Earl M. Shahan v. Franklin County ( 2003 )

IN THE COURT OF APPEALS OF TENNESSEE
AT NASHVILLE
May 6, 2003 Session
EARL M. SHAHAN v. FRANKLIN COUNTY, ET AL.
Appeals from the Chancery Court for Franklin County
Nos. 16,129 & 16,235 John W. Rollins, Judge
No. M2002-00725-COA-R3-CV - Filed December 30, 2003
This case involves a dispute between Franklin County and the developer and residents of a
subdivision over the maintenance of roads in the subdivision. After the county declined the
developer’s public dedication of the roads and denied applications for building permits in the
subdivision because of inadequate roads, the developer and several property owners filed separate
suits against the county in the Chancery Court for Franklin County to determine the responsibility
for maintaining the roads. The property owners also sought specific performance and damages from
the developer. The trial court consolidated the cases and, following a bench trial, held that the
county was not responsible for maintaining the roads. The trial court also directed the developer to
bring the roads up to 1990 subdivision standards. The developer asserts on this appeal that there had
been an implied public dedication of the roads and, therefore, that the county was responsible for
maintaining them. For their part, two property owners assert that they are entitled to damages in
addition to specific performance. We have determined that the trial court correctly determined that
the roads were not public roads and that the property owners were not entitled to damages as well
as specific performance. However, we have also determined that the trial court should have ordered
the developer to bring the roads up to the county’s current road standards.
Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Chancery Court
Modified and Affirmed
WILLIAM C. KOCH , JR., J., delivered the opinion of the court, in which BEN H. CANTRELL , P.J., M.S.,
and WILLIAM B. CAIN , J., joined.
Clifton N. Miller and Felicia B. Walkup, Tullahoma, Tennessee, for the appellant, Earl M. Shahan.
John B. Curtis and Steve E. Smith, Chattanooga, Tennessee, for the appellees, Franklin County,
Tennessee, Montgomery Adams, and John W. Woodall.
J. Stanley Rogers, Christina Henley Duncan, and Laura D. Riddle, Manchester, Tennessee, for the
appellees, Ron Cunningham, Linda Hudson, George Peckinpaugh, Dorothy Peckinpaugh, Jackson
Graham, and Joyce Graham.
OPINION
I.
Earl M. Shahan has owned and operated a real estate business in Franklin County for over
fifty years. He had acquired many tracks of real property over the years, and by November 1989, he
owned approximately eighty acres bordering Radio Beam Lane and Deer Creek Lane by inheritance,
gift, and purchase. At that time, Radio Beam Lane and Deer Creek Lane were only unimproved dirt
roads running over fields and farmland.
In September 1990, Mr. Shahan and Charles Abbott, one of Franklin County’s road
commissioners, discussed the need for a connecting road between Highway 41A and Rock Creek
Road. Mr. Abbott told Mr. Shahan that the county would “try to get a road there” if he would obtain
a 50-foot right-of-way and make certain improvements to Radio Beam Lane and Deer Creek Lane.
Over the next three years, Mr. Shahan obtained the 50-foot right-of-way and made $37,000 in
improvements to Radio Beam Lane and Deer Creek Lane. He bulldozed the roads, placed drainage
tiles, and cleared and graded the roadbed. In addition, he recorded easements for ingress and egress
for all his property along Deer Creek Lane and Radio Beam Lane, and he prepared a plat showing
a 50-foot right-of-way for power lines.
On November 30,1993, Mr. Shahan delivered a deed to Mr. Abbott conveying ownership of
the rights-of-way for Radio Beam Lane and Deer Creek Lane to Franklin County. However, the
Franklin County Highway Commission declined to accept the deed for the rights-of-way, and in early
1994, Mr. Abbott returned the deed to Mr. Shahan. The county declined to accept the roads because
they failed to meet county standards. Specifically, they (1) were not wide enough, (2) lacked
sufficient gravel, and (3) were not paved with asphalt. In addition, the drainage tiles were
inadequate, and the ditches running along the roads were obstructed. Because it had declined to
accept these roads, the county also declined to maintain them. However, the public has used both
Radio Beam Lane and Deer Creek Lane as a connector between Rock Creek Road and Highway
41A.
