ÿWPCÏy í£4u^ü•K •K A¼ÒùÐÁ[W Èµ½íœ¶çeï³d@Þý߇ }0¦ª ™7êM”³7dÝq.»ËH¿qâª1›åÑÁ~?~˜òízƒ>LÏÐãôž8=11/Ú‰_ ™ Væ-g2Z·]Â=èdņt+õÿ«‰É¾ãÓòÝïY“{Bp»Þ¸K=™óÌ·„2Ñ!Ò5j1àx‰‹_0ü¯>âÀ/†¼WÈ>Q2`Š9Ð ¹ùX£]nS×ó›6‘…á6U9îÒ® ”͡ѿÑXš?Ö ¹k·»o¹ ÆkÑ«6LOCìÑš¤;*Hç)KöWPɪ.¨²&€ák%œÍŠùT›¼Àç2^%[4ïdøùiû6™­Ì&ëÔ/¤Ðö½|¤$¶aÞtûT‹öÎÞY„4WXvþn1›fåw´„ÆÉP*?!îD6Ã[k; ¢±§œü ERô4d¯§¢¥£Ì+ÕídÅ8’¡@,‰dÊhSƒ0°ê)à àœFë‡ÄÀdÓ¥¦nÐÌcSš‡äÒIÉb“Dý8a]Nxâ­#ˆ §’ª¨ÏrþbÜ=6`­uþÛ_ð_å‹°R$¯{ŠØÙÞYdÎzýÝ 0HÁ¢¤äõß÷Pî#É %Í^ Ó 0ˆßU:Ngwµ4¹ zÍÒG( m*HAƉÆOÆÆÛ 0 D¡Nåå!çEw s2ô!?&$&$!e& †*q----- 0U1 0ãU1 0Å82 0¿ý2 0¹¼3 0³u4 0­(5 0§Õ5 0¡|6 0Å7 0Ñâ7b³8³8³8 0³»8 0­n9 0§: 0¡Â: 0›c; 0•þ;þ; 0“< 0 = 0Îâ= 0°°> 0ª`? 0¤ @ 0ž®@ 0˜LALA 0’äA 0ŠvBvBvBvBvBvBvBvBvBvBvBvBvBvBvBvB 0 ëCCCC BëCëC 0¤D D3¬D D-ßD 0K E E ASWEƪE 0¤pF 0DG A«XGXGXGXGXGXGXGXGXGXGXGXGXGXGXGXGXGXGXGåHHHHHHHHHHHHHHHHHHH 1UèH B-=I=I=IÙjIjIŠCJCJ0ÍMÍMîýNýN…ëQëQ¬pSpSpSÈUU¹äVäVWW"YY¤¿Z¿Z4c\c\ñ—^—^5ˆ`ˆ`B½a½aôÿcÿcyógógJljljF¶k¶k4ülül¹0o0o0o0o0o0o0o0o0oœépépépépépépépépépépépépépépépépépépépépépépépépépépépépépépépépépépépépép 0£…x…x…x…x…x…x…x…x…x…x 1u(y 72y˜\\ib01s01\clerk1nasÈÈ,,,,ÈÈ0»M¦ˆ1 (`£ª$¡¡Ñ€.ÑÑ8€½­»»d»»d8ÑÑ ý ÑÓ  Ó(í€"  Z6Times New Roman Regular„‚–0ê:i¢×+00 ˜C:\PROGRA~1\COREL\WORDPE~1\TEMPLATE\CUSTOM~1\REVISE~1.WPTC:\Program Files\Corel\WordPerfect Office 2000\Template\Custom WP Templates\revised standard opinion.wpt3|xÿU‹ÿÀÀÀ >Ý ƒRn]$ÝÓ  Óà  àòòÚ  Ú22Ú  ÚóóÔ€ôà ò»»ÔÝ  ÝÔ_ÔTenn.€R.€Civ.€P.€8.01€affords€plaintiffs€wide€latitude€in€pleading€claims€for€alternative€relief.€€òòConcreteÐ À ÐSpaces,€Inc.€v.€Senderóó,€2€S.W.3d€901,€906€(Tenn.€1999).€€Level 1Level 2Level 3Level 4Level 5‚Level 1Level 2Level 3Level 4Level 5„Level 1Level 2Level 3Level 4Level 5…Level 1Level 2Level 3Level 4Level 5(#Ã$òòÚ  Ú0Ú  Úóó Ý ƒRn]$ÝÓ  Óà  àòòÚ  Ú31Ú  ÚóóÔ€ôà ò»»ÔÝ  ÝÔ_ÔThe€Tennessee€Supreme€Court€has€even€upheld€an€award€of€attorneyððs€fees€under€42€U.S.C.A.€ðð€1988€(1991)Ð À Ðeven€though€the€plaintiff€did€not€specifically€plead€or€rely€on€42€U.S.C.€ðð€1983€(1991).€€òòBloomingdaleððs€By€Mail€v.Ð „Ä ÐÔ_ÔHuddlestonÔ_Ôóó,€848€S.W.2d€52,€56€(Tenn.€1992).€€Although€the€opinion€does€not€say€so,€we€presume€that€the€taxpayer€inÐ Hˆ Ðthe€case€sought€to€recover€attorneyððs€fees€under€Tenn.€Code€Ann.€ðð€67„1„1803(d)€(2003),€which€permits€prevailingÐ  L Ðtaxpayers€to€recover€attorneyððs€fees€in€litigation€seeking€a€tax€refund.€€€€€ mÝ ƒRn]$ÝÓ  Óà  àòòÚ  Ú23Ú  ÚóóÔ€ôà ò»»ÔÝ  ÝÔ_ÔThe€Division€of€Securitiesðð€October€1999€cease€and€desist€order€accused€Mr.€Harris€of€selling€unregisteredÐ À Ðsecurities€without€a€license.€€In€addition,€the€Hardcastlesðð€and€Mr.€Provanceððs€consumer€protection€claims€rested€onÐ „Ä Ðallegations€that€Mr.€Harris€had€sold€them€unregistered€securities.€€The€civil€warrant€Mr.€Pope€filed€in€May€2001Ð Hˆ Ðspecifically€alleged€that€Mr.€Harris€had€violated€the€Tennessee€Securities€Act€of€1980.€ iÝ ƒRn]$ÝÓ  Óà  àòòÚ  Ú24Ú  ÚóóÔ€ôà ò»»ÔÝ  ÝÔ_ÔAs€a€result€of€Mr.€Harrisððs€concession,€his€investors€were€only€required€to€prove€(1)€that€the€Merit€QuestÐ À Ðcontracts€had€not€been€registered€as€securities,€(2)€that€Mr.€Harris€and€his€agents€were€not€licensed€to€sell€securities€inÐ „Ä ÐTennessee,€and€(3)€that€Mr.€Harris€and€his€agents€actually€sold€Merit€Quest€contracts€in€Tennessee.€€These€factual€issuesÐ Hˆ Ðare€straightforward.€€Mr.€Harris€had€never€denied€that€he€and€his€agents€had€sold€Merit€Quest€contracts€in€Tennessee.€Ð  L ÐHe€also€had€admitted€that€the€Merit€Quest€contracts€had€not€been€registered€as€securities€and€that€neither€he€nor€his€agentsÐ Ð Ðwere€licensed€to€sell€securities€in€Tennessee. (Ý ƒRn]$ÝÓ  Óà  àòòÚ  Ú25Ú  ÚóóÔ€ôà ò»»ÔÝ  ÝÔ_ÔReasonable€reliance€on€the€defendantððs€representations€is€an€essential€ingredient€in€both€fraud€and€negligentÐ À Ðmisrepresentation€claims.€€òòSeeóó€òòRobinson€v.€Ô_ÔOmeróóÔ_Ô,€952€S.W.2d€423,€427€(Tenn.€1997)€(negligent€misrepresentation);Ð „Ä ÐòòHodges€v.€S.€C.€Ô_ÔToofÔ_Ô€&€Co.óó,€833€S.W.2d€896,€901€(Tenn.€1992)€(ð ðfraudðð). 5Ý ƒRn]$ÝÓ  Óà  àòòÚ  Ú27Ú  ÚóóÔ€ôà ò»»ÔÝ  ÝÔ_ÔòòGeorge€v.€Building€Materials€Corp.óó,€44€S.W.3d€481,€487€(Tenn.€2001)€(holding€that€failure€to€specificallyÐ À Ðplead€an€affirmative€defense€will€not€result€in€a€waiver€if€the€opposing€party€is€given€fair€notice€of€the€defense€and€anÐ „Ä Ðopportunity€to€refute€it).€€òòSee€also€Tips€Package€Store,€Inc.€v.€Commercial€Ins.€Managers,€Inc.óó,€86€S.W.3d€543,€553Ð Hˆ Ð(Tenn.€Ct.€App.€2001). Ý ƒRn]$ÝÓ  Óà  àòòÚ  Ú29Ú  ÚóóÔ€ôà ò»»ÔÝ  ÝÔ_ÔThe€amendment€to€the€Hardcastlesðð€complaint€related€back€to€the€date€of€the€filing€of€their€original€complaint.€Ð À ÐPursuant€to€Tenn.€R.€Civ.€P.€15.03,€an€amended€complaint€relates€back€to€the€original€complaint€as€long€as€it€ð ðarose€outÐ „Ä Ðof€the€conduct,€transaction,€or€occurrence€set€forth€.€.€.€in€the€original€pleading,ðð€regardless€of€whether€the€amended€claimÐ Hˆ Ðstates€a€new€cause€of€action.€òò€Hawk€v.€Chattanooga€Orthopaedic€Group,€P.C.óó,€45€S.W.3d€24,€31€(Tenn.€Ct.€App.€2000).€Ð  L ÐThe€language€of€Tenn.€R.€Civ.€P.€15.03€is€so€clear€that€it€is€ð ðvirtually€self„executing.ðð€€òòKarash€v.€Pigottóó,€530€S.W.2d€775,Ð Ð Ê Ð777€(Tenn.€1975).€€Accordingly,€the€trial€court€correctly€determined€that€the€Hardcastlesðð€amended€complaint€relatedÐ À Ðback€to€the€filing€of€their€original€complaint. ÿÝ ƒRn]$ÝÓ  Óà  àòòÚ  Ú28Ú  ÚóóÔ€ôà ò»»ÔÝ  ÝÔ_ÔOther€courts€have€also€invoked€the€doctrine€of€equitable€estoppel€upon€proof€of€a€defendantððs€affirmativeÐ À Ðstatements€that€the€statute€of€limitations€period€was€longer€than€it€actually€was,€òòParedes€v.€Princess€Cruise,€Inc.óó,€1€F.Ð „Ä ÐSupp.€2d€87,€91€(D.€Mass.€1998);€òòÔ_ÔLivingstonÔ_Ô€v.€Diocese€of€Clevelandóó,€710€N.E.2d€330,€339€(Ohio€Ct.€App.€1998),€orÐ Hˆ Ða€defendantððs€continuation€of€settlement€negotiations€in€bad€faith.€€òòALI,€Inc.€v.€Ô_ÔGenerallÔ_Ôóó,€954€F.€Supp.€118,€121€(D.N.J.Ð  L Ð1997).€€ gÝ ƒRn]$ÝÓ  Óà  àòòÚ  Ú30Ú  ÚóóÔ€ôà ò»»ÔÝ  ÝÔ_ÔThe€combination€of€the€repeated€use€of€the€conjunction€ð ðorðð€and€the€preceding€comma€is€inconsistent€withÐ À Ða€basic€rule€of€punctuation€and€grammar.€€No€comma€is€needed€if€all€the€elements€in€the€series€are€joined€by€conjunctions.€Ð „Ä ÐòòBryan€A.€Garner,€The€Ô_ÔRedbookÔ_Ô:€A€Manual€on€Legal€Style€óóðð€1.3(c)€(2002).€€Because€we€must€presume€that€theÐ Hˆ ÐGeneral€Assembly€chose€its€words€carefully€and€crafted€the€statute€deliberately,€we€must€presume€that,€by€using€ð ð,€orððÐ  L Ðthe€General€Assembly€did€not€intend€all€of€the€independent€elements€in€Tenn.€Code€Ann.€ðð€48„2„122(a)(1)(A)€to€be€inÐ Ð Ðthe€same€series.€€€*+ ÿÿ(_26Ô2ÔÔ3  Ôà..à*G+G ÿÿ(_25Ó ¨ý ÓÓ ° ÓÓ/%` ` ¸ hÀpÈ xÐ /ÓÔ2ÔÔ3  Ôà..àÓ/%` ` ¸ hÀpÈ xÐ /ÓÓ ¨ý ÓÓ ° Ó*8+8 ÿÿ(_24Ó  ÓÓ,"¸ ¸ hÀpÈ xÐ ,ÓÔ2ÔÔ3  Ôà..àÓ,"¸ ¸ hÀpÈ xÐ ,ÓÓ  Ó*5+5 ÿÿ(_23Ó ` ÓÓ) hÀpÈ xÐ )ÓÔ2ÔÔ3  Ôà..àÓ) hÀpÈ xÐ )ÓÓ ` Ó*2+2 ÿÿ(_22Ó ¸ ÓÓ&hhÀpÈ xÐ &ÓÔ2ÔÔ3  Ôà..àÓ&hhÀpÈ xÐ &ÓÓ ¸ Ó*/+/ ÿÿ(_21Ó  ÓÓ#ÀÀpÈ xÐ #ÓÔ2ÔÔ3  Ôà..àÓ#ÀÀpÈ xÐ #ÓÓ  Ó*,+, ÿÿ(_20Ó h ÓÓ pÈ xÐ ÓÔ2ÔÔ3  Ôà..àÓ pÈ xÐ ÓÓ h Ó*)+) ÿÿ(_19Ó À ÓÓppÈ xÐ ÓÔ2ÔÔ3  Ôà..àÓppÈ xÐ ÓÓ À Ó*&+& ÿÿ(_18Ó  ÓÓÈÈ xÐ ÓÔ2ÔÔ3  Ôà..àÓÈÈ xÐ ÓÓ  Ó*AA ÿÿ(_17Ó  ÓÓ5+° °` ¸ hÀpÈ xÐ 5ÓÔ2ÔÔ3  Ô€Ó5+° °` ¸ hÀpÈ xÐ 5ÓÓ  Ó*GG ÿÿ(_16Ó ¨ý ÓÓ ° ÓÓ/%` ` ¸ hÀpÈ xÐ /ÓÔ2ÔÔ3  Ô€Ó/%` ` ¸ hÀpÈ xÐ /ÓÓ ¨ý ÓÓ ° Ó- ù-*88 ÿÿ(_15Ó  ÓÓ,"¸ ¸ hÀpÈ xÐ ,ÓÔ2ÔÔ3  Ô€Ó,"¸ ¸ hÀpÈ xÐ ,ÓÓ  Ó*55 ÿÿ(_14Ó ` ÓÓ) hÀpÈ xÐ )ÓÔ2ÔÔ3  Ô€Ó) hÀpÈ xÐ )ÓÓ ` Ó*22 ÿÿ(_13Ó ¸ ÓÓ&hhÀpÈ xÐ &ÓÔ2ÔÔ3  Ô€Ó&hhÀpÈ xÐ &ÓÓ ¸ Ó*// ÿÿ(_12Ó  ÓÓ#ÀÀpÈ xÐ #ÓÔ2ÔÔ3  Ô€Ó#ÀÀpÈ xÐ #ÓÓ  Ó*,, ÿÿ(_11Ó h ÓÓ pÈ xÐ ÓÔ2ÔÔ3  Ô€Ó pÈ xÐ ÓÓ h Ó*)) ÿÿ(_10Ó À ÓÓppÈ xÐ ÓÔ2ÔÔ3  Ô€ÓppÈ xÐ ÓÓ À Ó(&& ÿÿ&_9Ó  ÓÓÈÈ xÐ ÓÔ2ÔÔ3  Ô€ÓÈÈ xÐ ÓÓ  Ó(AA ÿÿ&_8Ó  ÓÓ5+° °` ¸ hÀpÈ xÐ 5ÓÔ2ÔÔ3  ÔÓ5+° °` ¸ hÀpÈ xÐ 5ÓÓ  Ó(GG ÿÿ&_7Ó ¨ý ÓÓ ° ÓÓ/%` ` ¸ hÀpÈ xÐ /ÓÔ2ÔÔ3  ÔÓ/%` ` ¸ hÀpÈ xÐ /ÓÓ ¨ý ÓÓ ° Ó(88 ÿÿ&_6Ó  ÓÓ,"¸ ¸ hÀpÈ xÐ ,ÓÔ2ÔÔ3  ÔÓ,"¸ ¸ hÀpÈ xÐ ,ÓÓ  Ó(55 ÿÿ&_5Ó ` ÓÓ) hÀpÈ xÐ )ÓÔ2ÔÔ3  ÔÓ) hÀpÈ xÐ )ÓÓ ` Ó(22 ÿÿ&_4Ó ¸ ÓÓ&hhÀpÈ xÐ &ÓÔ2ÔÔ3  ÔÓ&hhÀpÈ xÐ &ÓÓ ¸ Ó(// ÿÿ&_3Ó  ÓÓ#ÀÀpÈ xÐ #ÓÔ2ÔÔ3  ÔÓ#ÀÀpÈ xÐ #ÓÓ  Ó(,, ÿÿ&_2Ó h ÓÓ pÈ xÐ ÓÔ2ÔÔ3  ÔÓ pÈ xÐ ÓÓ h Ó()) ÿÿ&_1Ó À ÓÓppÈ xÐ ÓÔ2ÔÔ3  ÔÓppÈ xÐ ÓÓ À Ó&&& ÿÿ$_Ó  ÓÓÈÈ xÐ ÓÔ2ÔÔ3  ÔÓÈÈ xÐ ÓÓ  Ó(|G2n]$¤¤Ý ƒ£ª!ÝÑ€.ÑÑ8€Hé»»dd8ÑÑ ý ÑÓ  ÓÝ  Ýà  àòòÚ  Ú0Ú  ÚóóÔ€ôà ò»»Ô d(|3G$££Ý ƒ£ª!ÝÑ€.ÑÑ8€Hé»»dd8ÑÑ ý ÑÓ  ÓÝ  ÝVVVV'ÿÿdxd)!ÈÈÈÈdxdx( ±þ$’’ò òFigure€Ú  Ú1Ú  Úó ó^_X`YEþÿ<<CÿÿƒLevel 1Level 2Level 3Level 4Level 5(|3G$¢¢Ý ƒ£ª!ÝÑ€.ÑÑ8€Hé»»dd8ÑÑ ý ÑÓ  ÓÝ  Ý($$””ò òÚ  Ú1Ú  Úó óX[Z&OLE 2.0 Box <=8ÿÿÿÿÿÿÿÿÿÿCÿÿ HKKKK ÛÝ ƒRn]$ÝÓ  Óà  àòòÚ  Ú26Ú  ÚóóÔ€ôà ò»»ÔÝ  ÝÔ_ÔòòRawlings€v.€John€Hancock€Mut.€Life€Ins.€Co.óó,€78€S.W.3d€291,€300€(Tenn.€Ct.€App.€2001).$ÿÿ359=AEIMQ111111111)Hairline d ÏÝ ƒRn]$ÝÓ  Óà  àòòÚ  Ú1Ú  ÚóóÔ€ôà ò»»ÔÝ  ÝÔ_ÔParticipants€investing€$100,000€or€more€would€earn€fifty€percent€(50%)€per€month. €Ý ƒRn]$ÝÓ  Óà  àòòÚ  Ú2Ú  ÚóóÔ€ôà ò»»ÔÝ  ÝÔ_ÔThese€materials€included:€(1)€a€description€of€the€Merit€Quest€program;€(2)€a€chart€showing€the€projectedÐ À Ðearnings€of€investments€from€$10,000€to€$25,000;€(3)€an€ð ðUnderstanding€and€Agreementðð€to€be€signed€by€the€investorÐ „Ä Ðand€Mr.€Harris;€€(4)€a€ð ðLetter€of€Intentðð€to€be€signed€by€the€investor;€(5)€a€ð ðJoint€Interest€Agreementðð€to€be€signed€byÐ Hˆ Ðthe€investor€and€Mr.€Harris;€(6)€a€power€of€attorney€to€be€signed€by€the€investor;€(7)€a€withdrawal€request€form€to€beÐ  L Ðsigned€by€the€investor;€and€(8)€instructions€for€wiring€investments€directly€to€an€account€at€Lloydððs€Bank€in€LondonÐ Ð Ðpurportedly€controlled€by€Merit€Quest€for€the€use€of€Hercules€Holding.€ &Ý ƒRn]$ÝÓ  Óà  àòòÚ  Ú3Ú  ÚóóÔ€ôà ò»»ÔÝ  ÝÔ_ÔThe€ð ðprojectedðð€earnings€of€a€$10,000€investment€were€$145,508€if€the€participant€left€all€of€his€or€her€earningsÐ À Ðin€the€program€for€one€year. äÝ ƒRn]$ÝÓ  Óà  àòòÚ  Ú4Ú  ÚóóÔ€ôà ò»»ÔÝ  ÝÔ_ÔThese€guarantees€took€the€form€of€a€ð ðpromissory€noteðð€on€Impact€stationery€stating€that€ð ð[Ô_Ôi]tÔ_Ô€is€agreed€that€onlyÐ À Ðthe€principal€investment€will€be€returned€to€the€investor€by€Frank€A.€Harris€and/or€Impact€in€the€event€that€Merit€QuestÐ „Ä ÐManagement€fails€to€return€the€investment€as€agreed.ðð€€Mr.