Court determines which lender holds priority for the purposes of enforcing a lien against a defaulting developer

CHARLES BLALOCK & SONS, INC. v. FAIRTENN, LLC ET AL. (Tenn. Ct. App. December 27, 2012)

Branch Banking and Trust Company (“BB&T”) provided financing for a construction project and recorded a deed of trust. The excavation contractor, Charles Blalock & Sons, Inc., started work on the project and had done substantial work when Marshall & Ilsley Bank (“M&I Bank”) made a loan and recorded its trust deed. BB&T was paid off out of the proceeds of the loan from M&I Bank. Blalock was also paid current with the proceeds from the M&I Bank loan. BB&T released its trust deed.

The developer later defaulted, and Blalock filed this action to enforce its statutory lien. M&I Bank’s assignee, Cay Partners, LLC, filed a counterclaim asserting that it should be entitled to the priority position of BB&T. Blalock and Cay filed competing motions for summary judgment. The trial court granted Blalock’s motion. Cay appeals. We affirm.

Opinion available at:
https://www.tba.org/sites/default/files/blalockc_122712.pdf

Court reviews competing lawsuits filed by a homeowner and a contractor against one another over construction contracts

BRIAN BOX v. DAVID GARDNER (Tenn. Ct. App. December 26, 2012)

Homeowner and Contractor filed competing suits against one another in the general sessions court. Homeowner was awarded $1,500.00 against Contractor; Contractor’s suit against Homeowner was dismissed. Contractor then appealed to the circuit court. The circuit court dismissed all actions filed by both parties, finding that the construction contracts required arbitration of disputes. Homeowner appeals and we affirm.

Opinion available at:
https://www.tba.org/sites/default/files/boxb_122612.pdf

Court reviews whether the UCC or the TN Consumer Protection Act applies in a breach of contract case

AUDIO VISUAL ARTISTRY v. STEPHEN TANZER (Tenn. Ct. App. December 26, 2012)

This is a breach of contract case. Appellant/Homeowner contracted with Appellee for the installation of a “smart home” system. After myriad problems arose, Appellant fired Appellee, who filed the instant lawsuit to collect the unpaid balance for equipment and installation.

The trial court determined that the primary purpose of the parties’ agreement was the sale of goods and applied Article 2 of the Uniform Commercial Code. The court granted judgment in favor of Appellee, but allowed certain offsets for items rejected by Appellant.

Appellant appeals, arguing that the trial court erred in applying the UCC, and in its calculation of damages. Appellant also appeals the trial court’s determination that the Tennessee Consumer Protection Act does not apply. Discerning no error, we affirm.

Opinion available at:
https://www.tba.org/sites/default/files/audiovisual_122612.pdf

Court reviews the damages awarded in a case involving the defective construction of a home

BROOKE BUTTREY v. HOLLOWAY’S, INC., ET AL. (Tenn. Ct. App. December 13, 2012)

A homeowner sued builders for the defective construction of a house, alleging breach of contract, intentional misrepresentations, and violations of the Tennessee Consumer Protection Act.

The trial court dismissed the Tennessee Consumer Protection Act claims, but found the builders liable for intentional misrepresentations and breach of the contract by failing to build the house in a workmanlike manner. The trial court awarded the homeowner the full amount she paid to have the house built as well as her attorney’s fees.

The builders appealed, claiming the evidence did not support the amount of damages awarded, the evidence did not support the court’s finding of intentional misrepresentation, and the homeowner was not entitled to attorney’s fees.

We modify the damages awarded to the homeowner to conform to the evidence presented. We reverse the court’s award of attorney’s fees, and we reverse the court’s finding that the builders intentionally misrepresented material facts.

Opinion available at:
https://www.tba.org/sites/default/files/buttreyb_121312.pdf

Lab to Pursue Fix in Botched Security System (John Serverence, Los Alamos Monitor)

Los Alamos National Security, LLC, is bringing in outside counsel to help it deal with the botched construction of a security upgrade at the lab. Originally, the system was supposed to cost $213 million, but cost overruns have jacked the project up to $254 million, according to a memo written by Lab Director Charlie McMillan, to employees. The National Nuclear Security Administration is holding LANS, LLC accountable for the projected $41 million in cost overruns.

Read the full story at:
http://www.lamonitor.com/content/lab-pursue-fix-botched-security-system

TN Supreme Court reviews whether the plaintiff's use of the property was exempt from zoning ordinances limiting his use of the property

READY MIX, USA, LLC v. JEFFERSON COUNTY, TENNESSEE (Tenn. August 30, 2012)

The plaintiff, a producer of construction aggregates, acquired property with proven reserves for mining and quarrying operations. Afterward, Jefferson County enacted a comprehensive zoning ordinance limiting the use of the property to agricultural purposes. Before the passage of the ordinance, the plaintiff undertook various activities designed to establish business operations.

When the county issued a stop work order, the plaintiff, without first receiving a decision from the county’s board of zoning appeals, filed a declaratory judgment action arguing that the portion of the property not previously subject to zoning qualified as a pre-existing non-conforming use, protected by Tennessee Code Annotated section 13-7-208 (1992).

