Cadence Bank, NA v. The Alpha Trust

IN THE COURT OF APPEALS OF TENNESSEE
AT JACKSON
November 12, 2014 Session

CADENCE BANK, N.A. v. THE ALPHA TRUST, ET AL.

Direct Appeal from the Chancery Court for Shelby County
No. CH-12-0654-3 Kenny W. Armstrong, Chancellor

No. W2014-01151-COA-R3-CV - Filed February 25, 2015

In this action to collect on a promissory note, the trial court granted summary judgment to
the bank. Appellants appeal the trial court’s decisions regarding whether the bank was
properly doing business in the State of Tennessee and whether the Appellants’ two contract-
based counter-claims fail as a matter of law. Discerning no error regarding the trial court’s
finding that the bank was properly doing business in the State, we affirm the trial court’s
ruling in that regard. We also affirm the trial court’s finding that the bank was entitled to
summary judgment on the contract-based counterclaims.

Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Chancery Court Affirmed
and Remanded

B RANDON O. G IBSON, J., delivered the opinion of the Court, in which A RNOLD B. G OLDIN,
J., joined. J. S TEVEN S TAFFORD, P.J., W.S., filed a separate opinion dissenting in part.

Kevin A. Snider, Germantown, Tennessee, for the appellants, The Alpha Trust; The M.S.U.
Family Trust; The D.S.U. Family Trust; Marvin V. Uthe; Shirley A. Uthe; Sandra L. Uthe;
and David B. Uthe.

T. Robert Abney, Memphis, Tennessee, for the appellee, Cadence Bank, N.A.
 OPINION

Background

On April 4, 2001, the Alpha Trust, the M.S.U. Family Trust, and the D.S.U. Family
Trust, (collectively, “the Trusts”), through their authorized representatives2 (together with
1

the Trusts, “Appellants”) executed a Promissory Note in the principal amount of $476,000.00
in favor of Enterprise National Bank, later known as Cadence Bank, N.A. (“Cadence Bank”
or “the Bank”) for the purchase of real property located in Cordova, Tennessee. The Note
was secured by a Deed of Trust. The Note stated that it would commence on May 10, 2001
and provided for fifty-nine installments in the amount of $4,097.00 each at an interest rate
of 8.25 percent. The parties’ agreement also contained a balloon payment scheduled to
mature on April 10, 2006. The Note was initialed on every page and signed on the final page
by each trustee, Marvin V. Uthe and Shirley A. Uthe, as Trustees for the M.S.U. Family
Trust, and as Trustees for the Alpha Trust; and Sandra L. Uthe and David B. Uthe, Trustees
for the D.S.U. Family Trust (hereinafter “the Trustees”). The Trustees also executed Trust
Secretary’s Certificates. Additionally, the Trustees, in their individual capacities, each
executed a Guaranty that by its terms guaranteed payment of the Note.

Despite the provision in the Note providing that the final balloon payment would
mature on April 10, 2006, according to Appellants, they were repeatedly assured by Cadence
Bank that they would be able to refinance the debt so long as they continued to make timely
payments. On May 10, 2006, the parties entered into a Modification Agreement. The
Modification Agreement indicates that it is made between Appellants and “CADENCE
BANK, N.A., a national banking association (formerly Enterprise National Bank).” 3 The

1
The D.S.U. Family Trust and the Trustees of the D.S.U. Family Trust have filed Chapter 11
bankruptcy. On November 26, 2014, the United States Bankruptcy Court for the Western District of
Tennessee entered an order lifting the automatic stay permitting this Court to proceed and “enter such orders
therein as may be appropriate according to its own rules without regard to th[e] [bankruptcy] proceeding now
pending.”
2
The trusts’ representatives, and named defendants, include: Marvin V. Uthe, individually, as
Trustee for the M.S.U. Family Trust, and as Trustee for the Alpha Trust; Shirley A. Uthe, individually, as
Trustee for the M.S.U. Family Trust, and as Trustee for the Alpha Trust; Sandra L. Uthe, individually and
as Trustee for the D.S.U. Family Trust; and David B. Uthe in his capacity as Trustee for the D.S.U. Family
Trust. The trusts’ representatives participated in this appeal in both their representative and individual
capacities, with the exception of David B. Uthe, who only participated in his representative capacity.
3
Appellants claim that they were unaware that Enterprise National Bank had changed its name to
Cadence Bank, N.A. However, the parties’ Modification Agreement states that it is “by and between
CADENCE BANK, N.A., a national banking association (formerly Enterprise National Bank) (“Lender”)”

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agreement further provides that the principal balance remaining from the original Note was
$423,220.70. Accordingly, this amount was refinanced at 8.00 percent interest payable in
fifty-nine installments of $4,073.49 each. The Modification Agreement further provided for
another balloon payment scheduled on April 10, 2011. The Modification Agreement was
signed by all four trustees and was accompanied by four Trust Secretary’s Certificates
executed by each of the four trustees.4 According to Appellants, Cadence Bank
representatives indicated that Appellants would be able to refinance the debt again when the
balloon payment matured.

On June 24, 2011, the parties executed a Change in Terms Agreement. The record
indicates that Cadence Bank sent at least seven letters (January 21, March 2, April 8, April
21, May 4, May 12, and June 13, 2011) to Appellants before it was able to collect enough
financial information from Appellants to execute the new Change in Terms Agreement.
Four of the letters contain a provision stating: “Cadence Bank has not obtained an appraisal
since 2001. In order to consider a renewal we will also need to order an appraisal at your
expense.” Despite this statement, however, an appraisal was not completed prior to the
execution of the June 24, 2011 Change in Terms Agreement. The Change in Terms
Agreement extended the maturity date of the loan to September 10, 2011. The principal
balance at that time was $331,057.20. The Change in Terms Agreement provided for
payment in “two regular payments of $4,073.49 each and one irregular last payment of
$328,596.14.” Again, the four representatives of the three trusts signed the Change in Terms
Agreement.

