Moore Construction Co. v. Story Engineering

IN THE COURT OF APPEALS OF TENNESSEE

AT NASHVILLE

FILED

MOORE CONSTRUCTION COMPANY, ) July 10, 1998

INC., and PAUL W. MOORE, )

) Cecil W. Crowson

Plaintiffs/Appellants, ) Appellate Court Clerk

) Montgomery Circuit

) No. C9-31

VS. )

)

) Appeal No.

STORY ENGINEERING COMPANY, ) 01A01-9606-CV-00267

INC., and RODDY L. STORY, )

)

Defendants/Appellees. )

APPEAL FROM THE CIRCUIT COURT

FOR MONTGOMERY COUNTY

AT CLARKSVILLE, TENNESSEE

THE HONORABLE JAMES E. WALTON, JUDGE

For Plaintiffs/Appellants: For Defendants/Appellees:

Thomas N. Bateman John T. Horton

Robert T. Bateman Brewer, Krause, Brooks & Mills

Bateman, Bateman & Darnell Nashville, Tennessee

Clarksville, Tennessee

AFFIRMED AND REMANDED

WILLIAM C. KOCH, JR., JUDGE

OPINION

This appeal stems from a construction contract to improve the natural gas

transmission system in the City of Clarksville. After the City awarded the contract,

an unsuccessful bidder sued the project engineer in the Circuit Court for Montgomery

County, claiming interference with prospective economic advantage, defamation, and

disparagement. The trial court granted the project engineer’s motion for summary

judgment, and the unsuccessful bidder has appealed to this court. We have

determined that the summary judgment was appropriate because Tennessee does not

recognize the tort of interference with prospective economic advantage and because

the project engineer’s statements concerning the unsuccessful bidder were true.

I.

In the early 1990's, the City of Clarksville hired Story Engineering Co., Inc. to

perform a feasibility study concerning the capacity of its natural gas transmission

system. Roddy L. Story, the principal of Story Engineering who was to perform the

work, is a Vanderbilt-trained engineer who had been employed by Nashville Gas

Company for thirty-two years. Mr. Story had assisted with the design of Clarksville’s

existing system in the 1950's.

After Mr. Story reported that Clarksville’s system was no longer adequate to

meet the expected demand in the case of severe weather, the City retained him as

project engineer to design the improvements and to prepare the plans and

specifications and other contract documents for the project. The project Mr. Story

designed called for the installation of 116,900 linear feet of 12¾-inch O.D. coated

steel natural gas pipe with fittings, 600 linear feet of 6e-inch O.D. coated steel gas

pipe, and various regulator stations, bridge crossings, tie-ins, and related

appurtenances.

Because the quality of the workmanship on the project was extremely

important, Mr. Story included in the specifications and contract documents a

requirement that the successful bidder must have constructed a similar natural gas

-2-

transmission pipeline project within three years preceding the date of the Clarksville

project.1 Moore Construction Company, Inc. was one of the nine companies

submitting bids on the project. Mr. Story requested Moore Construction Company

to provide additional information because its original bid did not contain sufficient

information about its prior jobs or the personnel who would perform the work.

Moore Construction Company’s supplemental information revealed that the last gas

pipeline it had constructed was in 1984 in Louisiana.

After evaluating the bids, Mr. Story informed the City that King Pipeline and

Utility Company, Inc. had submitted the lowest bid of $3,398,808 and that it had

recently completed four similar projects. He also informed the City that Moore

Construction Company had submitted the second lowest bid of $3,432,378 but that

it had not completed a similar project within the past three years. Moore

Construction Company appeared at a meeting of the Clarksville Utility Committee

shortly after the bids were opened and requested that it be awarded the contract in

accordance with the City’s procurement rule that favors local contractors when there

is less than a five percent difference between their bid and the lowest bid. The

committee declined to recommend Moore Construction Company because it did not

meet the specification’s qualifications for performing the work. When the matter

came before the Clarksville City Council, Mr. Story informed the council members

that Moore Construction Company was “not qualified to construct the project and that

the City of Clarksville, Tennessee, and its individual council members . . . would

expose itself and themselves to liability should it award the contract to [Moore

1

The Specifications and Contract Documents stated:

The Owner will require as minimum qualification for Bidder to have successfully

completed within the last thirty-six months the installation of a natural gas

transmission pipeline and regulator station system similar in size and complexity to

this Project. Bidder must have previous experience in welding on high pressure gas

lines, hydrostatic pressure testing, and filling of pipelines with high pressure natural

gas.

