GREIG MASSEY, ET AL., v. R.W. GRAF, INC., ET AL. (Tenn.Ct.App. June 26, 2008)
Plaintiffs brought this declaratory judgment action, asking the Court to declare that building restrictions on platted parcels of property from a common grantor applied to a non-platted parcel purchased by defendants from a subsequent grantor. The Trial Court, responding to a summary judgment motion, made detailed findings of facts, and concluded that the "subject to" language in the deeds was ambiguous and construed the language against the inclusion of restrictions on any portion of the property that lay outside the platted subdivisions. Plaintiffs have appealed, and we affirm the Judgment of the Trial Court.
Opinion may be found at:
http://www.tba2.org/tba_files/TCA/2008/masseyg_062608.pdf
Dissenting opinion may be found at:
http://www.tba2.org/tba_files/TCA/2008/masseyg_DIS_062608.pdf
"Because restrictive covenants are in derogation of the fundamental right of free use and enjoyment of real property, they are not favored under Tennessee law. [] Restrictive covenants are strictly construed. [] Any doubt concerning the applicability of a restrictive covenant will be resolved against the restriction, [] and, likewise, any ambiguity in the terms of the restrictive covenant will be resolved against the restriction. [] Similarly, when the terms of a covenant may be construed more than one way, the courts must resolve any ambiguities against the party seeking to enforce the restriction and in a manner which advances the unrestricted use of the property. []" Id. (citations omitted).
"The language in the Warranty Deed from the Dean Estate to the University of Tennessee is as follows: “This conveyance, however, is made subject to Restrictive Covenants applicable to all of the lots located in the Deanbrook Sub-divisions of record in book of deeds 954, page 564, in the Register’s Office of Knox County, Tennessee, to which said instrument specific reference is hereby made for said conditions, limitations, reservations and restrictions.” This language is susceptible to two very different meanings. It could mean that the referenced restrictive covenants applies to all of the property conveyed including the unsubdivided tract, that included the Graf Property. Or it could mean that the Dean Estate intended to have the referenced restrictive covenants apply only to the lots within the Deanbrook subdivisions as was the original intent when the restrictions were recorded in 1954. Accordingly, we conclude that ambiguity exists." Id.
"Both the grantor and the fellow grantees whose titles contain similar restrictive covenants may enforce their reciprocal negative easement rights in either a legal or an equitable proceeding. [] Grantees seeking equitable enforcement of a reciprocal negative easement must prove: (1) that the parties derived their titles from a common grantor; (2) that the common grantor had a general plan for the property involved; (3) that the common grantor intended for the restrictive covenant to benefit the property involved; and (4) that the grantees had actual or constructive knowledge of the restriction when they purchased their parcels. [] Grantees seeking judicial enforcement of their negative reciprocal easement rights are not necessarily limited to the recitals in the deeds to prove their case. In addition to the deeds from the common grantor [], they may also use recorded plats [], or parol evidence of the circumstances surrounding the purchase of the property. []" Id. (citations omitted).
"In this case, the properties known as Deanbrook Subdivision were platted with restrictions that expressly applied only to Deanbrook Subdivisions, and were recorded. The tract of land that encompassed the Dean properties adjacent to the Deanbrook Subdivisions was not platted and was not expressly included in the recorded restrictions. Further, there was no general plan or scheme of development to include the unsubdivided properties in the Deanbrook Subdivisions[.]" Id.
DISSENTING OPINION: "When I give the words in the subject language their usual and ordinary meaning – as I am required to do – I do not find the warranty deed to be ambiguous. As I understand the language at hand, it cannot be construed as being limited to the conveyed lots in the platted subdivisions. The language at issue addresses “[t]his conveyance.” The only reasonable interpretation of these two words is that they refer to the conveyed platted lots in the Deanbrook Subdivisions and the conveyed acreage outside the platted subdivisions. This is what was “convey[ed].” There can be no doubt about this." Id.
June 26, 2008
June 24, 2008
Local governments may enforce strict submission requirements for service contracts
BAIRD TREE COMPANY, INC. v. CITY OF OAK RIDGE, ET AL. (Tenn.Ct.App. June 24, 2008).
