Searching over 5,500,000 cases.

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Frix v. Integrity Medical Systems, Inc.

United States District Court, W.D. Tennessee, Eastern Division

September 20, 2017

CAREY W. FRIX, M.D., Plaintiff,



         Like 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.

         For the reasons set forth below, Plaintiff's Motion for Partial Summary Judgment is GRANTED.

         I. BACKGROUND[1]

         Plaintiff, 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 deal:

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.

         Plaintiff 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.


         Summary 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.

         III. ANALYSIS

         In the 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.

         Disposition 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 issue.

         A. Whether Tennessee Law or Florida Law Applies

         A 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 ...

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.