Mid–south Indus. Inc. v. Martin Mach. & Tool Inc.

• Decision Date: 19 March 2010
• Citation: 342 S.W.3d 19
• Court: Tennessee Court of Appeals
• Parties: MID–SOUTH INDUSTRIES, INC.v.MARTIN MACHINE & TOOL, INC., et al.

342 S.W.3d 19

MID–SOUTH INDUSTRIES, INC.

v.MARTIN MACHINE & TOOL, INC., et al.

Court of Appeals of Tennessee, Western Section, at Nashville.

Dec. 2, 2009 Session.March 19, 2010.Application for Permission to Appeal

Denied by Supreme Court

Oct. 18, 2010.

Dan R. Alexander, Nashville, Tennessee, for the appellant, Martin Machine & Tool, Inc.Beau E. Pemberton, Dresden, Tennessee, for the appellant, Spydell Davidson.Jonathan C. Stewart, Nashville, Tennessee, for the appellee, Mid–South Industries, Inc.Edmund W. Turnley, Nashville, Tennessee, for the appellees, Milina Cramb and Clayton V. Cramb, III.

OPINION

ALAN E. HIGHERS, P.J., W.S., delivered the opinion of the Court, in which DAVID R. FARMER, J., and J. STEVEN STAFFORD, J., joined.

When Mid–South ceased operation of its metal working business, the defendants purchased several pieces of equipment at auction, and the parties entered into an agreement whereby Mid–South would store the equipment until the defendants could resell it, and the parties would split the profits. After Mid–South notified the defendants that its property was being sold, the parties conducted a second auction. The defendants failed to remove their unsold equipment, and Mid–South filed suit. Defendant Martin Machine filed a counterclaim. The trial court awarded Mid–South $63,000 for equipment storage, and it awarded Martin Machine and Defendant Spydell Davidson $80,088.02 for “unrecovered costs” and $32,000 for the use of a forklift. The parties raise numerous issues on appeal. We affirm the trial court's award of $63,000 to Mid–South for storage costs, specifically finding that such award does not include storage of three pieces of equipment at issue. We further affirm the trial court's dismissal of the other parties (the Crambs), its finding that there was no breach of contract, and its offset of the defendants' recovery by $23,476. Regarding the trial court's award of $80,088.02 to the defendants, we find that Martin Machine's claim for lost profits is barred by the statute of limitations, but that its claims for magazine advertising, direct labor related to equipment, and auction costs are not. Thus, we remand to the trial court for a determination of the basis of the $80,088.02 award. We find that the trial court applied the appropriate measure of damages in valuing the improperly detained forklift, but we remand to the trial court to determine the appropriate number of months on which the award should be based. We reverse all awards to Mr. Spydell Davidson. Finally, we find that the trial court impliedly denied the defendants' request for dismissal, and that the defendants waived the issue of fraud.

I. Facts & Procedural History

In 1996, Mid–South Industries, Inc. (“Mid–South”) ceased daily operations of its metal working business, and it conducted an auction on May 15, 1996, to sell its equipment. Defendant Martin Machine and Tool, Inc., (“Martin Machine”) through its vice president Defendant Spydell Davidson purchased numerous pieces of equipment at the auction. Mid–South, through its president Clayton V. Cramb, Sr.,¹ and Martin Machine entered into a contract whereby Mid–South would store the purchased equipment until Martin Machine could resell it, and both parties would equally share the profits. The agreement provided in part: ²

All costs, such as purchase of equipment, cleanup, repairs, loading and handling, advertising, administrative, and insurance on the equipment will be the responsibility of Martin Machine and Tool, Inc. The storage of the equipment will be handled by Mid–South Industries, Inc. for it[ ]s 50% of any profit.

As the two parties enter into this agreement voluntarily, either party may terminate this agreement on terms agreeable to both parties.

Mr. Cramb notified Mr. Davidson by telephone on June 8, 1999, that Mid–South's property was being sold. On June 14, 1999, Mr. Davidson faxed a letter to Mr. Cramb as follows:

Concerning our telephone conversation this morning, it is our belief the best way to get the equipment out of the building is to schedule an auction which will take six weeks to clean up, set up, advertise and sell. So sale date can be July 27th.

....

We want to proceed in the direction most beneficial to you. So please advise the way you and your prospects would like us to move.

We will be pleased to consider any other direction possible that may be more beneficial for you. We enjoy doing business beneficial to all.

Mr. Cramb responded the following day:

As per our telephone conversation of June 8, 1999, I notified you that my buildings and property are being sold. However, we do not have a closing date at this time. I have not been able to contact the buyers to try to find out an exact date. However, as a part of my sale agreement, it is necessary for the equipment to be moved and I have only been given two weeks after closing to do so. The suggestion you made in your fax may not get the equipment out in a time frame suitable to my sale agreement.

