White's Electric v Lewis Construction

• Decision Date: 11 August 1999
• Docket Number: 98-00064
• Parties: WHITE'S ELECTRIC, HEATING, AIR AND PLUMBING, Plaintiff/Appellee, v. LEWIS CONSTRUCTION COMPANY, a/k/a TOMMY LEWIS CONSTRUCTION COMPANY AND FRONTIER INSURANCE COMPANY, Defendants/Appellants AppealIN THE COURT OF APPEALS OF TENNESSEE AT JACKSON Filed
• Court: Tennessee Court of Appeals

WHITE'S ELECTRIC, HEATING, AIR AND PLUMBING, Plaintiff/Appellee v LEWIS CONSTRUCTION COMPANY, a/k/a TOMMY LEWIS CONSTRUCTION COMPANY AND FRONTIER INSURANCE COMPANY, Defendants/Appellants

Appeal No. 02A01-9803-CH-00064

IN THE COURT OF APPEALS OF TENNESSEE AT JACKSON

Filed August 11, 1999

APPEAL FROM THE CHANCERY COURT OF MADISON COUNTY AT JACKSON, TENNESSEE

Madison Chancery No. 51088

THE HONORABLE JOE C. MORRIS, CHANCELLOR

This is a construction contract case. The plaintiff subcontractor sued the general contractor and the general contractor's surety seeking unpaid contract payments and damages for delays in performance of the construction contract. The trial court awarded the plaintiff damages for breach of contract and for disruption and delay. We affirm in part, reverse in part, and remand.

For the Plaintiff/Appellee:

Gerald B. Kirksey, J. Timothy Crenshaw, Brentwood, Tennessee

For the Defendants/Appellants:

Ralph D. Golden, Memphis, Tennessee

AFFIRMED IN PART, REVERSED IN PART, AND REMANDED

HOLLY KIRBY LILLARD, J.

CONCURS:

ALAN E. HIGHERS, J., DAVID R. FARMER, J.

OPINION

Lewis Construction Company ("Lewis Construction") was the general contractor for a construction project with the Jackson Housing Authority ("JHA") to renovate public housing facilities in Jackson, Tennessee. The original contract between the JHA and Lewis Construction contained a project deadline of November 15, 1994, or 278 days. The prime contract deadline was subsequently extended by agreement to September 5, 1995. The project was to be completed in three separate phases, with Phase I to be completed before Phase II began and so forth. Frontier Insurance Company ("Frontier Insurance") served as Lewis Construction's surety on the project. Lewis Construction and Frontier Insurance will be referred to collectively as the Defendants. White's Electric, Heating, Air and Plumbing ("White's Plumbing") was the plumbing subcontractor for the construction project.

White's Plumbing submitted a bid proposal to Lewis Construction in the amount of $151,000. The proposal referenced the plans and specifications for the project contained in a project manual distributed by Lewis Construction to potential subcontractors. White's Plumbing's proposal was accepted by Lewis Construction on February 22, 1994. The subcontract between White's Plumbing and Lewis Construction provided that White's Plumbing would provide labor, supplies, and material for installation of water lines, sanitary vent lines, plumbing fixtures, and gas lines "per plans and specifications for Jackson Housing Authority Modernization Program." The subcontract provided that Lewis Construction was to pay White's Plumbing "per specifications." The subcontract did not contain a completion date.

White's Plumbing began work on the project on March 4, 1994, and completed its work on the project on April 18, 1995. Two change orders in the record showed that the parties increased the contract price by $1790, making the total due White's Plumbing under the contract $152,790. Lewis Construction paid White's Plumbing $138,651.34 under the subcontract, but withheld the $14,138.66 retainage.

White's Plumbing filed a lawsuit on October 13, 1995 against Lewis Construction and Frontier Insurance. The complaint alleged that Lewis Construction caused damages to White's Plumbing by delaying White's Plumbing's completion of its work on the project, thereby increasing White's Plumbing's costs and decreasing its profits. White's Plumbing asserted that Lewis Construction caused delay by failing to perform necessary site work and clean up, making changes in the normal sequence for completion of the work, and failing to coordinate the work of other subcontractors. White's Plumbing also alleged that Lewis Construction had refused to pay for work that White's Plumbing performed under various change orders to the subcontract. White's Plumbing contended that Lewis Construction violated the Prompt Pay Act, Tennessee Code Annotated 66-34-101 to -703, by failing to pay White's Plumbing in a timely manner after it received payments from the JHA. White's Plumbing's claims against Frontier Insurance were based on the contractor's bond issued by Frontier Insurance for Lewis Construction, pursuant to Tennessee Code Annotated 12-4-201. A copy of the bond was attached to White's Plumbing complaint. White's Plumbing sought $15,551 in unpaid contract payments and retainage, and $84,329 for delay, disruption and impact damages.

