Heatherly Awad v. Selma Curtis ( 2007 )

IN THE COURT OF APPEALS OF TENNESSEE
AT NASHVILLE
Assigned on Briefs June 6, 2007
HEATHERLY AWAD v. SELMA CURTIS
Appeal from the Chancery Court for Montgomery County
No. MC-CV-CV-CD-02-20 Michael R. Jones, Judge
No. M2005-00094-COA-R3-CV - Filed November 27, 2007
This is a breach of contract case. The parties executed a contract for the sale of a beauty salon
whereby, according to one of the provisions, Seller agreed to work for Buyer for a specific amount
of time. Seller quit before the specified period expired. Both parties sued for breach of contract.
The trial court awarded damages to Buyer in the amount of $18,000.00. Seller appeals, asserting that
the provision at issue was too indefinite to be enforceable and challenging the damages awarded
Buyer. The judgment of the trial court is affirmed.
Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Chancery Court Affirmed
PATRICIA J. COTTRELL, J., delivered the opinion of the court, in which FRANK G. CLEMENT, JR., J.,
joined. WILLIAM B. CAIN , J., not participating.
Nick T. Tooley, Clarksville, Tennessee, for the appellant, Selma Curtis.
Thomas R. Meeks, Clarksville, Tennessee, for the appellee, Heatherly Awad.
OPINION
I. FACTUAL BACKGROUND
In early 2002, Selma Curtis (“Seller”) sought to sell her business, Legends Artistique Hair
Salon (“Legends”). She had recently opened another establishment in another part of town, Upscale
Hair Salon (“Upscale”). Heatherly Awad (“Buyer”) expressed interest in purchasing Legends.
Following negotiations, the parties entered into a Purchase and Sale Agreement on March 29, 2002,
whereby Buyer would purchase the business, with its inventory, equipment, and supplies. Buyer
agreed to pay a total of $30,000.00 for Legends, with a down payment of $18,000.00 and twelve
monthly installments of $1,000.00 each.
On June 27, 2002, the parties executed three more documents relating to the conveyance.
The first, an Asset Purchase Agreement (“Agreement”), conveyed the business and personal property
used in connection with the operation of the business. Such property used in connection with the
operation of the business (including items such as coffee makers, coat hangers, plumbing, a tile floor,
and pictures) was valued at $48,122.00. The Agreement indicated that all of the property related to
the business would remain after the sale, save a few specified pieces that would leave with Seller.
Again, the purchase price of the business and related property was $30,000.00. The Agreement
contained the following relevant provisions:
1. Sale of the Property
....
(d) Seller agrees not to advertise her new Salon named Upscale Hair
Salon at Legends Artistique Hair Salon, verbally or on the reader
board located outside Legends Artistique Hair Salon.
....
(f) Buyer requests Seller to work at Legends Artistique Hair Salon a
maximum of one (1) year from July 1, 2002 for a maximum of four
(4) days a week. After six (6) months, Buyer has the right to make
the determination prior to January 1, 2003 if Seller’s services are still
required from the last six (6) months. Seller agrees to work in
accordance with a flexible schedule between Seller and Buyer no
more than thirty (30) hours per week unless agreed upon between
Buyer and Seller or until Sellers services are no longer required.
....
(j) In good faith, Buyer expects Seller to maintain the same level of
professionalism and level of service as demonstrated in the last 12
months prior to Purchase Agreement . . . .
