IN THE COURT OF APPEALS OF TENNESSEE

AT NASHVILLE

NOVEMBER 8, 2001 Session

JEFFREY CROUCH, ET AL. v. BRIDGE TERMINAL TRANSPORT, INC.

Direct Appeal from the Chancery Court for Davidson County

No. 00-1171-I; The Honorable Irvin H. Kilcrease, Jr., Chancellor

No. M2001-00789-COA-R3-CV - Filed April 30, 2002

This appeal involves a trial court’s refusal to grant class action status to plaintiffs’ claims for breach

of contract and promissory fraud. Plaintiffs filed suit against defendant alleging that identical

contracts between proposed class members and defendant were breached and that defendant’s

conduct amounted to promissory fraud. The trial court held that plaintiffs failed to show that issues

of law and fact common to the class predominated over individual questions and refused to certify

the class. Plaintiffs were granted this interlocutory appeal to review the trial court’s decision on

class certification. For the following reasons, we affirm the decision of the trial court. 

Tenn. R. App. P. 3; Appeal as of Right; Judgment of the Chancery Court Affirmed

ALAN E. HIGHERS,J., delivered the opinion of the court, in whichW. FRANK CRAWFORD, P.J.,W.S.,

and DAVID R. FARMER, J., joined.

Charles J. Williams & John B. Carlson, Nashville, TN, for Appellants

Michael Richards, Memphis, TN, and John S. Hicks, Nashville, TN, for Appellee

OPINION

I. Facts and Procedural History

Jeffrey Crouch, James Gifford, and Shellie Lemons (“Plaintiffs”) independently own and

operate tractor trailers. Plaintiffs signed identical contracts with Bridge Terminal Transport, Inc.

(“Defendant”) wherein Plaintiffs agreed to provide trucking services for Defendant. Each contract

contained an identical “Schedule B” that outlined various rates of compensation for Plaintiffs’

services. Approximately one hundred other individuals who own and operate tractor trailers signed

identical contracts with Defendant. These contracts also contained the same Schedule B outlining

compensation. 
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As a result of Defendant’s performance under the contracts, Plaintiffs filed a class action

lawsuit against Defendant on April 13, 2000. Plaintiffs brought the lawsuit pursuant to Rule 23 of

the Tennessee Rules of Civil Procedure on behalf of themselves and the other truckers who had

signed identical contracts with Defendant. Plaintiffs’ complaint sought compensatory and punitive

damages for breach of contract and promissory fraud. Plaintiffs alleged that Defendant breached the

identical contracts by refusing to pay the truckers according to Schedule B and refusing to return

escrow funds as required under the contracts’ terms. As a basis for promissory fraud, Plaintiffs

alleged that they had reasonably relied on Defendant’s representations in the contracts, but that

Defendant never had the intention of paying Plaintiffs as agreed. 

Defendant filed a motion to dismiss the class action claims. In its motion, Defendant argued

that common issues of fact and law did not predominate. With regard to promissory fraud,

Defendant asserted that individualized hearings would be needed to establish reliance. With regard

to the breach of contract cause of action, Defendant pointed to a provision in the contract which

stated:

Notwithstanding any provision of this contract to the contrary, this contract shall be

terminated upon the happening of any of the following events:

(1) For any breach of the contract, unless the parties manifest an intention by written

agreement or otherwise not to terminate this contract upon such breach.

Based on this provision, Defendant argued that individual hearings would have to be conducted for

each class member in order to determine whether a breach occurred and if so, whether the contract

was terminated by the parties’ manifested intentions. Defendant further argued that if the parties

continued employment under the contract after a breach occurred, the element of reliance, needed

for the promissory fraud claim, would be negated. 

In response to Defendant’s motion, Plaintiffs submitted affidavits of the three named

Plaintiffs and eight proposed class members. Plaintiffs argued that these affidavits established that

the individual contracts were identical. Further, the affidavits stated that Defendant flatly refused

to honor the contracts for each of the proposed class members. Based on the affidavits, Plaintiffs

argue that individual hearings would not be required for either claim. 

Specifically, Plaintiffs argued that with regard to the breach of contract claim, no individual

hearings would be necessary because the contracts were terminated on the dates the individual

truckers stopped performing services for Defendant. Plaintiffs premised their argument on the

assertion that even with the provision in the contract relied upon by Defendant, the manifest

intentions of the Plaintiffs to terminate the contract could easily be determined by simply looking

at the date each proposed class member quit providing services to Defendant. This date, Plaintiffs

argued, could be easily confirmed by Defendant’s records without a hearing. In addition, with regard

to the promissory fraud claim, Plaintiffs recited statements in the affidavits stating that all those who
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enter a contract necessarily rely on the expectation that the contract will be honored. Based on these

statements, Plaintiffs argued that no individual hearings on reliance would be needed. 

The court granted Defendant’s motion and refused to certify the class. The court reasoned

that individual questions of fact predominated over questions of law or fact common to the class.

