ÿWPCB 3# ÚU:å % 0(%b Mw@Y4™­n­¼i 0lq 0DÝ 0J! 0Tk 0^¿ 0h 0r… 0|÷ 0†s 0ù 1u‰ 0dþ Bb AQ ÆÐ 0D– 0@Ú 0D D/^ B D3ª U *Ý B) DC0 AMs À  Ñv~ñvÓo˜HP LaserJet 4SiHPPCL5MS,ü,,,,,ü0nLhÎ, øð AZ‹"Arial RegularX($¡¡- ù - nDopqrEstDuvÓ€€ê‚_#3|x‚«<þ6X9`("Courier NewTTXXxþ6X@ÉDQX@((3üÝ$¤¤Ý ƒ!ÝÝ  Ýà  àòòÚ  Ú0Ú  Úóó(#Ã$òòÚ  Ú0Ú  Úóó2 ÿÿ0Indent1Ô2ÔÔ3  Ô2" ÿÿ0Indent2à0 àÔ2ÔÔ3  Ô2, ÿÿ0Indent3à0 àà0 àÔ2ÔÔ3  Ô26 ÿÿ0Indent4à0 àà0 àà0 àÔ2ÔÔ3  Ô2@ ÿÿ0Indent5à0 àà0 àà0 àà0 àÔ2ÔÔ3  Ô2J ÿÿ0Indent6à0 àà0 àà0 àà0 àà0 àÔ2ÔÔ3  Ô2T ÿÿ0Indent7à0 àà0 àà0 àà0 àà0 àà0 àÔ2ÔÔ3  Ô2^ ÿÿ0Indent8à0 àà0 àà0 àà0 àà0 àà0 àà0 àÔ2ÔÔ3  Ô ÿÿ?AGMSYaioIndent0I.A.1.a.(1)(a)i)a)P ÿÿ8Mac DefaultMac DefaultÓ ` °šXÓ d!"#$&Cþÿ<< CÿÿƒLevel 1Level 2Level 3Level 4Level 5(3¯$¢¢Ý ƒ!ÝÝ  Ý("ÿÿ$££Ò  ÒÒ  Ò($$””ò òÚ  Ú1Ú  Úó ó(('÷ÿ dxdüÿP Pd'ÿÿdxd< Œ 9p`(Arial% Line 7 d,,,,7Border 1dd!#-Cþÿ << Gÿÿ Ý ƒ!ÝÑ  ÑÑ#€d#ÑÔ€+ÔÝ  ÝÝ ƒ""ÝÝ  ÝÔ€+ÔÓ  Óò òÔ YYY ÔFILEDÔ€+XÔÌÌJuly€1,€1998ÌÌCecil€W.€CrowsonÌAppellate€Court€ClerkÔ  Ôó ó Ý ƒ!ÝÑ#€d#ÑÔ€+ÔÝ  ÝÒ € ÒÒ „ ÒÓ  ÓÔ€+ôÔà àòòÚ  ÚÚ  ÚóóWhether€he€can€recover€the€damage€to€RMS€his€wholly„owned€corporation,€is€not€an€issueÏin€this€appeal.ÌPtPtHHÚ(ÿáÿâùFG(üHHÚ(d'hStyl{WP}01•ÃÃÃÃÃÃÃÃÃÃÃÃÃÃÃÃÃÃà Ãà Ãà Ãà Ãà ÃÃÃÃÃÃÃÃÃÃÃÐ ÐÐHHÐÐ  ÐÐ2ÐÐÿÿ¸æ$ÿÐÐHHÐÐÐÐÐÐÐÐ  ÐÐ ÐÐ ÐÑÑÑGenevaÑÑ ÑÑ € ÑÑ<Px–ÈÑÒÒÒ443!#4ÒÒ$ *$ÒÒ$*$ÒÒ ÿKK ÒÒ  Geneva ÒÒ  Geneva ÒÓ.,ÓÓÓÓ6ÓÓ ÓßßßßßßßßßßßßßßßßßßÑGenevaÑÑ ÑÒ  ellan Geneva ÒÒ  ellan Geneva ÒÝ ƒ!ÝÔ . ÔÔ€+ÔÝ  ÝÒ € ÒÒ „ ÒÑ  ÑÑ\R AØ'\ÑÑ€ÑÑ7€ϘXXdædÈ7ÑÑ  ÑÑ  Ñò òÔ€+¼ÔÓ  Ó›Þ ÞÌà@ àIN€THE€COURT€OF€APPEALS€OF€TENNESSEEÌÙ€!ÙœßR€./-A1-j|;` ç `€€@ÿRß›à@ àAT€NASHVILLEó óÔ€+XÔÌÌÌÌÌDAVID€K.€WACHTEL,€JR.,à àà à)Ìà àà àà àà àà àà à)Ìà àPlaintiff/Appellant,à àà àà à)Ìà àà àà àà àà àà à)à àAppeal€No.ÌVS.à àà àà àà àà àà à)à à01„A„01„9708„CH„00396Ìà àà àà àà àà àà à)ÌTHE€WESTERN€SIZZLIN€à àà àà à)à àDavidson€ChanceryÌCORPORATION€f/k/a€FRANCHISEEà à)à àœNo.€95„781„I›ÌACQUISITION€CORPORATION,à àà à)Ìà àà àà àà àà àà à)à àà àà àà àà àà àÌà àDefendant„Counterà àà àà à)Ìà àClaimant/Appelleeà àà àà à)Ìà àà àà àà àà àà à)ÌVS.à àà àà àà àà àà à)Ìà àà àà àà àà àà à)ÌDAVID€K.€WACHTEL,€JR.,€ANDà àà à)ÌRESTAURANT€MANAGEMENTà àà à)ÌSERVICES,€INC.,à àà àà àà à)Ìà àà àà àà àà àà à)Ìà àCounter„Defendants.à àà à)ÌÌà@ àAPPEALED€FROM€THE€CHANCERY€COURT€OF€DAVIDSON€COUNTYÌà@ àAT€NASHVILLE,€TENNESSEEÌÌà@ àTHE€HONORABLE€œIRVIN€H.€KILCREASE,€JR.,€CHANCELLOR›ÌÌÌœJON›€D.€ROSSÌEDMUND€L.€CAREY,€JR.Ì2000€First€Union€TowerÌ150€Fourth€Avenue€NorthÌNashville,€Tennessee€37219Ìà àAttorneys€for€Plaintiff/AppellantÌÌMICHAEL€L.