€Harris€stopped€giving€his€customers€this€corporate€andÐ Hˆ Ðpersonal€guarantee€at€some€point€in€September€or€October€1999€because€he€ran€out€of€the€personal€funds€needed€to€makeÐ  L Ðgood€on€the€guarantee.€ {Ý ƒRn]$ÝÓ  Óà  àòòÚ  Ú5Ú  ÚóóÔ€ôà ò»»ÔÝ  ÝÔ_ÔMr.€Harris€himself€claims€to€have€invested€$210,000€in€the€program.€€Mr.€Hawkins€and€his€wife€investedÐ À Ð$15,000€in€the€program.€€The€record€contains€no€evidence€that€Ms.€Ô_ÔMurpheyÔ_Ô€invested€in€Merit€Quest. ¢Ý ƒRn]$ÝÓ  Óà  àòòÚ  Ú6Ú  ÚóóÔ€ôà ò»»ÔÝ  ÝÔ_ÔBilly€Ô_ÔHardcastleÔ_Ô€did€not€have€sufficient€funds€to€make€his€own€$10,000€minimum€investment.€€Accordingly,Ð À Ðhe€gave€his€brother€$5,000€to€invest€for€him.€€Thus,€Glen€Ô_ÔHardcastleÔ_Ôððs€total€investment€was€$60,000. ¾Ý ƒRn]$ÝÓ  Óà  àòòÚ  Ú7Ú  ÚóóÔ€ôà ò»»ÔÝ  ÝÔ_ÔMr.€Ô_ÔPyronÔ_Ô€invested€$25,000€in€Merit€Quest.€€Ms.€Ô_ÔMurpheyÔ_Ô€promised€to€pay€Ms.€Ô_ÔHardcastleÔ_Ô€a€$1,000Ð À Ðcommission€for€introducing€Mr.€Ô_ÔPyronÔ_Ô€to€the€program€€but€paid€her€only€$500. ¯Ý ƒRn]$ÝÓ  Óà  àòòÚ  Ú8Ú  ÚóóÔ€ôà ò»»ÔÝ  ÝÔ_ÔMr.€Hawkins€himself€is€a€former€Baptist€minister. öÝ ƒRn]$ÝÓ  Óà  àòòÚ  Ú9Ú  ÚóóÔ€ôà ò»»ÔÝ  ÝÔ_ÔMr.€Ô_ÔHardcastleÔ_Ô,€for€example,€testified€that€he€understood€that€ð ðBrother€Harris€has€invested€in€it,€and€made€aÐ À Ðsmall€fortune€off€of€itðð€and€that€ð ð[Ô_Ôe]venÔ_Ô€though,€I€felt€like€this€was€too€good€to€be€true,€everybody€else€was€getting€in€onÐ „Ä Ðit,€I€said€why€not€me.ðð€€ Ý ƒRn]$ÝÓ  Óà  àòòÚ  Ú10Ú  ÚóóÔ€ôà ò»»ÔÝ  ÝÔ_ÔMr.€Hogsed€claimed€that€an€agent€of€Hercules€Holding€had€drained€all€the€funds€from€the€Merit€Quest€trustÐ À Ðaccount€at€Lloydððs€Bank. šÝ ƒRn]$ÝÓ  Óà  àòòÚ  Ú11Ú  ÚóóÔ€ôà ò»»ÔÝ  ÝÔ_ÔIn€his€January€18,€2000€letter€to€investors,€Mr.€Harris€cautions€that€ð ð[i]t€may€prove€to€be€very€costly€toÐ À Ðeveryone€if€someone€else€gets€hyper.€€We€feel€we€are€moving€in€the€right€direction€and€expect€an€ending€to€this€ordealÐ „Ä Ðvery€soon.ðð *Ý ƒRn]$ÝÓ  Óà  àòòÚ  Ú12Ú  ÚóóÔ€ôà ò»»ÔÝ  ÝÔ_ÔMr.€Harris€stated€that€he€and€his€wife€had€ð ðretained€three€law€firms€and€expended€many€thousands€of€dollarsððÐ À Ðand€that€they€were€(1)€working€to€supply€the€State€with€all€the€information€needed€for€the€administrative€hearing;€(2)Ð „Ä Ðpursuing€collection€efforts€from€Hercules€Holdingsðð€attorney€in€Houston,€Texas;€and€(3)€continuing€the€litigation€withÐ Hˆ ÐMr.€Hogsed. çÝ ƒRn]$ÝÓ  Óà  àòòÚ  Ú13Ú  ÚóóÔ€ôà ò»»ÔÝ  ÝÔ_ÔThe€Ô_ÔHardcastlesÔ_Ôðð€complaint€contained€causes€of€action€for€(1)€breach€of€contract,€(2)€negligence€and€negligentÐ À Ðmisrepresentation,€(3)€fraud€and€fraudulent€breach€of€trust,€and€(4)€violation€of€the€Tennessee€Consumer€Protection€ActÐ „Ä Ðby€selling€an€unregistered€security€without€a€license. +Ý ƒRn]$ÝÓ  Óà  àòòÚ  Ú14Ú  ÚóóÔ€ôà ò»»ÔÝ  ÝÔ_ÔAlthough€Mr.€Provance€had€retained€other€lawyers€to€represent€him,€the€causes€of€action€in€his€complaintÐ À Ðtracked€those€in€the€Hardcastlesðð€complaint. 8Ý ƒRn]$ÝÓ  Óà  àòòÚ  Ú15Ú  ÚóóÔ€ôà ò»»ÔÝ  ÝÔ_ÔWhile€the€motion€to€amend€was€filed€jointly€by€the€Hardcastles€and€Messrs.€Provance€and€Pope,€only€twoÐ À Ðamended€complaints€were€ever€filed.€€No€amended€complaint€on€behalf€of€Mr.€Pope€was€ever€filed.€€The€style€of€Mr.Ð „Ä ÐProvanceððs€amended€complaint€named€the€Hardcastles€as€the€plaintiffs€and€Mr.€Provance€as€the€defendant.€€Mr.€HarrisÐ Hˆ Ðhas€not€taken€issue€with€these€discrepancies. êÝ ƒRn]$ÝÓ  Óà  àòòÚ  Ú16Ú  ÚóóÔ€ôà ò»»ÔÝ  ÝÔ_ÔThe€trial€court€dismissed€the€contract€claims€of€Messrs.€Provance€and€Pope€because€they€had€been€unable€toÐ À Ðprove€that€Mr.€Harris€had€guaranteed€their€investments.€€It€also€dismissed€all€the€claims€under€the€Tennessee€ConsumerÐ „Ä ÐProtection€Act€because€the€act€does€not€apply€to€the€sale€of€securities,€as€well€as€all€negligence€and€fraud€claims€becauseÐ Hˆ Ðthe€plaintiffs€had€been€unable€to€prove€that€they€acted€reasonably€in€relying€on€Mr.€Harrisððs€representations€regardingÐ  L Ðtheir€expected€earnings€and€the€safety€of€their€investment.€€Finally,€the€trial€court€denied€the€claims€for€punitive€damagesÐ Ð Ðbecause€the€plaintiffs€failed€to€prove€that€Mr.€Harris€knew€that€the€program€was€a€fraud€or€that€he€profited€personallyÐ ”Ô Ðfrom€being€involved€with€the€program. oÝ ƒRn]$ÝÓ  Óà  àòòÚ  Ú17Ú  ÚóóÔ€ôà ò»»ÔÝ  ÝÔ_ÔTheir€complaints€included€claims€based€on€breach€of€contract,€negligence,€negligent€misrepresentation,€fraud,Ð À Ðand€violation€of€the€Tennessee€Consumer€Protection€Act.€€The€consumer€protection€claim€is€a€curious€admixture€ofÐ „Ä > Ðconsumer€protection€and€securities€law.€€It€specifically€alleges€that€ð ð[t]he€sale€of€the€investment€instrument€by€DefendantÐ À ÐHarris€constituted€a€sale€of€an€unlicensed€security€by€an€unlicensed€broker.ðð€€ @Ý ƒRn]$ÝÓ  Óà  àòòÚ  Ú18Ú  ÚóóÔ€ôà ò»»ÔÝ  ÝÔ_ÔThe€lawyer€later€explained€that€ð ðwe€asked€for€relief€under€the€Tennessee€Consumer€Protection€Act,€becauseÐ À Ðof€the€Treble€Damages€provision€and€the€attorneyððs€fee.ðð€€ <Ý ƒRn]$ÝÓ  Óà  àòòÚ  Ú19Ú  ÚóóÔ€ôà ò»»ÔÝ  ÝÔ_ÔBy€agreement,€Mr.€Popeððs€case€was€removed€to€the€Chancery€Court€for€Davidson€County€and€consolidatedÐ À Ðwith€the€pending€cases€filed€by€the€Hardcastles€and€Mr.€Provance. *Ý ƒRn]$ÝÓ  Óà  àòòÚ  Ú20Ú  ÚóóÔ€ôà ò»»ÔÝ  ÝÔ_ÔThe€style€of€the€summary€judgment€motion€names€only€the€Hardcastles€as€the€plaintiffs.€€However,€the€orderÐ À Ðgranting€the€summary€judgment€identifies€the€Hardcastles€and€Messrs.€Provance€and€Pope€as€the€plaintiffs.€€Accordingly,Ð „Ä Ðwe€will€assume€that€the€parties€and€the€trial€court€considered€the€summary€judgment€to€be€directed€toward€the€claims€ofÐ Hˆ Ðall€the€plaintiffs.€ ¯Ý ƒRn]$ÝÓ  Óà  àòòÚ  Ú21Ú  ÚóóÔ€ôà ò»»ÔÝ  ÝÔ_ÔòòSee€Nichols€v.€Merrill,€Lynch,€Pierce,€Fenner€&€Smithóó,€706€F.€Supp.€1309,€1322„23€(M.D.€Tenn.€1989)Ð À Ð(holding€that€the€Tennessee€Consumer€Protection€Act€does€not€apply€to€transactions€involving€securities€governed€byÐ „Ä Ðthe€Tennessee€Securities€Act€of€1980).€€€€ HobbsMathewZennerUniquestHogshedp]articipants]uccessb]ankMurpheyHardcastlesPyronHardcastlet]his i]tesxpectexpect[edintestorPyronsGanzevoort NuttIntlAabakusHamblenAssn Liab t]heNicholsFennerKarashPigott S.W.RainesTallentForman WimmD.N.J.MorongoTroxelWeldenNagarajanestoppedFahrnerD.N.H.HipshireColevilleTeskyBokorHentosh W.VaMicromusePresnellMcMurryNetzerAssocsS.D.N.Y.MuhammedGuerreroNoldeFrayserDentsply J.R. R.C.EnggRupleyStainbackregulatories w]eDarlynHerculesepreincipal a]llProvanceLavinJordonLumbermens CasFlemmingRasarKradelLimbaughGleavess]ellsHarris;sMcDowell B.R.BankrHeilbronKeislingCastelliNatlLewisburgMcCurryCaufieldCanteleFlammeKillingsworth Omer ToofHogsedestoppels({2Ì~$©©Ý ƒ£ª!ÝÑ€.ÑÑ8€Hé»»dd8ÑÑ ý ÑÓ  ÓÝ  Ý3#37=CIQYag­­1.a.i.(1)(a)(i)1)a)ìi)Ý ƒ£ª!ÝÑ€.ÑÑ8€Hé»»ddÈ8ÑÑ ý ÑÓ  ÓÝ  ÝÔ_ÔÑÀ°ÑÑÀ°ÑÔ€¼Hé»»»ÔÑ8€mXXdì»»d8ÑÑ  ÑÑ  Ñà@¦ ¦ ìàIN€THE€COURT€OF€APPEALS€OF€TENNESSEEˆÐ À Ðà@§§$ìàAT€NASHVILLEˆÐ Ò Ðà@&& ìàJuly€7,€2003€Sessionà@@ìì*ìàˆÐ ä$ ÐÔ‡XmX»¼HéÔÌò òÔ#†¼Hé»XXmä#ÔÓ  Óà @ àJOAN€B.€HARDCASTLE,€òòet€al.óó€v.€FRANK€HARRISòòóóÔ‡XmX»¼HéÔó óÐ â" ÐÓ*ÓÌà@Ç Ç ìàò òAppeal€from€the€Chancery€Court€for€Davidson€CountyˆÐ â " Ðà@Ø Ø ìàNo.€00„2172„III€€€€€€Ellen€Hobbs€Lyle,€ChancellorˆÐ Î  ÐÌà@ìì*ìàßA€V) °°` d€÷E<¥ ` A߈Ð ¦ æ  ÐÌà@} } ìàNo.€M2002„01087„Ô_ÔCOAÔ_Ô„R3„CV€„€Filed€December€8,€Ô_Ô2004Ô_ԈР¡ á  Ðà  àà ` àà ¸ àà  àà h àà À àà  àà p àà È àÌßA€V) °°` dE<x` AßÐ y¹  Ðó óÌThis€appeal€concerns€a€pyramid€sales€scheme€involving€the€sale€of€unregistered€investment€contracts.€Ð t´  ÐAfter€discovering€that€their€contracts€were€worthless,€four€purchasers€filed€separate€actions€againstÐ `   Ðthe€person€who€sold€them€the€contracts.€€These€cases€were€consolidated€for€trial€in€the€ChanceryÐ LŒ ÐCourt€for€Davidson€County.€€Following€a€bench€trial,€the€trial€court€determined€that€the€seller€hadÐ 8x Ðbreached€his€personal€guarantee€contract€with€two€of€the€buyers€and€had€violated€the€TennesseeÐ $d ÐSecurities€Act€of€1980€by€selling€unregistered€investment€contracts€to€all€the€purchasers.€Ð P ÐAccordingly,€the€court€awarded€the€four€purchasers€judgments€totaling€$99,450.00,€as€well€asÐ ü< Ð$44,979.50€for€attorneyððs€fees€and€legal€expenses.€€The€seller€asserts€on€this€appeal€that€theÐ è( ÐTennessee€Securities€Act€claims€were€filed€after€the€statute€of€limitations€had€expired€and€that€theÐ Ô Ðdoctrines€of€waiver€and€estoppel€prevent€the€purchasers€from€asserting€these€claims.€€In€addition,€heÐ À Ðinsists€that€the€court€erred€by€permitting€the€purchasers€to€amend€their€complaints€one€week€beforeÐ ¬ì Ðtrial€to€add€their€Tennessee€Securities€Act€claims.€€He€also€takes€issue€with€the€trial€courtððs€decisionÐ ˜Ø Ðto€award€the€purchasers€their€attorneyððs€fees.€€We€affirm€the€judgments.Ð „Ä ÐÌò òÓ  ÓTenn.€R.€App.€P.€3€Appeal€as€of€Right;€Judgment€of€the€Chancery€Court€Affirmedó óÐ \œ ÐÓ: ÓÌòòWilliam€C.€Koch,€Jr.Ô#†¼Hé»àXmv#ÔÔ‡XmX.¼HéÔ,óó€J.,€delivered€the€opinion€of€the€court,€in€which€òòWilliam€B.€Cain,óó€andÐ 4t ÐòòPatricia€J.€Cottrell,€JJ.óó,€joined.Ð  `  ÐÌMathew€R.€Zenner,€Nashville,€Tennessee,€for€the€appellant,€Frank€Harris.Ð ø!8" ÐÌDavid€B.€Lyons,€Nashville,€Tennessee,€for€the€appellees,€Joan€B.€Hardcastle,€Glen€Hardcastle,Ð Ð# $ ÐJoseph€Pope,€and€Charles€Provance.Ð ¼$ü % ÐÌà@66'ìàò òOPINIONó óÔ#†¼Hé»XXm÷ #ÔÔ‡XmX»¼HéԈР”&Ô"' ÐÌà@¬¬)ìàò òI.ó óˆÐ l(¬$) ÐÔ#†¼Hé»XXm#ÔÔ‡XmX»¼HéÔÌÔ#†¼Hé»XXmŒ#ÔÔ‡XmX»¼HéÔà  àFrank€Harris€operates€several€businesses€in€Madison,€Tennessee.€€He€owns€a€small€real€estateÐ D*„&+ Ðbusiness€called€Impact€and€a€small€company€called€Impact€International,€Inc.€that€manufacturesÐ 0+p', Ðindustrial€lubricants.€€He€has€aspirations€of€becoming€a€major€developer€and€entrepreneur.€€TheÐ ,\(- Ðcenterpiece€of€his€plans€is€a€ð ðperpetual€worldððs€fair€type€developmentðð€called€Uniquest.€€As€Mr.Ð -H). ÐHarris€envisions€it,€the€development€will€consist€of€twelve€theme€parks€spread€over€50,000€acres€inÐ ô-4*/ ÐWarren€County.€€He€estimates€that€the€development€will€cost€approximately€ð ðfifty€billion€dollars.ðð€Ð à. +0ýð Їà  àMr.€Harris€decided€that€he€needed€ten€million€dollars€in€ð ðseed€moneyðð€to€get€Uniquest€offÐ À Ðthe€ground.