Court Opinion

ID: 4493872
Source: CourtListenerOpinion
Date Created: 2020-01-21 23:09:32.105939+00
Date Added: 2024-06-11T15:04:08.353375
License: Public Domain

01/21/2020
                 IN THE COURT OF APPEALS OF TENNESSEE
                              AT JACKSON
                                  November 13, 2019 Session

         ALEXANDER J. BYNUM, ET AL. v. MARK D. SAMPSON, ET AL.

                  Appeal from the Chancery Court for Weakley County
                     No. 23156     W. Michael Maloan, Chancellor

                                No. W2019-00188-COA-R3-CV

This appeal concerns an alleged breach of contract. Alexander Bynum and his father, Hal
Bynum, (“the Bynums,” collectively) bought a slaughterhouse owned by Mark D.
Sampson (“Defendant”) and his then-wife Kimberly Sampson (“the Sampsons,”
collectively) and kept it running as Southern Chop Shop, LLC.1 The contract for sale
provided that all plumbing systems would be in working order on the day of closing. A
year after closing, the Bynums discovered a pipe on the property that was gushing animal
blood straight from the kill floor of the slaughterhouse into a ditch. Defendant knew
about but had not disclosed the pipe. The State became involved and demanded a halt to
the discharge. When remedial efforts proved economically unfeasible, the Bynums shut
down the slaughterhouse. The Bynums and Southern Chop Shop, LLC (“Plaintiffs,”
collectively) sued the Sampsons for breach of contract in the Chancery Court for
Weakley County (“the Trial Court”). The Trial Court found for Plaintiffs, ordering
rescission or, if that is not possible, a monetary judgment against the Sampsons.
Defendant appealed and argues that the plumbing system was in working order on the
day of closing notwithstanding the blood-gushing pipe. We disagree and find that,
contrary to the representations made by Defendant and relied upon by the Bynums, the
plumbing system was not in working order on the day of closing. Defendant, therefore,
breached the contract. We affirm the judgment of the Trial Court.

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

D. MICHAEL SWINEY, C.J., delivered the opinion of the court, in which KENNY W.
ARMSTRONG, J., and ROBERT E. LEE DAVIES, SR. J., joined.

1
  Kimberly Goode—formerly Kimberly Sampson—did not appeal. She did, however, file notice of
bankruptcy in this Court after oral arguments. At the hearing on damages below, counsel for Ms. Goode
represented that his client was undergoing Chapter 13 bankruptcy. Counsel stated further: “I do have an
order from the bankruptcy trustee -- or from the bankruptcy court, allowing me to continue to represent
her until the conclusion of this matter.” Discerning no obstacles to deciding this appeal, we proceed.
Gregory D. Smith, Clarksville, Tennessee, for the appellant, Mark D. Sampson.

Keely N. Wilson and Matthew R. Courtner, Jackson, Tennessee, for the appellees,
Alexander J. Bynum, Hal Bynum, and Southern Chop Shop, LLC.

                                      OPINION

                                     Background

       Alexander Bynum, a realtor, partnered with his father, Hal Bynum, to purchase
Sharon Food Locker, a slaughterhouse built in the 1970s, from the Sampsons for
$235,000. Hal Bynum provided the funds for the purchase. The Bynums intended to
keep the business going under the new name Southern Chop Shop, LLC. Alexander
Bynum prepared the contract, which was executed on April 24, 2014. The pertinent
provisions of the contract are as follows:

             It is understood that the Purchasers are buying this as a going
      business and Sellers are selling it as such. Sellers agree to continue
      operating the business in good faith until closing and agree to continue to
      promote the business in the same manner as has been done to make it
      successful.

                                         ***

             Purchasers shall be given a 10 day due diligence period after
      acceptance during which they may have any inspections desired made at
      their own expense. In the event any unacceptable adverse conditions are
      noted that the Sellers do not wish to correct Purchaser may elect to accept
      the property with the defect(s) OR Purchaser may elect to void this
      cont[r]act without penalty.

                                         ***

             All heating/cooling, electrical, plumbing systems and equipment are
      to be in working order on the day of closing. Any inspections desired shall
      be made at the expense of the Purchasers.

