                                                                                            05/16/2018
                IN THE COURT OF APPEALS OF TENNESSEE
                            AT NASHVILLE
                                 January 9, 2018 Session

          ROBERT A. HANKS, ET AL. v. FIRST AMERICAN TITLE
                        INSURANCE CO.

                   Appeal from the Chancery Court for Sumner County
                  No. 2015-CV-42    Louis W. Oliver, III, Chancellor


                             No. M2017-00560-COA-R3-CV


Robert A. Hanks and Lee E. Hanks (“Plaintiffs”) sued First American Title Insurance Co.
(“First American”) for breach of contract with regard to an owner’s title insurance policy
(“Title Policy”). First American filed a motion for summary judgment. After a hearing,
the Chancery Court for Sumner County (“the Trial Court”) granted summary judgment to
First American after finding and holding, inter alia, that the Title Policy excluded any
claim pursuant to either federal bankruptcy code or Tennessee law for an alleged
fraudulent conveyance, fraudulent transfer, or preferential transfer. Plaintiffs appeal the
grant of summary judgment to this Court. We find and hold that First American made a
properly supported motion for summary judgment demonstrating that Plaintiffs’ evidence
is insufficient to establish an essential element of their claim and that Plaintiffs failed to
demonstrate that there are genuine disputed issues of material fact with regard to the
claims for fraudulent conveyance or fraudulent transfer. We further find and hold that
the claim for post-petition transfer is not excluded from coverage pursuant to exclusion 4
of the Title Policy, and, therefore, summary judgment on the post-petition claim was
improper. We, therefore, affirm the grant of summary judgment, in part, and reverse it,
in part, and remand this case to the Trial Court for further proceedings consistent with
this Opinion.

      Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Chancery Court
               Affirmed, in part; Reversed, in part; Case Remanded

D. MICHAEL SWINEY, C.J., delivered the opinion of the court, in which RICHARD H.
DINKINS and W. NEAL MCBRAYER, JJ., joined.

E. Covington Johnston, Jr., Franklin, Tennessee, for the appellants, Robert A. Hanks and
Lee E. Hanks.
Reba Brown and Brad W. Craig, Nashville, Tennessee, for the appellee, First American
Title Insurance Co.


                                       OPINION

                                      Background

       Plaintiffs own real property located on Valley Brook Drive in Sumner County,
Tennessee (“the Property”), which they purchased by Warranty Deed from Charles R.
Dennie and Joanne R. Dennie (“the Dennies”) on October 11, 2013. Charles Dennie is
the son of Plaintiff Lee E. Hanks and the step-son of Plaintiff Robert Hanks. The
Dennies had filed a Chapter 7 bankruptcy petition on October 10, 2013, the day before
the transfer of the Property. The bankruptcy petition listed the Property as one of the
Dennies’ assets. At the closing on the Property, the Dennies executed an affidavit as to
liens and encumbrances stating that no proceedings in bankruptcy or receivership had
been instituted against them.

       In connection with the closing on the Property, Plaintiffs executed a note and deed
of trust in the amount of $153,000 payable to CMG Mortgage, Inc. Plaintiffs also
purchased the Title Policy from First American. In pertinent part, the Title Policy
provides:

                          EXCLUSIONS FROM COVERAGE

      The following matters are expressly excluded from the coverage of this
      policy, and the Company will not pay loss or damage, costs, attorneys’ fees,
      or expenses that arise by reason of:

                                          ***

      3. Defects, liens, encumbrances, adverse claims, or other matters

      (a) created, suffered, assumed, or agreed to by the Insured Claimant;
      (b) not Known to the Company, not recorded in the Public Records at Date
      of Policy, but Known to the Insured Claimant and not disclosed in writing
      to the Company by the Insured Claimant prior to the date the Insured
      Claimant became an insured under this policy.
      (c) resulting in no loss or damage to the Insured Claimant;
      (d) attaching or created subsequent to Date of Policy (however, this does
      not modify or limit the coverage provided under Covered Risk 9 and 10); or
                                            2
      (e) resulting in loss or damage that would not have been sustained if the
      Insured Claimant had paid value for the Title.

