December 28, 2009

Court reviews whether statute of limitations had expired on inverse condemnation and nuisance claims


Plaintiffs alleged that defendant had constructed a bridge over Lick Creek which was adjacent to their property, and the bridge had caused their property to repeatedly flood. They further alleged that they were entitled to recover damages under the theory that the County maintained a temporary nuisance which damaged their property. Defendant filed a Motion for judgment on the pleadings which characterized plaintiffs' cause of action as an inverse condemnation action.

Affidavits and other documents were filed in the record and the Trial Court agreed with the defendant that plaintiffs' action was based on inverse condemnation and the statute had run on that action. The Trial Judge also ruled that the statute had run on the nuisance claim. On appeal, we affirm the Trial Judge's holding that plaintiffs' action was a nuisance type taking and was governed by the inverse condemnation statute, and we agree that the record demonstrates that the statute of limitations had run on plaintiffs' claims.

Opinion may be found at:

Susano’s dissenting opinion is available at:

Appelate Court affirms trial court ruling that statute of limitaions had run


Plaintiffs alleged that defendant had constructed a bridge over Lick Creek which was adjacent to their property, and the bridge had caused their property to repeatedly flood. They further alleged that they were entitled to recover damages under the theory that the County maintained a temporary nuisance which damaged their property.

Defendant filed a Motion for judgment on the pleadings which characterized plaintiffs' cause of action as an inverse condemnation action. Affidavits and other documents were filed in the record and the Trial Court agreed with the defendant that plaintiffs' action was based on inverse condemnation and the statute had run on that action. The Trial Judge also ruled that the statute had run on the nuisance claim.

On appeal, we affirm the Trial Judge's holding that plaintiffs' action was a nuisance type taking and was governed by the inverse condemnation statute, and we agree that the record demonstrates that the statute of limitations had run on plaintiffs' claims.

The full text of this opinion may be found on the TBA website at:

A dissenting opinion may be found on the TBA website at:

TCA upholds judgment for homebuyer

TIMOTHY BOWEN, ET AL. v. SAMUEL E. RASNAKE (Tenn. Ct. App. December 28, 2009)

Timothy Bowen and his wife Leanne Bowen ("the Buyers") contracted to purchase a house from Samuel E. Rasnake ("the Seller") that was still under construction. The Buyers experienced numerous problems with the house and filed their complaint against the Seller for defective construction, breach of warranty and misrepresentation. After a bench trial, the court awarded the Buyers judgment against the Seller in the amount of $42,300. The Seller appeals. We affirm.

The full text of this opinion may be found on the TBA website at:

December 23, 2009

Lawmakers to suspend new Workers Compensation requirements for further study in the legislature

Workers comp law change eyed
Lawmakers meet with contractors upset over measure
Knoxville News Sentinel

When they return to the Capitol next month, state lawmakers will be under pressure to change a workers compensation law that takes effect on Dec. 31.

At a breakfast meeting on Tuesday, a trio of local legislators heard from contractors who are upset about a provision that places new insurance mandates on certain businesses. The meeting was co-hosted by the National Federation of Independent Business, and featured Knoxville Reps. Harry Tindell, a Democrat, and Bill Dunn, a Republican, along with Sen. Doug Overbey, a Maryville Republican.

Jim Brown, NFIB's state director, said he's been told by members of the legislative leadership that a suspension of the law should happen quickly after lawmakers resume their business on Jan. 12. Brown also said the Department of Labor has indicated contractors who are found to be in violation before the law is suspended will be given 60 days to come into compliance.
But Overbey pointed out that it's dangerous to predict legislative action, saying "how long it will take and what it will do I wouldn't start to predict." The senator also said he's getting an equal number of letters from people who say the law should be left alone, as from those who are calling for a suspension.

Sam Sole, a local siding contractor, attended the meeting and said the law will put him out of business. His two biggest customers, Sole said in an interview, typically build 150 to 180 homes a year between them, but through the first six-and-a-half months of this year had only built six. His gross profit on six homes, Sole said, adds up to around $6,000, making it impossible to afford the new insurance mandate.

And the possibility that the law will be suspended? "How can I trust the same people that put it in as law (in the first place)?" he said.

Article located at:

December 15, 2009

TCA affirms Summary Judgment in favor of defendant


This appeal involves insurance coverage. The plaintiffs purchased an undeveloped parcel of real property and hired a contractor to build a house on it. After the house was constructed, the plaintiffs discovered that cleared timber was buried underneath the land on which the house stood. Thereafter, the house developed structural problems, such as foundation cracks and non-alignment of doors and windows. The plaintiffs made a claim for coverage under their homeowners insurance policy; however, the insurer denied the claim, citing an exclusion of coverage for damages resulting from settling. The plaintiffs filed suit against inter alia the insurer alleging breach of contract and bad faith, and the plaintiffs and the insurer filed cross-motions for summary judgment.

