Session April 19, 2018
from the Circuit Court for Blount County No. L-17937 David
Reed Duggan, Judge
appeal arises from a dispute over a construction contract
between Clayton Pickens ("Pickens"), a general
contractor, and John R. Underwood ("Underwood") and
his wife Suzanne Curtin ("the Underwoods, "
collectively). Pickens sued Underwood initially in
Chancery Court but later transferred to the Circuit Court for
Blount County ("the Trial Court") for allegedly
failing to pay him under a contract to build the
Underwoods' home. Underwood filed counterclaims against
Pickens alleging, among other things, fraud, cost overruns,
violation of the Tennessee Consumer Protection Act, and
entering into a construction contract in excess of the
monetary limit on Pickens' contractor's license. This
case was tried before a jury. The jury found the Underwoods
breached the construction contract and awarded Pickens $147,
340.25. The jury also found that Pickens breached the
contract through certain errors in construction and awarded
the Underwoods $10, 740.00. The Trial Court entered its final
judgment affirming the jury's verdict and awards of
damages. The Underwoods appeal, arguing in part that Pickens
should have been limited to his actual documented expenses
because he entered the construction contract in excess of his
contractor's license limit. We hold, inter alia,
that under the law in effect at the time of the execution of
the contract, Pickens was not limited in damages to his
actual documented expenses. We affirm the judgment of the
R. App. P. 3 Appeal as of Right; Judgment of the Circuit
S. MacDonald, Knoxville, Tennessee, for the appellants, John
R. Underwood and Suzanne Curtin.
William Coley and Bart C. Williams, Knoxville, Tennessee, for
the appellees, Clayton Pickens and Jama Pickens.
A. Fraser and J. Matt Drake, Knoxville, Tennessee, for the
appellees, Danny Miller, individually and d/b/a Miller's
Appliances Sales and Service/HVAC, Inc. a/k/a Miller's
Heating & Air, Inc.
Michael Swiney, C.J., delivered the opinion of the court, in
which John W. McClarty and Thomas R. Frierson, II., JJ.,
MICHAEL SWINEY, CHIEF JUDGE
Underwoods entered into a $572, 000 contract with Clayton
Pickens on June 2, 2008 for the construction of a home on 25
acres of land. Pickens subcontracted Miller's Heating
& Air, Inc. to install the HVAC system. On May 9, 2009,
the final bill which totaled $679, 314.94 was presented by
Pickens to Underwood. The construction contract provided that
"[i]f proposed construction or under construction, it is
understood that any additions or changes not included in the
plans and specifications are to be agreed upon between the
contracting parties and are to be confirmed in writing as the
work progresses." Underwood objected to Pickens'
figure and declined to pay him the amount he claimed was
owed. On July 21, 2009, Pickens sued Underwood in Blount
County Chancery Court, alleging breach of contract, unjust
enrichment, promissory fraud and mechanics' and
materialmens' lien. Underwood, meanwhile, learned that
the monetary limit of Pickens' contractors' license
at the time he signed the contract was $350, 000.
filed an answer and counterclaim seeking a jury trial. A
hearing was conducted by a Special Master in the case in
February 2012. Counsel for Pickens stipulated at that stage
that Pickens was an unlicensed contractor limited in damages
to actual documented expenses. This case then was transferred
to the Trial Court. In November 2012, Pickens filed several
third party complaints against certain subcontractors.
Pickens sued Suzanne Curtin in a separate complaint. All of
these various cases were consolidated for trial.
April 2014, the Trial Court entered an order, contrary to
counsel for Pickens' earlier stipulation, in which it
determined Clayton Pickens was a licensed contractor, stating
in part: "Clayton Pickens is hereby determined to be a
licensed contractor for purposes of the Tennessee
Contractor's Licensing Act of 1994 Tenn. Code Ann.
§62-6-101, et seq. during the time period in
question in this lawsuit even though the monetary limit of
his license may have been less than the sum of the contract
to construct the house of John R. Underwood." In May
2017, this case was tried before a jury.
evidentiary rulings made by the Trial Court gave rise to a
number of the issues the Underwoods raise on appeal. First,
upon Miller's motion the Trial Court barred Gary Cobble
("Cobble"), an architect, from testifying for the
Underwoods regarding alleged defects in the HVAC system.
Cobble, articulating the basis of his views, stated in his
deposition, in part:
Q. What was the reason for having Chancey & Reynolds
[HVAC technicians] come out to the property?
