Christenberry Trucking & Farm, Inc. v. F & M Mktg. Serv., Inc.

• Decision Date: 21 October 2010
• Docket Number: No. E2009-01325-COA-R3-CV.,E2009-01325-COA-R3-CV.
• Citation: 329 S.W.3d 452
• Parties: CHRISTENBERRY TRUCKING & FARM, INC. v. F & M MARKETING SERVICES, INC.
• Court: Tennessee Court of Appeals

329 S.W.3d 452

CHRISTENBERRY TRUCKING & FARM, INC.

v.F & M MARKETING SERVICES, INC.

No. E2009-01325-COA-R3-CV.

Court of Appeals of Tennessee, Eastern Section, at Knoxville.

Feb. 3, 2010 Session.

March 31, 2010.

Permission to Appeal Denied b Supreme Court Oct. 21, 2010.

Henry E. Seaton and Jere R. Lee, Nashville, Tennessee, for the appellant, F & M Marketing Services, Inc.

David L. Buuck, Knoxville, Tennessee, for the appellee, Christenberry Trucking & Farm, Inc.

Donald K. Vowell, Knoxville, Tennessee, for amicus curiae, the National Association of Small Trucking Companies.

OPINION

CHARLES D. SUSANO, J., delivered the opinion of the Court, in which HERSCHEL P. FRANKS, P.J., and JOHN W. McCLARTY, J., joined.

CHARLES D. SUSANO, J.

Christenberry Trucking & Farm, Inc., initiated this litigation against F & M Marketing Services, Inc., with a complaint seeking a declaration that Christenberry had not contracted to pay F & M a commission on loads Christenberry hauled for UPS/Dell Computer ("the UPS/Dell account"). F & M filed an answer and counterclaim asking for a determination that there was a contract with respect to the UPS/Dell account under which Christenberry was obligated to pay F & M a commission of 6%. F & M's counterclaim also asked for an accounting and attorney's fees. The case was tried without a jury, after which Christenberry was allowed to amend its pleadings to allege that if there was a contract it was illegal and unenforceable because F & M is not licensed as a broker by the Interstate Commerce Commission ("the ICC"). The trial court found that there was a contract between Christenberry and F & M, but that the contract was rendered illegal and unenforceable because of F & M's lack of a broker's license. F & M hired new counsel who filed a notice of appeal that did not contain the signature of its trial counsel. Christenberry filed a motion with the trial court to strike the notice of appeal. Six days later, F & M filed an amended notice of appeal which bore, in addition to the signature of its new appellate counsel, the signature of its counsel of record in the trial court. F & M argues on appeal that it was not required to be licensed and, alternatively, that the contract should not be nullified for its lack of a license, even if one was required. Christenberry argues that the notice of appeal is ineffective. We vacate the judgment of the trial court and remand for further proceedings.

I.

The only signed contract between the parties is a "Commission Sales Agreement" dated October 2, 2003. It describes Christenberry as "a motor carrier operating in interstate and/or intrastate commerce pursuant to operating authority issued to it by the Interstate Commerce Commission and/or other appropriate commissions MC 208052." It refers to Christenberry as "CARRIER" and F & M as "AGENT" without elaboration as to the meaning of these terms. The core of the agreement is as follows: "Commissions shall be paid at 2-1/2% for shippers brought to CARRIER by AGENT." However, a handwritten addition to the agreement labels it "Account Specific: Americold Logistics/Ashland City, TN."

UPS is a licensed freight broker ¹ that arranges shipping for Dell Computers, among others. Prior to the events at issue, Christenberry hauled some loads under contract with UPS, but had no ongoing relationship. F & M had been working with UPS since 2001 to secure haulers for the UPS/Dell account. In early 2004, F & M contacted Christenberry inquiring regarding Christenberry's interest. After some phone calls and discussions, F & M relayed an offer from Christenberry to haul the UPS/Dell freight from Nashville and Lebanon, Tennessee, to Harrisburg, Pennsylvania, at the rate of $1,170 per load. The figure consisted of $1,100 for the haul bill quoted by Christenberry plus $70 commission added by F & M. UPS approved the rate, and F & M only then disclosed the identity of UPS to Christenberry and vice versa. On February 20, 2004, F & M faxed Christenberry a copy of the Americold Commission Sales Agreement, which included a hand-written addendum for the UPS/Dell account with a request that Christenberry initial the document and fax it back. The addendum included a commission rate of 6% for the UPS/Dell account. Christenberry never initialed or signed the addendum.

