Robert McCollum v. Darrell Peters ( 2015 )

IN THE COURT OF APPEALS OF TENNESSEE
AT KNOXVILLE
May 15, 2015 Session
ROBERT MCCOLLUM, ET AL. v. DARRELL PETERS
Appeal from the Circuit Court for Washington County
No. 31032 Thomas J. Seeley, Jr., Judge
No. E2014-02082-COA-R3-CV – Filed July 23, 2015
Robert and Kimberly McCollum (Plaintiffs) sued Darrell Peters (Defendant) for damages
incurred after a garage he built partially collapsed. Their complaint alleged multiple
claims for relief including breach of contract, violations of the Tennessee Consumer
Protection Act (the TCPA), various forms of fraud and/or intentional misrepresentation
and negligence. Following a bench trial, the court ruled in favor of the Plaintiffs. The
court held that, with respect to his construction of the garage, Defendant was guilty of
promissory fraud, made fraudulent misrepresentations in violation of the TCPA, and
acted recklessly by consciously acting contrary to his representations. The trial court
entered judgment awarding Plaintiffs a sum total of $56,103.50 including compensatory
damages, punitive damages, and attorney‟s fees. Defendant appeals. We affirm.
Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Circuit Court
Affirmed; Case Remanded for Further Proceedings
CHARLES D. SUSANO, JR., C.J., delivered the opinion of the court, in which D. MICHAEL
SWINEY and JOHN W. MCCLARTY, JJ., joined.
Thomas A. Peters, Kingsport, Tennessee, for the appellant, Darrell Peters.
Jason S. Shade, Johnson City, Tennessee, for the appellees, Robert McCollum and
Kimberly McCollum.
OPINION
I.
Plaintiffs filed suit against Defendant on November 9, 2012, followed by an
amended complaint in January 2013. Their amended complaint alleges, in part, as
follows:
[P]rior to January 22, 2008, Plaintiffs and the Defendant
entered into extensive negotiations with respect to the
construction of a detached, three car garage . . . located at the
Plaintiffs‟ residence. . . . During these conversations,
Defendant represented to the Plaintiffs that he was insured
and that he had a valid contractor‟s license for the state of
Tennessee.
As a result of these assurances, Plaintiffs and the Defendant
entered into a contract on or about January 22, 2008, for the
construction of a detached, 24‟ x 36‟ three car garage at the
Plaintiffs‟ Residence. . . .
Among other things, the Contract stated and the Defendant
represented that the Garage would be constructed with a (1)
“4” concrete floor with 6” x 6” wire mesh or fiber” and (2)
“12” block below ground level with concrete and steel.” In
addition, the Contract stated that the Defendant would . . .
furnish materials and labor to complete the construction of the
Garage for a price of $21,194.00.
Throughout the Winter and Spring of 2008, Defendant
worked on the Garage. During the construction, and given
the representations of the Defendant, Plaintiffs were under the
impression that the Garage was being built and constructed
pursuant to the specifications of the Contract. As a result,
Plaintiffs paid the Defendant $21,194.00 for the construction
that they thought Defendant had performed.
On or about July 22, 2012, the rear masonry wall of the
structure failed and collapsed into the Garage which resulted
in a considerable amount of damage to the Garage as well as
the Plaintiffs‟ personal property including, but not limited to,
three vehicles, tools and a motorcycle.
Subsequent to the collapse of the rear masonry wall, Plaintiffs
discovered that the Garage was not constructed in a
workmanlike manner and was not constructed pursuant to []
either the specifications enumerated in the Contract or the
representation made by the Defendant. Among other things,
2
it was discovered that the Garage: (1) was not constructed
with a “4” concrete floor with 6” x 6” wire mesh or fiber,” (2)
was not constructed with “12” block below ground level with
concrete and steel,” and (3) was incorrectly constructed with
the drain pipe resting above the footers with no gravel around
it. As a result of such construction, the masonry wall
collapsed given that it could not withstand the lateral earth
pressure exerted by the retained soil.
In addition, and subsequent to the collapse of the rear
masonry wall, Plaintiffs discovered that Defendant was not a
licensed Tennessee contractor as was represented prior to and
during the construction of the Garage.