€DAGLEYÌOVERTON€THOMPSON€IIIÌSTEPHEN€H.€PRICEÌ424€Church€Street,€Suite€1900ÌNashville,€Tennessee€37219Ìà àAttorneys€for€Defendant/AppelleeÌ̛̜à@ àREVERSED€AND€REMANDEDÌÌÌà àà àà àà àà àà àà àBEN€H.€CANTRELL,€JUDGEÌÌÌCONCUR:ÌKOCH,€J.ÌBUSSART,€S.J.ÌÌÓÓò òÔ€+„Ôòòà@ àO€P€I€N€I€O€Nóóó óÔ€+XÔÌÌà àà àThis€breach€of€contract€case€is€before€us€on€a€Rule€54.02,€Tenn.€R.ÏœCiv.›€Proc.€appeal.€€The€œonly›€question€for€our€decision€is€whether€the€trial€courtÏerred€in€granting€the€defendantððs€motion€for€partial€summary€judgment€on€theÏplaintiffððs€claim€for€certain€consequential€damages€arising€from€the€defendantððsÏœbreach€of€contract.›€€We€reverse€the€trial€court.€ÌÌà@ àò òI.€€Facts€and€Prior€Proceedingsó óÌÌà àà àThe€plaintiff,€David€K.€Wachtel,€Jr.,€is€an€experienced€restaurantÏexecutive,€who€had€been€the€President€of€Shoneyððs,€and€the€President€andÏC.E.O.€of€the€OððCharleyððs€restaurant€chain.€€Mr.€Wachtel€was€also€the€sole€ownerÍof€Restaurant€Management€Services,€Inc.€(RMS),€a€former€franchisee€ofÏrestaurants€operated€as€part€of€the€Western€œSizzlin€chain€of€steakhouses.€€InÏ1992,€Western€Sizzlinððs€parent€company,€Western€Sizzlin,€Inc.€(WSI)€filed€forÏChapter€11€bankruptcy.ÌÌà àà àRestaurant€Management€Services€€was€a€secured€creditor€of€WSI,Ïand€Mr.€Wachtel€sponsored€a€reorganization€plan€that€enabled€him€to€settle€theÏclaims€of€RMS€for€cash€plus€stock€in€WSIððs€successor€corporation.€€ThisÏcorporation€was€initially€called€Franchisee€Acquisition€Corporation,€but€the€nameÏwas€later€changed€to€Western€Sizzlin€Corporation€(WSC).ÌÌà àà àThe€reorganization€plan€involved€changes€in€the€structure€of€theÏfranchisor,€designed€to€enable€it€to€go€public€within€five€years.€€Mr.€WachtelÏproposed€that€the€company€make€itself€attractive€to€the€financial€markets€byÏcreating€a€profitable€core€of€company„operated€franchises€in€€geographicallyÏconcentrated€areas,€a€tactic€that€he€had€successfully€pursued€in€turningÏOððCharleyððs€into€a€publicly„owned€company.ÌÌà àà àAfter€extensive€negotiations,€Mr.€Wachtel€and€FranchiseeÏAcquisition€Corporation€agreed€on€an€employment€contact,€which€the€partiesÏsigned€on€November€11,€1993.€€The€agreement€provided€that€Wachtel€was€toÏbecome€the€President€and€CEO€of€the€reorganized€company€for€five€years,€and€toÍreceive€a€base€annual€salary,€annual€cost€of€living€increases,€and€an€annualÏbonus€equaling€3.5%€of€the€corporationððs€pretax€operating€income.