      4. Any claim, by reason of the operation of federal bankruptcy, state
      insolvency, or similar creditors’ rights laws, that the transaction vesting the
      Title as shown in Schedule A, is

      (a) a fraudulent conveyance or fraudulent transfer; or
      (b) a preferential transfer for any reason not stated in Covered Risk 9 of this
      policy.

       The bankruptcy trustee (“Bankruptcy Trustee”) filed a complaint on December 9,
2013 in the United States Bankruptcy Court for the Middle District of Tennessee seeking
to void the transfer of the Property alleging that the transfer was a fraudulent transfer
under state law, a fraudulent transfer pursuant to the bankruptcy code, and an invalid
post-petition transfer under federal law. In pertinent part, the complaint filed by the
Bankruptcy Trustee specifically alleged:

             22. The Trustee, on behalf of the bankruptcy estate of the [Dennies]
      and on behalf the [sic] [Dennies’] unsecured creditors, is entitled to avoid,
      and recover back, all such fraudulent transfers, pursuant to, among other
      things, Tennessee’s law against fraudulent conveyances, T.C.A. § 66-3-
      101, et seq., and Tennessee’s codification of the Uniform Fraudulent
      Transfers Act, T.C.A. § 66-3-301, et seq., which include strong-arm
      provisions afforded to the Trustee pursuant to 11 U.S.C. § 544(b).

                                          ***

             27. The Trustee is entitled to avoid, and recover back, on behalf of
      the [Dennies’] bankruptcy estate, all such fraudulent transfers, pursuant to,
      among other things, the United States Bankruptcy Code’s Section
      prohibiting fraudulent transfers, 11 U.S.C. § 548.

                                          ***

             33. Trustee is entitled to avoid, and recover back, all such invalid
      post-petition transfers pursuant to 11 U.S.C. § 549. Pursuant to 11 U.S.C.
      §§ 550 and 551, [the Trustee] is entitled to recover back the avoided
      property or the value thereof, and such avoidances are recovered for the
      benefit of the estate.

                                            3
       Plaintiffs notified First American of the claim. First American investigated and
determined that Plaintiffs were related to the Dennies, that Plaintiffs agreed to purchase
the Property for $170,000, that CMG Mortgage Inc., in anticipation of closing, had
obtained an appraisal valuing the Property at $260,000, that at closing two mortgages
totaling approximately $132,500 were paid off, that the Dennies had received
approximately $29,515 in cash at closing, that the Dennies had filed for bankruptcy the
day before closing, and that the Dennies had executed the affidavit as to liens and
encumbrances at closing.

       First American refused Plaintiffs’ claim.        Plaintiffs paid $65,000 to the
Bankruptcy Trustee to clear title to the Property and extinguish claims and liens, and an
agreed order of voluntary dismissal was entered in the bankruptcy case. Plaintiffs sued
First American for breach of contract.

        First American filed a motion for summary judgment alleging that Plaintiffs could
not prove breach of contract as their claim was excluded under the Title Policy. Plaintiffs
opposed the motion for summary judgment and filed the affidavits of Plaintiffs. In their
affidavits, Plaintiffs each asserted that they paid $170,000 for the Property, that they had
no knowledge of the bankruptcy at the time of the closing on the Property, that prior to
the closing they had advanced approximately $35,000 to the Dennies to improve the
Property, that the appraised value of the Property on March 1, 2013 was $148,500, and
that they had obtained a mortgage on the Property in the approximate amount of
$150,000. Plaintiffs’ affidavits assert that a copy of the March 2013 appraisal is attached
to the affidavits, but the appraisal is not included in the record on appeal. Plaintiffs also
filed the affidavits of the Dennies in which the Dennies asserted similar facts to those
asserted in Plaintiffs’ affidavits and also asserted that the value of the Property was listed
as $163,000 in the bankruptcy petition and that they had not informed Plaintiffs about the
bankruptcy prior to the closing on the Property.

        After a hearing, the Trial Court granted First American summary judgment after
finding and holding, inter alia, that pursuant to exclusion number 4 the clear language of
the Title Policy excludes ‘any claim’ brought under the federal bankruptcy code or
Tennessee state law alleging a fraudulent conveyance, a fraudulent transfer, or a
preferential transfer, and that this is so despite the fact that Plaintiffs dispute that the
transfer was fraudulent and assert that the claim was settled without admission of
liability.

