BERNIE CHEATHAM d/b/a UNIVERSAL BUILDERS, ET AL. v. THE FEDERAL MATERIALS COMPANY, LLC, ET AL. (Tenn. Ct. App. February 22, 2012)
Builder was hired to construct a commercial building, and it purchased the concrete for the building’s concrete slab from Supplier. The concrete slab developed major cracks, which led to this lawsuit between Builder and Supplier. After a two-day bench trial, the trial court found that Supplier had delivered defective concrete, and it entered judgment in favor of Builder for $60,000. We affirm.
Opinion available at:
https://www.tba.org/sites/default/files/cheathamb_022212.pdf
February 22, 2012
February 10, 2012
Court reviews whether the final payment in a Development Agreement was contingent upon satisfying certain requirements of a Partnership Agreement.
EAGLES LANDING DEVELOPMENT, LLC. v. EAGLES LANDING APARTMENTS, LP., ET AL. (Tenn. Ct. App. February 2, 2012)
This is a breach of contract case. Following a bench trial, the trial court awarded Appellee Developer the remaining balance due under a Development Agreement that was entered by and between Appellee and the Appellants, a partnership and its limited liability partners, for construction of an apartment complex.
Appellants contend that Appellee was not entitled to final payment because the general partner, who is not a party to this appeal, had not funded the development fees that were contemplated under a Partnership Agreement, to which Appellee was not a party. Specifically, Appellants argue that the payment under the Development Agreement is contingent upon satisfaction of the funding requirements specified in the Partnership Agreement.
We conclude that the conditions precedent under the Development Agreement were met, and that the Appellee was, therefore, entitled to its full fee under the Development Agreement. The trial court assessed judgment against the limited liability partners and the partnership. Under the Tennessee Revised Uniform Partnership Act, Appellants' status as limited partners protects them from liability for the debts of the partnership. Appellee contends that it is a third-party beneficiary under the Partnership Agreement and may, therefore, have judgment against the limited partners who were parties to that agreement. We conclude that the third-party beneficiary issue is waived and that the trial court erred in entering judgment against the limited partners. Affirmed in part, reversed in part, and remanded.
Opinion available at:
http://www.tba2.org/tba_files/TCA/2012/eagleslanding_020212.pdf
This is a breach of contract case. Following a bench trial, the trial court awarded Appellee Developer the remaining balance due under a Development Agreement that was entered by and between Appellee and the Appellants, a partnership and its limited liability partners, for construction of an apartment complex.
Appellants contend that Appellee was not entitled to final payment because the general partner, who is not a party to this appeal, had not funded the development fees that were contemplated under a Partnership Agreement, to which Appellee was not a party. Specifically, Appellants argue that the payment under the Development Agreement is contingent upon satisfaction of the funding requirements specified in the Partnership Agreement.
We conclude that the conditions precedent under the Development Agreement were met, and that the Appellee was, therefore, entitled to its full fee under the Development Agreement. The trial court assessed judgment against the limited liability partners and the partnership. Under the Tennessee Revised Uniform Partnership Act, Appellants' status as limited partners protects them from liability for the debts of the partnership. Appellee contends that it is a third-party beneficiary under the Partnership Agreement and may, therefore, have judgment against the limited partners who were parties to that agreement. We conclude that the third-party beneficiary issue is waived and that the trial court erred in entering judgment against the limited partners. Affirmed in part, reversed in part, and remanded.
Opinion available at:
http://www.tba2.org/tba_files/TCA/2012/eagleslanding_020212.pdf
January 30, 2012
Court reviews a breach of contract and Consumer Protection Act claim against a home builder
ROBERT F. MEREDITH ET AL. v. KENNETH L. WELLER ET AL. (Tenn. Ct. App. January 25, 2012)]
The plaintiff, Robert F. Meredith ("the Owner"), appeals a judgment rendered against him in favor of his home builder, Kenneth L. Weller ("the Builder"), on the Builder's counterclaim for breach of contract and for attorney's fees incurred in defending the Owner's claims for, among other things, defective construction, misrepresentation, breach of contract, and violations of the Tennessee Consumer Protection Act, Tenn. Code Ann. sections 47-18-101 et seq. (2001)("the TCPA"). The Builder asks us to award him his attorney's fees incurred in defending the Owner's appeal. We affirm the judgment of the trial court in all respects. We also award the Builder his reasonable attorney's fees incurred on appeal and remand to the trial court for a hearing to determine those fees.
