F IL ED

M a r ch 25, 1999

C eci l C r o w son , Jr .

A p p e l l a t e C o u r t C l e r k

F REDERI C R. HA RRI S , I NC. , )

)

P l a i n tiff / A p p e lla n t , ) A ppea l N o .

) 01- A - 01- 9803- C H - 00130

v . )

) D avi d s on C hanc e r y

T H E M ETRO POLI T A N ) N o . 95- 537- I I

GOVE RNM E N T OF NAS HVI L L E )

a n d DAVI D S ON COUNT Y , )

TEN N ESS EE, )

)

D e f end ant / A p p e l l ee. )

)

COUR T OF AP P E A L S OF T E NNE S S E E

A P P E A L F ROM T H E CHANC E RY C OURT F OR DAVI D S ON COUNT Y ,

A T N A SHV I LLE, TEN N ESS E E

T H E HONORAB L E CAR O L L . M c COY, CHANC E L L O R

P E T ER H. CURRY

T uke Y opp & Sw e e ney

N a t i ons B ank Pl a z a , Sui t e 1100

4 1 4 U n i o n St r e e t

N ashvi l l e , T enn ess ee 37 2 1 9

A T T ORNE Y F OR P L A I N T I F F / A P P E L L ANT

J OHN L . KE NNE D Y

M e tro p o l i tan A t t o r n e y

T he D epa r t m ent of L a w of T h e

M e t r opol i t an G over n m ent of

N a s hvi l l e a nd D avi d s on C ount y

204 M e t r opol i t an C our t hous e

N ashvi l l e , T enn ess ee 37 2 0 1

A T T ORNE Y F OR DE F E NDANT / A P P E L L E E

R E V E R S E D AND RE M ANDE D

W I L L I A M B. CAI N , J UDGE
2

O P I N I O N

F r e d e ric R . H a rris, I n c . (F R H ) , f o r m e r l y P R C E n g i neeri n g , I nc. , ent e r e d

i n t o a c ont r a c t w i t h t he M e t r opol i t an G over n m ent of N a s hvi l l e a nd D avi d s o n

C ount y (M e tro ) , w h e r e b y FR H a g r e e d t o pr ovi de c o m put e r des i gn s e r v i c e s t o

M e tro o n a c o s t -plus-f e e b asis. F R H pr o m i s ed t o pr ovi de e ngi nee r i ng s e r v i c e s

f o r t he de s i gn and im p l e m e n t a tio n o f a C o m p u teriz e d T r a ffic S i g n a l S y ste m fo r

M e tro . T he or i g i nal cont r a c t , dat ed O c t ober 21, 1985, pr ovi ded f o r th e

com pen sat i o n and perf orm ance o f on e “S yst e m D esi g n P hase” w ith a n opt i on t o

cont i nue t he r e l a t i ons h i p over f i ve a ddi t i onal phas e s . T he e vent ual goal w as t hat

t h i s new s y s t e m w oul d ut i l i z e a s pec i a l t ype of s o f t w a r e t o cont r o l tra f f i c a t fiv e

hundr ed a nd f i f t y ( 550) i n t e r s e c t i ons t h r oughout t he c i t y of N a s hvi l l e . 

I . C o n trac t T e r m s

T h e do cum ent s execut ed b y t he p a r t i es cont a i ned t en g eneral ar t i c l es and

one exhi b i t denom i nat e d “S cop e of Servi ces. ” A m ong t hos e ge ner a l pr ovi s i ons ,

A rtic l e s 6, 7 and 1 0 a r e o f p a rtic u l a r im p o rta n c e to th e re s o l u tio n o f th e is s u e

bef o r e us .

T hey r e a d i n per t i nent par t :

A r ticle 6 . L i m ita tio n o f C o s t

A . I t is e stim a ted th a t t h e to tal c o st to th e C L I E N T , ex clusive of

any f i xed f e e , f o r t he pe r f o r m anc e of w o r k pur s uant t o t h i s

agreem ent , s hal l not excee d T HRE E HUNDRE D F ORT Y -

T W O T HOUS AND, F OUR HUNDR E D , T W E N T Y - F OUR

DOL L ARS ( $342, 424. 00) . T h i s am ount r e f l e c t s t he e s t i m a t e d

c o s t s f o r t h e S Y S T E M DE S I GN P HAS E - CONT RAC T I T E M

1 as d etai l e d i n t h e a t t a c h e d S c o p e o f S erv i c e s (E x h i b i t A ) .