                                         ***

             Sellers certify that they have no knowledge of any current property
      or business violations of any health or government rule/ordinance.
                                          -2-
                                            ***

              Closing of this sale constitutes acceptance of this property in its
       condition as of the time of closing, unless otherwise noted in writing.

       Approximately one year after the closing of the contract, the Bynums were having
some work done on a ditch on the property, and a pipe was discovered. Animal blood
and waste from the kill floor gushed out of the pipe into the ditch. Defendant, when
contacted for answers, stated that it was an “overflow pipe.” Defendant suggested that
the Bynums pump the septic system and send him the bill. The problem proved harder to
solve than that, however.

        Various solutions were explored. The Bynums tried connecting the pipe to the
septic system, but this caused daily problems with the septic tank backing up. Jason
Williams, an environmental scientist with the Tennessee Department of Environment and
Conservation, inspected the site. Williams was obliged to report the septic problems as a
codes violation. James J. Latendresse, a private soil scientist employed by the State,
performed a core drilling soil test and concluded that the soil was not favorable to
installing a new septic system. Daniel Hatch, an environmental engineer with the State,
examined the site, as well. According to Hatch, two options were available. One was a
solution called “pump and haul,” whereby the discharge would be stored in a large
container on site until a vendor could haul the discharge to a treatment facility. The other
possible remedy was to treat the wastewater on site. Pump and haul would cost around
$50,000 per year. Treating the wastewater on site required a permit, which Hatch was
skeptical would be issued because the ditch was dry. This, too, was an expensive
solution. In July 2016, Hatch sent Alexander Bynum a letter, stating in part:

       This office has received a report that untreated process waste water has
       been routinely discharged to a drainage ditch from your meat processing
       facility. . . . You must immediately discontinue discharging until the
       following has been completed and a permit to “pump and haul” has been
       issued:
       - Installation of a storage tank with a capacity sufficient enough to hold
       process waste water until it can be transported to a treatment facility.
       -Submit to this office an acceptance letter from a treatment facility that will
       agree to accept and treat your waste water.
       - Contract with a licensed septic hauler to transport the waste water to the
       designated treatment facility. A copy of the agreement must be submitted
       to this office.

                                             -3-
       - Complete pages 1, 2 and 5 of the enclosed application for a State
       Operating Permit (SOP) and submit it to the Jackson Field Office address
       listed on the instruction page.

The Bynums concluded that the proposed solutions were economically unfeasible. In
August 2016, the Bynums had no choice but to shut down the slaughterhouse.

        Earlier, in July 2015, Plaintiffs had sued the Sampsons in the Trial Court. In their
complaint, Plaintiffs alleged, in part: “Defendants breached the contract certifying the
plumbing systems were in good working order on the day of closing when in fact they
were not . . . As a direct and proximate result of Defendants’ breach of contract, the
Plaintiffs have incurred substantial damages.” Trial in this matter was bifurcated, with a
hearing on liability followed months later by a hearing on damages. The hearing on
liability was held in February 2018.

       The testimony most pertinent to the issues on appeal came from Alexander Bynum
and Defendant. Alexander Bynum was questioned as to why he had not conducted a
more thorough inspection of the property during the ten-day window provided under the
contract, an instrument he himself had drafted:

       Q. The fact that you had a ten-day narrow window --
       A. Yes.
       Q. -- which you gave yourself --
       A. Yes.
       Q. -- basically, would that be a reason to walk the property?
       A. I buy and sell property regularly. I never walk the ditch of any property
       I ever buy like this.
       Q. Well, this ditch runs along the property line; correct?
       A. It does.
       Q. And you could walk the top of the ditch beside where it goes down, and
       you would be walking your property line.
       A. I would, but I don’t know that I would have even necessarily seen the
       pipe then.
       Q. And my question was -- and you gave your explanation first -- but the
       fact that that was along your property line, would that be a reason to go
       back there and walk your line?
       A. I -- I’m -- no.
       Q. Okay.
       A. It -- I -- I don’t see that that’s a reasonable -- that’s not something
       reasonable that I would ever do.

