BSG, LLC v. Check Velocity, Inc.
395 S.W.3d 90
Tenn.2012Background
- BSG and Check Velocity entered into a two-year contract (2004–2006) for referral and fee residuals from Check Velocity’s re-presentment services.
- The 2004 contract terminated in 2006; a second contract (2006–2009) was executed with updated terms and services.
- BSG referred Weight Watchers to Check Velocity; Weight Watchers and Check Velocity entered an ECR Agreement (2005) for electronic re-presentment.
- The ECR Agreement permitted continued service and residuals through 2007 when it expired, after which Check Velocity paid residuals until 2008.
- In 2008 Weight Watchers and Check Velocity entered a Collection Services Agreement with material changes, including new credit card collection duties and a New York choice of law.
- BSG sued for residuals after September 15, 2008; Check Velocity moved for summary judgment arguing the 2008 agreement was not a renewal of the ECR Agreement.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Was the Weight Watchers Collection Services Agreement a renewal of the ECR Agreement? | BSG contends it is a renewal invoking continued residuals. | Check Velocity argues it is a new contract with different terms, not a renewal. | Not a renewal; insufficient basis to extend residuals. |
| What is the meaning of 'renew' in the 2006 BSG–Check Velocity contract? | Renewal equates to extending the existing contract. | Renewal may mean a new contract under some readings. | Renewal means a contract extension with same terms, absent contrary indication. |
| Did continued performance after ECR expiration imply renewal or a new contract? | Continuing to perform under ECR terms signified renewal. | Post-expiration conduct does not prove renewal when terms diverge. | Continued performance suggested renewal of the ECR, but the Collection Services Agreement differed materially. |
| Did the Collection Services Agreement's material changes render it a non-renewal of the ECR? | Some arguable continuity with prior terms could imply renewal. | Material changes (credit services, assignment, governing law) show a new contract. | Material changes mean it was not a renewal of the ECR. |
Key Cases Cited
- 84 Lumber Co. v. Smith, 356 S.W.3d 380 (Tenn. 2011) (contract interpretation as a question of law; de novo review)
- Allstate Ins. Co. v. Watson, 195 S.W.3d 609 (Tenn. 2006) (interpretation requires ascertainment of parties’ intent; unambiguous terms)
- Maggart v. Almany Realtors, Inc., 259 S.W.3d 700 (Tenn. 2008) (ambiguous contract language and renewal concepts)
- Womble v. Walker, 181 S.W.2d 5 (Tenn. 1944) (renewal often equates to extension; contract extension default understanding)
- Delzell v. Pope, 294 S.W.2d 690 (Tenn. 1956) (continuing performance implies new contract with same terms)
- Brewer v. Vanguard Ins. Co., 614 S.W.2d 360 (Tenn. Ct. App. 1980) (renewal of contract; context of terms and term extensions)
- Cocke Cnty Bd. of Highway Comm’rs v. Newport Utils. Bd., 690 S.W.2d 231 (Tenn. 1985) (contract interpretation; consideration of how clauses modify others)