In his answer, Defendant generally denied Plaintiff‟s allegations. He asserted that
Plaintiffs‟ complaint was barred by the statute of repose, see Tenn. Code Ann. § 28-3-202
(2000), and should be dismissed. Further, Defendant denied “that the garage was not
constructed in workmanlike manner in accordance to the contract,” and denied that he
“does not have a license from the State of Tennessee.” As to the parties‟ contract,
Defendant asserted that it “speaks for itself.” Lastly, Defendant averred that the garage
was built on Plaintiffs‟ property, with all work and materials visible to them during
construction.
After a hearing, the trial court denied Defendant‟s motion to dismiss. In February
2014, the case was mediated, but without success. In June 2014, after the first trial judge
recused herself, Defendant filed a second motion to dismiss which again alleged that the
cause of action was barred by the statute of repose. After a hearing before the new trial
judge, the motion to dismiss was again denied.
Trial was held on July 17, 2014. In addition to Plaintiff Robert McCollum and
Defendant, the court heard testimony from Harold Ioerger, an expert in the field of civil
and geotechnical engineering, and Wayne Bailey, a licensed general contractor.
Generally summarized, the proof shows that the parties contracted for the construction of
a garage with reinforced concrete block. Defendant took the position, however, that such
was neither requested by Plaintiffs nor required, so he instead used hollow blocks. After
the back wall of the garage collapsed, Plaintiffs employed Mr. Bailey‟s company to
demolish the existing structure and rebuild the garage. The garage was rebuilt to the
original specifications at a cost of $35,700. Mr. Bailey used concrete and steel reinforced
blocks, footers, and drainage. Mr. Bailey testified he “wouldn‟t even think about”
building the garage, without using reinforced concrete blocks given the slope of the land
and the influx of water at the site.
3
In its September 14, 2014 final judgment and order, the trial court found that the
underlying facts were as stated in the complaint. In support of its ruling in favor of
Plaintiffs, the trial court further found, in pertinent part, as follows:
Defendant supplied false information to Plaintiffs in relation
to the Contract and the construction of the garage.
Specifically, Defendant intentionally misrepresented material
facts with respect to the method of construction including that
the Garage would be constructed with 12” block below
ground level with concrete and steel. Defendant made a
promise to the Plaintiffs that he was going to put concrete and
steel in the rear masonry wall of the Garage which was a
material matter in relation to the construction of the wall. At
the time the representation was made, Defendant did not
intend to perform his obligations as represented to the
Plaintiffs and as enumerated in the Contract. In fact, at the
time the garage wall was built, the Defendant merely was
going to build the Garage comparable to all of his other
garages and not reinforce the back wall. The Plaintiffs were
unaware that Defendant did not intend to perform as
promised. The Plaintiffs justifiably relied upon the
Defendant‟s misrepresentations by executing the Contract and
continuing a business relationship with the Defendant. The
Plaintiffs were justified in relying on the promise and
representations made by the Defendant and, as result of
relying on the promise and representations, they sustained
damages as set forth below.
Defendant argues that the Court should dismiss the Amended
Complaint filed against him due to the fact that Plaintiffs‟
Complaint is barred by the statute of repose enumerated in
Tenn. Code Ann. § 28-3-202. Notwithstanding the language
of [Section] 28-3-202, Plaintiffs can maintain a cause of
action against the Defendant given the language contained in
Tenn. Code Ann. § 28-3-205(b) . . . . In this instance,
Defendant is guilty of promissory fraud in that he engaged in
fraudulent conduct with respect to the construction of the
Garage as set forth herein.
4
In addition, Defendant was not a licensed Tennessee
contractor as was represented prior to and during the
construction of the Garage. Although Defendant maintained
a business license issued through Sullivan County[,] he did
not possess a valid Tennessee contractor‟s license. As such,
Defendant violated the [TCPA]. As a result of the
aforementioned violations, Plaintiffs sustained damages as set
forth below.
As a direct, proximate and forseeable result of the
misrepresentations and the actions of the Defendant . . .,
Plaintiffs[] sustained the following damages:
a. $25,006.00 for the removal and replacement of the
Garage; and
b. $6,000.00 for the depreciation in value for the Porsche
928, Porsche 911 and Infinity automobiles.
In addition, pursuant to § 47-18-109(e)(1) of the [TCPA],
Plaintiffs are entitled to receive their reasonable attorney‟s
fees and costs in bringing this action in the amount of
$15,097,50.
