IN THE COURT OF APPEALS OF TENNESSEE
AT JACKSON
April 1, 2016 Session
PEGGY L. SMITH, INDIVIDUALLY AND AS TRUSTEE OF PEGGY L.
SMITH TRUST v. HI-SPEED, INC., ET AL.
Appeal from the Chancery Court for Shelby County
No. CH1115571 Walter L. Evans, Chancellor
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No. W2015-01613-COA-R3-CV – Filed August 30, 2016
___________________________________
This is a breach of contract case related to a commercial property located in Arkansas.
Plaintiffs also asserted claims for unjust enrichment, quantum meruit, equitable estoppel, and
promissory estoppel. Following a hearing on Defendants‘ motion for partial summary
judgment, the trial court dismissed all of the claims except for an alleged breach of contract
by Defendant Hi-Speed, Inc. After a bench trial on this remaining claim, the trial court
determined that the Plaintiffs were not entitled to any damages. We affirm.
Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Chancery Court Affirmed
and Remanded
ARNOLD B. GOLDIN, J., delivered the opinion of the Court, in which J. STEVEN STAFFORD,
P.J., W.S., and BRANDON O. GIBSON, J., joined.
Carl I. Jacobson, John J. Cook, and Jonathan P. Lakey, Memphis, Tennessee, for the
appellant, Peggy L. Smith.
John J. Heflin and Jack F. Heflin, Memphis, Tennessee, for the appellees, Hi-Speed, Inc., and
Mock, Inc.
OPINION
Background and Procedural History
This appeal stems from a dispute regarding the financing and leasing of an Arkansas
commercial building located on Lindsey Road in the Little Rock Port Industrial Park (the
―Little Rock Property‖). The Little Rock Property is owned by the Peggy L. Smith Trust (the
―Trust‖). The trustee of the Trust, as well as its sole beneficiary, is Peggy L. Smith (―Ms.
Smith‖). At a time prior to the commencement of this lawsuit, the Trust also owned real
property at 3013 Thomas Street in Memphis, Tennessee (the ―Thomas Street Property‖).
The Defendants in this case, Hi-Speed, Inc. (―Hi-Speed‖), and Mock, Inc. (―Mock‖)
(collectively, ―Defendants‖), are both engaged in the same general line of business. Both
companies sell, maintain, test, and repair electrical motors, hoists, and cranes. Although Hi-
Speed and Mock have had common leadership and ownership at various points throughout
their history, Hi-Speed is incorporated in Arkansas, whereas Mock is incorporated in
Tennessee. Mock, which was incorporated in 1978, previously operated its business at the
Thomas Street Property.
The present dispute can be traced to developments involving both Defendants over the
past decade. Although Ms. Smith previously had ownership interests in both corporations,
her ownership interests had ceased by the time of these recent developments. By 2005, both
Hi-Speed and Mock were seeking to expand. Ms. Smith‘s son, Bret Mock, served as
President of both companies. Although Mock was operating out of the Thomas Street
Property at the time, it relocated to a facility in Millington, Tennessee, before the end of
2006. Prior to its move to the Millington facility, Mock had been paying rent to Ms. Smith1
for a lease of the Thomas Street Property. The base rent amount was $4,000.00 per month.
Hi-Speed also made plans to move into a new facility during this period. On
December 1, 2005, Hi-Speed entered into a lease agreement with the Trust regarding the
Little Rock Property. In pertinent part, the lease agreement provides as follows:
WHEREAS, [the Trust] is the owner of certain real property and is
willing to ―build to suit‖ a facility as hereinafter described in EXHIBIT ―B‖;
and
1
The Trust was not in existence at the time Mock began paying Ms. Smith rent for its lease of the Thomas
Street Property.
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WHEREAS, [Hi-Speed] desires to lease the real property, facility and
improvements from [the Trust].
NOW, THEREFORE, in consideration of the mutual covenants,
conditions and promises set forth herein, [the Trust] and [Hi-Speed] agree as
follows:
1. Premises. [The Trust] hereby agrees to build the facility described in
EXHIBIT ―B‖ on the real property on Lindsey Road in Little Rock, Arkansas,
which is further described in EXHIBIT ―A‖ (―Premises‖) and further agrees to
lease same to [Hi-Speed] upon completion of construction within the period
specified in EXHIBIT ―B‖.
2. Term. The initial term (the ―Initial Term‖) of this Lease shall be
for twenty (20) years commencing upon issuance of a valid Certificate of
Occupancy for the operation of [Hi-Speed‘s] business at the Premises (the
―Commencement Date‖). [Hi-Speed] shall have the right, but not the
obligation, to renew this Lease for two (2) additional five (5) year terms
(―Renewal Terms‖) by written notice to [the Trust] on or before thirty (30)
days prior to the expiration of the Initial Term or either Renewal Term, as
applicable. During the Renewal Terms, this Lease shall continue on the same
terms, covenants and conditions as in the Initial Term.
3. Rental.
(a) Base Rent. Beginning on the Commencement Date and on the
first day of each calendar month thereafter, [Hi-Speed] shall pay to [the Trust]
without notice or demand from [the Trust] and without right of set-off the sum
of Fourteen Thousand and No/100 Dollars ($14,000.00) as rental for the
Premises (―Base Rent‖). In the event [the Trust] fails to pay sums that [the
Trust] is obligated to pay under this Lease, [Hi-Speed] may pay such sums on
behalf of [the Trust] and deduct same from Base Rent.
(b) Additional Rent. In addition to Base Rent, [Hi-Speed] shall
be responsible for the following additional costs, without first receiving
demand therefor (except as otherwise expressly provided below) and without
offset against the Base Rent:
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(i) [Hi-Speed] shall reimburse [the Trust] for interest expense, loan
fees and related costs of the construction financing during the construction
phase of the Premises until the Commencement Date.
(ii) In consideration for the pledging by [the Trust] of its real
property in Memphis, Tennessee, known municipally as 3013 Thomas
Street to further secure the construction financing, [Hi-Speed] shall pay
[the Trust] Four Thousand and No/100 Dollars per month for so long as
said property shall serve as said additional collateral.
****
20. Miscellaneous
(a) Successors and Assigns. This Lease shall be binding upon
and shall inure to the benefit of [The Trust], [Hi-Speed] and their respective
successors and assigns.
(b) Governing Law. This Lease shall be construed under the
laws of the State of Tennessee.
(c) Entire Agreement. This Lease contains the entire agreement
between [the Trust] and [Hi-Speed] regarding the Premises which are the
subject of this Lease and may only be altered by a written agreement executed
by both [the Trust] and [Hi-Speed]. (emphasis added)
According to Ms. Smith, the above written agreement does not represent the entirety
of the parties‘ agreement regarding the Little Rock Property. Contrary to the terms of the
lease agreement, she contends that the $4,000.00 payment of ―Additional Rent‖ was not tied
solely to the timeframe that the Thomas Street property served as collateral to secure
construction financing. She asserts that a ―Loan Guaranty Agreement‖ entered into between
her and the Defendants provided a different understanding. As outlined in the Complaint that
Ms. Smith filed in connection with this litigation, the purported ―Loan Guaranty Agreement,‖
which was not in writing, covered the following terms:
(a) Smith would sell the Thomas Street Building and invest the proceeds into the
construction of the Little Rock Facility. Defendants would assist Smith in her
efforts to sell the Thomas Street Building.
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(b) Smith would borrow another $1 million or more to complete the construction
of the Little Rock Facility.
(c) Hi-Speed, Inc. would enter into a lease for a 20 year term.
(d) The rent under the lease would be an amount approximately equal to the
monthly principal and interest payments due under the loan for the
construction of the Little Rock Facility.
(e) As consideration for her agreement to sell and commit the proceeds of the
Thomas Street Building to the project, and for the risk incurred by Smith in
financing the Little Rock Facility, Defendants agreed to pay Smith a monthly
amount . . . for the term of the loan equal to $4,000.00, plus an additional
amount to be determined at later date.
Although her Complaint specifically states that Defendants were to pay the additional
―monthly amount‖ for the term of the loan, Ms. Smith has averred generally in this litigation
that the additional payments were to be made for a period of twenty years.2 Moreover, she
has argued that the additional monthly payments were to, in part, replace the rent she
previously received from Mock‘s lease of the Thomas Street Property.
To secure financing for the construction of the improvements to the Little Rock
Property where Hi-Speed eventually relocated, the Trust pledged the Thomas Street Property
to Eagle Bank and Trust Co. (―Eagle Bank‖). After the construction loan matured, Ms. Smith
obtained permanent financing, which required her to make monthly payments to Eagle Bank
in the amount of $13,050.75. In February 2008, Hi-Speed began paying this monthly amount
directly to Eagle Bank as an accommodation to Ms. Smith and the Trust. Prior to this time,
Hi-Speed had paid $12,500.00 per month directly to Eagle Bank, an amount equal to the
payments required under the construction loan.
Hi-Speed also made additional $4,000.00 monthly payments to Ms. Smith while the
Thomas Street Property was pledged as collateral3 in accordance with the written lease
agreement, and it continued to make these payments even after the Trust sold the Thomas
2
Although the loan discussed in the Complaint was contemplated to be a loan for a term of twenty years, the
payment of the additional monthly amounts is not directly tied to the term of a loan, at least as the agreement is
presently represented. Ms. Smith simply avers that the Defendants agreed to lease the Little Rock Property
―and for a period of 20 years: to pay [Plaintiffs] . . . $4,000 to $5,500 per month.‖
3
Hi-Speed presently maintains, consistent with the written lease agreement, that the additional $4,000.00
monthly payments were only required to be made so long as the Thomas Street Property served as collateral.
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Street Property at auction in February 2008. According to the deposition testimony of
Barbara McCullough (―Ms. McCullough‖), former Secretary/Treasurer for Hi-Speed, Bret
Mock directed that these payments be made over her objection. In late 2008, Hi-Speed
increased its additional payments from $4,000.00 to $5,500.00 per month.
