Contractor in breach of contract for failure to complete work in "workmanlike" fashion; homeowner not in breach for failure to pay

DARREN REINICHE D/B/A REINICHE CONSTRUCTION v. JIMMIE R. McCOUN, ET AL. (Tenn. Crt. App. August 31, 2009)

Darren Reiniche d/b/a Reiniche Construction ("Contractor") was hired as a general contractor to build a new house for Jimmie R. McCoun ("Homeowner"). After numerous problems with the construction of the house developed, Homeowner refused to make the final payment of $21,085.30, prompting Contractor to file suit. Homeowner filed a counterclaim seeking damages for what he alleged were numerous structural and aesthetic defects with the house as built. Following a bench trial, the Trial Court determined that Contractor had breached his contract with Homeowner to construct the house in a workmanlike manner. The Trial Court dismissed Contractor's claim, and awarded Homeowner $100,000 in damages. Contractor appeals raising various issues. We affirm.

Opinion may be found at the TBA website:
http://www.tba2.org/tba_files/TCA/2009/reiniched_083109.pdf

Court reviews whether municipal planning commisision has statutory authority to approve site development plans

ROB ROTEN AND JERROLD SWAFFORD v. THE CITY OF SPRING HILL, TENNESSEE, ACTING BY AND THROUGH ITS PLANNING COMMISSION, AND IS INVESTMENT, INC. (Tenn. Crt. App. August 27, 2009)

Residents of the City of Spring Hill brought common law writ of certiorari challenging the City Planning Commission's authority to approve site development plans for proposed construction within the City. The Chancery Court upheld the action of the Planning Commission. Finding no error, we affirm the judgment.

Opinion may be found at the TBA website:
http://www.tba2.org/tba_files/TCA/2009/rotenr_082709.pdf

Court examines presumption of ownership under T.C.A. §28-2-110(a)

KINZEL SPRINGS PARTNERSHIP v. HAROLD KING, ET AL. (Tenn. Crt. App. July 31, 2009)

In this action to quiet title, the plaintiff sought the declaration of the true boundary line between the parties, along with an award of the litigation expenses, discretionary costs, and attorneys' fees incurred in protecting the title to the property. Following a bench trial, the court agreed with the property line claimed by the plaintiff. The defendants appeal. We affirm.

Opinion may be found at the TBA website:
http://www.tba2.org/tba_files/TCA/2009/kinzel_073109.pdf

Court examines revocability of plaintiff's personal license to use defendant's boat dock

BOBBY J. COLLINS v. LYNDA C. FUGATE (Tenn. Crt. App. July 31, 2009)

This appeal arises out of litigation in the trial court pertaining to a disputed interest in the use of a boat dock. Bobby J. Collins filed suit against Lynda C. Fugate seeking compensation for labor expended and materials used in the construction of a boat dock. He claimed that, some ten years before filing suit, he helped build the dock on lakeside property owned by Ms. Fugate. The plaintiff contended that, in exchange for building the dock, the defendant gave him a "lifetime dowry" to use her property and dock his houseboat. The defendant acknowledged an agreement between the parties, but contended that it ended by its own terms before she revoked her permission for the defendant's continued use of the property. Following a bench trial, the court found that the plaintiff had a revocable personal license to use the defendant's property that was terminated when and by virtue of the fact he had sold his boat. The complaint was dismissed. We affirm.

Opinion may be found at the TBA website:
http://www.tba2.org/tba_files/TCA/2009/collinsb_073109.pdf

Legality of a Guest Workers Program

TN Attorney General Opinion Number: 09-134 (July 29, 2009)

Opinion may be found at the TBA website:
http://www.tba2.org/tba_files/AG/2009/ag_09_134.pdf

Court rules that general contrator's indemnity claim barred by exclusive remedy provision of contract

BAPTIST MEMORIAL HOSPITAL and BAPTIST MEMORIAL HEALTH CARE CORPORATION v. ARGO CONSTRUCTION CORPORATION, HANSON PIPE & PRODUCTS SOUTH, INC., and ETI CORPORATION and ARGO CONSTRUCTION CORPORATION v. HANSON PIPE & PRODUCTS SOUTH, INC. (Tn. Crt. App. July 29, 2009)

This appeal involves a cross-claim for indemnity. The cross-plaintiff construction company served as the general contractor on a drainage improvement project for a hospital. The cross-defendant subcontractor manufactured and provided concrete pipe for the project, which was installed by the general contractor. After completion of the project, a sinkhole developed in the hospital's parking lot. An investigation revealed that the internal steel reinforcement for the concrete pipe was improperly positioned. The hospital sued, among others, the general contractor and the pipe subcontractor. The general contractor then filed a cross-claim against the pipe subcontractor for indemnity in the event the hospital received a judgment against the general contractor. The subcontractor filed a motion for summary judgment as to the general contractor's indemnity claim, arguing that the claim was barred by (1) the one-year limitations period contained in the parties' contract, as permitted under Tennessee Code Annotated section 47-2-725, and (2) the exclusive remedy provision in the parties' contract, which provided that the only remedies available to the general contractor were repair, replacement, or refund of the purchase price of the pipe. The general contractor argued that the one-year contractual limitations period was not applicable to its indemnity claim, and that the exclusive remedy provision did not preclude its indemnity claim. In the alternative, the general contractor argued that, because the defect in the pipe was latent and not discoverable upon reasonable inspection, the exclusive remedy in the contract failed of its essential purpose and the general contractor was not bound by it. The trial court granted the subcontractor's motion for summary judgment, concluding that the indemnity claim was barred by the one-year contractual limitations period and the exclusive remedy provision, and also that the latency of the alleged defect in the pipe did not cause the exclusive remedy to fail of its essential purpose. The general contractor appeals. We affirm, finding that the exclusive remedy provision applies to bar the indemnity claim and that the exclusive remedy in the contract does not fail of its essential purpose.

Opinion may be found at the TBA website:
http://www.tba2.org/tba_files/TCA/2009/baptist_072909.pdf

Court find that floor trusses are "common elements" in homeowner's association covenants

MICHAEL LLOYD MEIER, ET AL. v. HUNTINGTON RIDGE TOWNHOUSE HOMEOWNERS ASSOCIATION, INC. (Tn. Crt. App. October 24, 2008)

Homeowners association appeals the grant of summary judgment in favor of owners who sued for a declaration that the Association was responsible for the cost of repair of defective floor trusses. The trial court found that found that the defective floor trusses were considered "common elements" under the covenants of the Association. We affirm the decision of the trial court.

Opinion may be found at the TBA website:
http://www.tba2.org/tba_files/TCA/2008/meierm_102408.pdf

Court examines County's right to collect overlooked privilege taxes

HOME BUILDERS ASSOCIATION OF MIDDLE TENNESSEE v. WILLIAMSON COUNTY, ET AL. (Tn. Crt. App.)

Appellants, a group of homebuilders, appeal the trial court's grant of summary judgment in favor of Appellee Williamson County. Homebuilders filed a complaint for declaratory judgment against Williamson County, seeking interpretation of Chapter 118 of the Private Acts of 1987 as amended. Under the alleged authority granted by the Act, Williamson County levied additional adequate facilities taxes on homebuilders based upon its audit of actual square footage built. Builders contend that Williamson County exceeded its authority under the Act by calculating taxes at the time of the issuance of the certificate of occupancy as opposed to the time the building permit was issued. Finding that the Legislature intended to give the County broad authority to levy its tax at the time of the issuance of the building permit or at the time of the issuance of the certificate of occupancy, we affirm.

Opinion may be found at the TBA website:
http://www.tba2.org/tba_files/TCA/2008/homebuilders_101008.pdf

Court examines warranty of fitness, warranty of merchantability, breach of contract, measure of damages in breach of contract case

DAN STERN HOMES, INC. v. DESIGNER FLOORS & HOMES, INC., ET AL.
(Tenn. Ct. App. June 30, 2009).

Appellants, a flooring company hired to install hardwood flooring at a home being built by Appellee, appeal the judgment of the trial court finding them liable for breach of contract and breach of warranty and awarding damages to Appellee. Appellants were hired to install hardwood flooring at a home being built by Appellee. After installation of the floors, problems developed; Appellants tried to correct the problems on numerous occasions to no avail. Appellee hired another subcontractor to refinish the hardwood flooring and to resolve the problems associated therewith. Appellee subsequently brought action against Appellant to recover amounts paid to subcontractor and the trial court awarded Appellee full measure of damages sought. We modify and affirm the judgment of the trial court.

Opinion may be found at the TBA website:
http://www.tba2.org/tba_files/TCA/2009/dansternhomes_070109.pdf

Court examines whether chancery court has subject matter jurisdiction; whether defendant is required to exhaust administrative remedies before trial

CHEATHAM COUNTY by and through its Floodplain Administrator, A. M. Armstrong v. JAMES KONG, ET AL.
(Tenn. Ct. App. June 30, 2009)

Appellee was issued a building permit for a carport by Appellant, County. County subsequently revoked the permit and ordered demolition of the carport claiming the structure exceeded that permitted. Appellee failed to demolish the structure, and County sued in the chancery court. Appellee moved to dismiss for lack of subject matter jurisdiction, claiming that he should be allowed to exhaust his administrative remedies-an appeal to the Board of Zoning Appeals-before the chancery court could assume jurisdiction. The trial court granted Appellee's motion to dismiss. We find the chancery court had subject matter jurisdiction over the case, and thus, reverse and remand to the chancery court for a trial on the merits.

Opinion may be found at the TBA website:
http://www.tba2.org/tba_files/TCA/2009/cheathamcounty_070109.pdf

"Based on our review of the applicable statutes, case law, and the Zoning Resolution, we find
that the chancery court erred in dismissing County’s suit for lack of subject matter jurisdiction. As we cited above, both Tennessee Code Annotated section 13-7-111 and Zoning Resolution 8.100 provide that when buildings or structures are erected in violation of the applicable regulations, certain persons may institute an injunction or any other appropriate action in
order to remedy the violation. See Tenn. Code Ann. § 13-7-111. Mr. Kong has cited no
applicable statute or resolution requiring exhaustion of administrative remedies before such actions may be taken. Thus, he does not argue that exhaustion is statutorily required, but instead, that this Court should defer to the trial court’s decision to require exhaustion of Mr. Kong’s administrative remedies. We find the cases cited by Mr. Kong concerning exhaustion inapplicable to the instant case. In Moore, B.F. Nashville, Inc., Thomas, and Reeves, the courts considered whether the party instituting the action in the trial court should first be required to exhaust its administrative remedies. Such is not the case here. Mr. Kong did not first file suit in the trial court. Rather, County, which had no further administrative remedies to exhaust, did. County was not attempting to avoid the standard of review given to administrative proceedings, but was seeking enforcement of its decision by one of the few means available. We find no requirement that the defending party be allowed to exhaust its administrative remedies after the other party has initiated proceedings against it in the trial court. Furthermore, we find it inequitable to allow Mr. Kong to “cut off” County’s right to sue under Tennessee Code Annotated section 13-7-111 and Zoning Resolution 8.100 by filing an application to appeal with the Board of Zoning Appeals, only after the initiation of County’s suit. When, as here, the party initiating proceedings in the trial court has no further administrative remedies to exhaust, the trial court is not stripped of its subject matter jurisdiction when the defending party subsequently seeks administrative review. Therefore, we find that the chancery court had subject matter jurisdiction in this case, and, thus, erred in dismissing the suit." Id.

Procedure for Local Approval of Landfills

Procedure for Local Approval of Landfills Under Tenn. Code Ann. section 68-211-703

TN Attorney General Opinion (June 11, 2009)

Opinion may be found at the TBA website:
http://www.tba2.org/tba_files/AG/2009/ag_09_115.pdfAG/2009/ag_09_115.pdf

PUBLIC EMPLOYEES FOR ENVIRONMENTAL RESPONSIBILITY (PEER) v. TENNESSEE WATER QUALITY CONTROL BOARD, ET AL.
(Tenn. Ct. App. June 10, 2009)

Upon review under the Uniform Administrative Procedures Act, the trial court affirmed the decision of the Water Quality Control Board upholding the decision of the Tennessee Department of Environment and Conservation to approve Waste Management's application for a permit to expand a landfill into a mitigation wetlands area. Petitioner appeals. We dismiss the appeal for lack of standing and as moot.

Opinion may be found at the TBA website:
http://www.tba2.org/tba_files/TCA/2009/peer_061109.pdf

Court examines whether lost rent claim is speculative; perfected security interest; lease/ disguised security agreement

METRO CONSTRUCTION CO., LLC v. SIM ATTRACTIONS, LLC, ET AL.
(Tenn. Ct. App. June 9,2009)

This case originated with a mechanic's and materialman's lien asserted by Plaintiff Metro Construction against commercial real property owned by Defendant/Cross Plaintiff Peabody Place Center in Memphis. It arises from improvements made by Metro Construction to a leasehold held by Defendant Sim Attractions. Sim Attractions abandoned the leasehold without compensating Metro Construction for the improvements, which included the installation of a several-ton race car simulator that remained in the abandoned leasehold. Defendant Fitraco claimed the simulator was its property under the terms of a lease agreement between Fitraco and Sim Attractions. It alternatively asserted a superior security interest. The trial court found that the simulator was personal property and determined that that the agreement between Sim Attractions and Fitraco was not a lease but an unperfected, disguised security agreement. The trial court attached the simulator to secure judgment in favor of Metro Construction. It also awarded Metro Construction discovery sanctions against Fitraco. The trial court awarded Peabody Place damages for lost rent. Fitraco appeals, asserting it had leased the simulator to Sim Attractions or, in the alternative, that it had properly perfected its security interest prior to judicial attachment by the trial court. It further asserts the damages claimed by Peabody Place were speculative. We reverse the judgment in favor of Metro Construction and affirm the judgment in favor of Peabody Place.

Opinion may be found at the TBA website:

http://www.tba2.org/tba_files/TCA/2009/construction_060909.pdf

Court holds that easement was abandoned by predecessor-in-interest who had other direct access

DONNIE VAUGHT, ET AL. v. ALAN JAKES, SR. and wife DEBORAH JAKES, ET AL.
(Tenn. Ct. App. May 27, 2009)

A group of Rutherford County landowners whose property abutted one side of a private road which they maintained at their own expense filed a suit for trespass against a neighbor and developer who used the same road for access to houses he was building on the other side. Their suit also included a due process claim against the County for erroneously granting building permits for those houses. The trial court agreed that the building permits were granted in error, but ruled that the county's action was an innocent error rather than a due process violation. The trial court also dismissed the plaintiffs' claims against the developer, holding that he was entitled to use the road because of a permanent easement he had acquired from his predecessors-in-interest. We affirm the trial court's dismissal of the due process claim, but reverse its dismissal of the trespass claim because the evidence shows that the individual who sold the property to the defendant had abandoned the easement and, thus, that the defendant had no right to use the road.


Opinion may be found at the TBA website:
http://www.tba2.org/tba_files/TCA/2009/vaughtd_052709.pdf


"The record indicates that the County correctly informed Mr. Baltz that he was not entitled to sell tracts of his land that did not adjoin Trimble Road, and that the building permits obtained by Mr. Jakes were granted in error. We cannot infer, however, from his acceptance of the Planning Director’s decision that the land could not be subdivided in the way he wished that Mr. Baltz did not know or believe that he could use Bowen Road for other purposes. We conclude on the basis of our examination of the entire record, including the testimony of Henry Parsley and Ronald Baltz, that the Parsleys and Mr. Baltz did know that they could use Bowen Road if they needed to or wanted to, but that they used it only sparingly because they had better access to their property by way of their entrances on Trimble Road. We therefore hold that any easement on Bowen Road enjoyed by the Parsleys or Mr. Baltz was abandoned prior to the sale to Mr. Jakes and that his use of the road amounted to a trespass. We accordingly remand this case to the trial court for further proceedings to determine the damages arising from the defendants’ trespasses which should be awarded to the plaintiffs." Id.

Statute of repose bars construction claims brought too late; disclosure rule does not apply when claimant should have discovered the defect

KAYE LOCKWOOD v. RONALD G. HUGHES, ET AL. (Tenn. Ct. App. April 29, 2009).

Buyer of home filed complaint against Sellers for, among other things, violation of the Tennessee Consumer Protection Act (“TCPA”). The trial court granted summary judgment to Sellers on the TCPA claim on the ground that it was barred by the statute of repose. Buyer filed a Motion to Alter or Amend the Judgment, raising a new argument, which the trial court denied. On appeal, Buyer challenges: (1) the trial court’s grant of summary judgment, asserting that material facts were in dispute regarding Buyer’s allegation that Sellers fraudulently concealed defects in the home and that the fraudulent concealment tolled the statute of repose and (2) the trial court’s failure to consider the new argument raised in Buyer’s Motion to Alter or Amend. Finding the trial court’s actions to be proper in all respects, we affirm the decision.

Opinion may be found at the TBA website: http://www.tba2.org/tba_files/TCA/2009/lockwoodk_042909.pdf

”The trial court found that the home was substantially completed on August 1, 1997, and, consequently, the negligent construction and substandard workmanship claim was barred by the statute of limitations since it was brought more than 5 years after the date of substantial completion.” Id.

“To toll the application of the statute of repose based on an allegation of fraudulent concealment, a plaintiff is required to prove the following: (1) that the defendant took affirmative action to conceal the cause of action or remained silent and failed to disclose material facts despite a duty to do so; (2) the plaintiff could not have discovered the cause of action despite exercising reasonable care and diligence; (3) knowledge on the part of the defendant of the facts giving rise to the cause of action; and (4) concealment of material information from the plaintiff... “The tolling doctrine of fraudulent concealment does not apply to cases where the court finds a plaintiff was aware or should have been aware of facts sufficient to put the plaintiff on notice that a specific injury has been sustained as a result of another’s negligent or wrongful conduct.” Id.

“Ms. Lockwood did not have the home inspected prior to closing; that she was aware of a water leak in the home’s basement in 1999; and that she contacted the Hughes when the water leak first appeared but did not inform them during the next three years of the continuing problem. These materials were sufficient to negate an essential element of Ms. Lockwood’s fraudulent concealment claim, viz., that she could not have discovered the cause of action despite exercising reasonable care and diligence.” Id.

Plaintiff collaterally estopped because he was previously denied standing in a forfeiture action

GEORGE H. NASON, INDIVIDUALLY & AS TRUSTEE OF THE CHURCH STREET REALTY TRUST v. C & S HEATING, AIR, & ELECTRICAL, INC. AND O’BRIEN HEATING & AIR, INC. (Tenn. Ct. App. April 30, 2009).

Plaintiff appeals summary judgment granted on claims for breach of contract, unjust enrichment and entitlement to quantum meruit relief. The trial court dismissed the complaint based on the doctrine of collateral estoppel finding Plaintiff’s claims or rights to the same property were finally adjudicated in federal court. We affirm.

Opinion may be found at the TBA website: http://www.tba2.org/tba_files/TCA/2009/nasong_043009.pdf

”In this case, the district court found that Mr. Nason had the necessary standing under Article III but did not have the requisite statutory standing to challenge the forfeiture because he failed comply with Rule C(6) after sufficient constructive notice of the action was given. Mr. Nason’s inability to proceed as a party to the forfeiture action was a problem of his own making. Several attempts were made to personally serve Mr. Nason with notice in addition to the published notices. Despite Mr. Nason’s belief that the breach of contract claims do not arise from or relate to the forfeiture action, the time to challenge the validity of Appellees’ liens and claimed interest in the property was during the civil forfeiture action. Mr. Nason cannot now assert his position on a claim that was settled between the Appellees and the government and approved in a final order of the district court by filing a second suit, regardless of whether the first action was in rem or in personam. Examination of the previous action shows that Mr. Nason had a full and fair opportunity to litigate the issues he now seeks to raise but failed to timely act to use that opportunity when he failed to file an answer or statement of interest. Balancing the concerns of judicial efficiency and fairness to the parties, we find that Mr. Nason is subject to preclusion by collateral estoppel since he could have become a party to the prior litigation.” Id.

City of Lebanon acting in administrative capacity when it denied PUD; determined to be acting arbitrary and capricious

COST ENTERPRISES, LLC v. CITY OF LEBANON, TENNESSEE (Tenn. Ct. App. April 1, 2009).

Developer sought approval for a planned unit development. The city planning commission approved the development, but the city council did not approve it due to water runoff issues. Developer appealed. The trial court reversed the city council’s denial of the application, finding that the action was properly brought as a common law certiorari action and that the record contained no material evidence to support the city’s decision. The city appealed. We affirm.

Opinion may be found at the TBA website: http://www.tba2.org/tba_files/TCA/2009/costenterprises_040109.pdf

”The City further maintains that no section of the City’s PUD ordinance states that the council must grant an application for a PUD so long as a list of conditions is met. In McCallen, however, the court stated that where a “zoning ordinance provides relief from zoning requirements designed for more conventional development only when a planned development meets the standards of the pre-existing ordinance,” the criteria “are sufficient to require administrative adherence.”Id..

“It is our opinion that the Lebanon City Council was acting in an administrative capacity when it denied Cost’s application for a PUD. Consequently, the challenge to that action by writ of certiorari is proper. Under the writ of certiorari, review of the action of the Lebanon City Council is limited to whether it exceeded its jurisdiction or acted illegally, arbitrarily or fraudulently.”Id..
“The trial court noted that the Regan Smith study “states that the Chestnut Ridge PUD will reduce the drainage rate of water into the surrounding area. Specifically, the report states that ponds included in the Chestnut Ridge PUD design ‘will reduce runoff to the main channel from the south to rates that are less than pre-development flows.’” The City argues that the trial court ignored the portions of the Regan Smith report that called for additional examination into the sink hole, channels, culverts, and 100-year storm event. In our opinion, the trial court did not mention this because it was not relevant. If the flow is “less than pre-development flows,” the effect of the PUD can be nothing but beneficial to the downstream landowners. It appears that the report called for these additional examinations because of flooding events that have already taken place downstream.” Id..

“After a thorough examination of the record, we are convinced that the trial court was correct in its determination that there was no material evidence to support the Lebanon City Council’s decision.” Id..

Suit for negligent misrepresentation held to be construction defect case; barred by stature of repose; wrongful concealment fails

RON HENRY, ET AL. v. CHEROKEE CONSTRUCTION AND SUPPLY COMPANY, INC. (Tenn. Ct. App. March 26, 2009).

Ron Henry and Linda Henry (“Plaintiffs”) sued Cherokee Construction and Supply Company, Inc. (“Defendant”) alleging damages sustained when a wall in the home that Defendant constructed for Plaintiffs collapsed. Defendant filed a motion for summary judgment. The Trial Court entered an order finding and holding that Plaintiffs’ claim was barred by the four year statute of repose contained in Tenn. Code Ann. section 28-3-201, et seq., and granting Defendant summary judgment. Plaintiffs appeal to this Court. We affirm.

Opinion may be found at the TBA website: http://www.tba2.org/tba_files/TCA/2009/henryr_032609.pdf

“Plaintiffs argue that they have not sued for damages resulting from a construction defect but instead have sued for “a negligent misrepresentation of completeness and Notice of Completion....” Plaintiffs argue that their claim is based upon the Notice of Completion being negligently filed because Defendant had not actually completed the construction as required by the agreement between the parties.” Id..

“After a careful and thorough review of the record on appeal, we conclude that regardless of how Plaintiffs’ claim is couched, the case at hand is an action “to recover damages for any deficiency in the design, planning, supervision, observation of construction, or construction of an improvement to real property, for injury to property, real or personal, arising out of any such deficiency….” Tenn. Code Ann. § 28-3-202 (2000). The material substantive allegations of
Plaintiffs’ complaint relate to Defendant’s alleged negligence in the construction of the house. As such, the Trial Court did not err in applying Tenn. Code Ann. 28-3-202.” Id.

“By its plain and unambiguous language, Tenn. Code Ann. § 28-3-205(b) provides that the statute of repose will not be available “to any person who shall wrongfully conceal any such cause of action.” However, Plaintiffs’ claim with regard to this issue is predicated upon the assertion that Defendant wrongfully concealed construction defects and the fact that the job was not finished according to the contract. As this Court stated in Register v. Goad: “The concealment referred to in the statute is not concealment in the original construction, but rather a concealment by defendant of plaintiff’s cause of action once it arises.” Plaintiffs make no allegation that Defendant did anything to conceal the cause of action once it arose. Rather, the “concealment” complained of by Plaintiffs occurred in the original construction itself. As such, Plaintiffs’ claim for wrongful concealment fails.” Id.

Worker willfully disregarded instructions and was injured; thus, his workers' comp. claim was denied

CIVIL CONSTRUCTORS, INC., ET AL. v. GEORGE HAYNES, III (Tenn. Workers’ Comp. Panel, 2009).

This workers’ compensation appeal has been referred to the Special Workers’ Compensation Appeals Panel of the Supreme Court in accordance with Tennessee Code Annotated section 50-6-225(e)(3) for a hearing and a report of findings of fact and conclusions of law. Employee was injured on the job, when the dump truck he was driving overturned. Employer denied liability, asserting that the injuries were the direct result of willful misconduct by Employee. The trial court found in favor of Employer on that issue, and denied benefits. Employee has appealed, contending that the evidence preponderates against the trial court’s finding. We affirm the judgment.

Opinion may be found at the TBA website:
http://www.tba2.org/tba_files/TSC_WCP/2009/haynesg_032009.pdf

“Extending deference to the trial court’s implicit finding concerning Employee’s credibility, we conclude that the evidence in this record shows that Employee had an accident on June 5 as a result of driving his truck on the berm; that he was told thereafter by two of his supervisors not to drive his truck on the berm; that he was given the same instruction again on June 16, accompanied by a reference to endangering his job; that he was also warned by a co- worker on the same date that it was unsafe to drive the truck onto the berm; and that Employee disregarded those instructions and warnings, resulting in an accident which caused his injuries.” Id.

Witness testimony was contradictory but created issue of material fact as to whether witness had procured insurance coverage for company

URBAN HOUSING SOLUTIONS, INC., v. ASSURANCE COMPANY OF AMERICA ARTECH, INC., AND SIGNATURE PROPERTIES, LLC v. ZANDER INSURANCE AGENCY, INC., D/B/A ZANDER INSURANCE GROUP AND ASSURANCE COMPANY OF AMERICA (Tenn. Ct. App. March 18, 2009).

Plaintiff entered into an agreement with defendant Artech for renovation of plaintiff’s building. The agreement provided that Artech would obtain builder’s risk insurance naming Artech and plaintiff as the insured under the policy. Artech procured insurance through defendant Zander Insurance Agency, but the policy did not name plaintiff as an additional insured. A loss occurred and the insurance company refused to pay plaintiff’s claim because plaintiff was not named as an insured on the policy. A consent Judgment was entered in favor of plaintiff against Artech (which had become insolvent) and Artech assigned its cause of action against the insurance agency to plaintiff. The Trial Court granted Zander Insurance Agency summary judgment and plaintiff has appealed. On appeal, we hold that there is a disputed issue of material fact as to whether Artech asked the insurance agency to add plaintiff as an additional insured under the policy which was procured through the agency. We vacate the summary judgment and remand for further proceedings.

