# FILED February 12, 1998 Cecil Crowson, Jr. Appellate C ourt Clerk IN THE COURT OF APPEALS OF TENNESSEE WESTERN SECTION AT JACKSON

______________________________________________ ROBERT B. MARTIN, Plaintiff-Appella

nt, Vs. C.A. No. 02A01-9708-CV-00179 Shelby Law No.: 84079 UNION PLANTERS CORPORATION; AND UNION PLANTERS NATIONAL BANK, Defendants-Ap

pellees.

________________________________________________________ ____________________ FROM THE CIRCUIT COURT OF SHELBY COUNTY THE HONORABLE ROBERT A. LANIER, JUDGE

Jef Feibelman, Susan M. Clark; Burch, Porter & Johnson

of Memphis, For Appellant J. Richard Buchignani, Ross Higman; Wyatt, Tarrant & Combs

of Memphis, For Appellees

AFFIRMED AND REMANDED

Opinion filed:

W. FRANK CRAWFORD,

PRESIDING JUDGE, W.S. CONCUR: DAVID R. FARMER,

JUDGE HEWITT P. TOMLIN, JR., S ENIOR JUDGE This is basically a contract interpretation case. Altho u gh the complaint of plaintiff, Robert D. Martin, again st defendants, Union Planters National Bank (UPNB) and Union Planters1 The original complaint named only UPNB as the defendant, and by subsequent

amendment UPC was a

dded as a party de

fendant. Plaintif

f had contracts w

ith both defendants, which, except for the defendants’ names and the contractual amounts, were identical. 2 Corporation (UPC) 1 , has other theories of recovery, the primary f ocus of th e suit is for a declarationof rights and obligations under the contract between the parties and

alternatively for plaintiff’s recovery agai

nst the defendan

ts on the theories o

f u njust enrichment or quantum meruit

. In response to the complaint, defendants filed a motion to dismiss for failure to state a claim upon which relief can

be granted. Because the trial court considered matters outside the pleadings, the motion was tre ated as a summary judgment motion. On May 6, 1997, the trial court entered an order granting summary judgment to defendants, d ecl aring that plaintiff forfeited his rights under

t he contracts in qu

estion, and dismissin

g plaintiff’s act

ion with prejudice. Plaint

iff has appeale

d and presents two

issues for revie

w, as stated in his br

ief: 1. Whether

the trial court erred in its interpretation of the parties’ contracts that Martin has forfei ted his rights to receive deferred compensation. 2. Whether the tria

l court erred in f

inding that t

he forf eiture provision of paragraph 10 is enforceable

again s t Martin and denying Martin’s recovery on th e basis of unjust enrichment or quantum meruit

. The facts a

re undisputed. Martin, Chairman of the Board of Directors and Chief Executive Officer of Prof fitts , Inc., becam e a member of the Boards of Direct

ors of both defendants

in December of 1985. As Director, Martin wa s offered th e option of taking the customary director’s fee or entering into a director’s deferred compensation plan sponsored by eachof the defendan

ts. Under the plan

s, Martin could def

er all or any po rtion of his annual director’s fee in order to

take advantage of pretax

investment growth. The plan’s purposes and objectives were

explained to Martin in a document furnished by defendants titled, “Summary and Conclusion,” whic

h states in pertine

nt part as follows: The pur

pose of this program is to provide a more attractive means of compensa

tion for those executives and directors who elect to defer th

eir fees. The bank’s net cost to adop t the pla n is designed to be the sameas paying current

cash fees. This permits each executive or director to elect between current and future income.3 The cash value of each insurance policy is an unrestricted asset of the bank. The bank may borrow this cash value to genera te income for the bank.

