Robert F. Meredith v. Kenneth L. Weller ( 2012 )

IN THE COURT OF APPEALS OF TENNESSEE
AT KNOXVILLE
December 5, 2011 Session
ROBERT F. MEREDITH ET AL. v. KENNETH L. WELLER ET AL.
Appeal from the Chancery Court for Hamilton County
No. 09-0507 W. Frank Brown, III, Chancellor
No. E2010-02573-COA-R3-CV-FILED-JANUARY 25, 2012
The plaintiff, Robert F. Meredith (“the Owner”), appeals a judgment rendered against him
in favor of his home builder, Kenneth L. Weller (“the Builder”), on the Builder’s
counterclaim for breach of contract and for attorney’s fees incurred in defending the Owner’s
claims for, among other things, defective construction, misrepresentation, breach of contract,
and violations of the Tennessee Consumer Protection Act, Tenn. Code Ann. §§ 47-18-101
et seq. (2001)(“the TCPA”). The Builder asks us to award him his attorney’s fees incurred
in defending the Owner’s appeal. We affirm the judgment of the trial court in all respects.
We also award the Builder his reasonable attorney’s fees incurred on appeal and remand to
the trial court for a hearing to determine those fees.
Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Chancery Court
Affirmed; Case Remanded
C HARLES D. S USANO , J R., J., delivered the opinion of the Court, in which H ERSCHEL P.
F RANKS, P.J., and D. M ICHAEL S WINEY, J., joined.
Fred T. Hanzelik, Chattanooga, Tennessee, for the appellant, Robert F. Meredith.
Phillip C. Lawrence, Chattanooga, Tennessee, for the appellees, Kenneth L. Weller,
individually and dba Weller Construction, and Weller Construction, LLC.
OPINION
I.
In 2006, the Owner and his wife1 purchased a lot on Lake Chickamauga in Hamilton
County. The Owner “fell in love” with a particular set of house plans (“the Plans”) entitled
“Lakeview Cottage.” He purchased eight sets of the Plans and started the process of
selecting a contractor to build his “dream” home. He rejected two contractors. He
approached the Builder2 after noticing a “Weller Construction” sign on property in the
subdivision.
There is no dispute that the Owner wanted the “Lakeview Cottage” built for a target
price of $500,000 and, at least at the contract stage, he knew he would have to accept
modifications to the Plans to achieve this price. On February 12, 2008, after several
meetings, the parties signed a “Construction Contract” (“the Contract”). At the meetings, the
parties discussed modifications to the Plans. The Builder’s first cost estimate after several
conversations was $614,000. When the Owner reiterated the need to bring the price under
$500,000, further modifications brought the Builder’s price to $554,000. This number was
still above the Owner’s budget and more modifications were considered. The Builder’s third
estimate was $496,000. At that point the Owner added a few items back into the mix and the
parties agreed on a price, excluding the lot, of $501,686.
A general description of the house will be helpful. It has two stories of living space
above a full basement. The first floor is approximately 2100 square feet plus a three car
garage, a rear deck and the front porch. The second floor is approximately 500 square feet
with a studio room, a bathroom, a walk-in closet, and the option of either one or two
bedrooms. The interior features wood beams and hardwood floors for the most part. The
exterior features wood beams, stone, and cedar shake siding. For the reader’s benefit we
have shown, as Figure 1., a reduced image of the house shown on sheet E1 of the Plans.
1
In addition to the Owner, his wife, Patricia Meredith, was named as a plaintiff in the complaint. She
did not sign the contract with the Builder and did not testify at trial. Her claim was dismissed before the
court entered its judgment. She has not appealed. We will refer to the plaintiff in the singular.
2
The complaint names Kenneth L. Weller, individually, and further identifies him as dba Weller
Construction. It also names Weller Construction, LLC, as a defendant. For simplicity, we use the reference
“the Builder” to include all of these defendants.
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Figure 1.
A photograph of the completed house, overlooking Lake Chickamauga, is in Figure 2.
Figure 2.
There are three documents that are part of the Contract. The first is the “Building
Plans,” which is the document we have identified as “the Plans.” Pages A1, A2 and B1 of
the Plans contain handwritten modifications and the initials of both parties signifying their
agreement to those modifications. The modifications include omission of one fireplace,
omission of a closet, reduction in the size of a deck, selection of the single upstairs bedroom
option, and an unfinished basement. The second document is a “Building Specifications
Sheet” (“the Specifications”), which is actually multiple pages. It is likewise initialed by
both the Builder and the Owner. Among other things, it states that the garage is to have
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“three standard [7 foot by 9 foot] insulated garage doors.” With reference to the upstairs, or
“second floor,” it refers to only one bedroom and a studio. The third document is an
“Allowance Sheet,” which, again, is several pages in length, from which the Owner could
choose up to $153,400 in allowance items to “be incorporated into construction.” Allowance
items are assigned a cost. The Owner receives a credit for any allowance item that is less
than the assigned cost and pays extra for any item that is more expensive than the assigned
cost. The Allowance Sheet contains a warning that “[a]llowances have been figured at
minimum cost” and that “[the Owner] should expect to go over the allowance amount in
several categories.” Examples of allowance items are interior doors, kitchen and bath
cabinets, lighting fixtures, stairs, windows, and interior trim.
