Hannan v. Alltel Publishing Co.

• Decision Date: 31 October 2008
• Docket Number: No. E2006-01353-SC-R11-CV.,E2006-01353-SC-R11-CV.
• Parties: Michael HANNAN et al. v. ALLTEL PUBLISHING CO.
• Court: Tennessee Supreme Court

270 S.W.3d 1

Michael HANNAN et al. v. ALLTEL PUBLISHING CO.

No. E2006-01353-SC-R11-CV.

Supreme Court of Tennessee, at Knoxville.

January 8, 2008 Session.

October 31, 2008.

Linda J. Hamilton Mowles, Knoxville, Tennessee, for the Appellant, Alltel Publishing Company.

J. Lewis Kinnard, Madisonville, Tennessee, for the Appellees, Michael Hannan and Elizabeth Hannan.

Richard L. Burnette, Sevierville, Tennessee, for the Amicus Curiae, Tennessee Association for Justice.

OPINION

JANICE M. HOLDER, C.J., delivered the opinion of the court, in which WILLIAM M. BARKER, CORNELIA A. CLARK, and GARY R. WADE, JJ., joined. WILLIAM C. KOCH, JR., J., dissenting.

The defendant failed to print the plaintiffs' advertisement and business listings in a telephone directory. The plaintiffs filed suit against the defendant claiming loss of profits and other damages as a result of the omission. The defendant moved for summary judgment alleging the plaintiffs were unable to prove they were damaged. The trial court granted the defendant's motion for summary judgment. The Court of Appeals held that the defendant failed to negate an essential element of the plaintiffs' claim and reversed the trial court's judgment. We affirm the Court of Appeals' decision and remand to the trial court.

I. Facts and Procedural History

The plaintiffs, Michael and Elizabeth Hannan ("the Hannans"), owned and operated two businesses in Tellico Plains, Tennessee—Tellico Plains Realty and Magnolia House Bed and Breakfast. The Hannans advertised these businesses in telephone directories published by the defendant, Alltel Publishing Co. ("Alltel"). From November 2001 through November 2004, the Hannans placed a quarter-page advertisement containing information for both businesses in the yellow pages directory. In November 2003, however, the yellow pages directory was published without the Hannans' quarter-page advertisement. In addition, Alltel omitted Tellico Plains Realty from the November 2003 white pages directory and failed to list Tellico Plains Realty under the "Real Estate" heading of the yellow pages directory. The yellow pages directory did contain a listing for Tellico Plains Realty under the "Real Estate Consultants" heading. Alltel included listings for the Magnolia House Bed and Breakfast in both the white and yellow pages.

The Hannans contacted Alltel about the missing yellow pages advertisement and the omitted white and yellow pages directory listings, and Alltel informed them that a supplement to the directories would be published. Alltel published the directory supplement with the previously omitted listings in the white pages for Tellico Plains Realty and in the yellow pages under the heading of "Real Estate." The supplement, however, did not include the Hannans' quarter-page yellow pages advertisement. To compensate the Hannans for the omission, Alltel printed the Hannans quarter-page yellow pages advertisement the following year at no charge.

The Hannans filed suit against Alltel, claiming that as a result of the omissions from the November 2003 directory:

Plaintiffs have lost business and have been unable to expose their business to the public and many of their associates have assumed they have left the business and departed from the Tellico Plains area. Plaintiffs have suffered a dramatic loss of business and have suffered much economic loss and emotional distress so that they have been forced to leave the real estate and bed and breakfast business.

...

[The Defendant's] failure to provide the advertising purchased by the Plaintiffs and particularly their failure to include Plaintiffs [sic] name in the regular white and yellow pages of the directory amounts to actionable negligence and provides a cause of action for recovery. ...

The Hannans sought damages in the amount of $225,000.

Alltel filed a motion for summary judgment claiming that the Hannans "are unable to prove they suffered any damages as a result of Alltel's alleged breach of contract." Alltel pointed to the Hannans' tax returns from the years 2001 through 2004 to show that the Hannans' gross income increased from $42,138 in 2003, a year in which the directories contained the advertisement and listings for nearly the entire year, to $69,355 in 2004, the calendar year in which the advertisement was omitted from the yellow pages directory for a period of eleven months.