The second document, a Bill of Sale, covenanted that “the Seller owns and possesses the
Personal Property; that the Seller has a good and lawful right to convey the Personal Property; and,
that the Personal Property is unencumbered. The Seller further agrees to warrant and defend the title
to the Personal Property against any lawful claims.” Again, the purchase price of $30,000.00 is
noted. The third document was a Promissory Note executed by Buyer to Seller guaranteeing
payment of the balance of the transaction ($12,000.00). The first installment of $1,000.00 was due
July 31, 2002. The Promissory Note also stated that a ten percent penalty would be assessed against
any late payment by Buyer, following a fifteen day grace period, and that in the event of such late
payment Seller had the right to demand immediate payment of the balance due. These documents
were less than meticulous in their references to the property being conveyed. However, a fair
reading indicates that the business, together with personal property connected with the business, was
conveyed for a total purchase price of $30,000.00, even though the property connected with the
business was valued at $48,122.00. In their briefs, the parties also interpret the arrangement as
involving sale of the business and personal property for a total price of $30,000.00.
On July 1, 2002, Buyer took possession of Legends, and the parties’ working relationship
commenced. Almost immediately, the parties experienced difficulty in working together. Seller
alleges that Buyer worked short and sporadic hours, never making any effort to maintain
relationships with Legends existing customers. Similarly, Buyer alleges that Seller worked at
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Legends for approximately one to two weeks over the period of an entire month, taking a two week
vacation. The parties disagreed as to ownership of Legends retail items, valued at $1,200.00. Seller
claimed ownership to the retail items pursuant to the Purchase and Sale Agreement. Buyer changed
the locks on the doors, refusing to give Seller a new key. Further, Seller alleges that Buyer hired
new employees resulting in less work for Seller, constantly criticized Seller’s attire, and attempted
to estrange Seller from some of her regular customers. Buyer did not make the first installment
payment due on July 31, 2002.
Seller alleges that she found the working conditions at Legends to be so intolerable that, on
August 7, 2002, she informed Buyer that she would no longer work there. On September 4, 2002,
Buyer filed a Bill of Complaint in the Montgomery County Chancery Court alleging that Seller
breached the contract between them and additionally maintaining that Seller had encouraged
Legends customers to switch their allegiance to Upscale. Seller counter-sued for breach of contract.
The trial took place without a jury on December 2, 2004. On December 8, 2004, the trial court
issued an Opinion finding for Buyer. The Order, entered August 15, 2005, includes the following
findings:
1. On the 29th day of March, 2002, Plaintiff, Heatherly Awad and the
Defendant, Selma Curtis, entered into a purchase and sale agreement whereby
the Defendant, Selma Curtis, was selling the Plaintiff her ongoing beauty
salon business, aka Legends Artistic Hair Salon, including inventory,
equipment and supplies.
2. There were exceptions to the contract, inclusive of all resale retail hair
products (Exhibit 1).
3. The litigants executed an amendment to the agreement clearly reflecting that
the sale was a business opportunity and sale and purchase of Legends Artistic
Hair Salon. (See Exhibit 10).
4. On the 27th day of June, 2002, the litigants entered into an Asset Purchase
Agreement (Exhibit 2).
5. The Defendant agreed not to advertise her new salon verbally or on the reader
board outside Legends Artistic Hair Salon. The issue in this case was the
interpretation of paragraph 1F of the Asset Purchase Agreement. The
Defendant denies that she was under a contractual obligation to work at
Legends. The Court finds that the Defendant expressly agreed to work in
accordance with a flexible schedule, no more than 30 hours per week.
6. The Defendant placed an ad in the Leaf-Chronicle on June 29, 2002, (Exhibit
4) advertising her new business, Upscale Hair Salon prices and indicated that
the Defendant would be working at Legends Artistic Hair Salon from 9:00
a.m. to 4:00 p.m. and at Upscale Hair Salon after 4:00 p.m.
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7. A fair reading of the advertisement would lead one to believe that the
Plaintiff would be performing massages as an employee at Legends.
8. On the 27th day of June, 2002, the Defendant executed a bill of sale to the
Plaintiff for the personal property (See Exhibit 6).
9. On June 27, 2002, the Plaintiff executed a note payable to the Defendant in
the amount of $12,000 payable at the rate of $1,000 per month, with the first
payment due July 31, 2002 (See Exhibit 7).
10. On the 1st day of July, 2002, the Plaintiff took possession of Legends and
began operating the business.