T h e C O N T R A C T O R a g r e e s to e x e rt its b e s t e f f o rts to p e r f o r m th e

w o r k as s peci f i ed i n E xhi b i t A , “ Scope of Ser v i c e s , ” a nd al l

obl i gat i ons u n d e r th i s A g r e e m e n t w ith i n su c h esti m ated co s t s . If a t

any tim e t h e CONS U L T ANT h a s reaso n t o b eli e v e tha t t h e c o s t s t o

b e in c u r r e d a g a i n s t th i s A g r e e m e n t w ith i n t h e n e x t su c c e e d i n g si x t y

( 60) day s , w hen a dded t o al l cos t s pr evi ous l y i ncur r ed, exc l u s i ve of

any fix e d fe e , w ill be sub s t ant i a l l y great e r or l ess t han t he est i m a t e d

t o t a l c o s t s s e t fo rth in th i s A rtic l e 6 , th e C O N S U L T ANT s h a l l

n o t i f y th e C L I E N T in w rit i n g to th a t eff e c t, g i v i ng t he r evi s e d

e s tim a t e o f s u c h to t a l c o s t fo r th e p e r f o r m a n c e o f th i s A g r e e m e n t .
3

B . T h e CLI E N T s h a l l n o t be obl i gat ed t o r e i m bur s e t h e

CONS U L T ANT fo r c o s t s i n c u r r e d i n ex c e ss o f t h e est i m a t e d

c o s t s e t fo rth in th i s A rtic l e 6 , u n l e s s a n d unt i l t h e CLI E N T

shal l ha v e no t i f i e d t h e C O N S U L T A N T i n w r itin g th a t s u c h

est i m a t ed co s t has been i ncreas ed an d shal l hav e speci f i e d in

s uch no t i ce a r evi sed est i m a t ed co s t w h i ch shal l t h e r eupo n

con s t i t u t e t he est i m a t ed co s t of t h i s A greem ent .

* * *

A r t i c l e 7 . P a y m e n t

A . For t he p e r f orm ance o f th i s A g r e e m e n t, th e C L I E N T s h a ll p a y

t h e C O N S U L T A N T al l o w abl e cost s i n acco r danc e w ith th e

term s and c ondi t i ons as s e t f o r t h abov e . I n addi t i on t o t h e

pay m ent s f o r al l o w abl e cost s as herei n b e f ore pr o v i ded , t h e

CLI E N T ag rees t o p a y t h e C O N S U L T A N T t h e su m o f

T H I R T Y - F OUR T HOUS AND, T W O HUNDRE D F ORT Y -

T W O D O L L A R S ( $34, 242. 00) , and i t is agreed and

under s t ood th a t t h is w i l l co n stit u te fu l l c o m pens a t i on t o t h e

C O N S U L T A N T f or f i xed f ee cov e r i n g al l ser v i ces and w ork

r e q u ired by t h e con t r act i t e m s covered un der t h i s A greem ent

unl e s s s uch a m ount s hal l be a m ende d i n w r i t i ng by t h e

CLI E N T .

B . O n c e each m o n t h , th e C O N S U L T A N T s h a ll s u b m it to th e

CLI E N T a c e rtif i e d in v o i c e fo r a llo w a b l e c o s t s in c u r r e d in th e

perf orm ance o f t h i s A greem ent .

 * * *

A rti cle 1 0 . G e n e r a l P r o v i s i o n s

T h e f o l l o w i ng gen e r a l pr ovi s i ons ar e i ncor por a t ed he r e i n and m ade

a part hereof :

A . C hange s . T h e p a rtie s h e r e t o m a y fr o m tim e to tim e

r e q u ire ch ang es i n t he S cop e of s e r v i ces and t h e

tim e of per f orm ance as set f o r t h her e i n . Such

c h a n g es, i ncl udi ng any i n c r ease or decreas e i n t h e

a m ount o f th e c o m p e n s a t i o n t o t h e C O N S U L T A N T ,

w h i c h ar e m u t ual l y a g r e e d upon by and bet w een th e

p a rtie s heret o , shal l b e in c o r p o r a t e d a s w ritte n

a m end m ent s to th i s A g r e e m e n t. A n y c l a i m by t h e

CONS U L T ANT f o r an a d j u s t m ent under t h i s cl aus e

m u s t be asser t e d w ith i n th irty (3 0 ) d a y s fr o m th e

d a t e of t he r e c e i p t by t he C O N S U L T A N T of th e

not i f i c a t i on of cha nge; pr ovi ded, how eve r , t hat th e

CLI E N T m a y , if e q u ity i s obt a i ned , r ecei v e and act

upon any such cl a i m ass e r t e d a t a n y tim e p rio r to

f i nal pay m ent under t h i s A g r e e m ent .
4

T h e ph ases o f th i s ag reem e n t w ere d i v i d e d i n t o t ask s an d su b t ask s . P h ase I, T ask

A , w as desi g n a t ed as S yst e m D esign . O f pa r t i c u l ar i m p o r t a n c e are t h e su b t ask s

o f T ask A , w h i c h read as fo l l o w s :

S u b t a s k A . 2 . F u n c t i onal D e s i g n - T he c ont r o l s yst e m t o be

p r ovi ded shal l be bas ed on U T C S con cept s , i n p a r t i cul a r t he U T C S

E nhanc e d sof t w a r e . H o w ever, desi g n t asks t o ad a p t th e U TCS

con cept s fo r th e M e tro N a s hvi l l e a nd D avi d s on C ount y s y s t e m s hal l

be per f o r m ed by [ F R H ] .