Baird Tree Company, Inc. ("Plaintiff") was one of three bidders on a tree trimming and removal project submitted for bid by the City of Oak Ridge ("Oak Ridge"). Plaintiff was notified by letter of several deficiencies in its bid and Oak Ridge requested that the bid be supplemented with additional information. Plaintiff explicitly refused to do so and informed Oak Ridge that its bid was fine just the way it was.
After the contract was awarded to a different company, Plaintiff filed suit claiming it should have been awarded the contract because it was the lowest bidder and further claiming that Oak Ridge violated the Tennessee Trade Practices Act, Tenn. Code Ann. section 47-25-101, et seq. Oak Ridge filed a motion for summary judgment claiming, among other things, that it was entitled to summary judgment because Plaintiff's bid was invalid to begin with and the Trade Practices Act did not apply to this case. The Trial Court agreed and granted the motion for summary judgment. Plaintiff appeals raising numerous issues. We affirm.
Opinion may be found at:
http://www.tba2.org/tba_files/TCA/2008/bairdtree_062408.pdf
"The undisputed material facts demonstrate that there were numerous deficiencies in Plaintiff’s original bid. Although not required to do so, Dover sent a letter to Plaintiff’s owner and president requesting the additional necessary information. Mr. Baird refused to supply any additional information and even went so far as to inform Dover that he (i.e., Mr. Baird) would be sending questions to Dover that he wanted answered. The Trial Court correctly characterized this response as being “in your face.” This Court is at a loss as to how a company can send such a response to legitimate questions that were raised about its bid, and then complain when it is not awarded the bid." Id.
Baird Tree Company, Inc. ("Plaintiff") was one of three bidders on a tree trimming and removal project submitted for bid by the City of Oak Ridge ("Oak Ridge"). Plaintiff was notified by letter of several deficiencies in its bid and Oak Ridge requested that the bid be supplemented with additional information. Plaintiff explicitly refused to do so and informed Oak Ridge that its bid was fine just the way it was.
After the contract was awarded to a different company, Plaintiff filed suit claiming it should have been awarded the contract because it was the lowest bidder and further claiming that Oak Ridge violated the Tennessee Trade Practices Act, Tenn. Code Ann. section 47-25-101, et seq. Oak Ridge filed a motion for summary judgment claiming, among other things, that it was entitled to summary judgment because Plaintiff's bid was invalid to begin with and the Trade Practices Act did not apply to this case. The Trial Court agreed and granted the motion for summary judgment. Plaintiff appeals raising numerous issues. We affirm.
Opinion may be found at:
http://www.tba2.org/tba_files/TCA/2008/bairdtree_062408.pdf
"The undisputed material facts demonstrate that there were numerous deficiencies in Plaintiff’s original bid. Although not required to do so, Dover sent a letter to Plaintiff’s owner and president requesting the additional necessary information. Mr. Baird refused to supply any additional information and even went so far as to inform Dover that he (i.e., Mr. Baird) would be sending questions to Dover that he wanted answered. The Trial Court correctly characterized this response as being “in your face.” This Court is at a loss as to how a company can send such a response to legitimate questions that were raised about its bid, and then complain when it is not awarded the bid." Id.
May 29, 2008
Owner found 40% at fault for failing to provide sunroom kit manufacturer's instructions to contractor
JAY S. GORBAN v. DAVID HARRIS (Tenn.Ct.App. May 29, 2008)
This is a dispute between a homeowner and the contractor he hired to build a sunroom onto his home. We have concluded that the evidence does not preponderate against the trial court's award of a judgment in favor of the homeowner for 60 percent of the requested damages, based upon its allocation of 40 percent of the fault to the homeowner.
