### IN THE COURT OF APPEALS OF TENNESSEE AT NASHVILLE August 7, 2002 Session
MILL CREEK ASSOCIATES, I NC.

v. THE JACKSON FOUNDATION, INC.

An Appeal from the Chancery Court for Dickson County No. 7068-01 Leonard W. Martin, Chancellor

No. M2001-02811-COA-R3-CV - Filed Mar ch 11, 2003

This is an unjust enrichment case. The plaintiff design firm was c ontacted by the de fen dan t foundation to develop designs and a budget for the construction of a s c ience theater. The chief designer of the firm worked on the project and presented a proposal to the foundation . Th e foundati on neithe

r acce pted nor r ejecte d the desi gn firm ’s propos al. Instead, the foundation hired the design firm’s chief designer. Part of the designer’s duties with the foundation was to work on the sc ience theater p roject “ in house.” The foun dation re

fused to p ay

the desig n firm a f ee for its work on the project. The design firm then sued the foundation on a theory of

unjust enrichment for the work performed on the project while the chief designer was still a

t the firm

. The trial court found that since the project was never completed, the pre liminary designs did not conf er a v alue on the foundation and, consequ ently , the foundation ha d not been

unjustly enriched. The design firm now appeals

. We reverse, finding that the work perfor med by the

design f irm consti tuted a be nefit to the foundation, and that

it would be

unjust for the foundation to retain that benefit without pay ing the design firm for the value of the benef it.
Tenn. R. App.P. 3 Appe al as of Right ; Judgme nt of the Cha

ncery Court is Reversed and Remanded

H OLLY K IRBY L ILLARD , J., de liver ed th e opi nion o f the

cour t, in w hich W. F RANK C RAWFORD , P.J., W.S., and D AVID R. F ARMER , J., joined.
Stephen C. Knight, Nashville, Tennessee, for the appellant, Mill Creek A ssociates, Inc.
Henry F . Todd, Jr., Dickson, Tennessee, for the appellee, The Jackson Founda tion, Inc.

OPINION

Plaintiff /Appella nt Mill Cree

k Associa tes, Inc. (“Mill Creek”)
, is a design fabrication firm that produces displays for

the museum, theater, retail, and trade show industrie s. It i s owned by Sam Craig (“Craig”) and Steve L anders (“La

nders”). In August 1998, a re presentative of1 Th e Re naissan ce C enter itself w as op ened to the p ublic in A ugust 1 999

. -2- Defendant/Appellee

The Jackson Foundation, Inc. (“the Foundation”), contacted Mill Creek about designing and building a project for its ne w Renaiss ance Ce

nter fa cility 1 (“the Project”). The Project involved developing a depiction of a L ondon street scene from the 1830’s in a walkw ay

that would leadinto a science theater in the basement of the Renaissance Center. Robert Cooper (“Cooper”), Mill Creek ’s sole

designer, worked with the Foundation on the Project. The Foundation solicited no other bids or proposals for the design or construction of the pr oject.

Ini ti al ly, Cooper met with Foundation representatives Douglas Jackson (“ Jackson”) and Robert Spencer (“Spencer”) to discuss the Project. A fter the meeting with Jackson and Spencer, Cooper did p relim inary des ign work, inc luding r esearc h, collection of ima

ges, and planning. After that, Cooper went

to anothermeeting at the Renaissance Center, this time with Steve Jacobs (“Jacobs”). Jacobs had created the idea for the Project. Cooper a nd Jacobs exchanged information, and Jacobs provided Cooper with the research Jacobs had conducted. Cooper then did further research and made sketches for the Project. By September 5, 1998, Cooper

had spent about thirteen hours working on a proposal for the design and budget for the Project.

