Court Opinion

ID: 9926280
Source: CourtListenerOpinion
Date Created: 2024-01-24 15:09:24.582652+00
Date Added: 2024-06-11T09:22:15.473385
License: Public Domain

01/24/2024
                 IN THE COURT OF APPEALS OF TENNESSEE
                              AT JACKSON
                                   January 10, 2023 Session

J.E. ALLEN COMPANY, LLC v. PROGRESS CONSTRUCTION INC. ET AL.

                   Appeal from the Chancery Court for Shelby County
                    No. CH-19-1610 JoeDae L. Jenkins, Chancellor
                        ___________________________________

                              No. W2022-00648-COA-R3-CV
                          ___________________________________

An owner and a contractor executed a standard form construction agreement. The contract
identified the “Contractor” as a corporation and two individuals. Only one of the individuals
signed the contract, but he did so as president of the corporation. After a dispute arose with
a supplier, the owner filed a third-party complaint against the individual who signed on
behalf of the corporation. The individual moved to dismiss and/or for judgment on the
pleadings, arguing that he was not a party to the contract. The court agreed and dismissed
the claims against him with prejudice. We reverse.

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

W. NEAL MCBRAYER, J., delivered the opinion of the court, in which J. STEVEN STAFFORD,
P.J., W.S., and CARMA DENNIS MCGEE, J., joined.

Michael I. Less and Andrew B. Schrack, Memphis, Tennessee, for the appellant, Tennessee
Hotel Group, LLC.

Jeremy G. Alpert and Aubrey B. Greer, Memphis, Tennessee, for the appellee, Yogesh
Purohit.

                                MEMORANDUM OPINION1

                                                 I.

       Tennessee Hotel Group, LLC retained a general contractor to oversee renovations to
a hotel in Memphis, Tennessee. The parties executed an American Institute of Architects

       1
           Under the rules of this Court, as a memorandum opinion, this opinion may not be published,
“cited[,] or relied on for any reason in any unrelated case.” TENN. CT. APP. R. 10.
(“AIA”) standard form contract between owner and contractor.2 The contract identified
Tennessee Hotel Group as the “Owner” and Progress Construction, Inc., Yogesh Purohit,
and William Mann as the “Contractor” on the project. On June 19, 2019, Tennessee Hotel
Group sent Progress Construction, Mr. Purohit, and Mr. Mann written notice of default
based on the Contractor’s failure to meet the substantial completion deadline in the contract.
And it hired another contractor to supplement their work.

       During the renovations, Progress Construction purchased supplies and labor from
J.E. Allen Company, LLC. Alleging that it was never paid, J.E. Allen filed suit against
Tennessee Hotel Group, Progress Construction, and Mr. Mann3 for breach of contract,
unjust enrichment, and violation of the Prompt Pay Act. See Tenn. Code Ann. §§ 66-34-101
to 704 (2022). Tennessee Hotel Group, in turn, filed a crossclaim against Progress
Construction and Mr. Mann and a third-party complaint against Mr. Purohit. It sought
indemnification and damages for breach of contract.

       After filing an answer, Mr. Purohit moved to dismiss and/or for judgment on the
pleadings. He signed the contract only as a corporate representative, not an individual.
Thus, he argued he was not a party to the contract. And the claims against him should be
dismissed. He also asked for an award of costs and attorney’s fees. See id. § 20-12-119(c)
(2021).

       The trial court granted Mr. Purohit’s motion. The contract was signed by Tennessee
Hotel Group and Progress Construction. Mr. Purohit did not provide an individual
signature, and there was no signature line for him to do so. Based on the “four corners of
the contract,” the court found “no intent to bind Mr. Purohit” as an individual. Nor did the
third-party complaint allege that the parties intended for Mr. Purohit to act as a party to the
contract. So the court dismissed the claims against Mr. Purohit and granted him an award
of fees. And it directed entry of a final judgment. See TENN. R. CIV. P. 54.02(1).

                                                     II.

      We review the grant of a motion for judgment on the pleadings the same as the grant
of a Rule 12.02(6) motion to dismiss. Harman v. Univ. of Tenn., 353 S.W.3d 734, 736
(Tenn. 2011); Young v. Barrow, 130 S.W.3d 59, 63 (Tenn. Ct. App. 2003). We accept the

        2
          The parties used a version of AIA Document A101 — 1997 Standard Form of Agreement Between
Owner and Contractor, which expressly incorporated AIA Document A201 — 1997 General Conditions of
the Contract for Construction, and a set of Supplementary Conditions. “The standard form contracts
published by the AIA are the most widely used and generally accepted standard contract forms in use within
the construction industry.” Gables Constr., Inc. v. Red Coats, Inc., 228 A.3d 736, 748 (Md. 2020) (citing 4
Philip L. Bruner & Patrick J. O’Connor, Jr., Bruner & O’Connor on Construction Law § 5:2 (2002)).
        3
            Mr. Mann personally guaranteed the supplier agreement with J.E. Allen.