After concluding that the plaintiff was not required to exhaust its administrative remedies, the trial court ruled that the business activities on the property were “in operation” at the effective date of the ordinance for purposes of grandfather protection under section 13- 7-208. Because the Court of Appeals held that the plaintiff had failed to exhaust its administrative remedies, the judgment was set aside.

We hold that the trial court, under these circumstances, did not err by ruling that the plaintiff was not required to exhaust the administrative remedies. We further hold that the evidence does not preponderate against the trial court’s finding that the plaintiff had established operations sufficient to qualify for protection under Tennessee Code Annotated section 13-7-208.

Opinion available at:
https://www.tba.org/sites/default/files/readymix_083012.pdf

Justice Koch’s concurring opinion:
https://www.tba.org/sites/default/files/readymix_CON_083012.pdf

Court reviews whether a project owner can claim liquidated damages due to construction delays

RCR BUILDING CORPORATION v. PINNACLE HOSPITALITY PARTNERS, ET AL. (Tenn. Ct. App. November 16, 2012)

This appeal involves a contract for the construction of a hotel. The project owner refused to make the final payment owed to the general contractor, claiming that it was entitled to withhold $237,000 in liquidated damages because the project was not completed on time, in addition to deducting other “offsets” under the contract. The general contractor claimed that the owner was not entitled to liquidated damages for several reasons, including the fact that the owner had caused delays, and the fact that the owner had failed to make a timely claim for liquidated damages as required by the contract.

The trial court granted partial summary judgment to the owner on the issue of liquidated damages, allowing the owner to subtract $237,000 from the final payment it owed under the contract. The court also resolved several other issues between the parties. The trial court declared the owner to be the prevailing party in the litigation and awarded the owner its attorney’s fees. The general contractor appeals. We affirm in part and reverse in part and remand for further proceedings.

Opinion available at:
https://www.tba.org/sites/default/files/rcrbuilding_111612.pdf

Court reviews whether a landowner's water line trespassed on adjacent property

LEROY J. HUMPHRIES, ET AL. v. NICOLAS C. MINBIOLE, ET AL. (Tenn. Ct. App. November 9, 2012)

This appeal involves a dispute between adjacent landowners over Defendants’ installation of a private water line within a right-of-way easement across the Plaintiffs’ property. Following a bench trial, the trial court concluded that Defendants’ private water line trespassed on Plaintiffs’ property. Further, the trial court ordered that the Defendants would be incarcerated if they did not remove the water line and return Plaintiffs’ property to its previous condition within thirty (30) days. Defendants appealed. We affirm in part and remand for further proceedings.

Opinion available at:

https://www.tba.org/sites/default/files/humphriesl_110912.pdf

Court reviews Consumer Protection Act and Breach of Warranty claims against a builder

MARK T. WICKHAM v. SOVEREIGN HOMES, LLC (Tenn. Ct. App. September 25, 2012)

Plaintiff homeowner brought an action against Defendant builder alleging, inter alia, breach of warranty and violation of the Tennessee Consumer Protection Act. The trial court awarded summary judgment to Defendant builder. We affirm summary judgment on Plaintiff’s breach of warranty claim; reverse summary judgment on Plaintiff’s Consumer Protection Act claim; and remand for further proceedings.

Opinion available at:
https://www.tba.org/sites/default/files/wickhamm_092512.pdf

Court reviews the ripeness of a case involving a wastewater permit

E. RON PICKARD and LINDA PICKARD, as TRUSTEES OF THE SHARON CHARITABLE TRUST and as INDIVIDUALS v. TENNESSEE DEPARTMENT of ENVIRONMENT AND CONSERVATION, TENNESSEE WATER QUALITY CONTROL BOARD and TENNESSEE MATERIALS CORPORATION (Tenn. Ct. App. September 5, 2012)

The Tennessee Department of Environment and Conservation issued a draft permit allowing a proposed rock quarry to discharge storm water and wastewater into a nearby creek.

Owners of property allegedly affected by the discharge filed a declaratory order petition with the Water Quality Control Board, seeking a declaration construing the rules regarding the protection of existing uses of waters. The Water Quality Control Board dismissed the petition as not ripe. The Tennessee Department of Environment and Conservation subsequently issued a final permit to the quarry and the property owners filed both a permit appeal and another declaratory order petition with the Water Quality Control Board.

The Water Quality Control Board again dismissed the declaratory order petition. The property owners subsequently filed a petition for a declaratory judgment in the Davidson County Chancery Court. The Water Quality Control Board and the Tennessee Department of Environment and Conservation argued that the petition was not ripe and that the property owners had not exhausted their administrative remedies. In addition, the Water Quality Control Board and the Tennessee Department of Environment and Conservation argued that Tennessee Code Annotated Section 69-3-105(i) precluded the property owners from bringing a declaratory order petition prior to issuance of a permit. The trial court ruled in favor of the property owners and issued a declaratory judgment on the construction of Tennessee Compiled Rule and Regulation 1200-04-03-.06.

