SIDDARTH SHAH and DAKSHA SHAH v. Racetrac Petroleum Co.

*The Honorab le Jennifer B. Coffman, United States District
Judge for the E astern and W estern D istricts of Kentucky, sitting by
designation.
1
RECOMMENDED FOR FULL-TEXT PUBLICATION
Pursuant to Sixth Circuit Rule 206
ELECTRONIC CITATION: 2003 FED App. 0244P (6th Cir.)
File Name: 03a0244p.06
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
_________________
SIDDARTH SHAH and DAKSHA
SHAH,
Plaintiffs-Appellants/
Cross-Appellees,
v.
RACETRAC PETROLEUM CO.,
Defendant-Appellee/
Cross-Appellant.
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Nos. 01-6077/6451
Appeal from the United States District Court
for the Eastern District of Tennessee at Knoxville.
No. 99-00410—James H. Jarvis, District Judge.
Argued: March 14, 2003
Decided and Filed: July 24, 2003
Before: CLAY and ROGERS, Circuit Judges; COFFMAN,
District Judge.*
2 Shah, et al. v. Racetrac
Petroleum Co.
Nos. 01-6077/6451
_________________
COUNSEL
ARGUED: Jay W. Mader, ARNETT, DRAPER &
HAGOOD, Knoxville, Tennessee, for Plaintiffs. Debra L.
Fulton, FRANTZ, McCONNELL & SEYMOUR, Knoxville,
Tennessee, for Defendant. ON BRIEF: Jay W. Mader,
ARNETT, DRAPER & HAGOOD, Knoxville, Tennessee,
Mark A. La Mantia, FARRELL & LA MANTIA, Raleigh,
North Carolina, for Plaintiffs. Debra L. Fulton, FRANTZ,
McCONNELL & SEYMOUR, Knoxville, Tennessee, for
Defendant.
_________________
OPINION
_________________
CLAY, Circuit Judge. Plaintiffs Siddarth and Daksha Shah
appeal from an order awarding summary judgment to
Defendant Racetrac Petroleum Company after Plaintiffs filed
a complaint in diversity jurisdiction pursuant to 28 U.S.C.
§ 1332 alleging various contract causes of action and raising
claims under the Tennessee Consumer Protection Act, Tenn.
Code Ann. § 47-18-109, and the Tennessee Petroleum Trade
Practices Act, Tenn. Code Ann. § 47-25-601. Defendant
cross-appeals from an order denying Defendant’s
counterclaim for attorney’s fees. We AFFIRM the district
court in part and REVERSE in part.
FACTS
In late 1994, Plaintiffs became interested in purchasing
Raceway 773, a gas station and convenience store located in
Maryville, Tennessee. Defendant owned the store, exterior
improvements, and real property. Clyde and Gloria Holt
operated the Raceway pursuant to a lease and contract with

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Defendant, which operates a chain of similar stores. The
Holts planned to sell their interest in the lease and contract,
which included certain interior improvements, inventory, and
goodwill, for $90,000.
Plaintiffs learned about the offer from Bhanu Mehta, who
also considered purchasing the business from the Holts.
Mehta had previously reviewed the lease and contract under
which the Holts operated the store. Mehta learned that each
instrument contained a clause that arguably permitted either
party to terminate the agreement upon thirty days written
notice. When Mehta asked Holt about the termination
clauses, Holt explained that as he understood them, Defendant
would not terminate the lease or contract as long as the lessee
made timely rental payments and operated the business in a
satisfactory manner. Mehta had also inquired about the
termination clauses present in the agreements held by other
Raceway store operators. These other lessees similarly
reported that Defendant would not terminate the lease or
contract as long as the operator promptly paid rent and ran the
business effectively. In December of 1994, Plaintiffs first
reviewed the lease and accompanying contract for Raceway
773. The termination clause in the lease read:
2. TERM. This Lease shall be effective on the 7th day
of February, 1995, and subject to all its terms and
conditions shall remain in full force and effect for
twelve (12) months from date of execution. Upon
termination of the lease term, this Lease will be
automatically renewed for subsequent one-year
terms upon the same terms and conditions, subject to
Lessor’s adjustments of the rental provided,
however, that at any time during the initial or any
extended term, either party may give thirty (30) days
written notice in the form hereinafter described of its
intent to terminate this Lease. Lessee acknowledges
that this lease does not create, extend, or renew a
franchise under any local, state, or federal law
4 Shah, et al. v. Racetrac
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Nos. 01-6077/6451
including the Federal Petroleum Marketing Practices
Act (PMPA).
The termination clause in the contract had essentially the
same terms:
E. Term of Contract and Renewal. – This Contract
shall be for a duration of (12) months from date of
execution, provided the Contractor complies with all
the terms and conditions and covenants herein, it
being the intent of the parties that the term of this
Contract will run concurrently with the term of the
Lease executed as of even date herewith. Provided
that there has been no default as defined in the
Contract within the existing term of the Contract,
this Contract will be automatically renewed and the
term of the Contract extended for subsequent one
year terms. At any time during the initial or any
extended term, either party may give thirty (30) days
written notice in the form hereinafter described of its
intent to terminate the Contract. Any such extension
shall be upon the same terms and conditions as
stated herein.
Furthermore, highlighted above the word “CONTRACT” on
the document’s first page, the contract states: “THIS
CONTRACT DOES NOT CREATE A FRANCHISE
RELATIONSHIP UNDER STATE OR FEDERAL LAW
(See Paragraph C).” Paragraph C then states:
C. No Franchise. – Contractor acknowledges that this
Contract does not create, extend, or renew a
franchise under any local, state, or federal law
including the Federal Petroleum Marketing Practices
Act (PMPA). Contractor fully acknowledges that
this Contract with Contractee is a separate and
distinct contract and is not associated with any other
agreements, contracts or franchise relationships

