THOMAS A. VARLAN, District Judge.
This civil action is before the Court on Defendant J & M Incorporated's ("J & M's")Motion for Summary Judgment
The Court granted leave for Plaintiffs to file a surreply [Doc. 27-1], and J & M filed a reply to Plaintiffs' surreply [Doc. 30]. The Motion for Summary Judgment is now ripe for determination. The Court has carefully considered the pending Motion for Summary Judgment, along with the parties' briefs and relevant documents and exhibits. Because the Court finds that no material issue of fact exists as to Plaintiffs' claims, J & M is entitled to judgment as a matter of law. Accordingly, J & M's Motion for Summary Judgment [Doc. 21] will be granted.
On December 6, 2007, J & M entered into a written purchase agreement (the "Purchase Agreement") with North American Machinery, Inc. ("NAM")
On Friday, December 7, 2007, Ronald Schumacher ("Schumacher"), a representative of Plaintiffs, and Tom Smith ("Smith"), a representative of JH Reid, traveled to Meigs County, Tennessee [Doc. 23-1, at ¶ 9, Doc. 23-2, at ¶¶ 3-7]. Later that day, Schumacher and Smith conducted the inspection of the barge package with Robert Potter
Plaintiffs allege that the inspection of the barge package and the attendant negotiations were completed at approximately 5:30 P.M. on Friday, December 7, after the banks had closed and after wire transfers could be initiated [Doc. 23-1, at ¶¶ 11-12]. At approximately 7:30 P.M. on Friday, December 7, Plaintiffs allege that Greg Preuss ("Preuss") of NAM called Dwayne Potter ("Dwayne Potter") of J & M to confirm Plaintiffs' agreement to purchase the barge package from J & M and to explain that Plaintiffs could not send J & M the $100,000.00 deposit until the following Monday, December 10 [Id., at ¶¶ 10-12]. Dwayne Potter allegedly responded, "Monday would be fine." [Id., at ¶¶ 11-13]. At approximately 7:40 P.M. on December 7, Plaintiffs allege that Schumacher also called Dwayne Potter to confirm the deal and confirm that the $100,000.00 deposit could be sent on Monday, December 10 [Doc. 23-2, at ¶ 11].
Plaintiffs allege that the following day, Saturday, December 8, Dwayne Potter called JH Reid and offered to sell the barge package for $1,170,00.00, circumventing Plaintiffs' prior agreement with JH Reid [Doc. 23-1, at ¶¶ 14-16, Doc. 23-2,
On February 4, 2008, Plaintiffs filed the Complaint [Doc. 1] in the United States District Court for the Eastern District of Louisiana alleging four causes of action against J & M and JH Reid.
Under Federal Rule of Civil Procedure 56(c), summary judgment is proper "if the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c). The moving party bears the burden of establishing that there is no genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 330 n. 2, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). The court must view the facts and all inferences to be drawn therefrom in the light most favorable to the non-moving party. Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986); Burchett v. Kiefer, 310 F.3d 937, 942 (6th Cir.2002). To establish a genuine issue as to the existence of a particular element, the non-moving party must point to evidence in the record upon which a reasonable finder of fact could find in its favor. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). The genuine issue must also be material; that is, it must involve facts that might affect the outcome of the suit under the governing law. Id.
The judge's function at the point of summary judgment is limited to determining whether sufficient evidence has been presented to make the issue of fact a proper question for the fact finder. Id. at 249, 106 S.Ct. 2505. The judge does not weigh the evidence, judge the credibility of witnesses, nor determine the truth of the matter. Id. Thus, "[t]he inquiry performed is the threshold inquiry of determining whether there is the need for trial — whether, in other words, there are any genuine factual issues that properly can be resolved only by a finder of fact because they may reasonably be resolved in favor of either party." Id. at 250, 106 S.Ct. 2505.
Pursuant to Federal Rule of Civil Procedure 56(c), J & M argues that Plaintiffs'
In Tennessee, the essential elements of a breach of contract claim "include (1) the existence of an enforceable contract, (2) nonperformance amounting to a breach of the contract, and (3) damages caused by the breach of the contract." C & W Asset Acquisition, LLC v. Oggs, 230 S.W.3d 671, 676-77 (Tenn.Ct.App.2007) (quoting ARC LifeMed, Inc. v. AMC-Tennessee, Inc., 183 S.W.3d 1, 26 (Tenn.Ct. App.2005)). Accordingly, for a party to state a breach of contract claim, there must be an enforceable contract.
J & M asserts that the Purchase Agreement was "nothing more that [sic] a `conditional contract' with conditions precedent that were never satisfied, or alternatively stated . . . an unenforceable agreement," and summary judgment is appropriate because there can be no breach of contract claim when there was no enforceable contract due to Plaintiffs' failure to satisfy an express condition precedent of the Purchase Agreement [Doc. 30, at p. 2]. Moreover, J & M asserts that any alleged oral modification to the Purchase Agreement is invalid because the Purchase Agreement falls within the Statute of Frauds, and the doctrine of partial performance, a limited exception to the Statute of Frauds, does not apply.