Opinion available at:
http://www.tba2.org/tba_files/TCA/2012/meredithr_012512.pdf
The plaintiff, Robert F. Meredith ("the Owner"), appeals a judgment rendered against him in favor of his home builder, Kenneth L. Weller ("the Builder"), on the Builder's counterclaim for breach of contract and for attorney's fees incurred in defending the Owner's claims for, among other things, defective construction, misrepresentation, breach of contract, and violations of the Tennessee Consumer Protection Act, Tenn. Code Ann. sections 47-18-101 et seq. (2001)("the TCPA"). The Builder asks us to award him his attorney's fees incurred in defending the Owner's appeal. We affirm the judgment of the trial court in all respects. We also award the Builder his reasonable attorney's fees incurred on appeal and remand to the trial court for a hearing to determine those fees.
Opinion available at:
http://www.tba2.org/tba_files/TCA/2012/meredithr_012512.pdf
Court reviews whether the construction statue of repose applies in a case invovling the injury of a minor
CHRISTOPHER J. ETHERIDGE, by next friends and parents, SELENA A. ETHERIDGE and CHRISTOPHER J. ETHERIDGE (SR.), SELENA A. ETHERIDGE; and CHRISTOPHER J. ETHERIDGE (SR.) v. YMCA OF JACKSON AND WEST TENNESSEE, ET AL. (Tenn. Ct. App. January 30, 2012)
A minor was injured in June 2008 when a sink, installed in November 2004, shattered. Suit was initially filed in June 2009, and Defendants were added in September 2009 and April 2010. The trial court granted summary judgment to Defendants based upon the construction statute of repose, Tennessee Code Annotated section 28-3-202, et seq., and we affirm.
Opinion available at:
http://www.tba2.org/tba_files/TCA/2012/etheridgec_013012.pdf
A minor was injured in June 2008 when a sink, installed in November 2004, shattered. Suit was initially filed in June 2009, and Defendants were added in September 2009 and April 2010. The trial court granted summary judgment to Defendants based upon the construction statute of repose, Tennessee Code Annotated section 28-3-202, et seq., and we affirm.
Opinion available at:
http://www.tba2.org/tba_files/TCA/2012/etheridgec_013012.pdf
January 16, 2012
Court reviews whether a property owner breached a construction contract
GEORGE SANDERS, Individually and d/b/a SMS Contractors, Inc. v. BREATH OF LIFE CHRISTIAN CHURCH, INC., ET AL. (Tenn. Ct. App. January 13, 2012)
This is a contract case. The construction contract at issue provided for a specific contract amount plus a commission to the general contractor on any work done beyond the additional contract amount. After being dismissed from the job, the project manager for the general contractor sued both the general contractor and the owner of the property. The general contractor and the property owner then both sued the project manager and each other.
After the property owner failed to satisfactorily respond to discovery requests, the trial court excluded all evidence of the property owner's damages that had not already been provided in detail in discovery. The parties proceeded to trial, at which point the chancellor ordered that all issues of damages beyond the base contract damages would be referred to a special master.
After trial, the chancellor found that the property owner materially breached the contract and awarded the remaining balance to be paid on the contract to the general contractor. The special master awarded the project manager damages for work performed as a direct subcontractor on the project and awarded the general contractor delay damages and the commission on all extra work done on the project. The trial court concurred in the findings of the special master and the property owner appealed, raising a number of issues. We affirm in part, vacate in part, and remand for further proceedings.
Opinion available at:
http://www.tba2.org/tba_files/TCA/2012/sandersg_011312.pdf
This is a contract case. The construction contract at issue provided for a specific contract amount plus a commission to the general contractor on any work done beyond the additional contract amount. After being dismissed from the job, the project manager for the general contractor sued both the general contractor and the owner of the property. The general contractor and the property owner then both sued the project manager and each other.
