ÿWPCˆ Ìn» Y+Åë’»•y‘2äZ¶xA»Ðm†ÏVÀÈÈ%êv:Æùy7¤t® ¨ õcJsÔ: B@çŠÓÎ>rwÖ½ít|i£’Ëp¾—%wf16F &`‰;Ø£·J¾±#¼„_Š#Æ=ì,tÌ­uy@J¢4w¥q$FÞM±ÞoÈ6Uz`=‚MRzº=n«ºHãý[ d™“&†µ³¼÷7TøéI,?¼>ÞN_£º¹.äëY{6Ý×;?àÖ1±Ðã@EÍÑhöa×—j/êxqñ,r…ê:‰¿®O!x(=‹Ètlr#ÔÔ‡XX»¼L­ÔÐ L"œ! ÐÌòòóóÔ#†¼L­»XX¢ #ÔÔ‡XX»¼L­ÔÓ  ÓÓÓà@¬¬)ìàò òI.ó óˆÐ $$t# ÐÓÓà  àHerman€S.€Howard,€American€Direct€Marketing,€Inc.,€International€Media,€Inc.,€and€TheÐ ü%L!% ÐMedia€Group,€Inc.€sued€American€Industries€Services,€Inc.€and€Raymond€Ô_ÔTuppatschÔ_Ô€alleging€fraudÐ è&8"& Ðand€breach€of€a€fiduciary€duty.€€The€complaint€sought€a€declaratory€judgment,€an€injunction,€anÐ Ô'$#' Ðaccounting,€damages,€and€the€imposition€of€a€resulting€trust€on€the€ownership€of€American€IndustriesÐ À($( Ðin€favor€of€Media€Group€or€Mr.€Howard.Ð ¬)ü$) ÐÌà  àMr.€Howard€owns€the€plaintiff€companies,€and€they€market€products€to€the€public€throughÐ „+Ô&+ Ðsales€to€retailers€and€direct€advertising.€€In€order€to€deliver€the€products€to€the€consuming€public,€theÐ p,À', Ðmarketing€entities€use€a€ð ðfulfillment€companyðð,€which€stores€the€product,€takes€the€customerððs€order,Ð \-¬(-ý ÐÔ_Ôand€mails€out€the€goods.€€American€Industries,€a€Delaware€corporation€with€its€principal€place€ofÐ ° Ðbusiness€in€Nashville,€served€as€the€fulfillment€company€for€the€plaintiff€corporations.Ð œì ÐÌà  àIn€short,€this€dispute€started€over€the€ownership€of€American€Industries€and€an€employeeÐ tÄ Ðleasing€company€called€Mood€Cosmetics,€Inc.€€The€legal€title€to€the€shares€of€each€company€is€in€theÐ `° Ðname€of€Mr.€Tuppatsch,€who€at€one€time€served€as€Mr.€Howardððs€financial€advisor€and€confidant.€Ð L œ ÐMr.€Howard€alleges€that€Mr.€Tuppatsch€acquired€the€shares€as€Mr.€Howardððs€nominee€and€as€anÐ 8 ˆ Ðaccomodation€to€him,€but€that€as€a€result€of€Mr.€Tuppatschððs€fiduciary€relationship€to€Mr.€HowardÐ $ t Ðhe€has€caused€the€transfer€of€millions€of€dollars€to€Mood€Cosmetics€and€American€Industries,€all€toÐ  ` ÐMr.€Tuppatschððs€own€benefit.Ð ü L  ÐÌà  àUpon€the€filing€of€the€complaint,€the€plaintiffs€obtained€a€restraining€order€requiring€theÐ Ô$  Ðdefendants€to€continue€providing€fulfillment€services€to€the€plaintiffs.€€The€court,€however,€imposedÐ À  Ða€condition€that€the€plaintiff€pay€for€the€services€and€pay€50%€of€the€storage€services€provided€by€theÐ ¬ü  Ðdefendants.€€The€other€50%€of€the€storage€costs€was€placed€in€an€escrow€account€controlled€by€theÐ ˜è  Ðplaintiffsðð€lawyers.€€After€a€hearing,€the€court€made€the€order€a€temporary€injunction€but€extendedÐ „Ô  Ðits€effect€only€to€June€23,€2000.€€The€deadline€was€subsequently€set€back€to€January€31,€2001,€andÐ pÀ Ðthe€plaintiffs€finally€completed€the€removal€of€their€products€on€February€13,€2001.