# FILED

Ap ril 23, 1997 Cecil W. Crowson Ap pellate Cou rt Clerk UNITED BRAKE SYSTEMS, I NC., dba ) MIDL AND GRAU HEAVY DUTY ) SERVI CE CENTER, ECHLI N, INC., ) BRAKE SYSTEMS, INC. and FRI CTION ) MATERIAL S, INC., ) ) Plaintiff s/Appellees, ) Appeal No. ) 01-A-01-9610-CH-00448 v. ) ) Davidson Chancery AMERICAN ENVI

RONMENTAL ) No. 94- 286 4-III PROTECTION, I

NC., ) ) Defend ant/Appe

llant, )

) and ) ) LEE B ARR, ) ) Defendant/Appellee. )

COURT OF APPEALS OF TENNESSEE
MIDD LE S EC TION AT N AS HVILLE

APPEAL FROM THE CHANCERY COURT FOR DAVI DSON COUNTY AT NASHVIL

LE, TENNESSEE

THE HONORABLE ROB ERT S. BRANDT, CHANCELL OR

PHIL IP M. K IRKPA TRICK JOHN E. ANDERSON Stewart, Estes & D onnell SunTrust Center 424 Church Street, 14th Floor Nashville, Tennessee 37219-2392

ATTORNEYS FOR PLAI NTIFFS/APPEL

LEES JOE F. GI

LL ESPIE , JR. 6408-A Clarksville Highway Joelton, Tennessee 37080

ATTORNEY FOR DEFENDANT/APPEL LEE LEE B ARR JOSEPH L . LACK

EY, JR. Lackey , Rodgers, Price & Snedeker 1230 First American Center Nashville, Tennessee 37238-1230

ATTORNEYS FOR DEFENDANT/APPEL LANT AMERICAN ENVI

RONMENTA

L PROT ECTI ON, I

NC.

AFFIRMED I

N PART, REVERSED IN PART, AND REMANDED

SAMUEL L . LEWIS, JUDGE1 The re were three o ther plaintiffs in t his case: Echlin, Inc., Friction M aterials, Inc. and Bra ke Systems, Inc. Echlin, Inc. own s the other plaintiffs.

2 UBS util izes val uable tra demarks . Those tra demarks are “ Gray- rock” and “BT.” The regi ste red own er of the BT tradem ark is Frict ion Materials, Inc. , and the regis tered owner of Gray-rock is Brake Systems, Inc. The brand name of the lining i s printed on the underside of t he brake lining. UB S has expended substantial sums over the years to prom ote their tradema rk. No co mpan y other than U BS can utilize the Gray-rock and B T trad emarks.

3 Exposure to fire, water, and smoke diminishes the integrity and quality of t he brake linings. Once the water soaks int o the lini ngs, they must be placed in an oven at 350 degrees Fahrenheit for twenty -four hours. The use of we t li nings can resu lt i n “rus t jacki ng.” This occurs whe n moisture is trans ferr ed from th e block t o the meta l and rust develops. A wet l ini ng can come loos e and resul t in brake fa ilu re.
-2- 

## OPINION

This is an appeal by def

endant/app ellant, A

meri can Envir

onment al Protecti on , Inc. (“A EP”), from

a jury verdict r endered i n the Davi dson County Chancer y Cour t. The jury determ

ined AEP was liable to plaintiff/appellee, United Brake System s, Inc. (“UBS”) 1 , for m

isre presenta

tion, conve

rsion, an d unfair c ompet

ition. In addition , the courtdirected

a verdict against A

EP on UB S's brea

ch of contract claim. The j ury awardedUBS $130, 892.00, c ourt costs, attorney 's fees, and $100,000 .00 in punitive damages. The jury also determ ined AEP was liable to defendant/appellee, Lee Ba rr, for misrepresentation and awarded him $25 ,000.00plus legal f ees. T he facts out of which this matt

er arose are as f ollows.

I. Facts and Procedural History

UBS maint ained a fa

cility in Nashvil le where

it stocked b rake linings, brake shoes with linings, and other brake hardware. The facility nearly burned dow n on 13 July 1994. There were 57,040 brake l inings store d in the fac ility a t the tim e of the fire. The inven

tory i ncluded Gray-r

ock and BT

branded brake linings and 815 lined brakeshoes all of which were readyto sell. 2 There w as substanti al dam age to the building and the contents as a r esult of the fire and the fire fighting ef forts. T he damage to the brak

e linings w as so sever

e UBS' s resear

ch and d evelopment staff determ ined the br ake linings did not m eet UBS 's quality

levels. 3
Followingthe fire, UBS began obtai ning bids for the dem olition of th e facili ty and the removal of debris. UBS contacted AEP ab out such a bid. Bill

Hallibur ton of UB S spoke wi th Don Turner of AEP about a contract. Halliburton stated an essential requirem

ent of the contract was that AEP ta

ke the bra ke linings to a landfill

.4 In hi s depos it ion, Barr t est if ied t here were t

went y- six li nin gs i n each box. At tri al, he cl aimed h e had not stated th ere we re twen ty-six linings pe r bo x and that mo st of the b oxe s were small. W hen co nfronte d with his deposition testi mony, Barr claimed he did not know if the depositi on statement was t rue or not but that some of the box es wer e sma ll. -3- He explained to Turner UBS did not want the damaged brake lini ngs containi ng the Grey-rock

and BT trademarks to ge t into th e marketplace. Turner told Halli burton AEP would take

the brake linings to an appro ved landfill. AEP an d UBS ent ered into
acon tract on 21 July 1994. AEP prepared the contract which stated, in part, as follows: “All salvage rights to all item s within the footprint of the demolished build ing a re granted t o [AEP] WITH THE EXCEPTION OF ANY AND ALL BRAKE LINING S WHICH SHALL BE PROPERLY DISPOSED OF AT AN APPROVED LANDFILL.”

