David White v. Empire Express, Inc. and Empire Transportation, Inc.
395 S.W.3d 696
| Tenn. Ct. App. | 2012Background
- Two affiliated Tennessee companies operate a lease-purchase program: Hauling Co. (truck hauling) and Leasing Co. (truck ownership).
- White, a truck driver, entered a Lease with Leasing Co. in 2002 to buy a truck, with weekly lease payments funded via payroll deductions.
- White also executed a Work Agreement with Hauling Co. and a Direct Pay Authorization enabling Hauling Co. to deduct and pay Leasing Co. from White’s earnings.
- Over 2002–2007, White’s deductions covered lease payments and ongoing truck-related costs; if insufficient funds, Hauling Co. advanced money, creating debt to Hauling Co.
- End of Lease: White could purchase the truck for residual value; the parties later allowed residual payments over a year via payroll deductions, despite White’s outstanding debt to Hauling Co.
- White’s truck was repossessed and sold after he sought title despite debts; White sued Hauling Co. and Leasing Co for breach, conversion, and TCPA violation.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Breach-of-contract: summary judgment | White fulfilled lease payments and purchased via residual value. | White defaulted by owing Hauling Co. and breached multiple terms. | White granted summary judgment on breach. |
| Conversion liability | White owned the truck and was wrongfully repossessed. | Repossession was lawful due to White’s defaults. | Conversion affirmed at trial; however, punitive damages reversed on appeal. |
| TCPA violation | Defendants engaged in unfair/deceptive acts by interrelated contracts. | No TCPA violation; acts were intercompany and not deceptive. | TCPA claim reversed; no treble damages; no attorney-fee award. |
| Attorney-fees under TCPA | Defendants should recover fees if TCPA claim frivolous. | Fees should be awarded to Defendants for frivolous TCPA claim. | No TCPA-fee award. |
| Waiver and setoff defenses | Defendants waived first-breach defense by allowing option exercise. | Defendants preserved rights and could offset debts. | Waiver found; defendants’ offset/recoupment defenses referred to arbitration and resolved; final setoff established. |
Key Cases Cited
- Shelby County v. Barden, 527 S.W.2d 124 (Tenn. 1975) (corporate form should be respected; separate entities treated separately)
- Planters Gin Co. v. Fed. Compress & Warehouse Co., 78 S.W.3d 885 (Tenn. 2002) (contract interpretation; plain meaning controls when unambiguous)
- Madden Phillips Constr., Inc. v. GGAT Dev. Corp., 315 S.W.3d 800 (Tenn. Ct. App. 2009) (waiver of breach can occur by accepting benefits with knowledge of breach)
- Hodges v. S.C. Toof & Co., 833 S.W.2d 896 (Tenn. 1992) (punitive damages require clear and convincing evidence of malice or intent)
- In re Samaria S., 347 S.W.3d 188 (Tenn. Ct. App. 2011) (clear and convincing standard for punitive damages in certain contexts)
- 84 Lumber Co. v. Smith, 356 S.W.3d 380 (Tenn. 2011) (contract interpretation and ambiguity analysis; harmony of contract provisions)