Auxin, LLC et al. v. DW Interests, LLC et al.

This appeal concerns a claim for declaratory judgment and counterclaims for intentional misrepresentation and breach of contract arising from a series of agreements related to the development of a hotel and conference center in Cookeville, Tennessee. The developed property was to be owned by a limited liability company, and the plaintiffs sought a declaration that they had a right to buy the defendants’ interest in that company pursuant to an option in the operating agreement, which was to become effective upon a determination that the hotel project could not be completed with two identified, adjoining pieces of property. For their part, the defendants sought awards of compensatory and punitive damages based on allegations that the plaintiffs misrepresented their ability and intent to assist with financing and development tasks and then failed to perform those tasks as required by the parties’ development agreement. After the defendants filed their answer and counter-complaint, the plaintiffs moved for judgment on the pleadings based, in principal part, on the “undisputed” fact that the real estate purchase agreement for one of the two development properties had terminated. The plaintiffs also moved to dismiss the defendants’ intentional misrepresentation counterclaim for failure to state the allegations of fraud with particularity. But after the motions were filed and before they were heard, the defendants filed an amended answer with leave of the court in which they denied that the real estate purchase agreement had been properly terminated and asserted more particularized facts in support of their misrepresentation counterclaim. Nonetheless, the trial court granted the plaintiffs’ motions, declared that the real estate purchase agreement had been terminated, and dismissed the misrepresentation counterclaim. The plaintiffs then filed a motion to dismiss or for summary judgment on the remaining counterclaim for breach of contract, along with a motion for judicial notice of several public records. The trial court granted the motion under Rule 12.02 and, in the alternative, Rule 56. The defendants appeal. We vacate the trial court’s ruling that the plaintiffs were entitled to judgment on the pleadings because the defendants denied that the real estate purchase agreement had been properly terminated. But we affirm the dismissal of the misrepresentation counterclaim because the defendants failed to allege facts to establish the elements of their claim. We also affirm the trial court’s denial of the motion to continue because the record shows that the defendants were dilatory in prosecuting their contract claim. But we disagree with the court’s decision to take judicial notice of two newspaper articles, and we vacate the trial court’s ruling that the plaintiffs were entitled to dismissal of the contract counterclaim under Rule 12.02 and Rule 56. Thus, the decision of the trial court is vacated in part and affirmed in part, and this matter is remanded for further proceedings consistent with this opinion.