In Mid-November, Spencer called Cooper to chec k on where Cooper wa s in the “d esign phase” of the Project. After receiving that c all, Cooper worked almost exc lusively on the Project

u ntil December 2, 1998. On that date, he met with Spencer a nd Jackson to give the Foundation a packet that included prelimina

ry design p rintouts, s ketches , other r elated ma terials, and a bud

get. The proposal had a

$460, 000 bu dget, w hich i nclud ed $40 0,000 in con struc tion plus a 15% d esign fee for Mill Creek of $60,000.
Though Spencer and Jackson were pleased with how the desig n looked, they objecte d to the overall amount of the budget. They asked Cooper to redesign the Project using half of

the proposed budget
, or appro xima tely $200, 000. Consequently, Cooper, along with Landers and Craig , reworked the design to reduce construction costs. On Dece mber 16, 1998, Cooper met again with Spencer and Jackson. He ga ve them a re vised packet on the design, along with a re vised budget of $245,000, which included $213,000 in construction costs plus a 15% design fee of about $32,000. At t hat meeti ng, Cooper gave Spe ncer and Jack son a letter requesting 20% of the estimated design fee ($6,400) as a “ re ta in er an d p aym ent . . . for our se rvices to dat e.” By the d ate of t his m eetin g, Cooper had s pent

appr oxi ma te ly 156 hours working on the Proj ect and d

evelopin g a budg et. Spencer and Jackson told Cooper that they would prese nt the new budget to the Foundation’s board of directors for approval.
During the course of the Dece mber 16 meeti ng, Spencer and Jackso n also ask

ed Cooper

if he would be interested in working directly for the Foundation and taki ng the Pr oje ct “in house.” Cooper initially declined. He la ter reconsidered, however, and wa s hired by the F oundation as its Senior Exhibit Des ign er o n Ja nuary 4, 1999. Whe

n Cooper l eft Mill Cr

eek, he was giv en his research and designs on the Project.2 Though the action was i nitial ly brought in Davidson County, the case was t ransferred to t

he Chancery Court for Dicks on Count y on Fe bruary 5, 2001.

3 Cooper testi fied that

he was offered a 4% partnership interest in Mill Creek, and that

this was no t a sufficiently large partner ship i nteres t to k eep him th ere.
-3- After Cooper was hired by

the Foundation, Mill Creek sent the Foundation a bill for $9,390, for 156.5 hours at $60 per hour, the amount of time Cooper spent working on the Project while he

was still employed at Mill Creek. The Foundation did not pay Mill Creek for Cooper’s work. On March 1 1, 199 9, Sp encer w rote Land ers a l etter stati ng:

It was neith

er my nor Mr. Jac

kson’s und erstanding that we had entered into an agreement for the production and de sign of the London street and theater . We had met with Mr. Cooper on two separ ate occasions to review what appear ed to be preliminary

sketches and conceptualization for this project. I assumethis information was provided to allow us to make a decision concerning the servic es of Millcreek [sic].

Therefore, based on

it s position tha

t there w as no con

tract, th e Founda tion declined to pa

y Mi ll Creek for Cooper’s services desig ning the Project while he was employ ed at Mill Creek.

The Foundation never formally accepted or rejected the December 16 proposal presented by Cooper on behalf of Mill Creek. The Foundation later completed a small part of the Proje ct, but did not move forward with the bulk of it. Completion of the London street scene , however, remained under consideration, and

completing the Pro

ject was“part of

the list” o f projects to which Cooper was assigned.

On June 16, 199 9, Mill Cre ek su ed the Foundat i on on claims of breach of contract
, promissory

estoppel, andunjust enrichment. Mill Creek asserted that the Foundation was liable to Mill Creek in the amount of $31,950, which was approximately 15% of the Project’s projected budget for design services

. 2 On Aug ust 29, 2001, the case was tried before the trial cour t, sitting without a jury.

At the trial
, Cooper wa s the prima ry witness f or both sides. Cooper testified as a witness for Mill Creek in i

ts case- in-chief becau se Cooper was the a

gent fo r Mill Cree

k who dea

lt with th e Foundation. Cooper, however, was also designated a s the Foundation’s expert witness and testified on its beha

lf as well.

