IN THE COURT OF APPEALS OF TENNESSEE

AT NASHVILLE

March 7, 2019 Session

ACUTE CARE HOLDINGS, LLC V. HOUSTON COUNTY, TENNESSEE

Appeal from the Chancery Court for Houston County

No. 2014-CV-434 David D. Wolfe, Chancellor

No. M2018-01534-COA-R3-CV

This appeal arises from an action filed by a healthcare management company against a 

county for breach of contract and unjust enrichment. The dispute centered on a 

financially distressed hospital, which the county wanted to purchase and lease to the

healthcare company to manage. Thus, the county, the hospital, and the healthcare 

management company entered into a Letter of Intent to accomplish this goal. The Letter 

of Intent provided that the healthcare management company would loan funds to the 

owner of the hospital to keep the hospital operating while the county negotiated the asset 

purchase agreement. If the purchase of the hospital closed by the agreed-upon deadline, 

the county agreed to repay the healthcare management company for the amount loaned; 

however, if the purchase of the hospital did not close by the deadline, the county was not 

obligated to repay the loans to the hospital. After the asset purchase agreement did not 

close by the deadline set in the Letter of Intent, the county purchased the hospital and 

awarded the contract to manage the hospital to a company owned by the county’s 

attorneys and refused to pay the healthcare management company the more than $1.2 

million it loaned the hospital. Thereafter, the healthcare management company filed this

action against the county for breach of contract and unjust enrichment. In its answer, the 

county denied breaching the contract because of the failure of the condition precedent, 

that the purchase of the hospital close by the agreed-upon deadline. Thereafter, the 

county filed a motion for summary judgment on the same ground and also moved to 

summarily dismiss the unjust enrichment claim because the Letter of Intent, which was 

an enforceable contract, precluded the claim. The healthcare management company 

responded by presenting evidence indicating that the county failed to act in good faith to 

close on the purchase of the hospital by the deadline in order to avoid its obligations to 

the healthcare management company. It also contended that its claim of unjust 

enrichment should not be dismissed unless the court determined that the Letter of Intent 

was an enforceable contract. The trial court summarily dismissed both claims on the 

finding the evidence was not sufficient to create a genuine dispute of material fact as to 

either claim. Having determined that the evidence was sufficient, we reverse and remand 

this case to the trial court for further proceedings.

06/03/2019
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Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Chancery Court

Reversed and Remanded

FRANK G. CLEMENT JR., P.J., M.S., delivered the opinion of the Court, in which ANDY D.

BENNETT and RICHARD H. DINKINS, JJ., joined.

Robert E. Boston, Tera Rica Murdock, and Taylor J. Askew, Nashville, Tennessee, for 

the appellant, Acute Care Holdings, LLC.

Samuel P. Funk and Michael R. O’Neill, Nashville, Tennessee, for the appellee, Houston 

County, Tennessee.

OPINION

By the fall of 2001, the only hospital in Houston County, Patient’s Choice Medical 

Center (“PCMC”), was in financial distress and in danger of closing its doors. Although

the hospital had just recently obtained certification as a “Critical Access Medical 

Center,”1 which would likely provide for a better financial future, but not in the 

immediate future, PCMC lacked the capital or revenue to continue operating long enough 

to benefit from the new certification. Because PCMC was Houston County’s third largest 

employer and a critical provider of medical services to the community, in order to 

prevent the closure of the hospital, Houston County sought to purchase the hospital from 

PCMC and then lease it to a hospital management company.

Around the same time, Acute Care Holdings, LLC (“Acute Care”), which operated 

a nursing facility in Houston County, also considered buying PCMC but determined that 

it was not feasible to do so. Nevertheless, its inquiry into the matter ultimately resulted in 

the execution of a Letter of Intent among Houston County, Acute Care, and PCMC 

pursuant to which Houston County would endeavor to negotiate an asset purchase 

agreement with PCMC to purchase the hospital and its assets and then lease the hospital 

to Acute Care, which would manage the hospital. 