Disputes arose regarding efforts to refinance the debt again prior to the scheduled
September 10, 2011 balloon payment. Appellants contend that, prior to September 10, 2011,
Cadence Bank again assured Appellants that they would be able to refinance the debt to
avoid paying the balloon payment. Specifically, an affidavit later submitted by David B.
Uthe, Trustee of the D.S.U Family Trust, states: “Leonard McKinnon . . .[, Executive Vice
President for Cadence Bank,] made misleading statements to me by telling me that it was
okay for the [Appellants] to renew the loan with no questions asked provided that said
[Appellants] provide him with tax returns for the year 2010, wherein there was neither any
follow up by said Mr. McKinnon nor was the loan renewal and/or refinance being
processed.” Appellants contend that they reasonably relied on this representation. Shortly
thereafter, Cadence Bank ordered an appraisal and claimed that it revealed that the property
was only worth $350,000.00. Appellants allege Cadence Bank refused or failed to provide
a copy of the appraisal to Appellants.

and Appellants.
4
The Trust Secretary’s Certificates evinced the Trustees’ authority to execute loan documents.

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 Cadence Bank does not deny that there were discussions leading up to the September
2011 maturity date regarding Appellants’ desire to again refinance the debt. The Bank
contends, however, that it fulfilled its obligation to Appellants and that Appellants refused
to agree to new or additional terms, which were based on the appraisal of the property.
According to Cadence Bank, on January 18, 2012, Leonard McKinnon (hereinafter “Mr.
McKinnon”), Cadence Bank’s Executive Vice President, sent a letter to Appellants offering
to refinance the remaining balance. David Uthe testified at his deposition that he believed
that this letter was hand delivered to him by Mr. McKinnon. In the letter, Cadence Bank
offered to refinance a principal balance of $297,500.00, which represents eighty-five percent
of the appraised value of $350,000.00. Thus, Appellants, had they accepted the new terms,
would have been required to immediately reduce their existing balance of $334,472.25. Uthe
testified that, upon receipt of the letter, he told Mr. McKinnon: “I said, this is what you’re
offering after this period of time, that you want me to come up with another 50 grand on a
note? You could have restructured the note rather than doing this.” Uthe stated that Mr.
McKinnon replied, “Well this is all I have.”

Several weeks later, on February 10, 2012, Cadence Bank sent another letter offering
the same terms. The Bank asserts that Appellants neither accepted any of the new terms in
the letter nor made any counteroffers regarding refinancing the debt. Moreover, Appellants
did not obtain their own appraisal for the value of the property. Accordingly, counsel for
Cadence Bank sent Appellants a letter on February 27, 2012, notifying them of the default
and demanding repayment.

Procedural History

On April 16, 2012, Cadence Bank filed its Complaint against the Appellants based on
a sworn affidavit of account. Cadence Bank alleged that Appellants owed a debt totaling
$348,843.07, including an additional sum added for payment of lapsed insurance, plus
accrued interest and late charges. Cadence Bank also asserted that interest was accruing at
a rate of $71.327 per day.

Appellants filed their Answer and Counter Complaint against Cadence Bank on June
29, 2012. The Counter Complaint alleged that Cadence Bank “repeatedly assured” the
Appellants over the years that their short-term notes would be refinanced “as long as they
timely made payments on the note etc.” Appellants also alleged that they detrimentally relied
on these representations. The Counter Complaint also asserted that Cadence Bank’s actions
and omissions breached the implied covenant of good faith and fair dealing. Cadence Bank
answered the Counter Complaint on August 15, 2012.

A few months later, on October 18, 2012, Appellants filed a motion to dismiss. In

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their motion, Appellants alleged that Cadence Bank was not properly doing business in the
State of Tennessee and that it accordingly could not maintain a lawsuit in the State.
Appellants observed that, in Cadence Bank’s complaint, it stated that it is “a national banking
association, organized and existing under the laws of the United States of America, [] it is
authorized to do business in the State of Tennessee, and [] it maintains a principal business
office at 6075 Poplar Avenue, Suite 120, Memphis, Shelby County, Tennessee.” Appellants
also noted that, according to Cadence Bank’s website, it operates “more than 100 branch
locations in Alabama, Florida, Georgia, Mississippi, Tennessee, and Texas.” Appellants
claimed that Cadence Bank was required to obtain a certificate of authority prior to
transacting business in this State and that the Bank was required to maintain a registered
agent and/or office in this State pursuant to Tennessee law. Appellants attached “screen
shots” to their motion that demonstrated an online query for “Cadence Bank, N.A.” using the
Tennessee Secretary of State’s website. The search produced no results for Cadence Bank,
N.A. as a registered corporation in Tennessee.

Cadence Bank responded to Appellant’s Motion to Dismiss on October 26, 2012, and
disputed Appellants’ assertion that it was not properly doing business in the State of
Tennessee. The Bank argued that it is a national bank subject to the National Bank Act and
that the National Bank Act, 12 U.S.C.A. § 24, preempts State law in the regulation of
national banks. Specifically, Cadence Bank claimed that the National Bank Act, as codified
at 12 U.S.C.A. § 24, authorizes it “[t]o sue and be sued, complain and defend, in any Court
of law and equity, as fully as natural persons.” Accordingly, the Bank claimed that “[t]he
federal government has preempted the issue of national banks doing business within the
several States including Tennessee.”

Cadence Bank filed a Motion for Summary Judgment on January 4, 2013, including
a Statement of Undisputed Facts and the affidavit of Mr. McKinnon. In his affidavit, Mr.
McKinnon swore that the three trusts and their four representatives were liable to Cadence
Bank for the principal balance of $334,472.25, accrued interest totaling $34,264.82, and
contractually provided late charges totaling $100.00. In its motion for summary judgment,
the Bank argued that no dispute of material fact existed as to whether the Appellants had
defaulted on the loan. Cadence Bank also argued that Appellants’ assertions of unclean
hands, estoppel, lack of good faith and fair dealing, intentional misrepresentation, detrimental
reliance, and failure to mitigate damages on behalf of the Bank were without merit. The
Bank’s motion for summary judgment also refuted Appellants’ assertion that the Bank was
not properly doing business in the State of Tennessee. The Bank submitted the affidavit of
Jerry W. Powell, an Executive Vice President and Secretary for Cadence Bank, who stated
that the Office of the Comptroller of the Currency of the United States of America had issued
Cadence Bank’s Certificate of Corporate Existence.

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 Appellants responded to the motion for summary judgment on February 13, 2013, and
again argued that Cadence Bank was improperly doing business in the State of Tennessee.
Appellants also argued that a genuine dispute of material fact existed as to Appellants’ claims
of estoppel, the implied duty of good faith and fair dealing, intentional misrepresentation,
detrimental reliance, and the mitigation of damages.

