TA Operating LLC v. Comdata, Inc.

Citation: Not availableDocket: CA 12954-CB

Court: Court of Chancery of Delaware; September 11, 2017; Delaware; State Appellate Court

Original Court Document: View Document

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A contractual dispute arose between TA Operating LLC and Comdata, Inc. after over twenty years of partnership. TA, a major travel center operator, and Comdata, a leading fuel card provider, entered into simultaneous negotiations for a new RFID agreement to implement Comdata's SmartQ technology in late 2011. An amendment to their existing merchant agreement was signed alongside this RFID agreement, extending its term to January 2, 2022, and reducing transaction fees. The RFID agreement required both parties to "reasonably cooperate" to integrate SmartQ but did not specify a deadline for implementation.

For nearly five years, both parties operated under the agreements without issue until 2016, when FleetCor Technologies acquired Comdata and a new CEO initiated a revenue-enhancement strategy. On September 7, 2016, Comdata sent TA a notice of default, alleging that TA breached the RFID agreement by not installing SmartQ at all locations, claiming this installation was the consideration for the amendment. Comdata demanded a cure within thirty days. On the last day of this cure period, TA reported a 90% installation rate of SmartQ. However, Comdata disputed this claim and subsequently declared an immediate termination of the amended merchant agreement, asserting that TA failed to cure its alleged breach.

Comdata began charging significantly higher transaction fees to TA effective February 1, 2017, claiming it was no longer contractually limited in the fees. In response to a notice of default from Comdata, TA filed a lawsuit alleging breach of the merchant agreement. The findings from a subsequent trial determined that: (1) the RFID agreement was partially considered for the amendment to the merchant agreement; (2) TA did not materially breach its obligation to cooperate in integrating SmartQ with TA’s point of sale system; and (3) Comdata's own material breach of the RFID agreement excused any failure on TA's part to address an alleged breach. Under Tennessee law, this concluded that Comdata was not entitled to terminate the merchant agreement. Consequently, TA is entitled to an order for specific performance under the amended agreement, along with damages for the difference in transaction fees paid since February 1, 2017, compared to the fees that would have been paid under the original fee structure. The case involved a four-day trial with multiple witnesses, and the judge's findings were based on the credibility and weight of the evidence presented. TA Operating LLC is a Delaware LLC operating a network of travel centers, while Comdata, a Delaware corporation and subsidiary of FleetCor Technologies, provides payment solutions to various industries, particularly the trucking sector. FleetCor acquired Comdata in November 2014.

TA and Comdata have maintained a business relationship for over 20 years, characterized by multiple merchant agreements that mandate TA's acceptance of Comdata fuel cards and Comdata's processing and funding of transactions at TA locations in exchange for transaction fees. In 2016, Comdata processed over 40% of TA's diesel fuel transactions, amounting to approximately $2 billion. As the previous merchant agreement was set to expire in early 2010, negotiations for a new agreement commenced. Comdata proposed a shift from a flat transaction fee to a percentage fee based on transaction value, which would have significantly increased TA's costs. Ultimately, after nearly a year of negotiations, TA and Comdata reached an agreement on December 15, 2010, which allowed TA to limit the proposed price increase and retain the option to continue paying a flat fee per transaction. The Merchant Agreement, effective through January 2, 2016, could only be terminated for an uncured material breach after a 30-day notice period.

In 2010-2011, Comdata learned of a competing cardless fueling technology being developed by Electronic Funds Source LLC (EFS) in partnership with Pilot and Zonar Systems, which aimed to mitigate fraudulent fuel transactions. This competitor's product, Z-Con, heightened market competition during a period of rising fuel costs. In response to potential market share loss, Comdata initiated the development of its own RFID-based solution, utilizing technology from QuikQ, LLC. This RFID system, known as Fuel Island Manager or SmartQ, is designed to authenticate fuel purchases exclusively for trucks equipped with unique RFID tags, thus preventing fraud, although it restricts purchases to fuel only.

On August 24, 2011, Comdata entered a five-year agreement with QuikQ to serve as the 'limited exclusive reseller' of QuikQ’s RFID technology, with automatic one-year renewals unless either party opted out. The agreement required both parties to integrate the RFID technology with Comdata's SmartDesq POS system and other systems (Fiscal and Retalix) to provide a cardless fueling solution, which relies on effective POS systems for transaction processing. Evidence suggests Comdata did not adequately investigate QuikQ's RFID system before signing.

In the same month, Love’s announced it would implement QuikQ’s RFID technology independently of Comdata. Prior to this, in late 2010, QuikQ had approached TA regarding its RFID technology, but no progress occurred. In September 2011, Comdata's President, Steve Stevenson, contacted TA's CEO, Tom O’Brien, to explore collaborative initiatives, recognizing TA's potential significance in Comdata's strategy to secure a competitive edge. O’Brien had concerns about the RFID technology's readiness and emphasized the need for thorough testing and evaluation of competing products, specifically Zonar.

An internal memo from O’Brien outlined goals for an upcoming meeting with Comdata, including securing a comprehensive proposal for outfitting TA's network and understanding the interface with Fiscal, while highlighting the need for a careful and measured approach to the implementation process. Concurrently, TA sought proposals from Zonar, indicating a competitive landscape for RFID technology solutions. On November 10, 2011, Stevenson followed up with a formal proposal to TA regarding Comdata’s cardless and POS solutions.