* * *

S u b t a s k A . 3 . C o m p u t e r Syst e m D e s i g n - T h e t r a d e o f f s h a ll b e

m a d e of a l t e r n a te c o m p u ter c o n fig u r a t i o n s fo r th e M e tro S yst e m f o r

bot h th e in itia l i m p l e m ent a t i on pha s e s and e xpande d ( 550) s y s t e m

conf i gur a t i o n s . T he c onf i gur a t i ons , w h i ch [ F R H ] s hal l cons i der ,

shal l be ba s ed on t he ba s i c U T C S cont r o l conc ept s . T h e U T C S

s o ftw a r e and any speci a l f u n c t i o n s , such as E V R P , sh a ll b e

exam i ned a n d th e ir r e q u ire m e n t s tra n s l a t e d in t o c o m p u t e r

r e q u ire m e n t s .

M a j o r t r ade of f cons i der a t i ons s hal l i ncl ude

N Spee d

N S t orage capaci t y

N I n stru c t i o n re p e rto ire

N I / O capaci t y

N P e r i p h e r a l com p l e m ent

N P r o t e c t i ve ope r a t i ng pr oce dur e s

N P r oduct l i ne s t a t u s ( p r evi ous us age )

N R e lia b ility

N C o s t

N M a i n t enan ce ser v i c e

I n addi t i on t o r epr e s ent i ng t he ke y por t i ons of t he c ont r a c t i n t h i s cour t’s

e s tim a tio n , t he ab o v e ci t a t i o n s exem p l i f y th e f a r - r e a chi ng and com p r ehe n s i v e

scope o f th e a g r e e m e n t o f th e p a rti e s w i t h re g a r d t o t he de s i gn and

i m p l e m e n t a tio n o f a c o m p u t e r i z e d tr a f f i c c o n t r o l s y s t e m . 

I I . C o n tra c t u a l R e l a tio n s h i p a n d S y s t e m L i m ita tio n s

T h e re c o r d re v e a l s th a t, a lth o u g h th i s c o n tra c t u a l re l a tio n s h i p bega n w i t h

m u c h hope and a n t i c i pat i on f o r t he n e w com p u t e r i zed si g n a l syst e m , U T C S

E nhanc e d s o f t w a r e w a s not w hat ei t her par t y t o t he a g r e e m ent had h oped i t
5

w oul d b e . W ith th e on set of t he p e r sonal com p u t e r age, t he m a i nfr a m e - based

s o ftw a r e des i gned b y H oney w e l l , I nc. , pr oved i l l fit f o r th e ta s k o f m a n a g i n g th e

tra f f i c s i g n a l s o f la r g e U . S . c itie s . C itie s a c r o s s th e c o u n try a tte m p tin g to

i m p l e m e n t t he U T C S E nhanc e d s o f t w a r e ha d r epor t ed e x t ens i ve pr obl e m s w ith

r egard to th e fu n c tio n a lit y o f th e s y s t e m . T h e depos i t i o n o f M r. G r e g o r r e v e a l s

t hat as ear l y as N o v e m ber of 1988, bot h par t i e s bec a m e a w a r e of l i m i t a t i ons as

t o th e n u m b e r o f in t e r s e c tio n s t hat coul d be g over ned by t h e sy s t e m . S a y s M r .

G r egor :

Q . A n d wh e n di d t h e C i t y first b e c o m e a w a r e th a t t h e r e w e r e

l i m i t a t i o n s in h e r e n t t o th e U T C S p r o g r a m ?

A . I t w oul d have bee n ei t her l a t e 1988 or ea r l y 1989.

Q . O kay. In r espon se t o in t e r r o g a t o rie s in th i s c a s e , th e c ity

i n d i c a t e d t hat t hey w e r e verbal l y m ade aw a r e i n N o v e m ber of ‘ 8 8 .

D oes t hat s ound a bout r i ght ?

A . I bel i eve t he w o r d appr oxi m a t e l y w a s us ed.

Q . R i ght . A nd t o w hom w a s t hat aw a r ene s s conve y e d ?

A . T h e cons u l t ant conve ned a m e e t i ng w i t h us in M r .

H a r p e r’s off i ce, and I w as t here, and M r . H a r per w as t here, I b e lie v e

E l v i s w as t here. I w as, i n s p ite o f m y b e s t e f f o rts , u n a b l e to fin d

m eet i n g s -- th e n o t e s fo r it, a n d th a t’s w h y I c o u l d n ’t g i v e you t h e

exact dat e of t hat m eet i n g hap pen ed.

Q . A n d wh o el se w as t here? Y ou, M r . H a r per , M r . M oor e ?

A . R i ght . T he c ons u l t ant s , of cour se. I bel i eve K en K e i t t

w a s t her e on behal f of t he cons u l t ant . A gai n , w i t hout m y not e s , I

d o n’t r e m e m ber exact l y w h o w as t here.

Q . O kay. An d w hat di d t he co nsul t ant s s ay at t hat m eet i n g ?