Opinion may be found at the TBA website:
http://www.tba2.org/tba_files/TCA/2008/gorbanj_052908.pdf
"Dr. Gorban assigns error to the trial court’s allocation of 40% of the fault to him. The trial court’s comparative fault determination was predicated upon its finding that Dr. Gorban did not provide Mr. Harris with the manufacturer’s instructions regarding the foundation requirements. ... Dr. Gorban further argues that, even if he did not have the foundation instructions, Mr. Harris should have contacted the manufacturer himself. There is no proof that Mr. Harris was aware that additional instructions existed. While Mr. Harris could have contacted the manufacturer, we cannot say that the trial court erred in finding Dr. Gorban at fault for failing to provide the relevant instructions that were in his possession to Mr. Harris." Id.
This is a dispute between a homeowner and the contractor he hired to build a sunroom onto his home. We have concluded that the evidence does not preponderate against the trial court's award of a judgment in favor of the homeowner for 60 percent of the requested damages, based upon its allocation of 40 percent of the fault to the homeowner.
Opinion may be found at the TBA website:
http://www.tba2.org/tba_files/TCA/2008/gorbanj_052908.pdf
"Dr. Gorban assigns error to the trial court’s allocation of 40% of the fault to him. The trial court’s comparative fault determination was predicated upon its finding that Dr. Gorban did not provide Mr. Harris with the manufacturer’s instructions regarding the foundation requirements. ... Dr. Gorban further argues that, even if he did not have the foundation instructions, Mr. Harris should have contacted the manufacturer himself. There is no proof that Mr. Harris was aware that additional instructions existed. While Mr. Harris could have contacted the manufacturer, we cannot say that the trial court erred in finding Dr. Gorban at fault for failing to provide the relevant instructions that were in his possession to Mr. Harris." Id.
May 19, 2008
Decision reversed because trial court awarded punitive damages based on environmental tort theory, which was rejected by the jury
DAVID GOFF, ET UX, ET AL. v. ELMO GREER & SONS CONSTRUCTION CO., INC. (Tenn.Ct.App. May 19, 2008).
This appeal involves a jury's award of punitive damages. The construction company entered into a contract with the State of Tennessee to widen a portion of a highway. The homeowners entered into a contract with the construction company allowing the construction company to place excess materials generated from the highway project on the homeowners' property. In exchange, the homeowners would receive compensation based on the cubic fill area, and the company would fill and grade that portion of the homeowners' property. The project required that the construction company conduct extensive blasting near the homeowners' house and vehicles. One of the homeowners became concerned when he witnessed the construction company placing various garbage items and tires on his property near the fill area. After three years, the construction company finished the project.
The homeowners brought suit, alleging that the company failed to pay the amount due under the contract and caused damage to their house due to the blasting. The complaint also alleged that the company buried certain items, including tires, on the property which constituted an environmental tort. The homeowners' amended complaint stated a cause of action in nuisance and also sought an award of punitive damages in the amount of $1 million dollars.
The jury returned a verdict in favor of the homeowners for the nuisance claim in the amount of $3,305.00 and found that punitive damages should be imposed on the construction company. The jury found in favor of the construction company for the environmental tort claim. After the second phase of the trial, the jury returned an award of $2 million in punitive damages. The trial court remitted the award to $1 million, the amount of the homeowners' ad damnum. The construction company appeals, and we reverse and remand in part and affirm in part.
Opinion may be found at the TBA website:
http://www.tba2.org/tba_files/TCA/2008/goffd_051908.pdf
"Our Supreme Court, in Hodges v. S.C. Toof & Co., 833 S.W.2d 896, 901–02 (Tenn. 1992), laid out the procedural framework for awarding punitive damages. First, the plaintiff must prove by clear and convincing evidence that the defendant acted (1) intentionally, (2) fraudulently, (3) maliciously, or (4) recklessly. Id. at 900–01. Upon such a finding, the jury must then determine the amount of damages during the second phase of the trial[.]" Id.
Trial court: "By intentionally burying tires eight feet tall, thirty-two inches in diameter, and weighing over one ton, the defendant clearly violated the solid waste disposal act. The policy of the state to avoid pollution and the creation of unpermitted landfills was intentionally violated on the lands of another and justifies a substantial punitive damages award." Id. (quoting the trial court).