Comdata proposed to finance all capital needed for hardware and software installations for TA’s card-less payment solution, estimating costs between $3.0 and $4.0 million, with TA responsible for the installation. To recoup this investment, Comdata suggested retaining $0.05 per transaction (or $0.06 for non-exclusive use) on all TA transactions for six years. Comdata emphasized the strategic nature of its relationship with TA, offering to pay TA 20% of net proceeds from hardware and software installations for the first two years and 10% in the third year, projected to yield $0.7 million to $1.0 million over three years, if TA agreed to exclusivity by December 31, 2011.

Stevenson indicated that Quik-Q was integrating with Comdata’s SmartDesq POS system and proposed that if TA adopted this system, Comdata would cover 50% of TA's one-time license fees, estimated at $1.2 to $1.5 million, and integrate RFID technology at no extra cost to TA. Despite these offers, O’Brien communicated internally that TA preferred not to use Comdata’s SmartDesk system and proposed instead to purchase the necessary equipment from Comdata for $4 million, handle the interface with the Fuel Island Manager at TA's cost, amend the contract to extend the term to May 21, 2031, lower transaction fees, and revise settlement schedules.

On December 2, 2011, Comdata's Randy Morgan reached out to O’Brien regarding a proposed RFID agreement and expressed a desire for O’Brien to announce TA's adoption of the technology at an upcoming sales meeting. O’Brien responded, indicating the importance of finalizing all agreements simultaneously and offered to draft changes to the merchant agreement while Comdata's legal representative was unavailable.

On December 5, 2011, O’Brien sent an email to Stevenson containing initial revisions to the Merchant Agreement and the proposed RFID agreement. O’Brien suggested extending the Merchant Agreement to May 20, 2036, and reducing TA’s transaction fees to Comdata by $0.06 per transaction for locations that had installed RFID technology. Key changes to the RFID agreement included a stipulation for Comdata and the Customer to cooperate in integrating the FIM system with TA’s point of sale systems, recognizing that integration would require coordination with the Customer’s vendors, who would be directed at the Customer's cost. Comdata would deliver the System to designated locations, with the Customer responsible for shipping costs and installation, though Comdata would assist in finding a qualified installer and in setting up the FIM Software.

At trial, O’Brien clarified that the revisions aimed to emphasize the need for cooperation between the companies and to highlight the complexity of the integration process, which involved third-party vendors. On December 8, 2011, Stevenson communicated ongoing concerns regarding the Merchant Agreement’s length to O’Brien, stating his intent to extend its duration. A subsequent call on December 9 led to a markup from Mark Young, which removed a prior condition linking TA’s rate reduction to RFID installation, allowing an immediate $0.06 fee reduction for all transactions. O’Brien noted that this change, although not financially beneficial for Comdata, was likely due to technical issues preventing a location-specific fee reduction. On December 12, George Burke from Comdata sent a revised RFID agreement draft that largely accepted TA's modifications, while Peerman created a standalone amendment to the Merchant Agreement based on O’Brien’s revisions.

Section 3 of the draft amendment proposes changing the expiration date of the Merchant Agreement from January 2, 2016, to January 2, 2022, instead of TA’s suggested May 20, 2036. Sections 1 and 4 propose a reduction of $0.08 in transaction fees payable by TA to Comdata for all transactions at TA-owned locations and franchisees with RFID technology installed. On December 13, 2011, Young sent edits to the amendment, adding a recital regarding the FIM Solution Agreement, where TA agreed to purchase and install Comdata’s RFID technology nationwide. Young retained the January 2, 2022 expiration date. Following this, on December 14, 2011, TA and Comdata executed the RFID Agreement and the Original Amendment, signed by O’Brien prior to a Comdata sales meeting. On January 5, 2012, they replaced the Original Amendment with an Amended and Restated Amendment, primarily removing conditions on the reduced transaction fees related to the installation of the RFID system. The Amendment referenced the execution date of the Original Amendment, which was December 14, 2011. TA was the first travel center to contract for the QuikQ RFID technology. Rowe testified that TA had not tested the SmartQ product prior to signing the RFID Agreement but believed it technically sound based on interactions with QuikQ and Comdata. After executing the RFID Agreement, TA formed an internal team for installations and selected Velociti, Inc. for assistance. A kickoff meeting occurred on February 29, 2012, where a project management plan was reviewed, appointing Spikes as Project Manager. Deliverable dates were marked as "TBD" due to the project's nascent stage, and Rowe raised key questions regarding the rollout of the SmartQ system. The parties agreed that the software should be available at all sites simultaneously rather than in a staggered fashion.

O’Brien indicated that implementing RFID technology at TA on a location-by-location basis was impractical due to the needs of long-haul drivers who require fueling access at multiple TA locations. Morgan emphasized the necessity of outfitting every location with RFID to effectively market the technology to fleet customers. Following the project's initiation, Spikes led weekly meetings where updates on the RFID installation were shared, which continued under Mia McCain after Spikes' departure. Both project managers circulated meeting minutes to keep stakeholders informed. By early 2012, TA and Comdata aimed to complete the RFID rollout by late 2012 or early 2013, but significant delays arose due to three main challenges: locating RFID antennas, instability of TA's POS system, and water damage to RFID reader enclosures.