€€By€that€time,Ð \¬ Ðhowever,€the€plaintiffs€owed€the€defendants€$278,047.55€under€the€terms€of€the€courtððs€orders.€€OnÐ H˜ ÐApril€6,€2001€the€court€ordered€the€payment€of€that€amount€by€April€12,€2001,€but€denied€theÐ 4„ Ðdefendantsðð€motion€that€the€plaintiffs€be€held€in€contempt€of€court.€€Under€a€threat€by€the€court€toÐ  p Ðdismiss€all€of€their€claims,€the€plaintiffs€finally€paid€the€accrued€costs,€interest,€and€attorneys€feesÐ  \ Ðon€June€29,€2001.Ð øH ÐÌà  àBy€the€time€the€court€finally€dismissed€all€claims€on€August€1,€2001,€the€court€had€previouslyÐ Ð  Ðdismissed€any€claim€Mr.€Howard€had€to€ownership€of€the€two€companies.€€The€court€held€that€theÐ ¼  Ðplaintiffs€were€judicially€estopped€from€asserting€any€claim€of€ownership€in€the€companies€becauseÐ ¨ø Ðof€Mr.€Howardððs€sworn€testimony€in€numerous€prior€legal€proceedings€that€he€had€no€interest€in€theÐ ”ä Ðcompanies€and€that€they€in€fact€belonged€to€Mr.€Tuppatsch.€€The€plaintiffs€had€also€previouslyÐ €Ð Ðabandoned€a€claim€that€Mr.€Tuppatsch€had€usurped€the€opportunity€to€acquire€the€two€companies.€Ð l¼ ÐThese€claims€are€not€a€part€of€this€appeal.Ð X ¨ ÐÌà  àThe€only€claim€outstanding€after€the€dismissal€of€the€ownership€claim€was€a€fraud€claimÐ 0"€  Ðagainst€Mr.€Tuppatsch€individually.€The€court€had€ordered€the€plaintiffs€to€amend€their€complaintÐ #l! Ðto€allege€with€particularity€the€facts€supporting€their€fraud€claim€against€Mr.€Tuppatsch.€€òòSeeóó€Tenn.Ð $X" ÐR.€Civ.€P.€9.02.€€Despite€record€evidence€to€the€contrary,€the€amended€complaint€restated€allegationsÐ ô$D # Ðthat€Mr.€Howard€learned€for€the€first€time€in€March€of€2000€that€Mr.€Tuppatsch€was€asserting€thatÐ à%0!$ Ðhe€owned€American€Industries€and€Mood€Cosmetics.€€Nevertheless,€the€complaint€asserted€that€Mr.Ð Ì&"% ÐTuppatsch,€after€he€acquired€the€two€companies€in€1994,€continued€to€represent€to€Mr.€Howard€thatÐ ¸'#& Ðthe€companies€were€operating€for€Mr.€Howardððs€benefit€and€were€only€collecting€enough€funds€toÐ ¤(ô#' Ðcover€their€operating€expenses.€€In€actuality,€the€complaint€alleges,€Mr.€Tuppatsch,€through€hisÐ )à$( Ðauthority€as€defacto€comptroller€of€the€plaintiff€corporations,€had€caused€millions€of€dollars€to€beÐ |*Ì%) Ðtransferred€to€his€own€companies.€€Ô#†¼L­»XX #ÔÔ‡XX»¼L­ÔAs€the€court€succinctly€stated€in€its€order€dismissing€the€fraudÐ h+¸&* Ðclaim,€the€plaintiffs€claim€ð ðthat€defendant€Tuppatsch€engaged€in€a€program€and€course€of€conductÐ ° Ðof€diverting€and€transferring€the€funds€of€plaintiffs€and€converting€the€funds€to€his€own€use€andÐ œì Ðbenefit€.ððÐ ˆØ ÐÌà  àà@……)ìàò òII.