Axis Dynamics, Inc. v. Knox County, No. 3:24 (July 29, 2025)

Case details
Full caption
Axis Dynamics, Inc. v. Knox County, Tennessee
Country
United States
Jurisdiction
Federal
Decided
July 29, 2025
Disposition
Dismissed
Axis Dynamics, Inc. v. Knox County, Tennessee, Slip Copy (2025)2025 WL 2176505 © 2026 Thomson Reuters. No claim to original U.S. Government Works.12025 WL 2176505Only the Westlaw citation is currently available.United States District Court, E.D.Tennessee, Northern Division,at Knoxville.AXIS DYNAMICS, INC., et al., Plaintiffs,v.KNOX COUNTY,TENNESSEE, et al., Defendants.Case No. 3:24 -cv-329|Filed July 29, 2025Attorneys and Law FirmsRussell L. Egli, Law Office of Russell L. Egli, Concord, TN,for Plaintiffs.Clint J. Woodfin, Isaac Westling, Spicer Rudstrom, PLLC,Knoxville, TN, for Defendants.MEMORANDUM OPINION AND ORDERCHARLES E. ATCHLEY, JR., UNITED STATESDISTRICT JUDGE*1 Before the Court are Defendant First US Bank's(“FUSB”) Motion to Dismiss [Doc. 36] and Plaintiffs' Motionfor Interlocutory Appeal [Doc. 84]. For the following reasons,FUSB's Motion [Doc. 36] is GRANTED, and Plaintiffs'Motion [Doc. 84] is DENIED AS MOOT.I. BACKGROUNDThis case, as it currently exists, is a breach of contractaction between Plaintiffs and FUSB. Plaintiff Wendy Roseis the owner and CEO of Plaintiff Axis Dynamics Inc., abuilding contractor. [Doc. 29 at ¶¶ 1–2, 9]. In 2018, Axisagreed to build a house for Christopher and Sonja Hawkin Knox County, Tennessee. [Id. at 15]. To finance thisconstruction, the Hawks entered into a Construction LoanAgreement with FUSB. [Id. at 81; Doc. 37-3 (ConstructionLoan Agreement)1]. Plaintiffs claim that Axis was a third-party beneficiary to this contract, and that FUSB has breachedits obligations under it. [Doc. 29 at ¶¶ 80–86].The Construction Loan Agreement authorized, but didnot require, FUSB to pay the Hawks' contractors directlyfor construction costs. [Doc. 37-3 at 11(B)2]. FUSBtook advantage of this direct payment option, depositingconstructions funds in Axis's FUSB account. [Doc. 29 at ¶¶25, 84]. As construction on the Hawks' house progressed,Axis spent more than $100,000 of its own money on labor andmaterials. [Id. at 27]. Axis subsequently demanded $69,800in costs plus interest from both FUSB and the Hawks. [Id.at 28]. When neither responded, Axis filed a Mechanic'sLien with the Knox County Register of Deeds. [Id.]. Axis thenfiled an in rem case in Knox County Circuit Court to enforceits lien. [Id. at 29]. Rather than enforce the lien, however,the Knox County Circuit Court sent the parties before it toarbitration and ultimately confirmed an arbitration award thatdischarged Axis's lien. [See id. at ¶¶ 33–61, Doc. 1-2 at 98–1023]. This lawsuit followed.*2 Plaintiffs initially brought three claims: (1) the breachof contract claim against FUSB; (2) a declaratory judgmentclaim against Knox County and the judge who presided overthe in rem case; and (3) a Section 1983 civil conspiracyclaim against Knox County, the in rem judge, and the lawyersinvolved in the in rem case. [Doc. 29 at ¶¶ 63–96]. Theselatter two claims have since been dismissed. [Docs. 60,83]. Now, FUSB moves to dismiss Plaintiffs' breach ofcontract claim [Doc. 36], and Plaintiffs request permissionto file an interlocutory appeal regarding the dismissal oftheir second and third claims [Doc. 84]. The remainder ofthis Memorandum Opinion and Order will primarily addressFUSB's Motion as its resolution moots Plaintiffs' request foran interlocutory appeal.II. STANDARD OF REVIEWOn a motion to dismiss, the Court “must accept as true ‘wellpleaded facts’ set forth in the complaint.” In re ComshareInc. Sec. Litig., 183 F.3d 542, 548 (6th Cir. 1999) (citationomitted). “[O]nly a complaint that states a plausible claimfor relief survives a motion to dismiss.” Ashcroft v. Iqbal,556 U.S. 662, 679, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009).Generally, “[a] claim has facial plausibility when the plaintiffpleads factual content that allows the court to draw thereasonable inference that the defendant is liable for themisconduct alleged.” Id. at 678, 129 S.Ct. 1937 (citing BellAtlantic Corp. v. Twombly, 550 U.S. 544, 555–56, 127 S.Ct.1955, 167 L.Ed.2d 929 (2007)). “The [plaintiff's] factualallegations, assumed to be true, must do more than create