After entering into the contract, Halliburton met with Turner an d Terry Reeves, also of AEP, at the UBS fa cility. Ree ves aske d about the i mport ance of hauling the brake linings to an approved landfill. Once again, Halliburton explained UBS’s concerns over products liability exposure a nd recognition of the registered trademarks. Reeves guaranteed Halliburt on the lin ings woul d go to th e landfill

.
On Saturday morning, 2 3 July 1994 , Hal liburton and two other UBS employees removed

5,600 brak

e linings fr

om the building. A ccording to Hallib urton and a com prehensive

inventory control sy stem, there w ere 57,0 40 brake li nings in the building on the date

of the fire . Thus, there w ere 51,4 40 linings insi de the fac ility when Hallibur

ton left on S aturday . Whe n Hall iburton wen t to the premises on Mon day, 25 July 1994, it was evident that most of the contents of the facility had been rem oved.

On thatsame

Saturday , Reeve s contacte d Lee Ba rr and pre sented him

witha deal. Reeves to ld Barr he could have a forklif

t, parts, and a com

pressor in exchange for Barr's grade-a

ll. Ree ves also tol d Barr he could take

the brake linings as long as he did not sell them in Nashville.
Thereafter, Barr's emplo yees b egan haulin g off m aterials including the brake linings. Accordi ng to Barr ’s testi mony , he haule d off 2,00 0 box es of lining s with approximately

twenty -six linings in each box. 4 Barr te sti fied Ree ves and Bobb y-4-

Hargrove, an AEP employee, we r e present at the facility and saw Bar r's employ ees loading the brake

li ni ngs onto his truck. In addition, he stated Reeves allowed an AE P emplo yee to hel p Ba rr lo ad t he b rak e li nin gs. On Su nda y, 24 J uly 1994 , Hargrov e left and told Barr to “loc k the gate. ” When Barr had finished, he locked t he gate and left. Barr la

ter sold som

e of the brake lining s in Indiana to Tim Gedeck, Mike Hann owsky , and Russ ell’s T railer S ales.

After AEP c o mpleted the cle anup, Scott Howell of Circl e City Friction , a competitor

of UBS contact ed Hallibu rton. Howell inform ed Hallib urton that a Ti m Gedeck had approa

ched How ell and off

ered t o sell him what appeared to be UBS br ake l inings in burnt boxes. After his conversation with Howell, Halliburton was
conce rned the inferior, unapproved brake linings had gotten into the marketplace. Hallibur ton con ta cted Gedeck in Indianapolis. Gedeck advised Halliburton he had
so me UBS material which he intended to sell. Halliburton told him the linings were unapproved and were not

to be sold. Gedeck advised Ha lliburton he

was going to sell them anyway . Halliburton then contacted Reeves a nd inform ed him the brake linings from the UBS fire scene had

appeared in the Indianapolis area and were being offered for sale. Reeves insi sted Hall iburtonwas mistaken because AE P had taken the b rake linings to the landf

ill. Ha lliburton then contacte d UBS’ s legal dep artm ent who retai ned couns el in Indianapolis and in Nashville in order to recover the linings as quickly as possible.

UBS filed the instant

suit on 21 Septem

ber 1994. UBS all eged AEP was lia ble to UBS for misrepresen tation, b r each of c ontract, conversion , and viola ting the Lanham Act. UBS als o alleged B arr wa s liable f or violatin g the Lanham Act. AEP filed an answer, a cros s-complaint, an d a counte r-complaint. AEP de nied any wrongdoinga nd c laime d it never a uthorized B arr to remove t he brake l inings from the facility. It alleged Barr was liable for breach of contrac t and fo r violatingthe Lanham Act. Finally, AEP alleged it performed all the terms of the contract between itand UBS and U BS br eached the contract when it refused to pay AE P. Barr responded and claimed AEP had authorized him to take the linings. In addition, he alleged A EP was liable to hi m for

fraud.