In January 2009, Bret Mock passed away. Notwithstanding Bret‘s death, the
$5,500.00 monthly payments continued to be made by Hi-Speed to Ms. Smith. According to
Ms. McCullough‘s deposition testimony, Hi-Speed continued to make the payments at the
direction of Bret‘s surviving wife, Ellen Mock. Ms. McCullough also stated in her
deposition that the payments continued to be made after consultation with counsel. Kevin
Maxwell, President of both Hi-Speed and Mock following Bret Mock‘s death, testified
similarly in his deposition.
In January 2011, attorney Patrick Mason, acting as counsel for Ms. Smith, sent a letter
to Mr. Maxwell and enclosed a proposed amendment to the written lease agreement. The
letter stated that the enclosed lease amendment ―reflect[ed] the increased rent previously
agreed upon by Hi-Speed, Inc. and Peggy Smith.‖ The letter further stated that an additional
year had been added to the term of the lease ―in order to fulfill the contractual requirement of
consideration by both parties.‖ Hi-Speed never executed this amendment, and in May 2011,
the company was purchased by two new owners. On May 20, 2011, following this transition
in ownership, one of Hi-Speed‘s new owners sent an email to Ms. McCullough directing her
to stop making the additional $5,500.00 monthly payments to Ms. Smith. Hi-Speed
subsequently ceased making these payments.
As a result of Hi-Speed‘s decision to stop making the additional monthly payments,
Ms. Smith filed a complaint for damages in the Shelby County Chancery Court on September
23, 2011. The Complaint was brought in Ms. Smith‘s capacity as trustee of the Trust, as well
as in her individual capacity. In addition to alleging that Hi-Speed had breached the written
lease agreement, Ms. Smith averred that the Defendants had not made all payments required
pursuant to the purported ―Loan Guaranty Agreement.‖ According to the Complaint, the
written lease agreement entered into between Hi-Speed and the Trust only partially reflected
the ―Loan Guaranty Agreement‖ allegedly agreed to by both Defendants. As previously
indicated, under the alleged ―Loan Guaranty Agreement,‖ for which there was no executed
written agreement, the additional monthly payments were required to be made even after the
Thomas Street Property ceased serving as collateral. Ms. Smith contended that Mock and Hi-
Speed had breached their agreement by failing to continue to make the additional monthly
payments. She also asserted claims of unjust enrichment, quantum meruit, equitable
estoppel, and promissory estoppel. Both Defendants filed answers to the Complaint in July
2012.
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Approximately a year and a half later, on March 12, 2014, Mock and Hi-Speed filed a
joint motion for partial summary judgment as to five of the six counts asserted in the
Complaint. The only count of the Complaint that was not subject to the motion was Ms.
Smith‘s claim that Hi-Speed had breached the written lease agreement. Filed
contemporaneously with the motion was a statement of undisputed material facts and a legal
memorandum. Among other things, the Defendants argued that the alleged ―Loan Guaranty
Agreement‖ was not supported by a writing compliant with the Statute of Frauds.
On October 15, 2014, Ms. Smith filed a response to the Defendants‘ statement of
material facts, as well as a separate statement of undisputed material facts. Additionally, Ms.
Smith filed a memorandum in opposition to the Defendants‘ summary judgment motion.
Therein, Ms. Smith contended that genuine issues of material fact existed as to whether the
additional monthly payments were to continue after the sale of the Thomas Street Property.
She also claimed that genuine issues of material fact existed as to the asserted unjust
enrichment, quantum meruit, promissory estoppel, and equitable estoppel claims. Citing to
several pieces of evidence, Ms. Smith argued that the parties intended the additional monthly
payments to continue for a period of twenty years. She further argued that the parties‘
agreement regarding these payments complied with the Statute of Frauds. On February 9,
2015, Defendants filed a reply memorandum in support of their summary judgment motion,
in addition to a response to Ms. Smith‘s separate statement of undisputed material facts. The
trial court held a summary judgment hearing a few days later.
On February 23, 2015, the trial court entered an order granting the Defendants‘ motion
for partial summary judgment. Although the trial court acknowledged that Ms. Smith
asserted the existence of an agreement that differed slightly from the written lease agreement,
it concluded that the cited testimony supporting the purported separate agreement was barred
by the doctrine of merger and the parol evidence rule. The trial court further determined that
Ms. Smith‘s assertion of the separate agreement was barred by the Statute of Frauds. With
regard to the unjust enrichment and quantum meruit counts, the court concluded that these
claims were unavailable given the existence of an enforceable contract regarding the Little
Rock Property. With regard to the asserted promissory estoppel and equitable estoppel
claims, the trial court concluded that Ms. Smith had failed to proffer any evidence justifying
the application of these theories.
Following the entry of the trial court‘s February 23 order, only one of Ms. Smith‘s
claims remained: the breach of contract claim regarding the written lease agreement entered
into between the Trust and Defendant Hi-Speed. Although a trial on this claim was
originally set for July 9, 2015, the case was later reset to July 16, 2015. Following a full
evidentiary hearing, the trial court entered its final judgment in the case on July 22, 2015.
The trial court concluded that no basis for a claim existed against Mock because Mock was
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not a party to the written lease agreement. Moreover, upon determining that Hi-Speed had
paid the Trust more than it was obligated to under the parties‘ contract, the trial court
concluded that no monetary relief was available to Ms. Smith. This timely appeal followed.
Issues Presented
In the appellate brief filed by the Trust and Ms. Smith, three issues are presented for
our review, slightly restated as follows:
1. Whether the trial court appropriately applied the parol evidence rule and the Statute of
Frauds in granting summary judgment to Defendants on Plaintiffs‘ breach of contract
claim concerning the Loan Guaranty Agreement.
2. Whether the trial court erred in granting summary judgment to Defendants on
Plaintiffs‘ unjust enrichment, quantum meruit, promissory estoppel, and equitable
estoppel claims.
3. Whether the trial court erred in granting a judgment to Defendants on Plaintiffs‘
breach of contract claim for failure to pay the full base rent.
Standard of Review
―In an appeal from a bench trial, we review the trial court‘s findings of fact de novo
with a presumption of correctness, unless the evidence preponderates otherwise.‖ Foster-
Henderson v. Memphis Health Ctr., Inc., 479 S.W.3d 214, 223 (Tenn. Ct. App. 2015) (citing
Tenn. R. App. P. 13(d)). Although we also review the trial court‘s resolution on a question
of law de novo, no presumption of correctness attaches to the trial court‘s legal conclusions.
Bowden v. Ward, 27 S.W.3d 913, 916 (Tenn. 2000).
―Because the review of a trial court‘s grant of summary judgment is a question of law,
the standard of review is de novo, according no presumption of correctness to the trial court‘s
determination.‖ Maggart v. Almany Realtors, Inc., 259 S.W.3d 700, 703 (Tenn. 2008)
(citations omitted). Accordingly, when we review whether a grant of summary judgment was
proper, this Court must make a fresh determination that the requirements of Rule 56 of the
Tennessee Rules of Civil Procedure have been satisfied. Estate of Brown, 402 S.W.3d 193,
198 (Tenn. 2013). A motion for summary judgment should only be granted if ―the pleadings,
depositions, answers to interrogatories, and admissions on file, together with the affidavits, if
any, show that there is no genuine issue as to any material fact and that the moving party is
entitled to a judgment as a matter of law.‖ Tenn. R. Civ. P. 56.04.
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The party moving for summary judgment has the ultimate burden of persuading the
court that no genuine issues of material fact exist and that it is entitled to a judgment as a
matter of law. Town of Crossville Hous. Auth. v. Murphy, 465 S.W.3d 574, 578 (Tenn. Ct.
App. 2014) (citing Byrd v. Hall, 847 S.W.2d 208, 215 (Tenn. 1993)). If the moving party
makes a properly supported motion, the burden then shifts to the nonmoving party to
demonstrate the existence of a genuine issue of material fact for trial. Id. (citing Byrd, 847
S.W.2d at 215). When the party moving for summary judgment does not bear the burden of
proof at trial, the moving party may satisfy its burden of production by either (1)
affirmatively negating an essential element of the nonmoving party‘s claim or (2) by
demonstrating that the nonmoving party‘s evidence at the summary judgment stage is
insufficient to establish the nonmoving party‘s claim or defense. Rye v. Women’s Care Ctr.
of Memphis, MPLLC, 477 S.W.3d 235, 264 (Tenn. 2015); see also Tenn. Code Ann. § 20-16-
101.4 If the moving party satisfies its initial burden of production, the nonmoving party
cannot rest upon the mere allegations or denials in its pleadings, but must respond and set
forth specific facts at the summary judgment stage showing that there is a genuine issue for
trial. Rye, 477 S.W.3d at 265 (quoting Tenn. R. Civ. P. 56.06). ―The nonmoving party must
demonstrate the existence of specific facts in the record which could lead a rational trier of
fact to find in favor of the nonmoving party.‖ Id.
Discussion
This appeal requires us to consider whether the claims asserted by Ms. Smith and the
Trust (collectively, ―Plaintiffs‖) were properly dismissed by the trial court. Five of the six
claims pled in the Complaint were dismissed by summary judgment. The remaining count,
which related to an alleged breach of the written lease agreement, was dismissed following a
trial. In reviewing the propriety of the trial court‘s actions, we turn first to the trial court‘s
February 23, 2015 summary judgment order.
The trial court’s grant of partial summary judgment
The trial court‘s February 23, 2015 summary judgment order dismissed every claim
asserted in the Complaint, save for the Trust‘s claim that Hi-Speed breached the written lease
agreement that was executed in December 2005. On appeal, Ms. Smith and the Trust
4
Although the standard outlined in Tennessee Code Annotated section 20-16-101 appears to be substantially
similar to the Rye standard, ―there is still some disagreement amongst members of this Court as to whether the
standard set out in Rye or in Tennessee Code Annotated Section 20-16-101 is controlling.‖ Dennis v.
