DONALD W. MCCUTCHEON, ET AL. V. TND ASSOCIATES, L.P., ET AL. (Tenn.Ct.App. April 30, 2008).
A jury awarded the plaintiff homeowners judgment against their residential building contractor for damages sustained by the plaintiffs when the slope upon which their home was constructed failed. The defendant contractor appeals, arguing that the trial court abused its discretion by allowing an expert witness to testify outside his area of expertise and by allowing another witness to testify as an expert when the plaintiff had failed to identify him as a witness before trial. Upon careful review of the record, it is our determination that the trial court did not abuse its discretion in the admission of the testimony of these witnesses. Accordingly, we affirm the judgment of the trial court.
Opinion may be found at the TBA website:
http://www.tba2.org/tba_files/TCA/2008/mccutcheond_043008.pdf
"Mr. Huckaba testified that in his opinion as a professional engineer, the depth of the foundation that he saw was not adequate, based upon his experience and his observation as to the configuration of the lot and the quality of the soil. Thereafter, Mr. Huckaba further testified that he also held opinions set forth in an exhibit designated Geotechnical Expert. ... TND argues that the trial court erred in allowing the admission of the above three statements of opinion because Mr. Huckaba admitted during voir dire that he is not a structural engineer. We disagree." Id.
"a trial court may consider in determining the reliability of an expert’s methodology include: (1) “the expert’s qualifications for testifying on the subject at issue” and (2) “the connection between the expert’s knowledge and the basis for the expert’s opinion.” [] Upon review of the record in this matter, we are compelled to conclude that Mr. Huckaba has both “special as well as practical” knowledge qualifying him to render an expert opinion as to the matters objected to and that the reliability of his methodology is confirmed by his qualifications and by the connection between his knowledge and the basis of his opinion." Id. (citation omitted).
April 30, 2008
April 29, 2008
Notification requirement in the Tennessee One-Call statute is strictly construed; Knowledge of excavation may give rise to a duty to warn excavator
ROBERT A. WARD and wife, SALLY WARD, v. CITY OF LEBANON, TENNESSEE; CITY OF LEBANON GAS DEPARTMENT; JAMES N. BUSH CONSTRUCTION, INC.; FOSTER ENGINEERING & ENERGY, INC.; and WATER MANAGEMENT SERVICES, LLC. (Tenn.Ct.App. April 28, 2008).
Plaintiff, while excavating, struck a gas line which resulted in an explosion and fire, seriously injuring plaintiff. Plaintiffs brought this action against several defendants and the case went to trial against the City of Lebanon and Bush Construction Company, Inc. A jury returned a verdict for the plaintiffs and allocated percentages of fault as to both defendants and the plaintiff. The Trial Court entered Judgment in favor of the plaintiffs and defendants appealed. We reverse the Trial Court Judgment and remand for a new trial on the grounds that a part of the charge to the jury was erroneous.
Opinion may be found at the TBA website:
http://www.tba2.org/tba_files/TCA/2008/wardr_042808.pdf
"The Underground Utility Damage Prevention Act (also known as the Tennessee One-Call statute), codified at Tenn. Code Ann. §65-31-101 et seq., states that “no person may excavate in a street, highway, public space, a private easement of an operator or within one hundred feet (100') of the edge of the pavement of a street or highway, or demolish a building, without giving the notice required by §65-31-106 in the manner provided by such section.” Tenn. Code Ann. §65-31-106 states that before beginning any excavation, a person shall serve written or telephonic notice of intent to excavate at least three working days prior to the actual date of excavation, and that if 15 calendar days expire and the excavation is not complete, then the person shall serve an additional notice at least three working days prior to the expiration of time on the fifteenth day. There is no dispute in this case that Ward did not comply with the provisions of the One-Call statute." Id.
"The record shows that all the parties knew that Ward had to return for further excavations and that the gas line had been reconnected. The UUDPA does not indicate that an excavator’s failure to make the notifying call absolves the utility in all circumstances from negligence or from any common law duty to act reasonably to prevent harm. As stated above, a “risk is unreasonable and gives rise to a duty to act with due care if the foreseeable probability and gravity of harm posed by defendant's conduct outweigh the burden upon defendant to engage in alternative conduct that would have prevented the harm.” Id. In this case, the foreseeable probability and gravity of harm to plaintiff posed by defendants’ re-connection of the subject gas line, with the knowledge that plaintiff would be excavating in the area, outweigh the burden upon defendant to warn plaintiff that the gas line had been re-connected." Id.
Plaintiff, while excavating, struck a gas line which resulted in an explosion and fire, seriously injuring plaintiff. Plaintiffs brought this action against several defendants and the case went to trial against the City of Lebanon and Bush Construction Company, Inc. A jury returned a verdict for the plaintiffs and allocated percentages of fault as to both defendants and the plaintiff. The Trial Court entered Judgment in favor of the plaintiffs and defendants appealed. We reverse the Trial Court Judgment and remand for a new trial on the grounds that a part of the charge to the jury was erroneous.
Opinion may be found at the TBA website:
http://www.tba2.org/tba_files/TCA/2008/wardr_042808.pdf
"The Underground Utility Damage Prevention Act (also known as the Tennessee One-Call statute), codified at Tenn. Code Ann. §65-31-101 et seq., states that “no person may excavate in a street, highway, public space, a private easement of an operator or within one hundred feet (100') of the edge of the pavement of a street or highway, or demolish a building, without giving the notice required by §65-31-106 in the manner provided by such section.” Tenn. Code Ann. §65-31-106 states that before beginning any excavation, a person shall serve written or telephonic notice of intent to excavate at least three working days prior to the actual date of excavation, and that if 15 calendar days expire and the excavation is not complete, then the person shall serve an additional notice at least three working days prior to the expiration of time on the fifteenth day. There is no dispute in this case that Ward did not comply with the provisions of the One-Call statute." Id.
"The record shows that all the parties knew that Ward had to return for further excavations and that the gas line had been reconnected. The UUDPA does not indicate that an excavator’s failure to make the notifying call absolves the utility in all circumstances from negligence or from any common law duty to act reasonably to prevent harm. As stated above, a “risk is unreasonable and gives rise to a duty to act with due care if the foreseeable probability and gravity of harm posed by defendant's conduct outweigh the burden upon defendant to engage in alternative conduct that would have prevented the harm.” Id. In this case, the foreseeable probability and gravity of harm to plaintiff posed by defendants’ re-connection of the subject gas line, with the knowledge that plaintiff would be excavating in the area, outweigh the burden upon defendant to warn plaintiff that the gas line had been re-connected." Id.
April 22, 2008
Party improving adjacent land without an express contract is awarded quantum meruit for value of materials and labor
SAMUEL DEAN WILLIAMS v. RUSSELL W. COFFEY (Tenn.Ct.App. April 21, 2008).
This case involves a dispute over the improvements made to defendant's land by plaintiff, which alleged that defendant had agreed to sell the land on which the improvements were made. The Trial Court found an implied contract between the parties and awarded plaintiff damages. On appeal, we hold that the Trial Court employed the wrong measure of damages, vacate the damage award and remand for determination of damages under quantum meruit.