AEP a nd Barr m

oved for a

directed verdict on

UBS's L anham

Act cla im s a t-5-

the conclusion o f UBS’ s proof and at the conclusion o f

all the pr oof. The chancell or denied the motions. At the close of all the proof, UB S moved for a directed verdict
on its breac h of contract claim. T he court granted UBS’s m otion and also direct e d
averdict a

gainst AE P on its breach of contra

ct claim against UBS. Th e remainder of the case went to the

jury . The j ury m

ade the following findings: 1) UBS established by a preponderance of the evidence t hat AEP was liabl e for m

isrepres entation, conversion , and unf air c ompet iti on; 2) UB S di d no t es tab lis h by a preponderance of the evidence that Barr was liable for conversion

and unfair

competition; 3) A

EP did not establish by a preponderance of the evidence that Barr w as liable f or breac h of contract ; and 4) Barr established by a preponderance of the evidence that AEP was liablefor misrepres ent ation. The jury then aw arded UBS $130,892.00 damages which included a

ttorney 's fees, and court c osts a nd awarde d Barr $25 ,000.00 plus attorney fees. Finally, the j ury determ in ed AEP 's actions entitled UBS to puniti ve damages. After a separa

te hearin g, the j ury aw arded UB S $10 0 ,000.00 in punitive damages.

AEP moved

to set aside

the verdict a

nd to grant A

EP a new trial or a rem ittitur after the cour t ente red its final judgment in accordance with the j ury verdict. UBS filed a mot

ion request

ing discretionary

costs and a

motion to decla re the ca se an exceptional case so the court could award it at to rney' s fees unde r the La nham Act. Thereafter, the court a

warded U BS $3,141. 75 in discretionary costs, de clared th e case
was exce ptional unde

r the La nham Act, and denied AEP 's mo tions for a new tria l. AEP fi led a notic e of appea l on 24 May

1996.

II. Directed Verdicts

When reviewi ng a decisi on on a motion for di rected verdi ct, th is co urt’s standard of revie w is the

same as the sta ndard used b y the

trial cour t in passing up on the motion. Underwood v. HCA Health Ser vs. of Tenn., Inc., 892 S.W .2d 423, 42 5 (Tenn. App. 1994) . Courts reviewi ng amotion for dire cted verd

ict m ay not w eigh the evidence o r evaluate t he credibi lity of witness es. Id. In ruling o n the motion, the court must ta ke the stro ngest legit

imate view of the evidence in fa vor of the n on-mo ving party . In other words, the court m

ust rem ove any conflict i n the evide nce by construing i t in the light most favorab le to the non -mova nt and disca

rding all-6-

counterva iling evidence . The c ourt m ay gra nt the motion

only if, after assessing the eviden ce ac cording to t he foregoi ng standard s, it determines thatreasonab le minds c ould not diff er as to th e conclusio ns to be draw n from

the eviden ce. If

there is any doubt as to the proper conclusions to be drawn from the evidence, the motion must be denied. Eaton v. McLain , 891 S.W.2d 587, 590 (Tenn. 1994) (citations om itted).

A. Whetherthe court erred in not direct ing a verdict in favor of AEP as to UBS’s cause of action un der the Lan ham A ct, 15 U .S.C.§§ 1114(1), 1 125. Cong ress’s intent when enacting the Lanham Act wa s “to regulate comm erce within the control of Co ngress b y making acti onable the deceptive and mi sleading use of mar ks in such com

merc e [and] to protect

persons eng a ged in such comm erce against unfair c ompet

ition.” 15 U.S. C. §1127 (1988 & Supp. 1992). The Lanham Act provi des in pert

inent part as follow s: (1) Any pe

rson who, on or in conne ction with any goo ds or servi ces, or any container for goods, uses in comm erc e any word, term , name, sym bol, or device , or

anycombi nation ther

eof, or any fa

lse descr iption of origin, f alse or m isleading de scription of

fact, o r false o r mis leading represe ntation of f

act, w hich - (A) is lik ely to cause c onfusion, o r to cause mista ke, or to d eceive as to the a

ffiliati on, connec tion, or a ssociation o f suc h personwith anoth er person , or as to the origin, sponsorship, or approval of his or h er goods, s ervices, or c omm ercial a ctivities b y another pe

rson, or (B) in com

merc ial adver

tising or promo tion, m

isrepres ents the nature, charact

eristics, qualities, or geogra phic origin of his or her or another

person’ s goods, ser

vices, or comm ercial a ctivities, shall be liable in a civil ac tion by a ny per son who belie ves that he or she is or is likely

to be damaged by

such act. Id. §1125(a)( 1) (Supp. 1992). Se ction 1114 of the Lanha

m Ac t provides: (1) Any person wh o shall, w ithout the c onsent of the registra nt - (a) use in comme

rce any reproduction, co u nterfeit , copy , or colorable imitation of a

register ed ma rk in connection with the sale, offer in g for sale , distribu tion, or a dvertising o f any goods or services on or in connection with which such use is l ikely to cause confusion, or to cause

mista ke, or to deceive; o r

. . . . s hall be liable in a civil a ction by the regist

rant for the rem

edie s hereinaf ter provid ed. Id. § 1114(1) (1988 & Supp. 1992).5 In it s memorandum opini on, th e tri al court wrote: The defendant AEP puts f orth s everal reasons why this ca se shoul d not be hel d an exceptional one. First , AEP is still under the mistaken i mpression that t he goods it traded were salvag ed goods. It

conti nues t o refer

to th e brake shoes and brake l ini ngs sol d by Lee Barr as salvag e, ci tin g that

“[o]bvi ously there was no conf usion t hat t hese were salva ged products .