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which may now or hereafter exist between
Contractee and Contractor. Contractor further
acknowledges that Contractee is the retailer of the
fuel facilty to be operated hereunder and that this
Contract does not give any rights to the Contractor
as a fuel retailer. Contractor further acknowledges
that this Contract cancels any existing leases,
agreements or other contracts, except any lease,
agreement or contract of same date, or any ground
lease on the Premises between the parties, that may
have existed between Contractee and Contractor.
With respect to the title to the fuel, the contract provides:
F. Gasoline and Payment Obligations. – Contractee
owns and retains all title to the fuel at the property
until sold to the customer. Contractor agrees that all
funds collected for fuel sales are the property of the
Contractee and further agrees to act as the agent of
Contractee in the collection and safe keeping of all
monies collected for sale of fuel. Contractor
acknowledges that he owes a duty of trust to
Contractee in the collection and safe keeping of all
funds collected for sales and acknowledges that he
holds himself in such fiduciary relationship to
Contractee. Contractor agrees to remit funds so held
in trust to Contractee upon demand or otherwise as
directed by Contractee in cash or by cashier’s check.
. . . In addition, Contractor shall submit all books
and records relating to the sale of fuel and gasoline
products purchased from Contractee for an audit and
taking of inventory.
Also significant, the contract contained the following merger
provision:
Y. Entirety. – This Contract, together with attached
exhibits, and any other lease or contract executed the
6 Shah, et al. v. Racetrac
Petroleum Co.
Nos. 01-6077/6451
1Plaintiffs also signed a guaranty relevant to the attorney fee
dispute discussed in detail below.
same date, constitutes the entire understanding
between the parties and supersedes and cancels all
previous contracts between the parties with respect
to the facilities covered hereby.
The contract’s miscellaneous provision reiterates the
integration clause:
Z. Miscellaneous. –
. . . .
5. This Contract supersedes and cancels all
previous contracts or arrangements between the
parties relating to the matters herein and no
prior or subsequent stipulation, agreement or
understanding, verbal or otherwise, of the
parties or their agents relating to the matters
herein shall be valid or enforceable unless
embodied in the provisions of this Contract, or
a separate instrument in writing.
Although Plaintiffs did not read all of the contractual
provisions, they certainly saw the termination clauses.1
Plaintiffs expressed concern to the Holts about investing
money in a business that they could lose upon thirty days
notice. Clyde Holt told Plaintiffs what he told Mehta—that
Defendant would not terminate a lease as long as the tenant
performed acceptably. Plaintiffs also questioned J.D. Main,
Defendant’s district manager responsible for Racetrac 773.
Main explained that “[Defendant’s] policy is that they will
not kick any dealer out as long as they perform satisfactorily.”
(J.A. at 137.)

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2Defendant often made these repre sentations. Charles and Diane
Farhat operated Raceway 773 before the H olts, from March 1 990 until
January 199 3. The Farhats operated the business pursuant to a lease and
contract containing similar termination clauses, but Smith advised Charles
Farhat that Defendant would not terminate the contract or lease as long as
he timely paid rent, operated the business in a satisfactory manner, and
did not abuse the premises. Lalit N. Desai considered operating a
Raceway store in Athens, Tennessee, in 1994. When he asked Ma in about
the termination clauses, Main informed him that Defendant would not
terminate the lease or contra ct as long as he maintained the premises, p aid
rent on time, and otherw ise ran the business appropriately.
Plaintiffs thereafter spoke with James Smith, who assumed
Main’s corporate role after Main departed. Plaintiffs
explained that they could not afford to risk their money on an
investment in Racetrac 773 without assurances that Defendant
would not terminate the lease and contract on only thirty days
notice. Smith echoed the earlier representations of the Holts
and Main. According to Smith, “[Defendant] operates their
business as a family. [Defendant] never kicks any dealer out
from that business as long as it perform[s] satisfactorily.”
(J.A. at 137.) Furthermore, when Plaintiffs requested a five
or ten year lease instead of Defendant’s one year
automatically renewable term, Smith advised Plaintiffs that
Defendant would not agree to changes in the agreement, but
counseled Plaintiffs not “to worry about it . . . you will not
have any problem if you perform right.” (J.A. at 148.)
Finally, Smith recommended that Plaintiffs check with other
Raceway operators about Defendant’s reputation and
practices. Plaintiffs received similar assurances to those
Defendant made.2
Based on these oral assurances, Plaintiffs began to proceed
with the transaction by completing a credit report for
Defendant. Following approval of their credit, Plaintiffs
executed separate closing documents with the Holts and
Defendant at Raceway 773 on February 7, 1995. Smith
attended on Defendant’s behalf. Plaintiffs executed a
8 Shah, et al. v. Racetrac
Petroleum Co.
Nos. 01-6077/6451
3Jackie Russell, Asset Manager in Defendant’s Real Estate
Department Russell, testified that Philpot must have known Defendant
planned to sell Raceway 773:
Q: Did you ever speak with Mr. Floyd Philpot
regarding that store being offered for sale or
any stores in his region being offered for sale?
A: Actually, he is in the decision-making to put
them for sale, so he would have known before
me.
. . . .
Q: So if a Raceway is going up for sale, he
know s abo ut it?
A: Yes.
Confirmation of Purchase and Sale Agreement and paid
$76,172.59 to the Holts, not including $5000 they previously
tendered as earnest money. Plaintiffs then executed the lease
and contract with Defendant. Before executing the
agreements with Defendant, Siddarth Shah asked about the
termination clauses a final time. Smith assured him that “[i]f
you perform right we will not kick you out.” (J.A. at 145.)
After executing the documents, Smith called Floyd Philpot,
Defendant’s general manager. Smith introduced Plaintiffs to
Philpot, who welcomed Plaintiffs to “the Racetrac family.”
(J.A. at 141-42.) During his conversation with Philpot,
Siddarth Shah reiterated his concerns about the termination
clause, and Philpot repeated the same assurances.
At no point did Defendant inform Plaintiff that, regardless
of a dealer’s performance, Defendant used the termination
clauses to terminate an operator’s rights when Defendant sold
a Raceway location.3 At the time of the transaction, and

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(J.A. at 205, 50.)
4In his deposition Smith testified:
Q: W hat was your und erstand ing of how
procedurally [Defendant] would sell a store
when there’s an operator in it?
A: The thirty-day clause.
Q: Okay. So is it fair to say then that it was your
understanding that when [Defendant] wanted
to sell a Raceway and there was an operator in
it, that they would use the thirty-day clause?
A: If that’s what they cho se.
Q: But that was your understanding of
historica lly how Racetrac would procedurally
implement the sale of the store?
A: Sure.
Q: And you knew that at the time when you met
[Plaintiffs] initially, correct?
A: Yeah.
(J.A. at 178).
unbeknownst to Plaintiffs, Defendant was already trying to
sell Raceway 773.4
Sometime in 1992 and again in 1994, Defendant contacted
members of the Tennessee Oil Marketers Association to
ascertain whether other oil companies were interested in
purchasing some of Defendant’s properties, including
Raceway 773. In November of 1995, representatives from
Downey Oil Co., Inc., contacted Defendant and inquired
about purchasing Raceway 773.
10 Shah, et al. v. Racetrac
Petroleum Co.
Nos. 01-6077/6451
On February 10, 1995, three days after the closing, Jackie
Russell, Asset Manager in Defendant’s Real Estate
Department, mailed a bid package of Raceway stores
(including Raceway 773) to Worth L. Thompson of Fast
Petroleum. In her cover letter to Thompson, Russell
instructed him that when “visiting the stores please use
discretion as our field employees or our Contract operators
are not aware of this offering.” (J.A. at 211.) To receive the
offer at all, Fast Petroleum had to execute a Confidentiality
Agreement with Defendant. Philpot made the ultimate
decision on Defendant’s behalf to keep a store’s offering
hidden from its operators.
After becoming operators, and with Defendant’s approval,
Plaintiffs continued to invest money in the business. They
installed a surveillance system, improved the coolers,
increased inventory, and cut an overhang wall. Smith advised
Plaintiffs in May and December of 1995 that they had a
satisfactory performance history and that they did not need to
worry about Defendant terminating them. Smith also
encouraged Plaintiffs to continue making improvements to
the store.
In January of 1996, Smith telephoned Plaintiffs and told
them that Defendant received an offer for the property.
Although Smith did not disclose the identity of the potential
purchaser, Downey Oil proposed to purchase Raceway 773 in
December of 1995. Smith also advised Plaintiffs that they
could bid on the property, but he did not provide them with
specific terms or other information necessary to properly
formulate a bid. Plaintiffs asked for information in writing,
but failed to receive any. As a consequence, Plaintiffs did not
make a bid.
On March 27, 1996, Defendant provided Plaintiffs with a
letter serving as “a thirty-day notice of cancellation as
provided in your Lease and Contract.” (J.A. at 179.)
Plaintiffs vacated the store one month later.