Mr. Shahan continued to subdivide and sell his property along Radio Beam Lane and Deer
Creek Lane even though Franklin County declined to accept the roads.1 He advertised the property
along Deek Creek Lane as a “perfect setting for your dream home” and that the tracts he was selling
were “perfect building sites.” In October 1994, George and Dorothy Peckinpaugh purchased fifteen
acres from Mr. Shahan for $36,000. In February 1997, Linda Hudson and Ron Cunningham
purchased six acres from Mr. Shahan for $21,400. Later in 1997, Dennis and Brenda Huprich
purchased five and one-half acres for $17,250. In September 1998, Jackson and Joyce Graham
purchased nine acres for $27,750, and Larry Evans purchased five acres and a home from William
and Sharon Devine, who had purchased the lot from Mr. Shahan in 1995. Mr. Shahan assured all
of the purchasers that Deer Creek Lane and Radio Beam Lane would be taken over, improved, and
maintained by the county.
1
In Novem ber 1993 , prior to the county’s rejectio n of the ro ads, M r. Shah an had sold o ne 5.5 -acre tract to his
son and daughter-in-law. T hey co nstructed a ho me o n this tract.
-2-
The property owners eventually began applying for building permits to construct homes on
their property. The Peckinpaughs obtained a building permit in 1996, and Ms. Hudson and Mr.
Cunningham obtained a building permit in October 1997. Thereafter, Mark Dudley, Franklin
County’s building commissioner, declined to issue other building permits because neither the
subdivision nor Radio Beam Lane and Deer Creek Lane had been approved by the planning
commission. As a result of the moratorium on building permits, the Grahams have been unable to
construct a home on their lot. Their efforts to sell the property have been unsuccessful because
potential buyers lost interest in the property when they discovered that they would be unable to
obtain a building permit.
Mr. Shahan had not given up on turning over the responsibility for Radio Beam Lane and
Deer Creek Lane to the county. In January 1998, he surreptitiously recorded a deed dedicating the
lanes to the county. However, the county discovered the plot and again rejected the deed. In 1999,
Mr. Shahan again asked the county to accept the roads; however, the county again declined to
consider accepting the roads until he improved them up to county standards.
On November 16, 1999, Mr. Shahan filed suit against the Franklin County officials in the
Chancery Court for Franklin County. He argued that the county was now responsible for the
maintenance of Radio Beam Lane and Deer Creek Lane on the alternative theories of implied
dedication and promissory estoppel. He also requested a declaratory judgment that the property
owners along these roads were entitled to building permits. On February 22, 2000, several persons
who had purchased property from Mr. Shahan filed suit in the Chancery Court for Franklin County
against the county and Mr. Shahan. The property owners sought a declaratory judgment regarding
the responsibility for maintaining the roads, specific performance against Mr. Shahan, and
compensatory damages against both the county and Mr. Shahan.
The trial court consolidated the two cases in August 2000, and thereafter the county moved
for a summary judgment, and Mr. Shahan moved for a partial summary judgment. The trial court
denied Mr. Shahan’s motion but partially granted the county’s motion by dismissing (1) Mr.
Shahan’s and the property owners’ claims for monetary damages, (2) the claims arising out of the
denial of building permits, and (3) all claims against individual county defendants. Following a
bench trial in January 2002, the trial court filed an order on February 7, 2002, directing Mr. Shahan
to improve Radio Beam Lane and Deer Creek Lane up to its 1990 road standards and to submit his
subdivision to the Franklin County Planning Commission for approval within six months. The trial
court also denied the property owners’ claims for monetary damages against Mr. Shahan. Both Mr.
Shahan and the property owners have appealed.
II.
MR . SHAHAN’S EQUITABLE ESTOPPEL CLAIM
Mr. Shahan insists that Franklin County is estopped from applying its subdivision regulations
to his property and from declining to accept Radio Beam Lane and Deer Creek Lane as public roads.
