Wildasin v. Mathes et al

Filing 88

MEMORANDUM OPINION OF THE COURT. Signed by Chief Judge Kevin H. Sharp on 3/11/16. (DOCKET TEXT SUMMARY ONLY-ATTORNEYS MUST OPEN THE PDF AND READ THE ORDER.)(am)

UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF TENNESSEE
NASHVILLE DIVISION
JOAN ROSS WILDASIN,
Plaintiff,

v.
PEGGY MATHES;
HILAND, MATHES &
URQUHART; AND BILL
COLSON AUCTION &
REALTY COMPANY
Defendants.

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Civil No. 3:14-cv-2036
Judge Sharp

MEMORANDUM
This is a dispute over the auction sale of a house in Pegram, Tennessee. Plaintiff sued the
Administrator C.T.A. (Peggy D. Mathes), the auction company that she hired (Bill Colson
Auction & Realty), and the Administrator’s law firm (Hiland, Mathes & Urqhart, or “HUM”).
HUM has moved for summary judgment on all of Plaintiff’s claims.
Though this case arose from a property sale, this motion involves a narrower question of
law: whether, under Tennessee law, an unincorporated association may be held vicariously liable
when one of its members commits a tort. HUM argues that such a group may not be vicariously
liable; Plaintiff argues that it may be held liable. Tennessee courts have not confronted the
question, and the Court will not provide the answer today. Instead, it is enough to conclude that
HUM has not shown why, given the undisputed facts, it is entitled to judgment as a matter of
law. Accordingly, HUM’s Motion will be denied.

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BACKGROUND1
Edward Hiland, Mike Urqhart, and Mathes are attorneys practicing law in Nashville,
Tennessee. (Docket No. 68, p. 1.) Several years ago, they formed a limited-liability company
designed to help share business expenses. (Docket No. 68, p. 2.) The three attorneys work
together in a Nashville office space, where they split the cost of rent. They each own an equal
share in the items in the office, which include a conference table, chairs, a fax and copy machine,
and office furniture. (Docket No. 68, p. 2.) A single receptionist works at the office space and
answers phone calls for all three attorneys. (Docket No. 68, p. 2.)
Despite some appearance otherwise, Hiland, Urqhart, and Mathes maintain that they are
not a law firm, but “an association of attorneys.” (Docket No. 47, p. 1.) The attorneys all share a
letterhead—bearing the phrase “Hiland, Urqhart, and Mathes: an Association of Attorneys”—
and have sometimes “inadverten[tly]” included the name of the association on state-court
pleadings. (Docket No. 68, pp. 2, 5.) But they point out that they have no shared bank account,
nor do they file shared tax returns for business expenses. (Docket No. 68, pp. 3–4.)
In 2010, Mathes was appointed administrator of Plaintiff’s mother’s estate. (Docket No.
30, p. 2.) The estate included a parcel of real property in Pegram, Tennessee, consisting of a
single detached home that sits on a seven-acre lot. (Docket No. 30, p. 3.) The home was built in
2006 for about $450,000. (Docket No. 30, p. 3.) In September 2014, Mathes entered into an
Exclusive Auction Listing Contract with Bill Colson Auction and Realty Company to sell the
property. (Docket No. 30, p. 3.)
According to Plaintiff, Mathes misrepresented the property in advertisements, indicating
that the house was 2,500 square feet instead of 3,553 square feet. (Docket No. 30, pp. 3–4.)
Plaintiff also alleges that Mathes did not show up at the auction sale in October 2014. (Docket
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Unless the Court indicates otherwise, these facts are undisputed.

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No. 30, p. 4.) The house was ultimately sold for $315,000—about $135,000 less than its value in
2006. (Docket No. 30, p. 5.)
Plaintiff blames Mathes for the low purchase price. She alleges that “potential bidders
who were interested in a home having 3,553 square feet of living area, and who would have paid
substantially more than $315,000 for such a home situated on 7.16 wooded acres of land, likely
chose not to attend the auction.” (Docket No. 30, p. 6.)