In its order dismissing Plaintiffs’ class action claims, the court held that individual hearings would

be needed to determine “whether a class member waived his rights by continuing to work for

[Defendant] after [Defendant] had breached the contract and whether class member relied upon the

alleged misrepresentation by [Defendant].” Stating that it would be economically unfeasible for the

proposed class members to proceed individually, Plaintiffs filed this interlocutory appeal to review

the trial court’s refusal to certify the class. 

II. Issue

Whether the trial erred in refusing to certify Plaintiffs’ proposed class and finding that

individual hearings would be required in order for the individual class members to prove breach of

contract and promissory fraud.

III. Standard of Review

Class action status for a claim is not given as a right under Tennessee law. First Am. Nat’l

Bank of Nashville v. Hunter, 581 S.W.2d 655, 659 (Tenn. Ct. App. 1978). Instead, class action

status is a procedural privilege that may be granted in the trial court’s sound discretion. Id. Thus,

we will reverse a trial court’s decision to deny certification of a class only when the party seeking

class certification has demonstrated an abuse of the trial court’s discretion. Hamilton v. Gibson

County Util. Dist., 845 S.W.2d 218, 225 (Tenn. Ct. App. 1992). 

In determining whether an abuse of discretion has occurred, we must keep in mind that the

party seeking class certification bears the burden of showing that the prerequisites of Rule 23 of the

Tennessee Rules of Civil Procedure have been satisfied. Id. Further, appellate courts must not

merely substitute their judgment for that of the trial court when determining whether an abuse of

discretion has occurred. White v. Vanderbilt Univ., 21 S.W.3d 215, 223 (Tenn. Ct. App. 1999)

Instead, appellate review must seek to determine whether the lower court's decision has a basis in

law or fact and is therefore not arbitrary, illogical, or unconscionable. State v. Brown & Williamson

Tobacco Corp., 18 S .W.3d 186, 191 (Tenn.2000). Where a trial court has improperly construed or

applied the applicable legal principles, appellate courts may properly reverse the trial court’s

decision. White, 21 S.W.3d at 223.

IV. Law and Analysis
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Rule 23 of the Tennessee Rules of Civil Procedure governs the availability of class action

status in Tennessee. For class action treatment to be proper, Rule 23.01 requires the following four

elements to be present: a class so numerous as to make joinder impractical, questions of law or fact

common to the class, typicality of claims and defenses among the class members, and representative

parties who can fairly and adequately represent the interests of the entire class. TENN. R. CIV. P.

23.01. 

In addition to the requirements of Rule 23.01, a proposed class must also meet one of three

requirements listed in Rule 23.02. Here, Plaintiffs brought this action relying on Rule 23.02(3),

which states:

The court finds that the question of law or fact common to the members of the class

predominate over any questions affecting only individual members, and that a class

action is superior to other available methods for the fair and efficient adjudication of

the controversy. The matters pertinent to the findings include: (a) the interest of

members of the class in individually controlling the prosecution or defense of

separate actions; (b) the extent and nature of any litigation concerning the

controversy already commenced by or against members of the class; (c) the

desirability or undesirability of concentrating the litigation of the claims in the

particular forum; (d) the difficulties likely to be encountered in the management of

a class action.

As specified by the parties, this appeal essentially involves the issue of whether the questions

of law or fact common to the members of the class “predominate over any questions affecting only

individual members” as contemplated in Rule 23.02(3). Plaintiffs’ complaint states the following

as common issues of fact and law:

a) whether Defendant’s uniform course of conduct in calculating what was

owed to and paying drivers . . . violated the clear and unambiguous terms of

that contract;

b) whether Defendant’s uniform course of conduct in calculating what was

owed to and paying drivers . . . violated defendant’s obligation of good faith

and fair dealing in regard to its construction of and performance under that

contract;

c) whether Defendant is guilty of promissory fraud by inducing its drivers to

enter into a contract . . . with the intention of not complying with the terms

and provisions of that contract; and 

d) whether Defendant is liable for punitive damages predicated upon its

fraudulent conduct. 

Accordingly, we must determine whether the trial court abused its discretion in holding that these

common issues of law and fact did not predominate over individual questions of law and fact. The
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determination of this issue necessarily depends on whether the class members will require

individualized hearings to prove the elements for each cause of action. 

With regard to the alleged breach of contract, as stated above, the trial court held that

individual hearings would be necessary to determine “whether a class member waived his rights by

continuing to work for [Defendant] after [Defendant] had breached the contract.” In opposition to

the court’s ruling, Plaintiffs bring our attention to 17A AM.JUR. 2D, Contracts § 731 (1991), which

states:

Where there has been a material breach which does not indicate an intention to

repudiate the remainder of the contract, the injured party has an election of

continuing performance, or of ceasing to perform, or of repudiating the contract. Any

act by the injured party indicating an intent to continue will operate as a conclusive

election, not depriving him of the right of action for the breach which has already

taken place, but depriving him of any excuse for ceasing performance on his own

part.

