Overland Industrial Lubricant Corp. D/B/A Asco Sanitation v. City of Waynesboro, Collingwood, Clifton and Household and Commercial Garbage ( 1996 )

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.
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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
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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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