Castelli v. Lien

• Court: Tennessee Court of Appeals
• Writing for the Court: KOCH
• Citation: Castelli v. Lien, 910 S.W.2d 420 (Tenn. App. 1995)
• Decision Date: 19 May 1995
• Parties: Larry CASTELLI, d/b/a Castelli Designs, Plaintiff/Appellant, v. Lynn LIEN and George Lien, Defendants/Appellees.

Page 420

910 S.W.2d 420

Larry CASTELLI, d/b/a Castelli Designs, Plaintiff/Appellant, v. Lynn LIEN and George Lien, Defendants/Appellees.

Court of Appeals of Tennessee Middle Section.

May 19, 1995.

Permission to Appeal Denied by

Supreme Court Nov. 6, 1995.

Dicken E. Kidwell, Murfreesboro, for appellant.

George E. Copple, Jr., Nashville, for appellees.

OPINION

KOCH, Judge.

This appeal involves a dispute concerning interior design services rendered in connection with the redecoration of an older home in Murfreesboro. The designer filed suit against the homeowners in the Circuit Court for Rutherford County after they refused to pay the balance of his bill. The homeowners counterclaimed for additional decorating expenses incurred after terminating the designer. The trial court heard the proof without a jury and dismissed both the designer's claim and the homeowners' counterclaim. We have determined that the designer is entitled to recover the reasonable value of his services and, therefore, remand the case for further proceedings consistent with this opinion.

I.

George Lien and Lynn Lien were married in June 1991 after Mr. Lien completed his residency in neurosurgery. In the summer of 1991, they moved to Murfreesboro where Dr. Lien intended to establish his practice. They rented a temporary residence for one year and began looking for a suitable house to purchase. In November 1991 they became interested in purchasing a large old house known as the Bellwood Mansion after friends told them it was on the market.

The Liens decided to seek advice concerning the Bellwood Mansion's condition. At her realtor's suggestion, Ms. Lien asked Larry Castelli, an interior designer in Murfreesboro, to assist them in determining whether they should purchase the house. Mr. Castelli agreed to work with the Liens and to charge them an hourly fee to consult with them about buying the house. Mr. Castelli and the Liens walked through the house on November 18, 1991, and Mr. Castelli told the Liens that the house would be a good buy. He also discussed in general terms how the house could be redecorated to suit the Liens' tastes.

The Liens contracted to purchase the house for $232,000 after their conversation with Mr. Castelli. Dr. Lien then began looking for financing for the house and for their planned renovations and redecorating. The Liens had difficulty obtaining financing for the renovations because the bank that loaned them the money to purchase the house would not agree to a second mortgage for the redecorating. At the Liens' request, Mr. Castelli prepared a proposed $81,500 renovation budget that included $30,000 for wallcoverings and $20,000 for draperies. Dr. Lien eventually found another bank that agreed to give them an $80,000 second mortgage for redecorating.

The Liens decided to retain Mr. Castelli to assist them with redecorating the house. Dr. Lien left most of the details of the project to Ms. Lien and Mr. Castelli. Mr. Castelli agreed to work with the Liens, but he and Ms. Lien never signed a written contract defining the scope of the work or the manner in which Mr. Castelli would be compensated for his services. While the evidence is not entirely consistent, Mr. Castelli apparently told Ms. Lien that he would earn his fee by charging them the "retail price" for the furniture, fabrics, wallcoverings, and other items he purchased for them. He did not, however, tell Ms. Lien, and she did not ask, how he would compute the "retail price" of the items used in the house.

The scope of the project changed substantially between the time the Liens contracted to purchase the house and the time the work was completed. The Liens initially planned to spend between $120,000 and $150,000 on renovations and decorations. They discussed expanding the master bedroom and bathroom, reroofing the house, reworking the driveway, turning the carriage house into a pool house, and other improvements. However, they were forced to scale back their plans when they could not obtain all the financing they sought and when they began to receive estimates for all the work they wanted to do. Ms. Lien and Mr. Castelli eventually agreed that the project would include the rooms on the first floor, the second floor hall and sitting room, and some minor work in the second floor bedrooms.

Mr. Castelli and Ms. Lien began to meet frequently in December 1991 to develop a room-by-room plan for the house. Ms. Lien had definite ideas how she wanted the house to look and gave every impression that she was familiar with fine home decorations. Most of the work Mr. Castelli and Ms. Lien discussed involved painting, wallcoverings, floor coverings, and draperies. They also discussed the placement of the Liens' furniture and the purchase of additional furniture. Mr. Castelli understood that he would be responsible for obtaining the furniture and materials and for supervising the renovation work at the house. Ms. Lien understood that Mr. Castelli was responsible for the "painting, wallpapering, and decorating services."