. . .” De f. Rep ly Brie f p.2. T he br ake sh oes a nd lining s were not salv age. T hey we re spe cifically designated to be properly disposed of in an approved landfill in the contract between AEP and [UBS]. The pl aint

if f' s re sear ch department deci ded th at t

hese product s wer e unf it foruse a nd not salvageab le. Therefo re, the prod ucts were not ap prove d for sale, even as salva ged go ods. -7- AEP insists the p rovisions of the Lanham

Act did not

apply t o the fact s of this
case because every body knew the linings were salvaged from a fire in Nashville. AEP relies on Alfred D unhill L td. v. I nte rstate C igar Co. , 499 F.2d 232 (2d Cir. 1974), for the pro position that the sa le of salva

ged ma terials do es not viola

te the Lanham Act. T he facts of Dunhil

l , howeve r, are distinguisha

ble from the fact s of this
case. In Dunhil

l , the lawf

ul owner o f the goods a

t issue volunt arily

perm itted the insurance company to salvag e and sell t he goods

. Id. at 234. In this case, U BS took all the necessary steps in their contra ct with A EP to ensu

re that it convey ed no salvage r ights in the l inings to AE P and that n one of the l inings would ever be s old
as salvage or

otherwis e. AEP's clai m the fact that the purcha sers under stood the linings were sa

lvaged fr om a N ashville f

ire inno way negates the applic ation of the Lanham Act beca

use the goods were not salvage.

AEP's s econd argument is that UBS was not entitled to m onetary dam age s because the Lanha

m Ac t require s a pla intiff to pr ove actual

confusion toreceive monet ar y damages and UBS failed to m ake such a showing. Assuming actual confusion is a nece ssary

elem ent, it is the opinion

of this court that UBS satisfie d its burden. To explain, AEP ar gues “ every

body tha t had any contact w ith this product knew that it was salvage from a fire or auction in N ashville. ” Becaus e the lining s
were not salvage , a pers on who believed the linings were salvage would have been actually confused

. In addition , the re cord esta blished Ge deck and

Hannowsky were
ac tuallyconf

used as to ot

her aspec ts of the transaction. They believed t

he linings
we re quality products and did not know UBS had deemed the linings unfit for sal e and had contra

cted with AEP to t ake them

to a landfill

. Second, they believed Barr proper ly obtained the brake linings and ha

d the author

ity to s ell them . To the contrary , Barr

couldnot have had any ti tle to the linings bec ause AEP did not have any title. A s explained

by the tria l co urt, the contract , as a m atter of law, c learly stated AEP had no salvage rights wha

tsoever tothe linings. 5 As a converte r, AEP-8-

obtaine d no title to the linings and could not have transferred any title to Ba rr . Goodwin v. Taenzer , 122 T enn. 1 01, 11 9 S.W. 1133 (1909); Mc Da ni el v. Ad ams , 11 S.W. 939, 940, 8 7 Tenn. 7 56, 757-58 ( 1889). T he fact t hat Gede ck and

Hannowsk

y believed they r

eceived q uality products a

nd Barr ha

d authority

to sell the linings was actual co nfusion.

Itis the opinio n of this cou rt that the chance

ry cou rt did not er

r in faili ng to directa verdict

in favor of

AEP. There w as suffic ient evide nce in the record such that jurors could rea sonably

infer ac tual confus ion. Given such evide nce, it w ould have been error for the court to have directed a verdict in AEP's f avor.

B. Whetherthe court e rred in direct ing a verd ict in favor of

UBS and against A EP on th e breach of contract claims. Taking the strongest l egitim ate view of the evidence in fa

vor of AEP , the nonmovingpart y, there were three different breaches of the contract between UBS and AEP. UBS bre ached the

contract by inte rfering w ith AEP ’s exclusive contr ol of the facility and by failing to compensate AE P for its services. AEP breached the contract when it fa

iled to take

all the linings to a lan dfill.
“[T] here can be no r

ecovery for damages on the theory of breach of contract by the party who himse lf breached the contract.” Sa nta Barbar a Capital Corp. v. World Christia n Radio Fo und., Inc. , 491 S.W .2d 852, 85 7 (T enn . Ap p. 1 97 2). “A party who has mate ria ll y bre ach ed a con tra ct i s n ot ent it led to dama ges stem ming from the other p arty’ s later m aterial breach of the same contract. T hus, in cases

w here both partie s have not f ully pe rform ed, it is n ecessar

y for the courts to determ ine which party is chargeable with the first uncured m ater ial brea ch.” McClain v. Kimbrough C onst. Co. , 806 S.W .2d 194, 199 (Tenn . App. 1 990) . The determ inationof whethe

r a brea ch is m aterial requires considera tion of the f

ollowing factors: (a) t he extent t o which the

injured party will be de

prived of t

he benefit which he re asonably expected ; (b) the ext ent t o which the injured party can be ade quately compensated

for the pa

rt of that benefit of

which he will be deprive d; (c) the extent to which the party failing to perform or t o offerto perform will suffer f

orfeiture;-9-

(d) the likelihood that the party fa i ling to perf orm or to offer to perform will cure his failure, tak

ing account of all the circumstances including any rea sonable ass urances; (e) the extent to which the behavior of the party failing to perform or to offer to perfor m com ports with

standards of good f

aith and fair dealing. Id. (quoting Restatement (Second) of Contracts § 241 (1979)).

