                        IN THE COURT OF APPEALS

                             AT KNOXVILLE


BRENDA J. CROWDER, M.D.,               )   C/A NO. 03A01-9801-CH-00083
                                       )
      Plaintiff-Appellee,              )

v.
                                       )
                                       )
                                       )
                                                      FILED
                                       )
                                       )              November 9, 1998
                                       )
                                       )              Cecil Crowson, Jr.
BRENT D. LAING, M.D.,                  )              Appellate C ourt Clerk
                                       )   INTERLOCUTORY APPEAL FROM THE
      Defendant-Appellant,             )   CARTER COUNTY CHANCERY COURT
                                       )   PURSUANT TO RULE 9, T.R.A.P.
and                                    )
                                       )
                                       )
                                       )
JOHN D. GREEN, M.D., DAVID             )
DOBYNS, FIRST MEDICAL GROUP,           )
also known as FMG, INC., and           )
HEALTH CARE CONSULTANTS, INC.,         )
doing business as HCI, INC.,           )
                                       )   HONORABLE LEWIS W. MAY, JR.,
      Defendants.                      )   JUDGE




BRENT D. LAING, M.D.,                  )   C/A NO. 03A01-9801-CH-00013
                                       )
      Plaintiff-Appellant,             )
                                       )
v.                                     )   APPEAL AS OF RIGHT FROM THE
                                       )   CARTER COUNTY CHANCERY COURT
                                       )
                                       )
BRENDA J. CROWDER, M.D.,               )
                                       )   HONORABLE LEWIS W. MAY, JR.,
      Defendant-Appellee.              )   JUDGE


For Appellant                              For Appellee

MARK S. DESSAUER                           LOIS B. SHULTS
Hunter, Smith & Davis                      Shults & Shults
Kingsport, Tennessee                       Erwin, Tennessee




                             O P I N IO N




                                   1
REVERSED AS TO RULE 9 APPEAL
APPEAL AS OF RIGHT DISMISSED AS MOOT
REMANDED                                               Susano, J.
          We granted the Rule 9, T.R.A.P., application of the

appellant, Brent D. Laing, M.D. (“Laing”), in order to review the

propriety of the trial court’s denial of Laing’s motion to amend

his answer filed in litigation instituted against him and others

by the appellee, Brenda J. Crowder, M.D. (“Crowder”).      In the

same order, we consolidated that interlocutory appeal with the

appeal of Laing’s separate suit against Crowder, which latter

appeal is before us as of right.       See Rule 3(a), T.R.A.P.   The

claims asserted by Laing in the second suit are identical to

those in the counterclaim which Laing attempted to pursue, albeit

unsuccessfully, in the earlier litigation.       We reverse the trial

court’s denial of Laing’s motion to amend in the first suit.           We

dismiss, as moot, the appeal of Laing’s subsequent suit against

Crowder.



                             I.    Facts



            In July, 1987, Crowder and Laing each opened a medical

practice in Elizabethton, Tennessee.       They shared space under a

signed “Practice Agreement” that addressed their respective

rights and obligations in their combined practices.       In late 1994

or early 1995, the parties merged their practices into a

professional corporation known as First Medical Group, Inc.

(“FMG”).    FMG also included other medical practice groups in the

same building.   Following this merger of the various medical

practices, Crowder and Laing became employees of FMG’s OB/GYN

division.



                                   2
          Crowder later became dissatisfied with the new work

environment and other aspects of FMG’s business.   In January,

1996, Crowder discussed with Laing and another physician her

intention to leave FMG.   In May of that year, she wrote a letter

giving notice of her intention to disassociate herself from FMG.

Problems arose between Crowder and Laing shortly thereafter.

Specifically, the parties had disagreements regarding the date of

Crowder’s departure, the handling of her accounts receivable and

patient files, the disposition of her interest in the office

suite and equipment, and other matters attendant to her

departure.



          In September, 1996, Crowder notified Laing of her

intention to relocate her practice to Johnson City, Tennessee.

The parties’ Practice Agreement contains the following “buy-out”

provision:



          The value of the practice goodwill is
          recognized by both physicians. While this
          goodwill value is not considered as part of
          the hard assets, should Dr. Crowder wish to
          terminate this agreement and continue to
          practice in Carter or surrounding counties,
          the compensation for this goodwill value must
          be made to Dr. Laing. By agreement of the
          physicians the value of the goodwill
          compensation is set at [$]120,000....



On October 2, 1996, Crowder presented Laing with a copy of the

Practice Agreement that contained handwritten changes to the

above-quoted provision.   The changes purport to limit the buy-out

provision to the first five years of the agreement.   The initials

“BL” and “BJC” are affixed next to the handwritten

interlineations.   These changes were purportedly made on December

                                 3
27, 1987, as evidenced by the insertion of “12/27/87” next to the

changes.1



                         II.   Procedural History



            On October 28, 1996, Crowder filed suit against Laing,

Dr. John D. Green, David Dobyns, FMG and Health Care Consultants,

Inc., alleging that the defendants had interfered in various ways

with her medical practice.       Laing subsequently filed an answer.

