Court Opinion

ID: 1056089
Source: CourtListenerOpinion
Date Created: 2013-10-08 21:03:50.354911+00
Date Added: 2024-06-11T12:06:20.081283
License: Public Domain

IN THE COURT OF APPEALS OF TENNESSEE
                              AT NASHVILLE
                                      JULY 9, 2003 Session

     THOMAS G. HYDE, d/b/a MANAGEMENT RECRUITERS OF
   MURFREESBORO-NASHVILLE v. ISHIKAWA GASKET AMERICA,
                            INC.

               Direct Appeal from the Chancery Court for Rutherford County
                     No. 00CV-712     Robert E. Corlew, III, Chancellor

                   No. M2002-02653-COA-R3-CV - Filed December 22, 2003

This case involves the breach of a contract when Defendant refused to pay fees to which Plaintiff
claims an entitlement. The trial court below found that, under the facts of the case, the contract did
not apply and, therefore, refused to award Plaintiff its fees. Instead, the trial court awarded Plaintiff
a lesser amount under the theory of quantum meruit. Plaintiff timely appealed that decision and, for
the reasons stated below, this Court reverses the ruling of the lower court.

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

ALAN E. HIGHERS, J., delivered the opinion of the court, in which DAVID R. FARMER , J., and HOLLY
M. KIRBY, J., joined.

Gary D. Beasley, Murfreesboro, TN, for Appellant

Richard W. Rucker, Murfreesboro, TN, for Appellee

                                              OPINION

                                   Facts and Procedural History

         In late October or early November of 1999, Shiho Fukui ("Fukui") met and became friends
with Nobue Shibusawa ("Shibusawa"), who held a position at Ishikawa Gasket America, Inc.
("Ishikawa"), the defendant. During their conversations, Shibusawa discussed a position at Ishikawa
as a translator with Fukui. No interviews were held, and Fukui was not offered and did not take the
job because she was uncomfortable working for Shibusawa, her friend.
         In December 1999, Ishikawa decided to employ the services of Management Recruiters of
Murfreesboro-Nashville ("Recruiters"), an employment agency, to fill a position at its offices in
Ohio, and, in that month, Yukari Ishii ("Ishii"), an employee of Recruiters, sent Ishikawa a letter
stating the terms of their contract. Ishikawa stated no objections to the terms set out in the letter and
Recruiters began searching for and offering candidates to fill the position at Ishikawa. Ishikawa
filled the Ohio position through another recruiter but needed to fill another opening at its office in
Farmington Hills, Michigan. Ishikawa decided to use Recruiters to find candidates for this position
and agreed to the same terms as they were set out in the Ohio position agreement. Ishikawa placed
the order to fill the position in Michigan on January 26, 2000. That same day, Ishii sent Ishikawa
resumes for two candidates.

         Fukui, while searching for a new job, decided to employ the services of Recruiters and sent
her resume to their offices. An employee of Recruiters spoke with Fukui about the job opening with
Ishikawa without mentioning the company’s name, however, Fukui, from the job description and the
location, correctly guessed the company’s identity. Fukui stated she was uncomfortable with
working for a friend of hers. The Recruiters employee ended the conversation and had her
supervisor, Ishii, speak with Fukui. On January 27, Ishii spoke with Fukui about sending her resume
to Ishikawa for the position in Michigan and persuaded Fukui to apply for the job. In a conversation
between Ishii and Shibusawa in early February, Shibusawa rejected Fukui's application stating she
did not want to hire a friend to be her assistant. Recruiters sent additional candidate referrals to
Ishikawa. However, on February 22, 2000, Shibusawa notified Recruiters that the position had been
filled terminating the job order. Ishii and Recruiters later learned that Shibusawa and Ishikawa did,
in fact, hire Fukui to fill the position. Fukui had resubmitted an updated resume to Ishikawa and
began working on February 28, 2000.