He argues that Mr. Abbott, in his official capacity as a county road commissioner, promised him that
the county would take over the responsibility for the roads once he acquired a 50-foot right-of-way
and improved them and that he had fully performed his end of the bargain. Mr. Shahan’s equitable
-3-
estoppel claim must fail for three reasons. First, Mr. Abbott lacked the authority to bind the county
to accept these roads as public roads. Second, the evidence does not support Mr. Shahan’s claim that
Mr. Abbott promised to accept these roads as public roads. Third, Mr. Shahan never constructed the
roads to existing county standards.
A.
The doctrine of equitable estoppel is not favored in Tennessee, and parties seeking to invoke
it have the burden of proving each and every element. Robinson v. Tennessee Farmers Mut. Ins.
Co., 857 S.W.2d 559, 563 (Tenn. Ct. App. 1993). The doctrine protects, rather than creates, rights.
Franklin v. St. Paul Fire & Marine Ins. Co., 534 S.W.2d 661, 666 (Tenn. Ct. App. 1975); E.K.
Hardison Seed Co. v. Continental Cas. Co., 56 Tenn. App. 644, 652, 410 S.W.2d 729, 733 (1967).
Equitable estoppel may be invoked in appropriate circumstances to prevent one party from taking
unfair advantage of another party’s justifiable reliance on his or her representations or conduct.
Bokor v. Holder, 722 S.W.2d 676, 680 (Tenn. Ct. App. 1986).
Applying the doctrine of equitable estoppel to local governments is even less favored, and
so the doctrine is not applicable to governmental defendants to the same extent that it is applicable
to private parties. Paduch v. City of Johnson City, 896 S.W.2d 767, 772 (Tenn. 1995). In fact,
except for “very exceptional circumstances,” the doctrine does not apply to government actions.
Bledsoe County v. McReynolds, 703 S.W.2d 123, 124 (Tenn. 1985). As the Tennessee Supreme
Court has explained, “in those Tennessee cases where estoppel was applied, or could have been
applied, the public body took affirmative action that clearly induced a private party to act to his or
her detriment, as distinguished from silence, non-action or acquiescence.” Bledsoe County v.
McReynolds, 703 S.W.2d at 125.
This court has held that equitable estoppel may be invoked against governmental agencies
only when the agency induced the party to give up property or a right in exchange for a promise.
Thompson v. Department of Codes Admin, 20 S.W.3d 654, 664 (Tenn. Ct. App. 1999); Elizabethton
Hous. and Dev. Agency, Inc. v. Price, 844 S.W.2d 614, 618 (Tenn. Ct. App. 1992). Accordingly,
a party may invoke equitable estoppel against a governmental agency only when the facts clearly
establish the existence of an implied contract or that the government has induced a party to relinquish
a cause of action. Thompson v. Department of Codes Admin, 20 S.W.3d at 664; Elizabethton Hous.
& Dev. Agency, Inc. v. Price, 844 S.W.2d at 618.
B.
The essence of Mr. Shahan’s equitable estoppel claim is that Mr. Abbott induced him to
spend money to improve Radio Beam Lane and Deer Creek Lane by promising him that the county
would take over the responsibility for maintaining the roads once they were constructed. He insists
that he could reasonably rely on Mr. Abbott’s promise because Mr. Abbott was the Franklin County
road commissioner in charge of the roads in that part of the county. Because the trial court made few
findings of fact regarding Mr. Shahan’s equitable estoppel claim, we have reviewed the record de
novo and have determined that the evidence does not support Mr. Shahan’s claim.
-4-
Despite the fact that Mr. Abbott may have been a county road commissioner in the early
1990s, he did not have authority to bind the county to accept private roads as public roads.2 Parties
who deal with governmental officials are presumed to know the limits of the official’s authority.
J.A. Kreis & Co. v. City of Knoxville, 145 Tenn. 297, 305, 237 S.W. 55, 57 (1921); Stones River
Utils. v. Metro. Gov’t, 981 S.W.2d 175, 178 (Tenn. Ct. App. 1998). Accordingly, when Mr. Shahan
had his conversation about the roads with Mr. Abbott in 1990, he knew or should have known that
Mr. Abbott could not unilaterally bind the county to accept the roads and, therefore, that any
commitment Mr. Abbott might have made regarding the roads was legally unenforceable.