On February 19, 2013, the trial court entered a written order granting summary
judgment in favor of Cadence Bank, finding that there were no genuine issues of material
fact as to the liability of Appellants on the Note or its modifications. Despite Appellants’
contention that Cadence Bank failed in its promise to refinance the debt, the trial court
specifically found that: “Cadence did extend an offer to modify the Promissory Note to the
[Appellants], but that [Appellants] did not execute another modification agreement and did
not accept the terms of this offer by Cadence[.]” The trial court also ruled that there “does
not appear to be any real possibility that the [Appellants] can prove facts to substantiate
either their defense to liability upon the Note and their Guaranties, or their claims against
Cadence in their Counter-Complaint.” This ruling effectively dismissed the claims appealed
to this Court by Appellants, including the issues of preemption, the implied duty of good
faith and fair dealing, and promissory estoppel. On April 2, 2014, the trial court entered a
Final Order Granting Summary Judgment in favor of Cadence Bank in the amount of
$427,434.83.5 This Final Order Granting Summary Judgment in favor of Cadence Bank also
dismissed Appellants’ Counter-Complaint.

On May 1, 2014, Appellants filed a Motion to Alter or Amend the trial court’s
judgment, arguing that the trial court failed to address the issue of whether Cadence Bank
was properly doing business in the State of Tennessee. On May 20, 2014, the trial court
entered an order finding that Cadence Bank was properly doing business in Tennessee as a
national bank and could properly bring a lawsuit against Appellants. Appellants timely filed
their appeal on June 20, 2014.

Issues Presented

Appellants raise three issues for our review, as we have re-stated them:

1. Whether the trial court erred when it found that Cadence Bank was
properly doing business in the State of Tennessee and that the National
Bank Act, 12 U.S.C. § 24, preempts the State’s corporate requirements.

5
The final judgment sum of $427,434.83 represents the due and owing principal balance of
$334,472.25, the interest and contractual charges totaling $70,531.90, and attorney’s fees totaling
$22,430.68.

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 2. Whether the trial court erred when it granted summary judgment to
Cadence Bank on Appellants’ claim that Cadence Bank breached the
implied duty of good faith and fair dealing.

3. Whether the trial court erred when it granted summary judgment to
Cadence Bank on Appellants’ claim of promissory estoppel.6

Analysis

Federal Preemption of State Law Requirements for National Banks

We begin with the issue of whether Cadence Bank is properly doing business in the
State of Tennessee. Appellants argue that Cadence Bank cannot maintain a lawsuit in this
State because Cadence Bank does not have a certificate of authority or a registered agent
and/or office in this State.

Tennessee Code Annotated section 48-25-101(a) (2012) provides that a foreign
corporation “may not transact business in this state until it obtains a certificate of authority
from the secretary of state.”7 The following section further provides that “[a] foreign
corporation transacting business in this state without a certificate of authority may not
maintain a proceeding in any court in this state until it obtains a certificate of authority.”
Tenn. Code Ann. § 48-25-102(a) (2012). In addition, Tennessee Code Annotated section 48-
25-107 (2012) states that “[e]ach foreign corporation authorized to transact business in this
state shall continuously maintain in this state: (1) A registered office that may be the same
as any of its places of business; and (2) A registered agent[.]”

Throughout these proceedings, Cadence Bank has not disputed that it is in fact a
foreign corporation transacting business in the State of Tennessee within the meaning of
these statutes. As noted above, Cadence Bank stated in its complaint that it “is a national
banking association, organized and existing under the laws of the United States of America,
that it is authorized to do business in the State of Tennessee, and that it maintains a principal
business office at 6075 Poplar Avenue, Suite 120, Memphis, Shelby County, Tennessee
38119.” During discovery, Cadence Bank also admitted that it is “a national banking
association doing business in Shelby County, Tennessee.” When Appellants argued that

6
Appellants use the term “detrimental reliance,” but that term is interchangeable with the term
“promissory estoppel.”
7
The statute provides an exception for a foreign insurance corporation, but that exception is
inapplicable here.

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Cadence Bank was not properly doing business in this State, Cadence Bank disputed this
assertion by arguing that it is “authorized to do business in Tennessee,” authorized “to
transact business in Tennessee,” and “entitled to do business in the State of Tennessee
because of its classification as a national banking organization.” Thus, the parties do not
dispute that Cadence Bank is transacting business in this State and, absent preemption by the
National Bank Act, would be required to obtain a certificate of authority and maintain a
registered agent and office in this State pursuant to Tennessee law.

The question then becomes whether the National Bank Act (“NBA”) preempts these
state law requirements as they pertain to a national bank such as Cadence Bank. “Our federal
system of government recognizes the dual sovereignty of the federal government and the
various state governments. The states possess sovereignty within their particular spheres
concurrent with the federal government subject only to the limitations imposed by the
Supremacy Clause.” BellSouth Telecomms, Inc. v. Greer, 972 S.W.2d 663, 670 (Tenn. 1997)
(citations omitted). The preemption doctrine originated in the Supremacy Clause of the
United States Constitution. U.S. C ONST. Art. VI, cl. 2; BellSouth, 972 S.W.2d at 670. Under
the Supremacy Clause, if a state law conflicts with a federal law, it is “‘without effect,’”
Coker v. Purdue Pharma Co., No. W2005-02525-COA-R3-CV, 2006 WL 3438082, at *5
(Tenn. Ct. App. Nov. 30, 2006) (quoting Cipollone v. Liggett Group, Inc., 505 U.S. 504, 516
(1992)), and therefore displaced by federal law. BellSouth, 972 S.W.2d at 672. In other
words, it is preempted. However, the courts operate under the assumption that the power of
the State is not preempted “unless that was the clear and manifest purpose of Congress.”
Wyeth v. Levine, 555 U.S. 555, 565 (2009) (citations omitted). Accordingly, the touchstone
in all preemption arguments is the intent of Congress. Medtronic, Inc. v. Lohr, 518 U.S. 470,
485 (1996). Preemption is a question of law that we review de novo. Lake v. Memphis
Landsmen, L.L.C., 405 S.W.3d 47, 55 (Tenn. Ct. App. Mar. 15, 2010).