A . B asi cal l y t hey con vey e d th a t th e y w e r e ha v i ng pr obl e m s

w ith U T C S , th a t th e y had h it a n in t e r n a l lim it o f a b o u t 2 4 0

i n t e r s e c tio n s and th a t w a s ca u s i ng t hem pr obl e m s , and t hey f e l t t hat

t h e y nee ded t o dr op t he U T C S and go t o a di f f e r ent con cept , wh i c h

w oul d have bee n a c u s t o m i z e d deve l opm ent appr oac h . A nd t hey

conve y e d t hat t hey coul d do t hat w i t h i n t he c ont r a c t .

Q . A n d wh a t do you m e a n t hey conve y e d t hat t hey coul d do

it w ith i n th e c o n tra c t .

A . M y under s t andi ng w a s t hat th e r e w a s goi ng t o be n o

addi t i onal cos t t o t he gov e r n m ent .

T h e con cer ns di scuss ed i n t hat m eet i n g w e r e add r ess ed ag a i n i n a 1 9 9 1

l e tte r fro m F R H ’s S y ste m s E n g i n e e rin g D irec t o r to G e o r g e C. H a r per, E xecu t i v e

D ire c t o r and S e c r e t a r y o f th e M e tro T r a f f i c and Pa r k i ng C o m m i s s i on. T hat l e t t e r

o u tlin e d FR H ’ s pr opos ed a ppr oac h t o f u l f i l l i ng t he obl i gat i ons of t he or i g i n a l

1985 a g r e e m ent as f o l l o w s :
6

F aced w ith th e o b j e c t i v e of deve l opi ng an expa ndabl e s o f t w a r e

pack a g e th a t co u l d c o n tro l an u l t i m a te s y ste m siz e o f 5 5 0

i n t e r s e c tio n s , a n d in t e r a c t w ith a d d itio n a l syst e m enh ancem ent s ( i.e .

col o r graphi cs, m u l t i - t e r m i nal access , et c . ) , F R H exh aust i vel y

pur s ued expa n s i on of t he EN H A N C E D U T C S pac kage unt i l f o r c e d

t o adopt a m a j o r cour s e c o r r e c t i on i n t he N a s hvi l l e S yst e m

I m p l e m e n t a tio n . T h i s cons i s t ed of em bar k i ng on a n i ndepe ndent

deve l opm ent o f a c o m p lete l y n e w c o n tro l so ftw a r e pack age w h i c h

w oul d b e fr e e fr o m th e E n h a n c e d U T C S ’ s s i z e lim ita tio n w h ile

p r o v i d i n g s u b s t a n tia lly a ll o f its fu n c tio n a l c a p a b ili tie s . T h e

m agni t ude o f e f f o rt a s s o c i a t e d w ith s u c h m a j or s oft w a r e

devel opm ent pr ogr a m s i s us ual l y m e a s u r ed i n m anyea r s .

I n conc l u s i on, i n or der t o ac com p lis h t h i s t ask, F r ederi c R . H a r r i s

i n c u rre d t i m e , m anhour , and d i r e c t co s t s far i n ex c e ss o f w hat coul d

b e e s tim a t e d if th e s i z e lim ita tio n s o f th e E n h a n c e d p a c kage ha d

been cl ear l y d ocu m ent ed i n F H W A r e l ease m anu a l s . T hese f act ors

w e r e cl e a r l y be yond t he c ont r o l of Fr ede r i c R . H a rris w ho s u s t a i ned

d i l i gent pr o s e c u t i on of pr o j e c t w o r k i n good f a i t h .

T h e r e c o r d bel o w s how s , cons i s t ent w i t h t he a f o r e m ent i oned l e t ter a n d

1988 m eet i n g , t hat begi nni ng i n 1988, FR H , I nc. i ncur r ed e xpens e s ; t h e r ecord,

how eve r , i s uncl e a r as t o w hat por t i on of t he e xpens e s i n ques t i on w ent t o

deve l opi n g new sof t w a r e and w h a t p o rtio n fin a n c e d th e ill-f a t e d a tte m p t to ta ilo r

E nhanc e d U T C S fo r th e N a s h v ille S y s t e m . T h e p a rtie s b e l o w a g r e e th a t th e

exp enses conne c t ed w i t h t h i s at t e m p t ed cu s t o m i zat i o n ar e t h e ver y s ubj e c t of t h i s

d i s put e . It fu rth e r a p p e a r s fr o m th e c o n d u c t o f th e p a rtie s h e r e , th a t th e b u l k of

t h ese expe n s e s i n i s s ue w e r e pr obabl y i ncur r ed pr i o r t o D e c e m ber 31, 19 91,

w h e n FR H s ubm i t t ed t he s i x t h cha nge or der , r eque s tin g re i m b u r s e m e n t in th e

a m ount of $287, 028. 81. A l m o s t t w o ye a r s l a t e r , M a y 12, 1993, G eor g e H a r per,

t h e T r a f f i c and Pa r k i ng C o m m i s s i on C hai r m an, i n f o r m ed FR H , t hat $122, 673 of