€€On€the€sameÏday€that€the€employment€contract€was€signed,€the€Board€of€Directors€instructedÏMr.€Wachtel€to€carry€out€the€reorganization€plan,€with€the€ultimate€goal€of€offeringÏthe€companyððs€stock€to€the€public.ÌÌà àà àWe€note€that€a€considerable€part€of€the€employment€agreementÏdeals€with€the€consequences€of€its€premature€termination.€€Paragraph€7€sets€outÏthe€companyððs€financial€obligations€if€David€Wachtel€were€to€die€or€becomeÏdisabled€during€the€course€of€the€contract.€€Paragraph€8€provides€that€aside€fromÏdeath€or€disability,€Mr.€Wachtel€can€only€be€terminated€prior€to€completion€of€fiveÏyears€for€ð ðcause,ðð€a€term€that€is€defined€in€some€detail.€€Paragraph€9€givesÏWachtel€the€right€to€terminate€his€obligations€under€the€contract,€and€to€receiveÏspecified€compensation,€in€the€event€of€a€change€in€control€of€the€company.ÌÌà àà àOn€February€28,€1995,€WSCððs€Board€of€Directors€fired€Wachtel€asÏPresident€and€CEO.€€They€purportedly€did€not€give€their€reasons€at€that€time,€butÏin€a€counterclaim€they€alleged€that€they€were€compelled€to€take€this€actionÏbecause€of€Wachtelððs€refusal€to€abide€by€the€decisions€of€the€Board€of€Directors,Ïand€because€he€followed€a€consistent€course€of€action€calculated€to€benefit€himÏpersonally,€but€which€was€detrimental€to€the€company€and€its€other€shareholders.ÌÌà àà àThey€also€claimed€that€after€his€termination,€Mr.€Wachtel,€a€multi„millionaire€in€his€own€right,€vowed€to€destroy€the€company€through€litigation.€€Mr.ÏWachtel€denied€that€he€was€acting€out€of€any€such€motive.€€While€we€have€no€wayÏto€evaluate€the€defendantððs€allegation,€we€note€that€the€record€on€appeal€includesÏfive€boxes,€containing€thirteen€volumes€of€the€transcript€of€the€record,€and€literallyÏhundreds€of€exhibits,€far€more€documentation€than€is€needed€to€resolve€the€singleÏinterlocutory€issue€before€us.€€The€Designation€of€the€Record€on€Appeal,€whichÏlists€the€items€Mr.€Wachtel€asked€to€be€included€in€the€record,€itself€runs€over€sixÏlegal„sized€pages.€€ÌÌà àà àOn€March€13,€1995,€David€Wachtel€filed€the€instant€suit€againstÏWSC€for€breach€of€the€employment€contract.€€He€later€added€a€claim€for€$8.5Ïmillion€in€special€damages,€arguing€that€the€abandonment€of€the€plan€to€bringÏWSC€public€had€cost€him€this€sum€in€potential€profits€on€his€stock€entitlements›.€ÌÌà àà àOn€March€27,€1997,€the€defendant€filed€a€Motion€for€PartialÏSummary€Judgment€on€the€claim€for€special€damages.