Opinions may be found at the TBA website:
http://www.tba2.org/tba_files/TCA/2008/williamss_042108.pdf
"Under Tennessee law there are two distinct types of implied contracts: contracts implied in fact and contracts implied in law, which are often referred to as quasi contracts. A contract implied in fact arises under circumstances which show mutual intent of assent to contract, consideration and lawful purpose. Mutual assent may be shown by the conduct of the parties and the surrounding circumstances. [] In contrast to a contract implied in fact, “contracts implied in law are created by law without the assent of the party bound, on the basis that they are dictated by reason and justice.” [] The Supreme Court has established that a party seeking to recover on an implied contract in law or quasi contract theory must prove the following elements: (1) there is no existing, enforceable contract between the parties covering the same subject matter; (2) the party seeking recovery proves that it provided valuable goods or services; (3) the party to be charged received the goods or services; (4) the circumstances indicate that the parties to the transaction should have reasonably understood that the person providing the goods or services expected to be compensated and; (5) the circumstances demonstrate that it would be unjust for a party to retain the goods or services without payment. []" Id. (citations omitted).
"The most cogent factor for consideration regarding recovery under a quasi contract is unjust enrichment of the parties. [] A quantum meruit recovery is limited to the actual value of the goods and services received by the defendant. [] The reasonable value of services should be based on the customs and practices prevailing in the same sort of business in which the services would normally be provided. [] To prove the reasonable value of the goods and services, the party seeking to recover in quantum meruit can explain the method used to arrive at the fee or offer proof from other professionals in the same business or trade." Id. (citations omitted).
"On this theory, the case law is clear that a quantum meruit recovery must be the reasonable value of the material and labor furnished. [] The Trial Court erred in basing the plaintiff’s recovery on the increased value of defendant’s property. The Court reasoned “Damages to real estate are generally measured by the fair market value of the land immediately prior to the loss, less the fair market value immediately after the loss”. With due deference to the Trial Court, this reasoning is flawed as the property at issue was not damaged, but rather it was possibly improved by plaintiff’s services." Id. (citations omitted).
This case involves a dispute over the improvements made to defendant's land by plaintiff, which alleged that defendant had agreed to sell the land on which the improvements were made. The Trial Court found an implied contract between the parties and awarded plaintiff damages. On appeal, we hold that the Trial Court employed the wrong measure of damages, vacate the damage award and remand for determination of damages under quantum meruit.
Opinions may be found at the TBA website:
http://www.tba2.org/tba_files/TCA/2008/williamss_042108.pdf
"Under Tennessee law there are two distinct types of implied contracts: contracts implied in fact and contracts implied in law, which are often referred to as quasi contracts. A contract implied in fact arises under circumstances which show mutual intent of assent to contract, consideration and lawful purpose. Mutual assent may be shown by the conduct of the parties and the surrounding circumstances. [] In contrast to a contract implied in fact, “contracts implied in law are created by law without the assent of the party bound, on the basis that they are dictated by reason and justice.” [] The Supreme Court has established that a party seeking to recover on an implied contract in law or quasi contract theory must prove the following elements: (1) there is no existing, enforceable contract between the parties covering the same subject matter; (2) the party seeking recovery proves that it provided valuable goods or services; (3) the party to be charged received the goods or services; (4) the circumstances indicate that the parties to the transaction should have reasonably understood that the person providing the goods or services expected to be compensated and; (5) the circumstances demonstrate that it would be unjust for a party to retain the goods or services without payment. []" Id. (citations omitted).
"The most cogent factor for consideration regarding recovery under a quasi contract is unjust enrichment of the parties. [] A quantum meruit recovery is limited to the actual value of the goods and services received by the defendant. [] The reasonable value of services should be based on the customs and practices prevailing in the same sort of business in which the services would normally be provided. [] To prove the reasonable value of the goods and services, the party seeking to recover in quantum meruit can explain the method used to arrive at the fee or offer proof from other professionals in the same business or trade." Id. (citations omitted).
"On this theory, the case law is clear that a quantum meruit recovery must be the reasonable value of the material and labor furnished. [] The Trial Court erred in basing the plaintiff’s recovery on the increased value of defendant’s property. The Court reasoned “Damages to real estate are generally measured by the fair market value of the land immediately prior to the loss, less the fair market value immediately after the loss”. With due deference to the Trial Court, this reasoning is flawed as the property at issue was not damaged, but rather it was possibly improved by plaintiff’s services." Id. (citations omitted).
March 31, 2008
This opinion discusses several of the ways that courts use to decide which survey is correct
CONNIE R. (DAVIS) PHILLIPS, ET AL., V. LAWRENCE WOODS, ET AL. (Tenn.Ct.App. March 31, 2008).
This appeal involves a dispute over a boundary line and the ownership of a driveway. The plaintiffs, Connie R. (Davis) Phillips and Carol J. (Davis) Miller ("the plaintiffs" or "the Davis heirs"), and the defendants, Lawrence Woods and Charlotte Woods ("the defendants" or "the Woods"), own adjacent tracts of real property in Morgan County. When the initial complaint was filed, the northern tract of property was owned by the plaintiffs' mother, Stella Davis ("Mrs. Davis"), who had filed suit against the Woods, the owners of the southern tract, to quiet title, to establish the common boundary line, and for libel of title. After Mrs. Davis' death prior to trial, her daughters were substituted as plaintiffs.
Upon the conclusion of a bench trial, the trial court found, inter alia, that the Davis heirs owned the property over which the driveway ran, but that the defendants retained an easement by necessity in the roadway, and that the Woods had committed libel of title. While the trial court agreed with the common boundary line described by the surveyor for the Davis heirs, the court reformed the boundary between the parties upon finding that the defendants were entitled to a portion of the Davis property as a result of adversely possessing it for over 30 years. The Woods appeal. We affirm. Case remanded for further proceedings.
Opinion found at TBA website:
http://www.tba2.org/tba_files/TCA/2008/phillipsc_033108.pdf
"In determining disputed boundaries, resort is to be had first to natural objects or landmarks, because of their very permanent character; next, to artificial monuments or marks, then to the boundary lines of adjacent landowners, and then to courses and distances. [] This rule of construction is to aid in determining the intention of the parties to a deed which is to be determined, if possible, from the instrument in connection with the surrounding circumstances." Id.(citations omitted; quoting Thornburg v. Chase, 606 S.W.2d 672, 675 (Tenn.Ct.App. 1980)).
"The legal description for Tract 1 of the Davis property also calls for the property described to contain about half an acre. ... The dimensions of Tract 1 as depicted on the Nance survey are much closer to the quantity of land called for by the deed than the dimensions of Tract 1 as depicted on the Steelman survey. The call for the quantity of land in a deed may be resorted to for the purpose of locating and identifying the land in certain circumstances. [] “The boundaries of a tract of land are not usually delineated by the quantity or acreage,” but “where boundaries are in doubt, the quantity may become an important factor.” [] Thus, the fact that the Nance survey more closely produces the quantity of land called for in the deed supports the conclusion that it correctly located Tract 1." Id.(citations omitted).
This appeal involves a dispute over a boundary line and the ownership of a driveway. The plaintiffs, Connie R. (Davis) Phillips and Carol J. (Davis) Miller ("the plaintiffs" or "the Davis heirs"), and the defendants, Lawrence Woods and Charlotte Woods ("the defendants" or "the Woods"), own adjacent tracts of real property in Morgan County. When the initial complaint was filed, the northern tract of property was owned by the plaintiffs' mother, Stella Davis ("Mrs. Davis"), who had filed suit against the Woods, the owners of the southern tract, to quiet title, to establish the common boundary line, and for libel of title. After Mrs. Davis' death prior to trial, her daughters were substituted as plaintiffs.
