Sun Splash Painting v. Homestead Village

IN THE COURT OF APPEALS OF TENNESSEE
AT NASHVILLE
April 7, 2002 Session
SUN SPLASH PAINTING, INC. v. HOMESTEAD VILLAGE, INC., ET AL.
Appeal from the Chancery Court for Davidson County
No. 99-556-I Irvin H. Kilcrease, Jr., Chancellor
No. M2002-00853-COA-R3-CV - Filed October 15, 2003
This appeal involves a challenge to the trial court’s refusal to award attorney’s fees pursuant to the
Prompt Pay Act, and to the court’s denial of prejudgment interest. We affirm the trial court in all
respects.
Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Chancery Court
Affirmed and Remanded
WILLIAM B. CAIN , J., delivered the opinion of the court, in which BEN H. CANTRELL , P.J., M.S., and
WILLIAM CHARLES LEE, SP . J., joined.
Timothy W. Burrow, Nashville, Tennessee, for the appellant, Sun Splash Painting, Inc.
H. Frederick Humbracht, Nashville, Tennessee, for the appellee, Homestead Village, Inc.
OPINION
Homestead Village, Inc. (HVI) contracted with the Appellant Sun Splash Painting, Inc. (Sun
Splash) for painting-related services and materials. Sun Splash was to perform these services on
HVI’s extended-stay hotel known as Homestead Village Airport. A dispute arose between the
parties concerning HVI’s failure to pay for work Sun Splash had performed. As a consequence of
this dispute, Sun Splash filed suit in chancery court on February 24, 1999. In that complaint Sun
Splash alleged that pursuant to a “time and expense contract” Sun Splash was to be paid $20 per
hour plus materials. In the alternative, Sun Splash alleged the existence of a “written lump sum
contract.” Of specific interest to this appeal are the allegations contained in “Count Five” of the
chancery complaint.
COUNT FIVE
(Violation of Tennessee’s Prompt Pay Act of 1991)
25. Sun Splash realleges paragraphs 1-24 above as if fully alleged in this count
and incorporates them herein by this reference.
26. [HVI] failed or refused to pay Sun Splash in full for the work it provided.
Such failure was done in bad faith. Pursuant to the provisions of Tennessee’s
Prompt Pay Act of 1991, T.C.A. § 66-34-101, et seq., Sun Splash sent to
Atlantic Homestead Village L.P. and to Homestead Village, Inc. and to
Homestead Village, L.P. by certified mail, return receipt requested, notice of
its intent to seek relief under Tennessee’s Prompt Pay Act of 1991. All
entities received this document. HVI violated the provisions of this Act by
not paying Sun Splash what it was due for the work.
In response, HVI denied the existence of the oral contract for $20 per hour plus expenses,
admitted the existence of a written contract and denied the allegations of paragraphs 25 and 26 of
the Complaint.1 The matter was set for trial on October 8, 9 and 10 of 2001. After hearing proof and
argument, the trial court rendered its decision via Memorandum Opinion on December 5, 2001. The
court found the following facts which, pursuant to Tenn. R. App. P. 13(d), come to this Court
accompanied by a presumption of correctness absent a preponderance of the evidence to the contrary:
1. Sun Splash, a State of Georgia Corporation, entered into a Subcontract
with HVI to perform painting work on HVI’s Airport Project for the sum of
$26,000.00.
2. Sun Splash does not possess a Certificate of Authority to transact
business in the State of Tennessee, nor does Sun Splash have a Tennessee license to
conduct contracting business.
3. HVI, the owner and contractor prepared and presented a Subcontract
to Sun Splash. Sun Splash signed the Subcontract and returned it to HVI.
4. HVI failed to return a signed copy of the Subcontract to Sun Splash.
5. Sun Splash and HVI conducted their transactions as if the Subcontract
had been signed by both parties.
6. Sun Splash left the job site, after several weeks on the job, alleging
that it had not been paid for the work performed.
7. In December, 1997, Sun Splash agreed to return to the job site and
complete the work, under the following terms:
(a) HVI would pay Sun Splash $10,000.00 for work completed.
(b) Sun Splash is due an allowance of $6,500.00 for the touch-up
painting of interior walls.
(c) The balance owed to Sun Splash is $16,000.00, plus the allowance
of $6,500.00 and a back charge of $5,000.00 for work performed by
PR Painting Company.
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In its suit in chancery Sun Splash alleged causes of action concerning certain other defendants, those parties
are no t before this Co urt on appe al.
