                IN THE COURT OF APPEALS OF TENNESSEE
                           AT KNOXVILLE
                                 April 16, 2013 Session

      PHILLIP BURT v. DONALD L. MACTAVISH AND BARBARA W.
                        MACTAVISH ET AL.

                    Appeal from the Circuit Court for Knox County
                       No. 1-555-11     Dale Workman, Judge


                No. E2012-01293-COA-R3-CV-FILED-JUNE 21, 2013


This case presents the issue of whether the trial court properly dismissed the Appellees,
Donald and Barbara MacTavish, as parties from the lawsuit below because Plaintiff’s
complaint failed to state a claim upon which relief could be granted pursuant to Rule 12 of
the Tennessee Rules of Civil Procedure. Phillip Burt, Plaintiff below, appeals the trial
court’s dismissal of all claims against Donald and Barbara MacTavish. We vacate the trial
court’s order granting dismissal and remand for further proceedings.

        Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Circuit Court
                             Vacated; Case Remanded

T HOMAS R. F RIERSON, II, J., delivered the opinion of the Court, in which D. M ICHAEL
S WINEY and J OHN W. M CC LARTY, JJ., joined.

Curtis W. Isabell, Clinton, Tennessee, for the appellant, Phillip Burt.

Shelley S. Breeding and Bradley L. Henry, Knoxville, Tennessee, for the appellees, Donald
and Barbara MacTavish.

                                         OPINION

                          I. Factual and Procedural Background

       Mr. Burt filed a complaint on October 26, 2011, against Donald and Barbara
MacTavish; Richard Cook; Tennessee Building and Moisture Analyst, Inc. (“TBMA”);
Operation Reconstruction, Inc.; Realty Resource Systems, Inc.; and William Gallaher. In his
complaint, Mr. Burt stated that he owns and operates a business called Cobra Stucco
Retrofits and Restoration and that the MacTavishes hired him to perform repair work to their
home in Mariners Pointe subdivision in Knox County. Mr. Burt alleged that despite
knowledge that their home had water intrusion around the windows, the MacTavishes,
against Mr. Burt’s advice, elected to make repairs without replacing the windows. Mr. Burt
also stated that the MacTavishes later hired Mr. Cook and his company, TBMA, to conduct
a stucco follow-up report on their home. According to Mr. Burt, Mr. Cook and TBMA
opined in said report that the remedial work done by Mr. Burt was substandard.

       Mr. Burt further averred in his complaint that the MacTavishes then hired Defendant
Operation Reconstruction, Inc., to replace the windows in their home and perform other
repairs to remedy the alleged substandard work performed by Mr. Burt. As claimed by Mr.
Burt, Operation Reconstruction told the MacTavishes that their work confirmed the findings
of Mr. Cook and TBMA. Mr. Burt alleged that Donald and Barbara MacTavish, Richard
Cook, TBMA, and Operation Reconstruction:

       [I]n April and May 2011 told several neighbors of Donald and Barbara
       MacTavish at Mariners Pointe Subdivision that Cobra Stucco Retrofits and
       Restoration and Phillip Burt’s work was substandard in an attempt to convince
       the neighbors not to allow Phillip Burt to perform any work that was needed
       at their homes.

Mr. Burt also alleged that Mr. MacTavish was the President of the Mariners Pointe
Homeowners Board and in that capacity, met with Mr. Gallaher and other agents of Realty
Resource Systems, Inc., regarding Mr. Burt and his business on May 3, 2011.

       On May 3, 2011, an employee of Realty Resource Systems, Inc., sent an email to all
property owners in the Mariners Pointe subdivision. This communication included a quote
from Bill Gallaher, stating, “This email is to inform you that Cobra Stucco is no longer on
the approved list of vendors for Mariners Pointe homeowners, due to issues that have arisen
in the neighborhood concerning their work.” Mr. Burt asserted in his complaint that the
statements made to Mariners Pointe homeowners by defendants and in the email referenced
above were “false, incorrect, misleading, untrue and defamatory of the character and
reputation of the Plaintiff,” and that the statements were made with knowledge, reckless
disregard, or negligence regarding the truth thereof. According to the pleadings, the
statements were made with knowledge that these neighbors had either received quotes for
repair work from or had repair work done by Mr. Burt, and were made with the intent to
cause the other homeowners to refuse to do business with Mr. Burt. Mr. Burt claimed that
he was damaged thereby.

