Marshall Motor Homes International v. Newmar Corporation

Full title: MARSHALL MOTOR HOMES INTERNATIONAL, INC. Plaintiff, v. NEWMAR CORPORATION…

Court: United States District Court, E.D. Tennessee, at Knoxville

Date published: Dec 5, 2003

No. 3:01-CV-397 (E.D. Tenn. Dec. 5, 2003)

Opinion

No. 3:01-CV-397.

December 5, 2003

MEMORANDUM OPINION

THOMAS A. VARLAN, District Judge

I. Introduction

In this action, plaintiff Marshall Motor Homes International, Inc. ("MMHI") seeks compensatory damages and punitive damages from defendant Newmar Corporation ("Newmar"), arising out of a purported contractual relationship related to the distribution of motor homes overseas. MMHI brings the following causes of action against Newmar: breach of contract, breach of implied contract and quantum meruit, promissory estoppel, violation of T.C.A. § 47-50-109, and tortious interference with contractual relations¹ [ see Doc. 1].

1 For breach of contract, MMHI seeks $20 million for all expectancy damages, or in the alternative, a requirement that Newmar abide by the contract and compensate it for all lost profits; for breach of implied contract, MMHI seeks approximately $1 million in damages; for promissory estoppel, MMHI seeks compensation for all damages suffered based on its justifiable reliance on Newmar's promises; and finally, MMHI seeks an award of compensatory damages based on a violation of T.C.A. § 47-50-109 and tortious interference with contractual relations [ see Doc. 1].

This matter is presently before the Court on Newmar's motion for summary judgment [Doc. 41]. Oral argument on this motion was heard by the Court on July 17, 2003. The Court has carefully considered the entire record, including the parties' briefs and arguments and the applicable law, and is of the opinion that MMHI can only prevail on some of its theories of recovery. Therefore, based upon the reasons set forth herein, the Court will GRANT summary judgment to Newmar on MMHI's claims of breach of contract, breach of implied in fact contract, violation of T.C.A. § 47-50-109, and tortious interference with contractual relations and will DENY summary judgment to Newmar on MMHI's claims of breach of implied in law contract, quantum meruit, and promissory estoppel.

II. Relevant Background

A. History of Parties' Dealings and Correspondence

Newmar is an Indiana corporation that manufactures and sells recreational vehicles, and Newmar has a dealer network that spans the United States. Ross Marshall is a businessman with extensive experience in the automotive industry in numerous countries. Interested in developing the motor home business overseas, Mr. Marshall first contacted Newmar in April or May of 1999. A date in July 1999 was set for Mr. Marshall to make a presentation of his ideas to Newmar's principals. Among the main principals of Newmar present were Virgil Miller, the president; Craig Alexander, the vice president of sales and marketing; and Ron Stichter, the director of engineering.

At the presentation, Mr. Marshall proposed that Newmar build narrow, right-hand drive motor homes for export to Australia.² After Newmar expressed interest in the project, MMHI was formed as a Tennessee corporation and as a start-up company whose purpose was to distribute Newmar's motor homes overseas. Mr. Marshall became the chairman, chief executive, and principal shareholder of MMHI. Ed McMahon became the director of engineering for MMHI.

2 Mr. Marshall, who is Australian, was especially interested in exporting motor homes to Australia because the Olympics were scheduled to be in Sydney in the summer of 2000.

Between July 1999 and February 2000, the parties discussed the possibility of developing a motor home for the Australian market. MMHI was responsible for identifying the certification requirements for Australia and for the costs associated with gathering this information. At a meeting in February of 2000, Newmar concluded that the cost of certifying motor homes in Australia and the changes required for such certification were too great.

According to Mr. Marshall, Virgil Miller proposed at the February 2000 meeting that MMHI launch Newmar's P-27, a narrow left-hand drive prototype motor home which became known as the New Aire, at an upcoming motor home show in Dusseldorf, Germany. Mr. Marshall agreed with this proposal and further inquired about the possibility of developing the New Aire for the European market.

According to Mr. Marshall, Newmar promised during their February 2000 meeting to build a unit to European specifications in advance of the show, agreed to be responsible for identifying the certification requirements for Europe, and initially agreed to bear the costs associated with modifying the units. Thereafter, Newmar's Craig Alexander contacted Mr. Marshall by telephone to advise that the price of the New Aire motor home to MMHI would be $150,000.

On March 8, 2000, Craig Alexander sent MMHI a letter of intent which provides in its entirety:

This is to advise you of our intention to enter into a New Aire Distributorship Agreement that appoints Marshall to be its sole and exclusive distributor to sell and distribute within all European countries, all Pacific Rim countries, all of South Africa, and all of Saudi Arabia the New Aire motor home produced by Newmar, subject to the terms and conditions in the attached New Aire Distributorship Agreement.

The effective date of the New Aire Distributorship Agreement will coincide with the confirmation of the initial order of five (5) units and cash deposit of $150,000 US dollars.

[ see Ex. 1 to Doc. 1 and Ex. P-2 to Doc. 17]. As indicated by the letter of intent, a proposed New Aire Distributorship Agreement was attached.

The proposed New Aire Distributorship Agreement contained the following pertinent terms:

1. In consideration of the mutual promises and agreements herein contained, Newmar hereby constitutes and appoints Marshall to be its sole and exclusive distributor to sell and distribute within all European countries, all Pacific Rim countries, all of South Africa, and all of Saudi Arabia (hereinafter referred to collectively as the "Territory") the New Aire motor home produced by Newmar (hereinafter referred to as the "Product"), subject to the terms and conditions hereinafter contained and Marshall hereby accepts such appointment upon said terms and conditions.

2. Marshall shall diligently and faithfully distribute and sell the Product within the Territory in close collaboration with Newmar, and shall pay and discharge, at its sole cost and expense, any and all expenses, charges, fees, and taxes that may be imposed upon Marshall by reason of its carrying on the business of this exclusive distributorship, except as otherwise provided herein.

3. Marshall shall have the sole authority to appoint and deal with a local distributor in each country within the Territory (hereinafter referred to as "Local Distributor").

5. Local Distributors shall service and "dealer prep" each Product before delivery to retail customers in accordance with Newmar's pre-delivery inspection procedure and shall document upon the sale of each Product the performance of said procedure and any difficulties or defects detected with the Product during said procedure.

8. This Agreement authorizes Marshall to purchase the Product including accessories and repair parts. Prices to be paid by Marshall, unless otherwise indicated, shall be Newmar's current published prices in effect at time of scheduling for production. All transactions shall be in United States dollars. Prices are subject to change without notice. Marshall has the option to cancel any pending orders affected by any price change during a period not to exceed thirty (30) days following the date of receipt of notification of said price change. The terms of payment for the Product purchased by Marshall shall be by an irrevocable letter of credit or cash upon order and/or upon scheduling for production.

9. Marshall shall have on order or in its stock, a minimum of five (5) units of the Product. Marshall shall deliver with each order for Product a deposit of $30,000.00 US dollars, which shall be credited toward the purchase price of any such unit. The down payment shall be fully refundable to Marshall in the event Newmar fails to deliver the ordered Product in accordance with the terms of Paragraph 13.

10. Marshall shall not be deemed to be an agent nor legal representative for any purpose whatsoever on behalf of Newmar and Marshall shall not make any representations or warranties, express or implied, on Newmar's behalf and may not assume or create any obligation or responsibility, express or implied, on behalf or in the name of Newmar. The use by Marshall of the Newmar name shall be limited solely in the sale and promotion of the Product.

13. Subject to any delays occasioned by circumstances beyond the control of Newmar, Newmar agrees to fill Marshall's purchase orders in accordance with its ordinary manufacturing procedures, and to further notify Marshall at the time the purchase order is scheduled for production, and confirm the approximate date of completion and availability for shipment of Product. The ordering procedure includes 1) the deposit with the order placement and 2) the irrevocable letter of credit confirmed at least forty five (45) days before scheduling for production. Subject to the foregoing, purchase orders are not accepted until written confirmation is sent by Newmar when the unit is scheduled for production and method of payment accepted by Newmar.

[ see id.].

After the letter of intent and proposed distributorship agreement were sent, the parties exchanged correspondence regarding the terms of the proposed distributorship agreement. On April 20, 2000, Craig Alexander wrote to Mr. Marshall about the upcoming show in Dusseldorf, stating ". . . we need to: 1.) Get our proposed agreement approved and completed. 2.) Have the funds we discussed deposited into Newmar's account. These above details need to be completed before we can proceed or commit anymore to this project. . . . Please fax me your reply" [ see Ex. D-10 to Doc. 17]. Mr. Marshall replied to Mr. Alexander on April 23, 2000, stating in pertinent part:

Based on the price you have quoted us of $150,000, we feel we can provide you the minimum 5 unit orders and $150,000 cash deposit as required in the Letter of Intent. . . .

I would also like to address points one and two of your 4/20 fax and to take this opportunity to be sure we interpret the Letter of Intent/Dealer Agreement between Newmar Corporation and Marshall Motorhomes International, Inc. (MMI) in the same way, each being clear on what our obligations are:

Reference Point #1: In order to get our proposed agreement approved and completed as per the Agreement and Letter of Intent MMI must:

1. Appoint dealers; 2. Provide/place orders from dealers with an irrevocable Letter of Credit (LC); 3. Maintain a minimum of five (5) units and deposits.

For Example: 5 Orders × $150,000 (irrevocable Letters of Credits) = $750,000 Less Cash Deposits (5 × $30,000) = 150,000 Balance LC (redeemable at delivery) = $600,000

From this point on, MMI is required to maintain a minimum of five (5) vehicles on order at all times for the Agreement to remain binding.

. . .

Reflecting on point #2 of your fax, I have just realized you may be referring to Newmar's recovery of potential tooling costs for RHD³ units. My personal recollection from previous discussions is that we may amortize this cost over a predetermined number of RHD orders. To my knowledge, this particular issue was not defined in the terms of Agreement. I am open to discussion and willing to do whatever it takes to move things forward. The terms we agree upon should be documented and included in the Agreement (not to be confused with deposits).

Craig, I have attempted to view issues in their entirety from both sides and hope my rationale is not off base. I look forward to talking with you about any and all of the above and the other issues still outstanding. The bright spot here is that once these issues are all hammered out we need not deal with them again and can get on with our mutual goal of launching the New Aire on the international market.

3 RHD stands for right hand drive.

[ see Ex. D-5 to Doc. 17, emphasis in original].

The parties held a meeting on May 5, 2000. In advance of that meeting, Mr. Marshall prepared an agenda which stated that the first item to be discussed was: "Address the outstanding issues of the contract" [ see Ex. D-11 to Doc. 17]. Mr. Marshall testified that he does not recall whether this item was addressed at that time [ see Doc. 17 at p. 167]. On May 16, 2000, Virgil Miller, Newmar's president, issued a memorandum authorizing MMHI to be a "fully licensed dealer" for the New Aire at the show in Dusseldorf from September 30, 2000 through October 8, 2000 [ see Ex. 2 to Doc. 1 and Ex. P-4 to Doc. 17]. Mr. Marshall admitted that Newmar only gave MMHI dealer authority for the show, not distributor authority [ see Doc. 17 at p. 133].