€The€defendant€advancedÏthree€arguments€in€support€of€its€motion:€€(1)€that€the€termination€of€Mr.€WachtelÏhad€actually€been€for€cause,€and€that€his€recovery€therefore€had€to€be€limited€toÏthe€amount€specified€in€Paragraph€8€of€the€employment€contract,€(2)€that€theÏœgravaman›€of€his€injury€was€the€loss€of€the€potential€increase€in€value€of€the€WSCÏstock€he€owned,€and€that€a€derivative€shareholderððs€suit€was€therefore€his€soleÍlegitimate€avenue€of€recovery,€and€(3)€that€his€damages€were€so€remote€andÏspeculative€as€to€be€unprovable,€and€were€therefore€unrecoverable.ÌÌà àà àThe€trial€court€granted€partial€summary€judgment€to€the€defendantÏon€June€4,€1997,€and€dismissed€the€claim€for€special€damages.€€The€court€did€notÏspecify€which€of€the€defendantððs€three€arguments€was€(or€were)€persuasive.€ÏFinding€no€just€reason€for€delay,€the€court€subsequently€granted€the€plaintiffððsÏmotion€for€entry€of€its€order€as€a€final€judgment€pursuant€to€Rule€54.02€of€theÏTennessee€Rules€of€Civil€Procedure,€thus€setting€the€stage€for€this€appeal.€€TheÏCourt€stayed€all€further€proceedings€pending€this€courtððs€resolution€of€the€appeal.€€€€ÌÌà@ àò òIIó ó.€ò ò€The€ð ðFor€Causeðð€Issueó óÌÌà àà àAlthough€one€of€the€grounds€on€which€the€company€moved€forÏsummary€judgment€in€the€trial€court€was€that€it€terminated€Mr.€Wachtel€for€cause,Ïthat€issue€is€not€pressed€on€appeal.€€Mr.€Wachtel,€on€the€other€hand,€insists€thatÏhe€was€terminated€without€cause.ÌÌà àà àAbout€the€best€we€can€do€on€this€issue€is€to€recognize€that€the€factsÏin€the€record€are€œin›€dispute.€€Thus,€this€question€is€left€open€for€final€resolution€inÏthe€trial€court.ÌÌà@ àò òIII.€€The€Derivative€Suit€Issueó óÌÌà àà àThe€company€insists€that€the€trial€court€could€have€dismissed€theÏclaim€for€special€damages€on€the€ground€that€Mr.€Wachtelððs€claims€are€identical€toÏœthose€of€all›€the€other€Western€Sizzlin€œshareholders.€€It€reasons›€that€his€damagesÏare€œonly€for›€the€loss€of€the€potential€increase€in€value€of€his€shares€in€theÏœcompany,€and€that,€therefore,›€his€remedy€is€to€bring€a€shareholderððs€derivativeÏaction€on€behalf€of€the€company€and€all€its€shareholders.€€Mr.€Wachtelððs€reply€isÏthat€his€claim€is€based€on€œan›€employment€contract€under€which€the€company€hadÏa€special€duty€to€him,€a€duty€not€owed€to€any€other€shareholder.ÌÌà àà àOn€this€issue€we€think€Mr.€Wachtel€is€correct.€€ð ðStockholders€mayÏbring€an€action€individually€to€recover€for€an€injury€done€directly€to€them€distinctÏfrom€that€incurred€by€the€corporation€and€arising€out€of€a€special€duty€owed€to€theÏshareholders€by€the€wrongdoer.