       Plaintiffs filed a motion to alter or amend alleging that the Trial Court erred
because the transfer was not on its face a fraudulent conveyance and also alleging that the
third claim in the complaint filed by the Bankruptcy Trustee was for an invalid post-
petition transfer, which Plaintiffs allege is not excluded from coverage under the Title
                                              4
Policy. First American responded to the motion to alter or amend asserting that
Plaintiffs’ motion to alter or amend was merely another attempt to argue their same point
and that the third claim in the complaint filed by the Bankruptcy Trustee is excluded
under exclusion number 3 in the Title Policy. The Trial Court denied the motion to alter
or amend after finding that the third claim also was excluded under exclusion number 4
of the Title Policy. Plaintiffs appeal to this Court.

                                              Discussion

       Plaintiffs raise one issue on appeal: whether the Trial Court erred in granting First
American’s motion for summary judgment. First American raises an additional issue
regarding whether the Trial Court erred in finding that exclusions 3(a) and 3(e) did not
apply to Plaintiffs’ claims.1

        As our Supreme Court has instructed:

               Summary judgment is appropriate when “the pleadings, depositions,
        answers to interrogatories, and admissions on file, together with the
        affidavits, if any, show 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.”
        Tenn. R. Civ. P. 56.04. We review a trial court’s ruling on a motion for
        summary judgment de novo, without a presumption of correctness. Bain v.
        Wells, 936 S.W.2d 618, 622 (Tenn. 1997); see also Abshure v. Methodist
        Healthcare–Memphis Hosp., 325 S.W.3d 98, 103 (Tenn. 2010). In doing
        so, we make a fresh determination of whether the requirements of Rule 56
        of the Tennessee Rules of Civil Procedure have been satisfied. Estate of
        Brown, 402 S.W.3d 193, 198 (Tenn. 2013) (citing Hughes v. New Life Dev.
        Corp., 387 S.W.3d 453, 471 (Tenn. 2012)).

                                                  ***



1
  In its brief on appeal, First American argues that the Trial Court ruled upon this issue and cites to the
transcript of the hearing on the motion to alter or amend in support of this assertion. As our Supreme
Court has stated: “the court speaks through its order, not through the transcript.” In re Adoption of
E.N.R., 42 S.W.3d 26, 31 (Tenn. 2001). In its order granting summary judgment, the Trial Court made no
determination as to whether exclusions 3(a) or 3(e) of the Title Policy applied, but rather based its
decision to grant summary judgment solely upon exclusion 4. In its order denying Plaintiffs’ motion to
alter or amend, the Trial Court found that the Bankruptcy Trustee’s claim for relief for an invalid post-
petition transfer also was excluded under exclusion 4 of the Title Policy and did not address exclusions
3(a) or 3 (e). As the Trial Court did not address the issue of whether exclusions 3(a) or 3(e) applied, the
issue is not properly before this Court.
                                                     5
      [I]n Tennessee, as in the federal system, when the moving party does not
      bear the burden of proof at trial, the moving party may satisfy its burden of
      production either (1) by affirmatively negating an essential element of the
      nonmoving party’s claim or (2) by demonstrating that the nonmoving
      party’s evidence at the summary judgment stage is insufficient to establish
      the nonmoving party’s claim or defense. We reiterate that a moving party
      seeking summary judgment by attacking the nonmoving party’s evidence
      must do more than make a conclusory assertion that summary judgment is
      appropriate on this basis. Rather, Tennessee Rule 56.03 requires the
      moving party to support its motion with “a separate concise statement of
      material facts as to which the moving party contends there is no genuine
      issue for trial.” Tenn. R. Civ. P. 56.03. “Each fact is to be set forth in a
      separate, numbered paragraph and supported by a specific citation to the
      record.” Id. When such a motion is made, any party opposing summary
      judgment must file a response to each fact set forth by the movant in the
      manner provided in Tennessee Rule 56.03. “[W]hen a motion for summary
      judgment is made [and] . . . supported as provided in [Tennessee Rule 56],”
      to survive summary judgment, the nonmoving party “may not rest upon the
      mere allegations or denials of [its] pleading,” but must respond, and by
      affidavits or one of the other means provided in Tennessee Rule 56, “set
      forth specific facts” at the summary judgment stage “showing that there is a
      genuine issue for trial.” Tenn. R. Civ. P. 56.06. The nonmoving party
      “must do more than simply show that there is some metaphysical doubt as
      to the material facts.” Matsushita Elec. Indus. Co., 475 U.S. at 586, 106 S.
      Ct. 1348. The nonmoving party must demonstrate the existence of specific
      facts in the record which could lead a rational trier of fact to find in favor of
      the nonmoving party. If a summary judgment motion is filed before
      adequate time for discovery has been provided, the nonmoving party may
      seek a continuance to engage in additional discovery as provided in
      Tennessee Rule 56.07. However, after adequate time for discovery has
      been provided, summary judgment should be granted if the nonmoving
      party’s evidence at the summary judgment stage is insufficient to establish
      the existence of a genuine issue of material fact for trial. Tenn. R. Civ. P.
      56.04, 56.06. The focus is on the evidence the nonmoving party comes
      forward with at the summary judgment stage, not on hypothetical evidence
      that theoretically could be adduced, despite the passage of discovery
      deadlines, at a future trial.