The Letter of Intent, which was executed on February 29, 2012, established the 

conditions by which Acute Care agreed to loan funds to PCMC to sustain the hospital’s 

operations while Houston County and PCMC negotiated an asset purchase agreement. In 

pertinent part, the Letter of Intent provided:

 

1

The certification would allow the hospital to receive cost-based reimbursement from Medicare, 

rather than being bound by fixed-reimbursement rates.
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As of March 1, 2012, [Acute Care] . . . and [PCMC] shall enter into an 

interim management agreement for the [PCMC] facility . . . wherein [Acute 

Care] agrees to assume operational authority and control of the Facility 

under [PCMC’s] provider number and license, to the extent permitted by 

law, and to provide funding for certain improvements and operational 

expenses, to be reimbursed at a later date by [Houston County] to [Acute 

Care] if and when the Closing occurs. [PCMC] shall execute one or more 

promissory notes . . . for all expenses paid by [Acute Care] for operation of 

the Facility in excess of the Facility’s revenue during the interim 

management period, evidencing [PCMC’s] obligation to repay such 

expenses in the event the closing does not occur. 

(Emphasis added). 

The Letter of Intent further provided that once Houston County purchased the 

hospital, Houston County would lease the assets to Acute Care to operate and manage, 

stating:

Lease. As of the Closing, [Houston County] and [Acute Care] shall enter 

into a lease of the Assets (“Lease”) containing the following terms:

a. Term: 5 years, with six, five year renewal options, with lessee right to 

terminate early with notice in the event of a regulatory change 

materially and adversely affecting the operations of the facility.

b. Rent: building rental shall be based on fair market value.

c. Purchase option: [Acute Care] shall have the option to purchase the 

leased property at the end of the initial lease term and each renewal term 

thereafter for fair market value.

d. Capital Expenditures: [Houston County] shall be responsible for 

payment of the expenses set forth on Exhibit “C” attached hereto.

e. Charitable care: [Houston County] acknowledges and agrees that the 

provision of charitable care to the Erin community is a desired and 

valuable service, and therefore agrees to reimburse [Acute Care] on a 

monthly basis for such charitable care and bad debt.

The Letter of Intent also provided a due diligence period whereby Acute Care 

would inspect PCMC’s assets. The Letter of Intent also clarified the parties’ obligations 

to one another when the Letter of Intent was canceled or expired:

[Acute Care] shall have 30 days from the date of this Letter of Intent (“Due 

Diligence Period”) to fully inspect the Assets and, at its discretion, proceed 

with, or cancel the transaction. If canceled, no party shall have any further 

obligations to the others, except for the repayment of any promissory 
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note(s) signed by [PCMC] in favor of [Acute Care] for funds expended by 

[Acute Care] for payment of improvements and operating expenses during 

the interim management period. Unless [Acute Care], in its sole discretion, 

gives [PCMC] notice that it waives its rights to cancel the transaction, the 

transaction shall be deemed canceled at the end of the Inspection Period.

Based on the agreement, if Houston County closed on the purchase of the hospital 

within the agreed-upon deadline, Houston County would assume PCMC’s obligations to 

Acute Care on the loans that kept the hospital in business. If, however, the purchase did 

not close in accordance with the Letter of Intent, Houston County would have no 

financial obligations to Acute Care. 

Acting pursuant to the Letter of Intent, Acute Care periodically loaned PCMC the 

funds it needed to operate the hospital while Houston County and PCMC negotiated the 

asset purchase agreement. When Houston County and PCMC were unable to reach an 

agreement by the initial deadline, Acute Care, Houston County, and PCMC executed

amendments to the Letter of Intent that extended the deadline to December 31, 2012, all 

the while Acute Care continued to financially support PCMC. As each loan was made,

PCMC’s president, Ray Shoemaker, executed promissory notes to memorialize its debt to 

Acute Care.

By November 25, 2012, Houston County still had not closed on the purchase of 

the hospital. Thus, Acute Care sent Houston County a new proposed Letter of Intent 

which provided that Acute Care would “continue to manage the Hospital pursuant to the 

existing interim management agreement . . . until the County acquires the Hospital, but in 

no event beyond January 10, 2013.” It further provided that Houston County would 

execute a promissory note in Acute Care’s favor to cover the cost of PCMC’s November 

payroll. Houston County rejected the proposal.

Houston County did not close on the purchase of the hospital by the December 31 

deadline; however, Houston County and PCMC executed a purchase agreement in March 

2013, by which Houston County would not assume any of PCMC’s liabilities. 

Additionally, instead of awarding the management contract to Acute Care, Houston 

County awarded the hospital management contract to an entity owned by the County’s 

attorneys. Thereafter, Houston County refused to reimburse Acute Care for the money it

expended to keep the hospital in business during negotiations. 

