# FILED

April 16, 1999 Cecil Crowson, Jr. Appellate C ourt Clerk IN THE COURT OF APPEALS OF TENNESSEE

AT JACKSON

______________________________________________ BONHAM GROUP INC., Plaintiff-Appella

nt, Shelby Chancery No. 100896-1 Vs. C.A. No. 02A01-9709-CH-00238 CITY OF MEMPHIS and COUNTY OF SHELBY, Defendants-Ap

pellees.

________________

___________________________________________________________ _ FROM THE CHANCERY COURT OF SHELBY COUNTY THE HONORABLE NEAL SMALL, CHANCELLOR

Tim Edwards; Glass

man, Jeter, Edwa

rds and Wade, P.C.

of Memphis For Appellant Joseph T. Getz, Mic

hael D. Herrin; L

ess, Getz & Lipman

of Memphis For Appellees

AFFIRMED AND REMANDED Opinion filed:

W. FRANK CRAWFORD,

PRESIDING JUDGE, W.S.

CONCUR: ALAN E. HIGHERS, JUDGE DAVID R. FARMER,

JUDGE This appeal involves yet another of the multiple disputes that arose in connec

tion with1 Bonham Group Inc. is a successor corporation to b oth Bonham/Shlenker and

Associates and Bonham Communications, Inc. Dean B onham is the president and CEO of Bonham. 2 the construction of Th

e Pyramid arena i

n Memphis. Appellant, Bonham Group Inc. (Bonham), 1 appealsthe order of the t

rial court dismissin

g its suit against App

ellees, City of Mem

phis (City) and County of Shelby (County). On April 14, 1989, the C ity and Co unty executed an agr eement with Pyrami

d Management

Authority, Inc. (

PMA) whereby PMA w

as to develop, operat

e and manage a multi

use arena (th

e Pyra mid) and a theme park development on Mud Island. PMA was headed by Sidney Shlenker. In June 198 9, PMA o rally contracte d with Bonham to solic

it and negotiate contracts with spo nsors and conces sionaires for the project. This agr

eement was redu

ced to writing by letter d

ated July 23, 1990, w

hich states: July 23, 1990 Mr. Sidney Shlenker President and Chief Executive Officer The Pyramid Companies 245 Wagner Place Memphis, Tennessee 38103 Dear Sidney: Although Bonham/Shlenker & A ssociates and the

Py rami d Companies have been working together for more than a year, we haven’t yet formalized o

ur contr actual agreement. As you and John and I have discussed, it would be in both companies ’ b est interests to commit our heretofore verbal agreement to writing. In order to ensure that the Pyramid Co mpanies and Bonham/Shlenker

& Associates are in agreeme nt with both the scope of the work and the method of payment, I ask that you read th is letter careful

ly to review its con

tents. In this w ay, we ca n bothhave a better, more permanent unders tan ding of the responsibilities eachcompany has to the other. If this letter does reflect our understanding, please sign both copies and return one to Bonham/Shlenker

& Associates. Scope Bonham/Shlenker

& Associates has provided (and will continue to provide ) s ervices in the area of sponsorshi p development/contract

n e gotiations for The Great American Pyr amid. In this regard, “ contract negotia

tion” also refer

s t o related area s of economic development; for example, the conce ssion s and tenant contracts we negotiated with National Pi zzaCo . and Memphis State University, respectively. Also, under the direction of Pyramid management, B/S& A will have limited responsibility for follow-up and fulfillment on3 sponsorship

contracts it negotiates on be half of the Pyrami d Companies. B/S&A’s objective will b e to create $9.5 million in annualized sponsors hip/ concession contracts for th e Pyramid Companie

s. Our goal will be to negotiate agree ments with ten-year te rms; however, in no ca

se will the terms be

for less than five

years. Dean A. Bonham, president of Bonham/Shlenker & Associates will be the account mana g er for this projec t. Mr. Bonham will devote no fewer than 160 hours per month to The Great American Py r amid. Serving as assistant account manager will be Tom Lawrence, BS&A’s executive vice president. The Grea t A merican Pyramid will be Mr. Lawrence’s primary client, an d will exercise fir

st priority on his time

and efforts. Terms of Agreement Bonham/Shlenker

& Associates was o

riginally retained by the Pyramid Companies in June 198 9. The arrangement is openended. Termination may occur at the request of one or both parties, with 30 days prior written notice. Compensation/Collection Th e Pyramid Companies agree to pay Bonham/Shlenk er & Associates as fol

lows: Retainer: A $15,000 monthl y retainer, plus expenses. The retainer is to be paid within ten day s of the receipt of each monthly invoice. Commission: Fifteen percent ( 15%) of gross revenues derived from sponsorship contracts, minus any retainer amounts paid by the Pyramid Companies to B/S&A. 71⁄2% of gross revenues derived from concessions contracts not to exceed $1,200,000. 7. 5% of gross revenues derived from the renewal of any sponsorship

contracts. (No ren ew al fee will be paid on the concession contract unless mutually ag r eed upon. Such an agreement,

it is understood, would be based upon the degree and kind of assistance provided by B/S&A.) The commission fees will be assess ed annually and are due and payable within ten (10) day

s of the Pyramid Compa

nies’ receipt of revenues fro

m its sponsorship/con

cession contrac

ts. Bonham/Shlen ker& Associates’ rec eipt of any commissi

ons is subject to the following proviso: Prior to the Pyramid Co

mpan ies’ annual payment to B/S&A of 15% of gross sponsorship fees negotiated on behalf of The Pyramid by B/S&A, Pyramid mana gement wil l provide an accurate accounting of the ex act do llar amount of the m onthly retai ners that has been paid to B/S&A during the calendar year July 1 - June 30. Subsequent to this, half of B /S&A’s 15 % commission will be paid to B/S&A. The remaining half will be4 withheld unt il th e entire amount of dollars paid in month

ly retainers to B/S&A has been repa i d to the Pyramid Compa nies. After the Pyramid Com panie s have been reimb ursed in this manner, 100% of all commis sions du e will be paid dire ctly to B/S&A. Reimbursement of Expenses Bonham/Shlenker

& Associates will bill you at our cos ts for reimburs ement of all out-of-pocket expenses incurred on your behalf. T hese expe nses will include, but are not limited to, photograph y, printing, messengers, transportation, duplicating and postage on mai

lings. Protection of the Pyramid Companies No major out-of-pocket e xpenses will be undertaken by Bonham/Shlenker

& Associates without the appr oval of the Pyramid Companies. We will maintain accu rate r ecords of all expenditures made on your beha lf. We will

be prepared to supp

ly reasonable

supporting detail o

f these expenses as requested bythe Pyramid Companies. In the event

the Pyramid Companies question the validity of any charge by Bonham/Shlenker & Associates, payment for only that portion under question may be delayed. All informatio

n, f acts and figures

pertaining to the Py

ramid Companies or the project that come to our a t tention will be handled in a confidential manner. The City and County were not partie s to this contract. Bonham’s compensation to be paid by PMA (referred to in

the contract as t

he Pyramid Companie

s) was based on a monthly retainer of $15,000.00 which was offset by a fifteen percent commission of the gross revenues derived from sponsors and c

oncessionaires b

rought in by Bonham. In August o f 1988, before PMA or Bonham became

involved, the City a

nd County executed an agreement with M e mphis State University (MSU) for the use of the arena for basketball

. The MSU Agreement provided for state funding of seven million dollars for construction and use of the fa cility. This

contract gave MSU certain concessions on advertising, parking and luxury suites. T hese concession

s hampered Bonham’s efforts to neg otiate contracts withsponsors and conc

essionaires. As a

result, Bonham renegotiated the MSU contract which

was execu ted between the Tennessee Board of Regents, MSU and PMA on August 3, 1990. This resulted in an additional $2.2 million contributed by the state toward the construction and use of the arena. Bonhamalso negotiated a number of sponsor and concessionaire contracts on behalf of5

and for the benefit of PMA. These included Pe psi-Cola Company an

d its local distributo

r Delta Beverage, Inc., National Pizza Company, Acquisition Services Corp. (now known as National Cater ing Company and a wholl

y owned subsidiary

of National Pizza

Company), Federa

l Expres s Corporation, Phillips Consumer Elec troni cs Company, Sara Lee Corporation, Wang Laboratories,

