                   IN THE COURT OF APPEALS OF TENNESSEE
                                AT JACKSON

   K. C. LAM, D/B/A K. C. LAM AND ASSOCIATES v. ROBERT ALLEN

                  A Direct Appeal from the Circuit Court for Shelby County
                   No. 71155 T.D. The Honorable Kay S. Robilio, Judge



                   No. W1999-00244-COA-R3-CV - Decided May 26, 2000


        This case involves allegations of fraud. Plaintiff sued Thabet Saleh and Robert Allen to
recover the amount of a loan made to Saleh as a result of misrepresentations of fact made by Saleh
and Allen which induced plaintiff to make the loan. The case was nonsuited as to Saleh when
plaintiff failed to obtain service of process. The trial court granted summary judgment to Allen, and
plaintiff has appealed.

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

CRAWFORD , P.J., W.S., delivered the opinion of the court, in which HIGHERS , J., and FARMER , J.,
joined.

William G. Hardwick II, Memphis, For Appellant

Archie Sanders, III, Memphis, For Appellee, Robert Allen

                                            OPINION

       Plaintiff, K. C. Lam, d/b/a K. C. Lam & Associates, appeals from the order of the trial court

granting summary judgment to defendant, Robert Allen.1 The complaint alleges that Lam loaned

$26,500.00 to defendant, Saleh, and further states:



               To repay the loan, the defendant, Thabet Saleh, signed an Assignment
               of Security Agreement and Transfer of Promissory Note Agreement
               as Assignor and Guarantor to the plaintiff. In this agreement, the


       1
         The complaint names Thabet Saleh as a defendant, but when service of process was not
obtained, plaintiff took a voluntary nonsuit as to this defendant.
               defendant Thabet Saleh assigned a promissory note to the plaintiff for
               payment supposedly made to him by a Masouf Salef. A copy of this
               document is attached as “Exhibit A” and incorporated by reference to
               this complaint. The payments have not been made by the defendant
               Thabet Saleh and he is in default of his agreement of February 24,
               1995.

       The complaint further alleges that Allen, as agent of Saleh, made material misrepresentations

to Lam to induce him to make the agreement described above. The list of misrepresentations are:

               1. That, on February 24, 1995, Masouf Saleh owned a business in
               Clarksdale Mississippi, called the New One Stop Grocery, at 1405
               Martin Luther King St. (formerly 4th St.), Clarksdale, Mississippi.

               2. That Thabet Saleh had formerly owned the New One Stop Grocery
               at 1405 Martin Luther King St., Clarksdale, Mississippi and had sold
               it to Masouf Saleh on October 1, 1994.

               3. That Masouf Saleh had bought and was the present owner of the
               New One Stop Grocery in Clarksdale, Mississippi, and had given in
               partial payment for purchase, to Thabet Saleh, a promissory note on
               October 1, 1994.

               4. That Thabet Saleh had assigned his lease on the New One Stop
               Grocery in Clarksdale, Mississippi, to Masouf Saleh.

               5. That the financial net worth of Thabet Saleh was $407,628.35 on
               February 24, 1995.

       The complaint alleges that none of the above statements allegedly made by Allen were true

and that Allen provided Lam with documents in support of the misrepresentations and the documents

contain mis-statements and misrepresentations. Lam avers that Allen had independent knowledge

that the representations that he made were not true and that the documents he provided contained

untrue facts. Plaintiff further avers that Saleh has not paid the amounts due by virtue of the

agreement, and that by virtue of the fraud of Allen along with that of Saleh plaintiff has suffered

damages in that he has not been repaid his loan of $26,500.00. The complaint also seeks punitive


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damages by virtue of the alleged fraud.



       Allen’s answer denies that he was at any time the agent of Saleh, denies that he made any

representations to Lam concerning Saleh, denies that he furnished any documents to Lam, and

generally joins issue on the material allegations of the complaint directed to him.



       In support of Allen’s motion for summary judgment, he relies upon his deposition. In

opposition to the motion for summary judgment, Lam relies upon his affidavit and his deposition.