Finally, Plaintiffs are entitled to punitive damages in the
amount of $10,000.00. The Court finds that there is clear and
convincing evidence that Defendant acted recklessly with
regard to the representations that were made in connection
with the construction of the Garage. More specifically,
Defendant was reckless in that he was aware of the
representations that were made but consciously disregarded
those representations and did not have the intent to do what
was promised and represented to the Plaintiffs with respect to
the method of construction of the Garage.
(Italics in original.) Consistent with its findings, the trial court awarded Plaintiffs a
judgment in the total amount of $56,103.50, plus interest, and taxed costs of the action
against Defendant. Defendant filed a timely notice of appeal.
5
II.
As taken verbatim from his brief, Defendant raises the following issues for our
review:
1. Whether the Trial Court erred in not considering lack of
mitigation of their damages on the part of the Plaintiffs, in
awarding Plaintiffs the sum of $25,006.00 in
compensatory damages.
2. Whether the Trial Court erred in ruling the Defendant
recklessly violated the [TCPA].
3. Whether the Trial Court erred in awarding the Plaintiffs
$10,000.00 in punitive damages.
4. Whether the Trial Court erred in denying the Defendant‟s
Motion to dismiss due to the Statute of Repose applicable
in this Cause.
Plaintiffs raise the additional issue of whether they are entitled to an award of their
reasonable attorney‟s fees incurred in defending this appeal.
III.
Our review of this non-jury case is de novo upon the record of the proceedings
below with a presumption of correctness as to the trial court‟s factual findings, a
presumption we must honor unless the evidence preponderates against those findings.
Tenn. R. App. P. 13(d); McCarty v. McCarty, 863 S.W.3d 716, 719 (Tenn. Ct. App.
1992). We review the trial court‟s conclusions of law de novo with no presumption of
correctness. Oakes v. Oakes, 235 S.W.3d 152, 156 (Tenn. Ct. App. 2007).
IV.
Defendant asserts that the trial court erred in failing to consider a lack of
mitigation of damages on Plaintiffs‟ part in calculating the award of compensatory
damages. Defendant contends that, despite experiencing water in the garage, Plaintiffs
failed to take appropriate remedial action or to notify him of the problem. Defendant
concludes that as a result of the lack of notice, he had “no opportunity to remedy the
situation, and mitigate his and the Plaintiffs‟ damages.”
6
“As a general rule, a party alleging defects in the performance of a contract is
required to give notice and a reasonable opportunity to cure the defects.” Forrest Constr.
Co., LLC v. Laughlin, 337 S.W.3d 211, 229 (Tenn. Ct. App. 2009) (citing Carter v.
Krueger, 916 S.W.2d 932, 935 (Tenn. Ct. App. 1995)). The defaulting party is thereby
allowed the opportunity “„to repair the defective work, to reduce the damages, to avoid
additional defective performance, and to promote the informal settlement of disputes.‟”
Id. (quoting Custom Built Homes v. McNamara, No. M2004-02703-COA-R3-CV, 2006
WL 3613583, at *6 (Tenn. Ct. App. Dec. 11, 2006) (quoting Carter, 916 S.W.2d at 935)).
“There are, however, circumstances in which this duty to give notice and an opportunity
to cure is excused.” Id. In Forrest Construction Company, we further observed that
the duty to mitigate includes a “reasonableness” standard. We stated:
The critical factor in determining fulfillment of a plaintiff‟s
duty to mitigate is whether the method which he employed to
avoid consequential injury was reasonable under the
circumstances existing at the time. The rule with respect to
the mitigation of damages may not be invoked by a contract
breaker “as a basis for hypercritical examination of the
conduct of the injured party, or merely for the purpose of
showing that the injured person might have taken steps which
seemed wiser or would have been more advantageous to the
defaulter.” As stated in McCormack, Damages, Sec. 35
(1935), “a wide latitude of discretion must be allowed to the
person who by another‟s wrong has been forced into a
predicament where he is faced with a probability of injury or
loss. Only the conduct of a reasonable man is required of
him.”
Id. at 230 (citing Action Ads, Inc. v. William B. Tanner Co., 592 S.W.2d 572 (Tenn. Ct.
App. 1979) (quoting Tampa Electric Co. v. Nashville Coal Co., 214 F. Supp. 647, 652
(M.D. Tenn. 1963)).
