                    IN THE COURT OF APPEALS OF TENNESSEE
                        WESTERN SECTION AT NASHVILLE


PRISM PARTNERS, L.P.,                      )
                                           )
              Plaintiff/Appellee,          ) Davidson Circuit No. 95C-4342
                                           )
VS.                                        ) Appeal No. 01A01-9703-CV-00103
                                           )
MICHAEL D. FIGLIO,                         )
                                           )
              Defendant/Appellant,         )
                                           )
VS.                                        )
                                           )
PRISM PARTNERS, L.P.                       )
LARRY CHERRY,                              )
                                           )
              Counter-Defendant/           )
              Appellee,                    )
              Third Party Defendant/       )
              Appellee.                    )

           APPEAL FROM THE CIRCUIT COURT OF DAVIDSON COUNTY
                        AT NASHVILLE, TENNESSEE
               THE HONORABLE BARBARA N. HAYNES, JUDGE

STEVE NORTH
MARK NORTH
Madison, Tennessee
Attorneys for Appellant

EDMUND W. TURNLEY, III
Nashville, Tennessee
Attorney for Appellant

RICHARD M. SMITH
MANIER, HEROD, HOLLABAUGH & SMITH
Nashville, Tennessee
Attorney for Plaintiff/Appellee, Prism Partners, L.P.

W. LEE CORBETT
DAVID F. LEWIS
CORBETT, CROCKETT & LECKRONE
Nashville, Tennessee
Attorneys for Third-Party Defendant/Appellee, Larry Cherry

AFFIRMED IN PART, REVERSED IN PART
& REMANDED



                                                                 ALAN E. HIGHERS, J.

CONCUR:

DAVID R. FARMER, J.

HOLLY KIRBY LILLARD, J.

       In this unlawful detainer action, Defendant Michael D. Figlio appeals the trial court’s

final judgment which held that Plaintiff/Appellee Prism Partners, L.P., had free and clear
title to the subject property, ordered Figlio to vacate the subject property, and dismissed

Figlio’s counterclaim for conspiracy. The trial court’s judgment also dismissed Figlio’s third-

party complaint for fraud and conspiracy against Third-Party Defendant/Appellee Larry

Cherry. For the reasons hereinafter stated, we affirm in part and reverse in part the trial

court’s judgment, and we remand for further proceedings.



                                    I. Procedural History

       This lawsuit began as an unlawful detainer action filed in the Metropolitan General

Sessions Court of Davidson County by Prism Partners against Figlio. In its complaint,

Prism Partners alleged that Figlio was unlawfully detaining certain real property located at

115 Brookhollow Road in Nashville, Tennessee. The complaint sought possession of the

property and past-due rent in the amount of $63,000.



       After the case was transferred to the Circuit Court for Davidson County, Figlio filed

an answer in which he asserted several affirmative defenses, including, but not limited to,

the statute of limitations, unclean hands, and conspiracy. Figlio also asserted a

counterclaim against Prism Partners for conspiracy. In support of this counterclaim, Figlio

alleged that Prism Partners received title to the subject property by quitclaim deed

executed by Third-Party Defendant Larry Cherry on October 31, 1995; that Prism Partners

paid no consideration for the property; and that Prism Partners and Cherry had conspired

to deprive Figlio of his ownership of the property.



       In addition to asserting a counterclaim against Prism Partners, Figlio filed a third-

party complaint against Larry Cherry for fraud and conspiracy. The conspiracy count was

based on the same factual assertions as the conspiracy claim against Prism Partners. The

fraud claim, however, dated back to a series of events beginning in 1986. In support of the

fraud claim, Figlio made the following allegations:

              5.    That in 1986, Cherry owned and operated a financial
              consultant business under the style of Money Management
              Services.

              6.      That in or about February, 1986, Figlio and his wife,
              were experiencing financial difficulties and consulted with
              Cherry regarding the establishment of a plan to enable them
              to retain their financial stability.


                                              2
             7.     That Cherry established a financial plan wherein Figlio
             and his wife would pay all of their income to Cherry and he
             would negotiate with their creditors, pay their bills, and
             conserve their income until such time as they had reached
             financial stability.