The Owner financed the construction through Branch Banking & Trust (“BB&T”).
BB&T was to pay the Builder in draws as the work progressed. On or about September 29,
2008, the Builder sent the Owner an email stating that the “final total of overages & extras
is $10,372.” He asked for a reimbursement check. On or about October 4, 2008, the Owner
gave the Builder a “check for the keys” and both parties signed an undated document that
states:
The construction of a custom residence at 2444 Burton Road,
Sale Creek, Tennessee for [the Owner] has been completed. . . .
All work on the interior and exterior of the house is
complete. . . . Final payment of all overages has been made by
the [Owner].
At that point, however, BB&T had not made its final disbursement to the Builder in the
approximate amount of $50,000. When BB&T did make the final disbursement on or about
October 15, 2008, the total of payments to the Builder, according to the bank’s records, fell
short of the contract price of $501,686 by $4,481.52. The Builder notified the Owner of the
shortfall.3 BB&T confirmed the shortfall to the Owner, but the Owner did not pay it to the
Builder. The Owner took the position that the document acknowledging payment of “all
overages” covered any and all payments due. The Builder, in turn, refused to perform
warranty work. The Contract contains a waiver by the Owner in bold print of “any and all
rights and remedies under the . . . [w]arranty if there is any money owed to the [Builder] . . .
unless such money is placed in escrow.” After commencing this action, the Owner did place
$4,481.53 in escrow with the trial court. The Builder then performed corrections that he
considered to fall within the warranty and refused to perform work for corrections that he
viewed as outside the warranty.
3
The Builder’s number was $4,481.53, one cent more than BB&T’s number.
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The trial court commented on certain communications from the Owner to the Builder
that provide some insight as to when and how the relationship went sour:
[The Owner] wrote on May 10, 2008, . . . that “I am very
pleased with the quality and speed of work so far.” [The
Owner] states in . . . an email dated May 27, 2008, that he was
“thrilled with the progress til I saw the windows in the
front.” . . . On July 28, 2008, . . . [the Owner] said he was very
pleased with the quality of everything that has been done. In a
string of emails, . . . [the Owner] states that “[o]ther than the
windows in the front, the house is the house I want.”
The court believes the emails hold other evidence of some of the
issues that made this such an explosive case. In a June 24, 2008
email, [the Owner] writes that “Patti [Mrs. Meredith] never read
the contract and was unaware of the restrictions and potential
extra costs.” The [Owner] pushed to increase and restore the
house toward the [P]lans. This increased their costs, which
adversely affected their cash flow. [The Builder] became
adamant about being paid the balance. [The Owner] had some
issues occur and [the Builder] would not do any warranty work
without being paid in full.
The Owner commenced this action on July 6, 2009. The complaint alleges breach of
contract, defective construction, lack of good and sufficient workmanship, violation of the
implied warranty of good workmanship, negligence, negligent and intentional
misrepresentation, and violation of the TCPA. An amendment to the complaint adds a claim
of promissory estoppel. As amended, the complaint asks for damages of $300,000 to be
trebled under the TCPA to $900,000 or, alternatively, punitive damages of $200,000. The
Builder’s answer includes a counterclaim that demands the unpaid balance due on the
Contract. Both parties ask for attorney fees under the TCPA as well as the Contract. The
Contract contains a “Litigation Fees” clause that requires the losing party to pay “all costs
of litigation including reasonable attorney’s fees” to the “successful party.”
It is impossible and impracticable to identify each and every criticism the Owner
leveled at the Builder in the course of an eight-day trial. The trial court accurately
characterized them as falling within
two groupings. First, [The Owner] claim[s] the [Builder] did
not construct the dwelling in accordance with the architect’s
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plans and other contract documents. Second, [the Owner
alleges] that the [Builder] did not complete all of the work and
that some of the construction work was defective.
With two minor exceptions, the court found the Owner’s claims to be completely without
merit. We will attempt to set out the problems of which the Owner complains, the proof, and
the court’s resolution as to each alleged problem.
ELIMINATION OF SECOND
BEDROOM ON SECOND FLOOR
The Owner admitted that he initialed page A-2 of the Plans beside the handwritten
note, “This opt for 2nd level” with an arrow pointing to the version of the second story floor
plan providing for only one bedroom upstairs. The Owner claimed he was “tricked” into
initialing something that it would have been preposterous for him to have accepted. The
Owner claimed that no sensible homeowner would build an expensive house with only two
bedrooms total.4 The Owner claimed also that other items omitted from the Plans were
indicated by the word “omit” and that since there was no “omit” on page A-2, he did not
understand that the second bedroom on the second floor was being omitted. The Owner
claimed that the first time he was aware that he was only getting one bedroom upstairs was
on April 2, 2008, when he visited the site with his wife and noticed that there was framing
for only one upstairs bedroom. He claimed that is when he first received and initialed the
Specifications.
