First Fidelity Capital Markets Inc. v. Reliant Bank et al

Filing 179

MEMORANDUM OPINION OF THE COURT. Signed by District Judge William L. Campbell, Jr on 5/18/2020. (DOCKET TEXT SUMMARY ONLY-ATTORNEYS MUST OPEN THE PDF AND READ THE ORDER.)(vh)

IN THE UNITED STATES DISTRICT COURT FOR THE
MIDDLE DISTRICT OF TENNESSEE
NASHVILLE DIVISION
FIRST FIDELITY CAPITAL
MARKETS, INC.,
Plaintiff,
v.
RELIANT BANK, COMMERCE
UNION BANCSHARES, INC. and
RELIANT MORTGAGE VENTURES,
LLC d/b/a RELIANT BANK
MORTGAGE SERVICES,
Defendants.

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NO. 3:17-cv-01080
JUDGE CAMPBELL
MAGISTRATE JUDGE NEWBERN

MEMORANDUM
Pending before the Court is Defendants’ Motion for Summary Judgment on Plaintiff’s
Fraud Claim. (Doc. No. 158). Plaintiff filed a response to the motion (Doc. No. 165) and
Defendants filed a reply (Doc. No. 173). Defendants filed a statement of material facts (Doc. No.
160) to which Plaintiff responded (Doc. No. 166). For the reasons stated below, Defendants’
Motion is DENIED.
I.

BACKGROUND 1

The facts in this case are recounted in the Court’s Orders on two earlier filed motions for
summary judgment (Doc. Nos. 122, 123, 156, 157) and will be discussed here only briefly. The
dispute in this case revolves around a Reciprocal Confidentiality and Non-disclosure Agreement
(the “NDA”) entered into between the parties. The NDA includes a “non-circumvention clause”

1

The Court provided a more complete background of the case in its July 9, 2019, Memorandum on
Plaintiff’s Motion for Summary Judgment (Doc. No. 122) and the January 31, 2020, Memorandum on
Defendant’s Motion for Summary Judgment (Doc. No. 156).

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which Plaintiff’s assert was breached when Defendants directly hired two employment candidates,
Kyle Zotter and Mark Considine, that had been proposed by Plaintiff. Defendant contends Plaintiff
committed the first material breach of the NDA when it discussed the Zotter and Considine with
one of Defendants’ employees, thereby violating the confidentiality provision of the NDA.
After discovery closed, the Court granted Plaintiff’s motion to amend the Complaint to
assert a fraud claim. (Doc. No. 144). In the First Amended Complaint, Plaintiffs allege that Roger
Williams, President of Defendant Reliant Bank Mortgage Services, had no intent to abide by the
terms of the agreement at the time if its signing. (Am. Compl., Doc. No. 145, ¶¶ 40-43).
Defendants moved for summary judgment on the fraud claim on the grounds that Plaintiff has no
evidence to support the intent element of the fraud claim. (Doc. No. 159).
II.

STANDARD OF REVIEW

Summary judgment is appropriate “if 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 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 non-moving party’s claim or by demonstrating an absence of evidence to support
the nonmoving party’s case. Id.
In evaluating a motion for summary judgment, the court views the facts in the light most
favorable for the nonmoving party and draws all reasonable inferences in favor of the nonmoving
party. Bible Believers v. Wayne Cty., Mich., 805 F.3d 228, 242 (6th Cir. 2015); Wexler v. White’s
Fine Furniture, Inc., 317 F.3d 564, 570 (6th Cir. 2003). The Court does not weigh the evidence,

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judge the credibility of witnesses, or determine the truth of the matter. Anderson v. Liberty Lobby,
Inc., 477 U.S. 242, 249 (1986). Rather, the Court determines whether sufficient evidence has been
presented to make the issue of material fact a proper jury question. Id. The mere scintilla of
evidence in support of the nonmoving party’s position is insufficient to survive summary
judgment; instead, there must be evidence of which the jury could reasonably find for the
nonmoving party. Rodgers 344 F.3d at 595.
III.

ANALYSIS

Plaintiff’s fraud claim, which alleges Defendant entered into the agreement with no present
intent to perform, is a claim for fraudulent inducement, also known as promissory fraud. See
Bongard v. Winter, 516 So.2d 27 (Fla. 3d DCA 1987) (“[A] present misrepresentation concerning
a future intent may form the basis for actionable fraud where the party making the
misrepresentation is aware at the time that it is in fact false.”); Shahrdar v. Global Hous., Inc., 983
S.W.2d 230, 237 (Tenn. Ct. App. 1998) (claim based on promissory fraud must “embody a promise
of future action without the present intent to carry out the promise.”). 2
Defendants argue Plaintiff has no evidence that Roger Williams, President of Reliant Bank
Mortgage Services, had no intent to abide by the terms of the contract when he signed because (1)
Williams’s testimony and that of others supports his claim that he did not decide to hire the
candidates directly until after Plaintiff’s alleged first breach of the agreement; and (2) at the time
he entered into the agreement, Williams had not received enough information about Zotter and

2

The parties disagree on whether the law of Tennessee or Florida applied to the fraud claim. As the
elements of fraud under the law of either state are substantially the same, the Court need not decide this
issue.

