George M. Greenwood v. City of Lebanon, Tennessee
M2016-01168-COA-R3-CV
| Tenn. Ct. App. | Apr 19, 2017Background
- Greenwood and Langley (plaintiffs) acted as broker/agents of record for City of Lebanon employee health coverage under a June 4, 2013 service-provider/billing agreement providing a 3.5% premium service fee (75% Greenwood / 25% Langley).
- The agreement was signed by the City’s finance commissioner but not by the mayor and was not approved by ordinance of the city council as required by the City charter.
- Plaintiffs procured group coverage with UnitedHealthcare for July 1, 2013–July 1, 2014; UHC collected the service fee from the City but the City terminated plaintiffs as brokers in February 2014 and refused to pay remaining fees for the contract year.
- Plaintiffs sued for breach of contract and moved for summary judgment; the trial court found the contract ultra vires but granted plaintiffs summary judgment under equitable estoppel/quasi-contract and awarded damages based on UHC records.
- On appeal, the City argued the contract was ultra vires and executory, that plaintiffs’ affidavits should be stricken, and that summary judgment was improper; the Court of Appeals affirmed the trial court.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Validity/enforceability of the contract | Greenwood: contract procured coverage and fees were earned upon placement; City accepted benefit so cannot avoid payment | City: contract unsigned by mayor and unapproved by ordinance; therefore ultra vires and void | Contract was ultra vires for failure to follow charter formalities, but fits the category where equitable estoppel may apply |
| Applicability of equitable estoppel / quasi-contract | Plaintiffs: City received and retained benefits for the full year; fees were earned and unjust not to pay | City: agreement was executory (City had unpaid monthly obligations), so estoppel inapplicable | Court held plaintiffs performed and City retained benefits; estoppel/quasi-contract applied and plaintiffs entitled to fees |
| Sufficiency/admissibility of plaintiffs’ affidavits | Plaintiffs: affidavits and UHC affidavit/supporting facts demonstrated undisputed material facts | City: affidavits lacked personal knowledge / admissible facts and should be struck | Appellate review prevented because trial court’s earlier rulings on motions to strike/cross-motion lacked written orders; however, trial court later accepted affidavits and granted judgment — affirmed |
| Availability of summary judgment | Plaintiffs: no genuine dispute of material fact as to entitlement to fees | City: genuine issues exist and summary judgment was inappropriate | Court of Appeals affirmed summary judgment for plaintiffs under equitable estoppel/quasi-contract doctrines |
Key Cases Cited
- City of Lebanon v. Baird, 756 S.W.2d 236 (Tenn. 1988) (distinguishes ultra vires acts that are beyond power from those invalid for mode of exercise; equitable estoppel may apply where city accepted benefits)
- Byrd v. Hall, 847 S.W.2d 208 (Tenn. 1993) (summary judgment burden-shifting standard)
- Rye v. Women’s Care Ctr. of Memphis, MPLLC, 477 S.W.3d 235 (Tenn. 2015) (de novo review of summary judgment)
- Trull v. City of Lobelville, 554 S.W.2d 638 (Tenn. Ct. App. 1976) (city estopped from denying contract where city authorities assented and city received benefit)
- Carter Cnty. v. Williams, 190 S.W.2d 311 (Tenn. Ct. App. 1945) (implied contract/recovery where municipality received full benefits despite procedural defects)