### IN THE COURT OF APPEALS OF TENNESSEE AT KNOXVILLE Februar y 13, 2 003 Session
MESSER

GRIESH EIM IND USTRIE S, INC . D/B/A MG IND USTRIE S v. CRYOTECH OF KINGSPORT, INC., ET AL 

### . Appeal from the Circuit Court for Knox County No. 3-64-97 Wheeler A. Rosenbalm, Judge

FILED JULY 10, 2003

No. E2002-01728-COA-R3-CV

This appeal f

rom the Kn ox County

Circuit Court questions whether the Trial Court erred in granting
a summary judgme

nt in favor of the Appellee/Defendant, Eastman Chemica l Co mp an y, with respect to various claims connected with the purchase a nd sale of contaminated carbon dioxide by the Appellan t/Plainti ff, Messe r Griesh eim I ndustrie s, Inc., d/b/a

MG Industries. We affir m in part, vacate in part and remand.

Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Circuit Court Affirmed in Part

and Vacate

d in Part ; Cause Re

manded

H OUSTON M. G ODDARD , P.J., delivered the opinion of the court, in which D. M ICHAEL S WINEY and C HARLES D. S USANO , J R ., JJ., joined. Gregory M. Leitner, Chattanooga , Tenness ee; Mar k G. Arno ld, St. L

ouis, Missouri and Arthur G. Seymour, Jr., Knoxville, Tennesse e, for th e Appella nts, Messe

r Griesh eim I ndustrie s, Inc . d/b/a MG Indu stries

Pamela Blass Bracher, Chattanoog a, Tennessee; William Randall Wilson, Chattanooga, Tennessee and Robert C. Divine, Chattanooga, Tennessee, for the Appellee, Eastman Chemical Company

OPINION Cryotech of Kingsport, Inc. (he

reinafter "Cry

otech") operates ga s purification facilities and pr oduces food grade liquid carbon dioxide. The Appellee, Eastman Chemica l Corpor atio n (hereinafter "Eastman" ), owns and operates a coal gasific ation plant in Kingsport. The Appe llant, Messer Grieshe im, Inc., d/b/a

MG Industries (

hereina fter “Me sser”) , is a distributor of liquid carbon dioxide, which it purchases in bulk and sells to customers for various food and medical uses.-2-

In 1988 Cryotech and Ea stman entered into anagreement pursuant to which Cr

yot ech woul d purchas e a carbon dioxide richwaste stream (hereinafter “f eedgas”) from Eastman which Eastman had, prior to that time, vented into the atmosphere. The price paid to Eastman by Cryotech under the agreement was determined by the concentration of carbon dioxidein the feedgas and the volume of feedgas to be purchased w as measured by the amount of

carbon d ioxide Cry

otech shi pped to its customer s.
At the same time it entered the feedgas a greement Cryotech also entered into a lease of land belonging to Eastma

n adjace nt to Eastma

n's King sport p lant and constructed thereon a carbon dioxide purification facility. Cryotech’sp urificat ion facility beca me operational in 1992 and Cry otech began selling carbon dioxide to Messer and other customers. Shortly af ter operations began Cry otech began experiencing pr oblems due to chemical contaminants in the feedgas it was purc hasing from Eastman. In spring of 1993, Eastman discovered the presenc e of hydrog en cyanide ( he reinafter “HCN”), a toxic and potentially lethal substance , on Cryotech’s c atalyst and informed Cry otech of

this findi ng. The feedgas agreement had not included HCN in a description designated

“Typical Composition of Carbon Dioxide Gas” and deposition testimony indicates that Eastman had pre viously represe

nted that it had never detected any cyanide in the f

eedgas. Because

of resulting increased purifica ti on costs, Cryotech withheld pay ment for the feedg as and ev entually owed Eastman an arrearag e of over one million dollars.

Cr yotech be gan monitoring the HCN content of the fee dgas more than once a day and freque ntly discussed the results of such monitoring with Eas tma n representatives. In la te 1993 Cryotech detected increasing

levels of HCN and complained to Eastman about the incr eased c ost of its removal. Eastman sought to determine the cause of the increa sed HCN levels and endeavored to assist Cryotech in identify ing better and less expensive way s Cryotech could re move the HCN. Eastman also took s ome actions in its own facility to try to reduce the HCN content of the fee dgas. In 1996 Eastman installed its own HCN

analy zer to pre

pare fo r complia

nce with n

ew EPA regula tions; however , this ana

lyze r exhibited

various p roblems a nd was ultimately

determined to be an unrel iable mea sure of H CN levels

. In March o f 1996 Messe r began s elli ng carbo n dio xid e obta ined f rom C ryotech t o a large manufacturer

of carbonated beverag es. Shortly thereafte r, this manufacturer

notified M esser th at it
was receiving customer complaints reg arding the odor and/or taste of its beverag es. Testing revealed the presence of HCN in Cry otech’s carbon dioxide and thereafter Eastman discontinued supply ing feedgas to Cyotech. Su bs eq ue nt ly, several of Messer’s other customers claimed tha t their product had been adulterated by

the contaminated

carbon dioxide and that beverage ca nisters containing the contaminatedcarbon dioxide were rendered unusable and had to be destroyed. Messer s ettled the se claims in anticipation of

litigation. Messer also incurred expenses in cleaning its own storag e tanks and tanker cars which had contained the conta minated carbondioxide. Messer incurred additional expenses as a res ult of the a dultera tion of unc ontamina

ted car bon dioxide w

hen it was mixed with carbon dioxide purchased from Cryotec h. Altoge ther, Me sser ass erts that

it has sustained damages1 On Octob er 8, 19 99, the Ci rcuit Court gran ted Mellon’ s motion for su mmary judgment and that ruli ng was subse que ntly affi rmed by this Court in Me sser Griesh eim v. Cryot ech of Kin gsp ort, 45 S.W.3d 588 (Tenn . CtApp. 2001). Additi onally , all clai ms again st Cry otech were dismis sed wit h prejudi ce by agre ed order ent ered November 26, 2001

. 2 On December 10, 1997, the Circ uit Court al so dismi ssed Messer’ s clai ms all eging v iolat ions of the Federa l Consumer Products Safety Act and the RICO Act beca use those claims were previousl y dismissed wit h prejudice by the Distric t Cou rt in Cha ttanoo ga. -3- totaling nearly e

ight million dollars as a result of injury to its own pr

operty and the pr

operty of its customers and that it has suffered additional damages“including but not limited to, business l osses, subs tantial attorney’s f

ees, expenses incurred in determining the origin of the hydrog en c ya nid e contamination, and the costs of cover.” There a re no allegations of personal injury in this case.