Donelson Corp. Ctr. 1, No. M2015-01878-COA-R3-CV, 2016 WL 2931096, at *2 n.1 (Tenn. Ct. App. May
13, 2016).
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challenge the trial court‘s adjudication of each claim dismissed at summary judgment. We
examine each claim in turn.
Count 1- Alleged Breach of the ―Loan Guaranty Agreement‖
The central point of contention in this case relates to the required duration of the
additional monthly payments concerning the Little Rock Property. Under the written lease
agreement executed in December 2005, the $4,000.00 monthly payments were due ―so long
as [the Thomas Street Property] shall serve as . . . collateral.‖ Although the terms of this
provision are unambiguously clear as to their meaning, Ms. Smith argues that they fail to
fully reflect the ―Loan Guaranty Agreement‖ purportedly entered into between her and both
Defendants. In contrast to the plain language of the written agreement, she contends that the
additional monthly payments were to be made for a period of twenty years, irrespective of the
status of the Thomas Street Property.
As already noted, the trial court dismissed Ms. Smith‘s claim for breach of the ―Loan
Guaranty Agreement‖ on several grounds. In addition to concluding that the evidence
marshaled in support of the ―Loan Guaranty Agreement‖ was inadmissible under the doctrine
of merger and the parol evidence rule, the trial court determined that the contract claim was
barred by the Statute of Frauds. On appeal, Plaintiffs argue that the reasoning employed by
the trial court was in error. In addition to challenging the trial court‘s application of the parol
evidence rule, Plaintiffs assert that the trial court erred in holding that the alleged ―Loan
Guaranty Agreement‖ was barred by the Statute of Frauds.
Before turning to the specifics of Plaintiffs‘ arguments on these issues, it is
worthwhile to clarify the parameters of the agreement that Ms. Smith and the Trust are
seeking to enforce. Having carefully reviewed the record, we note that the Plaintiffs‘
represented terms of the agreement have changed throughout the course of this litigation.
This is most apparent as to the stated amount of the additional monthly payments, although
there are some subtle distinctions as to the representation of the duration term as well. In
order to explain the current position of the Plaintiffs, we will endeavor to briefly provide an
overview of the manner in which the ―Loan Guaranty Agreement‖ has been presented
throughout the course of this case.
As alleged in the Complaint, the ―Loan Guaranty Agreement‖ provides that the
Defendants would pay Ms. Smith ―a monthly amount . . . for the term of the loan equal to
$4,000.00, plus an (additional amount) to be determined at later date.‖ As is evident from the
ordinary words of the agreement, the payment of the stated monthly amount is directly tied to
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the term of a loan.5 Moreover, the agreement provides that an additional amount will be
determined in the future. No upper limit for the ―additional amount‖ is specifically provided
for in the version of the agreement alleged in the Complaint, nor is there any method
discussed by which the additional amount will be determined.
In her July 16, 2012 deposition, Ms. Smith testified similarly regarding the promised
amount of the additional monthly payments. She stated that Bret Mock had promised her that
she would not suffer a lapse in payments from the $4,000.00 in rent that Mock had been
paying for its lease of the Thomas Street Property. Her recollection of her first conversation
with Bret on the topic was as follows:
I would receive no less than the 4,000 a month. And that as time and
opportunity allowed that it would increase due to my added risk and
committing my property and building to this venture. And in the beginning
there was not a set date as to when this would happen because there was so
many things going on with the renovations and the building and all of that.
And then when he had the opportunity, he told me he was going to increase it.
With respect to the duration of these payments, Ms. Smith expressed difficulty in recalling
the specific words Bret used in making his promise. At one point, she stated as follows in
her deposition: ―[T]he understanding that we had [was] that I would receive [the additional
monthly payments] until the building was paid for.‖ Immediately thereafter, Ms. Smith
attempted to clarify her response with another understanding: ―Well, or until the end of the
lease or until the end of, yeah, to the end of the lease or those were inferred in different
ways.‖
In her May 2014 affidavit, Ms. Smith recalled her alleged agreement with the
Defendants as follows:
In or around November 2005, I was approached by Hi-Speed and asked
to personally borrow $1.6 million dollars for a construction loan to fund Hi-
Speed‘s expansion plans and was asked to sell the Thomas Street property and
use the sale proceeds to apply to the construction of the facility. In exchange,
Mock, Inc. and Hi-Speed, Inc. agreed to lease the facility and for a period of
20 years: to pay me and the Smith Trust a[] monthly amount sufficient to cover
all of the required loan payments, plus $4,000 to $5,500 per month to replace
5
The total duration of the additional payments is no different under this version of the alleged agreement than
it is in the other representations made by Plaintiffs: the loan referenced in the Complaint was contemplated to
be for a term of twenty years. Other representations of the agreement, however, do not specifically tie the
timing of the payments to the term of a loan.
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the rent previously received on the Thomas Street Building and to compensate
for the risk on the loan.
This specific recitation of the agreement is the one Plaintiffs referenced in opposing the
Defendants‘ motion for summary judgment; moreover, it is the one that they have relied upon
in prosecuting this appeal. As is clear, the term for the additional monthly payments is ―for a
period of 20 years.‖ In contrast to the Complaint and Ms. Smith‘s deposition testimony,
which both call for a baseline additional monthly payment of $4,000.00 plus an extra amount
to be determined in the future, Ms. Smith‘s affidavit represents that the agreed amount term
was within a specific range, ―$4,000 to $5,500 per month.‖
Parol Evidence Rule
Among other reasons, the trial court dismissed Plaintiffs‘ claim for breach of the
―Loan Guaranty Agreement‖ by finding that Ms. Smith‘s testimony concerning the
agreement was barred by the parol evidence rule. ―The parol evidence rule is a rule of
substantive law intended to protect the integrity of written contracts.‖ GRW Enters., Inc. v.
Davis, 797 S.W.2d 606, 610 (Tenn. Ct. App. 1990) (citation omitted). In furtherance of this
purpose, the rule provides that ―contracting parties cannot use extraneous evidence to alter,
vary, or qualify the plain meaning of an unambiguous written contract.‖ Id. (citations
omitted). Although the parole evidence rule appears to have a wide reach, the courts of this
State have been reluctant to apply it mechanically and have recognized that it has several
exceptions and limitations. Id. The rule does not prevent parties from using extraneous
evidence to prove the existence of an independent or collateral agreement not in conflict with
the written agreement, id., nor does it prevent parties from using extraneous evidence to
demonstrate supplemental, consistent terms where the writing is not intended to be a
complete and exclusive statement of the agreement. Strickland v. City of Lawrenceburg, 611
S.W.2d 832, 838 (Tenn. Ct. App. 1980) (citation omitted). Moreover, courts have held that
the rule does not prevent parties from using extraneous evidence ―to prove that a written
contract does not correctly embody the parties‘ agreement.‖ GRW Enters., Inc., 797 S.W.2d
at 611 (citations omitted). Additionally, the rule does not bar parties from proving the
existence of an agreement made after an earlier written agreement. Id. at 610 (citations
omitted).
Plaintiffs argue that each of the above-mentioned exceptions can apply so as to allow
them to prove the existence of the ―Loan Guaranty Agreement‖ outside the bar of the parol
evidence rule. Indeed, in their brief on appeal, they alternatively argue that tendering proof
of the ―Loan Guaranty Agreement‖ is permissible because (a) the proof would demonstrate
the existence of an independent collateral agreement, (b) the proof would provide additional
terms that supplement the written agreement, (c) the proof would show that the written
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agreement does not correctly embody the parties‘ true agreement, and (d) the proof would
demonstrate a permissible modification to the written agreement. Having reflected on each
of Plaintiffs‘ arguments as to why the parol evidence rule should not bar proof of their claim
for breach of the alleged ―Loan Guaranty Agreement,‖ we conclude that the first three can be
dispensed with rather quickly.
Although there is no question that parol evidence is admissible to demonstrate the
existence of an independent collateral agreement, proof of such a collateral agreement ―must
be limited to subject matter which does not contradict or vary terms which are plainly
expressed in the writing.‖ Airline Constr., Inc. v. Barr, 807 S.W.2d 247, 259 (Tenn. Ct. App.
1990) (citations omitted). In this case, the alleged terms of the ―Loan Guaranty Agreement‖
clearly contradict what is provided for in the written agreement. As noted by Defendants, the
proposed terms of the parol agreement contradict both the amount and duration of the
additional monthly payments. Whereas the additional payments were set at $4,000.00 under
the written lease agreement and were to last as long as the Thomas Street Property was
pledged as collateral, the alleged ―Loan Guaranty Agreement‖ calls for the payments to last
for twenty years and in the range of $4,000.00 to $5,500.00 per month. We note that the
Plaintiffs‘ Complaint directly states that the $4,000.00 payment owed under the written lease
agreement is the same additional monthly payment that is owed under the alleged ―Loan
Guaranty Agreement.‖ The specific terms on which this payment is made, however, clearly
differ depending on whether the written agreement or ―Loan Guaranty Agreement‖ is
controlling. As such, Plaintiffs‘ reliance on a supposed independent collateral agreement is
untenable.
Similarly, we must reject Plaintiffs‘ assertion that proof of the ―Loan Guaranty
Agreement‖ provides evidence of additional terms that supplement the written agreement.
The terms of the ―Loan Guaranty Agreement‖ are not consistent with and supplementary to
the written agreement; instead, they contradict the terms of the written lease. Accordingly,
we reject Plaintiffs‘ contention that the evidence of the ―Loan Guaranty Agreement‖ provides
admissible evidence of supplemental terms. See Gibson Cnty. v. Fourth and First Nat’l
Bank, 96 S.W.2d 184, 189 (Tenn. Ct. App. 1936) (noting that parol evidence may be heard to
supply parts omitted from a writing but that the added matter cannot contradict the written
contract).
