E Solutions For Buildings, LLC v. Knestrick Contractors, Inc.

CourtCourt of Appeals of Tennessee
DecidedSeptember 13, 2021
DocketM2020-01189-COA-R3-CV
StatusPublished

This text of E Solutions For Buildings, LLC v. Knestrick Contractors, Inc. (E Solutions For Buildings, LLC v. Knestrick Contractors, Inc.) is published on Counsel Stack Legal Research, covering Court of Appeals of Tennessee primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
E Solutions For Buildings, LLC v. Knestrick Contractors, Inc., (Tenn. Ct. App. 2021).

Opinion

09/13/2021 IN THE COURT OF APPEALS OF TENNESSEE AT NASHVILLE July 8, 2021 Session

E SOLUTIONS FOR BUILDINGS, LLC v. KNESTRICK CONTRACTORS, INC., ET AL.

Appeal from the Chancery Court for Davidson County No. 15-0062-IV Russell T. Perkins, Chancellor ___________________________________

No. M2020-01189-COA-R3-CV ___________________________________

This is the third appeal in a dispute among a general contractor, a subcontractor, and an equipment supplier. Each party blamed the others for delays in a construction project. After the first appeal was dismissed for lack of a final judgment, the trial court held each party partially responsible for the delays and partially responsible for liquidated damages assessed by the owner. In the second appeal, this court modified the judgment in part, reversed it in part, and remanded for further proceedings. On remand, the subcontractor sought to recover from the general contractor discretionary costs of $10,962.42, attorneys’ fees of $220,724.53 under the Prompt Pay Act of 1991, Tenn. Code Ann. §§ 66-34-101 to -704, and “[a]dditional charges.” The trial court awarded some of the requested fees but excluded $100,350 of attorneys’ fees attributed to legal services rendered during the first and second appeal because the subcontractor’s request for appellate attorneys’ fees was untimely, i.e., the relief had not been requested in the pleadings in the prior appeals. The trial court also denied $29,685 in fees incurred in the trial court proceedings for legal services that were “unrelated to [the general contractor].” The trial court also found the subcontractor was not entitled to recover the “[a]dditional charges” because the remand from the Court of Appeals did not authorize such expenses. This appeal followed. The principal issues in this appeal concern the subcontractor’s claims for attorneys’ fees and additional expenses and whether the general contractor’s surety is secondarily liable for one of the judgments. Finding no error, we affirm the trial court’s judgment in all respects.

Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Chancery Court Affirmed

FRANK G. CLEMENT JR., P.J., M.S., delivered the opinion of the Court, in which ANDY D. BENNETT and W. NEAL MCBRAYER, JJ., joined.

Paul Toby Housch, Nashville, Tennessee, for the appellant, Air Comfort Heating and Cooling, LLC. Griffin S. Dunham, Nashville, Tennessee, for the appellees, Berkley Regional Insurance Company and Knestrick Contractor, Inc.

OPINION

FACTS AND PROCEDURAL HISTORY

In 2013, the Metropolitan Government of Nashville and Davidson County (“Metro”) contracted with Knestrick Contractor, LLC (“Knestrick”) to expand the Centennial Sportsplex. Knestrick provided a payment and performance bond for the project with Berkley Regional Insurance Company (“Berkley”) as surety. Knestrick then entered into a subcontractor agreement with Air Comfort Heating and Cooling, LLC (“Air Comfort”). Air Comfort then entered into an agreement with E Solutions for Buildings, LLC (“E Solutions”) for the purchase of equipment it was to provide and install.