* * * On December 31, 1985, Martin entered into a Director’s Def erred Com pensation Agreement with bo

th UPNB and UPC and the two agreements provided that Martin would be paid a total of $1,404,820.00 in 120 equal monthly installments following his 65th birthday or his death, provided Martin served at least five years as a director. Each agreement recites that it is premised upon the bank’s recognition of the faithful efforts of the directors, that the bank recognizes that the director’s future services are vital to the bank’s “continued growth and pro fitability,” and that the bank desires to compensate the director and “retain his fu tur e services.” The pertinent three paragraphs of the con tracts whic

h are involved in th

e dispute before the Court

are as follows: 7. During the period of r eceipt of monthly installment paymentsfrom Union Planters, the Director shall not, directly

or indirectly, enter into, or any manner take part in any business, profession or other endeavor, either as an employ ee, agent, independent

contractor, adv

isor, consultant,

o wner or otherwis

e in the St ate of T ennessee, which, in the opinion of the Board of Directors of Union Planters, shall be in competition with the bus iness of

Union Planters. The opinion of the Board of Directors of Union Planters shall be conclusive for thepurposes hereof.

* * * 10. The Director sha

ll forfeit all righ

ts in and to any bene

fits payable under the terms of

this Agreement if (a) the Director dies by suicide (whether sane or insan e) within three years after the execution hereof, (b) if the Director f ails to observe any of the terms of this Agreement

and conti

nues su ch observance failure for a period of 20 days after Union Planters shall have requested him to abide by the same

, or (c) if the Dir

ecto r enters int o any business described in paragraph 7 above; then, and in such event, no further paymen ts shall be due or payable by Union Planters hereunde r to the Director, his Beneficiary or estate, and Union Planters shall have no further liability hereunder.

* * * 14. The Board of D irectors of Union

Planters ma

y, in its discretion, establish a committee of three(3) of its members who are not parties to contrac ts similar to this Agreement and who shallbe responsible for

construing the terms hereof, making the determinati

ons p rovided for herein. The Committee’s construction and interru ption [sic ] of this Agreement shall be final and binding on the parties hereto.4 Martin served on both defendants’ Board of Directors from December, 1985, toApril, 1994. In approximately October, 1994, Martin began serving as a director of First Tenne ssee National Corporation, and w as serving on that b

oard at the time of

the hearing in this

ma t ter. Martin concedes that First Tennessee is Union Planters’s chief competitor. In March, 1996, Martin wrote a letter to Kirk Walters, Treasurer of UPC, to inquire about the agreements, in particular the beneficiary designation and the value of the benefits under the deferred compensation plans. Martin’s attention to the agreements was precipitated at l

east in part by his recei

pt of a statement r

egarding an insur

ance policy purc

hased by UP. In re

sponse to Martin’s inquiry, Walters informed Martin that he had received the insurance policy statement in error because

as s t ated in the agreement the policy was owned by Union Planters. Walters also advised Martin that pursua nt to the terms of the agreement, Martin had forfeited his right for deferred compensation under the agreements by becoming a director of First Tennessee

. Martin thereupon filed the present suit, and after

so doing, a special committee of UPNB and UPC boardmembers met on January 23, 1997, pursuant to Paragraph 14 of the agreement to consider whether Martin had forfeited his rights under the agreements by becoming a Firs t Tennessee director. Thecommittee determined that Martin had forfeited his rights and found, among other things,

as follows:

. . . this Committee is of the opinion thatR. Brad Martin’s present membership

on the boardof directors of First Tennessee National Corporation constitutes “enter[ing] into, or [in] any such manner tak[ing] part in any bus iness, p rofession or other endeavor . . . which . . . shall be in compe tition with the busi

ness of ” [Union Planters], within the meaning o f that phrase

in numbered paragraph 7 of the Agreeme

nt[s] , which opinion, pursuant to numberedparagraphs 14 and 7 of the Agre ement[s], shall be “conclusive” and “shall be fi na l and binding on the parties hereto” in connection with the con struing and interpreting the Agreement[s]. NOW, THEREFORE, BE IT RESOL VED that this Committee has determined, pursuant to numbered paragraph 10 of the Agr eement[ s], that R. Brad Martin h as “forfeit[ed

