Session August 13, 2019
from the Chancery Court for Davidson County No. 15-62-IV
Russell T. Perkins, Chancellor.
appeal involves payment disputes arising out of a public
construction project. Among other things, the case involves
claims made by an equipment supplier against a subcontractor,
the project's general contractor, and the general
contractor's bonding company, and claims made by the same
subcontractor against the general contractor. Following a
trial, the trial court granted the supplier a judgment
against the subcontractor and granted the subcontractor a
judgment against the general contractor. The supplier's
claim against the general contractor and its bonding company
was denied. The propriety of these rulings and numerous other
issues are now before this Court. Having reviewed the record
transmitted to us on appeal, we affirm in part, affirm in
part as modified, reverse in part, and remand the case for
such further proceedings as are necessary and consistent with
R. App. P. 3 Appeal as of Right; Judgment of the Chancery
Court Affirmed in Part; Modified in Part; Reversed in Part
T. Housch, Nashville, Tennessee, for the appellant, Air
Comfort Heating and Cooling, LLC.
Timothy H. Nichols, Nashville, Tennessee, for the appellee, E
Solutions for Buildings, LLC.
G. LaFevor, Nashville, Tennessee, for the appellees,
Knestrick Contractor, Inc., and Berkley Regional Insurance
B. Goldin, J., delivered the opinion of the Court, in which
J. Steven Stafford, P.J., W.S., and Carma Dennis McGee, J.,
B. GOLDIN, JUDGE.
AND PROCEDURAL HISTORY
case stems from the construction of the Centennial Sportsplex
Indoor Fitness Expansion Building by the Metropolitan
Government of Nashville and Davidson County
("Metro"). In April 2013, Metro entered into a
contract with Knestrick Contractor Inc.
("Knestrick"), pursuant to which Knestrick agreed
to construct the Centennial Sportsplex expansion. Under the
contract, Knestrick was obligated to accomplish substantial
completion of the project by December 2, 2013,  and if it failed
to do so, Metro was entitled to assess "the sum of $1,
000.00 for each calendar day of delay until the Project is
Substantially Complete." Knestrick, as principal, and
Berkley Regional Insurance Company ("Berkley"), as
surety, provided a payment bond in connection with the
its agreement to serve as a general contractor for the
Centennial Sportsplex expansion, Knestrick entered into a
subcontract with Air Comfort Heating & Cooling, LLC
("Air Comfort") with respect to the HVAC work
required for the project. This subcontract, which was entered
into in July 2013, specifically provided that the work must
be performed on or before November 27, 2013. Moreover,
similar to the prime contract between Metro and Knestrick,
the subcontract involving Air Comfort provided that $1,
000.00 in liquidated damages could be assessed "for each
day that the work remains uncompleted beyond the specified
furtherance of its required work under the subcontract, Air
Comfort sought to purchase certain HVAC equipment. To this
end, Air Comfort engaged in negotiations with E Solutions for
Buildings, LLC ("E Solutions"). E Solutions sent
Air Comfort a proposal regarding the needed HVAC equipment on
November 11, 2013, and on November 13, 2013, Air Comfort
submitted a purchase order for the equipment. The purchase
order recited December 13, 2013 as the delivery date, but in
the terms and conditions attached to the purchase order, the
following was provided: "Shipment dates are estimates
only. No valid contract may be made to ship within or at a
specified time unless in writing, signed by an authorized
signatory of Seller." There was no liquidated damages
provision provided for in the contract between Air Comfort
and E Solutions, and the attached terms and conditions
further stated that the seller, E Solutions, would "IN
NO EVENT . . . BE LIABLE FOR ANY INCIDENTAL, CONSEQUENTIAL,
OR PUNITIVE DAMAGES." Moreover, the terms and conditions
provided that E Solutions' duty to perform was subject
to, among other things, the "inability to procure
materials from the usual sources of supply" and other
causes beyond its "reasonable control."
the original deadline for completion of the project proved
untenable, Metro and Knestrick entered into an amendment
whereby the substantial completion date was extended to
January 26, 2014. Although no corresponding amendment was
formally made regarding the completion date of Air
Comfort's work under its subcontract with Knestrick, a
Knestrick officer testified that an extension was also passed
on to subcontractors. Nonetheless, the ultimate delay
accompanying the project's completion has engendered
substantial controversy among the parties concerning their
respective claims for payment. The project was eventually
certified as substantially complete on May 8, 2014.
subsequently ensued as a result of the construction project.
