ASHBY COMMUNITIES, LLC, ET AL.
Session May 24, 2017
from the Chancery Court for Williamson County No. 38167 James
G. Martin, III, Judge
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.
R. App. P. 3 Appeal as of Right; Judgment of the Chancery
Court of Williamson County Affirmed; Case Remanded
A. Barney, Franklin, Tennessee, for the appellants; Ashby
Communities, LLC, and John Powell.
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.
RICHARD H. DINKINS, JUDGE.
AND PROCEDURAL HISTORY
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.
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,  (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)
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. On August 18, the court entered an order
granting the motion to join LIG and denied Ashby's
request for a continuance.
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.
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,
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.
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.
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.
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)).
Breach of Contract
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.
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."
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.
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
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 ...