We affirm the trial court’s rulings with regard to ripeness, exhaustion of administrative remedies, and Tennessee Code Annotated Section 69-3-105(i), but reverse the grant of summary judgment on the construction of Tennessee Compiled Rule and Regulation 1200-04-03-.06 and remand for further proceedings.

Opinion available at:
https://www.tba.org/sites/default/files/pickarde_090512.pdf

Court reviews whether a chancery court lacked jurisdiction in a case involving a wastewater permit

E. RON PICKARD and LINDA PICKARD, as TRUSTEES OF THE SHARON CHARITABLE TRUST and as INDIVIDUALS v. TENNESSEE DEPARTMENT of ENVIRONMENT AND CONSERVATION, TENNESSEE WATER QUALITY CONTROL BOARD and TENNESSEE MATERIALS CORPORATION (Tenn. Ct. App. August 15, 2012)

The Tennessee Department of Environment and Conservation issued a permit allowing a proposed rock quarry to discharge storm water and wastewater into a nearby creek. Owners of property allegedly affected by the discharge filed an appeal challenging the issuance of the permit with the Water Quality Control Board, as well as a petition seeking a declaratory order construing the rules regarding the protection of existing uses of waters. The Water Quality Control Board refused to issue a declaratory order and the property owners appealed to the Davidson County Chancery Court. Because we conclude that the trial court lacked jurisdiction to grant the relief requested, we vacate the judgment of the trial court and remand for dismissal of this cause. Vacated and remanded.

Opinion available at:
https://www.tba.org/sites/default/files/pickarde_081512.pdf

Court addresses whether a property developer or a county owns a road on which a motorcycle accident occurred

TIMOTHY KLEIN and ANGELA KLEIN v. HARDIN COUNTY, TENNESSEE, ET AL. (Tenn. Ct. App. August 16, 2012)

This is an appeal from the grant of summary judgment in favor of Appellee, a property developer. The underlying case is for personal injuries sustained by Plaintiffs in a motorcycle accident, which was allegedly caused by a pothole in the road. The question presented for determination is, as between Appellee and Appellant Hardin County, who owns the portion of the road where the accident occurred. After completing its development, Appellee dedicated portions of the roadway to Hardin County for public use. However, in cross-motions for summary judgment the Appellee and Appellant each claimed that the other owned the disputed portion of the road where the accident occurred.

Although the disputed portion of the road was specifically excluded from the dedication, and Appellee maintained the road, the trial court determined that Appellee had implicitly dedicated the disputed portion to Appellant and granted summary judgment in favor of Appellee developer. Based upon the evidence in record, we conclude that reasonable minds could reach different conclusions concerning ownership of the road and accordingly, reverse the grant of summary judgment.

Opinion available at:
https://www.tba.org/sites/default/files/kleint_081612.pdf

Court determines the priority of two liens--a mechanic's lien and a deed of trust

ANCHOR PIPE COMPANY, INC. v. SWEENEY-BRONZE DEVELOPMENT, LLC ET AL. (Tenn. Ct. App. August 3, 2012)

This appeal concerns the priority of two liens, a mechanic’s lien and a bank’s deed of trust. We have determined that the trial court erred in granting summary judgment in favor of the bank. We have further determined that the mechanic’s lien is entitled to priority and that the trial court erred in failing to grant summary judgment on that issue.

Opinion available at:
https://www.tba.org/sites/default/files/anchorpipe_080312.pdf

Court reviews a challenge to Lawrence County's decision to contract with another proposer for solid waste management

WASTE SERVICES OF DECATUR, LLC V. COUNTY OF LAWRENCE, ET AL. (Tenn. Ct. App. August 15, 2012)

Losing proposer for solid waste management services challenges Lawrence County’s decision to contract with another proposer. Because we find that the County acted arbitrarily and illegally in making its decision, we reverse the decision of the trial court and remand for further proceedings.

Opinion available at:
https://www.tba.org/sites/default/files/wasteservices_081512.pdf

Court reviews whether a bank had a duty to inspect construction prior to disbursing funds

JIM SUZICH v. FRANK BOOKER and wife, BEVERLY BOOKER and JOHN S. BOMAR, Trustee, KATIE WINCHESTER, Trustee, and FIRST CITIZENS NATIONAL BANK (Tenn. Ct. App. July 27, 2012)

This appeal involves a construction loan obtained by the plaintiffs for the construction of a new home. The loan proceeds were exhausted prior to the completion of the home. The plaintiffs then sued the lender bank for breach of contract, alleging that the bank had a duty to inspect the construction prior to disbursing funds, and that its failure to complete inspections resulted in improper disbursement of the loan funds. The trial court granted summary judgment to the bank upon concluding that the bank had no contractual duty to inspect the construction of the residence. The plaintiffs appealed. We affirm.

