News & Events

Anything is (Im)Possible: Applying the “Impracticability” Defense to the Tennessee Wildfires

The nation recently watched the unfortunate wildfires that overtook Gatlinburg, Pigeon Forge and the Great Smoky Mountains in East Tennessee.  The unstoppable flames engulfed those beautiful towns and mountains and left ashes in their wake.  As a native Tennessean, I am personally devastated by the damage suffered by a place I hold so deeply in my heart.  Most significantly, I pray for the families suffering from the loss of loved ones as a result of those uncontrollable fires.

Officials have indicated that it will take years to recover from the fires and to rebuild the towns.  Undoubtedly, the fires have caused countless individuals and businesses to fall short of contractual obligations that could not be fulfilled during – or after – the wildfires raged.  Inevitably, some Gatlinburg employers have breached employment agreements, vendors have failed to fulfill purchase contracts, and manufacturers have failed to comply with supply contracts.  Fortunately, a party that has breached or will breach a contract due to the effects of the fires may be protected by the “Impracticability” affirmative defense.  The “Impracticability” defense, formerly known as “Impossibility of Performance,” generally insulates a breaching party from contractual liability arising despite the fact that – based upon unforeseen circumstances – the breaching party was in no position to comply with his or her contractual obligations.

While “Impracticability” is not specifically recognized as an affirmative defenses in the Rules of Civil Procedure (see, e.g., Fed. R. Civ. P. 8(c); Tenn. R. Civ. P. 8.03), Courts routinely identify it as such.  See, e.g., Roth Steel Prod. v. Sharon Steel Corp., 705 F.2d 134, 149 (6th Cir. 1983) (“To successfully assert the affirmative defense of commercial impracticability, the party must show that the unforeseeable event upon which excuse is predicated is due to factors beyond the party’s control.”).  According to the Restatement (Second) of Contracts:

Where, after a contract is made, a party’s performance is made impracticable without his fault by the occurrence of an event the non-occurrence of which was a basic assumption on which the contract was made, his duty to render that performance is discharged, unless the language or the circumstances indicate the contrary.

Restatement (Second) of Contracts § 261 (1981).  Similarly, Williston on Contracts states:

Even though a party, in assuming a duty, has no qualifying language in the contract, the court may still relieve it from the duty of performance if it has unexpectedly become impracticable as a result of a supervening event.

30 Williston on Contracts § 77:16 (4th ed.) (citations omitted).  Consequently, if the Impracticability defense applies, a party will not be held liable for breaching a contract that was impossible to perform. Of course, a party will not be relieved for nonperformance where the impossibility is caused by the party’s own conduct or where the impossibility is caused by developments which the party could have “prevented or avoided or remedied by appropriate corrective measures.”   United Brake Sys., Inc. v. American Envtl. Protection, Inc., 963 S.W.2d 749, 756–57 (Tenn. Ct. App. 1997); Tucker v. Hundley, 452 S.W.2d 658, 660 (Tenn. Ct. App. 1969).

In the case of contracts breached because of the Tennessee Wildfires, a breaching party will likely contend that the nonperformance could not have prevented or avoided by any corrective measures.   Consequently, those damaged by the Tennessee Wildfires should be aware that Tennessee Courts do recognize the “Impracticability” affirmative defense.  Hinchman v. City Water Co., 167 S.W.2d 986, 991 (Tenn. 1943) (“The essence of the modern defense of impossibility is that the promised performance was at the making of the contract, or thereafter became, impracticable owing to some extreme or unreasonable difficulty, expense, injury, or loss involved, rather than that it is scientifically or actually impossible.”); APAC-Atl., Inc., Harrison Const. Div. v. State, 2013 WL 5883697, at *14–15 (Tenn. Ct. App. Oct. 31, 2013) (the impracticability defense is “a ‘rule of supervening impracticability whereby the occurrence of an unforeseen circumstance following the formation of the contract excuses a party’s performance.’”) (quoting Patterson v. Methodist Healthcare–Memphis Hosps., 2010 WL 363314 (Tenn. Ct. App. Feb. 2, 2010)).  Consequently, a lawyer representing the victims of the wildfires may contend that his or her clients are relieved from contractual liability caused solely by the fires.

The “Impracticability” defense was designed to protect a breaching party who could not have avoided its breach through any corrective measures.  Consequently, the victims of the Tennessee wildfires may be protected by the “Impracticability” defense on the grounds that a breach simply could not have been avoided. Often times it is difficult to understand certain legal principles and the purposes they serve.  Other times, the law simply makes sense because it is equitable and fair.  This is one of the latter times.

 

 

Kevin C. Baltz

award of attorney's fees