### IN THE COURT OF APPEALS OF TENNESSEE AT NASHVILLE July 10, 2001 Session LAURENCE B. KANDEL, M.D.

v. THE CENTER FOR

UROLOGICAL TRE

ATMENT AND

RESEARCH, P.C., RA LPH C. BENSON , JR., M.D ., L. DEAN KNOLL, M.D. , and THE INSTITUTE FOR UROLOGI CAL RESEARCH
An Appeal from the Circuit Court for Davidson County No. 98C-1987 Barbara N. Haynes, Judge

No. M2000-02128-COA-R3-CV - Filed April 17, 2002

This is a breach of contract case . The plaintiff physicia n entered into an e

mployment c ontract

with the defendant physician’s group. The contract provided that the physician

would work for the group for one year, and that

the parties would then “negotiate in good faith” to give the employee physician the opportunity t o pu rchase stock in the group. At the end of the physician’s first yea r of employme

nt, the parties negotiated, but reached an impasse. Subsequently, negotiations ceased, and the physician’s employment was terminated. He filed suit against the group, al leging that the defenda nts breach ed the c ontract to “negotiate in good faith,” and that the defendants c ommitted promissory fraud in inducing him into signing the employment agreement. The trial court granted summary judgment in fa vor of th e defendants on both counts. The physician now appeals. We affirm. Even if Tennessee recognizes a c ause of action for breach of an agr eement to negotiat e in good faith, the evide nce does no t demonstrate such a breach, and does not establish promissory fraud. Tenn. R. App.P. 3 Appeal as of Right ; Judgment

of the Cir

cuit Cour

t is Affir med.

H OLLY K. L ILLARD , J., delivered the opinion of the court, in which W. F RANK C RAWFORD , P.J., and D AVID R. F ARMER , J., joined. Alfred H. Knight and

William R. W

illis, Willis & Knight, Nashville, Tennessee, for the appellant Laurence B. Kandel, M.D.

R. Dale Grimes, Bryan E. Larson, and Andrea T aylor McKellar, Bass, Berry & Sims, Nashville, Tenness e e, for the a

ppellee s The Cent

er for U rologica l Treatme nt and Res earch, P.C., Ralp h C

. Benson, Jr., M.D., L. Dean Knoll, M.D., and The Institute for Urological Resear ch.-2- OPINION

This is a breach of contract case . In the spring of 1996, plaintiff/appellant Laurenc e B

. Kandel, M.D. (“Dr. Kandel”), was engaged in the academic practice of urology in the state of New York. During tha

t time, Dr. Kandel e

ntered into negoti ations wit h defend ant/appe

ll ee Ralph Benso n, M.D. (“Dr. Benson”), and defendant/appellee Dean Knoll, M.D. (“Dr. Knoll”), the sole shareholders in Defend ant/Appe

llee The Ce nt er for Urological Treatment and Resea rch, P.C. (“CUTR”), regarding Dr. Kandel joining CUTR as an employee in the practice of urology.

In July 1996, the partie s executed a contract, effective as of September 15, 1996. The contract contained the following provision:

10. Agreem ent

to Negotiate in Good Faith Toward Purchase of Equi t y Ownersh ip

. Th e Emplo yer agrees that in the event Employee remains
co ntinuously

employed by Employer for a period of one (1) yea r andha s a ch ievedBoard Certification through the American Board of Urology, Employer will negotiate in good faith with Employee to allow Em ployee to purcha se from Employer that number of shares of Employer’s stock which will permit Employee to own the same number of shares as the stockholder holding the most share s of Employer’s stock at that time. Employer anticipates that the purchase price of such stock shall be based on the GAAP book value of the Employer as of the date of the purcha se. (Emphasi s added). Thus, the contr act cont ained a p rovision r equiring the part ies to “ne gotiate in good faith” the sale to Dr. Kandel of an equal owne rship share in CUTR at the exp iratio n of one year.
Dr. Kandel remained Board certified, as re quired under his agr eement, and completed his first year of practice at