Opinion available at:
https://www.tba.org/sites/default/files/suzichj_072712.pdf

Court reviews a case against Blount County for flood damage caused by a school construction project

CHARLES RAYMOND LOVEDAY ET AL. v. BLOUNT COUNTY, TENNESSEE ET AL. (Tenn. Ct. App. July 24, 2012)

Charles Raymond Loveday and his wife, Virginia Hope Loveday (collectively “the Plaintiffs”), filed this action in January 2011 against Blount County and the Blount County School Board (collectively “the Defendants”) to recover for flood damage to their property allegedly caused by the construction of a new school next to the Plaintiffs’ property. The school was built in 2007. The Plaintiffs allegedly sustained “permanent” damage in 2008, 2009 and 2010. The Defendants filed a motion to dismiss asserting that the action was barred by the statute of limitations for a taking. The trial court granted the motion. The Plaintiffs appeal. We affirm.

Opinion available at:
https://www.tba.org/sites/default/files/lovedayc_072412.pdf

Court reviews whether a homeowner's septic tanks violated the restrictive covenants of his subdivision

ROGER D. ROACH, et al., v. DON BUNCH, et al. (Tenn. Ct. App. July 23, 2012)

Plaintiffs who own homes in Mallard Baye subdivision, brought this action against defendants who had constructed a septic system on several of the residential lots serving other properties, alleging that defendants acted in violation of the restrictive covenants of their subdivision. Following a bench trial, the Trial Court held that the defendants' construction of the septic system violated the subdivision restrictive covenants, and the defendants appealed. On appeal, we affirm the Judgment of the Trial Court.

Opinion available at:
https://www.tba.org/sites/default/files/roachr_072312.pdf

Court reviews a claim brought by a contractor against a subcontractor under the statute of repose

THE COUNTS COMPANY, v. PRATERS, INC. (Tenn. Ct. App. June 25, 2012)

Plaintiff, was general contractor for the renovation of a private club, and employed defendant to install flooring at the club. Plaintiff sued defendant to recover damages incurred when plaintiff was sued by the club which obtained judgment for damages against plaintiff for the defective floor, as well as for attorney's fees for defending the action and other expenses. Defendant moved to dismiss the action, relying on the statute of repose, Tenn. Code Ann. §28-3-202. The Trial Court granted defendant's motion and dismissed the action, and plaintiff has appealed. We affirm the Judgment of the Trial Court.

Opinion available at:
https://www.tba.org/sites/default/files/counts_062512.pdf

Court reviews a case involving a municipal construction project in Chattanooga

CITY OF CHATTANOOGA, TENNESSEE, ET AL. v. HARGREAVES ASSOCIATES, INC., ET AL. (Tenn. Ct. App. June 21, 2012)

The plaintiffs in this matter, the city and a redevelopment group, filed this action against the defendant entities involved in the design and construction of a large municipal project on the city’s waterfront. Also named as a defendant was the development manager for the project. The trial court granted summary judgment to the defendants on the basis that the plaintiffs’ lawsuit was barred by the applicable statute of limitations found in Tennessee Code Annotated section 28-3-105. The plaintiffs appeal. We affirm.

Opinion available at:
https://www.tba.org/sites/default/files/cityofchatt_062112.pdf

The Dissenting opinion is available at:
https://www.tba.org/sites/default/files/cityofchatt_DISS_062112.pdf

Court reviews whether a home builder failed to construct a home in a workman like manner, in breach of contract, warranty, and the TN Consumer Protection Act

DAN C. RAY ET AL. v. SADLER HOMES, INC. (Tenn. Ct. App. June 15, 2012)

Plaintiff-homeowners filed this action for breach of contract, breach of warranty, and violations of the Tennessee Consumer Protection Act against the builder and seller of their home alleging that the home was not constructed in a workmanlike manner.

Following a bench trial, the trial court found that the defendant breached the contract and the express and implied warranties, and violated the TCPA. The court awarded damages of $90,000 for the diminution in value of the home. The court also held Plaintiffs were entitled to recover their attorney’s fees pursuant to the TCPA.

Defendant appealed arguing that Plaintiffs failed to prove causation, that the trial court erred in awarding damages in the amount of $90,000 for the diminution in value of the home, and erred in finding it violated the TCPA for which the trial court awarded attorney’s fees. We affirm the trial court’s findings as to Plaintiffs’ claims for breach of contract and breach of warranty and affirm the trial court’s determinations as to damages; however, we find the evidence preponderates against the finding of a violation of the TCPA and therefore the trial court erred by awarding Plaintiffs their attorney’s fees.

Opinion available at:
https://www.tba.org/sites/default/files/rayd_061512.pdf

Court reviews a case about a home remodeling involving breach of contract and TN Consumer Protection Act claims

CASE HANDYMAN SERVICE OF TENNESSEE, LLC v. HELEN MARIE HARBEN LEE (Tenn. Ct. App. June 15, 2012)

Homeowner retained Contractor to remodel her residence and paid Contractor two out of three installments as provided in the contract. Homeowner was not satisfied with Contractor’s work and refused to pay the final installment.