After conducting a hearing on the matter and considering expert testimony that the damage was caused by settling, the trial court granted the insurer's motion for summary judgment. The plaintiffs now appeal, arguing that the settlement in this case is so excessive as to remove it from the ordinary meaning of the term "settling." We affirm.

The full text of this opinion may be found on the TBA website at:

TCA examines company's failure to follow TOSHA regulations


This appeal arises from a petition seeking judicial review of an administrative order. The Tennessee Department of Labor, Division of Occupational Safety and Health (TOSHA) cited Dillard Smith Construction Company for violating six safety regulations that related to the fatality of a Dillard Smith apprentice-lineman. The TOSHA Review Commission affirmed all six violations. The Chancery Court subsequently affirmed the Review Commission's findings as to five of the six violations but reversed one, concluding that the record did not support the finding that Dillard Smith failed to conduct a job briefing. Both parties appealed the Chancellor's rulings.

The Commissioner contends that the Chancellor erred in reversing the finding that Dillard Smith failed to conduct the required job briefing. Dillard Smith contends that the Chancellor erred in affirming the other five violations -- that it failed to check conditions related to safety, its employee came into contact with an energized part, the cut-off switch was not opened, the line was not tested, and the line was not grounded.

We have concluded that the record contains substantial and material evidence to support the Review Commission's finding that Dillard Smith violated the TOSHA regulation that required a job briefing before beginning the first job of the day; therefore, we reverse the Chancellor's ruling that it did not. We have also concluded that the record contains substantial and material evidence to support the Review Commission's findings that Dillard Smith was also in violation of the other five TOSHA regulations for which it was cited. Therefore, we reverse in part and affirm in part.

The full text of this opinion may be found on the TBA website at:

December 09, 2009

Court of Appeals confirms judgment against city for damages


Appellants granted a sewer line easement to the City. The City hired a sub-contractor to install the sewer line and to restore the property following construction. Appellants, who were dissatisfied with the sub-contractor's restoration, filed suit against the City and the sub-contractor. The sub-contractor subsequently went out of business, and the trial court entered a judgment against the City for $13,070.00, representing the value of Appellants' land plus the cost to repair a fence. Appellants appeal, claiming the proper measure of damages is the cost to restore their property -- $137,779.62. On appeal, the City contends that Appellants may not sue the City, that Appellants breached the contract by refusing the sub-contractor access to their property, and that the trial court's award should be reduced by $132.00.

The proper measure of damages in this case is the lesser of the cost to restore Appellants' property or the difference in reasonable market value of the premises immediately prior to and immediately after the injury. Although neither party presented evidence regarding the property's diminished value, we find that the trial court considered the appropriate factors in setting the amount of damages. Thus, the judgment of the trial court is affirmed.

The full text of this opinion may be found on the TBA website at:

Court vacates judgment in favor of plaintiff homeowner


This action involves a variety of claims arising from the construction of a residence in Williamson County. A homeowner, James Laughlin, entered into a cost plus contract with Forrest Construction Company, LLC to construct a home for he and his wife. Prior to the home being completed, Forrest Construction stopped work, filed a lien on the residence, and thereafter filed a breach of contract action against Mr. Laughlin and an action to recover damages based on the doctrine of quantum meruit against Mrs. Laughlin. Forrest Construction claimed that Mr. Laughlin was in breach of the contract for failure to pay according to the contract. Mr. and Mrs. Laughlin filed a counter-claim for negligent construction, gross negligence, negligence per se, breach of contract, and violations of the Tennessee Consumer Protection Act.

The trial court found that Mr. Laughlin had materially breached the contract by failing to pay according to the terms of the contract, and awarded damages to Forrest Construction. Conversely, the trial court found for the Laughlins on their claim of negligent construction and awarded damages against Forrest Construction. Both parties appeal. Forrest Construction contends that the trial court erred in holding it liable for alleged defects because Mr. Laughlin committed the first material breach and failed to give Forrest Construction notice and the opportunity to cure the alleged defects. Mr. Laughlin contends the trial court erred in finding that he committed the first material breach. The Laughlins also contend the trial court erred in reducing the cost of the repairs to their residence and in failing to pierce the corporate veil.