ó óˆÐ `° ÐÌà  àA€trial€court€is€authorized€by€the€Rules€of€Civil€Procedure€to€dismiss€a€plaintiffððs€claim€forÐ 8 ˆ Ðfailing€ð ðto€serve€answers€or€objections€to€interrogatories€submitted€under€Rule€33€.€.€.€.ðð€€òòSeeóó€RuleÐ $ t Ð37.02(C);€Rule€37.04(2).€€An€evasive€or€incomplete€answer€is€treated€the€same€as€a€failure€to€answer,Ð  ` ÐRule€37.01(3).€€The€trial€judgeððs€action€involves€an€exercise€of€discretion€that€will€not€be€disturbedÐ ü L  Ðin€the€absence€of€an€affirmative€showing€of€abuse.€€òòBrooks€v.€United€Uniform€Co.óó,€682€S.W.2d€913Ð è 8  Ð(Tenn.€1984).€€While€dismissal€is€a€ð ðharsh€sanction,ðð€òòHolt€v.€Websteróó,€638€S.W.2d€391,€394€(Tenn.Ð Ô$  ÐCt.€App.€1982),€harsh€sanctions€have€been€used€with€some€frequency€to€address€a€partyððs€failure€toÐ À  Ðcomply€with€discovery€orders.€€òòSee€American€Steinwinter€v.€American€Steinwinteróó,€òòInc.óó€964€S.W.2dÐ ¬ü  Ð569€(Tenn.€Ct.€App.€1997);€òòYearwood,€Johnson,€Stanton€&€Crabtree€v.€Foxlandóó,€828€S.W.2d€412Ð ˜è  Ð(Tenn.€Ct.€App.€1991);€òòPotts€v.€Mayforthóó,€59€S.W.3d€167€(Tenn.€Ct.€App.€2001).Ð „Ô  ÐÌÌà  àThe€courtððs€memorandum€recites€the€history€of€the€discovery€problems€encountered€in€theÐ H˜ Ðcase:Ð 4„ ÐÌà8  àà ` àTurning€first€to€Interrogatory€2€propounded€by€the€defendants€to€each€of€theÐ  \ Ðcorporate€plaintiffs€on€August€21,€2000,€the€Court€determines€that€the€discoveryÐ øH Ðseeks€to€uncover€the€factual€details€on€which€the€misappropriation€claims€are€basedÐ ä4 Ðð!ð€a€critical€inquiry€for€the€defendantsðð€defense.€€Interrogatory€2€reads€as€follows.ÐÐ Ð Ð  ÐÌà8  àà8` Ð Ð àINTERROGATORY€NO.€2:€For€each€financial€transaction€TheÐ ¨ø ÐMedia€Group,€Inc.€(hereinafter€ð ðMedia€Groupðð)€or€InternationalÐ ”ä ÐMedia,€Inc.€(hereinafter€ð ðInternational€Mediaðð)€claims€was€in€any€wayÐ €Ð Ðfraudulent€to€(sic)€otherwise€improper,€state€the€following:Ðl¼` x` x ÐÌÓ€ (¶é83 Óà8  àà8` Ð Ð à(a)à ¸ àThe€amount€of€funds€improperly€transferred;ÐD!”` x` x ÐÌÓ€ (ç 88ÓØ! !ØÝ"‚ 3£"ÝÝ  Ýà  àà ` àÝ‚ 3£Ž,ÝÔ2ç Ô(Ú  ÚbÚ  Ú)Ô3  Ôà0 ¸ àÝ  ÝThe€name€of€the€financial€institution€from€which€the€money€was€à Ð àà @Ð àÐ #l! Ðtransferred;݃ 3£Ž,Ó,ÝŒÐ$X"¸ (#¸ (# ÐŒÝ  ÝÌÝ"‚ 3£"ÝÝ  Ýà  àà ` àÝ‚ 3£é-ÝÔ2ç Ô(Ú  ÚcÚ  Ú)Ô3  Ôà0 ¸ àÝ  ÝThe€name€of€the€entity,€whether€another€financial€institution€or€otherwise,€toÐ à%0!$ Ðwhich€the€money€was€transferred;݃ 3£é-..