### IN THE COURT OF APPEALS OF TENNESSEE AT NASHVILLE August 7, 2001 Session FREDERIC R. HARRIS, INC., v. THE METROPOLITAN GOVERNMENT OF NASHVILLE AND DAVIDSO N COUNTY, TENNESSEE
Direct Appeal from the Chancery Court for Davidson County No. 95-537-II Hon. Carol L. McCoy, Chancellor

No. M2000-02421-COA-R3-CV - Filed October 22, 2001

Plai nt iff sued for payments under contract. The Trial Court held defenda nt was not liable for additional pay

ments under the co

ntract. We affir

m.

Tenn. R. App. P.3 Appe al as of Right; Judgme

nt of the Chancery Co

urt Affirmed.

H ERSCHEL P ICKENS F RANKS , J., de livered the opinion of the court, in which H OUSTON M. G ODDARD , P.J., and D. M ICHAEL S WINEY , J., joined. Peter H. Curry, Nashville, Tennessee, for Appellant Frede ric R. Harris, Inc.

The Department of Law of the Metropolitan Government of Nashville and Davidson County, Karl F. Dean, Director of L aw, Mic hael B. Bligh and John L. Kennedy, Na shville, Tennessee, for Appellee, The Metropolitan Government of Nashville and Davidson County, Tennessee.

OPINION

In this action on contract,

plaintiff, sued de

fendant allegi

ng breach of c

ontract, unjust enrichment,

and estoppel. Defendant

answered, admitting the terms of the contract, but averred that it had paid all amounts due.

The Trial Court gra

nted defendant Su

mmary Judgme

nt, and plaintiff a

ppealed. This Court, in remanding for trial said:

The Court below did not delve into the course of dealings of the parties, nor whether-2- the benefits of this arrangemen t we re actually retained under circumstances which would make it unfair for

FRH to go uncompe

nsated. Thus, it is

not necessary

for this Courtto address the ac

curacies of FRH ’s alleged cost under the contra

ct. Nor isit necessary to decide the app

ropriateness of

Metro’s offer to

settle the cost issu

e. It is enough to state that the contract between FRH and Metro was within the powe r o f Metro to authorize. It is a question of material fact whether or not the contract on the part of FRH is partially e

xecuted or fully

executed in matter

s relating to

change order No. 6. . . . Upon remand, a trial was held and the Trial Court found that Metro asked for bids for a feasibility study regarding its traffic control system. FRH w as a leading ex pert in the field of traffic control design and implementation , and successful

ly bid the pr oject. FRH had recommended that the system be ba

sed on a federa

lly sponsore

d Uniform Traffi

c Control Syste

m, and FRH was to make the necessary

enhancements. F

RH recommended a mainframe computer which was purchased by Metro. Th e contract s

pecified that the system would ultimately be used to sy nchronize 550 intersections.

The Tria

l Cour t found that in 1986 F RH knew that using

a single proce

ssor could create problems due to timin

g constraints, bu

t FRH recommende

d the use of a cen

tralized single processing unit.

For the years 1985 through 1989, there were five change orders approved by Metro. The first four change orders were initiated by Metro, a nd the fifth order was proposed by FRH, and increased the estimated costs by $176,780. The Court found that all five of the change orders complied with the 60 day notice provision in the contract.

On March 27, 1989, FRH advised Metro that it could not

make the enhanc

ed UTCS software work, and recommended that Metro forego the use of the UTCS software in favor of a new software program which FRH was developing called TMS. In April of 1989, FRH advised Metro in writing that it could not control the number of intersections required by the c ontract with the UTCS software. FRH once again suggested that Metro use the n ew TMS software, but did not submit an estimate o

f additional costs.

FRH worked on develo

ping the TMS softwa

re through Dec

emb er 1991, and was developing the TMS software for other cities as well, including Austin, Fort Worth, and Honolulu. FRH billed identical amounts for travel, telephone, postage, and copy char ges for all four cities. The court found that FRH’s repre

sentative could no

t state whether th

e work charge

d to Metro was a duplication of work charged to the other three cities, and did not k now what the total cost of development

was. The court stat ed that the witness testified that the time billed to Metro was accurate and was for work

actually performed, but the record did not support his assertion and “

his credibility

is undermined by

evidence that the

TMS software was already in the devel opment sta ge when Harr is proposed it as an alternative, that the TMS software was being developed and customized for several major U.S. cities, and that Harris assessed its expenses in a blanket pro rata fashion between the cities.”-3- The Court further hel

d that the TMS softwa

re never met the

requirements se

t out in the technical manua

l, nor did it

ever successfu

lly test on all levels at once. Metro found the software to be deficient and unstable, and it continually had problems. Nonetheless, FRH sent letters to Metro requesting $287,029.00, and st ating that these

costs were incur

red because

FRH had to do additional work in order to fulfill its obligations under the contract. F

RH submitted the sixth c

hange order in 1992, even though it had begun work on the T MS sof tware in 1989-1990. In February of 1994, Metro advised FRH

that it was terminating the contract pursuant to Article 10, Section D, and sent FRH $27, 851.65. Metro di d not have the UTCS software, because FRH had taken it back, and Metro used the TMS prog ram s omewhat b etween 1989 and 1993, but it never fulfilled the requirement to computerize 550 intersections. Metro does not now use the TMS program.

