Nashville at law: Danner estate feuds center on loans' 'accepted practice'

Also: Feds get embattled restaurateurs' sports car [From our print edition featured in Monday's City Paper]

Email | Print By E. Thomas Wood

[Correction: As originally published, this article stated that Ray Danner died of a brain tumor. He actually died of pneumonia related to another form of cancer. NashvillePost.com regrets the error.]

When Shoney’s entrepreneur Ray Danner died in August 2008, he left behind a great fortune — and a great mess. Lately, the legal writs have been flying once again as the battle over Danner’s millions grinds on.

Raymond L. Danner Jr. of Gallatin, as executor of his father’s estate, filed no fewer than six lawsuits in January against people and entities that did business with Danner in his later years. He says they owe some $9.4 million on loans his father made to them.

Defendants have responded in the past couple of weeks with what has become a recurring refrain in the dispute over Danner’s assets — the claim that documents he and others signed don’t really mean what they say.

The new legal actions in Davidson County Probate Court join a forest-leveling cavalcade of litigation that actually began more than a year before Danner passed away. Auto-dealership investor Michael J. Sandler sued Danner, along with fellow investors Randy L. Morton and Gary A. Neill, in July 2007 after he was voted off the board of directors of the Neill-Sandler Imports dealership in Murfreesboro. Sandler had put in a failed bid to purchase the company.

That lawsuit claimed Danner should not have taken part in a key board meeting because he was mentally incompetent.

Sandler filed a second lawsuit in November 2007, involving other dealerships the investors owned together. Both of those cases remain pending in Davidson Chancery.

The Danner estate later sued Morton in Rutherford County Circuit Court, seeking repayment of more than $1.1 million in loans. Morton then filed a probate claim against Danner’s estate in an effort to get off the hook for the loans. He claimed others talked him into signing the notes as part of the plan to oust Sandler from the company, asserting that “it was never anticipated by any of the parties that any money would actually change hands” after he signed the notes. Because portions of the probate file have been placed under seal, it is not clear whether this dispute remains unresolved.

“We’ve got promissory notes that he signed in September 2007,” said Nashville attorney C.K. McLemore III, who represents the estate, when asked last year about Morton’s claims. “For him to say now that they didn’t mean anything — we do not agree with that.”

Another probate claim came from Mike Eller, co-owner and manager of Danner-Eller Golf Properties Inc., operator of the Hermitage Golf Course. He disputed the price at which the estate wanted to sell him the golf course, under the terms of an agreement he and Danner had entered into. A November 2009 filing in the estate case indicates that the parties settled that issue, but it does not give the price agreed upon.

As all the legal threads play out, Ray Danner Jr. is “working hard to sell assets and generate cash” to cover the estate’s “significant outstanding debts,” according to a January filing by McLemore. “The weakness of the economy has seriously delayed this process,” the filing adds.

The six lawsuits the estate filed in January name Sandler, Morton, Neill, three of the Neill-Sandler dealerships and three related entities as defendants. Winston S. Evans, from the Nashville firm Evans, Jones & Reynolds P.C., is handling the cases for the estate. Filed as exhibits to the complaints are promissory notes from various loans Danner made, as well as a July 2008 e-mail from Neill to McLemore detailing more than $10 million that he said the dealerships and other businesses owed to Danner or to companies he owned.

Neill’s e-mail also sets out the amounts of loans Danner had guaranteed on behalf of the businesses. They add up to more than $32 million.

Sandler and the dealerships filed answers to the legal complaints in February. Those filings, submitted by Knoxville attorney Lynn Tarpy, each offer this defense: “It was the accepted practice of the parties that Danner would loan the money with the expectation of repayment only if the entity were profitable. The parties have no reason to believe other than that in this case.”

Morton’s answer and counterclaim, filed last week, says the Danner estate has no right to recover the loan proceeds, in part because it was the “customary practice” in dealing with Danner that he “would not expect repayment of notes from companies that did not have sufficient funds to pay them.” Morton’s filing also seeks $300,000 from Sandler and Neill-Sandler Imports to cover an April 2008 promissory note. Murfreesboro lawyers Jay B. Jackson and John G. Mitchell III are counsel to Morton.

Neill filed his answer and counterclaim on Feb. 26. “It was generally the accepted practice and philosophy of Mr. Danner Sr. to assist various people in starting or purchasing businesses by forwarding money to the business and/or individuals,” says the filing, prepared by Nashville attorneys Hal Hardin and Harold R. Donnelley.

“As a general matter, if the ventures were capable, after paying reasonable compensation to the partners/shareholders, employees, and intra-company loans, they would repay Mr. Danner the amounts injected. If the companies could not pay, generally Mr. Danner would write the money owed off.”

Francis Guess, a longtime associate of Ray Danner and advisor to his estate, declined to comment on the litigation when reached last week, except to say: “Whether Mr. Danner had a pattern and practice of giving his money away — I’d be shocked and surprised if that were ever determined by a court.”

United States District Court

United States of America v. 2003 Maserati. Default forfeiture judgment entered Feb. 25. The U.S. of A. moves up in the automotive world — from owning General Motors to taking possession of the 2003 Maserati Coupe that it seized in 2008 from the Tangredi family of Nashville restaurateurs. Judge Todd Campbell ruled that the government has established “by a preponderance of the evidence” that Michael D. Tangredi and his 19-year-old son, Michael G. Tangredi, bought the vehicle with the proceeds of a $1.2 million credit-card fraud scheme.

No criminal charges have been brought regarding the alleged fraud against American Express, but the card issuer’s civil lawsuit against both Michael Tangredis remains pending. In a separate matter, Michael G. Tangredi is set to go on trial July 26 in Davidson County Criminal Court on charges of sales tax evasion.