ÝŒÐÌ&"%¸ (#¸ (# ÐŒÝ  ÝÌÝ"‚ 3£"ÝÝ  Ýà  àà ` àÝ‚ 3£O/ÝÔ2ç Ô(Ú  ÚdÚ  Ú)Ô3  Ôà0 ¸ àÝ  ÝAll€persons€involved€in€each€transaction;݃ 3£O/”/݌Ф(ô#'¸ (#¸ (# Ðâ âŒÝ  ÝÐ )à$( ÐÝ"‚ 3£"ÝÝ  Ýà  àà ` àÝ‚ 3£y0ÝÔ2ç Ô(Ú  ÚeÚ  Ú)Ô3  Ôà0 ¸ àÝ  ÝThe€name,€address,€and€telephone€number€of€each€person€having€knowledgeÐ ° Ðor€whom€you€claim€has€knowledge€that€this€transaction€was€fraudulent€orÐ œì Ðotherwise€improper;݃ 3£y0¾0݌Јظ (#¸ (# Ðâ âŒÝ  ÝÌÝ"‚ 3£"ÝÝ  Ýà  àà ` àÝ‚ 3£12ÝÔ2ç Ô(Ú  ÚfÚ  Ú)Ô3  Ôà0 ¸ àÝ  ÝThe€(sic)€identify€by€document€title€and€location€each€document€that€youÐ `° Ðclaim€supports€or€will€claim€supports€or€evidence€in€any€way€that€theÐ L œ Ðtransaction€or€transfer€of€funds€was€fraudulent€or€otherwise€improper;݃ 3£12v2ÝŒÐ8 ˆ¸ (#¸ (# ÐŒÝ  ÝÌÝ"‚ 3£"ÝÝ  Ýà  àà ` àÝ‚ 3£4ÝÔ2ç Ô(Ú  ÚgÚ  Ú)Ô3  Ôà0 ¸ àÝ  ÝA€detailed€description€of€why€the€transaction€was€fraudulent€or€otherwiseÐ  ` Ðimproper;€and݃ 3£4V4ÝŒÐü L ¸ (#¸ (# ÐŒÝ  ÝÌÝ"‚ 3£"ÝÝ  Ýà  àà ` àÝ‚ 3£_5ÝÔ2ç Ô(Ú  ÚhÚ  Ú)Ô3  Ôà0 ¸ àÝ  ÝThe€date€of€the€transfer.݃ 3£_5¤5ÝŒÐÔ$ ¸ (#¸ (# ÐŒÝ  ÝÌÌà8  àà ` àThe€history€of€plaintiffsðð€responses€to€these€contention€interrogatories€is€thatÐ ˜è  Ðresponses€have€been€slow.€€The€Court€initially€allowed€the€delay€because€theÐ „Ô  Ðinterrogatories€seek€detailed€information€and€because€the€plaintiffs€argued€that€theÐ pÀ Ðfraud€claim€depends€on€circumstantial€evidence.€€The€plaintiffs€asserted€that€theyÐ \¬ Ðneeded€discovery€from€the€defendants€before€they€were€in€a€position€to€respond€withÐ H˜ Ðmeaningful€discovery.€€The€plaintiffs€asserted€that€proving€their€case€depends€onÐ 4„ Ðobtaining€voluminous€checks€and€bank€records€from€the€defendants€and€having€anÐ  p Ðaccountant€painstakingly€trace€those€records.€€After€several€more€delays€in€which€theÐ  \ ÐCourt€required€the€defendants€to€respond€with€more€and€specific€responses€toÐ øH Ðdiscovery,€the€Court€determined€that€the€plaintiffs€had€had€enough€time€and€had€beenÐ ä4 Ðprovided€with€enough€information€by€the€defendants€to€provide€specific€answers€toÐ Ð  Ðcontention€interrogatories.€€The€Court€regulated€the€case€with€deadlines€so€that€theÐ ¼  Ðplaintiffs€would€respond€to€discovery€and€then€initial€dispositive€motions€would€beÐ ¨ø Ðconsidered.€€The€Court,€therefore,€ordered€the€plaintiffs€to€answer€the€interrogatoriesÐ ”ä Ðby€May€25,€2001.€By€that€date€the€interrogatory€answers€had€been€outstanding€forÐ €Ð Ðeight€months.€€Moreover€the€plaintiffs€had€received€substantial€discovery€ofÐ l¼ Ðdocuments€and€answers€to€interrogatories€from€defendants€so€as€to€be€able€to€answerÐ X ¨ Ðthe€contention€interrogatories.ÐD!”Ð Ð  ÐÌà8  àà ` àThe€plaintiff€corporations€did€respond€but,€from€reviewing€the€answers,€theÐ #l! ÐCourt€judges€the€responses€to€be€inadequate.€€The€defendants€then€filed€this€motionÐ $X" Ðto€dismiss.€€The€plaintiffs€supplemented€their€answers,€but€still€the€plaintiffs€failedÐ ô$D # Ðto€identify€specific€transactions€that€were€improper,€did€not€separate€the€claimÐ à%0!