RAY BELL CONSTRUCTION COMPANY, INC. v. STATE OF TENNESSEE, TENNESSEE DEPARTMENT OF TRANSPORTATION (Tenn. December 12, 2011)
A construction company entered into a contract with the State of Tennessee to restructure an interstate interchange. The contract provides that the contract completion date "may be extended in accordance with the Standard Specifications, however, no incentive payment will be made if work is not completed in its entirety by December 15, 2006."
The Claims Commission found that the contract contained a latent ambiguity requiring extrinsic evidence to interpret the contract. The Claims Commission considered extrinsic evidence and concluded that the construction company was entitled to the maximum incentive payment and an extension of the contract completion date. A divided Court of Appeals affirmed the judgment of the Claims Commission. We hold that the contract is unambiguous and does not permit an extension of the incentive date. Accordingly, we reverse the Court of Appeals and remand to the Claims Commission for modification of the final judgment.
Opinion available at:
http://www.tba2.org/tba_files/TSC/2011/raybell_121211.pdf
December 27, 2011
December 22, 2011
Court reviews whether a contractor breached its contract to construct a parking lot
FILMtech, Inc., v. CHARLIE McANALLY, d/b/a GRAINGER PAVING (Tenn. Ct. App. December 21, 2011)
Plaintiff brought this action against this contractor alleging breach of contract to construct an asphalt parking lot for plaintiff. The Trial Court determined that defendant breached the contract and awarded damages. On appeal, we affirm the Judgment of the Trial Court.
Full opinion available at:
http://www.tba2.org/tba_files/TCA/2011/filmtech_122211.pdf
Plaintiff brought this action against this contractor alleging breach of contract to construct an asphalt parking lot for plaintiff. The Trial Court determined that defendant breached the contract and awarded damages. On appeal, we affirm the Judgment of the Trial Court.
Full opinion available at:
http://www.tba2.org/tba_files/TCA/2011/filmtech_122211.pdf
December 21, 2011
Court reviews whether a purchaser of real estate effectively exercised its right to terminate a contract.
CAMERON GENERAL CONTRACTORS, INC. v. KINGSTON PIKE, LLC (Tenn. Ct. App. December 21, 2011)
Cameron General Contractors, Inc., a Nebraska corporation ("Cameron"), sued Kingston Pike, LLC, a Georgia limited liability company ("Kingston Pike"), for breach of a contract concerning the sale of real property located in Knoxville, Tennessee. Prior to trial, Cameron elected to exercise its contractual right to terminate the contract, and the case proceeded to trial on the issue of damages.
After a bench trial, the Trial Court entered its order finding and holding, inter alia, that the contract did not limit Cameron to the return of its earnest money, and granting Cameron a judgment against Kingston Pike for damages in the amount of $872,418.22, plus attorney's fees of $137,656.56. Kingston Pike appeals to this Court.
We find and hold that the contract at issue clearly and unambiguously provides that once Cameron chose to terminate the contract, Cameron's sole remedy for Kingston Pike's breach was a return of Cameron's earnest money deposit. We, therefore, reverse the Trial Court's October 28, 2010 order.
Full opinion available at:
http://www.tba2.org/tba_files/TCA/2011/cameron_122111.pdf
Cameron General Contractors, Inc., a Nebraska corporation ("Cameron"), sued Kingston Pike, LLC, a Georgia limited liability company ("Kingston Pike"), for breach of a contract concerning the sale of real property located in Knoxville, Tennessee. Prior to trial, Cameron elected to exercise its contractual right to terminate the contract, and the case proceeded to trial on the issue of damages.
After a bench trial, the Trial Court entered its order finding and holding, inter alia, that the contract did not limit Cameron to the return of its earnest money, and granting Cameron a judgment against Kingston Pike for damages in the amount of $872,418.22, plus attorney's fees of $137,656.56. Kingston Pike appeals to this Court.
We find and hold that the contract at issue clearly and unambiguously provides that once Cameron chose to terminate the contract, Cameron's sole remedy for Kingston Pike's breach was a return of Cameron's earnest money deposit. We, therefore, reverse the Trial Court's October 28, 2010 order.
Full opinion available at:
http://www.tba2.org/tba_files/TCA/2011/cameron_122111.pdf
December 14, 2011
Court reviews whether the principal of an LLC authorized advances and pledgings of collateral.
REGIONS BANK v. BRIC CONSTRUCTORS, LLC, F/K/A BRIC CONTRACTORS, LLC, AND PATRICIA MCINTOSH (Tenn. Ct. App. December 14, 2011)
This is an action to collect a debt and to recover collateral. The defendant LLC obtained a line of credit from the plaintiff bank. The LLC borrowed against the line of credit to purchase certain property, and the property was pledged as collateral.
Several months later, the line of credit was converted into a fixed amount loan over a longer term, and a new security agreement was executed pledging the same collateral. On the same day, the LLC obtained another line of credit secured by the LLC's accounts receivable. The next day, the LLC took an advance on the new line of credit.
The LLC made monthly payments on both obligations for almost a year, and then it defaulted. The plaintiff bank filed this lawsuit against the LLC and its principal to collect on the loans and to recover the collateral. The LLC contended that the principal of the LLC did not sign key documents, did not authorize advances, and did not authorize the pledge of the collateral.
After a bench trial, the trial court held in favor of the bank based on, among other things, its finding that the principal of the LLC had ratified any allegedly unauthorized advances made under the lines of credit. The defendants now appeal. We reverse the finding of ratification as to one advance and remand for further findings; in all other respects, the decision of the trial court is affirmed.
Opinion available at:
http://www.tba2.org/tba_files/TCA/2011/regionsbank_121411.pdf
This is an action to collect a debt and to recover collateral. The defendant LLC obtained a line of credit from the plaintiff bank. The LLC borrowed against the line of credit to purchase certain property, and the property was pledged as collateral.
Several months later, the line of credit was converted into a fixed amount loan over a longer term, and a new security agreement was executed pledging the same collateral. On the same day, the LLC obtained another line of credit secured by the LLC's accounts receivable. The next day, the LLC took an advance on the new line of credit.
The LLC made monthly payments on both obligations for almost a year, and then it defaulted. The plaintiff bank filed this lawsuit against the LLC and its principal to collect on the loans and to recover the collateral. The LLC contended that the principal of the LLC did not sign key documents, did not authorize advances, and did not authorize the pledge of the collateral.
After a bench trial, the trial court held in favor of the bank based on, among other things, its finding that the principal of the LLC had ratified any allegedly unauthorized advances made under the lines of credit. The defendants now appeal. We reverse the finding of ratification as to one advance and remand for further findings; in all other respects, the decision of the trial court is affirmed.
Opinion available at:
http://www.tba2.org/tba_files/TCA/2011/regionsbank_121411.pdf
November 03, 2011
Court: Contractors liable for what their subs do (Jackson Sun)
A ruling from the Tennessee Supreme Court last week made it easier for homeowners to hold contractors responsible for shoddy work by subcontractors. The court has found that contractors have a duty to perform services in a "careful, skillful, diligent and workmanlike manner" that can't be fully delegated to another contractor they hire.
Read more about the issues that led up to the decision in the Tennessee Bar Journal.
The Jackson Sun carried this AP story
Read more about the issues that led up to the decision in the Tennessee Bar Journal.
The Jackson Sun carried this AP story
State Supreme Court ruling finds liability for contractors using subs
A ruling from the Tennessee Supreme Court has made it easier for homeowners to hold contractors responsible for shoddy work by subcontractors.
The court has found that contractors have a duty to perform services in a “careful, skillful, diligent and workmanlike manner” that can’t be fully delegated to another contractor they hire.
The 5-0 ruling in a case from Chattanooga over a botched roof repair job that caused a fire could have broad implications for homeowners and contractors because most home construction and repair work involves bringing in subcontractors to handle parts of the job.
The opinion written by Justice Gary Wade and released last week said this was the first time the state Supreme Court had taken up the issue of whether a contractor was absolved from liability under the contract by hiring a subcontractor.
The case began when Robert and Joanie Emerson signed a contract with Winters Roofing Co. to replace a roof. Company owner Martin Winters subcontracted out the work. When the Emersons complained that the new roof leaked, Winters brought in a different subcontractor for repairs.
The subcontractor used a propane torch on the roof, and a few hours later the house caught fire. A fire investigator for the insurance company concluded the open flame roofing work started the fire, which caused more than $870,000 in damages to the home on Sept. 26, 2007.
Neither Winters nor the subcontractor had liability insurance, although Winters tried to obtain it the day after the fire and then filed a claim that said the fire happened seven days later, the ruling said.
The Emersons’ insurance company sued Winters, who argued that he wasn’t at the site while the subcontractor was working and wasn’t responsible for his mistakes.
The trial court dismissed the lawsuit, saying the couple’s insurance company couldn’t recover damages because the fire wasn’t a foreseeable part of the contract. It also said that the only way Winters could be held responsible was if it was shown that he was negligent in his hiring or supervision of the subcontractor.
Last year the Tennessee Court of Appeals overturned that decision.