Christenberry did, within days, tell F & M that it needed a higher rate for the haul. F & M negotiated a rate of approximately $100 more per load. Between February and May, F & M attended meetings and communicated by email and telephone as a liaison between UPS and Christenberry to complete all preliminary requirements. Christenberry began hauling freight on the UPS/Dell account in May 2004. Under the Commission Sales Agreement, Christenberry is responsible for sending commission reports to F & M which the latter uses to invoice Christenberry. Between May 2004 and September 2005, F & M submitted invoices on the UPS/Dell account which Christenberry paid in 44 separate checks. In early September 2005, Christenberry asked F & M to secure a higher rate on the UPS/Dell account. The arrangement broke down in the late 2005 time frame when Christenberry began to protest that it did not have a contract with F & M. Christenberry refused to pay several pending F & M invoices. This lawsuit is the culmination of the dispute.

In its memorandum opinion filed after a two-day trial, the court determined that the evidence "overwhelmingly" proved a contract between Christenberry and F & M on the UPS/Dell account, one requiring Christenberry to pay a 6% commission. Since neither party challenges that finding, we have included only the evidence and discussion related to the contract that is necessary to understand whether F & M was acting as a broker when it brought Christenberry and UPS together.

After the trial concluded, but before the court filed its memorandum opinion, Christenberry filed a motion to have its pleadings amended to conform to the proof. The trial court granted the motion upon finding "that Christenberry established that the issue[ ] of whether the contract between the parties is unenforceable based upon public policy due to F & M Marketing's failure to have a broker's license ... [was] tried by either express or implied consent of the parties." As part of its order allowing the amendment, the court accepted the following facts as proven by stipulation of the parties:

(1) If there was a contract between the parties in this matter, then F & M Marketing operated by authority from Christenberry; (2) agents do not arrange the transportation of freight; (3) agents are not responsible for the scheduling of freight or the carriers who carry freight; (4) agents do not collect payment for the transportation of freight; (5) agents do not set the pricing of freight; (6) F & M negotiated pricing but did not set the final pricing; (7) F & M Marketing did not have the power to assign loads on a day-to-day load basis; (8) Christenberry made the final decision as to whether it wanted to take UPS loads or not.

F & M does not have a broker's license. It characterizes itself as follows:

What we are is not a broker. We are a group of agents.... We believe that we are unique in the industry in that we have 15 to 20 agents that operate under the auspices of F & M Marketing.

The "agents" maintain contact with carriers and shippers. F & M does business with hundreds of shippers. With regard to a given shipper, F & M tries to "find out what their needs are for a carrier." With regard to a carrier, F & M tries "to find freight for them that will meet their needs." Thus, according to F & M, they are in the business of making "matches between shippers and carriers for long-term relationships, not for spot loads here and there like a broker does." F & M has contracts with approximately 250 carriers. With regard to the UPS/Dell account, F & M, through Janice Peulausk Hadaway, contacted almost every licensed carrier in the vicinity of Knoxville. If Christenberry had rejected or terminated the UPS/Dell account, F & M would have solicited other carriers. Mike Hadaway, president of F & M, admitted on cross-examination, that his job "is to arrange the transportation of goods or property or whatever by an authorized motor carrier."

The trial court found that F & M is a " 'broker' within the meaning of the Interstate Commerce Act." The court employed the following analysis:

A broker is a person who, for compensation and as a principal or agent sells, offers for sale, negotiates for, or holds itself out by solicitation, advertisement, or otherwise as selling, providing, or arranging for transportation by a motor carrier. 49 U.S.C.S. § 13102(2)(2006).

UPS approached F & M's agent about assisting UPS in locating carriers for UPS's Dell account.... "After an intensive search, F & M's agent [ ]found that Christenberry was interested in hauling freight for the UPS/Dell account." ...

F & M asserts that at the time Ms. Hadaway provided the carrier's price to UPS/Dell, she was acting as the carrier's agent as contemplated by 49 C.F.R. § 386.2. F & M asserts that all Ms. Hadaway did was disclose the identity of UPS/Dell to the carrier and the carrier to UPS/Dell which does not constitute selling, offering for sale, providing, arranging or offering to arrange the transportation of property as contemplatedby 49 U.S.C. 13102 and 49 C.F.R. 386.2. F & M argues that the facilitator has to have a contract with the shipper in order to be considered a broker. However, the statutory definition of broker does not make such a distinction. Broker "means a person who, for compensation, arranges, or offers to arrange, the transportation of property by an authorized motor carrier." 49 U.S.C.S. § 13102.

A person may be a broker for transportation subject to jurisdiction under subchapter I of 49 U.S.C.S. §§ 13501 et seq. only if the person is registered under 49 U.S.C.S. §§ 13901 et seq. to provide the transportation or service. To operate as a freight broker,

...