In addition, Alltel relied upon the Hannans' deposition testimony as evidence that the Hannans would be unable to prove they sustained damages as a result of the omitted advertisement. This testimony concerned the Hannans' increased gross income in 2004 and their inability to quantify their damages. Specifically, Alltel relies on the following deposition testimony from Michael Hannan:

Q Would you agree with me that your gross receipts were up significantly in the year that your business was not listed as compared to the previous year when you were listed?

A That our gross sales were—

Q Significantly higher in the year that you weren't listed as compared to the year you were listed?

A If you are asking me to compare those two lines, yes.

Q And you told me you cannot give an explanation for that?

A Other than the fact that we may have sold a piece of our own property, I don't know. We may have had to start to liquidate by then.¹

Alltel also relied on the following testimony from Elizabeth Hannan:

Q Your husband responded to my questions about quantifying in dollars the amount of loss or documentation which would reflect the amount of loss for these omissions that we're here about. Do you have any way of doing that?

A I have absolutely no way of doing that. And neither does anyone else.

In addition to the motion for summary judgment, Alltel filed a Statement of Material Facts Not in Dispute. Alltel contended that the following material issues were not in dispute: in November 2003, the Hannans paid Alltel to publish an advertisement in the local phone directory; the advertisement was not placed in the initial directory although the business listing was included under the heading "Real Estate Consultants" in the directory; the advertisement was placed in a supplement to the 2003 telephone directory;² the Hannans placed advertisements in the phone directory in 2001, 2002, and 2004; and the Hannans' gross income for each of the years 2001 through 2004 was $87,703, $55,645, $42,138, and $69,355, respectively. The Hannans' response to the motion for summary judgment stated that the Hannans agreed with Alltel's statement of the material facts not in dispute and that the Hannans would establish damages by proof at trial. The trial court granted Alltel's motion for summary judgment. On appeal, the Court of Appeals reversed, finding that Alltel failed to negate an essential element of the Hannans' claim. We granted Alltel's application for permission to appeal.

II. Analysis

Summary judgment is appropriate when the moving party can show that there is no genuine issue of material fact and that it is entitled to judgment as a matter of law. Tenn. R. Civ. P. 56.04; Byrd v. Hall, 847 S.W.2d 208, 214 (Tenn. 1993). In Byrd, this Court set out the basic principles involved in determining whether a motion for summary judgment should be granted. The moving party has the ultimate burden of persuading the court that "there are no disputed, material facts creating a genuine issue for trial ... and that he is entitled to judgment as a matter of law." Byrd, 847 S.W.2d at 215. If the moving party makes a properly supported motion, the burden of production then shifts to the nonmoving party to show that a genuine issue of material fact exists. Id. To meet its burden of production and shift the burden to the nonmoving party, the moving party must either affirmatively negate an essential element of the nonmoving party's claim or establish an affirmative defense. Id. at 215 n. 5. If the moving party does not satisfy its initial burden of production, the court should dismiss the motion for summary judgment. See id. at 215. Summary judgment should be granted only when, with the facts viewed in favor of the nonmoving party, it is clear that no genuine issue of material fact exists. Id. at 210-11.

In Byrd, we stated that the Tennessee and federal rules for summary judgment were "virtually identical," and thus federal cases provided "helpful guidance" in our interpretation of Tenn. R. Civ. P. 56. Id. at 211 & n. 2. These statements have led to some confusion among Tennessee courts as to the proof required for the moving party to meet its burden of production. Although we stated that interpretations of both rules are "consistent in most material respects," this Court also stated that "conclusory assertion[s]" were not sufficient to shift the burden to the nonmoving party. Id. at 214, 215 (emphasis added).

In the seminal case governing federal summary judgment procedure, Celotex Corp. v. Catrett, 477 U.S. 317, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986), the plurality opinion held that a moving party may shift the burden of production to a nonmoving party by alleging that "there is an absence of evidence to support the nonmoving party's case." Id. at 325, 106 S.Ct. 2548. The Sixth Circuit, for example, has read Celotex to allow the moving party to merely challenge the nonmoving party to "put up or shut up" on a critical issue to shift the burden of production. Street v. J.C. Bradford & Co., 886 F.2d 1472, 1478 (6th Cir. 1989). The moving party shifts the burden of production simply by "asserting that the opposing party will not be able to produce sufficient evidence at trial." Id. Then, if the nonmoving party cannot "put up" the evidence needed to show a material fact is in dispute, summary judgment will be granted. Id. Decisions within the federal circuits vary, but most seem either to follow the "put up or shut up" approach or to require the moving party merely to point to deficiencies in the nonmoving party's evidence. See ...