“The defendant had an implied duty to perform the services required by his contract with the Emersons in a careful, skillful, diligent, and workmanlike manner,” the Supreme Court ruling says.
It concluded that while Winters had lawfully delegated his responsibility to install a proper roof to the subcontractors, he still was liable for the shoddy work.
http://www.jacksonsun.com/article/20111030/NEWS01/111030004/State-Supreme-Court-ruling-finds-liability-contractors-using-subs-
The court has found that contractors have a duty to perform services in a “careful, skillful, diligent and workmanlike manner” that can’t be fully delegated to another contractor they hire.
The 5-0 ruling in a case from Chattanooga over a botched roof repair job that caused a fire could have broad implications for homeowners and contractors because most home construction and repair work involves bringing in subcontractors to handle parts of the job.
The opinion written by Justice Gary Wade and released last week said this was the first time the state Supreme Court had taken up the issue of whether a contractor was absolved from liability under the contract by hiring a subcontractor.
The case began when Robert and Joanie Emerson signed a contract with Winters Roofing Co. to replace a roof. Company owner Martin Winters subcontracted out the work. When the Emersons complained that the new roof leaked, Winters brought in a different subcontractor for repairs.
The subcontractor used a propane torch on the roof, and a few hours later the house caught fire. A fire investigator for the insurance company concluded the open flame roofing work started the fire, which caused more than $870,000 in damages to the home on Sept. 26, 2007.
Neither Winters nor the subcontractor had liability insurance, although Winters tried to obtain it the day after the fire and then filed a claim that said the fire happened seven days later, the ruling said.
The Emersons’ insurance company sued Winters, who argued that he wasn’t at the site while the subcontractor was working and wasn’t responsible for his mistakes.
The trial court dismissed the lawsuit, saying the couple’s insurance company couldn’t recover damages because the fire wasn’t a foreseeable part of the contract. It also said that the only way Winters could be held responsible was if it was shown that he was negligent in his hiring or supervision of the subcontractor.
Last year the Tennessee Court of Appeals overturned that decision.
“The defendant had an implied duty to perform the services required by his contract with the Emersons in a careful, skillful, diligent, and workmanlike manner,” the Supreme Court ruling says.
It concluded that while Winters had lawfully delegated his responsibility to install a proper roof to the subcontractors, he still was liable for the shoddy work.
http://www.jacksonsun.com/article/20111030/NEWS01/111030004/State-Supreme-Court-ruling-finds-liability-contractors-using-subs-
TN Supreme Court whether a contractor can be held liable for damage caused by an independent subcontractor.
FEDERAL INSURANCE COMPANY A/S/O ROBERT AND JOANIE EMERSON v. MARTIN EDWARD WINTERS, D/B/A WINTERS ROOFING COMPANY (Tenn. October 24, 2011)
The defendant contractor entered into a contract to replace a roof. When the newly installed roof developed leaks, the defendant hired an independent contractor to make the necessary repairs. While performing the work, the independent contractor caused a fire, resulting in an $871,069.73 insurance claim by the homeowners. As subrogor to the homeowners' rights and claims arising out of the fire, the plaintiff insurance company sued the defendant in both tort and in contract. The defendant filed a motion for summary judgment, asserting that because he had subcontracted the work, he could not be liable. The trial court granted the motion on both the negligence and breach of contract claims.
The Court of Appeals reversed, holding that the defendant had a non-delegable contractual duty to perform the roofing services in a careful, skillful, and workmanlike manner. This Court granted the defendant's application for permission to appeal in order to determine the propriety of the claim under the theory of contract. Because the defendant had an implied non-delegable duty to install the roof in a careful, skillful, diligent, and workmanlike manner, the judgment of the Court of Appeals is affirmed. The case is remanded to the trial court for proceedings consistent with this opinion.
Opinion available at:
http://www.tba2.org/tba_files/TSC/2011/federalinsurance_102411.pdf
The defendant contractor entered into a contract to replace a roof. When the newly installed roof developed leaks, the defendant hired an independent contractor to make the necessary repairs. While performing the work, the independent contractor caused a fire, resulting in an $871,069.73 insurance claim by the homeowners. As subrogor to the homeowners' rights and claims arising out of the fire, the plaintiff insurance company sued the defendant in both tort and in contract. The defendant filed a motion for summary judgment, asserting that because he had subcontracted the work, he could not be liable. The trial court granted the motion on both the negligence and breach of contract claims.
The Court of Appeals reversed, holding that the defendant had a non-delegable contractual duty to perform the roofing services in a careful, skillful, and workmanlike manner. This Court granted the defendant's application for permission to appeal in order to determine the propriety of the claim under the theory of contract. Because the defendant had an implied non-delegable duty to install the roof in a careful, skillful, diligent, and workmanlike manner, the judgment of the Court of Appeals is affirmed. The case is remanded to the trial court for proceedings consistent with this opinion.
Opinion available at:
http://www.tba2.org/tba_files/TSC/2011/federalinsurance_102411.pdf
November 01, 2011
New Government Crackdown On Independent Contractors Coincides with IRS Offer to Come Clean
The IRS has launched a new program that will enable many employers to resolve past worker classification issues at a relatively low tax cost by voluntarily reclassifying their workers.
This new program offers employers an opportunity to come into compliance by making a payment covering past payroll tax obligations.
This IRS "Fresh Start" initiative coincides with another new government Department of Labor program to crack down on employers who misclassify employees as independent contractors (see right-hand box for more information).
The new IRS Voluntary Classification Settlement Program "is designed to increase tax compliance and reduce burden for employers by providing greater certainty for employers, workers and the government," according to the IRS.
See full article at: http://www.maloneynovotny.com/news-resources/latest-news/2011/100311.html
This new program offers employers an opportunity to come into compliance by making a payment covering past payroll tax obligations.
This IRS "Fresh Start" initiative coincides with another new government Department of Labor program to crack down on employers who misclassify employees as independent contractors (see right-hand box for more information).
The new IRS Voluntary Classification Settlement Program "is designed to increase tax compliance and reduce burden for employers by providing greater certainty for employers, workers and the government," according to the IRS.
See full article at: http://www.maloneynovotny.com/news-resources/latest-news/2011/100311.html
October 25, 2011
Court reviews the foreseeability of plaintiff's harm and the possible liability of a condominium complex
MARQUETTE WEAVER v. FOUR MAPLES HOMEOWNERS ASSOCIATION and WESTWOOD MANAGEMENT CORPORATION (Tenn. Ct. App. October 25, 2011)
This is a premises liability case in which the Plaintiff/Appellant, a resident of Defendants/Appellees' condominium complex, was assaulted by unknown individuals. Appellant filed suit, asserting negligence on the part of Appellees in failing to timely repair a vehicle access gate on the property.
The trial court granted summary judgment to Appellees, finding that Appellees owed no duty to Appellant as the harm was not reasonably foreseeable. We conclude that the evidence creates a dispute as to whether the underlying assault was foreseeable and, therefore, the grant of summary judgment was erroneous. Reversed and remanded.
Opinion available at:
http://www.tba2.org/tba_files/TCA/2011/weaverm_102511.pdf
This is a premises liability case in which the Plaintiff/Appellant, a resident of Defendants/Appellees' condominium complex, was assaulted by unknown individuals. Appellant filed suit, asserting negligence on the part of Appellees in failing to timely repair a vehicle access gate on the property.
The trial court granted summary judgment to Appellees, finding that Appellees owed no duty to Appellant as the harm was not reasonably foreseeable. We conclude that the evidence creates a dispute as to whether the underlying assault was foreseeable and, therefore, the grant of summary judgment was erroneous. Reversed and remanded.
Opinion available at:
http://www.tba2.org/tba_files/TCA/2011/weaverm_102511.pdf
October 13, 2011
Court reviews whether the seller of a home should indemnify the builder for damages relating to a breach of contract dispute
TRIANGLE AMERICAN HOMES v. SAMUEL B. HARRISON, ET AL. (Tenn. Ct. App. October 13, 2011)
In this indemnity case, Jere Krieg ("Builder"), through Triangle American Homes, Inc., initially filed a complaint for attachment and damages against Samuel and Lauren Harrison (collectively "the Harrisons") relating to the construction of a modular home. When the Harrisons filed a counterclaim, arguing that Builder had failed to perform pursuant to their contract, Builder brought a third-party complaint against All American Homes of Tennessee, LLC ("Seller"), alleging that Seller should indemnify Builder.
Builder and the Harrisons entered into a settlement agreement. In the remaining suit for indemnification, Seller argued that Builder was not entitled to indemnity because the damages and losses sustained by Builder were a result of Builder's actions. Following a bench trial, the trial court held that Builder was entitled to damages in the amount of $45,000 and attorney fees in the amount of $45,000, for a total award of $90,000. Seller appeals. We modify the award of attorney fees to $18,084 and affirm the decision of the trial court in all other respects.
Opinion available at:
http://www.tba2.org/tba_files/TCA/2011/triangle_101311.pdf
In this indemnity case, Jere Krieg ("Builder"), through Triangle American Homes, Inc., initially filed a complaint for attachment and damages against Samuel and Lauren Harrison (collectively "the Harrisons") relating to the construction of a modular home. When the Harrisons filed a counterclaim, arguing that Builder had failed to perform pursuant to their contract, Builder brought a third-party complaint against All American Homes of Tennessee, LLC ("Seller"), alleging that Seller should indemnify Builder.