Those who did attend the sale, she

claims, were probably confused as to the true size of the home and the surrounding land. Docket
No. 30, p. 6.)
Plaintiff filed her complaint in October 2014, shortly after the auction sale. (See Docket
No. 1.) She alleges that Mathes was negligent as administrator of the estate (Count I) and as
legal counsel (Count II). (Docket No. 30, pp. 6–8.) In Count II, Plaintiff alleges that HUM is
vicariously liable for Mathes’s negligent failure to provide legal services. (Docket No. 30, pp.
8–9.)

HUM filed a Motion for Summary Judgment against Plaintiff on August 20, 2015.

(Docket No. 46. )

HUM argues that, as an unincorporated association, it cannot be held

vicariously liable for the tortious conduct of one of its members. (Docket No. 47, p. 4.)
LEGAL STANDARD
Summary judgment is appropriate when there is no genuine issue as to any material fact
and the movant is entitled to judgment as a matter of law. FED. R. CIV. P. 56(c); Pennington v.
State Farm Mut. Auto. Ins. Co., 553 F.3d 447, 450 (6th Cir. 2009). The party bringing the
summary-judgment motion has the initial burden of informing the Court of the basis for its
motion and identifying portions of the record that demonstrate the absence of a genuine dispute
over material facts.

Rodgers v. Banks, 344 F.3d 587, 595 (6th Cir. 2003). The moving party

may satisfy this burden by presenting affirmative evidence that negates an element of the

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nonmoving party’s claim or by demonstrating an absence of evidence to support the nonmoving
party’s case. Id.
In deciding a motion for summary judgment, the Court must review all the evidence,
facts, and inferences in the light most favorable to the nonmoving party. Van Gordner v. Grand
Trunk W. R.R., Inc., 509 F.3d 265, 268 (6th Cir. 2007). The Court does not, however, weigh the
evidence, judge the credibility of witnesses, or determine the truth of the matter. Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 249 (1986).

The Court determines whether sufficient

evidence has been presented to make the issue of fact a proper jury question. Id. A mere
scintilla of evidence in support of the nonmoving party’s position is not enough to survive
summary judgment; instead, there must be evidence on which the jury could reasonably find for
the nonmoving party. Rodgers, 344 F.3d at 595.
ANALYSIS
HUM’s argument rests mainly on its assertion that it is not a partnership. It repeatedly
argues that an “association of three attorneys does not constitute a partnership as defined by
Tennessee law.” (Docket No. 47, p. 3.) It notes that the three attorneys have no written
partnership agreement, no joint ownership or control of the association, no ability to bind the
group to collective decisions, no joint bank accounts, and no shared tax returns. (Docket No. 47,
p. 3.) In short, it argues, there is no evidence suggesting that the three attorneys ever held
themselves out as partners or claimed to be a partnership. (Docket No. 47, p. 6.)
HUM has cited a few sources to support its assertion. It points to § 61-1-202 of the
Tennessee Code, which provides that individuals who share profits are presumed to be partners.
Tenn. Code. Ann. § 61-1-202(3). It also notes that the Sixth Circuit consistently finds that no
partnership exists without profit sharing. Merritt v. Mountain Laurel Chalets, Inc., 2015 WL

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1421165, at * 14 (E.D. Tenn. Mar. 27, 2015). And it points out that the parties in a partnership
must be bound by some contract, the existence of which must be proven by the party alleging the
existence of a partnership. See Story v. Lanier, 166 S.W.3d 167, 175 (Tenn. Ct. App. 2004)
(“When a partnership agreement is not in writing, the party alleging the existence of a
partnership carries the burden of proving that fact by clear and convincing evidence.”)
HUM then observes, correctly, that “Tennessee law imposes liability on a partnership for
the actionable conduct of a partner.” (Docket No. 47, p. 7.) It points to § 61-1-305(a), which
states that a partnership “is liable . . . as a result of a wrongful act or omission . . . of a partner”
who acts in the scope of her employment or with the partnership’s approval. Tenn. Code Ann.
§ 61-1-305. HUM notes that, if it were a partnership, it could be held vicariously liable for
Mathes’s shoddy legal representation.
So far, so good. But after establishing that Tennessee law imposes vicarious liability on
partnerships for a partner’s tort, HUM flatly claims that “[b]ecause no partnership exists, [HUM
is] not vicariously liable” for “any actionable conduct on behalf of Ms. Mathes.” (Docket No. 47,
p. 7.) It cites no authority to support this conclusion. Instead, perhaps for good measure, it states
the point again: “Because [HUM] is not a partnership, . . . there is no legal basis to impose any
liability [on HUM] for Ms. Mathes’[s] actions.” (Docket No. 47, p. 7.)
To sum up, HUM’s brief argues that (1) HUM is not a partnership; (2) partnerships may
be held vicariously liable for the torts of individual partners; therefore (3) HUM cannot be held
vicariously liable for the tortious conduct of one of its members.
This logic is not exactly drum-tight.