The Builder testified that the option of one bedroom upstairs was specifically
discussed and chosen by the Owner as part of the need to keep costs down. The Builder also
introduced proof that the house, if built in strict compliance with the Plans with a second
bedroom on the second floor, would have intruded upon mandatory setbacks. The Builder
acknowledged that, if the Plans had been modified, a second bedroom could have been built
on the second floor in a way that would have complied with the setbacks. The Builder
testified that all documents including the Specifications were signed at the same time. The
Builder introduced proof that the framing was not in place at the time of the Owner’s
visitation on April 2, 2008. The footers were then barely in place.
On this issue, among others, the court
did not find [the Owner] to be credible. The big issues he
asserted, signing [the] Specifications in April, not agreeing to
4
By the time of trial, the Owner had added a third bedroom in the basement.
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only one bedroom upstairs, the size of the garage doors, and not
agreeing to a ventless fireplace in lieu of the wood-burning
fireplace, went against him. [The Owner’s] credibility was
damaged greatly and the court did not believe his testimony on
these issues. On the other hand, [the Builder] appeared calm
during the trial and the court found his testimony to be credible
and confirmed by the testimony of other witnesses. . . .
The court made extensive and specific findings with regard to a single bedroom on
the second story.
[The Owner] says he was tricked or made a mistake with regard
to Sheet A-2. He asserts that the other changes said “omit.” So,
he thought this writing said omit. The court cannot accept [the
Owner’s] version. One, there are 3 “omits” and one “reduction
size change” on Sheet A-1. Two, the phrase on A-2 is much
longer than the word “omit.” [The Owner] should read what is
written and what he initials. The law in Tennessee is clear [that
a person cannot sign a writing and deny that it expresses the
agreement he made] . . .
* * *
The . . . Specifications were introduced as Trial Exhibit 9. . . .
The description of the second floor is found on page 2 of the
Specifications. Trial Exhibit 9 provides the Specifications for
the studio and the guest bedroom. Only one bedroom is
mentioned. The term “bedroom” is not mentioned in the plural
in the Specifications.
. . . [The Owner] attempts to escape the terms and provisions in
the Specifications by pointing out that there is no date on the . . .
Specifications. The parties did not insert a date beside their
initials on the house plans either. . . . [The Owner] says he . . .
initialed Trial Exhibit 9 on April 2, 2008. He remembers the
date because there was a note in his day timer, Trial Exhibit 140,
and that was the date he went to the house and noticed only one
bedroom upstairs. Indeed, in his first deposition . . . [the
Owner] testified he noticed the one bedroom in mid-March. . . .
Both dates were proven incorrect because the framing for the
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house had not started on April 2, 2008. On rebuttal, [the
Owner] stuck to his story about the framing but conceded the
date was wrong.
In addition to the contract documents, [the Owner] also has
problems with waiver. For example, if [the Owner] was correct
that he knew for the first time that there was only going to be
one bedroom upstairs when he saw the rooms framed, he should
have stopped work at that point until the issue was resolved. He
did not. Even Don Walker, [the Owner’s] building expert, said
such and said it was too late to change the number of bedrooms
after the house is completed. [The Owner] could use the studio
as a second bedroom.
The second bedroom would have extended the exterior of the
house beyond its boundaries. The Restrictive Covenants
prohibit a dwelling from being closer than ten feet to a lot line.
. . . The two bedroom alternative would have placed the house
within 9.1 feet of the lot line, according to a survey by David
Mathews. . . . [The Owner] had already moved the house once
as a result of discussions with a previous builder.
The court finds that the . . . Specifications were in existence and
were initialed on February 12, 2008 when the . . . Contract was
signed. The Specifications are referred to in Article I. of the . . .
Contract. If the Specifications were not present, [the Owner]
should have noted such on the . . . Contract and inquired about
the Specifications. The court does not find [the Owner’s]
testimony on the issue of when the Specifications were initialed
to be credible. The court accepts [the Builder’s] testimony in
regard to the Specifications and the date of signing. The
Contractor would have needed to have the Specifications
approved in order to commence the construction. Ms. Weller
also testified that the Specifications were signed on February 12,
2008. The Wellers produced a picture of their computer
showing the . . . Contract and Specifications were prepared on
February 11, 2008.