We find that Forrest Construction was the first to materially breach the contract by submitting requests for draws that were not properly supported by records of its costs and expenses as required by the contract, including submitting draws which erroneously included charges for work done on its other projects, and by failing to complete construction of the home. We, therefore, reverse the trial court's determination that Mr. Laughlin committed the first material breach and hold that Forrest Construction was the first to materially breach the contract. We affirm the trial court's determination that the Laughlins were excused from the duty to give notice of the alleged defects and an opportunity to cure; thus, the Laughlins are entitled to recover damages due to the negligent construction by Forrest.

As for the trial court's substantial reduction of the damages requested by the Laughlins for the cost to repair the yet unrepaired defects to their home, we are unable to determine whether the trial court considered or overlooked $55,000 of the estimated cost to repair the defects; therefore, we remand this issue to afford the trial court the opportunity to either restate its previous ruling or to increase the award of damages, if it so determines, based on the evidence presently in the record. As for the issue of piercing the corporate veil, we remand that issue for further proceedings.

The full text of this opinion may be found on the TBA website at:

Court reviews action to enforce a mechanics and materialmen's lien

GEORGE SANDERS, Individually and d/b/a SMS CONTRACTORS, INC., ET AL. v. DR. SAMMY HOLLOWAY, ET AL. (Tenn. Ct. App. December 9, 2009)

This lawsuit was commenced by Plaintiff/Appellee George Sanders, individually and d/b/a SMS Contractors, Inc., ("SMS"; collectively, Mr. Sanders) as an action to enforce a mechanics and materialmen's lien filed in the Chancery Court for Shelby County in March 2005. In his complaint, Mr. Sanders named as Defendants Dr. Sammy Holloway (Dr. Holloway); Breath of Life Christian Church ("the Church"); National Bank of Commerce ("NBC"); and Bricks, Inc. ("Bricks"). In April 2005, the Church answered and filed a counter-claim against Mr. Sanders and a cross-claim against Bricks. Mr. Sanders answered the Church's counter-claim in June 2005. Bricks answered Mr. Sanders' complaint and the Church's cross-claim in June 2005. In June 2005, Bricks also counter- claimed against Mr. Sanders, and filed a cross-claim against the Church. Mr. Sanders answered Brick's counter-complaint on June 30, 2005; the Church answered Brick's cross-claim on July 15, 2005.

Opinion may be found at:

Are the recent changes to Tennessee law requiring a sole proprietor to carry workers’ compensation insurance on himself constitutional?

Constitutionality of Mandatory Workers' Compensation Insurance Coverage (TN Attorney General Opinion 09-184, December 9, 2009)

The Attorney General states that yes, the recent addition to the T.C.A. requiring a sole proprietor to carry workers' compensation insurance on himself is constitutional. He cites the legislative history of the statute, which shows that the statute was amended due to a need to ensure that all subcontractors and employees working on a construction site are covered by workers' compensation insurance because some employers were claiming that their employees or subcontractors were sole proprietors in order to avoid paying for coverage. Since the TN Workers' Compensation Act is meant to relieve society the burden of providing compensation to injured workers, the Attorney General believes that the requirement that a sole proprietor have insurance coverage is related to the purpose of the TWCA and, thus, is constitutional.

Opinion may be found at:

December 02, 2009

Court reviews personal knowledge of trial court judge in case about a wall collapse


Elizabeth Fugate ("Plaintiff") had a homeowners insurance policy issued by Tennessee Farmers Insurance Company ("Defendant"). In April 2007, a retaining wall on Plaintiff's property collapsed. Defendant denied the claim asserting, among other things, that the collapse was caused by built up water pressure and that the retaining wall had been defectively constructed. Defendant asserted that both of these causes of the collapse were covered by policy exclusions.

Following a trial, the Trial Court determined that the retaining wall had been properly built and there was insurance coverage pursuant to the policy. The Trial Court entered a judgment in favor of Plaintiff for $18,680. We conclude that the Trial Court improperly considered personal knowledge which he possessed when deciding this case. Accordingly, we vacate the judgment and remand this case for a new trial before a different trial judge.

Opinion may be found at:

November 03, 2009

Supreme Court examines issues regarding punitive damage award


The owners of real property filed suit against a construction company hired by the State of Tennessee to widen a highway adjacent to their property. The property owners had a contract with the construction company that allowed it to place equipment and construction materials on their land in exchange for compensation. Following the completion of the road project, the property owners filed suit claiming that the construction company failed to pay the amount due under the contract and caused blasting damage to their house and vehicles. They also claimed that the construction company illegally buried debris on their property.