A. Earlier I testified that when you have humidity problems
inside a home or a building, it oftentimes is because - I
don't want to say oftentimes - sometimes it's because
the units are too large and they don't run long enough to
pull all the moisture out of the building. Well, that's
why I met Steve initially, Steve Chancey, so he could run the
Manual J load letter on the home. The two pieces of equipment
are sized properly, according to the Manual J letter. So the
next step is, is the equipment installed correctly and
cycling correctly, coming on and off correctly. And Ronnie
Brock did those tests on February 1, and they are. So by
process of elimination, we concluded that something in the
zoning, in the configuration of the duct work was just off,
somehow wrong, or just not functioning properly. So rather
than redesigning the duct work, tearing it all out and trying
to reconfigure it, the easiest solution to the problem was to
add dehumidifiers, which ultimately was done.
Q. Is it fair to say that you relied on Chancey &
Reynolds' expertise in HVAC systems to form the basis of
your opinions, then?
Q. You're saying you're not a licensed HVAC
Q. You're not certified.
A. No. That's why I had to go to Chancey & Reynolds
and hire them to do this work.
Q. Have you provided opinions in prior cases on HVAC issues?
Q. Can you tell me which cases, or is that something
you'd have to look at records?
A. Off the top of my head, I can't think of any, but
oftentimes I have to look at the HVAC system, not very often,
but along that line, humidity control, I've been involved
with a lack of humidity control, I've been involved with
many times over my career.
Q. And I'd like to narrow that down to lack of humidity
control that, according to you, is caused by the HVAC system,
or more specifically, the zoning. Have you dealt with that in
prior cases or have you testified in prior cases concerning
lack of humidity control by the HVAC system? A. Lack of
humidity control, yes. Zoning, no. And I can't think of
any specific cases. There hasn't been many times, but
I'm just very familiar, with the line of work I do and
being in construction for so many years, I've seen what
lack of humidity control can do . . . .
Q. Now, he does mention here that there's no bypass
damper on the zoning unit, and the owner may want to add one.
Is that right?
A. It does say that. I don't recall that, but it does say
that, no bypass damper.
Q. But he also mentions that wasn't creating any
A. That is correct.
Q. So is it fair to say, based on your testimony and based on
this invoice that I have here, that the system was
appropriate, the selection of the system was appropriate, and
the only issue was the zoning of the central area of the
A. That's what it boiled down to. And by process of
elimination, that's where we landed.
Q. What is your understanding of the zoning of the central
area of the house?
A. That somehow the zoning or lack of zoning or improper
design of the duct work and zoning was not allowing the units
to pull the humidity out of the central part of the house.
Q. You're talking to somebody that doesn't do HVAC
work, and I don't think anyone else in here does, but
tell me what zoning is.
A. In simple terms, a small, one-level house has one
air-conditioning unit and one thermostat. It has one zone. If
you put a second story on that house and put a separate
air-conditioning system for the upstairs, you've got two
zones. So every thermostat controls a zone. This house has
three thermostats with two units. In my example that I gave
you, you've got two systems with one thermostat each and
two zones. This one is more complicated because you've
got three thermostats and only two units, so it's split.
It's got dampers in it to divert the conditioned air into
different spaces. So that's where we finally concluded
there's some kind of problem in the zoning, the way the
thermostats and the configuration of the duct work was made
up, and dampers. But the easiest way to solve the problem was
just to add dehumidification, because that's really all
we were after, anyway. We didn't have issues with rooms
being cold in the winter, rooms being hot in the summer, that
sort of thing. It was just we needed humidity control in the
central part of the house.
Q. You said a couple of times that "we" reached
that conclusion, so was it also Steve Chancey and Ronnie
Brock's opinion that the central portion of the house was
not zoned properly?
A. Well, I don't think Ronnie Brock so much, because
he's a technical guy. Steve and I spoke about it later,
and I don't want to put words into Steve's mouth,
either, but ultimately, with talking with Steve and Ronnie,
that was my decision or my analysis of the problem, that
there's something going on with the zoning, because
that's all that was left of the whole system. We knew the
thermostats were working properly. They were sized properly.
The equipment's operating properly except for a couple of
little small items that Ronnie notes. That's all
that's left to create the lack of humidity control.
Q. And that's basically just by process of elimination
you got to that.
A. Exactly, by process of elimination, we got to that
Chancey and Brock submitted affidavits stating that they had
not rendered the opinions attributed to them. The Trial Court
excluded Cobble's testimony as to the HVAC system.
In addition, the Trial Court overruled the Underwoods'
motion in limine seeking to bar the testimony of appraiser
Fred Metz ("Metz"). Metz testified regarding the
quality of the construction and whether any alleged defects
resulted in a diminution of value. The Underwoods contend
that this testimony was irrelevant and prejudicial. Metz,
opining on numerous aspects of the house, testified in part
Q. And, okay. Mr. Metz, in addition, did you, did you inspect
an area in the master shower?
A. I did.
Q. What was your understanding of the complaint?
A. The complaint was that the water did not drain out of the