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Considine to determine that he wanted to hire them and, therefore, could not have formed the intent
to hire them at all, let alone the intent to hire them in circumvention of the agreement. 3
Defendants argue that Williams’s consistent testimony that he did not intend to hire Zotter
and Considine directly until after Plaintiff materially breached the NDA is dispositive. Plaintiff,
however, offers a host of circumstantial evidence of intent that they contend it more than sufficient
to present a question of fact for the jury. Notably, Plaintiff’s evidence of intent is largely an attack
on Williams’s credibility – a quintessential jury question. Plaintiff provides numerous examples
of evidence to undermine Williams’s credibility, including Williams’s testimony that he never
contemplated using Plaintiff to recruit loan originators (Williams Dep., Doc. No. 107-1, at 84) and
that there was “no way in hell” he would pay 40 basis points as a fee (id., at 107-08). 4
Plaintiff also provides evidence from which to infer that the alleged first material breach,
which occurred within days of the signing of the Agreement, was orchestrated by Williams
himself. The allegations of material breach are based on Plaintiff allegedly telling Reliant’s Group
Manager Sam Preis that Reliant was considering hiring Zotter and Considine, when Preis was not
supposed to know this information. (Doc. No. 159 at 4-5). Preis, however, testified that he learned
about Zotter and Considine from Williams, who told him they would be calling and to “say good
stuff” about Reliant. (Preis Dep., Doc. No. 106-1 at 150). Later, when Preis told Williams that
Zotter and Considine had called, Williams cried “breach” and has consistently maintained that
position. Plaintiff argues that the timing of the alleged breach, mere days after signing the
agreement, and the evidence showing that Williams set the course of events in action and had no

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The Court rejects Defendants’ contention that the deposition testimony of Plaintiff’s 30(b)(6)
representative that Williams’s intentions are “unknowable to anyone, save Roger Williams” is an admission
that Plaintiff has no evidence to support the intent element of the fraud claim.

4

The 40 basis point fee was not part of the NDA.

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basis to claim breach, is evidence that he never intended to abide by the agreement and that his
statements to the contrary are not credible.
The Court agrees that Defendant’s argument that Williams did not have enough
information about the candidates to have decided to hire them when he signed the agreement has
logical appeal. The argument rests on the assumption that the purpose of the NDA was to allow
the parties to exchange additional information about the proposed candidates so that Defendant
could make a decision about hiring them. Plaintiff has shown, however, that Defendant had
information about the candidates before he signed the NDA. What information he had and whether
it was sufficient basis to make a hiring decision presents a question of fact. First, there is a question
about the date Williams signed the NDA – January 23 or 25 – and what information he had prior
to signing the agreement. (See Williams Dep., Ex. 20, Doc. No. 6 (January 23, 2015 email with
attached signed agreement dated January 25, 2015). On January 23, 2015, Plaintiff provided some
information about the candidates, such as where they sold their jumbo loans. (Bennett Dep., Doc.
No. 95-1 at 97-98). The following day, on January 24, 2015, Plaintiff provided considerable
additional information. (See Williams Dep., Ex. 22, Doc. No. 172-7 (email providing resumes,
work history, fees, loan volume, etc.). In addition, Plaintiff provided evidence that Defendants’
corporate structure and financial incentives created could have motivated Williams to hire the
candidates before they were fully vetted.
The Court finds that Defendants failed to demonstrate there is no dispute of material fact
on Williams’s intent when he entered into the NDA. Given the myriad disputes of fact and
challenges to witness credibility and making all reasonable inferences in favor of Plaintiff, the
Court cannot conclude that no reasonable juror could find that at the time Williams entered into

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the NDA, he had already determined to hire the candidates directly. Accordingly, Defendants’
Motion for Summary Judgment on the fraud claim must be denied.
IV.

CONCLUSION

For the reasons stated, Defendants’ Motion for Summary Judgment DENIED.

An

appropriate Order will enter.

____________________________________
WILLIAM L. CAMPBELL, JR.
UNITED STATES DISTRICT JUDGE

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