Upon the conclusion of a bench trial, the trial court found, inter alia, that the Davis heirs owned the property over which the driveway ran, but that the defendants retained an easement by necessity in the roadway, and that the Woods had committed libel of title. While the trial court agreed with the common boundary line described by the surveyor for the Davis heirs, the court reformed the boundary between the parties upon finding that the defendants were entitled to a portion of the Davis property as a result of adversely possessing it for over 30 years. The Woods appeal. We affirm. Case remanded for further proceedings.
Opinion found at TBA website:
http://www.tba2.org/tba_files/TCA/2008/phillipsc_033108.pdf
"In determining disputed boundaries, resort is to be had first to natural objects or landmarks, because of their very permanent character; next, to artificial monuments or marks, then to the boundary lines of adjacent landowners, and then to courses and distances. [] This rule of construction is to aid in determining the intention of the parties to a deed which is to be determined, if possible, from the instrument in connection with the surrounding circumstances." Id.(citations omitted; quoting Thornburg v. Chase, 606 S.W.2d 672, 675 (Tenn.Ct.App. 1980)).
"The legal description for Tract 1 of the Davis property also calls for the property described to contain about half an acre. ... The dimensions of Tract 1 as depicted on the Nance survey are much closer to the quantity of land called for by the deed than the dimensions of Tract 1 as depicted on the Steelman survey. The call for the quantity of land in a deed may be resorted to for the purpose of locating and identifying the land in certain circumstances. [] “The boundaries of a tract of land are not usually delineated by the quantity or acreage,” but “where boundaries are in doubt, the quantity may become an important factor.” [] Thus, the fact that the Nance survey more closely produces the quantity of land called for in the deed supports the conclusion that it correctly located Tract 1." Id.(citations omitted).
March 28, 2008
Evidence of "significant and pervasive" problems in an newly constructed home starts the statute of limitations period in claims against homebuilders
WILLIAM H. LIGGETT, JR. ET AL. v. BRENTWOOD BUILDERS, LLC (Tenn.Ct.App. March 28, 2008).
Home buyers brought suit against home builder alleging fraud, breach of contract, consumer protection violations, negligent misrepresentation, and negligence. The trial court granted the builder's motion for summary judgment based upon the statute of limitations and statute of repose. We affirm.
Opinion may be found at the TBA website:
http://www.tba2.org/tba_files/TCA/2008/liggettw_032808.pdf.
"It is well-settled law in this state that 'the gravamen of an action, rather than its designation as an action for tort or contract, determines the applicable statute of limitations.' ... Pursuant to these authorities, we must conclude that, with respect to all but the consumer protection claims, the Liggetts’ claims are governed by the three-year statute of limitations set forth at Tenn. Code Ann. § 28-3-105. The claim for violations of the Consumer Protection Act is governed by the special one-year statute of limitations set forth at Tenn. Code Ann. § 47-18-110." Id.
"In interpreting the provisions of Tenn. Code Ann. § 28-3-105, the courts have held that, in a suit for property damages, 'the cause of action accrues at the time the injury occurs, or when it is discovered, or when in the exercise of reasonable care and diligence the injury should have been discovered.' ... The Liggetts filed their complaint on March 2, 2004. Under the statute of limitations of Tenn. Code Ann. 28-3--05, any cause of action that accrued prior to March 2, 2001 would be barred because the complaint would not be filed within three years of the accrual of the cause of action. ... In light of the overall picture of the information known to the Liggetts prior to March 2001, however, this Court has reached the conclusion that they were on notice that there were significant and pervasive problems with the construction of their home. ... Viewing the evidence in the light most favorable to the Liggetts, we must conclude that they knew of significant defects prior to March 2001 and either knew or should have known that they had a cause of action against Brentwood Builders for fraud and/or negligent misrepresentation." Id.
Home buyers brought suit against home builder alleging fraud, breach of contract, consumer protection violations, negligent misrepresentation, and negligence. The trial court granted the builder's motion for summary judgment based upon the statute of limitations and statute of repose. We affirm.
Opinion may be found at the TBA website:
http://www.tba2.org/tba_files/TCA/2008/liggettw_032808.pdf.
"It is well-settled law in this state that 'the gravamen of an action, rather than its designation as an action for tort or contract, determines the applicable statute of limitations.' ... Pursuant to these authorities, we must conclude that, with respect to all but the consumer protection claims, the Liggetts’ claims are governed by the three-year statute of limitations set forth at Tenn. Code Ann. § 28-3-105. The claim for violations of the Consumer Protection Act is governed by the special one-year statute of limitations set forth at Tenn. Code Ann. § 47-18-110." Id.
"In interpreting the provisions of Tenn. Code Ann. § 28-3-105, the courts have held that, in a suit for property damages, 'the cause of action accrues at the time the injury occurs, or when it is discovered, or when in the exercise of reasonable care and diligence the injury should have been discovered.' ... The Liggetts filed their complaint on March 2, 2004. Under the statute of limitations of Tenn. Code Ann. 28-3--05, any cause of action that accrued prior to March 2, 2001 would be barred because the complaint would not be filed within three years of the accrual of the cause of action. ... In light of the overall picture of the information known to the Liggetts prior to March 2001, however, this Court has reached the conclusion that they were on notice that there were significant and pervasive problems with the construction of their home. ... Viewing the evidence in the light most favorable to the Liggetts, we must conclude that they knew of significant defects prior to March 2001 and either knew or should have known that they had a cause of action against Brentwood Builders for fraud and/or negligent misrepresentation." Id.
March 27, 2008
Contractual provisions allow real estate agents to sue for breach of contract when buyer does not make good faith attempts to meet conditions
WAYNE BOYKIN AND ASSOCIATES ET AL. v. HARRY TINSLEY (Tenn.Ct.App. March 27, 2008).
Listing real estate agent and buyer's agent filed suit against prospective buyer to recover their commissions due under a contract for the sale of real estate. The trial court found that prospective buyer breached the contract and awarded commissions to both agents. On appeal, prospective buyer challenges the trial court's finding that he breached the contract as well as the determination that he was liable to the listing agent for a real estate commission. We affirm.
Opinion may be found at the TBA website:
http://www.tba2.org/tba_files/TCA/2008/boykinw_032708.pdf.
"Mr. Tinsley got mad and decided he didn’t want to go through with the contract, so he didn’t follow through what needed ... to be done to make the closing dates. So technically, in the contract, he is in default, and the contract provides if the buyer is in default, that the agents have the right to sue for damages or specific performance." Id(quoting the trial court).
"Mr. Tinsley emphasizes the fact that the contract contained two conditions: [the buyer's] ability to obtain financing from a lender of his choice and an appraisal at the sale price or above. Because these conditions were not met, Mr. Tinsley argues that he was excused from performing under the contract. However, Tennessee law implies in every contract a duty of good faith: 'Parties to a contract owe each other a duty of good faith and fair dealing as it pertains to the performance of a contract. [] Thus, each party to a contract promises to perform its part of the contract in good faith.' (citations omitted). The contract states that time was of the essence. ... Thus, there is ample evidence to support the trial court’s finding that Mr. Tinsley had the ability to obtain financing but simply decided he did not want to go forward because of a conflict with Mr. Boykin." Id.