A review of these documents, along with the complaint and answer, present a very confused and

irregular set of facts. The confusion starts with the complaint where Lam alleges that he made a loan

of $26,500.00 to Saleh, but the complaint does not present any evidence of indebtedness from Saleh

to Lam, but refers to an agreement between Saleh and Lam concerning an “assignment” of a

promissory note evidencing an indebtedness of Saleh’s brother to Saleh in the principal amount of

over $60,000.00. Lam’s deposition testimony sheds some light on the exact nature of the transaction

when he testified that he, for the sum of $26,500.00 paid to Saleh, purchased the note payable to

Saleh by his brother.     Thus, the real transaction is that Lam purchased a note evidencing

indebtedness of over $63,000.00 for $26,500.000. The evidence presented by Lam by affidavit and

deposition is to the effect that the misrepresentations set out in the complaint were made by Allen

and that Allen provided him with all the documents entered as exhibits in this case. He testified that

Allen was in the real estate business and on other occasions had sought funding for his clients and

in all of the cases Lam had relied upon the documentation supplied by Allen. He states that Allen

represented to him that he had known Saleh for a long time and that the transaction between Saleh


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and his brother concerning One Stop Grocery in Clarksdale, Mississippi was authentic and that when

Allen furnished him the documents concerning the Clarksdale transaction he was led to believe that

the documents were authentic.



        Allen, in his deposition, denied that he introduced Saleh to Lam, denied that he had any

knowledge of the One Stop Grocery in Clarksdale, Mississippi, or any of the transaction dealing with

that business. He denied that he knew anything about the documents concerning the One Stop

Grocery. Allen admits that he obtained a credit report and a lien search concerning Saleh, but did

so upon Lam’s request and that he knew nothing about the transaction involving Saleh except for

what he was told.



        Lam further testified that he ascertained that neither Thabet Saleh nor Masouf Saleh had

owned a business in Clarksdale, and that the documents purporting to represent a sale between them

were false and fraudulent. He further stated that he was familiar with Robert Allen’s signature, and

that the signature on some of the documents purporting to be that of the lessor and the closing

attorney are in his opinion in the handwriting of Robert Allen. The record does not indicate any

specific reason for the trial court’s grant of summary judgment. It appears to this Court, however,

that plaintiff has testified concerning misrepresentations of material facts on the part of the defendant

that induced him to purchase what apparently is a fraudulent and false promissory note. The

defendant, Allen, on the other hand, states that he knows nothing about any of the documents or facts

concerning the business transaction. Generally, summary judgment is not appropriate in cases

involving allegations of fraud because there are disputes as to material facts. See Fowler v. Happy


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Goodman Family, 575 S.W.2d 496 (Tenn. 1978); Perryman v. Peterbilt of Knoxville, Inc., 708

S.W.2d 403 (Tenn. Ct. App. 1985).

       The requisite elements for a fraud action are:

               (1) an intentional misrepresentation with regard to material fact, (2)
               knowledge of the representation[’s] falsity - that the representation
               was made “knowingly” or “without belief in its truth,” or “recklessly”
               without regard to its truth or falsity, (3) that the plaintiff reasonably
               relied on the misrepresentation and suffered damage, and (4) that the
               misrepresentation relates to an existing or past, or, if the claim is
               based on promissory fraud, then the misrepresentation must “embody
               a promise of future action without the present intention to carry out
               the promise.”

Shahrdar v. Global Housing, Inc., 983 S.W.2d 230, 237 (Tenn. Ct. App. 1998); Stacks v.

Saunders, 812 S.W.2d 587, 592 (Tenn. Ct. App. 1990).

       In the instant case, Lam testified that Allen furnished him the documents and made

statements to him that induced him to part with his money. He testified that the statements were

false, and the documents were apparently false and fraudulent. Allen has denied that he had any

involvement, but under these circumstances, it would appear that there are disputed material facts

which in all probability will depend upon the trial court’s assessment of the credibility of the

witnesses.

       In the record before us, it is at least not clear that summary judgment is proper in this case.

In Evco Corp. v. Ross, 528 S.W.2d 20 (Tenn. 1975), Justice Harbison commented on the use of

summary judgment:

               The summary judgment procedure was designed to provide a quick,
               inexpensive means of concluding cases, in whole or in part, upon
               issues as to which there is no dispute regarding the material facts.
               Where there does exist a dispute as to facts which are deemed
               material by the trial court, however, or where there is uncertainty as
               to whether there may be such a dispute, the duty of the trial court is

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                clear. He is to overrule any motion for summary judgment in such
                cases, because summary judgment proceedings are not in any sense
                to be viewed as a substitute for a trial of disputed factual issues.

Id. at 24-25.

       Accordingly, the order of the trial court granting summary judgment is vacated, and this case

is remanded to the trial court for such further proceedings as may be necessary. Costs of the appeal

are assessed against the appellee, Robert Allen.




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