United States District Court, W.D. Tennessee, Eastern Division
CAREY W. FRIX, M.D., Plaintiff,
INTEGRITY MEDICAL SYSTEMS, INC., Defendant.
ORDER GRANTING PLAINTIFF'S MOTION FOR PARTIAL
THOMAS ANDERSON, CHIEF UNITED STATES DISTRICT JUDGE.
many others before it, this case arises from a soured
business transaction. Plaintiff Carey W. Frix, M.D., a
Tennessee physician, moves the Court for entry of summary
judgment against Defendant Integrity Medical Systems, Inc., a
Florida-based dealer of medical imaging equipment, on the
sole issue of liability for breach of contract.
Plaintiff's Motion presents the Court with a number of
issues that range from questions of conflicts of law to those
of contracts. And all of these issues fundamentally lead
toward answering a single question: do the terms of the
Purchase Agreement control the contract at the center of the
parties' dispute? Plaintiff, having neither seen nor
signed the Purchase Agreement, appeals to common sense and
argues that they do not. But Defendant comes to the Court
bearing the thicket that is the Uniform Commercial Code and
asks the Court to wade into the tangled brambles of the
Code's provisions that favor contract formation over
clarity. To resolve this case, the Court must so wade.
reasons set forth below, Plaintiff's Motion for Partial
Summary Judgment is GRANTED.
as the owner and operator of several medical clinics
throughout west Tennessee, wanted to expand the services at
his clinics to include mammography. In order to do so,
Plaintiff specifically sought to place a 64-slice CT scanner,
then located at his Henderson clinic, inside a mobile trailer
with the new mammography equipment. Plaintiff owned the
mobile trailer, but it was currently occupied by a 4-slice CT
scanner. Plaintiff sought to solve all of these issues at
once and solicited bids from three medical equipment
companies (1) to uninstall and remove the four-slice CT
scanner from his trailer, (2) to transport and install the
64-slice CT scanner inside that same trailer, and (3) for new
mammography equipment that would also be installed in the
trailer. Defendant ultimately submitted the lowest bid to
Plaintiff. Though the parties disagree on the legal results
of what occurred next, they do not dispute that informal
discussions took place. Nor do they dispute that the
discussions eventually resulted in a contract between the
parties (the “Contract”). Plaintiff alleges he
simply accepted Defendant's bid and e-mailed David
Denholtz, owner of Defendant, to confirm the terms of the
To confirm - 65k for [the mammography equipment], installed
17.5k to install [the 64-slice CT scanner]
25k trade in on [the four-slice CT scanner]
End result 57.5 plus [the four-slice CT scanner] to you, [the
64-slice CT scanner] and [the mammography equipment]
installed in my trailer[.]
Is that correct? Do you have a timeframe to complete?
Pl.'s Statement of Facts, ¶ 12 (quoting Exhibit 1 -
Decl. of Carey W. Frix, M.D., Ex. A, Mar. 15, 2017, ECF No.
28-4 [hereinafter “Frix Decl.”]). To which
Denholtz replied: “Yes, correct.” Id.
¶ 13 (quoting Frix Decl., Ex. B). While Defendant admits
the content of these e-mails, it alleges that Plaintiff
accepted the terms of a Purchase Agreement that Defendant
faxed to Plaintiff shortly after their e-mail correspondence
(the “Purchase Agreement”). Def.'s Statement
of Facts, ¶¶ 12-13 (citing Decl. of David Denholtz,
Ex. C, Aug. 4, 2017, ECF No. 49-1 [hereinafter
“Denholtz Decl.”]; Decl. of Rhonda Johnson,
¶¶ 5-10, Aug. 4, 2017, ECF No. 49-2 [hereinafter
“Johnson Decl.”]). Defendant further denies that
any meeting of the minds between the parties occurred
regarding the terms set forth in the e-mails. Id.
sent Defendant a $14, 375 deposit on May 17, 2016. A week
later, Plaintiff sent Defendant an additional payment of $37,
375. The payments totaled up to $51, 750. A number of
details, such as who knew what and when regarding an issue of
cable length and what happened with a potential replacement
engineer after the original engineer went back to South
Carolina, are contested by the parties. See
Def.'s Statement of Facts, ¶¶ 20-33. While the
original engineer eventually returned and concluded the
installation, the parties dispute whether the installation
was successful. Id. ¶¶ 37-38. They further
dispute the condition of the 4-slice CT scanner that was
removed and taken by Defendant for credited value under the
terms of the Contract. Id. ¶¶ 39-40.