The "short canopy" issue was identified in April 2012 when QuikQ's initial antenna placement recommendation of seventeen feet from the fuel hose was found impractical for many TA locations. By September 2012, QuikQ adjusted the requirement to "as close to" seventeen feet but no less than fifteen feet, increasing the number of feasible installation sites from 68 to 108. A breakthrough solution was developed for narrow canopies, which required modifications to both QuikQ software and TA’s POS system, and was approved by TA on September 10, 2012. By October 2012, it was projected that the SmartQ system would not be operational at most TA locations until Q2 2013. As of November 26, 2012, TA had completed RFID hardware installations at 78 locations, achieving Phase 1 of the rollout. An update on January 2, 2013, indicated readiness for regional beta testing and a network-wide rollout in March or April, with subsequent phases planned for remaining sites and franchise locations.

In a related initiative, TA announced in December 2010 the installation of island pumps for diesel exhaust fluid, aimed at integrating this service with its POS system to facilitate combined transactions for customers.

In January 2013, the implementation of the new TravStar1 POS system by TA led to significant operational issues, peaking at the end of the first quarter. Testimonies revealed that while fuel transactions were occurring, payments were not being processed correctly, resulting in charge discrepancies and slowdowns at the point of sale, with registers occasionally freezing. This situation was deemed a "business critical issue," jeopardizing TA's $5 billion fuel operation. Consequently, TA halted other projects, including an RFID initiative, to focus on stabilizing the TravStar1 system.

By mid-2013, TA concluded that the TravStar1 source code was too unstable and decided to replace it with the Retalix system, previously used by Pilot Flying J and Love’s. Although the switch was anticipated to take two years, the full deployment of Retalix across all TA locations extended to over three years, concluding at the end of 2016.

In an August 28, 2013 email, a Shell employee communicated TA's plan to transition to Retalix, indicating a phased approach where TravStar1 would initially continue servicing other fuel sales. This email was shared with Comdata executives, who expressed concern over the potential impact on their operations. By December 2013, TA was still facing challenges with its core system, postponing additional implementations until the new processing system was stable. Around the same time, weekly RFID project meetings were discontinued by Comdata's Director of Implementation, who preferred to focus on onboarding new customers and suggested maintaining program communication through emails and calls.

Over three years, TA and Comdata had intermittent discussions regarding RFID technology. Comdata was aware of TA’s transition from TravStar1 to Retalix by August 2013, which caused significant delays, yet did not object to this transition or suggest a phased RFID rollout until litigation arose. TA completed RFID hardware installations by December 2013 but encountered network issues in mid-2014 due to water intrusion in NEMA-approved boxes housing the RFID readers. TA notified Comdata and QuikQ to obtain repair parts and discovered that the installation recommendation to mount the boxes on support poles, rather than beneath the canopy, had been approved by QuikQ. Most damaged boxes were found on the poles, although some under-canopy boxes also sustained damage. In response, QuikQ designed a new water-resistant box, and TA undertook the expense to replace all old boxes, completing replacements at 201 locations by August 2016. In March 2014, FleetCor began due diligence on acquiring Comdata, reviewing its contracts and identifying revenue opportunities from TA, while also noting complications related to these contracts.

The TA contract is set to renew in 2022. In August 2014, FleetCor announced its acquisition of Comdata for $3.45 billion. The merger agreement, dated August 12, 2014, included representations from Comdata that all Material Contracts were valid, binding, and in effect, with no known challenges to their validity. Comdata confirmed that neither it nor its subsidiaries were in default under any Material Contracts, which included the Merchant Agreement with TA, noted as a Material Contract in the disclosure schedule. However, the RFID Agreement was not separately listed. "Knowledge" in the agreement refers to the actual knowledge of specific individuals within Comdata and the knowledge they would reasonably be expected to have after due inquiry.

After the merger agreement was signed but before closing in November 2014, FleetCor's CEO sought confirmation regarding the validity of TA’s Merchant Agreement. In July 2015, Comdata's new president, Greg Secord, aimed for a 10% growth rate and sought to renegotiate agreements with major merchants, including TA, Pilot, and Love's. Secord's notes reflected dissatisfaction with existing deals and a willingness to terminate agreements if necessary. By 2016, Comdata had successfully renegotiated contracts with both Pilot and Love’s, resulting in higher transaction fees. In May 2016, a meeting with FleetCor's CEO discussed potential acquisition of QuikQ for its RFID technology, indicating strategic interests in enhancing Comdata's offerings.

Comdata is considering the acquisition of QuikQ and exploring ways to leverage Big 3 RFID technology to establish a market standard. A slide deck from a meeting raises concerns about potential consequences if Comdata breaches its contract with TA, including penalties, risks, and contractual "outs." Follow-up items include scheduling a meeting with counsel to assess these risks and clarify what Comdata seeks from TA, such as the installation of RFID, better rates, and marketing initiatives.

In a July 7, 2016 presentation, Secord criticized RFID technology as "kludgy" and unreliable, expressing doubts about its long-term viability and noting QuikQ's lack of interest in a deal with FleetCor. Despite these concerns, the presentation did not indicate any belief that TA was breaching their agreements.

A subsequent meeting on July 8 involved discussions with TA representatives regarding the challenges in installing RFID systems. TA indicated that installation would resume after a Point of Sale (POS) system update, expected to be completed in early 2017. Secord did not accuse TA of any contractual breaches during this meeting.

On August 15, 2016, Secord communicated priorities to Comdata employees, emphasizing the need to engage TA in discussions about a new agreement and focusing on a collaborative approach rather than confrontational tactics regarding the RFID rollout.

