Donald Greg Hopper v. Betty J. Moling ( 2005 )

IN THE COURT OF APPEALS OF TENNESSEE
AT JACKSON
MAY 17, 2005 Session
DONALD GREG HOPPER v. BETTY J. MOLING
Direct Appeal from the Chancery Court for Madison County
No. 55911 James F. Butler, Chancellor
No. W2004-02410-COA-R3-CV - Filed August 26, 2005
The plaintiff, an unlicensed home improvement contractor, entered into an agreement with the
defendant/homeowner to make certain improvements to her existing home. Shortly after the plaintiff
left the job site, the defendant/homeowner began to experience several problems associated with the
plaintiff’s work. The defendant/homeowner paid to have the defects repaired and/or completed. The
plaintiff filed a petition against the defendant/homeowner to enforce a materialman’s lien. The
defendant/homeowner filed a counter-complaint seeking damages for breach of contract, breach of
implied warranties, fraud, and violations of the Tennessee Consumer Protection Act. At the
conclusion of the bench trial, the chancellor held that the plaintiff’s conduct amounted to
constructive fraud, thereby voiding the contract; the plaintiff was only entitled to recover the cost
of his labor and materials under quantum meruit; and the defendant/homeowner was entitled to
damages, attorney’s fees, and discretionary costs. The plaintiff appealed to this Court to contest the
chancellor’s inclusion of certain costs in the damage award, the limitation of his quantum meruit
recovery, the finding of constructive fraud, and the award of attorney’s fees to the
defendant/homeowner. The defendant/homeowner appealed the chancellor’s exclusion of certain
costs from the damage award and the method used by the chancellor in calculating the damages. We
affirm in part and vacate in part.
Tenn. R. App. P. 3; Appeal as of Right; Judgment of the Chancery Court Affirmed in Part
and Vacated in Part
ALAN E. HIGHERS, J., delivered the opinion of the court, in which DAVID R. FARMER , J., and HOLLY
M. KIRBY , J., joined.
Kevin Carter, Lexington, TN, for Appellant
J. Brandon McWherter, Jackson, TN, for Appellee
OPINION
I.
FACTUAL BACKGROUND AND PROCEDURAL HISTORY
In 1998, Betty J. Moling (“Ms. Moling” or “Appellee”) entered into an oral contract with
Donald G. Hopper (“Mr. Hopper” or “Appellant”) whereby Mr. Hopper agreed to make certain
improvements to Ms. Moling’s home located in Jackson, Madison County, Tennessee. Ms. Moling
is an elderly female, and she is the aunt of Mr. Hopper’s wife’s mother. Mr. Hopper is employed
as a trooper with the Tennessee Highway Patrol. Mr. Hopper has also performed construction work
for approximately ten years. He previously performed construction work for Ms. Moling prior to
engaging in the projects which gave rise to the instant litigation.
Regarding the projects which are the center of this dispute, Ms.Moling asked Mr. Hopper to
make two improvements to her home. First, Ms. Moling asked Mr. Hopper to install vinyl flooring
in a significant portion of her home. Mr. Hopper agreed to perform this task for $2,600.00 , which
represented the cost of his labor and materials. Second, Ms. Moling asked Mr. Hopper to construct
a garage/bathroom addition onto her existing home. Mr. Hopper agreed to perform this task for
$19,800.00, which represented the cost of his labor and materials. Thus, the total agreed upon cost
of both projects equaled $22,400.00.
During the process of entering into the agreement with Ms.Moling, Mr. Hopper admitted that
he held himself out as a person who was qualified and competent to perform the requested work.
Ms. Moling believed that Mr. Hopper held the proper licenses and had obtained the proper permits
necessary for the work she requested him to perform. In fact, Mr. Hopper did not have a contractor’s
license, an electrician’s license, or a plumber’s license. Mr. Hopper obtained a building permit on
January 15, 1999, after he began constructing the garage/bathroom addition, but he only obtained
a permit for $4,000.00.
Mr. Hopper completed the installation of the vinyl flooring on December 9, 1998, and Ms.
Moling paid Mr. Hopper the $2,600.00 agreed upon by the parties. According to Ms. Moling, Mr.
Hopper assured her that the garage/bathroom addition would be completed by Christmas of 1998,
which Mr. Hopper denied. Mr. Hopper began constructing the garage/bathroom addition on January
15, 1999. Ms. Moling paid Mr. Hopper $5,000.00 on January 15, 1999, $5,000.00 on January 28,
1999, and $5,000.00 on February 9, 1999. These payments, totaling $15,000.00, were the only
payments Ms. Moling made to Mr. Hopper for the garage/bathroom addition. According to Ms.
Moling, each time she gave Mr. Hopper a $5,000.00 payment, he would assure her that the garage
would be completed in three to four days. Ms. Moling asserted that, when she gave Mr. Hopper the
final $5,000.00 payment on February 9, 1999, he told her that his laborers quit, and he promised that
the garage/bathroom addition would be completed in three to four more days. According to Mr.
Hopper, the weather in January and February of 1999 delayed construction of the addition. There
was a dispute between the parties as to whether Mr. Hopper abandoned the construction project or
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was fired after he received the final $5,000.00 payment on February 9, 1999. Mr. Hopper asserted
that Ms. Moling fired him. Ms. Moling asserted that Mr. Hopper failed to return to complete the job
after she made the last payment.
During the installation of the vinyl flooring, Ms. Moling asserted that she pointed out several
problems to Mr. Hopper regarding the quality of his work, and he agreed to fix the problems. She
also expressed her dissatisfaction with the installation when she tendered the $2,600.00 payment to
Mr. Hopper on December 9, 1998. Mr. Hopper stated that the floor was “good” when he finished
the installation, and he believed that Ms. Moling was satisfied with his work up to that point.