"The trial court’s findings of fact and conclusions of law are insufficient in that they rely heavily on the environmental tort claim, a theory which the jury rejected. We therefore reverse the award of punitive damages and remand the case to the trial court. On remand, the trial court should apply the Hodges factors and make appropriate findings of fact and conclusions of law in approving or decreasing the award of punitive damages, if the court deems appropriate, based on the nuisance theory." Id.
This appeal involves a jury's award of punitive damages. The construction company entered into a contract with the State of Tennessee to widen a portion of a highway. The homeowners entered into a contract with the construction company allowing the construction company to place excess materials generated from the highway project on the homeowners' property. In exchange, the homeowners would receive compensation based on the cubic fill area, and the company would fill and grade that portion of the homeowners' property. The project required that the construction company conduct extensive blasting near the homeowners' house and vehicles. One of the homeowners became concerned when he witnessed the construction company placing various garbage items and tires on his property near the fill area. After three years, the construction company finished the project.
The homeowners brought suit, alleging that the company failed to pay the amount due under the contract and caused damage to their house due to the blasting. The complaint also alleged that the company buried certain items, including tires, on the property which constituted an environmental tort. The homeowners' amended complaint stated a cause of action in nuisance and also sought an award of punitive damages in the amount of $1 million dollars.
The jury returned a verdict in favor of the homeowners for the nuisance claim in the amount of $3,305.00 and found that punitive damages should be imposed on the construction company. The jury found in favor of the construction company for the environmental tort claim. After the second phase of the trial, the jury returned an award of $2 million in punitive damages. The trial court remitted the award to $1 million, the amount of the homeowners' ad damnum. The construction company appeals, and we reverse and remand in part and affirm in part.
Opinion may be found at the TBA website:
http://www.tba2.org/tba_files/TCA/2008/goffd_051908.pdf
"Our Supreme Court, in Hodges v. S.C. Toof & Co., 833 S.W.2d 896, 901–02 (Tenn. 1992), laid out the procedural framework for awarding punitive damages. First, the plaintiff must prove by clear and convincing evidence that the defendant acted (1) intentionally, (2) fraudulently, (3) maliciously, or (4) recklessly. Id. at 900–01. Upon such a finding, the jury must then determine the amount of damages during the second phase of the trial[.]" Id.
Trial court: "By intentionally burying tires eight feet tall, thirty-two inches in diameter, and weighing over one ton, the defendant clearly violated the solid waste disposal act. The policy of the state to avoid pollution and the creation of unpermitted landfills was intentionally violated on the lands of another and justifies a substantial punitive damages award." Id. (quoting the trial court).
"The trial court’s findings of fact and conclusions of law are insufficient in that they rely heavily on the environmental tort claim, a theory which the jury rejected. We therefore reverse the award of punitive damages and remand the case to the trial court. On remand, the trial court should apply the Hodges factors and make appropriate findings of fact and conclusions of law in approving or decreasing the award of punitive damages, if the court deems appropriate, based on the nuisance theory." Id.
May 16, 2008
Case replete with tenets of construction law
CATHERINE SMITH BOWLING, ET AL. V. TODD JONES, ET AL. (Tenn.Ct.App. May 16, 2008).
Plaintiff homeowners sued defendant residential building contractors for breach of a home construction contract upon allegations of defective workmanship and abandonment of contract. The trial court entered judgment in favor of plaintiffs and awarded actual damages in an amount based upon the finding that the house was of no value. The trial court also awarded damages under the Tennessee Consumer Protection Act upon a finding that the defendants violated the Act by willfully and knowingly misrepresenting that they were bonded. Upon appeal, we find no error in the judgment of the trial court, and accordingly, the judgment is affirmed in all respects.
Opinion may be found at:
http://www.tba2.org/tba_files/TCA/2008/bowlingc_051608.pdf
IMPLIED WARRANTY TO BUILD NEW HOME IN A WORKMANLIKE MANNER:
"A contract to construct an entire building is essentially a contract for material and labor, and includes an implied warranty protecting the owner from defective construction. Once a builder undertakes a construction contract, the common law imposes upon him or her a duty to perform the work in a workmanlike manner, and there is an implied agreement that the building or work performed will be sufficient for the particular purpose desired or to accomplish a certain result. Thus, a failure to perform a building contract in a workmanlike manner constitutes a breach of the contract." Id. (citing 13 AM. JUR. 2d Building and Construction Contracts §10 (2000)).