11. On the 1st day of July, 2002, the Defendant worked from 10:00 a.m. to 2:00
p.m., on July 2, 2002, the Defendant worked 10:00 a.m. to 3:00 p.m.,
Defendant went on vacation from July 5 to July 9, 2002. On July 9, 2002, the
Defendant worked from 9:00 a.m. to 4:00 p.m., on July 10, 2002, the
Defendant worked from 1:00 p.m. to 4:00 p.m., on July 11, 2002, the
Defendant worked from 1:00 p.m. to 3:00 p.m., on July 12, 2002, the
Defendant worked from 12:00 p.m. to 4:00 p.m., on July 13, 2002, the
Defendant worked from 9:00 a.m. to 1:00 p.m., on July 26, 2002, the
Defendant worked from 9:00 a.m. to 12:00 p.m. and then had a dentist’s
appointment, on July 17, 18 and 19, 2002, the Defendant worked from 9:00
a.m. to 4:00 p.m. The Defendant then left for a two week vacation. On
August 1, 2002, the Defendant returned and worked from 9:00 a.m. to 3:00
p.m., on August 2, 2002, the Defendant worked from 9:00 a.m. to 1:00 p.m.,
on August 3, 2002, the Defendant did not work. On August 6 and 7, 2002,
the Defendant worked from 9:00 a.m. to 4:00 p.m.
12. On August 7, 2002, the Defendant told the Plaintiff that she was no longer
working for the Plaintiff. The Defendant has not worked for the Plaintiff
since August 7, 2002. The Defendant was not fired. The Court finds the
Defendant specifically voluntarily quit. (Emphasis added.)
13. The Defendant testified that the Plaintiff was not utilizing the Defendant’s
management skills and knowledge of the business. The Defendant testified
in court that two other ladies were her bosses and she felt that she had
nothing to do because another employee was taking her clients.
14. There is nothing mentioned in any of the agreements signed by the litigants
for the sale of certain products. The litigants agreed during testimony that
these products were to be sold, and the Defendant would receive her costs
and the Plaintiff would receive the profit. The Defendant removed
approximately $1,200 of these products without consulting the Plaintiff.
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15. The Plaintiff paid a yellow page bill that was incurred by the Defendant prior
to the agreement. The Plaintiff, according to the Defendant, made no demand
upon her to pay this bill. The Defendant described this as a bill from a
previous owner. At any rate, this bill did not enter into the Defendant’s
decision to quit working at Legends.
16. The Plaintiff had not paid the first note payment prior to the Defendant
quitting and refusing to work at Legends Artistic Hair Salon.
17. Plaintiff testified that she still has the assets purchased under the asset
purchase agreement. The Defendant has taken no action to secure possession
of the secured items.
18. As an integral part of this contract, the Defendant agreed to work a minimum
of 30 hours per week for a minimum period of 6 months. Defendant
breached the agreement by failing to work. The Defendant was not
justified in quitting due to any of the reasons that she mentioned and
testified to at the hearing. The Defendant, by quitting, deprived the
Plaintiff of the benefit of her bargain. The Defendant further breached
her contract by discussing with clients her new salon and requesting
clients to come to the new salon. (Emphasis added.)
19. Having determined that the Defendant breached the contract with the
Plaintiff, the Court must determine what damages were incurred by the
Plaintiff. The Court finds from the proof that the business dropped sharply
when the Defendant quit. The damages that should be awarded are those that
may fairly and reasonably be considered as arising out of the breach.
20. The business is closed. There is no evidence that the Plaintiff received any
benefit from her down payment of $18,000. To place the buyer in as good
a position as she was prior to the breach appears to be an equitable means of
measure of damages. The promissory note executed by the Plaintiff to the
Defendant is unenforceable due to the substantial breach of the contract by
the Defendant and the Defendant shall be entitled to the return of all the items
of personal property listed in Exhibit 2.