Secord's priority list does not mention RFID or any breach of contract by TA. During summer and early fall 2016, TA continued work on the RFID installation. On September 6, 2016, Rowe from TA informed Morgan of Comdata that SmartQ would be operational by early 2017 and that TA was preparing a purchase order for equipment needed for new truck stops. Morgan forwarded this email to Secord, who perceived it as standard but subsequently shared Rowe's purchase order with FleetCor and Comdata's legal counsel. Within hours, Peerman drafted a notice of default citing TA's failure to install RFID technology as per their agreement. Comdata mailed a formal default notice to TA on September 7, asserting that TA was in breach of the RFID Agreement and intended to terminate the Merchant Agreement unless the issue was remedied within thirty days. Rowe indicated that upon receiving this notice, TA expedited their implementation plan for SmartQ RFID. As of September 10, Rowe reported that RFID hardware was installed and operational at 170 out of 202 truck stops, with remediation efforts underway for the remaining sites. On September 16, TA sent a letter to Comdata acknowledging receipt of the default notice and disputing Comdata's right to terminate the Merchant Agreement based on the alleged default under the RFID Agreement.

Comdata responded to a letter from TA on September 21, asserting that the 2011 Amendment required the purchase and installation of RFID systems at all TA locations as part of their agreement. Comdata indicated that a thirty-day cure period would end on October 13, following which Rowe pressed for processing a purchase order for the SmartQ system for 156 diesel lanes across 21 sites. However, Comdata no longer held a contract with QuikQ, which delayed the equipment delivery until after the cure period. 

On September 29, an internal Comdata email discussed the recent implementation of RFID by TA, with one employee suggesting a press release, which Secord quickly opposed. On October 13, TA informed Comdata that it had "substantially" completed the RFID installation at 201 locations, with repairs pending at one site and installations at 22 sites awaiting equipment. TA decided to activate RFID at some locations still using an older POS system due to the limited number of sites and timeframe.

Following TA's update, Comdata initiated unannounced site visits to verify TA's claims, despite a provision in their agreement allowing for audits with prior notice. Comdata instructed its employees to present the visits as routine testing rather than an audit, with Secord admitting that the motivation behind the visits was to gather evidence rather than to resolve any issues. An independent contractor later reported the results of these visits to Secord.

As of October 31, Comdata had established RFID communications with 154 TA locations, while 67 locations had not sent any RFID communications. Comdata's visits to new and existing locations revealed multiple failures in equipment installation and RFID transaction processing. On November 2, 2016, Comdata notified TA via Federal Express that TA did not remedy its default under the Merchant Agreement, leading to immediate termination of the Agreement, although Comdata did not terminate the RFID Agreement at that time. Despite claiming default, Comdata continued to accept payments from TA for RFID equipment and process transactions, with TA spending over $7.3 million on RFID installations, exceeding its budget. A meeting on November 15, 2016, among senior officials from TA and FleetCor included discussions marked as settlement negotiations, and a subsequent settlement proposal was emailed on November 18, 2016. On November 30, 2016, TA filed a Verified Complaint against Comdata and FleetCor, seeking a declaration to prevent termination of the Merchant Agreement and alleging breach of contract for specific performance.

Count III claims that the defendants violated the implied duty of good faith and fair dealing in the Merchant Agreement, while Count IV alleges violations of the Tennessee Consumer Protection Act due to unfair business practices. TA has filed a motion for expedited proceedings and preliminary injunctive relief. On December 9, 2016, Secord informed O’Brien via email that Comdata would continue accepting its payment methods at TA locations until the court's final decision but would increase fees, purportedly reflecting what similar merchants pay. These higher fees commenced on February 1, 2017. The court granted expedited proceedings on December 14, 2016, but denied the request for a preliminary injunction, reasoning that Comdata’s commitment to accept cards mitigated concerns about irreparable harm. On December 22, 2016, the defendants filed a counterclaim for breach of contract, later amended on February 23, 2017, seeking damages and declaratory relief. TA's motion for partial judgment on the pleadings concerning Count I was denied on February 27, 2017. Subsequently, on March 27, 2017, TA filed a Verified Supplement to the Complaint with further allegations and additional relief requests under Counts II and IV.

The core of the dispute revolves around the legitimacy of Comdata’s termination of the Merchant Agreement on November 2, 2016, which had been extended to January 2, 2022. The Merchant Agreement allows early termination only in cases of material breach. The defendants do not claim TA breached the Merchant Agreement itself but argue that TA breached the RFID Agreement, which they assert was consideration for the Amendment. They contend this alleged failure of consideration justifies terminating the Amendment, allowing Comdata to impose higher fees. Conversely, TA argues that the Merchant Agreement and the RFID Agreement are distinct, asserting that any performance issues under the RFID Agreement do not warrant terminating the Merchant Agreement. TA also maintains it did not materially breach the RFID Agreement and remedied any issues within the specified cure period, suggesting that Comdata and FleetCor fabricated the RFID dispute as a pretext for renegotiation under more favorable terms.

TA argues that the evidence supports the conclusion that it did not materially breach the RFID Agreement, referencing the conduct concerning the Merchant Agreement. Defendants proposed a "contemporaneous contracts theory" as an alternative to the "failure of consideration theory," asserting both lead to the same outcome, although the latter is considered the simpler approach. However, the court finds that since the RFID Agreement served as partial consideration for the Amendment, it does not need to address the contemporaneous contracts argument.

