiffs allege “Defendant intentionally concealed and/or intentionally failed to
disclose all material facts of the transaction to Plaintiffs” (Court File No. 1, ¶¶ 42-43 ). Plaintiffs
therefore fail to plead with particularity any of the elements for a fraudulent concealment action.
Plaintiffs have not offered any specific facts contradicting Defendant’s evidence that Defendant
provided Plaintiffs all required disclosures. Plaintiffs similarly have not offered evidence indicating
Defendant “took affirmative action to conceal the cause of action or remained silent and failed to
disclose material facts despite a duty to do so.” Pero’s Steak and Spaghetti House, 90 S.W.3d at
624. Because Plaintiffs failed to satisfy Rule 9(b)’s pleading requirement and because there is no
genuine issue of material fact on at least the first and fourth elements, summary judgment for the
Defendant is appropriate.
6.

Conversion

“Conversion does not occur until the ‘alleged wrongdoer exercises dominion over the funds
in defiance of the owner’s rights.’” Ralston v. Hobbs, No. M2009-02442-COA-R3-CV, 2010 WL
4272692, at * 4 (Tenn. Ct. App. Oct. 28, 2010) (citation omitted). In order for Plaintiffs to succeed
on this claim, Plaintiffs must make out of a prima facie case establishing “(1) the appropriation of
[Plaintiffs’] property to [Defendant’s] own use and benefit, (2) by the intentional exercise of
dominion over it, (3) in defiance of the true owner’s rights.” Ferrell v. Addington Oil Corp., No.
2:08-CV-74, 2010 WL 3283029, at *4 (E. D. Tenn. Aug. 18, 2010).
Plaintiffs’ allegation of conversion consists only of the claim “Defendant and employees and
Officers took and/or converted to his/her/its use certain property of Plaintiffs” (Court File No. 1, ¶
49). Plaintiffs do not specify what property Defendant has allegedly appropriated, and offer no

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evidence demonstrating any such appropriation has occurred. Indeed, by Plaintiffs’ own admission,
they owe Defendant more than five hundred thousand dollars (Court File No. 20, Ex. 1). Plaintiffs
have thus failed to make out a prima facie case for conversion, and summary judgment for
Defendant is proper.
7.

Breach of Fiduciary Duty

Plaintiffs allege Defendant owed them fiduciary duties, which Defendant breached.
Tennessee statute provides that:
No financial institution or officer or employee thereof shall be deemed or implied to
be acting as fiduciary or have a fiduciary obligation or responsibility to its customers
or to other parties, other than shareholders of the institution, unless there is a written
agency or trust agreement under which the financial institution specifically agrees
to act and perform in the capacity of a fiduciary.
Tenn. Code Ann. § 45-1-127(a). Thus, the typical relationship between debtor and creditor does not
impose fiduciary duties on the creditor, See Glazer v. First Am. Bank, 930 S.W.2d 546, 550 (Tenn.
1996), underscoring “the recognition that bank-depositor or debtor-creditor relationships generally
involve arm's-length dealings.” Power & Tel. Supply Co. v. Sun Trust Banks, Inc., 447 F.3d 923,
932 (6th Cir. 2006) (interpreting Tennessee law).
Beyond allegations Defendant owed and violated fiduciary duties, Plaintiffs provide no
additional facts. Specifically, Plaintiffs do not point to any written agency or trust agreement that
would remove this case from the typical arm’s-length debtor-creditor relationship, in which the
creditor does not have fiduciary obligations to the debtor. Defendant, by contrast, offers an affidavit
stating “[a]t no point did [Plaintiffs] indicate that they placed any special trust or confidence in
[Defendant], nor did [Defendant] enter into any relationship with [Plaintiffs] other than the normal
lender-borrower relationship” (Court File No. 29, ¶ 7). Plaintiffs did not timely controvert this

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statement. Because there is no evidence of anything other than the typical debtor-creditor
relationship between the parties, the Court finds Plaintiffs have failed to demonstrate a genuine issue
of fact as to the existence of a fiduciary duty between the parties.
8.

Breach of Contract

To establish a breach of contract claim under Tennessee law, a plaintiff must prove “(1) the
existence of an enforceable contract, (2) nonperformance amounting to a breach of the contract, and
(3) damages caused by the breach of contract.” BancorpSouth Bank, Inc. v. Hatchel, 223 S.W.3d
223, 227 (Tenn. Ct. App. 2006). Moreover, “a party who commits the first uncured material breach
of contract may not recover damages for the other party's material breach.” Madden Phillips
Constr., Inc. v. GGAT Dev. Corp., 315 S.W.3d 800, 812 (Tenn. Ct. App. 2009).
Plaintiffs claim Defendant breached by “not giving proper notice and by not allowing
Plaintiffs to cure alleged debts owed” (Court File No. 1, ¶ 62). Defendant contends language in the
deeds of trust in each note provided Plaintiffs with proper notice of the foreclosure remedy under
Tennessee law (Court File No. 28, pp. 18-19). Defendant further argues the evidence clearly
indicates Plaintiffs have made no effort to cure the defect by repaying the various debts, and have
in any case failed to allege an injury attributable to the alleged breach (id. at p. 19). Finally,
Defendant claims Plaintiffs are barred from recovery on account of Plaintiffs’ own prior breach of
the contract (id. at pp. 19-20).
The Court finds Plaintiffs have not met their burden of establishing specific facts to
demonstrate there is a genuine issue for trial on their breach of contract claim. First, Plaintiffs have
not offered evidence of nonperformance by Defendant.

Plaintiffs provide no supporting

documentation for their general claim that Defendant failed to provide proper notice, leaving the

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Court uncertain what Plaintiffs are in fact arguing. Assuming Plaintiffs’ claim regarding improper
notice refers to the possibility of foreclosure, this claim is rebutted by the language supplied in each
of the loan agreements (Court File No. 20, Ex. 2, 4, 6, 7, 9), which spells out the foreclosure process.
Second, to the extent Plaintiffs’ claim they were not given time to cure by repaying debts owed to
Defendant constitutes nonperformance by Defendant, Plaintiffs provide no evidence they sought to
cure. In ruling on an earlier motion, the Court found Plaintiffs had, as of June 2010, not made a
payment on any of the notes for eighteen months (Court File No. 16, p. 2). Since that time, Plaintiffs
have not come forward with any additional evidence establishing they have tried to cure by
repaying, or that they have made any other payments on the notes. Finally, even if Plaintiffs could
establish nonperformance by Defendant, they are barred under Tennessee law from claiming
damages because of their own material breach of contract. Madden Phillips Constr., 315 S.W.3d
at 812.

IV.

CONCLUSION
For the reasons discussed above, the Court will GRANT Defendant’s motion for summary

judgment (Court File No. 27), and will likewise DENY Plaintiffs’ motion seeking denial or
postponement of Defendant’s motion for summary judgment (Court File No. 30). The Court also
will DENY AS MOOT Plaintiffs’ motion to appoint a special master (Court File No. 38), DENY
AS MOOT Plaintiff’s second motion for a preliminary injunction (Court File No. 47), and DENY
AS MOOT Defendant’s motion to quash notice of deposition and subpoena duces tecum (Court File
No. 63).
An Order shall enter.

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/s/
CURTIS L. COLLIER
CHIEF UNITED STATES DISTRICT JUDGE

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