Tennessee Business Litigation Lawyers Blog

Contractor’s Lawsuit Against Subcontractor Barred by Tennessee Statute of Repose

Published on: September 30, 2012 | by J. Ross Pepper

In Tennessee, there are two types of statutes that might bar an otherwise meritorious claim: (1) statutes of limitation; and (2) statutes of repose. A construction defect case may be filed within the statute of limitation, but, nevertheless, be barred by the statute of repose which establishes an outer limit for the filing of construction defect cases.

In a recent Tennessee construction defect and warranty case, The Counts Company v. Praters, Inc., which was decided by the Court of Appeals of Tennessee, a contractor’s lawsuit against a subcontractor, which installed the wood flooring on the project, was dismissed based on the statute of repose.

The Tennessee statute of repose which applies to claims arising from the construction of an improvement bars any lawsuit to recover damages for a construction defect which is not brought within four years of substantial completion of the improvement. If a defendant purposefully engages in conduct intended to conceal the plaintiff’s injury, often referred to as “fraudulent concealment,” then the statute of repose is tolled (meaning its length is extended).

Court Of Appeals Of Tennessee Upholds Ambiguous Codicil To Will

Published on: September 23, 2012 | by J. Ross Pepper

Rather than executing an entirely new will to change a provision in a will or, in order to make a specific bequest of property, sometimes a person will execute a codicil to an existing will, which, in effect, changes the will. Generally, codicils to wills are enforceable in Tennessee to the same extent as are wills.

In a recent Tennessee case, the testator (the person who made the will) signed a codicil (“Codicil”) to his will (“Will”) about thirty six hours before he died and years after he made the Will. That Codicil became the subject of a dispute between a beneficiary of the Will and the beneficiary named in the Codicil. In the Will, the 100 acre farm owned by the testator was bequeathed entirely to his daughter (“Daughter”). In the Codicil, the testator bequeathed part of his farm to a Mr. Powell, a close friend.

The wording of the Codicil is important to an understanding of the case. In it, the testator bequeathed to Powell a part of his farm of “approximately 35 acres” and described, very generally, the location of that acreage. In the Codicil, the testator also bequeathed to Powell another part of his farm of “approximately 20 acres” and, again, described its location in very general terms. At the very end of the Codicil, the testator stated that approximately 45 acres of his 100 acre farm, which remained after the bequests to Powell, were to be distributed to Daughter.

“Time Is Of The Essence” Clauses And Their Effect On Real Estate Contracts In Tennessee

Published on: September 11, 2012 | by J. Ross Pepper

Many real estate contracts, and other contracts, which are entered into in Tennessee and governed by Tennessee law, contain “time is of the essence” clauses. What difference do such clauses make in Tennessee contracts? A recent decision of the Tennessee Court of Appeals demonstrates how such a clause can make a practical and critical difference in a breach of contract case in Tennessee.

In the case of Seaton v. Wise Properties-TN, LLC, the Tennessee Court of Appeals was confronted with the following facts relating to a breach of contract case:

• Buyer and Seller entered into a real estate contract for the purchase and sale of real estate in Athens, Tennessee

Using Appraisers As Expert Witnesses In Eminent Domain Cases In Tennessee

Published on: August 20, 2012 | by J. Ross Pepper

Landowners in Tennessee sometimes become defendants in eminent domain cases (also called condemnation actions) filed by the state, or a city or county government. These cases often become “battles of appraisers.”

When the government files a condemnation case, it must pay just compensation to the landowner. Tennessee courts have defined “just compensation” to mean “market value” which they have further defined to mean the price which a willing buyer would pay to a willing seller assuming that the seller was not required to sell the land and the purchaser was not required to purchase it. The date that market value is to be determined, in an eminent domain case, is the date of appropriation. (Not some future date or past date).

In determining market value in condemnation cases, all the factors that enhance or detract from the value of the land should be considered. For example, it is proper to consider the other reasonable available uses of the property, and comparable sales. It is not proper for a jury to consider any increase or decrease in the value of the land because of the announcement or construction of a new improvement on the property.

Tennessee Member-Managed Limited Liability Companies: Liability Of Members To Other Members And/Or The LLC

Published on: August 13, 2012 | by J. Ross Pepper

This blog addresses Tennessee law regarding the liability of members of Tennessee limited liability companies to other members and/or to the LLC itself. In 1994, the “Tennessee Limited Liability Company Act” became law in Tennessee. In 2005, the “Tennessee Revised Limited Liability Company Act” became law. The Revised Act added statutes regarding the conduct of LLC members which would subject them to personal liability to other LLC members, the LLC, and to holders of financial rights.

Tennessee recognizes three types of LLCs: (1) member-managed LLCs; (2) manager-managed LLCs; and (3) director-managed LLCs. This blog focuses only on member-managed LLCs, though much of the law discussed herein is equally applicable to the two other types of LLCs.

The starting point for understanding the potential liabilities of members of Tennessee member-managed LLCs to other members and/or to the LLC is Tennessee Code Annotated §48-249-403. Even though that statute has been in effect for about seven years, there is no Tennessee case law interpreting that statute or discussing its application. In fact, a Westlaw search for all Tennessee cases in which the statute is mentioned turns up no cases.