Opinion may be found at the TBA website:
http://www.tba2.org/tba_files/TCA/2009/urbanh_031809.pdf

“Urban insists that it established that Mrs. Malakouti asked for Urban to be listed as an additional insured, but Zander failed to take the proper steps to effectuate that request, thus breaching its duty as an insurance agency. The representatives from Zander who testified stated that Mrs. Malakouti did not ask for Urban to be listed, as was evidenced by the form she filled out and sent to Zurich. Mrs. Malakouti testified in parts of her deposition that she did ask for Urban to be listed and that she was seeking coverage for the structure itself in addition to the work being done by Artech, but in other parts of her deposition stated that she only sought coverage for Artech’s work, and admitted that she told them that the owner had other insurance. She also admitted she filled out the form and did not list Urban, but stated that she filled out the form the way she was instructed to by someone at Zander. She testified that she never read the AIA contract and did not know what it required regarding insurance.” Id.

Court examines implied contracts, quantum meruit, promisory estoppel; good faith not actionable; construction site may not be proper venue

HERMOSA HOLDINGS, INC. f/k/a/THE MONROE PAGE GROUP v. MID-TENNESSEE BONE AND JOINT CLINIC, P.C., AMSURG, THE SURGERY CENTER OF MIDDLE TENNESSEE, et al (Tn. Crt. App. March 16, 2009)

The Plaintiff, Hermosa Holdings, Inc., instituted the case at bar against several Defendants by asserting various causes of action with reference to a proposed medical office building development. All Defendants responded to the original complaint by filing motions to dismiss pursuant to Tenn.R.Civ.P. 12.02(6) and for improper venue. The Plaintiff subsequently filed an amended complaint. The Defendants responded by filing additional motions to dismiss. By Order entered February 14, 2008, the Chancery Court of Davidson County granted the Defendant’ motions and dismissed the amended complaint with prejudice. We affirm in part, vacate in part and remand for further proceedings.

Opinion can be found at the tba website: http://www.tba2.org/tba_files/TCA/2009/hermosa_031809.pdf

”Tennessee courts recognize that contracts may be either express, implied in fact or implied in law. [] Contracts implied in fact arise under circumstances which show a mutual intent or assent to contract while contracts implied in law are created by law “without the assent of the party bound, on the basis that they are dictated by reason and justice. []” Id.

”As Hermosa has not pursued causes of action against the Defendants based upon any claim of breach of the written feasibility agreement and as the facts do not evince circumstances which show a mutual intent or assent to contract beyond the feasibility agreement, its cause of action necessarily claims a breach of a contract implied in law. ...[I]n order to establish a claim based upon a contract implied in law, the Plaintiff must show that “(1) a benefit has been conferred upon the defendant; (2) the defendant appreciated the benefit; and (3) acceptance of the benefit under the circumstances would make it inequitable for the defendant to retain the benefit without paying the value of the benefit.” Id. (citation omitted) ”A quantum meruit action is an equitable substitute for a contract claim pursuant to which a party may recover the reasonable value of goods and services provided to another if the following circumstances are shown: 1. There is no existing, enforceable contract between the parties covering the same subject matter; 2. The party seeking recovery proves that it provided valuable goods or services; 3. The party to be charged received the goods or services; 4. The circumstances indicate that the parties to the transaction should have reasonably understood that the person providing the goods or services expected to be compensated; and 5. The circumstances demonstrate that it would be unjust for a party to retain the goods or services without payment.” Id. ”In Tennessee, promissory estoppel is sometimes referred to as equitable estoppel or detrimental reliance. As with a claim of an implied contract, a claim of promissory estoppel does not depend upon the existence of an express agreement between the parties. [] The cause of action has been generally explained [] as: A promise which the promissor should reasonably expect to induce action or forbearance [] and which does induce such action or forbearance is binding if injustice can be avoided only by enforcement of the promise. Our courts do not liberally apply the doctrine of promissory estoppel and generally limit its application to exceptional cases. [] Promissory estoppel is said to be limited to situations where (1) the detriment suffered in reliance is substantial in an ecomonic sense; (2) the substantial loss to the promisee is foreseeable by the promisor; and (3) the promisee acted reasonable in justifiable reliance on the promise as made. []” Id.

”In Tennessee, the common law imposes a duty of good faith in the performance of contracts. [] ‘Parties to a contract owe each other a duty of good faith and fair dealing as it pertains to the performance of a contract.’ [] ‘The extent of the duty to perform a contract in good faith depends upon the individual contract in each case,’ []. Our courts have not recognized a duty to negotiate in good faith absent an express contractual agreement to do so. [] Although lack of good faith may be an element or circumstance in an action for breach of contract, Tennessee courts do not recognize lack of good faith, standing alone, as an actionable tort. []” Id.

”Hermosa prepared and presented various development scenarios and options to certain Defendants in Maury County. Much of the work performed, including preparation of the survey, was conducted in Maury County as well. Clearly the focal point of the dispute is upon the real property which had been proposed to be developed in Maury County. We conclude that the cause of action arose in Maury County, [] ...” Id. ”[] As Tenn. Code Ann. § 20-4-101(b) permits an action to be brought alternatively in the county where ‘plaintiff and defendant both reside’, our focus returns to the thorny question of venue for multiple defendants with different residences. []First, if venue is proper as to one of several defendants who is a material party, venue is proper as to all properly joined defendants, even if venue would not be proper as to the other defendants if sued individually. An exception, however, applies as to a defendant having common county residence with the plaintiff...” Id.

”[] The relief sought against SCMT includes the main relief requested in this case. We conclude Defendant SCMT is a material Defendant for purposes of establishing a common residence with Plaintiff for venue purposes. Davidson County is a county providing proper venue.” Id.

Bank payment to joint venture is sufficient payment to either party in venture; Bank not negligent, unjustly enriched or fraudulent in paying just one

WADE LEE PHELPS v. BANK OF AMERICA (Tenn. Ct. App. March 16,2009).

Plaintiff appeals from the grant of summary judgment in a negligence and breach of contract action against bank which had closed loan and delivered loan proceeds to contractor. An agreement between contractor and third party providing financing for construction project stated that contractor and third party would be paid out of loan proceeds. Contractor failed to pay third party in accordance with their agreement. Trial court granted summary judgment to bank, holding that there was a joint venture between contractor and third party and that Bank’s delivery of loan proceeds to contractor was payment to joint venture. Court also held that finding of joint venture pretermitted negligence and breach of contract claims against bank. Finding no error, we affirm the judgment of the trial court.

Opinion may be found at the TBA website:
http://www.tba2.org/tba_files/TCA/2009/phelpsw_031609.pdf

“The proof submitted by Mr. Phelps in his response was insufficient to negate BOA’s contention that Mr. Church and Mr. Phelps were joint venturers and, in fact, buttressed this conclusion and more clearly establishes the necessary elements of common purpose and agreement. Contrary to the contention of Mr. Phelps, the fact that the parties had different responsibilities does not detract from a finding that they had an equal right of control; rather, the action of the parties in dividing the responsibilities of constructing and financing the duplex is evidence that each had an equal right to control the venture, exercised that control for the benefit of the enterprise and agreed to the division of responsibilities. The trial court did not err in finding that Mr. Church and Mr. Phelps were engaged in a joint venture.”Id.

“In support of his contention that BOA owed him a duty and violated that duty, Mr. Phelps relies upon the statements of Mr. Howell, representative of BOA, that he would be paid at closing and that Mr. Howell would have the agreement between Mr. Angus, Mr. Phelps and Mr. Church sent to the closing agent. BOA correctly points out that the Statute of Frauds contained at Tenn. Code Ann. § 29-2-101(b)(1) precludes any claim against BOA relative to the loan to Mr. Angus not based on an instrument signed by BOA. The representations of Mr. Howell, consequently, cannot establish a duty on the part of BOA that would sustain a cause of action for breach of that duty in the absence of a writing. Moreover, any claim of negligence against BOA by Mr. Phelps would fail because of the uncontroverted proof that the cause in fact and proximate cause of Mr. Phelps’ failure to be paid was the action of Mr. Church in not paying him.” Id.

“Both Mr. Phelps and BOA acknowledge that, in order to establish a claim of unjust enrichment, Mr. Phelps must show: (1) a benefit was conferred on BOA; (2) that BOA appreciated the benefit; and (3) it would be unjust for BOA to retain the benefit without providing compensation for it. Of these requirements, the most significant is that the enrichment be unjust. Paschall’s, Inc., 407 S.W.2d at 155. The only benefit BOA received as a result of the transaction between Mr. Church, Mr. Phelps and Mr. Angus was any profit it received as a result of the loan made to Mr. Angus. At the time the loan was made, the duplex had been substantially completed and the property appraised at an amount sufficient to satisfy the BOA’s loan requirements. BOA had no interest in the property and, consequently, had no interest to be enriched prior to construction of the duplex; after construction, the sole interest it had in the property was to secure the indebtedness.” Id.

General Contractor and sub-contractor both found to be in breach of contract; each party assessed one-half of repair costs to damaged roof

TOTAL BUILDING MAINTENANCE, INC., v. J & J CONTRACTORS/RAINES BROTHERS, a Joint Venture, J & JCONTRACTORS, IN., RAINES BROTHERS, INC., ST. PAUL FIRE & MARINE INSURANCE COMPANY, and FIDELITY & DEPOSIT CO. OF MARYLAND (Tenn. Ct. Ann. MArch 13, 2009).

In this action plaintiff sued for money owed under its subcontract with the defendant contractor. The defendants’ contractor denied liability, raised as affirmative defenses, waiver/estoppel, unclean hands and breach of contract, filed a counter-claim alleging that plaintiff failed to complete its work in a timely and proper manner and permitted the roof to be harmed by others during the construction and generally failed to cooperate. Following an evidentiary hearing, the Trial Judge determined that both parties had breached the contract, that plaintiff was guilty of unclean hands, denied both parties any recovery and dismissed the case. On appeal, we affirm.

Opinion may be found at the TBA website: http://www.tba2.org/tba_files/TCA/2009/totalbuilding_031309.pdf

“As to the damage to the roof, the testimony showed that everyone involved bore some responsibility, which the Trial Court found. The Trial Court relied upon this fact in basically holding that the most equitable resolution in this situation was to leave the parties where they were, because each party had liability and responsibility for the damage, as mistakes were made by both parties.” Id.

”Defendants argue the Trial Court erred in failing to award them any attorney’s fees in this case, because plaintiff was shown to have breached the contract, to have unclean hands, etc. What the Trial Court found, however, was that both parties breached their agreement, and thus concluded that both parties should be left where they are. It appears that, based upon the evidence in this case, this was the most equitable resolution where it was shown that both parties bore responsibility for the problems leading up to the lawsuit, and both parties were technically in breach. The proof showed that the contractor directed the work on the roof to begin too early in construction, and the contractor also bore responsibility for failing to protect the roof.” Id.

Plaintiff's should pursue remedies against parties with whom they have privity before contract under implied theory

POWER EQUIPMENT COMPANY v. EUGENE ENGLAND, CLAIBORNE BUILDERS AND DEVELOPER, INC., and WILDER CONSTRUCTION COMPANY, INC., d/b/a LIFETIME HOMES (Tenn. Ct. App. February 26, 2009).

Plaintiff brought this action against defendant Claiborne Builders to recover the rental fees from a contract between plaintiff and Claiborne Builders for earth-moving equipment which Claiborne Builders used to remove soil from Wilder’s property. The Trial Judge entered Judgment against Claiborne Builders on its contract and Wilder Construction under an implied contract. Wilder has appealed. We reverse the Judgment of the Trial Court.

Opinion may be found at the TBA website:
http://www.tba2.org/tba_files/TCA/2009/powerequip_022609.pdf

“In this case, the evidence was conflicting and unsubstantiated as to whether the work performed on Wilder’s land using Power Equipment’s machinery benefitted Wilder, and based upon the Supreme Court’s holding in Paschall and our holding in Bennett, we do not have to decide if a benefit was received by Wilder. It is undisputed that England and Power Equipment had an express, written contract for the lease of the machinery and England owed Power Equipment a balance of $48,402.77 for the use of equipment pursuant to the contract and his personal guarantee. Thus, Power Equipment was required to pursue its remedy against England with whom it had privity of contract before it could pursue an alleged remedy against Wilder under a contract implied in law theory.”Id.

Legislation limiting development in certain rural communities that meet specified criteria, doe not constitute a taking

Validity of Pending Legislation Affecting Development in Rural Communities
TN Attorney General Opinions (March 12, 2009). Opinion Number: 09-26

Does House Bill 2361/Senate Bill 2217, which would limit development in certain predominantly rural communities, amount to a compensable taking of property under Article I, Section 21 of the Tennessee Constitution?

Opinion may be found at the TBA website:
http://www.tba2.org/tba_files/AG/2009/ag_09_26.pdf

“[T]he Supreme Court established its threshold categorical formulation in Lucas v. South Carolina Coastal Council, 505 U.S. 1003, 112 S.Ct. 2886, 120 L.Ed.2d 798 (1992), in which it determined that two categories of regulatory action would be compensable without reference to the three-part Penn Central type inquiry. But the Court acknowledged that, with respect to the second category, i.e., the deprivation of all economically viable use, it had not clarified the property interest against which the loss of value is to be measured. The Court went on to suggest that the answer might require an examination of how the property owner’s reasonable expectations had been shaped by the state’s laws affecting land use.Id.
“Applying all of this jurisprudence to the pending legislation that is the subject of this request, it is the opinion of this Office that the provisions of House Bill 2361/Senate Bill 2217 limiting development in predominantly rural communities, as long as those communities meet certain specified standards, are, on their face, constitutionally permissible. Any takings analysis of the enforcement of those provisions will be fact-dependent and must rely upon application of the case law and criteria listed above to the specific facts involved.”Id.

Photographs not enough evidence of breach of implied warranties in construction contract

GREGG BOLES v. TIMOTHY MOORE and MOORE FAMILY MEDICINE, PLLC (Tenn. Ct. App. December 31, 2008).

This is a construction case. The plaintiff filed an action in general sessions court to collect money that he alleged that the defendants owed him under a construction contract. The general sessions court entered a judgment in the plaintiff’s favor, and the defendants appealed to the circuit court. The circuit court also entered a judgment in favor of the plaintiff. After the circuit court denied the defendants’ motion for a new trial, the defendants appealed. We affirm, finding that the evidence does not preponderate against the trial court’s findings.

Opinion may be found at the TBA website: http://www.tba2.org/tba_files/TCA/2008/bolesg_123108.pdf

“Moore argues that Boles breached the implied warranties in the construction contract. See Dixon v. Mountain City Constr. Co., 632 S.W.2d 538, 541 (Tenn. 1982). He directs our attention to photographs that were made exhibits at trial to demonstrate that the build-out was not “constructed in a workmanlike manner.” Moore also argues that these photographs support his contention that the trial court’s decision is against the weight of the evidence.” Id.

“We have carefully reviewed the appellate record, including the photographs noted by Moore. Giving appropriate deference to the credibility determinations made by the trial court with regard to the experts and other witnesses, we cannot say that the evidence preponderates against the trial court’s implicit finding that Boles did not breach any implied warranties, or against the trial court’s ultimate decision.” Id.

Failure to properly apportion liens made them valid against general contractor but invalid against buyers who already purchased homes from contractor

WILLIAMSON COUNTY READY MIX, INC. v. PULTE HOMES TENNESSEE LIMITED PARTNERSHIP ET AL. (Tenn. Ct. App. December 16, 2008).

In this suit to enforce materialman’s liens, we have concluded that the lienor was statutorily required to perfect a lien for each townhouse instead of a blanket lien in order for the liens to have priority against subsequent purchasers and encumbrances. The lien was properly preserved, however, with respect to the original owner.

Opinion may be found at the TBA website: http://www.tba2.org/tba_files/TCA/2008/williamsoncountyreadymix_121608.pdf

“The pertinent statutory language stated that the lienor “who has performed labor or furnished materials therefor shall, in claiming a lien, apportion the lienor’s contract price between the separate buildings, units or improvements thereon as applicable and file a separate claim of lien for the amount demanded against each such separate building, unit or improvement.” ... We interpret “therefor” to reference the “more than one (1) building, condominium unit or other improvement” mentioned in the first sentence of Tenn. Code Ann. § 66-11-118(b)(1) and the phrase “as applicable” to reference the building, condominium unit or other improvement for which labor or materials are being used. Since this case involves materials provided to build separate townhome units, we believe that the townhomes are the applicable basis for apportionment. We therefore interpret Tenn. Code Ann. § 66-11-118(b)(1) to require an apportionment of the lien between the separate units or improvements, in this case, the townhomes. “ Id.

“The requirements of Tenn. Code Ann. §§ 66-11-117 and 66-11-118 have been interpreted as applicable only to the lienor’s rights against subsequent purchasers and encumbrances. Walker, 509 S.W.2d at 517. Tenn. Code Ann. § 66-11-112, quoted in full above, expressly addresses the priority of the materialman’s lien “as concerns subsequent purchasers or encumbrancers for a valuable consideration without notice thereof, though not as concerns the owner.” ... D.T. McCall, 796 S.W.2d at 461. Thus, as to the owner, “simple notice without registration or filing will suffice.” ... To be effective as to subsequent purchasers or encumbrancers, however, registration is necessary. Id. We therefore conclude that, as to Pulte, WCRM’s notices of lien were sufficient to perfect the liens. As to the other defendants, WCRM’s recorded unapportioned notices did not afford it priority with respect to subsequent purchasers or encumbrancers without notice.” Id.

Surety has right against engineering firm for losses on project; claims not barred by collateral estoppel or res judicata

ACUITY, A MUTUAL INSURANCE COMPANY v. MCGHEE ENGINEERING, INC. ET AL. (Tenn. Ct. App. December 16, 2008).

A surety filed suit against three engineering firms seeking to recover some of the surety’s losses on a project. The trial court granted summary judgment in favor of the engineers. We have concluded that the surety does have a right of action against the engineers based upon equitable subrogration and that the surety’s claims are not barred by res judicata or collateral estoppel. Because the consulting engineer had no contract with the project owner, the trial court did not err in granting summary judgment on contract claims against the consulting engineer. In all other respects, we reverse the trial court’s decision.

Opinion may be found at the TBA website: http://www.tba2.org/tba_files/TCA/2008/acuity_121608.pdf

“There appear to be no Tennessee cases involving the particular type of surety claim in this case–namely, a surety subrogating to the right’s of the obligee/creditor to seek damages from a third party. The Restatement, however, contemplates such an action: To the extent that the secondary obligor is subrogated to the rights of the obligee, the secondary obligor may enforce, for its benefit, the rights of the obligee as though the underlying obligation had not been satisfied: (a) against the principal obligor pursuant to the underlying obligation; (b) against any other secondary obligor . . . .(c) against any interest in property securing either the obligation of the principal obligor or that of any other secondary obligor . . . . (d) against any other persons whose conduct has made them liable to the obligee with respect to the default on the underlying obligation. RESTATEMENT (THIRD) OF SUR. & GUAR. § 28 (emphasis added).” Id.

“[A] surety or guarantor, by payment of the debt of his principal when he is obligated to make that payment, acquires an immediate right to be subrogated to the extent necessary to obtain reimbursement or contribution to all rights, remedies and securities which were available to the creditor to obtain payment from the person or property of any person who, as to the surety, is primarily liable for the debt. Thus, the surety is entitled to step into the shoes of the creditor. By completing a project on behalf of its defaulting principal, a surety “confer[s] a benefit on the obligee and, therefore, step[s] into the shoes of the obligee.” Id.

Adjoining landowner did not have particularized interest in intervening in proceeding brought by Metro even when building permit was deemed invalid

METROPOLITAN GOVERNMENT OF DAVIDSON COUNTY v. DYKE TATUM (Tenn. Ct. App. Novermebr 10, 2008).

A Nashville homeowner filed a petition in Circuit Court to intervene in a proceeding brought by the Metropolitan Government of Nashville and Davidson County to enjoin further construction on an uncompleted duplex located on property adjoining the homeowner's residence. The homeowner had previously challenged the developer's building permit in the Board of Zoning Appeals and obtained a ruling that the permit was invalid. The Circuit Court denied the motion to intervene and ultimately ruled that the developer could not be enjoined from completing the duplex because he had performed substantial work on it in good faith reliance on his building permit. The only issue on appeal is whether the trial court abused its discretion in denying the homeowner's petition to intervene. We affirm the trial court.

Opinion may be found at the TBA website:
http://www.tba2.org/tba_files/TCA/2008/tatumd_111008.pdf

"The court found that the developer had acted in good faith in reliance on the advice and approval of government employees and that the employees had themselves acted in good faith and made decisions that were consistent with their prior interpretations of the setoff ordinance. The court further found that the developer had engaged in substantial construction and had expended substantial funds before he learned of a challenge to the setback." Id.

"But Mr. Smith went on to insist that as an adjoining property holder, he had a particularized interest in preventing the developer from going ahead with the duplex, which differed from Metro’s generalized interest in seeing that its codes be enforced. Regardless of their separate motivations, the interests of Mr. Smith and the interests of Metro converged once the Board of Zoning Appeals ruled that the setback had been improperly determined. That interest was to enforce the setback as interpreted by the BZA. Mr. Smith has conceded that Metro was vigorous in pursuing the result that he desired. He also testified extensively at trial and, therefore, cannot complain that his concerns were not heard. We accordingly agree with the trial court that Mr. Smith was not entitled to intervene as of right under 24.01(1)." Id.

Tennessee consumer protection act regulates modular home builder's representations concerning quality; builder's representations unfair and deceptive

MIKE MILLS, and wife, MARY ANN MILLS v. RICHARD PARTIN, and wife, PEGGY PARTIN, ET AL. (Tenn. Ct. App. November, 4, 2008).

This appeal involves a dispute about the poor construction of a modular home. The purchasers brought a lawsuit alleging, among other things, that the manufacturer violated the Tennessee Consumer Protection Act. After a bench trial, the trial court found that certain representations made by the manufacturer were "unfair and deceptive" under the Act. Because the trial court found that these violations were made knowingly and willfully, it awarded the purchasers treble damages. The manufacturer appeals. We find that the trial court did not err in determining that the manufacturer's representations were unfair and deceptive. We also find that the trial court did not err in assessing treble damages. Therefore, we affirm the judgment of the trial court.

Opinion can be found at the TBA website:
http://www.tba2.org/tba_files/TCA/2008/millsm_100508.pdf

The matter before us more closely resembles Skinner v. Steele, 730 S.W.2d 335 (Tenn. Ct. App. 1987). In Skinner, the court considered whether certain transactions were “specifically authorized” by the insurance code, Tenn Code Ann. §§ 56-8-101 et seq., and thus exempt from the TCPA. Skinner, 730 S.W.2d at 337. The court found no exemption and held that: [the TCPA exemption section] is intended to avoid conflict between laws, not to exclude from the Act's coverage every activity that is authorized or regulated by another statute or agency. Virtually every activity is regulated to some degree. The defendants' interpretation of the exemption would deprive consumers of a meaningful remedy in many situations. Id. (internal citations omitted). Similarly, in this case, we do not find that the TCPA is preempted simply because the construction of modular homes is otherwise regulated.
Id.

Expert witnesses precluded from testifying for failure to fully comply with T.R.C.P. 26; Trial court has wide discretion in allowing expert architect

BILLY WALLS DBA B.S. WALLS CONSTRUCTION v. JEFFREY S. CONNER, ET AL.
(Tenn. Ct. App. October 28, 2008).

This litigation arises out of the renovation of and addition to a 100-year old house. While suit was pending, the plaintiff, Billy S. Walls dba B.S. Walls Construction ("Contractor") failed to respond to interrogatories with respect to requested information regarding experts. He likewise did not respond to a motion to compel responses to the interrogatories and an order of the court compelling responses. As a consequence of Contractor's inaction, the trial court refused to allow his two expert witnesses to testify. At trial, Contractor objected to the testimony of an expert tendered by the defendants, Jeffrey S. Conner and Tresia Conner ("Homeowners"). The trial court overruled the objection. Contractor argues in this court that the trial court abused its discretion when it refused to allow his experts to testify and when it held that Homeowners' expert was qualified to testify. We affirm.

Opinion may be found at the TBA website:
http://www.tba2.org/tba_files/TCA/2008/wallsb_102808.pdf

"The interrogatory answer supplied stated the names of two expert witnesses that Contractor intended to call at trial, but did not supply the other information required under Rule 26 and requested in the interrogatory concerning experts." Id.

'The sanction in this case is admittedly harsh. But “harsh sanctions have been used with some frequency to address a party’s failure to comply with discovery orders.” We hold that the trial court’s decision to preclude Contractor’s experts from testifying does not amount to an abuse of discretion.' Id. (Citations omitted).

"The witness was then tendered for voir dire. On appeal, Contractor points to several facts brought out during voir dire, which he contends shows that the trial court erred in admitting the witness’ expert testimony: (1) that Homeowners' expert had no experience renovating 100-year old structures; (2) the expert had not performed a renovation of an existing residential structure for nine years; (3) the expert’s experience was in building new structures; and (4) the expert testified that he calls his friends about pricing in the field of renovating homes. As the trial court noted, the facts brought out on voir dire of the witness go to the weight and credibility to be given to the witness’s testimony. We give the trial court’s determinations in that regard great deference on appeal. We find that the trial court did not abuse its discretion in determining that the witness was qualified to testify and admitting his testimony." Id.

Court finds that home seller should have disclosed failure to obtain proper permits and make repairs in compliance with building codes

KEVIN ORNDORFF ET AL. v. EDWARD RON CALAHAN ET AL. (Tenn. Ct. App. October 10, 2008).

The buyers of a home in Nashville sued the sellers for misrepresentation, fraud, and breach of contract. The proof showed the sellers did not acquire the proper permits and inspections required by the applicable building codes and that work on the plumbing, the electrical system, and the heating and air conditioning system was not performed in accordance with the codes. The sellers did not disclose the lack of permits and improper work on the statutorily required disclosure form. The chancellor found for the buyers. The sellers appealed. We affirm.

Opinion may be found at the TBA website:
http://www.tba2.org/tba_files/TCA/2008/orndorffk_101008.pdf

“[T]he defendants, the Calahans, misrepresented material facts when they recklessly and knowingly stated that they were not aware that the room additions, structural modifications, or other alterations or repairs were made without necessary permits. In fact, the Calahans knew that proper building permits had not been issued....”

“[T]he defendants, the Calahans, misrepresented material facts when they recklessly and knowingly stated they were not aware there were - - that room additions and modifications or other alterations and repairs were made not in compliance with building codes,” and that they “breached the contract for sale when they warranted that the sewer and plumbing systems were in good working order.” Id.

Installation and maintenance of drainage tile equitably estopps adjoining property owners from challenging right to maintain the drainage tile

CHRIS D. THORNTON, ET AL. v. LESLIE HIGDON, JR., ET AL. (Tenn. Ct. App. October 24, 2008).