It is therefore ORDERED, ADJUDGED AND DECREED as follows:
1. That the Plaintiff is awarded a judgment against the Defendant in the amount
of $18,000.00.
2. That the cross complaint filed by the Defendant and Counter Plaintiff is
dismissed.
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Further, the trial court provided its own Statement of Evidence detailing the proceedings,
appearing below:
The Complainant presented the following testimony:
1: Selma Curtis: Exhibit 1 is a purchase and sale agreement. Exhibit 2 is an
Asset Purchase Agreement that my real estate agent prepared. The first week after
the buyer took over, I worked. I then took 2 weeks vacation. I worked 8 more days
and then quit. The buyer told me to take my merchandise so I did. Exhibit 3 is a list
of the merchandise that I took. I was never approached about the “yellow page” bill.
I left because they were taking my clients and I had nothing to do. The buyer put
Cheryl and Shannon as my boss. I told the buyer that I was quitting. Exhibit 4 is the
newspaper advertisement that I placed in the paper. The buyer brought me the
picture. Exhibit 5 is a confirmation of agency status. Exhibit 6 is the Bill of Sale.
Exhibit 7 is the promissory note executed by the buyer. I received no monthly
payments.
2: Heather Awad: I took over the shop on July 1st. The Seller worked 10 to
2 on that date. On July 2nd, she worked 10 to 3. The Seller was on vacation from
July 5 until July 9. On July 9, the Seller worked 9 to 4; on July 10th, she worked
from 1 to 4; on July 11th, she worked from 1 to 3; on July 12, she worked from 12
to 4; on July 13, she worked from 9 to 1; on July 16, she worked 9 to 12 and then
went to a dentist appointment; on July 17th, 18th and 19th, she worked 9 to 4. On
July 18th, the Seller told me she was going on vacation for 2 weeks. Cheryl asked
someone to fill in for us. We had to pay her $300.00. On August 1st, the Seller
returned and worked from 9 to 3; on August 2nd, she worked 9 to 1; on August 3rd,
she did not work; on August 6th, she worked 9 to 4. On August 7th, the seller quit.
The buyer did not agree that the seller could quit. Exhibit 8 was identified as a book
that was kept concerning the hours worked. Monday was day off. The buyer had a
written dress code and gave each person written notice of the dress code. The seller
did not abide by the dress code. The seller violated the dress code day after day by
wearing see through blouses. The seller was very friendly with her clients. During
the few hours that she was there, she would receive telephone calls while she was
working with a client. The seller would take the telephone outside and have her
conversations. I talked to her on 2 or 3 occasions about that. After August 7th,
business dropped drastically. We had none of her former clients; we received no
telephone calls asking for the seller. In reference to the newspaper advertisement, the
seller approached me and told me that she wanted to do this as a gift for me and that
she needed a picture. I provided the picture but told the seller that I wanted to see the
ad prior to its publication. I did not see the ad until it had run in the newspaper. I did
not pay the August monthly payment because I could not afford it after she left. The
seller told the buyer that “this is not my problem.” On July 3rd, the Seller called the
buyer and told her that she (buyer) took the merchandise because she could not afford
to buy new merchandise. The agreement was that the seller was to get her cost from
these products and the buyer was to receive the profit. The yellow page bill was
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never discussed prior to my receiving the bill. The bill indicated October 02 for
Legends in the amount of $655.00. The seller stated that she felt that I needed the
yellow pages ad. The first payment was due on July 31st. I did not make the
payment because it was still in the grace period. Exhibit 9 is the security agreement.
I did sell shampoo and conditioner to Avante. Cheryl now works at Avante. I still
have the equipment. Exhibit 10 was prior to the contract.
3. Cheryl Milyo Laird: I was the hair dresser manager. The seller did tell
customers about her new business on Madison Street. Buyer was upset about the
advertisement.