Listing real estate agent and buyer's agent filed suit against prospective buyer to recover their commissions due under a contract for the sale of real estate. The trial court found that prospective buyer breached the contract and awarded commissions to both agents. On appeal, prospective buyer challenges the trial court's finding that he breached the contract as well as the determination that he was liable to the listing agent for a real estate commission. We affirm.
Opinion may be found at the TBA website:
http://www.tba2.org/tba_files/TCA/2008/boykinw_032708.pdf.
"Mr. Tinsley got mad and decided he didn’t want to go through with the contract, so he didn’t follow through what needed ... to be done to make the closing dates. So technically, in the contract, he is in default, and the contract provides if the buyer is in default, that the agents have the right to sue for damages or specific performance." Id(quoting the trial court).
"Mr. Tinsley emphasizes the fact that the contract contained two conditions: [the buyer's] ability to obtain financing from a lender of his choice and an appraisal at the sale price or above. Because these conditions were not met, Mr. Tinsley argues that he was excused from performing under the contract. However, Tennessee law implies in every contract a duty of good faith: 'Parties to a contract owe each other a duty of good faith and fair dealing as it pertains to the performance of a contract. [] Thus, each party to a contract promises to perform its part of the contract in good faith.' (citations omitted). The contract states that time was of the essence. ... Thus, there is ample evidence to support the trial court’s finding that Mr. Tinsley had the ability to obtain financing but simply decided he did not want to go forward because of a conflict with Mr. Boykin." Id.
March 25, 2008
U.S. Supreme Court limits judicial review of arbitration decisions, even when agreed to by contracting parties
High Court Rules in Arbitration Case
(by PETE YOST, March 25, 2008)
WASHINGTON (AP) — The Supreme Court has limited the role of the courts in reviewing arbitration awards under federal law.
In a 6-3 decision Tuesday, the justices said, however, that there may be other legal avenues besides the Federal Arbitration Act to enable a larger role for the courts in examining the work of arbitrators. The case before the Supreme Court involved a cleanup dispute between toymaker Mattel Inc. and the owner of a factory site in Oregon contaminated with an industrial solvent.
An arbitrator initially ruled in favor of Mattel, and the Supreme Court ruling is helpful to the toy manufacturer. The Federal Arbitration Act "confines its expedited judicial review" to narrow circumstances, Justice David Souter wrote in the majority opinion. Souter added, however, that the court is "is no position" to address possible alternatives to reliance on the FAA.
The issue before the Supreme Court was whether Mattel and Hall Street Associates L.L.C. could agree in advance to broad court review of an arbitration award to correct any errors of law.
An arbitrator ruled that Mattel did not have to pay for environmental cleanup on Hall Street's property. A federal judge subsequently rejected the arbitrator's legal reasoning. The 9th U.S. Circuit Court of Appeals in San Francisco sided with Mattel, saying the Federal Arbitration Act bars judicial review of arbitration awards in such circumstances. The appeals court finding in favor of Mattel underscores the concern of some businesses that are hesitant to settle disputes through arbitration. These businesses say that in most cases they cannot appeal to a judge if an arbitrator rules against them.
Expanding judicial review could have a positive impact, encouraging parties in a dispute to enter arbitration, knowing that serious errors could be corrected by the courts. Others in the business community say that the downside to expanded court review is that it could lead to an increase in the cost and time that result from losing parties attempting to overturn arbitration awards. The American Arbitration Association oversaw more than 137,000 cases in 2006, the large majority of them arbitrations. The association opposes expanded judicial review.
(by PETE YOST, March 25, 2008)
WASHINGTON (AP) — The Supreme Court has limited the role of the courts in reviewing arbitration awards under federal law.
In a 6-3 decision Tuesday, the justices said, however, that there may be other legal avenues besides the Federal Arbitration Act to enable a larger role for the courts in examining the work of arbitrators. The case before the Supreme Court involved a cleanup dispute between toymaker Mattel Inc. and the owner of a factory site in Oregon contaminated with an industrial solvent.
An arbitrator initially ruled in favor of Mattel, and the Supreme Court ruling is helpful to the toy manufacturer. The Federal Arbitration Act "confines its expedited judicial review" to narrow circumstances, Justice David Souter wrote in the majority opinion. Souter added, however, that the court is "is no position" to address possible alternatives to reliance on the FAA.
The issue before the Supreme Court was whether Mattel and Hall Street Associates L.L.C. could agree in advance to broad court review of an arbitration award to correct any errors of law.
An arbitrator ruled that Mattel did not have to pay for environmental cleanup on Hall Street's property. A federal judge subsequently rejected the arbitrator's legal reasoning. The 9th U.S. Circuit Court of Appeals in San Francisco sided with Mattel, saying the Federal Arbitration Act bars judicial review of arbitration awards in such circumstances. The appeals court finding in favor of Mattel underscores the concern of some businesses that are hesitant to settle disputes through arbitration. These businesses say that in most cases they cannot appeal to a judge if an arbitrator rules against them.
Expanding judicial review could have a positive impact, encouraging parties in a dispute to enter arbitration, knowing that serious errors could be corrected by the courts. Others in the business community say that the downside to expanded court review is that it could lead to an increase in the cost and time that result from losing parties attempting to overturn arbitration awards. The American Arbitration Association oversaw more than 137,000 cases in 2006, the large majority of them arbitrations. The association opposes expanded judicial review.
March 18, 2008
Builders must comply with building codes; Parties may contract for standard of workmanship, which negates implied warranty; Cost of repair preferred
ROGER WILKES, ET AL. v. SHAW ENTERPRISES, LLC (Tenn.Ct.App. March 17, 2008).
The principal issues presented by this appeal of a residential construction dispute between a contractor and the homeowner are (1) whether the standard of workmanship required of the contractor by the chancellor was correct and (2) whether the proper measure of damages was applied. The chancellor found that some of the house construction was defective, but that the cost of repair of the defects was excessive and disproportionate. The chancellor held that the proper measure of damages was the diminished value of the house and awarded damages on that basis. We affirm in part, reverse in part and remand for proof of the contractual workmanship standard of "good building practices" and for proof of the diminished value of the home.
Court opinions may be found at the TBA website:
http://www.tba2.org/tba_files/TCA/2008/wilkesr_031708.pdf
"The Wilkes contend that state law requires compliance with the building code. We agree. Tenn. Code Ann. § 5-20-102 provides that the governing body of any county may adopt by reference a specific building code, which serves as the enforceable building code in the county. Tenn. Code Ann. § 5-20-102; see also Tenn. Code Ann. §§ 5-20-101-106. ... Mr. Hatch’s office was charged with ensuring the houses were constructed in accordance with the 1995 CABO Code." Id.
"In an earlier case, however, this Court stated, “in the absence of express plans and specifications, the standard of workmanship prevailing in the area coupled with conformity to the applicable codes ... is the standard by which the appellee’s performance is to be tested.” Carter v. Krueger, 916 S.W.2d 932, 935 (Tenn. Ct. App. 1995). ... However, the language of the contract provides that “Seller agrees to erect the house in substantial accordance with the plans and specifications selected and in accordance with good building practices.” (emphasis added). ... Accordingly, the standard set out in Carter v. Krueger, supra at 935, does not apply because the parties contracted for a specific standard." Id.