Changing Insurance Policy Beneficiaries In Violation Of Marital Dissolution Agreements: What Tennessee Courts Have To Say

Published on: August 6, 2012 | by J. Ross Pepper

Frequently, as part of a divorce, a spouse is required to maintain life insurance for the benefit of the other spouse or for children. In our practice, we have been involved in several cases where, in spite of a requirement in a divorce decree or marital dissolution agreement, a spouse has either changed the designated beneficiary of a life insurance policy, or let the life insurance policy lapse. Under Tennessee law, a former spouse or child who has been wronged by such conduct has the law on his or her side, as evidenced by the Tennessee cases discussed in this blog.

In Dossett v. Dossett, a decision of the Supreme Court of Tennessee, the plaintiffs were children of an insured (the father) who was divorced from the children’s mother prior to his (the insured father’s) death. The divorce decree between the father of the children and their mother required the father to maintain a policy of life insurance upon his life with the children designated as beneficiaries. Specifically, the marital dissolution agreement in that case stated:

“That the Defendant [the father] is required to maintain a $20,000.00 life insurance policy upon his life and with the minor children of the marriage designated as the beneficiaries of said policy.”

Joint Bank Account With Right Of Survivorship Case: Tennessee Court Of Appeals Lays Ground Rules

Published on: July 31, 2012 | by J. Ross Pepper

In our practice, we are pretty frequently involved in cases (usually undue influence cases) where parties, usually relatives, are at odds over who should receive funds owned by a deceased relative in a bank account, or certificate of deposit. A recent case from the Tennessee Court of Appeals, Guess v. Finlay, not only provides a very useful analysis of Tennessee law regarding joint accounts with rights of survivorship, but also, reverses some prior Tennessee law regarding joint accounts.

Here are the facts:

• At the time of his death, Deceased had accounts at SunTrust Bank worth nearly $250,000.00, consisting of a checking account, a money market account, and CDs

Home Construction Contract Case: Tennessee Court Of Appeals Upholds Nashville Chancery Court

Published on: July 24, 2012 | by J. Ross Pepper

A recent opinion of the Tennessee Court of Appeals in a construction defect case between a homeowner and a contractor is worth the read for any lawyer or homeowner contemplating a breach of contract case against a contractor. The opinion touches on two areas of the law that might be implicated in any construction defect case where breach of contract and/or negligence are alleged: (1) the amount of damages a homeowner might be able to recover for a contractor’s defective work; and (2) a homeowner’s right to the remedy of rescission of the contract in a breach of construction contract case.

The opinion gives a plenary explanation and description of the contractor’s work which was alleged to have been incomplete, defective, and below standard (which is too detailed and lengthy to be repeated in this blog). In a nutshell, the facts of the defective construction case were as follows:

• Homeowner retained Contractor to remodel her residence

Tennessee Law Regarding Implied Contracts

Published on: July 16, 2012 | by J. Ross Pepper

In Tennessee, as in many other states, the law is not so technical as to deny a party a right to recover on a breach of contract claim just because the party’s contract was not expressed adequately either in writing or verbally. Where the facts make it clear that parties had an agreement (which is supported by mutual consideration and sufficiently definite), a party to that agreement might be able to recover– even without an express contract.

It is always best to have an express written contract. If you don’t have an express written contract, the next best thing to have is an express oral contract with someone who is truthful, and who will not deny the terms of your agreement. If you have neither an express oral nor a written contract, your only chance of recovery, in a breach of contract case, may depend on Tennessee common law regarding implied contracts.

Tennessee law recognizes two types of implied contracts: contracts implied in fact, and contracts implied in law. What is the difference? Contracts implied in fact arise when the court determines that the parties’ conduct shows mutual assent to a contract even though they never expressly agreed (either verbally, or in writing). Contracts implied in law can be created by a court to avoid an injustice even where there was neither an express agreement between the parties, nor conduct of the parties upon which the court can base an implied contract.

Enforcing Mechanics and Materialmen’s Liens In Tennessee

Published on: July 2, 2012 | by J. Ross Pepper

To say that Tennessee law which governs the rights of contractors and subcontractors to place liens on property is complex and full of potential pitfalls is an understatement. If you are owed money for work or materials, you should consult with a qualified, experienced construction lien attorney as soon as you suspect you may not be paid and may need to use your lien rights. We had one case a few years back where our subcontractor client could have recovered substantially more money if it had only acted a couple of weeks sooner.

In Tennessee, both general contractors (also referred to as “prime contractors”) and subcontractors (also referred to as “remote contractors”) have lien rights in certain situations. To be enforceable and effective, these lien rights must be properly asserted and perfected under the statutes which govern mechanics and materialmen’s liens (“construction liens”) in Tennessee. The rationale behind giving lien rights to contractors and subcontractors is that they should have greater rights and a better chance of collecting their debt than a party to a typical contract because their work or materials increased the value of the owner’s real property.

Keep in mind that, if you are a contractor or subcontractor, even if you never file a lien, you may be able to collect your debt from the party with whom you contracted. Where mechanics and materialmen’s lien make a critical difference for contractors and subcontractors are in those situations in which they have provided work or materials and the party who agreed to pay them cannot or will not pay them. In many of those situations, provided that the contractor or subcontractor has jumped through all of the construction lien law “hoops,” it can recover from the owner of the property with respect to which it provided work or supplied materials.

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