Tennessee law governs the claims, as both the Merchant and RFID Agreements stipulate that they are to be interpreted according to Tennessee law. The Tennessee Supreme Court emphasizes that contract interpretation is based on the parties' intent at the time of execution, with clear language controlling outcomes. In cases of ambiguity, courts may consider additional rules of construction and other evidence, including negotiations and the parties' conduct, to clarify intent. The law also states that partial failure of consideration can justify contract rescission if it significantly impacts the contract's purpose or if the parties would not have entered into the contract had they anticipated such failure. The distinction between inadequacy of consideration and failure of consideration is highlighted, with the latter carrying more weight in contract disputes.

"Inadequacy of consideration" refers to a situation where the value exchanged in a contract is not equivalent to what is conveyed. If both parties are aware of this inadequacy, it cannot be used to void the contract. Conversely, "failure of consideration" implies a complete lack of consideration. A partial failure that undermines the contract's purpose may justify rescission, but such rescission should be rare and only in significant circumstances. For Comdata to rescind the Amendment and terminate the Merchant Agreement under Tennessee law, two conditions must be met: (1) the RFID Agreement must be at least partially considered in the Amendment, and (2) TA's breach of the RFID Agreement must materially affect the Amendment's objective or involve a critical matter that would have influenced the parties' decision to enter the Amendment. The breach must be material to satisfy this condition.

The excerpt also addresses the burden of proof in this case, indicating a disagreement between parties on who must demonstrate whether TA materially breached the RFID Agreement and if that breach could excuse Comdata's obligations under the Merchant Agreement. Generally, plaintiffs and counterclaim plaintiffs must prove each element of their claims by a preponderance of the evidence, while defendants and counterclaim defendants must establish their affirmative defenses similarly. The matter of specific performance is discretionary for the court. The applicable law for determining the burden of proof is not explicitly settled, but since parties did not show significant differences between Delaware and Tennessee laws on this issue, Delaware law is applied.

The burden of proof in legal matters often influences court outcomes and is determined by policy judgments. In specific performance cases, the party seeking enforcement must prove entitlement by clear and convincing evidence, as established in prior cases. The defendants argue that TA must demonstrate it is not in default of the Merchant Agreement due to any material breach of the RFID Agreement, citing Peden v. Gray, which states that specific performance cannot be granted to a breaching party. However, the context differs in this case since the defendants do not contest TA's willingness or ability to perform, but rather claim a failure of consideration as an affirmative defense.

The defendants' reliance on AQSR India Pvt. Ltd. v. Bureau Veritas Hldgs. Inc. is unfounded, as that case involved clear breaches that warranted denial of specific performance. In contrast, this case is more similar to In re IBP, Inc. S’holders Litig., where the court emphasized that the parties' abilities to perform under the contract were not disputed. The critical issue revolves around whether Comdata has the right to terminate the Merchant Agreement due to TA’s alleged breach of the RFID Agreement, with the burden on Comdata to prove any breaches that might justify non-performance.

Defendants hold the burden of proof regarding their affirmative defense against TA's claim for specific performance. However, TA must demonstrate that any cure it proposed for alleged breaches conforms to the contract. In Count I, TA seeks a declaration of non-default under the Merchant Agreement based on the RFID Agreement's purported breaches, and TA bears the burden of proof here as well. The RFID Agreement serves as partial consideration for the Amendment, which contains a recital indicating that TA agreed to purchase and install RFID technology from Comdata. The recital's significance is tempered by the legal principle that while recitals can inform contract interpretation, they typically do not constitute binding contractual terms. Additionally, although the term "consideration" is significant in contract law, its use in the recital may be non-technical. To clarify the parties’ intentions during the negotiation of the Amendment and RFID Agreement, extrinsic evidence is considered, especially given the context that Comdata would seemingly act against its financial interests by entering into the Amendment, which reduced transaction fees and extended the duration of those lower fees under the Merchant Agreement.

Comdata asserts that the primary purpose of the Amendment was to ensure TA's commitment to implement RFID technology, while TA contends that the main objective was to prolong their payment processing relationship. Evidence heavily favors Comdata's claim, including contemporaneous documents from the negotiation of the Amendment and RFID Agreement. Initially, TA linked lower transaction fees to the RFID rollout, but Comdata later removed this condition due to technological constraints. Comdata's first draft of the amendment reduced TA’s requested extension from twenty years to six, aligning with Comdata's interests. 

Testimony indicates that Comdata would not have agreed to the Amendment without TA's commitment to RFID installation. Stevenson noted that the idea of extending the Merchant Agreement was not originally proposed by Comdata, but rather suggested by TA to avoid renegotiating in the near future. Comdata typically preferred shorter agreements, usually three to five years, which further emphasizes the unusual length of the amended contract.

Additionally, industry context supports the notion that the RFID Agreement was a significant factor in the Amendment, especially as Comdata sought to remain competitive against rivals like EFS. O’Brien recognized Comdata's urgency to implement RFID technology to maintain its market position, using the competitive landscape to leverage TA's commitment.

Considering the evidence presented, several key points emerge regarding the execution of the RFID Agreement and its implications for the Merchant Agreement. O'Brien expressed skepticism about the future of RFID technology when the agreement was made, while Stevenson indicated that extending the Merchant Agreement was not a significant factor for Comdata. Morgan, drawing on thirty years of experience, noted that Comdata saw no business benefit in extending the Merchant Agreement without the RFID Agreement.

Upon executing the Amendment and the RFID Agreement, the primary arrangement appeared to be that Comdata would reduce rates for TA in exchange for TA deploying RFID technology. O'Brien's testimony supported this, affirming that the proposal for RFID terms was countered with an extension of the Merchant Agreement. 