"Ordinarily, the implied warranty standard set out in Dixon would apply where there is no warranty. However, the Supreme Court has provided that “[t]his warranty is implied only when the written contract is silent.” Id. at 541-42. In line with the Supreme Court’s reasoning, the specific standard provided for in the contract prevails over the implied standard of workmanship because the contract is not silent on the issue of the standard to which the contractor will be held." Id.
"Generally, courts have assessed two types of damages for breach of a construction contract – “cost of repair” or “diminution in value,” also referred to as “difference-in-value.” ... “Generally, the measure of damages will be the cost [of] repair unless the repairs are not feasible or the cost is disproportionate to the [diminution] in value.” GSB Contractors, Inc., 179 S.W.3d at 543 (citations omitted). In a case where the cost of repairs is “disproportionate when compared with the difference in value of the structure actually constructed and the one contracted for, the diminution value may be used instead as the measure of damages.” Id. at 543 (quoting Redbud Cooperative Corporation v. Clayton, 700 S.W.2d 551 (Tenn.App.1985))." Id.
The principal issues presented by this appeal of a residential construction dispute between a contractor and the homeowner are (1) whether the standard of workmanship required of the contractor by the chancellor was correct and (2) whether the proper measure of damages was applied. The chancellor found that some of the house construction was defective, but that the cost of repair of the defects was excessive and disproportionate. The chancellor held that the proper measure of damages was the diminished value of the house and awarded damages on that basis. We affirm in part, reverse in part and remand for proof of the contractual workmanship standard of "good building practices" and for proof of the diminished value of the home.
Court opinions may be found at the TBA website:
http://www.tba2.org/tba_files/TCA/2008/wilkesr_031708.pdf
"The Wilkes contend that state law requires compliance with the building code. We agree. Tenn. Code Ann. § 5-20-102 provides that the governing body of any county may adopt by reference a specific building code, which serves as the enforceable building code in the county. Tenn. Code Ann. § 5-20-102; see also Tenn. Code Ann. §§ 5-20-101-106. ... Mr. Hatch’s office was charged with ensuring the houses were constructed in accordance with the 1995 CABO Code." Id.
"In an earlier case, however, this Court stated, “in the absence of express plans and specifications, the standard of workmanship prevailing in the area coupled with conformity to the applicable codes ... is the standard by which the appellee’s performance is to be tested.” Carter v. Krueger, 916 S.W.2d 932, 935 (Tenn. Ct. App. 1995). ... However, the language of the contract provides that “Seller agrees to erect the house in substantial accordance with the plans and specifications selected and in accordance with good building practices.” (emphasis added). ... Accordingly, the standard set out in Carter v. Krueger, supra at 935, does not apply because the parties contracted for a specific standard." Id.
"Ordinarily, the implied warranty standard set out in Dixon would apply where there is no warranty. However, the Supreme Court has provided that “[t]his warranty is implied only when the written contract is silent.” Id. at 541-42. In line with the Supreme Court’s reasoning, the specific standard provided for in the contract prevails over the implied standard of workmanship because the contract is not silent on the issue of the standard to which the contractor will be held." Id.
"Generally, courts have assessed two types of damages for breach of a construction contract – “cost of repair” or “diminution in value,” also referred to as “difference-in-value.” ... “Generally, the measure of damages will be the cost [of] repair unless the repairs are not feasible or the cost is disproportionate to the [diminution] in value.” GSB Contractors, Inc., 179 S.W.3d at 543 (citations omitted). In a case where the cost of repairs is “disproportionate when compared with the difference in value of the structure actually constructed and the one contracted for, the diminution value may be used instead as the measure of damages.” Id. at 543 (quoting Redbud Cooperative Corporation v. Clayton, 700 S.W.2d 551 (Tenn.App.1985))." Id.
March 13, 2008
Court finds contractual liquidated damage provision of $250 per day for contractor's failure to complete work reasonable
TEMPLE BAPTIST CHURCH, MANCHESTER, TENNESSEE v. C & H COMMERCIAL CONTRACTOR, INC. (Tenn.Ct.App. March 12, 2008).
Claimant/Appellant Temple Baptist Church brought suit against Defendant/Appellee C & H Commercial Contractors, Inc. to enforce a provision for liquidated damages pursuant to a construction contract entered into by the parties. The contract contained a provision for liquidated damages at the rate of $250.00 per day if the contractor failed to complete the work within the time required by the contract. Temple Baptist Church also sought awards for a credit due under the contract for sales tax and for the contractor's failure to obtain a bond. C & H Commercial Contractors filed an answer and counterclaim alleging that the church had wrongfully terminated the contract. The case was tried without a jury in March of 2006. The trial court found that both parities were mutually responsible for the delay in construction for a period of 220 days. The trial court found that the contractor was responsible for delays after this period and awarded liquidated damages in the amount of $14,250.00. The trial court also awarded attorney fees in the amount of $16,034.50, but denied the credits sought by the church. We affirm.
Opinion may be found at:
http://www.tba2.org/tba_files/TCA/2008/templebaptist_031208.pdf
"The term “liquidated damages” means a sum stipulated and agreed upon by the parties at the time they enter their contract, to be paid to compensate for injuries should a breach occur. 22 Am Jur Damages § 212 (1965); See Railroad v. Cabinet Co., 104 Tenn. 568, 58 S.W.303 (1900). The reason for allowing the parties to stipulate the amount of damages is to create certainty where damages are likely to be uncertain and not easily proven. Railroad, supra. The amount stipulated should be reasonable in relation to the terms of the contract and the certainty with which damages can be measured, there must exist a reasonable relationship between the amount and what might reasonably be expected in the event of a breach. Id. If the provision is a reasonable estimate of the damages that would occur from a breach, then the provision is normally construed as an enforceable stipulation for liquidated damages. See Bristol v. Bostwick, 146 Tenn. 205, 240 S.W.774 (1922); 22 Am Jur Damages § 227 (1965). A party will not be allowed, however, to recover liquidated damages where he is responsible for or has contributed to the delay or non performance alleged as a breach. (citations omitted)." Id.
"The pastor of Temple testified that the liquidated damages would reflect the loss of donations, tuition for the private school, and escalation of building costs. The pastor further testified that Temple was expecting donations to the church to increase as the building progressed. Again, it is implicit in the trial court’s findings that the sum of $250.00 was reasonable. After review of the record, we find that the evidence does not preponderate against the trial court’s award of $14,250.00 in liquidated damages." Id.
Claimant/Appellant Temple Baptist Church brought suit against Defendant/Appellee C & H Commercial Contractors, Inc. to enforce a provision for liquidated damages pursuant to a construction contract entered into by the parties. The contract contained a provision for liquidated damages at the rate of $250.00 per day if the contractor failed to complete the work within the time required by the contract. Temple Baptist Church also sought awards for a credit due under the contract for sales tax and for the contractor's failure to obtain a bond. C & H Commercial Contractors filed an answer and counterclaim alleging that the church had wrongfully terminated the contract. The case was tried without a jury in March of 2006. The trial court found that both parities were mutually responsible for the delay in construction for a period of 220 days. The trial court found that the contractor was responsible for delays after this period and awarded liquidated damages in the amount of $14,250.00. The trial court also awarded attorney fees in the amount of $16,034.50, but denied the credits sought by the church. We affirm.