                                                     2
factual allegations in the complaint as true and draw all reasonable inferences from those
facts in favor of the plaintiff. Tigg v. Pirelli Tire Corp., 232 S.W.3d 28, 31 (Tenn. 2007)
(citation omitted). Viewed in that light, the complaint “must contain sufficient factual
allegations to articulate a claim for relief.” Abshure v. Methodist Healthcare-Memphis
Hosps., 325 S.W.3d 98, 104 (Tenn. 2010). The complaint should not be dismissed unless
“it appears that the plaintiff can prove no set of facts in support of the claim that would
entitle the plaintiff to relief.” Crews v. Buckman Labs. Int’l, Inc., 78 S.W.3d 852, 857 (Tenn.
2002). Whether the factual allegations in the complaint state a claim for relief is a question
of law, which we review de novo. Harman, 353 S.W.3d at 736-37.

         An enforceable contract is an essential element of a breach of contract claim. Fed.
Ins. Co. v. Winters, 354 S.W.3d 287, 291 (Tenn. 2011). Tennessee Hotel Group alleged
that it entered a contract with Mr. Purohit. And it attached the written contract as an exhibit
to the complaint. Thus, the contract became part of the pleadings. TENN. R. CIV. P. 10.03.
The contract identified Mr. Purohit as a party. On its face, the contract indicated that it was
an agreement between the Owner, Tennessee Hotel Group, and the Contractor, identified as
Progress Construction, Mr. Purohit, and Mr. Mann.

       Mr. Purohit pointed to the contract’s signature block to demonstrate that he was not
a contracting party. He signed the contract on behalf of Progress Construction. And the
contract did not require additional signatures. But the lack of an individual signature is not
dispositive here. The contract did not have to be signed to be enforceable. See Staubach
Retail Servs.-Se., LLC v. H.G. Hill Realty Co., 160 S.W.3d 521, 524 (Tenn. 2005); T.R.
Mills Contractors, Inc. v. WRH Enters., LLC, 93 S.W.3d 861, 865 (Tenn. Ct. App. 2002).
And “parties can become contractually bound absent their signatures.” Harvey ex rel.
Gladden v. Cumberland Tr. & Inv. Co., 532 S.W.3d 243, 265 (Tenn. 2017) (citation
omitted).

       An enforceable contract requires mutual assent to be bound by the contract terms.
T.R. Mills Contractors, Inc., 93 S.W.3d at 865. Courts determine mutuality of assent using
an objective standard based on the parties’ outward manifestations. Staubach Retail Servs.-
Se., LLC, 160 S.W.3d at 524. A party’s signature can demonstrate the intent to be bound
by the contract terms. Moody Realty Co., Inc. v. Huestis, 237 S.W.3d 666, 674 (Tenn. Ct.
App. 2007). But “[t]he parties’ actions or inactions, as well as spoken words,” can serve
the same purpose. Id.; see also Staubach-Retail Servs.-Se., LLC, 160 S.W.3d at 524-25
(holding that the parties’ performance demonstrated mutual assent to be bound).

       “[A] complaint should not be dismissed, no matter how poorly drafted, if it states a
cause of action.” Dobbs v. Guenther, 846 S.W.2d 270, 273 (Tenn. Ct. App. 1992).
Tennessee Hotel Group sufficiently pleaded a claim for breach of contract. It alleged a
contractual relationship with Mr. Purohit and attached a written contract that identified
Mr. Purohit as a party. The absence of an individual signature on the contract does not
negate these allegations. So the complaint should not have been dismissed. Cf. Hampton
                                            3
v. Hawker Powersource, Inc., No. E2022-00258-COA-R3-CV, 2023 WL 3002492, at *6-7
(Tenn. Ct. App. Apr. 19, 2023), perm. app. denied, (Tenn. Aug. 8, 2023) (affirming
dismissal of breach of contract claim because complaint contained no allegations of a
contractual relationship); Nashville Tenn. Ventures, Inc. v. McGill, No. M2020-01111-
COA-R3-CV, 2021 WL 2070133, at *4 (Tenn. Ct. App. May 24, 2021) (dismissal
appropriate when contract did not identify defendant as a party); Le-Jo Enters., Inc. v.
Cracker Barrel Old Country Store, Inc., No. M2013-01014-COA-R3-CV, 2013 WL
6155622, at *4-5 (Tenn. Ct. App. Nov. 20, 2013) (dismissal appropriate when complaint
did not allege contract between plaintiff and defendant).

                                           III.

       The factual allegations in the third-party complaint state a claim for breach of
contract. The judgment of the trial court is reversed, and the case is remanded for further
proceedings consistent with this opinion.

                                                     s/ W. Neal McBrayer
                                                  W. NEAL MCBRAYER, JUDGE

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