Defendant canceled the project by e-mail in June 2016. This
cancelation still involved finishing the installation of the
64-slice CT scanner as best as Defendant could and refunding
any remaining money to Plaintiff. Although the parties agree
that no money was refunded to Plaintiff, Defendant claims
that this is because the funds paid by Plaintiff did not
cover the work performed and the parts required for that
work. See Id. ¶ 44 (citing Denholtz Decl.,
¶ 15; Decl. of Ralph “Scooter” Childs,
¶ 35, Aug. 4, 2017, ECF No. 49-3 [hereinafter
“Childs Decl.”]). In response to Defendant's
cancellation, Plaintiff's counsel sent Defendant a demand
letter of disputed admissibility. Pl.'s Statement of
Additional Undisputed Material Facts, ¶ 4, Aug. 25,
2017, ECF No. 52-2. The letter stated as follows:
Please be advised that I represent Dr. Carey Frix in
Henderson, Tennessee. You have informed Dr. Frix that you do
not intend to complete a portion of the contract that calls
for exchange of a [4-slice CT scanner] for a mammogram
machine. You have the claim that the [4-slice CT scanner]
does not live up to the specifications in the contract.
However, your own installer inspected the [4-slice CT
scanner] and verified that the machine was in good working
order and met the specifications of the contract.
However, it appears that you and Dr. Frix both desire to end
this contractual relationship as soon as possible. Therefore
Dr. Frix agrees to your offer to amend the contract. He will
arrange for shipping of his machine. However you will be
responsible for the appropriate loading of the [4-slice CT
scanner] and preparing it for long haul transport. Since your
employee thoroughly inspected the machine, we expect to
receive it back in the same condition. Since you refuse to
ship the machine back to Dr. Frix, we expect the sum of $ 32,
370.00 to be delivered immediately to Dr. Frix via wire
transfer of funds.
Denholtz Decl., Ex. C. Defendant sent the Purchase Agreement
to Plaintiff, but Plaintiff did not see or sign it.
See Def.'s Statement of Facts, ¶ 45.
STANDARD OF LAW
judgment is proper where the pleadings, depositions, answers
to interrogatories, and admissions on file, together with the
affidavits, if any, show that there is no genuine issue as to
any material fact and that the moving party is entitled to a
judgment as a matter of law. Fed.R.Civ.P. 56. When deciding a
motion for summary judgment, the Court must review all the
evidence and draw all reasonable inferences in favor of the
nonmovant. Matsushita Elec. Indus. Co. v. Zenith Radio
Corp., 475 U.S. 574, 587 (1986). In reviewing a motion
for summary judgment, the Court views the evidence in the
light most favorable to the nonmoving party, and it
“may not make credibility determinations or weigh the
evidence.” Laster v. City of Kalamazoo, 746
F.3d 714, 726 (6th Cir. 2014). When the motion is supported
by documentary proof such as depositions and affidavits, the
nonmoving party may not rest on his pleadings but, rather,
must present some “specific facts showing that there is
a genuine issue for trial.” Celotex Corp. v.
Catrett, 477 U.S. 317, 324 (1986); Eastham v.
Chesapeake Appalachia, L.L.C., 754 F.3d 356, 360 (6th
Cir. 2014). These facts must be more than a scintilla of
evidence and must meet the standard of whether a reasonable
juror could find by a preponderance of the evidence that the
nonmoving party is entitled to a verdict in his favor.
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252
(1986). The Court must enter summary judgment “against
a party who fails to make a showing sufficient to establish
the existence of an element essential to that party's
case, and on which that party will bear the burden of proof
at trial.” Celotex Corp, 477 U.S. at 322.
instant Motion, Plaintiff seeks partial summary judgment on
the single issue of Defendant's liability for breach of
contract. Pl.'s Motion for Partial Summ. J., Mar. 15,
2017, ECF No. 28. The amount of damages from Plaintiff's
breach of contract claim and Plaintiff's claim under the
Tennessee Consumer Protection Act are not issues currently
before the Court. See Mem. in Supp. of Pl's
Motion for Partial Summ. J., at 7, Mar. 15, 2017, ECF No.
