The opinion of the court was delivered by: James H. Jarvis United States District Judge
In this diversity action, plaintiffs, Coleman Logistics, Inc., and Christenberry Trucking and Farm, Inc. (sometimes collectively referred to as "CTF"), seek $2,046,232 in compensatory damages, unspecified punitive and/or treble damages, and pre-judgment interest against defendant Breed Safety Restraint Systems, Inc., d/b/a Breed Technologies ("Breed"), arising out of a freight contract executed by the parties on July 30, 2001 [see Doc. 1, Ex. A]. CTF's primary theories of recovery are based on breach of contract, promissory fraud (fraud in the inducement), and violations of the Tennessee Consumer Protection Act ("TCPA"), Tennessee Code Annotated §§ 47-18-101, et seq. Additionally, CTF claims that it is entitled to recover the value of certain trailers which were delivered into Breed's possession which have not been returned.*fn1 Finally, CTF seeks damages related to the purchase of new trucks required to perform the terms of this contract. Breed denies any and all liability to CTF.
This matter came before the court on July 10, 2006, for a bench trial. After giving careful consideration to the testimony of the witnesses, the exhibits introduced at trial, the proposed findings of fact and conclusions of law [Docs. 21 and 22], the post-trial briefs [Docs. 29-32], and the applicable law, the court makes the following findings of fact and conclusions of law. See Fed. R. Civ. P. 52(a).
1. Plaintiff Coleman Logistics, Inc. (sometimes referred to as "Coleman"), a Tennessee corporation, is a trucking brokerage service. Plaintiff Christenberry Trucking and Farm, Inc. (sometimes referred to as "Christenberry"), a Tennessee corporation, provides trucking services. Defendant Breed, a Michigan corporation, builds component parts for the automobile industry such as safety restraint systems and has production facilities in Tennessee in both Knoxville and Maryville.
2. Clayton V. Christenberry, Jr. ("Clayton") owns Christenberry. His son, Gusty Christenberry ("Gusty"), is Operations Manager of Christenberry, and Charles Dewitt Ingram is the General Manager and handles most financial affairs.
3. At the time of the relevant events, Cameron Faircloth ("Faircloth") was the Director of Production Control for Breed, and Gary R. Boyer ("Boyer") was its Transportation Manager in Knoxville. Boyer and Faircloth were CTF's primary contacts at Breed. Additionally, Stuart Boyd was the General Counsel for Breed.
4. Clayton testified at trial that he has been in the trucking business since the 1960s. In the 1980s, Christenberry entered into a contract with AlliedSignal, Inc. ("AlliedSignal"), to haul raw products for seat belts to locations in Texas and Arizona, which products would then be delivered across the border into Mexico for assembly. Clayton described these deliveries as "time-sensitive," which meant that freight haulers, such as Christenberry, had to deliver the needed parts to the assembly line "just in time" for the assembly line to receive them and assemble them, thereby avoiding the manufacturing expense of warehousing those parts. Clayton testified further that the relationship between Christenberry and AlliedSignal began with Christenberry delivering a few truck loads for AlliedSignal, but it eventually evolved into one in which Christenberry carried all of the parts for AlliedSignal. Breed eventually bought AlliedSignal in the late 1990s. A copy of the contract for transportation services between Christenberry and Breed's predecessor, AlliedSignal, dated May 1, 1996, was marked for identification as Trial Exhibit 13.*fn2
5. For several years before the contract at issue, CTF provided transportation services for Breed's Knoxville operation. CTF made runs from the Knoxville area to various sites along the Mexican border. CTF's trailers loaded with Breed's parts were detached from CTF's trucks and delivered to Breed to then be picked up by Breed's Mexican trucking companies for transit into Mexico. There, the parts would be assembled for transit to various American automobile manufacturers in the Detroit area. CTF now claims that Breed lost some of these trailers [see Trial Exhibit 18]. At trial, Clayton testified that Breed lost eight of CTF's trailers, the average value of each being around $12,000. Breed points out, for reasons which will be discussed very shortly in more detail, that all but three of these trailers were reported missing before November 22, 2000 [see id.]. And, on the morning of trial, CTF indicated that only one of those three was still unaccounted for, i.e., the very last one on Ex. 18 (assigned a value of $16,000).
6. On September 20, 1999, Breed filed its voluntary petition for bankruptcy pursuant to 11 U.S.C. § 101, et seq., with the United States Bankruptcy Court for the District of Delaware [see Trial Exhibit 11, Ex. 1]. Soon afterwards, several of Breed's suppliers demanded deposits against future invoices as a condition of continuing to do business with Breed. Breed paid those deposits to several vendors including Airborne Express, American Freightways, Emory Worldwide, Federal Express, L&D Transportation, and Pro Trans.
7. It is undisputed that Breed made a $300,000 payment to CTF on or about September 21, 1999 [see Trial Exhibit 14]. According to Boyer, this amount, just as with the other suppliers, was a deposit which would be paid back at sometime in the future. However, according to Clayton, this amount "was never a deposit nor intended to be a deposit." [See Doc. 10, attachment].*fn3 Rather, this $300,000 amount was "a premium for continuing to do business with a Chapter 11 Debtor in Possession which had filed for bankruptcy owing the company [CTF] in excess of $600,000." [Id.].*fn4 Clayton further testified that the "$300,000 we demanded of BREED after the filing of the bankruptcy was an amount we required in order to keep servicing BREED's time sensitive transportation requirements which they [sic] needed in order to continue to operate." [Id.]. Regarding that payment, Clayton sent the following letter to Boyer on September 22, 1999:
Gary, Per your instructions the following are the items requested. Any monies received via wire transfer or other means will be applied only to post petitioned invoices after 9/21/99. All pre-petitioned invoices will remain as they are, any advances will not be applied towards these invoices. We are requesting $300,000. In advance for any and all freight that is the responsibility of BREED Technologies after 9/21/99 and will not be applied to any pre-petitioned invoices.