However, within three months after Mr. Hopper completed the installation, the vinyl flooring began
to “peel up.” Because she lacked the funds needed to repair the floor at that time, Ms. Moling placed
rugs over the floor to cover those areas where the vinyl flooring was “peeling up.” Just prior to the
trial in this matter, Ms. Moling hired Tim Roe (“Mr. Roe”) of T & L Tile Center to repair the
flooring. Mr. Roe removed the vinyl flooring and installed a new vinyl floor of the same model
installed by Mr. Hopper. Ms. Moling paid Mr. Roe $3,187.00 to repair the flooring.
Ms. Moling also experienced numerous problems with the new garage/bathroom addition
constructed by Mr. Hopper. At some point after February 9, 1999, the last time that Mr. Hopper was
at the job site, Ms. Moling began to experience electrical problems, and “the breakers kept kicking
out all over the house.” Ms. Moling contacted Rodney Owens (“Mr. Owens”), a licensed electrician,
to inspect her home and determine the cause of the problem. Mr. Owens inspected the home on or
around February 15, 1999, and he discovered that Mr. Hopper had improperly installed the electrical
wiring for the new garage/bathroom addition. Mr. Owens opined that Mr. Hopper’s electrical work
was “not too good.” Mr. Owens, assisted by Charles Roe (“Mr. Roe”), Ms. Moling’s son, pulled off
some of the walls erected by Mr. Hopper and noted problems with the plumbing as well. According
to Mr. Hopper, he had only completed the “rough wiring” and “rough plumbing” when he left the
job site, and he planned to have a friend, who is licensed electrician, finish the electrical and
plumbing work.
Mr. Owens instructed Ms. Moling to contact Richard Woodard (“Mr. Woodard”), the
building inspector for Madison County at the time, to inspect the garage/bathroom addition. In fact,
Mr. Woodard inspected the progress of the construction project on three separate occasions: January
19, 1999, February 19, 1999, and February 24, 1999. During his inspections, Mr. Woodard noted
several problems with the construction, and he drafted a letter to Mr. Hopper on February 25, 1999,
setting forth his findings. Specifically, Mr. Woodard noted numerous code violations to include the
following: (1) failure to obtain a permit for the correct amount of work to be done; (2) failure to
obtain a permit to build a bathroom; (3) failure to request a framing or insulation inspection before
covering the framing and insulation: (4) failure to square the slab forms before pouring concrete,
which allowed water to run under the bottom plate and into the garage; (5) the bottom plate of the
walls were improperly anchored; (6) excessive notches were cut in several studs when cutting them
for the plumbing drain; (7) insulation was installed on the wrong side of the water supply lines; (8)
the water heater was installed so that access to the heating element faces a wall which makes it
inaccessible for service; (9) several plumbing leaks have been noted; (10) the shower drain was
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improperly vented; (11) the new front door was installed in the existing door jam and did not fit,
allowing a 1/4 inch gap on the hinge side; (12) the vinyl floor was installed incorrectly, leaving a gap
between blocks in two or more areas; and (13) the electrical work was not inspected by the state
electrical inspector. Mr. Woodard characterized Mr. Hopper’s work as “not up to standard” and “the
workmanship was poor.”
In late February of 1999, Ms. Moling hired Chris Stephenson (“Mr. Stephenson”), her
granddaughter’s husband, to inspect and complete the plumbing work begun by Mr. Hopper. Mr.
Stephenson, a licensed plumber at the time, noted that Mr. Hopper had “roughed in the plumbing,”
but he had not hooked the plumbing up to the water supply. With the assistance of Mr. Roe, Mr.
Stephenson hooked the plumbing to the water supply, turned it on, and found that the plumbing
installed by Mr. Hopper leaked. Mr. Stephenson also found that a lack of proper ventilation caused
the smell of sewage from the septic tank to enter the bathroom, and he noted several plumbing code
violations. Ms. Moling paid Mr. Stephenson to repair the plumbing problems, remove rock, and fix
ruts left in her yard by Mr. Hopper.
Ms. Moling also experienced numerous leaks around the garage/bathroom addition whenever
it would rain. Since the concrete slab the garage/bathroom addition sat on was not square, ground
water entered the structure when it rained. Mr. Hopper admitted that the concrete foundation was
not square because a retaining brace broke when the concrete was being poured. He stated that, if
he would have been allowed to finish the job, he intended to build an asphalt walkway against a wall
of the addition to divert rainwater away from the structure. Ms. Moling initially had Will Taylor
(“Mr. Taylor”) pour concrete around the garage/bathroom addition to prevent leaking. When this
failed to remedy the problem, she hired a company to install gutters and an awning on the addition
to divert rainwater away from her home. Both parties conceded that their original contract did not
call for the installation of the awning. Ms. Moling also paid to have the roof repaired where Mr.
Hopper attached the garage/bathroom addition to her existing home because leaks formed in the area
when it rained.
On March 18, 1999, Mr. Hopper filed a “Petition to Enforce Materialmans Lien” against Ms.
Moling in the Chancery Court of Madison County seeking to recover $5,575.00 for the
underpayment of the services he rendered to Ms. Moling. Thereafter, Ms. Moling filed an answer
and counterclaim against Mr. Hopper alleging fraud, misrepresentation, and deceit. After the
chancellor granted Ms. Moling’s motion to amend her counterclaim, she alleged breach of contract,
breach of implied warranties, fraud, and violations of the Tennessee Consumer Protection Act. Mr.
Hopper filed an answer denying the allegations in Ms. Moling’s counter-complaint. Prior to trial,
the parties stipulated in writing that Ms. Moling incurred expenses in the amount of $13,546.54 to
repair and/or complete the work performed by Mr. Hopper. In the same document, the parties also
stipulated that Mr. Hopper incurred $12,255.04 in costs representing his labor and the materials in
performing the work on Ms. Moling’s residence.