-3-

Construction Company] . . . instead of following [his] recommendation . . ..” 2

Thereafter, the City Council awarded the contract to King Pipeline.

In November 1992, Moore Construction Company and its president filed suit

against Mr. Story and Story Engineering in the Circuit Court for Montgomery County

alleging that Mr. Story’s statements to the City Council had defamed and disparaged

them and had interfered with their prospective economic advantage. They requested

$300,000 in actual and $600,000 in punitive damages. Mr. Story later moved for

summary judgment. The trial court granted the motion and dismissed each of Moore

Construction Company’s claims on the ground that Mr. Story’s statements to the City

Council concerning Moore Construction Company’s qualifications under the

project’s specifications were true.

II.

Summary judgments enjoy no presumption of correctness on appeal. See City

of Tullahoma v. Bedford County, 938 S.W.2d 408, 412 (Tenn. 1997); McClung v.

Delta Square Ltd. Partnership, 937 S.W.2d 891, 894 (Tenn. 1996). Accordingly,

reviewing courts must make a fresh determination concerning whether the

requirements of Tenn. R. Civ. P. 56 have been satisfied. See Hunter v. Brown, 955

S.W.2d 49, 50-51 (Tenn. 1997); Mason v. Seaton, 942 S.W.2d 470, 472 (Tenn. 1997).

Summary judgments are appropriate only when there are no genuine factual disputes

with regard to the claim or defense embodied in the motion and when the moving

party is entitled to a judgment as a matter of law. See Tenn. R. Civ. P. 56.04; Bain

v. Wells, 936 S.W.2d 618, 622 (Tenn. 1997); Carvell v. Bottoms, 900 S.W.2d 23, 26

(Tenn. 1995).

Courts reviewing summary judgments must view the evidence in the light most

favorable to the nonmoving party and must also draw all reasonable inferences in the

nonmoving party’s favor. See Robinson v. Omer, 952 S.W.2d 423, 426 (Tenn. 1997);

2

The City Council’s resolution awarding the contract to King Pipeline recited that

There was extended discussion regarding the option of awarding the contract to

Moore Construction Co., a local contractor and the second low bidder, under the 5%

provision. Mr. Story stated that in accordance with the bid specifications, it was his

opinion that Moore Construction Co. was not qualified because this company had not

completed a project of this magnitude within the past 36 months as specified in the

bid documents.”

-4-

Mike v. Po Group, Inc., 937 S.W.2d 790, 792 (Tenn. 1996). Thus, a summary

judgment should be granted only when the undisputed facts reasonably support one

conclusion -- that the moving party is entitled to a judgment as a matter of law. See

McCall v. Wilder, 913 S.W.2d 150, 153 (Tenn. 1995); Carvell v. Bottoms, 900

S.W.2d at 26. A party may obtain a summary judgment by demonstrating that the

nonmoving party will be unable to prove an essential element of its case, see Byrd v.

Hall, 847 S.W.2d 208, 212-13 (Tenn. 1993), because the inability to prove an

essential element of a claim necessarily renders all other facts immaterial. See

Alexander v. Memphis Individual Practice Ass’n, 870 S.W.2d 278, 280 (Tenn. 1993);

Strauss v. Wyatt, Tarrant, Combs, Gilbert & Milom, 911 S.W.2d 727, 729 (Tenn. Ct.

App. 1995).

III.

Moore Construction Company asserts that Mr. Story was not entitled to a

summary dismissal of his three claims because of material factual disputes that render

a summary judgment inappropriate. It claims that the record contains disputed facts

regarding its ability to construct the pipeline according to the project specifications

and the City Council’s potential liability for awarding the contract to a contractor

who did not meet the bid requirements. We have determined that these issues, to the

extent that they are factual, are not material to the disposition of this case and that Mr.

Story is entitled to a judgment dismissing each of Moore Construction’s claims as a

matter of law.

A.

The status of the tort of intentional interference with prospective economic

advantage was not settled when Moore Construction Company first filed its

complaint against Mr. Story. However, the Tennessee Supreme Court put this issue

to rest in 1997 when it held that this cause of action would not be recognized in

Tennessee. See Nelson v. Martin, 958 S.W.2d 643, 646 (Tenn. 1997). The Court’s

decision applies to cases pending at the time it was handed down, see Alexander v.

Inman, 825 S.W.2d 102, 105 (Tenn. Ct. App. 1991) (applying retroactively the

Tennessee Supreme Court’s abolition of the common-law tort of alienation of

-5-

affections). Thus, we affirm the trial court’s dismissal of this claim because it does

not exist under Tennessee law.