At that time, he did not assert a counterclaim.            Thereafter, on

two separate occasions, Crowder was allowed to amend her

complaint.



            On May 6, 1997, an agreed order was entered dismissing

the count of Crowder’s complaint pertaining to the parties’

interests in the medical office suite.          Still later, Crowder took

a voluntary non-suit as to her claims of interference with her

business and/or contractual relationship with others.



            In the meantime, the parties were involved in

discussions regarding settlement of Crowder’s remaining claims.

On June 27, 1997, Laing’s attorney sent Crowder’s attorney a

letter, in which the former stated that he was transmitting a

“draft” of an agreement regarding the division of personal

property between the parties.        Three days later, on June 30,

Laing filed a motion to amend his answer, seeking to assert a

counterclaim against Crowder.        In his proposed counterclaim,



      1
       Since the Practice Agreement was signed in 1987, the buy-out
requirement would have expired in 1992 if the changes are valid.

                                      4
Laing alleged, among other things, that Crowder had forged his

initials to the handwritten changes to the Practice Agreement.

Laing asserted that he did not agree to the changes, which

Crowder in her deposition had acknowledged making.   Laing also

alleged that Crowder had engaged in “a scheme to defraud Laing

and FMG of their patient base; their assets; and their future

earning capacities.”   The counterclaim sought damages for

Crowder’s alleged breach of the Practice Agreement, fraud, and

intentional or negligent misrepresentation.   With respect to a

portion of his proposed counterclaim, Laing relied upon the buy-

out provision in the Practice Agreement as originally signed.     He

claimed that the facts supporting his counterclaim were developed

in discovery conducted with respect to Crowder’s claims.



          Following a hearing on the motion to amend, the trial

court denied Laing’s request to amend his answer to assert a

counterclaim.   In a subsequent order, the trial court stated that

Laing’s motion had been “withheld until lately filed to induce

compromise of plaintiff’s claims while withholding... Laing’s

proposed counterclaim.”   The trial court also found “that the

proposed counterclaim was a known compulsory counterclaim

pursuant to R[ule] 13 of the Tennessee Rules of Civil Procedure

and should have been filed with defendant’s answer in January of

1997.”



          Following the denial of his motion to amend, Laing, on

July 31, 1997, filed a separate complaint against Crowder setting

forth the identical causes of action that he had sought to assert

in the counterclaim.   At some unidentified time thereafter, Laing


                                 5
and Crowder apparently reached a final settlement of the latter’s

claims,2 and on August 25, 1997, the trial court entered an

“Order of Dismissal on Voluntary Non-suit”, dismissing, without

prejudice, Crowder’s claims against Laing,3 Green and FMG.

Pursuant to Crowder’s motion, the trial court subsequently

dismissed Laing’s complaint in the second lawsuit.            As to Laing’s

proposed counterclaim in the original case, the trial court

ultimately denied Laing’s motion to reconsider its refusal to

allow the amendment, but granted Laing’s motion for a

discretionary appeal.          See Rule 9, T.R.A.P.



                              III.   Applicable Law



               Rule 15.01, Tenn.R.Civ.P., provides, in pertinent part,

that “leave [to amend a pleading] shall be freely given when

justice so requires.”          The Supreme Court has emphasized the

liberality of this rule:



               ...Rule 15.01 provides that leave (to amend)
               shall be freely given when justice so
               requires. This proviso in the rules
               substantially lessens the exercise of pre-
               trial discretion on the part of a trial
               judge.... That rule needs no construction;
               it means precisely what it says, that “leave
               shall be freely given.”



Branch v. Warren, 527 S.W.2d 89, 91-92 (Tenn. 1975); see also

Gardiner v. Word, 731 S.W.2d 889, 891 (Tenn. 1987) and HMF Trust

v. Bankers Trust Co., 827 S.W.2d 296, 301 (Tenn.App. 1991).              The


      2
          The settlement documents are not in the record.
      3
       The record does not indicate why the settled claims against Laing were
dismissed without prejudice, rather than with prejudice.

                                         6
denial of a motion to amend lies within the sound discretion of

the trial court, and will not be reversed absent a showing of an

abuse of that discretion.     Hall v. Shelby County Retirement Bd.,

922 S.W.2d 543, 546 (Tenn.App. 1995).     Nevertheless, as this

court has stated, “[a]lthough amendments to the pleadings lie

within the discretion of the trial court, the rule mandates the

allowance of amendments if justice requires.”     HMF Trust, 827

S.W.2d at 301; Garthright v. First Tennessee Bank of Memphis, 728

S.W.2d 7, 9 (Tenn.App. 1986).



          There are several factors that a trial court should

consider in determining whether to grant a motion to amend.