The initiating complaint in this matter, which was filed by E
Solutions in the Davidson County Chancery Court ("the
trial court") on January 15, 2015, alleged that E
Solutions had not been paid for the materials, equipment, and
services it provided on the project. In addition to asserting
a bond claim against Knestrick and Berkley, E Solutions sued
Air Comfort for breach of contract. Further, E Solutions pled
an unjust enrichment/quantum meruit claim against Air Comfort
February 20, 2015, Air Comfort filed an answer to E
Solutions' complaint and also asserted a counterclaim and
cross-claim. In its defense to E Solutions' action, Air
Comfort asserted, among other things, that E Solutions had
materially breached the purchase order with Air Comfort by
delaying delivery of the specified HVAC equipment. Air
Comfort claimed that it had been damaged by E Solutions'
alleged failure to timely deliver the ordered equipment, and
it asserted several theories of liability in its cross-claim
against Knestrick. Air Comfort alleged that Knestrick was
liable for breach of contract by failing to pay it sums owed
under the subcontract, and according to Air Comfort,
Knestrick should also be held liable for conversion and in
violation of the Prompt Pay Act. A bond claim, a claim for
unjust enrichment/quantum meruit, and a claim for
contribution were also asserted against
February 24, 2015, Knestrick and Berkley filed an answer to E
Solutions' complaint, wherein they prayed that the claims
against them be dismissed, and within the same filing,
Knestrick separately asserted a cross-claim against Air
Comfort. In the cross-claim, Knestrick averred it was
entitled to recover $72, 000.00 in liquidated damages and
alleged that it was entitled to indemnification regarding the
action filed against it by E Solutions. Answers to the
cross-claims and counterclaim were thereafter filed, and a
bench trial was held in the fall of 2016.
March 17, 2017, the trial court entered its "Memorandum
and Final Judgment," wherein it determined that Air
Comfort was entitled to a judgment for breach of contract
against Knestrick in the amount of $15, 000.00. According to
the trial court, this was the full extent of Knestrick's
liability, and the court declined to award Air Comfort
prejudgment interest. Further, the trial court dismissed Air
Comfort's claims against E Solutions and E Solutions'
claims against Knestrick and Berkley. As for E Solutions'
requested relief against Air Comfort, the court awarded it a
judgment in the amount of $42, 847.98, plus prejudgment
interest. Notably, the court's order stated that it was
reserving any determination about attorney's fees,
expenses, and discretionary costs until appeals in the case
post-trial motions were thereafter filed, and on July 7,
2017, the trial court entered an order addressing them. The
court noted that, notwithstanding its previous reservation of
certain issues, it had decided to entertain previously stayed
issues "[a]t the urging of certain of the parties."
In addition to addressing the parties' requests for
discretionary costs, the trial court denied Air Comfort's
request for attorney's fees. Further, regarding
attorney's fees sought by E Solutions, Knestrick, and
Berkley, the court held that:
E Solutions is a prevailing party and is entitled to an award
of reasonable attorneys' fees under the contract entered
with Air Comfort. The Court, however, hereby DENIES E
Solutions application for attorneys' fees, without
prejudice, because it is not accompanied by a sworn detailed
itemization of the services rendered and the time expended
for those particular services as required under Local Rule
§ 5.05 and Tenn. Sup. Ct. R. 8, RPC 1.5(a)(1). This
denial is without prejudice. E Solutions may renew its
request for attorneys' fees in this Court after all
appeals are exhausted.
Knestrick and Berkley are prevailing parties. Knestrick is
generally entitled to attorneys' fees under the
indemnification provisions of the parties' subcontract
due to Air Comfort's decision to withhold payment to E
Solutions when Air Comfort had no contractual right to do so.