The plaintiffs filed this action to quiet title to a twelve-foot strip of property claimed by adjoining property owners, the defendants. The defendants disputed the plaintiffs' claim and pointed to a seventy-foot drainage tile they had constructed and maintained as evidence of their ownership of the disputed strip of land. The trial court found that the boundary line should be set in accordance with the plaintiffs' survey; however, the trial court also found that the plaintiffs were equitably estopped to challenge the defendants' right to maintain the drainage tile. Both parties appeal. We affirm the trial court in all respects.

Opinion may be found at the TBA website:
http://www.tba2.org/tba_files/TCA/2008/thorntonc_102408.pdf

"The trial court found that the drainage system was installed with “the knowledge and understanding of the other parties in question, both Willie and Jerry Higdon, who preceded the
Thorntons in their chain of title.” The evidence does not preponderate against the trial court’s findings. We, therefore, affirm the trial court’s ruling that the Higdons have the right to access the drainage system and the right to maintain it in its present location, but they may not expand the drainage system or take any action that would constitute a nuisance." Id.

Trusses are not limited common elements but rather common elements and therefore are the responsibility of the Homeowners Association to repair

MICHAEL LLOYD MEIER, ET AL. v. HUNTINGTON RIDGE TOWNHOUSE HOMEOWNERS ASSOCIATION, INC. (Tenn. Ct. App. October 23, 2008).

Homeowners association appeals the grant of summary judgment in favor of owners who sued for a declaration that the Association was responsible for the cost of repair of defective floor trusses. The trial court found that found that the defective floor trusses were considered "common elements" under the covenants of the Association. We affirm the decision of the trial court.

Opinion may be found at the TBA website:
http://www.tba2.org/tba_files/TCA/2008/meierm_102408.pdf

"We do not find language in the Declaration of Covenants sufficient to hold that floor trusses should fall within the definition of “limited common elements,” particularly as that definition
incorporates those elements included within the definition of “common elements.” Being a part of the foundation and bearing wall systems, the trusses do not “serv[e] exclusively a single Unit or one or more adjoining units, the benefit or use of which is reserved to the lawful occupants of the Unit or Units”; rather they serve the entire building containing the units. In addition, the
characterization of the trusses as “appurtenances” to each unit is contrary to their function as part of the foundation, which is clearly a “common element.” The specific structural defects at issueaffect the entire structure." Id.

County given broad discretion to levy and collect taxes on new home construction

HOME BUILDERS ASSOCIATION OF MIDDLE TENNESSEE v. WILLIAMSON COUNTY, ET AL. (Tenn.Ct.App. October 10, 2008).

Appellants, a group of homebuilders, appeal the trial court's grant of summary judgment in favor of Appellee Williamson County. Homebuilders filed a complaint for declaratory judgment against Williamson County, seeking interpretation of Chapter 118 of the Private Acts of 1987 as amended. Under the alleged authority granted by the Act, Williamson County levied additional adequate facilities taxes on homebuilders based upon its audit of actual square footage built. Builders contend that Williamson County exceeded its authority under the Act by calculating taxes at the time of the issuance of the certificate of occupancy as opposed to the time the building permit was issued. Finding that the Legislature intended to give the County broad authority to levy its tax at the time of the issuance of the building permit or at the time of the issuance of the certificate of occupancy, we affirm.

Opinion may be found at the TBA website: http://www.tba2.org/tba_files/TCA/2008/homebuilders_101008.pdf

"The overarching goal of the tax is also clearly stated in Section 3 of the Act. The purpose of the tax is “to ensure and require that the persons responsible for new development share in the burdens of growth by paying their fair share for the cost of new and expanded public facilities...” (emphasis added). In order to facilitate the goal of the Act, the tax should necessarily be based upon the actual square footage of the improvement." Id.

"From this language, it is clear that the Legislature did not intend to limit the County’s ability to collect this tax. Rather, in order to ensure that the tax is levied upon the full square footage,
Williamson County is given broad discretion to calculate the tax at a time suitable to ascertaining the actual square footage." Id.

Court review of zoning ordinance limited to whether decision has a rational or justifiable basis; Compliance with land use plan not legally required

DENNIS B. GANN, ET AL. v. THE CITY OF CHATTANOOGA, ET AL (Tenn.Ct.App. September 30, 2008).

The plaintiffs, Chattanooga residents whose homes are adjacent to a tract of land that was rezoned to make way for the construction of a grocery store, sought a declaratory judgment that the zoning amendment was illegal. The City of Chattanooga, the Chattanooga City Council, and the developer, Wilwat Properties, Inc., were named as defendants. Plaintiffs argue that the rezoning did not comply with the Hixson-North River Land Use Plan; that the City Council's approval of the application is arbitrarily inconsistent with the council's prior denial of a similar application; and that the council impermissibly relied upon the recommendation of the Hixson North River Leadership Committee - a recommendation that was made at an informal meeting of which the plaintiffs claim to have had no notice. The trial court dismissed the case at the close of the plaintiffs' proof, finding that the plaintiffs had failed to prove that the zoning decision lacked a rational basis or was arbitrary, capricious or unconstitutional. Plaintiffs appeal. We affirm.

Opinion may be found at the TBA website: http://www.tba2.org/tba_files/TCA/2008/gannd_093008.pdf

"When a municipal governing body acts under its delegated police powers either to adopt or amend a zoning ordinance, it acts in a legislative capacity and the scope of judicial review of such action is quite restricted. [] In fact, legislative classification in a zoning law, ordinance or resolution is valid if any possible reason can be conceived to justify it.” [] Put another way, in cases where the validity of a zoning ordinance is fairly debatable, the court cannot substitute its judgment for that of the legislative authority. If there is a rational or justifiable basis for the enactment and it does not violate any state statute or positive constitutional guaranty, the wisdom of the zoning regulation is a matter exclusively for legislative determination. [] The courts should not interfere with the exercise of the zoning power ... unless the enactment ... is shown to be clearly arbitrary, capricious, or unreasonable, having no substantial relation to the public health, safety, or welfare, or is plainly contrary to the zoning laws. ... The law deliberately makes the plaintiffs’ burden high, out of deference to the legislative power over zoning matters." Id. (citations and quotations omitted).

"[T]he plaintiffs’ extensive elucidation of the action’s non-compliance is ultimately a non-sequitur, because compliance with the Land Use Plan is not legally required. It is a plan, not a law. The City Council is allowed to deviate from it, and did so here." Id.

"The notion that we would invalidate the City Council’s 2006 action because of a perceived inconsistency with the council’s stated rationale for an action on a similar matter, four years prior, totally misconceives our role in cases such as this. ... If we can find any rational basis –
or, stated even more broadly, “any possible reason” – to uphold the council’s decision, we must do so, absent evidence of arbitrary, capricious, or illegal action by the council." Id.

Contingent benefits offered under annexation in a plan of services are not subject to mandamus under Tenn. Code Ann. § 6-51-108.

STATE OF TENNESSEE EX REL CLAUDE CAIN, ET AL. v. CITY OF CHURCH HILL, TENNESSEE (Tenn.Ct.App. September 30, 2008).

The State of Tennessee, proceeding on relation of six individuals and one entity (who, for ease of reference, will collectively be referred to as "the plaintiffs"), sought mandamus in 2002 to force the City of Church Hill ("the City") to extend a sewer line to the individuals' homes. The individuals are residents of a neighborhood in Hawkins County that was annexed by the City in 1988. They claim that the City failed to adhere to the plan of services adopted as part of the annexation process, and that the plaintiffs are therefore entitled to mandamus under Tenn. Code Ann. section 6-51-108 (2005). The plan of services adopted in 1988 states that "[a] sanitary sewer system will be provided as soon as economically feasible." The trial court granted the plaintiffs summary judgment, finding that the long delay in installing a sewer system, which continued at the time of trial, was unreasonable, and that there were no disputed issues of material fact preventing the court from granting mandamus under section 6-51-108. However, the court ordered a trial on the issue of how quickly the City could reasonably install the sewer line. At the conclusion of this limited-purpose trial, the court ordered the City to extend sewer service to the plaintiffs within 16 months. The City appeals. We vacate the trial court's grant of summary judgment and remand for further proceedings.

Opinion may be found at the TBA website: http://www.tba2.org/tba_files/TCA/2008/cainc_093008.pdf

"The City’s first issue on appeal is whether the trial court erred by applying Tenn. Code Ann. § 6-51-108 retroactively. The City argues that the general presumption against applying laws retroactively ... However, as the plaintiffs correctly point out, this presumption is reversed for statutes which are remedial or procedural in nature. Such statutes apply retrospectively ... unless the legislature indicates a contrary intention or immediate application would produce an unjust result. ... Accordingly, we conclude that the statute is applicable to this case." Id. (citations and quotations omitted).

"The trial court declared this provision “vague,” and on that basis, essentially replaced the phrase “as soon as economically feasible” with the phrase “within a reasonable time.” The court then concluded that an 18-year delay is “unreasonable.” In essence, the court held that the City materially and substantially failed to comply with a requirement that sewer service be provided within a reasonable time after annexation. But no such requirement ever existed, because that is not what the plan of services says." Id. (italics in original).

"[T]he sewer provision is the only portion of the plan of services that is wholly indefinite, hinging upon a contingency – economic feasibility – that may or may not occur. We must assume that the plan’s drafters intended the plain meaning of their words. We therefore conclude that this unique aspect of the sewer provision was not a coincidence, but rather reflected an intentional decision to refrain from promising sewer service with the same sort of unconditional language that was used for other matters elsewhere in the plan. Accordingly, the court erred when it interpreted this provision as an unconditional promise to provide server services within a “reasonable time.”" Id.

Easement by necessity for landlocked property terminates when other means of ingress and egress become available

VICKIE ROBNETT v. EDWARD H. TENISON, JR. (Tenn.Ct.App. September 24, 2008).

The issue is whether a court-ordered easement by necessity for ingress and egress to landlocked property may be terminated on the ground it is no longer necessary because the landlocked owner has an express easement through which that owner has reasonable, although not as desirable, ingress and egress. The trial court denied the petition to terminate the easement by necessity upon a finding it would place an undue burden on the landlocked property owner to have it terminated. We have determined the trial court applied an incorrect legal standard, that of undue burden, to deny the petition to terminate the easement at issue. Easements by necessity are dependent on the necessity that created them; therefore, a way of necessity continues only as long as a necessity for its use continues. The fact that the way of necessity would be the most convenient does not prevent its extinguishment when it ceases to be absolutely necessary. Accordingly, we reverse the decision of the trial court

Opinion may be found at the TBA website: http://www.tba2.org/tba_files/TCA/2008/robnettv_092408.pdf

"[A]n easement by necessity may continue only as long, as a necessity for its use continues [] The fact the way of necessity continues to be the most convenient is not sufficient to prevent its extinguishment if it ceases to be absolutely necessary. [] The easement was created for the purpose of affording Ms. Robnett ingress and egress from a public road. Due to recent improvements to the easement that leads to Highway 412, the easement through Mr. Tenison’s property is no longer absolutely necessary. Because the purpose for which the easement through Mr. Tenison’s property was created no longer exists, there is an end to the easement by necessity through Mr. Tenison’s property." Id. (citations and quotations omitted).

"Substantial completion" under the construction statute of repose occurs when a residential structure can be used for its intended purpose

DEBORAH JENKINS as Personal Representative of THE ESTATE OF MALCOM WILLIAMS et al v. SOUTHLAND CAPITAL CORPORATION et al (Tenn.Ct.App. September 23, 2008).

This is a consolidated wrongful death and personal injury case. In May 2002, three young boys walking beside the road were struck by a drunken driver in a residential subdivision. Two were killed, the third severely injured. The plaintiffs sued the developers of the subdivision, arguing that the absence of sidewalks in the area where the boys were walking was a cause of the accident. The trial court granted summary judgment in favor of the developers on grounds that the plaintiffs' lawsuit was time-barred under the four-year statute of repose for improvements to real property, T.C.A. section 28-3-202. We agree with the trial court that the improvements to the real property on which the accident occurred were substantially completed more than four years prior to the filing of the lawsuits under the statutory definition at T.C.A. section 28-3-201(2), and therefore affirm.

Opinion may be found at TBA website: http://www.tba2.org/tba_files/TCA/2008/jenkinsd_092308.pdf

"[T]he absence of sidewalks on the two lots – is too circumscribed an interpretation of the statute. Concomitantly, defining the “real property” at issue to mean the entire subdivision is overly broad. Both interpretations defeat the essential purpose of Section 28-3-202, that is, to limit claims to those arising within four years after substantial completion of the improvements to the real property at issue." Id.

"[S]ubstantial completion would occur under the facts of this case when the lot at issue, including but not limited to the house, can be used for its intended purpose as a residence. ... [T]his may or may not coincide with the approval of a governmental entity ... ; passing such a final inspection is indicative of substantial completion but not necessarily determinative. Under the facts of this case, however, it is undisputed that the homes were transferred to individual homeowners the same year, 1995, and had been occupied as residences thereafter. The Plaintiffs put forth no evidence, save the absence of sidewalks, indicating that the lots had not been used for their intended purpose, as residences, since the transfer to individual homeowners. Here, the defect focused on by the Plaintiffs is the absence of sidewalks on these lots. However important that defect may be in the context of the Plaintiffs’ claims, it is not a defect that would prevent the lots from being used for their intended purpose, as residences." Id.

Owner who failed to notify State that land purchased for road construction was subject to a lease interest must indemnify State against suit by lessee

STATE OF TENNESSEE, ET AL. v. GOOD TIMES, LTD., ET AL. (Tenn.Ct.App. September 23, 2008).

The State of Tennessee ("State") sued Good Times, Ltd. ("Good Times") and others with regard to real property deeded to the State by Good Times after the State was sued for inverse condemnation by Good Times' lessee, Pun Wun Chan d/b/a #1 China Buffet ("China Buffet"). The State claimed that it was entitled to indemnity from Good Times in the inverse condemnation action under its warranty deed. The Trial Court consolidated the State's case against Good Times with the inverse condemnation action and then bifurcated the trial. The inverse condemnation case was tried before a jury and China Buffet was awarded a judgment against the State. The Trial Court then granted summary judgment to Good Times in the State's case against Good Times and dismissed the State's case. The State appeals to this Court. We vacate the grant of summary judgment to Good Times, grant the State summary judgment against Good Times, and remand this case to the Trial Court for a determination of the amount of damages, and for further proceedings as necessary with regard to all other parties and claims.

Opinion may be found at the TBA website: http://www.tba2.org/tba_files/TCA/2008/goodtimes_092308.pdf

"China Buffet had a leasehold interest in the entire property including the portion deeded to the State. China Buffet claimed, and was awarded, incidental damages to its interest in the entire property because the fair market value of the property has been affected by a significant and permanent loss of parking space, which has resulted in the loss of access to and utility of the restaurant." Id. (quotations omitted)

"Plus, the Agreement of Sale executed by Cazana on behalf of Good Times provided a space for Good Times to disclose the names of lessees or any other party who had any interest in the property being conveyed and that space was left blank. Cazana could have filled in this blank and taken this opportunity to inform the State that China Buffet had not been compensated by Good Times for its interest in the Property. He did not." Id.

Court finds against landowner who argued different easement theories for access to a secluded portion of property

TERESA WALKER NEWMAN v. WAYNE WOODARD, ET AL. (Tenn.Ct.App. September 17, 2008).

This case concerns the access rights of a landowner to a section of her property divided from the rest of her land by a steep bluff. The trial court held that the landowner did not have an implied easement through her neighbor's land to access her property at the bottom of the bluff because the there was insufficient evidence that the right-of-way preexisted severance of the properties. The trial court determined that Mrs. Newman did not have an implied easement by necessity because there was insufficient evidence that Mrs. Newman would be unable build a road down the bluff for a reasonable cost. Because the evidence does not preponderate otherwise, we affirm that Mrs. Newman does not have an implied easement or an implied easement by necessity over the right-of- way. The trial court also held that Mrs. Newman lacked a prescriptive easement over the right-or- way because she failed to prove that her use was exclusive; we affirm on the basis that Mrs. Newman failed to demonstrate that her use of the right-of-way was continuous.

Opinion may be found at the TBA website: http://www.tba2.org/tba_files/TCA/2008/newmant_091708.pdf

"Implied Easement. ... The party seeking to establish an easement by implication has the burden of proving the following three elements by a preponderance of the evidence: (1) A separation of title; (2) Necessity that before the separation takes place, the use which gives rise to the easement shall have been so long continued and obvious or manifest as to show that it was meant to be permanent; and (3) Necessity that the easement be essential to the beneficial enjoyment of the land granted or retained." Id.

"the trial court also found that Mrs. Newman failed to present evidence that there was a preexisting route between the two properties at the time of separation. At trial, Mrs. Newman presented the minutes of the Lauderdale County Court dated July 26, 1910, as evidence that both the Woodards’ and Mrs. Newman’s property were once part of the greater “Marley tract” divided in 1910. Although Mrs. Newman presented witnesses that testified that the field road existed for decades before trial, none of the witnesses could testify to the use of the field road before the previous owners severed the property in 1910. The trial court noted evidence that there was no preexisting route in the 1910 County Court Minutes Book and that a surveyor’s map indicated that Lot 7 and Lot 8 of the Marley tract, which comprised the modern-day Newman and Woodard properties, were not cleared at the time of separation." Id.

"Easement by Necessity. ... [A]n implied easement by necessity allows for the establishment of a right-of-way where one previously did not exist. [] An easement by necessity is a type of implied easement based upon the premise that wherever one conveys property he also conveys whatever is necessary for its beneficial use and enjoyment, including access to one’s property. [] The party claiming the right-of-way bears the burden of proving the following: (1) the titles to the two tracts in question must have been held by one person; (2) the unity of title must have been severed by a conveyance of one of the tracts; (3) the easement must be necessary in order for the owner of the dominant tenement to use his land with the necessity existing both at the time of the severance of title and the time of exercise of the easement." Id. (citations omitted).

"Where the party claiming the right can, at reasonable cost, create a substitute on his own estate the easement is not necessary. ... The bulldozer operator ... asserted at trial that for six hundred to a thousand dollars he could improve the overgrown field road so that Mrs. Newman could drive farm equipment down the bluff. Although Mrs. Newman questioned the feasibility and durability of the road Mr. Blankenship claimed he could create, she failed to present evidence at trial contradicting Mr. Blankenship’s testimony that he could create a road at a reasonable expense. ... Mrs. Newman, therefore, failed to prove that the cost of creating a road down the bluff was unreasonable," Id.

"Easement By Prescription. ... In order to demonstrate a prescriptive easement, a claimant must prove that the use and enjoyment of land which gives rise to a prescriptive easement must be adverse, under claim of right, continuous, uninterrupted, open, visible, exclusive, with knowledge and acquiescence of the owner of the servient tenement, and must continue for the full twenty year prescriptive period." Id.

"Mrs. Newman simply failed to demonstrate by clear and convincing evidence that she or her predecessors in title continuously used the field road. The record is not clear how often Mrs. Newman, her family, or her tenants used the field road to access the fifteen acres. ... At most, the evidence indicated that Mrs. Newman’s predecessors intermittently used the road during the years that they may have farmed the fifteen acres of their land. This is insufficient evidence to prove continuous use of the field road by clear and convincing evidence." Id.

Contractual provision requiring approval from an architectural review committee prior to construction of a new home requires a good faith effort

JAMES B. JOHNSON , ET AL v. CHARLIE B. MITCHELL, JR., ET AL. (Tenn.Ct.App. September 17, 2008).

Plaintiffs appeal the Chancery Court's grant of summary judgment in this breach of contract action. Finding no error, we affirm the Chancery Court's judgment.

Opinion may be found at the TBA website: http://www.tba2.org/tba_files/TCA/2008/johnsonj_091708.pdf

"Plaintiffs ... entered into a contract with defendant ... for the purchase of an unimproved lot ... on November 11, 2004. The contract price was $150,000.00, to be paid upon approval of the Johnsons’ building plans and their securing a construction loan; they tendered $1,000.00 as an earnest money deposit. The Johnsons were given a copy of design criteria for the subdivision, including architectural guidelines and design review procedures, when they signed the contract; they were also given a copy of the Declaration of Protective Covenants, Conditions and Restrictions for Phase II of Magnolia Vale. The design criteria required the Johnsons to receive approval of their plans from the architectural review committee prior to commencing construction." Id.

"The Johnsons filed suit against CBM and Charlie B. Mitchell, Jr., (“Mitchell”) for breach of contract, asserting that CBM’s action in voiding the contract constituted a breach of the contract
and requesting specific performance." Id.

"[T]he Johnsons were obligated to submit plans to the architectural review committee for approval, with such approval being a precondition of closing on the sale. Approval of the plans was in the sole discretion of the committee and that approval was never obtained. The affidavit of Mr. Lowry established that, as early as August 3, 2005, Mr. Johnson had indicated dissatisfaction with the decisions of the committee rejecting the two sets of plans submitted as of that date and had stated his unwillingness to cooperate further with CBM, thereby supporting CBM’s contention that the Johnsons did not deal in good faith. Inasmuch as a party who has materially breached a contract cannot recover on it [], a finding that the Johnsons breached the contract would negate an essential element of their claim and entitle CBM to judgment as a matter of law. ... The actions and inactions of the Johnsons support a finding that they breached the contract with CBM by repudiating it and in failing and refusing to perform their responsibilities." Id. (citations omitted).

Court takes the plain meaning of a homeowner's association declaration to find that developer's obligation to pay fees had not commenced

CORDOVA THE TOWN HOMEOWNERS ASSOCIATION, INC. v. GILL DEVELOPMENT COMPANY, INC. (Tenn.Ct.App. Feb. 21, 2008).

This appeal involves the interpretation of a declaration of covenants for a homeowners’ association. The declaration made the developer a member of the homeowners’ association, insofar as the developer owned lots within the development. It also stated that the obligation to pay assessments on a given lot did not begin until either the lot was transferred from the developer or improvements on the lot were completed, whichever occurred first. The homeowners’ association sued the developer, seeking damages for unpaid assessments on lots owned by the developer, on which improvements were not complete. The trial court granted the motion for summary judgment filed by the homeowners’ association. The developer appeals. We reverse, concluding that the declaration of covenants provides that the obligation to pay assessments on the lots owned by the developer had not yet commenced.

Opinion may be found at the TBA website: http://www.tba2.org/tba_files/TCA/2008/cordovat_091208.pdf

"Resolution of this dispute requires interpretation of the terms of the Declaration. At the outset, we note that our construction of the Declaration must proceed as would construction of any other written agreement. [] Accordingly, our first concern is the contracting parties’ mutual intent. [] If we find the Declaration to be unambiguous as it is written, the intention of the parties will be determined by the Declaration’s plain meaning. [] If a material part of the Declaration appears to be ambiguous, we look to extrinsic evidence. The ambiguity may be resolved against the party who drafted the Declaration." Id. (citations omitted).

"It is undisputed that the lots for which the assessments are sought are owned by Gill Development or were owned by Gill Development at one time. It is also undisputed that the improvements on those lots were incomplete at the time when the assessments were allegedly due. Accordingly, Gill Development’s obligation to pay assessments had not yet commenced." Id.

Allegedy inflated appraisal made prior to construction of new home cannot support a fraudulent misrepresentation claim; Court endorses "cost approach"

JOSEPH AND KIMBERLI DAVIS v. PATRICK J. MCGUIGAN, ET AL. (Tenn.Ct.App. September 11, 2008).

Homeowners filed suit against Appraiser for intentional and negligent misrepresentation and violation of the Tennessee Consumer Protection Act. Appraiser moved for summary judgment on all claims. The trial court denied Appraiser's motion on the negligent misrepresentation claim, but dismissed the intentional misrepresentation claim and the Tennessee Consumer Act claim. During the course of the proceedings, the trial court also excluded certain witnesses who were tendered as experts. Both parties appeal. We affirm the trial court's grant of summary judgment on both claims, and decline to address the remaining issues for lack of justiciability.

Opinion may be found at the TBA website: http://www.tba2.org/tba_files/TCA/2008/davisj_091108.pdf

"The Appraiser contends that the appraisal is an estimation or opinion, and is not a representation of an existing or past fact. Therefore, the Appraiser argues, an essential element of the Homeowners’ claim for intentional misrepresentation is conclusively negated and summary judgment was proper on this claim. Homeowners argue that the appraisal value was not the opinion of the Appraiser, but rather an opinion he gave which the Appraiser did not have or knew to be false. Although Homeowners’ argument applies to the fourth element for fraudulent misrepresentation, their contention does not change the requirement of the first element - that the defendant make a representation of an existing or past fact. In Tennessee, appraisals are not considered facts, but rather estimates or opinions." Id.

"Further, we note that when the Appraiser conducted the Appraisal, he was appraising a home that had not yet been constructed. The Appraiser used the “cost approach” analysis, and referred to, among other resources, the specifications and building plans provided by the Homeowners. At that point, the Appraiser only had plans for the future Home on which to base his appraisal; he could not verify that the materials planned for in the Home were actually used in the construction or examine the workmanship of the construction. In Tennessee, conjecture or representations concerning future events are not actionable even though they may later prove to be false." Id. (citations omitted).

Counties are not required to obtain utility easements to undertake repair of existing sewer lines

Authority of Governmental Entity to Replace/Repair Sewer Lines on Private Property (TN Attorney General Opinion No. 08-143, September 8, 2008).

Opinion may be found at the TBA website: http://www.tba2.org/tba_files/AG/2008/ag_08_143.pdf

"The provisions of Tenn. Code Ann. § 7-35-401(c)(1)(D), therefore, effectively eliminate the need for a utility easement when the objective is to reduce sanitary sewer overflows, as long as the private property owner provides consent and agrees to hold the municipality harmless for the work. Once the rehabilitative construction is completed, each affected private property owner would be responsible in the future for maintaining that portion of the sanitary sewer connection that is located on the property of the owner. Tenn. Code Ann. § 7-35-201(2) and § 68-221-209(a)(2)." Id.

Easement reserved on a recorded plat is "express" and does not terminate with the reason for prescription

ERVIN D. SMITH, ET AL. v. PAUL EVANS, ET AL. (Tenn.Ct.App. August, 28, 2008).

Owners of property brought suit to terminate an ingress/egress easement across their land, contending that the necessity for the easement no longer existed. Following a trial, the Chancery Court ruled against the owners, finding that since the easement was reserved in a recorded plat, it was not an easement by necessity; consequently, the easement was not destroyed upon the sale of the dominant estate. On appeal, the owners maintain that the easement was destroyed at the end of the necessity. Finding the easement to be express, we affirm the decision of the Chancery Court. Finding the appeal not to be frivolous, no attorney's fees are awarded.

Opinion may be found at TBA website: http://www.tba2.org/tba_files/TCA/2008/smithve_082808.pdf

"Mr. Cook retained ownership of a 14.2 acre tract of land immediately behind the lots which fronted on the west side of Sawmill Road (the “Cook Property”). To ensure access to the Cook Property, he reserved a 20 foot ingress/egress easement over lot 5 of the subdivision; this easement was included in the recorded plat and allows access to Sawmill Road." Id.

