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.

Opinion may be found at:
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.

Opinion may be found at:
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.

Opinion may be found at:
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.

Opinion may be found at:
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.

Opinion may be found at:
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.

Opinion may be found at:
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.

Opinion may be found at:
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.

Opinion may be found at:
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.

Opinion may be found at:
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.

Opinion may be found at:
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.

Opinion may be found at:
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.

Opinion may be found at:
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.

Opinion may be found at:
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.

Opinion may be found at:
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.

Opinion may be found at:
http://www.tba2.org/tba_files/TCA/2007/Barrettk_082907.pdf