        In the contract, Recruiters' fee for referring a candidate that Ishikawa ultimately hired was
thirty percent of the candidate’s first year compensation including overtime and pay bonuses. Though
Fukui did not work a full year, the base salary for her position was $35,000 and her bonus would be
a percentage of a week's salary. The contract also states that, if necessary, Recruiters may recover
collection fees, including attorney's fees, from Ishikawa to enforce the agreement.

         Recruiters, after learning that Fukui filled the position, sent invoices to Ishikawa for a service
fee of $12,000 calculated as thirty percent of Fukui's expected first year compensation of $40,000.
When Ishikawa refused to pay the invoices, Recruiters filed a complaint on May 19, 2000, to obtain
payment of the service fee. Ishikawa specially appeared on August 15, 2000, challenging whether
the trial court had subject matter jurisdiction and whether venue was proper but waived this objection
by filing an answer on April 9, 2001. A hearing on this matter was held before the Honorable Robert
E. Corlew, III on April 17, 2002, and the court held that the contract did not govern the terms of the
issue surrounding Fukui. While the court below held that Recruiters was not entitled to a service fee
under the contract, it awarded Recruiters a lesser amount under a theory of quantum meruit. A final
order was entered for this cause on June 17, 2002, and Recruiters timely appealed presenting the
following issues for our review:

                                                   -2-
         I.    Whether the trial court erred in holding that no contract existed between appellant
               and appellee which would entitle appellant to receive the service fee under the
               contract based on appellee's hiring of a candidate referred by appellant;1 and
       II.     Whether the trial court erred in holding that appellant was not entitled to attorney's
               fees and other collection costs expended to collect the service fee under the contract.
Appellee raises the following additional issue:
       III.    Whether the trial court erred in applying quantum meruit to the facts of this case.
For the following reasons, we reverse the decision of the trial court and remand for further
proceedings consistent with this opinion.

                                               Standard of Review

       For a trial court's findings of fact, this Court reviews such findings de novo on the record with
a presumption of correctness. Tenn. R. App. P. 13(d). However, the interpretation of a written
agreement is considered a matter of law and not fact. APAC-Tenn., Inc. v. J.M. Humphries Constr.
Co., 732 S.W.2d 601, 604 (Tenn. Ct. App. 1986). Therefore, our review is de novo on the record
with no presumption of correctness. Id.

                                             Contract Interpretation

        In this instance, the argument between the parties centers around the interpretation of the
contract terms found in a letter from Recruiters to Ishikawa dated December 1, 1999. Specifically,
the contract between the parties provides that a fee is "payable only if a candidate enters into a
service relationship with [Ishikawa] or [Ishikawa's] affiliate within one year after [Recruiters'] most
recent communication relating to the candidate." The contract further states that the service fee is
equal to thirty percent of the candidate's first year compensation. Finally, the contract provides that
"[t]he following definitions are applicable to the Agreement: 'Candidate' means a person referred to
[Ishikawa] by [Recruiters], directly or indirectly. 'Refer' means the disclosure by [Recruiters] of the
identity of a candidate by any means, orally or in writing." In addition, "first year compensation"
includes not only salary and wages but also "draw, fees, commissions, bonuses, and incentives."

        In general, when this Court is presented with an issue of contract interpretation, we must
review the contract and make our own independent determination of the contract's meaning. Cagle
v. Cagle, No. 02A01-9710-CH-00265, 1998 Tenn. App. LEXIS 776, at *7 (Tenn. Ct. App. Nov. 18,
1993). The rights and obligations of parties to a contract are governed by their written agreement.
Hillsboro Plaza Enters v. Moon, 860 S.W.2d 45, 47 (Tenn. Ct. App. 1993). This Court may not
make a new contract for parties who have spoken for themselves nor may we later relieve parties of
their contractual obligations because they have become burdensome or unwise. Id. In addition, we

         1
                    Appellee suggests, and this Court agrees, this issue should be reworded to ask whether the trial court
erred in holding that the terms o f the letter co ntract do not govern the matters in questio n. In the trial court's
memorand um of findings, it fails to state that there was no binding contract between the parties but rather "the terms of
this letter [contract] do not govern the matters in question however."