      Answers and motions were filed by various defendants, including motions seeking
dismissal pursuant to Tennessee Rule of Civil Procedure 12 for failure to state a claim upon

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which relief could be granted. The MacTavishes filed a motion seeking sanctions pursuant
to Rule 11 of the Tennessee Rules of Civil Procedure. In their motion, the MacTavishes
asserted that they had a prior lawsuit pending against Mr. Burt in Knox County Circuit Court,
which case was assigned the docket number 1-130-11. According to the motion, Mr. Burt
filed an answer and counter-complaint in the previous lawsuit, which contained the same
allegations that the MacTavishes had made defamatory statements to neighbors and others
as were made in the present lawsuit. The MacTavishes further asserted that their attorney
had sent a letter to Mr. Burt’s attorney regarding the duplicate claims pursuant to Tennessee
Rule of Civil Procedure 11.03. A copy of the letter was attached to their motion. The
MacTavishes never filed a motion seeking dismissal pursuant to Tennessee Rule of Civil
Procedure 12.

        Following a hearing on March 30, 2012, the trial court found that Mr. Burt’s counsel
violated Rule 11 by filing identical causes of action regarding defamation and that the
MacTavishes were therefore entitled to recover their costs incurred in the present lawsuit
until such time as Mr. Burt’s counsel dismissed the defamation claims in the present action.
The court noted that it would hear proof on those costs on May 4, 2012.

       At the May 4, 2012 hearing, the trial court heard various discovery motions, after
which counsel for the MacTavishes raised the issue of costs pursuant to the grant of their
Rule 11 motion. The court questioned counsel regarding whether the defamation claims
against the MacTavishes had been dismissed, and Mr. Burt’s counsel replied that he had
dismissed his counter-complaint in the prior lawsuit and “kept them in this one.” The court
then ruled that the MacTavishes would be dismissed as parties from the present action. The
court explained that in this case:

       [Y]ou [counsel for Mr. Burt] filed a separate libel and slander case and sued
       them again, still with your counter-complaint pleading in the first case. And
       I told you you couldn’t do that, and now you want to leave them in the second
       case. All right. To my knowledge, your pleadings never alleged his clients
       said anything. You alleged the statements were made by the other defendants.
       If you’re alleging something separate as to his client, that’s not alleged against
       them, I haven’t seen it yet. The court dismisses them from the second case as
       a defendant.

       ...

       Counsel, I’m going to agree with you, they’re not in that case, you’ve
       nonsuited in the libel case, but here in this case, I’m ruling in this case that
       there’s nothing in the pleadings that sets forth a short and plain statement of

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       the facts showing the MacTavishes either libel[ed] or slandered your clients.
       Under Rule 54, dismissing your counterclaim based on that.

      The court subsequently entered a written order memorializing its ruling, which
provided in relevant part:

       [T]he Court finds that the Plaintiff brought the same claims against Defendants
       Donald L. MacTavish and Barbara W. MacTavish in this cause and in the
       cause styled Donald L. MacTavish and Barbara W. MacTavish vs. William E.
       Long, et al, Knox County Circuit Court No. 1-130-11, has not made a short
       and plain statement of facts alleging that said Defendants libeled or slandered
       the Plaintiff, and the Court therefore finds that there is no just reason for delay
       in directing entry of a final judgment as to said claims.

       ...

       The Plaintiff’s action herein against Defendants Donald L. MacTavish and
       Barbara W. MacTavish shall be, and same hereby is, DISMISSED with full
       prejudice. The Court directs entry of final judgment as to said claims pursuant
       to T.R.C.P. 54.02, upon its specific finding that there is no just reason for
       delay.

Mr. Burt timely appealed.

                                     II. Issues Presented

        The parties present the following issues for our review, which we have restated for
clarity:

       1.     Whether the trial court erred in dismissing with prejudice Mr. Burt’s claims
              against the MacTavishes in this matter pursuant to Tennessee Rule of Civil
              Procedure 11.

       2.     Whether the trial court erred in dismissing Mr. Burt’s claims against the
              MacTavishes pursuant to Tennessee Rule of Civil Procedure 12 for Mr. Burt’s
              alleged failure to make a short and plain statement of facts regarding the
              MacTavishes’ libel or slander of Mr. Burt.

       3.     Whether this appeal is frivolous and the MacTavishes should be awarded their
              attorney’s fees as a sanction.

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                        III. Basis for Dismissal and Standard of Review

       Prior to this Court beginning its analysis of whether dismissal of all claims against the
MacTavishes in this lawsuit was proper, we must determine whether the claims were
dismissed pursuant to Tennessee Rule of Civil Procedure 11 or 12. Although the
MacTavishes did not file a motion to dismiss pursuant to Rule 12, they did file a motion for
sanctions pursuant to Rule 11. Initially, the trial court stated that because Mr. Burt’s counsel
violated Rule 11 by filing identical causes of action regarding defamation, the MacTavishes
were entitled to recover their costs incurred in the present lawsuit until such time as Mr.
Burt’s counsel dismissed the defamation claims. The court did not, however, expressly
dismiss those claims by its order. The court noted that it would hear proof regarding those
costs on May 4, 2012.