We also reject Plaintiffs‘ argument that parol evidence is admissible in this matter to
demonstrate that the written agreement does not correctly embody the parties‘ true
agreement. Although case law does allow for the admissibility of evidence for this purpose
as a general matter, this exception to the parol evidence rule is applicable in lawsuits that
seek to reform a written agreement. See, e.g., Rentenbach Eng’g Co. v. Gen. Realty Ltd., 707
S.W.2d 524, 526-27 (Tenn. Ct. App. 1985) (noting that the parol evidence rule does not bar
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proof of testimony extraneous to the written contract when offered in a lawsuit to reform the
contract on the ground of mutual mistake). As Defendants have pointed out in their brief on
appeal, Plaintiffs never prayed to reform the written lease in this case.
Although the above arguments do not present a proper basis for overturning the trial
court‘s reliance on the parol evidence rule in this case, this does not necessarily mean that the
parol evidence rule should act as an absolute bar to Plaintiffs‘ assertion of the ―Loan
Guaranty Agreement.‖ In articulating a fourth exception for evading the bar of the parol
evidence rule, Plaintiffs generally assert that there is evidence in the record from which it
could be concluded that the parties modified the written lease agreement. Assuming that
there is evidence creating a genuine issue of fact on this matter, the trial court‘s dismissal of
the ―Loan Guaranty Agreement‖ claim due to the parol evidence rule would be in error. As
we have previously noted, the parol evidence rule ―does not prevent using extraneous
evidence to prove the existence of an agreement made after an earlier written agreement.‖
GRW Enters., Inc., 797 S.W.2d at 610 (citations omitted); see also Brunson v. Gladish, 125
S.W.2d 144, 147 (Tenn. 1939) (―[I]t is well settled that [the law] does not prohibit the
establishment by parol evidence of an agreement made subsequent to the execution of the
writing, although such subsequent agreement may have the effect of adding to, changing,
modifying or even altogether abrogating the contract of the parties as evidenced by the
writing[.]‖).
Defendants argue that this exception to the parol evidence rule is inapplicable by
claiming that Plaintiffs have always asserted the existence of an agreement made prior to the
written lease, not a subsequent one. In support of their position on this issue, Defendants rely
primarily on paragraph eleven from Ms. Smith‘s affidavit. In full, that paragraph states as
follows:
11. In or around November 2005, I was approached by Hi-Speed and asked to
personally borrow $1.6 million dollars for a construction loan to fund Hi-
Speed‘s expansion plans and was asked to sell the Thomas Street property and
use the sale proceeds to apply to the construction of the facility. In exchange,
Mock, Inc. and Hi-Speed, Inc. agreed to lease the facility and for a period of
20 years: to pay me and the Smith Trust a[] monthly amount sufficient to cover
all of the required loan payments, plus $4,000 to $5,500 per month to replace
the rent previously received on the Thomas Street Building and to compensate
for the risk on the loan.
There is no question that the Plaintiffs have alleged facts suggesting that certain
conversations occurred prior to the execution of the written lease agreement. Indeed,
inasmuch as the Plaintiffs have argued that the written lease does not fully embody the
- 14 -
parties‘ true agreement, they have consistently pointed towards the existence of some prior
agreement. We would not dispute that evidence of such a prior agreement would be barred
by the parol evidence rule,6 nor would we dispute that paragraph eleven of Ms. Smith‘s
affidavit is perhaps suggestive of the fact that an agreement different from the written lease
was reached prior to the written lease‘s execution. We note, however, that nothing in that
paragraph specifically states when the parties reached an agreement.7 Even if we construed
the affidavit as indicating that an agreement had been reached in November 2005, that does
not mean that evidence of agreements made subsequent to the written lease would be
inadmissible. In this regard, although Defendants‘ reliance on Ms. Smith‘s affidavit is
understandable, we note that nowhere does the affidavit specifically limit the parties‘
agreement(s) to a time before the written lease agreement was executed. Moreover, there is
evidence in the record that suggests that conversations regarding the ―Loan Guaranty
Agreement‖ took place both before and after the written lease agreement had been signed. In
fact, when asked about this issue in her deposition, Ms. Smith stated that the conversations
about the ―Loan Guaranty Agreement‖ were ―pretty continual.‖ She testified that she was
sure that some of the conversations ―were made before, some were made during[,] and some
[were] made after.‖ Viewing the evidence in the light most favorable to the Plaintiffs, who
were the nonmoving parties on summary judgment, we are compelled to conclude that a
genuine issue of fact exists as to whether any of the Defendants‘ alleged promises to Ms.
Smith were made after the written lease agreement. Because conduct occurring after the
execution of the written lease agreement could serve as a basis for modifying the written
contract, the parol evidence rule should not prevent Plaintiffs from establishing the existence
of the ―Loan Guaranty Agreement.‖
Statute of Frauds
Although there is evidence in the record that could be offered to prove the ―Loan
Guaranty Agreement‖ without violating the parol evidence rule, this does not necessarily
mean that summary judgment was improper. When Defendants moved for summary
judgment, they specifically argued that the claimed agreement did not comply with the
6
Further, we would not question that proof of the ―Loan Guaranty Agreement‖ would be barred by the
doctrine of merger if that claim was based solely on agreements made prior to the written agreement. The
doctrine of merger is similar to the parol evidence rule. ―The principle of merger . . . states that prior or
contemporaneous negotiations and agreements are integrated into a contract intended by the parties to be a
complete expression of their agreement.‖ GRW Enters., Inc., 797 S.W.2d at 610 n.2. On appeal, Plaintiffs
have not specifically challenged the trial court‘s determination that the alleged ―Loan Guaranty Agreement‖ is
barred by the doctrine of merger.
7
Although the paragraph mentions the date November 2005, that time period is referenced to indicate when
Ms. Smith was approached by Hi-Speed regarding potential arrangements for Hi-Speed‘s expansion plans.
The paragraph does not specifically state whether the parties‘ agreement occurred during the same period.
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Statute of Frauds. This is significant inasmuch as ―[t]he parol evidence rule and the statute
of frauds are separate rules that operate independently from each other.‖ GRW Enters., Inc.,
797 S.W.2d at 611 (citations omitted). As this Court previously explained:
The statute of frauds does not exclude parol evidence; it simply makes certain
agreements unenforceable through suit unless they are evidenced by a signed
memorandum. The parol evidence rule protects a completely integrated
written contract from being varied or contradicted by extraneous evidence but
does not require any particular type of agreement to be in writing.
****
Thus, evidence that does not run afoul of the parol evidence rule may be
ineffective under the statute of frauds, and vice versa.
Id. at 612.
As taken from Ms. Smith‘s affidavit, the alleged ―Loan Guaranty Agreement‖ covered
the following terms: In exchange for Ms. Smith‘s efforts in financing the construction of a
new facility, which were to include selling the Thomas Street Property and applying its
proceeds to construction, Mock and Hi-Speed agreed to lease the new facility, and ―for a
period of 20 years . . . pay [Plaintiffs] a[] monthly amount sufficient to cover all of the
required loan payments, plus $4,000 to $5,500 per month to replace the rent previously
received on the Thomas Street Building and to compensate for the risk on the loan.‖ Like the
written contract that was executed on December 1, 2005, this purported modification to the
written lease agreement is subject to the Statute of Frauds as codified at Tennessee Code
Annotated section 29-2-101. In pertinent part, that statute provides that:
No action shall be brought . . . [u]pon any contract for the sale of lands,
tenements, or hereditaments, or the making of any lease thereof for a longer
term than one (1) year . . . unless the promise or agreement, upon which such
action shall be brought, or some memorandum or note thereof, shall be in
writing, and signed by the party to be charged therewith, or some other person
lawfully authorized by such party.
Tenn. Code Ann. § 29-2-101(a)(4) (2012). Because the purported modification to the written
lease agreement is subject to the statute, it must be evidenced by a signed writing in order to
be enforceable.
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―The primary purpose of the Statute of Frauds is to reduce the risk of fraud and
perjury associated with oral testimony.‖ Waddle v. Elrod, 367 S.W.3d 217, 223 (Tenn. 2012)
(citations omitted). By requiring certain transactions to be in writing, the statute also helps to
―prevent the proof of verbal agreements after the memory of witnesses has been dimmed by
lapse of time.‖ Boutwell v. Lewis Bros. Lumber Co., 182 S.W.2d 1, 3 (Tenn. Ct. App. 1944).
Although a written contract is not necessary to satisfy the Statute of Frauds, a written
memorandum or note evidencing the parties‘ agreement is required. Waddle, 367 S.W.3d at
226 (citation omitted). Moreover, ―while the writing required by the Statute of Frauds must
contain the essential terms of the contract, it need not be in a single document.‖ Id. (citation
omitted). As our State Supreme Court has explained:
―The general rule is that the memorandum, in order to satisfy the statute, must
contain the essential terms of the contract, expressed with such certainty that
they may be understood from the memorandum itself or some other writing to
which it refers or with which it is connected, without resorting to parol
evidence. A memorandum disclosing merely that a contract had been made,
without showing what the contract is, is not sufficient to satisfy the
requirement of the Statue of Frauds that there be a memorandum in writing of
the contract.‖
Lambert v. Home Fed. Sav. & Loan Ass’n, 481 S.W.2d 770, 773 (Tenn. 1972) (quoting 49
Am. Jur. Statute of Frauds §§ 353, 363-64).
Throughout this case, the parties have vigorously disputed whether a sufficient writing
evidencing the alleged agreement exists. Although Plaintiffs have pointed to a number of
documents that they contend satisfy the Statute of Frauds collectively, Defendants have
consistently maintained that a sufficient memorandum or note is lacking. Moreover,
Defendants have argued that the documents relied upon by Plaintiffs are not properly
authenticated and, therefore, not admissible.