After the property owner failed to satisfactorily respond to discovery requests, the trial court excluded all evidence of the property owner's damages that had not already been provided in detail in discovery. The parties proceeded to trial, at which point the chancellor ordered that all issues of damages beyond the base contract damages would be referred to a special master.
After trial, the chancellor found that the property owner materially breached the contract and awarded the remaining balance to be paid on the contract to the general contractor. The special master awarded the project manager damages for work performed as a direct subcontractor on the project and awarded the general contractor delay damages and the commission on all extra work done on the project. The trial court concurred in the findings of the special master and the property owner appealed, raising a number of issues. We affirm in part, vacate in part, and remand for further proceedings.
Opinion available at:
http://www.tba2.org/tba_files/TCA/2012/sandersg_011312.pdf
January 12, 2012
Court reviews whether a construction company is liable for injuries that occurred on a section of highway on which it worked
JOSHUA N. LEE, v. LYONS CONSTRUCTION COMPANY, INC. (Tenn. Ct. App. January 10, 2012)
Plaintiff and others sustained injuries in a single car accident and sued defendant construction company and the Tennessee Department of Transportation, alleging that defendant construction company had recently completed work on that section of the highway where the accident occurred, and that a low point in the pavement caused plaintiff to lose control of his vehicle and wreck. Defendant answered, stating that they had completed the required construction on that section of the highway, and the State had accepted its work pursuant to Tenn. Code Ann. section 12-4-501 et seq. which provides upon proper completion of the work the contractor "is discharged from all liability to any party". Defendant filed a Motion for Summary Judgment which the Trial Court granted and plaintiff appealed. We hold that summary judgment for the defendant in this case was proper, and affirm the Judgment of the Trial Court.
Opinion available at:
http://www.tba2.org/tba_files/TCA/2012/leej_011012.pdf
Plaintiff and others sustained injuries in a single car accident and sued defendant construction company and the Tennessee Department of Transportation, alleging that defendant construction company had recently completed work on that section of the highway where the accident occurred, and that a low point in the pavement caused plaintiff to lose control of his vehicle and wreck. Defendant answered, stating that they had completed the required construction on that section of the highway, and the State had accepted its work pursuant to Tenn. Code Ann. section 12-4-501 et seq. which provides upon proper completion of the work the contractor "is discharged from all liability to any party". Defendant filed a Motion for Summary Judgment which the Trial Court granted and plaintiff appealed. We hold that summary judgment for the defendant in this case was proper, and affirm the Judgment of the Trial Court.
Opinion available at:
http://www.tba2.org/tba_files/TCA/2012/leej_011012.pdf
January 09, 2012
2 courts back TDOT suspension of 2 contractors (Associated Press)
2 courts back TDOT suspension of 2 contractors (Associated Press)
NASHVILLE, Tenn. (AP) — Two courts in Nashville have backed a decision by state transportation officials to bar two guardrail companies that were implicated in corruption investigations from bidding on projects.
Lu Inc. and Tennessee Guardrail contend in separate lawsuits that their suspensions weren't proper.
Lu Inc. owner and president Novice Cole has acknowledged giving a Tennessee Department of Transportation supervisor $30,000 as the TDOT worker oversaw a 2005 Interstate 65 widening project in Nashville. Cole has not been criminally charged and claimed in his lawsuit that the suspension of his Kingston Springs-based company violated terms of a 2006 agreement he reached with TDOT, according to The Tennessean (http://tnne.ws/tIShL9.)
The state argued before Davidson County Chancellor Russell T. Perkins that Lu's suspension was required to preserve "public confidence in the integrity of the department's bidding and contracting processes" and was based on evidence of irregularities" committed by Cole.
In his lawsuit, Cole noted the payments to the TDOT supervisor occurred in 2005, and he held that a one-year bidding suspension should be overturned. He contended the 2006 settlement with TDOT keeps the state from punishing him for anything the state knew about at the time of the agreement.
Full article located at: http://www.knoxnews.com/news/2011/nov/08/2-courts-back-tdot-suspension-of-contractors/
NASHVILLE, Tenn. (AP) — Two courts in Nashville have backed a decision by state transportation officials to bar two guardrail companies that were implicated in corruption investigations from bidding on projects.
Lu Inc. and Tennessee Guardrail contend in separate lawsuits that their suspensions weren't proper.