Builder and the Harrisons entered into a settlement agreement. In the remaining suit for indemnification, Seller argued that Builder was not entitled to indemnity because the damages and losses sustained by Builder were a result of Builder's actions. Following a bench trial, the trial court held that Builder was entitled to damages in the amount of $45,000 and attorney fees in the amount of $45,000, for a total award of $90,000. Seller appeals. We modify the award of attorney fees to $18,084 and affirm the decision of the trial court in all other respects.
Opinion available at:
http://www.tba2.org/tba_files/TCA/2011/triangle_101311.pdf
September 27, 2011
Court reviews a breach of contract dispute involving the paving of a drag strip
NORTHWEST TENNESSEE MOTORSPORTS PARK, LLC v. TENNESSEE ASPHALT COMPANY (Tenn. Ct. App. September 23, 2011)
This is a breach of contract case. Appellants contracted with Appellees to pave their existing drag strip. Because the soil under the drag strip contained too much moisture, the paving project failed and other parts of the drag strip not included in the contract were damaged. The trial court awarded damages for the Appellant, but later reduced the damages by the amount over and above the original contract. Appellant appeals. Because the Appellant failed to present any evidence that Appellee breached the contract, we reverse and remand.
Opinion available at:
http://www.tba2.org/tba_files/TCA/2011/northwest_092311.pdf
This is a breach of contract case. Appellants contracted with Appellees to pave their existing drag strip. Because the soil under the drag strip contained too much moisture, the paving project failed and other parts of the drag strip not included in the contract were damaged. The trial court awarded damages for the Appellant, but later reduced the damages by the amount over and above the original contract. Appellant appeals. Because the Appellant failed to present any evidence that Appellee breached the contract, we reverse and remand.
Opinion available at:
http://www.tba2.org/tba_files/TCA/2011/northwest_092311.pdf
September 12, 2011
Guest Post: Tennessee surety bond basics for contractors
Tennessee surety bond basics for contractors
Danielle Rodabaugh, Surety Bonds Insider
The understanding most contractors have of surety bond legalities typically doesn't go much further than the fact that they have to buy bonds before beginning projects. Unfortunately, all too often contractors only really learn about surety bonds after a claim has been made and they're in the the midst of a lawsuit. This article will explore some key legal points that local contractors should know about Tennessee surety bonds.
Surety bonds are not insurance policies. Although insurance companies almost always underwrite surety bonds, they do not function in the same way. Insurance agents expect claims to be made against insurance policies. Conversely, surety providers do not expect claims to be made against bonds, and, if they are, the surety expects the contractor to pay for costs.
Surety bonds are risk mitigation tools that are used to reduce instances of fraud and malpractice across a number of different industries. In the construction industry, surety bonds are also called "contract bonds" or "construction bonds." Government agencies require the use of specific construction bonds that vary depending on the project type and its geographic location. Common ones include bid bonds, performance bonds and payment bonds, just to name a few. No matter the specific bond title, though, they all work in the same basic way.
Each surety bond that's issued essentially functions as a legally binding contract that joins three entities together.
If a principal fails to meet the bond's terms, then the obligee can make a claim on the bond to gain reparation. If the claim is found to be valid, the surety will be held responsible for paying the claim. The surety then expects the principal to repay the agency for all costs, which is a major distinction between surety bonds and insurance policies.
Generally speaking, contractor bonding provides legal protection to government agencies and other project owners who fund a construction project. Most contract bonds are required in case a contractor leaves a project incomplete or does unsatisfactory work, in which case the obligee can make a claim on the bond. Who exactly receives the bond's financial protection, though, depends on the bond's language. For instance, payment bonds actually protect subcontractors and material suppliers by guaranteeing they will be paid for their services.
A number of different laws regulate the use of surety bonds in Tennessee. For starters, the federal Miller Act requires the use of separate payment and performance bonds on every publicly funded project that's contracted for $100,000 or more. The Tennessee Board for Licensing Contractors does not require construction professionals to post a surety bond to get a contractor's license, however, surety bonds can be required for bidding or obtaining contractor permits from local government agencies in the state. Exact contract bond requirements vary by jurisdiction, so contractors should check with the government agency that enforces local construction regulations before beginning any project.
To get a home improvement contractor license in Tennessee, applicants must provide original proof of $10,000 worth of financial responsibility via either a 1) surety bond with written power of attorney attached, 2) cash bond, 3) property bond or 4) irrevocable letter of credit.
The first step to getting a surety bond is to find a surety provider that best meets the company's needs. The surety industry's leading providers offer online services to help Tennessee contractors get the surety bonds they need as quickly and easily as possible. Contractors can fill out online applications in just a few minutes.
Surety providers will conduct a thorough background check to decide whether an applicant qualifies for a contract bond. This typically involves an examination of the applicant's financial history, credit score and work record. If a business shows signs of financial instability or poor performance, the surety provider will simply refuse to issue the bond. If a contractor fails to secure the necessary bond(s), the business will not be able to legally work on the project. Ignoring surety regulations can result in heavy fines, legal action and license revocations.
Once a business secures the bond, it makes a legally binding promise to fulfill the bond's contractual language. This typically means the contractor agrees to finish the project at hand according to contract.
Although it might seem complicated, the goal of the surety bond process is twofold:
Since surety bonds play such an important role in Tennessee's construction industry, a basic understanding of their functionality can help contractors undergo the process much more easily.
Danielle Rodabaugh is the editor of the Surety Bonds Insider, a publication that provides in-depth analyses of developments within the surety industry. The publication is sponsored by SuretyBonds.com, a nationwide surety bond producer that helps contractors and their lawyers understand the legal implications of the surety bond process.
Danielle Rodabaugh, Surety Bonds Insider
The understanding most contractors have of surety bond legalities typically doesn't go much further than the fact that they have to buy bonds before beginning projects. Unfortunately, all too often contractors only really learn about surety bonds after a claim has been made and they're in the the midst of a lawsuit. This article will explore some key legal points that local contractors should know about Tennessee surety bonds.
What exactly are surety bonds?
Surety bonds are not insurance policies. Although insurance companies almost always underwrite surety bonds, they do not function in the same way. Insurance agents expect claims to be made against insurance policies. Conversely, surety providers do not expect claims to be made against bonds, and, if they are, the surety expects the contractor to pay for costs.
Surety bonds are risk mitigation tools that are used to reduce instances of fraud and malpractice across a number of different industries. In the construction industry, surety bonds are also called "contract bonds" or "construction bonds." Government agencies require the use of specific construction bonds that vary depending on the project type and its geographic location. Common ones include bid bonds, performance bonds and payment bonds, just to name a few. No matter the specific bond title, though, they all work in the same basic way.
How do surety bonds work?
Each surety bond that's issued essentially functions as a legally binding contract that joins three entities together.
- The principal is the contractor or construction firm that purchases the bond to guarantee the quality of future work.
- The obligee is the government agency or other project owner that requires the bond to protect against financial loss.
- The surety is the agency that executes the bond and acts as an intermediary between the principal and obligee.
If a principal fails to meet the bond's terms, then the obligee can make a claim on the bond to gain reparation. If the claim is found to be valid, the surety will be held responsible for paying the claim. The surety then expects the principal to repay the agency for all costs, which is a major distinction between surety bonds and insurance policies.
Who benefits from surety bond protection?
Generally speaking, contractor bonding provides legal protection to government agencies and other project owners who fund a construction project. Most contract bonds are required in case a contractor leaves a project incomplete or does unsatisfactory work, in which case the obligee can make a claim on the bond. Who exactly receives the bond's financial protection, though, depends on the bond's language. For instance, payment bonds actually protect subcontractors and material suppliers by guaranteeing they will be paid for their services.
Which laws require contract bonds in Tennessee?
A number of different laws regulate the use of surety bonds in Tennessee. For starters, the federal Miller Act requires the use of separate payment and performance bonds on every publicly funded project that's contracted for $100,000 or more. The Tennessee Board for Licensing Contractors does not require construction professionals to post a surety bond to get a contractor's license, however, surety bonds can be required for bidding or obtaining contractor permits from local government agencies in the state. Exact contract bond requirements vary by jurisdiction, so contractors should check with the government agency that enforces local construction regulations before beginning any project.
Surety bonds and the Tennessee home improvement contractor license
To get a home improvement contractor license in Tennessee, applicants must provide original proof of $10,000 worth of financial responsibility via either a 1) surety bond with written power of attorney attached, 2) cash bond, 3) property bond or 4) irrevocable letter of credit.
How do contractors get a Tennessee surety bond?
The first step to getting a surety bond is to find a surety provider that best meets the company's needs. The surety industry's leading providers offer online services to help Tennessee contractors get the surety bonds they need as quickly and easily as possible. Contractors can fill out online applications in just a few minutes.