In the present case, the proof showed that in addition to the garage construction,
Plaintiffs had employed Defendant to do some additional work at their home such as
installing new windows. Plaintiff Robert McCollum testified that after the garage was
finished, there was still work to be done at the house and Plaintiffs owed Defendant
$1,000 for the work he had already completed. The witness testified that Defendant
never returned to complete the job or to collect payment and failed to respond to
numerous attempts to reach him. According to Mr. McCollum, Plaintiffs simply
“couldn‟t get a hold of him; called, e-mailed, nothing.” Then, two to three months after
the garage was finished, Plaintiffs noticed that water came into the back part of the
7
garage after a heavy rain. Again, Plaintiffs attempted to reach Defendant by phone, but
he did not return their call. According to Mr. McCollum, “this was after we couldn‟t get
him back to finish the other work or get him to respond to calls or emails.” Mr.
McCollum explained that after nearly two years, and after Plaintiffs had given up any
hope of Defendant returning their messages, Mr. McCollum installed a sump pump
himself to take the water out of the garage. He further testified that the “bubbling” water
he saw was “mainly coming up through the floor.” He said that he had no idea that the
problem was related to the construction of the back wall. For his part, Defendant testified
that he decided to forgo the money he was owed after he was unable to satisfy Plaintiffs
regarding the new windows he installed. Defendant testified, “I figured the best thing I
do is just forget it.” He added, “I figured I couldn‟t win; I couldn‟t please them,” but
could not recall whether he ever informed Plaintiffs that he considered the job to be
finished and would not return.
The proof shows that Plaintiffs attempted unsuccessfully to contact Defendant
after observing water at the back of the garage. Ultimately, Plaintiffs believed they
remedied the problem by installing a sump pump. At trial, the expert engineer testified to
his opinion that the average person, upon discovering water accumulating in a garage,
“would sump pump the sucker because that‟s cheaper.” Notably, until the garage
collapsed some four years later, Plaintiffs were under the impression that the garage was
constructed with a reinforced wall as stated in the contract. In his brief, Defendant
suggests that Plaintiffs should have taken other remedial action such as installing
drainage to keep the water from entering the garage in the first place. At the same time,
Defendant testified, consistently with Plaintiffs, that even though it was not written into
the contract, the parties had discussed drainage prior to construction. Defendant testified,
“I just told them that that‟s the way we normally done it, . . . lay a 12-block wall up and
we put a drain around the back side of it.” In our view, Plaintiffs acted reasonably under
the circumstances, given their impressions regarding the incoming water and their
understanding of the manner in which the garage had been constructed. In addition,
Defendant failed to offer any proof to the contrary.
The evidence does not preponderate against the trial court‟s decision to award
Plaintiffs damages without any adjustment for failure to mitigate damages. Therefore, we
uphold the award of compensatory damages.
V.
Defendant challenges the trial court‟s finding that he violated the TCPA. He
asserts that the evidence does not show, and the trial court did not find, that he acted
intentionally or deceptively to provide substandard work, a finding he says the Act
requires.
8
Regarding application of the TCPA, this Court has recently observed:
The Tennessee Consumer Protection Act, Tennessee Code
Annotated Sections 47-18-101, et seq. (“TCPA”), prohibits,
among other things, “unfair or deceptive acts or practices
affecting the conduct of any trade or commerce.” Tenn. Code
Ann. § 47-18-104(a). . . . A “deceptive” act or practice is “one
that causes or tends to cause a consumer to believe what is
false or that misleads or tends to mislead a consumer as a
matter of fact.” Tucker v. Sierra Builders, 180 S.W.3d 109,
116 (Tenn. Ct. App. 2005) (citations omitted). An act or
practice may be deemed unfair if it “causes or is likely to
cause substantial injury to consumers which is not reasonably
avoidable by consumers themselves and not outweighed by
countervailing benefits to consumers or to competition.” Id.
at 116-17 (citing 15 U.S.C. § 45(n)). Because the TCPA is
remedial, courts have determined that it should be construed
liberally in order to protect the consumer. Id. at 115. In order
to recover under the TCPA, a plaintiff must prove: (1) that the
defendant engaged in an unfair or deceptive act; and (2) that
the defendant‟s conduct caused an “ascertainable loss of
money or property. . . .” Id. (quoting Tenn. Code Ann. § 47-
18-109(a)(1)); see also Cloud Nine, L.L.C. v. Whaley, 650
F. Supp. 2d 789, 798 (E.D. Tenn. 2009) (“plaintiffs asserting
claims under the [TCPA] are required to show that the
defendant‟s wrongful conduct proximately caused their
injury”). . . .