                                            -4-
Q. Okay. So it’s your position here today that because you didn’t go back
there and look around, had they found ancient Indian burial mounds in the
back of your property and that the use of this property is going to be limited
because there are Indian burial mounds --
A. Right.
Q. -- you had no responsibility to go back there and look?
A. (The witness shook his head.) It -- and I want to -- I’m not stating that I
am in this court today because of finding the pipe. I am in this court today
because I was not told of the pipe. So finding the pipe -- that is why I’m
here is because I have -- there is a pipe that was discharging blood out of it,
and that is something that we needed to know as a business.
Q. Okay. And you understand the reason I’m asking these questions --
A. Right.
Q. -- is because the contract that you drew up --
A. Right.
Q. -- put the burden on you to use due diligence and inspect the premises.
You understand that, don’t you?
A. Right. I would also, if I may, say that if they had not been slaughtering
animals at the time, there’s no way you would have seen anything coming
out of the pipe. You only see blood coming out of the pipe when slaught --
animals are being slaughtered. So there’s no way to even know that even if
I’d done an inspection I would ever have seen the pipe.
Q. Well, you could have seen the pipe and then asked the same questions.
A. The attention that was brought to the pipe was the blood that was
coming out of the pipe.
Q. I see. So if you’d just seen the pipe, you would not have asked any
questions.
A. I would have. But if there is nothing --
Q. I’m sorry.
A. -- coming out of --
Q. You would or would not have?
A. I would have asked questions.
Q. Okay.
A. Yes.
Q. Because the next question being you don’t have any information or any
knowledge as to whether Mr. or Mrs. Sampson ever saw blood coming out
of the pipe.
A. Right.
Q. You don’t know if they did or not either.
A. I can’t testify to what Mr. Sampson or Ms. Sampson saw.

                                      -5-
      Q. Okay. And -- and you understand that your lawsuit indicates that they
      knew about all this.
      A. When I called Mr. Sampson and he told me, yes, he knew about the pipe
      and it was an overflow pipe, I assumed that Mr. Sampson knew about the
      pipe.
      Q. Okay. Now, I thought the conversation was a text and then a phone call
      wherein he had agreed to pump the septic tank that he had forgotten to do
      before he left.
      A. He -- he did. And that’s what -- he told me there was an overflow, and it
      needed to be pumped; that’s why it was run out into the ditch.

       Defendant testified. Defendant owned and operated Sharon Food Locker from
1997 to 2014. Defendant testified that until he was called about the pipe, he did not
know that blood from the kill floor was being discharged into the ditch. Defendant stated
that he did not divert any overflow pipes from the septic system to the ditch. In all his
time running the slaughterhouse, Defendant never was written up for a health hazard of
any sort. Concerning the septic system, Defendant told Alexander Bynum during the
purchase process that the water would sometimes back up. Defendant knew the pipe at
issue existed as he had been told about it some time ago, but he never had personally seen
it. With respect to the business’s income, Defendant estimated that it made a gross
income of around $400,000 per year at a fifteen percent profit margin when he was
approached about selling it.

      Regarding his representations to the Bynums about the state of the plumbing
system, as well as his own knowledge about the pipe before the contract was executed,
Defendant testified:

      Q. Okay. And did you represent to Mr. Bynum or -- either one, Mr. Hal or
      Mr. Alex Bynum, did you represent to them that the plumbing system was,
      in fact, in working order with this particular facility?
      A. Yes.
      Q. Okay. Did you ever tell them issues that you had regarding the backing
      up into the building issues that you were having with the septic system?
      A. Yes. I told them that was a sign it needed to be pumped.
      Q. Okay. Did you also represent to them that you had this particular tank
      pumped every year?
      A. Yes.
      Q. And did you also represent to them that you would have it pumped right
      before closing to help them out?
      A. Yes.