It is not my intention to put you in a position of inconvenience, however, at this time this is the only information I can furnish you. As soon as I have a closing date, I will let you know.

On June 18, 1999, a second agreement was executed, in which the parties granted an auction company permission to auction the equipment owned by Martin Machine and housed by Mid–South in a July 20 auction. The auction took place on July 20, and although some items of equipment were sold, “numerous large pieces” of equipment remained unsold. Finally, on August 30, 1999, Mr. Cramb sent a letter to Mr. Davidson which contained the following language: “This letter is to inform you that as of August 30, 1999, our agreement[s] of May 16, 1996 and June 19, 1999 are terminated.”

After allegedly making unsuccessful “repeated requests” for Mr. Davidson to remove his unsold equipment, Mid–South filed a complaint against Martin Machine and Mr. Davidson on June 15, 2004, claiming, among other things, breach of contract and quantum meruit, and seeking recovery of the reasonable value of the storage Mid–South was forced to provide when the defendants failed to remove the equipment. Martin Machine ³ filed a counterclaim against Mid–South, asserting three causes of action: breach of contract, negligence, and conversion and intentional destruction of property.⁴

Following a three day bench trial, the trial court entered an order awarding Mid–South $63,000 for equipment storage, and awarding Martin Machine and Mr. Davidson $80,088.02 in unrecovered costs and $32,000 for the use of a forklift. The trial court further dismissed Milina Cramb and Clayton Cramb, III, as defendants. Martin Machine and Mr. Davidson appeal.

II. Issues Presented

Appellants have timely filed their notice of appeal and present the following issues for review, restated as follows:

1. Whether the trial court erred in awarding Mid–South damages when Mid–South breached the contract;

2. Whether the trial court erred in awarding Mid–South storage costs when the contract required Mid–South to store the equipment;

3. Whether the trial court erred in not ruling in defendants' favor regarding fraud;

4. Whether the trial court erred in dismissing the Crambs;

5. Whether the trial court erred in not granting the defendants' pretrial motion to dismiss; and

6. Whether the trial court erred in awarding an off-set to Mid–South.

Additionally, Mid–South presents the following issues as restated:

1. Whether Martin Machine's counterclaim should be dismissed pursuant to the statute of limitations;

2. Whether the trial court erred in granting a judgment in favor of Mr. Davidson when he asserted no counterclaim;

3. Whether the trial court erred in granting a judgment in favor of Martin Machine upon a quantum meruit theory when Martin Machine asserted no such claim in its pleadings;

4. Whether the trial court erred in offsetting the defendants' recovery based on the storage of three pieces of equipment; and

5. Whether the trial court erred in granting a judgment for defendants for the lost use of a forklift based on rental value.

III. Standard of Review

On appeal, a trial court's factual findings are presumed to be correct, and we will not overturn those factual findings unless the evidence preponderates against them. Tenn. R.App. P. 13(d) (2009); Bogan v. Bogan, 60 S.W.3d 721, 727 (Tenn.2001). For the evidence to preponderate against a trial court's finding of fact, it must support another finding of fact with greater convincing effect. Watson v. Watson, 196 S.W.3d 695, 701 (Tenn.Ct.App.2005) (citing Walker v. Sidney Gilreath & Assocs., 40 S.W.3d 66, 71 (Tenn.Ct.App.2000); The Realty Shop, Inc. v. RR Westminster Holding, Inc., 7 S.W.3d 581, 596 (Tenn.Ct.App.1999)). When the trial court makes no specific findings of fact, we review the record to determine where the preponderance of the evidence lies. Ganzevoort v. Russell, 949 S.W.2d 293, 296 (Tenn.1997) (citing Kemp v. Thurmond, 521 S.W.2d 806, 808 (Tenn.1975)). We accord great deference to a trial court's determinations on matters of witness credibility and will not re-evaluate such determinations absent clear and convincing evidence to the contrary. Wells v. Tennessee Bd. of Regents, 9 S.W.3d 779, 783 (Tenn.1999) (citations omitted). We review a trial court's conclusions of law under a de novo standard upon the record with no presumption of correctness. Union Carbide Corp. v. Huddleston, 854 S.W.2d 87, 91 (Tenn.1993) (citing Estate of Adkins v. White Consol. Indus., Inc., 788 S.W.2d 815, 817 (Tenn.Ct.App.1989)).

IV. Discussion

A. Breach of Contract

On appeal, the defendants argue that the trial court erred in awarding damages to Mid–South, as Mid–South breached the contract by repudiating the agreement prior to the completion of the contract. In their briefs to this Court, Martin Machine and Mr. Davidson state that the trial court found that Mid–South breached the agreement. The defendants' assertions misstate the...