The chancellor conducted a bench trial on March 1, 2004. At trial, Ms. Moling testified that,
due to the leaks in the roof, she had to replace the carpet in her bedroom and bathroom in 2001 at
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a cost of $224.14. At the conclusion of the hearing, the chancellor orally ruled in favor of Ms.
Moling, stating as follows:
Mr. Hopper, the Court finds that he has breached his duty to
do the work in a workmanlike manner and free from structural
defects. We’ve had three experts to testify to that and opine the
electric and the construction work and the floors were of poor
workmanship quality, and they outline several defects. We’ve looked
at them on the list. I’ve made notes about them; several defects
and/or code violations that would be sufficient to constitute a breach
of the contract and breach of Mr. Hopper’s duty to construct these
improvements in a workmanlike manner.
Now, it does not amount to active or intentional fraud, but it
does under the legal definition amount to constructive fraud;
therefore, Mr. Hopper could only recover under Quantum Meruit.
That would be the actual amount of labor and materials that he put
out on the job and that he could prove. Those figures have been
stipulated to be $12,255.04, so he would have been entitled to recover
that amount. The constructive fraud basically destroys his contract,
whether it’s oral or written, so he’s limited to recover under Quantum
Meruit. So his complaint that he has filed seeking additional recovery
is denied.
Now, getting down to the figures, I’ve looked at this awning
and gutter matter, and I’ve looked at the photographs; and it would
appear to the Court that the awning and gutters would not have been
necessary, had the building been sitting flush with the concrete pad.
Not sitting flush causes water to drip off and hit the concrete pad;
therefore allowing it to seep back into the room. I had considered
whether or not to allow that, and I am going to allow it.
Now, basically what I find, that Mrs. Moling contracted for a
$19,800 addition to her house. She got it, but she had to pay
$28,770.68 to get that. She paid $13,770 plus she paid $15,000 to
Mr. Moling. So the difference there is $8,970 that she paid more than
what she contracted for to get what she’s actually got. She actually
overpaid Mr. Moling [sic] because she paid him $2,745 more than he
could recover under Quantum Meruit; therefore there would be a
judgment in favor of Mrs. Moling for $11,715. The costs will be
against Mr. Hopper.
The tile claim that Mrs. Moling filed, the Court is not
convinced by a preponderance of the evidence that it’s totally
chargeable to Mr. Hopper. It’s very far removed. It’s totally been
fixed recently. There’s been conflicting testimony about it, and I
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resolve that in favor of Mr. Hopper. For one reason, the length of
time involved.
The attorney’s fees will be awarded to Mrs. Moling, and I
have not set an amount there at this time because I don’t know the
figures. And, Mr. McWherter, if you submit me the application,
submit that to Mr. Carter at the same time. Mr. Carter, if you want to
oppose that or object to it say something about it, feel free to do that.
I’ll hold that about 15 days before I do anything. . . .
Thereafter, Counsel for Ms. Moling submitted her application seeking attorney’s fees and
discretionary costs in the amount of $11,355.73.
On March 29, 2004, the chancellor entered “Findings of Fact and Conclusions of Law” which
consisted of an adoption of the transcript of the chancellor’s oral ruling at the conclusion of the
hearing. That same day, the chancellor entered an order dissolving the lien placed on Ms. Moling’s
real property by Mr. Hopper. On April 26, 2004, the chancellor entered a “Final Decree and
Judgment” awarding Ms. Moling $11,715.00 in damages, attorney’s fees in the amount of $9,244.12
pursuant to the Tennessee Consumer Protection Act, and discretionary costs in the amount of
$876.11 pursuant to Rule 55.04(2) of the Tennessee Rules of Civil Procedure. Thus, Ms. Moling
received a total judgment in the amount of $21,835.23 from the trial court. On May 25, 2004, Mr.
Hopper filed a motion to alter or amend the judgment arguing that the evidence presented at trial did
not support the trial court’s findings and judgment. On September 1, 2004, the chancellor entered
an order denying Mr. Hopper’s motion.
II.
ISSUES PRESENTED
Mr. Hopper filed a timely notice of appeal to this Court presenting the following issues
for our review:
1. Whether the chancery court erred in ruling that Appellant’s failure to complete the
requested work in a workmanlike manner amounted to constructive fraud which
“destroyed” the contract between the parties;
2. Whether the chancery court erred in denying the Appellant the value of his personal labor
in quantum meruit;
3. Whether the chancery court erred in its calculation of Appellee’s damages, specifically:
a. Whether the chancery court erred in its calculation of damages by including the
cost of the awning in the damage award;
b. Whether the chancery court erred by failing to deduct the expenses claimed by
Appellee related to replacing the vinyl flooring;
c. Whether the chancery court erred in its calculation of damages by including the
cost of replacing the roof and carpet in the damage award; and
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4. Whether the chancery court erred in finding that Appellant should pay Appellee her
attorney’s fees.
Ms. Moling has presented the following additional issues for our review:
5. Whether the chancery court erred in its calculation of damages by considering the amount
of the contract between the parties when the trial court previously found that the contract
to be void; and
6. Whether the trial court erred in excluding Appellee’s expenditures associated with the
repair and/or replacement of the vinyl flooring installed by Appellant.
For the following reasons, we affirm in part and vacate in part the decision of the chancery court.
III.
STANDARD OF REVIEW
In a non-jury case, we evaluate the trial court’s findings of fact de novo and afford those
findings a presumption of correctness unless the preponderance of the evidence is otherwise. See
Ganzevoort v. Russell, 949 S.W.2d 293, 296 (Tenn. 1997) (citing Tenn. R. App. P. 13(d)); Sloan
v. Perryman, No. M1999-00828-COA-R3-CV, 2000 Tenn. App. LEXIS 596, at *7 (Tenn. Ct. App.