HUM’s conclusion hinges on its unspoken

proposition that only a partnership—and no other business organization—may be held
vicariously liable for a member’s tortious conduct. Unfortunately, HUM does not provide any

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legal authority to support that proposition. The only cases cited in its memorandum simply lay
out the standards for determining whether a partnership exists. (See Docket No. 47, pp. 4, 6–7.)
And HUM mentions only two authorities after making its bold assertion of non-liability: Rule 8
of the Tennessee Rules of Supreme Court and a thirty-two-year-old ethics opinion published by
the Tennessee Supreme Court. Neither authority is particularly useful for HUM’s argument: the
Supreme Court Rule states that its provisions are “not designed to be a basis for civil liability,”
while the ethics opinion merely explains that a group of attorneys may conduct business without
forming a legal partnership.

TENN. SUP. CT. R. 8, RPC PREAMBLE; BD.

OF

PROF’L

RESPONSIBILITY OF THE SUP. CT. OF TENN., FORMAL ETHICS OPINION 84-F-64 (1984).
After a close look, Tennessee law seems unhelpful for HUM’s case, too. Unincorporated
associations are legal entities capable of being sued. See Tenn. Code. Ann. § 20-2-202(a)–(c)
(setting out requirements for service upon unincorporated associations); TENN. R. CIV. P.
17.02(2) (“Any partnership or other unincorporated association may . . . be sued.”). See also
Fain v. O’Connell, 909 S.W.2d 790, 794 (Tenn. 1995) (“Unincorporated associations are
consistently treated as legal entities which are subject to suit.”).

And an unincorporated

association is not exempt from liability when a member violates a state statute or regulation. See
Parker v. Warren Cty. Util. Dist., 2 S.W.3d 170, 177 (Tenn. 1999) (holding that employer could
be held vicariously liable for employee’s violation of state anti-discrimination law). See also
Tenn. Code Ann. § 4-21-102(14) (state anti-discrimination law defining “person” as, among
other things, an “unincorporated organization”). Moreover, many state-court cases show that an
unincorporated association may be liable for the debts that its members assume. Blair v. S. Clay
Mfg. Co., 121 S.W.2d 570, 572 (Tenn. 1938) (“If the association is organized for profit, the
members are partners in legal effect and are liable for debts contracted in the name of the

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association by other members.”). Indeed, in such a situation, an unincorporated association is
effectively a partnership for purposes of finding liability for breach of contract. See Boynton v.
Headwaters, Inc., 252 F.R.D. 397, 400–01 (W.D. Tenn. 2008) (“[F]or the purposes of
determining liability for the debts of [an unincorporated] association, members of a for-profit
entity shall be treated as if they were partners.”)
If vicarious liability can attach when a member of an unincorporated association violates
a statute or breaches a contract, can it also attach when a member commits a tort? HUM argues
that it cannot, but offers nothing to support that argument. Thus, even if the Court were to
assume that HUM is not a partnership, HUM has not shown why it is entitled to judgment as a
matter of law. This is not enough to prevail on summary judgment. FED. R. CIV. P. 56(c); See,
e.g., Gallenstein Bros., Inc. v. Gen. Accident Ins. Co., 178 F. Supp. 2d 907, 914 (S.D. Ohio
2001) (“In a summary judgment proceeding, the moving party must show that it is entitled to
judgment as a matter of law.”). HUM’s motion will be denied.
CONCLUSION
For the foregoing reasons, the Court will deny Defendant’s Motion for Summary
Judgment. An appropriate Order will be entered.

_________________________________________
KEVIN H. SHARP
UNITED STATES DISTRICT JUDGE

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