t hos e cos t s had b e e n appr oved a nd t hat FR H w a s t o s ubm i t a c hange or der f o r

pay m ent . T h i s appr oval w as m ade condi t i onal upon M e t r o ’ s ac c e p t anc e of t h e

syst e m and i t s unr e s t r i c t ed us e of t he s o f t w a r e . For t he pur pos e s of s u m m a r y

j udgm ent , how eve r , bot h par t i e s s t i pul a t ed be l o w t hat FR H , I nc. ’ s dut i e s under

t h e cont r a c t had a l l but bee n com p l e t ed. A l t hough M e t r o di d s tip u l a t e f o r th e

pur pos e of s u mma r y j udgm ent t hat FR H , I nc. had a g r e e d t o M e t r o ’ s unr e s t r i c t e d

u s e of th e c u s t o m i z e d s o ftw a r e , M e tro d i d d i s p u t e F R H ’ s a lle g a tio n th a t M e tro

had f i nal l y accep t ed t he syst e m . M e t r o t e r m i nat ed t he co n t r act f or t h e

conve n i enc e of t he gov e r n m ent pur s uant t o A r t . 10, s e c t i o n D . o f th e c o n trac t
7

Febr uar y 7, 1994. Th e cha nge or der s ubm i t t ed by FR H w a s neve r s i gned b y t h e

Pur cha s i n g A gent , D i r e c t o r of Fi nanc e and t he M ayo r . A t t he S u m m a r y

J udgm ent Pr oce edi ng bel o w , and a t a l l p o i n ts in th e p r o c e e d i n g h e r e , M e tro has

u r ged t hat si nce t h e s i x t h cha nge or der w a s not s o s i gned p u r s uant t o M e t r o C ode

§ 4. 24. 020, FR H ’ s cl a i m f o r expe n s e s i ncur r ed pr i o r t o t hat cha nge or der ca nnot

b e r ecov e r ed. T he gov e r n m ent ar gues t hat t he c hange or der s ought m odi f i c a t i o n

o f a n e x i s tin g fin a n c i a l lia b ility and t hat pay m ent t her eof w i t hout appr oval o f th e

P u rch asing A gent , D i r e c t o r of Fi nanc e a nd M a y o r w oul d be a n ul t r a v i r es act .

C ity of Lebanon v . B a i r d , 75 6 S. W . 2d 236, 244 ( Tenn. 1988) ; Lai d l a w E nvt l .

S erv s . of Sout h C a r o l i na, I nc. v . M e t r o p o lita n G o v ’t. o f N a s h v ille and D avi d s o n

C ount y , N o . 01A 01- 9610- C H - 00479, 1997 W L 706614 ( T enn. C t . A pp. N ov. 14,

1997) . T he c our t bel o w f ound, bas ed on Lai d l a w th a t t he e xec u t i on of a c hange

o r der w as necess a r y t o b i n d M e tro . T h i s c o u rt is o f t he opi n i on t hat Lai d l a w is

d i s tin g u i s h - a b l e fr o m th e c a s e a t b a r o n its fa c t s .

L a i d l a w E nvi r onm ent a l Ser v i c e s of Sout h C a r o l i na, I nc. ( L a i d l a w ) ,

con t r act e d w ith M e tro re g a r d i n g th e re m o v a l o f f l y a s h g e n e r a t ed b y th e

N a s h v ille T herm a l T r ansf e r Pl ant . T he or i g i nal cont r a c t t e r m s r equi r e d L a i d l a w

t o r e m ove onl y 15- 25 t ons of as h per day, w i t h a 15 - t on m i n i m u m cha r ge pa i d

b y M e t r o . W hen i t becam e appa r ent t o b o t h p a rtie s th a t th e c o n tra c t w a s n o t

m eet i n g Me t r o ’ s nee d s , th e p a r tie s a tte m p t e d a m o d i f i c a tio n . L a i d l a w , * 2 .

" L a i d l a w ' s est o p pel ar g u m ent w as pr e m i sed on w hat i t cha r a c t e riz ed as a ci t y

e m p l o y ee' s ' i n t e r p r e t a tio n ' o f a w r i t t en c ont r a c t . W e he l d t hat t he pur por t e d

i n t e r p r e t a t i o n w a s a c t u a l l y a n o r a l co n trac t m o d ifi c a t i o n th a t w a s b a rre d b y