        At the hearing on May 4, the court ordered the claims against the MacTavishes
dismissed upon learning that Mr. Burt had failed to dismiss them in the current action. The
court explained that it was basing the dismissal on its finding that “there’s nothing in the
pleadings that sets forth a short and plain statement of the facts showing the MacTavishes
either libel[ed] or slandered” Mr. Burt. Further, the subsequent written order is the only
order of the trial court which explicitly dismissed these claims with prejudice, based on a
finding that Mr. Burt had “not made a short and plain statement of facts alleging that said
Defendants libeled or slandered” him.1 Mr. Burt argues that the trial court relied on Rule 12
in dismissing these claims while the MacTavishes contend that the court’s dismissal was a
sanction under Rule 11. Upon a careful review of the record, we agree with Mr. Burt.

        The distinction between the dismissal of claims as a sanction under Rule 11 and a
Rule 12 dismissal for failure to state a claim upon which relief can be granted is significant
because the standards of review related to each are markedly different. Our review of a trial
court’s ruling on a motion made pursuant to Rule 11 is under an abuse of discretion standard.
Hooker v. Sundquist, 107 S.W.3d 532 (Tenn. Ct. App. 2002). As this Court has previously
stated:

        Our review of Rule 11 decisions is governed under this deferential standard
        since the question of whether a Rule 11 violation has occurred requires the
        trial court to make highly fact-intensive determinations regarding the
        reasonableness of the attorney’s conduct.


        1
          Our Supreme Court has ruled that a trial court has the authority to dismiss claims sua sponte and
in the absence of a motion to dismiss filed pursuant to Rule 12 when the court is of the opinion that the
complaint fails to state a claim upon which relief may be granted, although such practice is not to be
encouraged. Huckeby v. Spangler, 521 S.W.2d 568, 571 (Tenn. 1975).

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Id. at 535. The trial court’s decision under Rule 11 will not be reversed unless the decision
“has no basis in law or fact and is therefore arbitrary, illogical, or unconscionable.” Id.

       A dismissal pursuant to Tennessee Rule of Civil Procedure 12 has a significantly
different standard of review. As our Supreme Court has explained:

       A Rule 12.02(6) motion to dismiss only seeks to determine whether the
       pleadings state a claim upon which relief can be granted. Such a motion
       challenges the legal sufficiency of the complaint, not the strength of the
       plaintiff’s proof, and, therefore, matters outside the pleadings should not be
       considered in deciding whether to grant the motion. In reviewing a motion to
       dismiss, the appellate court must construe the complaint liberally, presuming
       all factual allegations to be true and giving the plaintiff the benefit of all
       reasonable inferences. It is well-settled that a complaint should not be
       dismissed for failure to state a claim unless it appears that the plaintiff can
       prove no set of facts in support of his or her claim that would warrant relief.
       Great specificity in the pleadings is ordinarily not required to survive a motion
       to dismiss; it is enough that the complaint set forth “a short and plain statement
       of the claim showing that the pleader is entitled to relief.”

Trau-Med of Am., Inc. v. Allstate Ins. Co., 71 S.W.3d 691, 696 (Tenn. 2002)(internal
citations omitted).

        Because the trial court concluded that Mr. Burt’s complaint failed to state a claim
upon which relief could be granted pursuant to Rule 12.02(6), we must determine whether
that decision was correct using the appropriate analysis, as elucidated in Trau-Med. The
complaint must be construed liberally, presuming all factual allegations to be true and giving
Mr. Burt the benefit of all reasonable inferences. See Id. The claims against the
MacTavishes should not be dismissed unless it appears that Mr. Burt can prove no set of
facts in support of his claim that would warrant relief. See Id. Mr. Burt is only required to
set forth a “short and plain statement of the claim,” showing that he is entitled to relief. See
Id. We review the trial court’s legal conclusions regarding the adequacy of the complaint de
novo. Webb v. Nashville Area Habitat for Humanity, Inc., 346 S.W.3d 422, 426 (Tenn.
2011).

                         IV. Tennessee Rule of Civil Procedure 12

       As our Supreme Court has explained:

       To be sufficient and survive a motion to dismiss, a complaint must not be

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          entirely devoid of factual allegations. Tennessee courts have long interpreted
          Tennessee Rule of Civil Procedure 8.01 to require a plaintiff to state “‘the
          facts upon which a claim for relief is founded.’” A complaint “need not
          contain detailed allegations of all the facts giving rise to the claim,” but it
          “must contain sufficient factual allegations to articulate a claim for relief.”
          “The facts pleaded, and the inferences reasonably drawn from these facts, must
          raise the pleader’s right to relief beyond the speculative level.”

Id. at 427 (internal citations omitted).