Whether a particular representation or act is “unfair” or
“deceptive,” within the meaning of the TCPA, is a question of
fact, Id. at 116 (citation omitted), which we review de novo
upon the record with a presumption of correctness, unless the
evidence preponderates otherwise. Tenn. R. App. P. 13(d).
Furthermore, when the resolution of an issue in a case
depends upon the truthfulness of witnesses, the trial judge
who has had the opportunity to observe the witnesses and
their manner and demeanor while testifying is in a far better
position than this Court to decide those issues.
9
Borla Performance Indus. v. Universal Tool & Eng’g, Inc., No. 2014-00192-COA-R3-
CV, 2015 WL 3381293, at *12-13 (Tenn. Ct. App. E.S., filed May 26, 2015) (citing
Audio Visual Artistry v. Tanzer, 403 S.W.3d 789, 809-10 (Tenn. Ct. App. 2012)).
In the present case, the trial court found that Defendant violated the TCPA by
representing to Plaintiffs prior to and during construction of the garage that he had a
Tennessee contractor‟s license. More specifically, the trial court found that the
Defendant‟s “fraudulent misrepresentations constituted unfair, misleading and deceptive
acts or practices” pursuant to Tenn. Code Ann. § 47-18-104(b) (21), -(35), and,
“possibly,” -(47) (Supp. 2014) and resulted in the Plaintiffs‟ sustained damages. En route
to its ruling, the trial court found that intent was not an element required to establish a
claim under the TCPA. As the trial court put it, “[i]f there‟s a violation of the provisions
of the [TCPA], then it‟s a violation of the Act.” The cited subsection of Section 47-18-
104(b), as referenced by the trial court, are as follows:
(b) The following unfair or deceptive acts or practices
affecting the conduct of any trade or commerce are declared
to be unlawful and in violation of this part:
* * *
(21) Using statements or illustrations in any advertisement
which create a false impression of the grade, quality, quantity,
make, value, age, size, color, usability or origin of the goods
or services offered, or which may otherwise misrepresent the
goods or services in such a manner that later, on disclosure of
the true facts, there is a likelihood that the buyer may be
switched from the advertised goods or services to other goods
or services;
* * *
(35) Representing that a person is a licensed contractor when
such person has not been licensed as required by § 62-6-103
or § 62-6-502; or, acting in the capacity of a contractor as
defined in § 62-6-102(4)(A), § 62-6-102(7) or § 62-6-501,
and related rules and regulations of the state of Tennessee, or
any similar statutes, rules and regulations of another state,
while not licensed;
10
* * *
(47) A home improvement services provider:
(A) Entering into a contract for home improvement services
without providing to the residential owner in written form:
(i) That it is a criminal offense for the person entering into
the contract for home improvement services with a residential
owner to do any of the prohibited acts set out in § 39-14-
154(b), by writing out the text of each prohibited act, and
providing the penalty and available relief for such; and
(ii) The true and correct name, physical address and
telephone number of the home improvement services
provider; or
(B) Having complied with subdivision (b)(47)(A), failing to
provide to the residential owner in written form a correct
current or forwarding address if the person changes the
physical address initially provided to the residential owner
and any or all work to be performed under the contract has
not been completed[.]
In arguing against the trial court‟s finding that he violated the TCPA, Defendant takes the
position that he holds a business license issued by Sullivan County, and as such considers
himself a “licensed contractor.” At trial, Defendant used the terms “business license” and
“contractor‟s license” interchangeably and testified, “[i]f you ask me if I‟m a licensed
contractor to work in the state of Tennessee, yes.” On questioning by Plaintiffs‟ counsel,
Defendant testified as follows:
Q: So in your mind, it‟s okay to advertise that you‟re a
licensed contractor and not explain the difference if
somebody calls and specifically asks you that. Yes or no?
A: Yeah, its - - I done it a thousand times, so I don‟t see a
problem.