In addition to our conclusion that Mr. Abbott lacked authority to bind the county, we have
also determined that the record does not bear out Mr. Shahan’s claim that Mr. Abbott actually
promised that the county would accept these roads if they were improved. Mr. Abbott’s recollection
of his conversation with Mr. Shahan differs significantly from Mr. Shahan’s. Mr. Abbott recalls that
he told Mr. Shahan that the county would “try to help him build a road through there.” We do not
construe this comment to be an unequivocal promise to accept the roads or some implied
authorization to construct roads that did not meet the existing county requirements for new road
construction. Mr. Shahan was far from a neophyte in 1990 when he had his conversation with Mr.
Abbott and should have known the difference between encouragement and a binding commitment.
Finally, the evidence establishes beyond question that Mr. Shahan’s improvements to Radio
Beam Lane and Deer Creek Lane did not meet the county’s existing requirements for new road
construction.3 It is essentially undisputed that these roads (1) were not wide enough, (2) lacked
sufficient gravel, (3) were not paved with asphalt, and (4) lacked adequate drainage tiles. Mr.
Shahan, as an experienced developer, knew or should have known the requirements for new road
construction, and, therefore, it was not reasonable for him to entertain the notion that the county
would accept or could be required to accept newly constructed roads that did not meet the county’s
minimum standards.
Mr. Shahan cannot use a casual conversation with a county road commissioner to circumvent
the county standards for new road construction or to force the county taxpayers to bear the expense
of properly constructing and then maintaining his roads. The record demonstrates that Mr. Shahan
has not proved the existence of the sort of exceptional circumstances that would warrant invoking
the doctrine of equitable estoppel against Franklin County. Accordingly, we affirm the trial court’s
conclusion that Mr. Shahan failed to substantiate his equitable estoppel claim.
2
At the time of the conversation between Messrs. Abbott and Shahan in 1990, Tenn. Code Ann. § 13-3-406(1999) provided that “no county or court or b oard or office r thereo f or any o ther pu blic officer or authority shall accept,
lay out, open, improve, grade, pave or light any road . . . unless such road has been accepted or ope ned or has otherwise
received the legal status of a public road . . ..”
3
In 1990, these regulations required: (1) a fifty-foot cleared right-of-way; (2) proper grading and drainage; (3)
a thirty-foot minimum graded road top; (4) a minimum of six inches of compacted crushed stone extending from shoulder
to shoulder for thirty feet; (5) a minimum of two inches of asphalt extending at least twenty-two feet wide with shoulder
stone; (6) properly installed cross drains and drainage tiles; (7) properly installed road signs; (8) painted reflective center
and side lines a minimum of four inches wide; and (9) written verification from the developer that all of the required road
regulations have be en me t.
-5-
III.
MR . SHAHAN’S IMPLIED DEDICATION CLAIM
Mr. Shahan also argues that there has been an implied dedication of Radio Beam Lane and
Deer Creek Lane as public roads because the public has been using these roads since he improved
them. While it is undoubtedly true that the public has used the roads, we have determined that the
doctrine of implied dedication does not apply because the roads are in an unapproved subdivision.
The doctrine of implied dedication cannot be used to circumvent duly enacted subdivision
regulations.
A.
A dedication of real property for public use requires an offer of the property for public use
by its owner and the public’s acceptance of the property owner’s offer. Stoker v. Brown, 583 S.W.2d
765, 766 (Tenn. 1979); Winn v. Tucker Corp., 848 S.W.2d 64, 68 (Tenn. Ct. App. 1992). Both the
offer and the acceptance need not be express. They may be implied. State ex rel. Matthews v.
Metropolitan Gov’t, 679 S.W.2d 946, 948 (Tenn. 1984); West Meade Homeowners Ass’n, Inc. v.
WPMC, Inc., 788 S.W.2d 365, 366 (Tenn. Ct. App. 1989).