4. Mrs. Dale Jackson: I heard the Seller tell a client that she had another salon
in the Sango area. The seller was not talking to me.
5. Barbara Grinsley: The Seller mentioned to me that she was opening a new
salon on Madison Street and wanted me to come there. The Seller wanted me to do
more than just a hair cut. The Seller told me that she was trying to get her clients to
go with her to the new salon.
6. Dorothy Bartholomai: Seller told me that she had sold business. She said
that she would stay there for awhile, and then she wanted me to go to her new
business.
7. Shannon Harris: I am employed at Nail Tech. The seller told me that she
had a new salon and said it was “better to come and visit with her at the new salon.
Business did go down after the Seller left. The Seller did not say come to the other
store.
The Buyer rested her case.
The Seller presented the following testimony:
1. Selma Curtis: I did not have to work those hours. If there were no clients,
I did not work.
2. Virginia Ryder: I followed Selma from Legends to Upscale. The seller did
not ask me to change. I saw it in the newspaper.
3. Shirley Hill: I always go to Selma. The seller did not solicit me to change
locations.
There was no further testimony presented.
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Seller presents three issues on appeal, specifically, whether the trial court erred in (1) finding
that Seller had breached the contract entered into by the parties; (2) awarding Buyer a total of
$18,000.00 in damages while denying any kind of legal or equitable relief to Seller; and (3) voiding
the Promissory Note executed by Buyer1.
II. STANDARD OF REVIEW
Review of the trial court must be in conformance with Tenn. R. App. P. 13(d), which states
that “review of findings of fact by the trial court in civil actions shall be de novo upon the record of
the trial court, accompanied by a presumption of the correctness of the finding, unless the
preponderance of the evidence is otherwise. . . .” Tenn. R. App. P. 13(d). “The review of a question
of law is de novo, with no presumption of correctness afforded to the conclusions of the court
below.” King v. Pope, 91 S.W.3d 314, 318 (Tenn. 2002).
III. BREACH OF CONTRACT
Seller alleges that the provision giving rise to the dispute, namely, paragraph 1(f) of the
Agreement, is “void for vagueness and for an indefiniteness of its essential elements.” Seller
maintains that the Agreement, while obligating her to work for Buyer, fails to address key elements
such as the nature of the work to be performed and the role Seller is expected to play in the
maintenance of the business. Seller argues in her appellate brief that “[t]he lack of specificity
regarding the nature of the work Mrs. Curtis was to perform, coupled with the open-ended
requirement that her work schedule be ‘flexible’ and the result of agreement between the parties,
almost assured that misunderstandings and deadlock would arise.” In summary, Seller maintains
that paragraph 1(f) of the Agreement is unenforceable due to its lack of specificity regarding certain
1
Seller’s third issue stated on appeal is never directly addressed within the analysis portion of her appellate
brief. As asserted by Buyer, this issue is thereby waived pursuant to Rule 6(b) of the Rules of the Court of Appeals of
Tennessee, which states the following:
No complaint of or reliance upon action by the trial court will be considered on appeal unless the
argument contains a specific reference to the page or pages of the record where such action is
recorded. No assertion of fact will be considered on appeal unless the argument contains a reference
to the page or pages of the record where evidence of such fact is recorded.
Tenn. R. Ct. App. 6(b) (2006). As noted by this Court in Brummitte v. Lawson, 182 S.W.3d 320 (Tenn. Ct. App. 2005),
Rule 6(b) of the Rules of the Court of Appeals provides in pertinent part that “[n]o assertion of fact
will be considered on appeal unless the argument contains a reference to the page or pages of the
record where evidence of such fact is recorded.” As we have previously stated, “this Court is under
no duty to blindly search the record in order to find proof to substantiate the factual allegations of the
parties or any other evidence to support a party’s contentions.” Pearman v. Pearman, 781 S.W.2d
585, 588 (Tenn. Ct. App. 1989). Failure to comply with the Rules of this Court results in a waiver of
the issue raised. Bean v. Bean, 40 S.W.3d 52, 55 (Tenn.Ct.App.2000).
