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Commercial Painting Co. Inc. v. Weitz Co. LLC

Court of Appeals of Tennessee, Jackson

November 18, 2014


Session Date July 23, 2014

Appeal from the Chancery Court for Shelby County No. CH0615733 Kenny W. Armstrong, Chancellor

Scott A. Frick, Memphis, Tennessee, for the appellant, Commercial Painting Company, Inc. Jeffrey C. Smith, Memphis, Tennessee, for the appellee, The Weitz Company, LLC.

Holly Streeter-Schaefer, Kansas City, Missouri, admitted Pro Hac Vice, for the appellee, The Weitz Company, LLC.

J. Steven Stafford, J., delivered the opinion of the Court, in which David R. Farmer, J., and Robert L. Childers, Sp. J., joined.




This case arises over a contract dispute between general contractor, Defendant/Appellee The Weitz Company, Inc. ("Weitz"), and its dry-wall subcontractor, Plaintiff/Appellant Commercial Painting Company, Inc. ("Commercial Painting"). Weitz is a foreign limited liability company who was employed to construct a multi-building retirement community in Germantown, Tennessee. Commercial Painting is a closely-held Tennessee corporation owned by Mark Koch. Commercial Painting's primary business is performing commercial and residential construction wallcovering, painting, drywall installation, metal stud installation, and other projects.

The contract at issue involved the construction of a multi-building facility in Shelby County. After Commercial Painting successfully bid on the project, in September of 2004, the parties entered into a subcontract for Commercial Painting to perform substantial work on the project. The subcontract provided that Commercial Painting would be paid $3, 222, 400.00 for its work on the project. Specifically, the subcontract obligated Commercial Painting to perform drywall installation throughout the project. In some places, Commercial Painting was required to perform a high level finish on the dry wall, in order that the wall could be painted. For the remainder of the contract obligations, however, Commercial Painting was only required to perform a mid-level finish on the walls. Whether Commercial Painting actually performed at this level would become an issue of much dispute as the project progressed.

Allegedly, at the time the parties entered into the subcontract, Weitz was already approximately six to eight months behind schedule on the project. Commercial Painting would later assert that Weitz improperly and unreasonably compressed construction schedules in order to make up for the delay on the project. According to Weitz, however, the project became further behind once Commercial Painting began working on the project in the winter of 2004 due to Commercial Painting's allegedly poor worksmanship and failure to provide enough workers to timely complete the project. Because of this, Weitz allegedly began negotiating with the project owner regarding an extension on the contract completion date. It appears that the project owner eventually allowed a six-month extension, but Commercial Painting was only informed that an extension of approximately four months had been granted. According to Commercial Painting, Weitz intentionally and fraudulently failed to disclose the full extent of the extension, in violation of the letter and spirit of the contract.[1]Even with the extension, however, Commercial Painting alleged that Weitz continued to compress its schedules and improperly supplement its work because the extension did not entirely mitigate the eight-month delay on the project.

As previously discussed, the parties also disagreed as to the level of work required by the contract, and both parties asserted that they incurred additional delays and additional costs to bring the work to the desired level. Eventually, Weitz hired additional workers to supplement the work done by Commercial Painting, alleging that it was required due to Commercial Painting's delays. Commercial Painting objected to the supplementation and later alleged that they were required to perform even more work to correct the work of the supplemental workers. At the conclusion of the contract, Weitz paid Commercial Painting on Pay Applications 1 through 12. However, Weitz refused to pay Commercial Painting on Pay Applications 13 through 17, which allegedly included previously agreed-upon work, as well as additional work beyond the contract amount.

Commercial Painting filed a complaint for damages on August 11, 2006, seeking an award of $1, 929, 428.74, constituting damages for unpaid progress payments, interest on retainage, extra work, unjust enrichment, plus attorney's fees and interest. In addition to its claims against Weitz, Commercial Painting also sought a judgment against Weitz's sureties. Weitz filed an Answer and Counterclaim on January 24, 2007, seeking $500, 000 for costs incurred on the project due to delays caused by Commercial Painting. Weitz claimed an additional $233, 217.51, representing damages under the liquidated damages provisions of the parties' contract, as well as increased management expenses resulting from the need for additional supervision of the supplemental workers retained by Weitz to complete the project.

On February 10, 2009, Weitz filed a Motion for Partial Summary Judgment pertaining to Commercial Painting's contract claims, arguing that Commercial Painting had waived its right to payment of some of its claims by its failure to comply with the modification terms in the subcontract. In response, in the fall of 2009, Commercial Painting filed two motions to amend its complaint to assert additional causes of action in tort, as well as a claim for punitive damages on the basis that the construction schedule attached to the subcontract was inaccurate and inconsistent with alleged statements about the schedule. The trial court granted Commercial Painting's request to amend its complaint on October 29, 2009. Accordingly, Commercial Painting filed an Amended Complaint on November 25, 2009. In addition to its prior contract claims, Commercial Painting raised additional claims for fraud, intentional and negligent misrepresentation, and rescission/reformation of the subcontract. Specifically with regard to rescission, Commercial Painting contended that the subcontract "should be rescinded in its entirety, or in the alternative, reformed to adjust the subcontract price to include additional compensation to [Commercial Painting] for work, labor, and materials[, ] which [Commercial Painting] has provided and incorporated into the Project." Finally, Commercial Painting sought punitive damages against Weitz in the amount of $10, 000, 000.00.

On October 19, 2010, Weitz filed an additional Motion for Partial Summary Judgment seeking summary dismissal of Commercial Painting's tort, rescission, and punitive damages claims. On July 15, 2011, the trial court granted the Motion for Partial Summary Judgment, and dismissed Commercial Painting's tort, rescission, and punitive damages claims. The court concluded that Commercial Painting could not establish it justifiably relied on any representations regarding the construction schedule, durations, or sequencing of the construction activities and that it could not establish it suffered any damages above and beyond the damages incurred for breach of contract.

On July 28, 2011, Commercial Painting filed a Motion to Reconsider, or in the alternative for Permission to Appeal to this Court, which was denied by the trial court by order of August 11, 2011. On August 28, 2011, the trial court entered an order denying Weitz's original Motion for Summary Judgment pertaining to Commercial Painting's contractual claims.

A bench trial commenced on January 9, 2012. At the conclusion of the proof, the trial court directed both parties to prepare proposed findings of fact and conclusions of law prior to closing arguments. Commercial Painting and Weitz complied with the trial court's order and closing arguments occurred on November 26, 2012. At the conclusion of this hearing, however, the trial court provided the parties the opportunity to submit revised proposed findings of facts and conclusions of law.

On March 6, 2013, the trial court entered its Memorandum Opinion, and awarded Commercial Painting a judgment of $450, 464.26. Both parties filed timely Motions to Alter or Amend the Judgment. On August 1, 2013, the trial court entered an Order reducing the award entered by the trial court in the Memorandum Opinion Order to $448, 874.26. The trial court further awarded Commercial Painting $75, 000.00 in attorney's fees, and $50, 000.00 in expert's fees, thus increasing the total amount of the judgment to $573, 874.26.

The judgment against Weitz was partially satisfied and a notice of partial satisfaction of judgment was filed in the trial court on August 2, 2013. On August 12, 2013, Weitz filed a Motion for attorney's fees. Commercial Painting and Weitz filed Notices of Appeal on August 23, 2013, and August 29, 2013, respectively. On September 27, 2013, the trial court entered an Order denying Weitz's Motion ...

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