Opinion may be found at:
http://www.tba2.org/tba_files/TCA/2008/templebaptist_031208.pdf
"The term “liquidated damages” means a sum stipulated and agreed upon by the parties at the time they enter their contract, to be paid to compensate for injuries should a breach occur. 22 Am Jur Damages § 212 (1965); See Railroad v. Cabinet Co., 104 Tenn. 568, 58 S.W.303 (1900). The reason for allowing the parties to stipulate the amount of damages is to create certainty where damages are likely to be uncertain and not easily proven. Railroad, supra. The amount stipulated should be reasonable in relation to the terms of the contract and the certainty with which damages can be measured, there must exist a reasonable relationship between the amount and what might reasonably be expected in the event of a breach. Id. If the provision is a reasonable estimate of the damages that would occur from a breach, then the provision is normally construed as an enforceable stipulation for liquidated damages. See Bristol v. Bostwick, 146 Tenn. 205, 240 S.W.774 (1922); 22 Am Jur Damages § 227 (1965). A party will not be allowed, however, to recover liquidated damages where he is responsible for or has contributed to the delay or non performance alleged as a breach. (citations omitted)." Id.
"The pastor of Temple testified that the liquidated damages would reflect the loss of donations, tuition for the private school, and escalation of building costs. The pastor further testified that Temple was expecting donations to the church to increase as the building progressed. Again, it is implicit in the trial court’s findings that the sum of $250.00 was reasonable. After review of the record, we find that the evidence does not preponderate against the trial court’s award of $14,250.00 in liquidated damages." Id.
March 11, 2008
Proposed amendment to construction lien law will allow owner to post and serve notice of completion on prime and remote contractors
SB 2950/HB 3102 - Mechanic's and materialmen's liens. Modifies provisions regarding mechanic's and materialmen's liens and notices pertaining thereto. Permits other authorized parties in addition to the owner or purchaser to serve notice of completion recorded with the register of deeds. States that no notice is required to be served on prime contractor if owner is also the general contractor. (S: Haynes; H: Curtiss)
Senate Status: Referred to Senate Judiciary.
House Status: House Utilities, Banking & Small Business Subcommittee deferred to 03/18/2008.
"(d)(1) On the same date of the recording of the notice of completion, a copy of the notice shall be served on each prime contractor and remote contractor who has served the required notice of nonpayment, pursuant to § 66-11-145, and the prime contractor and remote contractor:
(A) For improvements to or on real property for one-family, twofamily, three-family and four-family residential units, shall have ten (10) days from such service to serve notice in accordance with this section, and if notice is not served within that time, then the lien rights of the claimant shall expire; or
(B) For all other contracts for improvements to or on real property, shall have thirty (30) days from such service to serve notice in accordance with this section, and if notice is not served within that time, then the lien rights of the claimant shall expire.
[(d)](2) The lien rights of the prime contractor and each remote contractor not
so notified shall not be affected by the notice of completion." SB 2950/HB 3102.
Senate Status: Referred to Senate Judiciary.
House Status: House Utilities, Banking & Small Business Subcommittee deferred to 03/18/2008.
"(d)(1) On the same date of the recording of the notice of completion, a copy of the notice shall be served on each prime contractor and remote contractor who has served the required notice of nonpayment, pursuant to § 66-11-145, and the prime contractor and remote contractor:
(A) For improvements to or on real property for one-family, twofamily, three-family and four-family residential units, shall have ten (10) days from such service to serve notice in accordance with this section, and if notice is not served within that time, then the lien rights of the claimant shall expire; or
(B) For all other contracts for improvements to or on real property, shall have thirty (30) days from such service to serve notice in accordance with this section, and if notice is not served within that time, then the lien rights of the claimant shall expire.
[(d)](2) The lien rights of the prime contractor and each remote contractor not
so notified shall not be affected by the notice of completion." SB 2950/HB 3102.
March 09, 2008
TCA 13-4-104 requires metropolitan area utility company to submit plans for construction within corporate city limits
Utility Construction within Corporate Limits of Another City - TN Attorney General Opinion 08-44 (March 4, 2008).
Attorney General Opinions found at the TBA website: http://www.tba2.org/tba_files/AG/2008/ag_08-44.pdf
Attorney General Opinions found at the TBA website: http://www.tba2.org/tba_files/AG/2008/ag_08-44.pdf
March 07, 2008
Home purchaser must prove that homebuilder had actual knowledge of facts behind alleged misrepresentation to overcome 4-year statute of repose
SELMA P. GRIFFIN v. MUNFORD DEVELOPMENT COMPANY AND CHARLES WALKER (Tenn.Ct.App. March 6, 2008).
This case involves the statute of repose for actions based on improvements to real property. The defendant developer purchased and developed a lot for sale as part of a residential development. The plaintiff purchased the lot by warranty deed. The developer represented to the plaintiff that the lot was suitable for the construction of a residential dwelling. Relying on this representation, the plaintiff purchased the lot and built a house on it. Two years after the purchase, the house began to develop cracks in the foundation and exterior walls. Over the next two years, the problems worsened, so the plaintiff obtained an evaluation by professional engineers. The engineers informed the plaintiff that the house's structural problems may have arisen because the soil on which the house was built was unsuitable to support such construction.
The plaintiff then sued the development company and its president, claiming fraudulent misrepresentation, breach of implied warranty, and breach of express warranty. The defendants moved for summary judgment, asserting that the four-year statute of repose on claims involving improvements to real property barred the plaintiff's action. The plaintiff argued that the statute of repose was not applicable because her claims were based on misrepresentation. The trial court granted the defendants' motion, and the plaintiff appeals. We affirm, finding that the plaintiff failed to introduce evidence that any of the defendants had knowledge that the soil conditions were unsuitable to support a residential dwelling at the time the alleged misrepresentations were made.
Opinion available at the Tennessee Bar Association website:
http://www.tba2.org/tba_files/TCA/2008/griffins_030608.pdf
"In their statement of undisputed facts, the Defendants noted that Munford Development sold Lot 414 to Griffin on June 5, 2001; that Griffin began seeing cracks and other defects in the walls, floors, and foundation of her house in 2003; and that Griffin’s complaint was not filed until October 3, 2005. In light of these facts, the Defendants argued that the four-year statute of repose, set forth in Tennessee Code Annotated § 28-3-202, barred Griffin’s action. In Griffin’s response to the Defendants’ motion for summary judgment, she argued that because the Defendants had engaged in fraud, Tennessee Code Annotated § 28-3-205 precluded them from relying on section 28-3-202." Id.
"In Griffin’s response to the Defendants’ motion for summary judgment, on the issue of the Defendants’ knowledge, Griffin did not point to overlooked evidence, produce additional evidence, or request additional time for discovery. We have only Griffin’s evidence of the unsuitable soil conditions and her bare assertions regarding the Defendants’ knowledge and intent. Under these circumstances, we must find that Griffin failed to carry her burden to articulate specific facts showing that Defendants Walker and Munford Development had sufficient knowledge to support a finding by the trier of fact that their alleged misrepresentation about the suitability of the soil for construction was either intentional or reckless. Accordingly, Griffin cannot rely on Tennessee Code Annotated § 28-3-205(b), and the trial court properly concluded that the four-year statute of repose is applicable to Griffin’s cause of action." Id.