"An easement by reservation is “in behalf of the grantor [of] a new right issuing out of the thing granted, and an easement appurtenant to the grantor’s remaining land may be created by reservation.” [] Even though an easement by reservation is a separate type of easement, it can still be sub-categorized as being either express or implied. ... An express easement by reservation “arises when a property owner conveys part of his or her property to another, but includes language in the conveyance reserving the right to use some part of the transferred land as a right-of-way.” [] Any reservation of an easement “is equivalent, for the purpose of creation of the easement, to an express grant of the easement by the grantee of the lands.” Id." Id. (citations omitted).

"An easement by express grant can be extinguished: by an act of the dominant owner, either by release or abandonment, by act of the servient owner by prescription or conveyance to a bona fide purchaser without notice, by the conduct of both parties, such as by merger or estoppel, or by eminent domain, mortgage, foreclosure, or tax sale. [] An easement “created by reference to a filed map can be extinguished only by the united action of all lot owners for whose benefit the easement is created...” [] No such measures were taken in this case; indeed, the deed conveying the Cook Property to the Evanses includes the following language ... . The easement was not terminated when the Evanses bought the Cook Property." Id. (citations omitted).

Court endorses zoning boards reading of its zoning ordinances

MOORE & ASSOCIATES, INC. v. METROPOLITAN BOARD OF ZONING APPEALS (Tenn.Ct.App. August 25, 2008).

Zoning administrator denied a waiver of the Metropolitan Zoning Code's landscape buffer requirement and the Board of Zoning Appeals upheld the administrator's interpretation of the ordinance. Plaintiff contractor appealed to the circuit court, which determined that the zoning administrator's interpretation of the ordinance was incorrect and granted the waiver. The Board of Zoning Appeals appealed. The trial court's interpretation of the ordinance is affirmed, but the decision to grant the waiver is vacated, and the case is remanded to the trial court with instructions to return the matter to the board for further action.

Opinion may be found at TBA website: http://www.tba2.org/tba_files/TCA/2008/moore_assoc_082508.pdf

"During construction, a mud seam was discovered which, Moore and Associates claim, made the planned vertical wall “unsafe and impractical.” With the apparent approval of the building inspector and without seeking any approval from the zoning authorities to amend the original plans, Moore and Associates constructed a wall that begins by sloping slightly toward the adjacent property. About halfway to its height of approximately 39 feet, the wall turns and makes a gentler slope to the top, ending near the property line. In September 2001, Moore and Associates requested a waiver of the landscape buffer requirement. The zoning administrator, Mr. West, denied the request." Id.

"The trial court granted the waiver because of the Board of Zoning Appeal’s error in approving Mr. West’s interpretation. Doing so was a natural reaction in which the court sought to end litigation that had gone on far too long. We, however, must disagree with the trial court’s action. Under § 17.24.240G, a waiver is not automatic even if there is a demonstration of unusual site-grade conditions which would clearly negate the effects of the required yard. ... Therefore, we vacate the trial court’s issuance of the waiver and remand the case to the trial court with instructions to return the case to the Board of Zoning Appeals for further action consistent with this opinion." Id.

Court denies waiver and awards attorneys fees to contractor after appeal establishes contractual right to recover

HOMEBUILDERS McGEE & STORY, LLC v. HENRY BUCKNER (Tenn.Ct.App. August 22, 2008).

This is the second appeal of a contract dispute between a homeowner and the contractor he engaged to make improvements to his home. The homeowner contends that the trial court erred by awarding the contractor attorney's fees on remand following the first appeal because the contractor waived its claim of attorney's fees, the contractor is judicially estopped to claim attorney's fees, and the trial court lacked jurisdiction to award attorney's fees following remand. We have determined the contractor had not waived its claim and it was not judicially estopped to assert a claim for attorney's fees. We have also determined that the trial court had jurisdiction to award attorney's fees pursuant to the contract following remand of the first appeal.

Opinion may be found at TBA website: http://www.tba2.org/tba_files/TCA/2008/bucknerh_082208.pdf

"Litigation between the parties arose after Mr. Buckner unilaterally terminated the services of Homebuilders when the project was only 30% complete. ... When Mr. Buckner refused to pay any portion of the final bill, Homebuilders filed a Complaint against Mr. Buckner for breach of contract in the circuit court. ... Mr. Buckner filed a Complaint in chancery court against Homebuilders and its principals for fraud, breach of contract, violations of the Tennessee Consumer Protection Act, negligent misrepresentation, negligence, and breach of fiduciary duty. The two cases were soon consolidated into the circuit court action. ... [T]he trial court dismissed the parties’ respective breach of contract claims on a finding the Construction Management Agreement was not enforceable because the parties did not have a meeting of the minds. The trial court also dismissed all other claims of each party, including Mr. Buckner's claims for fraud, violations of the Tennessee Consumer Protection Act, negligent misrepresentation, negligence, and breach of fiduciary duty. Within a week of the foregoing judgment being entered by the trial court, Homebuilders filed a motion seeking to recover its attorney’s fees. Prior to that motion being heard, Mr. Buckner filed his notice of appeal. Immediately thereafter, the trial court entered an order stating that the motion for attorney’s fees would be taken under advisement pending the appeal. Thus, Homebuilders’ motion for attorney’s fees remained unresolved while Mr. Buckner pursued his first appeal." Id.

"We determined in the first appeal that the Agreement constituted an enforceable contract because it sufficiently identified the scope of the work and the price of the work, which was an agreed budget of $175,000 with a management fee of “Cost Plus 17%.” [] We also found that Homebuilders was entitled to damages resulting from Mr. Buckner’s breach of the contract in the amount of $25,328." Id. (citations omitted).

"Homebuilders had filed a motion to recover its attorney’s fees prior to the first appeal ... based on the fact that Homebuilders had been the prevailing party on Mr. Buckner’s claims based on the Tennessee Consumer Protection Act. Homebuilders had not filed a motion for attorney’s fees pursuant to the contract because the court found there was no enforceable contract between the parties. Thus, at that time, there was no contractual basis upon which Homebuilders could recover its attorney’s fees. It was not until this court had respectfully disagreed with the trial court’s conclusion on the contract claim that Homebuilders was in a posture to file a motion to recover its attorney’s fees based on contract." Id.

In a dispute over land ownership, payment of taxes is controlling only in the absence of contrary facts and circumstances

BOBBY E. WHITE AND ANN H. WHITE v. PULASKI ELECTRIC SYSTEM (Tenn.Ct.App. August 19, 2008).

Bobby E. White and Ann H. White sought judgment granting them title to a small portion of property that they claim to own by deed, adverse possession and by payment of taxes. The trial court granted Pulaski Electric System, a public electric company, summary judgment. Finding no reversible error, we affirm the judgment of the trial court.

Opinion may be found at the TBA website: http://www.tba2.org/tba_files/TCA/2008/whiteb_081908.pdf

"The Whites contend they should be granted relief based on the presumption of ownership through payment of taxes contained in Tenn. Code Ann. § 28-2-109. In support of this contention, they assert that they and their predecessors have been assessed and paid taxes on Parcel 24.03 since 1985 and that the tax assessor’s maps and records as well as every deed since 1985 describes the property as running 100 feet west from South First Street. They also contend that PES has not paid taxes on the disputed portion of property, and is therefore barred from its claim under Tenn. Code Ann. § 28-2-110."" Id.

"The evidence shows that the Whites and their predecessors paid city and county taxes on the disputed property for over twenty (20) years; however, inasmuch as neither they nor their predecessors had legal title or equitable interest in the disputed 19 foot tract of land, they were not entitled to the presumption of legal ownership granted by the statute. Moreover, the tax map cannot be used to establish the boundary lines of the property." Id. (citations omitted).

"Even if the Whites did meet the statutory requirements to receive the benefit of the presumption that they are the legal owners of the disputed tract, PES rebutted the presumption by showing by clear and convincing proof that any purported title to the disputed tract claimed by the Whites was not valid. The statutory presumption is that the claimant is the prima facie legal owner of the land; as such, it is controlling only in the absence of contrary facts and circumstances. [] Through the recorded deeds and other public records dating as far back as 1929, PES has shown, by a preponderance of evidence, that the property description contained in the Whites’ deed is erroneous." Id. (citations omitted).

"Pursuant to Tenn. Code Ann. § 67-5-203(a)(1),5 the property at issue, being property of the City of Pulaski, is exempt from taxation. Thus, the fact that PES did not pay taxes on the property does not preclude it from defending the title to same." Id.

Municipal planning commission may approve/disprove a plat with a majority vote, if a quorum is present

Vote of Municipal Planning Commission to Approve or Disapprove a Plat

TN Attorney General OpinionsDate: 2008-08-18Opinion Number: 08-135

Opinion may be found at the TBA website: http://www.tba2.org/tba_files/AG/2008/ag_08_135.pdf

"Under Tenn. Code Ann. § 13-4-202, the planning commission may adopt a municipal master plan by a resolution carried by the “affirmative votes of not less than a majority of all the members of the commission.” (Emphasis added). Under Tenn. Code Ann. § 13-4-302, once the planning commission adopts a master plan, a plat of a subdivision of land within the city must be approved by the planning commission before it may be filed or recorded. Where the plat divides a tract into no more than two lots, the approval may be endorsed in writing on the plat by the secretary of the commission or another designee of the commission without the approval of the commission, provided certain conditions are met." Id.

"Tenn. Code Ann. § 13-4-304(a)--(c) ... does not specify the number of board members who must vote to approve or disapprove a plat. A quorum generally consists of a simple majority of a collective body. In the absence of a statutory provision to the contrary, the common law provides that a majority of such a quorum is empowered to act for the body." Id. (citation omitted).

Conflicting surveys are subject to Court's review of the ambiguous and contradictory evidence supporting them

BART LAY ET AL. v. HOWARD HOLMES ET AL. (Tenn.Ct.App. August 13, 2008).
In this boundary dispute, the trial court had to choose between conflicting surveys. After a trial, the court determined that the survey for the defendants was correct due to the failure of the plaintiffs' surveyor to locate a landmark beech tree. We affirm.

Opinion may be found at TBA website: http://www.tba2.org/tba_files/TCA/2008/layb_081308.pdf

"[This case] contains conflicting evidence, the recollections of elderly members of the community, errors in deeds, deeds describing the property boundaries by who borders the property rather than by landmarks, and boundary descriptions using landmarks such as trees which may or may not exist today." Id.

"The court made a factual determination that the beech tree identified ... was the tree mentioned in the deeds. It is the oldest in the hollow, it is clearly old enough to be the one in the deeds, and it is located near a spring. This is a crucial factual determination that is central to the dispute. ...The spring located near the beech tree was identified by Mitchell Adcock as Boles Spring. While others identified a spring to the north as Boles Spring, the presence of the beech tree by this spring lends much credence to the trial court’s decision that this spring is indeed Boles Spring." Id.

"The second point implicit in the trial court’s endorsement of the Denny survey is that the old fence line upon which the Bradley survey relies is not a boundary. Bradley believed it was a boundary because it ran northward as the Lay deed recited, it had no gates, and it ended up around the area where the boundary agreements came together. The error in the deeds undercuts Bradley’s first reason. Testimony indicated that the fence was built by Mr. Baker, the prior owner of the property, to fence in his goats. This makes sense, in light of the fact that while a steep hollow may deter cows from wandering, steep terrain will not deter a goat. To keep the goats from wandering away up or down the hollow, a fence was a necessity. The fact that the fence ended up around the area where the boundary agreements came together is not a determinative factor. The apparent lack of gates is not determinative either. " Id.

Breach of construction contract fails because signature was induced for discussion purposes only

THOMAS BUILDERS, INC. v. SHAILESH PATEL, ET AL. (Tenn.Ct.App. July 31, 2008).
Thomas Builders, Inc. sued Shailesh Patel and his LLC, alleging that Mr. Patel breached a construction contract. The parties had been in negotiations to build a hotel in downtown Knoxville. Thomas Builders' president, Darrell Thomas, claims that he and Mr. Patel agreed to a binding contract; Mr. Patel claims that no contract was ever made. At a bench trial, Mr. Patel testified that Mr. Thomas asked him to sign the purported contract as an "indication that I am really serious to continue discussions." This testimony was not directly rebutted. At the conclusion of the trial, the trial court stated that it believed Mr. Patel's testimony, and held that there was no breach. We affirm.

Opinion may be found at TBA website: http://www.tba2.org/tba_files/TCA/2008/thomasbuilders_073108.pdf

"If, as the court declared in its primary holding, Mr. Thomas induced Mr. Patel’s signature by telling him that the signature would only indicate that Mr. Patel was serious about continuing discussions, then it follows necessarily that Mr. Patel’s signature was not an acceptance of an offer by Thomas Builders. Indeed, on these facts, Mr. Thomas was not even making an offer; asking someone to sign a "proposal” in order to prove his "seriousness" is not the same thing as making a contractual offer to build a hotel. And if Mr. Patel’s signature was not given in response to an offer, it cannot have been an acceptance, nor a counter-offer, nor an acceptance in escrow." Id. (quotations omitted).

"The dispute in this case is not over the terms of the contract, but over whether a contract was formed at all, and we do not believe Mr. Patel’s scribbling of the word “accepted” necessarily speaks for itself in that regard. ... [W]e hold that the evidence does not preponderate against the trial court’s factual finding that Mr. Thomas induced Mr. Patel to sign the proposal “for discussion purposes only.” Based on these facts, we find that no contract was formed. Thomas Builders’ breach of contract claim therefore must fail." Id. (quotations omitted).

No compensation for inverse condemnation resulting from "careful" construction by the government; No nuisance if government's conduct is reasonable

J. HANNAH FRANK v. THE GOVERNMENT OF THE CITY OF MORRISTOWN (Tenn.Ct.App. July 31, 2008).
The city of Morristown appeals a judgment in favor of a commercial leaseholder who brought an inverse condemnation and nuisance action against the city for damages allegedly sustained as a result of dirt, debris, odor, noise, and interference with ingress and egress caused by the city's road and bridge construction project. After careful review, we reverse the judgment of the trial court as to the inverse condemnation claim upon our finding that the damages complained of by the leaseholder were the necessary effects of careful construction and not different from the effects suffered by the leaseholder's neighbors and because damages resulting from inconvenience during construction are not recoverable. We also reverse the trial court's judgment in favor of the leaseholder upon the claim of nuisance because the leaseholder failed to establish that the construction project was conducted in an unreasonable manner.

Opinion may be found at the TBA website: http://www.tba2.org/tba_files/TCA/2008/frankj_073108.pdf

"'Inverse condemnation' is the popular description for a cause of action brought by a property owner to recover the value of real property that has been taken for public use by a governmental defendant even though no formal condemnation proceedings under the government’s power of eminent domain have been instituted." Id. (citations omitted).

"Owners of land, no part of which has been taken for public purposes, are not entitled to compensation for damages naturally and unavoidably resulting from the careful construction and operation of the public improvement which damages are shared generally by owners whose lands lie within the range of the inconveniences necessarily attending that improvement." Id. (citations omitted).

"A nuisance has been defined as anything which annoys or disturbs the free use of one’s property, or which renders its ordinary use or physical occupation uncomfortable. Under the circumstances presented in the present matter, it is clear that the noise, dirt, debris, and obstruction complained of annoyed or disturbed Ms. Frank’s free use of her leasehold and rendered its ordinary use uncomfortable. However, as this court has further noted, the key element of any nuisance is the reasonableness of the defendant’s conduct under the circumstances. Acts of the government are not nuisances per se and it is actionable only when a nuisance is established by evidence that the governmental function is conducted in an unreasonable manner. Our careful review of the record reveals no finding by the trial court that the City acted unreasonably at any time during the construction project." Id. (citations and quotations omitted).

Judgment for fraudulent misrepresentation against seller for covering up termite damage; 30% comparative fault against termite company

STEVE L. ELCHLEPP, JR., ET AL. v. EMOL HATFIELD, ET AL (Tenn.Ct.App. July 30, 2008).
The buyers of a house and real property brought this action against the sellers and a termite control company, alleging that the house was completely infested with termites to the extent that it was worthless and unsalvageable. The buyers charged the sellers with fraudulent and negligent misrepresentation, fraudulent concealment of the extent of termite damage, and breach of contract. The buyers alleged that the termite control company was negligent in its inspection of the house. Following a six-day jury trial, the jury found in favor of the buyers, holding the sellers 70 percent at fault and the termite control company 30 percent at fault and awarding the buyers $55,000 in damages. The trial court also awarded the buyers $25,000 in attorney's fees pursuant to the real estate sales contract. We find that the jury verdict is supported by material evidence and that the trial court committed no reversible error in its jury instructions and evidentiary rulings, and consequently affirm the trial court's judgment.

Opinion located on the TBA website: http://www.tba2.org/tba_files/TCA/2008/elchlepps_073008.pdf

"The clear and convincing standard of proof is appropriate to those cases where a party seeks the reform or rescission of a written instrument due to fraudulent inducement. But in all other cases involving claims of fraud, the standard of proof is preponderance of evidence." Id. (quotation omitted).

"Limit your damage consideration specifically to termite damage and the value of the land is not a consideration in determining the amount of damages in this case." Id. (quoting and affirming trial court's jury instruction).

"When a party intentionally misrepresents a material fact or produces a false impression in order to mislead another or to obtain an undue advantage over him, there is a positive fraud. The representation must have been made with knowledge of its falsity and with a fraudulent intent. The representation must have been to an existing fact which is material and the plaintiff must have reasonably relied upon that misrepresentation to his injury." Id. (quotation omitted).

"Simply stated, the central factual issue in this case was the credibility of the Hatfields’ assertion that they were unaware that the house was infested with termites. There is an abundance of evidence supporting the conclusion, obviously drawn by the jury, that the Hatfields were not believable on this point. ... The testimony of Mr. Elchlepp, including his testimony that Mr. Hatfield assured him that the termite damage discovered before closing was a limited and localized problem, also supports the jury verdict. ... We find that there is ample material evidence supporting the jury verdict in the case, and the Hatfields’ argument to the contrary is without merit." Id.

Noncompletion is not contemplated by the Tennessee construction statute of repose

PIERRE PONS, ET AL. v. BARRY HARRISON d/b/a B. HARRISON HOUSEWRIGHTS (Tenn.Ct.App. July 10, 2008).

Defendant Homebuilder left plaintiff Homeowners' job site before completing construction of their residence. Homebuilder appeals the chancery court's confirmation of an adverse arbitration award, arguing that the arbitrator exceeded his authority by refusing to enforce a provision of the contract that would have rendered the plaintiff Homeowners' suit time barred. The limitation provision applied to suits for defective improvements to real estate. The gravamen of this breach of contract action was partial performance, not defective performance. Further, the arbitrator awarded to Homeowners the cost to complete the construction plus interest, attorney's fees, and arbitration costs. Finding that the limitation period does not apply to this action, we affirm.

Opinion may be found at the TBA website: http://www.tba2.org/tba_files/TCA/2008/ponsp_071008.pdf

"Paragraph 14 of the contract, which addressed the builder’s limited warranty and provided for the repair of covered defects, contained the provision in question. Subparagraph (F) provided as follows:
Repairs. Upon receipt of Owner’s written report of a defect, if the defective item is covered by Builder’s Limited Warranty, Builder shall repair or replace it at no charge to Owner, within thirty (30) days, (extended for delays caused by weather conditions, labor problems or material shortages). Notwithstanding the foregoing, Builder and Owner expressly waive the statutory limitations on actions for defective improvements of real estate, as provided by Tennessee Code Section 28-3-201 et seq., and in lieu thereof covenant and agree that all actions recoverable under this statutory provision shall be brought within one (1) year after substantial completion of the House." Id.

"To determine whether this lawsuit falls within the ambit of the referenced statute of repose, thus making it subject to the one-year limitation, we look to the gravamen of the complaint and to the basis for which the damages are sought. [] Although there are some references made to inferior workmanship[] in the complaint, the suit plainly rests upon nonfeasance more so than malfeasance, or partial performance rather than defective performance. The Ponses averred, and it is undisputed, that the following items were left uncompleted by Mr. Harrison ... . Moreover, it appears that the arbitrator awarded them the cost to complete the residence." Id. (citations omitted).

"In this breach of contract case, the chief complaint was nonfeasance, not malfeasance. This distinction removes the action from the purview of Tennessee Code Annotated Section 28-3-202 because the statute applies to actions predicated upon defective improvements to real property, property damage, and personal injury or wrongful death attributable to the defective work. Because the statute does not apply, neither do the contractual waiver and one-year limitation period. We accordingly affirm the chancellor’s confirmation of the award." Id.

Court awards sanctions and attorneys fees for intereference with a prescriptive easement

BRUCE WAYNE FERGUSON v. DARRYL SHARP, ET AL. (Tenn.Ct.App. June 30, 2008).

Bruce Wayne Ferguson (“the Plaintiff”) filed this lawsuit after Darryl and Denise Sharp (“the Defendants”) installed a gate on a right-of-way over their land that the Plaintiff utilized to reach his property. The Defendants claimed the gate was necessary for their safe use and enjoyment of their land because the right-of-way area was being subjected to trespassing, vandalism, and theft. The trial court agreed with the Plaintiff that the gate was not necessary and permanently enjoined the Defendants from maintaining it on the right-of-way. The Defendants appeal the judgment of the trial court. We affirm.

Opinion may be found at the TBA website: http://www.tba2.org/tba_files/TCA/2008/fergusonb_063008.pdf

"The preponderance of the evidence presented to the court establishes that the Defendants have utilized their gate in an improper and illegal manner to deny the Plaintiff access to his property and to harass him despite the court order prohibiting these actions by the Defendants. The Plaintiff has an easement by prescription free of the impairment of the easement by the erection of gates." Id.

"This case involved a clear violation of the orders of the trial court. Our review of the record reveals that the Defendants interfered with and denied access by the Plaintiff to his property by use of the easement. The Plaintiff had to file motions requesting that the court find the Defendants in contempt of court. ... The trial court had clear authority to assess attorney’s fees against the Defendants pursuant to Tenn. Code Ann. § 29-9-105. The award served to compensate the Plaintiff for the loss he sustained as a result of the actions of the Defendants." Id.

Notemakers obligated to indemnify owner of land that secured the note after foreclosure sale

ESTATE OF LORINE GOODWIN HINDMON v. JIMMIE R. JONES, ET AL. (Tenn.Ct.App. June 27, 2008).

This appeal focuses on a dispute as to whether the defendants, Jimmie R. Jones ("Mrs. Jones") and Larry D. Jones ("Mr. Jones"), are obligated to indemnify the plaintiff, the Estate of Lorine Goodwin Hindmon ("the Estate"), for the value of property owned by Mrs. Hindmon that was foreclosed upon and sold, the proceeds from which were applied against a debt for which the Joneses were obligated. The trial court held that the plaintiff had a right to indemnification from the defendants and, as a consequence of that holding, granted the plaintiff summary judgment. We affirm.

http://www.tba2.org/tba_files/TCA/2008/hindmonl_062708.pdf

"The Estate is entitled to a judgment for indemnity against Mr. and Mrs. Jones. Indemnity may be recovered on the basis of implied indemnity. A right to indemnity “exists whenever one party is exposed to liability by the action of another who, in law or equity, should make good the loss of the other.” 41 Am. Jur. 2 Indemnity § 25 (1968). It is undisputed that Mr. and Mrs. Jones owed a note obligation to Capital Bank. This note obligation was secured by two parcels of real estate owned by the Decedent. The note obligation went into default. The note and deed of trust were subsequently assigned to the Moores, who foreclosed upon the Decedent’s real estate. The amount of $330,000 was realized from the sale of the property and applied toward the note obligations owed by Mr. and Mrs. Jones. In Jarnigen v. Stratton, 32 S.W. 625 (Tenn. 1895), the Tennessee Supreme Court noted as follows:
Mr. Story says: “Where the note is the several as well as the joint note of the makers, the holder is at liberty to elect upon whom he will make the demand and presentment.” Story, Prom. Notes, § 256. To the same effect, see 1 Daniel, Neg. Inst. § 596. The reason of the rule in both cases is the same. It is only necessary to make demand in the one case of all the makers where they are joint makers, and to give notice to all the indorsers where they are joint indorsers, to bind those notified. If they are joint and several indorsers, notice to any one is sufficient to bind him.
Id., 32 S.W. at 626. The estate was entitled to choose from whom it desired to seek indemnification. As to the assertion by Mr. and Mrs. Jones that this claim is barred by any statute of limitation, the contention lacks merit, as the action did not arise until the foreclosure occurred in 2006." Id.

Court limits use of an easement to the extent that a driveway runs onto the adjacent property; Dominant estate may not materially increase burden

GARY W. FRYE, ET AL. v. CARL PRESLEY, ET AL. (Tenn.Ct.App. June 27, 2008).
This case involves a dispute between the owners of adjoining properties over the use of a driveway. The dispute focuses on the easement rights of the defendants, if any, to a right-of-way across the north edge of the plaintiffs' property and a portion of the west edge. The court, following a bench trial, made findings regarding the subject driveway. The defendants appeal. We affirm in part and reverse in part.

Opinion may be found at: http://www.tba2.org/tba_files/TCA/2008/fryeg_062708.pdf

"An easement is a right an owner has to some lawful use of the real property of another. [] Any easement in this case would be an easement appurtenant, involving two tracts of land – the dominant tenement (in this case, the defendants’ property) and the servient tenement (the plaintiffs’ property). The dominant tenement benefits in some way from the use of the servient tenement. [] A prescriptive easement arises when a person acting under an adverse claim of right makes uninterrupted, open, visible, and exclusive use of another’s property for at least twenty (20) years with the owner’s knowledge and acquiescence. []." Id. (citations omitted).

"While the Presleys’ deed to their son refers to an easement 30 feet in width, that easement, to the extent it crosses the plaintiffs’ property, is limited in width to the 14 feet found by the trial court. ... Simply stated, the son’s easement over the Fryes’ property is limited to a width of 14 feet. If the driveway on the ground is more than 14 feet wide, the excess over 14 feet must be located entirely on the Presleys’ property." Id. (quotations to transcript omitted).

"[T]he owner of an easement “cannot materially increase the burden of it upon the servient estate or impose thereon a new and additional burden.” [] Accordingly, the use of the driveway has been expanded over time from originally benefitting only Mr. and Mrs. Presley to now being used by at least nine drivers, owning a combined fleet of approximately 15 vehicles including boats, trailers, and farm equipment. Mr. Frye testified that a number of the defendants speed along the driveway and “create the nuisance of dust”[]. ... It is clear to us that this testimony is related to the roadway along the northern section of the Frye property, not the portion of the driveway along a portion of their western boundary. The trial court concluded that the defendants’ use of the easement along the northern boundary did not result in an unreasonable increase in the burden to the servient estate. ... Furthermore, our review of the record likewise reveals no evidence of an increased burden along the western section of the easement. Accordingly, we find the plaintiffs’ argument to be without merit." Id. (citations omitted).

Restrictive covenants may not apply if the deed is ambiguous; Negative reciprocal easements require a common plan or scheme

GREIG MASSEY, ET AL., v. R.W. GRAF, INC., ET AL. (Tenn.Ct.App. June 26, 2008) With dissenting opinion.
Plaintiffs brought this declaratory judgment action, asking the Court to declare that building restrictions on platted parcels of property from a common grantor applied to a non-platted parcel purchased by defendants from a subsequent grantor. The Trial Court, responding to a summary judgment motion, made detailed findings of facts, and concluded that the "subject to" language in the deeds was ambiguous and construed the language against the inclusion of restrictions on any portion of the property that lay outside the platted subdivisions. Plaintiffs have appealed, and we affirm the Judgment of the Trial Court.