$ Ðbetween€each€of€the€corporate€plaintiffs,€did€not€identify€documents€that€supportedÐ Ì&"% Ðthe€claims€and€gave€no€specific€dates€other€than€stating€the€years€of€the€allegedÐ ¸'#& Ðmisappropriations.Ф(ô#'Ð Ð  ÐÌà8  àà ` àThe€plaintiffsðð€defense€to€the€claim€of€inadequate€responses€was€that€they€hadÐ |*Ì%) Ðsubmitted€documentation€or€notified€the€defendants€what€documents€they€intendedÐ h+¸&* Ðto€use€to€support€each€allegation€of€fraud€and€that€the€documents€were€produced€onÐ ° ÐMay€25€and€June€21,€2001.€€Upon€inquiry€by€the€Court,€the€defendants€responded€toÐ œì Ðthis€argument€that€the€documents€produced€by€the€plaintiffs€were€ð ðan€unorganizedÐ ˆØ Ðmixture€of€bank€statements,€wire€transfer€slips€(including€some€documents€showingÐ tÄ Ðtransfers€with€companies€other€than€American€Industries),€some€cancelled€checksÐ `° Ð(some€of€which€were€unsigned€copied€(sic)),€and€various€documents€concerningÐ L œ ÐMood€Cosmetics,€Inc.€(tax€returns,€expense/payee€analysis€reports,€paymentÐ 8 ˆ Ðschedules,€W„3€forms,€and€employer€contribution€forms€submitted€to€the€State€ofÐ $ t ÐConnecticut).ðð€€The€defendants€further€explained€that€on€June€21,€2001,€the€plaintiffsÐ  ` Ðproduced€15€more€pages€of€documents€consisting€of€12€checks€from€NovalÐ ü L  ÐInternational€Services€to€American€Industries,€but€that€the€documents€in€no€wayÐ è 8  Ðidentify€for€the€defendants€which€of€the€thousands€of€transfers€shown€on€theÐ Ô$  Ðdocuments€were€fraudulent€or€otherwise€improperly€made€and€that€the€documents€doÐ À  Ðnot€identify€the€alleged€fraudulent€transactions€by€dates€or€provide€information€as€toÐ ¬ü  Ðwhich€transactions€were€fraudulent€or€why€they€were€fraudulent.Иè Ð Ð  ÐÌà8  àà ` àThese€contention€interrogatories€are€at€the€heart€of€the€lawsuit.€€The€failureÐ pÀ Ðof€the€plaintiffs€to€provide€specific€meaningful€answers€is€holding€up€the€dispositionÐ \¬ Ðof€the€lawsuit:€the€defendants€do€not€know€what€to€defend€against.€€The€Court€judgesÐ H˜ Ðthat€based€on€the€voluminous€amount€of€information€provided€to€the€plaintiffs€inÐ 4„ Ðdiscovery€and€the€time€they€have€had,€the€plaintiffsðð€responses€could€beÐ  p Ðcomprehensive€and€detailed€but€they€are€not.€€The€plaintiffs€have€delayed,€and€haveÐ  \ Ðnot€taken€the€time€and€made€the€effort€to€provide€details€as€required€by€the€TennesseeÐ øH ÐRules€of€Civil€Procedure.Ðä4Ð Ð  ÐÌà8  àà ` àAs€to€the€February€13,€2001€document€request€to€the€corporate€plaintiffs€onÐ ¼  Ðthe€fraud€claim,€the€Court€ordered€production€by€May€25,€2001.€€The€Court€hasÐ ¨ø Ðreviewed€the€plaintiffsðð€responses€and€finds€that€the€plaintiffs€have€not€adequatelyÐ ”ä Ðresponded€and€have€not€been€diligent€in€responding€to€the€discovery.ЀÐÐ Ð  ÐÌà8  àà ` àAs€to€the€February€13,€2001€request€to€plaintiff€Sonny€Howard,€the€CourtÐ X ¨ Ðfinds€that€the€documents€requested€are€relevant€to€the€above„captioned€matter€andÐ D!” Ðwere€required€by€the€Court€to€be€produced€by€the€plaintiffs€on€or€before€May€25,Ð 0"€  Ð2001€and€the€plaintiffs€did€not€comply.Ð#l!Ð Ð  ÐÌà8  àà ` àNot€based€on€any€one€fact€but€considering€the€totality€of€the€circumstancesÐ ô$D # Ðoutlined€above,€the€Court€concludes€that€dismissal€of€the€plaintiffsðð€remaining€claimsÐ à%0!$ Ðwith€prejudice€is€appropriate.€€The€Court€has€stated€above€its€findings€of€missedÐ Ì&"% Ðdeadlines,€dilatory€and€inadequate€responses,€and€ð ðdribblingðð€responses€by€theÐ ¸'#& Ðplaintiffs.€€In€addition€to€that€conduct€being€violative€of€the€Tennessee€Rules€of€CivilÐ ¤(ô#' ÐProcedure,€the€conduct€has€discredited€the€Courtððs€authority€in€this€case,€has€undercutÐ )à$( Ðthe€Courtððs€attempts€to€manage€the€case€with€scheduling€deadlines€and€progressionÐ |*Ì%) Ðorders,€and€has€derailed€disposition€of€this€matter.€€While€it€is€true€that€cases€of€fraud,Ð h+¸&* Ðproven€by€circumstantial,€documentary€evidence,€are€time„consuming€and€difficultÐ ° Ðto€develop,€the€Court€concludes€that€it€has€more€than€adequately€regulated€discoveryÐ œì Ðin€this€case€to€address€that€consideration€and€that€the€plaintiffs€have€withoutÐ ˆØ Ðjustification€violated€the€Courtððs€liberal€May€25,€2001€deadline€by€providingÐ tÄ Ðincomplete€and€inadequate€responses.Ð`°Ð Ð  ÐÌÔ#†¼L­»XX~ #ÔÔ‡XX»¼L­Ôà  àSignificantly,€on€appeal€the€plaintiffs€do€not€attack€the€chancellorððs€findings€of€fact.€€RatherÐ 8 ˆ Ðthey€assert€that€they€had€done€the€best€they€could€and€that€the€chancellorððs€harsh€sanction€was€anÐ $ t Ðabuse€of€discretion.€€We€think€that€the€failure€to€identify€the€specific€transactions€that€were€improper,Ð  ` Ðthe€failure€to€separate€the€claims€between€the€individual€plaintiffs,€and€the€failure€to€identifyÐ ü L  Ðdocuments€that€support€their€claims€(after€almost€a€year€and€repeated€orders€to€comply)€makes€theÐ è 8  Ðorder€of€dismissal€something€clearly€within€the€chancellorððs€discretion.€€But€beyond€that,€theÐ Ô$  Ðchancellorððs€order€goes€on€to€identify€other€areas€where€the€plaintiffs€failed€to€completely€andÐ À  Ðadequately€respond€to€the€discovery€requests.Ð ¬ü  ÐÌà  àWe€affirm€the€chancellorððs€order€of€dismissal€and€remand€the€cause€to€the€chancery€court€forÐ „Ô  Ðfurther€orders.€€Tax€the€costs€on€appeal€to€the€appellants.Ð pÀ ÐÌÌÌÌà  àà ` àà ¸ àà  àà h àà À à__________________________________________Ð  \ Ðà  àà ` àà ¸ àà  àà h àà À àBEN€H.€CANTRELL,€PRESIDING€JUDGE,€M.S.Ð øH Ð