B.

Moore Construction Company asserts that its defamation claim should not have

been summarily dismissed because the facts, taken in their most favorable light,

demonstrate that Mr. Story’s statements were false or falsely implied the existence

of other derogatory facts. Based on the uncontroverted evidence concerning Mr.

Story’s statements to the City Council, we have determined that Mr. Story’s

statements were true as a matter of law. Therefore, the trial court correctly summarily

dismissed this claim because Moore Construction Company failed to demonstrate that

it would be able to prove an essential element of its defamation claim at trial.

The basis of a defamation action, whether it be libel or slander, is that the

defamatory statement has injured a person’s character or reputation. See Quality Auto

Parts Co. v. Bluff City Buick Co., 876 S.W.2d 818, 820 (Tenn. 1994). The Tennessee

Supreme Court, adopting Restatement (Second) of Torts § 580B (1977), defined the

tort as follows:

One who publishes a false and defamatory communication

concerning a private person, or concerning a public official

or public figure in relation to a purely private matter not

affecting his conduct, fitness or role in his public capacity,

is subject to liability, if, but only if, he

(a) knows that the statement is false and that it defames the

other,

(b) acts in reckless disregard of these matters, or

(c) acts negligently in failing to ascertain them.

Press, Inc. v. Verran, 569 S.W.2d 435, 442 (Tenn. 1978). Under this formulation,

statements that are factually true cannot provide a basis for a defamation action. See

Stones River Motors, Inc. v. Mid-South Publishing Co., 651 S.W.2d 713, 719 (Tenn.

Ct. App. 1983).

Mr. Story’s statements that Moore Construction Company did not satisfy the

qualifications for bidding on this project were based on information that Moore

Construction Company itself provided. There is no dispute that Moore Construction

Company had not undertaken to build a natural gas transmission pipeline during the

thirty-six months prior to bidding on this project. Mr. Story’s appraisal of whether

-6-

Moore Construction Company qualified as a bidder on this project cast no reflection

on the company’s competence as a contractor, but rather reflected the undisputed fact

that the company did not satisfy the prior experience requirement in the specifications

for this project.

Moore Construction also asserts that Mr. Story’s warning about the City

Council’s exposure to liability is false and defamatory. This statement, which is little

more than an expression of legal opinion by a lay person, is also correct. Local

governmental officials are not immune from suit for willful or wanton acts or acts

amounting to gross negligence. See Tenn. Code Ann. § 29-20-201(b)(2) (Supp.

1997). Because it was undisputed that Moore Construction Company did not meet

the qualifications to bid, Mr. Story’s caution about the consequences of awarding a

contract to construct a natural gas pipeline to a contractor who did not meet the

qualifications to bid was neither inappropriate nor defamatory.

C.

Moore Construction Company’s final claim is for disparagement. Even though

Tennessee courts have not specifically recognized this tort, it is among the classes of

torts recognized in the Restatement (Second) of Torts § 623(A) (1977) which

provides:

One who publishes a false statement harmful to the

interests of another is subject to liability for pecuniary loss

resulting to the other if

(a) he intends for publication of the statement to result in

harm to interests of the other having a pecuniary value, or

either recognizes or should recognize that it is likely to do

so, and

(b) he knows that the statement is false or acts in reckless

disregard of its truth or falsity.

This case does not provide an appropriate vehicle for explicitly recognizing

disparagement as a separate tort because Moore Construction Company has been

unable to demonstrate that it will be able to prove an essential ingredient of the cause

of action.

Like a claim for defamation, a claim for disparagement must be based on a

false statement. We have already determined that Mr. Story’s statements concerning

-7-

Moore Construction Company’s inability to qualify as a bidder under the project’s

specifications and his caution of the possible consequences of awarding the bid to a

non-responsive bidder were true and correct. Accordingly, these statements, as a

matter of law, cannot support a cause of action for disparagement.

IV.

We affirm the summary judgment and remand the case to the trial court for

whatever further proceedings may be required. We tax the costs of this appeal,

jointly and severally, to Moore Construction Company and Paul W. Moore and their

surety for which execution, if necessary, may issue.

______________________________

WILLIAM C. KOCH, JR., JUDGE

CONCUR:

__________________________________

HENRY F. TODD, PRESIDING JUDGE

MIDDLE SECTION

__________________________________

SAMUEL L. LEWIS, JUDGE

-8-