ABANDONMENT = BREACH OF CONTRACT; CONTRACTOR BREACHES BY REFUSING TO PERFORM WORK; OWNER BREACHES BY REFUSING TO PAY:
"The abandonment of a contract gives rise to a cause of action for breach. [] In the instant matter, each party contends that the other abandoned the contract; the Andersons argue that the Jones brothers simply left the job and quit performing their duties under the contract, while the Jones brothers argue that the only reasons they did not complete their contractual duties were that the Andersons abandoned the contract first, by failing to continue to pay draws and purchase building materials and later, by firing them." Id. (citation omitted).
DELEGATION TO INDEPENDENT CONTRACTORS DOES NOT ABSOLVE A CONTRACTOR OF ITS DUTIES TO THE HOMEOWNER:
"[T]he Jones brothers [contend that the subcontractors were independent contractors] and therefore [they] were not ordinarily liable for the negligence of an independent contractor.” ... We find no merit in this argument. The Jones brothers had a contractual duty to construct the house to completion and to perform the construction in a workmanlike manner. Their unilateral delegation of work to third parties did not absolve them of this duty." Id.
NEW HOME CONSTRUCTION WITH SEVER STRUCTURAL DEFECTS IS HELD TO HAVE ZERO VALUE (i.e., $0):
"It is well settled that an owner of property is competent to testify to the value of such property. [] Given the above referenced testimony of the owners and other evidence confirming the house’s structural instability, we believe the trial court’s determination that the house is of zero value is well supported, and we do not find that the evidence preponderates otherwise." Id. (citation omitted).
CONTRACTOR VIOLATED TCPA BY FALSELY REPRESENTING THAT THEY ARE BONDED; IF CONTRACTOR'S BUSINESS CARD SAYS "BONDED" AND CONTRACTOR IS NOT, THEY MUST APPRISE THE OWNER:
"The Jones brothers contend that insufficient evidence was presented to support the trial court’s finding that their violation of the TCPA was willful and knowing. They do not deny that they were not bonded, nor do they deny that they misrepresented to the Andersons that they were bonded and that the Andersons relied upon this misrepresentation. However, the Jones brothers insist that such misrepresentation was unintentional and that the record does not show otherwise. We disagree. First, we note Jerry Jones’s own testimony that prior to their employment by the Andersons, he gave Kimberly Anderson the Jones brothers’ business card, a copy of which is in the record before us. Among other things, this card states that the Jones brothers are “Licensed, Insured, and Bonded.”" Id.
Plaintiff homeowners sued defendant residential building contractors for breach of a home construction contract upon allegations of defective workmanship and abandonment of contract. The trial court entered judgment in favor of plaintiffs and awarded actual damages in an amount based upon the finding that the house was of no value. The trial court also awarded damages under the Tennessee Consumer Protection Act upon a finding that the defendants violated the Act by willfully and knowingly misrepresenting that they were bonded. Upon appeal, we find no error in the judgment of the trial court, and accordingly, the judgment is affirmed in all respects.
Opinion may be found at:
http://www.tba2.org/tba_files/TCA/2008/bowlingc_051608.pdf
IMPLIED WARRANTY TO BUILD NEW HOME IN A WORKMANLIKE MANNER:
"A contract to construct an entire building is essentially a contract for material and labor, and includes an implied warranty protecting the owner from defective construction. Once a builder undertakes a construction contract, the common law imposes upon him or her a duty to perform the work in a workmanlike manner, and there is an implied agreement that the building or work performed will be sufficient for the particular purpose desired or to accomplish a certain result. Thus, a failure to perform a building contract in a workmanlike manner constitutes a breach of the contract." Id. (citing 13 AM. JUR. 2d Building and Construction Contracts §10 (2000)).