                                           -6-
Q. Did you ever disclose to them the fact that there was an overflow pipe
running from the building from the kill floor and the coolers to the ditch?
A. No, ma’am.
Q. Now, in the particular contract, there’s also a provision that wherein the
sellers -- and your definition of the sellers would be Mark Sampson and
Kimberly Sampson equally. Is that correct?
A. Yes.
Q. Okay. Now, the “sellers certify” -- and what does “certify” mean to
you?
A. Agrees, you know.
Q. Agrees?
A. Yes.
Q. Guarantees?
A. Yes.
Q. That they “certify that they have no knowledge of any health or
governmental violation of any type of regulation.” Do you agree with that?
A. Yes.
Q. And you signed each -- you signed the contract; correct?
A. Yes.
Q. And you initialed each page of the contract.
A. Yes.
Q. Okay. Now, do you -- don’t you agree that discharging untreated waste
water or overflow from a septic from a cooler into a ditch is not in
compliance with governmental laws?
A. I never had any problems with this.
Q. I didn’t -- I didn’t ask you if you had any problems with this. I’m asking
you don’t you agree that discharging untreated waste or discharge from a
cooler from a kill floor into a ditch is against health and environmental
regulations?
A. Yes.
Q. You do agree with that; correct?
A. Yes.
Q. And you knew you had a pipe that was doing exactly that before you
entered into this contract.
A. No, ma’am.
Q. You knew you had an overflow pipe from the kill floor and the coolers
that discharged into --
A. No, ma’am.
Q. -- into the ditch.
A. There was a pipe supposedly from the cooler is all it was.
Q. That was run to the ditch.
                                     -7-
       A. To the ditch, yes.
       Q. And the coolers were located in the kill room, where you would hang up
       the meat to hang for several weeks.
       A. Yes.
       Q. Okay. You knew all this before you entered into that contract; right?
       A. Yes.
       Q. And you knew this even though the contract stated that you certified that
       there were no business or health violations of any type of ordinance --
       A. There --
       Q. -- when you signed it.
       A. There were none. I’ve never been cited for this pipe.
       Q. I didn’t ask -- the -- the contract doesn’t say whether or not you’ve been
       cited.
       A. It said --
       Q. The contract --
       A. It asked me does -- do -- did I know. No, I did not.
       Q. You didn’t know of any health or --
       A. No.
       Q. -- governmental violation, but you knew there was a pipe, and you knew
       that discharging said material is in violation of health and environmental --
       A. Yes.

        At the conclusion of the hearing, the Trial Court found in favor of Plaintiffs. The
Trial Court, however, found that no fraud had been committed. The Trial Court did find
that Defendant’s failure to disclose the pipe was a misrepresentation concerning a latent
defect.

       In November 2018, a hearing on damages was held. Hal Bynum testified that the
septic problems prevent the business from operating. Hal Bynum stated further that the
septic problems prevent the business from being sold. Jayne Parrish, a real estate
appraiser, testified also. Parrish testified that the real property value of the facility was
$16,800 as of July 26, 2018. Roger Reed, a personal property appraiser and auctioneer,
appraised the personal property left at the business after it closed. Reed valued the
personal property at $15,483 as of July 6, 2018. At the hearing’s conclusion, the Trial
Court took the matter under advisement.

       In January 2019, the Trial Court entered its order on damages. The Trial Court
found that rescission was the appropriate remedy and ordered Plaintiffs to convey the real
and personal property back to the Sampsons and the Sampsons to repay Plaintiffs
$226,000—the contract price of $235,000 reduced by $9,000 due to supplies used by the
Bynums. Alternatively, if rescission is not possible, the Trial Court entered an award of
                                             -8-
$193,717, a figure incorporating the two experts’ opinions as to the fair market value of
the real and personal property, against the Sampsons in favor of Plaintiffs. Finally, the
Trial Court awarded Plaintiffs $29,662.50 in attorney’s fees based on a provision in the
contract. Defendant timely appealed. The former Mrs. Sampson did not. As a final
background matter, an amended order was entered in May 2019 to account for a typo in
the final judgment.

                                       Discussion

      Although not stated exactly as such, Defendant raises two issues on appeal: 1)
whether the Trial Court erred in finding that Defendant breached the contract; and, 2)
whether Hal Bynum and/or Southern Chop Shop, LLC lack privity of contract with
Defendant. In the body of their brief, Plaintiffs attempt to raise the separate issue of
whether, pursuant to the contract, they should be awarded their attorney’s fees incurred
on appeal.

       Our review is de novo upon the record, accompanied by a presumption of
correctness of the findings of fact of the trial court, unless the preponderance of the
evidence is otherwise. Tenn. R. App. P. 13(d); Bogan v. Bogan, 60 S.W.3d 721, 727
(Tenn. 2001). A trial court’s conclusions of law are subject to a de novo review with no
presumption of correctness. S. Constructors, Inc. v. Loudon County Bd. of Educ., 58
S.W.3d 706, 710 (Tenn. 2001).

