January 30, 2012

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:

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


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:

January 16, 2012

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:

January 12, 2012

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:

January 09, 2012

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/

January 05, 2012

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/

January 03, 2012

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.