ðð€€òòœHadden›€v.€City€of€œGatlinburg›óó,€746€S.W.2d€687Ï(Tenn.€1988).€€In€this€case€the€wrongdoer€is€the€corporation€itself,€but€that€factÏdoes€not€change€the€general€rule.€€Nor€does€the€fact€that€the€other€shareholdersÏœmay€have€suffered›€the€same€harm€in€proportion€to€the€number€of€shares€theyÏowned.€€œThe›€cause€of€action€for€the€other€shareholders€would€be€against€theÏdirectors€for€violating€their€fiduciary€duty€to€take€the€corporation€public.€€WachtelððsÏcause€of€action€is€against€the€corporation€for€breaching€his€employment€œcontract.€ÏThe€loss€he€alleges€is€a€consequence€of€that€breach.›ÌÌà@ àò òIV.€€The€Remoteness€Issueó óÌÌà àà àOn€this€issue€it€is€important€to€review€Mr.€Wachtelððs€specific€claims.€œ€ÏThe€plan›€of€reorganization€œfor€WSC€included›€the€issuance€of€184,000€shares€ofÏœWSCððs›€common€stock€and€25,000€shares€of€WSC€Series€A€preferred€stock€to€Mr.ÏWachtelððs€wholly„owned€corporation,€Restaurant€Management€Services€Inc.Ï(RMS).€€These€shares€were€issued€in€partial€satisfaction€of€a€pre„bankruptcy€debtÏto€RMS,€and€the€preferred€shares€could€be€converted€to€250,000€shares€ofÏcommon€stock€in€WSC€in€the€event€the€company€went€public.€€These€shares€wereÏissued€ð ð[œa]s›€an€additional€incentive€and€in€consideration€of€Mr.€WachtelððsÏexecution€of€the€Employment€Agreement€.€.€.€œ.ðð€€In›€addition,€Mr.€Wachtel€loaned€$1Ïmillion€to€œWSC›€and€received€100,000€shares€of€its€common€stock€and€125,000ÏSeries€B€preferred€shares.€€The€preferred€shares€could€also€be€converted€toÏcommon€shares€on€a€œten›€to€one€ratio€if€the€company€went€public.€€œThus,›€Mr.ÏWachtel€stood€to€reap€an€enormous€benefit€from€a€public€offering.× ƒ0 ××  ×€œÌÌà àà àMr.€Wachtelððs€employment€contract€does€not€refer€to€his€shares€inÏthe€company,€nor€does€it€include€in€the€description€of€his€duties€a€duty€to€take€theÏcompany€public.€€It€does€refer€to€his€duty€to€ð ðconduct€the€companyððs€business€forÍthe€greatest€advantage€and€benefit€of€the€company€and€its€shareholders.ðð€€WhenÏthe€contract€was€signed,€however,€the€WSC€board€had€already€approved€the€planÏof€reoganization€and€it€referred€to€the€conversion€features€of€the€plan€as€anÏincentive€to€get€Mr.€Wachtel€to€sign€the€employment€agreement.›Ìà àà àÌà àà àIt€is€true€that€remote€and€speculative€damages€may€not€be€recoveredÏfor€a€breach€of€contract,€òòBlack€v.€Love€&€Amos€Coal€Co.