Lonnie H. Williams v. Estate of James P. Hollingsworth, III ( 2010 )

IN THE COURT OF APPEALS OF TENNESSEE
AT KNOXVILLE
Assigned on Briefs June 14, 2010
LONNIE H. WILLIAMS, ET AL. v. ESTATE OF JAMES P.
HOLLINGSWORTH, III, ET AL.
Appeal from the Chancery Court for Blount County
No. 01-196 Telford E. Forgety, Jr., Chancellor
No. E2009-01410-COA-R3-CV - FILED JULY 26, 2010
The original complaint in this case was filed by Lonnie H. Williams and his wife, Patricia
A. Williams (“the Williams”) against a neighboring landowner, James P. Hollingsworth, III,
following damage to their property allegedly caused by excavation, logging, and road
construction conducted on Hollingsworth’s properties. The Williams sought injunctive relief
(1) to prohibit Hollingsworth from further diverting surface water and debris onto their land,
and (2) to require restoration of their property. They also sought related damages.
Subsequently, Laurel Valley Investments, Inc., a Florida corporation, was added as a party
defendant after the Williams determined that the corporation owned part of the property on
which the erosion-causing activities occurred. The Williams alleged the joint and several
liability of Hollingsworth and Laurel Valley. Years into the case, the parties entered into an
agreed settlement that purported to settle their dispute. Later, the Williams filed a petition
for contempt that sought enforcement of the settlement order. At a bench trial, the court
permitted the Williams to take a non-suit as to the estate of Mr. Hollingsworth.1 The trial
court found Laurel Valley in violation of the court’s orders and awarded the Williams
damages of $194,915.60. Laurel Valley appeals. We affirm.
Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Chancery Court
Affirmed; Case Remanded
C HARLES D. S USANO, J R., J., delivered the opinion of the Court, in which D. M ICHAEL
S WINEY and J OHN W. M CC LARTY, JJ., joined.
Brian J. Hunt, Clinton, Tennessee, for the appellant, Laurel Valley Investments, Inc.
1
The record reflects that, after Mr. Hollingsworth died in November 2005, his estate was substituted
as a party defendant. The estate is not a party in this appeal.
Chris Ralls, Maryville, Tennessee, for the appellees, Lonnie H. Williams and wife, Patricia
A. Williams.
OPINION
I.
At the outset, we note that the record before us does not include a transcript or
statement of the evidence. The procedural history below and underlying facts are as reflected
in the technical record.
The parties’ properties are located in an area of Blount County known as Rich
Mountain Estates. The Williams own Tracts 4 and 8, Hollingsworth owned Tracts 6 and 7,
and Laurel Valley owns a tract generally located above both the Williams’ and
Hollingsworth’s properties and between Tracts 6-11 of Rich Mountain Estates and the
boundary of the Great Smoky Mountains National Park. In their October 2001 complaint,
the Williams claimed that activities on defendants’ lands resulted in siltation and excessive
water run-off that had eroded their land and adversely affected their rental cabin business.
Defendants denied liability for any damage to the Williams’ property or business. In
addition, Hollingsworth filed a counterclaim alleging that the Williams had encroached upon
his property by building a driveway, a sewer drain field and a berm on his property.
At a July 7, 2004 hearing, the parties announced that they had settled their dispute; the
trial court incorporated their agreement into an order of settlement entered on October 5,
2004. Generally, the agreement provided that within one year of the July 7 hearing,
encroachments by either party – by the Williams on Hollingsworth’s Tract 7 and by
defendants on the Williams’ Tract 8 – would be eliminated. Further, within the same period
of time, defendants would repair and/or improve the water drainage and siltation control
measures around a roadway constructed across their properties consistent with the “control
techniques” testified to by Eugene Baksa, a consulting engineer and expert witness retained
by the Williams. The parties agreed that upon completion of the remedial measures, they
would divide the costs of draining, removing silt, and resealing the banks of a pond located
on Tract 4 of the Williams’ property.