The Court, however, hereby DENIES, without prejudice,
Knestrick and Berkley's application for attorneys'
fees because it lacks the specific itemization required by
Local Rule Sec. 5.05 and Tenn. Sup. Ct. R. 8, RPC 1.5,
pending the outcome of the appeals.
the order was certified as final pursuant to Rule 54.02 of
the Tennessee Rules of Civil Procedure and an appeal was
thereafter pursued in this Court, a different panel of this
Court dismissed the previous appeal for lack of subject
matter jurisdiction, stating in relevant part as follows:
Here, the trial court resolved the parties' breach of
contract claims and found that E Solutions, Knestrick, and
Berkley are contractually entitled to recover their
attorney's fees, but the court granted in part and denied
in part the request for contractual attorney's fees,
without prejudice, directing the parties to re-submit their
requests after this appeal. This order was improvidently
certified as final. Rule 54.02 "does not allow a trial
court to certify an order[ ] that disposes of only some, but
not all, elements of damages, as final and appealable."
Cooper v. Powers, No. E2011- 01065-COA-R9-CV, 2011
WL 5925062, at *6 (Tenn. Ct. App. Nov. 29, 2011).
"Notably absent from Rule 54.02 is any mention of
allowing the certification as final of an order which
disposes of certain elements of a claim for damages but
leaves the claim pending as to other elements." Id.
See, e.g., Johnson v. Tanner-Peck, L.L.C., No.
W2009-02454-COA-R3- CV, 2011 WL 1330777, at *6 n.8 (Tenn. Ct.
App. Apr. 8, 2011) (explaining that an order was not
appropriate for certification as final under Rule 54.02
because it did not dispose of a request for treble damages,
punitive damages, attorney's fees and the like arising
out of the same claim); Cates, 1991 WL 168620, at *4
("Bifurcation of damages is fatal to a 54.02
certification.... While it is proper for the trial court to
bifurcate the eviden[t]iary hearings on these damages, it
cannot bifurcate the appeal of it."). An award as to
only one facet of the total damages is not properly
certifiable. Cates, 1991 WL 168620, at *4.
We reached the same conclusion on facts similar to those
before us in Toyos v. Hammock, No.
W2011-01649-COA-R3-JV, 2013 WL 177417, at *16-17 (Tenn. Ct.
App. Jan. 17, 2013). The trial court had certified its
judgment as final pursuant to Rule 54.02 in "an attempt
to finalize the judgment" even though the issue of
attorney's fees had not been resolved. This Court entered
a per curiam opinion finding that we lacked jurisdiction in
the matter because the trial court's order failed to
adjudicate the request for attorney fees. We likewise find
that this Court lacks jurisdiction over the appeal in this
E Sols. for Bldgs., LLC v. Knestrick Contractor,
Inc., No. M2017-00732-COA-R3-CV, 2018 WL 1831116, at *4
(Tenn. Ct. App. Apr. 17, 2018) (footnote omitted), perm.
app. denied (Tenn. Aug. 9, 2018).
the remand of the case, the trial court addressed the
outstanding issues. In an order entered on October 16, 2018,
the trial court ruled on the amount of attorney's fees,
discretionary costs, and prejudgment interest owed to E
Solutions and awarded Knestrick and Berkley attorneys'
fees and discretionary costs against Air Comfort. A timely
notice of appeal was filed by Air Comfort on November 8,
2018, leading to the present appeal.
appeal concerns a variety of issues by both Air Comfort and E
Solutions. In Air Comfort's brief, the issues presented
for our review are as follows:
1. Whether the trial court erred in dismissing Air
Comfort's claim of conversion of construction proceeds
and Prompt Pay Act claim against Knestrick.
2. Whether the trial court erred in finding that Knestrick
was entitled to assess liquidated damages against Air Comfort
and only awarding Air Comfort a judgment for $15, 000.00
against Knestrick for breach of contract.
3. Whether the trial court erred in awarding E Solutions a
judgment for $42, 847.98 against Air Comfort.
4. Whether the trial court erred in denying Air Comfort
attorney fees under the Prompt Pay Act against Knestrick for
withholding a contract payment and retainage payment.
5. Whether the trial court erred in denying Air Comfort
discretionary costs against Knestrick.
6. Whether the trial court erred in denying Air Comfort
prejudgment interest against Knestrick.
7. Whether the trial court erred in awarding E Solutions
Attorney Fees, and Prejudgment interest against Air Comfort.
8. Whether the trial court erred in awarding Knestrick
attorney fees and discretionary costs against Air Comfort.
part, E Solutions raises the following issues in its
1. Whether the trial court erred in awarding E Solutions a
judgment for [only] $42, 847.98 against Air Comfort.
2. Whether the trial court erred in awarding E Solutions
attorney's fees and prejudgment interest ...