TA relied on Stevenson’s testimony and that of its in-house counsel, Young, who drafted the original amendment. Young claimed the reference to the RFID Agreement was merely contextual. However, he did not remove this reference when revising the amendment, instead updating it to reflect the correct date of the RFID Agreement. This revision contradicted his assertion that the mention of the RFID Agreement was for context only. Young’s lack of recollection regarding his drafting intentions weakened the credibility of his testimony.

Additionally, Stevenson’s comments about extending the Merchant Agreement to foster a friendly relationship with TA were made under circumstances that raise concerns about their reliability, as he did not testify live at trial and his deposition was influenced by TA’s counsel. Thus, the evidence suggests that the RFID Agreement was a significant consideration for the Amendment.

Stevenson's counsel did not attend his deposition, leading to testimony that was at times confusing and imprecise, especially regarding the dealings between TA and Comdata. Notably, Stevenson failed to initially recall that an Amendment reduced TA's rates, only remembering this fact shortly before his deposition. He firmly stated that the proposal to extend the Merchant Agreement originated from TA in response to Comdata's approach about implementing RFID technology, asserting that he had not considered contract extension prior to that point and that Comdata would not have agreed to amend the agreement without TA's commitment to install RFID technology. 

The evidence suggests that the RFID Agreement served as at least partial consideration for the Amendment. Under Tennessee law, a partial failure of consideration could justify rescission of the contract if it significantly impacts the contract's purpose. 

Defendants claim that TA's delayed launch of RFID technology constituted a failure of consideration affecting the Amendment’s core. However, the RFID Agreement lacks a specific deadline for TA’s performance, stating only that both parties would cooperate to integrate the technology as soon as reasonably practical. Defendants allege that TA breached this agreement by August 2013, yet Comdata and FleetCor did not inform TA of any breach until a notice of default was issued in September 2016. Consequently, defendants failed to prove they were deprived of the benefits of the Amendment. They also argued that the consideration for the Amendment was TA’s commitment to launch RFID technology before a supposed "technology window" closed; however, this argument found no support in the parties' negotiation history or subsequent conduct.

The defendants argue that the technology window for RFID closed by 2016, which they claim negates TA's obligations under the Amendment unless a delay was excused. However, no credible evidence was presented to support that the concept of a "technology window" was part of the original agreement. The RFID Agreement does not mention a technology window, nor did Comdata provide evidence from the time of the agreements that TA committed to launching RFID technology before this alleged closure. TA's contractual obligation to complete integration "as soon as reasonably practical" is unrelated to any supposed technology window. Additionally, Comdata did not reference this closed window in its default and termination notices to TA and continued accepting payments for RFID equipment post-2016, contradicting their claim that the window had closed. The only mention of a "technology window" came from Secord's trial testimony, which does not reflect the parties' intentions at the time of the agreement in 2011. Comdata's actions, including offering a cure period and expressing readiness for TA to implement the system, suggest they were not aligned with the assertion that the technology window was closed.

Secord's assertion regarding a "technology window" being closed is contradicted by contemporaneous documents. In May 2016, Comdata was exploring a potential acquisition of QuickQ to establish RFID as a market standard, indicating ongoing interest in the technology. Additionally, in July 2016, Secord informed Comdata and FleetCor's senior officials about a deal proposal with QuickQ. This undermines the defendants' argument about a technology window, which lacks evidential support and appears improbable given the context of relevant transactions. TA was the first trucking merchant to contract with Comdata for the RFID system, yet uncertainties regarding the technology's future existed as early as 2011, including competition and limited applications. No timeline for a potential technology window was established at that time, making it unlikely that TA would have agreed to an undefined deadline in their RFID Agreement with Comdata.

The defendants reference Hifn, Inc. v. Intel Corp. to support their position on the relevance of a technology window for determining reasonable performance time. However, this case is distinguishable as it involved a contract with explicit target dates for development, and both parties recognized the critical nature of timely market entry. Hifn's delays led to a breach of contract ruling, as the parties had shared expectations about the market window. In contrast, no credible evidence exists in this case to establish similar shared intentions between the parties.

TA fulfilled its obligation to reasonably cooperate in completing the RFID integration as soon as reasonably practical, countering the defendants' claim of material breach under Section 5 of the RFID Agreement. The defendants carry the burden of proof, yet the agreement lacks a definition for "as soon as reasonably practical," and no relevant Tennessee legal authority was provided. TA referenced a Tennessee Court of Appeals case, Madden Phillips Construction, Inc. v. GGAT Development Corporation, which establishes that failure to meet completion timelines does not constitute material breach unless time is explicitly made essential in the contract. Although the defendants acknowledged that this case does not fall under a "time-is-of-the-essence" contract, they argued that failing to perform within a reasonable time is still a material breach. The courts recognize that determining a reasonable time for performance in silent contracts is fact-specific. The court concluded that TA did not materially breach the RFID Agreement, as it reasonably cooperated with Comdata in the integration process. The drafting history of the agreement indicated that the term in question was suggested by O’Brien, further supporting the court's conclusion that TA's actions were consistent with the contractual obligations.

The excerpt outlines obligations and interactions between TA and Comdata regarding the integration of the FIM system with TA’s point of sale and other systems, as specified in the RFID Agreement. It highlights that both parties agreed to cooperate reasonably to complete the integration as soon as practical, with TA having the discretion to direct its vendors at its own cost. The defendants allege that TA failed to cooperate in this integration beginning in August 2013, but do not dispute TA's efforts prior to that date. Evidence indicates that TA collaborated closely with Comdata for the initial two years, achieving significant milestones, including completing Phase 1 of the RFID rollout by November 2012 and finishing hardware installation by December 2013.

