536 S.W.3d 458
Tenn. Ct. App.2016Background
- The Peggy L. Smith Trust (Trust), trustee Peggy L. Smith, owned a Little Rock commercial property and earlier owned 3013 Thomas Street in Memphis. Hi-Speed, Inc. (Arkansas) leased the Little Rock property from the Trust under a written build-to-suit lease dated December 1, 2005. Mock, Inc. (Tennessee) formerly leased the Thomas Street property and has overlapping ownership/management connections with Hi-Speed.
- The written lease required Hi-Speed to pay $14,000 monthly base rent and an "additional" $4,000/month so long as the Thomas Street property served as collateral for construction financing; lease governed by Tennessee law and contained an integration clause.
- Smith alleges an oral "Loan Guaranty Agreement" (different from the written lease) under which Hi-Speed/Mock promised monthly payments of $4,000 (plus additional amounts up to $5,500) for twenty years to cover loan payments and replace prior Thomas Street rent; much of this alleged understanding was oral and evolved in the record.
- Hi-Speed paid Eagle Bank construction/permanent loan amounts and made $4,000 then $5,500/month payments to Smith for several years; payments ceased after Hi-Speed changed ownership in 2011, prompting Smith to sue (breach of contract, unjust enrichment, quantum meruit, promissory and equitable estoppel).
- Defendants moved for partial summary judgment; the trial court dismissed all claims except the written-lease breach by Hi-Speed. After bench trial on the lease claim the court found Hi-Speed had paid more than was contractually owed and awarded no damages. Plaintiffs appealed; the Court of Appeals affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether evidence of an oral “Loan Guaranty Agreement” is admissible despite the written, integrated lease (parol/merger) | Smith: the oral agreement is either collateral, supplemental, reforming, or a post‑writing modification and thus admissible | Hi‑Speed/Mock: parol evidence and merger bar contradictory oral terms; the written lease is integrated | Court: parol evidence barred for pre‑existing contradicting terms, but unresolved fact issues about post‑lease modifications could permit evidence; nonetheless other defects dispose of the claim |
| Whether the alleged oral agreement is enforceable under the Statute of Frauds (Tenn. Code §29‑2‑101) | Smith: written materials and part performance (payments made) satisfy the statute or remove it via part performance | Defendants: no signed memorandum contains essential terms; statute bars oral contract; authentication problems with documents | Court: no sufficient signed writing evidencing the claimed 20‑year oral modification; documents relied on do not contain essential terms without parol evidence; Statute of Frauds bars enforcement |
| Whether part performance or equitable estoppel/promissory estoppel removes Statute of Frauds bar | Smith: payments, selling/pledging property and other acts constituted part performance or support estoppel/relief | Defendants: partial performance unavailable for real‑estate interests; estoppel theories not pleaded or factually supported | Court: partial performance doctrine not available to avoid the Statute of Frauds for real‑estate leases >1 year; promissory estoppel claim too vague; equitable estoppel not properly invoked to create affirmative relief |
| Whether unjust enrichment/quantum meruit claims can proceed despite the written lease | Smith: quasi‑contractual relief should be allowed as alternative recovery | Defendants: express written lease covers the subject matter, barring quasi‑contract remedies; Mock did not receive direct benefit | Court: dismissed unjust enrichment/quantum meruit because an enforceable contract covered the same subject matter as to Hi‑Speed; no facts to impose quasi‑contract on Mock |
| Whether Hi‑Speed owes a rent deficiency under the written lease after trial | Smith: Hi‑Speed failed to prove payment defense or pled it as affirmative defense | Hi‑Speed: showed it paid more than contractually owed; payment negates plaintiff's prima facie case | Court: bench findings affirmed — Hi‑Speed paid more than obligated under the clear lease terms, so no deficiency; payment may negate the claim without being pled as an affirmative defense in these circumstances |
Key Cases Cited
- Foster‑Henderson v. Memphis Health Ctr., 479 S.W.3d 214 (Tenn. Ct. App. 2015) (bench‑trial factual‑finding standard on appeal)
- Maggart v. Almany Realtors, Inc., 259 S.W.3d 700 (Tenn. 2008) (standard of review for summary judgment)
- GRW Enters., Inc. v. Davis, 797 S.W.2d 606 (Tenn. Ct. App. 1990) (parol evidence rule and exceptions)
- Waddle v. Elrod, 367 S.W.3d 217 (Tenn. 2012) (Statute of Frauds — writing must contain essential terms)
- Lambert v. Home Fed. Sav. & Loan Ass’n, 481 S.W.2d 770 (Tenn. 1972) (writing must include essential contract terms to satisfy Statute of Frauds)
- Shedd v. Gaylord Entm’t Co., 118 S.W.3d 695 (Tenn. Ct. App. 2003) (promissory estoppel used sparingly to overcome Statute of Frauds in exceptional cases)
- Doe v. HCA Health Servs. of Tennessee, Inc., 46 S.W.3d 191 (Tenn. 2001) (quasi‑contract requires absence of an enforceable contract on same subject)
- Chavez v. Broadway Elec. Serv. Corp., 245 S.W.3d 398 (Tenn. Ct. App. 2007) (elements of promissory estoppel)
- Irwin v. Dawson, 273 S.W.2d 6 (Tenn. 1954) (partial performance rule and its limitations for real‑estate agreements)