In June of 1996 Messer filed a complaint in the United States District Court for the Eastern District of Tennessee at Chattanooga ag ainst Cryotech see king reimburs eme nt of fund s paid to satisfy claims of those customers of Messer who had purchased contaminated carbon dioxide. The complaint was amended in September of 1996 to include as defenda nts Eastman and Mellon Fi na nc ia l S er vi ce s w hi ch pr ov id ed fi na nc in g f or Cr yot ec h’ s g as pu ri fi ca ti on fa ci li ty. 1

On February

4, 1997, Messer filed a complaint in the Circuit Court for Knox County which essentia lly duplicatedthe complai nt filed in the District Court. The complaint alleged that the defenda nts were liable under theories of bre ach of co nt ra ct , f

ra ud , b re ac h o f w ar ra nt y, misrepresentation, products liab ilit y, ultra-hazardous a ctivity, neglig ence, gross neglig ence, recklessness, outrageous conduct, intentional conc ealment, violations of the Racketeer I nfluenced and Corrupt Organizations Act (“RI CO”) and violations of the Consumer Product Safety A ct. This complaint was removed to the United States District Court for the Eastern District of Tennessee at K noxville where it was consolidated with the federal suit pending in Chattanooga. The Distri c t Courtin Knoxville dismissed Messer’s claims for violation of the Consumer Product Safety Act and the RI CO Act and remand ed the ca se to the K

nox County

Circuit Cou

rt.

In July of 1997 Eastman filed a motion to dismiss and for summary judgment or partial summary judgmen t in the Circ

uit Court. H earing

on that moti on was held on October 6, 1997, at which time the Court granted the motion in part. I n so doing, the Court dismissed Messer’s product liability claim upon a finding that Messer had not sustaine d propert y da mage. T he Court a

lso dismissed Messer’s claim for breach of contra ct upon a finding that

there was lack of privity

between Eastman and Messer and Messer’s claim for breach of warranty

for lack of p rivity and/or pr operty damage. Fin ally, the Court dismissed Messer’s claim for violation of the TCPA. 2 Remaini n g ma tt er s u nd er th e m ot io n w er e h el d i n a be yan ce pe nd in g f ur th er di sc ov er y.
In October

of 2001, M ess er filed a motion requesting the Court to reconsider its October 1997 ruling granting Eastman’s motion for summary judgment and, on January 15, 2002, Eastman filed a renew ed mot ion fo r summ ary judgme nt req uesti ng that the Co urt di smis s all r emain ing c laims agains t it.-4-

On April 18, 2002, the Court granted Eastman’s renewed mot ion for su mmary judgmen t. Th e Cour t also granted Messer’s motion to reconsider with respect to its claim against Eastman under the Tennessee Co nsumer Pr ote ct ion Act; however, on May 13, 2002, the Court granted Eastman’s motion for summary a s to this claim also. Thereafter, Messer filed this appeal.

The issue s presen

ted for our revie

w in this ca se are r

estated as follow s:
1. Di d the Circuit Court e rr in gr anting E astman’smotion for summary

judgmen t as t o Messer’s tort claims upon grounds that such claims are bar red by the economic loss doctrine?

2. Did t he Circui t Court err in gran ting Eas tman’s mot

ion for su mmary judgmen t as to Messer’s fraud and

concea lment cla ims upon g

rounds tha

t such cla ims are ba

rred by the econ omic loss doctrine?

3. Did the Cir

cuit Court

err in g ranting Eastman’ s moti on for sum mary judgmen t as to Messer’s claim under the Tennessee Consumer Protection Act upon grounds that there was lack of privity betweenEastman and Messe r, that the re was la ck of evi dence th at Eastma n enga ged in unfair or deceptive conduct and that there was lac k of evidence of causation?

4. Did the Circuit Court err in granting Eastman’s motion fo r summary judgmen t as to Messer’s tort and contract claims upon grounds that Eastman and Messer were not enga ged in a joint venture?

5. Should the Circuit Court have applied Pennsylva nia law in ruling upon Eastman’s motion fo r s um ma ry j ud gm en t a s t o M es se r’ s c la im s a ga in st Ea st ma n f or br ea ch of wa rr an ty?

The standar

d of revi ew with

respect to a trial court’s ruling on a motion for summary judgment is well settled. S ummary judgme nt is only proper when the moving party has demonstratedthat ther

e are no genuine issues w ith respe ct to the ma terial f acts relevant to

the claim
or defense contained

in the motion and the moving party is e ntitled to judgment as a matter of law. Byrd v. H all, 847 S.W.2d 208, (Tenn. 1993). Because our inquiry in determining the propriety of
a summary judgme

ntinvolves purely a que stion of law no presumption of correctness attaches to the trial court’s judgment. Hunter v. Brown , 955 S.W.2d 49 (Tenn. 1997). In assessing evide nce in the summary judgmen t context we

must view t

he evide nce in the light most

favora ble to the nonmoving party and draw all reasonable inferenc es in that party’s fa vor and a summary

judg ment sho uld be granted only when the facts a nd the con

clusions to

be draw n from t

he facts pe rmit a re asonable person to reach only

one conclusion. Byrd , ibid.

The first issue we address is whether the Circuit Court properly g rantedEastman’s motion for summary judgme

nt as to Messer’s tort claims upon grounds that such claims were ba rred by the economic loss doctrine.-5-

The Tennessee Supreme Court has no ted that “Tennessee has joined thos e jurisdictions which hold that product liability claims resulting in pure economic loss can be better resolved on theories other than negligence.” Ritter v. Custom Chemicals, Inc. , 912 S.W.2 d 128 (Tenn. 1995). The economic loss doctrine provides that “[i]n acontract for the sale of goods whe re the only dama

ges alleged come under the heading of ec onomic losses, the rights and obligations of the buy er and seller
are governed

exclusively by

the contract.” Trinity Industries v. McKinnon Bridge Co. , 77 S.W.3d 159 (Tenn. Ct. App. 2001 ). Conseq uently , a plaint

iff may not mainta

in a claim for pure ly economic losses absent contractual privity with the party cha

rged w it h respons ibility

for those

losses. However, T.C.A. 29-34-104 provides as follows as to causes of action which do not involve pu

rely economic losses:

In all causes of

action for personal injury or property da

mage brought on account of neg ligenc e, strict liabil ity or breac h of warranty , including actions brought under the provisions of the Uniform CommercialCode, pri vity shall not be a requirement to maintain such action.

In the case before us there was no c ontractual pri vity between E astman and Messer. The Circuit Co urt fo und that the losses claimed by Messe r were economic losses and, based upon the economic loss doctrine, the Court dismissed Messer’ s tort claims against Eastman. However, Messer contendsthat i t asserted claims for property damage and that it’s tort claims should be allowedpursuant to T.C.A. 29-34-104. Speci fical ly, Messer conte nds that tank cars it used for shipping were damaged as a r esult of contact

with the contaminated carbon dioxide and that, when it placed the contaminated carbon dioxide in storage tanks, it damag ed th e tanks’ pipes as well as the uncontaminated carbon dioxide in the tanks with which it was mixed. Messer further contends that propert y da mage w as also incurred

when its customers c ombined the conta minated c arbon dioxide with soft drink ingredients in beverage c ans ruining bot h the ingr

edients a nd the ca ns. Messer argues that because of this asser ted property da

mage it should be allowed to pursue its tort claims und

er T.C.A . 29-34-1 04. I

n addition

to seekin g damag es to its own property Messe r seeks recovery for dama ges to the pr opert y of its cu stom ers th rough subro gation or, al ternat ively, t hrough contribution.