For several months in advance of the show, the parties continued to correspond regarding the terms of the proposed distributorship agreement. On May 25, 2000, Mr. Marshall sent an email to Virgil Miller regarding matters that had occurred in their February 2000 meeting:

As I recall, you presented me initially, the opportunity to represent Newmar exclusively with the P27, commencing with the Dusseldorf show release, later this year. At that time, I believe you indicated that Ron [Stichter] was directed to build the P27 to European specs for us, in time for our launch. Without hesitation, I accepted the challenge, notwithstanding the fact that up to that point I had put the majority of my efforts into the Pacific Rim development specifically with the Tynan Group appointment.

At that time, you rightly expressed your concerns as to the viability of doing RHD initially, and I agreed. In fact one of your Directors specifically asked me if I would be prepared to contribute to that development cost, at which time I confirmed by acceptance subject to a suitable amortization plan being reached. To my recollection, there was no discussion about any premium or development (up front) cost regarding European certification.

While MMI is prepared to accept some of this responsibility too, I would like to think that you might help us in some way. For instance, would you be prepared to amortize "our share" on a per vehicle basis?? You might have viewed my letter to Craig [Alexander] dated 4/23/00, where I touched on this very subject.

As the contract is currently documented, our official appointment cannot be confirmed till we have placed 5 orders. While your request now for MMI to accept responsibility for costs of development is understandable, perhaps the terms of our agreement could be redefined to provide MMI a more concrete foundation so we can comfortably contribute to the development of this fine project, at the same time not shirking our responsibilities, at the same time giving us the security I think we should have.

I believe we have not precisely addressed this subject in the contract and feel we should tidy up the document, not only for Europe but for RHD development as well.

. . .

I am sorry this letter is so long however it does cover the necessary subjects that need specific definition as we proceed along this roll out path to ensure a comfortable relationship between Newmar and MMI and a successful result!!

I look forward to your response and discussion on the above.

[ see Ex. D-12 to Doc. 17].

According to Mr. Marshall, Newmar advised him in June of 2000 that the cost of total vehicle approval⁴ for certification in Europe would be $100,000 and that Newmar was not prepared to bear this cost. In response to this development, Mr. Marshall agreed to assume the cost of identifying the certification requirements and the cost of making the necessary changes to comply with those requirements.

4 Once established, total vehicle approval means that all vehicles imported from a particular manufacturer comply with the certification requirements for Europe. To obtain this type of approval, Newmar's manufacturing plant would have been obligated to meet certain international standards.

On June 9, 2000, Virgil Miller wrote to Mr. Marshall regarding the status of their relationship:

This letter is an attempt to define our understanding of the current and future relationship of Newmar Corporation and Marshall Motor Homes.

— The relationship is broadly defined by the drafted "New Aire Distributorship Agreement" and the Letter of Intent signed by Craig Alexander March 8, 2000.

[ see Ex. D-23 to Doc. 17]. Virgil Miller also documented that MMHI would be required to pay up front for any certification for foreign sales, while Newmar would reimburse the certification investment should Newmar terminate the agreement without cause within three years after the start of the agreement [ see id.]. Virgil Miller further stated that Newmar would pursue MMHI's request to develop a right hand drive vehicle subject to certain qualifications [ see id.]. In response to this letter, Mr. Marshall wrote to Virgil Miller on June 12, 2000, stating in pertinent part:

Thank you for letter of June 9 instant, wherein you clearly defined our future relationship exactly as we agreed.

We commit to pay up front for all the certification required for our various markets, and note your intention to appropriately secure our contract with terms, yet to be defined. . . .

I look forward to your contract up date in due course[.]

[ see Ex. D-24 to Doc. 17].

On August 3, 2000, Ron Stichter, Newmar's director of engineering, wrote to Mr. Marshall and various personnel at the certification agency to advise that total or whole vehicle approval was not imminent because there were unresolved engineering issues which prevented Newmar from building an approved vehicle for test purposes at that time [ see Ex. 21 to Doc. 74]. On August 10, 2000, Virgil Miller, Craig Alexander, Ron Stichter, Phil Miller,⁵ and Ross Marshall held a meeting to discuss certification issues and the upcoming show in Dusseldorf [ see Ex. D-13 to Doc. 17]. At this meeting, Mr. Marshall suggested single vehicle approval⁶ for certification in the United Kingdom as a faster and possibly cheaper alternative to total vehicle approval.

5 Phil Miller is the director of New Aire sales for Newmar and first met Mr. Marshall in July of 2000.

6 Single vehicle approval means that each individual vehicle must be inspected to meet the certification requirements in the United Kingdom.

On August, 24, 2000, Phil Miller wrote to Mr. Marshall regarding the terms of the proposed distributorship agreement in relation to modifying the New Aire motor home to comply with single vehicle approval requirements:

Newmar is prepared to begin production of New Aire coaches that can be imported into the United Kingdom in accordance with your request. Before we order the first European component, we need the following from you:

1. Your order for five European units. These orders are in addition to Unit #5 which will be shipped to Duesseldorf and which you have expressed a desire to purchase on its return to the States.⁷

7 Newmar allowed MMHI to display two prototype New Aire motor homes at the show in Dusseldorf. MMHI paid Newmar a $15,000 deposit toward one of the units, and this amount was to be used as credit toward the $150,000 that Newmar requested for the five New Aire orders. Newmar eventually returned the $15,000 deposit to MMHI after the vehicle was returned by MMHI.

2. A $30,000 deposit per European order.

3. $3,000 to cover the cost of a certified European windshield that Ed McMahon [MMHI's director of engineering] said was required in his August 17 fax to Ron Stichter.

4. A detailed list of all the items that Newmar will have to change on its currently produced New Aire to comply with UK/EC Single Vehicle Certification. This is the same list that you pledged to send during our August 10 meeting at Newmar.

5. Your signature on the dealer agreement. If you have any revisions to be made to the dealer agreement presented to you for your approval, we need to discuss them when you are here next Monday.

We ask that you remit to Newmar $168,000 ($15,000 down payment for Unit #5, $30,000 down payment each for five European orders, and $3,000 for a European certified windshield) immediately. . . .

[Ex. D-14 to Doc. 17]. The next day, on August 25, 2000, Phil Miller wrote to Mr. Marshall to reiterate the terms of the proposed distributorship agreement:

. . . [W]e are not willing to build a European unit that we are not able to sell in this country without your specific financial commitment. . . . In conclusion, the scheduling of the manufacture of European New Aire units rests on you. For Newmar to proceed, we need you to satisfy the five items outlined in my August 24 letter to you.

[Ex. D-15 to Doc. 17].

Phil Miller attended and assisted with the motor home show in Dusseldorf in late September and early October of 2000. According to Mr. Marshall, Phil Miller told prospective customers at the show that MMHI was Newmar's exclusive distributor of the New Aire motor home and that Newmar was committed to supply a certified vehicle for the European market. Mr. Marshall testified that Phil Miller also encouraged him to appoint dealer and technical service companies for the New Aire motor home in Europe as soon as possible.

On November 1, 2000, Mr. Marshall entered into a contract with Camperland Group, a motor home sales company located in the Netherlands, to be the exclusive dealer in Europe for the New Aire motor home [ see Ex. P-11 to Doc. 17]. The contract specifically defines MMHI as the "exclusive distributor of New Aire Motorhome vehicles and products by Newmar Corporation" [ see id.]. Mr. Marshall personally signed this contract, which required Camperland Group to pay up front upon the placement of any orders. According to Mr. Marshall, Phil Miller knew in advance that he was going to contract with Camperland Group.

In addition, Mr. Marshall contracted in writing with Horst Mosolf, a German based company, to provide technical service to the New Aire motor home [ see Ex. P-12 to Doc. 17]. According to Mr. Marshall, Phil Miller was present during a dinner meeting while the contract with Horst Mosolf was being discussed, although the contract was not signed until a later date. This contract does not contain any language about MMHI being the exclusive distributor of the New Aire motor home and does not directly mention the New Aire motor home [ see id.].

Mr. Marshall also arranged for Tony Ball Associates in London to provide the promotional and public relations work for the New Aire motor home [ see Ex. P-26 to Doc. 17]. Mr. Marshall reportedly spent $100,000 promoting the New Aire motor home in Dusseldorf. Mr. Marshall further arranged for Deutsche Bank to provide financing and Lloyds of London to provide insurance for the New Aire motor home. Newmar was later informed about these arrangements.

On November 8, 2000, Phil Miller wrote to Mr. Marshall again regarding the terms of the proposed distributorship agreement:

. . . Newmar is not prepared to spend any more money in Europe until we have a signed distribution agreement with you which includes, among other things, five orders guaranteed with a down payment of $30,000 for each. Without this level of commitment from you, Newmar cannot continue to spend its money on an area that promises no return on its investment.

[Ex. D-16 to Doc. 17]. On November 10, 2000, Phil Miller sent a facsimile to Mr. Marshall to inform that he had just received a letter from Hans Groenendijk of Camperland Group stating that MMHI had granted him exclusive distribution rights to sell the New Aire motor home in Europe [ see Ex. D-8 to Doc. 17]. Phil Miller reminded Mr. Marshall about his November 8, 2000 correspondence wherein he had made it clear that "you have not signed the distribution agreement with Newmar and, as a consequence, you are not authorized to grant anyone exclusive territories for the New Aire product." [ see id.]. Phil Miller explained that he was sending Mr. Marshall a facsimile as a courtesy to let him know Newmar's position before responding to Mr. Groenendijk [ see id.]. Shortly thereafter, Phil Miller sent a facsimile to Mr. Groenendijk advising that MMHI did not have the legal authority to make Camperland Group the exclusive dealer in Europe:

Thank you for your fax and your interest in the New Aire motorhome. Newmar Corporation has been assisting Mr. Marshall as he attempts to set up a distribution network throughout Europe. With a small down payment, we have allowed Mr. Marshall to show the New Aire product in Europe to assess the marketability of the unit.

To date, Mr. Marshall has failed to sign a distribution agreement with Newmar and, as a consequence, is not legally authorized to grant Camperland Group B.V. exclusive sales rights for the New Aire motorhome in Europe.

[ see Ex. D-9 to Doc. 17].

On November 22, 2000, Craig Alexander wrote to Ross Marshall on the status of the proposed distributorship agreement as follows:

Newmar Corporation has communicated its desire to enter into a distributorship agreement with you. We have provided assistance to you to speed up your signing of the agreement so that we could get product flowing while we had the resources to work on the project. Unfortunately, our resources are now committed, as they are every year at this time, to the redesign of model year 2002 product and, the distributorship agreement, despite several requests to have it signed, is still unsigned.

We are greatly concerned that, even though you have not signed the proposed agreement, you are, in fact, conducting business as if you were a recognized distributor for Newmar in Europe. Let us be clear on this point: that is not the case. Until such time as you sign the agreement and comply with all of its requirements, you are not a New Aire distributor, or an agent of Newmar, and should not represent yourself as one. Specifically, you and/or Marshall Motor Homes Inc., may not make any monetary or legal obligations on behalf of, or binding upon, Newmar Corporation. In addition, you may not speak on behalf of Newmar Corporation to any member of the press whose publications, radio, television, or Internet products are distributed anywhere in the United States. Until such time as you comply with all of the requirements listed in our Letter of Intent and Distributorship Agreement and sign both, we have no agreement with you or Marshall Motor Homes, Inc.