This case involves the statute of repose for actions based on improvements to real property. The defendant developer purchased and developed a lot for sale as part of a residential development. The plaintiff purchased the lot by warranty deed. The developer represented to the plaintiff that the lot was suitable for the construction of a residential dwelling. Relying on this representation, the plaintiff purchased the lot and built a house on it. Two years after the purchase, the house began to develop cracks in the foundation and exterior walls. Over the next two years, the problems worsened, so the plaintiff obtained an evaluation by professional engineers. The engineers informed the plaintiff that the house's structural problems may have arisen because the soil on which the house was built was unsuitable to support such construction.
The plaintiff then sued the development company and its president, claiming fraudulent misrepresentation, breach of implied warranty, and breach of express warranty. The defendants moved for summary judgment, asserting that the four-year statute of repose on claims involving improvements to real property barred the plaintiff's action. The plaintiff argued that the statute of repose was not applicable because her claims were based on misrepresentation. The trial court granted the defendants' motion, and the plaintiff appeals. We affirm, finding that the plaintiff failed to introduce evidence that any of the defendants had knowledge that the soil conditions were unsuitable to support a residential dwelling at the time the alleged misrepresentations were made.
Opinion available at the Tennessee Bar Association website:
http://www.tba2.org/tba_files/TCA/2008/griffins_030608.pdf
"In their statement of undisputed facts, the Defendants noted that Munford Development sold Lot 414 to Griffin on June 5, 2001; that Griffin began seeing cracks and other defects in the walls, floors, and foundation of her house in 2003; and that Griffin’s complaint was not filed until October 3, 2005. In light of these facts, the Defendants argued that the four-year statute of repose, set forth in Tennessee Code Annotated § 28-3-202, barred Griffin’s action. In Griffin’s response to the Defendants’ motion for summary judgment, she argued that because the Defendants had engaged in fraud, Tennessee Code Annotated § 28-3-205 precluded them from relying on section 28-3-202." Id.
"In Griffin’s response to the Defendants’ motion for summary judgment, on the issue of the Defendants’ knowledge, Griffin did not point to overlooked evidence, produce additional evidence, or request additional time for discovery. We have only Griffin’s evidence of the unsuitable soil conditions and her bare assertions regarding the Defendants’ knowledge and intent. Under these circumstances, we must find that Griffin failed to carry her burden to articulate specific facts showing that Defendants Walker and Munford Development had sufficient knowledge to support a finding by the trier of fact that their alleged misrepresentation about the suitability of the soil for construction was either intentional or reckless. Accordingly, Griffin cannot rely on Tennessee Code Annotated § 28-3-205(b), and the trial court properly concluded that the four-year statute of repose is applicable to Griffin’s cause of action." Id.
February 29, 2008
"Flowdown" or "conduit" clause allows general contractor to enforce forum selection provision found in owner-GC contract
ESI COMPANIES, INC. v. RAY BELL CONSTRUCTION COMPANY, INC., ET AL. (Tenn.Ct.App. February 29, 2008).
This appeal involves the applicability and enforceability of a forum selection clause in a construction contract. The contract was for the design and construction of a Kentucky correctional facility. The contract between the Commonwealth of Kentucky and the general contractor, a Tennessee corporation, provided that all actions on the contract must be filed in Franklin County Circuit Court in Frankfort, Kentucky. The general contractor entered into a subcontract with another Tennessee corporation for the performance of certain work on the Kentucky correctional facility. The subcontract incorporated all terms of the original contract by reference and contained a "flow-down" provision. The subcontractor later sued the general contractor in Shelby County, Tennessee. When the general contractor moved to dismiss for lack of venue, the subcontractor contended that the forum selection clause did not apply to its claims. The subcontractor also contended that the forum selection clause was unenforceable under the facts of this case.
The trial court found in favor of the subcontractor. We granted the general contractor's Rule 10 application for extraordinary appeal. We reverse and remand, finding that the forum selection clause was applicable and enforceable, and the lawsuit should have been filed in Kentucky.
Cases available at the Tennessee Bar Association website: http://www.tba2.org/tba_files/TCA/2008/esi_022908.pdf
"The General Contractor also argues that the forum selection clause requires the Subcontractor to file its lawsuit in Kentucky because of the following provision of the Subcontract: 'Article VII - (a) Contractor shall have the same rights and privileges as against the Subcontractor herein as the Owner in the Design/Build Contract has against Contractor. Subcontractor shall have the same rights, remedies and privileges against the Contractor herein as the Contractor in the Design/Build Contract has against Owner.'" Id.
"The aforementioned provision is an example of a “flow-down” or “conduit” clause. Flow-down clauses are commonly used in subcontracts and are closely related to the concept of incorporation by reference. See T. Bart Gary, Incorporation by Reference and Flow-Down Clauses, 10 Constr. Lawyer 1, 45 (Aug. 1990). “If the clause functions as intended, the same rights and obligations of the subcontractor should flow from the subcontract up through the general contractor to the owner, and conversely down the same contractual chain.” Id. The use of flowdown clauses “represents efforts to ensure consistency of obligations throughout the various tiers of the contracting process.” Id. at 44." Id.
"We agree with the General Contractor’s contention, as the Subcontract clearly provided that “ALL TERMS AND CONDITIONS OF THE CONTRACT BETWEEN THE COMMONWEALTH OF KENTUCKY AND RAY BELL CONSTRUCTION COMPANY, INC. ARE FULLY INCORPORATED HEREIN BY REFERENCE.” Because the terms of the Contract were expressly incorporated into the Subcontract, the language of the Contract became a part of the Subcontract, and both writings must be construed together. See Staubach Retail Services-Southeast, LLC v. H.G. Hill Realty Co., 160 S.W.3d 521, 525 (Tenn. 2005); T.R. Mills Contractors, Inc. v. WRH Enterprises, LLC, 93 S.W.3d 861, 870 (Tenn. Ct. App. 2002). ... Pursuant to the flowdown clause, the General Contractor has the same right to enforce the forum selection clause against the Subcontractor. Similarly, the General Contractor’s corresponding remedy against the Owner was to file an action in Kentucky, and pursuant to the flow-down provision, the Subcontractor has that same remedy." Id.
This appeal involves the applicability and enforceability of a forum selection clause in a construction contract. The contract was for the design and construction of a Kentucky correctional facility. The contract between the Commonwealth of Kentucky and the general contractor, a Tennessee corporation, provided that all actions on the contract must be filed in Franklin County Circuit Court in Frankfort, Kentucky. The general contractor entered into a subcontract with another Tennessee corporation for the performance of certain work on the Kentucky correctional facility. The subcontract incorporated all terms of the original contract by reference and contained a "flow-down" provision. The subcontractor later sued the general contractor in Shelby County, Tennessee. When the general contractor moved to dismiss for lack of venue, the subcontractor contended that the forum selection clause did not apply to its claims. The subcontractor also contended that the forum selection clause was unenforceable under the facts of this case.
The trial court found in favor of the subcontractor. We granted the general contractor's Rule 10 application for extraordinary appeal. We reverse and remand, finding that the forum selection clause was applicable and enforceable, and the lawsuit should have been filed in Kentucky.