Eastma n argues that the only

losses incurred by Me sser were economic losses. Eas tma n asserts that the mo ney

paid by Messer to

its custome

rs was pa id solely because thecarbon dioxide sold by M esser to

these cu st omers did not mee t the custo mers’ co mmercia l expecta tions. Ac co rd in gl y, Eastman argues that these payments c onstitute economic loss for which Eastman is not liable because it is not in privity with either Messer or Messer’s customers. Eastman contends that Messer’s only re

medies are those which it may have against Cryotech.

Each party cites two United States Supre me Court cases in support of its position - East River S.S. Corp. v. Transamerica Delaval, Inc. , 106 S.Ct. 2295 (1986) and Saratoga Fishing Co. v. J.M Martinac & Co. , 117 S.Ct. 1783 (1997).-6-

In Eas t Riv er the plaintiffs chartered four oil-transporting supe rtankers. While at sea, the turbines on eachof the ships malfunctioned because of design and ma nufacturing defects. No harm resultedother than to the turbines themselves. The plaintiffs filed suit in tort against the manufacturer

of the turbines and

the issue before the Court was whether a cause of actio n in tort is stated when a defect

ive produc t injures only itself. The Court concluded tha t a plaintiff cannot
recover in tort for phy sical da

mage to a defective prod

uct itself and that, in such cases, remedies are limited to those available under contract. The Court stated as follows at pag e 2302: Damage to a produ ct itself is most natu

rally understood as a warranty

claim. Such damage means simply that the product has not met the customer’ s expectat ions, or, in other w ords, tha

t the custo mer has received “insufficient product value.”

... The maintenance of product valu e and quality is prec isely the purpose of express and implied warranties.... Therefore, a c laim of a nonworking product can be brought as a breach-of wa rranty a ction. Or, if the customer prefers, it can reject the product or revoke its acceptance and sue for breach of contract.... (Citations omitted.)

In Saratoga , another admiralty case, the plaintiff’s fishing vessel sank as a r esult of an engine
roomfire caused by

a defective hydraulic system installed by the defe

ndant boat manufacturer. The original purchaser of the

vessel ha d added a skiff, a seine ne t and misce

llaneousspare pa

rts and these were all incorporated into the vessel when it was resold to the plaintiff and were destroyed when it sank. The Supreme Court noted that under its prior holding in East River , although a plaintiff cannot
recover in tort for physical dama ge a defective prod

uct causes to itself, a plaintiff can recover f or physical damage the defective

product causes to other property . The issue in Saratoga was whether the added equipment - the skiff, seine net, etc.- was part of the “productit se lf ” o r “ ot he r p ro pe rt y” for which the

plaintiff could recover. The Court found that “[w]hen a manufacturer places an item in the strea

m of comme

rce by selling it to an I nit ial Use r, that item is the ‘product itself’” and “equipment

added to a product after the Manufacturer (or distributor selling in the initial distribution chain) has sold the product to an Initial User is not part of the product that itself caused phy sical harm. Rather, in East Rive r’s language, it is ‘other property ’.”

Ea stman argue s that in the instant case the soft drinks were an integra ted product and the carbon dioxide was a component of that product. Eastman contends that when the component was found to be defective the injury was to the product itself - the soft drinks- and proper rec overy is throu gh contract. Eastmanreferences the Court’s quotation of East River at page 1788 of Saratoga :
“Since all butthe very

simplest of

machine s have co mponent pa rts, [a co nt ra ry] holding would re quire a finding of ‘prop erty

damage ’ in virtua

lly e very case where a product damage s itself. Such a holding would eliminate the distinction between warranty

and strict products liability.”

We do not find that this statement is supportive of Eastman’s contention that the damaged soft drinks were the product itself of which the carbon dioxide was a c omponent. The quot ed-7-

language was prompted by the plaintiff’s allegations in East River that each turbine was damaged by defectively

designed components. The Court noted that “[s]ince each turbine wa s supplie d by [the manufactur er] as an int egrated packag e, ... each is properly regarded as a sing le unit.” In the
case before us the soft drink was not an integrate d unit supplied byEastman. In the languag e of the Court in Saratoga the soft drink was not the item placed in the stream of commerce by Eastman.

Eastman cites McCrary v. Kelly Tech. Coating, Inc. , an unreported opinion of this court filed in Knoxville on August 28, 1985. In McCrary the p laintif f, a swimming pool contractor who painted pools as part of his job, painted a pool with paint manufactured by

the defenda

nt. Bec ause of defect s in the pa

int the pla intiff wa s requir

ed to repaint the pool. Thereafter, the plaintiff filed suit agains tthe defe

ndant for the cost o f repai nting. T

his court determined that the cost of repainting was
a cost of repair and, therefore, a n economic loss. Accordingly , the p laintiff was precluded from recovering from the de fendant bec ause the re was n o privity

betwee n the two. In a

rriving at this conclusion we noted the following languag e from White & Summers, Uniform Commercial Code , § 11-4 (2 nd Ed. 1980) (quoting from Restatement Second, Torts § 402A (1965): [W]e use the terms “property damag e” on the one hand and “economic loss” on the other to describe different kinds of damage a plaintiff

may suffer . An action brought to recov er dama

ges for inadequa te value, costs of repair, and replacement of defect ive goo ds o r conseque nt loss of profits is one for “economic loss.” Property d am age, on the other hand, is the Restatem ent’s phy sical ha rm ... to [u se r’ s] pr op er ty.

We do not find

that our h olding in McCrary bars recovery for at least a port ion o f the d amage alleged by M esser in

the case at hand. We concluded our opinion in McCrary by noting that there
was no eviden

ce that th e compone

nt (the pa int) cau sed phy si cal dama ge to the end product (the swimming pool). In the case bef ore us there is evidence

that the component (the carbon dioxide) did cause damage to the end product (separate property of Messer and its customers).