CUTR. Towa

rd the end of his first year, Dr. Kandel raised to Drs. Benson and Knollthe issue of becoming a partner in CUTR pursuant to the terms of the contract. Dr. Kandel alleges that Drs. Benson and Knoll init ially told him that he would have to wait another year before he became

eligible to buy into the practice. When Dr. Kandel insisted that he had a contractual right to enter into good faith negotiations for the purchase of CUTR stock, the part ies bega n to negoti ate Dr. Kandel’s buy-in. Beginning in Septemb er 1997, CUTR made the first of sever al offe rs t o Dr. Kan del. The parties agreed on many ter ms of the buy- in, such as the formula to be used in determining the amount of Dr. Kandel’s compensation, the formula to be u se d to calculate the amount of Dr. Kandel’s buy-in, and t he te rms of the covenant not to compete. Regarding the amount of Dr. Kandel’s buy-in, the parties contemplated that Dr. Kandel would buy his stock for an amount equal to one-third of the group’s net asset value (assets less liabilities). This would total app roximate ly $141,000, based on

a valuat ion of the group tha t include d over $5 00,000 in a ccounts receivable. The parties disagreed, however, on the method for c alcula ting the stock redemption value. CUTR-3-

proposedthat, upon

terminat ion of Dr. Kandel’ s employme nt, he would sell his stock toCUTR for its book value “provided that no va lue shall b e assigne d to acco unts receivable.” At the time of the negotiat ions, eliminating accoun

ts receivable from the equation would have ca used the book value of the stock to drop to an amount below zero. However, under CUTR’s proposal, if Dr . Kandel were terminatedhe woul d have be en entitled to a “severance pay” in a n amount equal to 90% of the accounts receivable attributable to the service s rendered by Dr. Kandel.

Dr. Kandel refused CUTR’s proposal, asserting that it was not made in good faith be cause it required him to pay $14 1,000 for

stock tha t would be

essentia lly worthl ess if he

were re quired to immediate

ly redeem it. In response, CUTR defended its proposal to Dr. Kandel as it rela ted to the stock redemption terms. In a letter to Dr. Kandel’s attorney da ted November 12, 1997, counsel for CUTR explained:
[I]t is [ ] true that Dr. Kandel could be fire d the day afte r he buys into CUTR. However, Dr. Benson’s and Dr. Kn oll’s executed Employment and Redemption Agreeme nts also c ontain

similar “without cause” termination provisions that allow CUTR to terminate their employment without cause at any time without requirement of prior notice.

* * *
However, [you] er

roneousl y assume[

] that Dr . Kandel

would re ceive $0

if his employment with CUTR was terminated the day after he completed h is buy-i n or at any other time. To the cont rary, Dr. Kandel would potentially receive two payments

. First, Dr. Kandel, if termin ated, is e ntitled to r

eceive 90% of hisaccoun

ts rece iva ble . . . . This p ayment wo uld resul t in a larg e paymen

t to Dr. Ka

ndel. Specifically, since Dr. Kandel’s accounts re cei vable at the end of October approximated$93,000, D r. Kande l would be entitled to a

payment o f approx

imately $84,000. It is important to not e, however , that Dr. Kandel’ s curre nt accou nts receiv able

are significantly deflated solely because he took a considerable amount of time off during September. A more representative example may be Dr . Benson’s
accoun ts receivable as of October 31, 1997, which approximated $152,000. Under
a similar provision in Dr. Ben so n’s Employment and Redemption Agreement, Dr. Benson, if terminated, wou ld be entitled to a payment of approximately $137,000, or 90% of his accounts receivable.