After applying the law to the facts, it is the opinion of this court that the trial courtdid not err . To expl ain, the breach resulting from UBS’ s failure to provi de AEP with exclusive control of the faci lity w as not m aterial. There w as no eviden ce tha t UBS’s actions de

prived AE

P of the benefits it r

easonably

expected to rec eive. In addition, there w as no eviden ce that UBS ac ted in any manne r other tha

n in good faith . UBS’s fa ilur e to pa y and AEP’s failure to dumpthe linings in a landfill were both uncured and material breaches. A EP’s breach, however, occurred pri o r to UBS’ s. Thus, it

f ollows that the tr

ial court properly

granted a

directed verdict in favor of UBS a nd against AEP because AEP could not recover for brea ch of contract based on conduct occurring after having materially brea ched the contract itself.

AEP also claims the court should not have directeda verdict because i t should have allow ed the ju

ry to c onsider its defense o f imposs ibility

of perform ance. T his claim is withou t merit. “Im

possibility

of perfor manc e caused b y the pr

omisor or by those in privity

with him , or

by deve lo pment s which he could have prevented

or avoided or rem

edied by appropriate corrective measures, does not exclude him f rom liability for his nonperformance of the contract.” Tucker v. Hundley , 452 S.W. 2d 658, 660 (Tenn . App. 1969). AEP could have fully preform ed the contractand taken the linings to the landfill. Its agents admitted such. It couldhave had a

represe ntative present to control the premises and prevent LeeBarr from taking the linings. There
was no impo ssibility . Any imped iment to full per

form ance wa s o f A EP’s own makin g. In such a c ase, im possibility

is no defe nse. The

court prop erly directed

a verdict against AEP.

III. Whethe r the ch ancery c ourt erred in not granting AEP a n ew trial.

AEP claim s the court

erred in not grantingit a new t rial for eight diff

erent-10-

reas ons . We ad dre ss e ach reas on s epa rate ly.

A. There was no proof that AEP violated th e Lanham Act.

The proof clearl y established AEP violated the Lanham Act. Section 1125(a) makes any m

isrepres entation of

fact which result s in confusi on as to affili ation, connection , associat ion , source , origin, sponsorship or approval a

ctionable. Here, the evidence esta

bli shed those who purchase d the brake linings we

re not told t

he following: 1) UBS determined the brake linings were damaged or inferior; 2) UBS intended to send the b rake linin gs to a landf ill; 3) AEP convert ed the bra ke linings and had no ri ghts whatso ever to them; 4) UBS had taken s teps to disa ssociate i tself withthe linings such thatthe linings were to have been buried in a landfill to assure quality control; and 5) the product carri ed n o express or impli ed warranties by

the manufacturer. A product is not truly “genuine” unless i t is ma nufactur ed and distributed under quality controls established by the manufac turer. The Lanham

Tradem ark Act affords t

he tradem ark holder

the right to control the q uality

of the goods manuf

actured a nd sold under

its trademark. “The ac tua l qu ali ty of the goods is irrele vant; it is t he controlof thequality that a tradema rk holderis entitl ed to maintain .” Shel l Oil Co. v. Commercial Petroleum , Inc. 928 F.2d 104 , 107 (4th C ir. 19 91 ) (quoting El Greco Leathe r Prods. C

o. v. S hoe World , 806 F.2 d 392, 395 ( 2d Cir. 1986)). The linings Barr sold were not genuine G rey- rock or BT

linings acc ording to this definition because they were not dis tributed under UBS’s qua lity control s. See id. Theref

ore, the purchase rs were actually confused a s to the genuine ness as well as to the origi n of the lini ngs.

We are of the opinion UBS proved their claim under the Lanham Act . The argum ents of AEP to the contrary

fail. A

EP’s actions pr

evented UBS from controllingthe quality

of its goods sold under its trademark and associated UBS wi th
an unapproved, inferior

produ ct. UB S ha d no desire to have the ir trade mark

and reputation

associate d with a pr

oduct AEP was re quired to take to the landfill . AEP
was re s ponsible for

placing una

pproved, i nferior g oods bearin g UBS’ s tradem ark and otherindicia of

UBS into the strea

m of c omm

erce. The ver

dict of the jury regardin g the Lan ham Act wa s in all re spects prop er given th e facts a nd the law . It wa s not-11-

error to deny a new trial to AE P on the Lanham Act issue.

B. The jury’s ve rdict was in consiste nt in th atit found A EP had violated the LanhamAct, but also found Lee Barr had not violated the Lanham Act.
AEP insists the c hancery court should

have granted a new trial because t he jury was “obviously confused” on the Lanham Act claim. AEP has failed to cite any
case law for

this proposit

ion and did not

provide thi s court wi th any p roof th e jury was conf used or did

not follow the court’s charge on the Lanham Act claim against AEP. We have fully discussed the Lanham Act and think it i s clear A

EP is lia ble for its violations of the Lanham Act. W e find nothing in this record establishing the jury was conf used.