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THE ELIMINATION OF A WOOD-BURNING FIREPLACE
AND ELIMINATION OF ALL EXTERIOR CHIMNEYS
The Plans show multiple fireplaces and multiple exterior chimneys. The
Specifications call for a “vented 42 [inch] fireplace with stone hearth and face” in the
“keeping room” and a “42 [inch] ventless gas fireplace with stone hearth and face” in the
“lodge room.” The subject of fireplaces is also covered in the Allowance Sheet as follows:
“Fireplace Boxes, Venting, Mantle, Face, Hearth, Gas Line, & Fire Logs (Mat’ls & Labor):
$5,000 (Total of Two).” The house as built had two ventless gas fireplaces with no exterior
chimneys. There is no dispute that the company that supplied the fireboxes mistakenly
delivered two ventless units instead of one vented and one ventless unit. It is also undisputed
that the mistake was discovered before the installation was complete and the Builder was
willing to correct the mistake. Further, it is undisputed that the Owner agreed to accept a
ventless fireplace in the keeping room in place and instead of the vented fireplace. It is also
undisputed that a chimney for a ventless fireplace would serve no function. The Owner
claimed at trial that he did not understand that substitution of a second ventless fireplace
would eliminate the chimney and that the lack of a chimney detracts from the appearance of
the house.
As we have detailed above, the court found that the Owner agreed to the substitution
and that any testimony to the contrary was not credible. The court further found that the
fireplaces were an allowance item and the two ventless units
saved [the Owner] money ([he] used elsewhere). Despite his
agreement to the two ventless units, [the Owner] never “let go”
of his loss of the wood-burning fireplace.
SIZE AND TRIM FOR GARAGE DOORS
The Owner contends that he should have had 8 foot by 9 foot garage doors with
arched openings. That is the configuration in the Plans. However, the Specifications provide
for “three standard [7 foot by 9 foot] insulated garage doors.” The Builder testified that in
addition to agreeing to and knowing that the smaller doors were being used, the Owner made
the choice to compensate for the loss of arched openings by having the stone mason lay stone
arches over the garage doors.
Again, this was an issue on which the trial court found the Owner to be lacking in
credibility. Further, the court found that the configuration of the garage doors was controlled
by the Specifications.
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CHANGES IN THE ROOF LINE
The Plans reflect a complicated roof line with a myriad of different slope
configurations. The Owner complains that the house as build is just one big flat roof that
detracts from the appearance. The Builder testified that the house still has a complicated roof
line, with dormers, multiple gables and valleys. He testified that any changes to the roof line
were a necessary part of trying to reduce the price from approximately $1,000,000 which it
would have cost to build the house contemplated by the Plans, to the Owner’s budget of
$500,000. He testified that changes in the roof were discussed.
The court specifically found that changes to the roof line were made to reduce the
cost. In setting forth the background of the case, the court noted that changes to the roof
discussed by the parties were part of the basis for reducing the Builder’s cost estimate to the
final number of just over $501,000. The court further found that the Owner failed to object
to any changes in the roof line at a time when they could have been corrected, and, as a
consequence of this failure, implicitly waived any issue as to changes in the roof line.
OVERSPANNING
The Owner claimed that the Builder cut corners on the floor joist, ceiling joists and
rafters to save money by using lumber smaller than that reflected in the Plans and lumber that
did not meet code requirements. The term “overspanning” was used in the trial court to
describe the practice of spanning a distance too long for the size of the lumber used.
The Plans call for 14-inch manufactured floor joists. The Builder installed 11 7/8-inch
manufactured joists. The Owner presented the testimony of a home inspector who testified
that he measured the joists, particularly on a deck, and found them to be on 16-inch centers
and too small for the spans. On cross-examination he admitted that he made no notes of his
measurements. He claimed that he is able, without notes, to recall all the measurements he
makes in his inspections.
The Builder testified that the joists on the part of deck with a long span were actually
spaced on 12-inch centers and that the joists were, as installed, well within code and
manufacturer’s recommendations. He further testified that the joists he used were a version
manufactured with a wider flange which gives them more strength and span. Further, he
testified that the Owner’s expert did not take into account some support beams that reduced
the span of the joists on the main floor. The Builder supported his testimony with, among
other things, charts commonly used in the building trades showing acceptable spans, and
photographs of himself making measurements of the spacing and span of the joists and
support beams.
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The Owner complained that the rafters and ceiling joists are 2 by 6s but are supposed
to be 2 by 8s. His expert testified to measuring them but he acknowledged that he had not
made any notes of his measurements. The Builder admitted that the rafters are 2 by 6s but
testified that the ceiling joists are 2 by 8s . The Builder further testified that the rafters are
braced and that, as braced, the 2 by 6 rafters are stronger and more dependable over time than
the 2 by 8s would be. According to the Builder, this principle is illustrated by the use of
trusses, most of which employ 2 by 4s with liberal bracing. The Builder testified that over
time the unbraced 2 by 8s will sag while braced 2 by 6s will not. One of the Builder’s
witnesses was a registered structural engineer who testified that the structural members,
including the floor joists and rafters, are within code requirements. The Owner did not cross-
examine that expert.