Surety providers will conduct a thorough background check to decide whether an applicant qualifies for a contract bond. This typically involves an examination of the applicant's financial history, credit score and work record. If a business shows signs of financial instability or poor performance, the surety provider will simply refuse to issue the bond. If a contractor fails to secure the necessary bond(s), the business will not be able to legally work on the project. Ignoring surety regulations can result in heavy fines, legal action and license revocations.
Once a business secures the bond, it makes a legally binding promise to fulfill the bond's contractual language. This typically means the contractor agrees to finish the project at hand according to contract.
Although it might seem complicated, the goal of the surety bond process is twofold:
- keep financially unstable or otherwise unqualified construction professionals from working in the market
- protect government agencies, project owners and consumers from financial loss
Since surety bonds play such an important role in Tennessee's construction industry, a basic understanding of their functionality can help contractors undergo the process much more easily.
Danielle Rodabaugh is the editor of the Surety Bonds Insider, a publication that provides in-depth analyses of developments within the surety industry. The publication is sponsored by SuretyBonds.com, a nationwide surety bond producer that helps contractors and their lawyers understand the legal implications of the surety bond process.
September 10, 2011
TN Supreme Court considers home repair case
September 4, 2011
The Tennessee Supreme Court heard oral arguments last week on a case that could change a homeowner's ability to recover damages when a subcontractor botches a home repair or remodeling job. The case involves a Hamilton County couple whose house was destroyed by a fire while someone was fixing their roof. If the court finds in favor of the owner of the roofing company homeowners are going to have to be more vigilant, Nashville attorney John Day said. Day also wrote about the case in a recent Tennessee Bar Journal column.
Read the full story on the Tennessean's website.
The Tennessee Supreme Court heard oral arguments last week on a case that could change a homeowner's ability to recover damages when a subcontractor botches a home repair or remodeling job. The case involves a Hamilton County couple whose house was destroyed by a fire while someone was fixing their roof. If the court finds in favor of the owner of the roofing company homeowners are going to have to be more vigilant, Nashville attorney John Day said. Day also wrote about the case in a recent Tennessee Bar Journal column.
Read the full story on the Tennessean's website.
September 08, 2011
Tennessee High Court hears Botched Home Repair Case
September 3, 2011
The Tennessee Supreme Court is considering a case that could change a homeowner's ability to recover damages when a subcontractor botches a home repair or remodeling job.
The case involves a Hamilton County couple whose house was destroyed by a fire while someone was fixing their roof.
The Tennessee Supreme Court heard oral arguments in the case Thursday.
Robert and Joanie Emerson hired a company to repair their roof but, unbeknownst to them, the firm subcontracted the job out to someone else. The Emersons accuse the subcontractor of setting the house on fire while using a propane torch during the repairs.
The damage amounted to more than $800,000.
Because repair and construction work is often subcontracted out to cheap laborers who lack insurance, some legal experts say a decision in favor of the general contractor could leave many homeowners saddled with the costs for botched repair jobs.
The full article is located at: http://www.expertwitnessinconstruction.com/httpdocs/news-Botched_Home_Repair.php
The Tennessee Supreme Court is considering a case that could change a homeowner's ability to recover damages when a subcontractor botches a home repair or remodeling job.
The case involves a Hamilton County couple whose house was destroyed by a fire while someone was fixing their roof.
The Tennessee Supreme Court heard oral arguments in the case Thursday.
Robert and Joanie Emerson hired a company to repair their roof but, unbeknownst to them, the firm subcontracted the job out to someone else. The Emersons accuse the subcontractor of setting the house on fire while using a propane torch during the repairs.
The damage amounted to more than $800,000.
Because repair and construction work is often subcontracted out to cheap laborers who lack insurance, some legal experts say a decision in favor of the general contractor could leave many homeowners saddled with the costs for botched repair jobs.
The full article is located at: http://www.expertwitnessinconstruction.com/httpdocs/news-Botched_Home_Repair.php
September 01, 2011
Court reviews a case involving a breach of implied warranty dispute over unimproved real property
JERRY ANN WINN v. WELCH FARM, LLC, ET AL. (Tenn. Ct. App. September 1, 2011)
The buyer of unimproved real property sued the sellers for breach of implied warranties, imposition of a permanent nuisance, and diminution in value of the property; buyer also sought damages for alleged violations of the Tennessee Real Estate Broker License Act, the duty of good faith and fair dealing, the Tennessee Consumer Protection Act, and negligence.
The trial court held that Tennessee does not provide a cause of action for breach of implied warranty in the sale of unimproved real property; the court also held that buyer had not demonstrated a genuine issue of material fact as to whether the lot was "unbuildable." The court granted summary judgment to the defendants, and the buyer appealed. Buyer asserts that the sellers had a duty to disclose "possible adverse soil conditions." She also urges this Court to adopt a cause of action for breach of implied warranty of suitability for residential construction. We affirm the judgment of the trial court.
Opinion available at:
http://www.tba2.org/tba_files/TCA/2011/winnj_090111.pdf
The buyer of unimproved real property sued the sellers for breach of implied warranties, imposition of a permanent nuisance, and diminution in value of the property; buyer also sought damages for alleged violations of the Tennessee Real Estate Broker License Act, the duty of good faith and fair dealing, the Tennessee Consumer Protection Act, and negligence.
The trial court held that Tennessee does not provide a cause of action for breach of implied warranty in the sale of unimproved real property; the court also held that buyer had not demonstrated a genuine issue of material fact as to whether the lot was "unbuildable." The court granted summary judgment to the defendants, and the buyer appealed. Buyer asserts that the sellers had a duty to disclose "possible adverse soil conditions." She also urges this Court to adopt a cause of action for breach of implied warranty of suitability for residential construction. We affirm the judgment of the trial court.
Opinion available at:
http://www.tba2.org/tba_files/TCA/2011/winnj_090111.pdf
August 30, 2011
Court reviews the trial court's interpretation of the mechanic's and materialmen's liens statutes
TRI AM CONSTRUCTION, INC., ET AL. v. J & V DEVELOPMENT, INC., ET AL. (Tenn. Ct. App. August 30, 2011)
This interlocutory appeal stems from a lien enforcement action. Tri Am Construction, Inc. ("Tri Am") filed a complaint in the Chancery Court for Rhea County ("the Trial Court") against J & V Development, Inc. ("J & V"), Randall E. Vick, Brenda B. Jung, and Branch Banking and Trust Company ("BB&T") to enforce a lien.
BB&T moved to dismiss Tri Am's complaint, citing alleged fatal procedural defects. The Trial Court denied BB&T's motion to dismiss and allowed Tri Am to amend its complaint to cure the procedural defects. We granted permission for this interlocutory appeal.
We find that the Trial Court did not err in liberally construing the revised mechanic's and materialmen's liens statutes to permit Tri Am to amend its complaint in order to cure the procedural defects. We further find that the Trial Court did not err in declining to hold that BB&T's rights would be retroactively impaired by the liberal application of the revised mechanic's and materialmen's liens statutes. We affirm the judgment of the Trial Court.
Opinion available at:
http://www.tba2.org/tba_files/TCA/2011/triamconstruct_083011.pdf
This interlocutory appeal stems from a lien enforcement action. Tri Am Construction, Inc. ("Tri Am") filed a complaint in the Chancery Court for Rhea County ("the Trial Court") against J & V Development, Inc. ("J & V"), Randall E. Vick, Brenda B. Jung, and Branch Banking and Trust Company ("BB&T") to enforce a lien.
BB&T moved to dismiss Tri Am's complaint, citing alleged fatal procedural defects. The Trial Court denied BB&T's motion to dismiss and allowed Tri Am to amend its complaint to cure the procedural defects. We granted permission for this interlocutory appeal.
We find that the Trial Court did not err in liberally construing the revised mechanic's and materialmen's liens statutes to permit Tri Am to amend its complaint in order to cure the procedural defects. We further find that the Trial Court did not err in declining to hold that BB&T's rights would be retroactively impaired by the liberal application of the revised mechanic's and materialmen's liens statutes. We affirm the judgment of the Trial Court.
Opinion available at:
http://www.tba2.org/tba_files/TCA/2011/triamconstruct_083011.pdf
August 22, 2011
Court Reviews Whether the Trial Court had Jurisdiction to Confirm an Arbitration Award
LEE BROWN AND GUTTERSHUTTER OF NASHVILLE, LLC v. DAVID STYLES ET AL. (Tenn. Ct. App. August 22, 2011)
Appeal from a judgment confirming an arbitration award. The principle defense is that the appellant, the party against whom the arbitration award was issued, was never a party to the arbitration agreement at issue and did not participate in the arbitration proceedings. The trial court confirmed the arbitration award and enrolled a judgment against the appellant in the amount of $78,956.80 plus costs.
We reverse the confirmation of the award against the appellant upon the finding that the trial court lacked subject matter jurisdiction to confirm the award. This is because the statute which confers jurisdiction upon the court to confirm arbitration awards, Tenn. Code Ann.section 29-5-302, requires a written arbitration agreement between the parties, and there is no written agreement between the appellant and appellee to arbitrate. Thus, the trial court was without jurisdiction to confirm an arbitration award against the appellant.