Coordination diminished in August 2013 when Comdata suggested reducing project team communications to focus on new customers. Comdata was aware of TA's transition to a new system and the challenges TA faced, including water damage issues in 2014. Despite this knowledge, Comdata did not express dissatisfaction with TA's efforts until a notice of default in September 2016, undermining its claims of TA's lack of cooperation or material delays. The excerpt concludes by referencing a legal principle that a party's conduct can strongly indicate their original intent in a contract, suggesting it was reasonable for TA to delay implementing RFID until the transition to the new system was complete.

The determination of reasonableness concerning the timing of performance relies heavily on the established conduct of the parties, which reflects their original intent. During the oral argument, the defendants' counsel argued that Comdata's lack of action should not be construed negatively, suggesting that if TA's TravStar1 system was indeed too unstable for the RFID software, Comdata's requests for an earlier launch would be irrelevant. However, this argument is flawed because there is no evidence indicating that Comdata believed it was impossible for TA to operate RFID on TravStar1. Post-trial, the defendants maintained that TA could have run RFID on TravStar1 while transitioning to Retalix.

The analysis focuses on the delays stemming from TA's switch from the TravStar1 POS system, noting that the delay from water damage was less significant and overlapped with the POS system transition. Evidence indicates that the water damage arose partly from deviations from the installation guide for RFID equipment, which may excuse TA from liability under Tennessee law, as established in Anil Constr. Inc. v. McCollum.

In early 2013, TA replaced the unstable TravStar1 with Retalix, a system previously utilized by other companies. The parties disagree on whether TA could have operated RFID on TravStar1 during this transition. The record shows that in late 2016, after receiving a notice of default from Comdata, TA successfully ran RFID for a limited period at several sites still using TravStar1. Rowe testified that this was only feasible due to the small number of sites and duration, as extensive operation would risk destabilizing TravStar1 further.

The trial court affirmed the finding that the defendant did not breach the contract due to the delays, which were attributed to adverse weather, subcontractor delays, and numerous requests from the plaintiff. The defendants also claimed that TA breached the RFID Agreement by prioritizing its DEF rollout over RFID; however, TA's contractual obligation was to "reasonably cooperate" in launching the RFID system as soon as practicable, without being required to prioritize it above all other projects.

The DEF rollout in January 2013 highlighted the instability of TravStar1, a situation that had been known to TA and Comdata prior to the rollout. Defendants' failure to present evidence during the three years from 2013 to 2016 raises questions about their diligence, particularly regarding inquiries about RFID activation before TA completed its POS transition. There was mutual awareness that QuikQ was incompatible with TravStar1, leading to TA's concerns about destabilizing its system by launching RFID at multiple locations. 

Emails and internal documents from 2011 and 2012 reflect TA's frustrations and ongoing concerns about system integration. It is concluded that TA acted reasonably by delaying the RFID software launch until September 2016 due to the ongoing stability issues with TravStar1 and adhered to a previously agreed launch plan with Comdata. The defendants' assertion that TA failed to perform promptly is countered by the fact that Love’s, which successfully implemented RFID by 2013, had a different contractual relationship with QuikQ and utilized a compatible POS system. Additionally, Love's had fewer operational challenges compared to TA, making direct comparisons of their performance unjustifiable.

Comdata's breach of the RFID Agreement exempts TA from claims of failing to cure any material breach. TA asserts that even if it did not "reasonably cooperate" to integrate the RFID system by September 2016, it effectively cured any breach by completing substantial integration by October 13, 2016, the end of the cure period. Under Tennessee law, substantial compliance is sufficient, and on that date, TA reported that it was processing RFID transactions at 201 of its 224 travel center locations, indicating approximately 90% completion. Although defendants contend that this 90% completion does not constitute full compliance, Tennessee law supports that substantial completion equates to substantial performance. 

TA's notification to Comdata outlined the status of RFID installations and explained that the remaining 23 sites were awaiting repairs and equipment, which were contingent on Comdata delivering necessary software and hardware. The defendants argue against TA's claim of curing the breach on two grounds: first, that RFID was not operational at all locations; and second, that TA lacked certainty about whether transactions were being processed as of the cure period's end. However, the delay in installation was exacerbated by Comdata’s lack of a contractual agreement with QuikQ for equipment supply during the relevant timeframe, which contributed to the delays in completing installations.

TA confirmed that nearly all its locations had the capability to read RFID tags and process RFID transactions; however, it could not identify which specific locations were operational due to Comdata's refusal to share relevant data. In October 2016, a Comdata employee inadvertently provided some aggregate transaction data but was subsequently instructed to withhold further information. Defendants claimed that tests at TA locations indicated that TA could not process RFID transactions where it had claimed to have installed the necessary hardware, with half of the test transactions failing at nearly 10% of those locations. However, these tests were conducted without proper adherence to the RFID Agreement, which required Comdata to provide reasonable notice before auditing. Additionally, the testers did not use standard eighteen-wheelers as intended for the RFID system, and some lacked necessary training. TA disputed the defendants' assertion regarding the failure rate of transactions based on the defendants' reports. The legal precedent cited indicates that a party violating a material contract provision cannot later complain about similar violations by the other party. Ultimately, although TA could not definitively demonstrate how many sites were processing RFID transactions, it established that any failure to address issues should be excused due to Comdata's material breach of the RFID Agreement, emphasizing the mutual obligation of both parties to cooperate in completing the RFID system integration promptly.