] all rights in and to any benefits payable under the terms of” the Agreement[s]; and that pursuant to Paragraph 10(c) . . . “ no fur ther payments shallbe du e or payable” under the Agreement[s] by [Union Planters] to R. Brad Martin, hi s B eneficiary designated in the Agreement[s], or

his estate; and tha

t [Union Planters] “shall

have no further liability” under the Agreement[s]. We will consider Martin’s first issue: The trial court, in granting summary judgment to defendant,

determined that there was no ambiguity in the con tract, and that the express intention5

of the parties is th

at if the “plaintif

f goes into a busine

ss in competition with

the defendant,

he forfeits his rights under the contract, whether benefits have becom e payable or not. ” Martin asserts that the trial court

erred because the operative provision of the contract is Paragraph 10, which specifically pro vides forforfeiture only when the Directo

r “enters into an

y business described in Paragraph 7,” and that the Director did not enter into any business. Martin argues that the provisions of Paragraph 10 limit the forfeiture pro vision to entering in

to any business, while the provisions of Paragraph 7 are much broader and include taking part in any business, profession, or endeavor as an advisor, consultant or otherwise, and that Martin could not be in violation of Paragraph 7 because that paragraph becomes operable only

after the director begins drawing benefit

s. We agree with the tr

ial court’s inter

pretation of the c

ontract. The interpretation of a written agreement is a matter of la w and not of fact. APAC-Tennessee v. J. M. Humphries Constr. Co. , 732 S.W.2d 601, 604 ( Tenn. App. 1986). The cardinal rule for interpretation of contracts is to ascertain

the intention of the parties from the contract as a whole and to give effect to that int e ntion consistent with legal principles. Winfree v. Educators Credit Union , 900 S .W.2d 285, 289 (Tenn. App. 19 95); Rainey v. Stansell

, 836 S.W.2d 117 (Tenn. App. 1992). In construing contra

cts, the words exp

ressing the partie

s’ intentions should

be given their usua

l, natural, and ordinary meaning. Taylor v. White Stores, Inc. , 707 S.W.2d 514, 516 (Tenn. App. 1985). In the absence of fraud or mistake, a contract must be interpreted and enforced as written,

ev en though it contains terms which may seems harsh or unjust. Heyer-Jordan & Assocs. v . Jordan , 801 S.W.2d 814, 821 (Tenn. App. 1990). We, like the trial court, do not find any repugnancy between the provisions of

Paragraph 7 and Paragraph 10 of

the agreement. Paragraph 7 specifically deals with the time period when the director is drawing benefits under the agreement and in and of itself doe s not contain a forfeitureprovision. Paragr aph 10, on the other

hand, provides fo

r forfeiture of

benefits if its provisions are violated at a ny time dur ing the existence of the agreement. Martin asserts that Paragraph

10 explicitly requires that for forfeiture to occur, the director mus t “en ter into” a business, and tha t bec oming a director of First Tennessee does not violate that provision. He argues that Paragraph 7, which includes a broader range of prohibited activities than Paragraph 10, indicates the intent that Paragraph 10 should be strictly construed to requ

ire forfeiture

only6

upon the actual a

ctive entry by the

director in a com

peting business. We must respectfully disagree. Paragraph 10 provides that the director shall forfeit if he “enters into any business de scribed in Paragr

aph 7 above.” Cons

idering the docume

nt as a wh ole, we construe the incorporation provision of Paragraph 10 to prohibit the director f ro m engaging in any activity, practice or pursuit as described in Paragraph 7. Paragraph 7 does not describe a “business” as an entity, but describes various activities the director is prohibited from engaging in. It appears tha t the use of the ter

m “business”

in Paragraph10 is intended and does refer to the activities, practices an d p ursuits describe d in Paragraph 7. A

fter all, the only “business”

described is anything in competition with UP and certainly being a director of another bank fits that category. We conclude, as did t

he trial court, tha

t pursuant to the pr

ovisi ons of the ag reements betweenMartin and the defendant, Martin’s participation as a Director for Fir

st Tennessee is a violation of the agreements and he has thus forfeited his rights thereunder. The second issue presented for review is

whether the trial court erred in denying recovery on the basis of unjust enrichment or quantum meruit