Even though this payment m a y not equa l or surpa ss Dr. Ka

ndel’s bu y-in amount, it represents a fair price of admission to an esta blished a nd highly regarded medical practic e. It is a

lso import ant to note

that Dr. K

andel is n ot being a sked to pay any amount for goodwill or name, which direct benefit he will re ceive immediate

ly upon be coming a s harehol der witho ut any dir ect cost to him. (Footnote omitted).-4-

In a l etter dated Novembe r 26, 1997 , Dr. Kandel made a counte r-propo sal to CUTR, proposing, among other

things, that the redemption value of his stock b e deter

mined ac cording t

o the same for

mula utilized in the purchase of his stock. Significantly, Dr. Kandel’s proposal sought to recover this stock redemption value in addition to the “severa

nce pay” provision in CUTR’s proposal

. In a letter dated December

4, 1997, CUTR rejected that request, asserting that “[s]uch a n unfair provision would allo w Dr. Ka

ndel to dou

ble dip into

CUTR’s accoun

ts rece ivable” and would give Dr. Kandel rights greater than those held by the

other sto ckholder s, Dr. Ben son and Dr . Knoll. The December 4 letter stated that it was CUTR’s “final offer” to Dr. Kandel, and wa s set to expire
on December 8, 1997. In response, Dr. Kandel argued that his proposal wa s fair in lightof the fact that CUTR could terminate him without cause. Dr. Kandel also expressed regret that CUTR w ould notagree to give him a position on the group’s board of direc tors , nor the r ight of fir st refusa

l to purchas e the group in

the event a third party offered to buy it. On December 8, 1997, because Dr. Kandel would not accept CUTR’s “final offer,” his employment was terminated.

On July 20, 1998, Dr. Kand el sued CUTR, Dr. Benson, Dr. Knoll, and The Institute for Urological Research (“IUR”), a non-prof it corporation in which Drs. Benson and Knoll have an interest

. In count one of the complaint, Dr. Kandel alleged that CUTR, Dr. Benso n, and Dr . Knoll breached their contract to negotiate in good faith with Dr. Kandel to allow him to

purchas e stock in the group. In count t wo, Dr. K andel alleged tha

t CUTR bre ached it s obligatio n under h is employment

contract to pay him certain bonuses described in the agre ement. Finally, in

count three, Dr. Kandel asserted a claim for promissory fraud a lleging that the Defendant s induc ed him into signing the employment contract by promising that he could become a shareholder in IUR at the end of his first year of employment. Dr. Kandel asserted that Drs . Benson and K noll “knew said promises were false whenthey made them.” Dr. Kandel sought compensatory damage s including, butnot limited

to, lost sa lary, lost profits, lost bonuses, and the loss on the sale of his New York residence.

In response, the defendants filed a motion for summary judgment. On January 15, 1999, the trial court held a hear

ing on the m

otion. On Fe

bruary 4 , 1999, the

trial cou rt granted s ummary judgmentto the defendants on count one (breach of c ontract) and count three (promissory fraud) of the complaint, but denied summary judgment with respect to count two (employment bonus). On August 23, 2000, the trial court entered an order noting that the claim in count two had been settled and making the February 4 order final and appeala ble. Dr. Kandel now appeals the order e nt ere d on February 4, 1999.

Dr. Kandel a

rgues on a ppeal tha t the tria l court e rred in granting summary judgment in favor of the defendants. He claims that a contract to “ne gotiate in good faith” is enfor ceable in Tennessee, and that the facts of this case would support a finding that the defendants breached their duty under his employme

nt agree ment to negotiat

e in good f

aith. Dr. Kandel f

urther a rgues tha t the fac ts of this
case would suppor

t his claim

for dama ges unde r a theor y of promi ssory est

oppel.

W e review t

he trial c ourt’s gr

ant of sum

mary judg ment de novo with no pres umption o f
correctness. Warren v. E state of Ki

rk , 954 S.W.2d 722, 723 (Tenn. 1997) (quoting Bain v. Wells ,1 The trial cou rt’s ord er did not indicate the basis f or its dis missal of Dr. Kand el’s claim. In light of t he court’s dispo sition o f the m atter, the parties both add ress the issue o f enfo rceab ility on app eal.