Contractor sued for breach of contract and Homeowner filed a counterclaim asserting Contractor breached the contract by failing to perform the job in a workmanlike and reasonable manner. Homeowner also claimed Contractor violated the Tennessee Consumer Protection Act by engaging in unfair and deceptive practices.

The trial court dismissed Contractor’s complaint and held Contractor breached the contract by failing to perform the work in a reasonable and workmanlike manner. The court found Contractor was not liable for double or treble damages under the Tennessee Consumer Protection Act because Homeowner did not prove its deficiencies were intentional or willful.

Homeowner appealed, claiming the trial court erred in denying her motion to amend her counterclaim to assert a claim for rescission and erred in holding Contractor did not violate the Tennessee Consumer Protection Act. We affirm the trial court’s judgment.

Opinion available at:
https://www.tba.org/sites/default/files/casehandyman_061512.pdf

Court reviews a breach of contract case involving a contractor who performed additional work to install fire dampers

SONG & SONG CORPORATION, and JIN Y. “JIM” SONG, Individually v. FINE ART CONSTRUCTION COMPANY, LLC, ET AL. (Tenn. Ct. App. June 14, 2012)

Property owner hired a general contractor to perform construction work on a commercial building. The parties subsequently discovered that when the building was originally constructed, there were no fire dampers installed in the ductwork. The contractor performed the additional work necessary to install the missing fire dampers, but when the work was completed, the property owner refused to pay the amount invoiced by the contractor for the additional work. Both parties asserted that the other had breached the contract. Following a two-day bench trial, the trial court ruled in favor of the contractor and awarded her a judgment for the unpaid balance and other damages. The property owner appeals. We affirm as modified.

Opinion available at:
https://www.tba.org/sites/default/files/song-song_061412.pdf

Court reviews the dismissal of a case between the town of Pegram and a construction company

THE TOWN OF PEGRAM v. CORNERSTONE DEVELOPMENT, LLC ET AL. (Tenn. Ct. App. June 14, 2012)

Town of Pegram appeals from the trial court’s decision awarding it no damages in its claims against Cornerstone Development, LLC, the company which constructed the Town’s city hall and surrounding parking lot. Pegram also appeals the trial court’s summary dismissal of National Grange Mutual Insurance Company, which provided the performance bond assuring Cornerstone’s performance. We affirm the trial court’s findings in all respects.

Opinion available at:
https://www.tba.org/sites/default/files/Pegram_061412.pdf

Court reviews whether a land surveyor can be held liable for damages incurred by sinkholes

BRIAN DALE, single; BRIAN LAWHORN and wife, PAMELA LAWHORN; and WILLIAM JENKINS and wife, ELAINE JENKINS v. B & J ENTERPRISES, ET AL. (Tenn. Ct. App. May 10, 2012)

Homeowners filed this lawsuit against various individuals and entities shortly after purchasing their homes, when they discovered that their properties are affected by numerous sink holes. Original defendants identified a surveyor as a comparative tortfeasor, and the homeowners amended their complaint to add the surveyor as a defendant.

The surveyor filed a motion to dismiss, arguing that the homeowners’ claims were barred by Tennessee Code Annotated section 28-3-114, which provides that all actions to recover damages against any person engaged in the practice of surveying for any deficiency, defect, omission, error or miscalculation shall be brought within four years from the date the survey is recorded on the plat, or else be forever barred. The trial court granted the motion to dismiss. Plaintiffs were subsequently granted permission by the trial court and this Court to pursue an interlocutory appeal. Finding that section 28-3-114 governs the homeowners’ claims, we affirm.

Opinion available at:
https://www.tba.org/sites/default/files/daleb_051012.pdf

Court determines whether a contractor or a homeowner breached a construction contract following a dispute

BOBBY D. WALL v. SELMA CURTIS (Tenn. Ct. App. April 24, 2012

Homeowner and Contractor entered into an agreement for the construction of a new house. The contract provided that no changes would be made to the terms and specifications of the contract without a writing describing the changes signed by both parties. The parties ignored this provision and made changes without preparing change orders. Before the house was completed the parties had a dispute, and the homeowner contracted with someone else to complete her house.

Homeowner alleged Contractor breached the contract by walking off the job and refusing to complete the house, and Contractor alleged Homeowner fired him and told him not to return to her property. Contractor sued Homeowner for breach of contract and sought to recover his damages, which included expenses he incurred for materials and labor that Homeowner refused to pay. Homeowner counterclaimed for breach of contract and sought to recover as damages the amount she paid other contractors to complete her house. The trial court found Homeowner committed the first breach and entered judgment for Contractor in the amount of $21,120.69. Homeowner appealed, arguing the evidence did not support the trial court’s judgment. Concluding the evidence supports the trial court’s findings of fact, we affirm the trial court’s judgment in all respects.

Opinion available at: https://www.tba.org/sites/default/files/wallb_042412.pdf

Court reviews whether damages were asses based on a contractual standard of workmanship or an implied warranty of workmanship

CONSULTING AND FINANCIAL SERVICES, INC., ET AL. v. JOHN H. FRIEDMANN, SR. (Tenn. Ct. App. April 23, 2012)

This suit arises as a result of the installation of tile flooring in a home. Homeowners sued the contractor for breach of warranty, breach of contract, and unjust enrichment. The trial court awarded $106,103.92 to homeowners and assessed $4,252.00 in discretionary costs.