On November 14, 2005, the Williams returned to court in an effort to hold defendants
in contempt and to enforce the terms of the “settlement” order; the Williams essentially
contended that they had satisfied their obligations, but defendants had not. More specifically,
the Williams asserted that defendants had accomplished none of the remediation measures
recommended during Mr. Baksa’s testimony and, in fact, had never proposed any specific
remediation measures of their own. Following an October 11, 2006 hearing, the court
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concluded, as relevant to this appeal, that a more detailed plan for resolving the parties’
dispute was needed. In finding that defendants were not in contempt, the court stated:
That the Agreed Order sought to be enforced by the said Petition
[for contempt] . . . though not stated specifically, contemplates
a written set of engineering plans to define with particularity the
scope of work to be accomplished. Such plans were never
developed.
That without such engineering plans, the Agreed Order is
unenforceable as written.
As relevant to this appeal, the court clarified the parties’ obligations under the
settlement agreement by first ordering defendants, within 60 days, to obtain “written
engineering plans by a licensed civil engineer for the repair and/or improvement of the water
drainage and siltation control measures used on the road across their property in accordance
with the control techniques testified to by Eugene Baksa, expert witness for [the Williams]
at the July 7, 2004 hearing.” Next, defendants were ordered to “present said written
engineering plans to Eugene Baksa for review and approval” at their cost. Finally, the court
granted defendants until July 26, 2007, to implement the approved plans, to be followed by
completion of the repairs to the Williams’ pond as set out in the agreed order, “no later than
December 26, 2007.”
On December 10, 2008, the parties appeared at a hearing to review the defendants’
progress in complying with the October 11, 2006 order that clarified the terms of the agreed
settlement order. In its resulting order of January 15, 2009, the court found that there was
partial compliance with its order; to wit: (1) defendants had retained an engineering
company, Vision Engineering, to provide an engineering plan to address the problems created
by the activities conducted on defendants’ properties and their construction of a roadway to
access both of their properties; (2) Mr. Baksa had provided a written review of the plans; and
(3) defendants had eliminated the encroachment on the Williams’ Tract 8. With respect to
the remainder of the October 11 order, the court found as follows:
Defendants have had adequate time to implement the
engineering plans of Vision Engineering as modified by Mr.
Baksa’s comments and their failure to do so is a violation of the
order of this Court.
That before the Court [the Williams] have presented the estimate
of W. M. Vaughn, Inc., . . . and based on Mr. Vaughn’s
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estimate, along with the Court recognizing certain financial
obligations of [the Williams] to pay for part of the remediation
of the problem with their pond, finds that Mr. Vaughn’s estimate
in the amount of One Hundred Ninety-Four Thousand Nine
Hundred Fifteen Dollars Sixty Cents ($194,915.60) has been
properly presented to the Court.
The Court further finds that justice and fairness under the
circumstances of this case mandates that the Defendants should
have an opportunity to have their own contractor review and
either approve, modify, or submit their own estimate for the
implementation of the Vision Engineering plan.
It is, therefore, accordingly ORDERED that all matters brought
before the Court on December 10, 2008, are established for all
purposes and that the Defendants may, if they choose and
pursue, present a separate analysis of the cost of implementing
the Vision Engineering plan only, it being the Court’s intention
to enter a money judgment based either on Mr. Vaughn’s
estimate, on the estimate to be presented by the Defendant[s], or
upon such basis as the Court finds is reasonable and that it has
been properly presented.
It is further ORDERED that this matter is set for final hearing
on the issue of damages only for February 10, 2009, and that the
Defendants shall supply [the Williams’] counsel with any
estimate they intend to introduce at the hearing of this cause no
later than February 1, 2009.
The final hearing did not take place as scheduled. On February 11, 2009, the court
granted the motion of then-counsel for Laurel Valley, Irma G. Freestate and Jason
Beddingfield, to withdraw effective immediately. In addition to Ms. Freestate’s
hospitalization, counsel asserted, in support of their motion, that Laurel Valley had
“consistently failed to comply with or follow the direction of legal counsel.” On March 6,
2009, the court ordered the case reset and directed that “counsel for all parties are ordered
to attend [the] docket sounding.” Further, the court expressly directed that “Laurel Valley
. . . shall have until March 9, 2009 to retain counsel and have counsel appear as of record at
the docket sounding for purposes of setting this case.”