Federal preemption of state law can occur either expressly or impliedly. Congress may
explicitly preempt state law by stating so within its enactments. Schneidewind v. ANR
Pipeline Co., 485 U.S. 293, 299 (1988). However, if federal law does not expressly preempt
state law, a state law may still be impliedly preempted. Implied preemption takes two forms:
(1) field preemption, when Congress occupies the entire field of law on that issue, or (2)
conflict preemption, when the state law actually conflicts with the federal law. Id. at 300.
“Field preemption occurs when a state attempts to regulate conduct ‘in a field that Congress
intends the federal government to occupy exclusively.’” Coker, 2006 WL 3438082, at *5 n.8
(quoting Hunter Douglas, Inc. v. Harmonic Design, Inc., 153 F.3d 1318, 1332 (Fed. Cir.
1998)). On the other hand, “conflict preemption” occurs when it is impossible to comply
with both state and federal law, or when“the state law stands as an obstacle to the
accomplishment and execution of the full purposes and objectives of Congress.”
Schneidewind, 485 U.S. at 300 (citations omitted). Conflict preemption is at issue in this

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case. Therefore, the pertinent issue is whether it is impossible to comply with both state and
federal law, or whether the state law stands as an obstacle to the accomplishment and
execution of the objectives of Congress.

“In 1864, Congress enacted the NBA, establishing the system of national banking still
in place today.” Watters v. Wachovia Bank, N.A., 550 U.S. 1, 10-11 (2007). The NBA
“vested in nationally chartered banks enumerated powers and ‘all such incidental powers as
shall be necessary to carry on the business of banking.’” Id. (citing 12 U.S.C. § 24 Seventh).
“To prevent inconsistent or intrusive state regulation from impairing the national system,
Congress provided: ‘No national bank shall be subject to any visitorial powers except as
authorized by Federal law[.]’” Id. (citing § 484(a)). Over the years, the United States
Supreme Court has “repeatedly made clear that federal control shields national banking from
unduly burdensome and duplicative state regulation.” Id. (citations omitted). “Federally
chartered banks are subject to state laws of general application in their daily business to the
extent such laws do not conflict with the letter or the general purposes of the NBA.” Id.
(citing Davis v. Elmira Sav. Bank, 161 U.S. 275, 290 (1896)). “However, the States can
exercise no control over national banks, nor in any wise affect their operation, except in so
far as Congress may see proper to permit.” Id. (internal quotation omitted). “States are
permitted to regulate the activities of national banks where doing so does not prevent or
significantly interfere with the national bank’s . . . exercise of its powers. But when state
prescriptions significantly impair the exercise of authority, enumerated or incidental under
the NBA, the State’s regulations must give way.” Id. at 12.

Cadence Bank argues that the NBA preempts Tennessee’s statutory requirement that
national banks, as corporations transacting business in Tennessee, obtain a certificate of
authority. The NBA provides, in relevant part:

Upon duly making and filing articles of association and an organization
certificate a national banking association shall become, as from the date of the
execution of its organization certificate, a body corporate, and as such, and in
the name designated in the organization certificate, it shall have power--
....
Fourth. To sue and be sued, complain and defend, in any court of law and
equity, as fully as natural persons.

12 U.S.C.A. § 24.

While apparently never decided in Tennessee, courts in other jurisdictions have
concluded that the NBA preempts state statutes requiring a national bank to register or obtain
a certificate of authority before transacting business in a state. See, e.g., Kennedy v. City

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First Bank of D.C., N.A., 88 A.3d 142, 143-44 (D.C. 2014) (finding that the NBA preempted
a statute that prevented a foreign entity from maintaining an action in the District of
Columbia unless it registered to do business in the District because such a requirement
infringed on national banks’ ability to maintain suits “as fully as natural persons” in
accordance with the NBA); Wells Fargo Bank, N.A. v. Baker, 204 Cal. App. 4th 1063, 1069,
139 Cal.Rptr.3d 502, 506 (Cal. Ct. App. 2012) (holding that an Iowa statute requiring a
foreign corporation to hold a certificate of authority to transact business in the state was
preempted by the NBA, as the statute pertained to national banks, because it infringed on the
powers provided to national banks by the NBA); 770 PPR, L.L.C. v. TJCV Land Trust, 30
So.3d 613, 616 (Fla. Ct. App. 2010) (holding that a Florida statute requiring a foreign
corporation to obtain a certificate of authority prior to transacting business in the state was
preempted as it applied to national banks); Williams v. Chase Bank USA, N.A., 390 S.W.3d
824, 827 (Ky. Ct. App. 2012) (holding that the NBA preempted a Kentucky statute that
required a national bank, as a foreign corporation transacting business in the state, to obtain
a certificate of authority prior to maintaining suit in a Kentucky court, as it “significantly
impair[ed]” the bank’s exercise of authority under the NBA); Indiana Nat’l Bank v. Roberts,
326 So.2d 802, 803 (Miss. 1976) (“Unanimously, other state courts have held that a statute,
similar to Mississippi’s, prohibiting a foreign corporation not qualified to do business in the
State from maintaining any action in any court of the State, does not apply to a national
banking corporation.”); In re Hibernia Nat’l Bank, 21 S.W.3d 908, 909-10 (Tex. Ct. App.
2000) (holding that the NBA preempted application of a Texas statute that would infringe
on a national bank’s federally granted right to sue in any court as fully as natural persons by
requiring the bank to obtain a certificate of authority before it could maintain a suit in Texas).
As these cases demonstrate, “the law is well-established that a state cannot require a national
bank to register or file as a ‘foreign corporation’ in order to maintain a lawsuit in state court.”
770 PPR, 30 So.3d at 618. We find these opinions persuasive and likewise hold that the
NBA preempts Tennessee’s statute requiring a foreign corporation to obtain a certificate of
authority to the extent that it pertains to national banks. The NBA permits a national bank
“[t]o sue . . . in any court of law and equity, as fully as natural persons,” provided it has made
and filed the necessary “articles of association and an organization certificate.” 12 U.S.C.A.
§ 24. Tennessee’s certificate of authority requirement clearly infringes on that right. To use
the pertinent language from the preemption analysis, “the state law stands as an obstacle to
the accomplishment and execution of the objectives of Congress.” Schneidewind, 485 U.S.
at 300 (citations omitted).