In further support

of its argument that

the losse s suffer

ed by Messer a re not los ses attri

butable to property da

mage, Eastman

cites Trinity Industries, Inc. v. McKinnon Bridge Co. , 77 S.W.3d 159 (Tenn. Ct. App. 2001). Under the facts in Trinity, defective structural steel used in the construction of a bridg e cause d the brid

ge to co llapse a

nd the ste el’s manu

factur er was su ed for “ the dama ge to the steel itself and the attendant co sts of salvag e, stora ge, an d testing .” We dete rmined tha

t these damages constituted economic loss rather than property damage. In ou

r discuss ion of the

economic loss doctrine in Trinity we noted that, although Tennessee does not have definitive body of law on the doctrine, most courts in other jurisdictions “hold that there is tort liability for the sa le of goods only when there is either personal inju ry or damage to ‘other property ’ which was not a part of the contract for sale ” Eastma n relies o n the follo wing fo otnote to th is stateme nt:
There is a difference

of opinion as to what constitutes “other property ” to which, when injury incurs, can be the basis of a negligence c ause of action. We think that the interpre

tation of “ other pr

operty ” which ismost true to the policy behind the-8-

ruledoes not

include the type

of property tha

t one would reasonably

expect to be injured as a direct consequence of the fa ilure of the defective product , as these losses are essentially

damages for fail ed comme rcial expe ctations, or loss of the benefit of the bargain.

Based upon this f

ootnote Ea stman arg

ues that th

e ruinat io n of the described property of Messer and Messer’s customers does not constitute injury to “other prope rty” bec ause, as Eastman states in its brief, “[t]he most obvious consequence of a noncompliance w ith [cont ractual specifications for food grade carbon dioxide] woul d be ruina tion of an y f ood or drink product into which the [carbon dioxide] was combined and recall and destruction of those products.”

Alth ough Eastman’s argument is supported by the statement set forth in the referenced footnote, that state

ment is obiter dictum and as s uch, doe s not constitute binding precedential authority under the doctrine of stare dec isis

. Shepher d Fleets, Inc. v. Opryland USA , 759 S.W.2d 914 ( Tenn. Ct. App. 1988). In any event, we deem the statement to be overly broad and weagree withMesser’ s content

ion that if all property that

one would

reasona bly expect to b e injure d becau se of the defecti ve productis excluded from the definition of “other property” this would result in a remote buyer neve

r being able to recover fr om a manufacturer for prope rt y da mage in tort. This would be so be ca us e p ro xi ma te ca us e i s a pr er eq ui si te to su ch re co ve ry. King v. Dan ek Medi cal, Inc. , 37 S.W.3d 429 (Tenn. Ct. App. 2000). The establishm ent of prox imate cause is contingent upon a showing that the harm giving rise to the cause of a ction was reasonably

forseeable. McClenahan v. Cooley , 806 S.W. 2d 767 (Tenn. 1991). Therefore, under the dictum cited by Eastman, by

establish ing proximate cau se, the pl aintiff i n a tort a ction ag ainst a

manufacturer wo

uld
necessar il y el im in at e i ts da ma ge d p ro pe rt y fr om th e c at eg or y of “o th er pr op er ty” an d w ou ld , t he re by, undermine its case.

Guided by the Supreme Court’s holding in Saratoga, we are compelled to conclude that the contaminatedfeedgas, as the product placed in the stream of commerce by E astma n, was “the product itself ” and the property

of Messer and

its customers which was injured as a result of contact withthe contaminated carbon dioxide was “other property .” M esser is not req

uired to e stablish privity to maintain its cause of action in tort for damages arising from injur

y to this other propert y and the Tria

l Cou rt erred in granting summary judgment against Messer on that basis. I t is our determination that Messe

r’s car bon dioxide w

hich was contamin ated as a

result of being mixed with the contaminated carbon dioxide constitutes such injured property . We also find that the soft drink ingred ients and cans of Messer’s customers which wer e ruined a s a re sult of contact with the contaminatedcarbon dioxide fall within this cat egory . We do not, however , agre e that the cost incurred by M esser in

cleanin g its tanker cars and storage ta nks is properly classified a s a cost related to property da

mage. In McCrary we determined that the costs of repaintingthe pool, including the cost of removing the d

efectiv e paint, w as a

cost of repair and, therefore, a n economic loss. We find
no basis for

distinguishing between the cost of cleaning defective paint from the surface of a pool and the costs incurred by

Messer in cleaning its tanker cars and stora ge tank s. In

this reg ard we n ote the following testimony of Da vid Wolff, a witness for Messer, reference d by Messer in its brief:-9-

Q. To your

knowl edge, we re any cylinde rs or t ankers or sto rage tanks rendered not usable because of this HCN situation?

A. I’m not aware

of any cylinders, tanke

rs or storage tanks which were r endered permane ntly unusable. They

needed to be cle aned pro

perly so that they reg

istered no presence of HCN.

The next two issues are whether summary judgment was appropriate with res pect to M esser’s fraud c laim and w

hether s ummary

judgmen t was app ropriate with resp ect to the

claim asserted by Messer under the TCPA . We find it appropriate to address these two issues as one because we beli eve that o ur analysis of the r ecord regarding

Messer’s allegations of misrepresentation and
concea lment will r

esolve both issues. Sp ec if ic al ly, Eastman a sserts that it made no representations of any kind to Messer and has notdeceived Messer or any one else. Eastman points out that, u nde r the fe edgas agree ment, it contracted

with Cryotech to sell it raw feedgas for purification and that Cry otech contemplated that the feedgas contained HCN as a constitu ent. Eastman further maintains that the feedgas a greement withCryotech disclaimed a ny repre sentations about the merchantability or fitness of the fee dgas, expressly contemplated that the constituents of the feedgas mig ht change over time and

specific ally permitted Cryotech to terminate the agreement if the impurities in the feedgas reache d a level at which Cryotech could no lon ger process thegas. Eastman also notes that when it found HCN on Cryotech’sc ata lyst it immediately notified Cryotech. F

inally, Eastman aver s that there is no evidence that Cry

otech kno wingly

failed to remove i mpuritiesfrom the c arbon dio xide it so ld t o Messer or that Eastman knew of any such failure.

Messer argues that Eastman engaged in dec eptive activity when it place d a defective product in the stream of commerce knowing that it would da mage Me sser and failed to disclose this to Messer. Messer c ontends th at Eastma n knew tha

t its feed gas was co ntaminated with HCN throughout

the term of the feedgas ag reement, that Eastman kne w that on oc casion the concentrations of HCN exc eeded le vels of 30

parts pe r million a

nd that Ea st man’s own doc tor testified that he would start being concerned for

human saf

ety at conce ntrationsover tha

t amount. Messer further argues that Eastman knew or should have known that the Cry otech facility wa s incapab le of removing HCN at those levels and that it was, therefor e, inevitab le that th e carbon dioxide sold by

Cry otech would conta

in HCN. Finally , Mess er states tha t Eastman knew that Cryotech was selling Messer carbon dioxide and that this carbon dioxide would be r

esold for human consumption and, yet, Eastman ne ver informed Messer that the carbon dioxide it purchased from Cryotech would conta

in HCN.