On appeal, Plaintiffs insist that the Defendants‘ concern regarding authentication was
not timely raised in the trial court, and they note that the trial court did not address the merits
of the authentication issue when adjudicating Defendants‘ motion for summary judgment.
The rationale behind the trial court‘s decision to not rule on the authentication issue is
provided in a footnote that begins on page four of its February 23, 2015 summary judgment
order. Therein, the trial court concluded that it did not need to reach the issue of
authentication ―because no document or related documents, whether authenticated or
unauthenticated, and whether signed by Defendant(s) or by both parties . . . , contain the
essential terms of the agreement claimed by Plaintiff, without resort to parol.‖ Like the trial
court, we find it unnecessary to evaluate whether Defendants‘ authentication concerns have
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any substantive merit. We agree that the documents relied on by Plaintiffs do not contain the
essential terms of the alleged agreement. The documents on which Plaintiffs rely consist of
(a) three separate emails purportedly sent by Bret Mock between 2005 and 2008, (b) a
general ledger of certain payments made by Hi-Speed to Ms. Smith and Eagle Bank from
2006 to 2011, and (c) corporate tax returns of Hi-Speed from 2007 through 2010. Whereas
the last two of these items generally demonstrate certain ―rent‖ payments that Hi-Speed made
in the years immediately following the written lease‘s execution, the emails relied on by
Plaintiffs contain a number of assertions regarding a lease of a Little Rock facility. Although
these documents ostensibly broach the same subject matter as the written lease agreement,
they do not clearly evidence the terms of the alleged agreement that Plaintiffs assert is
controlling in this cause. In order to glean the meaning from the documents that Plaintiffs
suggest is available therein, we would need to resort to parol evidence. Indeed, even when
read together, the documents fail to evidence the alleged agreement that Plaintiffs set forth in
count 1 of their Complaint.
The first email cited by Plaintiffs is dated December 5, 2005. It reads as follows:
LeeAnne[8],
Please review this lease for both parties. Peggy Smith is my mother.
She is going to sell (I am going to sell for her) her 3013 Thomas St. property
where we currently rent for $4000 and use it along with another borrowed
$1,000,000 to build a new facility on a lot she owns in the Little Rock River
Port Industrial Park. The intent is to maintain her income stream and cover her
expenses for the loan plus some guarantors fee for a 20 year loan at Eagle
Bank in L.R. (Butch Lomax with Eagle is the one I referred to you about title
work). This is essentially a duplication of her current lease for the Memphis
property.
Any questions, please advise.
Thanks,
Bret
Although this email purportedly contains a lease as an attachment, the specific attachment
has not been provided. As such, we do not know the terms of the attached lease. Obviously,
if the attached lease referenced in the email was the prior written contract from December 1,
2005, the terms contained therein would contradict the terms of the ―Loan Guaranty
Agreement‖ Plaintiffs assert is controlling. Moreover, we note that the December 5 email
itself fails to evidence the payment terms that Plaintiffs suggest it does.
8
Plaintiffs have identified the recipient of this email as Memphis attorney LeeAnne Cox.
- 18 -
The second email relied on by Plaintiffs is dated August 7, 2007, and is a response to
an email purportedly sent by Matthew Shirley from Regions Bank on the same day.
According to Plaintiffs, these emails were exchanged as Ms. Smith sought permanent
financing for the Little Rock Property. Matthew Shirley‘s email to Bret Mock posed a
number of questions. In pertinent part, it stated as follows: ―How long has the company been
in the new facility in Little Rock? It looks like the company is currently paying Peggy
$17,000 per month in rent for the facility. Does this sound correct?‖ In response, Bret Mock
stated as follows:
Since November of 06. The $17,000 includes a previous amount for the 3013
Thomas St. property that is yet to be sold. That will probably be close to her
ongoing income. . . . maybe a little more. While not necessarily sound
business practice, the payment will equal her notes, tax, etc. plus about $50k
income (which covers prior equity in the LR land and the Memphis property
and risk).
We will revise the lease when that all gets sorted out.
Bret
Although Bret Mock‘s response indicates that he was making $17,000.00 payments in rent at
the time of the August 7 email, the email does not contain the terms of the ―Loan Guaranty
Agreement.‖ Moreover, we agree with Defendants that the terms of the email indicate that
any terms of a lease revision had not been agreed upon or settled. In addition to stating that
the lease would be revised in the future, the email contains several phrases embedded with
conjecture and uncertainty, i.e., ―That will probably be close to her ongoing income,‖ ―maybe
a little more,‖ and ―about $50k income.‖ (emphasis added).
The final email relied on by Plaintiffs is dated August 13, 2008. According to
Plaintiffs‘ separate statement of undisputed material facts, this email was sent to the
Defendants‘ appraiser, Bob King. The entirety of the August 13 email is reproduced below:
From: Bret Mock
Sent: Wednesday, August 13, 2008 9:22 AM
To: RSKing11@aol.com
Subject: Little Rock building lease . . . . . . guaranteed for 20 year minimum
Plus Personally guaranteed 20 year lease for $1,800,000 building in Little
Rock River Port . . . . . loan with Eagle bank . . . . payment . . $18,500.00
Although this email contains a reference to a twenty year lease, it does not contain the terms
of the alleged ―Loan Guaranty Agreement.‖ It references a payment of $18,500.00, but it is
- 19 -
unclear whether this payment is in specific reference to obligations under the lease or
obligations under the referenced loan. Moreover, as Defendants have pointed out in their
brief on appeal, the stated payment may be nothing more than a statement of what was being
paid at the time the email was sent. Specific terms of the alleged agreement are simply not
present.
As we have stated previously, even when the emails are read together and alongside
the other documents referenced by Plaintiffs, they fail to establish the terms of the alleged
―Loan Guaranty Agreement.‖ To conclude that the documents evidence the terms Plaintiffs
base their claim upon, we would be required to rely on parol evidence. It is not even entirely
clear—from the documents themselves—whether the referenced lease in the emails concerns
the Little Rock Property that is the subject of the December 1, 2005 written lease agreement.
Although we might assume that this is the case, the documents do not plainly establish this
point, nor do they do so by reference.9 Indeed, although the documents variously refer to ―a
new facility on a lot [Ms. Smith] owns in the Little Rock River Port Industrial Park,‖ ―the
new facility in Little Rock,‖ and the ―building in [the] Little Rock River Port,‖ they do not
clearly establish that the property or facility being discussed is the same property governed by
the December 1, 2005 written lease agreement. As such, even assuming that the other terms
of the ―Loan Guaranty Agreement‖ were somehow established by the documents relied upon
by Plaintiffs, the documents would not provide sufficient evidence of an agreement related to
the Little Rock Property identified in the written contract. Given our opinion on this issue,
we conclude that Plaintiffs‘ claimed agreement fails to comply with the Statute of Frauds.
Notwithstanding the Statute of Frauds, Plaintiffs argue that their claim should not be
barred due to their ―part performance of the agreement.‖ They note in their brief on appeal
that ―[w]hen a party begins part performance of an oral contract otherwise subject to the
statute of frauds, such contract is taken out of the statute of frauds and is enforceable.‖
Plaintiffs are correct that the Statute of Frauds is not always an absolute bar to agreements
that do not comply with the statute. Based on the recognition that ―the Statute itself can
sometimes be turned into an instrument of the very types of evils it was designed to limit or
prevent,‖ our law does allow, in appropriate cases, for a party‘s performance to bring an oral
contract out of the Statute of Frauds. Shedd v. Gaylord Entm’t Co., 118 S.W.3d 695, 698
(Tenn. Ct. App. 2003) (citation omitted). Case law has indicated, however, that partial
performance will not create an exception to the Statute of Frauds if the subject matter of the
alleged agreement involves interests in real estate. See Campbell v. Lane, No. 03A01-9205-
CH-179, 1992 WL 335947, at *6 (Tenn. Ct. App. Nov. 18, 1992) (citation omitted) (―[A]n
9
Again, we note that although the December 5, 2005 email purports to contain a lease as an attachment, the
attachment was not provided by Plaintiffs. We thus have no way of discerning, from the email itself, what
specific land or property was at issue in the email.
- 20 -
oral contract, otherwise unenforceable, can be the basis of an action if one of the parties has
performed and the subject matter of the contract is personalty, but not if it is realty.‖); see
also Owen v. Martin, No. M1999-02305-COA-R3-CV, 2000 WL 1817278, at *4 (Tenn. Ct.
App. Dec. 13, 2000) (citations omitted) (―[I]t has long been the rule in this state that partial
performance will not prevent the application of the Statute of Frauds to an agreement
involving interests in real estate.‖). When the trial court considered Plaintiffs‘ partial
performance argument, it rejected it on this basis, specifically concluding that ―part
performance does not remove application of the statute of frauds to contracts involving real
estate.‖
On appeal, Plaintiffs maintain that the partial performance doctrine is available to
escape the Statute of Frauds. They argue that the doctrine is only legally unavailable in cases
involving contracts for the sale of land. Because the alleged agreement in this case pertains
to a lease of land rather than a conveyance of land outright, they reason that proof of their
partial performance should be admissible so as to allow them to escape the bar imposed by
the Statute of Frauds. There is no question that several cases identify the partial performance
doctrine as applicable to oral contracts ―other than for the sale of land.‖ See, e.g., Schnider v.
Carlisle Corp., 65 S.W.3d 619, 622 (Tenn. Ct. App. 2001) (citations omitted). However, as
previously indicated, several other decisions have stated that the doctrine will not prevent the
application of the Statute of Frauds to agreements involving realty generally. See, e.g.,
Martin, 2000 WL 1817278, at *4. Many of the cases that specifically link the doctrine‘s
unavailability to cases involving parol contracts for the sale of land have regarded the
inapplicability of the doctrine as a ―rule of property.‖ See Baliles v. Cities Serv. Co., 578
S.W.2d 621, 624 (Tenn. 1979). Moreover, other cases have pinpointed the applicability of
the partial performance doctrine as dependent on whether the subject matter of the agreement
involves personal property. See Buice v. Scruggs Equip. Co., 250 S.W.2d 44, 47 (Tenn.