2 Th e arg um ents o f CU TR app ly to all d efen dan ts exce pt w here othe rwise indic ated.
-5- 936 S.W.2d 618 , 622 (Te nn. 1997) ). Summ ary judgmen t is appro priate w here “t he plead ings, depositio ns, answer s to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving par ty is entitled to a judgment a s a matter

of law.”Tenn. R. Civ. P. 56.03. We must view the evidenc e in a ligh t most favora ble to the nonmoving party, giving that party the benefit of all reasonable inferences. Warren , 954 S.W.2d at 723.

Dr. Kandel f

irst argu es that a

contract to “nego tiate in go od faith, ” such asthe provi sion in his employment contract, is enforceable in Tennessee

. 1 He notes that, evenwhere a contract does notcontain a

specific provision

to that ef fect, every con

tract is subje ct to an implied covenant of
r easonab le and good faith performance. See Covington v. Robinson , 723 S.W.2d 643, 645-4 6 (Tenn. Ct. App. 1986) (concluding that the purchaser’s refusa l to perform in good faith constituted
a default of their c ontract

ual obliga tions); see also Safec o Ins. Co. of Am. v. City of White Hou se , 36 F.3d 540, 548 (6 th Cir. 1994) (r elyin g on the proposition that, according to Tennessee law, “standards of good faith a nd fai r dealing [are] implied in every contract,” quoting Misco, Inc. v. United States Steel Corp. , 784 F.2d 198, 203 (6 th Cir. 1986)).

Dr. Kandel also cites two cases in which marital dissolution agreements requiring the parties to “negotia

te in good fa

ith” pote ntial modif

ications r elating to child supp ort, alimony, a nd prope rty allocation were enforced. Bruce v. Bruce , 801 S.W.2d 1 02, 103-04 (Tenn. Ct. App. 1990); Threadgill

v. Thread

gill , 740 S.W.2d 419, 424 (T enn. Ct. App. 1987). In Bruce , the husband argued that the agreement to negotiate was an inval id “agreement to agree.” This argument wa s reject ed because the marital dissolution agreement “is not an agree ment to agree in the future. A ‘contract may provide for modif

ication, and contr

acts whic h provide for subsequent cha

nges ther ein
are not unusual.’ ” Bruce , 801 S.W.2d at 106. In Threadgill , as in Bruce , the par ties’ duty to negotiat e modifica

tions in the original marital dissolution agreement arose if the parties experienced
a change in circumstances warranting such a modification. The appella te court determined that the parties’ circumstances had not changed so as to trigger any obliga

tion to negotiate. Threadgill , 740 S.W.2d at 424. Consequently, the Threadgill court did not reach the issue of whether the provision to “negotiate in good faith” was enforceable

. CUTR argues that the curre nt jur isprudence indicates an unwillingness to enforce an agreement to “negotiate in good faith.” 2 In suppor t, CUTR cite s EnGenius Entm’ t, Inc . v . Herenton , 971 S.W.2d 12 (Tenn. Ct. App. 1997). In EnGenius , the plaintiff developer was selected by the defe

ndants City

of Memphi s and Shelb y County to d evelop le asehold

space in The Pyramid,
a publ ic arena in downtown Memphis. The defendants’ written Reque st for Proposals (“R FP” ) provided that, upon the selection of a developer, the specific r ent structure wou ld be negotiated betweenthe parties. The defe ndants later demanded a $50,000 non-refundable f ee from the-6-

developer for the right

to negotiate a

lease with the defendants. EnGenius , 971 S.W.2d at 15-16. The plaintiff developer refused to pay the fee, so the defendants terminated further negotiations and told the plaintiff that it would not be used as the cont ractor on th e project. Id. The plaintiff developer filed a lawsuit alleging breach of contract, cla iming, among oth er things, that the defenda nts breached their “obligation to deal with [plaintiff] fairly and in goodfaith to pr oceed w ith the development of the Leasehold Space of the Pyramid.” Id. at 17.
The trial cou