M e tro p o lita n C ode § 4 . 24. 020. " T he t e r m s of t he c ont r a c t i n Lai d l a w we r e cl ear

and unam b i guous . Lai d l a w , *6. I n t he case at bar, ho w ever, t he co n t r act i n g

p a rtie s a l l o w e d fo r th e e las t i c n a t u r e of t hei r r e l a t i ons by c ont r a c t i ng on a cos t -

p l u s-fe e basi s w here cost s w e r e est i m a t ed an d sub j ect t o ch ang e . I n t he p l a i n

l angua g e o f th e c o n trac t , F R H a n d M E T R O a l l o w e d fo r c e rtain “ trad e - o ffs”

r e g a r d i n g E nhanc ed U T C S ada p t a t i on. T he pa r t i e s adm i t t hat th e m a j o rity o f th e

c o s t s r eque s t ed i n t he s i x t h cha nge or der w e r e i ncur r e d p rio r to s ubm i s s i on of t h e

p r opos e d chan ge o r der. A s s uch , t he co s t t e r m i n F R H ’ s cont r act i s

d i s t i ngui s habl e fro m t he una m b i guous l angua ge i n L a i d l a w ’ s agreem ent . M e t r o

i s act ual l y d o i n g i n t h i s cas e w hat t he co n t r act or c l a i m e d M e tro d i d in Lai d l a w .
8

S i n c e w e d i s tin g u i s h th e c o n tra c t in Lai d l a w , w e r e m o v e t he m a j or bar r i e r t o

estop p el w h i c h ex i s t e d i n t h at case .

I I I. U ltra V ire s , E s t o p p e l a n d E x e c u t e d C o n tra c t s

T he S u p r e m e C o u r t of T enn ess ee has hel d :

U nder T enn ess ee l a w , a m u n i c i pal ac tio n m ay b e decl a r ed u ltr a

v i res for ei t h er o f t w o reaso n s : (1) be c a u se the ac t i o n w as w h o l l y

out s i d e t he s cope of t he c i t y ' s aut hor i t y unde r i t s c h a rte r o r a s t a t u t e ,

o r ( 2 ) bec aus e t he a c t i on w a s not under t ake n cons i s t ent w i t h t h e

m anda t o r y p r o v isio n s o f it s c h a rter o r a st a t u t e . th u s , th e la w

r ecog n i zes a di f f e r ence b e t w een t he ex i s t ence of a m uni c i pal pow e r

and t he m anne r or m o de of exe r c i s i ng m uni c i pal pow e r

l e g iti m a t e l y . C o m par e C i t y of C hat t anooga v . Tenne s s e e E l e c t r i c

P o w e r Co . , 172 T enn. 524, 11 2 S . W . 2d 385 ( 1938) ( exi s t enc e of

pow e r ) w ith R u t h e r f o r d v . C ity o f Na s h v ille , 168 T enn. 499, 79

S . W . 2 d 581 ( 1935) ( m anne r of exe r c i s e ) . A s t h i s C our t obs e r ved

i n M e m phi s St r e e t R y . C o . v. R api d Tran s i t C o . , 138 T enn. 5 9 4 ,

607- 608, 198 S. W . 890, 893 ( 1917 ) , " [ i ] t is to b e o b s e r v e d th a t . .

. pow e r exi s t ed i n t h e m u n i c i p a lit y to [d o th e a c t ] in q u e s tio n , b u t

i t wa s lim ite d o r q u a lifie d a s to th e m o d e o f e x e r c i s e . S o it is in th e

c a s e under r e v i e w ; pow e r t o ac t , pr oce edi ng pr oper l y , w a s not

l acki n g , bu t t he l i m i t a t i o n s on i t s exer c i se w e r e no t r egarded. "

W h e n a m uni c i pal i t y ha s no pow e r w hat s oeve r t o do a n act ,

t h a t any at t e m p t t o u n d e r t ake such act i o n i s u l t ra vi res is re a d ily

seen; th e m o r e d iffi cul t qu est i o n i s t he co nsequ ences of a ci t y ' s

f a i l u r e t o do a n aut hor i z e d act i n t he m ann e r pres c r i bed by i t s

chart e r o r b y th e s t a t u t e u n d e r w h i c h it i s a tte m p tin g to a c t. I n s o m e

c a ses, i f th e C ity does an a c t t hat does not com p l y w i t h t he l a w

c o n tro llin g th e m anne r i n w h i c h it is to b e d o n e , th e c ity w ill b e

e s t opped fr o m d e n y i n g th e v a lid ity o f its a c t fo r e q u ita b l e

cons i der a t i ons a ris i n g o n th e f act s of t he p a r t i cul a r case, Law r enc e

C ount y v . W h ite , 200 T enn. 1, 8, 288 S. W . 2d 735, 73 8 ( 1956) ,

u s ual l y becau se t he ci t y h as accep t e d t he b enefi t s of an act i t

i nduce d anot her t o p e rfo r m , e . g ., B r o w n v . C ity o f M a n chest e r , 722

S . W . 2 d 3 94, 397- 398 ( T enn. A pp. 1986) , or bec aus e t he c i t y i nduce d

a d e t r i m e n t a l a c t o f a n o t h e r , e . g ., B l e d soe C o u n t y v. M c R eyno l d s ,

703 S. W . 2d 123, 145- 125 ( T enn. 1985) .

 * * *

U ltim a t e l y , t he a ppl i c a t i on of es t oppel or i m p l i ed co n trac t

m u s t be det e r m i ned on t he fact s and equ i t i es of t he p a r t i cul a r case.