             8.      That Cherry further devised a plan wherein Figlio and
             his wife would sell their home at 115 Brookhollow Road,
             Nashville, Davidson County, Tennessee, to certain of Cherry’s
             investors for the sum of $150,000, which would give the
             investors a tax advantage and at the same time, provide
             monies needed by Figlio and his wife to bring current their
             obligations and have additional capital upon which to live. Said
             sale was described as being in actuality a loan with the right in
             Figlio to repurchase the property when they were financially
             able to either sell or refinance the property.

             9.     That Figlio and his wife paid all of their income to Cherry
             for approximately one year.

             10.     That Cherry failed and/or refused to properly account for
             monies received and many obligations of Figlio and his wife
             were either not paid or paid in an untimely manner, causing
             additional problems for Figlio and his wife, including claims
             filed against them by the Internal Revenue Service.

             11.    That Cherry fraudulently induced Figlio and his wife to
             execute a deed to their property to Cherry’s investors, full well
             knowing that the financial plan structured by him for Figlio and
             his wife, would never result in their ability to repurchase the
             property.

             12.   That Cherry and Figlio terminated their arrangement in
             or about February, 1987.

             13.    That Figlio paid rent on the property at the rate of $900
             per month until June, 1989, when he was unable to obtain a
             true and accurate accounting from Cherry.

             14.    That from and after June, 1989, Cherry continually
             threatened Figlio with eviction, but full well knowing of his
             fraudulent acts and misrepresentations, did not bring an
             eviction action until June, 1994, when he filed a Detainer
             Warrant in the Metropolitan General Sessions Court, Docket
             Number 94GT4843, alleging that Figlio was in arrears in the
             sum of $48,600, . . . .

             15.    That Cherry failed to prosecute said Detainer Warrant
             and in December, 1995, entered a voluntary non-suit. . . .

Figlio’s third-party complaint further alleged that, having dismissed the initial detainer

warrant, Cherry conspired with Prism Partners to deprive Figlio of his property. In

furtherance of this conspiracy, Cherry allegedly executed the quitclaim deed and

transferred the property to Prism Partners for no consideration.



      In response to the third-party complaint, Cherry filed a motion to dismiss, contending

that the complaint failed to state a claim upon which relief could be granted and that the

                                             3
complaint was barred by the three-year statute of limitations for fraud actions. Prism

Partners filed a “Response to Motion to Dismiss” in which it adopted the legal arguments

set forth in Cherry’s motion to dismiss.



       In March 1996, the trial court entered an order dismissing Figlio’s third-party claims

against Cherry for fraud and conspiracy based on the court’s ruling that Figlio had not pled

these claims with sufficient particularity. See T.R.C.P. 9.02.



       Figlio filed a motion to vacate the trial court’s March 1996 order, supported by a

memorandum and affidavit. In his affidavit, Figlio admitted that Cherry’s fraudulent scheme

initially was exposed in 1989. Figlio asserted, however, that Cherry had engaged in an

intentional, ongoing conspiracy to deprive Figlio of funds and property which culminated

in October 1995, when Cherry quitclaimed the property to Prism Partners for no

consideration.



       In April 1996, the trial court entered an order which ruled that, inasmuch as Figlio’s

third-party claim for conspiracy against Cherry had been dismissed, “the subject matter of

the Motion For Summary Judgment set for hearing April 19, 1996 [was] moot.” Because

no motion for summary judgment appears in the record, we can only surmise that the trial

court’s order referred to Prism Partners’ “Response to Motion to Dismiss” in which Prism

Partners adopted the legal grounds for dismissal set forth in Cherry’s motion to dismiss.



       On June 17, 1996, the trial court entered an order which made the following rulings:

                     1.    That any fraud, misrepresentation and/or
              conspiracy claim as to Prism Partners, L.P. is dismissed, with
              prejudice;

                    2.     That the Defendant, Michael Figlio, vacate the
              premises as he has unlawfully detained the premises;

                     3.     That the Warranty Deed executed by Figlio and
              his wife in 1986, be given full force and effect according to its
              specific terms;

                    4.      That Prism, L.P. has free and clear title to the
              property as to Defendant Figlio; and

                    5.     That a date be set for a determination as to
              issues concerning damages only.


                                             4
The trial court also entered an order on June 17, 1996, which denied Figlio’s motion to

vacate the court’s previous judgment dismissing Third-Party Defendant Cherry from this

lawsuit. This time, in reaffirming its dismissal of the third-party complaint against Cherry,

the trial court ruled that Figlio’s cause of action against Cherry was barred by the statute

of limitations.   The trial court’s order indicated that, in making its ruling, the court

considered the entire record, including affidavits and depositions filed in the case.



