Don Culbreath vs. First Tennessee Bank

Don L. Culbreath (Culbreath) filed suit against Community First Bank (Community First) seeking compensatory and punitive damages. Culbreath alleged that Community First fraudulently refused to pay Culbreath the proceeds of a new $150,000 loan that had been agreed upon by a bank officer and Culbreath and for which Culbreath had signed a demand note and deed of trust. Instead, the bank used the deed of trust to serve as additional collateral for Culbreath's existing indebtedness to the bank. Prior to trial, Community First merged with First Tennessee Bank, N.A. (First Tennessee), and First Tennessee was substituted for Community First as the defendant in the case. The trial court found in favor of Culbreath and awarded $209,156 in compensatory damages. After a bifurcated hearing on the issue of punitive damages, the court awarded Culbreath an additional $9,000,000 in punitive damages. First Tennessee argues on appeal that as a successor corporation it should not be liable for punitive damages arising from Community First's actions. We hold that First Tennessee is liable for the compensatory damages awarded by the trial court and that it is also liable for punitive damages arising out of Community First's pre-merger conduct. However, we remand this case to the trial court for reassessment of punitive damages based upon the factors outlined in Hodges v. S.C. Toof & Co., 833 S.W.2d 896 (Tenn. 1992).