Comdata breached its obligation by allowing its contract with QuikQ to expire and failing to provide necessary information for TA to complete RFID integration. This breach excuses any claims against TA for not remedying alleged breaches of the RFID Agreement. The RFID Agreement served as partial consideration for the Amendment, and Comdata's actions prevent it from terminating the Merchant Agreement based on TA's purported default. Termination would significantly harm TA's business and reputation, justifying TA’s request for specific performance of the Merchant Agreement. Furthermore, since TA did not materially breach the RFID Agreement, the argument for equitable estoppel is not addressed. The remedies sought for breach of good faith and fair dealing overlap with those for the Merchant Agreement, rendering Count III moot. FleetCor, as a non-signatory to the Merchant Agreement, cannot be held liable unless the corporate veil is pierced, which is not justified in this case.

A non-signatory can only be held liable for breach of a contract in Tennessee if the court pierces the corporate veil. FleetCor, not a party to the Merchant Agreement, could face liability for damages only if this legal action occurs. There is a dispute regarding whether Delaware or Tennessee law applies in determining the possibility of veil piercing. The court concluded that the requisite exceptional circumstances to disregard FleetCor’s corporate identity were not demonstrated. Tennessee law requires three elements to pierce the corporate veil: (1) complete dominion by the parent over the subsidiary during the relevant transaction; (2) misuse of this control to commit fraud or violate legal duties; and (3) a direct causal link between the control and the injury claimed. The court found that TA failed to prove that FleetCor had complete dominion over Comdata, as evidence only showed collaboration to identify escape routes from the Merchant Agreement, which is insufficient legally. Under Delaware law, the corporate identity is maintained unless there are compelling reasons such as fraud or public wrongdoing, which TA did not prove. TA did not allege fraud, public misconduct, or lack of financial resources for Comdata to cover its contractual damages. Therefore, the court declined to pierce the veil, ruling that FleetCor is not liable for Comdata’s breach of the Merchant Agreement.

TA alleges that the defendants violated the Tennessee Consumer Protection Act (TCPA) by intentionally undermining TA's contract rights and forcing it into a less favorable contract. This scheme involved creating a default in the RFID Agreement, pressuring TA to renegotiate the Merchant Agreement under threats to terminate their card processing relationship, and misrepresenting fee proposals in late 2016 as similar to those agreed with Love’s and Pilot. Although the TCPA has a general provision for deceptive practices, it is enforceable only by the Tennessee Attorney General. For a private cause of action, a plaintiff must specify a violation of one of the TCPA's enumerated acts, with TA identifying misrepresentation of contract rights as the basis for its claim. However, TA's claim fails due to a lack of proof of causation; it did not demonstrate that the alleged misrepresentations caused any harm, as the decision to reject the defendants’ November fee proposal was made immediately, and TA did not file the lawsuit due to the proposal.

TA cannot pursue its TCPA claim based on the alleged misrepresentation regarding the defendants’ November fee proposal. Additionally, TA failed to demonstrate that the December misrepresentation—that the February Rates reflect what a similarly-sized merchant would pay—was the proximate cause of any injury. No evidence was presented to support this causation, and the context of the December 9 letter indicates otherwise. This letter indicated that Comdata would continue to accept its payment methods at TA's locations until the court's final decision, and that the fees charged would be based on rates applicable if a new agreement were entered today. The court noted in a December 14 hearing that Comdata’s assurances mitigated TA’s concerns about irreparable harm. It anticipated that Comdata would honor its representation of charging the same fees until January 31, 2017, after which the proposed February Rates would apply during the litigation. The record suggests that TA accepted the February Rates due to the court's ruling and understood them to be a temporary solution. TA has not provided evidence that acceptance of these rates was due to the alleged misrepresentation. Even if there were a violation under the TCPA based on the December 9 letter, TA would not be entitled to additional damages, as it recognizes that there is no independent theory for damages beyond its contract claim. Under Tennessee law, a plaintiff cannot receive double compensation for the same issue, and while treble damages are possible for willful TCPA violations, they are inappropriate in this case.

Treble damages may be awarded based on several factors, including the consumer's competence, the nature of the deception or coercion, the damages incurred, and the violator's good faith. In this case, TA, a sophisticated business entity represented by experienced counsel, can recover damages through its contract claim, which mirrors its TCPA claim. The court notes that if a violation is willful or knowing, it may triple the actual damages sustained but cannot award punitive damages for the same act. The December 9 letter, deemed not to involve sufficient deception or bad faith, does not warrant treble damages. 

Since Comdata improperly terminated the Merchant Agreement and imposed higher rates starting February 1, 2017, it breached the contract. TA is entitled to damages for the difference in rates, plus applicable interest, with an estimated daily loss of $30,715. A precise damages amount will be determined through an accounting, and TA must work with the defendants to quantify actual damages for final judgment submission, supported by an affidavit. The Merchant Agreement allows for reasonable attorneys' fees and costs to the prevailing party, with the parties required to propose a schedule for this resolution within ten days.

In conclusion, TA is awarded a judgment against Comdata (excluding FleetCor) on Counts I and II of the Complaint, while Comdata is favored on Count IV. Count III is dismissed as moot, and the parties must submit a final judgment form within ten days alongside the fee resolution schedule.