The foodgas agre ement between Cryotech and Eastman expressly ackno wledge s that Eastman is generating cr

ude carbon diox ide which, “in its raw form, is not suitable for food use” and that Cryotech “proposes to construct and operate a facility

for the purification and liquefaction” of such carbon dioxide. The product which Cryotech w as in the business of selling and producing was food grade carbon dioxide. The product sold by Ea stman to Cryotech was non-food

grade carbon dioxide-10-

There is no evidence that Eastman ever represe nted to Cryotech, Messer o r anyone else that the product it was selling to Cryotech was fit for human consumption.

In response to Eastman’s argument that it was merel y supplying a raw material that Cry otech alone was resp onsible f

or purif yin g, Messe

r states t hat “Eas tman’s ow n documen ts evidence it s intentthat the Eastman carbon dioxide be ‘ refine d and put in product f orm’ for delivery

to Cryotech as a ‘food grade ca

rbon dioxide feed stock,’...after which ‘Cry otech further purifies the gas’”

The documents referred to by Mess er consist of two internal memoranda gene rated by Eastman. We do not agree that a jury could reasonably

conclude from the information referenc ed in thes e documents that Eastman represented that it was supply ing, or intended to supply, a nything other than non-food grade c arbo n dioxide. Th e phrase “food g rade ca rbon dioxide

feed sto ck’ is derivedfrom an Eastman memorandum the subject of which is designate d “ App roval for Product Commerci alization f

or Carbo n Dioxide Cop

roduct” and appe ars as f

ollows in th at docume

nt: Proposal: It is proposed

that a coprodu ct carb on dioxide r ich strea m be made

in Acid Division and provided to Cryotech a s a food grade carbon dioxide feedstock

The only reasona

ble construction of this sentence, given t he la nguage of the feedgas agreement

that the carbon dioxide produced by Eastman is non- foodgrade, is that the words “food grade carbon dioxide” do not describe the grade of the feedstock but instead de scribe the product for which the “carbon dioxide rich stream” is to serve as feedstoc k or raw material. The words “refined and put in product form” appear in a n att achment to the same memorandum designated “Manufa cturing Attachme

nt” in the following

context:
1. Equipment

and Capa

city The carbon dioxide is produced in the Plant 12 Gasifiers. The CO2 is refined and put in product fo rm in Plant 14. The capacity is approximately 550 tons of CO 2 p er da y. U ti li za ti on is ex pe ct ed to be ab ou t 2 25 to ns CO 2 p er da y.
There is nothing

in this langua

ge in its original context which could be construed as evidence that Eastman is producing carbon dioxide fit for human consumption or making that repr esentation. Finally, the words “ Cryotech fur ther purifies the gas” appear i n a se parate Eastman
memoran dum, the designa ted subje ct of whic

h is “Tra ce I mpuritiesin Carbon

Dioxide CoPr

oduct” and the or iginal c ontext is as f

ollows:

The Gasification department is currently revising the MSDS for carbon dioxide
co product (PM 14324). This gas is sold to a company called Cryotec

h w hic h further purifiesthe gasand sells the car bon dioxide t

o carbon ate beve

rages
.-11-

The implicatio n that the

carbon d ioxide was p

urified b y Ea stma n because it is “further “ purifiedby Cry

otech does not

constitute

proof tha t the car bon dioxide i s produced by E astman to be of food grade quality

or that Eastman represents it to be such when it is sold to Cry otech.

As Messer concedes in its brief, Tenne ssee law require s relianc e inmisrepre sentation cases. Milwee v. Peachtree Cypress Inv. Co. , 510 F. Supp. 284 (E. D. Te nn. 1978). However, Messer contends that such relia nce nee d not be dir ect rel iance, citi ng Ladd v. Honda Motor Co. , 939 S.W.2d 83 ( Tenn. Ct. App. 1996).

In Ladd a twelve ye ar

old plainti ff was pa

ralyzed as the

result of injuries h

e incurr ed while operating an all-terrain vehicle manufacture d by the def endan t. The vehicle was owned by the plaintiff’s uncle who had allowed the plaintiff to opera te it. The uncle testified that he had believed that his nephew could sa

fely operate the vehic le beca

use of television advertising by

the defendant which de pi cted children operating all-terra in vehicles. The Court noted the requirement under
s ection 402B of the Restatement (Second) of Torts that a consumer must justifiably rely

upon a defendant’s misrepre sentation before liability will arise. The Court found that “the reliance required by Section 402(B) need not be that of the injur ed consumer but may be that of the pur chaser who passes the product along to the ultimate consumer.” Accordingly , Messer indicates that it need not have directly

relied upon misrepresentations by Eastman.

In Ladd the plaintiff’s uncle reasonably relied upon m isr epresentations in the defendant’s advertising in allowing the plaintiff to operate the vehicle. However, in the instant matter it cannot be said that Cryotech re asonably re lied upon any

misrepre sentation

by E astman in

marketing carbon dioxide to Messer. As noted above, Eastman never repres ented tha

t the prod uct it sold to Cryotech
was any thing oth er than n on-food g

rade ca rbon dioxide . Furthe

rmore, M esser c annot h ave rel ie d upon a misrepresentation by Eastman that the feedgas sold to C ry otech did not conta

in HCN because, when the

allege d injuriesoccurr

ed to Mess er in 1996 , Cry otech wa s well aw are tha t HCN was a constituent of the feedgas, having been informed of this fact by Eastman in 1993.

It is our conclusion that Messer has failed to submit evidence which creates a genuine issue of materia l fact asto whethe

r it reas onably

relie d upon a misrepresentation by Ea stman and, therefore, summary

judgment dismissal of it’s cause of action for fraud is appropr iate.

This Court has h

itherto he ld that a pla

intiff und er the TC PA is not re quired to show reliance upon a misrepresentation b y the d efendant in order to maintain a cause of ac tion. Harvey

v. Ford Motor Credit Company , an unrep orted opini on of this Court filed in Knoxville on July 13 1999. However, there mu st be a de cepti ve act by the defe ndant bef ore the d efenda nt can be held liab le under the TCPA. McDonald’s Corp. v. Shop At Home, Inc. , 82 F. Supp.2d 801 (M.D. Tenn. 2000). Our analy sis of the r

ecord in this case , as set f

orth above, compels us to the conclusion that Messer has failed to

establish a genuine issue of material fact a s to whether Eastman engaged in a deceptive act which wou

ld subjec t it to liability under the TCPA Accordingly, summary judgment

was also appropr iate as to Messer’ s TCPA claim.-12-

The next issue we address is whether Messer presented evidence establishing a g enuine issue of material fact as to whether Eastman and Cry otech were engag ed in an implied partnership or joint venture. Me ss er as se rt s t ha t, as a j oi nt ve nt ur er wi th Cr yo te ch, Eastman is jointl y a nd sever ally liable for Mess er’s tor

t and cont ract cla ims aga inst Cryotech bec ause Cryotec h and Messe

r were in privity.

