Wilfong v. Kaelin

1

JAY R. WILFONG v. CHARLES R. KAELIN, JR.

No. M2021-01007-COA-R9-CV

Court of Appeals of Tennessee, Nashville

March 1, 2023

Session November 2, 2022

Appeal from the Chancery Court for Wilson County No. 08260 Charles K. Smith, Chancellor

This matter is before this court on a Tennessee Rule of Appellate Procedure Rule 9 interlocutory appeal to determine "whether the trial court erred in determining that it cannot order a new trial on the issue of punitive damages only." Under Tennessee Rule of Civil Procedure 59.07 "[a] new trial may be granted to all or any of the parties and on all or part of the issues in an action ...." Accordingly, this court concludes that trial courts may order new trials addressing the limited matter of punitive damages without need of retrying the entirety of the parties' dispute.

Tenn R. App. P. 9 Interlocutory Appeal; Judgment of the Chancery Court Vacated; Case Remanded

Angello L. Huong, Lebanon, Tennessee, for the appellant, Jay R. Wilfong.

John S. Hicks, Nashville, Tennessee, and Sonya S. Wright, Murfreesboro, Tennessee, for the appellee, Charles R. Kaelin.

JEFFREY USMAN, J., delivered the opinion of the court, in which FRANK G. CLEMENT JR., P.J., M.S., and W. NEAL MCBRAYER, J., joined.

OPINION

JEFFREY USMAN, JUDGE

I.

The trial court found tension between this Court's decision in Westmoreland v. Tolbert, No. 89-125-II, 1990 WL 48464 (Tenn. Ct. App. Apr. 11, 1990) and Tennessee Rule of Civil Procedure 59.07. The trial court determined that based upon Westmoreland, Tennessee trial courts cannot address errors arising with regard to punitive damages without ordering a new trial for the whole case, including any compensatory claims. As noted in our order granting permission for an interlocutory appeal pursuant to Rule 9 of the Tennessee Rules of Appellate Procedure, the issue before this court is limited to the question of "whether the trial court erred in determining that it cannot order a new trial on the issue of punitive damages only."

As background in framing the legal issue before this Court, the facts of the present appeal relate to agreements connected with a transfer of land in Wilson County, Tennessee. Appellant Jay Wilfong sold land to CRK Real Estate, LLC ("CRK"). CRK is a singlemember LLC of which Appellee Dr. Charles R. Kaelin, Jr., is the sole member. Dr. Kaelin executed a Promissory Note and Deed of Trust both as the sole member of CRK and in his individual capacity as a guarantor.

The Promissory Note and Deed of Trust required Mr. Wilfong to be notified if the property was transferred and allowed Mr. Wilfong to mandate accelerated payment of the amount owed on the property should a transfer occur. CRK transferred the property to Mount Juliet Investor, LLC. According to Mr. Wilfong, no notice was provided to him of this transfer. Mr. Wilfong asserts, in addition to failing to disclose the transfer, that Dr. Kaelin actively concealed that transaction and subsequent related transactions. That concealment included, according to Mr. Wilfong, false information being provided in connection with Dr. Kaelin taking additional steps that undermined Mr. Wilfong's interests such as falsely denying that the property was used by CRK in connection with refinancing.

Mr. Wilfong filed suit, alleging breach of contract, conspiracy, and fraud. He sought compensatory and punitive damages. A four-day jury trial was conducted in September 2017. The jury determined that Dr. Kaelin breached the parties' contract and committed fraud. The jury awarded Mr. Wilfong $750,000 in compensatory damages and determined Mr. Wilfong was entitled to punitive damages. The parties presented additional evidence during the punitive damages phase of the trial. The jury awarded Mr. Wilfong an additional $900,000 in punitive damages.

After the conclusion of the jury proceedings, the parties filed various motions, including Dr. Kaelin's Motion to Disapprove Punitive Damages and/or Remittitur. At the hearing, the parties and trial court discussed whether the punitive damage phase of the trial had complied with Hodges v. S.C. Toof &Co., 833 S.W.2d 896 (Tenn. 1992).

The Court: And I really don't know what I did in May, but I'm of the opinion that I need to have a jury trial on punitive damages only and follow all those steps. And I forgot the case. . .

Mr. Huong: Hodges.

Mr. Hicks: Hodges.