Brummitte, 182 S.W.3d at 323. Therefore, Seller’s third issue is waived.
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factors. Further, Seller maintains that Buyer failed to make even the first monthly installment
pursuant to the Promissory Note.
This case boils down to the interpretation of the Agreement between the parties. As the
Tennessee Supreme Court has noted:
The interpretation of written agreements . . . is a matter of law that this Court reviews
de novo on the record according no presumption of correctness to the trial court’s
conclusions of law. See Guiliano v. Cleo, Inc., 995 S.W.2d 88, 95 (Tenn. 1999);
Union Planters Nat’l Bank v. Am. Home Assurance Co., 865 S.W.2d 907, 912 (Tenn.
Ct. App. 1993). A cardinal rule of contract interpretation is to ascertain and give
effect to the intent of the parties. Christenberry v. Tipton, 160 S.W.3d 487, 494
(Tenn. 2005). In interpreting contractual language, courts look to the plain meaning
of the words in the document to ascertain the parties’ intent. Planters Gin Co. v. Fed.
Compress & Warehouse Co., 78 S.W.3d 885, 889-90 (Tenn. 2002). This Court’s
initial task . . . is to determine whether the language is ambiguous. Id. at 890. If the
language is clear and unambiguous, the literal meaning controls the outcome of the
dispute. Id. If, however, the words in a contract are susceptible to more than one
reasonable interpretation, the parties’ intent cannot be determined by a literal
interpretation of the language. Id.
Allstate Ins. Co. v. Watson, 195 S.W.3d 609, 611 (Tenn. 2006).
The provision at issue details the time frame for Seller to work for Buyer, including dates,
deadlines, and limitations. The portion allowing for flexible schedules was likely inserted for the
convenience of the parties involved, as well as in anticipation of the changing hours required by the
nature of the salon business. The bottom line remains that Seller contracted to work for Buyer for
at least six months. This Court believes that the provision is sufficiently specific to alert both parties
to its meaning; any other interpretation is unfounded. The language establishing Seller’s obligation
to work is clear. The fact is Seller quit shortly after Buyer took over the business. In other words,
the conduct found to constitute a breach of contract was a refusal to work at all. This is not a
question of whether Seller worked enough hours per week or whether her hours were too flexible,
so this Court is not called upon to interpret the specifics of Seller’s agreement to work for Buyer.
Seller focuses on the use of the word “request” at the beginning of the provision, arguing that
such term indicates a lack of definiteness. We do not agree. Seller accepted the terms, including
Buyer’s request that Seller continue to provide services at the salon.
The trial court heard testimony from numerous witnesses before ruling that Seller breached
the Agreement. The credibility afforded witnesses by the trial court is a factor in this Court’s
determination to uphold the trial court’s ruling. At trial, both parties were given the opportunity to
give their own version of the facts regarding the treatment of Seller and the working relationship
between the parties. Further, former employees and customers of Legends testified regarding
whether or not Seller solicited business for Upscale while working for Buyer at Legends. Each party
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presented witnesses in support of her position, and the trial essentially became a swearing contest
between witnesses. When dealing with credibility determinations, this Court has stated:
One of the most time-honored principles of appellate review is that trial
courts are best situated to determine the credibility of the witnesses and to resolve
factual disputes hinging on credibility determinations. See State v. Pruett, 788
S.W.2d 559, 561 (Tenn. 1990); Tenn-Tex Properties v. Brownell-Electro, Inc., 778
S.W.2d 423, 425-26 (Tenn. 1989). Accordingly, appellate courts routinely decline
to second-guess a trial court’s credibility determinations unless there is concrete,
clear, and convincing evidence to the contrary. See Bingham v. Dyersburg Fabrics
Co., Inc., 567 S.W.2d 169, 170 (Tenn. 1978); Thompson v. Creswell Indus. Supply,
Inc., 936 S.W.2d 955, 957 (Tenn. Ct. App. 1996).