ABANDONMENT = BREACH OF CONTRACT; CONTRACTOR BREACHES BY REFUSING TO PERFORM WORK; OWNER BREACHES BY REFUSING TO PAY:
"The abandonment of a contract gives rise to a cause of action for breach. [] In the instant matter, each party contends that the other abandoned the contract; the Andersons argue that the Jones brothers simply left the job and quit performing their duties under the contract, while the Jones brothers argue that the only reasons they did not complete their contractual duties were that the Andersons abandoned the contract first, by failing to continue to pay draws and purchase building materials and later, by firing them." Id. (citation omitted).
DELEGATION TO INDEPENDENT CONTRACTORS DOES NOT ABSOLVE A CONTRACTOR OF ITS DUTIES TO THE HOMEOWNER:
"[T]he Jones brothers [contend that the subcontractors were independent contractors] and therefore [they] were not ordinarily liable for the negligence of an independent contractor.” ... We find no merit in this argument. The Jones brothers had a contractual duty to construct the house to completion and to perform the construction in a workmanlike manner. Their unilateral delegation of work to third parties did not absolve them of this duty." Id.
NEW HOME CONSTRUCTION WITH SEVER STRUCTURAL DEFECTS IS HELD TO HAVE ZERO VALUE (i.e., $0):
"It is well settled that an owner of property is competent to testify to the value of such property. [] Given the above referenced testimony of the owners and other evidence confirming the house’s structural instability, we believe the trial court’s determination that the house is of zero value is well supported, and we do not find that the evidence preponderates otherwise." Id. (citation omitted).
CONTRACTOR VIOLATED TCPA BY FALSELY REPRESENTING THAT THEY ARE BONDED; IF CONTRACTOR'S BUSINESS CARD SAYS "BONDED" AND CONTRACTOR IS NOT, THEY MUST APPRISE THE OWNER:
"The Jones brothers contend that insufficient evidence was presented to support the trial court’s finding that their violation of the TCPA was willful and knowing. They do not deny that they were not bonded, nor do they deny that they misrepresented to the Andersons that they were bonded and that the Andersons relied upon this misrepresentation. However, the Jones brothers insist that such misrepresentation was unintentional and that the record does not show otherwise. We disagree. First, we note Jerry Jones’s own testimony that prior to their employment by the Andersons, he gave Kimberly Anderson the Jones brothers’ business card, a copy of which is in the record before us. Among other things, this card states that the Jones brothers are “Licensed, Insured, and Bonded.”" Id.
May 07, 2008
Res judicata bars challenge to performance bond after judgment on injunctive relief claim; Privity gives right to assert defensive collateral estoppel
TRAVELERS CASUALTY & SURETY COMPANY OF AMERICA as subrogee of SMITH MECHANICAL CONTRACTORS, INC. v. LAWYER'S TITLE INSURANCE CORPORATION, ET AL. (Tenn.Ct.App. May 7, 2008).
Travelers Casualty & Surety Company of America ("Travelers") as subrogee of Smith Mechanical Contractors, Inc. ("Smith Mechanical") sued Lawyer's Title Insurance Company ("Lawyer's Title") and First Tennessee Bank National Association ("the Bank") seeking, among other things, a judgment declaring a mechanic's lien filed by Smith Mechanical to have priority over a deed of trust held by the Bank with regard to real property located in Johnson City, Tennessee. Lawyer's Title and the Bank filed a motion to dismiss or for summary judgment.
After a hearing, the Trial Court entered an order finding and holding, inter alia, that Travelers' complaint was barred under the doctrine of res judicata; that the complaint was barred under the compulsory counterclaim rule; that Travelers never acquired Smith Mechanical's mechanic's lien rights; and, that the Bank had recorded a payment bond ("Performance Bond"), which operated to discharge Smith Mechanical's lien from the real property. Travelers appeals to this Court. We affirm.
Opinion may be found on TBA website:
http://www.tba2.org/tba_files/TCA/2008/travelerscasualty_050708.pdf
"Parties asserting a res judicata defense must demonstrate that (1) a court of competent jurisdiction rendered the prior judgment, (2) the prior judgment was final and on the merits, (3) the same parties or their privies were involved in both proceedings, and (4) both proceedings involved the same cause of action." Id. (citations omitted).