       On August 8, 1996, Prism Partners filed a motion asking the trial court to enter a

final judgment in this case as to all issues but damages. The trial court granted the motion

and, on September 11, 1996, entered a final judgment pursuant to rule 54.02 of the

Tennessee Rules of Civil Procedure. The trial court entered an amended final judgment

on September 30, 1996, which additionally assessed costs against Figlio. Figlio timely filed

a motion for new trial, which was denied on December 9, 1996.



       On appeal, Figlio contends that the trial court erred in dismissing his third-party

complaint for fraud and conspiracy against Cherry on statute of limitations grounds; in

dismissing Figlio’s counterclaim for conspiracy against Prism Partners; and, finally, in

entering judgment in favor of Prism Partners on the detainer warrant without ruling on the

defenses asserted in Figlio’s answer, such as the statute of limitations, unclean hands, and

conspiracy.



                                   II. Standard of Review

       As an initial matter, we find it necessary to determine the appropriate standard

governing this court’s review of the trial court’s rulings in this case. Although Prism

Partners’ and Cherry’s motions to dismiss originally were filed pursuant to rule 12.02(6) of

the Tennessee Rules of Civil Procedure, the orders under review reveal that the trial court

considered the entire record in issuing its rulings, including affidavits and depositions filed

by the parties. By considering matters outside the pleadings, the trial court converted the

motions to dismiss into motions for summary judgment. Pacific E. Corp. v. Gulf Life

Holding Co., 902 S.W.2d 946, 952 (Tenn. App. 1995); T.R.C.P. 56.03.




                                              5
       Summary judgment is to be rendered by a trial court only when it is shown that there

is no genuine issue as to any material fact and that the moving party is entitled to a

judgment as a matter of law. T.R.C.P. 56.03. When a motion for summary judgment is

used defensively, the plaintiff must present evidence sufficient to establish the essential

elements of the claim on which he will bear the burden of proof at trial. Blair v. Allied

Maintenance Corp., 756 S.W.2d 267, 269-70 (Tenn. App. 1988). In ruling on a motion for

summary judgment, the trial court and the Court of Appeals must consider the matter in the

same manner as a motion for a directed verdict made at the close of the plaintiff’s proof.

All of the evidence must be viewed in the light most favorable to the opponent of the

motion and all legitimate conclusions of fact must be drawn in favor of the opponent. It is

only when there is no disputed issue of material fact that a summary judgment should be

granted by the trial court and sustained by the Court of Appeals. Byrd v. Hall, 847 S.W.2d

208, 211 (Tenn. 1993).



                           III. Figlio’s Fraud Claim Against Cherry

       Applying the foregoing standard, we affirm the trial court’s dismissal of Figlio’s fraud

claim against Cherry based on the statute of limitations. In Tennessee, the statute of

limitations for fraud is three years. Vance v. Schulder, 547 S.W.2d 927, 933 (Tenn. 1977);

American Fidelity Fire Ins. Co. v. Tucker, 671 S.W.2d 837, 841 (Tenn. App. 1983); T.C.A.

§ 28-3-105 (1980). As previously indicated, Figlio admitted in his affidavit that Cherry’s

fraudulent scheme initially was exposed in 1989; however, Figlio did not file his third-party

claim for fraud against Cherry until January 1996. Accordingly, based on the undisputed

evidence, we hold that Figlio’s fraud claim was barred by the three-year statute of

limitations.