1952) (―[W]e will enforce a verbal contract when there has been partial performance as to
personal property when we will not do so as to real property.‖); Trew v. Ogle, 767 S.W.2d
662, 664 (Tenn. Ct. App. 1988) (noting that, because the subject matter of the contract
constituted personal property, the partial performance exception was available to take the
agreement out of the Statute of Frauds). Based on this precedent, we fail to see how an oral
agreement involving a transfer of interest in land, including a leasehold interest greater than
one year, can escape the bar of the Statute of Frauds based on the partial performance
doctrine.
As support for their position that the partial performance doctrine can apply to a lease
of real property, Plaintiffs cite two cases. The first case that Plaintiffs reference, Shah v.
Racetrac Petroleum Co., 338 F.3d 557 (6th Cir. 2003), involved a dispute over a lessor‘s
decision to invoke termination clauses under a lease for a gas station. The plaintiffs/lessees
brought suit alleging that the lessor‘s reliance on the termination clauses was wrongful;
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among other things, the plaintiffs contended that the lease agreement had been orally
modified. Id. at 572. Although the lessor argued that any oral modification to the parties‘
agreement would fail under Tennessee‘s Statute of Frauds, the Sixth Circuit held that the
Statute of Frauds did not prevent the maintenance of the claim based on the plaintiffs‘ partial
performance. Id. at 573-74. Although the implication from the Shah case is that parties are
able to rely on partial performance as an exception to the Statute of Frauds in the context of a
lease of real property, we note that we are not bound by the Sixth Circuit‘s opinion on
matters of Tennessee law. See Townes v. Sunbeam Oster Co., Inc., 50 S.W.3d 446, 452
(Tenn. Ct. App. 2001) (noting that the Sixth Circuit‘s interpretation and application of state
law is not binding on this Court). In this vein, we further note that the Shah opinion does not
discuss any limitation that exists under Tennessee law pertaining to the application of the
partial performance doctrine with respect to interests in real property; it is not clear from the
opinion whether this point was raised or considered.
The second case referenced by Plaintiffs, Wheeler v. LaMac, Inc., 1986 WL 13964
(Tenn. Ct. App. Dec. 12, 1986), received little attention in Plaintiffs‘ brief. It was simply
cited for the proposition that the partial performance doctrine can apply to a lease of real
property. Having reviewed the opinion in Wheeler, we conclude that it fails to support the
proposition that Plaintiffs claim it does. First, as Defendants have pointed out, the lease at
issue in Wheeler was a lease of a billboard sign. Id. at *1. As such, it did not involve a lease
of real property. See Burks v. Elevation Outdoor Adver., LLC, 220 S.W.3d 478, 486 (Tenn.
Ct. App. 2006) (―[A] billboard constitutes a trade fixture, which retains its character as an
item of personal property, and not a fixture to be considered a part of the real property on
which it sits.‖). Second, the opinion in Wheeler reveals that this Court did not find partial
performance to be available in that case. Although the trial court found that the plaintiff was
entitled to some recovery on account of partial performance notwithstanding noncompliance
with the Statute of Frauds,10 this Court appeared to suggest that the trial court‘s actions could
be sustained on the theory of quantum meruit, not partial performance. See Wheeler, 1986
WL 13964, at *2.
Although not specifically decided in its opinion, we think that the Supreme Court‘s
discussion in Irwin v. Dawson, 273 S.W.2d 6 (Tenn. 1954), is instructive that the ―rule of
property‖ pronounced in cases such as Baliles and Eslick v. Friedman, 235 S.W.2d 808
(Tenn. 1951), is equally applicable to oral agreements to sell property in fee simple and to
oral agreements for real estate leases that are to last more than one year. That is, the Dawson
opinion appears to directly suggest what several of our decisions have repeatedly
pronounced: the partial performance doctrine is unavailable to remove agreements regarding
realty from the Statute of Frauds.
10
The lease was for three years. Wheeler, 1986 WL 13964, at *2.
- 22 -
At issue in Dawson was a tenant‘s suit for specific performance of a lease agreement
concerning real property located in Knoxville. Although the property that was the subject of
the lease was owned by a husband and wife as tenants by the entirety, the written contract
was only signed by the husband. Dawson, 273 S.W.2d at 6. The written agreement provided
that a building would be built on the property ―with certain rentals to be paid over a period of
ten years, payable monthly, with the privilege on the part of [the tenant] to renew for an
additional ten years.‖ Id. at 6-7. Although the tenant subsequently went into possession of
the rented property and paid the monthly rent, the wife refused to recognize the contract
when her husband died several years later. Id. at 7. In response to the tenant‘s bill for
specific performance, the wife demurred, pleading the Statute of Frauds as a defense. After
the trial court sustained the demurrer, the tenant appealed. Id. Our Supreme Court ultimately
affirmed the trial court‘s actions and stated that it was a well-settled rule that a husband could
not dispose of his wife‘s interest in an estate owned by tenants by the entirety. Id. It further
noted that the wife had not signed the lease in question and held that Statute of Frauds was a
good defense. Id. at 7-8. Importantly, we note that immediately prior to its conclusion that
the Statute of Frauds was a good defense against the tenant‘s claim for enforcement of the
lease, our Supreme Court stated as follows:
[I]t was said at page 241 of 184 Tenn., at page 336 of 198 S.W.2d:
―The rule that the partial performance of a parol contract will not
relieve from the application of the statute has become a rule of property.
Goodloe v. Goodloe, 116 Tenn. 252, 92 S.W. 767, 6 L.R.A., N.S., 703, 8 Ann.
Cas. 112.
―In Inman v. Tucker, 138 Tenn. 512, 198 S.W. 247, it was held that
where one goes into possession under a parol donation, he occupies the same
relation in respect to his possession as a purchaser by parol.
―In Jennings v. Bishop, 3 Shan.Cas. 138, it was held that partial
performance of a parol contract for the sale of land will not take the case out of
the statute, and, therefore, neither the taking of possession of land by the parol
vendee and permanently improving it, nor the payment of purchase money,
will prevent the vendee from electing to avoid the contract.‖
Id. at 8. As we construe it, the Supreme Court‘s favorable reference to this authority in the
context of the facts involved in Dawson suggests that the ―rule of property‖ regarding partial
performance applies equally to contracts for the sale of land in fee simple and real property
leases having a duration term over one year. Indeed, as we have already noted, several of our
previous decisions state that partial performance will not prevent the application of the
- 23 -
Statute of Frauds ―to an agreement involving interests in real estate.‖ See, e.g., Martin, 2000
WL 1817278, at *4. Certainly, there is no question that a lease of real property, as was
implicated in the present case, governs an interest in real property. See Mason v. City of
Nashville, 291 S.W. 1074, 1076 (Tenn. 1927) (noting that, because a lease of an upper story
of a building vests in the lessee an interest in real estate, the ―contracts therefor are governed
by the law pertaining to real estate‖); Adler v. Double Eagle Props. Holdings, LLC, No.
W2014-01080-COA-R3-CV, 2015 WL 1543260, at *1 (Tenn. Ct. App. Apr. 2, 2015) (―This
case concerns the proper interpretation of a contract governing an interest in real property.
The trial court concluded that the contract unambiguously granted a lease to one party[.] . . .
Affirmed[.]‖), perm. app. denied (Tenn. Aug. 13, 2015); BLACK‘S LAW DICTIONARY 1024
(10th ed. 2014) (noting that a lease includes ―[a] contract by which a rightful possessor of
real property conveys the right to use and occupy the property in exchange for consideration‖
and also refers to ―[t]he piece of real property so conveyed‖). Accordingly, we find no error
in the trial court‘s determination that the partial performance doctrine was unavailable to
remove the bar imposed by the Statute of Frauds.
Counts 3 and 5- Unjust Enrichment and Quantum Meruit
As alternative theories of recovery, Plaintiffs asserted claims for unjust enrichment
and quantum meruit. These theories are ―‗essentially the same.‘‖ Crye-Leike, Inc. v. Carver,
415 S.W.3d 808, 824 (Tenn. Ct. App. 2011) (quoting Paschall’s, Inc. v. Dozier, 407 S.W.2d
150, 154 (Tenn. 1966)). Under either theory, a party must demonstrate the following
elements:
(1) there must be no existing, enforceable contract between the parties
covering the same subject matter;
(2) the party seeking recovery must prove that it provided valuable goods
and services;
(3) the party to be charged must have received the goods and services;
(4) the circumstances must indicate that the parties involved in the
transaction should have reasonably understood that the person
providing the goods or services expected to be compensated; and
(5) the circumstances must also demonstrate that it would be unjust for the
party benefitting from the goods or services to retain them without
paying for them.
Id. at 824-25 (internal citations omitted). In their Complaint, Plaintiffs asserted that
Defendants had received benefits in connection with the Little Rock Property and stated that
it would be unjust for Defendants to retain these benefits without compensating Plaintiffs
for the value they received. In support of their request for relief, Plaintiffs alleged that the
- 24 -
value of benefits the Defendants had received in connection with the Little Rock Property
was not less than the amount of the additional monthly payments ―for each month through
and including December 2028.‖
When the trial court dismissed Plaintiffs‘ unjust enrichment and quantum meruit
claims at summary judgment, it explained its decision as follows:
Plaintiffs cannot recover under the theories of unjust
enrichment/quantum meruit because, among the other elements of these
claims, ―[a] party seeking to recover on one of these theories must demonstrate
. . . [that] there [is] no existing, enforceable contract between the parties
covering the same subject matter[.]‖ Id. (citation omitted; emphasis added);
accord, Doe v. HCA Health Services of Tennessee, Inc., 46 S.W.3d 191, 197-
98 (Tenn. 2001). The Court finds that the Lease Agreement is an existing,
enforceable contract between the parties covering the same subject matter as
Plaintiffs‘ claimed oral agreement. Accordingly, Plaintiffs‘ unjust enrichment
and quantum meruit claims must be dismissed.
