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IN THE COURT OF APPEALS OF TENNESSEE AT KNOXVILLE
May 14, 2004 Session JON E. SHELL, ET AL. v. D. SCOTT KING
Appeal from the Chancery Court for Sevier County No. 02-5-221 Telford E. Forgety, Jr., Chancellor

No. E2003-02124-COA-R3-CV

Filed August 5, 2004

Jon and Rebecca Shell ("Plaintiffs") sued D. Scott King ("King") after a limited liability company formed by the three of them went out of business. Plaintiffs sought dissolution of the company known as The Big Red Barn, LLC ("the Company" or "the LLC"). Plaintiffs also claimed King had breached his fiduciary obligations to both them and the LLC. The Trial Court referred this case to a Special Master and after a trial, the Special Master issued a Report concluding King was negligent and had breached his fiduciary obligations and recommending that Plaintiffs be awarded a judgment which included some, but not all, of Plaintiffs' attorney fees and expert witness fees. The Trial Court confirmed the Report of the Special Master in all respects. We modify the judgment of the Trial Court and affirm as modified.

Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Chancery Court Affirmed as Modified; Case Remanded

D. MICHAEL SWINEY, J., delivered the opinion of the court, in which CHARLES D. SUSANO, JR., J., and WILLIAM H. INMAN , SR. J., joined.

Charles W. Kite, Sevierville, Tennessee, for the Appellant D. Scott King.

James H. Ripley, Sevierville, Tennessee, for the Appellees Jon E. Shell and Rebecca Shell.

OPINION Background King has been in the landscaping field for several years and operated Elite Landscape Management ("Elite"), a landscaping business which, among other things, installed and maintained landscaping designed by Ms. Shell. In April of 2000, the parties formed the Company, which was a limited liability company formed under the laws of the State of Tennessee. The Company was a plant nursery and garden supply outlet located in Sevierville selling plants and other materials to customers of Elite and the general public. Jon and Rebecca Shell each owned a 25% interest in the Company, with King owning the remaining 50%. The Company closed after approximately one year. This litigation began when Plaintiffs sued King alleging the Company was unsuccessful because King breached his obligations to the LLC and Plaintiffs, breached his fiduciary obligation to Plaintiffs, and intentionally misused Company funds. More specifically, Plaintiffs claimed King: 1) neglected the Company; 2) illegally issued checks by forging the name of Ms. Shell; 3) neglected customers; 4) failed to make payments on Company indebtedness in a timely manner; and 5) falsely claimed a Company capital account was far in excess of that account's actual value. Plaintiffs sought immediate dissolution of the Company, at least $75,000 in damages, a declaration of the rights and obligations of the parties, as well as reasonable attorney fees, costs and expenses pursuant to Tenn. Code Ann.

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