Day on Torts
Where defendant’s counterclaim asserted the conversion of its real property through a transfer that “was not supported by consideration, was commercially unreasonable, and made under economic duress,” and that alleged conversion occurred less than ten years ago, summary judgment in favor of plaintiff was vacated. Summary judgment on defendant’s counterclaim for civil conspiracy was likewise vacated.
Bryan College v. National Association of Christian Athletes, No. E2021-00931-COA-R3-CV, 2023 WL 128275 (Tenn. Ct. App. Jan. 9, 2023) arose out of a transfer of property to Bryan College from National Association of Christian Athletes (NACA). NACA had owned a Christian camp with extensive facilities for many years. After allegations of misconduct were made in 2009 against one of NACA’s founders, NACA began “to pursue a change to leadership with the help of Bryan College.” Several members of the NACA board were replaced with individuals associated with Bryan College, including Steven Livesay, who was the president of Bryan College and became the chairman of NACA’s board.
In 2016, NACA’s board passed a motion to transfer ownership of the camp from NACA to Bryan College. As part of the deal, NACA would retain use of the camp and Bryan College would assume the debt owed on the camp ($920,000). At the time, the camp appraised for $7 million. When contemplating the transfer, NACA was given a lease that said it would only have to pay rent during years that Bryan College failed to end “its fiscal year in the black.”
On the day the resolution to approve the transfer passed, the board discussed the fact that Livesay now had a conflict of interest and board members with no affiliation to Bryan College needed to be added. That same day, Livesay’s assistant sent the board members a second lease, which required rent payments of $10,000 per month regardless of Bryan College’s financial status or any improvements made to the property. The next day, a quitclaim deed transferring the property was signed.
In 2018, problems arose. NACA erected a new building and refused to pay additional payments to Bryan College, “citing an oral agreement that the cost of the building would offset any rent owed.” Bryan College eventually filed suit for possession and unpaid rent, and NACA filed a counter-complaint asserting claims for conversion, civil conspiracy, and contract-related claims. The trial court granted summary judgment in favor of Bryan College on all claims based on the statute of limitations and the intracorporate conspiracy immunity doctrine, but on appeal, that ruling was vacated.
Conversion is an intentional tort with a varying statutes of limitation based on the property being converted. Conversion of real property, which would include the rent payments, is subject to a three-year statute of limitations. (internal citation omitted). Conversion of real property, which would include the camp itself, does not have a statute of limitations in the Tennessee Code and is thus subject to a ten-year limitations period. (internal citation omitted). Based on the years the rent payments were made and the year of the property transfer, the conversion claims here were not time-barred.
Further, the Court of Appeals found that the counter-complaint adequately stated a claim for conversion. The Court noted:
NACA alleged that the transfer of [the camp] was not supported by consideration, was commercially unreasonable, and made under economic duress. NACA further claimed that the subsequent rental payments were made pursuant to Lease 2, which was not approved by NACA’s Board but was signed by Mr. Berger, who was affiliated with Bryan and evidenced a conflict of interest. Construing these allegations as true, as is appropriate in our review of the trial court’s decision on a motion to dismiss, we conclude that dismissal was not warranted at this stage of the proceeding based upon failure to state a claim upon which relief can be granted.
Likewise, the Court found that the civil conspiracy claim should not have been dismissed. “A claim for civil conspiracy requires an underlying predicate tort allegedly committed pursuant to the conspiracy.” (internal citation omitted). The trial court had dismissed this claim based on its dismissal of the conversion claim and its ruling that the intracorporate conspiracy immunity doctrine applied, which states that “wholly intracorporate conduct does not satisfy the plurality requirement necessary to establish an actional conspiracy claim.” (internal citation omitted). the Court vacated dismissal, explaining:
The allegations contained in the amended complaint in support of this claim are sufficient to withstand a motion to dismiss. Further, this claim is not barred by the intracorporate conspiracy immunity doctrine as found by the trial court when NACA alleged facts to establish that the conspiracy involved agents or directors acting for both corporations and that those involved in the conspiracy acted outside the scope of their employment and for their own personal interests. The claim was also not untimely as pled based upon NACA’s allegation of the ongoing conspiracy.
Undergoing a similar analysis with the remaining claims, the Court of Appeals vacated the dismissal and summary judgment in favor of Bryan College.
This opinion was released 4 months after oral arguments in this case.
Note: Chapter 20, Section 3 and Chapter 22, Section 4 of Day on Torts: Leading Cases in Tennessee Tort Law has been updated to include this decision.
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