Court Opinion

ID: 1082138
Source: CourtListenerOpinion
Date Created: 2013-10-09 20:56:11.917125+00
Date Added: 2024-06-11T13:10:51.837516
License: Public Domain

OVERLAND INDUSTRIAL                           )
LUBRICANT CORPORATION,                    )
d/b/a ASCO SANITATION,                    )
                                          )
       Plaintiff/Appellant,               )
                                          )   Appeal No.
                                          )   01-A-01-9412-CH-00602
VS.                                       )
                                          )   Wayne Chancery
                                          )   No. 8844
CITY OF WAYNESBORO, CITY OF
COLLINWOOD, CITY OF CLIFTON,
AND HOUSEHOLD AND
                                          )
                                          )
                                          )
                                                               FILED
COMMERCIAL GARBAGE, INC.,                 )
                                                               February 7, 1996
                                          )
       Defendants/Appellees.              )
                                                             Cecil W. Crowson
                                                            Appellate Court Clerk
                      COURT OF APPEALS OF TENNESSEE
                        MIDDLE SECTION AT NASHVILLE

APPEALED FROM THE CHANCERY COURT OF WAYNE COUNTY
AT WAYNESBORO, TENNESSEE

THE HONORABLE JIM T. HAMILTON, JUDGE

W. ANDREW YARBROUGH
424 Highway 64 East
P. O. Box 456
Waynesboro, Tennessee 38485
       Attorney for Plaintiff/Appellant

GEORGE G. GRAY
JAMES Y. ROSS
P. O. Box 246
Waynesboro, Tennessee 38485
       Attorneys for Defendants/Appellees
       Cities of Waynesboro, Collinwood and Clifton

RANDY HILLHOUSE
P. O. Box 787
Lawrenceburg, Tennessee 38464
       Attorney for Defendant/Appellee
       Household and Commercial Garbage, Inc.

                              AFFIRMED AND REMANDED

                                   PER CURIAM
                                 OPINION

              This is a dispute over a contract to provide garbage and industrial waste

collection in three Wayne County cities. The contractor sued the three cities for failing

to prevent a rival contractor from providing the same services to some residents of

each city and sued the rival contractor for inducing a breach of contract, for

misrepresentation, and for interference with business relations. After a bench trial the

Chancery Court of Wayne County dismissed the complaint. We affirm.

                                              I.

              On February 2, 1990 the cities of Waynesboro, Collinwood and Clifton

entered into a contract with ASCO Sanitation to pick up garbage and non-hazardous

solid waste within the corporate limits of each city. The dispute in this case concerns

the interpretation of three of the contract provisions:

              ARTICLE I - SCOPE OF CONTRACT

                     A.       The work to be done consists of furnishing all
              plant, labor, tools, vehicles, equipment, materials and
              personnel to perform all work and services necessary to
              satisfactorily collect all non-hazardous residential, commercial
              and/or industrial solid waste within the corporate limits of the
              City, and to transport and dispose of same to an approved
              disposal site specified by the city in strict accordance with the
              terms and provisions of this contract.

                     B.     The work shall begin on the 2nd day of
              February, 1990, and shall be completed on the 2nd day of
              February, 1993, unless terminated sooner in accordance with
              the terms of this contract.

                     C.     In the performance of this contract, the
              Contractor binds himself to the City to comply fully with all
              provisions, undertakings, and obligations hereinafter set forth.

                                          *        *   *

              ARTICLE V - COLLECTION AND PAYMENT FOR AND TO
              CONTRACTOR

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                     A.      If requested by the contractor, the City will
              agree to provide for the billing and collection of the monthly
              solid waste collection and disposal fees on behalf of the
              Contractor, in conjunction with its own monthly utility billing
              system. The Contractor shall be responsible for providing the
              City with all pertinent data on customers, charges and fees,
              to include all monthly charges. The City shall pay to the
              Contractor, all such charges and fees collected on his behalf.

                     B.     The Contractor agrees to reimburse the City the
              actual expenses involved in the billing and collecting process.
              This service charge shall be negotiated with the Contract and
              shall be deducted from the gross monthly collections prior to
              payment of the same to the Contractor.

                                           *   *   *

              ARTICLE XXVI - CONTRACT NOT A FRANCHISE

                      It is the understanding and intention of the parties
              hereto that this agreement shall constitute a contract for the
              collection and disposal of residential, business, commercial
              and/or industrial non-hazardous solid wastes, and that such
              contract does not constitute a franchise; nor shall it be
              deemed or construed as such.

              Household and Commercial Garbage, Inc. was an unsuccessful bidder

on the work covered by ASCO's contract.            At about the same time, however,

Household secured a franchise to provide the same services for the county. Under

that contract Household picked up garbage at the county jail, some schools, and other

county facilities -- even though the facilities were within the three cities under contract

with ASCO. In addition, Household serviced some commercial establishments inside

the three cities. The record does not clearly show how actively Household solicited

the commercial business. It is clear that some of Household's business customers

sought them out because they were dissatisfied with ASCO's service.