On November 10, 2014, Acute Care filed a complaint for breach of contract and 

unjust enrichment in Houston County Chancery Court, alleging Houston County was 

liable to Acute Care for the more than $1.2 million Acute Care expended during the 
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interim management period.

2

In its answer, Houston County denied the allegations and 

asserted a number of affirmative defenses, including the failure of a condition precedent.

Houston County filed a motion for summary judgment on November 16, 2017, 

wherein it contended that the County was not obligated to reimburse Acute Care because 

it was undisputed the closing did not occur pursuant to the Letter of Intent; thus, Acute 

Care’s only recourse was to seek reimbursement from PCMC or its president Ray 

Shoemaker.3 Houston County also sought dismissal of the claim for unjust enrichment 

because that claim only applied when the parties did not have an enforceable contract, 

and it was undisputed that the parties had an enforceable contract. 

In its response to the motion for summary judgment, Acute Care agreed that the 

purchase of the hospital did not close pursuant to the Letter of Intent, which was a 

condition precedent to Houston County’s obligation to perform. However, Acute Care 

argued that the non-occurrence of a condition precedent is excused when the defendant 

prevents the condition from occurring. Acute Care alleged that Houston County’s failure

to negotiate an asset purchase agreement pursuant to the Letter of Intent was calculated to 

avoid the County’s obligations to Acute Care, and it asked the trial court for additional 

time to conduct discovery so it could present evidence supporting that allegation. The 

court granted the continuance, and after taking additional discovery, Acute Care filed a 

supplemental response to Houston County’s motion for summary judgment.

First, Acute Care contended that PCMC and Houston County reached an 

agreement for the purchase of the hospital as early as September 2012, well before the 

December 31 deadline, but the Mayor of Houston County failed to sign the agreement. 

As evidence, Acute Care submitted a resolution of the Houston County Board of 

Commissioners dated September 17, 2012, which acknowledged that the Commissioners 

reviewed Houston County’s asset purchase agreement with PCMC and its management 

agreement with Acute Care and approved the agreements “in all particulars.” The 

Commissioners then ordered the Mayor and County Clerk of Houston County “to 

execute, acknowledge, and deliver” the agreements on behalf of the County. 

As further support, Acute Care submitted an email exchange, dated October 16

and 18, 2012, between Cindy Barnett, an attorney for Houston County, and a loan 

representative from the United States Department of Agriculture (“USDA”). The emails 

showed that Houston County had obtained a USDA loan to purchase the hospital and to 

reimburse Acute Care. In an email dated October 16, Ms. Barnett sent the USDA 

representative the asset purchase agreement, the management agreement, and the 

 

2

Plaintiff also asserted a claim for promissory estoppel but that claim is not the subject of this 

appeal.

3

By this time, Ray Shoemaker was incarcerated in a federal prison for Medicare fraud.
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Commissioners’ resolution and indicated that the parties had agreed on all material terms,

and they were ready to close on the purchase of the hospital. Acute Care also submitted 

the meeting notes from the December 6, 2012 meeting of the Houston County Board of 

Commissioners wherein the Commissioners approved the management agreement with 

Acute Care and directed the Mayor to execute the agreement.

For its part, Houston County presented evidence to refute the claim that it had 

reached an agreement with PCMC before the December 31, 2012 deadline. Supporting its 

contention, Houston County submitted the asset purchase agreement approved by the 

Commissioners on September 17, 2012, and noted that the agreement was missing the 

purchase price. Houston County argued that the Commissioners had approved a “form” 

of an asset purchase agreement but not the agreement itself because Houston County and 

PCMC had not settled on the material terms and did not come to an agreement on the 

material terms until March 2013. Houston County also submitted emails between Ms. 

Barnett and PCMC representatives sent in October 2012, showing that PCMC was not 

satisfied with the Commissioner-approved asset purchase agreement. 

After a hearing on June 11, 2018, the trial court summarily dismissed Acute 

Care’s breach of contract claim, ruling in pertinent part:

While [Acute Care] argues that Houston County actually reached an 

agreement on an [asset purchase agreement] with PCMC and a 

management agreement with [Acute Care] but the county mayor refused to 

execute them, the plaintiff has not submitted any evidence which actually 

establishes that allegation. By contrast, Houston County submitted copies 

of the form of an [asset purchase agreement] and form of a management 

agreement adopted by the county commission, however those forms were 

incomplete in material terms . . . . The terms of the [Letter of Intent] made 

Houston County liable only if and when Houston County and PCMC 

reached an asset purchase agreement. That requirement never took place 

and therefore the breach of contract claim cannot be successful.