[See Trial Exhibit 2.]*fn5
8. On November 22, 2000, the Bankruptcy Court entered an order confirming Breed's Third Amended Plan of Reorganization [see Doc. 19-3]. Among other things, that Confirmation Order discharged Breed and its consolidated subsidiaries " ... from any claim or any 'debt' ... or from any conduct of the Debtors prior to the Confirmation Date ... ." [See id., p.11]. Moreover, that order provided that " ... all persons are permanently enjoined from, and restrained against, commencing or continuing in any court any suit, action or other proceeding ... seeking to hold ... Reorganized Breed ... liable for any claim, obligation, right, interest, debt or liability that has been discharged or released pursuant to Section 11.1 ... of the Plan." [Id., at p.17]. Finally, § 11.1 of the Plan also provides for the discharge of Breed and its consolidated subsidiaries " ... upon ... the Effective Date ... from any Claim ... that arose ... from any conduct of the Debtors prior to the Confirmation Date ... ." [See Doc. 19-4, p.37].
9. The Effective Date of the Plan was December 26, 2000. On that date, Breed and its consolidated subsidiaries were discharged from all claims that arose prior to the Plan's Confirmation Date, i.e., before November 22, 2000. In this action, CTF seeks damages for the loss of trailers whose last known date of movement was - with three possible exceptions - before November 22, 2000.
10. After emerging from bankruptcy on December 26, 2000, Breed asked vendors - including CTF - to return its deposits. Some vendors paid back the entire amount in one check and others returned the funds over time. For example, according to the spread sheet kept by Boyer, Airborne Express returned a $30,000 deposit by making two $15,000 payments; American Freightways returned a $10,000 deposit in one payment; and L. & D. Transportation made multiple payments, ranging from $50,000 to $10,000, until it had returned the entire $150,000 deposit [see Trial Exhibit 3]. CTF did not, however, return any portion of the $300,000 to Breed at this time because, as previously noted, Clayton believed that the $300,000 was not a security deposit; thus, according to Clayton, CTF did not owe that money to Breed.
11. At about the same time Breed was demanding from CTF its $300,000 "deposit," CTF in turn was demanding a rate increase since, as previously noted, the parties were still operating under the 1996 freight contract between Christenberry and AlliedSignal, including the rates set forth therein. Consequently, in the spring of 2001, Breed and CTF began negotiations for a contract which would establish a rate schedule, fuel surcharges, and other aspects of their business relationship. More particularly, Clayton testified that he initially sought a 6% rate increase for CTF; however, he received a 3% rate increase. Additionally, Clayton sought a five-year contract; however, he received a three-year contract (according to Clayton, Breed wanted a one-year contract).
12. During negotiations, Clayton suggested to Boyer and Faircloth that if he were to receive enough of an increase over a three-year period, based upon monthly billings of $400,000 to $460,000, then he could discount the freight rates in an amount of $300,000 to enable Boyer and Faircloth to satisfy their superiors. Moreover, during these discussions, the initial idea, according to Clayton, was to obtain the discount over the entire three-year period. Nevertheless, Faircloth demanded that he receive the discount in a shorter period of time. In fact, according to Clayton, Faircloth, using an easel, made a presentation showing Clayton how CTF could make up its money "on the back end" of the three-year contract.*fn6 Clayton testified that all of these negotiations were predicated on a factor of 4.6% of the anticipated regular weekly billings of around $100,000 so that Breed would receive a discount of $20,000 a month. Clayton repeatedly emphasized during his testimony that he did not believe that CTF owed $300,000, but that this precise amount could be discounted if the 3% increase were factored into the calculus.
13. The negotiations for the written freight contract itself spanned a period of several days. According to Clayton, David L. Buuck, one of CTF's attorneys of record, prepared the first draft of this contract; Mr. Buuck also prepared the final draft after Boyer submitted the draft to Breed's legal department for review. That contract, which is at the heart of this litigation, provides, among other things, that "Coleman agrees to haul freight for BREED and BREED agrees to pay Coleman for said services provided hereunder." [See Trial Exhibit 1, p.1]. The rates are then set forth in Addendum A to the contract. The term of the contract is three years, and it also provides that "[t]ermination ... for cause requires 60 days written notice by either party." [See id.]. The contract also provides that, "This agreement is contingent on ... Coleman maintain[ing] competitive pricing, quality and service." [Id. at pp.1-2]. It must be noted that the main body of this contract was executed only by Coleman, as the broker for Christenberry, and by Breed.
14. Addendum D to the contract provides that Christenberry will "discount" Breed $300,000 via monthly payments, specifically setting forth the following:
2. [Christenberry] will make monthly discount payments to BREED in an amount of $20,000 per month as long as the average monthly trade payments from BREED to Coleman Logistics are between $380,000 and $460,000.
3. For example, [i]f any consecutive three month average billing drops below $380,000.00, subsequent month's discount will change to $18,000. If any consecutive three month average billing is above $460,000, subsequent month's discount amount will change to $23,000. Such payments shall be made by check on the first day of each month beginning 8/1/2001 and shall continue until the $300,000 is remitted to BREED. This is based upon a percentage of 4.6% trade payments from BREED.*fn7
[See Trial Exhibit 1]. Interestingly, Addendum D was executed only by Clayton, on behalf of Christenberry, and by Breed. Coleman did, however, guarantee the payment of this $300,000 ...