The trial court lumped all the “spanning issues” together. It summarized the testimony
on the issue and found
that [the Owner] has not proved any unsafe or improper
spanning. The [Builder’s] adding a support beam to the floor
system handled one floor span issue. Numerous pictures and
documents showing acceptable spans were introduced.
Despite finding that the bracing was adequate with regard to strength and spanning
issues, the court did find some problems in the attic for which it allowed the Owner $1,500
out of the funds previously paid by him into escrow. Specifically, the court found:
The bracing works but there are exposed, but bent, [n]ails. The
insulation has been knocked down and appeared to be lacking in
a few areas. [The Owner] thought he could use the attic for
storage but the issue was never discussed between the parties.
* * *
. . . . The court also allows [the Owner] $1,500 for the attic. The
bracing is rather poorly done in places. Although the Hamilton
County inspectors did not note any attic insulation problems,
there are now a few places where the insulation is shallow.
Some places appear to have inadequate insulation. [The Owner]
can use this $1,500 as he sees fit. . . .
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FIBERGLASS TUB ENCLOSURE IN
SECOND STORY BATHROOM
The Owner complained that the Plans call for a cast iron tub and tile enclosure for the
second story bathroom and that the Builder made the unauthorized substitution of a fiberglass
tub and shower enclosure. However, the Specifications provide for a “5[-foot] fiberglass tub-
shower with chrome shower door.” The court found that the Specifications were part of the
Contract from the February 12, 2008, signing date and defeated the Owner’s contention.
UNTEMPERED GLASS IN WINDOWS
By all accounts, the house has a spectacular view of Lake Chickamauga. To
maximize the view, the house incorporates numerous windows on the side facing the Lake.
The Owner’s home inspector testified that the windows were not made of tempered glass as
required by code. The inspector was cross-examined by use of the building code section that
he relied upon for his testimony. However, the trial court found that the Owner’s expert
clearly misconstrued that section to require tempered glass if any one of four conditions were
present when, in truth, “[f]our requirements were needed for the mandatory use of safety
glass windows.” One of those four requirements was that the “[b]ottom edge [be] less than
18 inches (457 mm) above the floor.” The same expert testified that even though he made
no notes of his measurements, the bottom edge of the window was less than 18 inches from
the floor. The Owner testified that he measured the windows and that they were 21 inches
from the floor. The Owner supported his testimony with photographs of his measurements.
The court found that the “windows were not within 18 inches of the floor.”
CUPPED FLOORING
The Owner testified that water blew in around windows during a storm and that the
hardwood flooring in that area “cupped.” The Builder did not dispute that the flooring had
indeed cupped and he admitted that cupping is usually from moisture from some source.
However, the Builder testified that some repairs were made to the floor before the
completion document was signed and that at the final walkthrough the floor was not
damaged. The Builder did not believe any problems that arose after the final walkthrough
should be his responsibility because of the waiver of warranty provision in the Contract and
the Owner’s refusal to pay the balance owed until after this action was commenced.
The court sided with the Builder. It noted that there was no mention of the problem
until after the final walkthrough and that the Owner did not pay the balance owed or take any
steps to cure the problem despite knowing that it existed. The court found that any damage
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had been done by the time the Owner paid the balance owed into escrow and that the Owner
“cannot recover because he failed to mitigate his damages.”
SEWER PUMP
The basement is located below the grade of the sewer system. Waste water from the
basement level must be pumped to the level of the ground floor. The Contract requires the
Builder to provide “rough in” plumbing for the basement, including the pump. The Owner
finished part of the basement, including a bathroom, after the completion documents were
signed. In the course of doing that, the Owner found that the pump was rusted and not
operational. The Owner testified that the electrical wires to the pump were cut and surmised
that the Builder installed a used, non-functional pump. The Builder testified that a
subcontractor installed a new pump. The Owner called the plumbing subcontractor as a
witness. The plumbing subcontractor testified that he did not install the pump in the
basement.
The court found that the Owner was entitled to recover the contract price for the pump
but stopped short of finding that the Builder violated the Contract with regard to the pump.
The court simply stated
there was to be a septic pump installed in the basement floor.
The hole was prepared and the pump was placed in the hole.
Later the pump was hooked up and covered. In the interim there
was water in the hole and rust occurred. The pump should be
replaced.
The court awarded the Owner $410.67 out of the funds in escrow to cover the cost of
replacing the pump.
LACK OF STEPS TO FRONT PORCH
The Plans show a front porch with “stone steps per grade.” As constructed the porch
is close enough to ground level that no steps are present. The Owner’s position at trial was
that the lack of steps turned what was supposed to be porch into a “cheap looking” patio. It
was the Owner’s position that the lack of steps is a breach of the Contract because of the
deviation from the Plans. The Builder testified that the finished grade of the lot chosen by
the Owners was such that steps were not practical. The Builder also pointed to a provision
in the Contract that states:
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It is also understood by the [Owner] that the measurements on
the Drawings/Plans and in the Specifications language will not
always agree with the actual field measurements and visual
expectations.