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The final hearing was held on May 5, 2009 and the resulting final order and judgment,
from which Laurel Valley now appeals, was entered on June 9, 2009. At the outset, the court
noted that Laurel Valley had appeared without counsel. At the conclusion of the hearing, the
court found that Laurel Valley had failed to comply with its previous orders by failing to
submit their own estimate of the cost of implementing the Vision Engineering plans and by
“filing pleadings without the assistance of counsel.” The court declined to permit counsel for
co-defendant Hollingsworth’s estate to present evidence on behalf of Laurel Valley. The
court granted judgment in favor of the Williams and awarded them $194,915.60 in damages
based on the cost of the previously admitted proposal of W.M. Vaughn, Inc., minus a portion
of certain repair costs that had been assigned to the Williams under the 2004 settlement
agreement.
Laurel Valley, through counsel, filed a timely notice of appeal.
II.
Laurel Valley presents two issues for our consideration:
1. Did the trial court err by refusing to allow counsel for the
Estate of Hollingsworth to represent Laurel Valley at the final
hearing and present evidence on its behalf?
2. Was the evidence sufficient to justify an award of
$194,915.60 in damages in favor of the Williams?
III.
In this non-jury case, we presume that the trial court’s findings of fact are correct
unless the evidence preponderates to the contrary. Tenn. R. App. P. 13(d); Nashville Ford
Tractor, Inc. v. Great Am. Ins. Co., 194 S.W.3d 415, 425 (Tenn. Ct. App. 2005). This
presumption does not attach to the trial court’s conclusions of law. Johnson v. Johnson, 37
S.W.3d 892, 894 (Tenn. 2001); Hill v. Tennessee Rural Health Improvement Ass’n, 882
S.W.2d 801, 802 (Tenn. Ct. App. 1994). Since there are no transcripts or statements of the
evidence, we are limited in our review of Laurel Valley’s issues to errors of law appearing
on the face of the trial court’s orders.
IV.
First, Laurel Valley asserts that the “chancery court is a court of equity and the failure
of the . . . court to allow [Laurel Valley] to have counsel at the [final] hearing was an abuse
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of its discretion.” Laurel Valley submits that it had evidence to show that it was in
compliance with the court’s previous orders and insists that Hollingsworth’s counsel, Mr.
Ailor, should have been allowed to represent Laurel Valley and present the evidence to the
court. The Williams respond that Laurel Valley has not shown it was prejudiced “by
anything other than its own neglect” in failing to meet court-ordered deadlines and to hire
counsel as directed.
In its final order and judgment, the trial court explained its rulings stemming from
Laurel Valley’s failure to hire counsel and otherwise comply with its orders. The court
stated:
The Court in exercising its power to control its docket notes that
this case has lingered on its docket over several years and
through a number of hearings. The Court rules that [Laurel
Valley] has failed to comply with this Court’s orders throughout
the duration of these proceedings and with most particular
reference to the Order of this Court dated January 15, 2009.
[Laurel Valley] has specifically failed to comply with paragraph
six of that Order [which] reads as follows:
The Court further finds that justice and
fairness . . . mandates that [Laurel Valley] should
have an opportunity to have their own contractor
review and either approve, modify, or submit their
own estimate for the implementation of the Vision
Engineering plan.
[Laurel Valley] has failed to take advantage of the leniency
shown by the Court in that Order.
Attorney William Ailor, counsel for the [Estate of
Hollingsworth] requested that he be allowed to represent [Laurel
Valley] and to present evidence on its behalf which the court
denied based on the prejudice to [the Williams] in this case
caused by [Laurel Valley] filing pleadings without the assistance
of counsel which has lulled [the Williams] and their counsel into
believing [that] [Laurel Valley] would not be represented and
could not present proper evidence without counsel, and that
attempting to hire counsel after the hearing had commenced
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would unduly prejudice [the Williams] who have come into this
Court with clean hands.