The TCPA makes it unlawful to represent that goods or services are of a particular
standard if they are another, or to engage “in any other act or practice which is deceptive
to the consumer or to any other person.” This Court has stated that a “deceptive act need
not be knowing or intentional to be the basis for a TCPA claim,” as follows:
11
The Tennessee Consumer Protection Act does not impose a
single standard applicable to all cases for determining
whether a particular act or practice is deceptive for the
purpose of Tenn. Code Ann. § 47-18-104(b)(27). To be
considered deceptive, an act is not necessarily required to be
knowing or intentional. Negligent misrepresentations may be
found to be violations of the Act. A deceptive act or practice
is, in essence, “a material representation, practice or omission
likely to mislead . . . reasonable consumer[s]” to their
detriment.
Signature Designs Group, LLC v. Ramko, No. M2011-01086-COA-R3-CV, 2012 WL
2519037, at *14 (Tenn. Ct. App. 2012) (quoting Fayne v. Vincent, 301 S.W.3d 162, 177
(Tenn. 2009)) (internal citations omitted; emphasis added).
Simply stated, Defendant misrepresented that he was a “licensed contractor,” a
term understood to mean that he was licensed pursuant to the provisions of Tenn. Code
Ann. § 62-6-101, et seq. (2014), covering licensing requirements for general contractors,
or § 62-6-501 (2014) covering licensing requirements for home improvement contractors.
In fact, by Defendant‟s own testimony, the only license he has ever held is a county-
issued business license. We therefore uphold the trial court‟s finding that Defendant
thereby engaged in a deceptive act or practice in violation of the TCPA.
VI.
A.
Defendant challenges the trial court‟s award of $10,000 in punitive damages to
Plaintiffs. In short, Defendant submits that the trial court did not find that he committed
willful misconduct and, absent such a finding, no punitive damages should be allowed.
Defendant further contends, without elaboration, that “under the circumstances,” both
punitive damages and attorney‟s fees should not be allowed.
B.
The trial court reasoned that punitive damages were justified in the present case as
follows:
I am not going to award . . . treble damages in this case for
this reason: I have serious reservations about whether or not
[Defendant] actually intended to deceive. Apparently the
12
contract he uses, . . . he just doesn‟t follow his own contract.
And, having said that, his testimony was that this is the way
he builds all the garages. That may be correct and maybe
he‟s not building a very good garage or retaining wall when
he does that, but I don‟t think there‟s any malice . . . – it‟s
close to recklessness.
[F]or punitive damages, I‟m going to find recklessness. I
think if you make a promise to somebody, and that‟s what a
contract is, it‟s a promise, . . . and I don‟t think he had the
intent to deceive them, but he certainly had the intent not to
do what he promised to do. I think that‟s reckless behavior
and I‟m going to award $10,000.00 punitive damages.
The trial court thereby found that Defendant acted recklessly. In this state, it has
been long-held that a court may award punitive damages “only if it finds a defendant has
acted either (1) intentionally, (2) fraudulently, (3) maliciously, or (4) recklessly.”
Hodges v. S.C. Toof & Co., 833 S.W.2d 896 (Tenn. 1992). As relevant in this case, “[a]
person acts recklessly when the person is aware of, but consciously disregards, a
substantial and unjustifiable risk of such a nature that its disregard constitutes a gross
deviation from the standard of care that an ordinary person would exercise under all the
circumstances.” Id. Moreover, “because punitive damages are to be awarded only in the
most egregious of cases, a plaintiff must prove the defendant‟s intentional, fraudulent,
malicious, or reckless conduct by clear and convincing evidence.” Id. Lastly, a trial
court‟s award of punitive damages should be based on consideration of a list of factors to
include the following:
(1) The defendant‟s financial affairs, financial condition, and
net worth;
(2) The nature and reprehensibility of defendant‟s
wrongdoing, for example
(A) The impact of defendant‟s conduct on the plaintiff, or
(B) The relationship of defendant to plaintiff;
(3) The defendant‟s awareness of the amount of harm being
caused and defendant‟s motivation in causing the harm;
13
(4) The duration of defendant‟s misconduct and whether
defendant attempted to conceal the conduct;
(5) The expense plaintiff has borne in the attempt to recover
the losses;
(6) Whether defendant profited from the activity, and if
defendant did profit, whether the punitive award should be in
excess of the profit in order to deter similar future behavior;
(7) Whether, and the extent to which, defendant has been
subjected to previous punitive damage awards based upon the
same wrongful act;
(8) Whether, once the misconduct became known to
defendant, defendant took remedial action or attempted to
make amends by offering a prompt and fair settlement for
actual harm caused; and
(9) Any other circumstances shown by the evidence that bear
on determining the proper amount of the punitive award.