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PROCEDURAL HISTORY
Plaintiffs initially filed suit in the Circuit Court for Blount
County, Ohio on December 9, 1996. Defendant removed the
action to federal court on April 10, 1997. On February 3,
1998, the parties filed a joint stipulation of dismissal without
prejudice pursuant to Fed. R. Civ. P. 41(a)(1).
Plaintiffs filed a second complaint against Defendant in the
Circuit Court for Blount County, Ohio on February 2, 1999.
Plaintiffs also included Downey Oil Company, Inc.
(“Downey Oil”), as a defendant. Defendant again removed
the action to United States District Court, but the case was
quickly remanded back to Blount County for lack of subject
matter jurisdiction because Downey Oil is a Tennessee
corporation and Plaintiffs reside in Tennessee. The Plaintiffs
then voluntarily dismissed Downey Oil as a Defendant, re-
creating diversity jurisdiction, and Defendant again removed
the matter to federal court on July 21, 1999.
Plaintiffs filed a second amended complaint setting forth
multiple causes of action including breach of contract, breach
of the implied covenant of good faith and fair dealing,
promissory estoppel, promissory fraud, fraudulent or
negligent misrepresentation (including fraudulent
concealment and nondisclosure), violation of the Tennessee
Consumer Protection Act, and violation of the Tennessee
Petroleum Trade Practices Act. Plaintiffs sought $579,000 in
compensatory damages and $15 million in punitive damages.
Defendant generally denied the allegations, raised the
Statute of Frauds as an affirmative defense, and asserted
counterclaims for breach of contract, conversion, and
attorney’s fees. On June 5, 2000, Defendant filed a Motion
to Dismiss or, in the alternative, for Summary Judgment.
On August 1, 2000, after Plaintiffs replied, the parties
argued the motion before the trial court. The court took the
12 Shah, et al. v. Racetrac
Petroleum Co.
Nos. 01-6077/6451
matter under advisement and requested additional briefing on
the claim under the Tennessee Petroleum Marketing Practices
Act and the claim for fraudulent concealment and
nondisclosure. On July 31, 2001, the court granted
Defendant’s Motion for Summary Judgment. Plaintiffs
timely filed this appeal on August 29, 2001.
Relying on its counterclaim, Defendant moved the district
court to award costs and attorney’s fees under Fed. R. Civ. P.
54, but the court denied the request on October 12, 2001.
Defendant timely appealed this order on November 6, 2001.
DISCUSSION
We review summary judgment de novo. Eastman Kodak
Co. v. Image Technical Servs., Inc., 504 U.S. 451, 466 n.10
(1992); Johnson v. Econ. Dev. Corp., 241 F.3d 501, 509 (6th
Cir. 2001); Buckeye Cmty. Hope Found. v. City of Cuyhaoga
Falls, 263 F.3d 627, 633 (6th Cir. 2001). Summary judgment
is appropriate when there is no genuine issue of material fact,
thereby entitling the movant to a judgment as a matter of law.
Kocsis v. Multi-Care Mgmt., Inc., 97 F.3d 876, 882 (6th Cir.
1996). In Anderson v. Liberty Lobby, Inc., 477 U.S. 242
(1986), the Supreme Court explained that “[t]he mere
existence of a scintilla of evidence in support of the plaintiff's
position will be insufficient; there must be evidence on which
the jury could reasonably find for the plaintiff.” Id. at 252.
Thus, our “inquiry, therefore, unavoidably asks whether
reasonable jurors could find by a preponderance of evidence
that the plaintiff is entitled to a verdict.” Id.
The “mere possibility” of a factual dispute does not suffice
to create a triable case. Gregg v. Allen-Bradley Co., 801 F.2d
859, 863 (6th Cir.1986). To defeat summary judgment, the
plaintiff "must come forward with more persuasive evidence
to support [his] claim than would otherwise be necessary."
Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S.
574, 587 (1986). If the defendant successfully demonstrates,

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after a reasonable period of discovery, that the plaintiff cannot
produce sufficient evidence beyond the bare allegations of the
complaint to support an essential element of his or her case,
summary judgment is appropriate. Celotex Corp. v. Catrett,
477 U.S. 317, 325 (1986). When determining whether to
reach this conclusion, we view the evidence and draw all
reasonable inferences in the light most favorable to the non-
moving party. Adickes v. S.H. Kress & Co., 398 U.S. 144,
157 (1970); Williams v. Int’l Paper Co., 227 F.3d 706, 710
(6th Cir. 2000); Smith v. Thornburg, 136 F.3d 1070, 1074
(6th Cir. 1998).
I.
Plaintiffs first claim that Defendant committed promissory
fraud. The Tennessee Court of Appeals set forth the elements
of an action for fraud in Stacks v. Saunders, 812 S.W.2d 587
(Tenn. Ct. App. 1990):
(1) an intentional misrepresentation with regard to a
material fact,
(2) knowledge of the misrepresentation [sic]
falsity—that the representation was made
“knowingly or “without belief in its truth,” or
“recklessly” without regard to its truth or falsity,
(3) that the plaintiff reasonably relied on the
misrepresentation and suffered damage, and
(4) that the misrepresentation relates to an existing or
past fact, or if the claim is based on promissory
fraud, then the misrepresentation must embody a
promise of future action without the present
intention to carry out the promise.
Id. at 592 (citations omitted). To make a showing of
promissory fraud within this framework, a plaintiff must
14 Shah, et al. v. Racetrac
Petroleum Co.
Nos. 01-6077/6451
demonstrate that “a promise or representation was made with
the intent not to perform.” Fowler v. Happy Goodman
Family, 575 S.W.2d 496, 499 (Tenn. 1978). Tennessee courts
have found promissory fraud in several cases. See, e.g.,
Brungard v. Caprice Records, 608 S.W.2d 585, 590 (Tenn Ct.
App. 1980) (finding promissory fraud when defendant’s talent
scout made promises to induce aspiring singer to enter into
recording contract, when evidence showed scout had no intent
to keep the promises); Steed Realty v. Oveisi, 823 S.W.2d
195, 200-201 (Tenn. Ct. App. 1991) (finding promissory
fraud when real estate vendor induced vendees to purchase
property by promising to make certain improvements, when
evidence demonstrated vendor never intended to make the
improvements).
Significantly, the parol evidence rule does not apply to
allegations of fraudulent misrepresentation inducing a party
to enter a contract because under Tennessee law, promissory
fraud sounds in tort, not in contract. Brungard, 608 S.W.2d
at 588; Steed Realty; 823 S.W.2d at 202; Haynes v.
Cumberland Builders, 546 S.W.2d 228, 231 (Tenn. Ct. App.
1976). As this Court explained in Cincinnati Insurance Co.
v. Avery, No. 89-5536, 1990 WL 132245, at *3 (6th Cir. Sept.
12, 1990) (unpublished), Tennessee law “does not require
ambiguity when certain defects in the formation of the
agreement are demonstrated; parol evidence can be admitted
to contradict or vary the terms or enlarge or diminish the
obligation of a written instrument upon a showing of fraud.”
(citing McMillin v. Great S. Corp., 480 S.W.2d 152, 155
(Tenn. 1972)). Thus, the many oral statements Defendant
made to Plaintiffs are relevant here.
Plaintiffs argue that Defendant fraudulently induced them
to enter into the lease and contract by promising not to use the
termination clauses for anything other than poor performance.
Plaintiffs appear to have established a triable case under
Tennessee law as outlined in Stacks, 812 S.W.2d at 592.
First, the numerous assurances made by Smith and Main were