In his testimony, Cooper said that he decided to lea ve his emplo yment with Mill Creek because he was not ma

de a par tner with the firm. 3 He acknowledged that when he left he was given his research and

design w ork on the

Project, and said

that he keeps these materials in his Foundation office at the Renaissance Center. Cooper testified that, at the time he was wor king on the Project at Mill Creek , Mill Cree

k had not e

ntered into a contract with the Foundation. At that time, Cooper did not expe ct the Fo

undation t

o pay Mill Creek

for his wo

rk unlessthe Foundation went forward-4-

with t he Project. Cooper said he was confident that, had the Founda tion’s board appr oved th e project, the Foundat

ion would h ave ente

red into a contrac t with Mill Creek to help develop it. He testified that he had completed 20% of the Project’s design while he was at Mill Creek. When asked his opinion, Co oper sai d he thoug ht that, a fte r he became employed by the F oundation, the Foundation should have compensated Mill Creek for the work he had done on

the Project while he

was employed by

Mill Creek. Cooper acknowledged that, when he w as hired by the F oundation, the Pro ject wa s on the list of duties assigned to him. When asked whether the Project had been constructed, Cooper said that the Foundation had “built a very small portion of

the city street a s an entranceinto the science theater that resembles some of the wor k that had been done.” Otherwise, he stated, the Project had not been constructed.

Landers testified on behalf of Mill Creek. Lande rs said that Cooper was the person who deal t withthe Fo undat ion o n Mil l Cree k’s be half. Throu gh Cooper, Landers under stood that Mill Creek had been hir

ed to desi gn the Pr

oject. L anders k new, how ever, th at t

he Foundation’s board of directors had not yet approved the Project, and that such approval was necessar y before it could be developed. Landers believed that ove r 50% of the design of the Project had bee n complet ed b y Cooper while he was employ ed by Mill Creek.

Landers testified that

Cooper r esigne d from Mill

Creek to w ork for t

he Found ation with

the understanding that Mill Cr eek woul d be paid f

or the de sign fe es incur

red while Cooper wa s at Mill Creek. Landers said, “[P]art of [the agree ment with Cooper] was getting [Mill Creek] billed out for the due design fees now. And since he wa s going to work for the Jackson Foundation, he could pick it up from there. Every

bo dy leaves on a clean slate.” Based on that under standing, Landers permitted Cooper to take with him the designs and other materials related to the Project. L anders acknowledged

sending the Foundation a bill for $9,390 after Cooper went to work for the Foundation. He explained that he sent the b ill because the Foundation obviously would no longer need Mill Creek’s services, in light of the fact that the lead de signer on the Project had bec om e employed by the Founda

tion. Because the overall budge t had not been approved by

the Foundation’s boardof directors, Lander s thought tha t it was most logical to bill the Foundation for the hours worked, rather for a perc entage of the design budg et.

Fi na ll y, Spencer testified

on behalf of the Foundation. Spencer said that Jacobs had the idea to turn the basement of

the Rena issance Center in to a scie nce thea ter and t o depict a London street

scene in the entrance hallway . Spencer testified that, when he met with Cooper, there w as no discussion regarding pay

ment for ser vices. Spe

ncer sa id that he considered the proposal presented by Cooper to be “an offer to do work. . . . [I]t was a – done in an effort to secure the job.” Spencer noted that he, as a lawy er, is trained to have all of his agree ments in writing. Here, there was no such written agreement between the F oundation and Mill Creek. Consequently, Spence r felt that the Foundation did not agree to pay Mill Creek for its work on the Project, an d t hat it would be

unreaso nable

for Mill Creek to expect

such pay ment. Spencer acknowledged that the F oundation was still considering developing the L ondon street scene portion of what Cooper had desig ned.4 The Lati n tr ansl ati on of th is phr ase means “ as much as he has deserved. ” B LACK ’ S L AW D I CTI ONARY 1255

(7th ed. 1999).

-5- At the conclusion of the proof, the trial court found that there was no meeting of the minds betweenthe parties r

egard ing a de sign fe e, and c onseque ntly , held in favor of the Foundation on the breach of contract and promissory estoppel claims. The trial court also found that the Foundation has derive d no ben efit from Mill Creek’s design work because it neve r went forward with the Project. Based o n this finding, the trial cou rt held in f

avor of t he Found ation on Mi ll Creek’ s claim for unjust enrichment. Mill Creek now appeals the trial court’s decision withrespec t to the unju st
en ri ch me nt cl ai m o nl y.

Becau se the case was tried by the court sitting without a jury, we review the court’s decision de novo, with

a presum

ption of c orrect

ness aff orded to t

he trial c ourt’s fin d ings of fact. See Schnider v. Carlisle Corp. , 65 S.W.3d 619, 621 (Tenn. Ct. App. 2001); Tenn. R. App. P. 13(d). The trial court’s conclusions of law are reviewe d de novo, and are not afforded any presumption of correctness. See State v. Levandowski , 955 S.W.2d 603, 604 (Tenn. 1997).