               IV. Figlio’s Conspiracy Claims Against Prism Partners and Cherry

       Contrary to the trial court’s determination, however, the court’s dismissal of the fraud

claim against Cherry did not automatically dispose of the conspiracy claims against Cherry

and Prism Partners. Figlio’s third-party complaint against Cherry alleged, not one, but two

separate torts: fraud and conspiracy. The first tort occurred in 1986, when Cherry

allegedly fraudulently induced Figlio to execute a quitclaim deed to the subject property by

falsely representing, among other things, that the transaction was in actuality a loan and

                                              6
that the transaction was in Figlio’s financial best interests.1 The second tort occurred in

1995, when Cherry and Prism Partners allegedly conspired to deprive Figlio of the subject

property. Figlio alleged that, to this end, Cherry executed a quitclaim deed to the property

to Prism Partners for zero consideration.



        The statute of limitations for conspiracy is only one year. Braswell v. Carothers, 863

S.W.2d 722, 725 (Tenn. App. 1993); Harvest Corp. v. Ernst & Whinney, 610 S.W.2d 727,

729-30 (Tenn. App. 1980); T.C.A. § 28-3-104 (Supp. 1990). This one-year period of

limitation, however, does not begin to run until the time that an overt act of the conspiracy

occurs which causes damage to the complainant. Budget Rent-A-Car v. Car Services, 469

S.W.2d 360, 362 (Tenn. 1971); Emerson v. Machamer, 431 S.W.2d 283, 286 (Tenn.

1968). In this case, an overt act of the alleged conspiracy occurred in October 1995, when

Cherry transferred the property to Prism Partners for no consideration. If, as alleged,

Cherry and Prism Partners were acting in concert to deprive Figlio of the subject property,

the argument also could be made that Prism Partners acted in furtherance of the

conspiracy by filing this unlawful detainer action in November 1995. In any event, Figlio’s

counterclaim and third-party claim for conspiracy, filed in January 1996, were timely filed

within the one-year statute of limitations.2



        The foregoing discussion, of course, assumes that Figlio has presented evidence

sufficient to establish the essential elements of a claim for civil conspiracy against Prism

Partners and Cherry. See Blair v. Allied Maintenance Corp., 756 S.W.2d 267, 269-70

(Tenn. App. 1988). A civil conspiracy is

                 A “combination between two or more persons to accomplish by
                 concert an unlawful purpose, or to accomplish a purpose not
                 in itself unlawful by unlawful means.” Dale v. Thomas H.
                 Temple Co., [208 S.W.2d 344, 353 (Tenn. 1948)]. The

        1
         Contrary to the trial court’s ruling, we conclude that Figlio’s complaint contained suffic iently specific
allegations to state a cause of action for fraud. See, e.g., Vance v. Schulder, 547 S.W .2d 927, 931-32 (Tenn.
App. 1977); Pridem ore v. Cherry, 903 S.W .2d 705, 707-08 (T enn. App. 199 5).

        2
         Because the causes of a ctio n alleged by Figlio involved two discrete acts, rather than a continuous
act, we conclude that this court’s recent holding in W ansley v. Refined Metals Corp.,
No. 02A01-9503-CV-00065, 1996 W L 50249 7 (Ten n. App. Sept. 6, 1996), perm. app. denied (Tenn. Jan. 27,
1997), does not bar Figlio’s actio n fo r conspiracy against Cherry. In W ansley, we held that, where “a plaintiff
learns of his injuries and learns of the causal connection to the defendant’s conduct and continues to be
subjected to such conduct,” the statute of limitations begins to run when the plaintiff discovers his cause of
action and not whe n the plaintiff’s expo sure to the tortious con duc t ceases . Id., at *6. Here, the second tort
alleged by Figlio, the conspiracy, involved different conduct and a different tortfeasor than the first tort, the
fraud. Ac co rdingly, we do no t view the tortious acts alleged in this case to be a “continuing tort.” See
generally 54 C .J.S. Limitation of Actions § 177 (1987 ).

                                                        7
              essence of a civil conspiracy is a concert or combination to
              defraud or cause other injury to person or property, which
              results in damage to the person or property of the plaintiff.
              Black’s Law Dictionary, 5th Ed. 1979. The requisite elements
              of the cause of action are common design, concert of action,
              and an overt act. Koehler v. Cummings, 380 F. Supp. 1294
              (M.D. Tenn. 1974).

Kirksey v. Overton Pub, Inc., 739 S.W.2d 230, 236-37 (Tenn. App. 1987); accord

Braswell v. Carothers, 863 S.W.2d 722, 727 (Tenn. App. 1993).



