In life, Ray Danner attracted entrepreneurs to his side. In death, he has left some of them in disputes with each other and with his estate.
The builder of the Shoney's and Captain D's restaurant chains, who died last August at 83, moved into a wide range of businesses in the last two decades of his life. He partnered with experienced executives as he invested in car dealerships, a golf course, a waste disposal operation in Aruba and other projects.
Now several of those executives have filed claims against Danner's estate. Some have done so as a routine step in the probate process, but others accuse the estate of not holding up its end of various deals. And one of them has claimed that while Danner's health was in decline, his attorney engineered a sham transaction to cut another partner out of Neill-Sandler Imports Inc., a Toyota dealership in Murfreesboro.
The Neill-Sandler circular firing squad
Randy Morton, who was a co-owner of Neill-Sandler Imports, filed his claim last month in Davidson County Probate Court after the Danner estate sued him in Rutherford County Circuit Court seeking repayment of more than $1.1 million in loans.
Morton asserts that Danner's attorney C.K. McLemore III, of the Nashville firm McLemore & Rollins, advised him to sign the notes as part of a plan to oust former co-owner Mike Sandler from the company.
Morton says McLemore told him "it was never anticipated by any of the parties that any money would actually change hands" after he signed the notes. They were to be part of a transaction through which Morton and Gary Neill of Brentwood would buy Danner's interests in the dealership and four related companies, then sell them back to Danner after a lawsuit by Sandler was resolved.
Sandler had sued Neill, along with Danner and Morton, in July 2007 after he was voted off the board of directors of Neill-Sandler Imports following a failed bid to purchase the company himself. The legal action asserted that Danner should not have taken part in the board meeting because he was mentally incompetent.
McLemore, according to Morton, told Morton and Neill that "it would be damaging and embarrassing to the reputation of Mr. Raymond L. Danner to go through a lawsuit where his competency would be questioned." The lawyer also reportedly said Sandler "was likely to do an end run for control of the companies," calling him a "snake."
One of the companies in question, Neill-Sandler Ford/Lincoln/Mercury in Alcoa, went out of business last August after Ford Motor Co. selected it for consolidation in a cost-cutting drive.
"I very much disagree with Mr. Morton's rendition of the facts," McLemore said in an interview. "We've got promissory notes that he signed in September 2007. For him to say now that they didn't mean anything — we do not agree with that."
Morton has asked the Rutherford County court to void the notes and undo the purchase of Danner's stock.
Sandler filed a second lawsuit in November 2007, involving the other four companies besides Neill-Sandler Imports. McLemore said the parties continue to take part in court-ordered mediation.
Shooting for par value
Mike Eller co-owns and manages Danner-Eller Golf Properties Inc., operator of the Hermitage Golf Course. He filed a probate claim outlining differences he had with Danner, and now has with his estate, about the value at which he should be able to buy out Danner's shares in the company. In 2000, he and Danner entered into a buy-sell agreement, meant to address how one partner could buy the other's interest in the event of a partner's death.
Eller says he and Danner re-evaluated the value of the golf course, and thus the price of any buyout, once a year until 2006, when they agreed the property was worth $7 million. His court filing calls that an "excessive value" by today's standards, and it claims that the failure of Danner and then his estate to come up with a revised valuation showing what the golf course is worth under current economic conditions amounts to breach of contract and constitutes bad faith.
"There is a difference of opinion as to whether there was an obligation on the part of Mr. Danner to re-value the golf course," McLemore explained. "The estate's position is that there was no such obligation." The attorney added that "efforts are underway to reach an agreement with Mr. Eller."
Sorting out obligations
Other claims filed in the Danner probate case appear to be more routine, even though the numbers involved are substantial.
Bank of America put the court on notice that Danner had loan balances totaling about $15 million at the time of his death. McLemore said the estate is in good standing with the bank and has already paid down much of the debt.
Gary Neill submitted a claim last year for $640,000 related to his interests in Danner Restaurants Inc., WENCO of Shelbyville Inc. and Graham Pallet Co. Inc., all subsidiaries of The Danner Co. of Nashville. The estate has filed no objection to that claim.
And a former bookkeeper for Danner has attached to her probate claim a separation agreement signed by Danner at the time of her retirement in 2001. It provides for Danner to pay her $50,000 a year for the rest of her life. In return, she agreed not to compete with Danner's companies and not to disclose confidential information "relating to the employer [Danner], the employer's present wife, the Danner Foundation, the Neill-Sandler Foundation" or any of Danner's business interests.
McLemore said the woman worked for Danner for more than 20 years. "He never had retirement plans for any of his employees, and so when she retired, they set up an agreement where he would pay her as though he had created a retirement plan for her," he explained, saying the estate does not intend to dispute the claim.