Rye v. Women’s Care Cntr. of Memphis, MPLLC, 477 S.W.3d 235, 250, 264-65 (Tenn.
2015).

                                             6
        In addressing the issue raised, we will consider first the claims made by the
Bankruptcy Trustee of fraudulent transfer pursuant to federal bankruptcy and Tennessee
state law. Then we will discuss the claim made by the Bankruptcy Trustee with regard to
post-petition tranfer.

       In their brief on appeal, Plaintiffs argue that exclusion number 4 of the Title Policy
is not applicable because the Bankruptcy Trustee would not be able to prove that the
transfer of the Property to Plaintiffs was a fraudulent conveyance or a preferential
transfer. Plaintiffs have missed the point.

       The Trial Court construed the plain and unambiguous language contained in
exclusion 4 of the Title Policy and found and held, inter alia:

       The Exclusions From Coverage in the instant Owners Policy clearly
       exclude (in paragraph numbered 4.) coverage for “ANY CLAIM” made and
       does not separate valid or invalid, disputed or undisputed, claim but “ANY
       CLAIM”. The language is unambigusous and clear that the Defendant
       First American Title Insurance Company would not have to defend a claim
       brought under the Federal Bankruptcy Code or Tennessee State law which
       alleged a fraudulent conveyance, a fraudulent transfer or a preferential
       transfer.

       We interpret contracts of insurance using the same principles of construction as
are used for interpreting any other contracts. Swanson v. Mid-South Title Ins. Corp., 692
S.W.2d 415, 419 (Tenn. Ct. App. 1985). As this Court explained in Quebecor Printing
Corp. v. L & B Mfg. Co.:

       In resolving a dispute concerning contract interpretation, our task is to
       ascertain the intention of the parties based upon the usual, natural, and
       ordinary meaning of the contract language. Planters Gin Co. v. Fed.
       Compress & Warehouse Co., Inc., 78 S.W.3d 885, 889–90 (Tenn.
       2002)(citing Guiliano v. Cleo, Inc., 995 S.W.2d 88, 95 (Tenn. 1999)). A
       determination of the intention of the parties “is generally treated as a
       question of law because the words of the contract are definite and
       undisputed, and in deciding the legal effect of the words, there is no
       genuine factual issue left for a jury to decide.” Planters Gin Co., 78
       S.W.3d at 890 (citing 5 Joseph M. Perillo, Corbin on Contracts, § 24.30
       (rev. ed. 1998)); Doe v. HCA Health Servs. of Tenn., Inc., 46 S.W.3d 191,
       196 (Tenn. 2001)). The central tenet of contract construction is that the
       intent of the contracting parties at the time of executing the agreement
                                             7
      should govern. Planters Gin Co., 78 S.W.3d at 890. The parties’ intent is
      presumed to be that specifically expressed in the body of the contract. “In
      other words, the object to be attained in construing a contract is to ascertain
      the meaning and intent of the parties as expressed in the language used and
      to give effect to such intent if it does not conflict with any rule of law, good
      morals, or public policy.” Id. (quoting 17 Am.Jur.2d, Contracts, § 245).