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intentional and material. See id. Second, at least Smith knew
he was offering false assurances, because he knew that
Defendant used the termination clauses to remove operators
if Defendant sold the property. See id. Third, Plaintiff
reasonably relied on the multiple, uniform statements of
Defendant’s officials and suffered damages as a consequence.
See id. Finally, Plaintiffs must show that “the
misrepresentation . . . embod[ies] a promise of future action
without the present intention to carry out the promise.” Id.
Defendant promised a future action—not to use the
termination clauses to remove operators for any reason other
than mismanagement—and Defendant probably had no
intention of carrying out that promise, since (as Smith knew)
Defendant regularly used the termination clauses to remove
operators when Defendant wished to sell the property
associated with the lease and contract. In fact, Raceway 773
was already for sale. At the very least, a genuine issue of
material fact exists as to Defendant’s intent.
Defendant claims that Plaintiffs cannot meet the third
component of the test for promissory fraud because,
Defendant argues, it is unreasonable per se to rely on oral
representations when the contract contains an integration
clause. Defendant relies on Watkins & Son Pet Supplies v.
Iams Co., 254 F.3d 607 (6th Cir. 2001), in which this Court
examined the non-renewal of a distributorship contract
between Watkins as distributor and Iams, a pet food
manufacturer. Watkins claimed Iams represented that if
Watkins became an exclusive Iams distributor, Iams would
make it the exclusive Iams distributor in Michigan when Iams
established an exclusive territory distribution system. Id. at
609. Watkins alleged that it relied on these representations,
but Iams terminated its agreement with Watkins and gave the
exclusive contract to a competitor. Id. Watkins alleged
promissory fraud under Ohio law. Id. at 611. The Watkins-
Iams contract had a merger clause, however, and this Court
found that it was unreasonable for Watkins to rely on Iams’
oral statements when the contract contained a merger clause.
16 Shah, et al. v. Racetrac
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Nos. 01-6077/6451
5To the extent Watkins is unclear, it is useful to consider that
Watkins relies on Bollinger, Inc. v. Mayerson, 689 N.E .2d 6 2 (O hio
1996), and Bollinger also never established a per se rule. See Bollinger,
689 N.E.2d at 70 (“Furthe r, und er the fa cts of this case, Bollinger co uld
not have justifiably relied on any alleged oral promise on the part of
Mayerson to fund the New Comp any without limit.”) (emphasis added)).
Despite Defendant’s assertion otherwise, there is no rule
that a merger clause makes reliance on oral representations
unreasonable per se so as to necessarily defeat a fraudulent
inducement or promissory fraud claim. Watkins is
distinguishable in two respects. First, the Watkins Court
made clear that it was reaching a fact-based conclusion, not
announcing a new per se rule. The Watkins Court wrote that,
“[o]n the facts of this case, we find that Watkins’s reliance on
Iams’s representations was unreasonable as a matter of law.
. . . In this case, the reasonableness of Watkins’s reliance
depends upon the effect of the integration clause.” Id. at 612
(emphasis added). In Watkins, Iams evidently made only one
misrepresentation, see id. at 609, whereas Defendant made six
misrepresentations to Plaintiffs in response to Plaintiffs’
obvious concerns. Second, Watkins relies on Ohio law for the
principle that one acts unreasonably by relying on prior oral
representations when a contract is completely integrated.5
See id. at 612 (citing Bollinger, Inc. v. Mayerson, 689 N.E.2d
62, 69 (Ohio 1996)). Promissory fraud under Tennessee law
does require reasonable reliance, see, e.g., Dobbs v. Guenther,
846 S.W.2d 270, 274 (Tenn Ct. App. 1992), but nothing
suggests the Tennessee judiciary has either adopted or would
adopt a per se rule that an integration clause makes it always
unreasonable to rely on prior oral representations. See Loew
v. Gulf Coast Dev., Inc., No. 01-A-01-9010-CH-00374, at
1991 WL 220576, at *5 (Tenn. Ct. App. Nov. 1, 1991)
(unpublished) (noting that integration clauses “should not be
used to restrict the scope of proof” in fraud claims) (citing
Young v. Cooper, 203 S.W.2d 376, 382-83 (1947)).

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6The district court made another argument that Defendant
evidently abandoned on appeal. The court below found it very significant
that, in response to Plaintiffs’ effort to negotiate more favo rable terms,
Smith told Plaintiffs that “[Defendant’s] policy is not to change the lease.”
(J.A. at 54.) According to the district court, this put Plaintiffs on “notice
of Mr. Smith’s lack of authority to va ry the lease so that Mr. Smith’s
representations about future action by [Defendant] are not binding on
[Defendant].” (Id.) This is unpersuasive . Smith, who represented
Defendant, only said that he would not change the lease, not that he could
not change the lease. Moreover, even reading Smith’s remark as the
district court did, P laintiffs could still have reasonably believed Main (or
some other corp orate official) had the authority to change the lease.
For these reasons, Plaintiffs have raised a genuine issue of
material fact with respect to their promissory fraud claim.6
II.
Related to the promissory fraud claim, Plaintiffs allege
Defendant violated the Tennessee Consumer Protection Act
(“TCPA”), Tenn. Code Ann. § 47-18-109. The TCPA grants
a private right of action to consumers who suffer a loss due to
“unfair or deceptive acts or practices” as defined in the Act.
Id. In particular, the law proscribes “[r]epresenting that a
consumer transaction confers or involves rights, remedies, or
obligations that it does not have or involve.” Id. at § 47-18-
104(12). The TCPA also prohibits “[e]ngaging in any other
act or practice which is deceptive to the consumer or to any
other person.” Id. at § 47-18-104(27). The Act’s scope
includes “the advertising, offering for sale, lease or rental . . .
of any goods, services, property, tangible or intangible, real,
personal or mixed.” Id. at § 47-18-103(9).
Plaintiffs who successfully press allegations of promissory
fraud often have TCPA claims as well. See, e.g., Steed Realty
v. Oveisi, 823 S.W.2d 195, 201 (Tenn Ct. App. 1991);
Brungard v. Caprice Records, 608 S.W.2d 585, 589 (Tenn.
Ct. App. 1980). Moreover, this Court has held that the TCPA
does not require deceptive intent, which means a plaintiff may
18 Shah, et al. v. Racetrac
Petroleum Co.
Nos. 01-6077/6451
recover damages even for negligent violations. Menuskin v.
Williams, 145 F.3d 755, 767-68 (6th Cir. 1998).
Plaintiffs presented evidence that Defendant fraudulently
represented it would not invoke the termination clauses
except for poor performance. These assurances induced
Plaintiffs to sign the lease and contract with Defendant, which
violated the TCPA. See TENN. CODE ANN. § 47-18-104(27).
The misrepresentations also made the transaction
impermissibly appear as though it “involve[d] rights,
remedies, or obligations that it does not have or involve.” Id.
at § 47-18-104(12).
The district court rejected Plaintiffs’ TCPA claim because
the court found Defendant did not commit the prerequisite
fraudulent conduct. Defendant reiterates this position on
appeal. Since, as discussed above, Plaintiffs have raised a
genuine issue of material fact as to whether Defendant
committed promissory fraud, Plaintiffs have also raised a
genuine issue of material fact as to whether Defendant
violated the TCPA.
III.
Plaintiff next argues that the doctrine of promissory
estoppel bars Defendant from using the termination clauses
because of the representations Philpot made after Plaintiffs
executed the agreement. This Court recognized and applied
the generally accepted definition of promissory estoppel in
Owen of Ga., Inc. v. Shelby County, 648 F.2d 1084, 1095 (6th
Cir. 1981):
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
promissee, 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.