Opinion may be found at: http://www.tba2.org/tba_files/TCA/2008/masseyg_062608.pdf

Dissenting opinion may be found at: http://www.tba2.org/tba_files/TCA/2008/masseyg_DIS_062608.pdf

"Because restrictive covenants are in derogation of the fundamental right of free use and enjoyment of real property, they are not favored under Tennessee law. [] Restrictive covenants are strictly construed. [] Any doubt concerning the applicability of a restrictive covenant will be resolved against the restriction, [] and, likewise, any ambiguity in the terms of the restrictive covenant will be resolved against the restriction. [] Similarly, when the terms of a covenant may be construed more than one way, the courts must resolve any ambiguities against the party seeking to enforce the restriction and in a manner which advances the unrestricted use of the property. []" Id. (citations omitted).

"The language in the Warranty Deed from the Dean Estate to the University of Tennessee is as follows: “This conveyance, however, is made subject to Restrictive Covenants applicable to all of the lots located in the Deanbrook Sub-divisions of record in book of deeds 954, page 564, in the Register’s Office of Knox County, Tennessee, to which said instrument specific reference is hereby made for said conditions, limitations, reservations and restrictions.” This language is susceptible to two very different meanings. It could mean that the referenced restrictive covenants applies to all of the property conveyed including the unsubdivided tract, that included the Graf Property. Or it could mean that the Dean Estate intended to have the referenced restrictive covenants apply only to the lots within the Deanbrook subdivisions as was the original intent when the restrictions were recorded in 1954. Accordingly, we conclude that ambiguity exists." Id.

"Both the grantor and the fellow grantees whose titles contain similar restrictive covenants may enforce their reciprocal negative easement rights in either a legal or an equitable proceeding. [] Grantees seeking equitable enforcement of a reciprocal negative easement must prove: (1) that the parties derived their titles from a common grantor; (2) that the common grantor had a general plan for the property involved; (3) that the common grantor intended for the restrictive covenant to benefit the property involved; and (4) that the grantees had actual or constructive knowledge of the restriction when they purchased their parcels. [] Grantees seeking judicial enforcement of their negative reciprocal easement rights are not necessarily limited to the recitals in the deeds to prove their case. In addition to the deeds from the common grantor [], they may also use recorded plats [], or parol evidence of the circumstances surrounding the purchase of the property. []" Id. (citations omitted).

"In this case, the properties known as Deanbrook Subdivision were platted with restrictions that expressly applied only to Deanbrook Subdivisions, and were recorded. The tract of land that encompassed the Dean properties adjacent to the Deanbrook Subdivisions was not platted and was not expressly included in the recorded restrictions. Further, there was no general plan or scheme of development to include the unsubdivided properties in the Deanbrook Subdivisions[.]" Id.

DISSENTING OPINION: "When I give the words in the subject language their usual and ordinary meaning – as I am required to do – I do not find the warranty deed to be ambiguous. As I understand the language at hand, it cannot be construed as being limited to the conveyed lots in the platted subdivisions. The language at issue addresses “[t]his conveyance.” The only reasonable interpretation of these two words is that they refer to the conveyed platted lots in the Deanbrook Subdivisions and the conveyed acreage outside the platted subdivisions. This is what was “convey[ed].” There can be no doubt about this." Id.

Local governments may enforce strict submission requirements for service contracts

BAIRD TREE COMPANY, INC. v. CITY OF OAK RIDGE, ET AL. (Tenn.Ct.App. June 24, 2008).
Baird Tree Company, Inc. ("Plaintiff") was one of three bidders on a tree trimming and removal project submitted for bid by the City of Oak Ridge ("Oak Ridge"). Plaintiff was notified by letter of several deficiencies in its bid and Oak Ridge requested that the bid be supplemented with additional information. Plaintiff explicitly refused to do so and informed Oak Ridge that its bid was fine just the way it was. After the contract was awarded to a different company, Plaintiff filed suit claiming it should have been awarded the contract because it was the lowest bidder and further claiming that Oak Ridge violated the Tennessee Trade Practices Act, Tenn. Code Ann. section 47-25-101, et seq. Oak Ridge filed a motion for summary judgment claiming, among other things, that it was entitled to summary judgment because Plaintiff's bid was invalid to begin with and the Trade Practices Act did not apply to this case. The Trial Court agreed and granted the motion for summary judgment. Plaintiff appeals raising numerous issues. We affirm.

Opinion may be found at: http://www.tba2.org/tba_files/TCA/2008/bairdtree_062408.pdf

"The undisputed material facts demonstrate that there were numerous deficiencies in Plaintiff’s original bid. Although not required to do so, Dover sent a letter to Plaintiff’s owner and president requesting the additional necessary information. Mr. Baird refused to supply any additional information and even went so far as to inform Dover that he (i.e., Mr. Baird) would be sending questions to Dover that he wanted answered. The Trial Court correctly characterized this response as being “in your face.” This Court is at a loss as to how a company can send such a response to legitimate questions that were raised about its bid, and then complain when it is not awarded the bid." Id.

Owner found 40% at fault for failing to provide sunroom kit manufacturer's instructions to contractor

JAY S. GORBAN v. DAVID HARRIS (Tenn.Ct.App. May 29, 2008)

This is a dispute between a homeowner and the contractor he hired to build a sunroom onto his home. We have concluded that the evidence does not preponderate against the trial court's award of a judgment in favor of the homeowner for 60 percent of the requested damages, based upon its allocation of 40 percent of the fault to the homeowner.

Opinion may be found at the TBA website: http://www.tba2.org/tba_files/TCA/2008/gorbanj_052908.pdf

"Dr. Gorban assigns error to the trial court’s allocation of 40% of the fault to him. The trial court’s comparative fault determination was predicated upon its finding that Dr. Gorban did not provide Mr. Harris with the manufacturer’s instructions regarding the foundation requirements. ... Dr. Gorban further argues that, even if he did not have the foundation instructions, Mr. Harris should have contacted the manufacturer himself. There is no proof that Mr. Harris was aware that additional instructions existed. While Mr. Harris could have contacted the manufacturer, we cannot say that the trial court erred in finding Dr. Gorban at fault for failing to provide the relevant instructions that were in his possession to Mr. Harris." Id.

Decision reversed because trial court awarded punitive damages based on environmental tort theory, which was rejected by the jury

DAVID GOFF, ET UX, ET AL. v. ELMO GREER & SONS CONSTRUCTION CO., INC. (Tenn.Ct.App. May 19, 2008).

This appeal involves a jury's award of punitive damages. The construction company entered into a contract with the State of Tennessee to widen a portion of a highway. The homeowners entered into a contract with the construction company allowing the construction company to place excess materials generated from the highway project on the homeowners' property. In exchange, the homeowners would receive compensation based on the cubic fill area, and the company would fill and grade that portion of the homeowners' property. The project required that the construction company conduct extensive blasting near the homeowners' house and vehicles. One of the homeowners became concerned when he witnessed the construction company placing various garbage items and tires on his property near the fill area. After three years, the construction company finished the project. The homeowners brought suit, alleging that the company failed to pay the amount due under the contract and caused damage to their house due to the blasting. The complaint also alleged that the company buried certain items, including tires, on the property which constituted an environmental tort. The homeowners' amended complaint stated a cause of action in nuisance and also sought an award of punitive damages in the amount of $1 million dollars. The jury returned a verdict in favor of the homeowners for the nuisance claim in the amount of $3,305.00 and found that punitive damages should be imposed on the construction company. The jury found in favor of the construction company for the environmental tort claim. After the second phase of the trial, the jury returned an award of $2 million in punitive damages. The trial court remitted the award to $1 million, the amount of the homeowners' ad damnum. The construction company appeals, and we reverse and remand in part and affirm in part.

Opinion may be found at the TBA website: http://www.tba2.org/tba_files/TCA/2008/goffd_051908.pdf

"Our Supreme Court, in Hodges v. S.C. Toof & Co., 833 S.W.2d 896, 901–02 (Tenn. 1992), laid out the procedural framework for awarding punitive damages. First, the plaintiff must prove by clear and convincing evidence that the defendant acted (1) intentionally, (2) fraudulently, (3) maliciously, or (4) recklessly. Id. at 900–01. Upon such a finding, the jury must then determine the amount of damages during the second phase of the trial[.]" Id.

Trial court: "By intentionally burying tires eight feet tall, thirty-two inches in diameter, and weighing over one ton, the defendant clearly violated the solid waste disposal act. The policy of the state to avoid pollution and the creation of unpermitted landfills was intentionally violated on the lands of another and justifies a substantial punitive damages award." Id. (quoting the trial court).

"The trial court’s findings of fact and conclusions of law are insufficient in that they rely heavily on the environmental tort claim, a theory which the jury rejected. We therefore reverse the award of punitive damages and remand the case to the trial court. On remand, the trial court should apply the Hodges factors and make appropriate findings of fact and conclusions of law in approving or decreasing the award of punitive damages, if the court deems appropriate, based on the nuisance theory." Id.

Case replete with tenets of construction law

CATHERINE SMITH BOWLING, ET AL. V. TODD JONES, ET AL. (Tenn.Ct.App. May 16, 2008).

Plaintiff homeowners sued defendant residential building contractors for breach of a home construction contract upon allegations of defective workmanship and abandonment of contract. The trial court entered judgment in favor of plaintiffs and awarded actual damages in an amount based upon the finding that the house was of no value. The trial court also awarded damages under the Tennessee Consumer Protection Act upon a finding that the defendants violated the Act by willfully and knowingly misrepresenting that they were bonded. Upon appeal, we find no error in the judgment of the trial court, and accordingly, the judgment is affirmed in all respects.

Opinion may be found at the TBA website: http://www.tba2.org/tba_files/TCA/2008/bowlingc_051608.pdf

IMPLIED WARRANTY TO BUILD NEW HOME IN A WORKMANLIKE MANNER:
"A contract to construct an entire building is essentially a contract for material and labor, and includes an implied warranty protecting the owner from defective construction. Once a builder undertakes a construction contract, the common law imposes upon him or her a duty to perform the work in a workmanlike manner, and there is an implied agreement that the building or work performed will be sufficient for the particular purpose desired or to accomplish a certain result. Thus, a failure to perform a building contract in a workmanlike manner constitutes a breach of the contract." Id. (citing 13 AM. JUR. 2d Building and Construction Contracts §10 (2000)).

ABANDONMENT = BREACH OF CONTRACT; CONTRACTOR BREACHES BY REFUSING TO PERFORM WORK; OWNER BREACHES BY REFUSING TO PAY:
"The abandonment of a contract gives rise to a cause of action for breach. [] In the instant matter, each party contends that the other abandoned the contract; the Andersons argue that the Jones brothers simply left the job and quit performing their duties under the contract, while the Jones brothers argue that the only reasons they did not complete their contractual duties were that the Andersons abandoned the contract first, by failing to continue to pay draws and purchase building materials and later, by firing them." Id. (citation omitted).

DELEGATION TO INDEPENDENT CONTRACTORS DOES NOT ABSOLVE A CONTRACTOR OF ITS DUTIES TO THE HOMEOWNER:
"[T]he Jones brothers [contend that the subcontractors were independent contractors] and therefore [they] were not ordinarily liable for the negligence of an independent contractor.” ... We find no merit in this argument. The Jones brothers had a contractual duty to construct the house to completion and to perform the construction in a workmanlike manner. Their unilateral delegation of work to third parties did not absolve them of this duty." Id.

NEW HOME CONSTRUCTION WITH SEVER STRUCTURAL DEFECTS IS HELD TO HAVE ZERO VALUE (i.e., $0):
"It is well settled that an owner of property is competent to testify to the value of such property. [] Given the above referenced testimony of the owners and other evidence confirming the house’s structural instability, we believe the trial court’s determination that the house is of zero value is well supported, and we do not find that the evidence preponderates otherwise." Id. (citation omitted).

CONTRACTOR VIOLATED TCPA BY FALSELY REPRESENTING THAT THEY ARE BONDED; IF CONTRACTOR'S BUSINESS CARD SAYS "BONDED" AND CONTRACTOR IS NOT, THEY MUST APPRISE THE OWNER:
"The Jones brothers contend that insufficient evidence was presented to support the trial court’s finding that their violation of the TCPA was willful and knowing. They do not deny that they were not bonded, nor do they deny that they misrepresented to the Andersons that they were bonded and that the Andersons relied upon this misrepresentation. However, the Jones brothers insist that such misrepresentation was unintentional and that the record does not show otherwise. We disagree. First, we note Jerry Jones’s own testimony that prior to their employment by the Andersons, he gave Kimberly Anderson the Jones brothers’ business card, a copy of which is in the record before us. Among other things, this card states that the Jones brothers are “Licensed, Insured, and Bonded.”" Id.

Res judicata bars challenge to performance bond after judgment on injunctive relief claim; Privity gives right to assert defensive collateral estoppel

TRAVELERS CASUALTY & SURETY COMPANY OF AMERICA as subrogee of SMITH MECHANICAL CONTRACTORS, INC. v. LAWYER'S TITLE INSURANCE CORPORATION, ET AL. (Tenn.Ct.App. May 7, 2008).

Travelers Casualty & Surety Company of America ("Travelers") as subrogee of Smith Mechanical Contractors, Inc. ("Smith Mechanical") sued Lawyer's Title Insurance Company ("Lawyer's Title") and First Tennessee Bank National Association ("the Bank") seeking, among other things, a judgment declaring a mechanic's lien filed by Smith Mechanical to have priority over a deed of trust held by the Bank with regard to real property located in Johnson City, Tennessee. Lawyer's Title and the Bank filed a motion to dismiss or for summary judgment. After a hearing, the Trial Court entered an order finding and holding, inter alia, that Travelers' complaint was barred under the doctrine of res judicata; that the complaint was barred under the compulsory counterclaim rule; that Travelers never acquired Smith Mechanical's mechanic's lien rights; and, that the Bank had recorded a payment bond ("Performance Bond"), which operated to discharge Smith Mechanical's lien from the real property. Travelers appeals to this Court. We affirm.

Opinion found on TBA website: http://www.tba2.org/tba_files/TCA/2008/travelerscasualty_050708.pdf

"Parties asserting a res judicata defense must demonstrate that (1) a court of competent jurisdiction rendered the prior judgment, (2) the prior judgment was final and on the merits, (3) the same parties or their privies were involved in both proceedings, and (4) both proceedings involved the same cause of action." Id. (citations omitted).

"[O]nce the judgment on the merits became final in the second lawsuit seeking injunctive relief, the doctrine of res judicata through the principle of claim preclusion operates to bar any claims involving the same cause of action which were or could have been brought by Barker Building and Travelers against the Bank in that same action. This includes any claims against the Bank challenging the validity of the Subordination Agreement and Performance Bond." Id.

"Collateral estoppel, an issue preclusion doctrine, ... bars the parties or their privies from relitigating issues that were actually raised and determined in an earlier suit. ... Collateral estoppel may be used by a defendant in the second suit (defensive collateral estoppel), or it may be used by a plaintiff in a second suit (offensive collateral estoppel). In Tennessee the offensive use of collateral estoppel requires that the parties be identical in both actions. Without saying so specifically, however, Tennessee has not required party mutuality in applying defensive collateral estoppel." Id. (citations omitted).

"The issue sought to be precluded in this instance is the issue regarding the validity of the Performance Bond. Lawyer’s Title is in privity with the Bank with regard to this issue. Given this and the fact that the issue sought to be precluded went to final judgment on the merits in [the case] discussed above, Lawyer’s Title can utilize defensive collateral estoppel." Id. (citations omitted).

Court allows geotechnical engineer to testify about structural issues in a home construction defect case based on "special and practical" knowledge

DONALD W. MCCUTCHEON, ET AL. V. TND ASSOCIATES, L.P., ET AL. (Tenn.Ct.App. April 30, 2008).

A jury awarded the plaintiff homeowners judgment against their residential building contractor for damages sustained by the plaintiffs when the slope upon which their home was constructed failed. The defendant contractor appeals, arguing that the trial court abused its discretion by allowing an expert witness to testify outside his area of expertise and by allowing another witness to testify as an expert when the plaintiff had failed to identify him as a witness before trial. Upon careful review of the record, it is our determination that the trial court did not abuse its discretion in the admission of the testimony of these witnesses. Accordingly, we affirm the judgment of the trial court.

Opinion may be found at the TBA website: http://www.tba2.org/tba_files/TCA/2008/mccutcheond_043008.pdf

"Mr. Huckaba testified that in his opinion as a professional engineer, the depth of the foundation that he saw was not adequate, based upon his experience and his observation as to the configuration of the lot and the quality of the soil. Thereafter, Mr. Huckaba further testified that he also held opinions set forth in an exhibit designated Geotechnical Expert. ... TND argues that the trial court erred in allowing the admission of the above three statements of opinion because Mr. Huckaba admitted during voir dire that he is not a structural engineer. We disagree." Id.

"a trial court may consider in determining the reliability of an expert’s methodology include: (1) “the expert’s qualifications for testifying on the subject at issue” and (2) “the connection between the expert’s knowledge and the basis for the expert’s opinion.” [] Upon review of the record in this matter, we are compelled to conclude that Mr. Huckaba has both “special as well as practical” knowledge qualifying him to render an expert opinion as to the matters objected to and that the reliability of his methodology is confirmed by his qualifications and by the connection between his knowledge and the basis of his opinion." Id. (citation omitted).

Notification requirement in the Tennessee One-Call statute is strictly construed; Knowledge of excavation may give rise to a duty to warn excavator

ROBERT A. WARD and wife, SALLY WARD, v. CITY OF LEBANON, TENNESSEE; CITY OF LEBANON GAS DEPARTMENT; JAMES N. BUSH CONSTRUCTION, INC.; FOSTER ENGINEERING & ENERGY, INC.; and WATER MANAGEMENT SERVICES, LLC. (Tenn.Ct.App. April 28, 2008).

Plaintiff, while excavating, struck a gas line which resulted in an explosion and fire, seriously injuring plaintiff. Plaintiffs brought this action against several defendants and the case went to trial against the City of Lebanon and Bush Construction Company, Inc. A jury returned a verdict for the plaintiffs and allocated percentages of fault as to both defendants and the plaintiff. The Trial Court entered Judgment in favor of the plaintiffs and defendants appealed. We reverse the Trial Court Judgment and remand for a new trial on the grounds that a part of the charge to the jury was erroneous.

Opinion may be found at the TBA website: http://www.tba2.org/tba_files/TCA/2008/wardr_042808.pdf

"The Underground Utility Damage Prevention Act (also known as the Tennessee One-Call statute), codified at Tenn. Code Ann. §65-31-101 et seq., states that “no person may excavate in a street, highway, public space, a private easement of an operator or within one hundred feet (100') of the edge of the pavement of a street or highway, or demolish a building, without giving the notice required by §65-31-106 in the manner provided by such section.” Tenn. Code Ann. §65-31-106 states that before beginning any excavation, a person shall serve written or telephonic notice of intent to excavate at least three working days prior to the actual date of excavation, and that if 15 calendar days expire and the excavation is not complete, then the person shall serve an additional notice at least three working days prior to the expiration of time on the fifteenth day. There is no dispute in this case that Ward did not comply with the provisions of the One-Call statute." Id.

"The record shows that all the parties knew that Ward had to return for further excavations and that the gas line had been reconnected. The UUDPA does not indicate that an excavator’s failure to make the notifying call absolves the utility in all circumstances from negligence or from any common law duty to act reasonably to prevent harm. As stated above, a “risk is unreasonable and gives rise to a duty to act with due care if the foreseeable probability and gravity of harm posed by defendant's conduct outweigh the burden upon defendant to engage in alternative conduct that would have prevented the harm.” Id. In this case, the foreseeable probability and gravity of harm to plaintiff posed by defendants’ re-connection of the subject gas line, with the knowledge that plaintiff would be excavating in the area, outweigh the burden upon defendant to warn plaintiff that the gas line had been re-connected." Id.

Party improving adjacent land without an express contract is awarded quantum meruit for value of materials and labor

SAMUEL DEAN WILLIAMS v. RUSSELL W. COFFEY (Tenn.Ct.App. April 21, 2008).
This case involves a dispute over the improvements made to defendant's land by plaintiff, which alleged that defendant had agreed to sell the land on which the improvements were made. The Trial Court found an implied contract between the parties and awarded plaintiff damages. On appeal, we hold that the Trial Court employed the wrong measure of damages, vacate thedamage award and remand for determination of damages under quantum meruit.

Opinions may be found at the TBA website: http://www.tba2.org/tba_files/TCA/2008/williamss_042108.pdf

"Under Tennessee law there are two distinct types of implied contracts: contracts implied in fact and contracts implied in law, which are often referred to as quasi contracts. A contract implied in fact arises under circumstances which show mutual intent of assent to contract, consideration and lawful purpose. Mutual assent may be shown by the conduct of the parties and the surrounding circumstances. [] In contrast to a contract implied in fact, “contracts implied in law are created by law without the assent of the party bound, on the basis that they are dictated by reason and justice.” [] The Supreme Court has established that a party seeking to recover on an implied contract in law or quasi contract theory must prove the following elements: (1) there is no existing, enforceable contract between the parties covering the same subject matter; (2) the party seeking recovery proves that it provided valuable goods or services; (3) the party to be charged received the goods or services; (4) the circumstances indicate that the parties to the transaction should have reasonably understood that the person providing the goods or services expected to be compensated and; (5) the circumstances demonstrate that it would be unjust for a party to retain the goods or services without payment. []" Id. (citations omitted).

"The most cogent factor for consideration regarding recovery under a quasi contract is unjust enrichment of the parties. [] A quantum meruit recovery is limited to the actual value of the goods and services received by the defendant. [] The reasonable value of services should be based on the customs and practices prevailing in the same sort of business in which the services would normally be provided. [] To prove the reasonable value of the goods and services, the party seeking to recover in quantum meruit can explain the method used to arrive at the fee or offer proof from other professionals in the same business or trade." Id. (citations omitted).

"On this theory, the case law is clear that a quantum meruit recovery must be the reasonable value of the material and labor furnished. [] The Trial Court erred in basing the plaintiff’s recovery on the increased value of defendant’s property. The Court reasoned “Damages to real estate are generally measured by the fair market value of the land immediately prior to the loss, less the fair market value immediately after the loss”. With due deference to the Trial Court, this reasoning is flawed as the property at issue was not damaged, but rather it was possibly improved by plaintiff’s services." Id. (citations omitted).

This opinion discusses several of the ways that courts use to decide which survey is correct

CONNIE R. (DAVIS) PHILLIPS, ET AL., V. LAWRENCE WOODS, ET AL. (Tenn.Ct.App. March 31, 2008).
This appeal involves a dispute over a boundary line and the ownership of a driveway. The plaintiffs, Connie R. (Davis) Phillips and Carol J. (Davis) Miller ("the plaintiffs" or "the Davis heirs"), and the defendants, Lawrence Woods and Charlotte Woods ("the defendants" or "the Woods"), own adjacent tracts of real property in Morgan County. When the initial complaint was filed, the northern tract of property was owned by the plaintiffs' mother, Stella Davis ("Mrs. Davis"), who had filed suit against the Woods, the owners of the southern tract, to quiet title, to establish the common boundary line, and for libel of title. After Mrs. Davis' death prior to trial, her daughters were substituted as plaintiffs. Upon the conclusion of a bench trial, the trial court found, inter alia, that the Davis heirs owned the property over which the driveway ran, but that the defendants retained an easement by necessity in the roadway, and that the Woods had committed libel of title. While the trial court agreed with the common boundary line described by the surveyor for the Davis heirs, the court reformed the boundary between the parties upon finding that the defendants were entitled to a portion of the Davis property as a result of adversely possessing it for over 30 years. The Woods appeal. We affirm. Case remanded for further proceedings.

Opinions found at TBA website: http://www.tba2.org/tba_files/TCA/2008/phillipsc_033108.pdf

"In determining disputed boundaries, resort is to be had first to natural objects or landmarks, because of their very permanent character; next, to artificial monuments or marks, then to the boundary lines of adjacent landowners, and then to courses and distances. [] This rule of construction is to aid in determining the intention of the parties to a deed which is to be determined, if possible, from the instrument in connection with the surrounding circumstances." Id.(citations omitted; quoting Thornburg v. Chase, 606 S.W.2d 672, 675 (Tenn.Ct.App. 1980)).

"The legal description for Tract 1 of the Davis property also calls for the property described to contain about half an acre. ... The dimensions of Tract 1 as depicted on the Nance survey are much closer to the quantity of land called for by the deed than the dimensions of Tract 1 as depicted on the Steelman survey. The call for the quantity of land in a deed may be resorted to for the purpose of locating and identifying the land in certain circumstances. [] “The boundaries of a tract of land are not usually delineated by the quantity or acreage,” but “where boundaries are in doubt, the quantity may become an important factor.” [] Thus, the fact that the Nance survey more closely produces the quantity of land called for in the deed supports the conclusion that it correctly located Tract 1." Id.(citations omitted).

Evidence of "significant and pervasive" problems in an newly constructed home starts the statute of limitations period in claims against homebuilders

WILLIAM H. LIGGETT, JR. ET AL. v. BRENTWOOD BUILDERS, LLC (Tenn.Ct.App. March 28, 2008).
Home buyers brought suit against home builder alleging fraud, breach of contract, consumer protection violations, negligent misrepresentation, and negligence. The trial court granted the builder's motion for summary judgment based upon the statute of limitations and statute of repose. We affirm.

Court opinions may be found at the TBA website: http://www.tba2.org/tba_files/TCA/2008/liggettw_032808.pdf.

"It is well-settled law in this state that “the gravamen of an action, rather than its designation as an action for tort or contract, determines the applicable statute of limitations.” ... Pursuant to these authorities, we must conclude that, with respect to all but the consumer protection claims, the Liggetts’ claims are governed by the three-year statute of limitations set forth at Tenn. Code Ann. § 28-3-105. The claim for violations of the Consumer Protection Act is governed by the special one-year statute of limitations set forth at Tenn. Code Ann. § 47-18-110." Id.

"In interpreting the provisions of Tenn. Code Ann. § 28-3-105, the courts have held that, in a suit for property damages, “the cause of action accrues at the time the injury occurs, or when it is discovered, or when in the exercise of reasonable care and diligence the injury should have been discovered.” ... The Liggetts filed their complaint on March 2, 2004. Under the statute of limitations of Tenn. Code Ann. 28-3--05, any cause of action that accrued prior to March 2, 2001 would be barred because the complaint would not be filed within three years of the accrual of the cause of action. ... In light of the overall picture of the information known to the Liggetts prior to March 2001, however, this Court has reached the conclusion that they were on notice that there were significant and pervasive problems with the construction of their home. ... Viewing the evidence in the light most favorable to the Liggetts, we must conclude that they knew of significant defects prior to March 2001 and either knew or should have known that they had a cause of action against Brentwood Builders for fraud and/or negligent misrepresentation." Id.

