Burnett fears threat by Sells over loan accounting: Attorney

Wednesday, September 7, 2005

Dyersburg businessman Frank Burnett is willing to testify in a lawsuit brought against him by Darrell Sells, but needs to be assured Sells won't harm him, his lawyer said Friday.

"Mr. Burnett is quite competent and willing to testify if he's not threatened," Burnett's attorney, Edward K. White III of Nashville, told Dyer County Chancellor J. Steven Stafford during a hearing, "but we need more assurance that there is some protection for him."

Burnett has thus far failed to appear for hearings in the case, White said, on orders from his doctor. He said Burnett is suffering depression and is fearful for his life because Sells has threatened him.

Friday's hearing was the second in a lawsuit filed by Sells and two of his children against a group of partners asking for an accounting of their share of a $100 million loan collection partnership.

Darrell Sells, owner of McDonald's franchises in Dyersburg and elsewhere in West Tennessee and Missouri, his son, Darren Sells; his daughter, Dena Sells Quertermous; and the children's business, Interiors for Less Outlet; filed the civil complaint asking for an accounting of the loan-collection partnership, against Hewell Dennis Joslin, Burnett, Dennis Joslin Co., Walter Hastings and several other companies and partnerships owned or controlled by Joslin and/or Burnett.

In addition to asking for an accounting of the loan-collection partnership, the complaint contends that Burnett and Joslin improperly diverted funds for their own use and should repay them to Sells.

It asks for the defendants to be ordered by the court to provide an accounting for a business arrangement financed by Darrell Sells to buy loans at auction from lending institutions and collect them.

On June 6, Stafford issued a temporary injunction reaffirming a restraining order he had issued on June 1 that orders Burnett not to spend the proceeds of a California real estate partnership until the Sells claims are decided.

On Friday, White asked that the injunction be dissolved because it is harming Burnett's business.

"Seven hundred eighty thousand dollars of Mr. Burnett's money is being held in my trust account that is essential to Mr. Burnett's financial health," he told Stafford. "I've not been paid in six months and the (California) money was sent to me for the purpose of paying for this litigation.

"When all the dust settles in this case money will be paid by Darrell Sells to Frank Burnett."

Sells' lawyer, John G. Young Jr. of Clayton, Mo., objected, saying a hearing on the injunction is scheduled for mid-October.

Stafford denied White's motion to dissolve the injunction.

"I think sufficient wrong has been alleged to keep the injunction in place until mid-October," the judge said. "But I am concerned that we're about a year out from getting this case resolved.

"Remember, you're in the country, not a big city."

Stafford said during a recent telephone scheduling conference attorneys involved indicated the case would go to trial next August.

"With the number of attorneys and the complexity I think it will take that long," said Brandon Gibson, attorney for Dennis Joslin. "But I think if we all work hard and cooperate, a trial in May of next year probably is possible."

"That beats the heck out of August as the scheduling order says," Stafford said.

Earlier Stafford had denied Gibson's motion to dismiss Hastings from the lawsuit.

"My concern is the volume of loans and loan packages," Young said.

The bulk of Friday's three-hour hearing was devoted to a motion by White that Sells be mentally evaluated and a guardian be appointed to look after him.

"Mr. Burnett is not able to participate in his defense," White said. "That is caused by Mr. Sells' death threats to Mr. Burnett."

White called Sells as a witness.

When asked by White if he had ever threatened to kill Burnett, Sells replied "Hell, no" and Stafford admonished him for cursing on the witness stand.

Sells admitted he had said he would "blow a hole in Frank Burnett's rear big enough to drive one of his trucks through," but said he and Burnett had met amicably after church about six weeks ago.

White next called as a witness Judith Kirkland, an employee of the business run by Burnett and Joslin.

She testified that in February or early March, Sells told her he was frustrated with not getting an accounting of the loan-package business from Burnett and had "said he could kill Frank Burnett."

"When I told him, he shouldn't say that, he said, 'I will hurt him real bad,'" she testified.

Kirkland said Sells repeated the threat four to six weeks later, using the same words.