Aug. 31, 2000). In evaluating the trial court’s findings of fact in this case, we are mindful of the
following:
Unlike appellate courts, trial courts are able to observe witnesses as
they testify and to assess their demeanor, which best situates trial
judges to evaluate witness credibility. See State v. Pruett, 788
S.W.2d 559, 561 (Tenn. 1990); Bowman v. Bowman, 836 S.W.2d
563, 566 (Tenn. Ct. App. 1991). Thus, trial courts are in the most
favorable position to resolve factual disputes hinging on credibility
determinations. See Tenn-Tex Properties v. Brownell-Electro, Inc.,
778 S.W.2d 423, 425-26 (Tenn. 1989); Mitchell v. Archibald, 971
S.W.2d 25, 29 (Tenn. Ct. App. 1998). Accordingly, appellate courts
will not re-evaluate a trial judge’s assessment of witness credibility
absent clear and convincing evidence to the contrary. See Humphrey
v. David Witherspoon, Inc., 734 S.W.2d 315, 315-16 (Tenn. 1987);
Bingham v. Dyersburg Fabrics. Co., Inc., 567 S.W.2d 169, 170
(Tenn. 1978).
Wells v. Tenn. Bd. of Regents, 9 S.W.3d 779, 783 (Tenn. 1999). We review a trial court’s
conclusions of law under a purely de novo standard of review affording no presumption of
correctness to those findings. See Union Carbide Corp. v. Huddleston, 854 S.W.2d 87, 91 (Tenn.
1993); Adams v. Dean Roofing Co., Inc., 715 S.W.2d 341, 343 (Tenn. Ct. App. 1986).
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IV.
DISCUSSION
A.
Constructive Fraud
In her counter-complaint, Ms. Moling alleged that Mr. Hopper’s conduct amounted to fraud.
The trial court in the instant case relied upon the testimony of Ms. Moling’s three experts, Mr.
Woodard, Mr. Owens, and Mr. Stephenson, to conclude that Mr. Hopper breached the party’s
contract by failing to perform the projects in a workmanlike manner. The trial court went further and
concluded that Mr. Hopper’s actions amounted to constructive fraud, therefore, the contract was
void. On appeal, Mr. Hopper argues that the evidence in the record fails to support a finding of
constructive fraud.
“The doctrine of constructive fraud is recognized in this state as being a principle of equity.”
Land Developers, Inc. v. Maxwell, 537 S.W.2d 904, 918 (Tenn. 1976) (citation omitted). This
Court has previously adopted the following general explanation of the doctrine of constructive fraud:
“Constructive fraud is a breach of legal or equitable duty which,
irrespective of the moral guilt of the fraud feasor, the law declares
fraudulent because of its tendency to deceive others, to violate public
or private confidences or to injure public interests. Neither actual
dishonesty of purpose nor intent to deceive is an essential element of
constructive fraud. The presence or absence of such an intent
distinguishes actual fraud from constructive fraud.” 26 C.J. 1061;
Bank of Blount County v. Dunn, 10 Tenn. App. 95; Noel & Co. v.
Henderson, supra.
Hartnett v. Doyle, 64 S.W.2d 227, 232 (Tenn. Ct. App. 1932); see also Edwards v. Travelers Ins.
of Hartford, 563 F.2d 105, 114 (6th Cir 1977); Groover v. Torkell, 645 S.W.2d 403, 409 (Tenn. Ct.
App. 1982); Parks v. Alexander, 608 S.W.2d 881, 891 (Tenn. Ct. App. 1980); Maxwell v. Land
Developers, Inc., 485 S.W.2d 869, 874–75 (Tenn. Ct. App. 1972). The existence of fraud voids, ab
initio, the contract into which it enters at the election of the defrauded party. See Hunt v. Walker,
483 S.W.2d 732, 735 (Tenn. 1971); Brandon v. Wright, 838 S.W.2d 532, 534 (Tenn. Ct. App.
1992).
As Mr. Hopper correctly points out, the doctrine of constructive fraud is commonly employed
where there has been an abuse of a fiduciary or confidential relationship between the parties to the
contract. See Land Developers, Inc., 537 S.W.2d at 918. However, constructive fraud may also be
found to exist when a party’s acts, statements, or omissions would be prejudicial to the public
welfare, see Mawxell, 485 S.W.2d at 874, such as contracts entered into in violation of law or
against public policy. See Henry R. Gibson, Gibson’s Suits in Chancery § 388 (William H. Inman
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ed., 6th ed. 1982). The legislature has expressly provided that it is unlawful for a person to engage
in general contracting or home improvement contracting without a license. Regarding “general
contractors,” the legislature has provided that “[i]t is unlawful for any person . . . to engage in or
offer to engage in contracting in this state, unless such person . . . has been duly licensed under the
provisions of this chapter, as hereinafter provided.” Tenn. Code Ann. § 62-6-103(a)(1) (2003). The
legislature has also provided that it is unlawful “for any person . . . to represent itself as a licensed
contractor.” Tenn. Code Ann. § 62-6-136(a) (2003). Failure to obtain a general contractor’s license
in violation of these provisions constitutes a Class A misdemeanor. Tenn. Cod Ann. § 62-6-
120(a)(1) (2003). Regarding “home improvement contractors,” the legislature has provided that
“[n]o person shall maintain, own, operate or transact a home improvement business unless a license
is first obtained as hereinafter provided.” Tenn. Code Ann. § 62-37-104(b)(1) (2003). Failure to
obtain a home improvement contractor’s license in violation of these provisions constitutes a Class
A misdemeanor. Tenn. Code Ann. § 62-37-114 (2003). Our supreme court has recognized that the
legislature enacted the contractor’s licensing statutes to protect the safety and property of the public,
see Kyle v. Williams, 98 S.W.3d 661, 666 (Tenn. 2003), a policy which we can only conclude carries
over into the statutes governing home improvement contractors as well.