Lu Inc. owner and president Novice Cole has acknowledged giving a Tennessee Department of Transportation supervisor $30,000 as the TDOT worker oversaw a 2005 Interstate 65 widening project in Nashville. Cole has not been criminally charged and claimed in his lawsuit that the suspension of his Kingston Springs-based company violated terms of a 2006 agreement he reached with TDOT, according to The Tennessean (http://tnne.ws/tIShL9.)
The state argued before Davidson County Chancellor Russell T. Perkins that Lu's suspension was required to preserve "public confidence in the integrity of the department's bidding and contracting processes" and was based on evidence of irregularities" committed by Cole.
In his lawsuit, Cole noted the payments to the TDOT supervisor occurred in 2005, and he held that a one-year bidding suspension should be overturned. He contended the 2006 settlement with TDOT keeps the state from punishing him for anything the state knew about at the time of the agreement.
Full article located at: http://www.knoxnews.com/news/2011/nov/08/2-courts-back-tdot-suspension-of-contractors/
January 05, 2012
Knoxville contractor joins ICE enforcement program
Knoxville contractor joins ICE enforcement program (Josh Flory, Knoxville News-Sentinel)
To many business owners, voluntarily opening their books for a federal inspection may sound like a terrible idea.
One local contractor is doing just that, though, and says its customers are the reason.
On Monday, general contractor J.A. Fielden became the first company in the state to join the U.S. Immigration and Customs Enforcement "IMAGE" program.
Launched in 2006, IMAGE — which stands for ICE Mutual Agreement between Government and Employers — requires participants to submit to an inspection of their I-9 employment records. In return, the agency agrees to waive or mitigate any fines associated with violations and to refrain from additional I-9 inspections for two years.
Full article located at: http://www.knoxnews.com/news/2011/nov/07/knox-contractor-first-state-join-ice-program/
To many business owners, voluntarily opening their books for a federal inspection may sound like a terrible idea.
One local contractor is doing just that, though, and says its customers are the reason.
On Monday, general contractor J.A. Fielden became the first company in the state to join the U.S. Immigration and Customs Enforcement "IMAGE" program.
Launched in 2006, IMAGE — which stands for ICE Mutual Agreement between Government and Employers — requires participants to submit to an inspection of their I-9 employment records. In return, the agency agrees to waive or mitigate any fines associated with violations and to refrain from additional I-9 inspections for two years.
Full article located at: http://www.knoxnews.com/news/2011/nov/07/knox-contractor-first-state-join-ice-program/
January 03, 2012
Guest Post by Alex Levin: Contractor’s Top Questions Regarding Surety Bonding
Surety bonds are a necessary requirement not only for contractors, but also for a variety of small businesses to open. Although required for thousands of businesses to operate, much is unknown about their functions and the process of how to obtain a surety bond. To help clear up the mystery behind the bonding process, the following is look into the most frequently asked questions regarding surety bonding.
What is a surety bond?
Surety bonds are a form of contract. In most cases, they are a financial guarantee that protects customers’ money. In all cases it involves three parties:
- An obligee – the party requiring the bond – most often it’s a government entity
- A principal – the company or individual that is purchasing the bond
- A surety – the agency who writes and sells the bond(s)
If the principal should default on any specifications of the bond, a claim can be made seeking retribution. If the claim is found to be valid, compensation is used by the surety agency who will then, in turn, seek repayment from the principal. Because of this, a risk assessment is always performed in order to ensure principals are financial secure to repay in the event damages should be sought against them.
What are the benefits of becoming bonded?
Even for those that are working on private construction projects, obtaining surety bonds is seen as a validation of the company’s professionalism. Those that are able to acquire a surety bond typically are more financially secure than those who are unable to purchase a bond. Banks and financial lenders also view surety bonds as a form of verification of the company’s trustworthiness and financial stability.
For those that are bidding on a project, surety bonds also help validate the project owner’s financial security. As many know, contractors have faced bankruptcy as the project owner’s funding was not verified. Prior to writing and issuing bonds, the surety will investigate the source and amount of available funds. Sureties also help review contracts to ensure there isn’t any language present that will add unnecessary risk to the project. As a whole, surety bonds help protect project owners and the contracting companies that are preforming the work on the project.