"[O]nce the judgment on the merits became final in the second lawsuit seeking injunctive relief, the doctrine of res judicata through the principle of claim preclusion operates to bar any claims involving the same cause of action which were or could have been brought by Barker Building and Travelers against the Bank in that same action. This includes any claims against the Bank challenging the validity of the Subordination Agreement and Performance Bond." Id.
"Collateral estoppel, an issue preclusion doctrine, ... bars the parties or their privies from relitigating issues that were actually raised and determined in an earlier suit. ... Collateral estoppel may be used by a defendant in the second suit (defensive collateral estoppel), or it may be used by a plaintiff in a second suit (offensive collateral estoppel). In Tennessee the offensive use of collateral estoppel requires that the parties be identical in both actions. Without saying so specifically, however, Tennessee has not required party mutuality in applying defensive collateral estoppel." Id. (citations omitted).
"The issue sought to be precluded in this instance is the issue regarding the validity of the Performance Bond. Lawyer’s Title is in privity with the Bank with regard to this issue. Given this and the fact that the issue sought to be precluded went to final judgment on the merits in [the case] discussed above, Lawyer’s Title can utilize defensive collateral estoppel." Id. (citations omitted).
Travelers Casualty & Surety Company of America ("Travelers") as subrogee of Smith Mechanical Contractors, Inc. ("Smith Mechanical") sued Lawyer's Title Insurance Company ("Lawyer's Title") and First Tennessee Bank National Association ("the Bank") seeking, among other things, a judgment declaring a mechanic's lien filed by Smith Mechanical to have priority over a deed of trust held by the Bank with regard to real property located in Johnson City, Tennessee. Lawyer's Title and the Bank filed a motion to dismiss or for summary judgment.
After a hearing, the Trial Court entered an order finding and holding, inter alia, that Travelers' complaint was barred under the doctrine of res judicata; that the complaint was barred under the compulsory counterclaim rule; that Travelers never acquired Smith Mechanical's mechanic's lien rights; and, that the Bank had recorded a payment bond ("Performance Bond"), which operated to discharge Smith Mechanical's lien from the real property. Travelers appeals to this Court. We affirm.
Opinion may be found on TBA website:
http://www.tba2.org/tba_files/TCA/2008/travelerscasualty_050708.pdf
"Parties asserting a res judicata defense must demonstrate that (1) a court of competent jurisdiction rendered the prior judgment, (2) the prior judgment was final and on the merits, (3) the same parties or their privies were involved in both proceedings, and (4) both proceedings involved the same cause of action." Id. (citations omitted).
"[O]nce the judgment on the merits became final in the second lawsuit seeking injunctive relief, the doctrine of res judicata through the principle of claim preclusion operates to bar any claims involving the same cause of action which were or could have been brought by Barker Building and Travelers against the Bank in that same action. This includes any claims against the Bank challenging the validity of the Subordination Agreement and Performance Bond." Id.
"Collateral estoppel, an issue preclusion doctrine, ... bars the parties or their privies from relitigating issues that were actually raised and determined in an earlier suit. ... Collateral estoppel may be used by a defendant in the second suit (defensive collateral estoppel), or it may be used by a plaintiff in a second suit (offensive collateral estoppel). In Tennessee the offensive use of collateral estoppel requires that the parties be identical in both actions. Without saying so specifically, however, Tennessee has not required party mutuality in applying defensive collateral estoppel." Id. (citations omitted).
"The issue sought to be precluded in this instance is the issue regarding the validity of the Performance Bond. Lawyer’s Title is in privity with the Bank with regard to this issue. Given this and the fact that the issue sought to be precluded went to final judgment on the merits in [the case] discussed above, Lawyer’s Title can utilize defensive collateral estoppel." Id. (citations omitted).
April 30, 2008
Court allows geotechnical engineer to testify about structural issues in a home construction defect case based on "special and practical" knowledge
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).
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 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.
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