C. The jur

y’s initi al award in th e amou nt of $130, 892.00 dollars and its award of punitive damages was improper. The jury awar

ded UBS com

pensatory damages, atto rney' s fees, and punitive damages. AEP claim s the compensatory dam age awar d was im

proper bec ause the jury relied sol ely on t

he dam ages prove d by UB S for the Lanham Act viola

tion including attorney 's fees. AEP a lso argues t he p unitive damages were im proper because they were

based on the jury 's com

pensatory award which was b ased on the violations of the La

nham Act and the L anha m Act does not prov ide for punitive damages. Finally , AEP argues the award of a ttorney’s fees wa s improper.

We find no err

or in the aw ard of dam

ages. As to the com

pensatory damages, there is no evidence the jury based its award solely on the Lanham Act vio lations . At the close of t

he trial, the court entered a directed verdict

in favor of UBS on its breach of contract claim against AEP . In addition, the jury determ ined on the verdict form thatAEP w as liable t

o UBS as a result

of AEP's misr

epresent ation, co nversion, and unfair competition. Thereafter , the jury awar ded UBS $130,892.0 0 plus court costs and additional attorney 's fees. The aw ard was in response to the foll owing quest

ion
on the verdict form: “

What damages do you aw ard [UBS] against [AE P]?” Thereis
no reason to b elieve the

jury 's awar

d was inte nded to com

pensate UBS for a

nything but all of the actions comm

itted by AE

P. More over, A

EP has f ailed to cite any cases supporting the proposition that the compensatory dam ages were improper under the-12-

state law clai ms or the Lanham Act claim.

UBS argues and we agree that punitive damages were appropriate in this case. The jury made the determination UBS was entitled to punitive damages. They determined

by cle ar an d co nvi nci ng e vid enc e th at AE P act ed i nte nti ona lly, malic iou sly, reckless ly, or fraudule ntly, and the tri al court a greed. AEP’s claim that punitivedamages were im proper is, in our opinion, incorrect. Ther e wa s an abundance of proof of

fraud , conver sion, and ot her intent ional acts by AE

P. The courtproperly charged the jury as to punitive damages and held a proper hearin g during which the jury heard applicable financial information. There was no error.

As to the a

ttorney ’s fee s, the cou

rt charge d the jur

y as f ollows: Under th e La nh am Ac t, i f li abi li ty ex is ts , th e Co urt ma y a ward attorney fees in an excep tional ca se. An exceptional case is one wherein the to rtuous act

ions of the d efendant are malicious, fraudule nt, delibera

te or wil lful. If

you fi nd that the

actions of

one or moreof the def

endants in t

his case violated either of the sectio ns in the Lanham Act ref erred to above, a

nd that such conduct was malicious, fraudule ntdelibera

te or wil lful, y ou s hal l so i ndic ate, fo r the c ourt ’s pu rpo se o n yo ur j ury ver di ct f orm. The jury indicated on the verd

ict form UBS had establishe d their ca se against A E P for unfair c ompet

ition and U BS should r e cover all

attorney ’s fee s. In his
mem orandum opinion of 26 Ap ril 1996, the trial court concluded there was overwhel ming pro of t hat AEP ac ted int ent ion all y, del ibe rate ly, a nd with bad faith. Therefore, the trial court dete rmine d this to be an exceptional case under the Lanham Act and awarded attorney’ s fees. We can find no error.

D. The cour

t's instructions as to thedirected verdict in favor of UBS confused the jury

AEP argues the

court fa iled to prop erly explain to t he jury its reason s for directingthe verdic t on the bre ach of con trac t is sue . Spe cifi call y, AEP co ntends the court ’s instructio ns failed t o properly

explain the eff

ect of the directed verdict on Barr’s mi srepresentation cla im aga inst AEP . We disagree . The c ourt not only explained why i t granted t he direct ed verdic t, but made it c lear the only iss ue it decided w as the cont

ract issue between UBS and AEP. The cha ncery court stat

ed: I do need to e xplain one thing to yo u before w e haveclosin g-13-

argum ents. There is a procedure known as a directedverdict in which the Court can decide a particula r issue or part of a

case or a ll of the case if the Court determines there ar e no fac ts in dispu te. In this case, I have decided that [UBS] has proven its c laim against [A EP] on the contra ct claim, breach of co ntract. The contract , you

will rec all, wa s that it re quired [A EP] to take the brakeshoes to the landfill. They did not get to the lan dfil l, for whatever reason, which you’ll decide, my c oncl usion i s that that constitutes a breac h of the contract and as a resu lt, that c laim, you wi ll no longer ha

ve to decid e, that pa

rt of the s uit. Likewise, you wi ll not have t o decide th e part of

the suit in whic h [AEP] has sued [U

BS] f or the contractprice because having breached the contract itself, [AEP] is not entitl ed to recover the contract price. Other than that, al l the other

parts of t he case will be for you to decide. Itis the opinio n of this cou rt that the se instruc tions proper ly inf orme d th e jurors o f their duties. In addition, the verdictform included a

space for the jury ’s deci sion in Barr’s misr

epresent ation clai m aga

inst AEP and did not c on tain an y quest ions regardin g AEP’ s and UBS ’s brea ch of contract clai ms. AEP’ s argum ent is wit hout meri t.

