424 F. App'x 456
6th Cir.2011Background
- Crouch was Pepperidge Farm’s exclusive distributor in Memphis from 1993 to 2007 under a 2005 consignment agreement covering 13 stores, including Kroger and Schnuck Markets.
- Crouch’s duties included delivering product, removing stale/damaged product, verifying counts with store clerks, and billing or crediting stores, earning commissions and offsets for removals.
- Kroger discovered large inventory discrepancies at store #430 on Crouch’s route and compared Pepperidge Farm product receipts to customer sales, flagging overcharges.
- January 2007 Kroger and Pepperidge Farm disputed counts; a handwritten January 26 invoice signed by a Kroger clerk surfaced, though credibility contested.
- After March 2007 Kroger banned Crouch from Kroger stores; Schnuck Markets also barred him; Crouch then sold his route for $55,000.
- Pepperidge Farm later withheld $38,367 from Kroger’s payment and also from the sale proceeds to recoup alleged overcharges.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Anticipatory breach by Pepperidge Farm | Crouch claims Pepperidge Farm terminated or repudiated by enforcing others’ demands. | Pepperidge Farm never refused to perform; Crouch failed to provide service. | Allen does not apply; contract contemplated Pepperidge Farm substitution of service. |
| Conversion of funds from sale proceeds | Pepperidge Farm improperly retained $38,367 from the sale to repay Kroger losses. | Pepperidge Farm acted lawfully if Crouch caused Kroger losses; otherwise it was permission to withhold. | Material fact questions remain; summary judgment reversed for conversion claim. |
| Inducement of breach of contract by Kroger | Kroger’s actions caused Pepperidge Farm to breach the consignment agreement. | There was no breach by Pepperidge Farm; inducement cannot be established. | No breach by Pepperidge Farm found; no inducement. |
| Interference with business relationships | Kroger acted improperly to disrupt Crouch’s relationship with Pepperidge Farm. | Tennessee recognizes no claim for contractual relationships; improper motive/means not shown. | Tenn. tort not applicable to contractual relationship; no viable interference claim. |
Key Cases Cited
- UT Med. Grp., Inc. v. Vogt, 235 S.W.3d 110 (Tenn. 2007) (anticipatory breach defined by inability or refusal to perform)
- Allen v. Elliott Reynolds Motor Co., 230 S.W.2d 418 (Tenn. Ct. App. 1950) (risk of third-party consent allocated to the responsible party)
- Schreiber v. Moe, 596 F.3d 323 (6th Cir. 2010) (courts do not weigh evidence on summary judgment; credibility issues remain)
- Trau-Med of America, Inc. v. Allstate Ins. Co., 71 S.W.3d 691 (Tenn. 2002) (intentional interference with business relationships; distinguishes contractual relationships)
- Mammoth Cave Prod. Credit Ass’n. v. Oldham, 569 S.W.2d 833 (Tenn. Ct. App. 1977) (good faith immaterial to conversion claim; control over property required)
- Anthony v. DeWitt, 295 F.3d 554 (6th Cir. 2002) (business records admissibility and non-hearsay usage relevant to evidence)