Steve Payne v. Jan Savell, C.S.J. Travel, Inc., and Carleen Stephens ( 1998 )

IN THE COURT OF APPEALS OF TENNESSEE
FILED
STEVE PAYNE, ) C/A NO. 03A01-9708-CV-00352
) February 5, 1998
Plaintiff-Appellee, )
) Cecil Crowson, Jr.
) Appellate C ourt Clerk
)
)
v. ) APPEAL AS OF RIGHT FROM THE
) BLOUNT COUNTY CIRCUIT COURT
)
)
)
JAN SAVELL, C.S.J. TRAVEL, INC., )
and CARLEEN STEPHENS, )
) HONORABLE W. DALE YOUNG,
Defendants-Appellants. ) JUDGE
For Appellants For Appellee
L. LEE KULL DAVID T. BLACK
Bird, Navratil & Kull MELANIE E. DAVIS
Maryville, Tennessee Kizer & Black
Maryville, Tennessee
O P I N IO N
REVERSED IN PART
AFFIRMED IN PART
REMANDED WITH INSTRUCTIONS Susano, J.
1
Steve Payne (“Payne”), a stockholder and former
employee of CSJ Travel, Inc. (“CSJ”), sued CSJ and the
corporation’s other stockholders, Jan Savell (“Savell”) and
Carleen Stephens (“Stephens”)1, seeking damages for the
defendants’ alleged breach of a contract to repurchase Payne’s
CSJ stock. Payne’s action was filed in the Blount County General
Sessions Court at a time when earlier litigation between Payne
and CSJ in the Blount County Chancery Court was pending on appeal
to this court. In the instant action, the defendants allowed a
default judgment to be taken against them and thereafter appealed
to the Blount County Circuit Court for a de novo trial. The
Circuit Court denied the defendants’ joint motion for summary
judgment, and instead granted summary judgment in favor of Payne
and against CSJ for $6,666.64. Payne then filed a notice of
voluntary dismissal of his suit against Savell and Stephens. The
defendants appealed, arguing, among other things, that the
Circuit Court erred in failing to grant them summary judgment,
and erred in granting Payne a money judgment against CSJ.
I
Payne was formerly employed as a travel agent with CSJ.
Savell was the president of CSJ, and Stephens was the
corporation’s secretary. On August 30, 1993, Payne entered into
a contract with CSJ, by the terms of which he agreed that, upon
the termination of his employment, he would refrain from
competing with CSJ for a period of one year and within a radius
1
For ease of reference, CSJ, Savell and Stephens will collectively be
referred to as “the defendants.”
2
of 250 miles. By separate contract executed the same day, Payne
agreed to purchase 250 shares of stock in CSJ for $10,000. In
the same contract, Payne granted the corporation the option to
repurchase his stock if his employment with the company was
terminated for any reason.
Payne voluntarily terminated his employment with CSJ as
of February 1, 1995. CSJ subsequently informed him of its
intention to exercise its option to repurchase his stock. Payne
later became employed to work in Blount County by a travel agency
located in the Washington, D.C. area.
On March 14, 1995, CSJ filed suit against Payne in
Chancery Court, alleging that Payne had violated the covenant not
to compete by soliciting the business of some of its major
clients. The complaint sought damages and an injunction
prohibiting Payne from engaging in further competition. On May
18, 1995, CSJ notified Payne that it would not make its scheduled
payment under the stock repurchase agreement. To that point, CSJ
had made two payments of $1,666.67 each, but still owed Payne
$6,666.64.
On June 1, 1995, Payne filed a motion in the Chancery
Court action alleging that CSJ had interfered with his attempts
to sell the stock elsewhere. He sought a declaration that he was
free to sell the stock on the open market due to CSJ’s failure to
make the repurchase payments. He also requested an injunction
prohibiting CSJ from further interfering with his efforts to sell
3
his stock. The Chancery Court heard the motion but declined to
rule on it, deferring the issue for a later hearing.
The Chancellor ultimately determined that the covenant
not to compete was enforceable, but only to the extent that it
prohibited Payne from soliciting customers of CSJ. After both
parties appealed, the Court of Appeals held that the covenant was
fully enforceable according to its terms, and remanded the case
for further proof on the issue of damages. See CSJ Travel, Inc.
v. Payne, C/A No. 03A01-9604-CH-00142, 1996 WL 469694 (Tenn.App.,
E.S., filed August 20, 1996, Inman, Sr.J.).
On January 16, 1996, while the Chancery Court’s
decision was on appeal to the Court of Appeals, and while Payne’s
motion with respect to the repurchase agreement was still pending
in Chancery Court, Payne filed the instant action in General
Sessions Court. The warrant seeks damages for the defendants’
alleged breach of the contract to repurchase Payne’s stock. As
previously stated, the defendants allowed a default in General
Sessions Court and appealed the adverse ruling to the Circuit
Court for a trial de novo. The parties subsequently filed
various motions, including a motion by the defendants for summary
judgment, and a motion by Payne seeking the same relief. The
Circuit Court denied the defendants’ motion, and proceeded to
award Payne summary judgment, finding that he was entitled to
recover $6,666.64 plus interest against CSJ.