The trial court also granted Houston County’s motion to summarily dismiss Acute Care’s 

unjust enrichment claim, ruling that “a plaintiff cannot recover [on] an unjust enrichment 

claim where there is a valid contract, and it is undisputed that the [Letter of Intent] 

constituted a valid contract . . . .” This appeal followed. 

STANDARD OF REVIEW

This court reviews a trial court’s decision on a motion for summary judgment de 

novo without a presumption of correctness. Rye v. Women’s Care Ctr. of Memphis, 

MPLLC, 477 S.W.3d 235, 250 (Tenn. 2015). Accordingly, this court must make a fresh 

determination of whether the requirements of Tenn. R. Civ. P. 56 have been satisfied. Id.; 
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Hunter v. Brown, 955 S.W.2d 49, 50 (Tenn. 1997). In so doing, we consider the evidence 

in the light most favorable to the nonmoving party and draw all reasonable inferences in 

that party’s favor. Godfrey v. Ruiz, 90 S.W.3d 692, 695 (Tenn. 2002).

Summary judgment should be granted when “the pleadings, depositions, answers 

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 party is entitled to a 

judgment as a matter of law.” Tenn. R. Civ. P. 56.04. When a defendant moves for 

summary judgment based on an affirmative defense such as failure of a condition 

precedent, the defendant must establish the elements of the affirmative defense before the 

burden shifts to the nonmovant. See Carr v. Borchers, 815 S.W.2d 528, 532 (Tenn. Ct. 

App. 1991).

When a motion for summary judgment is made and supported as provided in 

Tenn. R. Civ. P. 56, the nonmoving party may not rest on the allegations or denials in its 

pleadings. Tenn. R. Civ. P. 56.06. Instead, the nonmoving party must respond with 

specific facts showing that there is a genuine issue for trial. Id. A fact is material “if it 

must be decided in order to resolve the substantive claim or defense at which the motion 

is directed.” Byrd v. Hall, 847 S.W.2d 208, 215 (Tenn. 1993). A “genuine issue” exists if 

“a reasonable jury could legitimately resolve that fact in favor of one side or the other.” 

Id.

ANALYSIS

We have determined that the dispositive issue concerning Acute Care’s breach of 

contract claim is whether there is a genuine dispute of material fact that Houston County 

acted in good faith in negotiating an asset purchase agreement with PCMC by the 

deadline.

As for Acute Care’s unjust enrichment claim, the dispositive issue is whether the 

Letter of Intent, as amended, constitutes an enforceable agreement between Houston 

County and Acute Care. We will consider each claim in turn.

I. BREACH OF CONTRACT

A claim for breach of contract requires an enforceable contract, nonperformance 

amounting to a breach of the contract, and damages caused by the breach. ARC LifeMed, 

Inc. v. AMC-Tennessee, Inc., 183 S.W.3d 1, 26 (Tenn. Ct. App. 2005). Parties “are 

generally free to impose whatever conditions they may choose on . . . the performance of 

their contractual undertakings, and the performance or occurrence of these conditions is 

essential before they become obligated under the agreement.” 13 Richard A. Lord, 

Williston on Contracts § 38:2 (4th ed.) (footnote omitted); see Covington v. Robinson, 

723 S.W.2d 643, 645 (Tenn. Ct. App. 1986). Therefore, failure of a condition precedent 
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is an affirmative defense that, if proven, will defeat the plaintiff’s claim for breach of 

contract. See Harlan v. Hardaway, 796 S.W.2d 953, 957 (Tenn. Ct. App. 1990); see also 

Branch Banking & Tr. Co. v. Hill, No. E2018-00232-COA-R3-CV, 2019 WL 993441, at 

*9 (Tenn. Ct. App. Feb. 28, 2019). However, as explained by this court:

Where a duty of one party to a contract is subject to the occurrence of a 

condition, the additional duty of good faith and fair dealing imposed on him 

may require some cooperation on his part, either by refraining from conduct 

that will prevent or hinder the occurrence of that condition or by taking 

affirmative steps to cause its occurrence; non-performance of that duty 

when performance is due is a breach, and that has the further effect of 

excusing the non-occurrence of the condition itself, so that performance of 

the duty that was originally subject to its occurrence can become due in 

spite of its non-occurrence.

