Terry Lake and Linda Ousley (plaintiffs) hired Louis Haynes, Barbara Haynes, and Running Bear Construction (defendants) under two contracts to construct two residential homes, with a stipulated completion time of 180 days post-notice to proceed. Disputes arose regarding construction quality, delays, and payment issues, leading the plaintiffs to terminate the contract and hire other contractors. The defendants initiated a lawsuit in 2000 for breach of contract, which was later dismissed for lack of prosecution. In 2005, the plaintiffs filed a new lawsuit alleging breaches of contract, including untimely completion, inadequate workmanship, and non-compliance with building codes. They sought damages of at least $25,000. The defendants countered, denying any breach and claiming that the plaintiffs were the first to materially breach the contracts, citing defenses such as laches and failure of consideration. The trial court dismissed both the plaintiffs’ and defendants’ claims but did not provide the required written findings of fact and conclusions of law, leading to the appellate court vacating the judgment and remanding the case to the trial court for compliance with Tennessee Rules of Civil Procedure, Rule 52.01.
Running Bear's counter-complaint claimed wrongful termination and sought payment of $27,265 under the contracts, asserting that Lake owed $47,148.11 and Ousley owed $45,529.84, including prejudgment interest, for breach of contract and unjust enrichment. The contracts also included a request for attorney fees. A trial was held over three days in January and December 2009, presided over by Judge Charles O. McPherson, where Lake and Ousley presented evidence, including over twenty exhibits and three witnesses, who discussed alleged substandard construction, weather impacts, and payment agreements. An expert testimony on damages was excluded by the court. After the defendants presented their case, they sought dismissal, with the court finding a breach of contract by Running Bear but insufficient evidence of damages. The court instructed Running Bear’s counsel to draft a judgment. There was a dispute regarding the counter-complaint, with the court initially believing it had been dismissed. However, it later allowed Running Bear to present its case, which included testimony from Mr. Haynes and related exhibits. At the conclusion, the court ruled that the evidence did not support that the work was completed properly.
A judgment was granted favoring the counter-defendant and dismissing both the plaintiffs' complaint and the defendants' counter-complaint with prejudice, meaning neither party would recover costs from the other. The trial court, in a written order dated January 12, 2010, confirmed its oral ruling from December 17, 2009, highlighting key findings from the trial, including live testimony from plaintiffs Dr. Terry Lake and Linda Ousley, and defendant Louis Haynes, among other evidence. The court awarded the defendant costs related to a deposition and partial transcript, with an option for plaintiffs to pay directly to the court reporter. Costs associated with both the plaintiffs’ complaint and the defendants’ counter-complaint were assessed against their respective parties.
The defendants, Haynes and Running Bear, appealed raising several issues, including: (1) whether the plaintiffs waived the requirement for the appellant to complete work within the contractually defined 180 days; (2) whether the plaintiffs breached the contract by failing to notify the appellant of deficiencies before terminating the contract; (3) whether the termination violated contract terms regarding notice and certification; (4) whether the plaintiffs wrongfully terminated the appellant without evidence of code violations; and (5) whether the trial court erred in not awarding the appellant damages for unpaid balances and anticipated profits.
On cross-appeal, the plaintiffs raised issues regarding the alleged breaches by the appellant, claiming defective construction and failure to complete the work within the specified time frame, as well as challenging the trial court's exclusion of evidence related to their costs for completing and correcting the appellant's work.
The appellate review is conducted de novo, with a presumption of correctness for the trial court's factual findings unless evidence suggests otherwise, while legal conclusions are also reviewed de novo without any presumption. The trial court’s credibility determinations are given significant weight on appeal.
In Cornelius v. DCS, the Tennessee Court of Appeals emphasized the wide discretion afforded to trial courts in admitting or rejecting evidence, stating that such decisions will be reversed only upon a clear showing of abuse of discretion. On appeal, it was noted that the trial court failed to make any findings of fact or conclusions of law, which are mandatory under the amended Rule 52.01 of the Tennessee Rules of Civil Procedure for all non-jury trials. This rule, effective July 1, 2009, requires trial courts to specially find the facts and state conclusions of law, particularly critical in construction cases where detailed review is necessary due to the complexity of disputes. The appellate court found that without these specific findings, it could not adequately review the trial court's determinations. Consequently, the appellate court vacated the trial court's judgment and remanded the case, instructing the trial court to issue detailed findings of fact and conclusions of law regarding both the complaint and the counter-complaint. The costs of the appeal were ordered to be split between the parties.