These factors include: undue delay in filing the amendment; lack

of notice to the opposing party; bad faith on the part of the

moving party; repeated failure to cure deficiencies by previous

amendments; undue prejudice to the nonmoving party; and the

futility of amendment.     Gardiner, 731 S.W.2d at 891-92; Hall, 922

S.W.2d at 546.



                             IV.   Analysis



          Our review of the record in this case persuades us that

the trial court abused its discretion in denying Laing’s motion

to amend his answer.     We find (1) that Crowder would not have

been prejudiced by the allowance of the amendment; (2) that Laing

had not previously amended his answer; (3) that Crowder had

notice of the proposed amendment; and (4) that the amendment of




                                    7
Laing’s answer was facially in pursuit of a valid claim.4               See

Gardiner, 731 S.W.2d at 891-92; Hall, 922 S.W.2d at 546.



              As indicated earlier, the trial court found that Laing

had withheld his claim “to induce compromise of [Crowder’s]

claims,” and that the proposed counterclaim was compulsory and

should have been asserted in Laing’s answer.                As to the first

rationale given by the trial court, we do not find any indication

in the record to support such a conclusion.             Although the parties

were engaged in settlement negotiations when Laing filed his

motion to amend, it does not appear that they had reached a final

settlement.       This is evidenced by a number of things: the fact

that the letter from Laing’s attorney to Crowder’s attorney dated

June 27, 1997 -- only three days before the motion to amend was

filed -- makes reference to an enclosed “draft” of an agreement5;

Crowder’s assertion, in her response to Laing’s motion to amend,

that Laing’s motion was filed contemporaneously with his mailing

of the “last proposed settlement” to Crowder; and, most

significantly, the following language in a discovery-related

motion that was subsequently filed by Crowder on July 25, 1997:



              On or about the 10th day of July, 1997, the
              parties appeared to have reached tentative
              agreement concerning certain claims of
              plaintiff and plaintiff elected to file a
              non-suit as to other claims so that it seemed
              at that time that the expense of further
              discovery would not be necessary.




     4
         We express no opinion regarding the merits of Laing’s counterclaim.
     5
         The draft of the agreement is not in the record.

                                        8
(Emphasis added).     Furthermore, the order dismissing Crowder’s

remaining claims against Laing was not entered until August 25,

1997, almost two months after the motion to amend was filed.       The

preponderance of the evidence in the record before us is that

Crowder’s claims had not been finally settled when Laing filed

his motion to amend.    This seems clear from Crowder’s discovery-

related motion in which she affirmatively indicated that her

claims had not been settled as of a point in time some ten days

after the motion to amend was filed.



          Even if Laing strategically delayed the filing of his

motion to amend until after Crowder had entered into settlement

discussions with him regarding her claims, this did not prejudice

Crowder, who, as previously noted, had not settled her lawsuit

against Laing when the motion to amend was filed.       There is

nothing in the record to indicate that Laing engaged in some

impropriety that tricked Crowder into doing something that she

did not want to do.



          As to the trial court’s second rationale for denying

the motion to amend -- that the motion sought to assert a

compulsory counterclaim -- we do not find that this is a proper

basis for the trial court’s action.     Assuming, without deciding,

that the claims which the motion to amend sought to assert amount

to a compulsory counterclaim, this is more of a reason to allow

the amendment than to deny it.     This is true because, as a

compulsory counterclaim, it had to be asserted in the first suit

or be lost forever.     See Rule 13.01, Tenn.R.Civ.P.




                                   9
          Our conclusion in this case is consistent with the

mandate of Rule 15.01, Tenn.R.Civ.P., that leave to amend “shall

be freely given when justice so requires.”      See Branch, 527

S.W.2d at 91-92; Gardiner, 731 S.W.2d at 891; and HMF Trust, 827

S.W.2d at 301.    With respect to the factors set forth in the

cases, we find no indication in the record that the proposed

amendment to Laing’s answer was inappropriate.      See Gardiner, 731

S.W.2d at 891-92; Hall, 922 S.W.2d at 546.      A trial court is

responsible for adjudicating claims, and it should not deny a

party the right to assert a facially-valid claim except under

extreme circumstances.    In this case, the record does not support

the trial court’s reasons for refusing to allow Laing to pursue

his counterclaim.



                            V.   Conclusion



          In light of the foregoing, we hold that the trial court

abused its discretion in denying Laing’s motion to amend.         Given

this conclusion, it is not necessary for us to address the

additional issues raised by Laing.      We remand this case to the

trial court for the entry of an order allowing the amendment to

Laing’s answer.     This disposition renders Laing’s appeal of the

dismissal of his complaint in the second case moot, and that

appeal is therefore dismissed.     Exercising our discretion, we tax

the costs of these appeals one-half to each of the parties.        This

matter is remanded to the trial court for such further

proceedings as may be necessary, consistent with this opinion.



                                        __________________________


                                   10
     Charles D. Susano, Jr., J.




11
CONCUR:



_________________________
Houston M. Goddard, P.J.



_________________________
Don T. McMurray, J.




                            12