Axis Dynamics, Inc. v. Knox County, Tennessee, Slip Copy (2025)2025 WL 2176505 © 2026 Thomson Reuters. No claim to original U.S. Government Works.2speculation or suspicion of a legally cognizable cause ofaction; they must show entitlement to relief.” League ofUnited Latin Am. Citizens v. Bredesen, 500 F.3d 523, 527(6th Cir. 2007). “Mere labels and conclusions are not enough;the allegations must contain ‘factual content that allows thecourt to draw the reasonable inference that the defendant isliable for the misconduct alleged.’ ” Id. at 575, 127 S.Ct.1955 (quoting Ashcroft, 556 U.S. at 678, 129 S.Ct. 1937).“Threadbare recitals of the elements of a cause of action,supported by mere conclusory statements, do not suffice,”Iqbal, 556 U.S. at 678, 129 S.Ct. 1937, and the Court is “notbound to accept as true a legal conclusion couched as a factualallegation.” Papasan v. Allain, 478 U.S. 265, 286, 106 S.Ct.2932, 92 L.Ed.2d 209 (1986).III. ANALYSISFUSB argues that Plaintiffs' breach of contract claim mustbe dismissed because Axis is not a third-party beneficiaryof the Construction Loan Agreement. FUSB further arguesthat Plaintiffs' breach claim is barred by the doctrine of resjudicata following the in rem case. Plaintiffs contest botharguments. They assert that the terms of the ConstructionLoan Agreement clearly establish that Axis is an intendedthird-party beneficiary of the contract and that their breachclaim is sufficiently distinct from their in rem claims to avoidres judicata. After careful consideration, the Court agreeswith FUSB that Axis is not a third-party beneficiary to theConstruction Loan Agreement. As this conclusion mandatesthe dismissal of Plaintiffs' beach claim, the Court does notreach FUSB's res judicata argument.Before turning to why Axis is not a third-party beneficiary,the Court must first explain what law governs the parties'dispute. The Construction Loan Agreement contains a choiceof law provision that provides, “This Agreement is governedby the laws of Alabama, the United States of America, andto the extent required, by the laws of the jurisdiction wherethe Property is located, except to the extent such state lawsare preempted by federal law.” [Doc. 37-3 at 17]. No partyhas asserted that this provision violates Tennessee's choiceof law rules, which governs the Court's analysis here,4 orthat the provision is otherwise invalid. Accordingly, the Courtfinds that the Construction Loan Agreement's choice of lawprovision is enforceable. Therefore, the Construction LoanAgreement is governed by federal law (which is not relevantto Plaintiffs' breach claim), Alabama law, and, to the extentrequired, Tennessee law. [Id.; Doc. 29 at 15].*3 FUSB argues that Axis does not qualify as a third-partybeneficiary under either Alabama or Tennessee law becauseFUSB and the Hawks did not intend to grant Axis a directbenefit under the Construction Loan Agreement. [Doc. 37at 4–9]. Plaintiffs counter that the contract's direct paymentmechanism demonstrates such an intent under Alabama law,and they argue that Tennessee law is not applicable to thequestion of who qualifies as a third-party beneficiary. [Doc.89 at 3–5]. FUSB has the better argument as to what it and theHawks intended in the Construction Loan Agreement. As forwhether Tennessee law plays any role in the