Transfill Equipment Supplies & Services, Inc. v. Advanced Medical Equipment, LLC
M2016-00288-COA-R3-CV
| Tenn. Ct. App. | May 31, 2017Background
- TESS (Transfill) fills, rents, and sells medical oxygen tanks; AME purchases filled tanks and rented some from TESS under written contracts (2004, updated 2010) that set prices and provided prevailing-party attorney’s fees and a replacement-cost term for lost rental cylinders.
- Business relationship involved delivery tickets signed by AME and TESS drivers; TESS verified and sometimes corrected delivery tickets at its facility before final billing.
- AME frequently fell behind on payments; TESS repeatedly placed AME on credit hold, required certified funds, and ultimately stopped doing business with AME in May 2012.
- Disputes arose over alleged missing/converted AME-owned tanks and billing; TESS sued AME in general sessions court for unpaid gas, rental charges, and replacement value of unreturned TESS tanks; AME counter-sued for conversion of its tanks.
- The general sessions court awarded TESS damages and attorney’s fees and dismissed AME’s conversion claim; the trial court affirmed, finding AME breached the contract, TESS did not convert AME tanks, and awarding $34,999.45 (including fees).
Issues
| Issue | TESS (Plaintiff) Argument | AME (Defendant) Argument | Held |
|---|---|---|---|
| Sufficiency of trial-court findings under Tenn. R. Civ. P. 52.01 | Trial court’s memorandum and order meet Rule 52.01 and adequately disclose subsidiary facts supporting its conclusions | Findings insufficient because court omitted specific factual findings about delivery tickets, credits, and ownership determinations | Affirmed: findings were sufficient; remand not required because findings disclose reasoning and credibility determinations |
| Conversion of AME tanks | TESS denied conversion; its verification/audit process explained billing and tank accounting | AME: alterations to delivery tickets and TESS auditing show conversion of specific AME tanks and overbilling | Affirmed: AME failed to prove elements of conversion or identify specific misappropriated tanks; trial court’s credibility findings credited TESS witnesses |
| Calculation of damages and application of credits | TESS presented voluminous delivery tickets and sought a larger recovery; trial court used records to compute award | AME argued award unexplained, omitted credits, and could not reconcile amounts | Affirmed: damages are factual, trial court’s calculation entitled to presumption of correctness; evidence does not preponderate against $34,999.45 award |
| Implied covenant of good faith/fair dealing; commercial reasonableness | TESS acted reasonably by verifying deliveries and billing under contract terms | AME argued verification process was bad faith, unconscionable, and commercially unreasonable, and excused payments | Affirmed: verification and billing under contract not bad faith; AME failed to show unfair or commercially unreasonable conduct |
Key Cases Cited
- Armbrister v. Armbrister, 414 S.W.3d 685 (Tenn. 2013) (appellate standard of review for factual findings in bench trials)
- Campbell v. Florida Steel Corp., 919 S.W.2d 26 (Tenn. 1996) (de novo review of legal conclusions)
- Union Carbide Corp. v. Huddleston, 854 S.W.2d 87 (Tenn. 1993) (standard for reviewing trial-court legal conclusions)
- Lovelace v. Copley, 418 S.W.3d 1 (Tenn. 2013) (Rule 52.01 sufficiency and remedies for deficient findings)
- Wells v. Tennessee Bd. of Regents, 9 S.W.3d 779 (Tenn. 1999) (deference to trial-court credibility findings)
- White v. Empire Exp., Inc., 396 S.W.3d 696 (Tenn. Ct. App. 2012) (elements of conversion)
- Wallace v. Nat’l Bank of Commerce, 938 S.W.2d 684 (Tenn. 1996) (implied duty of good faith and construction against intent of parties)
- PNC Multifamily Capital v. Bluff City, 387 S.W.3d 525 (Tenn. Ct. App. 2012) (pleading standards for conversion under Rule 9.02)