Tennessee Construction Law

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

2009-10-14T13:02:00.005-04:00

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

2009-10-14T12:38:00.005-04:00

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)

2009-10-14T12:36:00.004-04:00

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

2009-10-14T12:33:00.005-04:00

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

2009-10-14T12:30:00.002-04:00

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

2009-10-14T12:24:00.009-04:00

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

2009-10-13T16:52:00.011-04:00

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

2009-10-13T16:49:00.008-04:00

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

2009-07-15T11:33:00.007-04:00

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

2009-07-15T11:28:00.013-04:00

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

2009-07-15T11:25:00.003-04:00

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.pdf AG/2009/ag_09_115.pdf

2009-07-15T11:24:00.004-04:00

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

2009-07-15T11:20:00.008-04:00

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

2009-07-15T10:56:00.010-04:00

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

2009-06-04T15:55:00.005-04:00

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

2009-05-28T13:12:00.005-04:00

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

2009-05-28T12:49:00.007-04:00

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

2009-05-28T12:14:00.012-04:00

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

2009-05-28T11:53:00.006-04:00

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

2009-05-28T11:27:00.005-04:00

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

2009-05-28T11:26:00.015-04:00

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

2009-05-28T11:03:00.005-04:00

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

2009-05-28T10:48:00.020-04:00

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

2009-05-27T14:56:00.005-04:00

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

2009-05-22T14:41:00.004-04:00

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.