€€In€the€late€1990s,€after€his€efforts€to€obtain€bank€financing€for€the€project€provedÐ ¬ì Ðunsuccessful,€Mr.€Harris€began€searching€for€business€opportunities€that€would€enable€him€to€raiseÐ ˜Ø Ða€great€deal€of€capital€in€a€short€period€of€time.€€Sometime€during€1997€or€1998,€Mr.€Harris€becameÐ „Ä Ðacquainted€with€Ron€Hogsed,€who€lived€in€Erwin,€Tennessee,€and€began€discussing€a€number€of€get„Ð p° Ðrich„quick€schemes€with€him.Ð \œ ÐÌà  àThe€wheels€of€Mr.€Hogsedððs€and€Mr.€Harrisððs€first€venture€began€to€turn€in€late€1998€or€earlyÐ 4 t Ð1999€after€Mr.€Hogsed€became€an€agent€for€Hercules€Holding€LIT.€€Hercules€Holding€purported€toÐ  ` Ðbe€a€ð ðprogramðð€located€in€London,€England€that€purportedly€purchased€large€blocks€of€United€StatesÐ  L  Ðtreasury€bills€at€deep€discounts€and€then€resold€blocks€of€treasury€bills€at€enormous€profit.€€Mr.Ð ø 8  ÐHogsed€incorporated€Merit€Quest€Management€International,€Ltd.€(ð ðMerit€Questðð)€in€the€West€IndiesÐ ä $  Ðto€operate€this€business.€€Mr.€Hogsed€told€Mr.€Harris€about€his€Merit€Quest€venture€in€early€1999,Ð Ð  Ðand€Mr.€Harris€became€interested€in€the€program€because€some€bankers€had€purportedly€told€him€thatÐ ¼ü  Ðthe€only€way€to€raise€the€ten€million€dollars€needed€for€Uniquest€would€be€to€buy€and€sell€treasuryÐ ¨è  Ðbills.Ð ”Ô  ÐÌà  àIn€February€or€March€1999,€Mr.€Hogsed€sent€Mr.€Harris€a€set€of€materials€describing€theÐ l¬ ÐMerit€Quest€ð ðasset€enhancement€program.ðð€€These€materials€stated:€(1)€that€participation€in€theÐ X˜ Ðprogram€was€by€invitation€only;€(2)€that€the€program€was€private€and€confidential;€(3)€that€theÐ D„ Ðprogram€had€been€operating€successfully€for€over€three€years;€and€(4)€that€the€program€was€ð ðlicensedÐ 0p Ðunder€SEC€Rules€and€Regulations.ðð€€The€materials€also€stated€that€the€minimum€investment€in€theÐ \ Ðprogram€was€$10,000€and€that€participants€investing€between€$10,000€and€$24,999€would€earnÐ H Ðtwenty„five€percent€(25%)€per€month.׃‹×Ý ƒ#ÃÝòòÚ  Ú1Ú  ÚóóÝ  Ý×  ×Ð ô4 ÐÌà  àAccording€to€Mr.€Hogsedððs€materials,€investors€in€Merit€Quest€would€transfer€their€funds€toÐ Ì  ÐMerit€Questððs€ð ðtrust€accountðð€at€an€overseas€bank.€€The€funds€would€then€be€pooled€with€the€fundsÐ ¸ø Ðof€other€investors€and€would€eventually€be€transferred€to€a€ð ðprogram€attorneyððsðð€ð ðclient€trustÐ ¤ä Ðaccountðð€where€they€would€be€used€to€purchase€treasury€bills€ð ðfor€the€benefit€of€the€[p]articipant.ðð€Ð Ð ÐFollowing€the€purchase€of€the€treasury€bills,€investors€would€receive€their€first€interest€paymentÐ |¼ Ðwithin€four€to€six€weeks.€€The€materials€stated€that€each€participantððs€investment€was€protectedÐ h¨ Ðbecause€it€is€ð ðfree€and€clear€of€encumbrances€during€and€after€[the]€contractðð€and€because€it€wasÐ T ” Ðinsured€by€ð ðZenith€Insurance€Ltd.ððÐ @!€  ÐÌà  àMr.€Harris€decided€to€become€an€agent€of€Merit€Quest€and€eventually€signed€a€ð ðNon„Ð #X" ÐCircumvention€&€Non„Disclosure€Agreementðð€and€a€ð ðProgram€Agreementðð€with€Mr.€Hogsed.€€InÐ $D # Ðreturn€for€Mr.€Harrisððs€agreement€to€ð ðintroduceðð€ð ðclientsðð€to€Merit€Quest€and€to€act€as€ð ðTrustÐ ð$0!$ ÐOfficerðð€with€regard€to€the€disbursement€of€all€ð ðearnings,€commissions,€and€investment€returns,ðð€Mr.Ð Ü%"% ÐHogsed€agreed€to€pay€Mr.€Harris€a€ten€percent€(10%)€commission€on€all€funds€wired€to€MeritÐ È&#& ÐQuestððs€accounts€in€either€Erwin,€Tennessee€or€London,€England,€as€well€as€50%€of€the€monthlyÐ ´'ô#' Ðearnings€after€these€funds€were€invested.€€Mr.€Harris€was€responsible€for€paying€the€clients€heÐ  (à$( Ðintroduced€to€the€program€using€the€funds€he€received€from€Merit€Quest.Ð Œ)Ì%) ÐÐ x*¸&* Ðà  àMr.€Harris€then€prepared€another€set€of€materials€to€distribute€to€potential€investors.׃×Ý ƒ#ÃÝòòÚ  Ú2Ú  ÚóóÝ  Ý×  ×€€TheseÐ À Ðdocuments€characterized€Merit€Quest€as€a€ð ðbest€efforts€high€yield€programðð€in€which€persons€whoÐ ¬ì Ðinvested€$10,000€for€one€year€could€receive€ð ðpotential€returnsðð€with€a€ð ðvery€high€degree€ofÐ ˜Ø Ðconfidence€of€[s]uccessðð€of€twenty„five€percent€(25%)€every€thirty€days.׃(×Ý ƒ#ÃÝòòÚ  Ú3Ú  ÚóóÝ  Ý×  ×€€In€addition,€they€referredÐ „Ä Ðto€Mr.€Harris€variously€as€a€ð ðtransaction€managerðð€or€a€ð ðtrust€officer.ðð€€The€documents€alsoÐ p° Ðcontained€various€assurances€regarding€the€safety€of€the€investments.€€The€program€description€statedÐ \œ Ðthat€each€participantððs€investment€would€be€held€ð ðin€a€major€foreign€[b]ank,€which€insures€100%€ofÐ H ˆ Ðall€deposits.ðð€€Mr.€Harrisððs€early€documents€stated€that€ð ðImpact/Frank€Harris€underwrites€andÐ 4 t Ðprotects€all€principal€investments€for€investors€through€corporate€and€personal€investmentÐ  ` Ðguarantees.ðð׃‘x×Ý ƒ#ÃÝòòÚ  Ú4Ú  ÚóóÝ  Ý×  ×€€Several€months€later,€Mr.€Harrisððs€guarantee€was€replaced€by€a€ð ðTrust€Agreementðð€inÐ  L  Ðwhich€Mr.€Hogsed€accepted€ð ðfull€legal,€personal€and€corporate€responsibility€for€the€safety€andÐ ø 8  Ðaccurate€disbursement€of€funds€.€.€.€with€which€I€am€entrusted.ðð€Ð ä $  ÐÌà  àMr.€Harris€then€set€about€to€recruit€persons€who€would€act€as€ð ðintroducersðð€for€him,€who€inÐ ¼ü  Ðreturn€would€be€given€a€commission€for€every€person€they€brought€into€the€program€through€him.€Ð ¨è  ÐEventually,€Mr.€Harris€recruited€six€or€seven€introducers,€including€his€brother„in„law,€GordonÐ ”Ô  ÐHawkinsÔ#†¼Hé»XXmÏ#ÔÔ‡XmX»¼HéÔ,€and€his€sister,€Susan€Murphey.€€These€introducers€set€about€telling€their€family€andÐ €À Ðacquaintances€about€Merit€Quest.€€In€May€1999,€Mr.€Harris€convinced€his€father,€Darryl€A.€Harris,Ð l¬ Ðto€invest€$37,500€in€Merit€Quest.€€This€proved€to€be€a€potent€marketing€tool€because€his€father€wasÐ X˜ Ða€prominent€Baptist€minister€who€was€well„known€in€the€community.€€Many€potential€investorsÐ D„ Ðassumed€that€Merit€Quest€must€be€a€good€program€if€Darryl€Harris€had€invested€in€it.Ð 0p ÐÌà  àBetween€March€and€October€1999,€Mr.€Harris€and€his€introducers€convinced€118€persons€toÐ H Ðinvest€$3,300,000€in€Merit€Quest.׃“ ×Ý ƒ#ÃÝòòÚ  Ú5Ú  ÚóóÝ  Ý×  ×€€Included€among€these€investors€were€Glen€and€Joan€Hardcastle€Ð ô4 Ðwho€were€neighbors€of€Mr.€Harris€and€his€father.€€The€Hardcastles€invested€$30,000€in€SeptemberÐ à  Ðâ â1999€and€made€a€second€investment€of€$25,000€one€month€later.€€In€turn,€they€told€Billy€Hardcastle,Ð Ì  ÐMr.€Hardcastleððs€brother,׃•×Ý ƒ#ÃÝòòÚ  Ú6Ú  ÚóóÝ  Ý×  ×€and€Dale€Pyron,€Mr.€Hardcastleððs€cousin,€about€the€program.׃˜×Ý ƒ#ÃÝòòÚ  Ú7Ú  ÚóóÝ  Ý×  ×€€In€OctoberÐ À Ðâ â1999,€Joe€B.€Pope€and€his€wife€invested€$10,000€despite€Mr.€Popeððs€belief€that€Merit€Quest€was€aÐ ¬ì Ðpyramid€scheme.€€Likewise,€Mr.€Charles€Provance,€one€of€Mr.€Harrisððs€long„time€friends,€investedÐ ˜Ø Ð$25,000€in€October€1999.Ð „Ä ÐÌà  àA€profile€of€the€Merit€Quest€investors€emerges€from€their€testimony€at€trial.€€Most€of€themÐ \œ Ðhad€a€common€church€affiliation€with€Messrs.€Harris€and€Hawkins.׃šh×Ý ƒ#ÃÝòòÚ  Ú8Ú  ÚóóÝ  Ý×  ×€€None€of€them€understood€howÐ H ˆ Ðthe€Merit€Quest€program€worked,€and€few€of€them€read€or€understood€the€program€materials€orÐ 4 t Ðdocuments€they€signed.€€None€of€them€sought€independent€financial€or€legal€advice,€and€many€ofÐ  ` Ðthem€were€influenced€by€the€fact€that€Darryl€Harris€had€invested€in€the€program.׃œô×Ý ƒ#ÃÝòòÚ  Ú9Ú  ÚóóÝ  Ý×  ×€€Most€of€theÐ  L  Ðinvestors€did€not€believe€that€they€would€earn€the€promised€rate€of€return,€but€they€believed€Mr.Ð ø 8  ÐHarrisððs€assurances€that€their€principal€was€safe€and€that€it€would€be€returned€to€them€at€the€end€ofÐ ä $  Ðthe€contract€period.Ð Ð  ÐÌà  àThe€Securities€and€Exchange€Commission€learned€of€Merit€Quest€after€one€of€Mr.€HarrisððsÐ ¨è  Ðintroducers€posted€the€program€on€the€Internet.€€It€forwarded€the€information€to€the€Division€ofÐ ”Ô  ÐSecurities€of€the€Tennessee€Department€of€Commerce€and€Insurance.€€On€October€25,€1999,€afterÐ €À Ðreceiving€additional€information€from€the€Attorney€General€and€Reporter,€the€Division€of€SecuritiesÐ l¬ Ðissued€a€cease€and€desist€order€directing€Merit€Quest,€Mr.€Harris,€and€others€to€refrain€from€violatingÐ X˜ Ðthe€Tennessee€Securities€Act€of€1980€by€acting€as€unregistered€broker„dealers€and€by€sellingÐ D„ Ðunregistered€securities.Ð 0p ÐÌà  àThe€issuance€of€the€cease€and€desist€order€forced€Mr.€Harris€and€his€introducers€to€stopÐ H Ðaccepting€new€investors.€€At€the€same€time,€Mr.€Hogsed€stopped€sending€monthly€earnings€andÐ ô4 Ðcommissions€payments€to€Mr.€Harris€for€distribution,׃ž ×Ý ƒ#ÃÝòòÚ  Ú10Ú  ÚóóÝ  Ý×  ×€causing€a€dispute€between€Mr.€Harris€and€Mr.Ð à  ÐHogsed.€€During€December€1999€and€January€2000,€Mr.€Harris€wrote€a€series€of€heated€letters€to€Mr.Ð Ì  ÐHogsed€demanding€$17,847,172,€representing€ð ðall€payments€due€from€you€to€Frank€Harris,€Impact,Ð ¸ø ÐBrokers,€and€all€Investors€that€we€represent€in€the€Merit€Quest€Program,ðð€and€accusing€Mr.€HogsedÐ ¤ä Ðof€stealing€and€other€dishonesty.€€In€a€January€6,€1999€letter,€Mr.€Harris€told€Mr.€Hogsed€that€ð ð[t]hisÐ Ð Ðbusiness€has€proven€more€than€you€can€handleðð€and€that€ð ðI€will€not€allow€you€to€pull€me€down€withÐ |¼ Ðyour€attempts€to€steal€from€investors€and€brokers.ðð€€Ð h¨ ÐÐ T ” Ðà  àBeginning€in€January€2000,€Mr.€Harris€began€sending€letters€to€his€investors€in€the€MeritÐ À ÐQuest€program€to€update€them€on€the€status€of€their€investments.€€The€purpose€of€these€letters€was,Ð ¬ì Ðin€Mr.€Harrisððs€words,€ð ðto€hold€them€[the€investors]€at€bay,€so€to€speak,€in€regard€to€going€to€the€SECÐ ˜Ø Ðor€somebody€like€that.ðð׃ ×Ý ƒ#ÃÝòòÚ  Ú11Ú  ÚóóÝ  Ý×  ×€€In€February€2000,€he€informed€his€investors€of€his€plan€to€file€a€classÐ „Ä Ðaction€suit€against€Mr.€Hogsed.€€In€April€2000,€Mr.€Harris€informed€his€investors€that€the€lawsuitÐ p° Ðagainst€Mr.€Hogsed€had€been€filed€but€that€Mr.€Hogsed€was€evading€service€of€process.€€He€alsoÐ \œ Ðstated€that€he€was€ð ðworking€from€three€different€anglesðð€to€recover€their€investments€and€interest.׃¢Ü×Ý ƒ#ÃÝòòÚ  Ú12Ú  ÚóóÝ  Ý×  ׀РH ˆ ÐFinally,€in€August€2000,€Mr.€Harris€informed€the€investors€that€he€was€continuing€ð ðto€expendÐ 4 t Ðsignificant€effort€and€money€to€locate€Mr.