parties' dispute,this argument is largely academic as there are no dispositivedifferences between Alabama and Tennessee law.Under both Alabama and Tennessee law, “third parties mayenforce a contract if they are intended beneficiaries of thecontract.” Owner-Operator Indep. Drivers Ass'n v. ConcordEfs, 59 S.W.3d 63, 68 (Tenn. 2001); Airlines ReportingCorp. v. Higginbotham, 643 So. 2d 952, 954 (Ala. 1994)(stating that “a direct third-party beneficiary may sue on thecontract” provided that the third party “establish[es] that thecontracting parties intended, at the time the contract wascreated, to bestow a direct benefit upon [it]”). Incidentalbenefits are not enough. Swann v. Hunter, 630 So. 2d374, 376 (Ala. 1993); First Tenn. Bank Nat'l Ass'n v.Thoroughbred Motor Cars, 932 S.W.2d 928, 930 (Tenn. Ct.App. (1996)) (“Tennessee recognizes two categories of thirdparty beneficiaries, intended and incidental. Only if a party isan intended beneficiary may it maintain an action to enforcethe contract.”). The contracting parties must intend to confera direct benefit on the third party for the third party to gainenforceable rights under the contract. Swann, 630 So. 2dat 376; First Tenn. Bank Nat'l Ass'n, 932 S.W.2d at 930.Furthermore, both Alabama and Tennessee law hold thatwhere the contracting parties have expressly disclaimed thecreation of any third-party rights, courts should honor theparties' stated intent. Owner-Operator Indep. Drivers Ass'n,59 S.W.3d at 70 (“[C]ourts should honor any expression ofintent by the parties to reserve to themselves the benefitsof the contract.”); Mills v. Welk, 470 So. 2d 1226, 1229(Ala. 1985) (“ ‘Where, however, two contracting partiesexpressly provide that a third party shall have no legallyenforceable rights in their agreement, a court must effectuatethe expressed intent by denying the third party any directremedy.’ ”) (quoting Fed. Mogul Corp. v. Universal Constr.Co., 376 So. 2d 716, 724 (Ala. Civ. App. 1979)).Here, the Construction Loan Agreement contains states:“[FUSB] and [the Hawks] do not intend to create any third-
Axis Dynamics, Inc. v. Knox County, Tennessee, Slip Copy (2025)2025 WL 2176505 © 2026 Thomson Reuters. No claim to original U.S. Government Works.3party beneficiary rights under this Agreement. No one otherthan [the Hawks] will have any right to obtain or compela disbursement of the Loan's reserves of proceeds.” [Doc.37-3 at 13(E)]. As this provision expressly disclaims thecreation of any third-party rights, Axis is not a third-partybeneficiary of the Construction Loan Agreement under eitherAlabama or Tennessee law. Owner-Operator Indep. DriversAss'n, 59 S.W.3d at 70; Mills, 470 So. 2d at 1229. Plaintiffs'arguments to the contrary, which only address Alabama law,are unconvincing.Plaintiffs argue that although Alabama law allows partiesto disclaim the creation of third-party rights, “Ala. Code §7-5-116(4) permits enforcement” by third parties “when otherprovisions evince direct intent.” [Doc. 89 at 4; Doc. 90 at 2(“Boilerplate ‘no third-party rights’ clauses do not overrideother provisions showing intent to benefit a third party. AlaCode § 7-5-116(4).”)]. They claim that the Construction LoanAgreement's direct payment mechanism establishes such anintent because it demonstrates that one of the contract's corefunctions was to “guarantee draws to contractors[.]” [Doc.89 at 3–5; see also Doc. 90 at 2–3]. There are two problemswith Plaintiffs' argument. First, the authority Plaintiffs citein support of their position either does not exist or does notsupport the proposition that a third-party rights disclaimer canbe overcome by other contractual provisions demonstratingan intent to benefit a third party. Second, the ConstructionLoan Agreement's provision allowing for direct payment doesnot demonstrate an intent to directly benefit Axis as Plaintiffsclaim.