                   IN THE COURT OF APPEALS OF TENNESSEE
                       WESTERN SECTION AT NASHVILLE
                ______________________________________________

STANLEY HOLDER d/b/a HOLDER’S
TOBACCO WAREHOUSE,

      Plaintiff-Appellee,

Vs.                                             C.A. No. 01A01-9702-CV-00080
                                                Trousdale Circuit No. 2959-0-10
BILLY M. CELSOR; BILLY F. CELSOR;
E. J. PARKER, JR.; ROBERT N.
RICKMAN; LEWIS BEASLEY, JR. and
HARTSVILLE TOBACCO BOARD
OF TRADE,

      Defendants-Appellants.
____________________________________________________________________________

                FROM THE TROUSDALE COUNTY CIRCUIT COURT
                   THE HONORABLE BOBBY CAPERS, JUDGE




                      Jacky O. Bellar; Bellar & Bellar of Carthage
                  Eddie Taylor; Donoho, Taylor & Taylor of Hartsville
                                     For Appellee

                     Charles W. Bone and Keith C. Dennen; Wyatt,
                          Tarrant & Combs of Hendersonville
                                    For Appellants


                            REVERSED AND REMANDED

                                    Opinion filed:



                             FILED
                              August 27, 1997

                             Cecil W. Crowson           W. FRANK CRAWFORD,
                            Appellate Court Clerk       PRESIDING JUDGE, W.S.



CONCUR:


ALAN E. HIGHERS, JUDGE

DAVID R. FARMER, JUDGE
        Defendants, Billy M. Celsor, Billy F. Celsor, E.J. Parker, Jr., Robert N. Rickman, Lewis

Beasley, Jr., and the Hartsville Tobacco Board of Trade, appeal the trial court’s dismissal of the

case based on a lack of jurisdiction. The defendants had motion for summary judgment pending

against the plaintiff, Stanley Holder d/b/a Holder’s Tobacco Warehouse (Holder), on the issue

of the amount of damages allegedly suffered as a result of the wrongful issuance of an injunction.

        On September 21, 1992, Holder filed a complaint and motion for a temporary injunction

contesting his allocation of daily sales opportunity for the 1992-93 tobacco season by the

Hartsville Tobacco Board of Trade (Board).1 On October 21, 1992, the trial court granted a

temporary injunction ordering the defendants to recognize Holder’s claim to additional floor

space for the 1992-93 tobacco selling season. On July 6, 1994, the trial court entered a final

order making the temporary injunction a permanent injunction as to the 1992-93 tobacco season.

Holder furnished the injunction bond required by the court. The defendants appealed the trial

court’s final order. On appeal, this Court held that the trial court erred in issuing the injunction

because the trial court “was without jurisdiction to interfere into the actions of a private

corporation.” Holder v. Celsor, 914 S.W.2d 496, 501 (Tenn. App.), perm. app. denied, (Tenn.

1995). This Court reversed the issuance of a mandatory injunction by the trial court and

remanded the cause to the trial court for “further necessary proceedings.” Id.

        On remand, the defendants filed a motion for summary judgment on August 9, 1996 with

respect to the damages they allegedly suffered as a result of the issuance of the injunction, and

Holder filed a response thereto. After a hearing on the motion for summary judgment, the trial

court entered an order on January 6, 1997 dismissing the case. In its order, the trial court stated

that, in light of this Court’s opinion stating that the trial court lacked jurisdiction to interfere in

the actions of a private corporation, the trial court did not have jurisdiction to consider the

defendants’ claims for damages incurred as a result of the wrongful issuance of the injunction.



        The defendants appeal the trial court’s dismissal and present the following issues for

review, as stated in their brief:


        1
          The daily sales opportunity is the amount of tobacco that may be sold within a certain
tobacco market. Holder took issue with his allocation of daily sales opportunity, asserting that
allocation should be based on performance rather than the amount of each warehouse’s floor
space.

                                                  2
                1) Upon remand, following the decision by this Court that the
                trial court erred in issuing an injunction, did the trial court err in
                dismissing the defendants’ claim for damages suffered as a result
                of the wrongful issuance of the injunction for lack of jurisdiction?