Plaintiffs do not dispute that the Purchase Agreement contained an express condition precedent that was not satisfied in accordance with the written Purchase Agreement. However, Plaintiffs argue that the Purchase Agreement was partially performed and a valid oral modification occurred due to the doctrine of partial performance. Thus, Plaintiffs state that because there was an enforceable contract, J & M committed a breach by refusing to sell Plaintiffs the barge package, and, as a result, Plaintiffs incurred damages.
It is undisputed that the provision in the written Purchase Agreement requiring Plaintiffs to send a $100,000.00 deposit to J & M on December 7, 2007 was a condition precedent to J & M's obligation to sell the barge package to Plaintiffs [Doc. 21-2, Doc. 22, Doc. 23, at pp. 2, 6, Doc. 27-1, at pp. 3-4]. Under Tennessee law, a condition precedent has been defined as "[a]n event, not certain to occur, which must occur, unless its non-occurrence is excused, before performance under a contract becomes due." Covington v. Robinson, 723 S.W.2d 643, 645 (Tenn.Ct. App.1986) (quoting Restatement Second Contracts, § 244). A condition precedent in the law of contracts may be a condition which must be performed before the agreement of the parties becomes a binding contract or it may be a condition which must be fulfilled before the duty to perform an existing contract arises. Strickland v. Lawrenceburg, 611 S.W.2d 832, 837
It is also undisputed that this condition precedent of the deposit was unsatisfied [Doc. 21-2, Doc. 22, Doc. 23, Doc. 27-1]. Therefore, because J & M's performance under the Purchase Agreement was subject to Plaintiffs' sending of the deposit, and, because this was unsatisfied, J & M's duty to perform under the Purchase Agreement never became due and there arose no enforceable agreement. However, the Court's inquiry cannot end here due to Plaintiffs' allegation of an oral modification of the Purchase Agreement, specifically, an oral modification of the condition precedent which changed the date for sending the $100,000.00 deposit from December 7, to December 10.
In Tennessee, "[a]fter a written contract is made, it may be modified by the express words of the parties in writing, as well as by parol" evidence Galbreath v. Harris, 811 S.W.2d 88, 91 (Tenn.Ct.App. 1990); see also Cooperative Stores Co. v. United States Fid. & Guar. Co., 137 Tenn. 609, 195 S.W. 177, 180 (1917). The parol evidence rule is inapplicable to evidence of oral modification because the rule will "permit testimony to . . . show a subsequent modification to a written agreement. Once admitted, this evidence does not in any way deny what the original agreement expressed; however, it merely demonstrates that parties may have exercised their right to modify the written agreement." Shah v. Racetrac Petroleum Co., 338 F.3d 557, 572 (6th Cir.2003) (quoting Golden Constr., Inc. v. Greene, No. 83-286, 1987 WL 18061, at *1 (Tenn.Ct.App. Oct 9, 1987)); see also GRW Enters., Inc. v. Davis, 797 S.W.2d 606, 610-11 (Tenn.Ct. App.1990). Thus, under Tennessee law, Plaintiffs and J & M could orally modify the Purchase Agreement.
J & M suggests that any oral modification to the Purchase Agreement would fall under Tennessee's Uniform Commercial Code (the "UCC") and the Statute of Frauds. See TENN.CODE ANN. §§ 47-2-101, et seq.; id. §§ 47-2-201 to -210. As required under the Statute of Frauds, the Purchase Agreement contemplates a sale of goods, the barge package, as defined by Tennessee's UCC, and the purchase price exceeds $500.00 [Doc. 21-2]. See id. §§ 47-2-105(1), 47-2-201(1). The Statute of Frauds states that a contract is "not enforceable by way of action or defense unless there is some writing or record sufficient to indicate that a contract for sale has been made between the parties and signed by the party against whom enforcement is sought . . . . Id. § 47-2-201(1). It is undisputed that the written Purchase Agreement between Plaintiffs and J & M existed and that Dwayne Potter of J & M, the party to be charged, signed the Purchase Agreement. Accordingly, the Purchase Agreement falls within the Statute of Frauds.
