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Hoover, Inc. v. Ashby Communities, LLC

Court of Appeals of Tennessee, Nashville

November 28, 2017

HOOVER, INC.
v.
ASHBY COMMUNITIES, LLC, ET AL.

          Session May 24, 2017

         Appeal from the Chancery Court for Williamson County No. 38167 James G. Martin, III, Judge

         An asphalt paving company brought suit against the developer of a subdivision, and its managing member and guarantor, for breach of contract based on the developer's failure to pay for services rendered under the contract. The developer answered, asserting multiple affirmative defenses, and counterclaimed, asserting that the company breached the contract, violated the Tennessee Consumer Protection Act, and mispresented that it would perform the work for the price specified in the contract. The trial court held that the developer breached the contract by failing to pay and awarded damages, interest, and attorney's fees to the paving company. The developer appeals. Upon a thorough review of the record, we affirm the judgment in all respects.

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

          John A. Barney, Franklin, Tennessee, for the appellants; Ashby Communities, LLC, and John Powell.

          G. Sumner R. Bouldin, Jr., Murfreesboro, Tennessee, for the appellee, Hoover, Inc.

          Richard H. Dinkins, J., delivered the opinion of the court, in which Frank G. Clement, Jr., P.J., M.S., and Andy D. Bennett, J., joined.

          OPINION

          RICHARD H. DINKINS, JUDGE.

         FACTUAL AND PROCEDURAL HISTORY

         Ashby Communities, LLC, is the owner and developer of the King's Chapel subdivision in Arrington, Tennessee; John Powell ("Powell"), is the managing member and guarantor of Ashby and, at all times pertinent to this case, was responsible for Ashby's contractual matters. Hoover, Inc., is a company engaged in, inter alia, selling road materials and providing labor to lay the materials to subdivision developers. In the course of developing the subdivision, Ashby issued a request for bids for work on roads in the King's Chapel subdivision. On or about October 23, 2009, Ashby accepted Hoover's proposal, styled "Proposal and Contract, " wherein Hoover offered to furnish repair work on Meadow Bridge Lane and Meadow Brook Boulevard in Phase II for the total sum of $10, 025 and construction work on five roads in Phase III, for the sum of $143, 775. On that same date, Powell executed an Application for Credit prepared by Hoover, wherein Hoover agreed to extend credit to Ashby for materials purchased from Hoover; Powell signed the application as guarantor. On November 10, 2009, Ashby accepted another Proposal and Contract issued by Hoover (the "contract"), which did not include a reference to the repairs to be done to Phase II and which maintained the cost for Hoover's work under the Contract at $153, 800; there were no other changes to the October 23 proposal.

         Hoover began work at the subdivision on November 12, 2009. At the end of that month, Hoover billed Ashby for $92, 588.22, representing the amount due for work performed during the month of November. Ashby did not pay the invoice, and Hoover ceased work at the subdivision on December 14. On February 18, 2010, Hoover recorded a Notice of Mechanic's and Materialmen's Lien on the subdivision property in the amount of $92, 588.22 for materials and labor Hoover provided. On April 26, 2010, Hoover filed suit against Ashby and Powell (hereinafter collectively "Ashby" unless otherwise noted), seeking to recover the unpaid amount for the materials and labor, pre-judgment interest, attorney's fees, and the costs of collection. Ashby answered, raising the following affirmative defenses: (1) Hoover exaggerated the amount of its lien in violation of Tennessee Code Annotated section 66-11-139, [1] (2) Hoover exaggerated the amount of its mechanic's lien, (3) Hoover breached the contract, (4) Hoover failed to mitigate its damages, (5) Hoover breached its agreement with Ashby, (6) unclean hands, (7) unjust enrichment, (8) estoppel, and (9) fraud.

         On August 1, 2014, Ashby moved to join an adjoining landowner, Land Investment Group, LLC ("LIG"), as a necessary party and to continue the trial date. Ashby asserted that LIG should be joined in the instant suit because it had filed a separate suit against Hoover alleging that the property description in the mechanic's lien erroneously included LIG's property.[2] On August 18, the court entered an order granting the motion to join LIG and denied Ashby's request for a continuance.

         LIG answered the Complaint, asserting as affirmative defenses that Hoover failed to comply with Tennessee Code Annotated section 66-11-139, exaggerated its lien, failed to state a claim for relief, and lacked privity and standing; LIG also asserted a counterclaim, raising claims of negligence in preparation of the materialmen's lien, libel of title, and violations of the Tennessee Consumer Protection Act ("TCPA"). LIG also requested that the court quiet title to its property.

         On February 13, 2015, Ashby moved to amend its answer to assert a counterclaim for violation of the TCPA, breach of contract, and misrepresentation; the motion was granted on March 11, 2015.

         On April 27, 2015, LIG filed a motion seeking a declaratory judgment that the mechanic's lien was "invalid and void." A hearing was held on the motion and on July 30, the court entered an order, inter alia, declaring that the notice of lien filed by Hoover did not adversely impact LIG's title to its property.