             This Court’s initial task in construing the [contract] at issue, as was
      the Trial Court’s, is to determine whether the language of the contract is
      ambiguous. Planters Gin Co., 78 S.W.3d at 890. If the language is clear
      and unambiguous, the literal meaning of the language controls the outcome
      of the dispute. Id. A contract is ambiguous only when its meaning is
      uncertain and may fairly be understood in more than one way. Id.
      (emphasis added). If the contract is found to be ambiguous, we then apply
      established rules of construction to determine the intent of the parties. Id.
      Only if ambiguity remains after applying the pertinent rules of construction
      does the legal meaning of the contract become a question of fact. Id.

                                           ***

             It is not the role of this Court “to make a different contract than that
      executed by the parties.” Posner v. Posner, No. 02A01-9710-CV-00249,
      1997 WL 796216, at *2–3, 1997 Tenn. App. LEXIS 930, at *6 (Tenn. Ct.
      App. Dec. 30, 1997), no appl. perm. appeal filed. See also, e.g., Central
      Drug Store v. Adams, 184 Tenn. 541, 201 S.W.2d 682 (1947). “In the
      absence of fraud or mistake, a contract must be interpreted and enforced as
      written even though it contains terms which may be thought to be harsh or
      unjust.” Tenpenny v. Tenpenny, No. 01-A-01-9406-CV-00296, 1995 WL
      70571, at *6, 1995 Tenn. App. LEXIS 105, at *15 (Tenn. Ct. App. Feb. 22,
      1995), appl. perm. appeal denied July 3, 1995.

Quebecor Printing Corp. v. L & B Mfg. Co., 209 S.W.3d 565, 578–81 (Tenn. Ct. App.
2006). This Court further has noted:

      “Like other policies of insurance, title policies are liberally construed
      against the insurer and in favor of the insured.” Walker Rogge, Inc. v.
      Chelsea Title & Guaranty Co., 116 N.J. 517, 529, 562 A.2d 208 (1989).
      “Notwithstanding that principle of construction, courts should not write for
      the insured a better policy of insurance than the one purchased.” Id. (citing
      Last v. West Am. Ins. Co., 139 N.J.Super. 456, 460, 354 A.2d 364
      (App.Div.1976)).
                                             8
The Peoples Bank v. Troutman, No. E2014-01150-COA-R3-CV, 2015 WL 4511540, at
*7 (Tenn. Ct. App. July 27, 2015), Rule 11 appl. perm. appeal denied Nov. 24, 2015
(quoting Wolf v. Clack, No. E2009–01126–COA–R3–CV, 2009 WL 5173715 at *4–5
(Tenn. Ct. App. Dec. 30, 2009), no appl. perm. appeal filed (other internal citations
omitted)).

        Plaintiffs argue in their brief on appeal that the Bankruptcy Trustee would be
unable to prove that the transfer of the Property was fraudulent or preferential. Whether
this assertion is true or not, however, is immaterial to the issue now before us. The clear
and unambiguous language of exclusion 4 of the Title Policy specifically excludes: “Any
claim, by reason of the operation of federal bankruptcy, state insolvency, or similar
creditors’ rights laws, that the transaction vesting the Title . . . is . . . a fraudulent
conveyance or fraudulent transfer; or . . . a preferential transfer . . . .” The Title Policy
states “Any claim . . . .” The language could not be clearer. It does not state any ‘valid
claim,’ any ‘proven claim,’ any ‘undisputed claim,’ or other similar qualifying language.
Rather, exclusion 4 of the Title Policy clearly and unambiguously excludes “Any claim . .
.,” and the Bankruptcy Trustee filed a claim alleging that the transfer of the Property was
a fraudulent transfer or preferential transfer under both federal and Tennessee state law.

       As the Bankruptcy Trustee made a claim of fraudulent or preferential transfer
under federal law and Tennessee state law, and the Title Policy clearly and
unambiguously provides an exception for any such claim, First American demonstrated
that Plaintiffs would be unable to prove breach of contract. The burden then shifted to
Plaintiffs to show that there are genuine disputed issues of material fact.