óó,€206€S.W.2d€432€(Tenn.ÏApp.€1947),€but€contract€damages€that€are€proved€with€reasonable€certainty€mayÏbe€recovered.€€òòœChisholm›€œ&€Moore›€œMfg›.€Co.€v.€United€States€Canopy€Co.óó,€77€œS.W.›Ï1062€(Tenn.€1903)(adopting€the€rule€in€òòœHadley›€v.€œBaxendale›óó,€9€Ex.,€341).€€TheÏCourt€in€òòœChisholm›€œóósaid:›€€ÌÓÓà8 àà8 àð ðThe€rule€in€òòœHadley›€v.€œBaxendale›óó€would€seem€to€meanÏthat€plaintiff€may€recover€such€damages€as€normallyÏresult€from€the€breach€of€contract,€or€he€may€showÏcertain€special€facts€to€have€been€known€to€theÏdefendant€at€the€time€of€the€contract,€which€would€giveÏnotice€to€him€that€a€breach€of€the€contract€would€resultÏin€an€otherwise€unexpected€loss,€and€in€such€case€theÏplaintiff€might€recover€his€special€loss.ððÌÌÓÓœ77€S.W.€at€1064.€€All€the€people€involved€in€the€plan€of€reorganization€knew€thatÏMr.€Wachtelððs€primary€aim€was€to€take€the€company€public;€they€knew€it€was€hisÏprimary€interest€in€becoming€involved€in€the€company;€they€knew€that€he€hadÏaccepted€a€modest€salary€(for€him)€in€contemplation€of€a€greater€reward€in€theÏfuture.€€Therefore,€the€special€damages€alleged€fall€well€within€the€contemplationÏof€the€parties.ÌÌ›à àà àWe€cannot€say€as€a€matter€of€law€that€Mr.€Wachtelððs€claims€areÏincapable€of€proof.€€œIn›€fact,€in€opposition€to€the€motion€for€summary€judgment,€Mr.ÏWachtel€offered€expert€opinions€that€showed€a€probability€that€he€would€haveÏbeen€able€to€take€the€company€public€within€the€term€of€his€employmentÏagreement.€€œWhile›€this€type€of€proof€falls€far€short€of€settling€the€question,€it€doesÏmake€a€contested€issue€of€fact€on€whether€he€has€œsuffered€the€damages€heÏclaims€from›€the€alleged€breach€of€his€contract.ÌÌà àà àWe€therefore€reverse€the€lower€courtððs€judgment€dismissing€Mr.ÏWachtelððs€claim€for€special€damages.€€We€stress€the€fact,€however,€that€all€of€theÏissues€relating€to€this€claim€are€still€œopen,€and€it€remains€to€be€seen€whether€Mr.ÏWachtel€can€prove€that€the€alleged€breach€of€contract€caused€the€damages€heÏclaims.›€€The€cause€is€remanded€to€the€Chancery€Court€of€Davidson€County€forÏfurther€proceedings€in€accordance€with€this€opinion.€€Tax€the€costs€on€appeal€toÏthe€appellee.ÌÌÌÓÓà àà àà àà àà àà àà à____________________________Ìà àà àà àà àà àà àà àBEN€H.€CANTRELL,€JUDGEÌÌÌÌCONCUR:ÌÌÌÌÌ__________________________________ÌWILLIAM€C.€KOCH,€JR.,€JUDGEÌÌÌÌ__________________________________ÌWALTER€W.€BUSSART,€SPECIAL€JUDGEÌÇÑ  ÑÔ€+¼Ôò òà@ àœó ó›