In the proceedings below, Cadence Bank submitted its “Certificate of Corporate
Existence” from the Comptroller of the Currency, as Administrator of National Banks, which
stated that Cadence Bank “is a national banking association formed under the laws of the
United States and is authorized thereunder to transact the business of banking on the date of
this certificate.” Accordingly, we hold that Cadence Bank is authorized to maintain this

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lawsuit despite the fact that it does not have a certificate of authority from the State of
Tennessee.

Our research has not revealed any cases considering whether the NBA preempts state
laws requiring a national bank to maintain a registered agent and office in a state. However,
the NBA preempts such requirements imposed under state law for the same reason that it
preempts state laws requiring a certificate of authority. “[T]he intent naturally inferable from
the NBA’s language is to relieve national banks from having to meet manifold, and
potentially divergent, registration requirements in the fifty states.” Kennedy, 88 A.3d at 145.
Requiring a national bank to maintain a registered agent and registered office in each state
would be at least as burdensome on national banks as the certificate of authority requirement,
if not more so. As noted above, the Supreme Court has repeatedly emphasized that the NBA
“shields national banking from unduly burdensome and duplicative state regulation.”
Watters, 550 U.S. at 11. Therefore, we conclude that Cadence Bank was not required to
maintain a registered agent and office in Tennessee due to preemption by the NBA.

For these reasons, we affirm the trial court’s findings that Cadence Bank is properly
doing business in the State of Tennessee, and, because of federal preemption by the NBA,
Cadence Bank may maintain an action in the State of Tennessee without maintaining a
registered office within the State of Tennessee, maintaining a registered agent within the
State of Tennessee, or obtaining a certificate of authority from the State of Tennessee to
transact business within the State as a foreign corporation.

Summary Judgment on Remaining Counter-Claims

Standard of Review

In addition to finding that Cadence Bank was properly conducting business in
Tennessee, the trial court also ruled that Cadence Bank was entitled to summary judgment
on Appellants’ claims that Cadence Bank violated the implied duty of good faith and fair
dealing and that promissory estoppel barred Cadence Bank’s claim. A trial court’s decision
to grant a motion for summary judgment presents a question of law. Our review is therefore
de novo with no presumption of correctness afforded to the trial court’s determination. Bain
v. Wells, 936 S.W.2d 618, 622 (Tenn. 1997). This Court must make a fresh determination
that all the requirements of Tennessee Rule of Civil Procedure 56 have been satisfied.
Abshure v. Methodist-Healthcare-Memphis Hosps., 325 S.W.3d 98, 103 (Tenn. 2010). When
a motion for summary judgment is made, the moving party has the burden of showing that
“there is no genuine issue as to any material fact and the moving party is entitled to judgment
as a matter of law.” Tenn. R. Civ. P. 56.04. Further, under the Tennessee Code:

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 In motions for summary judgment in any civil action in Tennessee, the moving
party who does not bear the burden of proof at trial shall prevail on its motion
for summary judgment if it:
(1) Submits affirmative evidence that negates an essential element of
the nonmoving party’s claim; or
(2) Demonstrates to the court that the nonmoving party’s evidence is
insufficient to establish an essential element of the nonmoving party’s claim.

Tenn. Code. Ann. § 20-16-101(2014 Supp.) (effective on claims filed after July 1, 2011).

When reviewing the evidence, we must determine whether factual disputes exist. In
evaluating the trial court’s decision, we review the evidence in the light most favorable to the
nonmoving party and draw all reasonable inferences in the nonmoving party’s favor. Stovall
v. Clarke, 113 S.W.3d 715, 721 (Tenn. 2003). If we find a disputed fact, we must “determine
whether the fact is material to the claim or defense upon which summary judgment is
predicated and whether the disputed fact creates a genuine issue for trial.” Mathews
Partners, L.L.C. v. Lemme, No. M2008-01036-COA-R3-CV, 2009 WL 3172134, at *3
(Tenn. Ct. App. Oct. 2, 2009) (citing Byrd v. Hall, 847 S.W.2d 208, 214 (Tenn. 1993)). “A
disputed fact is material if it must be decided in order to resolve the substantive claim or
defense at which the motion is directed.” Byrd, 847 S.W.2d at 215. A genuine issue exists
if “a reasonable jury could legitimately resolve the fact in favor of one side or the other.” Id.
“Summary Judgment is only appropriate when the facts and the legal conclusions drawn from
the facts reasonably permit only one conclusion.” Landry v. S. Cumberland Amoco, No.
E2009-01354-COA-R3-CV, 2010 WL 845390, at *3 (Tenn. Ct. App. March 10, 2010) (citing
Carvell v. Bottoms, 900 S.W.2d 23 (Tenn. 1995)).

Breach of Implied Duty of Good Faith and Fair Dealing

We begin with Appellants’ argument that the trial court erred in granting summary
judgment on their breach of the implied duty of good faith and fair dealing claim. In its final
order granting summary judgment, the trial judge ruled:

[The] allegations alleged and averred in the Counter-Complaint are without
substantiating facts, and are not supported by the affidavits filed in this cause
by the Defendants and Counter-Plaintiffs, nor in their depositions filed herein,
and in spite of adequate investigation and query by counsel for all parties, and
that there does not appear to be any real possibility that the Defendants can
prove facts to substantiate either their defense to liability . . . or their claims
against Cadence in their Counter-Complaint, therefore the Court finds that
there are no genuine issues of material fact . . . .

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Appellants claim this finding was in error. Specifically, in their brief, Appellants state that:

It is the [Appellants]’ position that Cadence Bank acted in bad faith and/or
unfairly dealt with the [Appellants] by contradicting its statements with its lack
of follow through and by charging the Defendants fees, i.e. accrued interest
charges, a new balance per diem, and extra attorney fees beyond what lenders
in the normal course of business would do. . . . Cadence Bank further acted
in bad faith and/or dealt unfairly with the Defendants by claiming that the real
property at issue was somehow worth only approximately [$350,000.00], yet
neither providing the Defendants a copy of the appraisal report upon request
nor advising said Defendants that they would be responsible for paying for a
copy of Cadence Bank’s appraisal report.