       In their response to the motion for summary judgment and the accompanying
affidavits, Plaintiffs showed that there are disputed issues of fact with regard to whether
Plaintiffs had knowledge of the bankruptcy prior to the transfer of the Property and
whether Plaintiffs paid full value for the Property. These disputed issues, however, do
not address exclusion 4 of the Title Policy, which as discussed above, excludes: “Any
claim, by reason of the operation of federal bankruptcy, state insolvency, or similar
creditors’ rights laws, that the transaction vesting the Title . . . is . . . a fraudulent
conveyance or fraudulent transfer; or . . . a preferential transfer . . . .” Plaintiffs failed to
show that there are any genuine disputed issues of material fact with regard to First
American’s motion based upon exclusion 4 of the Title Policy with regard to the claims
for fraudulent transfer “by reason of the operation of federal bankruptcy, state insolvency,
or similar creditors’ rights laws . . . .” As First American made a properly supported
motion for summary judgment negating an essential element of Plaintiffs’ claim and
Plaintiffs failed to show any genuine disputed issues of material fact, we find no error in

                                               9
the Trial Court’s grant of summary judgment to First American with regard to the
Bankruptcy Trustee’s claims of fraudulent transfer.

       With regard to the Bankruptcy Trustee’s claim regarding a post-petition transfer,
however, the analysis differs. Specifically, the Bankruptcy Trustee made a claim to
recover back for an “invalid post-petition transfer[] pursuant to 11 U.S.C. § 549.” The
Bankruptcy Trustee did not allege a violation of Tennessee state law with regard to this
specific claim. Plaintiffs argue that post-petition transfers are not fraudulent transfers
pursuant to federal bankruptcy code, and therefore, that the claim for the post-petition
transfer is not excluded by exclusion 4 in the Title Policy.

       In pertinent part, the bankruptcy code provides that fraudulent transfers and
obligations are ones “made or incurred on or within 2 years before the date of the filing
of the petition . . . .” 11 U.S.C.A. § 548 (2005). Obviously, the post-petition transfer of
the Property, however, did not occur on or before the date the Dennies filed the petition
for bankruptcy. As such, the claim made by the Bankruptcy Trustee regarding the post-
petition transfer is not a claim of a fraudulent conveyance or fraudulent transfer under the
federal bankruptcy code and does not fall within the ambit of exclusion 4 of the Title
Policy. As the claim for post-petition transfer was not excluded pursuant to exclusion 4
of the Title Policy, summary judgment on this basis with regard to this claim was
improper.

       As discussed above, there are genuine disputed issues of material fact with regard
to whether Plaintiffs knew about the bankruptcy prior to the transfer of the Property and
whether Plaintiffs paid adequate value for the Property. To paraphrase Senator Howard
Baker in the Senate Watergate hearings: “What did the Plaintiffs know and when did they
know it?” Development of these issues could result in the claim for post-petition transfer
being excluded pursuant to exclusion 3 of the Title Policy. Such disputed issues,
however, preclude a grant of summary judgment on this issue at this time. Furthermore,
as noted above, specifically in footnote 1, the Trial Court did not address whether the
claim for post-petition transfer was excluded under exclusion 3 of the Title Policy.

       We affirm the grant of summary judgment with regard to the claims for fraudulent
transfer as First American made a properly supported motion for summary judgment
negating an essential element of Plaintiffs’ claim with regard to these claims and there are
no genuine disputed issues of material fact. We reverse the grant of summary judgment
with regard to the claim for post-petition transfer as this claim is not excluded pursuant to
exclusion 4 of the Title Policy, and there are genuine disputed issues of material fact with
regard to this claim as relevant to exclusion 3 of the Title Policy.



                                             10
                                       Conclusion

       The judgment of the Trial Court granting summary judgment to First American is
affirmed, in part, and reversed, in part, and this cause is remanded to the Trial Court for
further proceedings consistent with this Opinion and for collection of the costs below.
The costs on appeal are assessed one-half against the appellants, Robert A. Hanks and
Lee E. Hanks, and their surety; and one-half against the appellee, First American Title
Insurance Co.




                                          _________________________________
                                          D. MICHAEL SWINEY, CHIEF JUDGE




                                            11