E. The argument of UBS' s counsel

was erroneou s and the

conduct of Lee Barr and his relatives during the course o f the trial were prejud icial to A E P resulting in a verdict based upon p assion, prejudice, and ca price.
AEP makes the f

ollowing argument in its brief: To further compou nd the ultim ate eff ect of the Cour t directinga verdictagainst D efendant AEP the Plaintif f's counse l made

a closing argum ent that was highlyprejudi cial and to tally outside of the record that state d as follow s: I need to tal

k to you a

bo ut the damages in this c ase. W e have proven, we subm

it, by a preponde

rance of the eviden ce, bre ach of contract which the Court has direct ed a ve rdict on, fraud, conversion

and unfair competition under the Lanham Act by fa lse designation

of origin a

nd tradem

ark infri ngement without t he quality control of

the Plaintiffs. It is for the Plaintiff to determ ine thatspecific quality control. They did so and the Defen dant s actions viol ated the L anham Act. ( empha sis added)
AEP argues the

underlined

language “was so highly prej udicial an d inaccur ate the Cou rtshould have g ranted a n ew tria l in this ca

use.” It is the opini on of this c our t thatthe language quoted above is not misle ading parti cularly

if the unde

rlined por tion is read in conjunc tion with the r est of the sentence. Once the entire sentence is r

ead, it becomes clear UBS 's attorney was sim ply stating UBS had satisfied its burden as-14-

to all of the

claim s and the co urt had dir ected a verdi ct as to one

of those cl aims. Such a sta

teme nt is neithe

r inaccurate nor hig hly pre judicial

.

AEP also conte nds the act io ns of Le e Barr and his family prejudiced AEP's
case. Specifi cally , AEP

argues on

one occas ion Reeves no ticed the B arr's c arry ing
on a conver sation wit

h a juror about a mutua l friend. AEP c laims : “In v iew of thi s verdictan inference can be dra wn that thi s type of improper contact with the jury was prejudicial to AEP. ” We donot believe such an inf

erence c an be so ea sily drawn. We find nothing in this record to suggest that the jury rendered a verdict based upon passion, prejudice, or caprice. To th e contrary, we are of the opinion the jury verdict was in all respects fully supported by the evidence.

F. The evidence as to the damages sustained f rom loss of profit b y UBS was ent irely specul ative.
“[L ]ost or expected profits are recover able as da mage s for bre ach of

contract , provided, they can be pro ved with r easonable certaint y, a nd are not in fact r emote or specula t ive.” Morristown Lincoln Mercury , Inc. v. Lots

peich P ublishing Co. , 42 Tenn. App. 92, 102, 298 S. W.2d 78 8, 793 (1956). I t is undispute d that for

purchasers to obtain BT or Gray-rock linings other th an those AEP converted, the purchasers would have had topurchase

the linings t

hroughan authorized distributor of UBS. It is also undisput

ed that UB S would

have manufactur ed and sol d those l inings. Thus, the sales of

the linings which AEP converted and which were not recovered displaced other UB S sales.

UBS presented proo f regar ding its inven

tory sy stem at trial. The last inventory taken prior

to the fir e was adm

itted in evi dence and i nventory documents
were refe rred to b y Halliburton. The testimony revealed that

on Saturday there were 51,440 linings to be taken to the landfill and on Wednesday there wereapproxim ately 3,200 linings at th e front of the building. UBS recovered 19,220 linings from Gedeck and Barr, but never r

ecovere d the rem

aining 29,0 20 linings. Additionally, UBS never recovered 200 pairs of

compl ete heavy

dutybrake shoe s whic h Barr s old t o Rus sell ’s Trailer Sales. There w as clear

and com petent evi dence re garding the average price per set, the percenta ge profit, and the net

p r ofit per se

t. This e vidence pr

oves with-15-

sufficie ntcertaint

y the a mount of lost pr ofits. Finally, the court charged the jury as to the law o f lost prof

its under th e Lanham Act. The court specifically instructed the jury thatspeculative damages were not permitted. He stated: “ You are not permitted to award a

party speculati ve damages, which m eans com pensation f

or future loss or harm which, a lthough possibl e, is conj ectural or not reasonably certain.” The court charged the jurythat UBS had the burden of establishing by a preponderance of the evidence all fact s necessa ry to p rove their

claim s and damages.
Moreover, we f

ind no merit to AEP’ s argument that no consideration was given to th e fa ct t hat so me linings were at the faci lity on W

ednesday , 28 July

1994. Hallibur ton testifi ed that the

re wer e approxim

ately 3,200 lining s in the facility on 28 July an d that UBS ’s com putation of lost profit s assum ed AEP took 3,200 li nings to the landfill. The truck drivers testifie d on behalf of AEP and presented no evidence to contradi ct Halliburton’s testim ony. A EP’s argum

ents are without m

erit.

