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.