Id. at 901-02.
In this case, the trial court found that Defendant acted recklessly in making
representations regarding the method of construction he would employ that he never
intended to follow. There is no dispute that the Defendant prepared the contract between
the parties for construction of the 24 x 36 garage. Among the specifications is a
provision for “12[-inch] block below ground level with concrete and steel.”
Notwithstanding this specification for a reinforced wall, Defendant denied that he and
Plaintiffs ever discussed the use of reinforced concrete at all. Defendant explained that
he inserted the specification for reinforced concrete in the contract only because, initially,
he believed the project was located in Sullivan County where the building code required
“12-inch block with a one half-inch piece of steel every 6 foot. . . .” Because the garage
was actually built in Washington County, he did not, in fact, insert rebar every six feet
and pour concrete in the blocks as first contemplated. Defendant testified he never
informed Plaintiffs of the change because, he insisted, they never asked for reinforced
concrete. Defendant further disagreed with Plaintiff‟s expert witness that the structural
integrity of the back wall would have been enhanced by the use of reinforced concrete.
14
We agree with the trial court‟s conclusion that despite what the parties‟ contract
provided, Defendant always intended to build the Plaintiffs‟ garage to his customary
standard and his understanding of what the county building code required, and no more.
Defendant so testified, in relevant part, as follows:
I have worked construction all my life. [. . . .] I know what a
retaining wall is and how to build it properly, but . . . in
residential construction, you know, I mean, this is the real
world. [W]e aren‟t all talking about some big commercial
company that, . . . I mean, yeah, I could do it on every garage
if the people want to pay 50-, 60,000 bucks for a garage. I
mean, we‟re building a garage for a residential person.
* * *
I go by what I have done in the past 30 years, . . . that I have
always done. . ., a 12-inch block 6 foot high, I mean – more
than likely, 95 percent of the houses around here, you don‟t
see people pumping 12-inch block. [. . . .] No dirt – no
concrete in them; nobody does that. I mean, you have got to
be within people‟s budget, and a 12-inch block, according to
all the building county inspectors and everything else, is fine.
...
On our review of the evidence, we conclude that there is clear and convincing
evidence to support the trial court‟s award of punitive damages based on its finding of
Defendant‟s “reckless behavior” in the construction of the garage. In particular,
Defendant, in an apparent effort to keep costs down, misrepresented the method of
construction he intended to and did utilize without notice to Plaintiffs, who relied on
Defendant‟s assertions to their detriment. The award of $10,000 in punitive damages is
affirmed.
C.
As we earlier noted, the trial court awarded both punitive damages and attorney‟s
fees to Plaintiffs. As to the latter award, the trial court held that “pursuant to § 47-18-
109(e)(1) of the [TCPA], Plaintiffs are entitled to receive their reasonable attorney‟s fees
and costs in bringing this action in the amount of $15,097.50.” Defendant offers nothing
in support of his position that Plaintiffs should not receive both awards “under the
circumstances.” Plaintiffs respond that the award of both punitive damages and attorney‟s
15
fees under the TCPA is not duplicative or otherwise improper given the differing
purposes of the two types of awards. In short, we agree with Plaintiffs‟ position.
As noted by Plaintiffs, the Supreme Court has essentially resolved this issue in
their favor. In Miller v. United Automax, 166 S.W.3d 692, 697 (Tenn. 2005), the Court
held as follows:
The Tennessee Consumer Protection Act provides that once a
trial court finds that there has been a violation of the Act, the
court may award the plaintiff “reasonable attorney's fees and
costs.” Tenn. Code Ann. § 47-18-109(e)(1) (1995). Unlike an
award of treble damages under the Tennessee Consumer
Protection Act, attorney‟s fees are not punitive in nature.
“The potential award of attorney‟s fees under the Tennessee
Consumer Protection Act is intended to make prosecution of
such claims economically viable to plaintiff.” Killingsworth
v. Ted Russell Ford, Inc., 104 S.W.3d 530, 535 (Tenn. Ct.
App. 2002) (citation omitted). On the other hand, punitive
damages are designed to punish wrongful conduct and to
deter others from such conduct in the future. See Concrete
Spaces, 2 S.W.3d at 906-07. Because the purpose of the
attorney‟s fees and costs provision is different from the
purpose of punitive damages, an award of attorney‟s fees and
costs under the Tennessee Consumer Protection Act is not
duplicative of punitive damages.