Inc., VISA USA, Inc., and Dodge Dealers, Inc. Bonham received his mont hly retain erun der his contract with PMA but did not receive any commission. On February 13, 1991, PMA terminated its c ontract with Bo

nham due to an internal dispute concerning the schedule of opening the facilities. Shortlyafter Bonham had signed on, PMA began h aving prob lems performing it s contract withthe City and County due to the fact that Shlenker could not arrange the financing necessary to open the Pyram id and the other facilities. This problem became serious as basketball

season approached because the City and County were required to have the arena ready for the first MSU basketball game of the season. On June 17, 1991, t he City and County terminatedtheir contract with PMA after it was apparent that PMA was unable to perform its contract. Facing the soon approaching basketball season, the City and Count y took overthe project, and in light of the approaching deadline, were forced to forego all the proposed projects except the completion of the arena for the basketball season. Under these circumstanc es, th e City and County were unable to fulfill the cont racts previously negotiated by Bonham since those contracts covered s everal fa cilities. Furthermore, two of the concessionaires, National Pizza Company and National Catering Company , th at Bonham had contracted with, were threatening to force the City a nd County

to honor the contra

cts withPMA on the basis of a nondisturbance agreement that th e City and County executed for the concessionaire

s at the request of Bonham. The City and County employed Leisure Management of Memphi s, Inc. (LMM) to manage and oversee the completion of the Pyramid. Working under enormous tim e constraints, the City and County arranged for LMM to solicit sponsors and concessionaires for the arena. LMM sent out request for proposals (RFP) to several prospects including the spons ors and concessionaires that Bonham had previously cont racted with. These RFPs contained specifications materially different from the provisions of the contracts previously negotiated by2 The City and County di d not appeal the dis

missal of its third pa

rty complaint. 6 Bonham. Shortly thereaft er, LMM entered

into contracts co

vering sponsorship

and concessions with several companies which included entities that Bonham had previously contracted with - National Pizza Company, National Catering Company and Pepsi-Cola. On December

20, 1991, Bonham filed a complaint against the City and County seeking damages in the amount

of five million dollars

under the theory

of unjust enrichme

nt. The City and County’s answer denies the material allegations of the complaint and joins issue thereon. A third party compla

int was also

filed by the City and County against Dean Bonham and John Tigrett. On A pril 24, 199 7, Bonham filed an amended complaint seeking relief under the theories of breach of contract, unjust enrichment, tortious interference with contract and tortious interference

with business relationships. The City and County answered the amended complaint and filed a motion for s

ummary judgment. By

order entered July 30, 1997, the trial court granted the City and County’s motion for summary judgment as to Bonham’s claims of tortious interference

with contract and

to rtiou s interference with business relationships and denied the motion as to the bre

ach of contrac

t and unjust enrich

ment claims. After a non-jury trial, the trial court entered an order dismissing the claims of Bonham and the claim asserted by the City and County. Bonham appeals 2 and sets forth in its

brief three issue

s for review as f

ollows: I. After correct

ly finding that Plaint

iff was responsi

ble for restructuring the key contra ct f or the Pyramid Arena, i.e. the Memphis State University ba sketball contrac

t, which resulted i

n a contribution of $2 .2 million to the Pyramid Arena, the Trial Courtimproperly concluded that Plaintiff was not ent i tled to compensation for

this effort. II. A ftercorrectly finding that sponsor/vendor contracts for which Plaintiff was res

ponsible yielded over

$1,000,000.00 to the development of the

Pyramid project, t

he Trial Court impr

operly concluded

that no benefit had

been conferre

d on Defendants

and therefore Plaintiff was not entitled to compensation. III. After correctly finding that National Pizza Company and its subsidiary Acquisition Servic es Corp. (later N

ational Caterin

g Company) and Pepsi-Cola along with its local distribut or Delt a Beveragehad been brought t o and placed under contract with the Pyramid project by Plaintif