After reviewing the record, we conclude that the evidence presented at trial supports the
chancery court’s finding that Mr. Hopper’s conduct amounted to constructive fraud. At trial, Mr.
Hopper admitted that he held himself out to Ms. Moling as a person qualified and competent to
perform the work she requested. In fact, Mr. Hopper did not possess a contractor’s license,
electrician’s license, or plumber’s license. Ms. Moling also believed that Mr. Hopper, as a qualified
professional, would secure the proper permits necessary for the job. Mr. Hopper testified that he
began constructing the garage/bathroom addition without securing the necessary permit. While he
did subsequently secure the necessary permit, he only secured a permit for $4,000.00 when the work
to be performed was priced at $19,800.00. See Zimmerman v. Ross, No. 01A01-9201-PB-00036,
1992 Tenn. App. LEXIS 750, at *30–31 (Tenn. Ct. App. Sept. 2, 1992) (“[I]n this state the law is
clear that omissions can constitute constructive fraud.”). Accordingly, we affirm the trial court’s
finding that Mr. Hopper’s conduct constituted constructive fraud which voided the contract at issue.
B.
Appellant’s Quantum Meruit Recovery
After determining that the contract between the parties was void due to Mr. Hopper’s
constructive fraud, the trial court determined that Mr. Hopper could only recover the cost of his labor
and materials (the $12,255.04 he stipulated to prior to trial) under a theory of quantum meruit. The
stipulation entered into prior to trial sets forth payments made by Mr. Hopper to various entities and
individuals for labor and materials, but it does not include an amount representing the labor he
personally expended on the project. Mr. Hopper asserts that he is allowed to recover the cost of his
personal labor expended on the project at issue under a quantum meruit theory as well. Mr. Hopper
included a request for his personal labor in his motion to alter or amend the judgment, which the
chancery court denied. On appeal, Mr. Hopper urges this Court to award him an amount for his
personal labor by using a formula set forth in his brief to arrive at an award of $14,850.00. Ms.
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Moling asserts that Mr. Hopper has waived this issue since he did not present any proof of the value
of his personal labor at trial.
The legislature has promulgated statutes governing the licensing of “general contractors” and
“home improvement contractors.” “Home improvement” is defined by the legislature as follows:
“Home improvement” means the repair, replacement, remodeling,
alteration, conversion, modernization, improvement, or addition to
any land or building, or that portion thereof which is used or designed
to be used as a residence or dwelling unit for one (1), two (2), three
(3), or four (4) dwelling units, and includes the construction,
replacement, or improvement of driveways, swimming pools,
porches, garages, landscaping, fences, fall-out shelters, roofing,
painting and other improvements to structures or upon land which is
adjacent to a dwelling house for one (1), two (2), three (3), or four (4)
dwelling units. Without regard to the extent of affixation, “home
improvement” includes the installation of central heating or
air-conditioning systems, storm windows or awnings[.]
Tenn. Code Ann. § 62-37-103(6)(A) (2003) (emphasis added). “No person shall maintain, own,
operate or transact a home improvement business unless a license is first obtained . . . .” Tenn. Code
Ann. § 62-37-104(b)(1) (2003). Although the trial court did not discuss the statutes governing home
improvement contractors and general contractors in its order, our independent review of the statutes
and case law leads us to conclude that Mr. Hopper was acting as an unlicensed home improvement
contractor during the events which gave rise to the instant litigation.1 See Varnadoe v. McGhee, No.
W2001-00075-COA-R3-CV, 2001 Tenn. App. LEXIS 949, at *10–15 (Tenn. Ct. App. Dec. 27,
2001) (discussing the differences between the statutes governing general contractors and home
improvement contractors before ruling that an individual who agreed to complete a framing project
for the homeowners was performing work as an unlicensed home improvement contractor).
In Varnadoe, we noted that, while the legislation governing general contractors contains a
provision permitting the general contractor to “recover actual documented expenses only upon a
showing of clear and convincing proof,” Tenn. Code Ann. § 62-6-103(b) (2003), the statutes
governing home improvement contractors does not contain a similar provision. See id. at *15. This
Court concluded, however, that the statutory schemes governing these two categories of contractors
were sufficiently analogous to permit a home improvement contractor “to recover under quantum
1
At oral argument, counsel for Mr. Hopper asserted that Mr. Hopper was not required to obtain a license prior
to engaging in the work at issue. However, the legislature has expressly enumerated those instances when a home
improvement contractor’s license is not required. See Tenn. Code Ann. § 62-37-107 (2003). Mr. Hopper fails to qualify
for any of the enumerated exceptions.
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meruit2 limited to the actual documented expenses expended on the [project] as shown by clear and
convincing proof.”3 Id. at *18 (emphasis added).
Mr. Hopper failed to clearly and convincingly prove the value of his personal labor at trial.
Upon reviewing the record, we find no evidence offered by Mr. Hopper which would tend to prove
the value of his personal labor. This Court has previously addressed the issue presented by Mr.
Hopper in a similar case where we stated:
The burden was upon [the Plaintiff] to prove in the trial court his
entitlement to a judgment for services rendered on the basis of
quantum meruit. By his own admission, he failed to do so in the trial
court. “Without proof of damages, there can be no award of
damages.” Inman v. Union Planters National Bank, 634 S.W.2d 270,
272 (Tenn. App. 1982).
There is no proof in this record as to the value of [the
Plaintiff’s] services. [The Plaintiff] has had his day in court with the
2
“A party who had a contract at one time may pursue a quantum meruit recovery if the contract is no longer
enforceable.” Castelli v. Lien, 910 S.W .2d 420, 428 (Tenn. 1995). “Liability under quantum meruit is based on a legally
implied promise to pay a reasonable amount for goods or services received. Thus, quantum meruit recoveries are limited
to the actual value of the goods or services, not their contract price.” Id. at 427–28 (citations omitted). Our supreme
court has set forth the circumstances which warrant a quantum meruit action:
A quantum meruit action is an equitable substitute for a contract claim
pursuant to which a party may recover the reasonable value of goods and services
provided to another if the following circumstances are shown:
(1) There is no existing, enforceable contract between
the parties covering the same subject matter;
(2) The party seeking recovery proves that it provided
valuable goods or services;
(3) The party to be charged received the goods or
services;
(4) The circumstances indicate that the parties to the
transaction should have reasonably understood that the person
providing the goods or services expected to be compensated; and
(5) The circumstances demonstrate that it would be
unjust for a party to retain the goods or services without
payment.
Doe v. HCA Health Services of Tenn., Inc., 46 S.W .3d 191, 197–98 (Tenn. 2001) (quoting Swafford v. Harris, 967
S.W .2d 319, 324 (Tenn. 1998)).
3
The trial court apparently reached its decision that Mr. Hopper was entitled to a recovery under quantum
meruit by finding that his conduct constituted constructive fraud, which, as previously noted, made the contract void at
Ms. Moling’s election. However, as our case law interpreting the statutes governing the regulation of home improvement
contractors indicates, Mr. Hopper would be entitled to recover the amounts he expended on the project under quantum
meruit despite the trial court’s finding of constructive fraud in this case.
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opportunity to prove the value of his services. Through no fault
except his own, he failed to do so. He is not entitled to a second day
to remedy his failure. This issue is without merit.
Bokor v. Holder, 722 S.W.2d 676, 680–81 (Tenn. Ct. App. 1986). Accordingly, we find that the
chancery court did not commit error by denying Mr. Hopper the cost of his personal labor.
C.
Appellee’s Damages
Turning to Ms. Moling’s counterclaim for breach of contract, the trial court concluded that
Mr. Hopper breached the contract by failing to perform the project in a workmanlike manner. The
trial court denied Ms. Moling’s claim for the cost of repairing the vinyl flooring installed by Mr.
Hopper (which was installed in December of 1998) because she did not repair the floor until just
prior to trial (which occurred in March of 2004). The chancery court arrived at the damage award
in favor of Ms. Moling as follows:
• Ms. Moling contracted to have a garage/bathroom addition constructed onto her existing
home for $19,800.00. She had to pay $28,770.68 for that addition ($13,546.54 in stipulated
repair/completion costs prior to trial plus $224.14 for replacing the carpet in her home, for
a total sum of $13,770.68; the chancellor then added this amount to the $15,000.00 she
already paid to Mr. Hopper to arrive at the $28,770.68 total cost).
• The difference between what she actually paid ($28,770.68) and the agreed upon price
($19,800) is $8,970.68 (which the chancellor rounded down to $8,970.00).
• Next, the chancellor concluded that Ms. Moling paid Mr. Hopper $2,745.00 (the difference
between the $15,000.00 Ms. Moling paid for the garage/bathroom addition and the
$12,255.04 Mr. Hopper was entitled to for his labor and materials) above what he could
obtain in quantum meruit.
• Therefore, the chancellor awarded Ms. Moling a judgment in the amount of $11,715.00 (the
$8,970.00 she overpaid for the project plus the $2,745.00 above what Mr. Hopper could
obtain in quantum meruit).
Both Mr. Hopper and Ms. Moling raise issues concerning the correctness of the chancellor’s
calculation of the damages in this case.
Since the parties present issues concerning the propriety of the trial court’s damage award,
we are cognizant of the following:
Determinations concerning the amount of damages are factually
driven. See Loftis v. Finch, 491 S.W.2d 370, 377 (Tenn. Ct. App.
1972). Thus, the amount of damages to be awarded in a particular
case is essentially a fact question. See Sholodge Franchise Sys., Inc.
v. McKibbon Bros., Inc., 919 S.W.2d 36, 42 (Tenn. Ct. App. 1995);
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Buice v. Scruggs Equip. Co., 37 Tenn. App. 556, 571, 267 S.W.2d
119, 125 (1953). However, the choice of the proper measure of
damages is a question of law to be decided by the court. See
American Trust Inv. Co. v. Nashville Abstract Co., 39 S.W. 877, 881
(Tenn. Chan. App. 1896); see also Business Men’s Assurance Co. v.
Graham, 891 S.W.2d 438, 449 (Mo. Ct. App. 1994); Town of Fifield
v. State Farm Mut. Auto. Ins. Co., 119 Wis. 2d 220, 349 N.W.2d 684,
686 (Wis. 1984).
Beaty v. McGraw, 15 S.W.3d 819, 827 (Tenn. Ct. App. 1998); see also Johnson v. Welch, No.
M2002-00790-COA-R3-CV, 2004 Tenn. App. LEXIS 86, at *26–27 (Tenn. Ct. App. Feb. 9, 2004).
“The purpose of assessing damages in a breach of contract suit is to place the [non-breaching
party], as nearly as possible, in the same position he would have had if the contract had been
performed.” Wilhite v. Brownsville Concrete Co., Inc., 798 S.W.2d 772, 775 (Tenn. Ct. App. 1990)
(citing Action Ads, Inc. v. William B. Tanner Co., Inc., 592 S.W.2d 572, 575 (Tenn. Ct. App.
1979)). The chancery court’s order does not expressly set forth the measure of damages it applied
in this case. In evaluating the correctness of the chancery court’s award of damages to Ms. Moling,
we are guided by the following:
As a general rule, the measure of damages for defects and
omissions in the performance of a construction contract is the
reasonable cost of the required repairs. Estate of Jessee v. White, 633
S.W.2d 767 (Tuneup. 1982). This is especially true when the
structure involved is the owner’s home. Edenfield v. Woodlawn
Manor, Inc., 62 Tuneup. 280, 462 S.W.2d 237 (1970). However, in
the event that the cost of repairs is disproportionate when compared
with the difference in value of the structure actually constructed and
the one contracted for, the diminution value may be used instead as
the measure of damages. Redbud Cooperative Corporation v.
Clayton, 700 S.W.2d 551 (Tuneup. 1985). However, this rule is
applicable only when proof has been offered on both factors. The
defendant argues that plaintiffs were required to offer proof of both
factors so that the jury would be allowed to choose. We hold that the
plaintiffs do not have the burden of offering alternative measures of
damages. The burden is on the defendant to show that the cost of
repairs is unreasonable when compared to the diminution in value due
to the defects and omissions . . . .
Nutzell v. Godwin, No. 33, 1989 Tenn. App. LEXIS 485, at *2–3 (Tenn. Ct. App. July 13, 1989).
Ms. Moling sought to recover her costs associated with completing and repairing the structure begun
by Mr. Hopper, and we find nothing in the record to indicate that Mr. Hopper sought to demonstrate
that the diminution in value measure should be applied instead of the cost of repair measure of
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damages. See GSB Contractors, Inc. v. Hess, No. W2003-03068-COA-R3-CV, 2005 Tenn. App.
LEXIS 225, at *9–18 (Tenn. Ct. App. Apr. 15, 2005), perm. app. pending,(discussing the effect of
a defendant’s failure to offer proof that the cost of repair is the incorrect measure of damages in a
construction contract case). In fact, Mr. Hopper concedes in his brief that the cost of repairing the
defective structure is the appropriate measure of damages in this case. Accordingly, we conclude
that the proper measure of damages for Mr. Hopper’s breach of the construction contract at issue in
this case is Ms. Moling’s cost in repairing and/or completing the defective work.
Both parties contest the trial court’s treatment of the amount Ms. Moling expended on
replacing the vinyl flooring installed by Mr. Hopper. Mr. Hopper contends that the trial court, after
finding that Ms. Moling failed to prove her claim regarding the defective tile, improperly included
the cost of replacing the tile in the damages award. Conversely, Ms. Moling contends that the trial
court awarded her all of her costs associated with repairing the defective work performed by Mr.
Hopper except the cost of replacing the vinyl floor. Strangely, Ms. Moling concedes that “the repair
costs for the vinyl floor should not have been included in the judgment.”
“[I]n an action for a breach of contract the injured party is bound to use all proper means and
efforts to protect himself from loss and can charge the other party only for such damages as by
reasonable endeavors on his part he could not prevent.” Action Ads, Inc. v. William B. Tanner Co.,
592 S.W.2d 572, 575 (Tenn. Ct. App. 1979). The chancery court noted the conflicting testimony
surrounding the vinyl flooring claim, and resolved the conflict in favor of Mr. Hopper. We give such
credibility determinations great weight on appeal. See Wells v. Tenn. Bd. of Regents, 9 S.W.3d 779,
783 (Tenn. 1999) (“[A]ppellate courts will not re-evaluate a trial judge’s assessment of witness
credibility absent clear and convincing evidence to the contrary.”). Accordingly, we affirm the
chancery court’s ruling that Ms. Moling is not entitled to recover her costs associated with replacing
the vinyl flooring.
This does not conclude our inquiry of this issue, however, because the trial court clearly
included the costs associated with repairing the vinyl flooring in its damages calculation. The
stipulation entered into between the parties prior to trial stated that Ms. Moling expended $13,546.54
in repairing Mr. Hopper’s defective work. This amount included the $3,187.00 she expended
replacing the vinyl flooring. Thus, the chancellor erred to the extent that the chancellor’s calculation
of Ms. Moling’s damages included the cost of repairing the vinyl flooring.
Next, Mr. Hopper notes that the party’s original contract did not include the cost of an
awning or patio in the original contract price. As far as we are able to glean from his arguments on
appeal, Mr. Hopper is arguing that awarding the cost of installing the awning and patio would
constitute unjust enrichment to Ms. Moling. In turn, Ms. Moling asserts that these costs were
necessary to remedy the leaks which resulted from Mr. Hopper’s defective work. Regarding the
repairs to the roof, Mr. Hopper argues that a picture introduced at trial shows that the shingles Ms.
Moling had installed to repair the leak are the same as those on the rest of the house. Thus, Mr.
Hopper contends that Ms. Moling took the opportunity to replace her entire roof and included this
cost in her request for damages. We find this contention to be without merit since the record is
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devoid of any evidence supporting this allegation. As for the cost of replacing the carpet, Mr.
Hopper contends that Ms. Moling’s undue delay in having the roof repaired resulted in the damage
to the carpet.
Each of the arguments made by Mr. Hopper on appeal constitutes an attack on the amount
of damages, not the appropriate measure of damages. As previously noted, the determination of the
amount of damages is a fact question. Beaty v. McGraw, 15 S.W.3d 819, 827 (Tenn. Ct. App.
1998). Our review of the record does not reveal any evidence which would tend to preponderate
against the trial court’s findings of fact regarding these issues. Accordingly, we affirm the trial
court’s inclusion of the costs for installing the awning and patio, repairing the roof, and replacing
the damaged carpet in the damage award.
Finally, Ms. Moling argues that the trial court erred by considering the contract price when
it held that the contract was void due to Mr. Hopper’s constructive fraud. We agree. As previously
noted, the proper measure of damages in this case is the cost Ms. Moling expended on repairing the
defective work performed by Mr. Hopper. See Nutzell v. Godwin, No. 33, 1989 Tenn. App. LEXIS
485, at *2–3 (Tenn. Ct. App. July 13, 1989). Although the trial court’s order is not exactly clear, it
appears as though the trial court attempted to use the contract price and the cost of repair to calculate
Ms. Moling’s damages in this case.