€Hogsedðð€but€that€ð ðfinding€Mr.€Hogsed€is€not€as€importantÐ  ` Ðnow€since€the€money€may€be€completely€out€of€his€control.ðð€€He€also€reminded€investors€that€ð ðtheirÐ  L  Ðprinciple€and€interest€are€being€sought€in€a€ððMaster€lawsuitðð€against€ððMerit€Questðð€(Ron€Hogsed)ððÐ ø 8  Ðand€stated€that€he€ð ðexpect[ed]€to€disburse€proportionally€to€investorððs€contract€dates€and€their€amountÐ ä $  Ðof€investment.ðð€€Ð Ð  ÐÌà  àMr.€Harrisððs€letter€did€not€hold€his€investors€at€bay€for€very€long.€€On€July€12,€2000,€theÐ ¨è  ÐHardcastles€filed€suit€against€Mr.€Harris€in€the€Chancery€Court€for€Davidson€County€seekingÐ ”Ô  Ðcompensatory€and€punitive€damages.׃¤´×Ý ƒ#ÃÝòòÚ  Ú13Ú  ÚóóÝ  Ý×  ×€€Eight€days€later,€on€July€20,€2000,€the€Pyrons€filed€anÐ €À Ðidentical€suit€in€the€Chancery€Court€for€Davidson€County€using€the€same€lawyer€who€wasÐ l¬ Ðrepresenting€the€Hardcastles.€€These€suits€prompted€Mr.€Harris€to€send€a€facsimile€to€the€HardcastlesÐ X˜ Ðand€Pyrons€expressing€his€disappointment€and€displeasure€over€their€lawsuits.€€After€the€PyronsÐ D„ Ðagreed€to€dismiss€their€lawsuit€in€return€for€Mr.€Harrisððs€agreement€to€reimburse€their€$25,000Ð 0p Ðinvestment,€Mr.€Harris€asked€a€group€of€fellow€churchmen€to€resolve€the€dispute€with€theÐ \ ÐHardcastles.€€The€Hardcastles€did€not€accept€this€offer.Ð H ÐÌà  àIn€December€2000,€Mr.€Provance€filed€suit€against€Mr.€Harris€in€the€Chancery€Court€forÐ à  ÐDavidson€County.׃¦È ×Ý ƒ#ÃÝòòÚ  Ú14Ú  ÚóóÝ  Ý×  ×€€Five€months€later,€in€May€2001,€Mr.€Pope€sued€Mr.€Harris€in€the€MetropolitanÐ Ì  ÐGeneral€Sessions€Court€alleging€violations€of€the€Tennessee€Securities€Act€of€1980,€as€well€as€otherÐ ¸ø Ðclaims€related€to€his€$10,000€investment.€€In€July€2001,€Mr.€Popeððs€suit€was€removed€to€the€chanceryÐ ¤ä Ðcourt€and€consolidated€with€the€pending€complaints€of€the€Hardcastles€and€Mr.€Provance.€€Ð Ð ÐÌÐ h¨ Ðà  àMeanwhile,€on€the€regulatory€front,€an€administrative€law€judge€conducted€a€hearing€inÐ À ÐNovember€2000€regarding€the€Division€of€Securitiesðð€request€for€a€cease€and€desist€order.€€InÐ ¬ì ÐFebruary€2001,€the€administrative€law€judge€issued€an€initial€order€upholding€the€October€25,€1999Ð ˜Ø Ðcease€and€desist€order€after€concluding€that€the€Merit€Quest€program€was€an€unregistered€investmentÐ „Ä Ðcontract€and€that€Mr.€Harris€was€not€registered€as€a€broker„dealer€as€required€by€the€TennesseeÐ p° ÐSecurities€Act€of€1980.Ð \œ ÐÌà  àOn€October€12,€2001,€ten€days€before€the€scheduled€beginning€of€the€trial,€the€HardcastlesÐ 4 t Ðand€Messrs.€Provance€and€Pope€moved€to€amend€their€complaints€to€include€a€cause€of€action€basedÐ  ` Ðon€the€Tennessee€Securities€Act€of€1980.€€The€trial€court€granted€the€motion.׃¨×Ý ƒ#ÃÝòòÚ  Ú15Ú  ÚóóÝ  Ý×  ×€€On€January€9,€2002,Ð  L  Ðfollowing€a€five„day€trial,€the€trial€court€filed€its€memorandum€and€order€concluding€that€Mr.€HarrisÐ ø 8  Ðhad€breached€his€guarantee€contract€with€regard€to€the€Hardcastlesðð€initial€investment,€and€that€heÐ ä $  Ðhad€violated€the€Tennessee€Securities€Act€of€1980€in€his€dealings€with€the€Hardcastles€and€Messrs.Ð Ð  ÐProvance€and€Pope€by€selling€them€an€unregistered€security.€€Pursuant€to€the€remedies€availableÐ ¼ü  Ðunder€the€Tennessee€Securities€Act€of€1980,€the€trial€court€awarded€the€Hardcastles€a€$59,950.00Ð ¨è  Ðjudgment,€Mr.€Provance€a€$27,500.00€judgment,€and€Mr.€Pope€an€$11,000.00€judgment€along€withÐ ”Ô  Ðan€additional€$44,979.50€for€attorneyððs€fees€and€expenses.׃ª ×Ý ƒ#ÃÝòòÚ  Ú16Ú  ÚóóÝ  Ý×  ×€€Mr.€Harris€perfected€this€appeal€afterÐ €À Ðthe€trial€court€denied€his€Tenn.€R.€Civ.€P.€59.04€motion.€€The€Hardcastles€and€Messrs.€Provance€andÐ l¬ ÐPope€have€also€appealed€from€the€dismissal€of€their€fraudulent€misrepresentation€claims.Ð X˜ ÐÌà@……)ìàò òII.ó óˆÐ 0p Ðà@hhìàòòò òThe€Standard€of€Reviewó óóóˆÐ \ ÐÌà  àWe€turn€first€to€the€proper€standards€of€review€for€the€issues€presented€in€this€appeal.€Ð ô4 ÐBecause€this€is€an€appeal€from€a€decision€made€by€the€trial€court€itself€following€a€bench€trial,€theÐ à  Ðnow€familiar€standard€in€Tenn.€R.€App.€P.€13(d)€governs€our€review.€€This€rule€contains€differentÐ Ì  Ðstandards€for€reviewing€a€trial€courtððs€decisions€regarding€factual€questions€and€legal€questions.Ð ¸ø ÐÌà  àWith€regard€to€a€trial€courtððs€findings€of€fact,€we€will€review€the€record€de€novo€and€willÐ Ð Ðpresume€that€the€findings€of€fact€are€correct€ð ðunless€the€preponderance€of€the€evidence€is€otherwise.ðð€Ð |¼ ÐWe€will€also€give€great€weight€to€a€trial€courtððs€factual€findings€that€rest€on€determinations€ofÐ h¨ Ðcredibility.€€òòIn€re€Estate€of€Waltonóó,€950€S.W.2d€956,€959€(Tenn.€1997);€òòB€&€G.€Constr.,€Inc.€v.€Polkóó,Ð T ” Ð37€S.W.3d€462,€465€(Tenn.€Ct.€App.€2000).€€However,€if€the€trial€judge€has€not€made€a€specificÐ @!€  Ðfinding€of€fact€on€a€particular€matter,€we€review€the€record€to€determine€where€the€preponderanceÐ ,"l! Ðof€the€evidence€lies€without€employing€a€presumption€of€correctness.€€òòGanzevoort€v.€Russellóó,€949Ð À ÐS.W.2d€293,€296€(Tenn.€1997).Ð ¬ì ÐÌà  àTenn.€R.€App.€P.€13(d)ððs€presumption€of€correctness€requires€appellate€courts€to€defer€to€aÐ „Ä Ðtrial€court's€findings€of€fact.€€òòFell€v.€Ramboóó,€36€S.W.3d€837,€846€(Tenn.€Ct.€App.€2000);€òòTaylor€v.Ð p° ÐTrans€Aero€Corp.óó,€924€S.W.2d€109,€112€(Tenn.€Ct.€App.1995).€€Because€of€the€presumption,€anÐ \œ Ðappellate€court€is€bound€to€leave€a€trial€court's€finding€of€fact€undisturbed€unless€it€determines€thatÐ H ˆ Ðthe€aggregate€weight€of€the€evidence€demonstrates€that€a€finding€of€fact€other€than€the€one€found€byÐ 4 t Ðthe€trial€court€is€more€probably€true.€€òòEstate€of€Haynes€v.€Bradenóó,€835€S.W.2d€19,€20€(Tenn.€Ct.€App.Ð  ` Ð1992)€(holding€that€an€appellate€court€is€bound€to€respect€a€trial€court's€findings€if€it€cannotÐ  L  Ðdetermine€that€the€evidence€preponderates€otherwise).€€Thus,€for€the€evidence€to€preponderate€againstÐ ø 8  Ða€trial€court's€finding€of€fact,€it€must€support€another€finding€of€fact€with€greater€convincing€effect.Ð ä $  ÐÌà  àThe€presumption€of€correctness€in€Tenn.€R.€App.€P.€13(d)€applies€only€to€findings€of€fact,€notÐ ¼ü  Ðto€conclusions€of€law.€€Accordingly,€appellate€courts€review€a€trial€courtððs€resolution€of€legal€issuesÐ ¨è  Ðwithout€a€presumption€of€correctness€and€reach€their€own€independent€conclusions€regarding€theseÐ ”Ô  Ðissues.€€òòJohnson€v.€Johnsonóó,€37€S.W.3d€892,€894€(Tenn.€2001);€òòNutt€v.€Champion€Intððl€Corp.óó,€980Ð €À ÐS.W.2d€365,€367€(Tenn.€1998);€òòHicks€v.€Coxóó,€978€S.W.2d€544,€547€(Tenn.€Ct.€App.€1998);Ð l¬ ÐòòMcCormick€v.€Aabakus,€Inc.óó,€101€S.W.3d€60,€62€(Tenn.€Sp.€Workers€Comp.€Panel€2000).€Ð X˜ ÐÌà@^^(ìàò òIII.ó óˆÐ 0p Ðà@êêìàòòò òThe€Amendments€Adding€Claims€Based€on€Violations€of€theˆÐ \ Ðà@;;ìàTennessee€Securities€Actó óóóˆÐ H ÐÌà  àMr.€Harris€first€takes€issue€with€two€aspects€of€the€trial€courtððs€decision€to€permit€theÐ à  ÐHardcastles€and€Mr.€Provance€to€amend€their€complaints€to€add€claims€asserting€that€he€had€violatedÐ Ì  Ðthe€Tennessee€Securities€Act€of€1980.€€He€insists€that€they€should€not€have€been€permitted€to€amendÐ ¸ø Ðtheir€complaints€at€such€a€late€stage€of€the€litigation€because€they€had€acted€in€bad€faith€and€hadÐ ¤ä Ðwaived€their€right€to€assert€the€claim.€€Mr.€Harris€also€insists€that€the€trial€court€erred€by€failing€toÐ Ð Ðcontinue€the€trial€after€it€permitted€the€amendments.€€We€have€determined€that€the€trial€court€did€notÐ |¼ Ðerr€either€by€granting€the€Hardcastlesðð€and€Mr.€Provanceððs€motions€to€amend€their€complaints€to€seekÐ h¨ Ðrecovery€for€violations€of€the€Tennessee€Securities€Act€of€1980€or€by€declining€to€continue€the€trialÐ T ” Ðafter€granting€the€motions€to€amend.Ð @!€  ÐÌà@‹‹)ìàò òA.ó óˆÐ #X" ÐÌà  àThe€October€25,€1999€cease€and€desist€order€put€Merit€Questððs€investors€and€their€lawyersÐ ð$0!$ Ðon€notice€that€the€Division€of€Securities€had€concluded€that€Mr.€Harris€had€violated€the€TennesseeÐ Ü%"% ÐSecurities€Act€of€1980€by€selling€an€unregistered€security.€€Yet,€when€the€Hardcastles€and€Mr.Ð È&#& ÐProvance€filed€their€complaints€against€Mr.€Harris€in€July€2000€and€December€2000€respectively,Ð ´'ô#' Ðthey€did€not€include€a€Tennessee€Securities€Act€claim€among€the€many€claims€they€asserted.׃¬×Ý ƒ#ÃÝòòÚ  Ú17Ú  ÚóóÝ  Ý×  ×€€TheÐ  (à$( Ðlawyer€who€prepared€the€Hardcastlesðð€complaint€€apparently€decided€to€include€a€consumerÐ À Ðprotection€claim€rather€than€a€securities€claim€because€treble€damages€were€available€under€theÐ ¬ì ÐTennessee€Consumer€Protection€Act׃®Ü×Ý ƒ#ÃÝòòÚ  Ú18Ú  ÚóóÝ  Ý×  ×€and€because€Mr.€Harris€had€consistently€denied€that€MeritÐ ˜Ø ÐQuest€was€a€security.Ð „Ä ÐÌà  àThis€strategy€changed€following€the€administrative€law€judgeððs€February€2,€2001€orderÐ \œ Ðconcluding€that€Merit€Quest€was€a€security€and€that€Mr.€Harris€had€violated€the€Tennessee€SecuritiesÐ H ˆ ÐAct€of€1980€by€selling€an€unregistered€security€without€a€license.€€On€May€22,€2001,€the€lawyer€whoÐ 4 t Ðwas€already€representing€the€Hardcastles,€and€presumably€Mr.€Provance,€filed€a€civil€warrant€onÐ  ` Ðbehalf€of€Mr.€Pope€in€the€Metropolitan€General€Sessions€Court€that€included€a€claim€for€violatingÐ  L  Ðthe€Tennessee€Securities€Act€of€1980,€as€well€as€claims€for€fraud€and€violation€of€the€TennesseeÐ ø 8  ÐConsumer€Protection€Act.׃°,×Ý ƒ#ÃÝòòÚ  Ú19Ú  ÚóóÝ  Ý×  ×Ð ä $  ÐÌà  àOn€August€15,€2001,€Mr.€Harris€moved€for€summary€judgment€with€regard€to€all€the€claimsÐ ¼ü  Ðof€the€Hardcastles€and€Messrs.€Provance€and€Pope.׃²|×Ý ƒ#ÃÝòòÚ  Ú20Ú  ÚóóÝ  Ý×  ×€€During€the€hearing€on€this€motion€on€OctoberÐ ¨è  Ð12,€2001,€Mr.€Harris€insisted€that€the€consumer€protection€act€claims€should€be€dismissed€becauseÐ ”Ô  Ðthe€Merit€Quest€contracts€were€securities€and€because€the€Tennessee€Consumer€Protection€Act€didÐ €À Ðnot€apply€to€transactions€involving€securities€that€fall€within€the€purview€of€the€Tennessee€SecuritiesÐ l¬ ÐAct.׃´T ×Ý ƒ#ÃÝòòÚ  Ú21Ú  ÚóóÝ  Ý×  ×€€The€trial€court€agreed€with€Mr.€Harris€and€dismissed€the€consumer€protection€claims.