At trial, the parties stipulated that the construction company was liable for breach of contract in the amount of $5,355.50. A jury then determined that the construction company was strictly liable for harm caused by its blasting activities in the amount of $9,510, and that burying debris on the plaintiffs' property constituted a nuisance for which the company was liable for $3,305. The jury also returned an award of $2 million in punitive damages which the trial court modified to $1 million to conform to the amount requested in the pleadings. The Court of Appeals affirmed the trial court's judgment as to liability, but reversed the award of punitive damages based on a finding that the trial court improperly considered Tennessee's environmental laws in approving the award.

After careful review, we conclude that the evidence supports the jury's award of punitive damages and that the trial court properly considered Tennessee's environmental statutes in approving that award. We further conclude that the amount of the punitive damages award does violate the construction company's due process rights and must be modified to $500,000. Finally, we find no error in the trial court's instructions to the jury regarding punitive damages or its denial of a motion for mistrial based on a mention of insurance during the trial. Accordingly, the decision of the Court of Appeals is reversed and the judgment of the trial court is reinstated as modified.

The full text of this opinion may be found on the TBA website at:

August 31, 2009

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 ("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:

August 27, 2009

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


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:

July 31, 2009

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


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:

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

BOBBY J. COLLINS v. LYNDA C. FUGATE (Tenn. Ct. 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:

July 29, 2009

Attorney General Reviews Legality of a Guest Worker's Program

Legality of a Guest Workers Program

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

Opinion may be found at the TBA website:

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


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:

June 30, 2009

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:

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:

June 29, 2009

TCA affrims summary judgment based on statute of repose

GEORGE R. CALDWELL, Jr., ET AL. v. PBM PROPERTIES (Tenn. Ct. App. June 29, 2009)

George R. Caldwell, Jr., and Angie R. Caldwell ("the Homeowners") sued PBM Properties and others alleging that alterations made by PBM in 1998 to the natural drainage conditions on properties that neighbor the Homeowners created a continuing temporary nuisance that recurred in 2005 and caused flooding to the Homeowners' property. PBM filed a motion for summary judgment on the ground that the cause of action was barred by the statute of repose for improvements to real property found at Tenn. Code Ann. section 28-3-202 (2000). The trial court agreed and granted the motion. The Homeowners appeal. We affirm.

The full text of this opinion may be found on the TBA Website at:

TCA examines breach of construction contract issues


This appeal arises out of a dispute between a contractor and landowner over the parties' duties under a construction contract. Plaintiff/Appellee Madden Phillips Construction, Inc. ("Madden Phillips") filed suit to enforce a mechanics' and materialmen's lien and to recover damages in breach of contract against Defendant/Appellant GGAT Development Corporation ("GGAT"). Madden Phillips' complaint included a claim for damages and attorney's fees pursuant to Tennessee Code Annotated sections 66-34-101 to -703, also known as the Prompt Pay Act of 1991 ("Prompt Pay Act"). GGAT counterclaimed and asserted, inter alia, that Madden Phillips failed to perform its contractual obligations in a "workmanlike and expeditious fashion to coincide with the completion schedule of [GGAT]."

The trial court ruled in favor of Madden Phillips. The trial court determined that GGAT wrongfully terminated Madden Phillips from the construction project and refused to compensate Madden Phillips in bad faith. The court further concluded that GGAT's actions constituted a material breach and prevented GGAT from recovering on its counterclaim. The trial court entered judgment in favor of Madden Phillips for damages and attorney's fees in the amount of $88,739.51, plus interest and court costs. We affirm.

The full text of this opinion may be found on the TBA Website at:

June 25, 2009

Court of Appeals examines permit granting issue


The plaintiff filed a petition challenging the grant of a building permit to Verizon Wireless. The decision of the City was affirmed by the Board. After the trial court conducted a hearing, it affirmed and dismissed the petition. The plaintiff appeals. We affirm.

The full text of this opinion may be found on the TBA Website at:

June 10, 2009

Court reviews Water Quality Control Board decision.


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:

June 09, 2009

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


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:

May 28, 2009

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


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:

“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.

May 27, 2009

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:

"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.

May 22, 2009

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:

“[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


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:

“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


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:

“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


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:

“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


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:

"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:

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.

May 21, 2009

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

(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:

"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:

“[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:

"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


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:

"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.

April 30, 2009

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


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:

”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.

April 29, 2009

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:

”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.

April 01, 2009

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


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:

”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.

March 26, 2009

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


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:

“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.

March 19, 2009

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, March 19, 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:

“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.

March 16, 2009

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


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:

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:

“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.

March 13, 2009

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


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:

“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.

February 26, 2009

Plaintiffs should pursue remedies against parties with whom they have privity before contract under implied theory


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:

“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.