       We conclude that Figlio has presented sufficient evidence to support his claim that

Cherry and Prism Partners acted in concert to wrongfully deprive Figlio of the subject

property. Figlio’s theory of recovery was that Cherry justifiably feared that his prior

fraudulent conduct in procuring title to the subject property would prevent him from

successfully pursuing an unlawful detainer action in his own name; that Cherry and Prism

Partners, therefore, agreed that Cherry would convey the subject property to Prism

Partners, which, in return, would pursue the unlawful detainer action in the partnership’s

name; and that, to this end, Cherry conveyed the subject property to Prism Partners for no

consideration.    The affidavits and depositions filed in this case reveal the following

evidence to support this theory. In 1986, Cherry induced Figlio to quitclaim the subject

property to him by falsely representing that the transaction was actually a loan and that the

transaction was in Figlio’s best interest financially. In 1994, Cherry filed an unlawful

detainer action seeking to oust Figlio from the property, but Cherry later filed a voluntary

non-suit dismissing this action. Cherry’s only stated reason for dismissing the lawsuit was

that he “really [didn’t] like lawsuits.” Shortly before Cherry’s dismissal of the lawsuit, Cherry

transferred the subject property to Prism Partners. The deed recited that there was zero

consideration for the transfer. Prism Partners was formed on October 30, 1995, only one

day before Cherry transferred the subject property to the partnership. The general partner

of Prism Partners was Prism Management, Inc., which was solely owned by Richard L.

Garrett. Garrett was Cherry’s accountant, and their offices were in the same building. The

remaining partners of Prism Partners were fourteen investors who formerly belonged to an

investment group known as Money Management III, for which Cherry served as trustee

prior to formation of the partnership. The investors joined Prism Partners on the advice of

Garrett, who discussed the matter with Cherry and an attorney. Approximately one week



                                               8
after receiving title to the subject property, Prism Partners filed this unlawful detainer action

against Figlio.



       We recognize that much of the above evidence was circumstantial as to whether

Cherry and Prism Partners had the requisite agreement to engage in a civil conspiracy.

A civil conspiracy, however, may be proven by evidence which is largely circumstantial.

See Dale v. Thomas H. Temple Co., 208 S.W.2d 344, 353 (Tenn. 1948). Moreover, we

note that, as a general rule, “summary judgments should not be granted in cases where

the outcome hinges squarely upon the state of mind, intent, or credibility of the witnesses.”

Knapp v. Holiday Inns, 682 S.W.2d 936, 941-42 (Tenn. App. 1984). This rule is particularly

apt where, as in this case, the critical witnesses are also parties to the action. See

McDowell v. Moore, 863 S.W.2d 418, 421 (Tenn. App. 1992). Based on the evidence

presented in this case, we conclude that the trial court erred in granting summary judgment

to Prism Partners and Cherry on Figlio’s claims for conspiracy.



            V. Figlio’s Defenses to Prism Partners’ Unlawful Detainer Action

       We likewise agree with Figlio’s contention that the trial court improperly granted

relief to Prism Partners on its unlawful detainer warrant without ruling on the defenses

asserted in Figlio’s answer. Again, we can only surmise that the trial court granted this

relief based on the court’s determination that the dismissal of Figlio’s claims for fraud and

conspiracy somehow disposed of Figlio’s defenses to the unlawful detainer action,

particularly the defenses of unclean hands and conspiracy. The trial court’s dismissal of

the fraud and conspiracy claims, however, was based on the statute of limitations, not on

the court’s factual determination that the claims were unfounded. As we previously have

held, the trial court’s dismissal of the conspiracy claims was in error. Moreover, even if the

fraud and conspiracy claims were properly dismissed based upon the applicable statutes

of limitations, we can find nothing in the law, and the parties have cited no authority, which

would preclude Figlio from asserting the doctrine of unclean hands and conspiracy

defensively in this lawsuit. While causes of action have statutes of limitations, defenses

do not.



       Under the doctrine of unclean hands,

                                               9
              [H]e who comes into a court of equity, asking its interposition
              in his behalf, must come with clean hands; and if it appears
              from the case made by him or by his adversary that he has
              himself been guilty of unconscionable, inequitable, or immoral
              conduct in and about the same matters whereof he complains
              of his adversary, or if his claim to relief grows out of or
              depends upon or is inseparably connected with his own prior
              fraud, he will be repelled at the threshold of the court.