Parties seeking to prove an implied dedication must present clear and convincing evidence
that the property owner intended to permanently part with the real property and to vest it in the
public. Jackson v. Byrn, 216 Tenn. 537, 543, 393 S.W.2d 137, 140 (1965); McKinney v. Duncan,
121 Tenn. 265, 271, 118 S.W. 683, 684 (1909). This evidence may be circumstantial. Cole v. Dych,
535 S.W.2d 315, 319 (Tenn. 1976); Rogers v. Sain, 679 S.W.2d 450, 453 (Tenn. Ct. App. 1984).
They must also prove that the property has been accepted for public use. The government’s
acceptance of the property likewise need not be express. It too may be implied. Nashville & D.R.R.
v. State, 60 Tenn. 55, 57-58 (1873); Hackett v. Smith County, 807 S.W.2d 695, 699 (Tenn. Ct. App.
1990); Cartwright v. Bell, 57 Tenn. App. 352, 368-369, 418 S.W.2d 463, 470-471 (1967).
An implication of public acceptance arises from “a general and long-continued use by the
public as of right.” Doyle v. City of Chattanooga, 128 Tenn. 433, 438, 161 S.W. 997, 998 (1913).
While the common-law does not require a particular duration of public use, “it ought to be for such
a length of time that the public accommodation and private rights might be materially affected by
an interruption of the enjoyment.” Scott v. State, 33 Tenn. (1 Sneed) 629, 633 (1854); see also Town
of Benton v. Peoples Bank of Polk County, 904 S.W.2d 598, 602 (Tenn. Ct. App. 1995). The
Tennessee Supreme Court has explained that
[n]o particular period is controlling. Use for twenty years might be
insufficient to establish dedication in one case and yet it might be
established in another in one year. Dedication is not dependent upon
the duration of use. Use for a long period of time is, however, a
circumstance tending to show the fact of dedication.
Cole v. Dych, 535 S.W.2d at 320.
-6-
However, the doctrine of implied dedication should not, as a general matter, apply to roads
that are part of a subdivision as defined in Tenn. Code Ann. § 13-3-401(4) (1999). The regional
planning statutes, like their municipal counterparts,4 exist to promote the health, safety, and welfare
of the local residents and property owners by prescribing uniform rules for the orderly development
of real property. Tenn. Code Ann. § 13-3-302 (1999). They protect the public by guaranteeing that
adequate streets will be provided when property is subdivided. Foley v. Hamilton, 659 S.W.2d 356,
360 (Tenn. 1983). Accordingly, persons desiring to develop their property should not be permitted
to use the doctrine of implied dedication to circumvent these statutes and regulations.
The regional planning statutes themselves cannot easily accommodate the implied dedication
doctrine. Subdivisions must be approved by the regional planning commission. Tenn. Code Ann.
§ 13-3-402 (1999). Once the “platting jurisdiction” of a regional planning commission has attached,
no county or court or board or officer thereof or any other public
officer or authority shall accept, lay out, open, improve, grade, pave
or light any road . . . unless such road has been accepted or opened or
has otherwise received the legal status of a public road prior to the
attachment of the planning commission’s jurisdiction, or unless such
road corresponds in its location and lines with a road shown on a
subdivision plat approved by the planning commission.
Tenn. Code Ann. § 13-3-406 (1999). Accordingly, a county may not accept new or improved roads5
in a subdivision without first approving the subdivision plat and then accepting the roads.6
The doctrine of implied acceptance has only limited application to property within
subdivisions governed by local planning statutes. It may be invoked when a local government has
declined or refused to explicitly accept property after a developer of an approved subdivision has
complied with all applicable regulations. Accordingly, we have employed the doctrine in a case
where the developer had complied with all applicable regulations and had not only obtained the
planning commission’s approval of the subdivision plat but also had obtained a certification by the
county road commission that the roads in the subdivision complied with county standards. Even
though the local government had not expressly accepted the roads, we held that an implied
acceptance had occurred because the residents in the subdivision and the public, including mail
carriers, school buses, and law enforcement vehicles had used the road. Hackett v. Smith County,
807 S.W.2d at 699.
4
Tenn. Cod e Ann. § 13-4-301(4) (19 99).
