The opinion
STONES RIVER UTILITIES, INC., )
)
Plaintiff/Appellant, )
) Appeal No.
) 01-A-01-9505-CH-00217
VS. )
) Davidson Chancery
) No. 94-1665-III
METROPOLITAN GOVERNMENT OF )
NASHVILLE, DAVIDSON COUNTY, )
TENNESSEE, acting by and through
the ELECTRIC POWER BOARD and )
)
FILED
d/b/a "NASHVILLE ELECTRIC ) Oct. 25, 1995
SERVICE" or "NES," )
) Cecil Crowson, Jr.
Defendant/Appellee. ) Appellate Court Clerk
COURT OF APPEALS OF TENNESSEE
MIDDLE SECTION AT NASHVILLE
APPEALED FROM THE CHANCERY COURT OF DAVIDSON COUNTY
AT NASHVILLE, TENNESSEE
THE HONORABLE ROBERT S. BRANDT, CHANCELLOR
STANLEY M. CHERNAU
R. GARRY CHAFFIN
CHERNAU, CHAFFIN & BURNSED
424 Church Street
Suite 1750
Nashville, Tennessee 37219
Attorneys for Plaintiff/Appellant
CYRUS L. BOOKER
CARLA G. FOX
BOOKER & ASSOCIATES
First American Center
315 Deaderick Street
Suite 1280
Nashville, Tennessee 37238-1280
Attorneys for Defendant/Appellee
AFFIRMED IN PART; REVERSED IN PART;
AND REMANDED
BEN H. CANTRELL, JUDGE
CONCUR:
TODD, P.J., M.S.
KOCH, J.
OPINION
This is a contract dispute in which the chancellor found that the
uncontradicted proof showed that the plaintiff had no cause of action for the acts
alleged in the complaint. We reverse on the single ground of estoppel and remand
for further proceedings on that issue alone.
I.
In 1993 Stones River Utilities, Inc. secured a contract to supply meter
readers to Nashville Electric Service on an as needed basis. The specifications sent
out soliciting bids on the work stated: "The Contractor will furnish a maximum of
fifteen (15) Contract Meter Readers with twelve (12) Contract Meter Readers normally
being used on an as needed basis as determined by NES." Stones River was the
successful bidder and signed an agreement including the following provisions:
It is expressly understood that NES is not required to
assign any amount of work or any number of projects to
the contractor. The necessity of such work, and the
assignment thereof to the contractor is left solely and
exclusively to the judgment and determination of NES.
* * *
Either party may terminate this contract without cause by
giving the other party at least thirty (30) days notice in
writing.
After securing the contract, Stones River sought financing to purchase
new trucks for its meter readers but ran into difficulty because of the cancellation
clause in the contract. NES's general counsel agreed to clarify that provision and sent
Stones River a letter on June 9, 1993 containing the following:
-2-
It is standard policy of NES that all of its service
contracts state "... NES is not required to assign any
amount of work or any number of projects ...", and further,
to have a 30-day notice of cancellation of the contract.
NES is in the business of distributing electricity,
and as such, uses meters to record the amount of
electricity used by its customers. In order to know how
much is used, NES has to have individuals to read these
meters. As long as NES is in this business, the program
of reading meters will always be utilized.
As to the 30-day notice of cancellation, NES
reserves this right in the event the contractor does not
fulfill the terms of the contract.
I hope this clarifies the matter for you.
The letter was shown to the truck dealer, and subsequently, Stones River was able
to finance the new vehicles.
On January 10, 1994 NES sent a letter terminating the contract. The
letter cited a decision of "current management at NES" to reorganize the meter
reading function and return it to "permanent NES employees." Stones River
registered a protest and on February 4, 1994, NES sent another letter stating, "Due
to recent announcements and the undetermined effects on the meter reading function,
the action to terminate the above contract has been rescinded. The purpose of this
action is to keep options open to handle any meter reading contingencies."