*4 Starting with Ala. Code § 7-5-116(4), Plaintiffs cite itfor the proposition that “[b]oilerplate ‘no third-party rights’clauses do not override other provisions showing intent tobenefit a third party.” [Doc. 90 at 2]. Plaintiffs further attemptto bolster Section 7-5-116(4)'s weight by citing to LandaleEnterprises, Inc. v. Berry, 676 F.2d 506 (11th Cir. 1982).[Doc. 89 at 4 (“Even with a blanket ‘no third-party rights’clause, Ala. Code § 7-5-116(4) permits enforcement whenother provisions evince direct intent. See Landale Enters.v. Berry, 676 F.2d 506, 512 (11th Cir. 1982).)”]. The issuePlaintiffs face, however, is that Ala. Code § 7-5-116(4) doesnot exist. Section 7-5-116 exists more generally but thereis no subsection (4). Furthermore, Section 7-5-116 doesnot address third-party rights disclaimers. Instead, Section7-5-116 addresses Alabama's choice of law and forum rulesfor disputes involving letters of credit. Ala. Code § 7-5-116.Considering the foregoing, it should come as no shockthat Landale Enterprises does not cite Section 7-5-116,whether with the fictitious subsection (4) or otherwise, for theproposition that third-party rights disclaimers can be defeatedby other contractual provisions.5 In fact, Landale Enterprisesdoes not address third-party rights disclaimers at all butinstead concerns a contractual provision wherein a buyerdisclaimed reliance on representations made by others duringthe course of a transaction. 676 F.2d at 507–08. The LandaleEnterprises Court relied on this disclaimer to affirm thedismissal of a civil fraud claim brought by the buyer againstthe seller and its agents after they allegedly mispresented keyfacts concerning the transaction underlying the contract. Id.at 508. In short then, neither Section 7-5-116 (as it actuallyexists) or Landale Enterprises supports Plaintiffs' argument.Turning to Meridian Mutual Insurance Company v.Huntsville, 141 So. 3d 415 (Ala. 2013), Plaintiffs assert that inthis case, the Alabama Supreme Court “held that a nonpartymay enforce a contract where the agreement's mechanicsbenefit the claimant.” [Doc. 89 at 4; see also Doc. 90 at 2 (“Bycontrast, Meridian Mut. Ins. Co. v. Huntsville held that aninsurer's obligation to issue renewal notices conferred a directbenefit on insureds' lessees despite a disclaimer. 141 So. 3d415, 421 (Ala. 2013).”)]. It does not appear, however, that thiscase exists. When the Court attempted to locate the Meridiancase, it instead found an opinion from the Mississippi Court ofAppeals affirming a sex offender's conviction and sentence.See Ellis v. State, 141 So. 3d 415). Recognizing that eventhe best lawyers sometimes make citation errors, the Courtnext attempted to locate the Meridian case by searching for itscaption. This proved similarly unfruitful. Therefore, Meridiandoes support Plaintiffs' position as the case does not exist.Looking next to Iskra v. Bear Roofing, LLC, 406 So. 3d 51(Ala. 2024), Plaintiffs assert that this case “reaffirmed thata disclaimer cannot defeat clear contractual intent to benefita third party when the contract's mechanics directly servethat party.” [Doc. 90 at 2–3; see also Doc. 89 at 4]. UnlikeMeridian, this case does exist, and it even concerns the rightsof third-party beneficiaries. See generally Iskra, 406 So. 3d51. But contrary to Plaintiffs' assertion, it does not involvea third-party rights disclaimer or even mention how sucha disclaimer might impact a court's analysis. See generallyid. Rather, it simply held that there was a genuine issue ofmaterial fact as to whether the plaintiffs were third-partybeneficiaries of a repair contract between a home seller anda roofing company where the repair contract was executed tofacilitate the sale of a house to the plaintiffs. Id. at 55–56.
