F. DAVID CHAMBERS AND MICHELLE CHAMBERS APPELLANTS
KENNETH MCDOUGALD APPELLEE
FROM THE BRADLEY COUNTY CIRCUIT COURT [NO. 06CV-12-59]
HONORABLE DON GLOVER, JUDGE REVERSED AND REMANDED
G. Brooks, Attorney at Law, PLLC, by: Brian G. Brooks; Laurie
A. Bridewell; and Robert G. Bridewell, for appellants.
& Keith, PLLC, by: C. C. "Cliff" Gibson III and
Lee D. Curry, for appellee.
and Brown, JJ., agree.
BRANDON J. HARRISON, Judge
David Chambers and Michelle Chambers appeal from the circuit
court's judgment in favor of Kenneth McDougald, wherein
he was awarded the principal sum of $300, 000 on a promissory
note, plus prejudgment interest of $159, 698.63. They argue
that the circuit court erred in excluding their evidence that
McDougald was the first to breach the parties' purchase
agreement that included the note. They also challenge the
award of attorney's fees to McDougald. We agree that the
circuit court erred in excluding this evidence. The case is
therefore reversed and remanded for a new trial.
summer of 2005, the Chamberses and McDougald were members of
a limited liability company known as Bradley Timberland
Resources, LLC (BTR). The Chamberses were the majority owners
of BTR. McDougald approached the Chamberses about selling his
15 percent interest in BTR to them. On July 22, 2005, the
parties entered into a written purchase agreement for
McDougald to sell his interest to the Chamberses. According
to the terms of the agreement, the purchase price was $500,
000, payable in several different forms and at different
times. First, the Chamberses were to pay $35, 418 in cash to
McDougald upon execution of the agreement. Immediately upon
this payment, McDougald was to have no further interest,
whether ownership or management, in BTR. As another part of
the payment scheme, the Chamberses were to convey a
thirty-acre tract of land to McDougald, with McDougald
responsible for securing the release of any encumbrances on
this property. The parties further agreed that, as partial
payment, the Chamberses were to assign to McDougald a note
receivable from Roger George (the George note) payable to the
Chamberses in the amount of $119, 763.13. As for the
remaining sum due under the agreement, the Chamberses were to
pay $300, 000 to McDougald in three equal payments of $100,
000 due July 1 of 2007, 2008, and 2009. Finally, paragraph 7
of the agreement provided that McDougald was to continue his
employment (as vice president and general manager) with
Bradley Lumber Company (BLC), which was wholly owned by the
Chamberses, for the period of the contract and to defer all
salary due him until he and the Chamberses mutually agreed to
disburse those deferred sums (Paragraph 7).
same day, the Chamberses executed the promissory note at
issue to secure their obligations under the purchase
agreement. The note had an interest rate of 3 percent. It
also contained a penalty-interest-rate provision in the event
of a default as well as a provision for reasonable
had signed an employment contract with BLC in 2002. Although
the term of the contract expired in January 2005, it
contained a "roll over" provision stating that it
would remain in effect until modified by the parties.
McDougald continued his employment with BLC until July 2006.
June 2012, McDougald filed suit against the Chamberses to
collect on the note, asserting that none of the $300, 000 due
had been paid. The Chamberses answered, admitting execution
of the note but denying that they were in default or that
they had failed to make any payments. They later amended
their answer to include a counterclaim asserting that
McDougald had breached the purchase agreement by continuing
to pay himself while working for BLC.
answered the counterclaim, denying its material allegations.
He later filed an amended complaint seeking the deferred
compensation the Chamberses owed him. In it, McDougald
contended that the $300, 000 note was part of the
consideration he received from the Chamberses for his
interest in BTR. The Chamberses answered the amended
complaint, again admitting execution of the promissory note
but denying the other material allegations.
Chamberses amended their answer and counterclaim to assert
that McDougald had breached the contract by failing to defer
his salary and by failing to remain employed by BLC until
completion of the term of the note. The Chamberses also
claimed that McDougald had breached his fiduciary duties by
wrongfully removing and converting timber belonging to BTR
and by neglecting to cut timber on BLC's property,
causing it to ruin and lose value. The Chamberses sought
recoupment of the moneys McDougald received from payment of
the George note, the moneys he paid himself as salary while
employed at BLC, the cash payment specified in the purchase
agreement, damages to the real property transferred to
McDougald in the purchase agreement, and damages for the
timber wrongfully removed or allowed to ruin.
responded to the counterclaim, denying the material
allegations. Pleading affirmatively, McDougald argued that
David Chambers agreed to McDougald's early retirement in
July 2006. He also contended that the claims asserted by the
Chamberses could be pressed only by BLC.
Chamberses and McDougald each filed motions to nonsuit a
portion of their claims. The Chamberses sought to dismiss all
of their counterclaims against McDougald while McDougald
requested dismissal of his claim for deferred compensation.