rt dismisse d the comp laint. On a ppeal, th e appell ate cour

t held tha t the RFP requiring the parties to negotiate was not an enforceable agreement. Id. at 17-18. The cour t reasoned that when parties agree to pr epare and execute a fina

l written agreement, “it is necessary that agreement shall have been expresse d on all essential terms that are to be incorporated in the document. . . . The so-called ‘contract to make a contr act’ is not a contract at all.” Id. (quoting 1 Arthur L. Corbin, et al., Corbin on Contracts § 2.8, at 133-34 (Rev. ed. 1993) (footnotes omitted)). Because the part ies had not previou sly agre ed on the e ssential t erms of the rent structure, the court held that “no agreement existed between the parties regarding EnGenius’s development and lease of The Pyramid space. . . . At most, the docu ments evinced an agree ment betw een the p arties to negotiate in good faith to reach a final lease agreement .” Id. at 18 (emphasis added).

The EnGenius c ourt then cited cases holding that agreements to “negotiate in good faith”
are enforceable under cer tain circumstances. See , for example, Arcadi an Phosp hates, Inc. v. Arcadian Corp. , 884 F.2d 69 (2d Cir. 1989) (under New York law). In Arcadian Phosphates , the Second Circuit Court of Appeals, interpreting New York law, described two types of preliminary
a greeme nts. In the first type, the parties agree to later for malize a contract about which there ha s been complete agreement on all of the essential issues . In the second type, the parties have committed themselves to some of the major ter ms, but othe

r essent ial terms remain

to be negotiated. Arcadian Phosphates , 884 F.2d at 72. Under New York l aw, the exi stence of open terms in the secondtype of preliminary agreement is not fatal to its enforcement. See Teac hers Ins. & Annui

ty Ass’n v. Tribune Co. , 670 F. Supp. 491, 498 (S.D.N.Y. 1987). This is because the parties are bound to their ultimate contractual objective. Id. In the second type of preliminary agreement, the parties
are bound “in the sense that they accept a mutual co mmitment to n

egotiate together in good fa

ith in
an eff ort to reach a final agreement within the scope tha t has been settled in the prelimina r y agreement.” Id. , quoted in Arcadian Phosphates , 884 F.2d at 72.

In the instant case, CUTR asserts that EnGenius stands for the proposition that an agreement to negotiate is enfo rceabl e only if it is the first type of preliminary agreement, i.e. only if the essential terms of the contemplated agreem ent have alread y been de termined . Indeed , some cou rts adhere to this general rule. See, e.g., Mohrenweiser v. Blomer , 573 N.W. 2d 704, 706 -07 (Minn . Ct. App. 1998) (holding that an agreement to “negotiate in good faith,” like a letter o f intent and a ny other type of agreement to negotiate in the future, is unenforc eable). Other courts conclude that such a provision is unenforceable because of the vagueness of such a contrac t. Se e, e.g., Ohio Calculating, Inc. v. CPT Corp. , 846 F.2d 497, 501 (8 th Cir. 1988) (under Minnesota law , determining that a co ntract to negotiat e is unenf orceab le beca

use it is va

gue and u ncerta in as to the intentof the parties). Still other courts refuse to enforce a contr act to “negotiate in good faith”3 As we discussed above, Dr. K and el cites au thor ity ind icating that the duty to ba rgain in go od f aith is im plicit

in all con tracts und er Ten ness ee law . The duty imp osed by a con tractu al agr eem ent to “neg otiate in goo d faith ,” how ever, is dist

inguishable from the co mm on-law du ty to barg ain in goo d fait h. See Channel Hom e Centers v. Grossman , 795 F. 2d 291, 299 n.8 (3d Cir. 1986); Ven ture A ssocs . Cor p. v. Z enith Data Sys . Corp. , 887 F. Supp. 1014, 1017 (N.D . Ill. 199 5). T hus , the au thor it y on which Dr. Kandel rel ies does not support t he positi on that Tennessee courts would enforce agreements to “negotiate in good fait h.”
-7- because of the difficulty in ascertaining an appropriate remedy for the brea ch of such a clause. See, e.g., Jenks v. Jenks , 385 S.W.2d 370 , 376 (Mo. Ct. App. 1964) (holding that “equity will not indulge the futility of ordering the parties to ‘me et together’ to ‘discuss in good faith’ the very problem on which they have demonstrated their inability to agree”)