T h e p rin c i p l e s o f e s t o p p e l a r e w e l l set t l ed an d n o t every case w i l l

r equi r e a ppl i c a t i on of es t oppel or o f im p lie d c o n tra c t. T h e c l a s s i c

c a s e of es t oppe l in th e p r esent con t ext i s t he accep t ance o f t h e

b e n e fits of a con t r act and t he sub sequen t r e f usal of a ci t y t o pay f o r

t h e ben e f i t s r ecei ved . S e e , e . g ., T r u ll v . C ity o f L o b e l v ille , 554

S . W . 2d 638, 641- 642 ( T enn. A pp. 1976) .
9

C i t y of Lebanon v . B a i r d , 756 S. W . 2d 236, 241- 42, 244 ( T enn. 1988) .

T h e cour t s of t h i s s t a t e ha ve l ong r e c ogni z e d t hat a ci t y m ay b e est o p ped

fro m a s s e rti n g th e u l t r a v ires n a t u r e o f a n a c t i f th e a g g riev e d c o n trac t o r can

s how th a t th e u ltr a v i r e s c o n t r a c t is p a r tia lly o r fu lly e x e c u t e d . M ayor and C ity

C o unci l o f N a s h v ill e v . H aga n , 68 T enn. 495, 507 ( 1876) ; C i t y of Lebano n v .

B a i r d , 756 S. W . 2d 236, 244 ( T enn. 1988) ; T r u ll v . C ity o f L o b e l v ille , 554 S. W . 2 d

638, 641- 42 ( T enn. C t . A pp. 1976) . T h i s w e l l s e ttle d r u l e of equi t y a nd com m o n

sen s e ca nnot be a voi ded w hen a m u n i c i pal i t y co n t r act s f or a benefi t , r ecei ves and

r e t a i n s i t , and t hen r e f uses t o co m pens a t e th e c o n tra c t o r f o r th a t b e n e fit s o l e l y

b e c a u s e th e c ity fa ile d to fo llo w i t s ow n pr oce dur e s w i t h r ega r d t o t h e

com pens a t i on.

I V . T e r m i n a tio n fo r th e C o n v e n i e n c e o f th e C lie n t

I t bea r s not i ng t hat Me t r o te r m i n a t e d th i s c o n tra c t u a l re l a tio n s h i p u n d e r

s e c t i on 10. D of t he c ont r a c t w i t h FR H . T hat s e c t i on r e a d s i n per t i nent par t :

D . T e r m i n a tio n f o r C onveni enc e of C l i ent . T h e CLI E N T ma y

t e r m i n a t e th i s A greem ent at any t i m e by gi v i ng w r i t t en not i c e t o t h e

CONS U L T ANT o f s u c h te r m i n a tio n a n d s p e c ify i n g th e e f f e c tiv e

dat e th e r e o f , at l east f i f t een (15) days befor e t he eff ect i ve d a t e of

such te r m i n a tio n . In th a t e v e n t, a ll fin i s h e d o r u n fin i s h e d

docum ent s and o t her m a t e ria l s s h a ll, a t th e o p tio n o f th e CLI E N T ,

beco m e its p r o p e rty . If th i s A g r e e m e n t is te r m i n a t e d b y th e

CLI E N T as pr ovi ded he r e i n , t he C O N S U L T A N T w i l l be pa i d

i n c u rre d c o s t fo r c o m p l e t e d o r p a rtia lly c o m p l e t e d w o r k , p l u s a p r o

r a t a po r t i o n of t h e Fi x e d Fe e .

T h i s sect i o n of t he co n t r act cl ear l y st a t e s t hat s o m e a m ount i s ow ed t o FR H upon

t e r m i nat i on f o r t he c onveni enc e of t he gov e r n m ent . M e t r o s e e m s to ar gue t hat

t h e pl a i n unam b i guous l angua ge of s u b sect i on D of t he c ont r a c t i s t r u m ped by

§ 4. 24. 020, w h i ch s t a t e s i n per t i nent par t :

A . A ppr oval by pur cha s i ng age n t . B e f o r e any chan ge,

r e v i s i o n o r m o d ific a tio n shal l be m ade i n any cont r a c t r equi r i ng t h e

expe ndi t u r e of m oney or t he r e l i nqui s h m ent of r i ght s or pr i v i l ege s

b y th e m e t r opol i t an gov e r n m ent , s uch c hange , re v i s i o n o r a lte r a tio n

shal l be app r o v ed b y t he p urchasi n g agen t . T he p urchasi n g agen t

shal l di s appr ove a ny c hange , r evi s i on or a lte r a tio n o f s u c h c o n tra c t ,

i f i n hi s opi n i on, t he be s t i n t e r e s t s of t h e m e tro p o lita n gover n m ent

r e q u ire t hat a new procurem ent be i n itia t e d fo r th e ite m s in c l u d e d

i n t he pr opos e d cha nge o r m o d ific a tio n . T h e m a y o r s h a ll m a k e th e
1 0

fin a l d e term i n a t i o n if t h e d irec t o r o f a n y a ffe c t e d d e p art m e n t s ,

c o m m i ssi o n , boar d o r ag e n c y o b j e c t s t o t h e d e c i s i o n o f t h e

pur cha s i ng age n t .