28-1 [hereinafter “Pl.'s Mem.”]. Plaintiff
asserts that Defendant indisputably breached the Contract as
agreed to in their e-mail correspondence. The parties do not
dispute the existence of the Contract. Nor do they dispute
that Defendant refused to perform. Defendant, however, claims
Plaintiff breached the terms of the Purchase Agreement, which
governed the Contract in its view. Def. Integrity Medical
Systems, Inc.'s Mem. of Law in Opp'n to Pl.'s
Motion for Summ. J., at 17-18, Aug. 4, 2017, ECF No. 49-4
[hereinafter “Def.'s Resp.”]. In
Defendant's view, Plaintiff's alleged breach excuses
Defendant's refusal to perform. Id. at 19-20.
While this is generally true as a matter of contract law, all
of Defendant's arguments to this point invoke the
Purchase Agreement. Thus, the main issue for the Court to
resolve is whether the Purchase Agreement governs the
Contract. To put it simply for the purposes of this Motion:
if the Purchase Agreement controls, Defendant wins; if it
does not, Plaintiff wins.
of Plaintiff's Motion, however, requires resolution of
several other issues, some preliminary and others
alternative. First, the parties raise the issue of what law
governs this dispute. Second, the Court must decide the
applicability of the Uniform Commercial Code. Then, the Court
will reach the elements of Plaintiff's breach of contract
claim, addressing a number of alternative arguments along the
way. It is in determining whether Defendant breached the
Contract where this case becomes bogged down. For the inquiry
into whether the Purchase Agreement controls the Contract
runs straight into section 2-207, a provision perhaps best
likened to “an amphibious tank that was originally
designed to fight in the swamps but was sent to fight in
the desert.” James J. White & Robert S. Summers,
Uniform Commercial Code § 2-3 (6th ed. 2010).
For the reasons articulated below, the Court finds as
follows: (1) Tennessee law governs this action; (2) the
Contract is within the scope of Article 2 of the Uniform
Commercial Code; (3) the Purchase Agreement is not a part of
the Contract; (4) Defendant breached the Contract; and (5)
Plaintiff suffered injury as the result of Defendant's
breach. Accordingly, Plaintiff has established his breach of
contract claim based upon the undisputed facts of this case
and is entitled to a judgment as a matter of law on that
Whether Tennessee Law or Florida Law Applies
federal court exercising diversity jurisdiction must apply
the choice-of-law rules of the state in which it sits.
See Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S.
487, 496 (1941). And it must apply the law it believes the
highest court of such state would apply. See McClusky v.
Century Bank, FSB, 598 F.App'x 383, 386 (6th Cir.
2015) (quoting Lutz v. Chesapeake Appalachia,
L.L.C., 717 F.3d 459, 464 (6th Cir. 2013)); Mahne v.
Ford Motor Co., 900 F.2d 83, 85-86 (6th Cir. 1990).
“Absent a contractual choice of law provision,
Tennessee courts apply the lex loci rule to contract
causes of action.” In re Estate of Davis, 184
S.W.3d 231, 234 (Tenn. Ct. App. 2004) (citing Solomon v.
FloWarr Mgmt., 777 S.W.2d 701, 704-05 (Tenn. Ct. App.
1989)); see also Ohio Cas. Ins. Co. v. Travelers Indem.
Co., 493 S.W.2d 465, 467 (Tenn. 1973) (citation omitted)
(“Tennessee conflict of laws rule [states that] . . .
liability . . . under the [contract] . . . was to be governed
by the lex loci contractus . . . .”). The
Tennessee Supreme Court thought the rule to be well stated by
the Sixth Circuit:
The Tennessee conflict of laws rule provides that rights and
obligations under a contract are governed by the law of that
state with the view to which it is made and that the
intentions of the parties in this respect to be gathered from
the terms of the instruments and all of the attending
circumstances control. . . . “[A] contract is presumed
to be made with reference to the law of the place where it
was entered into ...