f, the Trial Co

urt improperly concluded

that Plaintiff was not entitled to compensation after those contracts were re-ne go tiated by Defend ants subsequent to the improper

termination of the developer, Pyramid Management Authority.7 Since this case was tried by the trial court sitting without a jury, we review the case de

novo upon the record with a presumption of correctness of the

findings of fact b

y the trial court. Unless the evidence pr

eponderates ag

ain st the fin dings, we must affirm, absent error of law. T.R.A.P. 13(d). The trial court filed written findings of fact and conclusi ons of law which are incorporated in t

he final decree

and state in pertin

ent part as follow

s: Defendants

could not fulfill th

e c ontracts negotiated by Bonhamfor PMA because those contracts cover ed several facilities and time would make it impossible to complete more than just one of these facilities, the arena, and even this was not certain. On the other hand, two of the vendors signed up by Bonhamw e re threatening t o force defend

ants to honor their contracts with PMA based on a non-disturbance agreement that defendants had s

igned for them at Bo

nham’s request. Under the circumstanc

es, the City and Coun

ty did the best they could with time running out and possible law suits f rom MSU and the two vendors hanging over their hea ds . They arranged for Leisure Ma

na gement, Inc. to solicit vendors and request for proposals (RFP) were sent out to m any pros pects including some, or perhaps all, of the vendors which Bonham had signed up. National Pizza and Pepsi-Cola, the two companies withnon-disturbance agreements, were among the companies resigned after

first having signed contracts with Bonham for PMA, however, both agreed to drop any claims they had under the former contrac

t as a part of their

final agreemen

t. Before PMA was terminated on June 17, 1991 by defendants,

substantial sums of money, perhaps more than one million dollars, was advanced by various vendors, that Bonham had signed up, to PMA. How ever, there is in

sufficien t proof in the record to indicate that defendants, City and County, e ve r received any of this money. Likewise, it is difficult for t his Court to see other s

pecific benefitsfrom Mr. Bonham’s admitted good efforts. Defendants may have been incidentally and indirectly benefited by Bonham’s renegotiation of the MSU contract, but this was done to makehis, Bonham’s, work easier not p ri marily to benefit defendants. To set a value, if any, for this service would involve pure speculation. The new contracts were entirely different in size, scope, and amounts and covered only one facility instead of se veral as Bonham’s contracts ha d don e. This was not the fault of the defendants,

but the fault of PMA, plaintiff’s employer, who could notfinish the faciliti

es and perform the contracts that Bonham had secured. It is understandable t

hat som e of the vendors o riginally signed by Bonham were re-signed by Leisure Management which the defendants had hired to replace PMA. Th ere are only two beveragecompanies in the entire country capable of h andling a3 Bonham presents no issue pertaining to tortious interference with contract or tortious interference

with business rela

tionships. 8 facility as large as the Mud

Island complex, Co

ca-Cola and Pepsi

. Leisure Manageme

nt, Inc. sent RFPs to both and it is nor surprising that Pepsi was again signed up in the s e cond round even without considerin

g the need for de

fendants to try to protect themselves from a lawsuit over the non-d i sturbance agre ement. Another vendor, Ticketmaster, was the only c om pany in the nation capable of servicing this kind of facility. Not only does this Court find thatthe defendants did not profit from Bonham’s eff

ort, but it see ms more likely that they suffe red a detriment from the over-all performance of PMA of which Bonham was a

part. Of all the facilities promised by PMA, only one, the arena, is even partially in place and usable today. To whatever extent these unfinished facilities would have benefited defendants, in gate receipts, sales tax, an d publici ty, that benefit has been

lost. Mr. Bonham appeared to be very effective

in his efforts

to secure business for PMA, bu t his contract was

withPMA and it is to PMAthat he must look for satisfaction. Once Bonham was terminated by PMA,

he was of no furth

er help to either

PMA or defendants

and the contracts hehad secured were of no value to defendants,

especially after PMA breached its con tract with Memphis and Shelby County and was terminated. The trial court concluded:

This Court finds that in this cas e, any benefits to, or enrichment

of, defendants w

as incidental and

inconsequential. Defendants

were not third-party benef iciar ies of the contract betweenPMA and Bonham, were not enriched and certainly not unjustly enriched