Contractual provisions allow real estate agents to sue for breach of contract when buyer does not make good faith attempts to meet conditions

WAYNE BOYKIN AND ASSOCIATES ET AL. v. HARRY TINSLEY (Tenn.Ct.App. March 27, 2008).
Listing real estate agent and buyer's agent filed suit against prospective buyer to recover their commissions due under a contract for the sale of real estate. The trial court found that prospective buyer breached the contract and awarded commissions to both agents. On appeal, prospective buyer challenges the trial court's finding that he breached the contract as well as the determination that he was liable to the listing agent for a real estate commission. We affirm.

Court opinions may be found at the TBA website: http://www.tba2.org/tba_files/TCA/2008/boykinw_032708.pdf.

"Mr. Tinsley got mad and decided he didn’t want to go through with the contract, so he didn’t follow through what needed ... to be done to make the closing dates. So technically, in the contract, he is in default, and the contract provides if the buyer is in default, that the agents have the right to sue for damages or specific performance." Id(quoting the trial court).

"Mr. Tinsley emphasizes the fact that the contract contained two conditions: [the buyer's] ability to obtain financing from a lender of his choice and an appraisal at the sale price or above. Because these conditions were not met, Mr. Tinsley argues that he was excused from performing under the contract. However, Tennessee law implies in every contract a duty of good faith: 'Parties to a contract owe each other a duty of good faith and fair dealing as it pertains to the performance of a contract. [] Thus, each party to a contract promises to perform its part of the contract in good faith.' (citations omitted). The contract states that time was of the essence. ... Thus, there is ample evidence to support the trial court’s finding that Mr. Tinsley had the ability to obtain financing but simply decided he did not want to go forward because of a conflict with Mr. Boykin." Id.

U.S. Supreme Court limits judicial review of arbitration decisions, even when agreed to by contracting parties

High Court Rules in Arbitration Case (by PETE YOST, March 25, 2008)

WASHINGTON (AP) — The Supreme Court has limited the role of the courts in reviewing arbitration awards under federal law.

In a 6-3 decision Tuesday, the justices said, however, that there may be other legal avenues besides the Federal Arbitration Act to enable a larger role for the courts in examining the work of arbitrators. The case before the Supreme Court involved a cleanup dispute between toymaker Mattel Inc. and the owner of a factory site in Oregon contaminated with an industrial solvent.

An arbitrator initially ruled in favor of Mattel, and the Supreme Court ruling is helpful to the toy manufacturer. The Federal Arbitration Act "confines its expedited judicial review" to narrow circumstances, Justice David Souter wrote in the majority opinion. Souter added, however, that the court is "is no position" to address possible alternatives to reliance on the FAA.

The issue before the Supreme Court was whether Mattel and Hall Street Associates L.L.C. could agree in advance to broad court review of an arbitration award to correct any errors of law.

An arbitrator ruled that Mattel did not have to pay for environmental cleanup on Hall Street's property. A federal judge subsequently rejected the arbitrator's legal reasoning. The 9th U.S. Circuit Court of Appeals in San Francisco sided with Mattel, saying the Federal Arbitration Act bars judicial review of arbitration awards in such circumstances. The appeals court finding in favor of Mattel underscores the concern of some businesses that are hesitant to settle disputes through arbitration. These businesses say that in most cases they cannot appeal to a judge if an arbitrator rules against them.

Expanding judicial review could have a positive impact, encouraging parties in a dispute to enter arbitration, knowing that serious errors could be corrected by the courts. Others in the business community say that the downside to expanded court review is that it could lead to an increase in the cost and time that result from losing parties attempting to overturn arbitration awards. The American Arbitration Association oversaw more than 137,000 cases in 2006, the large majority of them arbitrations. The association opposes expanded judicial review.

Builders must comply with building codes; Parties may contract for standard of workmanship, which negates implied warranty; Cost of repair preferred

ROGER WILKES, ET AL. v. SHAW ENTERPRISES, LLC (Tenn.Ct.App. March 17, 2008).
The principal issues presented by this appeal of a residential construction dispute between a contractor and the homeowner are (1) whether the standard of workmanship required of the contractor by the chancellor was correct and (2) whether the proper measure of damages was applied. The chancellor found that some of the house construction was defective, but that the cost of repair of the defects was excessive and disproportionate. The chancellor held that the proper measure of damages was the diminished value of the house and awarded damages on that basis. We affirm in part, reverse in part and remand for proof of the contractual workmanship standard of "good building practices" and for proof of the diminished value of the home.

Court opinions may be found at the TBA website: http://www.tba2.org/tba_files/TCA/2008/wilkesr_031708.pdf

"The Wilkes contend that state law requires compliance with the building code. We agree. Tenn. Code Ann. § 5-20-102 provides that the governing body of any county may adopt by reference a specific building code, which serves as the enforceable building code in the county. Tenn. Code Ann. § 5-20-102; see also Tenn. Code Ann. §§ 5-20-101-106. ... Mr. Hatch’s office was charged with ensuring the houses were constructed in accordance with the 1995 CABO Code." Id.

"In an earlier case, however, this Court stated, “in the absence of express plans and specifications, the standard of workmanship prevailing in the area coupled with conformity to the applicable codes ... is the standard by which the appellee’s performance is to be tested.” Carter v. Krueger, 916 S.W.2d 932, 935 (Tenn. Ct. App. 1995). ... However, the language of the contract provides that “Seller agrees to erect the house in substantial accordance with the plans and specifications selected and in accordance with good building practices.” (emphasis added). ... Accordingly, the standard set out in Carter v. Krueger, supra at 935, does not apply because the parties contracted for a specific standard." Id.

"Ordinarily, the implied warranty standard set out in Dixon would apply where there is no warranty. However, the Supreme Court has provided that “[t]his warranty is implied only when the written contract is silent.” Id. at 541-42. In line with the Supreme Court’s reasoning, the specific standard provided for in the contract prevails over the implied standard of workmanship because the contract is not silent on the issue of the standard to which the contractor will be held." Id.

"Generally, courts have assessed two types of damages for breach of a construction contract – “cost of repair” or “diminution in value,” also referred to as “difference-in-value.” ... “Generally, the measure of damages will be the cost [of] repair unless the repairs are not feasible or the cost is disproportionate to the [diminution] in value.” GSB Contractors, Inc., 179 S.W.3d at 543 (citations omitted). In a case where the cost of repairs is “disproportionate when compared with the difference in value of the structure actually constructed and the one contracted for, the diminution value may be used instead as the measure of damages.” Id. at 543 (quoting Redbud Cooperative Corporation v. Clayton, 700 S.W.2d 551 (Tenn.App.1985))." Id.

Court finds contractual liquidated damage provision of $250 per day for contractor's failure to complete work reasonable

TEMPLE BAPTIST CHURCH, MANCHESTER, TENNESSEE v. C & H COMMERCIAL CONTRACTOR, INC. (Tenn.Ct.App. March 12, 2008).
Claimant/Appellant Temple Baptist Church brought suit against Defendant/Appellee C & H Commercial Contractors, Inc. to enforce a provision for liquidated damages pursuant to a construction contract entered into by the parties. The contract contained a provision for liquidated damages at the rate of $250.00 per day if the contractor failed to complete the work within the time required by the contract. Temple Baptist Church also sought awards for a credit due under the contract for sales tax and for the contractor's failure to obtain a bond. C & H Commercial Contractors filed an answer and counterclaim alleging that the church had wrongfully terminated the contract. The case was tried without a jury in March of 2006. The trial court found that both parities were mutually responsible for the delay in construction for a period of 220 days. The trial court found that the contractor was responsible for delays after this period and awarded liquidated damages in the amount of $14,250.00. The trial court also awarded attorney fees in the amount of $16,034.50, but denied the credits sought by the church. We affirm.
http://www.tba2.org/tba_files/TCA/2008/templebaptist_031208.pdf

"The term “liquidated damages” means a sum stipulated and agreed upon by the parties at the time they enter their contract, to be paid to compensate for injuries should a breach occur. 22 Am Jur Damages § 212 (1965); See Railroad v. Cabinet Co., 104 Tenn. 568, 58 S.W.303 (1900). The reason for allowing the parties to stipulate the amount of damages is to create certainty where damages are likely to be uncertain and not easily proven. Railroad, supra. The amount stipulated should be reasonable in relation to the terms of the contract and the certainty with which damages can be measured, there must exist a reasonable relationship between the amount and what might reasonably be expected in the event of a breach. Id. If the provision is a reasonable estimate of the damages that would occur from a breach, then the provision is normally construed as an enforceable stipulation for liquidated damages. See Bristol v. Bostwick, 146 Tenn. 205, 240 S.W.774 (1922); 22 Am Jur Damages § 227 (1965). A party will not be allowed, however, to recover liquidated damages where he is responsible for or has contributed to the delay or non performance alleged as a breach. (citations omitted)." Id.

"The pastor of Temple testified that the liquidated damages would reflect the loss of donations, tuition for the private school, and escalation of building costs. The pastor further testified that Temple was expecting donations to the church to increase as the building progressed. Again, it is implicit in the trial court’s findings that the sum of $250.00 was reasonable. After review of the record, we find that the evidence does not preponderate against the trial court’s award of $14,250.00 in liquidated damages." Id.

Proposed amendment to construction lien law will allow owner to post and serve notice of completion on prime and remote contractors

SB 2950/HB 3102 - Mechanic's and materialmen's liens. Modifies provisions regarding mechanic's and materialmen's liens and notices pertaining thereto. Permits other authorized parties in addition to the owner or purchaser to serve notice of completion recorded with the register of deeds. States that no notice is required to be served on prime contractor if owner is also the general contractor. (S: Haynes; H: Curtiss)
Senate Status: Referred to Senate Judiciary.
House Status: House Utilities, Banking & Small Business Subcommittee deferred to 03/18/2008.

"(d)(1) On the same date of the recording of the notice of completion, a copy of the notice shall be served on each prime contractor and remote contractor who has served the required notice of nonpayment, pursuant to § 66-11-145, and the prime contractor and remote contractor:
(A) For improvements to or on real property for one-family, twofamily, three-family and four-family residential units, shall have ten (10) days from such service to serve notice in accordance with this section, and if notice is not served within that time, then the lien rights of the claimant shall expire; or
(B) For all other contracts for improvements to or on real property, shall have thirty (30) days from such service to serve notice in accordance with this section, and if notice is not served within that time, then the lien rights of the claimant shall expire.
[(d)](2) The lien rights of the prime contractor and each remote contractor not
so notified shall not be affected by the notice of completion." SB 2950/HB 3102.

TCA 13-4-104 requires metropolitan area utility company to submit plans for construction within corporate city limits

Utility Construction within Corporate Limits of Another City - TN Attorney General Opinion 08-44 (March 4, 2008).

Attorney General Opinions found at the TBA website: http://www.tba2.org/tba_files/AG/2008/ag_08-44.pdf

Home purchaser must prove that homebuilder had actual knowledge of facts behind alleged misrepresentation to overcome 4-year statute of repose

SELMA P. GRIFFIN v. MUNFORD DEVELOPMENT COMPANY AND CHARLES WALKER (Tenn.Ct.App. March 6, 2008).
This case involves the statute of repose for actions based on improvements to real property. The defendant developer purchased and developed a lot for sale as part of a residential development. The plaintiff purchased the lot by warranty deed. The developer represented to the plaintiff that the lot was suitable for the construction of a residential dwelling. Relying on this representation, the plaintiff purchased the lot and built a house on it. Two years after the purchase, the house began to develop cracks in the foundation and exterior walls. Over the next two years, the problems worsened, so the plaintiff obtained an evaluation by professional engineers. The engineers informed the plaintiff that the house's structural problems may have arisen because the soil on which the house was built was unsuitable to support such construction. The plaintiff then sued the development company and its president, claiming fraudulent misrepresentation, breach of implied warranty, and breach of express warranty. The defendants moved for summary judgment, asserting that the four-year statute of repose on claims involving improvements to real property barred the plaintiff's action. The plaintiff argued that the statute of repose was not applicable because her claims were based on misrepresentation. The trial court granted the defendants' motion, and the plaintiff appeals. We affirm, finding that the plaintiff failed to introduce evidence that any of the defendants had knowledge that the soil conditions were unsuitable to support a residential dwelling at the time the alleged misrepresentations were made.

Cases available at the Tennessee Bar Association website: http://www.tba2.org/tba_files/TCA/2008/griffins_030608.pdf

"In their statement of undisputed facts, the Defendants noted that Munford Development sold Lot 414 to Griffin on June 5, 2001; that Griffin began seeing cracks and other defects in the walls, floors, and foundation of her house in 2003; and that Griffin’s complaint was not filed until October 3, 2005. In light of these facts, the Defendants argued that the four-year statute of repose, set forth in Tennessee Code Annotated § 28-3-202, barred Griffin’s action. In Griffin’s response to the Defendants’ motion for summary judgment, she argued that because the Defendants had engaged in fraud, Tennessee Code Annotated § 28-3-205 precluded them from relying on section 28-3-202." Id.

"In Griffin’s response to the Defendants’ motion for summary judgment, on the issue of the Defendants’ knowledge, Griffin did not point to overlooked evidence, produce additional evidence, or request additional time for discovery. We have only Griffin’s evidence of the unsuitable soil conditions and her bare assertions regarding the Defendants’ knowledge and intent. Under these circumstances, we must find that Griffin failed to carry her burden to articulate specific facts showing that Defendants Walker and Munford Development had sufficient knowledge to support a finding by the trier of fact that their alleged misrepresentation about the suitability of the soil for construction was either intentional or reckless. Accordingly, Griffin cannot rely on Tennessee Code Annotated § 28-3-205(b), and the trial court properly concluded that the four-year statute of repose is applicable to Griffin’s cause of action." Id.

"Flowdown" or "conduit" clause allows general contractor to enforce forum selection provision found in owner-GC contract

ESI COMPANIES, INC. v. RAY BELL CONSTRUCTION COMPANY, INC., ET AL. (Tenn.Ct.App. February 29, 2008).
This appeal involves the applicability and enforceability of a forum selection clause in a construction contract. The contract was for the design and construction of a Kentucky correctional facility. The contract between the Commonwealth of Kentucky and the general contractor, a Tennessee corporation, provided that all actions on the contract must be filed in Franklin County Circuit Court in Frankfort, Kentucky. The general contractor entered into a subcontract with another Tennessee corporation for the performance of certain work on the Kentucky correctional facility. The subcontract incorporated all terms of the original contract by reference and contained a "flow-down" provision. The subcontractor later sued the general contractor in Shelby County, Tennessee. When the general contractor moved to dismiss for lack of venue, the subcontractor contended that the forum selection clause did not apply to its claims. The subcontractor also contended that the forum selection clause was unenforceable under the facts of this case. The trial court found in favor of the subcontractor. We granted the general contractor's Rule 10 application for extraordinary appeal. We reverse and remand, finding that the forum selection clause was applicable and enforceable, and the lawsuit should have been filed in Kentucky.

Cases available at the Tennessee Bar Association website: http://www.tba2.org/tba_files/TCA/2008/esi_022908.pdf

"The General Contractor also argues that the forum selection clause requires the Subcontractor to file its lawsuit in Kentucky because of the following provision of the Subcontract: 'Article VII - (a) Contractor shall have the same rights and privileges as against the Subcontractor herein as the Owner in the Design/Build Contract has against Contractor. Subcontractor shall have the same rights, remedies and privileges against the Contractor herein as the Contractor in the Design/Build Contract has against Owner.'" Id.

"The aforementioned provision is an example of a “flow-down” or “conduit” clause. Flow-down clauses are commonly used in subcontracts and are closely related to the concept of incorporation by reference. See T. Bart Gary, Incorporation by Reference and Flow-Down Clauses, 10 Constr. Lawyer 1, 45 (Aug. 1990). “If the clause functions as intended, the same rights and obligations of the subcontractor should flow from the subcontract up through the general contractor to the owner, and conversely down the same contractual chain.” Id. The use of flowdown clauses “represents efforts to ensure consistency of obligations throughout the various tiers of the contracting process.” Id. at 44." Id.

"We agree with the General Contractor’s contention, as the Subcontract clearly provided that “ALL TERMS AND CONDITIONS OF THE CONTRACT BETWEEN THE COMMONWEALTH OF KENTUCKY AND RAY BELL CONSTRUCTION COMPANY, INC. ARE FULLY INCORPORATED HEREIN BY REFERENCE.” Because the terms of the Contract were expressly incorporated into the Subcontract, the language of the Contract became a part of the Subcontract, and both writings must be construed together. See Staubach Retail Services-Southeast, LLC v. H.G. Hill Realty Co., 160 S.W.3d 521, 525 (Tenn. 2005); T.R. Mills Contractors, Inc. v. WRH Enterprises, LLC, 93 S.W.3d 861, 870 (Tenn. Ct. App. 2002). ... Pursuant to the flowdown clause, the General Contractor has the same right to enforce the forum selection clause against the Subcontractor. Similarly, the General Contractor’s corresponding remedy against the Owner was to file an action in Kentucky, and pursuant to the flow-down provision, the Subcontractor has that same remedy." Id.

Change orders failing written requirement are awarded equitably; Contractor who agreed to authorities' "specifications" was subject to all of them

M. R. STOKES COMPANY, INC. v. MICHAEL L. SHULAR, ET AL. (Tenn.Ct.App. February 27, 2008).
This is a construction case. In a contract prepared by the plaintiff, contractor agreed to install sewer lines, water lines, roads and to perform certain site preparation work for a section of a subdivision development owned by the defendant-owner. The total contract price is $925,000, which includes the material and labor to complete the project. The trial court entered judgment for contractor. Owner appeals and contractor cross-appeals. We affirm in part, reverse in part, and remand for further proceedings consistent with this opinion.

Cases available at the Tennessee Bar Association website: http://www.tba2.org/tba_files/TCA/2008/stokesm_022708.pdf

"It is well-settled in Tennessee that contract provisions can be waived, especially in construction projects because of the nature of construction which often require decisions to be made quickly to keep the project progressing. Moore Constr. Co. v. Clarksville Dep’t of Elect., 707 S.W.2d 1, 13 (Tenn. Ct. App. 1985). It is common for courts to find that “an owner has waived a written notice requirement in cases where extra work has been ordered verbally by the owner or the extra work has been performed with the owner's knowledge and without its objection.” Id. (citations omitted). The course of dealing between the parties can also amount to a waiver where the conduct of the parties makes it clear that they did not intend to rely strictly upon a contract's written notice requirement. Realty Shop, Inc. v. RR Westminster Holding, Inc., 7 S.W.3d 581, 601 (Tenn. Ct. App. 1999)." Id.

"We find that the parties “have not expressly or implicitly agreed upon a reasonable price nor have they agreed upon a practicable method of determination of price.” Accordingly, we hold that any agreement to “settle up” based upon “time and materials” at the end of the Project is unenforceable. Although we find that no enforceable contract exists, it would be inequitable for Owner to receive a windfall for the improvements Contractor made on Owner’s behalf. For that, we turn to equitable remedies. It is well settled that the theories of unjust enrichment, quasi contract, contracts implied in law, and quantum meruit are essentially the same. Paschall's, Inc. v. Dozier, 407 S.W.2d 150, 154 (Tenn. 1966). Unjust enrichment is a quasi-contractual theory or is a contract implied-inlaw in which a court may impose a contractual obligation where one does not exist. Whitehaven Community Baptist Church v. Holloway, 973 S.W.2d 592, 596 (Tenn. 1998) (citing Paschall's, 407 S.W.2d at 154-55). Such contracts are not based upon the intention of the parties but are obligations created by law and are “founded on the principle that a party receiving a benefit desired by him, under the circumstances rendering it inequitable to retain it without making compensation, must do so.” Paschall's, 407 S.W.2d at 154." Id.

"The Contract does not say “Contractor agrees to comply with the Standards and Specifications manual” or “agrees to pass all WHUD objective tests,” but rather that Contractor agrees to meet all White House Utility specifications. ... A plain language reading of the Contract indicates that Contractor agrees to comply with what White House Utility District specifies, whether written or not, subjective or objective. The term “specifications” is, by its nature, a broad term. Had Contractor intended to be bound to a more narrow definition, it should have drafted the Contract language accordingly. Contractor had worked with WHUD before and was aware of WHUD’s strict guidelines when drafting the Contract. The purpose of the Contract between Contractor and Owner was for Contractor, in part, to install the sewer lines for Owner so that Owner could develop an operating subdivision with plumbing that is acceptable to WHUD. Contractor did not fulfill its obligations under the Contract, and we reverse the trial court’s decision holding that Contractor did not breach its Contract with Owner." Id.

"Owner refused to pay the Contractor its final pay application, which was the retainage amount of $43,678.00. ... Our review of the record reveals that when the final pay application was submitted, Contractor had not completed its obligations under the Contract. The sewer lines had not been accepted by WHUD and a portion of the lines needed repairs. The retainage was not due until 30 days after completion. Having found that Contractor breached its Contract with Owner and did not complete its obligations under the Contract, we find that the retainage is not due to Contractor." Id.

Expert and lay testimony regarding causation, even if somewhat vague, is enough to survive summary judgment

THOMAS MORROW, ET AL. v. RONNIE BULL, ET AL. (Tenn.Ct.App. February 27, 2008).
The tenants, who leased a newly-constructed house from the builder/owner, sued the builder/owner alleging, among other things, that the house was negligently constructed in that it was built on a site that unreasonably exposed the house to excessive moisture and with a deficient water runoff and drainage system. The tenants sought compensation for personal injury and property damage allegedly caused by toxic mold in the house due to excessively wet basement walls. The trial court granted the builder/owner summary judgment. Upon review, we vacate the trial court's summary judgment based on our finding that genuine issues of material fact exist.

Cases available at the Tennessee Bar Association website: http://www.tba2.org/tba_files/TCA/2008/morrowt_022708.pdf

"The trial court ruled that Mr. Tiano’s affidavit was insufficient to create a genuine issue of material fact, stating that “the affidavit does not point to any one condition which did cause the mold and, therefore, deals in possibilities, not probabilities.” While Mr. Tiano’s opinion as to potential causation of the mold infestation could have been stated with more certainty, it is clearly not so vague as to be completely discounted on a summary judgment determination. We note in this regard that all nine of the possible causes identified by Mr. Tiano involve defective or insufficient construction of the house." Id.

"The combination of the expert and lay testimony clearly creates a genuine issue of material fact regarding whether water runoff from the school construction caused the mold growth under plaintiffs’ home, especially when viewing the evidence in the light most favorable to plaintiffs." Id. (citing Hardaway v. Hamilton County, No. E2006-01977-COA-R3-CV, 2007 WL 4207930, at *2 (Tenn. Ct. App. E.S., filed Nov. 29, 2007)).

Actual notice of restrictive conenants prevents estoppel argument, even when the covenants were not technically part of the deed

JOE GAMBRELL, ET AL. v. SONNY NIVENS, ET AL. (Tenn.Ct.App. February 27, 2008).
This case involves the enforcement of restrictive covenants in equity. After subdividing their property, imposing restrictions on the three lots they sold, and retaining the remaining land, vendors brought suit against remote grantees to enforce the restrictive covenants and to enjoin them from operating a wedding chapel, for commercial use, on the land. The central issue on appeal is whether the restrictions bind the remote grantees when the covenants were listed on an undated and unsigned attachment to a deed that neither identified encumbrances nor incorporated the attached restrictions. Following a trial on the matter, the trial court permanently enjoined the commercial activity because the remote grantees took title with actual notice of the restrictions. Finding ample support for the imposition of an equitable servitude, we concur in the trial court's judgment. Affirmed and remanded.

Cases available at the Tennessee Bar Association website: http://www.tba2.org/tba_files/TCA/2008/gambrellj_022708.pdf

"[T]he Nivenses had actual notice of the restrictions. Generally, factual assertions contained in a deed bind the grantor and the grantee. Duke v. Hopper, 486 S.W.2d 744, 748 (Tenn. Ct. App. 1972). To assert estoppel, however, a party damaged by a false factual assertion must establish (1) its lack of knowledge, without fault, of the true facts, (2) its reliance upon the false factual assertion, and (3) its consequent action based upon that untrue statement. Id. ... They could not have reasonably relied on the face of the Gambrell-Foshee deed when they had actual notice of the restrictions." Id.

"An equitable servitude is a “covenant respecting the use of land enforceable against successor owners or possessors in equity regardless of its enforceability at law.” 2 American Law of Property § 9.31 (A.J. Casner ed. 1952). ... For a covenant to bind remote grantees in equity, (1) it must “touch and concern” the land; (2) the original parties to the covenant must intend that it run with the land and bind remote grantees; and (3) the remote grantee must have had notice of the covenant. Id. at *1-*2 (quoting 5 Richard R. Powell & Patrick J. Rohan, The Law of Real Property § 673 (1991)). To have binding effect, valid restrictions on property need not be in the chain of title if the purchaser had actual notice of them. [citations omitted]. Nonetheless, even where the remote grantee takes title with actual notice, the first two requirements - - that the covenant “touch and concern” the land and that the original parties intend the covenant to run - - must still be established." Id.

"Under Tennessee law, undated and unsigned writings located below the signatures and the certificate of acknowledgment in a deed do not constitute part of that deed. Anderson v. Howard, 74 S.W.2d 287, 390 (Tenn. Ct. App. 1934). To conclude otherwise would “open wide the door to the perpetration of fraud.” Id. But there is no dispute regarding the agreement between the Gambrells and Mr. Foshee at the time of the conveyance. The record makes clear that the language of the deed itself did not express the true intention of the parties. In his deposition, Mr. Foshee unequivocally stated that the terms of their contract included the restrictions, that he understood the restrictions would run with the land for thirty years, and that the list was attached to the deed and duly recorded. Despite the omission of encumbrances on the face of the Gambrell-Foshee deed, Mr. Foshee never believed his property to be unencumbered. Certainly, the undated, unsigned, and unacknowledged written covenants fail in form; however, the original covenanting parties confirmed their substance." Id.

Description of real property in contract for sale failed to adequately define dimensions and was therefore unenforceable under the statute of frauds

BRIGADOON PARTNERS, LLC v. DALE HUGHES, ET AL. (Tenn.Ct.App. February 27, 2008).
The plaintiff purchaser brought this action for specific performance of an agreement for the sale of a parcel of real estate. The trial court granted the seller summary judgment upon its finding, among other things, that the property description in the agreement was insufficient to satisfy the requirements of the statute of frauds. We affirm the trial court's judgment that the description of the property, which was to be divided from a larger tract owned by the seller, as "[i]n Cleveland, Tennessee, fronting on Paul Huff Pkwy at exit 27, and being further described as 1.5 acres fronting on the PKWY and I-75," was insufficient, and therefore the sale agreement was unenforceable pursuant to the statute of frauds.