German v. Ford, 300 S.W.3d 692, 707 (Tenn. Ct. App. 2009) (quoting 13 Richard A.

Lord, Williston on Contracts § 38:11 (4th ed. Supp. 2008)).

In its motion for summary judgment, Houston County contended that its

contractual obligation to reimburse Acute Care was conditioned on Houston County’s 

ability to negotiate an asset purchase agreement with PCMC and close by December 31, 

2012. It further contended that the closing did not occur pursuant to the contract, and 

therefore, it had no obligation to perform. Houston County’s contentions were not 

disputed; therefore, Houston County met its burden to show, at the summary judgment 

stage, that the facts establishing its affirmative defense were not in dispute.

In its supplemental response to Houston County’s motion, Acute Care claimed 

that it was disputed whether Houston County actually reached an agreement before the 

deadline but prevented the closing from occurring to avoid its obligations to Acute Care.

Under Tennessee law, if Houston County prevented the condition from occurring, then 

Houston County was liable for breach. See id. Therefore, we examine the evidence 

presented by both parties in a light most favorable to Acute Care to determine if a 

reasonable trier of fact could find in favor of Acute Care on this issue.

In support of its statement of disputed facts, Acute Care presented the September

17, 2012 resolution passed by the Houston County Board of Commissioners approving 

the asset purchase agreement and Houston County’s management agreement with Acute 

Care, which stated in pertinent part:

WHEREAS, the County hereby finds and determines that it is necessary 

and desirable for the County to enter into that certain Asset Purchase 

Agreement by and among the County, Patients’ Choice Medical Center of 

Erin Tennessee LLC and Ray Shoemaker;
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WHEREAS, the County hereby finds and determines that it is necessary

and desirable for the County to enter into that certain Management 

Agreement by and between the County and Acute Care Holdings LLC;

SECTION 1. Approval of the Asset Purchase Agreement. The form, 

content, and provisions of the Asset Purchase Agreement, as presented to 

this meeting of the Board of Commissioners of the County, are in all 

particulars approved, and the Mayor and the County Clerk are hereby 

authorized, empowered, and directed to execute, acknowledge, and deliver 

said Asset Purchase Agreement in the name, and on behalf, of the County.

SECTION 2. Approval of the Management Agreement. The form, content, 

and provisions of the Management Agreement, as presented to this meeting 

of the Board of Commissioners of the County, are in all particulars 

approved, and the Mayor and County Clerk are hereby authorized, 

empowered, and directed to execute, acknowledge, and deliver said 

Management Agreement in the name, and on behalf, of the County.

(Emphasis added). 

Although this resolution shows that the Commissioners reviewed Houston 

County’s agreements with PCMC and Acute Care and approved the agreements “in all 

particulars,” Houston County insists the resolution merely approved “draft documents” 

that were missing a material term, the purchase price. However, the County’s position is 

undermined by the clear directive, which authorized the Mayor and County Clerk of 

Houston County “to execute, acknowledge, and deliver” the agreements on behalf of the 

County.

Furthermore, Acute Care relies on an email from October 16, 2012, in which Ms. 

Barnett, attorney for Houston County, sent the asset purchase agreement, the 

management agreement, and the Commissioners’ resolution to a USDA loan 

representative, writing:

Attached is a copy of the signed Resolution adopted by the Houston County 

Commission last night authorizing the execution of the Asset Purchase 

Agreement and the Management Agreement in connection with the 

Hospital purchase . . . Please let Markley or me know what else you need to 

process this for closing.

Then, on October 18, 2012, when the USDA representative noted that the asset purchase 

agreement did not have a purchase price, Ms. Barnett responded:
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Yes, it is the parties’ intentions that the USDA Loan be applied to retire all 

existing lien indebtedness (appearing on the title commitment), as well as to 

reimbursement of the management company, to the extent of payments 

advanced for accounts payable (with supporting documentation).

. . .

None of these numbers can be finalized until we set a firm closing/funding 

date. Then we can request a formal payoff letter.

In other words, the Seller is expecting the purchase price to be equal to 

the amount necessary to pay the liabilities on the Seller’s balance sheet. 

So yes, the purchase price will be that number. Funds available for 

renovations to the hospital, and other reserved funds are not going to the 

Seller. The Seller is not receiving any cash.

(Emphasis added).