As defined by T.C.A. 61- 1-202(a) a partnership is “the association of two or more persons to carry on as co-ow ne rs of a business for profit....” Joint ventures and partnerships are g overned by the same rules. Federated Stores Re alt y,Inc. v. Huddleston , 852 S.W.2d 206 (Tenn. 1992). Alth ough similar to a partnership, a joint venture e xists for a m ore limited time and for a more limited purpose. Fain v. O’ Connell , 909 S.W.2d 790 (Tenn. 1995).

In Bass v. Bass , 814 S.W.2d 38 (Tenn. 1991) the Tennessee Supreme Court noted as follows at page 41:

In determining whether one is a partner, no one f a ct or circumstance may

be pointed to as a conclusive test, but each case must be decided upon considera tion of all relevant facts, actions and conduct of the pa rties... . If t

he parti es’ business brings them within the scope of a joint business underta king for mutual pro fit – that is to say if they place mo ney , assets, labor, or sk ill in commerce with the understanding that prof

its will be s hared be

tween the m – the re sult is a pa

rtnersh ip whether or not the parties understood that it would be so....
Moreover, the existence of a partnership depends upon the intention of the parties, and the controlling intention in this regard is that asce rtainable from the acts of the parties.... Although a contract of partner ship, either express or implied, is essential to the creation of partnership status, it is not essential that the parties actually intend to be come partne rs.... Th e existenc e of a pa

rtnersh ip is not a question of the parties’ undisclos ed intent ion or eve n the ter minology they use to describe their re

lationship , nor is it nece ssary that the par ties have an understanding of the le gal ef fect of their acts. ... It is the in tent t o do t he thi ngs which constitute

a partner ship that d

etermine s whethe

r individu als are

partner s, regar dless if it is thei

r purpose to create or avoid the relationship.... Stated another
wa y, the existence of

a partnership may be

implied from the circumstances where it appears that the individuals involved h ave ente red into a business r

elationsh ip for profit, combining their property , labor, skill, experience, or money .(Citations omitted.)

The Trial Court found that “Cryotec h and Eastman did not have the right to control each other’s means and methods o f doing business or gener al busine ss activit

ies, and t herefo re, thes e parties were not partners or joint venturers.” Messer contends that the Trial Court’s ruling was in error, arguing that there wa s evidenc e that Ea stman woul d share p rofits wit h Cry otech and did, in fact, share lo sses with

Cry otech and that this a

lone esta blishes a prima facie case of joint venture.-13-

Messer additionally asserts that there was evidence of

a substan tial commu

nity of interest between Eastman and Cry

otech wh ich perm its an inference that Eastman had a rig ht of control. Andfi na ll y, Messer a sserts tha

t there w as direct evidenc e that Ea stman had a right of contr ol.

Ea st ma n c on te nd s t ha t M es se r s ub mi tt ed th e s am e a rg um en t, bo th fa ct ua ll y an d l eg al ly, regarding an alleged joint venture between Mellon, Cry otech and Eastman in Messer Griesheim v. Cryotech of Kingsport

, 45 S.W.3d 588 ( Tenn. Ct. App. 2001). In that case we de termined that “ the fact that eac h of the de

fendant s expecte d to profit from the relation ship does n ot mean that the y expected to share

the prof its of Cry otech’sbusiness”Acc ordingly, we found that Mellon was not involved in a joint venture or partnership with Cryotech and Eastman. Eastman argues that, based upon that dete

rmi nation Mes ser , we should also find that there was no joint venture/implied partnership in the case now before us. We disag ree.
Our determination that there was no joint venture/implied partnership between Mellon and the other two defendants in Mess er wa s based upon Mellon’s status as a secured creditor and w e foun d that the acti ons of Mellon refe renced by M esser to

establish a joint ve nture/imp lied par

tnership
were nothing m

ore than measure s taken by

Mellon as the fina

ncing le ssor of the Cry otech fa cility to preser ve its security

interest

. Although some of the evidence presented by Messer to establish a joint venture/implied partner ship in the present matter is not dissimila

r to that pr esented in the earlier case, the relationship between Eastman and C ry otech is n ot that of a secured creditor and debtor. The relationship between Eastman and Cry otech is g overned

by a totally differe nt agreement an d is properl y su bject to a separa te and dif ferent analy sis.

Before a partnership may

be implied the circumstances must show that the parties intended to share the profits from

their joint enterprise. Wright v. Quillen , 909 S.W.2d 804 (Tenn. Ct. App. 1995), citi ng Pritchett v. Thomas Plater 7 Co., 232 S.W. 961 (1921). Accordingly , absent evidence showing an intent by Eastman and Cry otech to share profits we

must affirm the judgment of the Trial Courtthat ther

e was no g enuine is sue of ma terial f act in thiscase wit

h respect to the existence of a joint venture or implied partnership.

Messer points out this Court’s recognition in Messer that “... Cry otech’s p rofits and Eastman’s profits seem to be s omehow linked to one another....” Although that statement does appear as dicta in Messer , we did no t in any way indicate in that ca se that Cr

yotec h and Eastman were sharing, or intended to share , profits.

With respec t to its assertio n that Eas tman would have shared profits with Cry otech, Messer notes that, under the terms of the feedgas agreement, Cry otech paid Eastman for the feedga s based upon the amount of

carbon diox ide Cryotech shipped to customer s and the price that Cry otech charged those cus tomers. “ If Cr

yot ech’s pr ice to [Messer] increased by 5%, Eastman was entitled to a 5% increase in the price it charg ed Cryotech.” Messer contends that a jury could re asonably conclude that this pricing mechanism amounted to a sharing of profits.-14-

Messer r elies upo n the cas e of Memphis Natural Gas Co. v. Pope , 161 S.W.2d 211 (Tenn. 1941) in support

of its con

tenti on tha t a jury could conc lude that Eastman and Cryotech were engaged in an ag

reement to share profits.

In Memphis Natural Gas Co. the Tennessee Supreme Court found that a joint venture existed betweena natural gas company and a power

company . Under t

he fact s of that case the gas company and the power

company were bo th organized in 1928 for the purpose of bringing natural gas from gas fields in Louisiana to cer tain area s of Tennessee. The gas company owned and operated pipe lines which convey ed the gas from L ouisiana to stations owned and operated by the power company from which it was distributed to the power station’s customers. Each party employed its own worker s and made its own purchase of m a terials. At least eighty per cent of the gas company ’s revenues
co ns is te d o f m on ie s d er iv ed fr om it s b us in es s w it h t he po we r c om pa ny.
Under the terms of the contrac t b etween the gas company and power company the parties
were require d to deliver , each to the other , a monthly

statement setting forth costs of operation and maintenance, taxes incu

rred, a mortization

costs, g ross r evenue s realized and the amount of net surplus or net deficit for the contract y ear. The contract further provide d that the combined net surpluses and net defici t s of the pa rties be e qually divided be

tween the

m by an annua

l cash adjustmentan d b y ad

ju st me nt of

th e r at es ch ar ge d b y th e g as co mp an y t o the powe r compan y “ in order as nearly as possible to effect an equal division of any contemplated combined

surplus and/or deficit for the contract year then current and for sub sequent c ontract yea rs.” Finally, the

contract provided that if in a

ny y ear all t h e net def

ic its of both parties were made up and, in addition, the power company had r

eceived from combined

net surpluses an amount equal to one and one-half per cent of cert ain inves tment expen ses for e very contract ye ar to dat

e then the entire b alance of the combined net surplus would be paid to or retained by the gas company