              ASCO's representatives complained to the Waynesboro City

Commission and received a sympathetic ear, but the Commission was uncertain

whether it could legally grant an exclusive right to collect garbage within the city. The

Commission sought and received conflicting answers to its question from the

University of Tennessee's Municipal Technical Advisory Service. Consequently, it was

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not until 1992 that Waynesboro passed an ordinance providing a mandatory garbage

collection service for the inhabitants of the city. The city of Collinwood passed such

an ordinance early in 1990.

              Collinwood and Waynesboro did, however, cite Household on numerous

occasions for violating a city ordinance. In Collinwood's case the citation was based

on the 1990 ordinance, providing that no one could collect or dispose of garbage

except in accordance with the ordinance. The Waynesboro ordinance was a general

ordinance, and provided that all refuse within the city was to be collected under the

supervision of the city manager's designee. In each case Household paid the fine,

although it fought the Collinwood convictions on the ground that the grant of an

exclusive right to ASCO violated the Constitution.

                                          II.

              ASCO contends that the cities had a duty to see that ASCO had no

competition in the performance of the contract. In taking this position ASCO assumes

that the contract gave it the exclusive right to handle garbage within the city. While

that interpretation of the contract is not free of doubt, we assume for the purpose of

this argument that ASCO is correct.

              ASCO, however, does not cite any part of the contract or any principle

of law that makes the cities guarantors of the contract or places on them the duty to

prevent interference with ASCO's contract rights. Ordinarily, the one having a contract

right should take steps to protect it. We do not think the record supports a conclusion

that the cities breached their agreement with ASCO.

                                          III.

                                         -4-
              ASCO     also    sued    Household      for   intentional   or   negligent

misrepresentations to customers in the cities, that Household had the authority to pick

up their garbage. In effect, these allegations state a cause of action for fraud or

deceit. But, since the alleged misrepresentations were not made to ASCO and they

did not rely on the misrepresentations to their detriment, a recovery could not be

based on this theory. See Brungard v. Caprice Records, 608 S.W.2d 585 (Tenn. App.

1980).

                                           IV.

              The remaining charges against Household involve (1) malicious

interference with business relationship and (2) inducement of breach of contract. See

Tenn. Code Ann. § 40-50-109. Since ASCO did not have a contract with any of the

individual inhabitants or the business entities in the cities, and we have held that the

cities did not breach their contract with ASCO, an action for inducing a breach cannot

be established on this record.

              The tort of interference with business relations is of uncertain validity in

Tennessee. While the Supreme Court in Hutton v. Watters, 132 Tenn. 527, 179 S.W.
134 (1915), recognized a tort for intentional interference with business relations, the

court in the recent case of Quality Auto Parts v. Bluff City Buick, 876 S.W.2d 818

(Tenn 1994), distinguished Hutton v. Watters and said that the tort of intentional

interference with prospective economic advantage has never been expressly

recognized in this state. It is possible that there are two separate torts, but we think

they seek to accomplish the same purpose: redress for the harm caused by

interference with one's business.

              In Lann v. Third National Bank, 198 Tenn. 70, 277 S.W.2d 439 (1955),

the Supreme Court recognized that "one's business is entitled to protection from

                                          -5-
tortious interference by a third person who, in interfering therewith, is not acting in the

exercise of some rights, such as the right to compete in business." 198 Tenn. at 72,

277 S.W.2d at 440 (quoting from 9 A.L.R. 2d 232). The Court further recognized,

however, that an essential element of the tort is malice. See also Testerman v.

Tragesser, 789 S.W.2d 553 (Tenn. App. 1989). Thus, if the tort of interference with

business relations is viable in Tennessee the plaintiff must also prove that the

defendant acted maliciously and in the absence of some right of his own.

              The trial judge held that Household did not act with malice in supplying

services within the three cities that ASCO arguably held the exclusive right to supply.

We agree. ASCO's exclusive right to collect the garbage within the cities was (and

still may be) a matter of conjecture. Household had a reasonable doubt that the cities

could grant an exclusive right, a doubt shared by the Municipal Technical Advisory

Service. It defended the first citations issued against it on the ground that ASCO's

"exclusive" contract was unconstitutional. Household also had a contract to provide

garbage collection services for the county. A natural conclusion could be drawn that

Household could legally pick up the garbage at the county facilities within the cities.

When it also serviced business entities in the city it was advancing a perceived right

to compete and was not acting with malice.

              The judgment of the trial court is affirmed and the cause is remanded

to the Chancery Court of Wayne County for any further proceedings necessary. Tax

the costs on appeal to the appellant.

                                            PER CURIAM

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