II
4
The defendants raise several issues regarding the
Circuit Court’s judgment. We shall first address their
contention that the trial court erred in failing to grant Savell
and Stephens summary judgment.2
As previously indicated, the plaintiff took a voluntary
nonsuit, without prejudice, of his action against the individual
defendants. Under Rule 41.01, Tenn.R.Civ.P., the plaintiff
“ha[d] the right to take a voluntary nonsuit” under the terms set
forth in the rule. He complied with those provisions. It is
clear that the individual defendants cannot appeal the order of
dismissal without prejudice, nor can they now appeal the trial
court’s interlocutory judgment denying their motion for summary
judgment.
This matter was addressed in the case of Oliver v.
Hydro-Vac Services, Inc., 873 S.W.2d 694 (Tenn.App. 1993) wherein
this court, citing an unpublished opinion of the Court of
Appeals, opined as follows:
As Judge Koch stated in Harriet Teresa Martin
vs. Washmaster Auto Center, Inc., and
Murfreesboro Road Autowash Association, Inc.,
1993 WL 241315 (Unpublished opinion,
Tenn.App. 1993):
Defendants ordinarily cannot appeal
from the denial of their motion for
summary judgment. The denial of a
summary judgment before trial is an
interlocutory decision that does
not satisfy Tenn.R.App.P. 3(a)’s
finality requirement. (citations
omitted).
2
Neither Savell nor Stephens was a party to the Chancery Court action.
5
* * *
Taking a voluntary nonsuit does not
render the denial of a summary
judgment any more suitable for
appellate review. No present
controversy exists after the
plaintiff takes a nonsuit. The
lawsuit is concluded and can only
be resurrected if and when the
plaintiff recommences the action.
The plaintiff’s refiling the suit
is a contingent event that may not
occur. Thus, determining whether
the defendant is entitled to a
summary judgment after the
underlying suit has been dismissed
without prejudice would be
unnecessary and premature.
Id. at 696. This issue is without merit.
III
We next turn to CSJ’s contention that Payne’s action
against it should have been dismissed by the Circuit Court
because of the pending motion in Chancery Court.
Payne’s motion in Chancery Court regarding the
repurchase agreement brought that contract to the attention of
that court. The motion raises issues that necessarily involve an
analysis of that agreement and of CSJ’s alleged breach of its
terms; in fact, in a letter attached as an exhibit to his motion,
Payne asserts that CSJ had defaulted by failing to make the
agreed-upon payments under the contract. Thus, the Chancery
Court was asked by Payne to determine whether CSJ had committed
an actionable breach. Payne could have sought a determination
that the same breach entitled him to recover monetary damages.
While he did not do so, it is clear that the Chancery Court had
6
jurisdiction over a breach of contract claim seeking monetary
damages. See T.C.A. § 16-11-102.
We acknowledge that the breach of contract claim filed
by Payne in the instant action is not identical to the request
for declaratory and injunctive relief that he submitted to the
Chancery Court. However, as stated above, by raising the issue
of CSJ’s breach in the Chancery Court action, Payne placed before
that court the very same breach that is at the heart of his
action in the instant case.
The parties have argued competing theories in their
briefs as to whether the breach of contract claim was a mandatory
or permissive counterclaim in the Chancery Court action. We do
not believe that this is the issue. Regardless of the proper
classification of this claim under Rule 13, Tenn.R.Civ.P., the
fact remains that the issue common to Payne’s motion in Chancery
Court and his claim in the instant suit -- breach of the
repurchase agreement -- was actually placed before the Chancery
Court by Payne’s motion. Accordingly, Payne was precluded from
pursuing this issue in Circuit Court while the same issue was
pending in Chancery Court. The Circuit Court should have
declined jurisdiction due to the doctrine of former suit pending.
See Young v. Kittrell, 833 S.W.2d 505, 508 (Tenn.App. 1992) (the
doctrine of “former suit pending” holds that “when two courts
have concurrent jurisdiction of a particular subject matter, that
tribunal which first obtains jurisdiction retains it.”) When this
suit was filed in General Sessions Court and when it was resolved
in Circuit Court, there was, at both times, a claim pending in
7
another court in the same courthouse, filed by the same person,
seeking a finding identical to that sought in the instant action
-- that CSJ had committed an actionable breach of the repurchase
contract. This is the exact type of conflict that the doctrine
of prior suit pending is designed to prevent.
IV
We therefore hold that the Circuit Court erred in
failing to dismiss Payne’s claim against CSJ, and erred in
awarding Payne a judgment against CSJ. The Circuit Court’s
judgment as to the plaintiff’s suit against CSJ is hereby
reversed. The remainder of the judgment is affirmed. Costs on
appeal are taxed to the appellee. This case is remanded to the
trial court for the entry of an order dismissing Payne’s suit
against CSJ without prejudice to his right to refile same in
Chancery Court, with all costs below being assessed against
Payne.
__________________________
Charles D. Susano, Jr., J.
CONCUR:
_________________________
Houston M. Goddard, P.J.
_________________________
William H. Inman, Sr.J.
8