          In discussing an action for defamation in particular, the Tennessee Supreme Court has
stated:

          [D]efamation . . . includes both slander and libel. A libel action involves
          written defamation and a slander action involves spoken defamation. The basis
          for an action for defamation, whether it be slander or libel, is that the
          defamation has resulted in an injury to the person’s character and reputation.

Quality Auto Parts Co., Inc. v. Bluff City Buick Co., Inc., 876 S.W.2d 818, 820 (Tenn. 1994).
Regarding the elements of such a claim, the Court has further explained:

          To establish a prima facie case of defamation in Tennessee, the plaintiff must
          establish that: 1) a party published a statement; 2) with knowledge that the
          statement is false and defaming to the other; or 3) with reckless disregard for
          the truth of the statement or with negligence in failing to ascertain the truth of
          the statement. “Publication” is a term of art meaning the communication of
          defamatory matter to a third person.

Sullivan v. Baptist Mem’l Hosp., 995 S.W.2d 569, 571 (Tenn. 1999)(internal citations
omitted).

          In his amended complaint, Mr. Burt alleged, inter alia:

          The Defendants, Donald L. MacTavish and wife, Barbara W. MacTavish,
          Defendants, Richard Cook, agents and/or employees of TnBMA and agents
          and/or employees of Operation Reconstruction, Inc. including but not limited
          to Jon Addington and Christopher Cook on or about April 26, 2011 through
          May 31, 2011 told Bill Seldom, Steve Masterman and several other neighbors
          of Donald and Barbara MacTavish at Mariners Pointe Subdivision, while at the
          individual neighbors’ property or somewhere else in Mariners Pointe

                                                 -7-
       Subdivision, that Cobra Stucco Retrofits and Restoration and Phillip Burt’s
       work was substandard and that the Plaintiff had attached new wood to rotten
       wood in the construction of the MacTavish home in an attempt to convince the
       neighbors not to allow Phillip Burt to perform any work that was needed at the
       homes of Bill Seldom, Steve Masterman and several other neighbors of the
       MacTavishes living in the subdivision.

Mr. Burt also averred that the MacTavishes met with other defendants and provided
information that resulted in the email sent to all Mariners Pointe homeowners. Mr. Burt
alleged that these statements made by the MacTavishes to their neighbors were “false,
incorrect, misleading, untrue and defamatory” and that he suffered injury therefrom.
Regarding damages, Mr. Burt claimed that his injuries included “loss of business income,
loss of economic opportunities, injury to Phillip Burt’s reputation, his credit, his economic
and social standing in the community and injury to the operation of his business.” The
amended complaint alleged that the statements made by the MacTavishes were made with
knowledge of the falsity of the statement or reckless disregard for the truth.

        In short, Mr. Burt alleged that 1) the MacTavishes published a statement, i.e.,
communicated a statement to a third person(s); 2) with knowledge that the statement was
false and defaming to him; or 3) with reckless disregard for the truth of the statement or with
negligence in failing to ascertain the truth of the statement. See Sullivan, 995 S.W.2d at 571.
Mr. Burt also alleged that the defamatory statement resulted in an injury to his character and
reputation and that he suffered an economic loss. Construing the amended complaint
liberally, presuming all factual allegations to be true, and giving Mr. Burt the benefit of all
reasonable inferences, as we must, this Court cannot find that Mr. Burt can prove no set of
facts in support of his claims that would warrant relief. See Trau-Med, 71 S.W.3d at 696.

       Upon our review of the record, we determine that the trial court erred in holding that
Mr. Burt had not made a short and plain statement of facts alleging that the MacTavishes
libeled or slandered him. Mr. Burt was not required to recite the “exact words of [the]
alleged defamatory statement in order to determine whether or not they [were] actionable.”
Handley v. May, 588 S.W.2d 772 (Tenn. Ct. App. 1979). This Court has recognized that
“[w]here the substance of the slanderous utterance is pled along with notice of the time and
place of the utterance the defendant is apprised of the allegations that he must defend
against.” Id. at 775. The MacTavishes were able to discern from the amended complaint
both the substance of the alleged defamatory utterance as well as when it allegedly occurred
and to whom it was published. We conclude that the trial court’s dismissal of Mr. Burt’s
claims pursuant to Tennessee Rule of Civil Procedure 12 was in error. Because we have
determined that Mr. Burt’s appeal has merit, there is no basis for an award of sanctions for
frivolous appeal.

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                                     V. Conclusion

       The trial court’s order dismissing Mr. Burt’s claims against the MacTavishes is
vacated, and the case is remanded for further action consistent with this opinion. Costs on
appeal are assessed to the Appellees, Donald and Barbara MacTavish.




                                                  _________________________________
                                                  THOMAS R. FRIERSON, II, JUDGE




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