The Court: The Hodges case sets out about five, six, ten things that ha[ve] to be covered. I think to keep this from going upstairs and coming back and wasting more time it would be better for us just to get a jury, because I don't think - I'm of the opinion all those items were not addressed, and they should be addressed individually and specifically. So we're going to have a jury trial on punitive damages, only on punitive damages. Liability and everything else is settled. If I hadn't have had a jury, I would have just let you come in and put these items on before me and I'd make a decision. That's what I did, and that's what I had a few days ago. . .

Ms. Wright: . . . So you're just basically saying you're ordering us a new trial as to the punitive damage part.

The Court: Yes. Do you understand it? . . . And then if you have something else after that to bring up, bring it up, but we need to get the trial right first.... Follow Hodges and then we'll let the jury make a decision on how much punitive damages, if any punitive damages, and then any other things that maybe went on with the trial or the hearing or y'all felt like we made - the jury or myself made a mistake, you could bring it up, and we'll address those things. Let's clean up the trial now without -that's why I wanted y'all in here.... I'm just saying to address any other issues.

Ms. Wright: After the new trial?

The Court: Yes.

Mr. Hicks: So do the punitive damages phase and then address all the post trial issues following that?

The Court: Yes. And put that in the order that post-trial issues will be addressed later.

The trial court entered an Order on October 17, 2018, granting a new trial as to the amount of punitive damages only. The trial court stated

1. The Court is concerned that the proof that was submitted in this case as to the punitive damages was not in compliance with the dictates of the Tennessee Supreme Court in Hodges v. S.C. Toof &Co., 833 S.W.2d 896 (Tenn. 1992) and its progeny. As a result, the Court ORDERS a new trial shall be conducted only as to the amount of punitive damages to award;

2. Following the conclusion of the new trial as to the punitive damages, the Court will address any further post-trial motions....

Dr. Kaelin objected. He asserted that such an approach was unduly prejudicial to him and that all issues must be retried based upon Westmoreland v. Tolbert, No. 89-125-II, 1990 WL 48464, at *9 (Tenn. Ct. App. Apr. 11, 1990). The trial court ordered additional briefing "on the sole issue of whether a new trial can be held on the issue of punitive damages only, or whether a full new trial must be granted as to all issues, including but not limited to, both compensatory and punitive damages and liability." Both parties filed briefs for the trial court's consideration.

In his brief before the trial court, Mr. Wilfong argued that Tennessee Rule of Civil Procedure 59.07 allows a trial court to order a new trial as to all or part of the issues, including the sole issue of punitive damages. Mr. Wilfong also relied in his brief upon multiple cases from the Tennessee Court of Appeals and the Tennessee Supreme Court where Tennessee appellate courts have remanded a case for a new trial on the issue of punitive damages only. Disagreeing with Mr. Wilfong, Dr. Kaelin argued that a new trial could not be limited to the question of punitive damages but instead must be on all issues in accordance with the Westmoreland decision.

In a September 30, 2019 order, the trial court agreed with Dr. Kaelin and concluded that it could not order a new trial on the sole issue of punitive damages only, stating,

The parties submitted briefs as ordered by the Court on the sole issue of whether a new trial can be held on the issue of punitive damages only, or whether a full new trial must be granted as to all issues including, but not limited to, both compensatory and punitive damages and liability. The Court concludes that it cannot order a new trial on the issue of punitive damages only and therefore ORDERS that a full new trial is GRANTED as to all issues, including, but not limited to, both compensatory and punitive damages and liability.

All other matters are reserved, pending further order.

Accordingly, believing itself bound to do so, the trial court granted Dr. Kaelin's motion for a new trial as to all issues, including liability, compensatory damages, and punitive damages.

Mr. Wilfong sought permission for an interlocutory appeal. In an August 23, 2021 order, the trial court granted Mr. Wilfong's motion for an interlocutory appeal finding

a conflict of law between Rule 59.07 of the Tenn. R. Civ. Proc. (which allows the trial court to order a re-trial on particular issues of a case) and the case of Westmoreland vs. Tolbert, 1990 WL 48464 (Tenn. Ct. App. 1990), previously cited by [Dr. Kaelin] in a prior hearing which suggests a new trial on only the issue of punitive damages in front [of] a new jury might create prejudice against the Defendant.

In pursuing an interlocutory appeal, the parties stated the issue to be presented as: "Does the case of Westmoreland vs. Tolbert, 1990 WL 48464 (Tenn. Ct App. 1990) prohibit the trial court from ordering a new trial before a different jury on the issue of punitive damages only." We granted Mr. Wilfong's request for interlocutory appeal to consider "whether the trial court erred in...