She said when she asked about the accounting Sells wanted she was told the information had been given to Sells' accountant.

Sells had testified that his accountant was not able to complete an audit because Burnett never provided all the information he promised.

White next called as a witness Dr. Johnnie Welch, a counselor treating Burnett for post-traumatic stress disorder and said he was testifying with Burnett's permission to disclose confidential information.

Welch said knowledge of Sells' threats against him was the triggering incident for both Burnett's depression and post-traumatic disorder.

Under cross-examination by Young, Welch said Burnett's perception that he is in danger is no longer related to any current actual event or current threat.

"He asked me if I can tell him Mr. Sells is not a threat and when I told him I could neither tell him it was or wasn't, he became agitated," Welch said. "I'm treating a perceived threat to self."

White said the impact of Sells' threat on Burnett is real.

"The potential for an injurious impact on Frank Burnett and others is real," he said. "I think it is incumbent on the court to determine Mr. Sells' mental condition."

"Whether Mr. Sells is insane or not is not the basis for Mr. Burnett's disorder," Young argued. "It would not be proper for the court to order an evaluation."

Stafford denied the motion, saying White had not met standards for ordering a mental evaluation set by the Tennessee Court of Appeals.

White said he intends to file a motion for a protective order preventing Sells from having contact with Burnett.

Since the last hearing in the case on June 21, two other lawsuits related to the case have been filed.

A company, Joslin Oklahoma, partially owned by Joslin and Burnett, filed a $2.996 million complaint against Sells.

The lawsuit against Sells, filed June 16 in Dyer County Circuit Court, accuses Sells of having agreed in August 2002 to purchase a medical office building in Oklahoma City for $2,996,000 and failing to make any payments on the purchase.

The complaint also alleges fraud in that Sells never intended to pay the note.

It was originally filed in February in federal court in Memphis but was withdrawn for technical jurisdictional reasons and refiled in Dyer County.

Another complaint, similar to Sells' original lawsuit, was filed June 30 in Chancery Court by a Knoxville company accusing Burnett, Joslin, Burnett's daughter and six partnerships Burnett and Joslin are involved in with breach of contract and fraud in a loan-redemption venture. It was filed on behalf of Knoxville partnership Hudharris L.L.C., composed of Kirk A. Huddleston and Paul Harrison.

The Hudharris complaint alleges Burnett and Joslin have failed to repay $618,133 plus interest they diverted from Hudharris accounts. It also asks for a restraining order against Burnett to prevent his use of the proceeds from the California real estate sale.

Near the end of Friday's hearing Hudharris' lawyer, Robert E. Craddock Jr. of Memphis, asked Stafford for a temporary restraining order preventing Burnett from hiding proceeds of a $2.5 million Arkansas judgment for defective materials a boat company previously partially owned by Joslin and Burnett won. The judgment is on appeal and the appeal is scheduled to be heard by the Arkansas Court of Appeals next month.

Craddock introduced an affidavit from a former CEO of the boat company claiming Burnett told him money he sent to the boat company came from Sells' accounts "... and possibly other loan package investors at the Dennis Joslin Company ... without the knowledge and consent of Sells."

Craddock also introduced an affidavit of a forensic accountant, Mark N. Henry of Nashville, that alleged that the transfers to the boat company totaled $1,806,800.34.

"It causes us a great deal of concern that an effort is being made to get this judgment beyond our reach," Craddock said.

"This is outrageous," White said. "We are in the process of trying to settle that judgment, but the perception that we're in the process of absconding is patent nonsense," he said. "Also this is a judgment in another state that is outside the jurisdiction of this court."

He said the former CEO was fired and is being sued for stealing from the now-bankrupt boat company.

Stafford agreed the judgment is beyond his jurisdiction and denied Craddock's motion for a restraining order.

The judge ordered all the attorneys to agree on a date for the mid-October hearing on the injunction he gave Sells in June.

That date probably will be set this week.

On Aug. 12 all parties to the Sells and Hudharris lawsuits agreed and Stafford ordered that all confidential business and operational information introduced into the proceedings will be sealed and kept secret.

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