Robert Shrout v. Hall Construction ( 2011 )

IN THE COURT OF APPEALS OF TENNESSEE
AT KNOXVILLE
February 1, 2011 Session
ROBERT SHROUT, et al., v. HALL CONSTRUCTION, et al.
Appeal from the Circuit Court for Claiborne County
No. 2009-CV-265 Hon. John McAfee, Judge
No. E2010-00862-COA-R3-CV - Filed March 14, 2011
This case arose over the construction of a home for plaintiffs. Plaintiffs sued the
construction company and a bank and several individuals. The Trial Court resolved the
issues as to defendants, except Mark Rodriguez, prior to trial. The plaintiffs' case against
Rodriguez was tried by the Trial Court who directed a verdict at the end of plaintiffs' proof.
Plaintiffs appealed to this Court. Plaintiffs insisted that material evidence established a
violation of the Consumer Protection Act by defendant, and the directed verdict should be
reversed. Upon review of the evidentiary record, we conclude that the Trial Judge properly
directed a verdict in favor of the defendant, and we affirm the Trial Court's Judgment.
Tenn. R. App. P.3 Appeal as of Right; Judgment of the Circuit Court Affirmed.
H ERSCHEL P ICKENS F RANKS, P.J., delivered the opinion of the Court, in which D. M ICHAEL
S WINEY, J., and J OHN W. M CC LARTY, J., joined.
Van R. Irion, Knoxville, Tennessee, for the appellants, Robert Shrout and Joyce Shrout.
Thomas J. Tabor, Jr., Tazewell, Tennessee, for the appellee, Mark Rodriguez.
OPINION
Plaintiffs filed a Complaint against Hall Construction, Sam Hall, Mark Rodriguez, Ed
Miller, Betty Beeler, and Home Federal Bank, alleging their home was shoddily constructed.
They asserted they had contracted with Hall Construction to build the home, and Sam Hall
was the owner of Hall Construction, and Mark Rodriguez was the General Manager, and Ed
Miller was the Regional Superintendent. They obtained their construction loan through
Home Federal Bank, and Betty Beeler was the office manager of that bank.
Plaintiffs alleged that they opened a construction account at Home Federal Bank and
deposited $95,000, and obtained a loan from Home Federal for an additional $75,000. They
alleged that disbursements were not to be made to the construction company until a progress
inspection was performed by the bank.
Plaintiffs alleged that since they lived in Ohio, the bank would call and report to them
that the house had been inspected and that a distribution should be made. At some point,
plaintiffs alleged they became aware that the work was not being completed as reported or
was not being done properly, and they relayed their concerns to Beeler. Further, that Home
Federal made distributions to Hall without their consent, and that they paid Hall directly for
work that was never done. Plaintiffs then hired Ronald Corum, an engineer, to inspect the
home, and he found numerous construction defects in the home and incomplete work, and
plaintiffs concluded that Hall Construction and its principals were guilty of breach of
contract and breach of warranty for failing to properly construct plaintiffs’ home. Further,
there were violations of the Tennessee Consumer Protection Act (TCPA). Also, the
defendants were guilty of fraud/intentional misrepresentation and that Home Federal had
breached its contract with plaintiffs and violated the covenant of good faith and fair dealing.
Motions to Dismiss and Motions for Summary Judgment were subsequently filed.
The Court entered a Default Judgment against Defendants Hall Construction and Sam Hall,
and plaintiffs then voluntarily nonsuited their claims against Home Federal and Beeler. The
Court held a hearing, and entered judgment against Hall and Hall Construction for $218,184,
and plaintiffs then filed a voluntary nonsuit as to defendant Miller.
The Court overruled Rodriguez's Motion for Summary Judgment and the case went
to trial against Rodriguez. Several witnesses testified, including Rodriguez, and at the close
of plaintiffs' proof, Rodriguez moved for a directed verdict, arguing there was no evidence
that Rodriguez made any misrepresentations or engaged in any acts in violation of the TCPA.
Plaintiffs’ counsel responded that plaintiffs were no longer pursuing a breach of contract or
breach of warranty claim against Rodriguez, but that they had proven violation of the TCPA
and negligent misrepresentation.
Following arguments by the parties' counsel, the Court granted the directed verdict.
The Court stated that, while plaintiffs were relying on the lien document that Rodriguez
signed as “General Contractor” as a misrepresentation, there was no evidence that they relied
on the document, since the construction contract was signed prior to that representation, and
that plaintiffs contracted with Hall Construction, not Rodriguez, and executed the
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construction documents with Hall Construction. The Court observed that defendant did
make requests for draws on behalf of Hall, but whether the money was to be released was
made by another individual. Further, the Court observed that plaintiffs failed to prove a
violation of the TCPA and offered no evidence that Rodriguez engaged in any unfair or
deceptive acts, and there was no admissible proof of fraud or intentional misrepresentation.
On appeal, the sole remaining issue is whether the Trial Court erred in granting
Rodriguez’s motion for directed verdict?
On appeal, plaintiffs also initially raised the issue of whether the Trial Court should
have granted their motion for non-suit, but subsequently filed a notice with this Court that
they were waiving that issue.
As this Court has previously explained:
On considering a motion for directed verdict, the court is required to take the
strongest legitimate view of the evidence in favor of the plaintiff, including all
reasonable inferences in the plaintiff's favor, and disregarding any evidence to the
contrary. A verdict may be directed only if there is no material evidence in the record
which would support the verdict for the plaintiff under any of the theories which
plaintiff had advanced.