B . A ppr oval by M ayo r and di r ect or of l a w . A n y chan ge,

r e v i s i o n s o r a l t e r a t i o n s of con t r act s , deed s , l eases or ot her

i n s tru m e n t s in w ritin g in w h i c h th e m e tro p o lita n g over n m ent i s

con cer ned shal l be a ppr oved b y t he de par t m ent of l a w , as pr ovi ded

b y s e c t i on 8. 602( e ) of th e M e tro p o lita n C h a rte r, a n d s h a l l be s i gned

by t he m a y o r .

C . A v a ila b ility of Fu n d s . W her e a ny c hange , r evi s i on or

a lte r a tio n of a c ont r a c t i n w h i ch t he m e t r opol i t an gov e r n m ent i s

con cer ned r equi r e s an e xpendi t u r e of m oney t he di r e c t o r of f i nanc e

o r hi s des i gnee m u s t appr ove t he c hange . Funds m u s t be avai l abl e

o r obt a i nabl e by m e a n s aut hor i z e d in th e C h a rte r or i n or d i nanc e s .

( O r d . 92- 210 § 1 ( 6 - 102) , 1992) .

T o app l y a st a t u t e w h i ch c over s m o d ifi c a t i o n s o f c o n trac t d u t i e s to a c o n trac t

w h i c h seeks onl y t he sat i s f act i o n of exi s t i n g du t i es s eem s t o st r a i n t he pl a i n

i n t e n t of bot h . M e t r o and F R H pr ovi ded t he m e t hods of t e r m i n a tio n in t hei r

agreem ent . M e t r o ch ose t h e m e t hod by w h i ch i t m u s t now l i ve a nd pay . T h e

ques t i o n of how m uch c o s t s i t m u s t pay i s cl e a r l y a ques t i on of f a c t f o r t he c our t

bel o w t o addr e s s on r e m and.

S i nce t h i s ca s e i s her e on app eal f r o m t he gr ant of s u m m a r y j udgm ent , our

bur den is c l e a r. W e m u s t d e t e r m i n e , v i e w i n g th e re c o r d b e l o w in th e lig h t m o s t

f avor abl e to th e non- m ovant , w het her a m a t e r i a l i s s ue o f f act exi s t s w h i ch w o u l d

p r e c l ude e n t r y of j udgm ent f o r t h e m ovant . See B yrd v. Ha l l , 847 S. W . 2d 208,

210- 211 ( T enn. 1993) . T he de novo r evi e w of s u m m a r y j udgm ent on ap pea l

e n t a ils no pr e s u m p t i on of cor r e c t nes s . C ity o f Tul l ahom a v. B edf o r d C ount y , 983

S . W . 2 d 408, 412 ( T enn. 1997) . T he f i ndi ng bel o w ce n t e r ed onl y on t h e

a p p lic a tio n of Lai d l a w to th e undi s put ed f a c t s r ega r d i ng t he c hange or der . Th e

cour t bel o w di d not del ve i n t o t he c our s e of dea l i ng of th e p a rtie s , nor w het her

t h e bene f i t s o f t h i s ar r ang e m ent w e r e act ual l y ret a i ned un der ci r cum s t ances

w h i c h w oul d m ake i t unf a i r f o r FR H t o go unc o m pens a t ed. T hus , i t i s not

necessar y fo r t h i s cour t t o ad dres s t he accu r acy o f F R H ’ s al l eged cost s und e r t h e

con t r act . N or i s i t necessar y t o d eci de t he ap propri a t eness of M e t r o’s off e r t o

s e ttle t he co s t i s s ue. I t i s enou g h t o st a t e t hat t he co n t r act bet w een F R H and

M e tro w a s w ith i n t he po w e r o f M e tro to a u t h o riz e . It is a q u e s tio n o f m a t e ria l
1 1

f act w het her or not t h e cont r a c t on t h e p a rt o f F R H is p a rtia lly e x e c u t e d o r f u lly

e x ecu t e d in m a tte r s re l a tin g to c h a n g e o r d e r n u m b e r s i x . Lai d l a w i s not

appl i c a b l e a nd s u m m a r y j udgm ent w a s i nappr opr i a t e .

T h e or der of t he c our t bel o w gr ant i ng s u m m a r y j udgm e n t to t h e

M e tro p o lita n G over n m ent of N a s hvi l l e a nd D avi d s on C ount y i s t her e f o r e

r evers e d an d t h e c a u se rem a n d e d for a t r i al on t h e m eri t s . C o s t s on ap p eal ar e

t axed agai nst t he ci t y .

_______________________ _ _ _______ _______ _

W I L L I A M B. CAI N , J UDGE

CONC UR:

_______________________ _____________

B E N H . C A N T R E L L , P . J ., M . S .

_______________________ _____________

W I L L I A M C. KOCH, J R . , J UDGE