The Court finds that [the Williams] properly relied on the status
of the record on this case, and that [Laurel Valley] has failed to
put itself in a posture to present evidence in proper form.
In support of its position that the trial court’s ruling was an abuse of discretion, Laurel
Valley has attached to its appellate brief its answers to interrogatories and the request for
production of documents propounded by the Williams in preparation for the final hearing.
Generally speaking, the discovery responses include various subcontractors’ rates and
proposals for work to be performed consistent with the approved engineering plan, and
details of “work completed” and “work to be completed.” The documents are signed by Mr.
Sandy Segall, Laurel Valley’s corporate representative, and reflect that they were sent to the
Williams’ counsel and the trial court clerk’s office on April 28 and 29, 2009, five or six days
before the final hearing. Although Laurel Valley acknowledges that these discovery
documents are not otherwise before us, it attributes this omission to the trial court: “These
filings were not included by the trial court in the record on appeal . . . .” As the Williams
correctly note, however, Tenn. R. App. P. 24(a) expressly excludes from the matters properly
includable in the record on appeal “all papers relating to discovery . . . .” While Rule 24
further provides a procedure whereby a party may designate that matter specifically excluded
by Rule 24, be included in the record, it does not appear that Laurel Valley utilized this
procedure in this case. In short, the filings on which Laurel Valley seeks to rely to
demonstrate error by the trial court – in refusing to permit co-defendant’s counsel to present
such evidence on its behalf, in establishing its compliance with the court’s orders, and in
determining the appropriate amount of damages – are not properly before this court. The
absence of these matters is not due to any failure on the part of the trial court or its clerk;
rather it is due to the failure of Laurel Valley to take the necessary steps to ensure that a
proper record was prepared for our use.
More significantly, perhaps, it appears that the trial court disallowed the “evidence”
at issue – the discovery responses – in part because they were signed and submitted by Laurel
Valley’s corporate representative. To bolster its contention that the trial court should have
allowed Mr. Ailor to represent it, Laurel Valley argues that representation by counsel was
“essential in order for [Laurel Valley] to present its case and demonstrate its compliance with
prior Court orders.” At the same time, however, it acknowledges that its “corporate
representative Sandy Segall was not licensed to practice law in the state of Tennessee and
therefore could not present evidence on [its] behalf.” Laurel Valley correctly states the law.
In this state, “a corporation is an artificial entity, separate from the corporation’s officers and
shareholders. Consequently, Tennessee statutes which permit a party to a lawsuit to represent
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himself in the lawsuit are not applicable to corporations. . . .” Humphreys v. Breakstone,
No. W1999-02502-COA-R3-CV, 2001 WL 99570 at * 8 (Tenn. Ct. App. W.S., filed Jan. 30.
2001)(citing Old Hickory Eng. & Mach. Co. v. Henry, 937 S.W.2d 782, 785 (Tenn. 1996)).
For this reason, pleadings, motions and “other papers” submitted on behalf of a corporation
require the signature of counsel. In the present case, the discovery responses signed only by
Laurel Valley’s corporate representative are essentially deemed unsigned. Id. at *9; see also
Tenn. R. Civ. P. 11. Presumably, its inability to prepare and present its case without an
attorney is precisely the reason that the trial court directed Laurel Valley to hire counsel well
in advance of the final hearing. In any event, we are unpersuaded that the trial court’s refusal
to allow Mr. Ailor to present the discovery documents was inequitable given the
corporation’s insistence on proceeding to the final hearing unrepresented despite the trial
court’s express order directing it to hire counsel nearly two months earlier.
Again, absent a hearing transcript or statement of the evidence, we rely on the trial
court’s findings of fact. Moreover, in the absence of a transcript or statement of the evidence
“there is a conclusive presumption that there was sufficient evidence before the trial court
to support its judgment, and this Court must therefore affirm the judgment.” Coakley v.