Opinion available at:
http://www.tba2.org/tba_files/TCA/2011/brownl_082211.pdf
Appeal from a judgment confirming an arbitration award. The principle defense is that the appellant, the party against whom the arbitration award was issued, was never a party to the arbitration agreement at issue and did not participate in the arbitration proceedings. The trial court confirmed the arbitration award and enrolled a judgment against the appellant in the amount of $78,956.80 plus costs.
We reverse the confirmation of the award against the appellant upon the finding that the trial court lacked subject matter jurisdiction to confirm the award. This is because the statute which confers jurisdiction upon the court to confirm arbitration awards, Tenn. Code Ann.section 29-5-302, requires a written arbitration agreement between the parties, and there is no written agreement between the appellant and appellee to arbitrate. Thus, the trial court was without jurisdiction to confirm an arbitration award against the appellant.
Opinion available at:
http://www.tba2.org/tba_files/TCA/2011/brownl_082211.pdf
August 01, 2011
Court reviews whether a valid contract existed between home buyer and seller for the repair of a drain
DENISE JEREMIAH and TIMOTHY JEREMIAH v. WILLIAM BLALOCK (Tenn. Ct. App. August 1, 2011)
The plaintiff home buyer and defendant home seller entered into an agreement to repair a drain at some future date because it had been improperly piped out of the buyer's house. When the time for performance came, the drain was not moved, resulting in damages to the buyer's home. The buyer sued for breach of contract. The circuit court granted a directed verdict to the defendant on the ground that there was no consideration to support the contract. We find that the mutual promises made by the parties constituted adequate consideration. We accordingly reverse the trial court and remand this case for such further proceedings as necessary.
Opinion available at:
http://www.tba2.org/tba_files/TCA/2011/jeremiahd_080111.pdf
The plaintiff home buyer and defendant home seller entered into an agreement to repair a drain at some future date because it had been improperly piped out of the buyer's house. When the time for performance came, the drain was not moved, resulting in damages to the buyer's home. The buyer sued for breach of contract. The circuit court granted a directed verdict to the defendant on the ground that there was no consideration to support the contract. We find that the mutual promises made by the parties constituted adequate consideration. We accordingly reverse the trial court and remand this case for such further proceedings as necessary.
Opinion available at:
http://www.tba2.org/tba_files/TCA/2011/jeremiahd_080111.pdf
July 24, 2011
Judy Greenwald: Professional liability risks grow with green construction
Challenges facing risk managers and insurers in developing errors and omissions coverage for “green” construction projects are similar to but also different than standard construction risks.
The difference generally is found in new technology and materials, which are untested and often experimental, and can lead to unfounded expectations, observers say.
Despite recent attention on the subject, “green building sustainable design has been around for decades,” said Paul Ablan, Minnetonka, Minn.-based senior vp and managing director of professional liability at OneBeacon Professional Insurance, a unit of Hamilton, Bermuda-based OneBeacon Insurance Group Ltd.
Professionals long have sought to operate more efficiently and economically while taking the environment into account, but it is only in the past several years that sustainable design has gained more governmental and public focus, Mr. Ablan said.
Read more at: http://www.expertwitnessinconstruction.com/httpdocs/news-Green_Construction_Liability_Risks.php
The difference generally is found in new technology and materials, which are untested and often experimental, and can lead to unfounded expectations, observers say.
Despite recent attention on the subject, “green building sustainable design has been around for decades,” said Paul Ablan, Minnetonka, Minn.-based senior vp and managing director of professional liability at OneBeacon Professional Insurance, a unit of Hamilton, Bermuda-based OneBeacon Insurance Group Ltd.
Professionals long have sought to operate more efficiently and economically while taking the environment into account, but it is only in the past several years that sustainable design has gained more governmental and public focus, Mr. Ablan said.
Read more at: http://www.expertwitnessinconstruction.com/httpdocs/news-Green_Construction_Liability_Risks.php
July 19, 2011
Property Damage Exclusion Precludes Duty to Defend (Wiley Rein, LLP)
The United States District Court for the District of Colorado has held that an insurer did not owe a duty to defend under a Non-Profit Executive Protection and Employment Practices Liability Insurance (D&O) policy issued to a condominium association (the Association) because the claims in the underlying breach of contract suit fell under the policy’s property damage exclusion. Beauvallon Condominium Assoc., Inc. v. Granite State Ins. Co., 2011 WL 2565474 (D. Colo. June 29, 2011).
After the retailers began to complain about problems with common elements, including drainage from the roof and interior leakage from overhead plumbing defects, the owner of the retail spaces filed suit against the Association, demanding repair of the common elements.
Read more at http://www.expertwitnessinconstruction.com/httpdocs/news-Property_Damage_Exclusion.php
After the retailers began to complain about problems with common elements, including drainage from the roof and interior leakage from overhead plumbing defects, the owner of the retail spaces filed suit against the Association, demanding repair of the common elements.
Read more at http://www.expertwitnessinconstruction.com/httpdocs/news-Property_Damage_Exclusion.php
Court Reviews Defendant's Failure to Pay a Contractor the Balance of a Settlement Agreement
REGENCY CONSTRUCTION, LTD, INC. ET AL. v. KATHY LESLIE ET AL. (Tenn. Ct. App. July 19, 2011)
This dispute arises from an agreement to construct a duplex in a residential area. The issue in dispute pertains to the cost of change orders that were not reduced to writing as the construction contract required. To resolve the dispute amicably, the parties entered into an agreement titled "Settlement of Disputed Amount." The defendant paid part of the agreed amount timely but failed to pay the balance of $23,000. This action followed. The trial court ruled in favor of the contractor for the balance owed pursuant to the agreement and applied an offset in favor of the defendant in the amount of $5,220.55. Defendant appealed. We affirm.
Opinion available at:
http://www.tba2.org/tba_files/TCA/2011/regencyconstruction_071911.pdf
This dispute arises from an agreement to construct a duplex in a residential area. The issue in dispute pertains to the cost of change orders that were not reduced to writing as the construction contract required. To resolve the dispute amicably, the parties entered into an agreement titled "Settlement of Disputed Amount." The defendant paid part of the agreed amount timely but failed to pay the balance of $23,000. This action followed. The trial court ruled in favor of the contractor for the balance owed pursuant to the agreement and applied an offset in favor of the defendant in the amount of $5,220.55. Defendant appealed. We affirm.
Opinion available at:
http://www.tba2.org/tba_files/TCA/2011/regencyconstruction_071911.pdf
July 18, 2011
Court Reviews an Administrative Agency's Affirmation of a Workplace Violation Citation
SWIFT ROOFING, INC. v. STATE OF TENNESSEE, COMMISSIONER OF LABOR AND WORKFORCE DEVELOPMENT (Tenn. Ct. App. July 14, 2011)
This appeal arises from a petition seeking judicial review of an administrative agency order, which affirmed citations for workplace safety violations. The Chancery Court affirmed the citations.
After reviewing the appellate record, we conclude that the administrative agency did not provide the required findings of fact, conclusions of law, and reasons for its decision. Consequently, judicial review is not possible based on the record before this Court. Therefore, we vacate the order of the Chancery Court and remand for further proceedings consistent with this opinion.
Full opinion is available here:
http://www.tba2.org/tba_files/TCA/2011/swiftroofing_071411.pdf
This appeal arises from a petition seeking judicial review of an administrative agency order, which affirmed citations for workplace safety violations. The Chancery Court affirmed the citations.
After reviewing the appellate record, we conclude that the administrative agency did not provide the required findings of fact, conclusions of law, and reasons for its decision. Consequently, judicial review is not possible based on the record before this Court. Therefore, we vacate the order of the Chancery Court and remand for further proceedings consistent with this opinion.
Full opinion is available here:
http://www.tba2.org/tba_files/TCA/2011/swiftroofing_071411.pdf
July 16, 2011
Court Reviews a Recission of Contract Case Against Builders of a Home
HOSIE JOHNSON ET AL. v. NICK DATTILO ET AL. (Tenn. Ct. App. July 15, 2011)
The purchasers of a lot and newly constructed residence filed this action against the builders, seeking damages and rescission of the construction and sale agreement. The plaintiffs allege the defendants breached the agreement by failing to construct the home in accordance with "good building practices," and breached the implied warranty of workmanship. They also allege that statements made by the foreman during construction, concerning the condition of the property, amount to a violation of the Tennessee Consumer Protection Act, Tenn. Code Ann. section 47-18-104(b)(7), as well as common law negligent and fraudulent misrepresentation. The trial court granted the defendant's motion for a directed verdict on all claims. Finding plaintiffs failed to provide evidence of key elements in each of their claims, we affirm.
Opinion available at:
http://www.tba2.org/tba_files/TCA/2011/johnsonh_071511.pdf
The purchasers of a lot and newly constructed residence filed this action against the builders, seeking damages and rescission of the construction and sale agreement. The plaintiffs allege the defendants breached the agreement by failing to construct the home in accordance with "good building practices," and breached the implied warranty of workmanship. They also allege that statements made by the foreman during construction, concerning the condition of the property, amount to a violation of the Tennessee Consumer Protection Act, Tenn. Code Ann. section 47-18-104(b)(7), as well as common law negligent and fraudulent misrepresentation. The trial court granted the defendant's motion for a directed verdict on all claims. Finding plaintiffs failed to provide evidence of key elements in each of their claims, we affirm.