€Ð X˜ ÐImmediately€following€the€hearing€on€Mr.€Harrisððs€summary€judgment€motion,€the€Hardcastles€andÐ D„ ÐMessrs.€Provance€and€Pope€moved€to€amend€their€complaints€to€add€a€claim€based€on€the€TennesseeÐ 0p ÐSecurities€Act€of€1980.€€The€trial€court€granted€the€motion€on€October€18,€2001€and€reaffirmed€itsÐ \ Ðdecision€on€October€22,€2001€ð!ð€the€day€before€the€trial€began.Ð H ÐÌà@)ìàò òB.ó óˆÐ à  ÐÌà  àTennessee€law€and€policy€have€always€favored€permitting€litigants€to€amend€their€pleadingsÐ ¸ø Ðto€enable€disputes€to€be€resolved€on€their€merits€rather€than€on€legal€technicalities.€€òòKarash€v.€Pigottóó,Ð ¤ä Ð530€S.W.2d€775,€777€(Tenn.€1975);€òòPatton€v.€Dixonóó,€105€Tenn.€97,€103,€58€S.W.€299,€301€(1900);Ð Ð ÐòòRutherford€v.€Rainesóó,€3A€Tenn.€(2€Cooke)€35,€42€(1814).€€This€policy€is€reflected€in€Tenn.€R.€Civ.Ð À ÐP.€15.01's€admonition€that€ð ðleave€[to€amend€a€pleading]€shall€be€freely€given€when€justice€soÐ ¬ì Ðrequires.ðð€€While€decisions€whether€to€permit€an€amendment€are€discretionary,€òòDaniels€v.€Tallentóó,Ð ˜Ø Ð212€Tenn.€447,€462,€370€S.W.2d€515,€522€(1963),€Tenn.€R.€Civ.€P.€15.01€substantially€lessens€a€trialÐ „Ä Ðcourtððs€discretion€to€deny€a€requested€amendment.€€òòBranch€v.€Warrenóó,€527€S.W.2d€89,€91„92€(Tenn.Ð p° Ð1975).Ð \œ ÐÌà  àDespite€the€liberality€implicit€in€Tenn.€R.€Civ.€P.€15.01,€the€courts€have€identified€a€numberÐ 4 t Ðof€circumstances€that,€singly€or€in€combination,€could€warrant€denying€a€motion€to€amend€aÐ  ` Ðpleading.€€These€circumstances€include:€(1)€undue€delay€in€seeking€the€amendment,€(2)€lack€of€noticeÐ  L  Ðto€the€opposing€party,€(3)€bad€faith€or€dilatory€motive€of€the€moving€party,€(4)€repeated€failure€byÐ ø 8  Ðthe€moving€party€to€cure€deficiencies€in€earlier€amendments,€(5)€futility€of€the€proposed€amendment,Ð ä $  Ðand€(6)€undue€prejudice€to€the€opposing€party.€€òòForman€v.€Davisóó,€371€U.S.€178,€182,€83€S.€Ct.€227,Ð Ð  Ð230€(1962);€òòGardiner€v.€Wordóó,€731€S.W.2d€889,€891„92€(Tenn.€1987).€€Of€these€factors,€the€mostÐ ¼ü  Ðimportant€is€the€proposed€amendmentððs€potential€prejudicial€effect€on€the€opposing€party.€€6Ð ¨è  ÐòòCharles€A.€Wright€et€al.,€Federal€Practice€and€Procedure€óóðð€1487,€at€613€(2d€ed.€1990)Ð ”Ô  Ð(ð ðòòFederal€Practice€and€Procedureóóðð).Ð €À ÐÌà  àAnalyzing€the€prejudicial€effect€of€a€proposed€amendment€requires€a€careful€examination€ofÐ X˜ Ðthe€facts€of€the€case.€€The€courts€must€consider€the€position€of€both€parties€and€the€effect€thatÐ D„ Ðgranting€or€denying€the€request€will€have€on€each€of€them.€€This€entails€inquiring€into€(1)€theÐ 0p Ðhardship€on€the€moving€party€if€the€amendment€is€denied;€(2)€the€reasons€for€the€moving€partyððsÐ \ Ðfailure€to€include€the€claim,€defense,€or€other€matter€in€its€earlier€pleading;€and€(3)€the€injustice€toÐ H Ðthe€opposing€party€should€the€motion€to€amend€be€granted.€€6€òòFederal€Practice€and€ProcedureÐ ô4 Ðóóðð€1487,€at€621„23.€Ð à  ÐÌà  àLate€amendments€fundamentally€changing€the€theory€of€a€case€are€generally€not€viewedÐ ¸ø Ðfavorably€when€the€facts€and€theory€have€been€known€to€the€party€seeking€the€amendment€since€theÐ ¤ä Ðbeginning€of€the€litigation.€€òòMarch€v.€Levineóó,€115€S.W.3d€892,€909€(Tenn.€Ct.€App.€2003).€€òòSee€alsoÐ Ð ÐWimm€v.€Jack€Eckerd€Corp.óó,€3€F.3d€137,€140€(5th€Cir.€1993)€(holding€that€the€plaintiffs€would€notÐ |¼ Ðbe€allowed€to€amend€their€complaint€a€second€time€because€they€knew€of€the€facts€underlying€theÐ h¨ Ðclaim€before€the€action€was€filed);€òòWindsor€Card€Shops,€Inc.€v.€Hallmark€Cards,€Inc.óó,€957€F.€Supp.Ð T ” Ð562,€571€(D.N.J.€1997)€(denying€the€plaintiffððs€motion€to€amend€because€the€plaintiff€could€haveÐ @!€  Ðincluded€the€claim€in€its€original€complaint€but€did€not€do€so€for€strategic€reasons).€€Accordingly,€theÐ ,"l! Ðcourts€usually€deny€this€sort€of€amendment€when€the€opposing€party€can€legitimately€claim€surpriseÐ #X" Ðor€when€it€will€(1)€cause€additional€expense€and€the€burden€of€a€more€complicated€and€lengthy€trial,Ð $D # Ð(2)€require€the€opposing€party€to€engage€in€significant€additional€pre„trial€preparation,€(3)€undulyÐ ð$0!$ Ðincrease€discovery,€or€(4)€unduly€delay€the€trial.€€òòMorongo€Bd.€of€Mission€Indians€v.€Roseóó,€893€F.2dÐ Ü%"% Ð1074,€1079€(9th€Cir.€1990);€òòTroxel€Mfg.€Co.€v.€Schwinn€Bicycle€Co.óó,€489€F.2d€968,€971€(6th€Cir.Ð È&#& Ð1973);€6€òòFederal€Practice€and€Procedure€óóðð€1487,€at€623„32.€Ð ´'ô#' ÐÌà@‹‹)ìàò òC.ó óˆÐ Œ)Ì%) ÐÌà  àOmitting€an€unregistered€securities€claim€from€the€Hardcastlesðð€and€Mr.€Provanceððs€originalÐ d+¤'+ Ðcomplaints€was€unnecessarily€risky.€€When€the€investors€filed€their€original€complaints,€the€partiesÐ P,(, Ðand€their€lawyers€knew€all€the€facts€underlying€the€claim€and€that€the€Division€of€Securities€hadÐ À Ðcommenced€an€administrative€enforcement€proceeding€against€Mr.€Harris€for€selling€unregisteredÐ ¬ì Ðsecurities.€€In€addition,€they€knew€or€should€have€known€that€Tenn.€R.€Civ.€P.€8.01€expressly€permitsÐ ˜Ø Ðpleading€in€the€alternative.׃ ×Ý ƒ#ÃÝòòÚ  Ú22Ú  ÚóóÝ  Ý×  ×€€Thus,€by€including€both€their€consumer€protection€claim€and€theirÐ „Ä Ðunregistered€securities€claims€in€their€original€complaint,€the€Hardcastles€and€Mr.€Provance€couldÐ p° Ðeasily€have€avoided€the€predicament€of€seeking€permission€to€add€a€new€claim€to€their€complaint€onÐ \œ Ðthe€eve€of€trial.€€Mr.€Harrisððs€concession€that€the€Merit€Quest€contracts€were€securities€saved€theÐ H ˆ ÐHardcastlesðð€and€Mr.€Provanceððs€unregistered€securities€claims€from€the€potentially€prejudicialÐ 4 t Ðeffects€of€their€lawyerððs€pleading€strategy.€€Ð  ` ÐÌà  àMr.€Harrisððs€eventual€concession€that€the€Merit€Quest€contracts€were€securities€was€intendedÐ ø 8  Ðto€undermine€his€investorsðð€consumer€protection€claims€and€the€accompanying€exposure€to€trebleÐ ä $  Ðdamages.€€However,€by€closing€the€door€on€the€consumer€protection€claims,€Mr.€Harris,€perhapsÐ Ð  Ðunwittingly,€opened€the€door€to€claims€under€the€Tennessee€Securities€Act€of€1980.€€The€HardcastlesÐ ¼ü  Ðand€Mr.€Provance€were€not€seeking€to€delay€the€trial€or€to€take€unfair€advantage€of€Mr.€Harris€whenÐ ¨è  Ðthey€sought€permission€to€amend€their€complaint.€€Rather,€they€were€simply€seeking€to€capitalize€onÐ ”Ô  ÐMr.€Harrisððs€concession€that€the€Merit€Quest€contracts€were€securities.Ð €À ÐÌà  àHis€investorsðð€efforts€to€amend€their€complaints€in€2001€to€assert€an€unregistered€securitiesÐ X˜ Ðclaim€came€as€no€real€surprise€to€Mr.€Harris€because€he€had€been€repeatedly€accused€of€sellingÐ D„ Ðunregistered€securities€without€a€license€since€1999.׃×Ý ƒ#ÃÝòòÚ  Ú23Ú  ÚóóÝ  Ý×  ×€€In€addition,€permitting€his€investors€to€amendÐ 0p Ðtheir€complaint€did€not€unduly€complicate€the€trial.€€Mr.€Harrisððs€concession€that€the€Merit€QuestÐ \ Ðcontracts€were€securities€actually€rendered€the€investorsðð€case€far€less€complex€because€proving€thatÐ H Ðthese€contracts€were€securities€would€have€been€the€most€difficult€and€complex€part€of€the€investorððsÐ ô4 Ðcase.׃ð×Ý ƒ#ÃÝòòÚ  Ú24Ú  ÚóóÝ  Ý×  ×€Ð à  ÐÌà  àFinally,€denying€the€motion€to€amend€would€have€significantly€impaired€the€investorsððÐ ¸ø Ðabilities€to€recover€damages€from€Mr.€Harris€in€light€of€the€patent€shortcomings€in€their€other€claims.€Ð ¤ä ÐThe€consumer€protection€claims€were€legally€flawed€because€the€Tennessee€Consumer€ProtectionÐ Ð ÐAct€does€not€apply€to€securities€transactions€governed€by€the€Tennessee€Securities€Act€of€1980.€Ð |¼ ÐTheir€breach€of€contract€claims€based€on€Mr.€Harrisððs€personal€guarantee€were€undermined€by€theÐ h¨ Ðundisputed€fact€that€Mr.€Harris€had€ceased€giving€personal€guarantees€by€the€time€that€Messrs.Ð T ” ÐProvance€and€Pope€invested€in€Merit€Quest€and€the€Hardcastles€made€their€second€investment.€Ð À ÐLikewise,€the€investorsðð€fraud€and€misrepresentation€claims€lacked€evidence€that€any€of€the€investorsÐ ¬ì Ðacted€reasonably€by€relying€on€the€representations€of€Mr.€Harris€and€his€agents.׃×Ý ƒ#ÃÝòòÚ  Ú25Ú  ÚóóÝ  Ý×  ×Ð ˜Ø ÐÌà  àIn€summary,€we€conclude€that€the€trial€court€did€not€err€by€granting€the€investorsðð€motion€toÐ p° Ðamend€their€complaints€to€add€an€unregistered€securities€claim.€€This€amendment€did€not€undulyÐ \œ Ðcomplicate€the€case€and€did€not€require€extensive€additional€discovery€or€other€trial€preparation.€€Mr.Ð H ˆ ÐHarris€had€been€aware€for€approximately€two€years€that€the€sale€of€Merit€Quest€contracts€wasÐ 4 t Ðconsidered€to€be€a€sale€of€unregistered€securities,€and€at€least€one€of€the€investors€had€already€allegedÐ  ` Ðthat€he€had€violated€the€Tennessee€Securities€Act€of€1980.€€Thus,€Mr.€Harris€was€not€unfairlyÐ  L  Ðsurprised€by€the€amended€claim,€nor€was€it€unjust€to€require€him€to€defend€the€claim€at€trial.Ð ø 8  ÐÌà@‹‹)ìàò òD.ó óˆÐ Ð  ÐÌà  àMr.€Harris€also€insists€that€the€Hardcastles€and€Mr.€Provance€waived€their€unregisteredÐ ¨è  Ðsecurities€claim€because€their€lawyer€deliberately€omitted€it€from€their€original€complaints.€€ThisÐ ”Ô  Ðargument€is€not€well„taken.€€While€the€Tennessee€Rules€of€Civil€Procedure€require€claims€andÐ €À Ðdefenses€to€be€raised€in€a€timely€manner,׃tÜ×Ý ƒ#ÃÝòòÚ  Ú26Ú  ÚóóÝ  Ý×  ×€they€do€not€necessarily€require€plaintiffs€to€include€allÐ l¬ Ðtheir€claims€in€their€original€complaint€nor€defendants€to€include€all€their€defenses€in€their€originalÐ X˜ Ðanswer.׃h×Ý ƒ#ÃÝòòÚ  Ú27Ú  ÚóóÝ  Ý×  ×€€Thus,€claims€not€included€in€an€original€complaint€may€still€be€asserted€if€they€are€raisedÐ D„ Ðin€a€timely€manner€or€are€tried€by€consent€under€Tenn.€R.€Civ.€P.€15.02.Ð 0p ÐÌà  àWhether€a€claim€has€been€asserted€in€a€timely€manner€must€be€determined€with€reference€toÐ H Ðthe€applicable€procedural€rules.€€The€Tennessee€Rules€of€Civil€Procedure€are€sufficiently€flexible€toÐ ô4 Ðpermit€the€parties€to€modify€their€claims€and€defenses€as€the€exigencies€of€the€case€require.€€BecauseÐ à  Ðthese€modifications€generally€take€the€form€of€amendments€to€the€pleadings,€the€timeliness€ofÐ Ì  Ðasserting€a€new€claim€or€defense€should€be€judged€using€Tenn.