For the reasons discussed below, we affirm the trial court‘s decision to dismiss Plaintiffs‘
unjust enrichment and quantum meruit claims. Indeed, having reviewed the record
transmitted to us on appeal, we conclude that no genuine issue of fact exists with respect to
Plaintiffs‘ request for quasi-contractual relief.
Concerning Defendant Hi-Speed, we observe, like the trial court, that an enforceable
contract already exists regarding the same subject matter. Under the written lease
agreement that was executed in December 2005, Hi-Speed‘s obligations with respect to the
additional monthly payments are clearly defined. The payments, therein defined as a
component of ―Additional Rent,‖ were to continue so long as the Thomas Street Property
served as collateral. Although Plaintiffs argue that the written lease agreement addresses a
different subject matter inasmuch as it does not specifically address the parties‘ alleged
agreements regarding the sale of the Thomas Street Property, we find their arguments to be
without merit. The written lease agreement generally addresses, inter alia, the
consideration that is to be provided in exchange for financing the construction of the Little
Rock Property. The fact that it does not cover every element of consideration allegedly
agreed to as part of a purported larger agreement does not mean that it does not cover the
same subject matter. In any event, as we have already noted, the precise subject matter at
issue was unquestionably addressed by the written lease agreement. As Plaintiffs observed
in their Complaint, the $4,000.00 monthly payment outlined in the written lease agreement
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―is the same $4,000.00 that was to be paid to Plaintiffs [under the ―Loan Guaranty
Agreement‖].11
Concerning Defendant Mock, the record does not evidence any genuine factual issue
as to whether Mock received any benefit that would justify the enforcement of a quasi-
contractual remedy against it. Despite Ms. Smith‘s affidavit testimony that both Defendants
agreed to lease the Little Rock Property, there is no evidence in the record that the Little
Rock Property was actually constructed for the benefit of Mock. Hi-Speed is the only entity
that ever leased the property, and Ms. Smith‘s decision to sue Mock does not appear to have
been factually tied to Mock‘s own corporate actions. In this vein, we note that there are no
asserted facts specifically linking the financing/leasing arrangements to the corporate
actions of Mock. As evidenced by Ms. Smith‘s deposition testimony, she sued Mock
because of her perception that it was intertwined with Hi-Speed:
Q. Hi-Speed, Inc., the Arkansas corporation is the entity that entered into
this lease with you for that Lindsey Road property?
A. Yes.
Q. Okay, tell me in your own words, why are you asserting in this lawsuit a
claim against Mock, Inc., the Tennessee corporation?
[Counsel]: Objection to form.
A. Because I don‘t see differences.
Q. You don‘t, well, we have seen –
A. I have seen the documentation but it‘s all intertwined.
11
It is technically true that Ms. Smith, in her individual capacity, was not a party to the written lease
agreement. It is unclear to us, however, how the evidence in the record would support her having an individual
claim for unjust enrichment. The actions she took in furtherance of the development of the Little Rock
Property are all seemingly connected to her role as trustee of the Trust. For example, although Ms. Smith notes
that the Defendants were provided value by way of the Plaintiffs’ agreement to surrender the Thomas Street
Property, that property was owned by the Trust, not Ms. Smith individually. Moreover, although Ms. Smith
cites that she incurred personal indebtedness to finance the construction loan for the Little Rock Property, the
Little Rock Property itself was also owned by the Trust. The ultimate benefit received by Hi-Speed, the use of
the Little Rock Property, is thus tied to value provided by the Trust, not Ms. Smith in an individual capacity.
In keeping with this fact, the rent due under the written lease agreement was directed to be paid to the Trust,
not Ms. Smith individually.
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Q. Okay, from your perspective, it‘s all intertwined and Hi-Speed -- is Hi-
Speed a subsidiary of Mock, Inc.?
A. I don‘t know.
Q. Well, when you say it‘s all intertwined, tell me more of what you mean
so that I understand why you have sued Mock.
A. Because Mock, Inc. manages and does everything for Hi-Speed, Inc.
Although the record arguably raises a question as to whether Mock could potentially be held
liable for Hi-Speed‘s separate obligations,12 there is no evidence that Mock itself received
any direct benefits. Accordingly, there is no basis in law for the imposition of a quasi-
contractual remedy against it.
Count 4- Equitable Estoppel
As another vehicle for extending the duration of the additional monthly payments past
the timeframe outlined in the written lease agreement, Plaintiffs have asserted a claim of
equitable estoppel. The doctrine of equitable estoppel can be applied when the following
elements are present with respect to the party against whom estoppel is asserted:
(1) Conduct which amounts to a false representation or concealment of
material facts, or, at least, which is calculated to convey the impression
that the facts are otherwise than, and inconsistent with, those which the
party subsequently attempts to assert;
(2) Intention, or at least expectation that such conduct shall be acted upon
by the other party;
(3) Knowledge, actual or constructive of the real facts.
12
In certain cases, parties may establish, ―[b]y suitable evidence[,] . . . that separate corporations should be
treated as a single entity.‖ Murroll Gesellschaft M.B.H. Tenn. Tape, Inc., 908 S.W.2d 211, 213 (Tenn. Ct.
App. 1995) (citation omitted). Although Ms. Smith‘s deposition testimony, along with other evidence,
arguably raises the question of whether it is appropriate to treat Mock and Hi-Speed as a single entity, this
argument was never specifically advanced on appeal. Issues not raised in a brief are considered waived. See
Thompson v. Deutsche Bank Nat’l Trust Co., No. W2011-00329-COA-R3-CV, 2012 WL 1980373, at *3
(Tenn. Ct. App. June 4, 2012) (citations omitted) (―[A]n issue that the appellant does not raise or adequately
argue in her appellate brief is waived.‖).
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Osborne v. Mountain Life Ins. Co., 130 S.W.3d 769, 774 (Tenn. 2004) (citation omitted).
Moreover, in order to successfully invoke estoppel, the party relying on it must lack
knowledge of the truth of the facts in question, rely on the conduct of the party estopped,
and take such action so as to change his or her position prejudicially. Id. (citation omitted).
For the specific reasons articulated below, we conclude that the trial court did not err in
dismissing Plaintiffs‘ equitable estoppel claim at summary judgment.
Analytically, equitable estoppel is distinguishable from a claim of promissory
estoppel. Whereas ―promissory estoppel is a sword, based on the failure to deliver on a
promise, . . . equitable estoppel is a shield a plaintiff can raise against the defense of the
statute of frauds when the defendant has knowingly misrepresented a fact.‖ Seramur v. Life
Care Ctrs. of Am., Inc., No. E2008-01364-COA-R3-CV, 2009 WL 890885, at *5 (Tenn. Ct.
App. Apr. 2, 2009). ―[E]quitable estoppel is not a cause of action, and standing alone it will
not entitle the party to affirmative relief.‖ Deal v. Tatum, No. M2015-01078-COA-R3-CV,
2016 WL 373265, at *8 (Tenn. Ct. App. Jan. 29, 2016) (citation omitted).
In this case, Plaintiffs asserted an equitable estoppel claim in their original Complaint.
They have treated equitable estoppel as a substantive cause of action rather than a doctrine
that could remove the bar of the Statute of Frauds. In their initial brief on appeal, for
example, Plaintiffs raise arguments as to why an exception to the Statute of Frauds exists,
but none of these arguments involve equitable estoppel. As in the Complaint and in the
course of the trial proceedings, equitable estoppel is instead treated as a free-standing legal
cause of action. Although Plaintiffs‘ reply brief does state that equitable estoppel is
available so as to allow them to overcome the bar imposed by the Statute of Frauds, we
have consistently held that arguments not raised in an initial brief are waived. See Artist
Bldg. Partners v. Auto-Owners Mut. Ins. Co., 435 S.W.3d 202, 220 n.5 (Tenn. Ct. App.
2013) (noting that a reply brief is not a vehicle for raising new issues or arguments).13
Because equitable estoppel is not a sword that can be asserted as a stand-alone cause of
action, the trial court did not err in dismissing Plaintiffs‘ equitable estoppel count.
Count 6- Promissory Estoppel
Plaintiffs also raised a promissory estoppel claim in an attempt to recover additional
monthly payments past the timeframe provided in the written lease agreement. The trial
court dismissed their promissory estoppel claim at summary judgment, concluding as
follows:
13
In any event, we note that claims for equitable estoppel involve representations of existing or past facts to a
plaintiff, as opposed to promises of future performance. Mills v. Mills, No. W2014-00855-COA-R3-CV, 2015
WL 3883176, at *10 (Tenn. Ct. App. June 24, 2015).
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The Tennessee Supreme Court has held that the application of promissory
estoppel to overcome the bar of the Statute of Frauds is limited to ―exceptional
cases where to enforce the statute of frauds would make it an instrument of
hardship or oppression, verging on actual fraud.‖ Shedd v. Gaylord
Entertainment Co., 118 S.W.3d 695, 699-700 (Tenn. Ct. App. 2003), perm.
app. denied. This is not such an exceptional case. Plaintiffs have not alleged
or offered any evidence that they were lied to or misled. To the contrary,
Plaintiff Smith testified her dealings were with her son toward whom she
apparently has expressed no claim of deceit or misrepresentation.
Having reviewed the record transmitted to us on appeal, we agree with the trial court‘s
decision to dismiss the promissory estoppel claim, albeit for the specific reasons discussed
below.