Contractor appeals asserting that, in finding liability, the trial court failed to apply the standard of performance set forth in the contract and that the court erred in calculating and measuring the damages. We have determined that the trial court applied an implied warranty or workmanship rather than the contractual standard; however we have reviewed the evidence de novo and modify the judgment to hold that the contractor breached the contractual standard. We remand the case for a determination of the appropriate amount of damages.

Opinion available at: https://www.tba.org/sites/default/files/consulting_042312.pdf

Court reviews a Tennessee Consumer Protection Act claim and other claims in a case involving accusations of negligent construction

MICHAEL L. JOHNSON, ET AL. v. TODD FORD (Tenn. Ct. App. April 12, 2012)

Michael L. Johnson and Tammy K. Johnson (“Plaintiffs”) purchased from Todd Ford (“Defendant”) real property located in Athens, Tennessee containing a house constructed by Defendant (“the House”). Shortly after purchasing the House, Plaintiffs began to experience problems with a leaking and flooding basement.

Plaintiffs sued Defendant alleging, among other things, breach of contract, negligent construction, misrepresentation, and violations of the Tennessee Consumer Protection Act. Prior to trial, the Trial Court partially granted Plaintiffs’ motion for summary judgment finding that Defendant had violated the Tennessee Consumer Protection Act. The Trial Court held, however, that whether the violation caused damages to Plaintiffs would be submitted to the jury for its determination.

After a jury trial, the Trial Court entered judgment upon the jury’s verdict finding and holding, inter alia, that Defendant breached the parties’ contract, and that Plaintiffs were awarded compensatory damages of $50,000 for the breach. The Trial Court also awarded Plaintiffs their attorney’s fees and discretionary costs.

Plaintiffs appeal to this Court raising issues regarding the jury’s failure to find in Plaintiffs’ favor with regard to the claims of misrepresentation, damages for Defendant’s violation of the Tennessee Consumer Protection Act, punitive damages, and rescission, among other things. We affirm.

Opinion available at:
https://www.tba.org/sites/default/files/johnsonm_041212.pdf

Court reviews whether plaintiff sufficiently established a cause of action to entitle it to a mechanic's lien on the property.

HEFFERLIN + KRONENBERG ARCHITECTS, PLLC, v. CLP DEVELOPMENT, LLC, et al. (Tenn. Ct. App. April 9, 2012)

Plaintiff brought this action claiming, inter alia, that it was entitled to a mechanics' lien on the subject property. Defendant filed Motions to Dismiss, one ground being that the Complaint failed to state a cause of action. The Trial Court subsequently ruled that the Complaint did not establish a cause of action to entitle plaintiff to a lien on the property.

Plaintiff has appealed and we hold that upon review of the Complaint, and applying the rules governing the test of the sufficiency of the allegations in the Complaint, that the Complaint states a cause of action. We vacate the Trial Court's Judgment and remand for further proceedings.

Opinion available at:
https://www.tba.org/sites/default/files/hefferlinpllc_040912.pdf

Court reviews a case involving construction materials that were allegedly defective

BERNIE CHEATHAM d/b/a UNIVERSAL BUILDERS, ET AL. v. THE FEDERAL MATERIALS COMPANY, LLC, ET AL. (Tenn. Ct. App. February 22, 2012)

Builder was hired to construct a commercial building, and it purchased the concrete for the building’s concrete slab from Supplier. The concrete slab developed major cracks, which led to this lawsuit between Builder and Supplier. After a two-day bench trial, the trial court found that Supplier had delivered defective concrete, and it entered judgment in favor of Builder for $60,000. We affirm.

Opinion available at:
https://www.tba.org/sites/default/files/cheathamb_022212.pdf

Court reviews whether the final payment in a Development Agreement was contingent upon satisfying certain requirements of a Partnership Agreement.

EAGLES LANDING DEVELOPMENT, LLC. v. EAGLES LANDING APARTMENTS, LP., ET AL. (Tenn. Ct. App. February 2, 2012)


This is a breach of contract case. Following a bench trial, the trial court awarded Appellee Developer the remaining balance due under a Development Agreement that was entered by and between Appellee and the Appellants, a partnership and its limited liability partners, for construction of an apartment complex.

Appellants contend that Appellee was not entitled to final payment because the general partner, who is not a party to this appeal, had not funded the development fees that were contemplated under a Partnership Agreement, to which Appellee was not a party. Specifically, Appellants argue that the payment under the Development Agreement is contingent upon satisfaction of the funding requirements specified in the Partnership Agreement.