. The instant case involves the second type of preliminary agr eemen t, an agr

eement to “negotia te in good faith” wheresome essential terms are left to negotiation. The parties agreed tha t Dr. Kandel would be e

ligible to buy-in a

fter one year of employme

nt, that he would be e

ntitled to purchas e one third of the group’s stock, and that the stock price would bedetermined acco rding to the GAAP book value as of the date of purchase. Howeve r, the stock redemption value, among other items, had not been negotiated prior to the signing of the original employment agreement.

I n this case, we ne ed not deter mine whether such a preliminary agreement would be enforc eable

under Te nnesse e law. 3 Even if Tennessee courts would recognize a cause of action based on such a provision, our review of the record indicates that no reasona ble trier of fact could find that the defendants breached their duty under the circumstances.

Dr. Kandel maintains that the d efenda nts brea ched the ir dutyto barga

in in good f

aith bec ause they insisted on

terms that wer

e unrea sonable

on their face. “[A] party might breac h its obligation to bargain i n good fa

ith by unre asonably

insisting on

a conditi on outside

the scope

of the pa rties’ preliminary agreement.” A/S Apothekernes Laboratorium v. I.M.C. Chemical Group, Inc. , 8 73 F.2d 155,158 (7 th Cir. 19 89). In his ple adings, Dr. Kande l assertsthat, although the d efenda nts adoptedminor ter

ms that h e requested, their “proposals always contained te rms and conditions which allowed CUTR to terminate Dr. Kandelwitho ut cause at any time

thereby causing h

im to forfeit more than $141,000 and thereby precluding him from competin g with the D efenda nts inthe middle-Tennessee area for one year.” Thus, Dr. Kandel describes the “worst-case scenario,” a rguing that he could buy into the company for approximately $141,000, be fired without cause the very next day, be required to forfeit the $141,000 paid for his stock, and be pr evented from practicing urology within a 50-mile radius for one year.
However, a number of significant factors are o mi tted from Dr. Kand

el’s ana lysis. First , under his own “worst-case scenario,” though he would not receive compensation for his stock, he would be entitled to receive compensation under the “seve rance pay” provision of the agreem en t, which he acknowledges is a substantial amount. Second, under the terms pro posed by CU

TR, if Dr. Kandel remained with the group ove r any len gth of time , he would likely re ceive a

n amount f

or his stock in addition to the severance pay. In addition, although Dr. Kand el notes CUT R’s proposed4 Th e no n-co mp ete ag reem ent in Dr. B enso n an d D r. Kn oll’s co ntrac ts, and the o ne p rop osed to D r. Ka nde l,

pro vide s that the phy sicians cann ot co mp ete w ithin th ree y ears fro m th e tim e they pur cha se their stock

. -8- contract would prevent him from competing with the defendants within a 50-mile radius for a period of one year from termination, that non-compete provision was actually negot iate d by Dr. Kandel and in cluded athis reque st. 4 Under Dr. Kandel’s proposal, his stock redemption value would be calculated

in the same manner as the stock purchase price . Under this proposal, Dr. Kandel would be entitled, upon termination, to receive his stock value ($141,000) in addition to the severance pay, which would result in a substantial windfall to Dr. Kandel. It must also be noted that the contract first proposed by CUTR to Dr. Ka nde l was essentially the same in all pertinent respects as the agreem ents signed by Drs. Benson and Knoll. Dr. Kandel requested severa l minor changes that were adoptedby the defendants, including adding a provision for a specific leve l of salary, allowing Dr. Kandel a minimum of four weeks paid vacation, and allowingDr. Kandel to participate in CUTR’s employer-sponsored

group insu

rance plans and any group-sponsored qualified retirement plan. Under these circumstances, we must conclude that no trier of f act could reasonably find that the defenda nts negotiat

ed in bad fait h. Thus, we affi

rm the tri al court ’s grant

of summar

y judgment

in favor of the defe ndants on c ount one o f the com plaint.