[ see Ex. D-17 to Doc. 17].

The parties held a meeting on December 3, 2000 to discuss the status of their relationship. Phil Miller sent Mr. Marshall the notes from this meeting, which reflect that the following occurred:

Virgil began the meeting by reiterating his serious concerns about the viability of doing business in Europe with Marshall Motor Homes. He restated his expectation that Newmar was to have had a signed distribution agreement with Marshall along with five orders and a comprehensive list of those items required for the New Aire to meet European Certification. However, after nine months, neither has been accomplished.

. . .

Instead of going further down the road with Marshall Motor Homes based on speculation, Newmar will do nothing more and will consider the project on indefinite hold until the following happens:

1. Ross provides Newmar with a list of specific items needed in order to meet German Single Vehicle Certification;

2. Newmar judges whether or not it can realistically comply with all of the vehicle certification items supplied by TUV; and,

3. Ross must sign the Distributorship Agreement and comply with all of its specifications.

Ross agreed with Virgil's proposed direction without reservation.

[ see Ex. D-18 to Doc. 17]. At this meeting, Mr. Marshall discussed the contracts he had obtained with Horst Mosolf, Camperland Group, and Lloyds of London [ see id.]. In response, Phil Miller pointed out that "Newmar was uncomfortable with Ross negotiating dealership deals and conducting business as an agent of Newmar when no distributorship agreement has been signed" [ see id.].

Virgil Miller wrote to Mr. Marshall on December 22, 2000 regarding the modifications that Newmar was willing to make on a New Aire unit in order to obtain single vehicle approval:

As we have discussed with you on many occasions, Newmar has no desire to redesign or reengineer the New Aire product to comply with foreign vehicle certification requirements. We have worked with you with the clear understanding that any changes to the US-production New Aire required for foreign certification would be the sole responsibility of Marshall Motor Homes. It is not our desire to have you, Mosolf, or anyone else remanufacture the New Aire. Because German/EC certification requirements mandate that Newmar reengineer the New Aire, we are no longer interested in distributing to that market.

Please make arrangements to ship New Aire Unit #5 to Newmar so that we can update that unit to our current standards.

[ see Ex. 4 to Doc. 1 and Ex. D-26 to Doc. 17].

In early January 2001, Mr. Marshall presented Newmar with the following proposed addendum to the distributorship agreement:

1. The Products shall be produced in accordance with European specifications, as identified and agreed to by Marshall and Newmar. Any reasonable and additional cost thereof in excess of the cost of the Products manufactured according to American specification Products shall be included in the purchase price of the Products and paid by Marshall. The Products shall be produced and delivered by Newmar to Marshall in a manner and condition reasonably calculated to allow Marshall to obtain single vehicle approval certification for sale of the Products in Europe and/or Territory.

5. Local Distributors or their agents shall be required to service and deal prep the Products before delivery to retail customer in accordance with Newmar's pre-delivery inspection procedure.

8. Prices to be paid by Marshall shall be Newmar's current published prices for the Products in effect at the time of scheduling production, with a reasonable upcharge reflecting those reasonable additional production costs incurred by Newmar to manufacture the Products according to European specifications and/or to be eligible for single vehicle approval certification in Europe. The terms of payment for the Products purchased by Marshall shall be by:

A. For a cash purchase, good funds or irrevocable letter of credit with a deposit of $30,000.00 U.S. upon order or upon scheduling for production.

B. For an inventory financed purchase of Products by Marshall and/or its local dealers through Deutsche Financial Services (U.K.) Limited, Marshall shall pay the purchase price to Newmar's account 15 days from Marshall's receipt of a ____ from Newmar for the Products. In the case of dealer inventory financing of Products, Marshall shall not be required to deliver with such order a deposit, but shall deliver to Newmar a true and exact copy of the "Acceptance of Credit Request" and corresponding "Transaction Number" issued by Deutsche Financial Services or other inventory financier acceptable to Newmar confirming dealer inventory financing.

9. Marshall shall deliver with each cash order for Products a deposit of $30,000.00 U.S. which shall be credited toward the purchase price of any such unit. With respect to dealer inventory financed orders identified to Newmar by Marshall, the cash deposit requirement shall be waived by Newmar upon receipt of an Acceptance of Credit Request and Credit Transaction Number as described Paragraph 8(b) above.

13. The ordered procedure shall take into consideration whether the purchase is a cash purchase or financed dealer inventory purchase with respect to any deposit requirements upon order placement, subject to Newmar's receipt of appropriate documentary confirmation of dealer inventory financing.

15. Marshall shall be responsible, functionally and financially, for European certification testing and for obtaining "local country" vehicle certification and the cost thereof.

[ see Ex. D-19 attachment to Doc. 17; see also Doc. 69 at p. 23].

In response, Virgil Miller wrote to Mr. Marshall on January 12, 2001 to reject the proposed addendum to the distributorship agreement:

We have reviewed the proposed addendum to the New Aire Distributorship Agreement. We do not agree with it and do not plan to accept it or any part of it. As you will recall, we have said and stated in the Letter of Intent as well as in the New Aire Distributorship Agreement that the minimum amount of orders at any given time is to be five units with a down payment of $30,000.00 each. Any dealings including payments are to be only between Marshall Motor Homes and Newmar Corporation. Any dealing with any other entities such as Deutsche Financial Services would only be with your corporation.

With that in mind I seriously question if the process of certifying unit #5 is prudent or of any value whatsoever. Consequently, we are withdrawing our permission to try to certify unit #5 until we are assured that you will be able to honor the agreement as written. [ see Ex. D-19 to Doc. 17]. Virgil Miller objected to Mr. Marshall's proposed addendum because it would have allowed MMHI to substitute a letter of credit for the requested cash deposits and it would have required Newmar to repurchase European inventory that Newmar could not sell domestically [ see Ex. 2 at pp. 53-55 to Doc. 73].

Mr. Marshall obtained approval for a $750,000 loan through AmSouth Bank in order to purchase the motor homes from Newmar. In January of 2001, Mr. Marshall placed an order with Newmar for five New Aire units to basic United States specifications. According to Mr. Marshall, Phil Miller sent him five invoices for the New Aire units but then would not accept the order anyway because Newmar had a "liability problem" [ see Doc. 17 at pp. 85-86]. Mr. Marshall testified that Phil Miller did not elaborate on what he meant by "liability problem" [ see id. at p. 86]. Mr. Marshall further testified that he had a problem with the price of $150,000 for each unit listed on the invoices, which was $20,000 higher than dealer prices [ see id. at pp. 86, 141-42; see also Ex. D-32 to Doc. 17]. According to Mr. Marshall, the letter of intent and proposed distributorship agreement obligated Newmar to sell the units to MMHI for basic dealer price [ see Doc. 17 at pp. 141-45]. Mr. Marshall did not purchase the units and complete the order because he objected to the price [ see id.].

Subsequently, they exchanged correspondence regarding this situation. On February 1, 2001, Mr. Marshall wrote to Phil Miller stating in pertinent part:

I wish to document our phone conversation late yesterday evening, where you confirmed that Newmar was not able to accept our confirmation order for five (5) New Aire units to basic USA specs as referred to in my letter to Virgil 1/18/01. Notwithstanding the verbal withdrawal I offered you on the phone last evening of buy-back requested in our letter of 01/18/01, you admitted to me the real issue is "that of liability," but did not elaborate.

While we understand the reason Newmar is not wanting to comply with much stricter TUEV requirements at this time, at our meeting on 01/11/01 Newmar agreed to consider the alternative to proceed with a pilot approval into the UK, conditional upon conformation (sic) of the required 5 unit order remaining. We subsequently confirmed our intention in writing to proceed with a straight out purchase of 5 existing units, Craig had indicated were available in local USA specs. It was agreed that Craig would furnish, through you Phil, the list of units available, with exact specs, in order for us to complete the contract, as outlined in our letters of 01/18/01.

. . .

MMHI has reasonably relied on Newmar representations and actions over months of meetings and correspondence constituting its agreement and commitment for MMHI to be the exclusive overseas distributor of New Aire units and that Newmar would diligently work to supply suitable product for our markets, within the parameters previously documented. The investments, MMHI and our Associates have made in this project, including the Dusseldorf and Amsterdam shows, were based on Newmar representations of MMHI exclusive distributorship of New Aire overseas, now clearly withdrawn through no fault of MMHI.

Naturally we are most disappointed at the outcome you have outlined, and firmly believe this news is inconsistent with all prior course of dealings.

[ see Ex. P-14 to Doc. 17].

In response, Virgil Miller wrote to Mr. Marshall on February 3, 2001 to explain that the issue of liability involved Newmar's concern that MMHI wanted Horst Mosolf to update Unit #5 while Newmar had always maintained that no one else could remanufacture the New Aire motor home [ see Ex. P-15 to Doc. 17]. Virgil Miller also reiterated that Newmar had withdrawn permission to certify Unit #5 "until we are assured that you will be able to honor the dealer agreement as written," as he had conveyed in his January 12, 2001 letter [ see id.]. Virgil Miller then stated:

Newmar has repeatedly asked that, if you desire to become a European distributor for the New Aire, you comply with the requirements that we have outlined for you. Specifically,

1. You must order five NewAire units.

2. You must secure each order with a $30,000 deposit.

3. You must sign the Distributor Agreement.

We have one additional requirement. Because we are not able to redesign our current New Aire product to comply with EC certification requirements, which we communicated to you in writing December 22, 2000, and at our meeting January 11, we will require a letter from you stating that, in accepting delivery of New Aire vehicles built to US certification requirements, Marshall Motor Homes, Inc., accepts complete responsibility for complying with the certification requirements of any country into which MMHI imports the New Aire, that Newmar Corporation will be held harmless for any design or construction requirements necessary for foreign vehicle certification, and that any or all costs associated with complying with vehicle certification requirements which may be levied by any country will be the sole and exclusive responsibility of Marshall Motor Homes, Inc.

[ see id.]. Virgil Miller concluded the letter by stating that Newmar had reasonably relied on Mr. Marshall's representations of personal financial capability in the selection of its exclusive distributor for the New Aire motor home and that Newmar had invested a considerable amount of time, money, and effort in helping MMHI establish a distribution network in Europe [ see id.]. Virgil Miller then demanded that MMHI meet the listed requirements no later than February 16, 2001 and that MMHI make complete payment for and delivery of the five units no later than March 9, 2001 [ see id.].

On February 7, 2001, Mr. Marshall responded to Virgil Miller stating in detail the history of their negotiations:

I was disappointed in both the tone and content of the letter MMHI received from you regarding our unprecedented offer to purchase five vehicles to US specifications. MMHI has continued to move our partnership forward, while Newmar has continued to rebuff our efforts with an unwillingness to provide us with saleable product and new and additional unreasonable demands which Newmar would not even require of a domestic dealer.

