Winter v. Smith

• Citation: 914 S.W.2d 527
• Parties: Helene WINTER, Plaintiff-Appellant, v. Tommy SMITH, Defendant-Appellee. GARY FARMER TRUCKING, Plaintiff-Appellee, and Helene WINTER, Defendant-Appellant and Tommy Smith, Defendant-Appellee.
• Decision Date: 23 August 1995
• Court: Court of Appeals of Tennessee

Page 527

914 S.W.2d 527

Helene WINTER, Plaintiff-Appellant, v. Tommy SMITH, Defendant-Appellee.

GARY FARMER TRUCKING, Plaintiff-Appellee,

and

Helene WINTER, Defendant-Appellant and Tommy Smith,

Defendant-Appellee.

Court of Appeals of Tennessee,

Middle Section.

Aug. 23, 1995.

Permission to Appeal denied by

Supreme Court Dec. 18, 1995.

Appeal from Williamson Court, Chancery County; The Honorable Cornelia A. Clark, Judge.

Larry R. Williams and Rene Riggs Williams, Williams, Smith & Dozier, Nashville, for Helene Winter.

Robert L. Jones and G. Brian Jackson, Trabue, Sturdivant & DeWitt, Nashville, for Gary Farmer Trucking.

Robert A. Anderson, Nashville, for Tommy Smith.

OPINION

KOCH, Judge.

This appeal concerns two consolidated lawsuits arising from the construction of an equestrian center in Williamson County. The first suit involves the landowner and a contractor who was terminated before the project's completion. The second suit involves the landowner, the terminated contractor, and two of the contractor's unpaid suppliers. After receiving a jury's answers to special interrogatories, the Chancery Court for Williamson County found that the contractor was contractually indebted to his unpaid suppliers, that the suppliers were entitled to liens on the project, and that the landowner must indemnify the contractor for his payments to the suppliers. Both the landowner and the contractor have appealed. The landowner raises issues on this appeal concerning the existence and scope of the parties' respective indemnification rights and the lien rights of one of the suppliers; while the contractor takes issue with the dismissal of his damage claims against the landowner. We affirm the judgment except for the trial court's conclusions with regard to the contractor's indemnification rights.

I.

Helene Winter decided to build an equestrian center in Williamson County after her teenage daughter became interested in show jumping. She arranged to purchase fifty-five acres of undeveloped property on Old Hillsboro Road. She intended to construct the center herself and then to lease it to a family corporation called Schandwin Farm, Inc. ¹ Her plans called for the construction of a stable with an indoor ring, three outdoor show rings, paddocks, a manager's residence, and other related improvements including fences and an access road.

Ms. Winter decided to oversee and coordinate the improvements on the property herself even though she had little experience with construction. She retained one contractor to build the barn and another to erect all the fences on the property. Since the project called for extensive site preparation, she retained a third contractor to perform all the excavation, grading, and road construction. These lawsuits relate to the excavation and grading contract.

Ms. Winter contacted Tommy Smith in late October 1989 about doing the grading and excavation work for the project. Mr. Smith had been a foreman for a large construction company and was then operating his own business called Smith Dozier [sic] Service. He had been licensed as a contractor until 1987 but was not licensed when Ms. Winter contacted him. Ms. Winter and Mr. Smith met at the job site to discuss the project, and while the precise terms of their agreement are not clear, Mr. Smith agreed to do excavation work for Ms. Winter and to charge her $50.00 per hour for the use of his bulldozer. ²

Ms. Winter's surveyor placed the grading stakes on the property, and Mr. Smith began work on November 2, 1989. After wet weather interrupted the work for several days, Ms. Winter telephoned Mr. Smith on November 16, 1989 to find out why he was not working. Despite Mr. Smith's explanation that wet soil conditions hampered the grading and excavating, Ms. Winter insisted that Mr. Smith continue working despite the weather because she was planning to have horse shows in the spring and wanted the barn built as soon as possible.

Ms. Winter customarily made daily visits to the job site when she was in town, and she and Mr. Smith met at the job site on November 17, 1989. She paid Mr. Smith $2,000 and asked him for an estimate of the cost to complete the project. Ms. Winter assumed that the estimate would include all the work for the project; while Mr. Smith assumed that Ms. Winter wanted an estimate for the cost of completing only the barn pad, the parking lot at the barn, and the road from Old Hillsboro Road to the barn.

On November 22, 1989, Mr. Smith gave Ms. Winter an estimate that the lump sum cost to complete the work would be $91,726. Ms. Winter decided against accepting the lump sum quote and to continue paying Mr. Smith in accordance with their original agreement after her surveyor commented that the estimate seemed high and after Mr Smith told her that she would end up spending less if he worked on a "time and materials" basis. During this meeting, Ms. Winter instructed Mr. Smith to continue building the road from the barn to the back of the property and discussed building the three show rings.

