G.T. ISSA Constr. v. Blalock

G.T. ISSA CONSTRUCTION, LLC v. BONNIE BLALOCK

No. E2020-00853-COA-R3-CV

Court of Appeals of Tennessee, Knoxville

November 23, 2021

Session August 18, 2021.

Appeal from the Circuit Court for Hamilton County No. 17C1296 L Marie Williams, Judge

This is a controversy between a homebuyer, the plaintiff, and a residential developer/contractor concerning the construction and sale of a newly constructed custom-built home and lot within a subdivision with restrictive covenants. The parties executed a fill-in-the-blank "Purchase and Sale Agreement" ("the Agreement") pursuant to which the defendant agreed to construct a custom home and sell the home and lot to the plaintiff. The principal matter in dispute is whether the defendant was contractually obligated to provide a brick veneer on the retaining wall installed by the defendant. The Agreement did not expressly include the construction of a retaining wall; however, the parties agree that a retaining wall was to be constructed and included in the sale. Although the brick veneer had not been installed and the hotly disputed issue remained unresolved, the sale closed. Shortly thereafter, the buyer commenced this action in which she asserted, inter alia, claims for breach of contract and violation of the Tennessee Consumer Protection Act. The plaintiff alleged that the defendant failed to finish the retaining wall with brick veneer as required by the subdivision's restrictive covenants and implicitly required by the Agreement. In its answer, the defendant denied liability and asserted that it had no obligation to provide a veneer finish on the retaining wall. The case proceeded to a jury trial, after which the jury awarded the plaintiff $6, 800 on her breach of contract claim. Thereafter, the trial court awarded the plaintiff $201, 255.50 in attorney fees and expenses. This appeal followed. The defendant seeks to set aside the jury verdict arguing that the Agreement was fully integrated and did not include an obligation to build a retaining wall. The defendant also appeals the amount of the award of attorneys' fees, arguing that the plaintiff was not entitled to an award for time spent on her unsuccessful claims. We affirm the trial court's decision in all regards.

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

Buddy Bryant Presley and Terrance L. Jones, Chattanooga, Tennessee, for the appellant, G.T. Issa Construction, LLC.

Timothy M. Gibbons, Nathan Lee Kinard, and Harold Lebron North, Jr., Chattanooga, Tennessee, for the appellee, Bonnie Blalock.

Frank G. Clement Jr., P.J., M.S., delivered the opinion of the Court, in which D. Michael Swiney, C.J., and John W McClarty, J., joined.

OPINION

FRANK G. CLEMENT JR., P.J., M.S.

Facts and Procedural History

In July 2015, Bonnie Blalock ("Plaintiff") began a months-long process of discussions, negotiations, and plans review in furtherance of a contract with G.T. Issa Construction, LLC ("Defendant"). Pursuant to the parties' contract, Defendant would construct, and Plaintiff would purchase, a custom home on an empty lot Defendant owned in the Majestic Hills neighborhood of Chattanooga, Tennessee. Because the lot was on a steep hillside, Plaintiff asked what type of house Defendant could build there and whether a retaining wall would be needed. Defendant provided Plaintiff with several house plans to consider, and Defendant's owner/operator, Gus Issa confirmed that a retaining wall would probably be necessary. Plaintiff eventually settled on a house plan, which Defendant modified to suit her needs.

In December 2015, the parties executed a fill-in-the-blank "Purchase and Sale Agreement"^[1] that was completed or "filled in" by a neutral transaction facilitator. Pursuant to the Agreement, Plaintiff agreed to buy, and Defendant agreed to construct and sell, a "GT419-118 plan" custom home, along with the lot known as 1113 Renas Terrace, for $340, 000.00.^[2] Because the home was being built and finished to Plaintiff's specifications, the Agreement required her to pay a $34, 000 non-refundable deposit.

In an addendum, the parties agreed on certain interior and exterior details, including the use of "sod" in the front and side yards and "straw/seed" in the rear. Other details, such as the paint colors, were left to be decided at a later date. Although the parties discussed the need for a retaining wall, a retaining wall was not expressly included in the house plan, the addendum, or the Agreement. Nonetheless, when Mr. Issa began preparing the lot for construction, he decided to construct a concrete retaining wall to level the lot. When complete, the retaining wall ran almost the entire length of the lot and partway around back.