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7Defendant’s entire Watkins argument hinges on one sentence,
which is somewhat misleading when removed from context: “[i]f a
written contract is completely integrated, it is unreasonable as a matter of
law to rely on parol representations or promises within the scope of the
contract made prior to its execution.” Watkins, 254 F.3d at 612 (em phasis
added). Philpot misled Plaintiffs about the termination clauses after
Plaintiffs executed the agreem ent.
(citing Foster & Creighton Co. v. Wilson Contracting Co.,
579 S.W.2d 422, 427 (Tenn Ct. App. 1978)).
Defendant makes the same claim it made with respect to
promissory fraud, that Plaintiffs could not have reasonably
relied on Philpot’s statements after the execution because the
lease and contract contained an integration clause. Defendant
again points to Watkins for the principle that it is
unreasonable per se to rely on oral representations when the
contract contains an integration clause. As already explained,
Watkins, which applies Ohio law, does not stand for such a
broad proposition.7 Moreover, Tennessee law has not clearly
defined when reliance is reasonable enough to support a
promissory estoppel claim. Calabro v. Calabro, 15 S.W.3d
873, 879 n.4 (Tenn. Ct. App.1999) (“Courts have not reached
a uniform standard to determine if the promisor's words and
actions justify the promisor's reliance.”); Amacher v. Brown-
Forman Corp., 826 S.W.2d 480, 482 (Tenn. Ct. App. 1991)
(“The courts have not worked out a uniform standard to
determine whether a defendant's words or actions justify the
plaintiffs’ reliance.”). Nevertheless,
the fact that the state law here involved may seem to be
uncertain and that the question has not yet been answered
by the State Court of Appeals or by an Appellate Court
of the State does not relieve this court of its duty, since
jurisdiction has been properly invoked, “to decide
questions of state law whenever necessary to the
rendition of a judgment.”
20 Shah, et al. v. Racetrac
Petroleum Co.
Nos. 01-6077/6451
Paschall v. Mooney, 110 F.Supp. 749, 751 (D.C.N.Y. 1953)
(quoting Meredith v. City of Winter Haven, 320 U.S. 228,
234-35 (1943)).
Although not absolutely dispositive, Tennessee case law is
still very helpful. The fact-specific nature of any
“reasonableness” inquiry inherently lends itself to flexibility.
Tennessee courts have found promisees to have reasonably
relied even when something suggested they should not have
done so. See, e.g., Alden v. Presley, 637 S.W.2d 862, 863-64
(Tenn. 1982) (finding promisee stated promissory estoppel
claim by reasonably relying on promisor’s promise even
though promisee continued to rely on promise with
knowledge that promisor was dead); Bank of Gleason v.
Weakley Farmers Coop., Inc., No. W1999-02161-COA-R3-
CV, 2000 Tenn. App. LEXIS 303, at *9 (Tenn. Ct. App.
Apr. 9, 2000) (enforcing promise despite lack of agreement
regarding type or quantity of product to be supplied)
(unpublished).
Finally, when diversity jurisdiction forces us to grapple
with an uncertain question of state law, we should approach
the problem with the background assumption that the state
judiciary would not formulate a new rule of equity that would
produce an unfair result. Philpot served as Defendant’s
general manager. When, in response to the Plaintiffs’ direct
query, Philpot told Plaintiffs that the termination clauses
would not be used except if Plaintiffs failed to perform
satisfactorily, Philpot should have expected his assurances to
“induce action or forbearance of a definite and substantial
character on the part of the promisee.” Owen of Georgia,
Inc., 648 F.2d at 427. At the very least, “there are disputes of
material fact as to the alleged promises of defendant, the
plaintiff[s’] action and response thereto, and any inferences