The Court held that FRH failed to perform its end of the contract when it could not make the UTCS software work, and that FRH then proposed

to substitute the TMS sof

tware to fulfill its contractual obligations, but it did not provide Metro with any notice that the costs would be substantially

greater than t

hose set forth in th

e contract. The

Court found that Me

tro allowed FRH to try and correct the

problem by using the TMS software, but that this did not create an inducement upon whi ch FR H rel ied in i ncu rri ng mo re co sts suc h th at e sto ppe l wo uld com e in to p lay. The Court found the sixth

change order was not

submitted in a fashion in keeping with the parties’ course of dealing, and was not prope rly submitted

according to th

e contract’s te

rms. Essentiall

y, t he Court held tha t FRH was to blame for problems with the software and hardware which FRH had recommended, and that it had complete control over the project. The Court dismissed the action on the basis that FRH f

ailed to perform i

ts obligations unde

r the contract.

The issues raised on appeal are whether the Trial Curt erred

in finding that FR

H could notrecover its costs under the doctrines of implied contract and/or estoppel, and whether the Trial Courterred in finding that FRH was not entitled to be paid for thework it performed up to the point that Metro terminated the contract, pursuant to Section 10D.

The findings of fact by the Trial Cour t are presumed correct unless the evidence preponderates against the finding. Tenn. R. App. P. 13(d). Questions of law are not accorded any presumption of cor

rectness.
The contract between the parties provides that FRH would perform certain services for Metro, and that

the cost of the same would not exceed $342,424.00. The contract provides that if the costs were going to exceed that amount, FRH was to notify Metro in writing and provide a revised estimate . The contract f urther provides t

hat Metro would

notbe liable for such additional costs unless Metro notified FRH in writing that the costs had been increa

sed, and specifie

d in their notice a revised estima

ted cost. The contract specifies that any change s to the contract had to be incorporated

as written amendm

ents, and provides that

the contract could be terminated by Metro at any time by

giving fiftee

n days notic

e, and that if Metro te

rminated the ag

reement, FRH wou

ld be paid “incurred c

ost for completed

or partially

completed work, p

lus a pro rata portion of the Fixed Fee.” The evidence supp orts the Trial Court’s factual findings. Regarding change order six, the evidence establishes the fi rst estimate of these additional costs was sent to Metro on December 31,-4-

1991, requesting the $287,029.00 f or wo rk already done. Change order number six was never approved in writing, and FRH did not comply with the terms of the contract and/or with the pa

rties’ previous course of dealing in seeking this increase in costs.

The law in

this jurisdiction is clear

that when parties have an express contract dealing with a transaction, there can be no recovery either in quantum meruit or implied contract. Jaffe v. Bolton , 817 S.W.2d 19 (Tenn. Ct. App. 1 991); Fletcher Realty, Inc. v. Hayslope Properties , 712 S.W.2d 478 (Tenn. Ct. App. 1986).

As to estoppel, the issue is whether Metro acted to induce FRH to perform the additional work and incur additional costs by prom ising that Metro w

ould pay for the same. Under the terms of the contract, Metro was not obligated to pay costs in excess of the estimate unless such change was approved in writing by Metro after receipt of the revised estimate. Metro received the estimate at issue in December 1991, and received th

e change orde

r at issue in May

of 1992, but did not approve in ac

cordance with th

e terms of the con

tract.
The record reveals that the cost request

in the sixth change order had essentially been incurred prior t

o submitting the re

quest.
Metro’s representative admitted that he never called anyone a tFRH during thetime that the request for the additional cost was made in late 1991, until the contract was terminated by Metro. Howe ver, prior to 1991, Metro had no notice of what these costs would be or that there
wou ld b e any. Accordingly , the evidence do

es not establish a p

romise or inducem

ent by Metro

to pay any costs incurred

by FRH. More

over, the eviden

ce supports

the Trial Court’s conclusion that FRH was simply trying to fulfill its obligations under the contrac t, and Metro had no notice that any additional costs would be required. There is no basis to invoke the doct rine of estoppel again

st Metro.

Fin all y, FRH argued tha t it is due some additi

onal comp ensa tion because Metro terminatedt he agre ement “for its convenience”. FRH had already be en fully paid pursuant to the terms of the contract, moreo ver, Metro neve

r received the f

ull benefit

for which it bargained. The termination clause does not abro gate the other t erms of the contr

act, including F

RH’s duty to perform under the contract.

The material factual determination made by the Trial Court direct ed by this Cour

t, upon rema

nd, are fu lly supporte

d by the evid

ence and we af

firm the judgmen

t of the Trial Court

, holding that the pl

aintiff’s claims a

re without merit. The costs of the appeal are assessed to Frederic R. Harris, I nc.

_________________________ H ERSCHEL P ICKENS F RANKS , J.