Because construction was not completed until five months after the original deadline, Metro assessed some $100,000 in liquidated damages against Knestrick. In turn, Knestrick assessed $72,000 in liquidated damages against Air Comfort and withheld a final payment of $85,960.50. Air Comfort then withheld a final payment of $52,847.98 from E Solutions.1

I. TRIAL PROCEEDINGS

In early 2015, E Solutions filed a breach of contract action against Air Comfort and a bond claim against Knestrick and Berkley. Air Comfort asserted cross-claims against Knestrick for breach of contract and violation of the Prompt Pay Act of 1991, Tenn. Code Ann. §§ 66-34-101 to -704 (“the PPA”). Like E Solutions, Air Comfort also asserted a bond claim against Knestrick and Berkley. Knestrick and Berkley generally denied liability and contended that the other parties had been paid all they were owed.

After a bench trial, the court found that each party was responsible for a portion of the delay and a portion of the liquidated damages. The court awarded E Solutions $42,848.98 against Air Comfort, and it awarded Air Comfort $15,000 against Knestrick. The court ruled that Berkley was not liable for the judgment against Knestrick unless Knestrick failed to pay, and it denied Air Comfort’s request for an award of attorneys’ fees and discretionary costs.

1 Our discussion of the facts and procedural history is limited to the issues presented in this appeal. A more complete discussion of the facts and procedural history can be found in our prior opinions. See E Sols. for Buildings, LLC v. Knestrick Contractor, Inc. (E Solutions I), No. M2017-00732-COA-R3-CV, 2018 WL 1831116 (Tenn. Ct. App. Apr. 17, 2018); E Sols. for Buildings, LLC v. Knestrick Contractor, Inc. (E-Solutions II), No. M2018-02028-COA-R3-CV, 2019 WL 5607473 (Tenn. Ct. App. Oct. 30, 2019).

-2- II. THE SECOND APPEAL

In the second appeal, we found Knestrick was ineligible for liquidated damages because it was partially at fault for the project delay. See E Solutions II, 2019 WL 5607473, at *9 (citing V. L. Nicholson Co. v. Transcon Inv. & Fin. Ltd., Inc., 595 S.W.2d 474, 484 (Tenn. 1980)). We also concluded that Air Comfort was entitled to full payment of the $85,960.50 owed under the subcontract. Id. We further found that Knestrick acted in bad faith under the PPA by withholding more than the disputed $72,000. Id. at *10. Thus, we concluded that Air Comfort was eligible for an award of attorney’s fees under the PPA2, id., and an award of discretionary costs under Tenn. R. Civ. P. 54.04, id. at *11. We then remanded the case with directions to, inter alia, “reconsider Air Comfort’s request for attorney’s fees,” and “if a new motion for discretionary costs [was] timely filed by Air Comfort, . . . to consider that issue as well.” Id. at *14.

III. PROCEEDINGS ON REMAND

On remand, Air Comfort filed a Motion for Award of Discretionary Costs and a Motion for Award of Attorney’s Fees. Specifically, Air Comfort sought to recover discretionary costs of $10,962.42 for court reporter expenses under Tenn. R. Civ. P. 54.04 and $220,724.53 for professional services and “[a]dditional charges” under the PPA.

After a hearing, the trial court found Air Comfort was entitled to the full amount of requested discretionary costs as well as some, but not all, of the attorneys’ fees it sought to recover from Knestrick. The trial court excluded $100,350 attributed to legal services rendered during the first and second appeal and $29,685 in attorneys’ fees incurred in the trial court for services “unrelated to Knestrick.” The court reasoned that Air Comfort’s request for appellate attorneys’ fees was untimely. And while the “rates and time expended were reasonable and complied . . . with the requirements of RPC 1.5,” the court found an award of fees against Knestrick for time spent on matters unrelated to Knestrick would be inequitable. The trial court also found “that Knestrick should [not] be responsible for” some $7,000 in “[a]dditional charges,” because the remand from the Court of Appeals did not authorize an award for such expenses.

This appeal followed.

2 Tennessee Code Annotated § 66-34-602 provides that where payment is not made after notice of nonpayment, the notifying party may seek relief in chancery court, where “[r]easonable attorney’s fees may be awarded against the nonprevailing party if the nonprevailing party acted in bad faith.” Id. § 602(a)(3), (d).

-3- ISSUES

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