G. There was no proof in the record to sup por t the ju ry's verd ict of $25,000.00 in favor of Lee Barr
Itis AEP’s contention that the trial court er red in not granting it

a new tr ial or
aremittitur because the jury ’s verdict “wa s totally

speculati ve and not f

ounded on any evidence in the record.” “Courts are encouraged to exerci se caution in ordering a new trial based on the

size of a jury verdict a nd should, if

at all possi

ble, utili ze therem

edy of remittitur.” Thrailkil

l v. Th railkill , 879 S.W .2d 836, 84 0 (Tenn. 1994). T he chancery court correctly denied Plaintiffs’ m otion for a new trial on this issue, however; it is the opinion of this court that the chancery court should have entered
aremittitur. When reviewing a jury award approved by the chancery court this court follows the standa

rd of revi ew set f

orth in Rule

13( d ) of the T ennessee R ules of Appellat e Procedure. Id. at 841, 843; see Benson v. Tenne ssee V alley Ele c. Coop. , 868 S.W .2d 630, 64 0 (Tenn. App. 1993) . That r ule provide s: (d) Findin gs of Fact in Civil Actio ns. Unless oth erwise required by statute, review of findings of fact by the trial cour t in civil a ctions shall be de novo upon the r

ecord of t

he trial c ourt, ac compa

nied by a presum ptio n of th e correc tness of the finding, u nless the preponderance of t he e vid enc e is oth erwi se. F ind ing s of fact by a jury in civil act

ions shallbe set asi de only if there is no material evidence to support the

verdict. Tenn. R. App. P. 13(d) (

West 1996).6 “This Court is not under any duty to minutely search a voluminous record to locate and examine matters

not iden tif

ied by ci tati on to th e record.” England v. Burns St one Co. , 874 S.W .2d 32, 35 (T enn. App. 1993 ). -16- “The proper measure of dam

ages for fra

ud is that the

injured party should be compensated

for actual inj uries susta

ined by placing him or

her in the same

position he or she would have been had the frau d not occurr ed. A pl aintiff who alleges fraud bears the burden of proving damages.” Harrogate C orp. v. S ystems Sales Corp
. , 915 S.W.2d 812, 817 (Tenn. App. 199 5) (citatio ns omitted). The evidence revealed the followi ng. Barr purchased the grade-all given to Reeves pursuant to the tra d e between Reeves a

nd Barr f or approxim

ately $10,500.00 . Barr

testifie d the value

of the grade-a

ll was bet ween $25, 000.00 and

$30,000.00 . Reeve s valued the grade-a ll at$18,000.00

. Pursuant

to the trade, Bar

r recei ved certa

in tools and $1 6,000.00 f

rom the sale of a

tow motor and the

brakelinings. Finally, Barr and his daughter testified thatthe Barr ’s and e ight em ployee s worked m

any hour s remo vin g item s from the fa cil ity. I n addition, Barr te stified tha t he incurr

ed additiona

l dama ges when t

he fram e to one of h

is trucks br

oke under th e weight o f the lining s.
Thus, a ssuming the grade-a ll was worth

$30,000.00 , Barr

lost $14,000 .00 from the trade and

incurred certain other expe nses. T he problem is neither

party has cited any portions of the re cord whic h evidence the am ounts of thes e other ex

penses. 6 From Barr’ s testim

ony we know that h e and his fa

mily gave up the i r time, he had employees to compensate, and had to pay for

truck repairs. The problem is that neitherthis court, the chanc ery c ourt, nor the jury knew the v alue of

these expenses. In other word s, Barr’s damages were $1 4,000.00 plus “X,” and thejury determ ined “X” equaled $11,000.00. It is the opinion of this court that there is no material evidence in the r ecord to su pport this f

inding and the

chancer y cour t erred i n not entering a remittitur.

H. The court failed to charge the jury with AEP 's request number four.
AEP’s final ar

gument is the cour

t should have

granted it

a new tr ial becau se itfaile d to ch arge t he jury wi th AEP’s fourth req uest. AEP ar gues its fou

rth reque st “wou ld have in par

t given som

e explana tion of the C ourts [sic ] actio n in direct ing the verdict.” It is the

opinion of this court that any error on the part of the chancery court-17-

in failing to charge

the jury with AE

P’s fourth request is harmless. To explain, given
our conclusion

as to AEP’s othe

r issues, it is clea

r the chan cery

court’ s instructi ons to the jury

sufficie ntl y expla

ined the j urors’ duties. T hus, it wa s not neces sary to provideany further explanation. If there w ere any error, it was harmless an d not a basis for a new trial. See Tenn. R. App. P. 36(b).

IV. Conclus ion
Therefore, it results that the j udgmen tof the chancery court

is affir med in part, reversed in part, and remanded. O n rem and, the chancer y cour t shall enter a r

emitt itur reducing the awa

rd to Lee

Barr by $5, 000.00 . Costs on a ppeal are taxed to defendant /appellant , American Environmenta l Protectio n, Inc., an d defendant/appellee, Lee Barr.

_________________ _________________

__ SAMUEL L. LEWIS, JUDGE

CONCUR:

_________________

_________________

___ HENRY F. T ODD, P.J., M.S.

_________________

_________________

___ BEN H . CANTREL

L, J.