Due to the errors in the trial court’s calculation of damages to Ms. Moling, we vacate the trial
court’s order in so far as the calculation of damages awarded to Ms. Moling. Instead, we hold that
Ms. Moling is entitled to the following damages:
• Mr. Hopper is entitled to recover the cost of the labor and materials as proven at trial (i.e.,
the $12,255.04 he stipulated to prior to trial) under the theory of quantum meruit. Ms.
Moling paid Mr. Hopper $15,000.00 for the garage/bathroom addition, therefore, she is
entitled to recover from Mr. Hopper $2,744.96, representing the amount she paid in excess
of his labor and materials, to prevent his unjust enrichment.
• The parties stipulated that Ms. Moling expended $13,546.54 to repair and/or complete the
work performed by Mr. Hopper. From this amount, $3,187.00 is to be deducted for the cost
of replacing the vinyl flooring. Thus, Ms. Moling is entitled to $10,359.54 which represents
her costs for repairing the defective work performed by Mr. Hopper. Ms. Moling is also
entitled to $224.14 representing the cost of replacing the carpet in her home. In sum, Ms.
Moling is entitled to $10,583.68 in damages.
Accordingly, Ms. Moling is entitled to a judgment in the amount of $13,328.64 (the $2,744.96
overpaid to Mr. Hopper plus the $10,583.68 she incurred in repairing and/or completing the
defective work performed by Mr. Hopper).
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D.
Attorney’s Fees
In its “Final Judgment and Decree,” the chancery court awarded Ms. Moling $9,244.12 in
attorney’s fees “as authorized by the Tennessee Consumer Protection Act.” (emphasis added). In
the final issue presented for our review, Mr. Hopper argues that the chancery court erred in awarding
such fees because “[a] statutory basis, contractual obligation or other equitable ground must exist
for a court to order the losing party to pay the prevailing party’s attorney’s fees.” During oral
argument, counsel for Mr. Hopper argued that the chancery court’s order did not contain an express
finding that a violation of the Tennessee Consumer Protection Act occurred in this case.
Tennessee adheres to the firmly established “American Rule” which requires litigants to pay
their own attorney’s fees absent a statutory or contractual provision providing otherwise. State v.
Brown & Williamson Tobacco Corp., 18 S.W.3d 186, 194 (Tenn. 2000). The Tennessee Consumer
Protection Act provides that, “[u]pon a finding by the court that a provision of this part has been
violated, the court may award to the person bringing such action reasonable attorney’s fees and
costs.” Tenn. Code Ann. § 47-18-109(e)(1) (2003) (emphasis added). When evaluating a trial
court’s grant of attorney’s fees under the statute, we employ the following standard of review:
Because the Act gives the trial court the discretion to award or to
deny attorney fees in the circumstances enumerated, we review a trial
court’s decision regarding fees under the abuse of discretion standard.
A finding of abuse of discretion is proper when the trial court applied
an incorrect legal standard or reached a decision against logic or
reasoning that caused an injustice to the party complaining. Eldridge
v. Eldridge, 42 S.W.3d 82, 85 (Tenn. 2001); State v. Coley, 32
S.W.3d 831, 833 (Tenn. 2000).
Glanton v. Bob Parks Realty, No. M2003-01144-COA-R3-CV, 2005 Tenn. App. LEXIS 263, at *29
(Tenn. Ct. App. Apr. 27, 2005). While the Tennessee Consumer Protection Act may authorize an
award of attorney’s fees, such an award is premised on a trial court finding a violation of the Act.
In this case, the trial court found that Mr. Hopper was guilty of constructive fraud. Although the trial
court did not expressly state that Mr. Hopper’s conduct was a violation of the Tennessee Consumer
Protection Act, it found as a fact that Mr. Hopper was guilty of conduct which constituted such a
violation. See Tenn. Code Ann. § 47-18-104(b)(27), (33) (2003). In awarding attorney’s fees, the
trial court relied upon the Act and made specific reference to it. We believe this is sufficient under
the facts of this case to establish a finding by the trial court that there was a violation of the Act. But
cf. Hall v. Hamblen, No. M2002-00562-COA-R3-CV, 2004 Tenn. App. LEXIS 524, at *7–8 (Tenn.
Ct. App. Aug. 16, 2004) (“Simply mentioning the Tennessee Consumer Protection Act as a basis for
fees does not qualify as a finding of a violation of it.”). Therefore, we affirm the award of attorney’s
fees to the Appellee.
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V.
CONCLUSION
For the aforementioned reasons, we affirm the chancery court’s finding that Appellant’s
conduct amounted to constructive fraud which voided the contract between the parties, and we affirm
the chancery court’s finding that Appellant was not entitled to the cost of his personal labor under
quantum meruit. After reviewing the chancery court’s findings regarding Appellee’s damages, we
affirm the chancery court’s decision to exclude the cost of replacing the vinyl flooring, include the
cost of the awning, include the cost of repairing the roof, and include the cost of replacing the carpet.
However, we find that the chancery court erred in its calculation of the damages to be awarded to
the Appellee, and we vacate that portion of the chancellor’s order setting forth said calculation. In
turn, we enter judgment in favor of Appellee in the amount of $13,328.64, as set forth supra.
Finally, we affirm the trial court’s award of attorney’s fees to Appellee in the amount of $9,244.12.
Costs of this appeal are to be taxed to the Appellant, Donald G. Hopper and his surety, for which
execution may issue if necessary.
___________________________________
ALAN E. HIGHERS, JUDGE
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