The most often cited reason for this principle can be traced to the fact that
trial judges, unlike appellate judges, have an opportunity to observe the manner and
demeanor of the witnesses while they are testifying. See Bowman v. Bowman, 836
S.W.2d 563, 566 (Tenn. Ct. App. 1991). There are, however, other reasons for this
principle. As the United States Supreme Court has observed:
The trial judge’s major role is the determination of fact, and with
experience in fulfilling that role comes expertise. Duplication of the
trial judge’s efforts in the court of appeals would very likely
contribute only negligibly to the accuracy of fact determination at a
huge cost in diversion of judicial resources. In addition, the parties to
a case on appeal have already been forced to concentrate their
energies and resources on persuading the trial judge that their account
of the facts is the correct one; requiring them to persuade three more
judges at the appellate level is requiring too much.
Anderson v. City of Bessemer City, 470 U.S. 564, 574-75, 105 S. Ct. 1504, 1512, 84
L. Ed. 2d 518 (1985).
....
Embarking on independent appellate credibility determinations would be a
drastic change in the settled principles of appellate review.
Mitchell v. Archibald, 971 S.W.2d 25, 29-30 (Tenn. Ct. App. 1998). “Our search for the
preponderance of the evidence is tempered by the principle that the trial court is in the best position
to assess the credibility of the witnesses; accordingly, such credibility determinations are entitled
to great weight on appeal.” Rice v. Rice, 983 S.W.2d 680, 682 (Tenn. Ct. App. 1999). Therefore,
this Court defers to the trial court’s credibility determinations.
The trial court found that Seller breached the parties’ agreement by failing to work and that
her quitting was not justified by any of the reasons she posited. The trial court also found that Seller
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committed an additional breach by requesting that clients come to her new salon. These breaches,
according to the trial court, deprived Buyer of the benefit of her bargain. The evidence does not
preponderate against the trial court’s findings. Accordingly, we affirm the trial court’s holding that
Seller breached the contract.
IV. REMEDY
Having found the contract enforceable and having affirmed the trial court’s finding that Seller
breached the agreement, we must now address the issues regarding the trial court’s remedies. The
trial court’s remedy had three components. First, the court awarded Buyer damages in the amount
of her down payment, $18,000. The trial court also found the Promissory Note Buyer had executed
for the remainder of the purchase price unenforceable, thus relieving Buyer of that obligation, and
also ordered the property listed in the Asset Purchase Agreement (essentially the shop’s equipment)
returned to Seller.
Seller argues that the trial court rescinded the contract and that rescission was not an
appropriate remedy. While the totality of the trial court’s remedies may have operated to return the
parties, as nearly as possible, to their pre-contract position, we do not agree with Seller’s
characterization of the trial court’s actions. The trial court explicitly found Seller had breached the
agreement. In constructing a remedy for Seller’s breach, the trial court specifically stated, “Having
determined that the Defendant breached the contract with the Plaintiff, the Court must determine
what damages were incurred by the Plaintiff.” The court further held “a judgment is granted the
buyer against the seller in the amount of $18,000.00.” This language clearly indicates the court
intended to award damages for breach and not to invoke the equitable remedy of rescission.
The question, therefore, is whether the trial court applied the correct standard for calculating
and the evidence in the record in arriving at the damages it awarded. The court’s order, entered
August 15, 2005, includes the following analysis:
The Court finds from the proof that the business dropped sharply when the Defendant
quit. The damages that should be awarded are those that may fairly and reasonably
be considered as arising out of the breach. . . . The business is closed. There is no
evidence that the Plaintiff received any benefit from her down payment of $18,000.
To place the buyer in as good a position as she was prior to the breach appears to be
an equitable means of measure of damages.