It is well-settled in Tennessee that “‘the common law imposes a duty of good faith in
the performance of contracts.’” Dick Broad. Co. v. Oak Ridge FM, Inc., 395 S.W.3d 653,
660 (Tenn. 2013) (quoting Wallace v. Nat’l Bank of Commerce, 938 S.W.2d 684, 686 (Tenn.
1996)). The duty of good faith, however, does not extend beyond the terms of the contract
and the reasonable expectations of the parties under the contract. Wallace, at 687. The
obligation of good faith and fair dealing does not create additional contractual rights or
obligations, and it cannot be used to avoid or alter the terms of an agreement. Lamar Adver.
Co. v. By-Pass Partners, 313 S.W.3d 779, 791 (Tenn. Ct. App. 2009). The purpose of the
implied duty is “(1) to honor the reasonable expectations of the contracting parties and (2)
to protect the rights of the parties to receive the benefits of the agreement into which they
entered.” Id. (citations omitted).

The duty of good faith is not specifically defined by our courts. As explained in the
Tennessee Practice Series:

The term “good faith” resists an exact definition . . . because it arises in
various contexts and its meaning will vary accordingly. Indeed, “good faith”
is “a term frequently defined in the negative,” i.e., it represents the absence of
bad faith. Another authority makes these helpful observations about the “good
faith” concept:

[G]ood faith is an “excluder.” It is a phrase without general
meaning (or meanings) of its own and serves to exclude a wide
range of heterogenous forms of bad faith. In a particular context
the phrase takes on specific meaning, but usually this is only by
way of contrast with the specific form of bad faith actually or
hypothetically ruled out.

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 Notwithstanding this uncertainty over the exact nature of “good faith,” parties
are presumed to know the law and that the contract contains this implied duty.

The implied covenant of good faith and fair dealing is not limited to the
specific contract terms but is a method of effectuating the parties’ intent in
unforeseen circumstances. Further, a party may violate the covenant when it
interprets the contract purposely in a way to prevent the other party from
performing in a timely fashion or when a party conjures up a pretended dispute
with its interpretation.

21 Tenn. Prac. Contract Law & Practice § 8:33 (2014) (footnotes and internal citations
omitted).

Because Cadence Bank was the moving party on the motion for summary judgment,
we must first analyze whether it met its burden by showing that there is no genuine issue of
material fact and that it is entitled to judgment as a matter of law. See Tenn. R. Civ. P. 56.04.
Regarding Appellants’ claim that Cadence Bank violated the implied duty of good faith and
fair dealing, the thrust of the claim arises out of their allegations that Cadence Bank
improperly refused to refinance their loan pursuant to the same terms. However, it is
undisputed that Cadence Bank offered to refinance the loan in written correspondence to
Appellants, but Appellants took no action. Thus, the “evidence is insufficient to establish
an essential element of the nonmoving party’s claim” as required by Tennessee Code
Annotated § 20-16-101(2). Cadence Bank also offered the only evidence in the record
pertaining to the obligation to obtain an appraisal for the property at issue.

Cadence Bank points to evidence that it asserts demonstrates that Appellants are
unable to show that Cadence Bank failed to refinance the debt in good faith. First, Cadence
Bank submitted two letters establishing that it had, in fact, offered to refinance the loan.
These two letters, dated January 18, 2012 and February 10, 2012, indicate that Cadence Bank
was extending an offer to refinance the debt subject to new conditions. Notably, the offers
in the letters contain a lower interest rate than the previous loan. Cadence Bank contends
these letters are evidence of its willingness and its offer to refinance the loan, contrary to
Appellants’ argument. In the first letter, sent January 18, 2012, Mr. McKinnon wrote that he
was:

pleased to inform [Appellants], that Cadence Bank has agreed to extend the
matured referenced note, subject to the terms and conditions outlined below.

....

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 Amount: $297,500 (Amount represents 85% of the appraised
value of $350,000 on October 5, 2011 . . . )

Rate: 6.5% fixed (Reduction from 8.0%) . . . .

Maturity: January 2013

....

Other: Borrower will be responsible for customary closing costs and
appraisal fees.

The second letter, dated February 10, 2012, was sent by Cadence Bank’s counsel on its
behalf. The second letter repeated the terms offered in the first letter, but stated that the Bank
was “willing to forbear the current matured status of the loan, and extend its due date to
January 1, 2013, when all sums are due.” Further, the letter provided that “if this offer is not
accepted and performed within ten (10) days of the date of this letter, the bank will have no
choice other than to resort to its remedies under the law.” Like the first letter, the second
letter included a provision stating that if Appellants “accept these new terms, you will be
responsible for customary closing costs, attorney’s fees and appraisal fees . . . .”

Cadence Bank indeed offered to refinance the loan. Therefore, they complied with
any promise they allegedly made. Contrary to Appellants’ claim that Cadence Bank refused
to participate in any proposed refinancing of the debt, the letters contained in the record are
specific evidence demonstrating that Cadence Bank offered to refinance the debt. Having
submitted evidence demonstrating that Cadence Bank did attempt to refinance, the Bank met
its burden under the statutory summary judgment standard. Accordingly, we now must
consider whether Appellants met their burden to establish a material factual dispute regarding
this issue.

Once the moving party has met its burden, the burden of production shifts to the
nonmoving party to show that a genuine issue of material fact exists. Byrd, 847 S.W.2d at
215. The nonmoving party, here, Appellants, may accomplish meeting its own burden by:

(1) pointing to evidence establishing material factual disputes that were
overlooked or ignored by the moving party; (2) rehabilitating the evidence
attacked by the moving party; (3) producing additional evidence establishing
the existence of a genuine issue for trial; or (4) submitting an affidavit
explaining the necessity for further discovery pursuant to Tenn. R. Civ. P.,
Rule 56.06.

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Martin v. Norfolk S. Ry. Co., 271 S.W.3d 76, 84 (Tenn. 2008) (citations omitted).

As we perceive them, Appellants make two arguments: (1) that Cadence Bank
violated the implied duty of good faith and fair dealing inherent in the parties’ written
contract by failing to refinance the debt on the previous terms; and (2) that Cadence Bank
made oral promises to Appellants that constituted an oral contract to refinance the debt,
which contract was subsequently breached by Cadence Bank’s lack of good faith in actually
going forward with the refinance as discussed. We begin with the actual language in the
written contract between the parties. In its motion for summary judgment, Cadence Bank
argued that Appellants “failed to point to any specific contractual provision that had been
breached.” A thorough review of the record indicates that Appellants pointed to no specific
provision in the written contract that Cadence Bank failed to perform in good faith.