Tennessee has long rec ogniz ed claimsbased on the doctr ine of unj ust enrichment. Thi s theory of reco very

can als o be called quantum m eruit , 4 quasi contract, or contract implied in law. Paschall's

, Inc. v. Dozier , 407 S.W.2d 150, 154 (Tenn. 1966) (stating that “[a]ctions brought upon theories of unjust e

nrichme nt, quasi c ontract , contra cts implie d in law, and quantum m eruit are essentia lly the same ”); see also River Park Hosp., Inc. v. BlueCross BlueShield of Tenn., Inc. , No. M2001-00288-COA-R3-CV, 2002 WL 31302926, at *11 (Tenn. Ct. App. Oct. 11, 2002 ). “Cour ts freque ntly emp lo y the various terminolog y interchangeably to descr ibe that class of implied obligations where, on the basis of justice and equity , the law will impose a contractual rela

tionship betweenthe parties, regardless of their a ssent thereto.” Paschall' s , 4 07 S.W.2d at

154. “Unj ust enrichment is a quasi-contractual theory under wh

ich a cou rt may impose a contractual obligation

on the parties where one does not otherwise exist.” Whitehaven Cmty. Baptist Church v. Holl oway , 973 S.W.2d 592 , 596 (Tenn. 1998). “[C]ontracts implied in law ‘are created by law without the assent of th e party bound, on the ba sis that they are dicta ted by rea son and justice.’ ” River Par k Hosp.
, 2002 W L 313029 26, at *11 (q uoti ng Angus v. City of Jackson , 968 S.W.2d 804, 808 (Tenn. Ct. App. 1997)).

In Paschall’s , the TennesseeS upreme Co urt dete rmined tha

t, in orde r to estab lish a cla

im basedon qua si contract , the plaintiff must show that (1) a benefit has been confer red upon the defendant by the plaintiff; (2) the de

fendant appreciated the benefit; and ( 3) acceptance of the be nefit under the circumstances would make it inequitab l e for the defendant to retain the benef it without paying the value of the benefit. Paschall’s , 407 S.W.2d at 155; Angus , 968 S.W.2d at 808 (quoting Paschall’s
, 407 S.W.2d at 155). “The most significant requirement for a recovery

on quasi contract is that the e

nrichme nt to the defendant be unjust.” Paschall’s , 407 S.W.2d at 155. Each claim of unjust enrichm ent must be decided according to its own factual situation. B & L Corp. v. Thomas & Thorngren, Inc. , 917 S.W.2d 674, 680 (Tenn. Ct. App. 1995).5 It coul d not r ecover fr om Lambut h on a br each of cont ract the ory, be ca use Lambuth was not a party to the

con tract.

-6- In the instant case, the trial court dismissed Mill Creek’s unjust enrichment claim based on its determination that the Foundation derived no benefit from Mill Creek’s work. Mill Cree k argues th at the trial court’s conclusion in this regard is contrary to the reasoning in Hall & Wa ller & Assocs., Architects, Inc. v. Lambuth College , No. 02A01-9109CH00196, 1992 WL 252510 (Tenn. Ct. App. Oct. 6, 1992). In Lambuth , the plaintiff architectural firm prepared some preliminary floor plans for a retirement home, which were done without compensation but with the e xpress understanding that the firm would be retained for future s ervice s if

the project proceeded. Lambuth
, 1992 WL 252510, at *1. La ter, the architecturalfirm signed a contract with the Village Corporation,

a not-for-profit c orporat

ion forme d by

Lambuth to fac ilitate the project. Under this contract, the architecturalfirm was to furnish service s for the

proje ct in return for 4% of the completed construction cost. The

firm comp leted the

plans and

specific ations fo

r th e reti rement home, and delivered them to the Village Corporation. Later, h owever, the retirement home project was terminatedbefore construction began. The a rchitectural firm

sued Lambuth on a theory of quantum meruit to recover pay

ment for the work it had performed on the project. 5 The trial court held in favor of Lam buth , becau se the re was n o agency rel ation ship betwe en Lambu th and the Vi llage Corporation. Id. at *4. On appeal, this Court held that privity between the parties was not necessary for the architectur

al firm to recove r for unj u st enrichm ent. Id. at *5. The Court also held that Lambuth was enriched by the services provided

by t he architectural firm because the pla ns and specifications “were

absolutely

necessary

to the furtherance of [the] project,” and it was anticipated that the project “would have been of g reat benefit to Lambuth.” Id. at *11. Th erefore, becau se privity was unnecessary , and because “all the requirements for rec o very on quasi-c ontract or quantum meruit

. . . ha[d] been established,” the ca use was remanded to the trial court for a determination of damages. Id.