       We first address whether the Trial Court erred in finding that Defendant breached
the contract. As this Court has stated: “The essential elements of any breach of contract
claim include (1) the existence of an enforceable contract, (2) nonperformance amounting
to a breach of the contract, and (3) damages caused by the breach of the contract.” ARC
Lifemed, Inc. v. AMC-Tennessee, Inc., 183 S.W.3d 1, 26 (Tenn. Ct. App. 2005) (quoting
Custom Built Homes v. G.S. Hinsen Co., Inc., No. 01A01-9511-CV-00513, 1998 WL
960287, at *3 (Tenn. Ct. App. Feb. 6, 1998), no appl. perm. appeal filed). Factor number
two, nonperformance amounting to a breach, was the main disputed question at trial.
Regarding contract interpretation, our Supreme Court has stated:

             When we interpret a contract, our role is to ascertain the intention of
      the parties. The intention of the parties is based on the ordinary meaning of
      the language contained within the four corners of the contract. The
      interpretation of a contract is a matter of law, which we review de novo
      with no presumption of correctness.

84 Lumber Co. v. Smith, 356 S.W.3d 380, 383 (Tenn. 2011) (citations omitted).

                                           -9-
       Defendant begins by arguing that he and his ex-wife were at a disadvantage in
entering this contract. Defendant notes that Alexander Bynum, an experienced realtor,
drafted the contract, and even used his business letterhead. Defendant also contends that
the contract is one of adhesion—that is, a “take it or leave it” contract—and urges this
Court to interpret any ambiguities in his favor. Defendant asserts further that,
notwithstanding the blood-gushing pipe, “[t]he plumbing and septic systems were in
working order on the day the contract purchase closed.”

        Having reviewed this record carefully, we find no evidence that the Sampsons
were under any pressure whatsoever to enter the contract. Indeed, Alexander Bynum
testified at the liability hearing that the Sampsons reviewed the contract and suggested
changes.2 This was no contract of adhesion. Instead, this was a thought-out business
deal between rational adults, none of whom were operating under any duress. The fact
that Alexander Bynum was a realtor is, under these circumstances, irrelevant. He
approached the Sampsons about this deal in his personal capacity. In addition, the
contractual provision at issue required the plumbing systems to be in working order on
the day of closing. This was not some convoluted piece of trickery that might ensnare an
unsophisticated party. It was quite simple and straightforward.

       As to whether the plumbing system worked on the day of closing, Defendant is
correct in that it functioned by dumping animal blood and waste into the ditch. The
slaughterhouse could operate until the State came calling. However, the mere
functioning of the plumbing system does not necessarily equate to it being in “working
order.” The discharge from the pipe violated serious governmental health and
environmental regulations. Remedial efforts proved futile or inordinately expensive. In
our judgment, “working order on the day of closing” means, at a minimum, that the
plumbing system was not in violation of environmental and regulatory rules such that,
were those violations brought to light, the business would have to shut down. After all,
the Bynums entered this deal with the aim of keeping the business running. While
Defendant points to language in the contract providing that “[c]losing of this sale
constitutes acceptance of this property in its condition as of the time of closing,”
Plaintiffs did not bargain for the undisclosed health hazard of the discharge pipe. On the
contrary, Plaintiffs relied on Defendant’s contractual representations that the plumbing
system worked. Plaintiffs were led to believe that, at least as of the day of closing, they
were purchasing a slaughterhouse with a viable plumbing system—a system in “working
order.” Plaintiffs were misled in this regard, albeit, as found by the Trial Court, not
fraudulently.
2
 “Q. So you drafted the contract, but they had some changes that they wanted to be put into the contract.
A. Right.
Q. Okay. And did you make those changes that they requested?
A. Yes.”
                                                  -10-
       Defendant argues further that the Bynums failed to exercise due diligence.
Defendant states “[t]he overflow pipe was easily visible to the naked eye if a person did
even a cursory inspection of the Sharon Food Locker property,” and that “[d]uring that
ten (10) day timeline, the knowledge of the overflow pipe could have, and would have
been seen -- if Mr. Bynum had actually walked the property line as is required by due
diligence.” Defendant’s assertions are curious given that he swore that despite his
purchase of the business and his resulting 17 years of ownership and operation of this
business, he did not know where the pipe was located or its true function; he just knew it
existed. This pipe was located in a brushy area off to the side of the property in a
drainage ditch. It was not obvious. Defendant hardly can reasonably expect the Bynums
to discover in 10 days what he missed for 17 years. We find no failure of due diligence
on the Bynums’ part in failing to discover the pipe on their inspection.