. Our Supreme Court noted in Memphis Natural Gas Co. that the sh aring o f profit s of a business is prima facie evidence of partnership and that “eve n without joint control of the operations that produce profits, persons or corporations may establish relationships that will result in a sharing of profits, e ach with

the other.” The Court found that theabove described contractual provisions set forth a mathematical formula whereby the parties could calculate profits after ea ch was given specified credits and

that prof its from the entire

enterpr ise were divided be

tween the m. The Court noted that under the final provision described above the ga s c om pa ny w as no t o nl y a particip ant in the profits from distribution of gas by the pow er company but that, afte r a certain situation was reached, the gas company would receive all the remaining profits of the distribution.

Messerc orrectly points out that in Memphis Natural Gas Co., the Court f ound that “ [t] h e price of gas, if there

was eve r an act ual sale , was not a

nd could n ot be dete

rmined un

til after the gas had been delivered

to the ultimate consumer.” However, the Court’s determination that there was
a joint ventu re was n ot bas ed upo n thi s find ing. The gas company ’s complaint in Memphis Natural Gas Co. sought to enjoin the collection of excise taxes collectible onintrastate commerce. The gas company asserted that

the gas was sold at a fixed price to the power company

and delivered in the direct flow of interstate commerce. The ques tion befo re the Cou rt, therefore, was whether the par ties-15-

were engag ed in

a jointoperati on at the t

ime the g as was dis tributed t o custome

rs in Tennessee, in which case the gas company would be engaged in intrastate, r ather than interstate, commer ce and would, therefore, be subject to the tax. The question of when the price of the gas bec ame fixed was raisedin relev ance to a

determin ation of w

hether t he gas was, as a sserted

by t he gas company , sold at a fixed rate and then delivered it to the power company

in interst ate comme

rce bef ore intra state distribution. Howeve

r, the Cou rt opined at page s 215-216

that the q uestion of when title

to the gas passed was not important in view of the fact that the parties were engaged in a joint operation:

It is not necessary

to d etermine whe n title to the gas passed to Memphis power and Light Company , or whet her the t itle ever actually

passed. If title passed, then, still the busine ss conduc ted in distr ibuting t o consumers was for and on behalf of boththese development and operating corpor ations, and Memphis Natural Gas Company was engaged throug

h its co-operative in intrastate b usine ss in Tennessee.

The price of gas, if ever there was a n actual sale, was not and could not be determineduntil after the gas had been delivered to the ultimate consumer. Our view is, that there is not a fixed price in article sixth which is merely adjusted by article eleventh, but in reality ther e was an operation in which both compa nies
were jointly interested. There was an allotment of work performed but

a division of the entire results of that work.

While the Court recognized that theprice of the gas was not determinable until after delivery to the customer, its conclusion that the gas company and pow er company

we re engaged in a joint vent ure was not ba sed upon th at fact but rathe r upon a f

inding th at the co ntractu al provision s discussed above constituted an agreement to shar e profits and losses.

We are fur

ther com pelled to point out the distinct

ion betwe en profits and gr oss revenues. Tennessee case la

w has def ined prof it to mean the net amount after deduction of proper expenses incident to the business. Jones v. Davidson , 34 Tenn. 447 (1854 ). We do not agree that a re asonable jury could conclude that the pricing mechanism whe reby the pr

ice rec eived by

Eastman f

or its feedg as incre ased in pr

oportion t o the pric e Cry otech ch arged when selling the

carbon d ioxide it processed was a device to share profits. Even if this pricing mechanism were conc eived to be an arrangement for

sharing funds re ceived t

hose fund s would co nstitute gross returns not profits and, unlike the shar

ing of pr ofits, the sharing of gros s r etu rns does not of itself establish a partnership. T.C.A. 61-1-202(b)(2). Messer’s arg ument that the pricing mechani sm con stitutes evidence that Eastman and Cryotec

h intended to share profits is without merit.

Messer has failed to prese

nt evidence that Cr

yot ech and Eastman i ntended t

o share p rofits and has, therefore, failed to establish a ge nuine issue of material fact as to whether those parties w ere engaged in a joint venture or implied partnership. Accordingly , the Trial Court’s summary judgme nt with respect to this issue is affirmed.3 Although Eastman contends t hat, prior t o this appeal, Messer did not r aise t

he iss ue of whet

her Tennessee law allows it to r ecover

propert y damag es f

or brea ch of w arran ty even in the abse nce of pri vit y, t he record sh ows that

Messer did rais e thi s is sue at

trial in it s September 22, 199 7, response to Eastman’s motion to dismis s and motion for summary judg men t or pa rtial summ ary jud gme nt -16- The final issue we addressis whether the Trial Court erroneously dismissed Messer’s breach of warran ty claim based upon the fact that there is no privity between Messer

and Eastman. Messer argues that the Trial Court should have applied Pennsylvania law and that under Moscatiello v. Pittsburgh Contractors Equipment Co. , 595 A2d 1198 (Pa. Super. 1991), even absent pr ivity , a manufacturer

can be held liable

for eco nomic losse s as w ell as prop erty damage resulting from a defective product. Eastman apparently does not dispute this construction of Moscatie llo

. Messer asserts that

the HCN in the carbon dioxide supplied by Cryotech caused it to be nonconforming to express and implied spec ifications set forth in supply agr

eements entered into between Messer and Cry otech and resulte d in a bre ach of e xpress and

implied wa

rrantie s in those ag

reemen ts. Mess eralso asserts that the HCN in Eastman’s feedgas g ave rise to breach of warra nty claims by Cryotech ag ainst Eastman. Although thereis privity between Eastman a nd Cryotech and be

tween Cryotech an d M es se r, th er e i s n o p ri vi ty b etwee n Messer and Eastman. Howe

ver, as p reviousl y indicatedin this opinion, we have foundthat a portion of the damages alleged by

Messer arise from injury to proper

ty. Messer isentitled to pursue its claim for property damage under a brea

ch of
warr anty theory in Tenne ssee even in the absence of privity . T.C.A. 29-34-104 and Comme rcia l Truck & Trailer Sales v. McCampbell, 580 S.W.2d 765 (Tenn. 1979). 3 But Tennessee law does not allow recovery

of economic losses under a breach of wa rranty theor

y absent privity

and, unless we determine that Penns ylv ania law, rather than Tennessee law, applies to Messe r’s breach of

warran ty claims we must affirm

the Trial Court’s summary judgment to the extent those claims seek recovery for economic losses.