€R.€Civ.€P.€15.01€standards,€and€theÐ ¸ø Ðcourts€should€conclude€that€a€new€claim€or€defense€is€untimely€only€if€the€party€asserting€it€wouldÐ ¤ä Ðnot€be€entitled€to€amend€its€pleading€under€Tenn.€R.€Civ.€P.€15.01.€€As€we€have€already€determinedÐ Ð Ðin€the€above€section,€the€trial€court€properly€granted€the€investorsðð€motion€to€amend€their€complaintsÐ |¼ Ðto€add€a€claim€based€on€violations€of€the€Tennessee€Securities€Act€of€1980.€€Therefore,€because€theÐ h¨ Ðinvestorsðð€motion€to€amend€was€timely€under€Tenn.€R.€Civ.€P.€15.01,€they€did€not€waive€their€rightÐ T ” Ðto€seek€damages€from€Mr.€Harris€for€selling€unregistered€securities€without€a€license.Ð @!€  ÐÌÐ #X" Ðà@)ìàò òE.ó óˆÐ À ÐÌà  àAs€a€final€challenge€to€the€trial€courtððs€decision€to€permit€the€investors€to€amend€theirÐ ˜Ø Ðcomplaints,€Mr.€Harris€insists€that€the€trial€court€erred€by€refusing€to€continue€the€trial€after€it€grantedÐ „Ä Ðthe€investorsðð€motion€to€amend.€€While€a€trial€court€may€grant€a€continuance€to€enable€a€party€toÐ p° Ðrespond€effectively€to€an€amended€pleading,€òòGardiner€v.€Wordóó,€731€S.W.2d€at€890;€òòWelden€v.€Wylieóó,Ð \œ Ð645€S.W.2d€247,€250€(Tenn.€Ct.€App.€1982),€these€decisions€are€discretionary.€€òòBlake€v.€Plus€Mark,Ð H ˆ ÐInc.óó,€952€S.W.2d€413,€415€(Tenn.€1997).€€Appellate€courts€will€not€second„guess€a€trial€courtððsÐ 4 t Ðdecision€regarding€a€continuance€unless€the€record,€reviewed€as€a€whole,€shows€a€clear€abuse€ofÐ  ` Ðdiscretion€or€that€a€clear€prejudicial€error€has€been€committed.€€òòBlake€v.€Plus€Mark,€Inc.óó,€952€S.W.2dÐ  L  Ðat€415;€òòNagarajan€v.€Terryóó,€___€S.W.3d€___,€___,€2003€WL€23094223,€at€*4€(Tenn.€Ct.€App.€2003)Ð ø 8  Ðòòperm.€app.€deniedóó€(Tenn.€2004).Ð ä $  ÐÌà  àThe€trial€court€did€not€err€when€it€denied€Mr.€Harrisððs€motion€to€continue€the€trial.€€Mr.Ð ¼ü  ÐHarris€did€not€need€additional€time€to€defend€against€his€investorsðð€claims€that€he€had€soldÐ ¨è  Ðunregistered€securities€without€a€license.€€He€had€known€since€October€1999€that€the€Merit€QuestÐ ”Ô  Ðcontracts€were€considered€to€be€unregistered€securities.€€In€addition,€as€the€trial€approached,€heÐ €À Ðdecided€to€limit€his€exposure€by€conceding€that€the€Merit€Quest€contracts€were€securities.€€While€thisÐ l¬ Ðstrategy€successfully€undermined€the€treble€damage€claim€under€the€Tennessee€Consumer€ProtectionÐ X˜ ÐAct,€it€provided€a€basis€for€his€investors€to€claim€that€he€had€sold€unregistered€securities.€€UnderÐ D„ Ðthese€facts,€Mr.€Harris€was€not€prejudiced€by€the€trial€courtððs€denial€of€his€request€for€a€continuance.Ð 0p ÐÌà@dd)ìàò òIV.ó óˆÐ H Ðà@ÖÖ ìàòòò òThe€Timeliness€of€the€Investorsðð€Unregistered€Securities€Claimsó óóóˆÐ ô4 ÐÌà  àMr.€Harris€insists€that€the€trial€court€erred€by€concluding€that€he€was€equitably€estopped€fromÐ Ì  Ðasserting€a€statute€of€limitations€defense€against€the€unregistered€securities€claims€of€the€HardcastlesÐ ¸ø Ðand€Messrs.€Provance€and€Pope.€€Optimistic€about€the€success€of€his€equitable€estoppel€argument,Ð ¤ä Ðhe€also€asserts€that€the€Hardcastlesðð€and€Mr.€Provanceððs€unregistered€securities€claims€did€not€relateÐ Ð Ðback€to€their€original€complaints€under€Tenn.€R.€Civ.€P.€15.03€and€that€the€original€claims€filed€byÐ |¼ ÐMessrs.€Provance€and€Pope€were€not€timely€filed.€€We€have€determined€that€the€trial€court€properlyÐ h¨ Ðinvoked€the€doctrine€of€equitable€estoppel€to€prevent€Mr.€Harris€from€asserting€statute€of€limitationsÐ T ” Ðdefenses€in€this€case.Ð @!€  ÐÌÔ_ÔÔ_ÔÔ_ÔÔ_ÔÔ_ÔÔ_Ôà@‹‹)ìàò òA.ó óˆÐ #X" ÐÌà  àThe€doctrine€of€equitable€estoppel€may€be€applied€to€prevent€a€defendant€who€has€activelyÐ ð$0!$ Ðinduced€a€plaintiff€to€delay€filing€suit€from€asserting€a€statute€of€limitations€defense.òò€€Fahrner€v.€S.W.Ð Ü%"% ÐMfg.,€Inc.óó,€48€S.W.3d€141,€145€(Tenn.€2001).€€When€the€doctrine€is€applied,€it€prevents€a€party€fromÐ È&#& Ðasserting€what€would€otherwise€be€a€valid€statute€of€limitations€defense.€€òòSee€FDIC€v.€Fonsecaóó,€759Ð ´'ô#' ÐF.2d€1102,€1107€(1st€Cir.€1986).€€Thus,€as€the€Tennessee€Supreme€Court€has€observed,€partiesÐ  (à$( Ðinvoking€the€doctrine€of€equitable€estoppel€are€essentially€asking€the€court€to€waive€the€statute€ofÐ Œ)Ì%) Ðlimitations€with€regard€to€their€claim.€€òòFahrner€v.€S.W.€Mfg.,€Inc.óó,€48€S.W.3d€at€164.€€Ð x*¸&* Ðâ âÐ d+¤'+ Ðà  àThe€courts€should€not€be€too€quick€to€invoke€the€doctrine€of€equitable€estoppel€to€prevent€aÐ À Ðâ âdefendant€from€asserting€an€otherwise€valid€statute€of€limitations€defense.€€Statutes€of€limitationsÐ ¬ì Ðare€favored€because€they€promote€the€timely€pursuit€of€legal€rights€by€suppressing€stale€claims.€Ð ˜Ø ÐòòBrown€v.€Hipshireóó,€553€S.W.2d€570,€571€(Tenn.€1977);€òòStephens€v.€Mayóó,€3A€Tenn.€(2€Cooke)€17,Ð „Ä Ð24„25€(1814).€€At€the€same€time,€estoppels€are€not€favored€when€they€prevent€parties€from€assertingÐ p° Ðclaims€or€defenses€to€which€they€would€otherwise€be€entitled.€€òòRogers€v.€Colevilleóó,€145€Tenn.€650,Ð \œ Ð659,€238€S.W.€80,€83€(1922).€€Thus,€determining€whether€to€invoke€equitable€estoppel€requires€theÐ H ˆ Ðcourts€to€examine€the€facts€and€circumstances€of€the€particular€case,€òòPierce€v.€Metropolitan€Life€Ins.Ð 4 t ÐCo.óó,€307€F.€Supp.€2d€325,€334€(D.N.H.€2004),€to€determine€whether€the€defendantððs€conduct€isÐ  ` Ðsufficiently€unfair€or€misleading€to€outweigh€the€public€policy€favoring€statutes€of€limitations.€Ð  L  ÐòòGonzales€v.€Teskyóó,€465€N.W.2d€525,€530€(Wis.€Ct.€App.€1990).Ð ø 8  ÐÔ#†¼Hé»XXm&+#ÔÔ‡XmX»¼HéÔÌà  àThe€party€invoking€the€doctrine€of€equitable€estoppel€bears€the€burden€of€proof.òò€€Pierce€v.Ð Ð  ÐMetropolitan€Life€Ins.€Co.óó,€307€F.€Supp.€2d€at€334;€òòsee€also€Carlton€v.€Davisóó,€No.€M2002„01189„Ð ¼ü  ÐCOA„R3„CV,€2003€WL€1923825,€at€*5€(Tenn.€Ct.€App.€Apr.€24,€2003),€òòperm.€app.€denied€óó(Tenn.Ð ¨è  ÐOct.€6,€2003);€òòBokor€v.€Holderóó,€722€S.W.2d€676,€680€(Tenn.€Ct.€App.€1986).€€The€focus€of€theÐ ”Ô  Ðinquiry€is€on€the€defendantððs€conduct€and€the€reasonableness€of€the€plaintiffsðð€reliance€on€thatÐ €À Ðconduct.€€òòFahrner€v.€S.W.€Mfg.,€Inc.óó,€48€S.W.3d€at€146;òò€see€also€Bridgeport€Music,€Inc.€v.€DiamondÐ l¬ ÐTime,€Ltd.óó,€371€F.3d€883,€891€(6th€Cir.€2004);€òòHentosh€v.€Herman€M.€Finch€Univ.óó,€167€F.3d€1170,Ð X˜ Ð1174€(7th€Cir.€1999);€òòBradley€v.€Williamsóó,€465€S.E.2d€180,€184„85€(W.Va.€1995).Ð D„ ÐÌà  àTo€prevail,€a€plaintiff€must€demonstrate€that€the€defendant€lulled€it€into€putting€off€filing€itsÐ \ Ðsuit€by€conduct,€suggestions,€or€assurances€that€the€defendant€knew€or€should€have€known€wouldÐ H Ðinduce€the€plaintiff€to€delay€filing€suitòò.€€Fahrner€v.€S.W.€Mfg.,€Inc.óó,€48€S.W.3d€at€145.€€òòSee€alsoÐ ô4 ÐMicromuse,€Inc.€v.€Micromuse,€PLCóó,€304€F.€Supp.€2d€202,€211„12€(D.€Mass.€2004);€òòRiley€v.Ð à  ÐPresnellóó,€565€N.E.2d€780,€787€(Mass.€1991).€€Actual€fraud,€bad€faith,€or€intent€to€mislead€or€deceiveÐ Ì  Ðon€the€part€of€the€defendant€is€not€necessary€to€invoke€equitable€estoppel.€€òòChurch€of€Christ€v.Ð ¸ø ÐMcDonaldóó,€180€Tenn.€86,€95,€171€S.W.2d€817,€821„22€(1943);€òòCovington€v.€McMurryóó,€4€Tenn.€Civ.Ð ¤ä ÐApp.€(Higgins)€378,€394€(1913).€€Plaintiffs€must€also€demonstrate€that€their€delay€in€filing€suit€wasÐ Ð Ðnot€attributable€to€their€own€lack€of€diligence,€òòsee€Netzer€v.€Continuity€Graphic€Assocs.,€Inc.óó,€963Ð |¼ ÐF.€Supp.€1308,€1316€(S.D.N.Y.€1997),€and€that€the€delay€was€not€unreasonably€prolonged.€Ð h¨ ÐòòMuhammed€v.€Welchóó,€675€N.W.2d€402,€407€(N.D.€2004).€Ð T ” ÐÌà  àEvidence€of€vague€statements€or€ambiguous€behavior€by€a€defendant€will€not€carry€the€dayÐ ,"l! Ðfor€a€plaintiff€asserting€equitable€estoppel.€€The€plaintiff€must€identify€specific€promises,Ð #X" Ðinducements,€representations,€or€assurances€by€the€defendant€that€reasonably€induced€the€plaintiffÐ $D # Ðto€delay€filing€suit.€€òòGuerrero€v.€Gatesóó,€357€F.3d€911,€919€(9th€Cir.€2004);€òòNolde€v.€Frankieóó,€964Ð ð$0!$ ÐP.2d€477,€481€(Ariz.€1998).€€In€addition€to€written€or€spoken€words,€the€defendantððs€conduct€mayÐ Ü%"% Ðalso€provide€a€basis€for€invoking€equitable€estoppel.€€òòFrayser€v.€Dentsply€Intððl,€Inc.óó,€78€S.W.3d€242,Ð È&#& Ð248€(Tenn.€Sp.€Workers€Comp.€2002).€Ð ´'ô#' ÐÌà  àThe€most€commonly€cited€examples€of€conduct€supporting€the€invocation€of€equitableÐ Œ)Ì%) Ðestoppel€to€defeat€a€statute€of€limitations€defense€are€(1)€a€promise€not€to€plead€the€statute€ofÐ x*¸&* Ðlimitations,€òòe.g.,€Fahrner€v.€S.W.€Mfg.,€Inc.óó,€48€S.W.2d€at€145;€(2)€a€promise€to€pay€or€otherwiseÐ d+¤'+ Ðsatisfy€the€plaintiffððs€claim€without€filing€suit,€òòe.g.,€Brick€Church€Transmissions,€Inc.€v.€SouthernÐ P,(, ÐPilot€Ins.€Co.óó,€140€S.W.3d€324,€335€(Tenn.€Ct.€App.€2003);€or€(3)€encouraging€the€plaintiff€not€toÐ À Ðpursue€available€legal€remedies.€€òòJ.R.€Hale€&€Sons€v.€R.C.€Stone€Engððg€Co.óó,€14€Tenn.€App.€461,€472Ð ¬ì Ð(1932).׃×Ý ƒ#ÃÝòòÚ  Ú28Ú  ÚóóÝ  Ý×  ×€€Of€specific€relevance€to€this€case,€a€number€of€courts€have€invoked€the€doctrine€ofÐ ˜Ø Ðequitable€estoppel€when€the€plaintiff€delayed€filing€suit€as€a€result€of€the€defendantððs€representationsÐ „Ä Ðthat€it€would€settle€the€plaintiffððs€claim€without€litigation€following€the€conclusion€of€another€legalÐ p° Ðproceeding€between€the€defendant€and€a€third€party.€€òòRupley€v.€Huntsmanóó,€324€P.2d€19,€23€(Cal.€Ct.Ð \œ ÐApp.€1958);€òòDuke€Univ.€v.€Stainbackóó,€806,€808€(N.C.€Ct.€App.€1987).€€òòSee€also€Garfield€v.€Clarkóó,Ð H ˆ Ð567€P.2d€777,€781€(Alaska€1977)€(declining€to€invoke€equitable€estoppel€because€the€plaintiffs€didÐ 4 t Ðnot€allege€that€the€defendant€offered€to€settle€the€dispute€should€the€coverage€issue€be€adjudicatedÐ  ` Ðin€their€favor€in€another€suit).Ð  L  ÐÌà@)ìàò òB.ó óˆÐ ä $  ÐÌà  àBetween€January€and€August€2000,€Mr.€Harris€sent€a€series€of€written€communications€to€hisÐ ¼ü  Ðinvestors€informing€them€that€he€and€others€were€working€on€their€behalf€to€recover€their€money.€Ð ¨è  ÐIn€a€January€18,€2000€letter,€Mr.€Harris€stated€that€he€and€another€investor€believed€that€ð ðthey€canÐ ”Ô  Ðwork€out€this€situation€without€involving€the€court€system.