James Thompson v. Knoxville Teachers Federal Credit Union

Citation: Not availableDocket: E2002-00780-COA-R3-CV

Court: Court of Appeals of Tennessee; November 12, 2002; Tennessee; State Appellate Court

Original Court Document: View Document

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James L. Thompson, the principal stockholder and officer of People Personnel Industrial Corporation, engaged in check kiting during financial difficulties, resulting in significant losses for Knoxville Teachers Federal Credit Union. Following bankruptcy filings by both the corporation and Thompson, they reached an agreement where the Credit Union would not pursue actions against Thompson related to the kiting. However, after Thompson was prosecuted federally and pled guilty to defrauding the Credit Union, he was sentenced to prison and ordered to pay restitution of $74,417.29. Thompson subsequently filed a lawsuit alleging that the Credit Union violated the settlement agreement by pursuing restitution. The trial court granted summary judgment in favor of the defendants, leading to Thompson's appeal. The court affirmed the trial court's judgment.

In a related matter, Thompson had executed a promissory note to compensate the Credit Union for its losses, mistakenly drafting it in the name of People Personnel, Inc. instead of People Personnel Industrial Corporation. Despite making payments towards the debt, he later declared bankruptcy, leading the Credit Union to file an adversary proceeding to deny the discharge of the remaining debt. Thompson contested this, seeking attorney fees.

A Joint Stipulation of Dismissal was executed by the parties, where the Credit Union and Cumis agreed to dismiss the Complaint with prejudice, preventing any further claims against the Defendants, James or Barbara Thompson, related to the actions in the Complaint. In return, the Defendants agreed to forgo any claims against the Plaintiffs concerning the Complaint's initiation. Following this, Plaintiff was prosecuted for check kiting, and claims the Credit Union and Cumis violated the Stipulation by participating in the criminal proceedings regarding restitution. Plaintiff seeks damages of $74,417.29, the restitution amount mandated by the court.

The Credit Union and Cumis acknowledged Plaintiff's check kiting and his signing of a promissory note, confirming the restitution amount. However, they denied breaching the Joint Stipulation and claimed Plaintiff suffered no damages from any alleged breach. The Defendants filed for summary judgment, arguing Plaintiff lacked evidence of a breach and damages. An affidavit from Myra Melton, a probation officer, detailed Plaintiff's guilty plea, sentencing to five months in prison, and mandatory restitution of $74,417.29. Melton affirmed that neither the Credit Union nor Cumis sought a criminal judgment or restitution order and clarified that the restitution obligation is a component of Plaintiff's criminal sentence that cannot be altered by private agreement.

Plaintiff opposed Defendants' motion for summary judgment, arguing that Defendants sought restitution claims against him without informing the United States Government that claims were settled. Plaintiff interpreted the settlement agreement as resolving any restitution claims and communicated this to the government. He reviewed information from Defendants related to a check kiting scheme during criminal proceedings and noted that the Credit Union's counsel was prepared to file restitution documents at the sentencing hearing, which were ultimately not filed. The Trial Court granted summary judgment to Defendants without detailing its reasoning, prompting Plaintiff's appeal. 

On appeal, Defendants contended that the Chancellor correctly ruled that the separate action of the United States District Court, which mandated restitution as part of Plaintiff's criminal sentence for defrauding a federal credit union, did not breach the civil settlement agreement. The appellate review process for summary judgment is based on established Tennessee law, emphasizing that no presumption of correctness is afforded to the lower court’s decision when only legal questions are involved. Under Tennessee Rule of Civil Procedure 56, summary judgment is warranted when there are no genuine disputes regarding material facts, and the moving party is entitled to judgment as a matter of law. The burden of proof initially lies with the moving party, and if they adequately support their motion, the burden shifts to the nonmoving party to demonstrate disputed facts. Evidence must be viewed favorably towards the nonmoving party, with reasonable inferences drawn in their favor.

Summary judgment is appropriate when the facts and inferences allow for only one reasonable conclusion. A material fact is defined as one necessary to resolve the substantive claim or defense. Defendants contend that the criminal action resulting in ordered restitution does not constitute a "cause of action" that a private party can pursue. They assert that undisputed material facts reveal they neither pursued such a cause nor permitted the government to do so on their behalf, thus not breaching the Joint Stipulation. Citing relevant case law, they argue that a victim lacks the standing to litigate in a criminal trial, and the state's right to seek restitution differs from the victim's right to civil damages. The Plaintiff claims a breach occurred when Defendants shared loss information with the government and appeared ready to file documents. However, evidence presented by Melton indicates Defendants did not pursue or advocate for restitution, and they lack authority to prevent or release the obligation of restitution imposed by the federal court. Plaintiff did not contest these material facts. The court concluded that Defendants did not pursue or allow a cause of action for restitution, affirming that they did not breach the Joint Stipulation. Consequently, the trial court's summary judgment in favor of Defendants was upheld, and the case was remanded for any necessary further proceedings. Costs on appeal were assigned to the Appellant, James L. Thompson.