Messer asserts, and the r

ecord c onfirms, t

hat it wassold

the contaminated carbon dioxide pursuant to supply agree ments it entered into with Cryotec h and that those agreements provide that they shall be gove rned b y Pennsylvan ia law , citi ng Vantage Technology, LLC v. Cross , 17 S.W.3d 637 (Tenn. Ct

. App. 1999 ). Messe r argu es that, since Messer and Cry otech chose Pennsylvania law to gover n their su pply agree ments, Pen

nsy lvania la

w should g overn its warran ty c laim s again st Eastman notwithstanding the fact that such claims were filed in Tennessee. Messer also cites T.C.A. 47-1-105 in support

of this ar gument a pparent ly relying on subsection (1) of that statute which states as follow s: (1) Except as p

rovided h ereaf ter in thissection, when a tr ansacti on bears a reasona ble relation

to this stat

e and also to another state or nation theparties may agree that the la w either of this sta te or such other state or

nation sha

ll gover n their rights and duties....

In Vantage this C our t found that a provision in a covenant not to compete between the plaintiff employer a

nd the defendant employ ee was a valid choice of law clause calling for the-17-

application of Tennessee law. However, in that ca se both plaintiff and defendant were parties to the agreement

containing the choic e of law p rovision. In the

instant ma

tter Eas tman was n ot a

party to the su pp ly a gr ee me nt s e nt er ed in to be tw ee n M es se r a nd Cr yo tech and , therefore, the described choice of law provision doesnot merit a finding that Penns ylv ania

law gov erns Mes ser’s wa rranty actions against Eastman. Messer p resents no author

ity for the argument that the agr eements entered into betwee n its elf and Cryotec h are determinative of the proper law to be a pplied in Messer’s warranty claims against Eastman.

Messer further contends that it is otherwise appropriate that thelaw of Pennsylvania g overn in this case because that is where both Messer and Cry otech are headquartere d and that is where Cryotech executed the feedgas ag

reement with Eastman. Messer also asserts that Pennsylvania law should app ly because

it sustained at least a portion of its damages in Pennsy lvania, referencing witness testimony that the carbon dioxide purchased from Cry otech was placed in a storage tank at Messer’s terminal

in Philadelphia wher

e it was mixe d with car

bon dioxide f

rom other supplier s, indicating that t hat is where M esser’ s sto rage tank and other carbon dioxide were contaminated due to contact with the c ontamina

ted produ ct purch ased fr

om C ry ote ch. Messer also states that it has consiste ntly asserted that Pennsylva

nia law applies, that it pleadedclaims in its amended complaint under Penn sylvania la

w and tha t Eastman did not spe cifically c ontest the applica tion of Pen

nsy lvania law in its answ er to that comp laint. How ever, Me sser fa ils to cite authority for the proposition that any of these factors dictates that Pennsy lvania law should be applied in th is ca se an d, ac co rd in gl y, its argument that Pennsylva nia law applies based

upon eac h of these factor s may

be deemed to be waived. Failure to cite aut hority fo r propositions in arguments submitted on appeal constitutes waiver of the issue. State v . Brown , 795 S.W.2d 689 (Tenn. Cr. App. 1990) and Rhea County v. Town of Graysv ille , an unre ported op inion of th

is Co urt file d in Knoxville on July 25, 2002. However, even in light of these factors referen ced by Messe r, we do not agree that the rec ord supports Messer’s argument that Pennsy lvania law should be applied in this case.

In Hataway v. Mckinley, 830 S.W.2d 53 (Tenn. 1992) our Supreme Court abandoned the lex loci del ec ti doctrine which required that the substantive rights of an injure d party in a tort ca se be determinedaccording to the law of the state where the injury

occurred. In its plac e the Court adopted the “most sig nifican

t relatio nship ” appro ach of the Restatement (Second) of Conflict of L aws. At page 59 the Court cites §145 of the Restatement which provides under subsect i on (2) that the following contacts are to be taken into acc ount in determining the law applicable to an issue: (a) the place where the injury occurred, (b) the place where the conduct c ausing the injury occurred, (c) the domicile, residence , natio nality, place of inc orporation and place of business of the parties, (d) the place where the rela tionship, if any, between the parties is centered.

In Vantage, ibid. at page 650 we set forth Tennessee’s conflict of law doctrine applica ble to contractual claims as follo ws:-18- Tennessee follows the rule of lex loci contractus . This ruleprovides that
a contract i s presumed to be go verned b y th e law of t he jurisd iction in w

hich it
was executed absent a contrary intent. Ohio Cas. I

ns. Co. v. Tr

avelers Indem. Co., 493 S.W.2d 465, 467 (Tenn. 1973).

If t he parties manifest an intent to instead apply the laws of another jurisdiction, then that intent will be hon ored provided certain requirements are met. The choice of law provision must be executed in good faith. Goodwin Bro.s Leasing, Inc. v. H

& B I nc., 597 S.W.2d 303, 306 (Tenn. 1980). The jurisdiction whose law is chosen must bear a material connection to the transaction. Id. The basis for the choice of another jurisdiction’s law must be rea sonable a nd not merely a sham or subterfuge. Id

. Finally, the parties’ choice of another jurisdiction’s law must

not be “contrary

to ‘a fundamental policy’ of a state having [a] ‘materially g

reater interest’ and whose law would otherwise govern.” Id. , n. 2 (cit ing RESTATEMENT (SECOND) OF CONFL ICT OF L

AWS § 187(2) (1971).

Whether Messer’ s claims a

re anal yze d under th

e confli ct of law

doctrin e applicab le to matters arising in tort or that ap plicable to matters arising in contract, it is our determination that Tennessee law should govern this case . The fe edgas containi ng HCN was produced at Eastman’s factory in Tenness ee and E astman pe rformed its duties under the feedgas ag reement in Tennessee, thus the act ions /omissions a ttributed to Eastma

n by Messer w ould appe ar to hav e taken p lace in Ten nessee. The feedgas was supplied to Cry otech at Cryotec

h’s facility in Tenne ssee. Cry otec h processed the feedgas receive d from Eastman in Tennessee and delivered the contaminated carbon dioxide to Messer

in Tenne ssee. F

inally , the fee dgas a

greem ent betwe en Eastma

n and Cryotech provides that that a

greem ent “sha ll be governed

and construed according to the laws of the State of Tennessee.” Under these circumstances we believe it is appropriate to apply Tennessee law in this
case and Messer ’s argument for the appli cation of

Pennsy lvania la w is withou

t merit.

For t he fore going

reasonswe affi

rm in part , vacate

in part a nd remand for fur

ther ac tio n consis tent

with our decision herein. Costs of appeal are adjudg ed equally a gainst Messer a

n d Eastman.

_________________________________________ HOUSTON M. GODDARD, PRESIDI NG JUDGE