Acute Care insists this email proves that Houston County and PCMC had agreed

upon the purchase price because they had agreed upon the method for calculating the 

purchase price and, thus, the county had an enforceable contract to purchase the hospital

before the deadline expired. As we explained in previous cases, “where price is the 

unspecified material term, courts have enforced contracts that call for the price to be set 

by vague but ascertainable standards . . . .” Abbott v. Abbott, No. E2015-01233-COA-R3-

CV, 2016 WL 3976760, at *5 (Tenn. Ct. App. Jul. 20, 2016) (quoting Huber v. Calloway, 

No. M2005-00897-COA-R3-CV, 2007 WL 2089753, at *5 (Tenn. Ct. App. Jul. 12, 

2007)).

Considering the foregoing facts in a light most favorable to Acute Care, a 

reasonable finder of fact could infer that all material terms of the asset purchase 

agreement had been agreed upon as early as October 18, 2012. Therefore, the Mayor and 

County Clerk of Houston County could have proceeded “to execute, acknowledge, and 

deliver” the asset purchase agreement as previously authorized by the Board of 

Commissioners.

Acute Care also contends it was disputed as to why Houston County failed to sign 

the asset purchase agreement by December 31. Acute Care contended that Houston 

County acted in bad faith because its failure to sign the agreements was calculated to 

avoid its obligation to both reimburse Acute Care and award the management contract to

Acute Care. Pursuant to the plain terms of the Letter of Intent, if the purchase of PCMC 

closed pursuant to the Letter of Intent, Houston County was required to lease the assets of

PCMC to Acute Care—“As of the Closing, [Houston County] and [Acute Care] shall

enter into a lease of the Assets . . . .” (Emphasis added). Ultimately, because the purchase 
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of the hospital did not close in accordance with the Letter of Intent, Houston County was 

free to award the management contract to a company owned by Houston County’s 

attorneys, Tim Gary and John Griffin.

As evidence of the County’s bad faith, Acute Care submitted an October 2012 

email, redacted by Houston County, from Mr. Griffin to Mr. Gary stating: “Attached are 

both documents with updates. Let me know if you need to add anything else. If this looks 

like it is moving forward, I would like to get together and discuss the overall management 

company concept.” When deposed, the Mayor of Houston County could not confirm or 

deny that Houston County had begun discussions with Mr. Griffin and Mr. Gary as early 

as October 2012 about forming a separate entity to manage PCMC:

Q. Did you have discussions with Mr. Griffin or Mr. Gary in or around 

October of 2012 about getting together with them to discuss the overall 

management-company concept?

A. I don’t remember.

Q. Who is Mr. Gary?

A. Tim Gary was an attorney.

Q. He was your attorney?

A. He was an attorney for the county up at the hospital.

Q. After [Acute Care] is no longer involved in the particular transaction, 

did Mr. Griffin and Mr. Gary end up in—an entity they have ownership 

interest or control, operating the hospital?

A. The—I think that’s what Franklin Management ended up being.

Considering the foregoing facts in a light most favorable to Acute Care, a 

reasonable finder of fact could infer that the October email represented the start of 

negotiations to award Franklin Healthcare Management, instead of Acute Care, the 

hospital management contract. 

Based on the foregoing and other evidence in the record, there is a genuine dispute 

of material fact concerning whether Houston County acted in good faith in negotiating an 

asset purchase agreement with PCMC and in closing on the purchase of the hospital by 

the deadline, either by refraining from conduct that would prevent or hinder the 

occurrence of the condition precedent or by taking affirmative steps to cause its 

occurrence. Accordingly, Houston County was not entitled to summary judgment on the 

claim of breach of contract.4

 

4

As an alternative theory, Houston County contends that as of December 18, 2012, Acute Care 

withdrew from the Letter of Intent and terminated all obligations therein, including Houston County’s 

obligations to reimburse Acute Care. As evidence, Houston County submitted a letter written by Acute 

Care’s CEO to Houston County’s Mayor and Commissioners on December 18, 2012, in which, counsel 

(continued...)
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II. UNJUST ENRICHMENT

The trial court summarily dismissed Acute Care’s unjust enrichment claim on the 

basis that “a plaintiff cannot recover [on] an unjust enrichment claim where there is a 

valid contract, and it is undisputed that the [Letter of Intent] constituted a valid contract . 

. . .” Acute Care contends this was in error because whether the April 17, 2012 and July 

6, 2012 amendments to the Letter of Intent are enforceable is disputed.