Walker v. Associates Commercial Corp., 673 S.W.2d 517 (Tenn. Ct. App. 1983). The case
does not have to be submitted to the jury where there is a mere glimmer of evidence - the
evidence must be of a substantial and material nature. Sadek v. Nashville Recycling Co., 751
S.W.2d 428 (Tenn. Ct. App. 1988).
Plaintiffs insist they proved a violation of the Consumer Protection Act, because
Rodriguez signed the form document for the bank in a blank that said “general contractor”,
and in fact he was not the contractor. Plaintiffs rely on Tenn. Code Ann. §62-6-136, which
provides that “[i]t is unlawful for any person, firm or corporation to represent itself as a
licensed contractor or to act in the capacity of a “contractor” as defined in §§ 62-6-102, or
62-37-103, and related rules and regulations of this state, or any similar statutes, rules and
regulations of another state, while not licensed, unless such person, firm or corporation has
been duly licensed under § 62-6-103 or § 62-37-104.” The statute also provides that a
violation of its provisions will also be construed to be a violation of the TCPA. Id. Plaintiffs
also rely on evidence that bank employees testified that Rodriguez represented himself to be
the project manager for plaintiffs’ project, and requested draws on the project, and that
Rodriguez was liable for negligent misrepresentation.
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Plaintiffs’ reliance on the document signed by Rodriguez for the bank as proving a
violation of the TCPA/negligent misrepresentation is misplaced. Rodriguez testified that he
was asked by Hall and Mr. Shrout to go to the bank and sign the document so that
construction could proceed. He testified that he went to the bank and signed the document
that he was presented where he was told to sign it, and that he had no choice. He testified
he asked if he could sign Mr. Hall’s name to it, and the bank representative told him just to
sign his name. There is no contradictory evidence on his testimony.
There was no evidence that anyone, including plaintiffs, thought that Rodriguez, by
signing this document as he did, was holding himself out to be a licensed contractor. As he
testified, he was signing as a representative of Hall Construction in Hall’s stead, since Hall
was out of town at the time. Moreover, there is no material evidence that plaintiffs relied on
Rodriguez’s signature or any alleged representation that he was a licensed contractor, since
they had already contracted with Hall. Shrout testified that Rodriguez was introduced to him
by Hall as “National Sales Manager”, and there was no evidence that either Rodriguez or
Hall told plaintiffs that Rodriguez was a licensed contractor, or that Rodriguez ever held
himself out to be anything other than an employee of Hall.
As the Trial Court noted, there was no evidence that Rodriguez made any
misrepresentations to plaintiffs or acted in an unfair or deceptive manner.
Plaintiffs further argue that emails from Hall Construction requesting draws on the
construction account purportedly came from Rodriguez. Rodriguez denied sending the
emails (except for the first one) and testified that any requests he made were done at Hall’s
direction. There is no dispute that the draws would not have been made without the
inspector's authorization.
Finally, plaintiffs argue there was evidence of a partnership or joint venture between
Rodriguez and Sam Hall. The Trial Court observed that this was not plead in the plaintiffs’
complaint, and was not raised until the motion for directed verdict was made. However,
there was no evidence that Rodriguez was anything other than an employee/contractor of
Hall Construction.
As this Court has previously explained:
Tennessee Code Annotated section 61-1-101 defines a “partnership” as “an
association of two (2) or more persons to carry on as co-owners of a business or other
undertaking for profit[.]”
A partnership can only be created pursuant to a contract of partnership, though such
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an agreement may be either express or implied. To determine whether a partnership
exists, courts must ascertain the intention of the parties. In the absence of a written
agreement, the requisite intention is that which is deducible from the parties' actions.
The parties need only intend “to do the things which constitute a partnership.” A
partnership results if the parties “place their money, assets, labor, or skill in commerce
with the understanding that profits will be shared between them.”
“A joint venture is a relationship which arises from an agreement between two or
more persons to undertake some common objectives for the benefit of all in pursuit
of which each is authorized to act for the other.” Our Supreme Court has stated that
a joint venture is “‘something like a partnership, for a more limited period of time,
and a more limited purpose.’” “Joint ventures are governed by the same rules of law
as those governing partnerships.”
Wyatt v. Byrd, 2010 WL 3063153 (Tenn. Ct. App. Aug. 03, 2010)(internal citations omitted).
In this case, there was no evidence that Rodriguez and Hall placed their money, assets,
labor, or skill in commerce with the understanding that the profits would be shared between
them. The evidence was that Rodriguez worked for Hall and did Hall’s bidding. Rodriguez
testified that every act he undertook with regard to plaintiffs’ construction project was done
because Hall directed him to do that, as his boss. The Trial Court properly dismissed these
claims as well.
In sum, plaintiffs have failed to show that, when taking the strongest legitimate view
of the evidence in their favor, including all reasonable inferences, and disregarding any
evidence to the contrary, there was any material evidence in the record which would support
the verdict for the plaintiffs under any of the theories which plaintiffs had advanced. We
affirm the Trial Court's directed verdict in favor of Rodriguez.
The Judgment of the Trial Court is affirmed, and the cost of the appeal is assessed to
Robert and Joyce Shrout.
_________________________________
HERSCHEL PICKENS FRANKS, P.J.
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