Opinion available at:
http://www.tba2.org/tba_files/TCA/2011/johnsonh_071511.pdf
July 14, 2011
Earl K. Messer: Insurance coverage for construction defects
Contractor liability insurance coverage in construction defect cases is a matter that is hotly litigated. On the one hand, coverage often exists when a defect causes harm to a third party’s property. On the other hand, if the only harm is to the insured contractor’s defective work itself, there is usually no coverage. In between lies controversy. A key area of dispute is where defective work on one part of a construction project causes harm to another part of the same project, a common occurrence. Courts are split on whether coverage exists under such circumstances, although the trend appears to be in favor of coverage.
Read the full story here: http://www.expertwitnessinconstruction.com/httpdocs/news-Construction_Defect_Insurance_Coverage.php
Read the full story here: http://www.expertwitnessinconstruction.com/httpdocs/news-Construction_Defect_Insurance_Coverage.php
June 29, 2011
TN Supreme Court Reviews Whether a Construction-Related Injury was Negligence Subject to the Governmental Tort Liability Act
DALTON REB HUGHES ET AL. v. THE METROPOLITAN GOVERNMENT OF NASHVILLE AND DAVIDSON COUNTY, TENNESSEE ET AL. (Tenn. May 24, 2011)
After being injured when he jumped out of the path of a front-end loader owned by a governmental entity and operated by its employee, the plaintiff filed suit, claiming that the employee either was negligent in his operation of the equipment or had acted intentionally and that the governmental entity was liable under the Governmental Tort Liability Act. The trial court entered judgment for the plaintiff against the governmental entity and the Court of Appeals affirmed.
The governmental entity sought permission to appeal, arguing first that the employee had acted outside the scope of his employment and, secondly, that he had committed an assault against the plaintiff, either of which would preclude liability under the Act. Although we hold that the employee's conduct fell within the scope of his employment, his operation of the equipment constituted the intentional tort of assault rather than negligence. The governmental entity cannot, therefore, be held liable under the Act absent proof of its negligent supervision. The judgment of the Court of Appeals is reversed as to the governmental entity, and the cause is remanded to the trial court for entry of judgment against the employee.
Opinion available at:
http://www.tba2.org/tba_files/TSC/2011/hughesd_052411.pdf
After being injured when he jumped out of the path of a front-end loader owned by a governmental entity and operated by its employee, the plaintiff filed suit, claiming that the employee either was negligent in his operation of the equipment or had acted intentionally and that the governmental entity was liable under the Governmental Tort Liability Act. The trial court entered judgment for the plaintiff against the governmental entity and the Court of Appeals affirmed.
The governmental entity sought permission to appeal, arguing first that the employee had acted outside the scope of his employment and, secondly, that he had committed an assault against the plaintiff, either of which would preclude liability under the Act. Although we hold that the employee's conduct fell within the scope of his employment, his operation of the equipment constituted the intentional tort of assault rather than negligence. The governmental entity cannot, therefore, be held liable under the Act absent proof of its negligent supervision. The judgment of the Court of Appeals is reversed as to the governmental entity, and the cause is remanded to the trial court for entry of judgment against the employee.
Opinion available at:
http://www.tba2.org/tba_files/TSC/2011/hughesd_052411.pdf
June 25, 2011
An ICE Storm of Immigration Audits is Coming
An ICE Storm of Immigration Audits is Coming
Dana Olsen
Corporate Counsel
June 22, 2011
For the second time this year, auditors at the U.S. Immigration and Customs Enforcement branch of the Department of Homeland Security are cracking down on employers to ensure compliance with workplace eligibility laws. Ian MacDonald, an immigration attorney at Littler Mendelson, says the audits are not going to stop anytime soon.
The government announced last week its intention to audit the hiring records of 1,000 employers of all sizes across the country. ICE says the selection of targeted employers is random, but MacDonald says certain industries are particularly prone to the audits. In February, the agency made a similar announcement and investigated 1,000 employers. Adding in whistleblower tips, the latest action brings the number of I-9 audits for fiscal year 2011 up to 2,300.
See complete article:
http://www.law.com/jsp/cc/PubArticleCC.jsp?id=1202498023756
Dana Olsen
Corporate Counsel
June 22, 2011
For the second time this year, auditors at the U.S. Immigration and Customs Enforcement branch of the Department of Homeland Security are cracking down on employers to ensure compliance with workplace eligibility laws. Ian MacDonald, an immigration attorney at Littler Mendelson, says the audits are not going to stop anytime soon.
The government announced last week its intention to audit the hiring records of 1,000 employers of all sizes across the country. ICE says the selection of targeted employers is random, but MacDonald says certain industries are particularly prone to the audits. In February, the agency made a similar announcement and investigated 1,000 employers. Adding in whistleblower tips, the latest action brings the number of I-9 audits for fiscal year 2011 up to 2,300.
See complete article:
http://www.law.com/jsp/cc/PubArticleCC.jsp?id=1202498023756
June 15, 2011
Court Reviews a Dismissed Cased Involving a Dispute Arising from the Construction of Two Houses
TERRY LAKE AND LINDA OUSLEY V. LOUIS HAYNES, BARBARA HAYNES AND RUNNING BEAR CONSTRUCTION (Tenn. Ct. App. June 9, 2011)
This is a construction case. The plaintiffs hired the defendant construction company to build two residential houses. Disputes arose during construction over completion of the work and the plaintiffs did not make some payments to the construction company. After the plaintiffs terminated the contract, they sued the defendant construction company. The construction company filed a counter-complaint. After a trial, the trial court dismissed the plaintiffs' complaint and the defendants' counter-complaint. However, the trial court failed to issue written findings of fact and conclusions of law as required under Rule 52.01 of the Tennessee Rules of Civil Procedure. We vacate the trial court's judgment and remand the cause to the trial court for written findings of fact and conclusions of law.
Opinion available at:
http://www.tba2.org/tba_files/TCA/2011/laket_060911.pdf
This is a construction case. The plaintiffs hired the defendant construction company to build two residential houses. Disputes arose during construction over completion of the work and the plaintiffs did not make some payments to the construction company. After the plaintiffs terminated the contract, they sued the defendant construction company. The construction company filed a counter-complaint. After a trial, the trial court dismissed the plaintiffs' complaint and the defendants' counter-complaint. However, the trial court failed to issue written findings of fact and conclusions of law as required under Rule 52.01 of the Tennessee Rules of Civil Procedure. We vacate the trial court's judgment and remand the cause to the trial court for written findings of fact and conclusions of law.
Opinion available at:
http://www.tba2.org/tba_files/TCA/2011/laket_060911.pdf
May 19, 2011
Court Reviews Whether a Contractor Violated the TN Consumer Protection Act by Hiding Unsuitable Soil
SPRING CRESS REALTY, LLC v. LARRY E. BROWN DBA S&B ASSOCIATES ET AL. (Tenn. Ct. App. May 16, 2011)
This is an action by an owner/developer of real property, Spring Cress Realty, LLC, against its excavation contractor, Larry E. Brown dba S&B Associates. The primary factual allegation is that the excavator intentionally hid approximately 40,000 cubic yards of unsuitable soil in an "engineered fill." The complaint included a claim that Brown violated the Tennessee Consumer Protection Act ("the TCPA"), Tenn. Code Ann. section 47-18-101 et seq.(2001). After a bench trial, the court awarded Spring Cress a judgment against Brown for compensatory damages of $551,295, trebled under the TCPA to $1,653,885. Brown appeals raising issues as to the preponderance of the evidence and the statute of limitations applicable to the TCPA claim. We affirm.
Opinion may be found at:
http://www.tba2.org/tba_files/TCA/2011/springcress_051611.pdf
This is an action by an owner/developer of real property, Spring Cress Realty, LLC, against its excavation contractor, Larry E. Brown dba S&B Associates. The primary factual allegation is that the excavator intentionally hid approximately 40,000 cubic yards of unsuitable soil in an "engineered fill." The complaint included a claim that Brown violated the Tennessee Consumer Protection Act ("the TCPA"), Tenn. Code Ann. section 47-18-101 et seq.(2001). After a bench trial, the court awarded Spring Cress a judgment against Brown for compensatory damages of $551,295, trebled under the TCPA to $1,653,885. Brown appeals raising issues as to the preponderance of the evidence and the statute of limitations applicable to the TCPA claim. We affirm.
Opinion may be found at:
http://www.tba2.org/tba_files/TCA/2011/springcress_051611.pdf
May 18, 2011
Court Reviews Whether A Builder Constructed a House in Accordance with "Good Building Practices"
ROGER WILKES, ET AL. v. SHAW ENTERPRISES, LLC (Tenn. Ct. App. May 5, 2011)
This is an appeal of the trial court's determination on remand that the Appellee did not breach the parties' contract when it constructed the Appellant's house without through-wall flashing and weep holes, as required by the applicable building code. The parties' contract provided that the builder would construct the house in accordance with "good building practices." The trial court concluded the builder constructed the house in accordance with good building practices even though it was not in strict conformance with the building code. We affirm this holding. The Appellants also appeal the trial court's failure to award them their attorneys' fees and costs incurred in their first appeal. We remand this matter to the trial court with directions that it award to Appellants reasonable attorneys' fees and costs incurred in their first appeal, as determined by the trial court.