5
Roads which have not received the legal status of a public road.
6
Of course, approval of a plat by the regional planning commission “shall not be deemed to constitute or effect
an acceptanc e by any county or by the public of the dedication of any road or other ground shown upon the plat.” Tenn.
Code Ann. § 13-3-405 (1999). The Tennessee Supreme Court has explained that “the exception carved out of the act
providing that plat approval is not acc eptan ce of ro ads the rein clearly shows the legislative intent of requiring specific
and separate acceptance of roads, over and above the step s required to get plat approval.”Foley v. Hamilton, 659 S.W.2d
at 360. Such acceptance would d epend upon w hether the road at issue com plied with the county’s regulations regarding
new road s.
-7-
B.
To determine whether Mr. Shahan may take advantage of the doctrine of implied dedication,
we must first determine whether his development of the property along Radio Beam Lane and Deer
Creek Lane is a subdivision. Mr. Shahan insists that his development is not a subdivision because
the lots in the subdivision exceed five acres. While we have no doubt that Mr. Shahan set out to
avoid the regional planning commission, we find that he has not succeeded.
Tenn. Code Ann. § 13-3-401(4)(B) defines a “subdivision” as “the division of a tract or
parcel of land into two (2) or more lots, sites, or other divisions requiring new streets or utility
construction, or any division of less than five (5) acres for the purpose, whether immediate or future,
of sale or building development.” This definition plainly includes a development containing lots
larger than five acres if the development required new streets or utility construction. Accordingly,
we determined that a project requiring the developer (1) to make major improvements in an existing
road running through the property, (2) to arrange for providing power to various lots, and (3) to
install a new water line was a subdivision. Loftin v. Langsdon, 813 S.W.2d 475, 479-80 (Tenn. Ct.
App. 1991).
Mr. Shahan made $37,000 in improvements to Radio Beam Lane and Deer Creek Lane solely
for the purpose of making his property attractive to potential purchasers. Like the developer in Loftin
v. Langsdon, he improved the existing roads by bulldozing brush and trees, grading, and installing
drainage. He also prepared a plat to enable the local electric utility to install power lines for the
development. Like the developer in Loftin v. Langsdon, Mr. Shahan did not begin selling the tracts
in his development until he had completed the improvements to the road. There is little doubt that
the improvements to Radio Beam Lane and Deer Creek Lane were required by “the imperatives of
the marketplace.” Loftin v. Langsdon, 813 S.W.2d at 480. Accordingly, we conclude that Mr.
Shahan’s development is a subdivision because it required new street and utility construction.7
C.
Because Mr. Shahan’s development is a “subdivision” as defined in Tenn. Code Ann. § 13-3-
401(4)(B), he was required not only to obtain approval of his plat, but he was also required to obtain
approval of his improvements to the roads in his subdivision before the county could be required to
accept the roads and assume responsibility for their maintenance. Mr. Shahan did neither. In
addition, his improvements to Radio Beam Lane and Deer Creek Lane did not comply with the
applicable county requirements for new roads. These facts distinguish this case from Hackett v.
Smith County in which the developer had complied with all applicable requirements for new roads.
Mr. Shahan’s wholesale disregard for the subdivision regulations and road requirements disentitles
him to claim the benefit of the doctrine of implied dedication. Accordingly, the trial court properly
declined to find that there had been an implied acceptance of Radio Beam Lane and Deer Creek
Lane.
7
W e note that Mr. Shahan violated Tenn. Code Ann. § 13-3-410(a) (199 9) by selling tracts of land in his
development before obtaining planning com mission approval.
-8-
IV.
THE STANDARDS APPLICABLE TO RADIO BEAM LANE AND DEER CREEK LANE
Because Mr. Shahan has failed to pass along the obligation to maintain Radio Beam Lane
and Deek Creek Lane to Franklin County, he has the continuing obligation to maintain these roads.