Why are surety bonds required?
Although many have not heard about surety bonds, the fact is they’ve been a necessary requirement for several years. The Miller Act, which was passed in 1935, requires contract surety bonds on federal construction projects. In specific, the law specifies both performance bonds and payment bonds (commonly referred to as material and labor payment bonds). The act specifies these bonds must be in place for projects exceeding $100,000, but many state legislatures have adopted the same theory and require them on smaller projects. These regulations are also known as Little Miller Acts.
Aren't surety bonds another form of insurance?
This is the most common misconception regarding surety bonding. Although both insurance policies and surety bonds have the same goal – to protect consumers – the main difference is where the element of risk lies. In regards to insurance policies, it is traditionally a two-person agreement with the company issuing the policy assuming risk.
However, with surety bonds the principal (or the company purchasing the bond) is assigned risk and the bond protects obligees. If a claim is filed against the bond purchaser, the surety agency will make initial payments to the obligee, and then seek retribution from the principal.
The services bonds and insurance policies provide are also different from one to another. Insurance policies are written to assist in times of loss, however surety bonds are written under the assumption (and hope) no claims will be filed against the principal. Because of this, should a claim be filed against an individual or company, it is extremely difficult for that individual to purchase surety bonds in the future.
Alex Levin is a writer for several surety organizations. Although much is unknown about them, surety bonds are a necessary requirement for many small businesses to open and are required on almost all major construction projects.
What is a surety bond?
Surety bonds are a form of contract. In most cases, they are a financial guarantee that protects customers’ money. In all cases it involves three parties:
- An obligee – the party requiring the bond – most often it’s a government entity
- A principal – the company or individual that is purchasing the bond
- A surety – the agency who writes and sells the bond(s)
If the principal should default on any specifications of the bond, a claim can be made seeking retribution. If the claim is found to be valid, compensation is used by the surety agency who will then, in turn, seek repayment from the principal. Because of this, a risk assessment is always performed in order to ensure principals are financial secure to repay in the event damages should be sought against them.
What are the benefits of becoming bonded?
Even for those that are working on private construction projects, obtaining surety bonds is seen as a validation of the company’s professionalism. Those that are able to acquire a surety bond typically are more financially secure than those who are unable to purchase a bond. Banks and financial lenders also view surety bonds as a form of verification of the company’s trustworthiness and financial stability.
For those that are bidding on a project, surety bonds also help validate the project owner’s financial security. As many know, contractors have faced bankruptcy as the project owner’s funding was not verified. Prior to writing and issuing bonds, the surety will investigate the source and amount of available funds. Sureties also help review contracts to ensure there isn’t any language present that will add unnecessary risk to the project. As a whole, surety bonds help protect project owners and the contracting companies that are preforming the work on the project.
Why are surety bonds required?
Although many have not heard about surety bonds, the fact is they’ve been a necessary requirement for several years. The Miller Act, which was passed in 1935, requires contract surety bonds on federal construction projects. In specific, the law specifies both performance bonds and payment bonds (commonly referred to as material and labor payment bonds). The act specifies these bonds must be in place for projects exceeding $100,000, but many state legislatures have adopted the same theory and require them on smaller projects. These regulations are also known as Little Miller Acts.
Aren't surety bonds another form of insurance?
This is the most common misconception regarding surety bonding. Although both insurance policies and surety bonds have the same goal – to protect consumers – the main difference is where the element of risk lies. In regards to insurance policies, it is traditionally a two-person agreement with the company issuing the policy assuming risk.
However, with surety bonds the principal (or the company purchasing the bond) is assigned risk and the bond protects obligees. If a claim is filed against the bond purchaser, the surety agency will make initial payments to the obligee, and then seek retribution from the principal.
The services bonds and insurance policies provide are also different from one to another. Insurance policies are written to assist in times of loss, however surety bonds are written under the assumption (and hope) no claims will be filed against the principal. Because of this, should a claim be filed against an individual or company, it is extremely difficult for that individual to purchase surety bonds in the future.
Alex Levin is a writer for several surety organizations. Although much is unknown about them, surety bonds are a necessary requirement for many small businesses to open and are required on almost all major construction projects.