, therefore pla

intiff’s case mus

t fail. Bonham’s complaint presen ts two theories of recovery for matters encompassed in the issues. 3 The complaint first alleges that the def endants are third party beneficiaries of the contract between Bonham

and PMA and, thus,

as third party beneficiaries are liable to Bonham under the contract. Alt

ernatively, the c

omplaint avers that the City and County are lia

ble to Bonhamon the theories of unjust enrichment, quasi contract, contr

act imp lied in l aw, and quantum meruit. Third Party Beneficiary Tennessee recognizes two categories o f third party beneficiaries - intended and inciden tal

. First Tennessee Ba

nk Nat ’l Ass’n v. Thoroughbred Motor Cars, Inc. , 932 S.W.2d 928, 930 (Tenn. App. 1996). Only if the third pa rty is an intended b

eneficiary may

it maintain an action

on the contract. Moore Constr. Co. v. Clarksvi lle Dep’t of Elect

ricity , 707 S.W.2d 1, 9 (Tenn.9

App. 1985). The requisites necessary to establish a third party beneficiary relationship are: (1)

a valid contract

made upon sufficient consideration between the promisor and promisee; and (2) the clear intent to have the contract operate f or th e benefit of a third party. United Am. Bank of Memphis v. Gardner , 706 S.W.2d 639, 641 (Tenn. App. 1985). This intent to benefit may be shown if “there is either an expression in the contract that the contracting par

ties intended to benefit the third party (the ‘intent to benefit’ test)

or proof that the p

romisor’s perfor

mance will otherwise discharge a duty owed to a third party beneficiary by the promisee (the ‘duty owed’ test).” Moore Constr. , 707 S.W.2d at 9. Whet her a party is a third party beneficiary must be decided on a case-by-case basis in light of the specific contractual agree ments and t he circumstances under which they were made. Id. at 10. Bonhamasserts that the City and County are third party beneficiaries to the contract betweenPMA and Bonham, and, therefore, are liable under the contract for t he commissions earned due to Bonham’s efforts in renegotiating the MSU contract and in negotiating the various sponsor and concessionaire contracts. We do not find it neces sary to determine if the City

an d County are third p arty beneficiaries , and, if so, what type, since they are not seeking any r elief under the contra

ct. Bonham’s assertion of liability against the City and County on the contract is unknown to the law. Bonham has not, and probably cannot,

cite any authorit

ies in support of this

position. The very descrip tion of the status “third party beneficiary” belies an assertion of liability as an obligor. A beneficiary ge ts a benefit,

not an obligation. To attempt to hold someone liable on

a contract to which

it is not a party is co

ntrary to common reason. Accordingly, Bonham has no cause of action a

gainst the City and Co

unty for breach

of contract. Unjust Enrichment The theories of

unjust enrichment, quasi

contract, contracts implied in law, and quantum meruit are essentially the same. Paschall’s, Inc. v. Dozier , 219 Tenn. 45, 53, 407 S.W.2d 150, 154 (1966). Unjust e

nrichment is a qua

si-contractual t

heory or is a

contract implied-

in-law in which a court may impos e a co ntractual obligation where one does not exist. Whitehaven Community Baptist Church v. Holloway , 973 S.W.2d 592, 596 (Tenn. 1998) (citing Paschall’s , 219 Tenn. at 53-54, 407 S.W.2d at 154-55). Such contracts are not based upon the intention of the parties but are obli gations created by law and are “f

ounded on the princ

iple that a party10

receiving a benefit desired by him, under the c

ircumstances re

ndering it inequita

ble to retain

it withoutmaking compensation, must do so.” Paschall’s, 219 Tenn. at 54, 407 S.W.2d at 154. A contractual obli

gation under an un

just enrichment the

ory wil l b e imposed when: (1) no contract exists between the parties or, if one exist, it has become unenforceable or invalid; and (2) the defendant will be unjustly enriched absent a quasi-contractual obligation. Holloway , 973 S.W.2d at 596. In Paschall’s, supra , the Court stated:

Each case must be decided accor ding to the essentia

l elements

of quasi contract, to-wit: A benefit conferred upon the defendant

by the plaintiff, appreciation by the defendant of such benefit, and acceptance

of such benefit

under such circ

umstances that it

would be inequitable for h

imto retain the benefit without payment of the value thereof. 219 Tenn. at 57, 407 S.W.2d at 155. The most significant requirement for a recovery under this theory is that the enrichment must be unjust. Id. Consequently, if th e defendant has

given any conside

ration to anyone for the bene fit, i t would not be unjust for the defendant to retain the benefit without paying the provider of such. Furthermore, before recovery can be had against the defendant on the theory of unjust enrichment, the provider of the benefit must have exhausted his remedies against the pe rson with w hom he had contra cted, and still has

not received the

reasonable valu

e of his services. Id. In the record, test

imony was introduc

ed that while Bonham negotiated some contracts betweenPMA and various spo nsors and conces sionaires, the substance of these contract s covered a project that was differ ent in size and scope from the contracts which were subsequently nego

tiated and actua

lly used. The rec

ord reveals

extensive efforts on the part of the City and County, necessitated by the change in the size and scope of the project, in sending outRFPs to numerous sponsors and concessionaires and the procurement of new contract

s with such. Moreover, the proof showed that no one ever operated under the contracts negotiated

by Bonham. The record also reflects that payments made by any of the contractees were received by PMA. Testimony was intro duced that the City a

nd County

never receive

d any of the funds, and there is no proof that the payments made to PMA benefited the City and County. Bonhamalso seeks recovery by virtue of the renegotiation of the MSU Agreeme

nt. The testimony in the record indicates that the MSU Agreement did not provide exclusive contro l to11

MSU for all of the parking, all of the advertising and all of the luxury suites. Admittedly, the

new MSU Agreement all owed PMA more flex

ibility in its solicitat

io n with sp onsors and concessionaire

s, bu t the renegotiatio

n of the contract

was procured fo

r the benefit of PM

A to allow this flexibility. Bonh am also claims

that he is entitled to a commission on the procurement of $2.2 million from the renegotiated MSU/PMA contract. Proof is lacking that Bonham’s effortssecured the $2.2 million from MSU or that it directly benefited the City and County. During the hearing, extensivetestimony was intro duced that the City

and County did not derive any benefit from Bonham’s actions in connection with his work with PMA. Admittedly, this testimony conflict

s with some of the other evidence introduced on behalf of Bonham. The trial court made detailed findings of fact, and obviously the findings on the disputed issues were largely dependent on the credibility of the witnesses. Any conflict in the testimony requiring a determination of the weight, faith, and credit of any witn

ess’s testimony re

sts in the first

instance wi th the trial court an

d will be given gre

at weight by the ap

pellate court unl

e ss other rea l evidence compels a contrary conclusion. Haverlah v. Memphis Aviation, Inc. , 674 S.W.2d 297, 302 (Tenn. App. 1984). Whether a benefit has been conferred and the value of such benefit is a fact question. Therefore, the finding by the trial court comes to us with a presumption of correctness. From the record before us, we do not find that the evidence preponderates against the findings of the trial court. Bonhamhas also presente d in this Court an issu

e concerning agency on the part of Bonhamacting for the City and the County. However, the record r ef lects that he fail

ed to present this as a theory in his complaint and did not present the issue in the tria

l court, and this is raised for the first time on appeal. As a general rule, questions or issues not raised in the trial court will not be entertained on appeal. Lawre nce v . Stanford , 655 S.W.2d 927, 929 (Tenn. 1983); City of Lavergne v. Southern Silver, Inc. , 872 S.W.2d 687, 691 (Tenn. App. 1 993 ). Therefore, we

will

not consider Bonham’s arguments concerning this issue. Accordingly, the order of the trial court is affirmed, and the case is remanded to the trial court for such further proceedings as may be necessary. Costs of appeal are assessed against

the12

appellant.

_________________________________ W. FRANK CRAWFORD, PRESIDING JUDGE, W.S.

____________________________________ ALAN E. HIGHERS, JUDGE

____________________________________ DAVID R. FARMER,

JUDGE