On November 30, 1989, Mr. Smith gave Ms. Winter a statement for $12,522.50 for the work from November 2 through November 30, 1989. The statement included charges for a bulldozer, a loader, a scraper, a truck, and a roller. Mr. Smith had obtained several of these pieces of equipment from Dixie Earthmovers, Inc. While he and Ms. Winter had agreed on the hourly charges for the equipment, Ms. Winter was not aware that the charge for the equipment obtained from Dixie Earthmovers included Mr. Smith's markup. Ms. Winter paid Mr. Smith $12,522.50 on December 1, 1989.

The project called for a large amount of crushed stone and gravel for the road, the parking lot, the barn pad, and the show rings. The parties' original agreement required Ms. Winter to furnish these materials. When the work progressed to the point where the stone was required, Ms. Winter arranged with Bentley and Son Trucking & Construction ("Bentley") to begin delivering stone to the job site. Bentley, however, would only do business with Ms. Winter on a COD basis, and thus she was required to be at the job site every day to write a check for the stone that had been delivered.

Mr. Smith paid Bentley for stone on one occasion because Ms. Winter could not come to the job site. On December 12, 1989, Ms. Winter complained to Mr. Smith about Bentley's prices, and Mr. Smith informed her that Buford Trucking ("Buford") could furnish the same material for $6.00 per ton. Since Ms. Winter had been paying Bentley $6.55 per ton for stone, she decided to begin purchasing the stone from Buford.

Buford, however, would not agree to extend credit to Ms. Winter and insisted on billing Mr. Smith directly for the stone. In order to avoid the inconvenience of paying for the stone on a daily basis, Ms. Winter and Mr. Smith eventually agreed that Mr. Smith would purchase the stone. Ms. Winter agreed to pay $6.00 per ton for the stone, and Mr. Smith agreed to include the charges for the stone in his periodic statements. Ms. Winter assumed that Mr. Smith had agreed to charge her no more than his actual cost for the stone; while Mr. Smith understood that Ms. Winter had agreed to pay $6.00 per ton for stone, regardless of his actual cost.

On December 13, 1989, Mr. Smith gave Ms. Winter another statement for $10,973 covering the work from December 1 through December 12, 1989. On the same day, Ms. Winter gave Mr. Smith a check for $11,153.50 in payment for the work covered by the statement and to reimburse Mr. Smith for the stone he had purchased from Bentley on December 6, 1989, when she was unable to be on-site to write the check.

The grading work continued to be delayed by bad weather. Ms. Winter was not pleased with the progress, and on January 10, 1990, she told Mr. Smith that she intended to contact Buford to arrange for more earth moving equipment. Mr. Smith explained that using more equipment would increase Ms. Winter's already high equipment costs, but Ms. Winter was more concerned with early completion of the project than with the costs. When Ms. Winter continued to insist on using more equipment, Mr. Smith obtained several additional pieces of equipment from Dixie Earthmovers. Ms. Winter assumed that she was reimbursing Mr. Smith for his actual costs for the equipment and did not realize that the hourly rate she agreed to pay included Mr. Smith's markup.

Mr. Smith provided Ms. Winter with another statement for $21,920.37 on January 22, 1990, covering the work from December 13, 1989, through January 17, 1990. This statement reflected the use of three additional pieces of equipment. It also included a $2,066.91 charge for gravel, supported by a copy of Buford's bill to Smith for $2,066.91 and, for the first time, a $78.00 charge identified as "foreman." When Ms. Winter questioned Mr. Smith about this charge, he explained that it was for the time he spent on the project when he was not actually running a piece of equipment. Ms. Winter was satisfied with this explanation and agreed to pay Mr. Smith $12.00 per hour for this work. She also wrote Mr. Smith a check for $22,000.

Mr. Smith discovered in early January 1990 that he could purchase stone from Anchor Rock Products ("Anchor Rock") for less than what he was paying Buford. He began ordering from Anchor Rock in mid-January and eventually purchased approximately 7,900 tons of stone for between $5.00 and $5.85 per ton. ³ He continued to charge Ms. Winter $6.00 per ton but did not inform her that he was now paying less for the material. He did, however, provide her with Anchor Rock's scale tickets showing the amount of material being delivered to the project. These tickets did not, however, indicate how much Mr. Smith had paid for the stone.

Mr. Smith gave Ms. Winter a statement for $32,487.03 on February 23, 1990, covering work from December 27, 1989, through February 22, 1990. In addition to the charges for the equipment, the stone, and Mr. Smith's "forema...