Stones River filed this action on February 16, 1994 alleging that NES
breached the contract and an implied covenant of fair dealing and was estopped to
rely on the sections of the contract quoted above. Despite the breakdown in the
parties' relations, from late February, 1994 through June, 1994, NES assigned enough
work to Stones River to occupy two meter readers and a lead person. After that,
although the contract remained open, NES did not assign any work to contract meter
readers.
-3-
II.
The chancellor granted summary judgment to NES. In his memorandum
opinion the chancellor said, "Stones River may or may not have some other cause of
action based upon representations made to it by NES after the contract was executed,
but NES did not breach the contract." We agree that NES could not be liable on the
original agreement because it did not obligate NES to assign any work to Stones River
and it gave NES the right to terminate the agreement on thirty days notice.
On appeal, however, Stones River argues waiver, estoppel, and
modification of the contract (based on the events that took place after the agreement
was signed). With respect to the waiver and modification contentions, we do not find
any support for them in the record. Even if the letter issued on June 9, 1993 is
considered as somehow altering the written agreement, it does not commit NES to
furnishing any level of work to Stones River. Arguably, it could be taken as a
modification of the right to terminate the contract without cause; but the paragraph
referring to meter readers, as a matter of law, is too vague for a reasonable person
to place any reliance on it.
With respect to the estoppel issue, Stones River's president said in an
affidavit filed in opposition to the motion for summary judgment that, on May 14th,
1993, she met with members of NES's staff who strongly suggested that Stones River
obtain new vehicles for use in performing the contract. Specifically, she said, "NES
further assured us that we would have twelve readers every day for the duration of the
contract, if we bought new trucks. Therefore, at the urging of NES we decided to
purchase all new vehicles." Earlier, when she gave her deposition, she was asked if
NES told her she had to buy new vehicles. She replied:
No, I don't think they said you had to purchase new
vehicles, because they couldn't say that. I had to -- when
-4-
the specs called for properly functioning vehicles, but they
said we needed new vehicles. And they made that very
clear.
In its complaint Stones River made the following allegations:
8. Plaintiff would show that when it received
the contract it was necessary to acquire thirteen vehicles.
Plaintiff's President, one Jamie Wilson, on May 14, 1993
met with NES representatives Melvin Bess, Tyler Mills,
and Don Hill to discuss the start-up of the contract and the
necessity for the purchasing of vehicles.
* * *
11. Plaintiff alleges that at this meeting Ms.
Wilson was advised by the NES representatives that
Plaintiff would have twelve routes on a daily basis and
that if Plaintiff's performance was good the contract would
be extended or renewed, which gave further credence to
the insistence that Plaintiff purchase new vehicles.
An action based on estoppel may be brought where the promises of one
party are relied on by another party to his detriment. In Foster & Creighton Co. v.
Wilson Contracting, 579 S.W.2d 422 (Tenn. App. 1979), this court said:
[W]hen one man by his promise induces another to
change his situation, a repudiation of the promise would
amount to a fraud. Where one makes a promise which
the promisor should reasonably expect to induce action or
forbearance of a definite and substantial character on the
part of the promisee, and where such promise does in fact
induce such action or forebearance, it is binding if
injustice can be avoided only by enforcement of the
promise.
579 S.W.2d at 427.
We are of the opinion that there are contested facts in this case that
make summary judgment on the estoppel issue improper. See Byrd v. Hall, 847
S.W.2d 208 (Tenn. 1993). Therefore, we reverse the judgment below on that point
-5-
and remand the cause to the trial court for further proceedings on the issue of
estoppel only. Otherwise, the judgment is affirmed.
Tax the costs on appeal to the appellee.
_____________________________
BEN H. CANTRELL, JUDGE
CONCUR:
_______________________________
HENRY F. TODD, PRESIDING JUDGE
MIDDLE SECTION
_______________________________
WILLIAM C. KOCH, JR., JUDGE
-6-