We conclude that the conditions precedent under the Development Agreement were met, and that the Appellee was, therefore, entitled to its full fee under the Development Agreement. The trial court assessed judgment against the limited liability partners and the partnership. Under the Tennessee Revised Uniform Partnership Act, Appellants' status as limited partners protects them from liability for the debts of the partnership. Appellee contends that it is a third-party beneficiary under the Partnership Agreement and may, therefore, have judgment against the limited partners who were parties to that agreement. We conclude that the third-party beneficiary issue is waived and that the trial court erred in entering judgment against the limited partners. Affirmed in part, reversed in part, and remanded.

Opinion available at:
http://www.tba2.org/tba_files/TCA/2012/eagleslanding_020212.pdf

Court reviews a breach of contract and Consumer Protection Act claim against a home builder

ROBERT F. MEREDITH ET AL. v. KENNETH L. WELLER ET AL. (Tenn. Ct. App. January 25, 2012)]

The plaintiff, Robert F. Meredith ("the Owner"), appeals a judgment rendered against him in favor of his home builder, Kenneth L. Weller ("the Builder"), on the Builder's counterclaim for breach of contract and for attorney's fees incurred in defending the Owner's claims for, among other things, defective construction, misrepresentation, breach of contract, and violations of the Tennessee Consumer Protection Act, Tenn. Code Ann. sections 47-18-101 et seq. (2001)("the TCPA"). The Builder asks us to award him his attorney's fees incurred in defending the Owner's appeal. We affirm the judgment of the trial court in all respects. We also award the Builder his reasonable attorney's fees incurred on appeal and remand to the trial court for a hearing to determine those fees.

Opinion available at:
http://www.tba2.org/tba_files/TCA/2012/meredithr_012512.pdf

Court reviews whether the construction statue of repose applies in a case invovling the injury of a minor

CHRISTOPHER J. ETHERIDGE, by next friends and parents, SELENA A. ETHERIDGE and CHRISTOPHER J. ETHERIDGE (SR.), SELENA A. ETHERIDGE; and CHRISTOPHER J. ETHERIDGE (SR.) v. YMCA OF JACKSON AND WEST TENNESSEE, ET AL. (Tenn. Ct. App. January 30, 2012)


A minor was injured in June 2008 when a sink, installed in November 2004, shattered. Suit was initially filed in June 2009, and Defendants were added in September 2009 and April 2010. The trial court granted summary judgment to Defendants based upon the construction statute of repose, Tennessee Code Annotated section 28-3-202, et seq., and we affirm.

Opinion available at:
http://www.tba2.org/tba_files/TCA/2012/etheridgec_013012.pdf

Court reviews whether a property owner breached a construction contract

GEORGE SANDERS, Individually and d/b/a SMS Contractors, Inc. v. BREATH OF LIFE CHRISTIAN CHURCH, INC., ET AL. (Tenn. Ct. App. January 13, 2012)

This is a contract case. The construction contract at issue provided for a specific contract amount plus a commission to the general contractor on any work done beyond the additional contract amount. After being dismissed from the job, the project manager for the general contractor sued both the general contractor and the owner of the property. The general contractor and the property owner then both sued the project manager and each other.

After the property owner failed to satisfactorily respond to discovery requests, the trial court excluded all evidence of the property owner's damages that had not already been provided in detail in discovery. The parties proceeded to trial, at which point the chancellor ordered that all issues of damages beyond the base contract damages would be referred to a special master.

After trial, the chancellor found that the property owner materially breached the contract and awarded the remaining balance to be paid on the contract to the general contractor. The special master awarded the project manager damages for work performed as a direct subcontractor on the project and awarded the general contractor delay damages and the commission on all extra work done on the project. The trial court concurred in the findings of the special master and the property owner appealed, raising a number of issues. We affirm in part, vacate in part, and remand for further proceedings.

Opinion available at:
http://www.tba2.org/tba_files/TCA/2012/sandersg_011312.pdf

Court reviews whether a construction company is liable for injuries that occurred on a section of highway on which it worked

JOSHUA N. LEE, v. LYONS CONSTRUCTION COMPANY, INC. (Tenn. Ct. App. January 10, 2012)

Plaintiff and others sustained injuries in a single car accident and sued defendant construction company and the Tennessee Department of Transportation, alleging that defendant construction company had recently completed work on that section of the highway where the accident occurred, and that a low point in the pavement caused plaintiff to lose control of his vehicle and wreck. Defendant answered, stating that they had completed the required construction on that section of the highway, and the State had accepted its work pursuant to Tenn. Code Ann. section 12-4-501 et seq. which provides upon proper completion of the work the contractor "is discharged from all liability to any party". Defendant filed a Motion for Summary Judgment which the Trial Court granted and plaintiff appealed. We hold that summary judgment for the defendant in this case was proper, and affirm the Judgment of the Trial Court.

Opinion available at:
http://www.tba2.org/tba_files/TCA/2012/leej_011012.pdf

2 courts back TDOT suspension of 2 contractors (Associated Press)

2 courts back TDOT suspension of 2 contractors (Associated Press)

NASHVILLE, Tenn. (AP) — Two courts in Nashville have backed a decision by state transportation officials to bar two guardrail companies that were implicated in corruption investigations from bidding on projects.