Virgil, from day one when you asked MMHI to take this project to Dusseldorf, you agreed to build a European spec vehicle for us. In fact, you offered to handle all aspects of certification and appointed Newmar's engineering director at that meeting, to this task. When Newmar realized what it was going to cost, Newmar put the burden of certification on MMHI, which we accepted.

. . .

It would not be unreasonable for us to place an order for five vehicles, which meet all of the certification requirements for Europe. Yet Newmar takes the position almost a year into the program that they are unable to redesign the current New Aire product to comply with the TUEV certification requirements. Again in a good faith effort, MMHI proposed that we seek SVA in the UK and presented to Newmar a list of requirements that do not require any redesign or reengineering, but only reasonable modifications and additions. Again, Newmar's engineering department has been aware and preparing for these modifications for over a year and still indicates that Newmar is unwilling to produce a saleable vehicle.

Our position is simple, it is untenable to appoint us as exclusive overseas distributors, but refuse to supply/produce vehicles to foreign specifications.

. . .

Regarding our proposal to take five (5) existing USA spec units in order to complete the dealer agreement, MMHI is accepting the entire risk. MMHI is prepared to take this gamble even though it was against our original principal (sic)/plan. As I indicated in my letter this approach requires that the vehicle be sold prior to shipping to the UK. It is therefore necessary for MMHI to floorplan/finance the outright purchase of these vehicles prior to shipping overseas. When asking for a buy back MMHI is only asking for a common dealer practice. The reasons Newmar gave MMHI not to provide buy back on the European vehicles was that they were not saleable here. These are US spec vehicles and buy back is completely reasonable. Again, MMHI is assuming this risk in a good faith effort to get the program moving.

Newmar's response of (sic) our generous offer is to put new demands on our agreement. FIRST, "that MMHI accepts complete responsibility for complying with the certification requirements of any country into which MMHI imports the New Aire, that Newmar Corporation will be held harmless for any design or construction requirements necessary for foreign vehicle certification, and that any and all costs associated with complying with vehicle certification requirement which may be levied by any country will be the sole and exclusive responsibility of MMHI." Again, in our spirit of a good faith effort, MMHI accepts these conditions on the five (5) US spec vehicles.

SECOND, Newmar put an arbitrary deadline of February 16, 2001 for MMHI to comply with. MMHI cannot accept this arbitrary date when there is a signed letter of intent with no date specified.

Our mutual effort was never meant to be a one-sided agreement where MMHI would buy vehicles for sale in foreign markets and Newmar would refuse to produce saleable vehicles to the foreign markets. MMHI is fully prepared to honor our commitment to purchase five (5) US spec vehicles with the following provisions, which are fully in compliance with our original agreement and necessary for MMHI to act in its designated capacity as the Exclusive Overseas Distributor for the New Aire product.

. . .

Additionally, you mention in your letter that Newmar is prepared to make limited changes in the current US spec vehicles. MMHI would like to have specific information on how far Newmar is willing to go towards the requirements outlined in Ed McMahon's letter.

In closing MMHI is prepared to commit to purchase the (5) five USA spec units, on the clear understanding that we get your complete cooperation to go forward and represent Newmar with the New Aire around the world, knowing we have your full company support. We have now invested $300,000 into this venture and intend seeing it through.

I look forward to your early response[.]

[ see Ex. 3 to Doc. 1, emphasis in original].

On February 13, 2001, Virgil Miller responded to Mr. Marshall as follows:

In reviewing the lengthy and ongoing process of Newmar exporting the New Aire product via Marshall Motor Homes, it is obvious that the current stalemate is a disappointment for both parties. The countless conversations and many letters show major disagreements and misunderstandings between the two parties. I will again attempt to state our position as plainly as possible and not address the many issues point by point.

— The Newmar letter of intent dated March 8, 2000, is still valid as well as the terms and conditions of the still unsigned "New Aire Distributorship Agreement" which includes selling the USA code version at the current published base price. The published base price currently is $134,908.

— We want unit #5 returned to Newmar immediately with all the credits and refunds as stated in my letter of February 3, 2001.

— We are not in a position nor have we ever committed to major engineering redesign for any codes or regulations other than the United States. From our earliest communications we made it clear to you that for Newmar to manufacture to any other code would have to be well defined and easy for our operations people. We would install easily obtained foreign approved fixtures, devices, and components that have been well defined and approved by both parties ahead of time. That has still not happened.

— After the "New Aire Distributorship Agreement" is consummated and you wish to follow through with your suggestions to have one of the units evaluated by TUEV for foreign certification, Newmar will co-fund the project with MMHI up to a total cost of $4000.00 US ($2000.00 for Neware and $2000.00 for MMHI). I look forward to your response.

[ see Ex. D-20 and Ex. P-16 to Doc. 17].

In mid-March, Ed McMahon provided Virgil Miller with a list of changes necessary to obtain single vehicle approval for the New Aire motor home in the United Kingdom. Newmar agreed to build a New Aire unit on a single vehicle approval basis and to sell such a unit to MMHI. On March 30, 2001, Phil Miller wrote to Mr. Marshall to document this development:

This confirms our telephone conversation regarding the building of a New Aire for you to be used for UK/SVA certification. We are not prepared to build a vehicle for TUV certification at this time.

1. The cost of this first unit only will be USD$134,908 plus $9,000 to cover UK compliance items plus the cost of any additional options you elect to add to the unit. The $9,000 is our best guess at the cost of UK items and may, after we build this first unit, change.

2. Even though we do not have a signed Distributorship Agreement with you, we will, in good faith, reduce the above price to you by 3% to cover any warranty expense you may incur on the unit. See #3 below for a further discussion on warranty.

3. At such time as you sign a Distributorship Agreement with Newmar, the vehicle warranty for all units purchases by you will be your sole responsibility. To compensate you for any warranty expense you may have, as outlined in Paragraph 14 of the proposed Agreement, Newmar will reduce the cost of units to you by 3%. Units shipped outside the United States will not be covered under warranty by Newmar.

4. Newmar is not able to provide you with a demonstrator NewAire.

5. Estimated build time for your first unit will be ten weeks after receipt of your payment in full confirming your order.

6. The information you requested in your March 26 letter to Virgil Miller will be provided to you at such time as we receive your payment in full for your first order.

7. I have attached a retail order form for your use. If you have any questions about any item on this form, please let me know. Since this is a form used for US dealers, you will need to note the addition of $9,000 for the UK/SUV unit and a deduct of 3% for your warranty liability.

[ see Ex. D-27 and P-17 to Doc. 17].

Mr. Marshall wrote to Phil Miller on April 25, 2001 to relay, among other things, information about MMHI's plan to pay Newmar up front for the NewAire test vehicle and the order for five NewAire units rather than rely on Deutsche Financial Services to pay Newmar [ see Ex. 49 to Doc. 74]. He wrote as follows:

Because of the complexity of funding for export requirements, naturally the banking opportunities are very limited. We think we have found the answer however and are currently going through the process of approval, which should make the end sale through our dealer network fit right into the DFS [Deutsche Financial Services] program. It is our intention to provide Newmar the funds up front and not rely on DFS to pay Newmar. This way it makes the transaction, far less complicated and restrictive, on the other hand providing Newmar the full payment guarantee at time of order placement.

. . .

Naturally, time is of the essence, so we are hoping to get our banking arrangements/initial order concluded as quickly as possible, in order to meet the time frame, and in line with your build program.

[ see id.]. Mr. Marshall also informed Virgil Miller at that time that he had reserved space to display the NewAire motor home at the 2001 Dusseldorf motor home show [ see id.]. On May 17, 2001, Virgil Miller wrote to Mr. Marshall to state that he had contracted for the space in Dusseldorf "without [Newmar's] knowledge and sanction" and to state "you are not authorized to act as an agent of Newmar, nor make any commitments on behalf of Newmar" [ see Ex. D-21 to Doc. 17].

On June 8, 2001, Phil Miller wrote to Mr. Marshall to reiterate Newmar's position with respect to the proposed distributorship agreement:

Newmar's position remains unchanged. If you desire to become a European distributor for the NewAire, you must comply with the requirements that the company has outlined for you. Specifically, (1) you must order five NewAire units; (2) you must secure each order with a $30,000 deposit; and (3) you must sign the Distributor Agreement. These requirements must be met before any vehicles can be built.

[ see Ex. D-22 and Ex. P-18 to Doc. 17]. On June 14, 2001, Mr. Marshall wrote to Virgil Miller to relay that MMHI would agree to meet Newmar's conditions:

We have continued to work hard to complete the terms of the agreement even though Newmar has not kept their commitment to develop a certifiable vehicle that we can offer for sale in the foreign markets. The plan we agreed to in March was a reasonable alternative stepwise approach without risk to Newmar.

In the best interest of all parties, we will agree to signing the agreement and placing a deposit of $150,000 toward five vehicles.

In fact we would like to confirm the order for (2) two SVA UK, spec units, ie. The first two vehicles to the SVA specifications we provided at the March meeting and updated on May 14^th. We will not be able to specify the other three vehicles until we have completed the UK SVA testing and evaluation of the results, across the borders.

. . .

We would like to arrange a meeting the end of next week, or early the following week to sign the agreement, and give you a check for $150,000.00 as initial deposit for 5 units.

[ see Ex. 5 to Doc. 1 and Ex. P-19 to Doc. 17].

Mr. Marshall admitted that he was planning to sign the proposed exclusive distributorship agreement if Newmar had forced him to do so at that time [ see Doc. 17 at p. 217]. Further, he admitted that he could have sent the deposit money directly to Newmar instead promising to give it at a later date [ see id. at p. 216]. Finally, Mr. Marshall admitted that although he was planning to pay Newmar $150,000 he still wanted to discuss with Newmar that the price was too high [ see id. at pp. 216-17].

After Mr. Marshall failed to meet the conditions set out by Newmar, Virgil Miller wrote to him on June 20, 2001 to terminate their relationship:

The management at Newmar Corporation has concluded that further efforts at establishing a distributorship relationship with Marshall Motor Homes International, Inc. for NewAire products overseas is at an end.

Consequently, we respectfully request that you discontinue any effort to represent NewAire products in any fashion.

[ see Ex. P-20 to Doc. 17]. This suit was filed shortly after MMHI received this final letter.

B. History of MMHI's allegations and Ross Marshall's testimony

MMHI filed its complaint against Newmar on August 17, 2001. In support of its breach of contract theory, MMHI alleged:

[Newmar] offered Marshall Motor Homes an agreement granting it exclusive distributorship rights to sell [Newmar's] product, the NewAire motor home, "within all European countries, all Pacific Rim countries, all of South Africa, and all of Saudi Arabia," subject to Marshall Motor Homes meeting certain conditions. (Exh. 1, Letter of Intent provided to Marshall Motor Homes by [Newmar].) Marshall Motor Homes accepted that offer by beginning the requested performance, and by tendering full performance of all conditions. With [Newmar's] full knowledge and consent, and at times pursuant to its explicit directions, Marshall Motor Homes expended substantial time, energy and funds while beginning the requested performance and working toward fulfilling the conditions in the Letter of Intent and complying with [Newmar's] directions. These efforts culminated in Marshall Motor Homes' tender of full and complete performance in June, 2001. [Newmar] subsequently refused to accept the tendered performance.

