Assigned on Briefs February 2, 2018
Appeal from the Circuit Court for Shelby County No.
CT-004623-16 Rhynette N. Hurd, Judge
appeal involves a homeowner's lawsuit against a
construction company for breach of contract and negligence.
After a bench trial, the trial court entered judgment for the
homeowner for $135, 383.93 and denied a counterclaim filed by
the construction company for the balance of the contract
price. The construction company appeals, arguing that the
trial court erred in its calculation of damages and in
denying the counterclaim. We affirm in part, reverse in part,
and remand for further proceedings.
R. App. P. 3 Appeal as of Right; Judgment of the Circuit
Court Affirmed in part, Reversed in part, and Remanded
Christopher M. Myatt, Memphis, Tennessee, for the appellant,
MTown Construction, LLC.
Clayton Culpepper, III, Memphis, Tennessee, for the appellee,
Brandon O. Gibson, J., delivered the opinion of the court, in
which Charles D. Susano and Richard H. Dinkins, JJ., joined.
BRANDON O. GIBSON, JUDGE
FACTS & PROCEDURAL HISTORY
Durkin purchased a home in a historic neighborhood in Memphis
in 2015. In 2016, Mr. Durkin entered into a written contract
with MTown Construction, LLC, for the replacement of his
roof. The work began on August 25, 2016. After workers
removed about three quarters of the existing shingles, rain
began falling. The rain quickly developed into a thunderstorm
and "a complete downpour." MTown workers attempted
to cover the exposed roof with tarps, but the tarps contained
holes and did not adequately protect the home. Rain entered
the attic and then began seeping into the living area. Mr.
Durkin used pots, pans, boxes, drawers, and trash cans in an
attempt to contain the water from the numerous leaks.
However, rain entered every room in Mr. Durkin's home.
Water filled the light fixtures and poured out of ventilation
registers in the ceilings. Water continued flooding the home
for over an hour.
MTown workers took cover from the rain on Mr. Durkin's
porch, Mr. Durkin called his contact at MTown to report the
situation. MTown's owner, Michael Inglasbe, and two other
individuals arrived shortly thereafter and surveyed the
damage. Eventually, someone brought new tarps for the roof,
but the damage was done by that point. MTown's crews
completed the roof work over the next two days but did
nothing to address the water intrusion affecting the inside
of the home. During that time, the plaster ceilings inside
the home began to collapse and fall to the floor.
days after the flooding occurred, MTown's owner, Mr.
Ingalsbe, finally returned Mr. Durkin's phone calls and
returned to the home. Mr. Ingalsbe indicated that he had
fans, moisture meters, and dehumidifiers and that his crews
would soon begin "dropping ceilings." Mr. Inglasbe
said he would send a storage pod to the property and
instructed Mr. Durkin to move all of his belongings into the
pod prior to the reconstruction work. In the days that
followed, Mr. Inglasbe and Mr. Durkin discussed proposals for
the work, and Mr. Durkin moved out of the home. However,
after Mr. Ingalsbe's crew returned and saw the damage,
Mr. Inglasbe contacted Mr. Durkin and told him that he had
decided to proceed through his insurance company because his
crew believed the home was "a complete demo."
insurer sent a claims representative to inspect the damage on
September 11, 2016, two weeks after the rain event. He
prepared an estimate of damages totaling $24, 678.84. Mr.
Durkin believed this was woefully insufficient and consulted
with general contractors to obtain independent estimates. A
general contractor and project manager from Capital
Construction concluded that $33, 455.53 in additional work
needed to be performed besides that listed in the estimate
from the claims representative. Mr. Durkin also obtained an
estimate from ServiceMaster by Cornerstone, a remediation
company, for $60, 791.75 in environmental remediation work
that was deemed necessary due to the mildew and hazardous
waste concerns in the home. Mr. Durkin also discovered
numerous problems with the roof that MTown ultimately
installed, including nails piercing the HVAC system in the
attic, exposed nails in the soffits around the porch, and
rotten wood that was not removed prior to the installation of
the roof. Mr. Durkin obtained an estimate of $7, 000 to
repair the problems with the roof that MTown installed.
November 14, 2016, Mr. Durkin filed this lawsuit against
MTown, asserting breach of contract and negligence. He sought
to recover damages for construction and remediation costs
that would be necessary to address the water damage and
repair of the defective roof, displacement costs due to the
home being uninhabitable, and other incidental damages. MTown
filed an answer and a counterclaim, in which it sought to
recover the unpaid contract price for the roof under theories
of breach of contract and unjust enrichment.
two-day bench trial was held in May 2017. The trial court
heard testimony from the claims representative who provided
the original estimate to Mr. Durkin, the project manager from
Capital Construction who prepared the additional estimate,
the licensed general contractor from Capital Construction,
the operations manager from ServiceMaster by Cornerstore, and
Mr. Durkin. MTown also presented testimony from an expert in
the field of meteorology, who testified about the sudden
nature of the thunderstorm. After two additional post-trial
hearings, the trial court ultimately entered an order ruling
in favor of Mr. Durkin. The trial court found that MTown was
liable under both theories of liability - breach of contract
and negligence. The court found that MTown was not prepared
with appropriate supplies in the event of rain and that Mr.
Durkin did what he could to mitigate his damages, relying in
part on the representation of MTown's owner that he would
address the situation. The trial court awarded Mr. Durkin a
sum for displacement costs and storage fees he incurred for
the pod, in addition to $7, 000 for the repairs necessary to
fix the roof that MTown installed. On appeal, MTown does not
challenge the findings of liability or the trial court's
damage awards on these matters.
the water damage, the trial court acknowledged that Mr.
Durkin had presented evidence regarding the cost to repair
the damage, but the trial court elected to award damages
based on the diminished value of the home instead. Using a
method that we will explain in more detail below, the trial
court ultimately concluded that the diminution in the value
of the home was $118, 500, and it awarded that sum to Mr.
Durkin rather than the cost to repair the damage. The trial
court denied MTown's counterclaims for breach of contract
and unjust enrichment, reasoning that MTown was the first to
breach the contract and that it caused additional damages
necessitating further repairs. MTown timely filed a notice of