Lu Inc. and Tennessee Guardrail contend in separate lawsuits that their suspensions weren't proper.

Lu Inc. owner and president Novice Cole has acknowledged giving a Tennessee Department of Transportation supervisor $30,000 as the TDOT worker oversaw a 2005 Interstate 65 widening project in Nashville. Cole has not been criminally charged and claimed in his lawsuit that the suspension of his Kingston Springs-based company violated terms of a 2006 agreement he reached with TDOT, according to The Tennessean (http://tnne.ws/tIShL9.)

The state argued before Davidson County Chancellor Russell T. Perkins that Lu's suspension was required to preserve "public confidence in the integrity of the department's bidding and contracting processes" and was based on evidence of irregularities" committed by Cole.

In his lawsuit, Cole noted the payments to the TDOT supervisor occurred in 2005, and he held that a one-year bidding suspension should be overturned. He contended the 2006 settlement with TDOT keeps the state from punishing him for anything the state knew about at the time of the agreement.

Full article located at: http://www.knoxnews.com/news/2011/nov/08/2-courts-back-tdot-suspension-of-contractors/

Knoxville contractor joins ICE enforcement program

Knoxville contractor joins ICE enforcement program (Josh Flory, Knoxville News-Sentinel)

To many business owners, voluntarily opening their books for a federal inspection may sound like a terrible idea.

One local contractor is doing just that, though, and says its customers are the reason.

On Monday, general contractor J.A. Fielden became the first company in the state to join the U.S. Immigration and Customs Enforcement "IMAGE" program.

Launched in 2006, IMAGE — which stands for ICE Mutual Agreement between Government and Employers — requires participants to submit to an inspection of their I-9 employment records. In return, the agency agrees to waive or mitigate any fines associated with violations and to refrain from additional I-9 inspections for two years.


Full article located at: http://www.knoxnews.com/news/2011/nov/07/knox-contractor-first-state-join-ice-program/

Guest Post by Alex Levin: Contractor’s Top Questions Regarding Surety Bonding

Surety bonds are a necessary requirement not only for contractors, but also for a variety of small businesses to open. Although required for thousands of businesses to operate, much is unknown about their functions and the process of how to obtain a surety bond. To help clear up the mystery behind the bonding process, the following is look into the most frequently asked questions regarding surety bonding.

What is a surety bond?

Surety bonds are a form of contract. In most cases, they are a financial guarantee that protects customers’ money. In all cases it involves three parties:

- An obligee – the party requiring the bond – most often it’s a government entity
- A principal – the company or individual that is purchasing the bond
- A surety – the agency who writes and sells the bond(s)

If the principal should default on any specifications of the bond, a claim can be made seeking retribution. If the claim is found to be valid, compensation is used by the surety agency who will then, in turn, seek repayment from the principal. Because of this, a risk assessment is always performed in order to ensure principals are financial secure to repay in the event damages should be sought against them.


What are the benefits of becoming bonded?

Even for those that are working on private construction projects, obtaining surety bonds is seen as a validation of the company’s professionalism. Those that are able to acquire a surety bond typically are more financially secure than those who are unable to purchase a bond. Banks and financial lenders also view surety bonds as a form of verification of the company’s trustworthiness and financial stability.

For those that are bidding on a project, surety bonds also help validate the project owner’s financial security. As many know, contractors have faced bankruptcy as the project owner’s funding was not verified. Prior to writing and issuing bonds, the surety will investigate the source and amount of available funds. Sureties also help review contracts to ensure there isn’t any language present that will add unnecessary risk to the project. As a whole, surety bonds help protect project owners and the contracting companies that are preforming the work on the project.


Why are surety bonds required?

Although many have not heard about surety bonds, the fact is they’ve been a necessary requirement for several years. The Miller Act, which was passed in 1935, requires contract surety bonds on federal construction projects. In specific, the law specifies both performance bonds and payment bonds (commonly referred to as material and labor payment bonds). The act specifies these bonds must be in place for projects exceeding $100,000, but many state legislatures have adopted the same theory and require them on smaller projects. These regulations are also known as Little Miller Acts.


Aren't surety bonds another form of insurance?


This is the most common misconception regarding surety bonding. Although both insurance policies and surety bonds have the same goal – to protect consumers – the main difference is where the element of risk lies. In regards to insurance policies, it is traditionally a two-person agreement with the company issuing the policy assuming risk.

However, with surety bonds the principal (or the company purchasing the bond) is assigned risk and the bond protects obligees. If a claim is filed against the bond purchaser, the surety agency will make initial payments to the obligee, and then seek retribution from the principal.

The services bonds and insurance policies provide are also different from one to another. Insurance policies are written to assist in times of loss, however surety bonds are written under the assumption (and hope) no claims will be filed against the principal. Because of this, should a claim be filed against an individual or company, it is extremely difficult for that individual to purchase surety bonds in the future.



Alex Levin is a writer for several surety organizations. Although much is unknown about them, surety bonds are a necessary requirement for many small businesses to open and are required on almost all major construction projects.