Lifetime Books v. Thomas Nelson ( 1998 )

IN THE COURT OF APPEALS OF TENNESSEE
AT NASHVILLE
FILED
LIFETIME BOOKS, INC., ) October 16, 1998
Successor in Interest to )
FELL PUBLISHERS, INC., ) Cecil W. Crowson
) Appellate Court Clerk
Plaintiff/Appellant, )
) Appeal No.
) 01-A-01-9708-CV-00399
VS. )
) Davidson Circuit
) No. 94C-4151
THOMAS NELSON PUBLISHERS, )
INC., )
)
Defendant/Appellee. )
APPEALED FROM THE CIRCUIT COURT OF DAVIDSON COUNTY
AT NASHVILLE, TENNESSEE
THE HONORABLE HAMILTON GAYDEN, JUDGE
NORMAN GILLIS
NORMAN GILLIS & ASSOCIATES
713 18th Avenue South
Nashville, Tennessee 37203
Attorney for Plaintiff/Appellant
JAY S. BOWEN
TIMOTHY L. WARNOCK
SARAH W. ANDERSON
GREGORY S. REYNOLDS
OWEN RILEY WARNOCK & JACOBSON, PLC
1906 West End Avenue
Nashville, Tennessee 37203
Attorneys for Defendant/Appellee
AFFIRMED AND REMANDED
BEN H. CANTRELL, JUDGE
CONCUR:
KOCH, J.
CAIN, J.
OPINION
This appeal involves an interpretation of a “first refusal” provision in a
publishing contract. The Circuit Court of Davidson County dismissed an action
claiming that the publisher breached the provision. We affirm.
I.
In 1991, Thomas Nelson Publishers, Inc. agreed to publish a three
volume book set entitled The Og Mandino Gift Set. The agreement to publish was
actually between Thomas Nelson and Fell Publishers, Inc., which had a separate
publishing contract with Mandino. The agreement referred to Fell as the “Author” and
contained the following provision with respect to Remainders or Overstock:
The Publisher may dispose of books or sheets
which, in its discretion, it deems to be overstock or
remainders in any manner it may see fit and will have no
obligation to pay royalties on copies so disposed of at or
below Publisher’s production costs. Prior to disposal,
Author shall be granted the right of first refusal to
purchase such overstock or remainder upon those terms
and provisions offered to Publisher by any third party
which right Author shall exercise or waive within ten (10)
days receipt of Publisher’s written notification of the
proposed disposition date, or within twenty (20) days of
the date of mailing thereof, whichever shall occur first. In
the event Author fails to reply to Publisher’s offer within
such time, Author’s right of first refusal shall be deemed
waived. On all overstock and remainder copies of the
Work sold in excess of Publisher’s cost of production,
Author shall receive a royalty equal to ten percent (10%)
of the excess amount.
On March 6, 1992, Thomas Nelson wrote to Fell advising Fell that the
Mandino Gift Set would soon be out of print. The letter also contained the following
two paragraphs:
At the present time we have approximately 5,500 copies
in inventory which we would like to offer the author for
$2.00 per set plus the cost of shipping the books.
Please let me know by 17 April 1992 if there is any
interest in obtaining any of the remaining inventory.
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On March 12, 1992, Mr. Lessne of Lifetime Books (the successor to Fell
Publishers) faxed a reply to the letter offering $1.50 for all the remaining books. Early
in April Thomas Nelson contacted Mr. Mandino and offered him the books at $2.00
per set. He ultimately accepted the offer, and about two days later Mr. Lessne
changed his mind and tried to exercise his company’s right to take the books.
(However, the only evidence of Lifetime’s attempt to exercise its right of first refusal
is an August 5, 1992 re-fax of its $1.50 offer.) When Thomas Nelson refused to
comply with Mr. Lessne’s request, this action followed.
II.
Lifetime insists that a literal reading of the publishing contract required
Thomas Nelson to find a buyer first and then to allow Lifetime to accept or reject the
books at the same price. Since the letter of March 6, 1992 did not specifically say that
Thomas Nelson had a buyer and that Lifetime had ten days to match it, Lifetime
argues that the letter was of no effect whatever.
While we agree that the March 6, 1992 letter did not strictly fit the
language of the publishing contract, we cannot agree that after receiving the letter
Lifetime could make a counter-offer and then wait for a second chance to purchase
the books for $2.00 per set. The uncontradicted proof in the record shows that the
March 6 letter was Thomas Nelson’s good faith attempt to comply with the contract.
If nothing else, the letter put Lifetime on notice that Thomas Nelson was going to sell
the books after the deadline set out in the letter. If Lifetime thought that they could
reject the offer and wait for another opening, they had a duty to put Thomas Nelson
on notice of that fact. Instead, they allowed Thomas Nelson to carry out their
announced plan. We are satisfied that under these circumstances they are estopped
to rely on the literal words of the contract.
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Estoppel is based on an equitable principle that prohibits a party from
complaining when his own acts have induced another party to act to his detriment.
If the party’s action or inaction induces another party to change his position “for the
worse,” the first party causing the change of position will lose the rights of property or
contract that he might otherwise have enjoyed. Church of Christ v. McDonald, 171
S.W.2d 817 (Tenn. 1943). An estoppel may arise out of the silence of one under a
duty to speak. Lusk v. Consolidated Aluminum Corp., 655 S.W.2d 917, 920 (Tenn.
1983).
After inducing Thomas Nelson’s belief that they had no interest in
purchasing the remaining inventory at $2.00 per volume, with the certain knowledge
that Thomas Nelson intended to sell at that price, Lifetime cannot complain when
Thomas Nelson obligated itself to another buyer.
The judgment of the court below is affirmed and the cause is remanded
to the Circuit Court of Davidson County. Tax the costs on appeal to the appellant.
____________________________
BEN H. CANTRELL, JUDGE
CONCUR:
_____________________________
WILLIAM C. KOCH, JR., JUDGE
_____________________________
WILLIAM B. CAIN, JUDGE
-4-