Cases available at the Tennessee Bar Association website: http://www.tba2.org/tba_files/TCA/2008/brigadoonpartners_022708.pdf

"As in Gorbics, the property description in the agreement in this case makes it possible to ascertain one definite corner of the property to be sold – the southwest corner – because the tract is said to front I-75 and the Paul Huff Parkway. But it is impossible to tell the shape or dimensions of the parcel, and to determine how much, if any, frontage on Ellis Circle Drive the parties intended to include in the sale, because, as in Gorbics, the parcel to be sold was to be divided from a larger tract owned by the sellers. The trial court so held, noting that “[t]here is an unlimited number of shapes that this property could in the defendants’ four acres2 that this Court is not at liberty to make decisions concerning.” Because “the description employed is one that must necessarily apply with equal exactness to any one of an indefinite number of tracts,” Dobson v. Litton, 45 Tenn. (5 Cold.) at 620, 1868 WL 2161 at *2, parol evidence was inadmissible to show that the parties intended to designate a particular tract by the description. Id." Id.

Certain water/wastewater authorities have a statutory obligation to maintain sewer lines beyond customer property lines

Effect of Statute Requiring Maintenance of Sanitary Sewer Connections - Tenn. Attorney General Opinion No. 08-35 (February 26, 2008).

Opinions available at the Tennessee Bar Association website: http://www.tba2.org/tba_files/AG/2008/ag_08_35.pdf

"The obligation for maintaining sewer lines beyond the property line of a customer, then, applies to any water and wastewater treatment authority created in accordance with Tenn. Code Ann. §§ 68-221-601 to 68-221-618 that also meets the criteria in Tenn. Code Ann. § 68-221-209(b)(1)(A) and (B) above. The provisions for maintaining sewer line connections in Tenn. Code Ann. § 68-221-209(b)(1) were added to the statute in 1999. According to [TDEC], which regulates these entities, this legislation applies to a number of existing water and wastewater treatment authorities in Tennessee, and not just the Hamilton County Water and Wastewater Treatment Authority. It is the opinion of this Office, therefore, that the provisions in Tenn. Code Ann. § 68-221-209(b)(1), requiring maintenance of sanitary sewer connections, constitute a general law of statewide application and a uniform policy on the maintenance of public sewage treatment works." Id.

Parties purchasing sewer taps for future use should contract for exclusivity and priority of their use

JOHN R. SHOMO ET AL. v. CITY OF FRANKLIN, TENNESSEE (Tenn.Ct.App. February 25, 2008).
The Shomos owned several sewer taps on undeveloped property. The City of Franklin sold sewer taps on the property, offering lower prices than the Shomos. The Shomos sued Franklin asserting causes of action for breach of contract, unjust enrichment, conversion, and violation of the duties of a public utility. The trial court granted Franklin's motion to dismiss on the grounds that the complaint contained no set of facts that would entitle the Shomos to any relief according to law. We affirm.

Cases available at the Tennessee Bar Association website: http://www.tba2.org/tba_files/TCA/2008/shomoj_022508.pdf

"The Shomos contend that Wills had an 'understanding' with MLSTC that as to the Wills properties these taps would be sold first. An 'understanding' is not necessarily an enforceable contract. In fact, the Shomos have failed to allege that Wills and MLSTC had a binding or enforceable contract regarding MSLTC’s sale of future taps. The Shomos attach great significance to a letter written by Franklin’s attorney in 2002. Yet, what is absent from that letter is more significant than what is in it. The letter contains no indication by Franklin of exclusivity or priority for the Shomos’ taps in relation to the Wills properties. It recognizes the right of Wills or his affiliates to use the taps in connection with his properties. It does not recognize an obligation on Franklin’s part to require the use of those taps at the beginning of development or at any time thereafter." Id.

Fair rental value damages must not be "disproportionate, speculative, or unfair"

BEVERLY C. SMITH v. RONNIE R. SMITH ET AL. (Tenn.Ct.App. February 22, 2008).
Buyers of commercial property, who were denied possession of that property for a period of two years, appeal from the trial court's determination that they failed to carry their burden of proving a fair rental value for one of the three units of the property. Finding that the evidence preponderates against the trial court's determination, we reverse.

Cases available at the Tennessee Bar Association website: http://www.tba2.org/tba_files/TCA/2008/smithb_022208.pdf

"The unrebutted testimony of Ronnie Smith established a fair rental value of $600 per month for C Building. Moreover, the cancelled checks of Mr. Buckner supported Mr. Smith’s testimony concerning his current rental agreement with Mr. Buckner, which includes $600 in rent for C Building. The amount Ronnie Smith and Mr. Bucker agreed to in an arms-length transaction is at least some evidence of the rental value at the time of the breach. See BanccorpSouth, 223 S.W.2d at 231; Myer v. Whitacre, No. 01-A-01-9701-CH00014, 1997 WL 367483, at *2 (Tenn. Ct. App. July 2, 1997). ... In this context, the $600 rental value for C Building does not seem disproportionate, speculative, or unfair." Id.

Cout finds implied terms of contract for construction of cable television system to be "same as or better" than existing system within six months

BOGGS KURLANDER STEELE, LLC V. HORIZON COMMUNICATIONS, INC. (Tenn.Ct.App. February 22, 2008).
This appeal involves a declaratory judgment regarding the termination of a contract to install a cable system and provide cable service to a trailer park as well as a counter-complaint for damages. The trial court determined that the contract was properly terminated and dismissed the counter-complaint. On appeal, the Appellant argues that (1) the Appellee waived its contractual right to have this matter decided pursuant to Kentucky law; (2) that the trial court erred in determining that it materially breached the contract by failing to install a new system in a timely manner; (3) that the trial court erred in determining that it did not provide cable service equal to the service rendered by the former cable provider; (4) that the trial court erred in determining that the contract was properly terminated; (5) that it is entitled to damages because the Appellee failed to notify the Appellant with information about new residents as required by the contract; and (6) that the trial court erred by awarding the Appellee its attorney's fees and failing to award the Appellant its attorney's fees. We find that the Appellee has waived its right to have this matter determined pursuant to Kentucky law. The trial court did not err in determining that the Appellant materially breached the contract by not providing cable service equal to the service previously provided and that the contract was properly terminated. Furthermore, we find that the Appellant is not entitled to damages because the Appellant did not prove what damages it incurred due to the Appellee's failure to provide the homes of new residents as required by the contract. Finally, the trial court did not err in awarding the Appellee's attorney's fees. The judgment of the trial court is affirmed, and this cause is remanded to the trial court for the award of Appellee's attorney's fees on appeal.

Cases available at the Tennessee Bar Association website: http://www.tba2.org/tba_files/TCA/2008/boggskurlandersteele_022208.pdf

"[T]he majority owner of Horizon testified that his company installed higher grade amplifers, replaced defective amplifiers, began replacing old cable with more appropriate cable and “it was made very clear that the old system would stay in place to ensure a smooth transition for when we did rebuild the system.” He further testified that to improve the signal quality, they decided to go to a digital system immediately and did so. Therefore, ... we find that the parties reasonably expected Horizon’s system to be the same as or better than Mr. Clinnard’s system. Thus, Horizon was required by the Contract to provide cable service equal to or better than Mr. Clinnard’s system." Id.

"Since the trial court found, without objection by either party, that six months was a reasonable time for the transition to take place, Horizon had six months from the date of the Contract to provide cable service equal to or better than Mr. Clinnard’s system, and Horizon breached the contract by not providing cable service that met that requirement. ... [W]e find that the preponderance of the evidence supports the trial court’s finding that Horizon did not provide cable service equal to or better than Mr. Clinnard’s system within the six month transition period. Thus, Horizon breached the Contract on December 26, 2003, six months after the date of the contract, and the breach was clearly material because cable television service was what the Contract was all about." Id.

Court looked to understandings between parties to a real estate transaction and awarded a prescriptive easement for access

WILLARD D. GORE, ET AL. v. TONY STOUT, ET AL. (Tenn.Ct.App. Feb. 20, 2008)
This appeal involves a dispute between two landowners over use of a route across the defendants' land that the plaintiffs use for access to their nearby land. Plaintiffs filed suit contending they had a right to use the disputed route. The trial court determined that the route had been dedicated and accepted as a public road, that the plaintiffs were entitled to a prescriptive easement over the defendants' land, and that the plaintiffs had a right to use the road by adverse possession. We have determined that the contested section of the route is not a public road, that adverse possession does not apply, and that the plaintiffs are entitled to a prescriptive easement over the defendants' land.

Cases available at the Tennessee Bar Association website: http://www.tba2.org/tba_files/TCA/2008/gorew_022008.pdf

"To establish a public road by implication, the proponent must satisfy two requirements. First, the landowner must intend to dedicate the road to the public. McCord v. Hays, 302 S.W.2d 331, 333 (Tenn. 1957). Second, the public must expressly or impliedly accept the road. Id. The burden of proof is heavy. In short, the proponent must present 'proof of facts from which it positively and unequivocally appears that the owner intended to permanently part with his property and vest it in the public, and that there can be no other reasonable explanation of his conduct. In other words, dedication is a question of intention, and the intent must be clearly and satisfactorily proven.' ... Mr. Stout asked the county to gravel the entire length of the track. But this was just an attempt to get a little free work, to “gouge” the county as Mr. Stout put it. His intent was to save money, not to donate a road to the county. The county declined his request." Id. (quoting McKinney v. Duncan, 118 S.W. 683, 684 (Tenn. 1909)).

"An easement is an interest in another's real property that confers on the easement holder an enforceable right to use that real property for a specific use. Brew v. Van Deman, 53 Tenn. (6 Heisk.) 433, 436 (1871)). The most common form of an easement is a right of passage across another's property. Shew v. Bawgus, 227 S.W.3d 569, 578 (Tenn. Ct. App. 2007). In Tennessee, easements can be created in several ways: (1) express grant, (2) reservation, (3) implication, (4) prescription, (5) estoppel, and (6) eminent domain. Pevear v. Hunt, 924 S.W.2d 114, 115-16 (Tenn. Ct. App. 1996). A prescriptive easement is an implied easement that is premised on the use of the property rather than language in a deed. Shew, 227 S.W.3d at 578. To create a prescriptive easement, the use and enjoyment of the property must be adverse, under a claim of right, continuous, uninterrupted, open, visible, exclusive, with the knowledge and acquiescence of the owner of the servient tenement, and must continue for the full prescriptive period. Pevear, 924 S.W.2d at 116 (citing Keebler v. Street, 673 S.W.2d 154 (Tenn. Ct, App. 1984). The proponent must prove each of the elements by “clear and convincing evidence.” Stone v. Buckley, 70 S.W.3d 82, 86 (Tenn. Ct. App. 2001). In Tennessee the prescriptive period is twenty years. Nashville Trust Co. v. Evans, 206 S.W.2d 911, 913 (Tenn. Ct. App. 1947). ... All of this evidence – Johnson and Mr. Gore’s discussions, the fact that there is no other feasible access to Gore’s land, and their use of the route both before and after the sale – can only lead to one conclusion: Johnson and Gore had a parol understanding that Johnson was transferring the right to use the route." Id.

Tennessee statute mandates that local governments contracting with "pure" construction managers must use competitive bidding and licensed contractors

Local Government Contracts With "Pure" Construction Managers

TN Attorney General Opinions
Date: 2008-02-01
Opinion Number: 08-16

http://www.tba2.org/tba_files/AG/2008/ag_08_16.pdf

"Tenn. Code Ann. § 12-4-106(a)(1) does not prohibit local government contracts for 'pure' construction managers from being awarded based on competitive bids. ... Pursuant to Tenn. Code Ann. § 62-6-103(a)(1), any corporation engaged in contracting in Tennessee must be licensed as provided in the Contractors Licensing Act of 1994, Tenn. Code Ann. § 62-6-101, et seq. ... Tenn. Code Ann. § 5-7-107 does not authorize counties to contract with 'pure' construction managers without competitive bidding. Rather, that statute permits local governments to contract with construction managers to superintend construction projects." Id.

Get it in writing: a ledger entry plus testimony provides evidentiary basis to defeat claim of amendment of JV agreement to construct a home for sale

STINSON, INC. v. JOHNATHAN ANDREW COOK (Tenn.Ct.App. January 25, 2008).
The two parties to this appeal entered into a joint venture based upon an oral agreement, the purpose of which was to construct a house with the intent to sell the house on the open market. Unfortunately, no one agreed to purchase the house, and thus, pursuant to the venturers' oral agreement, the defendant purchased the house "at cost." The plaintiff sued the defendant contending it was entitled to an additional $30,000 based upon an alleged subsequent agreement by the defendant to purchase the lot upon which the house was constructed for $50,000 even though the plaintiff's cost to purchase the lot was $20,000. The trial court found the parties' agreement provided that the defendant would purchase the house and lot at cost, that the cost of the lot was $20,000, and that the defendant had paid the plaintiff all it was entitled to receive. Finding no error, we affirm.
http://www.tba2.org/tba_files/TCA/2008/cookj_012508.pdf

"And two times in this matter, the lot in question, 157, was shown of an actual cost of $20,000. It was shown on the oath of Mr. Stinson upon the transfer from Plantation Properties to Stinson, Incorporated, and it was shown on the Stinson job ledger sheet. And by a preponderance of the evidence, the cost of the lot was $20,000. ... As the foregoing reveals, the trial court found that the parties’ agreement provided that Cook would purchase the lot “at cost,” that the lot cost Stinson $20,000, and that Cook paid Stinson all of its costs, including $20,000 it was entitled to receive for the cost of the lot. Moreover, the court did not find that the parties had entered into a subsequent agreement or that they had amended their joint venture agreement." Id.

The law of adverse possession and related legal doctrines are thoroughly examined in this court opinion

ROGER BALL and CARROL E. ROSE, LLC., v. BRUCE MCDOWELL, Individually and as Next Friend for D.B., C.B., B.B., Children under the age of Eighteen (18) years, PENNY CAYLOR, GARY ESTES, BRYAN KEITH BROCK, WARREN YONTS and PAULINE YONTS and JAMES D. YONTS (Tenn.Ct.App. January 18, 2008).
In this action, plaintiffs ask the Court to declare their easement across defendants' lands be cleared of all encroachments and that defendants be barred from interfering with their use. The Trial Court ruled for plaintiffs. Defendants appeal on the grounds they proved adverse possession of the easement for more than seven years, and plaintiffs are barred from interfering with their use by Tenn. Code Ann. section 28-2-103. We reverse the Trial Court's Judgment.
http://www.tba2.org/tba_files/TCA/2008/ballr_011808.pdf

"At trial, plaintiffs did not offer any evidence to rebut the testimony regarding the use of the 50 ft. easement. The Trial Court incorrectly applied the law, when it refused to find that Tenn. Code Ann. § 28 - 2 - 103 barred plaintiffs’ cause of action. The Trial Court further erred when it found that there was no adverse possession because “the owner had no actual notice of the claim of adverse possession.” A showing of actual knowledge is not necessary if the possession is so open and notorious that there is an implied presumption of that fact. Kirkman v. Brown, 93 Tenn. 476, 27 S.W. 709, 710 (Tenn.1894). The evidence establishes defendants’ possession was open and notorious. Moreover, plaintiffs offered no testimony as to whether they were aware of the defendants’ activities or not." Id.

Simple tool doctrine is abolished because it is essentially a variation of the assumption of risk defense

CHARLES ROBERT BAGGETT v. BEDFORD COUNTY, TENNESSEE (Tenn.Ct.App. January 16, 2008).
This is a comparative negligence case. The plaintiff prisoner was incarcerated at the defendant county's jail. The inmates were given an opportunity to earn a reduction in their sentences by performing construction work to expand the jail's workhouse facility. The plaintiff volunteered for this program and was assigned the task of hanging cement board on the walls of the workhouse; the jail provided the plaintiff with a scaffold and a step ladder. The plaintiff was told to hang one of the boards at a height that could not be reached by standing on the scaffold alone. To perform the task, the plaintiff put the ladder on top of the scaffold and climbed the ladder. In doing so, he lost his balance, the scaffold collapsed, and he fell to the floor, sustaining serious injuries. The plaintiff prisoner sued the county under the Governmental Tort Liability Act, seeking damages for his injuries. The county moved for summary judgment, asserting the simple tool doctrine and comparative negligence. The trial court granted the motion on both grounds. The plaintiff appeals. We reverse, finding, inter alia, that the simple tool doctrine is a form of assumption of the risk and, as such, has been abolished in favor of comparative negligence.
http://www.tba2.org/tba_files/TCA/2008/baggettc_011608.pdf

"The simple tool doctrine is clearly grounded in the principle of implied assumption of risk, unequivocally abolished in Perez. Because the simple tool doctrine is a variation of assumption of risk, we hold that it too must be considered abolished in favor of comparative negligence." Id.

Trial court believes construction company's testimony over homeowner; Reasonable opportunity to cure violated by prohibiting contractor from entering

DAVID LAVY d/b/a DL CONSTRUCTION v. JOAN CARROLL (Tenn.Ct.App. December 27, 2007).
This is a home construction case in which the homeowner appeals the trial court's decision finding her liable to the contractor for the amount remaining due under their original agreement as well as for subsequently authorized modifications. The homeowner contended below that the contractor's work was defective, but the trial court ruled that she was required to have given the contractor notice of any defects in his work and then afforded him a reasonable opportunity to cure these alleged deficiencies. On appeal, the homeowner argues that the trial court erred both in finding that she had not done this and in holding that these actions were required of her as a matter of law. We affirm.
http://www.tba2.org/tba_files/TCA/2007/lavyd_122707.pdf

"Mr. Lavy testified that he was prohibited from ever returning to Ms. Carroll’s property after the incident on January 22, 2005. Testimony from Mr. Underhill corroborated Mr. Lavy’s account of these events. Thus, there was certainly evidence from which the trial court could have concluded that Mr. Lavy had not been provided a reasonable opportunity to cure. Put simply, the trial court believed Messrs. Lavy and Underhill rather than Ms. Waite. Because the evidence does not preponderate against the trial court’s findings, see Tenn. R. App. P. 13(d), we conclude that Ms. Carroll’s argument here is without merit." Id

"The trial court did not find that Mr. Lavy had been previously notified of any problems with his work, nor did it find that Mr. Lavy had ever refused to address any issues that had been brought to his attention. It did find, however, that, soon after he made his request for final payment, Ms. Carroll’s agents prohibited him from reentering the property. While Ms. Carroll contends that Mr. Lavy’s requesting payment and making filings with the Register of Deeds relieved her of the obligations imposed by McClain and Carter, she has failed to cite any law which would support this proposition. Likewise, the Court is unaware of any such authority. Filings under the lien law would have no effect on her duty to first give the contractor notice of the claimed defects and then allow him a reasonable opportunity to cure." Id

"Virgin" land surveys may trump multiple prior surveys based on the same inaccuracy

RALPH DAVIS, ET AL. v. DANIEL CUEL, ET AL. (Tenn.Ct.App. December 27, 2007).
In this boundary line dispute, Ralph Davis and his wife Jackie Davis ("the Davises") sued Daniel Cuel and Francine Cuel ("the Cuels"), alleging that the Cuels had improperly claimed a portion of the Davises' property as their own. Existing surveys supported the Cuels' claim, but the Davises asserted that a prior agreement gave them the right to an additional 0.42-acre tract ("the southern disputed area") on the Cuels' side of the survey boundary. The Cuels, meanwhile, believed that they were entitled to more land than the existing surveys indicated, so they hired a surveyor, Dave Bruce, to conduct a new survey ("the Bruce survey"). The Bruce survey indicated that the Cuels are entitled not only to the southern disputed area, but also to an additional area north of it ("the northern disputed area"), on what the earlier surveys had regarded as the Davises' side. The Bruce survey further indicated that an additional tract claimed by the Davises, immediately north of the northern disputed area, is actually a county right-of-way. The trial court adopted the Bruce survey and awarded both the northern and southern disputed areas to the Cuels. As a consequence of this ruling, the Davises, the plaintiffs in this case, actually end up with less land than they started with. They appeal, claiming that the evidence preponderates against the court's factual findings, and also that they should have prevailed on a theory of estoppel or acquiescence. We hold that the evidence does not preponderate against the court's findings, and, even assuming that the Davises did not waive their alternative theories of recovery at trial, the evidence does not support those theories. We affirm.
http://www.tba2.org/tba_files/TCA/2007/davisr_122707.pdf

"Disregarding the deposition, we find no merit in the Davises’ claim that the evidence preponderates against the trial court’s findings. The Davises note that the Bruce survey contradicts four earlier surveys, including Mr. Crutchfield’s, which all showed the boundary line at the same place. However, as noted earlier, Mr. Bruce testified that his was a “virgin” survey, and the court was entitled to credit it over the prior, non-virgin surveys; the number of previous surveys reaching a contrary conclusion certainly does not create a preponderance where those earlier surveys were, according to testimony that the court was entitled to accept, all built upon one another. Similarly, it is not dispositive that the parties’ own deeds lack any reference to the right-of-way that the Bruce survey defines as the boundary. The testimony indicated that Mr. Bruce relied on documents which pre-dated those deeds, including deeds that preceded them in the chains of title. The court was entitled to believe that the “virgin” Bruce survey, based in part on early deeds and tax maps that Mr. Crutchfield did not consider, more accurately describes the boundary in question than the Crutchfield “retracing” survey does." Id.

Use of a product manufacturer's literature in a contract does not establish agency; Employee's use of "we" and "us" may not be used to pierce the veil

CHARLES BURNETTE, ET AL. v. THE ESTATE OF RICHARD GUIDER, ET AL. (Tenn.Ct.App. December 27, 2007).
Charles Burnette and Imogene Burnette ("Homeowners") allege that their driveway was damaged as a result of the faulty repair work of Concrete Maintenance Specialists ("CMS"), a company that employed, among others, Brian Cupp ("Cupp"). The repairs by CMS made use of a product sold by Fischl Enterprises, Inc., aka Lone Star Epoxies ("Lone Star"). Art Fischl is the principal of this corporation. No defect in the product is alleged, only a faulty installation by employees of CMS. Homeowners sued CMS, Cupp, Lone Star and several others (collectively "Defendants") seeking damages, claiming that CMS is directly liable, Lone Star is liable because CMS was its agent, and Cupp is liable because CMS's corporate veil should be pierced and Cupp is a principal of CMS. Cupp and Lone Star each filed a motion for summary judgment. Cupp argues that he was only an employee of CMS, not a principal, and thus could not be liable even if CMS's corporate veil were pierced. Lone Star argues that CMS was not its agent. The trial court granted both motions. Homeowners appeal, arguing that they successfully demonstrated the existence of material factual disputes regarding the issues pertaining to Cupp and Lone Star, and also that the trial court should not have granted summary judgment before ruling on Homeowners' motion to compel. We affirm.
http://www.tba2.org/tba_files/TCA/2007/burnettec_122707.pdf


"King states that “[m]uch of the technical information and some of the marketing information utilized by CMS were actually Lone Star documents which CMS used replacing the name ‘Lone Star Epoxies’ with the name ‘Concrete Maintenance Specialists’ which gave the impression that the products were actually CMS products.” This statement fails to help Homeowners because it does not allege that Lone Star played any role in altering the documents, which would be necessary to establish that they were representations or conduct of the purported principal rather than of the purported agent. In addition, the foundation of King’s statement is unclear, and she does not allege that the documents were actually used to make representations to Homeowners, only that the documents existed. This is clearly inadequate to create a disputed issue of material fact on the issue of apparent agency." Id.

"The affidavit of Burnette, one of the homeowner plaintiffs, states that he “was informed by Brian Cupp that he managed employees and supervised work such that he gave orders to perform certain work on my driveway[.]” Burnette further quotes Cupp as making various statements about CMS using words like “we” and “our.” To bolster this argument, Homeowners point to a lengthy transcript of a recorded telephone conversation between Burnette and Cupp. Homeowners argue in their brief that Cupp’s statements to Burnette are evidence that Cupp “held himself out as a person with management authority.” This they may be, but they are not evidence that he is a principal of the company. A mere employee may exercise “management authority,” and certainly may refer to his employer as “we” or “us.” An employee may also promise that his employer company will get work done by a date certain, and he may order subordinate employees to do the work. None of these actions suggest principal status. To hold Cupp liable on a veil-piercing theory, Homeowners needed to provide evidence that he is not merely a “person with management authority” of an alleged “joint family venture,” but that he is a principal, shareholder, officer or director of the company, whatever its corporate status. This they have failed to do." Id.

Final plat approval and commitment letter conditions precedent clauses keep new home construction delays from constituting breach of contract

ASHRAF KHALIL, ET AL. v. CARCAR DEVELOPMENT, INC. (Tenn.Ct.App. December 26, 2007).
This appeal arises from two consolidated breach of contract actions involving two separate but nearly identical residential real estate transactions. The buyers brought suit alleging that the seller breached its contracts by failing to complete construction of their homes by the closing date set out in the contracts. After the close of the plaintiffs' proof, the defendant moved for involuntary dismissal under Rule 41.02 of the Tennessee Rules of Civil Procedure, arguing that the seller's obligation to sell the homes never arose due to the buyers' failure to satisfy several conditions in the contracts. The Chancellor granted the defendant's motion for involuntary dismissal and denied the plaintiffs' motions to alter or amend. We affirm.
http://www.tba2.org/tba_files/TCA/2007/khalila_122607.pdf

"At the close of the plaintiffs’ proof, Seller moved for involuntary dismissal on the grounds that the evidence did not show that a lender commitment letter was received within 30 days of the execution of the contract or that final plat approval had been obtained. Seller argued that, because Buyers had not performed their obligations under the contracts, Seller had no obligation to sell them the homes. The Chancellor granted Seller’s motion for involuntary dismissal. The Chancellor concluded that, construing the evidence in the light most favorable to the plaintiffs as required under Rule 41, 'there is no evidence upon which the Court can reasonably infer that the Plaintiffs have sustained their burden of demonstrating that the Defendant failed to perform in accordance with the terms of the contracts.'" Id.

Fraudulent statements made by home builder to first purchaser suspend 4-year SOR, but do not constitute common law fraud against remote purchasers

ROBERT JENKINS ET AL. v. CHASE BROWN ET AL. (Tenn.Ct.App. December 17, 2007).
This appeal involves a dispute regarding the liability for the structural defects in a four-year-old house in a Mt. Juliet subdivision. Shortly after purchasing the house from its original owners, the property owners discovered that the house had been constructed on improperly compacted fill and other debris. When additional structural problems manifested themselves, the property owners filed suit in the Chancery Court for Wilson County seeking compensatory and punitive damages against the contractor who built the house and his wife, the original owners, the original owners' real estate agent and broker, their own real estate agent and broker, and their home inspector. Following an eight-day trial, the jury determined that the contractor and the original owners had engaged in intentional and reckless misrepresentation by concealing the house's structural problems. The jury also determined that both real estate agents and the developer of the subdivision were at fault. The jury awarded the property owners $58,720.80 in compensatory damages to be apportioned among the parties at fault. The jury also awarded the property owners $20,000 in punitive damages against one of the original owners and $50,000 in punitive damages against the contractor. The trial court reduced the punitive damage award against the original property owner to $14,000, and granted a judgment notwithstanding the verdict for the two real estate agents with regard to the property owners' Tennessee Consumer Protection Act claims. On this appeal, the property owners take issue with the dismissal of their claims against the real estate agents and their brokers based on their use of an outdated and incomplete real property disclosure form. The contractor also takes issue with the judgments awarded against him for compensatory and punitive damages. We have determined that the trial court did not err by dismissing the property owners' claims against the real estate agents and their brokers based on the use of the incomplete and outdated disclosure form. We have also concluded that the property owners presented insufficient evidence to establish their common-law fraud claim against the contractor who built the house. Accordingly, we reverse the portion of the judgment requiring the contractor to pay compensatory and punitive damages.
http://www.tba2.org/tba_files/TCA/2007/jenkinsr_121707.pdf

"Based on our review of the record, we have concluded that it contains sufficient material evidence to support the jury’s conclusion that Mr. Wright had committed 'fraud' with regard to his dealings with the Browns by concealing the extent to which fill material had been used on the lot and by asserting that the house had been constructed on 'original dirt.' This conduct amounts to 'fraud ... in performing the ... construction of' the house for the purpose of Tenn. Code Ann. § 28-3-205(b). Therefore, Mr. Wright was not entitled to assert the four-year statute of repose in Tenn. Code Ann. § 28-3-202 in this case." Id.

