RICHARD HARKLEROAD, ET AL.
FRONTIER BUILDING AND DEVELOPMENT, INC.
Session Date January 15, 2015
Appeal from the Circuit Court for Knox County No. 227212 Harold Wimberly, Jr., Judge
Margaret W. Vinsant, Knoxville, Tennessee, for the appellants, Richard and Shannon Harkleroad.
R. Deno Cole, Knoxville, Tennessee, for the appellee, Frontier Building and Development, Inc. 
D. Michael Swiney, J., delivered the opinion of the court, in which Charles D. Susano, Jr., C.J., and Thomas R. Frierson, II, J., joined.
D. MICHAEL SWINEY, JUDGE
In October 2011, the Harkleroads sued Frontier in the General Sessions Court for Knox County for breach of contract related to Frontier's construction work on the Harkleroads' residence. The Harkleroads non-suited the case and refiled in March 2012. In April 2012, Frontier filed a counterclaim for breach of contract against the Harkleroads. The General Sessions Court heard the matter in May 2012, after which both parties appealed to the Trial Court for a de novo hearing. This case was tried in January 2013.
The Harkleroads entered into a contract ("the Contract") with Frontier in February 2008. Under the Contract, Frontier was to build a home for the Harkleroads. The Contract was a "cost-plus" contract, with the final price to consist of the actual labor and material costs plus 15% above the actual cost of the project. Shawn Roderiques and Christian Johnson, the owners of Frontier, signed the Contract for Frontier.
Richard Harkleroad testified. Mr. Harkleroad stated that he and his wife chose Frontier to build their home because they had seen the quality of Frontier's other work. Frontier estimated the cost of construction to be $527, 275.00. The parties agreed that this figure was not set in stone. The Harkleroads visited the property regularly during the construction. The parties had a practice of making changes verbally or by email. The parties never executed any formal change orders during construction.
By October 2008, the project was running over the estimated cost by about $40, 000. The Harkleroads made efforts to cut costs by, among other things, undertaking to do the landscaping and sodding themselves. Frontier did not do the landscaping in the front and backyards as was originally planned.
After moving into the house, the Harkleroads began experiencing water and flooding problems. In December 2008, the roof began leaking around the chimney causing damage in the master bedroom on the main floor and the den in the basement. The roof around the chimney was repaired by Frontier and K.C. Construction in April 2009. Additional water issues emerged. According to Mr. Harkleroad, the grading of the backyard sloping caused water problems around the back of the house. Photographs of the affected area were admitted into evidence.
In response to the Harkleroads' request for help, Frontier installed a French drain in the backyard at no cost to the Harkleroads. This reduced the level of flooding but did not completely resolve the problem. The Harkleroads completed their final walkthrough of the home in December 2008. Mr. Harkleroad shook hands with Mr. Roderiques and Mr. Johnson and thanked them for their work. While Article 10.1 of the Contract provided a one-year builder's warranty, Mr. Harkleroad testified that he never received any written warranty.
Shannon Harkleroad testified. The Harkleroads' home was substantially completed in November 2008. The family moved into the house in December 2008. Mrs. Harkleroad testified that Frontier returned to the house to effect repairs multiple times through July 2009. According to Mrs. Harkleroad, a number of problems never were fixed by Frontier. In February 2010, the Harkleroads sent Frontier a letter detailing the various outstanding issues. No reply from Frontier was forthcoming. The Harkleroads had not submitted payment on the 2009 invoice from Frontier for work it did repairing the interior water damage. By the time this case was filed, there were three main problem areas with the home: the grading of the backyard, the driveway, and the front and back porches. In September 2011, in response to a letter from the Harkleroads outlining their problems, Frontier responded by denying liability or defects. Mrs. Harkleroad testified to the ...