Our courts recognize two types of implied contracts—contracts implied in fact and 

contracts implied in law. Freeman Indus., LLC v. Eastman Chem. Co., 172 S.W.3d 512, 

524 (Tenn. 2005). “Contracts implied in fact arise under circumstances establishing the

parties’ mutual intention to contract.” Id. However, when there is no mutual intent to 

contract, a contract implied in law may arise under various quasi-contractual theories, 

including unjust enrichment. Id. at 524–25. Thus, a plaintiff “may assert a claim for 

unjust enrichment when the plaintiff does not have a contract with the defendant, or the 

contract that the plaintiff has with the defendant is not enforceable or invalid.” Advanced 

Sec. Servs. Evaluation & Training, LLC v. OHR Partners Ltd., No. M2017-00249-COAR3-CV, 2018 WL 1391626, at *11 (Tenn. Ct. App. Mar. 20, 2018) (citing Freeman, 172 

S.W.3d at 524–25).5

Houston County conceded that the Letter of Intent was a valid contract and 

admitted that the amendments executed on April 17, 2012, and July 6, 2012, were 

“signed” by PCMC, Acute Care, and Houston County.6 However, Houston County never 

 

for Houston County insisted at oral argument that Acute Care formally withdrew from the agreement and 

released Houston County of its obligations to reimburse Acute Care. We disagree. We also find it 

significant that Acute Care assured Houston County in the December 18 correspondence that it wanted to 

participate in “a long-term solution” to ensure the viability of PCMC. Moreover, the following day, 

Sandra Adams, Vice President and General Counsel for Acute Care, sent an email to Houston County 

attorney Tim Gary stating: “Tim, I have still not heard from you on the management agreement. Could 

you please let me know the status?” Thus, we find no merit to the contention that, as of December 18, 

2012, Acute Care withdrew from the Letter of Intent and terminated all obligations therein, including 

Houston County’s obligations to reimburse Acute Care.

5

To proceed under an unjust enrichment theory, the plaintiff must show: “1) ‘[a] benefit 

conferred upon the defendant by the plaintiff’; 2) ‘appreciation by the defendant of such benefit’; and 3) 

‘acceptance of such benefit under such circumstances that it would be inequitable for him to retain the 

benefit without payment of the value thereof.’” Freeman, 172 S.W.3d at 525 (quoting Paschall’s, Inc. v. 

Dozier, 407 S.W.2d 150, 155 (Tenn. 1966)).

6

Houston County’s statement of undisputed facts, reads:

12. PCMC, [Acute Care], and Houston County signed an amendment to the [Letter of 

Intent] dated April 17, 2012.

(continued...)
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admitted or conceded that the amendments were valid and enforceable. Stated another 

way, the fact that it is undisputed the parties “signed” the amendments was not 

tantamount to admitting that the amendments were enforceable. Moreover, Houston 

County signed the April amendment “[a]s an acknowledgment only.” 

Whether the initial date or the date of December 31, 2012, constitutes the agreedupon deadline for closing on the purchase of the hospital is dependent on whether both of 

the amendments are valid and enforceable. Therefore, there is a genuine dispute of a 

material fact which precludes a finding that an enforceable agreement exists. Because the

trial court based its decision to summarily dismiss Acute Care’s unjust enrichment claim 

on the determination that it was “undisputed that the [Letter of Intent] constituted a valid 

contract,” we must reverse the dismissal of Acute Care’s unjust enrichment claim.7

IN CONCLUSION

The judgment of the trial court is reversed and remanded for further proceedings 

consistent with this opinion. Costs of appeal are assessed against Houston County.

________________________________

 FRANK G. CLEMENT JR., P.J., M.S.

 

14. PCMC, [Acute Care], and Houston County signed an amendment to the [Letter of 

Intent] dated July 6, 2012.

7

Houston County also argues that Acute Care’s unjust enrichment claim fails as a matter of law 

because it is undisputed that Acute Care conferred a direct benefit on PCMC, and not on Houston County. 

However, the Tennessee Supreme Court has held that “a plaintiff need not establish that the defendant 

received a direct benefit from the plaintiff. Rather, a plaintiff may recover for unjust enrichment against a 

defendant who receives any benefit from the plaintiff if the defendant’s retention of the benefit would be 

unjust.” Freeman, 172 S.W.3d at 525 (emphasis in original). Therefore, the County’s argument is without 

merit.