A Tennessee state appeals court has overturned a trial court’s denial of a directed verdict in a case in which two baseball entrepreneurs, who sought to start a business concern that would “recruit, train, and coach youth baseball players with aspirations of playing professionally or in college,” got sideways about compensation.
In so ruling, the appeals court held that the plaintiff failed to “prove that the benefit conferred on (the defendant) was in excess of the compensation (he had) already received.”
This case began with allegations that the parties — Plaintiff/Appellee Victor Cole and Defendant/Appellant Joe Caruso — participated in a secret partnership agreement. Both men played professional baseball and would train together at a sports academy near Memphis.
In 2009, Caruso allegedly approached Cole about becoming potential business partners to “recruit, train, and coach youth baseball players with aspirations of playing professionally or in college.” Cole and Caruso had a meeting in the fall of 2010 at Cole’s home, in which they discussed the alleged partnership agreement.
During this meeting, Cole claimed that he and Caruso initially discussed a 50/50 split of the profits. However, the two ultimately agreed on a 60/40 split with Caruso receiving 60 percent of the profits and Cole receiving 40 percent. Caruso disputed that he and Cole ever had a meeting to discuss a potential partnership and maintained that there was never a partnership between he and Cole.
After the alleged partnership was made, it is undisputed that Caruso and Cole both worked together for a time in the East Coast Grays baseball organization. In the fall of 2011, however, Caruso informed Cole that Cole was not meeting the expectations of the organization and was no longer needed. The two then parted ways. Up to this point, Cole had received compensation in the amount of approximately $13,000. He cashed the checks with no complaint.
On Dec. 22, 2011, Cole filed his complaint in state court against Caruso for “damages, injunction, and accounting for breach of partnership agreement, conversion, promissory fraud and/or unjust enrichment.” Caruso filed an answer on Jan. 13, 2012, denying all the material allegations set forth in Cole’s complaint. Following a period of discovery, the case was eventually heard by a jury for four days beginning on April 25, 2016. At trial, Cole offered testimony from three people: (1) himself; (2) Dr. Ralph Scott, an expert witness; and (3) Mrs. Sherri Cole, Cole’s wife.
At trial, Cole testified that he coached and served as a recruiting director for the organization, and that during his tenure, from 2010-2011, the organization grew from one team to three teams. He also testified that during the early days of the East Coast Grays, he and Caruso met regularly to discuss tournaments, camps, clinics, uniforms, other coaches to hire, player development, and player placement. Cole further stated that during his time with the East Coast Grays, he and Caruso traveled across the Southeast, often using his automobile for the trips and that he turned down other income opportunities to work with Caruso and the East Coast Grays organization. In sum, Cole generally testified as to the services and contributions he provided for the East Coast Grays and its players, his alleged partnership with Caruso, and his alleged partnership interest in the East Coast Grays. Dr. Scott testified solely as to the monetary value of Cole’s partnership interest. Mrs. Cole testified mostly to the facts surrounding the meeting in which Caruso and Cole established the alleged partnership. At the closing of Cole’s proof, Caruso moved for a directed verdict. The trial court granted the directed verdict regarding the claims of conversion, attorney fees, punitive damages, and promissory fraud. However, the trial court denied the motion for breach of a partnership agreement and unjust enrichment.
On April 28, 2016, the jury returned a unanimous verdict specifically finding that the parties did not have a partnership, and thus Cole had not suffered damages as a result of a breach of partnership agreement. On the alternative ground of unjust enrichment, the jury did find that Caruso had “received the benefits of [Cole’s] services under circumstances rendering it inequitable to keep those benefits without compensating [Cole.]” Therefore, the jury found that Caruso was unjustly enriched by Cole’s services and awarded Cole $10,000. Judgment on the jury verdict was entered on May 16, 2016.
On May 20, 2016, Cole sought additional monies, arguing that the $10,000 jury verdict was not reasonable in light of his contributions to the organization. The court agreed and gave him an additional $40,000.
Caruso appealed, making two arguments:
(1) Whether the trial court erred in failing to grant Caruso’s directed verdict because Cole did not establish a prima facie case on the theory of unjust enrichment.
(2) Whether the trial court erred by suggesting a $40,000 additur.
In its analysis, the appeals court noted that the jury found that there was not a partnership between Cole and Caruso. The jury awarded damages solely on Cole’s claim of unjust enrichment. Neither party has appealed the jury’s decision regarding the issue of whether a partnership existed. Therefore, for the purposes of this appeal, we must conclude that Cole was not a partner, nor was he entitled to any damages representing his partnership interest in the East Coast Grays. Rather, the dispositive question in this case is whether Cole submitted sufficient proof of his claim for unjust enrichment, and if so, the appropriate damages resulting from that claim.”
The court defined the theory of unjust enrichment as “a contract implied-in-law in which a court may impose a contractual obligation where one does not exist.” Whitehaven Cmty. Baptist Church v. Holloway, 973 S.W.2d 592, 596 (Tenn. 1998) (citing Paschall’s Inc. v. Dozier, 219 Tenn. 45, 407 S.W.2d 150, 154-55 (Tenn. 1966)).
In deciding the case, the court relied on the test set forth to establish a claim for quantum meruit from Castelli v. Lien, 910 S.W.2d 420, 427 (Tenn. Ct. App. 1995). To prove such a claim for quantum meruit or unjust enrichment, one must prove that:
(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 or services expected to be compensated,
(5) the circumstances must also demonstrate that it would be unjust for the party benefitting from the goods or services to retain them without paying for them.
The court continued: “There is no dispute in this case that Cole conferred a benefit on Caruso that was appreciated by Caruso.” Nor was it in dispute that Cole was the pitching coach and recruited for the organization, or that he attended meetings, drove players to games, helped design uniforms, and spent a significant amount of time involved in the organization. In fact, the evidence “shows that Caruso was aware of Cole’s work for the organization,” according to the court. “Indeed … Cole was compensated for some work done for the East Coast Grays. As such, the first two elements necessary to establish an unjust enrichment claim have clearly been met in this case.
“The dispute in this case concerns whether proof was presented to support the final element: that it is inequitable to allow Caruso to retain the benefit without payment of the value thereof. Although the parties generally frame this issue in their briefs as a failure to present proof of the value of the benefit conferred, a closer inspection of the parties’ arguments reveals that this issue must be resolved on the basis of whether Cole presented any material evidence as to whether the enrichment to Caruso was unjust.
“In conclusion, following a thorough review of the record, we discern no instance in which Cole testified as to the value of his services to Caruso or the organization so as to prove that the benefit conferred on Caruso was in excess of the compensation Cole has already received. Likewise, the proof contains no estimate of the value of any expenses incurred by Cole on behalf of the organization that were not reimbursed by Caruso. Consequently, we cannot conclude that this evidence is sufficient to prove that Caruso was actually unjustly enriched by Cole’s services. Accordingly, taking the strongest legitimate view of the evidence presented in Cole’s favor, we must conclude that he failed to provide any evidence that an injustice occurred by allowing Caruso to retain the benefits conferred by Cole. Cole therefore did not establish a prima facie case in the trial court, and the trial court erred when it failed to grant Caruso’s motion for directed verdict.”
Victor Cole v. Joe Caruso; Ct. App. Tenn. at Jackson; No. W2017-00487-COA-R3-CV, 2018 Tenn. App. LEXIS 146; 2/20/18
Attorneys of Record: (for appellant) Robert L. Moore, Memphis, Tennessee. (for appellee) Charles W. Weirich, Jr., Memphis, Tennessee.