The trial court found that the “problem was a relatively flat yard” that would have
required either raising the house or lowering the grade of the yard to accommodate steps.
The court did not expressly state whether or not the lack of steps was a violation of the
Contract. However, it did expressly state that other than the problems with the sewer pump
and the attic, the Owner failed to prove any of his numerous claims.
DEBRIS AND GRADING
The Owner testified that the yard was unevenly graded and that it was strewn with
debris, such as pieces of plastic pipe, litter, bottles and cans. He introduced numerous
photographs of the debris. The Builder testified that he graded and seeded the yard properly
and that, when his crew left, the yard was free of debris. It is undisputed that after the
Builder left the premises, the Owner had other people working on a boat dock and pathway
from the house to the dock, along with landscaping. Also, the Owner had other contractors
present working on the basement and cedar siding. In May of 2010, after the Owner paid the
balance of the Contract price into the court, the Builder performed some remedial grading
and sodding. The Builder and one of his employees testified that when they did the remedial
work there was a deep rut along one side of the driveway caused by the tires of a vehicle.
The trial court found the Owner
did not prove the debris, bottles, and cans in the backyard came
from the [Builder’s] agents or employees. [The Owner] hired
others to build a walled walkway to the river. Also, he
employed another contractor to finish the basement. These
people were at the . . . home after the [Builder’s] agents left.
[The Owner] made no complaint about debris before the closing.
The yard’s problems were due in part to a truck coming off the
driveway and running over the irrigation pipe. A rut was caused
by the truck. The [Builder] did some resodding in this area and
more sodding was done in May of 2010.
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LACK OF CHANGE ORDERS
The Owner testified that the Contract requires that any changes to the Contract be the
subject of a written change order. He testified that the Builder deviated from the Plans in the
ways we have set forth above and others without presenting even one change order. He
admitted on cross-examination that he took several copies of the change order form and
could have prepared change orders himself. The Builder testified that it is his practice to
only use change orders on substantial changes and that none of the changes to the house at
issue were, in his opinion, substantial enough to warrant a change order.
The court found, first, that the parties modified the Plans substantially in the
negotiations that led to the signing of the Contract. These modifications included things that
were expressly mentioned in the writing, such as the size of garage doors, as well as things
that were not expressly mentioned, such as changes in the roof and other features to
accommodate the Owner’s budget. The pre-signing modifications covered “most” of the
departures from the Plans and were part and parcel of the Contract. As to changes not
expressly covered by the written contract, the court found that the Owner had waived the
requirement of a change order by requesting and allowing changes to be made without
insisting on change orders. Further, the court found that the Owner had ratified the changes
by signing the completion documents without reserving any objections.
Regarding the Builder’s claim to the unpaid balance of the price of the Contract, the
court found “[t]here is no doubt that [the Owner] owes the balance due.” The court accepted
the lending bank’s record of construction draws and found that the amount owed is
$4,481.52, exactly one cent less than the amount claimed by the Builder. The court then
allowed the Owner “offsets or credits” of $410.67 for the sewer pump and $1,500 for the
attic for a total of $1,910.68 to be paid by the clerk and master to the Owner from the funds
in escrow. Except for this award, the court dismissed all claims made by the Owner with
prejudice. The court ordered any remaining balance of the funds in escrow, after deduction
of court costs, to be paid to the Builder.
As to the claims for attorney’s fees under both the TCPA and the contract, the court
found that
[the Owner] has not been successful in proving that the
[Builder] . . . violated the TCPA. Instead, the court holds that
[the Owner’s] TCPA claims are “frivolous [and] without legal
or factual merit.” [The Builder] committed no act of fraud or
deceit. [The Builder] did not commit any unfair or deceptive
act. [The Owner] made a deal to change the house plans so he
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could afford the house. As the project neared completion, he
got buyer’s remorse and tried to get the [Builder] to restore, at
[the Builder’s] costs, some of the reductions to or changes in the
house. [The Owner’s] charges of [the Builder] tricking him,
defrauding him, and changing the construction plans unilaterally
were frivolous and had no basis in fact. Evidently, [the Owner]
thought he could have his home and recover from [the Builder]
half the money he spent for it.
Based upon the Affidavits, the court’s knowledge of this case,
and other attorneys’ charges in this community, the court awards
[the Builder] attorney’s fees against [the Owner] in the amount
of $45,000 [of the $54,207.50 requested]. This award is
justified under both the TCPA and the contractual provision.
The court knowingly has not granted [the Builder] their full
attorney’s fees because the court did grant [the Owner] some
relief, payable from the funds on deposit with the Clerk &
Master.
II.
The Owner raises the following issues on appeal, as taken verbatim from his brief:
Did the Court [e]rr in awarding the [Builder] attorney’s fees?
Did the Court [e]rr in not enforcing the contract provisions, thus
not finding a breach of contract, with all due credits and
amounts owed to the [Owner]?