       Continuing his arguments, Defendant states that while he knew about the pipe, he
did not know that blood gushed out from the pipe into the ditch. Defendant notes further
that never in his 17 years of ownership was he written up for any health violation—
incidentally, a disturbing oversight by the inspectors. If Defendant did not know about
the discharge, he certainly had the facts necessary to know. Defendant testified that he
knew all along that a pipe led from the coolers in the kill room to a ditch. Despite this
knowledge, Defendant not only failed to disclose the pipe to the Bynums, he represented
that the plumbing system was in working order. The Bynums, relying on Defendant’s
contractual representations, were saddled with a slaughterhouse that, unbeknownst to
them, violated from day one of their purchase serious governmental health and
environmental regulations that would lead to the business’s inevitable closure. We affirm
the Trial Court in its determination that Defendant breached the contract.3

         We next address whether Hal Bynum and/or Southern Chop Shop, LLC lack
privity of contract with Defendant. Defendant argues that Hal Bynum lacks privity
because he never signed the agreement, never exercised any due diligence, and basically
has been a passive actor in this transaction. Defendant argues Southern Chop Shop, LLC
lacks privity because the contract does not reference it, nor was there any testimony at
trial to support it being part of this lawsuit.

        For their part, Plaintiffs argue that the issue is waived because Defendant did not
raise it below. Plaintiffs argue further that if the issue of privity of contract is not
waived, it is established at least as to Hal Bynum. Plaintiffs cite Defendant’s testimony
from the liability hearing that it was his understanding the contract included him, his
3
  Defendant argues in the alternative that, if the contract was not breached, Defendant fraudulently
misrepresented and concealed material terms. Given our determination that the contract was breached,
we find it unnecessary to address this alternative basis for affirming the Trial Court’s judgment argued by
Plaintiffs.
                                                   -11-
then-wife, and both of the Bynums.4 Defendant, in response, argues that privity of
contract is an essential element of every breach of contract case, and that he did not need
to specifically raise the issue below in order to raise it on appeal.

        Privity of contract has indeed been described as an essential element in breach of
contract actions. Tipton v. Sparta Water Co., 57 S.W.2d 793, 795 (Tenn. 1933).
However, the law in Tennessee is well-settled that, with a few exceptions not present
here, issues not raised in the trial court may not be raised on appeal. E.g., Blankenship v.
Anesthesiology Consultants Exchange, P.C., 446 S.W.3d 757, 760 (Tenn. Ct. App. 2014).
It is not surprising that no proof was presented at trial as to Southern Chop Shop, LLC’s
privity given that Defendant never raised it as an issue. As this issue was raised for the
first time on appeal, we deem it waived.

        As a final matter, Plaintiffs attempt to raise the issue of whether, pursuant to the
contract, they should be awarded their attorney’s fees incurred on appeal. We say
“attempt” because, while Plaintiffs devote a section in the body of their brief to the issue,
they do not identify it as such in their statement of the issues. “Courts have consistently
held that issues must be included in the Statement of Issues Presented for Review
required by Tennessee Rules of Appellate Procedure 27(a)(4). An issue not included is
not properly before the Court of Appeals.” Hawkins v. Hart, 86 S.W.3d 522, 531 (Tenn.
Ct. App. 2001). Plaintiffs’ issue is waived. The judgment of the Trial Court is affirmed
in all respects.

                                          Conclusion

       The judgment of the Trial Court is affirmed, and this cause is remanded to the
Trial Court for collection of the costs below. The costs on appeal are assessed against the
Appellant, Mark D. Sampson, and his surety, if any.

                                            ____________________________________
                                            D. MICHAEL SWINEY, CHIEF JUDGE

4
 “Q. And the contract was between you, your wife, Mr. Alex Bynum, and Mr. Hal Bynum. Is that your
understanding?
A. Yes.
Q. And that’s how you read the contract?
A. Yes.”
                                              -12-