Opinion available here:
http://www.tba2.org/tba_files/TCA/2011/wilkesr_050511.pdf
This is an appeal of the trial court's determination on remand that the Appellee did not breach the parties' contract when it constructed the Appellant's house without through-wall flashing and weep holes, as required by the applicable building code. The parties' contract provided that the builder would construct the house in accordance with "good building practices." The trial court concluded the builder constructed the house in accordance with good building practices even though it was not in strict conformance with the building code. We affirm this holding. The Appellants also appeal the trial court's failure to award them their attorneys' fees and costs incurred in their first appeal. We remand this matter to the trial court with directions that it award to Appellants reasonable attorneys' fees and costs incurred in their first appeal, as determined by the trial court.
Opinion available here:
http://www.tba2.org/tba_files/TCA/2011/wilkesr_050511.pdf
March 25, 2011
Court Reviews the Dismissal and Abatement of a Counterclaim in a Case Involving the Demolition and Construction of a Residential Garage
DAVID BATES D/B/A DAVID BATES CONSTRUCTION CO. v. CAROLINE BENEDETTI (Tenn. Ct. App. March 22, 2011)
David Bates d/b/a David Bates Construction Co. ("Plaintiff") sued Caroline Benedetti ("Defendant") for breach of a construction contract involving demolition of an existing residential garage and construction of a new one. Defendant answered the complaint and filed a counterclaim.
After a bench trial, the Trial Court entered its order finding and holding, inter alia,
(1) that Plaintiff had not proven damages,
(2) that Defendant had failed to comply with Tenn. Code Ann. section 66-36-103 with regard to her counterclaim and, therefore, pursuant to the statute her counterclaim should be abated, and
(3) that Defendant also had failed to give notice and an opportunity to cure pursuant to the common law and that her counterclaim should be dismissed for that reason as well.
Defendant appeals the abatement and dismissal of her counterclaim. We find that Tenn. Code Ann. section 66-36-103 does not apply to the case at hand, but that the Trial Court correctly dismissed Defendant's counterclaim. We, therefore, affirm the Trial Court's order.
Opinion available at:
http://www.tba2.org/tba_files/TCA/2011/batesd_032211.pdf
David Bates d/b/a David Bates Construction Co. ("Plaintiff") sued Caroline Benedetti ("Defendant") for breach of a construction contract involving demolition of an existing residential garage and construction of a new one. Defendant answered the complaint and filed a counterclaim.
After a bench trial, the Trial Court entered its order finding and holding, inter alia,
(1) that Plaintiff had not proven damages,
(2) that Defendant had failed to comply with Tenn. Code Ann. section 66-36-103 with regard to her counterclaim and, therefore, pursuant to the statute her counterclaim should be abated, and
(3) that Defendant also had failed to give notice and an opportunity to cure pursuant to the common law and that her counterclaim should be dismissed for that reason as well.
Defendant appeals the abatement and dismissal of her counterclaim. We find that Tenn. Code Ann. section 66-36-103 does not apply to the case at hand, but that the Trial Court correctly dismissed Defendant's counterclaim. We, therefore, affirm the Trial Court's order.
Opinion available at:
http://www.tba2.org/tba_files/TCA/2011/batesd_032211.pdf
March 14, 2011
Court Reviews whether Defendant Violated the Consumer Protection Act in a Cases Involving the Construction of a Home
ROBERT SHROUT, et al., v. HALL CONSTRUCTION, et al. (Tenn. Ct. App. March 14, 2011)
This case arose over the construction of a home for plaintiffs. Plaintiffs sued the construction company and a bank and several individuals. The Trial Court resolved the issues as to defendants, except Mark Rodriguez, prior to trial. The plaintiffs' case against Rodriguez was tried by the Trial Court who directed a verdict at the end of plaintiffs' proof. Plaintiffs appealed to this Court.
Plaintiffs insisted that material evidence established a violation of the Consumer Protection Act by defendant, and the directed verdict should be reversed. Upon review of the evidentiary record, we conclude that the Trial Judge properly directed a verdict in favor of the defendant, and we affirm the Trial Court's Judgment.
Opinion available at:
http://www.tba2.org/tba_files/TCA/2011/shroutr_031411.pdf
This case arose over the construction of a home for plaintiffs. Plaintiffs sued the construction company and a bank and several individuals. The Trial Court resolved the issues as to defendants, except Mark Rodriguez, prior to trial. The plaintiffs' case against Rodriguez was tried by the Trial Court who directed a verdict at the end of plaintiffs' proof. Plaintiffs appealed to this Court.
Plaintiffs insisted that material evidence established a violation of the Consumer Protection Act by defendant, and the directed verdict should be reversed. Upon review of the evidentiary record, we conclude that the Trial Judge properly directed a verdict in favor of the defendant, and we affirm the Trial Court's Judgment.
Opinion available at:
http://www.tba2.org/tba_files/TCA/2011/shroutr_031411.pdf
Court Reviews a Contractor's Claim for Lien Enforcement Against Homeowners
WISE CONSTRUCTION, LLC, ET AL. v. THOMAS BOYD, ET AL (Tenn. Ct. App. March 14, 2011)
This appeal involves a home construction dispute between an LLC contractor and the homeowners. The contractor entered into a written contract with the homeowners for the construction of a 6000 square foot home. Upon the relationship between the parties becoming strained, the homeowners claim the contractor told them to find another builder. The contractor contends it was fired from the project. The instant action was commenced by the contractor to enforce a lien. The trial court found in favor of the contractor. The homeowners appeal. We affirm.
Opinion available at:
http://www.tba2.org/tba_files/TCA/2011/wiseconstruction_031411.pdf
SWINEY dissenting
http://www.tba2.org/tba_files/TCA/2011/wiseconstruction_DIS_031411.pdf
This appeal involves a home construction dispute between an LLC contractor and the homeowners. The contractor entered into a written contract with the homeowners for the construction of a 6000 square foot home. Upon the relationship between the parties becoming strained, the homeowners claim the contractor told them to find another builder. The contractor contends it was fired from the project. The instant action was commenced by the contractor to enforce a lien. The trial court found in favor of the contractor. The homeowners appeal. We affirm.
Opinion available at:
http://www.tba2.org/tba_files/TCA/2011/wiseconstruction_031411.pdf
SWINEY dissenting
http://www.tba2.org/tba_files/TCA/2011/wiseconstruction_DIS_031411.pdf
February 28, 2011
Court Reviews the Award of Damages in a Case about the Construction of a Defective Dentist Office
CHARLES PESCE v. EAST TENNESSEE CONSTRUCTION SERVICES, INC. (Tenn. Ct. App. February 28, 2011)
Charles Pesce ("the Owner") is a practicing dentist. He contracted with East Tennessee Construction Services, Inc. ("the Builder") to build him a new office for his practice on a lot owned by him. The Builder constructed the building, but with numerous undisputed defects.
The Owner filed this action which culminated in a bench trial that lasted several days. Based upon diminution in value, the trial court awarded the Owner $282,000 in damages. The trial court expressly found that the cost to repair the structure was an unacceptable measure of damages because it "is disproportionate . . . to the difference in the value of the structure actually constructed and the one contracted for." The court awarded the Owner discretionary costs of over $10,000.
The Owner appeals challenging the measure of damages as well as the amount awarded under the diminution in value measure. The Owner also challenges the trial court's failure to order the Builder to reimburse him for fees charged by one of the Owner's experts in connection with his discovery deposition taken by the Builder. The Builder challenges the award of discretionary costs and argues that the damages awarded are excessive. We reverse in part and affirm the remaining judgment as modified.
Opinion available at:
http://www.tba2.org/tba_files/TCA/2011/pescec_022811.pdf
SWINEY concurring
http://www.tba2.org/tba_files/TCA/2011/pescec_CON_022811.pdf
Charles Pesce ("the Owner") is a practicing dentist. He contracted with East Tennessee Construction Services, Inc. ("the Builder") to build him a new office for his practice on a lot owned by him. The Builder constructed the building, but with numerous undisputed defects.
The Owner filed this action which culminated in a bench trial that lasted several days. Based upon diminution in value, the trial court awarded the Owner $282,000 in damages. The trial court expressly found that the cost to repair the structure was an unacceptable measure of damages because it "is disproportionate . . . to the difference in the value of the structure actually constructed and the one contracted for." The court awarded the Owner discretionary costs of over $10,000.
The Owner appeals challenging the measure of damages as well as the amount awarded under the diminution in value measure. The Owner also challenges the trial court's failure to order the Builder to reimburse him for fees charged by one of the Owner's experts in connection with his discovery deposition taken by the Builder. The Builder challenges the award of discretionary costs and argues that the damages awarded are excessive. We reverse in part and affirm the remaining judgment as modified.