ðð€€He€closed€this€letter€with€the€followingÐ €À Ðadmonition:Ð l¬ ÐÌà8  àà8` Ð Ð àI€want€to€ask€anyone€who€is€reading€this€to€call€me€.€.€.€before€takingÐ D„ Ðany€action€to€the€courts€or€regulatories.€€It€is€my€understanding,€thatÐ 0p Ðthe€excuse€used€by€the€traders€for€holding€the€money€is€because€of€anÐ \ Ðinvestor€intervention.€€It€may€prove€to€be€very€costly€to€everyone€ifÐ H Ðsomeone€else€gets€hyper.€€We€feel€we€are€moving€in€the€rightÐ ô4 Ðdirection€and€expect€an€ending€to€this€ordeal€very€soon.Ðà ` x` x ÐÌLess€than€one€month€later,€on€February€4,€2000,€Mr.€Harris€informed€the€investors€that€he€hadÐ ¸ø Ðð ðretained€a€large€Nashville€law€firm€to€represent€us€concerning€the€Insurance€Commissionððs€CeaseÐ ¤ä Ð&€Desist,ðð€that€he€had€ð ðsigned€[the]€necessary€paperwork€for€trial€proceedings€against€Ron€Hogsed,ððÐ Ð Ðand€that€ð ð[w]e€are€proceeding€as€quickly€as€possible€to€settled€[sic]€this€matter.ðð€€Like€his€earlierÐ |¼ Ðletter,€Mr.€Harris€included€the€following:Ð h¨ ÐÌà8  àà8` Ð Ð àI€feel€it€best€that€we€all€stand€together€as€a€group.€€We€have€a€strongÐ @!€  Ðcase,€good€representation,€and€powerful€evidence.€€Darlyn€[Ms.Ð ,"l! ÐHarris]€and€I€have€worked€full€time€on€this€since€Ron€failed€to€pay€theÐ #X" ÐOctober€15th€trade€payment.€€The€suit€is€prepared€and€will€be€filedÐ $D # Ðwhen€our€attorneys€give€the€green€light.€€Donððt€misunderstand,Ð ð$0!$ Ðanyone€has€the€right€to€sue€Ron,€if€they€so€desire.€€I€am€available€toÐ Ü%"% Ðdiscuss€why€your€staying€with€the€group€is€less€expensive,€moreÐ È&#& Ðprofitable,€and€more€likely€of€receiving€payment.д'ô#'` x` x Їà  àMr.€Harrisððs€April€10,€2000€letter€continued€the€same€theme.€€He€informed€the€investors€thatÐ À Ðhe€had€retained€a€new€law€firm€and€that€ð ð[t]he€lawsuit€[against€Mr.€Hogsed]€was€filed€March€30th.ðð€Ð ¬ì ÐHe€also€stated€that:Ð ˜Ø ÐÌà8  àà8` Ð Ð àAs€of€this€date€we€are€working€from€three€different€angles.€€First€ofÐ p° Ðall€we€are€working€to€supply€all€the€information€the€State€needs€forÐ \œ Ðthe€Merit€Quest€hearing€in€May.€€Secondly,€our€lawyers€are€pushingÐ H ˆ Ðto€collect€the€principal€investments€from€Herculese€[sic]Ð 4 t ÐHoldings/Bond€Partnershipððs€Attorney€in€Houston.€€Thirdly,€we€haveÐ  ` Ðfiled€the€lawsuit€against€Mr.€Hogsed€for€collection€of€all€earningsÐ  L  Ð(through€date€of€payment)€and€principal,€if€it€has€not€been€paid€by€theÐ ø 8  Ðcourt€date.Ðä $ ` x` x ÐÌà8  àà8` Ð Ð àAs€a€personal€note,€my€wife€and€I€have€worked€on€the€collecting€ofÐ ¼ü  Ðthese€funds€almost€exclusively€since€October€15,€1999.€€We€currentlyÐ ¨è  Ðhave€retained€three€law€firms€and€expended€many€thousands€ofÐ ”Ô  Ðdollars.€€We€personally€have€invested€with€Mr.€Hogsed€$210,000.€Ð €À ÐSeveral€of€my€family€members€are€investors€in€the€program.€€DonððtÐ l¬ Ðthink€for€a€minute€we€will€leave€one€rock€unturned€until€this€matterÐ X˜ Ðis€resolved.ÐD„` x` x ÐÌFinally,€in€an€ð ðupdateðð€dated€August€11,€2000,€Mr.€Harris€informed€the€investors€that€he€had€talkedÐ \ Ðwith€the€ð ðLondon€Metro€Policeðð€and€that€he€understood€that€all€the€money€had€been€traced€and€hadÐ H Ðbeen€ð ðfrozen€in€place.ðð€€He€also€stated€that€ð ð[a]ll€investors€should€understand€that€their€principal€andÐ ô4 Ðinterest€are€being€sought€in€a€ððMaster€lawsuitðð€against€ððMerit€Questðð€(Ron€Hogsed).€€When€paid,€weÐ à  Ðexpect€to€disburse€proportionally€to€investorððs€contract€dates€and€their€amount€of€investment.ððÐ Ì  ÐÌà@‹‹)ìàò òC.ó óˆÐ ¤ä ÐÌà  àMr.€Harrisðð€investors€knew€or€should€have€known€about€the€Division€of€Securitiesðð€cease€andÐ |¼ Ðdesist€order€against€Mr.€Harris€and€Merit€Quest€by€no€later€than€December€1999.€€Therefore,€basedÐ h¨ Ðon€the€allegations€in€the€cease€and€desist€order,€they€knew€or€should€have€known€that€Mr.€Harris€hadÐ T ” Ðviolated€the€Tennessee€Securities€Act€of€1980€by€selling€the€Merit€Quest€contracts.€€Thus,€in€lightÐ @!€  Ðof€the€statute€of€limitations€in€Tenn.€Code€Ann.€ðð€48„2„122(h)€existing€at€the€time,€Mr.€HarrisððsÐ ,"l! Ðinvestors€should€have€filed€their€securities€act€claims€by€December€2000.Ð #X" ÐÌà  àThe€Hardcastlesðð€original€complaint€was€filed€within€the€statutory€limitations€period€but€didÐ ð$0!$ Ðnot€contain€a€securities€act€claim.€€This€oversight€was€cured€when€the€Hardcastles€amended€theirÐ Ü%"% Ðcomplaint€to€add€a€securities€act€claim.׃×Ý ƒ#ÃÝòòÚ  Ú29Ú  ÚóóÝ  Ý×  ×€€Mr.€Popeððs€complaint€contained€a€securities€act€claim€butÐ È&#& Ðwas€plainly€filed€after€the€limitation€period€had€expired.€€It€is€also€likely€that€Mr.€ProvanceððsÐ À Ðcomplaint,€which€did€not€contain€a€securities€act€claim,€was€not€timely€filed.€€Therefore,€the€fate€ofÐ ¬ì ÐMessrs.€Provanceððs€and€Popeðð€securities€act€claim€rests€on€the€correctness€of€the€trial€courtððsÐ ˜Ø Ðconclusion€that€Mr.€Harris€should€be€equitably€estopped€to€assert€a€statute€of€limitations€defense.Ð „Ä ÐÌà  àAfter€the€Merit€Quest€program€was€shut€down€by€the€Division€of€Securitiesðð€cease€and€desistÐ \œ Ðorder,€Mr.€Harris€deliberately€set€out€to€dissuade€his€investors,€including€Messrs.€Provance€and€Pope,€Ð H ˆ Ðfrom€pursuing€independent€legal€action.€€He€represented€to€them€that€he€had€commenced€variousÐ 4 t Ðlegal€proceedings€on€their€behalf€and€that€there€was€a€good€prospect€that€their€investments€would€beÐ  ` Ðreturned€to€them€as€a€result€of€the€proceedings€he€had€instigated.€€Mr.€Harris€also€represented€to€hisÐ  L  Ðinvestors€that€their€interests€would€be€best€served€by€ð ðstaying€with€the€groupðð€and€by€not€pursuingÐ ø 8  Ðlegal€remedies€on€their€own.€€Messrs.€Provance€and€Pope€did€not€act€unreasonably€by€putting€offÐ ä $  Ðtheir€own€legal€proceedings€in€reliance€on€Mr.€Harris€representations€that€his€efforts€would€result€inÐ Ð  Ðthe€return€of€their€investments.€€They€did€not€delay€commencing€their€proceedings€beyond€the€pointÐ ¼ü  Ðwhen€a€reasonable€person€would€no€longer€believe€Mr.€Harris€representations.€€Accordingly,€basedÐ ¨è  Ðon€these€facts,€the€trial€court€correctly€determined€that€Mr.€Harris€had€ð ðlulled€the€investors€into€aÐ ”Ô  Ðfalse€sense€that€was€taking€legal€action€on€their€behalf.ðð€€Ð €À ÐÌà@‹‹)ìàò òV.ó óˆÐ X˜ Ðà@   ìàòòò òThe€Evidentiary€Support€of€the€Unregistered€Securities€Claimó óóósˆÐ D„ ÐÌà  àMr.€Harris€insists€that€he€should€not€be€held€civilly€liable€to€his€investors€because€they€failedÐ  ` Ðto€prove€that€he€actually€knew€that€the€Merit€Quest€contracts€were€unregistered€securities€when€heÐ  L Ðsold€them.€€His€argument€is€based€on€his€understanding€that€Tenn.€Code€Ann.€ðð€48„2„122(a)(1)(A)Ð ø8 Ð(Supp.€2004)€conditions€civil€liability€on€the€sellerððs€actual€knowledge€that€a€security€is€unregistered.€Ð ä$ ÐMr.€Harrisððs€interpretation€of€Tenn.€Code€Ann.€ðð€48„2„122(a)(1)(A)€is€incorrect.Ð Ð ÐÌà@‹‹)ìàò òA.ó óˆÐ ¨è ÐÌà  àTennesseeððs€securities€statutes€are€remedial€and€should€be€construed€broadly€to€effectuateÐ €À Ðtheir€purpose.€€òòKing€v.€Popeóó,€91€S.W.3d€314,€323€(Tenn.€2002);€òòState€v.€Breweróó,€932€S.W.2d€1,€10Ð l¬ Ð(Tenn.€Crim.€App.€1996).€€Like€other€statutes,€the€courtððs€responsibility€is€to€ascertain€and€then€toÐ X ˜ Ðgive€the€fullest€possible€effect€to€the€General€Assemblyððs€purpose€in€enacting€the€statute€as€reflectedÐ D!„  Ðin€the€statuteððs€language.€€òòStewart€v.€Stateóó,€33€S.W.3d€785,€790„91€(Tenn.€2000);€òòLavin€v.€Jordonóó,Ð 0"p! Ð16€S.W.3d€362,€365€(Tenn.€2000).€€In€doing€so,€we€must€avoid€constructions€that€unduly€expand€orÐ #\" Ðrestrict€the€statuteððs€application.€€òòWatt€v.€Lumbermens€Mut.€Cas.€Ins.€Co.óó,€62€S.W.3d€213,€218€(Tenn.Ð $H # Ð2001);€òòPatterson€v.€Tennessee€Depððt€of€Labor€&€Workforce€Dev.óó,€60€S.W.3d€60,€64€(Tenn.€2001)òòóó.Ð ô$4!$ ÐÌà  àOur€construction€of€a€statute€is€more€likely€to€harmonize€with€the€General€AssemblyððsÐ Ì& #& Ðpurpose€if€we€approach€the€statute€presuming€that€the€General€Assembly€chose€its€words€purposelyÐ ¸'ø#' Ðand€deliberately,€òòTidwell€v.€Servomation„Willoughby€Co.óó,€483€S.W.2d€98,€100€(Tenn.€1972);Ð ¤(ä$( ÐòòMerrimack€Mut.€Fire€Ins.€Co.€v.€Battsóó,€59€S.W.3d€142,€151€(Tenn.€Ct.€App.€2001),€and€that€theÐ À Ðwords€chosen€by€the€General€Assembly€convey€the€meaning€that€the€General€Assembly€intendedÐ ¬ì Ðthem€to€convey.€€òòLimbaugh€v.€Coffee€Med.€Ctr.óó,€59€S.W.3d€at€83;€òòBellSouth€Telecomms.,€Inc.€v.Ð ˜Ø ÐGreeróó,€972€S.W.2d€663,€673€(Tenn.€Ct.€App.€1997).€€Thus,€we€must€construe€statutes€as€we€findÐ „Ä Ðthem,€òòJackson€v.€Jacksonóó,€186€Tenn.€337,€342,€210€S.W.2d€332,€334€(1948);€òòPacific€Eastern€Corp.Ð p° Ðv.€Gulf€Life€Holding€Co.óó,€902€S.W.2d€946,€954€(Tenn.€Ct.€App.€1995),€and€our€search€for€a€statuteððsÐ \œ Ðpurpose€must€begin€with€the€words€of€the€statute€itself.€€òòBlankenship€v.€Estate€of€Bainóó,€5€S.W.3d€647,Ð H ˆ Ð651€(Tenn.€1999).Ð 4 t ÐÌÓ€ ‡(ÿÿ43ìÓà  àWe€must€give€a€statuteððs€words€their€natural€and€ordinary€meaning€unless€the€context€inÐ  L  Ðwhich€they€are€used€requires€otherwise.€€òòFrazier€v.€East€Tenn.€Baptist€Hosp.óó,€55€S.W.3d€at€928;Ð ø 8  ÐòòMooney€v.€Sneedóó,€30€S.W.3d€304,€306€(Tenn.€2000);€òòState€v.€Fitzóó,€19€S.W.3d€213,€216€(Tenn.€2000).€Ð ä $  ÐBecause€words€are€known€by€the€company€they€keep,€òòóówe€should€construe€the€words€in€a€statute€inÐ Ð  Ðthe€context€of€the€entire€statute€and€in€light€of€the€statuteððs€general€purpose.€€òòState€v.€Flemmingóó,€19Ð ¼ü  ÐS.W.3d€195,€197€(Tenn.€2000);€òòLyons€v.€Rasaróó,€872€S.W.2d€895,€897€(Tenn.€1994);€òòWachovia€BankÐ ¨è  Ðof€N.C.€v.€Johnsonóó,€26€S.W.3d€621,€624€(Tenn.€Ct.€App.€2000).€€When€the€meaning€of€statutoryÐ ”Ô  Ðlanguage€is€clear,€we€must€interpret€it€as€written,€òòKradel€v.€Piper€Indus.,€Inc.óó,€60€S.W.3d€744,€749Ð €À Ð(Tenn.€2001);€òòATS€Southeast,€Inc.€v.€Carrier€Corp.óó,€18€S.W.3d€626,€629„30€(Tenn.€2000),€rather€thanÐ l¬ Ðusing€the€tools€of€construction€to€give€the€statute€another€meaning.€€òòLimbaugh€v.€Coffee€Med.€Ctr.óó,Ð X˜ Ð59€S.W.3d€73,€83€(Tenn.€2001);€òòGleaves€v.€Checker€Cab€Transit€Corp.óó,€15€S.W.3d€799,€803€(Tenn.Ð D„ Ð2000).Ð 0p ÐÌà@)ìàò òB.ó óˆÐ H ÐÌà  àTenn.€Code€Ann.