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8Defendant never argues that the Statute of Frauds, Tenn. Code
Ann. § 29-2-101(a)(5), would interfere with the operation of promissory
estop pel. Thus, we need not address this co ncern. Security Watch, Inc.
v. Sentinel Sys., Inc., 176 F.3d 36 9, 375 (6th Cir. 1999) (noting issues not
addressed in appellate brief are deemed abandoned); United States v.
Elder, 90 F.3d 11 10, 1118 (6th Cir. 1996) (finding that issues adverted to
by an appellant in a perfunctory manner, unaccompanied by some effort
at developed argumentation, are deemed waived). Tennessee’s Statute of
Frauds may, in fact, create a problem for a promissory estoppel claim.
See S.I.B.C. v. Ford Mtr. Cred it Co., 911 S.W.2d 720, 723
(Tenn.App.1995) (declining to recognize promissory esto ppe l as an
exception to the Statute of Frauds); but see Engenius Entm’t, Inc. v.
Herenton, 971 S.W.2d 12, 20-21 (Tenn. App. 1997) (“Although the
statute of frauds may prevent the defendants from seeking enforcement
of an alleged oral agreement under these equitable doctrines [including
promissory estoppel], the statute does not preclude [promisee] from
recovering damages for unjust enrichment or detrimental reliance.”). In
any event, Plaintiffs’ part performance would exempt D efendant’s oral
promise from the Statute of Frauds. See Blasing ame v. Am . Materials,
Inc., 654 S.W.2d 659, 663 (Tenn.19 83). Plaintiffs had already paid
Defendant substantial sums in rent and spent to make improvements to
Raceway 7 73 b ased on P hilpot’s guarantee.
that legitimately may be drawn therefrom.”8 Calabro, 15
S.W.3d at 879.
IV.
Plaintiffs claim that Defendant fraudulently concealed
important information. As the Tennessee Supreme Court
explained, “[t]he tort of fraudulent concealment is committed
when a party who has a duty to disclose a known fact or
condition fails to do so, and another party reasonably relies
upon the resulting misrepresentation, thereby suffering
injury.” Chrisman v. Hill Home Dev., Inc. 978 S.W.2d 535,
538-39 (Tenn.1998) (citing Simmons v. Evans, 206 S.W.2d
295, 296 (Tenn.1947)). The duty to disclose arises in three
distinct circumstances: (1) “[w]here there is a previous
definite fiduciary relation between the parties,” (2) “[w]here
it appears one or each of the parties to the contract expressly
22 Shah, et al. v. Racetrac
Petroleum Co.
Nos. 01-6077/6451
9W e recognize that in Simmons v. Evans, 206 S.W.2d 295, 296
(Tenn. 1947), the Tennessee Supreme Court held that “each party to a
contract is bo und to disclose to the other all he may know respecting the
subject matter materially affecting a correct view of it.” Subsequent
Tennessee opinions have relied on Simmons and related decisions for the
proposition that each party to a contract has a duty to disclose to the other
all material knowledge of which the party is aware respecting the subject
reposes a trust and confidence in the other,” and (3) “[w]here
the contract or transaction is intrinsically fiduciary and calls
for perfect good faith.” Domestic Sewing Mach. Co. v.
Jackson, 83 Tenn. 418, 425 (1885).
No previous fiduciary relationship existed between the
parties, nor was this lease and contract agreement
“intrinsically fiduciary.” See Domestic Sewing, 83 Tenn. at
425. Nor were the parties in a confidential relationship.
Tennessee law defines a confidential relationship as one
created when “confidence is placed by one on the other and
the recipient of that confidence is the dominant personality
with the ability because of that confidence to influence and
exercise dominion over the weaker or dominated party.”
McGuirk Oil Co., Inc. v. Amoco Oil Co., 889 F.2d 734, 737-
38 (6th Cir. 1989) (quoting Edwards v. Travelers Ins. of
Hartford, 563 F.2d 105, 115 (6th Cir. 1977)). Plaintiffs and
Defendant in the instant case reached an agreement at arms’
length, and Defendant did not “exercise dominion” over
Plaintiffs. None of the Domestic Sewing categories applies;
thus, Defendants did not have a duty to disclose.
Plaintiffs argue for a broader interpretation of Tennessee
law by citing a few cases in which the Tennessee Court of
Appeals analyzed a fraudulent concealment claim without
referring to the limits Domestic Sewing imposes. See, e.g.,
Garrett v. Mazda Motors of Am., 844 S.W.2d 178 (Tenn. Ct.
App. 1992). Despite a few outliers, federal courts considering
fraudulent concealment under Tennessee law have made clear
that Domestic Sewing is the governing law.9 See Aetna Cas.

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matter of the contra ct, other than the knowledge that one may gain
through the exercise of ordinary diligence. See, e.g., Gray v. Boyle Inv.
Co., 803 S.W .2d 6 82, 6 85 (Tenn. Ct. A pp. 1 990 ); Lonning v. Jim Walter
Hom es, 725 S.W .2d 6 82, 6 85 (Tenn. Ct. App . 198 6); Patel v. Bayliff, No.
W2002-00238-COA-R3-CV, 2003 WL 11 93248, at *5 (Tenn. Ct. App.
Mar. 12, 200 3) (unpublished). However, these cases have gen erally been
limited to real estate purchases, see Patel, 2003 WL 1993 248 , at *5
(noting the use of the doctrine in the rea l estate context), and used car
sales, see Mazda Motors of Am., 844 S.W .2d at 181 ; Patton v. McHone,
822 S.W .2d 608 , 616 n.14 (Tenn. Ct. A pp. 1 991 ). W e dec line to
anticipate that the Tennessee Supreme Court would extend the Simmons
and Lonning cases to the context of a franchise dispute. Cf. O’Neil v.
Burger Chef Sys., Inc., 860 F.2d 1341, 13 46 (6th Cir. 1988) (questioning
the applicability of Lon ning to a suit by a franchisee alleging that the
parent of the franchiso r had not disc losed its intent to sell franchiso r).
& Sur. Co. v. FDIC, No. 90-5292, 1991 WL 23543, at *8 (6th
Cir. Feb. 26, 1991) (unpublished); French v. First Union Sec.,
Inc., 209 F. Supp. 2d 818, 825 (M.D. Tenn. 2002); Morgan v.
Wellman, Inc., 165 F. Supp.2d 704, 721 (E.D. Tenn. 2001).
Thus, the district court properly granted Defendant summary
judgment on Plaintiffs’ fraudulent concealment and
nondisclosure claim.
V.
Plaintiffs next allege that Defendant breached the implied
covenant of good faith and fair dealing. In Tennessee, “there
is implied in every contract a duty of good faith and fair
dealing in its performance and enforcement.” TSC Indus.,
Inc. v. Tomlin, 743 S.W.2d 169, 173 (Tenn. Ct. App. 1987);
see also TENN. CODE ANN. § 47-1-203 (imposing an
obligation of good faith and fair dealing upon parties in the
performance or enforcement of contracts). The nature of the
duty “depends upon the individual contract in each case.”
TSC Indus., 743 S.W.2d at 173.
The official commentary to the statute creating the implied
covenant of good faith and fair dealing explains that the law
24 Shah, et al. v. Racetrac
Petroleum Co.
Nos. 01-6077/6451
10This is true even if the contract expressly specifies that the
parties may only modify the agreement in writing. Co-Operative Stores
Co. v. United States Fid. & Guar. Co., 195 S.W. 17 7, 180 (T enn. 1917).
“does not support an independent cause of action for failure
to perform or enforce in good faith.” See TENN. CODE ANN.
§ 47-1-203. As one court explained, “good faith or the lack
of it may be an element or circumstance of recognized torts,
or breaches of contracts, but it does not appear that good faith,
or the lack of it is, standing alone, an actionable tort.”
Solomon v. First Am. Nat’l Bank, 774 S.W.2d 925, 945
(Tenn. Ct. App. 1989). Breach of the implied covenant of
good faith and fair dealing is not an independent basis for
relief.
VI.
Plaintiffs aver that the assurances Defendant made after
Plaintiffs executed the lease agreement constitute an oral
modification of the contract. Specifically, Philpot told
Plaintiffs that Defendant would not use the termination
clauses for any reason other than inadequate performance.
Plaintiffs claim that under the agreement, as modified,
Defendant would not terminate Plaintiffs for any reason other
than inadequate performance. When Defendant invoked the
termination clauses to sell the property, Plaintiffs argue
Defendant breached the orally modified agreement.
In Tennessee, “[a]fter a written contract is made, it may be
modified by the express words of the parties in writing, as
well as by parol.”10 Galbreath v. Harris, 811 S.W.2d 88, 91
(Tenn Ct. App. 1991); see also Co-Operative Stores Co. v.
United States Fid. & Guar. Co., 195 S.W. 177, 180 (Tenn.
1917). The parol evidence rule is inapplicable to evidence of
oral modification because the rule will “permit testimony to
. . . show a subsequent modification to a written agreement.
Once admitted, this evidence does not in any way deny what