The language in the written contract clearly obligates Appellants to pay the balance
due on the Note, but it does not obligate Cadence Bank to perpetually refinance the debt or
forever extend the maturation date of the balloon payment. Appellants argue, however, that
the Trust Secretary’s Certificates authorized the Trustees to refinance the loan. Appellants
submitted that the Certificates authorized the Trustees to do the following: “amend, modify,
alter, extend, renew or otherwise change any of the provisions, terms, conditions, covenants,
guaranties, or representations contained in any of the Loan Documents . . . .” Appellants
underlined and acknowledged the foregoing language, but they failed to emphasize the final
phrase that provided the Trustees could take the above actions “as the Lender may require.”
The above language simply does not give the Trustees any authority to unilaterally refinance
or unilaterally initiate a renewal of the loan.

The written language in the contract at issue is contained in several documents;
however, none of the documents in the record include a modification provision that allows
either party to unilaterally renew or refinance the loan. Because there is nothing in the
parties’ written contract that indicates that Cadence Bank has a duty to refinance the debt,
it cannot be said that Cadence Bank failed to perform its duties under the written contract by
allegedly failing to refinance the debt. See Wallace, 938 S.W.2d at 687 (“the duty . . . does
not extend beyond the agreed upon terms of the contract”). This Court cannot impose the
implied duty of good faith and fair dealing in such a way as to add new obligations. Barnes
& Robinson Co. v. One Source Facility Svcs., Inc., 195 S.W.3d 637, 643 (Tenn. Ct. App.
2006). Further, to hold that Cadence Bank’s alleged actions in failing to refinance the
parties’ debt were in violation of the duty of good faith and fair dealing implied in the written
contract would “circumvent or alter the specific terms of the parties’ agreement.” Dick
Broad. Co., 395 S.W.3d at 665; see also Solomon v. First Am. Nat’l Bank of Nashville, 774
S.W.2d 935, 945 (Tenn. Ct. App.1989) (noting that without an underlying breach of contract,
a breach of good faith is not an “actionable” claim); Duke v. Browning-Ferris Indus. of

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Tenn., Inc., No. W2005-00146-COA-R3-CV, 2006 WL 1491547, at *9 (Tenn. Ct. App. May
31, 2006), perm. app. denied (Tenn. Nov. 13, 2006) (holding that a breach of the duty of
good faith is merely an element of a claim for “recognized torts, or breaches of contracts”).
Accordingly, summary judgment was appropriate with respect to Appellants’ claim that
Cadence Bank violated the implied duty of good faith and fair dealing.

Appellants argue, however, that despite the lack of modification terms in the parties’
written agreement, the parties’ negotiations after the written agreements constitute either an
oral modification of the contract or a new agreement upon which a breach of the duty of good
faith could be found.8 Appellants argue these oral negotiations left Appellants with the
reasonable expectation that Cadence Bank would enter into a further modification of the
Note. Appellants accordingly argue that they have raised a cognizable claim for breach of
the implied duty of good faith with regard to the alleged oral agreement, and summary
judgment should not have been granted.9 After a thorough review of the record, we disagree.

A significant portion of Appellants’ good faith and fair dealing claim is premised on
their allegation that Cadence Bank breached an alleged oral promise to refinance the loan by
offering different terms in its January 18, 2012 and February 10, 2012 letters. In their
Response to Cadence Bank’s Statement of Undisputed Facts, Appellants rely on the affidavit
of David B. Uthe, which provided:

[Mr. McKinnon] . . . made misleading statements to [David B. Uthe] by telling
[him] that it was okay for the Defendants to renew the loan with no
questions asked provided that said Defendants provide him with tax returns
for the year of 2010, wherein there was neither any follow up by said Mr.
McKinnon nor was the loan renewal and/or refinance being processed . . .

8
Neither party points to any provision in the Note or other underlying agreements that prohibits
the parties from entering into subsequent oral agreements regarding extending the maturity date of the
Note or refinancing the debt.
9
Generally, parol evidence is inadmissible to contradict, vary, or alter a written contract when the
written instrument is valid, complete, and unambiguous, except in cases where fraud or mistake is alleged.
Tenn. Code Ann. § 47-2-202. However, evidence of a subsequent agreement, such as alleged here, after the
execution of the written agreement, is not barred by the parol evidence rule. Schwartz v. Diagnostix Network
Alliance, LLC, No. M2014-00006-COA-R3-CV, 2014 WL 6453676 (Tenn. Ct. App. 2014) (citing Brunson
v. Gladish, 125 S.W.2d 144, 147 (Tenn. 1939); Univ. Corp. v. Wring, No. W2011-01126-COA-R3-CV, 2012
WL 4078517, at *6 (Tenn. Ct. App. Sept. 18, 2012)). Accordingly, a written contract may be altered by the
express words of the parties after the contract is made. Schwartz, 2013 WL 6453676, at *10; Lancaster v.
Ferrell Paving, Inc., 397 S.W.3d 606, 611 (Tenn. Ct. App. 2011).

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(Emphasis added.) Appellants argue that the allegations of statements made by Cadence
Bank representatives, including Mr. McKinnon, create a dispute of material fact.

“The determination of whether a contract has been formed is a question of law.”
German v. Ford, 300 S.W.3d 692, 701 (Tenn. Ct. App. 2009) (citations omitted). Taking the
evidence in the light most favorable to the nonmoving party, summary judgment was
appropriate. We recognize that David Uthe testified, by Affidavit, that Mr. McKinnon “made
misleading statements to [him] by telling [him] that it was okay for the Defendants to renew
the loan with no questions asked provided that said Defendants provide him with tax returns
for the year of 2010, wherein there was neither any follow up by said Mr. McKinnon nor was
the loan renewal and/or refinance being processed.” However, David Uthe also testified in
his deposition that Mr. McKinnon suggested in 2011 that they extend the note for six months
and that Cadence Bank would “look to renew it.” Uthe also testified that Mr. McKinnon told
him “[y]our rates will go down, rates are down since the time you had this one in 2006.”