The Builder raises the issue of whether he is “entitled to attorney’s fees for defending the
appeal of this case.”
III.
Our standard of review in this case is as stated in Morrison v. Allen, 338 S.W.3d 417,
425-26 (Tenn. 2011).
In a civil case heard without a jury, the trial court’s findings of
fact are presumed to be correct unless the evidence
preponderates otherwise. Tenn. R. App. P. 13(d); Langschmidt
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v. Langschmidt, 81 S.W.3d 741, 744 (Tenn. 2002). When
credibility and weight to be given testimony are involved,
considerable deference must be afforded to the trial court when
the trial judge had the opportunity to observe the witness’
demeanor and to hear in-court testimony. Walton v. Young, 950
S.W.2d 956, 959 (Tenn. 1997) (quoting Randolph v. Randolph,
937 S.W.2d 815, 819 (Tenn. 1996)). Because trial courts are
able to observe the witnesses, assess their demeanor, and
evaluate other indicators of credibility, an assessment of
credibility will not be overturned on appeal absent clear and
convincing evidence to the contrary. Wells v. Bd. of Regents,
9 S.W.3d 779, 783 (Tenn. 1999). Questions of law are subject
to de novo review with no presumption of correctness. Seals v.
H & F, Inc., 301 S.W.3d 237, 241 (Tenn. 2010); Colonial
Pipeline Co. v. Morgan, 263 S.W.3d 827, 836 (Tenn. 2008)
(citing Perrin v. Gaylord Entm’t Co., 120 S.W.3d 823, 826
(Tenn. 2003)).
The interpretation of a written contract is a question of law. Allstate Ins. Co. v. Watson, 195
S.W.3d 609, 611 (Tenn. 2006). The decision whether or not to award attorney fees pursuant
to the TCPA is reviewed for abuse of discretion. Aslinger v. Price, No. E2006-00029-COA-
R3-CV, 2006 WL 2521566 at *8 (Tenn. Ct. App. E.S., filed Sept. 1, 2006) (citing Glanton
v. Bob Parks Realty, No. M2003-01144-COA-R3-CV, 2005 WL 1021559 at *9 (Tenn. Ct.
App. M.S., filed April 27, 2005)). However,
[w]hen the parties’ contract provides that the prevailing party is
entitled to reasonable attorney’s fees in litigation to enforce the
contract, the party who prevails is contractually entitled to
recover its reasonable attorney’s fees, and the trial court has no
discretion regarding whether to award attorney’s fees or not.
However, determining the amount of the attorney’s fee that is
reasonable is within the trial court’s discretion.
Hosier v. Crye-Leike Commercial, Inc., No. M2000-01182-COA-R3-CV, 2001 WL 799740at *6 (Tenn. Ct. App. M.S., filed July 17, 2001) (citations omitted).
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IV.
A.
Obviously, we need to address the issue of whether the trial court erred as to the
merits of the action before we consider whether it erred in awarding attorney’s fees to the
Builder. The Owner asserts two reasons that the trial court erred. The Owner argues that the
trial court erred in not holding the Builder to the strict terms of the Contract. The Owner
criticizes the trial court’s reliance on M.R. Stokes Company, Inc. v. Shular, M2006-02659-
COA-R3-CV, 2008 WL 544665 at *4 (Tenn. Ct. App. M.S., filed Feb. 26, 2008) for the
proposition that the requirement of change orders was waived. The Owner argues that in the
present case, unlike Shular, “[c]hanges were made by the [Builder], at the [Builder’s] doing.
Only afterward, would they be pointed out, or discovered after completion and never agreed
upon by the [Owner].”
There is no necessity for an extensive comparison of the present case to Shular. The
problem with the Owner’s position is that he is still trying to hold the Builder to the
obligation of building the exact house depicted in the Plans despite the overwhelming
evidence that the parties did not contract for that exact house. The trial court specifically
found that the Plans were modified significantly to accommodate the Owner’s budget, that
many of those changes were specifically discussed and included in the Contract as signed by
the parties and that, as the house neared completion, the Owner started trying to force the
Builder to build the house depicted in the Plans. The Owner’s testimony to the contrary was
found to be unbelievable. The trial court’s credibility determinations are binding on this
court absent clear and convincing evidence to the contrary. Morrison, 338 S.W.3d at 426.
The Owner did not come close to showing clear and convincing evidence to attack the trial
court’s credibility findings. To the extent there were changes from the Contract documents,
they were agreed to as found by the court. We have reviewed the record carefully and we
conclude that the evidence does not preponderate against the trial court’s findings as to the
requirements of the Contract or the quality and completion of the work. One example of the
many instances of the parties agreeing to something slightly different from the Contract is
the substitution of a second unvented fireplace. The record leaves no doubt that,
notwithstanding the lack of a change order, the Owner decided to accept a second unvented
fireplace. His argument that this type of change is a violation of the Contract is not
convincing.