Thus, in Lambuth , the appellate court implicitly dete rmined that the college was enriched by the plans and spe cification s generated by the architectural firm, even though the pr oject was abandoned

before construction began. L ike the architectural

firmin Lambuth , Mill Creek produced the initial designs of the London street sce ne/science theater

Project, anticipating that the Foundation would hire it to c omplete th

e desig ns and to

participate in construction of the Project. The fact that the Foundation did not accept Mill Creek’s proposal does not necessarily me an that the preliminary designs were devoid of value. The value of the designs may

depend on the use to which they ar e put considering the fac t th at, at the time of trial, the Project remained on Cooper’s list of job assignm ents. Therefore, Cooper’s prelimina ry work did confer value to th e Found ation , alth ough that valu e may

be less th an if the

Foundat ion had co nstructe d the Project.

The question r

emains, h owever , whethe r, under these ci rcumstan ces, it would be unjust for the Foundation “to retain the benefit without pay ment of the value thereof.” Paschall’s , 407 S.W.2d at 155. In this case, the Foundation did not solicit bids from a varie ty of contrac

tors with the understanding that only

the contr actor se lected w ould be co mpensate d as part o f his work on the project

. The trial cou

rt, however, fou

nd that, while the Foundation did not solicit bids from other6 Though Lander s t est if ied t hat he bel ieve d, throug h Cooper, tha t the Foun dati on hired M ill Creek to co mple te the designs, Cooper testif ied that no agreement had been reached with the Foundation that Mill Creek w ould be compensated f

or the des igns if t

he proposal wer e reject ed. Therefor e, it appears th at the trial co urt cred ited C oop er’s testimo ny, and the ev idence does n ot preponderat e agains t th e tri al court ’s concl usion t hat t he parti es did not

have a meeting of th e minds on t his i ssue.
-7- contractors, it did not enter into an exclusive arrangement with Mill Creek. 6 Indeed, it is apparent that the parties had no express agreement on any compensa

tion for Mill Creek for the preliminary design, and t here has been no appeal from the trial c ourt’s factual finding on this issue. Neverth eless, although the F oundation d id not acc ept Mill Creek’s pro posal, ne ither did i

t complete ly reject the Project. Rather, it is undisputed that the Fou ndation hi

red Coope

r, Mill Creek’s chief de signer , to take t he Proje ct “in -house”so that it c ould rea p the bene

fits of Mill Creek’s preliminary work and decrease its costs. Cooper, testify ing on behalf of both Mill Creek and the Foundation, said that when hemade his f inal prop osal to the Foundation, Spencer and Jackson offered him a job at the Foundation to take “this whole project in-house.” Moreover , it is undisputed that the Foundation used portions of Cooper’s design to construct a very small portion of the London street sc en e a s a n e nt ra nc e i nt o t he sc ie nc e t he at er . F in al ly, Cooper testified that the Foundation has assigned him to work on the Project at some time in the future, and at trial Spencer conf irmed that the Foundation was still considering completing the L ondon street scene .

Under these circumstances, we must conclude that it would be unjust for

the Foun dation to retain the benefit of Cooper’s designs without paying Mill Creek the value of the benefit of the work completedby Mill Creek. Consequently , we reverse the decision of the trial court on Mill Creek’s unjust enrichm ent claim and rema nd the ca use to the trial

court to d etermine the value of the be nefit of Mill Creek’s work to the Foundation.

We reverse the decision of the trial court and re mand for proceedings not inconsiste

nt with this Opinion. Costs are to be asses sed to the appellee, The Jackson Foundation, I nc., for which

ex ec ut io n m ay i ss ue , i f n ec es sa ry.

___________________________________ HOLL Y KIRBY L

IL LARD, JUDGE