The Statute of Frauds addresses modification, rescission, and waiver of contracts that fall within the Statute of Frauds and states that "[t]he requirements of the statute of frauds section of this chapter (§ 47-2-201) must be satisfied if the contract as modified is within its provisions. TENN.CODE ANN § 47-2-209(3). For instance, "[a] sales contract which falls within the statute of frauds can only be rescinded by written agreement signed by the party against whom rescission is
There is however, an exception to the writing requirement for a modification to a contract within the Statute of Frauds—once partial performance of the contract occurs, the Statute of Frauds will not apply. Blasingame v. Am. Materials, Inc., 654 S.W.2d 659, 663 (Tenn.1983) (superseded by statute on other grounds); Foust v. Carney, 205 Tenn. 604, 329 S.W.2d 826, 829 (1959). In other words, if the parties partially perform a contract, an oral modification to that contract does not have to be in writing. The Tennessee Supreme Court has explained the partial performance exception this way:
Buice v. Scruggs Equip. Co., 194 Tenn. 129, 250 S.W.2d 44, 48 (1952). Tennessee courts have not articulated definite standards for determining the nature or the magnitude of the acts necessary for the partial performance doctrine to apply, other than to say it depends upon the particular facts of each case. Schnider v. Carlisle Corp., 65 S.W.3d 619, 622 (Tenn.Ct.App. 2001); see also Foust, 329 S.W.2d at 829. J & M asserts that partial performance of the Purchase Agreement did not occur so any alleged oral modification would be invalid. Plaintiffs do not dispute that the Purchase Agreement falls within the Statute of Frauds, but assert that the doctrine of partial performance takes the alleged oral modification out of the Statute of Frauds, thus permitting the oral modification.
Representatives from Plaintiffs and JH Reid traveled to Meigs County, Tennessee to inspect the barge package. J & M made the barge package available to Plaintiffs for this inspection. Plaintiffs inspected the barge package, satisfying one express condition precedent of the Purchase Agreement. According to Plaintiffs, there were discussions between representatives of the parties regarding the date on which the deposit was to be sent, and this date was orally modified. This modification of the Purchase Agreement was not memorialized in a writing. Thus, the sum of the parties' performance under the Purchase Agreement was that J & M held the barge package out for inspection by Plaintiffs, and Plaintiffs performed the inspection.
Essentially the only required performance under the Purchase Agreement that was actually performed and completed was the inspection. Following the inspection, Plaintiffs can point to no other performance under the Purchase Agreement by either J & M or Plaintiffs. While the inspection condition precedent was satisfied, along with preparatory acts by the parties in furtherance of the inspection, such as Plaintiffs' travel to Meigs County, the Court cannot find that these actions rise to the level at which partial performance can be found to take the alleged oral modification out of the Statute of Frauds. This is not a case where Plaintiffs have performed almost all the obligations they agreed to under the parties' agreement.
As stated above, the doctrine of partial performance, intended to prevent fraud or unjust results, is "purely an equitable doctrine" and dependent upon the facts of each individual case. See Buice, 250 S.W.2d at 48; Schnider, 65 S.W.3d at 622. The Court also notes that this doctrine, if too liberally applied, could easily result in the partial performance exception swallowing the rule of the Statute of Frauds. See Buice, 250 S.W.2d at 48. Under the facts of this case, a finding that the inspection of the barge package alone would constitute partial performance and take the Purchase Agreement out of the Statute of Frauds would certainly "swallow[] the rule." The record as a whole simply does not contain enough performance by either party for the Court to find that the Purchase Agreement was partially performed.
In light of all of this and mindful of the summary judgment standard, the Court finds that partial performance of the Purchase Agreement did not occur and that any alleged oral modification of the Purchase Agreement was invalid under the Statute of Frauds. Thus, because there was no valid modification of the Purchase Agreement and a condition precedent of the Purchase Agreement was unsatisfied, performance under the Purchase Agreement never became due and no enforceable contract existed. Because there was no enforceable contract, there can be no claim for breach of contract and thus, J & M is entitled to summary judgment as a matter of law as to Plaintiffs' breach of contract claim. Matsushita, 475 U.S. at 587, 106 S.Ct. 1348; Burchett, 310 F.3d at 942.
Plaintiffs have also alleged that J & M acted in bad faith and failed to
As discussed above, Plaintiffs failed to establish an enforceable contract because the conditions precedent of the Purchase Agreement were unsatisfied and any oral modification to the Purchase Agreement was invalid under the Statute of Frauds. Because there was no enforceable contract, Plaintiffs have failed to establish a breach of contract claim. A claim for breach of the implied covenant of good faith and fair dealing does not provide an independent basis for relief and is, rather, a potential "element or circumstance of recognized torts, or breaches of contracts." Solomon, 774 S.W.2d at 945. In other words, this claim is just "part and parcel" of Plaintiffs' breach of contract claim. Envoy Corp., 2007 WL 2173365, at *8. As a result, the Court will also grant summary judgment in favor of J & M as to Plaintiffs' claims for breach of the duty of good faith and breach of the duty to observe reasonable commercial standards of fair dealing.
For the reasons set forth herein, Defendant J & M Incorporated's Motion for Summary Judgment [Doc. 21], will be
ORDERED ACCORDINGLY.
For the reasons set forth in the accompanying memorandum opinion, the Motion for Summary Judgment of J & M Incorporated
The parties shall be responsible for their own costs. See Fed. R. Civ. P. 54(d)(l.