Axis Dynamics, Inc. v. Knox County, Tennessee, Slip Copy (2025)2025 WL 2176505 © 2026 Thomson Reuters. No claim to original U.S. Government Works.4It is a similar case with Ex parte Stamey, 776 So. 2d 85(Ala. 2000). Plaintiffs cite Ex parte Stamey for the propositionthat “contract terms and circumstances showing third-partyfocus overcome a general disclaimer[.]” [Doc. 89 at 5].But Ex parte Stamey, like Iskra, did not involve a contractcontaining a third-party rights disclaimer, nor did the Ex parteStamey Court explain how such a disclaimer would havealtered its analysis. See generally 776 So. 2d 85. Rather,the Ex parte Stamey Court simply held that a mobile homefinancing contract between a financier and buyers vestedthe mobile home seller with enforceable third-party rightsbecause (i) the contract called for the financier to pay theseller directly and (ii) the buyers expressly waived their rightto a jury trial in any litigation between them and the seller(as opposed to the financier). Id. at 92–93. While both thiscase and Iskra support the proposition that a third party mayhave enforceable contract rights under Alabama law, neithersuggests that a third-party rights disclaimer is invalid merelybecause other contractual provisions appear to benefit thirdparties as Plaintiffs claim.*5 Looking finally to Brown v. Gadsden Regional MedicalCenter, LLC, 748 Fed. App'x 930 (11th Cir. 2018), Plaintiffsassert that in this case, the Eleventh Circuit (applyingAlabama law) “recognized that a direct-payment requirementcreated a third-party beneficiary right.” [Doc. 90 at 2]. But thisis not what Brown held. To the contrary, Brown expressly heldthat a group of individuals were not third-party beneficiariesto a contract because the at-issue contract contained a third-party rights disclaimer. 748 Fed. App'x at 933. Therefore, notonly does Brown not stand for Plaintiffs' cited proposition,it also directly undercuts their argument that Axis is a third-party beneficiary of the Construction Loan Agreement.In short, none of Plaintiffs' cited authority supports theirposition that Axis has enforceable third-party rights underthe Construction Loan Agreement notwithstanding the third-party rights disclaimer, and some of their cited authoritydoes not even exist.6 These deficiencies severely undercutPlaintiff's argument. That said, the Court recognizes thatwhile Plaintiffs have utterly failed to support their position,there is some validity to their general argument that a third-party rights disclaimer may not always be enforceable. Acourt's paramount concern when interpreting a contract is togive effect to the contracting parties' intent. Parr v. Godwin,463 So. 2d 129, 132 (Ala. 1984); Allmand v. Pavletic, 292S.W.3d 618, 630 (Tenn. 2009). And when a contract containsa third-party rights disclaimer, it is generally reasonable toinfer that the contracting parties did not intend to create third-party rights. See Mills, 470 So.2d at 1229; Owner-OperatorIndep. Drivers Ass'n, 59 S.W.3d at 70. This, however, maynot always be the case. Ambiguous or contradictory termscould call into question whether the contracting parties trulyintended to avoid the creation of third-party rights.7 In suchcircumstances, it would be for a court to determine what theparties intended. This could to the invalidation of some third-party rights disclaimers, but such is not the case here.The Construction Loan Agreement is neither ambiguous norcontradictory; it clearly does not vest Axis with enforceablethird-party rights. Plaintiffs base their argument that Axis is athird-party beneficiary on the fact that the Construction LoanAgreement permits, but does not require, FUSB to pay Axisdirectly for construction costs.8 [Doc. 89 at 4–5; Doc. 90 at2–3]. Plaintiffs contend that this direct payment mechanismdemonstrates that FUSB and the Hawks intended to confer adirect benefit on Axis by ensuring that it was paid for its work.[Doc. 89 at 4–5; Doc. 90 at 2–3]. The Court is not convinced.*6 First, if FUSB and the Hawks intended the ConstructionLoan Agreement to guarantee that contractors like Axiswere paid, then it seems likely that the Construction LoanAgreement would have required FUSB to make paymentsto third parties instead of merely permitting it. [See Doc.37-3 at 11(B)]. Second, contractual provisions cannotbe read in isolation. Booth v. Newport TV, LLC, 111So. 3d 719, 725 (Ala. Civ. App. 2011) (citing CertainUnderwriters at Lloyd's, London v. Kirkland, 69 So. 3d98, 101 (Ala. 2011)); see also Perkins v. Metro. Gov't ofNashville & Davidson Cnty., 380 S.W.3d 73, 85 (Tenn. 2012).Rather, courts must look to the entirety of an agreementto discern the contracting parties' intent. See Booth, 111So. 3d at 725; Perkins, 380 S.W.3d at 85. In doing so,courts attempt to harmonize contractual provisions andavoid interpretations that render certain provisions invalid orotherwise contradictory. Sullivan, Long & Hagerty v. S. Elec.Generating Co., 667 So. 2d 722, 725 (Ala. 1995) (“Termsof a written instrument should be construed in pari materiaand a construction adopted that gives effect to all termsused. Inconsistent parts in a contract are to be reconciled, ifsusceptible of reconciliation[.]” (internal citation omitted));Guiliano v. Cleo, Inc., 995 S.W.2d 88, 95 (Tenn. 1999) (“Allprovisions in the contract should be construed in harmonywith each other, if possible, to promote consistency and toavoid repugnancy between the various provisions of a singlecontract.”).