The trial court properly recognized that the purpose of damages for breach of contract is to
compensate the nonbreaching party for injury caused by the breaching party’s conduct. Waggoner
Motors, Inc. v. Waverly Church of Christ, 159 S.W.3d 42, 57 (Tenn. Ct. App. 2004). That includes
such damages as are incidental to or directly caused by the breach.
It appears that the trial court determined in the August order that the appropriate measure of
damages was the amount necessary to place Buyer in as good a position as she was prior to Seller’s
breach. However, in its Opinion, entered December 8, 2004, the trial court, in addition to the
statement above, also found:
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The general law is that the buyer would be entitled to be placed in as good a position
as would have been occupied had the contract been fulfilled. If the seller had
remained, it is unknown whether or not the salon would have been profitable.
Certainly the proof is that business dropped sharply when the seller quit. The
damages that should be awarded are those that may fairly and reasonably be
considered as arising out of the breach.
The trial court’s first enunciation of the applicable measure of damages was a little off the
mark. However, its later pronouncement was a correct statement of the measure of damages.
The purpose of assessing damages in a breach of contract suit is to place the plaintiff,
as nearly as possible, in the same position he would have been in had the contract
been performed. Chambliss, Bahner & Crawford v. Luther, 531 S.W.2d 108 (Tenn.
App. 1975), and Hawkins v. Reynolds, 62 Tenn.App. 686, 467 S.W.2d 791 (1971).
However, it is well settled law that the injured party is not to be put in a better
position by recovery of damages for breach of contract than he would have been in
if the contract had been fully performed. Great American Music Machine, Inc. v.
Mid-South Record Pressing Company, 393 F. Supp. 877 (M.D. Tenn. 1975).
Action Ads, Inc. v. William B. Tanner Co., Inc., 592 S.W.2d 572, 575 (Tenn. Ct. App. 1979).
Thus, the damages should have been based on a determination of the Buyer’s position had
the contract been performed according to its terms. That is different from the Buyer’s position
before the breach. The trial court did not make any calculations or reference any evidence regarding
the Buyer’s position had the contract been performed, i.e., what Buyer would have made (or lost)
had Seller continued to work at the salon and not otherwise breached the agreement. A review of
the statement of the evidence explains why.
In her complaint, Buyer asked for compensatory damages in the amount of $20,000 in
addition to an undetermined sum for damages “as to the loss of business future.” It is important to
note that Buyer has not appealed the amount of damages actually awarded as insufficient.
Carefully reading Seller’s brief in this appeal, we do not find an objection to the amount of
damages either. Instead, Seller argues the trial court rescinded the contract and that rescission is not
appropriate in this case. Seller also argues that the judgment of the court did not achieve equity
because “[t]he result of the trial court award to the [Buyer] has been to free her of any of the
financial burden associated with the closing of the business while leaving her with all of the tangible
assets associated with that business, specifically those items listed in the inventory attached to the
Asset Purchase Agreement. . . .”
On appeal, Seller argues that “the Trial Court should have ordered the Buyer to restore Mrs.
Curtis the equipment valued at forty-eight thousand one hundred twenty-two dollars ($48,122.00)
which was conveyed to her at the time of the sale.” Seller has apparently overlooked that portion
of the court’s order that deals with the equipment. In fact, the trial court’s Order states “the
Defendant shall be entitled to the return of all the items of personal property listed in Exhibit 2.”
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Exhibit 2 is the Asset Purchase Agreement, with the personal property associated with the business
listed in Exhibit A. Thus, Buyer was instructed to return Seller’s personal property associated with
the business.
V. CONCLUSION
The evidence in the appellate record does not preponderate against the trial court’s findings.
Seller breached the Agreement between the parties by refusing to work for Buyer at Legends for the
time period specified in the Agreement and by encouraging customers to come to her new salon.
The judgment of the trial court is affirmed, and costs of this appeal are taxed against Appellant,
Selma Curtis.
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PATRICIA J. COTTRELL, JUDGE
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