€ðð€48„2„122(a)(1)(A)€imposes€civil€liability€on€any€person€who:Ð à  ÐÌà8  àà8` Ð Ð à[s]ells€a€security€in€violation€of€ðððð€48„2„104€ð!ð€48„2„109,€48„2„110(f),Ð ¸ø Ðor€of€any€condition€imposed€under€ðð€48„2„107(f),€or€any€rule,€or€orderÐ ¤ä Ðunder€this€part€of€which€the€person€has€notice.ÐÐ` x` x ÐÌ€Mr.€Harris€asserts€that€the€notice€requirement€applies€to€the€entire€statute.€€We€disagree€for€twoÐ h¨ Ðreasons.€€First,€Mr.€Harrisððs€interpretation€is€at€odds€with€the€generally€applicable€rules€of€grammarÐ T ” Ðand€punctuation.€€Second,€the€notice€requirement€in€the€statute,€even€if€it€were€applicable,€is€broadÐ @!€  Ðenough€to€include€actual€and€constructive€notice.Ð ,"l! ÐÌà  àThe€structure€of€Tenn.€Code€Ann.€ðð€48„2„122(a)(1)(A)€consists€of€a€series€of€independent€ofÐ $D # Ðstatutory€or€regulatory€restrictions€the€violation€of€which€may€give€rise€to€civil€liability.€€EachÐ ð$0!$ Ðelement€of€this€series€is€separated€by€ð ð,€orðð׃×Ý ƒ#ÃÝòòÚ  Ú30Ú  ÚóóÝ  Ý×  ×€which€creates€some€ambiguity€regarding€whichÐ Ü%"% Ðrestriction€or€restrictions€are€modified€by€the€concluding€phrase€ð ðof€which€the€person€has€notice.ðð€Ð È&#& ÐWe€have€determined€that€the€phrase€ð ðof€which€the€person€has€noticeðð€applies€only€to€ð ðany€conditionÐ À Ðimposed€under€ðð€48„2„107(f),€or€any€rule,€or€order€under€this€partðð€for€two€reasons.€€First,€theÐ ¬ì ÐGeneral€Assemblyððs€repetitive€use€of€the€preposition€ð ðofðð€reflects€an€intention€to€distinguish€betweenÐ ˜Ø Ðviolations€of€ð ððððð€48„2„104€ð!ð€48„2„109,€48„110(f)ðð€and€violations€of€ð ðany€condition€imposed€underÐ „Ä Ððð€48„2„107(f),€or€any€rule,€or€order.ðð€€€Second,€the€former€violations€are€statutory,€while€the€latterÐ p° Ðinvolve€violations€of€a€rule€or€order€issued€by€the€Division.€€The€General€Assembly€could€reasonablyÐ \œ Ðhave€decided€to€apply€the€notice€requirement€to€administrative€actions€by€the€Division€but€not€toÐ H ˆ Ðviolations€of€the€Securities€Act€of€1980€itself.Ð 4 t ÐÌà  àAs€a€general€matter,€a€sellerððs€lack€of€knowledge€of€a€stateððs€securities€laws€does€not€excuseÐ  L  Ðthe€sale€of€an€unregistered€security.€€òòSee€e.g.,€Hogg€v.€Jerryóó,€773€S.W.2d€84,€86€(Ark.€1989).€€Thus,Ð ø 8  Ða€sellerððs€lack€of€knowledge€of€the€registration€requirement€is€irrelevant€with€regard€to€civil€liabilityÐ ä $  Ðfor€selling€unregistered€securities.€€òòIn€re€McDowellóó,€87€B.R.€554,€559€(Bankr.€S.D.€Ill.€1988);Ð Ð  ÐòòHeilbron€v.€ARC€Energy€Corp.óó,€757€S.W.2d€294,€296€(Mo.€Ct.€App.€1988).€€Accordingly,€the€sellerÐ ¼ü  Ðof€an€unregistered€security€may€be€held€civilly€liable€for€the€sale€if€he€or€she€knew,€or€through€theÐ ¨è  Ðexercise€of€reasonable€diligence€should€have€known,€that€the€securities€should€have€been€registered.€Ð ”Ô  ÐòòChiles€v.€M.C.€Capital€Corp.óó,€642€N.E.2d€1115,€1123€(Ohio€Ct.€App.€1994).€€Ð €À ÐÌà  àThe€notice€requirement€in€Tenn.€Code€Ann.€ðð€48„2„122(a)(1)(A)€did€not€apply€to€Mr.€HarrisÐ X˜ Ðbecause€he€violated€the€statutory€prohibition€against€the€sale€of€unregistered€securities€and€theÐ D„ Ðstatutory€prohibition€against€selling€securities€without€a€license.€€Thus,€his€professed€ignorance€thatÐ 0p Ðthe€Merit€Quest€contracts€were€investment€contracts,€and€therefore€securities€as€defined€in€Tenn.Ð \ ÐCode€Ann.€ðð€48„2„102(16)€(Supp.€2004),€cannot€shield€him€from€liability€to€his€investors.€€Even€ifÐ H Ðthe€notice€requirement€were€applicable,€Mr.€Harris,€as€a€self„professed€expert€knowledgeable€in€thisÐ ô4 Ðparticular€business€opportunity,€should€have€known€that€the€Merit€Quest€contracts€were€securitiesÐ à  Ðand€that€they€were€not€exempt€from€registration€under€the€Tennessee€Securities€Act€of€1980.Ð Ì  ÐÌà@dd)ìàò òVI.ó óˆÐ ¤ä Ðà@ìàòòò òThe€Award€for€Attorneyððs€Feesó óóóˆÐ Ð ÐÌà  àAs€a€final€matter,€Mr.€Harris€asserts€that€the€trial€court€erred€by€awarding€the€Hardcastles€andÐ h¨ ÐMessrs.€Provance€and€Pope€an€additional€$44,979.50€for€attorneyððs€fees€and€expenses.€€He€claimsÐ T ” Ðthat€he€should€not€be€required€to€pay€attorneyððs€fees€because€he€did€not€have€adequate€notice€that€hisÐ @!€  Ðinvestors€were€seeking€attorneyððs€fees€under€the€Tennessee€Securities€Act€of€1980.€€We€disagree€forÐ ,"l! Ðtwo€reasons.€€First,€Mr.€Harris€knew€as€early€as€July€2000€that€his€investors€were€seeking€to€recoverÐ #X" Ðattorneyððs€fees.€€Second,€the€investorsðð€amended€complaints€contained€specific€requests€for€attorneyÐ $D # Ðfees€under€the€Tennessee€Securities€Act.Ð ð$0!$ ÐÌà  àBoth€of€the€original€complaints€filed€by€the€Hardcastles€in€July€2000€and€the€originalÐ È&#& Ðcomplaint€filed€by€Mr.€Provance€five€months€later€requested€an€award€of€attorneyððs€fees€under€theÐ ´'ô#' ÐTennessee€Consumer€Protection€Act.€€Mr.€Popeððs€original€civil€warrant€filed€in€May€2001€includedÐ  (à$( Ða€securities€claim€and€sought€attorneyððs€fees.€€The€amended€complaints€filed€by€the€Hardcastles€andÐ Œ)Ì%) ÐMr.€Provance€in€October€2001€included€a€securities€claim€and€specifically€requested€attorneyððs€feesÐ x*¸&* Ðunder€the€Tennessee€Securities€Act€of€1980.€€Thus,€Mr.€Harris€knew€since€July€2000€that€one€or€moreÐ d+¤'+ Ðof€his€investors€intended€to€seek€attorneyððs€fees.€€He€also€knew€as€early€as€May€2001€ð!ð€five€monthsÐ P,(, Ðprior€to€the€trial€ð!ð€that€at€least€one€of€his€investors€was€seeking€attorneyððs€fees€under€the€TennesseeÐ À ÐSecurities€Act€of€1980.Ð ¬ì ÐÌà  àThe€fundamental€purpose€of€the€pleading€requirement€in€Tenn.€R.€Civ.€P.€9.07€is€notice.€Ð „Ä ÐòòKeisling€v.€Keislingóó,€92€S.W.3d€374,€377€(Tenn.€2002);€òòCastelli€v.€Lienóó,€910€S.W.2d€420,€429€(Tenn.Ð p° ÐCt.€App.€1995).€€Because€claims€for€attorneyððs€fees€are€ð ðfairly€unusual,ðð€òòMarshall€v.€First€Natððl€BankÐ \œ Ðof€Lewisburgóó,€622€S.W.2d€558,€561€(Tenn.€Ct.€App.€1981),€a€claim€for€attorneyððs€fees€must€beÐ H ˆ Ðspecifically€pleaded€under€Tenn.€R.€Civ.€P.€9.07.€€òòCross€v.€McCurryóó,€859€S.W.2d€349,€353€(Tenn.Ð 4 t ÐCt.€App.€1993).€€Thus,€prudent€lawyers€seeking€to€recover€attorneyððs€fees€should€include€a€specificÐ  ` Ðrequest€for€attorneyððs€fees€in€their€pleadings€that€includes€a€specific€reference€to€the€contractual,Ð  L  Ðstatutory,€or€other€substantive€basis€for€an€award€of€attorneyððs€fees.€€€€€€Ð ø 8  ÐÌà  àMany€courts,€however,€have€held€that€a€general€claim€for€attorneyððs€fees€that€does€not€includeÐ Ð  Ðthe€legal€basis€for€the€claim€satisfies€the€requirements€of€rules€similar€to€Tenn.€R.€Civ.€P.€9.07.€€òòSeeÐ ¼ü  Ðe.g.,€Caufield€v.€Canteleóó,€837€So.2d€371,€377„78€(Fla.€2002);€òòMitchell€v.€La€Flammeóó,€60€S.W.3d€123,Ð ¨è  Ð130€(Tex.€App.€2000).€€Tennesseeððs€courts€have€been€even€more€relaxed.€€For€example,€this€courtÐ ”Ô  Ðhas€upheld€an€award€for€attorneyððs€fees€under€the€Tennessee€Consumer€Protection€Act€even€thoughÐ €À Ðthe€consumer€did€not€include€a€specific€request€for€attorneyððs€fees€in€his€complaint.€€The€courtÐ l¬ Ðreasoned€that€the€consumer€protection€claim€by€itself€put€the€defendant€on€notice€that€it€could€beÐ X˜ Ðrequired€to€pay€the€consumerððs€attorneyððs€fees€because€attorneyððs€fees€were,€by€statute,€an€elementÐ D„ Ðof€damages€in€the€consumer€protection€case.€€òòKillingsworth€v.€Ted€Russell€Ford,€Inc.óó,€104€S.W.3dÐ 0p Ð530,€533„34€(Tenn.€Ct.€App.€2002).׃×Ý ƒ#ÃÝòòÚ  Ú31Ú  ÚóóÝ  Ý×  ׀Р\ ÐÌà  àUnder€the€circumstances€of€this€case,€Mr.€Harris€had€adequate€notice€that€his€investors€wereÐ ô4 Ðseeking€to€recover€their€attorneyððs€fees,€even€if€the€basis€for€this€recovery€changed.€€He€knew€twoÐ à  Ðyears€before€trial€that€his€investors€were€seeking€attorneyððs€fees€under€the€Tennessee€ConsumerÐ Ì  ÐProtection€Act,€and€he€knew€five€months€before€trial€that€at€least€one€of€his€investors€was€seekingÐ ¸ø Ðattorneyððs€fees€under€the€Tennessee€Securities€Act€of€1980.€€Thus,€he€was€not€unfairly€prejudicedÐ ¤ä Ðwhen€the€trial€court€permitted€the€remaining€investors€to€amend€their€complaints€shortly€before€trialÐ Ð Ðto€include€a€securities€claim€and€to€recover€attorneyððs€fees€under€the€Tennessee€Securities€Act€ofÐ |¼ Ð1980.Ð h¨ ÐÌÌà@==(ìàò òVII.ó óˆÐ ,"l! Ðà@ÇÇ ìàòòò òThe€Dismissal€of€the€Investorsðð€Fraudulent€Misrepresentation€Claimsó óóóˆÐ #X" ÐÌà  àWe€need€not€tarry€long€with€the€investorsðð€argument€that€the€trial€court€erred€by€dismissingÐ ð$0!$ Ðtheir€fraudulent€misrepresentation€claim.€€It€is€only€sketchily€briefed,€and€it€does€not€address€the€basisÐ Ü%"% Ðfor€the€trial€courtððs€decision.€€No€claim€for€fraud€or€fraudulent€misrepresentation€can€succeed€withoutÐ È&#& Ðsome€proof€that€the€injured€party€or€parties€reasonably€relied€on€the€false€representations€of€theÐ ´'ô#' Ðdefendant.€€òòRobinson€v.€Omeróó,€952€S.W.2d€at€427;€òòHodges€v.€S.€C.€Toof€&€Co.óó,€833€S.W.2d€at€901.€Ð À ÐThe€evidence€proves€that€the€investors€acted€impetuously€and€imprudently€when€they€purchased€theirÐ ¬ì ÐMerit€Quest€contracts.€€All€of€the€investors€conceded€that€they€believed€that€Mr.€Harrisððs€claimsÐ ˜Ø Ðregarding€the€return€on€their€investment€were€inflated€and€that€they€did€not€read€most€of€the€contractÐ „Ä Ðdocuments€submitted€to€them€before€they€purchased€their€Merit€Quest€contract.€€Yet,€none€of€themÐ p° Ðsought€independent€advice€before€getting€involved€in€Mr.€Harrisððs€get„rich„quick€scheme.€TheÐ \œ Ðevidence€in€this€case€supports€the€trial€courtððs€conclusion€that€none€of€the€investors€reasonably€reliedÐ H ˆ Ðon€Mr.€Harrisððs€representations€regarding€the€amount€of€return€on€their€investment€or€the€safety€ofÐ 4 t Ðtheir€principal.€€Without€evidence€of€reasonable€reliance,€the€investorsðð€fraudulent€misrepresentationÐ  ` Ðclaims€must€fail.€€€€Ð  L  ÐÌà@(ìàò òVIII.ó óˆÐ ä $  ÐÌà  àWe€affirm€the€judgment€and€remand€the€case€to€the€trial€court€for€further€proceedingsÐ ¼ü  Ðconsistent€with€this€opinion.€€We€tax€the€costs€of€this€appeal€to€Frank€Harris€and€his€surety€for€whichÐ ¨è  Ðexecution,€if€necessary,€may€issue.Ð ”Ô  ÐÌÌÌà  àà ` àà ¸ àà  àà h àà À àà  à________________________Ð D„ Ðà  àà ` àà ¸ àà  àà h àà À àà  àWILLIAM€C.€KOCH,€JR.,€J.Ô#†¼Hé»XXmJ¸#ÔÔ‡XmX»¼HéÔ