December 27, 2011
TN Supreme Court reviews the Claims Commission's interpretation of a contract with the State of Tennessee
RAY BELL CONSTRUCTION COMPANY, INC. v. STATE OF TENNESSEE, TENNESSEE DEPARTMENT OF TRANSPORTATION (Tenn. December 12, 2011)
A construction company entered into a contract with the State of Tennessee to restructure an interstate interchange. The contract provides that the contract completion date "may be extended in accordance with the Standard Specifications, however, no incentive payment will be made if work is not completed in its entirety by December 15, 2006."
The Claims Commission found that the contract contained a latent ambiguity requiring extrinsic evidence to interpret the contract. The Claims Commission considered extrinsic evidence and concluded that the construction company was entitled to the maximum incentive payment and an extension of the contract completion date. A divided Court of Appeals affirmed the judgment of the Claims Commission. We hold that the contract is unambiguous and does not permit an extension of the incentive date. Accordingly, we reverse the Court of Appeals and remand to the Claims Commission for modification of the final judgment.
Opinion available at:
http://www.tba2.org/tba_files/TSC/2011/raybell_121211.pdf
A construction company entered into a contract with the State of Tennessee to restructure an interstate interchange. The contract provides that the contract completion date "may be extended in accordance with the Standard Specifications, however, no incentive payment will be made if work is not completed in its entirety by December 15, 2006."
The Claims Commission found that the contract contained a latent ambiguity requiring extrinsic evidence to interpret the contract. The Claims Commission considered extrinsic evidence and concluded that the construction company was entitled to the maximum incentive payment and an extension of the contract completion date. A divided Court of Appeals affirmed the judgment of the Claims Commission. We hold that the contract is unambiguous and does not permit an extension of the incentive date. Accordingly, we reverse the Court of Appeals and remand to the Claims Commission for modification of the final judgment.
Opinion available at:
http://www.tba2.org/tba_files/TSC/2011/raybell_121211.pdf
December 22, 2011
Court reviews whether a contractor breached its contract to construct a parking lot
FILMtech, Inc., v. CHARLIE McANALLY, d/b/a GRAINGER PAVING (Tenn. Ct. App. December 21, 2011)
Plaintiff brought this action against this contractor alleging breach of contract to construct an asphalt parking lot for plaintiff. The Trial Court determined that defendant breached the contract and awarded damages. On appeal, we affirm the Judgment of the Trial Court.
Full opinion available at:
http://www.tba2.org/tba_files/TCA/2011/filmtech_122211.pdf
Plaintiff brought this action against this contractor alleging breach of contract to construct an asphalt parking lot for plaintiff. The Trial Court determined that defendant breached the contract and awarded damages. On appeal, we affirm the Judgment of the Trial Court.
Full opinion available at:
http://www.tba2.org/tba_files/TCA/2011/filmtech_122211.pdf
December 21, 2011
Court reviews whether a purchaser of real estate effectively exercised its right to terminate a contract.
CAMERON GENERAL CONTRACTORS, INC. v. KINGSTON PIKE, LLC (Tenn. Ct. App. December 21, 2011)
Cameron General Contractors, Inc., a Nebraska corporation ("Cameron"), sued Kingston Pike, LLC, a Georgia limited liability company ("Kingston Pike"), for breach of a contract concerning the sale of real property located in Knoxville, Tennessee. Prior to trial, Cameron elected to exercise its contractual right to terminate the contract, and the case proceeded to trial on the issue of damages.
After a bench trial, the Trial Court entered its order finding and holding, inter alia, that the contract did not limit Cameron to the return of its earnest money, and granting Cameron a judgment against Kingston Pike for damages in the amount of $872,418.22, plus attorney's fees of $137,656.56. Kingston Pike appeals to this Court.
We find and hold that the contract at issue clearly and unambiguously provides that once Cameron chose to terminate the contract, Cameron's sole remedy for Kingston Pike's breach was a return of Cameron's earnest money deposit. We, therefore, reverse the Trial Court's October 28, 2010 order.
