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B.W. Byrd Metal Fabricators, Inc. v. ALCOA, Inc.

Court of Appeals of Tennessee, Knoxville

August 19, 2019

B.W. BYRD METAL FABRICATORS, INC.
v.
ALCOA, INC.

          Session: May 22, 2019

          Appeal from the Circuit Court for Knox County No. 2-92-16 William T. Ailor, Judge

         This appeal involves a lease agreement for the storage of a friction welding/joiner machine. The original agreement was entered into by John F. Humphrey Metal Fabricators, Inc. and Aluminum Company of America. B. W. Byrd Metal Fabricators, Inc. is the successor in interest to John F. Humphrey Metal Fabricators, Inc. and Aluminum Company of America was formerly known as Alcoa, Inc.[1] The trial court awarded to the plaintiff rent payments for the months of May and June 2012, plus interest at 1.5% per month, but it found that the plaintiff had failed to submit invoices to put the defendant on notice of a debt and neglected to mitigate its damages. The plaintiff appeals. We affirm in part and reverse in part and remand for further proceedings.

         Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Circuit Court Affirmed in Part and Reversed in Part; Case Remanded

          Raymond E. Lacy and Michael R. Franz, Knoxville, Tennessee, for the appellant, B.W. Byrd Metal Fabricators, Inc.

          Michael K. Atkins, Knoxville, Tennessee, for the appellee, Alcoa, Inc.

          John W. McClarty, J., delivered the opinion of the court, in which D. Michael Swiney, C.J., and Arnold B. Goldin, J., joined.

          OPINION

          JOHN W. McCLARTY, JUDGE

         I. BACKGROUND

         In 1969, John F. Humphrey Metal Fabricators, Inc. ("Humphrey"), a Tennessee corporation, entered into a contract ("the Original Agreement") with Aluminum Company of America (whose name was changed to Alcoa, Inc. and herein referred to as "Alcoa"), a Pennsylvania corporation whose corporate center is located in Pittsburgh. The Original Agreement was to lease a building for the purpose of housing a friction welding/joiner machine ("the Machine")[2] that welded aluminum to steel. The Machine was promptly delivered to Humphrey's site at 4422 Anderson Road in Knoxville pursuant to the Original Agreement. According to testimony, one piece of the Machine alone weighs as much as 65, 000 pounds. The Machine sits on a four-foot concrete base and a metal building was custom built to house and protect it from the elements. Through the years, Humphrey maintained and cared for the Machine, used it to produce anode rods, and performed other work for Alcoa. Alcoa, in turn, paid rent to Humphrey for the storage of the Machine. B. W. Byrd Metal Fabricators, Inc. ("Byrd"), through its President Billy W. Byrd ("Owner"), subsequently acquired the business of Humphrey as well as possession of the Machine and assumed all of the rights and obligations under the Original Agreement as successor in interest to Humphrey. Owner remarked at trial that Alcoa was "[a] very good customer" and agreed that the company was "[t]he best there is." He acknowledged that Alcoa had hired his company to perform work for many years and that he "did several million dollars' worth of jobs for Alcoa."

         Beginning in approximately August 2010, Owner and Dave Hensley, Alcoa's former interim plant manager at the Tennessee Operations South Plant, negotiated a modification of the monthly amount of rent owed by Alcoa to Byrd to $1, 750 (this agreement hereinafter referred to as "the Lease Agreement").[3] For each payment of rent, Byrd sent Alcoa an invoice with the purchase order number of 260216863 reflecting the Lease Agreement. Payments were made to Byrd from Pittsburgh. It was stipulated before the trial court that $1, 750 was paid to Byrd from August 2010 to April 2012. By September 2011, however, Alcoa had determined that it had no further use for the Machine and paid Byrd $18, 500 to "mothball" it in a process that would render it in an inactive state where it could easily and quickly be reverted to use if necessary. During this time, Alcoa's South Plant had been idled, and the company was ridding itself of all unneeded equipment. The Machine, which utilized outdated technology, was determined to be obsolete. Alcoa decided to sell it for scrap. According to Byrd, however, Alcoa did not inform it at that time that the Machine was to be removed from its premises.

         According to Alcoa, from September to November 2011, its officials attempted to gain access to the Machine but were unable to reach Owner. When Owner was finally located in early November 2011, he informed Tim Cromwell of GoIndustry DoveBid, Alcoa's agent for the sale of the Machine, that "he has not received a rent check in 2 months and was not too keen on the idea of anyone coming to look at (or removing) the equipment until he gets paid." The record reveals that the Lease Agreement had expired in August 2011, and Alcoa understood "that the mothball order concluded [its] commitment with Byrd until [it] could have the equipment removed." Thus, in Alcoa's view, it did not owe Byrd any additional money. An Alcoa official related in an email: "We certainly need not continue to pay Byrd . . . they have received excessive compensation from Alcoa over the years with this situation and the anode contract they have enjoyed over the years at TN. . . . In my opinion it is robbery to think that we are still paying them rent!" A potential buyer for the Machine informed Alcoa officials in late November 2011 that Owner "told him that Alcoa owes him money and until it is settled, he will not let anyone remove the machine."

         On January 13, 2012, Byrd received a letter from Carol Sue (Suzie) Reed at Alcoa informing him that the company was in the process of selling the Machine and that rent would only be paid through December 2011. The letter specifically provided:

Enclosed you will find Alcoa Purchase Order number 260282996. This order will enable rent payment for the building where Alcoa's Equipment is currently located for September 2011 through December 2011. No additional money will be paid as Alcoa has been working to sell the equipment for several months. We request that you cooperate and give full access to Alcoa's Friction Joinder and associated equipment to our Agent, Go Industries in their efforts to sell our equipment as the Tennessee Smelter is now permanently closed. Upon notice from our Agent that you have complied with Alcoa's request, your invoice payment for the Purchase Order referenced above will be released.

(Emphasis added.). Reed testified at trial that her boss, Randy Gibson, instructed her to write the letter and that it was her intention "to put Mr. Byrd on notice that Alcoa was finished with that piece of equipment and . . . was trying to sell it." The new purchase order number noted by Reed, 260282996, allowed Byrd to receive an additional rent payment for the period after the Lease Agreement had ended. Another Alcoa employee, Craig Brogan, testified that the plant manager, Hensley, instructed that rent payments be made as long as the Machine remained on Byrd's property; Hensley acknowledged this position at trial. The parties stipulated that Alcoa paid Byrd $7, 000 in January 2012 for the months September through December 2011. Despite the fact that Alcoa had indicated in the letter that "[n]o additional money will be paid," on June 5, 2012, it appears that Alcoa paid Byrd another $7, 000 in rent.[4]

         As noted above, Owner had been advised by Alcoa that it was attempting to sell the Machine and asked to "cooperate and give full access" to the Machine by the agents or potential buyers. However, in a February 2012 email, Cromwell advised Reed at Alcoa of "extreme" demands by Owner related to the removal of the Machine.

         On June 18, 2012, Alcoa, through Cromwell, sold the Machine to R&M Metals, Inc. ("R&M"). R&M planned to remove the Machine, at its own cost, and sell it for scrap. The agreement between Alcoa and R&M, however, did not address the issue of rent because Alcoa believed that it owed nothing further.[5] Owner advised a representative of R&M of the existence of the past due rent and noted that satisfaction of the debt was a condition of the Machine's removal. According to Owner's testimony, he told R&M's representative that "all . . . he had to do was see that the rent got paid and he could do whatever he wanted to with [the Machine]." Cromwell advised Alcoa's Reed and Randy Bush on June 25, 2012, that Owner "still insists that Alcoa still owes him money and will not let us in." Owner testified that he never heard from R&M again, and the Machine was subsequently sold to JBM Incorporated ("JBM"). Like R&M, JBM never removed the Machine. At the time of this appeal, the Machine was still located on Byrd's property.

         In February 2016, Byrd sued Alcoa, alleging breach of contract by failing to remove the Machine from Byrd's property and neglecting to pay rent. A month later, Byrd filed for bankruptcy.[6] He asserted that potential buyers for the property have "backed out on account of that machine." Owner admitted that he had to shut the company down because he had depended on the $1, 750 a month rent from Alcoa to pay the bills.

         The trial court found that Byrd had breached its duty to mitigate its damages by not submitting invoices to Alcoa and by not allowing any party to remove the Machine. The court determined that no rent invoices were sent to Alcoa for May and June 2012, or anytime thereafter.[7] Additionally, the trial court observed that despite Byrd knowing that Alcoa no longer owned the Machine after June 2012, he waited until February 2016, to file the lawsuit that is the subject of this appeal and failed to put Alcoa on notice of the rent obligation during that period. Therefore, the court's award was limited to rent payments for May and June 2012 in the amount of $3, 500 plus interest at 1.5% per month ($3, 908.50) for a total judgment in favor of Byrd of $7, 408.50. Byrd filed this timely appeal.

         II. ISSUES

         Byrd raises two issues for review which we restate as follows:

A. Whether the trial court erred in its factual finding that Byrd did not invoice Alcoa for rent after April 2012; and
B. Whether the trial court erred in its finding that Byrd failed to satisfy its duty to mitigate its damages.

         Alcoa presents an additional alternative issue for review which we restate as follows:

C. Whether Byrd is barred from prevailing under the common law doctrine of laches.

         III. STANDARD OF REVIEW

         This appeal follows a bench trial, and as such we review the trial court's findings of fact de novo with a presumption of correctness, unless the preponderance of the evidence is otherwise. Tenn. R. App. P. 13(d); Rawlings v. John Hancock Mut. Life Ins. Co., 78 S.W.3d 291, 296 (Tenn. Ct. App. 2001). We will also give great weight to a trial court's factual findings that rest on determinations of credibility. In re Estate of Walton, 950 S.W.2d 956, 959 (Tenn. 1997); B & G Constr., Inc. v. Polk, 37 S.W.3d 462, 465 (Tenn. Ct. App. 2000). However, if the trial judge has not made a specific finding of fact on a particular matter, we review the record to determine where the preponderance of the evidence lies without employing a presumption of correctness. Ganzevoort v. Russell, 949 S.W.2d 293, 296 (Tenn. 1997). For the evidence to preponderate against a trial court's finding of fact, evidence must support another finding of fact with greater convincing effect. Id.; see also Realty Shop, Inc. v. R.R. Westminster Holding, Inc., 7 S.W.3d 581, 596 (Tenn. Ct. App. 1999). Issues of law, on the other hand, are reviewed de novo with no presumption of correctness, and we reach our own independent conclusions regarding these issues. Id.; see also Nashville Ford Tractor, Inc. v. Great Am. Ins. Co., 194 S.W.3d 415, 425 (Tenn. Ct. App. 2005).

         IV. ...


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