C.F. Simmons Med. Co. v. Mansfield Drug Co., 23 S.W. 165, 168 (Tenn. 1893). The

doctrine of unclean hands

              [E]xpresses the principle that where a party comes into equity
              for relief he or she must show that his or her conduct has been
              fair, equitable, and honest as to the particular controversy in
              issue. A complainant will not be permitted to take advantage
              of his or her own wrong or claim the benefit of his or her own
              fraud or that of his or her privies.

27A Am. Jur. 2d Equity § 126 (1996).



       This equitable maxim prevents parties from using the courts to enforce agreements

“that arise out of unconscionable, immoral or just plain ‘crooked’ conduct.” Farmers &

Merchants Bank v. Templeton, 646 S.W.2d 920, 924 (Tenn. App. 1982). The operation

of the maxim is confined to misconduct connected with the subject matter of the litigation.

Greer v. Shelby Mut. Ins. Co., 659 S.W.2d 627, 630 (Tenn. App. 1983) (citing Henry R.

Gibson, Gibson’s Suits in Chancery § 18, at 20-21 (William H. Inman ed., 6th ed. 1982)).

Subject to the procedures set forth in Continental Bankers Life Insurance Co. v. Simmons,

561 S.W.2d 460, 464 (Tenn. App. 1977), this equitable defense may be raised in circuit

court or in chancery court, even if the suit is one at law.



       Although a finding of fraud or conspiracy on the part of the plaintiff may support the

defense of unclean hands, the success of an unclean hands defense is not contingent

upon the defendant’s successful pursuit of any actionable claim against the plaintiff:

              [O]ne’s misconduct need not necessarily have been of such a
              nature as to be punishable as a crime or as to justify legal
              proceedings of any character to [warrant] application of the
              maxim; any wilful act concerning the cause of action which
              rightfully can be said to transgress equitable standards of
              conduct is sufficient cause for the invocation of the maxim.
              Within the purview of the maxim, the hands of the litigant are
              rendered unclean by conduct which is “condemned and
              pronounced wrongful by honest and fair-minded men,”
              inequitable, unfair, dishonest, fraudulent, unconscionable, or
              in bad faith.



                                             10
27A Am. Jur. 2d Equity § 129 (1996) (footnotes omitted); accord Southern Coal & Coke

Co. v. Beech Grove Mining Co., 381 S.W.2d 299, 303 (Tenn. App. 1963) (indicating that,

if plaintiff has committed any willful act in regard to subject matter of litigation “which would

be condemned and pronounced wrongful by honest and fairminded men,” such act will be

sufficient to make plaintiff’s hands unclean) (quoting Christians v. Town of East Ridge, 12

Tenn. App. 101, 112 (1928)). In accordance with the foregoing authorities, we conclude

that the record contains evidence to support Figlio’s defenses of unclean hands and

conspiracy and, thus, that summary judgment was improvidently granted in Prism Partners’

unlawful detainer action.



                                        VI. Conclusion

       In holding that the trial court erred in granting relief to Prism Partners on its unlawful

detainer warrant without ruling on Figlio’s defenses, we express no opinion on the merits

of the various defenses asserted by Figlio or on the merits of Figlio’s conspiracy claims

against Prism Partners and Cherry. We merely hold that, at this stage in the proceedings,

the pleadings and evidence reveal genuine issues of material fact which precluded the trial

court from deciding these issues on summary judgment.



       The portion of the trial court’s judgment dismissing Figlio’s third-party claim for fraud

against Cherry is affirmed. In all other respects, the trial court’s judgment is hereby

reversed. Specifically, the trial court’s order awarding Prism Partners affirmative relief on

its unlawful detainer warrant, as well as the trial court’s orders dismissing Figlio’s claims

for conspiracy against Prism Partners and Cherry, are reversed, and this cause is

remanded for further proceedings consistent with this opinion. Costs on appeal are taxed

to Appellees, for which execution may issue if necessary.




                                                           HIGHERS, J.

CONCUR:



FARMER, J.


                                               11
LILLARD, J.




              12