[ see Doc. 1 at pp. 1-2].

MMHI further alleged that it "tendered full and complete performance, as contemplated by the Letter of Intent" when it sent the June 14, 2001 letter to Newmar "confirming that Marshall Motor Homes would submit the agreed upon deposit of one hundred and fifty thousand dollars ($150,000.00) for five (5) vehicles and sign the Distributorship Agreement" [ see id. at p. 8]. In addition, MMHI alleged that Newmar's "ability to deliver a certified, saleable vehicle was a requirement of the Agreement,⁸ as indicated by [Newmar's] promise `to fill Marshall's purchase orders,' which [Newmar] could not do unless and until it obtained initial certification in the United States, and then respective country certification of the NewAire. (Exh. 1, Para. 13.)"⁹ [ see id. at p. 5].

8 Throughout the complaint, MMHI refers to "the Agreement" as the exclusive distributorship agreement offered to and accepted by it [ see Doc. 1 at p. 2].

9 As set out earlier, paragraph 13 of the proposed distributorship agreement provides that "[s]ubject to any delays occasioned by circumstances beyond the control of Newmar, Newmar agrees to fill Marshall's purchase orders in accordance with its ordinary manufacturing procedures . . ." [ see Ex. 1 to Doc. 1 and Ex. P-2 to Doc. 17]. Also, the proposed distributorship agreement states in paragraph 9 that MMHI's down payment of $30,000 per unit shall be fully refundable in the event Newmar fails to deliver the ordered units [ see id.].

At a preliminary injunction hearing before then United States Magistrate Judge Robert P. Murrian in October and November of 2001, counsel for MMHI explained its contract theory in keeping with the complaint:

And the agreement that we'll be presenting later was based on a Letter of Intent with a Distributorship Agreement attached. That Letter of Intent sought performance by doing certain things. Then the agreement would become final.

. . .

Also the evidence will show there is a strong chance for success on the merits of the contract claim because there are clearly facts here from which a jury could find that the Letter of Intent and agreement created an irrevocable offer.

[ see Doc. 17¹⁰ at pp. 6-7]. In addition, the sworn testimony of Ross Marshall throughout the hearing revealed his belief that the March 8, 2000 letter of intent with attached distributorship agreement constituted the only agreement between the parties:

10 Document 17 is the transcript of proceedings before Magistrate Judge Murrian.

Q: I call your attention to Plaintiff's Exhibit 2, which is a letter of intent with the distributorship agreement attached. Mr. Marshall, did you enter into any sort of distributorship agreement with Newmar other than Plaintiff's Exhibit 2?

A: No. This was our agreement.

[ see id. at p. 211].

Mr. Marshall admitted that he understood the following about when the proposed NewAire Distributorship Agreement would become effective:

Well, the contract in itself, the dealer, the distributorship agreement comes into effect or was to come into effect after we placed our first five orders. It is very specific in such that when we place our first five orders it becomes an effective contract, ongoing contract. * * *

[W]e are not officially a distributor at this point of time until we sign the Distributor Agreement.

[ see id. at pp. 52-53]. Mr. Marshall also admitted that he never signed the proposed NewAire Distributorship Agreement and that he never paid $150,000 for the five units he was required to order [ see id. at pp. 128, 130, 138-40, 147-48, 171, 184]. Other than Newmar asking MMHI to pay for the certification in June 2000, Mr. Marshall testified that Newmar's position with respect to the three conditions of placing the order, paying the money, and signing the agreement never changed [ see id. at p. 207]. Mr. Marshall testified that he understood the distributorship agreement between MMHI and Newmar would be for an indefinite or open-ended term [ see id. at pp. 154-56]. Mr. Marshall stated that he did not know whether the distributorship agreement could be cancelled at the will of either party [ see id.].

Further, Mr. Marshall testified that if MMHI had placed an order for five units and made the $150,000 deposit it would have been Newmar's responsibility to build a unit to European specifications under paragraph 13 of the proposed distributorship agreement [ see id. at pp. 219-20]. However, Mr. Marshall also testified throughout the hearing that Newmar promised to build a certified vehicle and that MMHI was not going to place an order or pay a deposit until it was assured that Newmar could build a certified vehicle [ see id. at pp. 47-48, 90-91, 171, 175, 220]. In fact, using the analogy of whether the chicken or the egg came first, Mr. Marshall testified that MMHI would only launch the New Aire motor home if Newmar guaranteed to build it to specifications [ see id. at p. 175].¹¹

11 On November 15, 2001, Magistrate Judge Murrian filed his report and recommendation with respect to MMHI's preliminary injunction request [ see Doc. 21]. Magistrate Judge Murrian evaluated the likelihood of MMHI's success on the merits of its contract claim from the standpoint of MMHI's theory in its complaint and Mr. Marshall's sworn testimony that a contract was formed when it tendered full performance in June 2001 of all conditions outlined in Newmar's letter of intent. Concluding that MMHI did not establish a strong probability of success on the merits of its contract claim, Magistrate Judge Murrian found that there was substantial doubt that MMHI ever made a tender of Newmar's invited performance or began the invited performance such that Newmar could not revoke its offer on June 20, 2001 [ see id. at p. 22]. Magistrate Judge Murrian explained that the invited performance was the confirmation of the initial order of five units, a cash deposit of $150,000, and execution of the proposed distributorship agreement and that MMHI's beginning preparations in launching the NewAire motor home in Europe should not be confused with the invited performance necessary to make Newmar's offer irrevocable [ see id. at pp. 16]. Judge Leon Jordan, the United States District Judge originally assigned to this case, adopted the report and recommendation after neither party filed objections [ see Doc. 22].

Newmar filed its motion for summary judgment on November 4, 2002 [ see Doc. 41]. Based on MMHI's theory in its complaint that a contract was formed when it tendered full performance in June 2001 of all conditions outlined in Newmar's letter of intent, Newmar maintained that MMHI has no cause of action for breach of contract because no contract existed. Newmar pointed out that MMHI was clearly and repeatedly informed that the exclusive distributorship agreement would only become effective when MMHI performed the following three conditions: signing the agreement; ordering five NewAire motor homes; and paying a cash deposit of $150,000 for the five vehicles. Because it is undisputed that MMHI never fulfilled any of the three conditions, Newmar argued that MMHI never accepted the offer, and consequently Newmar was free to revoke its offer on June 20, 2001.

On February 4, 2003, MMHI filed its opposition to Newmar's motion for summary judgment [ see Doc. 71]. For the first time in the history of the case, MMHI maintained that a bilateral oral contract was formed even before the letter of intent was sent. In this regard, MMHI submitted:

Beginning on July 6, 1999, Plaintiff MMHI and Defendant Newmar began a course of dealing that ultimately led to the formation of a bilateral contract on February 7, 2000 wherein Defendant proposed that Newmar would develop their as yet uncertified P-27 model for the European Market and Plaintiff promised to serve as Defendant's exclusive dealer within all European countries, all Pacific Rim countries, all of South Africa, and all of Saudi Arabia. Both parties to the contract agreed to the essential terms: Newmar would build a vehicle for the European market which was legal (i.e., certifiable) to sell in the European market, (Virgil Miller Depo., pp. 34, 99, 119) (Stichter, Tr. 273) (Marshall Aff., ¶ 4); Marshall would be the exclusive distributor in Europe and the Pacific Rim of the NewAire; the cost to Marshall would be $150,000.00 down, then $600,000.00 forty-five days before commencement of production. (April 23, 2000, Marshall letter) (Marshall Aff., ¶ 4); The parties would cooperate in plans for the Dusseldorf marketing efforts, (June 9, 2000, Virgil Miller letter) (Marshall Aff., ¶ 4); The relationship was "broadly defined" in the NewAire Distributorship Agreement. (June 9, 2000, Virgil Miller letter) (June 12, 2000, Marshall letter) (Marshall Aff., ¶ 4); Marshall Motor Homes agreed to pay up front for all certification required in foreign markets with Newmar's agreement that if Newmar terminates the agreement without cause, it would, in some way, reimburse the certification investment amount. (June 9, 2000, Virgil Miller letter) (June 12, 2000, Marshall letter) (Marshall Aff., ¶ 4).

On March 8, 2000 Defendant began to try to get Plaintiff to sign a Distributorship Agreement, drafted by Defendant, that also contained the same essential terms but contained a plethora of unessential terms decidedly more favorable to the Defendant. Defendant made it clear through subsequent correspondence that this "Agreement" was subject to negotiation. Defendant also made it quite clear that they were most interested in having Plaintiff MMHI deposit $150,000.00 U.S. dollars into their account allegedly as a deposit against five units which, by their own admission, were not certified in the United States, let alone in Europe. No vehicle which could be EC or UK compliant was identified until March 15, 2001. There was never any willingness by Defendant to negotiate, in good faith, the terms of a written memorandum of the oral agreement which would fairly memorialize the contract.

[ see Doc. 71 at pp. 24-25]. As cited in the above quoted section, Mr. Marshall submitted an affidavit in support of MMHI's opposition wherein he testified to this oral agreement between the parties [ see Ex. 29 to Doc. 74].

In its reply to MMHI's opposition to summary judgment filed on February 14, 2003 [ see Doc. 75] and also at the oral argument of Newmar's motion for summary judgment on July 17, 2003, Newmar's counsel pointed out that the Statute of Frauds would bar any oral contract theory of an exclusive distributorship agreement because by Mr. Marshall's own testimony the distributorship agreement was for an indefinite or open-ended term [ see Doc. 17 at pp. 154-56]. At the oral argument, counsel for MMHI responded that the June 9, 2000 and June 12, 2000 letters, which are cited in the above quoted section and also set out in the section detailing the parties' correspondence, were the writings which confirmed their earlier oral agreement.

To the extent that MMHI solely relies upon an oral contract theory, the Court agrees with Newmar that the Statute of Frauds would bar an oral agreement of an exclusive distributorship agreement because it is clear from Mr. Marshall's testimony that the performance of any exclusive distributorship agreement would have extended beyond one year's time. See T.C.A. § 29-2-101 (a)(5). In addition to addressing MMHI's theory that a contract was formed when it tendered full performance in June 2001 of all conditions outlined in Newmar's letter of intent, the Court will address MMHI's claim that the oral agreement was reduced to writing in June 2000 in the breach of contract section below.

III. Analysis

A. Standard of Review

Under Fed.R.Civ.P. 56(c), summary judgment is proper if "the pleadings, depositions, answers to interrogatories, admissions on file, together with the affidavits, if any, show that there is no genuine issue of material fact and that the moving party is entitled to judgment as a matter of law." The burden of establishing that there is no genuine issue of material fact lies upon the moving party. Celotex Corp. v. Catrett, 477 U.S. 317, 330 n. 2 (1986). The Court must view the facts and all inferences to be drawn therefrom in the light most favorable to the non-moving party. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986). To establish a genuine issue as to the existence of a particular element, the non-moving party must point to evidence in the record upon which a reasonable jury could find in its favor. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). The genuine issue must also be material; that is, it must involve facts that might affect the outcome of the suit under the governing law. Id.