         On June 15, 2015, Hoover filed a motion for partial summary judgment as to LIG's claims for negligence and libel of title, as well as the TCPA claims raised against it by LIG and Ashby. On May 6, 2016, the court entered an order nunc pro tunc to August 21, 2015, holding that LIG's causes of action for negligence, violation of the TCPA and libel of title were barred by the applicable statute of limitations; the court also held that LIG's request that the court quiet title to its property had been resolved in an order entered July 30, 2015.

         The case proceeded to trial on August 25 and 26, 2015. On June 30, 2016, the court entered a memorandum and order (the "June 30 Order" herein), holding that Ashby breached the contract. The court awarded Hoover $89, 739.52 for work performed, $104, 995.23 in interest, and $59, 559.42 in attorney's fees; Ashby's motion to alter or amend the judgment was denied. Ashby appeals, raising several issues: whether the Chancery Court incorrectly sua sponte reformed the contract at issue; whether the Chancery Court erred in finding that Ashby committed the first material breach of the contract; whether the Chancery Court erred in dismissing Ashby's counterclaims; whether Hoover presented sufficient evidence of the reasonableness of its attorney fees; and whether the dilatory conduct of Hoover precludes an award of pre-judgment interest.

         STANDARD OF REVIEW

         This case was tried by the court sitting without a jury, so we review the factual findings de novo with a presumption of correctness unless the preponderance of the evidence is otherwise. Watson v. Watson, 196 S.W.3d 695, 701 (Tenn. Ct. App. 2005) (citing Campbell v. Florida Steel Corp., 919 S.W.2d 26, 35 (Tenn.1996); Tenn. R. App. P. 13(d)). To preponderate against a trial court's finding of fact, the evidence has to support another finding of fact with greater convincing effect. Watson, 196 S.W.3d at 701 (citing Walker v. Sidney Gilreath & Assocs., 40 S.W.3d 66, 71 (Tenn. Ct. App. 2000); The Realty Shop, Inc. v. R.R. Westminster Holding, Inc., 7 S.W.3d 581, 596 (Tenn. Ct. App. 1999). We review the court's legal conclusions de novo with no presumption of correctness. Watson, 196 S.W.3d at 701 (citing Campbell, 919 S.W.2d at 35). When credibility of witnesses and the weight to be given testimony are involved, we afford considerable deference to the trial court, as the trial judge has had the opportunity to observe the witness' demeanor and to hear the in-court testimony. Morrison v. Allen, 338 S.W.3d 417, 426 (Tenn. 2011) (citing Walton v. Young, 950 S.W.2d 956, 959 (Tenn. 1997)).

         DISCUSSION

         I. Breach of Contract

         As an initial matter we address Ashby's contention that the trial court sua sponte reformed the contract when it held that the contract was for construction of three roads instead of five; Ashby asserts that "whether the contract called for the construction of three roads rather than five roads is vital to the determination of whether Hoover breached the contract by billing Ashby for more than the amount of work that had been completed at the time." Ashby argues that this was error because, first, Hoover did not request reformation and, second, the evidence did not support a finding of mutual mistake or unilateral mistake on the part of Hoover that would support the court's reforming the contract. We do not agree that the court reformed the contract; to the contrary, the court properly held that payment was to be based on work performed and materials supplied during a billing period. As more fully explained hereinafter, whether the contract called for construction of three roads or five roads is not determinative of the issue of breach.

         The trial court found that "Ashby . . . refused to pay Hoover anything it owed on the invoice received in December 2009" ("November Invoice") and concluded that "Ashby's nonpayment of Hoover's invoice constitute[d] nonperformance of the Terms and Conditions of the Contract by Ashby." Ashby did not pay the November invoice; it argues, however, that Hoover first breached the contract by failing to accurately bill Ashby for the work performed. Ashby argues that Hoover overbilled because, "[e]ven giving every benefit of the doubt to Hoover, it still performed less than fifty percent (50%) of the work called for by the contract, yet was seeking to collect on nearly 70% of the total contract price."

         The payment provision of the contract stated:

Payment in full for all work performed hereunder during any month shall be made not later that [sic] the tenth (10th) day of the month next following. Final and complete payment for all work performed hereunder shall be made not later that fifteen (15) days after the completion of such work.

         Contrary to Ashby's argument, payment under the contract is not based on the percentage of work completed, but is made for "all work performed" during a given month. Accordingly, Ashby was obligated to pay for "all work performed" during the month of November. While the trial court did find that there was some overbilling on the November Invoice, the trial court found that the overcharge was negligible.[3]

         After a careful review of the record, we conclude that the court correctly interpreted the contract and that testimony and other evidence relied upon by Ashby does not preponderate against the trial court's determination that Hoover properly billed Ashby for the work that was performed during the month of November 2009, and that any overbillings were not an attempt to mislead or defraud Ashby. We ...


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