On December 23, 1991, Ms. Lien paid Mr. Castelli $8,000 to enable him to order part of the wallcoverings before expected price increases. The Liens' first mortgage closed on March 13, 1992, and their second mortgage closed six days later. On the afternoon that the second mortgage closed, Ms. Lien delivered a $52,000 check to Mr. Castelli at his home. She asked him if the house could be decorated "like we have been talking about" for $60,000. Mr. Castelli responded, "Yes, very likely." Based on this conversation, Ms. Lien assumed that Mr. Castelli understood that their decorating budget could not exceed $60,000.

Work on the Liens' house began after the closing in mid-March 1992. The project soon encountered problems common to renovations of old homes. Rotten flooring on the first floor and wiring problems on the second floor together with extra work requested by the Liens caused the construction portion of the budget to increase from $5,000 to over $17,000. The painting budget also increased from $11-12,000 to over $17,000 because Ms. Lien expanded the scope of the work.

In addition to the changes in the scope of the work, the project was complicated by the Liens' desire to complete the project in approximately two months. Dr. Lien pushed to complete the work by Memorial Day to enable them to move into the house before the lease on their temporary home expired. Because of the short timetable, Ms. Lien refused to purchase any wallcovering or fabric that could not be delivered immediately. Accordingly, she changed her selections whenever Mr. Castelli informed her that a manufacturer could not deliver her choice immediately.

Even though she was aware of increasing construction expenses, Ms. Lien continued to select the most expensive wallcoverings and fabrics and to insist on acquiring additional furnishings for the house. Mr. Castelli, who was not accustomed to telling a client how much they could spend, did not keep Ms. Lien informed about the amount of her expenditures or of the balance remaining on her $60,000 budget. Except for one instance when he told Ms. Lien that she could not afford a $13,500 area rug, Mr. Castelli simply continued to remind Ms. Lien that she was selecting very costly materials. Mr. Castelli did not suggest, nor did Ms. Lien request, less expensive materials. Her grandmother had used only the finest materials in her house, and Ms. Lien did not want her husband's "neurosurgeon friends from Nashville [to] come and see us live in a shack."

Ms. Lien and Mr. Castelli went on an antique buying trip to Columbia, Tennessee in April 1992. At a birthday party for some of her acquaintances later the same month, Ms. Lien confided to an acquaintance that her "wallpaper cost more than some people make in one year" and that her husband "was going to kill her because she was over budget." Despite this state of affairs, Dr. and Ms. Lien joined Mr. Castelli at the Atlanta Design Arts Center on May 5, 1992 to purchase additional items. Dr. Lien requested an itemization of all their purchases after Mr. Castelli confided to him that he was unable to control Ms. Lien's spending. In another conversation, Ms. Lien told Mr. Castelli that her husband was planning to pay him a bonus.

The expenditures became more of an issue in late May 1992 after the Liens did not receive an itemized list of expenditures from Mr. Castelli. When Ms. Lien asked whether their purchases were within the budget, Mr. Castelli told her that "I think we're okay" and suggested that she and Dr. Lien set up an appointment at his office to go over the bills. The next day, Mr. Castelli informed Ms. Lien that "we might have a little problem with the design fee."

The Liens met with Mr. Castelli at his office on the afternoon of June 24, 1992 to go over the bills for the project. Even though all the bills had not yet been assembled, Mr. Castelli presented the Liens with four invoices totaling $64,707.97. This amount included the wallcoverings, upholstery fabric, window treatments, furniture, and floor coverings. It also included a $2,500 design fee. The Liens expressed anger and surprise at the amount of the bills. Mr. Castelli suggested another meeting one week later to give him a chance to examine and to recalculate the bills.

Mr. Castelli and the Liens met again on July 2, 1992. During this meeting, Mr. Castelli presented the Liens with revised figures showing the cost of the entire project to be $103,503.45. In addition to the items included in the earlier statements, the revised figures included the ceiling medallions and the construction and painting costs. Mr. Castelli also informed the Liens that he could reduce their bill by reducing the price of the furnishings and materials and by charging a corresponding design fee. Reducing the price of the furnishings and materials would reduce the amount of sales tax the Liens would be required to pay.

The Liens had...