December 28, 2012

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:

December 27, 2012

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:

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:

December 15, 2012

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:

December 12, 2012

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.

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December 07, 2012

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


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:

Justice Koch’s concurring opinion:

December 05, 2012

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


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:

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: