Custom Built Homes v. G.S. Hinsen Company, Inc. ( 2001 )

IN THE COURT OF APPEALS OF TENNESSEE
AT NASHVILLE
CUSTOM BUILT HOMES, )
)
Plaintiff/Counter-Defendant/ )
Appellee, )
) Williamson Circuit
) No. 94208
VS. )
) Appeal No.
) 01A01-9511-CV-00513
G. S. HINSEN COMPANY, INC., )
)
Defendant/Counter-Plaintiff/ )
Appellant. )
APPEAL FROM THE CIRCUIT COURT FOR WILLIAMSON COUNTY
AT FRANKLIN, TENNESSEE
THE HONORABLE HENRY DENMARK BELL, JUDGE
For the Plaintiff/Appellee: For the Defendant/Appellant:
Robert H. Plummer, Jr. Phillip B. Jones
Franklin, Tennessee EVANS, JONES & REYNOLDS
Nashville, Tennessee
AFFIRMED AND REMANDED
WILLIAM C. KOCH, JR., JUDGE
OPINION
This appeal arises out of a dispute over the workmanship of residential
renovations. The interior designer hired by the owner to undertake the renovations
withheld final payment to the contractor who performed the work because the owner
was dissatisfied with the renovations. After the contractor obtained a judgment
against the interior designer in the Williamson County General Sessions Court, the
interior designer perfected an appeal to the Circuit Court for Williamson County and
filed a counterclaim against the contractor. Following a bench trial, the trial court
dismissed the interior designer’s claims against the contractor and entered a judgment
against the interior designer for the remaining balance of the construction contract.
The interior designer has appealed. While the trial court erroneously concluded that
the Contractor’s Licensing Act of 1976 prevented the interior designer from pursuing
its claims against the contractor, we have concluded that the trial court reached the
proper result. Accordingly, we affirm the judgment.
I.
In the spring of 1992, Dan Clark decided to renovate his home in Leipers Fork.
He retained G. S. Hinsen Company, Inc., a Nashville interior design firm, to
undertake and complete the renovations. Under its verbal agreement with Mr. Clark,
G. S. Hinsen agreed to hire and superintend one or more contractors to perform the
work on Mr. Clark’s home.
G. S. Hinsen sought a quote for the work from Custom Built Homes, and in
May 1992 Custom Built Homes submitted a proposal to G. S. Hinsen stating that it
would perform the specified renovations to Mr. Clark’s home for $8,687. G. S.
Hinsen accepted the proposal and accordingly entered into a contract with Custom
Built Homes for the work. After Custom Built Homes started the work, Mr. Clark
decided to expand the scope of the project to include the construction of a horse barn
and the extension of an existing fence. In September 1992, Custom Built Homes
submitted another proposal to G. S. Hinsen offering to perform the additional work
for $31,640. G. S. Hinsen accepted the proposal and accordingly entered into a
second contract with Custom Built Homes. Mr. Clark never entered into a contract
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with Custom Built Homes; his only contract for these renovations was with G. S.
Hinsen.
During the course of the construction, Custom Built Homes periodically
submitted requests for progress payments to G. S. Hinsen, and G. S. Hinsen made
corresponding payments to Custom Built Homes for the work performed.1 Before the
project was substantially completed, Mr. Clark informed G. S. Hinsen of his
dissatisfaction with portions of the work, including the fit and finish of the interior
millwork, the fence, and the barn. Custom Built Homes undertook some remedial
work on the interior millwork and the fence but disputed the remaining complaints
about the quality of its work. Ultimately, G. S. Hinsen declined to pay Custom Built
Homes’s final $932 bill to induce Custom Built Homes to satisfy Mr. Clark’s
complaints about the quality of the work.
After Custom Built Homes and G. S. Hinsen were unable to resolve their
dispute, Custom Built Homes sued G. S. Hinsen in the Williamson County General
Sessions Court seeking to recover $932. G. S. Hinsen, in turn, filed a claim against
Custom Built Homes seeking $10,000 (the general session’s court’s jurisdictional
limits at the time) for breach of contract stemming from defective or uncompleted
work. The general sessions court awarded Custom Built Homes $832 and dismissed
G. S. Hinsen’s claim.
G. S. Hinsen perfected an appeal to the Circuit Court for Williamson County
where it filed an amended counterclaim against Custom Built Homes for $21,585.
During the trial, the trial court determined that G. S. Hinsen had been functioning as
an unlicensed contractor and, therefore, that G. S. Hinsen could recover from Custom
Built Homes only if it could prove its damages by clear and convincing proof. At the
conclusion of the proof, the trial court dismissed G. S. Hinsen’s claims against
Custom Built Homes because its proof of damages was purely speculative. The trial
court also gave Custom Built Homes a $932 judgment against G. S. Hinsen. This
appeal ensued.
II.
1
Although the record is not entirely clear, it appears that Mr. Clark also made periodic
payments to G. S. Hinsen.
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We turn first to the trial court’s conclusion that G. S. Hinsen could not recover
from Custom Built Homes because it was an unlicensed contractor. G. S. Hinsen
takes issue with this conclusion on the ground that it is a licensed interior designer
and that it “did not intend for its involvement in this project to be that of a
contractor.” Notwithstanding G. S. Hinsen’s intentions, it was performing
contracting services covered by the Contractor’s Licensing Act of 1976. However,
its failure to be properly licensed did not prevent it from filing suit against Custom
Built Homes.
When G. S. Hinsen entered into its contract with Mr. Clark in 1992, Tenn.
Code Ann. § 62-6-103(a)(1) required all persons engaging or offering to engage in
“contracting” to be licensed by the state contractor’s licensing board. Tenn. Code
Ann. § 62-6-102(1)(A) defined “contracting” as
undertaking, for a fixed price, fee, commission, or gain of
whatever nature, to construct, erect, alter, repair, supervise,
superintend, oversee, direct, or in any manner assume
charge of the construction, erection, alteration, or repair of
part or all of any structure, or private work or utility of any
nature or character whatsoever . . . where the cost of the
completed work, or of different projects under a single
contract, equals or exceeds twenty-five thousand dollars
($25,000).
The definition explicitly excluded services performed by licensed architects and
engineers but did not exclude the services of interior designers.
An employee of G. S. Hinsen described the company’s business to include
construction management services. Under the facts of this case, it is clear that Mr.
Clark was paying G. S. Hinsen a fee to superintend, oversee, and assume charge of
the construction of the renovations to his house. Accordingly, G. S. Hinsen was
performing “contracting” services which required a license.
The purpose of the Contractor’s Licensing Act of 1976 is to safeguard the
public’s safety and property. See Farmer v. Farmer, 528 S.W.2d 539, 542 n.1 (Tenn.
1975); Winter v. Smith, 914 S.W.2d 527, 538 (Tenn. Ct. App. 1995). In order to
induce persons engaging in contracting to become licensed, the Tennessee Supreme
Court created a common law disability preventing unlicensed contractors from using
the courts to collect payment for their work, even under the doctrine of quantum
meruit. See Chedester v. Phillips, 640 S.W.2d 207, 208 (Tenn. 1982); Farmer v.
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Farmer, 528 S.W.2d at 542. This harsh rule was later modified to permit unlicensed
contractors to recover their actual documented expenses if they could present clear
and convincing evidence of these expenses. See Tenn. Code Ann. § 62-6-103(c);
Gene Taylor & Sons Plumbing Co. v. Corondolet Realty Trust, 611 S.W.2d 572, 577
(Tenn. 1981).
The trial court evidently determined that Tenn. Code Ann. § 62-6-103(c)
applied to G. S. Hinsen’s claim. However, in doing so, it overlooked the decisions
holding that the common-law restriction on an unlicensed contractor’s access to court
does not apply to disputes between contractors and other licensed professionals in the
construction business. See Gene Taylor & Sons Plumbing Co. v. Corondolet Realty
Trust, 611 S.W.2d at 575-56; Wiltcher v. Bradley, 708 S.W.2d 407, 409 (Tenn. Ct.
App. 1985). This is not a case in which G. S. Hinsen is attempting to collect its fee
or its expenses from Mr. Clark. Rather, this case is nothing more than a contract
dispute between the company who contracted with the owner to renovate the owner’s
house and the company with whom this contractor contracted to perform the work.
Under these circumstances, neither Gene Taylor & Sons Plumbing Co. v. Corondolet
Realty Trust nor Tenn. Code Ann. § 62-6-103(c) had any application to G. S.
Hinsen’s claims against Custom Built Homes.
III.
We turn next to the adequacy of G. S. Hinsen’s proof of damages. In light of
our previous finding that Tenn. Code Ann. § 62-6-103(c) did not apply to G. S.
Hinsen’s claim against Custom Built Homes, we find that the trial court erred by
requiring G. S. Hinsen to prove its claim for damages with clear and convincing
evidence. However, this error does not necessarily require reversal of the judgment
if G. S. Hinsen failed to carry its proper burden of proof with regard to its breach of
contract claim.
The essential elements of any breach of contract claim include (1) the existence
of an enforceable contract, (2) nonperformance amounting to a breach of the contract,
and (3) damages caused by the breach of the contract. See Life Care Ctrs. of Am.,
Inc. v. Charles Town Assocs. Ltd. Partnership, LPIMC, Inc., 79 F.3d 496, 514 (6th
Cir. 1996). G. S. Hinsen proved the existence of two contracts with Custom Built
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Homes stemming from the two proposals submitted by Custom Built Homes in May
1992 and September 1992. Accordingly, the success of G. S. Hinsen’s breach of
contract claim hinges on the adequacy of its evidence concerning the remaining two
elements of a breach of contract claim.
The evidence concerning whether Custom Built Homes breached its contracts
is much less clear. The trial court determined that “some of the [interior] work could
have been improved” but that Custom Built Homes had not been given an
opportunity to remedy the defects prior to litigation. The trial court also found that
G. S. Hinsen has failed to prove that the fence and barn were not properly
constructed. Our review of the evidence under Tenn. R. App. P. 13(d) causes us to
have some concern about the trial court’s conclusions concerning whether the
“evidentiary scales tip, no matter how slightly,” 2 in favor of Custom Built Homes
with regard to each and every part of the work alleged to be defective. However, we
need not determine whether the evidence preponderates against the trial court’s
findings regarding the quality of the work because of the clear shortcomings in G. S.
Hinsen’s proof of damages.
Damages in breach of contract cases are nothing more than payment in money
for actual losses caused by the breach of contract. Only persons who have actually
sustained an injury, see Collins v. East Tenn., Va. & Ga. R.R., 56 Tenn. (9 Heisk.)
841, 850-51 (1872); Aycock v. Nashville, Chattanooga & St. Louis Ry., 4 Tenn. App.
655, 667 (1927), or who have suffered an actual loss, see Western Union Tel. Co. v.
Green, 153 Tenn. 59, 82-83, 281 S.W. 778, 785 (1926), may recover damages.
Parties are not entitled to uncertain, contingent, or speculative damages. See
Moore Constr. Co. v. Clarksville Dep’t of Elec., 707 S.W.2d 1, 15 (Tenn. Ct. App.
1985); Maple Manor Hotel, Inc. v. Metropolitan Gov’t of Nashville and Davidson
County, 543 S.W.2d 593, 599 (Tenn. Ct. App. 1975). Damages will be considered
uncertain or speculative when their existence is uncertain, see Jennings v. Hayes, 787
S.W.2d 1, 3 (Tenn. Ct. App. 1989); Cummins v. Brodie, 667 S.W.2d 759, 765 (Tenn.
Ct. App. 1983), or when the proof is insufficient to enable a trier of fact to make a fair
and reasonable assessment of damages. See Wilson v. Farmers Chem. Ass’n, Inc., 60
2
See Stinson v. Carpenter, App. No. 01A01-9601-CV-00036, 1997 WL 24877, at *2 (Tenn.
Ct. App. Jan. 24, 1997) (No Tenn. R. App. P. 11 application filed).
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Tenn. App. 102, 111, 444 S.W.2d 185, 189 (1969). Damages need not be proved
with mathematical certainty, see Airline Constr., Inc. v. Barr, 807 S.W.2d 247, 274
(Tenn. Ct. App. 1990), but rather with only reasonable certainty. See Lamons v.
Chamberlain, 909 S.W.2d 795, 801 (Tenn. Ct. App. 1993).
G. S. Hinsen has failed to prove that it has been actually damaged by Custom
Built Homes’s purported breach of contract. The faulty workmanship, if it occurred,
damaged Mr. Clark’s home. Since Mr. Clark has already paid the full, agreed-upon
price for the renovations, G. S. Hinsen has received the full benefit of its bargain with
Mr. Clark and thus has not been injured.3
G. S. Hinsen could theoretically be damaged if Mr. Clark could require G. S.
Hinsen to correct the defective work at its own cost. Presently, the extent of this
potential liability is completely speculative. The record contains no evidence that Mr.
Clark has or could make an enforceable demand on G. S. Hinsen to repair the
allegedly defective work,4 or that G. S. Hinsen has actually corrected any of the
allegedly defective work. Nor does the record contain any evidence of the actual cost
of any corrective work that may have been performed.
After listening to all the evidence, the trial court concluded that the existence
of damages to G. S. Hinsen was speculative. We agree and, accordingly, find that the
trial court was fully justified in dismissing G. S. Hinsen’s counterclaim against
Custom Built Homes on the ground that G. S. Hinsen failed to present adequate proof
of its damages.