The record is clear that the Trustees executed the original promissory note on April
4, 2001, for $476,000.00, payable in fifty-nine (59) installments of $4,097.00 per month at
8.25 percent interest. The parties executed a Modification Agreement on May 10, 2006,
refinancing a balance of $423,220.70 to be paid in fifty-nine (59) installments of $4,073.79,
but at 8.00 percent interest. The Modification Agreement matured on April 10, 2011.
Between January 2011 and June 2011, Cadence Bank sent numerous letters to the Trustees,
all of which are contained in the record. Those letters indicate that Mr. McKinnon requested
additional information before “submitting [the loan] for approval,” “consider[ing] renewal,”
and “reviewing [the] loan.” Finally, on June 24, 2011, the parties entered into a Change in
Terms Agreement, which provided that “borrower will pay this loan [with a principal amount
of $331,057.20] in 2 regular payments of $4,073.49 each and one irregular last payment of
$328,596.14.” The Change in Terms Agreement matured on September 10, 2011.

In order to analyze whether Cadence Bank breached the implied duty of good faith
and fair dealing, we must first determine whether there was, in fact, any oral contract
between the parties. “[A] claim based on the implied covenant of good faith and fair dealing
is not a stand alone claim; rather, it is part of an overall breach of contract claim.” Jones v.
LeMoyne-Owen College, 308 S.W.3d 894, 907 (Tenn. Ct. App. 2009) (citing Lyons v.
Farmers Ins. Exch., 26 S.W.3d 888, 894 (Tenn. CT. App. 2000)). “The determination of
whether a contract has been formed is a question of law.” German v. Ford, 300 S.W.3d 692,
701 (Tenn. Ct. App. 2009).

Appellants contend that there is a dispute of fact as to whether any oral promises were
made and/or breached. However, taking the facts in the light most favorable to the
Appellants, as we are required to do when reviewing summary judgment, we are still unable

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to find that a contract was formed. Appellants rely on Uthe’s Affidavit testimony that “it was
okay for the [Appellants] to renew the loan with no questions asked,” alleging that this
testimony creates an issue of fact precluding summary judgment. However, the remainder
of Uthe’s Affidavit states the renewal would be forthcoming “provided that said [Appellants]
provide [Mr. McKinnon] with tax returns for the year of 2010.”

To be enforceable, a contract must result from a meeting of the minds, be based on
sufficient consideration, and be sufficiently definite. Peoples Bank of Elk Valley v. ConAgra
Poultry Co., 832 S.W.2d 550, 553 (Tenn. Ct. App. 1991). “If the essential terms of an
alleged agreement are so uncertain that there is no basis for deciding whether the agreement
has been kept or broken, there is no contract.” Id. at 553-554 (citing Restatement (2d)
Contracts, § 33 (1981)). When a term is left open for future negotiation, there is nothing
more than an unenforceable agreement to agree. See Four Eights, L.L.C. v. Salem, 194
S.W.3d 484, 486 (Tenn. Ct. App. 2005). “It is a fundamental rule of law that an alleged
contract which is so vague, indefinite and uncertain as to place the meaning and intent of the
parties in the realm of speculation is void and unenforceable.” Id. at 487 (quoting United
Am. Bank of Memphis v. Walker, 1986 WL 11250 (Tenn. Ct. App. 1986) (quoting King v.
Dalton Motors, Inc. 109 N.W.2d 51 (Minn. 1961))).

As noted above, a contract “must result from a meeting of the minds of the parties in
mutual assent to the terms, must be based upon a sufficient consideration, free from fraud or
undue influence, not against public policy and sufficiently definite to be enforced.” Doe v.
HCA Health Servs. of Tenn., Inc., 46 S.W.3d 191, 196 (Tenn. 2001) (citations omitted). In
this case, Appellants present no evidence whatsoever to establish the basic elements of a
contract. While David Uthe does assert that Mr. McKinnon told him that Appellants could
“renew the loan with no questions asked,” there is no evidence in the record to establish the
actual terms of the alleged oral contract. The principal balance, interest rates, and payment
amount had changed between the parties’ 2001 Promissory Note and the 2006 Modification
Agreement. The principal balance changed from 2001 to 2006 and then again between the
2006 Modification Agreement and the 2011 Change in Terms Agreement, as did the number
of payments to be made (59 installments to be made under the 2006 Modification Agreement,
compared to two regular payments and one irregular payment under the 2011 Change in
Terms Agreement). Uthe testified that Mr. McKinnon told him in 2011 that “your rates will
go down, rates are down since the time you had this one in 2006.” However, Appellants
offer no evidence to suggest any certainty in the interest rate Mr. McKinnon allegedly
promised for a renewal of the full loan balance. Appellants also offer no evidence to suggest
any certainty in the term of the loan renewal or the principal amount to be financed. Without
evidence regarding the specific terms of an alleged oral agreement, we cannot find, as a
matter of law, that a contract was formed.

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 Without a contract, Appellants cannot sustain a claim for breach of the implied duty
of good faith and fair dealing. For that reason, we affirm the trial court’s grant of summary
judgment.

Promissory Estoppel

We likewise affirm the trial court’s grant of summary judgment on Appellants’ claim
of detrimental reliance. Promissory estoppel is also referred to in Tennessee case law as
“‘detrimental reliance’ because the plaintiff must show not only that a promise was made,
but also that the plaintiff reasonably relied on the promise to his detriment.” Calabro v.
Calabro, 15 S.W.3d 873, 879 (Tenn. Ct. App. 1999) (citations omitted). Again viewing the
evidence in the light most favorable to Appellants, the promise upon which they claim they
relied was ambiguous and unenforceably vague. See Amacher v. Brown-Forman Corp., 826
S.W.2d 480, 482 (Tenn. Ct. App. 1991). As discussed above, the promise Mr. McKinnon
allegedly made was too indefinite to provide a basis for relief. Therefore, we affirm
summary judgment on Appellants’ promissory estoppel claim.

Conclusion

The judgment of the Chancery Court of Shelby County is affirmed as to the authority
of Cadence Bank, N.A., to bring this lawsuit in Tennessee and affirmed with respect to the
dismissal of Appellants’ counter-claims. This cause is remanded to the trial court for all
further proceedings as are necessary and consistent with this Opinion. Costs of this appeal
are taxed to the Appellants The Alpha Trust, The M.S.U. Family Trust, The D.S.U. Family
Trust, Marvin V. Uthe, Shirley A. Uthe, and Sandra L. Uthe, and David B. Uthe in his
capacity as trustee, and their surety, for all of which execution may issue, if necessary.

_________________________________
BRANDON O. GIBSON, JUDGE

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