Axis Dynamics, Inc. v. Knox County, Tennessee, Slip Copy (2025)2025 WL 2176505 © 2026 Thomson Reuters. No claim to original U.S. Government Works.5Therefore, the Court cannot determine whether Axis is a third-party beneficiary by looking to the provision authorizingdirect payment alone. Instead, the Court must look to theentirety of the Construction Loan Agreement, including itsthird-party rights disclaimer, to determine FUSB and theHawks' intent.9 See Sullivan, Long & Hagerty, 667 So. 2dat 725; Guiliano, 995 S.W.2d at 95. Performing this task, itis readily apparent that FUSB and the Hawks did not intendto give Axis any enforceable third-party rights. Although theConstruction Loan Agreement authorized FUSB to pay Axisdirectly, only the Hawks had “any right to obtain or compel adisbursement of the Loan's reserves of proceeds.” [Doc. 37-3at 13(E)]. Put another way, while Axis could receive fundsdirectly from FUSB, it had no right to demand them under theConstruction Loan Agreement. [See id. at ¶¶ 11(B), 13(E)].This, coupled with the contract's unambiguous statement thatFUSB and the Hawks did “not intend to create any third-party beneficiary rights[,]” clearly establishes that FUSB andthe Hawks did not intend for Axis to be able to enforce theConstruction Loan Agreement. [See id. at 13(E)]; Mills,470 So. 2d at 1229; Owner-Operator Indep. Drivers Ass'n, 59S.W.3d at 70. Consequently, while there may be times when athird-party rights disclaimer cannot defeat a third-party claim,this is not such a case. The Construction Loan Agreementis clear; Axis is not a third-party beneficiary of the contract.Accordingly, Plaintiffs' breach claim against FUSB must bedismissed. See Mills, 470 So. 2d at 1229; Owner-OperatorIndep. Drivers Ass'n, 59 S.W.3d at 70.IV. CONCLUSIONFor the foregoing reasons, FUSB's Motion to Dismiss [Doc.36] is GRANTED. As this decision resolves all outstandingclaims in this matter, the Court will enter a separate judgment.As a result, Plaintiffs can now appeal the entirety of this caseto the Sixth Circuit if they so desire. Therefore, Plaintiffs'Motion for Interlocutory Appeal [Doc. 84] is DENIED ASMOOT. There being no more matters to resolve, the Clerk isDIRECTED to close the file.SO ORDERED.All CitationsSlip Copy, 2025 WL 2176505Footnotes1The Court may consider this contract without turning the instant motion into one for summary judgment as the contractis referenced in the Amended Complaint and central to the claims therein. Kyrkanides v. Univ. of Ky., No. 19-6348, 2020WL 7062675 at *2, 2020 U.S. App. LEXIS 24014 at *5 (6th Cir. July 29, 2020) (“In considering a motion to dismiss, a courtmay consider exhibits attached to the complaint, public records, items appearing in the record of the case and exhibitsattached to defendant's motion to dismiss so long as they are referred to in the complaint and are central to the claimscontained therein.” (cleaned up)).2“[FUSB] may make advances payable to [the Hawks] or jointly to [the Hawks] and Project's general contractor, thesubcontractors or the material suppliers for the amounts due under the Construction Contract. Alternatively, [FUSB]may make payments for the Project's construction costs directly to any contractor, subcontractor, material supplier; thispower is coupled with an interest that makes it irrevocable and survives [the Hawks'] default. Any disbursement maybe deposited into an account established by [the Hawks] or another payee entitled to payment under the