Full opinion available at:
http://www.tba2.org/tba_files/TCA/2011/cameron_122111.pdf
Cameron General Contractors, Inc., a Nebraska corporation ("Cameron"), sued Kingston Pike, LLC, a Georgia limited liability company ("Kingston Pike"), for breach of a contract concerning the sale of real property located in Knoxville, Tennessee. Prior to trial, Cameron elected to exercise its contractual right to terminate the contract, and the case proceeded to trial on the issue of damages.
After a bench trial, the Trial Court entered its order finding and holding, inter alia, that the contract did not limit Cameron to the return of its earnest money, and granting Cameron a judgment against Kingston Pike for damages in the amount of $872,418.22, plus attorney's fees of $137,656.56. Kingston Pike appeals to this Court.
We find and hold that the contract at issue clearly and unambiguously provides that once Cameron chose to terminate the contract, Cameron's sole remedy for Kingston Pike's breach was a return of Cameron's earnest money deposit. We, therefore, reverse the Trial Court's October 28, 2010 order.
Full opinion available at:
http://www.tba2.org/tba_files/TCA/2011/cameron_122111.pdf
December 14, 2011
Court reviews whether the principal of an LLC authorized advances and pledgings of collateral.
REGIONS BANK v. BRIC CONSTRUCTORS, LLC, F/K/A BRIC CONTRACTORS, LLC, AND PATRICIA MCINTOSH (Tenn. Ct. App. December 14, 2011)
This is an action to collect a debt and to recover collateral. The defendant LLC obtained a line of credit from the plaintiff bank. The LLC borrowed against the line of credit to purchase certain property, and the property was pledged as collateral.
Several months later, the line of credit was converted into a fixed amount loan over a longer term, and a new security agreement was executed pledging the same collateral. On the same day, the LLC obtained another line of credit secured by the LLC's accounts receivable. The next day, the LLC took an advance on the new line of credit.
The LLC made monthly payments on both obligations for almost a year, and then it defaulted. The plaintiff bank filed this lawsuit against the LLC and its principal to collect on the loans and to recover the collateral. The LLC contended that the principal of the LLC did not sign key documents, did not authorize advances, and did not authorize the pledge of the collateral.
After a bench trial, the trial court held in favor of the bank based on, among other things, its finding that the principal of the LLC had ratified any allegedly unauthorized advances made under the lines of credit. The defendants now appeal. We reverse the finding of ratification as to one advance and remand for further findings; in all other respects, the decision of the trial court is affirmed.
Opinion available at:
http://www.tba2.org/tba_files/TCA/2011/regionsbank_121411.pdf
This is an action to collect a debt and to recover collateral. The defendant LLC obtained a line of credit from the plaintiff bank. The LLC borrowed against the line of credit to purchase certain property, and the property was pledged as collateral.
Several months later, the line of credit was converted into a fixed amount loan over a longer term, and a new security agreement was executed pledging the same collateral. On the same day, the LLC obtained another line of credit secured by the LLC's accounts receivable. The next day, the LLC took an advance on the new line of credit.
The LLC made monthly payments on both obligations for almost a year, and then it defaulted. The plaintiff bank filed this lawsuit against the LLC and its principal to collect on the loans and to recover the collateral. The LLC contended that the principal of the LLC did not sign key documents, did not authorize advances, and did not authorize the pledge of the collateral.
After a bench trial, the trial court held in favor of the bank based on, among other things, its finding that the principal of the LLC had ratified any allegedly unauthorized advances made under the lines of credit. The defendants now appeal. We reverse the finding of ratification as to one advance and remand for further findings; in all other respects, the decision of the trial court is affirmed.
Opinion available at:
http://www.tba2.org/tba_files/TCA/2011/regionsbank_121411.pdf
November 03, 2011
Court: Contractors liable for what their subs do (Jackson Sun)
A ruling from the Tennessee Supreme Court last week made it easier for homeowners to hold contractors responsible for shoddy work by subcontractors. The court has found that contractors have a duty to perform services in a "careful, skillful, diligent and workmanlike manner" that can't be fully delegated to another contractor they hire.
Read more about the issues that led up to the decision in the Tennessee Bar Journal.
The Jackson Sun carried this AP story
Read more about the issues that led up to the decision in the Tennessee Bar Journal.