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the original agreement expressed; however, it merely
demonstrates that parties may have exercised their right to
modify the written agreement.” Golden Constr. Co. v.
Greene, No. 83-286, 1987 WL 18061, at *1 (Tenn Ct. App.
Oct. 9, 1987) (unpublished); see also GRW Enters., Inc. v.
Davis, 797 S.W.2d 606, 610-11 (Tenn. Ct. App. 1990).
Defendant suggests that any oral modification would fail
under Tennessee’s Statute of Frauds. See TENN. CODE. ANN.
§ 29-2-101 (1980). The Statute of Frauds requires that parties
memoralize certain types of contracts in writing. Huffine v.
McCampbell, 257 S.W. 80, 89 (1923). The Statute of Frauds
does not apply, however, once part performance occurs.
Blasingame v. Am. Materials, Inc., 654 S.W.2d 659, 663
(Tenn.1983); Foust v. Carney, 205 Tenn. 604, 329 S.W.2d
826, 829 (1959); Buice v. Scruggs Equip. Co., 250 S.W.2d 44,
47 (Tenn.1952); Schnider v. Carlisle Corp., 65 S.W.3d 619,
621 (Tenn. Ct. App. 2001). The Tennessee Supreme Court
explained the “part performance” exception this way:
Th[e] doctrine of partial performance to take the verbal
contract out of the operation of the Statute of Frauds is
purely an equitable doctrine and is a judicial
interpretation of the acts of the parties to prevent frauds.
The acts of the appellant relied on as partial performance
had been done by him in pursuance to the averred
contract and agreement and are clearly referable thereto.
“The plaintiff must be able to show such acts and
conduct of the defendant as the court would hold to
amount to a representation that he proposed to stand by
his agreement and not avail himself of the statute to
escape its performance; and also that the plaintiff, in
reliance on this representation, has proceeded, either in
performance or pursuance of his contract, so far to alter
his position as to incur an unjust and unconscious [sic]
injury and loss, in case the defendant is permitted after
all to rely upon the statutory defense." 49 Am. Jur., Sec.
427, page 733.
26 Shah, et al. v. Racetrac
Petroleum Co.
Nos. 01-6077/6451
11The district court dispatches with Plaintiff’s breach of contract
claim in just a few sentences: “In this case, plaintiffs do not dispute the
fact that both the lease and the contract provide that ‘either party may give
thirty (30) days written notice’ to terminate the initial lease or agreement
as well as any extended lease or agreement. Nor is there any dispute that
[Defendant] gave plaintiffs proper written notice of its intent to terminate
both the lease and the contra ct. Hence, plaintiffs do not, and cannot, point
to any specific provision o f either the contact or lease which was
breached.” (J.A. at 4 7) (em phasis add ed). The district court
misunderstands Plaintiffs’ argument. Plaintiffs are not arguing that
Defendant breached the lease and contra ct agreement as originally
written. Rather, Plaintiffs contend that Defendant breached the lease and
contract agreement as orally modified.
Buice, 250 S.W.2d at 48. Plaintiffs altered their position to
their detriment by installing a surveillance system, improving
the coolers, increasing inventory, and modifying the store’s
layout. Plaintiffs might not have done so if they believed
Defendant could terminate their lease and contract for reasons
other than poor performance.11
Since part performance occurred, the Statute of Frauds did
not prevent Defendant from modifying the agreement after its
execution. Because Defendant invoked the termination
clauses without alleging that Plaintiffs mismanaged Raceway
773, Plaintiffs have at least raised a genuine issue of material
fact as to whether an oral modification occurred and, if so,
whether Defendant breached the revised agreement.
VII.
Finally, Plaintiffs claim Defendant violated the Tennessee
Petroleum Trade Practices Act (TPTPA), Tenn. Code Ann.
§ 47-25-601. The TPTPA regulates petroleum trade practices
in Tennessee. See TENN. CODE ANN. § 47-25-601. Most
relevant here, the law provides that “[a]ny vertically
integrated producer engaged in a franchise agreement with a
dealer shall give sixty (60) days’ notice to such dealer prior to
termination or nonrenewal of such franchise agreement.” Id.

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12The district court found that Plaintiffs did not qualify as
“dealers” within the meaning of the TPTP A, and did not address whether
Defendant is a “vertically integrated producer” or whether Defendant
“engaged in a franchise agreement.”
13The TP TP A sep arately d efines “vertical integration” as “the
ownership or co ntrol of all phase s of the production of petroleum products
including the drilling, pumping, refining, distribution, and resale of such
petroleum products by a person, firm, partnership or corporation or from
the well to the gasoline pump.” TE N N. CODE AN N. § 47 -25-602(11).
14Conceiva bly, Defendant could estab lish on remand that it is
not a “vertically integrated producer” for some reason other than that
Plaintiffs do not qualify as “dealers.” Perhaps Defendant does not own
at § 47-25-604(a)(1). Plaintiffs allege that Defendant violated
this provision by affording only thirty days notice.
To receive the Act’s protection, Plaintiffs must show (1)
that Defendant is a “vertically integrated producer;” (2) that
Defendant “engaged in a franchise agreement;” and that (3)
Plaintiffs qualify as a “dealer.”12
The TPTPA defines “vertically integrated producer” as “a
producer controlling all phases of petroleum production and
sale from the well through distribution to dealers as defined
herein.”13 Id. at § 47-25-602(11). Although the record does
not include information about the entire scope of Defendant’s
business operations, it appears Defendant could qualify as a
“vertically integrated producer.” It is significant that the
contract between Plaintiffs and Defendant states that
Defendant “owns and retains all title to the fuel at [Raceway
773] until sold to the customer.” (J.A. at 87.) Neither
Defendant nor the court below contends that Defendant is not
a “vertically integrated producer” for any reason other than
that Defendant does not distribute to “dealers” as defined in
the TPTPA. Thus, if Plaintiffs are dealers, then Defendant
can qualify as a “vertically integrated producer.”14
28 Shah, et al. v. Racetrac
Petroleum Co.
Nos. 01-6077/6451
oil wells, for instance. The issue o f whether Defendant is a “vertically
integrated producer” was briefed by the parties for the trial court, but the
trial court did not address the question in its short memorandum and
order.
The TPTPA defines “franchise” as follows:
(5) (A) "Franchise" means a contract or agreement
between a dealer and a distributor or producer of
petroleum products or other related products which
grants to the dealer the right and authority to sell or use
in connection with the sale of petroleum products, motor
fuel, or related products, such as tires, batteries, etc., a
petroleum trademark, trade name, service mark, or other
identifying symbol or name.
(B) "Franchise" includes a contract or agreement under
which such dealer is granted authority to occupy
premises owned, leased, or in any way controlled by a
producer or distributor, which premises are to be
employed for the sale or distribution of petroleum or
related products under the producer or distributor's
petroleum trademark, trade name, service mark, or other
identifying symbol or name which is controlled by the
distributor or producer.
TENN. CODE ANN. § 47-25-602. Pursuant to this definition,
the lease and contract between Plaintiffs and Defendant
creates a franchise relationship. Plaintiffs were “granted
authority” to “lease” premises “employed for the sale or
distribution of petroleum . . . under the producer or
distributor’s petroleum trademark.” Id.
Defendant argues that the contract expressly provided that
it would not create a franchise relationship. The contract did
include several disclaimers purporting to guarantee that “this
contract does not create a franchise relationship under state or