Promissory estoppel ―is an equitable doctrine, and its limits are defined by equity and
reason.‖ Chavez v. Broadway Elec. Serv. Corp., 245 S.W.3d 398, 404 (Tenn. Ct. App. 2007)
(citations omitted). ―A claim of promissory estoppel is not dependent upon the existence of
an express contract between the parties.‖ Id. at 405 (citations omitted). Rather, such a claim
will be established when plaintiffs show the following:
(1) that a promise was made;
(2) that the promise was unambiguous and not unenforceably vague; and
(3) that they reasonably relied upon the promise to their detriment.
Id. at 404 (citations omitted). The key element, of course, is the promise. Amacher v.
Brown-Forman Corp., 826 S.W.2d 480, 482 (Tenn. Ct. App. 1991). ―It is the key because
the court must know what induced the plaintiff‘s action or forbearance[.]‖ Id. Importantly,
the promise ―must be unambiguous and not unenforceably vague.‖ Id. (citations omitted).
In this case, the alleged oral promise does not meet the legal standard outlined above.
According to Ms. Smith‘s affidavit, the alleged promise made by Defendants included the
promise to pay Plaintiffs, for twenty years, ―a[] monthly amount sufficient to cover all of
the required loan payments, plus $4,000 to $5,500 per month.‖ This purported promise is
too indefinite to support a basis for relief; the promised payment terms are uncertain, and
there is no reference to other facts from which a sense of certainty can be established.
Although a defined range is given concerning the amount of additional monthly payments
promised to be made, the range itself provides us no basis upon which to bring clarity to the
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promise. Does the promise call for a specific amount within the listed range that is to last
for the duration of the identified twenty year period? Or can the payment amount vary
within the range depending on the specific month? If so, on what basis? Although the
relied-upon promise invites these questions, the questions themselves are left unanswered.
Because the alleged promise by Defendants is too vague to be enforceable, we affirm the
trial court‘s summary dismissal of the promissory estoppel claim.
The trial court’s findings pertaining to the written lease agreement
Following the trial court‘s entry of summary judgment as to the claims discussed
above, a trial was held on the Trust‘s claim for violation of the written lease agreement.
This claim was presented in count two of Plaintiffs‘ Complaint and was predicated on Hi-
Speed‘s alleged failure to pay the full amount of base rent and additional monthly payments
due under the lease. In its July 22, 2015 final judgment, the trial court concluded that no
deficiency was available to the Trust:
As of this date, Hi-Speed, Inc. has paid Plaintiff Peggy L. Smith, Trustee of the
Peggy L. Smith Trust more rent under the Little Rock Lease than the Court has
found it was obligated to pay her under the clear and unambiguous Lease
provisions, including specifically the provision at paragraph 3(b)(ii) that an
additional $4,000.00 per month was to be paid only ―for so long as [the
Thomas Street] property shall serve as said additional collateral.‖ Thus, at this
time there is no deficiency owed to her by Hi-Speed, Inc. Therefore, she is not
entitled to any judgment under Count 2 of her Complaint, or otherwise under
any other Count of her Complaint as the Court has previously ruled.
On appeal, the Trust challenges the trial court‘s determination that it is not entitled to a
deficiency. First, it argues that the defense of payment is an affirmative defense that Hi-
Speed failed to plead. Second, it argues that Hi-Speed failed to make the ―requisite showing‖
that its rent obligations under the written lease agreement were satisfied.
Although the Trust correctly identifies that ―payment‖ is as an affirmative defense
under Rule 8.03 of the Tennessee Rules of Civil Procedure, we disagree that Hi-Speed was
required to affirmatively plead ―payment‖ in order to prove that it had, in fact, paid more than
it was required to under the lease agreement.14 In the context of this case, Hi-Speed‘s
14
Given our opinion on this issue, we do not need to reach a resolution on Hi-Speed‘s alternative position that
it properly pleaded ―payment.‖ According to the seventh defense in Hi-Speed‘s answer, it was ―paying a full
and fair rental for the [Little Rock Property] to which Plaintiffs contractually agreed[.]‖ We note that this
defense was specifically raised in defense of Plaintiffs‘ claims for unjust enrichment and quantum meruit.
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apparent15 proof of payment is consistent with a general defense to liability. As former
Tennessee Supreme Court Justice William Koch explained while serving as a judge on this
Court:
The difference between a general defense which is not required to be
specifically pled and an affirmative defense is that a general defense negates
an element of the plaintiff‘s prima facie case, while an affirmative defense
excuses the defendant‘s conduct even if the plaintiff is able to establish a
prima facie case.
Brooks v. Davis, No. 01-A-01-9509-CV00402, 1996 WL 99794, at *7 (Tenn. Ct. App. Mar.
8, 1996) (Koch, J., concurring) (citation omitted). Although we have not been able to locate
any Tennessee authority specifically stating that evidence of ―payment‖ may sometimes be
asserted as a general defense notwithstanding the language contained in Rule 8.03, we are of
the opinion that such a position is an appropriate one. If the proof of payment serves to
negate a plaintiff‘s prima facie case rather than excuse it, payment functions as a general
defense, not an affirmative one. In reaching our conclusion on this matter, we are
particularly persuaded by the decision of the Missouri Court of Appeals in Smith v. Thomas,
210 S.W.3d 241 (Mo. Ct. App. 2006). At issue in that case was a landlord‘s claim to recover
rent allegedly due under a residential lease. Id. at 242. After the trial court entered a
judgment in favor of the tenants, the landlord appealed. Id. at 243. Among other issues, the
landlord argued that the trial court had erred in considering evidence that the tenants had
made all of their rent payments due to their failure to plead payment as an affirmative
defense. Id. The appellate court rejected this argument, stating as follows:
Payment is one of the affirmative defenses specifically referred to in
Rule 55.08 as one that must be included in a responsive pleading. Appellant
contends that Respondents‘ failure to file a written pleading asserting that
defense precluded Respondents from presenting any evidence that they had
made the rent payments Appellant claimed not to have received.
The crucial problem with Appellant‘s argument is that, rather than
seeking to establish an affirmative defense, Respondents sought to introduce
the challenged evidence in order to negate an element of Appellant‘s cause of
action and to impeach the credibility of Appellant‘s witness. ―An affirmative
defense seeks to defeat or avoid the plaintiff‘s cause of action, and avers that
15
We say ―apparent‖ because we are unable to discern the totality of the proof presented to the trial court given
Plaintiffs‘ failure to file a transcript of the trial proceedings or prepare a statement of the evidence in
accordance with Rule 24 of the Tennessee Rules of Appellate Procedure.
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even if the allegations of the petition are taken as true, the plaintiff cannot
prevail because there are additional facts that permit the defendant to avoid the
legal responsibility alleged.‖ [Mobley v. Baker, 72 S.W.3d 251, 257 (Mo. Ct.
App. 2002)]; see also Rice v. James, 844 S.W.2d 64, 66 (Mo. App. E.D. 1992)
(quoting Parker v. Pine, 617 S.W.2d 536, 542 (Mo. App. W.D. 1981)) (―‗An
affirmative defense contemplates additional facts not included in the
allegations necessary to support plaintiff‘s case and avers that plaintiff‘s theory
of liability, even though sustained by the evidence, does not lead to recovery
because the affirmative defense allows the defendant to avoid legal
responsibility.‘‖). ―‗Any evidence which tends to show plaintiff‘s cause never
had legal existence is admissible on a general denial even though the facts are
affirmative, if and insofar as they are adduced only to negative the plaintiff‘s
cause of action and are not by way of confession and avoidance.‘‖ Rice, 844
S.W.2d at 66 (quoting Parker, 617 S.W.2d at 542).
As a part of Appellant‘s prima facie case, he was required to ―establish
the existence of a valid lease, mutual obligations arising under the lease, that
defendant did not perform, and that plaintiff was thereby damaged by the
breach.‖ TA Realty Assocs. Fund V, 144 S.W.3d at 347. In his petition,
Appellant averred that Respondents had breached the lease by failing to pay
rent on several unspecified occasions.
****
At trial, Appellant presented testimony from the property manager that
Respondents had not paid rent in January, February, April, and May 2004 and
submitted an accounting ledger that did not reflect payments having been
received from Respondents for those months. Respondents‘ testimony that
they had indeed paid their rent for those four months served to impeach
Appellant‘s evidence of their failure to pay rent and to thereby negate the
breach element of his cause of action. Accordingly, the trial court did not err
in admitting and considering that testimony in assessing whether Appellant
proved his cause of action.
Id. at 243-44 (internal footnote omitted).
In this case, the trial court determined that Hi-Speed‘s payments of rent under the
written lease agreement resulted in no deficiency. This proof of payment was proper as a
general defense because it successfully negated the Trust‘s prima facie case. With respect to
the Trust‘s argument that Hi-Speed failed to make the ―requisite showing‖ that its rent
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obligations were fulfilled, our ability to review this issue has been hampered by the Trust‘s
failure to file a transcript of the trial proceedings or prepare a statement of the evidence.
Because we cannot review the facts without an appellate record containing the facts, ―we
must assume that the record, had it been preserved, would have contained sufficient evidence
to support the trial court‘s factual findings.‖ Sherrod v. Wix, 849 S.W.2d 780, 783 (Tenn. Ct.
App. 1992) (citations omitted). Accordingly, we conclude that no basis exists to disturb the
trial court‘s findings regarding the lack of a deficiency.
Conclusion
For the foregoing reasons, we affirm the dismissal of the claims by the trial court‘s
February 23, 2015 summary judgment order, as well as its later July 22, 2015 final judgment.
Costs of this appeal are assessed jointly and severally against the Appellants Peggy L. Smith
and the Peggy L. Smith Trust, and their surety, for which execution may issue if necessary.
This case is remanded to the trial court for the collection of costs, enforcement of the
judgment, and for such further proceedings as may be necessary and are consistent with this
Opinion.
_________________________________
ARNOLD B. GOLDIN, JUDGE
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