Dr. Kandel next argues on appeal that the trial court e rred in granting the defendant s summary judgment o n count thr ee of hiscomplain

t, purportedly based on the theory of promissory estoppel

. A “ claim of promissor y estoppe l is not dep endent up on the exi stence o f an expr ess contr ac tbetween the parties.” EnGenius , 971 S.W.2d at 19. Under that theory of recovery, a plaintiff can rec over if, by the pro mises of a nother, h e is induc ed into changing his situati on. “This theory of recovery is sometimes refer red to as‘detrime

ntal reli ance’ b ecause , in addition to showing that the defe ndant mad

e a promi se upon which the plaintiff reasonably relied, the plaintiff must show that this reliance resulted in detriment to the plaintiff.” Id. at 19-20 (footnote omitted). Dr. Kandel argues that the defendants are liable to him under this theory because they made

oral pro mises to him which induced h

im to move hi s f

amily from New York to Tennessee and to incur substantial expenses related to his relocation.

In reviewing Dr. Ka

ndel’s c omplaint, however , he alle ges that th e defendants ar

e liable t o him on a theory of promissory fraud, rather than promissory estoppel. I n count three of the complain t, Dr. Kandel asserts that the defendants induced him into signing the employment contract withCUTR by promising him that he could become a shareholder in IUR at the end of his first year of employment. Dr. Kandel states in his complaint that Drs. Benson and Knoll “knewsaid promises
were false when they made them.” In other words, Dr. Kandel asserts a claim for “fraud in the inducement.”
The Tennessee Supreme Court “has not adopted t he d octrine

of promiss ory fra

ud in Tennessee, but has merely indicated a willingness to consider adopting the ru le ‘in a proper case where justice demands.’” Farmers & Me rchant’s Bank v. Petty , 664 S.W.2d 77, 80 (Tenn. Ct. App. 1983) (quoting Fowler v. H appy Good

man Family , 575 S.W.2d 496, 499 (Tenn. 1978)). To-9-

establish a claim for promissory fraud, a claimant must show that, at the time the promise

was made, the person making the promise had no intention to perform. Fowler , 575 S.W.2d at 499. The party alleging promissory fraud bears the burden of proving that the def endants who made the promise had
no present intent to perform at the time the promise made. Brungard v. Caprice Records, Inc. , 608 S.W.2d 585, 590 (Tenn. Ct. App. 1980). The Tennessee Supreme Court is unwilling to apply the doctrine “except in those cases where there is direct proof of a

misrepresentation of actualpresent intention.” Farmers & Me rchant’s Bank , 664 S.W.2d at 82.

In this case, the record contains no evidence to support Dr . K andel’s claim that the defenda nts fraudulently induced him into signing his employment agreement. There is no evidence to show that the defendants either made any misre

present ation with respec t to IUR, or that any such misrepresentations were kn own to be f alse. In fact, the employment agreement signed by Dr. Kandel indicates that the p arties w ould agree, afte r a year , to negoti ate in goo d faith “to pur chase from Employer that numbe

r of shar es of Empl oyer’s s tock which will per mit Employee to own the

same number of share s as the sto ckholder holding the

most shares of Employer’s stock at that time.” Under the contrac t, “Employe r” was CUTR, with no reference made to IUR. Therefore, the trial court did not err in granting summary judgment to the defendants on Dr. Kandel’s claim for re lief based on promissory fraud.
The decision of the trial court is affirmed. Costs are to be taxed to the appellant, Laurence B. Kandel, M.D., and his surety, for which execution may issue if nece ssary.

___________________________________ HOLLY K. LILLARD, JUDGE