                                                           -3-
are mindful that, when interpreting language in a contract, we should attribute the usual, natural, and
ordinary meaning to such language enforcing the contract according to its plain terms. Bob Pearsall
Motors, Inc. v. Regal Chrysler-Plymouth, Inc., 521 S.W.2d 578, 580 (Tenn. 1975); Hillsboro Plaza
Enterprises, 860 S.W.2d at 47. "[A contract's] ordinary meaning is that meaning which would have
been derived from its words by reasonable persons dealing in the same situation as that of the
contracting parties." Moore v. Moore, 603 S.W.2d 736, 739 (Tenn. Ct. App. 1980) (citing Hardwick
v. Am. Can Co., 88 S.W. 797 (Tenn. 1905)).

         The trial court below found important that Ishikawa knew of Fukui and that Fukui knew of
the position at Ishikawa before Recruiters transmitted her resume to Ishikawa. For this reason, the
trial court found, and Ishikawa argues, that Fukui was not a "candidate" that was "referred" by
Recruiters as defined in the contract. This finding, however, is inconsistent with the terms of the
contract and the evidence at the hearing. In defining "candidate," the contract fails to specify that
this excludes persons with whom Ishikawa had already had informal discussions. "Candidate" is
defined as a person that is referred to Ishikawa and "refer" means the "disclosure by [Recruiters] of
the identity of a candidate by any means, orally or in writing." While Shibusawa was an
acquaintance of Fukui and Fukui knew of the position at Ishikawa, the evidence supports the
conclusion that, before Recruiters transmitted her resume, Fukui did not apply for the job, she had
no interview with Ishikawa, and the job was not offered to Fukui. Both Fukui and Shibusawa
testified that they were uncomfortable with the arrangement of Fukui working for Shibusawa as her
assistant because they were friends. It was only after Ishii persuaded Fukui to apply for the job that
Fukui authorized the transmittal of her resume to Ishikawa. Though Ishikawa knew of Fukui's
existence and her bilingual background which qualified her for the position, Fukui's candidacy for
the position was not disclosed until Recruiters referred Fukui to Ishikawa, and, therefore, Recruiters
is entitled to its service fee. Because we hold that the contract between the parties applies to this
case and Recruiters is entitled to its service fee, we reverse the decision of the trial court. In
addition, since the trial court found the contract did not apply and awarded Recruiters a sum under
the theory of quantum meruit, that award by the trial court is improper and reversed.

                                          Attorney's Fees

        The contract between the parties provides that "[i]f collection activities should become
necessary, the fee would be adjusted to include any related expenses, such as reasonable attorney’s
fee." "[W]here an attorney's fee is based upon a contractual agreement expressly providing for a
reasonable fee, the award must be based upon the guidelines by which a reasonable fee is
determined." Wilson Mgmt. Co. v. Star Distribs. Co., 745 S.W.2d 870, 873 (Tenn. 1988) (citations
omitted). Where the parties to a contract specify that one party shall be liable for "reasonable
attorney's fees" rather than an agreed upon amount or percentage of the recovery, the expectation of
the parties is that a court will adjudicate the issue of a reasonable fee, unless they agree upon an
amount after the controversy matures. Id. Because the trial court found the terms of the contract
inapplicable, it decreed that plaintiff was not entitled to attorney's fees. Therefore, because we find

                                                 -4-
that the provisions of the contract apply to the circumstances of this case, Recruiters has met the
burden of showing an entitlement to collection costs, including reasonable attorney's fees. See
Taylor v. T & N Office Equip., No. 01A01-9609-CV-00411, 1997 Tenn. App. LEXIS 352, at *11
(Tenn. Ct. App. May 23, 1997). For this reason, we remand this case to the trial court for a proper
determination of Recruiters' reasonable attorney's fees.

                                           Conclusion

        For the foregoing reasons, we reverse the decision of the trial court and remand this case
for further proceedings consistent with this opinion. Costs are judged against Appellee, Ishikawa
Gasket America, Inc., for which execution may issue, if necessary.

                                                     ___________________________________
                                                     ALAN E. HIGHERS, JUDGE

                                               -5-