The evidence convincingly demonstrates he has shirked his responsibility. Several property owners
testified that the roads were barely passable because of deep potholes and that they had become “an
obstacle course.” When it rained, poor drainage caused water to cover the roadway in certain areas.
Accordingly, the trial court properly ordered Mr. Shahan to maintain these roads.
However, we have determined that the trial court erred by only requiring Mr. Shahan to bring
these roads up to the standards as they existed in 1990. This decision effectively rewards Mr. Shahan
for ignoring the subdivision regulations that were clearly applicable to his property. These roads are
located in a subdivision that has yet to be approved by the regional planning commission. Mr.
Shahan has never requested the planning commission to approve his subdivision, and the planning
commission will not be required to approve his subdivision until he submits a plat that meets all
applicable requirements. Likewise, the commission will not be required to accept the roads in the
subdivision until they meet applicable requirements.
In light of the fact that Mr. Shahan never sought appropriate public acceptance of these roads,
he must take the appropriate steps required by law before Franklin County can be required to accept
them. It is his obligation to bring these roads up to present standards, not the standards existing in
1990. Accordingly, we modify the judgment to require Mr. Shahan to repair or improve Radio Beam
Lane and Deer Creek Lane so that they meet the county’s current road standards.8
V.
THE PROPERTY OWNERS’ REQUESTS FOR DAMAG ES
Two of the property owners living along Radio Beam Lane and Deer Creek Lane insist that
they are entitled to collect monetary damages from Mr. Shahan in addition to specific performance.
They assert that they have lost the beneficial use of the money they used to purchase the property
and, therefore, that they are entitled to interest on the money between the time they purchased the
property and the time that Mr. Shahan obtains approval of the subdivision and the roads. We have
determined that the trial court properly denied these damage claims.
A.
A breach of contract triggers both legal and equitable remedies. The preferred remedy is the
legal remedy – monetary damages. Shuptrine v. Quinn, 597 S.W.2d 728, 730 (Tenn. 1979);
Robinson v. Kenney, 526 S.W.2d 115, 119 (Tenn. Ct. App. 1973). The purpose of monetary
damages is to compensate a party to a contract for the loss or injury sustained by the other party’s
breach. Beaty v. McGraw, 15 S.W.3d 819, 829 (Tenn. Ct. App. 1998). However, there are
8
Based on this record, the Franklin County Highway Comm ission now requires new roads to comply with the
199 5 Franklin County new ro ad standards.
-9-
occasions when monetary damages are insufficient to protect a contracting party’s expectation
interests. In those circumstances, the equitable remedy of specific performance is warranted. GRW
Enters., Inc. v. Davis, 797 S.W.2d 606, 614 (Tenn. Ct. App. 1990); Restatement (Second) of
Contracts § 359(1) (1981).
Specific performance is proper whenever there is any reasonable doubt regarding the
adequacy of monetary damages. 12 ARTHUR LINTON CORBIN , CORBIN ON CONTRACTS § 1139, at
188 (Interim ed. 2002) (“CORBIN ON CONTRACTS”). While granting specific performance is
discretionary, North v. Robinette, 527 S.W.2d 95, 98 (Tenn. 1975); Hillard v. Franklin, 41 S.W.3d
106, 111 (Tenn. Ct. App. 2000), the courts frequently grant specific performance with regard to
contracts for the sale of real property. Radiophone Broadcasting Station v. Imboden, 183 Tenn. 215,
219, 191 S.W.2d 535, 537 (1946); McGaugh v. Galbreath, 996 S.W.2d 186, 191 (Tenn. Ct. App.
1998).
In proper circumstances, a trial court may award both specific performance and damages
when specific performance will not make the injured party whole. Bush v. Cathey, 598 S.W.2d 777,
783 (Tenn. Ct. App. 1979). As Professor Corbin has explained:
A decree for specific performance seldom brings about performance
within the time that the contract requires. In this respect, such a
decree is nearly always a decree for less than exact and complete
performance. For the partial breach involved in the delay or in other
existing non-performance, money damages will be awarded along
with the decree for specific performance.