In the present case, the evidence does not preponderate against the trial court‟s award of
attorney‟s fees at the trial court level to Plaintiff. Accordingly, we uphold the award of
$15,097.50 in attorney‟s fees.
VII.
Tenn. Code Ann. § 28-3-202 is the statute of limitations that governs actions based
on defects to improvements in real property. The statute provides, in relevant part, that
such action shall be brought “against any person performing or furnishing the design,
planning, supervision, observation of construction, construction of, or land surveying in
connection with, such an improvement within four (4) years after substantial completion
of such an improvement.” As earlier set forth, Defendant completed construction of the
Plaintiffs‟ garage in April 2008, and Plaintiffs filed suit against Defendant in November
2012. At trial, Defendant renewed his motion to dismiss Plaintiffs‟ complaint as being
time-barred. In denying the motion, the trial court found, in relevant part, as follows:
16
Notwithstanding the language of Tenn. Code Ann. § 28-3-
202, Plaintiffs can maintain a cause of action against the
Defendant given the language contained in Tenn. Code Ann.
§ 28-3-205(b) which provides, in relevant part, as follows:
The limitation hereby provided shall not be
available as a defense to any person who shall
have been guilty of fraud in performing or
furnishing the design, planning, supervision,
observation of construction, construction of, or
land surveying, in connection with such an
improvement, or to any person who shall
wrongfully conceal any such cause of action.
In this instance, Defendant is guilty of promissory fraud in
that he engaged in fraudulent conduct with respect to the
construction of the Garage as set forth herein.
Defendant maintains that there was no evidence to support the trial court‟s finding
of fraud in connection with Defendant‟s representations to Plaintiffs and his actual
construction of their garage. Defendant concedes that if this Court disagrees with his
position, and upholds the trial court‟s ruling, his argument that the statute of repose
applies becomes moot.
Earlier in this opinion, we upheld the trial court‟s finding that Defendant “engaged
in fraudulent conduct with respect to construction of the Garage. . . .” As a result, the
exception for fraud contained in Section 28-3-205(b) applies in this case to remove the
action from the four-year limitations period. Accordingly, the trial court properly denied
Defendant‟s motion to dismiss.
VIII.
Lastly, Plaintiffs have requested an award of the additional attorney‟s fees and
costs they have incurred in defending this appeal. See Killingsworth v. Ted Russell
Ford, 205 S.W.3d 406, 411 (Tenn. 2006) (providing that “a plaintiff seeking to recover
reasonable attorney‟s fees generated during an appeal of a case brought under the TCPA
must set forth his or her intention to do so in his or her appellate pleadings”). In
Killingsworth, the Supreme Court addressed awards of attorney‟s fees under the TCPA
as follows:
17
Additionally, the TCPA allows an award of attorney‟s fees to
a plaintiff only where the trial court has found that one of the
Act‟s provisions “has been violated.” Tenn. Code Ann. § 47-
18-109(e)(1). If an appeal ensues, the wronged plaintiff‟s
monetary judgment is at risk of being consumed by the
resulting appellate attorney‟s fees unless they are also subject
to being awarded. A plaintiff successful at trial is therefore at
risk of being “de-remedied” if unable to collect his or her
reasonable appellate legal fees. Given the broad remedial
goals our legislature determined to pursue with the TCPA, we
do not think the General Assembly intended that result. As
this Court has previously recognized, a potential award of
attorney‟s fees under the TCPA is intended to make the
prosecution of such claims economically viable to a plaintiff.
The same concern with economic viability applies equally to
appellate attorney‟s fees.
205 S.W.3d at 410 (internal citations omitted.) Consistent with the principles set forth in
Killingsworth, we conclude that Plaintiffs should be awarded their reasonable attorney‟s
fees incurred on this appeal. Accordingly, on remand the trial court will hold a hearing to
determine Plaintiffs‟ reasonable attorney‟s fees on appeal.
IX.
The judgment of the trial court is affirmed. This case is remanded, pursuant to
applicable law, for further proceedings as directed herein and for the collection of costs
assessed below. Costs on appeal are assessed against the appellant, Darrell Peters.
______________________________________
CHARLES D. SUSANO, JR., CHIEF JUDGE
18