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federal law.” (J.A. at 42.) It would defeat the purpose of the
TPTPA (and many other statutes like it) if parties could
simply “opt-out” of otherwise applicable legislation by
declaring that the law would not apply to their particular
transaction. If the relationship between Plaintiffs and
Defendant qualifies as a “franchise relationship” under the
terms of the TPTPA, which it does, how the parties describe
their relationship is irrelevant. Petereit v. S.B. Thomas, Inc.,
853 F. Supp. 55, 60 (D. Conn. 1993), aff'd in relevant part, 63
F.3d 1169 (2d Cir. 1995) (holding, when interpreting the
Connecticut Franchise Act, that a court must determine
parties’ relationship by reality rather than disclaimers and
labels in a contract).
Tenn. Code Ann. § 47-25-602(2) defines dealer as “any
person, firm, corporation or partnership engaged in the sale of
petroleum products to the public at retail.” The statute then
defines “sale at retail” as “any transfer, made in the ordinary
course of trade or in the usual prosecution of the seller’s
business, of title to tangible personal property to the purchaser
for use or consumption and/or for valuable consideration.”
TENN. CODE ANN. § 47-25-602(9). Defendant argues that
Plaintiffs cannot meet this definition because, pursuant to the
contract and lease agreement, Plaintiffs never had title to the
gasoline. Yet, nothing in the definition actually requires the
dealer to hold title to the petroleum—rather, the dealer must
be involved in its “transfer.” The statute does not define
“transfer.”
Legislative intent should guide this Court’s attempt to
apply an ambiguous statutory provision to a particular set of
facts. Security Ins. Co. of Hartford v. Kevin Tucker & Assoc.,
Inc., 64 F.3d 1001, 1007 (6th Cir. 1995) (“If a statute is found
to be ambiguous, the ambiguity is resolved in favor of
upholding the statute and giving effect to legislative intent.”).
The Tennessee legislature made its intent clear by including
a “purpose” provision in the TPTPA:
30 Shah, et al. v. Racetrac
Petroleum Co.
Nos. 01-6077/6451
The purpose of this part is to regulate vertical integration
of the petroleum industry in Tennessee, it being the
conclusion of the general assembly hereby expressed that
vertical integration tends to operate in restraint of free
trade and inhibits full and free competition and,
therefore, tends to increase the price of petroleum and
related products and services . . . .
TENN. CODE ANN. § 47-25-603(a). Since the district court
never made the necessary factual findings, it is unclear
whether Defendant qualifies as a “vertically integrated
producer.” It is undeniable, however, that the Tennessee
legislature intended the TPTPA to regulate the activities of
vertically integrated producers. As a consequence, this Court
should broadly interpret the definition of dealer by including
those operators, like Plaintiffs, who are involved in the
transfer of title to petroleum products. Otherwise, vertically
integrated producers could avoid the very legislation designed
to regulate their activity by simply failing to relinquish title to
their petroleum until it reaches the consumer—which, not
coincidentally, is part of what “vertical integration” means.
A franchise agreement existed and Plaintiffs qualify as
“dealers” within the meaning of the TPTPA. At this stage,
we lack the factual basis to conclude that no genuine issue of
material fact exists as to whether Defendant is a “vertically
integrated producer.”
VIII.
Defendant counterclaimed for $60,000, including
$51,354.25 for attorney’s fees and $8,645.75 for alleged
breach of contract and conversion of personal property.
Correspondingly, Defendant moved for an award of
attorney’s fees under Fed. R. Civ. P. 54(d)(2)(B). The district
court denied the motion because it lacked supplemental
jurisdiction over Defendant’s counterclaim and remanded the
case to state court. “[I]n an effort to discourage defendant

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15Another well-established rule of contract construction points
toward the same conclusion: “the language of the contract, where
ambiguous, will be construed most strongly against the party who drew
it.” Hanover Ins. Co. v. Haney, 425 S.W.2d 590, 592 (Tenn. 1968 ); see
also APCO Am usem ent Co., Inc. v. Wilkins Family Rests. of Am., Inc., 673
S.W .2d 5 23, 5 28 (Tenn. Ct. A pp. 1 984 ).
from amending its counter-complaint in state court to increase
the amount of attorney’s fees, and therefore the amount in
controversy, in order to again remove the matter,” the trial
court also stated that Defendant’s claim for fees lacked merit.
(J.A. at 395.)
Our decision to reinstate some of Plaintiffs’ claims makes
the supplemental jurisdiction issue moot, because Plaintiff
now has a triable case worth more than the jurisdictional
minimum. Nevertheless, we will still consider Defendant’s
counterclaim for fees because Defendant bases its
counterclaim on substantive provisions of the disputed
agreement governed by Tennessee law, which makes the
counterclaim a contract action rather than a procedural
motion. We review “a decision regarding the award of
attorney's fees for an abuse of discretion.” Nichols v.
Muskingum Coll., 318 F.3d 674, 682 (6th Cir. 2003).
In pertinent part, the attorney’s fees clause of the contract
states that “if Contractee at any time rightfully seeks to
recover possession of said premises and payment due and
Contractee is obstructed or resisted therein and any litigation
ensues, Contractors shall pay and discharge all costs and
attorney’s fees and expenses that shall arise from enforcing
the covenants of the Contract.”
None of the causes of action involve Defendant regaining
possession of Raceway 773 or recovering payment due.
Thus, the attorney’s fees clause does not entitle Defendant to
recover for defending Plaintiffs’ claims.15
32 Shah, et al. v. Racetrac
Petroleum Co.
Nos. 01-6077/6451
16Defendant cites two cases, Hosier v. Crye-Leike, M2000-
01182-COA-R3-CV, 2001 WL 799740 (Tenn. Ct. App. July 17, 2001)
(unpublished), and Pic ‘N Pay Stores v. Jessee, No. 79, 1986 WL 2148
(Tenn. Ct. Ap p. Feb. 12 ,198 6) (unpublished). Both of these cases are
distinguishable because each involves claims in which a party to a
contract attempted to enforce its rights under the guaranty. See Hosier,
200 1 W L 79 997 40, at *3; Pic ‘N Pay, 198 6 W L 2148, at *1.
The pertinent section of the guaranty provides that
“[g]uarantor agrees to pay all costs of collection, including
reasonable attorney’s fees and all costs of suit, in the
enforcement of any right of the Lessor hereunder.”
Defendant’s counterclaim for fees, however, does not involve
Defendant’s attempt to enforce any rights under the
guaranty.16
CONCLUSION
For the aforementioned reasons, we AFFIRM the district
court’s rulings on fraudulent concealment and nondisclosure,
the implied duty of good faith and fair dealing, and the
counterclaim for attorney’s fees, but REVERSE the district
court’s decisions on promissory fraud, breach of contract,
promissory estoppel, the Tennessee Consumer Protection Act,
and the Tennessee Petroleum Trade Practices Act.

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