. Martin asserts that the forfeiture of compensation due him for services as a director and deferred under the agreement is unjust and results in a windfall and unjust enrichment

to UP. UP asserts that Martin made an election to receive compensation as a director pursua

nt to the terms of the contracts in question, and that he is bound by the provisions of the contract.

“ Actions brought

upon theories of u

njust enrichment,

quasi contracts, contr

acts implied in law, and quantum meruit are essentially the same. Courts freq uently emplo y the various terminology interchangeably to describe that class of implied obligations where, on the basis of justice and equity, the law will impose a contrac

tual relationship

between the par

ties, regardles s of their assent

thereto.” Paschall’s, Inc. v. Dozier , 219 Tenn. 45, 53-54, 407 S.W.2d 150, 154 (1966). Quantum meruit

actions are equitable substitutes for contract claims and are based on a legally implied promise to pay a reasonable amount for goods or services received. John J. Heirigs Constr. Co. v. Exide , 7 09 S.W.2d 604, 607 (Tenn. App. 1986). Quasi-contractual liability can be created where one person receives a b enefit at the exp ense of another

and it is unjust or inequitab

le for him to retain this benefit. Jaffe v. Bolton , 817 S.W.2d 19, 26 (Tenn. App. 1991)(citing 7 Tenn. Juris. Contracts § 103 (1983)).7 In the case at bar,

Martin entered in

to an agreement w

ith UP which specific

ally provided for forfeiture unde

r certain circu

mstances. The se

rvices which Mar

tin claims he should be paid for were rendered in the past, before there was any breach of the provisions of the contract. We believe that this case is controlledby the decision of our Supreme Court in Robinson v. Durabilt Mfg. Co. , 195 Tenn. 452, 260 S.W.2d 174 (1953), where there was an action to recover on a quantum meruit

basis for expenses incurred under the terms

of an oral contract. In Robinson , an agent entered in

to a contract with the manufacturer for the distribution of the manufacturer’s product and expressly assumed the sale expense. The manufacturer had the right to

terminate the contract at will,

which he eventually did. The agent sued for sales expenses which enured to the benefit of the manufacturer. In holding that the agent was not entitled to

recover on the basis of quantum meruit

, the Court said: That is, where the nature of the benefit received by the employer is such that

it cannot be abandoned by him uponhis termination of a contract which he has a right to terminate, then he will not be required to pay f

or the receipt of

such benefit. Robinson, 260 S.W.2d at 175. The words of the Court in Jaffe v. Bolton , 817 S.W.2d 19 (Tenn. App. 1991) are also appropriate for the instant case:

Although the results in this case ma y be harsh, the “q

uasicontractual principle of unjust enrichment does not apply to an agreement

deliberately entered

into by the parties, how

ever harsh the provisions of such contract may seem in the light of subsequent happenings.” 17 C.J.S. Contracts § 6 (1963). Jaffe , 817 S.W.2d at 26. T he trial c ourt correctly denied recovery to plaintiff. The order granting summary judgmentis affirmed, and the case is rema

nded for such othe

r proceedings as are necessary. Costs of the appeal are assessed against appellant. We pretermit appell

ee’s issue conce

rning the tr

ia l court’s determination that the provisions of the agreements pertaining to dispute resolution is unconscionable.

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

____________________________________ DAVID R. FARMER,

JUDGE8

____________________________________ HEWITT P. TOMLIN, JR. SENIOR JUDGE