Daniels, 840 S.W.2d 367, 370 (Tenn. Ct. App. 1992). Nothing in the limited record before
us preponderates against the trial court’s factual conclusion that Laurel Valley “failed to put
itself in a posture to present evidence in a proper form.” Further, we find no error of law in
the trial court’s ruling that essentially declined to allow Laurel Valley to proceed in violation
of its previous order directing the corporation to hire counsel prior to the final hearing. We
further note that Mr. Ailor never made a written or oral appearance as hired or retained
counsel for Laurel Valley and he never filed any papers purporting to be the corporation’s
counsel. Nothing in the record before us shows an abuse of discretion by the trial court.
V.
Next, Laurel Valley challenges the award of damages as excessive. In a continuation
of its previous argument, Laurel Valley asserts that it was prevented from presenting
evidence that it hired contractors who reviewed the engineering plans and actually performed
the required work for a total of $4,452.08, a fraction of the damages awarded.
The settlement agreement allocated to defendants the cost of “repair and/or
improve[d] . . . water drainage and control measures” under an approved engineering plan.
As discussed, we have already concluded that the trial did not abuse its discretion in rejecting
Laurel Valley’s attempt to have Mr. Ailor speak for it, during the course of the final hearing,
to present its discovery responses as proof of the costs of implementing the plan. As a result,
the only evidence properly before the trial court on the question of damages – in this case,
the cost of implementing the Vision Engineering plan – was the estimate of Vaughn, Inc.,
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provided by the Williams at an earlier hearing. The trial court used the Vaughn estimate as
the basis for the damages awarded to the Williams. There is nothing on the face of the trial
court’s orders demonstrating that the trial court awarded excessive damages.
Lastly, Laurel Valley asserts that the court erred in failing to divide the cost of
repairing the Williams’ pond as provided in the parties’ settlement agreement. It concludes
that under the terms of the agreement, “each party would be responsible for 50% of the costs
for repair to [the Williams’] pond.” It asserts that the trial court erred in failing to make each
of the parties responsible for $12,500. The Williams respond simply that because Laurel
Valley breached the terms of the agreement and related court orders, it is no longer binding.
We think both parties misread the agreement and misapprehend the trial court’s calculation
of damages.
Regarding the division of the pond-related costs, the settlement agreement provides,
in relevant part, as follows:
After the plans and specified control measures therein as
referred to in Paragraph 2 are completed, the parties will split
the costs of repairs to the pond on [the Williams’] Lot 4
including draining, removing silt, and resealing pond banks with
Bentonite as follows: Up to and including the cost of
$10,000.00, 75% of the cost will be borne by the Defendants,
25% by [the Williams]; the cost above $10,000.00 will be split
50/50 by the parties.
The total cost of the proposal submitted by Vaughn, Inc., was $205,392.00 2 . Of this
amount, $26,000 was attributed to the pond work. Applying the above-cited division of
costs, of the first $10,000, 75% or $7,500 is assessed to Laurel Valley, while 25% or $2,500
is assessed to the Williams. Above the initial $10,000, a balance of $16,000 remains, and
this cost is divided equally at a cost of $8,000 to Laurel Valley and $8,000 to the Williams.
This results in a division of costs under the agreement of $15,500 to Laurel Valley and
$10,500 to the Williams. When the Williams’ costs are subtracted from the amount of the
entire proposal, it can be seen that the trial court correctly calculated the amount of damages
assessed against Laurel Valley: $205,392 less $10,500 = $194,892.
2
To simplify the calculations, we have rounded the actual figure of $205,391.60 up to the nearest
whole dollar.
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Based upon the limited record, and based upon the exhibits3 relied upon by the trial
court, we find no error in the trial court’s calculations.
VI.
The judgment of the trial court is affirmed. Costs on appeal are taxed to the appellant,
Laurel Valley Investments, Inc. This case is remanded to the trial court, pursuant to
applicable law, for enforcement of the court’s judgment and the collection of costs assessed
below.
_________________________________
CHARLES D. SUSANO, JR., JUDGE
3
These exhibits are in the record.
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