IV.
3
The record contains no factual basis to conclude that G. S. Hinsen was asserting Mr. Clark’s
damage claim. G. S. Hinsen’s lawyer stated at the outset of the trial that his client was not suing
Custom Built Homes as Mr. Clark’s agent. While he argued later that Mr. Clark had “in essence”
assigned its claim for damages to G. S. Hinsen, the record contains no competent proof of the
claimed assignment.
4
The only evidence in the record concerning an agreement between Mr. Clark and G. S.
Hinsen concerning the correction of the defective work is that G. S. Hinsen had agreed “to take care
of all the problems with the fence, with the barn, with the house” out of any proceeds it recovered
from Custom Built Homes.
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As a final matter, G. S. Hinsen complains that the trial court denied its motion
for new trial without affording it a hearing. It characterizes the trial court’s action as
a “drastic measure” and as “an abuse of discretion.” We disagree because the manner
in which the trial court considered and acted upon the motion was consistent with
Rule 5.02 of the Local Rules for the Twenty-First Judicial District.
G. S. Hinsen’s lawyer filed a motion for new trial on July 20, 1995 - four days
before the trial court entered the judgment. He also set the motion on the trial court’s
July 31, 1995 motion docket, apparently overlooking Local Rule 5.02 which
expressly provides that motions for new trial will not be set for hearing except upon
direction of the trial court. After the judgment was entered on July 24, 1995, the trial
court reviewed G. S. Hinsen’s motion for new trial and supporting memorandum and
on July 26, 1995, entered an order denying the motion.
The Tennessee Rules of Civil Procedure do not give litigants a right to insist
on oral argument prior to the submission and determination of motions. While
Tennessee’s courts have never confronted this question directly, our federal
counterparts have consistently held that district courts have considerable discretion
whether or not to allow oral argument on motions and that their decisions will be
rarely overruled. See Borden, Inc. v. Meiji Milk Prods. Co., 919 F.2d 822, 828 (2d
Cir. 1990); Domegan v. Fair, 859 F.2d 1059, 1065 (1st Cir. 1988); U.S.F.&G. v.
Lawrenson, 334 F.2d 464, 467 (4th Cir. 1964); Tomar Elec., Inc. v. Whelen Tech.,
Inc., 819 F. Supp. 871, 873 n.1 (D. Ariz. 1992). The Federal Rules of Civil Procedure
even expressly authorize district courts to adopt local rules of practice governing
when or if oral arguments on motions will be permitted. See Fed. R. Civ. P. 78; M.D.
Tenn. R. 8(b)(1); Lewis, Lewis & Van Etten, Inc. v. MCI Telecomm. Corp., 138
F.R.D. 25, 26 (E.D.N.Y. 1991).
The Tennessee Rules of Civil Procedure do not contain a rule analogous to Fed.
R. Civ. P. 78. However, trial courts may adopt local rules of practice that do not
conflict with the Tennessee Rules of Civil Procedure. See Tenn. Code Ann. § 16-2-
511 (1994); Tenn. S. Ct. R. 18; Brown v. Daly, 884 S.W.2d 121, 123-24 (Tenn. Ct.
App. 1994). Thus, in the absence of a rule requiring otherwise, Tennessee’s trial
courts may adopt local rules permitting them to consider and act on motions without
oral argument.
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Our rules of practice require motions to “state with particularity the grounds
therefor, and . . . the relief or order sought.” See Tenn. R. Civ. P. 7.02. Thus, a
properly prepared motion accompanied by a memorandum of law should thoroughly
appraise the trial court of the specific relief requested and the reasons why the
requested relief should be granted. It follows, therefore, that oral argument in most
cases serves mainly to restate points already made in the motion and supporting
memorandum of law. Under these circumstances, we cannot say that the trial court
acted improperly by considering and acting on G. S. Hinsen’s motion for new trial
without oral argument.
V.
We affirm the judgment awarding Custom Built Homes $932 plus interest and
dismissing G. S. Hinsen’s counterclaim and remand the case to the trial court for
whatever further proceedings may be required. We tax the costs of this appeal to G.
S. Hinsen Company, Inc., and its surety for which execution, if necessary, may issue.
____________________________
WILLIAM C. KOCH, JR., JUDGE
CONCUR:
__________________________________
HENRY F. TODD, PRESIDING JUDGE
MIDDLE SECTION
__________________________________
BEN H. CANTRELL, JUDGE
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