Id. at p. 741-42. Plaintiffs argue that this provision illustrates that the class members could not have

waived their right to sue Defendant for breach of contract. Plaintiffs contend that this provision only

shows that by continuing performance, the class members merely waived their right to repudiate the

contract and cease their performance. 

Under Tennessee law, however, a party may waive his or her known rights under a contract

by either express declarations or by acts manifesting an intent not to claim the rights. Tenn. Asphalt

Co. v. Purcell Enter., 631 S.W.2d 439, 444 (Tenn. Ct. App. 1982) (citing Dallas Glass, etc. v.

Bituminous F. & M. Ins., 544 S.W.2d 351 (Tenn.1976)). Whether by declaration or by acts,

however, the waiver must be intentional. Hill v. Goodwin, 722 S.W.2d 668, 671 (Tenn. Ct. App.

1986) (citing Baird v. Fidelity-Phenix Fire Ins. Co., 162 S.W.2d 384 (Tenn. 1942)). Although the

American Jurisprudence section relied upon by Plaintiffs does not presume a waiver in the event of

continued performance after a material breach, Tennessee law nevertheless recognizes that rights

under a contract may be waived under certain circumstances. While we make no determination of

whether Plaintiffs indeed waived their rights, our inquiry into the law reveals that the trial court did

have a legal basis in ruling that individual hearings could be required for the proposed class members

with regard to the breach of contract claim. Accordingly, we hold that the trial court did not abuse

its discretion in this respect. 

With regard to Plaintiff’s claim for fraud, as this Court explained in Stacks v. Saunders, 812

S.W.2d 587 (Tenn. Ct. App. 1990), an action for fraud contains four basic elements: 

(1) an intentional misrepresentation with regard to a material fact, Keith v.

Murfreesboro Livestock Market, Inc., 780 S.W.2d 751 (Tenn.Ct.App.1989); (2)

knowledge of the representation falsity--that the representation was made

"knowingly" or "without belief in its truth," or "recklessly" without regard to its truth

or falsity, Tartera v. Palumbo, 224 Tenn. 262, 266-67, 453 S.W.2d 780, 782 (1970);
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(3) that the plaintiff reasonably relied on the misrepresentation and suffered damage,

Holt v. American Progressive Life Ins. Co., 731 S.W.2d 923, 927

(Tenn.Ct.App.1987); Haynes v. Cumberland Builders, Inc., 546 S.W.2d 228, 232

(Tenn.Ct.App.1976); and (4) that the misrepresentation relates to an existing or past

fact, Haynes, 546 S.W.2d at 232 . . . .

Stacks, 812 S.W.2d at 592. The essential requirements of any action for fraud will always include

detrimental reliance on a false premise. Farley v. Clayton, 928 S.W.2d 931, 933 (Tenn. Ct.

App.1996) (citing Shwab v. Walters, 251 S.W. 42 (1922)); Tartera v. Palumbo, 453 S.W.2d 780

(Tenn. 1970); Williams v. Van Hersh, 578 S.W.2d 373 (Tenn. Ct. App.1978); Dozier v. Hawthorne

Development Co., 262 S.W.2d 705 (Tenn. Ct. App. 1953). When the claim is for promissory fraud,

“the misrepresentation must embody a promise of future action without the present intention to carry

out the promise.” Stacks, 812 S.W.2d at 592.

Tennessee appellate courts have repeatedly held that the elements of fraud can never be

presumed. Hiller v. Hailey, 915 S.W.2d 800, 803 (Tenn. Ct. App.) (citations omitted). Instead,

because “the presumption is in favor of the fairness of the transaction and the innocence of the

person accused,” each element must be affirmatively proven by the party alleging fraud. Williams

v. Spinks, 7 Tenn.App. 488, 494 (1928). Accordingly, each proposed class member must prove each

element individually for his or her respective claim. 

The flaw in Plaintiffs’ reasoning here deals with the element of reliance. As indicated above,

each proposed class member would be required to affirmatively prove that they detrimentally relied

on the representations of Defendant and suffered damages as a result. Plaintiff deals with this issue

by merely asserting that anyone who enters a contract necessarily relies on the contract being carried

out according to its terms. While we generally agree with this statement, as applied to the facts of

this case, such a declaration of reliance is insufficient to confer class action status to Plaintiffs with

regard to this cause of action. 

As pointed out by Defendant, many of the proposed class members chose to continue

working under the contract after the alleged breaches had occurred. Given the facts, Plaintiffs’ basic

assertion regarding reliance becomes strained. Individual hearings would be required to determine

whether the class members continued relying on their contract’s terms if they knew that the contract

had previously been dishonored. This situation was obviously recognized by the trial court.

Accordingly, because of the necessity for proof of reliance and the individual hearings that would

be necessary, we hold that the court did not abuse its discretion in refusing to certify the class.
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V. Conclusion

Based on the foregoing conclusions, we hereby affirm the decision of the circuit court. Costs

on appeal are assessed against PlaintiffsJeffrey Crouch, James Gifford, and Shellie Lemons and their

sureties for which execution may issue if necessary.

___________________________________ 

ALAN E. HIGHERS, JUDGE