Cases available at the Tennessee Bar Association website: http://www.tba2.org/tba_files/TCA/2008/esi_022908.pdf
"The General Contractor also argues that the forum selection clause requires the Subcontractor to file its lawsuit in Kentucky because of the following provision of the Subcontract: 'Article VII - (a) Contractor shall have the same rights and privileges as against the Subcontractor herein as the Owner in the Design/Build Contract has against Contractor. Subcontractor shall have the same rights, remedies and privileges against the Contractor herein as the Contractor in the Design/Build Contract has against Owner.'" Id.
"The aforementioned provision is an example of a “flow-down” or “conduit” clause. Flow-down clauses are commonly used in subcontracts and are closely related to the concept of incorporation by reference. See T. Bart Gary, Incorporation by Reference and Flow-Down Clauses, 10 Constr. Lawyer 1, 45 (Aug. 1990). “If the clause functions as intended, the same rights and obligations of the subcontractor should flow from the subcontract up through the general contractor to the owner, and conversely down the same contractual chain.” Id. The use of flowdown clauses “represents efforts to ensure consistency of obligations throughout the various tiers of the contracting process.” Id. at 44." Id.
"We agree with the General Contractor’s contention, as the Subcontract clearly provided that “ALL TERMS AND CONDITIONS OF THE CONTRACT BETWEEN THE COMMONWEALTH OF KENTUCKY AND RAY BELL CONSTRUCTION COMPANY, INC. ARE FULLY INCORPORATED HEREIN BY REFERENCE.” Because the terms of the Contract were expressly incorporated into the Subcontract, the language of the Contract became a part of the Subcontract, and both writings must be construed together. See Staubach Retail Services-Southeast, LLC v. H.G. Hill Realty Co., 160 S.W.3d 521, 525 (Tenn. 2005); T.R. Mills Contractors, Inc. v. WRH Enterprises, LLC, 93 S.W.3d 861, 870 (Tenn. Ct. App. 2002). ... Pursuant to the flowdown clause, the General Contractor has the same right to enforce the forum selection clause against the Subcontractor. Similarly, the General Contractor’s corresponding remedy against the Owner was to file an action in Kentucky, and pursuant to the flow-down provision, the Subcontractor has that same remedy." Id.
February 28, 2008
Certain water/wastewater authorities have a statutory obligation to maintain sewer lines beyond customer property lines
Effect of Statute Requiring Maintenance of Sanitary Sewer Connections - Tenn. Attorney General Opinion No. 08-35 (February 26, 2008).
"The obligation for maintaining sewer lines beyond the property line of a customer, then, applies to any water and wastewater treatment authority created in accordance with Tenn. Code Ann. §§ 68-221-601 to 68-221-618 that also meets the criteria in Tenn. Code Ann. § 68-221-209(b)(1)(A) and (B) above. The provisions for maintaining sewer line connections in Tenn. Code Ann. § 68-221-209(b)(1) were added to the statute in 1999. According to [TDEC], which regulates these entities, this legislation applies to a number of existing water and wastewater treatment authorities in Tennessee, and not just the Hamilton County Water and Wastewater Treatment Authority. It is the opinion of this Office, therefore, that the provisions in Tenn. Code Ann. § 68-221-209(b)(1), requiring maintenance of sanitary sewer connections, constitute a general law of statewide application and a uniform policy on the maintenance of public sewage treatment works." Id.
Opinion available at the Tennessee Bar Association website: http://www.tba2.org/tba_files/AG/2008/ag_08_35.pdf
"The obligation for maintaining sewer lines beyond the property line of a customer, then, applies to any water and wastewater treatment authority created in accordance with Tenn. Code Ann. §§ 68-221-601 to 68-221-618 that also meets the criteria in Tenn. Code Ann. § 68-221-209(b)(1)(A) and (B) above. The provisions for maintaining sewer line connections in Tenn. Code Ann. § 68-221-209(b)(1) were added to the statute in 1999. According to [TDEC], which regulates these entities, this legislation applies to a number of existing water and wastewater treatment authorities in Tennessee, and not just the Hamilton County Water and Wastewater Treatment Authority. It is the opinion of this Office, therefore, that the provisions in Tenn. Code Ann. § 68-221-209(b)(1), requiring maintenance of sanitary sewer connections, constitute a general law of statewide application and a uniform policy on the maintenance of public sewage treatment works." Id.
Opinion available at the Tennessee Bar Association website: http://www.tba2.org/tba_files/AG/2008/ag_08_35.pdf
Parties purchasing sewer taps for future use should contract for exclusivity and priority of their use
JOHN R. SHOMO ET AL. v. CITY OF FRANKLIN, TENNESSEE (Tenn.Ct.App. February 25, 2008).
The Shomos owned several sewer taps on undeveloped property. The City of Franklin sold sewer taps on the property, offering lower prices than the Shomos. The Shomos sued Franklin asserting causes of action for breach of contract, unjust enrichment, conversion, and violation of the duties of a public utility. The trial court granted Franklin's motion to dismiss on the grounds that the complaint contained no set of facts that would entitle the Shomos to any relief according to law. We affirm.
Opinion available at the Tennessee Bar Association website: http://www.tba2.org/tba_files/TCA/2008/shomoj_022508.pdf
"The Shomos contend that Wills had an 'understanding' with MLSTC that as to the Wills properties these taps would be sold first. An 'understanding' is not necessarily an enforceable contract. In fact, the Shomos have failed to allege that Wills and MLSTC had a binding or enforceable contract regarding MSLTC’s sale of future taps. The Shomos attach great significance to a letter written by Franklin’s attorney in 2002. Yet, what is absent from that letter is more significant than what is in it. The letter contains no indication by Franklin of exclusivity or priority for the Shomos’ taps in relation to the Wills properties. It recognizes the right of Wills or his affiliates to use the taps in connection with his properties. It does not recognize an obligation on Franklin’s part to require the use of those taps at the beginning of development or at any time thereafter." Id.
The Shomos owned several sewer taps on undeveloped property. The City of Franklin sold sewer taps on the property, offering lower prices than the Shomos. The Shomos sued Franklin asserting causes of action for breach of contract, unjust enrichment, conversion, and violation of the duties of a public utility. The trial court granted Franklin's motion to dismiss on the grounds that the complaint contained no set of facts that would entitle the Shomos to any relief according to law. We affirm.
Opinion available at the Tennessee Bar Association website: http://www.tba2.org/tba_files/TCA/2008/shomoj_022508.pdf
"The Shomos contend that Wills had an 'understanding' with MLSTC that as to the Wills properties these taps would be sold first. An 'understanding' is not necessarily an enforceable contract. In fact, the Shomos have failed to allege that Wills and MLSTC had a binding or enforceable contract regarding MSLTC’s sale of future taps. The Shomos attach great significance to a letter written by Franklin’s attorney in 2002. Yet, what is absent from that letter is more significant than what is in it. The letter contains no indication by Franklin of exclusivity or priority for the Shomos’ taps in relation to the Wills properties. It recognizes the right of Wills or his affiliates to use the taps in connection with his properties. It does not recognize an obligation on Franklin’s part to require the use of those taps at the beginning of development or at any time thereafter." Id.
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