The judge's function at the point of summary judgment is limited to determining whether sufficient evidence has been presented to make the issue of fact a proper jury question, and not to weigh the evidence, judge the credibility of witnesses, and determine the truth of the matter. Id. at 249. Thus, "[t]he inquiry performed is the threshold inquiry of determining whether there is the need for trial — whether, in other words, there are any genuine factual issues that properly can be resolved only by a finder of fact because they may reasonably be resolved in favor of either party." Id. at 250. There must be some probative evidence from which the jury could reasonably find for the non-moving party. If the Court concludes a fair-minded jury could not return a verdict in favor of the non-moving party based on the evidence presented, it may enter a summary judgment. Id. at 251-52.

B. Breach of Contract

As will be readily demonstrated, the Court concludes as a matter of law that there was never a meeting of the minds between the parties as to the definite terms of an exclusive distributorship agreement for the NewAire motor home. Throughout the parties' extended course of dealing, the evidence reveals that Mr. Marshall consistently believed that Newmar was required to provide a certified vehicle before he had to place an order for five units and pay the $150,000 deposit for those units, whereas Newmar consistently believed that MMHI was required to sign the agreement, place the order, and pay the deposit before it had to supply a certified vehicle. As a result, it is clear that the parties simply never had a meeting of the minds in this case.

A careful review of the history of MMHI's allegations shows that MMHI has raised alternative theories but the facts underlying those theories have essentially remained the same. In its complaint, MMHI alleged that Newmar offered MMHI an exclusive distributorship agreement by way of a letter of intent and that MMHI tendered full performance of all conditions by June 2001. In its opposition to the summary judgment motion, MMHI maintained that an oral agreement was formed between the parties whereby Newmar would provide a certified vehicle and MMHI would serve as the exclusive distributor. According to MMHI, this oral agreement preceded the letter of intent and was committed to writing in the parties' June 2000 correspondence.

Importantly, MMHI's complaint included allegations that Newmar promised to provide a certified vehicle to MMHI as part of their agreement [ see Doc. 1 at paras. 10, 13]. In addition to Mr. Marshall's testimony that the letter of intent with proposed distributorship agreement was the only agreement between the parties [ see Doc. 17 at p. 211], Mr. Marshall testified that Newmar promised MMHI repeatedly that it would build a certified vehicle and that MMHI was not going to place an order or pay a deposit until Newmar did so [ see id. at pp. 47-48, 90-91, 171, 175, 220].

Therefore, while MMHI travels on alternative theories in this case, the Court finds that MMHI rides on the same essential facts to advance its ultimate contention that MMHI had an exclusive distributorship agreement with Newmar for the New Aire motor home. In light of this finding, MMHI's alternative theory is not inconsistent with its complaint or Mr. Marshall's sworn testimony to the extent that judicial estoppel would be appropriate to bar MMHI from making this argument.¹² See Obion County v. McKinnis, 364 S.W.2d 356, 357 (Tenn. 1962) (under the doctrine of judicial estoppel, "a party will not be permitted to occupy inconsistent positions or to take a position in regard to a matter which is directly contrary to, or inconsistent with, one previously assumed by him, at least where he had, or was chargeable with, full knowledge of the facts, and another will be prejudiced by this action"). However, the Court concludes that under either of MMHI's theories there was no meeting of the minds between the parties as to definite terms of an exclusive distributorship agreement. To borrow Mr. Marshall's analogy, the parties were never able to agree which came first — the chicken (MMHI had to meet all three conditions in the letter of intent) or the egg (Newmar had to build certifiable vehicle).

12 In its reply to MMHI's opposition to the summary judgment motion, Newmar urged that judicial estoppel should apply to bar MMHI's shift in theories [ see Doc. 75 at pp. 4-5].

Under Tennessee law, the requirements for a valid contract are well settled:

While a contract may be either express or implied, or written or oral, it must result from a meeting of the minds of the parties in mutual assent to the terms, must be based upon a sufficient consideration, free from fraud or undue influence, not against public policy and sufficiently definite to be enforced.

Johnson v. Central Nat'l Ins. Co., 210 Tenn. 24, 356 S.W.2d 277, 281 (1962) ( citing American Lead Pencil Co. v. Nashville, Chattanooga St. Louis Ry. Co., 124 Tenn. 57, 134 S.W. 613 (1910)).¹³ In the present case, the requirement that the parties have a meeting of the minds in mutual assent to definite terms is critical to the determination of whether MMHI had a contract with Newmar to be the exclusive distributor of the New Aire motor home.

13 The Court notes that the proposed New Aire Distributorship Agreement provides that Indiana law determines its enforceability [ see Ex. 1 para. 21 to Doc. 1 and Ex. P-2 para. 21 to Doc. 17]. However, the Court is not bound by this choice of law provision where the parties never signed this contract. Both parties solely rely upon Tennessee law in their briefs. Moreover, Indiana law appears to be similar to Tennessee law with respect to general contract principles and therefore would not produce a different result. See e.g. Homer v. Burman, 743 N.E.2d 1144, 1146-47 (In. Ct. App. 2001) (citations omitted) (discussing the well settled law concerning contracts in Indiana, including that "[a] mutual assent or a meeting of the minds on all essential elements or terms must exist in order to form a binding contract"). Accordingly, the Court will follow Tennessee law in analyzing the claims raised by MMHI.

It has long been regarded that the meeting of the minds in mutual assent to the terms of a contract is essential to the creation of an enforceable contract. Roy McAmis Disposal Serv., Inc. v. Hiwassee Sys., Inc., 613 S.W.2d 226, 229 (Tenn.Ct.App. 1979) ( citing American Lead Pencil Co., supra). There can be no contract without mutual assent. Richmond v. Travelers' Ins. Co., 123 Tenn. 307, 130 S.W. 790, 791 (1910).

When through mutual mistake of fact, each party was assenting to a different contract, there is no real valid agreement, notwithstanding the apparent mutual assent. Wiggins v. Gill, 62 Tenn. 140 (1873). "The contemplated mutual assent and meeting of the minds cannot be accomplished by the unilateral action of one party, nor can it be accomplished by an ambiguous course of dealing between the two parties from which differing inferences regarding continuation or modification of the original contract might reasonably be drawn." Jamestowne on Signal, Inc. v. First Fed. Sav. Loan Ass'n, 807 S.W.2d 559, 564 (Tenn.Ct.App. 1990) (citations omitted).

It is well settled that the construction of a written contract is a question of law for the court, not the jury, to decide. Independent Constr. Co. v. Mathis, 79 F.R.D. 18, 20 (E.D. Tenn. 1978) (citation omitted). Construction of a contract in light of all circumstances is a question for the court rather than the jury. Hoskins v. United States, 299 F. Supp. 1229, 1231 (E.D. Tenn. 1969), aff'd, 425 F.2d 1301 (6th Cir. 1970).

Against this legal backdrop, MMHI's breach of contract claim must be rejected under either the theory that MMHI tendered full performance of Newmar's conditions in June 2001 or the theory that the parties reached an oral agreement that was confirmed in writing in June 2000. The evidence in this case fails to establish a meeting of the minds between the parties in mutual assent to definite terms of any exclusive distributorship agreement. On the one hand, Mr. Marshall intended for Newmar to provide a certified vehicle before he had to place an order for five units and pay the $150,000 deposit for those units; Newmar, on the other hand, intended for MMHI to sign the agreement, place the order, and pay the deposit before it had to supply a certified vehicle. Under these circumstances, no contract between the parties ever arose for lack of meeting of the minds under any theory. See Castelli v. Lien, 910 S.W.2d 420, 427 (Tenn.Ct.App. 1995) (finding no enforceable contract where the "parties' differing versions of their contract demonstrate that they did not have a meeting of the minds concerning the essential terms of their agreement").

MMHI produced no evidence that Newmar agreed to MMHI's terms and waived its own terms of any exclusive distributorship agreement, and therefore MMHI has failed to establish a genuine issue of material fact that would preclude this Court from rendering judgment as a matter of law in favor of Newmar. A careful review of the parties' course of dealing for over a year leads to the inescapable conclusion that the parties were never able to reach an agreement as to the definite terms of an exclusive distributorship agreement and therefore they never had a meeting of the minds.¹⁴

14 This conclusion is similar to Magistrate Judge Murrian's conclusion at the preliminary injunction hearing in that it was determined that MMHI never tendered Newmar's invited performance and therefore MMHI never agreed to meet Newmar's terms of the proposed distributorship agreement.

At a meeting in February 2000, Virgil Miller proposed that MMHI launch Newmar's P-27, a narrow left-hand drive prototype motor home which became known as the New Aire, at the motor home show in Dusseldorf that was scheduled to take place in the fall. Mr. Marshall accepted this proposal and further inquired about the possibility of developing the New Aire for the European market. According to Mr. Marshall, Newmar promised to build a unit to European specifications in advance of the show, agreed to be responsible for identifying the certification requirements for Europe, and initially agreed to bear the costs associated with modifying the units.

On March 8, 2000, Newmar sent MMHI a letter of intent and attached a proposed New Aire Distributorship Agreement. In the letter of intent, Newmar stated that the "effective date of the New Aire Distributorship Agreement will coincide with the confirmation of the initial order of five (5) units and cash deposit of $150,000 US dollars" [ see Ex. 1 to Doc. 1 and Ex. P-2 to Doc. 17].

On April 20, 2000, Craig Alexander reminded Mr. Marshall that the proposed distributorship agreement needed to be signed and the funds needed to be deposited [ see Ex. D-10 to Doc. 17]. Mr. Marshall responded to Mr. Alexander on April 23, 2000 "to be sure we interpret the Letter of Intent/Dealer Agreement . . . in the same way, each being clear on what our obligations are" [ see Ex. D-5 to Doc. 17]. With regard to Mr. Alexander's point about funds being deposited, Mr. Marshall responded that he "may be referring to Newmar's recovery of potential tooling costs," an issue which "was not defined in the terms of the Agreement" and which needed to be "hammered out" [ see id.].

The "outstanding issues of the contract" were still a matter to be addressed at the parties' May 5, 2000 meeting [ see Ex. D-11 to Doc. 17]. Mr. Marshall's letter to Virgil Miller on May 25, 2000 reveals that MMHI was still trying to "redefine" the terms of the proposed distributorship agreement, "tidy up the document," and "cover the necessary subjects that need specific definition" [ see Ex. D-12 to Doc. 17].

On June 9, 2000, Virgil Miller wrote to Mr. Marshall in an "attempt to define our understanding of the current and future relationship," which is "broadly defined by the drafted `New Aire Distributorship Agreement and the Letter of Intent signed by Craig Alexander March 8, 2000" [ see Ex. D-23 to Doc. 17]. Mr. Marshall wrote back on June 12, 2000 stating that the earlier letter had "clearly defined our future relationship exactly as we agreed" [ see Ex. D-24 to Doc. 17]. In that same letter, Mr. Marshall further noted Virgil Miller's intention to "secure our contract with terms, yet to be defined" and stated that he "look[ed] forward to your contract up date in due course" [ see id.].

