Blake Burton, et al vs. Hardwood Pallets, Inc., et al

This appeal involves a dispute between the sellers of a business and the bank that financed a portion of the purchase price. The plaintiffs, Blake Burton and Michael Burton, entered into an agreement with the defendant, Hardwood Pallets, Inc., to sell the Burtons' pallet manufacturing business. As partial consideration for the sale, Hardwood Pallets executed an unsecured promissory note to the Burtons in the amount of $1,000,000. Additional consideration for the sale was obtained by way of an $800,000 loan from the defendant, AmSouth Bank, to Hardwood Pallets; as a part of the bank transaction, Hardwood Pallets pledged its assets as collateral. As a condition to the making of the loan, AmSouth required the Burtons to execute a subordination agreement. When Hardwood Pallets defaulted on the bank loan, AmSouth sold the collateral at a private sale. Litigation ensued. In addition to suing Hardwood Pallets and its shareholders, the Burtons sued AmSouth, alleging procurement of breach of contract and civil conspiracy to defraud. AmSouth filed a counterclaim, alleging that the Burtons breached the subordination agreement. It also filed a motion for summary judgment, asserting that it acted within its rights under the subordination agreement. The trial court entered a judgment in favor of AmSouth pursuant to Tenn. R. Civ. P. 54.02. We affirm.