The Owner also seems to suggest that the trial court erred in admitting parole evidence
of verbal agreements that varied the terms of the writing. Our review of the record shows
that the Owner – during his direct testimony as the first witness to testify – gave a lengthy
history of the dealings between the parties, including many agreements reached during the
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course of construction. The substitution of a second unvented fireplace was among the
subjects of his testimony. Even if we otherwise found merit to the suggestion, and we stress
that we do not, it would not be appropriate to relieve the Owner of any such error because
he introduced it into the record. See Tenn. R. App. P. 36(a).
The Owner also argues that even if the Builder is not held to the express terms of the
Contract, changes from the Contract saved the Builder money that he did not pass along to
the Owner. This argument suffers from the same problems as the above argument. It ignores
the evidence and the findings of the trial court. By reference to the example of the unvented
fireplace, the trial court considered the evidence and concluded that any money saved was
passed along to the Owner. There is no merit to the Owner’s argument that the Builder
changed the Contract to save himself money and did not pass those savings along to the
Owner. As the trial court expressly found, the parties worked mightily to find areas within
the Plans where costs could be shaved. The Contract incorporated those cost-saving
measures which the Owner now refuses to acknowledge. We hold that the trial court did not
err in finding that, with the very limited exceptions of the attic insulation and some cosmetic
issues in the attic, the Owner failed completely to prove his claims.
B.
We turn now to the Owner’s argument that the trial court erred in awarding the
Builder a portion of his attorney’s fees. The argument focuses primarily on the TCPA claim
and whether fees were properly awarded under the TCPA. The Owner argues that the award
is, in effect, punishment for not succeeding. He argues that such an approach is contrary to
the policy behind the TCPA. The trial court, however, went further than simply finding
against the Owner on his TCPA claim. The trial court specifically found that the claim was
“frivolous [and] without legal or factual merit.” (Brackets in original). The legislature has
specifically articulated a policy of discouraging TCPA actions that are frivolous and without
merit by allowing attorney’s fees against the persons who file such actions. Tenn. Code Ann.
§ 47-18-109(e)(2)(Supp. 2011). The court found that, contrary to the Owner’s allegations,
the Builder did not engage in deceit or unfair practices. It also made the determination that
the Owner was not believable. The court clearly believed that the Owner knew the Builder
had not engaged in any deceit. The court did not penalize the Owner; it simply applied the
TCPA according to its terms to a party that it found had misused the TCPA.
Moreover, the trial court specifically found that attorney’s fees were in order under
both the TCPA and the Contract. The primary argument the Owner makes against the award
of attorney’s fees under the litigation expense clause of the Contract is that “both parties
prevailed under the Chancellor’s ruling.” The Owner references his recovery of $1,910.68
of the monies placed in escrow.
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The law is not on the Owner’s side with respect to this issue:
Tennessee courts have defined “prevailing party” for purposes
of attorney’s fees clauses in contracts as “the party to a suit who
successfully prosecutes the action or successfully defends
against it, prevailing on the main issue, even though not
necessarily to the extent of his original contention. The one in
whose favor the decision or verdict is rendered and judgment
entered.” D airy G old, Inc. v. Thom as, N o.
E2001-02463-COA-R3-CV, 2002 Tenn. App. LEXIS 548, at
*10 (Tenn. Ct. App. July 29, 2002) (quoting Black’s Law
Dictionary 1188 (6th ed.1990)).
Clark v. Rhea, M2002-02717-COA-R3-CV, 2004 WL 63476 at *3 (Tenn. Ct. App. M.S.,
filed Jan. 13, 2004). There can be no doubt that the Builder prevailed on the “main issue”
in this case. The Owner is the party who initiated this action. He sought $300,000 in
damages, trebled to $900,000, and, as an alternative to triple damages, punitive damages.
In defending those claims, the Builder was successful by any standard. Further, the Builder
was successful in proving that there was an unpaid balance due under the Contract. We find
no merit to the argument that the trial court erred in awarding the Builder a portion of his
attorney’s fees.
V.
The Builder argues that, for several reasons, he is entitled to his attorney’s fees
incurred in defending this appeal. He argues that the appeal is frivolous, and, alternatively,
that he is entitled to attorney’s fees under the Contract as the prevailing party. We agree with
the latter argument and therefore do not decide the former. The Builder is the successful
party on appeal and the appeal is, by the choice of the Owner, a necessary part of this
litigation. Under the terms of the Contract, the Owner is entitled to “reasonable attorney’s
fees.” We will leave the amount to be determined by the trial court on remand.
VI.
The judgment of the trial court is affirmed. Costs on appeal are taxed to the appellant,
Robert F. Meredith. The Builder is awarded reasonable attorney’s fees incurred in defending
this appeal. This case is remanded to the trial court, pursuant to applicable law, for
determination of a reasonable attorney’s fee, for enforcement of the judgment, and for
collection of costs assessed by the trial court.
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_______________________________
CHARLES D. SUSANO, JR., JUDGE
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