Cut-Heal Animal Care Products Inc v. Agri-Sales Associates Inc, 3:07-cv-01816

Cut-Heal sells veterinary care products with a distinctive trade dress and a registered mark CUT-HEAL; Agri-Sales distributed them under an exclusive 1993 sales agreement for nearly 14 years.
In 2007 Cut-Heal learned Agri-Sales also sold AHC Products’ liquid wound care treatments with labeling allegedly identical to Cut-Heal’s and using similar bottles.
Cut-Heal terminated the Agreement and sued for trade dress/trademark infringement, unfair competition/misappropriation, breach of implied covenant of good faith and fair dealing, and breach of fiduciary duty; Agri-Sales counterclaimed for breach of contract and bad faith commissions, and sought an accounting.
An Agreed Order on March 16, 2009 dismissed trade dress/trademark/unfair competition claims with prejudice; settlement discussions followed but later failed.
In January 2011 Agri-Sales moved to reopen; court granted, new counsel appeared, and by April 2011 the court noted Agri-Sales’ July 30, 2009 motion for partial summary judgment was under submission.
The court granted summary judgment for Agri-Sales, dismissing Cut-Heal’s remaining claims (breach of the implied covenant and breach of fiduciary duty) and indicated counterclaims would be addressed separately.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Is the implied covenant of good faith an independent claim?	Cut-Heal argues it is an independent claim under Tennessee law.	Agri-Sales contends the covenant is not standalone and is part of breach of contract.	Independent claim not available; dismissed.
Did an agency fiduciary duty exist between Cut-Heal and Agri-Sales?	Cut-Heal asserts control rights and contractor status created an agency with fiduciary duties.	Agri-Sales argues independent contractor status and lack of control negates agency.	No fiduciary duty; summary judgment for Agri-Sales granted.

Wallace v. Nat’l Bank of Commerce, 938 S.W.2d 684 (Tenn. 1996) (implied covenant not an independent tort; duty arises in contract)
Solomon v. First American Nat’l Bank, 774 S.W.2d 935 (Tenn. Ct. App. 1989) (no standalone claim for breach of implied covenant)
Jones v. LeMoyne-Owen Coll., 308 S.W.3d 894 (Tenn. Ct. App. 2009) (implied covenant is not standalone; part of contract breach)
Jack Daniel Distillery, Lem Motlow, Prop. v. Jackson, 740 S.W.2d 413 (Tenn. 1987) (right of control as essential test for agency)
White v. Revco Discount Drug Centers, Inc., 33 S.W.3d 713 (Tenn. 2000) (agency relationship may exist without explicit agreement)