The Jackson Sun carried this AP story
State Supreme Court ruling finds liability for contractors using subs
A ruling from the Tennessee Supreme Court has made it easier for homeowners to hold contractors responsible for shoddy work by subcontractors.
The court has found that contractors have a duty to perform services in a “careful, skillful, diligent and workmanlike manner” that can’t be fully delegated to another contractor they hire.
The 5-0 ruling in a case from Chattanooga over a botched roof repair job that caused a fire could have broad implications for homeowners and contractors because most home construction and repair work involves bringing in subcontractors to handle parts of the job.
The opinion written by Justice Gary Wade and released last week said this was the first time the state Supreme Court had taken up the issue of whether a contractor was absolved from liability under the contract by hiring a subcontractor.
The case began when Robert and Joanie Emerson signed a contract with Winters Roofing Co. to replace a roof. Company owner Martin Winters subcontracted out the work. When the Emersons complained that the new roof leaked, Winters brought in a different subcontractor for repairs.
The subcontractor used a propane torch on the roof, and a few hours later the house caught fire. A fire investigator for the insurance company concluded the open flame roofing work started the fire, which caused more than $870,000 in damages to the home on Sept. 26, 2007.
Neither Winters nor the subcontractor had liability insurance, although Winters tried to obtain it the day after the fire and then filed a claim that said the fire happened seven days later, the ruling said.
The Emersons’ insurance company sued Winters, who argued that he wasn’t at the site while the subcontractor was working and wasn’t responsible for his mistakes.
The trial court dismissed the lawsuit, saying the couple’s insurance company couldn’t recover damages because the fire wasn’t a foreseeable part of the contract. It also said that the only way Winters could be held responsible was if it was shown that he was negligent in his hiring or supervision of the subcontractor.
Last year the Tennessee Court of Appeals overturned that decision.
“The defendant had an implied duty to perform the services required by his contract with the Emersons in a careful, skillful, diligent, and workmanlike manner,” the Supreme Court ruling says.
It concluded that while Winters had lawfully delegated his responsibility to install a proper roof to the subcontractors, he still was liable for the shoddy work.
http://www.jacksonsun.com/article/20111030/NEWS01/111030004/State-Supreme-Court-ruling-finds-liability-contractors-using-subs-
The court has found that contractors have a duty to perform services in a “careful, skillful, diligent and workmanlike manner” that can’t be fully delegated to another contractor they hire.
The 5-0 ruling in a case from Chattanooga over a botched roof repair job that caused a fire could have broad implications for homeowners and contractors because most home construction and repair work involves bringing in subcontractors to handle parts of the job.
The opinion written by Justice Gary Wade and released last week said this was the first time the state Supreme Court had taken up the issue of whether a contractor was absolved from liability under the contract by hiring a subcontractor.
The case began when Robert and Joanie Emerson signed a contract with Winters Roofing Co. to replace a roof. Company owner Martin Winters subcontracted out the work. When the Emersons complained that the new roof leaked, Winters brought in a different subcontractor for repairs.
The subcontractor used a propane torch on the roof, and a few hours later the house caught fire. A fire investigator for the insurance company concluded the open flame roofing work started the fire, which caused more than $870,000 in damages to the home on Sept. 26, 2007.
Neither Winters nor the subcontractor had liability insurance, although Winters tried to obtain it the day after the fire and then filed a claim that said the fire happened seven days later, the ruling said.
The Emersons’ insurance company sued Winters, who argued that he wasn’t at the site while the subcontractor was working and wasn’t responsible for his mistakes.
The trial court dismissed the lawsuit, saying the couple’s insurance company couldn’t recover damages because the fire wasn’t a foreseeable part of the contract. It also said that the only way Winters could be held responsible was if it was shown that he was negligent in his hiring or supervision of the subcontractor.
Last year the Tennessee Court of Appeals overturned that decision.
“The defendant had an implied duty to perform the services required by his contract with the Emersons in a careful, skillful, diligent, and workmanlike manner,” the Supreme Court ruling says.
It concluded that while Winters had lawfully delegated his responsibility to install a proper roof to the subcontractors, he still was liable for the shoddy work.
http://www.jacksonsun.com/article/20111030/NEWS01/111030004/State-Supreme-Court-ruling-finds-liability-contractors-using-subs-
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