Lewis Construction and Frontier Insurance filed a joint answer. Frontier Insurance admitted that it was Lewis Construction's surety, but denied that it issued a contractor's bond to Lewis Construction pursuant to Tennessee Code Annotated 12-4-201. The Defendants denied that Lewis Construction breached the subcontract with White's Plumbing, that Lewis Construction was responsible for any delays to the subcontract, or that Lewis Construction owed White's Plumbing any monies under the subcontract. The Defendants raised several affirmative defenses, including lack of subject matter jurisdiction, failure to state a claim on which relief could be granted, the statute of frauds, and failure to give timely notice of the claim as required by Tennessee Code Annotated 12-4-205.

The Defendants later filed an amended answer in which they asserted the defense of unclean hands. The Defendants alleged that White's Plumbing committed the first material breach of the contract, and thus they were not liable to White's Plumbing for any damages. The Defendants also alleged that White's Plumbing was not properly licensed by the Tennessee Contractor's Licensing Board for the construction project, that White's Plumbing failed to mitigate its damages, and that White's Plumbing failed to pay required county and city business taxes and to obtain the required county and city business licenses pursuant to Tennessee Code Annotated 67-4-217. Finally, the Defendants asserted that White's Plumbing waived the claims set forth in its complaint.

The case was heard in a bench trial. Jerry White ("White"), the owner of White's Plumbing, testified that he understood the completion date for the subcontract to be November 15, 1994, based on the original completion date in the project manual and the contract between the JHA and Lewis Construction. White said that he calculated his bid based on his estimate of the materials needed and the plans and specifications for the job, including the completion date. He considered the completion date to be an important factor in preparing his bid because of his knowledge that both the general contractor and the subcontractors would be subject to liquidated damages if the project were not completed on time.

White testified that it is the general contractor's duty to coordinate the subcontractors on the project, and that Lewis Construction failed to do so. He explained that Lewis Construction never met with the subcontractors to let them know when to show up at the job site, nor did it provide the subcontractors with a schedule. White said that he would be told to begin work at one job site and then, a few days later, Lewis Construction would send White's Plumbing to another job site across town. He described the job site as "just chaos." He testified that he experienced delays and difficulties due to the large turnover in personnel under Lewis Construction's supervision, including twenty-four painters, twenty-two carpenters, fifty-one laborers, and six sheetrock finishers: "You didn't know from one day to the next who the next guy was. Every day you'd come in and you'd have to reintroduce yourself to the painter and tell him where you was and whether you had that lavatory hung, for him to paint behind it or not."

White also testified that sanitary conditions at the job site were unsatisfactory. He said that no commodes were provided at the work sites, and that consequently, his employees had to drive into town to use the restroom. White said that other workers at the site under Lewis Construction's supervision would pull the tape off the sealed bathtub drains and other drains his employees had to work on and use them as commodes.

White testified that he had not received any complaints about the quality of his work on the project or that he failed to provide the material, services, or supplies he was supposed to furnish under the subcontract. Based on the project manual, he understood his work to be warranted for one year, although the water heaters White's Plumbing installed came with a five-year warranty. He said that he supplied Lewis Construction with the purchase tickets on the water heaters containing the warranty information, as required by the project manual, including the serial numbers. White asserted that he furnished the warranty parts for other plumbing materials directly to the JHA, as required by the project manual. An order form from Tennessee Pump and Supply Company was introduced showing that White's Plumbing ordered various maintenance parts on July 17, 1995. White testified that he sent in his Subcontractor Certificate and Release showing that he had paid for all of the parts and labor used in the project. Despite this, White asserted, he was not paid approximately $15,000 he was owed under the contract.

White also testified about several invoices totaling $1412.50 for work done that was not included in the subcontract, such as clearing bathtub drains, commodes, and a main water line clogged with construction debris and trash. These invoices were admitted as exhibits along with pictures showing the condition of the work site. White maintained that these repairs were not contemplated by the subcontract. He referred to page 15005-3 of the project manual, which states that "All drainage openings in floors, plumbing fixtures to remain, etc., are to be covered so as not to allow mortar, tile, etc., into the sanitary system." He testified that these drains were not...