ConstructionContract...” [Doc. 37-3 at 11(B)].3The Court may consider this state court order without converting the instant motion into one for summary judgment.Buck v. Thomas M. Cooley Law Sch., 597 F.3d 812, 816 (6th Cir. 2010) (“Although typically courts are limited to thepleadings when faced with a motion under Rule 12(b)(6), a court may take judicial notice of other court proceedingswithout converting the motion into one for summary judgment.”).4Wright v. Linebarger Googan Blair & Sampson, Ltd. Liab. P'ship, 782 F. Supp. 2d 593, 601 (W.D. Tenn. 2011) (“In adiversity action, state substantive law governs. A federal district court is required to apply the choice of law rules of thestate in which it sits.” (internal citations omitted)).
Axis Dynamics, Inc. v. Knox County, Tennessee, Slip Copy (2025)2025 WL 2176505 © 2026 Thomson Reuters. No claim to original U.S. Government Works.65Landale Enterprises also likely does not cite Section 7-5-116 because Landale Enterprises was written in 1982, andSection 7-5-116 did not become part of the Alabama Code until 1997. See Landale Enters., Inc. v. Berry, 676 F.2d 506(11th Cir. 1982); 1997 Al. HB 374.6The Court cannot say whether this is the product of a lack of diligence, an irresponsible use of generative artificialintelligence, or an intentional attempt to mislead the Court. In any event, Plaintiffs' counsel is REMINDED that theTennessee Rules of Professional Conduct and the Federal Rules of Civil Procedure prohibit misrepresenting the law tothe Court. See Tenn. Sup. Ct. R. 8, Rule 3.3; FED. R. CIV. P. 11(b); Penn, LLC v. Prosper Bus. Dev. Corp., 773 F.3d764, 766 (6th Cir. 2014) (“Rule 11 imposes on attorneys a duty to reasonably investigate factual allegations and legalcontentions before presenting them to the court.”). Plaintiffs' counsel is hereby placed ON NOTICE that future citationsto fictitious authority or the misrepresentation of actual authority will result in sanctions.7For example, a contract could simultaneously state that it did not create any third-party rights and that it was entered intofor the benefit of a non-contracting party. In such a case, a court would have to determine whether the two provisionscould be read harmoniously, and if not, which provision controlled. See Sullivan, Long & Hagerty v. S. Elec. GeneratingCo., 667 So. 2d 722, 725 (Ala. 1995); Guiliano v. Cleo, Inc., 995 S.W.2d 88, 95 (Tenn. 1999).8As a reminder, this provision states:[FUSB] may make advances payable to [the Hawks] or jointly to [the Hawks] and Project's general contractor, thesubcontractors or the material suppliers for the amounts due under the Construction Contract. Alternatively, [FUSB]may make payments for the Project's construction costs directly to any contractor, subcontractor, material supplier; thispower is coupled with an interest that makes it irrevocable and survives [the Hawks'] default. Any disbursement maybe deposited into an account established by [the Hawks] or another payee entitled to payment under the ConstructionContract...[Doc. 37-3 at 11(B)].9As the Court has previously noted, this disclaimer states, “[FUSB] and [the Hawks] do not intend to create any third-party beneficiary rights under this Agreement. No one other than [the Hawks] will have any right to obtain or compel adisbursement of the Loan's reserves of proceeds.” [Doc. 37-3 at 13(E)].End of Document© 2026 Thomson Reuters. No claim to original U.S.Government Works.
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