                2) Are the defendants entitled to summary judgment in light of
                the failure of the plaintiff to present any competent evidence of a
                genuine issue of material fact with respect to the damages
                incurred by the defendants by virtue of the issuance of the
                injunction?

        In their first issue, the defendants contend that the trial court erred in dismissing the case

based on a lack of jurisdiction because a trial court has jurisdiction to award damages to a party

that has been wrongfully enjoined even though the court lacked the authority to issue the

injunction in the first place.

        Holder contends that the trial court interpreted this Court’s decision to mean that it lacked

subject matter jurisdiction and that the cases cited by the defendants are distinguishable because

those cases did not involve a lack of subject matter jurisdiction.

        We must respectfully disagree with plaintiff and the trial court. In Holder, this Court

noted the well settled principle of law, “that the courts in Tennessee should not interfere in the

affairs of an association or private corporation in the absence of proof of bad faith or fraud on

the part of those intrusted with its management.” 914 S.W.2d at 496. Clearly the court has

jurisdiction to make the determination of whether there is bad faith or fraud, and failure of proof

in this regard does not render the proceeding void ab initio as in the case of lack of subject matter

jurisdiction. To the contrary, it is merely a failure of proof on the part of the plaintiff as in any

other case, thus resulting in the wrongful issuance of the injunction.

        The injunction bond required by Tenn. R. Civ. P. 65.05 is specifically for “the payment

of such costs and damages as may be incurred or suffered by any person who is found to have

been wrongfully restrained or enjoined.” Tenn. R. Civ. P. 65.05. “A surety’s liability may be

enforced on motion without the necessity of an independent action.” Tenn. R. Civ. P. 65A.

        The trial court issuing an injunction later determined to be wrongfully issued has

jurisdiction to determine the amount of damages incurred by virtue of the wrongfully issued

injunction. See Smith v. Rodgers, 677 S.W.2d 1, 4 (Tenn. App. 1984); James v. Williams, 20

Tenn. App. 420, 99 S.W.2d 831 (1936).

        In the case before us, the trial court issued an injunction upon plaintiff posting an



                                                  3
injunction bond as required by Tenn. R. Civ. P. 65.05. It was determined that the facts did not

warrant the issuance of the injunction; therefore, the injunction was wrongfully issued. Under

the above authorities, the trial court has jurisdiction to assess damages for the wrongful issuance

of the injunction.

        In their second issue, the defendants contend that they are entitled to summary judgment

on the issue of the amount of damages they allegedly suffered as a result of the injunction. They

argue that they established that they lost profits as a result of the injunction and that Holder

failed to set forth specific facts to create a genuine issue of material fact on the issue of damages.

Therefore, they argue that they are entitled to a judgment as a matter of law.

        On the other hand, Holder contends that damages must be proven under Tenn. R. Civ.

P. 56.03 and argues that he raised a genuine issue of material fact. In addition, Holder argues

that further discovery is necessary on the issue of damages and that the defendants failed to

establish that they were entitled to judgment as a matter of law. Moreover, Holder argues that

the defendants did not comply with Tenn. R. Civ. P. 65A requiring notice before proceeding

against a surety.

        At the time the trial court dismissed this case based on lack of jurisdiction, the defendants

had a summary judgment motion pending before the court. Given our reversal of the dismissal,

we decline to rule on this issue in this case without first allowing the trial court the opportunity

to do so.

        The defendants also ask that if there is a remand, this Court direct the trial judge to recuse

himself because of bias or a lack of impartiality. We again decline to do as the defendants

request. If grounds exist for recusal, the matter should first be presented to the trial judge.

        Accordingly, the order of trial court is reversed, and this cause is remanded for such

further proceedings as necessary. Costs of appeal are assessed against the appellee.

                                                         _________________________________
                                                         W. FRANK CRAWFORD,
                                                         PRESIDING JUDGE, W.S.
CONCUR:

____________________________________
ALAN E. HIGHERS, JUDGE

____________________________________
DAVID R. FARMER, JUDGE



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