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Eagle CDI, Inc. v. Orr

Court of Appeals of Tennessee

May 31, 2017

EAGLE CDI, INC., ET AL.
v.
MICHAEL J. ORR, ET AL.

         Session: January 24, 2017

         Appeal from the Chancery Court for Monroe County No. 18-704 J. Michael Sharp, Judge No. E2016-01399-COA-R3-CV

         This appeal involves a contract dispute between a general contracting company and a husband and wife who sought the company's assistance to build a log cabin home. After the husband and wife defaulted on the original construction contract, the husband and wife and the company signed a second contract, a promissory note, for the remaining balance. The husband and wife subsequently defaulted on the promissory note. The trial court held that the husband and wife breached the second contract, the terms were clear and unambiguous, and a potential ambiguity in the first contract regarding a non-refundable deposit and/or retainer was legally irrelevant in determining the amount owed under the second contract. Because the second contract was clear and unambiguous, we hold that the total sum owed by the husband and wife is proper despite any ambiguity in the first contract. Further, we hold that the trial court properly denied the husband and wife's motion to amend their answer because of undue delay. Accordingly, we affirm the trial court's judgment.

         Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Chancery Court Affirmed; Case Remanded

          D. Mitchell Bryant, Athens, Tennessee, for the appellants, Michael J Orr and Mary E Orr.

          Gary M. Prince and N. Craig Strand, Knoxville, Tennessee, for the appellees, Eagle CDI, Inc. and Dan Mitchell.

          John W. McClarty, J., delivered the opinion of the Court, in which D. Michael Swiney, C.J., and Frank G. Clement, P.J., M.S., joined.

          OPINION

          JOHN W. MCCLARTY, JUDGE

         I. BACKGROUND

         This appeal arises from a contract dispute between Eagle CDI, Inc. ("Eagle"), its president Dan Mitchell ("Mitchell") and Mr. Michael Orr and Mrs. Mary Orr (collectively "the Orrs" and individually "Mr. Orr" and "Mrs. Orr"). The Orrs were seeking to build a log cabin house in Monroe County, Tennessee. The Orrs purchased a log cabin kit and then contacted Eagle, a general contractor, with the purpose of contracting for Eagle to aid in the construction process. The Orrs and Eagle entered into the Construction Contract on February 1, 2013.

         The pertinent aspects of the Construction Contract described the costs to be paid to Eagle as follows:

         CONTRACTOR shall be compensated for services herein on a modified cost plus basis. Cost shall be defined as follows:

(a) The materials and equipment reasonably and necessarily incurred in the construction herein.
(b) Permits
(c) Actual cost of on-site utilities, insurance
(d) Actual costs of sub-contract items
(e) The CONTRACTOR shall receive an Administrative Expense to be calculated at a rate of 15.5% of the costs stated above.
In addition to the costs described above, the CONTRACTOR shall receive additional compensation to be calculated as 10% of the costs stated above.
* * *
All sums shall be paid as follow: A Non-Refundable Deposit in the amount of $45, 000 based upon the estimated scope of work requested to perform for construction of $498, 430.62, with draws based upon work completion and this contract.

The record is undisputed that on February 4, 2013, the Orrs paid Eagle the $45, 000 sum contracted for in the second clause quoted above. Eagle submitted Invoice #730 to the Orrs concerning the $45, 000 payment. The invoice reflected the full payment of $45, 000 by the Orrs. The Description column on the invoice stated "ECDI DEPOSIT INVOICE NON-REFUNDABLE ...


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