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(d) The balance owed Sun Splash for completion of the work in
Building “C” is $17,500.00.
8. HVI made a payment to Sun Splash in the sum of $10,000.00.
9. On March 5, 1998, Sun Splash filed a Notice of Lien Claim in the sum
of $22,500.00, against the Airport Project.
10. When Sun Splash filed the Notice of Lien Claim, the parties were in
dispute as to the amount of money owed Sun Splash.
11. The Airport Project was substantially completed on December 31,
1997, Sun Splash’s Cause of Action was filed February 24, 1999, more than one (1)
year after the completion of the project. Tenn Code Ann. §66-11-106.
In this Memorandum, the trial court denied Defendant’s Motion to Dismiss inasmuch as the
record established damages of $17,500.00, but granted the Motion to Dismiss grounded on plaintiff’s
failure to obtain a certificate of authority consistent with the requirements of Tennessee Code
Annotated section 48-25-102.
On January 3, 2002, Sun Splash filed its Motion to Alter or Amend challenging the finding
of the trial court stating as follows:
As grounds for this Motion, and as more fully set forth in the attached
memorandum of points and authorities, Sun Splash would show this Court that:
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Sun Splash had a Certificate of Authority; it didn’t introduce it as evidence
because the burden of proof was upon Defendants to show that Sun Splash did not
have a Certificate of Authority, and Defendants offered no evidence in that regard.
4. Furthermore, Defendants’ did not motion the Court for a dismissal on
this basis.
On March 18, 2002, the court granted the Motion to Alter or Amend in part, stating:
Although the Court disagrees with Plaintiff’s premise, it appears that Plaintiff
did have a Certificate of Authority. Accordingly, the Court grants the motion to
reopen the proof, thereby admitting Plaintiff’s Certificate of Authority, a copy of
which was attached to the motion, as the final exhibit in this matter.
The Court, having considered the proof, concludes that a contract existed
between Sun Splash and Homestead Village Inc., and that Plaintiff is entitled to
recover from defendant Homestead Village, Inc. the sum of $17,500. The claims
against the remaining defendants should be dismissed.
The statute upon which Plaintiff relied at trial for the recorvery of attorney’s fees provides:
“Reasonable attorney’s fees may be awarded against the non-prevailing party; provided, that such
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non-prevailing party has acted in bad faith Tenn.Code Ann. § 66-34-602(b)(1991)” (emphasis
added). The existence of bad faith is a question of fact. See Tennessee Farmer’s Mutual Ins. Co.
v. Thompson, 12 Tenn. App. 591 (1930). Once determined this factual finding is accompanied with
a presumption of correctness and will not be overturned on appeal absent a preponderance of
evidence to the contrary. Tenn. R. App. P. 13(d) Carrington v. W.A. Socfker & Son, Inc., 624
S.W.2d 894, 895 (Tenn.Ct.App.1981). Nonetheless, Appellant argues that, regardless of the
disparity of damages attested to by its own witnesses, since the appellee acknowledged liability at
least to the extent of $17,500.00, any claim pressed by the appellee is by definition bad faith. The
testimony that Sun Splash’s representatives presented to the trial court shows that, while there did
exist a contract between the parties, by the time Sun Splash began pressing its claim, the actual
amount due under the contract was confused primarily by Sun Splash’s own actions. Prior to the
filing of the Complaint, Sun Splash had already agreed that HVI was due $5,000.00 for corrective
measures taken by HVI and its other subcontractor P.R. Painting, Inc. In addition, prior to the
Complaint, Sun Splash had admitted receiving $10,000.00 that had been past due under the contract.
The trial court found specifically that there was a dispute between the parties as to the amount due
under the construction contract. Implied in this factual finding is the determination that such dispute
was not in bad faith. The record does not preponderate against that finding: This Court accordingly
affirms the trial court’s refusal to award attorney’s fees. The award of pre-judgment interest is a
matter well within the discretion of the trial court and will not be overturned on appeal absent a
showing of an abuse of that discretion. See e.g. Myint v. Allstate Ins. Co., 970 S.W.2d 920, 927
(Tenn.1998); Tenn. Code Ann. § 47-14-123 (2001). Inasmuch as no bad faith appears in the record,
the trial court did not abuse its discretion in refusing to award interest.
We affirm the trial court in all respects and remand this case for further proceedings as
necessary. Costs on appeal are taxed against Appellant for which execution may issue.
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WILLIAM B. CAIN, JUDGE
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