Plaintiff did not complain about the wall being built, but she was concerned about how it looked. Thus, at a material selection meeting in April 2016, Plaintiff asked one of Defendant's employees what finish "the wall" would have. After conferring briefly with Mr. Issa, the employee told Plaintiff that "the wall" would be covered in brick.

The parties did not discuss the retaining wall again until the project was nearly complete. In early October 2016, Plaintiff sent Mr. Issa an email asking when the brick would be installed on the wall-to which Mr. Issa replied that there were no plans to install brick. Plaintiff insisted that she had been promised brick at the April 2016 meeting, and she pointed out that the Majestic Hills restrictive covenants required "[a]ll retaining walls [to] be veneered with brick or stone."

Mr. Issa insisted that "the wall" they discussed in April 2016 was a smaller "landscaping wall" that was eventually built along the front side of the house. He also told Plaintiff that the restrictive covenant was no longer required by the homeowners' association because several houses in the neighborhood had bare concrete retaining walls and the restriction had not been enforced.

Plaintiff also asserted that Defendant used the wrong type of sod in the front and side yards. Defendant used Bermuda grass, and Plaintiff claimed that she requested Fescue during construction. After several heated exchanges, Defendant refused to replace the sod and told Plaintiff it would cost another $6, 800 to brick the retaining wall. Plaintiff refused to pay the extra money.

Concerned about losing her non-refundable deposit, Plaintiff closed on the purchase of the property in December 2016. She then paid a third-party $12, 400 to install a stone veneer on the retaining wall and replace the Bermuda grass.

In January 2017, Plaintiff filed a civil warrant against Defendant in Hamilton County General Sessions Court to recoup the above costs. Before that action was heard in the General Sessions Court, Defendant filed a complaint for declaratory judgment in the Hamilton County Circuit Court. Plaintiff then filed a countercomplaint to reassert her claims in the circuit court action. Defendant later nonsuited the declaratory judgment action, leaving only Plaintiff's claims to be adjudicated.

As later amended, Plaintiff's countercomplaint asserted claims for breach of contract, breach of the covenant of good faith and fair dealing, violation of the Tennessee Consumer Protection Act ("TCPA"), promissory fraud, and breach of the implied warranty of merchantability and the implied duty to build in compliance with the restrictive covenants of the development. Plaintiff alleged, inter alia, that Defendant breached its express obligation under paragraph 5 of the Agreement to convey "good and marketable title" to the property "subject . . . to . . . subdivision and/or condominium declarations, covenants, restrictions, and easements of record." Plaintiff also alleged that Defendant breached its implied "duty to construct improvements to real property in compliance with the covenants and restrictions of the development." Defendant filed an answer denying liability under any theory.

In June 2019, Defendant moved for summary judgment on the allegation that it violated paragraph 5 of the Agreement. The trial court denied the motion, finding a dispute of material fact concerning the meaning of the language in paragraph 5.

During the jury trial, each party presented an expert witness to testify on the meaning of paragraph 5. Plaintiff's expert witness, real estate attorney Brian Kopet, testified that Defendant's duty to convey "good and marketable title" to the property "subject . . . to . . . subdivision and/or condominium declarations, covenants, restrictions, and easements of record" meant Defendant had to build all improvements "in compliance with" the subdivision restrictions. He justified his interpretation by explaining that it was an industry standard for builders to comply with subdivision covenants and restrictions.

In contrast, Defendant's expert witness, real estate attorney Darren Kennedy, gave his opinion that the obligation to convey title "subject . . . to" certain exceptions was referring to possible encumbrances on the title-not physical improvements on the property.

Mr. Issa also testified on behalf of Defendant. He acknowledged that, as a new home builder, he is generally required to comply with subdivision restrictive covenants. Yet Mr. Issa maintained that the retaining-wall restriction was void because it had been violated on other properties in the neighborhood and no one was enforcing it.

At the close of the evidence, Plaintiff voluntarily dismissed her claim for breach of the implied warranty of merchantability and the implied duty to build in compliance with the restrictive covenants of the development, and Defendant waived the "selective enforcement" defense to the validity of the restrictive covenant. Both parties also made oral motions for a directed...