In response to Newmar's summary judgment motion, MMHI places particular importance on the June 2000 correspondence between the parties, arguing that these writings confirm their earlier oral agreement in February 2000 whereby Newmar would build a certified vehicle and MMHI would serve as the exclusive distributor. However, MMHI's position is undermined by two important considerations: first, Virgil Miller still contemplated that the letter of intent applied to any proposed distributorship agreement between the parties and second, Mr. Marshall ended his responsive letter by noting that his contract terms were "yet to be defined" and still not in the form of a written contract [ see Ex. D-23 and Ex. D-24 to Doc. 17]. Clearly, the parties had no meeting of the minds as to the definite terms of any exclusive distributorship agreement in June 2000. Even assuming that MMHI could somehow overcome the Statute of Frauds problem, the parties' oral exchanges in February 2000 certainly did not contain the essential terms necessary to form an exclusive distributorship agreement and the correspondence between the parties in June 2000 did not do so either.

When the parties met on December 3, 2000 to discuss the status of their relationship, Newmar decided that the project would remain on indefinite hold until MMHI met several conditions, including the three conditions set forth in the letter of intent [ see Ex. D-18 to Doc. 17]. In January 2001, Mr. Marshall presented Newmar with a proposed addendum to the distributorship agreement [ see Ex. D-19 attachment to Doc. 17; see also Doc. 69 at p. 23]. However, Virgil Miller rejected this proposed addendum on January 12, 2001 [ see D-19 to Doc. 17].

On February 3, 2001, Virgil Miller sent Mr. Marshall a letter stating:

Newmar has repeatedly asked that, if you desire to become a European distributor for the New Aire, you comply with the requirements that we have outlined for you. Specifically,

1. You must order five NewAire units.

2. You must secure each order with a $30,000 deposit.

3. You must sign the Distributor Agreement.

[ see Ex. P-15 to Doc. 17]. Mr. Marshall responded on February 7, 2001 explaining: "Our position is simple, it is untenable to appoint us as exclusive overseas distributors, but refuse to supply/produce vehicles to foreign specifications" [ see Ex. 3 to Doc. 1, emphasis in original]. Then, on February 13, 2001, Virgil Miller wrote again to attempt to outline Newmar's position that the letter of intent was still valid but before doing so he stated: "The countless conversations and many letters show major disagreements and misunderstandings between the two parties." [ see Ex. D-20 to Doc. 17].

The February 2001 correspondence, better than any other, highlights the disparity between Mr. Marshall's belief that Newmar was required to provide a certified vehicle before he had to place an order for five units and pay the $150,000 deposit for those units and Newmar's belief that MMHI was required to sign the agreement, place the order, and pay the deposit before it had to supply a certified vehicle. Virgil Miller's remarks about the parties' "major disagreements and misunderstandings" capture their ambiguous course of dealing in attempting to negotiate the terms of an exclusive distributorship agreement for, at that point, nearly one year.

Between March and June 2001, Newmar continued to maintain that MMHI meet the three conditions in its letter of intent. On June 14, 2001, Mr. Marshall wrote to Virgil Miller to convey that MMHI would agree to sign the proposed distributorship agreement and place a deposit of $150,000 toward five vehicles and further would like to confirm an order for two units with the other three units to be confirmed later [ see Ex. 5 to Doc. 1 and Ex. P-19 to Doc. 17]. Mr. Marshall stated that he would like to arrange a meeting in order to complete the deal [ see id.]. It is undisputed that MMHI never met all three conditions. Virgil Miller wrote to Mr. Marshall on June 20, 2001 to terminate their relationship [ see Ex. P-20 to Doc. 17].

To the extent that MMHI finally agreed to Newmar's terms in June 2001, the Court finds that Newmar offered MMHI a conditional contract which invited acceptance by performing three conditions: placing an order of five units, paying a cash deposit of $150,000, and signing the proposed distributorship agreement. It is well established in Tennessee that a conditional contract "is a contract the very existence and performance of which depends upon the happening of some contingency or condition expressly stated herein." Buchanan v. Johnson, 595 S.W.2d 827, 830 (Tenn.Ct.App. 1979) (citing Real Estate Management v. Giles, 41 Tenn. App. 347, 293 S.W.2d 596, 599 (1956)). Mr. Marshall's admissions of his intent at this stage are noteworthy: Mr. Marshall was planning to sign the proposed exclusive distributorship agreement only if Newmar had forced him to do so at that time [ see Doc. 17 at p. 217]; he could have sent the deposit money directly to Newmar without promising to send it [ see id. at p. 216]; and he still wanted to discuss with Newmar that the price of $150,000 was too high [ see id. at pp. 216-17]. The Court finds that Mr. Marshall's June 14 letter is merely an agreement to make an agreement and did not constitute performance of Newmar's invited acceptance. See Moore, Inc. v. Greentree Financial Corp., No. 02A01-9707-CV-00148, 1998 WL 802008, at *3 (Tenn.Ct.App. 1998) (finding that a provision for the purchase of retail installment contracts under a dealer agreement was merely an agreement to possibly agree and did not create a binding agreement for the purchase of those contracts — at best, the dealer agreement was a conditional contract).¹⁵

15 See also Wolvos v. Meyer, 668 N.E.2d 671, 674 (In. 1996) (in Indiana "the law is well established that a mere agreement to agree at some future time is not enforceable").

In reaching the conclusion that the parties never had a meeting of the minds as to definite terms, the Court has not ignored Mr. Marshall's testimony, which must be accepted as true, that Phil Miller told prospective customers at the Dusseldorf motor home show that MMHI was Newmar's exclusive distributor of the NewAire motor home and that Newmar was committed to supply a certified vehicle for the European market and further that Phil Miller encouraged Mr. Marshall to appoint European dealer and technical service companies for the NewAire motor home as soon as possible. However, this evidence does not change the Court's determination that the parties never had a meeting of the minds as to definite terms of an exclusive distributorship agreement.¹⁶ There is no evidence that Phil Miller ever waived Newmar's three conditions and accepted MMHI's terms instead. In fact, before the show, Phil Miller wrote to Mr. Marshall on August 24, and 25, 2000 to reiterate that MMHI must sign the proposed agreement, place the order, and pay the deposit before Newmar would build a certifiable unit [ see Ex. D-14 and D-15 to Doc. 17]. Furthermore, after the show, Phil Miller made it clear that Mr. Marshall had not signed the proposed distributorship agreement and therefore he had no authority to contract with Camperland Group [ see Ex. D-16, Ex. D-8, Ex. D-9 to Doc. 17].

16 As will be seen in the ensuing section, based upon the record to date, these facts do preclude summary judgment on MMHI's claims of implied in law contract or quantum meruit and promissory estoppel.

Based on the controlling authority and in light of the undisputed material facts, the Court concludes as a matter of law under either theory advanced by MMHI that the parties were never able to reach an agreement as to the definite terms of any exclusive distributorship agreement after serious negotiations that lasted for over a year. The disputes between the parties as to what the terms of any exclusive distributorship agreement would have been underscore the fact that MMHI and Newmar simply never had a meeting of the minds. MMHI failed to raise a genuine issue of material fact regarding any meeting of the minds because there was no proof that Newmar agreed to MMHI's terms and waived its own terms of any exclusive distributorship agreement. Accordingly, summary judgment must be entered in favor of Newmar with respect to MMHI's breach of contract claim.

Before concluding its discussion on the breach of contract claim, the Court will address several additional issues raised by MMHI relating to the Uniform Commercial Code ("U.C.C."). MMHI maintains that it was justified in refusing to provide a cash deposit until such time as Newmar provided assurance that it could build a vehicle that was certified in the United States or Europe [ see Doc. 71 at pp. 28-31]. In support of this position, MMHI points to T.C.A. § 47-2-609 of the U.C.C., which states that in a contract for sale a party may suspend its own performance if commercially reasonable pending the outcome of a written demand of adequate assurance of the other party's due performance.

More specifically, MMHI points to newly discovered contract documents between Newmar and Travel World, a recreational vehicle dealer in the United Kingdom, to show Newmar's practice of sending out form contracts without having them signed but then consummating a dealership arrangement anyway [ see Docs. 79 and 97]. According to MMHI, this practice allows Newmar to later repudiate the contract at its choice while contending that it was never signed [ id.]. MMHI maintains that this evidence shows how contracts are formed and the minimal degree of formality required in this particular industry¹⁷ [ id.]. In view of this evidence against Newmar's position that there must be a signed contract between the parties, MMHI argues that the U.C.C. is designed to discourage the formalistic and legalistic approach to contracts in favor of the realities of commerce [ id.].

17 Here, it is interesting to note that Mr. Marshall personally signed contracts with Camperland Group and Horst Mosolf. In addition, Camperland Group was required to pay up front upon the placement of any orders pursuant to the terms of the contract.

In addition, MMHI maintains that various brake test results and testimony show conclusively that the NewAire motor home did not meet the United States certification requirements and therefore Newmar did not have a legally saleable vehicle at any time [ see Docs. 77, 79, 116, 117, 119]. The brake test results are dated January 19, 2001 and August 17, 2001. MMHI says that this evidence corroborates its concern that the NewAire motor home was not legally saleable and in turn justifies its suspension of performance until Newmar built a certified vehicle [ see Docs. 79, 117].

The Court acknowledges the majority rule that distributorship contracts are considered sales contracts under the U.C.C. See Watkins Son Pet Supplies v. Iams Co., 254 F.3d 607, 612 (6th Cir. 2001) (distributorship agreement held to be a sales contract where it was clear from the text of the written agreement between the parties that their relationship was primarily about the sale and resale of pet food). In this case, however, the Court concludes that no exclusive distributorship agreement existed between the parties and therefore § 2-609 simply cannot be applied. MMHI cites AMF, Inc. v. McDonald's Corp., 536 F.2d 1167 (7th Cir. 1976), in support of its position that a repudiation based upon § 2-609 was upheld under similar circumstances to the instant case [ see Doc. 71 at pp. 28-29]. In the AMF case, however, there was no question that the parties were operating under a legal and valid contract, which cannot be said in the instant case. Furthermore, it is undisputed that MMHI has failed to show any place in the record where it demanded in writing or otherwise that Newmar had to demonstrate adequate assurance of due performance before MMHI had to meet Newmar's conditions, and therefore § 2-609 is not applicable. See DLA, Inc. v. D.F. Shoffner Mech. Contractors, Inc., No. 1395, 1991 WL 73940, at *5 (Tenn.Ct.App. 1991) (finding § 2-609 inapplicable where it was undisputed that a written demand for assurance was not made). Moreover, the Court is compelled to note that the newly discovered contract documents could not have formed the basis for demanding adequate assurance under the U.C.C. since MMHI did not know about them until discovery was conducted. Therefore, for all of these reasons, the additional issues raised by MMHI under the U.C.C. have no merit.¹⁸

18 As a result of this conclusion, MMHI's motion to permit filing of report under seal [Doc. 116] and motion to permit filing of additional post-hearing memorandum in support of opposition to motion for summary judgment [Doc. 119] will be denied as moot.