"It is important to note at the outset of this discussion that the 'fraud' that is relevant with regard to the application of Tenn. Code Ann. § 28-3-205(b) is different from the Jenkinses’ commonlaw fraud claim. In the context of Tenn. Code Ann. § 28-3-205(b), the fraud necessary to prevent a defendant from invoking the four-year statute of repose in Tenn. Code Ann. § 28-3-202 need not be made directly to the plaintiff. The same is not necessarily the case with regard to common-law fraud claims." Id.

"The Jenkinses concede that they never talked with Mr. Wright about the house. Likewise, there is no evidence in the record that the Jenkinses were privy to any of the misrepresentations that Mr. Wright may have made to the Browns regarding the structural stability of the house. Accordingly, there is no evidence upon which the jury could have concluded that the Jenkinses relied on any misrepresentations that Mr. Wright may have made. There is likewise no evidence that when Mr. Wright represented to Mr. Brown that the house was constructed on “original dirt” that he intended or understood that anyone other than Mr. Brown would rely on the statement. Thus, in light of the essentially undisputed evidence that Mr. Wright had no role in the Browns sale of the house to the Jenkinses, the Jenkinses cannot recover from Mr. Wright for fraud." Id.

County Powers Relief Act does not prevent cities from requiring residential developers to build or pay for sidewalks

Effect of County Powers Relief Act on City's Authority to Require Developers of Certain Real Property to Construct Sidewalks or Pay a Fee in Lieu of Construction (TN Attorney General Opinion 07-161, December 13, 2007).
http://www.tba2.org/tba_files/AG/2007/ag_07_161.pdf

"The Act restricts the enactment of impact fees and adequate facilities taxes after its June 20, 2006, effective date by providing that:
no county shall be authorized to enact an impact fee on development or a local real estate transfer tax by private or public act. In addition, this part shall be the exclusive authority for local governments to adopt any new or additional adequate facilities taxes on development. Tenn. Code Ann. § 67-4-2913 (2007)." Id.

"The Proposed Ordinance is not an adequate facilities tax. First, and most importantly, it is not a privilege tax on development. The Proposed Ordinance does not declare the development of property to be a taxable privilege. Also, unlike the taxes described above, it is not the intent of the Proposed Ordinance to ensure that developers pay their fair share of new or expanded public facilities caused by a substantial increase in property development. The City wants to create a network of sidewalks as part of its desire to promote the health, safety and welfare of the public. This desire exists outside of any residential development boom that might create the need for new or expanded sanitary sewers, roads, waterworks, and other facilities. Furthermore, the fee in lieu of construction is based on the actual cost of constructing the required sidewalk, not a calculation of the gross square footage or number of lots or units being developed. Finally, it must be noted that the default position of the Proposed Ordinance is for the developer to build the sidewalk, not for the City to impose a tax and collect revenue. Under the Proposed Ordinance, the City collects funds from the developer only when the developer requests a waiver of the construction requirement and the waiver is approved by the City’s Director of Engineering." Id.

"The General Assembly’s use of these particular terms demonstrates its desire to limit counties from enacting impact fees while allowing cities to do so. If the General Assembly had intended to limit cities, it could have used the term “local governments” as it did in the second sentence with regard to the restriction on adequate facilities taxes or the term “municipality” as it did in the third sentence." Id.

Partners in construction ventures must offer substantive evidence to back up allegations of fraudulent inducement, breach of fiduciary duty, duress

RICKY HOLLOWAY ET AL. v. CYRIL EVERS, ET AL. (Tenn.Ct.App. December 7, 2007).
A contractor who was a partner in a subdivision development venture sold his interest to the other partners for $175,000. He subsequently filed a complaint against them alleging that they had deliberately taken advantage of his weak financial and physical condition to force him out the partnership. His complaint included claims for violation of fiduciary duty, duress and fraud. The trial court dismissed the contractor's claim on summary judgment. We affirm.
http://www.tba2.org/tba_files/TCA/2007/hollowayr_120707.pdf

"We note that the Rules of Civil Procedure require that averments of fraud be stated with particularity. Tenn. R. Civ. P. 9.02; Black v. Black, 166 S.W.3d 699, 705 (Tenn. 2005). However,Mr. Holloway does not indicate in his pleadings nor in his argument on appeal exactly what material existing fact the defendants misrepresented at the time the partnership was formed that he reasonably relied upon to his injury, and we have not found any evidence in the record of any such misrepresentation." Id.

"We note that Mr. Holloway does not allege that Mr. Evers or Mr. Golden failed to account to the partnership for any property, profit, or benefit derived from the partnership, or that they dealt with the partnership on behalf of any party having an adverse interest to it, or that they competed with the partnership in the conduct of the partnership business. He also does not allege that either defendant engaged in grossly negligent or reckless conduct, intentional misconduct or a knowing violation of the law. He does claim that Evers and Golden acted in their own interest, but that is specifically permitted by Tenn. Code Ann. § 61-1-404(e)." Id.

"Mr. Holloway argues that the defendants took advantage of his relatively
weak financial situation and some health problems he was experiencing to coerce him into selling his partnership interest, and that this likewise constituted duress of property. His allegations, in and of themselves, do not address the required elements of duress. Further, he has presented no evidence of any wrongful or illegal act by Mr. Evers or Mr. Golden or even improper external pressure. The financial and health problems he was facing were unfortunate and undoubtedly caused him stress. However, they were not caused by the defendants, and many people are required to make business and other decisions while facing such problems. There is simply no evidence that some action by the defendants deprived Mr. Holloway of his free will to make the best decision he could in the circumstances." Id.

Government need only cure constitutional defects to preclude development of landfill with zoning ordinances

CONSOLIDATED WASTE SYSTEMS, L.L.C. v. METROPOLITAN GOVERNMENT OF NASHVILLE AND DAVIDSON COUNTY (Tenn.Ct.App. November 30, 2007).
The developer of a "construction and demolition" landfill appeals the denial of its application for a permit to construct the landfill. When the developer first applied for a permit in 1999 to develop the landfill, the Metropolitan Government denied the application based upon two zoning ordinances. In the lawsuit that ensued, the trial court found the ordinances unconstitutional. In the appeal that followed, this Court affirmed the trial court and issued a stay of 150 days to afford the Metropolitan Government the opportunity to cure the constitutional infirmities. The Metropolitan Government timely amended one of the ordinances in 2003, but not the other ordinance, believing the amendment to that ordinance cured the constitutional infirmities identified in the first appeal. Following the post-remand amendments to the ordinance, the developer renewed its request for a permit to construct the landfill. The Metropolitan Government again denied the permit, this time stating the landfill would violate Section 17.16.110(A)(2) of the Metro Code because the property was zoned in a district that permitted construction and demolition landfills with "conditions" and the proposed landfill did not meet the requisite conditions for two reasons. The landfill was within 100 feet of a property line for a residential area, and it was within 2000 feet of a park. Believing the Metropolitan Government had not cured the constitutional infirmities, the developer filed a motion to compel the Metropolitan Government to issue the twice-requested permit. After analyzing the two relevant ordinances and this court's opinion in the first appeal, the trial court concluded that the Metropolitan Government had cured all constitutional infirmities. It also concluded that the proposed landfill did not meet the requisite conditions for the reasons stated by the Metropolitan Government, and thus, affirmed the denial of the permit. We have determined, as the trial court did, that the Metropolitan Government cured the constitutional infirmities and find no error with the determination that the plaintiff did not meet the requisite conditions for a construction and demolition landfill. Accordingly, we affirm.
http://www.tba2.org/tba_files/TCA/2007/consolidatedw_113007.pdf

"The trial court went on to conclude that the Metropolitan Government had corrected the constitutional infirmities in the buffer ordinance and, therefore, was in compliance with the declaratory judgment issued in this case and the mandate of this Court. Moreover, and significant to the second issue, is that the trial court found that '[n]o evidence has been presented that the ‘new’ buffer ordinance, which sets the current conditions that construction and demolition landfills must comply with, has any constitutional defects.' Finally, the trial court found Consolidated’s argument that the Metropolitan Government was out of compliance with its ruling in this case because it is still using the 'table ordinance,' to be without merit because, as the trial court determined, the table ordinance 'did not contain any constitutional defects.'" Id.

Court disregards two licensed surveyors, two fences, and an iron boundary marker in boundary line dispute.

JAMES O. OVERTON, ET AL. v. TERRY L. DAVIS, ET AL. (Tenn.Ct.App. November 29, 2007).
Landowners brought action against adjacent neighbors to establish boundary line. Following a bench trial, the court held that each side is entitled to approximately half of the disputed area. Landowners appeal from the trial court’s resolution of the boundary dispute. The neighbors agree with landowners’ assertion that the evidence does not support the line found by the trial court. The judgment of the trial court is vacated. This case is remanded for further proceedings.
http://www.tba2.org/tba_files/TCA/2007/overtonj_112907.pdf

"The construction of deeds and other instruments and documents and their legal effect as to boundaries is a question of law. What boundaries the grant or deed refers to is a question of law; where those boundaries are located on the face of the earth is a question of fact. If, therefore, the evidence concerning the location of the true boundary line between adjacent owners is conflicting, that issue is one of fact unless the legal construction of the deed or grant is such that the boundary is determined as a matter of law." Id. (citing 12 Am. Jur.2d Boundaries § 121 at 515 (1997) (footnotes omitted); see also Mitchell v. Chance, 149 S.W.3d 40, 45 (Tenn. Ct. App. 2004).

Testimony by plaintiff and expert helps case survive summary judgment for mold allegedly caused by runoff from construction site

HAROLD DENNIS HARDAWAY & wife, SONYA HARDAWAY, v. HAMILTON COUNTY, TENNESSEE BOARD OF EDUCATION, DERTHICK, HENLEY & WILKERSON, CONSTRUCTION & IMPROVEMENT SPECIALTY CO., and HBJ CORPORATION (Tenn.Ct.App. November 29, 2007).
In this action for damages allegedly due to water runoff from construction for a new school, the Trial Court granted defendants summary judgment. On appeal, we conclude there are disputed issues of material fact, and remand and vacate the summary judgment. http://www.tba2.org/tba_files/TCA/2007/hardawayh_112907.pdf

"Moreover, plaintiffs can offer their opinion of the cause of the mold growth. See Tenn. R. Evid. 701, and when plaintiffs’ testimony is coupled with the experts’ testimony, it is clear that an issue of disputed material fact has been established that precludes summary judgment. A causal connection may be established by expert opinion combined with lay testimony. White v. Werthan Industries, 824 S.W.2d 158 (Tenn. 1992)." Id.

Damages for construction defects and omissions is the cost of required repair, but plaintiff may argue diminution in value.

PEGGY J. COLEMAN v. DAYSTAR ENERGY, INC. (Tenn.Ct.App. November 19, 2007).
In this breach of construction contract suit, the Trial Court gave judgment in favor of plaintiff homeowner, and contractor defendant has appealed. We affirm.
http://www.tba2.org/tba_files/TCA/2007/colemanp_111907.pdf

"As a general rule, the measure of damages for defects and omissions in the performance of a construction contract is the reasonable cost of the required repairs. This is especially true when the structure involved is the owner’s home. However, in the event that the cost of repairs is disproportionate when compared with the difference in value of the structure actually constructed and the one contracted for, the diminution value may be used instead as a measure of damages. However, this rule is applicable only when proof has been offered on both factors. . . . We hold that the plaintiffs do not have the burden of offering alternative measures of damages. The burden is on the defendant to show that the cost of repairs is unreasonable when compared to the diminution of value due to the defects and omissions . . . ." Id. (quoting Hopper v. Moling, No. W2004-02410-COA-R3-CV, 2005 WL 2077650 at *7, (Tenn. Ct. App. Aug. 26, 2005)).

Proof of notice of substandard work before non-payment makes owner the "non-defaulting party" who may collect attorney fees under the contract

ROBERT G. O'NEAL, d/b/a R & R CONSTRUCTION CO. v. PAUL E. HENSON, ET AL. (Tenn.Ct.App. November 16, 2007).
This is a construction contract dispute. The trial court entered judgment in favor of Defendants buyers/Counter-Plaintiffs in the amount of $72,418, less an offset in the amount of $48,713.15 for payments due to Plaintiff Builder; attorney's fees; and costs. Plaintiff Builder appeals. We affirm.
http://www.tba2.org/tba_files/TCA/2007/onealr_111607.pdf

"The trial court awarded attorney’s fees to the Hensons as the 'prevailing parties.' However, although we agree with Mr. O’Neal that he 'prevailed' on his claim, the determination of who is entitled to attorney’s fees under the plain language of the contract again requires a determination of which party 'defaulted' and which party was the 'non-defaulting' party." Id.

FAA preempts TUAA and trumps its separate-initial provision when materials used in new home construction are manufactured outside Tennessee

STATE FARM FIRE AND CASUALTY COMPANY, as subrogee of, GERALD SCOTT NEWELL, ET AL. v. EASYHEAT, INC., ET AL (Tenn.Ct.App. November 8, 2007).
The trial court denied Defendant Tennessee Heritage Enterprises's motion to compel arbitration under the Federal Arbitration Act notwithstanding the arbitration clause contained in the construction contract executed by Plaintiff homeowner and Defendant. The trial court denied arbitration on the basis of insufficient interstate commerce. Defendant appeals; we reverse and remand. http://www.tba2.org/tba_files/TCA/2007/easyheat_110807.pdf

"In this case, it is undisputed that a substantial number of the materials used by THE in the construction of the Newell home, including the roof shingles, lumber, windows, tile, carpet, insulation, appliances, mortar, HVAC units, wood trim, flooring, and the floor warming system at the center of this dispute, were manufactured outside of Tennessee. Further, although State Farm asserts these materials were purchased by THE after leaving the flow of commerce, the FAA clearly reaches beyond the “flow” of commerce and is applicable even where interstate commerce was not contemplated by the parties at the time the contract was executed. We are not insensitive to the trial court’s observation that virtually every modern construction contract falls within the purview of the FAA under the broad interpretation urged by THE. However, in light of the Supreme Court’s holdings in Allied-Bruce and Citizens Bank, we must agree that the contract here involves interstate commerce where a substantial amount of materials used in the Newell home were manufactured out of Tennessee by non-Tennessee entities. We agree with THE that the FAA is applicable in this case. " Id.

Damages equal the cost of having the job redone if defects in workmanship render the contract worthless.

JOHN KIRK TARVER, ET AL. v. GARRISON'S CUSTOM CABINETS, INC. (Tenn.Ct.App. October 31, 2007).
Based on a Special Master's report, the Circuit Court of Shelby County entered judgment against the appellant for damages for breach of a contract to install cabinets in the appellee's home. The appellant contends that the trial judge did not independently review the evidence in the record and that the damage award was not supported by the evidence. We affirm.
http://www.tba2.org/tba_files/TCA/2007/tarverj_103107.pdf

"[I]f the defects in workmanship are so substantial that the performance of the contract is worthless, the contractor must pay the other party the cost of having the job redone." Id.

No TRCP 34A spoliation for plaintiff who demolished home after suing homebuilder, who had opportunity to obtain factual evidence during construction

CHARLES GROSS ET AL. v. MICHAEL K. McKENNA ET AL. (Tenn.Ct.App. October 30, 2007).
This case arose out of a construction contract between Charles Gross and Kathy Gross ("Homeowners") and Woodbridge Construction Services, LLC, a company run by Michael K. McKenna ("Builder"). The parties' relationship went sour in the midst of construction, and Homeowners sued Builder and Woodbridge seeking damages for breach of contract, fraud, misrepresentation, and violations of the Tennessee Consumer Protection Act ("the TCPA"). After a bench trial, the court awarded Homeowners damages of $79,622.31 against both defendants. Builder appeals on various grounds. Regrettably, he has failed to provide us with either a transcript of the proceedings or a statement of the evidence, and, as a result, we are unable to reach most of the issues raised by him, as we must accept the trial court's factual determinations as conclusive in the absence of a record. The only issue requiring extended discussion is Builder's claim that the trial court should have dismissed the case or imposed some other sanction against Homeowners for demolishing the home and thus destroying evidence during discovery without first notifying the court and Builder. Although this was a violation of the Tennessee Rules of Civil Procedure, the trial court has broad discretion to determine what, if any, sanctions to impose for such violations, and we do not find an abuse of discretion in its decision to impose no sanction. The remainder of Builder's issues are also found to be without merit. We therefore affirm.
http://www.tba2.org/tba_files/TCA/2007/grossc_103007.pdf

Court strictly construes contractual size and notice requirements against landscaping company, condoning contractor's contractual "takeover" rights

BIG CREEK LANDSCAPING, LLC v. HUDSON CONSTRUCTION COMPANY (Tenn.Ct.App. October 23, 2007).
This appeal involves a dispute between a contractor and a landscaping subcontractor over the subcontractor's installation of undersized trees and the contractor's subsequent invocation of the take over clause upon the landscaper's failure to cure the defect. Both parties asserted breach of contract, and the trial court awarded damages to the defendant contractor for the cost of completing the job through a third-party landscaper and for attorney's fees and expenses. Concurring with the trial court that the subcontractor breached the contract when it installed undersized trees and, despite sufficient notice and opportunity to cure, failed to do so, we affirm the trial court's judgment. http://www.tba2.org/tba_files/TCA/2007/BigCreekLandscaping_102307.pdf

Homebuilders may be liable for misrepresentation for constructing features that would violate neighborhood restrictions when used by the homebuyer

ISLAND BROOK HOMEOWNERS ASSOCIATION, INC. v. JANICE AUGHENBAUGH (Tenn.Ct.App. October 9, 2007).
The defendant had her house built in a restricted subdivision and began using it for operation of her fitness training business. The owners of the corporation that developed the neighborhood and constructed the defendant's house were also controlling members of the subdivision homeowners association's board of directors. The homeowners association filed suit to permanently enjoin the defendant from conducting her business out of her home upon grounds that such activity violated subdivision restrictions. In her answer and countersuit, the defendant argued that the homeowners association's controlling board members had waived the restrictions by certain actions during construction of her house. The defendant also filed a third party complaint against the development corporation and against the individual owners of the corporation for misrepresentation. Upon motions for directed verdict, the trial court granted the homeowners association's request for a permanent injunction and dismissed the defendant's countercomplaint against that entity. The trial court also dismissed the defendant's complaint against the individual owners by directed verdict, but denied the development corporation's motion for directed verdict. A jury then found the development corporation liable for misrepresentation. On appeal, we conclude that the trial court did not err in granting the homeowners association's motion for directed verdict or in failing to grant the development corporation's motion for directed verdict. However, we conclude that the trial court did err in granting the individual owners' motion for directed verdict. Accordingly, the judgment of the trial court is affirmed in part, reversed in part and the case is remanded. http://www.tba2.org/tba_files/TCA/2007/islandbrook_100907.pdf

If the Water Quality Control Board deems an issue to be "complex" and "contested," a lawyer must prosecute the claim.

TENNESSEE ENVIRONMENTAL COUNCIL, INC. v. WATER QUALITY CONTROL BOARD, ET AL. (Tenn.Ct.App. September 28, 2007).
The sole issue on appeal is whether a non-attorney's attempt to participate in a contested case hearing before the Water Quality Control Board as the representative of a corporation is permitted pursuant to Tenn. Code Ann. Section 4-5-305(a), which expressly provides that a corporation may participate in the hearing by a duly authorized representative, or prohibited as constituting the unauthorized practice of law. Notwithstanding the fact that the statute provides that a duly authorized representative of a corporation may "participate" as the representative of the corporation in a hearing, we have determined that a non-attorney may not participate as the representative of a corporation if doing so requires the non-attorney to exercise the professional judgment of an attorney.
http://www.tba2.org/tba_files/TCA/2007/tnenvcumberlandyacht_092807.pdf

Home inspectors that rubber stamp their prior inspection reports can be held liable under the TCPA

QUINTIN G. MACDONALD, ET AL. v. BILL GUNTHER, d/b/a BJK PROPERTY INSPECTIONS (Tenn.Ct.App. September 21, 2007).
The plaintiff homeowners contended that the defendant licensed property inspector had performed a negligent or fraudulent home inspection on the house they subsequently purchased, and that as a result, they incurred many unanticipated expenses for repairs. The parties agreed to resolve their dispute through binding arbitration, which resulted in an arbitration award of nearly $100,000 for the homeowners. The trial court granted the plaintiffs' motion to confirm the award. The defendant argues on appeal that the court should have dismissed the plaintiffs' motion to confirm because of their failure to comply with the court's scheduling order. We affirm the trial court.
http://www.tba2.org/tba_files/TCA/2007/macdonaldq_092107.pdf

Failure to immediately appeal when the court ignores a contractual arbitration provision results in loss of enforceability

DANIEL E. LONG v. ANDREA ELISE MILLER, ET AL. (Tenn.Ct.App. September 21, 2007).
This is a breach of contract action filed by Daniel E. Long against R & M Builders, Inc. ("R & M"), the successful bidder on a governmental project to demolish and rebuild the plaintiff's house. The plaintiff claims that R & M performed its services in an unworkmanlike manner and that the company failed to complete several of the contractual requirements. R & M filed a motion to dismiss asserting that the parties had agreed to binding arbitration. The trial court denied the motion and the case proceeded to trial. The jury found that R & M had breached the contract and awarded the plaintiff damages of $15,000. R & M appeals, claiming the trial court erred when it refused to order the parties to arbitration. It also asserts that the trial court erred in excluding certain evidence. The plaintiff argues that this appeal is frivolous. We affirm the judgment of the trial court and conclude that R & M's appeal is frivolous. We remand this case to the trial court with instructions.
http://www.tba2.org/tba_files/TCA/2007/longd_092107.pdf

Conveyance of land may be deemed fraudulent if the seller can prove certain "badges of fraud"

KATHERINE MCKAY v. RONNIE REECE AND HIS WIFE, MARY REECE; JAMES BLANKENSHIP AND HIS WIFE, PATRICIA BLANKENSHIP; AND CITIZENS BANK OF LAFAYETTE (Tenn.Ct.App. September 18, 2007)
This is an action to set aside a warranty deed based on fraud. The plaintiff inherited family-owned property after her father's death, and she lived on the property. She obtained a line of credit for $40,000 from the defendant bank, secured by the property. The plaintiff defaulted on the loan, and the bank initiated foreclosure proceedings. The plaintiff contacted the defendants, acquaintances of her father, seeking their advice on how to stop the foreclosure. The defendants told the plaintiff that the bank could not stop the foreclosure, but suggested that, in order to avoid foreclosure, they would assume the plaintiff's $40,000 loan and the plaintiff would transfer the property to them. The parties agreed that, in addition to the defendants' assumption of the $40,000 loan, the plaintiff could live on the property for one year and repurchase the property at the end of the year for the amount of the loan plus any incidental costs. With that understanding, the plaintiff executed a warranty deed transferring the property to the defendants, and the defendants assumed the loan. Before the end of the agreed year, the defendants listed the property for sale with a real estate agent for approximately $400,000. When the plaintiff questioned the defendants, she was told that she could purchase the property for one dollar over the highest offer the defendants had received for the property. The plaintiff then filed this lawsuit, asking the court to set aside the warranty deed transferring the property to the defendants. After a bench trial, the trial court set aside the deed based on inadequacy of consideration and other badges of fraud. The defendants now appeal. We affirm, upholding the trial court's credibility determinations and finding that the preponderance of the evidence supports the trial court's decision. http://www.tba2.org/tba_files/TCA/2007/mcKayk_091807.pdf

Fire insurers face higher evidentiary burden to limit payouts for cost of repair, replacement, or rebuild

ROGERSVILLE INVESTMENT CORPORATION d/b/a HOLIDAY INN EXPRESS v. MERIDIAN INSURANCE GROUP, INC. (Tenn.Ct.App. September 4, 2007)
In this case involving an insurance claim for property damage when a nearly-completed Holiday Inn building in Rogersville partially burned, the issue is how much money the insurance company must pay under the contract. The insurance contract provided that the insurer would pay the insured "the cost to repair, replace or rebuild the property with material of like kind and quality." The insured submitted proof that the contractor's bill for the covered repairs was $47,982.92. Over the insured's hearsay objection, the insurance company introduced evidence that its third-party investigator, who inspected the damaged property, prepared an estimate approximating the loss at $20,532.94. The trial court rejected the insurer's defense of accord and satisfaction, and awarded the insured $33,757.93. We affirm the trial court's judgment that the insurer did not prove accord and satisfaction, and hold that under the unambiguous terms of the contract, the insurer is required to pay the insured $46,982.92, in the absence of proof that the amount charged by the contractor for repairs is excessive or unreasonable. We therefore affirm the judgment of the trial court as modified. http://www.tba2.org/tba_files/TCA/2007/rogersville_090407.pdf

Contractors who improperly install advanced earthwork features may be liable under the TCPA

KENNETH BARRETT v. FRANK VANN dba FRANK VANN CONSTRUCTION COMPANY, ET AL (Tenn.Ct.App. August 29, 2007)
The plaintiff, Kenneth Barrett, entered into a written contract with Frank Vann, doing business as Frank Vann Construction Company ("Vann"), for Vann to construct a parking area on the plaintiff's property and to re-pave the plaintiff's driveway. It was later discovered that a retaining wall would be necessary to support the parking area due to the steep slope of the plaintiff's property. Vann suggested to the plaintiff that he use Matt Johnson, doing business as ProGreen Landscaping & Lawn Maintenance ("Johnson"), to build the wall. Johnson agreed to build it. After the wall was completed, it began to collapse. This prompted the plaintiff to file suit. A jury returned a money verdict against Vann and Johnson for violating the Tennessee Consumer Protection Act, T.C.A. section 47-18-101 (Supp. 2006) ("the TCPA"). The jury also found Vann guilty of breach of contract. When, as to Vann, the jury returned separate monetary verdicts for the TCPA violation and the breach of contract, the trial court required the plaintiff to elect between the two monetary awards. Under compulsion, the plaintiff chose the damage award under the TCPA. The trial court then trebled the TCPA damages and awarded the plaintiff a part of his request for attorney's fees. The plaintiff and Vann both raise issues on appeal. We modify the trial court's judgment. As modified, it is affirmed. This case is remanded to the trial court with instructions. http://www.tba2.org/tba_files/TCA/2007/Barrettk_082907.pdf