Opinion available at:
http://www.tba2.org/tba_files/TCA/2011/pescec_022811.pdf
SWINEY concurring
http://www.tba2.org/tba_files/TCA/2011/pescec_CON_022811.pdf
Court Reviews Whether a City Council Acted Illegally in Approving a Planned Development and a Street Closure
NATHAN E. STEPPACH, JR. v. WILLIAM H. THOMAS, JR., ET AL. (Tenn. Ct. App. February 28, 2011)
This is the second appeal of this case, which arises from the grant of a writ of certiorari by the Shelby County Chancery Court. Upon review of the Memphis City Council's record, the trial court found that the Appellee City had not acted arbitrarily, capriciously, or illegally in either approving a planned development, or in approving the companion street closure.
The trial court granted partial summary judgment in favor of the City, thereby affirming the City Council's action in approving the planned development. The issue of the companion street closure proceeded to hearing, with the trial court ultimately affirming the City Council's decision. Appellant appeals, arguing that the City Council's decision was made in violation of the Memphis City Charter and ordinances, and that the decision was the product of corruption within the City Council. Discerning no error, we affirm the action of the trial court and remand for further proceedings.
Opinion available at:
http://www.tba2.org/tba_files/TCA/2011/steppachn_022811.pdf
This is the second appeal of this case, which arises from the grant of a writ of certiorari by the Shelby County Chancery Court. Upon review of the Memphis City Council's record, the trial court found that the Appellee City had not acted arbitrarily, capriciously, or illegally in either approving a planned development, or in approving the companion street closure.
The trial court granted partial summary judgment in favor of the City, thereby affirming the City Council's action in approving the planned development. The issue of the companion street closure proceeded to hearing, with the trial court ultimately affirming the City Council's decision. Appellant appeals, arguing that the City Council's decision was made in violation of the Memphis City Charter and ordinances, and that the decision was the product of corruption within the City Council. Discerning no error, we affirm the action of the trial court and remand for further proceedings.
Opinion available at:
http://www.tba2.org/tba_files/TCA/2011/steppachn_022811.pdf
February 27, 2011
Court Reviews a Case Involving a Non-Performing Construction Company, a Developer, and Homeowners
DANIEL CAVANAUGH, et al., v. AVALON GOLF PROPERTIES, LLC. (Tenn. Ct. App. February 24, 2011)
Plaintiffs purchased a residential lot from defendant developer, but the purchase contract required plaintiffs to use defendant construction company to build their home. Before the home was completed, defendant construction company defaulted on paying materialmen and suppliers and abandoned the project.
Plaintiffs brought this action alleging that developer knew, or should have know, that the construction company was incapable of performing the required construction services, and that the developer owed plaintiff a fiduciary duty to provide a contractor who could perform the work in a good, workmanlike manner. They further alleged a breach of contract, in violation of the Tennessee Consumer Protection Act.
A default judgment was entered against the construction company, and the developer filed a Motion for Summary Judgment which the Trial Court ultimately granted against plaintiffs. Plaintiffs appealed and we affirm the Judgment of the Trial Court.
Opinion available here:
http://www.tba2.org/tba_files/TCA/2011/cavanaugh_022411.pdf
Plaintiffs purchased a residential lot from defendant developer, but the purchase contract required plaintiffs to use defendant construction company to build their home. Before the home was completed, defendant construction company defaulted on paying materialmen and suppliers and abandoned the project.
Plaintiffs brought this action alleging that developer knew, or should have know, that the construction company was incapable of performing the required construction services, and that the developer owed plaintiff a fiduciary duty to provide a contractor who could perform the work in a good, workmanlike manner. They further alleged a breach of contract, in violation of the Tennessee Consumer Protection Act.
A default judgment was entered against the construction company, and the developer filed a Motion for Summary Judgment which the Trial Court ultimately granted against plaintiffs. Plaintiffs appealed and we affirm the Judgment of the Trial Court.
Opinion available here:
http://www.tba2.org/tba_files/TCA/2011/cavanaugh_022411.pdf
February 25, 2011
Court Reviews the Allocation of Responsibility Between Developers in a Case Involving Construction of a Road
THE METROPOLITAN GOVERNMENT OF NASHVILLE AND DAVIDSON COUNTY v. BARRY CONSTRUCTION COMPANY, INC., ET AL. (Tenn. Ct. App. February 25, 2011)
This matter is before the court for a second time. The Metropolitan Government of Nashville and Davidson County initiated suit to compel two developers to complete an unfinished portion of a road in a planned unit development or to recover damages equal to the cost of completing the road if it completed the road itself.
The trial court dismissed the action, finding that the amended complaint did not provide a legal basis for requiring either developer to complete the road. On appeal this Court vacated the trial court's order and remanded the case for the court to consider the appropriate allocation of responsibility for construction of the road between the two developers.
While the appeal was pending, the Metropolitan Government acquired the land and subsequently completed the unfinished portion of the road. On remand, the trial court assessed costs of constructing the road to the developers equally, but assessed the land-acquisition costs entirely to one developer. The Metropolitan Government appeals. Finding no error in the trial court's allocation of responsibility, we affirm.
Opinion available at:
http://www.tba2.org/tba_files/TCA/2011/barryconstruction_022511.pdf
This matter is before the court for a second time. The Metropolitan Government of Nashville and Davidson County initiated suit to compel two developers to complete an unfinished portion of a road in a planned unit development or to recover damages equal to the cost of completing the road if it completed the road itself.
The trial court dismissed the action, finding that the amended complaint did not provide a legal basis for requiring either developer to complete the road. On appeal this Court vacated the trial court's order and remanded the case for the court to consider the appropriate allocation of responsibility for construction of the road between the two developers.
While the appeal was pending, the Metropolitan Government acquired the land and subsequently completed the unfinished portion of the road. On remand, the trial court assessed costs of constructing the road to the developers equally, but assessed the land-acquisition costs entirely to one developer. The Metropolitan Government appeals. Finding no error in the trial court's allocation of responsibility, we affirm.
Opinion available at:
http://www.tba2.org/tba_files/TCA/2011/barryconstruction_022511.pdf
February 20, 2011
Court Reviews Negligent and Fraudulent Misrepresentation in a Case Involving the Failure to Disclose Defects in a Home
EDMOND CATO ET AL. v. D. L. BATTS ET AL. (Tenn. Ct. App. February 18, 2011)
Purchasers of home filed this action against the sellers for negligent misrepresentation and fraudulent misrepresentation for the failure to disclose defects in the home. The trial court found for the purchasers on their claim of negligent misrepresentation but denied their claim of fraudulent misrepresentation and their request for rescission. Purchasers appealed contending the trial court erred by not finding fraudulent misrepresentation and partially denying their motion to alter or amend the judgment in which they sought to introduce new evidence. We affirm the ruling of the trial court in all respects.
Opinion may be found at:
http://www.tba2.org/tba_files/TCA/2011/catoe_021811.pdf
Purchasers of home filed this action against the sellers for negligent misrepresentation and fraudulent misrepresentation for the failure to disclose defects in the home. The trial court found for the purchasers on their claim of negligent misrepresentation but denied their claim of fraudulent misrepresentation and their request for rescission. Purchasers appealed contending the trial court erred by not finding fraudulent misrepresentation and partially denying their motion to alter or amend the judgment in which they sought to introduce new evidence. We affirm the ruling of the trial court in all respects.
Opinion may be found at:
http://www.tba2.org/tba_files/TCA/2011/catoe_021811.pdf
January 13, 2011
Court Reviews the Validity of a Land Survey in a Case about a Boundary Dispute between Hunting Clubs
OPEN LAKE SPORTING CLUB v. LAUDERDALE HAYWOOD ANGLING CLUB (Tenn. Ct. App. January 13, 2011)
This appeal involves a dispute over the location of a boundary line between tracts of land owned by two hunting clubs. After many years of litigation, the parties agreed that a new survey would be conducted by a new surveyor and that they would be bound by his decision.
After the new surveyor filed a report and survey, one of the clubs filed a motion to set aside the survey, contending that the new surveyor did not make an independent determination regarding the location of the boundary line, but rather, copied a previous survey that was completed in the past. The trial judge refused to hold a hearing regarding the validity of the survey because the parties had agreed to be bound by the surveyor's decision. We reverse and remand for further proceedings.
Opinion may be found at:
http://www.tba2.org/tba_files/TCA/2011/openlake_011311.pdf
This appeal involves a dispute over the location of a boundary line between tracts of land owned by two hunting clubs. After many years of litigation, the parties agreed that a new survey would be conducted by a new surveyor and that they would be bound by his decision.
After the new surveyor filed a report and survey, one of the clubs filed a motion to set aside the survey, contending that the new surveyor did not make an independent determination regarding the location of the boundary line, but rather, copied a previous survey that was completed in the past. The trial judge refused to hold a hearing regarding the validity of the survey because the parties had agreed to be bound by the surveyor's decision. We reverse and remand for further proceedings.
Opinion may be found at:
http://www.tba2.org/tba_files/TCA/2011/openlake_011311.pdf
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