C. Implied Contract and Quantum Meruit and Promissory Estoppel

In the alternative to its breach of contract claim, MMHI alleges claims of breach of implied contract and quantum meruit. MMHI maintains that it is entitled to recover for benefits conferred upon Newmar through its launch of the NewAire motor home in Europe, specifically the "tremendous publicity and expressed consumer interest" that MMHI garnered for Newmar [ see Doc. 71 at p. 31]. According to MMHI, its promotional efforts would have been successful but for Newmar's obstinance in refusing to cooperate with the certification process in a meaningful manner. For this reason, MMHI says that it would be unjust to deny it recovery of the value of benefits conferred upon Newmar.

An implied contract can only arise in the absence of an express contract. Taillie v. Chedester, 600 S.W.2d 732, 735 (Tenn.Ct.App. 1980) ( citing Hill v. Childress, 18 Tenn. 514 (1837). An implied contract is one not created or evidenced by the explicit agreement of the parties, but is a contract inferred by the law, as a matter of reason and justice from the parties' acts or conduct, where the circumstances surrounding the transaction make it a reasonable or even necessary assumption that a contract existed between them by tacit understanding. Boston, Bates Holt v. Tennessee Farmers Mut. Ins. Co., 857 S.W.2d 32, 35 (Tenn. 1993) (citation omitted).

In Tennessee, two distinct types of implied contracts are recognized: contracts implied in fact and contracts implied in law or quasi contracts. Angus v. City of Jackson, 968 S.W.2d 804, 808 (Tenn.Ct.App. 1997) (citation omitted).¹⁹ In Angus, the Tennessee Court of Appeals explained the difference between the two types of implied contracts as follows:

19 MMHI does not designate which type of implied contract it pursues, and therefore the Court will analyze both types.

Contracts implied in fact arise under circumstances which show mutual intent or assent to contract. Mutual assent and a meeting of the minds cannot be accomplished by the unilateral action of one party. . . . Contracts implied in law are created by law without the assent of the party bound, on the basis that they are dictated by reason and justice. A party seeking to recover on an implied in law or quasi contract theory must prove the following:

A benefit conferred upon the defendant by the plaintiff, appreciation by the defendant of such benefit, and acceptance of such benefit under such circumstances that it would be inequitable for him to retain the benefit without payment of the value thereof.

Id. (citations omitted).

Quantum meruit actions are equitable substitutes for contract claims. Castelli v. Lien, 910 S.W.2d 420, 427 (Tenn.Ct.App. 1995).²⁰ A party who has provided goods and services to another must prove that the five circumstances exist in order to recover the reasonable value of those goods and services:

20 See also DiMizio v. Romo, 756 N.E.2d 1018, 1024 (In. Ct. App. 2001) (discussing the requirements of implied in law contracts and quantum meruit in Indiana which are similar to Tennessee).

(1) there must be no existing, enforceable contract between the parties covering the same subject matter;

(2) the party seeking recovery must prove that it provided valuable goods and services;

(3) the party to be charged must have received the goods and services;

(4) the circumstances must indicate that the parties involved in the transaction should have reasonably understood that the person providing the goods and services expected to be compensated; and

(5) the circumstances must also demonstrate that it would be unjust for the party benefitting from the goods and services to retain them without paying for them.

Id. (citations omitted).

MMHI also brings a claim for promissory estoppel, maintaining that it spent thousands of dollars promoting the NewAire motor home over the course of two years based upon Newmar's promise to build a certified vehicle for the European market. The theory of promissory estoppel provides:

[W]hen one man by his promise induces another to change his situation, a repudiation of the promise would amount to a fraud. Where one makes a promise which the promisor should reasonably expect to induce action or forbearance of a definite and substantial character on the part of the promisee, and where such promise does in fact induce such action or forbearance, it is binding if injustice can be avoided only by enforcement of the promise.

Foster Creighton Co. v. Wilson Contracting Co., Inc., 579 S.W.2d 422, 427 (Tenn.Ct.App. 1978) (citation omitted).²¹

21 See also First National Bank of Logansport v. Logan Mfg. Co, Inc., 577 N.E.2d 949, 954 (In. 1991) (discussing the requirements of promissory estoppel in Indiana which are similar to Tennessee).

To extent that MMHI pursues an implied in fact contract, the Court concludes that MMHI has failed to submit any proof in the record that would sustain such a claim. For the same reasons that the Court concludes there was no meeting of the minds for an express contract between the parties, it is clear that MMHI cannot prove a mutual intent or assent to definite terms of an exclusive distributorship agreement in the context of a contract implied in fact. MMHI has not raised a genuine issue of material fact as to this claim, and therefore summary judgment in favor of Newmar is appropriate.

However, the Court determines that summary judgment is not appropriate to Newmar on MMHI's implied in law contract or quantum meruit claims and its promissory estoppel claim. With respect to these claims, the Court focuses on the statements made by Phil Miller at the motor home show in Dusseldorf. In particular, Phil Miller held MMHI out as a de facto distributor for a limited period of time by telling prospective customers at the show that MMHI was Newmar's exclusive distributor of the NewAire motor home and that Newmar was committed to supply a certified vehicle for the European market. Moreover, Phil Miller encouraged Mr. Marshall to appoint European dealer and technical service companies for the NewAire motor home. With respect to the dealer agreement with Camperland Group, Mr. Marshall stated that Phil Miller knew in advance that he was going to make the contract. As for the technical service agreement with Horst Mosolf, Mr. Marshall testified that Phil Miller was present during a dinner meeting while the contract was being discussed, although the contract was not signed until a later date. At this stage of the proceedings, as noted earlier, the Court must accept these statements as true.

Therefore, after carefully considering all of the evidence, the Court concludes that the record presents a jury question as to whether MMHI can recover benefits that it may have conferred upon Newmar through its promotional efforts in Europe. In this respect, it bears noting that MMHI agrees that it "did not expect to be compensated from Newmar for its marketing and product development expenditures" [ see Doc. 71 at p. 33]. MMHI acknowledges that the proposed distributorship agreement provided that MMHI's expenses in promoting the NewAire motor home would have fallen on MMHI anyway [ see Ex. 1 at para. 2 to Doc. 1 and Ex. P-2 at para. 2 to Doc. 17]. However, MMHI maintains that it did expect to be compensated by selling the NewAire motor home that Newmar promised to build [ see Doc. 71 at p. 33]. Although MMHI did not plan to recoup its promotional costs, the Court will leave this issue to a jury to determine whether MMHI spent the money promoting the NewAire motor home based upon the representations of Newmar that it would ultimately receive greater benefits through an exclusive distributorship agreement. Accordingly, the Court will deny Newmar's motion for summary judgment on MMHI's claims of implied in law contract or quantum meruit and promissory estoppel, but the Court will grant Newmar's motion for summary judgment on MMHI's claim of implied in fact contract.

D. Violation of T.C.A. § 47-50-109 and Tortious Interference with Contractual Relations

For its final causes of action, MMHI makes claims for procurement of breach of contract pursuant to Tennessee statutory and common law. MMHI specifically maintains that Newmar tortiously interfered with its contract with Camperland Group when Phil Miller notified Camperland Group that MMHI did not have the legal authority to grant exclusive dealership rights to the NewAire motor home [ see Ex. D-8 and Ex. D-9 to Doc. 17]. MMHI points out that Phil Miller took this action after he had encouraged Mr. Marshall to consummate a dealer agreement in Europe while at the Dusseldorf motor home show. According to MMHI, it had the authority to grant exclusive dealer rights to Camperland Group because MMHI had a contract to be Newmar's exclusive distributor of the NewAire motor home.

T.C.A. § 47-50-109 states:

It is unlawful for any person, by inducement, persuasion, misrepresentation, or other means, to induce or procure the breach or violation, refusal or failure to perform any lawful contract by any party thereto; and, in every case where a breach or violation of such contract is so procured, the person so procuring or inducing the same shall be liable in treble the amount of damages resulting from or incident to the breach of contract. The party injured by such breach may bring suit for the breach and for such damages.

The elements of a claim for procurement of breach of contract either at common law or under the statute are well established:

there must be a legal contract; the wrongdoer must have knowledge of the existence of the contract; there must be an intention to induce its breach; the wrongdoer must have acted maliciously; there must be a breach of the contract; the act complained of must be the proximate cause of the breach of contract; and, there must have been damages resulting from the breach of the contract.

New Life Corp. of Am. v. Thomas Nelson, Inc., 932 S.W.2d 921, 926 (Tenn.Ct.App. 1996) (citations omitted).

As set forth above, malice is "a necessary element to an action for common law and statutory inducement to breach." Testerman v. Tragesser, 789 S.W.2d 553, 557 (Tenn.Ct.App. 1989) (citation omitted). In Tennessee, malice in this context means a willful violation of a known right. Edwards v. Travelers Ins., 563 F.2d 105, 121 (6th Cir. 1977) (citation omitted). Malice does not require illwill or spite toward the injured party. In Re AM Int'l, Inc. v. Tennessee Valley Authority, 46 B.R. 566, 575 (Bankr. M.D. Tenn. 1985). Intentional commission of a harmful act without justifiable cause is the equivalent of legal malice. Id. Tennessee courts indicate that the burden of persuasion for proving a violation of T.C.A. § 47-50-109 is somewhat elevated, requiring a "clear showing" of the necessary elements, including malice. See id. (citation omitted).

Assuming for the sake of argument that MMHI can prove that it had a legal contract with Camperland Group,²² the record fails to reveal that Newmar clearly acted with malice or with intent to commit a harmful act without justifiable cause when it notified Camperland Group that MMHI lacked the authority to grant exclusive dealership rights to the NewAire motor home. Even assuming that an agent of Newmar encouraged Mr. Marshall to consummate a European dealer agreement during a limited period of time, there is nothing malicious about Newmar notifying Camperland Group that MMHI had not met the three conditions that it understood MMHI must meet in order to become the exclusive distributor of the NewAire motor home. In fact, Newmar negotiated with MMHI about a proposed distributorship agreement for over a year and during that time Newmar never waivered from the three conditions of signing the agreement, placing the order, and paying the deposit. Because MMHI has failed to raise a genuine issue of material fact as to the essential element of malice, the Court concludes that Newmar is entitled to summary judgment on MMHI's claims of procurement of breach of contract pursuant to Tennessee statutory and common law.

22 It should be noted that the Court has serious questions about whether MMHI could even prove that it had a legal contract with Camperland Group given the Court's holding that MMHI did not have a contract to be Newmar's exclusive distributor of the NewAire motor home for lack of meeting of the minds. In addition, Mr. Marshall admitted that Newmar only gave MMHI dealer authority for the motor home show in Dusseldorf from September 30 to October 8, 2000, not distributor authority [ see Doc. 17 at p. 133] and MMHI did not sign a contract with Camperland Group until November 1, 2000.

IV. Conclusion

For the reasons set forth above, Newmar's motion for summary judgment [Doc. 41] will be GRANTED as to MMHI's claims of breach of contract, breach of implied in fact contract, violation of T.C.A. § 47-50-109, and tortious interference with contractual relations and will be DENIED as to MMHI's claims of breach of implied in law contract, quantum meruit, and promissory estoppel. In addition, MMHI's motion to permit filing of report under seal [Doc. 116] and motion to permit filing of additional post-hearing memorandum in support of opposition to motion for summary judgment [Doc. 119] will be DENIED AS MOOT.