12 CORBIN ON CONTRACTS § 1160, at 254-55. Thus, for example, a court may properly decree
specific performance of a contract to convey real property and also award damages for delay in
occupancy. 330 Michigan Ave., Inc. v. Cambridge Hotel, Inc., 183 So. 2d 725, 728 (Fla. Ct. App.
1966); Cohn v. Mezzacappa Bros., Inc., 547 N.Y.S.2d 367, 369 (App. Div. 1989).
B.
The trial court determined that the property owners were entitled to specific performance of
Mr. Shahan’s agreement to provide adequate roads for ingress and egress to their property. While
the property owners do not take issue with the trial court’s decision to grant them specific
performance, they assert that specific performance alone is insufficient to make them whole. We
have determined that their evidence of damages is far too speculative to warrant an award of
damages in addition to specific performance.
As the parties seeking damages, the property owners must prove that specific performance
alone is not an adequate remedy. They must also prove the nature and amount of their damages,
Hogan v. Coyne Int’l Enters. Corp., 996 S.W.2d 195, 206 (Tenn. Ct. App. 1998). While their proof
need not be mathematically precise, it should be reasonably certain enough to enable a reasonable
trier-of-fact to make a fair and reasonable assessment of the damages. Baker v. Hooper, 50 S.W.3d
463, 470 (Tenn. Ct. App. 2001); Tire Shredders, Inc. v. ERM-North Central, Inc., 15 S.W.3d 849,
-10-
857 (Tenn. Ct. App. 1999); Wachtel v. Western Sizzlin Corp., 986 S.W.2d 2, 6 (Tenn. Ct. App.
1998).
The Peckinpaughs and the Grahams assert that they are entitled to monetary damages because
they lost the beneficial use of their property due to the substandard roads and Mr. Shahan’s failure
to obtain planning commission approval for the subdivision. They equate their damages with the
interest they would have earned on the money they used to purchase their property had they invested
the funds at eight percent as well as the expenses they incurred after purchasing the property. 9 We
find these calculations unrelated to the actual losses, if any, that the parties actually incurred because
of Mr. Shahan’s conduct.
The Grahams purchased their 9.25-acre tract because they wanted access to the back of
another piece of property they owned. After they decided to build a house on the property, they
discovered that they would be unable to obtain a building permit because the subdivision was
unimproved. They attempted to sell the property in 1999, but potential buyers lost interest after they
discovered that they would be unable to obtain a building permit. They introduced no evidence
regarding the diminished value of the property, how much their offering price was, the number of
potential buyers of the property, or whether they received counter-offers for the property and, if so,
the amount of these counter-offers. More importantly, they presented no evidence that the amount
they will be able to sell the property for after Mr. Shahan improves the roads and obtains approval
of the subdivision will not adequately compensate them.
The Peckinpaughs purchased three tracts from Mr. Shahan. They obtained a building permit
to construct their home on the middle lot but had not applied for building permits for their two
remaining lots. In addition, the Peckinpaughs had not attempted to sell any of their property, even
though they planned at some point to sell the two undeveloped lots to fund their retirement. In light
of this proof, the Peckinpaughs have failed to prove that they have actually been harmed by Mr.
Shahan’s failure to construct adequate roads or to obtain approval of his subdivision.
VI.
We affirm the judgment as modified herein and remand the case to the trial court with
directions to enter an order amending its final decree to require Mr. Shahan to bring Radio Beam
Lane and Deer Creek Lane up to Franklin County’s current standards for new roads. We tax the
costs of this appeal to Earl M. Shahan for which execution, if necessary, may issue.
_____________________________
WILLIAM C. KOCH, JR., J.
9
Their lawyer inc luded property taxes in his damage calculations. For the Peckinpaughs, the attorney calculated
the total amount of lost interest from October 1994 to January 2002 to be $10,540 plus $4,444 in real estate taxes, for
a total of $14 ,984 in damages. For the Grahams, he calculated $7,906 in lost interest, $1,200 for constructing a well,
plus $57 2 in real estate taxes, for a total of $9,678 in damages.
-11-